2.8M SF of construction paired with high occupancy rates prove Austin s office market is hotter than ever in 3Q 2014.

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1 Q OFFICE MARKET AUSTIN OFFICE MARKET RESEARCH & FORECAST REPORT 2.8M SF of construction paired with high occupancy rates prove Austin s office market is hotter than ever in 3Q AUSTIN OFFICE MARKET INDICATORS Q Q CITYWIDE NET ABSORPTION (SF) 99K 728K CITYWIDE AVERAGE VACANCY 10.7% 9.7% CITYWIDE AVERAGE RENTAL RATE $27.70 $28.20 CITYWIDE DELIVERED INVENTORY (SF) 143K 0 CLASS A RENTAL RATE CBD $39.76 $41.57 SUBURBAN $30.49 $30.81 CLASS A VACANCY CBD 16.0% 12.1% Office vacancy rates decreased by 4.0% between quarters as new tenants lease space in Austin s CBD. Citywide absorption reached 728,703 SF in the Q compared to 99,000 in Q2 2014, making this by far the strongest quarter for Austin s office market this year. Although there were no deliveries in Q3 2014, nearly 2.9 million SF of office space is currently under construction. Some of these buildings include the Colorado Tower, already 95% preleased, IBC Bank Plaza, which is 90% preleased, and finally 311 Bowie Street where Whole Foods has preleased 40,000 SF of office space. The citywide average rental rate increased 0.9% from $27.70 per SF to $28.20 per SF over the quarter and 6.2% from $26.56 per SF to $28.20 per SF over the year. The average CBD rental rate increased to $39.34 from $37.90 last quarter, and the average suburban rental rate increased slightly from $26.02 to $ According to the Texas Workforce Commission, the Texas economy and workers across all major industries continue to perform at a record pace. Austin s unemployment rate fell to 3.9% from 4.9% over the year. The continued construction paired with high demand for office space both inside the CBD and out, proves that Austin s market is stronger than ever. Competition for downtown office space is at an all time high as we see a creative, well-educated workforce infiltrate the city and continue to drive occupancy rates up. SUBURBAN 10.5% 10.1% ABSORPTION, NEW SUPPLY & VACANCY RATES 1,000, % JOB GROWTH & UNEMPLOYMENT (Not Seasonally Adjusted) UNEMPLOYMENT 8/13 8/14 AUSTIN 4.9% 3.9% TEXAS 6.4% 5.5% U.S. 7.3% 6.3% JOB GROWTH ANNUAL CHANGE # OF JOBS ADDED AUSTIN 3.5% 31K TEXAS 3.4% 381.6K U.S. 1.8% 2.5M 800, , , , , , , ,000-1,000, % 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Net Absorption New Supply Vacancy

2 CBD VS. Suburban Class A Office Vacancy 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% CBD Vacancy Suburban Vacancy Class A Office Rents $42.00 $40.00 $38.00 $36.00 $34.00 $32.00 $30.00 $28.00 $26.00 CBD Rents Suburban Rents VACANCY & AVAILABILITY Austin s citywide vacancy rate decreased 100 basis points from 10.7% to 9.7% between quarters and vacancy decreased across both the CBD and suburban markets. With the influx of growing companies into Austin s CBD, others are forced out of the city and into suburbs, causing vacancy rates to decrease across the board. Between quarters, the average suburban vacancy rate decreased slightly from 10.5% last quarter to 10.1% in Q3. The average CBD vacancy rate saw an even greater drop this quarter from 11.3% to just 8.4%. The average CBD Class A vacancy rate decreased 390 basis points between quarters from 16.0% to 12.1%, and the average CBD Class B vacancy rate decreased 190 basis points from 5.0% to 3.1%. The average suburban Class A vacancy rate decreased 40 basis points from 10.5% to 10.1% between quarters, and the average suburban Class B vacancy rate fell 80 basis points from 11.5% to 10.7% between quarters. ABSORPTION & DEMAND Austin s office market posted 728,703 SF of positive net absorption in Q making this the most successful quarter in almost two years. The CBD submarket posted the largest gain, with 279,332 SF of positive net absorption, followed by the Southwest submarket, posting 196,082 SF of positive net absorption in contrast to the previous quarter where the Southwest submarket saw a negative net absorption of 89,623 SF. Demand for office space remains strong even as office building construction continues. Of the 25 buildings currently under construction citywide, 38.6% of that office inventory is already preleased. RENTAL RATES The citywide average rental rate increased slightly from $27.70 per SF to $28.20 per SF over the quarter and increased 6.2% from $26.56 per SF to $28.20 per SF over the year. Average citywide Class A rents increased from $32.47 to $32.99 and Class B rents increased from $22.76 to $22.91 over the quarter. The Class A average rental rate in the CBD increased 4.6% from $39.76 per SF to $41.57 per SF between quarters, while the suburban Class A average rental rate increased only slightly from $30.49 per SF to $30.81 per SF. The average Class B rental rate in the CBD remained unchanged at $33.03 per SF, while the average suburban Class B rental rate increased slightly between quarters. QUOTED GROSS RENTAL RATES FOR EXISTING TOP PERFORMING OFFICE BUILDINGS BUILDING NAME ADDRESS SUB MARKET RBA (SF) YEAR BUILT % LEASED AVAIL. SF RENT ($/SF) OWNER Frost Bank Tower 401 Congress Ave. CBD 535, % 42,596 $51.53 Parkway Properties, Inc. One Congress Plaza 200 Cesar Chavez CBD 518, % 139,990 $43.07 Parkway Properties, Inc One American Center 600 Congress Ave. CBD 503, % 93,160 $42.44 Parkway Properties, Inc. 300 West Sixth 300 W. 6 th Street CBD 454, % 20,311 $49.17 Parkway Properties, Inc. 301 Congress 301 Congress Ave. CBD 418, % 26,974 $45.32 National Office Partners, LP 100 Congress 100 Congress Ave. CBD 411, % 52,383 $47.36 Metlife, Inc. San Jacinto Center 98 San Jacinto Blvd. CBD 410, % 79,642 $42.89 Parkway Properties, Inc. Northview Business Center 9001 N. I-35 Northeast 262, % 47,584 $19.64 Trigate Capital, LLC UFCU Plaza 8303 N. MoPac Expy Central 246, % 24,721 $31.00 University Federal Credit Union University Park 3300 N. Interstate 35 Central 206, % 51,863 $34.65 Spear St. Capital GP LLC Two Barton Skyway 1601 S. MoPac Expy South 195, % 55,137 $37.64 DRA Advisors, LLC Research Park Plaza Bldg IV Research Blvd Northwest 184, % 99,789 $35.59 Union Investment Real Estate GmbH Note: Avail. SF includes direct and sublet space as well as any future available space listed. Source: CoStar Property and Austin Business Journal COLLIERS INTERNATIONAL P. 2

3 LEASING ACTIVITY Austin s office leasing activity reached 1.0M SF in Q with transactions including renewals, expansions, subleases, and pre-leases in buildings currently under construction. Q OFFICE LEASE TRANSACTIONS BUILDING NAME/ADDRESS SUBMARKET SF TENANT LEASE DATE Aspen Lake II Far Northwest 68,500 Q2ebanking, Inc. 4 Jul-14 Seaholm Power Plant CBD 35,000 Under Armour 4 Jul-14 River Place Corporate Park Bldg III Northwest 32,945 Acxiom Jul-14 One American Center CBD 32,674 Main Street Hub Jul-14 One American Center CBD 30228? Box, Inc Unknown University Park Central 24,690 Evernote Corporation Aug-14 Colorado Tower CBD 24,184 IPSoft, Inc. 4 Unknown Perry Brooks CBD 23,900 SpareFoot 2 Jul-14 Former Austin Children's Museum CBD 22,000 Google, Inc. Jul-14 Northview Business Park Northeast 18,700 GateHouse Media Jul-14 Colorado Tower CBD 14,180 Kelly Hart & Hallman 4 Unknown Champion Office Park Northwest 13,500 Jobs2Careers Sep-14 Lavaca Plaza CBD 11,199 Outbound Engine Jul-14 1 Renewal 2 Expansion/Extension 3 Sublease 4 Pre-lease/proposed or under construction SALES ACTIVITY Austin s office investment sales activity included 13 sales transactions with a total sales volume of approximately $65 million, averaging $166 per SF. Listed below are a few significant transactions that closed in Q Q SIGNIFICANT SALES TRANSACTIONS - (100,000 SF OR GREATER) BUILDING NAME SUBMARKET SF YEAR BUILT BUYER SELLER CLOSED Hill Country Galleria Southwest 257, CSTRS & Invesco Real Estate REIT Management & Research LLC Sep-14 Cameron Business Park Northeast 567, Greenfield Partners LLC Scher Investment Group Jul-14 StoneCreek I & II North 239, /2000 CH Realty VI / O Austin Stonecreek, L.P. Intercontinental Real Estate Group Sep-14 Crossing at Lakeline Cedar Park 239, DRA Advisors, LLC Simmons Vedder Partners Jul-14 Barton Oaks Plaza II & III South 237, Invesco Real Estate HPI Real Estate/Sarofim Realty Advisors Jul-14 IBM Tivoli Systems Building 1 North 200, Cs Kinross Lake Parkway LLC International Bush Machines Co Aug-14 Centennial Towers Central 156, Taurus Investment Holdings, LLC Braun Enterprises Sep-14 Arboretum Point Northwest 150, Property Reserve Inc Fort Bend Investments LLC Aug Barton Building South 143, Cornerstone Real Estate Advisors TIAA-CREF Aug-14 Southfield Office Building South 141, Southfield Office Holding LLC Robert W Gray Builder Aug-14 Pecan Park Far Northwest 136, IPIX Pecan Park LLC CapRidge Partners Sep-14 Plaza On The Lake Southwest 119, Clarion Partners Endeavor Real Estate Group Jul W New Hope Dr Cedar Park 107, Halo Insurance Agency Inc LPG Shopping Center Ltd Jul-14 Data Source: CoStar Property COLLIERS INTERNATIONAL P. 3

4 AUSTIN OFFICE MARKET SUMMARY (CBD, SUBURBAN & OVERALL) CLASS CBD # OF BLDGS INVENTORY DIRECT VACANCY SUBLEASE VACANCY VACANCY VACANCY RATE (%) NET ABSORPTION (SF) TOTAL (SF) (SF) RATE (%) (SF) RATE (%) TOTAL (SF) Q Q Q Q RENTAL RATE AVG ($/SF) A 20 5,338, , % 49, % 648, % 16.0% 204,114 78,105 $41.57 B 55 3,041,748 95, % 0 0.0% 95, % 5.0% 56,961-5,097 $33.03 C 28 1,002,226 40, % 0 0.0% 40, % 5.8% 18,257 2,282 $22.56 Total 103 9,382, , % 49, % 783, % 11.3% 279,332 75,290 $39.46 Suburban A ,620,132 1,928, % 348, % 2,277, % 10.5% 224,770-1,821 $30.81 B ,799,332 2,515, % 241, % 2,757, % 11.5% 212,602 77,651 $22.43 C 200 6,243, , % 2, % 409, % 6.7% 11,999-51,699 $18.12 Total ,662,513 4,851, % 592, % 5,443, % 10.5% 449,371 24,131 $26.43 Overall A ,958,720 2,527, % 398, % 2,925, % 11.5% 428,884 76,284 $32.99 B ,841,080 2,610, % 241, % 2,852, % 10.8% 269,563 72,554 $22.91 C 228 7,245, , % 2, % 449, % 6.6% 30,256-49,417 $18.72 Total ,045,075 5,584, % 642, % 6,227, % 10.7% 728,703 99,421 $28.20 AUSTIN SUBURBAN OFFICE MARKET SUMMARY CLASS # OF BLDGS INVENTORY DIRECT VACANCY SUBLEASE VACANCY VACANCY VACANCY RATE (%) NET ABSORPTION (SF) TOTAL (SF) (SF) RATE (%) (SF) RATE (%) TOTAL (SF) Q Q Q Q RENTAL RATE AVG ($/SF) Bastrop County A 1 35,000 4, % 0 0.0% 4, % 11.4% 0 0 $28.50 B 5 73,163 3, % 0 0.0% 3, % 5.5% $3.84 C 1 12, % 0 0.0% 0 0.0% 0.0% 0 0 $16.00 Total 7 120,903 7, % 0 0.0% 7, % 6.6% $10.82 Cedar Park A 2 232,274 14, % 0 0.0% 14, % 8.4% 4,904 0 $22.55 B ,013 19, % 2, % 22, % 6.1% 5,850-5,572 $22.36 C 2 30, % 0 0.0% 0 0.0% 0.0% Total ,888 34, % % 36, % 6.6% 10,754-5,572 $22.97 Central A 3 474, , % 0 0.0% 111, % 29.8% 30,215 21,481 $33.61 B 46 2,155, , % 27, % 292, % 12.7% -14,370-26,887 $21.86 C 42 1,386,918 53, % 0 0.0% 53, % 5.3% 19,925-5,642 $18.54 Total 91 4,016, , % 27, % 456, % 12.2% 35,770-11,048 $23.54 East A 2 104, % 0 0.0% 0 0.0% 0.0% B 25 1,151, , % 0 0.0% 292, % 25.7% 3,516 8,234 $19.68 C ,878 61, % 0 0.0% 61, % 26.0% 0 0 $20.28 Total 39 1,540, , % 0 0.0% 354, % 24.0% 3,516 8,234 $19.82 Far Northeast B 4 77,268 5, % 0 0.0% 5, % 3.4% -2, $23.68 C 3 147,843 2, % 0 0.0% 2, % 2.8% 2,006 0 $13.90 Total 7 225,111 7, % 0 0.0% 7, % 3.0% $21.07 COLLIERS INTERNATIONAL P. 4

5 AUSTIN SUBURBAN OFFICE MARKET SUMMARY - CONTINUED CLASS # OF BLDGS INVENTORY DIRECT VACANCY SUBLEASE VACANCY VACANCY VACANCY RATE (%) NET ABSORPTION (SF) RENTAL RATE TOTAL (SF) (SF) RATE (%) (SF) RATE (%) TOTAL (SF) Q Q Q Q AVG ($/SF) Far Northwest A 16 2,367, , % 64, % 511, % 19.1% -59,700-4,004 $27.72 B 30 1,295,327 53, % 1, % 54, % 3.8% -5,164 10,544 $19.94 C 5 91,076 13, % 0 0.0% 13, % 7.2% -7,014 0 $21.32 Total 51 3,753, , % 66, % 580, % 13.5% -71,878 6,540 $26.94 Georgetown B , % 0 0.0% % 0.1% 0 4,500 $15.86 C 6 97, % 0 0.0% 0 0.0% 0.0% 0 0 $18.87 Total , % 0 0.0% % 0.1% 0 4,500 $17.82 Hays County B ,935 46, % 0 0.0% 46, % 10.7% -1,772 8,808 $16.68 C ,584 7, % 0 0.0% 7, % 4.1% $20.14 Total ,519 53, % 0 0.0% 53, % 8.9% -2,432 8,808 $17.05 North A 10 1,247, , % 45, % 152, % 10.1% 102,051-3,374 $27.07 B 55 3,806, , % 24, % 304, % 9.6% 76,213 52,895 $21.38 C ,968 57, % 0 0.0% 57, % 19.5% 2,300-33,152 $16.10 Total 77 5,358, , % 70, % 514, % 10.4% 180,564 16,369 $22.80 Northeast A 4 503,753 13, % 0 0.0% 13, % 4.7% 10,500 1,869 $21.44 B 33 1,726, , % 0 0.0% 217, % 16.5% 67, $15.34 C , , % 0 0.0% 139, % 17.1% 1,730-16,318 $12.82 Total 62 3,056, , % 0 0.0% 370, % 14.7% 79,469-15,031 $15.72 Northwest A 79 7,921, , % 36, % 781, % 9.7% -13, ,215 $31.46 B 150 5,464, , % 141, % 617, % 11.0% -17,488 5,673 $25.90 C 16 1,324,085 5, % 0 0.0% 5, % 0.7% 2,943-1,516 $21.16 Total ,710,532 1,226, % 177, % 1,404, % 4.1% -28, ,372 $29.30 Round Rock A 10 2,045,595 6, % 1, % 7, % 0.2% -4,095-1,905 $26.02 B ,370 62, % 0 0.0% 62, % 12.1% 53,361-1,806 $20.21 C ,662 7, % 0 0.0% 7, % 2.5% $16.43 Total 56 3,273,627 76, % 1, % 77, % 3.9% 48,688-3,711 $20.48 South A 21 2,745, , % 102, % 307, % 11.0% -6,167-38,265 $34.17 B 42 1,529,853 75, % 0 0.0% 75, % 4.4% -7,606-2,157 $24.29 C ,402 14, % 2, % 17, % 3.0% 837-1,571 $24.01 Total 83 4,849, , % 105, % 400, % 7.9% -12,936-41,993 $31.65 Southeast B 22 1,775, , % 1, % 529, % 31.5% 30,049 4,929 $19.76 C 9 280,146 24, % 0 0.0% 24, % 9.2% 1,075 2,147 $15.39 Total 31 2,055, , % 1, % 553, % 28.5% 31,124 7,076 $19.08 Southwest A 35 4,474, , % 70, % 342, % 10.9% 145,031-92,569 $31.90 B 167 3,983, , % 40, % 213, % 6.5% 22,349 1,404 $25.46 C ,437 11, % 0 0.0% 11, % 2.5% -2,298 1,542 $24.24 Total 225 8,833, , % 111, % 567, % 8.5% 165,082-89,623 $29.34 West Central A 3 469,003 2, % 27, % 30, % 9.8% 15,892-18,269 $36.91 B ,791 18, % % 19, % 6.5% 2,348 18,257 $34.67 C 4 83,496 8, % 0 0.0% 8, % 0.0% -8,267 2,811 $23.69 Total ,290 29, % 27, % 57, % 2.4% 9,973 2,799 $35.40 COLLIERS INTERNATIONAL P. 5

6 Q OFFICE UNDER CONSTRUCTION 10,000 SF OR GREATER More than 2.8 million square feet of office space was under construction during 3Q The Colorado Tower, Austin s first high rise office tower built downtown since 2003, is now 95% leased and will deliver in December This building is only one example of over one million square feet of office space under construction in the CBD the majority of which is already pre-leased, including IBC Bank Plaza and 311 Bowie St. SUBMARKET BUILDING NAME BUILDING ADDRESS RBA % LEASED DEVELOPER EST. DELIVERY DATE CBD Colorado Tower 303 Colorado Street 371, % Cousins Properties Mar-15 Southwest 3700 San Clemente 3700 N Capital of Texas Highway 249, % HPI Real Estate Services & Investments May-15 North Domain Alterra Parkway 221, % Endeavor Real Estate Group Dec-14 Southwest Capital Ridge 320 Capital of Texas Highway 217, % Riverside Resources Apr-15 CBD IBC Bank Plaza 500 W. 5th Street 195, % Endeavor Real Estate Group Dec-14 Northeast Parmer McCallen Pass Dr 192, % Trammel Crow Co May-15 CBD 5th+Colorado 201 W 5th St 179, % Lincoln Property Company Mar-16 Southwest Encino Trace I 5707 Southwest Parkway 160, % Brandywine Realty Trust Jun-15 Southwest Encino Trace II 5707 Southwest Parkway 160, % Brandywine Realty Trust Sep-15 Southwest Bldg Bee Caves Road 145, % Endeavor Real Estate Group May-15 Northwest Champion Office Park I 6500 N Capital of Texas Highway 115, % Endeavor Real Estate Group Oct-14 Northwest Champion Office Park II 6500 N Capital of Texas Highway 115, % Endeavor Real Estate Group Mar-15 CBD Power Plant Building Cesar Chavez & West Ave 113, % City of Austin/Trammel Crow Co. Oct-14 Southwest 317 Grace Ln 317 Grace Ln 87, % Unknown Apr-15 Southwest Bldg Bee Caves Road 69, % Endeavor Real Estate Group May-15 CBD 1303 San Antonio St 1303 San Antonio St 54, % Unknown Jun-15 CBD Office Floors 311 Bowie Street 40, % Endeavor Real Estate Group Mar-15 Southwest Building A 7710 Rialto Blvd 35, % Barton Commercial Nov-14 CBD 901 Congress Ave 901 Congress Ave 32, % Unknown Feb-15 Southwest Building B 7710 Rialto Blvd 27, % Barton Commercial Nov-14 CBD NorthShore 110 San Antonio St 24, % Trammel Crow Co. Oct-15 Cedar Park White Stone Professional Park 1785 Whitestone Blvd 16, % Huffman Builders Oct-14 CBD Texas PTA Building 408 W 11th St 15, % Square One Consultants, Inc. Jan-15 Cedar Park El Salido Pky & FM 620 El Salido Pky & FM , % Antenora Architects LLP Feb-15 Northwest River Place Medical III Ranch Road , % Equitable Commercial Realty Feb-15 Data Source: CoStar Property COLLIERS INTERNATIONAL P. 6

7 The Colliers Advantage Enterprising Culture Colliers International is a leader in global real estate services, defined by our spirit of enterprise. Through a culture of service excellence and a shared sense of initiative, we integrate the resources of real estate specialists worldwide to accelerate the success of our partners. When you choose to work with Colliers, you choose to work with the best. In addition to being highly skilled experts in their field, our people are passionate about what they do. And they know we are invested in their success just as much as we are in our clients success. This is evident throughout our platform from Colliers University, our proprietary education and professional development platform, to our client engagement strategy that encourages cross-functional service integration, to our culture of caring. We connect through a shared set of values that shape a collaborative environment throughout our organization that is unsurpassed in the industry. That s why we attract top recruits and have one of the highest retention rates in the industry. Colliers International has also been recognized as one of the best places to work by top business organizations in many of our markets across the globe. Colliers International offers a comprehensive portfolio of real estate services to occupiers, owners and investors on a local, regional, national and international basis. *Information herein has been obtained from sources deemed reliable, however its accuracy cannot be guaranteed. LISA R. BRIDGES Director of Market Research Houston 1233 W. Loop South, Suite 900 Houston, Texas Direct lisa.bridges@colliers.com HANNAH TYSOR Research and Marketing Coordinator Houston 1233 W. Loop South, Suite 900 Houston, Texas Direct hannah.tysor@colliers.com Accelerating success. COLLIERS INTERNATIONAL P. 7