RALEIGH-DURHAM OFFICE

Research Report RALEIGH-DURHAM OFFICE Q2 2018 Accelerate Success Triangle Continues to Grow, Future Office Deliveries Expected to Drive Leasing Activity Kelsey Rogers Research Analyst Raleigh- Key Takeaways > > The overall vacancy rate remains relatively unchanged until the 2.5M square feet of office space that is currently under construction is delivered. A flurry of market activity post construction delivery will ultimately swing vacancy and absorption totals. > > Average asking rents in the market were $23.47 per square foot with Class A rents averaging $27.44 per square foot. The increasing demand for high-end, Class A space in the major Triangle submarkets will continue to push rents higher. Tenants seeking Class A space are willing to pay aggressive rents for key locations and space configuration. > > The Triangle region is home to the second most educated city in the country bringing higher levels of innovation and high-tech employment to the area. Nationally, tech tenants continue to lead the charge and the Raleigh- region is no exception. Raleigh ranked fourth in the country for the highest concentration of tech job openings behind San Francisco, Austin and Seattle. > > Raleigh has been ranked Top 4 US Tech Hubs to Watch in 2018 and #4 Highest % of Workforce in STEM. Raleigh is home to over 500 startup companies and in the last five years the market experienced $9.2B+ in startup company acquisitions. Market Indicators Relative to prior quarter NET ABSORPTION RENTAL RATE Summary Statistics Q2 2018 Office Market Existing Inventory (Millions Square Feet) Triangle Market Triangle Class A 66.6 32.2 Vacancy Rate 7.62% 8.53% Net Absorption (Square Feet) Under Construction (Million Square Feet) Construction Deliveries (Square Feet) Asking Rents Per Square Foot Per Year Raleigh- Q1 2018 Raleigh- Q2 2018 446,656 239,390 2.5 2.5 267,000 267,000 Average Quoted $23.47 $27.44

Absorption & Leasing Activity > > The Triangle reported over 446,565 square feet of total net absorption at the close of the second quarter. The North submarket contained the most positive net demand with over 152,549 square feet of office space absorbed. > > The Downtown Raleigh submarket continues to produce strong office demand with over 93,500 total square feet absorbed during the second quarter. > > Overall Class A net absorption in the Triangle reached 29,390 square feet at the end of the second quarter. The over all Class B market reported a positive net absorption of 149,624 square feet for the quarter end totals. 500,000 450,000 0,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 - Abosrption vs. Deliveries, Vacancies Q2 2018 3Q 2017 4Q 2017 1Q 2018 2Q 2018 8.80% 8.60% 8.% 8.20% 8.00% 7.80% 7.60% 7.% 7.20% 7.00% > > The Downtown Raleigh submarket reported the highest Class A demand of the quarter with over 60,225 square feet of total net absorption. Deliveries Absorption Vacancy > > As expected, lease activity remained steady in the second quarter of 2018. The largest lease was the 31,186 -square-foot space at Regency Creek I, 120 Regency Parkway, in Cary. Vacancy Rates Among Major Submarkets Q2 2018 Vacancy & Availability > > The overall Triangle vacancy rate held steady at 7.62% for the second quarter end. The overall Class A vacancy in the Triangle office market was reported at 8.53% at the close of the quarter with over 2.5M total square feet of vacant space. > > Downtown reported the lowest vacancy rate in the Triangle office market for the ninth-consecutive quarter, however, after the delivery of several large Class A developments on the horizon, vacancies in this submarket will increase throughout the year. > > The anticipation of several new Class A deliveries will continue to create an aggressive market for tenants. > > Market activity will be hot in 2018. As companies move forward with new locations and expansions, the Triangle will experience an influx of deals bumping vacancies and absorption. 6 Forks Falls of Neuse Cary Downtown Downtown Raleigh Glenwood Creedmoor Orange County Research Triangle Park RTP I- West Raleigh 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Class A Vacancy Overall Vacancy Total SF Under Construction (millions) Q2 2018 Rental Rates > > Average asking rents in the Triangle office market continue to increase. The Triangle's Class A rents are experiencing the most growth as vacancies remain relatively unchanged. While several large buildings have recently delivered, an impressive amount of supply is still to come and the leasing environments in the Triangle will continue to heavily favor the landlord. > > Average asking rents for the overall submarket were reported at $23.47 per square foot for the quarter end. Class A rents were up over $1.07 from last year, with rents increasing to $27.44 psf. Millions 2.56 2.53 2.30 2.16 2.03 1.89 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 2Q 2018 2 Raleigh- Research Report Q2 2018 Office Market Colliers International

RALEIGH-DURHAM SUBMARKET COMPARISONS SUBMARKET NAME EXISTING INVENTORY DIRECT SUBLET TOTAL PERCENTAGE (%) NET ABSORPTION NEW DELIVERIES UNDER AVERAGE RENTAL RATE Cary 8,516,396 511,251 27,246 538,497 6.32% 23,204 0 369,000 $23.51 Downtown 4,432,778 63,502 21,136 84,638 1.91% (3,820) 0 905,422 $29.52 Downtown Raleigh 6,377,730 416,337 14,032 430,369 6.75% 93,598 267,000 162,680 $29.18 Glenwood Creedmoor 3,209,457 145,486 0 145,486 4.53% 31,979 0 0 $20.68 North 1,629,292 244,461 1,886 246,347 15.12% 152,549 0 0 $15.11 Northeast Wake County 392,764 12,916 0 12,916 3.29% (2,716) 0 0 $17.00 Orange County 2,854,824 248,395 0 248,395 8.70% 36,008 0 47,648 $24.84 Research Triangle Park 7,396,532 1,155,763 36,523 1,192,286 16.12% 27,681 0 152,456 $21.22 RTP I- 5,569,4 375,891 62,528 438,419 7.87% 25,662 0 564,681 $24.22 Six Forks Falls of Neuse 8,365,644 714,554 21,330 735,884 8.80% 28,239 0 0 23 South 4,910,038 325,727 18,679 344,6 7.01% (6,286) 0 0 $21.51 Southern Wake County 1,653,136 45,7 0 45,7 2.77% 12,857 0 0 $16.50 US 1 Capital Blvd. 2,575,821 148,562 0 148,562 5.77% 2,819 0 0 $18.19 West Raleigh 8,707,563 445,086 15,067 460,153 5.28% 24,882 0 323,500 $24.76 MARKET TOTALS/WGHT AVG 66,591,379 4,853,671 218,427 5,072,098 7.62% 446,656 267,000 2,525,387 $23.47 RALEIGH-DURHAM CLASS A SUBMARKET COMPARISONS EXISTING INVENTORY DIRECT SUBLET TOTAL PERCENTAGE (%) NET ABSORPTION NEW DELIVERIES UNDER AVERAGE RENTAL RATE SUBMARKET NAME Cary 4,178,830 346,557 7,552 354,109 8.47% 22,658 0 369,000 $26.48 Downtown 2,482,209 21,807 16,593 38,0 1.55% 14,642 0 905,422 $32.08 Downtown Raleigh 4,141,648 377,627 14,032 391,659 9.46% 60,255 267,000 149,842 $32.29 Glenwood Creedmoor 1,366,980 57,048 0 57,048 4.17% 20,777 0 0 $24.09 Orange County 1,369,844 165,148 0 165,148 12.06% (3,834) 0 47,648 $29.08 Research Triangle Park 2,979,883 358,260 5,433 363,693 12.20% 37,962 0 152,456 $24.27 RTP I- 3,953,163 251,787 53,487 305,274 7.72% 27,868 0 564,681 $25.83 Six Forks Falls of Neuse 3,783,011 466,751 19,134 485,885 12.84% 14,509 0 0 $26.86 South 2,360,447 241,984 11,309 253,293 10.73% 19,156 0 0 $25.28 US 1 Capital Blvd. 958,016 39,320 0 39,320 4.10% 0 0 0 $23.10 West Raleigh 4,625,247 277,582 15,067 292,649 6.33% 25,397 0 323,500 $27.89 MARKET TOTALS/WGHT AVG 32,199,278 2,603,871 142,607 2,746,478 8.53% 239,390 267,000 2,512,549 $27.44 *NOTE: North, NE Wake County submarkets do not have any Class A office inventory. YEAR END 2017 NOTABLE LEASE TRANSACTIONS TENANT BUILDING SUBMARKET TOTAL SF LEASE TYPE LabCorp 5 Moore Drive Research Triangle Park 221,988 New Northwestern Mutual Life Trinity Place West Raleigh 28,845 New Charter Communications Park Plaza Research Triangle Park 26,272 New Stantec Interchange Plaza II West Raleigh 25,000 New 3 Raleigh- Research Report Q2 2018 Office Market Colliers International

Construction & Investment Activity > > At the close of the second quarter of 2018, office deliveries totaled 267,000 SF with an additional 2.5 million square feet that is currently under construction. id, a 178,000 square foot mixed-use building in Downtown is still under construction with an anticipated delivery time of early 2018. In the Downtown Raleigh submarket, construction is underway for the new 228,000 square foot One Glenwood building with anticipated delivery in early 2019. > > The Raleigh- market produced over $367M in total sales volume within the last twelve months, with an average per square foot price of $152. Q2 2018 NOTABLE DEVELOPMENT ACTIVITY PROPERTY SUBMARKET SIZE PRE-LEASED % STATUS START / DELIV DATE Perimeter Park Five RTP I- 258,250 100.0 Under Construction Q1 2019 555 Mangum Downtown 229,455 0.0 Under Construction Q3 2017 One Glenwood Downtown Raleigh 228,600 46.8 Under Construction Q3 2017 Perimeter Park Six RTP I- 200,000 67.5 Under Construction Q2 2019 id Downtown 178,998 8.5 Under Construction Q3 2018 200 Morris Street Downtown 160,000 96.6 Under Construction Q3 2018 One City Center Downtown 150,000 73.2 Under Construction Q1 2018 Regency Woods II Cary 150,000 63.5 Under Construction Q1 2018 Tower IV at North Hills Six Forks Falls of Neuse 344,500 0.0 Proposed Q4 2018 The Edison Downtown Raleigh 298,001 0.0 Proposed Q1 2020 Wade V West Raleigh 209,322 0.0 Proposed Q1 2020 City Gateway Downtown Raleigh 196,802 62.6 Proposed Q2 2019 Q2 2018 NOTABLE INVESTMENT SALES ACTIVITY PROPERTY Lenovo Enterprise Midtown Plaza SUBMARKET SALES PRICE (MILLIONS) SIZE PRICE PER SF CAP RATE% BUYER SELLER RTP I- $135.30 485,000 $279 5.7 Six Forks Falls of Neuse $127.00 330,000 $385 6.0 Sentinel Real Estate Lionstone Investments Crossroads Cary $68.80 390,542 $176 NA Menlo Equities *Brown Bros Portfolio *Meridian Campus Regency Lakeview Arzan Financial Group Kane Realty; JV: KBS Realty American Realty Advisors South $55.60 201,008 $276 NA Innovatus Clarion Partners RTP I- $95.80 587,901 $189 7.0 Accesso Partners; JV: Torchlight Cary $20.00 382,000 $52 NA Safety Income Dilweg Investcorp; JV: American RE Partners 6501 Weston Cary $18. 93,990 $196 NA Albany Road Childress Klein Stratford Hall RTP I- $14.30 81,000 $176 NA Meridian Corporate Trust Building RTP I- $12. 73,446 $169 7.0 Downtown 4307 Emperor LLC Accesso Partners; JV: Torchlight $10.70 48,222 $222 NA Akridge Principal RE Investors Origin Investments Greenfire Development *NOTE: Part of a portfolio sale. 4 Raleigh- Research Report Q2 2018 Office Market Colliers International

North TRIANGLE SUBMARKET MAP BURLINGTON Orange County Graham 85 64 CHAPEL HILL Carrboro 85 ORANGE CO. DURHAM CO. 501 South Downtown CHATHAM CO. DURHAM 5 147 Research Triangle Park RESEARCH TRIANGLE PARK RTP / I- Apex Morrisville RDU International Airport Cary 1 64 CARY West Raleigh DURHAM CO. Glenwood/ Creedmoor GRANVILLE CO. 5 Six Forks Rd 4 RALEIGH Downtown Raleigh Falls of the Neuse Rd Garner FRANKLIN CO. Wake Forest US 1 / Capital Blvd 264 Northeast Wake County 1 Southern Wake County Holly Springs East Raleigh 70 Clayton Fuquay-Varina. JOHNSON CO. Smithfield Sanford METHODOLOGY METHODOLOGY The Raleigh- office reports calculate statistics using CoStar Group and Colliers International Raleigh- s database of existing and under construction properties at market and submarket levels. Included in the pool of data are non-owner occupied Class A, B, and C office properties of 10,000+ SF. DOWNTOWN DURHAM AMERICAN TOBACCO CAMPUS 5 Raleigh- Research Report Q2 2018 Office Market Colliers International

413 offices in 69 countries on 6 continents United States: 145 Canada: 28 Latin America: 23 Asia Pacific: 39 EMEA: 131 $116 billion in annual revenue 2.0 billion square feet managed OFFICE SERVICES CONTACT: Kathy Gigac, SIOR Director of Tenant Advisory Services Raleigh +1 919 582 3130 Kathy.Gigac@colliers.com Baxter Walker Senior Vice President Raleigh +1 919 582 3112 Baxter.Walker@colliers.com Martie Serianni Senior Vice President Raleigh +1 919 582 3156 Martie.Serianni@colliers.com Thomas Kenna Vice President Raleigh +1 919 582 3141 Thomas.Kenna@colliers.com Lindsey Calverley Associate Raleigh +1 919 582 3153 Lindsey.Calverley@colliers.com REGIONAL AUTHOR: Kelsey Rogers Research Analyst, CPRC +1 919 582 31 Kelsey.Rogers@colliers.com 15,0 professionals and staff About Colliers International Group Inc Colliers International Group Inc. (NASDAQ and TSX: CIGI) is an industry leading global real estate services company with 15,000 skilled professionals operating in 68 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting. Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 global outsourcing firms by the International Association of Outsourcing Professionals for 12 consecutive years, more than any other real estate services firm. Colliers also has been ranked the top property manager in the world by Commercial Property Executive for two years in a row. For the latest news from Colliers, visit Colliers.com or follow us on Twitter : @Colliers and LinkedIn. Colliers International has served clients in the Raleigh- Eastern North Carolina market since 1987. Visit our website at colliers.com/rdu or follow us on Twitter: @ColliersRDU. colliers.com Copyright 2017 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.