Industrial Market Report

Transcription

1 Industrial CHICAGO Second 26 Quarter

2 Table of Contents CHICAGO INDUSTRIAL MARKET OVERVIEW 1 Page INDUSTRIAL SUBMARKET MAP 2 SECOND QUARTER STATISTICS 3 TOP 26 INDUSTRIAL TRANSACTIONS YEAR-TO-DATE 4 CHICAGO Second 26 Quarter SELECT SUBMARKET OVERVIEWS Central DuPage 5 North 6 South 7 Fox Valley 8 I-29 North 9 I-29 South 1 I-55 Corridor 11 I-8/Joliet Corridor 12 Lake County 13 North Suburbs 14 O Hare 15 South Suburbs 16 ABOUT COLLIERS BENNETT & KAHNWEILER INC. 17

3 Market conditions improved substantially in the second quarter with an impressive 7.4 million square feet of positive net absorption. Industrial Overview and Supply In the second quarter of 26, the supply of industrial space fell dramatically to 95.8 million square feet from the previous quarter s level of 1.6 million square feet. This resulted in a vacancy rate of 8.85 percent, down from 9.32 percent in the first quarter 26 and 9.27 percent at mid-year. The I-55 Corridor and Central DuPage County markets experienced the most considerable drop in available inventory levels, falling 1.7 million square feet and 628,9 square feet, respectively, from levels posted last quarter. December Historical and Net 15,, 1,, 5,, -5,, -1,, -15,, 1% Rate Quarterly Market Trends 9.3 Net -112,297 sf Deliveries 3,16,818 sf 8.85% 7,41,825 sf 3,27,894 sf Net Unprecedented tenant demand resulted in a significant rise in positive net absorption to a total of 7,41,825 square feet. Because of disappointing net absorption in the first quarter, the year-to-date total is 7,289,528 square feet. At mid-year, the industrial market had a year-to-date absorption figure of 6,458,764 square feet. Second quarter leasing activity reached historically high levels, with 12.2 million square feet of transactions completed in the metropolitan area. This eclipsed the previous record of 9.2 million square feet leased during the third quarter of The I-55 Corridor witnessed 3.6 million square feet or 29.5 percent of all leasing activity. Although lease transactions told a more compelling story in the second quarter, sale volume totaled a healthy 5.3 million square feet. While this was an improvement of 1. million square feet over the first quarter s total, the figure was lower than the 6.8 million square feet sold in the second quarter of. The South market led the way with 1. million square feet of transactions, followed closely by the O'Hare and South Suburban markets with 912, square feet and 829,1 square feet respectively. Facilities completed during the second quarter of 26 totaled 3. million square feet, slightly behind the 3.2 million square feet completed last quarter. Once again, speculative development (1.8 million square feet) exceeded build-to-suit development (1.2 million square feet). The I-8/Joliet Corridor surpassed the I-55 Corridor for most completed developments, including a 861,4-square-foot speculative warehouse/distribution facility at Minooka Ridge Business Park by Opus North Corporation. Also noteworthy, the Fox Valley market witnessed 852,7 square feet of construction completions. 1

4 s Industrial Submarket Parameters December 2

5 Industrial Market Statistics December Sub-Market Total Inventory Sq. Ft New Supply Existing Properties Came on Market Rate Current Qtr Rate Prior Qtr Net Current Qtr- Sq. Ft. Net YTD-Sq. Ft. Leased Sq. Ft. Sold Sq. Ft. Rental Rate Sale Price Leased Sq. Ft. Current Qtr. Sold Sq. Ft. Current Qtr. Under Current Qtr. Ave Annual Asking Rate/SF Ave Asking Sales Price/SF Central DuPage County North South DeKalb County Elgin I-9 Corridor Far South Suburbs Fox Valley I-29 North I-29 South I-55 Corridor* I-8/Joliet Corridor* Lake County McHenry County North Suburbs Northwest Suburbs O'Hare South Suburbs Metro Total Northwest Indiana Southeastern Wisconsin GRAND TOTAL 82,198,45 25, 724, % ,881 18,236 1,441, , , $5.37 $67. 9,964, , % 372,12 (235,876) 1,9 93,35 $6.4 $ ,482,661 1,39, ,17 235, ,116 1,8,189 $3.36 $ ,78, % ,44 (114,68) - 145,44 325, $2.38 $ ,939,796 6, 437, (9,86) 531,37 189, , ,82 $5.28 $ ,76,28 154, (66,233) 2,297-49,661 39, $3.39 $ ,127,45 852,65 1,77, % 9.73% (187,62) (14,19) 546,67 297,864 14,255 $4.69 $ ,544, , % , ,2 289,31 288, ,72 $4.34 $ ,592,345 3, 761, % (197,238) (49,464) 35, ,568 37,731 $3.65 $ ,55, , 1,43, ,146,45 2,578,423 3,612,289 54,53 2,56,356 $4.72 $ ,934, ,438 1,841, ,786 35,574 1,27,12 139,25 4,512,3 $4.55 $ ,78,26 133,66 486, % 8.3% 6,71 472, ,41 243,33 26,591 $5.94 $ ,74,113 44,5 175,67 2.7% 3.83% 38,98 296,54 41,466 92,49 $5.44 $ ,912, , % 6.79% 393,764 51, ,362 26,74 $4.77 $ ,96, ,7 369, % ,18 334,386 85,675 63,96 1,331,686 $7.3 $ ,962, ,783 1,529, ,25,114 1,624,54 2,81,88 912,34 775,21 $5.65 $ ,132, , % 1.77% 975,539 62, , ,51 651,329 $4.23 $ ,82,138,791 2,592,111 12,446, % 9.3 7,41,825 7,289,528 12,249,87 5,38,971 11,847,719 $4.77 $ ,46, , % 171,67 725, ,598 3,1 65,962 $3.3 $ ,858, , , % 1.77% 492, ,279 42,118 77,6 $4.61 $ ,194,44,585 3,146,829 13,536, ,65,871 8,532,574 13,94,83 5,339,71 11,991,281 $4.69 $51.5 QUARTERLY COMPARISON AND TOTALS Q2-6 Q1-6 Q4-5 Q3-5 Q2-5 1,194,44,585 3,146,829 13,536, ,65,871 8,532,574 13,94,83 5,339,71 11,991,281 $4.69 $51.5 1,191,257,755 3,259,668 14,753, % 466,73 466,73 8,399,844 4,326,679 11,264,942 $4.66 $ ,188,439,844 6,954,15 14,564, % 9.1% 9,432,597 19,441,256 8,399,137 7,341,26 1,189,728 $4.7 $5.89 1,181,485,739 6,29,581 12,887,51 9.1% 8.91% 3,356,56 1,8,659 8,891,25 5,547,276 1,291,377 $4.7 $5.58 1,175,44,158 3,959,48 13,854, % 8. 1,97,356 6,652,99 9,34,198 6,819,325 13,537,345 $4.58 $48.51 The information contained in this report was provided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability. As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports. *The I-55 and I-8/Joliet markets were formally combined and known as the Southwest Suburban market 3

6 Top 26 Industrial Transactions Year-to-Date December Sales Market Address City Comp SF Quarter Buyer/Tenant Company Seller/Landlord Company O'Hare 3 E. Oakton Street Des Plaines 33, 2nd Qtr Columbus Foods Podolsky North Star Realty Partners South 1355 E. 93rd Street, 1 Floor 311,4 2nd Qtr 93rd Street Crane, LLC Marc Realty I-29 South 67th Street & River Road Hodgkins 3, 2nd Qtr Vee Pak I-29 North 9441 Fullerton Avenue Franklin Park 274,675 1st Qtr Frain Industries Northwest Indiana 4245 Railroad Avenue East 27, 2nd Qtr Ware Industries O'Hare Lunt Avenue Elk Grove 228,94 2nd Qtr Equinix Kaiser/Lopin Family Trust South 2351 W. 48th Street 193,959 2nd Qtr TWJ & Associates Tube & Iron South 57 S. Lawndale Avenue 186,161 1st Qtr 51st Lawndale Land, LLC World's Finest Chocolate, Inc. I-29 North Charles Street Franklin Park 174,225 2nd Qtr Luxury Motors Basswood LLC South 433 S. Racine Avenue 168,35 2nd Qtr Royal American Bus Lines First Industrial Realty Trust Leases * Market Address City Comp SF Quarter Buyer/Tenant Company Seller/Landlord Company Southwest Suburbs 1 Crossroads Court Building 3 Romeoville 85,912 2nd Qtr Kimberly-Clark Corp. Duke Realty Corp. Southwest Suburbs Andrew Corp. BTS Joliet 689,35 1st Qtr Andrew Corporation Northern Builders Southwest Suburbs 1375 N. Weber Road Romeoville 426,23 2nd Qtr Levy Home Entertainment Orix Real Estate Equities, Inc. Southwest Suburbs 76 W. Crossroads Parkway Bolingbrook 425,368 2nd Qtr Broder Corum Real Estate Group Southwest Suburbs 41 Rock Creek Boulevard Joliet 393,95 2nd Qtr Madison Warehouse IDI Southwest Suburbs 251 Laraway Road Joliet 374, 2nd Qtr Arnold Logistics The Ryan Companies I-39 Corridor 51 Steward Road Rochelle 364,755 2nd Qtr Del Monte DP Partners Southwest Suburbs 261 Internationale Parkway Woodridge 356,621 2nd Qtr Best Buy ProLogis Southwest Suburbs HUDD BTS Joliet 352, 2nd Qtr HUDD IDI Southwest Suburbs 333 Gibraltar Drive Bolingbrook 35, 2nd Qtr Sony Music Entertainment TA Associates Note: Bolded items indicate a Colliers B&K transaction 4

7 Central DuPage 82,2, SF Historical and Net Three large Addison lease transactions carried the Central DuPage submarket in the second quarter, resulting in significant gains in net absorption. 1,5, 1,, 5, -5, -1,, -1,5, 1 1% % Rate % -635,645 SF 116, SF 653,881 SF 25, SF Tenant activity remained robust in Central DuPage in the second quarter with 1.4 million square feet leased, slightly ahead of the 1.3 million square feet leased last quarter. and Supply The Central DuPage vacancy rate ended the second quarter at 9.89 percent, down from 1.66 percent in the first quarter and 9.91 percent at mid-year. Available space in DuPage County dropped 628,9 square feet from the previous quarter s level to 8.1 million square feet. Strong second quarter leasing activity coupled with a limited amount of space returning to the market contributed to the favorable market conditions in the second quarter. Only one building was delivered to the market this quarter- a build-to-suit lease for Navistar International totaling 25, square feet. Current construction projects include a 65,-squarefoot development on 14 acres for McMaster-Carr in Elmhurst; a 193,-square-foot facility in Lombard for Walter E. Smithe; and a 13,-square-foot facility in Carol Stream for Glen Ellyn Moving and Storage. 4 Tenant demand was strongest in Addison as it captured 67 percent or 961,9 square feet of all leasing volume. The quarter s significant lease transactions included a 264,-square-foot lease at Swift Center for Business for The Pampered Chef, already a major tenant in the market; a 258,-square-foot lease for Staymar Packaging at Tollway Park; and NAL Logistics 221,1-square-foot lease at Meadows Business Park. All three transactions occurred in Addison. Sales activity worsened, as five transactions totaling only 122, square feet were completed, a decrease from the 58, square feet sold last quarter. This is the lowest level since the third quarter of when 46,2 square feet were sold. Net Tenant demand resulted in second quarter net absorption of positive 653,9 square feet, more than doubling the first quarter s figure of a negative 635,6 square feet. Pictured Above: Colliers B&K negotiated the sale of 225 Glen Ellyn Road, Glendale Heights 5

8 North 91,, SF Despite lackluster demand for both leased and owned facilities, the North market made tremendous strides in absorption, mostly due to previously available space being pulled from the market. 1,5, 1,, 5, -5, -1,, -1,5, -2,, -2,5, Historical and Net 9% 7% 5% 3% 1% % Rate 6.59% 6.1 and Supply The North submarket boasts one of the lowest vacancy rates of any of the Metropolitan markets. The second quarter rate was 6.18 percent, an improvement from the 6.89 percent reported last quarter. The North s available industrial supply dropped almost 4, square feet from the 6. million square feet available in the first quarter, primarily due the removal of 329,5 square feet previously marketed as available. Minimal space returning to the market rather that user activity had a positive impact on vacancy rates for the North market. -67,888 SF SF 372,12 SF SF Industrial development along the city s north side remained idle and has for the past three quarters. This can be attributed to the lack of available land at industrial user pricing. Although industrial development was non-existent, residential and retail development continued at a healthy pace in the North market. Demand for leased space remains weak. In the second quarter, 1,9 square feet were leased compared to 213,9 square feet in the first quarter. Although tenant activity was sluggish in the second quarter, the year-to-date leasing total of 314,8 square feet is considerably ahead of the 218,3 square feet measured in the first half of. The quarter s largest lease transaction totaled 35, square feet at 451 W. Augusta Boulevard for Wal-Mart. Sales volume suffered with only 93,4 square feet sold in the second quarter, a sharp decline from the 636,4 square feet recorded in the first quarter of 26. The largest sale transaction was a 45,4-square-foot facility at 381 W. Lawrence Avenue. Net The lack of user demand did not have an adverse affect on North s net absorption figure. In fact, the net absorption total rebounded nicely to 372, square feet from negative 67,9 square feet in the first quarter. Year-to-date absorption totals negative 235,876 square feet, considerably lower than the 948, square feet of positive net absorption in the first half of. 6

9 South 84,5, SF 3,, Historical and Net 1 South continues to suffer from lackluster demand, resulting in the third-highest vacancy rate of all submarkets ,, 1,, -1,, -2,, -3,, -4,, 1 1 1% % Rate -183,351 SF 419,17 SF 11, SF SF and Supply Although improving modestly in the second quarter, the South market s second quarter vacancy rate of percent was the third-highest of all submarkets. The amount of vacant space totaled 1.4 million square feet, a 4,-square-foot decline from the first quarter s total. Considerable sales volume was a major factor in this decline. Industrial development is rare in the South Market, with no new construction deliveries completed in the second quarter. There are several sites available for industrial development, however, decision makers are not aggressively pursuing those opportunities. Leasing activity was healthy in the second quarter, totaling 451,1 square feet. However, this was a substantial decline from the 871,2 square feet leased last quarter. There was only one lease transaction greater than 1, square feet completed in the second quarter. Global Logistics leased 175, square feet of freezer/cooler space at 422 S. Kildare Avenue. The remaining lease transactions were consummated in spaces from 12,4 square feet to 49,6 square feet. Sale volume rose sharply to 1. million square feet from 37,9 square feet in the first quarter, the result of three large building sales: 1355 E. 93 rd Street (311,4 square feet); 2351 W. 48th Street (193,959 square feet); and 433 S. Racine Avenue (168,4 square feet). Net The increase in sale activity positively impacted net absorption, ending the second quarter at 419,17 square feet for a year-to-date total of 235,666 square feet. This is an improvement over mid-year absorption figure of negative 397,914 square feet. Pictured Above: Colliers B&K assisted Global Logistics in a 175,-square-foot lease at 422 S. Kildare Avenue, 7

10 Fox Valley 84,1, SF Historical and Net The Fox Valley market witnessed negative net absorption for the first time in seven quarters due to the return of several large facilities to the market. 4,, 3,5, 3,, 2,5, 2,, 1,5, 1,, 5, -5, 1 1 1% % Rate and Supply The Fox Valley vacancy rate increased to 1.87 percent in the second quarter from 9.73 percent in the first quarter. Available space rose by over 1. million square feet between the first and second quarters to 9.1 million square feet, a level not reached since the second quarter of when 9.2 million square feet were available. Contributing factors to the rise in vacancy rate and available supply were the return of several large facilities to the market and 42, square feet of new speculative product (with no pre-leasing activity). 9.73% 83,493 SF 324,993 SF 1.87% -187,62 SF 852,65 SF A total of 852,65 square feet of new construction were added to the Fox Valley market in the second quarter, including two speculative warehouse/distribution facilities totaling 42, square feet at the Aurora Distribution Center. activity was not limited to speculative development. Six build-to-suit projects were completed in the first quarter which added 432,7 square feet to Fox Valley s inventory base. The largest development was completed by Pella Windows, which moved into its 175,-square-foot facility at the DuPage National Technology Park in West. Demand for space weakened with 546,1 square feet leased, down 45 percent from the level reported during the previous quarter. However, this is a modest improvement over the 41,7 square feet leased in the second quarter of. Continuing the trend from last quarter, tenant desire for space was in all size ranges with the exception of big box. If this trend continues it will not bode well for vacancy rates. The quarter s largest lease transaction occurred at Prairie Point Corporate Park in Naperville as Acme Logistics expanded in its building by 173,3 square feet. The third-party warehouser now occupies the entire 33,8- square foot facility. Sale activity nearly doubled last quarter s amount of 142,6 square feet, registering a total of 267,9 square feet sold. One unique sale occurred when a church purchased the 25,6-square-foot former Aronson Showroom facility at 1319 N. Lake Street in Aurora. Net After seven consecutive quarters of positive net absorption, the Fox Valley market posted negative absorption of 187,62 square feet in the second quarter. As a result, the year-to-date total is negative 14,19 square feet. As a comparison, net absorption totaled nearly 6, square feet in the first half of. Pictured Above: Colliers B&K completed a lease to Padma Plantation at 14 Kingsland Drive, Batavia 8

11 1-29 North 78,5, SF Historical and Net Despite a decrease in both sale and lease activity, market conditions in I-29 North improved due to very little space returning to the market % 1,, 5, -5, -1,, -1,5, -2,, -2,5, 1% 9% 7% 5% 3% 1% % Rate 96,487 SF 525,515 SF SF SF and Supply Available space in the I-29 North market declined for the fifth consecutive quarter, resulting in a vacancy rate of 7.81 percent, down from the 8.48 percent witnessed in the first quarter. This marks the first time since the third quarter of that the vacancy level dropped below 8 percent. The improvement in the I-29 North s vacancy rate was the direct result of a smaller-than-normal amount of space returning to the market - 392, square feet versus the historical average of 721,4 square feet. The market s available supply was aided by Design Pak s decision to remain in 15, square feet at the Melrose Distribution Center. No new construction was completed in the I-29 North market in the second quarter. The only project currently underway is a 177,7-square-foot build-to-suit for Grand Warehouse in Northlake. KTR Capital is purchasing the 58,8-square-foot former Duro Fast building with plans to raze the building and construct two facilities totaling 394,2 square feet. I-29 tenants were not as active in the second quarter as evidenced by leasing volume of 289,3 square feet. However, 896,7 square feet were leased year-to-date, superior to the 621,9 square feet tallied at mid-year. Six lease transactions were recorded this quarter including a 125,-square-foot lease for Diversified Logistics at 56 Proviso Drive in Berkeley. Sale activity also declined, measuring 288,6 square feet in the second quarter versus 373,4 square feet sold last quarter. Less encouraging is a comparison to s midyear sale figure of 1.2 million square feet, nearly twice the 662, square feet sold thus far in 26. Franklin Park claimed 83 percent of all second quarter sale volume. The most significant transaction occurred when Luxury Motors purchased a 174,2-square foot facility at Charles Street. Net Net absorption in the I-29 North market was positive for the fifth consecutive quarter, measuring 96,5 square feet. Pictured Above: Colliers B&K negotiated the sale of Charles Street, Franklin Park 9

12 I-29 South 42,6, SF Historical and Net 77 percent of second quarter leasing activity in the I-29 South market resulted from a single transaction a 236,56-square-foot lease to Bolthouse Farms in Hodgkins. 7.21% 8.3 6, 5, 4, 3, 2, 1, -1, -2, -3, 9% 7% 5% 3% 1% % Rate 147,774 SF -197,238 SF SF 3, SF and Supply Last quarter s improvement in I-29 South s vacancy rate was short lived, as it increased from 7.21 percent to 8.32 percent in the second quarter. The 3.5 million square feet reported available in the second quarter is a new high for the I-29 South market. The vacancy rate increase is the result of significant space returning to the market. An example is Vee Pak s 291,2 square feet at 945 W. Sergo Drive in McCook. Leasing activity reached 35,6 square feet, a remarkable improvement from 26,5 square feet leased last quarter. One transaction contributed 77 percent of the quarter s total leasing volume as Bolthouse Farms leased a 236,56- square foot facility at Santa Fe Drive in Hodgkins. Also, Wertheimer Box and Paper Corporation expanded by 69,1 square feet at 795 Joliet Road in McCook. Two sale transactions were completed with the most significant occurring when Vee Pak purchased a brand new 3,-square-foot build-to-suit at 67th Street and River Road in Hodgkins. Total sale volume in the first quarter totaled only 198, square feet. Net Despite improvement in both sale and leasing activity from the first quarter, the net absorption figure was a negative 197,238 square feet. Net absorption has been negative in four of the last six quarters. One new development was completed this quarter. Vee Pak completed a 3,-square-foot manufacturing plant in Hodgkins. Two additional developments are nearing completion at the McCook Business Center for Koch Foods (155,9 square feet) and McCook Cold Storage (151,8 square feet). All construction activity year-to-date is build-to-suit rather than speculative. Interestingly, all of these facilities are being developed for food-related companies. 1

13 I-55 Corridor 64,5, SF Historical and Net Leasing activity in the I-55 Corridor reached historically high levels in the second quarter, resulting in a sharp decline in vacancy ,, 6,, 4,, 2,, -2,, -4,, 25% 15% 1% 5% % Rate 432,378 SF 2,146,45 SF 855,187 SF 491, SF and Supply At percent, the I-55 Corridor claimed the highest vacancy rate of any Metropolitan market in the second quarter. However, it also posted the largest quarterly decline, dropping 27 basis points from the first quarter level of percent. The percent vacancy rate equates to 9.8 million square feet available. Leasing volume totaled 3.6 million square feet, a record-high for the I-55 market. This eclipses the previous high of 2.4 million square feet reached in the fourth quarter of Seven bulk distribution users (users of space greater than 25, square feet) leased 2.7 million square feet in the second quarter. The largest of these transactions was Kimberly-Clark Corporation s 85,9-square-foot lease at Park 55 Building Three in Romeoville. Sale activity has been slow in the I-55 market the past three quarters. This quarter, two sale transactions totaling only 54,5 square feet were completed, both in the same building. Originally marketed for lease, the owner opted to split the building in half, selling half to Myks while the other half was sold to Arrow Pack. Net The I-55 Corridor achieved 2.1 million square feet of positive net absorption in the second quarter, double that of the next closest market (O Hare). Year-to-date net absorption totals 2,578,423 square feet. The only construction delivery was Land and Lakes Development Company s 491,-square-foot speculative bulk warehouse-distribution facility at Bluff Point Business Center in Romeoville. Three speculative bulk warehouse/distribution projects were started in the second quarter that will add 2.2 million square feet to the I-55 inventory base by year s end. Pictured Above: Colliers B&K represented both Duke Realty and Kimberly-Clark Corporation in an 85,9-square-foot lease at Park 55 Building Three, Romeoville, IL 11

14 I-8/Joliet Corridor 44,9, SF Historical and Net Developers continue to construct large-scale speculative projects in the I-8/Joliet Corridor, placing a burden on vacancy rates ,, 3,5, 3,, 2,5, 2,, 1,5, 1,, 5, % % Rate 85,788 SF 218,786 SF and Supply The recent completion of 1.5 million square feet of speculative facilities with no pre-leasing activity placed a burden on vacancy rates. The second quarter vacancy rate of percent was marginally higher that the 12.4 percent reported vacant last quarter. The I-8/Joliet Corridor s vacancy rate was the second highest of all submarkets, topped only by the I-55 Corridor (15.18 percent). 86,4 SF 861,438 SF New speculative construction delivered 1.5 million square feet into the market. The projects included two facilities totaling 682,5 square feet at Crest Hill Business Park and an 86,4-square-foot development at ProLogis Park 8 in Morris. Pictured Above: Colliers B&K represented both Ryan Companies and Arnold Logistics in a 374,-square-foot renewal at Laraway Crossings, Joliet Despite higher vacancies, demand for leased space was on the rise. At the end of the second quarter, leasing volume totaled 1.3 million square feet, a 38 percent improvement from first quarter. Three large transactions were completed in Joliet totaling 1.1 million square feet. Madison Warehouse leased an additional 393,1 square feet at Rock Run Business Park; HUDD contracted with IDI for a 352,-square-foot build-to-suit; and Arnold Logistics renewed in 374, square feet at Laraway Crossings. Two sale transactions totaling 139, square feet were completed, an improvement from 27,7 square feet sold in the first quarter. Dry Wall Supply acquired a 75,- square foot building at W. Amoco Road in Channahon and County Materials bought a 64,-square foot facility at 252 N. 2753rd Road in Ottawa. Net Net absorption remained positive for the fifth consecutive quarter, totaling 218,786 square feet, increasing the yearto-date absorption to 35,574 square feet. 12

15 Lake County 66,8, SF and Supply Market conditions in Lake County improved fairly significantly in the second quarter, largely due to strong tenant demand and minimal space returning to the market. 8.3% Lake County s vacancy rate declined in the second quarter to 7.59 percent, down from 8.3 percent in the first quarter and 8.36 percent at mid-year. The market s vacancy rate has not been this low since the second quarter of when it reached 7.1 percent. Minimal space returning to the market (486,3 square feet) aided in the recovery of the market s vacancy rate. This reduced Lake County s available industrial supply to 5.1 million square feet, almost 5, square feet lower than first quarter s level. -127,913 SF 3,2 SF 7.59% 6,71 SF 133,66 SF 786, square feet were leased during the quarter, a 58,4-square-foot improvement from last quarter s level. Three lease transactions contributed 67 percent of the total leasing volume including Stack-On Products 254,4-squarefoot lease in Libertyville and Uline, Inc. s 167,9-square-foot lease in Waukegan. Sale activity suffered as eight transactions totaling only 243, square feet were completed, a 5 percent drop in volume from last quarter. The largest acquisition was completed when EW Wachs purchased a 61,1-square-foot manufacturing facility in Lincolnshire. 2,5, 2,, 1,5, 1,, 5, -5, -1,, Net The increase in tenant demand during the quarter had a positive effect on net absorption which totaled 6,71 square feet. When considering the negative 127,9 square feet posted in the first quarter, year-to-date absorption is 472,788 square feet, an improvement over the 287,962 square feet absorbed at mid-year. Historical and Net Three facilities (all build-to-suit) were completed during the quarter totaling 133,66 square feet. Learning Resources completed a 13,6-square-foot addition for a total occupancy of 215,6 square feet. Additionally, Architectural Limestone moved into a 3,-square-foot build-to-suit facility in Gurnee. Speculative development, although non-existent during the first half of the year, will increase next quarter as a 13,-square-foot facility is nearing completion in Waukegan. Marantec America is constructing a 64,9-square-foot facility in CenterPoint Business Center, Gurnee, marking the fifth development to be introduced into the park in the past 18 months. 1 1% % Rate 13

16 North Suburbs 58,9, SF and Supply The North Suburbs vacancy rate continued to fall, ending the second quarter at 6.13 percent, down from 6.79 percent in the first quarter and 8.26 percent at mid-year. The North Suburbs typically has one of the lowest vacancy rates in the Metropolitan Area. Available space totaled 3.6 million square feet, an 11 percent improvement from the first quarter. Available supply has not dropped below 4. million square feet since the fourth quarter of when 3.8 million square feet were available. The 249,8-square-foot building at 361 W. Howard Street in Skokie was removed from the market, a factor in the North market s decline in available supply. Net The North Suburbs, consistently one of the strongest of all submarkets, witnessed its sixth consecutive quarter of positive net absorption. 6.79% 116,563 SF SF 6.13 % 393,764 SF SF The North market has achieved six consecutive quarters of positive results, ending the second quarter at 393,8 square feet. When adding the first quarter s total of 116,6 square feet of positive net absorption, year-to-date absorption totals 51,4 square feet. As a comparison, 66, square feet were absorbed at mid-year. 6, 4, 2, -2, -4, -6, -8, -1,, Historical and Net Leasing volume in the second quarter was more than twice what was achieved in the first quarter (253,4 square feet vs. 124,4 square feet), primarily due to one large transaction. The largest lease transactions occurred when Fiber-Craft Materials Corporation leased a 169,8-square-foot warehouse/distribution facility at the Niles Industrial Center. The balance of lease transaction recorded during the quarter occurred in spaces from 1, square feet to 25, square feet. Sale volume worsened, ending the second quarter with four completed transactions totaling 26,16 square feet. 419,8 square feet were sold in the first quarter. The largest sale transaction occurred when Johns Byrne purchased a 25,3-square-foot manufacturing facility at 671 W. Oakton Street in Niles. No new construction was completed during the first quarter. Pictured Above: Colliers B&K completed the sale of 671 W. Oakton Street in Niles, IL 1% 9% 7% 5% 3% 1% % Rate 14

17 O Hare 14,, SF Second quarter leasing volume of 2.1 million square feet was the highest ever recorded in the O Hare market. 2,, 1,, -1,, -2,, -3,, -4,, -5,, Historical and Net 9% 7% 5% 3% 1% Rate and Supply The O Hare market s available inventory declined by more than 1.5 million square feet to a total of 1.2 million square feet. This represents the largest decline in available space of any market in the Metropolitan Area. Substantial demand from both tenants and users resulted in a second quarter vacancy rate of 7.26 percent, dramatically lower than the 8.28 percent measured last quarter. 599,39 SF 12,175 SF 1,25,114 SF SF A 37,-square-foot warehouse/distribution facility at Mt. Prospect Road Des Plaines was razed so construction can begin on a 228,6-square foot build-to-suit for lease facility for BAX Global. IAC purchased and demolished a 65,7-square-foot facility at 185 Arthur Avenue in Elk Grove Village and will construct a 4,32-square-foot build-to-suit lease for Select Carrier. Leasing activity totaled 2.1 million square feet in the second quarter, far surpassing last quarter s output of 1.4 million square feet. This represented the highest leasing volume ever recorded for the O Hare Market. Large tenants (those 1, square feet and above) contributed almost half of all leasing activity reported this quarter. Transactions included UPS Supply Chain Solution s lease of 272,6 square feet at Brummel in Elk Grove and Bax Global s 226,6-squarefoot build-to-suit lease at Mt. Prospect Road in Des Plaines. Sale volume in the O Hare market (912, square feet) was second only to the South market (1,8,89 square feet). The town of Des Plaines registered the largest sale transaction of any market when Columbus Foods purchased a 33,-square-foot warehouse/distribution facility at 3 E. Oakton Street. Net The O Hare market achieved an impressive 1,25,114 square feet of positive net absorption, second only to the 1-55 Corridor. The year-to-date absorption of 1,624,54 square feet far surpasses the mid-year total of 191,266 square feet. Pictured Above: Colliers B&K negotiated the sale of Lunt Avenue in Elk Grove Village 15

18 South Suburbs 98,1, SF Historical and Net 1,, 1 in the South Suburbs nearly doubled results from the previous quarter, assisted by strong lease and sale activity. 5, -5, -1,, -1,5, -2,, 1% Rate and Supply 1.77% Like most of the other markets, the South Suburbs experienced a decline in its vacancy rate. The 9.77 percent recorded at the end of the second quarter was an improvement of one full percentage point from first quarter. Robust sale volume played a substantial role in the decline. Available space decreased by 975,5 square feet from the first quarter to 9.6 million square feet. The return of the Universal Automotive Industries facility in Alsip to the market (284,4 square feet) did not have an adverse affect. -912,67 SF 22,356 SF 9.77% 975,359 SF SF Leasing activity increased to 426, square feet in the second quarter compared to 394, square feet in the first quarter. Significant transactions included Toyota Tsusho America Inc. s lease of 28,8 square feet at 5445 W. 73 rd Street in Bedford Park, a new speculative facility. Sale volume strengthened as several purchases totaling 829,1 square feet were completed, a 72 percent increase from first quarter s volume. Bedford Park witnessed 41 percent of all South Suburban sales volume with three sales transactions totaling 341,5 square feet. -2,5, Net Strong user demand improved net absorption. The second quarter recorded 975,359 square feet of absorption, twice that of the negative 912,67 square feet witnessed in the first quarter. Year-to-date absorption totals 62,932 square feet, still a vast improvement from the negative 1.3 million square feet of absorption recorded at mid-year. While there were no new construction deliveries in the second quarter, a 363,9-square-foot development in Sauk Village is nearing completion. Over the past 18 months seven speculative buildings were completed adding 2.1 million square feet to the South Suburbs inventory base. To date, one-half or 1.4 million square feet remain available. There are two additional developments in the planning stages that could potentially add 651,3 square feet of new available inventory. It remains to be seen if these projects will break ground based on the current supply of available speculative development. Pictured Above: Colliers B&K negotiated the sale of 5858 W. 73 rd Street in Bedford Park % 16

19 About is a member/owner of Colliers International, one of the three largest real estate services firms in the world with 241 offices in 54 countries. Locally, Colliers Bennett & Kahnweiler offers full service real estate services including office, retail, investment, and industrial brokerage; development; project/construction management; and property/asset/facility management. Headquartered in Rosemont, Illinois, the firm also maintains offices in downtown and Denver, CO. In total, some 14 persons are employed by the firm more than half of which are brokerage professionals. Headquarters 625 N. River Road, Suite 11-1 Rosemont, IL / (main number) 847/ (fax) Principals David Kahnweiler, SIOR President and CEO Chairman, Colliers USA William Fausone, SIOR Chief Operating Officer David Bercu, SIOR Colliers Manager Daniel Arends Richard Berger Gerald Cernick Robert Chodos, SIOR Kevin Clifton, SIOR Steven Disse, SIOR Jeffrey Kahan Gregory Pacelli, SIOR Jack Rosenberg, SIOR Department Leadership Richard Berger Robert Chodos Directors of Corporate Office Group Kevin Clifton Director of Suburban Office Group James Degnan, SIOR Director of Industrial Service Group Jeffrey Kahan Director of Investment Services Group Michael L. Richwine Director of Retail Services Group Branch Offices 2 S. Wacker Drive, Suite 33, IL / (main number) 312/ (fax) 4643 South Ulster Street, Suite 1 Denver, CO / (main number) 313/ (fax) Colliers International is a shareholder in Boston-based Colliers International Property Consultants, a worldwide commercial real estate organization. Colliers provides immediate access to more than 9,3 professionals in 241 offices throughout 54 countries on six continents. Colliers International is composed of the best local real estate companies in key world markets. Each member provides immense local insight as to customs, trends and cultural standards; a sound experiential base and an extraordinary staff of professionals committed to all Colliers International clients. Market coverage of Colliers International spans the Americas, Europe, Africa, the Middle East and Asia/Pacific. Phil Stafford Senior Vice President Colliers Real Estate Management Services LLC 17

20 625 N. River Road Suite 11-1 Rosemont, IL South Wacker Drive Suite 33, IL