S U B M A R K E T R E P O R T

Near West Submarket, Chicago MSA Third Quarter 2007

SUBMARKET MAP SUBMARKET FACTS



12 Submarket Metro



45
Population 523,599 8,669,654
Lake/McHenry
Lake/McHenry
Lake
Lake
Lake
Lake
Lake
Lake
Avg. Annual Five-Year Chg.* -0.6% 0.7%


20 

14


294 Michigan
Michigan
Michigan
Michigan
Michigan
Michigan



41
Total Households 188,275 3,095,362


90
Far
Far Far
Far
Northwest
Northwest North
North Avg. Annual Five-Year HH Chg.* -0.9% 0.4%
Arlington
Arlington
Heights
Heights Median Household Income $54,871 $60,565
Kane
Kane North
North
Lombard/
Lombard/
Near
Near Median Age 36.2 35.2


88 Addison 88
Addison
 West
West  55

South
South Employment 239,823 3,962,437
Far
Far West
West


294
Vacancy Rate (2Q 07) 6.2% 7.3%


30 

55

45
Far
Far
Southwest
Southwest
Southwest
Southwest Avg. Asking Rent (2Q 07) $18.67 $19.31
South
South



30 * 2006-2011 Forecast

SUBMARKET VACANCY RANKING SUBMARKET HIGHLIGHTS

2Q 07 2Q 07 Healthy economic growth in the Chicago MSA in
Submarket Vacancy Asking Rents recent years has benefited the retail market, where the
demand for additional inventory has encouraged
South 3.8% $20.60
builders to speed up construction activity. Vacancy in
North 5.5% $25.94 the metro declined over 300 basis points since 2003,
despite elevated construction, a result of robust retail-
Far North 6.2% $22.01 er demand.
The Near West submarket boasts an attractive loca-
Near West 6.2% $18.67 tion which draws potential investors to the area. The
submarket has access to two of the metro’s main thor-
Far Northwest 6.4% $17.35 oughfares, Interstates 290 and 294, which help to sus-
tain the retail business in the area by bringing motorist
Southwest 6.5% $16.88 through the submarket. Additionally, the submarket’s
proximity to the cities major airports, O’Hare
Arlington Heights 7.4% $16.76 International to the northwest and Midway to the
southeast, benefits retail owners, as the constant flow of
Far West 7.4% $19.85 travelers help to contribute to the region’s retail sales.
Although the economic fundamentals in the sub-
Lombard/Addison 8.2% $19.61 market are not as strong as other parts of the metro, as
the current migration trend is to the rapidly developing
Far South 10.8% $14.83
suburbs, the area has maintained a healthy vacancy
rate and strong rent growth. These investment drivers,
coupled with the attractive location, will continue to
lure investors to the submarket in the coming years.

Jonni M. deGraaf © Marcus & Millichap 2007

Research Analyst www.MarcusMillichap.com
Near West Submarket, Chicago MSA Retail Submarket Report ◆ Third Quarter 2007

Construction Trends CONSTRUCTION TRENDS

◆ Preceded by three years of stable inventory growth, the pace of
Square Feet Completed (thsouands)

1,200
construction skyrocketed in 2006, with over 1.1 million square feet
900 of retail space added to the Near West submarket. During the last
year, six projects came online, averaging just under 200,000 square
600 feet each. In response to the significant retail stock additions last
year, there are no projects currently under way in the submarket.
300
◆ While there are currently no retail development under construc-
0 tion in the Near West submarket, there are eight projects totaling
03 04 05 06 07* 500,000 square feet that are being considered.
* Forecast
Sources: Marcus & Millichap Research Services, Reis, TWR

◆ In the Chicago MSA, developers are projected to deliver 6.3 mil-

lion square feet of retail space this year, of which 85 percent will
be in located in the suburban areas of the metro.

Asking Rent and Vacancy Trends RENT AND VACANCY TRENDS

Average Asking Rent per Square Foot

Average Asking Rent 10% ◆ Submarket vacancy has fluctuated over the last several years, but
$19
Vacancy
has since returned to levels more in line with the metro average.
$18 8% Vacancy in the Near West submarket is currently 6.2 percent, up
Vacancy Rate

30 basis points from the end of last year, when significant stock
$17 6% additions precipitated a modest increase.

$16 4% ◆ Despite varying vacancy in the submarket, owners have been able
to keep increasing rents, as asking and effective rents have posted
$15 2% consistent growth over the last several years. Asking rents are cur-
03 04 05 06 07*
* 2Q 2007 rently $18.67 per square foot, up 3.3 percent from year-end 2006.
Sources: Marcus & Millichap Research Services, PPR, Reis

◆ Concessions in the submarket have increased slightly this year, as

asking rents growth has outpaced effective rent growth by 50
basis points. Effective rents are currently 90 percent of asking
rents, or $16.69 per square foot.

Sales Trends SALES TRENDS

$300 Single Tenant ◆ Sales velocity for single- and multi-tenant properties has
Median Price per Square Foot

Multi Tenant
remained consistent over the last 24 months, though multi-tenant
$225 velocity is based on a minimal number of transactions.

$150 ◆ Year over year, the median sales price for single-tenant properties
has increased a mere 1.3 percent to $241 per square foot, though
$75 during the previous 12-month period the median price climbed 56
percent. Over the last year, the median price for multi-tenant prop-
$0
erties increased minimally, or 1.4 percent, to $140 per square foot.
03 04 05 06 07*
* Trailing 12 Months Ended June 30
Sources: Marcus & Millichap Research Services, CoStar Group, Inc. ◆ Though cap rates for both property types have compressed in
recent years, they remain favorable, hovering in the low- to mid-
7 percent range, which will still attract the attention of local and
out-of-state buyers.

Jonni M. deGraaf © Marcus & Millichap 2007

Research Analyst www.MarcusMillichap.com
Sources: Marcus & Millichap Research Services, BOC, CoStar Group Inc., RCA, Reis, SRC, TWR
The information contained herein was obtained from sources deemed reliable. Every effort was made to obtain complete and accurate information; however, no representation, warranty or guarantee to the accuracy, express or implied, is made.