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

Glen Ellyn/Wheaton Submarket, Chicago MSA Fourth Quarter 2007

SUBMARKET MAP SUBMARKET FACTS



20
Submarket Metro

Population 217,968 9,573,949



64 Avg. Annual Five-Year Chg.* 0.5% 0.6%

Total Households 72,410 3,375,144

Avg. Annual Five-Year HH Chg.* 0.2% 0.4%

Glen Ellyn/
Glen Ellyn/
Wheaton
Wheaton Median Household Income $86,635 $63,393

Median Age 36.3 35.5



355

Employment 120,149 4,656,565

Vacancy Rate (3Q 07) 5.5% 4.6%

Avg. Asking Rent (3Q 07) $979 $1,035



88


34
* 2006-2011 Forecast

SUBMARKET VACANCY RANKING SUBMARKET HIGHLIGHTS

3Q 07 3Q 07 Fueled by a growing renter pool and stable vacancy
Submarket Vacancy Asking Rents rates, owners in the Glen Ellyn/Wheaton submarket have
recorded steady revenue streams over the last five years.
O’Hare 4.1% $924
Employment in the area is driven primarily by the retail
and service sectors, both of which further strengthen
Aurora/Naperville 4.2% $1,041
demand for local apartment space, as these employees
tend to rent rather than own. While the median household
Glendale Heights 4.3% $1,063
income is higher than the metro average, local incomes
vary widely across the area and across age groups. The key
Oak Park 4.7% $960
renters, those ages 20 to 29 continue to migrate to the area
for its location near key transportation corridors, as well as
Schaumburg/Hoffman 5.2% $1,043
its relatively low rents, which are below the metro average.
Kane County 5.3% $938
Available land is limited, prohibiting construction in
the submarket. No apartment complexes have been
Glen Ellyn/Wheaton 5.5% $979
delivered over the last five years, and developers have
yet to bring any new for-rent projects to local planning
Woodridge/Lisle 5.8% $962 boards. This scarcity of new units has allowed apartment
owners of all class sectors to enjoy healthy asking and
Palatine 6.2% $1,109 effective rent increases and shrinking vacancy rates.
Velocity has been slower in Glen Ellyn/Wheaton than in
Downers Grove 6.7% $940 competing submarkets in the metro due to an overall lack
of available for-sale inventory. Even though investor
demand exists, owners without organized balance sheets,
stable rent rolls and managerial efficiency will find it dif-
ficult to obtain fair market value offers, due to tightening
lender guidelines.

Josh Gisselquist © Marcus & Millichap 2007

Research Associate www.MarcusMillichap.com
Glen Ellyn/Wheaton Submarket, Chicago MSA Apartment Submarket Report ◆ Fourth Quarter 2007

Renter Demographics RENTER DEMOGRAPHIC TRENDS

100%
Ages 20-24 Ages 25-29 Ages 30-34 ◆ The Glen Ellyn/Wheaton submarket is a relatively small subur-
Ages 35-39 Ages 40-44
ban area comprised of nearly 15,000 rental units, which represents
50%
approximately 6 percent of the total suburban Chicago apartment
Percent Change

stock. Multi-family construction has been limited solely to town-

0% homes and condominiums over the past five years. Since 2003,
nearly 700 for-sale units have been delivered, with another 355
-50% units in the planning pipeline.

◆ While the majority of the total population declined from 2000 to

-100%
1990-2000 2000-2007 2007-2012* 2007, the 20- to 24-year-old cohort posted a strong 72 percent
* Forecast
Sources: Marcus & Millichap Research Services, U.S. Census Bureau increase, which contributed to the overall healthy performance of
the apartment sector in the submarket. Over the next five years,
the renter pool is not expected to grow at such a rate, but the key
renter age groups of the 20 to 24 year olds and the 25 to 29 year
olds are forecast to grow at 11 percent and 7 percent, respectively.
The expansion of these segments will further strengthen demand
for apartment units.

Asking Rent and Vacancy Trends

RENT AND VACANCY TRENDS
$1,000 Average Asking Rent 8%
◆ A lack of new construction and a steady employment base have
Vacancy resulted in a decrease in vacancy. The third quarter vacancy rate
Average Asking Rent per Month

$950 7%
averaged 5.5 percent, 80 basis points less than one year ago. Vacancy
Vacancy Rate

rates are projected to continue this downward trend through the

$900 6%
next 12 months as no new complexes are scheduled for delivery.

◆ Vacancy in Class A properties performed well during the third

$850 5%
quarter, as the rate dropped 120 basis points to 3.8 percent.
Vacancy in the Class B/C sector also improved, declining 50 basis
$800 4%
03 04 05 06 07* points from 12 months ago to 6.6 percent.
* 3Q 2007
Sources: Marcus & Millichap Research Services, Reis
◆ Over the past year, the average effective rent in the Glen
Ellyn/Wheaton submarket has increased 7.4 percent to $917 per
month, representing the fifth largest effective rent gain of all sub-
markets in the Chicago metro. Concessions are expected to com-
press over the next 12 months, allowing owners to record healthy
revenue streams due to rising tenant demand resulting from a
cooling for-sale market and tightening lender guidelines.

Sales Trends SALES TRENDS

Median Price per Unit (thousands)

$100
◆ Given that 65 percent of the submarket’s total apartment invento-
ry is Class B/C units, a lack of high-end for-sale inventory has
$90
driven down the median sales price in the area and kept it below
that of neighboring submarkets. The median sales price has
$80
decreased 15 percent during the last 12 months to $79,292 per unit.
Demand in the area has been consistent over the past four years, as
$70
sales velocity has been stable, showing that investor demand is
present but limited by a small available for-sale market.
$60
03 04 05 06 07*
* Trailing 12 Months Ended September 30 ◆ Cap rates have compressed recently. After two years in the upper-
Sources: Marcus & Millichap Research Services, CoStar Group, Inc. 6 percent to low-7 percent range, cap rates have dropped to the
low- to mid-6 percent range, as transactions have been limited to
lower-tiered offerings. Nevertheless, cap rates are still able to
attract buyers seeking entry into the submarket for the healthy
fundamentals that have been recorded over the last three years.

Josh Gisselquist © Marcus & Millichap 2007

Research Associate 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.