IndustrialResearch

S U B M A R K E T R E P O R T
South Cook County Submarket, Chicago MSA First Quarter 2008

SUBMARKET MAP SUBMARKET FACTS

 

Oak Lawn
Oak
Oak Lawn
Lawn

12
Submarket Metro

Population 658,758 9,573,949

Palos Park
Palos
Palos Park
Park Alsip
Alsip
Alsip
Alsip 

94 

90

Avg. Annual Five-Year Chg.* 0.0% 0.6%



57
Calumet
Calumet
Calumet
Calumet
Calumet
Calumet
Orland
Orland Park
Orland Park
Park
Park Harvey
Total Households 229,500 3,375,144
Orland
Orland Park Oak
Oak
Oak
Oak
Oak Forest
Forest
Forest
Oak Forest
Forest
Forest Harvey
Harvey
Harvey
Harvey
Harvey City
City
City

7 

6
Avg. Annual Five-Year HH Chg.* -0.2% 0.4%
Tinley
Tinley
Tinley
Tinley
Tinley
Tinley South
South Cook
Cook 

80
Park
Park
Park
County
County Lansing
Lansing
Lansing
Lansing
Lansing
Lansing Median Household Income 61,658 $63,393


INDIANA

80


57
Median Age 37.1 35.5
Chicago Heights
Chicago
Chicago
Chicago
Chicago Heights
Heights
Heights
Heights


30
Employment 254,947 4,656,565
Frankfort
Frankfort
Frankfort
Frankfort
Frankfort
Frankfort 

30

Vacancy Rate (4Q 07) 9.8% 10.1%

Crete
Crete
Crete
Crete Willowbrook
Willowbrook
Willowbrook
Willowbrook
Willowbrook
Willowbrook


45


1 

394 Avg. Asking Rent (4Q 07) $3.78 $5.13
Monee
Monee
Monee
Monee
* 2007-2012 Forecast

SUBMARKET VACANCY RANKING SUBMARKET HIGHLIGHTS

4Q 07 4Q 07 South Cook County is conveniently located in the
Submarket Vacancy Asking Rents Chicago region and offers access to cities in Indiana and
southern Illinois via Interstate 80 and Interstate 294.
McHenry County 5.4% $4.81
Although the South Cook County industrial submarket
West Cook County 5.8% $4.79 remains strong, slower economic growth and addition-
al inventory are putting upward pressure on vacancy.
North Cook County 5.9% $4.98 Newer properties have been the most affected, with
occupancy rates well above the metro average, where-
West Chicago 8.4% $3.39 as older, less-expensive multi-tenant assets have kept
vacancy below 10 percent. Demand could continue to
O’Hare 9.5% $6.48 wane during the coming year due to a decrease in con-
sumer spending, relieving the need for distribution and
South Cook County 9.8% $3.78 warehouse space.
Deal flow in the area has slowed in the last year,
Southwest/I-55 12.4% $4.05 though owner-users remain active, supporting sales
and driving price appreciation. This year, buyers will
rely on single-tenant properties with long-term,
secured leases to provide stability and immediate cash
flow. Overall, investors should approach South Cook
County with cautious optimism and an increased
amount of due diligence, as additional competition
from newer buildings in surrounding submarkets
could soften demand in the future.

Chris Best © Marcus & Millichap 2008

Research Associate www.MarcusMillichap.com
South Cook County Submarket, Chicago MSA Industrial Submarket Report ◆ First Quarter 2008

Construction Trends CONSTRUCTION TRENDS

◆ In 2007, developers completed 797,000 square feet of industrial
Square Feet Completed (thousands)

2,000
space, the same amount delivered in the previous year. Builders
1,500 boosted inventory by 1.4 percent last year.

1,000 ◆ Supply growth will decelerate this year, as builders are scheduled
to bring online 496,000 square feet of stock, below the five-year
500 annual average of 750,000 square feet. In the first quarter of 2008,
two projects totaling 50,000 square feet were delivered.
0
04 05 06 07 08* ◆ There are two developments in the planning pipeline that, if com-
* Forecast
Sources: Marcus & Millichap Research Services, Reis, TWR pleted, would total over 1 million square feet of new industrial
space. The largest of these projects is a 900,000-square foot specu-
lative distribution center in Tinley Park.

RENT AND VACANCY TRENDS

Asking Rent and Vacancy Trends ◆ Vacancy in the South Cook County submarket increased 120 basis
Average Asking Rent per Square Foot

Average Asking Rent 12%

$4.50 Vacancy points in 2007 to 9.8 percent. The trend is expected to continue in
2008, with vacancy rising another 80 basis points to 10.6 percent due
$4.00 11% to tenants moving out of the area and elevated construction levels.
Vacancy Rate

10%
$3.50 ◆ Despite vacancy increasing last year, owners were eager to recov-
er rents that were significantly lowered in 2006 to be competitive
$3.00 9% with surrounding submarkets. As a result, asking rent growth in
2007 was 3 percent, or $3.78 per square foot.
$2.50 8%
04 05 06 07 08*
* Forecast ◆ The average asking rent in 2008 is expected to grow more mod-
Sources: Marcus & Millichap Research Services, PPR, Reis
estly, ticking up 1.9 percent to $3.85 per square foot. Payroll cuts
in the manufacturing and industrial sectors will soften demand
for space and limit owners’ ability to significantly raise rents.

Sales Trends
SALES TRENDS
$40
◆ Transaction velocity in the submarket has decelerated by 25 per-
Median Price per Square Foot

cent in the last 12 months, as investor interest has diminished. A

$35
slowdown in the economy and a trade imbalance have lessened
demand for manufacturing space.
$30
◆ The median sales price for industrial properties skyrocketed to
$25 $37 per square foot last year, a 30 percent improvement from 2006.
Investors have focused on higher-quality, well-located assets,
$20 supporting the increased median price.
03 04 05 06 07
Sources: Marcus & Millichap Research Services, CoStar Group, Inc. ◆ Marketwide cap rates are averaging within the high 6-percent to
high 7-percent range, as initial returns on all assets appear favorable.

Chris Best © Marcus & Millichap 2008

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.