12.0% 11.5% 11.0% 10.5% 10.0% 9.5% 9.0% $15.00 $14.50 $14.00 $13.50 $13.00

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1 Q UPSTATE, SOUTH CAROLINA OFFICE MARKET REPORT LOCAL UPSTATE ECONOMY Population...1,375,759 Households...537,556 Median Age Labor Force...640,411 Unemployed...57,015 Unemployment Rate...8.9% OFFICE MARKET TRENDS Vacancy Rate Net Absorption Construction Asking Rents Source: SC Dept. of Employment & Workforce & ESRI Business Analyst OFFICE MARKET OVERVIEW By: David Feild, CCIM Office Division The slow and steady recovery the first half of 2012 enjoyed continued through the third quarter. The Upstate office market ended the quarter with a vacancy rate of 9.1%, a decrease from 9.6% in the previous quarter. The downward pressure on vacancy rates is a product of the continued net absorption of square footage in the office market. The third quarter enjoyed a absorption of 152,589 SF. The net absorption for the Greenville Central Business District was positive 76,751 SF while the suburban areas also had a positive net absorption of 107,763 SF this quarter. There was 178,624 SF of office space under construction at the end of this quarter. The majority of this is represented by ONE Greenville, 175,000 SF building located in heart of Greenville s downtown. 83% of this project is preleased. David Feild, CCIM davidf@naiearlefurman.com % 11.5% 11.0% 10.5% 10.0% 9.5% 9.0% $15.00 $14.50 $14.00 $13.50 $13.00 Overall Vacancy (%) Average Asking Rental Rate Mid Year Vacancy 9.1% Mid Year Average Rate $13.94 Number of Buildings...4,105 Market Size (SF)...35,986,737 Overall Vacancy Space (SF)...3,286,737 Overall Vacancy (%)...9.1% Direct Vacancy (SF)...3,242,394 Sublease Vacancy (SF)...42,511 Net Absorption...152,589 Average Asking Rental Rate ($/SF/YR)...$13.94 Upstate Market 1 / Submarket Data 2 / Activity 3 / News 4-7 / Office Division 8 / About Us 9 / Resources 10

2 SUBMARKET DATA GREENVILLE CBD Overall Vacancy (%) Greenville CBD Submarket/ Class # of Bldgs. RBA (SF) Vacant (%) Net Absorption (SF) Average Rate All Classes 453 6,601, ,751 $16.83 Class A 11 1,471, ,078 $21.00 Class B 160 3,296, ,850 $17.43 Class C 276 1,180, (1,002) $ % 11.0% 10.0% 9.0% 8.0% $17.00 $16.50 $16.00 $15.50 $15.00 Average Asking Rental Rate - Greenville CBD GREENVILLE SUBURBAN Submarket/ Class # of Bldgs. RBA (SF) Vacant (%) Net Absorption (SF) Average Rate All Classes 1,812 17,583, ,763 $13.95 Class A 33 3,120, ,750 $17.60 Class B 809 9,862, ,568 $13.27 Class C 970 4,600, (18,555) $ % 12.0% 11.0% 10.0% 9.0% $15.00 $14.50 $14.00 $13.50 $13.00 Overall Vacancy (%) Greenville Suburban Average Asking Rental Rate -Greenville Suburban SPARTANBURG Submarket/ Class # of Bldgs. RBA (SF) Vacant (%) Net Absorption (SF) Average Rate All Classes 905 6,698, (29,535) $12.16 Class A 7 661, (13,384) $20.00 Class B 463 3,805, (19,113) $11.95 Class C 426 1,780, ,962 $ % 11.0% 10.0% 9.0% 8.0% $13.00 $12.50 $12.00 $11.50 $11.00 Overall Vacancy (%) Spartanburg Average Asking Rental Rate - Spartanburg 2

3 UPSTATE OFFICE ACTIVITY SELECT UNDER CONSTRUCTION PROPERTIES 14.0% U.S. VACANCY COMPARISON PAST 8 QUARTERS Greenville/Spartanburg United States 1 North Main Street - ONE Greenville CBD SF: 175,000 Preleased: 83% Delivery: Holly Springs Road Spartanburg SF: 3,624 Preleaed: 100% Delivery: 4Q 2012 Tenant: DSI Vacancy Rate 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% By Class Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q EXISTING INVENTORY By Space Type 27% 55% 18% 32% 68% Graph Source: CoStar Property Class A Class B Class C Multi Single SAMPLING OF TOP LEASE TRANSACTIONS Tenant: Size (SF): Submarket: Address/Building: N/A 55,000 Greenville Suburban 1200 Brookfield Blvd. BE&K Building Group 18,032 Greenville CBD 201 East McBee Avenue (renewal)* Sempra US Gas & Power 17,985 Greenville CBD 201 Riverplace Strayer University 13,560 Greenville Suburban 555 N Pleasnantburg Dr./Park Central (renewal)* SAMPLING OF TOP SALE TRANSACTIONS Buyer: Size (SF): Submarket: Address/Building: Price: Greenville Research Properties 8,732 Greenville Suburban 2 Roper Corners Ct. $1,190,000 Investor 4,883 Greenville Suburban 17 Memorial Medical Dr. $740,000* *NAI Earle Furman Transaction 3

4 UPSTATE IN THE NEWS MARKET FOR DOWNTOWN OFFICE SPACE ON THE RISE David Dykes, Rudolph Bell & Woody White Published Aug. 24, 2012 The Greenville News For all that downtown Greenville is with its restaurants, bars, trees, sidewalks and entertainment it s also a place where scores of people come to work. And the legions working in banking, finance and communications jobs in high-rise buildings downtown are important components of what makes the central business district vibrant, providing daytime activity and customers for restaurants, shops and city parking garages. City officials have said about one of every eight or nine workers in Greenville County is located within two miles of City Hall. Maintaining enough office workers downtown became a concern for landlords and city officials even before the recession, but in the past year their fears have subsided. As companies such as CertusBank, Windsor Aughtry, SCIO Diamond and Phillips Staffing have taken space downtown, the vacancy rate for downtown office space has dropped from a high of 15.6 percent in the second quarter of 2010 to 14.2 percent in the second quarter of this year, according to data from CBRE/The Furman Co. Overall, it is much better, said Earle Furman, chairman of NAI Earle Furman, the commercial real estate brokerage. This, despite the fact that downtown Greenville has lost such corporate headquarters as Bowater Inc. While a lot of office space remains vacant, conditions are much better than during the recession, when the vacancy rate rose above 15 percent for five quarters. Even before the recession, downtown landlords were complaining that almost all of the new lease deals were the result of tenants jumping from building to building. A group of the most significant landlords formed a marketing organization, the Downtown Owners Group, to try to recruit more companies downtown. But conditions only worsened when the recession hit. City officials began to get nervous about their parking revenues as companies trimmed workforces and one of the biggest downtown tenants, the former South Financial Group, struggled, Mayor Knox White said. He said city officials also worried when Windstream, the telecommunications company from Little Rock, Ark., acquired Nuvox, another big downtown tenant. As it turned out, TD Bank bought South Financial, retaining a downtown workforce at Poinsett Plaza as well as launching a new regional hub along Interstate 85. Windstream kept Nuvox s 670-worker presence and added 100 workers to that, said Scott Morris, a company spokesman. Windstream occupies 181,000 square feet in two downtown office buildings same as Nuvox but its footprint will shrink to 137,000 square feet when it consolidates operations to the Landmark Building by the end of the year, Morris said. Some of the best news for the downtown office market arrived in May 2011, when CertusBank announced that it had picked Greenville for its new headquarters. The bank agreed to lease at least 126,000 square feet of space for its headquarters and showcase branch, making possible construction of the twin-tower, 370,000-square-foot One development in the middle of Main Street. CertusBank leased space at two other downtown developments, the Field House and RiverPlace, while waiting for One to get built. article continued on next page... 4

5 UPSTATE IN THE NEWS Not limited to large firms Smaller companies also have taken space downtown. Phillips Staffing, for example, recently moved its headquarters and about 25 employees into the former Bowater building next to Falls Park. that it was combining with Canadian rival Abitibi-Consolidated Inc. and moving its headquarters to Montreal. Other smaller companies that have moved downtown include Proaxis Therapy, Wireless Communications and Mediasation. As Clemson President Jim Barker had put it in a speech to business leaders almost a decade earlier, the small-town university needed the Upstate s biggest city as much as Greenville needed Clemson, and the city and the school should find a way to make things happen. A lot of our people just really liked downtown, said Blanton Phillips, chief executive of the work force services company that his father founded in In addition to making employees happy, the downtown location is a more appropriate business address for the kind of company that we like to keep, Phillips said. It s a good neighborhood, if you will. Downtown was starting to become a cool place when Phillips Staffing moved to Pelham Road 20 years ago, Phillips said. But now it s not just cool, but the center of business, and the hub of the Upstate. Phillips Staffing leased 7,000 square feet of space, joining the Nexsen Pruet law firm and Clemson University s MBA program in the four-story building. The company s move from the suburbs helps plug the hole created when papermaker Bowater announced in 2007 Today, market conditions are much improved, the mayor said. We dodged a lot of bullets, and really came out stronger than ever, he said. But reinvigorating the office market has presented a new problem: We re running out of parking spaces, White said, and we re actively looking at building new parking facilities downtown. College connection Businesses aren t the only entities that think it s smart to have office space downtown. Clemson University took its first bite of the downtown apple in 2009, leasing about 30,000 square feet in the former Bowater building next to Reedy River falls. The lease signing that put Clemson s graduate school of business administration in Greenville was a milestone for both the university and downtown. Last month, Clemson trustees decided to take a bigger stake downtown, approving the move of two more graduate programs the master of real estate development and master of professional accountancy to the One development, where Clemson plans to occupy about 70,000 square feet. Likewise, the University of South Carolina recently decided it needed a presence downtown with the opening of an office for its Moore School of Business at RiverPlace. Dean Hildy Teegen said the Moore School will use its space here for professional MBA classes, executive education, alumni meetings and statewide discussions on business and policy issues over an advanced telecommunications network. article continued on next page 5

6 UPSTATE IN THE NEWS Local office market In a second-quarter report on the office market, CBRE/The Furman Co. analysts cited CertusBank s aggressive expansion into the market. The bank will share the One development with Clemson, the Haynsworth Sinkler Boyd law firm, retailer Anthropologie and other tenants not yet announced. Certus and Haynsworth will vacate office space in several other downtown buildings when they move to One, which could push up the vacancy rate, the analysts said. But market absorption or the net change in occupied office space this year should exceed the historical annual average of 200,000 square feet, although the number largely is dependent on completion of One, the analysts said. Pressure to increase lease rates is rising, driven by the absorption of the best spaces in the market, combined with tenants signing for longer terms, the analysts said. give companies more options and, often, less expensive rental rates. Wells Fargo Securities economists said in a commercial real estate report that office fundamentals continued to improve late last year and the recovery continues to progress at a moderate pace. Economists Mark Vitner, Anika Khan and Joe Seydl said surveys showed U.S. banks continue to report a moderate easing in loan terms as well as a modest pickup in the demand for new commercial real estate loans. The challenge is that the game has changed for commercial real estate owners, CBRE/The Furman Co. said in its 2012 Upstate commercial real estate forecast. At the height of the boom, an owner could purchase a $100 million asset by leveraging 90 percent of its value. In a refinance under current conditions with a common revaluation, the same owner would have to come up with about $35 million to orchestrate a refinance, the company said. more opportunistic. Activity and the aptitude for risk is increasing, slowly, the forecast said. In a separate report, CBRE analysts said concessions are waning for Class A space downtown and tenants are taking the best spaces off the market for longer terms. The analysts also said employment is one of the most important indicators of commercial real estate demand. Since the beginning of 2008, more than 45,000 jobs have been lost in the Greenville, Spartanburg and Anderson areas, but 26 percent of those have been regained in the last two years, the analysts said. While the social and economic pulse of the city has been Greenville s downtown area, projects also are developing outside the center of the city, such as the Millennium Campus near Interstate 85, to The forecast said real estate investment trusts, or REITs, are continuing to accumulate cash and will eventually take it off the sidelines to purchase more assets as their acquisitions become 6

7 UPSTATE IN THE NEWS OLD TEXTILE BUILDINGS IN WEST END TO GET NEW LIFE OOBE TO BE LEAD TENANT IN FIRST PHASE OF MARKLEY TERRACE Cindy Landrum Published June 21, 2012 Journal Watchdog Three freestanding buildings on Markley Street have roots in Greenville s textile past and soon will have a place in Greenville s textile future. OOBE, a textile company that started making outdoor apparel and expanded into custom-designed corporate uniforms, will be the lead tenant in a new 67,000-square-foot mixed-use development that will continue the revitalization of Greenville s West End. Markley Terrace will turn three buildings in the 100 block of Markley Street that were used as a train-loading depot for textiles and machinery in the mid-1900s into office, light industrial and event/retail space. The development could also feature a restaurant with outdoor and rooftop dining. We didn t go out looking for a development project to do, said Jenks Patrick, president of Jenks Inc. Realty. If it wasn t for the buildings and their current structure, we wouldn t be doing it. Patrick said downtown has a shortage of creative architecture cool Class B office space downtown. Markley Terrace will retain much of the original buildings architectural aesthetics, such as the 15-foot ceilings braced by heart pine wood beams, interior walls with exposed brick and wide plank floors made of solid maple, he said. That can t be re-created, he said. Patrick likened the difference in office space to the difference between homeowners who want a brand-new house in a brand-new subdivision and those who buy in a historic mill village or neighborhood like Augusta Road and renovate the old structure to meet their needs. I think a balanced community has some of both, Patrick said. The West End is an opportunity for people who want that historic niche. We re one of the few people who have that available. OOBE, which has outgrown its space in the Old Cotton Warehouse building in the West End and has temporarily relocated on Park Avenue, is excited about being a part of the continued improvement of the West End, said founder and co-ceo Tom Merritt. OOBE has been a long-time resident of the West End and we support many business partners here, such as the (Greenville) Drive (baseball team), he said. The fact that Markley Terrace has its roots grounded in the textile industry, like OOBE, and is within easy walking distance to incredible restaurants, shops, art and entertainment options makes it ideally suited to our corporate culture. Markley Terrace will be between South Main Street and Academy Street, providing a link between Fluor Field and the Kroc Center, Patrick said. Patrick said he will be one of the owners of the site and the deal should close before Aug. 15. Construction should start in the fall and OOBE hopes to be in its new space by April, Patrick said. Patrick said he is talking to three other companies about locating in the project. I don t think we ll have a problem filling the space, said Patrick. He said he is targeting large space users who need 10,000 square feet. He did say there would be one 5,000-square-foot space available. The two other buildings will be done on a build-to-suit basis, he said. Balconies and patios will be added to the rear of the building, which has a panoramic view of downtown and the Blue Ridge Mountains. The design will also feature an outdoor plaza with a stage for special events. The buildings will get new heating and ventilation systems, windows, roofs and facades. Streetscape improvements to Markley and Rhett streets are planned, such as new sidewalks, reducing the number of telephone poles and new trees, Patrick said. The buildings have been vacant since Smith Dray Line moved to near the interstate at least 15 years ago, Patrick said. 7

8 THE OFFICE DIVISION For more information on the Upstate Office Market please contact one of our specialists. Glenn Batson Andrew Babb J. Peter Couchell, CCIM Principal & David Feild, CCIM J. Earle Furman, Jr., SIOR Chairman and -in-charge John Gray, CCIM Keith Jones, CCIM W. Scott Jones, SIOR Principal & Tyson Smoak Stuart Wyeth Principal & 8

9 ABOUT NAI EARLE FURMAN, LLC Uptown 15.3 million SF vacant 4.13% vacancy rate $54.14 NAI Earle SF/YR Furman avg. principals rental A SOLID FOUNDATION AND PROVEN RESULTS Midtown Founded by J. Earle Furman in 1986, NAI Earle Furman, LLC is the leading full service commercial real estate brokerage firm in the Upstate of South Carolina specializing in the office, industrial, investment, 4.88 healthcare, million land, SF vacant multifamily and retail sectors. NAI Earle Furman, LLC offers a wide range of services including sales, leasing, development, site selection, consulting and property management. A partnership with NAI Global allows NAI Earle Furman, 4.7% LLC to vacancy access a rate network of worldwide real estate connections and offer international commercial real estate services to Upstate $37.53 clients, SF/YR while avg. retaining rentallocal personality and knowledge. Downtown NAI Earle Furman offers a full service property management program that encompasses a unique hands-on approach to real estate management. Formal monthly property inspections with face-to-face contact with each tenant provide the foundation of the 11.3 million SF vacant management program. Each property is evaluated on an individual basis with the end result being a management program that will suit the needs of each property. Monthly operational reports are tailored 4.o% to accommodate vacancy rate each property and include an executive summary page unlike any in the industry. $42.03 SF/YR avg. rental STRONG LEADERSHIP AND A TEAM APPROACH The firm has over 60 team members and in 2011 completed 550 transactions. The Property Management team has also grown exponentially in recent years and manages over 5 million square feet of commercial space in North and South Carolina. NAI GLOBAL As the world s only managed network of commercial real estate firms, New America International (NAI) works together to help clients strategically optimize their assets throughout the world. As a member of this network, NAI Earle Furman, LLC, is able to provide commercial real estate services to our local Upstate clients, as well as national and international clients. We have immediate access to over 5,000 professionals working out of 350 offices in 55 countries throughout the world. The NAI Global Network has annual sales and leasing transactions of $45 billion and manages 300 million square feet of property. In addition to NAI Global, our brokers are also members of ICSC, Urban Land Institute, CCIM and SIOR, giving them access to a wealth of knowledge and networking. NAI Earle Furman has more SIOR and CCIM designees than any other firm in South Carolina. 101 East Washington Street, Suite 400 Greenville SC

10 ADDITIONAL RESOURCES Complete listings of NAI Earle Furman s available properties The Greenville Area Development Corporation (GADC) is dedicated to the growth and prosperity of Greenville County, SC. Since its founding in 2001, GADC efforts have resulted in the creation of nearly 10,000 new jobs and more than $2 billion in capital investment in Greenville County. The organization s continued successes are demonstrated by the innovative, dynamic, and inviting nature of our community. Formed in 2000, the Upstate South Carolina Alliance is a public/private regional economic development organization designed to market the dynamic 10-county Upstate region to the world. The 10 counties of the Alliance represent the commerce-rich northwestern corner of South Carolina - The Greater Greenville Chamber at its core is dedicated to promoting quality development of Upstate South Carolina through managed growth, service to members and the public, and a community-wide approach to issues shaping the region's future. - Provides information on trade, grants, rural development, and recycling. Includes databases of community profiles, labor market information, etc South Carolina's Information Highway is the largest directory of South Carolina information on the Internet. - The South Carolina Power Team promotes industrial sites & industrial buildings in South Carolina and the state's unique advantages for industry. - Official website of the City of Greenville Official website of Spartanburg County government Official website of Greenville County government - Official website of Anderson county government - Official website of Cherokee county government 10