2011 Market Review

Office

Retail

Industrial

Market Review

Market Review

■The great (expectation) reset

■Shift from uncertainty to stability

–Housing

–Consumer spending

–Rates/occupancy

■Corporate consolidations

■Broad dynamics with local impact

–Jobs

–Deficits at all levels

–Infrastructure needs

■Community assets

■Tourism as driver

Tucson Construction Completions

479

485 650

423

129

245

1,4

43

820

1864

467

424

358

411

518

1,8

71

445

51

143

2006 2007 2008 2009 2010 2011

Th

ou

san

d S

F

Office Retail Industrial

Source: CoStar

Vacancy

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2006 2007 2008 2009 2010 2011

Office Retail Industrial

Source: CoStar

Asking Rents

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

2006 2007 2008 2009 2010 2011

Office Retail Industrial

Source: CoStar

Office

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

$12.00

$13.00

$14.00

$15.00

$16.00

$17.00

$18.00

$19.00

$20.00

$21.00

$22.00

2007 2008 2009 2010 2011

psf/

yr

OVERALL GROSS RENT OVERALL VACANCY RATE

Source: CoStar

Office

■2011

–Improving fundamentals

–Increased lease activity year end

–Limping sale market

–Stable medical office market

■2012

–Bright future downtown

–Office demise? Footprint change = opp

–Pent up demand remodel/cap upgrades

–Grant Rd relocations/redevelopment

Retail

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

2007 2008 2009 2010 2011

psf/

yr

OVERALL RENT VACANCY RATE

Source: CoStar

Retail

Retail

■2011

–Strong finish (spending, improvements, auto)

–Positive absorption (376K)

–Development/redevelopment traction

–Active competition for location/corners

■2012

–Bricks/mortar demise? (change/opp)

–Benefit from improving housing market

–Stabilized rates

–Continued flight to quality

–Increased investor activity

Industrial

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

2007 2008 2009 2010 2011

psf/

mo

OVERALL NET RENTAL RATE OVERALL VACANCY RATE

Source: CoStar

Industrial

■2011

–Corporate consolidations

–Increased economic development activity

–Tale of 3 lease markets

–Sales dominated by distress

■2012

–Large Vacancies = opportunity

–Logistics & “Reshoring”

–Mining support

–Construction supply survivors

Summary

■Where are the opportunities?

■How will proximity to Mexico support growth &

opportunity?

■When will the windows close/pendulum shift?

Resources

■Resources

– www.picor.com

@PICORcres

– PICOR

– PICOR

– PICOR Connect: Trends in Commercial Real

Estate (blog.picor.com)