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Economic OverviewThe Triangle has become a center for economic growth. The Raleigh-Cary metro was recently ranked #3 in Bloomberg’s list of Boomtowns based on the region’s GDP growth and population growth of 1.49% and 11.06% respectively. Forbes named the Raleigh-Cary metro the 4th Fastest Growing City in America. They took population growth into account as well as job growth, unemployment, gross metro product and median salary. The Triangle added 13,819 jobs in the 12-month period ending in March 2013 bringing unemployment to 6.9%; this is above the seven-year average of 10,749 jobs.

Market OverviewTriangle office market totalled ± 41.4 million square feet at the end of 1Q13. The vacancy rate increased 0.9 percentage point to 16.5%. Class B buildings continue to have the highest vacancy rates at 20.7%. There was a negative net demand of 375,089 square feet during this period – much of this was attributed to tenant relocations and lease expirations on previously vacated blocks of space. Average rental rates for office space during the first quarter are $20.61, up by $0.10 per square foot. Downtown Raleigh has enjoyed the lowest vacancy rate at 6.0% and a positive net absorption of 7,572 square feet. Among those that reported positive net absorption were Downtown Durham at 17,525 SF, Orange County at 22,330 SF and Cameron Village at 8,260 SF. The largest negative net absorption were in the North Wake (-172,974 SF) and I-40/RTP (-186,810 SF) submarkets.

Tenant Relocations and Lease Expirations Strongly Influence 1Q13 StatsGenworth Financial’s lease at Northchase I and II expired in North Wake: a total of 176,255 square feet. They relocated to their 6-story, 129,347 SF build-to-suit office (in the same submarket) in 2009. Fidelity left 118,757 SF of space at Danbury Hall - Imperial Center in the NE Wake submarket. Pergo Flooring’s 33,797 SF lease expired at Red Oak. They consolidated their corporate office to their manufacturing plant in Garner prior to being acquired by Mohawk Industries. (The $150 million cash transaction was completed 1-10-2013.) Biogen left 31,538 SF at Cambridge Hall in I-40/RTP.

Downtown Durham’s new office building, The Measurement Building reported significant occupancy during the period when Measurement Inc. expanded into an additional 16,598 SF. East 64 in Orange County had a significant adjustment to occupancy of 12,000 SF. First Tennessee National Bank closed 5,000 SF at Glen Lake I in NW Wake and opened a branch in Cameron Village totaling 9,057 SF.

MARkET REPORTrALEIGH-DUrHAM

Q1 2013 | OFFICE

A Center of Economic Growth

WAKE COUNTY

DURHAM COUNTY

ORANGE COUNTY

GREATER TRIANGLE REGION

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

(500,000)

500,000

1,500,000

2,500,000

3,500,000

2008

2009

2010

2011

2012

2013

Squ

are

Feet

Absorption Vacancy %

HIstOrICAL VACAnCy AnD AbsOrptIOn

$18.00

$19.00

$20.00

$21.00

$22.00

2007

2008

2009

2010

2011

2012

2013

HIstOrICAL rEntAL rAtEs pEr sf

Triangle Market Average Class A

MArkEt InDICAtOrs

Q4 2012

Q1 2013

VACAnCy

nEt AbsOrptIOn

COMpLEtEtIOns

rEntAL rAtE

Us UnEMpLOyMEnt

trIAnGLE UnEMpLOyMEnt

7.5%

7.9%

7.8%

7.7%

U /C rEnt

AVErAGE AskInG rEnts | sUbMArkEts (pEr sf)

$10.00

$12.00

$14.00

$16.00

$18.00

$20.00

$22.00

$24.00 10

6

12

3

5

11

7

8

9

131

4

2

8570

40

40

85

40

85

540540

540

540

55

147

70

501

157

86

86

86

54

751

751

49

57

501

1598 98

50

54

55

64 1

440

440

40

40

40150

70

70

70

4242

55

401 55

264

64 64

264 97

96

1

1

1

401

MARKET COMPARISONS

OFFICE MARKET

SUBMARKET BLDGS TOTAL INVENTORY SF

TOTAL VACANT SF

TOTAL VACANCY

RATE

NET ABSORPTION CURRENT QTR

NET ABSORPTION

YTD SF

COMPLETIONS CURRENT QTR

SF

COMPLETIONS YTD SF

UNDER CONSTRUCTION

SF

PROPOSED SF AVERAGE ASKING

RENTAL RATE

CAMERON VILLAGE 20 648,928 54,732 8.4% 8,262 8,262 - - 0 0 $18.71

CARY 82 4,690,795 594,081 12.7% (27,514) (27,514) - - 0 2,413,039 $20.44

DOWNTOWN DURHAM 35 2,159,196 188,675 8.7% 17,525 17,525 - - 150,000 302,090 $22.08

DOWNTOWN RALEIGH 30 3,410,185 204,810 6.0% 7,572 7,572 - - 371,473 593,884 $21.52

I-40/RTP 143 10,870,516 2,929,653 27.0% (208,619) (208,619) - - 0 1,619,043 $19.87

NORTH DURHAM 27 1,548,459 262,442 17.0% 0 0 - - 0 0 $20.09

NORTH WAKE 91 5,633,142 904,415 16.1% (172,974) (172,974) - - 0 605,000 $20.62

NORTHEAST WAKE 38 1,931,047 284,672 14.7% (26,762) (26,762) - - - 378,000 $20.16

NORTHWEST WAKE 47 2,596,112 287,799 11.1% 6,920 6,920 - - 0 372,070 $21.37

ORANGE COUNTY 32 1,651,522 256,860 15.6% 22,330 22,330 - - 0 0 $22.87

SOUTH DURHAM 18 1,000,712 211,811 21.2% 6,084 6,084 - - 0 75,000 $18.65

SOUTH WAKE 12 313,123 56,128 17.9% 2,430 2,430 - - 0 144,975 $17.71

WEST WAKE 78 4,965,604 617,421 12.4% (34,262) (34,262) - - - 125,000 $21.32

TOTAL 653 41,419,341 6,853,499 15.6% (399,008) (399,008) - - 521,473 6,628,101 $20.51

QUARTERLY COMPARISON AND TOTALS

Q4-12 659 41,745,013 6,524,471 15.6% 166,290 - 0 - 411,473 6,314,367 $20.51

Q3-12 661 41,982,672 6,556,824 15.6% 295,768 - 109,563 - 307,513 6,258,367 $20.46

Q2-12 657 41,715,701 6,649,472 15.9% 279,393 - 87,379 - 357,017 6,476,367 $20.47

Q1-12 653 41,536,897 6,796,429 16.4% (151,227) - 0 - 444,017 6,563,367 $20.51

Q4-11 656 41,689,692 6,691,437 16.1% 90,401 - 48,300 - 294,017 6,713,367 $20.46

CLASS BREAKDOWN

Class A 14.4% $21.30Class B 20.2% $16.90Class C 6.1% $14.92Total

COnstrUCtIOn

sUbMArkEt MAp

There is currently 571,473 square feet of office space under construction in the Triangle. The Central Business districts’ growing proclivity for combining attractive amenities and visibility for growing businesses has led to significant relocations and new construction of multi-tenant leasable office space in these submarkets. Downtown Raleigh has 371,473 square feet under construction and 593,884 square feet proposed. This includes the renovation of 227 Fayetteville Street in downtown Raleigh; it began this quarter and is expected to be completed winter of 2014. The $8 million project will add a total of 110,000 square feet of entrepreneurial hub space to Downtown Raleigh, much like the American Tobacco Campus in Durham. Construction also began on the $25 Million Citrix headquarters (130,000 SF) in the warehouse district of downtown Raleigh. Completion of the State Employees Credit Union tower (131,473 SF) is expected in the second quarter. The Downtown Durham submarket currently has 150,000 square feet under construction and 302,090 square feet proposed. 95,000 square feet is preleased to FHI360 at Diamond View III. Cary has a total of 2,413,039 square feet of proposed construction, exceeding all other submarkets. This includes Veridia on US-1 (500,000 SF) and Alston Station on NC 55 near I-540 (400,000 SF).

1

23 4

56

78 9 10 11

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p. 2 | COLLIErs IntErnAtIOnAL

market report | Q1 2013 | OFFICE | RALEIGH - DuRHAm

Colliers International | Raleigh-Durham 702 Oberlin Road, Suite 400Raleigh, NC 27605TEL 919 832 1110www.colliers.com/rdu

Kathy GIGaCSenior Vice Presidentkathy.gigac@colliers.com, 919 582 3130

482 offices in 62 countries • $2 billion in Revenue • $71 billion Total Transaction Value• 1.12 billion square feet managed• 13,500 Professionals

www.colliers.com/marketname

Accelerating success.

raleigh AccoladesIn addition to gaining economic momentum, the Triangle demonstrates an ability to sustain its growth in an increasingly data-driven global economy. Recently, the National Consortium for Data Science (NCDS) launched the Renaissance Computing Institute (RENCI) at UNC Chapel Hill. Most of the founding members of NCDS (Cisco, SAS, NCSU, UNC-Chapel Hill, Duke University, RTI, etc.) are based in the Triangle and are interested in making the area a national hub for “business and data science research”. RENCI is a collaborative environment for data researchers, vendors, creators and users. Recently Citrix, leaders in the data-sharing industry, relocated to Raleigh, NC. Steve Nicholson, Senior Director of Real Estate Strategy and Operations at Citrix, recently revealed the factors behind their decision to expand into the market at the State of Downtown Raleigh address. Raleigh’s rich talent pool offers ‘The ability to attract and retain great talent’. Large, growing technology companies are becoming more aware of Raleigh’s investment potential, which could lead to more corporate expansions in downtown Raleigh.

Largest new Lease DealNew York technology company, Ipreo agreed to lease a full floor totaling 23,000 square feet of office space in the 17-story One Bank of America Building in downtown Raleigh. Ipreo will add a total of 250 new jobs. This deal will bolster economic activity in Downtown Raleigh and augment economic confidence in the submarket. Ipreo provides market intelligence, data and technology solutions to financial centers around the world. kevin Marcus, President and COO of Ipreo chose Raleigh because of “its strong university system and business-friendly environment conducive to recruitment and continued growth.”

Captrust tower sold for $98MJoint Venture owners, kane Realty Corp. and Duke Realty Corp. sold the 17-story office and retail center to California-based, kBS Realty Advisors for $98 million. Captrust Tower was built in 2009 and is 95 percent leased. kBS CEO Charles Schreiber selected Captrust Tower “due to the quality master-plan and the maturity of the mix of uses already in-place and planned.”

Raleigh Durham

www.colliers.com/rdu

This market report is a research document of Colliers International. Information herein has been deemed reliable and no representation is made as to the accuracy thereof. Colliers International Inc., and certain of its subsidiaries, is an independently owned and operated business and a member firm of Colliers International Property Consultants, an affiliation of independents companies with over 482 offices throughout more than 62 countries worldwide. Sources include: State of North Carolina Department of Commerce, CoStar, LoopNet, The kARNES Report, The Triangle Business Journal, Real Capital Analytics and the Research Triangle Park Foundation of North Carolina.

sELECt 1Q13 OffICE trAnsACtIOns

prOpErty ADDrEss sUbMArkEt sALE prICE sf typECaptrust Tower North Wake $98.3 Million 300,389 1 bldg/17 flrs

3900 North and South Paramount Pkwy1400 Perimeter Park Drive

I-40/RTP $50.1 Million 265,073 15-property portfolio

Erwin Square Plaza Downtown Durham $37.5 Million 242,000 1 bldg/10 flrs

Wells Fargo Office Park West Wake $36.8 Million 450,393 41-property portfolio

Rex Healthcare Wellness Center South Wake $9 Million 30,054 1 bldg/2 flrs

sALE

s

prOpErty sUbMArkEt tEnAnt sf typEOne Bank of America Building Downtown Raleigh Ipreo 23,000 New

Cambridge Hall I-40/RTP Nimble Storage 15,769 New

RDU Center III I-40/RTP Extreme Networks 29,368 Expansion

4700 Falls of Neuse Road North Wake Teague Campbell Dennis & Gorham 27,000 Relocation

Crescent Green Cary Xerox 154,519 Renewal

LEAs

Es

BaxteR M. WalKeR, III,Senior Vice Presidentbaxter.walker@colliers.com, 919 582 3112

fOUrtH QUArtEr HIGHLIGHts

lee holDeRSenior Vice Presidentlee.holder@colliers.com, 919 582 3129

market report | Q1 2013 | OFFICE | RALEIGH - DuRHAm