tenant’s guide - cresa€¦ · · 2012-12-27austin, tx . . . . . . . . . . . . . . . . . . . ....

Tenant’s Guide

North American Markets

Third Quarter 2012

Tenant ’s Guide North Amer ican Markets Th i rd Quarter 2012

The Tenant’s Advantage

cresa.com

Table of Contents

North America Overview . . . . . . . . . . . . . . . . . . . . . 3

Albany, NY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Atlanta, GA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Austin, TX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Baltimore, MD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Birmingham, AL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Boston, MA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Calgary, AB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Charlotte, NC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Chicago, IL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Cincinnati, OH . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Dallas, TX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Denver, CO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Detroit, MI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

East Bay, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Fairfield County, CT . . . . . . . . . . . . . . . . . . . . . . . . 18

Fort Worth, TX . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Houston, TX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Indianapolis, IN . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Inland Empire, CA . . . . . . . . . . . . . . . . . . . . . . . . . 22

Kansas City, MO . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Long Island, NY . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Los Angeles, CA . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Madison, WI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Milwaukee, WI . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Minneapolis, MN . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Nashville . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

New York, NY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

NJ – North/Central . . . . . . . . . . . . . . . . . . . . . . . . 31

Orange County, CA . . . . . . . . . . . . . . . . . . . . . . . . 32

Orlando, FL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Ottawa, ON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Palo Alto, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Philadelphia, PA . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Phoenix, AZ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Pittsburgh, PA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Portland, OR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Princeton, NJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Raleigh, NC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Sacramento, CA . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Salt Lake City, UT . . . . . . . . . . . . . . . . . . . . . . . . . 43

San Antonio, TX . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

San Diego, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

San Francisco, CA . . . . . . . . . . . . . . . . . . . . . . . . . 46

San Jose, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

South Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

St . Louis, MO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Toronto, ON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Vancouver, BC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Washington, DC . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Cresa Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

October 2012

Off ice and Industr ia l Real Estate Markets in 2012

North America Market Overview

In Cresa’s mid-year North America Overview, uncertainty was the watchword, with the European debt crisis and anemic US job growth combining to keep economic growth mostly flat. As we close the third quarter of 2012, modest growth continues, the unemployment rate finally dips below 8.0 percent, and the Euro-zone debt crisis has so far not substantially impacted the US and Canada economies.

U.S. EconomyThe unemployment picture has improved slightly from mid-year, declining 0.3 percentage points to 7.8 percent in September, and total nonfarm payroll employment rose by 114,000. This is a small but significant improvement over the first 8 months of the year, when the rate fluctuated between 8.1 and 8.3 percent. The number of unemployed persons, at 12.1 million, decreased by 456,000 in September. Industries seeing the most employment include healthcare, transportation, and warehousing, as well as modest job growth in financial services. Jobs in professional and business services, which make up the largest occupiers of office space, showed little change.

In addition, retail sales rose more than expected in September, buoying the US economy and supporting the sentiment that slow but steady improvement is taking hold. It is expected that the economic picture will remain somewhat uncertain until after the US presidential election.

CanadaIn Canada, there appears to be increased cautiousness among corporations due to anticipated slower sales growth, partially

accounted for by a weakening in the outlook for global demand and a sharp moderation in sales in the past 12 months. However, employment increased for the second consecutive month in September, up 52,000, mainly in full-time work. The unemployment rate rose 0.1 percentage points to 7.4% as more people returned to the labor market.

International OutlookOutside the US, the European debt crisis persists, and there is still a risk that some Euro-zone countries could default on their loans. Meanwhile, in China, the pace of economic growth is reported at 7.4%, the lowest in three years. As China and other developing countries have been the engine for global economic growth, a slowing economy could have significant impact around the world.

OutlookThe result for tenants in the market for space is that conditions remain favorable. Except for a few selectsubmarkets, there is an abundance of space available for office and industrial users. Discounted rents show very little sign of movement and continue to present opportunities for tenants. Looming on the horizon is a glut of maturing commercial mortgages that may sharpen the focus of landlords on retaining tenants. While this would necessarily affect absorption, it may very well slow the growth of lease rates for some time.

Our Core ValuesIntegrity. We are guided by the concept “Do

the Right Thing” both internally and externally.

We always do what is right for the client’s best

interest and put our client’s interests before

our own. We treat our clients and employees

with respect, dignity, and fairness in all

matters. We provide a professional working

environment with competitive compensation

for all employees. Character matters and all

employees are expected to endorse and live

up to our Ethics Statement. All employees

must value our professional reputation.

Partnership. We are all in this together.

We will cultivate the culture of an enjoyable

work experience for all. We will learn

from one another; we will cooperate and

collaborate with one another; we will

foster a fraternity of interdependence. We

Note About CresaWith more than 57 offices and $220 M in annual revenue, we are the largest tenant representation firm in North America. Through our partnership with Savills, we cover more than 255 locations in 40 countries. We hope you experience the difference when working with Cresa. We are the real estate firm that cares enough to listen and give you the Tenant’s Advantage.

For more details on market conditions and how you can maximize your real estate options, contact your local Cresa advisor or email [email protected].

will encourage inclusive equity sharing

structures and/or profit sharing plans in all

offices. Charitable giving is encouraged

as a goal and benefit of profitability in our

communities.

Entrepreneurship. We strive to live

“Outside the Box.” We maintain a culture

of creativity and innovative thinking,

where leaders are welcome to thrive. We

empower employees to quickly adapt to

circumstances, encouraging flexibility and

new ideas. We reward employees for saving

money or enhancing revenues, for our

clients and our firm.

We Listen. We listen to our clients needs

and use our experience to match their

needs with a real estate solution.

Jim LeslieChief Executive OfficerCresa


OverviewThe rental rate for Class A downtown office space declined for a fourth consecutive quarter . However, the drop was slim (~1%) compared to prior (~7%) quarters . The downtown Class A rate has fallen about 20% overall in the past 5 quarters . Class A downtown vacancies have held relatively steady with minor (~3%) declines in 3 consecutive quarters, reflecting continued slow absorption . Class B downtown vacancies have risen modestly (~10%) for consecutive quarters after sharp declines (~25%) in the two prior quarters . Class B downtown rates fell slightly (~2%) in the past quarter .

Class A and B suburban rental rates have held mostly steady for the past 2 years, recovering from a minor dip with scant but steady gains (~1%) over the past two to three quarters . During the past year, vacancies have dropped significantly (~40%) for Class A suburban properties, reflecting a continued flight to quality . Class B suburban vacancies had been relatively steady, but dipped strongly (~25%) below that average in the last quarter . Indications are for a slightly improving suburban market .

Moves by NY State are still liable to induce sharp sub-market shifts as large agencies redistribute their office space and property portfolios .

*This market analysis is based only on properties being actively marketed for office use .

Market Trends• Vacancy has been dropping in suburban markets coupled with

slight rate increases, while central business districts are still experiencing slow absorption despite price reductions .

Tenant’s PerspectiveIt is still a tenant’s market in Central Business District markets with slow absorption and competitive pricing . Downtown tenants look-ing to capitalize on the market conditions are exploring longer term leases, and negotiating for more tenant improvements as landlords work to win new tenants and retain current ones .

Major Transactions

Albany, New York

Prepared By Cresa Albany194 Washington Avenue

Albany, NY 12210518 .463 .5500 | www .cresa .com

Tenant/Buyer Size Type Lease/Sale

Bond, Schoeneck & King 22,000 Office Lease

Madison Handbags 6,200 Retail Purchase

O’Connell & Aronowitz 15,864 Office Lease

Hoffman Warnick, LLC 9,400 Office Lease

Trader Joes 22,782 Retail Sale

Joe’s Crab Shack 6,926 Retail/Rest . Lease

Recovery Sports Grill 5,500 Retail/Rest . Lease

Eric Mower & Associates 5,186 Office Lease

Upstate Urology 1,842 Medical Office Lease

Average Rental Rates

CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $17 .60 $16 .28 $16 .14

Class B Office $16 .75 $15 .20 $14 .93

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $16 .80 $17 .00 $17 .16

Class B Office $14 .25 $14 .50 $14 .68

Vacancy Rate


OverviewThe good news for Georgia is that more jobs will be added than lost over the next 36 months . Recent forecasts indicate that Georgia’s employment base will grow by over 41,000 jobs this calendar year, with a similar recovery in 2013 . However, the overall unemployment rate of 9 .2% continues to be higher than the U .S . average of 8 .1% and it will take two to three more years before Atlanta recovers the jobs lost during the Great Recession .

The market for office space continues to be to the tenant’s advan-tage, but many companies are hesitant to make a decision on reloca-tion or expansion until after the upcoming presidential election . This uncertainty, along with changes in building ownership due to financial distress, is delaying transactional activity .

Market Trends• Georgia recently ranked No . 5 on a national list for Best States for

Business .• Home to over 200 biotech and life science companies, Georgia

is a premier location for technology-driven firms due to its highly educated work force, advanced research infrastructure and mod-erate operating costs .

• In a recent survey of national investors, 83% of the venture capi-talists respondents indicated a strong “buy” on Atlanta technol-ogy start-ups and perceived Atlanta company valuations to be more advantageous than Silicon Valley .

Tenant’s PerspectiveIn the third quarter, every major submarket in Atlanta reported positive absorption, indicating that the market is tightening, fueled in part by new companies moving to Atlanta . This is especially true for smaller office spaces of 10,000 SF or less, where the amount of vacant space is less than the historical average . The rent premium between Class A office space is now fairly high at 36%-38% above Class B buildings, due primarily to rental rate concessions offered by Class B landlords to retain tenants . So the “flight to quality” momentum observed in the last few years is easing . In fact, as companies elect to downsize the amount of space per employee to reduce operating costs, Class B space may be more attractive since higher parking ratios can be more easily accommodated . Cresa Atlanta’s advisors take a consultative approach to real estate and analyze business needs first, before talk-ing about space . Since Cresa never represents landlords, our clients benefit from unbiased recommendations about how to best fulfill their real estate requirements .

Major Transactions

Vacancy Rate

Atlanta, Georgia


IBM 238,000 Office Renewal

RedPrairie 80,314 Office Lease

Americold 76,000 Office Expansion

Level 3 42,000 Office Extension

Select Mgmt Resources 40,347 Office Renewal

The Paradies Shops 38,000 Office Lease

Atlanta Life Financial Group 33,137 Office Lease

American Wholesale Insur . 28,000 Office Lease

Regency Hospital 26,882 Office Sublease

Bottomline Technologies 26,113 Office Lease

Esquire Solutions 26,000 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $19 .72 $19 .90 $19 .73

Class B Office $15 .55 $14 .49 $15 .53

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $20 .91 $20 .97 $21 .07

Class B Office $15 .37 $15 .16 $15 .03

Prepared By Cresa Atlanta3475 Piedmont Road, Suite 900

Atlanta, GA 30305404 .257 .8866 | www .cresa .com


OverviewThe Austin market continues to outperform much of the na-tion in 2012 . Austin has experienced positive job growth over the last year . The unemployment rate of 5 .8% is well below the national average . Rental rates have remained steady . Vacancy rates have started a definite decline . Most submarkets have ful-ly recovered to pre-2008 levels . Uncertainty about the national economy continues to cause many companies to delay making long term commitments .

Market Trends• Vacancy rates declined to 11 .5% .• Average rental rates increased to $28 .45 .• Proposed new developments have been announced for the

CBD .• Industrial vacancy decreased to $11 .2% .

Tenant’s PerspectiveThe national economic downturn impacted Austin for a short period of time but the market has recovered in most areas to pre recession levels . Landlords are still willing to offer moderate concessions and enter into early lease renewals . Asking rental rates have increased slightly . Landlords are still looking closely at tenant’s credit . Increasing consolidation in the real estate in-dustry makes it imperative that tenant’s work more closely with their real estate advisors to most effectively develop their real estate strategies for the future .

Major Transactions

Vacancy Rate

Austin, Texas

Prepared By Cresa Austin515 Congress Avenue, Suite 1950

Austin, TX 78701512 .457 .8820 | www .cresa .com


Rackspace USA 87,884 Office Lease

Microsemiconductor 46,949 Flex Lease

Locke Lord PC 28,000 Office Lease

Calxeda 21,080 Flex Lease

Apollo Endosurgery 18,388 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $38 .05 $38 .10 $38 .20

Class B Office $26 .75 $26 .95 $27 .75

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $28 .26 $28 .25 $28 .55

Class B Office $21 .02 $22 .95 $23 .35

R&D $8 .94 $9 .75 $9 .75


Baltimore, Maryland

OverviewThere is a growing desire by tenants to take space in the south-ern suburbs of the Baltimore office . The area along I-95 near Columbia, MD has attracted a number of tenants out of the CBD . The latest example is XL Health, which moved into 68,779 square feet at 6514 Meadowridge Road . The southern submarkets are strategically located midway between Washington, DC and Bal-timore and offer cost savings compared to space in Baltimore’s CBD . While rental rates are roughly the same, tenants can find free and abundant parking in the suburbs . This is highly attrac-tive considering the cost of the structure parking in the CBD . Additionally, landlords in the suburbs typically offer three park-ing spots per 1,000 square feet . This compares to one spot per 1,000 square feet in the CBD .

Market Trends• Army Core Engineering completed a 153,500 -square-foot

lease at 9055 Sterling Drive .• Given the success of their speculative project at the Emer-

son Corporate Center, the James F . Knott Realty Group is expected to break ground, on a speculative basis, on another 150,000-square-foot office building .

• Local REITs have been offloading “non-core assets” to refocus on their core missions .

Tenant’s PerspectiveFor the most part, there are excellent opportunities for tenants in the market . However, there is neither the same demand for, nor same abundance of certain sizes or quality of space in all loca-tions within the market . Trophy space is not moving as well as commodity A space in the City . Columbia has few large blocks of available Class A space, which is forcing tenants to split require-ments between buildings, lease space in older building or have new building built for them . Given the efficiencies of Class A product and the deficit in multi-family apartment units, a number of downtown Baltimore landlords are redeveloping their Class B office buildings into multifamily living apartments . As a result, there is less Class B product for tenants to choose from .

Major Transactions

Vacancy Rate


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $22 .78 $22 .78 $22 .58

Class B Office $17 .89 $17 .83 $17 .80

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $24 .18 $24 .70 $24 .28

Class B Office $20 .91 $20 .89 $21 .00

Tenant/Buyer Size Type Submarket

U .S . Army Corps of Engineers 153,500 New Columbia South

Actavis, Inc . 38,453 Renewal Reisterstown Rd .

Computer Sciences Corp . 26,475 New Aberdeen

SAIC 17,015 Renewal Frederick

Nucletron, Corp . 12,000 Relocation Columbia South

Prepared By Cresa Baltimore509 South Exeter Street, Suite 200

Baltimore, MD 21202410 .558 .6192 | www .cresa .com


OverviewIn talking with commercial real estate brokers in the market, everyone has seen an increase in activity this year . Office, industrial, and retail have all seen an increase in activity . Large office users are relocating and upgrading spaces . Adams and Reese Law Firm recently announced they were relocating from The Concord Center where they were once the lead tenant and anchor of this development close to 10 years ago . They will be moving to Regions Plaza which is the headquarters for Regions Financial . Merrill Lynch announced recently, and represented by Cresa, that they will be relocating from the City Center out to the suburbs specifically Homewood (Midtown Submarket) to Colonial Properties Brookwood property . Merrill Lynch is taking ap-proximately 29,000 RSF . Robins & Morton continues to explore new headquarter opportunities in the market as they have been forced to split their company up due to space constraints . Big Communications even announced this week that they will be relocating from Southside to the CBD into a 50% larger space . Big is a public relations and marketing firm . The fact that they are growing does indicate and confirm that the economy is in a recovery and steadily progressing upward .

Market TrendsAs reported in previous Tenant Guides, the new baseball stadium for the Birmingham Barons and the BJCC Hotel and Entertainment District are both on schedule to open first part of 2013 . Both of these projects will create a tremendous amount of revitalization to follow to both of these sectors in the CBD .

Tenant’s PerspectiveNew opportunities are beginning to present themselves with large users relocating and freeing up second generation space . Land-lords are in a deal making mindset .

Major Transactions

Birmingham, Alabama

Prepared By Cresa Birmingham100 41st Street South

Birmingham, AL 35222205 .397 .9399 | www .cresa .com


Merrill Lynch 29,000 Office Lease

Adams Reese 22,045 Office Lease

Big Communications 12,000 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $19 .95 $20 .00 $20 .00

Class B Office $13 .50 $14 .00 $14 .00

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $21 .75 $21 .50 $21 .50

Class B Office $17 .00 $17 .50 $17 .50

R&D $8 .00 $8 .50 $8 .50

Vacancy Rate


OverviewIt is still a tale of three markets within Boston . The Back Bay continues to experience increasing rents as vacancy stays under 6% . Rents increased $1 .00/SF to an average of $57/SF . In the low-rise portion of the Financial District tower buildings, rents are in the $38-$42/SF range and offer value to more cost-conscious tenants . Downtown Boston, the Back Bay, and Seaport Districts all experienced positive absorption for Q3 2012 . The Seaport Dis-trict is a very hot submarket as a result of continued migration of Cambridge tenants . This demand will increase the average rents to $39-$40/SF during Q4 2012 .

The overall Central Route 128 market experienced positive ab-sorption again in Q3 . Rents will average $28-$32/SF for Class A properties, and quality Class A space is dwindling . Burlington ex-perienced the benefit of rising rents in Waltham, thus pushing rents upwards another 2% to an average of $23-$26/SF through 2012 .

Market Trends• The Back Bay will likely be a landlord’s market through Q2 2013 .• The migration to Seaport District and Fort Point Channel will

continue (Cambridge and suburban tenants), and rents will rise to $39-$42/SF .

• High-tech companies are starting to grow again and add jobs on Routes 128, 495, and in Cambridge .

• The value opportunity downtown is in the low-rise portion of the Financial District . We expect high-tech companies to pursue this segment of the market, with limited options in Cambridge and Seaport District .

Tenant’s Perspective• Develop alternative options at least 12 months in advance in

order to create leverage .• It will be a landlord’s market through Q4 2012 in select submar-

kets such as the Back Bay and East Cambridge .• Rents will continue to rise over the next 24-36 months in spe-

cific submarkets .

Major Transactions

Vacancy Rate

Boston, Massachusetts

Prepared By Cresa Boston200 State Street, 13th Floor

Boston, MA 02109617 .758 .6000 | www .cresa .com


Church of Christ, Scientist 198,825 Office Sale

Merrimack Pharma . 109,132 Office/Lab Lease

Ironwood Pharma . 92,756 Office Lease

Ebay 65,000 Office Lease

Citizens Disability 42,000 Office Lease

Epizyme 32,000 Office/Lab Lease

One Shield 29,959 Office Lease

480 Biomedical 27,000 Office/Lab Lease

Ariad Pharma . 27,000 Office Lease

Perkins & Will 24,930 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012Class A Office $49 .00 $49 .00 $47 .00

Class B Office $31 .00 $33 .00 $33 .00

Back Bay Q1 2011 Q2 2012 Q3 2012Class A Office $57 .00 $57 .00 $57 .00Class B Office $36 .00 $38 .00 $38 .00

Suburban Q1 2012 Q2 2012 Q3 2012Class A Office $28 .00 $28 .00 $28 .50Class B Office $18 .00 $18 .00 $18 .00R&D $9 .00 $9 .00 $9 .00

CBD Back Bay Suburban


OverviewDowntown vacancy had little change over the past quarter and now sits at 2 .85%, up slightly from 2 .48% . The class AA/A market remains virtu-ally fully occupied . Although the third quarter is traditionally slow due to summer vacations this year was especially quiet .

The volatility in oil prices and the continued low natural gas prices has tempered growth expectations in many mid- to small-sized compa-nies . Barring a major change this trend is expected to continue . Larger companies still remain active as their decision making process is longer and more involved .

The third quarter saw the first groups of Cenovus employees move into the lower levels of The Bow . In the coming year a game of musical chairs will see companies moving around the downtown as they occupy the Cenovus and Encana backfill space . Substantially all the space be-ing freed up has been pre-leased over the past two to three years .

Most notable this quarter was the announcement of Imperial Oil’s move out of the core starting in 2014 to a new 20-acre, 800,000 SF, five- building office complex in Remington’s Quarry Park . The move is signifi-cant because it is the first time a major oil & gas producer has moved to the suburbs to escape the high priced downtown environment .

Market Trends• Vacancy in the class AA/A market is down to 0 .29% from

0 .91% during the second quarter . The class B market increased slightly to 7 .15% . Vacancy in the class C market increased to 13 .65% .

• Overall downtown vacancy sits at 2 .85% and the Beltline is at 6 .36% .

• Rental rates continue to rise in all classes .

Tenant’s PerspectiveWith exception of new opportunities the vacant spaces available are the remnants of the past few years’ historic activity . It is these leftovers, often of poorer quality, that are now being leased at increased rents .

In general more time and better planning is required by tenants . An opportunity for some tenants will be from sublease space, which has become more apparent . However the quality of these options is spotty . Tenants with needs in the near term are advised to start their search process early so when opportunities come their decisions can be made quickly .

Major Transactions

Vacancy Rate

Calgary, Alberta

Prepared By Cresa CalgarySuite 510, 250 - 5 Street SW

Calgary, AB T2P 0R4, Canada 403 .571 .8080 | www .cresa .com


Enbridge 52,000 Office Headlease

Syncrude Canada 75,000 Office Headlease

Inter Pipeline Fund 141,000 Office Headlease

*Mosaic Energy 29,000 Office Sublease

Crescent Point Energy 340,000 Office Headlease

Pembina Pipelines 60,000 Office Headlease

Matrix Solutions 130,000 Office Headlease

Alberta Infrastructure 42,000 Office Headlease

*Fasken Martineau 22,000 Office Headlease

Cenovus 180,000 Office Sublease

*Transactions in which Cresa Calgary was involved


CBD Q1 2012 Q2 2012 Q3 2012

Class AA Office $61 .28 $61 .79 $63 .67

Class A Office $51 .96 $52 .59 $53 .59

Class B Ofiice $39 .85 $40 .87 $41 .68

Class C $32 .69 $34 .61 $35 .04


OverviewThe old saying that Charlotte is a two bank town is quickly dissolving . The push to become an energy hub has been successful with several firms having significant presence in Charlotte . Charlotte Douglas International Airport continues to impress and if the merger between American and US Airways happens, this will be more good news for Charlotte in terms of appeal to Fortune 500 and global companies, as well as creating jobs . More institutions of higher learning are also calling Charlotte home in the past few years . In the previous quarter alone, Montreat College leased 16,000 RSF at 212 South Tryon and Charlotte School of Law leased 40,000 RSF at Gateway Center and has been searching uptown for a +/-240,000 RSF location for several months .

There are a handful of office parks that have not suffered in the past few years, but others are still struggling to overcome the downturn . The CBD, South Park, and Highway 51/Southeast submarkets are strong, having Class A inventory and numerous amenities they con-tinue to have vacancy rates near or below 10% . These markets are trending favorably for landlords, while landlords in other submarkets remain willing to offer aggressive concessions to compete for tenants .

With several buildings in Charlotte changing ownership or landlord representation in the previous quarter, strategies in negotiation have changed with added incentive to get deals done . This creates an opportunity for existing tenants desiring to stay in place long-term to renew early, while gaining more favorable lease terms .

Market Trends• Charlotte continues to receive national recognition as being an

ideal location for businesses to operate . • North Carolina continues moving away from textile and furniture

manufacturing and into high-tech manufacturing, such as bio-tech, pharmaceuticals, and aerospace .

• Charlotte is shifting from a tenant favored to a more neutral market . Some submarkets are trending toward a landlord favored market . This isn’t a reason to avoid these markets, but tenant representa-tion becomes even more important in these submarkets .

Tenant’s PerspectiveThe statistics on rental and vacancy don’t accurately reflect the amount of positive activity within Charlotte . There are opportunities for tenants of all sizes, but as expected, the larger tenants or those seeking a specific location, will have limited options . Small to mid-sized tenants should still be pleased at the opportunities available and the cooperation of landlords to come to agreeable terms .

Major Transactions

Vacancy Rate

Charlotte, North Carolina

Prepared By Cresa Charlotte227 West Trade Street, Suite 305

Charlotte, NC 28211704 .831 .3488 | www .cresa .com


Shutterfly 303,000 Office Lease

MSC 180,000 Office Under Construction

Physicians Lab 100,000 Office/Lab Lease

United Technologies 70,000 Office Lease

Peak10 62,000 Data Center Lease

Charlotte School of Law 40,000 Office/School Short Term Lease

STV, Inc . 30,000 Office Lease

Carlisle Company 20,000 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $24 .41 $24 .89 $24 .97

Class B Office $19 .19 $19 .91 $20 .02

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $22 .24 $21 .62 $21 .69

Class B Office $17 .82 $18 .02 $17 .86


OverviewVacancy for class “A” and “B” buildings in the Chicago CBD remains at 14% and 16% including subleases . Average Chicago CBD gross rents range from $28 .00/SF to $32 .00/SF . The largest deal completed this quarter was by Google, who secured 572,000 SF at the Merchandise Mart for their newly acquired Motorola Mobility group . Overall with the lack of new inventory the vacancy rates continue to slowly tighten . The Chicago Suburban submarket vacancy rate remains at 21% . The average rental rates also continue to remain flat at $19 .00/SF to $23 .00/SF . The average sized user in the suburban submarket is 3,200 SF and with 10 blocks of space over 200,000 SF vacancy rates will remain flat until new large space users locate to the sub-urban submarkets .

Market Trends• River North submarket continues to have the lowest vacancy

at 10% . The trend should continue with more technology firms moving to the River North submarket .

• Large space users in the market: Google “2nd phase” (approx . 300,000 SF), AON Insurance (approx . 350,000 SF), Citadel (ap-prox . 350,000 SF), DLA Piper (approx . 225,000 SF), McDermott, Will & Emery (approx . 200,000 SF) and SNR Denton (approx . 200,000 SF) .

• The majority of the large leases are completed for 2012 and 2013 . The next wave of large lease expirations, which will dic-tate the market, will expire between 2016 and 2018 .

• Chicago suburban market continues to remain status quo with 21% vacancy .

Tenant’s PerspectiveAs the third quarter closes and a majority of the large users secure locations in the Chicago CBD including potentially anchoring new development sites, the next wave of large users will begin to shape the CBD landscape . Users looking for “Trophy” buildings may have new alternatives by 2017 as new development projects are being presented to the market .

Major Transactions

Vacancy Rate

Chicago, Illinois

Prepared By Cresa Chicago225 West Washington Street, Suite 1000

Chicago, IL 60606312 .376 .4100 | www .cresa .com


Motorola Mobility 572,000 New Lease

HD Supply 346,663 Renewal Lease

Catamaran Corp 300,686 New Lease

Acer 275,680 Renewal Lease

Universal Technical Inst . 186,394 New Lease

Draft FCB, Inc 166,000 New Lease

Salesforce 116,000 New Lease

Mondelez (Kraft) 105,394 New Lease

WMD 90,624 Renewal Lease

EN Engineering 83,094 New Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $31 .76 $31 .19 $31 .59

Class B Office $26 .66 $26 .93 $27 .11

Suburban Q4 2011 Q1 2012 Q2 2012

Class A Office $22 .16 $21 .33 $21 .58

Class B Office $18 .32 $18 .30 $18 .27

R&D $4 .02 $3 .92 $4 .08


OverviewThe market was unable to extend robust 2nd quarter absorption of 219,000 SF, at is consumed only an additional 31,000 square feet in the 3rd quarter . Overall availability rates remained high at 24% . A flight to quality continues as the Class B market showed a negative 48,000 SF of absorption . Led by KAO Brands, Rendigs Fry, and URS, the CBD Class A market absorbed 149,000 SF for the quarter . The softest markets (with approximately 30% availability) are the CBD Periphery, Northern Kentucky and Tri-County . The strongest are West Chester at 2 .6% available, Kenwood 12 .8% and Blue Ash 13 .4% . Look for the Kenwood market to add up to 270,000 SF of new office space should the purchase of the long stalled Kenwood Towne Place by Phillips Edison finally reignite the project .

Market Trends• Distressed real estate includes Centennial Plaza, Tower Place

Mall and the 580 Building in the CBD, 200 & Grand Baldwin in Midtown and Central Parke in Norwood . An inability to re-finance is the culprit .

• There is weaker investment demand in the region with a very conservative mindset . However, savvy investors are looking to acquire quality properties, especially multi-family and medical at this point in time .

• We are continuing to see speculative construction along the Cin-cinnati / Dayton corridor in Liberty Township, Miami Township, Springboro and near Wright Patterson AFB .

• Although the office and retail sectors continue to struggle, indus-trial spaces are able to take advantage of increased manufactur-ing growth in the region .

• Healthcare continues to be the strongest industry, including new construction, as well as taking space in traditional office build-ings and thereby reducing vacancies .

• Development at the Banks and Over-the-Rhine continue to fuel retail and residential growth downtown . The energy level in these areas is palpable and continues to strengthen our core .

Tenant’s PerspectiveAs landlords and their lenders continue to experience financing and lower occupancy hurdles, excellent deals await tenants . However, we caution users to look closely at the financial health of their landlord’s and mitigate potential risks associated with possible default . Although the entire market continues to struggle to increase occupancy levels, the best deals are in the aforementioned softer submarkets .

Major Transactions

Vacancy Rate

Cincinnati, Ohio

Prepared By Cresa CincinnatiOne Financial Way, Suite 309

Cincinnati, OH 45242513 .241 .7373 | www .cresa .com


Rendigs, Fry (LLP) 25,899 Office Lease

Jewish Hospital 21,740 Office Lease

Sinclaire College 17,176 Office Sale

CAI Insurance 17,000 Office Lease

Robert Baird 12,067 Office Lease

Cadre Computer 10,823 Office Lease

Calfee Halter Griswold 8,982 Office Lease

Medical Recovery Systems 8,344 Office Lease

Cincinnati Asset Mmgt . 8,324 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $24 .20 $23 .23 $22 .98

Class B Office $15 .75 $15 .52 $15 .57

Suburban Q4 2011 Q1 2012 Q2 2012

Class A Office $19 .80 $21 .27 $21 .02

Class B Office $15 .12 $15 .70 $16 .78


OverviewThe Dallas market experienced an increase in office leasing in the third quarter of 2012 . Overall vacancy decreased from 18 .2% to 17 .6% . There was positive absorption of 1,639,832 SF . Average rental rates increased from the second to third quarter rising from $19 .54/SF to $19 .80/SF .

The Dallas industrial market had a very slight decrease in vacancy during the third quarter from 8 .9% to 8 .7% . Average rental rates, however, had an increase from $3 .56/SF to $3 .61/SF .

The CBD had a few ownership changes in the third quarter . 2100 Ross Avenue was purchased at a foreclosure auction by Cousins Properties for $59,740,000 . Dividend Capital became 100% owner/titleholder of Comerica Bank Tower . This was a result of a non-performing mezzanine loan for which ownership interest had served as collateral .

In Las Colinas (an extension of the Dallas market), Brookfield Office Properties took over a four building portfolio at Regent Commons . Total purchase price was $53,992,136 .

Market Trends• As occupancy increases in the Far North Dallas submarket,

many tenants are looking into space in the Telecom Corridor in Richardson .

• The Lower Platinum Corridor (south of 190) is seeing increased activity as many new vacancies have hit the market over the last 6-12 months .

Tenant’s PerspectiveTenants must continue to leverage the market in order to achieve favorable market terms and concessions (including free rent, ten-ant improvement allowances, and reduced rental rates) .

Major Transactions

Vacancy Rate

Dallas, Texas

Prepared By Cresa Dallas5910 North Central Expressway, Suite 800

Dallas, TX 75206214 .559 .3900 | www .cresa .com


State Farm 405,000 Office Lease

Verizon 144,000 Office Lease

Emcare 82,000 Office Lease

Connextions 76,000 Office Lease

Verizon Data Center 64,000 Office Lease

Parago 63,000 Office Lease

Yahoo 45,000 Office Lease

Wells Fargo 42,000 Office Lease

UT Southwestern 41,000 Office Lease

Aviall 41,000 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $20 .71 $20 .82 $20 .59

Class B Office $16 .32 $16 .27 $16 .45

Suburban Q4 2011 Q1 2012 Q2 2012

Class A Office $22 .83 $22 .41 $22 .81

Class B Office $17 .78 $17 .70 $17 .82

R&D $8 .40 $8 .47 $9 .39


OverviewThe CBD has experienced over 300,000 SF of negative absorption in 2012, but those stats just do not tell the real story . Strong de-mand for space by downtown tenants has been offset by Century Link’s 900,000 SF downsizing at 1801 California . Other downtown companies have expanded by 500,000 SF this year . Still, vacancy sits at 13% and 3% for “view space .”

The “tenant’s market” has disappeared in the major markets of the Denver, and Class A landlord negotiations are becoming more difficult .

Market Trends• A couple months after IMA Financial broke ground on their HQ

building in Union Station, several other office developments have been announced and more are rumored to be announced shortly .

- Anadarko is the anchor tenant for a 105,000 SF development in Union Station . -Hines has announced a 350,000 SF building in Union Station - A mixed use development, including 120,000 SF of office, has been announced for 16th Street and Market in the CBD .• There were several major office buildings sold in the 3rd quarter

of 2012, some of the notables include: - 11900 E Cornell Ave - $90,846,892 ($317 .65/SF) – Data Center Building - Aurora - 6380 S Fiddlers Green Cir . - $62,000,000 ($309 .73/SF) – 89% Leased – SE Market

Tenant’s PerspectiveFree rent and other concessions are still part of lease negotiations, but landlords have abandoned their aggressive posture of the past few years . Today’s equilibrium market will likely continue in 2012-2013 . The reason? Federal and state governments will vacate 300,000 SF and return to the renovated Bryan Rogers building . 1801 California will be selectively aggressive now with the former Century Link space to establish its own momentum .

Major Transactions

Vacancy Rate

Denver, Colorado

Prepared By Cresa Denver1515 Arapahoe Street, Tower 3, Suite 350

Denver, CO 80202303 .228 .0800 | www .cresa .com


Precision Building Systems 100,750 Industrial Renewal

Sport Haley Inc . 82,500 Industrial Renewal

Frederick Printing 68,200 Industrial Renewal

Antero Resources 66,642 Office Lease

Anadarko 50,000 Industrial Lease

William Sonoma Direct 41,765 Industrial Lease

Workplace Elements, LLC 41,728 Industrial Lease

Berry Petroleum Company 38,120 Office Lease

Transamerica Capital 24,992 Office Renewal


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $28 .01 $29 .26 $29 .88

Class B Office $20 .99 $21 .29 $21 .84

Suburban Q4 2011 Q1 2012 Q2 2012

Class A Office $22 .57 $23 .12 $23 .15

Class B Office $17 .79 $17 .98 $18 .13

R&D $6 .62 $7 .61 $7 .69

10.0

% 13.1

%

11.7

%

17.4

%

10.0

%

9.8% 11

.8%

10.9

%

16.7

%

10.0

%13.5

0%

12.3

0%

10.2

0%

15.1

0%

9.50

%

0%

5%

10%

15%

20%

25%

Class ACBD

Class BCBD

Class ASuburban

Class BSuburban

R&D

Q1 2012 Q2 2012 Q3 2012


OverviewThe economy continues to grow at a lackluster pace at just 1 .7% in the most recent quarter . The employment market disappointed in August . Job creation fell below expectations with just 96,000 new jobs added during the month, well below expectations of 130,000 . More workers left the labor force in August, allowing the unemployment rate to ease to 8 .1% . Locally, according to the Detroit Free Press, Detroit Medical Center CEO Mike Duggan has filed paperwork enter the race to become the next mayor of Detroit .

Two key factors are making an impact on the Detroit real estate market . Absorption was positive again in the most recent quarter . This included more than 2 million square feet in the industrial sec-tor . Although small amount of construction activity is taking place, the absence of any large, significant projects and delays in differed maintenance are also playing a role on the number of quality available buildings . The other factor is the amount of building debt coming due through 2014 that could result in more buildings tak-ing hands and signaling a bottom to the market .

Market Trends• Tenants continue to proceed with shorter-term leases .• Landlords are more amenable to numerous provisions such as

cancelation options, fixed renewals, and space expansion and reduction clauses which in the past were unheard of .

• Lender approval for lease transactions is delaying the actual commencement of leases as the approval process has taken a back seat to the debt crisis .

Tenant’s PerspectiveTenants should not expect significant change in 2012 . The economy and election year should continue to place uncertainty in the marketplace coupled with high vacancy rates . Tenants should again be in the driver seat all year .

Major Transactions

Vacancy Rate

Detroit, Michigan

Prepared By Cresa Detroit26300 Northwestern Highway

Southfield, MI 48076248 .223 .3500 | www .cresa .com


Chrysler 294,435 Industrial Lease

Comau 340,000 Office Lease

Panasonic 90,460 Industrial Lease

St John Providence 202,515 Office Sale

Allied Commerce Center 1,075,756 Office Sale

Barracuda Networks 45,000 Office Lease

Secrest Wardle 41,868 Office Lease

Proctor Financial 54,337 Office Lease

Flagstar Bank 62,367 Office Lease

Gardner White 381,000 Industrial Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $23 .53 $23 .70 $23 .10

Class B Office $16 .05 $16 .36 $16 .36

Suburban Q4 2011 Q1 2012 Q2 2012

Class A Office $20 .89 $20 .81 $20 .68

Class B Office $17 .75 $17 .56 $17 .53

R&D $4 .53 $4 .11 $4 .13


OverviewOffice leasing continues to see strong activity locally with little or no “spill over” from the hot San Francisco market . However, as technology companies absorb San Francisco real estate at a premium, more and more companies are beginning to consider the East Bay as a result of being priced out of the market – time will tell how this will play out .

Since 2008, the East Bay market saw many distressed proper-ties trade hands . As a result, tenants and those in the market for space were left uncertain about the stability of building ownership . However, we are finally beginning to see stable properties put on the market again – Emeryville Public Market, Concord Tech Center, Lake Merritt Plaza, and Treat Towers, to name a few . Treat Towers was sold to Metropolitan Life Insurance Company (MetLife) this last quarter for close to $120 million, marking one of the largest office sales this year for the East Bay market . Other notable activ-ity included Pandora’s expansion in Oakland, taking an additional floor at 2100 Franklin Street to accommodate growth, and Gap’s announcement that it would be relocating hundreds of employees from San Francisco to Pleasanton .

Market Trends• Competition for larger blocks of space is increasing .• Absorption remains relatively flat .• Class A rental rates are increasing .

Tenant’s PerspectiveAlthough the market velocity is significantly slower than San Fran-cisco’s, tenants continue to compete for the best spaces . We ad-vise clients to extend their planning horizon to match the market .

Major Transactions

Vacancy Rate

East Bay, California

Prepared By Cresa East Bay6701 Hollis Street

Emeryville, CA 94608 510 .273 .2000 | www .cresa .com


MetLife 378,000 Office Sale

True North Mgmt Group 199,014 Office Sale

Harvest Properties 152,000 Office Sale

Solta Medical, Inc . 88,000 Office Lease

Singulex 51,858 Office Lease

MedAmerica 48,003 Office Lease

GT Nexus 44,425 Office Lease

Globalhawk Insurance 36,400 Office Sale

Aspera 30,000 Office Lease

Pandora Media Inc . 25,000 Office Lease

Kraft Foods 24,000 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $27 .60 $28 .20 $28 .28

Class B Office $21 .96 $22 .32 $22 .22


OverviewAlthough there was significant activity in the market during the third quarter, there was little change in the overall vacancy rates for Fairfield County Class A and B buildings . By the end of the third quarter, the vacancy rate for Class A buildings decreased by only .2% to 21 .7% . The vacancy rates for Class B buildings ended the quarter at 25 .3% - an increase of 0 .8% over the second quarter . Average asking rental rates decreased slightly with Class A buildings averaging approximately $1 .25 less per square foot compared to last quarter .

Market Trends• There was a significant decrease in the vacancy rate for

Bridgeport Class A buildings since over 35,000 square feet was successfully leased during the quarter .

• Compared to last quarter and with little leasing activity, the vacancy rates for both Class A and B buildings in New Canaan were noticeably impacted and decreased by over 5% and 16% respectively .

Tenant’s PerspectiveThere are a significant number of business leaders who are chang-ing the way they use office space . We have noticed an increase in office density from the typical of three employees per 1,000 rent-able square feet “3/1,000” to 5/1,000 . Private office space is on the decline and collaborative common areas and huddle rooms are supplementing the use of more cubes in an open space planning environment . As the Tenant’s Advisor, Cresa helps companies navigate through the process of refining needs and sometimes changing the way offices use space, which can result in less space rented and lower fit up costs . We recommend benchmarking your lease against market rates at least 18 months prior to lease expiration . This will give you plenty of time to determine if a move will result in better use of space and ultimately lower occupancy expense .

Major Transactions

Vacancy Rate

Fairfield County, Connecticut

Prepared By Fairfield County200 Connecticut Avenue, 4th Floor

Norwalk, CT 06854203 .899 .7700 | www .cresa .com


Technology firm 167,691 Building Sale

Consumer products firm 112,584 Office Lease

Financial services 72,418 Office Lease

Financial services 70,936 Office Lease


Stamford Q1 2012 Q2 2012 Q3 2012

Class A Office $41 .82 $44 .68 $41 .56

Class B Office $26 .99 $27 .23 $27 .53

Fairfield Cty Q4 2011 Q1 2012 Q2 2012

Class A Office $38 .45 $38 .91 $37 .66

Class B Office $27 .07 $27 .15 $27 .32


OverviewThe Fort Worth market had the slightest decrease in office leasing in the third quarter of 2012 . Overall vacancy increased by 0 .1% from 7 .9% to 8% and absorption was negative 49,485 SF . Average rental rates went from $20 .32/SF down to $20 .27/SF in third quarter .

The industrial market for Fort Worth had a very slight decrease in vacancy during the quarter from 8 .9% to 8 .7% . Meanwhile, the average triple net rental rate had a very large decrease this quarter going from $3 .19/SF to $2 .89/SF . Total absorption for the market was positive 142,843 SF .

A few changes to note include: Ridglea Bank Building had a hefty rate increase going from $13 .00/SF to $21 .00/SF . The second largest rate increase was at Bank of America Centre going from $17 .00/SF to $20 .00/SF . The largest rate decrease was at 6601 Oak Grove moving from $3 .35/SF to $1 .10/SF . Chesapeake Plaza (office) withdrew its for sale status along with 7301 Trinity Blvd (industrial) .

Market Trends• Spire Realty is still awaiting a big tenant to kick off they re-

development of the sister building to Two City Place – 100 Throckmorton . The building will deliver over three hundred thousand square feet of Class A space to the CBD .

• Chesapeake Plaza is “For Sale” as an off market opportunity . The 460,000 square foot Class A building is also headquarters to Pier One .

Tenant’s PerspectiveThe Jacobs sublease in the newly named 777 Main, previously Jacobs Carter Burgess building is expiring in the third quarter of 2013 . This has most tenants in the project staring at a rate that is 15% to 20% higher than what most are paying today . With oil at lingering around $100 a large amount of these companies are looking to purchase a building of their own .

Major Transactions

Vacancy Rate

Fort Worth, Texas

Prepared By Fort Worth306 West Seventh Street, Suite 612

Fort Worth, TX 76102 817 .870 .9044 | www .cresa .com


4300 Cagle Drive 85,000 Office Sale

XTO Energy 24,000 Office Lease

DSS 20,000 Office Lease

Contech Engineered 8,500 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $27 .30 $28 .02 $28 .06

Class B Office $18 .40 $18 .52 $18 .90

Suburban Q4 2011 Q1 2012 Q2 2012

Class A Office $24 .87 $24 .07 $23 .76

Class B Office $19 .87 $19 .70 $19 .44

R&D $9 .99 $10 .20 $10 .33


OverviewAs evidenced by all of the construction cranes around the city, Houston continued its positive momentum through the 3rd quarter of 2012 . The energy sector again provided the jobs that drive the demand for more office space . That fact was most closely reflected in the absorption rate for Class A space as it reached one million square feet for the 5th straight quarter . Class A rental rates showed signs of returning to historic highs, however Class A Suburban rental rates slowly inched down . The strong appetite for space led Transwestern to announce the commencement of construction on a three building, 660,000 square foot development in Park 10 that is 66% pre-leased to Subsea 7 and Wood Group Mustang, in the Energy Corridor District . Also in the same submarket, Mac Haik broke ground on Energy Tower III, a 428,000 square foot speculative building and Core started on its 228,000 square foot spec build, 8 West Centre . In the Galleria, BLVD Place put more cranes in the air to build the second phase of that project which consists of two office towers, one of which has pre-leased two floors to Frost Bank . More new construction is expected to be announced in the coming months due to the lack of large block availabilities . The Class A CBD market has also seen a flurry of transactions completed in the 3rd quarter to significantly move the vacancy rate from 9% to 7 .6% at an average gross rental rate of $37 .54 per square foot . With almost three million square feet of office space already absorbed in 2012 and strong activity from tenants in the market, expect rental rates to slowly be pushed up by landlords and concessions to decrease throughout 2013 .

The race for space is particularly acute in the Energy Corridor, Westchase and the Woodlands where there are now very few large blocks of space available . New projects currently under construction should be able to deliver additional space, but not until the end of 2013 . In the Galleria, the BBVA Compass and Skanska buildings are on target for a combined 600,000 SF of new space to come on line in 2014 . Houston’s sublease inventory continues to remain flat suggesting a more stabilized market .

Market Trends• New owners of buildings pushing rental rates• Construction costs increasing, while landlord concessions on the

decline• More buildings being delivered in 2013 and 2014• Anticipate operating expenses to increase due to higher tax evalua-

tions

Tenant’s PerspectiveAs the cranes rise in Houston, expect pressure on rental rates to in-crease until those buildings are delivered to the marketplace . As more and more high quality, investment-grade buildings go up for sale, ten-ants will see new landlords ratchet up rents, especially in well occupied buildings and hot submarkets .

Major Transactions

Vacancy Rate

Houston, Texas

Prepared By Cresa Houston5599 San Felipe, Suite 500

Houston, TX 77056713 .402 .5800 | www .cresa .com


Ashford 5-7 566,000 Office Sale

Houston Pavilions 556,000 Office Sale

Sugar Creek on Lake 515,000 Office Sale

Wood Group Mustang 340,000 Office Lease

Murphy Exp . & Prod . 173,000 Office Lease

Samsung Engineering 159,000 Office Sale

Subsea 7, Inc . 100,000 Office Lease

Seadrill Americas 64,000 Office Lease

Ryder Scott 59,000 Office Lease

IHI E&C Int’l Co . 52,000 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $37 .16 $37 .41 $37 .54

Class B Office $23 .89 $23 .90 $24 .85

Suburban Q4 2011 Q1 2012 Q2 2012

Class A Office $27 .86 $27 .85 $27 .77

Class B Office $19 .14 $19 .02 $19 .29


OverviewThe Indianapolis Market is maintaining a modest rate of growth, reflecting the national and state economies very closely . Following an extended period of no growth, there is finally sufficient demand for modern space that speculative development of both office and industrial projects have been announced .

The suburban office market continues to exhibit high overall vacancy rates, but demand for the best buildings is allowing for landlords to increase rates in those properties . Conversely, the more marginal properties are suffering the highest vacancies and are having to dis-count rates substantially to compete .

The market for modern bulk warehouse has been particularly ac-tive, largely driven by expansions by Amazon depleting the available product . New developments in the primary submarkets will lead the market in pricing .

Market Trends• Continued soft office market for Indianapolis in 2012 .• Office deals taking twice the time to complete .• Rental rates bottoming out in 2012 .• Vacancy rates steady as lack of development is offset by shrinking

space needs of corporate America .

Tenant’s PerspectiveWhile tenants will likely continue to benefit from the soft market conditions in 2012, favorable fundamentals and absorption dynamics coupled with record-low construction activity could result in improved rent and vacancy trends for landlords in the coming year . However, it is likely that changing demographics resulting in a younger workforce, coupled with an increased reliance on teamwork will cause a continu-ation of the trend towards shrinking office requirements, offsetting any projected increase in rents . While this trend may be a source of concern for landlords with significant office holdings, tenants will likely benefit by transitioning to newly configured, modern work envi-ronments .

Evidence of this evolving trend can be found in the recent sale of Indianapolis-based Duke Realty’s suburban office building portfolio . While Duke representatives claim that they are not getting out of the office market, it is clear that they are adjusting their portfolio mix . Their move hints at a belief that the near term trend in the office sec-tor will be somewhat bumpy for landlords . This evolution, however, will create opportunities for savvy tenants, interested in optimizing space in an environment that is rich with opportunity .

Major Transactions

Vacancy Rate

Indianapolis, Indiana

Prepared By Cresa Indianapolis941 E . 86th Street, Suite 115

Indianapolis, IN 46240317 .254 .0600 | www .cresa .com


Carrier Corp 436,343 Industrial Renewal

OHL 413,280 Office Sale

Jacobson Warehouse 333,560 Office Sale

Venture Logistics 299,000 Office Lease

11711 N . College LLC 74,395 Office Lease

U .S . Attorney’s Office 44,412 Office Renewal

Carrington Mortgage 34,609 Office Lease

Stanley Security 26,191 Office Lease

Southern Wine and Spirits 25,261 Office Lease

Liberty Mutual 23,507 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $21 .00 $21 .00 $21 .50

Class B Office $15 .00 $16 .00 $16 .50

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $19 .50 $20 .50 $21 .50

Class B Office $15 .00 $15 .00 $16 .00

R&D $14 .00 $14 .00 $15 .00


OverviewThe Inland Empire industrial outlook and overall transaction perfor-mance increased noticeably over the last quarter . Large global firms, expanding regional companies and smaller manufactures are busy completing deals, along with healthy renewal and expansion activity . More large-scale land deals on hold the last few years are securing final approvals and moving forward .

This regional office market remains more challenged than the sur-rounding, more mature markets of Orange and Los Angeles counties . Unfortunately, the uptick in office leasing volumes earlier this year did not continue into the third quarter . But investment sales increased as buyers competed for the best deals in core submarkets .

Market TrendsIndustrial product greater than 100,000 square feet will continue to be the preferred product for prospective tenants and expanding us-ers . During 2012, a sampling of these transactions include: Church & Dwight, Home Depot, New Home Furnishing, Reusable Container, Global Tire, Medline Industries and Cardenas Markets . Corporate users interested in expanding their Southern California market share, and/or expanding their distribution hubs will continue to consider the Inland Empire . Vacancy rates remain healthy and asking rent rates increased slightly as the market improves in more established submarkets .

The struggling local economy does not bode well for a quick correc-tion in the office outlook . A still weak housing market, coupled with a high unemployment rate of 12 .7 percent, will continue to stress the office market and keep vacancy rates high and hold asking rents firm . Additional downsizing expected by the public sector will put even more space back on the market .

Tenant’s PerspectiveIndustrial tenants can still expect to find product at competitive prices . The large amount of speculative product currently being de-veloped will keep asking rents firm over the short term . In the specific larger, big-box inventory, deals are happening much faster and with fewer concessions, but still priced well when compared to other major markets . The recent increased velocity of lease transactions could make it harder to find inventory for those that choose to wait .

Effective office lease rates will remain very competitive into 2013 . Generous concessions will be the norm for prospective office tenants looking to trade up to newer, Class A space . Limited positive leasing momentum will keep any new constructions significantly constrained .

Major Transactions

Vacancy Rate

Inland Empire, California

Prepared By Cresa Inland Empire3633 Inland Empire Boulevard, Suite 550

Ontario, CA 91764909 .944 .6290 | www .cresa .com


Cardenas Markets 225,461 Warehouse/Dist . Lease

Medline Industries 144,677 Warehouse/Dist . Lease

B/E Aerospace 93,268 Warehouse/Dist . Lease

Buchanan Street Partners 75,000 Office Sale

U .S . Citizenship 39,024 Office Lease


Industrial Q1 2012 Q2 2012 Q3 2012

East $4 .12 $3 .96 $3 .72

West $4 .34 $4 .50 $4 .26

Office Q1 2012 Q2 2012 Q3 2012

Class A Office $23 .52 $23 .88 $24 .48

Class B Office $18 .90 $18 .92 $20 .28


OverviewThe Kansas City real estate market while showing signs of improve-ments in some fundamental areas such as new construction contin-ues to struggle with high vacancy rates that have inched higher this quarter . Companies have been slow and cautious with the process of adding new employees and thus have not yet affected the overall demand for space even though the end of last year saw an increase in employment levels continuing into 2012 . While increasing employ-ment levels will eventually translate into companies leasing more space, in the meantime, vacancy rates moved higher as the overall va-cancy rate reached 14 .0% this quarter, up from 13 .5% . Net absorp-tion continues to run negative for the year, but is expected to rebound and end in positive territory, barring any unforeseen market adjust-ments . New office construction is recovering as several high profile projects are underway led by the new Cerner Campus in western Wy-andotte County and Polsinelli Shughart’s new building on the Country Club Plaza, formerly known as West Edge now renamed Plaza Vista . In addition, construction has started on AMC’s and TEVA Neurosci-ence’s new buildings in South Johnson County . Altogether, there is over a million square feet of office construction underway in Kansas City . New speculative office construction activity is still a long way off, but construction levels such as these are a much needed boost to the local economy .

Office investment activity has rebounded in Kansas City due to the availability of quality right priced assets, low interest rates and moti-vated investors looking to place equity in long term properties . Na-tional economic and political factors continue to play a part in future trades, but in the near term, it looks like this momentum will continue .

Market Trends• Available sublease space increase to 303,762 SF, up from 239,558

SF last quarter• The Kansas City Metro area unemployment rate in July was 7 .5%,

down from 8 .2% this time last year• Landlords are looking to a turnaround in the real estate market but

continue to be competitive in attracting new tenants .

Tenant’s PerspectiveThe market shows signs of significant activity in the quarters to come, but any overall improvement will be slow and cautious . 2012 should end with a minimal net positive absorption possibly as high as 100,000 SF . Technology allowing remote workers and reduced overall occupancy continues to add additional pressure on overall occupancy rates . Companies that are flexible in location and timing will continue to find opportunities to capitalize on market conditions, lowering overall occupancy costs or improving the image or quality of their oc-cupied space .

Major Transactions

Vacancy Rate

Kansas City, Missouri

Prepared By Cresa Kansas City8001 Conser Street, Suite 250

Overland Park, KS 66212913 .322 .0500 | www .cresa .com


Perceptive Software 240,000 Office Lease

TEVA Neuroscience 154,000 Office Lease

Comprehensive Logistics 120,000 Industrial Lease

Missouri Housing 30,784 Office Lease

CEVA Freight 60,000 Industrial Lease

Stonegate Mortgage 16,019 Office Lease

Marketing Commun . 25,837 Office Lease

Country Club Bank 62,116 Office Sale

Case & Roberts 10,401 Office Lease

American Century 30,000 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $17 .89 $17 .82 $17 .93

Class B Office $15 .65 $15 .54 $15 .54

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $21 .85 $21 .25 $20 .96

Class B Office $16 .95 $16 .97 $17 .00

R&D $8 .48 $8 .66 $8 .87


OverviewThe overall economy and commercial real estate sector is continu-ing to improve and there has been a slight increase over the previous quarter . Several landlords in the market have begun to cut back on some of the incentives previously offered and we are beginning to see some small increases in asking rents and a dip in rental concessions . There has been another drop in the vacancy rates over last quarter which continues to fuel the idea that recovery is underway . The office leasing sector has continued with a near zero absorption (as space is leased more hits the market) . The sublease market has stabilized to some degree with old space being subleased as the newer units hit the market . The industrial sector continues to outperform the office sector . Most of the economists on Long Island have forecast 2012 to be another difficult year with minor overall improvement in the com-mercial real estate market . It is anticipated that a strong recovery will not begin until 2013 .

The changes from last quarter have been minor, so there have not been widespread adjustments in the asking rents . Rental concessions continue to be an area Landlord’s have shown a willingness to offer as an inducement . Sublease space continues to cause some overall vacancy rates to remain higher than our market is accustomed to . Recovery continues to be a slow as direct space and sublease space continues to enter the market . The leasing activity has increased which should result in another drop in the vacancy factor next quarter .

Market Trends• Slow recovery to continue with little upside potential for the begin-

ning of the fourth quarter of 2012• Asking rents may increase slightly and amenities offered such as

rental concessions may begin to dip . Other incentives such as, signage, reserved parking, upgraded work letters will continue to be offered as Landlord inducements

Tenant’s PerspectivePreviously many tenants were choosing short term (1 to 2 years) re-newals in their current space, this is no longer the “norm” and tenants have begun to lock into longer term leases under more favorable con-ditions . Those conditions may not always be lower rent rates, as Land-lords are still held accountable to pro-formas set by mortgagees . But they can often result in greater concessions, in the form of free rent or tenant improvements . Providing the tenant can demonstrate superior credit they will still be able to drive the economics in their favor .

Major Transactions

Vacancy Rate

Long Island, New York

Prepared By Cresa Long Island999 Walt Whitman Road, Suite 210

Melville, NY 11747631 .424 .4888 | www .cresa .com


Cullen and Dykman 52,936 Office Lease

LA Fitness 55,000 Office Lease

Arrow Linen & Supply 72,069 Industrial Sale

Luther Appliance 20,200 Industrial Sale

Kiddie Academy 11,000 Office Lease

AXA Advisors 44,000 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $26 .72 $27 .12 $27 .14

Class B Office $24 .30 $24 .63 $24 .68


OverviewThe Los Angeles class A office leasing market experienced a slight increase in the availability rate in Q3 2012 . Office leasing activity (as measured by the total square footage of new leases and lease renewals executed) was once again well below the average quar-terly leasing activity in 2011 (2 .8 mm square feet of signed leases versus 3 .5 mm square feet in 2011) . The availability rate for class A office space continues to hover slightly above 19%, the same rate for the past two years . To put it in perspective, the availability rate bottomed out at 12% in 2006 and peaked at 19 .9% in 2010 .

The South Bay and the West Valley improved slightly with avail-ability rates of 22 .1% and 18 .8%, respectively . The remainder of the submarkets in Los Angeles experienced a slight increase in availability .

The average asking rate for class A space across all submarkets was unchanged at $2 .70 per month, 2% higher than 12 months ago . Asking rates in all submarkets remained flat except for the East Valley, which softened slightly . The average asking rate for all submarkets has remained relatively flat for the past 11 quarters after falling off from a high of $3 .01 in 2008 .

Market Trends• Leasing activity has been slow the first three quarters of 2012 .• Tenants appear to be getting a bit more conservative, perhaps

contributing to the slowdown .• Santa Monica appears to be the only submarket experienc-

ing reasonable leasing activity, which has empowered certain landlords to begin attempting to increase asking rents .

• At current availability levels, select landlords are negotiating aggressive deal terms and concessions, offsetting attempts by a small subset of landlords to increase rates .

• The slowdown in leasing activity should have a dampening effect on occupancy and lease rates for the remainder of 2012, and perhaps into 2013 .

Tenant’s PerspectiveWe are still in a tenant’s market, with concessions increasing and activity remaining slow . Tenants in the softer markets that plan in advance and create competition between landlords for their tenancy should continue to be in a position to negotiate attractive economic terms through the remainder of the year and into 2013 .

Major Transactions

Los Angeles, California

Prepared By Cresa Los Angeles11726 San Vicente Boulevard, Suite 500

Los Angeles, CA 90049310 .207 .1700 | www .cresa .com


Guidance Software 87000 Office Lease

Given Imaging 25000 Office Lease

Maker Studios 50000 Office Lease

Verizon 46000 Office Lease

72andSunny 58000 Office Lease

Chase Bank 35000 Office Lease


Downtown Q1 2012 Q2 2012 Q3 2012Class A Office $34 .56 $35 .28 $34 .40Class B Office $23 .88 $24 .84 $24 .70

Greater Westside Q1 2012 Q2 2012 Q3 2012Class A Office $34 .20 $34 .44 $34 .80Class B Office $31 .08 $31 .68 $31 .80

South Bay Q1 2012 Q2 2012 Q3 2012Class A Office $24 .96 $25 .32 $25 .45Class B Office $22 .32 $23 .28 $23 .40

Valley-West Q1 2012 Q2 2012 Q3 2012Class A Office $25 .44 $25 .56 $25 .70Class B Office $22 .68 $22 .68 $22 .30

Valley-East Q1 2012 Q2 2012 Q3 2012Class A Office $31 .80 $31 .92 $31 .60Class B Office $25 .44 $25 .44 $25 .80

All Submarkets Q1 2012 Q2 2012 Q3 2012Class A Office $31 .92 $32 .28 $32 .40Class B Office $25 .32 $25 .92 $26 .00

Vacancy Rate


Madison, Wisconsin

OverviewThe 3rd Quarter of 2012 saw continued growth in the bio-science / lab sectors including relocations by Aldevron and Nexcyon Phar-maceuticals and an expansion by Xolve; each instance representing positive net absorption in the Madison market . Another indicator of the market’s upward trend is the increasing number of small busi-nesses and startup companies searching for office space such as Snowshoefood .com, Flux Mopeds, Ronin SC and Nature National Limited .

Despite these positive markers in isolated sectors, the overall Madison vacancy rate remains only slightly improved from the 2nd Quarter . Many of the transactions in the last few months were lateral moves involving companies seeking to relocate to take ad-vantage of the high level of supply . Nonetheless, expansions were realized by Shoutlet, Energy Center of Wisconsin, Sentry Insurance and WisPACT, to name a few .

Market Trends• As vacancy rates slowly tighten, some concessions are becom-

ing more difficult to obtain .• Small and medium-sized companies continue to favor short

term, flexible leases .• Madison’s East-Side market continues to experience the highest

vacancy rate with many west side and downtown tenants unwill-ing to consider that sub-market for relocations .

Tenant’s PerspectiveWhenever possible, landlords are becoming less willing to provide rental concessions and other advantageous deal terms; however, the slower than expected recovery continues to provide excellent opportunities for tenants who are able to take advantage of this environment .

The real estate market, like the stock market, has become diffi-cult to predict and it is essential to work with an expert in order to understand where the values are hidden and how best to uncover them .

Major Transactions

Vacancy Rates (office)


Energy Center of WI 9,996 Office Lease

CIBA 24,814 Specialty Lease

Hatch Building Supply 30,000 Warehouse Lease

Xolve 6,661 Lab Lease

Nexcyon 2,800 Bio Lease

Shoutlet 6,214 Office Lease

Average Gross Rental Rates

CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $23 .25 $23 .12 $22 .92

Class B Office $17 .11 $17 .12 $16 .79

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $17 .93 $17 .91 $17 .89

Class B Office $15 .95 $15 .87 $15 .47

Prepared By Cresa Madison613 Williamson Street, Suite 202

Madison, WI 53703608 .467 .1513 | www .cresa .com


Milwaukee, Wisconsin

OverviewThe Milwaukee office space market continues positive absorption, albeit with a much slower quarter than the previous three months . There is a continuation of excitement and optimism that a new downtown high rise building will be announced in the near future . Absent of speculative volatile yet still mired in a stagnate “hunker down” mentality and employment woes, there is a continued lack of vibrancy .

Many opportunities do exist for tenants in this market as landlords continue to be willing to extend leases and trade additional term for immediate concessions .

The highly charged gubernatorial recall election is over . Many companies that have weathered many different storms continue positive yet modest growth plans .

Market Trends• With virtually no speculative construction for 10 years, large

blocks of space a limited .• Northwestern Mutual is rumored to be close to an announce-

ment of possibly a new office building .• As has been the case in the past, a new downtown high rise

has one major law firm already committed as an anchor .• Q3 absorption was a modest 40,000 square feet compared to

the previous quarter of over 200,000 .• A seven building portfolio sold for $17 .5 million .

Tenant’s PerspectiveGiven the current market conditions, it is essential to engage an expert in order to completely understand the market and the ten-ant’s position therein . When properly leveraged, Landlords are still agreeing to tenant-favorable terms .

Major Transactions

Vacancy Rate


Infosys 16,000 Office Lease

Willis Insurance 21,569 Office Lease

Aerotech 6,642 Office Lease

URS Corp 13,970 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $20 .65 $19 .65 $20 .22

Class B Office $15 .56 $15 .75 $15 .70

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $20 .70 $19 .63 $19 .71

Class B Office $15 .96 $15 .51 $15 .46

Prepared By Cresa Milwaukee735 North Water Street, Suite 1110

Milwaukee, WI 53703414 .455 .1502 | www .cresa .com


OverviewMinneapolis/St . Paul’s regional economy continues to outpace the nation – with steady gains in employment, corporate growth and overall occupancy rates . The market for premium space continues to favor the Landlord, while B and C options work in the tenant’s favor . Preferred floors in preferred buildings are at historic low vacancy rates while more pedestrian spaces and average quality buildings (office or industrial) struggle to find occupancy . Large users looking to upgrade their space are finding a shortage of alternatives . Mid-size users or smaller tenants continue to have options in virtually every category and geography . As indecision moves toward some certainty (post-election), we envision this shift toward the landlord to continue .

Market Trends• Multi-family construction continues to be the strongest new

building category based on current market vacancy rates of under 2% .

• Slight shift in preference for downtown over suburbs emerging, based in part, on convenience of public transportation network .

• Institutional buyers continue to explore opportunities in Minne-apolis region, indicating relative health of our local market .

• Office and industrial overall vacancy declining as employment continues gradual growth .

• Our region’s 19 different Fortune 500 HQ’s continue to grow and support regional economy .

Tenant’s PerspectiveOver the last 12-18 months, we have been forecasting a gradual tightening of the commercial real estate market across the Twin Cit-ies . While this trend continues, it is most evident in the premier qual-ity properties, such as the upper floors of downtown Class A office towers . The Minneapolis region continues to be a relatively strong and healthy market for operating a business . Total employment figures are strong, the regional economy is diverse, and we continue to watch growth happen in virtually every sector . And while we see this growth leading to further erosion of the available vacant space inventory, we are also watching an emerging trend toward a decline in space per employee . If the alternative workplace trend gains ve-locity, the subsequent shrinkage in space will, over time, offset the demand generated by increases in total employment . Speed and agility continue to be critical decision-making skills for those tenants who seek to capture the best deals in this market .

Major Transactions

Vacancy Rate

Minneapolis, Minnesota


US Bank 100,000 Office Lease

Lunds 17,000 Retail Lease

Delta Dental 25,000 Office Lease

United Health 150,000 Office Lease

Tata Consulting 100,000 Office Lease

Equity Group 1,200,000 Office Purchase

Hillcrest Development 680,000 Office Purchase


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $28 .00 $29 .00 $28 .75

Class B Office $23 .25 $24 .00 $24 .00

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $27 .00 $27 .50 $27 .00

Class B Office $23 .00 $24 .00 $24 .00

R&D $7 .00 $7 .50 $7 .50

Prepared By Cresa Minneapolis920 Second Avenue South, Suite 900

Minneapolis, MN 55402612 .337 .8498 | www .cresa .com


OverviewThis economy make be taking baby steps, but the Nashville office market continues at a brisk clip .By necessity, Tractor Supply joined LifePoint Hospitals in the build-to-suit trend, breaking ground on a 260,000 SF headquarter complex in Maryland Farms . HCA has helped launch The West End Summit (900,000 SF) with Sara Cannon Research Institute taking 150,000 SF and Parallon Business Solutions taking 350,000 SF . With the expansion rights of these tenants leaving about 150,000 SF, the property should be fully leased when it opens in March, 2015 .

Butler Snow’s 46,000 SF lease at The Pinnacle demonstrates the appetite for trophy property office space . The building is now 80% leased . The next trophy property to be built will be the West End Summit . The Regions Bank Building in the CBD presents an interesting opportunity for a mixed use development .

Market Trends• Vacancies will continue their downward trend until first quarter

2014 .• Outside the CBD, build-to-suits and new projects are the only

current choices available to large users .• Over 275,000 SF of space will becoming available for occupan-

cy in the first quarter of 2014, caused by tenants vacating for build-to-suits . Another 225,000 SF becomes available March, 2015 .

• Tenants can expect higher rents and fewer build-out dollars at renewal time .

Tenant’s PerspectiveBecause of higher prices and fewer choices in available properties, tenants need to start their evaluation and renewal process earlier . Additionally, they should seek advice in space optimization/mod-ernization as a method of containing costs . Nashville is experi-encing 20-year lows on vacancies in some submarkets . Conces-sions have all but disappeared, and landlords are capitalizing on the shortage of alternatives . While new properties will emerge to fill the demand, tenants will pay a premium price for this premium space .

Major Transactions

Vacancy Rate

Nashville, Tennessee

Prepared By Cresa Nashville783 Old Hickory Boulevard, Suite 320E

Brentwood, TN 37027615 .460 .9900 | www .cresa .com


Parallon 350,000 Office Lease

Tractor Supply 260,000 Office Lease

Sara Cannon 150,000 Office Lease

Butler Snow 46,000 Office Lease

Dale Morris 41,000 Industrial Sale

Dollar General 33,000 Office Lease

H3GM 25,926 Office Lease

FD Stonewater 23,291 Office Sale

Pinnacle 4th & Peabody 22,832 Office Sale

GL C2 Cleghorn 12,960 Office Sale

M*Modal 19,488 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $21 .33 $22 .05 $22 .05

Class B Office $16 .76 $16 .42 $16 .26

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $21 .93 $21 .90 $21 .91

Class B Office $18 .60 $17 .35 $17 .52


OverviewManhattan’s availability rate remains unchanged from last quarter at 13 .1 and continues to languish within a narrow band of 13 .0% to 13 .2% over the last five quarters . Across the submarkets, leasing activity was relatively strong compared to the same quarter in 2010 or 2011 . Six of the 14 transactions of100,000 SF and greater were renew-als, highlighting tenants continued hesitancy . Numerous large blocks of space totaling 4 .5 MSF were placed on the market . The overall availability rate for Midtown North inched up, while Midtown South and Downtown dropped a notch . Absorption was slightly positive for Man-hattan (+349,242 SF) . Midtown South and Downtown each recorded positive absorption, while Midtown North posted negative absorption . Rental rate posted slight declines in each submarket .

The low level of participation by financial services, legal services and insurance has placed a drag on leasing activity . The lack of large ten-ants in the market foretells a continuation of softness in tenant activity at least for the near term . The return of tenants to the space market is not anticipated until the economy posts sustainable stronger growth .

Market TrendsMidtown• Class A availability rate remained relatively unchanged from last

quarter (13 .0%) at 13 .1% . Asking rents for Class A decreased to $73 .56/RSF .

• Class B availability rate rose moderately to 12 .1%, with rents in-creasing to $52 .38/RSF .

• Absorption was positive for Class A (93,036 SF) but negative for Class B (-325,828 SF) .

Midtown South• Overall availability rate decreased from the previous quarter to

9 .2%, with rents increasing from $51 .39/RSF to $47 .71/RSF .• Net absorption was positive at 302,366 SF .Downtown• Class A availability rate decreased from 21 .9% to 21 .3%, with rents

dropping from $51 .92/ RSF to $48 .82/RSF .• Class B availability rate declined slightly to 10 .3% with rents increas-

ing to $33 .49/ RSF from $32 .18/ RSF .• Net absorption was positive for Class A space at 245,297 SF, Class B

absorption was positive at -44,371 SF .

Tenant’s PerspectiveLandlords have been more open to smaller tenants than in the recent past . Some have gone as far as reconfiguring larger blocks of space into smaller prebuits to accommodate the smaller tenant and save tenant improvement costs . In addition, with stagnant availability rates and slug-gish demand, landlords continue to offer generous concessions .

Major Transactions

Vacancy Rate

New York, New York

Prepared By Cresa New York100 Park Avenue, 24th floor

New York, NY 10017212 .758 .3131 | www .cresa .com


New York City Law Dep . 372,520 Office Lease

Bloomberg L .P . 372,382 Office Lease

MTHM, LLP 337,000 Office Lease

General Services Admin . 270,000 Office Lease

Interpublic Group 220,000 Office Lease

City of New York 207,812 Office Lease

Fitch, Inc . 180,019 Office Lease

New York Genome Center 175,692 Office Lease

Havas Worldwide Health 170,000 Office Lease

Amerigroup Corporation 165,029 Office Lease


Midtown North Q1 2012 Q2 2012 Q3 2012Class A Office $71 .84 $75 .00 $73 .56Class B Office $49 .94 $51 .60 $52 .38

Midtown South Q1 2012 Q2 2012 Q3 2012Class A Office $58 .86 $59 .98 $50 .38Class B Office $44 .62 $47 .52 $46 .96

Downtown Q1 2012 Q2 2012 Q3 2012Class A Office $48 .95 $51 .92 $48 .82Class B Office $33 .41 $32 .18 $33 .49


OverviewEconomic data continued to be mixed during the 3rd quarter . The September jobs report indicated that 96,000 jobs were created in August, significantly down from 141,000 in July and even further reduced from the preceding two-year average of 150,000 . The un-employment rate decreased to 8 .1% due to a reduction in the labor force . On the positive side, housing prices have climbed by 5 .9% in 2012, which is the largest YTD gain since 2005 . This may have the dual impact of increasing consumer spending (if consumers feel wealthier), and motivating more buyers due to lower mortgage rates .

In New Jersey, the recovery seems to be slower than most of the country . The unemployment rate increased from 9 .8% to 9 .9% in August - the 4th highest in the U .S . In September, S&P lowered its outlook on NJ debt to negative from stable .

Market TrendsClass A• Total vacancy rate increased from 16 .9% to 17 .2%, the first time it has

been over 17% since 2004 .• An additional 1 .1 million SF has been put on the market for lease .• Direct average rental rate of $27 .14 continues within the $27 .00-$27 .50

PSF range of the past three years .• Although direct negative absorption was less than the 750,000 SF in the

2nd quarter, it was still negative by over 400,000 SF .Class B• Total vacancy rate of 16 .2% remains at its highest level since

1997 .• Direct net absorption was a negative 347,000 SF after being

slightly positive in the past two quarters .• At 178, the number of leasing transactions was the lowest since

2003 .• Total average rental rate remains within the 1 .0% range of

$21 .00, as it has been for the past three years .

Tenant’s PerspectiveThe real estate market continues to bounce along a two-year bottom . However, tenants can negotiate flexibility into their leases to overcome near-term uncertainty . This can lock in long-term rents, which will disappear quickly as the recovery accelerates over the next couple of years .

Major Transactions

Vacancy Rate

NJ - North/Central

Prepared By Cresa NJ - North/Central201 Route 17 North, Suite 904

Rutherford, NJ 07070201 .712 .4900 | www .cresa .com


PSE&G 825,000 Office Lease

IDS USA 500,525 Industrial Lease

Global Equipment Co . 500,100 Industrial Lease

Ridge Road Properties 378,000 Mixed Sale

Coty Inc . 98,000 Flex Lease

EisnerAmper 87,000 Office Lease

Hatch Mott MacDonald 81,351 Office Lease

Amneal Pharmaceuticals 70,000 Office Lease

Aon Hewitt 50,000 Office Lease

CDS Inc . 29,167 Office Lease


Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $26 .66 $26 .73 $26 .63

Class B Office $21 .07 $20 .76 $21 .08


OverviewMost product types experienced slowly improving demand in the sec-ond half of 2012 . Office occupancy rates improved slightly, continuing a gradual correction since peaking in early 2010 . Although improving, asking rents are not yet experiencing major increases . This current pricing advantage still affords tenants who act quickly an excellent opportunity to secure Class A product in some of the most desired locations . Industrial speculative construction is slowly returning to the marketplace, along with limited new, build-to-suit office projects .

Market TrendsBoth national and start up high tech and healthcare tenants will remain active in Orange County . These sectors, along with profes-sional services, will also produce the most growth in white-collar jobs over the next year - creating additional demand for office space . This quarter, Chapman University in Orange purchased two projects in the Jeronimo Technology Park, located in the Irvine Spectrum submarket, for a University Health Care Campus .

Continued shifts in ownership of many high-profile office projects could impact future pricing trends and concession packages offered . Recently, the Michelson Tower, a 19-story, 536,000-square-foot building changed ownership, and could be Orange County’s most expensive CRE transaction of the year . Both office and industrial tenants who wish to trade up to higher quality space will begin to consider longer term lease transactions as this market continues on its slow, but steady correction curve .

Tenant’s PerspectiveNational and regional tenants that weathered the economic storm - or are finally moving forward with expansion initiatives - will be looking for the best space available to accommodate their changing needs while still supporting their bottom line profit projections . Orange County’s fundamental advantages, its coastal location, excellent transporta-tion options, selection of newer, Class A office product and attractive pricing, combined with an improving local job outlook, will offer many tenants in the market some of the best lease options and employee base in Southern California .

Research and development tenants will continue to have the advan-tage in determining lease terms . Availability of product in this sector will support healthy concessions and competitive effective rents . Industrial users that require large blocks of premier space should con-sider early renewals, or strategic expansions/contractions to secure the best deals at still attractive terms .

Major Transactions

Vacancy Rate

Orange County, California

Prepared By Cresa Orange County610 Newport Center Drive, Suite 500

Newport Beach, CA 92660949 .706 .6600 | www .cresa .com


Ricoh 500,625 Warehouse Lease

St Joseph Health 194,180 Office Lease

Tenant not disclosed 172,967 Warehouse Lease

Cash Call 125,208 Office Lease

C&D Zodiac 85,773 Warehouse Lease

AT&T Advertising Sol . 80,998 Office Renewal


Airport Area Q1 2012 Q2 2012 Q3 2012Class A Office $25 .89 $26 .04 $25 .90Class B Office $20 .82 $20 .90 $21 .01

Central County Q1 2012 Q2 2012 Q3 2012Class A Office $23 .40 $23 .30 $23 .40Class B Office $19 .48 $19 .22 $19 .17

North County Q1 2012 Q2 2012 Q3 2012Class A Office $23 .70 $23 .42 $23 .69Class B Office $21 .41 $21 .36 $21 .53

South County Q1 2012 Q2 2012 Q3 2012Class A Office $25 .43 $26 .44 $25 .26Class B Office $21 .64 $21 .36 $21 .46

West County Q1 2012 Q2 2012 Q3 2012Class A Office $25 .14 $25 .42 $25 .26Class B Office $20 .82 $20 .67 $20 .61

North OC Q1 2012 Q2 2012 Q3 2012R&D $9 .38 $9 .37 $9 .54Industrial $6 .07 $6 .01 $6 .18

South OC Q1 2012 Q2 2012 Q3 2012R&D $11 .22 $11 .24 $11 .23Industrial $7 .42 $7 .58 $7 .61


OverviewAlthough Florida is typically attractive for corporate relocations, the overall inflow of companies is at a near standstill . Over the last four years and especially during this election year, the market has been stagnant . And with this softness, companies are choosing to ‘right size’ their space and negotiate better terms . The overall trend in the market is ‘wait and see’ with tenants . Many companies are analyzing a new relocation or renewal based on the “what-could-go-wrong” view versus spending time focusing on “what-could-go-right” . This pessimism in the market is contributing to a lack of company expansions, upgrades, new hires and capital expenditures . Finally, with no appreciable new construction, which typically competes with existing Class A, landlords in this segment of the market are on slightly more solid footing with regards to rates and concessions .

Market Trends• No new space was delivered during the quarter . Three build-

ings totaling 391,000 SF are under construction .• Vacant sublease space continues to be absorbed down from

248,000 to 237,000 SF .• The overall office vacancy rate is 13 .3% .• The Class-A office market recorded net negative absorption of

91,000 SF .• The Class-B office market recorded net negative absorption of

126,000 SF .

Tenant’s PerspectiveLandlords remain fairly aggressive offering a combination of low rental rates, free rent and high tenant improvement packages . Companies should strongly consider locking in these rates during this lull as rents should continue to rise, particularly in the face of no new product coming on the market . As always, an experienced tenant representative with no conflicts can make the process considerably less painful and maximize the benefits to the tenant’s side of the table .

Major Transactions

Vacancy Rate

Orlando, Florida

Prepared By Cresa Orlando221 NE Ivanhoe Boulevard, Suite 330

Orlando, FL 32804407 .648 .0330 | www .cresa .com


Universal Studios 45,000 Office Lease

United Credit Recovery 33,795 Office Lease

Paylocity 26,938 Office Lease

Disney 25,000 Office Lease

Leavitt Management 18,000 Office Lease

Ford & Harrison 12,234 Office Lease

M2 Systems 12,000 Office Lease

XOS Digital 12,000 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $23 .73 $24 .26 $23 .82

Class B Office $20 .67 $20 .67 $20 .59

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $21 .99 $21 .89 $20 .88

Class B Office $17 .87 $17 .84 $17 .70

R&D $9 .16 $8 .55 $8 .95


OverviewOttawa’s third quarter saw two major deals completed in down-town Ottawa . The largest being the Department of Justice award-ing an 80,000 SF tender to the owners of the Sun Life complex at 50 O’Connor Street and 99 Bank Street . The second is Ogilvy Renault LLP who completed a 42,000 SF renewal at World Ex-change Plaza .

The Bank of Canada’s impending 350,000 SF deal has yet to be finalized but industry insiders are still expectant of a deal at 234 Laurier Ave . West . New to the scene are the National Capital Commission which has just published a request for information concerning availability of 90,000 to 120,000 SF of downtown office space for a lease that would star in November 2014 . The timing of this might allow for a potential build-to-suit but it would be a close thing to get a new tower built in that time frame .

In Kanata the market has settled to a calm simmer as the former Nortel business units have all either completed a deal or, in the case of Ciena, elected to stay put for a while . There continues to be no clear timeframe for DND to complete their move to Bells Corners .

Vacancy rates across the city have remained relatively flat but we expect, with the Dept . of Justice now complete, and the Bank of Canada looking large on the horizon, that the Class A sector of Downtown Core will see a sharp decline with the potential of 420,000 SF of space in the process of being absorbed .

Market Trends• All the suburban markets are relatively balanced . A good selec-

tion of choices available for most tenants .• A Class vacancy set to decline downtown but more space B and

C space is expected to be vacated by the Federal Government .

Tenant’s PerspectiveThis is a good time to explore your options . There continue to be a number of quality spaces sitting vacant and more are coming on stream . While it’s true deals are getting done, there remains plenty of buildings to choose from .

Major Transactions

Vacancy Rate

Ottawa, Ontario

Prepared By Cresa Ottawa85 Albert Street, Suite 502

Ottawa, ON K1P 6A4, Canada613 .688 .7200 | www .cresa .com


PWGSC: Dept . Justice 80,000 New Lease Lease

Ogilvy Renault LLP 41,000 Renewal Lease

Fidus Systems 12,600 New Lease Sublease

Cowater International 8,000 Renewal Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $23 .41 $25 .71 $27 .43

Class B Office $18 .03 $18 .33 $17 .92

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $14 .26 $14 .63 $14 .42

Class B Office $11 .60 $12 .40 $12 .40

R&D $12 .22 $11 .67 $11 .67


OverviewLeasing demand for the third quarter of 2012 continued the strong trend from the second quarter . Peninsula Class A properties are rare . Mountain View has two large projects in the planning stages, including one million (1M) square feet to be developed by Rreef and another project of at least 500K SF being developed on the former Mayfield Mall site . Competition for tenants is still trending southward toward San Jose and Santa Clara .

Market Trends• Demand for Class A Office and R&D remains strong .• Venture capital funding growing and strong in Peninsula/Silicon

Valley .• New, large projects in planning stages .

Tenant’s PerspectiveTenants are being forced further south to relocate . Large blocks of space are only available in Santa Clara and San Jose . Sunnyvale and the Northern Peninsula have a very low supply . This is creating an upward trending in market rates and focusing tenant demand toward Santa Clara, with several new projects under construction . Most of the activity in 2012 has been driven by technology compa-nies, and we expect the demand in this area to continue .

Major Transactions

Vacancy Rate

Palo Alto, California

Prepared By Cresa Palo Alto705 High Street

Palo Alto, CA 94301650 .812 .9800 | www .cresa .com


Samsung 385,000 Office Lease

Stanford Hospital 155,000 Office Lease

Theranos 132,780 Office/R&D Lease

Audience 87,500 Office Lease

Success Factors 87,000 Office Lease

Depomed 46,000 Office/R&D Lease

LiveOps 42,000 Office Lease

Western Digital 40,000 Office Lease

Sencha 35,000 Office Sublease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $76 .00 $76 .00 $84 .00

Class B Office $56 .00 $56 .00 $60 .00

Suburban /

Stanford Park Q1 2012 Q2 2012 Q3 2012

Class A Office $60 .00 $66 .00 $66 .00

Class B Office $40 .00 $42 .00 $48 .00

R&D $28 .00 $28 .00 $28 .00


OverviewWith continued quarter-over-quarter improvement, the Philadelphia MSA is sustaining a fragile modest recovery . Q3 closed with positive net market absorption of 83,214SF and overall vacancy declined to 11 .07% . Nearly 465,000 square feet of newly constructed office space was delivered in Q3 2012 so the positive absorption is more impressive considering this added inventory . Research is also indicating that office building sales activity YTD 2012 is up compared to 2011 by 21% .

Market Trends• The local MSA unemployment rate rose to 8 .4% thru June

2012, rising above the national average .• (8 .3%) for the first time in more than three years . • A study by KPMG reported Greater Philadelphia has a lower

cost of doing business in 17 sectors when compared to the 18 largest metro areas across the U .S .

• A study conducted by Select Greater Philadelphia, found that Greater Philadelphia is among the top 5 research and development centers in the U .S . with total R&D spending higher than the U .S . average .

• St . Christopher’s Hospital for Children is proceeding with a 135,000 SF, $110M expansion that will reportedly create more than 300 new jobs .

• Greater Philadelphia has the 5th largest labor force among the nation’s largest metro areas (Source: Select Greater Philadelphia 2/2012) .

Tenant’s PerspectiveCautious optimism remains prevalent in the market as lingering economic and geo-political conditions continue to put a damper on any robust US recovery . It is expected that the Philadelphia region will remain a tenants’ market through 2012 . Statistically we have not yet approached market equilibrium which occurs at approximately a 10% vacancy rate . However, suburban tenants in particular are vulnerable to a more rapid recovery given the decrease in vacant spaces and slight uptick in rental rates . As expected in this type of environment it is becoming increasingly difficult to locate blocks of space in excess of 50,000 SF . The trend towards improved market conditions will present challenges for those tenants that don’t plan ahead . As always there are sub-markets which will run counter to this forecast and it is advisable for tenants to consider researching multiple sub-markets as they evaluate their options .

Major Transactions

Vacancy Rate

Philadelphia, Pennsylvania

Prepared By Cresa PhiladelphiaOne West First Avenue, Suite 201

Conshohocken, PA 19428610 .825 .3939 | www .cresa .com


Keystone Mercy Health 85,000 Office Lease

Metso Automation 50,000 Office Lease

Cozen O’Connor 193,136 Office Lease

Marsh, Inc . 102,608 Office Lease

Auxilium Pharma . 74,516 Office Lease

PetSmart 870,000 Distro Lease

OSIsoft 29,884 Office Lease

Tempur Pedic 224,000 Office Lease

Pew Charitable Trusts 22,961 Office Lease

Impact Thrift 66,485 Retail Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $26 .32 $26 .32 $26 .30

Class B Office $22 .40 $22 .40 $22 .40

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $24 .13 $24 .85 $24 .59

Class B Office $20 .21 $20 .05 $20 .03

R&D $36 .00 $33 .45 $33 .40


OverviewThe Phoenix Office market ended the third quarter of 2012 with a vacancy rate of 20 .3% . Phoenix had a positive absorption of 907,843 square feet in the third quarter of 2012 . Phoenix will remain a Tenant’s market for the next year with higher than normal vacancy levels and asking rents at level below their historical norm .

Market Trends• Net absorption for the market was a positive 907,843 SF .• Vacancy rates have decreased slightly to 20 .3% .• Average rental rates for all office space declined slightly; aver-

age rates decreased to $20 .06 PSF .• Two buildings were delivered to the market totaling 46,326 SF .• Overall office square footage inventory of 158,596,403 SF .

Tenant’s PerspectiveThe Phoenix market continues to quote lower than average rates and offer landlord concessions allowing tenants (whether renew-ing or new) to take advantage of market conditions . Landlords are providing concessions of abated rent and tenant improvement allowances in order to sway new tenants or keep existing ones . Tenants are investigating market options normally unattainable due to high occupancy costs, creating a “flight to quality” . Companies with strong foundations are able to move into more desirable prop-erties and/or areas rather than be restricted to certain geographic parameters .

Major Transactions

Vacancy Rate

Phoenix, Arizona

Prepared By Cresa Phoenix2398 E . Camelback Road, Suite 900

Phoenix, AZ 85016602 .648 .7373 x100 | www .cresa .com


MiTek 259,200 Industrial Lease

Exel 237,176 Industrial Lease

QBE Insurance Group 183,000 Office Lease

Clear Energy Systems 158,000 Industrial Lease

State Farm Insurance 140,000 Office Lease

Ulta Solon 108,195 Industrial Lease

Infusionsoft 92,109 Office Lease

IPOWER 70,000 Office Lease

Dignity Health 63,426 Office Lease

Mitel Networks 38,157 Industrial Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $22 .74 $22 .75 $22 .75

Class B Office $19 .43 $18 .72 $18 .68

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $23 .52 $23 .44 $23 .33

Class B Office $19 .80 $19 .62 $19 .39


OverviewOffice transaction activity is slowing down in the Pittsburgh market . Companies are waiting on the results of the election before they finalize real estate plans . Bakery Square is now 100% occupied, with Carnegie Mellon’s Software Engineering Institute (SEI) leasing the first floor of the building . In August, the City of Pittsburgh received a $2 million grant that can be applied to Bakery Square 2 .0 . With plans for 400,000 square-feet of office space and townhouses, the development is highly anticipated for high-tech office users .

With the purchase of the James Reed building, PMC Property Group continues investing in downtown office buildings . PMC plans to convert the building into residential space . As more residential space becomes available in the downtown area, retail space should see an increase in demand . Instead of heading back to the suburbs, people are staying downtown after work . Perle, a champagne bar, recently opened in Market Square . With Burga-tory signing a lease in the future Millcraft building, The Gardens, Market Square continues its revitalization .

Market Trends• Tenants are delaying their real estate plans .• The CBD eagerly awaits new downtown high rise buildings .• Rental rates have leveled off .

Tenant’s PerspectiveUntil new office space construction is complete, tenants need to be decisive with available space . With such low vacancy, available space is in high demand . Tenants should evaluate the market with 12-24 months left on their lease . Working with an advisor will help tenants find the limited available space or provide guidance leas-ing space currently under construction .

Major Transactions

Vacancy Rate

Pittsburgh, Pennsylvania

Prepared By Cresa PittsburghSpectra One, 2593 Wexford-Bayne Road, Suite 207

Sewickley, PA 15143412 .336 .3333 | www .cresa .com


ANSYS 186,000 Office Lease

Edison ARC Shopping 113,372 Shopping Sale

Gateway Health Plan 93,430 Office Lease

Excela Health System 85,000 Medical Sale

Kimzey Casing Service 43,000 Industrial Sale

Software Engineering 38,000 Office Lease

Invivodata 28,000 Office Lease

Vector Security 27,997 Office Lease

Harsco Metals 16,987 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $22 .80 $22 .85 $22 .90

Class B Office $18 .30 $18 .35 $18 .37

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $22 .00 $22 .05 $22 .15

Class B Office $17 .90 $18 .00 $18 .05

R&D $4 .98 $5 .00 $5 .00


OverviewThe Portland CBD office market is continuing to tighten in Q3 . The vacancy rate in class A space remains relatively low; quality spac-es are quickly being leased . The market continues to be favorable to landlords, resulting in fewer concessions for tenants . Due to lack of larger availability in the CBD, renovations on the east side such as Convention Plaza, Industrial Home, and 240 SE Clay are attracting attention from office users planning ahead . With those redevelopments still 8-24 months away from occupancy, historic office building redevelopments in the CBD as well as industrial conversions in NW Portland are beginning to fill up and options are limited for users looking for creative space . Large users looking for space in 2013 could be in luck as a few large blocks of office space are anticipated to be coming available, as government offices will be moving into the redeveloped Edith Green Federal Building .

The suburban markets are continuing to recover as long vacant spaces are disappearing from the market . Kruse Way continues to lead the suburban markets in the recovery as increased activity prompts landlords to offer fewer concessions . Tenants are seeing more aggressive negotiations from landlords who are optimistic they can capitalize future recovery .

Market Trends• New east side developments are attracting creative office users .• Many large blocks of space will be coming available in 2013 .• Landlords are more aggressive and giving less concessions . • Companies are optimizing work space, increasing density .

Tenant’s PerspectiveThis quarter we are continuing to advise our clients to prepare for the landlord to have the upper hand during lease negotiations . Tenants should be prepared for increased rates and decreasing concessions . Large users (+20,000sq . ft .) should plan ahead and use the abundance of large blocks of space coming to market in 2013 as a negotiating point when either renewing or blending and extending their current leases . Tight market conditions demand value driven services . One of those services that many of our clients are taking advantage of is the Cresa Project Management team, working through a density optimization analysis .

Major Transactions

Vacancy Rate

Portland, Oregon

Prepared By Cresa PortlandOne SW Columbia Street, Suite 1610

Portland, OR 97258503 .598 .3900 | www .cresa .com


Exel 302,765 Industrial Lease

Portland Willamette 140,000 Industrial Lease

LIT Workshop 101,131 Industrial Lease

Comcast of Tualatin Valley 72,644 Office Lease

Trimet 65,099 Office Lease

Mergenthaler Transfer 19,986 Industrial Lease

Puppet Labs Inc . 15,407 Office Lease

POWER Engineers Inc . 12,927 Office Lease

PST Services Inc . 12,857 Office Lease

AGS 12,625 Industrial Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $24 .57 $24 .60 $24 .57

Class B Office $19 .05 $19 .28 $19 .55

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $22 .20 $22 .36 $22 .35

Class B Office $17 .80 $17 .95 $17 .67

R&D $10 .37 $10 .61 $10 .55


OverviewThe surfacing of attractive Princeton area sublet opportunities in the first three quarters provided direct competition as slow but steady leasing activity regained some momentum . A look at em-ployment labor statistics provides some insight into the evolving trends and opportunities for firms looking to grow where a highly qualified and professional labor force can be secured . That is why the greater Princeton office market holds such great opportu-nity and promise .

Market Trends• The estimated 2 .7 million residents of the Central Region ac-

counted for about 31 percent of the state’s population• Almost one quarter (24 .1%) of the persons collecting unem-

ployment benefits in the Central Region during the second quarter of 2012 were age 45-54 .

• In June 2012, the unadjusted unemployment rate for the Cen-tral Region was 9 .4 percent, a rate 0 .7 percentage point higher than the rate for the same month a year ago .

• In comparison, the statewide unemployment rate for June 2012 was 10 .1 percent and the national average was 8 .3% .

Tenant’s PerspectiveClaimants of unemployment insurance benefits in the Central Region were most likely to be previously employed in an office and administrative support occupation during the second quarter of 2012 . In the past year employment changes in the Trenton Ewing Labor saw declines in the construction, manufacturing, informa-tion and professional businesses and services . Sizable increase in public and private solar farms boosted construction activity in Lawrenceville, Trenton and on some of the area’s corporate owned sites . Only educational and health services saw a marked increase in employment due in part to the delivery of major area hospitals .

For firms looking to grow or expand, the abundance of qualified professionals and fully furnished plug-n-play office sublet space at competitive rental rates bodes well for the next economic upturn .

Major Transactions

Vacancy Rate

Princeton, New Jersey

Prepared By Cresa Princeton103 Carnegie Center, Suite 300

Princeton, NJ 08540609 .452 .8200 | www .cresa .com


Equity Industrial Partners 378,195 R&D Sale

BT Americas 20,888 Office Lease

Mathematica 21,020 Office Lease

Medical Office 20,000 Medical Pre-Lease

Aetna 19,360 Office Sublease

IDIS 14,000 Office Sublease

Biovid Pharma 11,247 Office Lease

Rutgers 6,659 Office Lease

Deloitte 6,108 Office Lease

Heartland Payment 4,886 Office Sublease


Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $32 .81 $31 .60 $31 .31

Class B Office $26 .65 $19 .13 $20 .03


OverviewThe overall office vacancy rate in the Triangle for the 3rd quarter of 2012 increased by 0 .7% from last quarter to 14 .8% . The Net absorption year to date decreased to 17,789 SF .

The Triangle jobless rate fell to 7 .9 percent in August from 8 .1 percent in July .

Sales activity among investors of office and warehouse properties in the Triangle region has increased .

Market Trends• Rental rates have dropped slightly since 2nd quarter• Class A space continues to outpace Class B office space• Vacancy of Class B CBD space, Class A suburban space and

R&D space decreased from last quarter• Vacancy of Class A CBD office space increased slightly from

the 2nd quarter to 7 .1% .• Vacancy of Class B Suburban office space increased from

15 .3% to 17 .1% from last quarter .

Tenant’s PerspectiveThe Triangle has shown continued economic growth and momen-tum compared to the national average . The availability of large blocks of Class A office space continues to decrease as tenants opt for Class A product . The diverse Triangle economy continues to drive businesses to the area . Tenants who commit to renewals and longer-term leases will continue to benefit as landlord conces-sions decrease in the future .

Major Transactions

Vacancy Rate

Raleigh, North Carolina

Prepared By Cresa Raleigh200 Cascade Pointe Lane, Suite 101

Cary, NC 27513919 .677 .6100 | www .cresa .com


United Therapeutics 697,569 Office Sale

Highwoods Properties, Inc . 184,600 Office Sale

Pizzagalli Properties 182,000 Industrial Sale

Capital Advisors 101,850 Industrial Sale

WBN/Discover Drive 84,600 Industrial Sale

LNR Partners, Inc . 83,486 Office Sale

Novella Clinical 77,239 Office Lease

Blue Cross Blue Shield 49,000 Office Sale

Old Battleground Prop . 47,500 Office Sale

Priority Equipment Source 43,899 Industrial Sale

WorldWide Clinical Trials 30,000 Office Lease

HTC 29,067 Office Lease

Healthways, Inc . 27,440 Office Lease

HB Properties 26,000 Industrial Sale


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $22 .33 $22 .36 $22 .67

Class B Office $18 .13 $18 .40 $18 .11

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $21 .52 $21 .31 $21 .19

Class B Office $17 .16 $16 .98 $16 .86

R&D $9 .78 $9 .79 $9 .76


OverviewThe Sacramento office market ended the 3rd quarter 2012 with a vacancy rate of 17 .3% . The vacancy rate was consistent with the previous quarter with net absorption for the overall Sac-ramento office market at positive 61,226 SF . Vacant sublease space decreased in the 3rd quarter ending at 258,130 SF . Rental rates ended the 3rd quarter at $20 .28, the same as the previous quarter .

Market Trends• The six-county Sacramento Region experienced positive an-

nual job growth throughout the entire second quarter of 2012 . With the exception of Educational and Health Services all private sector activities rebounded to positive job growth .

• The lack of new construction has reduced the options for ten-ant requirements over 50,000 SF .

• Free rent is the lease concession of choice given current Lender requirements .

• Space options in the suburban areas are plentiful, while CBD vacancy remains consistently low .

Tenant’s PerspectiveSacramento’s office market has two extremes with Class “A” vacancy rates in the CBD at 5 .7% with firm lease rates, compared with several suburban markets with vacancy in the 40% range . With no new construction, large tenants will start to compete for large blocks of space while smaller tenants will continue to have multiple options in a soft market . Overall Tenant activity has been extremely light . Tenants should take advantage of soft market conditions by contacting their brokers to assess possible savings/concessions .

Major Transactions

Vacancy Rate

Sacramento, California

Prepared By Cresa Sacramento575 University Avenue, Suite 100

Sacramento, CA 95825916 .929 .6699 | www .cresa .com


State of CA Controller 191,000 Office Lease

Advanced Call Center Tech . 87,543 Office Lease

CalPers 43,584 Office Lease

eHealth 38,897 Office Lease

Adventist Health 22,940 Office Lease

Fortune Charter School 20,354 Office Lease

Pro Unlimited Inc . 15,442 Office Lease

Fortune Charter School 11,294 Office Lease

CYS Engineering 7,369 Office Lease

City Year 6,922 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $28 .82 $28 .92 $29 .40

Class B Office $21 .59 $21 .00 $21 .00

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $22 .06 $21 .96 $22 .08

Class B Office $20 .11 $19 .80 $19 .80

R&D $17 .03 $17 .04 $17 .76


Salt Lake City, Utah

OverviewAs of the close of the Third Quarter, the Salt Lake City office market experienced a modest decline in overall vacancy, increas-ing lease rates, and net absorption levels . The Suburban market saw strong demand for Class-A and Class-B properties, while demand in the Downtown/CBD submarket was relatively flat . Two new buildings were added to the inventory with an additional 180,000 square feet scheduled to come on-line by year-end .

Large blocks of office space are plentiful in the CBD which now has five buildings offering over 100,000 square feet to large tenants . An additional six properties can provide over 40,000 square feet of contiguous space . In contrast, the Suburban market has a shortage of large blocks with only two options of 100,000 square feet and three others of up to 40,000 square feet .

Market Trends• Decreasing overall vacancy rate .• Positive absorption .• Modestly increasing lease rates .• Decreasing tenant improvement allowances .• Decreasing concessions .• New construction increasing .

Tenant’s PerspectiveThe South Valley continues to demonstrate incredible strength . In-migration of tech companies and expansion of existing tenants is fueling a drop in vacancy, a rise in market rates, and a reduction in market concessions such as free rent offered by landlords to ten-ants . Large blocks of Class-B space are virtually non-existent and Class-A new construction is being rapidly absorbed . A trend is beginning to emerge that hasn’t been seen since the credit crisis: A small number of landlords are willing to build on-spec without an anchor tenant/tenants committed to taking space in the new construction .

Tenants active in the Downtown marketplace are hitting a good window to structure favorable terms whereas large users in the South Valley will need to be strategic in their approach to the market given the high velocity of transactions occurring and the relatively limited number of less-expensive options in the South Valley marketplace .

Major Transactions

Vacancy Rate


Xactware 202,000 New Lease

Health Equity 47,650 Renewal Lease

Instructure 126,000 New Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $26 .37 $26 .76 $27 .16

Class B Office $18 .85 $18 .99 $20 .65

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $20 .70 $23 .11 $23 .38

Class B Office $15 .50 $18 .32 $17 .36

Prepared By Cresa Salt Lake City16465 South 3000 East, Suite 204

Salt Lake City, UT 84121801 .300 .4500 | www .cresa .com


OverviewThe San Antonio market continues to outperform the national economy in 2012 . Vacancy rates and rental rates have both im-proved during the last quarter . A diversified employment base has helped San Antonio weather the economic storms of a meltdown in the lending markets and a drop in consumer confidence .

Market Trends• Citywide vacancy decreased to 11 .7% .• Average rental rates increased $20 .48 .• The unemployment rate is currently at 6 .7%• Industrial Vacancy decreased to 9 .2% .

Tenant’s PerspectiveSan Antonio remains a relatively stable market for tenants . Howev-er there are very few existing blocks of vacant space in the market . The immediate impact has been that Tenants are required to com-pete for the most desirable blocks of space . Landlords are looking more closely at tenant’s credit . Increasing consolidation in the real estate industry makes it imperative that tenant’s work more closely with their real estate advisors to most effectively develop their real estate strategies for the future .

Major Transactions

Vacancy Rate

San Antonio, Texas

Prepared By Cresa San Antonio1777 NE Loop 410, Suite 600

San Antonio, TX 78217210 .820 .2675 | www .cresa .com


Becton Dickenson 72,701 Office Lease

Sigma Solutions 21,400 Office Lease

Caremark 16,694 Flex Lease

National Oil Well 14,650 Office Lease

Business Suites 14,201 Office Lease

BB&T Bank 7,500 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $20 .40 $20 .35 $20 .95

Class B Office $17 .39 $18 .05 $17 .75

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $21 .95 $23 .20 $23 .80

Class B Office $18 .75 $19 .00 $18 .70

R&D $ 9 .13 $9 .98 $10 .40


OverviewWhile San Diego has received some economic endorsements this last quarter, the local economy remains sluggish with no short term upside in sight . San Diego ranked very high as a destination for tourists, namely number one in the state of California, fourth in the country and eighth in the world according to the San Diego Business Journal . San Diego also continues to be a focus of venture capitalist funding in the biotech field . These are two of the major industries making up San Diego’s economic base . However, from a commercial real estate perspective, the effective lease rates market-wide have not increased this year and the vacancy rates in the Central Business District and the Suburban submarkets remain the same . In fact, in several markets, vacancy has actually increased very slightly . With a lack of any new development, we still anticipate that rents will begin to trend upward . Concessions including rental abatement, increased tenant improvement allowances, and limits on future tenant expenses remain prevalent .

Market Trends• Wet lab vacancy is decreasing in the core biotech areas .• Countywide asking prices for office and industrial properties

have decreased by approximately 6% and 7% respectively over the past year .

• During the past year, the amount of office product offered for sale has decreased approximately 22%, while industrial product offerings decreased by approximately 16% .

• Actual sale prices have increased, however, over the same year period, approximately 2% for office and 8% for industrial .

Tenant’s PerspectiveInvestors and developers still have financial issues lingering and the lending community continues to be very selective, thus foreclosures and short sales are expected to continue . It remains imperative that tenants seek adequate non-disturbance language as part of their lease agreements . With our knowledge of each owner’s loan situation, we can assist tenants in negotiating below market terms, sometimes months or even years in advance of their lease expiration, with willing landlords interested in retaining their investment .

Major Transactions

Vacancy Rate

San Diego, California

Prepared By Cresa San Diego12230 El Camino Real, Suite 110

San Diego, CA 92130858 .794 .5500 | www .cresa .com


Qualcomm 124,373 Office Lease

Vertex Pharm . 81,204 Flex Lease

Alaskan Copper & Brass 77,760 Industrial Sale

EagleBurgmann EJS 70,158 Industrial Lease

Lantham & Watkins 69,836 Office Lease

Layfield Env . Systems 67,344 Industrial Lease

CUSO Financial Services 60,850 Office Sale

Legend Films 58,452 Office Sublease

Pro Spot Intl . Inc . 48,111 Industrial Sale

Applied Clinical Research 46,124 Industrial Sale


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $27 .84 $28 .44 $27 .96

Class B Office $23 .40 $23 .40 $23 .64

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $30 .96 $31 .92 $32 .40

Class B Office $24 .48 $24 .84 $24 .60

R&D $12 .84 $13 .20 $13 .20


OverviewAs has been the case throughout 2012, the San Francisco market continued to show signs of recovery, particularly within class A as-sets . Both class A and B vacancies declined slightly – and class A and B rents consequently continued to rise, in large part due to the pressure of South of Market (SoMa) rents . The decrease of SoMa space continues to be the catalyst for activity in the Central Business District (CBD) . It has become nearly impossible to find starting rents below $40/SF in class A buildings . Tenant improvement packages have also started to decline, especially with space that landlords consider to be market ready . SoMa properties that do not compare to CBD class A product have surpassed traditional office towers in rent . A typical SoMa lease is now over $50/SF industrial gross starting .

The San Francisco, San Mateo, and Marin office markets continue to interrelate and collectively had the best employment figures in the country during the last fiscal year . Almost 41,000 jobs were added with an increase of employment of almost 4%, according to the U .S . Bureau of Labor Statistics . Tech jobs were the biggest sector, rising over 10% in that timeframe . Recent press about increased subleases has been counterintuitive to this growth; however, there is speculation that this relates more to companies right-sizing their portfolios than it does to recession-related lay-offs .

Market Trends• Space in SoMa with sub-$50/SF rental rates continues to be more

difficult to find .• New speculative projects have emerged as a way of responding to

the declining supply of space . • While investment sales activity continues to slow, certain buyers

remain bullish on San Francisco (and Bay Area) and are identifying targets promising long-term value; near record sales prices continue to amaze the investor community .

• Due to rising office rents, more companies are casting a wider net in search of large blocks of space, including Oakland/Emeryville .

• Showplace Square has nearly reached capacity, “book-ending” South of Market, and suggesting new development in Mid-Market .

• Tenants are looking at fringe locations within the city as a matter of necessity .

Tenant’s PerspectiveDespite slow job growth nationally, the local market continues to be active and poses challenges for companies that do not plan ahead . Well-capitalized investors still see San Francisco as a healthy long-term player .

Major Transactions

Vacancy Rate

San Francisco, California

Prepared By Cresa San Francisco275 Battery Street, Suite 1050

San Francisco, CA 94111415 .394 .1020 | www .cresa .com


Rockefeller Group Dev . 662,060 Office Sale

BXP Folsom-Hawthorne479,220 Office Sale

Dolby Laboratories 354,000 Office Sale

Hines REIT 282,773 Office Sale

1700 California Street 95,075 Office Sale

Amazon 83,000 Office Lease

Shorenstein Properties 76,453 Office Sale

Pinterest 60,000 Office Lease

New Relic 55,000 Office Lease

eVault 28,236 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $45 .66 $43 .29 $44 .40

Class B Office $33 .51 $34 .42 $35 .95


OverviewThe large deal trend in the first half of the year continued through Q3 . Apple and Google continue to push companies to other locations--LinkedIn and Amazon/Lab123 are the latest examples . The larger deals are all in Class A buildings/projects and involve some pre-leasing . This includes Samsung and leases of buildings just under construction, such as Arista, Dell, and Global Founderies . Just a few large blocks remain available; however, there are several projects under construction or renovation .

Market Trends• The flight to Class A space continues . • Another continuing trend is renovation/redesign of older build-

ings and projects . Many companies are using strategic plan-ning/needs assessment expertise in developing a real estate strategy .

• The market remains highly bifurcated, with vacancy 4% or less in outlying areas like Cupertino . Vacancies there and in Mountain View and other locations along Caltrain are expected to drop another percent while rent may rise $5/SF .

• Vacancy in the CBD is 19%, and asking rental rates average $4 .00/SF less than the areas in hottest demand .

Tenant’s Perspective• With more options and less expensive rents in the CBD, now

may be a good time for companies to explore alternatives there while it is still a tenant’s market .

• More companies may want to invest in Project Management to create high-image space and realize long-term savings in the suburbs .

• Tenants can expect more speculative building and a steadier stream of available venture capital .

Major Transactions

Vacancy Rate

San Jose, California

Prepared By Cresa San Jose550 S . Winchester Boulevard, Suite 600

San Jose, CA 55402408 .554 .8855 | www .cresa .com


LinkedIn 550,000 Office Lease

Samsung 385,000 Office Lease

Amazon/Lab 123 375,000 Office Lease

Palo Alto Networks 302,000 Office Lease

Aritsa 150,000 Office Lease

Dell 150,000 Office Lease

Global Foundries 130,000 Office Lease

EMC 95,000 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $33 .40 $34 .50 $30 .00

Class B Office $26 .60 $27 .00 $28 .00

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $34 .00 $36 .00 $34 .00

Class B Office $25 .20 $25 .80 $24 .00

R&D $15 .75 $16 .80 $18 .00


OverviewThe South Florida office market continues to be perplexing as CBD landlords display a misplaced perception of a strengthening market as reflected in their asking rates while vacancy rates for Class A buildings remain in excess of 21% . This market is experiencing a lull in leasing activity which gives more emphasis on smaller transactions which traditionally pay higher rental rents . The next round of signifi-cant tenant activity is just around the corner as we approach 2014-2015, which will create more competition by the landlord for some of the larger, credit worthy tenants .

Suburban markets are mixed with some experiencing solid levels of tenant activity (W . Airport, Miramar) and others suffering from extremely low tenant velocity like Coral Gables and Miami Lakes . Rental rates in the better performing suburban markets continue to increase as larger blocks of contiguous Class A space are becoming increasingly scarce .

Market Trends• The office market, while remaining a tenant’s market given the

vacancy factors is, in actuality, a building-by-building market with some landlords choosing to reduce concessions .

• Job creation and upper class immigration, which brings both talent and capital, are increasingly impacting the demand for office space . Leasing rates are creeping up in the Class B Suburban submarkets .

• Brazilian, Canadian, Mexican and Colombian economies con-tinue to impact positive absorption in South Florida .

Tenant’s Perspective• In an effort to retain tenants, existing Class A and B buildings

are investing capital to compete with newer buildings and continue to conduct aggressive early renewal efforts for key tenants .

• Technology and efficiencies continue to reduce the amount of physical space required by most tenants .

• Noteworthy building sales include: - Atlanta based Brookdale Group’s acquired a portion of Sawgrass International Park the four-building portfolio in suburban Ft . Lauderdale was acquired for $51 .5 million (approx . $149 PSF) from AFL-CIO Building Investment Trust - Banyan Street Capital acquired Tower 101 a 230,000 SF complex in Ft . Lauderdale for 18 .7M (approx . $125 PSF) - New Boston Fund acquired Waterford Centre, a 91,000 SF, six-story, Class A office building located on Blue Lagoon Drive in the West Airport submarket .

Major Transactions

Vacancy Rate

South Florida

Prepared By Cresa South Florida601 Brickell Key Drive, Suite 1000

Miami, FL 33131305 .375 .8000 | www .cresa .com


Perez Trading 280,000 Industrial Lease

Hogan Lovells 47,508 Office Lease

Brown Mackie 42,000 Office Lease

Starboard 39,900 Warehouse Lease

UBS 34,536 Office Lease

Cartier-Richemont 26,578 Office Lease

Restaurant Svs . Inc . 25,742 Office Lease

Right Space Mgmt . 24,575 Office Lease

Cosmetics of France 18,543 Office Lease

Agora, Inc . 14,007 Office Lease

Average Rental Rates*

CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $37 .19 $36 .98 $37 .24

Class B Office $24 .56 $24 .50 $24 .61

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $29 .92 $29 .70 $30 .03

Class B Office $23 .10 $23 .16 $23 .18

R&D $12 .75 $12 .75 $12 .75

*South Florida Combined (Miami-Dade, Boward, Palm Beach Counties)


OverviewDuring Q3, the commercial real estate sector appears to be making slow, but steady improvement . One positive indicator may be that over the past 12 months unemployment rates dropped from 8 .4% to 7 .5% . In addition, the office sector has seen demand for space increase . However, due to excess capacity in the corporate footprint, there will likely be a drag effect before positive absorption materially impacts the overall vacancy . The Suburban office market reflects this modest improvement as the vacancy rate decreased from Q3 2011 from 11 .1% to 10 .9% in Q3 2012, with positive net absorption increasing from 81,829 SF to 141,440 SF for the same period . Even the St . Louis CBD, which has traditionally been one of our weaker submarkets, experienced some improvement in Q3 by retaining and expanding such stalwart companies as Gateway EDI, Jacobs Engineering, Stifel Financial and Nestle Purina . While these leases do provide some stability, landlords continue to deal with flat or declining “net” rents, sluggish activity, and a shallow tenant base which increases the long-term risk for tenants .

For the industrial market, overall activity is on the rise and expected to outpace 2011 . Sizable industrial users or users with special require-ments may need to consider build-to-suit options in the absence of existing space; i .e ., the proposed Emerald Automotive plant or Unile-ver’s expansion plans in Southwest Illinois . While these are positive examples of growth and new investment, the vacancy rate continues to hover around 9 .8 % . As such, rental rates for existing space remains depressed with abundant space options for most users across the region .

Market Trends• Availability of capital is becoming an issue for many landlords • As Tenant’s renegotiate their lease terms prior to lease expira-

tion many building owners struggle to maintain the value of their assets

• Increased focus by corporations to maximize efficiency, secure operating flexibility and control real estate expense .

Tenant’s PerspectiveBoth office and industrial tenants continue to take advantage of the marketplace by renegotiating rates that were in place 10 years ago . In downtown, office tenants need to be wary of certain Landlord’s ability to fund necessary tenant improvements and maintain the as-set at customary levels .

Major Transactions

Vacancy Rate

St. Louis, Missouri

Prepared By Cresa St . Louis1401 S . Brentwood Boulevard, Suite 900

St . Louis, MO 63144314 .968 .0220 | www .cresa .com


LMI Aerospace 114,000 Industrial Lease

Gateway EDI 108,000 Office Lease

Nestle Purina 95,000 Office Lease

Jacobs Engineering 78,385 Office Lease

Federal Mogul 72,000 Industrial Lease

Hub Group 55,861 Office Lease

Stifel Financial 40,862 Office Lease

Cass Information Systems 24,555 Office Lease

CBS Radio 24,323 Office Lease

TricorBraun 22,584 Office Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $18 .88 $18 .23 $18 .25

Class B Office $14 .14 $14 .28 $14 .10

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $23 .22 $23 .29 $23 .24

Class B Office $17 .49 $17 .54 $17 .43


OverviewThe overall GTA office market remained relatively level over the past quarter, with the availability increasing to 8 .4% from 8 .3% recorded at the end of Q2 2012 . The availability rate in the Financial Core increased from 7 .8% to the current 8 .2% . Financial Core A Class buildings have an availability of 8 .8%, slightly down from the previously recorded 8 .9% while the availability in B Class buildings has gone up from 6 .5% to 7 .9% . After a marginal increase recorded two quarters ago, the availability in the Suburban market decreased to 9 .0% from 9 .1% .

The average gross rent in the GTA office market remained level at $29 .66 PSF, as recorded at the end of Q2 2012 . The average gross rent in the Financial Core decreased from $39 .36 PSF to $38 .84 PSF, with a decrease in Class A Financial Core average gross rent to $53 .09 PSF from $53 .52 PSF . On the other hand, the average gross rent in the Suburban market has increased slightly, and is up to $28 .59 PSF from the previously recorded $28 .55 PSF .

Market Trends• The most significant absorption impact was recorded within

B Class buildings in the CBD with 163,000 SF of negative absorption .

• The GTA North node had a second consecutive quarter of negative absorption, with approximately 92,000 SF returning to the market and availability increasing from 5 .2% to 5 .6% .

Tenant’s PerspectiveThe GTA office market remained relatively stable over the last quarter, with a marginal increase in availability and the average gross rent remaining level . With all five major banks reporting higher than expected profits and increasing dividends, the outlook in the Canadian financial sector continues to be positive . Whether this strong performance of the “Big 5” will translate into the banks taking on additional office space within the current availabilities as they have done over the past three years, or whether they will wait for the new buildings to come on stream remains to be seen . Should the financial institutions expand within the current buildings, it will likely result in lowering the overall availability and exerting upward pressure on rental rates . This will be especially evident in the Class A Financial Core market until the new wave of buildings comes on stream .

Major Transactions

Vacancy Rate

Toronto, Ontario

Prepared By Cresa Toronto170 University Avenue, Suite 1100

Toronto, ON M5H 3B3, Canada416 .862 .2666 | www .cresa .com


PWC 100,000 Direct Lease

TD Canada Trust 90,733 Direct Lease

Toshiba of Canada Ltd 78,774 Direct Lease

QA Consultants 56,811 Direct Lease

Manulife 49,818 Direct Lease

Hydro One 30,366 Direct Lease

Stantec Consulting Ltd . 29,251 Direct Lease

MTE Consultants 27,552 Direct Lease

Maxxam Analyitics 25,564 Direct Lease

Duff & Phelps 23,092 Direct Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $53 .39 $53 .52 $53 .09

Class B Office $41 .84 $39 .95 $38 .96

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $30 .71 $30 .98 $31 .30

Class B Office $25 .35 $27 .94 $27 .69


OverviewPositive absorption in Vancouver’s downtown core has, for the 10th consecutive quarter, forced down vacancy rates . With Q3 2012 vacancy sitting at just under 3 .4% overall, and at 1 .4% for A-class Space, Landlords are pushing rents higher and forcing tenants to seriously consider options in alternative markets where rates are more moderate . Average gross rental rates in the core have jumped $2 .00 per square foot from the previous quarter to $57 .00 for A-Class space and $1 .00 per square foot to $48 .00 for B Class Space . These numbers are $7 .00 higher per square foot than this same time last year and it looks as though this trend will continue through 2014 . With new inventory arriving in two years, and a stable local economy, vacant space will continue to be a rare commodity .

Market Trends• New sublease opportunities provide tenants quality options at

discounted rents . • Space previously vacated by HSBC’s move to Burnaby is

slowly leasing up . • New office towers continue to make progress signing tenants .

Tenant’s PerspectiveThe Metro Vancouver market remains strong and third quarter activity remained relatively stable . No new notable large deals were recorded as almost all leasing activity in the quarter pertained to renewals . A number of large block sublease opportunities in the core are providing tenants with some of the only economi-cal alternatives as direct space is difficult to come by . As we near the completion of the first office tower however, more tenants are beginning to consider the benefits of moving to a new, state-of the art building .

Major Transactions

Vacancy Rate

Vancouver, British Columbia

Prepared By Cresa Vancouver1040 West Georgia Street, Suite 1020

Vancouver, BC V6E 4H1, Canada604 .696 .6000 | www .cresa .com


Harper Grey 36,000 Renewal Lease

Bull Houser 36,000 TempSpace Sublease

Owen Bird 21,000 Renewal Lease

Farliegh Dickenson 18,591 Expansion Lease

BDO Dunwoody 16,000 Renewal Lease

SNC Lavalin 15,700 Expansion Lease

Silvercorp 12,319 Renewal Lease


CBD Q1 2012 Q2 2012 Q3 2012

Class A Office $53 .00 $55 .00 $57 .00

Class B Office $46 .00 $47 .00 $48 .00

Suburban Q1 2012 Q2 2012 Q3 2012

Class A Office $37 .00 $37 .00 $37 .00

Class B Office $33 .00 $33 .00 $33 .00


OverviewBusiness uncertainty, as it relates to the Federal Government’s ability to purchase goods and services, has put numerous orga-nizations’ business plans in question . Under the Budget Control Act of 2011, federal spending is to be reduced by nearly $1 .0 trillion from 2012 levels over the next ten years . When the su-per committee failed to create a focused, bi-partisan strategy for implementing deficit reduction, broad-based cuts to Defense and non-defense agencies became the law of the land . Known as Sequestration, the cuts are scheduled to be implemented in January of 2013 . Since no clear guidance was given as to which programs will be cut, companies reliant on the Federal Govern-ment and governmental agencies are left to guess which aspects of their operations will be impacted and what level of staffing will be needed in the future . This effectively dried up demand for office space around the Metropolitan Area . While there is some hope that Congress will be able to address Sequestration during its lame duck session this year, in all likelihood Sequestration will be implemented, and the individual departments, agencies and contractors will be left to figure out where to cut their budgets .

Market Trends• Overall demand for office space has shrunk during 2012 with

nearly 1 .5 million square feet of space being returned to the market . A large portion of the returned space was from the Department of Defense in Northern Virginia, as it implemented the required relocation of its employees from leased space onto military bases under the Base Realignment and Closure (BRAC) Act of 2005 .

• During the third quarter, the amount of space under construc-tion decreased for the first time in a year, as developers have become more cautious before commencing new projects .

• Companies continue to shed jobs and real estate obligations as they position themselves to weather 2013 . This has kept the available stock of office product at sufficient levels to force landlords to compete hard to attract and retain tenants .

Tenant’s PerspectiveAll the uncertainty associated with Sequestration and the current state of the economy has created excellent leasing conditions in almost all submarkets and blocks of space . Tenants are taking advantage of the situation to lock in favorable leasing terms with historically high concessions .

Major Transactions

Vacancy Rate

Washington, DC

Prepared By Cresa Washington, DC505 9th Street, NW, Suite 600

Washington, DC 20004202 .628 .0300 | www .cresa .com

Tenant/Buyer Size Type Submarket

General Services Admin . 358,000 Assump . Southwest

National Institutes of Health 356,000 Renewal North Bethesda

Transaction Network Serv . 120,000 Relocation Reston

Raytheon Company 115,000 Renewal Rosslyn

Inovalon, Inc . 104,000 Renewal Bowie

U .S . Food and Drug Admin . 100,522 Renewal Rockville

Georgetown University 91,255 New East End

Anser 87,557 Relocation I-395 Corridor

United Nations Foundation 83,996 Relocation CBD

Navy Federal Credit Union 83,188 Renewal Herndon


Washington DC Q1 2012 Q2 2012 Q3 2012Class A Office $55 .01 $54 .74 $55 .35Class B Office $42 .74 $43 .19 $43 .23 Northern VA Q1 2012 Q2 2012 Q3 2012Class A Office $34 .49 $33 .93 $35 .09Class B Office $28 .99 $27 .88 $27 .84

Suburban MD Q1 2012 Q2 2012 Q3 2012Class A Office $29 .41 $29 .70 $29 .99Class B Office $21 .61 $21 .44 $21 .15

Washington, DC



cresa.com

Cresa Office Locations

Albany, NY194 Washington Avenue tel 518 .463 .5500 Albany, NY 12210

Atlanta, GA3475 Piedmont Road tel 404 .257 .8866Suite 900 fax 404 .256 .6399Atlanta, GA 30305

Austin, TX515 Congress Avenue tel 512 .457 .8820Suite 1950 fax 512 .476 .1798Austin, TX 78701

Baltimore, MD509 South Exeter Street tel 410 .558 .6192 Suite 200 fax 301 .951 .0079Baltimore, MD 21202

Bethesda, MD2 Bethesda Metro Center tel 301 .951 .6500Suite 900 fax 301 .951 .0079Bethesda, MD 20814

Birmingham, AL100 41st Street South tel 205 .397 .9399 Birmingham, AL 35222 fax 205 .591 .1691

Boston, MA200 State Street tel 617 .758 .600013th Floor fax 617 .742 .0643Boston, MA 02109 Calgary, ABSuite 510 tel 403 .571 .8080250 – 5 Street SW fax 403 .571 .8089Calgary, AB T2P 0R4 Canada

Capital Markets16250 Dallas Parkway tel 972 .713 .4040Suite 102 fax 972 .250 .1387Dallas, TX 75248

Charlotte, NC227 West Trade Street tel 704 .831 .3488Suite 305 fax 704 .831 .3489Charlotte, NC 28211

Chicago, IL225 West Washington Street tel 312 .376 .4100Suite 1000 fax 312 .376 .4200Chicago, IL 60606

Cincinnati, OHOne Financial Way tel 513 .241 .7373Suite 309 fax 513 .338 .8111Cincinnati, OH 45242

Dallas, TX5910 North Central Expressway tel 214 .559 .3900Suite 800 fax 214 .559 .0004Dallas, TX 75206

Denver, CO1515 Arapahoe Street, Tower 3 tel 303 .228 .0800Suite 350 fax 303 .813 .1639Denver, CO 80202

Detroit, MI26300 Northwestern Highway tel 248 .223 .3500Southfield, MI 48076 fax 248 .223 .3150

East Bay, CA6701 Hollis Street tel 510 .273 .2000 Emeryville, CA 94608 fax 510 .899 .8300

Fairfield County, CT200 Connecticut Avenue tel 203 .899 .77004th Floor fax 203 .899 .7701Norwalk, CT 06854

Fort Worth306 West Seventh Street tel 817 .870 .9044Suite 612 fax 214 .559 .0004Fort Worth, TX 76102

Houston, TX5599 San Felipe tel 713 .402 .5800Suite 500 fax 713 .402 .1800Houston, TX 77056

Indianapolis, IN941 E . 86th Street tel 317 .254 .0600Suite 115 fax 317 .252 .5757Indianapolis, IN 46240

Inland Empire, CA3633 Inland Empire Boulevard tel 909 .944 .6290Suite 550 fax 909 .944 .6299Ontario, CA 91764

Kansas City, MO8001 Conser Street tel 913 .322 .0500Suite 250 fax 888 .882 .4608Overland Park, KS 66212



cresa.com


Kitchener, ON55 King Street West tel 519 .772 .77227th Floor Kitchener, ON N2G 4W1, Canada

Lease Administration205 N . Michigan Avenue tel 312 .279 .5327Suite 2202 fax 312 .946 .8578Chicago, IL 60601

Long Island, NY999 Walt Whitman Road tel 631 .424 .4888Suite 210 fax 631 .424 .4897Melville, NY 11747

Los Angeles, CA11726 San Vicente Boulevard tel 310 .207 .1700Suite 500 fax 310 .207 .0930Los Angeles, CA 90049

Madison, WI613 Williamson Street tel 608 .467 .1513Suite 202 fax 608 .259 .9114Madison, WI 53703 Milwaukee, WI735 North Water Street tel 414 .455 .1502Suite 1110 fax 414 .271 .8506 Milwaukee, WI 53202

Minneapolis, MN920 Second Avenue South tel 612 .337 .8498Suite 900 fax 612 .337 .8459Minneapolis, MN 55402

Mumbai, India202, Nimbus Centre tel 91 22 5604 7601Oberai Complex fax 91 22 2633 3471Off New Link Road, Andheri (W)Mumbai 400 053 India

Nashville, TN783 Old Hickory Boulevard tel 615 .460 .9900Suite 320E fax 615 .460 .9600Brentwood, TN 37027

New York, NY100 Park Avenue tel 212 .758 .313124th Floor fax 212 .980 .1977New York, NY 10017

NJ - North/Central201 Route 17 North tel 201 .712 .4900Suite 904 fax 201 .438 .4000 Rutherford, NJ 07070

Orange County, CA610 Newport Center Drive tel 949 .706 .6600Suite 500 fax 949 .706 .6565Newport Beach, CA 92660

Orlando, FL 221 NE Ivanhoe Boulevard tel 407 .648 .0330Suite 330 fax 407 .422 .1273Orlando, FL 32804

Ottawa, ON85 Albert Street tel 613 .688 .7200 Suite 502 fax 613 .688 .7201Ottawa, ON K1P 6A4, Canada

Palo Alto, CA705 High Street tel 650 .812 .9800Palo Alto, CA 94301 fax 650 .812 .9833

Philadelphia, PAOne West First Avenue tel 610 .825 .3939Suite 201 fax 610 .825 .2928Conshohocken, PA 19428

Phoenix, AZ2398 E . Camelback Road tel 602 .648 .7373 x100Suite 900 fax 602 .648 .7339Phoenix, AZ 85016

Pittsburgh, PASpectra One tel 412 .336 .3333 2593 Wexford-Bayne Road fax 412 .336 .3339 Suite 207 Sewickley, PA 15143

Portland, OROne SW Columbia Street tel 503 .598 .3900Suite 1610 fax 503 .598 .0860Portland, OR 97258

Princeton, NJ103 Carnegie Center tel 609 .452 .8200Suite 300 fax 609 .452 .8388Princeton, NJ 08540

Providence, RI10 Dorrance Street tel 401 .285 .1150Suite 700 fax 401 .519 .3601Providence, RI 02903

Raleigh, NC200 Cascade Pointe Lane tel 919 .677 .6100Suite 101 fax 919 .677 .6161Cary, NC 27513



cresa.com


Sacramento, CA575 University Avenue tel 916 .929 .6699Suite 100 fax 916 .929 .6678Sacramento, CA 95825

Salt Lake City, UT6465 South 3000 East tel 801 .300 .4500Suite 204Salt Lake City, UT 84121

San Antonio, TX1777 NE Loop 410 tel 210 .820 .2675Suite 600 fax 210 .820 .2609San Antonio, TX 78217

San Diego, CA12230 El Camino Real tel 858 .794 .5500Suite 110 fax 858 .794 .5514San Diego, CA 92130

San Francisco, CA275 Battery Street tel 415 .394 .1020Suite 1050 fax 415 .394 .1038San Francisco, CA 94111

San Jose, CA550 S . Winchester Boulevard tel 408 .554 .8855Suite 600 fax 408 .554 .0704San Jose, CA 95128

South Florida601 Brickell Key Drive tel 305 .375 .8000Suite 1000 fax 305 .372 .8777Miami, FL 33131

St. Louis, MO1401 S . Brentwood Boulevard tel 314 .968 .0220Suite 900 fax 314 .968 .5050St . Louis, MO 63144

Toronto, ON170 University Avenue tel 416 .862 .2666Suite 1100 fax 416 .862 .2360Toronto, ON M5H 3B3 Canada Tucson, AZ5151 East Broadway tel 520 .882 .8115Suite 1600 fax 520 .512 .5401Tucson, AZ 85711

Tysons Corner, VA1600 Tysons Boulevard tel 571 .203 .9360Suite 800 fax 571 .203 .9361McLean, VA 22102

Vancouver, BC1040 West Georgia Street tel 604 .696 .6000Suite 1020 fax 604 .696 .6000Vancouver, BC V6E 4H1 Canada

Washington, DC505 9th Street, NW tel 202 .628 .0300Suite 600 fax 202 .393 .0815Washington, DC 20004

tenant’s guide - cresa€¦ · · 2012-12-27austin, tx . . . . . . . . . . . . . . . . . . . ....

Documents