Chris feurer, CeOJAMESON SOTHEBY’S INTERNATIONAL REALTY

A stable Chicago market has 4 months of inventory; a sellers’ market less than that and a buy-

ers’ market has more. By the end of 2012 we had 3.4 months of inventory which created a

strong seller market. This number is down 73% from 2011. Concurrently, prices are still down

approximately 35% from their peak in 2006, so this creates a strong value for buyers.

Inventory levels have been shrinking rapidly; including the “shadow market” (these are the

properties that are in distress and will most likely have to be sold). Investors have been

gobbling these properties up either one at a time or buying large packages from major

national banks.

The lack of inventory in the market, both locally and nationally, is helping to push home prices

back up. Most U.S. major cities have already experienced fairly strong Real Estate rebounds.

Chicago is lagging behind this trend, but we see the same factors in our market that created

these increases in other cities. Some neighborhoods, such as Lincoln Park and River North, did

experience price increases in 2012.

A much larger group of sellers have had enough time to accept the current market value of

their home, which is down considerably. Banks have gotten more efficient with their ever

changing requirements for loans. Realtors® have had enough experience with this “new

market” to help buyers and sellers navigate the negotiations and closing of a sale.

The spring market in 2013 seems to have arrived early in Chicago. Our January sales numbers

are up 21% from 2012. Jameson Real Estate had an increase in transaction volume of 55%

from 2011, which pushed us just above $1 Billion for the year in residential and commercial

transactions.

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KEY OBSERVATIONS2012 yielded the best price versus the costs of rent in history. rents have skyrocketed, making the prospect of home buying more attractive. Chicago has one of the most affordable housing inventories in the nation, compared to people’s income. a highlight of 2012 was the reduction of inventory.

we are finally feeling the lack of new construction and the absorption of excess inventory. Multiple bid situations and very low market times on appropriately priced homes in desirable neighborhoods were the key indicators.

GROSS DOMESTIC PRODUCTChicago ranks 4th worldwide among cities with the largest Gross Domestic Product.

ENTREPRENEURIAL HOTSPOTSChicago is #10 in the world’s entrepreneurial hot spots in startup activity; providing a vital component of job creation and venture capital funding. Source: Crain’s Chicago Business 11.23.2012

SWEET HOME CHICAGOChicagoland is home to an impressive 32 Fortune 500 companies.

Source: CityofChicago.org

NEW CONSTRUCTION SALESLocal new home sales rose 18% in 2012, the first increase since 2005.

Source: ChicagoRealEstateDaily.com

32 460 #10

Over $1 Billion in Volume for 201235,000

30,000

25,000

20,000

15,000

10,000

5,000

‘94 ‘12‘10‘08‘06‘04‘02‘00‘98‘96

0

3,4452,859586

Metropolitan AreaIncludes 10 counties in IL & Kenosha Co, Wi

Suburbs

Chicago

LUXURY LISTINGSChicago offers buyers incredible luxury real estate. 461 West Superior in River North sold for $8,545,000 in 2012.

8.5

as tabulated internally as of December 31, 2012, utilizing a standardized accounting system. the stated volume represents all transactions at all Jameson real estate LLC offices, and includes residential transactions as well as commercial.

2012 at a Glance: ChicagoYear-end 2012 home sales in the city of Chicago totaled 22,333, up 22.4

percent from 2011 home sales. The year-end median home sale price in

Chicago was $185,000, up 5.7 percent from 2011. Year-end 2012 home

sales totaled 90,365 in the greater nine-county Chicago metro region, up

26.7 percent from 2011. Looking specifically at the city’s condo market,

November 2012 enjoyed a sales increase of 36.2 percent to 1,047 units

sold, compared to November 2011.The year-end 2012 median home

sale price in the region reached $160,000, down 1.5 percent from 2011.

REALTORS® are encouraged by positive trends across the Chicago market.

The trends continue statewide; Illinois home sales increased 30.6 percent

over previous-year levels in November and median prices increased 7.7

percent, according to the Illinois Association of Realtors®. Additionally, a

decrease in days-on-the-market for Chicago homes signals greater

confidence among buyers who are picking up attractively priced homes

while they still can. Looking ahead to 2013, we see promise for industry’s

progress toward recovery. Source: Chicago Association of Realtors®

2012

2011

2010

5,000 10,000 15,000

SHRINKING INVENTORY: CHICAGO HOMESThe number of Chicago homes for sale shrunk by 20.9% from 2010 to 2011. Between 2011 and 2012, the number shrunk by 42.4%.

Source: Chicago Association of Realtors®

MEDIAN SALES PRICEOver the past year Median Sales Price for all properties is up 19.4%.

Source: Chicago Association of Realtors®

CLOSED SALESThe one year change in Closed Sales for all properties is up 16%.

Source: Chicago Association of Realtors®

19.4

16

MONTH

AVERAGE TIME ON MARKETIn 2012, the average time a residential property spent on the market went from 161 days to 136 days for a total shift of -15.1%

Source: Chicago Association of Realtors®

2012 at a Glance: Evanston & WinnetkaStatistics for the North Shore show transactions are up in general even though average and median sale prices show only modest increases, if any. With

inventory low, more realistic pricing of homes, which is reflected in fewer price reductions, and interest rates still low, there is a positive outlook for 2013.

Closed transactions for the North Shore were up 32% in 2012 over 2011. Contracts pending at the end of 2012 were up 25% over the pending contracts

at the end of 2011. The number of price changes was down 31% for 2012 over 2011 reflecting more accurate listing prices.

The average sale price for single family homes(detached) on the North Shore was down 8% while the median price remained flat. The average sale price

for attached housing was down 9% with the median price down 11%.

There are some bright spots. Detached houses showed price increases in several communities. Evanston closed transactions were up 24% with the

average sale price up 5.9% and the median price up 3.3%. Wilmette transactions were up 28% with the average price up .5%, but the median price fell

8%. Winnetka’s transactions and average sale price were down but the median price was up 4.8%. Glencoe showed an 8% increase in transactions with

a 2% increase in average sale price, but the median price was down 1.5%. Highland Park’s transactions increased 19% with average sales up 2% and the

median price up 8%.

Attached housing also showed increases in several communities. Evanston had a 15% increase in transactions but was down 14% in average price and

13.5% in median price. Wilmette had an 8% increase in transactions and a 2% increase in average sale price, but down 7% in median price. Winnetka had

an amazing increase of 150% in transactions and a 14% increase in sale price, with a 4.6% increase in median price. Highland Park had a 90% increase in

transactions but still fell 12% in average sale price and even more at 18% in median price.

Above information was taken from the Midwest Real Estate Data (MRED) as published by the North Shore Barrington Association of Realtors (NSBAR).

The statistics provide an overview of the North Shore in 2012 compared to 2011.

CLOSED SALESThe 1 year change in Closed Sales for Winnetka is up 6.5%Source: Chicago Association of Realtors®

6.5

CLOSED SALESThe one year change in Closed Sales for Evanston is up 19.9%Source: Chicago Association of Realtors®

19.9HOME SALES, EVANSTONThe number of home sales in December 2012 rose 31.3% compared to December 2011.Source: Chicago Association of Realtors®

31.3

HOME SALES, WINNETKAThe number of home sales in December 2012 rose 50% compared to December 2011.Source: Chicago Association of Realtors®

50WINNETKA PROPERTIES ON MARKETThe number of homes available for sale went down 27.1%.Source: Chicago Association of Realtors®

27.1

EVANSTON PROPERTIES ON MARKETThe number of homes available for sale went down 41.8%.Source: Chicago Association of Realtors®

41.8

209 E. Lake Shore Drive

Price: $6,550,000Price per SF: $1,129.31

11 E. Walton

Price: $6,200,000Price per SF: $1,033.33

1141 W. Sheridan

Price: $5,100,000Price per SF: $463.63

1701 N. Dayton

Price: $4,500,000Price per SF: $562.50

1703 N. Dayton

Price: $4,275,000Price per SF: $521.34

2012 SIGNIFICANT SALES

2012 SIGNIFICANT SALES

718-47 W. Irving Park

Price: $16,450,000Two Courtyard Buildings$147,000 per unit

4014 West Lawrence

Price: $10,350,000Strip Mall with Chase Bank, Starbucks, etc7.25 CAP / $287 per SF

Southport & Addison

Price: $48 per SFLeased to LuLuLemon

119 Main St, Naperville

Price: $8,500,000Change of use from 55+ to Master Lease Student Housing

8780 W. Golf Rd, Niles

Price: $2,300,00012 Unit Medical Office$191,666 per Unit

KEY OBSERVATIONSCap rates in the single tenant leased sector compressed in the 4th Quarter of 2012 due to lack of available product, more so in investment grade assets below $2 million in value, while demand for investment grade as-sets remains high. Multi-unit investment properties continue to rise in value

and investment sales of retail properties grew substantially. Investors are looking for new opportunities to diversify and in search of a better cap rate or deal. Banks are flush with liquidity and eager to lend but they are being very selective as to what they are financing.

4010WORLD’S STARTUP HOTSPOTSChicago cracked the top 10 in startup activity in a new analysis of the world’s entrepreneurial hotspots.Source: Chicago Association of Realtors.

LARGE CONTIGUOUS SPACEThe supply of downtown spaces over 100,000 square feet has increased by more than 40% over the past year.

OFFICE VACANCY RATESThe downtown office vacancy rate was 14.8% in the third quarter of 2012, down from 15.8% a year earlier.

CAPITAL GAINS TAX INCREASEWith new tax laws taking effect, demand for 1031 trade property looks to increase in 2013.

BY THE NUMBERSChicago was second to only Los Angeles in the top 25 market ranking by Retail Transaction Volume in 2012.Source: Real Capital Analytics, compiled by IRR

TOP 25 1031

The Chicago area industrial property vacancy rate has fallen to the lowest level since 2008.

PERCENT INCREASEJameson Commercial’s total sales and leasing volume increased 144.1% from 2011 to 2012.

144

14.8

Nationwide, all major commercial property types enjoyed NOI growth in 2012 for the first

time since 2008. Multi-unit investments led the way with a rise in value due to a strong rental

market. The demand for multi-units should continue to be strong with low inventory and

investors looking for 1031 Exchange property with new tax laws instituted in 2013. Developers

are back in the market looking for properties to add value by converting into single family

homes, updated rentals or condos or to tear down and build new construction.

Retail sales and leasing were also very strong and appear to be doubling over the next few

years. The average annual retail absorption from 2009-2012 was 200,000 square feet. The forecasted

average annual retail absorption for 2013-2015 is 500,000 square feet.

In 2012, Jameson Commercial enjoyed its most successful year since 2007, selling

$203,412,832 including leases, which was a 144.1% increase over the year prior.

The commercial division has grown to over 40 practitioners with expertise in Multi-Unit

properties, Investment Sales, Retail Sales and Leasing, Office Sales and Leasing, Tenant

Representation and Industrial

2012COMMERCIALYEAR IN REVIEW

Mike satO, PresiDentJAMESON REAL ESTATE, LLC

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