CoStar Office Statistics. Y e a r - E n d Palm Beach County Office Market

Transcription

1 CoStar Office Statistics Y e a r - E n d Palm Beach County Office Market

2 Year-End 2017 Palm Beach County Table of Contents Table of Contents A Methodology B Terms & Definitions C Market Highlights & Overview CoStar Markets 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 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 Boca Raton Market Boynton/Lantana Market Delray Beach Market Jupiter Market North Palm Beach Market Palm Beach Market Palm Springs/Lake Worth Market Royal Palm Bch/Wellington Market West Palm Beach Market 2018 CoStar Group, Inc. CoStar Office Statistics A

3 Palm Beach County Year-End 2017 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 global database includes approximately 119 billion square feet of coverage in 5.4 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 2018 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 2018 CoStar Group, Inc.

4 Year-End 2017 Palm Beach County 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 2018 CoStar Group, Inc. CoStar Office Statistics C

5 Palm Beach County Year-End 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 2018 CoStar Group, Inc.

6 Overview Year-End 2017 Palm Beach County Palm Beach County s Increases to 10.8% Net Absorption Negative (118,809) SF in the Quarter The Palm Beach County Office market ended the fourth quarter 2017 with a vacancy rate of 10.8%. The vacancy rate was up over the previous quarter, with net absorption totaling negative (118,809) square feet in the fourth quarter. Vacant sublease space increased in the quarter, ending the quarter at 155,670 square feet. Rental rates ended the fourth quarter at $29.28, an increase over the previous quarter. A total of two buildings delivered to the market in the quarter totaling 10,849 square feet, with 281,433 square feet still under construction at the end of the quarter. Absorption Net absorption for the overall Palm Beach County office market was negative (118,809) square feet in the fourth quarter That compares to positive 212,880 square feet in the third quarter 2017, positive 103,536 square feet in the second quarter 2017, and positive 52,418 square feet in the first quarter The Class-A office market recorded net absorption of positive 2,104 square feet in the fourth quarter 2017, compared to positive 61,849 square feet in the third quarter 2017, positive 36,828 in the second quarter 2017, and positive 109,190 in the first quarter The Class-B office market recorded net absorption of negative (143,616) square feet in the fourth quarter 2017, compared to positive 196,124 square feet in the third quarter 2017, positive 48,750 in the second quarter 2017, and positive 9,453 in the first quarter The Class-C office market recorded net absorption of positive 22,703 square feet in the fourth quarter 2017 compared to negative (45,093) square feet in the third quarter 2017, positive 17,958 in the second quarter 2017, and negative (66,225) in the first quarter Net absorption for Palm Beach County s central business district was negative (3,754) square feet in the fourth quarter That compares to positive 60,042 square feet in the third quarter 2017, positive 38,503 in the second quarter 2017, and negative (23,786) in the first quarter Net absorption for the suburban markets was negative (115,055) square feet in the fourth quarter That compares to positive 152,838 square feet in third quarter 2017, positive 65,033 in the second quarter 2017, and positive 76,204 in the first quarter The office vacancy rate in the Palm Beach County market area increased to 10.8% at the end of the fourth quarter The vacancy rate was 10.5% at the end of the third quarter 2017, 10.8% at the end of the second quarter 2017, and 10.9% at the end of the first quarter Class-A projects reported a vacancy rate of 13.2% at the end of the fourth quarter 2017, 13.2% at the end of the third quarter 2017, 13.4% at the end of the second quarter 2017, and 13.7% at the end of the first quarter Class-B projects reported a vacancy rate of 11.6% at the end of the fourth quarter 2017, 11.1% at the end of the third quarter 2017, 11.7% at the end of the first and second quarter Class-C projects reported a vacancy rate of 5.5% at the end of the fourth quarter 2017, 5.7% at the end of third quarter Rates by Class A B C Total Market 30% 25% Rate 20% 15% 10% 5% 0% q2000 3q2001 3q2002 3q2003 3q2004 3q2005 3q2006 3q2007 3q2008 3q2009 3q2010 3q q2012 3q2013 3q2014 3q2015 3q2016 3q2017 3q 2018 CoStar Group, Inc. CoStar Office Statistics 1

7 Palm Beach County Year-End 2017 Overview 2017, 5.3% at the end of the second quarter 2017, and 5.5% at the end of the first quarter The overall vacancy rate in Palm Beach County s central business district at the end of the fourth quarter 2017 changed to 10.3%. The vacancy rate was 10.3% at the end of the third quarter 2017, 10.7% at the end of the second quarter 2017, and 11.0% at the end of the first quarter The vacancy rate in the suburban markets increased to 10.9% in the fourth quarter The vacancy rate was 10.6% at the end of the third quarter 2017, 10.8% at the end of the second quarter 2017, and 10.9% at the end of the first quarter Largest Lease Signings The largest lease signings occurring in 2017 included: the 40,286-square-foot lease signed by Modernizing Medicine at 4850 T Rex Ave in the Boca Raton market; the 37,000-squarefoot deal signed by Shoes For Crews at 5000 T Rex Ave in the Boca Raton market; and the 24,914-square-foot lease signed by The Geo Group at Boca Village Corporate Center - Tower 1 in the Boca Raton market. Sublease The amount of vacant sublease space in the Palm Beach County market increased to 155,670 square feet by the end of the fourth quarter 2017, from 109,582 square feet at the end of the third quarter There was 110,243 square feet vacant at the end of the second quarter 2017 and 90,315 square feet at the end of the first quarter Palm Beach County s Class-A projects reported vacant sublease space of 91,105 square feet at the end of fourth quarter 2017, up from the 55,933 square feet reported at the end of the third quarter There were 37,178 square feet of sublease space vacant at the end of the second quarter 2017, and 43,052 square feet at the end of the first quarter Class-B projects reported vacant sublease space of U.S. Comparison Past 10 Quarters Rate 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Palm Beach County United States q 55,269 square feet at the end of the fourth quarter 2017, up from the 44,353 square feet reported at the end of the third quarter At the end of the second quarter 2017 there were 70,500 square feet, and at the end of the first quarter 2017 there were 43,433 square feet vacant. Class-C projects reported no vacant sublease space from the third quarter 2017 to the fourth quarter Sublease vacancy went from 9,296 square feet to 9,296 square feet during that time. There was 2,565 square feet at the end of the second quarter 2017, and 3,830 square feet at the end of the first quarter Sublease vacancy in Palm Beach County s central business district stood at 44,432 square feet at the end of the fourth quarter It was 30,631 square feet at the end of the third quarter 2017, 41,359 square feet at the end of the second quarter 2017, and 23,305 square feet at the end of the first quarter Sublease vacancy in the suburban markets ended the fourth quarter 2017 at 111,238 square feet. At the end of the third quarter 2017 sublease vacancy was 78,951 square feet, was 68,884 square feet at the end of the second quarter 2017, and was 67,010 square feet at the end of the first quarter Rental Rates The average quoted asking rental rate for available office space, all classes, was $29.28 per square foot per year at the end of the fourth quarter 2017 in the Palm Beach County market area. This represented a 1.6% increase in quoted rental rates from the end of the third quarter 2017, when rents were reported at $28.81 per square foot. The average quoted rate within the Class-A sector was $33.73 at the end of the fourth quarter 2017, while Class-B rates stood at $27.57, and Class-C rates at $ At the end of the third quarter 2017, Class-A rates were $33.69 per square foot, Class-B rates were $27.03, and Class-C rates were $ The average quoted asking rental rate in Palm Beach County s CBD was $29.79 at the end of the fourth quarter 2017, and $29.11 in the suburban markets. In the third quarter 2017, quoted rates were $29.79 in the CBD and $28.45 in the suburbs. Deliveries and Construction During the fourth quarter 2017, two buildings totaling 10,849 square feet were completed in the Palm Beach County market area. This compares to three buildings totaling 33,400 square feet that were completed in the third quarter 2017, one building totaling 37,500 square feet completed in the second quarter 2017, and nothing completed in the first quarter There were 281,433 square feet of office space under construction at the end of the fourth quarter Inventory 2 CoStar Office Statistics 2018 CoStar Group, Inc.

8 Overview Year-End 2017 Palm Beach County Total office inventory in the Palm Beach County market area amounted to 54,930,563 square feet in 2,835 buildings as of the end of the fourth quarter The Class-A office sector consisted of 14,387,808 square feet in 137 projects. There were 1,144 Class-B buildings totaling 29,151,951 square feet, and the Class-C sector consisted of 11,390,804 square feet in 1,554 buildings. Within the Office market there were 105 owneroccupied buildings accounting for 2,557,446 square feet of office space. Sales Activity Tallying office building sales of 15,000 square feet or larger, Palm Beach County office sales figures rose during the third quarter 2017 in terms of dollar volume compared to the second quarter of In the third quarter, eight office transactions closed with a total volume of $301,112,000. The eight buildings totaled 1,518,699 square feet and the average price per square foot equated to $ per square foot. That compares to eight transactions totaling $118,260,200 in the second quarter The total square footage in the second quarter was 671,361 square feet for an average price per square foot of $ Total office building sales activity in 2017 was up compared to In the first nine months of 2017, the market saw 27 office sales transactions with a total volume of $511,884,614. The price per square foot averaged $ In the same first Absorption & Deliveries Past 10 Quarters (0.1) (0.2) Net Absorption Deliveries q (0.12) nine months of 2016, the market posted 40 transactions with a total volume of $494,832,255. The price per square foot averaged $ Cap rates have been higher in 2017, averaging 7.32% compared to the same period in 2016 when they averaged 6.75%. Reports compiled by: Alfredo Negron and David Spragg, CoStar Research Managers CoStar Group, Inc. CoStar Office Statistics 3

9 Palm Beach County Year-End 2017 Markets CoStar 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 Boca Raton Boynton/Lantana Delray Beach Jupiter North Palm Beach* Palm Beach* Palm Springs/Lake Worth Royal Palm Bch/Wellington West Palm Beach** * Submarkets comprising the CBD. For statistics reference the CBD vs Suburban Figures at a Glance Page. 4 CoStar Office Statistics 2018 CoStar Group, Inc.

10 Inventory & development Year-End 2017 Palm Beach County 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 North Palm Beach 1 111, , % 21, ,972 Delray Beach 1 84,300 64, % 10,661 84,300 Palm Beach 6 58,999 44, % 16,329 9,833 Royal Palm Bch/Wellington 2 26,162 8, % 20,883 13,081 West Palm Beach % 16,376 0 Boca Raton % 36,962 0 Boynton/Lantana % 13,068 0 Palm Springs/Lake Worth % 8,627 0 Jupiter % 16,351 0 Totals , , % 19,376 28,143 Recent Deliveries Leased & Un-Leased SF in Deliveries Since 2013 Future Deliveries Preleased & Un-Leased SF in Properties Scheduled to Deliver 0.3 Leased Un-Leased 120 Preleased Un-Leased Millions of SF Thousands of SF T q q 2018 CoStar Group, Inc. CoStar Office Statistics 5

11 Palm Beach County Year-End 2017 Inventory & development Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction Construction Starts 0.15 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 7 117,217 49, % $ , ,817 50,000 SF - 99,999 SF % $ ,000 SF - 249,999 SF % $ ,000 SF - 499,999 SF % $ 0 0 >= 500,000 SF % $ 0 0 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 9% 1% 21% 11% 26% 91% 99% 53% 89% Multi Single Multi Single Class A Class B Class C Multi Single 6 CoStar Office Statistics 2018 CoStar Group, Inc.

12 Inventory & development Year-End 2017 Palm Beach County 2018 CoStar Group, Inc. CoStar Office Statistics 7

13 Palm Beach County Year-End 2017 Inventory & development 8 CoStar Office Statistics 2018 CoStar Group, Inc.

14 Figures at a Glance Year-End 2017 Palm Beach County Class A Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Boca Raton 67 7,804,797 1,186,498 1,236, % 30, $33.39 Boynton/Lantana 3 311,632 13,108 13, % 52, $24.47 Delray Beach 1 30, % $ Jupiter ,414 34,703 34, % (1,286) 0 0 $33.00 North Palm Beach 24 1,702, , , % 8, ,972 $33.69 Palm Beach 3 83,518 43,233 44, % (6,460) 0 0 $35.96 Palm Springs/Lake Worth 1 50, % $ Royal Palm Bch/Wellington 3 124,705 6,561 6, % (1,194) 0 0 $33.96 West Palm Beach 24 3,624, , , % 127, $35.11 Totals ,387,808 1,808,416 1,899, % 209, ,972 $33.73 Class B Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Boca Raton 229 7,715, , , % 6, $26.04 Boynton/Lantana 81 1,852, , , % 72,341 7,099 0 $24.59 Delray Beach 122 2,565, , , % 6,698 33,400 84,300 $29.14 Jupiter 117 2,309, , , % 11, $26.21 North Palm Beach 172 5,270, , , % 6, $27.70 Palm Beach 90 1,840, , , % 18,559 37,500 58,999 $44.79 Palm Springs/Lake Worth ,805 28,294 28, % 19,343 3,750 0 $29.36 Royal Palm Bch/Wellington 48 1,195,647 73,954 73, % (11,237) 0 26,162 $27.65 West Palm Beach 250 5,832, , , % (20,447) 0 0 $24.74 Totals 1,144 29,151,951 3,331,609 3,386, % 110,711 81, ,461 $27.57 Class C Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Boca Raton 175 1,888,478 89,990 89, % (4,849) 0 0 $26.61 Boynton/Lantana ,232 13,922 13, % 1, $23.47 Delray Beach 246 1,338,084 87,647 87, % (50,568) 0 0 $29.01 Jupiter ,105 27,929 28, % (1,061) 0 0 $25.72 North Palm Beach 198 1,630,085 76,530 76, % (22,655) 0 0 $23.46 Palm Beach ,216 39,512 46, % (14,382) 0 0 $23.01 Palm Springs/Lake Worth ,650 33,284 33, % (10,789) 0 0 $23.05 Royal Palm Bch/Wellington ,810 8,813 8, % 8, $24.89 West Palm Beach 537 3,824, , , % 23, $22.12 Totals 1,554 11,390, , , % (70,657) 0 0 $23.86 Total Office Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Boca Raton ,409,035 2,170,264 2,232, % 32, $30.10 Boynton/Lantana 207 2,705, , , % 126,898 7,099 0 $24.52 Delray Beach 369 3,934, , , % (43,870) 33,400 84,300 $29.11 Jupiter 220 3,597, , , % 9, $27.14 North Palm Beach 394 8,602, , , % (7,795) 0 111,972 $28.95 Palm Beach 161 2,628, , , % (2,283) 37,500 58,999 $40.45 Palm Springs/Lake Worth 118 1,018,032 61,578 61, % 8,554 3,750 0 $26.68 Royal Palm Bch/Wellington 84 1,754,162 89,328 89, % (4,231) 0 26,162 $28.02 West Palm Beach ,281,074 1,270,967 1,301, % 130, $27.00 Totals 2,835 54,930,563 5,759,494 5,915, % 250,025 81, ,433 $ CoStar Group, Inc. CoStar Office Statistics 9

15 Palm Beach County Year-End 2017 Figures at a Glance Class A Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 26 3,672, , , % 120, $35.52 Suburban ,714,875 1,408,603 1,492, % 89, ,972 $33.31 Totals ,387,808 1,808,416 1,899, % 209, ,972 $33.73 Class B Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 281 6,544, , , % (51,710) 0 0 $29.93 Suburban ,607,917 2,547,499 2,574, % 162,421 81, ,461 $26.76 Totals 1,144 29,151,951 3,331,609 3,386, % 110,711 81, ,461 $27.57 Class C Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 563 4,152, , , % 1, $22.63 Suburban 991 7,238, , , % (72,467) 0 0 $24.95 Totals 1,554 11,390, , , % (70,657) 0 0 $23.86 Class A & B Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD ,216,967 1,183,923 1,219, % 69, $31.78 Suburban ,322,792 3,956,102 4,066, % 251,487 81, ,433 $29.50 Totals 1,281 43,539,759 5,140,025 5,286, % 320,682 81, ,433 $30.02 Total Office Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD ,369,216 1,440,948 1,485, % 71, $29.79 Suburban 1,965 40,561,347 4,318,546 4,429, % 179,020 81, ,433 $29.11 Totals 2,835 54,930,563 5,759,494 5,915, % 250,025 81, ,433 $ CoStar Office Statistics 2018 CoStar Group, Inc.

16 Figures at a Glance Year-End 2017 Palm Beach County 2018 CoStar Group, Inc. CoStar Office Statistics 11

17 Palm Beach County Year-End 2017 Leasing Activity Historical Rental Rates Based on Full-Service Equivalent Rental Rates A B C Total Market $4 $35.00 $3 $25.00 $2 $15.00 $1 $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 Palm Beach County United States Palm Beach County United States 3% 5% 11% 13% 57% 32% 45% 42% 97% 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* $35.00 Palm Beach County United States $3 1.0 $ $2 $15.00 $ $5.00 $ q q q q q q * Includes Under Construction Spaces 12 CoStar Office Statistics 2018 CoStar Group, Inc.

18 Leasing Activity Year-End 2017 Palm Beach County Select Top O ce Leases Based on Leased Square Footage For Deals Signed in 2017 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company Communication Ave Boca Raton North 67,685 2nd N/A N/A CBRE 2 North 40 Boca Raton North 43,427 4th N/A N/A Avison Young T Rex Ave Boca Raton North 40,286 1st Modernizing Medicine N/A CBRE T Rex Ave Boca Raton North 37,000 2nd Shoes For Crews Cushman & Wakefield; Blanca Commer CBRE Quantum Blvd Boynton/Lantana 35,000 4th N/A N/A Cushman & Wake eld Northpoint Pky North Palm Beach 26,780 4th N/A N/A NAI/Merin Hunter Codman, Inc. 7 FNBCC 301 Yamato Boca Raton East 25,275 2nd N/A N/A Stoltz Realty Co. of Florida, Inc. 8 Boca Village Corporate Center - Tower 1 Boca Raton North 24,914 3rd The Geo Group Whelchel Partners Cushman & Wake eld 9 FNBCC 301 Yamato Boca Raton East 24,860 4th The Bridge Direct, Inc N/A Morning Calm Management Exchange Ct Boca Raton North 23,630 3rd Integrated Dermatology Group N/A Cushman & Wake eld T Rex Ave Boca Raton North 22,714 4th Modernizing Medicine N/A CBRE Communication Ave Boca Raton North 22,614 4th IDA N/A CBRE N Congress Ave West Palm Beach 20,760 3rd Southeastern College Direct Deal Touchstone Webb Realty Company Corporate Way North Palm Beach 17,962 2nd N/A N/A Nationwide -RE Columbia Dr West Palm Beach 16,693 3rd BHI Energy Cushman & Wake eld Paul Hanna Management, Inc. 16 Lynn Financial Center Boca Raton West 16,408 4th Broad and Cassel NAI MIAMI Commercial Real Estate Se Avison Young 17 Lost Tree Village Financial Center* North Palm Beach 15,100 4th Ameriprise Financial Services, Inc. Cushman & Wake eld Lost Tree Village Corporation 18 Fairway O ce Center - Phase II - Fairway* North Palm Beach 13,475 3rd Anesthetix Holdings, LLC N/A NAI/Merin Hunter Codman, Inc Metrocentre Blvd West Palm Beach 12,252 4th N/A N/A Strategic Realty Services, LLC Worthington Rd West Palm Beach 11,970 4th Brown & Brown of Florida N/A NAI/Merin Hunter Codman, Inc. 21 Sabre Centre II Boca Raton North 11,656 2nd N/A Direct Deal Stoltz Realty Co. of Florida, Inc. 22 Mizner Park O ce Tower Boca Raton East 11,486 3rd N/A N/A Cushman & Wake eld 23 Mizner Park O ce Tower Boca Raton East 11,486 3rd N/A N/A Cushman & Wake eld 24 Beacon Square Professional Campus Boca Raton North 11,423 2nd Functional Rehab Solutions N/A East Resources Inc Parker Ave West Palm Beach 10,449 2nd N/A N/A Rebel Cook Real Estate 26 South City Plaza Boca Raton East 10,293 4th N/A N/A Penn-Florida Realty Corporation 27 Fairway O ce Center - Phase II - Fairway* North Palm Beach 10,180 3rd Schwed, Adams, Sobel & McGinley, PA N/A NAI/Merin Hunter Codman, Inc. 28 The Atrium at Broken Sound Boca Raton North 10,170 1st N/A N/A Cushman & Wake eld 29 One Lincoln Place Boca Raton West 10,011 1st COSuites N/A JLL 30 North 40 Boca Raton North 10,000 1st Mainstreet Cv North 40 LLC N/A Avison Young 31 Boca Colonnade Boca Raton North 9,872 2nd N/A N/A Workspace Property Trust 32 Sabadell Building West Palm Beach 9,795 1st Trilogy Home Healthcare N/A JLL 33 Yamato O ce Center - Building 2 Boca Raton North 9,648 2nd Phoenix Tower Direct Deal CBRE 34 Bank of America Tower Boca Raton East 9,632 3rd N/A N/A Cushman & Wake eld 35 Watterson & Zappolo North Palm Beach 9,624 2nd Chromalloy Gas Turbine LLC. N/A Cushman & Wake eld 36 Old School Square O ce Bldg Delray Beach 9,621 1st Specialized Healthcare Partners LLC Direct Deal CBRE 37 Fairway O ce Center - Phase I North Palm Beach 9,320 3rd Locus Solutiuons Llc N/A NAI/Merin Hunter Codman, Inc. 38 Boca Center Tower I Boca Raton West 8,924 2nd Bbt Management, Inc N/A Tower Commercial Real Estate N Military Trl North Palm Beach 8,245 1st Prodigy Capital LLC N/A Willard Development 40 Centrepark 1450* West Palm Beach 8,104 3rd Paychex North America N/A NAI/Merin Hunter Codman, Inc. * Renewal 2018 CoStar Group, Inc. CoStar Office Statistics 13

19 Palm Beach County Year-End 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 $ % $690 Cap Rate Percentage 6.0% 5.0% 4.0% 3.0% 2.0% $590 $490 $390 $290 Dollars/SF 1.0% q q q $190 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 $450 Sales Volume Price/SF $400 Bldg Size # RBA $ Volume Price/SF Cap Rate Millions of Sales Volume Dollars $400 $350 $300 $250 $200 $150 $100 $350 $300 $250 $200 $150 $100 Price/SF < 50,000 SF ,724 $150,118,569 $ % 50K-249K SF 250K-499K SF 18 2,230,103 $409,122,000 $ % 1 304,009 $48,700,000 $ % $50 $50 $0 $0 >500K SF 1 625,000 $132,050,000 $ 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 $370 Palm Beach County US 9.0% Palm Beach County US Dollars per SF $320 $270 $220 Cap Rate Percentage 8.0% 7.0% 6.0% 5.0% 4.0% $ % $ % q q q q q q q q Source: CoStar COMPS Source: CoStar COMPS 14 CoStar Office Statistics 2018 CoStar Group, Inc.

20 Year-End 2017 Palm Beach County 2018 CoStar Group, Inc. CoStar Office Statistics 15 Sales Activity

21 Palm Beach County Year-End 2017 Deliveries, Absorption & B o c a R a t o n M a r k e t Market Highlights Class A, B & C (0.050) Delivered SF Absorption SF 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% Percent Vacant (0.100) q q q q q q q q q q q q q q q q 0.0% Vacant Space Quoted Rental Rates 3.00 Direct SF Sublet SF $ Dollars/SF/Year $3 $29.50 $29.00 $28.50 $ $27.50 $27.00 Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q ,409,035 2,232, % (45,961) $ q ,409,035 2,186, % 22, $ q ,409,035 2,209, % 48, $ q ,409,035 2,258, % 7, $ q ,413,270 2,269, % 47, $ q ,415,022 2,318, % 207, $ q ,415,022 2,525, % 92, $ q ,415,022 2,617, % 7, $ q ,415,022 2,625, % 46, $ q ,415,022 2,671, % 22, $ q ,415,022 2,694, % 156, $ q ,415,022 2,850, % (426) $ q ,415,022 2,849, % 202, $ q ,415,022 3,051, % 11, $ q ,415,022 3,062, % 142, $ q ,415,022 3,205, % 120, $ CoStar Office Statistics 2018 CoStar Group, Inc.

22 Deliveries, Absorption & B o y n t o n / L a n t a n a M a r k e t Market Highlights Class A, B & C Year-End 2017 Palm Beach County (0.010) (0.020) (0.030) (0.040) Delivered SF Absorption SF 18.0% 16.0% 14.0% 8.0% 6.0% 4.0% 2.0% 0.0% q q q q q q q q q q q q q q q q 12.0% 10.0% Percent Vacant Vacant Space Quoted Rental Rates 0.40 Direct SF Sublet SF $ $ Dollars/SF/Year $25.50 $25.00 $ $24.00 $23.50 Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 207 2,705, , % (368) 1 7, $ q 206 2,698, , % 37, ,099 $ q 206 2,698, , % 33, ,099 $ q 206 2,698, , % 56, ,099 $ q 206 2,698, , % 32, , $ q 204 2,662, , % (14,551) ,000 $ q 204 2,662, , % 2, ,000 $ q 204 2,662, , % 30, ,000 $ q 204 2,662, , % 7, ,000 $ q 204 2,662, , % (3,627) $ q 204 2,662, , % 23, $ q 204 2,662, , % 35, , $ q 203 2,651, , % 6, ,718 $ q 203 2,651, , % (8,491) ,718 $ q 203 2,651, , % (28,999) ,718 $ q 203 2,651, , % (29,644) 1 36, $ CoStar Group, Inc. CoStar Office Statistics 17

23 Palm Beach County Year-End 2017 Deliveries, Absorption & D e l r a y B e a c h M a r k e t Market Highlights Class A, B & C (0.010) (0.020) (0.030) (0.040) (0.050) (0.060) Delivered SF Absorption SF 23.5% 23.0% 22.5% 19.5% 19.0% 18.5% 18.0% q q q q q q q q q q q q q q q q 22.0% 21.5% 21.0% 20.5% 20.0% Percent Vacant Vacant Space Quoted Rental Rates 0.86 Direct SF Sublet SF $ Dollars/SF/Year $3 $25.00 $2 $15.00 $ $ $ Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 369 3,934, , % (18,397) ,300 $ q 369 3,934, , % (18,170) 3 33, ,300 $ q 368 3,901, , % 1, ,400 $ q 368 3,901, , % (9,008) ,400 $ q 369 3,903, , % 28, ,400 $ q 369 3,903, , % 33, , ,400 $ q 369 3,900, , % (639) ,442 $ q 369 3,900, , % 16, , ,442 $ q 367 3,884, , % (13,054) ,442 $ q 367 3,884, , % 13, ,042 $ q 367 3,884, , % 20, ,042 $ q 367 3,884, , % (45,920) ,000 $ q 367 3,884, , % 39, $ q 368 3,889, , % 19, $ q 368 3,889, , % 13, $ q 369 3,894, , % 3, , $ CoStar Office Statistics 2018 CoStar Group, Inc.

24 Deliveries, Absorption & J u p i t e r M a r k e t Market Highlights Class A, B & C Year-End 2017 Palm Beach County Delivered SF Absorption SF 12.0% (0.020) 10.0% 8.0% 6.0% 4.0% 2.0% Percent Vacant (0.040) q q q q q q q q q q q q q q q q 0.0% Vacant Space Quoted Rental Rates 0.30 Direct SF Sublet SF $29.00 $ $ Dollars/SF/Year $27.50 $27.00 $26.50 $26.00 $25.50 $25.00 Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 220 3,597, , % (7,517) $ q 220 3,597, , % 33, $ q 220 3,597, , % (29,820) $ q 220 3,597, , % 12, $ q 220 3,597, , % 44, , $ q 219 3,566, , % 27, ,030 $ q 219 3,566, , % 19, , ,030 $ q 218 3,557, , % 17, , ,530 $ q 217 3,552, , % 39, ,280 $ q 217 3,552, , % 44, ,250 $ q 217 3,552, , % 12, ,250 $ q 217 3,552, , % ,750 $ q 217 3,552, , % 73, , ,750 $ q 213 3,445, , % 10, ,441 $ q 213 3,445, , % (13,721) ,441 $ q 213 3,445, , % (18,694) ,441 $ CoStar Group, Inc. CoStar Office Statistics 19