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Monthly Economic Summary

A Monthly Summary of Economic

Conditions in Metro Denver

(Adams, Arapahoe, Boulder, Broomfield, Denver,

Douglas, and Jefferson Counties)

Released December 4, 2012

10184 West Belleview Avenue Suite 100 Littleton, Colorado 80127 www.DevelopmentResearch.net 303.991.0070

MONTHLY ECONOMIC SUMMARY

The Monthly Economic Summary is a comprehensive analysis of economic conditions in the seven-county Metro Denver area, or the region comprised of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, and Jefferson Counties. There are two metropolitan statistical areas (MSAs) located within the Metro Denver region: the Boulder MSA (Boulder County) and the Denver-Aurora-Broomfield MSA (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties). This report presents recent data and long-term trends for the seven-county region, MSAs, or counties, depending on availability. The analysis includes four sections: labor force and employment, the consumer sector, residential real estate, and commercial real estate.

Notable Rankings

! The Deloitte Technology Fast 500 list for 2012 named two Colorado companies in the top 20. Recondo Technology, a software company in Greenwood Village, ranked ninth based on its 25,482 percent revenue growth between 2007 and 2011. Gevo Inc, a cleantech firm based in Douglas County, ranked 12th with revenue growth of 23,372 percent. The list ranks the fastest-growing tech, media, telecom, life sciences, and cleantech companies in North America for the 2007 to 2011 period.

! Travel + Leisure released its annual “America’s Favorite Cities” rankings, which uses travelers and residents to rate 35 of the country’s most visited cities on 66 different categories. Denver ranked highest in quality of microbrews (second), most active and athletic residents (third), most sports-crazed fans (seventh), and having the nicest summer (eighth). The city ranked lowest in charming local accent (32nd), diversity (32nd), and ethnic food (31st).

! The Four Seasons Hotel Denver was ranked as a top five conference center hotel in the Americas by Oyster.com. The hotel was named the best hotel for impressing the boss and was noted for being situated very close to the Colorado Convention Center, having 17,000 square feet of meeting space, and offering a free shuttle. Other hotels in the top five were located in Puerto Vallarta, Peru, Scottsdale, and Boston.

! Coldwell Banker Real Estate reported that the average listing price of a four-bedroom, two-bathroom home in Colorado was ranked as the sixth highest price in the nation ($387,309). Boulder was the 16th most expensive market in the nation ($1,084,183). Hawaii ranked first for housing prices with an average listing of $742,551.

! Realtor.com ranked Denver as the 24th most-Internet searched real estate market during October. The ranking has improved from 26th in September. Colorado Springs was the 58th most-searched, followed by Boulder-Longmont (114th), and Fort Collins-Loveland (123rd). Chicago ranked first on the list.

! Colorado ranked 26th for the number of international students attending school in the state, according to a report by the Institute of International Education. The number of students in Colorado rose 10 percent during the 2011-2012 school year, and those students contributed more than $253 million to the state’s economy. California ranked first in the nation and New York ranked second.

Policy Watch

National & International

! The Organization for Economic Cooperation and Development (OECD) released its latest outlook, suggesting a positive scenario in the next two years, contingent upon prudent policy decisions in several areas. Assuming the “fiscal cliff” is avoided in the U.S., gross domestic product (GDP) is forecast to grow at two percent annually in 2013 and 2.8 percent in 2014. The euro area crisis continues to be a threat to global recovery, and assuming the avoidance of a major financial shock, the area will continue to contract slightly in 2013 but start to grow at 1.3 percent in 2014. Growth across OECD countries is projected to be unchanged in 2013 at 1.4 percent and grow to 2.3 percent in 2014.

Metro Denver Economic Development Corporation Released December 4, 2012


Local

! The passage of Measure 2A during November’s elections, which allows the city to “de-Bruce” its property taxes, will permit the City and County of Denver to put an additional $68 million into the budget. The extra funds will allow the city to hire 100 more police officers and firefighters, repave 300 lane miles of roads, and increase library hours. The money will also provide for free access to pool and recreation centers for children and increase the business incentive fund to $1 million to bring new companies and jobs to the area.

! Several school bond issues and operating revenue increases passed in November. Denver Public Schools will receive a $466 million bond issue and $49 million in operating costs, Jefferson County Public Schools a $99 million bond and a $39 million operating increase, and Cherry Creek School District a $125 million bond issue and $25 million for operating increases. Sheridan School District raised its match for the Building Excellent Schools Today program grant of $6.5 million.

! Colorado voters approved Amendment 64, legalizing the recreational use of marijuana in Colorado. The amendment allows adults at least 21 years old to purchase up to one ounce of the drug at specially regulated retail stores, overseen by the state’s Department of Revenue. Possession was legalized but public use was not. Adults may also grow up to six plants in their homes. The state of Washington also passed a similar measure.

! The state’s Division of Insurance reported that Colorado employers will see an increase in premium payments for workers’ compensation insurance next year. The “loss costs” components of the insurance—the average cost of lost wages and medical payments of workers injured during employment—is forecast to rise 5.2 percent in 2013. The component has increased for three consecutive years. Frequency and length of claims, number of treatments per claim, and severity of injury are included as factors affecting loss costs.

! The National Survey of Employer-Sponsored Health Plans conducted by Mercer reported that costs of health insurance to employers rose 4.1 percent in 2012 and predicts costs will rise five percent in 2013. Mercer, an international human resources and benefits consulting company, reported that an increase in the use of consumer-directed health plans, which involve workers more in healthcare decisions and cost less than traditional insurance, increased to 16 percent of covered employees. The increase in use of this lower cost option resulted in the smallest increase of insurance costs in 15 years in 2012.

! Pinnacol Assurance, the state-chartered insurer who writes nearly 60 percent of workers’ compensation policies for Colorado businesses, approved a rate increase that will average 9.5 percent for its customers. The increase will be effective January 1, 2013 and includes a 5.2 percent basic rate change for 2013 ordered by the Colorado Division of Insurance (DOI). This is the third consecutive year of rate increases ordered by the DOI and the third year that Pinnacol has raised rates.

General Economic Overview

According to revised data released by the U.S. Bureau of Economic Analysis (BEA), GDP grew at a rate of 2.7 percent in the third quarter, 1.4 percentage points higher than second quarter growth. According to economists, inventory investment increased, as did consumer spending on durable goods such as motor vehicles. Residential new homes sales also accelerated, particularly single-family homes. However, consumer spending on services slowed and business investment remained sluggish. The next BEA data release will be on December 20th.

During its October meeting, the Federal Reserve noted that economic activity was expanding at a moderate pace in recent months, but growth in employment has been slow and the unemployment rate remains elevated. Household spending has picked up recently, but business fixed investment has slowed, possibly due to the uncertainty surrounding the fiscal cliff. Inflation is expected to remain stable and stay at or below the target of two percent. The Fed will continue its purchasing program for mortgage-backed securities at a pace of $40 billion per month, as well as purchasing $45 billion longer-term Treasury securities monthly. The federal funds rate



target remains at zero to one-fourth percent through mid-2015. The Federal Open Market Committee (FOMC) expects continued moderate growth but believes the European fiscal banking crisis coupled with uncertainty over the U.S. fiscal and regulatory policies will weigh on confidence and restrain household and business spending. The FOMC’s next meeting will be over a two-day period beginning December 11th.

Economic Indexes & Notable Data Releases

National & International

! The U.S. trade deficit decreased 5.1 percent between August and September to $41.5 billion. This was the smallest deficit since December 2010. Exports increased more than imports, suggesting continued strong global demand for U.S. goods. Exports increased by 3.1 percent to $187 billion in September, while imports increased 1.5 percent to $228.5 billion.

! The Conference Board’s Leading Economic Index for the U.S. increased 0.2 percent in October to 96. The index increased by 0.5 percent between September and August after declining 0.4 percent in August. Analysts for the organization believe the economy will continue to expand modestly through the beginning of 2013.

! The JPMorgan Global manufacturing Purchasing Managers’ Index rose to 49.2 in October, its highest point in five months. The sector continued to report a decline in volumes of production and new orders, but declines were smaller than the previous months.

! The Institute for Supply Management’s Purchasing Managers Index declined 2.2 percent over-the-month to 49.5 in November, signaling a slight contraction in manufacturing. The index is at its lowest point since July 2009. Respondents to the survey reported slow or steady business and noted that political uncertainty in the U.S. and world are affecting growth potential.

! The Institute for Supply Management’s Non-Manufacturing Index declined slightly in October to 54.2, down 0.9 percentage points from September. The index indicated continued growth at a slightly slower rate month-over-month. Respondents to the survey noted steady business activity with positive outlooks but were reluctant to hire and expand and suffered from higher fuel costs.

Local

! According to the Bureau of Economic Analysis, Boulder MSA (13th) and Denver-Aurora-Broomfield (19th) MSA ranked in the top twenty for the highest per capita personal income in the nation. Per capita income increased 3.7 and 4.3 percent in the Boulder and Denver MSAs, respectively. Boulder’s per capita income was $51,893 and Denver’s was $48,980. The area with the highest income was Bridgeport, Connecticut ($78,504).

! The Federal Reserve’s Beige Book for the Kansas City District, which includes Colorado, reported modest economic expansion in October and early November. Retail sales were strong during the period and are expected to continue through the holiday season. Construction activity was also growing, and real estate prices are predicted to rise further in the coming months. Manufacturing did slow during the period but is expected to rebound in orders, production, and shipments. According to economists, political uncertainty continues to hinder growth and delay investments and hiring.

! The Global MetroMonitor report, published by the Brookings Institutions, ranked Denver 18th nationally for economic performance from 2011 to 2012. The Metro Denver area had 2.5 percent employment growth during the time, but posted a 0.2 percent decline in GDP per capita. According to the study, Denver is still considered to be in a partial recession. The highest ranked city in the U.S. was Houston with 1.7 percent increase in GDP per capita and a 3.3 percent increase in employment.

! The Goss Institute’s Colorado Business Conditions Index remained above growth neutral for November. The index decreased slightly by 3.2 percent to 54.9. Business growth was reported among several industries in the



state, including mining, durable goods manufacturing, and non-durable goods manufacturing. Growth in the construction industry also positively influenced the index.

! The University of Colorado Boulder Leeds School of Business released its annual Colorado Business Economic Outlook for 2013. According to the report, Colorado is expected to post a strong year in 2013 with the state expected to add 42,100 jobs during the year. The unemployment rate is also forecast to decline to 7.4 percent in 2013, down from eight percent in 2012. The forecast is predicated on the assumption that legislators will resolve the fiscal cliff, but economists believe that if the fiscal cliff materializes, the economy will be set back initially and gain momentum once uncertainty is resolved.

Labor Force and Employment

Employment in Metro Denver rose 0.5 percent between October and September, and 6,600 jobs were added.

Over-the-year, employment increased 2.7 percent. The supersector posting the largest over-the-year gain was

education and health services (+9,500 jobs), followed by wholesale and retail trade (+7,300 jobs), and leisure

and hospitality (+6,200 jobs). The only supersector to report a slight negative change over-the-year in October

was Transportation, Warehousing, and Utilities (-0.6 percent).

Colorado added 7,400 jobs between October and September and employment increased 0.3 percent. Employment

in the state rose 1.8 percent over-the-year. The U.S. also reported gains in October with jobs increasing 0.7

percent over-the-month and 1.4 percent over-the-year.

Metro Denver Industry Cluster Headlines

Aerospace

! Ball Aerospace and Technologies Corp. was selected by the National Aeronautics and Space Administration (NASA) to work on an instrument that will monitor air quality from space. The spectrometer will measure ozone, aerosols, and other trace gases over North America and will be completed by 2017. The project value will be up to $90 million.

! Sierra Nevada Corp. plans to add 79 positions at its Louisville facility and expand into a 50,000-square-foot space to build its DreamChaser spacecraft. The majority of the new employees will be engineers, who will help develop the reusable spacecraft that will be privately owned and operated.

Aviation

! Front Range Airport received $660,000 in matching grant money for a feasibility study, which will examine the potential building of a spaceport for sub-orbital flights at the airport. The study will be used to make a case to the Federal Aviation Administration for spaceport certification, with approval expected by the end of 2013.

Broadcasting & Telecommunications

! Universal Sports Network announced that it would be moving its production and broadcast operations from California to the Comcast Media Center in Centennial. The company will be creating 44 new jobs in the area. The proximity to the various athletic training centers, particularly the U.S. Olympic Training Center and winter sports venues, were noted as reasons for the move.



Nonfarm Wage & Salary Employment

(000s, not seasonally adjusted)

Month of Month of Month of

Year-to-

Date

Average

Year-to-

Date

Average

Year-to-

Date

Average

Annual

Growth

Rate

Annual

Growth

Rate

Oct-12 (p) Sep-12 Oct-11 2012 2011 % Change 2007 2002

Total 11-County Metro Denver* 1,427.1 1,420.5 1,389.5 1,403.8 1,370.4 2.4% 2.1% -3.1%

Denver-Aurora MSA 1,256.2 1,251.7 1,224.4 1,237.7 1,208.7 2.4% 2.1% -3.0%

Boulder-Longmont MSA 170.9 168.8 165.1 166.1 161.7 2.7% 2.2% -3.4%

Natural Resources & Construction 81.3 80.2 76.9 77.3 73.2 5.6% -1.4% -4.9%

Manufacturing 79.0 79.1 77.1 78.4 77.6 1.0% -1.5% -9.0%

Wholesale & Retail Trade 215.3 213.4 208.0 211.0 204.3 3.3% 2.1% -2.9%

Transp., Warehousing & Utilities 46.7 46.8 47.3 46.5 46.8 -0.6% 2.8% -9.8%

Information 51.9 52.0 51.9 52.0 53.2 -2.3% 1.4% -14.2%

Financial Activities 100.4 99.5 98.0 99.2 97.5 1.7% -0.6% -0.8%

Professional & Business Services 249.2 249.2 244.8 247.5 238.8 3.7% 5.5% -6.1%

Education & Health Services 179.6 176.2 170.1 174.2 167.4 4.1% 3.9% 2.9%

Leisure & Hospitality 153.7 157.8 147.5 153.5 148.6 3.3% 2.6% -0.6%

Other Services 56.7 56.9 55.7 55.9 53.9 3.8% 2.0% 1.6%

Government 213.3 209.4 212.2 208.1 209.1 -0.4% 1.8% 3.4%

Federal Gov't 30.0 30.1 30.5 30.2 30.6 -1.5% -0.7% 0.5%

State Gov't 57.1 55.5 55.4 53.2 52.1 2.1% 2.8% 1.8%

Local Gov't 126.2 123.8 126.3 124.8 126.3 -1.3% 2.1% 4.8%

Colorado 2,318.0 2,310.6 2,276.4 2,289.5 2,250.2 1.7% 2.3% -1.9%

United States 134,792 133,881 132,870 132,907 131,017 1.4% 1.1% -1.1%

*Includes the Denver-Aurora-Broomfield MSA (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties)

and the Boulder-Longmont MSA (Boulder County).

Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary

Cleantech

! Vestas announced it will be cutting 3,000 jobs throughout its global workforce. The company has not announced the location of the cuts yet, or whether it will affect its Colorado locations, but noted the action will enable the company to save $510 million.

! Denver was the first city in the nation to earn the designation of a “Solar Friendly Community” due to its efforts to cut the cost and time necessary to obtain permits for solar power system installations. The title was given by the Solar Friendly Communities program, which is sponsored by the U.S. Department of Energy. Permit fees have been reduced to $50 in Denver and can be issued in as little as 15 minutes compared to 20 days in other jurisdictions.

! Four Colorado projects were chosen to receive grants from the U.S. Department of Energy’s Advanced Research Projects Agency-Energy program. Colorado State University will receive $2 million to introduce genetic traits into crops that cannot currently be engineered and may eventually use them for biofuel. The National Renewable Energy Laboratory (NREL) will receive two grants - $800,000 to develop a new approach to boost the efficiency of plastic solar cells and $890,000 to develop a solar thermal electric generator to convert heat from concentrated sunlight to electricity. Finally, the University of Colorado Boulder will receive $380,000 to use nanotechnology to improve the structure of gas-to-liquids catalysts, eventually used to convert natural gas to liquid fuels.



Financial Services

! Charles Schwab & Co. will build a centralized campus in Lone Tree for its 2,000 current employees in Metro Denver and plans to add 480 new employees by 2017.

! Florida-based FBC Mortgage, LLC, an affiliate of FBC Bank, will open its second National Operations Center in Centennial. The company will initially hire up to 50 experienced mortgage professionals for the office. The location will eventually be a full-service retail mortgage division for the company.

! Atlanta-based iLumen Inc plans to open a sales and marketing division in Metro Denver. The company offers business intelligence services to the accounting, banking, and franchise markets and chose Denver based on its wealth of franchise companies.

Healthcare & Wellness

! Leapfrog Group released its most current ratings of Colorado hospitals based on safety factors such as hospital-borne infections and patients given incorrect medications or blood. Thirteen Colorado hospitals were given a top “A” rating, up from seven six months ago. One-third of Colorado hospitals received the A grade, but nearly 80 percent receive it in areas with strong hospital safety programs such as Maine. A-grade Metro Denver hospitals consisted of Denver Health Medical Center, Centura-St. Anthony, University of Colorado Hospital, Exempla St. Joseph Hospital, Rose Medical Center, Centura-Porter Adventist Hospital, Medical Center of Aurora, Sky Ridge Medical Center, Centura-Littleton Adventist Hospital, and Exempla Good Samaritan Medical Center.

Other Business and Employment Headlines

! Hostess Brands Inc. announced its decision to shut down all operations over the next year. The company has a bread-making plant in Metro Denver that employs 160 people. There are also retail stores and depots around the state that will be closed. Stores employ three people each, and an average of six jobs will be lost at each depot.

! TCBY, one of the world’s largest frozen yogurt chains, announced that it will open its flagship corporate store, franchisee training center, and research and development headquarters at Arista Place in Broomfield. Construction will begin in December and should be completed by March.

Employment Outlook

Results of the Manpower Employment Outlook Survey for the fourth quarter suggest employers in the Denver-Aurora-Broomfield MSA remain cautious but plan to hire at a steady pace. Seventeen percent of employers said they planned to add jobs over the next three months, compared to 16 percent of employers who reported hiring plans in the fourth quarter 2011 survey. The share of employers planning to cut jobs over the next three months (eight percent) was slightly more than the seven percent share that planned layoffs at the same time last year. While hiring expectations continue to improve, many employers remain focused on the status quo: three-quarters of respondents in the fourth quarter survey said they would leave staffing levels unchanged or said they were unsure about their hiring plans.



Employment Outlook Survey

Note: Manpower stopped collecting data for the Boulder MSA after the second quarter of 2010.

Quarter 4 Quarter 3 Quarter 4 YTD Avg YTD Avg Ann Avg

2012 2012 2011 2012 2011 2007

Denver-Aurora-Broomfield MSA

Percent of Companies Hiring 17% 18% 16% 17% 18% 33%

Percent of Companies Laying Off 8% 5% 7% 6% 8% 12%

Percent of Companies No Change 73% 76% 73% 74% 70% 49%

Percent of Companies Unsure 2% 1% 4% 3% 5% 6%

U.S.

Percent of Companies Hiring 17% 21% 16% 18% 17% 27%

Percent of Companies Laying Off 9% 6% 11% 8% 9% 9%

Percent of Companies No Change 72% 71% 70% 71% 72% 59%

Percent of Companies Unsure 2% 2% 3% 4% 3% 6%

Source: Manpower Inc.

The same steady but cautious hiring pattern prevails nationwide, as 74 percent of respondents to the national outlook survey said they were unsure about their hiring plans or would keep staff counts unchanged during the fourth quarter. Seventeen percent of employers said they would add jobs, but nine percent said they would eliminate positions. One year earlier, 16 percent of national survey respondents said they would hire in the fourth quarter and 11 percent planned layoffs.

The Metro Denver unemployment rate increased slightly by 0.1 percentage points between September and

October. The City and County of Broomfield was the only Metro Denver area to post a decrease over-the-month

of 0.1 percentage points. Rates in Denver, Arapahoe, and Jefferson counties were unchanged over-the-month, and

Adams, Douglas, and Boulder counties posted increases of between 0.1 and 0.2 percentage points. Despite the

small over-the-month increases in some areas, the average year-to-date unemployment rate in Metro Denver

decreased 0.4 percentage points over the same period in 2011. Counties’ year-to-date averages also declined

between 0.2 and 0.6 percentage points over-the-year. The unemployment rate in Colorado matches that of the

nation at 7.5 percent.

Labor Force Statistics

(000s, not seasonally adjusted civilian labor force)

Oct 2012 (p) 2012 YTD Avg 2011 YTD Avg 2007 2002

Labor

Force

Unemploy-

ment Rate

Labor

Force

Unemploy-

ment Rate

Labor

Force

Unemploy-

ment Rate

Ann Avg

Unemploy-

ment Rate

Ann Avg

Unemploy-

ment Rate

Metro Denver 1,566.0 7.3% 1,551.9 7.8% 1,542.9 8.2% 3.7% 5.9%

Adams County 233.8 8.6% 232.4 9.3% 231.4 9.8% 4.2% 6.3%

Arapahoe County 323.0 7.3% 320.4 7.8% 318.8 8.3% 3.7% 5.8%

Boulder County 181.2 5.7% 177.5 6.1% 175.5 6.3% 3.3% 5.8%

Broomfield County 31.4 6.9% 31.1 7.2% 30.9 7.5% 3.5% 5.8%

Denver County 324.9 7.9% 323.1 8.6% 321.7 9.2% 4.1% 6.7%

Douglas County 163.0 6.1% 161.2 6.3% 159.9 6.5% 3.1% 5.3%

Jefferson County 308.6 7.0% 306.2 7.6% 304.6 8.0% 3.6% 5.4%

Colorado 2,746.8 7.5% 2,730.7 8.0% 2,721.9 8.4% 3.7% 5.7%

United States 155,779 7.5% 154,984 8.3% 153,634 9.2% 4.6% 5.8%

Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary



The weekly average number of unemployment insurance claims in Metro Denver decreased over-the-year in

October by 8.4 percent but rose 13.7 percent from September. Colorado posted similar trends, increasing over-

the-month by 21.5 percent but decreasing over-the-year by 5.8 percent. The jump in month-over-month claims is

typical of the time of year and may be attributed to a seasonal trend rather than a signal of rising claims.

Weekly First-Time Unemployment Insurance Claims

Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg

Oct-12 Sep-12 Oct-11 2012 2011 % Change 2007

Metro Denver 1,630 1,434 1,779 1,571 1,747 -10.1% 1,211

Colorado 3,279 2,698 3,481 3,011 3,259 -7.6% 2,211

Note: Reference week data includes the 19th day of the month for all months except November and December, which include the 12th day of the month.

Source: Colorado Department of Labor and Employment, Labor Market Information.

Consumer Sector

Sentiment & Spending

The Conference Board’s Consumer Confidence Index rose slightly between October and November by 0.8 percent

to its highest point since February 2008. The index increased by 33.6 percent over-the-year as well. According to

economists, the moderate gain was due to an increase in consumers’ expectations as they became more upbeat

about the job market, which in turn boosted confidence.

The Mountain Region’s Consumer Confidence Index declined slightly by 0.3 percent over-the-month, but

increased 43.8 percent over-the-year. November was the second consecutive month of decline for the region, but

the year-to-date average increase of 21.3 percent over the same period in 2011 is encouraging.

Consumer Confidence Index

Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg

Nov-12 (p) Oct-12 Nov-11 2012 2011 % Change 2007

Mountain 73.0 73.2 50.8 70.0 57.6 21.3% 131.8

United States 73.7 73.1 55.2 67.3 57.5 17.0% 103.4

Source: The Conference Board. (p) = preliminary

The Department of Commerce released advance estimates of October retail sales, showing a 0.3 percent decrease over September but a 3.8 percent increase over October 2011. Revised figures for September were 1.3 percent higher than August and 5.4 percent higher over-the-year. The October monthly total of $411.6 billion reported lower automobile sales, a decrease of 1.5 percent over last month’s automobile sales. Analysts believe that superstorm Sandy, which hit the East Coast in late October, may have negatively affected automobile sales.

Auto sales in Colorado, however, increased 31.6 percent in October over-the-year. Vehicle registrations, which run about two months behind vehicle sales figures, reveal a 22.9 percent increase in new vehicles from January through October 2012 compared to the same period one-year ago and a three percent increase in used vehicles. According to the Colorado Automobile Dealers Association, historically low interest rates, easier access to credit, more diversity in brands and features, and demand for fuel-efficient models influenced the strong increase in automobile sales.

Metro Denver consumer activity through August was up 7.3 percent over the same period in 2011, showing relatively strong growth. Year-to-date sales gains in six of Metro Denver’s seven counties ranged from 3.9



percent in the City and County of Broomfield to 14 percent in Arapahoe County. The only area to report a decline in year-to-date sales was the City and County of Denver. A similar trend occurred throughout the state, with retail sales increasing 6.1 percent year-to-date.

Total Retail Sales ($000s)

Month of Month of Month of YTD Total YTD Total YTD Total

Annual

Growth

Annual

Growth

Aug-12 Jul-12 Aug-11 2012 2011 % Change 2007 2002

Total Metro Denver 7,979,840 7,922,495 7,500,097 62,052,150 57,833,253 7.3% 9.2% -0.1%

Adams County 1,742,823 1,714,976 1,491,172 13,078,782 11,760,785 11.2% 15.6% 0.7%

Arapahoe County 1,533,269 1,537,466 1,461,375 12,329,132 10,819,643 14.0% 6.1% 1.6%

Boulder County 711,871 680,565 669,796 5,747,064 5,449,617 5.5% 15.2% -14.3%

Broomfield County 141,378 140,172 133,240 1,088,468 1,047,499 3.9% 9.2% 414.4%

Denver County 2,049,276 1,979,472 2,055,190 15,408,702 15,662,493 -1.6% 8.3% -3.3%

Douglas County 649,956 693,829 634,041 5,090,431 4,818,921 5.6% 8.2% -1.3%

Jefferson County 1,151,267 1,176,015 1,055,283 9,309,571 8,274,295 12.5% 6.0% 1.0%

Colorado 13,311,774 13,087,069 12,565,605 102,826,570 96,923,173 6.1% 9.7% 0.4%

Source: Colorado Department of Revenue.

The non-seasonally adjusted Consumer Price Index (CPI) decreased less than one-tenth percent between October and September and increased 2.2 percent over-the-year. The U.S. Bureau of Labor Statistics also reported that the “core” CPI, or the CPI less food and energy, increased 0.2 percent over-the-month and two percent over-the year. Analysts belive the increase in the core CPI was due to rising rents and clothing costs.

The AAA Daily Fuel Gauge Report showed national average gas prices for November ($3.40 per gallon) rose over-the-year by 3.2 percent. However, prices decreased 3.4 percent over-the-month. The Metro Denver average price ($3.32 per gallon) posted similar trends, rising 1.4 percent over November 2011 prices but declining over-the-month by 5.4 percent.

Stock Market

The four stock market indexes posted mixed signals in November. Bloomberg Colorado decreased 2.2 percent

over-the-month but posted a three percent year-to-date return, up from negative returns in 2011 during the same

period. The Dow Jones index also decreased slightly over-the-month by 0.5 percent but showed year-to-date

returns of 6.6 percent, 2.6 percentage points higher than returns through November 2011. The NASDAQ index

rose the most over-the-month by 1.1 percent and reported 15.5 percent returns through November.

Stock Market Indexes

Month of Month of Month of YTD Return YTD Return

Ann Avg

Return

Nov-12 Oct-12 Nov-11 2012 2011 2007

Bloomberg Colorado 465.2 475.9 453.8 3.0% -3.1% 17.7%

S&P 500 1,416.2 1,412.2 1,247.0 12.6% -0.8% 3.5%

NASDAQ 3,010.2 2,977.2 2,620.3 15.5% -1.2% 9.8%

DJIA (Dow Jones) 13,025.6 13,096.5 12,045.7 6.6% 4.0% 6.4%

Sources: Bloomberg.com; Yahoo! Finance.

Travel & Tourism

Visit Denver reported that Denver posted its best-ever October for convention delegates and convention room nights. The city drew 81 conventions in October, including 75,582 delegates staying 118,369 room nights. The



organization expects to see Denver hotels increase revenue per available room by four to five percent in 2012 compared to 2011.

The average hotel rate in Metro Denver increased 9.9 percent between September and October, while the

occupancy rate remained unchanged. Occupancy rates did increase by 5.9 percentage points over-the-year, and

room rates increased 9.3 percent over October 2011. The average room rate year-to-date also increased, posting

rates 1.7 higher than the same period in 2011.

Metro Denver Hotel Statistics

Month of Month of Month of YTD Avg YTD Avg YTD Avg Annual Annual

Oct-12 Sep-12 Oct-11 2012 2011 % Change 2007 2002

Percent of Hotel Rooms Occupied 74.4% 74.4% 68.5% 70.8% 69.3% 2.2% 67.0% 60.3%

Average Hotel Room Rate $125.62 $114.35 $114.93 $113.17 $111.24 1.7% $111.21 $86.05

Source: Rocky Mountain Lodging Report.

Denver International Airport was expected to be among the nation's busiest airports for Thanksgiving travel, but not quite as busy as it was last year, based on flights booked through Orbitz.com. According to Orbitz, DIA was expected to be the eighth-busiest airport over the Thanksgiving holiday. Chicago O'Hare International Airport and Los Angeles International Airport were expected be the busiest, as the two have been for the past three years. The final actual tally for Thanksgiving travel will not be available for several months.

Spokespeople for Denver International Airport said passenger traffic in September decreased over-the-month by

13.9 percent, but increased by 0.8 percent over-the-year. Total passengers in 2012 year-to-date increased by 0.1

percent compared to the same period in 2011.

Denver International Airport Passengers

Month of Month of Month of YTD Total YTD Total YTD Total Annual Annual

Sep-12 Aug-12 Sep-11 2012 2011 % Change 2007 2002

Number of Airline Passengers 4,379,049 5,083,518 4,344,205 40,162,163 40,102,951 0.1% 49,863,286 35,652,084

Source: Denver International Airport, Traffic Statistics.

Residential Real Estate

Home Resales

According to the National Association of Realtors (NAR), existing home sales rose 2.1 percent between October and September and increased 10.9 percent over October 2011 sales. Single-family home sales increased 1.9 percent over-the-month and 9.6 percent over-the-year. Condominium sales also increased both over-the-month (+3.6 percent) and over-the-year (+13.7 percent). Home sales in the Midwest increased the most of all the regions, rising 18.1 percent over-the-year, followed by the South (+11 percent) and the West (+3.5 percent).

Home resales in Metro Denver through October increased 18.2 percent over the same period in 2011. Month-

over-month home prices showed a slight decline, but year-to-date average prices have increased for both single

family homes and condominiums by eight and 11.5 percent, respectively. Homes under contract rose 3.8 percent

over-the-month and 20.3 percent compared to October 2011, suggesting a strong positive trend and indicating

steady future sales activity.



Previously-Owned Home Sales Activity

Month of Month of Month of YTD Total YTD Total YTD Total Ann Avg Ann Avg

Oct-12 Sep-12 Oct-11 2012 2011 % Change 2007 2002

Home Sales (Under Contract) 4,624 4,457 3,844 49,429 41,176 20.0% 61,663 30,089

Home Sales (Closed) 4,095 3,949 3,183 39,207 33,163 18.2% 49,789 47,919

Unsold Homes on Market 9,719 10,470 14,156 9,719 14,156 -31.3% 24,603 20,676

Average Sales Price-Single Family $304,237 $306,633 $269,503 $302,956 $280,629 8.0% $310,418 $268,926

Average Sales Price-Condo $179,803 $186,843 $160,273 $177,273 $158,965 11.5% $180,321 $168,226

Median Sales Price-Single Family $255,000 $255,000 $226,021 $250,000 $229,820 8.8% $245,000 $221,000

Median Sales Price-Condo $145,500 $147,500 $125,000 $140,000 $125,000 12.0% $150,000 $149,500

Note: Data includes the seven-county Metro Denver region plus Elbert, Park, Gilpin, and Clear Creek Counties as well as portions of the Loveland area.

Source: MetroList, Inc.

Home Prices

The national median existing home price increased 11.1 percent year-over-year in October. According to NAR economists, lower levels of inventory and growing demand continue to put upward pressure on home prices. The increase in prices in October marked the eight consecutive months of year-over-year increases, something that has not occurred since May 2006. Each region in the U.S. reported price increases over-the-year. The West (+21.2 percent) and the Midwest (+10.6 percent) had higher gains, while the South (+8.2 percent) and the Northeast (+4.6 percent) had slightly smaller increases.

The NAR’s data for median home prices in metro areas shows that prices in the Boulder and Denver-Aurora-

Broomfield MSAs have decreased slightly over-the-quarter by 1.6 and 0.2 percent, respectively. However, the

prices have increased over the third quarter of 2011 in both areas, with Boulder MSA prices increasing 6.1

percent and Denver-Aurora-Broomfield MSA increasing 10.5 percent. Metro areas throughout the U.S. posted a

range of over-the-year changes, with the largest decline in prices of 16.1 percent in the Raleigh-Cary MSA and

the largest gain of 34.9 percent in the Phoenix-Mesa-Scottsdale MSA. The Denver MSA ranked 25th in terms of

positive gains over-the-year, and the Boulder MSA ranked 53rd of 147 MSAs.

Median Sales Price of Existing Single-Family Homes ($000s)

Quarter 3 Quarter 2 Quarter 3 YTD Avg YTD Avg YTD Avg Median Median

2012 (p) 2012 (r) 2011 2012 2011 % Change 2007 2002

Boulder MSA $382.1 $388.2 $360.1 $381.4 $361.3 5.6% $376.2 n/a

Denver-Aurora-Broomfield MSA $260.3 $260.7 $235.6 $249.1 $230.7 8.0% $245.4 $228.1

United States $186.1 $181.3 $173.0 $175.3 $166.9 5.0% $217.9 $158.1

Source: National Association of REALTORS. (p) =preliminary (r) =revised



The S&P/Case-Shiller Home Price Index increased slightly for the majority of cities in the 20-City Composite Index. September was the sixth consecutive month of month-over-month increasing prices for the 20-city composite index. Only five cities posted an over-the-month decrease, all of which were less than one percent. The Denver index increased by 0.53 points to 134.01 from August to September.

100

120

140

160

180

200

220S&P/Case-Shiller Home Price Indices

Denver 20-City Composite

Source: Standard & Poor's.

Over-the-year, prices increased in 18 of the cities, decreasing only in Chicago (-1.5 percent) and New York (-2.3 percent). The Denver area index increased 6.7 percent over September 2011, compared to a three percent increase in the 20-City Composite Index. The highest increase occurred in the Phoenix area with the price index gaining 20.4 percent over-the-year.

Foreclosures

Foreclosure filings in the U.S. rose three percent between September and October, RealtyTrac reported. Despite the monthly increase, filings were down 19 percent over-the-year. Trends varied across the country, and analysts believe the variation is due to individual states’ foreclosing infrastructure and their ability to handle high volumes of delinquent loans during the foreclosure crisis of 2010. Counties affected by Hurricane Sandy showed a decrease of eight percent over-the-month but filings remained 92 percent above year-ago levels.

Foreclosure data from the Colorado Division of Housing point to significant over-the-year decreases in October,

as foreclosure filings declined in each of the seven counties, ranging from a decline of 24.2 percent in Douglas

County to a decline of 38.9 percent in the City and County of Broomfield. Over-the-month, filings in Metro

Denver increased in six of the seven counties, decreasing only in Broomfield by 15.4 percent. The largest over-

the-month increase in filings was in Douglas County, which reported a 39.8 percent increase.

Real Estate Foreclosures

Month of Month of Month of YTD Total YTD Total YTD Total

Annual

Total

Oct-12 Sep-12 Oct-11 2012 2011 % Change 2007

Total Metro Denver* 1,088 1,004 1,547 13,173 13,818 -4.7% 26,520

Adams County 239 223 380 2,757 2,929 -5.9% 6,192

Arapahoe County 262 257 346 3,158 3,288 -4.0% 6,237

Boulder County 60 59 83 702 815 -13.9% 981

Broomfield County 11 13 18 184 190 -3.2% 252

Denver County 219 215 326 2,695 2,850 -5.4% 7,405

Douglas County 116 83 153 1,369 1,427 -4.1% 1,865

Jefferson County 181 154 241 2,308 2,319 -0.5% 3,588

*The total number of election and demand setups (initial filings) received by county public trustees. Filings may be subsequently cured or withdrawn.

Sources: Colorado Division of Housing and county public trustees.



New Homes

0

200

400

600

800

1,000

1,200

1,400

1,600

Aug 1964 Aug 1972 Aug 1980 Aug 1988 Aug 1996 Aug 2004 Aug 2012

(00

0s)

U.S. New Home Sales, Seasonally Adjusted Annual Rate

Source: U.S. Census Bureau.

U.S. new home sales rose 17.2 percent over-the-year in October, according to seasonally-adjusted Census Bureau data. Sales declined slightly over-the-month by 0.3 percent, driven by decreased sales in the Northeast (-32.3 percent) and the South (-11.6 percent). However, the Midwest posted a large increase (62.2 percent), and the West posted a smaller increase (8.8 percent). Each region’s sales increased over-the-year between 9.3 percent (Northeast) and 33.7 percent (West).

New home building permits declined 2.7 percent between September and October. However, permits increased 29.8 percent over-the-year, and show an overall positive trend during the previous two years. Structures with five or more units increased the most over-the-year by 40.7 percent, followed by single-family homes, which increased 26.6 percent. The highest increase in the number of permits pulled was in the Midwest, rising 38.5 percent over-the-year, followed by the West (38.3 percent) and the Northeast (16.7 percent). The South was the only region to post an over-the-year decline with the number of permits pulled dropping 57.1 percent.

The National Association of Homebuilders (NAHB)/Wells Fargo Housing Market Index rose for the seventh consecutive month to its highest level since May 2006. The index rose five points to 46 between October and November. Builders reported increased demand for new homes, and potential buyers continued to find motivation in favorable prices and low interest rates.

Residential building permits increased 15 percent between September and October. The largest increase occurred

in multi-family unit permits, rising 255 percent. Single-family detached homes was the only category to decrease

slightly over-the-month by one percent. Permits also increased 18.4 percent over-the-year for Metro Denver, with

the largest increase occurring in single-family detached homes (69 percent).

Residential Building Permits

Month of Month of Month of YTD Total YTD Total YTD Total Total Total

Oct-12 Sep-12 Oct -11 2012 2011 % Change 2007 2002

Single-Family Detached Units 441 445 261 4,552 2,943 54.7% 7,082 13,793

Single-Family Attached Units 79 72 95 726 724 0.3% 4,632 4,425

Multi-Family Units 110 31 176 1,790 1,259 42.2% 3,015 4,085

Total Units 630 548 532 7,068 4,926 43.5% 14,729 22,303

Source: Home Builders Association of Metro Denver.

Apartment Rental Market

! TOD Group of New Orleans plans to build up to 1,125 apartments, townhomes, and condominiums in Adams County. The development, Clear Creek Transit Village, will be close to the RTD Gold Line in Wheat Ridge.



! The Empowerment Program, in conjunction with J. Mercado and Associates Inc. and Community Capital Corp., will develop the Odyssey Family Residences aimed at housing female veterans and other at-risk women. The project includes 36 one-and two-bedroom apartments and resident support services in north Denver.

! The team of Wood Partners and East West Partners broke ground on the Alta City House west of Denver Union Station. The $62 million complex will include 281 units, a rooftop deck with kitchen, a bike room, dog park, and wine cellar. The project is expected to be completed in 18 to 24 months.

The Denver Metro Apartment Vacancy and Rent Survey reported decreasing vacancy and increasing rental rates in Metro Denver’s apartment market. The third quarter vacancy rate dropped 0.5 percentage points quarter-over-quarter and rents increased 0.6 percent. The year-to-date average vacancy rate decreased by 0.4 percentage points over-the-year, and the average rent rose 5.6 percent over the same period on 2011.

The vacancy rate in each of the seven counties was at the lowest level since 2000 or 2001. The vacancy rate decreased from the second quarter to the third quarter in all counties except Douglas County, with Douglas County posting a slight increase from 3.9 to 4.1 percent. The lowest vacancy rate occurred in Boulder/Broomfield at 2.9 percent. The average rental rate decreased in Adams County from the second to the third quarter of 2012; however, average rental rates increased in all other counties. The largest increase of 3.2 percent occurred in Jefferson County.

Apartment Statistics

Quarter 3 Quarter 2 Quarter 3

YTD

Average

YTD

Average

YTD

Average

Annual

Average

Annual

Average

2012 2012 2011 2012 2011 % Change 2007 2002

Apartment Vacancy Rate 4.3% 4.8% 4.9% 4.7% 5.1% 6.2% 9.8%

Average Monthly Rental Rate (all units) $986 $980 $936 $973 $921 5.6% $856 $809

Source: Denver Metro Apartment Vacancy and Rent Survey.

Commercial Real Estate

Denver Union Station redevelopment began, according to the Regional Transportation District. The project will be a mixed-use, transit-oriented hub and is expected to open in mid-2014. The station will feature 22,000 square feet of ground-floor space for retail stores and restaurants, a 12,000-square-foot “great hall” public area, and a 40,000-square-foot outdoor plaza.

Office Market

Data from CoStar Realty Information, Inc. show direct vacancy in Metro Denver’s office market rose three-tenths of a percentage point between the second (12.1 percent) and third (12.4 percent) quarters. Despite the small increase, the third quarter rate was down one-half of a percentage point from the rate reported one year earlier. Direct average lease rates in the office market have started to trend upward. The third quarter direct average rate ($20.55) was 2.1 percent above the second quarter rate and was up 3.2 percent from the year-ago rate.



Office Market Statistics

Quarter 3 Quarter 2 Quarter 3 Quarter 3 Quarter 3 Quarter 3

2012 2012 2011 2010 2009 2008

Number of Buildings 5,849 5,842 5,834 5,816 5,804 5,763

Existing Square Feet (millions) 170.1 169.4 169.0 168.4 166.8 164.3

Vacant Square Feet (direct, millions) 21.1 20.5 21.8 22.9 23.1 20.3

Vacancy Rate (direct) 12.4% 12.1% 12.9% 13.6% 13.9% 12.4%

Vacancy Rate (with sublet) 12.7% 12.4% 13.4% 14.4% 14.9% 13.2%

Avg. Lease Rate (direct, per sq. ft, full service) $20.55 $20.12 $19.91 $20.13 $20.83 $21.81New Construction Completed (year-to-date) 0.83 MSF,

7 Bldgs0.35 MSF,

4 Bldgs0.48 MSF, 10 Bldgs

1.03 MSF, 7 Bldgs

0.93 MSF, 19 Bldgs

1.05 MSF, 44 Bldgs

Currently Under Construction 0.95 MSF, 9 Bldgs

1.30 MSF, 9 Bldgs

0.91 MSF, 9 Bldgs

0.54 MSF, 15 Bldgs

1.76 MSF, 13 Bldgs

3.41 MSF, 54 Bldgs

Source: CoStar Realty Information, Inc. MSF=Million Square Feet

Industrial & Flex Market

Data from CoStar Realty Information Inc. show the third quarter direct vacancy rate in Metro Denver’s industrial market (5.7 percent) was lower than the six percent rate reported for the second quarter of 2012 and the 6.3 percent rate reported one year earlier. These declining vacancy rates and an increase in investment activity are contributing to lease rate growth: the direct average rate in the third quarter ($4.66 per square foot) was 1.7 percent higher than the second quarter average and 2.4 percent above the year-ago average rate.

Despite these trends and encouraging market fundamentals, the industrial construction market has been slow to improve. About 600,000 square feet of industrial property was under construction during the third quarter, and roughly 273,000 square feet of space has been completed so far this year.

Industrial Market Statistics


2012 2012 2011 2010 2009 2008






Avg. Lease Rate (direct, per square foot, NNN) $4.66 $4.58 $4.55 $4.73 $4.85 $5.15New Construction Completed (year-to-date) 0.27 MSF,

6 Bldgs0.06 MSF,

3 Bldgs0.28 MSF,

4 Bldgs0.07 MSF,

3 Bldgs 0.23 MSF,

6 Bldgs1.77 MSF,

33 BldgsCurrently Under Construction 0.60 MSF,

7 Bldgs0.50 MSF,

6 Bldgs0.04 MSF,

2 Bldgs0.08 MSF,

1 Bldg 0 MSF, 0 Bldgs

0.90 MSF, 11 Bldgs




Flex Space Statistics


2012 2012 2011 2010 2009 2008







2 Bldgs0 MSF,1 Bldg*

0 MSF, 0 Bldgs

0.05 MSF, 2 Bldgs

0.27 MSF, 8 Bldgs

0.59 MSF, 20 Bldgs

Currently Under Construction 0.20 MSF, 2 Bldgs

0.20 MSF, 2 Bldgs

0 MSF, 1 Bldg

0 MSF, 0 Bldgs

0 MSF, 0 Bldgs

0.38 MSF, 11 Bldgs

*Roughly 4,900 square feet of flex space was completed as second quarter ended. This small amount of property rounds to zero when stated in millions of

square feet.


CoStar data show the direct vacancy rate for Metro Denver’s flex market declined for the third-straight quarter. In fact, the third quarter direct vacancy rate (12 percent) was one-half of a percentage point below the second quarter rate and eight-tenths of a percentage point below the year-ago vacancy rate. These declining vacancy rates have not improved enough to support higher lease rates: the third quarter direct average lease rate for Metro Denver flex property ($8.79 per square foot) was 1.5 percent below the year-ago rate. Two Metro Denver flex properties – with roughly 202,000 square feet – were under construction during the third quarter. Slightly more than 119,000 square feet of Metro Denver flex property has been completed so far this year.

Retail Market

Like the flex market, third quarter was the third-consecutive quarter in which Metro Denver’s direct retail vacancy rate declined from the prior period. Data from CoStar Realty Information Inc. show the third quarter vacancy rate (6.7 percent) was slightly below the year-ago rate (seven percent) and noticeably below the third quarter of 2010 (7.5 percent). Retail lease rates are gradually improving: the third quarter direct average rate ($14.83 per square foot) was 1.2 percent above the second quarter average and the year-ago average rate.

Retail Market Statistics


2012 2012 2011 2010 2009 2008







22 Bldgs0.09 MSF,

15 Bldgs0.93 MSF,

11 Bldgs0.34 MSF,

14 Bldgs 1.58 MSF,

62 Bldgs2.55 MSF,

73 BldgsCurrently Under Construction 0.65 MSF,

31 Bldgs0.67 MSF,

27 Bldgs0.16 MSF,

10 Bldgs0.65 MSF,

11 Bldgs 0.55 MSF,

17 Bldgs2.94 MSF,

72 Bldgs





Metro Denver Indicator Summary

Indicator Monthly/Quarterly

Direction

Annual

Direction

Summary of Recent Changes

Nonfarm Employment Growth

" " Employment up 6,600 jobs Sep to Oct; YTD employment up 2.4% through Oct 2012.

% Companies Hiring (Denver Area)

# # 17% of companies expect to add workers in Q4 2012 and 73% expect no change.

Unemployment Rate " # Metro rate 7.3% in Oct; YTD avg. rate of 7.8% down from 2011 YTD avg (8.2%)

Initial Unemployment Insurance Claims

" # Claims increased Sep to Oct; YTD claims down 10.1% through Oct 2012.

Total Retail Sales " " Metro retail sales increased Jul to Aug; YTD sales up 7.3% through Aug 2012.

Consumer Confidence Index

# " Mountain Region Index down to 73 in Nov from 73.2 in Oct; index up 21.3% YTD thru Nov ‘12.

Hotel Occupancy $% " Hotel occupancy remained unchanged Sep to Oct at 74.4%; occupancy up 2.2 % YTD.

DIA Passengers # " Traffic decreased Aug to Sep; YTD traffic up slightly through Sep 2012.

Bloomberg Colorado Index

# " Bloomberg Colorado down 2.2% from Oct to Nov; year-to-date return at 3.0%.

Dow Jones Industrial Average

# " DOW decreased 0.5% Oct to Nov; year-to-date return at 6.6%.

Home Sales (closed) " " Home sales increased Sep to Oct; YTD sales up 18.2% through Oct.

Median Home Price (Denver-Aurora MSA)

# " Median price in Denver MSA down 0.2% Q2 ‘12 to Q3 ‘12; price up 8% YTD through Q3 ‘12

Foreclosures " # Foreclosures increased Sep to Oct; YTD down 4.3% through Oct 2012.

Residential Building Permits (Total)

" " Total permits increased between Sep and Oct; YTD up 43.5% through Oct 2012.

Apartment Vacancy Rate # # Vacancy fell to 4.3% in Q3; avg rental rate at $986 per month.

Office Vacancy Rate (with Sublet)

" # Vacancy up to 12.7% in Q3 2012 from 12.4% in Q2; avg lease rate up to $20.55/sq.ft.

Industrial Vacancy Rate (with Sublet)

# # Vacancy down to 5.9% in Q3 2012 from 6.1% in Q2; avg lease rate up to $4.66/sq. ft. (NNN)

Retail Space Vacancy Rate (with Sublet)

$% # Vacancy unchanged at 7.1% in Q3 2012; avg. lease rate up to $14.83/sq. ft. (NNN)

Positive Changes 6 of 18 17 of 18

Economic and Demographic Research

Industry Studies

Fiscal and Economic Impact Analysis

Real Estate Economics

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