National Airport-Area Office-Warehouse

Rental Rate Survey

Ed Riggins, CCIMExecutive Vice President

ACI-NA March 29, 2007

The 7-10-Year Real Estate Cycle

Low

vacancies

Increasing prices

and rents

Accelerated new

construction

Oversupply

High

vacancies

Declining prices,

rents, construction

Absorption of

excess supply

City Inclusion Criteria

• Heavy cargo traffic per ACI

• Presence of airport related functions per D&B

• forwarders

• expedited truckers

• airline parts suppliers

Survey Property Criteria

• 3 properties per city – average of net asking rates

• 4th quarter data collection

• Dock high truck doors

• Off airport-owned property but, w/in 5 miles

• Sized for hypothetical user

• 20,000 sq. ft.

• 20% office finish

2007 Rental Rate Survey Results

$2.53

$3.77

$4.00

$4.50

$4.70

$5.20

$5.45

$5.60

$5.67

$5.92

$6.20

$6.65

$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00

20 MEM - Memphis

19 SDF - L'ville

18 IND - Indy

17 MSP - Minn

16 ATL - Atlanta

15 CVG Cincy

14 DTW -Detroit

13 IAH - Houston

12 DIA - Denver

11 DFW - Dallas

10 OAK - Oakland

AVG - Average

$6.65

$6.73

$6.92

$6.95

$8.28

$8.79

$9.32

$10.42

$10.83

$11.12

$0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00

AVG - Average

9 EWR - Newark

8 PHL - Philly

7 MIA - Miami

6 SEA - Seattle

5 SFO - San Fran

4 ORD - Chicago

3 JFK - New York

2 BOS - Boston

1 LAX - LA

2007 Rental Rate Survey Results

2001 – 2007 National Average

Year-By-Year Comparison

$6.73

$6.32

$6.26

$6.05

$6.14

$6.36

$6.65

$6.36

$5.60 $5.80 $6.00 $6.20 $6.40 $6.60 $6.80

2001

2002

2003

2004

2005

2006

2007

7-Yr. Avg.

Lessons Learned

• Subleases at 20-50% off in 2001-2002 for 18-24

months

• Some new development by 2004-2005.

• Expenses now 10-25% of rental costs

• Leases “more net” – mgt. fees, roof/parking repair,

etc.

• Free rent still preferred to rate reduction

• Cap rates down from 9-10% on 2000 to 5-6% now

• For tenants - More time = more choices = more

leverage

How Properties Are Valued

Net Income

Sales PriceCapitalization Rate=

How Properties Are Valued

$6.5 per sq. ft

$100 per sq. ft

6.5% =

How Properties Are Valued

$6.5 per sq. ft

$108 per sq. ft

…this goes up

If this goes down…

6.0% =

The 7-10 Year Real Estate Cycle

Low

vacancies

Increasing prices

and rents

Accelerated new

construction

OversupplyHigh

vacancies

Declining prices,

rents, construction

Absorption of

excess supply

Didn’t happenDidn’t happen

The 7-10 Year Real Estate Cycle

Here Now?Here Now?

Low

vacancies

Increasing prices

and rents

Accelerated new

construction

OversupplyHigh

vacancies

Declining prices,

rents, construction

Absorption of

excess supply