Commercial Real Estate OutlookIRR-Viewpoint 2010

Commercial Real Estate OutlookIRR-Viewpoint 2010

IndustrialThe Best, The Worst and The Local MarketIndustrialThe Best, The Worst and The Local Market

Top Three Markets By Vacancy…1. Los Angeles, CA – 4.92%2. Orange County, CA – 6.58%3. Seattle, WA – 6.70%

Local Market…50. Charlotte, NC – 14.26% (3Q 2009);14.70% (1Q 2010-NA)

…and the Bottom Three Markets54. Austin, TX – 18.40%55. Boston, MA – 24.76%56. Louisville, KY – 26.01%

Industrial Market PricingIndustrial Market PricingMoodys/REAL Commercial Property Price Index - Industrial

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Industrial – Overall Capitalization RatesIndustrial – Overall Capitalization Rates

Institutional NoninstitutionalNational Flex

7.50 %-12.0%

9.38% - Average

100-400 basis points

250 or 11.88% - Average

National Warehouse

7.00%-12.0%

8.60% - Average

100-300 basis points

225 or 10.85 % -Average

Korpacz – Second Quarter 2010 –Investor Survey

• Realty Rates.com – Second Quarter 2010- Investor Survey

Industrial - 9.59%

ApartmentThe Best, The Worst and The Local MarketApartmentThe Best, The Worst and The Local Market

Top Three Markets By Vacancy…1. San Francisco, CA – 3.59%2. Syracuse – 3.94%3. New York City – 4.80%

Local Market…49. Charlotte – 11.64% (3Q–2009);13.6% (1Q 2010)

…and the Bottom Three Markets54. Phoenix – 12.97%55. Naples/Ft. Myers – 13.37%56. Providence – 14.11%

Apartment Market PricingApartment Market Pricing

Moodys/REAL Commercial Property Price Index - Apartments

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Apartment – Overall Capitalization RatesApartment – Overall Capitalization Rates

Institutional NoninstitutionalNational Apartment

5.00 %-11.00%

7.68% - Average

0-400 basis points

161 or 9.29% - Average

Korpacz – Second Quarter 2010 –Investor Survey

• Realty Rates.com – Second Quarter 2010- Investor Survey

Retail – 9.50% Average

Office Market CycleOffice Market Cycle

Office – CBD The Best, The Worst and The Local MarketOffice – CBD The Best, The Worst and The Local Market

Top Three Markets By Vacancy…1. Charlotte, NC – 6.43%2. Boise, ID – 8.10%3. Memphis, TN – 8.70%

Local Market…1. Charlotte, NC – 6.43% (3Q–2009); 12.0% (1Q-2010)

…and the Bottom Three Markets54. San Jose, CA – 23.90%55. Detroit, MI – 25.00%56. Dayton, OH – 26.00%

Office – Suburban The Best, The Worst and The Local MarketOffice – Suburban The Best, The Worst and The Local Market

Top Three Markets By Vacancy…1. Dayton, OH – 10.88%2. Pittsburgh, PA – 11.09%3. Los Angeles, CA – 11.30%

Local Market…41. Charlotte, NC – 19.07% (3Q–2009);19.77% (1Q–2010)

…and the Bottom Three Markets54. Detroit, MI – 23.89%55. Phoenix, AZ – 27.41%56. Hartford, CT – 29.45%

Office Market PricingOffice Market PricingMoodys/REAL Commercial Property Price Index - Office

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Office – Overall Capitalization RatesOffice – Overall Capitalization Rates

Institutional NoninstitutionalNational CBD

6.00 %-10.50%

8.15% - Average N/A

Suburban

6.00%-12.00%

8.60% - Average

25-300 basis points

141 or 10.01 % -Average

Korpacz – Second Quarter 2010 –Investor Survey

• Realty Rates.com – Second Quarter 2010- Investor Survey

Office – 9.48% Average

Retail Market CycleRetail Market Cycle

RetailThe Best, The Worst and The Local MarketRetailThe Best, The Worst and The Local Market

Top Three Markets By Vacancy…1. San Francisco, CA – 3.08%2. Los Angeles, CA – 4.87%3. San Jose, CA – 5.03%

Local Market…12. Charlotte, NC – 6.77% (3Q–2009); 8.0% (4Q–2009)

…and the Bottom Three Markets54. Providence, RI – 17.00%55. Dayton, OH – 17.30%56. Detroit, MI – 17.35%

Retail Market PricingRetail Market PricingMoodys/REAL Commercial Property Price Index - Retail

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Retail – Overall Capitalization RatesRetail – Overall Capitalization Rates

Institutional NoninstitutionalRegional Malls

5.00 %-10.50%

7.93% - Average

25-500 basis points

279 or 10.72% - Average

Power Center

7.50%-10.00%

8.70% - Average N/A

Strip Center

7.00%-11.40%

8.38% - Average

50-1000 basis points

303 or 11.41%- Average

Korpacz – Second Quarter 2010 –Investor Survey

• Realty Rates.com – Second Quarter 2010- Investor Survey

Retail – 9.50% Average

Recent Development in Capitalization RatesRecent Development in Capitalization Rates

Korpacz Survey data for investment grade property and our analysis are presented in the following table:

National Markets4th Q 2007

Value of $1 at 2007 Cap

Rate2nd Q 2010

Value of $1 at 2010 Cap

Rate

Annual Change Cap

Rate(bps)

Annual Change Cap

Rate(%)

Change in Value of $1 from 4th Q

2007 to 2nd Q 2010

Apartment 5.75% $17.39 7.68% $13.02 193 -14.40% -25.13%Regional Mall 6.68% $14.97 7.93% $12.61 125 -10.51% -15.76%Warehouse 6.48% $15.43 8.60% $11.63 212 -13.85% -24.65%CBD Office 6.64% $15.06 8.15% $12.27 151 -10.81% -18.53%Strip Shopping Center 7.24% $13.81 8.38% $11.93 114 -7.64% -13.60%Power Center 7.13% $14.03 8.70% $11.49 157 -8.68% -18.05%Suburban Office 7.20% $13.89 8.60% $11.63 140 -9.48% -16.28%Flex/R&D 7.60% $13.16 9.38% $10.66 178 -9.91% -18.98%Net Lease 7.60% $13.16 8.98% $11.14 138 -7.38% -15.37%Average 6.92% $14.54 8.49% $11.82 156 -10.30% -18.48%

National Markets1st Half

2008

Value of $1 at 2007 Cap

Rate1st Half

2009

Value of $1 at 2010 Cap

RateAnnual

Change (bps)Annual

Change (%)

Change in Value of $1

from 2008 to 2010

Domestic Self Storage 7.55% $13.25 8.45% $11.83 90 -7.12% -10.65%

1

Source: Korpacz

KORPACZ INVESTMENT GRADE

Note: Self storage survey is completed every six months.

CAPITALIZATION RATE DATA

Recent Development in Capitalization RatesRecent Development in Capitalization Rates

Korpacz Survey data for non-investment grade property and our analysis are presented in the following table:

Real Estate Listing Sources – For Sale & For LeaseReal Estate Listing Sources – For Sale & For Lease

• Loopnet http://www.loopnet.com/

• Edis http://www.nccommerce.com/en/BusinessServices/LocateYourBusiness/BuildingsAndSites/(N.C. Department of Commerce Buildings & Sites EDIS)

• Mecklenburg County Real Estate Lookuphttp://meckcama.co.mecklenburg.nc.us/relookup/(Market Analysis Link)

• National & Local Brokerage Firms– Apartment Realty Advisors http://www.arausa.com/Index.cfm– CB Richard Ellis (CBRE) http://www.cbre.com/EN/Pages/default.aspx– Sperry Van Ness http://www.svn.com/– Lincoln Harris CSG http://www.lincolnharris.com/Home/– The Stump Corporation http://www.stumpnet.com/– Marcus & Millichamp http://www.marcusmillichap.com/– NAIGLOBAL http://www.naiglobal.com/

National Real Estate SurveysNational Real Estate Surveys

• IRR.com (Viewpoint – Real Estate Value Trends)

• Marcus & Millchap.com

• NAIGLOBAL

• www.pwc.com (Korpacz Real Estate Investor Survey)

• ACLI (American Council of Life Insurers)

• Realty Rates.com (Developer Surveys, Financial Indicators, Market Surveys, Investor Surveys)

Vacancy and Rental Rate Surveys - SUBSCRIPTIONVacancy and Rental Rate Surveys - SUBSCRIPTION

• Karnes (Office, Retail and Industrial)

• Real Data (Apartments)

• REIS

Real Estate Sales - SUBSCRIPTIONReal Estate Sales - SUBSCRIPTION

• Costar

• REIS

• Real Capital Analytics http://www.rcanalytics.com/

Integra Realty ResourcesNation’s Largest Valuation

and Counseling Firm

Integra Realty ResourcesNation’s Largest Valuation

and Counseling Firm

• 59 Offices in 33 states, plus DC and Mexico• Over 800 Consultants & Advisors• 150+ MAIs company-wide