Office Market Remained Steady in Q4

Research & Forecast Report Long Island OFFICE MARKET Q4 2015 Office Market Remained Steady in Q4 Rose Liu Research & Financial Analyst Long Island Takeaways Class A & B Continuing the momentum, the Long Island office market remained steady in Q4. Long Island s unemployment rate declined 50 basis points (bps) from Q3 2015 to 4.1% in Q4 2015. GDP growth shrank to 2.0% in Q3 due to the stronger US dollars and reduced exports. In December, the Federal Reserve finally raised the long-waited short-term interest rate by 0.25% since the financial crisis in 2008. Strength in the economic fundamentals and stronger job market were the key reasons of the rate increase. However, it has little impact on US properties or returns as well as the long-term mortgage rate. Q4 vacancy rate dropped 10 basis points (bps) to 10.0%, 90 bps lower than a year ago. Likewise, Class A buildings continued to record a lower vacancy rate at 9.9%, down 40 bps from Q3. The average gross asking rents dropped to $26.50 per square foot (psf), a 0.6% decrease from Q3. The rental rates for Class A buildings declined slightly to $31.39 psf. Long Island net absorption, however, rolled back to 86,196 square feet (sf) in Q4 from its peak at 299,385 sf in Q3. Leasing activity totaled 289,240 square feet in Q4, which however was below the Long Island average of 667,032 sf in the past five years. Market Indicators Relative to prior period VACANCY NET ABSORPTION Summary Statistics Q4 2015 Long Island Office Market Nassau Suffolk Long Island* Vacancy Rate 9.7% 10.3% 10.0% Change From Q3 2015 (basis points) Net Absorption (Thousand Square Feet) Vacancy Rate (Class A) Nassau Q4 2015 Nassau Q1 2016* Suffolk Q4 2015-10 -30-10 3.4 82.8 86.2 9.3% 10.6% 9.9% Suffolk Q1 2016* CONSTRUCTION RENTAL RATE** Note: *Projected **Rental rates for current quarter are for suburban area. Net Absorption (Class A, Thousand Square Feet) 27.1 88.9 116.0 Asking Rents Per Square Foot Per Year Suburban Class A & B $29.26 $23.62 $26.50 Change From Q3 2015-1.01% 0.55% -0.64% Suburban Class A $33.65 $28.00 $31.39 Change From Q3 2015-2.18% -2.03% -1.13% *Long Island Office Market refers to Nassau & Suffolk Counties; 10,000 square feet and above

Gross Domestic Product (GDP): Percentage Change From Preceding Period Unemployment Trends - Nassau & Suffolk GDP % Change Quarter-over-Quarter Unemployed in Thousands 5.00 Unemployment Rate 4.00 3.00 2.00 1.00 - % Change 120.00 100.00 80.00 60.00 40.00 20.00 0.00 6.80% 7.10% 5.40% 4.53% 4.10% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% (1.00) Source: US Department of Commerce Vacancy Q4 inventory ending December 31 was 60.4 million square feet for Class A & B buildings. The Long Island vacancy rate continued to drop, standing at 10.0% in Q4, which marked the 5th straight quarterly decline and the lowest rate in the past 9 years. The vacancy rates decreased to 9.7% and 10.3% in Nassau and Suffolk Counties respectively. Submarkets have been seeing mixed vacancy rates in Q4. The Western Suffolk submarket had the most existing inventory of 19 million square feet, taking up nearly one third of the entire Long Island office market. In Q4, the Western Suffolk and Southern Nassau submarkets outperformed other submarkets, posting 10.8% and 6.8% vacancy rates respectively. The Long Island office market remained tight due to the scarcity of product and high demand, partly because of companies migrating from Queens and Brooklyn. For Class A buildings the vacancy rates in Nassau and Suffolk continued to drop 40 bps to 9.9% in Q4, the lowest rate in 2015, which posted 180 bps decline from the beginning of 2015. Suffolk County continued to improve benefitting from its high demand, with the vacancy rate dropping to 10.6%, a big decrease of nearly 1% from Q3. Source: NYS Department of Labor Rental Rate The Long Island average gross rental rate experienced ups and downs in the last four consecutive quarters, which declined slightly to $26.50 psf in Q4. The average asking rent in Nassau County rolled back to $29.26 psf in Q4, but a $0.36 increase from Q1. Suffolk County saw an improvement in the rental rate, up from $23.49 psf in Q3 to $23.62 psf in Q4, which increased for the first time since the beginning of 2015. The rental rates varied in each submarket because of the various building types and locations. The Western Nassau submarket continued to be the top performer, recording the highest rental rate of $31.75 psf in Q4, despite a decrease of 1.7% from Q3. The rental rate of the Central Suffolk submarket remained at the bottom amongst the submarkets, down 0.25% from Q3 to $19.79 psf in Q4. The Central Nassau and Western Suffolk made gains in the rental rates, averaging $27.85 psf and $25.05 psf respectively. The overall Long Island rental rate for Class A buildings slid to $31.39 psf, a quarterly decline of 1.13%, but an annual increase of 1.82% from a year ago. Update Vacancy Rates, Asking Rents, & Absorption Vacancy Rates Average Asking Rents Net Absorption (in Thousands) Class A Class A&B Western Nassau Northern Nassau Central Nassau Eastern Nassau Southern Nassau Western Suffolk Central Suffolk 0.0% 10.0% 20.0% Western Nassau Northern Nassau Central Nassau Eastern Nassau Southern Nassau Western Suffolk Central Suffolk $0 $15 $30 Western Nassau Northern Nassau Central Nassau Eastern Nassau Southern Nassau Western Suffolk Central Suffolk (20) 20 60 100 Source: CoStar & Colliers International Research 2 Long Island Research & Forecast Report Q4 2015 Long Island Colliers International

Absorption Long Island net absorption dipped to 86,196 square feet in Q4 from 299,385 sf in Q3, down 58.6% from a year ago. The Q4 net absorption in Nassau County shrank significantly to 3,387 sf in Q4 from its peak in Q3. A few phenomenal buildings had negative net absorption including 3 Dakota Drive in Lake Success posting negative 21,353 sf, 333 Earle Ovington Boulevard (The Omni) in Uniondale recording negative 46,373 sf and 1025 Old Country Road reading negative 56,991 sf. Yet, buildings such as 1981 Marcus Avenue in Lake Success and 100 Quentin Roosevelt Boulevard in Garden City had total net absorption in excess of 41,000 sf. In contrast, Suffolk County stood out with a major improvement in net absorption reading 82,809 sf in Q4. The net absorption for Class A buildings totaled 116,025 sf, a slight decline from Q3 but a surge from Q1. The total YTD Long Island net absorption was 592,004 sf. The Western Nassau submarket continued to be the key player, with the highest YTD net absorption of 182,553 sf. Sale & Lease Activity Leasing activity somewhat slowed in Q4 partly due to the limited supply and the holiday season. The leasing activity quarterly during the past five years averaged 667,032 sf, while leasing activity in Q4 2015 was under the average level. A few major deals took place in Q4. Co-working places remained popular that Regus a global workplace provider leased 16,000 sf at 100 Duffy Avenue in Hicksville. Waterstone Development closed the $113.7 million deal for a 940,000 square foot office condominium unit and will lease to North Shore-LIJ Health System at 1111 Marcus Avenue in Lake Success. A 170,000 square foot office building at 1377 Motor Parkway in Islandia was inked by Damianos Realty Group for $11.5 million. Update Transaction Highlights Long Island Absorption (Square Feet, in Thousands) Leasing Activity (SF) Square Feet 1,000,000 800,000 600,000 400,000 200,000 0-200,000-400,000 Long Island Office Net Absorption 2010-2015 86 184 208 45 31 283 663-123 108-339 -194 (400) (200) 0 200 400 600 800 Nassau VS. Suffolk Office Leasing Activity 2010-2015 Nassau Suffolk Average Source: CoStar & Colliers International Research office SALE ACTIVITY Property Address Town Submarket Size SF Sale Price 1111 Marcus Avenue Lake Success Nassau Western 940,000 $113,700,000 1377 Motor Parkway Islandia Suffolk Western 170,000 $11,500,000 330 Old Country Road Mineola Nassau Central 115,690 $23,500,000 91 North Franklin Street Hempstead Nassau Central 32,608 $3,400,000 office LEASE ACTIVITY Outlook Property Address Town Submarket Size SF Lease Type 2 Jericho Plaza Jericho Nassau Eastern 21,000 Lease 100 Duffy Avenue Hicksville Nassau Eastern 16,000 Lease 100 Jericho Quadrangle Jericho Nassau Eastern 15,000 Renewal 49 Wireless Boulevard Hauppauge Suffolk Central 14,762 Lease The Long Island office market continued the momentum and grew steadily throughout 2015 and has positive outlook heading into 2016 despite a slight slowdown in the leasing activity and net absorption in Q4. It also continued the trend that demand outpaced supplies with a matter of fact of limited product and stronger demand for office spaces in Long Island. With the growing new business and technological firms, people desire to move to more efficient space layouts, such as Regus. 3 Long Island Research & Forecast Report Q4 2015 Long Island Colliers International Even though the Federal Reserve raised its interest rate target range by 25 bps, it would have little impact on the property value and returns in the short term. In the long run, it might affect the long-term borrowing rate, however, this small rate increase would be offset by the higher rate of return. The Long Island office market has been benefitting from the stronger national economic fundamentals and continues to make positive strides outperforming expectations in 2016.

UPDATE - MARKET STATISTICS SNAPSHOT LONG ISLAND CLASS A & B COUNTY VACANCY RATE AVERAGE ASKING RENTS 4Q15 3Q15 2Q15 1Q15 4Q15 3Q15 2Q15 1Q15 Nassau Total 9.7% 9.8% 10.4% 10.9% $29.26 $29.56 $29.30 $28.90 501 Bldgs Lease 9.6% 9.6% 10.1% 10.7% $29.29 $29.58 $29.29 $28.89 Sublease 0.2% 0.2% 0.3% 0.2% $32.74 $28.76 $28.05 $28.61 Suffolk Total 10.3% 10.6% 10.9% 10.9% $23.62 $23.49 $23.50 $23.86 509 Bldgs Lease 9.8% 10.0% 10.3% 10.3% $23.67 $23.53 $23.53 $23.89 Sublease 0.5% 0.6% 0.6% 0.6% $22.58 $25.23 $23.81 $23.77 Long Island Total 10.0% 10.1% 10.6% 10.9% $26.50 $26.67 $26.35 $26.42 1,010 Bldgs Lease 9.7% 9.8% 10.2% 10.5% $26.52 $26.68 $26.34 $26.41 Sublease 0.3% 0.3% 0.4% 0.4% $25.84 $27.05 $25.13 $25.14 Nassau Total 9.3% 9.5% 10.6% 11.5% $33.65 $34.40 $33.34 $32.95 75 Class A Bldgs Lease 9.0% 9.2% 9.9% 11.0% $33.64 $34.39 $33.33 $32.93 Sublease 0.3% 0.3% 0.7% 0.5% $39.35 $31.38 $30.29 $30.29 Suffolk Total 10.6% 11.4% 11.7% 12.1% $28.00 $28.58 $28.09 $28.34 74 Class A Bldgs Lease 9.5% 10.2% 10.5% 10.9% $28.00 $28.52 $28.02 $28.27 Sublease 1.1% 1.2% 1.2% 1.1% $26.58 $27.75 $30.37 $30.20 Long Island Total 9.9% 10.3% 11.1% 11.7% $31.39 $31.75 $30.92 $30.67 149 Class A Bldgs Lease 9.2% 9.7% 10.2% 11.0% $31.32 $31.65 $30.83 $30.58 Sublease 0.6% 0.7% 0.9% 0.8% $29.06 $29.77 $30.34 $30.23 LONG ISLAND CLASS A & B -Q4 2015 MARKET EXISTING INVENTORY (SF) december 31, 2015 VACANCY RATE OVERALL AVERAGE ASKING RENT rental rate (Class a) rental rate (Class b) net absorption (sf) net absorption (sf) current quarter YTD NASSAU Western Nassau 10,229,667 10.60% $31.75 $32.37 $30.76 (9,643) 182,553 Northern Nassau 378,364 8.60% $25.31 $28.00 $24.25 5,850 4,427 Central Nassau 10,906,953 9.00% $27.85 $34.68 $23.96 (14,766) 142,277 Eastern Nassau 9,943,486 10.70% $29.45 $34.65 $23.62 (5,666) 142,478 Southern Nassau 2,391,735 6.80% $26.02 $0.00 $26.02 24,262 64,879 NASSAU TOTAL* 34,152,641 9.70% $29.26 $33.65 $25.66 3,387 545,116 SUFFOLK Western Suffolk 18,971,914 10.80% $25.05 $28.02 $22.98 67,846 62,819 Central Suffolk 5,185,048 10.40% $19.79 $22.00 $19.73 (12,240) (63,310) SUFFOLK TOTAL** 26,209,545 10.30% $23.62 $28.00 $21.62 82,809 46,888 LONG ISLAND TOTAL 60,362,186 10.00% $26.50 $31.39 $23.46 86,196 592,004 *Totals include all Nassau Submarkets **Totals include all Suffolk Submarkets Source: CoStar and Colliers International Research 4 Long Island Research & Forecast Report Q4 2015 Long Island Colliers International

Featured Listings 1991 marcus avenue, lake success +/- 170,000 SF office/medical building for lease Available space: +/- 4,100 SF Fully built out medical space Private bathroom within space, sinks in every exam room Near North Shore LIJ, LIE, and Northern State Parkway 50 CHERRY STREET, FARMINGDALE St. kilian parish school +/- 34,790 SF Available for Lease 24 classrooms Large, high ceiling Double pane windows Cafeteria - full cooking facilities Cinderblock construction 1981/1983 marcus ave, lake success 350,000 SF Building for Lease/Sale Over 80,000 SF Available for lease Beautiful campus setting Cafeteria in Building Convenient access to major highways Underground parking 1300 WALT WHITMAN ROAD 132,741 SF Class A office building for lease Available space: +/- 10,500 SF (divisible) Marble lobby, vision panels, low loss factor Responsive, on-site Landlord (Nikon) Close to Route 110 and accessible via the LIE and Northern Parkway Copyright 2015 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. 5 Colliers International Long Island 1981 Marcus Avenue, Suite E104 Lake Success, New York 11042 +1 516 328 6500 colliers.com/long Island North American Research & Forecast Report Q4 2014 Office Market Outlook Colliers International

502 offices in 67 countries on 6 continents United States: 140 Canada: 31 Latin America: 24 Asia Pacific: 199 EMEA: 108 Market Contact: Rose Liu Research & Financial Analyst Long Island Main +1 516 328 6500 Ext. 555 Dir +1 516 284 3447 rose.liu@colliers.com $2.3 billion in annual revenue 1.7 billion square feet under management 16,300 professionals and staff About Colliers International Colliers International is a global leader in commercial real estate services, with more than 16,300 professionals operating out of 502 offices in 67 countries. A subsidiary of FirstService Corporation, Colliers International delivers a full range of services to real estate occupiers, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. Colliers International has been recognized and ranked by the International Association of Outsourcing Professionals Global Outsourcing 100 for 10 consecutive years, more than any other real estate services firm. colliers.com Copyright 2015 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.