OFFICE TRENDS REPORTGREATER COLUMBUS REGION

www.colliers.com/columbus

Activity Turns to GainsCOLUMBUS REGION OVERVIEWThe Columbus office market gained 189,981 square feet of positive absorption in the second quarter. The optimism from last quarter that vacancy rates would drop this quarter due to increased activity has played out. Similar to first quarter 2011, significant downsizing occurred as Verizon Wireless vacated 198,000 square feet of 5000 Britton Road, and expansion occurred in the Central Business District (CBD) as a number of smaller to medium tenants expanded their footprints within their current buildings. Looking forward indications of market growth are less positive. State-wide and local employment growth is sputtering or reversing course, however the signs within the real estate industry are still fairly positive. Continued on page 2 ...

FORECASTS AND REFLECTIONS• The Columbus region posted positive results

during the second quarter of 2011 with the vacancy rate decreasing to 13.0 percent from 13.4.

• NetJets Inc construction continues at their 140,000-square-foot building at Port Columbus International Airport, as does construction in New Albany.

• Average asking rental rates for class A

strengthened marginally this quarter by $.15. Class B average asking rental rates also decreased by $.21.

• Landlords and tenants are still spending an extended amount of time coming to terms on rates, but the majority of deals are done with added concessions and for financially secure tenants. Landlords desire security and tenants are looking to have their build-outs be turnkey.

POSITIVE SIGNS

After three quarters of negative absorption the Columbus region posted its strongest results since first quarter 2008.

MARKET INDICATORS

RENTAL RATES

Q2

2010

Q3

2011*

VACANCY

NET ABSORPTION

CONSTRUCTION — —

RENTAL RATES — — *Projected trend for next quarter

Q2 2011 | OFFICE

$14.00

$15.00

$16.00

$17.00

$18.00

$19.00

$20.00

$21.00

$22.00

3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11

Ren

tal R

ates

Class A Rental Rates Class B

(400,000)

(300,000)

(200,000)

(100,000)

0

100,000

200,000

300,000

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11

Completions and

 Absorption

Vacan

cy Rates

Completions Absorption Vacancy Rate

ABSORPTION, COMPLETIONS, AND VACANCY RATES

Market interest has increased during the first quarter. While it’s very difficult to calculate and gauge market interest accurately, Colliers International attempts to deduce demand by tracking tenants in the market. There was a slight increase compared to last quarter in the size desired by tenants that have toured space and have been in the market. There were roughly 11 tenants seeking more than 25,000 square feet of space which has not significantly changed from last quarter.

Tenants are active in the market but there are many firms who are hanging on to cash in order to protect themselves. Just as banks are making loans more difficult to secure, firms are hanging on to assets and being very scrupulous with hiring or capital decisions. There is a fair amount of looking and waiting as firms are rethinking plans multiple times. In line with this protective approach, tenants are opting to renew instead of incurring the extra cost of moving. Significant office growth will only occur when firms begin hiring again and that will in large part depend on the national economy as Columbus’ economy

For landlords, securing the lease is becoming more important. Landlords are reviewing tenant financials more closely and are asking the tenant for additional security deposits and personal signatures in some cases. If the additional

security is not available from the tenant the landlord will look for ways to reduce their cost of tenant improvements by having the tenant modify their requirements or contribute funds to build out.

Market Activity Volume is the sum of the absolute value of each absorption change in the market, and it tells us how much space was in transition in the quarter. Roughly 300,000 fewer square feet were in transition this quarter than in the first quarter last year. The total amount in transition was slightly more than 700,000 square feet. This is significant as the general trend is that the first quarter has the highest amount of space in transition.

There were no investment sales or significant purchases this quarter. Last quarter there were numerous buildings sold by Duke, as well as the Atlas building and LeVeque towers in the CBD.

Class B space remains the strongest performing subtype in the region as well as the most palatable. Class B has more space vacant than class A or C meaning that there are more options available for tenants to secure the correct space configuration. The compressed prices are a double-edge sword for class B however as class B is much closer priced to class C, class A space prices have also been compressed.

The Columbus office market consists of 15 suburban submarkets plus the Central Business District submarket. The Columbus region features a total of 62.6 million square feet, 43.5 million of which is suburban.

MARKET ACTIVITY

SALES AND DEALS

PROPERTY ADDRESS SALES DATE SALE PRICE SIZE SF SALES PRICE / SF SUBMARKET

6397 Emerald Parkway May 2011 $3,400,000 45,716 $74.37 Dublin

255 East Main Street May 2011 $8,500,000 106,288 $79.97 CBD

4343 Easton Commons II April 2011 $16,700,000 101,869 $163.93 Easton

463 North High Street June 2011 $900,000 25,500 $35.19 CBD

PROPERTY ADDRESS LESSOR LESSEE LEASE SF ASKING PRICE / SF (FSG) SUBMARKET

5455 Rings Road Duke Realty Corp Alcatel-Lucent 121,035 $11.45 (NNN) Dublin

825 Tech Center Drive 825 Tech Center Drive

LLC

Chase 72,000 - Gahanna/Airport

800 Tech Center Drive Morrison Taylor LTD Chase 54,615 - Gahanna/Airport

7775 Walton Parkway Waters Edge at New

Albany LLC

Blue Mile 23,558 - New Albany

4300 E. Broad Street First Community Bank - 21,448 - East

7450 Huntington Park

Drive

7450 Huntington Park

Associates LLC

First Community Bank 18,610 $16.00 Worthington

Powell Polaris

Worthington

Westerville

NewAlbany

LickingCounty

Fairfield County

Madison County

Union County

Delaware County

Pickaway County

DublinBethel

Easton

East

Gahanna/Airport

CBD

Hilliard

SouthwestSoutheast

Arlington/Grandview

NorthCentral

P. 2 | COLLIERS INTERNATIONAL

RESEARCH & FORECAST REPORT | Q2 2011 | OFFICE | GREATER COLUMBUS REGION

COLUMBUS REGION MARKET

Colliers international has changed the critieria for inclusion in the office dataset. All 10,000 square foot, class A , B, C buildings, not owned and fully leased by government are included in the dataset. This has changed the overall vacancy rate significantlyfrom the numbers at the close of 2010.

UPDATE Market Comparisons

OFFICE MARKET

Net Absorption Construction Asking Rental Rates

SUBMARKET Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions Class A ($) Class B ($)

CBD 19,091,001 2,194,334 11.5 15,911 74,388 - - $18.38 $16.26

ARLINGTON/GRANDVIEW 4,752,155 705,044 14.8 28,550 16,971 - - $22.18 $15.96

DUBLIN 9,501,878 1,190,856 12.5 142,338 111,859 - - $17.84 $14.81

EAST 3,555,814 547,337 15.4 26,568 36,219 140,000 - $16.59 $12.38

EASTON 2,685,332 148,181 5.5 44,903 35,550 - - $18.70 -

GAHANNA/AIRPORT 1,262,397 168,125 13.3 138,853 181,264 - - $17.63 $15.96

HILLIARD 2,480,456 495,009 20.0 (184,434) (195,749) - - $19.88 $14.02

NEW ALBANY 1,935,789 206,255 10.7 43,266 28,679 106,500 - $18.05 $15.00

NORTH CENTRAL 1,255,636 85,647 6.8 1,306 (17,822) - - $23.00 $15.76

POLARIS 4,419,869 374,760 8.5 (24,542) (104,189) - - $18.29 $16.54

POWELL 273,719 81,732 29.9 (7,837) (704) - - - $15.40

SOUTHEAST 402,548 70,365 17.5 - (10,500) - - - -

SOUTHWEST 236,158 54,547 23.1 (13,074) (13,074) - - - $7.50

WESTERVILLE 4,489,479 793,196 17.7 41,643 32,421 - - $16.86 $15.47

WORTHINGTON 6,496,402 1,059,375 16.3 (63,470) 168 - - $16.74 $14.37

SUBURBAN TOTAL 43,747,632 5,980,429 13.7 174,070 101,093 246,500 - $18.19 $14.81

TOTAL 62,838,633 8,174,763 13.0 189,981 175,481 246,500 - $18.25 $15.25

Net Absorption Construction Asking Rental Rates

PROPERTY TYPE Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions By Product TypeCLASS A 25,676,078 3,184,510 12.4 36,504 (48,664) 246,500 - $18.25

CLASS B 23,102,511 3,321,227 14.4 98,765 193,154 - - $15.25

CLASS C 14,060,044 1,669,026 11.9 54,712 30,991 - - $12.33

TOTALS 62,838,633 8,174,763 13.0 189,981 175,481 - - $15.88

QUARTERLY COMPARISON AND TOTALS

Net Absorption Construction Asking Rental Rates

QUARTER, YEAR Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions By Product TypeQ1, 2011 62,838,633 8,394,042 13.4 (14,500) (14,500) 246,500 65,000 $18.10 $15.46

Q4, 2010 40,544,677 7,188,371 17.73 (13,360) (253,648) 65,000 - $18.56 $14.96

Q3, 2010 40,544,677 7,184,011 17.72 (191,783) (240,288) 90,000 - $18.77 $15.38

Q2, 2010 40,544,677 6,992,228 17.25 54,334 (48,505) 90,000 - $19.30 $15.82

RESEARCH & FORECAST REPORT | Q2 2011 | OFFICE | GREATER COLUMBUS REGION

COLLIERS INTERNATIONAL | P. 3

CENTRAL BUSINESS DISTRICTThe CBD showed marginal gains in absorption. As mentioned on page one there were a number of expansions and there were a a significant number of deals done between 900 to 2,500 square feet. Looking forward to third quarter, all of the leases that the State of Ohio operations were under expired at the end of June. The movement of those operations will certainly affect the composition of space downtown. There were also two very large users touring space this quarter and they are both expected to sign in the third quarter.

NORTH COLUMBUS MARKETThe north submarkets are Dublin, Powell, Polaris, North Central, Worthington, and Westerville. Class A leasing was cumulatively strong in the north submarkets with more than 110,000 square feet of absorption. Polaris, however, lost slightly more than 29,000 square feet. Last quarter Polaris lost 80,000 square feet of space.

The average asking rental rates dipped in all submarkets especially in Polaris which lost $.83. Overall, class A space is being taken but not at a pace that will allow landlords increase average asking rental rates in the short term.

Alcatel-Lucent moved into their new space in the 120,000-square-foot lease at 5455-5475 Rings Road, Atrium II in Dublin. The firm moved 600 employees to the new location.

WEST MARKETThe west submarkets, are Arlington/Grandview and Hilliard. Continued price compression between class A and B is likely for some time in Hilliard. Verizon Wireless’ downsizing 198,000 square feet at 5000 Britton Road in Hilliard will likely keep prices low for class A space in that submarket and surrounding submarkets. With such a large new vacancy, Hilliard was the worst performing submarket, though beyond Verizon’s downsize the submarket would have gained 13,000 square feet of positive absorption.

The average asking rental rate for class A space in Arlington/Grandview shows a dramatic increase and it has to with what prices were reported, rather than a substantive change in the price of the subtype in that submarket.

SOUTH MARKETThe south submarkets are the Southwest and the Southeast. There was very little movement in these submarkets this quarter. One class C building was vacated in the Southwest for 13,074 square feet.

EAST MARKETThe east submarkets are the East side, Easton, Gahanna/Airport, and New Albany. There is a lot of development and leasing occurring in the east submarkets. Chase hired many of the 1,000 new employees needed to help absolve the bad mortgages on their books. Chase filled more than 120,000 square feet of absorption in Gahanna/Airport. Construction in New Albany and NetJet’s new facility in the East continue.

EMPLOYMENT DATAThe unemployment rate for Columbus in June was 8.2 percent, up from a six month low of 7.3 percent in April 2011. The unemployment rate is determined by the ratio of the number of those who have looked for work in the last 4 weeks compared to the total number of workers and those searching for employment. The one month jump in unemployment from 7.4 percent in May to 8.2 percent in June was not surprising given the national and state new jobs numbers which have been exhibits in dismally slow growth. The recovery has slogged. This is a concern for landlords but good news for tenants who are looking to expand or begin new leases.

The sectors which are significant for office leasing were steady or up in the preliminary June numbers. The information sector was basically flat January through June, but the sector was down a steady 1.8 percent each month year-over-year. Employment for Financial Activities in the first half of the year was stronger than the same period in 2011. 1,300 jobs were lost from May to June however which brought the growth year-over-year in June to 0 percent. Professional and Business Services has been much stronger this year than last, though from May to June 400 jobs were lost. Education and Health Services decreased by about 1300 jobs but is only down 1.3 percent compared to June last year.

GREATER COLUMBUS REGION:

Richard B. Schuen SIOR CCIMCEO | Principal | Columbus8800 Lyra DriveSuite # 150Columbus, Ohio 43240TEL +1 614 410 5612FAX +1 614 410 3312

Leslie HobbsMarketing & Research Manager8800 Lyra DriveSuite # 150Columbus, Ohio 43240TEL +1 614 410 5640FAX +1 614 410 3310

Jonathan BadgleyResearch Analyst8800 Lyra DriveSuite # 150Columbus, Ohio 43240TEL +1 614 410 5652FAX +1 614 410 3327

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This document/email has been prepared by Colliers International for advertising purposes. Colliers International statistics and data are audited annually and may result in revisions to previously reported quarterly and final year-end figures. Sources include Columbus Dispatch, Business First, Xceligent, and the Wall Street Journal.

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RESEARCH & FORECAST REPORT | Q2 2011 | OFFICE | GREATER COLUMBUS REGION