Milwaukee Office Market 2010 Year in Review Appraisal Institute – Wisconsin Chapter November 11, 2010

2010 Office Market Overview Leasing Activity Net Absorption Vacancy & Availability Investment Activity Capitalization Rates

Office Market – Bright Spots in 2010 No New Construction Class A Office Submarkets - Downtown & along I-94 Corridor Downtown Investment Activity

Leasing Activity – Milwaukee Office Market

Vacancy Trends – Milwaukee Office Market (Includes Milwaukee, Waukesha, Ozaukee, Washington Counties)

Downtown vs. Suburban Office – 3Qtr 2010

Downtown Office By Class (A vs. B/C) As of Third Quarter 2010

Suburban Office By Class – 3Qtr 2010 Source: CoStar Property

Vacancy By Submarket – 3Qtr 2010

Historical Vacancy Trend – Milwaukee Office

Availability Rate Trend Source: CoStar Property

Market Trends – Absorption, Deliveries, & Vacancy

Office Sales Volume Trends

Office Sales – Sale Price/SF Trend

Who Are the Buyers??? 3-yr 1-yr Individuals27.8%41.2% Inst. Investors30.6%17.7%

National Cap Rate Trends – CBD & Suburban

National Cap Rate Trends & Value Change Observations: All the growth in value from cap rate compression between 2000 and 2007 was lost in just 2-years ( ) Surveys suggest stabilization in office cap rates by First Quarter 2010 with a slight decrease in the 2 nd and 3 rd quarter of 2010

Milwaukee Cap Rates

Office Market Projection for 2011 Vacancy – Stable Rental Rates – Stable New Construction – None Cap Rates – Stable Investment Activity – Increase

Contact Information Michael J. Tompkins Vice President The Nicholson Group LLC 555 S Industrial Drive, Suite 207 Hartland, WI ext Fax Mobile