2008 THIRD QUARTER OFFICE MARKET OVERIVEW | 1 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 | 1 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 prepared by JONATHAN PUTNAM

2008 THIRD QUARTER OFFICE MARKET OVERIVEW | 2 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 | 2 1 “CAUTIOUS PESSIMISM”

2008 THIRD QUARTER OFFICE MARKET OVERIVEW | 3 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 | 3 FAST CHANGING LANDSCAPE  As of August, UCONN’s CCEA was predicting a soft landing for Connecticut with a short downturn: “Connecticut will suffer mild job losses, especially compared to both previous contractions and compared to most other states. At the same time, the total output in the Connecticut economy will continue to grow — so Connecticut will not experience a recession. And by the end of the forecast period in 2010, this Outlook anticipates growth in the Connecticut economy to accelerate. This reasonably good outcome—a soft landing…”  By November, CCEA had a very different assessment. “Connecticut’s economy is in a recession; the contraction began nearly a year ago, in third quarter 2007,. But to date the pain has been remarkably little. Connecticut has seen only modest job losses through this period, and its unemployment rate, 6.1%, is below the national rate, 6.5%. Despite the gathering economic storm clouds, the CCEA Economic Outlook forecasts total job losses of only 40,000 and a modest decline in the state’s economic output. Declining energy prices – the price of a barrel of oil has fallen nearly 60% since its peak – will mitigate the economic contraction.”

2008 THIRD QUARTER OFFICE MARKET OVERIVEW | 4 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 | 4 INSURANCE  Healthcare companies stable  Property Casualty/Wealth Management companies a mixed result  The Hartford’s recent struggle is alarming AEROSPACE - DEFENSE  Connecticut’s high tech engineering and manufacturing sector has been relatively healthy supported by the weak dollar, defense spending and growth overseas FINANCIAL SERVICES  Financial firms which had been riding high are in crisis mode REGIONAL ECONOMIC DRIVERS

2008 THIRD QUARTER OFFICE MARKET OVERIVEW | 5 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 | 5 2 OFFICE OVERVIEW

2008 THIRD QUARTER OFFICE MARKET OVERIVEW | 6 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 | 6 HARTFORD CBD TRENDS 4Q 06 4Q08 Rents 4Q08 $25 to $60 Tenant Improvements $ Q 06 $15 to $30 Operating Expenses 4Q08 4Q 06 $15.50 $17.00 PAST 24 MONTHS Landlords’ bottom lines have been eroding…. Rents Operating Expenses NEXT 24 MONTHS

2008 THIRD QUARTER OFFICE MARKET OVERIVEW | 7 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 | 7 HARTFORD CBD RENTAL RATES VS. VACANCY  The space vacated by MetLife added about 400,000 rsf of class A space to the market  This brought up the vacancy rate, but also brought up the direct average asking rental rate

2008 THIRD QUARTER OFFICE MARKET OVERIVEW | 8 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 | 8 HARTFORD COUNTY LEASING ACTIVITY  Leasing activity remains steady, although lower than that seen in recent years

2008 THIRD QUARTER OFFICE MARKET OVERIVEW | 9 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 | 9 HARTFORD COUNTY ABSORPTION  Absorption is strongly negative throughout the county, due mainly to space vacated by MetLife in the CBD, The Hartford in Windsor and Vallasis (Advo) in Windsor 506, , ,176 (685,303) (531,440)(519,613) (10,960) (177,993) 183,145 (910,146) (1,000,000) (800,000) (600,000) (400,000) (200,000) - 200, , ,

2008 THIRD QUARTER OFFICE MARKET OVERIVEW | 10 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 | 10 HARTFORD COUNTY CONSTRUCTION DELIVERIES VS. VACANCY  Low levels of construction activity relieve upward pressure on vacancy rates

2008 THIRD QUARTER OFFICE MARKET OVERIVEW | 11 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 | 11 NEW HAVEN COUNTY - RENTAL RATES VS. VACANCY  Yale University is currently the most active player in the New Haven office market  In the fourth quarter of 2008, they leased over 140,000 rsf of space in New Haven’s Science Park, bringing down the overall vacancy rate

2008 THIRD QUARTER OFFICE MARKET OVERIVEW | 12 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 | 12 4 CONCLUSION

2008 THIRD QUARTER OFFICE MARKET OVERIVEW | 13 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 | 13 NATIONAL PERSPECTIVE HARTFORD 18.3% | $22.91 – CBD Class A STAMFORD 15.5% | $47.46 – CBD Class A LOS ANGELES 14.0% | $38.65 – CBD Class A SAN FRANCISCO 11.4% | $50.75 – CBD Class A SE A TTLE 10.6% | $38.83 – CBD Class A BOS T ON 7.3% | $61.88 – CBD Class A W ASHING T ON DC 10.8% | $55.74 – CBD Class A MIDTOWN MANHATTAN 9.2% | $92.32 – Midtown Class A CHICAGO 12.4% | $31.71 – CBD Class A ATLANTA 23.9% | $21.26 – CBD Class A DALLAS 21% | $23.71 – CBD Class A DENVER 11.4% | $32.47 – CBD Class A Source: Cushman & Wakefield Research Overall Class A Vacancy and Avg. Direct Asking Rent

2008 THIRD QUARTER OFFICE MARKET OVERIVEW | 14 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 | 14 MARKET SUMMARY  Investment activity had slowed dramatically– flight to quality and more conservative underwriting  Hartford Investment Market surprisingly active through 3 rd qtr., despite financial upheaval  Credit - from the Latin verb credere: “to believe”. We are experiencing a monumental crisis of confidence  Capital expenditures under tight scrutiny. Tenants reluctant to move due to up front cost of relocation  Hartford and New Haven office markets will see moderate downturn  Well capitalized Buyers and Tenants will dominate. Fortunes will be made by the risk takers – OPPORTUNITY arises from chaos

2008 THIRD QUARTER OFFICE MARKET OVERIVEW | 15 CBIA ECONOMIC SUMMIT & OUTLOOK 2009 | 15 C&W CONTACTS C&W NEW ENGLAND RESEARCH SERVICES C&W NEW ENGLAND THOMAS L. COLLINS Executive Managing Director, New England Region RICK CLEVELAND Director, Research Services New England Region ANTHEA STREZZE Associate, Research Services New England Region C&W Of Connecticut, Inc. 280 Trumbull Street 22 nd Floor Hartford, CT T F C&W CONNECTICUT JONATHAN PUTNAM Executive Director, Hartford