www.ColliersNashville.com

1Q

2012

Forecast

2012

VACANCY

NET ABSORPTION

CONSTRUCTION

ASKING RATE

MARKET REPORTNASHVILLE

First Quarter Is a Good Start for the Upcoming Year

The past two years have been a recovering period for the national and local economies. Recently, businesses have seen the benefits of expansion, relocation and growth due to low rental rates. This frame of mind brings more businesses to the area. Proving that Nashville is a desirable location time and time again are a series of positive rankings in national surveys on business and the local economy’s status.

Nashville was named one of the top twenty “Best Performing” US cities by Business Insider in March, the number two city for “Most Cost-Attractive Business Location” in KPMG’s Competitive Alternatives survey, and Tennessee was named as the number one state for “Low Business Taxes & Regulations” by the US Chamber of Commerce. The city boasts an unemployment rate of 6.9%, which is well below the national average of 8.3%, and the gross metro product (GMP) is up 7.0% from the pre-recession peak.

In addition to a low unemployment rate, growing GMP, and attractive business regulations, there are other features making Nashville a solid choice for businesses such as reasonable asking rates, coming in at an average of $18.32 per square foot for all building types. We saw positive absorption in seven of the nine submarkets for an overall absorption of 80,253 square feet. Though still considered low by usual industry standards for a first quarter compared to recent recession-impacted data, this quarter’s absorption is headed in the right direction and is showing movement in the market.

MARKET INDICATORS

1Q 2012 | OFFICE

Nashville Office MarketSummary of Statistics, Q1 2012

Vacancy Rate: 10.5%

Absorption: 80,253 SF

Under Construction: 333,496 SF

Asking Rents Per Square Feet:Class A: $21.86Class B: $18.20Class C: $13.89Overall Rental Rates: $18.32

Downtown Class A: $18.21Suburban Class A: $17.67

Quarterly Comparisons and Totals

QUARTER BLDGSTOTAL

INVENTORY SF

DIRECT VACANT

DIRECT VACANCY

RATE

SUBLEASE VACANCY

RATE

NET ABSORPTION

CURRENT QTR

NET ABSORPTION

YTD SF

UNDER CONSTRUCTION

SF

AVG ASKING RATE

Q1.12 516 35,144,134 2,328,067 10.5% 2.1% 80,253 80,253 333,496 $18.32

Q4.11 382 31,039,759 3,432,515 11.1% 2.1% 122,589 493,865 333,496 $19.92

Q3.11 380 31,039,756 3,399,841 11.0% 2.2% 105,707 285,561 320,820 $19.78

Q2.11 381 31,056,877 3,506,318 11.3% 2.2% 166,274 210,025 267,832 $18.05

Q1.11 419 33,633,050 3,641,291 11.9% 2.0% 68,010 68,010 128,110 $19.71

Updated 7-2011

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MARKET REPORT | Q1 2012 | OFFICE | NASHVILLE

www.ColliersNashville.com

Having shown Nashville’s resiliency against the downfalls of recession through the low unemployment rate and steadily improving absorption numbers, several companies have expanded or relocated headquarters here. The Nashville Chamber of Commerce cites that 168 business have relocated to Nashville in the past five years. We can now add Harris Research, Inc. (HRI) to that list, which announced in March that it would be opening a regional headquarters in town.

Companies are also expanding in the area

including HCA’s IT operations, ServiceSource, Jackson National Life Insurance Co. and Symmetry Medical. “Despite the recession, Nashville continues to show remarkable strength and the ability to still grow and expand,” states Managing Partner Nate Greene CCIM. “This first quarter of 2012 has just further cemented my belief that our market is on the right track and the rest of the year is going to show more and more market improvement.”

Class A Class B Class C

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1Q 2012 | Vacancy Space By Type

Class A 1,191,089 SF

Class B 1,873,293 SF

Class C 623,685 SF

1Q 2012 | Net Absorption By Submarket

RECENT SALES TRANSACTIONSSALES ACTIVITY

PROPERTY BUYER SALE PRICE SIZE SF SUBMARKET

Synergy Business Park Boyle Investment Company $62,800,000 496,235 Brentwood

Baker Donelson Center SunLife Financial $47,000,000 228,567 DowntownFirst Image Building David L. Black $8,700,000 110,000 MetroCenter

30 North Offices 30 North Offices $2,960,000 36,000 West End

333 Union Street Andy’s Union LLC $1,641,283 34,177 Downtown

RECENT LEASING TRANSACTIONSLEASING ACTIVITY

PROPERTY TENANT SIZE SF TYPE SUBMARKET

Highland Ridge III ACS 17,794 New Airport North

Maryland Park Center Forterus 15,000 New Brentwood

Metro Airport Center I ACS 14,213 Expansion Airport North

Cool Springs III Carlise Tire 10,405 New Cool Springs/Franklin

DEFINITIONS

Absorption - The net change in occupied space between the current quarter and the previous quarter, calculated by summing all the positive changes in occupancy and subtracting all the negative changes in occupancy.

Class A Building - Most prestigious buildings competing for premier office users with rents above average for the area. Buildings have high quality standard finishes, state of the art systems, exceptional accessibility and a definite market presence.

Class B Building - Buildings competing for a wide range of users with average rents. Building finishes are fair to good for the area and systems are adequate but the building does not compete with Class A at the same price.

Class C Building - Buildings competing for tenants requiring functional space at rents below the average for the area.

Total Building SF - All single & multi tenant office buildings above 10,000 SF excluding medical, government and owner occupied.

Vacancy Rate - Percentage rate of the total amount of physically vacant space divided by the total amount of existing inventory.

*Bold text denotes Colliers International Nashville transactions.

MARKET REPORT | Q1 2012 | OFFICE | NASHVILLE

www.ColliersNashville.com

HIGHLIGHTS FROM THE QUARTER• We welcomed the well-respected

office brokerage team of Bill Neill and Mark Woolwine in January of this year. Both Bill and Mark have worked in commercial real estate for more than 20 years.

• Company partners, Nate Greene and Bert Mathews were named in the Nashville Post’s IN CHARGE issue, a compendium of Middle Tennessee’s business, political and civic power brokers. Nate and Bert were recognized among 16 other real estate industry leaders.

• Reaffirming Colliers International’s leadership in the commercial real estate industry, The Lipsey Co., the industry’s leading training consultancy, has ranked Colliers

among the top global brands in a new survey of more than 50,000 industry professionals.

• Colliers International headed one of the largest global giving campaigns called Everyone Gives. In just 17 days, more than 12,000 people participated to pledge over $700,000 to thousands of charities across the globe. With such a great success this first year, we are hopeful that 2013’s campaign will be an even greater success. For more information regarding the Everyone Gives campaign, please visit www.EveryoneGives.org.

UPDATE Market Comparisons

OFFICE MARKET

SUBMARKET BLDGS TOTALINVENTORY

SF

DIRECTVACANT

SF

DIRECTVACANCY

RATE

SUBLEASEVACANCY

RATE

VACANCY RATE PRIOR

QTR

NET ABSORPTIONCURRENT QTR

NET ABSORPTION

YTDUNDER

CONSTRUCTION

AVG ASKING RATE

AIRPORT NORTH 43 3,902,536 354,658 9.1% 2.5% 10.3% 53,253 53,253 0 $16.86

AIRPORT SOUTH 71 3,447,839 562,754 16.3% 1.2% 16.3% 4,971 4,971 0 $12.93

BRENTWOOD 86 5,007,163 270,392 5.4% 0.7% 5.1% 31,785 31,785 0 $20.25

COOL SPRINGS/FRANKLIN 91 5,829,273 354,378 6.1% 0.8% 7.6% 16,084 16,084 175,000 $19.33

DOWNTOWN 70 8,113,820 1,511,980 18.6% 3.7% 19.3% 1,434 1,434 90,000 $18.21

GREEN HILLS/MUSIC ROW 64 2,678,130 172,188 6.4% 1.1% 4.7% 9,079 9,079 0 $20.72

METROCENTER 17 1,572,901 119,636 7.6% 1.0% 6.1% (29,386) (29,386) 68,496 $15.64

RIVERGATE/NORTH 23 655,433 91,726 14.0% 0.0% 16.7% 284 284 0 $14.76

WEST END/BELLE MEADE 51 3,937,039 250,355 6.4$ 2.9% 6.6% (17,251) (17,251) 0 $20.83

CLASS

A 137 17,103,249 1,191,089 7.0% 3.2% 7.9% 7,759 7,759 175,000 $21.86

B 276 14,689,662 1,873,293 12.8% 1.2% 13.7% 50,852 50,582 158,496 $18.20

C 103 3,351,223 623,685 18.6% 0.2% 18.0% 11,642 11,642 0 $13.89

TOTAL 516 35,144,134 3,688,067 10.5% 2.1% 11.0% 80,253 80,253 333,496 $18.32

MARKET REPORT | Q1 2012 | OFFICE | NASHVILLE

www.ColliersNashville.com

Richard Fulton, CCIMDIR +1 615 850 2719

Vice President

Nate Greene, CCIMDIR +1 615 850 2729Managing Partner &

President

Bert MathewsDIR +1 615 850 2701Partner & President

Chris Grear, CCIMDIR +1 615 850 2702

Vice President

John Gifford, CCIMDIR +1 615 850 2713

Senior Associate

Shane Douglas, CCIMDIR +1 615 850 2734

Associate

Lee ParadiseDIR +1 615 850 2717

Vice President

Vickie SaitoDIR +1 615 850 2711

Senior Associate

UNITED STATES:

NashvilleNate GreeneManaging Partner & President300 BroadwayNashville, TN, 37201TEL +1 615 850 2729FAX +1 615 850 3229

RESEARCHER:

NashvilleAllison SchepmanDirector of Marketing300 BroadwayNashville, TN, 37201TEL +1 615 850 2748FAX +1 615 244 2957

512 offices in 61 countries on 6 continents

• $1.5 billion in annual revenue• 979 million square feet under management

• 12,500 professionals

Copyright © Colliers International

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it.

Accelerating success.

ABOUT COLLIERS INTERNATIONAL – NASHVILLE

Collier International Nashville is one of the largest full service commercial real estate firms in the region. Its brokers provide a myriad of services to owners and tenants with a commitment to excellence that has won them the respect of local, national and international clients for many years. With more than 25 employees, the firm serves clients ranging from Fortune 500 corporations, major banks and insurance companies to investors, private institutions and small businesses.

Chad PoffDIR +1 615 850 2707

Associate

Figure 1: Nashville Office Submarkets include Airport North, Airport South, Brentwood, Cool Springs/Franklin, Downtown, Green Hills/Music Row, Metrocenter, Rivergate/North and West End/Belle Meade.

BRENTWOOD

GREEN HILLSMUSIC ROW100 OAKS

COOL SPRINGS/FRANKLIN

WEST END

RUTHERFORD COUNTY

WILSONCOUNTY

RIVERGATE/HENDERSONVILLE

NORTHWEST

CENTRAL BUSINESS DISTRICT

AIRPORTSOUTH

AIRPORTNORTH

DOWNTOWNMETRO CENTER

Gallatin Rd.

Leba

non P

l.

West E

nd A

ve.

Harding Pl.

O ld Hickory Blvd.

Fran

klin

Moores Ln.

Murfreesboro Rd.

Nolensville Rd.

Done

lson

Pike

Briley

Pkwy.

Bell Rd

.

Woodmont Blvd.

Charlotte Ford, CCIMDIR +1 615 850 2751

Senior Associate

Bill NeillDIR +1 615 850 2742

Vice President

Mark WoolwineDIR +1 615 850 2732

Vice President