Chicago Downtown Offi ce Market Report 1Q ‘08 Market will Remain Tight Through 2008 While tenants are slowing their leasing activity to see if better terms will be available later this year, vacancy remains low and rents continue to rise.

In contrast to clear indications of recession in other parts of the coun- By The Numbers try, the downtown offi ce market continues to look healthy. Leasing activity over this quarter was slower than in the 4th quarter of Chicago CBD – Availability vs. Rental Rates 2007, but tenants are not putting space back on the market. Available Space Available Average Gross Asking Rent sublease space, an early indicator of a change in the leasing market, 16% $30 took another drop to 1,333,173 square feet, its lowest point since 2nd 15% $29 quarter of 1999. Rental rates are at an all-time high, and continue to rise. 14% $28 Rental Rates 13% $27 Th e current average asking rate, $29.53 PSF Gross, is another record 12% $26 high, exceeding the highest average asking rate of $28.65 PSF Gross set last quarter. Recent leases show landlords easing slightly on con- 11% $25 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 cessions for new tenants, but not dropping their rates. Chicago CBD - Existing Buildings 4Q 2007 Rental rates have risen signifi cantly over the last two years, and with each increase, vacancy continued to drop. At this point, nothing short Existing RBA - Overall (585 buildings) 152,863,279 of consistent increases in vacancy over several consecutive quarters Existing RBA - Class A (78 buildings) 58,561,411 will convince landlords to shift rents downward. If leasing activity Existing RBA - Class B (204 buildings) 67,691,826 remains low over the next two quarters, landlords are more likely to Existing RBA - Class C (303 buildings) 26,610,042 off er more favorable concession packages, in anticipation of the deliv- Total Vacant Sq. Ft. 16,730,613 ery of new space in 2009. Percent Vacant 10.9% Total Available Sq. Ft. 18,446,365 Space Available Percent Available 12.1% Space remains tight across all submarkets and classes. While the up- Gross Average Asking Rental Rate (Overall) $29.53 coming addition of over 3 million square feet of new Class A space Year-To-Date Net Absorption (110,346) in 2009 will ease the market for tenants of older Class A buildings, it may take until 2010 for that increased availability to transfer to Class B buildings.

Noteworthy Leases Tenant Address Sq. Ft. Type Northern Trust Corp. 801 South Canal Street 555,000 Renewal Northern Trust Corp. 420,000 Renewal - Expansion William Blair & Co. 444 West Lake Street 340,000 Relocation Marketing Werks Inc. 130 East Randolph Street 44,463 Relocation - Expansion Upshot 350 North Orleans Street 41,486 Relocation - Expansion Veolia Environmental Services 200 East Randolph Street 34,533 New Arch Insurance Group Inc. 311 South 22,048 New DRI-The Voice of the Defense Bar 55 West Monroe Street 21,102 Relocation - Expansion Schneider Logistics, Inc. 1 North Dearborn Street 21,000 Relocation - Expansion Newmarket Underwriters Insurance Company 311 South Wacker Drive 14,614 New

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Inside: Chicago Downtown Offi ce Market Report – 1Q’08

Bradford Allen Market Meter - Chicago Downtown Offi ce 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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