4Q16 CAPITAL MARKETS REPORT Select Midwest Markets: Cincinnati, Cleveland, Columbus, Detroit and Pittsburgh

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1 4Q16 CAPITAL MARKETS REPORT Select Midwest Markets: Cincinnati, Cleveland, Columbus, Detroit and Pittsburgh

2 EXECUTIVE OVERVIEW Cincinnati Average cap rates in the 8-8.5% range Cap rates on single-tenant office assets with credit tenants traded in 2016 at lower rates Recent multi-tenanted office building sales pushed price per square foot averages higher Cleveland Columbus Detroit Pittsburgh Strong liquidity in marketplace; demand coming from new buyers Institutional investors are the dominant buyers right now Cap rates historically in the 8% range, but select recent trades were well below Liquidity pushing pricing to highest levels of the current cycle Significant demand in the industrial market long term Amazon lease strengthens core Office activity trails other property type, but institutional capital has returned Pricing in the suburbs still soft and below replacement costs Downtown planned projects anticipating high rents Positive trending fundamentals prove attractive to national investors looking to Detroit for opportunities Financing - availability and favorable terms - shape buyer demand in 2016 Offerings of true Class A properties in the market are limited, however, those that come available typically receive multiple offers and command premium pricing Significant activity in office market for both stabilized and speculative assets Investor demand from regional and national investors for industrial assets exceeds supply High watermark pricing achieved for recent sale of GE R&D facility in Airport Corridor Multi-housing and hospitality activity slowing 4Q16 CAPITAL MARKETS REPORT 2

3 MARKET SNAPSHOT Cincinnati; 12-Month Totals Land 1% Hotel 7% Office 26% $200 Office Price Per Square Foot Warehouse/ Flex 21% $176 $150 Multihousing 22% Retail 24% * Percentages based on total volume Property Type Volume # of Properties $100 Office $429 M 26 Retail $387 M 34 Multihousing $354 M 22 $50 Warehouse/Flex $341 M 35 Hotel $109 M 7 Land $20 M 5 Totals $1.6 B 129 $ Source: Newmark Grubb Knight Frank Research, Real Capital Analytics; transactions $10M+ 3

4 TOP OF THE MARKET Cincinnati; All Property Types; 12-Month Totals Acquisitions Dispositions Trades Top Buyers Top Sellers Top Deals Property KAMCO Investment $107M Gramercy Property Trust $87M 191 Rosa Parks St $107M Gramercy Property Trust $75M USAA Real Estate $65M 4382 Marburg Ave (Multihousing) $54M VanTrust Real Estate $58M Buckingham Co $54M 1600 Donaldson Hwy (Industrial) $48M Priderock Capital Partners $54M Carter $54M 8134 Kenwood Rd $43M DRA Advisors $53M Nicol Investment Co $54M 151 W 5 th Street (Hotel) $42M Source: Newmark Grubb Knight Frank Research, Real Capital Analytics 4

5 MARKET SNAPSHOT Cleveland; 12-Month Totals Land 1% Multihousing 12% $250 Office Price Per Square Foot Warehouse/ Flex 14% Office 37% Hotel 16% $200 $197 Retail 20% * Percentages based on total volume $150 Property Type Volume # of Properties Office $392 M 22 $100 Retail $216 M 25 Hotel $171 M 9 Warehouse/Flex $150 M 25 $50 Multihousing $129 M 9 Land $6 M 1 Totals $1.1 B 91 $ Source: Newmark Grubb Knight Frank Research, Real Capital Analytics; transactions $10M+ 5

6 TOP OF THE MARKET Cleveland; All Property Types; 12-Month Totals Acquisitions Dispositions Trades Top Buyers Top Sellers Top Deals Property Hertz Group $95M Forest City (REIT) $109M 1001 Lakeside Ave E $95M Strategic Props of NA $84M Equity Commonwealth $107M Chagrin Blvd (Multihousing) $84M Rock Ventures LLC $75M Munsell Realty Advisors $61M 230 W Huron Rd $56M Montecito Medical $53M Inland Real Estate Corp $59M 50 Public Square $39M AIC Ventures $43M Hackman Capital $57M 3211 Westgate Mall $35M Source: Newmark Grubb Knight Frank Research, Real Capital Analytics 6

7 MARKET SNAPSHOT Columbus; 12-Month Totals Land 1% Hotel 8% Office Price Per Square Foot Office 17% Retail 11% Warehouse/ Flex 38% $250 $200 Multihousing 24% * Percentages based on total volume $150 $151 Property Type Volume # of Properties Warehouse/Flex $609 M 50 $100 Multihousing $389 M 27 Office $272 M 27 Retail $183 M 28 $50 Hotel $131 M 11 Land $25 M 6 Totals $1.6 B 149 $ Source: Newmark Grubb Knight Frank Research, Real Capital Analytics; transactions $10M+ 7

8 TOP OF THE MARKET Columbus; All Property Types; 12-Month Totals Acquisitions Dispositions Trades Top Buyers Top Sellers Top Deals Property Cortland Partners $98M Prologis $109M National Rd SW (Industrial) $89M GC Essential Asset REIT II $89M The Connor Group $98M 1585 Georgesville Sq $33M Cabot Properties $77M Blackstone $ Sawdust Ln (Multihousing) $30M Georgetown $60M NorthPoint Development $77M 83 Equestrian Way (Multihousing) $27M Schulte Hospitality Group Inc $40M Hackman Capital $60M 1701 Stringtown Rd $27M Source: Newmark Grubb Knight Frank Research, Real Capital Analytics 8

9 MARKET SNAPSHOT Detroit; 12-Month Totals Land 1% Hotel 11% Retail 27% $250 Office Price Per Square Foot Multihousing 20% $210 $200 Warehouse/ Flex 20% Office 22% * Percentages based on total volume $150 Property Type Volume # of Properties Retail $523 M 43 $100 Office $432 M 38 Warehouse/Flex $387 M 52 $50 Multihousing $384 M 41 Hotel $222 M 16 Land $18 M 3 Totals $2.0 B 193 $ Source: Newmark Grubb Knight Frank Research, Real Capital Analytics; transactions $10M+ 9

10 TOP OF THE MARKET Detroit; All Property Types; 12-Month Totals Acquisitions Dispositions Trades Top Buyers Top Sellers Top Deals Property Brookfield $189M Rouse Properties $189M th Ave $112M Carlyle Group $87M Greenfield Partners $87M 150 West Jefferson $82M Redico $82M Piedmont REIT $82M Eureka Rd $77M SCA Hospitality $71M Wheelock Street Capital $71M 9400 McGraw Ave (Industrial) $33M RESSCO $64M LNR Property Corp $71M Van Dyke Ave $30M Source: Newmark Grubb Knight Frank Research, Real Capital Analytics 10

11 MARKET SNAPSHOT Pittsburgh; 12-Month Totals Hotel 10% Multihousing 10% Land 1% $250 Office Price Per Square Foot Warehouse/ Flex 11% Office 48% $200 Retail 21% * Percentages based on total volume $150 $175 Property Type Volume # of Properties Office $700 M 25 $100 Retail $307 M 23 Warehouse/Flex $157 M 19 $50 Hotel $144 M 9 Multihousing $140 M 13 Land $12 M 4 Totals $1.5 B 93 $ Source: Newmark Grubb Knight Frank Research, Real Capital Analytics; transactions $10M+ 11

12 TOP OF THE MARKET Pittsburgh; All Property Types; 12-Month Totals Acquisitions Dispositions Trades Top Buyers Top Sellers Top Deals Property Lionstone Investments $186M Walnut Capital Partners $210M 301 Grant St $152M Shorenstein $152M Oxford Development Co $152M 6425 Penn Ave $100M CBRE Global Investors $97M Starwood Capital Group $97M 1001 Liberty Ave $97M Lixi Hospitality Group $96M BNY Mellon $68M 6408 Living Pl $86M Pearson Partners Inc $68M Aimbridge Hospitality JV Garrison Investment Group $66.5M (each) 525 William Penn Pl $68M Source: Newmark Grubb Knight Frank Research, Real Capital Analytics 12

13 Number of Transactions OFFICE SALES - $10 MILLION BENCHMARK Midwest; Yearly Transaction Totals Cincinnati Cleveland Columbus Detroit Pittsburgh Transactions: Under $10M $10M and Over Source: Newmark Grubb Knight Frank Research 13