RESEARCH & FORECAST REPORT

Q3 2012 OFFICE LAS VEGAS NEVADA RESEARCH & FORECAST REPORT Office Forges Ahead Southern Nevada s office market continued to post positive net absorption in the third quarter of 2012, despite weak employment numbers. With almost 100,000 square feet of net absorption, office vacancy dropped two-tenths of a point to 23.5 percent. The weighted average asking rental rate remained stable at $1.90 per square foot (psf) on a Full Service Gross (FSG) basis. New completions of office space are up over last quarter, and several office projects are now under construction in the Valley. MARKET INDICATORS Q3-12 NET ABSORPTION Projected Q4-12 According to the Nevada Department of Employment, Training & Rehabilitation, between July 2011 and July 2012, a net of 1,100 office sector jobs were lost in Southern Nevada. The professional & business services sector, which had been adding jobs in 2011, dropped 1,400 jobs over the past twelve months. The financial activities sector, which includes insurance and real estate, continued its decline, dropping 1,900 jobs over the past twelve months. The traditionally bullet-proof health care & social assistance sector added 2,200 jobs over the same period, though this sector has only a small impact on the professional office market. Unemployment in the Las Vegas-Paradise MSA stood at 12.9 percent as of July 2012, down from 14.5 percent in July 2011. Over the same period, total employment in Southern Nevada has increased by 8,700 jobs, the majority in leisure and hospitality and trade, transportation and utilities. RENTAL CLARK COUNTY ECONOMIC DATA Unemployment Rate (Apr) Visitor Volume (Apr YTD) Gaming Revenue (Apr YTD) 2012 2011 11.6% 12.0% 13.1 MM 12.8 MM $3.21 BB $3.05 BB 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 The amount of office space under construction has not rebounded to the levels seen during the boom, of course, but it has grown over the past few quarters. The office pipeline currently includes 866,000 square feet of product, a surprising amount of it in the form of speculative projects. The third quarter of 2012 saw two office buildings completed at Seven Hill Plaza, totaling 66,000 square feet. Both of these buildings were speculative projects and were approximately 44 percent pre-leased. The largest projects under development in the Valley were the recently revived Summerlin Centre office component and the Zappos.com headquarters, which recently began its renovations of the old Las Vegas City Hall and Metropolitan Police Department headquarters. Construction will soon be re-started at Red Rock Business Park (formerly Copper Pointe). HISTORICAL AND ASKING S 25.0% 24.0% 23.0% 22.0% 21.0% 20.0% 19.0% 18.0% 17.0% 16.0% $2.20 $2.15 $2.10 $2.05 $2.00 $1.95 $1.90 $1.85 $1.80 $1.75 The amount of office space under construction has not rebounded to the levels seen during the boom, of course, but it has grown over the past few quarters. JOHN M. STATER Research & GIS Manager 15.0% $1.70 Vacancy Asking Rental Rate www.colliers.com/lasvegas

NORTHWEST 95 SOUTHWEST EMPLOYMENT Financial Activities Professional & Business Services Health Care & Social Assistance 215 WEST CENTRAL 215 NORTH LAS VEGAS 15 DOWN TOWN AIRPORT EAST LAS VEGAS 95 HENDERSON July2012 July 2011 Change 37,500 39,400-1,900 97,700 99,100-1,400 67,500 65,300 +2,200 TOTAL 202,700 203,800-1,100 Source: Nevada Department of Employment, Training and Rehabilitation. Office vacancy has now declined for two quarters, after increasing during the two quarters prior. Vacancy in the third quarter of 2012 was 23.5 percent, two-tenths of a point lower than in the second quarter of 2012 and the third quarter of 2011. This trajectory suggests a market that is bouncing along the bottom. A lack of office job growth is probably to blame for the market s inability to gain any real traction and begin a sustained recovery. The highest vacancy rates in the Valley, by submarket, were in North Las Vegas (28.4 percent), East Las Vegas (26.1 percent), and the Northwest (25.7 percent). Downtown continued to boast the market s lowest vacancy rate at 12.1 percent. Vacancy dropped in five of the Valley s eight submarkets: Airport, Downtown, North Las Vegas, Northwest and West Central, and increased in the East Las Vegas, Henderson and Southwest submarkets this quarter. Vacancy in Class A office currently stands at 30.4 percent, down from a high of 34.0 percent in the second quarter of 2011 and about even with where it was in mid-2009. This is, of course, a far cry from the low of 4.8 percent experienced in mid-2006. Vacancy increased for Class B office space this quarter, but Class C office saw a small decline and now has its lowest vacancy in eleven quarters. Southern Nevada s office market absorbed 99,681 square feet of product this quarter, a decrease from last quarter s 118,302 square feet of net absorption and a significant decrease from the 482,966 square feet absorbed one year ago. Most of the net absorption in the third quarter took place in the Northwest, Downtown and West Central submarkets, with the Southwest and East Las Vegas submarkets producing the only negative net absorption in the office market this quarter. Class A office has absorbed 79,406 square feet of space so far this year, not a significant sum considering the 1.76 million square feet of Class A product that remains vacant, but better than nothing. Class B net absorption continued to waver, following 76,445 square feet of net absorption last quarter with negative 2,539 square feet of net absorption this quarter. Apparently, call center operators are once again investigating Southern Nevada as a place to do business, and this could positively impact the Class B sector moving forward, though probably not to a significant degree. Class C office space is proving to be the most popular product type in Southern Nevada this year, with 156,526 square feet of net absorption year-to-date, a good deal of it due to owner/user sales. LEASE AND SALES ACTIVITY LEASE ACTIVITY PROPERTY NAME LEASE DATE LEASE TERM SIZE LEASE TYPE Town Square Aug 2012 65 months 5,700 $2.30 MG Class A El Capitan Professional Park Jul 2012 65 months 5,300 $0.93 NNN Class C Quail Bonita Business Park Jul 2012 60 months 4,100 $1.98 MG Class C Rainbow Quail Park Aug 2012 9 months 3,700 $0.84 NNN Class C Nevada Financial Center Jul 2012 63 months 3,400 $2.34 FSG Class A SALES ACTIVITY PROPERTY NAME SALE DATE SALE PRICE SIZE PRICE/ TYPE Cheyenne Fairways Business Center Jul 2012 $4,460,000 55,000 $81 Class C Cambridge Quail Park Jul 2012 $2,350,000 50,000 $47 Class C Media Center Jul 2012 $1,050,000 34,000 $30 Class C Tolosa Redrock Jul 2012 $675,000 16,000 $42 Class B Durango Courtyards Jul 2012 $1,120,000 10,000 $112 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 averaged 1.2 million square feet per quarter, compared to 1.1 million in 2011, 1.0 million in 2010, 0.9 million in 2009 and 1.0 million in 2008. As overall demand for office space has remained consistent, the difference is now in the number of units that are being vacated quarter after quarter. Retention of tenants remains the key for landlords. The weighted average asking rental rate remained at $1.90 per square foot on a full service gross (FSG) basis this quarter. This was a decrease of $0.08 from four quarters ago, and indicates that the rate of decline is Y-O-Y OFFICE CHANGE Office Y-O-Y Vacancy Change 8.0% 6.0% 4.0% Of the office deals we have tracked so far in 2012, the most active industries have been travel and leisure, financial services, business services and education and social services. Local companies took 47 percent of this space. The local nature of this recovery is one explanation for why it has been so slow and uneven. If regional and national companies again take notice of Southern Nevada, both for its once-again growing population and once-again competitive rental rates and housing costs, the office recovery may quicken its pace. 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 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 Q 2012 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) dropped by approximately 321,000 square feet between the end of 2011 and the third quarter of 2012. Distressed sales represented about 58 percent of office sales so far in 2012, selling for an average of $57 psf, as compared to $65 psf for non-distressed properties. HISTORICAL ABSORPTION VS. COMPLETIONS 208,000 207,000 206,000 205,000 204,000 203,000 80.0% 79.0% 78.0% 77.0% 76.0% 75.0% slowing and possibly stopping. The only large movement in asking rents, for the second quarter in a row, was in North Las Vegas, where the average asking rent increased by $0.10 to $1.54 psf FSG, the lowest asking rate in the Valley. Asking rents were down by 1 cent for Class B and C product, and up by 1 cent for Class A product. Available office sublease space in the third quarter was 280,252 square feet, its lowest point since the first quarter of 2008, i.e. the beginning of the recession. This is an excellent sign that the market is ready to recover, given that sublease space is often the canary in the coal mine. There is still more sublease space on the market than would be considered normal (i.e. between 100,000 and 200,000 square feet), but it is at least heading in the right direction. 202,000 74.0% 201,000 200,000 199,000 198,000 Office Jobs Occupancy Rate 73.0% 72.0% 71.0% 70.0% The amount of office space available for sale on an owner/user basis has decreased by 200,000 square feet since the fourth quarter of 2011, and now stands at 783,000 square feet. The average asking price for owner/ user space this quarter was $121 psf, a decrease of $12 from the end of last year. Owner/user sales are significantly stronger this year than OFFICE DEVELOPMENT PIPELINE PROJECT TYPE SUBMARKET SIZE PRE-LEASING COMPLETION Horizon Ridge Professional Park Class C Henderson 8,000 Spec 2013 Legal Aid Center BTS Class C Downtown 10,000 BTS 2012 Horizon Ridge Professional Park Ph 2 Class C Henderson 19,000 Spec 2013 Red Rock Business Park Class B Southwest 37,000 Spec 2013 Seven Hills Plaza C/D Class B Henderson 44,000 Spec 2013 EVAPS Law Office Building Class B Downtown 49,000 Spec 2013 Tivoli Village Phase 2 Class A Northwest 100,000 Spec 2013 Federal Justice Tower Class A Downtown 129,000 BTS 2013 Summerlin Centre Office Development Class A Northwest 200,000 Spec 2013 Zappos.com Headquarters Class A Downtown 270,000 BTS 2013 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 6 605,557 224,654 37.1% 22,257 3.7% 246,911 40.8% 37.1% 168 20,808 - - - - $2.73 B 43 1,964,834 331,976 16.9% 19,687 1.0% 351,663 17.9% 16.7% (19,877) (45,259) - - - - $1.88 C 266 2,928,364 739,263 25.2% 17,184 0.6% 756,447 25.8% 26.7% 24,954 39,753 - - - - $1.57 Total 315 5,498,755 1,295,893 23.6% 59,128 1.1% 1,355,021 24.6% 24.2% 5,245 15,302 - - - - $1.85 DOWNTOWN A 5 807,588 78,461 9.7% 7,706 1.0% 86,167 10.7% 12.0% 10,751 (13,001) - - 399,000 - $2.60 B 32 2,273,742 281,729 12.4% 1,500 0.1% 283,229 12.5% 13.7% 27,575 41,612 - - - 49,200 $1.91 C 80 1,110,798 146,748 13.2% - 0.0% 146,748 13.2% 11.9% (14,460) (11,565) - - 10,000 - $1.55 Total 117 4,192,128 506,938 12.1% 9,206 0.2% 516,144 12.3% 12.9% 23,866 17,046 - - 409,000 49,200 $1.91 EAST LAS VEGAS A 9 1,352,166 261,875 19.4% 31,662 2.3% 293,537 21.7% 22.0% (13,231) 20,486 - - - - $2.84 B 19 1,409,555 491,161 34.8% - 0.0% 491,161 34.8% 35.4% 7,702 (15,367) - - - - $1.16 C 141 2,404,834 594,025 24.7% 13,522 0.6% 607,547 25.3% 25.3% 2,368 (9,838) - - - - $1.29 Total 169 5,166,555 1,347,061 26.1% 45,184 0.9% 1,392,245 26.9% 27.2% (3,161) (4,719) - - - - $1.55 HENDERSON A 11 787,274 280,790 35.7% 7,271 0.9% 288,061 36.6% 38.9% 7,302 (48,541) - - - - $2.58 B 70 2,352,917 599,000 25.5% 19,868 0.8% 618,868 26.3% 24.7% 6,906 55,932 67,692 67,692-44,000 $2.18 C 222 2,148,987 430,021 20.0% 6,389 0.3% 436,410 20.3% 19.9% (8,747) 42,156-13,500-27,620 $1.63 Total 303 5,289,178 1,309,811 24.8% 33,528 0.6% 1,343,339 25.4% 24.9% 5,461 49,547 67,692 81,192-71,620 $2.08 NORTH LAS VEGAS A - - - n/a - n/a - n/a n/a - - - - - - $- B 8 200,796 73,663 36.7% - 0.0% 73,663 36.7% 36.6% (149) 5,810 - - - - $1.50 C 49 426,417 104,627 24.5% - 0.0% 104,627 24.5% 26.2% 7,022 (14,420) - - - - $1.57 Total 57 627,213 178,290 28.4% - 0.0% 178,290 28.4% 29.5% 6,873 (8,610) - - - - $1.54 NORTHWEST A 21 1,709,415 691,319 40.4% 454 0.0% 691,773 40.5% 44.9% 23,506 61,783 - - - 200,000 $2.14 B 82 2,988,470 563,113 18.8% 22,549 0.8% 585,662 19.6% 18.8% (24,674) 56,622 - - - - $2.12 C 281 2,949,584 681,650 23.1% 10,000 0.3% 691,650 23.4% 26.1% 71,044 56,499 - - - - $1.80 Total 384 7,647,469 1,936,082 25.3% 33,003 0.4% 1,969,085 25.7% 27.2% 69,876 174,904 - - - 200,000 $2.01 SOUTHWEST A 3 397,112 169,733 42.7% - 0.0% 169,733 42.7% 42.7% - 53,263 - - - - $2.57 B 70 2,714,887 680,020 25.0% 75,603 2.8% 755,623 27.8% 28.2% 13,141 42,887 - - 37,123 - $2.38 C 303 3,304,797 687,193 20.8% - 0.0% 687,193 20.8% 20.6% (48,602) 31,100 - - - - $1.83 Total 376 6,416,796 1,536,946 24.0% 75,603 1.2% 1,612,549 25.1% 25.2% (35,461) 127,250 - - 37,123 - $2.15 WEST CENTRAL A 2 227,624 50,731 22.3% - 0.0% 50,731 22.3% 21.3% (2,188) (15,392) - - - - $1.99 B 46 1,672,458 488,165 29.2% - 0.0% 488,165 29.2% 28.4% (13,163) (130,464) - - - - $1.75 C 165 2,678,524 607,074 22.7% 2,069 0.1% 609,143 22.7% 24.3% 42,333 22,841 - - - - $1.55 Total 213 4,578,606 1,145,970 25.0% 2,069 0.0% 1,148,039 25.1% 25.7% 26,982 (123,015) - - - - $1.65 MARKET TOTAL A 57 5,886,736 1,757,563 29.9% 69,350 1.2% 1,826,913 31.0% 32.2% 26,308 79,406 - - 399,000 200,000 $2.45 B 370 15,577,659 3,508,827 22.5% 139,207 0.9% 3,648,034 23.4% 23.1% (2,539) 11,773 67,692 67,692 37,123 93,200 $1.94 C 1,507 17,952,305 3,990,601 22.2% 49,164 0.3% 4,039,765 22.5% 23.2% 75,912 156,526-13,500 10,000 27,620 $1.61 Total 1,934 39,416,700 9,256,991 23.5% 257,721 0.7% 9,514,712 24.1% 24.5% 99,681 247,705 67,692 81,192 446,123 320,820 $1.90 QUARTERLY COMPARISON AND TOTALS Q3-12 1,934 39,416,700 9,256,991 23.5% 257,721 0.7% 9,514,712 24.1% 24.5% 99,681 247,705 67,692 81,192 446,123 320,820 $1.90 Q2-12 1,932 39,249,008 9,288,980 23.7% 316,135 0.8% 9,605,115 24.5% 24.9% 188,302 148,024 4,500 13,500 67,692 459,620 $1.90 Q1-12 1,931 39,244,508 9,472,782 24.1% 316,208 0.8% 9,788,990 24.9% 24.8% (40,278) (40,278) 9,000 9,000 133,500 63,190 $1.91 Q4-11 1,929 39,235,508 9,423,504 24.0% 322,029 0.8% 9,745,533 24.8% 24.4% (108,433) 125,689 45,579 378,023 142,500 8,190 $1.95 Q3-11 1,928 39,189,929 9,269,492 23.7% 294,361 0.8% 9,563,853 24.4% 25.0% 482,966 234,122 312,444 332,444-26,190 $1.98 Q2-11 1,925 38,877,485 9,440,014 24.3% 266,009 0.7% 9,706,023 25.0% 25.2% 51,337 (248,844) - 20,000 332,444 26,190 $2.01 www.colliers.com/lasvegas

in the last four years. A total of 764,000 square feet traded in the first three quarters of 2012 at an average price of $62, an average dragged down significantly by the sale of the former Southwest Gas facility, a 348,000 square foot property that sold for only $29 psf. Discounting the Southwest Gas facility, the average sales price for owner/user office space was $90 psf. Distressed sales have accounted for 24 percent of owner/user sales in 2012, selling at an average price of $83 psf. Properties available for sale on an investment basis decreased to 562,000 square feet in the third quarter of 2012, roughly half the amount that was available for sale at the end of 2011. Investment sales have totaled almost 1.4 million square feet in 2012, at an average price of $59 psf. This low average price is due to the fact that 77 percent of investment sales this year have been of distressed properties, selling at an average of $53 psf; while non-distressed investments have sold for an average of $82 psf. The big news, in terms of investments, is the offering of GGP s office portfolio in the Northwest submarket for sale. Accounting for 1.2 million square feet of office space, this portfolio would give the buyer a significant presence in Southern Nevada. Southern Nevada s office market is, by most indications, bouncing along the bottom. Office DISTRESSED OFFICE PROPERTIES employment is still down, and will have to improve before the market begins to recover in earnest. In the meantime, demand for space has stabilized, and more properties in the Valley are moving through foreclosure and returning to active participation in the market. This injection of new space onto the market should keep values (rental rates and sales prices) depressed for the foreseeable future. Net absorption will continue to bounce around a bit, and while several projects are now under construction or in the planning stages, and should positively impact net absorption for the next twelve months, there is no indication that this trend will not be short lived. In essence, the office market is in neutral. OCCUPANCY VS. OFFICE EMPLOYMENT 208,000 207,000 206,000 205,000 204,000 203,000 202,000 201,000 200,000 199,000 198,000 Office Jobs Occupancy Rate 80.0% 79.0% 78.0% 77.0% 76.0% 75.0% 74.0% 73.0% 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 annual revenue $1.25 billion square feet under management Over 12,300 professionals COLLIERS INTERNATIONAL LAS VEGAS 3960 Howard Hughes Parkway Suite 150 Las Vegas, NV 89109 TEL +1 702 735 5700 FAX +1 702 731 5709 MANAGING PARTNER Mike Mixer Managing Partner mike.mixer@colliers.com Product Type 2012 (YTD) 2011 2010 Class A 706,000 698,000 677,000 Class B 1,830,000 1,753,000 1,897,000 Class C 2,329,000 2,735,000 2,834,000 TOTAL 4,865,000 5,186,000 5,408,000 OWNER/USER SALES ACTIVITY Owner User Space 2012 YTD 2011 2010 Space for Sale (sf) 783,000 1,015,000 1,015,000 Average Asking Price/ $121 $133 $133 Space Sold (sf) 750,000 528,000 528,000 Average Price/ $62 $104 $104 INVESTMENT SALES ACTIVITY Investment Space 2012 YTD 2011 2010 Space for Sale (sf) 562,000 1,125,000 1,504,000 Average Asking Price/ $130 $145 $133 Average Cap Rate 7.9% 9.1% 9.0% Space Sold (sf) 1,364,000 2,056,000 1,024,000 Average Price/ $59 $85 $96 Average Cap Rate 6.7% 6.9% 8.8% 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