ECONOMIC OVERVIEW Over the last year, the private sector job count on Long Island decreased by 0.7% and fell by 6,800 jobs; government employment alone declined by 3,100 jobs. Employment in financial activities remained unchanged from last year

while employment grew over the year in retail trade. Recently, the Long Island region received two large grants, and according to the New York State Department of Labor these grants will aid in job growth in numerous sectors in the coming future.

LEASING & SALES ACTIVITY Leasing activity for 2011 recorded 1,474,479 square feet (sf), down 21.0% from 2010’s robust leasing activity. While this seems like a significant drop from last year, 2011’s leasing was 14.2% lower than the average leasing activity of the last five years, which was approximately 1.7 million square feet (msf). The first quarter of 2011 had a weaker start than usual with just below 300,000 sf leased, but gradually gained momentum over the course of the year. In addition, there were multiple noteworthy renewals this year which did not contribute to new leasing activity.

Tenants who renewed this year include FalconStor Software for 59,218 sf at 2 Huntington Quadrangle; Morgan Stanley for 50,359 at 58 S. Service Road; Merrill Lynch, Pierce, Fenner & Smith for 50,154 sf at 1225 Franklin Avenue; JPMorgan Chase for 40,000 sf at 395 N. Service Road; Rubin & Rothman for 32,000 sf at 1787 Veteran’s Memorial Highway; and UBS renewed for 25,176 sf at 225 Broad Hollow Road.

The biggest new lease of the year and fourth quarter was Suffolk County’s 63,402-sf lease at 3500 Sunrise Highway in Great River. This was followed closely by the largest sublease of the year, which was HealthCare Partner’s 57,000-sf sublease at 501 Franklin Avenue in Garden City.

Sales activity in 2011 improved over 2010, specifically with investment activity. The year saw almost 900,000 sf of investment sales, up 39.8% from last year.

VACANCY & RENTS The overall vacancy rate on Long Island closed the quarter at 17.7%, down 9.2% from last year’s 19.5% vacancy rate. While leasing activity was stronger in 2010, more blocks of space also came to the market last year. Nassau County’s vacancy decreased by 6.5% since last year while Suffolk County’s vacancy decreased by 13.3%.

Overall average asking rents recorded $29.62 per square foot (psf) in the fourth quarter, representing a 2.2% increase since last year. Nassau County’s rent recorded $30.94 psf while Suffolk County’s rent recorded $27.44 psf.

OUTLOOK The Long Island office market was active in 2011 yet still remains somewhat flat. There will continue to be space lingering on and coming to the market in the next few months as companies cautiously evaluate and reevaluate their space needs. Vacancies should continue their slow trend down over the course of 2012.

STATS ON THE GO

4Q10 4Q11

Y-O-Y

CHANGE 12 MONTH FORECAST

Overall Vacancy 19.5% 17.7% -1.8pp

Direct Asking Rents (psf/yr) $29.86 $30.03 0.6%

YTD Leasing Activity (sf) 1,865,349 1,474,479 -21.0%

OVERALL OCCUPIER ACTIVITY

DIRECT RENTAL VS. VACANCY RATES

1.8

1.6

1 1.9

1.5

0.05

0.1

0.05

0 0

2007 2008 2009 2010 2011 YTD

msf

LEASING ACTIVITY USER SALES ACTIVITY

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

$16.00

$20.00

$24.00

$28.00

$32.00

$36.00

2007 2008 2009 2010 4Q11

psf/y

r

DIRECT GROSS RENTAL RATE DIRECT VACANCY RATE

Q4 2011LONG ISLAND, NY

OFFICE SNAPSHOT MARKETBEAT

A Cushman & Wakefield Research Publication

Cushman & Wakefield of Long Island, Inc. 401 Broad Hollow Road, Melville, NY 11747 www.cushmanwakefield.com/knowledge

The market terms and definitions in this report are based on NAIOP standards.

No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals.

© 2012 Cushman & Wakefield, Inc. All rights reserved.

LONG ISLAND SUBMARKET INVENTORY OVERALL

VACANCY RATE

DIRECT VACANCY RATE

YTD LEASING ACTIVITY

UNDER CONSTRUCTION

YTD CONSTRUCTION COMPLETIONS

YTD DIRECT NET ABSORPTION

YTD OVERALL NET ABSORPTION

OVERALL WTD. AVG ALL CLASSES GROSS

RENTAL RATE*

DIRECT WTD. AVG. CLASS A GROSS RENTAL RATE*

Western Nassau 5,610,002 16.6% 15.2% 185,358 0 0 (84,912) (60,064) $31.91 $33.76

Central Nassau 8,646,709 18.6% 17.4% 384,720 0 0 (125,080) 41,189 $30.42 $33.35

Eastern Nassau 5,759,037 16.4% 13.3% 311,827 0 0 281,806 384,513 $30.91 $35.97

NASSAU COUNTY 20,015,748 17.4% 15.6% 881,905 0 0 71,814 365,638 $30.94 $33.92

Western Suffolk 7,718,880 18.7% 17.3% 425,041 0 0 120,095 318,018 $29.26 $31.31

Central Suffolk 4,306,409 17.5% 15.1% 167,533 0 0 41,393 72,222 $23.54 $26.60

SUFFFOLK COUNTY 12,025,289 18.3% 16.5% 592,574 0 0 161,488 390,240 $27.44 $30.53

LONG ISLAND TOTALS*

32,041,037 17.7% 16.0% 1,474,479 0 0 233,302 755,878 $29.62 $32.68

* RENTAL RATES REFLECT ASKING $PSF/YEAR

MARKET HIGHLIGHTS SIGNIFICANT 2011 LEASE TRANSACTIONS SUBMARKET TENANT/BUYER PROPERTY TYPE SQUARE FEET

3500 Sunrise Highway, Great River Suffolk Suffolk County Office-Class B 63,402

2 Huntington Quadrangle, Melville Western Suffolk FalconStor Software * Office-Class B 59,218

501 Franklin Avenue, Garden City Central Nassau HealthCare Partners Office-Class B 57,000

1 Jericho Plaza, Jericho Central Nassau Astoria Federal Savings Bank Office-Class A 55,000

58 S. Service Road, Melville Western Suffolk Morgan Stanley * Office-Class A 50,359

1225 Franklin Avenue, Garden City Central Nassau Merrill Lynch, Pierce, Fenner & Smith * Office-Class B 50,154

300 Crossways Park Drive Eastern Nassau Clever Devices Office-Class B 43,592

395 N. Service Road, Melville Western Suffolk JP Morgan Chase * Office-Class A 40,000

1787 Veteran’s Memorial Highway, Islandia Central Suffolk Rubin & Rothman * Office-Class B 32,000

265 Broad Hollow Road, Melville Western Suffolk MBS Insight Office-Class A 31,561

2200 Northern Boulevard, East Hills Western Nassau Kliger-Weiss Infosystems Office-Class A 31,000

SIGNIFICANT 2011 SALE TRANSACTIONS SUBMARKET BUYER PURCHASE PRICE SQUARE FEET

Franklin Avenue Professional Center, Garden City (Portfolio Sale of 4 Office Properties) Central Nassau The Long Wharf Real Estate Partners and

The Treeline Companies $75,000,000 506,564

5000 Corporate Court, Holtsville Eastern Suffolk Government Properties Income Trust $39,250,000 265,000

1600 Stewart Avenue, Garden City Central Nassau The Carlton Group $23,500,000 220,000

1000 Stewart Avenue and 500 Endo Boulevard, Garden City (Portfolio Sale of 2 Office Properties) Central Nassau David Werner and Carlton Associates $39,200,000 188,500

538 Broad Hollow Road, Melville Western Suffolk Fairfield Properties $18,500,000 183,000

2000 Marcus Avenue, Lake Success Western Nassau Marcus Park, LLC $14,800,000 101,091

SIGNIFICANT 2011 CONSTRUCTION COMPLETIONS

SUBMARKET MAJOR TENANT COMPLETION DATE SQUARE FEET

85 S. Service Road, Plainview Eastern Nassau Rechler Equities 4Q11 20,000

SIGNIFICANT PROJECTS UNDER CONSTRUCTION

SUBMARKET MAJOR TENANT COMPLETION DATE SQUARE FEET

S. Service Road / Walt Whitman Road, Melville Western Suffolk Canon 3Q12 668,300

2200 Northern Boulevard, East Hills Western Nassau Kliger-Weiss Infosystems 1Q12 315,000

* RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS