COLLIERSINTERNATIONAL USRealEstate Review2008 · LETTER FROM THE DIRECTOR OF RESEARCH COLLIERS INTERNATIONAL l US REAL ESTATE REVIEW 2008 colliers.com 1 Inlastyear’sUSRealEstateReviewwelistedanumber

colliers.com

US Real EstateReview 2008

COLL IERS INTERNATIONAL

Colliers Research Services Group is recognized as a knowledge leader in thecommercial real estate industry, and provides clients with valuable marketintelligence to support business decisions. Colliers researchers providemulti-level support across all property types, ranging from data collectionto comprehensive market analysis.

Colliers Research has developed powerful technological tools to provideclients with valuable market intelligence. Our expansive databases housedetailed information on properties nationwide, including historical supply,demand, absorption data, and transaction comparables. Research uses thisinformation to produce quarterly surveys of office and industrial marketsin over 70 North American metropolitan areas.

Colliers research reports provide standardized information for each market.Market Highlights reports based upon quarterly surveys include inventory,vacancy, absorption and rental rates in side-by-side comparisons forNorth American markets as well as quarter-to-quarter comparisons andaggregated national statistics. Investment sales prices and cap rates arereported as well.

Research groups across the country also have expertise in location andsite analysis, geographic information systems, and financial modeling.To ensure that our clients’ real estate decisions are thoroughly informed,our researchers perform numerous financial analyses. Options includecomprehensive occupancy cost comparisons for potential lease locationsand complex lease vs. own scenarios.

The information contained herein has been obtained from sources deemed reliable. While every reasonableeffort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for anyinaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of thematerial contained in this report.

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COLLIERS RESEARCH

TABLE OF CONTENTS

UNITED STATES REAL ESTATE REVIEW

Letter from the Director of Market and Economic Research 1US Real Estate 3– US Office Market 3– US Industrial Warehouse Market 4– US Retail Centers 5– US Investment Sales Market 5 – 6

Glossary 70Colliers USA Office Locations 71

US CITY ANALYSES AND FORECASTS

Atlanta, GA 9Bakersfield, CA 10Baltimore, MD 11Boise, ID 12Boston, MA 13Charleston, SC 14Charlotte, NC 15Chicago, IL 16Cincinnati, OH 17Cleveland, OH 18Columbia, SC 19Columbus, OH 20Dallas/Ft. Worth, TX 21Denver, CO 22Detroit, MI 23Ft. Lauderdale/Broward County, FL 24Fresno, CA 25Greenville, SC 26Hartford, CT 27Honolulu, HI 28Houston, TX 29Indianapolis, IN 30Jacksonville, FL 31Kansas City, MO-KS 32Las Vegas, NV 33Little Rock, AR 34Los Angeles, CA 35Los Angeles/Inland Empire, CA 36

Louisville, KY 37Memphis, TN 38Miami/Dade County, FL 39Milwaukee, WI 40Minneapolis, MN 41Nashville, TN 42New Jersey – Central 43New Jersey – Northern 44New York, NY 45 – 47Oakland, CA 48Orange County, CA 49Orlando, FL 50Philadelphia, PA 51Phoenix, AZ 52Pleasanton/Walnut Creek, CA 53Portland, OR 54Raleigh/Durham, NC 55Reno, NV 56Sacramento, CA 57San Diego, CA 58San Francisco, CA 59San Francisco/San Mateo Peninsula, CA 60San Jose/Silicon Valley, CA 61Seattle/Puget Sound, WA 62St. Louis, MO 63Stockton, CA 64Tampa Bay, FL 65Washington, DC 66 – 67West Palm Beach, FL 68

CO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

colliers.com

LETTER FROM THE DIRECTOR OF RESEARCH


colliers.com 1

In last year’s US Real Estate Review we listed a numberof “crises” that might derail a near perfect period forcommercial real estate. Being somewhat prescient, onesuch item was a debt crisis which of course is exactlywhat transpired beginning in August and continuinginto 2008. The subprime lending debacle has been wellchronicled and is a story that still is without an end.For readers of this report, the concern now is how willevents transpiring in the residential world impact ouruniverse as leases come up for renewal, developmentprojects get a second look, mortgages are refinanced andinvestment decisions are made. The outlook has neverbeen so murky but the key to navigating safely throughsuch dangerous waters is good information, good adviceand a little perspective. That is the intent of this report.

In the following pages we have provided market bymarket data and commentary for 57 metropolitan areasacross the country. Local researchers have providedinsight into likely market movements bearing in mindmarket conditions and current fundamentals. The resultis one of the most comprehensive reviews of its kind.

So what are the common themes coming through inthis year’s report? The overwhelming concern from everycorner of the country is the economy and specifically thehousing market. Almost every city listed housing as thenumber one issue likely to affect the local economy andthe possible impact on income-producing real estate.Layered on top was the availability of credit and thelikely impact of a significant pullback by lenders for aprolonged period.

Difficulties in credit markets are nothing new andfinancial markets have demonstrated a talent for beingflexible enough to avert a material downturn. This timehowever, the problem is considerably larger and muchmore complicated. This begs the question whether theFederal Reserve, along with other central banks, canprovide the much needed support and liquidity thatis required. The answer is “probably” but, any suchtreatment will take time to see the results, thus a quickturnaround is highly unlikely.

For commercial real estate owners a slow recovery isnever good news but the industry is entering into thisperiod of sluggishness in reasonably good shape.The biggest concern in going into a slowdown hashistorically been an unusually large developmentpipeline. But this time around development activityis abnormally low. A surge in sublease space is highlyunlikely because firms weren’t generally “space banking”as was the case in the last downturn. Lastly, for the mostpart owners are also better capitalized meaning landlordswon’t be forced to act hastily.

This is not to suggest the coming months and quarterswon’t be full of tension and anxiety – they will.Whenever the economy slows substantially, as recentdata has indicated, there is good reason to be cautious.Leasing activity will slow, real estate transactions will bedown considerably and many developments will be puton hold. The key to any sense of normalcy will be thepublic debt markets. Until stability returns to the world’scredit markets commercial real estate will continue totread water. Access to debt has always been a criticalingredient for our industry and that is no less true today.Real estate markets will fluctuate over the coming yearbut the general direction is still up as fundamentals areunlikely to weaken substantially and actions by theFederal Reserve and other policymakers eventually takeeffect. As always, the road ahead no doubt will offermany opportunities and it is often at times like thisthat “once in a life-time opportunity” comes a along.Be assured everyone at Colliers is available to help youachieve your goals and hope this report goes somewayto help you navigate through this restless period.

Ross MooreSenior Vice President, Market & Economic [email protected]

AtTimes LikeThis, Good Information, GoodAdvice and a Little Perspective are Critical

colliers.com 3

US REAL ESTATE


US Office Market• Demand for office space was off from 2005/2006 levelsas the national economy slowed and hiring declinedthrough 2007

• Office rents increased again led by New York,San Francisco, Boston and Washington, DC

• Relative to 2006, rental increases were more broadbased, both regionally and downtown/suburban areas

• Rental growth is almost certain to slow even thoughmany markets report balanced market conditions

• The US office vacancy rate fell marginally in 2007 butfor 2008 the national vacancy rate is almost certain torise in the face of modest construction and belowtrend absorption

• 2008 absorption is expected to be down from 2007 levels

• Office construction will increase relative to 2007levels but a sharp drop-off is anticipated by year-end

• Very few markets could be described as oversupplied

• Sublease space is not anticipated to spike as signs of“over leasing” by tenants has not been observed

• Shadow space will not be a feature in thecoming slowdown

DOWNTOWN OFFICE

Inventory New Absorption Vacancy ClassA(SF) Supply (SF) (SF) Rate (%) Rent ($PSF)

1999 1,231,905,000 9,773,000 17,713,000 8.4 36.812000 1,372,195,000 16,158,000 24,735,000 7.5 42.832001 1,403,246,000 11,048,000 (53,388,000) 11.9 38.102002 1,423,336,000 20,249,000 (15,171,000) 14.1 33.202003 1,441,446,000 14,562,000 4,767,000 14.7 32.002004 1,478,242,000 9,939,000 12,752,000 14.4 33.252005 1,489,610,000 11,461,000 28,190,000 12.8 34.692006 1,499,672,000 10,276,000 32,299,000 11.4 41.092007 1,562,178,000 12,035,000 21,394,000 10.7 48.582008P 1,574,070,000 11,892,000 17,885,000 10.2 50.52

Source: Colliers Research Services

SUBURBAN OFFICE


1999 2,373,162,000 113,866,000 86,297,000 10.0 26.532000 2,502,093,400 98,170,000 103,518,000 9.4 27.232001 2,829,102,000 116,661,000 (22,501,000) 14.5 26.402002 2,904,501,000 70,187,000 (10,299,000) 16.7 23.902003 2,949,460,000 37,666,000 21,178,000 17.2 23.602004 3,012,205,000 37,219,000 65,950,000 15.6 23.482005 3,047,315,000 35,611,000 78,632,000 13.6 24.042006 3,099,134,000 48,191,000 64,525,000 12.8 25.832007 3,199,869,000 61,896,000 43,076,000 13.0 28.682008P 3,268,072,000 68,203,000 42,564,000 13.5 29.25



US IndustrialWarehouse Market• Demand for warehouse space was down relativeto 2006 with leasing activity at year-endparticularly sluggish

• As anticipated construction activity picked up asthe year progressed

• Warehouse rents increased throughout 2007 matchingthe growth rate recorded in 2006

• Demand for warehouse space fell short of expectationsas the economy stalled at year-end

• Full year 2007 completions came in marginallybelow 2006 levels – 2008 construction is expectedto drop further

• Even with a more sluggish leasing environment theanticipated drop-off in construction will leavethe national warehouse vacancy rate static for muchof the year

• Warehouse rents are anticipated to show surprisingstrength as landlords attempt to hold rents steadyeven with a slower leasing market

• The housing market a long with the auto sector areexpected to be key sources of weakness in 2008

• Trade is again expected to be a bright spot

• Manufacturing, while sluggish, is anticipated tobe relatively healthy

4

INDUSTRIAL

Inventory New Absorption Vacancy Warehouse Land(SF) Supply (SF) (SF) Rate (%) Rent ($PSF) ($PSF)

1999 9,027,196,000 201,214,000 177,753,000 6.8 4.81 2.652000 9,647,919,000 203,515,000 212,480,000 6.4 5.51 2.682001 9,999,449,000 221,535,000 6,112,000 8.8 4.88 4.672002 10,587,718,000 128,987,000 16,200,000 10.1 4.65 4.802003 10,842,256,000 102,853,000 83,237,000 10.0 4.73 5.952004 11,022,474,000 133,411,000 193,992,000 9.2 4.73 6.232005 11,169,324,000 153,475,000 239,559,000 8.4 4.99 8.022006 11,385,152,000 186,596,000 186,138,000 8.2 5.28 9.472007 11,862,539,000 181,151,000 142,622,000 8.1 5.62 9.742008P 12,000,262,000 149,723,000 152,852,000 8.0 5.79 9.74


US Retail Centers• Retail spending trended down for much of 2007 butstill managed to eke out positive year-over-year growth

• Retail vacancies are expected to move marginallyhigher as construction remains elevated and certainretailers/sectors consolidate

• Rents are expected to hold steady reflecting a fairlybalanced market in most cities

• Cities with above average tourism will be somewhatimmune to a slowdown in retail spending and a keysource of growth

• Growth sectors – warehouse clubs, grocery stores, foodservices and drinking places, non-store retailers, luxuryretailers and foreign retailers are all expected to showreasonable growth

• Shrinking sectors – home furnishings, building,materials, department stores and sporting goodretailers, however, will likely continue to struggle

• Mixed use open-air retail continues to flourish, despitethe pullback in housing

• Rising gasoline prices continue to steal retail sales,particularly at the low end

• Regional malls remain a bright spot despite the surgein lifestyle centers

• Neighborhood and community centers are expected tobenefit from a still robust grocery store sector

• Urban retail continues to flourish with many“suburban” retailers exploring downtown locationsand infill locations

• Further declines by department stores continue to posechallenges for mall owners, however, many landlordshave been able to re-lease vacated department storespace at a higher rate

• While department stores continue to struggle,warehouse clubs and superstores show few signsof slowing

5

YEAR-TO-DATE SALES ENDING DECEMBER 2005 2006 2007 % CHANGE (06/07)

All Stores 4,115,815 4,330,457 4,511,870 4.2%MotorVehicle and Parts Dealers 895,250 901,112 924,623 2.6%Gasoline Stations 388,261 404,485 428,729 6.0%Food and Beverage Stores 519,292 541,688 572,474 5.7%Grocery Stores 463,905 482,805 509,581 5.5%Health and Personal Care Stores 208,376 224,169 236,848 5.7%Building Material and Garden Equipment Stores 326,993 358,569 353,791 -1.3%General Merchandise Stores 525,726 552,191 576,793 4.5%Department Stores (excluding leased departments) 214,658 212,181 209,181 -1.4%Clothing and Accessories Stores 201,682 214,732 224,953 4.8%Furniture, Home Furnishings, Electronics and Appliance Stores 211,733 230,168 235,852 2.5%Furniture and Home Furnishing Stores 111,293 121,190 123,287 1.7%Electronics and Appliance Stores 100,440 108,978 112,565 3.3%Sporting Goods, Hobby, Book and Music Stores 81,853 87,200 89,734 2.9%Miscellaneous Store Retailers 111,001 119,493 123,450 3.3%Nonstore Retailers 249,011 270,498 296,166 9.5%Food Services and Drinking Places 396,637 426,152 448,457 5.2%

Source: US Census Bureau.All Values are expressed in millions of US dollars and are not seasonally adjusted.

US Investment Sales Market• In contrast to early 2007, the investment sales marketat year-end was characterized by slower volume,apprehensive buyers and longer due diligence periods

• From the top of market in June/July, property values insome markets were down by as much as 10% to 15%by year-end

• By year-end there was significant upward pressureon cap rates

• Lending standards tightened considerably – includingloan-to-value, debt coverage ratios and fully costingvacancy and rollover risk

• 10 yr Treasurys yields/LIBOR came down at year-end,however, conditions for leverage buyers remainsvery difficult

• As investors became more risk averse spreads increaseddramatically for all forms of commercial real estate

• Equity capital remained available but access to debtbecame increasingly difficult

• By year-end the CMBS market, which had been a keysource of debt, was largely inactive

• Large portfolio sales and/or privatizations will belargely absent from the market in 2008

• Sovereign wealth funds (SWF) could be significantinvestors in 2008 if the right opportunitiespresent themselves

• Led by German, Australian, Irish and Middle Easternbuyers, foreign investors in general are expected to bea significant buyer group in 2008

• For many investors, however, until the debt marketreturns to normal acquisitions and dispositions willlikely be postponed


6

9.75

9.50

9.25

9.00

8.75

8.50

8.25

8.00

7.75

7.50

7.25

7.00

6.75

6.50

6.25

6.00

5.75

5.50

Capitaliz

ationRa

tes(%

)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

20072002 2003 2004 2005 2006

Multi-Family Industrial Office-CBD Office-Sub Retail (Neighborhood)

CAP RATETRENDS

Source: Real Estate Research Corp.

INVESTMENT MARKET RANKINGS– ALL PROPERTYTYPES

(BY SALESVOLUME, DOLLARS)

City 2007 Sales in Millions

1. NewYork, Manhattan . . . . . . . . . . . . . . . . . . . . . . . 40,922

2.Washington, DC. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,239

3. San Francisco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,429

4. Los Angeles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,993

5. Chicago . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,730

6. Seattle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,161

7. Boston . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,110

8. Orange County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,910

9. Houston. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,277

10. San Diego. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,792

Source: Real Capital Analytics

US CITY ANALYSES AND FORECASTS

ATLANTA, GACO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

CONTACT:Mike Spears • [email protected] l RESEARCH: Scott Amoson • [email protected] 9

OFFICE

• Office absorption reached the 3 million SF mark for the fourthstraight year.

• The largest leases signed in 2007 were InterContinental HotelGroup’s renewal and expansion of 361,000 SF in Central Perimeter,Georgia DOT taking 284,000 SF downtown, and Invesco signing for178,000 SF in Midtown for relocation of their global headquarters.

• Affected by the turmoil in the capital markets, office investment inAtlanta is down 12% from 2006.

• Development activity is focused mostly in Midtown and Buckhead.Combined, these submarkets account for half of new constructionin Atlanta.

Office Outlook• In 2008, office absorption is expected to be lower than previous yearsat around 2.5 million SF.

• New development will mainly be tied to mixed-use projects andoccurring in office buildings with significant equity upfront.

• The ongoing drought and availability of water are the most seriousfactors affecting metro Atlanta’s economic vitality. These issues aretarnishing the city’s appeal as a corporate headquarters destination.

INDUSTRIAL

• For the fourth straight year, absorption in Atlanta has surpassed9 million SF.

• The largest lease transactions were Sears Logistics leasing 772,800 SFin Northeast Atlanta, Dick’s Sporting Goods signing for 657,200 SFnear the airport and Whirlpool which recently announced plans for a1.5 million SF build-to-suit in South Atlanta.

• Industrial deliveries totaled 9.5 million SF in 2007 which was well offof the record square feet delivered in 2006.

• The manufacturing industry in Atlanta continued to take a hitwith over 4,000 jobs lost in 2007. The closings of the Ford and GMvehicle assembly plants were major contributors to these job losses.

Industrial Outlook• Leasing activity will remain steady in 2008 with the bulk of theactivity taking place in the first half of the year. Absorption isexpected to total between 7 to 9 million SF.

• The average rental rate for industrial space may begin to see someconsistent, upward movement over the course of the year.

• The influx of Asian investment to the state and metro Atlanta areawill have a positive impact to the industrial market in the comingyears. Over 5,000 new industrial jobs are expected to be added fromthese Asian companies.

• Manufacturing and construction as it relates to single-familyresidential will continue to struggle in 2008. The slack, however,will be picked up by the transportation and logistical industries.

DOWNTOWN OFFICE

Inventory New Absorption Vacancy ClassA Cap Rate(SF) Supply (SF) (SF) Rate (%) Rent ($PSF) (%)

1999 47,578,000 290,000 (151,000) 7.4 22.20 –2000 48,228,000 650,000 1,397,000 5.7 24.20 9.252001 51,188,000 2,960,000 (166,000) 11.3 24.90 12.302002 52,413,000 1,225,000 59,000 13.3 23.50 9.402003 52,901,000 488,000 203,000 13.7 23.30 9.752004 53,454,000 553,000 348,000 13.9 21.90 9.002005 53,774,000 320,000 721,000 13.1 22.40 7.502006 54,484,000 710,000 321,000 13.6 21.90 6.502007 55,712,000 1,164,000 1,077,000 13.5 20.50 7.402008P 55,962,000 250,000 650,000 12.7 – –

SUBURBAN OFFICE


1999 139,295,000 10,259,000 8,485,000 10.6 23.00 –2000 146,658,000 7,363,000 6,588,000 10.6 23.30 9.502001 154,643,000 7,985,000 560,000 14.8 23.80 10.502002 158,961,000 4,318,000 406,000 16.9 22.40 10.002003 161,856,000 2,895,000 1,194,000 17.6 21.50 10.002004 163,198,000 1,342,000 3,841,000 15.9 21.30 8.502005 165,760,000 2,562,000 4,127,000 14.7 21.40 8.102006 168,656,000 2,896,000 3,848,000 13.9 21.50 7.502007 171,985,000 2,986,000 1,929,000 14.4 23.60 6.502008P 175,152,000 3,167,000 1,800,000 14.9 – –

INDUSTRIAL

Inventory New Absorption Vacancy Warehouse Land Cap Rate(SF) Supply (SF) (SF) Rate (%) Rent ($PSF) ($PSF) (%)

1999 450,600,000 18,629,000 15,507,000 8.5 3.75 – –2000 467,289,000 16,689,000 16,064,000 8.3 3.70 – –2001 486,710,000 19,421,000 3,504,000 11.2 3.60 2.50 9.752002 493,957,000 7,247,000 (1,550,000) 12.9 3.35 2.87 8.502003 496,986,000 3,029,000 1,369,000 13.1 3.30 3.80 9.152004 504,632,000 7,646,000 13,946,000 11.7 3.50 1.40 9.002005 514,033,000 9,401,000 11,800,000 11.0 3.75 1.85 8.402006 534,363,000 20,330,000 12,882,000 11.9 3.80 1.95 7.302007 555,246,000 9,491,000 9,439,000 11.3 3.83 2.30 8.002008P 561,246,000 6,000,000 7,500,000 10.9 – – –

METROPOLITAN INDICATORS – 2008

• Gross Metro Product Percent Change: 2.8

• Total Employment Increase/Decrease: 43,250Percent Change: 1.8

• Unemployment Rate: 4.6

• Population (000): 5,361.4

Source: Moody’s Economy.com

P = Projection. Please see Glossary page for explanation.

BAKERSFIELD, CACO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 2,658,000 0 50,000 4.8 21.002000 2,758,000 100,000 94,000 5.8 16.202001 2,826,000 68,000 119,000 5.5 16.202002 2,860,000 34,000 73,000 4.0 17.402003 2,860,000 0 14,000 3.2 17.402004 2,860,000 0 24,000 2.7 17.402005 2,860,000 0 86,000 5.2 17.402006 2,860,000 0 89,000 4.3 17.402007 2,868,000 0 13,000 4.1 17.402008P 2,910,000 42,000 50,000 3.8 –

SUBURBAN OFFICE


1999 4,526,000 (86,000) (453,000) 14.9 21.002000 4,586,000 60,000 122,000 16.3 18.602001 4,586,000 0 125,000 13.5 19.202002 4,732,000 146,000 106,000 14.0 18.602003 4,829,000 97,000 307,000 9.4 19.802004 4,857,000 28,000 99,000 7.8 19.802005 5,047,000 190,000 218,000 8.2 19.802006 5,206,000 159,000 391,000 4.2 19.802007 5,447,000 0 157,000 5.1 24.002008P 5,663,000 216,000 93,000 7.1 –

INDUSTRIAL


1999 21,468,000 300,000 722,000 3.0 3.00 – –2000 21,908,000 440,000 800,000 2.7 3.10 – –2001 23,224,000 1,316,000 1,243,000 3.5 3.20 1.25 10.002002 25,717,000 2,493,000 1,576,000 4.9 3.20 1.38 10.002003 25,974,000 257,000 (263,000) 7.0 3.20 1.90 9.752004 26,457,000 483,000 1,018,000 5.0 3.20 2.50 9.252005 27,027,000 570,000 870,000 3.5 3.60 5.00 8.502006 27,708,000 681,000 662,000 3.5 3.60 5.02 8.002007 28,498,000 739,000 870,000 2.9 4.00 5.50 7.502008P 29,298,000 800,000 498,000 3.8 – – –





• Population (000): 799.9



10 CONTACT:DavidWilliams • [email protected] l RESEARCH:Debbie Kidd • [email protected]

OFFICE

• The amount of available office sublease space doubled over the lastyear due to closures, downsizing and mergers of residential real estateoffices, title companies and mortgage firms.

• Office absorption for the year measured approximately 170,000 SF.• Bakersfield’s overall vacancy was 4.77% at year-end, up slightly from4.33% in 2006.

• Land prices held steady at $10 to $15 per SF due to thelimited availability.

• Average rental rates for Class A space rose to average between$1.90 per SF and $2.05 per SF plus janitorial and utilities.

Office Outlook• Construction starts will begin to decrease over the nexttwelve months.

• Office rental rates will continue to rise slightly and level offover the next 24 months.

• New freeway infrastructure to alleviate increasing traffic burdens inthe city is being planned for 2008 and beyond.

• The owner-user market in the northwest submarket will continue toflourish due to the rising rents, availability and competitive financing.

• The availability of sublease space will continue to increase asthe effects of the housing market continue to affect businessesin these markets.

INDUSTRIAL

• Bakersfield’s industrial absorption was robust in 2007, surpassinglevels recorded in 2006.

• The overall vacancy rate reached a historical low atapproximately 3%.

• Tejon Ranch and Rockefeller Group were near completionon a 603,000 SF high cube warehouse space in the TejonIndustrial Center.

• Class A warehouse rents ranged between $0.34 per SF and$0.40 per SF NNN with NNN charges of $.05 per SF to $.08 per SF.

• Land prices ranged between $5.00 per SF and $7.00 per SF due tolimited inventory.

• The amount of investment activity remained strong.Institutional developers continued to assess the market asLos Angeles markets were further impacted.

Industrial Outlook• Big box distribution will continue to look at the Central Valley justas IKEA, Sears, Target, Oneida and Wal-Mart have in recent years.

• North Meadows Industrial Park, consisting of 150 acres, will becompleted mid-2008.

• Industrial warehouse rental rates will continue to hold over thenext twelve months.

• New construction will continue to chase demand.• Industrial land prices are expected to level off in 2008.

BALTIMORE, MD

DOWNTOWN OFFICE


1999 12,963,000 161,000 593,000 9.2 25.00 –2000 13,187,000 224,000 171,000 9.3 26.50 –2001 13,795,000 608,000 299,000 11.4 24.10 –2002 15,485,000 1,690,000 33,000 19.6 21.40 10.002003 15,650,000 165,000 296,000 18.4 24.30 10.002004 16,031,000 381,000 294,000 17.7 24.00 9.002005 16,214,000 183,000 316,000 17.2 23.20 8.002006 16,739,000 525,000 511,000 17.0 23.80 7.252007 17,076,000 190,000 36,000 17.1 24.10 7.252008P 17,136,000 60,000 220,000 16.1 – –

SUBURBAN OFFICE


1999 30,598,000 1,856,000 1,400,000 8.4 23.50 –2000 33,044,000 2,446,000 1,913,000 9.9 23.70 9.502001 35,252,000 2,208,000 418,000 14.6 22.50 10.502002 36,253,000 1,001,000 14,000 17.4 18.40 10.002003 36,902,000 649,000 1,114,000 16.0 21.30 10.002004 38,577,000 1,675,000 2,213,000 14.2 22.50 9.252005 40,641,000 2,064,000 1,797,000 14.0 24.30 8.502006 42,392,000 1,751,000 1,847,000 13.4 24.55 7.252007 43,773,000 1,655,000 746,000 14.5 25.90 6.602008P 45,838,000 2,065,000 581,000 17.1 – –

INDUSTRIAL


1999 75,749,000 2,529,000 2,608,000 11.6 4.75 – –2000 77,050,000 1,301,000 3,616,000 7.7 4.70 – –2001 80,951,000 3,901,000 917,000 13.3 4.50 3.45 10.002002 82,258,000 1,307,000 (322,000) 16.8 5.00 6.00 9.802003 84,590,000 2,332,000 2,250,000 17.0 5.60 4.90 8.002004 85,728,000 1,138,000 (814,000) 18.7 5.40 5.17 8.602005 88,255,000 2,527,000 3,924,000 16.5 5.90 5.75 7.502006 89,242,000 987,000 1,169,000 15.2 6.46 6.31 6.502007 95,566,000 2,458,000 1,944,000 14.2 7.08 6.31 6.252008P 97,299,000 1,733,000 1,272,000 14.4 – – –





• Population (000): 2,678.8



C O L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

CONTACT: Peter McGill • [email protected] l RESEARCH: James Murray • [email protected] 11

OFFICE

• The market sagged under the weight of too much construction andtoo little absorption after three years of building and absorbing morethan 2 million SF. Absorption at 782,000 SF fell 67% from 2006,while the market added over 1.8 million SF, elevating the vacancyrate to 15.2%.

• Legg Mason signed a lease 400,000 SF in Harbor East to be completedin 2009. T. Rowe Price expanded at 100 E. Pratt Street and will add400,000 SF at its Owings Mills campus. Morgan Stanley leased130,000 SF in a new project in Harbor East, where Laureate, Inc.moved its new headquarters.

• Arc Wheeler acquired the venerable B&O Building for $267 per SFto convert to a mixed use project. The recently completed 500 E.Pratt Street sold for $282 per SF. The new Johns Hopkins AppliedPhysics building sold for $235 per SF, while the Micros Headquartersbuilding sold for $250 per SF.

Office Outlook• The market added 1.8 million SF of space in 2007 with 830,000 SFstill available. Another 2.6 million SF is under construction,2.1 million SF of which remains unleased. 791,000 SF of this 2008new construction is in the BWI market, which is expected to be aprincipal beneficiary of the BRAC relocations.

• Several large defense contractors, such as CSC and Booz AllenHamilton have offered to sublease some of their space in theBWI market, so the overhang is of potential concern.

INDUSTRIAL

• The majority of new supply consisted of speculative bulk distributionspace. The market received 349,000 SF of flex space and 349,000 SFof new office warehouse space.

• ATEC leased 345,000 SF and CPEEC, leased 343,000 SF.Other leases included Restoration Hardware leasing 602,000 SF,Frederick P Winner taking 302,000 SF, and Rite Aid leasing266,000 SF.

• Zais Group acquired the 530,000 SF 504 Advantage Avenue propertyfor $51 per SF. RREEF Funds paid $67 per SF for the 1.9 million SFGateway Commerce Center. AMB acquired a four-building portfoliofor $71 per SF, and Exeter Property Group acquired 5107 North PointBoulevard and the 338,000 SF Baltimore Air Coil facility.

Industrial Outlook• The outlook is cautionary as 80% of new bulk distribution spacedelivered in 2007 is still available, as is 95% of the 1 million SF ofnew bulk space coming in 2008.

• Higher lease rates for new properties could be problematic for tenantsare uncertain if the economy will slow down or worsen.

BOISE, IDCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 1,935,000 242,000 181,000 8.9 19.00 –2000 1,975,000 40,000 17,000 9.1 18.80 9.002001 – – 0 – – –2002 – – 0 – – –2003 3,210,000 75,000 (4,000) 10.6 18.90 8.752004 3,462,000 252,000 187,000 11.7 18.80 8.752005 3,551,000 89,000 206,000 7.6 18.90 8.802006 3,731,000 180,000 88,000 9.7 20.00 7.202007 3,470,000 81,000 126,000 9.3 19.90 7.902008P 3,470,000 0 85,000 6.8 – –

SUBURBAN OFFICE


1999 4,833,000 331,000 244,000 15.3 17.00 –2000 5,034,000 201,000 234,000 12.6 17.00 8.752001 – – 0 – – –2002 – – 0 – – –2003 6,933,000 442,000 323,000 15.6 16.60 8.502004 7,102,000 169,000 157,000 19.2 17.60 8.502005 7,981,000 879,000 1,068,000 13.4 16.90 9.402006 8,157,000 176,000 197,000 12.9 16.20 7.202007 9,242,000 318,000 113,000 15.6 16.50 7.902008P 9,542,000 300,000 211,000 16.1 – –

INDUSTRIAL


1999 20,858,000 396,000 345,000 2.3 4.90 – –2000 22,219,000 1,361,000 1,558,000 1.5 5.00 – –2001 22,300,000 81,000 (712,000) 5.0 4.50 – –2002 22,445,000 145,000 (476,000) 7.7 3.50 – –2003 22,532,000 87,000 (468,000) 10.1 4.40 – 8.752004 22,669,000 137,000 146,000 10.0 4.60 5.00 8.752005 22,757,000 88,000 288,000 9.1 4.60 4.00 8.802006 22,937,000 180,000 754,000 5.7 6.03 3.94 7.852007 26,904,000 297,000 (83,000) 6.0 6.96 4.00 7.802008P 27,254,000 350,000 683,000 4.7 – – –








12 CONTACT: Pete Draper • [email protected] l RESEARCH: Cory Read • [email protected]

OFFICE

• The Boise office market saw an increase in tenant activity during2007 with regional and national companies looking for expansioninto the Boise market.

• 2007 saw 100% absorption of Idaho’s first LEED certified green officebuilding; the 180,000 SF Banner Bank building in downtown Boise.

• Idaho Power leased 50,000 SF in the former Boise CascadeCorporation headquarters building in downtown Boise whicheffectively reduces the vacancy in Boise’s top five office buildingsto near zero percent.

• Downtown Boise has been the most active office leasing area in theValley since mid-2006.

Office Outlook• Key suburban office parks to the west of Boise will see sustainedactivity because of increased options for company parking and thelack of large continuous space in downtown Boise.

• Suburban Boise office markets will remain strong for leasing becauseof the high population growth west of Boise which is also sustaininghigh amounts of retail growth.

• Boise surface uncovered parking lots are seeing up to two-monthwaiting lists with no significant development planned for coveredor uncovered parking planned.

INDUSTRIAL

• The beginning of 2007 saw very low vacancies (5.4%) and very littlespeculative development; creating limited opportunities to meettenant demands for space in Boise.

• One of the most prohibitive factors to industrial speculativedevelopment is high priced industrial-zoned land in areas withdesirable freeway access.

• High land prices during 2006 and 2007 pushed some industrialdevelopment west of the Valley closer to the Oregon border, buttenant demand has forced development projects back to south Boisenear Interstate 84 and the Boise airport region.

• The latter half of 2007 saw a leveling off of industrial pricing that hadbeen consistently increasing since 2005.

• Even with continued strong population growth, slowdown in theresidential home sales has resulted in downsizing in residential basedcompanies in the Boise market national and regional firms such asPerdue Woodworks and BMCWest.

• Commercial construction growth has continued unaffected bydownward trends in the residential construction in the Boise market.

Industrial Outlook• The city of Boise backed out of initial plans to provide services andinfrastructure for a large tract of industrial zoned land near the Boiseairport which will hinder warehouse development in southeast Boise.

BOSTON, MA

DOWNTOWN OFFICE


1999 58,904,000 844,000 812,000 5.5 50.50 –2000 60,754,000 1,850,000 2,290,000 4.5 72.00 8.002001 62,928,000 2,174,000 (1,935,000) 11.9 55.30 8.502002 64,660,000 1,732,000 (860,000) 16.2 43.70 7.502003 65,914,000 1,254,000 368,000 17.4 38.40 7.502004 66,722,000 808,000 (61,000) 17.9 38.20 6.752005 66,942,000 220,000 2,045,000 12.6 41.40 6.502006 66,942,000 0 1,773,000 9.8 46.00 5.502007 67,816,000 12,000 742,000 8.6 64.60 5.602008P 67,816,000 0 745,000 7.5 – –

SUBURBAN OFFICE


1999 90,941,000 5,599,000 7,904,000 12.3 25.60 –2000 95,894,000 4,953,000 9,241,000 6.2 38.90 9.002001 102,727,000 6,833,000 (6,570,000) 21.0 31.00 10.002002 106,177,000 3,450,000 (1,766,000) 26.0 25.00 10.502003 108,561,000 2,384,000 (290,000) 28.2 21.00 9.502004 108,383,000 (178,000) 1,810,000 25.6 20.80 8.002005 107,341,000 (1,042,000) 3,363,000 18.8 20.10 8.002006 108,091,000 750,000 2,616,000 12.7 24.00 7.002007 113,132,000 516,000 1,046,000 12.0 36.70 6.402008P 114,132,000 1,000,000 1,196,000 11.7 – –

INDUSTRIAL


1999 142,309,000 795,000 2,170,000 9.7 6.00 – –2000 144,744,000 2,435,000 3,030,000 8.2 7.00 – –2001 146,806,000 2,062,000 (1,726,000) 14.6 7.00 1.95 10.002002 147,664,000 858,000 (60,000) 15.9 6.00 1.95 9.502003 148,421,000 757,000 (1,248,000) 19.2 6.00 1.70 8.902004 149,036,000 615,000 (1,767,000) 23.0 5.50 2.87 8.002005 151,142,000 2,106,000 503,000 23.7 5.50 – 7.002006 152,380,000 1,238,000 488,000 22.8 5.84 – 6.802007 219,834,000 830,000 4,089,000 18.2 5.78 – 6.602008P 221,634,000 1,800,000 2,159,000 17.9 – – –





• Population (000): 1,848.7




CONTACT: Tom Hynes • [email protected] l RESEARCH:Mary Kelly • [email protected] 13

OFFICE

• Boston’s overall office vacancy rate measured 11.1% at year-end. Inthe downtown, the office market absorbed 742,000 SF as the vacancydecreased from 9.8% to 8.6%. In the suburban market, the vacancyrate fell from 12.7% to 12.0% over the year.

• Overall absorption measured almost 1.8 million SF, and newconstruction in 2007 measured just over half a million square feet,mainly in the suburban market.

• Although the injection of completed new supply was minimal forthe year, an additional 2.57 million SF was under construction, fairlybalanced between the CBD and the suburbs.

• In both the downtown and suburban markets, absorption and newsupply levels were significantly less than 2005 and 2006 levels.

• The lack of new construction capped absorption levels while placingstrong upward pressure of rental rates. The average annual quotedrent at year end skyrocketed 40.5% to $64.60 per SF for Class Aspace in the downtown.

• Office investment began the year with a fervor including theBlackstone/EOP sale but cooled off in the second half of 2007.Despite a slowing of sales, investment fundamentals remainedstrong in Boston.

Office Outlook• Boston’s office market in 2008 will see a return of new constructionin both the downtown and suburban submarkets.

• Vacancy rates are expected to decline across submarkets.• Rental rate growth is anticipated as well, albeit at a slower pacethan in 2007.

INDUSTRIAL

• Boston’s industrial market witnessed a decline in vacancy over2007 from 22.8% to 18.2% after three years of the vacancy ratebeing over twenty percent of inventory.

• Demand was slow to begin the year but picked up in the fourthquarter which accounted for 77% of the year’s absorption.Annual absorption measured 4,089,000 SF in total.

• New supply introduced in the year measured 830,000 SF, a notabledrop from the 2.1 million SF injected in 2005 and 1.2 million SFin 2006.

• Asking rents for warehouse/distribution space averaged $5.78 per SFand flex space went for an average of $9.84 per SF.

• For industrial investments, the average cap rate on salesmeasured 6.6%.

Industrial Outlook• After a quieter year of new supply, 2008 will see a resurgence ofnew construction with 1.8 million SF anticipated for the year.

CHARLESTON, SCCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 – – 0 – – –2000 1,403,000 0 50,000 8.0 23.75 –2001 1,734,000 331,000 200,000 9.0 24.00 –2002 1,764,000 30,000 17,000 10.3 24.40 9.252003 1,890,000 126,000 (76,000) 13.3 24.30 8.902004 1,949,000 59,000 31,000 11.3 25.10 7.502005 2,045,000 96,000 55,000 11.5 27.45 7.002006 2,045,000 0 79,000 7.6 27.20 7.402007 2,064,000 0 51,000 5.9 27.80 6.502008P 2,064,000 0 43,000 3.8 – –

SUBURBAN OFFICE


1999 – – 0 – – –2000 – – 0 – – –2001 – – 0 – – –2002 4,797,000 220,000 64,000 16.1 19.45 9.502003 5,579,000 782,000 413,000 20.5 19.10 9.002004 5,687,000 108,000 479,000 13.5 19.60 9.002005 6,016,000 329,000 442,000 10.8 23.60 8.002006 6,815,000 799,000 515,000 14.3 24.50 8.002007 7,204,000 369,000 174,000 16.0 25.50 7.502008P 7,454,000 250,000 133,000 17.1 – –

INDUSTRIAL


1999 14,446,000 450,000 917,000 20.4 3.00 – –2000 14,859,000 413,000 948,000 19.1 3.30 – –2001 15,559,000 700,000 442,000 21.0 3.30 2.30 –2002 16,159,000 600,000 545,000 21.0 3.35 2.00 –2003 16,959,000 800,000 1,447,000 18.5 3.40 1.50 9.002004 18,029,000 1,070,000 1,389,000 18.4 3.50 2.53 7.502005 18,029,000 350,000 1,692,000 7.8 3.70 1.26 7.002006 24,135,000 95,000 3,468,000 6.2 3.73 2.53 7.352007 25,192,000 1,200,000 1,355,000 6.8 4.00 2.87 7.852008P 26,092,000 900,000 517,000 8.0 – – –








14 CONTACT:Woody Moore • [email protected] l RESEARCH:Terry Ansley • [email protected]

OFFICE

• The Charleston office market maintained a steady overall vacancyrate of 12%.

• Charleston won large projects from GE, Vought/Alenia (Boeing 787),Damlier (Sprinter Van).

• Land prices for the office market stabilized in both the CBD andsuburban office markets. The prices for Class A office marketare $30 per SF for CBD and $26 per SF for suburban.

Office Outlook• The vacancy rate is expected to increase to a level of at least 15%by the second quarter of 2008. This vacancy will be reflective of theshift in the housing market with homebuilders, mortgage companiesand residential real estate firms placing excess space on the market.

• 2008 office absorption is anticipated to decrease from past years of450,000 to 600,000 SF.

• Delivery of new supply will be limited to those that broke ground in2007 and office construction slated for 2008 will be delayed until theoverall market shows more promise.

INDUSTRIAL

• SC and Georgia agreed to collectively purchase the 1,400 acresfor the Jasper Terminal located on the state line with the intentionto operate the terminal jointly. Many operational issues remainto be resolved.

• Bulk warehouse lease rates ranged between $4.35 to $4.65 per SFfor new facilities and $3.65 to $4.10 per SF for older facilities.Absorption measured 1,227,800 SF, off from 2006’s 2,885,900 SFwhile vacancy measured 8%.

• Investment interest remained strong. The Macalloy site sold for$33 million and interest in Chevron Terminal (40 acres) was strongdespite a $26 million price tag. The Johnson Development Packageof $1.4 million SF sold for $45 per SF. The 886,900 SF Leeds Parkbuilding sold for $58 per SF. Port proximate land tracts per acre soldfor $125,000 per acre.

Industrial Outlook• Large institutional developers will deliver sorely needed functionalindustrial space to the market. Some significant projects includeChildress Klein’s 351,000 SF project, Hillwood Development’s400,000 SF development and Lauth Development Group’s300,000 SF project.

• Reduced Army and Marine Corp demand for Mine ResistantAmbush Protected vehicles will lead to a slowing of productionat Force Protection and could lead to vacancy in smallersupplier buildings.

• Vought and its suppliers will expand as orders for 787 Dreamlinercontinue to grow. Automobile, aviation and military vehiclemanufacturers will lead the industrial growth sector.

CHARLOTTE, NC

DOWNTOWN OFFICE


1999 17,251,000 1,145,000 938,000 5.1 28.002000 18,003,000 752,000 947,000 3.2 25.302001 18,670,000 667,000 126,000 5.4 24.502002 19,668,000 998,000 364,000 9.5 22.902003 19,768,000 100,000 (7,000) 10.2 23.802004 19,768,000 0 77,000 9.7 23.802005 19,858,000 90,000 463,000 5.2 21.302006 19,858,000 0 157,000 4.7 22.802007 19,865,000 41,000 363,000 2.5 29.002008P 20,005,000 140,000 484,000 0.8 –

SUBURBAN OFFICE


1999 33,835,000 420,000 1,558,000 13.0 24.002000 34,972,000 1,137,000 1,423,000 11.8 21.802001 36,825,000 1,853,000 215,000 17.8 20.302002 37,682,000 857,000 98,000 19.8 20.002003 38,074,000 392,000 539,000 18.9 19.302004 38,737,000 663,000 89,000 20.7 19.302005 39,690,000 953,000 1,551,000 15.3 19.402006 41,250,000 1,560,000 1,273,000 15.7 19.702007 50,991,000 858,000 1,624,000 12.2 20.002008P 52,751,000 1,760,000 1,119,000 13.1 –

INDUSTRIAL


1999 159,077,000 1,959,000 2,044,000 13.0 4.30 – –2000 160,427,000 1,350,000 1,712,000 9.7 3.80 – –2001 162,917,000 2,490,000 233,000 7.1 3.88 1.49 9.502002 164,802,000 1,885,000 1,442,000 8.6 3.72 1.50 9.802003 165,439,000 637,000 (274,000) 8.9 3.12 1.70 9.502004 166,239,000 800,000 102,000 9.2 3.31 1.75 9.002005 166,994,000 755,000 1,648,000 9.2 3.65 2.06 9.002006 167,962,000 968,000 2,231,000 8.3 3.79 2.29 9.002007 169,106,000 1,144,000 2,825,000 7.4 3.85 1.95 7.502008P 170,056,000 950,000 3,915,000 5.6 – – –





• Population (000): 1,666.4




CONTACT: Rob Cochran • [email protected] l RESEARCH:Matt Russell • [email protected] 15

OFFICE

• Downtown vacancy measured 2.5%, the tightest downtown market inthe nation. The suburbs offered more availability at 12.2% vacancy.

• High growth industries included financial services, legal, governmentand defense-related.

• New CBD towers under construction included BOA, Wachovia,NASCAR and Cornerstone. For the suburbs, City Park was a175-acre mixed-use redevelopment of the former Charlotte Coliseum.Outer belt commercial development continued to surge.

Office Outlook• The NASCAR Hall of Fame arrives in 2009 which will have a largeeconomic impact on the city.

• The bio-tech and pharmaceutical sectors will pick up momentumwhile the textile market is expected to wane. Banking and financewill take a breather in 2008 due to the subprime market issues.

• Land rates will rise in 2008. As infill spikes considerably, the trendwill push developers further out.

• Following the first light rail line opening in 2007, the next completedline will be a north line to the University area. The project has a25-year timeline and will transform Charlotte. Another project isthe I-485 outerbelt which will be completed in 2013.

INDUSTRIAL

• High growth industries and companies included the power industry(Shaw, SPX Corp), defense-related manufacturing (GeneralDynamics, Indigen Armor, Goodrich) and high tech manufacturing.

• Much of the speculative development subsided by year-end 2007 asland became scarce. Under construction was Beacon Partner’s77 Overlook consisting of 112,600 SF.

• Two large headquarter relocations were announced – Shaw Groupand Freightliner. Target began construction on a 1.5 million SFdistribution center located between Charlotte and Hickory, NC.Ross Dress For Less leased a 423,000 SF speculative building.The year registered absorption of 2,824,900 SF, the majority insmall to medium sized transactions.

• Industrial land in the Charlotte metro area sold for between $85,000to $125,000 per acre while land in the outlying counties went forbetween $35,000 to $65,000 per acre. Speculative developerscontinued to seek tracts of land for industrial build-to-suits.

Industrial Outlook• Employment growth in the Charlotte area will be led by educationand health care in 2008, with 3,000 net new jobs, then leisure andhospitality, and professional and business services, with 2,500 and1,800 jobs, respectively. Healthcare, logistics and transportationcould also be a source of new jobs. The NC Research Campus isprojected to create nearly 40,000 jobs over 20 years.

CHICAGO, ILCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 118,962,000 333,000 355,000 9.9 34.00 –2000 120,235,000 1,273,000 178,000 10.7 36.00 9.502001 121,981,000 1,746,000 (2,826,000) 14.3 35.00 8.502002 122,764,000 782,000 (207,000) 15.0 32.00 8.502003 124,268,000 1,504,000 (535,000) 16.5 32.00 8.252004 126,095,000 1,827,000 (141,000) 17.8 32.00 7.502005 127,992,000 1,896,000 1,545,000 17.8 34.00 7.502006 128,471,000 479,000 3,520,000 15.4 36.00 5.502007 128,319,000 0 2,622,000 13.2 40.00 5.502008P 128,799,000 480,000 1,447,000 12.4 – –

SUBURBAN OFFICE


1999 93,130,000 3,984,000 1,681,000 11.7 27.00 –2000 97,059,000 3,929,000 1,383,000 13.8 28.50 9.502001 101,232,000 4,173,000 (3,010,000) 20.7 29.00 9.252002 102,945,000 1,713,000 (793,000) 23.4 25.00 9.502003 103,347,000 402,000 (1,283,000) 23.9 25.00 9.002004 103,886,000 539,000 2,501,000 21.8 22.00 8.002005 104,112,000 226,000 1,365,000 21.1 23.60 7.252006 104,245,000 133,000 1,385,000 18.9 22.30 7.252007 104,732,000 534,000 (176,000) 19.3 27.80 7.252008P 105,767,000 1,035,000 1,099,000 19.1 – –

INDUSTRIAL


1999 988,381,000 22,227,000 24,189,000 5.6 5.20 – –2000 1,007,524,000 19,143,000 15,680,000 5.8 5.60 – –2001 1,017,872,000 10,348,000 (10,978,000) 8.0 5.10 4.68 9.002002 1,031,233,000 13,361,000 1,305,000 8.9 4.40 3.90 8.502003 1,044,699,000 13,466,000 7,392,000 9.4 4.60 4.80 8.102004 1,061,977,000 17,278,000 13,221,000 9.5 4.50 4.20 7.352005 1,080,869,000 18,892,000 19,349,000 9.0 4.60 5.17 6.752006 1,098,495,000 17,626,000 14,077,000 9.0 4.56 6.01 6.652007 1,128,267,000 14,160,000 11,833,000 8.8 4.64 6.39 6.752008P1,136,352,000 8,085,000 13,375,000 8.3 – – –



• Total Employment Increase/Decrease: -3,130Percent Change: -0.1


• Population (000): 7,994.7



16 CONTACT:David Bercu • [email protected] l RESEARCH:George Cutro • [email protected]

OFFICE

• CBD vacancy declined by nearly 2%. Absorption was driven by thelack of new supply and expanding tenants.

• Large CBD leases included CME Group’s renewal/expansion for360,000 SF, Citigroup’s new lease for 235,000 SF and Blue CrossBlue Shield Association’s renewal for 215,000 SF. Suburban leasesincluded Fenwal’s 145,000 SF lease and Career Education’s180,000 SF renewal/expansion.

• Tishman Speyer purchased Blackstone Group’s seven-buildingdowntown portfolio for $1.7 billion. GE Capital purchased theBlackstone portfolio for $1.1 billion, comprised of 20 properties.

Office Outlook• Investment activity will taper off as landlords wait for the market torebound, but demand will remain strong for new, top-tier office towersin the CBD.

• Approximately 480,000 SF of new supply is expected in 2008downtown. The addition of over 4 million SF to inventory between2008 and 2010 could cause vacancy rates to climb upon delivery.

• CBD rents are expected to rise, particularly in some recently tradedassets where landlords increase rates to justify the purchase prices.Suburban lease rates will also climb.

INDUSTRIAL

• In 2007, 14.2 million SF of new space was completed, just shortof the all-time high posted in 1999 at 22.2 million SF.

• Leasing volume fell from 38.5 million SF in 2006 to 34.9 million SFin 2007 due to fewer large deals of over 250,000 SF. Fourteen suchleases were completed totaling 5.9 million SF, compared to 34 leasesin 2006, absorbing 13.5 million SF.

• Demand was strongest in the 10,000 SF to 50,000 SF range makingup 69.7% of deals. Warehouse distribution firms accounted for themajority transactions.

• User-building sales closely matched the 2006 level of 18.69 millionSF. Sales volume reached 18.75 million SF, consistent with historicaluser sale volume.

Industrial Outlook• Rental rates will remain compressed as availability has notdiminished and more sublease space may be returned in 2008.

• Land prices skyrocketed over the past 18 months and will stillclimb in 2008, though at a slower pace.

• Cap rates will stabilize for core assets. Class B product willexperience a slight up tick in cap rates. Sale prices will rise due inpart to businesses in search of buildings in an ever-shrinking pool.

• Speculative development will continue at a feverish pace.Six buildings commenced construction, all over 500,000 SF, andwill add 4.5 million SF to available supply. Eleven additionalprojects have developer commitment that could add another11.6 million SF by the end of 2008.

CINCINNATI, OH

DOWNTOWN OFFICE


1999 13,312,000 36,000 93,000 7.6 20.80 –2000 13,325,000 13,000 97,000 6.9 20.90 10.102001 13,332,000 7,000 (288,000) 10.5 21.30 9.002002 13,695,000 363,000 (221,000) 12.2 21.20 10.002003 13,098,000 (597,000) (56,000) 13.0 21.20 10.002004 13,097,000 (1,000) 120,000 11.9 21.00 10.002005 13,256,000 159,000 (78,000) 13.7 21.80 9.002006 12,368,000 (888,000) (311,000) 17.5 21.80 8.002007 12,368,000 0 175,000 17.3 22.30 7.502008P 12,368,000 0 47,000 17.0 – –

SUBURBAN OFFICE


1999 15,228,000 409,000 2,000 11.6 22.00 –2000 16,212,000 984,000 (319,000) 12.9 19.20 10.102001 17,349,000 1,137,000 (6,000) 19.2 19.30 9.852002 17,992,000 643,000 3,000 20.3 19.70 10.852003 16,475,000 (1,517,000) (142,000) 23.1 19.80 10.752004 16,611,000 136,000 189,000 21.8 19.80 10.502005 17,284,000 673,000 675,000 21.0 19.80 6.502006 17,935,000 651,000 552,000 20.2 19.80 8.252007 18,698,000 614,000 796,000 21.1 20.20 7.502008P 19,450,000 752,000 68,000 23.8 – –

INDUSTRIAL


1999 228,634,000 9,000,000 2,163,000 5.0 4.30 – –2000 236,634,000 8,000,000 2,500,000 6.0 3.30 – –2001 242,073,000 5,439,000 464,000 7.6 3.20 1.38 9.752002 244,173,000 2,100,000 1,003,000 8.5 3.20 1.85 9.502003 245,215,000 1,042,000 (35,000) 8.9 3.20 1.40 9.002004 247,872,000 2,657,000 6,134,000 7.8 3.20 1.78 9.002005 250,900,000 3,028,000 7,636,000 5.8 3.20 1.25 8.502006 256,033,000 5,133,000 4,694,000 5.9 3.20 1.25 8.752007 263,065,000 5,256,000 2,397,000 6.6 3.25 1.50 7.002008P 265,995,000 2,930,000 1,134,000 7.2 – – –





• Population (000): 2,116.3




CONTACT: Laura Brunner • [email protected] l RESEARCH:MaryAnn Christenson • [email protected] 17

OFFICE

• The overall vacancy rate decreased in 2007 to 17.70% from 19.08%in 2006.

• The office market gained over 600,000 SF in new Class A space inthe suburbs.

• New construction took place along transportation corridors of I-71and I-75.

• There was a significant increase in the number of educationalfacilities that have leased office space in the market.

• Out-of-town investors continued to find value in the Cincinnatioffice market.

Office Outlook• Economic incentives will lure companies to the area and fosterexpansion of businesses.

• “Green” practices will be incorporated in the construction andredevelopment of buildings.

• Approximately 750,000 SF of new product will be completed inthe next year.

• The future of the CBD office market will continue to evolve asbuildings face conversion to other uses and the Banks Projectcomes to fruition.

• The CBD market faces competition not only from the northernsuburbs, but also from the Northern Kentucky area.

INDUSTRIAL

• The market experienced growth with absorption of 2.4 million SFin 2007.

• New construction exceeded the previous year’s for the fourthconsecutive year.

• Vacancy increased in 2007, mostly as a result of much needed newspace delivered to the market.

• Quality land sites in the West Chester and Northern KentuckyAirport quadrants continued to be developed, pushingdevelopment outward.

• Development started on the 429-acre Corridor 75 Park in Monroe.The site was designed and approved for over 6 million SF and will bethe next large industrial development hub of Northern Cincinnati.

Industrial Outlook• The outlook for Cincinnati’s industrial market is steady: activity anddemand is expected to remain at the levels of 2007.

• Speculative construction will slow as demand catches up with supply.• There will be continued outward development in growth areas ofMonroe, Ohio and Richwood, Kentucky.

• Lease rates and sale prices are forecast to rise for industrial product.• The owner/user market is expected to remain active with goodfunctional buildings and quality land sites charging a premium.

CLEVELAND, OHCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 28,669,000 26,000 (134,000) 15.3 23.00 –2000 28,706,000 37,000 352,000 13.9 22.50 9.502001 28,706,000 0 (429,000) 14.0 21.20 10.002002 29,411,000 705,000 (1,285,000) 22.1 20.00 10.252003 29,426,000 15,000 (575,000) 23.5 20.50 13.852004 29,426,000 0 (79,000) 23.9 20.50 12.102005 29,426,000 0 45,000 21.2 20.90 10.252006 29,426,000 0 784,000 18.7 20.30 10.252007 31,858,000 0 107,000 17.0 20.00 9.002008P 31,858,000 0 (90,000) 17.3 – –

SUBURBAN OFFICE


1999 58,343,000 578,000 218,000 14.9 22.50 –2000 59,211,000 868,000 771,000 15.4 23.30 10.502001 59,637,000 426,000 173,000 17.1 22.00 10.502002 59,834,000 197,000 348,000 15.4 21.60 10.502003 59,944,000 110,000 (61,000) 18.3 20.90 10.502004 60,035,000 91,000 311,000 16.5 19.10 10.602005 60,151,000 116,000 107,000 11.6 21.00 10.602006 60,430,000 279,000 (381,000) 12.8 21.70 8.752007 65,876,000 614,000 391,000 11.2 20.60 8.502008P 66,376,000 500,000 351,000 11.4 – –

INDUSTRIAL


1999 349,708,000 3,300,000 3,724,000 7.4 5.50 – –2000 351,607,000 1,899,000 (3,088,000) 8.9 5.50 – –2001 353,555,000 1,948,000 (7,162,000) 9.4 4.50 1.72 11.002002 355,296,000 1,741,000 (1,120,000) 9.6 3.50 1.95 9.502003 356,313,000 1,017,000 (5,682,000) 10.3 4.10 5.50 9.002004 358,697,000 2,384,000 2,372,000 10.1 3.60 1.14 10.802005 359,511,000 814,000 3,928,000 9.2 3.55 1.25 9.502006 359,757,000 246,000 (2,071,000) 9.1 3.74 1.37 8.502007 383,278,000 815,000 3,845,000 8.3 3.50 1.32 9.002008P 384,478,000 1,200,000 (1,201,000) 8.9 – – –


• Gross Metro Product Percent Change: -0.3



• Population (000): 2,094.7



18 CONTACT: Joseph Martanovic • [email protected] l RESEARCH: JenniferWilms • [email protected]

OFFICE

• Investment sales included Eaton Center ($71 million),45 Erieview Plaza ($53 million), 1100 Superior ($47 million),and 800 Superior (estimated $66 million).

• In the suburbs, Veyance Technologies leased 50,400 SF with plans toexpand, and Tele Tech Corp leased 46,000 SF for a new call center.

• The Cleveland Clinic purchased a $115 million property including707,000 SF on 53 acres in the east suburbs. Duke Realty Corp.sold its 2 million SF portfolio in two packaged sales – a ninebuilding set for $141 million and a 14-building package for anestimated $166 million.

Office Outlook• In the CBD, high-end space will be at a premium for large tenants.The need for modern space, coupled with several anchor tenantsnearing lease expirations, point to the possibility of a new officetower downtown.

• Refurbished downtown offices have caught the attention of techcompanies looking for space. Among others, the Hanna buildingand Idea Center have become home to several high-tech tenantsand interest is growing.

INDUSTRIAL

• The newly redeveloped Baumhart Road industrial park began tofill up with three tenants signing during the year. The park brought3 million SF to the market in 2007.

• Sale transactions included Griffin Capital’s acquisition of 630,000 SFof suburban warehouse/distribution space for $35.8 million.Argo-Tech sold its 157 acre, 1.7 million SF headquarters in oneof the largest sale-leaseback deals seen in the region.

• Large investment portfolios put millions in square footage up for thetaking. Local developer Geis received $51 million for a portfolioencompassing almost 1 million SF. This sale followed a 1.8 millionSF transfer when Duke Realty sold its Cleveland industrial portfoliolast year.

Industrial Outlook• Three separate construction projects are expected to add nearly800,000 SF of modern warehouse space in the east suburbs andnearby Summit County. Because the projects bring much neededhigh-bay distribution and warehouse space, the market is expectedto absorb the new square footage.

• Many vacated or outdated sites are seeing new life with a surgein industrial conversion projects. Examples include a 3 million SFpark created on the grounds of a shuttered Ford assembly plantand a possible conversion of an 85-acre site upcoming at a vacantHoover Plant.

COLUMBIA, SC

DOWNTOWN OFFICE


1999 – – 0 – 18.802000 3,975,000 0 50,000 4.6 18.502001 4,055,000 80,000 (267,000) 10.9 18.802002 4,111,000 56,000 (18,000) 11.2 18.002003 4,111,000 0 97,000 8.9 17.802004 4,461,000 350,000 (135,000) 14.4 19.702005 4,461,000 0 (10,000) 12.8 19.802006 4,461,000 0 52,000 12.4 19.702007 4,383,000 0 (40,000) 13.6 19.902008P 4,508,000 125,000 87,000 14.0 –

SUBURBAN OFFICE


1999 – – 0 – 16.502000 4,273,000 90,000 103,000 7.6 17.002001 4,308,000 35,000 (41,000) 15.2 18.002002 4,408,000 100,000 236,000 12.4 18.002003 4,483,000 75,000 (248,000) 21.3 17.502004 4,483,000 0 72,000 23.5 16.202005 4,518,000 35,000 229,000 22.4 17.102006 4,518,000 0 157,000 19.5 17.802007 4,516,000 14,000 204,000 15.0 16.902008P 4,554,000 38,000 88,000 13.8 –

INDUSTRIAL


1999 29,531,000 1,048,000 1,183,000 6.8 3.25 – –2000 30,612,000 1,081,000 781,000 8.0 3.25 – –2001 31,386,000 774,000 1,298,000 5.2 3.25 1.00 11.502002 32,991,000 1,605,000 (143,000) 10.6 3.25 1.25 9.502003 32,991,000 0 (1,082,000) 15.4 3.25 0.90 9.502004 33,209,000 218,000 1,253,000 10.5 3.65 1.00 9.252005 33,461,000 252,000 1,745,000 5.1 3.90 1.00 7.252006 33,940,000 479,000 539,000 4.6 3.90 1.10 7.002007 34,299,000 359,000 753,000 2.4 3.95 1.00 7.002008P 34,699,000 400,000 770,000 1.3 – – –









CONTACT:Woody Moore • [email protected] l RESEARCH: Ryan Hyler • [email protected] 19

OFFICE

• Job growth created by new companies locating in the Columbiamarket drove office absorption to exceed 200,000 SF for the year.

• Healthcare providers and service center operations also helped to fuelthe growth of the office market in 2007.

• Two significant new tenants moving into the market during 2007included a Staples accounting operation and Performance FoodGroup. These two new companies accounted for over 450 jobsannounced in the Columbia area during 2007.

Office Outlook• Columbia’s CBD will expand notably during 2008 as two new officeprojects are announced and construction begins. Innovista, theUniversity of South Carolina’s in-town and on-campus researchinstitute, will greatly impact the future of the office market as publicand private multi-tenant office space becomes available in 2008.

• The trends for 2008 will be a stabilized economy with moderate,sustainable, office absorption.

• The Columbia office market is poised for new speculativedevelopment in the CBD. These developments will play a significantrole in forcing landlords to be more aggressive in getting deals done.

• With tightened occupancies and new developments in the nearfuture, rent growth will become apparent in all property sectorsduring 2008.

INDUSTRIAL

• In 2007, the Columbia industrial market experienced an increase inactivity from national developers due to the stability of the marketand lack of available product.

• The majority of leasing activity was driven by the warehousing anddistribution-based businesses, which have been buoyed by Columbia’scentral location in the state and its proximity to Interstates 20, 26and 77.

• While the market has maintained a 5% vacancy over the past severalyears, lack of new product and increased absorption resulted in a 2.4%vacancy rate at year-end 2007. New space was at a premium, whileolder Class C space remained vacant.

Industrial Outlook• A shortage of distribution space is the key factor that may hinder thismarket in 2008. At year-end 2007, approximately 20 prospects werelooking for new space ranging from 20,000 to 300,000 SF.

• Approximately 400,000 SF of new industrial space is anticipatedin 2008.

• The 600-acre Saxe Gotha Industrial Park owned by LexingtonCounty has been taken off of the market due to little interest shownby major manufacturing tenants.

• Kirco will begin development of a 126 acre parcel at the CarolinaPines Industrial Park off of Interstate 77. The project will begin witha 184,000 SF speculative building and will ultimately total roughly2 million SF at final build-out.

COLUMBUS, OHCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 – – 30,000 6.4 –2000 6,696,000 305,000 125,000 7.4 22.462001 7,549,000 853,000 (340,000) 13.4 21.702002 7,627,000 78,000 (137,000) 15.8 20.302003 7,767,000 140,000 68,000 17.3 18.802004 7,929,000 162,000 106,000 17.6 18.802005 7,929,000 0 115,000 18.5 17.302006 8,142,000 213,000 125,000 18.9 16.902007 8,343,000 201,000 312,000 12.8 21.702008P 8,483,000 140,000 47,000 13.7 –

SUBURBAN OFFICE


1999 – – 1,261,000 6.0 –2000 11,467,000 (831,000) 1,002,000 10.8 19.802001 12,034,000 567,000 (336,000) 15.9 19.802002 14,308,000 2,274,000 460,000 20.9 19.152003 14,041,000 (267,000) (136,000) 21.0 18.102004 14,609,000 568,000 219,000 22.9 18.202005 14,802,000 193,000 (32,000) 22.2 17.202006 15,443,000 641,000 776,000 19.6 16.302007 16,176,000 733,000 411,000 16.9 18.502008P 17,073,000 897,000 650,000 17.5 –

INDUSTRIAL


1999 – – 0 – – –2000 210,433,000 0 12,813,000 6.6 3.14 –2001 214,443,000 4,010,000 10,628,000 8.3 3.05 –2002 216,551,000 2,108,000 11,041,000 9.1 2.88 –2003 218,282,000 1,731,000 8,563,000 9.5 3.00 –2004 221,363,000 3,081,000 13,317,000 10.9 2.87 –2005 224,945,000 3,582,000 14,578,000 11.2 2.87 1.602006 232,667,000 7,722,000 7,208,000 13.2 3.27 1.602007 235,613,000 2,037,000 3,617,000 10.1 3.03 3.182008P 238,222,000 2,609,000 1,371,000 10.5 – –





• Population (000): 1,750.5



20 CONTACT: Steve Falor • [email protected] l RESEARCH: Zane Fry • [email protected]

OFFICE

• Columbus was the only city in Ohio with positive growth from2000 to 2006, and was the third fastest growing city in the Midwest.

• A growing economy led to increased demand in the office market.Leading the charge were the business and professional services sectorswhich outperformed the national average in 2007. Businesses in theeducational, health and social services sectors were also healthy butgrew at a slower pace than previous years.

• Nationwide expanded their headquarters complex with theconstruction of a 125,000 SF building located in the CBD.Grange Insurance agreed to complete a 240,000 SF expansionof their existing facility also in the Columbus CBD.

• Significant sales included the sale of Fifth Third Center for over$46 million, Capital Square for $40 million and Time Warner for$23 million.

• The vacancy rate registered 14.61%, down more than one pointfrom the third quarter. Downtown year-end vacancy registered12.8%, down over third quarter vacancy at 13.57%.

Office Outlook• Upcoming downtown infrastructure initiatives will include themayor’s streetcar proposal connecting neighborhoods on the HighStreet corridor, and the major reconstruction of several highways.

• Mixed-use developments are becoming increasingly attractive,and several speculative buildings and build-to-suits underway.

• The business and professional services sectors will continue tolead growth in demand for space in the Columbus office market.

INDUSTRIAL

• The Columbus industrial market benefited from its central locationand access to major railroads, ideal for distribution businesses.

• Wholesale trade grew consistent with the state, and transportationand utilities sectors have grown 33% since 2001.

• A new intermodal facility adjacent to the airport drove demand formore industrial parks, and developers stockpiled land in the area.The facilities also fueled sales in the Southeast submarket.

• The vacancy rate decreased to 10.13%. Bulk vacancy decreased sincethe third quarter, down from 16.18% to 15.85%. Busy SoutheastConstruction saw largest decrease in Vacancy from 15.9% to 14.7%.

Industrial Outlook• Columbus will see continued infrastructure development.The intermodal yard will double the amount of cargo throughcentral Ohio by 2010, creating more than 20,000 jobs overnext 30 years.

• New construction will continue with large, speculative bulkfacilities of 400,000 SF and larger, mostly around airport andnew industrial yard.

DALLAS/FT. WORTH, TX

DOWNTOWN OFFICE


1999 33,977,000 0 0 18.9 21.00 –2000 33,977,000 0 (308,000) 19.8 22.50 8.502001 34,020,000 43,000 75,000 19.7 25.00 10.002002 34,123,000 103,000 (562,000) 21.6 19.00 10.002003 34,123,000 0 (438,000) 22.9 18.50 10.002004 34,123,000 0 123,000 22.5 18.50 7.502005 34,123,000 0 66,000 22.3 19.10 7.502006 34,123,000 0 270,000 21.5 19.50 7.802007 34,054,000 878,000 305,000 21.9 25.00 7.402008P 34,054,000 0 745,000 19.7 – –

SUBURBAN OFFICE


1999 199,469,000 15,644,000 11,727,000 12.9 23.00 –2000 205,262,000 5,793,000 6,196,000 12.3 22.70 8.502001 214,429,000 9,167,000 336,000 15.9 23.50 10.002002 218,150,000 3,721,000 (1,749,000) 18.1 21.00 10.002003 220,692,000 2,542,000 446,000 18.8 20.50 9.502004 224,466,000 3,774,000 5,844,000 17.6 20.00 7.902005 227,179,000 2,713,000 2,897,000 17.3 22.00 9.102006 231,508,000 4,329,000 5,221,000 16.5 22.50 7.452007 241,528,000 3,287,000 2,393,000 16.5 26.50 6.902008P 246,142,000 4,614,000 5,647,000 15.8 – –

INDUSTRIAL


1999 570,445,000 20,437,000 11,941,000 6.5 3.00 – –2000 587,101,000 16,656,000 14,566,000 7.0 4.10 – –2001 610,983,000 23,882,000 14,665,000 9.9 3.50 2.75 10.502002 622,642,000 11,659,000 18,302,000 10.1 3.00 2.60 8.752003 628,783,000 6,141,000 11,619,000 11.1 3.00 2.50 8.002004 640,677,000 11,894,000 10,159,000 11.7 3.00 2.35 8.252005 640,677,000 6,316,000 12,608,000 10.6 3.35 2.60 7.802006 658,841,000 11,848,000 14,797,000 10.2 3.50 2.95 6.902007 683,019,000 12,527,000 15,689,000 9.0 3.40 1.75 7.002008P 688,720,000 17,701,000 17,402,000 8.8 – – –





• Population (000): 4,184.9




CONTACT:Mark Noble • [email protected] l RESEARCH:Mike Otillio • [email protected] 21

OFFICE

• Vacancy remained at 17.1% at year-end, the same as year-end 2006;absorption reached 2.7 million SF, a decrease of 2.8 million SFover 2006.

• The largest lease signings included Bank of America leasing350,000 SF and Verizon Communications Inc. leasing 253,000 SFof space.

• The largest construction projects in Uptown/Turtle Creek submarketincluded One Victory Park adding 458,000 SF to inventory andRosewood Court supplying 400,000 SF.

• Uptown/Turtle Creek and Far North Dallas had a combined total ofmore than 3 million SF in the construction pipeline.

• For suburban office properties, sales averaged $121 per SF and a caprate of 6.9% compared to $128 per SF at 7.7% in 2006.

Office Outlook• The Dallas CBD and Uptown markets have several projectsunderway in the Arts District and near Victory Park, contributingto a downtown Dallas revitalization.

• It is expected that rental rates and demand for space will continueto be robust in 2008.

• The credit crunch could serve to slow construction on speculativeproperties and this may serve to moderate the imbalance ofdemand and supply.

INDUSTRIAL

• Dallas had over a dozen large construction projects underway, eachsupplying over 500,000 SF or more of new industrial supply.

• Ground broke on the Dallas Logistics Hub, a 6,000-acre park that willhave the capacity for 60 million SF of commercial space. BNSF hasa 350-acre tract under option for an Intermodal facility, which wouldmake the Dallas Logistics Hub the only U.S. Inland Port with twoTier 1 railroads.

• Significant leases/move-ins included Unilever at 800,000 SF, PlainsCotton Cooperative Associations at 650,000 SF, Cadbury Schweppeswith 594,000 SF, and Service Craft Logistics at 420,000 SF.

• Absorption was up measuring 15,689,000 million SF compared to14,797,000 SF at year-end 2006.

• Cap rates for industrial properties moved higher averaging 7.0%, upmarginally from 6.9% at the end of 2006.

Industrial Outlook• The market will continue to hold steady in 2008 as manufacturingand employment woes experienced in other parts of the country have,for the most part, by-passed this area.

• The Dallas Logistics Hub will continue to have a huge impacton South Dallas and the region as more companies move into thearea to take advantage of the distribution efficiencies withinthe development.

• New industrial supply is projected to be over 17 million SF for 2008.

DENVER, COCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 25,015,000 22,000 288,000 7.3 24.40 –2000 25,597,000 582,000 665,000 5.5 27.50 8.752001 25,803,000 206,000 (793,000) 10.8 25.40 9.252002 25,803,000 0 (1,206,000) 14.9 22.40 9.002003 25,803,000 0 (123,000) 15.3 20.50 9.002004 25,803,000 0 (173,000) 14.8 18.20 8.052005 25,803,000 0 447,000 14.0 18.50 7.002006 26,179,000 376,000 705,000 11.8 23.80 7.002007 26,867,000 0 351,000 12.3 30.00 6.202008P 27,587,000 720,000 495,000 12.8 – –

SUBURBAN OFFICE


1999 72,371,000 5,028,000 2,106,000 9.5 26.50 –2000 77,399,000 5,028,000 7,495,000 8.3 22.90 9.502001 81,998,000 4,599,000 1,652,000 15.1 21.50 9.252002 84,113,000 2,115,000 (1,300,000) 18.7 19.00 9.002003 84,889,000 776,000 381,000 18.0 19.30 9.302004 85,832,000 943,000 1,052,000 16.3 19.45 8.752005 86,040,000 208,000 2,130,000 14.5 20.40 7.252006 86,702,000 662,000 1,896,000 13.4 21.10 7.002007 88,291,000 395,000 1,851,000 12.3 23.50 6.202008P 89,200,000 909,000 1,626,000 11.4 – –

INDUSTRIAL


1999 219,414,000 1,800,000 (471,000) 5.5 4.00 – –2000 223,806,000 4,392,000 2,434,000 6.5 4.50 – –2001 228,195,000 4,389,000 1,920,000 7.1 5.90 2.75 9.102002 232,650,000 4,455,000 (264,000) 8.5 5.65 3.00 8.902003 235,338,000 2,688,000 (666,000) 9.6 5.60 3.00 8.102004 237,351,000 2,013,000 2,105,000 9.5 5.60 3.25 7.502005 238,974,000 1,623,000 2,850,000 8.8 5.55 3.00 7.202006 240,709,000 1,735,000 2,545,000 7.3 4.25 3.50 7.302007 246,890,000 1,900,000 3,698,000 6.4 4.70 4.00 6.502008P 248,615,000 1,725,000 4,851,000 5.1 – – –





• Population (000): 2,481.6



22 CONTACT: BobWhittelsey • [email protected] l RESEARCH: Julie Duran • [email protected]

OFFICE

• Investment sales volume totaled $3.3 billion in Metro Denverthrough the third quarter of 2007. In 2007, office sales pricesaveraged $223 per SF.

• Metro Denver office rents continued their cyclical rise; year-to-daterents increased 5.5%. Metro rents for Class A product rose6.5% year-to-date.

• There was 2.3 million SF under construction or renovation in thethird quarter 2007 with 22% pre-leased.

• Available sublease space in Metro Denver declined by 418,000 SFin 2007 so far. As a result, sublease space represented just 0.9% ofstanding inventory.

• The largest lease signings in 2007 included 160,600 SF UnitedLaunch Alliance and 84,700 SF by Gambro BCT at SignatureCentre at Denver West.

• Cap rates averaged 6.2%, down from 7.0% in 2006.

Office Outlook• Vacancy rates are expected to drop and lease rates to increase.• Speculative development will remain balanced as demandrequires additional supply.

• Capital market turmoil should have the effect of increasingcap rates in 2008.

• Market trends project strong demand for green, highperformance buildings.

INDUSTRIAL

• Notable 2007 deliveries included the unoccupied 406,959 SFAurora Commerce Center Building C and ProLogis Park 70 Phase IBuilding 8, a 360,000 SF building, also unoccupied.

• One of the largest lease signings included the 150,000 SF renewal byTSA Stores, Inc.

• The average cap rate declined in 2007, averaging 6.5%, compared tothe first six months of last year when the average was 7.24%.

• DCT Industrial Trust bought Centerpark, a 431,600 SF Class Aindustrial park, in a joint venture with JPMorgan Asset Management.Lowe Enterprises was the seller. Alliance Commercial Properties solda 300,300 SF building at 200 Bromley Business Parkway in Brightonfor $16.19 million to BS Properties LLC. Staples occupied theproperty via a 10-year lease. A landmark industrial property near thecrossroads of Interstate 70 and I-25 sold to a Denver-based REIT inmultimillion-dollar deal.

• The largest sale was the Seagate/Maxtor Campus in Longmont, a450,090 SF industrial building for $60.5 million.

• Industrial sales activity in 2007 was up from 2006. The first sixmonths of 2007 saw 125 industrial sales transactions with a totalvolume of over $434 million.

Industrial Outlook• Colorado’s economy will grow modestly in 2008, and shouldoutperform the national economy according to economistRichard Wobbekind.

DETROIT, MI

DOWNTOWN OFFICE


1999 25,871,000 0 (104,000) 8.6 25.75 –2000 25,871,000 0 187,000 11.0 27.80 10.002001 25,871,000 0 (218,000) 11.4 25.80 12.002002 26,017,000 146,000 (319,000) 16.5 24.00 12.002003 27,097,000 1,080,000 569,000 17.3 21.00 12.002004 27,097,000 0 588,000 14.3 21.50 10.002005 27,097,000 0 (172,000) 15.9 22.50 10.002006 27,452,000 355,000 303,000 16.6 22.00 12.002007 47,130,000 0 852,000 16.4 23.70 10.002008P 47,130,000 0 (401,000) 17.2 – –

SUBURBAN OFFICE


1999 85,435,000 1,345,000 971,000 6.5 24.50 –2000 87,333,000 1,898,000 (236,000) 7.1 24.30 10.502001 89,250,000 1,917,000 (1,927,000) 12.8 25.30 11.002002 90,686,000 1,436,000 (3,015,000) 15.0 24.80 10.002003 91,526,000 840,000 (807,000) 16.4 23.00 9.002004 92,357,000 831,000 598,000 16.0 22.00 10.002005 93,062,000 705,000 777,000 16.6 23.50 8.502006 93,502,000 440,000 (663,000) 17.5 23.50 9.002007 98,835,000 928,000 536,000 17.6 23.50 9.002008P 98,835,000 0 733,000 16.8 – –

INDUSTRIAL


1999 397,895,000 5,000,000 (593,000) 7.0 5.80 – –2000 405,726,000 7,831,000 (1,752,000) 9.0 5.70 – –2001 411,782,000 6,056,000 (11,789,000) 12.6 6.00 7.00 11.002002 414,111,000 2,329,000 (12,891,000) 13.1 4.80 3.40 11.002003 415,255,000 1,144,000 (5,626,000) 14.2 4.80 4.50 9.502004 416,539,000 1,284,000 1,647,000 13.0 4.80 4.00 10.502005 417,952,000 1,413,000 7,914,000 11.6 5.00 3.75 8.902006 420,001,000 2,049,000 (9,959,000) 13.6 4.75 5.50 9.002007 435,578,000 3,340,000 (7,078,000) 13.3 4.59 4.50 7.802008P 436,053,000 475,000 (3,839,000) 14.3 – – –





• Population (000): 1,932.4




CONTACT: Cameron McCausland • [email protected] l RESEARCH:Michelle McGuzkin • [email protected] 23

OFFICE

• The Detroit office market slowed considerably with much of theactivity consisting of companies exchanging buildings back and forth.

• Lease rates depended less on the sector of the market but more on thespecific building with rates ranging anywhere between $15 per SF to$27.50 per SF.

• Wayne County purchased the historic Guardian Office Building for$14.5 million.

• The I-696-corridor is seeing strong growth along with the usualBirmingham/Bloomfield areas. Increased retail and apartment/condominium activity occurring along Jefferson, extending eastfrom the CBD, to the Grosse Pointe border.

• On the weaker side were the Southfield and Troy areas, bothexperiencing higher office vacancy rates.

Office Outlook• State and local incentives plus the three pending Detroit casinoswill spark new opportunities for future growth in the Detroit CBD.Large companies like Quicken Loans are currently considering theirrelocation options.

• Medical office properties are still in high demand bringing positiveactivity and much desired new job opportunities.

• Office investment is appealing to West Coast investors due toDetroit’s higher cap rate opportunities. The Detroit office marketis expected to improve over the next 18 months.

INDUSTRIAL

• The Detroit sector reported 3.34 million square feet of new supply in2007, the most since 2001.

• Major new construction was underway at Brownstown BusinessCenter, Bldg. 6, a 267,500 SF warehouse & distribution buildingin Brownstown Twp.

• Overall lease rates trickled down with the lowest in the City ofDetroit. R&D and flex lease rates were double that of warehouse/distribution rents in almost all submarkets across Detroit with thehighest reaching $13.78 per SF in the Washtenaw County market.

• Vacancy rates were still relatively high in all sub-markets butincreased only slightly compared to last year. Vacancy in Royal Oak,Farmington Hills and Washtenaw stabilized around 10%.

• A large sale transaction occurred on 2110 Executive Hills Dr.,Auburn Hills. The 103,819 SF R&D property sold for $19 million.

Industrial Outlook• National investors are continuing to take advantage of Detroit’s lowerthan average prices, which will result in increasing sales prices andcontinued interest.

• Incentives from the State and local cities will spark interest inmany companies to consider the Detroit area in their relocationor expansion plans.

• Manufacturing tenants are still dealing with the continueduncertainty surrounding the automotive industry resulting in thepreference of shorter lease terms and renewals as well as requestsfor lease rate reductions.

FT. LAUDERDALE/BROWARD COUNTY, FLCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 6,646,000 406,000 (71,000) 6.3 29.00 –2000 6,905,000 259,000 200,000 6.4 26.70 –2001 7,082,000 177,000 49,000 12.5 25.50 –2002 7,525,000 443,000 (55,000) 17.5 26.20 –2003 7,579,000 54,000 189,000 15.9 26.40 –2004 7,629,000 50,000 1,000 16.7 26.70 –2005 7,679,000 50,000 187,000 11.6 27.40 5.502006 7,679,000 0 176,000 9.0 30.30 6.602007 10,135,000 269,000 (170,000) 11.3 32.40 7.102008P 10,150,000 15,000 198,000 9.5 – –

SUBURBAN OFFICE


1999 37,097,000 1,245,000 (686,000) 10.1 21.50 –2000 38,336,000 1,239,000 555,000 10.4 18.70 –2001 40,790,000 2,454,000 967,000 16.3 24.70 –2002 41,261,000 471,000 (12,000) 15.5 23.70 10.702003 41,791,000 530,000 976,000 13.8 24.10 10.002004 42,472,000 681,000 1,285,000 11.9 23.90 8.502005 42,920,000 448,000 1,115,000 7.8 25.10 7.002006 43,567,000 647,000 1,259,000 8.0 28.00 6.702007 43,802,000 1,099,000 127,000 10.1 28.60 6.802008P 46,547,000 1,745,000 866,000 13.6 – –

INDUSTRIAL


1999 97,591,000 2,794,000 (885,000) 7.7 – –2000 100,532,000 2,941,000 4,060,000 6.8 6.70 –2001 103,862,000 3,330,000 2,049,000 9.4 5.80 8.572002 105,406,000 1,544,000 1,014,000 8.9 6.00 5.002003 106,937,000 1,531,000 2,379,000 8.0 6.30 10.002004 109,063,000 2,126,000 2,797,000 7.3 6.30 8.002005 110,473,000 1,410,000 3,675,000 4.8 6.95 9.002006 111,834,000 1,361,000 1,534,000 3.8 7.46 20.002007 125,918,000 1,830,000 762,000 5.5 8.63 15.002008P 129,203,000 3,285,000 2,619,000 5.9 – –





• Population (000): 1,852.9



24 CONTACT: SteveWasserman • [email protected] l RESEARCH: Pani Roshani • [email protected]

OFFICE

• The Broward County office market ended 2007 with a vacancy rate of11.3% as supply outpaced current demand needs with the completionof three projects adding a total of 269,000 SF of new inventory.

• Class A office space experienced positive absorption while Class Band C space experienced negative absorption in 2007.

• Rental rates averaged $32.40 per SF for Class A downtown space and$28.60 per SF for Class A suburban space, a slight increase from theprior year.

• Bentley Forbes’ purchase 350 and 450 Las Olas Center with 416,700SF of office space, and 52,500 SF of street front retail in Ft.Lauderdale set a new record for South Florida office buildings,fetching a sales price of $492 per SF.

Office Outlook• Rental rates should begin to stabilize as new construction andsublease options enter the market in 2008.

• Approximately 1.8 million SF of office space remained underconstruction at the end of 2007, several of which are slated for2008 delivery.

• A prime parcel on Las Olas Boulevard in downtown Ft. Lauderdalewhich was purchased for residential condos will now be changed formixed-use development. This is evidence of project restructuring asdevelopers move increasingly away from residential and financially-stressed homebuilders begin to divest.

INDUSTRIAL

• Low vacancy, solid demand, rising rents and lack of land for newconstruction continued to attract private and institutional investmentdollars into the area.

• Industrial condominiums returned to the market as buyers did notpurchase as much as developers had anticipated and are expected tobe absorbed by tenants in the next 12 to 18 months.

• Construction completions totaled over 1.8 million SF in 2007.• The $30 million “Marina Mile Business Park” industrial complexwas completed in early 2007. This was the biggest venture yet inthe revitalization of Marina Mile Road which today houses70 corporations and 30,000 employees.

Industrial Outlook• Asking rates are expected to stabilize in 2008 as new space arrives onthe market.

• Increases in building operating expenses continue to affect tenants’bottom lines and some have begun to consolidate or simply downsize.

• Many projections show that residential land will be rezoned back toindustrial as the residential market continues to decline.

• Port Everglades released its latest version of its 20-year, $2 billionvision plan for general infrastructure work to support cruise andcargo activities, which is anticipated to attract new companiesinto the area.

FRESNO, CA

DOWNTOWN OFFICE


1999 – – 0 – 19.50 –2000 2,085,000 0 150,000 12.3 15.60 11.002001 2,195,000 110,000 149,000 10.9 15.60 12.002002 2,342,000 147,000 86,000 12.7 18.00 10.752003 2,844,000 502,000 440,000 13.7 19.20 9.002004 2,930,000 86,000 101,000 10.6 22.80 8.502005 2,928,000 (2,000) (19,000) 11.2 23.00 7.502006 2,976,000 48,000 157,000 7.3 24.00 9.002007 3,060,000 84,000 12,000 9.5 27.60 8.002008P 3,110,000 50,000 47,000 9.4 – –

SUBURBAN OFFICE


1999 12,410,000 213,000 160,000 12.0 23.50 –2000 12,713,000 303,000 830,000 11.3 19.20 10.002001 13,274,000 561,000 694,000 10.4 19.20 10.252002 14,444,000 1,170,000 1,343,000 8.1 16.20 9.002003 14,503,000 59,000 60,000 7.0 19.20 8.402004 15,422,000 919,000 601,000 7.9 25.20 8.002005 15,767,000 345,000 417,000 6.3 26.40 7.002006 16,440,000 673,000 544,000 8.8 26.40 7.252007 17,436,000 733,000 364,000 11.9 27.60 8.002008P 17,836,000 400,000 261,000 12.4 – –

INDUSTRIAL


1999 43,164,000 750,000 2,800,000 8.6 3.60 – –2000 44,164,000 1,000,000 1,200,000 6.0 3.20 – –2001 44,364,000 200,000 100,000 8.0 3.40 2.25 9.002002 44,764,000 400,000 0 9.0 3.20 2.50 8.502003 45,564,000 800,000 (30,000) 10.8 3.20 2.50 8.502004 45,964,000 400,000 20,000 11.6 3.20 3.00 7.752005 46,764,000 800,000 1,923,000 9.1 3.20 4.25 7.752006 47,204,000 440,000 786,000 7.6 3.20 4.00 8.002007 48,304,000 100,000 1,393,000 4.6 4.08 7.00 7.502008P 48,604,000 300,000 784,000 3.5 – – –









CONTACT:Mike Schuh • [email protected] l RESEARCH:Debbie Kidd • [email protected] 25

OFFICE

• The Fresno office market consisted of 20.2 million SF of spacewith another 4.5 million SF in government-owned and occupiedoffice buildings.

• New construction was strong with approximately 817,000 SF addedin 2007. Of that, three-quarters of the square footage was leased bytenants or built for owners-users.

• The increase in metro vacancy from 8.35% to 11.84% was primarilydue to remaining vacancy in new product.

• There was an increase in sublease space as home builders, titlecompanies and mortgage companies were affected by the housingmarket downturn.

Office Outlook• Fresno’s Central Valley will continue to see strong growth as bothpopulation and businesses move inland for more affordable housingand better opportunities.

• The office market remains favorable for high growth industries suchas financial services and medical services.

• As the region grows, infrastructure will expand to meet populationneeds. Three freeways expanded and will undergo further expansion.

• There continues to be an abundance of land available fordevelopment. Construction costs have tapered in the past fewmonths due to the slowdown in the residential housing market.

• Rents will remain stable but incentives will start to favor tenants.Purchase prices are not likely to increase in 2008.

INDUSTRIAL

• Fresno’s industrial inventory consisted of approximately 75%warehouse/distribution facilities, 20% manufacturing facilities,and 5% R&D facilities.

• Vacancy at the end of 2007 registered 4.6%, representing acomparatively low vacancy rate for the market.

• Lack of new construction contributed to low vacancy as developerswait for rents to catch up with construction costs before kick-startingnew projects.

• A handful of large leases and sales contributed to a record absorptionof over 1 million SF of industrial space in 2007.

• The majority of small businesses preferred to buy rather than leaseindustrial facilities. The existing market was characterized as offeringmore space for lease than for sale, thereby creating an imbalance ofdemand for space for lease.

Industrial Outlook• As record low vacancy, steady demand, and higher rents justifynew projects, there will be a return of new construction of Class Afacilities in 2008.

• Demand for improved industrial land will increase as the varietyof available existing buildings becomes limited and small businessescontinue their desire to own property.

GREENVILLE, SCCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 – – 0 – – –2000 2,695,000 0 88,000 14.0 18.25 –2001 2,356,000 45,000 107,000 14.3 18.25 –2002 2,581,000 183,000 154,000 13.8 18.25 –2003 3,120,000 29,000 1,000 16.1 18.25 –2004 3,182,000 62,000 9,000 16.3 18.50 –2005 3,269,000 87,000 102,000 10.7 18.90 9.002006 3,101,000 0 15,000 11.4 19.60 8.002007 3,050,000 123,000 (43,000) 12.8 18.00 8.002008P 3,050,000 0 64,000 10.7 – –

SUBURBAN OFFICE


1999 – – 0 – – –2000 2,894,000 0 64,000 21.0 17.25 –2001 3,328,000 434,000 113,000 19.6 17.25 –2002 3,461,000 0 (50,000) 28.1 16.75 –2003 3,780,000 75,000 (77,000) 30.7 16.00 –2004 3,808,000 28,000 60,000 28.8 16.75 –2005 3,837,000 29,000 107,000 21.0 16.70 7.502006 3,801,000 0 232,000 16.2 18.50 8.502007 3,989,000 126,000 698,000 12.5 18.00 8.502008P 3,989,000 0 84,000 10.4 – –

INDUSTRIAL


1999 – – 0 – – – –2000 – – 0 – – – –2001 – – 0 – – – –2002 43,161,000 343,000 0 20.5 3.30 0.80 9.502003 43,423,000 262,000 (1,090,000) 23.5 3.20 0.80 9.502004 43,787,000 364,000 1,099,000 21.5 3.20 – 9.502005 43,787,000 – 0 – – – –2006 60,586,000 900,000 0 13.0 3.50 0.92 9.002007 62,526,000 601,000 1,157,000 10.3 3.13 0.92 8.252008P 62,904,000 378,000 1,346,000 8.7 – – –






Source: Moody’s Economy.com.


26 CONTACT: Frank Hammond • [email protected] l RESEARCH: Kitty Allen • [email protected]

OFFICE

• The Greenville office market experienced another significant year ofabsorption in the office market of 655,000 SF.

• The suburban office market reported 12.36% absorption to 87.47%occupancy, and is swinging to the landlords’ favor.

• Reported suburban rental rates remained constant while therewere less “below market” rate deals made as the market continuedto tighten.

• The Fifth RiverPlace mixed-use building, The Terrace, was deliveredto the market fully occupied by the Bounce Agency, Allora, Inc, andDon Gardner Architects.

Office Outlook• The mixed-use project planned by Bo Aughtry at South Main andBroad Streets is expected to break ground in the first quarter of2008 with 30,000 SF of Class A office space already pre-leased.

• Other new office development in the CBD is stymied by the lackof parking availability.

• Merrifield Partners announced a mixed-use project on 26 acres nearthe Fluor Corporation campus with 26,000 SF of new office space.

• The Erwin-Penland marketing agency announced hiring andexpansion plans that could further tighten or grow the officespace capacity in the CBD.

INDUSTRIAL

• High growth industries include research and development,warehouse/logistics, and light manufacturing. Expansion locallyand regionally with some potential manufacturing companiesrelocating to the Upstate.

• New developments include 342,000 SF speculative building,126,000 SF speculative building, and 108,000 SF flex space building.

• In Greenville, the construction of Adidas’ new distribution centeris underway.

• Significant transactions included 215,000 SF leased by Cliffstar Corp.,116,400 SF leased by Edward B. Dee Lee Co., 100,000 SF leased bySun Paper Co., 100,000 SF leased by CWC Logistics, and 80,000 SFleased by STI.

• On the investment side, C.F. Sauer purchased a 148,800 SFdistribution building, and a local developer sold 2 million SF of itsindustrial portfolio in the upstate.

• Land prices were varied: rough grade sold from $20,000 to $39,500per acre; pad ready ranged from $65,000 to $75,000 per acre. The sizeof acreage ranged from 8 to 72 acres.

• The market witnessed an influx of suppliers migrating to becloser to BMW.

Industrial Outlook• In 2008, Greenville will see several new developments including theconstruction of a 200,000 SF speculative building in Spartanburg byan Atlanta, GA developer.

• It is becoming more difficult to find entitled property, and theproblem is increasing as re-zoning issues continue.

HARTFORD, CT

DOWNTOWN OFFICE


1999 10,944,000 0 122,000 25.5 22.00 10.302000 10,929,000 0 310,000 20.8 22.10 9.252001 10,929,000 0 125,000 19.8 24.00 12.302002 10,727,000 0 (305,000) 19.9 24.20 9.402003 10,631,000 0 (141,000) 20.5 24.20 9.752004 10,198,000 0 48,000 18.8 24.00 9.002005 10,103,000 0 210,000 20.6 24.30 7.502006 10,057,000 0 521,000 15.8 24.20 6.502007 10,050,000 0 71,000 15.4 24.00 7.452008P 10,050,000 0 40,000 15.0 – –

SUBURBAN OFFICE


1999 12,881,000 0 240,000 15.7 18.80 10.152000 13,204,000 235,000 250,000 11.9 19.60 9.502001 13,535,000 125,000 (486,000) 16.1 20.30 10.502002 13,693,000 0 (157,000) 18.1 19.90 10.002003 14,157,000 150,000 (97,000) 20.5 20.20 10.002004 13,745,000 0 214,000 18.2 19.70 8.502005 14,102,000 125,000 316,000 17.7 20.10 8.102006 14,286,000 90,000 539,000 15.6 20.10 7.502007 14,273,000 0 (213,000) 16.9 20.90 7.652008P 14,310,000 37,000 56,000 16.8 – –

INDUSTRIAL


1999 61,361,000 150,000 150,000 14.5 4.00 – –2000 61,611,000 250,000 250,000 14.3 4.50 – –2001 61,761,000 150,000 160,000 14.2 4.50 1.10 10.002002 61,861,000 100,000 300,000 13.9 4.50 1.03 10.002003 62,678,000 817,000 900,000 13.2 4.30 1.00 9.002004 62,932,000 254,000 484,000 13.4 4.30 1.70 9.002005 63,082,000 150,000 241,000 13.2 4.50 1.72 9.002006 63,282,000 200,000 200,000 13.1 4.50 1.72 8.502007 96,875,000 130,000 478,000 10.3 6.00 2.30 9.002008P 97,005,000 130,000 409,000 10.0 – – –





• Population (000): 1,197.1




CONTACT: Keith J. Kumnick, SIOR • [email protected] l RESEARCH: James Stanulis • [email protected] 27

OFFICE

• The CBD Class A vacancy rate registered 13.16% and the suburbanClass A vacancy rate was 14.17%.

• MetLife closed on a 500,000 SF CIGNA building and willconsolidate to the suburbs and ING’s 400,000 SF suburban,build-to-suit, was occupied. Hartford Insurance Group’s 450,000 SFproject neared completion, while UTC early extended its leaseon 173,000 SF.

• Four sizeable law firms relocated to a repositioned Class A CBDproperty, collectively leasing over 100,000 SF.

• Prime CBD gross lease rates averaged $23.97 per SF, and primesuburban space averaged $20.90 per SF.

• Sixteen sales over 25,000 SF occurred during 2007. Four wereClass A properties ranging from $100 to $146 per SF and theremainder sold for under $100 per SF. Cap rates ranged between7.5% and 8.4%.

Office Outlook• Leasing activity will be modest for the first half of 2008, however,rates will creep up slightly between 1% and 5%.

• Hartford’s office absorption will be modest. There are no speculativeconstruction projects except for a handful of medical buildings.

• Rental concessions, especially waivers, will be case-specific butgenerally non-existent.

INDUSTRIAL

• Demand was led by warehouse/distribution users and third-partylogistics companies.

• Build-to-suit activity included a 482,000 SF warehouse/distributionfacility for ALDI’s, Emhart Glass for a specialized manufacturingand R&D facility of 45,000 SF, a warehouse for William B. Meyer of100,000 SF, and a regional distribution center for Walgreen’sof 800,000 SF.

• Larger leases included King Koil for 150,000 SF, Shuco USA for60,000 SF, Electrical Wholesalers taking 135,000 SF, Ardent Displaysleasing 81,500 SF.

• Equity Industrial sold as part of a $516 million national portfolio salethe 1 million SF Lego facilities and another 400,000 SF building toa joint venture of KBS, Hackman Capital and Calare Properties.Ford-leased distribution center of 226,700 SF was sold for$14.3 million, and Namco completed a sale-leaseback of theirheadquarters/distribution facility of 190,000 SF for $10.3 million.

Industrial Outlook• Leasing activity is anticipated to improve as the year progresses tocome close to 2007 levels.

• Demand for smaller buildings around 20,000 SF will be strong forpurchase by local companies. Buildings are in short supply and priceshave appreciated but are still below costs of new construction.

• Warehouse facilities with good clear height will be highly desired.• Demand will continue for investment opportunities – deals that makesense will get financed.

HONOLULU, HICO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 7,932,000 0 (82,000) 14.3 27.20 9.252000 7,932,000 0 78,000 11.8 27.70 9.002001 7,932,000 0 (75,000) 12.0 26.50 10.252002 7,932,000 0 (12,000) 12.3 27.60 9.002003 7,932,000 0 19,000 12.1 27.80 7.502004 7,932,000 0 90,000 11.0 29.40 7.202005 7,932,000 0 184,000 8.7 31.50 7.002006 7,932,000 0 162,000 6.7 34.20 6.502007 8,057,000 0 (118,000) 8.0 36.40 6.502008P 8,057,000 0 (60,000) 8.8 – –

SUBURBAN OFFICE


1999 7,383,000 0 19,000 12.7 – 10.252000 7,383,000 0 80,000 10.1 – 9.502001 7,383,000 0 (146,000) 13.4 – 9.752002 7,383,000 0 (116,000) 15.0 – 8.502003 7,383,000 0 174,000 11.5 – 7.002004 7,383,000 0 133,000 9.6 – 7.502005 7,383,000 0 65,000 8.6 – 7.002006 7,405,000 0 87,000 7.4 – 6.752007 7,645,000 13,000 109,000 6.5 – 6.802008P 7,645,000 0 10,000 6.3 – –

INDUSTRIAL


1999 34,925,000 20,000 350,000 6.4 6.00 6.00 –2000 34,965,000 40,000 833,000 4.0 8.64 6.00 –2001 35,000,000 35,000 (181,000) 4.4 8.30 6.00 –2002 35,100,000 100,000 174,000 3.6 8.00 6.00 8.502003 35,150,000 50,000 199,000 2.7 10.92 10.00 7.652004 35,270,000 120,000 340,000 1.7 11.50 13.00 6.802005 35,620,000 350,000 425,000 1.8 11.85 26.50 6.152006 36,245,000 625,000 452,000 2.3 13.10 31.00 5.502007 36,387,000 286,000 (269,000) 3.0 15.72 31.00 5.402008P 36,662,000 275,000 (200,000) 4.3 – – –








28 CONTACT: James Piane • [email protected] l RESEARCH:Mike Hamasu • [email protected]

OFFICE

• The professional and business services sectors remained healthydespite financial services being affected by struggling debt markets.Year-end absorption posted negative 9,000 SF, a dramatic reversalin direction after having posted 112,000 SF of positive absorptionat mid-year.

• Both Class A and B average asking rents surpassed $36 per SF, thefirst time in over fifteen years.

• Suburban rents exceeded CBD Class A levels by as much as 20% to30%, and office development began in the Leeward and West Oahumarkets. Asking rents for these proposed developments in Kapoleiranged from $36 to $42 per SF triple net.

Office Outlook• For 2008, the market is projected to post negative absorption resultingin the overall Oahu island-wide vacancy rate to fluctuate between7.5% and 8.0%.

• After a nearly 24% increase in rents over the past three years, growthrates should range between to 4% to 6% over the next year.

• Although Hawaii appears insulated from the initial shocksexperienced from the subprime debacle, should the U.S. fall intoa recession, Hawaii’s tourist based economy will feel the affectof slowing discretionary spending.

INDUSTRIAL

• For the past several years Honolulu’s industrial market was thetightest in the country, averaging vacancy in the 2% range, atyear-end vacancy rates rose to 3.01%. As a result, landlords boostedrents by more than 42% over the past four years.

• The availability of industrial-zoned parcels fell to single digits.Kapolei land jumped from $12 per SF in 2003 to $37 per SF landfor 2007.

• The success of the Kapolei Spectrum industrial condominiumproject spurred more than 600,000 SF of industrial condominiumdevelopment in Leeward and West Oahu markets, selling oftenwith prices over $300 per SF.

• Absorption dropped into negative territory for the first time since2001. For 2008, new supply is likely to result in negative absorption.

Industrial Outlook• Rental rates will continue rising as new ‘for lease’ developments arenot planned for the near future.

• Morgan Stanley’s acquisition of 100 acres of land in Kapolei is theonly industrial park slated for near-term development. Infrastructureimprovements are needed prior to land sales or development resultingin a target date of 2009 before additional land is added to the market.

• Between 2009 and 2012, a significant portion of Honolulu’s leaseholdlands come up for rent renegotiations. As land prices escalatedramatically, negotiations are likely to be contentious as lessees,tenants and investors will face difficult financial positions.

HOUSTON, TX

DOWNTOWN OFFICE


1999 35,000,000 0 293,000 8.9 24.40 –2000 35,000,000 0 182,000 8.4 27.80 –2001 35,000,000 0 (786,000) 10.6 28.70 9.002002 35,581,000 581,000 (1,209,000) 15.5 24.40 9.002003 37,114,000 1,533,000 (621,000) 20.6 22.70 9.002004 37,114,000 0 3,000 20.6 21.50 8.402005 37,114,000 0 (730,000) 22.6 21.40 7.502006 37,114,000 0 1,641,000 18.2 24.20 6.602007 36,941,000 0 2,010,000 12.1 36.40 6.002008P 37,184,000 243,000 1,104,000 9.7 – –

SUBURBAN OFFICE


1999 131,261,000 3,474,000 322,000 12.4 21.30 –2000 135,069,000 3,717,000 41,000 14.8 21.50 –2001 136,534,000 1,465,000 (411,000) 16.1 21.90 10.502002 137,825,000 947,000 (704,000) 17.4 20.60 9.302003 138,649,000 583,000 (429,000) 18.2 20.50 8.902004 139,486,000 506,000 1,166,000 17.8 19.80 8.802005 140,163,000 623,000 2,447,000 16.5 20.10 7.502006 141,039,000 877,000 4,374,000 13.9 22.60 7.202007 142,211,000 756,000 3,838,000 11.8 26.60 7.102008P 144,434,000 2,223,000 4,267,000 10.2 – –

INDUSTRIAL


1999 373,832,000 8,352,000 1,975,000 5.5 4.24 0.75 –2000 382,800,000 8,968,000 3,327,000 6.5 4.44 1.00 –2001 389,905,000 7,105,000 4,941,000 7.0 4.31 1.05 10.002002 395,993,000 6,088,000 1,279,000 8.0 4.22 1.00 11.102003 400,142,000 4,149,000 546,000 8.7 4.34 1.10 10.602004 403,957,000 3,815,000 7,818,000 7.8 4.29 1.20 10.002005 412,851,000 8,894,000 13,650,000 6.5 4.46 1.30 9.652006 415,979,000 3,128,000 4,131,000 6.6 4.45 1.50 7.402007 436,582,000 9,235,000 10,175,000 6.1 5.61 5.00 7.102008P 442,082,000 5,500,000 13,939,000 4.1 – – –





• Population (000): 5,784.8




CONTACT:Gary Mabray • [email protected] l RESEARCH: Rosalinda Engle • [email protected] 29

OFFICE

• Single-digit vacancy for CBD Class A space at year-end 2007marked a significant decrease from vacancy in the high teenstwelve months earlier.

• Above-average rental rate growth in CBD and all major suburbansubmarkets continued as supply levels dwindled and landlordsmaintained market control.

• Robust leasing activity citywide was driven by tenant expansions inthe energy, finance, and law sectors of business.

• Speculative construction surged in submarkets with limited Class Aspace on the market including the Energy Corridor, Westchaseand CBD.

• New office completions reached 756,000 SF in 2007, with anadditional 2.6 million SF under construction at year-end.

Office Outlook• Following double-digit growth in 2007, rental rates are expectedto stabilize in 2008 to average $30 per SF and $40 per SF gross forsuburban and CBD space, respectively.

• Key office projects set to break ground in 2008 include two newCBD buildings – Hines’ 1 million SF Main Place and TrammellCrow’s 868,000 SF Discovery Tower.

• Houston’s strong local economy is expected to continueoutperforming the nation in job growth, driven by expansionsin the energy sector, Port of Houston, Houston Airport System,NASA/Johnson Space Center, and Texas Medical Center.

INDUSTRIAL

• Record-breaking positive absorption of 10.2 million SF highlightedHouston’s industrial market in 2007.

• Robust leasing activity included eight leases over 200,000 SFcitywide, with top leases in the Southeast Corridor led by WilsonIndustries (450,000 SF), Packwell (423,700 SF), WSP USA(339,600 SF), and Frontier Logistics (206,300 SF).

• Single-digit vacancy for all major corridors and submarketscontributed to the year-end 6.1% vacancy rate citywide.

• Houston’s industrial market added 9.2 million SF in 2007, includingTranswestern’s 1.2 million SF Port 225 Distribution Center(Southeast); National Property Holdings’ 909,900 SF Port CrossingCommerce Center (Southeast); Clay Development’s 423,700 SFPackwell build-to-suit (Southeast); and ProLogis’ 323,700 SF JerseyVillage Corporate Center (Northwest).

• Under construction projects totaled 5.7 million SF at year-end, ledby North, Southeast, and Northwest corridors.

Industrial Outlook• Strong demand will drive 3% to 4% rent growth for key product linesincluding warehouse distribution space.

• While much of Houston’s new industrial construction is speculative,the Simpkins Group is developing a 500,000 SF Walgreensbuild-to-suit distribution warehouse.

• Active construction pipeline to continue with developers includingProLogis, Clay Development, Verde, Liberty Property Holdings,Vantage, and First Industrial proposing significant industrial projectsfor 2008.

INDIANAPOLIS, INCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 10,691,000 54,000 4,000 12.0 21.00 –2000 10,905,000 214,000 (270,000) 16.0 21.00 10.002001 11,270,000 365,000 22,000 18.5 21.50 10.002002 11,270,000 0 117,000 17.5 19.60 10.502003 11,286,000 16,000 193,000 15.9 19.60 10.502004 11,348,000 62,000 129,000 15.2 19.60 8.502005 11,348,000 0 112,000 14.6 19.60 7.502006 11,412,000 64,000 (84,000) 18.3 19.40 7.502007 11,518,000 147,000 208,000 15.3 19.50 8.502008P 11,518,000 0 199,000 13.5 – –

SUBURBAN OFFICE


1999 14,466,000 972,000 647,000 10.9 21.00 –2000 16,034,000 1,568,000 640,000 15.7 23.00 10.002001 16,488,000 454,000 622,000 16.0 20.80 9.002002 16,927,000 439,000 (66,000) 18.8 19.00 10.002003 17,502,000 575,000 135,000 20.7 19.00 10.002004 17,936,000 434,000 689,000 18.7 19.00 8.502005 18,203,000 267,000 297,000 18.3 19.10 7.502006 18,530,000 327,000 502,000 17.8 19.30 7.502007 19,124,000 533,000 163,000 18.6 19.40 8.502008P 20,042,000 918,000 358,000 20.5 – –

INDUSTRIAL


1999 188,566,000 5,912,000 4,461,000 6.7 4.25 1.20 –2000 193,890,000 5,324,000 8,117,000 5.1 3.50 1.05 –2001 198,371,000 4,482,000 (1,195,000) 7.8 4.50 1.72 8.902002 203,776,000 5,405,000 3,563,000 8.5 5.90 1.50 8.902003 207,898,000 4,122,000 3,902,000 8.4 4.80 2.40 9.252004 214,694,000 6,796,000 7,796,000 7.7 4.30 1.49 9.002005 217,137,000 2,443,000 4,777,000 6.5 5.90 1.25 8.502006 222,822,000 5,685,000 6,102,000 6.2 5.75 1.85 8.502007 229,942,000 7,121,000 1,222,000 8.6 5.00 3.55 8.002008P 232,519,000 2,577,000 4,285,000 7.7 – – –





• Population (000): 1,704.2



30 CONTACT: LukeWessel • [email protected] l RESEARCH:Matt Briggs • [email protected]

OFFICE

• The cost of doing business in the metropolitan area has always beenlower than the national average and continued to decline.

• New office construction in 2007 measured its highest levelsince 2001.

• The CBD showed a decrease in the vacancy and rental ratesincreased in both the CBD and suburban markets.

Office Outlook• Employment growth in the city is expected to continue outpacingthe national average.

• State and local taxes are expected to remain lower than thenational average.

• Low office rents continue to attract business and professional services.• Speculative office construction continues to add about 500,000 SFper year to the inventory and net absorption is expected to keep pace.

INDUSTRIAL

• High quality free-standing facilities remained in high demandas increased construction costs prompted buyers to seek lessexpensive alternatives.

• New construction spread further out in the MSA along the majorinterstate routes.

• The market continued to grow in 2007 with 1.2 million SF ofabsorption. The market grew by 27.4 million SF since the beginningof 2002. Thirty-nine industrial projects added 7.1 million SF tothe market.

• Modern bulk projects drove construction with 5.3 million SFcompleted, but 2007 also saw more mid-sized construction, a totalof 1.8 million SF than in recent years.

Industrial Outlook• With companies requiring specialized site criteria, the market will seeincreased build-to-suit construction of over 3.5 million SF.

• Speculative construction, particularly of modern bulk product, willslow in 2008 due to a large supply already on the market.

• Medium distribution and office/showroom rents will remain stableor could rise due to healthy demand. Rents for modern andtraditional bulk product could soften due to the current bulk supply.Developers may attempt to raise rental rates due to increasedreal estate taxes.

• As land prices, materials and gas costs rises, the option of adaptingolder space, particularly in the city, to suit users and developers willbecome more attractive.

• Landlords will look to renew leases early, as much as two to threeyears prior to expiration, especially in the modern bulk market.

JACKSONVILLE, FL

DOWNTOWN OFFICE


1999 – – 0 – – –2000 – – 0 – – –2001 12,191,000 49,000 (269,000) 9.7 18.90 10.002002 12,218,000 27,000 27,000 10.4 19.60 10.002003 12,358,000 140,000 (146,000) 12.3 20.00 9.002004 12,358,000 0 (120,000) 16.7 19.50 9.002005 12,358,000 0 514,000 16.7 23.00 9.002006 12,838,000 480,000 913,000 12.7 20.00 8.002007 12,838,000 0 205,000 11.1 20.00 8.002008P 12,878,000 40,000 254,000 9.4 – –

SUBURBAN OFFICE


1999 – – 0 – – –2000 – – 0 – – –2001 23,502,000 688,000 137,000 14.0 18.00 10.002002 23,880,000 378,000 (170,000) 16.1 18.50 10.002003 24,523,000 643,000 1,057,000 13.6 18.00 9.002004 24,815,000 292,000 372,000 10.7 19.80 9.002005 25,023,000 208,000 224,000 13.2 19.80 8.002006 25,592,000 569,000 858,000 11.8 20.50 8.002007 26,007,000 414,000 362,000 11.8 20.50 7.502008P 26,421,000 414,000 510,000 11.3 – –

INDUSTRIAL


1999 – – – – – – –2000 – – – – – – –2001 77,944,000 438,000 (1,800,000) 10.0 3.40 0.75 11.002002 78,414,000 470,000 (418,000) 8.7 3.50 0.80 10.102003 80,190,000 1,776,000 2,126,000 8.7 3.50 1.25 9.002004 81,803,000 1,613,000 605,000 7.9 3.60 1.75 9.502005 83,759,000 1,956,000 2,073,000 8.1 3.70 2.00 7.002006 85,117,000 1,358,000 2,700,000 6.2 3.75 2.50 7.002007 86,039,000 3,249,000 1,286,000 5.6 4.00 3.50 7.002008P 91,039,000 5,000,000 4,000,000 6.3 – – –





• Population (000): 1,309.5




CONTACT: Kim Conlee • [email protected] l RESEARCH: Louis Galant • [email protected] 31

OFFICE

• Investors went on a buying spree in the first half of 2007, spendingover $212 million for various prime office buildings – a new salesrecord for a six-month period.

• Improving conditions were due to the overall strength of thelocal economy, population growth, and the city's anticipatedport expansion.

• Downtown vacancy declined with little new construction andshrinking supply. Activity focused on conversions of older officebuildings to mixed-use and residential use.

• Office condominiums gained strength as entrepreneurs and smallbusinesses preferred owning space over renting.

Office Outlook• Vacancy is expected to drop to 10% in 2008 due to a relative lack ofnew construction, which has been at a subdued level for the pastseven years.

• Jacksonville’s office rents are expected to increase at least 3% to5% in 2008.

• Office growth and development will continue to shift with theexpanding population toward the southern reaches of the cityand into St. Johns and Clay counties.

• Class A office construction will be driven by build-to-suit deals.

INDUSTRIAL

• Warehouse and distribution development companies jockeyed forposition near Jacksonville’s port and major highways, heralding theearly stages of the city’s biggest industrial boom in decades. In 2007,three build-to-suit projects, each around 800,000 SF, beganconstruction – an unprecedented event in Jacksonville.

• Two major international ocean shipping carriers, Mitsui O.S.K. Linesand Hanjin Shipping Co., have each made a commitment to buildtheir East Coast hub in Jacksonville.

• The TraPac Container Terminal, Mitsui O.S.K. Lines’ new$220 million state-of-the-art facility, is scheduled to open byyear-end 2008.

• Hanjin Shipping Co. has a written understanding with theJacksonville Port Authority to develop a $360 million containerterminal by 2011.

Industrial Outlook• The greatest space demand will be for bulk warehousing anddistribution, with new facilities from 300,000 to 500,000 SFbecoming the norm.

• Most of the city’s construction activity will occur on the Northsideand Westside, and increasingly in outlying counties where land isavailable. Build-to-suit construction is expected to nearly matchthe level of speculative industrial development in 2008.

• Vacancy rates should remain in the 5% to 7% range, with newproduct delivery being absorbed by pent-up demand.

• Asking rents will surpass the rate of inflation due to low vacancyas well as rising construction, entitlement and land costs.

KANSAS CITY, MO-KSCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 9,984,000 241,000 333,000 10.3 21.30 –2000 9,984,000 0 20,000 10.1 21.70 10.002001 10,258,000 274,000 9,000 12.5 20.90 –2002 10,528,000 270,000 (299,000) 17.5 21.00 –2003 11,017,000 489,000 (186,000) 22.9 20.35 10.002004 10,877,000 (139,000) (384,000) 25.4 20.35 10.002005 11,248,000 371,000 216,000 26.0 20.50 9.252006 11,321,000 73,000 427,000 22.7 20.20 8.502007 11,124,000 (197,000) 97,000 20.4 20.40 7.002008P 11,124,000 0 107,000 19.5 – –

SUBURBAN OFFICE


1999 27,344,000 1,206,000 1,140,000 6.3 23.50 –2000 29,033,000 1,689,000 909,000 8.7 22.40 9.002001 30,600,000 1,567,000 96,000 13.0 22.10 10.002002 31,294,000 694,000 (1,551,000) 19.9 21.70 11.002003 31,938,000 643,000 429,000 20.2 21.60 10.002004 32,401,000 464,000 867,000 18.6 20.90 8.002005 32,727,000 325,000 791,000 17.0 20.10 8.002006 33,549,000 822,000 656,000 17.1 20.90 8.002007 34,086,000 544,000 1,437,000 14.2 22.40 7.002008P 35,286,000 1,200,000 353,000 16.1 – –

INDUSTRIAL


1999 158,727,000 3,662,000 3,486,000 4.9 3.80 – –2000 164,080,000 5,354,000 4,325,000 5.4 4.40 – –2001 167,445,000 3,364,000 (2,471,000) 8.8 4.40 1.70 10.002002 170,164,000 2,719,000 1,617,000 9.3 3.80 1.70 9.752003 171,346,000 1,182,000 (759,000) 10.4 3.80 1.70 9.752004 173,119,000 1,774,000 3,821,000 9.1 3.80 1.80 9.002005 175,228,000 2,109,000 1,473,000 9.3 3.95 1.80 8.252006 176,545,000 1,317,000 2,754,000 8.4 4.10 2.00 7.002007 179,310,000 2,764,000 4,807,000 7.1 4.15 2.00 7.002008P 181,710,000 2,400,000 2,008,000 7.2 – – –





• Population (000): 1,996.3



32 CONTACT: Frazier Bell • [email protected] l RESEARCH: Carolyn Bagnall • [email protected]

OFFICE

• The office market continued to improve, but overall vacancyremained higher than national averages for both the downtownand suburban areas.

• The two suburban markets of South Johnson County, Kansas andSouth Kansas City, Missouri continued to outperform the rest of themetro area.

• Kansas City’s largest investment transaction was the sale of the1 million SF Summit Tech Center for $140 per SF.

• Construction of leasable space has been limited over the last fewyears. Current construction projects included the West Edge(220,000 SF on the Plaza) and the Hilltop at Briarcliff (200,000 SFwithin view of the Missouri River).

• Major growth companies in the Kansas City area includedBurns & McDonnell, Cerner Corporation, Garmin International,and Lockton Companies.

Office Outlook• Early in 2008 a 620,000 SF building will be completed for theFederal Reserve Bank of Kansas City.

• MARC projects that KC’s employment growth will be 1.4% in 2008and accelerate to 2.6% in 2009.

• Downtown is undergoing a major revitalization. Sprint Arenaopened in 2007. Kansas City Live entertainment district isopening in 2007 – 2008. The Kauffman Performing Arts Centeris under construction.

INDUSTRIAL

• Kansas City’s industrial absorption of 4.8 million SF made 2007 themost productive of the last ten years.

• The overall vacancy at year-end registered 7.1%, and for moderndistribution space, year-end vacancy was tight at 3.7%.

• No large industrial portfolios traded in 2007, but investor interestremained strong. A total of 2.5 million SF of industrial space soldduring the year.

• During the last four years, most new construction was in build-to-suitprojects driven by users. Recently completed projects included446,000 SF for Kimberly-Clark, 250,000 SF for Corporate Express,and 100,000 SF for Complete Home Concepts.

Industrial Outlook• In Kansas City, a planned build-to-suit distribution facility may add asmuch as 1.3 million SF to the industrial market.

• Low distribution vacancy and the rush of recent build-to-suit projectshave prompted action on speculative construction. 2008 will see thestart of at least one speculative project of 600,000 SF. As many asthree are possible in the range of 250,000 to 600,000 SF.

• Two new intermodal facilities have been in the planning stages.Construction will start on both in 2008. The intermodal facilitiesand recent distribution new construction mark Kansas City’stransition to a prominent regional and national distribution hub.

LAS VEGAS, NV

DOWNTOWN OFFICE


1999 2,071,000 26,000 14,000 11.5 28.20 –2000 2,129,000 58,000 14,000 13.3 29.00 –2001 2,248,000 119,000 103,000 13.2 28.00 –2002 2,530,000 282,000 264,000 13.6 27.20 –2003 2,538,000 8,000 8,000 13.6 28.20 –2004 2,754,000 216,000 33,000 19.2 28.80 –2005 2,754,000 0 89,000 15.9 28.80 –2006 2,754,000 0 261,000 6.4 28.80 6.502007 3,363,000 609,000 589,000 5.9 39.00 6.702008P 3,363,000 0 13,000 5.5 – –

SUBURBAN OFFICE


1999 16,910,000 1,665,000 1,108,000 10.8 26.00 –2000 18,316,000 1,406,000 1,827,000 7.6 27.50 –2001 20,118,000 1,802,000 962,000 11.2 26.20 –2002 22,191,000 2,073,000 1,717,000 12.7 27.20 8.752003 23,284,000 1,093,000 853,000 13.2 30.10 12.652004 25,451,000 2,167,000 2,059,000 12.5 29.00 7.252005 28,136,000 2,685,000 3,481,000 8.4 29.90 7.502006 31,092,000 2,956,000 2,173,000 10.2 32.20 7.352007 34,661,000 3,569,000 2,039,000 13.5 38.20 6.302008P 38,056,000 3,395,000 120,000 20.9 – –

INDUSTRIAL


1999 64,641,000 3,711,000 2,477,000 7.2 3.84 – –2000 67,976,000 3,335,000 4,192,000 5.6 3.84 – –2001 72,674,000 4,698,000 2,812,000 7.8 4.08 9.43 –2002 76,993,000 4,319,000 2,866,000 10.0 3.84 2.88 9.452003 79,809,000 2,816,000 1,342,000 11.5 4.80 2.90 8.502004 83,687,000 3,878,000 6,110,000 8.3 4.92 7.00 7.502005 87,277,000 3,590,000 6,695,000 4.4 5.52 6.66 7.002006 92,738,000 5,461,000 5,379,000 4.2 5.52 6.42 6.802007 99,359,000 6,621,000 4,277,000 6.3 7.18 29.13 7.102008P 103,861,000 4,502,000 373,000 10.0 – – –





• Population (000): 1,905.6




CONTACT:Mike Mixer • [email protected] l RESEARCH: John Stater • [email protected] 33

OFFICE

• Over the past 18 months, Las Vegas office occupancy has fallen from91.3% to 87.8% while asking rents rose 19% over the same period.

• Office absorption was stronger in 2007 than 2006, but wasoverwhelmed by the influx of new office space. Over 4 million SFof new space was completed.

• Approximately 272,000 SF of sublease space was available atyear-end, up from 196,000 SF in 2006.

• Newer projects out-performed older projects throughout 2007,despite being significantly more expensive.

• Weakness in the residential market impacted the office marketdirectly through the decreased office space requirements ofhome developers.

Office Outlook• New jobs created by newly completed resorts will impact the officemarket indirectly, and the impact will probably not be felt until thesecond half of 2008 at the earliest.

• Office demand will decrease in 2008 if the residential and investmentmarkets remain in a slump.

• With 1.5 million SF of office space under construction and another3.8 million SF planned to begin construction within the nexttwelve months, demand will continue to fall behind the rateof supply in 2008.

INDUSTRIAL

• Over the past 18 months, industrial occupancy dropped from 96.5%to 94.5%.

• Las Vegas lost 2,000 construction jobs since June 2007 due to thelagging residential market.

• Absorption registered over 4.2 million SF, below the influx of newsupply and below the levels recorded in the last three years.

• Construction rose steadily since 2005, initially spurred by strongdemand and falling vacancy rates.

• Asking rental rates hovered between $0.80 and $0.82 per SF during2007; this is approximately $0.05 per SF higher than in 2006.

• Small dock-high projects have been difficult to lease throughoutthe Valley.

Industrial Outlook• Investment sales have been slow and will likely remain that way formost of 2008.

• Prices for industrial land have not yet fallen, but may begin to drop inthe very near future. The cost of construction materials is expectedto increase while the cost for construction labor falls.

• 2008 will likely see continued weak demand and continued robustdevelopment. There is currently 3.7 million SF of industrial spaceunder construction, and another 4.4 million SF planned to beginconstruction in the next twelve months.

LITTLE ROCK, ARCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 – – 0 – – –2000 – – 0 – – –2001 – – 0 – – –2002 – – 0 – – –2003 – – 0 – – –2004 5,879,000 53,000 149,000 14.7 14.10 –2005 5,717,000 (162,000) 173,000 15.2 14.20 8.752006 5,669,000 (48,000) 84,000 12.3 14.80 8.752007 5,669,000 0 120,000 10.9 15.20 8.752008P 5,669,000 0 121,000 8.8 – –

SUBURBAN OFFICE


1999 – – 0 – – –2000 – – 0 – – –2001 – – 0 – – –2002 – – 0 – – –2003 – – 0 – – –2004 7,129,000 20,000 (39,000) 8.8 – –2005 7,189,000 60,000 117,000 8.8 17.90 –2006 7,232,000 43,000 80,000 9.8 17.90 9.002007 7,270,000 38,000 25,000 9.9 18.00 9.002008P 7,360,000 90,000 157,000 8.9 – –

INDUSTRIAL


1999 – – 0 – – – –2000 – – 0 – – – –2001 – – 0 – – – –2002 – – 0 – – – –2003 – – 0 – – – –2004 15,284,000 215,000 327,000 12.5 3.80 2.50 8.002005 15,438,000 154,000 14,000 13.3 3.25 1.95 8.252006 15,438,000 0 449,000 10.3 3.25 2.00 8.252007 17,051,000 0 191,000 16.7 3.13 2.00 8.502008P 17,751,000 700,000 341,000 18.1 – – –








34 CONTACT: Steve Lane • [email protected] l RESEARCH:Marolyn Dorman • [email protected]

OFFICE

• In Little Rock, the high growth industries proved to be the insuranceand banking sectors.

• The investment in infrastructure, with plans made to extend themain cross-town freeway, helped the city.

• New development in the city consisted of more downtowncondominiums and small user-driven buildings.

• The migration of retail growth trended towards the city’s Westernsuburbs. Throughout Little Rock, similar to most markets, thehousing market was flat.

• Traditional indoor malls were converted into mixed-usedevelopments, and former manufacturing/assembly plantswere converted into high density office use space.

• Absorption measured 120,000 SF for the downtown market, morethan half of which occurred in Class A buildings, and was less for theyear in the suburbs at 25,000 SF.

• There was little activity in the land market, and prices ranged ingeneral between $6 and $12 per SF.

Office Outlook• Both downtown and suburban office rental rates are expected tocontinue to move slightly higher in 2008.

• New construction will be subdued, and most new office developmentwill continue to be limited to smaller, owner-occupied properties.

INDUSTRIAL

• In 2007, one large manufacturing facility consisting of 800,000 SF wasin the process of being converted into high density office space.

• Manufacturers such as Welspun and LM Glasfiber which were basedoutside the U.S. moved to Little Rock in 2007.

• There was some loss of “traditional” domestic manufacturing such asclothing or hat manufacturing in 2007 and the trend is expected tocontinue next year.

• Rental rates remained flat throughout the year. Warehouse/distribution space averaged rental rates of $3.13 per SF.

• The year ended with positive absorption of industrial space at about191,000 SF. Vacancy at year-end registered 16.7%.

Industrial Outlook• A soggy industrial market is projected for 2008.• Up to 2 million SF of second generation space is expected to comeonto the market in 2008 which will add to vacancy.

• A total of 700,000 SF of new industrial supply is expected forLittle Rock in 2008.

LOS ANGELES, CA

DOWNTOWN OFFICE


1999 31,153,000 (100,000) (622,000) 18.9 24.00 8.702000 31,153,000 0 (88,000) 19.4 24.50 9.002001 31,227,000 74,000 478,000 18.4 24.60 9.002002 31,227,000 0 (67,000) 19.5 24.00 9.002003 31,227,000 0 (86,000) 19.8 24.20 8.202004 31,227,000 0 162,000 20.3 25.20 7.502005 31,282,000 55,000 1,186,000 16.3 27.70 6.502006 31,282,000 0 48,000 15.8 34.40 6.002007 31,282,000 0 441,000 14.4 37.10 5.002008P 31,282,000 0 371,000 13.2 – –

SUBURBAN OFFICE


1999 129,936,000 5,788,000 6,654,000 11.9 28.00 9.002000 138,007,000 8,071,000 11,159,000 11.9 31.00 8.752001 140,947,000 2,940,000 (2,938,000) 14.2 30.30 8.752002 143,813,000 2,866,000 (1,864,000) 16.7 29.00 8.502003 145,164,000 1,351,000 1,252,000 17.0 28.30 7.752004 145,679,000 515,000 2,944,000 14.0 29.30 7.302005 146,473,000 794,000 5,042,000 10.7 30.10 6.402006 147,291,000 818,000 3,636,000 9.4 32.40 6.002007 149,131,000 1,843,000 287,000 10.5 40.20 5.102008P 151,419,000 2,288,000 1,268,000 11.0 – –

INDUSTRIAL


1999 659,137,000 26,408,000 38,090,000 5.4 6.60 – 9.102000 694,174,000 35,037,000 44,337,000 4.4 6.10 – 9.302001 723,978,000 29,804,000 14,628,000 6.3 6.60 5.00 8.502002 732,201,000 8,223,000 6,233,000 6.4 7.00 12.00 8.252003 739,308,000 7,107,000 11,085,000 3.6 6.40 13.00 7.752004 746,191,000 6,883,000 10,951,000 2.8 6.50 13.80 7.602005 752,664,000 6,473,000 11,075,000 2.7 6.85 25.00 6.502006 757,502,000 4,838,000 5,037,000 2.6 7.67 30.00 6.202007 761,353,000 3,845,000 897,000 3.0 8.04 30.00 6.302008P 765,853,000 4,500,000 5,000,000 2.9 – – –





• Population (000): 10,034.3




CONTACT: Carla Gazzolo • [email protected] l RESEARCH:Michael Gold • [email protected] 35

OFFICE

• With 0.75 million SF absorption and minimal construction, themarket ended 2007 in good condition.

• Vacancy rates ranged from 7% in West Los Angeles to 15% in theSouth Bay.

• Availability was limited in certain segments such as large contiguousblocks of Class A space in downtown Los Angeles, West Los Angeles,Burbank, and Pasadena.

• Rental rates climbed by 12.6%, however, in West Los Angeles theywere up 25%. Even so, rents were still relatively inexpensive whencompared to other major cities in the U.S.

Office Outlook• New supply in 2008 is roughly equal to growth in demand, and willcause vacancy to hover in the low teens.

• Growth in rents is expected to continue, albeit at a more moderatepace. Rental rates in tight markets of West Los Angeles andTri Cities will continue to climb significantly.

• South Bay, downtown Los Angeles and Glendale will benefit fromtight conditions in adjacent submarkets; a continued decline invacancy rates is expected in these areas.

• Cap rates will remain low for institutional grade assets in goodlocations. Elsewhere, cap rates are expected to increase slightlyin 2008.

INDUSTRIAL

• Los Angeles is the largest industrial market in the nation, andcontinued to have the lowest vacancy rate of any market.

• A lack of vacant land continued to constrain construction activity.• Vacancy rates were in the 2% to 3% range across all submarkets.• Demand remained strong, however, a lack of available spaceconstrained sales and leasing activity.

• Sales prices nearly doubled in the past five years, and increasedapproximately 7% in 2007.

• A weak dollar slowed import growth, but boosted U.S. exportsthereby maintaining strong demand for warehouse and distributionspace in Los Angeles.

Industrial Outlook• With tight market conditions, Los Angeles should continue to seeupward pressure on rents.

• Construction and planned development are far below projecteddemand, thus vacancy will remain between 2% and 4% inall submarkets.

• The lack of available space will continue to limit activity. Firms willexperience significant difficulty finding available space that meetstheir needs.

• Los Angeles will remain a key point-of-entry to the U.S. market andwill continue to have strong investment demand. These factors willsupport prices and keep cap rates from rising significantly over thenear term.

LOS ANGELES/INLAND EMPIRE, CACO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

SUBURBAN OFFICE


1999 14,627,000 121,000 (53,000) 12.7 21.00 10.702000 14,794,000 167,000 169,000 12.5 21.20 10.302001 15,312,000 518,000 520,000 12.1 22.30 10.002002 15,618,000 306,000 336,000 11.7 22.60 9.302003 16,081,000 463,000 682,000 10.0 23.40 9.002004 16,936,000 855,000 546,000 11.3 24.60 8.102005 18,175,000 1,239,000 1,444,000 9.4 25.40 7.102006 19,250,000 1,075,000 822,000 10.2 27.20 6.302007 21,017,000 1,767,000 993,000 13.0 27.10 6.202008P 23,017,000 2,000,000 500,000 15.0 – –

INDUSTRIAL


1999 – – 0 – – – 8.702000 – – 0 – – – 9.302001 – – 0 – – – 8.602002 286,740,000 168,000 1,594,000 9.0 4.70 5.50 8.502003 293,192,000 6,452,000 9,149,000 6.2 4.70 5.80 5.752004 300,061,000 6,869,000 7,147,000 5.8 4.70 5.75 7.702005 311,771,000 11,710,000 11,783,000 4.0 5.15 7.25 7.202006 338,140,000 26,369,000 18,359,000 5.4 5.58 8.15 6.502007 359,046,000 19,786,000 10,091,000 7.4 5.84 7.20 5.702008P 379,446,000 20,400,000 9,645,000 9.8 – – –





• Population (000): 4,197.0



36 CONTACT: Carla Gazzolo • [email protected] l RESEARCH:Michael Gold • [email protected]

OFFICE

• The Inland Empire’s office inventory increased by 7.4%, due toover 1.7 million SF of new completions.

• This increase in new supply caused vacancy rates to rise from 10.2%to 13.0% over the year.

• There was a wedge driven between rents for the older product andrecently constructed office space; average rents for space constructedprior to 2003 averaged $1.80 per SF per month while the average rentfor post 2003 space averaged $2.25 per SF per month.

• Significant risk of overdevelopment occurred as large amountsof office product were being completed at the same time andwithout sufficient levels of pre-leasing activity to keep marketwide rents stable.

Office Outlook• Planned projects are anticipated to remain in the pipeline longer asfinancing for speculative product has dried up and developers waitand see how these demand factors are resolved.

• At current absorption rates, a two to three-year supply of office spaceexists currently in the market which will likely put downward pressureon rents while also decreasing new construction activity.

INDUSTRIAL

• The Inland Empire benefited from the proximity to the Portsof Los Angeles and Long Beach, the availability of large tracks ofdevelopable land, and well-developed transportation infrastructure.

• The Ports handled 40% of all U.S.-bound containers and much ofthese imported goods found their way into the warehouses in theInland Empire.

• Third-party logistics firms and large multinationals that run their ownsupply chain were responsible for the majority of warehouse demand.These firms often chose to construct modern buildings that met theircurrent requirements while also providing room to expand.

• These demand factors led to the Inland Empire accounting for 10%of all absorption in the U.S. in 2007.

• Developable land and available locations were scarce in theWest Inland Empire, thus firms had to locate further east awayfrom the ports.

Industrial Outlook• A possible recession will decrease consumer spending nationwide,hurting warehouse demand significantly as fewer goods and servicesare consumed.

• Downward pressure on the dollar will propel domestic exports at theprice of imports. The Inland Empire is poised to benefit more fromimport trade since Asian countries account for about 25% of foreignimports but are responsible for only 11% of domestic exports.

LOUISVILLE, KYCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

CONTACT:Doug Owen • [email protected] l RESEARCH:Doug Owen • [email protected] 37

OFFICE

• The Louisville economy remained strong and continued togrow in 2007.

• Office inventory at year-end totaled nearly 20 million SF of leasableClass A and B space.

• These are some speculative construction this year, albeit limited.A 150,000 SF Class A office building was completed in the firstquarter of 2007, and by year-end, had leased approximately one-thirdof its space.

• The vacancy rates in both Class A and B submarkets continuedto decline.

• PharMerica, an industry-leading pharmaceutical services company,selected Louisville for its headquarters. Major growth companies ininclude Humana Healthcare, ResCare, and Kindred Healthcare.

Office Outlook• Growth is expected to continue in Louisville’s office market, but at aslower pace in 2008.

• The CBD will continue its revitalization, which includes an increasedsupply of residential units, additional retail expansion, and thewelcoming of new top-tier hotels.

• New projects announced for the CBD include a 61-story mixed-usetower, a new sports arena, a 230,000 SF office/retail building and amajor expansion to the Cordish 4th Street Live development.

INDUSTRIAL

• Louisville’s industrial absorption measured 919,000 SF in 2007.• Contributing to the city’s growth as the $1 billion airport expansionproject which was underway in the year. The housing market slowed,but sales exceeded that of the national average.

• Pharmaceutical distribution operations continued to consider metroLouisville as a distribution hub.

• Major industrial lease and sale transactions included Asus leasing200,000 SF, GSI Commerce Solutions leasing 273,000 SF of space,and JOM Pharmaceutical purchasing a 322,526 SF property.

• Lauth announced a 936,000 SF speculative project, becoming thelargest speculative distribution facility ever built in metro Louisville.

• River Ridge in Southern Indiana secured two tenants and speculativeconstruction began for a total of over 1.1 million SF of space.

• On the investment side, eleven acquisitions occurred during 2007.

Industrial Outlook• Speculative construction of 2.8 million SF available by end of1st Quarter 2008.

• A limited number of bulk distribution sites will cause developersto consider alternatives in Southern Indiana and Shelby County.

DOWNTOWN OFFICE


1999 – – 0 – –2000 – – 0 – –2001 8,791,000 0 (90,000) 15.8 20.202002 9,010,000 219,000 (201,000) 20.0 20.002003 9,010,000 0 (25,000) 20.3 19.502004 9,147,000 137,000 10,000 20.1 19.102005 9,171,000 24,000 54,000 19.5 19.402006 9,171,000 0 383,000 15.3 20.002007 9,171,000 0 494,000 9.9 19.502008P 9,171,000 0 91,000 9.0 –

SUBURBAN OFFICE


1999 – – – – –2000 – – – – –2001 7,982,000 647,000 120,000 19.6 17.702002 8,251,000 269,000 258,000 19.1 17.502003 8,347,000 96,000 192,000 17.7 17.602004 8,424,000 77,000 151,000 15.8 17.602005 8,665,000 241,000 61,000 16.5 16.902006 8,849,000 184,000 124,000 16.4 17.102007 9,020,000 171,000 287,000 14.8 20.002008P 9,110,000 90,000 85,000 14.7 –

INDUSTRIAL


1999 – – 0 – – – –2000 – – 0 – – – –2001 – – 0 – – – –2002 78,733,000 561,000 (231,000) 19.0 3.40 2.30 9.502003 79,458,000 725,000 1,716,000 16.7 3.30 2.30 8.752004 80,707,000 1,249,000 1,854,000 7.5 3.80 2.18 8.002005 82,767,000 2,060,000 2,734,000 7.9 3.95 3.09 8.002006 86,567,000 3,800,000 4,517,000 6.7 3.95 3.32 8.002007 89,330,000 2,220,000 919,000 8.6 3.60 3.79 8.002008P 91,226,000 1,896,000 899,000 9.5 – – –



• Total Employment Increase/Decrease: 550Percent Change: 0.1


• Population (000): 1,240.0



MEMPHIS, TNCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 6,240,000 0 (20,000) 25.0 19.00 –2000 6,415,000 175,000 200,000 24.2 18.00 –2001 6,430,000 15,000 (27,000) 21.2 18.80 9.502002 6,430,000 0 206,000 21.5 16.60 10.002003 6,430,000 0 (18,000) 23.4 17.00 9.502004 6,430,000 0 80,000 21.4 16.70 10.002005 6,430,000 0 91,000 19.0 16.60 10.002006 6,430,000 0 3,000 16.5 16.60 9.502007 6,526,000 0 (30,000) 17.9 17.00 7.502008P 6,526,000 0 91,000 16.5 – –

SUBURBAN OFFICE


1999 22,395,000 240,000 100,000 14.5 19.00 –2000 23,110,000 715,000 600,000 12.7 21.00 –2001 24,408,000 1,298,000 (117,000) 14.5 18.80 9.502002 25,188,000 780,000 70,000 15.6 18.90 9.752003 25,436,000 248,000 159,000 15.4 19.50 9.502004 25,470,000 34,000 278,000 16.7 20.40 9.002005 25,561,000 91,000 317,000 14.5 20.50 9.002006 25,676,000 115,000 138,000 15.5 20.80 9.002007 26,392,000 32,000 351,000 12.4 21.00 7.002008P 26,691,000 299,000 393,000 11.9 – –

INDUSTRIAL


1999 118,312,000 4,900,000 5,600,000 14.4 4.00 – 8.002000 124,812,000 6,500,000 8,200,000 12.8 2.80 – 8.502001 128,162,000 3,350,000 2,100,000 14.0 3.00 2.00 9.002002 130,662,000 2,500,000 (2,700,000) 16.9 2.50 1.60 9.002003 134,660,000 3,998,000 3,972,000 16.3 2.40 1.50 9.002004 135,699,000 1,039,000 3,164,000 17.2 2.60 1.03 8.752005 141,636,000 5,937,000 7,398,000 15.1 2.60 2.12 8.502006 145,679,000 4,043,000 7,059,000 13.4 2.70 2.25 7.752007 161,561,000 3,490,000 2,471,000 15.3 2.71 2.00 8.402008P 163,674,000 2,113,000 2,325,000 15.0 – – –





• Population (000): 1,294.5



38 CONTACT:GeneWoods • [email protected] l RESEARCH: Lindsey Browndyke • [email protected]

OFFICE

• Memphis rents, both CBD and suburban managed a slight increaseduring 2007.

• Wright Medical began the first of three major expansions of itscorporate headquarters. The $60 million expansion will add60,000 SF and 129 jobs to the metropolitan area.

• Memphis Bioworks Foundation announced the launch ofINNOVA, an accelerator/seed fund to drive the developmentof new technology-based companies to Memphis.

• Due to mergers and acquisitions of two of the three largest local banksby larger regional banks, Memphis experienced increased demand forbranch sites by smaller regional banks.

Office Outlook• In 2008, Memphis will continue to benefit from healthy job andrevenue growth in the medical industry with hospital-driven projectsand company expansions, due in part to being home to FedEx.

• LeBonheur Children’s Medical Center began its $327 millionexpansion which when complete, will bring the campus to almost1 million SF of space. Completion is expected in the summerof 2010.

• Medtronics, the Minneapolis-based manufacturing giant of medicaldevices, currently employs 1,200 in Memphis and is adding a new6-story, 176,532 SF office building and 7-story parking structureto its existing campus.

INDUSTRIAL

• Over 2.7 million SF of new construction occurred in DeSoto County,Mississippi, plus a building of 525,000 SF in the Southeast submarket.Active developers included ProLogis, Panattoni, Hillwood, and IDI.

• Some large transactions included Diamond Comics leasing 600,000SF, ScanSource taking 592,700 SF, Trane leasing 373,000 SF, PhilipsElectronics leasing 200,000 SF, and Smith & Nephew taking210,0000 SF of space.

• The announcement of Toyota’s new production plant in Tupelo,Mississippi, excited developers in the Memphis area withopportunities for Toyota-supplier locations.

• With the continued expansion of I-69 and US 385, industrialdevelopment reached existing outlying markets of Tunica County,Southern DeSoto County and Marshall County in Mississippi.

Industrial Outlook• With the presence of Federal Express’ worldwide headquarters andWorldHub, distribution companies will continue to find manyadvantages to settling in the metropolitan area.

• A new 1 million SF distribution center facility, announced by Nike in2007, will house operations from Nike’s existing Memphis location aswell as operations from its distribution center in Oregon.

• The BNSF Tennessee Yard is expanding and will reach a 400,000 liftannual capacity in 5 years and 1 million lifts in 15 years.

MIAMI/DADE COUNTY, FL

DOWNTOWN OFFICE


1999 8,194,000 0 (154,000) 10.0 28.002000 8,194,000 0 34,000 10.0 28.002001 8,194,000 0 0 10.7 27.802002 8,194,000 0 (284,000) 11.9 28.202003 8,194,000 0 42,000 11.6 29.602004 8,194,000 0 72,000 12.4 30.302005 8,194,000 0 158,000 9.2 30.402006 8,194,000 0 (2,000) 9.2 33.102007 8,177,000 0 19,000 9.0 36.902008P 8,177,000 0 164,000 7.0 –

SUBURBAN OFFICE


1999 60,259,000 624,000 (744,000) 8.4 –2000 60,259,000 0 1,541,000 6.5 27.202001 61,734,000 1,475,000 (449,000) 11.8 28.002002 63,167,000 1,433,000 (114,000) 12.3 28.702003 63,892,000 725,000 533,000 12.5 29.702004 64,996,000 1,104,000 2,062,000 11.3 28.902005 65,703,000 707,000 1,746,000 8.4 30.002006 66,126,000 423,000 1,324,000 7.8 34.502007 62,164,000 1,748,000 387,000 8.8 33.202008P 65,095,000 2,931,000 1,247,000 11.0 –

INDUSTRIAL


1999 196,535,000 2,355,000 (2,589,000) 6.9 – –2000 197,954,000 1,419,000 1,319,000 7.1 6.00 –2001 200,849,000 2,895,000 (556,000) 9.8 5.00 20.182002 202,576,000 1,727,000 1,302,000 9.4 5.90 15.002003 203,590,000 1,014,000 2,934,000 8.2 5.90 11.002004 204,814,000 1,224,000 2,881,000 6.5 6.00 10.002005 206,262,000 1,448,000 4,524,000 4.3 7.35 9.002006 207,709,000 1,447,000 346,000 4.5 7.63 21.002007 228,475,000 2,580,000 (433,000) 5.5 8.05 23.002008P 230,541,000 2,066,000 4,752,000 4.3 – –





• Population (000): 2,460.4




CONTACT:Michael Fay • [email protected] l RESEARCH: Pani Roshani • [email protected] 39

OFFICE

• The Miami-Dade office market ended 2007 with a vacancy rateof 8.9%, which marked a modest increase over the previous year.

• CBD Rental rates ended the year at $36.90 per SF, while suburbanrents finished 2007 at $33.20 per SF. This left downtown rents upslightly while suburban rents slipped marginally.

• Class B and C space experienced negative absorption in 2007, whileClass A space experienced positive absorption.

• Over 4.5 million SF of Class A office space was under constructionin the Miami market at year-end. The Brickell and downtownsubmarkets show the most construction activity in Miami-DadeCounty with 2 million SF of Class A office under construction.

• Many buildings in Miami-Dade County have begun to quote triplenet rates to compensate for increased operating expenses.

• Office investment cap rates moved higher in 2007, averaging6.52% compared to 6.21% in 2006.

Office Outlook• More mixed-use buildings are anticipated in 2008 as investors attemptto lease off any space not sold during condo conversion.

• The buzzword in development will continue to be “Green”.In the Miami area, several developers are working on the newLEED concept (Leadership in Energy and Environmental Design).

INDUSTRIAL

• The Miami Dade County industrial market ended 2007 with avacancy rate of 5.5%, up from 4.5% for year-end 2006, mostly due toone of South Florida’s largest buildings (978,200 SF), Centergate atGratigny, being vacated in the fourth quarter. Despite this increase,vacancies continued to remain below the national average.

• Lease rates ended the year at $8.05 per SF, an increase over theprevious quarters.

• Over 3.3 million SF of industrial space was under construction as theend of 2007, of which roughly 2 million SF was pre-leased.

Industrial Outlook• Low availability of new product for lease is expected to continuepushing industrial space rents upwards and keep vacancy rates lowin the county.

• The upward trend of operating expenses such insurance and realestate taxes has resulted in rental rates beginning to be quoted on atriple net basis.

• Lack of developable industrial land still continues to keep theindustrial market in Miami Dade tight, yet developers are nowseeking new opportunities as land shifts away from residential use.

MILWAUKEE, WICO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 15,007,000 167,000 105,000 15.7 – –2000 15,122,000 115,000 74,000 15.0 23.50 9.002001 15,122,000 0 (976,000) 14.5 23.00 10.002002 15,317,000 195,000 250,000 9.3 23.00 10.002003 15,838,000 521,000 1,003,000 10.7 23.00 9.502004 15,838,000 0 121,000 9.9 22.00 9.502005 15,838,000 0 (1,029,000) 11.9 22.00 7.502006 15,838,000 0 494,000 14.1 22.00 7.502007 16,785,000 0 322,000 14.7 22.00 8.002008P 16,785,000 0 103,000 14.0 – –

SUBURBAN OFFICE


1999 36,077,000 550,000 110,000 10.9 – –2000 36,594,000 517,000 318,000 9.1 21.50 9.002001 37,188,000 594,000 371,000 1.5 21.00 10.002002 37,394,000 206,000 – 11.9 21.00 10.002003 37,894,000 500,000 918,000 10.8 21.00 9.502004 38,394,000 500,000 1,398,000 8.3 21.00 9.502005 38,416,000 22,000 (341,000) 8.9 21.00 8.002006 38,416,000 0 16,000 12.0 21.00 8.002007 40,469,000 874,000 1,275,000 11.3 21.00 8.002008P 40,469,000 0 258,000 10.7 – –

INDUSTRIAL


1999 252,203,000 2,000,000 3,750,000 2.9 4.00 – –2000 255,203,000 3,000,000 4,000,000 3.7 4.00 – –2001 257,703,000 2,500,000 1,200,000 6.0 4.00 1.75 10.502002 259,203,000 1,500,000 (1,500,000) 7.7 4.00 2.05 10.102003 264,523,000 5,320,000 14,376,000 6.7 4.30 2.00 9.502004 271,011,000 6,488,000 4,933,000 7.1 4.30 2.25 9.252005 272,050,000 1,039,000 537,000 7.2 4.20 1.72 8.502006 274,900,000 2,850,000 (650,000) 7.7 4.20 1.85 8.252007 277,200,000 2,300,000 1,300,000 7.4 4.30 1.75 8.502008P 278,400,000 1,200,000 1,846,000 7.1 – – –



• Total Employment Increase/Decrease: -630Percent Change: -0.1


• Population (000): 1,522.7



40 CONTACT: Bill Quinlivan • [email protected] l RESEARCH:Nicole Benish • [email protected]

OFFICE

• Companies such as American Family, GE Medical, StarkInvestments, Johnson Controls, Infinity Healthcare, IntegratedMail Services and NML absorbed the largest contiguous new orrepositioned office space.

• The biggest new developments included Pabst City, Pabst Farms,Bayshore and NML’s Franklin campus. The Milwaukee CountyResearch Park also matured quite rapidly.

• Municipalities continued to become more “hands-on” with regard toregulating real estate and development, to the point approaching aburden on the market.

• The largest investment deal was the sale of the 500,000 SF GEHealthcare Information Services building in Wauwatosa, WI.The largest lease deal was R.W. Baird’s 250,000 SF renewal ofthe US Bank tower in downtown Milwaukee.

• Developers, especially REITs, continued to land bank (this is okayas-is), perhaps more so than in past years. In-fill developments(rather than larger business park) were the most desirous.Land prices continued an upward trend, but are still steady.

Office Outlook• UW-Milwaukee has plans in the works to expand its campus atthe Zoo interchange, which may increase office development andinvestment in the submarket.

• Opportunities in downtown Milwaukee will continue topresent themselves.

• Suburban development will be slow, but investment and leasingactivity will be steady.

INDUSTRIAL

• Printing, financial processing, crane manufacturing and large-scaledistribution have grown the most, while other heavy manufacturingindustries have seen low growth. Bucyrus, QuadGraphics,S.C. Johnson & Co., GE Medical and Michels Pipeline weregrowing companies.

• Completion of the $1 billion Marquette freeway interchange andcommencement of improvements on the South I-94 corridor fromChicago to Milwaukee were the newest infrastructure initiativesin this area.

• New developments included the 73-acre new development inPewaukee for Irgens Development and a potential 55-acre industrialpark in Menomonee Falls for First Industrial REIT.

• One of the most significant transactions of 2007 was BentleyWorldwide Packaging’s 260,000 SF sale/leaseback to Stag Partners.

• Companies such as Abbott Labs and Uline continued to migrate fromnorthern Illinois to Kenosha County in southeast Wisconsin.

• Availability of large blocks of industrial space or large land sites wasvery limited except in outlying areas. Most in-fill or conversion siteswere spoken for.

Industrial Outlook• Most municipalities are in the process of finalizing detailed masterplans, which will govern future zoning. Rezoning is becoming moreand more difficult as delineated uses have become more settled.

MINNEAPOLIS, MN

DOWNTOWN OFFICE


1999 21,445,000 0 370,000 7.1 28.40 –2000 22,372,000 927,000 573,000 7.2 28.70 9.002001 24,288,000 1,916,000 513,000 12.2 27.60 9.502002 25,216,000 928,000 (1,400,000) 20.3 23.50 9.502003 24,991,000 (224,000) (35,000) 21.9 25.10 9.502004 24,991,000 0 (323,000) 22.5 26.00 8.002005 24,991,000 0 485,000 20.6 24.70 7.502006 24,647,000 (344,000) 293,000 18.3 24.40 6.902007 24,418,000 0 191,000 16.7 26.40 7.502008P 24,418,000 0 237,000 15.8 – –

SUBURBAN OFFICE


1999 37,456,000 1,154,000 366,000 10.5 26.00 –2000 39,270,000 1,814,000 1,489,000 12.7 27.50 9.502001 41,372,000 2,102,000 1,664,000 17.6 27.00 10.502002 42,711,000 1,339,000 180,000 20.3 23.50 10.002003 42,711,000 0 2,038,000 20.8 27.40 9.502004 42,842,000 131,000 473,000 19.9 26.30 8.002005 42,744,000 (98,000) 1,115,000 17.1 23.20 7.502006 42,861,000 117,000 500,000 16.2 24.00 7.502007 43,481,000 724,000 639,000 16.1 26.60 7.752008P 44,981,000 1,500,000 425,000 17.9 – –

INDUSTRIAL


1999 102,612,000 3,600,000 2,870,000 8.6 4.60 – –2000 104,812,000 2,200,000 1,846,000 9.4 4.70 – –2001 108,075,000 3,263,000 1,084,000 13.4 4.30 3.00 10.502002 111,059,000 2,984,000 1,546,000 17.0 4.40 3.00 9.752003 111,259,000 200,000 1,673,000 12.4 4.10 3.00 9.002004 111,389,000 130,000 113,000 14.8 4.25 3.00 8.002005 113,181,000 1,792,000 4,918,000 11.8 4.30 5.00 8.602006 114,623,000 1,442,000 2,796,000 10.5 4.55 7.23 7.502007 116,031,000 1,408,000 943,000 10.6 4.80 5.00 7.502008P 117,031,000 1,000,000 1,207,000 10.4 – – –





• Population (000): 3,240.2




CONTACT: Jeffrey LaFavre • [email protected] l RESEARCH: Jim Mayland • [email protected] 41

OFFICE

• Demand for Minneapolis office space remained relatively steady in2007 with declining vacancy and positive absorption.

• There was limited new speculative construction completed in 2007.• Minnesota’s unemployment rate climbed above the national averagefor the first time in 25 years.

• Due to limited large blocks of space and no new construction inthe near future, large tenants in the CBD opted to renew theirleases early.

• Office building sales slowed, but still reflected a strong showingin 2007.

Office Outlook• The addition of new office construction will drive vacancy rateshigher in the suburban market 2008.

• Companies that grew rapidly when there was no space available willbe able to consolidate space as previously limited large blocks of spacebecome available.

• Companies will continue to right-size, limiting expansion until theeconomic worries have been addressed.

• Cap rates will rise, especially for leveraged buyers, and there will stillbe plenty of unleveraged capital in the investment market.

• In 2008, it is expected that the inventory of large blocks of subleasespace will increase, especially in the Southwest metropolitan area.

INDUSTRIAL

• Manufacturing jobs continued to decline.• Most deals were done at either less than 30,000 SF or over60,000 SF, with limited number of lease transactions in themid-range. However, many users adopted the “wait and see” attitudeas the economy continued to fluctuate.

• Minneapolis saw plenty of new speculative industrial constructionin the Northern markets.

• The industrial market witnessed a large number of investmentsales in 2007.

Industrial Outlook• Speculative construction will continue to remain strong, especiallyin the Northeastern and Northwestern markets.

• It is expected that leasing activity will remain high, but deals willtake longer to close.

• Tenants may seek shorter term renewals until the economicuncertainty diminishes.

• Users remain skittish given the unknowns surrounding the electionyear and the possible nationwide negative fallout from the housingand subprime mortgage crisis.

• A lowering of land prices may stimulate development andbuild-to-suit activity.

NASHVILLE, TNCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 5,929,000 – 32,000 6.6 20.00 9.752000 6,611,000 682,000 330,000 12.0 19.80 9.752001 6,633,000 22,000 (143,000) 14.7 18.50 11.002002 6,752,000 119,000 184,000 12.2 18.30 10.252003 6,752,000 0 166,000 11.7 18.80 10.252004 6,788,000 36,000 (227,000) 15.5 18.80 10.252005 6,815,000 26,000 87,000 14.5 17.50 8.752006 6,815,000 0 213,000 11.4 20.90 7.002007 7,143,000 333,000 306,000 11.3 20.00 8.252008P 7,143,000 0 133,000 9.4 – –

SUBURBAN OFFICE


1999 16,289,000 1,260,000 1,115,000 8.5 19.00 9.502000 1,746,400 1,175,000 731,000 10.5 19.50 9.502001 18,904,000 1,440,000 549,000 14.8 18.50 10.002002 19,899,000 995,000 478,000 16.6 18.50 10.002003 19,985,000 85,000 6,000 16.5 18.80 10.002004 20,309,000 324,000 939,000 13.2 19.00 10.002005 20,461,000 152,000 491,000 11.5 18.80 8.252006 21,777,000 1,317,000 1,305,000 10.9 20.00 7.752007 22,502,000 763,000 1,104,000 9.2 20.10 7.252008P 23,851,000 1,349,000 429,000 12.5 – –

INDUSTRIAL


1999 156,340,000 3,722,000 4,913,000 3.2 3.50 – –2000 161,637,000 5,297,000 4,394,000 3.4 3.30 – –2001 166,358,000 4,721,000 1,539,000 5.1 3.00 1.25 9.502002 16,854,000 2,181,000 (2,428,000) 7.8 3.00 1.06 9.502003 170,693,000 2,154,000 (13,000) 9.0 3.00 3.10 10.502004 173,349,000 2,656,000 4,807,000 7.6 2.90 2.90 9.002005 177,137,000 3,788,000 4,567,000 7.0 3.10 1.29 8.502006 180,704,000 3,567,000 6,507,000 5.3 3.71 1.45 8.002007 182,977,000 2,512,000 2,042,000 5.5 4.18 0.78 7.752008P 185,632,000 2,655,000 3,633,000 4.9 – – –





• Population (000): 1,482.7



42 CONTACT:Doug Brandon • [email protected] l RESEARCH:Dominic Minadeo • [email protected]

OFFICE

• In Nashville, Class A space was at a premium in someoffice submarkets.

• Demand slowed for large blocks of space but remained highfor smaller spaces.

• Nashville’s CBD benefited from low vacancy rates inadjacent submarkets.

• Asking rates stabilized but were up over $2 per SF in high demandsubmarkets. Developers responded with additional Class A product.

Office Outlook• Nashville maintains attractiveness and accolades as a desiredrelocation city – more companies are expected to relocateto Nashville.

• Investors will become more selective and will scrutinize creditworthiness and risk.

• There will be continued development of Class A office supply, offeredas both speculative and build-to-suit space.

• The CBD vacancy rate may increase when short-term tenants moveand new facilities come on line.

• Rental rates will stay at current levels in the suburban markets, withincreased incentives to be offered in Nashville’s CBD.

INDUSTRIAL

• Big box leasing activity decreased in the last 6 months of 2007.• Interest existed for large blocks of space with few closed deals, butimproved by the close of the year.

• Nashville’s properties for sale in the 20,000 SF to 40,000 SF rangewere at a premium.

• As with the office investment market, investment activity becamemore selective based on credit worthiness and risk.

• The inventory of Class A bulk buildings was sufficient to handlecurrent needs.

• 2007 witnessed a slowdown in speculative industrialnew construction.

• High demand continued for stand-alone buildings in the 20,000 SFto 40,000 SF range.

Industrial Outlook• Build-to-suit development will continue in the North andSoutheast submarkets.

• Rental rates are expected to stabilize but are up significantlyover the past two years.

• A slowdown in big box activity will reflect nationaleconomic uncertainties.

• Small space flex activity will be on the upswing in 2008.

NEW JERSEY – CENTRAL

SUBURBAN OFFICE


1999 91,990,000 3,651,000 3,010,000 9.4 29.00 –2000 93,767,000 1,777,000 2,524,000 6.0 26.90 9.502001 95,934,000 2,167,000 1,330,000 11.8 24.30 9.002002 98,433,000 2,499,000 (1,387,000) 15.3 23.50 8.752003 99,007,000 574,000 719,000 15.5 24.00 8.752004 99,537,000 530,000 1,717,000 14.2 25.50 7.752005 100,815,000 1,278,000 2,821,000 12.5 25.30 7.002006 101,646,000 831,000 218,000 13.0 25.50 7.002007 103,419,000 1,773,000 377,000 14.4 26.60 7.002008P 103,769,000 350,000 885,000 13.9 – –

INDUSTRIAL


1999 253,307,000 3,675,000 3,927,000 7.2 5.20 – –2000 256,557,000 3,250,000 3,725,000 5.7 5.50 – –2001 263,712,000 7,155,000 1,479,000 7.0 5.00 4.00 9.002002 268,989,000 5,277,000 (2,031,000) 8.3 5.00 3.75 9.002003 269,848,000 859,000 7,137,000 5.9 4.50 5.00 8.002004 272,207,000 2,359,000 7,066,000 4.3 4.20 4.50 8.002005 278,844,000 6,637,000 709,000 6.6 4.70 18.00 8.002006 284,290,000 5,446,000 2,575,000 7.5 5.05 18.50 7.002007 288,070,000 3,780,000 4,641,000 8.1 5.28 1.65 7.002008P 291,570,000 3,500,000 2,648,000 8.3 – – –

METROPOLITAN INDICATORS – 2008 (EDISON)




• Population (000): 2,318.4




CONTACT: JonTesser • [email protected] l RESEARCH:Michael Gottilla • [email protected] 43

OFFICE

• In 2007, 1,773,000 SF of new office space was delivered. As not allthe space was absorbed, the vacancy rate rose to 14.4% from 13%a year ago.

• Data center demand became a new growth driver. New Yorkfinancial firms and New Jersey’s life-sciences companies led the trendby establishing off-site data backup facilities throughout the region.

• This market is home to some of the largest pharmaceutical companiesin the world. Merck and Johnson & Johnson each maintainsubstantial facilities on several campuses.

• Asking rents for Class A and B space showed little movement,averaging $24.90 per SF.

Office Outlook• The Princeton submarket should begin to tighten as the recentconstruction boom winds down.

• The amount of new construction should decrease significantlythroughout Central New Jersey. Although there is much moredevelopable land, the amount under construction should be similarto that in Northern New Jersey.

• Office rents will fall slightly in 2008 despite the lack of newconstruction. Landlords will reduce rates to lure tenants.

INDUSTRIAL

• Continuing the construction boom, over 5 million SF of space wasunder construction at year-end 2007.

• Average asking rates started to inch up as rents moved back toward$5.10 per SF.

• Expansion Westward into Mercer County picked up pace in 2007.Interstate 195 continued to play a larger and larger role in theconstruction boom.

• KTR Capital Partners purchased the New York Times printing anddistribution facility in Edison. The deal included a 25-acre tract thatKTR was considering redeveloping.

• Exit 8A remained the epicenter of development in Central NewJersey. In the last three years over 7.7 million SF of space wasdelivered to that submarket.

Industrial Outlook• Central New Jersey’s vacancy rates will continue to rise throughout2008 as the market experiences difficulty absorbing the new spacecoming on the market. As a result, the pace of new constructionwill finally slow in the second half of the year.

• This market is dependent upon consumer spending since the vastmajority of its space is distribution and warehousing facilities. If thecredit crunch or an economic downturn affects consumer spending,the market will experience the full force of slackening demand.

• As the speculative projects started in 2007 are completed andexperience difficulty leasing up, build-to-suit projects will comprisethe majority of new construction in 2008.

NEW JERSEY – NORTHERNCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

SUBURBAN OFFICE


1999 142,458,000 3,750,000 4,100,000 13.1 29.00 –2000 145,458,000 3,000,000 4,600,000 8.8 29.00 9.502001 148,571,000 3,113,000 510,000 11.1 30.00 9.002002 152,752,000 4,181,000 1,449,000 12.6 25.00 8.252003 155,099,000 2,347,000 (318,000) 13.6 28.70 8.252004 156,766,000 1,667,000 3,607,000 12.2 27.10 7.752005 157,078,000 312,000 (609,000) 12.0 27.40 7.752006 157,271,000 193,000 550,000 11.8 28.20 7.002007 158,269,000 998,000 1,850,000 11.2 28.90 7.002008P 158,519,000 250,000 703,000 10.8 – –

INDUSTRIAL


1999 417,089,000 946,000 4,902,000 5.3 5.50 – –2000 418,449,000 1,360,000 6,630,000 3.6 5.90 – –2001 420,323,000 1,874,000 (2,493,000) 5.5 6.30 5.75 9.002002 420,874,000 551,000 1,602,000 5.3 6.20 9.00 8.752003 421,699,000 825,000 2,811,000 4.9 5.90 7.00 8.002004 422,859,000 1,160,000 914,000 4.8 6.10 11.00 8.002005 422,975,000 116,000 (3,773,000) 5.7 6.20 22.00 8.002006 423,877,000 902,000 278,000 5.9 6.63 23.00 7.002007 424,837,000 960,000 4,400,000 6.1 6.69 25.00 7.002008P 425,387,000 550,000 1,995,000 5.7 – – –

METROPOLITAN INDICATORS – 2008 (NEWARK)




• Population (000): 2,151.4



44 CONTACT: JonTesser • [email protected] l RESEARCH:Michael Gottilla • [email protected]

OFFICE

• The disparity between rental rates in New Jersey and Manhattanreached an all-time high. Northern New Jersey office ownersmarketed this fact to lure tenants from the City.

• There were a few successful speculative projects. Mack-Cali majorityleased its speculative project to Deloitte & Touche. Regardless,developers were still wary of over-building.

• Despite tumultuous credit markets, cap rates did not rise significantly.• The vacancy rate for Class A and B properties held steadythroughout 2007.

Office Outlook• Positive net absorption will continue to be limited because ofNew Jersey’s slow rate of job creation.

• Several large-scale, mixed-use redevelopment projects have stalledrecently for a variety of reasons. Regardless, such projects willbecome increasingly popular due to the limitations placed ondevelopment by the state.

• Goldman Sachs received approval for a second tower on the JerseyCity Waterfront. The investment bank planned a 30-story buildingto be constructed in late 2009.

• Unemployment in New Jersey has been at or below the nationalaverage for twelve consecutive months. That trend should holdthrough 2008.

• Rental rates should rise slightly over the first half of 2008 as theeffects of the credit crunch ebb and the economy stabilizes.

INDUSTRIAL

• Demand for space was consistently strong. The vacancy rate rangedbetween 5.7% and 6.2% for the last twelve quarters.

• The average asking rental rate hit an all-time high of $6.69 per SFby year-end.

• There was 800,000 SF under construction at year-end. The majorityof this space was in the form of state-of-the-art distribution space nearPort Newark/Elizabeth.

Industrial Outlook• As foreign trade has become a larger and larger percentage of GDP,Port Newark/Elizabeth has thrived. The recent depreciation in thedollar may alter the mix of imports to exports, however, the port willstill see record container volume in 2008.

• Manufacturing will continue to have a diminished impact on demandfor space. Distribution and warehousing will play an ever more vitalrole in the market.

• Consumer spending will play a large role in the strength of themarket in 2008 since the distribution market is directly tied to thehealth of the retail sector.

• The majority of new construction in 2008 will be close to the port.The aging stock of facilities in that submarket has become obsoleteand many redevelopment opportunities exist.

NEW YORK, NY

MIDTOWN MANHATTAN OFFICE


1999 239,008,000 1,600,000 3,900,000 6.4 54.00 –2000 239,008,000 0 1,445,000 5.4 65.40 9.002001 239,863,000 855,000 (12,916,000) 10.4 61.30 8.002002 242,369,000 2,506,000 (573,000) 11.4 54.70 7.252003 244,267,000 1,898,000 888,000 11.8 52.40 6.752004 247,250,000 2,983,000 5,846,000 10.5 57.50 6.402005 250,385,000 3,135,000 7,065,000 8.0 59.60 5.002006 251,516,000 1,131,000 4,607,000 6.5 79.60 5.002007 253,887,000 2,371,000 1,476,000 6.8 95.00 4.002008P 255,987,000 2,100,000 2,009,000 6.8 – –

MIDTOWN SOUTH MANHATTAN OFFICE


1999 – – 0 – – –2000 98,218,000 0 787,000 5.5 38.00 8.502001 98,218,000 0 (7,256,000) 12.9 43.80 9.002002 98,218,000 0 (998,000) 14.0 34.00 8.002003 98,218,000 0 1,460,000 12.5 27.60 7.002004 98,218,000 0 1,054,000 11.4 33.70 6.502005 98,218,000 0 3,114,000 8.3 36.00 5.302006 98,218,000 0 689,000 7.6 44.50 5.802007 98,339,000 122,000 (1,524,000) 9.3 60.10 5.302008P 98,339,000 0 757,000 8.5 – –



CONTACT:Nicola Heryet • [email protected] l RESEARCH: Robert Sammons • [email protected] 45

OFFICE

NewYork, Midtown Manhattan• Class A average asking rent rose 20% to $95.04 per SF, close to thehighest ever.

• Trophy buildings along prestigious Avenues, especially in the Plazadistrict, commanded rents in excess of $150 per SF with a fewapproaching $200 per SF. Sales prices for such buildings continued tosoar, with some exceeding $1,500 per SF.

• Class A vacancy remained fairly flat, falling from 5.6% in 2006 to5.2% in mid-year 2007, before ticking back up to 5.8% by year-end.Several large blocks of space became available, causing the year-endrise in vacancy.

• Major new construction was ongoing in the Times Square submarket,including One Bryant Park and 11 Times Square. Two boutique officebuildings broke ground on Madison Avenue in the Plaza District.

NewYork, Midtown Manhattan Outlook• Additional blocks of space will be added to the Midtown market in2008 as several firms relocate to One Bryant Park while others moveless expensive markets such as Midtown South and Downtown.

• Layoffs likely to occur in the first quarter of 2008 may add subleasespace to availability.

• The average asking rent for Midtown will remain steep though itsascent will slow or level for at least the first half of 2008.

• Investment sales will not dry up completely with well-located propertiescommanding top prices, however, financing options will not be as lenient.

• Further announcements are anticipated for new residential and officetowers along Eighth Avenue and points west (Times Square andPenn/Garment submarkets).

NewYork, Midtown South Manhattan• The overall vacancy rate rose from 7.6% to 9.3%. The general trendacross all submarkets was a tightening for the first half of 2007, thenlooser in the latter part of the year. Hudson Square registered thehighest vacancy at over 23%.

• Several large blocks became available in Midtown South totalingover 1.8 million SF, contributing to the rise in vacancy.

• Overall asking rents increased 26% from $37.86 per SF to $47.71 perSF, although most of the jump occurred early in the year.

• The largest blocks of availability were at 532 Washington Street with750,000 SF, and 200 Fifth Avenue with 400,000 SF.

• Demand was driven by companies seeking cheaper alternativesto Midtown and the emergence of a high tech/media clusterin the vicinity.

NewYork, Midtown South Manhattan Outlook• Continued relocations, especially among broadcast/media firms, areexpected for 2008 which may drive the vacancy rate lower, especiallyin Chelsea and Hudson Square.

• Asking rents across Midtown South will hold flat to somewhathigher because of the increased popularity among Midtown firmswith leases expiring.

• Midtown South will not be immune to the “layoff bug” with financialand professional/business service firms being affected.

• An announcement will be made early in 2008 regarding the choiceof developer(s) for the Hudson Yards project in West Chelsea.

• Additional hotel and residential condominium projects will getunderway across Midtown South.

NEW YORK, NYCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN MANHATTAN OFFICE


1999 101,469,000 0 2,255,000 8.2 37.00 –2000 101,469,000 0 4,021,000 4.5 46.20 9.002001 88,069,000 (13,400,000)(19,195,000) 11.4 42.50 9.002002 88,069,000 0 (2,742,000) 14.4 36.40 8.002003 88,069,000 0 446,000 14.2 33.90 7.102004 88,069,000 0 536,000 13.6 33.60 7.102005 88,069,000 0 2,494,000 11.3 33.80 5.502006 89,744,000 1,675,000 3,217,000 8.9 48.40 5.502007 89,744,000 0 1,895,000 6.8 54.50 5.302008P 89,744,000 0 710,000 6.0 – –


46 CONTACT:Nicola Heryet • [email protected] l RESEARCH: Robert Sammons • [email protected]

OFFICE

NewYork, Downtown Manhattan• The downtown office market saw a significant tightening in 2007with vacancy falling from 8.9% to 6.8%. Overall asking rentsclimbed 15% to $47.56 per SF.

• Downtown Class A had the lowest vacancy in Manhattan at 3.9%,the lowest since 2001. This represented a 320 basis point dropsince 2006. Class A average asking rents rose 13% to $54.50 per SF.The downtown benefited from its relatively discounted rentscompared to Midtown.

• Construction continued on two major trophy buildings: the GoldmanSachs Tower, due for completion in 2009, and the Freedom Tower,due for completion in 2012.

• Among the submarkets, World Trade saw a marked drop in vacancy,and the highest Class A average asking rent at $74.68 per SF.Leasing activity was strong, most recently with Omnicom taking184,000 SF at 195 Broadway in a move from Midtown.

NewYork, Downtown Manhattan Outlook• Downtown will see vacancy increase as some availability fromGoldman Sachs enters the market due to the early-2009 openingof its World Financial Center headquarters tower.

• Sublease availability may rise as financial service firms and otherscut back on staff.

• Asking rents will be restrained due to impending vacancies.• Downtown will remain popular as a relocation option for firmswith leases expiring in the most costly Midtown submarket.

• Additional construction should begin at the World Trade Centersite with Towers 2, 3 and 4 totaling 6.5 million SF.

NEW YORK, NY

WESTCHESTER COUNTY, NY SUBURBAN OFFICE


1999 – – 0 – – –2000 – – 0 – – –2001 39,873,000 0 (2,074,000) 16.5 26.30 –2002 39,873,000 0 704,000 14.8 26.10 8.002003 39,873,000 0 407,000 13.7 27.00 7.002004 39,873,000 0 (991,000) 16.2 27.60 7.502005 39,873,000 788,000 1,231,000 15.1 27.20 6.002006 43,423,000 0 (711,000) 15.5 27.60 6.752007 43,823,000 0 95,000 16.1 30.60 5.802008P 43,823,000 0 312,000 15.4 – 5.75

FAIRFIELD COUNTY, CT SUBURBAN OFFICE


1999 – – 0 – – –2000 – – 0 – – –2001 60,241,000 0 (3,797,000) 14.1 30.80 –2002 60,241,000 0 (1,810,000) 17.3 30.80 7.502003 60,241,000 0 29,000 17.3 28.80 8.002004 60,241,000 0 (73,000) 17.4 28.60 7.502005 61,510,000 1,269,000 1,640,000 15.6 28.00 6.502006 61,510,000 0 932,000 14.1 30.40 5.402007 61,510,000 0 114,000 14.0 34.70 –2008P 61,510,000 0 449,000 13.3 – –





• Population (000): 11,564.6




CONTACT:Nicola Heryet • [email protected] l RESEARCH: Robert Sammons • [email protected] 47

OFFICE

NewYork –Westchester County, NY• Westchester County’s Class A vacancy rate closed the year down just10 basis points from 20.3% to 20.2%.

• The White Plains submarket had a sluggish year due primarily to thesubprime mortgage meltdown, though the Class A vacancy ratepulled back to 25.6% from almost 30% a year ago.

• The Class A average asking rent climbed just over 10% to close atalmost $31 per SF. For White Plains, asking rents jumped 14% toover $32 per SF. This was the first major annual jump in averageasking rents since 1998 though that paled in comparison.

• There were fewer leasing transactions than expected by New YorkCity firms looking for less expensive space in Westchester County –this was both due to the changing economy as well as the desire ofcompanies to remain in Manhattan.

NewYork –Westchester County, NY Outlook• The vacancy rate for Westchester County will remain steep at leastthrough mid-year 2008 as tenants cut back on their space needs.

• The average asking rent is expected to flatten once again or even fallsomewhat after a rather sharp increase in 2007.

• Only one office property is due to be delivered in 2008 – a 53,000 SFbuilding in Armonk.

• Sales prices will most likely remain subdued as investors focus on coreassets in major markets.

• Additional layoffs in financial and professional services will push theunemployment rate closer to 4%.

NewYork – Fairfield County, CT• Fairfield County performed better than Westchester County with itsClass A vacancy rate ending the year at 16.5%, down approximately100 basis points for the year.

• Stamford saw its vacancy rate close 2007 at 21.3%. The averageasking rent jumped approximately 63%.

• The greater Greenwich submarket performed well, remaining red-hotwith demand from financial service firms and hedge funds. Class Aaverage asking rents jumped a whopping 63%.

• Investment sales hit new heights with steep prices recorded inStamford ($518 per SF for the seven-building EOP portfolio) andGreenwich ($1,083 per SF for 55 Railroad Avenue).

NewYork – Fairfield County, CT Outlook• Fairfield County, heavy with financial service firms, could see anincrease in availability due to the economic downturn. UBS, withmajor operations in Stamford, announced global layoffs though it’sunclear how many of these cuts will be here.

• Asking rents should remain flat for Fairfield County thoughGreenwich may see increases due to high tenant demand pluswith no new inventory.

• No major office buildings are due to come on-line in 2008 though25 office developments are proposed.

• The saving grace for Stamford for 2008 may be hedge funds, fed upwith the lack of space and pricing in Greenwich, looking to this lessexpensive submarket.

OAKLAND, CACO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 12,641,000 0 515,000 7.6 30.00 –2000 12,641,000 0 334,000 4.8 51.20 8.502001 12,641,000 0 (278,000) 8.9 37.20 8.502002 13,169,000 528,000 (238,000) 15.5 26.70 10.002003 13,169,000 0 (130,000) 15.7 26.20 9.002004 13,169,000 0 124,000 14.6 24.40 8.002005 13,169,000 0 212,000 12.7 25.70 7.402006 13,169,000 0 101,000 11.9 28.20 7.402007 13,384,000 215,000 (107,000) 14.2 32.60 6.502008P 13,384,000 0 207,000 12.6 – –

SUBURBAN OFFICE


1999 8,934,000 1,741,000 1,957,000 5.3 30.00 –2000 9,818,000 884,000 3,204,000 1.7 44.00 8.252001 12,731,000 2,913,000 (396,000) 12.9 35.30 8.002002 14,073,000 1,342,000 (1,129,000) 17.8 28.20 8.502003 15,077,000 1,004,000 1,431,000 16.3 23.50 10.802004 15,077,000 0 (277,000) 19.8 24.10 7.702005 15,113,000 36,000 836,000 14.4 25.40 7.502006 15,113,000 0 (9,000) 17.3 28.10 7.502007 15,749,000 249,000 270,000 16.4 30.20 4.402008P 15,749,000 0 237,000 14.9 – –

INDUSTRIAL


1999 127,054,000 1,619,000 3,135,000 5.3 6.20 – –2000 127,964,000 910,000 3,455,000 3.8 10.40 – –2001 129,529,000 1,565,000 (4,148,000) 8.0 5.70 14.00 8.702002 130,417,000 888,000 (1,544,000) 9.3 4.60 8.29 8.502003 130,586,000 169,000 276,000 9.1 4.50 11.00 7.202004 130,921,000 335,000 1,494,000 8.0 4.20 12.00 7.402005 131,078,000 157,000 1,895,000 6.7 4.30 13.62 8.602006 131,170,000 92,000 1,712,000 5.4 5.16 17.00 7.502007 131,233,000 63,000 (1,607,000) 6.7 5.52 29.37 6.002008P 131,284,000 51,000 2,204,000 5.0 – – –





• Population (000): 2,521.5



48 CONTACT:Mike Burke • [email protected] l RESEARCH:Glenda Cheng • [email protected]

OFFICE

• Despite sluggish leasing activity, most of Oakland’s submarketsexperienced rapidly escalating rents. The average asking rent for bothClass A and B/C and flex categories rose to $2.23 per SF per month,nearly a 10% increase from 2006.

• Class A rents increased by 15% to $2.74 per SF per month.Emeryville led the charge where rents rose to $3.00 per SF per month.

• Downtown Oakland had a surge in rents to $2.72 per SF per month.Asking rents in Oakland remained lower than San Francisco,enticing tenants to Oakland.

• The metro-wide vacancy rate increased during 2007 due to theaddition of two new buildings – Center Twenty One in downtownand EmeryStation East in Emeryville.

Office Outlook• The Southern end’s Marina Village, Harbor Bay and the OaklandAirport, which all had vacancy rates over 20%, will see improvementin 2008 as the overall region tightens.

• The 1100 Broadway project involves the historic renovation of theKey Systems building plus twenty stories of new office space.

INDUSTRIAL

• Oakland’s industrial market remained healthy, with a slight increasein vacancy to 6.7%. This bump was attributed to several largervacant facilities remaining unleased. Absorption for the yearwas negative 1,607,400 SF.

• The warehouse/distribution sector was the most active, with3.9 million SF of leasing and sales activity by the end of the thirdquarter. The vacancy rate for warehouse/distribution productincreased slightly to 5.3%.

• Vacancy rates for light industrial and R&D/flex product also roseslightly to 6.6% and 15.5% respectively. Asking rents for the overallmarket remained steady at $0.46 NNN per SF per month.

• Larger tenants such as Simpson Strong Tie, Albertson’s, Sears, andPechiney Plastics shut down their local operations. Local developersand investors stepped in to redevelop these facilities into morefunctional industrial space for smaller users.

Industrial Outlook• The Oakland metropolitan area will continue to be active in allmarket segments. The lack of available developable land, risingdevelopment costs, and a strong economy will ensure that the area’scommercial real estate market remains tight throughout futureeconomic swings.

• There has been much turmoil in the financial markets over thesubprime loan crash, but it is unknown yet how this may affectthe industrial market. The biggest concern is an overall economicslowdown or recession.

ORANGE COUNTY, CA

SUBURBAN OFFICE


1999 – – – – – 9.002000 – – – – – 9.202001 68,769,000 3,522,000 (644,000) 17.7 31.10 9.102002 69,855,000 1,086,000 288,000 18.8 29.80 8.502003 70,862,000 1,007,000 2,918,000 16.2 27.40 7.752004 70,897,000 35,000 2,580,000 12.4 27.90 7.752005 71,003,000 106,000 3,021,000 8.0 31.30 6.502006 71,977,000 974,000 204,000 9.0 34.30 5.902007 74,972,000 3,128,000 (1,635,000) 15.2 38.30 5.702008P 75,778,000 806,000 0 16.1 – –

INDUSTRIAL


1999 – – 0 – – – 8.502000 – – 0 – – – 8.402001 – – 0 – – – 8.902002 204,298,000 892,000 (1,458,000) 6.6 7.00 14.00 8.252003 205,521,000 1,223,000 2,083,000 6.6 7.20 17.00 7.602004 206,153,000 632,000 5,218,000 4.5 6.50 13.63 7.502005 206,663,000 510,000 2,667,000 3.6 7.20 23.00 7.002006 207,969,000 1,306,000 498,000 4.0 8.40 32.00 6.002007 206,491,000 1,126,000 613,000 3.9 8.58 32.00 6.302008P 206,991,000 500,000 505,000 3.9 – – –





• Population (000): 3,028.7




CONTACT: Carla Gazzolo • [email protected] l RESEARCH:Michael Gold • [email protected] 49

OFFICE

• The downturn in the mortgage finance industry, which is highlyconcentrated in Orange County, was largely responsible for negativeabsorption of over 1.6 million SF in 2007.

• Space givebacks outpaced demand causing vacancy rates to increasefrom 9% to 15% over the year.

• The recent decline in demand clashed with the delivery of severallarge office projects. In 2007, 3.1 million SF of new office spacewas completed.

• Despite these trends, asking rental rates in Orange County climbedby 11.1% in 2007.

• Higher interest rates and fewer buyers for investment propertiescaused cap rates to increase slightly over the past year.

Office Outlook• As the market tilts toward the tenant; landlord concessions willbecome more abundant in 2008.

• An additional 1.2 million SF of office construction is underway.• It is likely that vacancy rates may climb another one to twopercentage points as new space comes on line and the mortgageand finance industries continue to contract.

• The growth in rental rates is expected to level off in 2008.• Cap rates are expected to increase 80 to 100 basis points; and theremay be fewer leveraged buyers. Although Class A product will holdsteady due to demand from institutional and cash investors, prices forvalue-add property will soften.

INDUSTRIAL

• Strong demand and a lack of available space caused rents to climbby over 15%. This marked record-high rates for Orange County andregistered amongst the highest in the Los Angeles Basin.

• Sales and leasing activity and absorption remained low due primarilyto a lack of available space.

• Construction activity remained at a low level due to a general lackof vacant land and high land prices. Approximately 1,126,000 SF ofnew construction was delivered in 2007.

• Average sale prices dropped slightly, bucking the robust growth from2002 through early 2006.

Industrial Outlook• With almost no new construction and vacancy rates close to theirall-time lows, the market should continue to see upward pressureon lease rates.

• There will be a continued decline in vacancy rates over the next sixto twelve months, with very tight market conditions.

• Lack of available space in the County will continue to limit theamount of activity that can take place.

• Current and planned projects total less than one million SF; theoutlook is for continued tight market conditions.

ORLANDO, FLCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 9,102,000 337,000 216,000 6.1 25.20 –2000 9,859,000 757,000 414,000 9.0 25.40 9.252001 9,945,000 86,000 (104,000) 12.0 25.30 9.252002 9,945,000 0 (149,000) 11.8 23.60 9.202003 10,165,000 220,000 135,000 12.5 22.80 9.702004 10,165,000 0 13,000 11.1 21.00 8.502005 10,430,000 265,000 81,000 11.9 24.00 8.002006 11,007,000 577,000 927,000 8.0 26.50 7.502007 11,334,000 26,000 323,000 8.5 27.90 6.502008P 11,590,000 256,000 301,000 7.9 – –

SUBURBAN OFFICE


1999 35,628,000 490,000 438,000 6.8 18.00 –2000 37,565,000 1,937,000 2,212,000 7.9 19.80 9.252001 40,178,000 2,613,000 672,000 11.6 20.60 9.252002 41,011,000 833,000 187,000 12.4 20.30 9.302003 41,729,000 718,000 (97,000) 14.1 20.20 9.702004 42,131,000 402,000 291,000 11.9 19.70 8.502005 42,454,000 323,000 1,204,000 8.9 19.00 9.002006 43,590,000 1,136,000 1,703,000 7.6 22.60 8.602007 47,286,000 1,614,000 402,000 9.9 25.10 6.502008P 49,272,000 1,986,000 1,235,000 11.0 – –

INDUSTRIAL


1999 108,221,000 813,000 (339,000) 7.2 – – –2000 110,067,000 1,846,000 1,658,000 7.3 5.90 – –2001 113,647,000 3,580,000 2,859,000 9.4 4.20 3.00 9.752002 115,253,000 1,606,000 924,000 10.1 4.30 3.50 8.502003 116,680,000 1,427,000 (154,000) 11.6 4.10 2.60 9.152004 119,916,000 3,236,000 6,191,000 8.6 4.50 3.63 9.002005 121,766,000 1,850,000 2,909,000 8.1 4.75 4.00 8.402006 124,522,000 2,756,000 4,344,000 6.7 5.25 6.50 7.302007 131,790,000 3,403,000 2,197,000 6.2 5.84 4.50 7.002008P 133,837,000 2,047,000 3,585,000 5.0 – – –





• Population (000): 2,076.1



50 CONTACT:Matt Sullivan • [email protected] l RESEARCH:Danny Rice • [email protected]

OFFICE

• One of the largest transactions in 2007 was the sale of the OneOrlando Centre building for $90,625,000 or $255.28 per SF.The buyer was EOLA Capital and the seller was The PraediumGroup LLC.

• The current unemployment rate for Central Florida remainedat a positive level of 4% and was unchanged since mid-year.

Office Outlook• The office market is forecasted to remain fairly unchanged andcomparable to the current statistics. Rental rates will continue torise but at a slower pace and vacancy will fall as demand slowlycatches up to supply.

• Going beyond 2009 construction is anticipated to slow compared toprevious years due to the restrictive conditions experienced in thelending and credit markets across the nation.

• The Southeast region of Orlando and Orange County is positionedto experience strong growth within the coming years. Known as the“Medical City” of Lake Nona this area will include the Universityof Central Florida’s Medical School, Burnham Institute for MedicalResearch, a new VA Hospital and Nemours Children’s Hospital.

INDUSTRIAL

• The industrial market continued to be the strongest marketin Central Florida in terms of vacancy, demand and growth.Vacancy edged down half a percent to 6.2%.

• Industrial land was hard to come by. Nearly all developable andavailable industrial land throughout Central Florida had eitherbeen bought or was being developed, contributing to the increasein land values.

• New construction activity continued to thrive with over 3.4 millionSF completed in 2007. Rental rates increased throughout 2007 andregistered $5.84 per SF at year-end.

• One of the larger transactions in 2007 was the sale of the AgereSystems Campus on South John Young Pkwy. The property of1.37 million SF sold for $50 million.

Industrial Outlook• In the coming year, the Orlando industrial market is positionedto continue with its strong performance.

• Vacancy will continue to fluctuate near current levels as projectsunder construction are delivered to the market.

• In the long term outlook, many new opportunities will be formed asthe main rail line used will be converted over to the commuter railand rail traffic will shift to the west of Orlando. This will open upmany new opportunities for industrial parks and structures alongthe new rail line.

• Rental rates are forecasted to remain nearly unchanged with slightincreases throughout 2008.

PHILADELPHIA, PA

DOWNTOWN OFFICE


1999 27,984,000 215,000 1,517,000 10.7 25.00 –2000 27,984,000 0 727,000 8.8 28.40 9.002001 27,984,000 0 (1,349,000) 12.3 23.50 9.252002 27,984,000 0 (816,000) 14.4 23.00 8.502003 27,984,000 0 561,000 13.0 23.30 9.252004 27,984,000 0 244,000 12.4 23.30 9.252005 28,937,000 953,000 68,000 13.9 23.20 7.302006 28,937,000 0 556,000 12.4 23.70 7.502007 41,464,000 1,253,000 2,060,000 10.7 25.50 7.502008P 41,464,000 0 647,000 9.1 – –

SUBURBAN OFFICE


1999 90,902,000 1,885,000 699,000 7.9 25.00 –2000 92,660,000 1,758,000 (1,741,000) 9.4 23.50 8.502001 95,441,000 2,781,000 (1,465,000) 13.2 24.00 9.252002 97,714,000 2,273,000 (1,003,000) 13.7 23.00 8.752003 99,488,000 1,774,000 (880,000) 17.4 24.30 9.502004 100,675,000 1,187,000 1,900,000 16.1 23.30 9.502005 101,443,000 768,000 1,197,000 15.5 22.90 7.302006 103,086,000 1,643,000 2,834,000 13.9 22.95 7.002007 107,729,000 2,789,000 2,640,000 13.6 24.70 7.502008P 108,446,000 717,000 1,624,000 12.7 – –

INDUSTRIAL


1999 393,268,000 350,000 1,227,000 13.1 2.50 – –2000 395,853,000 2,585,000 3,446,000 8.5 3.90 – –2001 402,239,000 6,386,000 (2,422,000) 12.7 4.00 2.53 9.502002 403,643,000 1,404,000 (6,367,000) 13.8 4.00 2.50 8.502003 404,829,000 1,186,000 4,281,000 12.3 4.00 2.90 9.002004 409,128,000 4,299,000 5,782,000 12.2 4.00 3.04 9.502005 413,972,000 4,844,000 11,390,000 10.5 4.25 4.00 8.002006 418,115,000 4,143,000 10,810,000 8.6 4.75 4.00 6.802007 419,301,000 6,372,000 8,167,000 7.9 4.75 3.44 7.702008P 424,336,000 5,035,000 6,741,000 7.4 – – –





• Population (000): 3,885.5




CONTACT:GregWest • [email protected] l RESEARCH: Rose Penny • [email protected] 51

OFFICE

• The office market experienced strong build-to-suit activity, butspeculative projects were slow to lease and absorb.

• There were eight new office leases of over 100,000 SF during thefirst half of the year and only two during the last half.

• The largest investment transactions involved REITs realigningportfolios or acquiring assets through corporate mergers.

• Downsizing in the mortgage industry resulted in a loss in occupancyin a few suburban submarkets, but have not had a major impact onthe Philadelphia office market overall.

Office Outlook• Asking rents are forecasted to remain flat, but not decrease in 2008.Landlords are likely to increase concessions rather than drop rates.

• Due to the cost of new construction and longer stabilizationproformas, landlords, particularly REITs, who have new constructionand second generation vacancies, are likely to be more aggressive inleasing their existing product. This will result in a slower lease-uptime for new construction.

• Investment sales activity is likely to be constrained due to stricterlending requirements for potential buyers but also a lack of offerings.However, there is a sizeable suburban portfolio on the market as wellas a few major CBD buildings.

INDUSTRIAL

• Absorption was strong, boosted by major build-to-suit projects inthe Lehigh Valley and Southern New Jersey.

• The inner-ring counties had very few industrially-zoned parcelsof land available for development. Land prices reflected theshort supply.

• Demand for user sales remained high despite a lack of qualitybuildings for sale in all size ranges. The volume of investmentsales dropped off as a result of the increasingly stringent lending.Sale prices began to level off and cap rates rose.

• Asking rents increased during the first six months, but leveled offin the last two quarters. Quoted rents for bulk warehouse spacewere adjusted down because of increased competition.

Industrial Outlook• A disputed and postponed plan to dredge the shipping channel onthe Delaware River is finally moving forward, which will boost thecapability of the Ports of Philadelphia and New Jersey. As a result,a major expansion of the Port of Philadelphia is planned, whichincludes 400,000 SF of new warehouse space.

• Flip sales and other value added acquisitions that were commonduring the last two years will be difficult to finance. There will stillbe opportunities for well-located, credit-tenant leased properties;however, offerings of this type of product will remain limited.

PHOENIX, AZCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 19,097,000 399,000 (128,000) 9.2 29.40 –2000 19,111,000 14,000 (185,000) 10.5 22.00 –2001 20,237,000 1,126,000 (115,000) 17.0 21.80 –2002 20,237,000 0 (449,000) 18.6 18.40 10.402003 20,362,000 125,000 (109,000) 19.0 17.50 9.402004 20,530,000 168,000 111,000 18.3 19.40 8.252005 20,530,000 0 976,000 15.1 21.20 7.252006 20,530,000 0 1,165,000 10.6 21.40 7.502007 19,076,000 150,000 (188,000) 13.1 28.10 –2008P 19,647,000 571,000 (66,000) 16.0 – –

SUBURBAN OFFICE


1999 65,406,000 5,630,000 2,392,000 11.3 27.90 –2000 68,960,000 3,554,000 3,920,000 10.1 24.00 9.502001 74,361,000 5,401,000 1,785,000 16.9 24.00 9.852002 77,433,000 3,072,000 1,457,000 17.9 20.90 10.052003 79,118,000 1,685,000 2,618,000 16.1 20.10 9.002004 82,569,000 3,451,000 2,694,000 15.8 23.00 8.802005 85,351,000 2,782,000 5,676,000 13.5 22.70 7.852006 87,275,000 1,924,000 5,020,000 12.9 23.40 6.802007 105,382,000 6,476,000 2,693,000 14.5 28.20 6.202008P 109,724,000 4,342,000 (360,000) 18.2 – –

INDUSTRIAL


1999 200,362,000 9,447,000 6,918,000 8.2 5.70 – –2000 206,071,000 5,709,000 5,069,000 8.3 4.00 – –2001 212,248,000 6,177,000 2,491,000 10.1 4.80 2.84 –2002 217,498,000 5,250,000 1,338,000 12.1 5.40 5.47 10.602003 220,398,000 2,900,000 215,000 13.2 5.90 4.50 9.902004 224,101,000 3,703,000 4,546,000 11.4 5.80 1.80 7.802005 228,470,000 4,369,000 8,766,000 9.5 6.30 4.58 7.702006 236,932,000 8,462,000 9,351,000 9.0 6.54 5.68 7.002007 219,479,000 6,828,000 4,733,000 10.1 5.98 15.46 7.102008P 225,395,000 5,916,000 (789,000) 12.8 – – –





• Population (000): 4,226.1

Source: Moody’s Economy.com.


52 CONTACT:Mike Fitz-Gerald • [email protected] l RESEARCH: Stewart Park • [email protected]

OFFICE

• Phoenix’s office absorption totaled over 2.5 million SF for 2007.Markets recording the most activity were the Northwest Valleyat 1.23 million SF and the Southeast Valley at 701,400 SF.

• Office vacancy rates fluctuated during 2007 with the year endingat 13.2%.

• Office deliveries totaled 6.62 million SF at year-end, a significantjump from the 1.9 million SF seen in 2006. Under constructionwas 7.27 million SF, the highest level in several years.

• Office sales activity remained strong. Total sales volume posted$769 million with the average price posting $191.14 per SF.

• The economic base in metro Phoenix is extremely diverse.Recent industries driving the majority of activity were as follows:high-tech (semiconductors), aerospace, advanced businessservices, transportation, distribution & wholesale trade, tourismand retirement & second home.

Office Outlook• High levels of new office construction activity and slightlydecreasing absorption volume are expected to cause vacancyrates to increase.

• The economic outlook for Arizona and the metro Phoenix arearemains positive with forecasts calling for a slower rate of growththan what was experienced over the last several years.

• While demand is expected to be slightly less than what wasexperienced in prior years, continued high levels of job creationand population inflow will continue to drive activity forward.

INDUSTRIAL

• Year-end absorption activity posted 4.73 million SF. Warehouse/distribution projects experienced the most activity, recording2.88 million SF of absorption.

• New construction posted 6.82 million SF. The pipeline of newprojects increased during the fourth quarter with 7.91 million SFunder construction, and actively proposed projects at 17.8 million SF.

• The vacancy rate posted 10.1 %, up from 9% seen in 2006.Increases in vacancy were caused mainly by massive newconstruction deliveries.

• Asking rents for first generation space increased slightly in 2007 from$0.70 per SF per month in 2006 to $0.75 per SF per month.

• The average investment sales price was $86.50 per SF, while theaverage cap rate registered 7.0 %.

Industrial Outlook• The only stressed area of the metro Phoenix economy, the housingmarket, is projected to rebound in late 2008 or 2009 according to theGreater Phoenix Blue Chip Panel.

• Projections indicate industrial absorption levels in 2008 will beslightly reduced from previous years, but demand will remainfirmly in place.

• 2008 will be another banner year for development and constructionactivity as long as the demand for new product remains strong.

PLEASANTON/WALNUT CREEK, CA

DOWNTOWN OFFICE


1999 – – 0 – – 8.382000 – – 0 – – 8.002001 – – 0 – – 7.502002 – – 0 – – 7.502003 – – 0 – – 7.002004 21,465,000 0 354,000 12.2 26.10 6.752005 21,465,000 0 783,000 11.1 25.80 5.602006 21,085,000 (380,000) (256,000) 11.3 26.90 5.502007 21,163,000 78,000 (112,000) 12.2 28.10 6.002008P 21,301,000 138,000 335,000 11.2 – –

SUBURBAN OFFICE


1999 – – 0 – – 8.882000 – – 0 – – 8.502001 – – 0 – – 8.002002 – – 0 – – 8.002003 – – 0 – – 7.502004 18,499,000 0 185,000 13.6 22.90 7.252005 18,499,000 0 321,000 10.5 24.40 6.102006 20,899,000 2,400,000 1,256,000 13.5 26.40 5.752007 21,001,000 104,000 2,000 13.9 27.20 6.602008P 21,113,000 112,000 326,000 12.8 – –

INDUSTRIAL


1999 – – 0 – – – –2000 – – 0 – – – –2001 – – 0 – – – 8.702002 – – 0 – – – 8.502003 – – 0 – – – 7.202004 31,804,000 66,000 206,000 8.6 4.80 10.00 7.202005 31,933,000 88,000 39,000 8.6 4.35 10.17 7.002006 32,966,000 126,000 1,000 8.6 4.93 10.55 7.002007 33,313,000 346,000 (391,000) 10.1 4.80 12.27 7.002008P 33,380,000 67,000 539,000 8.7 – – –





• Population (000): 2,521.5

Note: Metropolitan Indicators are for Oakland




CONTACT:Mike Burke • [email protected] l RESEARCH: Lisa Kohler • [email protected] Kevin Bailey • [email protected] 53

OFFICE

• Technology and financial companies not related to real estate tookoffice space, while companies related to home building includingconstruction, finance, and sales continued to give back space.

• Record high office building sales prices artificially pushedrents up regardless of actual tenant demand and in spite ofincreasing vacancies.

• The Lafayette Mercantile completed construction in thefourth quarter.

• Deal velocity dropped during the second half of 2007.• The sale of Vodafone Plaza and pending sale of Treat Towers willbe two of the most significant transactions towards the end of 2007.

Office Outlook• The opening of the Highway 4 Bypass will ease traffic for commutersgoing to and from Brentwood.

• The housing market will continue to slow.

INDUSTRIAL

• Pleasanton’s vacancy rates slowly edged downward but not enough topush the market rents up.

• The majority of local tenants continued to renew their existing leasesas opposed to relocating due to growth.

• Deal velocity dropped dramatically during the second half of 2007.The industrial market continued to show only moderate leasingactivity in the last half of the year.

• Sales remained the strongest part of the market, especially for owner/users looking to take advantage of low interest rates and favorableloan structures such as the SBA 504 loan. Prices of small lightindustrial buildings hit record highs in the $200 to $250 per SF range.

• Completion of new Benicia bridge induced more Concord areacompanies to look at relocating to Benicia.

• Opportunities for purchases of developable land remained limited dueto geographical constraints.

Industrial Outlook• Vacancy rates are expected to decrease as companies continue tomigrate from San Francisco and Silicon Valley.

• As rents rise in other Bay Area cities and available space becomeslimited, the Tri-Valley will be an attractive place for companies torelocate which will allow landlords to push up the asking rents.

• Construction will slow as existing space is waiting to be absorbed.With the short supply of land, land values will continue their upwardtrend, driving many types of users out of this market.

• The East Bay region will continue to experience an outpace of privateeducators, healthcare services, financial services and food servicescompared to surrounding cities in 2008.

PORTLAND, ORCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 18,846,000 0 56,000 6.3 27.30 –2000 19,300,000 454,000 758,000 5.4 25.00 9.502001 19,370,000 70,000 (814,000) 11.3 27.00 9.502002 20,138,000 768,000 (214,000) 15.1 22.00 9.252003 20,326,000 188,000 212,000 12.7 21.00 8.252004 20,326,000 0 113,000 12.8 20.10 8.102005 20,326,000 0 104,000 12.7 20.50 7.002006 20,326,000 0 280,000 11.7 21.30 7.252007 30,565,000 0 1,399,000 8.5 23.60 6.202008P 31,165,000 600,000 755,000 7.8 – –

SUBURBAN OFFICE


1999 36,516,000 464,000 243,000 10.0 21.50 –2000 37,333,000 817,000 1,306,000 7.9 23.50 9.502001 38,687,000 1,354,000 (18,000) 12.0 23.00 9.502002 38,827,000 140,000 (794,000) 14.0 23.00 9.252003 40,373,000 1,546,000 (252,000) 17.3 21.00 8.102004 40,930,000 557,000 1,536,000 14.3 20.60 8.002005 41,174,000 244,000 1,369,000 10.9 21.80 8.002006 41,817,000 643,000 442,000 11.7 21.80 7.502007 36,429,000 324,000 884,000 11.6 23.90 6.502008P 36,779,000 350,000 870,000 10.0 – –

INDUSTRIAL


1999 141,131,000 2,087,000 1,683,000 8.1 4.10 – –2000 142,544,000 1,413,000 2,466,000 4.8 3.50 – –2001 143,596,000 1,052,000 (1,219,000) 8.5 5.00 5.50 9.002002 144,532,000 936,000 455,000 16.4 5.00 5.00 9.002003 146,885,000 2,353,000 2,609,000 16.4 4.80 4.70 8.502004 147,998,000 1,113,000 5,001,000 13.9 4.60 4.40 8.002005 149,317,000 1,319,000 4,839,000 10.8 4.55 7.61 8.952006 151,843,000 2,526,000 4,189,000 9.6 4.71 6.51 7.652007 149,645,000 2,946,000 4,061,000 7.3 7.60 4.51 7.002008P 151,895,000 2,250,000 3,745,000 6.2 – – –





• Population (000): 2,201.1



54 CONTACT:Tom Lawwill • [email protected] l RESEARCH: JazmyneThompson • [email protected]

OFFICE

• The fastest growing sectors driving demand were the construction andfinancial industries. Growing companies were the Sabre Corp.,InsightsNow Inc., and Korvis Automation.

• Despite trouble nationally in the residential market, Portland’s homeprices increased 6.5% in 2007.

• Developers started new office projects. New construction totaled324,000 SF with 1.29 million SF under construction includingmultiple buildings in CBD.

• The vacancy rate registered 10.6% at year-end 2007, down from11.7% year-end 2006.

• The largest leases signed in 2007 involved Farmer’s Insurancecommitting to 103,300 SF, and Waggener Edstrom Worldwideopting for 70,100 SF. The largest sale to occur in Portland in theyear was the purchase of Shorenstein’s portfolio of fifty propertiesfor $1.125 billion.

• Land sales volume and prices are up from 2006. Largest commercialland sale in the metro area was 75 acres for $17.8 million.

• TriMet began construction on the MAX light rail line at thebeginning of 2007. Rail ran from downtown Portland toClackamas County.

Office Outlook• Several developers have announced intentions to built new Class Aoffice buildings in the CBD. The first will be completed in late 2009.

• Home sales in Portland will slow but is not expected to slow down asmuch as other parts of the U.S. This trend is expected to continue.

INDUSTRIAL

• Industrial new construction was planned for 6.68 million SF with3.44 million SF under construction as of year-end 2007. The largestdelivery this year, Bybee Lake Logistics Center, Phase II added290,400 SF to the Portland industrial supply. The largest projectunder construction was Rivergate Corporate Center’s Phase III withan additional 573,400 SF of space.

• The vacancy rate registered 7.3%, down drastically from 9.6%year-end 2006.

• Sizeable leases signed during the year included Bybee Lake LogisticsCenter, Phase II leasing 136,000 SF, Allegro Corporation leasing131,000 SF. The largest sale involved SolarWorld’s 419,200 SF for$40 million or $95.43 per SF.

• The largest land sale involved the property at NE 117th Ave,Vancouver. A total of 25.57 acres sold for $5.5 million or$4.94 per SF.

Industrial Outlook• The industrial market is expected to continue steady growth through2008, with slowing starting at the end of the year as the effects of theeconomy start to show up in industrial activity.

• Portland is expected to see continued growth in the “green” industriessuch as wind and solar power companies.

RALEIGH/DURHAM, NC

DOWNTOWN OFFICE


1999 2,842,000 95,000 178,000 6.8 – –2000 2,933,000 91,000 156,000 5.1 19.00 10.502001 3,120,000 187,000 46,000 9.8 18.00 10.502002 3,179,000 59,000 30,000 8.7 18.00 9.502003 3,226,000 47,000 (3,000) 10.3 18.00 10.002004 3,513,000 287,000 250,000 10.5 18.00 9.502005 3,648,000 135,000 198,000 8.4 19.00 8.252006 3,712,000 64,000 32,000 10.6 19.30 8.502007 3,457,000 (198,000) 31,000 6.9 21.00 7.502008P 3,789,000 332,000 84,000 12.9 – –

SUBURBAN OFFICE


1999 25,217,000 3,586,000 2,551,000 6.9 – –2000 28,299,000 3,082,000 2,186,000 7.7 19.50 9.752001 31,455,000 3,156,000 (2,473,000) 20.0 18.50 9.502002 32,620,000 1,165,000 (148,000) 21.4 18.00 9.002003 33,017,000 397,000 179,000 21.7 18.00 9.252004 34,639,000 1,622,000 1,761,000 19.7 18.00 8.502005 35,597,000 958,000 1,625,000 17.1 19.00 7.002006 37,236,000 1,639,000 1,279,000 15.8 19.80 7.752007 38,536,000 1,300,000 1,384,000 15.7 21.60 7.002008P 40,511,000 1,975,000 845,000 17.7 – –

INDUSTRIAL


1999 30,019,000 442,000 1,988,000 11.9 – – –2000 30,955,000 936,000 868,000 12.3 4.30 – –2001 33,895,000 2,940,000 101,000 21.9 4.30 3.00 9.502002 34,234,000 339,000 (464,000) 26.5 4.00 1.85 9.002003 34,450,000 216,000 (106,000) 27.3 3.50 2.00 8.802004 34,630,000 180,000 661,000 26.0 3.50 2.00 8.602005 34,785,000 155,000 1,924,000 21.5 3.75 1.72 8.502006 34,985,000 200,000 1,413,000 15.5 4.25 2.25 8.002007 38,586,000 400,000 1,911,000 16.3 4.50 2.75 7.252008P 39,136,000 550,000 839,000 15.4 – – –





• Population (000): 1,068.6




CONTACT: BobVanWormer • [email protected] l RESEARCH: Suzy McPherson • [email protected] 55

OFFICE

• In 2007, sectors that showed growth included gaming, contractresearch organizations, education, healthcare, and government.Companies which demonstrated high growth were QuintilesTransnational, Network Appliance, Time Warner, NC State,UNC, and Duke Universities. Struggling was Biogen Idec.

• Approximately 3 million SF of Class A space was under constructionfor a 2008 and early-2009 delivery. Approximately 35% of the spacewas pre-leased.

• Significant lease signings included Quintiles Transnational leasing250,000 SF of space at Imperial Center, NIEHS taking 80,000 SF atKeystone Park, and AKC committing to 75,000 SF at Brier Creek.

• Wind Realty sold a six building portfolio at Meridian Corporate Parkfor $48 million to America’s Capital Partners, and American RealtyInvestors sold the 300,000 SF Durham Center to Craig DavisProperties for $19.2 million. Suburban office land sites sold forbetween $3 and $9 per SF.

Office Outlook• In 2008, possible new infrastructure initiatives aiding theRaleigh/Durham office market include the Durham Expresswayextension into RTP as a toll road.

• Over 500,000 SF of existing Class B product will come availablein 2008 and early 2009 as companies relocate to newly constructedfacilities. Another 3 million SF of Class A projects are planned butwill not break ground without significant pre-lease commitments.

• For office investment properties, prices will continue to escalate,as viable sites become scarcer.

INDUSTRIAL

• The Raleigh/Durham industrial market was fueled by strongbusiness growth in the pharmaceutical and manufacturing sectors.Facilities for Novartis and Merck were under construction.

• New development was limited with 400,000 SF developed in 2007.Only two projects delivered institutional grade warehouse space.

• Amongst the larger lease deals were Hallmark Cards for 412,000 SFat Carolinas Distribution Center, and Amerisource leasing164,000 SF at Air Park. On the sales side, the 1.5 million SFResearch Tri-Center traded hands from Transwestern InvestmentServices to Grosvenor Investment Management for $105 million.Crown West purchased the 1,150,000 SF Carolinas DistributionCenter from JER Fulcra for $62.25 million.

Industrial Outlook• As vacant space continues to get absorbed, new development isexpected to increase.

• Very few blocks of institutional grade warehouse space above 100,000SF will be available which should drive new construction including a150,000 SF building at Falls Lake Commerce Center and potentiallya 300,000 SF project at the Carolinas Distribution Center.

• Prices will continue to escalate as it becomes increasingly difficult tofind quality suitable land for larger parks.

RENO, NVCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 – – 0 – – –2000 – – 0 – – –2001 1,429,000 0 (28,000) 13.8 – –2002 1,429,000 0 19,000 12.6 20.00 9.502003 1,429,000 0 22,000 11.3 20.50 9.502004 1,429,000 0 (24,000) 12.4 20.20 9.002005 1,429,000 0 (91,000) 17.9 21.00 8.902006 1,429,000 0 132,000 8.5 23.50 9.002007 1,425,000 0 (8,000) 17.8 22.90 7.502008P 1,425,000 0 0 17.8 – –

SUBURBAN OFFICE


1999 – – 0 – – –2000 – – 0 – – –2001 4,018,000 70,000 98,000 12.4 – –2002 4,244,000 226,000 317,000 10.3 20.60 9.002003 4,478,000 234,000 238,000 9.4 20.50 9.002004 4,751,000 273,000 79,000 13.3 21.10 8.002005 4,971,000 220,000 87,000 14.2 22.80 7.502006 4,971,000 0 31,000 12.3 24.00 7.002007 5,004,000 83,000 (85,000) 14.9 24.00 7.502008P 5,207,000 203,000 1,000 18.2 – –

INDUSTRIAL


1999 – – 0 – – – –2000 – – 0 – – – –2001 55,032,000 2,543,000 1,526,000 8.8 3.70 2.50 8.752002 56,291,000 1,259,000 717,000 9.8 3.50 2.20 9.302003 57,383,000 1,092,000 269,000 10.9 3.50 2.20 8.602004 58,950,000 1,567,000 2,805,000 8.7 3.50 2.00 8.252005 60,554,000 1,604,000 1,986,000 6.2 3.50 3.75 7.502006 61,845,000 1,291,000 2,210,000 5.0 4.08 3.75 6.502007 67,185,000 4,319,000 1,658,000 8.9 4.32 3.88 6.752008P 69,855,000 2,670,000 20,000 12.4 – – –








56 CONTACT:Mike Burke • [email protected] l RESEARCH: Krystal Christiaens • [email protected]

OFFICE

• Housing-related industries not only discontinued growth plans,but put space back on the market in the form of sublease ordirect vacancy.

• Vacancy increased due to the large amount of sublease space addedto the market.

• Throughout 2007, only three new buildings over 10,000 SF werecompleted. The Mt. Hood Building added 35,300 SF at the SierraCorporate Center, while 1170 S. Rock Blvd of 32,400 SF and 10765Double R Blvd of 15,000 SF were completed.

• A significant transaction in the Reno office market in 2007 was the80,000 SF build-to-suit for Employer’s Insurance. Also, a record officeproperty sale was that of 100 W. Liberty for $38.25 million.

Office Outlook• Rent rates will drop in order to stay competitive and to lease secondgeneration space.

• Construction will be minimal in 2008 mostly consisting ofbuild-to-suit and garden office construction.

• Due to the lack of construction in the next 18 months, land saleswill be sluggish. Land prices should remain constant ranging from$10 to $18 per SF.

INDUSTRIAL

• 2007 brought the largest construction boom in Northern Nevadahistory with 4.3 million SF completed. An additional 2.7 million SFwas under construction with another 6 million SF planned.

• The sale of jointly owned DP Partners and CalSTRS industrialportfolio to Prologis for $1.85 billion elevated Prologis to the largestsingle industrial owner in Northern Nevada with approximately16.4 million SF.

• The vacancy rate reached the highest peak since 2003 due tonew construction coming on-line.

Industrial Outlook• Under construction was the USA Parkway that will connect I-80at Tracy Clark Station in Story County to US 50 in Silver Springsin Lyon County. It is estimated the completion of USA Parkwaywill cut one hour off the trip between Las Vegas and Reno and willprovide access to convenient air-freight by linking SilverSprings Airport.

• Migration of existing tenants from the Sparks industrial core to thenew Tahoe Reno Industrial Center.

• With the vacancy rising, industrial rents are flattening as landlordsare motivated to remain competitive.

• Within the Reno and Sparks industrial core, land remains scarce.However, an abundance of rail served and non-rail served land isavailable in the outer submarkets ranging from $2 to $6 per SF.

SACRAMENTO, CA

DOWNTOWN OFFICE


1999 12,184,000 398,000 335,000 8.3 26.75 –2000 12,184,000 0 172,000 6.8 27.95 9.252001 12,184,000 0 (1,000) 6.9 27.95 9.502002 12,334,000 150,000 (118,000) 8.9 29.25 9.602003 12,576,000 242,000 (272,000) 12.8 29.80 8.502004 12,576,000 0 (85,000) 13.5 28.90 8.002005 13,126,000 550,000 661,000 12.1 30.30 6.602006 13,126,000 0 (274,000) 14.2 30.30 6.002007 14,231,000 0 367,000 9.6 35.90 6.502008P 14,597,000 366,000 167,000 10.8 – –

SUBURBAN OFFICE


1999 48,404,000 2,454,000 2,056,000 9.1 19.50 –2000 50,325,000 1,921,000 1,137,000 10.4 21.35 9.502001 52,352,000 2,027,000 1,134,000 11.7 21.70 9.502002 54,204,000 1,852,000 326,000 14.1 22.00 9.102003 55,699,000 1,495,000 1,423,000 13.9 23.10 8.502004 57,030,000 1,331,000 747,000 14.6 23.50 7.702005 58,202,000 1,172,000 1,880,000 12.7 24.50 7.152006 59,702,000 1,500,000 629,000 13.6 25.80 6.502007 64,895,000 1,718,000 754,000 13.7 27.20 6.802008P 66,549,000 1,654,000 728,000 14.7 – –

INDUSTRIAL


1999 151,466,000 3,528,000 2,782,000 7.5 4.20 – –2000 153,667,000 2,201,000 1,163,000 8.1 4.43 – –2001 157,003,000 3,336,000 (6,611,000) 14.2 4.66 3.75 9.152002 160,203,000 3,200,000 2,537,000 14.3 4.90 3.40 9.002003 161,434,000 1,231,000 1,623,000 14.0 5.20 3.30 8.502004 163,789,000 2,355,000 2,779,000 13.5 5.48 10.50 8.152005 166,143,000 2,354,000 4,370,000 12.1 5.76 11.17 7.452006 167,891,000 1,748,000 3,079,000 11.1 6.04 15.00 7.002007 179,168,000 1,925,000 2,102,000 10.7 7.04 10.00 7.102008P 180,168,000 1,000,000 2,081,000 10.0 – – –





• Population (000): 2,125.8




CONTACT:Dennis Shorrock • [email protected] l RESEARCH:Garrick Brown • [email protected] 57

OFFICE

• Office demand was down from most private sector sources and asignificant amount of space was returned to market from variousmortgage and title companies. However, the public sector’srequirements drove leasing activity in 2007. Large leases by theState of California helped contribute to over 1.1 million SF ofoccupancy growth throughout the year.

• Supply outpaced demand as developers brought over 1.7 million SF ofnew product to the market. This particularly impacted Sacramento’spremier suburban submarket, Roseville/Rocklin, now overbuilt withvacancy at 17.3%.

• Vacancy crept up throughout the region and stood at 12.9%, upfrom 12.6% in 2006.

• Despite increased vacancy, asking rents in the region rose.The overall average asking rent was $25.56 compared to$23.76 per SF a year ago.

• The Downtown, Highway 50 and Roseville/Rocklin trade areasrecorded the strongest occupancy growth in 2007. However, newdevelopment continued to outpace net absorption in the latter.

Office Outlook• Over 3.1 million square feet of new office space is currently underconstruction throughout the region, with as much as 1.7 millionsquare feet of that scheduled for 2008 delivery. Supply will continueto outpace demand.

• Lease rates are expected to be flat at best in 2008.

INDUSTRIAL

• Industrial vacancy dropped to 10.7%. Demand from constructiontrades virtually disappeared and absorption in 2007 was at its lowestlevel since 2003. However, construction levels were at their lowestlevels. As a result, occupancy growth still outpaced deliveries.

• Only 910,000 SF of product was in the construction pipeline whenthe market averaged 2.1 million SF under construction since 1999.

• Asking rates jumped significantly as quality institutional-gradeproduct became scarce.

Industrial Outlook• Despite expected slowing in the leasing market, record low levelsof construction will mitigate the impact and vacancy will continueto decrease.

• While demand will be impacted by a weakening economy, thehousing and construction sectors were already pummeled in 2007.Transportation, distribution, logistics, warehousing, and businessservices will likely slow slightly.

• A worsening overall economy in 2008 will flatten rental rate growth,but it will not reverse for all products. In fact, for some property typesin stronger submarkets there may be minimal increases.

• FEMA’s reclassifying the flood zoning for much of the Natomas areanear Sacramento Airport may stall new development there until2010. This includes the largest industrial project currently in theplanning stages, the Metro Air Park. Industrial construction mayremain limited in the coming two years.

SAN DIEGO, CACO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 9,371,000 120,000 52,000 10.2 25.80 –2000 9,371,000 0 140,000 8.4 26.40 9.002001 9,371,000 0 178,000 7.6 28.40 8.402002 9,371,000 0 (171,000) 10.1 27.20 7.002003 9,371,000 0 (6,000) 10.2 29.10 8.802004 9,371,000 0 43,000 9.4 31.10 7.302005 9,752,000 381,000 179,000 11.0 30.40 6.102006 9,888,000 136,000 (39,000) 13.5 34.20 6.102007 10,123,000 237,000 65,000 14.9 35.40 5.102008P 10,123,000 0 155,000 13.4 – –

SUBURBAN OFFICE


1999 52,370,000 2,250,000 2,784,000 7.4 27.00 9.502000 52,870,000 500,000 1,786,000 4.6 24.70 9.202001 54,409,000 1,539,000 (385,000) 10.1 23.60 9.102002 55,736,000 1,327,000 (1,900,000) 12.8 22.50 9.202003 56,290,000 554,000 757,000 11.3 29.40 8.502004 56,545,000 255,000 102,000 11.6 32.90 6.902005 58,119,000 1,574,000 2,409,000 8.9 33.60 6.902006 60,796,000 2,677,000 1,220,000 11.1 35.90 6.102007 63,377,000 1,992,000 128,000 13.8 38.20 6.752008P 67,089,000 2,200,000 984,000 15.2 – –

INDUSTRIAL


1999 166,537,000 11,380,000 7,102,000 7.9 7.20 – –2000 170,091,000 3,554,000 4,565,000 5.6 7.80 – –2001 173,528,000 3,437,000 2,363,000 8.2 7.50 8.50 8.752002 175,145,000 1,617,000 213,000 9.1 6.50 9.00 8.702003 177,161,000 2,016,000 684,000 9.8 7.60 5.50 8.202004 179,981,000 2,820,000 2,493,000 7.8 8.00 5.94 7.052005 182,603,000 2,622,000 3,423,000 6.8 8.50 12.90 5.652006 185,713,000 3,110,000 2,801,000 6.9 9.00 16.52 6.302007 187,174,000 2,966,000 (274,000) 8.3 8.64 12.50 –2008P 188,420,000 1,246,000 3,088,000 7.3 – – –





• Population (000): 2,960.5



58 CONTACT: Jim Zimsky • [email protected] l RESEARCH: Chris Reutz • [email protected]

OFFICE

• Nearly 2.3 million SF of new construction was completed in 2007,close to matching the 2006 ten-year high of 2.8 million SF.

• Positive absorption occurred only in Class A space with the Class Bsubmarket experiencing considerable negative absorption.

• Class A average asking rents rose slightly in the downtown. In thesuburban markets, they rose by 6%.

• Class A sales activity of over $1.9 billion in twenty transactionsmarked the highest volume for any year on record. The overall salesdollar volume was 56% higher than in 2006. The median price perSF of $492 was a 42% increase over 2006.

Office Outlook• Continued job losses, declining consumer confidence, and negativenet migration will contribute to weakened economy, however, a localrecession is not likely since the majority of San Diego’s industries willnot be as adversely affected by the economic downturns. In fact, themajor industries of tourism and defense continue to see strong growth.

• An additional 2.2 million SF of new office space under constructionwill create an oversupply situation countywide since demand is notexpected to keep a similar pace.

• In 2008, sublease vacancy should remain within the 2% to 3% range.

INDUSTRIAL

• In 2007, the industrial market experienced significant negativeabsorption. Almost 3 million SF was completed during the year.

• Average asking office space rents remained flat over the year at$11.52 per SF on a triple-net basis compared to $11.40 per SFa year ago.

• Land availability was limited, forcing land prices to be prohibitivelyexpensive for new development. In the last few years, North Countyand South County have been where most new warehouse andmulti-tenant construction occurred due to relatively lower land costs.Central County’s industrial development was focused on R&D/flex,two-story corporate headquarters, and laboratory space.

• The majority of development was built on a speculative basis withnearly two-thirds over all buildings under 10,000 SF.

Industrial Outlook• Future redevelopment trends in the county will focus on razing oldermanufacturing facilities with the intention of redeveloping them asoffice projects.

• An additional 400,000 SF of new supply is expected in the first half of2008. Vacancy is expected to rise slightly but will stabilize or decreasein the last half of the year. Vacancy will remain in the 7% to 9%range with sublease vacancy staying below 1.5%.

• Rents should remain relatively flat throughout 2008.

SAN FRANCISCO, CA

DOWNTOWN OFFICE


1999 71,903,000 525,000 2,634,000 2.6 45.10 –2000 74,837,000 2,934,000 3,093,000 3.6 78.10 8.002001 77,010,000 2,173,000 (5,011,000) 13.5 40.90 9.002002 79,353,000 2,343,000 (1,137,000) 16.9 32.00 8.502003 79,578,000 225,000 138,000 16.9 29.10 8.002004 79,578,000 0 1,237,000 15.4 31.30 8.002005 79,328,000 (250,000) 1,700,000 13.2 35.40 7.002006 79,154,000 (174,000) 1,139,000 11.6 42.60 6.252007 81,087,000 411,000 1,665,000 9.9 55.80 5.802008P 82,914,000 1,827,000 750,000 11.0 – –





• Population (000): 1,719.2




CONTACT:Glen Esnard • [email protected] l RESEARCH:Tove Nilsen • [email protected] 59

OFFICE

• Leasing activity exhibited a healthy performance enabling the yearto post nearly 6.4 million SF of activity. Some large office leasetransactions included O’Melveny & Meyers leasing 170,000 SF atTwo Embarcadero Center, Barclay’s Global Investors’ renewing112,000 SF at 45 Fremont, and Sega’s ten-year, 70,000 SFcommitment at 350 Rhode Island Street.

• High tech companies were active, specifically in the South ofMarket with activity by Sega of America, H5 Technologies andService Sources.

• Average effective rental rates surged over the last 12 months.The financial district’s average weighted effective Class A rentsincreased 31% to $55.80 per SF and Class B rents rose 24.2%to $38.40 per SF.

• The high turnover in building ownership at record high prices led toupward pressure on rental rates. The average price paid on Class Aassets was $535 per SF, a 58% increase since 2005. Over the sameperiod, average Class B prices rose by 30% to $337 per SF.

Office Outlook• Tenants will have more options as new and renovated blocks of spacehit the market in the South Financial and Yerba Buena submarkets.

• The credit crunch will slow down the investment activity.The market has already seen a dramatic slowdown in buyingof core assets.

• Sharp increases in rental rates will likely taper off, although premiumspace in the Financial District will continue to trade for top-dollar.

• The demand for office space from the growing technology sector willcontinue to increase throughout 2008.

SAN FRANCISCO/SAN MATEO PENINSULA, CA


SUBURBAN OFFICE


1999 26,022,000 2,118,000 2,084,000 0.7 56.05 9.002000 28,600,000 2,578,000 3,215,000 2.6 70.90 8.002001 29,731,000 1,131,000 (4,363,000) 22.4 36.95 9.002002 30,221,000 490,000 (1,104,000) 28.3 28.45 9.002003 30,388,000 167,000 189,000 29.3 25.10 8.502004 30,388,000 0 644,000 25.4 24.70 7.702005 30,388,000 0 1,548,000 20.4 25.70 7.202006 30,388,000 0 710,000 15.8 29.60 6.502007 31,091,000 0 1,483,000 11.3 43.80 5.502008P 31,091,000 0 800,000 8.8 – –

INDUSTRIAL


1999 43,952,000 100,000 297,000 1.8 9.60 – 8.702000 43,933,000 (19,000) 682,000 2.5 31.20 – 6.302001 43,933,000 0 (3,333,000) 9.8 10.10 – 7.502002 43,973,000 40,000 (1,877,000) 11.6 10.00 – 8.002003 43,973,000 0 436,000 10.6 8.60 60.00 7.602004 43,973,000 0 1,179,000 8.3 7.90 65.00 8.752005 43,973,000 0 1,051,000 6.2 9.25 73.00 8.402006 43,973,000 0 327,000 5.4 9.36 73.11 6.302007 43,154,000 0 602,000 4.3 10.80 42.00 5.752008P 43,154,000 0 1,197,000 1.6 – – –





• Population (000): 1,816.5

Note: Metropolitan Indicators are for San Jose



60 CONTACT:Mike Burke • [email protected] l RESEARCH: Jeff Dizon • [email protected]

OFFICE

• Overall vacancy fell from 15.8% at the beginning of 2007 toend at 11.3%.

• Central County performed the strongest, with vacancy dropping from15.4% in 2006 to 9.9% in 2007.

• Asking rents increased from $2.47 per SF to $3.35 per SF by year-end.• YouTube leased 180,000 SF LEED certified Class A space at 901Cherry from The Gap in San Bruno. These companies were alsoinvolved in San Francisco at Hill Plaza for 210,000 SF.

• Taking significant sublease space off the market at the former Seibelcampus were Guidewire subleasing 88,200 SF at 2211 BridgepointeParkway, Actuate Corp. taking 83,200 SF and GLU Mobileoccupying 52,100 SF at 2207 Bridgepointe Parkway.

• Meyers Development broke ground on Centennial Towers inSouth San Francisco - 333,000 SF and 364,000 SF tower.

• Hines sold Parkside Towers to Harvest Properties and Invesco for$180 million, then bought 600 Clipper in Belmont for $52 million.

Office Outlook• San Mateo Executive Office Park, the former Visa Headquarters,will add 270,000 SF of space after Class A upgrades are completedmid-2008.

• Rents look to increase in 2008 as vacancy diminishes and thedownward pressure of the sublease market dwindles.

• The Peninsula Office market should hold strong with good demandfrom tech companies and startups, coupled with the low supply ofspace straddling the Highway 101 corridor.

INDUSTRIAL

• The market was steady with vacancy between 4% and 5.5%,bolstered by its proximity to San Francisco International Airport.

• Average asking rents ranged from $0.82 per SF NNN in the NorthCounty and $0.95 per SF NNN in the Central and South counties.

• R&D vacancy dropped from 9.3% beginning the year to 6.4%by year-end.

• From 2006 to 2007, R&D asking rents rose from $1.65 per SFto $1.95 per SF.

• Amgen Pharmaceuticals put 365,000 SF of sublease space ontothe market at a three-building project in Oyster Point; two of thebuildings are in shell condition, with the other ready for occupancy.

Industrial Outlook• Anticipating continuing long term strength in the R&D Life Sciencesector in South San Francisco, Brisbane and Daly City, constructionof up to 1,495,000 SF of office/R&D space is expected over thenext 12-18 months.

• The warehouse sector looks to remain steady as no newconstruction is slated in the near future and demand is expectedto remain consistent.

SAN JOSE/SILICON VALLEY, CA

DOWNTOWN OFFICE


1999 6,174,000 0 96,000 5.4 45.10 –2000 6,174,000 0 260,000 1.2 60.00 9.002001 6,516,000 342,000 (151,000) 8.7 57.10 10.002002 6,516,000 0 (292,000) 13.2 39.30 10.002003 7,172,000 656,000 (77,000) 20.3 32.70 8.002004 7,172,000 0 (10,000) 20.6 33.00 8.002005 7,172,000 0 (286,000) 24.6 30.30 7.502006 7,172,000 0 310,000 20.0 30.40 6.252007 7,275,000 0 423,000 13.0 35.80 5.002008P 7,275,000 0 (100,000) 14.4 – –

SUBURBAN OFFICE


1999 42,119,000 1,704,000 1,455,000 4.6 42.40 9.502000 44,142,000 2,023,000 2,559,000 1.9 84.00 9.002001 47,634,000 3,492,000 (171,000) 10.7 42.20 10.002002 49,566,000 1,932,000 216,000 13.1 29.20 9.002003 49,875,000 309,000 (2,389,000) 17.3 25.90 8.502004 49,881,000 6,000 1,035,000 15.2 24.80 8.502005 49,895,000 14,000 1,875,000 11.5 27.20 8.502006 50,146,000 251,000 2,327,000 6.9 32.10 6.752007 50,633,000 70,000 (205,000) 8.1 41.00 5.702008P 50,675,000 42,000 (650,000) 9.5 – –

INDUSTRIAL


1999 237,972,000 253,000 4,680,000 4.2 10.50 – 9.252000 242,960,000 4,988,000 11,230,000 1.3 8.40 – 9.002001 251,531,000 8,571,000 (7,312,000) 7.6 8.40 32.50 8.502002 253,861,000 2,330,000 (8,607,000) 11.7 4.30 35.00 8.002003 253,883,000 22,000 (12,987,000) 16.8 5.50 25.00 8.002004 253,964,000 81,000 951,000 16.4 5.20 25.00 7.002005 254,470,000 506,000 4,311,000 14.5 4.90 25.00 7.002006 254,511,000 41,000 5,333,000 12.2 5.11 30.00 6.252007 252,895,000 99,000 1,078,000 8.9 6.36 56.10 6.102008P 254,211,000 1,316,000 1,000,000 9.0 – – –





• Population (000): 1,816.5




CONTACT:Mike Burke • [email protected] l RESEARCH: Jeff Dizon • [email protected] 61

OFFICE

• The vacancy rate continued to fall in 2007, however, at a muchslower pace compared to 2005 and 2006. Office vacancy droppedbelow 9% for the first time since 2001.

• Overall demand fell as absorption was much lower compared tothe previous two years. After recording eight consecutive quartersof positive absorption, the Silicon Valley experienced negativeabsorption in the second quarter of 2007. Additionally, the amountof available sublease space on the market increased.

• Rents increased dramatically and some submarkets saw rentsclimb over 50% in the past year. Overall, Silicon Valley averageasking rents increased over 17%, compared 10.6% in 2006 and2.4% in 2005.

• BEA Systems, Inc. purchased a new 381,000 SF Class Aoffice building in downtown San Jose from SobratoDevelopment Companies.

• Higher rents were met with some resistance, and demand shiftedtowards high-end R&D industrial space as a cheaper alternative.

Office Outlook• Unless office demand picks up in 2008, asking rates will stay flat,or possibly fall.

• Tenants will take more time to make their real estate decisions, andas uncertainty continues to cloud the national and local economicoutlook, demand will continue to slow.

INDUSTRIAL

• The Silicon Valley continued to be very tight with the vacancy rateunder 5% for industrial space and under 4% for warehouse space.

• The R&D market’s vacancy rate continued to fall, posting a ratebelow 13% for the first time since 2002.

• R&D gross absorption was greater in 2007 compared to 2006, but netabsorption was significantly less in 2007. Activity slowed down inboth industrial and warehouse markets as the gross absorption totalfor 2007 was the lowest in over five years.

• Average R&D asking rates increased over 30% while industrial andwarehouse rents modestly increased during the year.

• Venture capital spending continued to focus on software and lifescience industries, however, there was also significant growth insemiconductor and alternative energy (green energy) industries.

Industrial Outlook• Over 1.7 million SF of R&D product is under construction withplenty of Class A space becoming available in 2008.

• Businesses related to new construction and home improvement willlikely be affected by the subprime financial shock.

• The industrial and warehouse markets will continue to see aslowdown in activity during 2008 with limited space alternativesfor users, and virtually no new construction in the pipeline.

SEATTLE/PUGET SOUND, WACO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 30,961,000 428,000 741,000 2.5 32.00 –2000 32,892,000 1,931,000 1,819,000 3.5 37.00 8.502001 34,879,000 1,987,000 (1,405,000) 12.6 35.00 8.252002 35,732,000 853,000 (45,000) 14.6 29.50 8.252003 36,577,000 845,000 311,000 15.3 26.30 8.002004 36,665,000 88,000 (167,000) 15.2 25.80 7.002005 36,665,000 0 763,000 12.8 25.20 6.502006 36,850,000 185,000 1,487,000 8.5 27.50 6.502007 37,402,000 392,000 471,000 8.4 32.30 5.802008P 38,256,000 854,000 1,200,000 7.3 – –

SUBURBAN OFFICE


1999 43,380,000 3,943,000 1,670,000 6.7 22.50 –2000 45,962,000 2,582,000 3,769,000 5.3 24.00 9.502001 49,500,000 3,538,000 (1,222,000) 15.6 25.00 9.502002 50,593,000 1,093,000 166,000 17.5 23.00 9.502003 50,803,000 210,000 (90,000) 17.6 22.90 8.752004 50,874,000 71,000 965,000 15.4 23.60 7.002005 51,270,000 396,000 2,031,000 12.0 21.80 6.502006 51,320,000 50,000 779,000 10.6 26.00 6.252007 51,630,000 2,310,000 1,300,000 11.0 31.00 5.262008P 54,930,000 3,300,000 1,731,000 6.8 – –

INDUSTRIAL


1999 196,165,000 5,292,000 607,000 4.7 4.90 – –2000 196,881,000 716,000 643,000 5.2 4.60 – –2001 199,991,000 3,110,000 (4,646,000) 8.6 5.50 8.00 8.002002 201,140,000 1,149,000 (2,380,000) 10.4 5.50 9.70 8.002003 201,988,000 848,000 (1,057,000) 11.1 5.50 8.00 8.002004 205,112,000 3,124,000 6,496,000 9.3 5.50 6.00 7.852005 215,141,000 10,029,000 8,102,000 7.4 5.60 6.75 6.502006 219,360,000 4,219,000 5,595,000 6.5 6.36 7.50 6.502007 225,157,000 5,782,000 5,736,000 6.2 6.48 11.46 6.542008P 228,355,000 3,198,000 7,394,000 4.2 – – –





• Population (000): 2,582.8



62 CONTACT: John Powers • [email protected] l RESEARCH: Jeff Bonar • [email protected]

OFFICE

• Seattle’s downtown office vacancy rate ended 2007 at 8.4%.• Total downtown absorption registered only 471,000 SF, less than athird of 2006’s total.

• Vulcan’s Westlake Terry Buildings delivered 277,400 SF of Class Aspace in South Lake Union submarket.

• South King County’s vacancy rate dropped to 18.4%, its lowest ratein five years. Total absorption was over 469,000 SF.

• The Eastside’s average asking rates climbed 21% in 2007, going from$27.20 per SF to $32.87 per SF. New supply registered 925,000 SFwhile 2.6 million SF was under construction. In this market,Microsoft pre-leased 1.3 million SF of space.

• Tacoma’s CBD ended the year with a 5.55% vacancy rate, twopercentage points below the Pierce County average. 250,000 SF ofnew office space added to the Pierce County market in 2007 andnearly half of it already absorbed.

Office Outlook• Most of the new supply that will be added to the market in 2008 isalready pre-leased. Unless demand drops significantly, asking rateswill continue escalating.

• Vacancy rates are expected to remain low in the Puget Sound.

INDUSTRIAL

• Seattle’s industrial market absorbed over 5.7 million SF in 2007,the second-highest mark of the decade.

• The overall vacancy rate fell to finish 2007 at 6.2%.• Close-in manufacturing space remained scarce with only3.28% vacant.

• The Kent Valley submarket stayed consistent with 1,750,000 SF ofabsorption. AMB Valley Distribution Center delivered 766,200 SFof new space in Auburn.

• New construction was built on the outskirts of the Eastside marketmainly because industrial space close to downtown Bellevue wasconverted into other uses. The Bel-Red Corridor is evidence ofthe growing change.

• The Northend’s vacancy rate dropped from 16.33% to 6.43% in 2007,absorbing 1.1 million SF in the process. Boeing’s 150,000 SF leasewas the biggest of the year on the Northend.

Industrial Outlook• Manufacturing will continue its strength in the Northend, spurred bythe success of Boeing.

• As more space is converted to other uses like residential and office,industrial supply will shrink. Lease rates are expected to escalate inthe process.

• Industrial new construction will continue to be built farther andfarther from city centers. Areas far north and south of Seattle shouldbenefit from the shift.

ST. LOUIS, MO

DOWNTOWN OFFICE


1999 11,476,000 165,000 153,000 13.2 18.50 10.502000 11,521,000 45,000 153,000 12.2 20.00 10.502001 11,521,000 0 (241,000) 14.6 19.50 10.502002 11,519,000 (2,000) (506,000) 18.7 18.80 10.502003 11,523,000 4,000 (345,000) 21.7 18.80 10.502004 11,297,000 (226,000) (163,000) 21.5 18.50 10.502005 11,250,000 (47,000) 54,000 20.8 19.30 8.002006 11,221,000 (29,000) 178,000 19.0 20.60 7.752007 11,437,000 0 (22,000) 19.0 20.60 9.002008P 11,437,000 0 68,000 18.4 – –

SUBURBAN OFFICE


1999 30,418,000 2,296,000 1,853,000 6.6 26.30 10.002000 32,113,000 1,696,000 1,381,000 7.1 25.50 10.502001 34,459,000 2,346,000 435,000 12.2 24.50 10.752002 35,333,000 874,000 294,000 13.6 24.50 10.752003 35,970,000 636,000 (248,000) 15.9 23.50 10.252004 35,889,000 (81,000) 376,000 14.7 23.00 9.752005 36,348,000 459,000 925,000 13.2 23.00 7.502006 36,758,000 410,000 923,000 11.6 23.00 7.502007 37,606,000 854,000 1,513,000 9.6 23.00 7.502008P 39,055,000 1,449,000 250,000 12.3 – –

INDUSTRIAL


1999 217,784,000 4,569,000 3,926,000 3.4 4.25 – 9.502000 221,603,000 3,819,000 2,122,000 4.1 5.00 – 9.502001 226,709,000 5,106,000 (1,947,000) 7.1 4.00 2.75 10.002002 230,107,000 3,398,000 1,856,000 7.6 3.30 3.50 9.502003 231,703,000 1,596,000 573,000 8.0 3.50 4.50 9.252004 233,133,000 1,430,000 3,961,000 6.5 3.50 3.50 8.502005 234,834,000 1,701,000 3,985,000 5.5 3.75 3.25 8.002006 238,137,000 3,304,000 2,428,000 5.8 4.00 3.85 7.502007 242,912,000 3,065,000 1,786,000 5.9 4.00 3.50 6.902008P 244,847,000 1,935,000 1,680,000 6.0 – – –





• Population (000): 2,838.9




CONTACT: Rick Messey • [email protected] l RESEARCH: JeradawnVaughn • [email protected] 63

OFFICE

• The market witnessed strong overall absorption of 1.5 million SF,the most since 2000. Absorption was positive in suburbanmarkets but negative downtown as the downtown moved towardentertainment, cultural, and residential development in new andconverted historic structures.

• Class A suburban space had a vacancy rate of 6.8%, while downtownClass A vacancy was 16.9%.

• New construction was dominated by build-to-suit as developersremained cautious.

• Large contiguous blocks of space were in short supply with only threesuburban Class A buildings able to accommodate a 50,000 SF tenant.

Office Outlook• Speculative construction is underway with 600,000 SF scheduledfor 2008 completion; most projects are in the West St. LouisCounty market.

• Express Scripts announced plans for a second building in NorthSt. Louis County, and Centene Corporation announced plans tomove its headquarters into downtown while retaining Claytonspace as the company grows.

• Lumiere Place, a $500 million casino with two hotels, will expandand enhance the downtown entertainment district, and employover 1,000 people.

• Reconstruction of Highway 40/I-64 from Kingshighway to SpoedeRoad in West St. Louis County will take two years starting 2008.

INDUSTRIAL

• St. Louis ranked second among Expansion Management Magazine’smost logistics-friendly metro areas in the US. While automanufacturing employment fell, suppliers to the local Chrysler plantleased several hundred thousand SF of just-in-time warehouse andassembly space.

• Over 70% of construction was in the form of modern bulk space,serving as distribution centers for consumer products companies andthird party logistics providers. Nearly all of the 2.5 million SF wasbuilt speculatively.

• Significant leases included True Manufacturing, maker of commercialrefrigeration equipment, and Spectrum Brands, which manufactureslawn and garden products locally, each leasing over 400,000 SF ofdistribution space.

Industrial Outlook• The first speculative building in NorthPark will be completed in 2008– a 550-acre office, retail, and industrial development one-half mileeast of Lambert St. Louis Airport.

• Two million SF of space was under construction leading into 2008.Illinois and North St. Louis County each accounted for over halfa million SF.

• An alphabet soup of logistics technology – RFID, SCM, WMS,EDI, and TMS – will enable the efficient operation of ever largerdistribution centers while utilizing fewer workers.

• Industrial land availability is limited to small portions of northwestSt. Louis County, to central St. Charles County, and to largertracts in Illinois.

STOCKTON, CACO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 – – – – –2000 – – – – –2001 – – – – –2002 – – – – –2003 – – – – –2004 – – – – –2005 – – – – –2006 – – – – –2007 6,921,000 131,000 0 16.58 19.002008P 7,093,000 172,000 87,000 17.4 –

INDUSTRIAL


1999 – – – – – –2000 – – – – – –2001 – – – – – –2002 – – – – – –2003 – – – – – –2004 – – – – – –2005 – – – – – –2006 – – – – – –2007 81,348,000 2,861,000 117,000 11.7 4.08 6.002008P 85,598,000 4,250,000 1,077,000 14.8 – –








64 CONTACT:Tim Mustin • [email protected] l RESEARCH:Maria Marquez • [email protected]

OFFICE

• The Central Valley office market shifted in 2007 with supplyoutpacing demand.

• Vacancy rose in all classes. For the first time in over five yearssublease inventory was available and growing.

• Medical and professional service (accounting, engineering, etc.)companies faced limited choices as new construction and speculativebuilding tapered.

• The City of Stockton is set to capitalize on an opportunity topurchase the 247,000 SF WAMU building in downtown Stocktonfor $35 million.

Office Outlook• Opportunities are strong for investors to purchase at favorableprices or prospective tenants to lease at below prior market rates.Sales and leases are anticipated to continue as a result of theeconomic adjustment.

• The Bay Area Markets, particularly downtown San Francisco andits environs continue to show record levels of demand. This trendtypically overflows into the East Bay Region and the Central ValleyRegion eventually.

• Vacancy is expected to plateau.

INDUSTRIAL

• San Joaquin County remained an ideal distribution point forNorthern California and the eleven western states based upon itsproximity to major freeway arterials, access to west coast ports andintermodal rail infrastructure.

• The expanding Port of Stockton became a large participant inattracting new and expanding industries to San Joaquin Countyand the City of Stockton.

• Over 5 million SF of new high-cube warehouse space was underconstruction at year-end.

• Sales in the industrial condo market slowed down as a result of theavailability of inventory and the softening in demand partly due tothe correction of the residential real estate market.

• Higher costs for building permits, development impact & mitigationfees continued to affect the bottom line for developers and users.

Industrial Outlook• Stockton/San Joaquin County will continue to be considered a viablelocation to distribute goods and services. Although values are on therise, land prices will continue to look attractive in comparison to BayArea and Southern California markets.

• Both private and institutional capital will continue to seekopportunities in San Joaquin County.

• Speculative construction for general purpose high-cube warehousedistribution facilities, ranging in size from 250,000 SF to in excessof 1 million SF, will remain active.

• Industries linked to the housing market will retrench and positionfor uncertain conditions.


TAMPA BAY, FLCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 8,548,000 0 (62,000) 11.1 19.30 –2000 8,548,000 0 (164,000) 13.0 19.80 9.252001 8,548,000 0 (132,000) 14.5 19.70 9.252002 8,548,000 0 (143,000) 16.2 19.70 9.002003 8,559,000 11,000 58,000 15.8 19.50 9.002004 8,559,000 0 35,000 15.4 19.90 8.502005 8,591,000 32,000 105,000 14.5 19.70 8.002006 8,661,000 70,000 25,000 14.2 20.70 8.002007 8,731,000 70,000 117,000 13.2 21.80 7.252008P 8,764,000 33,000 129,000 12.0 – –

SUBURBAN OFFICE


1999 58,366,000 2,557,000 661,000 7.4 20.50 –2000 60,668,000 2,302,000 290,000 10.5 21.80 9.252001 62,537,000 1,869,000 633,000 12.2 20.60 10.002002 63,202,000 665,000 890,000 11.7 20.00 10.502003 64,119,000 917,000 471,000 12.2 20.80 8.502004 65,707,000 1,588,000 1,668,000 11.8 21.10 8.502005 66,881,000 1,174,000 2,262,000 9.9 21.40 7.752006 67,820,000 939,000 1,437,000 9.1 24.00 7.852007 69,402,000 1,582,000 728,000 10.2 24.40 7.252008P 70,705,000 1,303,000 1,000,000 10.5 – –

INDUSTRIAL


1999 166,408,000 507,000 1,021,000 4.5 4.44 – –2000 169,526,000 3,118,000 1,341,000 5.5 4.68 – –2001 173,010,000 3,484,000 1,818,000 6.7 4.50 2.00 –2002 174,512,000 1,503,000 1,531,000 6.6 4.25 2.50 9.382003 176,344,000 1,832,000 2,288,000 6.3 4.32 3.90 9.002004 177,223,000 878,000 873,000 6.3 4.33 5.00 8.502005 179,276,000 2,053,000 2,256,000 6.1 4.65 5.00 8.502006 182,333,000 2,957,000 5,273,000 4.8 5.44 5.50 8.002007 188,062,000 4,112,000 2,073,000 5.7 5.86 5.50 7.752008P 190,935,000 2,873,000 2,500,000 5.8 – – –





• Population (000): 2,768.2



CONTACT: Russ Sampson • [email protected] l RESEARCH: KarenTemmen • [email protected] 65

OFFICE

• The vacancy rate increased to 10.7% from 9.6% over the year.Absorption was down significantly compared to the two previousyears. The 2007 total was 845,000 SF compared to 1,462,000 SFfor 2006.

• Overall asking lease rates registered $21.21 per SF compared to$20.16 per SF at year-end 2006. Class A rents were $23.92 per SF.

• Approximately 1,650,000 SF of new supply was completed in2007 with 62% pre-leased or pre-sold by year-end. Two mixed-usebuildings containing office space were completed in downtownTampa for the first time in two and a half years. Grand Central East& West contained 70,000 SF of office condominiums which were48% pre-sold by year-end.

• One of the largest leases involved Network Centric Systemsleasing 146,802 SF of office at 8333 Bryan Dairy Rd in theGateway submarket.

Office Outlook• Approximately 1,585,000 SF is currently under construction with25% pre-leased or pre-sold. The I-75 Corridor submarket leads thearea for current construction with ten buildings going up totalingapproximately 620,000 SF.

• Asking lease rates will likely increase in 2008 due to slowerjob growth.

• The vacancy rate may continue to rise due to slower job growthand increased speculative space now under construction.

INDUSTRIAL

• Approximately 4,112,000 SF of new supply was added in 2007.Under construction at year-end was approximately 3 million SF.

• Industrial/flex vacancy rate rose to 5.7% compared to 2006 at 4.7%.• Increases in lease rates continued in 2007 due to new constructionand shrinking availability. Warehouse/distribution rose to $5.86 perSF. Flex building rents climbed to $10.69 per SF.

• Total absorption was at 2,073,000 SF, however, this fell short of the2006 total of 5,273,000 SF.

• Largest industrial lease was for VF Image Ware who leased 217,100 SFat 6422 Harney Rd in the East Side submarket.

Industrial Outlook• Vacancy rates are expected to climb in 2008 due to abundance ofnew product delivered in the latter part of 2007 and upcomingcompletions throughout 2008.

• Continued port growth will benefit industrial market.Additional container freight capabilities offer future port growth.

• Lakeland/Polk County and East Side industrial submarkets battle forthe hottest spots for industrial development. East Side industrial isslightly busier with current construction totaling approximately1.35 million SF.


WASHINGTON, DC

DOWNTOWN OFFICE


1999 91,968,000 1,598,000 1,979,000 5.7 39.10 8.552000 93,579,000 1,611,000 2,774,000 4.0 39.40 9.002001 97,784,000 4,205,000 2,223,000 5.3 40.75 9.202002 99,492,000 1,708,000 209,000 6.4 41.90 8.002003 102,135,000 2,643,000 911,000 7.2 42.20 8.002004 103,802,000 1,667,000 1,667,000 7.5 43.20 7.002005 106,573,000 2,771,000 1,809,000 7.2 44.10 5.952006 111,351,000 4,778,000 3,213,000 7.1 46.70 5.802007 112,513,000 2,794,000 1,489,000 7.4 51.00 6.002008P 114,625,000 2,112,000 1,636,000 7.7 – –

INDUSTRIAL


1999 – – 0 – – – –2000 164,666,000 2,700,000 1,400,000 6.1 – – –2001 168,013,000 3,347,000 21,000 8.5 6.70 5.00 10.202002 169,777,000 1,764,000 (2,999,000) 10.2 7.50 6.00 10.502003 172,218,000 2,441,000 656,000 11.2 7.20 5.00 9.002004 174,977,000 2,759,000 3,438,000 10.6 8.80 5.50 8.002005 178,972,000 3,995,000 3,027,000 9.2 7.80 6.00 7.752006 182,233,000 3,261,000 2,095,000 9.4 8.38 6.23 7.002007 187,928,000 2,839,000 1,014,000 10.0 7.84 – 7.802008P 189,190,000 1,262,000 2,657,000 9.2 – – –





• Population (000): 4,231.5



66 CONTACT: Paul Darr • [email protected] l RESEARCH: KevinThorpe • [email protected]

OFFICE

• The office market in Washington D.C. remained healthy with a leanvacancy rate at around 7.4% and steadily rising rentals rates.

• Office absorption measured over 1,489,000 SF for 2007.• Fundamentals in Washington D.C. remained healthy. The metroarea was on pace to add 40,000 to 50,000 jobs in 2007.

• In terms of office investment, the total dollar volume of saleseclipsed $4 billion in 2007. Once again, blockbuster portfolio dealscontributed to the healthy activity.

Office Outlook• The mega portfolio sales that accounted for a significant percentageof total sales volume in 2006 and 2007 are not likely to occur in2008, which will see lower sales volume.

• Prices are expected to soften in certain secondary and tertiarymarkets, but top assets in core markets will still garnerhealthy returns.

• New development will be constrained, so vacancy rates are expectedremain low.

• Overall, strong economic fundamentals and a flight to qualityshould help Washington D.C. mitigate some of the fallout fromthe credit correction.

INDUSTRIAL

• Total inventory accounted for 188 million SF in the Washingtonmetro area with a total 4604 building structures. Most of this supplyis located in suburban Maryland and Northern Virginia.

• The Washington metro industrial market ended the fourth quarterwith a vacancy rate around 10.0%.

• Net absorption was a positive at 645,000 SF in the fourth quarter,compared to negative 467,000 SF in the third quarter. Overall, 2007registered over 1 million SF of absorption.

• Asking rents for available warehouse space averaged $7.84 per SF.

Industrial Outlook• Activity continues with 3.09 million SF under construction at theend of 2007.

• The outlook is for a moderate year of activity with absorption andvacancies staying right near historical average for the past 10 years.

• Industrial rental rates should continue to rise, as supply of availablespace will remain fairly constrained.


WASHINGTON, DC

NORTHERNVA OFFICE


1999 108,681,000 10,036,000 8,642,000 4.9 30.50 10.052000 116,959,000 8,278,000 10,212,000 3.1 35.00 10.202001 125,781,000 8,822,000 (5,479,000) 14.2 34.00 10.802002 131,816,000 6,035,000 (34,000) 18.2 28.00 9.752003 133,753,000 1,937,000 3,068,000 16.3 26.75 8.752004 136,734,000 2,981,000 6,057,000 12.8 28.85 8.502005 138,906,000 2,172,000 3,920,000 10.6 30.30 7.502006 142,437,000 3,531,000 2,973,000 10.3 32.50 6.252007 145,525,000 3,088,000 1,971,000 11.3 30.60 5.702008P 150,602,000 5,077,000 2,027,000 12.9 – –

SUBURBAN MD OFFICE


1999 61,556,000 1,432,000 2,099,000 8.3 – 9.152000 63,667,000 2,111,000 3,008,000 6.0 32.00 9.252001 66,397,000 2,730,000 (242,000) 11.7 31.00 10.502002 68,802,000 2,405,000 313,000 15.7 28.50 9.002003 70,097,000 1,295,000 (27,000) 17.3 26.50 8.752004 71,448,000 1,351,000 2,743,000 13.6 26.10 7.502005 71,721,000 273,000 1,020,000 9.7 26.30 7.252006 72,330,000 609,000 339,000 9.9 27.20 6.502007 72,997,000 1,246,000 732,000 10.9 28.80 7.002008P 73,989,000 992,000 1,040,000 10.7 – –





• Population (000): 4,231.5



CONTACT: Paul Darr • [email protected] l RESEARCH: KevinThorpe • [email protected] 67

OFFICE

Washington, DC – NorthernVirginia• The office market in Northern Virginia remained healthy witha lean vacancy rate at around 11.3% and rentals rates holding insubmarkets outside the Beltway and steadily rising in submarketsinside the Beltway.

• Total office absorption measured over 1.9 million SF for 2007.• The presence of the Federal government and procurementhelp this suburban market to remain stable during regionaleconomic downturns.

• In terms of office investment, the total dollar volume of sales totaled$6.9 billion in 2007- the sixth consecutive record-setting year in arow. Once again, blockbuster portfolio deals contributed to thehealthy activity.

Washington, DC – NorthernVirginia Office Outlook• The mega portfolio sales that accounted for a significant percentageof total sales volume in 2006 and 2007 are not likely to occur in2008, which will see lower sales volume.

• Prices are expected to soften in certain secondary and tertiarymarkets, particularly outside the Beltway. Top assets inside theBeltway markets will still garner healthy returns.

• New construction starts will be constrained, which will help lowerthe impact of vacant speculative projects delivering throughout theremainder of 2008.

• Overall, strong economic fundamentals and a flight to qualityshould help Northern Virginia mitigate some of the fallout fromthe credit correction.

Washington, DC – Suburban Maryland• Suburban Maryland had a strong run up in office sales in 2005 and2006 which left very little demand for 2007.

• Dollar volume of office building sales declined for the second straightyear, from $1.7 billion to $1.0 billion.

• Leasing velocity gained momentum despite a slowdown in largeFederal requirements. Total office net absorption reached 732,000 SFcompared to 339,000 SF in 2006.

• Year-over-year vacancy increased, moving from 9.9% to 10.8%.• The rise in vacancy can be attributed to the delivery of availablespace to the market and the downsizing of private sector tenants.

Washington, DC – Suburban Maryland Office Outlook• Healthy leasing activity is likely to continue into the earlypart of 2008 in submarkets that lie inside the Beltway such asBethesda/Chevy Chase and North Bethesda.

• As tenants face renewal options for high rents, submarkets likeRockville and North Rockville may begin to attract the attentionof tenants who are seeking lower rents.

• Suburban Maryland is projected to add 10,000 new jobs in 2008most of which will be office related.

WEST PALM BEACH, FLCO L L I E R S I N T E RNAT I ONA L l U S R E A L E S TAT E R E V I EW 2 0 0 8

DOWNTOWN OFFICE


1999 – – 0 – –2000 9,445,000 65,000 (176,000) 10.4 29.902001 9,953,000 508,000 415,000 14.6 28.402002 9,953,000 0 (26,000) 13.3 30.302003 9,993,000 40,000 (37,000) 13.8 30.002004 10,011,000 18,000 311,000 10.8 27.802005 10,045,000 34,000 281,000 8.7 30.202006 10,065,000 20,000 638,000 8.9 35.102007 7,120,000 48,000 (242,000) 9.6 34.202008P 7,346,000 226,000 142,000 10.4 –

SUBURBAN OFFICE


1999 – – 0 – –2000 27,761,000 835,000 831,000 8.7 27.202001 28,374,000 613,000 (226,000) 14.0 28.602002 28,514,000 140,000 (286,000) 13.0 27.602003 28,953,000 439,000 421,000 12.7 27.602004 29,206,000 253,000 932,000 10.5 25.802005 29,432,000 226,000 377,000 7.6 24.802006 29,994,000 562,000 641,000 9.1 28.002007 28,498,000 630,000 (786,000) 14.8 30.802008P 31,211,000 2,713,000 534,000 20.5 –

INDUSTRIAL


1999 – – 0 – – –2000 45,583,000 773,000 (45,000) 6.1 6.50 –2001 46,303,000 720,000 229,000 6.1 6.80 –2002 46,662,000 359,000 154,000 6.3 6.40 11.002003 47,676,000 1,014,000 (103,000) 8.6 6.70 10.002004 48,399,000 723,000 643,000 6.4 6.70 8.002005 49,145,000 746,000 1,868,000 3.4 7.00 11.002006 49,703,000 558,000 (116,000) 4.4 8.44 20.002007 40,190,000 328,000 (897,000) 6.6 9.25 12.882008P 41,162,000 972,000 826,000 6.8 – –





• Population (000): 1,338.5



68 CONTACT: SteveWasserman • [email protected] l RESEARCH: Pani Roshani • [email protected]

OFFICE

• West Palm Beach showed a noticeable increase in vacancy ratefrom 8.8% at year-end 2006 to 13.7% at year-end 2007. This wasattributed to the addition of new product in the market.

• The average asking rent for 2007 ended at $19.75 per SF on a triplenet basis for the Palm Beach market, an increase of 2.1% from 2006.

• Average asking rents across all submarkets remained flat frommid-year numbers at $28.81 per SF.

• Absorption was negative, with the Boca Raton submarket registeringthe highest total negative square feet, primarily in the Class B officespace category.

Office Outlook• The Palm Beach office market should continue stabilizing into2008 as year-end absorption rates and rental rates remain flat overmid-year 2007 figures.

• The increased availability of sublease space and new product inthe market should keep prices stable or begin to pressure pricesdown by providing tenants with further leverage to negotiatemore favorable rents.

• Construction activity is expected to continue despite rising landcosts in the Palm Beach market over the past two years.

INDUSTRIAL

• Palm Beach County closed 2007 with low vacancy rates of 6.6% andrental rates of approximately $10.72 per SF.

• Absorption remained negative across the majority of the Palm Beachsubmarkets as available space being marketed increased over lastyear and can be expected to rise as new product is being constructedin the market.

• A total of 26 new buildings were completed for the county. As of theend of 2007, there was approximately 1.1 million SF of industrialinventory under construction.

• Cap rates were higher in 2007, averaging 6.3%, compared to 2006when they averaged 5.52%.

Industrial Outlook• Although vacancy rates increased, asking rental rates remainedabout the same from mid-year figures and should stabilize as increasedoperating expenses begin to impact the market and more productcomes to the market.

• The market will shift as tenants begin to downsize and consolidatetheir industrial space obligations due to increased operating costsimpacting their profits.

• The leasing demand in Palm Beach County continues to be strongand it should be a good year for sales of institutional-grade product.

GLOSSARY


70

OFFICEInventory – Includes all existing multi or single tenant leased andowner-occupied office properties greater than or equal to 10,000square feet (net rentable area). In some larger markets this minimumsize threshold may vary up to 50,000 square feet. Does not includemedical or government buildings.

Vacancy Rate – Percentage of total inventory physically vacant as atthe survey date including direct vacant and sublease space.

Absorption – Net change in physically occupied space over a givenperiod of time.

New Supply – Includes completed speculative and build-to-suitconstruction. New supply quoted on a net basis after anydemolitions or conversions.

Annual Quoted Rent – Includes all costs associated with occupyinga full floor in the mid-rise portion of a Class A building inclusive oftaxes, insurance, maintenance, janitorial and utilities (electricitysurcharges added where applicable). All office rents in thisreport are quoted on an annual, gross per square foot basis.Rent calculations do not include sublease space.

Cap Rate – (Or going-in cap rate) Capitalization rates in this surveyare based on multi-tenant institutional grade buildings fully leased atmarket rents. Cap rates are calculated by dividing net operatingincome (NOI) by purchase price.

Note: SF = Square Feet PSF = Per Square FootCBD = Central Business District

INDUSTRIALAbsorption – Net change in occupied space over a given period of time.

Bulk Space – 100,000 square feet or more with up to 10 percent officespace, the balance being general warehouse space with 20 to 36 footceiling heights. All loading is dock-height.

Flex Space – Single-story buildings having 10 to 18 foot ceilings withboth floor-height and dock-height loading. Includes wide variation inoffice space utilization, ranging from retail and personal service throughdistribution, light industrial and occasional heavy industrial use.

Inventory – Includes all existing multi or single tenant leased andowner-occupied industrial warehouse, light manufacturing, flex andR&D properties greater than or equal to 10,000 square feet.

Land Value – Land values are based on prime logistics/industriallocations and are based on approximately 3 acres of fully servicedentitled land.

New Construction – Includes completed speculative andbuild-to-suit construction. New construction quoted on a netbasis after any demolitions or conversions.

Service Space – Single story (or mezzanine) with 10 to 16 footceilings with frontage treatment on one side and dock-height loadingor grade level roll-up doors on the other. Less than 15% office.

Tech/R&D – One and two story, 10 to 15 foot ceiling heights withup to 50% office/dry lab space (remainder in wet lab, workshop, storageand other support), with dock-height and floor-height loading.

Triple Net Rent – Includes rent payable to the landlord and doesnot include additional expenses such as taxes, insurance, maintenance,janitorial and utilities. All industrial and high-tech/ R&D rents inthis report are quoted on an annual, triple net per square foot basisin U.S. dollars.

Vacancy Rate – Percentage of total inventory available (both vacantand occupied) as at the survey date including direct vacant andsublease space.

Warehouse – 50,000 square feet or more with up to 15 percent officespace, the balance being general warehouse space with 18 to 30 footceiling heights. All loading is dock-height.

RETAILCommunity Shopping Center – Usually configured as a strip oftenin a straight line or “L” or “U” shape. Anchor tenant is typically adiscount department store (i.e. Wal-Mart, Target), supermarket orsuper drug store. A community center typically offers a wider rangeof apparel and other soft goods than a neighborhood center does.Total gross leasable area is often between 100,000 and 400,000square feet.

Neighborhood Shopping Center – These centers are designed toprovide convenience shopping for the day-to-day needs of consumersin the immediate neighborhood. Anchors are likely to besupermarkets or drugstores. Other tenants might includestores providing sundries, snacks and personal services.Generally, neighborhood centers are 30,000-150,000 SF in sizeand are configured as strip centers without an enclosed walkwayor mall area, but may possibly have a canopy to connect the storefronts.

Power Center – These centers are designed to provide tremendousselection in a particular merchandise category at low prices.Anchors are likely to be category killers, home improvement stores,discount department stores, warehouse clubs or off-price stores.Generally, regional centers are 250,000-600,000 SF in size and areconfigured with several freestanding (unconnected) anchors and aminimal number of small specialty tenants.

Lifestyle Center – Nonanchored open-air specialty center withhigh concentration of mall type fashion, home, restaurant andentertainment retailers.

Premier Fashion Streetfront – Destination retail corridor in urbancenter typically occupied by fashion retailers and able to commandtop rents.

Rents – All retail rents in this report are quoted on an annual, triplenet per square foot basis.

Note: SF = Square Feet PSF = Per Square Foot

PROJECTIONSProjections made based on economic forecasts by Moody’s Economy.comand local input by Colliers researchers. Projections are subject toeconomic conditions that may or may not change and are onlyintended to be a general guide. For a more detailed forecast readersare encouraged to contact the researcher listed for each city.

COLLIERS USA OFFICE LOCATIONS


colliers.com 71

ARBentonvilleLittle RockAZPhoenixScottsdaleCABakersfieldCarlsbadFairfieldFoster CityFresnoGilroyLos AngelesOaklandPalo AltoPleasantonRosevilleSacramentoSan DiegoSan FranciscoSan JoseSan MateoSanta RosaStocktonWalnut CreekCODenverCTHartfordNew HavenStamfordDCWashingtonDEWilmington

FLBoca RatonClearwaterFt. LauderdaleFt. MyersJacksonvilleMiamiOrlandoTampaGAAtlantaHIHonoluluIDBoiseSun ValleyILChicagoINIndianapolisKYLouisvilleMABostonMDBaltimoreMIAnn ArborDetroitMNMinneapolisSt. PaulMOKansas CitySt. LouisNCCharlotteRaleigh

NJCherry HillParsippanyPrincetonSomersetTeaneckNVLas VegasRenoNYNew YorkOHAkronCincinnatiClevelandColumbusDaytonPepper PikeORPortlandPAAllentownConshohockenPhiladelphiaSCCharlestonColumbiaGreenvilleTNMemphisNashvilleTXDallas/Ft. WorthHoustonWABellevueSeattleTacomaWIMilwaukee

COLLIERS USA OFFICE LOCATIONS

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Colliers International 2008National Market Analyst – Michele Reitman

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Documents

COLLIERSINTERNATIONAL USRealEstate Review2008 · LETTER FROM THE DIRECTOR OF RESEARCH COLLIERS INTERNATIONAL l US REAL ESTATE REVIEW 2008 colliers.com 1 Inlastyear’sUSRealEstateReviewwelistedanumber