Chicago Downtown Office Market Report 1Q ‘09 CBD Downturn Continues Chicago’s CBD office market downward trend picks up the pace and is unlikely to show signs of recovery before 2010. Rental Rates Moving Lower By The Numbers CBD rental rates moved lower and the trend points to a continuing drop through the second quarter. The current average gross asking rate, $29.59 per square foot, repre- Chicago CBD – Availability vs. Rental Rates sents a 1.7% reduction from the fourth quarter average gross asking rate of $30.11 Space Available Average Gross Asking Rent per square foot. Many landlords are agreeing to rents more than 10% below their 13% $31 asking rates, as well as offering more generous concession packages. All indications are that asking rents will continue to fall through 2009 while concessions such as rent 12% $30 abatements and tenant improvement allowances will continue to increase.

Inverted Activity and Rising Availability 11% $29 2009 year to-date net absorption is negative 608,227 square feet – twice the level of negative absorption the market saw in the fourth quarter of 2008. 10% $28 4Q07 1Q08 2Q08 3Q08 4Q08 4Q08 During the first quarter available space increased to 12.5% from 11.4% at year-end 2008. It is anticipated that the availability rate in the CBD will further climb fueled, in Chicago CBD - Existing Buildings 1Q 2009 part, by the addition of over 3.6 million square feet of office space as three new major office towers are completed this year. These new buildings, coupled with continuing Existing RBA - Overall (582 buildings) 153,099,971 layoffs, will likely prevent availability rates from stabilizing before 2010. Existing RBA - Class A (81 buildings) 69,457,173 Existing RBA - Class B (202 buildings) 57,516,474 Downward Trend until 2010 Existing RBA - Class C (299 buildings) 26,126,324 Current numbers indicate a continued softening of the market, and do not yet show Total Vacant Sq. Ft. 17,776,174 clear signs of recovery. Available sublease space, typically an early indicator of a Percent Vacant 11.6% change in demand, has increased sharply, rising more than 25% since the end of 2008 Total Available Sq. Ft. 19,151,707 to 2,324,822 square feet. Additionally, Chicago’s MSA unemployment was reported at Percent Available 12.5% 9.1% for March of 2009, an increase of over 30% since the end of 2008. Gross Average Asking Rental Rate (Overall) $29.59 Year-To-Date Net Absorption (608,227) Noteworthy Leases Tenant Address Sq. Ft. Type KPMG LLP 200 East Randolph Street 260,000 Relocation Willis Group Holdings Limited 233 South Wacker Drive 140,000 Relocation - Consolidation 222 West Monroe Street & FTI Consulting, Inc. 91,265 Relocation - Consolidation 227 West Monroe Street Federal Home Loan Bank of Chicago (FHLBC) 200 East Randolpph Street 61,701 Relocation - Downsized National Holdings Corporation 875 North Michigan Avenue 35,000 New American Heart Association, Inc. 208 South LaSalle Street 29,083 Renewal HOK Group, Inc. 60 East Van Buren Street 27,300 Relocation - Expansion Children’s Home & Aid Society of Illinois 100 North Michigan Avenue 20,000 Relocation Jackson Lewis LLP 150 North Michigan Avenue 18,400 Relocation - Expansion McCormick Foundation 205 North Michigan Avenue 16,500 Relocation Pfingsten Partners, L.L.C. 300 North LaSalle Street 15,466 Relocation

© 2009 Bradford Allen Realty Services. The information contained herein is from sources deemed reliable, however no warranty or representation is made as to the accuracy or completeness thereof. Peoria Blair’s if the developer for penalty lease called Hines to canceled the project. pay a multimillion-dollar nancing for the project. The nancial terms and Hines’ of Blair agreement were not disclosed but A Hines joint venture was unable to deadline earlier in March meet a Blair-imposed to obtain seeking alternatives, including a renewal at its currentat 222 headquarters West Adams Street. date to 2012 and consider the size cutting tower, of the 1.1-million-square-foot is while Blair at 444 West Lake Street. The termination forces Hines to completion push back the construction “mutual termination” of Blair’s lease to 340,000-square-foot anchor Hines’ $536-million oce tower Chicago-based William & Co. Blair and Houston-based developer Hines Interests L.P. worked out a

Peoria Fulton Carol Chicago

Green Green Halsted Halsted

Halsted Madison W Lake Randolph Gladys Monroe Adams Jackson V Hubbard

Harrison an Buren ashington Kinzie T aylor 90 94 Union W ayman

Des Plaines Des Plaines Loop West

Quincy Jefferson Chicago W Lexington Jefferson Polk

290 Milwaukee

Clinton Kingsbury

Clinton NORTHWESTERN Transportation Ohio TERMINAL CHICAGO METRA Ogilvie Center North

River Canal Kingsbury

Canal

C

h

i c

a

g

o

R

i

v

e r

Wacker ST. ORLEANS N. LEVEL U/L Orleans

River Chicago Franklin

Franklin Chestnut Chicago Superior

Institute Randolph V

Locust

Walton an Buren Ontario Madison W

Harrison Huron Monroe Illinois Kinzie Grand Adams Quincy acker Ohio Oak Brook and Lombard will be consolidated into the Wacker Drive location. 22,500 Sq. Ft. at Riverside Plaza. In addition, oces 222 South in Street;at LaSalle 10 South 27,000 Sq. Ft. at 1 East Wacker Drive; and approximately 91,000 Sq. Ft. in three downtown buildings – 42,000 Sq. Ft. moving almost 500 employees into its new location. Willis currently has will be renamed Willis Tower. Willis will consolidate ve oces, local 140,000 Sq. Ft. at Sears Tower at 233 South Wacker Drive and the building London-based Willis Group Holdings Limited signed a lease for more than Erie Lake opts to relocate an oce currently Avenue. at Michigan 332 South West Monroe Street – 17,219 Sq. Ft. – an option it may exercise if it an option later in this month to take the rest of the 10th oor at 227 333 West Wacker Street. LaSalle Drive and 33 North FTI also has West Monroe Street. The rm will consolidate oces currently at and 57,219 Sq. Ft. 10th oor at on the entire 227 9th and partial – 34,046 Sq. Ft. on the entire 9th oor at 222 West Adams Street FTI Consulting,Baltimore-based Inc. signed a lease for 91,265 Sq. Ft.

Hubbard Wells Wells Wells Central

Financial CARROLL AVE. L LEVEL Loop Sherman (Metra) Station Street LaSalle La Salle

Locust LaSalle Chestnut

La Salle

Clark W W Clark Washington ashington Jackson

Clark ashington Square Square

South Federal

Loop Dearborn Dearborn Harrison Plymouth Congress Pritzker Park Polk

State

State E. KINZIE ST. Michigan

E. North Water St. Avenue Wabash North

Wabash Loop Harrison 9th 1 E. HUBBARD ST U/L LEVEL

8th L/L East 1th

Garland Rush Delaware

Chestnut North LaSalle Street. LaSalle North later this year when it moves to 300 that Kirkland & Ellis LLP will vacate The accounting rm will occupy space relocating from 303 East Wacker Drive. Sq. Ft. at Street, 200 East Randolph KPMG LLP signed a lease for 260,000 T W Old ower ater Michigan Michigan S.W Randolph Jackson Balbo

10 S. of Chicago Art Institute U/L LEVEL Michigan ater Station Metra Street Randolph

E. North Water St. L/L PIONEER COURT 400 S. Station Metra Buren V an Avenue Michigan North Sq. Ft. at 875 a lease for 35,000 Corporation signed National Holdings Cityfront Plaza Dr. U/L

Institute the School of St. Clair Grant Park Art Millennium Stetson Park

U/L Cityfront Plaza Dr. Cityfront Plaza Mies van der Rohe

Columbus L/L St. Clair St. E. North Water St. St. Water North E. Shell Music Petrillo

Pearson Fountain Buckingham Chicago Columbus Superior Ontario Huron Illinois Grand Ohio Erie Lake Shore Drive Fairbanks Ogden Plaza Dewitt Lake Michigan U/L LEVEL N. Park Dr. Photos courtesy of CoStar

Peoria Blair’s if the developer for penalty lease called Hines to canceled the project. pay a multimillion-dollar nancing for the project. The nancial terms and Hines’ of Blair agreement were not disclosed but A Hines joint venture was unable to deadline earlier in March meet a Blair-imposed to obtain seeking alternatives, including a renewal at its currentat 222 headquarters West Adams Street. date to 2012 and consider the size cutting tower, of the 1.1-million-square-foot is while Blair at 444 West Lake Street. The termination forces Hines to completion push back the construction “mutual termination” of Blair’s lease to 340,000-square-foot anchor Hines’ $536-million oce tower Chicago-based William & Co. Blair and Houston-based developer Hines Interests L.P. worked out a

Peoria Fulton Carol Chicago Chicago CBD Office Market Statistics – 1Q’09 Market Statistics – CBD Office Chicago Class A Gross Average Asking Rent (PSF) Class B Gross Average Asking Rent (PSF) Class C Gross Average Asking Rent (PSF)

Green Green Halsted Halsted

Halsted Madison W Lake Randolph Gladys Monroe Adams Jackson Year-to-Date Net Absorption V Hubbard

Harrison an Buren ashington Kinzie T aylor Total Inventory (Sq. Ft.) 90 94 Total Sq. Ft. Available Union W Percent Available ayman

Des Plaines Des Plaines Loop West

Quincy Jefferson Chicago W Lexington Jefferson Polk 290 Overall CBD

153,099,971

19,151,707 (608,227) Milwaukee $21.60 $27.54 $33.31 12.5% Clinton Kingsbury

Clinton NORTHWESTERN Transportation Ohio TERMINAL CHICAGO METRA Ogilvie Center North

River Canal Kingsbury

Canal

River North C

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i

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17,007,677 a

2,064,088 g o

786,628 R

$20.38 $25.81 $37.84 i

12.1% v

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Wacker ST. ORLEANS N. LEVEL U/L Orleans North Michigan North River Chicago 15,922,534 1,577,481 (122,980)

Avenue Franklin $21.71 $27.68 $35.02

Chestnut

9.9% Franklin Chicago Superior

Institute Randolph V

Locust

Walton an Buren Ontario Madison W

Harrison Huron Monroe Illinois Kinzie Grand Adams Quincy acker Ohio Oak Brook and Lombard will be consolidated into the Wacker Drive location. 22,500 Sq. Ft. at Riverside Plaza. In addition, oces 222 South in Street;at LaSalle 10 South 27,000 Sq. Ft. at 1 East Wacker Drive; and approximately 91,000 Sq. Ft. in three downtown buildings – 42,000 Sq. Ft. moving almost 500 employees into its new location. Willis currently has will be renamed Willis Tower. Willis will consolidate ve oces, local 140,000 Sq. Ft. at Sears Tower at 233 South Wacker Drive and the building London-based Willis Group Holdings Limited signed a lease for more than Erie Lake opts to relocate an oce currently Avenue. at Michigan 332 South West Monroe Street – 17,219 Sq. Ft. – an option it may exercise if it an option later in this month to take the rest of the 10th oor at 227 333 West Wacker Street. LaSalle Drive and 33 North FTI also has West Monroe Street. The rm will consolidate oces currently at and 57,219 Sq. Ft. 10th oor at on the entire 227 9th and partial – 34,046 Sq. Ft. on the entire 9th oor at 222 West Adams Street FTI Consulting,Baltimore-based Inc. signed a lease for 91,265 Sq. Ft.

Hubbard Wells Wells Wells Central

Financial CARROLL AVE. L LEVEL Loop Sherman (Metra) Station Street LaSalle West Loop 51,624,970 6,877,432

(730,606) La Salle

Locust LaSalle Chestnut $22.52 $29.46 $33.08 13.3%

La Salle

Clark W W Clark Washington ashington Jackson

Clark ashington Square Square South

Central Loop Federal Loop 39,777,775 Dearborn 5,250,030 (462,367) Dearborn $21.88 $27.99 $32.87 13.2% Harrison Plymouth Congress Pritzker Park Polk

State

State E. KINZIE ST. Michigan

E. North Water St. Avenue Wabash 25,318,383 North East Loop 3,061,651 (116,266)

Wabash Loop $22.04 $24.85 $31.86 12.1% Harrison 9th 1 E. HUBBARD ST U/L LEVEL

8th L/L East 1th

Garland Rush Delaware

Chestnut North LaSalle Street. LaSalle North later this year when it moves to 300 that Kirkland & Ellis LLP will vacate The accounting rm will occupy space relocating from 303 East Wacker Drive. Sq. Ft. at Street, 200 East Randolph KPMG LLP signed a lease for 260,000 T W Old ower ater Michigan Michigan S.W Randolph Jackson Balbo

10 S. of Chicago Art Institute U/L LEVEL Michigan ater Station Metra Street Randolph

E. North Water St. L/L PIONEER COURT 400 S. Station Metra Buren V an South Loop South 3,448,632 321,025 Avenue Michigan North Sq. Ft. at 875 a lease for 35,000 Corporation signed National Holdings $19.37 $17.00 37,364 9.3% Cityfront Plaza Dr. U/L N/A

Institute the School of St. Clair Grant Park Art Millennium Stetson Park

U/L Cityfront Plaza Dr. Cityfront Plaza Mies van der Rohe

Columbus L/L St. Clair St. E. North Water St. St. Water North E. Shell Music Petrillo

Pearson Fountain Buckingham Chicago Columbus Superior Ontario Huron Illinois Grand Ohio Erie Lake Shore Drive Fairbanks Ogden Plaza Dewitt Lake Michigan U/L LEVEL N. Park Dr. 200 South Michigan Avenue 18th Floor Chicago, IL 60604

Inside: Chicago Downtown Office Market Report – 1Q’09

Bradford Allen Market Meter - Chicago Downtown Office Space

Year-To-Date Net Absorption (SF) Availability (%) Average Gross Asking Rental Rate ($) The change, positive or negative, in physically occupied The total amount of space being marketed for lease, re- The weighted average gross asking price per square foot space during the year to date. gardless of current occupancy, including sublease space. of all available space, weighted by number of square feet available.

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