OfficeResearch

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

West Suburban, Chicago, IL Second Quarter 2007

Submarket Map Submarket Facts

Submarket Metro

Population 1,542,750 9,531,487

Avg. Annual Five-Year Chg. 1.4% 0.7%

Total Households 545,266 3,420,599

Avg. Annual Five-Year HH Chg. 1.0% 0.4%

Median HH Income $72,405 $59,585

Median Age 35.5 35.3

Employment 694,332 4,292,030

Vacancy Rate (2007*) 20.9% 16.9%

Avg. Asking Rent (2007*) $21.89 $26.24

* Year-End Forecast

Submarket Vacancy Ranking Submarket Highlights

1Q 07 1Q 07 The West office submarket, rivaled only by the

Submarket Vacancy Ask. Rent Northwest suburban area, remains the pre-eminent
suburban office corridor in the Chicago metro area. Over the
City North 4.7% $19.79 past decade, inventory growth in the West submarket has
outpaced nearly all other suburban markets, second only to
City West 10.3% $18.55
the West Loop submarket in terms of total existing office
River North 10.8% $24.30 square footage. The East-West Tollway (Interstate-88) runs
west from Chicago and anchors the West submarket.
West Loop 13.8% $31.62
Employers are attracted to the supporting infrastructure and
North 14.2% $23.11 employee base this submarket offers. As a result, while Class
N. Michigan Avenue 16.4% $30.97 A properties are found throughout this submarket, the office
inventory is comprised of primarily low- to mid-rise back
East Loop 16.5% $28.11 office and R&D facilities. Home to more than 30 percent of
South Loop 17.8% $26.50 Chicago’s Forbes 500 firms, the West submarket has become
a favored location for both large and small investors.
Southwest 18.1% $18.19
Central Loop 18.6% $28.38
O’Hare Area 19.9% $23.82
West Suburban 20.3% $21.72
Northwest Suburbs 21.3% $21.40

J. Davenport 1
Research Analyst, Research Services
 Office Submarket Report
West Suburban, Chicago, IL Second Quarter 2007

Construction Trends
Construction Trends ƒ Office construction has ramped up so far this year,
with nearly 1 million square feet expected to come
online. Development remains geared towards
Sq. Ft. Completed (thousands)

1,000
Class B assets, such as low- and mid-rise back-
750 office and R&D properties.
500
ƒ High-end Class A construction has also
250 accelerated since the beginning of the year, as
more than 500,000 square feet is under way in the
0 submarket. The 213,000-square foot first phase of
02 03 04 05 06 07* CityGate Centre in Naperville is nearing
* Forecast completion. In addition, Opus’ 250,000-square foot
Highland Landmark V is expected to be
Sources: M arcus & M illichap Research Services, Reis, TWR

completed in Downers Grove early next year.

Vacancy and Rent Trends

ƒ

Asking Rent and Vacancy Trends ƒ Office vacancy in this submarket remained the
Average Asking Rent Vacancy
second highest of all submarkets metrowide.
Vacancy in the first quarter was posted at 20.3
$24 28%
percent, a 100 basis points increase from the same
Avg. Asking Rent per Sq. Ft.

$22 24%
period one year ago.
Vacancy Rate

ƒ Vacancy improvement has been led by the Class

$20 20%
B/C sector, which has fallen 100 basis points over
the past 12 months to 20.3 percent. Class A
$18 16%
properties recorded a first quarter vacancy rate of
19.7 percent.
$16 12%
02 03 04 05 06 07* ƒ Owners have continued to cut back on leasing
* Forecast
Sources: M arcus & M illichap Research Services, Reis
incentives. As a result, the average asking rent has
advanced 2.4 percent over the past 12 months, and
effective rents have gained 5.1 percent.

Sales Trends
ƒ Transaction velocity in the West submarket
Sales Trends
remains robust, accounting for 31 percent of the
total metrowide sales year over year. Sales volume
$150 is on pace to meet or exceed last year’s record of
nearly $850 million.
Median Price per Sq. Ft.

$125
ƒ Investor confidence remains high, which has
$100 supported further price gains. The median sales
price has increased 4.5 percent to $138 per square
$75
foot since the beginning of the year.
$50 ƒ Cap rates have fallen to the high-7 percent to low-8
02 03 04 05 06 07* percent range. Double-digit cap rates were found
* 1Q Estimate
Sources: M arcus & M illichap Research Services, CoStar Group, Inc.
in older, less-occupied properties.

J. Davenport 2 © Marcus & Millichap 2007

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