RESEARCH REPORTMETRO DETROIT & WASHTENAW MARKET

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Detroit Offi ce Market

DETROIT OFFICE MARKET REPORTS A SLIGHT INCREASE IN RENTAL RATES AND

DECREASE IN VACANCY RATES

At the end of 2010, the fourth quarter Metro Detroit offi ce market area has fi nally shown positive results after a long steady decline due to the current recession that the entire Nation is experiencing. Net absorption totaled a positive 924,996 square feet at the end of the fourth quarter 2010. Vacancy rates decreased to 19 percent this quarter. Rental rates slightly increased to $18.77 per square foot.

The Detroit Michigan real estate market has taken a hard hit over the last few years due to increasing unemployment and continuing downsizing of organizations. New development and construction are practically nonexistent. Through 2011, challenges remain for commercial property owners as mortgages become due, vacancies remain high and new projects are scarce.

MARKET INDICATORS Q4

Q4 2010 | OFFICE

2009 2010

VACANCY

NET ABSORPTION

CONSTRUCTION

RENTAL RATE

0%

77%

23%

UNDER CONSTRUCTION BY SUBMARKET

I-696 Corridor

Northern Oakland CountyMacomb County AreaI-96 Corridor

Washtenaw County

0.17

0.175

0.18

0.185

0.19

0.195

0.2

-2000000

-1500000

-1000000

-500000

0

500000

1000000

1500000

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Vac

ancy

(^)

Vac

ancy

(^)

Mill

ion

Squa

re F

eet

Mill

ion

Squa

re F

eet

Completions Absorption Vacancy Rate (%)

RENTAL RATES

A building’s vacancy is the major factor in its rental rate rather than the overall performance of a market sector. Rates range from $12.04 to $25.58.

The Metro Detroit’s average rental rate increased since third quarter 2010 and stands at $18.77 per square foot. This represented a $0.33 decrease from 12 months ago.

Currently, the average rental rate in fourth quarter for Class A was $22.49, Class B was $18.17 and Class C was at $14.38. Detroit’s Downtown average asking rental rate decreased $0.06 to $18.45 while a $0.04 increase to $18.70 reported in the suburban markets.

Local landlords must continue to off er aggressive incentives on both new leases and renewals.

CONSTRUCTION

Fourth quarter delivered any additional 44,500 square feet of offi ce product to the market. All Class B type and located in the Oakland County Central Submarket.

Construction activity decreased this quarter compared to third quarter. With 8,885 square feet of offi ce space reported under construction, mainly concentrated in the Suburban market and majority Class B type property.

SALES ACTIVITY

PROPERTY ADDRESS CITY SALE DATE SALE PRICE SIZE PRICE PER SF

333 E Jeff erson Ave (3 Properties) Detroit 12/2/2010 37,800,000 550,094

401-411 S Old Woodward Ave Birmingham 11/12/2010 15,300,000 250,000 61.2

38525 Woodward Ave Bloomfi eld Hills 12/17/2010 7,000,000 63,186 110.78

43630 Hayes Rd (5 Properties) 12/29/2010 6,525,000 98,830 66.02

17199 N Laurel Park Dr Livonia 12/23/2010 6,000,000 124,000 48.39

1349 S Rochester Rd Rochester Hills 12/22/2010 2,825,000 64,000 44.14

500 Avis Dr Ann Arbor 10/29/2010 2,000,000 27,160 73.64

6001 N Adams Rd Bloomfi eld Hills 12/28/2010 2,000,000 67,484 29.64

29621 Northwestern Hwy Southfi eld 11/5/2010 1,875,000 26,500 70.75

800-900 W University Blvd Rochester 12/3/2010 1,500,000 40,400 37.13

6050 Greenfi eld Rd Dearborn 11/5/2010 1,434,532 15,100 95

17000 Executive Plaza Dr Dearborn 11/30/2010 1,250,000 60,000 20.83

continued on page 4

LEASE ACTIVITY

BUILDING NAME SUBMARKET TENANT SIZE SF

28333 Telegraph Rd. Southfi eld Int. AutomotiveComponentsGroup 113,894

401 - 407 E. Liberty St. Washtenaw Google 81,292

100 Galleria Southfi eld NA 41,865

2800 Livernois Rd. Troy Carlson Marketing 36,720

Total offi ce inventory in the Detroit market area amounted to 164,292,884 Square feet in 2,940 properties.

Total year to date net absorption at the end of 2010 totaled a positive 223,249 square feet.

P. 2 | COLLIERS INTERNATIONAL

RESEARCH REPORT | Q4 2010 | OFFICE | DETROIT

EXISTING PROPERTIES DIRECT VACANCYSUBLEASE VACANCY TOTAL VACANCY

NET ABSORPTION - SF NEW SUPPLY - SF

U/C & PROPOSED - SF

AVG RENT

Total

Inventory 4Q Current UnderClass Bldgs. Sq. Ft. Sq. Ft. Rate Sq. Ft. Rate Sq. Ft. Rate Period YTD Period YTD Constr. Proposed Rate

DOWNTOWN MARKETS

Detroit CBD and New Center AreaA 24 11,563,170 2,012,289 17.4% 2,704 0.0% 2,014,993 17.4% 815 (282,975) 0 0 0 194,604 $23.00

B 96 15,919,800 2,574,908 16.2% 45,831 0.3% 2,620,739 16.5% 7,362 (249,448) 0 0 0 0 $16.89

C 50 2,963,362 545,473 18.4% 0 0.0% 545,473 18.4% 42,721 83,915 0 0 0 0 $15.81

All 170 30,446,332 5,132,670 16.9% 48,535 0.2% 5,181,206 17.0% 50,898 (448,508) 0 0 0 194,604 $19.11Outer Detroit, Dearborn, and Downriver, Airport, The Pointes

A 26 5,669,774 333,750 5.9% 15,060 0.3% 348,810 6.2% 116,768 139,960 $21.21

B 179 10,020,178 2,373,361 23.7% 57,401 0.6% 2,430,762 24.3% 187,727 (39,426) 40,000 $18.67

C 165 5,910,157 924,731 15.6% 0 0.0% 924,731 15.6% 57,271 247,747 0 0 0 $12.04

All 370 21,600,109 3,631,842 16.8% 72,461 0.3% 3,704,303 17.1% 361,766 348,281 0 0 0 40,000 $17.52DOWNTOWN TOTALS

A 50 17,232,944 2,346,039 13.6% 17,764 0.1% 2,363,803 13.7% 117,583 (143,015) 0 0 0 194,604 $22.41

B 275 25,939,978 4,948,269 19.1% 103,232 0.4% 5,051,501 19.5% 195,089 (288,874) 0 0 0 40,000 $17.58

C 215 8,873,519 1,470,204 16.6% 0 0.0% 1,470,204 16.6% 99,992 331,662 0 0 0 0 $13.30

All 540 52,046,441 8,764,512 16.8% 120,996 0.2% 8,885,509 17.1% 412,664 (100,227) 0 0 0 234,604 $18.45SUBURBAN MARKETS

I-696 Corridor: Madison Heights, Royal Oak, Ferndale, Southfi eld

A 26 6,173,667 1,339,889 21.7% 159,978 2.6% 1,499,867 24.3% 178 (39,725) 949,000 $20.97

B 229 15,225,304 3,299,200 21.7% 95,120 0.6% 3,394,320 22.3% 211,879 112,057 85,550 $17.47

C 172 5,012,512 691,164 13.8% 25,980 0.5% 717,144 14.3% 52,632 86,994 0 0 0 0 $13.92

All 427 26,411,483 5,330,253 20.2% 281,078 1.1% 5,611,332 21.2% 264,689 159,326 0 0 0 1,034,550 $17.61Oakland County Central: Birmingham, Bloomfi elds, Troy

A 46 7,461,835 1,681,745 22.5% 40,732 0.5% 1,722,477 23.1% (33,769) (191,536) 27,220 627,003 $21.20

B 263 14,099,756 4,506,191 32.0% 185,082 1.3% 4,691,273 33.3% (68,023) (91,459) 44,500 60,500 93,550 $19.21

C 90 2,208,549 315,901 14.3% 47,577 2.2% 363,478 16.5% 26,476 (12,792) 0 0 $15.83

All 399 23,770,140 6,503,837 27.4% 273,391 1.2% 6,777,229 28.5% (75,316) (295,787) 44,500 87,720 0 720,553 $19.52Northern Oakland County: Rochester, Auburn Hills, Clarkston, Lake Orion, Pontiac

A 16 6,334,686 207,769 3.3% 22,497 0.4% 230,266 3.6% 8,563 31,130 419,852 $23.99

B 140 6,963,072 2,561,828 36.8% 60,301 0.9% 2,622,129 37.7% 28,099 25,120 293,464 $17.80

C 81 2,557,867 487,059 19.0% 0 0.0% 487,059 19.0% 14,709 327 0 0 0 $15.76

All 237 15,855,625 3,256,656 20.5% 82,798 0.5% 3,339,455 21.1% 51,371 56,577 0 0 0 713,316 $19.94Macomb County Area: Warren, Sterling Heights, Shelby Twp., Roseville, Clinton Twp., Saint Clair Shores, Macomb Twp.

A 11 611,896 185,039 30.2% 0 0.0% 185,039 30.2% 1,456 53,567 70,327 $23.59

B 255 6,379,069 1,104,675 17.3% 8,669 0.1% 1,113,344 17.5% (7,959) 8,545 212,002 $17.81

C 141 2,741,134 232,343 8.5% 3,600 0.1% 235,943 8.6% 11,357 14,535 0 0 0 $13.34

All 407 9,732,099 1,522,057 15.6% 12,269 0.1% 1,534,327 15.8% 4,854 57,352 0 0 0 282,329 $16.91I-96 Corridor: Novi, Howell, Brighton, South Lyon, Farmington

A 30 3,470,040 604,692 17.4% 143,503 4.1% 748,195 21.6% (12,281) (45,875) 1,720,746 $23.10

B 263 10,066,754 1,280,684 12.7% 17,074 0.2% 1,297,758 12.9% 165,730 293,736 6,885 355,108 $19.22

C 90 1,780,694 270,569 15.2% 0 0.0% 270,569 15.2% (21,225) (50,037) 0 0 0 14,000 $17.15

All 383 15,317,488 2,155,945 14.1% 160,577 1.0% 2,316,522 15.1% 132,224 197,824 0 0 6,885 2,089,854 $19.86I-275 Corridor: Livonia, Westland, Canton, Plymouth, Northville

A 11 1,579,420 287,199 18.2% 4,655 0.3% 291,854 18.5% (20,697) (16,916) 100,000 $21.03

B 151 4,771,134 887,933 18.6% 15,489 0.3% 903,422 18.9% 21,181 44,202 251,204 $17.78

C 75 2,284,063 308,803 13.5% 0 0.0% 308,803 13.5% (3,231) (32,673) 0 0 0 $14.03

All 237 8,634,617 1,483,935 17.2% 20,144 0.2% 1,504,080 17.4% (2,747) (5,387) 0 0 0 351,204 $17.38SUBURBAN TOTALS

A 140 25,631,544 4,306,333 16.8% 371,365 1.4% 4,677,698 18.2% (56,550) (209,355) 0 27,220 0 3,886,928 $22.14

B 1,301 57,505,089 13,640,511 23.7% 381,735 0.7% 14,022,246 24.4% 350,907 372,906 44,500 60,500 6,885 1,290,878 $18.31

C 649 16,584,819 2,305,839 13.9% 77,157 0.5% 2,382,996 14.4% 80,718 6,354 0 0 0 14,000 $14.72

All 2,090 99,721,452 20,252,683 20.3% 830,257 0.8% 21,082,941 21.1% 375,075 169,905 44,500 87,720 6,885 5,191,806 $18.70WASHTENAW COUNTY

A 24 3,345,044 271,016 8.1% 1,156 0.0% 272,172 8.1% (17,155) (16,793) 0 806,381 $25.58

B 214 7,801,244 665,653 8.5% 41,425 0.5% 707,078 9.1% 152,228 178,069 0 0 2,000 267,127 $19.15

C 72 1,378,703 191,160 13.9% 0 0.0% 191,160 13.9% 2,184 (7,705) 0 0 $17.22

All 310 12,524,991 1,127,829 9.0% 42,581 0.3% 1,170,410 9.3% 137,257 153,571 0 0 2,000 1,073,508 $20.65MARKET TOTALS – DOWNTOWN, SUBURBAN, AND WASHTENAW COUNTY

A 214 46,209,532 6,923,388 15.0% 390,285 0.8% 7,313,673 15.8% 43,878 (369,163) 0 27,220 0 4,887,913 $22.49

B 1,790 91,246,311 19,254,433 21.1% 526,392 0.6% 19,780,825 21.7% 698,224 262,101 44,500 60,500 8,885 1,598,005 $18.17

C 936 26,837,041 3,967,203 14.8% 77,157 0.3% 4,044,360 15.1% 182,894 330,311 0 0 0 14,000 $14.38

All 2,940 164,292,884 30,145,024 18.3% 993,834 0.6% 31,138,860 19.0% 924,996 223,249 44,500 87,720 8,885 6,499,918 $18.77

QUARTERLY COMPARISON AND TOTALSQ410 2,940 164,292,884 30,145,024 18.3% 993,834 0.6% 31,138,860 19.0% 924,996 223,249 44,500 87,720 8,885 6,499,918 $18.77Q310 2,911 163,189,957 30,709,526 18.8% 986,171 0.6% 31,695,699 19.4% 0 (701,747) 27,220 16,000 740,309 6,925,908 $18.75

Q210 2,891 162,710,814 30,323,377 18.6% 1,005,839 0.6% 31,329,218 19.3% 0 (612,530) 16,000 16,000 202,528 7,311,514 $18.98

Q110 2,931 168,406,862 29,844,859 17.7% 1,245,183 0.7% 31,090,044 18.5% (510,483) 0 0 149,709 7,764,636 $18.92

Q409 2,895 166,790,401 29,081,419 17.4% 1,346,110 0.8% 30,427,531 18.2% (2,830,949) 88,719 165,557 285,409 8,114,232 $19.10

Q309 2,843 163,465,688 27,428,354 16.8% 1,033,600 0.6% 28,461,956 17.4% 0 (1,191,121) 20,872 76,838 223,575 6,378,890 $19.20

Q209 2,819 161,069,549 27,376,284 17.0% 1,011,099 0.6% 28,387,385 17.6% 0 (654,896) 0 55,966 197,463 8,361,715 $19.38

Q109 2,824 161,898,822 27,658,991 17.1% 1,191,626 0.7% 28,850,619 17.8% (683,664) 55,966 55,966 228,624 8,787,019 $19.58

Q408 2,798 162,686,534 26,483,723 16.3% 1,270,905 0.8% 27,754,630 17.1% 189,881 0 48,260 319,158 8,558,723 $19.62

RESEARCH REPORT | Q4 2010 | OFFICE | DETROIT

COLLIERS INTERNATIONAL | P. 3

VACANCY

The overall offi ce vacancy rate in the Metro Detroit market decreased to 19.0% in the fourth quarter 2010 compared to third quarter; higher than it was 12 months ago at 18.2%.

The average vacancy rate for Class A projects was 15.8%, Class B projects 21.7% and Class C projects 15.1%. Detroit’s Downtown vacancy rate decreased to 17.1% and the Suburban vacancy slightly decreased to 21.1% in the fourth quarter of 2010.

ABSORPTION/LEASING ACTIVITY

Net absorption for the overall offi ce market in the fourth quarter 2010 amounted to a positive 924,996 square feet, an increase from last quarter.

The Outer Detroit Dearborn submarket reported the highest absorption while the Oakland County submarket came in with the lowest. 2010 has amounted to a positive 223,249 square feet.

Net absorption for Detroit’s Central Business District increased this quarter to a positive 50,898 square feet. The suburban markets saw a decline and posted a positive 375,075 square feet for the fourth quarter 2010.

SALES ACTIVITY

At the end of the third quarter of 2010, total offi ce building sales activity was up compared to 2009. In the fi rst nine months of 2010, the market saw 34 offi ce sales transactions with a total volume of over $195 million. The price per square foot averaged $76. In the same fi rst nine months of 2009, 17 transactions posted with a total volume of over $53 million. The price per square foot averaged $44. Locally, sales are averaging approximately $35 - $75 per square foot and capitalization rates between 8.5 and 9.5%.

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The information contained herein has been obtainedfrom sources deemed reliable. While every reasonableeff ort has been made to ensure its accuracy, we cannotguarantee it. No responsibility is assumed for anyinaccuracies. Readers are encouraged to consult theirprofessional advisors prior to acting on any of thematerial contained in this report.

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RESEARCH REPORT | Q4 2010 | OFFICE | DETROIT