CBRE State of the Market: Mid-Year 2011

Second Quarter Washington, DC Regional Office Market Statistics June 30, 2011

Agenda Second Quarter 2011 Introduction Overview of Washington, DC Region In-depth Analysis of Quarter Northern Virginia g Washington, DC Suburban Maryland National Overview and Outlook Questions

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Speakers

Introduction Second Quarter 2011

Liz Wainger, Moderator John Germano, Executive Managing Director Marianne S M i Swearingen, R i Research M h Manager Jon Southard, Principal and Director of Forecasting, CBRE Econometric Advisors

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Washington Metropolitan Regional Perspective

Second Quarter 2011

Northern Virginia Office

Second Quarter 2011

Northern Virginia

Historical Deliveries Second Quarter 2011

2008 2009 2010

2006

2007

6.1M SF

4.8M 4 8M SF

5.5M S SF

2.9M 2 9M SF

313K SF

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Northern Virginia

Development Second Quarter 2011

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Northern Virginia

Historical Vacancy Rates Second Quarter 2011

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Northern Virginia

Historical Trends Second Quarter 2011

10 Year Average Net Absorption: 2 431 892 SF 2,431,892

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Washington, Washington DC Office

Second Quarter 2011

Washington, DC

Historical Deliveries Second Quarter 2011

2008 2009 2010

2006

2007

5.1M 5 1M SF

2.5M 2 5M SF

1.2M 1 2M SF

6.0M 6 0M SF

2.9M 2 9M SF

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Washington, DC

Development Second Quarter 2011

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Washington, DC

Historical Vacancy Rates Second Quarter 2011

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Washington, DC

Historical Trends Second Quarter 2011

10-Year Average Annual Net Absorption: 1,700,383 SF g p

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Suburban Maryland Office

Second Quarter 2011

Suburban Maryland
2007 2008

Historical Deliveries Second Quarter 2011

2009 2010

1.6M 1 6M SF

1.3M 1 3M SF

1.8M 1 8M SF

0 SF

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Suburban Maryland

Development Second Quarter 2011

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Suburban Maryland

Historical Vacancy Rates Second Quarter 2011

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Suburban Maryland

Historical Trends Second Quarter 2011

10-Year Average Net Absorption: 256,364 SF

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The Economy And the National Perspective

DC Advantage Starts with Employment Second Quarter 2011

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More Businesses Starting to Hire Second Quarter 2011

Change in Payrolls (x1000): May 2010 to May 2011 Ed and Health Admin Professional and Technical Leisure Manufacturing Retail Transportation Wholesale Construction Financial Activities Information Government -853 -800 -600 -400 -200 0 200 400 600 -28 -34 0 870 Thous Jobs Created In Last 12 Months 209 202 158 107 96 87 290 445

-1000

Source: Bureau of Labor Statistics.

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Office Market Healing Nationally Second Quarter 2011

Completions, Net Absorption, msf 150 Vacancy, % 24 Forecast 100 20

50

16

12

-50

-100

150 -150 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Completions (L) Source: CBRE EA Office Outlook, Summer 2011.

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Net Absorption (L)

Vacancy (R)

Pricing Power Will Begin to Shift, But Slowly Second Quarter 2011
Rent Inflation, % 15 Forecast Vacancy, % 21

10

18

15

12

-5

-10

-15 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Rent Inflation Source: CBRE EA Office Outlook, Summer 2011.

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Vacancy (R)

Industrial Availability Keeps Dropping Second Quarter 2011 Net Absorption, Completions (msf)
Availability Rate (%) 18 Forecast 100 15 12 50 9 0 6 -50 3 0 2000.1 2001.2 2002.3 2003.4 2005.1 2006.2 2007.3 2008.4 2010.1 2012.3 2013.4 2011.2 150

-100

Completions (L)

Net Absorption (L)

Availability Rate (R)

Source: CBRE EA Industrial Outlook, Summer 2011.

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Annual % in TW Warehouse Rent Index 12

Lower Availability Will Start to Drive Rent Growth Second Quarter 2011
Availability Rate (%) 18 Forecast F t 15 12 9 6 3 0 2 2011 2012 2013 2014 2015 2016

8 4 0 -4 -8 -12 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Rent Growth (L)

Availability Rate (R )

LT Availability Average

Source: CBRE EA Industrial Outlook, Summer 2011.

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Second Quarter 2011

Questions?

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