SOUTHEAST OFFICE MARKET

Transcription

1 SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK SOUTHEAST REGION WEBINAR JANUARY 21, 2014

2 AGENDA Vvv U.S. & SOUTHEAST ECONOMIC OUTLOOK - KEN McCARTHY NATIONAL MARIA SICOLA SOUTHEAST S RONNIE DAVIS Q & A SOUTHEAST 2012 WRAP-UP & 2013 OUTLOOK CUSHMAN & WAKEFIELD 1

3 U.S. & SOUTHEAST ECONOMIC OUTLOOK SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 2

4 OVERVIEW 2014: Starting with More Stability and Momentum No confrontations in Washington Private sector healthy Confidence rising Drivers of growth Optimism on economy increasing-consumers/business/investors Pent up demand is being activated Labor market fundamentals continue to improve Housing improvement Tech, Energy Headwinds Will Washington really get its act together? Fed tapering/rising rates Strength of European recovery/apac Real Estate Impact Stronger employment-healthier markets Tech/energy dominated markets remain among the best Supply remains constrained in most markets Densification trend Southeast Outlook Region s recovery outpaces U.S. Almost every city is projected to grow faster than the U.S. SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 3

5 US GDP GROWTH IN RECOVERIES AFTER 17 QUARTERS Average Annual growth rate from trough 5.0% 4.0% 4.0% 4.1% 3.0% 31% 3.1% 2.0% 2.3% 1.0% 0.0% Previous 4 Recoveries 2009 Recovery 2014 Forecast 2015 Forecast Source: US Bureau of Economic Analysis, Moody s Analytics SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 4

6 MOODYS ANALYTICS GLOBAL BUSINESS CONFIDENCE INDEX 4-week moving average Source: Moody s Analytics SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 5

7 US OFFICE-USING EMPLOYMENT 30,000 29,000 Thousands of Per rsons 28,000 27,000 26,000 25,000 24,000 12/07-10/ Mil. 10/09-12/ Mil 23,000 22, Source: US Bureau of Labor Statistics SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 6

8 EMPLOYMENT GROWTH SINCE FEBRUARY % % US Southeast SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 7

9 JOBS GROWTH SINCE FEBRUARY 2010 (Percent) 14% NOVEMBER % % 10% 10.9% 8% 6% 4% 9.0% 8.8% 8.4% 8.0% 7.9% 7.2% 6.3% 5.8% 2% 2.7% 0% SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 8

10 JOBS RECOVERED SINCE TROUGH AS A PERCENT OF JOBS LOST NOVEMBER % 200% 150% 226.5% % 100% 50% 33.3% % 87.8% 86.3% 85.8% 83.1% 82.5% 69.0% 67.3% 31.4% 0% SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 9

11 RECESSION & RECOVERY: FLORIDA by Metro Area and Office-Sector Miami Total PBS Tampa Financial Info Total Financial 80 PBS Info Orlando Jacksonville 114 Total Financial PBS Info Total Financial 94 PBS Info Source: US Bureau of Labor Statistics SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 10

12 RECESSION & RECOVERY GEORGIA, NORTH CAROLINA, TENNESSEE BY METRO AREA AND OFFICE-SECTOR Charlotte Raleigh 110 Total Financial PBS Info Total Financial 88 PBS Info Atlanta Total 118 PBS Nashville Financial Info Total Financial 93 PBS Info Source: US Bureau of Labor Statistics SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 11

13 ECONOMIC OVERVIEW & FORECAST Payroll Employment Forecast Major Regional Cities 12,000 11,500 Full recovery Q ,000 10,500 10,000 9, , ,500 8,000 7,500 7,000 SOURCE: US Bureau of Labor Statistics, Moody s Analytics SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 12

14 ECONOMIC OVERVIEW & FORECAST Projected Growth by Metro: Number of Jobs Thousands of Perso ons % 11.1% Percent Growth 10% 8% 9.3% 9.2% 8.5% 8.0% 7.1% 6.7% 6.7% 6.5% 6.3% 6% 5.6% 4% 2% 0% SOURCE: US Bureau of Labor Statistics, Moody s Analytics SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 13

15 ECONOMIC OVERVIEW & FORECAST Projected Date of Full Recovery 3/31/2012 9/30/ / /31/2013 6/30/2013 3/31/2014 9/30/ /2014 6/30/2015 9/30/ / 31/2016 SOURCE: Moody s Analytics SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 14

16 U.S. SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 15

17 INTRODUCTION Suburban and Downtown leasing above 10-year average The U.S. overall vacancy rate has remained steady Overall Net Absorption recovered in the CBD to finish positive for the year Construction at highest levels since 2009; Sublease supply remained unchanged in 2012 and 2013 Quarter-over-quarter rent held steady but increased from 2012 Flight to quality driven by increasing efficiency SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 16

18 DOWNTOWN VACANCY REMAINS UNCHANGED 20.0% % % 18.0% % 16.0% Percent 14.0% 12.0% 13.5% 10.0% 8.0% 6.0% SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 17

19 NATIONAL DOWNTOWN AVERAGE ASKING RENT UP 7% $45 $41.74 psf $40 $35 Dollars per Square Foo ot $30 $25 $20 $15 $ % % % $5 $ SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 18

20 OVERALL LEASING TOTALS ABOVE AVERAGE CBD AND SUBURBS DRIVING ACTIVITY msf msf MSF Suburban CBD CBD 10-Year Ave Suburban 10-Year ave. SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 19

21 OVERALL POSITIVE NET ABSORPTION CBD PALES IN COMPARISON TO THE SUBURBS MSF CBD Suburban SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 20

22 SUBLEASE SPACE HOLDING STEADY POCKETS OF SPACE IN BOSTON/NYC MSF Q1 13 Q2 13 Q3 13 Q4 13 CBD Suburban SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 21

23 NATIONAL OFFICE CONSTRUCTION COMPLETIONS VS. OVERALL VACANCY RATES % % 20.0% % MSF % 10.0% Vacancy msf completed 5.0% % CBD Completions Suburban Completions CBD Vacancy Suburban Vacancy SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 22

24 SOUTHEAST S SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 23

25 SOUTHEAST S Inventory Overview SOUTHEAST Q YTD 12 MONTH FORECAST Total Absorption 7.4 msf Total Leasing Activity 33.9 msf Overall Vacancy Rate 15.2% 20 Office markets in the Southeast Overall Asking Rents $21.20 Total: CBD: Suburban: msf msf msf C&W Tracked Market C&W Alliance Tracked Market SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 24

26 SOUTHEAST S Overall Occupancy & Rental Rates Q % Higher Occupancy, Lower Rent Higher Occupancy, Higher Rent 95% Charlotte Over rall Occupancy (% %) 90% 85% 80% Birminghami Raleigh-Durham Louisville Jacksonville Savannah Nashville SE Avg Tampa Bay Orlando US Avg South Florida Memphis Atlanta 75% 70% $14 $16 $18 $20 $22 $24 $26 $28 $30 Overall Average Asking Rent (psf) Lower Occupancy, Lower Rent Lower Occupancy, Higher Rent SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 25

27 SOUTHEAST S Change in Overall Occupancy & Rental Rates Q vs. Q % Increasing Occupancy, Decreasing Rent Birmingham Increasing Occupancy, Increasing Rent 3.0% cupancy YoY Q (ppt) Change in Oc 2.0% 1.0% 0.0% -1.0% -2.0% Raleigh-Durham Orlando Jacksonville Savannah Atlanta Charlotte SE Avg Memphis Nashville South Florida Louisville Tampa Bay US Avg -3.0% -4.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% Change in Rents YoY Q (%) Decreasing Occupancy, Decreasing Rent Decreasing Occupancy, Increasing Rent SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 26

28 SOUTHEAST S Overall Occupancy & Asking Rent Q Total Occupancy Overall Asking Rent Nashville 89.8% South Florida $29.29 Charlotte 89.4% US Avg $26.60 Birmingham 88.6% SE Avg $21.20 Raleigh-Durham 87.4% Atlanta $20.81 Louisville 84.9% Tampa Bay $20.65 SE Avg 84.8% Orlando $20.28 US Avg 84.7% Nashville $19.78 Tampa Bay 83.8% Charlotte $19.31 South Florida 83.2% Raleigh-Durham $19.13 Orlando 82.2% Savannah $18.77 Jacksonville 81.4% Birmingham $18.58 Savannah 81.3% Jacksonville $17.31 Atlanta 80.8% Memphis $17.24 Memphis 78.7% Louisville $ % 75.0% 80.0% 85.0% 90.0% 95.0% 100.0% Total Occupancy Q (%) $10 $12 $14 $16 $18 $20 $22 $24 $26 $28 $30 Overall Asking Rent Q ($psf/yr) SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 27

29 SOUTHEAST S Top 2013 Leasing and Sales Transactions DENOTES C&W TRANSACTION TOP 5 LEASING TRANSACTIONS MARKET BUILDING ADDRESS TYPE SUBMARKET TENANT SF INDUSTRY Raleigh, NC Weston Parkway New RTP/I-40 MetLife 427,000 Insurance Charlotte, NC Gragg and Woodward Buildings Ballantyne Corporate Park New Highway 51 MetLife 340,000 Insurance Atlanta, t GA 1155 Perimeter Center Place Central Perimeter State t Farm 318,000 Insurance New Atlanta, GA 303 Peachtree Center Avenue New Downtown Coca-Cola 276,000 Beverage Charlotte, NC Innovation Park New University Allstate 200,000 Insurance TOP 5 SALES TRANSACTIONS MARKET BUILDING SALES PRICE (MILLIONS) PRICE PSF SELLER BUYER Charlotte, NC One Wells Fargo Center $245 $249 Childress Klein Properties Starwood Vision Equities Atlanta, GA 754 Peachtree Street $205 $258 Kan Am Group LLC Cole Real Estate Investments Atlanta, GA The Terraces $190 $180 Royal Bank of Scotland MetLife Testa American Real Estate Prudential Real Estate Miami, FL 1111 Brickell Ave $184 $352 Company Investors Atlanta, GA 999 Peachtree $157.9 $254 Jamestown Franklin Street Properties SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 28

30 ATLANTA Market Trends and Indicators Leasing activity for the year was the strongest it has been since 2010 with almost 8.8 million square feet leased. The vacancy rate declined for the 9 th consecutive quarter and is down 1.2 percentage points compared to this time a year ago. Asking rental rates continue to remain steady in the market. Investment sales activity totaled 15.5 million square feet in 2013, up almost 95% compared to the pace of activity in MARKET NAME 4Q 2013 YTD Total Absorption 1,533,796 Total Leasing Activity 8,812,446 Overall Vacancy Rate 19.2% Overall Asking Rents $20.81 Under Construction 661, MONTH FORECAST SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 29

31 ATLANTA Vacancy Rates vs. Asking Rents $ % $ % $ % 20.0% $ % $ % $20 $ $21.85 $21.65 $ $21.23 $21.03 $21.05 $20.79 $ Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 1Q13 2Q13 3Q13 4Q13 $ $20.85 $20.86 $20.86 $20.91 $ $20.96 $ % Asking Rent Vacancy Rate SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 30

32 ATLANTA Top 2013 Leasing and Sales Transactions DENOTES C&W TRANSACTION TOP LEASING TRANSACTIONS TYPE ADDRESS SUBMARKET TENANT SF INDUSTRY New Lease 1155 Perimeter Center Place Central Perimeter State Farm 318,000 Insurance New Lease 303 Peachtree Center Avenue Downtown Coca-Cola 276,000 Beverage New Lease Three Ravinia Drive Central Perimeter State Farm 192,000 Insurance New Lease 4151 Ashford Dunwoody Road Central Perimeter State Farm 187,328 Insurance Renewal 945 East Paces Ferry Buckhead RSUI 133,146 Insurance TOP SALES TRANSACTIONS ADDRESS SUBMARKET SALES PRICE (MILLIONS) PRICE / PSF 754 Peachtree Street Midtown $205,000,000 $258 Kan Am Group LLC The Terraces Central Perimeter SELLER BUYER BUYER TYPE Cole Real Estate Investments REIT $190,000, $180 Royal Bank of Scotland MetLife Institutional 999 Peachtree Midtown $157,900,000 $254 Jamestown Three Ravinia Central Perimeter Franklin Street Properties REIT $144,300,000 $177 Mid-America Apartments CBRE Global Investors Institutional One Alliance Center Buckhead $140,100,000 $253 ORIX Capital Markets Highwoods Properties REIT SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 31

33 SOUTH FLORIDA Market Trends and Indicators Strong leasing activity and absorption improved vacancy levels, dropping overall vacancy to 16.8%, down 1.9 percentage points from a year ago. Legal services was the most active sector during The market continues to see fading concessions and increasing rental rates as fundamentals improve. Lowest vacancy rates and highest asking rental rates recorded over the past five years. Decreasing availabilities has put pressure on companies needing to expand. Developers are acting on strengthening conditions by building new inventory. SOUTH FLORIDA 4Q 2013 YTD Total Absorption Total Leasing Activity 1,425,013 sf 5,567,382 sf Overall Vacancy Rate 16.8% Overall Asking Rents $29.29 Under Construction 177,452 sf 12 MONTH FORECAST SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 32

34 SOUTH FLORIDA Vacancy Rates vs. Asking Rents $ % $ % $ % $ % $28 5.0% $27 $ $ $ $ $ $ $ $ $ Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 1Q13 2Q13 3Q13 4Q13 $ $ $ $ $ $ $ $ % Asking Rent Vacancy Rate SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 33

35 SOUTH FLORIDA Top 2013 Leasing and Sales Transactions DENOTES C&W TRANSACTION TOP LEASING TRANSACTIONS TYPE ADDRESS SUBMARKET TENANT SF INDUSTRY Renewal 701 Waterford Way Airport West FedEx Corporation 74,100 Air Delivery & Freight Services New 200 S Biscayne Blvd Downtown Miami Shutts & Bowen 69,155 Legal New 6451 N Federal Hwy Cypress Creek New 200 E Broward Blvd CBD Ft. Lauderdale CHG Medical Staffing Greenspoon Marder 67,000 Employment Services 64,964 Legal New 600 Brickell Ave Brickell Ave Northern Trust 64,000 Banking TOP SALES TRANSACTIONS ADDRESS SUBMARKET SALES PRICE (MILLIONS) PRICE / PSF 1111 Brickell Ave Brickell Ave $184 $352 SELLER BUYER BUYER TYPE Testa American Real Estate Company 80 SW 8 th St Brickell Ave $70 $245 Colony Realty Partners 222 Lakeview Ave 2333 Ponce de Leon Blvd CBD Palm Beach Prudential Real Estate Investors Banyan St Capital JV Crocker Partners $71 $277 SPUSV5 Esperante CREF Esperante Coral Gables $81 $371 Deka Immobilien TA Associates REalty 444 Brickell Ave Brickell Ave $69 $344 The Related Companies Rivergate Investors Investor Investor Investor Investor Investor SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 34

36 TAMPA BAY Market Trends and Indicators Tampa Bay s economy outshined Florida s other major metropolitan areas during As of November, a total of 33,500 new jobs were added since year-end 2012 and year-over-year, the number of positions increased by 39,300. The Tampa Bay overall office vacancy rate ended 2013 at 16.2%, down 0.9 percentage points from year-end This was the lowest market-wide overall vacancy since the third quarter of Overall absorption in 2013 was positive 885,051 sf, which was 11.1% higher than the absorption of The completion of four build-to-suit buildings over the past year, which totaled 596,000 sf, was a major factor in the market s healthy 2013 absorption. Tenant demand increased during the past 12 months within the office market, but the time it has taken to get a lease fully executed has jumped significantly over prior years. TAMPA BAY 4Q 2013 YTD Total Absorption Total Leasing Activity 885,051 sf 3,145,791 sf Overall Vacancy Rate 16.2% Overall Asking Rents $20.65 Under Construction 110, MONTH FORECAST SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 35

37 TAMPA BAY Vacancy Rates vs. Asking Rents $ % $ % $ % $ % $ % $ % $ % $19 $19 $ $21.37 $21.03 $ $20.75 $20.59 $ $20.54 $20.46 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 1Q13 2Q13 3Q13 4Q13 $ $ $20.01 $19.93 $20.41 $20.35 $20.54 $ % 8.0% 6.0% Asking Rent Vacancy Rate SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 36

38 TAMPA BAY Top 2013 Leasing and Sales Transactions DENOTES C&W TRANSACTION TOP LEASING TRANSACTIONS TYPE ADDRESS SUBMARKET TENANT SF INDUSTRY Renewal 4401 North Himes Avenue Westshore New Lease 6700 Lakeview Center Drive I-75 Corridor New Lease 5104 Eisenhower Boulevard Westshore New Lease 100 Carillon Parkway Gateway New Lease Dr. Martin Luther King Jr. Street TOP SALES TRANSACTIONS ADDRESS SUBMARKET SALES PRICE (MILLIONS) 5 Bld. Portfolio - Cypress Ctr. 1-3, The Pointe, & Int'l Corp. Center IV 2 Bld. Portfolio & 4350 West Cypress St. Gateway PRICE / PSF The Art Institute of Tampa Healthplan Services, Inc. Bristol-Myers Squibb Co. 102,965 Education 95,689 Insurance 73,796 Pharmaceuticals Triad Digital Media 64,634 Advertising Confidential Tenant 52,331 Confidential SELLER BUYER BUYER TYPE Westshore $97.5 $124 Tampa Fund II Assets Parkway Properties REIT Westshore $52.75 $142 DRA Advisors, LLC Highwoods Properties REIT 702 North Franklin St. Tampa CBD $22.0 $ North Second Ave. St. Petersburg Downtown $20.0 $108 Franklin Street Associates LTD CNL Real Estate Advisors Benderson Development Company, Inc. Feldman Equities/ Tower Realty/Second City Developer Private Partnership SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 37

39 ORLANDO Market Trends and Indicators Unemployment in Orlando has decreased by 1.9 percentage points over the past year to 5.8%, led by strong gains in the hospitality, healthcare and financial services sectors. The vacancy rate spent the last five quarters under 20.0%. For the CBD, vacancy cy is at its lowest point since the second quarter of Leasing activity was up 11.0% from 2012 and had its highest full-year of activity since High level of activity in capital markets included over 3.5 million square feet in office sales. Tenants with large square foot requirements are creating build-to-suit opportunities. MARKET NAME 4Q 2013 YTD Total Absorption 153,142 Total Leasing Activity 2,465,852 Overall Vacancy Rate 17.8% Overall Asking Rents $20.28 Under Construction 0 12 MONTH FORECAST SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 38

40 ORLANDO Vacancy Rates vs. Asking Rents $ % $ % $ % $21 $ % $19 $18 $ $ $21.1 $21.1 $ $ $ $ $ Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 1Q13 2Q13 3Q13 4Q13 $ $ $ $ $ $ $ $ % 8.0% Asking Rent Vacancy Rate SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 39

41 ORLANDO Top 2013 Leasing and Sales Transactions DENOTES C&W TRANSACTION TOP LEASING TRANSACTIONS TYPE ADDRESS SUBMARKET TENANT SF INDUSTRY Renewal 301 East Pine Street CBD Gray Robinson P.A. 83,963 Legal Services New Lease 6277 Sea Harbor Drive Tourist Corridor Visit Orlando 44,045 Business Services New Lease 901 International Parkway Lake Mary Verizon 42,586 Telecommunications New Lease 501 West Church Street CBD TravelCLICK 39,722 Computers/Software New Lease 701 International Parkway Lake Mary/Heathrow Symantec Corp. 30,593 Computers/Software TOP SALES TRANSACTIONS ADDRESS SUBMARKET SALES PRICE (MILLIONS) PRICE / PSF SELLER BUYER BUYER TYPE 610/615 Crescent Executive Court Lake Mary $39,100,000 $129 DRA Advisors Colonial Properties JV Banyan Street Capital JV Private KBS Strategic 495 North Keller Road Maitland $31,200,000 $135 Flagler Development Group Opportunity REIT, INC. Private 6355 MetroWest Blvd. Millenia/MetroWest $11,127,000 $111 Highwood Realty LP Bluebird Metrowest Orlando Private 210 Celebration Place Tourist Corridor $9,551,000 $138 Old Bridge Park Celebration Walt Disney Company Public 4750/4776 New Broad St. Winter Park $8,639,500 $134 New Broad Street I LLC Mears Destination i Svc Pi Private SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 40

42 JACKSONVILLE Market Trends and Indicators Jacksonville s unemployment rate has decreased by 1.7 percentage points over the last 12-months to 5.8% had the strongest level of leasing activity in the past five years and over double the amount of activity actvty recorded e in Since the height of the recession, the vacancy rate has dropped 6.5 percentage points or by 25.9%. Investment sale activity surged in 2013 with over 4.3 million square feet of office space trading hands. The limited supply of large blocks of available space in core submarkets has increased the potential for new development. MARKET NAME 4Q 2013 YTD Total Absorption 215,814 Total Leasing Activity 1,967,772 Overall Vacancy Rate 18.6% Overall Asking Rents $17.31 Under Construction 0 12 MONTH FORECAST SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 41

43 JACKSONVILLE Vacancy Rates vs. Asking Rents $ % $ % 22.0% $ % $ % $ % 18.0% $17 $16 $ $ $ $ $ $ $ $ $ Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 1Q13 2Q13 3Q13 4Q13 $ $ $ $ $ $ $ $ % 16.0% Asking Rent Vacancy Rate SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 42

44 JACKSONVILLE Top 2013 Leasing and Sales Transactions DENOTES C&W TRANSACTION TOP LEASING TRANSACTIONS TYPE ADDRESS SUBMARKET TENANT SF INDUSTRY New Lease 8171 Baymeadows Way West Butler/Baymeadows Amerihealth Caritas 66,202 Healthcare Sublease 5022 Gate Parkway Southside Deutche Bank 51,040 Finance New Lease 8935 Dix Ellis Trail Butler/Baymeadows INCOMM 33,323 Business Services New Lease 301 West Bay Street Northbank C2C 31,920 Technology Expansion 9550 Regency Square Boulevard Arlington Dade Medical College, Inc. 9,617 Education TOP SALES TRANSACTIONS ADDRESS SUBMARKET SALES PRICE (MILLIONS) PRICE / PSF SELLER BUYER BUYER TYPE 8 Office Property Portfolio Butler/Baymeadows $130,000,000 $128 Flagler Development Parkway Properties Public 11 Office Property Portfolio Butler/Baymeadows $109,700, $116 Liberty Property Trust Greenfield Partners Private 841 Prudential Drive Southbank $55,500,000 $108 South Shore Group PRN IP Capital Partners Private 8001 Baymeadows Way Butler/Baymeadows $43,800,000 $155 State Farm Insurance Lone Star Funds Private Belfort Rd. Butler/Baymeadows $31,300,000 $105 Western Devcon Inc. Easterly Partners Private SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 43

45 CHARLOTTE Market Trends and Indicators Economic data continues to show improvement for employment, local housing, and consumer sentiment. Overall leasing volume was down nearly 20% from 2012 levels, with overweight towards renewals. Net absorption down almost 40% versus 2012; high concentration in a few large transactions. CBD witnessed negative net absorption in Very few smaller deals (30,000 sf and lower) in the market. Large corporate users still circling the market. Build-to-suit activity beginning to heat up, both suburban and CBD. Leasing momentum should resume in CHARLOTTE 4Q 2013 YTD Total Absorption 1,297,298 Total Leasing Activity 4,489,166 Overall Vacancy Rate 10.6% Overall Asking Rents $19.31 Under Construction 496, MONTH FORECAST SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 44

46 CHARLOTTE Vacancy Rates vs. Asking Rents $ % $ % $ % $ % $ % $17.00 $ $ $ $ $ $ $ $ $ Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 $ $ $ $ $ $ $ $ % Asking Rent Vacancy Rate SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 45

47 CHARLOTTE Top 2013 Leasing and Sales Transactions DENOTES C&W TRANSACTION TOP LEASING TRANSACTIONS TYPE ADDRESS SUBMARKET TENANT SF INDUSTRY New Lease Gragg and Woodward Buildings Ballantyne Corporate Park Highway 51 MetLife 340,000 Insurance Relocation Innovation Park University Allstate 200,000 Insurance New Lease 8740 Research Drive University Research Park University Wells Fargo & Co. 160,000 Finance New Lease Ballantyne Three Highway 51 MetLife 104,368 Insurance New Lease Arrowpoint One Airport Carolinas HealthCare System 66,864 Healthcare TOP SALES TRANSACTIONS ADDRESS SUBMARKET SALES PRICE (MILLIONS) PRICE / PSF One Wells Fargo Center CBD $245 $249 Childress Klein Properties Metropolitan Plaza Midtown $94.4 N/A LakePointe Office Park (7 Buildings) Wake Forest University Charlotte Center Airport $75 $111 TIAA-CREF SELLER BUYER BUYER TYPE Starwood Vision Equities Institutional Equity Midtown Redevelopment JP Morgan Asset Institutional Partners (Colonial & Pappas) Management Equity Mainstreet Capital & Archon Group CBD $72.5 $158 Bank of America Corp. The Shidler Group 121 West Trade Street CBD $59.6 $181 Cornerstone Real Estate Advisors Dilweg Companies Institutional Equity Private Equity Real Estate Investor SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 46

48 RALEIGH-DURHAM, NC Market Trends and Indicators The Raleigh-Durham office market continues to show robust signs of steady expansion with total class A inventory reporting a vacancy rate of 10.3%, down from 12.2% 2% only a year ago. Excluding large owner occupied properties coming available, rental rates in Q4 remained flat in key submarkets. Landlords in certain areas are still buying deals to gain occupancy while others are now pushing rates given the limited supply of available space. MARKET NAME 4Q 2013 YTD Total Absorption 703,259 Total Leasing Activity 1,804,303 Overall Vacancy Rate 12.6% 12 MONTH FORECAST While flat rates currently outnumber those which are raising, concessions continue to diminish resulting in this trend reversing going forward. Multiple speculative buildings planned for construction have succeeded in securing preleasing, fostering an environment where economic fundamentals are prompting developers to consider pulling the trigger on multiple spec projects. Overall Asking Rents $18.80 Under Construction 623,313 Downtown Raleigh remains one of the tightest Class A CBD office markets in the United States with a current vacancy rate of 4.7%. SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 47

49 RALEIGH-DURHAM, NC Vacancy Rates vs. Asking Rents $ % $ % $ % $19 $ % $18 $ $ $ $ $ $ $ $ $ Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 1Q13 2Q13 3Q13 4Q13 $ $ $ $ $ $ $ $ % Asking Rent Vacancy Rate SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 48

50 RALEIGH-DURHAM, NC Top 2013 Leasing and Sales Transactions DENOTES C&W TRANSACTION TOP LEASING TRANSACTIONS TYPE ADDRESS SUBMARKET TENANT SF INDUSTRY Direct Weston Parkway RTP/I-40 MetLife 427,000 Insurance Direct 3015 Carrington Mill Rd. RTP/I-40 Teleflex Medical 150,000 Medical Direct 1801 Varsity Drive West Raleigh Lexis Nexis 120,000 Software Direct 79 TW Alexander Drive RTP/I-40 NC Dept. of Health and Human Services 95,600 Government Direct 3020 Carrington Mill RD RTP/I-40 SciQuest 78,565 Software TOP SALES TRANSACTIONS ADDRESS SUBMARKET SALES PRICE (MILLIONS) 4208 Six Forks Rd Six Forks/Falls of Neuse PRICE / PSF SELLER BUYER BUYER TYPE $98,275,000 $327 Kane Realty KBS Investor Wd Wade I & II RTP/I-40 $46,000,000 $228 Litchin Properties Prudential Real Estate Investor Erwin Square Plaza Durham $37,000,000 $157 Middleton Duke Fund Federal Capital Partners Investor 7001 & 8001 Development Dr. RTP/I-40 $26,000,000 $57 Sony Ericsson AB Rubenstein Partners LP Investor Arbors at Highwoods North Raleigh $22,300,000 $87 Craig Davis Properties The Simpson Organization Investor SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 49

51 SOUTHEAST S Looking Forward MAXIMIZING EFFICIENCIES will remain the top priority for tenants. STRONG PIPELINE OF TENANTS IN THE MARKET will remain active, translating into continued healthy leasing activity in CONSTRUCTION ACTIVITY, although minimal, will pick up in both large and small Southeast markets as large blocks of available space disappear. Look for an increase in BTS projects in many Southeast markets. STRONG INVESTMENT SALES PIPELINE and ongoing interest in Atlanta, Miami, and Tampa will keep overall sales volume at high levels. TECH AND BUSINESS SERVICES will continue to drive most of the Southeast office markets. MARKET FUNDAMENTALS will continue to improve as major southeast markets continue to build momentum. THE SLOW AND STEADY improvement experienced in many Southeast office markets is expected to accelerate, as the Southeast recovery begins to outpace the U.S. SOUTHEAST 2013 WRAP-UP & 2014 OUTLOOK CUSHMAN & WAKEFIELD 50

52 KEN MCCARTHY Avenue of the Americas New York, NY RONNIE DAVIS Ivan Allen Jr. Boulevard Atlanta, GA MARIA SICOLA (415) One Maritime Plaza, Suite 900 San Francisco, CA