How the Private Sector Views Land/Buildings February 2016

There are numerous factors that determine where a business will relocate “One size fits all” does not apply here. Different key variables are important to different companies. 1

Just because you build it, they will not necessarily come… 2

What helps them decide to move to an area? Labor Availability Occupational Supply Current labor supply Prospective labor supply Labor competition Unemployment rate 3 Labor quality Knowledge skills and abilities Education Proximity to educational institutions Language skills Labor Costs Compensation, benefits, taxes Recruiting and training Termination liability and costs Area Attributes Tax incentives Location to end user markets (drive time) Zoning restrictions Rental rates in market Infrastructure Etc. and more etc.

On Location… Where is the market? Varies a bit for asset class (industrial asset class can be very large) <30 minutes drive time, more often minute drive time (or in metro 2-3 subway stops) Generally contiguous town/city Wright-Pat market does not include Dayton Knox market does not include Louisville O’Hare (BRAC 95) area was right outside O'Hare Airport and included Rosemont (casinos) Unless…the market is on the installation 4

What is the overall status of the U.S. market across asset classes? 5 Peaking market Falling market Rising market Bottoming market Multifamily Hotel, Industrial CBD office Suburban office Retail Source: JLL Research

Q U.S. overall office clock 6 Tenant-favorable market Neutral market Landlord-favorable market Source: JLL Research Peaking phase Falling phase Rising phase Bottoming phase Dallas, San Francisco Charlotte, Fort Lauderdale, Kansas City Oakland-East Bay, Orlando Houston Cleveland, Indianapolis, Raleigh-Durham, St. Louis San Francisco Peninsula Baltimore, Detroit, San Antonio, West Palm Beach, Westchester County Los Angeles, San Diego Silicon Valley Atlanta, Jacksonville, Miami, Orange County, Richmond, United States New York, Pittsburgh, Portland, Tampa Denver, Minneapolis, Seattle-Bellevue New Jersey, Washington, DC Chicago, Phoenix Columbus, Sacramento Philadelphia Boston Cincinnati, Fairfield County, Hampton Roads, Milwaukee Austin, Fort Worth

Hampton Roads overall property clock Key market indicators Supply 18,570,507 s.f. Total vacancy 14.5% Under construction 287,858 s.f. Demand Leasing activity 12-mo. % change -40.2% YTD net absorption 59,394 s.f. Pricing 12-month overall rent % change -6.5% Class A overall asking rent $20.64 p.s.f. Market conditions Three major influences have shifted demand away from new construction in Hampton Roads: the 33.3-percent premium for new construction over existing Class A rental rates, the increased popularity of teleworking in Hampton Roads and the numerous, but now less frequent, downsizes that occurred between 2009 and present. Additionally, growing demand from call centers created the largest active requirements in market, but focused solely on low-cost options with generous parking ratios. This criteria made the conversion of aging shopping malls to call center operation facilities an alternative to traditional office space. The inherent risks from a market tied to defense spending and poor rental rate growth have been the most cited concerns to investors searching for yields in secondary and tertiary markets. While multifamily and retail investment sales remained strong in Hampton Roads, traditional office sales have struggled to gain ground. Outlook for tenants Downtown Norfolk has been the epicenter of redevelopment in the Hampton Roads market. Most recently, 1 Commercial Place (Bank of America Center) was slated for multifamily conversion while 2 Commercial Place, a circa-1978, 287,858-square-foot office building, went under renovation and will absorb most tenants displaced by the conversion. Once complete, the redevelopment will remove a circa-1968 office building that has maintained an average vacancy rate of 52.0 percent (180,156 square feet) since The latest delivery and with an asking rate of $26.00 per square foot, full service, Convergence Center V (200 Bendix Road), also delivered 55.1 percent preleased last quarter and is currently one of four Class A suburban space options larger than 20,000 square feet available for immediate occupancy. Hampton Roads 7 12-month forecast Peaking market Falling market Bottoming market Rising market Source: JLL Research Tenant-favorable market Neutral market Landlord-favorable market

Silicon Valley overall property clock Key market indicators Supply 68,545,489 s.f. Total vacancy 12.2% Under construction 3,276,660 s.f. Demand Leasing activity 12-mo. % change -16.5% YTD net absorption 2,891,738 s.f. Pricing 12-month overall rent % change 2.7% Class A overall asking rent $44.87 p.s.f. Market conditions Silicon Valley experienced yet another solid quarter of net absorption. Based on the level of touring activity, more tenants are expected to land in There are at least one million square feet of preleased, under construction space coming online in early 2016 to kick start the new year with positive occupancy gains. With several major tech tenants finally planting their flag in North San Jose, the region will be well poised to be the next hot core submarket of the Valley. Given the steady decline in newer space availability combined with the current preleasing trend; tenants with future growth or relocation plans will consider targeting space options earlier to avoid missed opportunities. Outlook for tenants Although vacancy rates have yet to reach single digit levels, the market for tenants in need of 100,000 square feet and larger has become much tighter when compared to 12 months ago. The aggressive expansion of large tech companies in core submarkets continues to push leasing activity further along 101 through Santa Clara into North San Jose. While there are still some Class A under construction options available, rents for new development are rising in response to demand. For this reason, renovated second- generation space is becoming more attractive as it offers similar Class A finishes at relatively less expensive rents. Several tenants with larger requirements have yet to land. It is expected that North San Jose will capture some of this activity and help to push overall vacancy levels closer to single-digit levels. Silicon Valley 8 12-month forecast Peaking market Falling market Bottoming market Rising market Source: JLL Research Tenant-favorable market Neutral market Landlord-favorable market

Seattle-Bellevue overall property clock Key market indicators Supply 91,830,292 s.f. Total vacancy 10.2% Under construction 5,912,171 s.f. Demand Leasing activity 12-mo. % change 43.8% YTD net absorption 2,461,440 s.f. Pricing 12-month overall rent % change 7.5% Class A overall asking rent $38.99 p.s.f. Market conditions For the third consecutive year, net absorption has surpassed 2.0 million square feet. In Q4, 551,591 square feet of space was taken down, bringing the 2015 total to nearly 2.5 million square feet. Total vacancy in Seattle-Bellevue remains at 10.2 percent and is as low as the market has seen in the last 10 years. Subsequently, average asking rents are up 7.5 percent year-over-year and have hit a 10-year peak. Fourth quarter leasing activity was driven primarily by technology tenants; however, Safeco’s deal at Safeco Plaza was far and away the largest. Other tenants that signed major leases include Intellectual Ventures, DocuSign, Salesforce and Juno Therapeutics. More than $4.4 billion in office investment transactions has occurred in Puget Sound this year. This represents a percent increase over all of The most active submarkets for sales have been the Seattle CBD and Lake Union, with year-to-date volumes of $1.3 billion and $849.9 million, respectively. Outlook for tenants Seven major office projects delivered this year; totaling more than 2.2 million square feet. This makes 2015 the most active year for development since prior to the recession. The largest project, 929 Office Tower, is the first office building to be delivered in downtown Bellevue since With more than 5.9 million square feet scheduled to deliver in the next two years, construction activity will continue to dominate the conversation. Tenants will have ample opportunity to acquire premier space and continue migrating to and growing in Puget Sound as just 35.1 percent of the space is currently preleased. Average asking rents for new construction space being marketed stand at $48.50 per square foot, full service, and represent a 42.7 percent premium over the regional average. Seattle-Bellevue 9 12-month forecast Peaking market Falling market Bottoming market Rising market Source: JLL Research Tenant-favorable market Neutral market Landlord-favorable market

Atlanta overall property clock Key market indicators Supply 133,555,157 s.f. Total vacancy 17.5% Under construction 885,000 s.f. Demand Leasing activity YTD % change 12.2% YTD net absorption 2,578,651 s.f. Pricing 12-month overall rent % change 10.2% Class A overall asking rent $25.94 p.s.f. Market conditions Declines in the metro unemployment rate, meaningful population increases, a growing GDP and strong corporate cash positions all pointed to substantial increases in annual demand for Atlanta office space. On the contrary, 2015 net absorption figures totaled less than in Actual figures fell short of analysts’ projections of 3.0 million square feet by about 400,000 square feet. Diversification trends also moved counter to expectations as demand failed to broaden further into the Class B segment as one would expect in a supply-constrained market with positive tenant demand. Increasingly active are deals smaller than 25,000 square feet, which make up the bedrock of Atlanta’s office market demand. When compared to this time last year, smaller deals are making up a larger percentage of total leasing activity. As this smaller segment continues to expand, so too will overall net absorption. Outlook for tenants Over the final months of 2015, landlords seemed to be less aggressive relative to previous quarters. On the whole, average asking rates of large, contiguous blocks of Class A space (those 50,000 square feet and larger) increased by only $1.13 per square foot, much less than in previous quarters. Even more telling is how few blocks actually increased in price over the same period: landlords of only eight blocks pushed rates. Without a substantial anchor tenant to occupy 50.0 percent or more of a building, lending for new construction is somewhat of an aberration at the moment. This offers owners of Trophy assets some degree of protection against any threat of competition from new supply. Atlanta month forecast Peaking market Falling market Bottoming market Rising market Source: JLL Research Tenant-favorable market Neutral market Landlord-favorable market

Marketing a location - Take a tour: The 2020 Tokyo Olympic venues 11