Research & Forecast Report | INDUSTRIAL Second Quarter 2016

Industrial Vacancy Falls Below 7.0 Percent for the First Time in 15 Years

Craig Hurvitz Vice President | Chicago

The Chicago metropolitan industrial market continued to thrive during the second quarter. Sixteen construction completions, many Market Indicators sizeable new leases and expansions, and continued consolidation CHICAGO METRO Q2 2016 Q1 2016 Q2 2015 of tenants from multiple warehouses into larger state-of-the-art VACANCY 6.91% 7.05% 7.23% facilities resulted in net absorption totaling 5.3 million square feet for the quarter. Due to this impressive demand, the industrial NET ABSORPTION 5,276,979 9,046,149 8,050,705 vacancy rate decreased by 14 basis points to 6.91 percent, the fi rst ASKING RENTAL RATE $4.68 $4.61 $4.50 time this rate has dropped below the 7.0 percent threshold in 15 years. Vacancy Rate & Net Absorption Vacancy And Supply Chicago Metro

The vacancy rate improved for the second consecutive quarter to 25.0 14% 20.0 6.91 percent, an improvement of 14 basis points between April and 12% 15.0 June, a rate 32 basis points below the 7.23 percent rate recorded 10.0 10% 5.0 8% during the second quarter one year ago and 533 basis points 0.0 below the peak 12.24 percent rate recorded during the fi rst quarter -5.0 6% -10.0 4% Vacancy Rate of 2010. This represents the lowest vacancy rate witnessed in -15.0 2% Chicago’s industrial market since the second quarter of 2001, which -20.0 -25.0 0% Square Feet Absorbed(Millions) saw a rate of 6.78 percent. Demand for space continued to outpace 2009 2010 2011 2012 2013 2014 2015 2016 the eff ects of new speculative construction completions, many of YTD which have been delivered to the market at least partially vacant.

Vacancy has dropped below 6.0 percent in nine of the 22 New Lease & User Sale Volume submarkets that make up the Chicago industrial market. The Chicago Metro centrally located O’Hare submarket continues to lead the pack at 70.0 4.21 percent and has witnessed an astounding improvement trend 60.0 over the past fi ve years, as vacancy decreased from 13.17 percent 50.0 40.0 30.0

Millions 20.0 10.0 0.0 2009 2010 2011 2012 2013 2014 2015 2016 YTD

Leased Sold during the second quarter of 2011, a correction of 896 basis points. The building is currently being expanded by an additional 504,000 The area benefi ts from its close proximity to O’Hare International square feet by developer Ridge Property Trust. Airport and easy access to multiple interstates and major arteries that serve the entire market. Additionally, construction activity in User sales volume totaled 2.5 million square feet for in the second the infi ll O’Hare submarket has largely involved the redevelopment quarter, a 3.0 percent increase over the fi rst quarter’s user sales of several older, functionally-obsolete buildings into modern volume. One of the largest user sales of the second quarter involved distribution facilities. Napleton Auto Group purchasing the 157,200-square-foot vacant building at 220 Brookshire Court in Naperville formerly occupied by Despite 8.8 million square feet of new vacancies coming online lumber products supplier Weyerhaeuser Company. during the second quarter due to speculative construction completions and vacated second-generation space, new leasing and Construction Activity user sale activity resulted in a reduction of the total vacant supply in the market to 93.0 million square feet, more than 3.1 million Industrial development activity increased signifi cantly during the square feet less vacant space than was available one year ago. second quarter with 29 projects totaling an impressive 9.4 million square feet starting construction between April and June. A total Absorption of 16.8 million square feet is currently under construction, a level similar to what was last witnessed in 2007. Speculative development Net absorption totaled 5.3 million square feet during the second accounts for 9.3 million square feet, or 55.5 percent of this total, quarter, bringing the total net absorption for the fi rst half of 2016 with build-to-suit projects and building expansions making up the to 14.3 million square feet. This six-month total is greater than the remainder of activity. Only 10.6 percent of the ongoing speculative net absorption tally recorded in Chicago’s industrial market during development has been pre-leased. The most activity is taking place in all four quarters of 2015. The last time net absorption exceeded this the I-80/Joliet Corridor submarket, where 6.2 million square feet of amount during a six-month period was during the second half of new development is underway, followed by 3.4 million square feet in 2011 following multiple quarters of negative net absorption. the I-55 Corridor, 1.2 million square feet in I-290 North, and 1.1 million square feet in the Elgin I-90 submarket. Net absorption exceeded 1.0 million square feet in the I-55 Corridor, I-88 Corridor, and I-80/Joliet Corridor during the second quarter, A total of 16 projects were completed during the second quarter largely due to signifi cant new leasing activity and the completion totaling 4.6 million square feet, of which 2.8 million square feet, or of several build-to-suit and fully-leased speculative construction 61.4 percent of the activity, was constructed on a speculative basis. projects. Net absorption was negative in the I-290 North submarket The speculative space that was delivered during the quarter is 33.1 during the second quarter, totaling negative 1.1 million square feet, percent leased. primarily due to the demolition of two large industrial facilities in River Grove and Franklin Park. New industrial developments are expected to soon begin construction on both sites. Leasing And Sale Activity

New leases and lease expansions totaled 6.8 million square feet, representing an 18.6 percent decline when compared to the 8.3 million square feet of new leasing activity recorded during the fi rst quarter of the year.

The two largest new leases signed during the quarter involved e-commerce giant Amazon.com taking additional space in the market. The online retailer leased the 767,161-square-foot warehouse building at 1125 Remington Boulevard in Romeoville formerly occupied by Central American and leased the 746,772-square-foot speculative facility recently developed by Hillwood Development Company at 201 Emerald Drive in Joliet’s Laraway Crossings Business Park. Breakfast cereal producer MOM Brands Company, recently acquired by Post Holdings, leased 720,000 square feet in Wilmington’s RidgePort Logistics Center.

Note: International adjusted some market boundaries during the fi rst quarter of 2016 and added the “I-88 Corridor” market to account for the changing industrial landscape. Historical statistics follow the new market boundaries.

2 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International Chicago Industrial Market Map

Milton Troy 90 JOHN H BATTEN MEMORIAL AIRPORT Rochester Racine 1 Chicago North 43 Mount SYLVANIA BURLINGTON AIRPORT94 Pleasant MUNICIPAL Union Grove 2 Chicago South Janesville AIRPORT Burlington 9494 3 O’Hare Delavan 94 e 4 North Suburbs Kenosha Regional Airport 43 Kenosha 5 Lake County 19 6 Central DuPage Beloit Pleasant Prairie Westosha 7 Northwest Suburbs Airport 8 I-290 North 9 I-290 South Zion 90 Waukegan 10 South Suburbs Regional Airport Fox Lake 11 Elgin I-90 Waukegan 12 McHenry County McHenry Grayslake 13 Fox Valley 222 122 94 Rockford 14 I-88 Corridor Belvidere Mundelein Crystal Lake Lake Forest 15 I-55 Corridor Cherry Vernon Hills Valley 16 DeKalb County Lake Zurich Buffalo Highland Park 17 Far South Suburbs Grove 18 Northwest Indiana 90 Glencoe Northbrook Hampshire Palatine 19 Southeast Wisconsin Dundee Chicago Executive Airport 94 Arlington 20 I-80/Joliet Corridor Heights 294 11 Evanston Des Grov 21 I-39 Corridor Elgin Schaumburg 39 Plaines Niles Skokie 22 Rockford Area Streamwood Sycamore South Elgin 290 are

DeKalb Bensenville Rochelle Dupage St CharlesAirport 88 Elmhurst 94 Geneva Stream West Chicago Park 290 Chicago Batavia 294 55 North Aurora 211 88 DownersHinsdaleLa Grange Grove Chicago Midway Sugar Grove Naperville Burr Airport Aurora Ridge Bedford Woodridge Park Montgomery Willow Springs Oak Lawn Oswego Bolingbrook 57 55 90 Yorkville Palos 94 Romeoville Heights 355 East Chicago Porter Gary/Chicago AirportGary 39 Lockport Crest Hammond 94 Tinley Park Hazel Crest Hill 94 80 90 80 Munster Joliet Mokena Matteson 65 New Lenox Park Forest Schererville Merrillville Valparaiso Minooka University Park 80 Channahon Monee Elwood ND 80 Ottawa Morris 57 I La Salle 17 55 Peotone Seneca

Submarket Overviews

Central DuPage 4 I-290 South 14 North Suburbs 24 Chicago 6 I-55 Corridor 16 Northwest Suburbs 26 Elgin I-90 Corridor 8 I-80 Joliet Corridor 18 O’Hare 28 Fox Valley 10 I-88 Corridor 20 South Suburbs 30 I-290 North 12 Lake County 22 Southeast Wisconsin 32

3 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International Central DuPage

Vacancy And Supply Market Indicators For the fi rst time in one year, the Central DuPage vacancy rate CENTRAL DUPAGE Q2 2016 Q1 2016 Q2 2015 increased during the second quarter, up 18 basis points to 6.48 VACANCY 6.48% 6.30% 7.81% percent when compared to the fi rst quarter’s 6.30 percent vacancy rate, but remains 163 basis points below the 8.11 percent rate NET ABSORPTION -130,263 266,282 -101,526 recorded during the second quarter of 2015. This remains one ASKING RENTAL RATE $5.57 $5.60 $5.40 of the lowest vacancy rates witnessed in the Central DuPage submarket since 2000. ee Chicago Executive Airport Vacant industrial supply increased for the second consecutive Arlington quarter, reaching 4.8 million square feet by the end of June. Heights 294 Mo Several new vacancies totaling 403,007 square feet were G Elgin Des introduced during the quarter. The largest new vacancy introduced Schaumburg Plaines involved auto part manufacturer FIC America Corp. moving out of Streamwood Elk Grove 110,960 square feet at 640-680 Center Avenue in Carol Stream and h Elgin 290 Village Ohare relocating its operations to Rockford. Int'l Airport Wood Dale Construction Activity Bloomingdale Bensenville Dupage Franklin Although no new development projects were completed during the Addison harlesAirport Park second quarter, fi ve projects are currently underway. The largest Carol Elmhurst is a 350,000-square-foot build-to-suit project for supply-chain eva Stream 355 Melrose West Chicago Park services provider CoreCentric Solutions at 191 E in Carol Stream. The building is expected to be completed in July. via Construction started on three speculative projects during the 294Westcheste second quarter in IDI Gazeley’s Bloomingdale Corporate Center. Aurora The buildings will be 154,000 square feet, 70,650 square feet, and 88 DownersHinsdaleLa Grange 51,600 square feet in size when completed towards the end of the Grove Naperville Burr year. Finally, a 15,072-square-foot build-to-suit facility is underway ora B for Kosmek USA Ltd. at 650 Springer Drive in Lombard. Woodridge Ridge ery Willow Springs Bolingbrook Leasing And Sale Activity Vacancy Rate & Net Absorption Central DuPage Only four new leases were signed during the second quarter, resulting in a signifi cant decrease in new leasing volume to 173,451 2.5 14% SF, the third consecutive quarter this tally has decreased. The largest 2.0 12% 1.5 10% new lease involved stainless steel strip coil provider Stainless Sales 1.0 8% Corporation leasing 62,513 square feet at 2301 Windsor Court in 0.5 6% Addison, bringing the building to 100 percent leased. Tile and carpet 0.0 4% Vacancy Rate provider Century Tile leased 60,315 square feet at 280 Madsen Drive -0.5 -1.0 2% in the Bloomingdale Business Center. -1.5 0% Square Feet Absorbed(Millions) 2009 2010 2011 2012 2013 2014 2015 2016 User sale activity decreased as well during the second quarter, with YTD only one transaction totaling 63,208 square feet recorded. Greek and Mediterranean food product manufacturer Devanco Foods purchased the building located at 440 West Mission Street in Carol Stream from DCT Industrial Trust for $5,215,000, or $82.51 per square foot. Dermody Properties purchased the 229,903-square- New Lease & User Sale Volume foot manufacturing building at 345-365 East North Avenue in Central DuPage Carol Stream which it plans to demolish to make way for a new 6.0 381,600-square-foot speculative development. 5.0 Absorption 4.0 3.0 Millions Net absorption turned negative in the Central DuPage submarket 2.0 for the fi rst time in one year, totaling negative 130,263 square feet 1.0 during the second quarter. Despite this, net absorption through the 0.0 2009 2010 2011 2012 2013 2014 2015 2016 YTD fi rst half of 2016 remains positive, totaling 136,019 square feet year- Leased Sold to-date.

Signifi cant Lease and Sale Activity

Central DuPage | Top Q2 2016 Transactions

TENANT/BUYER SIZE (SF) ADDRESS TYPE Dermody Properties 229,903 345-365 E North Avenue, Carol Stream Investment sale/redevelopment project Partners Group/Westmount Realty Capital 131,978 777-781 N Church Road, Elmhurst Part of a 19-property investment portfolio sale Pentair Filtration Solutions 107,635 1040 Muirfi eld Drive, Hanover Park Lease renewal Partners Group/Westmount 75,020 2171 Executive Drive, Addison Part of a 19-property investment portfolio sale Rosetta Group Co Ltd 68,422 1966 Quincy Court, Glendale Heights User sale Stainless Sales Corporation 62,513 2301 Windsor Court, Addison New lease Devanco Foods 63,208 440 Mission Street, Carol Stream User sale Century Tile 60,315 280 Madsen Drive, Bloomingdale New lease Supply Technologies 51,010 417-419 Village Drive, Carol Stream Lease renewal

5 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International Chicago

Vacancy And Supply Market Indicators CHICAGO NORTH Q2 2016 Q1 2016 Q2 2015 The overall Chicago industrial vacancy rate improved by 18 basis points during the second quarter to 7.29 percent. The Chicago VACANCY 5.04% 5.06% 4.85% North vacancy rate decreased slightly by two basis points to 5.04 NET ABSORPTION 23,652 96,600 625,826 percent to its lowest level since 2001, while the Chicago South vacancy rate improved more signifi cantly, dropping by 35 basis ASKING RENTAL RATE $8.40 $8.50 $8.52 points to 9.69 percent, the fi rst time it has been below the 10.0 percent threshold since 2014. CHICAGO SOUTH Q2 2016 Q1 2016 Q2 2015

Positive net absorption resulted in a reduction in the total vacant VACANCY 9.69% 10.04% 10.11% space in the city of Chicago to 12.6 million square feet. Nearly NET ABSORPTION 291,404 171,822 -103,946 two-thirds of that space can be found in the Chicago South market, where the vacant industrial supply decreased to 8.1 ASKING RENTAL RATE $4.15 $4.25 $4.18 million square feet. In the Chicago North Market, the vacant supply decreased slightly to 4.5 million square feet, a level slightly above the 4.3-million-square-foot tally recorded during the second Plaines Niles Skokie quarter of 2015. ve e Ohare Int'l Airport Construction Activity le Although no construction projects were completed in the city nville of Chicago during the second quarter, construction has started Franklin 90 on a 40,700-square-foot speculative facility being developed by Park Dayton Street Partners at 4150 North Knox Avenue in the Chicago rst Melrose 94 North submarket. Construction of the building is expected to be Park Oak Park 290 completed by October. Chicago Cicero Several additional projects are expected to soon begin 294Westchester 55 construction. The largest is a 227,043-square-foot build-to- dale suit facility for Preferred Freezer at 2302 South Paulina Street. La Grange Chicago Midway Next to the Preferred Freezer project, a 156,000-square-foot rr Airport speculative facility is also expected to be constructed by a joint- ge Bedford venture between Clarius Partners and Wanxiang America Real Park Willow Estate. Denver-based DCT Industrial is also planning to construct Oak Lawn a 166,370-square-foot speculative facility at 1400 West 44th Springs Street. 294 57 90 Palos Blue Island 94 Heights East Chic Leasing And Sale Activity Vacancy Rate & Net Absorption Chicago North New leasing volume between the two Chicago industrial 1.5 10% submarkets totaled 141,497 square feet during the second quarter, 1.0 8% only 24.2 percent of the new leasing total recorded during the 0.5 fi rst quarter. The Chicago South submarket witnessed 89,100 0.0 6% Rate square feet of new leasing volume, while the north side of the city -0.5 y -1.0 4% Vacanc witnessed only 52,397 square feet of new leasing activity. The -1.5 2% largest new lease signed involved The Salvation Army leasing -2.0 -2.5 0% 45,240 square feet at 4800 West . Square Feet Absorbed(Millions) 2009 2010 2011 2012 2013 2014 2015 2016 YTD Three user sales comprised the 155,382 square feet of user sale Chicago South activity recorded during the second quarter, a slight increase from 4.0 16% the fi rst quarter. The largest user sale involved -based 3.0 14% Highland Development Venture buying the 76,000-square-foot 2.0 12% 1.0 10% building at 1400 North . The buyer is currently 0.0 8% redeveloping the property into a self-storage facility and expanding -1.0 6% Vacancy Rate it to 130,000 square feet. -2.0 4% -3.0 2% -4.0 0% Square Feet Absorbed(Millions) Absorption 2009 2010 2011 2012 2013 2014 2015 2016 YTD Net absorption was positive in both the Chicago North and Chicago South submarkets during the second quarter of the year, totaling 315,056 square feet between the two submarkets. Through the New Lease & User Sale Volume fi rst half of the year, net absorption in the city of Chicago totaled Chicago North 583,478 square feet. 2.5

2.0

1.5

Millions 1.0

0.5

0.0 2009 2010 2011 2012 2013 2014 2015 2016 YTD

Leased Sold Chicago South

4.0 3.5 3.0 2.5 2.0

Millions 1.5 1.0 0.5 0.0 2009 2010 2011 2012 2013 2014 2015 2016 YTD Signifi cant Lease and Sale Activity Leased Sold

Chicago | Top Q2 2016 Transactions

TENANT/BUYER SIZE (SF) ADDRESS TYPE OSI Group, LLC 200,000 4201 S Ashland Avenue User sale Edsal Sandusky Corporation 128,426 4300-4330 S Racine Avenue Sublease BRB Development, LLC 82,300 3705 N Investment sale/redevelopment project Highland Development Ventures 76,000 1400 N Cicero Avenue Investment sale/redevelopment project Accurate Metal Fabricating, LLC 56,000 1657 N Kostner Avenue User sale El Cubano Wholesale Food Inc 52,948 4630 W 53rd Street User sale Fort Pitt Furniture, LLC 50,000 5100-5150 W Roosevelt Road New lease The Salvation Army 45,240 4800-500 W Roosevelt Road New lease

7 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International Elgin I-90 Corridor

Vacancy And Supply Market Indicators The Elgin I-90 Corridor vacancy rate decreased by 13 basis ELGIN/I-90 CORRIDOR Q2 2016 Q1 2016 Q2 2015 points to 10.20 percent during the second quarter. Despite VACANCY 10.20% 10.33% 11.11% three quarters of improvement, the vacancy rate remains one of the highest among the 22 submarkets tracked. One year ago, NET ABSORPTION 70,526 85,635 1,046,428 during the second quarter of 2015, this rate was 91 basis points ASKING RENTAL RATE $5.05 $5.05 $4.97 higher at 11.11 percent. The vacancy rate peaked at 14.62 percent during the fi rst quarter of 2014 following the introduction of several sizeable vacancies and the delivery of vacant speculative Crystal Lake construction.

Total vacant supply dipped slightly to 3,172,029 square feet, a decrease of 35,526 square feet from fi rst quarter. The largest percentage of vacancies fell between 30,000 and 60,000 square feet with only six spaces available for users requiring more than 100,000 square feet of space. 90 Hampshire Construction Activity Dundee

Only one industrial project was completed during the second quarter, a 35,000-square-foot build-to-suit facility for freight shipping and trucking company Atlantic Transport on Davis Road Elgin in Elgin. Streamw South Elgin Three speculative buildings in Elgin and two build-to-suit projects in West Dundee and Huntley totaling more than 1.1 million square feet are currently underway, the most construction activity the Elgin I-90 Corridor submarket Dupage has ever witnessed. The speculative developments St CharlesAirport include a 385,375-square-foot building being developed Geneva by Conor Commercial in the Northwest Corporate Park, a West Chicago 308,500-square-foot building being developed by Northern Builders at Randall Crossings, and a 159,000-square-foot Batavia facility being developed by Pancor Development in Randall Point Business Park. The build-to-suit projects include Opus’ 133,000-square-foot facility for Renishaw Tool in West Dundee and Hiwin Corporation’s 117,400-square-foot building on Jim Dhamer Drive in Huntley. Three of these projects started construction during the second quarter. Leasing And Sale Activity Vacancy Rate & Net Absorption Elgin I-90 Corridor New leasing activity declined to 74,145 square feet from the fi rst quarter’s 212,535 square feet. The largest standalone new lease 2.0 14% 12% of the quarter involved electrical construction services provider 1.5 MJ Electric leasing 47,650 square feet at 255 Industrial Drive in 10% 1.0 Hampshire. 8% 0.5 6%

4% Vacancy Rate Two user sales were recorded totaling 55,117 square feet for 0.0 second quarter, an increase compared to the absence of user sales 2% -0.5 0% Square Feet Absorbed(Millions) in the submarket during the fi rst quarter. 2009 2010 2011 2012 2013 2014 2015 2016 YTD On the investment side, Brennan Investment Group completed two separate sale-leaseback transactions. The Packaging Wholesalers (formerly Just-In-Time Packaging) sold its 443,103-square-foot building to Brennan Investment Group in June. The packaging and shipping supplier executed a long-term leaseback transaction New Lease & User Sale Volume to retain its current company headquarters location in Elgin. The Elgin I-90 Corridor second acquisition involved the 91,888-square-foot, fully-leased building located at 13701 George Bush Court in Huntley sold 3.5 3.0 to Brennan as part of a 3-property industrial portfolio. Rohrer 2.5 Corporation, a top producer of skin and blister packaging, will lease 2.0 1.5 back the property. Rohrer’s headquarters, located in , as well Millions as another manufacturing facility in Georgia were also included in 1.0 this transaction totaling 376,215 square feet. The Huntley property 0.5 0.0 traded at $6.82 million or $74.24 per square foot, while the entire 2009 2010 2011 2012 2013 2014 2015 2016 YTD portfolio sold for $20.5 million or $54.49 per square foot. Leased Sold Absorption

Net absorption fell slightly to 70,526 square feet from 85,635 square feet during the fi rst quarter. This marks the ninth straight quarter of positive net absorption for the Elgin I-90 Corridor.

Signifi cant Lease and Sale Activity

Elgin I-90 Corridor | Top Q2 2016 Transactions

TENANT/BUYER SIZE (SF) ADDRESS TYPE Brennan Investment Group 443,103 1717 Giff ord Road, Elgin Sale-leaseback Brennan Investment Group 91,888 13701 George Bush Court, Huntley Sale-leaseback MJ Electric 47,645 255 Industrial Drive, Hampshire New lease Henderson Truck Rental 28,117 11921 Smith Drive, Huntley User sale Elgin Riverboat Resort 27,000 300 , Elgin User sale

9 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International Fox Valley

Vacancy And Supply Market Indicators The Fox Valley vacancy rate declined by 20 basis points to 5.24 ELGIN/I-90 CORRIDOR Q2 2016 Q1 2016 Q2 2015 percent between April and June. This rate has improved by an VACANCY 10.20% 10.33% 11.11% impressive 937 basis points since it peaked during the second quarter of 2009 at 14.61 percent. The Fox Valley submarket has NET ABSORPTION 70,526 85,635 1,046,428 historically been mostly an owner/user market with limited activity, ASKING RENTAL RATE $5.05 $5.05 $4.97 however demand for space over the past six years has been signifi cant. Hampshire Vacant industrial supply now stands at 1.6 million square feet, Dundee a decrease from the 1.8 million square feet recorded in the fi rst quarter of 2016. This is the lowest measured vacant supply this market has historically witnessed. Elgin Sch Construction Activity Streamwood South Elgin Although no new construction projects were completed during the second quarter, two build-to-suit facilities are underway in the Fox Valley submarket. Venture One Real Estate is developing Bloo a 180,121-square-foot facility for AJR Filtration at 1200 Equity Dupage Drive in St. Charles. The fi lter bag and cartridge manufacturer is St CharlesAirport expected to take occupancy during the fourth quarter of this year. Car Geneva Secondly, due to continued company growth, DS Containers is West ChicagoStre expanding its recently completed 299,520-square-foot building by an additional 250,575 square feet at 2500 Enterprise Circle Batavia in West Chicago’s DuPage National Technology Park. The aerosol manufacturer plans to add over two dozen production jobs once the North Aurora project is complete. 88 Sugar Grove Naperville Aurora Montgomery Leasing And Sale Activity Vacancy Rate & Net Absorption Fox Valley Few new leases were signed during the second quarter in the Fox Valley submarket, refl ected by only 21,168 square feet of new 1.0 16% 14% leasing activity. 0.5 12% Several investment sales were signed between April and June. 0.0 10% 8% The largest investment sale involved Cabot Properties acquiring -0.5 6% Vacancy Rate a four-property portfolio in West Chicago that totaled 829,198 4% -1.0 square feet. The portfolio (dubbed “Blackhawk Center”) included 2% -1.5 0% Square Feet Absorbed(Millions) the 291,015-square-foot building at 1801 Hawthorne Lane, the 2009 2010 2011 2012 2013 2014 2015 2016 252,858-square-foot building at 1601-1701 West Hawthorne Lane, YTD the 200,000-square-foot building at 1700 Harvester Road, and the 85,325-square-foot building at 1600 Harvester Road. Denver-based DCT Industrial Trust sold the portfolio for $33 million, or $39.80 per square foot. New Lease & User Sale Volume User sale activity increased for the third consecutive quarter, Fox Valley climbing to 69,884 square feet. Pack Smart Inc expanded its operations by purchasing the 43,356-square-foot building at 2.0

1000 Atlantic Drive in West Chicago for $2.0 million, or $47.25 1.5 per square foot. The processing and packing equipment provider vacated its former 28,700-square-foot facility at 775 West Belden 1.0 Millions

Avenue in Addison. 0.5

Absorption 0.0 2009 2010 2011 2012 2013 2014 2015 2016 YTD Net absorption decreased to 64,982 square feet in the second Leased Sold quarter, however total cumulative absorption for the fi rst half of 2016 now stands at 478,676 square feet, well above the 197,047-square-foot net absorption total recorded during all of 2015.

Signifi cant Lease and Sale Activity

Fox Valley | Top Q2 2016 Transactions

TENANT/BUYER SIZE (SF) ADDRESS TYPE Cabot Properties, Inc. 829,198 4 buildings, West Chicago Investment portfolio sale STAG Industrial Management LLC 249,470 1726-1850 Blackhawk Drive, West Chicago Investment sale Pack Smart Inc 43,356 1000 Atlantic Drive, West Chicago User sale Venture One Real Estate LLC 34,358 1890-1896 Suncast Lane, Batavia Investment sale Kurt Berghofer 34,105 707 Kautz Road, St. Charles Investment sale Undisclosed 21,168 1501 Indiana Avenue, St. Charles New lease

11 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International I-290 North

Vacancy And Supply Market Indicators The I-290 North vacancy rate increased by 40 basis points to I-290 NORTH Q2 2016 Q1 2016 Q2 2015 9.48 percent this quarter. This rate is 197 basis points above the VACANCY 9.48% 9.08% 7.51% 7.51 percent rate recorded during the second quarter of 2015, but remains well below the 14.12 percent peak vacancy rate reached NET ABSORPTION -1,138,960 132,362 43,086 during the fi rst quarter of 2010. ASKING RENTAL RATE $4.61 $4.34 $4.59 Vacant industrial supply also increased to just over 7 million square feet. The largest amount of new vacancies introduced during the quarter took place in Melrose Park, where 613,335 square feet of Arlington formerly occupied space became vacant. For tenants looking for Heights 294 Morton 200,000 square feet or larger, there are currently eight options in Evanston Des Grove the I-290 North submarket. mburg Plaines Niles Skokie Construction Activity Elk Grove 290 Village Ohare Int'l Airport Two buildings were demolished in I-290 North during the Wood Dale second quarter, resulting in a 931,272-square-foot decrease in ingdale the submarket’s total inventory to 74.2 million square feet. The Bensenville former 522,584-square-foot A.M. Castle facility at 3400 North Addison Franklin 90 Wolf Road in Franklin Park was demolished to make way for a Park Elmhurst 94 new 491,089-square-foot speculative facility being developed m 355 Melrose Park Oak Park by Panattoni Development Company. A.M. Castle relocated its 290 C operations to a new processing center in Janesville, Wisconsin during fi rst quarter of this year. The former 408,688-square-foot WestchesterCicero Follett Corporation headquarters building at 2233 West Street in 294 55 River Grove was also demolished during the second quarter. A DownersHinsdaleLa Grange new, modern, cross-docked build-to-suit facility for GO2 Logistics Grove Chicago Midway will take its place. The freight transportation and logistics services Burr Airport Ridge Bedford provider purchased the property in June of 2015 for $7.9 million. Woodridge Park Willow Four speculative construction projects are currently underway Oak Lawn in the I-290 North submarket totaling 1.2 million square feet. Springs ook The largest development is a 491,089-square-foot facility being 57 developed by Panattoni at 3400 Wolf Road in Franklin Park, 294 followed by a 367,389-square-foot building being developed by 94 Molto Capital, LLC on the former Central Grocers site in Franklin Park. Walls are going up on Pritzker’s 194,260-square-foot speculative development at 11333 Addison Avenue in the Franklin Park Rail Center, and Bridge Development Partners is nearing completion on a 182,923-square-foot building at 11600 in Northlake. Leasing And Sale Activity Vacancy Rate & Net Absorption I-290 North Leasing volume totaled 65,481 square feet in the I-290 North submarket during the second quarter, representing a 56.35 percent 2.0 14% 1.5 12% decrease when compared to the 150,018 square feet of new leasing 1.0 10% activity during the fi rst quarter. The largest new lease involved 0.5 fl at-rolled carbon, stainless, and aluminum products provider Viking 0.0 8% -0.5 6% Materials, Inc leasing 98,600 square feet at 11305 Franklin Avenue -1.0 4% Vacancy Rate in Franklin Park. The company will vacate its previously occupied -1.5 2% 90,760-square-foot facility at 3434 Powell Street in Franklin Park, -2.0 -2.5 0% Square Feet Absorbed(Millions) about two blocks southwest from its new address. 2009 2010 2011 2012 2013 2014 2015 2016 YTD User sale activity increased during the second quarter to 458,470 square feet, the greatest user sale tally since the second quarter of 2015. The largest user sale took place in Schiller Park consisting of two buildings with a combined total of 218,255 square feet New Lease & User Sale Volume purchased by Bridge Development Partners. The two-property I-290 North portfolio sold for $4.25 million and involved the 154,000-square- 4.0 foot building at 9555 Soreng Avenue and the 64,255-square-foot 3.5 facility at 9601-9657 Soreng Avenue. Bridge Development Partners 3.0 intends to level the buildings to make way for two new speculative 2.5 2.0 industrial developments. The largest investment sale of the quarter Millions 1.5 involved four adjacent properties located at 2525 Armitage Avenue, 1.0 2020 Indian Boundary Drive and 2040 Indian Boundary Drive in 0.5 0.0 Melrose Park. The 534,000-square-foot, four-property portfolio 2009 2010 2011 2012 2013 2014 2015 2016 YTD was acquired by Ryzman Family Trust from Reich Brothers for $6 Leased Sold million or $11.24 per square foot. The buyer plans to redevelop the former Alberto Culver site which had stood vacant since May 2013. Absorption

Net absorption totaled negative 1,138,960 square feet during the second quarter mainly due to aforementioned building demolitions. Additional negative net absorption is anticipated over the next six months when the buildings purchased for redevelopment during this quarter are demolished.

Signifi cant Lease and Sale Activity

I-290 North | Top Q2 2016 Transactions

TENANT/BUYER SIZE (SF) ADDRESS TYPE Ryzman Family Trust 534,000 4 buildings, Melrose Park Portfolio investment sale/redevelopment Bridge Development Partners 218,255 9555 & 9601-9657 Soreng Avenue, Schiller Park Portfolio investment sale/redevelopment Just Manufacturing Inc 100,000 9301 King Street, Franklin Park User sale Viking Materials Inc 98,600 11305 Franklin Avenue, Franklin Park New lease Westmount Realty Capital LLC 82,380 11700 Grand Avenue, Northlake Part of a 19-property investment portfolio sale U-Stor-It Managers LLC 58,468 4501 W North Avenue, Melrose Park Investment sale Combined Metals of Chicago 30,500 2401 W Grant Avenue, Bellwood New lease

13 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International I-290 South

Vacancy And Supply Market Indicators The I-290 South vacancy rate improved for the second consecutive I-290 SOUTH Q2 2016 Q1 2016 Q2 2015 quarter, dropping by 60 basis points in the second quarter to 7.41 percent. Over the past six months, this rate has declined an VACANCY 7.41% 8.01% 7.88% impressive 186 basis points to the lowest rate the submarket has NET ABSORPTION 277,068 577,250 261,805 recorded since the fourth quarter of 2014. ASKING RENTAL RATE $5.25 $4.96 $5.07 Total vacant space further improved, declining by 277,068 square feet between April and June to 3.4 million square feet, falling to a level not witnessed since the fi rst quarter of 2015 when vacant supply stood at 3.1 million square feet. Arlington Heights 294 Morton Construction Activity Evanston Des Grove mburg No development projects were completed during the second Plaines Niles Skokie quarter; however, one project did break ground. Footings have Elk Grove 290 Village Ohare been poured for a 282,933-square-foot speculative project Int'l Airport being developed by a joint-venture between Cabot Properties Wood Dale and Seefried Properties at 7225 Santa Fe Drive in Hodgkins. ingdale Bensenville Construction is expected to soon begin on a 172,000-square-foot Franklin 90 build-to-suit facility for shipping company FedEx at 4800 South Addison Park Central Avenue in Forest View. Elmhurst 94 m 355 Melrose Park Oak Park 290 C Cicero 294Westchester 55 DownersHinsdaleLa Grange Grove Chicago Midway Burr Airport Ridge Bedford Woodridge Park Willow Springs Oak Lawn ook 294 57 94 Leasing And Sale Activity Vacancy Rate & Net Absorption I-290 South The I-290 South submarket witnessed an uptick in new leasing volume in the second quarter totaling 306,443 square feet, a 57.43 2.0 12% percent increase when compared to the fi rst quarter’s leasing 1.5 10% 1.0 volume total of 194,649 square feet. This represents the greatest 8% 0.5 amount of leasing activity recorded in the submarket since the third 6% 0.0 quarter of 2013. The largest lease of the quarter involved printing 4% material provider GPA Specialty Substrate Solutions leasing 156,214 -0.5 Vacancy Rate 2% square feet at 8701 West 47th Street in McCook. -1.0 -1.5 0% Square Feet Absorbed(Millions) 2009 2010 2011 2012 2013 2014 2015 2016 User sale activity decreased to 291,216 square feet during the YTD second quarter from the fi rst quarter’s total of 444,309 square feet. The largest user sale completed involved industrial pump manufacturer Graymills purchasing the 119,817-square-foot building at 2601 South 25th Avenue in Broadview. The company sold its 82,300-square-foot facility on the north side of Chicago during the New Lease & User Sale Volume quarter to facilitate the move to Broadview. The largest investment I-290 South sale involved a two-property portfolio acquired by Heitman in 2.0 McCook. The portfolio included the 353,322-square-foot building at 8601 West 47th Street and the 312,227-square-foot building at 1.5

8701 West 47th Street. The buyer paid $59.9 million, or $90.00 per 1.0 square foot for the buildings which have both been issued 6B real Millions estate tax reductions due to the fact that they have been vacant 0.5 since being completed in 2014 and 2015. 0.0 2009 2010 2011 2012 2013 2014 2015 2016 YTD Absorption Leased Sold

Net absorption totaled 277,068 square feet between April and June and remained positive for the second consecutive quarter. Cumulative net absorption for the fi rst half of 2016 totaled 854,318 square feet, a remarkable increase from the combined negative 1.2 million square feet of net absorption recorded during all of 2015.

Signifi cant Lease and Sale Activity

I-290 South | Top Q2 2016 Transactions

TENANT/BUYER SIZE (SF) ADDRESS TYPE Heitman 353,322 8601 W 47th Street, McCook 2-property investment portfolio Heitman 312,227 8701 W 47th Street, McCook 2-property investment portfolio GPA Specialty Substrate Solutions 156,214 8701 W 47th Street, McCook New lease Graymills 119,817 2601 S 25th Avenue, Broadview User sale Undisclosed 55,938 8701 W 47th Street, McCook New lease Hasak Cold Storage 48,121 8424 W 47th Street, Lyons New lease A Lava & Son Company 37,882 5950 W 51st Street, Forest View New lease

15 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International I-55 Corridor

Vacancy And Supply Market Indicators The I-55 Corridor vacancy rate improved for the third consecutive I-290 SOUTH Q2 2016 Q1 2016 Q2 2015 quarter, dropping by an impressive 114 basis points during the second quarter to 7.34 percent, one of the lowest rates recorded VACANCY 7.41% 8.01% 7.88% in the submarket’s history. Elevated user demand for spaces large NET ABSORPTION 277,068 577,250 261,805 and small in size over the past year has resulted in the vacancy $5.25 $4.96 $5.07 rate decreasing by 378 basis points from 11.12 percent in only four ASKING RENTAL RATE quarters. Signifi cant improvements were witnessed in Bolingbrook and Romeoville during the second quarter. In Bolingbrook, elevated leasing activity resulted in the vacancy rate decreasing by 164 basis West Chicago Park points to 7.83 percent, while the Romeoville vacancy rate dropped atavia by an impressive 361 basis points due to two large new leases Westches being signed to 4.79 percent, one of the lowest vacancy rates ever 294 h Aurora recorded in Romeoville. Meanwhile, a 438,150-square-foot vacant 88 HinsdaleLa Grang speculative facility was completed in Crest Hill during the second Downers Grove quarter, where the vacancy rate jumped from 6.76 percent to 28.20 Naperville Burr percent during the period. urora Woodridge Ridge Vacant supply in the I-55 Corridor decreased by 904,749 square mery Willow feet during the second quarter. At the end of June, only 6.2 million Spring square feet of vacant space was available in the submarket. This Bolingbrook is less than half the vacant space that was available during the third quarter of 2010, when 13.2 million square feet was vacant 55 in the submarket. There are only fi ve options for users looking for Romeoville H 355 300,000 square feet or more with another three options currently under construction. Plainfield Lockport Crest Construction Activity Hill Tinley Five buildings were completed during the second quarter, all built on a speculative basis. The largest was a 438,150-square- Joliet Mokena foot facility developed by Ridgeline Property Group and Cabot New Lenox Properties, Inc. at 16824 Enterprise Boulevard in Crest Hill Industrial Park. The fi rst of four buildings in Bolingbrook’s new Fountain Square Commerce Center was completed during the second quarter, a 109,354-square-foot speculative facility at 680 Remington Boulevard. The remaining three buildings being developed by Conor Commercial will be delivered during the third quarter. The 89,887-square-foot building developed by Prologis at 1201 Internationale Parkway in Woodridge has been completed as well, and has been leased by Blue Line Distribution, Inc. Finally, a 35,429-square-foot speculative industrial condominium building was completed at 650 Willowbrook Center Parkway in Willowbrook. There are currently 13 projects under construction totaling 3.4 Vacancy Rate & Net Absorption million square feet in the I-55 Corridor, fi ve of which began I-55 Corridor construction during the fi rst quarter. Only two of the ongoing projects are build-to-suit construction, while the remaining 11 are 4.5 18% 4.0 16% speculative projects. Three of these buildings have been at least 3.5 14% partially leased. 3.0 12% 2.5 10% 2.0 8% 1.5 6% Leasing And Sale Activity Vacancy Rate 1.0 4% New leasing activity totaled 2.3 million square feet during the 0.5 2% 0.0 0% Square Feet Absorbed(Millions) second quarter, the largest quarterly tally since the third quarter 2009 2010 2011 2012 2013 2014 2015 2016 of 2013 and a 12.4 percent increase compared to the 2.0 million YTD square feet of new leasing activity recorded during the fi rst quarter of the year. This represents the sixth consecutive quarter that the new leasing volume has increased in the I-55 Corridor. During that time, nearly 10.5 million square feet of new leases or New Lease & User Sale Volume lease expansions have been signed. Four new leases greater than I-55 Corridor 300,000 square feet were signed during the quarter, the largest involving Amazon.com leasing the 767,161-square-foot facility 8.0 at 1125 Remington Boulevard in Romeoville’s Windham Lakes 7.0 Business Park. The largest lease renewal of the quarter involved 6.0 5.0 liquor distributor Diageo North America, Inc. renewing its lease for 4.0

800,000 square feet at 1701 Remington Boulevard in Bolingbrook. Millions 3.0 2.0 User sale activity was limited during the second quarter, totaling 1.0 0.0 only 22,098 square feet. However, several signifi cant investment 2009 2010 2011 2012 2013 2014 2015 2016 YTD sales occurred. Leased Sold Absorption

Net absorption totaled 1.6 million square feet during the second quarter, a slight increase from the fi rst quarter’s total. The net absorption tally through the fi rst half of 2016 is 3.1 million square feet, the most impressive fi rst half the I-55 Corridor has witnessed since 2005, when net absorption totaled 3.9 million square feet through the fi rst half of the year.

Signifi cant Lease and Sale Activity I-55 Corridor | Top Q2 2016 Transactions

TENANT/BUYER SIZE (SF) ADDRESS TYPE Diageo North America, Inc. 800,000 1701 Remington Boulevard, Bolingbrook Lease renewal Amazon.com 767,161 1125 Remington Boulevard Romeoville New lease Gramercy Property Trust 546,450 900 N Schmidt Road, Romeoville Sale-leaseback The Room Place 453,568 1120-1140 Remington Boulevard, Romeoville New lease Industrial Property Trust 443,620 1075 W Taylor Road, Romeoville Part of a 7-property national investment portfolio Central American 419,317 555 St. James Gate, Bolingbrook New lease Lincoln Property Company 350,662 3 buildings, Romeoville & Bolingbrook 3-property local investment portfolio sale APL Logistics 324,144 800 S Veterans Parkway, Bolingbrook New lease TA Associates Realty 320,722 3-7 Timber Court, Bolingbrook Investment sale UPS 273,640 16328 S John Lane Crossing, Lockport New lease RJW Transport, Inc. 231,250 11240 Katherine’s Crossing, Woodridge Lease expansion/extension

17 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International I-80 Joliet Corridor

Vacancy And Supply Market Indicators Despite a 13-basis-point rise in the I-80/Joliet Corridor vacancy I-80 JOLIET CORRIDOR Q2 2016 Q1 2016 Q2 2015 rate during the second quarter, the current 5.66 percent rate is one VACANCY 5.66% 5.53% 6.00% of the lowest vacancy rates recorded in the submarket’s history. It remains an impressive 588 basis points below the 11.54 percent NET ABSORPTION 1,955,945 753,800 2,005,804 rate recorded during the second quarter of 2014, and nearly 15 ASKING RENTAL RATE $3.94 $4.26 $4.23 percent below the peak vacancy rate of 20.52 percent recorded during the third quarter of 2009. Hill The total vacant supply increased by 5.5 percent during the second quarter to 4.3 million square feet, but remains only a fraction of the 13.9 million square feet vacant in the submarket during the height of Joliet M the Great Recession in 2009. For users looking for big-box spaces New Lenox of 300,000 square feet or larger in the I-80/Joliet Corridor, there are currently only three existing vacant spaces, with another two options currently under construction. Minooka Construction Activity 80 Channahon

Three construction projects were delivered during the second Elwood quarter, the largest being a 1.1-million-square-foot build-to- suit project for Saddle Creek Logistics in Elwood’s CenterPoint Intermodal Center. Additionally, a 746,772-square-foot speculative facility developed by Hillwood Development Company was 55 completed at 201 Emerald Drive in Joliet’s Laraway Crossings Business Park. The entire building was leased by internet giant Amazon.com. Finally, a 318,562-square-foot speculative project developed by Clarion Partners was completed in Shorewood’s Heartland Corporate Center and remains available.

Construction activity continued to expand in the I-80/Joliet Corridor, with seven new projects beginning construction during the second quarter, bringing the tally of new development projects underway to 10, totaling nearly 6.2 million square feet. The largest new development to begin construction during the second quarter is a 1,250,481-square-foot build-to-suit building for Swedish furniture and accessories distributor IKEA in Joliet’s Laraway Crossings Business Park. Construction has begun on two large speculative facilities in the submarket, including a 751,769-square- Vacancy Rate & Net Absorption foot building being developed by CenterPoint Properties at 3900 I-80 Joliet Corridor Brandon Road in Joliet and a 749,500-square-foot facility to be developed by IDI Gazeley at 23700 West Bluff Road in the 4.5 20% Channahon Corporate Center. 4.0 3.5 15% 3.0 2.5 Leasing And Sale Activity 10% 2.0 1.5 Vacancy Rate Several new leases greater than 200,000 square feet were signed 1.0 5% during the second quarter, resulting in a signifi cant spike in leasing 0.5 0.0 0% Square Feet Absorbed(Millions) activity. New leasing volume for the quarter totaled 1.2 million 2009 2010 2011 2012 2013 2014 2015 2016 square feet, more than three times the 377,890-square-foot leasing YTD volume recorded during the fi rst quarter of the year. The largest new lease of the quarter involved Amazon.com taking the entire 746,772-square-foot building recently completed at 201 Emerald Drive in Joliet. Breakfast cereal producer MOM Brands, recently New Lease & User Sale Volume acquired by Post Holdings, leased 720,000 square feet at 29700 I-80 Joliet Corridor South Graaskamp Boulevard in Wilmington’s RidgePort Logistics Center. The building is currently being expanded by 504,000 square feet. 6.0 5.0 User sale activity was limited to only one small transaction during 4.0 the second quarter totaling 16,800 square feet. The largest 3.0 Millions investment sale involved Hillwood Development Corporation 2.0 purchasing three buildings in Tinley Park totaling more than 1.2 1.0 million square feet. The transactions included the 915,643-square- 0.0 2009 2010 2011 2012 2013 2014 2015 2016 YTD foot building at 18801 Oak Park Avenue occupied by M. Block & Leased Sold Sons, the fully-leased 237,241-square-foot building at 7979 West 183rd Street, and the 79,066-square-foot building at 7950 West 185th Street. Absorption

Signifi cant new leasing activity pushed net absorption strongly positive during the second quarter, totaling nearly 2.0 million square feet, the largest quarterly net absorption tally since the second quarter of 2015. Through the fi rst half of 2016, net absorption in the I-80/Joliet Corridor totaled 2.7 million square feet.

Signifi cant Lease and Sale Activity

I-80 Joliet Corridor | Top Q2 2016 Transactions

TENANT/BUYER SIZE (SF) ADDRESS TYPE Hillwood Development Corporation 1,231,950 3 buildings, Tinley Park 3-property investment portfolio sale Amazon.com 746,772 201 Emerald Drive, Joliet New lease MOM Brands (Post Holdings) 720,000 29700 S Graaskamp Boulevard, Wilmington New lease Batory Foods 678,000 24827 W Lorenzo Road, Wilmington Build-to-suit sale IKEA 415,800 21051 W Walter Strawn Drive, Elwood New lease Samsung Electronics 383,494 21051 W Walter Strawn Drive, Elwood New lease B&G Foods 252,356 4000 Rock Creek Boulevard, Joliet New lease Kellogg’s 117,643 2700 McDonough Street, Joliet New lease

19 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International I-88 Corridor

Vacancy And Supply Market Indicators The I-88 Corridor vacancy rate improved by 40 basis points during I-88 CORRIDOR Q2 2016 Q1 2016 Q2 2015 the second quarter, decreasing to 6.70 percent, a rate slightly above VACANCY 6.70% 7.10% 6.45% the 6.45 percent vacancy rate recorded during the second quarter of 2015, but well below the peak 15.81 percent rate recorded during NET ABSORPTION 1,126,904 724,292 -390,390 the fourth quarter of 2009. ASKING RENTAL RATE $4.44 $4.39 $4.32 A total of 638,169 square feet of new vacancies were introduced to the market, a 48.75 percent increase when compared to last quarter’s tally of 429,010 square feet. Despite these new vacancies, the total vacant supply decreased in the I-88 Corridor due to Bloomingdale signifi cant new leasing and user sale activity. At the end of June, a Bensenv total of 4.8 million square feet remained vacant in the submarket. Dupage St CharlesAirport Addison This fi gure has held between 4.0 million and 5.0 million for the Carol Geneva 355 Elmhurst past 12 quarters in a row. For users looking for 200,000-square- West ChicagoStream foot spaces or larger, there are currently only seven vacant options available. Batavia Construction Activity 29 North Aurora 88 DownersHinsdal Two construction projects were completed during the second Grove quarter. The largest was a 499,140-square-foot build-to-suit e Naperville Burr Aurora facility developed by Duke Realty Corporation for offi ce products Woodridge Ridge manufacturer Fellowes, Inc. at 2850 Duke Parkway in Aurora’s Montgomery Butterfi eld Corporate Park. In the same business park, Duke Realty Corporation also completed a 402,860-square-foot speculative facility at 4200 Ferry Road. Oswego Bolingbrook

Two speculative facilities remain under construction, the largest 55 Romeoville being a 452,153-square-foot building being developed by The 355 Opus Group in North Aurora’s Gateway Logistics Park. Walls are up on a 375,040-square-foot building being developed by Plainfield Lockport Seefried Properties, Inc. at 1600 Sequoia Drive in Aurora’s Crest CenterPoint Business Park. A 160,000-square-foot build-to-suit Hill facility for chemical company Nexeo Solutions is expected to begin construction during the third quarter in the Montgomery Rail Center in Montgomery. Leasing And Sale Activity Vacancy Rate & Net Absorption I-88 Corridor The I-88 Corridor posted 544,216 square feet of new leasing activity during the second quarter, an 84.5 percent increase when 2.5 16% compared to the fi rst quarter’s tally, and the greatest amount of 2.0 14% 1.5 12% new leasing activity the submarket has recorded in one year. The 1.0 10% 0.5 largest new lease of the quarter involved web-based bookseller 8% 0.0 6% Thriftbooks taking 160,000 square feet at 2413 Prospect Drive in -0.5 Vacancy Rate Aurora’s Butterfi eld Center for Business & Industry. -1.0 4% -1.5 2% -2.0 0% Square Feet Absorbed(Millions) New leasing activity totaled 294,948 square feet during the fi rst 2009 2010 2011 2012 2013 2014 2015 2016 quarter, a 51.24 percent increase when compared to the 195,018 YTD square feet recorded during the fourth quarter of 2015. The largest new lease of the quarter involved California-based offi ce furniture supplier Cherryman Industries leasing 160,047 square feet at 2413 prospect Drive in Aurora. CME Group sold its 260,428-square-foot facility at 2905 Diehl Road in Aurora to Texas-based CyrusOne, New Lease & User Sale Volume Inc., and signed a long-term lease with the new owner to keep its I-88 Corridor electronic trading platform, CME Globex, in the building. 4.0 User sale activity totaled 262,086 square feet in the I-88 Corridor 3.5 3.0 during the second quarter, the greatest quarterly tally since the 2.5 fourth quarter of 2014. Two user sale transaction closed, including 2.0 the sale of the 157,200-square-foot building at 220 Brookshire Millions 1.5 1.0 Court in Naperville to auto group The Napleton Group, and modular 0.5 fi xturing systems manufacturer Bluco Corporation purchasing the 0.0 104,886-square-foot building at 1510 Frontenac Drive in Naperville. 2009 2010 2011 2012 2013 2014 2015 2016 YTD S Absorption

Signifi cant net absorption was recorded in the I-88 Corridor during the second quarter. More than 1.1 million square feet of vacant space was removed from the market between April and June, bringing the total year-to-date net absorption to nearly 1.9 million square feet. The second quarter net absorption total was the greatest amount absorbed in the I-88 Corridor since the fourth quarter of 2013.

Signifi cant Lease and Sale Activity I-88 Corridor | Top Q2 2016 Transactions

TENANT/BUYER SIZE (SF) ADDRESS TYPE JLL Income Property Trust, Inc. 304,560 2570 Orchard Gateway Road, Aurora Investment sale CyrusOne, Inc. 260,428 2905 Diehl Road, Aurora Sale-leaseback GEA Farm Technologies, Inc. 163,915 1880 Country Farm Drive, Naperville Lease renewal Thriftbooks 160,000 2413 Prospect Drive, Aurora New lease Nexeo Solutions 160,000 Aucutt Road, Montgomery Build-to-suit lease The Napleton Group 157,200 220 Brookshire Court, Naperville User sale Best Warehouse and Transportation Center Inc. 147,115 1203 Bilter Road, Aurora Sublease Bluco Corporation 104,886 1510 Frontenac Drive, Naperville User sale Lakin Montgomery, LLC 101,750 2001 Greenfi eld Avenue, Montgomery Investment sale

21 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International Lake County

Vacancy And Supply Market Indicators The Lake County vacancy rate improved by 41 basis points during LAKE COUNTY Q2 2016 Q1 2016 Q2 2015 the second quarter, decreasing to 9.68 percent. This rate is slightly VACANCY 9.68% 10.09% 9.86% below the 9.86 percent rate recorded one year ago, and well below the peak 14.98 percent rate recorded during the second quarter of NET ABSORPTION 207,813 739,529 690,073 2010 six years ago. Despite this improvement, the vacancy rate in ASKING RENTAL RATE $5.94 $5.61 $4.93 Lake County remains one of the highest among the 22 industrial markets tracked.

The total vacant supply dipped below 7.0 million square feet for the Westosha Pleasant Prairie fi rst time since the fi rst quarter of 2015. At the end of June a total Airport of 6.9 million square feet were vacant in the submarket. During the WISCONSINW COO N S I height of the Great Recession in 2010, this fi gure reached a high of ILLINOISN O I 10.5 million square feet. Construction Activity Zion Waukegan Regional Airport A 20,000-square-foot build-to-suit facility was completed during the second quarter for Bimbo Bakeries at 845 Telser Road in the Fox Lake Lake Zurich Corporate Park. Waukegan Construction started on a 400,734-square-foot speculative Grayslake development at 3900 Burwood Drive in Waukegan’s Bridge Point 94 North business park. The building is being developed by Bridge Development Partners and is expected to deliver by the fi rst quarter of 2017. Two additional speculative facilities are expected to soon Mundelein begin construction including a 201,000-square-foot building being Lake Forest developed by CenterPoint Properties in Gurnee’s CenterPoint Vernon Hills Business Park and a 157,500-square-foot building being developed by Ridgeline Property Group at 850 Asbury Drive in Buff alo Grove’s Lake Zurich Corporate Grove Business Park. Buffalo Highland Park Grove Glenco Northbrook Leasing And Sale Activity Vacancy Rate & Net Absorption Lake County New leasing activity in Lake County totaled 325,775 square feet during the second quarter, a signifi cant decline when compared to 2.0 16% the 901,878-square-foot new leasing volume total recorded during 1.5 14% 1.0 12% the fi rst quarter of the year. The largest new lease of the quarter 0.5 10% involved 3PL services provider Trifi nity Specialized Distribution 0.0 8% relocating its operations to 120,249 square feet at 2431 North -0.5 6% Vacancy Rate Delany Road in Waukegan’s Delany Commerce Center. Packing -1.0 4% -1.5 2% supplies specialist ULINE renewed its lease for 395,000 square feet -2.0 0% Square Feet Absorbed(Millions) at 30120 Skokie Highway in North Chicago. The company has been 2009 2010 2011 2012 2013 2014 2015 2016 YTD in the building since 2005.

User sale activity totaled 121,984 square feet during the second quarter, a 70.26 percent increase when compared to the fi rst quarter. Four user sales took place during the quarter – the largest involved trade show fl ooring manufacturer K&S International New Lease & User Sale Volume purchasing the 51,088-square-foot building located at 901 Deerfi eld Lake County Road in Buff alo Grove’s Covington Corporate Center for $1,758,750, 5.0 or $34.43 per square foot. 4.0 Absorption 3.0

Millions 2.0 Net absorption totaled 207,813 square feet for the second quarter, a 1.0 73.81 percent decline from the fi rst quarter’s total, but represented 0.0 the second consecutive quarter of positive net absorption. The 2009 2010 2011 2012 2013 2014 2015 2016 YTD

947,342-square-foot net absorption tally through the fi rst half of the Leased Sold year is the strongest start to the year for Lake County since 2004.

Signifi cant Lease and Sale Activity

Lake County | Top Q2 2016 Transactions

TENANT/BUYER SIZE (SF) ADDRESS TYPE ULINE 395,000 30120 Skokie Highway, North Chicago Lease renewal Partners Group/Westmount Realty Capital 350,831 1947-2005 Delany Road, Gurnee (2 bldgs) Part of a 19-property investment portfolio sale Focus Foodservice, LLC 150,192 451 Trumpet Drive, Zion Lease expansion/extension Founders Properties, LLC 129,039 2400 Commerce Drive, Libertyville Sale-leaseback Trifi nity Specialized Distribution 120,249 2431 N Delany Road, Waukegan New lease Horizons Window Fashions 96,367 1585-1705 S Waukegan Road Lease expansion/extension USAA Real Estate Company 58,708 840-850 Asbury Drive, Buff alo Grove Investment sale/redevelopment project K&S International 51,088 901 Deerfi eld Parkway, Buff alo Grove User sale Design Phase, Inc. 48,370 3540-3630 Amhurst Parkway, Waukegan New lease

23 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International North Suburbs

Vacancy And Supply Market Indicators The vacancy rate in the North Suburbs decreased by 60 basis NORTH SUBURBS Q2 2016 Q1 2016 Q2 2015 points during the second quarter, the largest quarterly adjustment VACANCY 5.90% 6.50% 6.48% since the third quarter of 2014. At the end of June, the submarket’s vacancy rate stood at 5.90 percent, the lowest rate recorded in six NET ABSORPTION 340,810 148,249 -433,690 quarters. This rate peaked at 10.38 percent during the fi rst quarter ASKING RENTAL RATE $5.61 $5.20 $4.95 of 2011.

Vacant industrial supply decreased along with the vacancy rate, dipping to 3.3 million square feet of vacant space by the end of the quarter, down from 3.7 million square feet last quarter. Only Lake Forest seven vacant options are currently available in the North Suburbs on Hills submarket for tenants looking to lease at least 100,000 square feet.

Construction Activity Buffalo Highland Park Grove The North Suburbs submarket is considered an “infi ll” construction market, meaning any new development projects would involve the Glencoe demolition or renovation of an existing building. No construction Northbrook projects were completed during the second quarter and no Chicago Executive Airport 94 construction activity is currently underway. However, several gton planned and proposed buildings remain in the pipeline. Two ghts 294 Morton Evanston buildings are expected to soon begin construction including Des Grove a 134,593-square-foot speculative facility being developed by Plaines Niles Skokie Hamilton Partners in Wheeling and a 140,542-square-foot Grove speculative building being developed by Molto Properties in Niles. Village Ohare Int'l Airport d Dale ensenville Franklin 90 n Park mhurst Melrose 94 Park Oak Park 290 Chicago Cicero 294Westchester 55 Leasing And Sale Activity Vacancy Rate & Net Absorption North Suburbs New leasing volume totaled only 146,066 square feet during the second quarter, the lowest new leasing activity tally in fi ve quarters 1.5 12% 1.0 10% and signifi cantly below the impressive 404,813 square feet of 0.5 new leases signed during the fi rst quarter. Only four new leases 0.0 8% -0.5 over 10,000 square feet were signed in the submarket between 6% -1.0 April and June, the largest involving printing company Segerdahl -1.5 4% Vacancy Rate -2.0 Corporation leasing the 52,170-square-foot warehouse building 2% -2.5 located at 225 Gilman Avenue in Wheeling. -3.0 0% Square Feet Absorbed(Millions) 2009 2010 2011 2012 2013 2014 2015 2016 User sale activity totaled 235,500 square feet n Skokie during the YTD second quarter. The largest user sale involved confection and snack producer Georgia Nut Company purchasing the 78,101-square-foot building at 7515 Linder Avenue in Skokie for $2.7 million, or $34.57 per square foot. The company’s main headquarters is located nearby at 7500 North Linder Avenue. New Lease & User Sale Volume North Suburbs

Absorption 3.0

2.5 Total net absorption more than doubled during the second quarter, 2.0 with a net total of 340,810 square feet of vacant space absorbed 1.5 through new leasing and user sale activity. This is the greatest Millions 1.0 quarterly absorption tally since the fourth quarter of 2012, when 0.5 net absorption totaled 602,726 square feet. Cumulative net 0.0 absorption through the fi rst half of 2016 totals 489,059 square feet. 2009 2010 2011 2012 2013 2014 2015 2016 YTD

Leased Sold

Signifi cant Lease and Sale Activity

North Suburbs | Top Q2 2016 Transactions

TENANT/BUYER SIZE (SF) ADDRESS TYPE Molto Properties, LLC 130,000 7720 N Lehigh Avenue, Niles Investment sale/redevelopment project Johnson & Quinn 105,000 7460 N Lehigh Avenue, Niles Lease renewal Partners Group/Westmount Realty Capital 120,643 2 buildings, Wheeling Part of a 19-property investment portfolio sale Georgia Nut 78,101 7515-7555 N Linder Avenue, Skokie User sale Segerdahl Corporation 52,170 225 W Gilman Avenue, Wheeling New lease Avery Dennison Corporation 48,331 7542 N Natchez Avenue, Niles Lease renewal Global Marble & Granite 42,055 5600-5750 W Jarvis Street, Niles New lease

25 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International Northwest Suburbs

Vacancy And Supply Market Indicators The Northwest Suburbs submarket experienced a second NORTHWEST SUBURBS Q2 2016 Q1 2016 Q2 2015 consecutive quarter of improvement as the vacancy rate declined VACANCY 8.60% 8.74% 8.68% by 14 basis points to 8.60 percent. This is slightly below the 8.68 percent rate recorded one year ago during the second quarter of NET ABSORPTION 107,377 116,864 -43,527 2015, but is well below the 11.39 percent peak rate recorded during ASKING RENTAL RATE $5.02 $5.27 $5.02 the fourth quarter of 2011.

Supply of vacant industrial product further declined by 43,185 tal Lake Lake F square feet to 3.0 million square feet. Currently, only fi ve vacant Vernon Hills spaces are on the market that could accommodate tenants seeking space 100,000 square feet or more. Lake Zurich Buffalo Hig Construction Activity Grove One project was completed in the second quarter located in Bartlett at Brewster Creek Business Park. The 64,192-square-foot, fully air- Palatine Nort conditioned warehouse facility at 1580 Hecht Court was developed ndee Chicago Executive Airport by Greco & Sons. ixmation COX systems, a worldwide provider Arlington of automated assembly and production solutions, pre-leased the Heights 294 building and relocated from the Roselle Commerce Center in Elgin Des Roselle. Schaumburg Plaines Streamwood Elk Grove The only ongoing construction project is a 271,200-square-foot outh Elgin 290 Village Ohare speculative facility being developed by Ridge Development on Int'l Airport Schiferl Road in Bartlett’s Ridge Brewster Creek Business Park. Wood Dale The building is 50 percent pre-leased to brake rotor and drum Bloomingdale Bensenville distributor Winhere Break Parts. Dupage Addison Frankli CharlesAirport Park Site work has started on a 67,080-square-foot build-to-suit facility Carol Elmhurst being developed by Meridian Design Build for Traffi c Control & eneva Stream 355 Melros West Chicago Park Protection in Bartlett’s Blue Heron Business Park. Exeter Property Group is planning a 400,000-square-foot speculative facility in atavia Bartlett’s Brewster Creek Business Park, while Greco & Sons is Wh planning a 167,500-square-foot speculative building in the same park. Leasing And Sale Activity Vacancy Rate & Net Absorption Northwest Suburbs Three new lease transactions were completed during the second quarter, totaling only 19,640 square feet of new leasing activity, a 1.0 12%

70.6 percent decline compared to the 66,861 square feet of new 0.5 10% leasing activity recorded during the fi rst quarter. The largest lease 8% 0.0 transaction inked during the quarter involved Winhere Break Parts 6% -0.5 4%

leasing 135,600 square feet in the 271,200-square-foot speculative Vacancy Rate development under construction in Bartlett’s Brewster Creek -1.0 2%

Business Park. -1.5 0% Square Feet Absorbed(Millions) 2009 2010 2011 2012 2013 2014 2015 2016 Two user sales were completed during the quarter, the larger of YTD the two involving the Islamic Society of the Northwest Suburbs purchasing the 46,000-square-foot facility at 1200 Hicks Road in Rolling Meadows for $1.9 million, or $41.30 per square foot to use as its new headquarters building. BDJ Trucking purchased the 25,600-square-foot building at 1425 Payne Road from non-profi t New Lease & User Sale Volume organization Clearbrook Human Service Agency for $1.25 million, Northwest Suburbs or $48.83 per square foot. The buyer leased the building back 1.6 to the seller on a short-term basis and plans to convert it into a 1.4 truck repair facility. Clearbrook intends to relocate to a few smaller 1.2 locations throughout the Chicagoland area to help better serve 1.0 0.8 communities. Millions 0.6 0.4 Absorption 0.2 0.0 2009 2010 2011 2012 2013 2014 2015 2016 YTD Net absorption was positive for the fourth consecutive quarter with Leased Sold a total of 107,377 square feet of vacant space removed from the market between April and June. Much of this absorption was due to a few smaller lease transactions being executed. Through the fi rst half of 2016, total net absorption has reached 224,241 square feet.

Signifi cant Lease and Sale Activity

Northwest Suburbs | Top Q2 2016 Transactions

TENANT/BUYER SIZE (SF) ADDRESS TYPE Winhere Break Parts 135,600 1331 Schiferl Road, Bartlett New lease

Islamic Society of the Northwest Suburbs 46,000 1200 S Hicks Road, Rolling Meadows User sale

BDJ Trucking Co. 25,600 1425 N Payne Road, Schaumburg User sale

Hubbell Lighting 11,247 2100 Golf Road, Rolling Meadows New lease

27 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International O’Hare

Vacancy And Supply Market Indicators The O’Hare market vacancy rate decreased by 40 basis points O’HARE Q2 2016 Q1 2016 Q2 2015 from 4.61% to 4.21% in the second quarter, now the second VACANCY 4.21% 4.61% 5.45% lowest vacancy rate among the 22 submarkets tracked. This represents the strongest improvement witnessed in Chicago’s NET ABSORPTION 554,322 830,923 339,849 industrial market, as the O’Hare vacancy rate peaked at 13.17% ASKING RENTAL RATE $5.80 $5.48 $5.15 only fi ve years ago during the second quarter of 2011, a correction of 896 basis points.

Despite 658,953 square feet of vacant space being introduced Buffalo Highland Park during the second quarter, the total vacant industrial supply Grove decreased by 554,322 square feet due to signifi cant new leasing and user sale activity outpacing the eff ects of these new Glencoe Northbrook vacancies. Presently, there is a plethora of available spaces for Palatine users looking for smaller space, but only three spaces 200,000 Chicago Executive Airport 94 square feet or larger. Arlington Heights 294 Morton Evanston Construction Activity Des Grove chaumburg Plaines O’Hare construction activity remained unchanged quarter-over- Niles Skokie Elk Grove quarter with no new developments currently underway. One od 290 Village Ohare build-to-suit project is scheduled to begin construction in the Int'l Airport third quarter – a 175,982-square-foot facility for MC Machinery Wood Dale Systems at 85 Northwest Point Boulevard in Elk Grove Village. oomingdale Bensenville The company, a subsidiary of Mitsubishi Corporation, needed Franklin 90 to expand from its current Wood Dale location. The building is Addison Park expected to be completed in early 2017. arol Elmhurst 94 ream 355 Melrose Park Oak Park 290 Cicero 294Westchester 55 DownersHinsdaleLa Grange Grove Chicago Midway Leasing And Sale Activity Vacancy Rate & Net Absorption O’Hare New leasing activity declined by 28% to 842,695 square feet during the second quarter from last quarter’s 1.18 million square feet. The 4.0 14% largest new lease involved HD Supply expanding operations from its 3.0 12% 2.0 10% location in Northlake to 231,679 square feet of space at 855 North 1.0 8% Wood Dale Road in Wood Dale, occupying more than half of the 0.0 6% -1.0

439,350-square-foot building. Vacancy Rate -2.0 4% User sale activity climbed to 324,695 square feet, an 81% increase -3.0 2% -4.0 0% Square Feet Absorbed(Millions) from fi rst quarter’s 179,347 square feet. The largest user sale 2009 2010 2011 2012 2013 2014 2015 2016 transaction of the quarter involved freight forwarder CR Express YTD Inc purchasing the 109,783-square-foot building located at 2300 Arthur Avenue in Elk Grove Village for its operations. The O’Hare market contains a signifi cant amount of older, yet solid investment- grade industrial buildings which are becoming more valuable, as New Lease & User Sale Volume portrayed by Westmount Realty Capital’s purchase of a 19-property O’Hare portfolio that included twelve class B and C buildings in the O’Hare market. Prologis sold the 86% leased portfolio for approximately 8.0 $72.5 million in April. 7.0 6.0 5.0 Absorption 4.0

Millions 3.0 Net absorption fell to 554,322 square feet from fi rst quarter’s 2.0 830,923 square feet. This marks the fi fth consecutive quarter the 1.0 0.0 O’Hare market has witnessed positive net absorption. 2009 2010 2011 2012 2013 2014 2015 2016 YTD

Leased Sold

Signifi cant Lease and Sale Activity

O’Hare | Top Q2 2016 Transactions

TENANT/BUYER SIZE (SF) ADDRESS TYPE Westmount Realty Capital LLC 612,306 12 O’Hare buildings Part of a 19-property investment portfolio sale (Elk Grove Village, Itasca, Wood Dale) HD Supply 231,679 855 N Wood Dale Road, Wood Dale New lease

DuPont Fabros Development, LLC 147,532 1480-1540 E , Elk Grove Village 2-property user portfolio sale

American Dawn 135,468 1269 N Wood Dale Road, Wood Dale New lease

Sam’s Beauty 110,086 1000 E Business Center Drive, Mt Prospect New lease

CR Express 109,783 2300 Arthur Avenue, Elk Grove Village User sale

United Business Mail, Inc 81,084 1001 Foster Avenue, Bensenville User sale

29 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International South Suburbs

Vacancy And Supply Market Indicators The vacancy rate in the South Suburbs improved for the second SOUTH SUBURBS Q2 2016 Q1 2016 Q2 2015 consecutive quarter, decreasing by 35 basis points between April VACANCY 6.98% 7.33% 7.11% and June to 6.98 percent from last quarter’s 7.33 percent rate. This marks the fi rst time in over 15 years that the rate has fallen below NET ABSORPTION 357,416 242,214 651,578 the 7.0 percent threshold indicating a steady and stable recovery ASKING RENTAL RATE $3.86 $3.84 $3.59 for the South Suburbs submarket.

Vacant industrial supply also decreased to 7.1 million square feet by the end of the quarter. Similarly, this fi gure has not been this low since 2001 when vacant supply stood at 6.9 million square feet. Cicero 294Westchester 55 Construction Activity sHinsdaleLa Grange Chicago Midway A 348,000-square-foot addition to Winpak Portion Packaging Inc.’s Burr Airport facility at 1111 Winpak Way in the LogistiCenter at Sauk Village was Ridge Bedford started during the second quarter. Otherwise, no construction ge Park Willow projects have been completed this year in the South Suburbs Oak Lawn submarket. Springs Leasing And Sale Activity 294 57 90 Palos Blue Island 94 New leasing volume improved in the second quarter with 424,016 Heights square feet of activity, more than triple the 102,198 square feet of Eas

Ha Tinley Park Hazel Crest 80 Mun Mokena Matteson ew Lenox Park Forest Sch S A

University I NA N

Pk OIS new leasing activity recorded during the fi rst quarter. The largest Vacancy Rate & Net Absorption new lease signed during the quarter involved AAL Organic Matters South Suburbs leasing the 223,517-square-foot building at 300 East Joe Orr Road in Chicago Heights on a short-term basis. Brake rotors and pads 2.5 14% provider Power Stop LLC expanded its footprint in the building at 2.0 12% 6112 West 73rd Street in Bedford Park by an additional 80,239 1.5 10% square feet. 1.0 8% 0.5 6% User sale volume totaled 189,978 square feet during the second 0.0 4% Vacancy Rate quarter, a decrease from the 308,360 square feet of user sales -0.5 2% -1.0 0% Square Feet Absorbed(Millions) recorded during the fi rst quarter of the year. The largest user 2009 2010 2011 2012 2013 2014 2015 2016 sale involved Midwest food distribution company Sherwood Food YTD Distributors purchasing the 43,900-square-foot building located at 12646-12650 South Springfi eld Avenue in Alsip for $450,000, or $10.25 per square foot, well below the initial asking price of $1.2 million. Several investment sales occurred during the quarter, New Lease & User Sale Volume including a 5-property portfolio sale that included two buildings in South Suburbs the South Suburbs submarket. The largest building in the portfolio sale was the 464,818-square-foot building located at 5100 West 5.0 123rd Street in Alsip. The 161,740-square-foot building at 7400- 4.0 7420 Richards Road in Bridgeview also sold in the transaction. 3.0 Gramercy Property Trust purchased a 12-property portfolio that included the 133,127-square-foot building located at 7351 South Millions 2.0 78th Avenue in Bridgeview. The portfolio sale totaled 1.385 million 1.0 square feet and was sold by Angelo, Gordon & Company for $115.2 0.0 million, or $83.15 per square foot. Other buildings involved in the 2009 2010 2011 2012 2013 2014 2015 2016 YTD transaction were located in California, Florida, Maryland, New Leased Sold Jersey, , Texas, and Virginia. Absorption

Net absorption was positive for the second consecutive quarter, totaling 357,416 square feet between April and June, bringing the tally for the fi rst half of 2016 to 599,630 square feet.

Signifi cant Lease and Sale Activity South Suburbs | Top Q2 2016 Transactions

TENANT/BUYER SIZE (SF) ADDRESS TYPE Transwestern Investment Group 464,818 5100 W 123rd Street, Alsip Part of a 5-property investment portfolio sale AAL Organic Matters 223,517 300 E Joe Orr Road, Chicago Heights New lease Transwestern Investment Group 161,740 7400-7420 Richards Road, Bridgeview Part of a 5-property investment portfolio sale Repwest Insurance Company 160,000 12245 S Central Avenue, Alsip Investment sale Gramercy Property Trust 133,127 7351 S 78th Avenue, Bridgeview Part of a 12-property investment portfolio sale Brennan Investment Group 91,504 16800 S Canal Street, South Holland Investment sale Pactiv Corporation 84,195 7207 S Mason Avenue, Bedford Park Lease renewal Power Stop LLC 80,239 6112 W 73rd Street, Suite A, Bedford Park Lease expansion Chicagoland Quad Cities Express 75,385 7723 S 78th Avenue, Bridgeview Lease renewal Flaska Properties LLC 72,000 6515 S Austin Avenue, Bedford Park Investment sale

31 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International Southeast Wisconsin

Vacancy And Supply Market Indicators The vacancy rate in Southeast Wisconsin increased by 127 basis SOUTHEAST WISCONSIN Q2 2016 Q1 2016 Q2 2015 points during the second quarter to 5.68%, the highest vacancy rate VACANCY 6.98% 7.33% 7.11% recorded in the submarket since the fi rst quarter of 2013. This is largely due to the completion of a 601,491-square-foot speculative NET ABSORPTION 357,416 242,214 651,578 construction project in Somers, which was delivered to the market ASKING RENTAL RATE $3.86 $3.84 $3.59 vacant. Additionally, packaging supplies provider ULINE moved out of the 256,240-square-foot building at 8505 100th Street in Pleasant Prairie during the quarter, adding another sizeable vacancy to the market. Caledonia Total vacant supply increased to 3.1 million square feet during the second quarter from last quarter’s total of 2.4 million square feet, JOHN H BATTEN a 30.59% increase due to the two aforementioned new vacancies. MEMORIAL AIRPORT Despite this increase, there are only fi ve existing options for tenants ster Racine looking to lease 200,000 square feet or more. This number will Mount SYLVANIA increase as additional speculative construction projects currently AIRPORT94 Pleasant under construction or planned are completed. Union Grove n 9494

Construction Activity 94

Two buildings were delivered to the market during the second Kenosha quarter. The larger of the two completions was a 601,491-square- Regional Airport foot speculative facility developed by First Industrial Realty Kenosha Trust, the fi rst building in First Park 94 in Somers. Additionally, an 81,900-square-foot building addition for Goodwill at 1630 Enterprise Drive in Sturtevant’s Renaissance Business Park was Westosha Pleasant Prairie completed. Airport WISCONSINW COO N S I Two speculative projects are currently underway including a 200,696-square-foot building being developed by CenterPoint ILLINOISN O I Properties that began construction during the second quarter at 10490 88th Avenue in Pleasant Prairie’s Lakeview Corporate Zion Park. Opus Group is nearing completion on a 155,844-square- Waukegan foot building in the Mount Pleasant Business Park just south of the Vacancy Rate & Net Absorption Route 20 and I-94 interchange in Mount Pleasant. Majestic Realty Southeast Wisconsin Co. is expected to soon begin construction on a 424,164-square- foot speculative development in Pleasant Prairie’s Majestic Badger 3.0 14% Logistics Center. 2.5 12% 2.0 10% Leasing And Sale Activity 1.5 8% 1.0 6% Total new leasing activity of 101,122 square feet was recorded in 0.5 4% Vacancy Rate Southeast Wisconsin during the second quarter, a slight decline 0.0 2% -0.5 0% Square Feet Absorbed(Millions) compared to the new leasing volume of 125,823 square feet during 2009 2010 2011 2012 2013 2014 2015 2016 the fi rst quarter. The largest new lease signed during the quarter YTD involved classic and exotic car sales company Gateway Classic Cars of Milwaukee leasing 39,960 square feet at 9949 58th Place in Kenosha. Customer-branded parts and chemicals marketer Kem Krest Corporation renewed its lease for the 277,454-square- foot building at 9801 80th Avenue in Pleasant Prairie’s Lakeview New Lease & User Sale Volume Corporate Park. Southeast Wisconsin

4.0 Only one user sale was completed during the second quarter, 3.5 following no user sales during the fi rst quarter of the year. New and 3.0 used bus dealer Best Bus Sales purchased the 45,884-square-foot 2.5 2.0 building at 12721 12th Street in Kenosha. Milwaukee-based The MCR Millions 1.5 Group, LLC acquired the 187,000-square-foot building at 2700 90th 1.0 Street in Sturtevant from R&B Grinding Co. in an investment sale for 0.5 0.0 $1,875,000, or $10.03 per square foot. 2009 2010 2011 2012 2013 2014 2015 2016 YTD

Leased Sold Absorption

The eff ect of new vacancies outweighed the impact of new leasing and user sale activity during the second quarter, resulting in net absorption totaling negative 47,334 square feet. This represents only the third quarter with negative net absorption among the past 19 quarters in Southeast Wisconsin. Through the fi rst half of the year, total net absorption remained positive at 1.1 million square feet.

Signifi cant Lease and Sale Activity

Southeast Wisconsin | Top Q2 2016 Transactions

TENANT/BUYER SIZE (SF) ADDRESS TYPE Kem Krest Corporation 277,454 9801 80th Avenue, Pleasant Priarie Lease renewal The MCR Group, LLC 187,000 2700 90th Street, Sturtevant Investment sale Best Bus Sales 45,884 12721 12th Street, Kenosha User sale Gateway Classic Cars of Milwaukee 39,960 9949 58th Place, Kenosha New lease

33 Research & Forecast Report | Second Quarter 2016 | Chicago / Industrial | Colliers International Second Quarter 2016 Industrial Market Statistics

AVG VACANCY VACANCY CURRENT AVERAGE YTD NET UNDER ASKING TOTAL INVENTORY NEW SUPPLY CAME ON RATE RATE QTR NET NEW LEASING USER SALE ASKING SUBMARKET ABSORPTION CONSTRUCTION NET (SF) (SF) MARKET (SF) CURRENT PREVIOUS ABSORPTION ACTIVITY (SF) ACTIVITY (SF) SALE PRICE (SF) (SF) RENTAL QTR QTR (SF) PSF RATE PSF Central 74,008,538 0 403,007 6.48% 6.30% (130,263) 136,019 173,451 85,608 641,322 $5.57 $75.81 DuPage Cty Chicago 89,266,277 0 110,082 5.04% 5.06% 23,652 120,252 52,397 76,000 40,700 $8.40 $45.76 North Chicago 84,080,986 0 133,260 9.69% 10.04% 291,404 463,226 89,100 79,382 0 $4.15 $32.75 South DeKalb 20,201,307 0 0 6.14% 6.14% 0 0 0 0 978,120 $3.28 $31.30 County Elgin I-90 31,098,516 35,500 93,736 10.20% 10.33% 70,526 156,161 74,145 55,117 1,103,366 $5.05 $55.74 Corridor Far South 45,462,099 37,000 470,075 4.68% 3.73% (396,825) 584,289 0 0 0 $3.52 $41.59 Suburbs Fox Valley 32,416,825 0 34,105 5.24% 5.44% 64,982 478,676 21,168 69,884 430,696 $4.40 $60.77

I-290 North 74,236,691 -931,272 747,444 9.48% 9.08% (1,138,960) (1,006,598) 65,481 458,470 1,235,661 $4.61 $37.20

I-290 South 45,989,900 0 415,262 7.41% 8.01% 277,068 854,318 306,443 291,216 282,933 $5.25 $37.41

I-39 Corridor 17,919,915 0 0 3.05% 3.05% 0 0 0 0 0 $3.75 $21.46

I-55 Corridor 84,182,775 672,820 1,627,723 7.34% 8.48% 1,577,569 3,130,093 2,281,338 22,098 3,445,673 $4.80 $64.95

I-88 Corridor 72,223,620 902,000 638,139 6.70% 7.10% 1,126,904 1,851,196 544,216 262,086 827,193 $4.44 $52.11

I-80 Joliet 76,299,470 2,179,909 1,444,582 5.66% 5.53% 1,955,945 2,709,745 1,167,613 16,800 6,171,700 $3.94 $48.06 Corridor Lake County 71,819,891 -92,750 262,657 9.68% 10.09% 207,813 947,342 325,775 121,984 400,734 $5.94 $62.71

McHenry 30,099,848 0 101,667 15.55% 15.52% (9,464) 34,842 30,603 61,600 0 $4.33 $40.63 County North 56,646,497 0 232,504 5.90% 6.50% 340,810 489,059 146,066 235,500 0 $5.61 $55.50 Suburbs Northwest 34,898,447 64,192 118,020 8.60% 8.74% 107,377 224,241 19,640 71,600 271,200 $5.02 $65.68 Suburbs O’Hare 139,855,217 0 658,953 4.21% 4.61% 554,322 1,385,245 842,695 324,695 0 $5.80 $65.04

South 101,962,865 0 395,337 6.98% 7.33% 357,416 599,630 424,016 189,978 348,000 $3.86 $26.47 Suburbs Metro 1,182,669,684 2,866,899 7,886,583 7.02% 7.24% 5,280,276 13,157,736 6,564,147 2,422,018 16,177,298 $4.83 $48.47 Chicago Northwest 55,027,139 40,000 0 5.70% 5.75% 64,000 (65,655) 73,500 0 0 $3.92 $31.85 Indiana Rockford 52,892,503 0 31,963 7.03% 6.99% (19,963) 148,037 12,000 0 205,000 $3.27 $22.61 Area Southeast 54,915,049 683,391 877,731 5.68% 4.41% (47,334) 1,083,010 101,122 45,884 356,540 $4.36 $34.04 Wisconsin GRAND 1,345,504,375 3,590,290 8,796,277 6.91% 7.05% 5,276,979 14,323,128 6,750,769 2,467,902 16,738,838 $4.68 $44.19 TOTAL

QUARTERLY COMPARISON AND TOTALS Q2 2016 1,345,504,375 3,590,290 8,796,277 6.91% 7.05% 5,276,979 14,323,128 6,750,769 2,467,902 16,738,838 $4.68 $44.19

Q1 2016 1,341,914,085 5,577,501 8,295,572 7.05% 7.32% 9,046,149 9,046,149 8,292,702 2,396,577 11,138,202 $4.61 $45.75

Q4 2015 1,336,336,584 4,487,322 9,750,125 7.32% 7.26% 3,375,825 13,927,451 6,105,527 1,735,032 15,228,338 $4.56 $45.44

Q3 2015 1,331,849,262 2,496,176 11,108,636 7.26% 7.23% 1,232,046 10,551,626 5,538,515 2,019,961 12,562,722 $4.54 $45.34

Q2 2015 1,329,353,086 5,055,598 11,904,129 7.23% 7.59% 8,050,705 9,319,580 9,255,785 6,118,859 12,828,045 $4.50 $46.05

34 Research & Forecast Report | Fourth Quarter 2015 | Chicago / Industrial | Colliers International 554 offi ces in MARKET CONTACTS: Craig Hurvitz Vice President | Chicago 66 countries on +1 847 698 8295 [email protected]

6 continents Jennifer Olsen Senior Research Analyst | Chicago United States: 153 +1 847 698 8217 : 34 [email protected] Latin America: 24 Asia Pacifi c: 231 EMEA: 112

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Copyright © 2016 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable eff ort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.