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mbre-cmo 2010q4

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									F OU RT H Q UA RT E R


2010
CHICAGO
MARKET OVERVIEW

C O M P I L E D BY M B R E A L E S TAT E
TABLE OF CONTENTS
SECTION ONE

CHICAGO ECONOMY

  01 Economic Analysis


SECTION TWO

CHICAGO CENTRAL BUSINESS DISTRICT

  02 CBD Executive Summary

     SUPPLY
   03 New Developments
   04 Sublease Space
   05 Large Blocks of Direct Availability

     DEMAND
   06 Vacancy Rates
   07 Large Deals
   08 Absorption

     FEATURES
   09   Lease Comparables
   10   Investment Sales
   11   Forecast
   12   Submarket Map
   13   Market Statistics

SECTION THREE

SUBURBAN CHICAGO

  14 Suburban Chicago Executive Summary
                                            FOURTH QUARTER
     SUPPLY
   15 New Developments
   16 Sublease Space
   17 Large Blocks of Direct Availability
                                            2010
     DEMAND
   18 Vacancy Rates
   19 Large Deals
                                            CHICAGO
   20 Absorption
                                            MARKET OVERVIEW
     FEATURES
   21   Gross Asking Rents                    The Chicago Market Overview is published
   22   Investment Sales                            quarterly by MB Real Estate.
   23   Forecast
   24   Submarket Map                          To obtain additional copies or for further
   25   Market Statistics                            information, please contact:

SECTION FOUR
                                                         KRYSTA BAVLSIK
                                               Manager of Research and Analytics
ADDITIONAL INFORMATION
                                                              or
                                                            JACK GAVIN
   26 Glossary
                                                       Research Coordinator
   27 About MB Real Estate
                                                181 West Madison Street, Suite 4700
                                                      Chicago, Illinois 60602
                                                         p: 312.726.1700
                                                          www. mbres.com
SECTION ONE




                                                                                                                                                             CHICAGO ECONOMIC ANALYSIS
CHICAGO ECONOMY
ECONOMIC ANALYSIS
The United States is recovering, but at an extremely slow pace. Economists are optimistic about 2011, citing better job opportunities, growth prospects,
and rising consumer spending. This contrasts to negatives like the weakened housing market and the national debt burden. Also growth is expected
to be coupled with high unemployment. Without jobs, economic growth is not likely to translate into increased office occupancy.

Although the country exited the recession in June 2009, the Chicago-Joliet-Naperville, IL-IN-WI Metropolitan Statistical Area (MSA) is still entrenched
in it, with total employment hovering near its recessionary low, holdings steady for the last four months. Though the unemployment rate has fallen to
9.0 percent from 10.5 percent one quarter ago, it is not indicative of a turnaround. The drop in the unemployment rate is due to a shrinking labor force
as dismayed workers quit looking for jobs and are no longer counted as unemployed.

Chicago serves as the Midwest hub for the business services, transportation, and distribution industries. The area is a critical component of the national
supply chain with stable prospects. This year it experienced gains in biotech (Astellas Pharma US, Accretive Health), digitech (Groupon, Redbox,
Cleversafe), education (Career Education, John Marshall), trading (Getco, Nico Holdings, Ronin Capital), and logisitics (Coyote Logistics, Navistar
International).

Chicago’s employment losses do not bode well for office demand, despite a positive quarter
As Chicago MSA's economy calls for continued occupancy reductions, the positive quarter in the CBD and only slightly negative one in Suburban
Chicago lead to more uncertainty in the outlook for office space demand.

The largest factor that distorts the correlation between office occupancy and the employment factor is confidence. If businesses are confident of future
expansion, they may lease or renew space ahead of necessity. This is likely what helped support the largely positive quarter in the Chicago MSA.
Overall, however, U.S consumer confidence dipped in December and may impact sentiment across all facets of the economy.

Many tenants with long-term lease commitments have been unable to substantially reduce their square footage to reflect the magnitude of employee
layoffs. Despite the modest improvement in the CBD office market there are various possible future scenarios. MB Real Estate’s baseline office forecast
still expects substantial declines in occupancy over several upcoming quarters to correlate with job losses. An alternative downside scenario, which is
becoming increasingly plausible, is that declines in occupancy will be small but continue until the long-term effects of the recession fully materialize.
An optimistic scenario points to the recent data as an early sign of a turning point, where rental rates have fallen enough to warrant expansion for some
tenants before it is justified by employee headcount.


Sources: MBRE Research, BLS, Chicago Sun-Times, Crain’s Chicago Business, Financial Times, Moody’s Economy.com, National Real Estate Investor


CHICAGO EMPLOYMENT STABILIZES AT RECESSIONARY LOW




                                                                                FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                      1
SECTION TWO




                                                                                                                                                                   CENTRAL BUSINESS DISTRICT
CENTRAL BUSINESS DISTRICT
EXECUTIVE SUMMARY
Sentiment has trumped employment fundamentals leading to positive demand in the CBD before the job market warranted it. This quarter's data
showed positive absorption and stabilizing rental rates, but it is likely to be an outlier rather than a turning point.

Key Points:
• United Airlines leased an additional 180,000 square feet at Willis Tower, moving additional operations from Suburban Chicago. This lease was the
    major driver of positive absorption during the fourth quarter.

• While new construction is still unlikely, two proposed developments at 625 West Adams and 301 South Wacker made headlines and hope to
  procure anchor tenants in order to move forward with construction.

• The CBD's vacancy rate declined 0.1 percent since last quarter with 286,000 square feet of increased occupancy. Leasing activity increased,
  particularly with renewal transactions.

• Underutilized space remains the biggest concern to the outlook of the market. Among the tenants tracked with near-term lease expirations, many
  will be downsizing from their current footprint. This will lead to prolonged weakness in the market according to the baseline forecast.

• The increase in sublease space caused the total vacancy rate to rise 0.1 percent to 18.8 percent, despite the decrease in direct vacancy.

• The CBD remains increasingly attractive for suburban tenants evaluating relocation alternatives. The City of Chicago contains many of the country's
  fastest-growing companies.

• The investment sales market was very active during the quarter, especially compared to the last two years of little to no volume. Trophy and
  distressed assets traded, with little activity in the middle of the market.

Lingering effects of the recession are expected to cause direct vacancy rates to rise above 17 percent by 2012, despite the positive absorption this quarter.

CBD VACANCY AND YEAR-TO-DATE ABSORPTION SUMMARY

   Direct Vacancy                               Change from                   Change from                   Change from                    Change from
                                       A                             B                             C                           Total
   4Q2010                                         3Q2010                        3Q2010                        3Q2010                         3Q2010

   Central Loop                     10.2%          -0.2%          16.7%          -0.1%          13.9%           0.6%          13.6%             0.0%
   East Loop                        25.0%          -0.6%          23.7%          -0.1%          13.7%          -0.5%          20.2%            -0.3%
   N. Michigan Ave.                 18.8%           0.4%          22.8%           0.5%          13.1%           0.5%          18.2%             0.5%
   River North                      15.5%          -1.2%          10.0%          -0.6%          14.4%           0.1%          13.6%            -0.5%
   South Loop                        9.4%          -0.2%                                        25.6%           3.5%          18.6%             1.9%
   West Loop                        15.9%          -1.2%          13.6%          -0.4%          18.7%           0.2%          15.8%            -0.8%
   CBD Chicago Total                15.2%          -0.7%          17.8%          -0.1%          15.2%           0.3%          16.0%            -0.3%

   Net Absorption
                                       A                             B                             C                           Total
   4Q2010

   Central Loop                     34,929                        29,793                       (59,902)                        4,821
   East Loop                        25,673                        15,623                       (12,860)                       28,435
   N. Michigan Ave.                (16,531)                       (21,843)                     (37,411)                      ( 75,785)
   River North                      46,990                        13,757                        (9,493)                       51,254
   South Loop                        1,673                                                     (61,472)                      ( 59,799)
   West Loop                       329,992                        39,523                       (32,299)                      337,217
   CBD Chicago Total               422,726                        76,854                      (213,436)                      286,144
                                                                                                                             Numbers in parentheses are negative


                                                                         FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                                   2
NEW DEVELOPMENTS




                                                                                                                                    CENTRAL BUSINESS DISTRICT
New construction is not warranted by demand but is possible

• The estimated net rent needed to justify a new building      2000 - 2009 INVENTORY ADDITIONS                     % Leased (Avg)
  is 75 to 100 percent greater than the average of Class
  A initial rents. The likelihood of a new development is      2000 - 5 Properties                2,870,576   sf           95.8%
  low until rents stabilize and begin to increase. Despite     2001 - 2 Properties                  904,436   sf           86.9%
  this, two proposed developments were heavily marketed        2002 - 2 Properties                2,236,364   sf           94.6%
                                                               2003 - 0 Properties                        0   sf            0.0%
  during the quarter, trying to create interest despite weak
                                                               2004 - 1 Property                  1,300,000   sf          100.0%
  demand. A 490,000 square foot office building is
                                                               2005 - 2 Properties                2,500,143   sf           97.4%
  proposed at 625 West Adams while a one million square
                                                               2006 - 2 Properties                1,320,498   sf           96.9%
  foot tower is proposed at 301 South Wacker. Others
                                                               2007 - 0 Properties                        0   sf            0.0%
  have been proposed for years and could move forward
                                                               2008 - 2 Properties                  728,254   sf           70.6%
  if significant demand warrants it.




                                                                                                                                    SUPPLY
                                                               2009 - 3 Properties                3,652,913   sf           81.4%
                                                               Total - 17 Properties             15,513,184 sf
• Although new development is unlikely, there are seven
  tenants in the market looking for 200,000 square feet        2010 INVENTORY ADDITIONS                                % Leased
  or more that could anchor a new development. With
  renewal options and six large blocks of direct space         300 East Randolph (Expansion)        933,710 sf             92.9%
  available that would suit these tenants, new development     Total                               933,710 sf
  would occur out of preference for premier space rather
                                                               UNDER CONSTRUCTION                                      % Leased
  than out of necessity. If any project moves forward, it is
  most likely to be 625 West Adams due to its smaller size     N/A
  and subsequent ability to gain financing after signing       Total                                      0 sf
  only one or two large tenants.
                                                               2000-2010 INVENTORY ADDITIONS
• OUTLOOK: Headlines brought news of potential new
                                                               Delivered (2000-2009)             15,513,184 sf
  developments, but none will move forward without
                                                               Delivered (2010)                     933,710 sf
  significant pre-leasing. Due to high availability across
  the market, new construction is unlikely to be delivered     Total                             16,446,894 sf
                                                               Under Construction                         0 sf
  in the next three to four years.
                                                               Proposed Inventory                 1,490,000 sf
                                                               Total                              1,490,000 sf


NEW DEVELOPMENT HALTED; DEMAND INCREASES DURING THE QUARTER BUT NEGATIVE FOR THE YEAR




                                                               FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                              3
SUBLEASE SPACE




                                                                                                                                                                    CENTRAL BUSINESS DISTRICT
Unexpected increase likely a short-term occurrence

• Almost 400,000 additional square feet of sublease space became available during the quarter, a reversal of the trend of decreasing availability
  witnessed earlier in the year.

• The net change in large blocks of sublease space was zero as Northern Trust subleased two blocks within 231 South LaSalle for a total of 207,000
  square feet. Two new blocks became available. Playboy Enterprises is listing a 95,523 square foot block in the North Michigan Avenue submarket
  while Merrill Lynch is listing a 78,974 square foot block in the Central Loop.

• The almost 300,000 square foot block of space listed by Kirkland & Ellis now has less than one year before it will become directly available as
  that lease expires.

• OUTLOOK: Tenants offered excess space on the sublease market in reaction to extreme distress. MB Real Estate expects sublease availability to
  resume its decline in coming quarters.




                                                                                                                                                                    SUPPLY
YEAR-END HISTORIC SUBLEASE AVAILABILITY: DECREASING FROM ONE YEAR AGO




LARGE BLOCKS (OVER 50,000 SQUARE FEET) OF SUBLEASE SPACE CURRENTLY AVAILABLE
     CLASS A
     Building Address                       Size (sf)       Occupancy            Expiration   Floor(s)   Sublandlord
     200 E Randolph St                     296,247              Vacant     December 2011      53-61      Kirkland & Ellis
     200 E Randolph St                      95,103              Vacant     December 2013      14-16      AON Corporation
     227 W Monroe St                        58,094              Vacant          June 2025     26-27      Citibank
     233 S Wacker Dr                        50,586           Negotiable       August 2014      14        SNR Denton
     Total - 4 Spaces                     500,030

     CLASS B
     Building Address                       Size (sf)       Occupancy            Expiration   Floor(s)   Sublandlord
     225 W Randolph St                     238,778         March 2011      December 2022      22-30      AT&T
     231 S LaSalle St                      137,368      November 2011          June 2023        6-9      Bank of America
     600 W Chicago Ave                     117,101              Vacant     November 2015         2       Level 3 Communications
     680 N Lake Shore Dr                    95,523           Negotiable      August 2022      15-16      Playboy Enterprises
     222 N LaSalle St                       78,974        January 2012          May 2014      17-18      Merrill Lynch
     205 N Michigan Ave                     77,437              Vacant          July 2013     29-32      Unilever
     2 N LaSalle St                         51,014              Vacant          July 2016     2-Mezz     Computershare
       t
     Totall - 7 Spaces                     96,195
                                              1
                                          796 195
                                                                                                         Italicized addresses indicate space is new on the market

                                                                     FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                                        4
LARGE BLOCKS OF DIRECT AVAILABILITY




                                                                                                                                                                      CENTRAL BUSINESS DISTRICT
With 79 large blocks available, tenants have a wide range of choices

• After several quarters of minimal change, the number of and total
                                                                                                  CLASS A
  square footage within large blocks jumped this quarter with 4 net new                           Building Address              Size (sf)               Submarket
  additions and over 250,000 square feet.                                                         200 E Randolph St            415,075                   East Loop
                                                                                                  500 W Monroe St              369,207                  West Loop
• The AON Center at 200 East Randolph now contains the largest block                              233 S Wacker Dr **           314,833                  West Loop
                                                                                                  540 W Madison St             161,028                  West Loop
  available after several floors were added between two existing blocks                           10 S Wacker Dr               156,134                  West Loop
  to create a 415,000 square foot option.                                                         300 E Randolph St            142,123                   East Loop
                                                                                                  1 N Franklin St              126,592                  West Loop
                                                                                                  155 N Wacker Dr              116,206                  West Loop
• The only new block greater than 100,000 square feet was in the Class
                                                                                                  30 S Wacker Dr               114,192                  West Loop
  B segment at 333 South Wabash. CNA Insurance remains the primary                                200 S Wacker Dr              112,929                  West Loop
  tenant in this building.                                                                        500 W Monroe St *            106,475                  West Loop




                                                                                                                                                                      SUPPLY
                                                                                                  500 W Madison St              92,924                  West Loop
                                                                                                  333 W Wacker Dr *             92,830                  West Loop
• Thirty-five tenants requiring at least 50,000 square feet of space are                          227 W Monroe St               90,286                  West Loop
  active in the market. While many of their leases do not expire until                            455 N Cityfront Plaza Dr      90,207      North Michigan Avenue
  2013 or 2014, they may sign leases sooner to take advantage of                                  233 S Wacker Dr               85,364                  West Loop
                                                                                                  353 N Clark St                82,545                  River North
  current rates, removing some large, contiguous spaces. Most of these                            333 W Wacker Dr               80,736                  West Loop
  tenants are expected to lease less than or equal to the amount of                               1 S Wacker Dr                 77,961                  West Loop
  square feet currently occupied. Therefore, such tenants will not                                30 S Wacker Dr                75,892                  West Loop
                                                                                                  233 S Wacker Dr               74,806                  West Loop
  generate net absorption.
                                                                                                  180 N Stetson Ave             73,644                   East Loop
                                                                                                  222 W Adams St                72,139                  West Loop
                                                                                                  227 W Monroe St               70,000                  West Loop
                                                                                                  567 W Lake St                 70,000                  West Loop
                                                                                                  10 S LaSalle St               68,937                Central Loop
                                                                                                  77 W Wacker Dr                67,342                Central Loop
      CLASS B
                                                                                                  875 N Michigan Ave            66,387      North Michigan Avenue
      Building Address                               Size (sf)               Submarket
                                                                                                  980 N Michigan Ave            62,384      North Michigan Avenue
      330 N Wabash Ave                             371,945       North Michigan Avenue            155 N Wacker Dr               62,262                  West Loop
      303 E Wacker Dr *                            241,206                    East Loop           353 N Clark St                61,176                  River North
      111 E Wacker Dr *                            202,086                    East Loop           233 S Wacker Dr               60,817                  West Loop
      55 E Monroe St                               189,194                    East Loop           875 N Michigan Ave            60,610      North Michigan Avenue
      130 E Randolph St *                          185,042                    East Loop           181 W Madison St **           56,199                Central Loop
      120 S LaSalle St                             139,348                 Central Loop           550 W Adams St                55,346                  West Loop
      205 | 225 N Michigan Ave                     120,446                    East Loop           155 N Wacker Dr               55,298                  West Loop
      333 S Wabash Ave *                           109,200                    East Loop           10 S Wacker Dr                54,175                  West Loop
      101 N Wacker Dr                              101,917                   West Loop            37 Blocks                  3,995,061
      330 N Wabash Ave *                            97,932       North Michigan Avenue
      1 N Dearborn St                               97,261                 Central Loop
      231 S LaSalle St                              91,962                 Central Loop
                                                                                                  CLASS C
      222 N LaSalle St                              79,529                 Central Loop           Building Address              Size (sf)               Submarket
      225 N Michigan Ave                            78,498                    East Loop
      135 S LaSalle St                              75,547                 Central Loop           400 S Jefferson St           157,694                  West Loop
      200 N LaSalle St *                            71,728                 Central Loop           401 S State St               144,442                   East Loop
      525 W Monroe St *                             67,594                   West Loop            33 S State St                121,149                   East Loop
      150 N Michigan Ave                            65,586                    East Loop           111 W Jackson Blvd           102,943                Central Loop
      303 E Wacker Dr                               61,503                    East Loop           600 W Van Buren St            91,500                  West Loop
      180 N LaSalle St                              59,804                 Central Loop           1-13 N State St               87,544                   East Loop
      125 S Wacker Dr                               55,405                   West Loop            564 W Randolph St             86,171                  West Loop
      55 W Monroe St                                55,063                 Central Loop           350 W Mart Ctr                84,371                  River North
      350 N Clark St                                52,462                   River North          111 W Jackson Blvd            83,612                Central Loop
      130 E Randolph St                             52,224                    East Loop           619 S LaSalle St              78,000                 South Loop
      401 N Michigan Ave                            51,870       North Michigan Avenue            740 N Rush St                 73,294      North Michigan Avenue
      30 W Monroe St                                50,365                 Central Loop           20 N Wacker Dr *              61,027                  West Loop
      222 Merchandise Mart Plz                      50,000                   River North          111 N Canal St                57,800                  West Loop
      27 Blocks                                  2,874,717                                        111 N Canal St                57,800                  West Loop
                                                                                                  11 S LaSalle St               51,698                Central Loop
Italicized addresses indicate space is new on the market
                                                                                                  15 Blocks                  1,339,045
* Block of space is for future occupancy
**Block of space will be vacated in the upcoming quarter



                                                                                           FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                    5
VACANCY RATES




                                                                                                                                                       CENTRAL BUSINESS DISTRICT
Another slight vacancy increase signals that prolonged contraction is likely

• Positive net absorption caused the CBD's direct vacancy rate to fall to 16.0 percent. Total vacancy rose to 18.8 percent due to the increase in
  sublease availability.

• The flight-to-quality trend is very apparent. The Class A office segment experienced the greatest change, with direct vacancy falling 0.7 percent.
  In addition, Class B space received a small amount of positive demand, while Class C remained solidly negative.

• The West Loop submarket continued to drive demand. All other submarkets experienced small changes with positive or negative net absorption
  less than 60,000 square feet.

• OUTLOOK: A recovery in vacancy rates before the job market warrants it creates a very uncertain outlook.




                                                                                                                                                       DEMAND
HISTORIC YEAR-END DIRECT VACANCY: REDUCED IN FOURTH QUARTER TO LESSEN IMPACT FOR THE YEAR




HISTORIC YEAR-END VACANCY MARKET STATISTICS BY BUILDING CLASS: CLASS A HAS IMPROVED




                                                                   FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                             6
LARGE DEALS




                                                                                                                                                            CENTRAL BUSINESS DISTRICT
Renewal velocity increases; United Airlines expansion dominates

• United Airlines' lease at Willis Tower (233 South Wacker) drove positive absorption this quarter. Without it, total positive net absorption for the CBD
  would have been a less notable 100,000 square feet.

• The largest deal of the quarter was a sublease, as Northern Trust leased 207,000 square feet from Bank of America at 231 South LaSalle.

• Activity for new tenants was muted. Only one transaction represents new occupancy to the CBD while the other two relocated within the market.

• On the other hand, the volume of renewal and expansion transactions was high. Of the 16 transactions in this category, only five will lead to
  additional occupancy for the market while the remainder will occupy the same or less square footage. Notably, RSM McGladrey will reduce their
  footprint by 22 percent and Goldman Sachs will cut their space by half.




                                                                                                                                                            DEMAND
• Upcoming changes to lease accounting rules have the potential to shorten lease terms because companies will carry the capitalized cost of the
  entire term on their balance sheets starting in 2013. This would increase leasing velocity as leases roll more often. However, tenant improvement
  allowances and rental rates are based on the length of the lease, with landlords offering more construction dollars and a more favorable rate in
  exchange for a longer term. Although modifications may happen, transactions will need to make sense regardless of the accounting rules so the
  overall change will likely be less severe than some are predicting.

• OUTLOOK: As expected, leasing velocity has increased. With at least 65 tenants in the market seeking 20,000 square feet or more, leasing velocity
  will remain elevated since many have delayed decisions as long as possible. However, many firms are expected to downsize upon renewal.

LARGE LEASE TRANSACTIONS

     NEW
     Tenant                                                     Type            Submarket               Building Address               Size (sf)
     HighTower Advisors                                         Relo            West Loop               200 W Madison                  22,146
     Appraisal Institute                                        Relo            West Loop               200 W Madison                  21,660
     Project Leadership Associates                              New             Central Loop            120 S LaSalle                  20,068
     Total - 3 Spaces                                                                                                                  63,874



     RENEWAL/EXPANSION/SUBLEASE
     Tenant                                                     Type            Submarket               Building Address               Size (sf)
     The Northern Trust Company                                 Sublease        Central Loop            231 S LaSalle                 207,000
     United Airlines                                            Exp             West Loop               233 S Wacker                  180,000
     RSM McGladrey                                              Ren/Cont        West Loop               1 S Wacker                    132,000
     Northwestern University                                    Ren             North Michigan Ave      645 N Michigan                 88,110
     Goldman Sachs                                              Ren/Cont        South Loop              440 S LaSalle                  81,000
     Digitas                                                    Ren/Exp         Central Loop            180 N LaSalle                  81,000
     Allianz Global Corporate & Specialty                       Ren/Exp         West Loop               225 W Washington               73,242
     Options Clearing Corp.                                     Ren/Cont        West Loop               1 N Wacker                     58,000
     Groupon                                                    Exp             River North             600 W Chicago                  57,000
     Motorola                                                   Ren             East Loop               233 N Michigan                 54,000
     Bovis Lend Lease                                           Ren             West Loop               1 N Wacker                     34,800
     True Partners Consulting                                   Ren             West Loop               225 W Wacker                   32,197
     Chicago Institute for Psychoanalysis                       Ren             East Loop               122 S Michigan                 30,000
     International Asset Holding Corp.                          Ren/Exp         Central Loop            230 S LaSalle                  30,000
     Niro, Haller & Niro                                        Ren             Central Loop            181 W Madison                  27,044
     Chicago Mercantile Exchange                                Ren             West Loop               550 W Washington               24,549
     Total - 16 Spaces                                                                                                              1,189,942

Abbreviations:
Cont - Contraction   Exp - Expansion    Relo - Relocation   Ren - Renewal

                                                                        FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                             7
ABSORPTION




                                                                                                                                                        CENTRAL BUSINESS DISTRICT
Majority of submarkets positive this quarter; River North and West Loop positive for the year

• Positive fourth quarter absorption brought the negative absorption for 2010 below 2009's total. Annual negative absorption was just 0.4 percent
  of inventory.

• Two submarkets experienced positive absorption for the year: River North and West Loop. River North attracted new tenants to its recently delivered
  trophy buildings while the West Loop benefitted from its premier location near the commuter train stations and its inventory of high quality space.
  Only the North Michigan Avenue and South Loop submarkets were negative during the quarter. The East Loop, which has been lagging its peers,
  was supported by Groupon moving into 48,000 square feet of temporary space at 303 East Wacker. This will reverse itself next quarter when their
  expansion space at 600 West Chicago is finished.

• OUTLOOK: The average square footage per employee has fallen to 200 from 500 to 700 square feet in the 1970s. Efficient floorplans and stagnating
  headcount do not bode well for office market fundamentals. Total employment must grow significantly to compensate.




                                                                                                                                                        DEMAND
HISTORIC ABSORPTION: NEGATIVE DEMAND WILL CONTINUE




HISTORIC ABSORPTION BY SUBMARKET: RIVER NORTH AND WEST LOOP POSITIVE FOR THE YEAR




                                                                    FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                             8
LEASE COMPARABLES




                                                                                                                                                                                                       CENTRAL BUSINESS DISTRICT
Transaction terms are more favorable for tenants than one year ago

• Lease metrics are compared on a four-quarter basis instead of calendar year. This allows a full year of data to be compared in the current period.

• Class C net rental rates for new transactions have posted the most negative results in 2010. They have fallen 12.5 percent over the same period
  last year, a decrease of just over $1.50. It is further evidence of the lengths these lower quality buildings must go to in order to attract tenants.
  Class A net rental rates for new transactions have fallen 5.4 percent (just over $1 per square foot) over the same period last year and 11.8 percent
  (~$2.60 per square foot) since peak. While less of a decline than Class C, it is enough for tenants to be enticed to the higher quality buildings as
  witnessed by the absorption data.

• Tenant improvement allowances have held steady in the Class A segment of the market, but have fallen considerably in the Class B and C segments.
  Although allowances would typically be increasing in times of stress in the market, capital-constrained landlords are unable to offer large work
  packages. To compensate, abatement packages have increased and at 9.4 months are nearly double their 10-year average of 5.3 months within




                                                                                                                                                                                                       FEATURES
  the Class A segment for new deals.

• Across classes for renewals, transaction terms have held steadier than for their new counterparts. The average initial net rate for Class A renewals
  has actually risen, while the fall in tenant improvement packages and abatement has been less precipitous.

• OUTLOOK: Landlords are attempting to hold transaction terms from falling further and may be successful as evidenced by the positive absorption.

AVERAGE LEASE TERMS ON NEW AND RENEWAL DEALS
                                                                      AVERAGE TENANT                            AVERAGE ABATEMENT                                   AVERAGE TERM
                          AVERAGE INITIAL RATE
     NEW DEALS                                                         IMPROVEMENT                                   (MONTHS)                                          (YEARS)
                            A        B            C                  A            B            C                   A           B            C                   A           B            C

    1Q2010 - 4Q2010       $19.36   $15.74      $11.04             $39.43       $25.19       $20.75                9.4         6.2          8.1                 7.8         5.9          6.8
    1Q2009 - 4Q2009       $20.47   $15.99      $12.63             $40.54       $32.61       $24.67                7.5         5.5          4.1                 8.5         7.0          6.6
    1Q2008 - 4Q2008       $21.95   $16.86      $14.26             $44.42       $39.54       $29.61                4.7         4.6          4.1                 8.2         7.2          7.3
    1Q2007 - 4Q2007       $18.72   $14.85      $10.96             $44.55       $38.13       $25.16                4.9         5.2          3.7                 7.9         7.0          6.3
    1Q2006 - 4Q2006       $17.88   $13.59      $15.75             $45.75       $37.76       $13.49                6.9         4.9          2.1                 8.2         7.1          4.6
    1Q2005 - 4Q2005       $17.48   $12.41      $10.42             $49.63       $41.20       $29.25                7.2         6.6          4.2                 9.5         8.1          7.2
    1Q2004 - 4Q2004       $16.70   $13.00       $9.61             $41.21       $40.99       $15.81                6.0         6.6          3.6                10.0         8.6          5.6
    1Q2003 - 4Q2003       $18.14   $13.57      $10.12             $38.76       $36.37       $23.34                3.8         4.8          2.7                 7.9         8.7          6.6
    1Q2002 - 4Q2002       $22.86   $15.60      $11.95             $34.74       $29.98       $26.29                1.4         1.9          1.7                 8.3         8.6          6.0
    1Q2001 - 4Q2001       $22.59   $16.48      $16.87             $28.71       $25.88       $26.79                1.0         0.2          0.7                 7.7         7.9          7.7
    1Q2000 - 4Q2000       $21.15   $15.94      $15.73             $25.22       $25.12       $30.75                0.1         0.1          0.3                 7.9         6.6          6.0
    1Q1999 - 4Q1999       $20.36   $15.15      $11.66             $24.43       $27.10       $21.98                0.3         0.3          0.0                 7.6         7.8          7.6


                                                                      AVERAGE TENANT                            AVERAGE ABATEMENT                                   AVERAGE TERM
                          AVERAGE INITIAL RATE
  RENEWAL DEALS                                                        IMPROVEMENT                                   (MONTHS)                                          (YEARS)
                            A        B            C                  A            B            C                   A           B            C                   A           B            C

    1Q2010 - 4Q2010       $19.81   $15.48      $10.32             $15.00        $8.65        $5.56                4.1         3.9          4.0                 4.9         4.3          4.9
    1Q2009 - 4Q2009       $17.55   $16.31      $11.54             $16.69       $12.99       $10.50                4.4         3.4          2.9                 5.6         5.5          6.5
    1Q2008 - 4Q2008       $22.27   $16.13      $17.31             $20.62       $15.98       $15.33                2.6         2.9          2.3                 6.6         5.7          6.2
    1Q2007 - 4Q2007       $17.42   $14.43      $11.49             $15.94       $17.04       $18.20                4.2         2.4          2.2                 6.6         5.4          8.0
    1Q2006 - 4Q2006       $16.32   $13.54      $17.71             $23.76       $17.14        $9.63                4.5         2.9          0.6                 6.8         7.0          4.9
    1Q2005 - 4Q2005       $16.50   $12.16      $12.86             $23.72       $20.86        $4.66                5.8         2.7          0.6                 8.7         8.0          4.7
    1Q2004 - 4Q2004       $17.33   $13.17       $9.70             $21.76       $20.28        $9.51                2.5         3.6          0.9                 7.6         7.2          6.5
    1Q2003 - 4Q2003       $19.15   $14.08      $10.19             $19.75       $16.42        $9.17                1.5         2.8          0.8                 8.0         7.2          6.2
    1Q2002 - 4Q2002       $22.68   $15.52      $13.55             $17.60       $14.07        $8.99                0.7         0.8          0.2                 7.4         6.6          4.8
    1Q2001 - 4Q2001       $22.44   $17.52      $11.52              $8.48        $6.04        $2.94                0.0         0.1          0.0                 5.2         7.4          3.7
    1Q2000 - 4Q2000       $21.90   $15.52      $15.82             $12.40       $12.92        $6.33                0.0         0.0          0.0                 5.4         7.8          4.1
    1Q1999 - 4Q1999       $20.78   $13.62      $13.53             $13.14       $13.11        $9.22                0.1         0.0          0.1                 6.6         5.9          5.2


                                         All rates are shown as net and do not include tax and operating costs for building. Numbers will be revised as new data are reported in subsequent quarters


                                                                                  FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                                                              9
INVESTMENT SALES




                                                                                                                                                                                      CENTRAL BUSINESS DISTRICT
Activity returns to the market

• After very little activity in the first three quarters of the year, the fourth quarter witnessed high building sales volume in the Chicago CBD. For the
  most part, sales were still at opposite ends of the spectrum, with trophy sales on one side and distressed sales on the other.

• Following 300 North LaSalle's record sale last quarter for $503 per square foot, two additional buildings traded for prices greater than $300 per
  square foot. The Hyatt Center at 71 South Wacker sold for $625 million ($419 per square foot). Delivered in 2005, its tenants include the world
  headquarters of Hyatt Hotels as well as Goldman Sachs and IBM.

• 353 North Clark, delivered in 2009 with 300 North LaSalle, sold for $385 million ($328 per square foot). However, this price is less than the cost
  of construction. The previous owner and anchor tenant, Mesirow Financial, will experience a net loss on the sale.




                                                                                                                                                                                      FEATURES
• 300 South Riverside finally closed at the end of the year after being announced in the second quarter. A group of investors led by David Werner
  and Joseph Mizrachi teamed up to purchase the property. Its tenancy is dominated by two large institutional tenants.

• First year capitalization rates for top transactions ranged from 5.5 to 7.0 percent, indicative of the still large spectrum of valuation for even trophy
  properties

• Nationally, building sales volume increased substantially from 2009 levels. At $90.7 billion, it is almost double the same period last year according
  to RC Analytics Data. Despite a weak economy, investor optimism regarding future cap rate compression has led to intense bidding for core assets
  and higher than predicted sales prices.

• OUTLOOK: Investor appetite was strong during the quarter. With several properties publicly on the market and rumors of others, sales should
  continue to increase.

INVESTMENT SALES: ACTIVITY SOARS
                                                                            Price
    Building Address        Sale Date         Size (sf)       Price         per sf *   Class Seller                       Status (Buyer or Listing Agent)

    600 W Chicago       On Market 4Q10     1,567,592       $425,000,000 $271            B     600 West Chicago            Marketing (Holliday Fenoglio Fowler)
                                                                                              Associates
    35 W Wacker         On Market 4Q10     1,118,042       $400,000,000 $358            A     Piedmont Office             Marketing (Eastdil Secured)
                                                                                              Realty Trust

    71 S Wacker           4th Qtr 2010     1,490,825       $625,000,000      $419       A     Pritzker Realty Group       Irvine Cos.
    353 N Clark           4th Qtr 2010     1,173,643       $385,000,000      $328       A     Mesirow Financial           Tishman-Speyer Properties L.P.
    300 S Riverside       4th Qtr 2010     1,075,907       $189,000,000      $176       A     Brookfield Prop.            David Werner and Joseph Mizrachi
    225 W Washington      4th Qtr 2010       483,497        $60,000,000      $124       A     Avestus Capital             KTC Properties
                                                                                              Partners
    65 E Wacker           4th Qtr 2010       220,000        $14,900,000 $68             C     The Griffith Group          The Private Bank
    79 W Monroe           4th Qtr 2010       199,824       ~$10,000,000 ~$50            C     Bank of America             Farbman Corp.
    820 S Michigan        4th Qtr 2010       127,153         $8,000,000 $63             C     Johnson Publishing          Columbia College
    238 S Wabash          4th Qtr 2010        90,312                  -   -             C     Cook County Sheriff         LaSalle 115 Holdings

    300 N LaSalle         3rd Qtr 2010     1,300,000       $655,000,000 $503            A     Hines Interests             KBS Realty Advisors

    180 N LaSalle         2nd Qtr 2010       770,191        $72,250,000 $94             B     Prime Group           Berkley Properties
    29 N Wacker           2nd Qtr 2010       129,792        $16,900,000 $130            C     Intercontinental Real Sun Life Financial
                                                                                              Estate

    N/A                   1st Qtr 2010 -                                -       -        -    -                           -
                                                                                         Price per sf (square foot) - based off estimated selling price for new to market buildings


                                                                       FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                                                  10
FORECAST




                                                                                                                                                                             CENTRAL BUSINESS DISTRICT
Considerable space must still be eliminated, but timing is uncertain

Currently, MB Real Estate views the positive absorption in
                                                                                   Total Historic and           Total Historic &
the current quarter as an anomaly due to the disconnect
                                                                Year                  Forecasted                  Forecasted              Direct Vacancy %
with the job market. Therefore, the forecast calls for more
occupancy reductions.                                                                Inventory (sf)             Occupancy (sf)
                                                                1996                  120,244,884                 101,285,488                              15.8%
Occupancy has now decreased 1.2 percent since peak              1997                  120,434,748                 104,939,294                              12.9%
while total employment has declined 8.5 percent.                1998                  119,972,770                 106,058,995                              11.6%
Although changes in occupancy are not perfectly                 1999                  118,691,577                 106,744,585                              10.1%
correlated with total employment, the Chicago CBD has           2000                  121,440,276                 109,533,759                               9.8%
considerable excess space that must be consolidated to          2001                  122,776,164                 108,743,284                              11.4%
match companies’ headcounts.                                    2002                  124,713,268                 107,598,500                              13.7%




                                                                                                                                                                             FEATURES
                                                                2003                  125,037,423                 106,754,119                              14.6%
While employment losses typically equal occupancy losses        2004                  126,452,643                 106,568,104                              15.7%
on a percentage basis in the Chicago CBD, there are             2005                  128,385,650                 105,737,728                              17.6%
several influential factors this recession that will buoy the   2006                  126,478,575                 108,402,912                              14.3%
                                                                2007                  125,626,639                 110,969,808                              11.7%
market. Companies took a more conservative approach
                                                                2008                  125,269,078                 110,833,045                              11.5%
to space planning during the expansion, therefore they
                                                                2009                  130,038,076                 110,112,891                              15.3%
have less underutilized space to eliminate when leases
                                                                2010                  130,539,796                 109,602,892                              16.0%
expire. The CBD is increasingly more desirable than the
                                                                2011                  130,539,796                 108,816,972                              16.6%
suburbs indicating employment loss is weighing more             2012                  130,539,796                 108,266,828                              17.1%
heavily on suburban occupancy than the CBD’s. Although
vacancy increases are expected, the magnitude will be                  1996-2009 Absorption Avg:                     685,250
lower than the job market would suggest.
                                                                           2010 Absorption:                         (509,999)
MB Real Estate's baseline forecast calls for more losses                              Total projected inventory based on addition of projects currently under construction
in 2011, decelerating into 2012. However, the current                                             Occupancy is forecast based on proprietary assumptions regarding the
gains could indicate a long-term stagnation where                                                      Chicago MSA’s total employment change and the office industry’s
absorption wavers between slightly positive and negative                                                         historical performance which trails the overall economy.

for many quarters.


HISTORIC & PROJECTED VACANCY: OCCUPANCY WILL CONTINUE TO FALL




                                                                   FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                                             11
SUBMARKET MAP




                                                                CENTRAL BUSINESS DISTRICT
                                                                FEATURES




                FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW   12
MARKET STATISTICS




                                                                                                                                                        CENTRAL BUSINESS DISTRICT
                                                                                        Direct                 Sublease       Total Vacancy
                       RBA            YTD            4th Quarter      Direct Vacancy             Occupancy
  CENTRAL LOOP                                                                         Vacancy                 Vacancy        Rate (Direct +
                       (sf)       Absorption (sf)   Absorption (sf)         (sf)                    (sf)
                                                                                          %                      (sf)          Sublease) %
      Class A       13,533,449        68,302            34,929          1,382,117       10.2%    12,151,332     377,329             13.0%
      Class B       13,918,618       (198,839)          29,793          2,330,099       16.7%    11,588,519     537,128             20.6%
      Class C        8,616,598       (134,797)          (59,902)        1,198,558       13.9%     7,418,039     142,659             15.6%
       Total        36,068,664       (265,334)          4,821           4,910,774       13.6%    31,157,890    1,057,116           16.5%


                                                                                        Direct                 Sublease       Total Vacancy
                       RBA            YTD            4th Quarter      Direct Vacancy             Occupancy
   EAST LOOP                                                                           Vacancy                 Vacancy        Rate (Direct +
                       (sf)       Absorption (sf)   Absorption (sf)         (sf)                    (sf)
                                                                                          %                      (sf)          Sublease) %
      Class A        3,979,249        89,330            25,673           993,626        25.0%     2,985,623     480,403             37.0%
      Class B       10,162,744       (472,205)          15,623          2,412,674       23.7%     7,750,070     287,770             26.6%




                                                                                                                                                        FEATURES
      Class C        8,534,181       (137,198)          (12,860)        1,170,487       13.7%     7,363,694     39,144              14.2%
       Total        22,676,173       (520,072)          28,435          4,576,787       20.2%    18,099,386    807,317             23.7%


                                                                                        Direct                 Sublease       Total Vacancy
                       RBA            YTD            4th Quarter      Direct Vacancy             Occupancy
 N. MICHIGAN AVE.                                                                      Vacancy                 Vacancy        Rate (Direct +
                       (sf)       Absorption (sf)   Absorption (sf)         (sf)                    (sf)
                                                                                          %                      (sf)          Sublease) %
      Class A        3,949,554       (108,813)          (16,531)         743,319        18.8%     3,206,235     48,814              20.1%
      Class B        4,604,796        (86,345)          (21,843)        1,048,349       22.8%     3,556,447     142,293             25.9%
      Class C        4,479,756        (73,742)          (37,411)         586,715        13.1%     3,893,041     71,359              14.7%
       Total        13,034,106       (268,900)         (75,785)         2,378,383       18.2%    10,655,723    262,466             20.3%


                                                                                        Direct                 Sublease       Total Vacancy
                       RBA            YTD            4th Quarter      Direct Vacancy             Occupancy
   RIVER NORTH                                                                         Vacancy                 Vacancy        Rate (Direct +
                       (sf)       Absorption (sf)   Absorption (sf)         (sf)                    (sf)
                                                                                          %                      (sf)          Sublease) %
      Class A        4,009,748       220,965            46,990           619,540        15.5%     3,390,208     177,517             19.9%
      Class B        3,488,170        51,939            13,757           349,330        10.0%     3,138,840     148,932             14.3%
      Class C        5,854,082        (22,887)          (9,493)          844,740        14.4%     5,009,343     123,048             16.5%
       Total        13,352,001       250,016            51,254          1,813,610       13.6%    11,538,391    449,497             16.9%


                                                                                        Direct                 Sublease       Total Vacancy
                       RBA            YTD            4th Quarter      Direct Vacancy             Occupancy
   SOUTH LOOP                                                                          Vacancy                 Vacancy        Rate (Direct +
                       (sf)       Absorption (sf)   Absorption (sf)         (sf)                    (sf)
                                                                                          %                      (sf)          Sublease) %
      Class A        1,019,325        (29,597)          1,673             96,036        9.4%       923,289         0                9.4%
      Class C        1,328,483       (156,757)          (61,472)         339,501        25.6%      988,981       2,005              25.7%
       Total         2,347,808       (186,354)         (59,799)          435,537        18.6%     1,912,270     2,005              18.6%


                                                                                        Direct                 Sublease       Total Vacancy
                       RBA            YTD            4th Quarter      Direct Vacancy             Occupancy
   WEST LOOP                                                                           Vacancy                 Vacancy        Rate (Direct +
                       (sf)       Absorption (sf)   Absorption (sf)         (sf)                    (sf)
                                                                                          %                      (sf)          Sublease) %
      Class A       26,790,317       763,330           329,992          4,268,278       15.9%    22,522,039     754,253             18.7%
      Class B        9,713,943        (42,559)          39,523          1,324,159       13.6%     8,389,784     208,662             15.8%
      Class C        6,556,783       (240,127)          (32,299)        1,229,376       18.7%     5,327,407     35,530              19.3%
       Total        43,061,043       480,644           337,217          6,821,813       15.8%    36,239,230    998,445             18.2%


                                                                                        Direct                 Sublease       Total Vacancy
                       RBA            YTD            4th Quarter      Direct Vacancy             Occupancy
     TOTALS                                                                            Vacancy                 Vacancy        Rate (Direct +
                       (sf)       Absorption (sf)   Absorption (sf)         (sf)                    (sf)
                                                                                          %                      (sf)          Sublease) %
      Class A       53,281,642      1,003,517          422,726          8,102,916       15.2%    45,178,726    1,838,316           18.7%
      Class B       41,888,271       (748,009)          76,854          7,464,611       17.8%    34,423,660    1,324,785           21.0%
      Class C       35,369,883       (765,507)         (213,436)        5,369,378       15.2%    30,000,506    413,745             16.4%
     Total CBD      130,539,796      (509,999)         286,144          20,936,904      16.0%    109,602,891   3,576,846           18.8%
                                                                                                                  Numbers in parentheses are negative




                                                                   FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                        13
SECTION THREE

SUBURBAN CHICAGO




                                                                                                                                                                SUBURBAN CHICAGO
EXECUTIVE SUMMARY
The Chicago Suburban vacancy rate increased in the quarter, but at a slower pace than expected. In contrast to the CBD, a majority of the recessionary
effects have already been felt. But further negativity is likely, especially as tenants like United Airlines leave in favor of the CBD.

Key Points:
• There is considerable evidence of a flight-to-quality within the data, with Class A buildings outperforming the other sectors. The Class C market
    is the weakest, indicative of containing mostly obsolete and undesirable space.

• Despite average leasing activity, the net volume of occupancy changes was slight in the fourth quarter of 2010, reflective of a year-end lull.

• Another increase in sublease availability indicates that the sublease market has not quite hit bottom. With increasing square footage available within
  contiguous blocks of space of 50,000 square feet or more, large tenants have considerable leverage in negotiations, as landlords become
  increasingly eager to maintain or improve occupancy.

• Two new large lease transactions resulted from tenants that are new to Suburban Chicago. Tate and Lyle is moving their headquarters to Hoffman
  Estates from downstate Decatur while SunCoke Energy moves from Tennessee.

• Building transaction activity increased, led by Navistar International's purchase of a new 1.2 million square foot headquarters in Lisle.

• Unlike the CBD, there are no potential office developments making headlines. The only project underway is the build-to-suit headquarters for
  Astellas Pharma US in Glenview.

• The East-West submarket, largest in terms of inventory, experienced positive absorption during the quarter for the first time since the recession
  began. The North, typically the strongest submarket, is still losing tenants rapidly and is seemingly lagging the rest of the submarkets.

• The O'Hare submarket, which still has the highest vacancy, experienced another positive quarter as it recovers from its early and rapid deterioration.

Occupancy has decreased 6.1 percent in Suburban Chicago compared to an 8.5 percent peak-to-current total employment loss. Underutilized space
remains the biggest risk to the market because companies are leasing more space than they need and will reduce square footage upon lease expiration.


SUBURBAN VACANCY AND YEAR-TO-DATE ABSORPTION SUMMARY

   Direct Vacancy                               Change from                  Change from                  Change from                    Change from
                                       A                            B                            C                          Total
   4Q2010                                         3Q2010                       3Q2010                       3Q2010                         3Q2010

   East-West                        20.9%          -0.8%         23.1%           0.4%         23.8%          0.8%          22.1%             -0.2%
   North                            18.9%           0.2%         20.8%           0.9%         20.7%          1.2%          19.6%              0.5%
   Northwest                        20.0%           0.8%         31.7%           0.2%         28.4%          0.6%          24.4%              0.6%
   O'Hare                           20.5%          -1.7%         30.9%          -0.7%         35.4%          0.3%          26.1%             -1.1%
   Suburban Chicago Total           20.1%          -0.2%         25.9%           0.3%         26.4%          0.7%          22.7%              2.1%

   Net Absorption
                                       A                            B                            C                          Total
   4Q2010

   East-West                       170,027                       (54,438)                    (41,257)                       74,332
   North                            (40,998)                     (68,188)                    (30,720)                     ( 139,906)
   Northwest                       (144,877)                     (20,646)                    (13,258)                     ( 178,781)
   O'Hare                          135,199                       30,248                       (7,440)                      158,006
   Suburban Chicago Total          119,352                      (113,024)                    (92,676)                       (86,349)
                                                                                                                          Numbers in parentheses are negative

                                                                        FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                           14
NEW DEVELOPMENTS
Lackluster demand does not warrant development




                                                                                                                                                        SUBURBAN CHICAGO
• With over a quarter of Suburban Chicago vacant, there are plenty of options for tenants looking to expand or relocate. There is no demand for new
  construction as landlords aggressively compete for tenants.

• Companies that demand new, premier space are the only exception and may build new space to suit their needs. Besides several noncompetitive
  medical office developments, the only office construction underway is the North American Headquarters of Astellas Pharma US in Glenview. The
  development is a build-to-suit project with MB Real Estate managing the construction.

• The Bridge Development spec construction at 555 Aptakisic Road in Lincolnshire still sits vacant since being completed at the end of 2009. It is
  evidence that zero demand exists for speculative construction.

• OUTLOOK: Suburban Chicago is not supply constrained. Plenty of parcels are ready to be developed once demand warrants it, which will always
  keep rent growth to inflationary levels. Between shrinking occupancy and constrained financing, new speculative development is unlikely for several
  years.



NEW DEVELOPMENT PIPELINE

     2010 Deliveries
     Building Address                          Size (sf)   % Leased        Submarket                            Comments
     1901 Chestnut Ave, Glenview              110,000      100.0%             North        Delivered September 2010. Build-to-suit Headquarters
                                                                                           for General Board of Pension & Health Benefits for The
                                                                                           United Methodist Church. Construction managed by MB
                                                                                                                 Real Estate.
     9501 Technology Blvd, Rosemont           119,000       74.8%            O'Hare           Delivered April 2010. Rosemont Corporate Center.
                                                                                            Tenants: Cisco, Skyline Advanced Tech. Developed by
                                                                                                               Ryan Companies.
     111 Shuman Blvd, Naperville               85,000      100.0%           East-West        Delivered March 2010. Tenants: Delta Dental, Ryan
                                                                                                 Companies. Developed by Ryan Companies.


     Total - 3 Properties                    314,000

     2009 Deliveries
     Building Address                          Size (sf)   % Leased        Submarket                            Comments
     555 Aptakisic Rd, Lincolnshire           160,000       0.0%              North           AKA 555 Corporate Center. Developed by Bridge
                                                                                                             Development.
     500 N McLean Blvd, Elgin                  21,579       50.0%           Northwest                   Owned by Ezam Properties.
     Total - 2 Properties                    181,579

     Under Construction
     Building Address                          Size (sf) % Pre-leased       Due Date                            Comments
     1 Astellas Way, Glenview                 440,000      100.0%           Fall 2012      Broke ground April 2010. Build-to-suit North American
                                                                                             Headquarters for Astellas Pharma US. Construction
                                                                                                       managed by MB Real Estate.
     Total - 1 Property                      440,000

     Proposed
     Building Address                          Size (sf) % Pre-leased       Due Date                            Comments
     Total - 0 Properties



                                                                      FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                     15
SUBLEASE SPACE
Increase in sublease availability mostly attributable to two large spaces




                                                                                                                                                                       SUBURBAN CHICAGO
• The total square footage of sublease availability rose again this quarter after declines earlier in the year, now higher than at the end of 2009.

• Although 12 large sublease spaces are still available, two smaller spaces were taken off the market and two larger spaces were listed. Navistar
  International is marketing almost 250,000 square feet of space in Warrenville as they prepare to move to their new, purchased headquarters in
  Lisle. Océ-USA Holding also listed nearly 120,000 square feet of Class B space. Four of the large blocks of Class A space will become directly
  available during 2011.

• OUTLOOK: When the market is at equilibrium, roughly three million square feet of sublease space is available. The current level needs to be
  reduced by nearly one-quarter before the market is in balance.

HISTORIC YEAR-END SUBLEASE AVAILABILITY: EXCEPT CLASS A, BELOW PREVIOUS RECESSION HIGHS




                                                                                                                                                                       SUPPLY
LARGE BLOCKS (OVER 50,000 SQUARE FEET) OF SUBLEASE SPACE CURRENTLY AVAILABLE
     Class A
     Building Address                             Size (sf)   Occupancy          Expiration    Submarket      Sublandlord
     3 Overlook Pt, Lincolnshire                290,143          Vacant     February 2017        North        Hewitt Associates
     700 Oakmont Ln, Westmont                   256,767          Vacant    November 2015       East-West      SIRVA
     4201 Winfield Rd, Warrenville              249,996          Vacant      January 2016      East-West      Navistar
     75 N Fairway Dr, Vernon Hills              150,258          Vacant    December 2011         North        Washington Mutual
     1600 McConnor Pky, Schaumburg               86,919          Vacant       August 2011      Northwest      Ameriquest Mortgage Company
     1600 McConnor Pky, Schaumburg               86,662          Vacant       August 2011      Northwest      Ameriquest Mortgage Company
     1450 American Ln, Schaumburg                65,259       Negotiable     October 2016      Northwest      Zurich American Insurance Company
     1200 Lakeside Dr, Bannockburn               63,328          Vacant       August 2011        North        RR Donnelley
     410 Warrenville Rd, Lisle                   60,434          Vacant         May 2013       East-West      IKON Office Solutions
     Total - 9 Spaces                         1,309,766

     Class B
     Building Address                             Size (sf)   Occupancy          Expiration    Submarket      Sublandlord
     6200 S Route 53, Lisle                     360,000          Vacant          July 2012     East-West      Telcordia Technologies
     5450 N Cumberland Ave, Chicago             118,666       Negotiable     February 2020      O'Hare        Océ-USA Holding Inc
     750 N Commons Dr, Aurora                    60,000       Negotiable   September 2017      East-West      Westell Technologies
     Total - 3 Spaces                           538,666
                                                                                                            Italicized addresses indicate space is new on the market

                                                                      FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                                    16
LARGE BLOCKS OF DIRECT AVAILABILITY
Large space availabilities across all submarkets give tenants considerable choices




                                                                                                                                                                            SUBURBAN CHICAGO
• While the number of large blocks decreased since last quarter, the
                                                                                            CLASS A
  total square footage of available space has increased. In several                         Building Address                City                   Size (sf)   Submarket
  cases, previous separate blocks within one building combined to make
  a “super block” as additional space became vacant.                                        51 W Higgins Rd *               South Barrington      504,000      Northwest
                                                                                            1600 McConnor Pky *             Schaumburg            300,034      Northwest
                                                                                            1701 Golf Rd                    Rolling Meadows       281,528      Northwest
• At 1600 McConnor Parkway in Schaumburg, Ameriquest Mortgage                               21440 Lake Cook Rd              Deer Park             277,200      Northwest
                                                                                            1200 Lakeside Dr *              Bannockburn           257,190           North
  Company’s space is being marketed directly by the landlord as well                        700 Oakmont Ln                  Westmont              256,767      East-West
  as being marketed for sublease through August 2011 by Ameriquest.                         150 NW Point Blvd               Elk Grove Village     176,844      Northwest
                                                                                            1415 W Diehl Rd                 Naperville            168,000      East-West
                                                                                            4101 Winfield Rd                Warrenville           167,216      East-West
• In the East-West submarket, American Utility Management leased                            1701 Golf Rd                    Rolling Meadows       158,486      Northwest
                                                                                            425 N Martingale Rd **          Schaumburg            155,559      Northwest
  31,000 square feet in Lombard, removing a nearly 66,000 square




                                                                                                                                                                            SUPPLY
                                                                                            1 Overlook Pt                   Lincolnshire          148,686           North
  feet Class B block. This helps reduce the oversupply in the East-West,                    1011 Warrenville Rd             Lisle                 141,567      East-West
                                                                                            3333 Beverly Rd *               Hoffman Estates       129,000      Northwest
  which has the highest number of large blocks available.                                   2895 Greenspoint Pky *          Hoffman Estates       127,941      Northwest
                                                                                            9525 W Bryn Mawr Ave **         Rosemont              113,868         O'Hare
                                                                                            1333 Butterfield Rd             Downers Grove         111,493      East-West
• Although the Northwest submarket has fewer large spaces available                         1707 N Randall Rd               Elgin                 109,076      Northwest
  than the East-West, it’s percentage of inventory is the highest. More                     1707 N Randall Rd               Elgin                 109,076      Northwest
  than 12 percent of its total rentable area is available for lease within                  75 Tri State International *    Lincolnshire          104,580           North
                                                                                            25 Tri State International *    Lincolnshire          103,742           North
  large blocks.                                                                             8700 W Bryn Mawr Ave            Chicago                97,801         O'Hare
                                                                                            1 Pierce Pl                     Itasca                 97,517      Northwest
   CLASS B                                                                                  1 Corporate Dr                  Long Grove             91,499           North
                                                                                            9700 W Higgins Rd               Rosemont               91,203         O'Hare
   Building Address                  City                          Size (sf)   Submarket
                                                                                            1 Tower Ln                      Oakbrook Terrace       88,268      East-West
                                                                                            2655 Warrenville Rd **          Downers Grove          87,685      East-West
   1200 Warrenville Rd               Naperville                   329,770      East-West    5550 Prairie Stone Pky          Hoffman Estates        84,617      Northwest
   2400 Cabot Dr *                   Lisle                        211,596      East-West    2135 CityGate Ln                Naperville             81,675      East-West
   747 E 22nd St                     Lombard                      209,557      East-West    2800 W Higgins Rd *             Hoffman Estates        80,686      Northwest
   28100 Torch Pky                   Warrenville                  203,842      East-West    18W140 Butterfield Rd *         Oakbrook Terrace       79,969      East-West
   1 Salem Lake Dr                   Long Grove                   150,000      Northwest    850-860 Technology Way          Libertyville           78,000           North
   544 Lakeview Pky                  Vernon Hills                 144,999           North   3333 Warrenville Rd             Lisle                  77,139      East-West
   2350-2360 E Devon Ave             Des Plaines                  142,596         O'Hare    1000 Royce Blvd                 Oakbrook Terrace       75,000      East-West
   4 Corporate Dr                    Long Grove                   133,421           North   333 Knightsbridge Pky           Lincolnshire           74,728           North
   700 N Wood Dale Rd **             Wood Dale                    125,328      Northwest    2100 Sanders Rd                 Northbrook             74,363           North
   3800 Golf Rd                      Rolling Meadows              109,061      Northwest    9500 W Bryn Mawr Ave *          Rosemont               72,149         O'Hare
   703-709 W Algonquin Rd            Arlington Heights             96,213      Northwest    200 Tri State International *   Lincolnshire           70,962           North
   4242 N Harlem Ave                 Norridge                      93,155         O'Hare    535 E Diehl Rd                  Naperville             67,731      East-West
   800 Jorie Blvd                    Oak Brook                     88,886      East-West    1 Corporate Dr                  Long Grove             67,378           North
   9801 W Higgins Rd                 Rosemont                      87,239         O'Hare    300 Park Blvd                   Itasca                 67,307      Northwest
   975 Meridian Lakes Dr *           Aurora                        74,266      East-West    4201 Lake Cook Rd               Northbrook             66,000           North
   715-723 W Algonquin Rd            Arlington Heights             70,000      Northwest    100 S Saunders Rd               Lake Forest            65,982           North
   1245 Corporate Blvd               Aurora                        69,965      East-West    1001 Warrenville Rd             Lisle                  65,407      East-West
   814 Commerce Dr                   Oak Brook                     66,882      East-West    2 Corporate Dr                  Long Grove             64,730           North
   700-702 Deerpath Dr               Vernon Hills                  65,607           North   150 E Pierce Rd                 Itasca                 64,603      Northwest
   27545 Diehl Rd                    Warrenville                   62,440      East-West    2651 Warrenville Rd             Downers Grove          61,789      East-West
   6400 Shafer Ct                    Rosemont                      56,219         O'Hare    2001 Butterfield Rd             Downers Grove          61,758      East-West
   8550 W Bryn Mawr Ave              Chicago                       54,968         O'Hare    2 Pierce Pl                     Itasca                 60,904      Northwest
   1000 E Woodfield Rd **            Schaumburg                    51,410      Northwest    1955 W Field Ct *               Lake Forest            59,130           North
   2400 E Devon Ave                  Des Plaines                   51,000         O'Hare    9500 W Bryn Mawr Ave *          Rosemont               56,554         O'Hare
   2850 W Golf Rd                    Rolling Meadows               50,606      Northwest    2333 Waukegan Rd                Bannockburn            56,543           North
   5440 N Cumberland Ave             Chicago                       50,000         O'Hare    9500 W Bryn Mawr Ave *          Rosemont               56,471         O'Hare
   26 Blocks of Space                                           2,849,026                   18W140 Butterfield Rd           Oakbrook Terrace       56,420      East-West
                                                                                            2100 Enterprise Ave             Geneva                 55,584      East-West
                                                                                            1700 E Golf Rd **               Schaumburg             54,496      Northwest
   CLASS C                                                                                  7400 N Caldwell Ave             Niles                  54,000           North
                                                                                            55 Shuman Blvd                  Naperville             52,073      East-West
   Building Address                  City                          Size (sf)   Submarket
                                                                                            8725-8745 W Higgins Rd          Chicago                50,214         O'Hare
                                                                                            2000 Millbrook Dr               Lincolnshire           50,000           North
   9401 W Grand Ave                  Franklin Park               375,000          O'Hare
                                                                                            60 Blocks of Space                                  6,620,188
   3501 Algonquin Rd                 Rolling Meadows             208,900       Northwest
   2-4-6 Genesee St                  Waukegan                     75,996            North
   1950 S Batavia Ave                Geneva                       53,790       East-West
   4 Blocks of Space                                             713,686

Italicized addresses indicate space is new on the market
* Block of space is for future occupancy
** Block of space will be vacated during the upcoming quarter


                                                                                      FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                         17
VACANCY RATES
Vacancy rises, but at a decelerating pace




                                                                                                                                                      SUBURBAN CHICAGO
• Due to the mostly inactive quarter in terms of tenant moves, the vacancy rate for Suburban Chicago increased only 0.1 percent to 22.7 percent.
  Coupled with the large increase in sublease availability, the total vacancy rate for the market is 26.2 percent.

• Positive absorption in the market’s largest submarket, the East-West, bodes well but is likely unsustainable. The O’Hare submarket’s vacancy also
  improved from last quarter but the Class B and C segments are above 30 percent.

• While the Class A vacancy rate is the lowest, evidence of flight-to-quality, the direct vacancy rate is still above 20 percent and when combined
  with sublease vacancy, total vacancy is almost 25 percent.

• OUTLOOK: Pervasive weakness continues in Suburban Chicago. It has lost occupancy quicker than the CBD so a bottoming out may be possible
  soon. However, there are few demand drivers to raise the market off that floor for several years.




                                                                                                                                                      DEMAND
HISTORIC YEAR-END VACANCY RATES BY SUBMARKET: NORTH OUTPERFORMS DESPITE WEAK QUARTER




HISTORIC YEAR-END VACANCY RATES BY CLASS: B AND C PROPERTIES MORE THAN ONE-QUARTER VACANT




                                                                   FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                      18
LARGE DEALS
Most transactions continue to generate new demand for the market




                                                                                                                                                             SUBURBAN CHICAGO
• Leasing activity for spaces larger than 20,000 square feet remained at an average level during the quarter. Suburban Chicago made some strides
  during the quarter by attracting demand from outside the MSA, an important factor in its recovery. With still pervasive job losses, the market must
  rely on new tenants to the area to occupy the high vacancy.

• Only two of the large transactions represented a contraction of space for Suburban tenants. In the largest lease transaction of the quarter, Health
  Care Service Corp. renewed and expanded their space in Downers Grove. Also adding to occupancy, Tate and Lyle PLC, which manufactures
  Splenda, is moving the U.S. headquarters of its Innovation and Commercial Development group to Hoffman Estates from downstate Decatur. They
  received a $15 million incentive package from the state to build out their space. In the East-West submarket, Lisle has attracted considerable activity.
  SunCoke Energy, a steel industry supplier to be spun off from Sunoco Inc., is moving its headquarters from Tennessee, creating 105 jobs.

• TriZetto, a health insurance software and service provider, is moving from 500 Technology Drive in Naperville and leasing 5,000 square feet less




                                                                                                                                                             DEMAND
  than before in favor of a more efficient build-out.

• OUTLOOK: Increased leasing activity is expected as tenants are forced to make decisions, but will not necessarily translate into increased occupancy.

LARGE LEASE TRANSACTIONS: A MAJORITY OF DEALS REPRESENT NEW DEMAND

     NEW
     Tenant                                            Type          Submarket     Building Address                                      Size (sf)
     Tate & Lyle                                       New           Northwest     5450 Prairie Stone Pky, Hoffman Estates               97,391
     TriZetto                                          Relo/Cont     East-West     1240 E Diehl Rd, Naperville                           40,748
     SunCoke Energy                                    New           East-West     Arboretum Lakes, Lisle                                40,000
     Douglas Shaw & Associates                         Relo/Exp      East-West     1717 Park St, Naperville                              35,000
     American Utility Management, Inc.                 Relo/Exp      East-West     333 E Butterfield Rd, Lombard                         31,000
     Focus Products Group                              Relo/Cont     North         300 Knightsbridge Pkwy, Lincolnshire                  23,870
     CNA                                               New           East-West     801 Warrenville Rd, Lisle                             21,270
     Total - 7 Deals                                                                                                                    289,279



     RENEWAL/EXPANSION/SUBLEASE
     Tenant                                                          Submarket     Building Address                                      Size (sf)
     Health Care Service Corp.                         Ren/Exp       East-West     1020 W 31st St, Downers Grove                       177,000
     Jim Beam                                          Ren           North         510 Lake Cook Rd, Deerfield                         116,000
     Lundbeck                                          Ren           North         Four Parkway North, Deerfield                        69,852
     Assurance Agency Ltd.                             Ren/Exp       Northwest     1750 Golf Rd, Schaumburg                             61,239
     Arris Group                                       Ren           East-West     2400 Ogden Ave, Lisle                                56,000
     Illinois Tool Works                               Sublease      North         1000 N Milwaukee Ave, Glenview                       40,000
     Mead Johnson                                      Exp           North         2701 Patriot Blvd, Glenview                          33,918
     Total - 7 Deals                                                                                                                   554,009

Abbreviations:
Cont - Contraction   Exp - Expansion     Relo - Relocation    Ren - Renewal




                                                                          FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                      19
ABSORPTION
The North submarket continues to catch up to the rest; East-West and O’Hare post positive absorption




                                                                                                                                                          SUBURBAN CHICAGO
• While performance was split amongst submarkets, the overall result stayed the same: slow negative absorption. In general, the results were
  impacted by small moves. One exception is negative absorption in the North submarket Class B sector; it was dominated by Allstate vacating a
  150,000 square foot building in Vernon Hills.

• OUTLOOK: With total employment falling again and space reductions not matching job losses, negative absorption is expected until 2012.


SUBURBAN CHICAGO ABSORPTION BY CLASS: NEGATIVE ACROSS CLASSES




                                                                                                                                                          DEMAND
HISTORIC SUBURBAN CHICAGO ABSORPTION BY SUBMARKET
   EAST-WEST        2002          2003         2004         2005         2006          2007          2008          2009             2010
  Class A           (268,350)   (1,044,708)   1,080,332     102,299      366,688       542,281      (259,973)     (301,745)        (219,164)
  Class B           (395,762)    (499,928)     (25,541)     389,014      484,869      (203,072)      (2,062)      (529,770)         67,827
  Class C           (138,598)    (49,662)      76,936       85,269       (125,850)    (108,813)     (87,441)      (224,496)          7,017
  Total            (802,710)    (1,594,298)   1,131,727     576,582      725,707      230,396      (349,476)     (1,056,011)       (144,319)

   NORTH            2002          2003         2004         2005         2006          2007          2008          2009             2010
  Class A           (195,157)    (617,229)     (10,452)     196,403      (100,049)     615,115      (240,617)     (174,639)        (312,238)
  Class B           48,986       (51,905)      62,026       164,357      316,207       355,510      (60,982)      (266,317)        (319,078)
  Class C           22,926       (45,023)      (39,173)     12,697       (39,440)      26,935        (2,048)      (236,598)         (40,044)
  Total            (123,245)     (714,157)     12,401       373,457      176,718      997,560      (303,647)     (677,554)         (671,360)


   NORTHWEST        2002          2003         2004         2005         2006          2007          2008          2009             2010
  Class A           (60,417)     (280,998)     902,901      225,865      (488,651)     10,333       (302,930)     (192,339)         (21,262)
  Class B           21,819       (397,531)     233,613      (234,681)     12,266      (164,112)     (261,498)     (384,130)        (295,928)
  Class C           (45,244)      22,431       (13,282)     (216,898)    (15,371)      (51,429)     (28,362)      159,609          (192,091)
  Total             (83,842)     (656,098)    1,123,232    (225,714)     (491,756)    (205,208)    (592,790)     (416,860)         (509,280)


   O'HARE           2002          2003         2004         2005         2006          2007          2008          2009             2010
  Class A           (256,990)    (159,845)     402,561      (55,786)     189,235       11,636       (256,325)     (162,721)        209,180
  Class B           11,221        9,761       (306,424)     53,945        7,915        (81,167)     (51,601)      (361,521)         70,376
  Class C           265,771      (39,147)      (15,002)     (204,597)     90,170       (50,022)     (35,696)      (334,621)         (10,855)
  Total             20,002       (189,231)     81,135      (206,438)     287,320      (119,553)    (343,622)     (858,863)         268,701

   TOTALS           2002          2003         2004         2005         2006          2007          2008          2009             2010
  Class A          (780,914)    (2,102,780)   2,375,342     468,781      (32,777)     1,179,365    (1,059,845)   (831,444)         (343,484)
  Class B          (313,736)     (939,603)     (36,326)     372,635      821,257       (92,841)    (376,143)     (1,541,738)       (476,802)
  Class C           104,855      (111,401)     9,479       (323,529)     (90,491)     (183,329)    (153,547)     (636,106)         (235,972)
  Total            (989,795)    (3,153,784)   2,348,495     517,887      697,989      903,195      (1,589,535)   (3,009,288)      (1,056,259)

                                                                                                                   *Numbers in parentheses are negative
                                                                   FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                          20
GROSS ASKING RENTS
O’Hare rebounds from lows but most segments continue to cut rents




                                                                                                                                                              SUBURBAN CHICAGO
• Over the last year, gross asking rents have fallen across almost all submarkets and classes as landlords reduce rates to attract tenants. However,
  the reduction in the Class A and B segments was less than one percent, indicating stabilization.

• Performance in the O’Hare submarket is an outlier as increases in the Class B and C segments led to just over three percent rent gains over the
  year. O’Hare has suffered from oversupply and rents have reduced accordingly to drive demand. Now that some demand has returned, rents have
  stabilized. While this may seem like a reversal of the flight-to-quality demonstrated throughout the market, it is more indicative of the early bottoming
  out for the submarket that now makes room for growth.

• Class A rental rate levels show little variance among submarkets, but Class B and C gross asking rents in the Northwest submarket are considerably
  lower than their peers due to the high level of oversupply. Northwest Class C space has also experienced the greatest decline over the last year.




                                                                                                                                                              FEATURES
• OUTLOOK: Asking rents, coupled with concession packages, will need to become even more aggressive to jumpstart a recovery in the office market
  before hiring warrants it. However, with asking rents at their lowest point in MB Real Estate’s tracked history, landlords may not have any room left
  to further reduce rents.


AVERAGE GROSS ASKING RATES BY CLASS AND SUBMARKET

   Average Direct Gross Asking                  Change over                   Change over                   Change over                  Change over
                                       A                             B                            C                           Total
   Rent                                          last year                     last year                     last year                    last year

   East-West                        $21.55         -4.8%          $19.25         -3.3%         $15.74          -4.3%         $20.00         -4.2%
   North                            $21.90          2.8%          $19.66         -0.5%         $16.56          -0.7%         $20.79          1.4%
   Northwest                        $22.75          1.2%          $17.28         -0.7%         $13.63         -16.4%         $20.30         -0.5%
   O'Hare                           $22.80         -1.8%          $20.70          8.9%         $15.50         13.9%          $20.92          3.1%
   Suburban Chicago Total           $22.14         -0.7%          $18.97         -0.6%         $15.45          -3.7%         $20.39         -0.9%



ASKING RATES STABILIZE OVER THE QUARTER ACROSS CLASSES




                                                                         FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                        21
INVESTMENT SALES
The sales market is active, targeting opportunistic sales




                                                                                                                                                                                           SUBURBAN CHICAGO
• Suburban investment sales accelerated during the quarter, with buildings trading across all segments of the market for prices ranging from $22
  to $251 per square foot.

• Besides being home to one of the biggest leases in the quarter, Lisle was the home of the largest purchase in terms of square footage as Navistar
  International Corporation purchased a new 1.2 million square foot headquarters complex from Alcatel-Lucent. The highest priced sales on a square
  foot basis occurred in the North submarket. Properties in this submarket are highly valued due to land constraints and proximity to executive
  housing. In Deerfield and Buffalo Grove, properties sold for $250 and $195 per square foot respectively.

• OUTLOOK: The volume of sales indicates that investors are looking for opportunities beyond trophy and distressed assets.

INVESTMENT SALES: BUILDINGS SELL BUT AT LOW VALUES PER SQUARE FOOT




                                                                                                                                                                                           FEATURES
  Investment Sales: 4th Quarter 2010
                                                                                      Price per
  Building Address                        Submarket     Size (sf)       Price         sf *      Class Seller                                   Buyer

                                                                                                                                               Navistar International
  2701 Lucent Ln (2 Properties), Lisle    East-West   1,200,950      $33,000,000        $27       A/B Alcatel-Lucent
                                                                                                                                               Corporation
  8750 W Bryn Mawr Ave (2 Properties),
                                           O'Hare      631,445       $96,250,000 $152              A     The John Buck Company                 CommonWealth REIT
  Chicago
  1200 Warrenville Rd, Naperville         East-West    329,770         $9,408,000       $29        B     Principal Real Estate Investors       Wanxiang America Corp.
  800 Enterprise Dr (3 Properties), Oak
                                          East-West    147,664       $10,250,000        $69       A/B Matocha Associates                       Henry Crown & Co.
  Brook
  5100 N River Rd, Schiller Park           O'Hare      139,987       $17,400,000 $124              A     RREEF America                         Colony Realty Partners
                                                                                                                                               37 VZM (Individual California
  777 Big Timber Rd, Elgin                Northwest    127,280       $11,200,000        $88        A     Stonewater Partners
                                                                                                                                               Investor)
  760 Pasquinelli Dr (4 Properties),
                                          East-West    112,999        $7,300,000        $65        B     Prime Group Realty Trust              JSQ Real Estate
  Westmont
  75 Executive Dr, Aurora                 East-West    107,087        $2,355,914        $22        B     LNR Partners                          Boxer Property
                                                                                                                                               Inland Diversified Real Estate
  887 Deerfield Pky, Buffalo Grove          North      105,106       $20,501,000 $195              B     Buffalo Grove Venture
                                                                                                                                               Trust
  1200 Internationale Pky, Woodridge      East-West    100,000                    -      -         B     Alliance Commercial Partners          -

  2800 S River Rd, Des Plaines             O'Hare       99,732        $5,500,000        $55        A     KBS Real Estate Investment Trust Marc Realty

  10 Parkway Blvd N, Deerfield              North       99,566       $25,000,000 $251              A     The John Buck Company                 CB Richard Ellis Realty Trust
                                                                    Deed in Lieu of
  1200 N Arlington Heights Rd, Itasca     Northwest     94,897                           -         A     Hamilton Partners                     Principal Real Estate Investors
                                                                       Foreclosure
  333 E Lake St, Bloomingdale             Northwest     71,053       $11,500,000 $162              A     Hamilton Partners                     Wells Core Office Income REIT


  On the Market / Under Contract: 4th Quarter 2010
                                                                                      Price per
  Building Address                        Submarket     Size (sf)       Price         sf *      Class Seller                                   Status (Buyer or Listing Agent)

                                                                                                                                               New on Market (Cushman &
  75 N Fairway Dr, Vernon Hills             North      200,344                    -      -         A     Washington Mutual Bank
                                                                                                                                               Wakefield)
                                                                                                                                               Under Contract (Real Estate
  909 Davis St, Evanston                    North      195,245       $39,000,000       $200        A     Romanek Properties
                                                                                                                                               Capital Partners)
                                                                                                                                               Under Contract (JV - Duke/CBRE
  100 Field Dr, Lake Forest                 North      105,000 Part of a 20-building, 3.1          A     Duke Realty Corp.
                                                               million SF office portofolio                                                    Realty Trust)
                                                                                                                                               Under Contract (JV - Duke/CBRE
  1925 W. Field Ct, Lake Forest             North      100,210 under contract for $517M            A     Duke Realty Corp.
                                                                                                                                               Realty Trust)
  2600 Forbes Ave, Hoffman Estates        Northwest     90,000       $28,000,000       $311        B     Serta International                   Under Contract
                                                                                                         Marsh Affinity & Private Client       New on Market (Arthur J. Rogers
  1440 Renaissance Dr, Park Ridge          O'Hare       58,000                    -      -         B
                                                                                                         Practices                             & Co.)
                                                                                              Price per sf (square foot) - based off estimated selling price for new to market buildings

                                                                          FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                                                    22
FORECAST
Slow losses must continue to match the economy




                                                                                                                                                                          SUBURBAN CHICAGO
While negative absorption was expected to continue
                                                                                Total Historic and Total Historic &
at a slow pace for several quarters, the fourth quarter
result was even smaller than anticipated. Due to the         Year                  Forecasted        Forecasted                        Direct Vacancy %
high employment loss, a very close correlation                                    Inventory (sf)   Occupancy (sf)
between occupancy and total employment in previous           1996                  90,601,193                  82,039,636                                9.4%
recessions, and an increasing trend of relocating to         1997                  91,989,948                  85,388,879                                7.2%
the CBD, MB Real Estate still expects increasing             1998                  95,078,215                  88,016,285                                7.4%
vacancy in coming quarters. This quarter’s performance,      1999                  98,744,696                  90,321,332                                8.5%
with only an additional 86,000 square feet of vacancy,       2000                  103,270,399                 93,033,912                                9.9%
is not considered a turning point.                           2001                  108,254,000                 92,247,968                               14.8%
                                                             2002                  109,769,838                 91,258,173                               16.9%
Since occupancy peaked in 2007, it has fallen 6.1            2003                  110,090,266                 88,104,389                               20.0%




                                                                                                                                                                          FEATURES
percent in Suburban Chicago. Typically, total occupancy      2004                  110,423,452                 90,452,884                               18.1%
declines mirror peak-to-trough employment losses on          2005                  111,030,084                 90,970,771                               18.1%
a percentage basis in this market. Total employment          2006                  110,806,221                 91,668,760                               17.3%
has declined 8.5 percent in the Chicago MSA.                 2007                  111,175,875                 92,571,955                               16.7%
Suburban Chicago has few mitigating factors that             2008                  112,080,944                 90,982,420                               18.8%
would change the forecast. Companies like United
                                                             2009                  112,218,212                 87,973,132                               21.6%
Airlines are exiting Suburban Chicago to better
                                                             2010                  112,374,614                 86,916,873                               22.7%
accommodate this demographic, leaving behind
                                                             2011                  112,374,614                 85,460,607                               24.0%
formerly owner-occupied buildings that may enter the
                                                             2012                  112,374,614                 85,023,727                               24.3%
competitive tenant market
                                                                    1997-2009 Absorption Avg:                    478,543
MB Real Estate expects relatively small occupancy
declines to continue until 2012. The large losses from                  2010 Absorption:                       (1,056,259)
2009 are not expected again, but tenants still need to                             Total projected inventory based on addition of projects currently under construction
shave off excess space when their leases expire.                                               Occupancy is forecast based on proprietary assumptions regarding the
Starting in 2013, absent a new demand driver, positive                                              Chicago MSA’s total employment change and the office industry’s
absorption will occur but will be deliberate, representing                                                    historical performance which trails the overall economy.
slow growth within companies.


HISTORIC & PROJECTED VACANCY: OVERALL VACANCY RATE WILL PEAK NEAR 25%




                                                                FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                                             23
SUBMARKET MAP




                                                                SUBURBAN CHICAGO
                                                                FEATURES




                FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW   24
MARKET STATISTICS




                                                                                                                                                     SUBURBAN CHICAGO
                                                                                       Direct                Sublease      Total Vacancy
                      RBA            YTD            4th Quarter      Direct Vacancy             Occupancy
  EAST-WEST                                                                           Vacancy                Vacancy      Rate (Vacancy +
                      (sf)       Absorption (sf)   Absorption (sf)         (sf)                    (sf)
                                                                                         %                     (sf)         Sublease) %
     Class A       20,624,716       (219,164)         170,027          4,319,842       20.9%    16,304,874   1,022,390           25.9%
     Class B       14,535,375        67,827            (54,438)        3,357,361       23.1%    11,178,014    583,318            27.1%
     Class C        4,921,427        7,017             (41,257)        1,170,822       23.8%    3,750,605      8,184             24.0%
      Total        40,081,517       (144,319)          74,332          8,848,025       22.1%    31,233,493   1,613,892           26.1%


                                                                                       Direct                Sublease      Total Vacancy
                      RBA            YTD            4th Quarter      Direct Vacancy             Occupancy
    NORTH                                                                             Vacancy                Vacancy      Rate (Vacancy +
                      (sf)       Absorption (sf)   Absorption (sf)         (sf)                    (sf)
                                                                                         %                     (sf)         Sublease) %
     Class A       16,875,594       (312,238)          (40,998)        3,195,178       18.9%    13,680,416    998,115            24.8%
     Class B        7,445,998       (319,078)          (68,188)        1,551,152       20.8%    5,894,846     83,156             21.9%
     Class C        2,599,952        (40,044)          (30,720)         539,435        20.7%    2,060,517      7,097             21.0%




                                                                                                                                                     FEATURES
      Total        26,921,544       (671,360)         (139,906)        5,285,765       19.6%    21,635,779   1,088,368           23.7%


                                                                                       Direct                Sublease      Total Vacancy
                      RBA            YTD            4th Quarter      Direct Vacancy             Occupancy
  NORTHWEST                                                                           Vacancy                Vacancy      Rate (Vacancy +
                      (sf)       Absorption (sf)   Absorption (sf)         (sf)                    (sf)
                                                                                         %                     (sf)         Sublease) %
     Class A       18,533,154        (21,262)         (144,877)        3,711,071       20.0%    14,822,083    650,145            23.5%
     Class B        9,816,744       (295,928)          (20,646)        3,111,752       31.7%    6,704,992     167,784            33.4%
     Class C        2,292,412       (192,091)          (13,258)         651,768        28.4%    1,640,644     35,894             30.0%
      Total        30,642,310       (509,280)         (178,781)        7,474,591       24.4%    23,167,719   853,823             27.2%


                                                                                       Direct                Sublease      Total Vacancy
                      RBA            YTD            4th Quarter      Direct Vacancy             Occupancy
    O'HARE                                                                            Vacancy                Vacancy      Rate (Vacancy +
                      (sf)       Absorption (sf)   Absorption (sf)         (sf)                    (sf)
                                                                                         %                     (sf)         Sublease) %
     Class A        7,822,339       209,180           135,199          1,601,694       20.5%    6,220,645     185,322            22.8%
     Class B        4,352,575        70,376            30,248          1,344,114       30.9%    3,008,461     178,707            35.0%
     Class C        2,554,329        (10,855)          (7,440)          903,552        35.4%    1,650,777      3,448             35.5%
      Total        14,729,243       268,701           158,006          3,849,360       26.1%    10,879,883   367,477             28.6%


                                                                                       Direct                Sublease      Total Vacancy
                      RBA            YTD            4th Quarter      Direct Vacancy             Occupancy
   TOTALS                                                                             Vacancy                Vacancy      Rate (Vacancy +
                      (sf)       Absorption (sf)   Absorption (sf)         (sf)                    (sf)
                                                                                         %                     (sf)         Sublease) %
     Class A       63,855,802       (343,484)         119,352          12,827,785      20.1%    51,028,017   2,855,972           24.6%
     Class B       36,150,692       (476,802)         (113,024)        9,364,378       25.9%    26,786,314   1,012,965           28.7%
     Class C       12,368,120       (235,972)         (92,676)         3,265,577       26.4%    9,102,543     54,623             26.8%
  Total Suburban   112,374,614     (1,056,259)        (86,349)         25,457,741      22.7%    86,916,873   3,923,560           26.1%

                                                                                                               Numbers in parentheses are negative




                                                                  FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                      25
SECTION FOUR




                                                                                                                                                                              CHICAGO MARKET OVERVIEW
ADDITIONAL INFORMATION
GLOSSARY
Absorption: The net change in occupied space over a given period of time.               Rentable Building Area (RBA): The total square footage of a building that can be
Unless otherwise noted Net Absorption includes direct and sublease space.               occupied by, or assigned to a tenant for the purpose of determining a tenant’s
                                                                                        rental obligation. Generally RBA includes a percentage of common areas
Asking Rent: The published rental rate for a space in a building, which may             including all hallways, main lobbies, bathrooms, and telephone closets.
vary from the rent which is negotiated upon by the tenant and landlord.
                                                                                        Rental Rates: The annual costs of occupancy for a particular space quoted on
Central Business District: The designations of Central Business District (CBD) and      a per square foot basis.
Suburban refer to a particular geographic area within a metropolitan statistical
area (MSA) describing the level of real estate development found there. The CBD         Sales Price: The total dollar amount paid for a particular property at a particular
is characterized by a high density, well organized core within the largest city of      point in time.
a given MSA.
                                                                                        SF: Abbreviation for Square Feet.
Class: A classification used to describe buildings, with Class A reflecting the
highest quality and Class C reflecting the lowest quality.                              Sublease Space: Space that has been leased by a tenant and is being offered
                                                                                        for lease back to the market by the tenant with the lease obligation. Sublease
Direct Vacant Space: Space that is being offered for lease directly from the            space is sometimes referred to as sublet space.
landlord or owner of a building, as opposed to space being offered in a building
by another tenant (or broker of a tenant) trying to sublet a space that has already     Submarkets: Specific geographic boundaries that serve to delineate a core group
been leased.                                                                            of buildings that are competitive with each other and constitute a generally
                                                                                        accepted primary competitive set, or peer group. Submarkets are building type
Initial Rate: The contracted starting rental rate for the first term of a lease.        specific (office, industrial, retail, etc.), with distinct boundaries dependent on
                                                                                        different factors relevant to each building type. Submarkets are non-overlapping,
Inventory: The square footage of buildings that have received a certificate of          contiguous geographic designations having a cumulative sum that matches the
occupancy and are able to be occupied by tenants. Calculated by adding the              boundaries of the Market they are located within
Rentable Building Area (RBA) of all properties in a market or submarket.
                                                                                        Suburban: The Suburban and Central Business District (CBD) designations refer
Large Block: The amount of contiguous space available in a building in terms            to a particular geographic area within a metropolitan statistical area (MSA).
of square footage. Contiguous spaces over 50,000 square feet are considered             Suburban is defined as including all office inventory not located in the CBD.
large by MB Real Estate.
                                                                                        Tenant Improvement: Those changes to property to accommodate specific
Lease Comparable: Comparables are properties with characteristics that are              needs of a tenant. TIs include installation or relocation of interior walls or
similar in nature. Their signing lease rates and other contracted elements are          partitions, carpeting or other floor covering, shelves, windows, toilets, etc. The
aggregated to analyze contracted market conditions as opposed to asking                 cost of these is negotiated in the lease.
market conditions.
                                                                                        Total Vacant Space: Direct plus sublease vacant space.
Market: Geographic boundaries that serve to delineate core areas that are
competitive with each other and constitute a generally accepted primary                 Under Construction: The status of a building that is in the process of being
competitive set of areas. Markets are building type specific, and are non-              developed, assembled, built or constructed. A buildings considered to be under
overlapping contiguous geographic designations. Markets can be further                  construction after it has begun construction and until it receives a certificate of
subdivided into Submarkets.                                                             occupancy.

Net Rental Rate: A rental rate that excludes certain expenses that a tenant could       Vacancy Rate: A measurement expressed as a percentage of the total amount
incur in occupying office space. Such expenses are expected to be paid directly         of physically vacant space divided by the total amount of existing inventory.
by the tenant and may include janitorial costs, electricity, utilities, taxes,          Under construction space generally is not included in vacancy calculations.
insurance and other related costs.                                                      Can be based on direct, sublease, or total vacant space.

Preleased Space: The amount of space in a building that has been leased prior           Vacant Space: Space that is not currently occupied by a tenant, regardless of
to its construction completion date, or certificate of occupancy date.                  any lease obligation that may be on the space. Vacant space could be space that
                                                                                        is either available or not available. For example, sublease space that is currently
Price/SF: Calculated by dividing the price of a building (either sales price or         being paid for by a tenant but not occupied by that tenant, would be considered
asking sales price) by the Rentable Building Area (RBA).                                vacant space. Likewise, space that has been leased but not yet occupied
                                                                                        because of finish work being done, would also be considered vacant space.

                                                                                        YTD: Abbreviation for Year-to-Date. Describes statistics that are cumulative from
                                                                                        the beginning of a calendar year through whatever time period is being studied.




                                                                                   FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                              26
ABOUT MB REAL ESTATE




                                                                                                                                         MB REAL ESTATE
Our mission is to provide clients and investors with extraordinary real estate value and unlimited support




                                                At MB Real Estate, our corporate mission is to maximize the value of our clients’
                                                real estate by creating timely and innovative solutions that meet their unique needs
                                                and objectives.

                                                We offer the highest level of real estate support with our team of committed, results-
                                                driven experts in asset and facilities management, leasing, tenant representation,
                                                development, project management, and investment services.

                                                Supported by dedicated accounting, marketing, human resources, and information
                                                technology teams, our unique full-service firm is an industry leader in local and
                                                national corporate real estate.




MB REAL ESTATE                                  DEPARTMENT LEADERSHIP
HEADQUARTERS
181 West Madison, Suite 4700)                   MARK A. BUTH
                                                Senior Vice President & Managing Director of Leasing Services
Chicago, Illinois 60602
phone: 312.726.1700
                                                ANDREW J. DAVIDSON
fax: 312.807.3853                               Executive Vice President & Managing Director of Corporate Services & Tenant Advisory

EAST COAST                                      GARY A. DENENBERG
REGIONAL HEADQUARTERS                           Executive Vice President & Managing Director of Leasing Services

335 Madison Avenue, 14th Floor
                                                DAVID R. GRAFF
New York, New York 10017                        Senior Vice President of Project Services
phone: 212.350.2300
fax: 212.350.2301                               MAUREEN G. GROVE
                                                Vice President & Managing Director of Accounting Services


COMPANY LEADERSHIP                              DANIEL J. NIKITAS
                                                Executive Vice President of Corporate Services & Tenant Advisory Services
PETER E. RICKER
Chairman & CEO
                                                KEVIN M. PURCELL
JOHN T. MURPHY                                  Executive Vice President & Managing Director of Asset Management
President
                                                EVE WEST
                                                Chief Administrative Officer & Managing Director, Support Services




                                                          FOURTH QUARTER 2010 | CHICAGO MARKET OVERVIEW                                  27

								
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