Chicago's shifting supply and demand. River North Inventory increases 4.2 million square feet of new product as tech tenant demand driving conversions to office due to limited supply.

1. Steady tech demand coupled with no new supply pushing conversions
Chicago’s office demand over the past five years has been driven by the growing
technology sector and corporate tenants migrating downtown. Limited supply has
pushed tenants to seek alternative options for office space, most notably seen in
River North. Many tech tenants driving the market gravitate toward less traditional
office space, preferring high ceilings and exposed brick, among other unique
architectural features. As a result, conversions of showrooms and lofts into office
space has quietly added 4.2 million square feet of new product in River North.
Furthermore, Class B and C buildings in River North have seen 25.0 and 34.3
percent rent growth since Q3 2012, respectively, outpacing the overall market.
Suburban migration continues driving occupancy gains
Several large corporate relocations, including ConAgra and Motorola Solutions
drove year-to-date net absorption to more than 2 million square feet. Suburban
migration continues to drive absorption, accounting for approximately 6 million
square feet of downtown’s office space since 2010 as this urban migration
phenomenon has turned into a steady stream of major employers seeing
downtown Chicago as the optimal location for their talent and innovation
strategies. Recent lease transactions from Duracell Batteries and Wilson Sporting
Goods 100,000-square-foot commitment at Prudential Plaza – shows no signs of
slowdown and points to strong net absorption over the next two years.
New towers rising but leasing must keep up
Construction downtown is a representation of pure pent-up demand for high-
quality office space located near transit. Total vacancy set a new record low level
of 10.4 percent, down 230 basis points y-o-y. The market is nearing a record low
from a vacancy perspective. Looking ahead, if every proposed project moves
forward, Chicago will add over 7.3 million square feet of space to the skyline by
2020, including the transformative renovation of the Old Main Post Office,
delivering 2.1 million square feet of office space by Q1 2019. The question today
is whether the Chicago office leasing velocity will sustain its strong pace. For now,
however, both tenants and landlords are winning, with renewed vitality downtown
and increased options for office space.
River North Inventory – Q3 2013 vs. Q3 2016
Suburban migration driving robust leasing activity
Office inventory under construction is climbing (sf)
Chicago CBD | Q3 2016
Chicago’s shifting supply and demand
©2016 Jones Lang LaSalle IP, Inc. All rights reserved.For more information, contact: Hailey Harrington | +1 312 228 3189 | Hailey.Harrington@am.jll.com
Office Insight
141,946,121
Total inventory (s.f.)
332,500
Q3 2016 net absorption (s.f.)
$37.55
Direct average asking rent
7,265,664
Total under construction (s.f.)
10.4%
Total vacancy
2,096,643
YTD net absorption (s.f.)
1.8%
12-month rent growth
44.2%
Total preleased
Source: JLL Research, excludes leases less than 25,000 sf
Source: JLL Research
Source: JLL Research
0
500,000
1,000,000
1,500,000
2012 2013 2014 2015 YTD 2016
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
Class A Class B Class C
2013 2016
2,000,000
4,000,000
6,000,000
8,000,000
Q 2
2 0 1 5
Q 3
2 0 1 5
Q 4
2 0 1 5
Q 1
2 0 1 6
Q 2
2 0 1 6
Q 3
2 0 1 6

2. Current conditions – submarket Historical leasing activity (s.f.)
Source: JLL Research Source: JLL Research
Total net absorption (s.f.)
Source: JLL Research
Total vacancy rate (%)
Source: JLL Research
Direct average asking rent ($ p.s.f.)
Source: JLL Research
2,828,556
175,858
-2,381,109
-528,328
382,460
-29,176
620,297
1,922,389
2,308,240 2,092,643
-3,000,000
-2,000,000
-1,000,000
0
1,000,000
2,000,000
3,000,000
4,000,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 2016
$31.15
$33.39
$32.34
$32.73 $32.70
$33.71 $33.64
$36.40
$36.79
$37.55
$30.00
$34.00
$38.00
2007 2008 2009 2010 2011 2012 2013 2014 2015 Q3 2016
12.0% 11.9%
15.8%
16.4% 16.1% 15.8%
15.3%
12.8% 12.4%
10.4%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 Q3 2016
Landlordleverage
Tenantleverage
Peaking
market
Falling
market
Bottoming
market
Rising
market
8,749,696
8,244,478
9,515,901 9,379,466
5,924,889
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
2012 2013 2014 2015 YTD 2016
©2016 Jones Lang LaSalle IP, Inc. All rights reserved.For more information, contact: Hailey Harrington | +1 312 228 3189 | Hailey.Harrington@am.jll.com
West Loop
Central Loop
Kennedy West,
East Loop
River North
North Michigan

3. Office Statistics
Chicago | Q3 2016
Class Inventory (s.f.)
Total net
absorption (s.f.)
YTD total net
absorption (s.f.)
YTD total net
absorption (%
of stock)
Direct vacancy
(%)
Total vacancy
(%)
Average direct
asking rent ($
p.s.f.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
West Loop Totals 46,310,916 -58,700 176,206 0.4% 10.0% 11.0% $39.65 0 3,559,664
Central Loop Totals 37,160,358 25,653 406,748 1.1% 9.3% 10.5% $36.46 0 0
East Loop Totals 24,346,395 65,682 684,387 2.8% 11.7% 12.1% $35.29 0 0
South Loop Totals 1,264,787 2,812 8,652 0.7% 12.9% 12.9% $25.29 0 2,450,000
North Michigan Avenue Totals 11,392,541 130,642 309,870 2.7% 11.2% 11.7% $36.87 0 0
River North Totals 16,243,258 165,385 525,953 3.2% 4.7% 5.1% $41.81 0 80,000
Kennedy West Totals 5,227,866 3,838 -10,521 -0.2% 9.4% 10.6% $32.15 0 1,176,000
Far West Loop Totals 1,709,818 -6,706 14,551 0.9% 11.4% 11.5% $29.95 0 0
Fulton Market Totals 2,871,567 5,985 -37,013 -1.3% 8.6% 10.6% $33.55 0 1,176,000
River West Totals 646,481 4,559 11,941 1.8% 7.7% 7.7% $31.75 0 0
CBD Totals 141,946,121 332,500 2,092,643 1.5% 9.6% 10.4% $37.55 0 7,265,664
Eastern East-West Totals 22,771,680 153,604 362,761 1.6% 14.6% 16.8% $24.58 0 0
Western East-West Totals 14,456,314 -113,269 -75,232 -0.5% 17.2% 19.4% $23.74 0 0
North (Cook County) Totals 9,716,234 -240,517 -175,582 -1.8% 16.2% 16.7% $27.88 0 0
North (Lake County) Totals 15,798,901 117,205 136,637 0.9% 20.7% 21.8% $24.51 0 0
O'Hare Totals 12,458,927 71,272 187,562 1.5% 16.5% 16.9% $24.64 0 0
Northwest Totals 26,022,860 156,358 76,957 0.3% 18.5% 19.6% $22.34 0 1,111,000
Suburbs Totals 101,224,916 144,653 513,103 0.6% 17.3% 18.6% $24.06 0 1,111,000
Chicago Totals 243,171,037 477,153 2,605,746 1.1% 12.8% 13.9% $29.96 0 8,376,664
West Loop A 29,661,434 346,198 553,378 1.9% 8.3% 9.4% $42.46 0 3,559,664
Central Loop A 10,191,682 -145,613 -49,309 -0.5% 9.1% 11.4% $40.71 0 0
East Loop A 5,511,381 14,782 305,957 5.6% 5.9% 6.0% $43.48 0 0
North Michigan Avenue A 2,871,938 4,276 84,120 2.9% 8.0% 8.0% $38.09 0 0
River North A 8,519,690 182,694 475,338 5.6% 2.8% 2.9% $48.64 0 50,000
Kennedy West A 1,072,473 -5,612 -1,802 -0.2% 2.8% 7.5% $32.03 0 0
Far West Loop A 35,462 0 21,959 61.9% 0.0% 0.0% $32.00 0 0
Fulton Market A 852,011 -5,000 -29,457 -3.5% 1.9% 7.8% $36.00 0 1,176,000
River West A 185,000 -612 5,696 3.1% 7.6% 7.6% $30.00 0 0
CBD A 57,828,598 396,725 1,367,682 2.4% 7.3% 8.3% $42.25 0 4,785,664
Eastern East-West A 9,728,397 55,283 2,920 0.0% 12.2% 15.1% $28.03 0 0
Western East-West A 5,534,716 1,012 24,036 0.4% 17.2% 20.4% $27.02 0 0
North (Cook County) A 5,446,551 -260,439 -211,346 -3.9% 20.1% 20.5% $29.39 0 0
North (Lake County) A 11,105,659 107,235 -107,640 -1.0% 21.2% 22.3% $25.14 0 0
O'Hare A 6,732,939 -13,242 11,403 0.2% 13.2% 14.0% $28.60 0 0
Northwest A 15,208,180 22,300 175,463 1.2% 9.1% 10.1% $24.47 0 1,111,000
Suburbs A 53,756,442 -87,851 -105,164 -0.2% 14.6% 16.1% $26.47 0 1,111,000
Chicago A 111,585,040 308,874 1,262,518 1.1% 10.8% 12.1% $31.98 0 5,896,664
West Loop B 14,142,482 -416,148 -432,531 -3.1% 14.5% 15.4% $34.80 0 0
Central Loop B 22,670,390 194,356 465,126 2.1% 9.3% 10.0% $34.94 0 0
East Loop B 12,342,590 27,178 261,151 2.1% 14.2% 14.8% $34.40 0 0
North Michigan Avenue B 5,946,800 106,056 171,463 2.9% 13.0% 14.0% $38.07 0 0
River North B 5,896,409 -6,650 66,792 1.1% 7.5% 8.1% $38.86 0 30,000
Kennedy West B 3,118,569 11,948 -14,627 -0.5% 10.8% 11.1% $32.43 0 0
Far West Loop B 1,230,612 -9,708 -13,616 -1.1% 9.2% 9.2% $29.78 0 0
Fulton Market B 1,517,292 16,485 -7,256 -0.5% 14.5% 15.0% $33.68 0 0
River West B 370,665 5,171 6,245 1.7% 1.1% 1.1% $20.00 0 0
CBD B 64,117,240 -83,260 517,374 0.8% 11.6% 12.4% $35.30 0 30,000
Eastern East-West B 10,550,151 85,537 315,297 3.0% 16.0% 17.9% $20.42 0 0
Western East-West B 7,835,479 -116,714 -108,245 -1.4% 17.6% 19.4% $20.57 0 0
North (Cook County) B 3,455,824 8,566 9,519 0.3% 12.1% 12.1% $23.76 0 0
North (Lake County) B 4,413,995 9,970 244,277 5.5% 20.6% 21.9% $22.86 0 0
O'Hare B 4,218,447 83,786 168,451 4.0% 22.6% 22.7% $21.45 0 0
Northwest B 9,099,934 135,178 -129,751 -1.4% 33.3% 34.4% $21.11 0 0
Suburbs B 39,573,830 206,323 499,548 1.3% 21.1% 22.4% $21.36 0 0
Chicago B 103,691,070 123,063 1,016,922 1.0% 15.3% 16.2% $27.94 0 30,000
200 E Randolph Street Chicago, IL 60601 tel +1 312 228 3189 hailey.harrington@am.jll.com
2016 Jones Lang LaSalle IP, Inc. All rights reserved.
Hailey Harrington Research Manager

4. Chicago | Q3 2016
Class Inventory (s.f.)
Total net
absorption (s.f.)
YTD total net
absorption (s.f.)
YTD total net
absorption (%
of stock)
Direct vacancy
(%)
Total vacancy
(%)
Average direct
asking rent ($
p.s.f.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
West Loop C 2,507,000 11,250 55,359 2.2% 5.1% 6.0% $32.25 0 0
Central Loop C 4,298,286 -23,090 -9,069 -0.2% 9.5% 10.9% $30.54 0 0
East Loop C 6,492,424 23,722 117,279 1.8% 12.0% 12.2% $30.71 0 0
South Loop C 1,264,787 2,812 8,652 0.7% 12.9% 12.9% $25.29 0 2,450,000
North Michigan Avenue C 2,573,803 20,310 54,287 2.1% 10.5% 10.5% $30.51 0 0
River North C 1,827,159 -10,659 -16,177 -0.9% 4.2% 5.9% $30.61 0 0
Kennedy West C 1,036,824 -2,498 5,908 0.6% 12.0% 12.2% $31.26 0 0
Far West Loop C 443,744 3,002 6,208 1.4% 18.2% 18.6% $28.83 0 0
Fulton Market C 502,264 -5,500 -300 -0.1% 2.3% 2.3% $32.10 0 0
River West C 90,816 0 0 0.0% 35.2% 35.2% $32.42 0 0
CBD C 20,000,283 19,035 207,587 1.0% 9.7% 10.4% $30.07 0 2,450,000
Eastern East-West C 2,493,132 12,784 44,544 1.8% 18.3% 19.0% $15.15 0 0
Western East-West C 1,086,119 2,433 8,977 0.8% 14.9% 14.9% $16.09 0 0
North (Cook County) C 813,859 11,356 26,245 3.2% 8.1% 10.3% $17.63 0 0
North (Lake County) C 279,247 0 0 0.0% 2.4% 2.4% N/A 0 0
O'Hare C 1,507,541 728 7,708 0.5% 13.7% 13.7% $14.61 0 0
Northwest C 1,714,746 -1,120 31,245 1.8% 23.4% 24.6% $17.90 0 0
Suburbs C 7,894,644 26,181 118,719 1.6% 16.4% 17.0% $16.70 0 0
Chicago C 27,894,927 45,216 326,306 1.2% 11.6% 12.3% $24.73 0 2,450,000
Hailey Harrington Research Manager
200 E Randolph Street Chicago, IL 60601 tel +1 312 228 3189 hailey.harrington@am.jll.com
2016 Jones Lang LaSalle IP, Inc. All rights reserved.