CBD Market Will Decline Through 2009

Chicago Downtown Office Market Report 3Q ‘08 CBD Market will Decline through 2009 While the Chicago’s CBD Office Market Remains Strong, Activity has Slowed, Rates are Dropping, and Market is Poised for a Downturn Flattening Rental Rates By The Numbers The current average asking rate, $30.13 gross cost per square foot, is slightly down from last quarter’s all-time high of $30.16, and ends 6 Chicago CBD – Availability vs. Rental Rates consecutive quarters of increasing rates. Asking rental rates are likely Space Available Average Gross Asking Rent to hold steady for the next few months, as landlords wait to see what 14% $31 impact the ongoing financial crisis will have on the Chicago market.

13% $30 Slowing Activity Year-to-date net absorption rose again during the third quarter, to 1,928,616 square feet. About 400,000 square feet of this activity is 12% $29 due to office space being converted to other uses during the second quarter. Discounting these transactions, we see year-to-date net ab- 11% $28 sorption of about 1.5 million square feet. At the end of the third quarter in 2007, year-to-date net absorption was over 2.6 million 10% $27 square feet. 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08

Downturn in 2009 - But for how long? Chicago CBD - Existing Buildings 2Q 2008 Available sublease space has taken a small rise, increasing approximately 150,000 square feet to 1,809,272 square feet. Chicago MSA’s Existing RBA - Overall (583 buildings) 153,214,559 unemployment was reported at 7.1% for August, another sharp in- Existing RBA - Class A (80 buildings) 68,077,970 crease over the 6.5% figure for May. Illinois’ unemployment figures Existing RBA - Class B (205 buildings) 58,589,807 remain among the highest in the nation. Existing RBA - Class C (298 buildings) 26,546,782 While these trends indicate a downturn in the Chicago CBD office Total Vacant Sq. Ft. 15,696,174 market, it is not clear how far or for how long the market will drop. In Percent Vacant 10.2% a stronger economy, the small drops in pricing and activity shown here Total Available Sq. Ft. 16,577,642 would not be considered a downturn at all. However, while Chicago Percent Available 10.8% is likely to suffer less and for a shorter period than other markets, we are seeing the affects of the financial crisis, and we are unlikely to see Gross Average Asking Rental Rate (Overall) $30.13 it reverse again before 2010. Year-To-Date Net Absorption 1,928,616 Noteworthy Leases Tenant Address Sq. Ft. Type Walgreens Co. 2 Overlook Parkway, Lincolnshire 321,320 New - Sublease Baker & McKenzie LLP 444 West Lake Street 300,000 Relocation BP PLC 10 and 30 South Wacker Drive 225,000 Relocation Solo Cup Company 150 South Saunders Road, Lake Forest 133,441 Relocation Aviva plc 300 North LaSalle Street 49,088 Relocation - Expansion The OfficeLinks 233 South Wacker Drive 30,000 New M3 Capital Partners LLC 155 North Wacker Drive 27,115 Relocation - Expansion Chambers Business Suites 35 East Wacker Drive 21,802 New Marketing Innovators International, Inc. 9701 West Higgins Road, Rosemont 20,418 Renewal Robbins, Schwartz, Nicholas, Lifton & Taylor, Ltd. 55 West Monroe Street 18,638 Relocation - Expansion Reyes Holdings, L.L.C. 9500 West Bryn Mawr Avenue, Rosemont 18,249 Expansion Iowa Foundation for Medical Care 711 Jorie Boulevard, Oak Brook 14,607 Relocation Jack Morton Worldwide 217 North Jefferson Street 10,150 Relocation Interfaith Youth Core 910 West Van Buren Street 10,000 Relocation

Transactions completed by Bradford Allen.

© 2008 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

Peoria Fulton Carol Chicago

Green Green Halsted Halsted

Halsted Madison city, increasing its Chicago work force to 800. plant, will move all 350 of the suburban jobs into the ing the plant to Monterrey, Mexico where it already has a Wolcott Avenue. The rm, which had considered relocat - at campus 5454 and 5500 North Chicago manufacturing from of Chicago and the state, the city will renovate its plant and, with a $7-million subsidy foot Libertyville Tempel Steel Company will close its 177,040-square - W Lake Randolph Gladys Monroe Adams Jackson V Hubbard

Harrison an Buren ashington Kinzie T aylor 90 94 Union W ayman options to renew its lease for up to 20 years. signed a long-term lease for the property, with Education Inc., Kendall College’s parent company, Laureatealmost $29.4 million. Baltimore-based aliate of New York-based W.P. Carey & Co. for Branch Street North to an atcampus 900 North Island Goose sold its 178,490-square-foot Kendall In a sale/leaseback transaction, College

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

15-20% of WaMu’s Chicago-area branches. Chicago-area branches and sources indicate Chase is likely to shut down all but Chase has approximately 340 branches in the Chicago market and WaMu has 117 and it plans to close less than 10 percent of the two rms’ branches overall. about $31 billion. The acquisition will give Chase 5,400 branches in 23 states Chase & Co. for $1.9 billion. Chase plans to write-down WaMu’s by loan portfolio InsuranceDeposit Corp. and its banking assets were then sold to JP Morgan Seattle-based Washington Mutual Inc. (WaMu) was seized by the Federal Canal Kingsbury Canal

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

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foot building. LLC for the 243,147-square - Advisors KBS Realty CA-based a fund managed by Newport, Drive, paying $30.5 million to 205 Westof Wackeracquisition Group LLC closed on its Cape Miami-based Horn La Salle

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LaSalle building.38,555-square-foot AST Remington, LLC for the burg, paying $4.05 million to Remington- Road in Schaum of America acquired 500 Cancer Treatment The Centers

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Clark W W Clark Washington ashington Jackson ashington building. which then leased back the building,135,999-square-foot Stationers Co. Supply for the paying $10.5 million to United Plaines,East Road in Des Golf Lexington Homes acquired 2200 In a sale/leaseback transaction, Clark Square Square

Federal Dearborn Dearborn Harrison Plymouth Congress Pritzker Park Polk

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State KINZIE ST.E. Michigan

E. North Water St. Avenue Wabash North

Wabash Loop and the weak U.S. dollar. demand, the rising cost of steel 11 bankruptcy, citing falling distance buses, led for Chapter biggest U.S. supplier of long - (MCI) and six aliates, the Industries International, Inc. Schaumburg-based Motor Coach Harrison 9th 1 E. HUBBARD ST U/L LEVEL

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

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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

Peoria Fulton Carol Chicago CBD Office Market Statistics – 3Q’08 Market Statistics – CBD Office Chicago 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

Harrison an Buren ashington Kinzie T aylor Total Inventory (Sq. Ft.) 90 94 Total Sq. Ft. Available Union W Percent Available ayman options to renew its lease for up to 20 years. signed a long-term lease for the property, with Education Inc., Kendall College’s parent company, Laureatealmost $29.4 million. Baltimore-based aliate of New York-based W.P. Carey & Co. for Branch Street North to an atcampus 900 North Island Goose sold its 178,490-square-foot Kendall In a sale/leaseback transaction, College

Des Plaines Des Plaines Loop West

Quincy Jefferson Chicago W Lexington Jefferson Polk 290 Overall CBD 153,214,559

16,577,642 1,928,616 Milwaukee $22.27 $27.72 $33.90 10.8% Clinton Kingsbury

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1,397,717 Franklin Avenue 384,181

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Locust

Walton an Buren Ontario Madison W

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Chestnut 5,780,997 LaSalle building.38,555-square-foot AST Remington, LLC for the burg, paying $4.05 million to Remington- Road in Schaum of America acquired 500 Cancer Treatment The Centers $22.52 $29.76 $34.28 99,185 11.2% La Salle

Federal Central Loop Dearborn

40,337,499 Dearborn 4,459,042 820,599 $22.86 $28.83 $34.45 11.1% Harrison Plymouth Congress Pritzker Park Polk

State

State KINZIE ST.E. Michigan

E. North Water St. Avenue Wabash North 26,160,214 East Loop 3,207,734 Wabash Loop and the weak U.S. dollar. demand, the rising cost of steel 11 bankruptcy, citing falling distance buses, led for Chapter biggest U.S. supplier of long - (MCI) and six aliates, the Industries International, Inc. Schaumburg-based Motor Coach 397,332 Harrison 9th 1 E. HUBBARD ST U/L LEVEL

8th L/L $22.05 $25.80 $31.62 East 12.3% 1th

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

E. North Water St. L/L property. the 172,446-square-foot Younan Properties, Inc. for to Woodland Hills, CA-based Street, paying $35.7 million tion of 211 East Ontario Hospital closed on its acquisi - Northwestern Memorial PIONEER COURT 400 S. Station Metra Buren V an South Loop South 3,448,604 122,953 322,028 Cityfront Plaza Dr. U/L $23.80 $17.00 9.3% Institute the School of N/A 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 – 3Q’08

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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