The CoStar Office Report

Transcription

1 The CoStar Office Report Y E A R - E N D

2 YEAR-END 2009 SALT LAKE CITY Table of Contents Table of Contents A Methodology B Terms & Definitions C Market Highlights & Overview CoStar Markets & Submarkets Employment & Tenant Analysis Employment & Unemployment Analysis Inventory & Development Analysis Select Top Deliveries Select Top Under Construction Properties Figures at a Glance Figures at a Glance by Class & Market Figures at a Glance by Class & Submarket Figures at a Glance Grouped by CBD vs Suburban Historical Figures at a Glance Leasing Activity Analysis Select Top Lease Transactions Analysis of Individual CoStar Markets Cache County Market CBD Market Central Valley Market Central Valley East Market Davis/Weber Counties Market East Valley Market Juab County Market Morgan County Market South Valley Market Summit County Market Tooele County Market Utah County Market West Valley Market 2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT A

3 SALT LAKE CITY YEAR-END 2009 Methodology The CoStar Office Report, unless specifically stated otherwise, calculates office statistics using CoStar Group s entire database of existing and under construction office buildings in each metropolitan area. Included are office, office condominium, office loft, office medical, all classes and all sizes, and both multi-tenant and single-tenant buildings, including owner-occupied buildings. CoStar Group's national database includes approximately 69.1 billion square feet of coverage in 2.8 million properties. All rental rates reported in the CoStar Office Report have been converted to a Full Service equivalent rental rate. For information on subscribing to CoStar s other products and services, please contact us at COSTAR, or visit our web site at Copyright 2010 CoStar Group, Inc. All Rights Reserved. Although CoStar makes efforts to ensure the accuracy and reliability of the information contained herein, CoStar makes no guarantee, representation or warranty regarding the quality, accuracy, timeliness or completeness of the information. The publication is provided as is and CoStar expressly disclaims any guarantees, representations or warranties of any kind, including those of MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CoStar Group, Inc. 2 Bethesda Metro Center Bethesda, MD USA (800) NASDAQ: CSGP B THE COSTAR OFFICE REPORT 2010 COSTAR GROUP, INC.

4 YEAR-END 2009 SALT LAKE CITY Terms & Definitions Availability Rate: The ratio of available space to total rentable space, calculated by dividing the total available square feet by the total rentable square feet. Available Space: The total amount of space that is currently being marketed as available for lease in a given time period. It includes any space that is available, regardless of whether the space is vacant, occupied, available for sublease, or available at a future date. Build-to-Suit: A term describing a particular property, developed specifically for a certain tenant to occupy, with structural features, systems, or improvement work designed specifically for the needs of that tenant. A build-to-suit can be leased or owned by the tenant. In a leased build-to-suit, a tenant will usually have a long term lease on the space. Buyer: The individual, group, company, or entity that has purchased a commercial real estate asset. Cap Rate: Short for capitalization rate. The Cap Rate is a calculation that reflects the relationship between one year s net operating income and the current market value of a particular property. The Cap Rate is calculated by dividing the annual net operating income by the sales price (or asking sales price). CBD: Abbreviation for Central Business District. (See also: Central Business District) Central Business District: The designations of Central Business District (CBD) and Suburban refer to a particular geographic area within a metropolitan statistical area (MSA) describing the level of real estate development found there. The CBD is characterized by a high density, well organized core within the largest city of a given MSA. Class A: A classification used to describe buildings that generally qualify as extremely desirable investment-grade properties and command the highest rents or sale prices compared to other buildings in the same market. Such buildings are well located and provide efficient tenant layouts as well as high quality, and in some buildings, one-of-a-kind floor plans. They can be an architectural or historical landmark designed by prominent architects. These buildings contain a modern mechanical system, and have above-average maintenance and management as well as the best quality materials and workmanship in their trim and interior fittings. They are generally the most attractive and eagerly sought by investors willing to pay a premium for quality. Class B: A classification used to describe buildings that generally qualify as a more speculative investment, and as such, command lower rents or sale prices compared to Class A properties. Such buildings offer utilitarian space without special attractions, and have ordinary design, if new or fairly new; good to excellent design if an older non-landmark building. These buildings typically have average to good maintenance, management and tenants. They are less appealing to tenants than Class A properties, and may be deficient in a number of respects including floor plans, condition and facilities. They lack prestige and must depend chiefly on a lower price to attract tenants and investors. Class C: A classification used to describe buildings that generally qualify as no-frills, older buildings that offer basic space and command lower rents or sale prices compared to other buildings in the same market. Such buildings typically have below-average maintenance and management, and could have mixed or low tenant prestige, inferior elevators, and/or mechanical/electrical systems. These buildings lack prestige and must depend chiefly on a lower price to attract tenants and investors. Construction Starts: Buildings that began construction during a specific period of time. (See also: Deliveries) Contiguous Blocks of Space: Space within a building that is, or is able to be joined together into a single contiguous space. Deliveries: Buildings that complete construction during a specified period of time. In order for space to be considered delivered, a certificate of occupancy must have been issued for the property. Delivery Date: The date a building completes construction and receives a certificate of occupancy. Developer: The company, entity or individual that transforms raw land to improved property by use of labor, capital and entrepreneurial efforts. Direct Space: Space that is being offered for lease directly from the landlord or owner of a building, as opposed to space being offered in a building by another tenant (or broker of a tenant) trying to sublet a space that has already been leased. : The square footage of buildings that have received a certificate of occupancy and are able to be occupied by tenants. It does not include space in buildings that are either planned, under construction or under renovation. Flex Building: A type of building designed to be versatile, which may be used in combination with office (corporate headquarters), research and development, quasi-retail sales, and including but not limited to industrial, warehouse, and distribution uses. A typical flex building will be one or two stories with at least half of the rentable area being used as office space, have ceiling heights of 16 feet or less, and have some type of drive-in door, even though the door may be glassed in or sealed off. Full Service Rental Rate: Rental rates that include all operating expenses such as utilities, electricity, janitorial services, taxes and insurance. Gross Absorption: The total change in occupied space over a given period of time, counting space that is occupied but not space that is vacated by tenants. Gross absorption differs from leasing Activity, which is the sum of all space leased over a certain period of time. Unless otherwise noted Gross Absorption includes direct and sublease space. Growth in Inventory: The change in size of the existing square footage in a given area over a given period of time, generally due to the construction of new buildings. Industrial Building: A type of building adapted for such uses as the assemblage, processing, and/or manufacturing of products from raw materials or fabricated parts. Additional uses include warehousing, distribution, and maintenance facilities. The primary purpose of the space is for storing, producing, assembling, or distributing product. Landlord Rep: (Landlord Representative) In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the owner/landlord is referred to as the Landlord Rep. Leased Space: All the space that has a financial lease obligation. It includes all leased space, regardless of whether the space is currently occupied by a tenant. Leased space also includes space being offered for sublease. Leasing Activity: The volume of square footage that is committed to and signed under a lease obligation for a specific building or market in a given period of time. It includes direct leases, subleases and renewals of existing leases. It also includes any pre-leasing activity in planned, under construction, or under renovation buildings. Market: Geographic boundaries that serve to delineate core areas that are competitive with each other and constitute a generally accepted primary competitive set of areas. Markets are buildingtype specific, and are non-overlapping contiguous geographic designations having a cumulative sum that matches the boundaries of the entire Region (See also: Region). Markets can be further subdivided into Submarkets. (See also: Submarkets) 2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT C

5 SALT LAKE CITY YEAR-END 2009 Multi-Tenant: Buildings that house more than one tenant at a given time. Usually, multi-tenant buildings were designed and built to accommodate many different floor plans and designs for different tenant needs. (See also: Tenancy). Net Absorption: The net change in occupied space over a given period of time. Unless otherwise noted Net Absorption includes direct and sublease space. Net Rental Rate: A rental rate that excludes certain expenses that a tenant could incur in occupying office space. Such expenses are expected to be paid directly by the tenant and may include janitorial costs, electricity, utilities, taxes, insurance and other related costs. New Space: Sometimes called first generation space, refers to space that has never been occupied and/or leased by a tenant. Occupied Space: Space that is physically occupied by a tenant. It does not include leased space that is not currently occupied by a tenant. Office Building: A type of commercial building used exclusively or primarily for office use (business), as opposed to manufacturing, warehousing, or other uses. Office buildings may sometimes have other associated uses within part of the building, i.e., retail sales, financial, or restaurant, usually on the ground floor. Owner: The company, entity, or individual that holds title on a given building or property. Planned/Proposed: The status of a building that has been announced for future development but not yet started construction. Preleased Space: The amount of space in a building that has been leased prior to its construction completion date, or certificate of occupancy date. Price/SF: Calculated by dividing the price of a building (either sales price or asking sales price) by the Rentable Building Area (RBA). Property Manager: The company and/or person responsible for the day-to-day operations of a building, such as cleaning, trash removal, etc. The property manager also makes sure that the various systems within the building, such as the elevators, HVAC, and electrical systems, are functioning properly. Quoted Rental Rate: The asking rate per square foot for a particular building or unit of space by a broker or property owner. Quoted rental rates may differ from the actual rates paid by tenants following the negotiation of all terms and conditions in a specific lease. RBA: Abbreviation for Rentable Building Area. (See also: Rentable Building Area) Region: Core areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Regions are further divided into market areas, called Markets. (See also: Markets) Relet Space: Sometimes called second generation or direct space, refers to existing space that has previously been occupied by another tenant. Rentable Building Area: (RBA) The total square footage of a building that can be occupied by, or assigned to a tenant for the purpose of determining a tenant s rental obligation. Generally RBA includes a percentage of common areas including all hallways, main lobbies, bathrooms, and telephone closets. Rental Rates: The annual costs of occupancy for a particular space quoted on a per square foot basis. Sales Price: The total dollar amount paid for a particular property at a particular point in time. Sales Volume: The sum of sales prices for a given group of buildings in a given time period. Seller: The individual, group, company, or entity that sells a particular commercial real estate asset. SF: Abbreviation for Square Feet. Single-Tenant: Buildings that are occupied, or intended to be occupied by a single tenant. (See also: Build-to-suit and Tenancy) Sublease Space: Space that has been leased by a tenant and is being offered for lease back to the market by the tenant with the lease obligation. Sublease space is sometimes referred to as sublet space. Submarkets: Specific geographic boundaries that serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted primary competitive set, or peer group. Submarkets are building type specific (office, industrial, retail, etc.), with distinct boundaries dependent on different factors relevant to each building type. Submarkets are non-overlapping, contiguous geographic designations having a cumulative sum that matches the boundaries of the Market they are located within (See also: Market). Suburban: The Suburban and Central Business District (CBD) designations refer to a particular geographic area within a metropolitan statistical area (MSA). Suburban is defined as including all office inventory not located in the CBD. (See also: CBD) Tenancy: A term used to indicate whether or not a building is occupied by multiple tenants (See also: Multi-tenant) or a single tenant. (See also: Single-tenant) Tenant Rep: Tenant Rep stands for Tenant Representative. In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the tenant is referred to as a Tenant Rep. Time On Market: A measure of how long a currently available space has been marketed for lease, regardless of whether it is vacant or occupied. Under Construction: The status of a building that is in the process of being developed, assembled, built or constructed. A building is considered to be under construction after it has begun construction and until it receives a certificate of occupancy. Rate: A measurement expressed as a percentage of the total amount of physically vacant space divided by the total amount of existing inventory. Under construction space generally is not included in vacancy calculations. Vacant Space: Space that is not currently occupied by a tenant, regardless of any lease obligation that may be on the space. Vacant space could be space that is either available or not available. For example, sublease space that is currently being paid for by a tenant but not occupied by that tenant, would be considered vacant space. Likewise, space that has been leased but not yet occupied because of finish work being done, would also be considered vacant space. Weighted Average Rental Rate: Rental rates that are calculated by factoring in, or weighting, the square footage associated with each particular rental rate. This has the effect of causing rental rates on larger spaces to affect the average more than that of smaller spaces. The weighted average rental rate is calculated by taking the ratio of the square footage associated with the rental rate on each individual available space to the square footage associated with rental rates on all available spaces, multiplying the rental rate by that ratio, and then adding together all the resulting numbers. Unless specifically specified otherwise, rental rate averages include both Direct and Sublet available spaces. Year Built: The year in which a building completed construction and was issued a certificate of occupancy. YTD: Abbreviation for Year-to-Date. Describes statistics that are cumulative from the beginning of a calendar year through whatever time period is being studied. D THE COSTAR OFFICE REPORT 2010 COSTAR GROUP, INC.

6 OVERVIEW YEAR-END 2009 SALT LAKE CITY Salt Lake City s Increases to 10.0% Net Absorption Positive 542,525 SF in the Quarter The Salt Lake City Office market ended the fourth quarter 2009 with a vacancy rate of 10.0%. The vacancy rate was up over the previous quarter, with net absorption totaling positive 542,525 square feet in the fourth quarter. Vacant sublease space decreased in the quarter, ending the quarter at 248,557 square feet. Rental rates ended the fourth quarter at $16.96, a increase over the previous quarter. A total of six buildings delivered to the market in the quarter totaling 800,508 square feet, with 875,952 square feet still under construction at the end of the quarter. Absorption Net absorption for the overall Salt Lake City office market was positive 542,525 square feet in the fourth quarter That compares to negative (88,328) square feet in the third quarter 2009, positive 395,896 square feet in the second quarter 2009, and positive 355,606 square feet in the first quarter Tenants moving out of large blocks of space in 2009 include: Overstock.Com, Inc. moving out of 81,688 square feet at Old Mill Corporate Center III; Novell, Inc. moving out of 44,252 square feet at Novell Technology Park - Building B; and Sensory Sweep moving out of 41,202 square feet at Decker Lake Office Campus Building 4. Tenants moving into large blocks of space in 2009 include: Vangent, Inc moving into 130,000 square feet at Discover Card Building; Holland and Hart moving into 66,900 square feet at 222 South Main; and West Jordan School District moving into 47,000 square feet at Jordan Landing Corporate Center - Bldg 1. The Class-A office market recorded net absorption of negative (56,952) square feet in the fourth quarter 2009, compared to negative (95,001) square feet in the third quarter 2009, positive 79,593 in the second quarter 2009, and positive 70,830 in the first quarter The Class-B office market recorded net absorption of positive 547,560 square feet in the fourth quarter 2009, compared to positive 60,402 square feet in the third quarter 2009, positive 382,890 in the second quarter 2009, and positive 335,533 in the first quarter The Class-C office market recorded net absorption of positive 51,917 square feet in the fourth quarter 2009 compared to negative (53,729) square feet in the third quarter 2009, negative (66,587) in the second quarter 2009, and negative (50,757) in the first quarter Net absorption for Salt Lake City s central business district was positive 33,398 square feet in the fourth quarter That compares to negative (7,255) square feet in the third quarter 2009, negative (72,160) in the second quarter 2009, and negative (4,014) in the first quarter Net absorption for the suburban markets was positive 509,127 square feet in the fourth quarter That compares to negative (81,073) square feet in third quarter 2009, positive 468,056 in the second quarter 2009, and positive 359,620 in the first quarter The office vacancy rate in the Salt Lake City market area increased to 10.0% at the end of the fourth quarter The Rates by Class A B C Total Market 14% 12% 10% Rate 8% 6% 4% 2% 0% q q q q q q q 2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 1

7 SALT LAKE CITY YEAR-END 2009 OVERVIEW vacancy rate was 9.8% at the end of the third quarter 2009, 9.6% at the end of the second quarter 2009, and 9.8% at the end of the first quarter Class-A projects reported a vacancy rate of 11.8% at the end of the fourth quarter 2009, 9.2% at the end of the third quarter 2009, 8.6% at the end of the second quarter 2009, and 9.1% at the end of the first quarter Class-B projects reported a vacancy rate of 9.5% at the end of the fourth quarter 2009, 9.9% at the end of the third quarter 2009, 9.9% at the end of the second quarter 2009, and 10.3% at the end of the first quarter Class-C projects reported a vacancy rate of 9.6% at the end of the fourth quarter 2009, 10.0% at the end of third quarter 2009, 9.6% at the end of the second quarter 2009, and 8.9% at the end of the first quarter The overall vacancy rate in Salt Lake City s central business district at the end of the fourth quarter 2009 increased to 14.0%. The vacancy rate was 9.5% at the end of the third quarter 2009, 9.4% at the end of the second quarter 2009, and 8.4% at the end of the first quarter The vacancy rate in the suburban markets decreased to 9.6% in the fourth quarter The vacancy rate was 9.8% at the end of the third quarter 2009, 9.6% at the end of the second quarter 2009, and 10.0% at the end of the first quarter Largest Lease Signings The largest lease signings occurring in 2009 included: the 130,000-square-foot lease signed by Vangent, Inc at Discover Card Building in the South Valley market; the 45,692-square-foot deal signed by C Square Educational Enterprises Inc at 240 E Morris Ave in the East Valley market; and the 26,468-square-foot lease signed by Green River Capital LC at Decker Lake Office Campus - Building Four in the West Valley market. Sublease The amount of vacant sublease space in the Salt Lake City U.S. Comparison Past 10 Quarters Rate 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% q Salt Lake City q q q q United States q q market decreased to 248,557 square feet by the end of the fourth quarter 2009, from 250,387 square feet at the end of the third quarter There was 178,246 square feet vacant at the end of the second quarter 2009 and 210,176 square feet at the end of the first quarter Salt Lake City s Class-A projects reported vacant sublease space of 103,048 square feet at the end of fourth quarter 2009, down from the 110,725 square feet reported at the end of the third quarter There were 38,823 square feet of sublease space vacant at the end of the second quarter 2009, and 50,373 square feet at the end of the first quarter Class-B projects reported vacant sublease space of 139,032 square feet at the end of the fourth quarter 2009, up from the 136,149 square feet reported at the end of the third quarter At the end of the second quarter 2009 there were 133,288 square feet, and at the end of the first quarter 2009 there were 154,635 square feet vacant. Class-C projects reported increased vacant sublease space from the third quarter 2009 to the fourth quarter Sublease vacancy went from 3,513 square feet to 6,477 square feet during that time. There was 6,135 square feet at the end of the second quarter 2009, and 5,168 square feet at the end of the first quarter Sublease vacancy in Salt Lake City s central business district stood at 13,585 square feet at the end of the fourth quarter It was 13,585 square feet at the end of the third quarter 2009, 13,585 square feet at the end of the second quarter 2009, and 14,494 square feet at the end of the first quarter Sublease vacancy in the suburban markets ended the fourth quarter 2009 at 234,972 square feet. At the end of the third quarter 2009 sublease vacancy was 236,802 square feet, was 164,661 square feet at the end of the second quarter 2009, and was 195,682 square feet at the end of the first quarter Rental Rates The average quoted asking rental rate for available office space, all classes, was $16.96 per square foot per year at the end of the fourth quarter 2009 in the Salt Lake City market area. This represented a 0.5% increase in quoted rental rates from the end of the third quarter 2009, when rents were reported at $16.87 per square foot. The average quoted rate within the Class-A sector was $21.16 at the end of the fourth quarter 2009, while Class-B rates stood at $16.64, and Class-C rates at $ At the end of the third quarter 2009, Class-A rates were $22.15 per square foot, Class-B rates were $15.79, and Class-C rates were $ The average quoted asking rental rate in Salt Lake City s CBD was $22.27 at the end of the fourth quarter 2009, and $16.65 in the suburban markets. In the third quarter 2009, quoted rates were $20.81 in the CBD and $16.40 in the suburbs. Source: CoStar Property 2 THE COSTAR OFFICE REPORT 2010 COSTAR GROUP, INC.

8 OVERVIEW YEAR-END 2009 SALT LAKE CITY Deliveries and Construction During the fourth quarter 2009, six buildings totaling 800,508 square feet were completed in the Salt Lake City market area. This compares to three buildings totaling 59,718 square feet that were completed in the third quarter 2009, 10 buildings totaling 229,808 square feet completed in the second quarter 2009, and 163,342 square feet in 11 buildings completed in the first quarter There were 875,952 square feet of office space under construction at the end of the fourth quarter Some of the notable 2009 deliveries include: 222 South Main, a 422,000-square-foot facility that delivered in fourth quarter 2009 and is now 20% occupied, and Mountain America Credit Union - Annex, a 150,000-square-foot building that delivered in fourth quarter 2009 and is now 100% occupied. The largest projects underway at the end of fourth quarter 2009 were SelectHealth Building, a 150,134-square-foot building with 100% of its space pre-leased, and 100 W Towne Ridge Pky, a 150,000-square-foot facility that is 67% pre-leased. Absorption & Deliveries Past 10 Quarters (0.2) Source: CoStar Property q Net Absorption q q q q Deliveries q 0.06 (0.09) q Inventory Total office inventory in the Salt Lake City market area amounted to 76,570,256 square feet in 3,852 buildings as of the end of the fourth quarter The Class-A office sector consisted of 17,048,223 square feet in 152 projects. There were 2,315 Class-B buildings totaling 48,566,757 square feet, and the Class-C sector consisted of 10,955,276 square feet in 1,385 buildings. Within the Office market there were 149 owner-occupied buildings accounting for 2,752,158 square feet of office space. Reports compiled by: Ethan Reed CoStar Research Manager COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 3

9 SALT LAKE CITY YEAR-END 2009 MARKETS CoStar Markets & Submarkets In analyzing metropolitan areas in the U.S., CoStar has developed geographic designations to help group properties together, called Regions, Markets and Submarkets. Regions are the equivalent of metropolitan areas, or areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Regions are then divided into Markets, which are core areas within a metropolitan area that are known to be competitive with each other in terms of attracting and keeping tenants. Markets are then further subdivided into smaller units called Submarkets, which serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted competitive set, or peer group. Markets Cache County CBD Central Valley Central Valley East Davis/Weber Counties East Valley Juab County Morgan County South Valley Summit County Tooele County Utah County West Valley Submarkets Cache County CBD* CBD*/Periphery Northeast Avenues Central Valley Central Valley West Central Valley East Cottonwood Union Park District Davis/Weber Counties Foothill Corridor Interchange Research Park Sugarhouse Juab County Morgan County Draper Sandy South Towne Southeast Valley Southwest Valley Summit County Tooele County Utah County Airport/International Ctr West Valley/Lake Park * Submarkets comprising the CBD. For statistics reference the CBD vs Suburban Figures at a Glance Page. 4 THE COSTAR OFFICE REPORT 2010 COSTAR GROUP, INC.

10 EMPLOYMENT AND TENANT YEAR-END 2009 SALT LAKE CITY Total Employment by Industry Percent of Total Employment by Industry Total Employment Growth Total Number of Jobs Added Per Year 17% 3% 9% 9% 0% 11% 16% 23% 3% 9% Natural Resources & Mining Construction Manufacturing Trade, Transportation & Utilities Information Financial Activities Professional & Business Services Education & Health Services Leisure & Hospitality Other Services Government Percent Growth 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% Salt Lake City U.S. Average Source: Department of Labor, Bureau of Labor Statistics Office* Employment Growth Cumulative Growth in Office* Jobs Over the Past 5 Years Market Employment Growth Inventory Growth Difference Atlanta -8.00% 6.90% % Boston -1.10% 2.60% -3.70% Chicago -5.80% 4.30% % Dallas/Ft Worth 4.20% 7.10% -2.90% Denver -0.70% 5.10% -5.80% Los Angeles -6.20% 2.90% -9.10% New York City -0.10% 1.80% -1.90% Seattle/Puget Sound 1.70% 8.60% -6.90% Tampa/St Petersburg % 8.00% % Washington -0.80% 9.40% % Salt Lake City 1.50% 11.10% -9.60% Source: Department of Labor, Bureau of Labor Statistics Historical Unemployment Rates Source: Department of Labor, Bureau of Labor Statistics Office* Employment Growth Number of Office* Jobs Added Per Year Percent Growth 9.0% Salt Lake City U.S. Average 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% -7.0% Source: Department of Labor, Bureau of Labor Statistics. * Office employment is defined as jobs in the Information, Financial Activities, and Professional & Business Services industries 12.0% Salt Lake City U.S. Average 10.0% Percent Unemployment 8.0% 6.0% 4.0% 2.0% 0.0% q q q q q q q q q q q 2009 Source: Department of Labor, Bureau of Labor Statistics COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 5

11 SALT LAKE CITY YEAR-END 2009 INVENTORY & DEVELOPMENT Historical Deliveries Deliveries 3.1 Average Delivered SF 3.0 Millions of SF * Future deliveries based on current under construction buildings. Construction Activity Markets Ranked by Under Construction Square Footage Under Construction Inventory Average Bldg Size Market # Bldgs Total RBA Preleased SF Preleased % All Existing U/C South Valley 7 317, , % 22,213 45,332 Utah County 3 157,997 26, % 14,505 52,666 Central Valley 1 150, , % 23, ,134 Central Valley East 1 102, , % 18, ,000 West Valley 2 78,500 34, % 35,947 39,250 Davis/Weber Counties 3 70,000 60, % 14,375 23,333 Morgan County % 9,010 0 Juab County % 18,000 0 East Valley % 15,836 0 Cache County % 11,105 0 All Other % 31,009 0 Totals , , % 19,878 51,527 Recent Deliveries Leased & Un-Leased SF in Deliveries Since 2005 Future Deliveries Preleased & Un-Leased SF in Properties Scheduled to Deliver 3.0 Leased Un-Leased 300 Preleased Un-Leased Millions of SF Thousands of SF T q q q 6 THE COSTAR OFFICE REPORT 2010 COSTAR GROUP, INC.

12 INVENTORY & DEVELOPMENT YEAR-END 2009 SALT LAKE CITY Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction 1.2 Construction Starts Deliveries Millions of SF q q q q q q Recent Deliveries by Project Size Breakdown of Year-to-Date Development Based on RBA of Project Building Size # Bldgs RBA SF Leased % Leased Avg Rate Single-Tenant Multi-Tenant < 50,000 SF , , % $ , ,321 50,000 SF - 99,999 SF 2 151,820 91, % $ 0 151, ,000 SF - 249,999 SF 2 267, , % $ 117, , ,000 SF - 499,999 SF 1 422,000 84, % $ 0 422,000 >= 500,000 SF % $ 0 0 Recent Development by Tenancy Comparison Based on RBA Developed for Single & Multi Tenant Use Based on Total RBA 2009 Deliveries Currently Under Construction By Class By Space Type 14% 18% 14% 17% 22% 86% 82% 64% 83% Multi Single Multi Single Class A Class B Class C Multi Single 2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 7

13 SALT LAKE CITY YEAR-END 2009 INVENTORY & DEVELOPMENT 8 THE COSTAR OFFICE REPORT 2010 COSTAR GROUP, INC.

14 INVENTORY & DEVELOPMENT YEAR-END 2009 SALT LAKE CITY 2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 9

15 SALT LAKE CITY YEAR-END 2009 FIGURES AT A GLANCE Class A Market Statistics Year-End 2009 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Cache County % $ CBD 18 4,412, , , % (3,600) 422,000 0 $21.59 Central Valley 5 434,743 81,072 81, % (4,265) 0 150,134 $20.80 Central Valley East 33 3,174, , , % (92,144) 0 102,000 $22.28 Davis/Weber Counties ,914 77,209 77, % (255) 0 60,000 $19.85 East Valley 6 656,660 33,062 33, % (26,496) 0 0 $ Juab County % $ Morgan County % $ South Valley 32 3,678, , , % (22,497) 0 128,626 $23.37 Summit County % $ Tooele County % $ Utah County 36 2,510, , , % 118, ,093 $17.77 West Valley 11 1,616,137 10,508 16, % 29, $20.52 Totals ,048,223 1,904,249 2,007, % (1,530) 422, ,853 $21.16 Class B Market Statistics Year-End 2009 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Cache County ,008 16,324 16, % 19, $12.73 CBD 187 8,872, , , % 101,569 49,887 0 $20.52 Central Valley 88 2,810, , , % 267, ,000 0 $17.14 Central Valley East 374 7,207, , , % 140, $18.37 Davis/Weber Counties 367 6,259, , , % 17,087 46,604 10,000 $16.25 East Valley 113 3,163, , , % 71,195 87,000 0 $15.83 Juab County % $ Morgan County 1 16, % $12.00 South Valley 360 5,905, , , % 380,006 27, ,695 $17.65 Summit County ,547 69,553 69, % 25,918 48,200 0 $21.59 Tooele County 3 40,430 4,000 4, % (4,000) 0 0 $15.50 Utah County 634 8,972, , , % 315, ,488 20,904 $14.28 West Valley 121 4,327, , , % (8,770) 40,500 78,500 $13.66 Totals 2,315 48,566,757 4,470,292 4,609, % 1,326, , ,099 $ THE COSTAR OFFICE REPORT 2010 COSTAR GROUP, INC.

16 FIGURES AT A GLANCE YEAR-END 2009 SALT LAKE CITY Class C Market Statistics Year-End 2009 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Cache County ,049 23,300 23, % (8,826) 0 0 $10.69 CBD 262 2,233, , , % (108,913) 0 0 $11.15 Central Valley , , , % (16,096) 0 0 $11.30 Central Valley East 234 1,614, , , % (31,612) 0 0 $11.66 Davis/Weber Counties 260 2,347, , , % 21, $10.54 East Valley 204 1,294,720 81,870 81, % 3, $12.38 Juab County 1 18, % $ Morgan County 2 10,178 2,640 2, % (2,640) 0 0 $ South Valley ,933 10,882 10, % 4, $9.94 Summit County 10 66,367 2,722 5, % (5,684) 0 0 $ Tooele County 7 44, % $ Utah County , , , % 4, $12.42 West Valley 67 1,209,547 9,317 9, % 20, $25.50 Totals 1,385 10,955,276 1,041,772 1,048, % (119,156) 0 0 $11.27 Total Office Market Statistics Year-End 2009 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Cache County ,057 39,624 39, % 10, $12.24 CBD ,518,618 1,514,570 1,553, % (10,944) 471,887 0 $19.34 Central Valley 168 3,878, , , % 247, , ,134 $17.03 Central Valley East ,996,353 1,273,234 1,386, % 16, ,000 $18.63 Davis/Weber Counties 638 9,171, , , % 38,432 46,604 70,000 $14.10 East Valley 323 5,115, , , % 47,800 87,000 0 $15.18 Juab County 1 18, % $ Morgan County 3 27,030 2,640 2, % (2,640) 0 0 $12.00 South Valley 446 9,907,113 1,281,804 1,308, % 362,206 27, ,321 $18.80 Summit County ,914 72,275 75, % 20,234 48,200 0 $21.59 Tooele County 10 85,006 4,000 4, % (4,000) 0 0 $15.50 Utah County ,459,563 1,289,674 1,327, % 438, , ,997 $14.84 West Valley 199 7,153, , , % 40,888 40,500 78,500 $16.69 Totals 3,852 76,570,256 7,416,313 7,664, % 1,205,699 1,253, ,952 $ COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 11

17 SALT LAKE CITY YEAR-END 2009 FIGURES AT A GLANCE Class A Submarket Statistics Year-End 2009 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport/International Ctr 2 359, % $ Cache County % $ CBD 11 3,135, , , % 6, ,000 0 $21.27 CBD/Periphery 7 1,276,804 11,909 11, % (10,409) 0 0 $25.28 Central Valley 4 398,743 53,382 53, % (12,575) 0 150,134 $20.80 Central Valley East , , , % 6, $15.91 Central Valley West 1 36,000 27,690 27, % 8, $ Cottonwood 18 2,012, , , % (93,119) 0 0 $24.18 Davis/Weber Counties ,914 77,209 77, % (255) 0 60,000 $19.85 Draper 5 358,713 15,957 15, % $18.50 Foothill Corridor % $ Interchange 1 27, % $ Juab County % $ Morgan County % $ Northeast Avenues % $ Research Park 4 539,660 6,566 6, % $ Sandy South Towne 14 1,580, , , % (6,649) 0 128,626 $23.11 Southeast Valley 2 107, % $ Southwest Valley 11 1,631, , , % (15,848) 0 0 $23.95 Sugarhouse 1 90,000 26,496 26, % (26,496) 0 0 $ Summit County % $ Tooele County % $ Union Park District 5 406,285 42,917 42, % (5,243) 0 102,000 $21.00 Utah County 36 2,510, , , % 118, ,093 $17.77 West Valley/Lake Park 9 1,256,845 10,508 16, % 29, $20.52 Totals ,048,223 1,904,249 2,007, % (1,530) 422, ,853 $21.16 Class B Submarket Statistics Year-End 2009 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport/International Ctr 33 1,578, , , % 29,623 40,500 39,500 $10.50 Cache County ,008 16,324 16, % 19, $12.73 CBD 53 4,180, , , % 5, $24.45 CBD/Periphery 127 4,478, , , % 95,895 49,887 0 $17.88 Central Valley 56 2,104, , , % 64, $18.18 Central Valley East 201 4,131, , , % 44, $15.35 Central Valley West ,772 52,272 61, % 203, ,000 0 $12.90 Cottonwood 63 1,534,640 83,814 83, % 55, $15.06 Davis/Weber Counties 367 6,259, , , % 17,087 46,604 10,000 $16.25 Draper 80 1,709, , , % 98,790 17,233 12,000 $19.04 Foothill Corridor ,570 11,368 11, % (2,264) 0 0 $16.90 Interchange ,436 83,214 83, % (16,604) 0 0 $9.47 Juab County % $ Morgan County 1 16, % $12.00 Northeast Avenues 7 213, % $16.00 Research Park 27 1,465,367 87,219 87, % 79,989 87,000 0 $ Sandy South Towne 84 1,664, , , % 159, ,000 $17.06 Southeast Valley ,813 58,972 58, % 7, $15.26 Southwest Valley 145 2,110, , , % 113,741 10,464 26,695 $16.52 Sugarhouse ,268 31,499 36, % 10, $18.54 Summit County ,547 69,553 69, % 25,918 48,200 0 $21.59 Tooele County 3 40,430 4,000 4, % (4,000) 0 0 $15.50 Union Park District 110 1,540, , , % 40, $26.21 Utah County 634 8,972, , , % 315, ,488 20,904 $14.28 West Valley/Lake Park 88 2,748,800 98,013 98, % (38,393) 0 39,000 $16.64 Totals 2,315 48,566,757 4,470,292 4,609, % 1,326, , ,099 $ THE COSTAR OFFICE REPORT 2010 COSTAR GROUP, INC.

18 FIGURES AT A GLANCE YEAR-END 2009 SALT LAKE CITY Class C Submarket Statistics Year-End 2009 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport/International Ctr , % 8, $ Cache County ,049 23,300 23, % (8,826) 0 0 $10.69 CBD , , , % (62,514) 0 0 $21.50 CBD/Periphery 242 1,810, , , % (46,399) 0 0 $10.33 Central Valley ,988 52,677 52, % (22,880) 0 0 $8.35 Central Valley East 179 1,267, , , % (36,167) 0 0 $11.69 Central Valley West ,937 55,821 55, % 6, $12.15 Cottonwood 12 73, % 4, $11.00 Davis/Weber Counties 260 2,347, , , % 21, $10.54 Draper 25 97,489 1,500 1, % $10.50 Foothill Corridor 16 72, % 1, $ Interchange ,909 54,932 54, % (77) 0 0 $6.75 Juab County 1 18, % $ Morgan County 2 10,178 2,640 2, % (2,640) 0 0 $ Northeast Avenues 9 50,433 2,554 2, % $14.87 Research Park 2 10, % $ Sandy South Towne 6 64,882 6,596 6, % 1, $ Southeast Valley 6 65,221 2,786 2, % (1,260) 0 0 $ Southwest Valley 17 95, % 4, $9.75 Sugarhouse ,562 26,938 26, % 1, $14.99 Summit County 10 66,367 2,722 5, % (5,684) 0 0 $ Tooele County 7 44, % $ Union Park District ,052 17,620 17, % (200) 0 0 $12.00 Utah County , , , % 4, $12.42 West Valley/Lake Park ,781 9,317 9, % 12, $25.50 Totals 1,385 10,955,276 1,041,772 1,048, % (119,156) 0 0 $11.27 Total Office Submarket Statistics Year-End 2009 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport/International Ctr 51 2,408, , , % 37,723 40,500 39,500 $10.50 Cache County ,057 39,624 39, % 10, $12.24 CBD 75 7,688,375 1,062,474 1,076, % (50,031) 422,000 0 $22.27 CBD/Periphery 376 7,566, , , % 39,087 49,887 0 $15.71 Central Valley 80 2,724, , , % 28, ,134 $18.45 Central Valley East 390 6,155, , , % 14, $14.51 Central Valley West 88 1,153, , , % 218, ,000 0 $12.55 Cottonwood 93 3,620, , , % (32,493) 0 0 $21.71 Davis/Weber Counties 638 9,171, , , % 38,432 46,604 70,000 $14.10 Draper 110 2,166, , , % 99,134 17,233 12,000 $18.96 Foothill Corridor ,743 11,368 11, % (860) 0 0 $16.90 Interchange 171 1,633, , , % (16,681) 0 0 $8.93 Juab County 1 18, % $ Morgan County 3 27,030 2,640 2, % (2,640) 0 0 $12.00 Northeast Avenues ,129 2,554 2, % $15.55 Research Park 33 2,015,103 93,785 93, % 79,989 87,000 0 $ Sandy South Towne 104 3,310, , , % 154, ,626 $19.57 Southeast Valley ,664 61,758 61, % 6, $15.26 Southwest Valley 173 3,836, , , % 101,893 10,464 26,695 $18.31 Sugarhouse 92 1,107,830 84,933 89, % (14,648) 0 0 $17.88 Summit County ,914 72,275 75, % 20,234 48,200 0 $21.59 Tooele County 10 85,006 4,000 4, % (4,000) 0 0 $15.50 Union Park District 158 2,220, , , % 34, ,000 $25.68 Utah County ,459,563 1,289,674 1,327, % 438, , ,997 $14.84 West Valley/Lake Park 148 4,744, , , % 3, ,000 $19.01 Totals 3,852 76,570,256 7,416,313 7,664, % 1,205,699 1,253, ,952 $ COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 13

19 SALT LAKE CITY YEAR-END 2009 FIGURES AT A GLANCE Class A Market Statistics Year-End 2009 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 11 3,135, , , % 6, ,000 0 $21.27 Suburban ,912,983 1,413,826 1,507, % (8,339) 0 577,853 $21.14 Totals ,048,223 1,904,249 2,007, % (1,530) 422, ,853 $21.16 Class B Market Statistics Year-End 2009 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 53 4,180, , , % 5, $24.45 Suburban 2,262 44,386,612 4,002,276 4,136, % 1,320, , ,099 $16.43 Totals 2,315 48,566,757 4,470,292 4,609, % 1,326, , ,099 $16.64 Class C Market Statistics Year-End 2009 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD , , , % (62,514) 0 0 $21.50 Suburban 1,374 10,582, , , % (56,642) 0 0 $11.19 Totals 1,385 10,955,276 1,041,772 1,048, % (119,156) 0 0 $11.27 Class A & B Market Statistics Year-End 2009 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 64 7,315, , , % 12, ,000 0 $22.29 Suburban 2,403 58,299,595 5,416,102 5,644, % 1,312, , ,952 $17.50 Totals 2,467 65,614,980 6,374,541 6,616, % 1,324,855 1,253, ,952 $17.80 Total Office Market Statistics Year-End 2009 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 75 7,688,375 1,062,474 1,076, % (50,031) 422,000 0 $22.27 Suburban 3,777 68,881,881 6,353,839 6,588, % 1,255, , ,952 $16.65 Totals 3,852 76,570,256 7,416,313 7,664, % 1,205,699 1,253, ,952 $ THE COSTAR OFFICE REPORT 2010 COSTAR GROUP, INC.

20 FIGURES AT A GLANCE YEAR-END 2009 SALT LAKE CITY Class A Market Statistics Year-End 2009 Net Deliveries UC Inventory Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates q ,048,223 1,904,249 2,007, % (56,952) 1 422, ,853 $ ,626,223 1,417,620 1,528, % (95,001) ,227 $ q ,626,223 1,394,521 1,433, % 79, ,227 $ q ,626,223 1,462,564 1,512, % 70, ,227 $ q ,626,223 1,524,177 1,583, % 214, , ,093 $ ,994,503 1,131,121 1,166, % 309, , ,190,813 $ q ,627,503 1,078,556 1,109, % 242, , ,420,720 $ q ,466,656 1,171,554 1,191, % 218, , ,159,567 $ q ,266,081 1,157,195 1,210, % 368, , ,303,757 $ ,592, , , % 45, , ,935,372 $ q ,442, , , % 398, , ,663,934 $ q ,962, , , % 88, , ,446,504 $ q ,936, , , % 603, , ,235,066 $ ,761,930 1,142,474 1,209, % 145, , ,095,755 $ q ,393, , , % 127, , ,363,982 $ q ,314, ,671 1,036, % 46, , ,106,965 $19.13 Quoted Class B Market Statistics Year-End 2009 Net Deliveries Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates q 2,315 48,566,757 4,470,292 4,609, % 547, , ,099 $ ,310 48,188,249 4,642,227 4,778, % 60, , ,008 $ q 2,307 48,128,531 4,645,772 4,779, % 382, , ,726 $ q 2,297 47,898,723 4,777,507 4,932, % 335, , ,734 $ q 2,286 47,735,381 4,950,461 5,104, % (124,041) , ,416 $ ,272 47,279,771 4,369,700 4,524, % (198,239) , ,086,260 $ q 2,260 46,896,360 3,826,217 3,943, % 176, , ,103,587 $ q 2,251 46,756,448 3,890,902 3,979, % 50, , ,028,093 $ q 2,238 46,561,520 3,694,833 3,835, % 414, , ,002,623 $ ,228 46,328,043 3,805,064 4,016, % 401, , ,033,648 $ q 2,217 46,014,907 3,863,380 4,104, % 302, , ,118,318 $ q 2,207 45,854,350 4,074,590 4,246, % (70,651) , ,545 $ q 2,186 45,550,649 3,604,439 3,872, % 24, , ,818 $ ,179 45,387,998 3,554,197 3,733, % 220, , ,638 $ q 2,170 45,234,156 3,613,042 3,800, % (43,905) 4 31, ,076 $ q 2,166 45,202,418 3,601,186 3,724, % (230,559) , ,222 $14.56 UC Inventory Quoted Total Office Market Statistics Year-End 2009 Net Deliveries UC Inventory Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates q 3,852 76,570,256 7,416,313 7,664, % 542, , ,952 $ ,846 75,769,748 7,156,500 7,406, % (88,328) 3 59, ,500,235 $ q 3,843 75,710,030 7,080,595 7,258, % 395, , ,559,953 $ q 3,833 75,480,222 7,214,753 7,424, % 355, , ,622,961 $ q 3,822 75,316,880 7,390,263 7,617, % 21, ,087, ,523,509 $ ,802 74,229,550 6,334,035 6,550, % 26, , ,277,073 $ q 3,787 73,485,299 5,671,260 5,833, % 463, , ,524,307 $ q 3,774 73,184,540 5,875,495 5,996, % 259, , ,187,660 $ q 3,757 72,789,037 5,654,889 5,860, % 931, , ,306,380 $ ,740 71,881,945 5,580,727 5,884, % 391, , ,969,020 $ q 3,728 71,418,809 5,473,568 5,812, % 800, , ,782,252 $ q 3,714 70,778,273 5,685,430 5,973, % (35,800) , ,346,049 $ q 3,692 70,448,888 5,251,456 5,607, % 704, , ,136,884 $ ,683 70,111,364 5,711,902 5,974, % 553, , ,002,393 $ q 3,671 69,589,316 5,706,834 6,005, % 144, , ,115,058 $ q 3,665 69,478,692 5,714,442 6,040, % (227,347) , ,447,187 $14.67 Quoted 2010 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 15