RESEARCH & FORECAST REPORT

Q2 2012 OFFICE LAS VEGAS NEVADA RESEARCH & FORECAST REPORT Recovery Without Job Growth? Despite office employment still trending downwards, Southern Nevada s office market posted positive net absorption in the second quarter of 2012 and saw vacancy again begin to decline, reaching 23.7 percent. By most measures, the office market in Southern Nevada appears to be on the mend, but the lack of meaningful job growth so far this year makes this nascent recovery perplexing. Asking rental rates decreased by $0.01 to $1.90 per square foot (psf) on a Full Service Gross (FSG) basis. Construction remains constrained. MARKET INDICATORS Q2-12 NET ABSORPTION Projected Q3-12 According to the Nevada Department of Employment, Training & Rehabilitation, between May 2011 and May 2012, a net of 1,600 office sector jobs were lost in Southern Nevada. The professional & business services sector, which had been adding jobs in 2011, dropped 1,600 jobs over the past twelve months. The financial activities sector, which includes insurance and real estate, continued its decline, dropping 1,700 jobs over the past twelve months. Even the traditionally bullet-proof health care & social assistance sector has been shaky of late, though comparing May 2012 to May 2011 shows an increase of 1,700 jobs. Unemployment in the Las Vegas-Paradise MSA stood at 11.8 percent as of May 2012, down from 13.6 percent in May 2011. Over the same period, total employment in Southern Nevada has increased by 5,900 jobs, the majority in leisure and hospitality and trade, transportation and utilities. RENTAL CLARK COUNTY ECONOMIC DATA 2012 2011 Office completions in the first quarter of 2012 consisted of a single 4,500 square foot Class C buildings on Horizon Ridge Parkway in Henderson, keeping new constructions to a minimum at mid-year 2012. If completions have been constrained, however, the office pipeline is beginning to fill up, at least by the standards of the past five years. There are currently three Class C, three Class B and two Class A projects in development in Southern Nevada. New developments are primarily located in the Downtown and Henderson submarkets, with one project, the Summerlin Centre Office Development located within the Shoppes at Summerlin Mall, apparently rising from the dead and scheduled to finally complete construction sometime over the next two years. Unemployment Rate (Apr) Visitor Volume (Apr YTD) Gaming Revenue (Apr YTD) 11.6% 12.0% 13.1 MM 12.8 MM $3.21 BB $3.05 BB HISTORICAL AND ASKING S 25.0% 24.0% 23.0% 22.0% $2.20 $2.15 $2.10 $2.05 The Great Recession may have been global, but it looks as though, for Southern Nevada, the recovery is going to local. Taxable Sales (Mar YTD) $7.54 BB $7.16 BB Commercial Occupancy (Q2) 83.8% 83.5% SOURCE: THE CENTER FOR BUSINESS & ECONOMIC RESEARCH, UNLV 21.0% 20.0% 19.0% 18.0% 17.0% 16.0% $2.00 $1.95 $1.90 $1.85 $1.80 $1.75 15.0% 3 Q 2010 4 Q 2010 1 Q 2011 2 Q 2011 3 Q 2011 4 Q 2011 1 Q 2012 2 Q 2012 $1.70 Vacancy Asking Rental Rate www.colliers.com/lasvegas

95 215 NORTH LAS VEGAS After two quarters of rising vacancy, the office market got back on track in the second quarter of 2012 and saw vacancy decline by 0.4 points to 23.7 percent. Current vacancy remains higher now than during the surge in demand experienced in mid-2011, however, job losses in the office sector suggest that this rally may be short lived. NORTHWEST WEST CENTRAL 15 DOWN TOWN EAST LAS VEGAS 95 The highest vacancy rates by submarket were in the North Las Vegas (29.5 percent), Northwest (26.4 percent), and East Las Vegas (26 percent) submarkets. Downtown continued to boast the market s lowest vacancy rate at 12.7 percent. Vacancy dropped in six of the Valley s submarkets: Airport, Downtown, East Las Vegas, Henderson, North Las Vegas and Southwest, increasing only in the Northwest and West Central submarkets this quarter. SOUTHWEST 215 AIRPORT HENDERSON Class A office eased back this quarter after posting strong net absorption last quarter. Given the weakness in the finance, insurance, real estate and legal firms that make up the tenant base of Class A office, this is not surprising. So far in 2012, though, activity by gaming corporations is making up for the weakness in those other industries. EMPLOYMENT Financial Activities Professional & Business Services Health Care & Social Assistance May 2011 May 2010 Change 38,000 39,700-1,700 99,900 101,500-1,600 66,800 65,100 +1,700 TOTAL 204,700 206,300-1,600 Source: Nevada Department of Employment, Training and Rehabilitation. Vacancy declined for both Class B and Class C properties in the second quarter, reversing weak performance posted last quarter. The return of call center operators to Southern Nevada may keep Class B space headed in the right direction, assuming they are able to find spaces that meet their needs. Net absorption was 188,302 square feet this quarter, a significant improvement over last quarter s negative 40,278 square feet of net absorption. After strong net absorption in mid-2011, demand for Southern Nevada office space turned negative in the fourth quarter of 2011 and first quarter of 2012. This quarter s positive net absorption is the strongest net absorption the market has seen since the fourth quarter of 2009, but may be short lived considering the continued job losses in the office sector. Class A office has absorbed 53,098 square feet of space so far this year. Class B net absorption rebounded this quarter, with 76,445 square feet for the quarter, but only 14,312 square feet of net absorption year-to-date. Class C space has absorbed 80,614 square feet so far in 2012, all of its positive net absorption being recorded in the second quarter. Most of the net absorption in Southern Nevada so far in 2012 has taken place in the Southwest, Northwest and Henderson submarkets. LEASE AND SALES ACTIVITY LEASE ACTIVITY PROPERTY NAME LEASE DATE LEASE TERM SIZE LEASE TYPE McCarran Center II May 2012 48 months 23,000 $0.99 NNN Class C 2690 Decatur Apr 2012 120 months 22,000 $0.47 NNN Class C Quail Alta Apr 2012 120 months 17,000 $1.30 MG Class C Renaissance Office Park May 2012 63 months 8,000 $0.96 FSG Class C Camino Al Norte Business Park May 2012 36 months 6,000 $0.67 NNN Class C SALES ACTIVITY PROPERTY NAME SALE DATE SALE PRICE SIZE PRICE/ TYPE Spanish Villas Apr 2012 $5,000,000 114,000 $44 Class C Cambridge Quail Park Apr 2012 $3,045,000 50,000 $61 Class C Rainbow Oasis Plaza May 2012 $1,850,000 39,000 $47 Class C South Pointe May 2012 $3,150,000 21,000 $148 Class C

Gross absorption in 2012 has not kept pace with the very strong gross absorption numbers posted in the second and third quarters of 2011, but it remains fairly consistent with the gross absorption numbers we ve seen throughout the Great Recession. In 2012, gross absorption has averaged 1.1 million square feet per quarter, compared to 1.1 million in 2011, 1 million in 2010, 0.9 million in 2009 and 1 million in 2008. As overall demand for office space has remained consistent, the difference is now in how much new space is coming onto the market quarter after quarter. In essence, retention of businesses may be the key to jump starting recovery in Southern Nevada s office sector. Of the office deals we have tracked so far in 2012, the most active industries have been financial services, amusement & recreation (which includes gaming and hospitality companies), business services and education & social services. Local companies made up 66 percent of the tenants taking space so far this year and 58 percent of the total office space taken. The fact that this recovery (such as it is) has been largely homegrown goes a long way in explaining why is has been so slow and uneven. Regional companies made up 17 percent of the tenants taking space and 23 percent of the total office space taken. The amount of distressed office space (i.e. office properties that have received a notice of default or are at some stage in the foreclosure process) has dropped by approximately 400,000 square feet between the end of 2011 and mid-year 2012. Distressed sales have been fair this year, and the amount of new distressed office space has slowed down tremendously over past years. Distressed office properties are, overall, selling for about 83 percent of non-distressed properties this year. HISTORICAL ABSORPTION VS. COMPLETIONS 5,000,000 4,000,000 The weighted average asking rental rate decreased this quarter to $1.90 per square foot (psf) on a full service gross (FSG) basis. This was a decrease of $0.01 from last quarter, and $0.11 from four quarters ago. Asking rents have been declining since the onset of the Great Recession in 2007/2008. The only large movement in asking rents this quarter, among submarkets or classes, was in North Las Vegas, where the average asking rent increased by $0.11 to $1.65 psf FSG (still among the lowest asking rents in the Valley) and East Las Vegas, where the average asking rent decreased by $0.07 to $1.55 psf FSG. Y-O-Y OFFICE CHANGE Office Y-O-Y Vacancy Change 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% Q101 Q201 Q301 Q401 Q102 Q202 Q302 Q402 Q103 Q203 Q303 Q403 Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Available office sublease space was increasing in the third and fourth quarters of 2011 a distressing sign since increases in sublease space soon translate into increases in directly leasable space. Fortunately, space available for sublease declined in the first quarter of 2012 and has remained fairly stable in the second quarter of 2012, hitting 338,666 square feet at mid-year. This is still higher than one year ago, but at least is once again heading in the right direction. Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 1 Q 2011 2 Q 2011 3 Q 2011 4 Q 2011 1 Q 2012 2 Q 2012 3,000,000 2,000,000 1,000,000 0-1,000,000-2,000,000 2004 2005 2006 2007 2008 2009 2010 2011 Absorption YTD Completions YTD The amount of office space available for sale on an owner/user basis has decreased by 21,000 square feet since the fourth quarter of 2011, and now stands at 994,000 square feet. The average asking price for owner/ user space this quarter was $108 psf, a decrease of $25 from last year. Owner/user sales are significantly stronger this year than in the last four years. A total of 553,000 square feet traded in the first half of 2012 at an average price of $50. Non-distressed owner/user sales accounted for 82 percent of this space, and sold at an average sales price of $45 per square foot. Distressed owner/user sales sold for an average of $69 per square foot. At least some of this seeming discrepancy can be explained by the OFFICE DEVELOPMENT PIPELINE PROJECT TYPE SUBMARKET SIZE PRE-LEASING COMPLETION Legal Aid Center BTS Class C Downtown 10,000 100% 2012 Horizon Ridge Professional Park Class C Henderson 8,000 0% 2012 Horizon Ridge Professional Park Ph 2 Class C Henderson 13,000 0% 2012/13 Seven Hills Plaza A/B Class B Henderson 68,000 n/a 2012 Seven Hills Plaza C/D Class B Henderson 44,000 n/a 2013 EVAPS Law Office Building Class B Downtown 55,000 n/a 2012/13 Federal Justice Tower Class A Downtown 129,000 100% 2013 Summerlin Centre Office Development Class A Northwest 325,000 0%??? COLLIERS INTERNATIONAL - LAS VEGAS P. 3

MARKET COMPARISONS OFFICE MARKET TYPE BLDGS TOTAL INVENTORY DIRECT VACANT DIRECT SUBLEASE SUBLEASE VACANT TOTAL VACANT QUARTER PRIOR QUARTER NET ABSORPTION QTR NET ABSORPTION YTD COMPLETIONS QTR COMPLETIONS YTD UNDER PLANNED WEIGHTED AVG ASKING RENTAL AIRPORT SUBMARKET A 6 605,557 224,822 37.1% - 0.0% 224,822 37.1% 38.4% 7,521 20,640 - - - - $2.74 B 43 1,957,902 312,099 15.9% 15,089 0.8% 327,188 16.7% 16.9% (14,607) (25,382) - - - - $1.88 C 266 2,937,554 771,837 26.3% 17,184 0.6% 789,021 26.9% 28.3% 38,958 14,799 - - - - $1.59 Total 315 5,501,013 1,308,758 23.8% 32,273 0.6% 1,341,031 24.4% 25.3% 31,872 10,057 - - - - $1.85 DOWNTOWN A 5 807,588 89,212 11.0% 7,706 1.0% 96,918 12.0% 11.2% (6,077) (23,752) - - - 129,000 $2.57 B 32 2,273,742 309,304 13.6% 1,500 0.1% 310,804 13.7% 14.2% 11,978 14,037 - - - 55,000 $1.90 C 80 1,094,098 132,288 12.1% - 0.0% 132,288 12.1% 13.0% 9,737 2,895 - - - 10,000 $1.54 Total 117 4,175,428 530,804 12.7% 9,206 0.2% 540,010 12.9% 13.3% 15,638 (6,820) - - - 194,000 $1.92 EAST LAS VEGAS A 9 1,351,642 248,644 18.4% 48,845 3.6% 297,489 22.0% 25.7% 57,326 33,717 - - - - $2.83 B 19 1,409,555 498,863 35.4% - 0.0% 498,863 35.4% 34.5% (17,757) (23,069) - - - - $1.20 C 141 2,404,834 596,393 24.8% 12,776 0.5% 609,169 25.3% 25.1% (540) (12,206) - - - - $1.31 Total 169 5,166,031 1,343,900 26.0% 61,621 1.2% 1,405,521 27.2% 27.8% 39,029 (1,558) - - - - $1.55 HENDERSON A 11 787,274 288,092 36.6% 17,824 2.3% 305,916 38.9% 35.5% (26,699) (55,843) - - - - $2.57 B 68 2,285,225 538,214 23.6% 26,728 1.2% 564,942 24.7% 25.7% 22,668 49,026 - - 67,692 44,000 $2.11 C 222 2,148,987 421,274 19.6% 6,159 0.3% 427,433 19.9% 23.4% 81,293 50,903 4,500 13,500-21,620 $1.68 Total 301 5,221,486 1,247,580 23.9% 50,711 1.0% 1,298,291 24.9% 26.2% 77,262 44,086 4,500 13,500 67,692 65,620 $2.07 NORTH LAS VEGAS A - - - n/a - n/a - n/a n/a - - - - - - $- B 8 200,796 73,514 36.6% - 0.0% 73,514 36.6% 38.5% 3,697 5,959 - - - - $1.82 C 49 426,417 111,649 26.2% - 0.0% 111,649 26.2% 25.8% (1,693) (21,442) - - - - $1.53 Total 57 627,213 185,163 29.5% - 0.0% 185,163 29.5% 29.8% 2,004 (15,483) - - - - $1.65 NORTHWEST A 21 1,709,415 714,825 41.8% 7,404 0.4% 722,229 42.3% 41.2% (14,648) 38,277 - - - 200,000 $2.12 B 82 2,988,470 548,246 18.3% 22,549 0.8% 570,795 19.1% 21.2% 63,028 81,296 - - - - $2.15 C 281 2,949,534 752,694 25.5% 16,011 0.5% 768,705 26.1% 24.2% (53,830) (14,545) - - - - $1.77 Total 384 7,647,419 2,015,765 26.4% 45,964 0.6% 2,061,729 27.0% 26.8% (5,450) 105,028 - - - 200,000 $2.00 SOUTHWEST A 3 397,112 169,733 42.7% - 0.0% 169,733 42.7% 44.7% 7,752 53,263 - - - - $2.57 B 70 2,714,887 693,161 25.5% 71,876 2.6% 765,037 28.2% 28.2% 5,837 29,746 - - - - $2.41 C 303 3,298,374 638,591 19.4% 42,415 1.3% 681,006 20.6% 21.8% 38,708 79,702 - - - - $1.85 Total 376 6,410,373 1,501,485 23.4% 114,291 1.8% 1,615,776 25.2% 25.9% 52,297 162,711 - - - - $2.19 WEST CENTRAL A 2 227,624 48,543 21.3% - 0.0% 48,543 21.3% 15.5% (13,204) (13,204) - - - - $2.03 B 46 1,672,458 475,002 28.4% - 0.0% 475,002 28.4% 28.5% 1,601 (117,301) - - - - $1.79 C 165 2,663,939 649,407 24.4% 2,069 0.1% 651,476 24.5% 24.0% (12,747) (19,492) - - - - $1.56 Total 213 4,564,021 1,172,952 25.7% 2,069 0.0% 1,175,021 25.7% 25.2% (24,350) (149,997) - - - - $1.67 MARKET TOTAL A 57 5,886,212 1,783,871 30.3% 81,779 1.4% 1,865,650 31.7% 31.7% 11,971 53,098 - - - 329,000 $2.43 B 368 15,503,035 3,448,403 22.2% 137,742 0.9% 3,586,145 23.1% 23.7% 76,445 14,312 - - 67,692 99,000 $1.96 C 1,507 17,923,737 4,074,133 22.7% 96,614 0.5% 4,170,747 23.3% 23.8% 99,886 80,614 4,500 13,500-31,620 $1.62 Total 1,932 39,312,984 9,306,407 23.7% 316,135 0.8% 9,622,542 24.5% 24.9% 188,302 148,024 4,500 13,500 67,692 459,620 $1.90 QUARTERLY COMPARISON AND TOTALS Q2-12 1,932 39,312,984 9,306,407 23.7% 316,135 0.8% 9,622,542 24.5% 24.9% 188,302 148,024 4,500 13,500 67,692 459,620 $1.90 Q1-12 1,931 39,308,484 9,490,209 24.1% 316,208 0.8% 9,806,417 24.9% 24.8% (40,278) (40,278) 9,000 9,000 133,500 63,190 $1.91 Q4-11 1,929 39,299,484 9,440,931 24.0% 322,029 0.8% 9,762,960 24.8% 24.4% (119,560) 209,462 45,579 478,023 142,500 8,190 $1.95 Q3-11 1,928 39,253,905 9,275,792 23.6% 294,361 0.7% 9,570,153 24.4% 24.9% 482,966 329,022 312,444 432,444-26,190 $1.98 Q2-11 1,925 38,941,461 9,446,314 24.3% 266,009 0.7% 9,712,323 24.9% 25.2% 48,637 (153,944) - 120,000 332,444 26,190 $2.01 www.colliers.com/lasvegas

sale last quarter of the old Southwest Gas facility at 4300 W. Tropicana Avenue, which traded for only $29 psf. Properties available for sale on an investment basis decreased to 710,000 square feet at mid-year 2012 from last year s 1,125,000 square feet. The average asking price for investment sales was $117 psf, a $28 psf decrease from the fourth quarter of 2011, and coupled with the much lower actual sales prices, an indication that office sellers are still probably overvaluing their properties. Investment sales are still lagging this year compared to last, but are stronger than in the other years of the recession. The average sales price of an office investment currently stands at just $58 per square foot. Distressed investment sales amounted to 661,000 square feet at an average sales price of $47 per square foot. Non-distressed sales have sold at an average of $96 per square foot so far in 2012. The Great Recession may have been global, but it looks as though, for Southern Nevada, the recovery is going to be local. Office employment, which posted a nice surge in mid-2011, has been hit hard over the past five years (though not as hard as the construction sector). Since the first quarter of 2008, office employment in Southern Nevada has dropped by over 24,000 jobs. As with construction, the main culprit here appears to be the collapse of residential, and to a lesser extent commercial, real estate in the Valley. When the housing market bubble burst, it took thousands of OCCUPANCY VS. OFFICE EMPLOYMENT 207,000 206,000 205,000 79.0% 78.0% 77.0% jobs with it in the financial, real estate and legal sectors. Unless job gains in the leisure and hospitality sector soon translate into demand for commercial real estate, it 204,000 76.0% seems unlikely that the Valley will 203,000 202,000 201,000 75.0% 74.0% 73.0% see significant recovery in the office sector without also seeing recovery in the housing sector. 522 offices in 62 countries on 6 continents United States: 147 Canada: 37 Latin America: 19 Asia Pacific: 201 EMEA: 118 $1.8 billion in USD annual revenue Over 12,300 professionals 1,250 million square feet under management $68 billion USD in total transaction value COLLIERS INTERNATIONAL LAS VEGAS 3960 Howard Hughes Parkway Suite 150 Las Vegas, NV 89109 TEL +1 702 735 5700 FAX +1 702 731 5709 200,000 199,000 198,000 3 Q 2010 4 Q 2010 1 Q 2011 2 Q 2011 3 Q 2011 4 Q 2011 1 Q 2012 2 Q 2012 72.0% 71.0% 70.0% Office Jobs DISTRESSED OFFICE PROPERTIES OWNER/USER SALES ACTIVITY Owner User Space 2012 YTD 2011 2010 Space for Sale (sf) 994,000 1,015,000 1,444,000 Average Asking Price/ $108 $133 $171 Space Sold (sf) 553,000 528,000 510,000 Average Price/ $50 $104 $125 INVESTMENT SALES ACTIVITY Occupancy Rate Product Type 2012 (YTD) 2011 2010 Class A 659,000 698,000 677,000 Class B 1,816,000 1,753,000 1,897,000 Class C 2,309,000 2,735,000 2,834,000 TOTAL 4,784,000 5,186,000 5,408,000 Investment Space 2012 YTD 2011 2010 Space for Sale (sf) 710,000 1,125,000 1,504,000 Average Asking Price/ $117 $145 $133 Average Cap Rate 8.5% 9.1% 9.0% Space Sold (sf) 856,000 2,056,000 1,024,000 Average Price/ $58 $85 $96 Average Cap Rate 6.7% 6.9% 8.8% MANAGING PARTNER Mike Mixer Managing Partner mike.mixer@colliers.com RESEARCHER John Stater Research Director john.stater@colliers.com This report and other research materials may be found on our website at www.colliers.com/lasvegas. This quarterly report is a research document of Colliers International Las Vegas, NV. Questions related to information herein should be directed to the Research Department at +1 702 836 3781. Information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Accelerating success. COLLIERS INTERNATIONAL - LAS VEGAS P. 5