CoStar Office Statistics. T h i r d Q u a r t e r Phoenix Office Market

Transcription

1 CoStar Office Statistics T h i r d Q u a r t e r

2 Third Quarter 2017 Phoenix Table of Contents Table of Contents A Methodology B Terms & Definitions C Market Highlights & Overview CoStar Markets & Submarkets Inventory & Development 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 Sales Activity Analysis Sales Activity Analysis Select Top Sales Transactions Analysis of Individual CoStar Submarket Clusters Airport Area Market Central Corridor Market East Phoenix Market East Valley Market North Phoenix Market Northwest Phoenix Market Scottsdale Market West Phoenix Market 2017 CoStar Group, Inc. CoStar Office Statistics A

3 Phoenix Third Quarter 2017 Methodology The CoStar Office Statistics, 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 global database includes approximately 95.6 billion square feet of coverage in 4.4 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 2017 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 L ST NW Washington, DC (800) NASDAQ: CSGP B CoStar Office Statistics 2017 CoStar Group, Inc.

4 Third Quarter 2017 Phoenix 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-ofa-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 building-type 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) 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 2017 CoStar Group, Inc. CoStar Office Statistics C

5 Phoenix Third Quarter 2017 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: Buildings in a state of construction, up until they receive their certificate of occupancy. In order for CoStar to consider a building under construction, the site must have a concrete foundation in place. Abbreviated UC. 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 CoStar Office Statistics 2017 CoStar Group, Inc.

6 Overview Third Quarter 2017 Phoenix Phoenix s Decreases to 15.0% Net Absorption Positive 139,652 SF in the Quarter The Phoenix Office market ended the third quarter 2017 with a vacancy rate of 15.0%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 139,652 square feet in the third quarter. Vacant sublease space decreased in the quarter, ending the quarter at 1,353,620 square feet. Rental rates ended the third quarter at $24.09, an increase over the previous quarter. A total of four buildings delivered to the market in the quarter totaling 37,408 square feet, with 1,504,676 square feet still under construction at the end of the quarter. Absorption Net absorption for the overall Phoenix office market was positive 139,652 square feet in the third quarter That compares to positive 594,437 square feet in the second quarter 2017, positive 824,987 square feet in the first quarter 2017, and positive 615,662 square feet in the fourth quarter The Class-A office market recorded net absorption of positive 215,024 square feet in the third quarter 2017, compared to positive 103,858 square feet in the second quarter 2017, positive 898,231 in the first quarter 2017, and positive 461,750 in the fourth quarter The Class-B office market recorded net absorption of positive 69,514 square feet in the third quarter 2017, compared to positive 461,210 square feet in the second quarter 2017, positive 58,484 in the first quarter 2017, and positive 55,157 in the fourth quarter The Class-C office market recorded net absorption of negative (144,886) square feet in the third quarter 2017 compared to positive 29,369 square feet in the second quarter 2017, negative (131,728) in the first quarter 2017, and positive 98,755 in the fourth quarter Net absorption for Phoenix s central business district was negative (12,350) square feet in the third quarter That compares to positive 66,528 square feet in the second quarter 2017, negative (99,136) in the first quarter 2017, and negative (64,560) in the fourth quarter Net absorption for the suburban markets was positive 152,002 square feet in the third quarter That compares to positive 527,909 square feet in second quarter 2017, positive 924,123 in the first quarter 2017, and positive 680,222 in the fourth quarter The office vacancy rate in the Phoenix market area decreased to 15.0% at the end of the third quarter The vacancy rate was 15.1% at the end of the second quarter 2017, 15.2% at the end of the first quarter 2017, and 15.3% at the end of the fourth quarter Class-A projects reported a vacancy rate of 13.8% at the end of the third quarter 2017, 14.2% at the end of the second quarter 2017, 14.3% at the end of the first quarter 2017, and 14.7% at the end of the fourth quarter Class-B projects reported a vacancy rate of 16.3% at the end of the third quarter 2017, 16.3% at the end of the second quarter 2017, 16.6% at the end of the first quarter 2017, and 16.6% at the end of the fourth quarter Class-C projects reported a vacancy rate of 11.6% at the end of the third quarter 2017, 11.2% at the end of second quarter 2017, 11.3% at the end of the first quarter 2017, and 10.9% at the end of the fourth quarter The overall vacancy rate in Phoenix s central business district at the end of the third quarter 2017 decreased to 17.5%. The vacancy rate was 17.6% at the end of the second quarter Rates by Class A B C Total Market 30% 25% Rate 20% 15% 10% 5% 0% q2000 1q2001 1q2002 1q2003 1q2004 1q2005 1q2006 1q2007 1q2008 1q2009 1q2010 1q q2012 1q2013 1q2014 1q2015 1q2016 1q2017 1q 2017 CoStar Group, Inc. CoStar Office Statistics 1

7 Phoenix Third Quarter 2017 Overview 2017, 18.0% at the end of the first quarter 2017, and 17.7% at the end of the fourth quarter The vacancy rate in the suburban markets changed to 14.6% in the third quarter The vacancy rate was 14.6% at the end of the second quarter 2017, 14.8% at the end of the first quarter 2017, and 14.9% at the end of the fourth quarter Largest Lease Signings The largest lease signings occurring in 2017 included: the 300,000-square-foot lease signed by Freedom Financial at 2100 E Rio Salado Pky - RIO 2100 in the East Valley market; the 173,055-square-foot deal signed by MUFG Union Bank at 1101 W Washington St - The Grand at Papago Park Center - Phase I in the East Valley market; and the 163,607-square-foot lease signed by Consumer Cellular at N Black Canyon Hwy in the Northwest Phoenix market. Sublease The amount of vacant sublease space in the Phoenix market decreased to 1,353,620 square feet by the end of the third quarter 2017, from 1,373,195 square feet at the end of the second quarter There was 1,249,513 square feet vacant at the end of the first quarter 2017 and 1,261,368 square feet at the end of the fourth quarter Phoenix s Class-A projects reported vacant sublease space of 394,170 square feet at the end of third quarter 2017, up from the 392,972 square feet reported at the end of the second quarter There were 493,523 square feet of sublease space vacant at the end of the first quarter 2017, and 436,298 square feet at the end of the fourth quarter Class-B projects reported vacant sublease space of 927,458 square feet at the end of the third quarter 2017, down from the 949,236 square feet reported at the end of the second quarter At the end of the first quarter 2017 there were 735,693 square feet, and at the end of the fourth quarter 2016 there were 808,182 square feet vacant. U.S. Comparison Past 9 Quarters Rate 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Phoenix United States q q q q q Class-C projects reported increased vacant sublease space from the second quarter 2017 to the third quarter Sublease vacancy went from 30,987 square feet to 31,992 square feet during that time. There was 20,297 square feet at the end of the first quarter 2017, and 16,888 square feet at the end of the fourth quarter Sublease vacancy in Phoenix s central business district stood at 138,475 square feet at the end of the third quarter It was 115,295 square feet at the end of the second quarter 2017, 169,008 square feet at the end of the first quarter 2017, and 174,293 square feet at the end of the fourth quarter Sublease vacancy in the suburban markets ended the third quarter 2017 at 1,215,145 square feet. At the end of the second quarter 2017 sublease vacancy was 1,257,900 square feet, was 1,080,505 square feet at the end of the first quarter 2017, and was 1,087,075 square feet at the end of the fourth quarter Rental Rates The average quoted asking rental rate for available office space, all classes, was $24.09 per square foot per year at the end of the third quarter 2017 in the Phoenix market area. This represented a 1.1% increase in quoted rental rates from the end of the second quarter 2017, when rents were reported at $23.83 per square foot. The average quoted rate within the Class-A sector was $28.85 at the end of the third quarter 2017, while Class-B rates stood at $22.58, and Class-C rates at $ At the end of the second quarter 2017, Class-A rates were $28.39 per square foot, Class-B rates were $22.39, and Class-C rates were $ The average quoted asking rental rate in Phoenix s CBD was $24.30 at the end of the third quarter 2017, and $24.06 in the suburban markets. In the second quarter 2017, quoted rates were $24.03 in the CBD and $23.80 in the suburbs. Deliveries and Construction During the third quarter 2017, four buildings totaling 37,408 square feet were completed in the Phoenix market area. This compares to 10 buildings totaling 360,905 square feet that were completed in the second quarter 2017, nine buildings totaling 1,238,029 square feet completed in the first quarter 2017, and 534,663 square feet in 10 buildings completed in the fourth quarter There were 1,504,676 square feet of office space under construction at the end of the third quarter Some of the notable 2017 deliveries include: 600 E Rio Salado Pky - State Farm Bldg E, a 443,000-square-foot facility that delivered in first quarter 2017 and is now 99% occupied, and 2701 E Ryan Rd - The HUB Chandler, a squarefoot building that delivered in first quarter 2017 and is now 0% occupied. The largest projects underway at the end of third quarter 2017 were 410 N Scottsdale Rd - The Watermark, a 273,306-2 CoStar Office Statistics 2017 CoStar Group, Inc.

8 Overview Third Quarter 2017 Phoenix square-foot building with 0% of its space pre-leased, and 1870 W Rio Salado Pky - Liberty Center at Rio Salado, a 235,000- square-foot facility that is 100% pre-leased. Inventory Total office inventory in the Phoenix market area amounted to 172,964,725 square feet in 8,286 buildings as of the end of the third quarter The Class-A office sector consisted of 48,914,108 square feet in 305 projects. There were 4,595 Class- B buildings totaling 101,172,327 square feet, and the Class-C sector consisted of 22,878,290 square feet in 3,386 buildings. Within the Office market there were 813 owner-occupied buildings accounting for 17,280,156 square feet of office space. Sales Activity Tallying office building sales of 15,000 square feet or larger, Phoenix office sales figures rose during the second quarter 2017 in terms of dollar volume compared to the first quarter of In the second quarter, 27 office transactions closed with a total volume of $430,280,500. The 27 buildings totaled 2,400,402 square feet and the average price per square foot equated to $ per square foot. That compares to 34 transactions totaling $387,745,897 in the first quarter The total square footage in the first quarter was 2,547,533 square feet for an average price per square foot of $ Total office building sales activity in 2017 was up compared to In the first six months of 2017, the market saw 61 office sales transactions with a total volume of $818,026,397. The price per square foot averaged $ In the same first six months of 2016, the market posted 68 transactions with a total volume of $656,529,678. The price per square foot averaged $ Cap rates have been lower in 2017, averaging 7.70% compared to the same period in 2016 when they averaged 7.71%. One of the largest transactions that has occurred within the last four quarters in the Phoenix market is the sale of Galleria Corporate Centre in Scottsdale. This 538,074-squarefoot, two-building office park sold for $142,500,000, or $ per square foot. The property sold on 3/7/2017. Absorption & Deliveries Past 9 Quarters Net Absorption Deliveries q q q q q Reports compiled by: Adam Jarrett, CoStar Senior Research Manager CoStar Group, Inc. CoStar Office Statistics 3

9 Phoenix Third Quarter 2017 Markets CoStar Submarket Clusters & Submarkets In analyzing metropolitan areas, CoStar has developed geographic designations to help group properties together, called Markets, Submarket Clusters and Submarkets. Markets 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. Markets are then divided into Submarket Clusters, 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. Submarket Clusters Airport Area Central Corridor East Phoenix East Valley North Phoenix Northwest Phoenix Scottsdale West Phoenix Submarkets Airport Area South Tempe/Ahwatukee Downtown* Midtown* 44th Street Corridor Camelback Corridor Midtown*/Central Phoenix Chandler Gateway Airport/Loop 202 Mesa Downtown* Mesa East Superstition Corridor Tempe N Phoenix/Cave Creek Paradise Valley Piestewa Peak Corridor Arrowhead Deer Valley/Airport North I-17 Northwest Phoenix Central Scottsdale N Scottsdale/Carefree Scottsdale Airpark Scottsdale South Glendale Loop 303/Surprise Southwest Phoenix West I-10 * Submarkets comprising the CBD. For statistics reference the CBD vs Suburban Figures at a Glance Page. 4 CoStar Office Statistics 2017 CoStar Group, Inc.

10 Inventory & development Third Quarter 2017 Phoenix Historical Deliveries Deliveries Average Delivered SF 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 East Valley 8 631, , % 16,409 78,973 Scottsdale 2 271, , % 20, ,500 Airport Area 1 235, , % 35, ,000 West Phoenix 2 169,000 55, % 15,994 84,500 East Phoenix 1 118, % 21, ,090 Central Corridor 2 51,486 51, % 42,312 25,743 North Phoenix 2 20,565 20, % 17,248 10,282 Northwest Phoenix 2 7,750 3, % 17,871 3,875 Totals 20 1,504, , % 20,874 75,234 Recent Deliveries Leased & Un-Leased SF in Deliveries Since 2013 Future Deliveries Preleased & Un-Leased SF in Properties Scheduled to Deliver 3.5 Leased Un-Leased 600 Preleased Un-Leased Millions of SF Thousands of SF T q q 2017 CoStar Group, Inc. CoStar Office Statistics 5

11 Phoenix Third Quarter 2017 Inventory & development Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction Construction Starts 1.59 Deliveries Millions of SF 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 ,971 83, % $ , ,857 50,000 SF - 99,999 SF 2 149,889 60, % $ ,000 89, ,000 SF - 249,999 SF 4 615, , % $ , , ,000 SF - 499,999 SF 2 736, , % $ , ,785 >= 500,000 SF % $ Recent Development by Tenancy Comparison Based on RBA Developed for Single & Multi Tenant Use Based on Total RBA 2017 Deliveries Currently Under Construction By Class By Space Type 42% 58% 37% 63% 59% 13% 28% 23% 77% Multi Single Multi Single Class A Class B Class C Multi Single 6 CoStar Office Statistics 2017 CoStar Group, Inc.

12 Inventory & development Third Quarter 2017 Phoenix 2017 CoStar Group, Inc. CoStar Office Statistics 7

13 Phoenix Third Quarter 2017 Inventory & development 8 CoStar Office Statistics 2017 CoStar Group, Inc.

14 Figures at a Glance Third Quarter 2017 Phoenix Class A Market Statistics Third Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Area 21 2,808, , , % 189, ,000 $26.56 Central Corridor 26 9,666,310 1,740,636 1,859, % (51,689) 0 0 $27.23 East Phoenix 39 6,506,813 1,168,961 1,260, % 42, ,090 $32.80 East Valley 53 9,200, , , % 665, , ,847 $30.88 North Phoenix 17 1,819, , , % 22, $27.82 Northwest Phoenix 36 5,502, , , % 225, ,000 0 $23.97 Scottsdale ,403,918 1,246,882 1,360, % 136, ,000 $29.01 West Phoenix 12 2,005, , , % (13,452) 0 0 $26.42 Totals ,914,108 6,333,872 6,728, % 1,217, ,055 1,243,937 $28.85 Class B Market Statistics Third Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Area ,568,878 2,344,512 2,952, % (192,051) 89,889 0 $22.90 Central Corridor ,774,304 1,897,300 1,909, % 25, ,486 $22.29 East Phoenix 288 8,383,088 1,240,744 1,260, % (41,179) 0 0 $22.25 East Valley 1,391 22,155,997 2,883,556 2,996, % 741, ,068 11,938 $22.45 North Phoenix 245 4,988, , , % (21,505) 9,230 20,565 $20.91 Northwest Phoenix ,264,150 3,550,781 3,570, % (102,766) 18,400 7,750 $20.78 Scottsdale ,392,056 2,041,315 2,150, % 83,461 2,500 0 $25.02 West Phoenix 393 6,644, , , % 96,928 42, ,000 $24.24 Totals 4, ,172,327 15,573,429 16,500, % 589, , ,739 $22.58 Class C Market Statistics Third Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Area 91 1,169, , , % (106,217) 0 0 $23.56 Central Corridor 339 2,957, , , % (18,271) 0 0 $17.84 East Phoenix 531 3,251, , , % (12,004) 0 0 $16.22 East Valley 762 4,841, , , % 1, $16.07 North Phoenix 214 1,401, , , % (30,772) 0 0 $18.45 Northwest Phoenix 730 4,843, , , % (7,069) 0 0 $14.88 Scottsdale 461 2,460, , , % (14,818) 0 0 $21.54 West Phoenix 258 1,953, , , % (59,667) 0 0 $16.06 Totals 3,386 22,878,290 2,630,413 2,662, % (247,245) 0 0 $17.16 Total Office Market Statistics Third Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Area ,546,676 2,997,710 3,605, % (108,662) 89, ,000 $23.56 Central Corridor ,398,449 3,962,386 4,100, % (44,958) 0 51,486 $24.30 East Phoenix ,141,457 2,636,750 2,757, % (10,544) 0 118,090 $26.82 East Valley 2,206 36,197,962 4,227,668 4,372, % 1,408,398 1,324, ,785 $24.01 North Phoenix 476 8,209,820 1,149,441 1,198, % (29,450) 9,230 20,565 $22.70 Northwest Phoenix 1,545 27,610,395 4,758,086 4,785, % 115, ,400 7,750 $20.62 Scottsdale 1,465 30,255,988 3,514,055 3,748, % 205,317 2, ,000 $26.71 West Phoenix ,603,978 1,291,618 1,322, % 23,809 42, ,000 $22.66 Totals 8, ,964,725 24,537,714 25,891, % 1,559,076 1,636,342 1,504,676 $ CoStar Group, Inc. CoStar Office Statistics 9

15 Phoenix Third Quarter 2017 Figures at a Glance Class A Submarket Statistics Third Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 44th Street Corridor 13 1,716, , , % 6, $26.79 Airport Area 15 2,032, , , % 183, ,000 $26.55 Arrowhead 2 187,352 35,515 35, % (35,515) 0 0 $27.89 Camelback Corridor 26 4,790, , , % 35, ,090 $34.71 Central Scottsdale 28 2,668, , , % 151, $26.83 Chandler 21 2,673, , , % 172,666 60, ,310 $27.65 Deer Valley/Airport 24 4,022, , , % 226, ,000 0 $26.29 Downtown 12 5,090, , , % (54,365) 0 0 $30.41 Gateway Airport/Loop. 1 46,732 4,808 4, % 7, ,231 $29.66 Glendale 5 521,061 60,347 60, % (22,153) 0 0 $27.21 Loop 303/Surprise 1 390, % $0.00 Mesa Downtown % $0.00 Mesa East % $0.00 Midtown 14 4,575,909 1,022,295 1,043, % 2, $24.77 Midtown/Central Phoe % $0.00 N Phoenix/Cave Creek % $0.00 N Scottsdale/Carefre % $0.00 North I % $0.00 Northwest Phoenix 10 1,293, , , % 33, $22.54 Paradise Valley 14 1,410, , , % 21, $27.86 Piestewa Peak Corrid ,370 13,776 33, % $27.56 Scottsdale Airpark 57 6,603, , , % 70, $28.96 Scottsdale South 16 2,131, , , % (85,917) 0 271,000 $31.53 South Tempe/Ahwatuke ,034 13,969 13, % 6, $26.99 Southwest Phoenix 6 1,093, , , % 8, $26.00 Superstition Corrido , , , % (23,767) 0 0 $23.33 Tempe 26 5,815, , , % 509, , ,306 $34.46 West I % $0.00 Totals ,914,108 6,333,872 6,728, % 1,217, ,055 1,243,937 $ CoStar Office Statistics 2017 CoStar Group, Inc.

16 Figures at a Glance Third Quarter 2017 Phoenix Class B Submarket Statistics Third Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 44th Street Corridor 53 1,676, , , % (66,216) 0 0 $23.62 Airport Area 155 8,484,024 1,452,437 2,043, % (169,506) 89,889 0 $22.83 Arrowhead 298 3,521, , , % 4,684 16,000 7,750 $24.16 Camelback Corridor 104 3,590, , , % (4,326) 0 0 $24.08 Central Scottsdale 284 5,629, , , % 62, $23.71 Chandler 390 7,204,317 1,209,860 1,265, % 392, ,264 11,938 $23.51 Deer Valley/Airport 207 7,567,263 1,527,864 1,529, % (70,254) 0 0 $22.50 Downtown 65 4,125, , , % 67, ,174 $28.82 Gateway Airport/Loop ,467, , , % 58,794 15,162 0 $24.45 Glendale 102 1,990, , , % 60,655 16, ,000 $24.44 Loop 303/Surprise 129 1,821, , , % 33,952 26,200 0 $23.36 Mesa Downtown ,228 26,794 26, % 5, $15.33 Mesa East 218 2,209, , , % 20, $17.99 Midtown 123 6,648,675 1,505,885 1,517, % (42,533) 0 25,312 $20.46 Midtown/Central Phoe ,116, , , % 29, $19.52 N Phoenix/Cave Creek 11 99,621 8,835 8, % 4, ,400 $19.51 N Scottsdale/Carefre ,636, , , % 33,814 2,500 0 $20.73 North I , , , % (5,137) 0 0 $24.36 Northwest Phoenix 218 5,431,702 1,485,137 1,485, % (32,059) 2,400 0 $18.10 Paradise Valley 154 2,544, , , % (43,147) 9,230 16,165 $21.18 Piestewa Peak Corrid. 80 2,345, , , % 16, $20.81 Scottsdale Airpark 307 6,075, , , % 14, $24.14 Scottsdale South 156 3,051, , , % (27,224) 0 0 $28.68 South Tempe/Ahwatuke ,084, , , % (22,545) 0 0 $23.04 Southwest Phoenix 54 1,248,852 41,161 41, % (3,136) 0 44,000 $27.50 Superstition Corrido ,852, , , % 196, $19.39 Tempe 158 4,691, , , % 68, ,642 0 $24.52 West I ,583, , , % 5, $23.80 Totals 4, ,172,327 15,573,429 16,500, % 589, , ,739 $ CoStar Group, Inc. CoStar Office Statistics 11

17 Phoenix Third Quarter 2017 Figures at a Glance Class C Submarket Statistics Third Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 44th Street Corridor ,473 28,815 28, % (325) 0 0 $13.79 Airport Area ,732 45,140 45, % 15, $19.38 Arrowhead , , , % (5,826) 0 0 $19.35 Camelback Corridor ,870 32,116 32, % (3,776) 0 0 $19.02 Central Scottsdale ,682 10,964 17, % (13,076) 0 0 $16.51 Chandler ,311 52,284 52, % (10,414) 0 0 $18.87 Deer Valley/Airport ,072 32,633 32, % 3, $15.72 Downtown 96 1,279, , , % (31,101) 0 0 $27.34 Gateway Airport/Loop ,307 3,490 3, % $21.20 Glendale ,920 56,372 56, % 7, $15.04 Loop 303/Surprise ,974 10,467 10, % (5,529) 0 0 $15.08 Mesa Downtown ,385 84,209 85, % 17, $13.25 Mesa East 207 1,293, , , % 3, $15.80 Midtown 243 1,677, , , % 12, $15.86 Midtown/Central Phoe ,026, , , % (7,903) 0 0 $16.16 N Phoenix/Cave Creek 5 20, % $0.00 N Scottsdale/Carefre ,655 31,003 31, % (4,802) 0 0 $18.03 North I , % $0.00 Northwest Phoenix 607 3,944, , , % (5,186) 0 0 $13.53 Paradise Valley ,576 92,180 92, % (16,075) 0 0 $17.39 Piestewa Peak Corrid ,646 45,161 45, % (14,697) 0 0 $20.26 Scottsdale Airpark ,873 11,885 11, % 5, $17.09 Scottsdale South 331 1,612, , , % (2,525) 0 0 $22.81 South Tempe/Ahwatuke , , , % (122,135) 0 0 $24.69 Southwest Phoenix , , , % (8,936) 0 0 $15.99 Superstition Corrido ,791 88,558 88, % (5,188) 0 0 $13.07 Tempe 212 1,583, , , % (5,048) 0 0 $17.61 West I ,291 95,183 95, % (52,873) 0 0 $16.52 Totals 3,386 22,878,290 2,630,413 2,662, % (247,245) 0 0 $ CoStar Office Statistics 2017 CoStar Group, Inc.

18 Figures at a Glance Third Quarter 2017 Phoenix Total Office Submarket Statistics Third Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 44th Street Corridor 143 3,948, , , % (59,790) 0 0 $24.86 Airport Area ,189,496 1,931,982 2,522, % 29,494 89, ,000 $23.67 Arrowhead 371 4,238, , , % (36,657) 16,000 7,750 $23.42 Camelback Corridor 222 9,050,155 1,487,936 1,591, % 27, ,090 $30.82 Central Scottsdale 387 8,717, , , % 201, $24.91 Chandler ,344,372 1,525,976 1,581, % 554, , ,248 $24.35 Deer Valley/Airport ,955,401 1,781,381 1,790, % 160, ,000 0 $23.16 Downtown ,495,915 1,292,280 1,397, % (17,931) 0 26,174 $29.78 Gateway Airport/Loop ,586, , , % 67,364 15,162 43,231 $24.70 Glendale 188 3,128, , , % 46,173 16, ,000 $24.18 Loop 303/Surprise 151 2,372, , , % 28,423 26,200 0 $22.87 Mesa Downtown 208 1,491, , , % 23, $13.95 Mesa East 425 3,503, , , % 23, $16.98 Midtown ,902,534 2,670,106 2,703, % (27,027) 0 25,312 $21.78 Midtown/Central Phoe ,142, , , % 21, $18.69 N Phoenix/Cave Creek ,658 8,835 8, % 4, ,400 $19.51 N Scottsdale/Carefre ,871, , , % 29,012 2,500 0 $20.44 North I , , , % (5,137) 0 0 $24.36 Northwest Phoenix ,669,712 2,294,532 2,295, % (3,592) 2,400 0 $18.26 Paradise Valley 260 4,637, , , % (37,391) 9,230 16,165 $23.98 Piestewa Peak Corrid ,453, , , % 3, $21.39 Scottsdale Airpark ,871,048 1,343,573 1,442, % 90, $26.97 Scottsdale South 503 6,795, ,653 1,023, % (115,666) 0 271,000 $28.97 South Tempe/Ahwatuke ,357,180 1,065,728 1,082, % (138,156) 0 0 $23.32 Southwest Phoenix 177 3,155, , , % (3,371) 0 44,000 $22.46 Superstition Corrido ,181, , , % 167, $19.73 Tempe ,091,174 1,216,313 1,272, % 571, , ,306 $28.50 West I ,947, , , % (47,416) 0 0 $20.34 Totals 8, ,964,725 24,537,714 25,891, % 1,559,076 1,636,342 1,504,676 $ CoStar Group, Inc. CoStar Office Statistics 13

19 Phoenix Third Quarter 2017 Figures at a Glance Class A Market Statistics Third Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 26 9,666,310 1,740,636 1,859, % (51,689) 0 0 $27.23 Suburban ,247,798 4,593,236 4,868, % 1,268, ,055 1,243,937 $29.24 Totals ,914,108 6,333,872 6,728, % 1,217, ,055 1,243,937 $28.85 Class B Market Statistics Third Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD ,774,304 1,897,300 1,909, % 25, ,486 $22.29 Suburban 4,407 90,398,023 13,676,129 14,591, % 564, , ,253 $22.61 Totals 4, ,172,327 15,573,429 16,500, % 589, , ,739 $22.58 Class C Market Statistics Third Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 339 2,957, , , % (18,271) 0 0 $17.84 Suburban 3,047 19,920,455 2,305,963 2,330, % (228,974) 0 0 $17.10 Totals 3,386 22,878,290 2,630,413 2,662, % (247,245) 0 0 $17.16 Class A & B Market Statistics Third Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD ,440,614 3,637,936 3,768, % (26,687) 0 51,486 $24.65 Suburban 4, ,645,821 18,269,365 19,460, % 1,833,008 1,636,342 1,453,190 $24.73 Totals 4, ,086,435 21,907,301 23,228, % 1,806,321 1,636,342 1,504,676 $24.72 Total Office Market Statistics Third Quarter 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD ,398,449 3,962,386 4,100, % (44,958) 0 51,486 $24.30 Suburban 7, ,566,276 20,575,328 21,790, % 1,604,034 1,636,342 1,453,190 $24.06 Totals 8, ,964,725 24,537,714 25,891, % 1,559,076 1,636,342 1,504,676 $ CoStar Office Statistics 2017 CoStar Group, Inc.

20 Figures at a Glance Third Quarter 2017 Phoenix 2017 CoStar Group, Inc. CoStar Office Statistics 15

21 Phoenix Third Quarter 2017 Leasing Activity Historical Rental Rates Based on Full-Service Equivalent Rental Rates A B C Total Market $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $ q q q q q q q q q q by Available Space Type by Class Percent of All Vacant Space in Direct vs. Sublet Percent of All Vacant Space by Class Phoenix United States Phoenix United States 5% 5% 10% 13% 26% 46% 64% 41% 95% 95% Direct Sublet Direct Sublet Class A Class B Class C Class A Class B Class C U.S. Rental Rate Comparison Based on Full-Service Equivalent Rental Rates Future Space Available Space Scheduled to be Available for Occupancy* Phoenix United States $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $ q q q q q q * Includes Under Construction Spaces 16 CoStar Office Statistics 2017 CoStar Group, Inc.

22 Leasing Activity Third Quarter 2017 Phoenix Select Top Oce Leases Based on Leased Square Footage For Deals Signed in 2017 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company E Rio Salado Pky Tempe 300,000 2nd Freedom Financial JLL CBRE W Washington St Tempe 173,055 3rd MUFG Union Bank CBRE CBRE N Black Canyon Hwy Deer Valley/Airport 163,607 3rd Consumer Cellular Lee & Associates CBRE 4 1 N Central Ave Downtown 149,273 2nd Quicken Loans, Inc. Newmark Knight Frank CBRE N Central Ave* Midtown 147,983 2nd Department of Economic Security Direct Deal JLL S Price Rd Chandler 81,896 3rd Wells Fargo CBRE Cushman & Wakeeld N Priest Dr Tempe 71,618 1st Endurance International Group JLL Cushman & Wakeeld S Price Rd Chandler 66,756 1st Walgreens Call Center JLL JLL S McQueen Rd Chandler 60,000 1st Orbital ATK N/A CBRE W Frye Rd Chandler 55,000 3rd Stantec JLL CBRE N 7th Ave Deer Valley/Airport 52,097 1st NPL N/A CBRE W Peoria Ave Northwest Phoenix 51,411 2nd CSAA Insurance N/A Transwestern W Obispo Ave Chandler 51,401 1st GoDaddy.com, Inc. N/A Cushman & Wakeeld E Rio Salado Pky Tempe 49,505 3rd Varsity Tutors JLL CBRE E Washington St Downtown 42,866 3rd Uber Technologies Inc. N/A CBRE 16 2 N Central Ave Downtown 39,000 2nd Upgrade, Inc. JLL Lee & Associates N Scottsdale Rd Scottsdale South 36,503 2nd Web.com Group, Inc. N/A Lee & Associates W Washington St* Tempe 35,369 2nd Nationwide Credit N/A Cushman & Wakeeld S 5th St* Downtown 34,582 1st WebPT Direct Deal Direct Deal N Black Canyon Hwy Deer Valley/Airport 34,536 1st Paychex, Inc. The Acclaim Group LLC JLL E Hartford Dr Scottsdale Airpark 28,952 2nd SiteLock N/A Cushman & Wakeeld N Central Ave* Midtown 28,500 3rd U.S. Army Corps of Engineers Tucson Realty; Carpenter/Robbins Cushman & Wakeeld E Del Camino Central Scottsdale 28,313 3rd Nationwide Mutual Insurance Lee & Associates Lee & Associates E Hartford Dr Scottsdale Airpark 27,990 3rd North Central University N/A Cushman & Wakeeld N Scottsdale Rd Scottsdale South 27,323 3rd Benchmark Electronics JLL Cushman & Wakeeld E Camelback Rd Camelback Corridor 27,289 2nd Alliance Residential LLC N/A CBRE S 1st St Downtown 26,174 2nd Scientic Technologies Corp. Keyser CBRE N 15th St* Piestewa Peak Corridor 26,090 3rd Multi-Systems, Inc. CBRE Cushman & Wakeeld E Del Camino Central Scottsdale 26,025 2nd Nationwide Mutual Insurance N/A Lee & Associates E Missouri Ave Midtown 25,625 3rd LaneTerralever Lee & Associates CBRE W Warner Rd South Tempe/Ahwatukee 25,190 2nd CEC Educational Services N/A Cushman & Wakeeld W 4th St Airport Area 25,000 3rd CR Bard CBRE JLL W Chandler Blvd Chandler 24,983 1st RUI Management Services N/A Lee & Associates N Scottsdale Rd Scottsdale South 24,398 1st Indeed N/A JLL N Central Ave Downtown 24,233 2nd Cantor Law Group JLL Lee & Associates 36 1 N Central Ave Downtown 22,294 3rd Arizona Summit Law School Newmark Knight Frank CBRE W Peoria Ave Northwest Phoenix 21,589 3rd Convergent Outsourcing N/A CBRE E Thomas Rd Midtown 21,339 2nd Open Door Labs Colliers International CBRE N 44th St 44th Street Corridor 20,166 3rd Ortho Arizona N/A Cushman & Wakeeld N Central Ave Midtown 19,777 1st BMO Harris Bank CBRE JLL * Renewal 2017 CoStar Group, Inc. CoStar Office Statistics 17

23 Phoenix Third Quarter 2017 Sales Activity The Optimist Sales Index Average of Two Highest Price/SF's and Two Lowest Cap Rates Per Quarter 8.0% Cap Rate Price/SF $500 Cap Rate Percentage 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% $450 $400 $350 $300 $250 Dollars/SF 0.0% q q q $200 Source: CoStar COMPS Sales Volume & Price Sales Analysis by Building Size Based on Office Building Sales of 15,000 SF and Larger Based on Office Building Sales From July June 2017 $800 Sales Volume Price/SF $250 Bldg Size # RBA $ Volume Price/SF Cap Rate Millions of Sales Volume Dollars $700 $600 $500 $400 $300 $200 $200 $150 $100 $50 Price/SF < 50,000 SF 244 2,915,603 $436,467,814 $ % 50K-249K SF 250K-499K SF 46 4,583,279 $816,034,396 $ % 7 2,006,631 $340,770,000 $ % $100 $0 $0 >500K SF 1 538,074 $142,500,000 $ q q q q Source: CoStar COMPS Source: CoStar COMPS U.S. Price/SF Comparison Based on Office Building Sales of 15,000 SF and Larger U.S. Cap Rate Comparison Based on Office Building Sales of 15,000 SF and Larger $330 Phoenix US 10.0% Phoenix US Dollars per SF $280 $230 $180 $130 Cap Rate Percentage 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% $80 2.0% q q q q q q q q Source: CoStar COMPS Source: CoStar COMPS 18 CoStar Office Statistics 2017 CoStar Group, Inc.

24 Third Quarter 2017 Phoenix 2017 CoStar Group, Inc. CoStar Office Statistics 19 Sales Activity