ABSORPTION

The Chicago industrial market has reported occupancy losses throughout 2008.      Halfway through the year, negative        absorption amounts to 9,184,929 square feet; of this number, 6,851,936 of negative   absorption took place in the second quarter.  All occupancy loss was witnessed in the Chicago Metro Area and Northwest Indiana;  Wisconsin has reported positive absorption in the first half of the year.

Submarkets accounting for the most     significant occupancy losses are Will, Kane, DuPage, and I-55 Corridor: these four   submarkets each reported in excess of one million square feet of negative absorption for the quarter. Collectively, these four         submarkets account for 73% of the Chicago Metro Area’s total absorption. Other poor performers for the quarter were South Cook and North Cook. Chicago South has been the consistently strongest performing    submarket with a year-to-date absorption of 852,992 square feet.

Despite this increase in negative           absorption, leasing activity remains strong and several deals in excess of 100,000 square feet were signed in the second  quarter.  The issue, therefore, may not be lack of demand, but rather, too much    supply.   However, even with the increasing vacancy and expected spec deliveries which will further exacerbate the demand/supply ratio, landlords have kept rents flat throughout the first half of the year. With hints that the economy could rebound as early as 2009, it is clear that Chicago    landlords are thinking long-term.