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

Glendale Heights/Lombard Submarket, Chicago MSA Fourth Quarter 2007

SUBMARKET MAP SUBMARKET FACTS

Submarket Metro

Population 226,539 9,573,949



20
Avg. Annual Five-Year Chg.* 0.3% 0.6%


290



294 Total Households 80,669 3,375,144

Avg. Annual Five-Year HH Chg.* 0.1% 0.4%

Glendale
Glendale Median Household Income $73,561 $63,393
Heights/
Heights/ Median Age 38.8 35.5
Lombard
Lombard
Employment 166,009 4,656,565


355


12
Vacancy Rate (3Q 07) 4.3% 4.6%


88

Avg. Asking Rent (3Q 07) $1,063 $1,035

* 2006-2011 Forecast



SUBMARKET VACANCY RANKING SUBMARKET HIGHLIGHTS

3Q 07 3Q 07 The Glendale Heights/Lombard submarket’s
Submarket Vacancy Asking Rents employment base is composed of mainly light manu-
facturing and warehousing, accounting for approxi-
Wheeling 2.7% $1,054
mately 17 percent of the submarket’s work force, as
O’Hare 4.1% $924 well as a significant service and retail sector, centered
around the Yorktown Center Mall, with 12 percent of
Aurora/Naperville 4.2% $1,041 the work force. These industries typically indicate
healthy renter demand, as employees in these sectors
Glendale Heights/Lombard 4.3% $1,063 tend to rent rather than own.
The apartment sector in the submarket has record-
Oak Park 4.7% $960 ed healthy fundamentals over the last three years. Since
the third quarter of 2004, vacancy has improved 350
Schaumburg/Hoffman 5.2% $1,043 basis points, asking rents have increased 7 percent, and
effective rents have advanced 8.2 percent. These factors
Glen Ellyn/Wheaton 5.5% $979 have created strong demand for investors; however, it
has been difficult for buyers to enter the market, as cur-
Woodridge/Lisle 5.8% $16.43 rent owners have posted robust NOI growth and have
remained unwilling to list their assets on the market, as
Palatine 6.2% $1,109 evidenced by the relatively slow pace of sales velocity
when compared to neighboring areas. The apartment
Downers Grove 6.7% $940
sector will further tighten in the foreseeable future, as
the submarket’s occupancy rate remains among the
best in suburban Chicago, and projected effective rent
growth, averaging 3 percent annually through 2011,
will yield increasing revenue streams.

Josh Gisselquist © Marcus & Millichap 2007

Research Associate www.MarcusMillichap.com
Glendale Heights/Lombard Submarket, Chicago MSA Apartment Submarket Report ◆ Fourth Quarter 2007

Construction Trends CONSTRUCTION TRENDS

500 ◆ Construction remained modest in the submarket, with only one
project completed in 2007. M&R Enterprises’ 112-unit Regency
375 Place Apartments in Oak Brook Terrace were delivered in the
Units Completed

third quarter of this year.

250
◆ Although the majority of multi-family developments in the
125 pipeline are condos or townhomes, Bristol Development has bro-
ken ground for a 270-unit apartment complex in Downers Grove.
0 The project is slated for delivery in the second quarter of 2009.
03 04 05 06 07*
* Forecast
Sources: Marcus & Millichap Research Services, Reis, TWR
◆ Developable land is scarce, which will limit new competition to
existing property owners in the submarket. The Glendale
Heights/Lombard submarket contains just over 16,000 units, rough-
ly 7 percent of all apartment stock located in suburban Chicago.

RENT AND VACANCY TRENDS

◆ Vacancy has improved steadily since 2004, and was recorded at
Asking Rent and Vacancy Trends
Average Asking Rent
4.3 percent in the third quarter of 2007, down 20 basis points from
$1,100 10%
Vacancy the third quarter of last year. As completions are minimal, absorp-
Average Asking Rent per Month

tion is forecast to remain level over the next two years, keeping
$1,050 8%
projected vacancy stable in the low-4 percent range.
Vacancy Rate

$1,000 6%
◆ Vacancy in the Class A sector has continued to tighten, dropping
40 basis points over the past year to 4.3 percent. The Class B/C
$950 4%
sector also posted a slight improvement in vacancy to 4.3 percent,
down 10 basis points year over year.
$900 2%
03 04 05 06 07*
* 3Q 2007
Sources: Marcus & Millichap Research Services, Reis
◆ Over the 12-month period ending in the third quarter of 2007, the
average Class A asking rent increased 3.8 percent to $1,300 per
month, while the Class B/C sector gained 5.2 percent to $936 per
month, as a result of pent-up demand for affordable housing.
Looking ahead, effective rent growth will likely continue to
eclipse asking rent growth due to the submarket’s shrinking con-
cessions and relatively high occupancy rates.

Sales Trends
SALES TRENDS
Median Price per Unit (thousands)

$100
◆ Despite healthy investor demand, limited for-sale product contin-
$90 ues to dampen sales velocity. The number of transactions fell 50
percent on a year-over-year basis, following four years of consis-
$80 tent velocity. Overall, the Glendale Heights/Lombard submarket
currently represents approximately 1 percent of metrowide sales.
$70
◆ The median sales price declined for the second straight year,
$60 dropping 9.8 percent in 2007 to $75,541 per unit. The decrease is
03 04 05 06 07*
due, in part, to a greater number of Class B/C offerings, selling
* Trailing 12 Months Ended September 30
Sources: Marcus & Millichap Research Services, CoStar Group, Inc. over this time period. Accordingly, cap rates compressed this year
to the mid-5 to upper-5 percent range, down from the mid-6 per-
cent range recorded over the same span.

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.