The CoStar Office Report

Transcription

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

2 YEAR-END 2011 JACKSONVILLE Table of Contents Table of Contents A Methodology B Terms & Definitions C Market Highlights & Overview CoStar Markets Inventory & Development Analysis Construction Activity Map Inventory & Development Analysis Select Top Under Construction Properties Select Top Deliveries Figures at a Glance Figures at a Glance by Class & Market Figures at a Glance Grouped by CBD vs Suburban Historical Figures at a Glance Leasing Activity Analysis Leasing Activity Map Leasing Activity Analysis Select Top Lease Transactions Sales Activity Analysis Sales Activity Analysis Select Top Sales Transactions Select Same Building Sales Select Land Sales Analysis of Individual CoStar Markets Arlington Market Baker County Market Beaches Market Butler/Baymeadows Market Downtown Northbank Market Downtown Southbank Market Mandarin Market Northeast Jacksonville Market Northwest Jacksonville Market Orange Park/Clay County Market Riverside Market San Marco Market Southside Market St Johns County Market 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT A

3 JACKSONVILLE YEAR-END 2011 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 80.7 billion square feet of coverage in 3.5 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 2012 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 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

4 YEAR-END 2011 JACKSONVILLE 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) 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT C

5 JACKSONVILLE YEAR-END 2011 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 2012 COSTAR GROUP, INC.

6 OVERVIEW YEAR-END 2011 JACKSONVILLE Jacksonville s Decreases to 13.5% Net Absorption Positive 307,391 SF in the Quarter The Jacksonville Office market ended the fourth quarter 2011 with a vacancy rate of 13.5%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 307,391 square feet in the fourth quarter. Vacant sublease space decreased in the quarter, ending the quarter at 65,699 square feet. Rental rates ended the fourth quarter at $17.12, a decrease over the previous quarter. A total of two buildings delivered to the market in the quarter totaling 27,200 square feet, with 54,859 square feet still under construction at the end of the quarter. Absorption Net absorption for the overall Jacksonville office market was positive 307,391 square feet in the fourth quarter That compares to positive 163,900 square feet in the third quarter 2011, positive 99,121 square feet in the second quarter 2011, and positive 324,052 square feet in the first quarter Tenants moving out of large blocks of space in 2011 include: Bank of America moving out of 249,000 square feet at 9000 Southside Blvd, Sparta Special Servicing LLC moving out of 45,114 square feet at Grand Bay Pky W and The Rayonier Foundation moving out of 42,802 at 1301 Riverplace Blvd. Tenants moving into large blocks of space in 2011 include: CSX moving into 167,015 square feet at 550 Water St; Wells Fargo & Co moving into 118,000 square feet at 1 Independent Dr; and Modis moving into 78,292 square feet at Deerwood Park Blvd. The Class-A office market recorded net absorption of positive 67,027 square feet in the fourth quarter 2011, compared to negative (12,534) square feet in the third quarter 2011, negative (242,440) in the second quarter 2011, and positive 155,079 in the first quarter The Class-B office market recorded net absorption of positive 167,431 square feet in the fourth quarter 2011, compared to positive 111,090 square feet in the third quarter 2011, positive 328,797 in the second quarter 2011, and positive 152,127 in the first quarter The Class-C office market recorded net absorption of positive 72,933 square feet in the fourth quarter 2011 compared to positive 65,344 square feet in the third quarter 2011, positive 12,764 in the second quarter 2011, and positive 16,846 in the first quarter Net absorption for Jacksonville s central business district was positive 80,133 square feet in the fourth quarter That compares to positive 59,330 square feet in the third quarter 2011, negative (93,009) in the second quarter 2011, and positive 12,563 in the first quarter Net absorption for the suburban markets was positive 227,258 square feet in the fourth quarter That compares to positive 104,570 square feet in third quarter 2011, positive 192,130 in the second quarter 2011, and positive 311,489 in the first quarter The office vacancy rate in the Jacksonville market area decreased to 13.5% at the end of the fourth quarter The vacancy rate was 14.0% at the end of the third quarter 2011, 14.3% at the end of the second quarter 2011, and 14.5% at the end of the first quarter Class-A projects reported a vacancy rate of 12.3% at the Rates by Class A B C Total Market 20% 18% 16% 14% Rate 12% 10% 8% 6% 4% 2% 0% q q q q q q q q q q q q COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 1

7 JACKSONVILLE YEAR-END 2011 OVERVIEW end of the fourth quarter 2011, 12.7% at the end of the third quarter 2011, 12.6% at the end of the second quarter 2011, and 11.1% at the end of the first quarter Class-B projects reported a vacancy rate of 14.6% at the end of the fourth quarter 2011, 15.1% at the end of the third quarter 2011, 15.4% at the end of the second quarter 2011, and 16.5% at the end of the first quarter Class-C projects reported a vacancy rate of 12.8% at the end of the fourth quarter 2011, 13.3% at the end of third quarter 2011, 13.8% at the end of the second quarter 2011, and 13.9% at the end of the first quarter The overall vacancy rate in Jacksonville s central business district at the end of the fourth quarter 2011 decreased to 13.7%. The vacancy rate was 14.2% at the end of the third quarter 2011, 14.5% at the end of the second quarter 2011, and 13.9% at the end of the first quarter The vacancy rate in the suburban markets decreased to 13.5% in the fourth quarter The vacancy rate was 14.0% at the end of the third quarter 2011, 14.2% at the end of the second quarter 2011, and 14.6% at the end of the first quarter Largest Lease Signings The largest lease signings occurring in 2011 included: the 270,000-square-foot lease signed by EverBank Financial Corp at 301 W Bay St in the Downtown Northbank market; the 112,966- square-foot deal signed by Wells Fargo & Co at 1 Independent Dr. in the Downtown Northbank market; and the 41,421-squarefoot lease signed by Outreach Financial Services at Gran Bay Pky W in the Butler/Baymeadows market. Sublease The amount of vacant sublease space in the Jacksonville market decreased to 65,699 square feet by the end of the fourth quarter 2011, from 93,758 square feet at the end of the third quarter There were 117,271 square feet vacant at the end U.S. Comparison Past 10 Quarters Rate 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% q 2009 Jacksonville (Florida) q q q q United States q q 2011 of the second quarter 2011 and 119,534 square feet at the end of the first quarter Jacksonville s Class-A projects reported vacant sublease space of 19,060 square feet at the end of fourth quarter 2011, down from the 36,310 square feet reported at the end of the third quarter There were 58,160 square feet of sublease space vacant at the end of the second quarter 2011, and 41,186 square feet at the end of the first quarter Class-B projects reported vacant sublease space of 46,639 square feet at the end of the fourth quarter 2011, down from the 57,448 square feet reported at the end of the third quarter At the end of the second quarter 2011 there were 59,111 square feet, and at the end of the first quarter 2011 there were 77,298 square feet vacant. Class-C projects reported no vacant sublease space from the third quarter 2011 to the fourth quarter There was no sublease vacancy during that time. There were no square feet at the end of the second quarter 2011, and 1,050 square feet at the end of the first quarter Sublease vacancy in Jacksonville s central business district stood at zero square feet at the end of the fourth quarter It was 7,809 square feet at the end of the third quarter 2011, 17,288 square feet at the end of the second quarter 2011, and 9,479 square feet at the end of the first quarter Sublease vacancy in the suburban markets ended the fourth quarter 2011 at 65,699 square feet. At the end of the third quarter 2011 sublease vacancy was 85,949 square feet, was 99,983 square feet at the end of the second quarter 2011, and was 110,055 square feet at the end of the first quarter Rental Rates The average quoted asking rental rate for available office space, all classes, was $17.12 per square foot per year at the end of the fourth quarter 2011 in the Jacksonville market area. This represented a 0.2% decrease in quoted rental rates from the end of the third quarter 2011, when rents were reported at $17.15 per square foot. The average quoted rate within the Class-A sector was $19.27 at the end of the fourth quarter 2011, while Class-B rates stood at $16.54, and Class-C rates at $ At the end of the third quarter 2011, Class-A rates were $19.18 per square foot, Class-B rates were $16.80, and Class-C rates were $ The average quoted asking rental rate in Jacksonville s CBD was $18.14 at the end of the fourth quarter 2011, and $16.73 in the suburban markets. In the third quarter 2011, quoted rates were $17.94 in the CBD and $16.86 in the suburbs. Deliveries and Construction During the fourth quarter 2011, two buildings totaling 27,200 square feet were completed in the Jacksonville market area. This compares to one building totaling 7,500 square feet Source: CoStar Property 2 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

8 OVERVIEW YEAR-END 2011 JACKSONVILLE that were completed in the third quarter 2011, nothing completed in the second quarter 2011, and nothing completed in the first quarter There were 54,859 square feet of office space under construction at the end of the fourth quarter Some of the notable 2011 deliveries include: 7021 A.C. Skinner Pky, a 21,200-square-foot facility that delivered in fourth quarter 2011 and is now 100% occupied, and 6851 Southpoint Pky, a 7,500-square-foot building that delivered in third quarter The largest projects underway at the end of fourth quarter 2011 were Veveras Dr, a 48,574-square-foot building with 100% of its space pre-leased, and 6100 Greenland Road, a 4,560- square-foot. Inventory Total office inventory in the Jacksonville market area amounted to 59,623,314 square feet in 3,842 buildings as of the end of the fourth quarter The Class-A office sector consisted of 16,074,014 square feet in 92 projects. There were 1,523 Class-B buildings totaling 29,695,466 square feet, and the Class- C sector consisted of 13,853,834 square feet in 2,227 buildings. Within the Office market there were 141 owner-occupied buildings accounting for 7,132,049 square feet of office space. Sales Activity Tallying office building sales of 15,000 square feet or larger, Jacksonville (Florida) office sales figures fell during the third quarter 2011 in terms of dollar volume compared to the second quarter of In the third quarter, two office transactions closed with a total volume of $3,055,000. The two buildings totaled 38,684 square feet and the average price per square foot equated to $78.97 per square foot. That compares to two transactions totaling $4,760,000 in the second quarter The total square footage in the second quarter was 168,950 square feet for an average price per square foot of $ Absorption & Deliveries Past 10 Quarters (0.1) (0.2) (0.3) (0.4) (0.5) (0.6) 0.06 (0.47) q Source: CoStar Property Net Absorption q 0.24 Total office building sales activity in 2011 was down compared to In the first nine months of 2011, the market saw five office sales transactions with a total volume of $13,615,000. The price per square foot averaged $ In the same first nine months of 2010, the market posted 10 transactions with a total volume of $66,379,874. The price per square foot averaged $ Cap rates have been higher in 2011, averaging 11.46% compared to the same period in 2010 when they averaged 9.19%. One of the largest transactions that has occurred within the last four quarters in the Jacksonville (Florida) market is the sale of 7510 Baymeadows Way in Jacksonville. This 116,974-squarefoot office building sold for $5,800,000, or $49.58 per square foot. The property sold on 3/11/2011. Reports compiled by: Chevelle Bushnell, Research Manager and the Jacksonville Research team. (0.12) q q q Deliveries q q COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 3

9 JACKSONVILLE YEAR-END 2011 MARKETS CoStar Markets 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 Arlington Baker County Beaches Butler/Baymeadows Downtown Northbank* Downtown Southbank* Mandarin Northeast Jacksonville Northwest Jacksonville Orange Park/Clay County Riverside San Marco Southside St Johns County * Submarkets comprising the CBD. For statistics reference the CBD vs Suburban Figures at a Glance Page. 4 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

10 INVENTORY & DEVELOPMENT YEAR-END 2011 JACKSONVILLE Construction Highlights in Select CoStar Markets Color Coded by Under Construction Square Footage as a Percentage of 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 5

11 JACKSONVILLE YEAR-END 2011 INVENTORY & DEVELOPMENT 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 Butler/Baymeadows 2 53,134 48, % 44,447 26,567 Riverside 1 1,725 1, % 4,897 1,725 St Johns County % 6,830 0 Arlington % 10,475 0 Beaches % 8,551 0 Baker County % 8,330 0 Downtown Northbank % 35,046 0 Downtown Southbank % 22,629 0 Mandarin % 9,338 0 Northeast Jacksonville % 8,876 0 All Other % 15,512 0 Totals 3 54,859 50, % 15,519 18,286 Recent Deliveries Leased & Un-Leased SF in Deliveries Since 2007 Future Deliveries Preleased & Un-Leased SF in Properties Scheduled to Deliver 1.8 Leased Un-Leased 60 Preleased Un-Leased Millions of SF Thousands of SF T q q 6 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

12 INVENTORY & DEVELOPMENT YEAR-END 2011 JACKSONVILLE Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction Construction Starts 0.68 Deliveries 0.6 Millions of SF q q q q q q 2009 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 3 34,700 27, % $ ,200 13,500 50,000 SF - 99,999 SF % $ ,000 SF - 249,999 SF % $ ,000 SF - 499,999 SF % $ >= 500,000 SF % $ Recent Development by Tenancy Comparison Based on RBA Developed for Single & Multi Tenant Use Based on Total RBA 2011 Deliveries Currently Under Construction By Class By Space Type 8% 23% 23% 61% 39% 27% 92% 50% 77% Multi Single Multi Single Class A Class B Class C Multi Single 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 7

13 JACKSONVILLE YEAR-END 2011 INVENTORY & DEVELOPMENT 8 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

14 FIGURES AT A GLANCE YEAR-END 2011 JACKSONVILLE Class A Market Statistics Year-End 2011 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Arlington % $0.00 Baker County % $0.00 Beaches 7 431, , , % 1, $27.01 Butler/Baymeadows 13 1,863, , , % (54,233) 0 0 $19.04 Downtown Northbank 12 4,838, , , % (137,627) 0 0 $18.54 Downtown Southbank 6 1,991, , , % 14, $19.71 Mandarin % $0.00 Northeast Jacksonville % $0.00 Northwest Jacksonville % $0.00 Orange Park/Clay County 1 85, % $0.00 Riverside % $0.00 San Marco % $0.00 Southside 50 6,635, , , % 134, $19.38 St Johns County 3 227,676 24,063 24, % 8, $19.99 Totals 92 16,074,014 1,957,601 1,976, % (32,868) 0 0 $19.27 Class B Market Statistics Year-End 2011 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Arlington ,450 87,387 87, % (6,839) 0 0 $14.36 Baker County 1 2, % $0.00 Beaches 156 1,738, , , % 42, $22.81 Butler/Baymeadows 144 6,748,938 1,176,014 1,205, % 148, ,134 $16.31 Downtown Northbank 113 6,358, , , % 152, $16.43 Downtown Southbank ,491 14,069 14, % 3, $18.09 Mandarin 141 1,574, , , % 57, $16.90 Northeast Jacksonville ,622 48,661 48, % 8, $17.02 Northwest Jacksonville ,506 10,733 10, % 8, $15.55 Orange Park/Clay County 159 1,608, , , % 37, $19.97 Riverside ,699 76,414 76, % 5, ,725 $16.27 San Marco , , , % 39, $16.20 Southside 247 5,712, , , % 197,056 34,700 0 $14.18 St Johns County 312 2,197, , , % 63, $20.16 Totals 1,523 29,695,466 4,284,994 4,331, % 759,445 34,700 54,859 $ COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 9

15 JACKSONVILLE YEAR-END 2011 FIGURES AT A GLANCE Class C Market Statistics Year-End 2011 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Arlington ,142 58,278 58, % (14,785) 0 0 $14.56 Baker County 3 31, % $14.93 Beaches ,063 82,318 82, % (2,513) 0 0 $18.71 Butler/Baymeadows , , , % (9,655) 0 0 $15.43 Downtown Northbank 239 1,559, , , % 10, $16.84 Downtown Southbank ,652 52,430 52, % 14, $16.33 Mandarin ,123 79,451 79, % 2, $14.81 Northeast Jacksonville ,959 43,291 43, % (2,861) 0 0 $13.74 Northwest Jacksonville ,905 38,993 38, % 4, $13.70 Orange Park/Clay County ,455 80,456 80, % (2,549) 0 0 $17.87 Riverside 405 1,674,419 99,073 99, % 47, $16.02 San Marco , , , % 19, $15.95 Southside 381 3,755, , , % 106, $14.42 St Johns County ,886 35,368 35, % (6,050) 0 0 $16.75 Totals 2,227 13,853,834 1,769,167 1,769, % 167, $15.46 Total Office Market Statistics Year-End 2011 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Arlington 138 1,445, , , % (21,624) 0 0 $14.42 Baker County 4 33, % $14.93 Beaches 360 3,078, , , % 41, $23.20 Butler/Baymeadows 215 9,556,050 1,695,352 1,736, % 85, ,134 $16.47 Downtown Northbank ,756,744 1,843,077 1,843, % 25, $17.92 Downtown Southbank 138 3,122, , , % 33, $19.20 Mandarin 235 2,194, , , % 59, $16.23 Northeast Jacksonville ,581 91,952 91, % 5, $15.35 Northwest Jacksonville ,411 49,726 49, % 13, $14.20 Orange Park/Clay County 318 2,647, , , % 34, $19.53 Riverside 524 2,566, , , % 52, ,725 $16.07 San Marco 224 1,912, , , % 59, $16.06 Southside ,104,287 1,931,920 1,944, % 437,944 34,700 0 $15.51 St Johns County 420 2,868, , , % 66, $19.81 Totals 3,842 59,623,314 8,011,762 8,077, % 894,464 34,700 54,859 $ THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

16 FIGURES AT A GLANCE YEAR-END 2011 JACKSONVILLE Class A Market Statistics Year-End 2011 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 18 6,830,482 1,162,796 1,162, % (123,284) 0 0 $18.76 Suburban 74 9,243, , , % 90, $20.31 Totals 92 16,074,014 1,957,601 1,976, % (32,868) 0 0 $19.27 Class B Market Statistics Year-End 2011 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 128 7,044, , , % 156, $16.53 Suburban 1,395 22,650,551 3,504,426 3,551, % 602,534 34,700 54,859 $16.54 Totals 1,523 29,695,466 4,284,994 4,331, % 759,445 34,700 54,859 $16.54 Class C Market Statistics Year-End 2011 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 356 2,004, , , % 25, $16.69 Suburban 1,871 11,849,681 1,544,143 1,544, % 142, $15.35 Totals 2,227 13,853,834 1,769,167 1,769, % 167, $15.46 Class A & B Market Statistics Year-End 2011 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD ,875,397 1,943,364 1,943, % 33, $18.23 Suburban 1,469 31,894,083 4,299,231 4,364, % 692,950 34,700 54,859 $17.22 Totals 1,615 45,769,480 6,242,595 6,308, % 726,577 34,700 54,859 $17.55 Total Office Market Statistics Year-End 2011 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD ,879,550 2,168,388 2,168, % 59, $18.14 Suburban 3,340 43,743,764 5,843,374 5,909, % 835,447 34,700 54,859 $16.73 Totals 3,842 59,623,314 8,011,762 8,077, % 894,464 34,700 54,859 $ COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 11

17 JACKSONVILLE YEAR-END 2011 FIGURES AT A GLANCE Class A Market Statistics Year-End 2011 Net Deliveries UC Inventory Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates ,074,014 1,957,601 1,976, % 67, $ q 92 16,074,014 2,007,378 2,043, % (12,534) $ q 92 16,074,014 1,972,994 2,031, % (242,440) $ q 92 16,074,014 1,747,528 1,788, % 155, $ ,074,014 1,885,714 1,943, % 80, $ q 92 16,074,014 1,950,517 2,023, % 17, $ q 92 16,074,014 1,933,600 2,040, % 167, $ q 92 16,074,014 2,092,706 2,208, % (5,485) $ ,074,014 2,087,366 2,203, % (200,521) $ ,074,014 1,847,980 2,002, % 334, , $ ,473,465 1,683,685 1,736, % 583, , ,549 $ ,656,810 1,369,673 1,503, % 955, , ,195,249 $ ,014,621 1,697,427 1,816, % 776, , ,562 $ ,150,210 1,593,661 1,728, % 48, , ,411 $ ,106,230 1,653,854 1,732, % 48, , ,980 $ ,838,575 1,477,826 1,513, % (184,843) 4 297, ,286 $19.61 Quoted Class B Market Statistics Year-End 2011 Net Deliveries UC Inventory Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates ,523 29,695,466 4,284,994 4,331, % 167, , ,859 $ q 1,521 29,668,266 4,414,416 4,471, % 111, , ,334 $ q 1,520 29,660,766 4,516,343 4,575, % 328, ,834 $ q 1,520 29,660,766 4,826,953 4,904, % 152, ,260 $ ,520 29,660,766 4,964,824 5,056, % 107, , ,060 $ q 1,519 29,650,642 5,062,992 5,154, % (16,940) ,124 $ q 1,519 29,650,642 5,037,244 5,137, % (24,480) 1 5, ,124 $ q 1,518 29,645,642 4,991,605 5,107, % 144, , ,124 $ ,517 29,596,879 5,088,020 5,203, % (674,586) , ,763 $ ,500 29,261,906 4,113,492 4,193, % 417, , ,993 $ ,442 28,293,751 3,512,589 3,642, % 706, , ,578 $ ,368 27,498,485 3,429,321 3,553, % 971, ,118, ,239 $ ,238 26,380,114 3,349,782 3,406, % 566, , ,860 $ ,179 25,829,829 3,364,926 3,422, % 458, , ,444 $ ,123 25,008,563 3,007,713 3,060, % 214, , ,911 $ ,088 24,609,360 2,774,673 2,875, % 475, , ,133 $17.00 Quoted Total Office Market Statistics Year-End 2011 Net Deliveries UC Inventory Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates ,842 59,623,314 8,011,762 8,077, % 307, , ,859 $ q 3,840 59,596,114 8,263,894 8,357, % 163, , ,334 $ q 3,839 59,588,614 8,396,781 8,514, % 99, ,834 $ q 3,839 59,588,614 8,493,639 8,613, % 324, ,260 $ ,839 59,588,614 8,785,992 8,937, % 202, , ,060 $ q 3,838 59,578,490 8,963,733 9,129, % (121,687) ,124 $ q 3,838 59,578,490 8,795,202 9,008, % 244, , ,124 $ q 3,837 59,573,490 9,010,787 9,247, % 181, , ,124 $ ,836 59,524,727 9,143,572 9,379, % (917,576) , ,763 $ ,819 59,189,754 7,880,409 8,127, % 673, ,596, ,993 $ ,756 57,595,050 7,018,541 7,206, % 1,131, ,684, ,424,127 $ ,667 55,931,418 6,409,354 6,674, % 2,180, ,784, ,998,392 $ ,520 54,146,607 6,881,000 7,069, % 1,474, ,535, ,758,729 $ ,445 52,658,794 6,859,997 7,056, % 423, , ,463,730 $ ,380 51,744,838 6,430,869 6,565, % 448, , ,613 $ ,334 51,029,899 6,141,779 6,298, % 65, , ,860 $17.03 Quoted 12 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

18 LEASING ACTIVITY YEAR-END 2011 JACKSONVILLE Leasing Highlights in Select CoStar Markets Color Coded by Rate 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 13

19 JACKSONVILLE YEAR-END 2011 LEASING ACTIVITY Historical Rental Rates Based on Full-Service Equivalent Rental Rates A B C Total Market $25.00 $20.00 Dollars/SF/Year $15.00 $10.00 $5.00 $ q q q q q q q q q q q q 2011 by Available Space Type by Class Percent of All Vacant Space in Direct vs. Sublet Percent of All Vacant Space by Class Jacksonville (Florida) United States Jacksonville (Florida) United States 1% 4% 22% 16% 24% 49% 35% 99% 96% 54% 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* $25.00 Jacksonville (Florida) United States Dollars/SF/Year $20.00 $15.00 $10.00 Millions $ $ q q q q q q q q q q q q * Includes Under Construction Spaces 14 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

20 LEASING ACTIVITY YEAR-END 2011 JACKSONVILLE Select Top Office Leases Based on Leased Square Footage For Deals Signed in 2011 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company W Bay St Downtown Northbank 270,000 4th EverBank Financial Corp CBRE Elad National Realty 2 1 Independent Dr Downtown Northbank 112,966 2nd Wells Fargo & Co CBRE Parkway Realty Services Gran Bay Pky W Butler/Baymeadows 41,421 2nd Outreach Financial Services CNL Commercial Real Estate Flagler Development Realty, LLC Baymeadows Way Butler/Baymeadows 32,368 2nd Florida Department of Health N/A CBRE Belfort Rd Southside 27,285 4th Diversified Clinical Services CNL Commercial Real Estate Hallmark Partners Deerwood Park Blvd Southside 21,246 2nd N/A Direct Deal Flagler Development Realty, LLC Skinner Lake Dr Southside 18,280 3rd N/A N/A Jones Lang LaSalle Riverplace Blvd Downtown Southbank 18,000 2nd Levy Isaac L N/A N/A Deerwood Park Blvd Southside 15,995 1st Cisco Systems, Inc. Jones Lang LaSalle Flagler Development Realty, LLC Baymeadows Way Butler/Baymeadows 15,268 4th N/A N/A Parkway Realty Services Baymeadows Way* Butler/Baymeadows 13,883 4th ParkerVision, Inc. N/A Cushman & Wakefield of Florida, Inc Carmichael Ave Southside 13,502 3rd Florida Dept of Business and Professional Regul Direct Deal Midtown Centre Office Park Southpoint Dr N Southside 12,221 1st N/A N/A Coldwell Banker Commercial Benchmar Salisbury Rd Southside 11,946 2nd N/A N/A NAI Commercial Jacksonville Salisbury Rd Southside 11,764 3rd N/A N/A Grubb & Ellis Phoenix Realty Group Belfort Rd Southside 11,704 3rd N/A N/A CBRE Baymeadows Way Butler/Baymeadows 11,000 3rd N/A Direct Deal Florida Commercial Real Estate Serv N A1A Hwy Beaches 10,598 3rd The Regus Group Florida N/A The Regus Group N Laura St Downtown Northbank 9,442 4th N/A N/A Jones Lang LaSalle Water St Downtown Northbank 9,058 1st Joytel Wireless Communications N/A Colliers International Northeast Fl Deerwood Park Blvd Southside 8,310 3rd Desert Micro N/A CBRE San Jose Blvd Mandarin 7,900 3rd N/A N/A Bard Commercial Properties, Inc Baymeadows Rd Butler/Baymeadows 7,659 3rd Core Logic N/A Cushman & Wakefield of Florida, Inc N Southpoint Dr Southside 7,341 1st Department of Veterian Affairs Direct Deal KW Commercial Atlantic Partners W Forsyth St Downtown Northbank 7,323 2nd N/A N/A CBRE Emerson St Southside 6,959 3rd N/A N/A Addison Commercial Real Estate, Inc West Town Pl* St Johns County 6,852 1st Sunshine State Insurance N/A Hallmark Partners W Forsyth St Downtown Northbank 6,641 2nd N/A N/A Cushman & Wakefield of Florida, Inc S Southpoint Dr Southside 6,635 1st Environmental Capital Holdings Inc. Direct Deal Coldwell Banker Commercial Benchmar Spring Park Rd Southside 6,500 3rd N/A N/A N/A Eagle Harbor Pky Orange Park/Clay County 6,500 1st N/A N/A Nine Star Realty San Jose Blvd Mandarin 6,400 2nd N/A N/A Bard Commercial Properties, Inc S Southpoint Dr Southside 6,234 3rd N/A Direct Deal Corvus Commercial Realty Baymeadows Way Butler/Baymeadows 6,111 4th N/A N/A Parkway Realty Services Hartley Rd Mandarin 6,039 1st N/A N/A Vestcor Realty Management Town Center Pky Southside 6,000 1st Charles Schwab & Company N/A NAI Commercial Jacksonville West Town Pl* St Johns County 5,903 3rd Brown Jordan International, Inc. N/A Hallmark Partners Riverside Ave Downtown Northbank 5,653 1st EverBank Financial Corp. N/A Hallmark Partners rd St S Beaches 5,648 1st FaverGray Company Colliers International Northeast Fl Strategic Sites Clifford Commercial Baymeadows Way Butler/Baymeadows 5,632 3rd N/A N/A Sims Family Enterprises, LLC * Renewal 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 15

21 JACKSONVILLE YEAR-END 2011 SALES ACTIVITY The Optimist Sales Index Average of Two Highest Price/SF's and Two Lowest Cap Rates Per Quarter 14.0% Cap Rate Price/SF $ % $250 Cap Rate Percentage 10.0% 8.0% 6.0% 4.0% $200 $150 $100 Dollars/SF 2.0% $50 0.0% q q q q q q q q q $0 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 Oct Sept Sales Volume Price/SF Bldg Size # RBA $ Volume Price/SF Cap Rate $70 $200 Millions of Sales Volume Dollars $60 $50 $40 $30 $20 $10 $180 $160 $140 $120 $100 $80 $60 $40 $20 Price/SF < 50,000 SF ,204 $ 19,829,857 $ % 50K-249K SF 3 416,298 $ 16,100,000 $ K-499K SF 1 256,565 $ 24,800,000 $ % $ q q q q q q q q $0 >500K SF $ - - 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 $320 Jacksonville (Florida) US 12.0% Jacksonville (Florida) US Dollars per SF $270 $220 $170 $120 $70 Cap Rate Percentage 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% $ q q q q q q q q 3.0% q q q q q q q q Source: CoStar COMPS Source: CoStar COMPS 16 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

22 SALES ACTIVITY YEAR-END 2011 JACKSONVILLE 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 17

23 JACKSONVILLE YEAR-END 2011 SALES ACTIVITY Select Land Sales Based on Commercially Zoned Land Sales Occurring From Oct Dec Blanding Blvd, Orange Park Veterans Dr, Jacksonville County Road 220, Orange Park Sale Price: $2,550,000 Sale Price: $1,539,351 Sale Price: $1,200,000 Acres: 8.99 Acres: 3.93 Acres: 1.02 Price/SF: $6.51 Price/SF: $8.99 Price/SF: $27.14 Closing Date: 08/11/2011 Closing Date: 01/27/2011 Closing Date: 06/01/2011 Zoning: BB Zoning: PUD Zoning: Commercial Intended Use: Office Intended Use: Office Intended Use: Office Buyer: Haven Hospice Buyer: General Capital Group Buyer: Professional Resource Dev Inc Seller: Homer J & Fern O Custead Seller: Flagler Development Realty, LLC Seller: John O'Connor International Golf Pky, Saint Augustine Wells Rd, Orange Park Beach Blvd, Jacksonville Sale Price: $1,000,000 Sale Price: $750,000 Sale Price: $615,000 Acres: 7.43 Acres: 7.66 Acres: 2.70 Price/SF: $3.09 Price/SF: $2.25 Price/SF: $5.23 Closing Date: 10/06/2011 Closing Date: 11/23/2010 Closing Date: 03/23/2011 Zoning: PUD Zoning: BB Zoning: CCG-1, Jacksonville Intended Use: Hold for Investment Intended Use: Commercial Intended Use: Commercial Buyer: Randal L Ringhaver Buyer: Blue Way Developers LLC Buyer: Mark Debiase Seller: Rarco Investment Properties Seller: Church Randolph E & Bernice C Seller: Challenged Investments, LLC Source: CoStar COMPS 18 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.