Year-End 2017 / Office Market Report. Jacksonville

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1 Year-End 20 / Office Market Report Jacksonville Market Facts 24.9 MSF Total office inventory in the Jacksonville office market 573,094 SF Direct net absorption for % Overall Vacancy $22.30 PSF Average rental rate for class A space in Jacksonville on a fullservice gross basis Jacksonville's Office Market is Growing and Slowly Evolving, Driven Largely by Sustained Demand in the I-/9A Corridor Economic Drivers Economic fundamentals in Jacksonville at year-end 20 are sound as indicated by a 0 basis point drop in the unemployment rate over the trailing 2-month period to a current 3.6%, over,000 new jobs added during the same period, healthy leasing activity (particularly within the I-/9A Corridor), and continued slow but steady rental rate growth within top tier properties. On the national economic front, The Federal Reserve demonstrated its confidence in the growing U.S. economy by instituting a 25-bps interest rate hike in December, taking the fed funds target range to between.25% and.50%, with three additional hikes expected during 208. Office Market Snapshot Largely considered a tertiary market by institutional investors and cross-border buyers, Jacksonville is beginning to come into its own. There are several exciting developments planned throughout the metro area, with most situated in the Northbank, Southbank, and I-/9A Corridor areas, and investors continue to scour the market for opportunities. At the close of the fourth quarter, office fundamentals remained steady with a healthy 3.4 percentage point decline in the overall vacancy rate since year-end 206 to a current.9%, and sustained demand for quality space within the I-/9A Corridor where the direct weighted average asking rate is up $0.46 per sf since the close of 206. Significant lease transactions during the fourth quarter included a 28,700-sf lease with Web.com at Town Center Two (covered in greater detail on the following page), Crowley Maritime's lease of 36,000 sf at Cypress Point Business Park, and a 3,484-sf lease deal concluded with a law firm at 4 Belfort in the Southpoint area.

2 Jacksonville Office Market Report Year-End 20 The recent sale of the Dyal-Upchurch building in Downtown's Northbank presented a value-add proposition and serves to demonstrate the city's growing appeal to investors. Average Asking Rent Rate ($/SF/FS) $20.00 $9.50 $9.00 $8.50 $8.00 Direct Vacancy $.38 Rate $.50 $.00 $6.50 $.25 Net Absorption (SF) $8.33 $9.45 $ Direct Vacancy Rate 25.0% 20.0% 5.0% 0.0% 5.0% 0.0% 9.6% 9.9%.7% 4.8%.9% YTD Net Absorption (SF) 700, , , , , ,000 00, ,500 20,273 42, ,06 573,094 4Q6 Q 2Q 3Q 4Q The Dyal-Upchurch building traded hands during the fourth quarter in the Northbank area of Downtown Jacksonville for $3.45 million, or $8 per sf, and strong demand for the property was encouraged by the positive momentum taking place in the urban core. The building presented a value-add proposition and its sale serves to demonstrate Jacksonville's growing appeal to investors. VanTrust Underway on Town Center Two Following Major Lease Deal During Q4 Internet company Web.com announced during the fourth quarter that it had signed a sf lease to anchor Town Center Two, a new class A office building VanTrust Real Estate Partners had planned in the Town Center development in Deerwood Park. The company, a leading global provider of internet services and online marketing solutions for small businesses, elected to remain in Jacksonville despite the incentives available elsewhere, and did not request or receive any incentives from the city. Currently located in Flagler Center, Web.com will be moving to the new building when it is completed in 209. Other potential sites were considered in Nocatee, World Golf Village, the Bartram area and Downtown Jacksonville, but in the end Town Center Two represented the best overall choice and was situated in "a happening place" according to Web. com's Chairman and CEO. Town Center One, the adjacent building, remains under construction, and the$30 million, 60,000-sf building has been largely preleased by Availity, a health care information technology company. Ash Properties is also underway on The Offices at Flagler Station, offering just over 50,000 sf of class A office space at the intersection of Flagler Center Blvd and Old St Augustine Rd. Changes Coming to Downtown Jacksonville's Northbank Downtown Jacksonville continues to slowly evolve and there are several residential, mixed-use, transportation and redevelopment projects planned in and around the urban core. Following nearly a decade of planning, the redevelopment of the Laura Street Trio buildings on the Northbank is finally underway. The full renovation of the historic buildings is estimated at $ million. While most of the property will be redeveloped as a boutique-style Marriott-branded hotel, the developer s plans for The Barnett Building call for a ground-floor bank, retail and office space up to the seventh floor, and multi-residential housing on the upper floors. An adjacent $ million, 650-space parking garage will also be developed and the garage and revamped Barnett Building are scheduled for completion by the end of 208. Looking Ahead Jacksonville's office market is well positioned heading into 208. Avison Young's expectations for 208 largely mirror those for 20 as the economy remains strong and employment growth persists. Healthy leasing activity and developer discipline will ensure that net absorption remains solid, particularly in the I-/9A corridor submarkets, rental rates will likely further strengthen (primarily within trophy properties and those offering a superior amenity package), and that investment sales interest will remain strong.

3 Jacksonville Office Market Report Year-End 20 JACKSONVILLE OFFICE MARKET STATISTICS Class A,79,569,335,248 3,382 $ %.32% 0.96% 2.29% 428,70 84,60 Class B 3,3,786,630,842 64,750 $ % 2.42% 0.49% 2.9% 0 388,493 Total 24,9,355 2,966,0 8,32 $ %.% 0.7% 2.62% 428,70 573,094 Arlington Class B 984,575 66,554 4,374 $ % 6.92% 0.44%.36% 0 56,293 Total 984,575 66,554 4,374 $ % 6.92% 0.44%.36% 0 56,293 Beaches Class A 650,634 49,406 0 $ % 7.59% 0.00% 7.59% 0 8,7 Class B 42,397 3,7 0 $ % 2.66% 0.00% 2.66% 0,070 Total 793,03 53,96 0 $ % 6.7% 0.00% 6.7% 0 9,865 Clay County Class A 85, $ % 0.00% 0.00% 0.00% 0 0 Class B 56,69 63,503 0 $ % 2.30% 0.00% 2.30% 0,078 Total 60,69 63,503 0 $ % 0.56% 0.00% 0.56% 0,078 Downtown - Northbank Class A 3,603,6 607,985 5,446 $ % 6.87% 0.43%.30% 0 73,766 Class B,524,3 87,835 0 $ % 2.32% 0.00% 2.32% 0 0,064 Total 5,28,2 7,820 5,446 $ % 5.52% 0.30% 5.82% 0 83,830 Downtown - Southbank Class A 2,049,8 58,37 36,638 $ % 7.73%.79% 9.5% 0 (68,765) Class B 5,094 30,6 0 $ % 2.83% 0.00% 2.83% 0 (27,56) Total 2,285,002 88,532 36,638 $ % 8.25%.60% 9.85% 0 (96,326) I- / 9A Corridor Class A 5,, ,45 6,298 $ % 8.35%.20% 9.55% 428,70 35,343 Class B 6,6,2 689,50 60,376 $ % 0.30% 0.%.20% 0 26,634 Total,82,677,6,2 2,674 $ % 9.46%.03% 0.49% 428,70 26,977 Park Breakdown Total RSF Direct Vacant SF Sublet Vacant SF Asking Rate % Occupied % Vacant % Sublet Vacancy % Total Vacancy Under Construction Net Absorption Baymeadows 4,404, ,034 63,967 $9.34.2% 9.88%.45%.33% 0 6,948 Deerwood Park 3,399, ,803 8,04 $ % 8.9% 0.53% 9.44% 378,700 5,325 I- Corridor,05,388 52,7 0 $ % 5.02% 0.00% 5.02% 50,00 6,6 Southpoint 2,6, ,325 39,693 $ %.04%.34% 2.38% 0 33,528 Mandarin Class B 644,37 74,083 0 $ %.50% 0.00%.50% 0 40,065 Total 644,37 74,083 0 $ %.50% 0.00%.50% 0 40,065 Nocatee Class A 42,75 44,594 0 $ % 3.24% 0.00% 3.24% 0 8,57 Class B $ % 0.00% 0.00% 0.00% 0 0 Total 42,75 44,594 0 $ % 3.24% 0.00% 3.24% 0 8,57 Northside Class B 94,608 3,360 0 $ % 3.55% 0.00% 3.55% 0,302 Total 94,608 3,360 0 $ % 3.55% 0.00% 3.55% 0,302 St Johns County Class A 4,96 47,44 0 $ % 33.43% 0.00% 33.43% 0,305 Class B 265,838 28,037 0 $ % 0.55% 0.00% 0.55% 0 5,460 Total 407,754 75,478 0 $ % 8.5% 0.00% 8.5% 0 32,765 Southside Class B,652,654 33,628 0 $ % 20.07% 0.00% 20.07% 0 29,29 Total,652,654 33,628 0 $ % 20.07% 0.00% 20.07% 0 29,29 Westside Class B 376,780 52,3 0 $ % 3.% 0.00% 3.% 0 2,9 Total 376,780 52,3 0 $ % 3.% 0.00% 3.% 0 2,9

4 Jacksonville Office Market Report Year-End 20 Leading Indicators (Y-O-Y 4Q-206 to 4Q-20) Avison Young's expectations for 208 largely mirror those for 20 as the economy remains strong and employment growth persists. Vacancy Rate Net Absorption Average Asking Rate PSF (FS) New Construction Total Employment 2.62% 573,094 SF $ ,70 SF 0.72 MM CBD Class A 5,653,84 766,356 52,084 $ % 3.55% 0.92% 4.48% 0 5,00 Class B,759,405 2,996 0 $ % 2.39% 0.00% 2.39% 0 (,497) Total 7,43,29 984,352 52,084 $ % 3.28% 0.70% 3.98% 0 (2,496) Non-CBD / Suburban Class A 6,37, ,892 6,298 $.22.73% 9.27%.00% 0.27% 428,70 9,600 Class B,372,38,42,846 64,750 $ % 2.42% 0.57% 2.99% 0 405,9 Total,50,36,98,738 26,048 $ %.32% 0.72% 2.04% 428,70 585,5 Reporting Methodology: This report includes all class 'A' and 'B' office buildings and parks 20,000 SF and greater in the Jacksonville MSA that are not owner occupied, office medical, or government owned. All rents are reported on a full-service gross basis. The information in this report has been collected by the Avison Young research team via sources that are deemed reliable but is not guaranteed. Significant Fourth Quarter 20 Lease Transactions - Sorted by SF Tenant Property Type SF Submarket Web.com Town Center Two New 28,700 Deerwood Park Crowley Maritime Corporation Cypress Point Business Park New 36,000 Baymeadows Quintairos Law Firm 4 Belfort Rd New 3,484 Southpoint Next Science Greystone Park 300 New,05 Deerwood Park STV Incorporated Concourse III New 7,200 Southpoint Illuminate Healthcare 4 Belfort Rd New 6,936 Southpoint Academy Mortgage Baywood Center III New 5,564 Baymeadows Weaver Realty Group Spring Lake Business Center II New 5,539 Baymeadows RS&H Waterview Building Expansion 4,62 Deerwood Park Crew Training International Lakeside Plaza New 3,200 Baymeadows Significant Fourth Quarter 20 Sales Transactions - Sorted by Sale Price Property SF Sale Price Price/SF Buyer Submarket 300 Adams St 42,466 $3,450,000 $8.24 CRA Investments Downtown Northbank Dyal Upchurch Building 4,600 $2,800,000 $67.3 Jack Hanania & Joe Hassan Downtown Northbank 208 Avison Young - Florida, LLC. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young.

5 Jacksonville Office Submarkets Contact Information 08 H illia rd 08 Year-End 20 Fernand ina SUBMARKETS Yulee 30 WESTSIDE NORTHSIDE NORTHBANK SOUTHBANK SOUTHSIDE ARLINGTON MANDARIN I- / 9A CORRIDOR CLAY COUNTY ST JOHNS COUNTY NOCATEE BEACHES Ca lla ha n 08 2 N a ssa u Villa g e -R at liff Jacksonville International Airport 30 CO U N TY 2 05 U SA AS N 2 Jac ks o nvi l l e 9 ALT At lant ic B al dw i n ALT B ellair-m ead owbro ok Terrace O range Park 9B L akesid e Fleming Island Asbur y L ake Pe nney Fa rms Cam p B l an di n g A S awgras s 20 3 Fruit Cove 220 M i dd le burg Jac k s onville Palm Valley 9A 52 DUVAL COUNTY Oa k le a f Pla nt at io n CLAY COUNTY Nep t une 0A No c atee A 6 G reen Cove 5A Springs World G olf Village Villano C 35 Lisa McNatt Director of Research 35 W Central Blvd, Suite 700 Orlando, FL lisa.mcnatt@ 05 ST. JOHNS COUNTY 9 Mark Montgomery, CCIM Senior Vice President 2724 Gran Bay Pkwy, Suite 40 Jacksonville, FL mark.montgomery@ St. Augus t ine 3A Avison Young - Florida, LLC. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young.