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

Schaumburg/Hoffman Submarket, Chicago MSA Fourth Quarter 2007

SUBMARKET MAP SUBMARKET FACTS



90 Submarket Metro

Population 283,531 9,5753,949

Avg. Annual Five-Year Chg.* 0.2% 0.6%

Schaumburg/
Schaumburg/ 

290

Total Households 99,378 3,375,144

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

Median Household Income $79,330 $63,393

Median Age 35.4 35.5



20

Employment 124,762 4,656,565

Vacancy Rate (3Q 07) 5.2% 4.6%



355 Avg. Asking Rent (3Q 07) $1,043 $1,035


64
* 2006-2011 Forecast

SUBMARKET VACANCY RANKING SUBMARKET HIGHLIGHTS

3Q 07 3Q 07 The Schaumburg/Hoffman submarket had one of
Submarket Vacancy Asking Rents the fastest-growing populations in suburban Chicago
during the 1980s and 1990s. Despite slowing growth
Wheeling 2.7% $1,054
overall, the 20- to 24-year-old cohort is forecast to
expand by 5 percent over the next five years, which will
O’Hare 4.1% $924
further strengthen demand for apartment units.
Schaumburg, which anchors the submarket, has
Aurora/Naperville 4.2% $1,041
emerged as a significant business hub. The city boasts
more than 12 million square feet of office and industri-
Glendale Heights 4.3% $1,063
al space centered around the Woodfield Regional
Center in northeast Schaumburg and approximately 10
Schaumburg/Hoffman 5.2% $1,043
million square feet of retail and commercial space prox-
imate to the Woodfield Mall. The submarket’s substan-
Kane County 5.3% $938
tial commercial infrastructure and its access to trans-
portation corridors have attracted major corporations
Glen Ellyn 5.5% $979
such as Motorola, Cingular, Experian and IBM.
Schaumburg/Hoffman’s elevated median home
Woodridge/Lisle 5.8% $962
price is keeping demand for apartments higher in the
submarket than in neighboring areas. As a result, ask-
Palatine 6.2% $1,109
ing rents are among the steepest in the suburban
Chicago area and are projected to remain healthy for
Downers Grove 6.7% $940
the foreseeable future. Investors seeking value-add
opportunities will be attracted to the area, as more than
75 percent of the submarket’s inventory is Class B/C
complexes that can be become turnkey operations with
efficient management and upkeep.

Josh Gisselquist © Marcus & Millichap 2007

Research Associate www.MarcusMillichap.com
Schaumburg/Hoffman Submarket, Chicago MSA Apartment Submarket Report ◆ Fourth Quarter 2007

Apartment Inventory by Class CONSTRUCTION TRENDS

Class A
32
Class B/C
◆ Over the past five years, multi-family construction has been limit-
ed solely to townhomes and condominiums. Since 2002, more
24 than 1,300 for-sale units have been constructed in the submarket.
Units (thousands)

16 ◆ Apartment-to-condo conversions have reduced local apartment

stock by approximately 1,000 units over the past three years.
8
◆ Due to the sluggish housing market, the number of reversions
0 increased in the previous quarter and will likely continue to climb
03 04 05 06 07*
* 3Q 2007 throughout 2008. As the condominium market weakens and lend-
Sources: Marcus & Millichap Research Services, Reis
ing guidelines tighten, demand for apartments will increase allow-
ing for higher rents, decreased concessions and elevated NOIs.

RENT AND VACANCY TRENDS

◆ A shortage of new construction and a reduction in inventory have
Asking Rent and Vacancy Trends supported an improvement in vacancy. As of the third quarter,
$1,100 Average Asking Rent 10% the average vacancy rate was 5.2 percent, down 260 basis points
Vacancy
Average Asking Rent per Month

from its peak in 2003. Further tightening is expected through the

$1,050 8% next 24 months.
Vacancy Rate

$1,000 6% ◆ Vacancy in the Class B/C segment has remained slightly higher at
5.3 percent, compared with the 5.1 percent vacancy rate recorded
$950 4% in the submarket’s upper-tiered assets.

$900 2% ◆ Owners continue to withdraw concessions. Over the past 12

* 3Q 2007
03 04 05 06 07* months, effective rents have increased 4.3 percent to $964 per
Sources: Marcus & Millichap Research Services, Reis month, while the average asking rent has gained 3.4 percent to
$1,043 per month.

SALES TRENDS
◆ Investors persist in targeting this prime, suburban submarket.
Sales Trends Transaction velocity in 2007 is expected to remain at a consistent
level with the previous 36 months.
Median Price per Unit (thousands)

$120

$100 ◆ The median sales price has increased 28 percent to $102,344 per
unit this year. This rate of change is skewed, however, due to an
$80 elevated amount of lower-tiered offerings in 2006. The quality of
for-sale inventory increased this year, as more than 60 percent of
$60 transactions sold for more than $100,000 per unit, compared with
less than 30 percent in 2006.
$40
03 04 05 06 07*
◆ Cap rates held steady in the high-6 percent to low-7 percent range
* Trailing 12 Months Ended September 30
Sources: Marcus & Millichap Research Services, CoStar Group, Inc. in 2005 and 2006 but have begun to compress this year due to an
elevated amount of premium offerings. Nevertheless, cap rates in
the submarket remain attractive enough to draw out-of-state
investors to the area.

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.