frozenomics thaw unfreezes office market in q2 · q2 2014 | office market indicators relative to...

HIGHLIGHTSNORTH AMERICA

WWW.COLLIERS.COM

Q2 2014 | OFFICE

MARKET INDICATORSRelative to prior period

NORTH AMERICAN OFFICE MARKETSummary Statistics, Q2 2014

US Q2

2014

US Q3

2014*

Canada Q2

2014

Canada Q3

2014*

VACANCY NET ABSORPTION

CONSTRUCTION RENTAL RATE**

*Projected | Construction is the change in Under Construction. **Rental rates for current quarter are for CBD Class A space.

Rent forecast is for metro-wide rents.

US CAN NA

VACANCY RATE (%) 13.72 8.52 13.36

CHANGE FROM Q1 2014 (%) -0.21 0.52 -0.15

ABSORPTION (MSF) 17.0 -0.1 16.9

NEW CONSTRUCTION (MSF) 8.8 2.6 11.5

UNDER CONSTRUCTION (MSF) 80.6 21.2 101.8

ASKING RENTS PER SF US CAN

DOWNTOWN CLASS A ($) 44.95 48.19

CHANGE FROM Q1 2014 (%) 1.4 -2.9

SUBURBAN CLASS A ($) 27.33 31.64

CHANGE FROM Q1 2014 (%) 0.8 -2.5

Frozenomics Thaw Unfreezes Office Market in Q2ANDREA CROSS National Office Research Manager | USA KEY TAKEAWAYS

• Both the U.S. and Canada surmounted the effects of “Frozenomics” in Q2. The U.S. added more than 200,000 jobs each month between February and July – the longest stretch since 1997. Projected job growth and rising business confidence levels bode well for office demand through the remainder of 2014.

• The U.S. economic recovery is broadening: half of the metro areas tracked by Colliers have recovered all of the office-using jobs lost during the recession, including hard-hit markets like Atlanta, Miami and Jacksonville.

• Continuing the trend of recent quarters, the overall U.S. vacancy rate decreased by 21 basis points to 13.72% in Q2 2014 and the overall Canadian vacancy rate increased by 52 basis points to 8.52%. Of the markets tracked by Colliers reporting both Q1 and Q2 data, 56 of 72 U.S. markets posted quarterly vacancy decreases, whereas vacancies declined in only one of the seven Canadian markets.

• North American absorption totaled about 16.9 million square feet in Q2 2014, up from 15.3 million square feet in Q1 2014. The U.S. posted just under 17 million square feet of positive absorption, compared with 83,530 square feet of negative absorption in Canada.

• Construction activity continued to increase in both countries, but at a faster pace in the U.S. At mid-year, 101.8 million square feet were under construction in the U.S. and Canadian markets tracked by Colliers, up from 92.1 million square feet at the end of Q1 2014 and 75.7 million square feet one year earlier.

P. 2 | COLLIERS INTERNATIONAL

HIGHLIGHTS | Q2 2014 | OFFICE | NORTH AMERICA

U.S. Economic TrendsFollowing the weak, weather-impacted first quarter of 2014, the U.S. economy bounced back strongly in Q2. After a 2.1% contraction in Q1 2014 – the largest decline since Q1 2009 – real GDP surged by 4.2% in Q2 2014, with gains in nearly every category. The U.S. labor market continued to show signs of improvement, with more than 200,000 jobs added each month since February 2014. The average monthly gain of 277,000 jobs in Q2 2014 was the highest total since Q1 2006. Also, weekly initial uninsurance claims dipped below 300,000 in recent weeks, on par with 2005-2006 levels.

Growth in office-using employment continues to track ahead of overall employment growth, an encouraging sign for the office market. As of July 2014, the primary office-using employment sectors had recovered about 122% of jobs lost during the recession, compared with the recovery in total employment of approximately 107% of jobs lost in the downturn. Professional and business services, which contains many jobs in the technology sector, has been the main driver of office-using employment growth, having recovered about 173% of jobs lost during the recession. However, since bottoming in early 2011, financial activities has also been adding jobs at a modest pace.

Tech and energy markets continue to lead the recovery, although economic growth is broadening to include additional markets. As of June 2014, half of the 84 metro areas tracked by Colliers had recovered all of the office-using jobs that were lost during the recession. This includes many Sunbelt markets such as Atlanta, Charlotte and Miami that were hit particularly hard by the housing bust and financial crisis. Office-using employment is approaching the pre-recession peak in other highly impacted markets, including Orlando, Tampa-St. Petersburg, West Palm Beach and Phoenix. Many of these markets are benefiting from financial services firms relocating to or expanding within lower-cost areas.

In contrast, many traditional financial centers, including Chicago, Boston, Los Angeles, San Francisco and New York, are lagging the national recovery in financial activities employment growth. Instead, growth in TAMI (technology, advertising, media and information) industries remains the driver of the office market recoveries in these markets. Tech-driven submarkets, such as San Francisco’s SoMa, New York’s Midtown South, Los Angeles’ Westside, Chicago’s River North and Boston’s Seaport District and Cambridge, remain among the strongest in the U.S., with a shortage of available space and high rents driving demand to other submarkets in these metro areas and adjacent markets.

Although robust growth in temporary hiring has garnered much attention, the recovery in permanent employment has gained steam during the last few years. In fact, the recovery in the professional and business services sector excluding temporary employment is ahead of the recovery in temporary employment, with nearly two permanent jobs in the professional and business services sector regained per one lost during the recession, compared with about 1.25 temporary jobs regained for every one lost. This trend reflects businesses’ greater confidence in the strength of the economic recovery and is boosting office demand.

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT | US

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Note: Latest data as of August 9, 2014; data are seasonally adjusted. Sources: Bureau of Labor Statistics, Colliers International.

CHANGE IN EMPLOYMENT FROM CYCLICAL PEAK | US

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Total Employment O�ce-Using Employment Professional & Business Services Financial Activities

MONTHS

Note: Latest data as of July 2014; x-axis indicates number of months elapsed since each sector’s previous cyclical employment peak; office-using employment sectors include professional and business

services, financial activities and information services; information services not displayed separately because sector peaked in 2001. | Sources: Bureau of Labor Statistics, Colliers International.

(

Sq. Ft. By Region

Absorption Per Market (SF)q1 '14 - q2 '14

1,600,000800,000160,000-160,000-800,000

-1,600,000

2 billion1 billion200 mil.

Occupied Sq. Ft.Vacant Sq. Ft.

8.5% vac.

OFFICE VACANCY, INVENTORY & ABSORPTION | Q2 2014 | NORTH AMERICA


COLLIERS INTERNATIONAL | P. 3

We expect steady growth in job creation to continue through 2014 and 2015, driving office absorption. IHS projects the addition of an average of 208,000 jobs per month in 2014 for a total of 2.5 million jobs to be added this year, the highest annual total since 2000, followed by nearly 2.7 million jobs added in 2015. Due to the weak Q1 2014 GDP figure, IHS expects real GDP growth to slow slightly, from 2.22% in 2013 to 2.11% in 2014, accelerating to 2.84% in 2015. Steady job creation and economic growth as well as rising business confidence bode well for office demand during the next few years.

14.78 14.73 14.63 14.49 14.45 14.15 14.00 13.93 13.72

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Absorption MSF Completions MSF Vac Rate (%)

OFFICE MARKET | Q2 2012–Q2 2014 | US

Source: Colliers International.

MSA% OF JOBS

RECOVEREDMSA

% OF JOBS

RECOVERED

St. Louis 377.8 Richmond 150.0

Dallas - Fort Worth 315.9 Phoenix 141.4

Nashville 305.6 Jacksonville 114.8

Omaha 266.7 Cincinnati 110.5

Austin 248.3 Birmingham 103.6

Pittsburgh 172.7

UNITED STATES: 37.4Note: All data are seasonally adjusted as of June 2014;

Includes markets tracked by Colliers with at least 25,000 financial activities jobs as of June 2014. Sources: Bureau of Labor Statistics, Federal Reserve Bank of St. Louis, Colliers International.

MARKETS WITH FINANCIAL ACTIVITIES EMPLOYMENT AT OR ABOVE PRE-RECESSION PEAK | JUNE 2014 | US

MSAFINANCIAL

ACTIVITIES JOBS RECOVERED %

PROFESSIONAL & BUSINESS

SERVICES JOBS RECOVERED %

Chicago 8.5 137.2

Boston 8.6 156.6

Los Angeles 11.6 101.7

San Francisco 25.9 357.0

New York 26.4 197.5

Washington, DC 49.7 281.0

UNITED STATES: 37.4 170.3

OFFICE-USING EMPLOYMENT SECTOR RECOVERY - MAJOR MARKETS

Note: Data represent % of jobs lost during the recession that have been regained as of Jun-14. Sources: Bureau of Labor Statistics, Federal Reserve of St. Louis, Colliers International.

MSA PERCENT RECOVERED MSA PERCENT

RECOVERED

Austin 504.9 Indianapolis 187.3

Raleigh 349.5 Baltimore 165.0

Nashville 313.2 St. Louis 160.1

San Francisco 267.7 Denver 156.9

Pittsburgh 238.7 Charlotte 152.2

Dallas - Fort Worth 231.8 Atlanta 142.2

San Jose - Silicon Valley 226.1 Jacksonville 128.3

Houston 216.6 Minneapolis - St. Paul 128.0

Columbus 190.3 Portland, OR 127.1Omaha 188.5 Boston 125.6

UNITED STATES: 119.2Note: All data are seasonally adjusted as of June 2014; Includes markets tracked by Colliers with at least

100,000 office-using jobs as of June 2014.Sources: Bureau of Labor Statistics, Federal Reserve Bank of St. Louis, Colliers International.

TOP 20 MARKETS FOR OFFICE-USING JOBS RECOVERED | JUNE 2014 | US

MSA PERCENT CHANGE MSA PERCENT

CHANGE

Raleigh 9.8 Charlotte 3.4

Austin 6.9 Los Angeles 3.4

Nashville 5.6 Atlanta 3.3

Inland Empire 5.4 Memphis 3.3

Indianapolis 5.3 Miami 3.2

Dallas - Fort Worth 5.1 Sacramento 3.2

San Francisco 3.8 St. Louis 3.2

Jacksonville 3.6 West Palm Beach 3.1

Las Vegas 3.5 Orlando 3.1

Richmond 3.4 San Jose - Silicon Valley 3.1

UNITED STATES: 2.4

Note: All data are seasonally adjusted as of June 2014; Includes markets tracked by Colliers with at least 100,000 office-using jobs as of June 2014.

Sources: Bureau of Labor Statistics, Federal Reserve Bank of St. Louis, Colliers International.

FASTEST OFFICE-USING EMPLOYMENT GROWTH | JUNE 2013-2014 | US



CANADA ECONOMIC TRENDSThe Canadian economy expanded further through the first half of 2014, adding nearly 53,000 jobs. Major drivers included growth in the energy and tech industries, the improving economy in its key trading partner the United States, and low interest rates. Looking forward, the Conference Board of Canada projects accelerating employment and GDP growth driven by the private sector into 2015, which should support further demand for office space. In 2014 and 2015, the Conference Board predicts average annual employment growth of 1.4% and 1.8%, respectively. Real GDP growth is expected to accelerate from 1.8% in 2013 to 2.4% in 2014 and 2.6% in 2015. Edmonton and Calgary should remain leading markets, fueled by robust energy industry growth in Alberta. Vancouver and Toronto also should experience above-average economic growth, benefiting from both expansions by local tech firms and tech companies relocating from other areas, as well as a preference among many young employees for a walkable environment accessible to transit, restaurant, retail and entertainment options.

OFFICE OUTLOOK 2014 BEHIND THE STATISTICS & BEYOND THE BASICSScope of Colliers’ Office Outlook Report: Colliers’ office space universe encompasses 87 markets in the U.S. and Canada with a combined total of more than 6.4 billion square feet. The 75 U.S. markets account for most of this space, with nearly 6.0 billion square feet of tracked inventory and the remaining 448 million square feet in Canada. Our coverage includes 21 markets with more than 100 million square feet of space, which combined account for 3.8 billion square feet, or nearly 60% of our office market inventory. The largest U.S. markets are New York, Washington, D.C., Chicago, Dallas and Atlanta; Toronto is the only Canadian market with more than 100 million square feet of space.

VacancyVacancy rate trends in Q2 2014 mirrored recent quarters. In the U.S., both the CBD and suburban vacancy rates decreased at a moderate pace, driven by solid office-using employment growth and relatively low levels of new supply. The overall U.S. vacancy rate decreased by 21 basis points to 13.72% in Q2 2014, a slightly faster rate than the 16 basis-point quarterly average decrease since the vacancy rate’s cyclical peak in Q2 2010. Of the 72 U.S. markets tracked by Colliers reporting both Q1 and Q2 vacancy rates, 56 posted vacancy rate decreases during the quarter. In Canada, both the CBD and suburban vacancy rates increased as new supply came online. The overall Canadian vacancy rate increased by 52 basis points to 8.52%, with all but one of the Canadian markets reporting both Q1 and Q2 data posting vacancy rate increases in Q2 2014.

MSAVACANCY RATE (%)Q2 2014

VACANCYRATE (%)Q1 2014

BASIS- POINT

CHANGE

Savannah, GA 16.51 17.81 -130

San Francisco, CA 8.28 9.45 -117

Nashville, TN 8.00 9.13 -113

New York, NY - Downtown Manhattan 13.35 14.43 -108

Waterloo Region, ON 16.02 17.08 -106

Las Vegas, NV 20.00 21.05 -105

Fairfield County, CT 12.85 13.84 -99

Charleston, SC 10.45 11.38 -93

Orange County, CA 14.98 15.67 -71

Ft. Lauderdale - Broward, FL 13.64 14.34 -70

NORTH AMERICA 13.36 13.51 -16

LARGEST Q-o-Q DECREASE IN OVERALL VACANCY RATE | NA


MARKET VACANCY (%) MARKET VACANCY (%)

Toronto, ON 6.29 San Francisco, CA 8.28

Saskatoon, SK 6.86 Pittsburgh, PA 8.36

Bakersfield, CA 7.77 Montréal, QC 8.68

Winnipeg, MB 7.84 Calgary, AB 8.77

Nashville, TN 8.00 NYC - Midtown South Manhattan 8.93

NORTH AMERICA 13.36

LOWEST OVERALL VACANCY RATES | Q2 2014 | NA

CITY 2015F-2018F CITY 2015F-2018F

Edmonton 3.1 Winnipeg 2.4

Calgary 2.9 Kitchener - Cambridge - Waterloo 2.4

Vancouver 2.8 Victoria 2.3

Abbotsford - Mission 2.7 Ottawa-Gatineau 2.2

Saskatoon 2.7 Halifax 2.2

Toronto 2.6 Moncton 2.1

Oshawa 2.4 Montreal 2.1

Regina 2.4

CANADA 2.2

Source: The Conference Board of Canada.

CANADA AVERAGE ANNUAL FORECASTED REAL GDP GROWTH %




North American Downtown Markets:Excluding renewals, of the leases signed this quarter in your CBD/downtown, did most tenants...?

Hold Steady73.6%

Expand16.7%

Contract9.7%

North American Downtown Markets:What was the trend in Free Rent (in months) o�ered by CBD landlords this quarter?

Same82.9%

Less14.3%

More 2.9%

North American Downtown Markets:What was the trend for tenant improvement allowances o�ered by CBD landlords this quarter?

Same78.6%

Less12.9%

More8.6%

North American Suburban Markets:Excluding renewals, of the leases signed this quarter in your suburban market, did most tenants...?

Hold Steady63.0%

Expand26.0%

Contract11.0%

Note: Charts above reflect % of markets reporting

Like the employment data, the Q2 2014 U.S. vacancy data indicate that the office market recovery is broadening to include more markets. Although some leading markets such as San Francisco and Nashville still rank high in terms of vacancy rate decrease, hard-hit markets such as Las Vegas, Orange County, Fort Lauderdale and West Palm Beach also posted significant decreases in the quarter. We also are observing more spillover demand from the tightest markets and submarkets to adjacent areas with greater availabilities and/or lower rents. Examples include Oakland (spillover demand from San Francisco and Silicon Valley) and Downtown and Midtown Manhattan (spillover demand from Midtown South), all of which posted faster vacancy rate decreases than the U.S. average. Rent trends also reflect increasing demand in these markets: Midtown Manhattan (12.8%) and Downtown Manhattan (7.9%) posted the first-highest and third-highest year-over-year Class A CBD rent growth among Northeast markets in Q2 2014, with Midtown South (8.7%) ranking second; and Oakland (7.5%) posted the fifth-highest year-over-year Class A CBD rent growth among West markets during the quarter, although growth still trailed San Francisco (18.8%) and San Jose/Silicon Valley (15.5%).

In many Canadian markets, the large amount of new supply coming online is contributing to an upward trend in vacancies. Of the markets reporting both Q1 and Q2 data, only the Waterloo Region posted a quarterly decrease in vacancy rate. In general, the Canadian office market has shifted in favor of tenants, particularly for older buildings as companies move into newly constructed properties. However, the overall Canadian office vacancy rate remains well below the 10% threshold considered indicative of a healthy market, and anticipated continued job growth bodes well for market fundamentals into 2015.

Tenant Demand and Leasing ActivityTenants in many industries, particularly tech and other creative firms, continue to lease space in areas and properties preferred by their employees in order to attract and retain top talent. For example, many tech firms in New York are eschewing contemporary corporate space for the renovated nineteenth-century cast-iron buildings common in Midtown South, driving robust rent growth in this office market. Several non-tech companies opened offices or signed leases for their tech operations in the San Francisco Bay Area in recent months, reflecting the region’s deep talent base. Examples included: Wal-Mart’s recently signed lease for an additional 127,000 at Sunnyvale Business Park, for a total footprint of about 312,000 square feet at the park; a new McDonald’s tech incubator on San Francisco’s Market Street; and Target’s recently opened second Bay Area tech hub in Silicon Valley’s Sunnyvale submarket, following the opening of its Technology Innovation Center in San Francisco in 2013.

Brooklyn also remains a preferred location by tech tenants in response to many of their employees’ preference to live and work in the borough. Etsy recently signed on to anchor the Dumbo Heights complex where it will have space to grow its current employee base of 350 to 650 or more in the next five years. Also, Vice Media will double its current Williamsburg, Brooklyn footprint by leasing 60,000 square feet that will accommodate its growing workforce, set to increase from 400 employees to 925 employees, citing that three-quarters of its employees live in the neighborhood as a key reason for locating there.

Other premier tech submarkets such as Manhattan’s Meatpacking District continue to experience strong demand from tenants seeking to use their office space as a recruiting tool. Samsung Electronics North America leased the entire building at 837 Washington Street in the Meatpacking District for more than $100 per square foot, illustrating the area’s tremendous appeal to TAMI and fashion tenants. In Los Angeles, True Car will double the size of its Santa Monica office to 33,700 square feet when it relocates to oceanfront Portofino Plaza, which will accommodate up to 400 employees. In Chicago, the Merchandise Mart in the River North submarket continues to draw tech tenants. eBay unit Braintree will relocate from 27,000 square feet in the West Loop to 60,000 square feet at the Merchandise Mart, with plans to hire about 360 additional people through 2017. Also, in August, Yelp announced plans to expand from its current Chicago incubator space into a permanent 50,000 square-foot office at the Merchandise Mart, at which it will hire about 300 people during the coming year. Many of these deals also indicate the very high densities employed by tech companies due to open, collaborative layouts as well as the increased mobility of their workforces.



AbsorptionNorth American absorption increased in Q2 2014, totaling about 16.9 million square feet, up from 15.3 million square feet in Q1 2014. Positive Q2 absorption was solely due to the U.S., which posted just under 17 million square feet of positive absorption, compared with 83,530 square feet of negative absorption in Canada. Although the U.S. absorption figures are volatile on a quarterly basis, the trend has been consistent improvement: four-quarter trailing average quarterly absorption reached more than 17.6 million square feet in Q2 2014, the highest figure during the current recovery. More than three-quarters of the markets tracked by Colliers posted positive absorption on both a quarterly and year-to-date basis in Q2 2014.

Once again, Houston led all North American markets, with 1.6 million square feet of absorption in Q2 2014 and nearly 3.9 million square feet of absorption through the first half of the year, as energy firm leasing remained robust. The confluence of energy and technology remains key to the market’s strength, with advanced oil and natural gas extraction techniques driving the current boom. Illustrative of this trend, Element Materials Technology recently opened its new Oil and Gas Materials Technology Centre near the booming Energy Corridor.

The tech industry drove absorption in many of the other top markets in Q2, including San Francisco, Orange County, Seattle and Chicago. Phoenix also is benefiting from tech industry growth. Recent announcements included San Francisco-based Weebly’s plan to open a 25,000 square-foot North American customer operations headquarters in Scottsdale, and Silicon Valley Bank’s plan to add 250 positions, including finance and IT roles, in Tempe during the next three years and make at least $100 million in loans to Arizona firms during the next five years.

Other top markets include Atlanta and Dallas, which continue to benefit from expansions of local firms as well as company relocations from other markets. Year-to-date absorption in Atlanta through Q2 nearly reached the total for all of 2013, and Texas continues to attract firms from out-of-state. Recent announcements included a pair of San Diego-area firms, Active Network and Omnitracs, moving their headquarters and a total of nearly 1,500 jobs to Dallas, and Charles Schwab moving 1,200 jobs to El Paso and Austin.

Many markets without significant tech and energy industry concentrations and that were hit particularly hard by the housing bust and financial market correction have been lagging in the recovery. However, positive signs have emerged in many of these markets in recent quarters. For example, although their overall vacancy rates remain high, Las Vegas and the Inland Empire each posted positive absorption for four or more consecutive quarters through Q2. Moderate improvements should continue in these office markets, driven by continued job growth, rising business confidence and a lack of new supply.

Construction ActivityConstruction activity continued to tick up in Q2 2014, driven by higher occupancy gains and rents, rising business and developer confidence, a gradually loosening lending environment, and a shortage of certain types and blocks of space in some markets. At mid-year, 101.8 million square feet were under construction in the U.S. and Canadian markets tracked by Colliers, up from 92.1 million square feet at the end of Q1 2014 and 75.7 million square feet one year earlier. The amount of new construction increased in both countries during the last 12 months. However, with concerns growing regarding new supply levels in some Canadian markets, construction activity increased at a slower pace than in the U.S., which is further behind in the development cycle. Between mid-year 2013 and mid-year 2014, the amount of square footage under way in the markets tracked by Colliers increased by about 25% in Canada, compared with a 37% increase in the U.S.

Absorption in the U.S. and Canada during the first half of 2014 totaled 32.2 million square feet, outpacing new supply totaling 27.2 million square feet – a 1.2:1 ratio. However, the new supply picture varied significantly between the two countries. The absorption to new supply ratio through H1 2014 in the U.S. was nearly 1.4:1, whereas the ratio was 0.1:1 in Canada.

Despite the increase in construction activity in the U.S., overbuilding is generally not a concern yet, with development activity still concentrated in the strongest markets and submarkets. The top 10 markets for square footage under construction at mid-year accounted for about 69% of all construction under way in Colliers’ U.S. markets, down only slightly from 72% at mid-year 2013. Moreover, the top ten markets for construction activity include many of the strongest intellectual capital, energy and education (ICEE) markets where tenant demand remains robust, such as Houston, San Jose/Silicon Valley, San Francisco, Seattle and Manhattan’s Midtown South. In other markets with construction under

MARKET ABSORPTION (MSF) MARKET ABSORPTION

(MSF)

Houston, TX 3.86 Boston, MA 1.41

NYC - Downtown Manhattan 2.45 NYC - Midtown

South Manhattan 1.31

Atlanta, GA 2.05 Phoenix, AZ 1.11

Dallas, TX 1.96 Minneapolis, MN 1.04

San Francisco, CA 1.77 Baltimore, MD .96

YTD NORTH AMERICA ABSORPTION: 16.9 MSF

TOP MARKETS FOR METRO OFFICE ABSORPTION | YTD | NA




Owners in both the U.S. and Canada are repositioning existing buildings to make them more competitive with newer buildings, with a focus on attracting the creative, tech and media tenants that have been the greatest source of current office demand in many markets. With new supply outpacing absorption in Canada and a large amount of space still under construction, some landlords in markets including Calgary, Vancouver and Ottawa are renovating older buildings to incorporate features such as higher ceilings, energy efficient upgrades, increased on-site amenities, and highly customized spaces. In the U.S., tech tenant demand continues to spread from the strongest tech submarkets to adjacent areas, and developers are repositioning assets to capture this spillover demand. Lane Partners plans to redevelop the 400,000 square-foot Sears Building in downtown Oakland into creative office space in response to a shortage of sizeable blocks of space in buildings with large floorplates in San Francisco and Oakland. Also, Ridge Capital Investors and Contrarian Capital Management recently purchased the 114,000 square-foot Latham Square office building in downtown Oakland with plans to renovate it into creative space. In Downtown Los Angeles, several developers are repositioning former warehouses to attract tech/creative tenants, including Lincoln Property, which recently signed a lease with AEG to occupy all of the 82,000 square feet of office space at The Desmond, a former department store warehouse that currently is under renovation in the South Park submarket. Redevelopment activity in both Oakland and Downtown Los Angeles also reflects their growing popularity as residential areas, particularly among Millennials desiring a walkable environment and access to public transit.

CAPITAL MARKETS & TRANSACTION ACTIVITYInvestment in North American office properties increased through the first half of 2014, with transaction volume totaling $52.9 billion, up 25% compared with the year-earlier period according to Real Capital Analytics (RCA) data. The increase was entirely due to growth in U.S. transaction activity, which grew by 30% to $51.0 billion during the period. Canadian office transaction volume decreased by nearly 40% to $1.9 billion.

MSA YTD SQUARE FEET DELIVERED

Houston, TX 3,855,608

New York, NY - Downtown Manhattan 2,861,402

Washington DC 2,820,143

Calgary, AB 1,375,670

Dallas, TX 1,311,871

Boston, MA 1,300,000

San Francisco, CA 1,194,405

Montréal, QC 937,060

New York, NY - Midtown South Manhattan 894,672

Baltimore, MD 778,400

TOP MARKETS FOR OFFICE SPACE NEW SUPPLY | YTD | NA

Note: Rankings are based on the 87 U.S. and Canadian markets tracked by Colliers International.Source: Colliers International.

way, development generally is occurring in response to a shortage of a particular type of space or lack of availabilities in a given submarket. Tishman Speyer recently announced groundbreaking on Three Alliance Center, Atlanta’s first new office tower since 2008, in the Buckhead submarket, which has one of the lowest vacancy rates in the metro area. In Phoenix, tightening market conditions in eastern and southeastern submarkets such as Tempe, Scottsdale, Gilbert and Mesa are prompting development activity; all of the 1.8 million square feet under construction at mid-year 2014 were in these areas.

MSA SQUARE FEET UNDERWAY (MSF)

% OF EXISTING INVENTORY

Calgary, AB 5.84 8.81%

Houston, TX 17.77 8.39%

San Jose - Silicon Valley 4.99 6.89%

Vancouver, BC 3.58 6.58%

Edmonton, AB 1.69 6.33%

Halifax, NS 0.46 5.92%

San Francisco, CA 4.99 5.59%

Toronto, ON 6.75 4.87%

Regina, SK 0.20 4.45%Seattle/Puget Sound, WA 4.61 4.11%

NORTH AMERICA 101.80 1.58%

CONSTRUCTION AS % OF EXISTING INVENTORY | Q2 2014 | NA

Note: Rankings are based on the 87 U.S. and Canadian markets tracked by Colliers International. Source: Colliers International

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12-Month Trailing Volume (left-axis) Year-Over-Year % Change (right-axis)

OFFICE TRANSACTION VOLUME | Q2 2014 | NA

Note: Latest data as of Q2 2014; all data are 12-month trailing.Sources: Real Capital Analytics; Colliers International.



Despite the specter of rising interest rates, investor demand for CBD assets in gateway cities remains voracious, further compressing cap rates. According to RCA, the average cap rate in the top quartile of CBD properties in major U.S. metros was just 4.4% in the first half of the year, and the lowest cap rates for office properties in New York, Boston, Washington, DC and San Francisco were in the low- to mid-3% range. Based on the Moody’s/RCA Commercial Property Price Index (CPPI), pricing for major metro CBD properties is now 16.6% above the pre-recession peak, the only segment of the office market in which pricing has fully recovered from the recession. However, quarterly price growth for major metro CBD properties decelerated to 0.2% in Q2 2014, the slowest growth among the four segments. Growth was strongest for non-major metro suburban properties, at 11.2%, reflecting investor interest broadening to include more geographies as well as suburban assets. Nonetheless, pricing in non-major markets remains nearly 19% off the peak for CBD assets and 24% off the peak for suburban assets. Given high pricing and stiff competition for office properties in gateway markets, we expect investor interest to continue to shift to secondary and tertiary markets as well as suburban assets in search of higher yields, driving further price growth in these areas.

Foreign investors remain a key source of capital in North American real estate, particular in gateway cities. Of the $13.0 billion of cross-border capital invested in U.S. office properties year-to-date through mid-August 2014, nearly 80% was in Boston, Manhattan, Los Angeles, Washington, DC, and San Francisco. In Canada, 15 of the 19 properties, accounting for 76% of cross-border capital flows, that were purchased by foreign investors were in Toronto. The relative stability and transparency of the North American real estate markets will likely continue to attract foreign investors to both gateway cities and, increasingly, secondary markets in search of higher returns and less competition.

Looking forward, the 10-year Treasury yield is expected to rise as the Federal Reserve ends its bond purchases in October 2014 and likely begins raising interest rates in 2015. U.S. office assets, particularly secondary, tertiary and suburban properties, still offer attractive risk-adjusted returns and should benefit from continued capital inflows, particularly as economic conditions strengthen further and development activity remains low and targeted in most markets. For suburban office properties, the cap rate spread to the 10-year Treasury was 469 basis points in Q2 2014, higher than the average of 410 basis points between Q1 2001 and Q2 2014 and well above the recent low of 183 basis points in Q2 2007. Non-gateway markets with favorable growth prospects, such as many Texas markets, Raleigh/Durham, Nashville, Phoenix and Portland, will likely attract a greater amount of interest from both domestic and foreign capital sources in the coming quarters.

MOODY’S/RCA COMMERCIAL PROPERTY PRICE INDICES - US OFFICE

0

50

100

150

200

250

300

Major O�-CBD Non-Major O�-CBD Major O�-Sub Non-Major O�-Sub

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Average Cap Rates - Q2 2014 O�ceU.S. Overall 5.8%

Major Metro CBD 5.3%Non-Major Metro CBD 6.9%Major Metro Suburban 6.7%Non-Major Metro Suburban 7.6%

Note: Latest data as of Q2 2014. Sources: Moody’s Investor Service, Real Capital Analytics.

US OFFICE SPREADS: CAP RATE TO 10-YEAR TREASURY YIELD

0

100

200

300

400

500

600

700

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Basis Points

CBD Suburban All O�ce

Note: Latest data as of Q2 2014. Sources: Real Capital Analytics, IHS Global Insight, Colliers International Research.



UNITED STATES | DOWNTOWN OFFICE | ALL INVENTORY

MARKETEXISTING

INVENTORY (SF) JUNE 30, 2014

NEW SUPPLY Q2 2014

(SF)

YTD NEW SUPPLY 2014

(SF)

UNDER CONSTRUCTION

(SF)

VACANCY RATE (%) MARCH 31,

2014

VACANCY RATE (%) JUNE 30,

2014

ABSORPTION Q2 2014

(SF)

YTD ABSORPTION

2014 (SF)

NORTHEAST

Baltimore, MD 28,652,392 45,000 45,000 0 12.77 12.99 -21,458 -339,193

Boston, MA 62,623,701 0 1,050,000 2,047,827 12.02 12.30 -175,631 649,702

Hartford, CT 9,971,800 0 0 0 12.53 13.45 -92,168 19,926New York, NY Downtown Manhattan

110,938,458 0 2,861,402 2,800,000 14.43 13.35 1,201,140 2,447,603

New York, NY Midtown Manhattan

230,068,701 0 0 0 11.78 11.39 902,866 -367,202

New York, NY Midtown South Manhattan

162,245,367 0 894,672 3,600,000 8.83 8.93 -162,903 1,305,850

Philadelphia, PA 42,857,113 0 0 0 11.08 11.33 -105,278 84,052

Pittsburgh, PA 32,091,162 0 0 1,560,643 10.28 9.64 43,805 38,023

Stamford, CT* 18,708,865 0 0 0 21.28 20.74 152,473 152,473

Washington DC 144,431,119 287,800 863,741 1,513,291 10.38 10.77 -423,371 -208,780

White Plains, NY 7,671,679 0 0 0 14.89 15.79 -69,577 -90,629

Northeast Total 850,260,357 332,800 5,714,815 11,521,761 11.53 11.39 1,249,898 3,691,825

SOUTH

Atlanta, GA 50,075,209 0 0 487,034 16.26 15.63 319,826 575,588

Birmingham, AL 4,985,532 0 0 0 20.43 20.48 -2,406 450,850

Charleston, SC 2,252,548 0 0 21,000 9.41 7.49 43,231 37,952

Charlotte, NC 22,609,763 0 0 0 9.15 9.65 -111,837 -79,125

Columbia, SC 4,678,427 0 0 0 12.11 11.81 13,964 -36,435

Dallas, TX 33,948,885 0 0 450,000 26.47 26.91 -150,176 -20,070

Ft. Lauderdale-Broward, FL 8,121,843 0 0 0 12.59 11.29 105,588 165,980

Ft. Worth, TX 10,154,101 0 0 75,971 15.76 15.87 -11,979 124,173

Greenville, SC 3,293,679 0 0 0 17.87 18.78 -30,169 -39,468

Houston, TX 42,670,624 0 0 1,464,268 12.05 11.33 303,907 316,159

Jacksonville, FL 15,572,544 0 0 0 13.24 14.19 -148,449 -133,485

Little Rock, AR 6,482,552 0 0 0 10.79 10.62 27,815 3,330

Louisville, KY 43,702,531 0 299,483 130,000 10.83 10.39 191,924 496,801

Memphis, TN 5,403,149 0 0 0 17.52 14.71 151,809 184,321

Miami-Dade, FL 18,812,554 0 0 172,932 17.63 17.29 65,323 95,249

Nashville, TN 13,240,053 0 0 262,000 12.69 11.56 149,521 134,000

Orlando, FL 12,194,869 0 0 22,832 11.76 13.04 -156,152 -160,132

Raleigh/Durham/ Chapel Hill, NC

14,306,307 0 388,279 242,969 6.53 6.46 9,817 291,219

Richmond, VA 16,533,157 0 106,662 321,500 11.68 11.17 84,145 169,579

Savannah, GA 803,516 0 0 0 14.06 11.61 19,678 18,442

Tampa Bay, FL 6,779,680 0 0 0 15.13 15.06 4,801 23,280West Palm Beach/Palm Beach County, FL

10,086,288 0 0 0 15.86 15.27 58,859 55,850

South Total 346,707,811 0 794,424 3,650,506 14.37 14.10 939,040 2,674,058

* Q1-14 data used for Stamford.



UNITED STATES | DOWNTOWN OFFICE | ALL INVENTORY

MARKETEXISTING


NEW SUPPLY Q2 2014

(SF)

YTD NEW SUPPLY 2014

(SF)

UNDER CONSTRUCTION

(SF)

VACANCY RATE (%) MARCH 31,

2014


2014

ABSORPTION Q2 2014

(SF)

YTD ABSORPTION

2014 (SF)

MIDWEST

Chicago, IL 158,102,210 0 0 1,073,100 12.71 12.41 475,307 393,097

Cincinnati, OH 18,989,060 0 0 0 15.13 14.97 30,682 12,653

Cleveland, OH 32,520,214 0 0 0 17.66 17.50 49,818 57,258

Columbus, OH 19,452,521 0 0 490,000 10.96 9.97 192,463 246,829

Grand Rapids, MI 5,314,801 0 0 0 17.43 15.02 85,119 107,774

Indianapolis, IN 22,548,402 0 0 0 9.49 9.22 60,961 -6,527

Kansas City, MO 34,737,964 0 0 0 14.80 14.64 55,518 146,983

Milwaukee, WI 18,749,253 0 0 42,000 12.27 12.39 -21,790 104,031

Minneapolis, MN 31,690,413 0 0 1,160,000 13.45 12.43 324,289 170,204

Omaha, NE 6,457,869 0 0 0 7.18 7.06 9,615 -11,707

St. Louis, MO 23,216,158 0 0 0 20.37 19.77 138,714 -386,762

St. Paul, MN 11,730,218 0 0 0 14.08 14.25 -19,239 -95,754

Midwest Total 409,631,096 0 0 2,765,100 13.98 13.53 1,381,457 934,987

WEST

Albuquerque, NM 3,191,080 0 0 0 27.73 27.00 23,261 40,566

Bakersfield, CA 3,243,457 12,991 12,991 59,242 8.72 8.74 10,955 2,743

Boise, ID 4,177,362 46,368 298,715 466,022 8.69 11.34 -110,776 -104,324

Denver, CO 34,319,952 112,552 112,552 868,100 12.01 12.04 89,363 182,211

Fresno, CA 3,288,944 0 0 0 10.83 11.10 -8,864 -51,311

Honolulu, HI 7,164,686 0 0 0 14.36 14.22 9,727 -39,655

Las Vegas, NV 5,017,501 0 49,200 129,000 11.88 10.78 55,401 153,621

Los Angeles, CA* 32,566,100 0 0 508,200 19.73 20.14 -137,400 -137,400

Oakland, CA 17,255,313 0 0 0 11.49 11.22 47,674 58,788

Phoenix, AZ 20,181,280 0 0 0 21.26 21.26 -2 67,788

Portland, OR 34,830,351 0 15,579 205,290 9.61 9.31 105,075 271,840

Reno, NV 3,337,018 0 0 0 15.12 14.41 23,812 308

Sacramento, CA* 13,570,765 0 0 0 15.86 15.49 49,426 49,246

San Diego, CA 10,172,525 0 0 320,000 19.36 18.82 54,760 -44,306

San Francisco, CA 89,213,545 425,993 1,194,405 4,990,366 9.45 8.28 1,442,981 1,772,981

San Jose - Silicon Valley 8,060,488 0 0 0 18.16 16.72 104,197 137,414

Seattle/Puget Sound, WA 55,619,584 58,959 58,959 3,246,507 11.10 10.64 301,649 545,203

Stockton, CA 8,221,819 0 0 0 15.87 15.66 16,744 41,822

Walnut Creek, CA 12,443,115 0 0 0 15.29 14.78 62,985 138,734West Total 365,874,885 656,863 1,742,401 10,792,727 13.01 12.57 2,140,968 3,086,269

U.S. TOTALS 1,972,474,149 989,663 8,251,640 28,730,094 12.81 12.53 5,711,363 10,387,139

(continued)

*Q1-14 data used for Sacramento and Los Angeles markets.



UNITED STATES | DOWNTOWN OFFICE | CLASS A

MARKETEXISTING


AVERAGEANNUALQUOTED

RENT(USD PSF)

VACANCY RATE (%) MAR 31,

2014


2014

ABSORPTION Q2 2014

(SF)

YTD ABSORPTION

2014 (SF)

QUARTERLY CHANGE IN RENT (%)

ANNUAL CHANGE IN RENT(%)

NORTHEAST

Baltimore, MD 12,805,993 21.47 11.77% 11.62% 18,629 228,016 -0.6% -8.4%

Boston, MA 43,673,537 49.63 13.36% 13.90% -209,907 529,633 -1.0% 2.4%

Hartford, CT 6,771,455 22.60 11.21% 13.48% -154,205 -80,207 0.1% -0.6%

NYC - Downtown Manhattan 80,463,304 50.97 16.44% 14.98% 1,173,885 2,155,612 -2.7% 7.9%

NYC - Midtown Manhattan 197,217,338 76.00 12.38% 11.86% 1,020,961 -107,596 1.3% 12.8%

NYC - Midtown South Manhattan 34,311,898 67.16 9.64% 9.43% 71,827 1,059,295 1.9% 8.7%

Philadelphia, PA 30,476,310 27.63 10.99% 11.34% -106,806 43,380 0.5% 6.0%

Pittsburgh, PA 18,367,184 25.65 8.14% 7.72% 96,262 -43,468 -0.7% 4.0%

Stamford, CT* 13,339,184 38.10 22.04% 21.77% 65,472 65,472 -0.5% -0.5%

Washington DC 89,488,906 54.54 11.58% 11.53% 311,301 766,835 3.1% 0.7%

White Plains, NY 4,887,012 31.48 17.23% 17.90% -32,789 -41,736 -0.4% -0.3%

Northeast Total 531,802,121 58.00 12.79% 12.43% 2,254,630 4,575,236 0.8% 8.1%

SOUTH

Atlanta, GA 30,396,533 21.63 17.63% 16.79% 257,499 440,454 -0.1% -6.6%

Birmingham, AL 4,029,421 20.99 15.21% 15.08% 5,058 476,113 -0.3% -0.3%

Charleston, SC 1,009,994 34.51 9.33% 6.28% 30,753 31,052 3.7% 5.7%

Charlotte, NC 16,132,547 25.15 9.64% 9.68% -6,576 53,085 -0.1% 1.0%

Columbia, SC 2,131,068 20.77 11.29% 10.73% 11,957 -39,949 0.8% 1.2%

Dallas, TX 22,640,759 22.95 25.12% 25.80% -154,911 -54,371 0.7% 5.8%

Ft. Lauderdale-Broward, FL 4,494,296 33.05 17.67% 14.79% 129,694 162,836 0.2% 5.9%

Ft. Worth, TX 5,855,897 28.90 17.08% 17.45% -21,522 -5,592 0.0% -0.7%

Greenville, SC 2,021,715 21.26 17.52% 19.14% -32,085 -25,752 1.8% 10.0%

Houston, TX 30,778,455 40.54 10.56% 9.82% 227,672 197,191 4.9% 10.0%

Jacksonville, FL 6,846,824 19.98 16.50% 16.50% -370 -215,242 0.3% 0.3%

Little Rock, AR 2,635,440 17.30 10.71% 10.69% 681 4,555 4.4% 6.1%

Louisville, KY 10,578,190 20.43 10.78% 10.74% 4,243 254,621 0.6% 0.9%

Memphis, TN 2,009,825 17.12 26.76% 20.64% 123,143 133,943 0.1% -1.5%

Miami-Dade, FL 9,980,567 40.15 17.75% 17.12% 62,660 108,641 1.0% 1.7%

Nashville, TN 4,058,652 23.77 11.28% 9.98% 52,720 55,383 1.6% 9.5%

Orlando, FL 5,776,846 25.00 12.56% 14.29% -99,535 -101,212 -0.6% 2.5%

Raleigh/Durham/Chapel Hill, NC 7,059,959 26.03 6.64% 6.67% -2,081 13,584 -1.0% 9.6%

Richmond, VA 6,355,704 24.88 9.83% 8.09% 110,852 119,490 0.2% 7.1%

Savannah, GA 645,713 20.91 9.65% 6.82% 18,273 14,795 0.0% 1.6%

Tampa Bay, FL 4,999,570 24.24 13.25% 13.26% -518 11,665 1.9% 4.8%

West Palm Beach/ Palm Beach County, FL

3,515,957 35.63 18.73% 17.84% 31,550 44,363 0.6% 0.9%

South Total 183,953,932 27.35 14.93% 14.53% 749,157 1,679,653 1.4% 3.3%




UNITED STATES | DOWNTOWN OFFICE | CLASS A

MARKETEXISTING


AVERAGEANNUALQUOTED

RENT(USD PSF)


2014


2014

ABSORPTION Q2 2014

(SF)

YTD ABSORPTION

2014 (SF)


ANNUAL CHANGE IN RENT(%)

MIDWEST

Chicago, IL 61,039,401 39.12 12.85% 12.42% 267,455 140,347 2.1% 5.4%

Cincinnati, OH 8,359,432 21.77 19.36% 18.79% 47,903 82,998 -2.7% 0.4%

Cleveland, OH 10,512,842 21.34 15.20% 14.83% 38,894 23,102 0.5% -3.3%

Columbus, OH 8,377,149 19.75 11.96% 11.21% 62,933 106,903 -0.3% 2.9%

Grand Rapids, MI 1,461,047 18.48 22.51% 19.26% 47,385 65,030 -2.2% -4.6%

Indianapolis, IN 9,501,787 18.95 12.01% 12.07% -5,780 -58,448 0.0% 0.5%

Kansas City, MO 10,518,171 19.03 20.96% 20.33% 66,538 58,206 0.5% 0.8%

Milwaukee, WI 5,106,083 26.53 8.92% 8.80% 5,931 10,877 0.0% -0.4%

Minneapolis, MN 13,618,828 17.17 12.37% 10.85% 205,929 52,768 2.6% 1.6%

Omaha, NE 3,549,103 20.25 3.48% 3.32% 5,544 33,599 0.0% 0.6%

St. Louis, MO 9,558,798 18.06 20.05% 19.76% 28,172 -508,055 -0.2% 0.6%

St. Paul, MN 2,773,960 14.45 12.54% 13.51% -26,706 -109,108 0.0% 8.0%

Midwest Total 151,576,895 27.62 14.06% 13.50% 744,198 97,411 1.4% 3.5%

WEST

Albuquerque, NM 575,047 20.14 26.55% 26.55% 0 0 0.0% 1.9%

Bakersfield, CA 729,040 17.40 6.12% 6.35% -1,737 -13,243 0.0% 0.0%

Boise, ID 1,941,427 20.75 4.40% 11.52% -93,934 -56,044 8.0% 9.0%

Denver, CO 21,463,546 32.62 12.78% 12.81% 93,041 180,056 0.5% 8.3%

Fresno, CA 1,026,046 24.60 8.43% 6.11% 23,730 809 0.0% 2.5%

Honolulu, HI 4,644,304 35.52 14.16% 12.32% 29,628 -30,844 0.0% 1.9%

Las Vegas, NV 1,103,341 33.36 12.67% 13.10% -4,771 -665 5.7% 6.9%

Los Angeles, CA* 18,098,100 37.32 19.20% 19.48% -53,000 -53,000 1.3% 3.0%

Oakland, CA 10,562,045 34.20 9.68% 9.64% 4,133 -37,565 0.7% 7.5%

Phoenix, AZ 9,474,848 22.94 22.43% 22.75% -30,459 -11,801 0.2% 2.1%

Portland, OR 13,302,291 26.61 9.82% 10.22% -52,597 -142,686 1.3% 2.9%

Reno, NV 583,955 23.51 13.85% 13.42% 2,461 -811 -0.4% -2.2%

Sacramento, CA* 5,945,146 31.32 15.61% 15.29% 18,734 18,734 -1.1% -2.6%

San Diego, CA 7,257,266 29.76 18.60% 17.85% 54,316 -53,231 2.5% 6.0%

San Francisco, CA 57,465,551 59.73 10.24% 8.75% 1,190,858 1,458,016 6.0% 18.8%

San Jose - Silicon Valley 3,493,453 36.72 18.31% 17.57% 24,544 26,344 8.1% 15.5%

Seattle/Puget Sound, WA 32,199,750 34.07 11.35% 10.68% 110,223 312,459 0.8% 7.5%

Stockton, CA 2,790,574 19.44 19.49% 19.49% 77 18,649 -3.0% -10.0%

Walnut Creek, CA 8,271,861 28.08 14.62% 13.62% 82,637 124,189 0.9% 1.7%West Total 200,927,591 39.62 13.01% 12.46% 1,397,884 1,739,366 3.2% 10.1%

U.S. TOTALS 1,068,260,539 44.95 13.38% 12.95% 5,145,869 8,091,666 1.4% 7.5%

(continued)

* Q1-14 data used for Sacramento and Los Angeles markets.



UNITED STATES | SUBURBAN OFFICE | ALL INVENTORY

MARKETEXISTING


NEW SUPPLY Q2 2014

(SF)YTD NEW SUPPLY

2014 (SF)UNDER

CONSTRUCTION (SF)

VACANCY RATE (%)

MAR 31, 2014

VACANCY RATE (%)

JUNE 30, 2014

ABSORPTION Q2 2014

(SF)YTD ABSORPTION

2014 (SF)

NORTHEAST

Baltimore, MD 88,259,043 0 733,400 0 12.39% 12.15% 207,916 1,299,972

Boston, MA 112,698,600 250,000 250,000 1,673,573 18.06% 17.70% 291,990 757,713

Fairfield County, CT 40,646,251 0 0 0 13.84% 12.85% 213,792 194,596

Hartford, CT 12,784,662 0 0 0 13.04% 11.86% 150,825 419,283

Long Island, NY 74,486,194 0 0 154,999 10.23% 10.18% 32,915 -44,348New Jersey - Central 131,315,428 0 20,525 0 15.66% 15.56% 135,589 766,086

New Jersey - Northern 163,629,090 0 40,018 0 15.73% 15.79% -100,064 -327,930

Philadelphia, PA 110,544,032 229,838 605,631 535,000 15.25% 14.94% 545,868 457,790

Pittsburgh, PA 91,138,395 208,981 444,605 1,347,989 7.55% 7.91% -38,625 -84,678

Washington DC 289,371,434 1,916,402 1,956,402 3,796,119 16.86% 17.28% 252,078 -670,152Westchester County, NY 38,211,929 0 0 0 13.08% 13.24% -60,743 -129,118

Northeast Total 1,153,085,058 2,605,221 4,050,581 7,507,680 14.75% 14.75% 1,631,541 2,639,214

SOUTH

Atlanta, GA 171,907,388 0 0 1,029,608 16.17% 15.95% 424,193 1,480,850

Birmingham, AL 14,683,072 0 0 0 15.02% 14.18% 123,347 -4,800

Charleston, SC 9,818,033 0 114,880 215,000 11.84% 11.13% 69,184 160,216

Charlotte, NC 62,302,056 105,500 241,235 433,758 12.19% 11.72% 382,770 668,161

Columbia, SC 4,966,961 0 0 0 22.62% 22.43% 9,325 62,291

Dallas, TX 238,058,523 969,191 1,311,871 4,621,008 14.72% 14.72% 839,485 1,983,167Ft. Lauderdale-Broward, FL

43,222,291 0 0 515,000 14.67% 14.08% 253,292 114,130

Ft. Worth, TX 21,168,105 153,195 181,285 928,651 10.56% 10.82% 81,459 124,024

Greenville, SC 4,896,690 0 0 0 19.60% 18.54% 51,783 15,959

Houston, TX 169,088,850 1,728,894 3,855,608 16,303,874 11.84% 11.98% 1,290,750 3,546,701

Jacksonville, FL 46,157,943 0 12,151 223,000 11.75% 11.28% 214,601 529,741

Little Rock, AR 7,551,255 0 0 0 12.59% 11.83% 39,299 68,375

Memphis, TN 27,227,184 0 0 241,000 14.96% 14.77% 52,426 190,590

Miami-Dade, FL 65,547,026 80,000 80,000 303,768 11.28% 10.88% 334,576 493,769

Nashville, TN 15,010,996 0 0 532,720 5.99% 4.86% 171,544 268,640

Orlando, FL 54,400,023 220,000 295,997 60,000 13.62% 13.88% -170,392 83,408Raleigh/Durham/Cha-pel Hill, NC

64,772,682 206,409 264,481 1,155,043 12.24% 11.99% 343,220 396,296

Richmond, VA 34,772,603 0 15,000 314,658 11.07% 11.03% 66,862 -24,099

Savannah, GA 1,461,838 0 0 0 19.88% 19.21% 9,832 1,261

Tampa Bay, FL 57,275,381 0 0 18,000 17.66% 17.44% 127,713 269,957West Palm Beach/Palm Beach County, FL

28,464,865 0 0 133,586 18.08% 17.45% 180,268 294,510

South Total 1,142,753,765 3,463,189 6,372,508 27,028,674 13.83% 13.65% 4,895,537 10,723,147




UNITED STATES | SUBURBAN OFFICE | ALL INVENTORY

MARKETEXISTING


NEW SUPPLY Q2 2014

(SF)YTD NEW SUPPLY

2014 (SF)UNDER

CONSTRUCTION (SF)

VACANCY RATE (%)

MAR 31, 2014

VACANCY RATE (%)

JUNE 30, 2014

ABSORPTION Q2 2014

(SF)YTD ABSORPTION

2014 (SF)

MIDWEST

Chicago, IL 155,576,032 123,475 123,475 915,000 17.19% 17.19% 110,798 -652,665

Cincinnati, OH 46,579,893 0 135,576 0 16.03% 15.89% 66,399 219,673

Cleveland, OH 47,980,920 0 139,212 127,708 11.40% 11.10% 147,404 29,275

Columbus, OH 44,027,261 0 0 424,840 10.46% 10.49% -11,388 36,460

Grand Rapids, MI 12,533,768 140,593 140,593 0 19.16% 19.20% -31,258 -31,258

Indianapolis, IN 43,264,183 0 0 132,991 9.70% 9.37% 144,135 110,087

Kansas City, MO 58,622,017 131,200 131,200 637,800 11.94% 11.33% 472,518 588,448

Milwaukee, WI 33,330,654 0 0 160,000 12.36% 12.00% 122,039 203,521

Minneapolis, MN 79,206,435 0 598,400 870,900 13.49% 13.39% 76,411 878,834

Omaha, NE 21,486,334 168,489 284,489 78,689 10.38% 10.18% 275,009 532,931

St. Louis, MO 55,394,777 0 183,000 435,000 9.45% 9.18% 152,087 127,682

Midwest Total 737,494,892 571,677 1,755,977 3,872,096 14.35% 14.01% 1,524,154 2,921,390

WEST

Albuquerque, NM 10,877,999 0 0 0 15.69% 19.09% -369,650 -306,408

Bakersfield, CA 6,070,404 0 8,984 131,894 6.53% 7.24% -43,291 34

Boise, ID 17,158,432 3,576 24,142 153,048 12.42% 12.95% -87,145 -334,958

Denver, CO 106,931,545 48,537 91,537 690,310 13.00% 12.71% 352,021 655,505

Fairfield, CA 4,995,686 0 0 30,000 20.05% 19.97% 3,863 12,215

Fresno, CA 17,562,156 0 20,000 0 13.10% 13.34% -43,410 146,469

Honolulu, HI 7,730,394 0 0 0 11.85% 12.93% -83,603 -78,267

Las Vegas, NV 36,776,508 0 47,000 577,894 22.30% 21.26% 382,762 479,548Los Angeles - In-land Empire, CA

20,516,142 0 94,891 58,000 18.90% 18.46% 102,300 214,800

Los Angeles, CA* 167,879,800 152,300 152,300 1,588,000 17.82% 17.64% 364,700 364,700

Oakland, CA 16,271,372 0 0 0 19.99% 19.03% 155,298 153,599

Orange County, CA 81,476,457 488,696 488,696 354,845 15.67% 14.98% 1,150,900 884,401

Phoenix, AZ 111,159,050 100,622 218,332 1,997,202 18.27% 18.11% 261,531 1,044,490Pleasanton/Tri-Valley, CA

27,748,942 0 0 0 12.81% 12.48% 90,516 -208,837

Portland, OR 43,981,869 0 45,521 53,000 9.37% 8.93% 192,191 365,717

Reno, NV 9,592,304 0 0 0 14.47% 14.93% -43,645 -72,526

Sacramento, CA* 52,144,531 68,417 68,417 77,000 19.13% 18.91% 141,121 141,160

San Diego, CA 71,901,725 45,917 587,052 920,416 12.79% 12.63% 154,798 847,920San Francisco Peninsula

35,209,871 57,741 57,741 485,924 11.28% 11.11% 9,726 -4,835

San Jose - Silicon Valley

64,391,616 246,000 711,283 4,993,108 9.89% 9.95% 260,466 521,899

Seattle/Puget Sound, WA

56,542,804 0 0 1,363,700 10.31% 9.95% 287,220 206,577

Walnut Creek, CA 5,513,617 0 0 0 16.27% 16.68% -22,357 19,330

West Total 972,433,224 1,211,806 2,615,896 13,474,341 15.01% 14.80% 3,216,312 5,052,533

U.S. TOTALS 4,005,766,939 7,851,893 14,794,962 51,882,791 14.48% 14.31% 11,267,544 21,336,284

(continued)




UNITED STATES | SUBURBAN OFFICE | CLASS A

MARKETEXISTING


AVERAGEANNUAL

QUOTED RENT(USD PSF)

VACANCY RATE (%)

MAR 31, 2014

VACANCY RATE (%)

JUNE 30, 2014

ABSORPTION Q2 2014

(SF)

YTD ABSORPTION

2014 (SF)


ANNUAL CHANGE IN RENT (%)

NORTHEAST

Baltimore, MD 31,999,072 24.30 13.27% 12.49% 207,916 1,299,972 1.3 -3.0

Boston, MA 48,244,601 26.20 16.52% 16.19% 291,990 757,713 1.0 4.7

Fairfield County, CT 18,121,467 39.48 13.42% 12.63% 213,792 194,596 2.0 8.1

Hartford, CT 7,123,495 21.01 12.82% 11.46% 150,825 419,283 -1.7 0.5

Long Island, NY 25,394,853 30.76 10.92% 10.57% 32,915 -44,348 1.8 0.7

New Jersey - Central 61,295,100 26.50 15.42% 15.33% 135,589 766,086 3.0 0.3

New Jersey - Northern 87,786,735 28.00 18.04% 18.32% -100,064 -327,930 0.2 6.6

Philadelphia, PA 67,648,043 25.62 13.55% 13.23% 545,868 457,790 0.8 1.4

Pittsburgh, PA 16,920,743 25.92 7.11% 8.69% -38,625 -84,678 17.1 15.7

Washington DC 139,579,792 31.75 17.22% 17.74% 252,078 -670,152 -2.3 -2.7

Westchester County, NY 17,711,395 27.71 15.60% 15.66% -60,743 -129,118 1.2 2.7Northeast Total 521,825,296 28.49 15.48% 15.53% 1,631,541 2,639,214 0.6 1.6

SOUTH

Atlanta, GA 81,351,202 22.87 14.07% 14.08% 424,193 1,480,850 1.1 3.3

Birmingham, AL 9,276,993 20.79 11.88% 9.55% 123,347 -4,800 0.5 0.3

Charleston, SC 3,689,350 25.06 8.08% 7.43% 69,184 160,216 2.7 2.8

Charlotte, NC 20,362,557 23.50 13.33% 12.38% 382,770 668,161 1.7 2.3

Columbia, SC 1,001,769 17.11 18.42% 18.91% 9,325 62,291 -0.1 2.3

Dallas, TX 97,441,781 24.90 13.28% 13.65% 839,485 1,983,167 0.4 5.3

Ft. Lauderdale-Broward, FL 10,571,174 27.47 14.79% 15.18% 253,292 114,130 1.1 0.4

Ft. Worth, TX 3,591,539 24.30 1.87% 1.83% 81,459 124,024 -2.6 -1.6

Greenville, SC 2,458,553 19.33 14.46% 11.02% 51,783 15,959 1.3 9.8

Houston, TX 75,225,262 32.17 8.48% 9.37% 1,290,750 3,546,701 0.2 7.7

Jacksonville, FL 9,183,817 19.60 9.31% 7.42% 214,601 529,741 0.7 1.0

Little Rock, AR 2,843,202 19.74 17.26% 16.82% 39,299 68,375 7.0 3.2

Memphis, TN 8,310,062 20.97 8.22% 8.05% 52,426 190,590 -0.2 -1.2

Miami-Dade, FL 16,208,719 27.47 15.17% 14.20% 334,576 493,769 1.1 0.4

Nashville, TN 7,660,730 26.50 6.83% 4.78% 171,544 268,640 6.0 10.6

Orlando, FL 16,822,153 21.04 16.96% 17.26% -170,392 83,408 -0.6 -0.1

Raleigh/Durham/Chapel Hill, NC 25,192,507 21.33 10.08% 9.88% 343,220 396,296 0.1 4.6

Richmond, VA 13,754,859 18.70 11.21% 11.15% 66,862 -24,099 4.4 1.6

Savannah, GA 490,035 22.08 15.96% 16.05% 9,832 1,261 -5.4 -5.0

Tampa Bay, FL 18,368,902 23.59 17.19% 16.73% 127,713 269,957 0.4 2.3

West Palm Beach/ Palm Beach County, FL

8,999,060 31.38 18.82% 16.32% 180,268 294,510 -0.1 3.0

South Total 432,804,226 25.06 12.48% 12.40% 4,895,537 10,723,147 0.8 4.6



UNITED STATES | SUBURBAN OFFICE | CLASS A

MARKETEXISTING


AVERAGEANNUAL

QUOTED RENT(USD PSF)

VACANCY RATE (%)

MAR 31, 2014

VACANCY RATE (%)

JUNE 30, 2014

ABSORPTION Q2 2014

(SF)

YTD ABSORPTION

2014 (SF)



MIDWEST

Chicago, IL 78,047,353 27.33 18.53% 18.75% 110,798 -652,665 0.0 0.6

Cincinnati, OH 18,266,220 20.36 18.40% 17.72% 66,399 219,673 3.8 -1.4

Cleveland, OH 9,345,155 21.15 11.36% 11.23% 147,404 29,275 0.0 -0.2

Columbus, OH 18,337,079 19.67 9.00% 8.91% -11,388 36,460 1.9 2.5

Grand Rapids, MI 937,115 17.50 17.14% 18.75% -31,258 -31,258 0.0 0.0

Indianapolis, IN 12,456,333 18.80 12.52% 11.49% 144,135 110,087 1.9 3.0

Kansas City, MO 16,559,970 20.52 12.81% 12.05% 472,518 588,448 -0.1 -0.1

Milwaukee, WI 6,187,173 22.14 11.08% 10.67% 122,039 203,521 0.1 0.4

Minneapolis, MN 26,563,731 14.63 16.00% 14.88% 76,411 878,834 2.8 5.8

Omaha, NE 5,229,149 26.35 2.86% 2.43% 275,009 532,931 3.4 6.3

St. Louis, MO 26,374,431 21.86 9.15% 8.27% 152,087 127,682 0.0 -0.7

Midwest Total 252,583,758 22.11 14.70% 14.33% 1,524,154 2,921,390 0.7 0.6

WEST

Albuquerque, NM 811,008 21.30 4.31% 4.69% -369,650 -306,408 -3.6 2.2

Bakersfield, CA 2,776,404 24.00 5.84% 6.50% -43,291 34 0.0 0.0

Boise, ID 5,826,036 15.75 15.38% 16.36% -87,145 -334,958 1.5 4.3

Denver, CO 35,797,994 25.04 11.90% 11.60% 352,021 655,505 0.8 5.0

Fairfield, CA 1,950,606 25.61 19.82% 19.74% 3,863 12,215 -2.5 -0.9

Fresno, CA 3,973,324 25.80 16.99% 17.49% -43,410 146,469 0.0 2.4

Las Vegas, NV 4,898,279 30.00 33.12% 28.95% 382,762 479,548 0.8 2.5

Los Angeles - Inland Empire, CA 5,019,438 25.56 21.01% 19.93% 102,300 214,800 0.5 4.9

Los Angeles, CA* 102,218,200 35.04 16.72% 16.37% 364,700 364,700 0.0 2.8

Oakland, CA 3,682,927 29.40 23.83% 23.66% 155,298 153,599 -0.8 -0.4

Orange County, CA 33,193,269 26.52 16.21% 15.48% 1,150,900 884,401 0.5 3.8

Phoenix, AZ 30,886,235 24.16 17.43% 17.45% 261,531 1,044,490 0.5 3.0

Pleasanton/Tri-Valley, CA 15,526,039 29.04 10.07% 10.82% 90,516 -208,837 0.4 9.0

Portland, OR 11,443,780 23.70 10.98% 10.20% 192,191 365,717 -0.2 2.4

Reno, NV 912,364 20.92 14.93% 17.90% -43,645 -72,526 0.6 8.9

Sacramento, CA* 14,682,299 22.32 17.78% 17.39% 141,121 141,160 0.5 1.1

San Diego, CA 24,117,278 35.64 12.32% 11.86% 154,798 847,920 1.0 5.7

San Francisco Peninsula 22,580,852 45.72 10.33% 10.51% 9,726 -4,835 4.7 5.8

San Jose - Silicon Valley 33,234,700 43.20 12.45% 12.18% 260,466 521,899 1.1 5.9

Seattle/Puget Sound, WA 20,752,875 34.55 9.42% 9.11% 287,220 206,577 4.3 4.3

Walnut Creek, CA 737,964 28.56 19.13% 19.51% -22,357 19,330 -0.4 -14.4West Total 375,021,871 31.87 14.65% 14.36% 3,299,915 5,130,800 1.0 4.4

U.S. TOTALS 1,582,235,151 27.33 14.34% 14.20% 11,351,147 21,414,551 0.8 3.0

(continued)




CANADA | DOWNTOWN OFFICE | ALL INVENTORY

MARKETEXISTING


NEW SUPPLY Q2 2014

(SF)

YTD NEW SUPPLY 2014

(SF)

UNDER CONSTRUCTION

(SF)

VACANCY RATE (%)

MAR 31, 2014

VACANCY RATE (%)

JUNE 30, 2014

ABSORPTION Q2 2014

(SF)YTD ABSORPTION

2014 (SF)

Calgary, AB 40,447,480 0 841,064 3,359,000 8.13 8.23 -39,401 389,794Edmonton, AB 17,140,407 0 0 1,490,493 8.47 8.66 -50,864 -25,644

Halifax, NS* 4,547,627 17,000 17,000 463,900 11.46 12.41 -159,741 -159,741

Montréal, QC 49,610,579 279,476 279,476 653,498 5.14 5.94 -128,429 -34,930

Ottawa, ON 15,995,156 0 0 0 9.47 9.47 -110,669 259,669

Regina, SK 3,714,792 0 0 160,000 12.75 12.79 -1,405 -57,012

Saskatoon, SK 2,402,872 0 0 0 6.22 6.86 -15,509 -19,075

Toronto, ON 70,514,344 40,000 40,000 5,190,400 3.78 3.61 134,792 362,274

Vancouver, BC 24,474,251 0 45,770 2,150,490 5.56 5.78 -54,165 -53,402

Victoria, BC* 4,902,931 0 0 29,000 8.69 9.85 -36,664 -36,664

Waterloo Region, ON 3,938,504 25,586 25,586 43,280 12.90 12.71 29,596 7,696Winnipeg, MB* 11,944,204 0 0 70,000 8.65 8.26 46,911 46,911

CANADA TOTAL 249,633,147 362,062 1,248,896 13,610,061 6.35 6.55 -385,548 679,876

CANADA | DOWNTOWN OFFICE | CLASS A

MARKETEXISTING


AVERAGEANNUAL

QUOTED RENT(CAD PSF)


2014


2014

ABSORPTION Q2 2014

(SF)YTD ABSORPTION

2014 (SF)QUARTERLY CHANGE IN RENT (%)


Calgary, AB 27,568,453 58.00 7.53% 7.01% 143,972 630,126 0.0 -5.6Edmonton, AB 8,434,321 21.50 6.11% 6.34% 16,027 44,935 -2.3 -14.0

Halifax, NS* 1,951,103 32.53 9.14% 9.42% 9,991 9,991 4.3 -0.2

Montréal, QC 23,073,808 45.00 5.87% 7.69% -157,167 -162,175 0.0 0.0

Ottawa, ON 10,004,044 36.75 6.48% 7.45% -96,150 -96,150 -19.3 -26.5

Regina, SK 1,392,816 34.97 6.08% 6.11% -516 -56,123 0.0 16.6

Saskatoon, SK 570,571 43.00 5.75% 6.88% -6,498 -6,498 0.0 0.0

Toronto, ON 39,391,697 53.94 4.54% 4.56% 74,229 201,107 -4.0 -0.7

Vancouver, BC 10,094,997 53.01 5.51% 5.43% 7,554 -7,852 0.9 -5.9

Victoria, BC* 513,808 35.00 3.55% 2.33% 8,969 8,969 2.9 0.0

Waterloo Region, ON 1,561,288 24.86 10.50% 10.69% -2,939 -1,042 3.1 -4.5Winnipeg, MB* 2,619,428 33.75 3.99% 4.50% -13,347 -13,347 0.0 0.0

CANADA TOTAL 127,176,334 48.19 5.90% 6.24% -15,875 551,941 -2.9% -4.3%

*Halifax, Victoria and Winnipeg report semi-annually. Q2 data displayed.



CANADA | SUBURBAN OFFICE | ALL INVENTORY

MARKETEXISTING


NEW SUPPLY Q2 2014

(SF)

YTD NEW SUPPLY 2014

(SF)

UNDER CONSTRUCTION

(SF)

VACANCY RATE (%)

MAR 31, 2014

VACANCY RATE (%)

JUNE 30, 2014

ABSORPTION Q2 2014

(SF)

YTD ABSORPTION

2014 (SF)

Calgary, AB** 25,818,920 534,606 534,606 2,478,741 9.49 9.62 153,225 153,225Edmonton, AB 9,544,323 178,631 278,631 197,400 12.37 12.50 130,801 134,953

Halifax, NS* 3,282,082 34,000 34,000 0 10.23 9.42 56,960 56,960

Montréal, QC 25,664,903 586,676 657,584 1,270,962 11.38 13.99 -150,690 -184,707

Ottawa, ON 21,293,374 211,204 211,204 230,500 10.39 11.44 -34,108 -19,533

Regina, SK 784,404 0 31,122 40,000 3.27 6.34 -24,081 -24,081

Toronto, ON 67,879,191 119,206 472,974 1,554,921 8.05 9.08 -165,311 -173,117

Vancouver, BC 29,985,814 556,000 616,000 1,434,462 11.27 12.23 205,703 214,245

Victoria, BC* 3,717,151 0 0 99,600 9.87 10.03 -5,849 -5,849

Waterloo Region, ON 7,379,966 35,186 35,186 203,265 19.29 17.79 61,528 -475,511Winnipeg, MB* 3,386,471 0 0 70,000 8.54 6.36 73,840 73,840

CANADA TOTAL 198,736,599 2,255,509 2,871,307 2,871,307 10.06 10.50 302,018 -249,575

CANADA | SUBURBAN OFFICE | CLASS A

MARKETEXISTING


AVERAGEANNUAL

QUOTED RENT(CAD PSF)

VACANCY RATE (%)

MAR 31, 2014

VACANCY RATE (%)

JUNE 30, 2014

ABSORPTION Q2 2014

(SF)YTD ABSORPTION

2014 (SF)QUARTERLY CHANGE IN RENT (%)


Calgary, AB** 12,727,120 43.00 9.49 8.44 153,225 153,225 -2.3 -2.3

Halifax, NS* 1,478,125 28.56 11.50 10.54 56,960 56,960 -3.7 0.2

Montréal, QC 14,491,322 29.00 10.02 14.62 -184,707 -184,707 0.0 3.6

Ottawa, ON 12,250,530 32.00 10.45 11.58 -34,108 -19,533 8.9 4.6

Regina, SK 141,122 29.00 0.00 22.05 -24,081 -24,081 0.0 0.0

Toronto, ON 32,652,849 31.11 9.07 9.60 -173,117 -173,117 -0.2 1.3

Vancouver, BC 15,332,892 27.62 12.06 13.07 214,245 214,245 -17.4 -17.9

Victoria, BC* 808,145 40.00 16.53 17.15 -5,849 -5,849 0.0 5.3Waterloo Region, ON 3,696,762 22.44 17.57 16.74 -475,511 -475,511 0.0 -7.6

CANADA TOTAL 93,578,867 31.64 10.37 11.43 97,377 -458,368 -2.5 -2.2

*Halifax, Victoria and Winnipeg report semi-annually. Q2 data displayed. | **Q1-14 data displayed for Calgary Suburban.

0.0 0.0 0.0 0.0 0.1 0.2

0.5 0.7

1.5 2.2

3.4 5.2

0.0 1.0 2.0 3.0 4.0 5.0 6.0 Ottawa, ON

Saskatoon, SK Victoria, BC*

Waterloo Region, ON Winnipeg, MB*

Regina, SK Halifax, NS*

Montréal, QC Edmonton, AB Vancouver, BC

Calgary, AB Toronto, ON

SF (Millions)

CBD OFFICE UNDER CONSTRUCTION BY MARKET | Q2 2014 | CANADA

*Victoria, Halifax and Winnipeg report data semi-annually Q2 data shown | Source: Colliers International.

-159.7

-128.4

-110.7

-54.2

-50.9

-39.4

-36.7

-15.5

-1.4

29.6

46.9

134.8

-200 -150 -100 -50 0 50 100 150Halifax, NS*

Montréal, QC

Ottawa, ON

Vancouver, BC

Edmonton, AB

Calgary, AB

Victoria, BC*

Saskatoon, SK

Regina, SK

Waterloo Region, ON

Winnipeg, MB*

Toronto, ON

SF (Thousands)

CBD OFFICE ABSORPTION BY MARKET | Q2 2014 | CANADA



UNITED STATES | OFFICE INVESTMENT

MARKETCBD

SALES PRICE (USD PSF)

CBD CAP RATE

(%)

SUBURBAN SALES PRICE

(USD PSF)

SUBURBAN CAP RATE

(%)

Albuquerque, NM 145.00 9.00 175.00 8.00Atlanta, GA 125.00 7.90 127.00 8.20

Bakersfield, CA 108.00 205.00

Baltimore, MD 288.98 6.70 124.80 7.65

Boston, MA 421.00 213.00

Chicago, IL 350.00 5.50 225.00 7.50

Cincinnati, OH 125.00 9.75 135.00 9.25

Columbia, SC 57.00 8.00

Dallas, TX 166.00 6.80 73.00 6.75

Denver, CO 375.00 6.00 150.00 7.00

Fairfield County, CT 139.00 7.80

Fresno, CA 125.00 8.50 160.00 8.00

Ft. Lauderdale- Broward, FL 173.00 163.00 8.37

Ft. Worth, TX 132.00 8.10

Houston, TX 202.00 7.50

Indianapolis, IN 170.00 8.00 150.00 7.25

Jacksonville, FL 94.00 7.00 127.00 9.70

Las Vegas, NV 130.35 8.00

Little Rock, AR 88.00 9.00 117.00 9.00

Long Island, NY 168.00 8.15

Los Angeles - Inland Empire, CA 200.00 7.50

Los Angeles, CA* 276.00 6.44

Miami-Dade, FL 311.00 5.00 212.00 6.75

Milwaukee, WI 120.00 8.75 110.00 9.00

Minneapolis, MN 116.00 7.40

Nashville, TN 275.00 7.20 150.00 7.00

New Jersey - Central 200.53 6.26

New Jersey - Northern 155.66 7.75

NYC- Downtown Manhattan 440.00 4.50

NYC - Midtown Manhattan 1221.00 4.50

NYC - Midtown South Manhattan 590.00 4.10

UNITED STATES | OFFICE INVESTMENT (continued)

MARKETCBD

SALES PRICE (USD PSF)

CBD CAP RATE

(%)


(USD PSF)

SUBURBAN CAP RATE

(%)

Oakland, CA 275.00 7.00 180.00 7.75

Orange County, CA 182.00 6.40

Orlando, FL 220.00 7.50 154.70 7.50

Philadelphia, PA 145.00 7.20 172.00 7.56

Phoenix, AZ 100.00 6.50 120.00 6.80

Pittsburgh, PA 90.00 8.25 115.00 8.50

Pleasanton/Tri-Valley, CA 163.00 7.90

Portland, OR 122.57 6.01 187.97 7.80

Sacramento, CA* 85.24 6.50 70.00 8.20

San Diego, CA 141.50 6.75

San Francisco Peninsula 325.00 7.45

San Francisco, CA 565.00 4.58

San Jose - Silicon Valley 130.00 7.50 394.00 5.70

Savannah, GA 160.00 9.25 120.00 9.50

Seattle/Puget Sound, WA 321.00 5.50 191.00 7.50

St. Louis, MO 90.00 9.50 135.00 8.50

Stamford, CT 186.00 8.00

Tampa Bay, FL 110.58 7.50 125.76 7.75

Walnut Creek, CA 369.00 5.50 180.00 8.00

Washington DC 600.00 5.28 221.00 7.10

West Palm Beach/Palm Beach County, FL 90.00 215.00

Westchester County, NY 179.00 7.60White Plains, NY 283.73

U.S. TOTALS** 254.06 6.96 163.82 7.70

* Q1-14 data used for Sacramento, Stamford and Los Angeles markets.** Average sales price and cap rate use straight averages.

CANADA | OFFICE INVESTMENT

MARKETCBD SALES

PRICE (CAD PSF)

CBD CAP RATE

(%)


(CAD PSF)

SUBURBAN CAP RATE

(%)

Edmonton, AB 279.62 5.75 6.50Montréal, QC 265.00 6.75 185.00 7.25

Regina, SK 280.00 6.75 200.00 7.25

Saskatoon, SK 306.00 6.75

Vancouver, BC 500.00 5.00 375.00 6.25

Victoria, BC* 300.00 6.25 280.00 6.50

Waterloo Region, ON 180.00 7.50 141.00 7.50Winnipeg, MB* 150.00 7.25 140.00 7.25

CANADA TOTALS** 251.18 5.78 188.71 6.06

*Victoria and Winnipeg report semi-annually. Q2 data displayed. **Straight averages used.



GlossaryInventory — Includes all existing multi- or single-tenant leased and owner-occupied office properties greater than or equal to 10,000 square feet (net rentable area). In some larger markets this minimum size threshold may vary up to 50,000 square feet. Does not include medical or government buildings.

Vacancy Rate — Percentage of total inventory physically vacant as of the survey date, including direct vacant and sublease space.

Absorption — Net change in physically occupied space over a given period of time.

New Supply — Includes completed speculative and build-to-suit construction. New supply quoted on a net basis after any demolitions or conversions.

Annual Quoted Rent — Includes all costs associated with occupying a full floor in the mid-rise portion of a Class A building, inclusive of taxes, insurance, maintenance, janitorial and utilities (electricity surcharges added where applicable). All office rents in this report are quoted on an annual, gross per square foot basis. Rent calculations do not include sublease space.

Cap Rate — (Or going-in cap rate) Capitalization rates in this survey are based on multi-tenant institutional grade buildings fully leased at market rents. Cap rates are calculated by dividing net operating income (NOI) by purchase price.

NOTE: SF = square feet

MSF = million square feet

PSF = per square foot

CBD = central business district

COLLIERS INTERNATIONAL601 Union Street, Suite 4800Seattle, WA 98101TEL +1 206 695 4200

FOR MORE INFORMATION

Andrea B. CrossOffice Research Manager | USA TEL +1 415 288 7892 EMAIL [email protected]

CONTRIBUTORS

Jeff Simonson Senior Research Analyst | USA

Cliff Plank National Director | GIS & Mapping

485 offices in 63 countries on 6 continentsUnited States: 146Canada: 44Latin America: 25Asia Pacific: 186EMEA: 84

• $2.1 billion in annual revenue

• 15,800 professionals and staff

• 1.46 billion square feet under management

• $75 billion in total transaction value

Copyright © 2014 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. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

Accelerating success.

VACANCY RATES

101.8msf

13.728.52

Up from 88.2 msf at year-end 201375.7 msf at mid-year 2013

Note: Office statistics are based on the 87 U.S. and Canadian markets tracked by ColliersSources: Bureau of Labor Statistics, Federal Reserve of St. Louis, Colliers International

frozenomics thaw unfreezes office market in q2 · q2 2014 | office market indicators relative to...

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