Office

Scott Savacool, SIOR, CCIM Sansone Group

Jim Mosby, SIOR, CCIM Senior Managing Director, Principal, Cassidy Turley

Chris Fox, SIOR, CCIM

Executive Vice President, Gershman Commercial

Tom Bajardi, SIOR, CCIM Senior Associate, Sansone Group

Art Kerckhoff, CCIM Vice President, CBRE

Ruth Sergenian

St. Louis Regional Chamber

Office Committee

Agenda 2013 Market Highlights

Leasing Investment Sales / User Sales

The Results

2014 Market Drivers

Forecast & Predictions

2010 - 2012

2012

2013

Office Summary •  Office Inventory – 48,920,872 SF •  2013 Net Positive Absorption – 727,543 SF •  Four consecutive quarters of positive absorption

(first time since 2004)

•  All office submarkets ended 2013 with positive absorption (first time since 2000)

•  Overall vacancy of 15.7% (lowest since 2008)

Overall Unemployment

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

11.00%

2008 2009 2010 2011 2012 2013

U.S.

St.  Louis

Source:  St.  Louis  Regional  Chamber

St. Louis Office Employment

290,000

295,000

300,000

305,000

310,000

315,000

2008 2009 2010 2011 2012 2013 2014

Source:  St.  Louis  Regional  Chamber

Total  St.  Louis  MSA  Office  Using  Employment  

Major St. Louis Employers

1.  BJC Health Care 2.  Boeing Defense Systems 3.  Washington University 4.  SSM Health Care 5.  Scott Air Force Base 6.  Wal-Mart Stores, Inc. 7.  Schnucks Markets, Inc. 8.  United States Postal Service 9.  St. John’s Mercy 10.  McDonald’s

1.  BJC Health Care 2.  Boeing Defense, Space, Security 3.  Washington University 4.  Scott Air Force Base 5.  SSM Health Care 6.  Mercy 7.  Schnucks Markets, Inc. 8.  Wal-Mart Stores, Inc. 9.  McDonald’s 10.  AT&T

2008 2013

Source:  St.  Louis  Business  Journal  Book  of  Lists

Healthcare, which never shrank, has added 28,000 jobs since 2007

Financial Services, fueled by firms like Wells Fargo, Stifel, Scottrade and Edward Jones, is the only sector to replace all

jobs lost in the recession

St. Louis is 2nd only to New York in concentration of brokerage and financial services firms

St. Louis Office Occupancy

66.00% 68.00% 70.00% 72.00% 74.00% 76.00% 78.00% 80.00% 82.00% 84.00% 86.00% 88.00% 90.00% 92.00%

2008 2009 2010 2011 2012 2013

Statistics  are  a  blended  number  from  a  variety  of  business  sources

Class  A

Class  B

Absorption

-­‐‑800,000

-­‐‑600,000

-­‐‑400,000

-­‐‑200,000

0

200,000

400,000

600,000

800,000

   2008              2009                    2010              2011       2012        2013

Statistics  are  a  blended  number  from  a  variety  of  business  sources

Average Asking Rent Trends

$14.00  

$16.00  

$18.00  

$20.00  

$22.00  

$24.00  

$26.00  

2008  1Q

2008  3Q

2009  1Q

2009  3Q

2010  1Q

2010  3Q

2011  1Q

2011  3Q

2012  1Q

2012  3Q

2013  1Q

2013  3Q

Clayton

Suburban

City

Market Statistics Inventory Occupancy Absorption Rental  Rate Class  A  

Occupancy Class  A  

Rental  Rate

Downtown 11.6  MSF 79.9% +160,000  SF $16.62 86.4% $19.12

Clayton 6.9  MSF 87.8% +5,000  SF $23.70 90.8% $25.79

West  County 16.8  MSF 87.1% +276,404  SF $20.69 92.5% $23.68

South  County 2.6  MSF 86.8% +70,129 $20.79 86.3% $22.74

North  County 6.2  MSF 83.7% +169,475  SF $17.38 89.3% $20.78

St.  Charles 4.4  MSF 88.1% +46,535  SF $17.24 92.2% $19.10

Statistics  are  a  blended  number  from  a  variety  of  business  sources

Sublease Space

0

100,000

200,000

300,000

400,000

500,000

600,000 550,223  SF 453,971  SF

262,200  SF

Statistics  are  a  blended  number  from  a  variety  of  business  sources

½  of  1%

Large Blocks of Space

0

100

200

300

400

500

600

700

800

900

1000

<10,000 10,000-­‐‑20,000 20,000-­‐‑50,000 50,000-­‐‑100,000 >100,000

Clayton

City

Suburban

10 7

Statistics  are  a  blended  number  from  a  variety  of  business  sources

5  in  CBD 4  in  CBD

Large Leases

St. Louis City

130,000 SF renewal at St. Louis Place

110,000 SF renewal at 10 S. Broadway

44,000 SF new lease at Bank of America Plaza

Northwest County

99,000 SF new lease at 3470 Rider Trail

78,000 SF new lease at 13022 Hollenberg

46,000 SF new lease at 3301 Rider Trail South

43,000 SF new lease at Riverport Office Center

South County

17,158 SF renewal at Southwest Exec

42,000 SF new lease at Laumeier II

12,758 SF new lease at Laumeier II

West County

58,494 SF new lease at 520 Maryville Centre 45,688 SF new lease at 575 Maryville Centre

46,161 SF new lease at 575 Maryville Centre

51,000 SF new lease at CityPlace 6

St. Charles County

90,000 SF new lease at The Crossings in Wentzville

Clayton

56,000 SF new lease at 101 S. Hanley

30,000 SF sublease at Pierre Laclede II

26,000 SF new lease at Shaw Park Plaza

Investment Sales

Tryperion Partners

6 building portfolio from Duke Realty South County, West County, Westport

637,000 SF $84,000,000 $131.87 / SF

Metonic Real Estate Solutions

Cityplace 6 from Koman Group Creve Coeur 224,000 SF $40,300,000 $180 / SF

Westport Capital Partners

14528 S. Outer Forty from IPERS West County 210,500 SF $16,750,000 $80.00 / SF

*This value was impacted by the pending vacancy of Mercy (187,000 SF) which represents

89% of the building

Griffin Capital Essential Asset REIT

13655 Riverport Drive from Columbia Property Trust Earth City, Riverport

205,107 SF *Portfolio sale of 23 properties across 9 markets

resulting in an averaged value of $129.25 SF for this building

Hogan Trucking

2150 Schuetz from TriStar Properties Maryland Heights

80,000 SF $7,280,000 $91.00 / SF

Owner / User Purchase

2013 Results

2014 Market Drivers

Employment Forecast

• Office Using Employment Growth of 2.8%

•  8,562 Additional Jobs in 2014

• Double the Growth of 2013

• @ 100 SF per employee = 856,200 SF of absorption

US  Bureau  of  Labor  Statistics

Large Tenant Effect

AT&T vacating over 1 million SF of space between 2015-2017

Laclede Group moving from Laclede Gas Building to Gen Am Building and

vacating 100,000 SF

Large Tenant Effect – St. Louis City

Bank of America vacating approximately 100,000 RSF at Bank of America Tower (100 N Broadway) by

the end of 2014

Large Tenant Effect – St. Louis City

RGA vacating 180,000 SF at Timberlake Corporate Center and moving to their

new corporate headquarters

Mercy vacating over 200,000 SF leased space throughout St. Louis and moving

to their new corporate headquarters

Large Tenant Effect – West County

Forecast & Predictions

The Forecast •  Market conditions •  Balanced market…equal playing field •  Limited supply of large blocks of space will

force large users to rethink their requirements •  Financial services sector will continue to grow

•  Healthcare sector will continue to increase