The CoStar Industrial Report

The CoStar Industrial Report F I R S T Q U A R T E R 2 0 1 1 Seattle/Puget Sound Industrial Market

Seattle/Puget Sound Industrial Market FIRST QUARTER 2011 SEATTLE/PUGET SOUND Table of Contents Table of Contents.................................................................... A Methodology........................................................................ B Terms & Definitions.................................................................. C Market Highlights & Overview......................................................... 1 CoStar Markets & Submarkets......................................................... 4 Employment & Tenant Analysis........................................................ 5 Employment & Unemployment Analysis Inventory & Development Analysis...................................................... 6 Construction Activity Map Inventory & Development Analysis Select Top Under Construction Properties Select Top Deliveries Figures at a Glance.................................................................. 10 Figures at a Glance by Building Type & Market Figures at a Glance by Building Type & Submarket Historical Figures at a Glance Leasing Activity Analysis............................................................. 15 Leasing Activity Map Leasing Activity Analysis Select Top Lease Transactions Sales Activity Analysis............................................................... 18 Sales Activity Analysis Select Top Sales Transactions Select Same Building Sales Select Land Sales Analysis of Individual CoStar Markets.................................................. 21 Downtown Market Eastside Market Northend Market Southend Market Tacoma Market 2011 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT A

SEATTLE/PUGET SOUND FIRST QUARTER 2011 Seattle/Puget Sound Industrial Market Methodology The CoStar Industrial Report calculates Industrial statistics using CoStar Group's base of existing, under construction and under renovation Industrial buildings in each given metropolitan area. All Industrial building types are included, including warehouse, flex / research & development, distribution, manufacturing, industrial showroom, and service buildings, in both single-tenant and multi-tenant buildings, including owner-occupied buildings. CoStar Group's national database includes approximately 71.7 billion square feet of coverage in 3 million properties. All rental rates reported in the CoStar Industrial Report are calculated using the quoted rental rate for each property. The quoted rental rate is exclusive of the expense pass through associated with the rent. For information on subscribing to CoStar s other products and services, please contact us at 1-877-7COSTAR, or visit our web site at www.costar.com Copyright 2010 CoStar Group, Inc. All Rights Reserved. Although CoStar makes efforts to ensure the accuracy and reliability of the information contained herein, CoStar makes no guarantee, representation or warranty regarding the quality, accuracy, timeliness or completeness of the information. The publication is provided as is and CoStar expressly disclaims any guarantees, representations or warranties of any kind, including those of MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CoStar Group, Inc. 1331 L ST NW Washington, DC USA 20005 (800) 204-5960 www.costar.com NASDAQ: CSGP B THE COSTAR INDUSTRIAL REPORT 2011 COSTAR GROUP, INC.

Seattle/Puget Sound Industrial Market FIRST QUARTER 2011 SEATTLE/PUGET SOUND Terms & Definitions Availability Rate: The ratio of available space to total rentable space, calculated by dividing the total available square feet by the total rentable square feet. Available Space: The total amount of space that is currently being marketed as available for lease in a given time period. It includes any space that is available, regardless of whether the space is vacant, occupied, available for sublease, or available at a future date. Build-to-Suit: A term describing a particular property, developed specifically for a certain tenant to occupy, with structural features, systems, or improvement work designed specifically for the needs of that tenant. A build-to-suit can be leased or owned by the tenant. In a leased build-to-suit, a tenant will usually have a long term lease on the space. Buyer: The individual, group, company, or entity that has purchased a commercial real estate asset. Cap Rate: Short for capitalization rate. The Cap Rate is a calculation that reflects the relationship between one year s net operating income and the current market value of a particular property. The Cap Rate is calculated by dividing the annual net operating income by the sales price (or asking sales price). CBD: Abbreviation for Central Business District. (See also: Central Business District) Central Business District: The designations of Central Business District (CBD) and Suburban refer to a particular geographic area within a metropolitan statistical area (MSA) describing the level of real estate development found there. The CBD is characterized by a high density, well organized core within the largest city of a given MSA. Class A: A classification used to describe buildings that generally qualify as extremely desirable investment-grade properties and command the highest rents or sale prices compared to other buildings in the same market. Such buildings are well located and provide efficient tenant layouts as well as high quality, and in some buildings, one-of-a-kind floor plans. They can be an architectural or historical landmark designed by prominent architects. These buildings contain a modern mechanical system, and have above-average maintenance and management as well as the best quality materials and workmanship in their trim and interior fittings. They are generally the most attractive and eagerly sought by investors willing to pay a premium for quality. Class B: A classification used to describe buildings that generally qualify as a more speculative investment, and as such, command lower rents or sale prices compared to Class A properties. Such buildings offer utilitarian space without special attractions, and have ordinary design, if new or fairly new; good to excellent design if an older non-landmark building. These buildings typically have average to good maintenance, management and tenants. They are less appealing to tenants than Class A properties, and may be deficient in a number of respects including floor plans, condition and facilities. They lack prestige and must depend chiefly on a lower price to attract tenants and investors. Class C: A classification used to describe buildings that generally qualify as no-frills, older buildings that offer basic space and command lower rents or sale prices compared to other buildings in the same market. Such buildings typically have below-average maintenance and management, and could have mixed or low tenant prestige, inferior elevators, and/or mechanical/electrical systems. These buildings lack prestige and must depend chiefly on a lower price to attract tenants and investors. Construction Starts: Buildings that began construction during a specific period of time. (See also: Deliveries) Contiguous Blocks of Space: Space within a building that is, or is able to be joined together into a single contiguous space. Deliveries: Buildings that complete construction during a specified period of time. In order for space to be considered delivered, a certificate of occupancy must have been issued for the property. Delivery Date: The date a building completes construction and receives a certificate of occupancy. Developer: The company, entity or individual that transforms raw land to improved property by use of labor, capital and entrepreneurial efforts. Direct Space: Space that is being offered for lease directly from the landlord or owner of a building, as opposed to space being offered in a building by another tenant (or broker of a tenant) trying to sublet a space that has already been leased. Existing Inventory: The square footage of buildings that have received a certificate of occupancy and are able to be occupied by tenants. It does not include space in buildings that are either planned, under construction or under renovation. Flex Building: A type of building designed to be versatile, which may be used in combination with office (corporate headquarters), research and development, quasi-retail sales, and including but not limited to industrial, warehouse, and distribution uses. A typical flex building will be one or two stories with at least half of the rentable area being used as office space, have ceiling heights of 16 feet or less, and have some type of drive-in door, even though the door may be glassed in or sealed off. Full Service Rental Rate: Rental rates that include all operating expenses such as utilities, electricity, janitorial services, taxes and insurance. Gross Absorption: The total change in occupied space over a given period of time, counting space that is occupied but not space that is vacated by tenants. Gross absorption differs from leasing Activity, which is the sum of all space leased over a certain period of time. Unless otherwise noted Gross Absorption includes direct and sublease space. Growth in Inventory: The change in size of the existing square footage in a given area over a given period of time, generally due to the construction of new buildings. Industrial Building: A type of building adapted for such uses as the assemblage, processing, and/or manufacturing of products from raw materials or fabricated parts. Additional uses include warehousing, distribution, and maintenance facilities. The primary purpose of the space is for storing, producing, assembling, or distributing product. Landlord Rep: (Landlord Representative) In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the owner/landlord is referred to as the Landlord Rep. Leased Space: All the space that has a financial lease obligation. It includes all leased space, regardless of whether the space is currently occupied by a tenant. Leased space also includes space being offered for sublease. Leasing Activity: The volume of square footage that is committed to and signed under a lease obligation for a specific building or market in a given period of time. It includes direct leases, subleases and renewals of existing leases. It also includes any pre-leasing activity in planned, under construction, or under renovation buildings. Market: Geographic boundaries that serve to delineate core areas that are competitive with each other and constitute a generally accepted primary competitive set of areas. Markets are buildingtype specific, and are non-overlapping contiguous geographic designations having a cumulative sum that matches the boundaries of the entire Region (See also: Region). Markets can be further subdivided into Submarkets. (See also: Submarkets) 2011 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT C

SEATTLE/PUGET SOUND FIRST QUARTER 2011 Seattle/Puget Sound Industrial Market Multi-Tenant: Buildings that house more than one tenant at a given time. Usually, multi-tenant buildings were designed and built to accommodate many different floor plans and designs for different tenant needs. (See also: Tenancy). Net Absorption: The net change in occupied space over a given period of time. Unless otherwise noted Net Absorption includes direct and sublease space. Net Rental Rate: A rental rate that excludes certain expenses that a tenant could incur in occupying office space. Such expenses are expected to be paid directly by the tenant and may include janitorial costs, electricity, utilities, taxes, insurance and other related costs. New Space: Sometimes called first generation space, refers to space that has never been occupied and/or leased by a tenant. Occupied Space: Space that is physically occupied by a tenant. It does not include leased space that is not currently occupied by a tenant. Office Building: A type of commercial building used exclusively or primarily for office use (business), as opposed to manufacturing, warehousing, or other uses. Office buildings may sometimes have other associated uses within part of the building, i.e., retail sales, financial, or restaurant, usually on the ground floor. Owner: The company, entity, or individual that holds title on a given building or property. Planned/Proposed: The status of a building that has been announced for future development but not yet started construction. Preleased Space: The amount of space in a building that has been leased prior to its construction completion date, or certificate of occupancy date. Price/SF: Calculated by dividing the price of a building (either sales price or asking sales price) by the Rentable Building Area (RBA). Property Manager: The company and/or person responsible for the day-to-day operations of a building, such as cleaning, trash removal, etc. The property manager also makes sure that the various systems within the building, such as the elevators, HVAC, and electrical systems, are functioning properly. Quoted Rental Rate: The asking rate per square foot for a particular building or unit of space by a broker or property owner. Quoted rental rates may differ from the actual rates paid by tenants following the negotiation of all terms and conditions in a specific lease. RBA: Abbreviation for Rentable Building Area. (See also: Rentable Building Area) Region: Core areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Regions are further divided into market areas, called Markets. (See also: Markets) Relet Space: Sometimes called second generation or direct space, refers to existing space that has previously been occupied by another tenant. Rentable Building Area: (RBA) The total square footage of a building that can be occupied by, or assigned to a tenant for the purpose of determining a tenant s rental obligation. Generally RBA includes a percentage of common areas including all hallways, main lobbies, bathrooms, and telephone closets. Rental Rates: The annual costs of occupancy for a particular space quoted on a per square foot basis. Sales Price: The total dollar amount paid for a particular property at a particular point in time. Sales Volume: The sum of sales prices for a given group of buildings in a given time period. Seller: The individual, group, company, or entity that sells a particular commercial real estate asset. SF: Abbreviation for Square Feet. Single-Tenant: Buildings that are occupied, or intended to be occupied by a single tenant. (See also: Build-to-suit and Tenancy) Sublease Space: Space that has been leased by a tenant and is being offered for lease back to the market by the tenant with the lease obligation. Sublease space is sometimes referred to as sublet space. Submarkets: Specific geographic boundaries that serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted primary competitive set, or peer group. Submarkets are building type specific (office, industrial, retail, etc.), with distinct boundaries dependent on different factors relevant to each building type. Submarkets are non-overlapping, contiguous geographic designations having a cumulative sum that matches the boundaries of the Market they are located within (See also: Market). Suburban: The Suburban and Central Business District (CBD) designations refer to a particular geographic area within a metropolitan statistical area (MSA). Suburban is defined as including all office inventory not located in the CBD. (See also: CBD) Tenancy: A term used to indicate whether or not a building is occupied by multiple tenants (See also: Multi-tenant) or a single tenant. (See also: Single-tenant) Tenant Rep: Tenant Rep stands for Tenant Representative. In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the tenant is referred to as a Tenant Rep. Time On Market: A measure of how long a currently available space has been marketed for lease, regardless of whether it is vacant or occupied. Under Construction: The status of a building that is in the process of being developed, assembled, built or constructed. A building is considered to be under construction after it has begun construction and until it receives a certificate of occupancy. Vacancy Rate: A measurement expressed as a percentage of the total amount of physically vacant space divided by the total amount of existing inventory. Under construction space generally is not included in vacancy calculations. Vacant Space: Space that is not currently occupied by a tenant, regardless of any lease obligation that may be on the space. Vacant space could be space that is either available or not available. For example, sublease space that is currently being paid for by a tenant but not occupied by that tenant, would be considered vacant space. Likewise, space that has been leased but not yet occupied because of finish work being done, would also be considered vacant space. Weighted Average Rental Rate: Rental rates that are calculated by factoring in, or weighting, the square footage associated with each particular rental rate. This has the effect of causing rental rates on larger spaces to affect the average more than that of smaller spaces. The weighted average rental rate is calculated by taking the ratio of the square footage associated with the rental rate on each individual available space to the square footage associated with rental rates on all available spaces, multiplying the rental rate by that ratio, and then adding together all the resulting numbers. Unless specifically specified otherwise, rental rate averages include both Direct and Sublet available spaces. Year Built: The year in which a building completed construction and was issued a certificate of occupancy. YTD: Abbreviation for Year-to-Date. Describes statistics that are cumulative from the beginning of a calendar year through whatever time period is being studied. D THE COSTAR INDUSTRIAL REPORT 2011 COSTAR GROUP, INC.

Seattle/Puget Sound Industrial Market OVERVIEW FIRST QUARTER 2011 SEATTLE/PUGET SOUND Seattle/Puget Sound s Vacancy Decreases to 8.1% Net Absorption Positive 848,784 SF in the Quarter The Seattle/Puget Sound Industrial market ended the first quarter 2011 with a vacancy rate of 8.1%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 848,784 square feet in the first quarter. Vacant sublease space increased in the quarter, ending the quarter at 1,949,089 square feet. Rental rates ended the first quarter at $7.01, an increase over the previous quarter. A total of five buildings delivered to the market in the quarter totaling 137,028 square feet, with 8,820 square feet still under construction at the end of the quarter. Absorption Net absorption for the overall Seattle/Puget Sound Industrial market was positive 848,784 square feet in the first quarter 2011. That compares to negative (173,595) square feet in the fourth quarter 2010, positive 121,542 square feet in the third quarter 2010, and positive 66,734 square feet in the second quarter 2010. Tenants moving out of large blocks of space in 2011 include: Atlas Columbia Warehouse moving out of (142,500) square feet at 901 Alexander Avenue, Emerald City Moving & Storage moving out of (108,000) square feet at NW Corporate Park Kent - Bldg F, and Walmart moving out of (75,000) square feet at Lakewood Industrial Park - Bldg 9. Tenants moving into large blocks of space in 2011 include: Pepsico/Quaker Distribution moving into 444,400 square feet at Port Commerce Center Phase I - Bldg A, ULine moving into 282,393 square feet at Auburn Logistics Facility, and American Tire Distributors moving into 126,036 square feet at Auburn 18 Distribution Center. The Flex building market recorded net absorption of negative (60,464) square feet in the first quarter 2011, compared to negative (308,678) square feet in the fourth quarter 2010, positive 65,625 in the third quarter 2010, and positive 11,267 in the second quarter 2010. The Warehouse building market recorded net absorption of positive 909,248 square feet in the first quarter 2011 compared to positive 135,083 square feet in the fourth quarter 2010, positive 55,917 in the third quarter 2010, and positive 55,467 in the second quarter 2010. Vacancy The Industrial vacancy rate in the Seattle/Puget Sound market area decreased to 8.1% at the end of the first quarter 2011. The vacancy rate was 8.4% at the end of the fourth quarter 2010, 8.3% at the end of the third quarter 2010, and 8.2% at the end of the second quarter 2010. Flex projects reported a vacancy rate of 13.0% at the end of the first quarter 2011, 12.8% at the end of the fourth quarter 2010, 11.8% at the end of the third quarter 2010, and 12.1% at the end of the second quarter 2010. Warehouse projects reported a vacancy rate of 7.6% at the end of the first quarter 2011, 7.9% at the end of fourth quarter 2010, 7.9% at the end of the third quarter 2010, and 7.8% at the end of the second quarter 2010. Largest Lease Signings The largest lease signings occurring in 2011 included: the 233,035-square-foot renewal signed by Honeywell International Inc at the Overlake Industrial Park; the 138,386-square-foot lease Vacancy Rates by Building Type 2000-2011 20% Flex Warehouse Total Market 18% 16% 14% Vacancy Rate 12% 10% 8% 6% 4% 2% 0% 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 1

SEATTLE/PUGET SOUND FIRST QUARTER 2011 Seattle/Puget Sound Industrial Market OVERVIEW signed by Cooper Tire & Rubber Company at Carbon Bldg in the Tacoma market; and the 102,400-square-foot renewal signed by United States Postal Service at Van Doren s West - Bldg C in the Southend market. Sublease Vacancy The amount of vacant sublease space in the Seattle/Puget Sound market increased to 1,949,089 square feet by the end of the first quarter 2011, from 1,925,192 square feet at the end of the fourth quarter 2010. There was 2,159,751 square feet vacant at the end of the third quarter 2010 and 2,422,172 square feet at the end of the second quarter 2010. Seattle/Puget Sound s Flex projects reported vacant sublease space of 315,479 square feet at the end of first quarter 2011, up from the 270,540 square feet reported at the end of the fourth quarter 2010. There were 337,773 square feet of sublease space vacant at the end of the third quarter 2010, and 193,809 square feet at the end of the second quarter 2010. Warehouse projects reported decreased vacant sublease space from the fourth quarter 2010 to the first quarter 2011. Sublease vacancy went from 1,654,652 square feet to 1,633,610 square feet during that time. There was 1,821,978 square feet at the end of the third quarter 2010, and 2,228,363 square feet at the end of the second quarter 2010. Rental Rates The average quoted asking rental rate for available Industrial space was $7.01 per square foot per year at the end of the first quarter 2011 in the Seattle/Puget Sound market area. This represented a 0.6% increase in quoted rental rates from the end of the fourth quarter 2010, when rents were reported at $6.97 per square foot. The average quoted rate within the Flex sector was $14.36 per square foot at the end of the first quarter 2011, while Warehouse rates stood at $5.87. At the end of the fourth quarter U.S. Vacancy Comparison Past 7 Quarters Vacancy Rate 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Seattle/Puget Sound United States 2009 2009 4q 2010 2010 2q 2010 2010 4q 2011 2010, Flex rates were $14.78 per square foot, and Warehouse rates were $5.81. Deliveries and Construction During the first quarter 2011, five buildings totaling 137,028 square feet were completed in the Seattle/Puget Sound market area. This compares to one building totaling 1,920 square feet that were completed in the fourth quarter 2010, three buildings totaling 380,600 square feet completed in the third quarter 2010, and 65,200 square feet in two buildings completed in the second quarter 2010. There were 8,820 square feet of Industrial space under construction at the end of the first quarter 2011. Some of the notable 2011 deliveries include: Fife Portal Industrial Park - Bldg A, a 56,764-square-foot facility that delivered in first quarter 2011 and is now 0% occupied, and Fife Portal Industrial Park - Bldg C, a 34,880-square-foot building that delivered in first quarter 2011 and is now 0% occupied. The only project under construction at the end of first quarter 2011 was Mukilteo Speedway, an 8,820-square-foot building with 0% of its space pre-leased. Inventory Total Industrial inventory in the Seattle/Puget Sound market area amounted to 301,594,455 square feet in 7,885 buildings as of the end of the first quarter 2011. The Flex sector consisted of 30,772,298 square feet in 989 projects. The Warehouse sector consisted of 270,822,157 square feet in 6,896 buildings. Within the Industrial market there were 993 owner-occupied buildings accounting for 76,370,046 square feet of Industrial space. Sales Activity Tallying industrial building sales of 15,000 square feet or larger, Seattle/Puget Sound industrial sales figures rose during the fourth quarter 2010 in terms of dollar volume compared to the third quarter of 2010. In the fourth quarter, 24 industrial transactions closed with a total volume of $222,749,874. The 24 buildings totaled 2,807,683 square feet and the average price per square foot equated to $79.34 per square foot. That compares to 12 transactions totaling $73,061,266 in the third quarter. The total square footage was 787,998 for an average price per square foot of $92.72. Total year-to-date industrial building sales activity in 2010 is up compared to the previous year. In the twelve months of 2010, the market saw 61 industrial sales transactions with a total volume of $403,518,888. The price per square foot has averaged $79.22 this year. In the twelve months of 2009, the market posted 47 transactions with a total volume of $279,200,886. The price per square foot averaged $86.16. Cap rates have been higher in 2010, averaging 8.20%, compared to the twelve months of last year when they averaged 7.84%. Source: CoStar Property 2 THE COSTAR INDUSTRIAL REPORT 2011 COSTAR GROUP, INC.

Seattle/Puget Sound Industrial Market OVERVIEW FIRST QUARTER 2011 SEATTLE/PUGET SOUND One of the largest transactions that has occurred within the last four quarters in the Seattle/Puget Sound market is the sale of Renton Logistics Center in Renton. This 481,134-square-foot industrial building sold for $30,250,000, or $62.87 per square foot. The property sold on 12/09/2010, at a 8.10% cap rate. Absorption & Deliveries Past 7 Quarters Net Absorption Deliveries 1.5 1.2 1.0 0.8 Reports compiled by: Michael Clemen CoStar Research Manager. 0.5 0.4 Millions SF 0.0 (0.5) 0.1 0.0 0.1 0.1 0.1 0.1 (0.2) 0.0 0.1 (1.0) (1.0) (1.0) (1.5) 2009 2009 4q 2010 2010 2q 2010 2010 4q 2011 Source: CoStar Property 2011 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 3

SEATTLE/PUGET SOUND FIRST QUARTER 2011 Seattle/Puget Sound Industrial Market MARKETS CoStar Markets & Submarkets In analyzing metropolitan areas in the U.S., CoStar has developed geographic designations to help group properties together, called Regions, Markets and Submarkets. Regions are the equivalent of metropolitan areas, or areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Regions are then divided into Markets, which are core areas within a metropolitan area that are known to be competitive with each other in terms of attracting and keeping tenants. Markets are then further subdivided into smaller units called Submarkets, which serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted competitive set, or peer group. Markets Submarkets Downtown Ind Ballard Ind Belltwn/Denny Regrade Ind Capitol Hill/Ctrl Dist In Greenwood/Fremont Ind Gtown/Duwamish N Ind Gtown/Duwamish S Ind Lake Union Ind Magnolia Ind Queen Anne Ind Rainier/Beacon Hill Ind Seattle CBD Ind SoDo Ind U. District/Ravenna Ind W Seattle Ind Waterfront Ind Eastside Ind 520 Corridor Ind Bellevue Ind E King County Ind Kirkland Ind Newport/Issaquah Ind Redmond Ind Northend Ind Bothell/Kenmore Ind Edmonds/Lynnwood Ind Everett CBD Ind Mill Creek/N Creek Ind N Snohomish County Ind Northgate/N Seattle Ind S Everett/Harbor Pt Ind S Snohomish County Ind Woodinville Ind Southend Ind Auburn Ind Federal Way Ind Kent Valley N Ind Kent Valley S Ind Renton Ind Seatac/Burien Ind Tukwila Ind Vashon/Maury Isl Ind Tacoma Ind Dupont Ind E Pierce County Ind E Tacoma Ind Fort Lewis Ind Gig Harbor/W Pierce Ind Lakewood Ind North End Tacoma Ind Parkland/Spanaway Ind Port of Tacoma/Fife Ind Puyallup/S Hill Ind Tacoma CBD Ind University Place Ind 4 THE COSTAR INDUSTRIAL REPORT 2011 COSTAR GROUP, INC.

Seattle/Puget Sound Industrial Market EMPLOYMENT AND TENANT FIRST QUARTER 2011 SEATTLE/PUGET SOUND Total Employment by Industry Percent of Total Employment by Industry Total Employment Growth Total Number of Jobs Added Per Year 4% 16% 9% 5% 0% 13% 10% 14% 19% 5% 5% Natural Resources & Mining Construction Manufacturing Trade, Transportation & Utilities Information Financial Activities Professional & Business Services Education & Health Services Leisure & Hospitality Other Services Government Percent Growth 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% Seattle/Puget Sound U.S. Average 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Department of Labor, Bureau of Labor Statistics Source: Department of Labor, Bureau of Labor Statistics Total Employment Growth Cumulative Growth in Jobs Over the Past 5 Years Market Employment Growth Inventory Growth Difference Atlanta -8.40% 4.00% -12.40% Chicago -4.60% 4.10% -8.70% Dallas/Ft Worth 1.10% 7.10% -6.00% Denver -4.70% 3.30% -8.00% Detroit -11.00% 0.80% -11.80% Houston 2.90% 6.80% -3.90% Inland Empire (California) -10.60% 14.20% -24.80% Los Angeles -7.70% 1.30% -9.00% Northern New Jersey -5.60% 2.30% -7.90% Pittsburgh -2.80% 1.90% -4.70% Seattle/Puget Sound -0.90% 4.80% -5.70% Source: Department of Labor, Bureau of Labor Statistics Historical Unemployment Rates Industrial* Employment Growth Number of Industrial* Jobs Added Per Year Percent Growth 4.0% Seattle/Puget Sound U.S. Average 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% -7.0% -8.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Department of Labor, Bureau of Labor Statistics. * Industrial employment is defined as jobs in the Manufacturing, and Trade, Transportation & Utilities industries 12.0% Seattle/Puget Sound U.S. Average 10.0% Percent Unemployment 8.0% 6.0% 4.0% 2.0% 0.0% 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 Source: Department of Labor, Bureau of Labor Statistics 2011 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 5

SEATTLE/PUGET SOUND FIRST QUARTER 2011 Seattle/Puget Sound Industrial Market INVENTORY & DEVELOPMENT Construction Highlights in Select CoStar Markets Color Coded by Under Construction Square Footage as a Percentage of Existing Inventory 6 THE COSTAR INDUSTRIAL REPORT 2011 COSTAR GROUP, INC.

Seattle/Puget Sound Industrial Market INVENTORY & DEVELOPMENT FIRST QUARTER 2011 SEATTLE/PUGET SOUND Historical Deliveries 1982-2011 9.0 Deliveries 8.2 Average Delivered SF 8.0 7.1 7.4 7.1 Millions of SF 7.0 6.0 5.0 4.0 3.0 2.0 3.8 2.7 3.8 6.3 6.6 6.5 5.7 5.2 5.5 2.6 3.2 4.6 6.1 6.6 5.9 4.7 2.8 1.9 3.6 5.4 6.6 6.5 4.8 2.2 1.0 0.0 0.6 0.1 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 * Future deliveries based on current under construction buildings. Construction Activity Markets Ranked by Under Construction RBA Market Under Construction Inventory Average Bldg Size # Bldgs Total RBA Preleased SF Preleased % All Existing U/C Northend Ind 1 8,820 0 0.0% 37,009 8,820 Southend Ind 0 0 0 0.0% 58,809 0 Downtown Ind 0 0 0 0.0% 26,260 0 Eastside Ind 0 0 0 0.0% 28,882 0 Tacoma Ind 0 0 0 0.0% 35,112 0 Totals 1 8,820 0 0.0% 38,249 8,820 Recent Deliveries Leased & Un-Leased SF in Deliveries Since 2007 7.0 Leased Un-Leased 6.0 5.0 Millions of SF 4.0 3.0 2.0 1.0 0.0 2007 2008 2009 2010 2011 2011 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 7

SEATTLE/PUGET SOUND FIRST QUARTER 2011 Seattle/Puget Sound Industrial Market INVENTORY & DEVELOPMENT Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction 2.5 Construction Starts Deliveries 2.0 1.9 Millions of SF 1.5 1.0 0.5 0.0 1.5 1.2 1.2 0.7 0.6 0.6 0.6 0.4 0.5 0.4 0.3 0.3 0.2 0.1 0.1 0.1 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 2008 2008 2q 2008 2008 4q 2009 2009 2q 2009 2009 4q 2010 2010 2q 2010 2010 4q 2011 Recent Deliveries by Project Size Breakdown of Year-to-Date Development Based on RBA of Project Building Size # Bldgs RBA SF Leased % Leased Avg Rate Single-Tenant Multi-Tenant < 50,000 SF 4 80,264 246 0.3% $6.00 12,044 68,220 50,000 SF - 99,999 SF 1 56,764 0 0.0% $4.80 0 56,764 100,000 SF - 249,999 SF 0 0 0 0.0% $0.00 0 0 250,000 SF - 499,999 SF 0 0 0 0.0% $0.00 0 0 >= 500,000 SF 0 0 0 0.0% $0.00 0 0 Recent Development by Tenancy Existing Inventory Comparison Based on RBA Developed for Single & Multi-Tenant Use Based on Total RBA 2011 Deliveries Currently Under Construction By Building Type By Tenancy Type 9% 0% 90% 10% 45% 55% 91% 100% Multi Single Multi Single Flex Warehouse Multi Single 8 THE COSTAR INDUSTRIAL REPORT 2011 COSTAR GROUP, INC.

Seattle/Puget Sound Industrial Market INVENTORY & DEVELOPMENT FIRST QUARTER 2011 SEATTLE/PUGET SOUND 2011 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 9

SEATTLE/PUGET SOUND FIRST QUARTER 2011 Seattle/Puget Sound Industrial Market FIGURES AT A GLANCE Flex Market Statistics First Quarter 2011 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Downtown Ind 170 7,258,132 487,968 494,911 6.8% 27,463 0 0 $18.30 Eastside Ind 295 8,414,395 1,023,433 1,061,616 12.6% (5,857) 0 0 $14.61 Northend Ind 228 7,505,097 992,258 1,147,935 15.3% (5,567) 0 0 $15.09 Southend Ind 209 6,004,654 1,042,607 1,157,283 19.3% (88,533) 0 0 $11.02 Tacoma Ind 87 1,590,020 150,741 150,741 9.5% 12,030 0 0 $11.18 Totals 989 30,772,298 3,697,007 4,012,486 13.0% (60,464) 0 0 $14.36 Warehouse Market Statistics First Quarter 2011 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Downtown Ind 1,894 46,942,817 2,647,629 2,711,229 5.8% (95,245) 0 0 $7.53 Eastside Ind 424 12,351,697 904,084 943,836 7.6% (57,294) 0 0 $7.92 Northend Ind 1,220 46,083,645 3,222,461 3,359,209 7.3% (7,599) 0 8,820 $6.89 Southend Ind 1,679 105,025,862 6,471,495 7,795,605 7.4% 804,075 0 0 $5.10 Tacoma Ind 1,679 60,418,136 5,628,299 5,697,699 9.4% 265,311 137,028 0 $5.16 Totals 6,896 270,822,157 18,873,968 20,507,578 7.6% 909,248 137,028 8,820 $5.87 Total Industrial Market Statistics First Quarter 2011 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Downtown Ind 2,064 54,200,949 3,135,597 3,206,140 5.9% (67,782) 0 0 $9.49 Eastside Ind 719 20,766,092 1,927,517 2,005,452 9.7% (63,151) 0 0 $11.37 Northend Ind 1,448 53,588,742 4,214,719 4,507,144 8.4% (13,166) 0 8,820 $8.14 Southend Ind 1,888 111,030,516 7,514,102 8,952,888 8.1% 715,542 0 0 $5.64 Tacoma Ind 1,766 62,008,156 5,779,040 5,848,440 9.4% 277,341 137,028 0 $5.27 Totals 7,885 301,594,455 22,570,975 24,520,064 8.1% 848,784 137,028 8,820 $7.01 10 THE COSTAR INDUSTRIAL REPORT 2011 COSTAR GROUP, INC.

Seattle/Puget Sound Industrial Market FIGURES AT A GLANCE FIRST QUARTER 2011 SEATTLE/PUGET SOUND Flex Submarket Statistics First Quarter 2011 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 520 Corridor Ind 47 1,146,980 88,335 88,335 7.7% 48 0 0 $12.93 Auburn Ind 24 638,624 18,339 18,339 2.9% 0 0 0 $11.60 Ballard Ind 23 308,046 11,421 11,421 3.7% 1,382 0 0 $12.85 Bellevue Ind 44 938,497 122,454 122,454 13.0% (3,020) 0 0 $17.51 Belltwn/Denny Regrade Ind 6 186,470 0 0 0.0% 0 0 0 $0.00 Bothell/Kenmore Ind 65 2,915,917 531,846 569,588 19.5% 9,948 0 0 $16.49 Capitol Hill/Ctrl Dist In 5 223,805 0 0 0.0% 0 0 0 $13.00 Dupont Ind 0 0 0 0 0.0% 0 0 0 $0.00 E King County Ind 12 371,436 61,285 61,285 16.5% 41,397 0 0 $16.93 E Pierce County Ind 1 9,500 0 0 0.0% 9,500 0 0 $12.48 E Tacoma Ind 2 40,626 0 0 0.0% 0 0 0 $0.00 Edmonds/Lynnwood Ind 42 635,889 56,418 56,418 8.9% (8,498) 0 0 $11.78 Everett CBD Ind 11 214,159 22,500 22,500 10.5% 0 0 0 $9.60 Federal Way Ind 13 399,419 247,894 247,894 62.1% (2,721) 0 0 $13.58 Fort Lewis Ind 0 0 0 0 0.0% 0 0 0 $0.00 Gig Harbor/W Pierce Ind 7 114,891 36,974 36,974 32.2% (5,032) 0 0 $15.13 Greenwood/Fremont Ind 12 103,801 4,700 4,700 4.5% 0 0 0 $18.00 Gtown/Duwamish N Ind 18 677,502 50,122 50,122 7.4% (886) 0 0 $12.60 Gtown/Duwamish S Ind 22 604,909 1,040 7,983 1.3% 5,180 0 0 $11.67 Kent Valley N Ind 21 727,668 58,723 58,723 8.1% 4,555 0 0 $7.38 Kent Valley S Ind 55 925,139 80,094 80,094 8.7% (1,186) 0 0 $9.82 Kirkland Ind 50 1,211,188 217,892 217,892 18.0% (13,539) 0 0 $12.66 Lake Union Ind 20 774,167 84,854 84,854 11.0% 30,836 0 0 $30.03 Lakewood Ind 12 129,663 34,987 34,987 27.0% 0 0 0 $11.82 Magnolia Ind 12 225,620 35,232 35,232 15.6% (7,954) 0 0 $18.60 Mill Creek/N Creek Ind 6 96,763 34,600 34,600 35.8% (26,500) 0 0 $17.57 N Snohomish County Ind 18 375,395 23,665 23,665 6.3% 0 0 0 $0.00 Newport/Issaquah Ind 21 469,371 56,208 56,208 12.0% 1,916 0 0 $11.79 North End Tacoma Ind 7 284,677 0 0 0.0% 0 0 0 $0.00 Northgate/N Seattle Ind 16 122,183 3,200 3,200 2.6% 889 0 0 $16.46 Parkland/Spanaway Ind 13 153,999 16,806 16,806 10.9% 0 0 0 $8.43 Port of Tacoma/Fife Ind 12 253,765 30,151 30,151 11.9% (4,575) 0 0 $10.21 Puyallup/S Hill Ind 14 155,114 0 0 0.0% 1,800 0 0 $10.00 Queen Anne Ind 8 899,477 21,031 21,031 2.3% 0 0 0 $11.39 Rainier/Beacon Hill Ind 12 96,420 0 0 0.0% 0 0 0 $13.20 Redmond Ind 121 4,276,923 477,259 515,442 12.1% (32,659) 0 0 $14.80 Renton Ind 16 290,553 50,616 50,616 17.4% 164 0 0 $9.76 S Everett/Harbor Pt Ind 40 2,231,644 184,682 284,682 12.8% 8,606 0 0 $11.69 S Snohomish County Ind 9 223,325 36,131 36,131 16.2% (2,600) 0 0 $14.50 Seatac/Burien Ind 9 180,274 55,845 55,845 31.0% (208) 0 0 $8.85 Seattle CBD Ind 0 0 0 0 0.0% 0 0 0 $0.00 SoDo Ind 21 2,805,593 269,245 269,245 9.6% (1,370) 0 0 $14.72 Tacoma CBD Ind 5 151,356 11,552 11,552 7.6% 5,854 0 0 $11.13 Tukwila Ind 71 2,842,977 531,096 645,772 22.7% (89,137) 0 0 $11.47 U. District/Ravenna Ind 4 173,384 0 0 0.0% 0 0 0 $0.00 University Place Ind 14 296,429 20,271 20,271 6.8% 4,483 0 0 $8.94 Vashon/Maury Isl Ind 0 0 0 0 0.0% 0 0 0 $0.00 W Seattle Ind 5 75,193 8,423 8,423 11.2% 0 0 0 $9.00 Waterfront Ind 2 103,745 1,900 1,900 1.8% 275 0 0 $11.21 Woodinville Ind 21 689,822 99,216 117,151 17.0% 12,588 0 0 $13.87 Totals 989 30,772,298 3,697,007 4,012,486 13.0% (60,464) 0 0 $14.36 2011 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 11

SEATTLE/PUGET SOUND FIRST QUARTER 2011 Seattle/Puget Sound Industrial Market FIGURES AT A GLANCE Warehouse Submarket Statistics First Quarter 2011 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 520 Corridor Ind 17 277,466 5,646 5,646 2.0% (5,646) 0 0 $8.16 Auburn Ind 376 23,458,413 878,099 1,197,638 5.1% 606,824 0 0 $5.34 Ballard Ind 205 2,433,621 89,845 89,845 3.7% 7,787 0 0 $9.11 Bellevue Ind 79 2,778,823 214,224 214,224 7.7% (99,756) 0 0 $7.43 Belltwn/Denny Regrade Ind 9 156,960 1,073 1,073 0.7% 9,918 0 0 $0.00 Bothell/Kenmore Ind 74 1,959,600 97,327 115,967 5.9% (49,861) 0 0 $8.82 Capitol Hill/Ctrl Dist In 43 729,845 30,443 30,443 4.2% (11,499) 0 0 $11.29 Dupont Ind 8 1,417,353 9,552 9,552 0.7% 24,934 0 0 $6.60 E King County Ind 72 1,892,103 135,218 135,218 7.1% (8,545) 0 0 $7.23 E Pierce County Ind 32 308,367 14,100 14,100 4.6% 2,800 0 0 $5.57 E Tacoma Ind 204 3,132,347 195,378 247,068 7.9% 7,400 0 0 $4.73 Edmonds/Lynnwood Ind 121 2,594,815 124,298 136,431 5.3% 6,647 0 0 $7.55 Everett CBD Ind 94 2,182,632 478,779 478,779 21.9% (17,875) 0 0 $4.56 Federal Way Ind 45 976,957 43,254 43,254 4.4% (6,768) 0 0 $7.68 Fort Lewis Ind 9 90,834 5,880 11,088 12.2% 0 0 0 $5.52 Gig Harbor/W Pierce Ind 17 275,791 40,794 40,794 14.8% (13,059) 0 0 $8.50 Greenwood/Fremont Ind 118 1,326,130 23,933 32,913 2.5% (4,400) 0 0 $13.32 Gtown/Duwamish N Ind 358 13,773,779 1,161,909 1,186,909 8.6% (61,147) 0 0 $7.31 Gtown/Duwamish S Ind 233 4,306,024 159,899 159,899 3.7% 7,510 0 0 $6.19 Kent Valley N Ind 379 28,198,432 3,326,839 3,635,191 12.9% 114,918 0 0 $4.56 Kent Valley S Ind 381 19,831,523 1,005,943 1,061,728 5.4% 112,995 0 0 $5.47 Kirkland Ind 57 1,470,746 162,806 183,507 12.5% (600) 0 0 $7.28 Lake Union Ind 118 2,051,501 341,531 346,383 16.9% 5,115 0 0 $8.63 Lakewood Ind 135 4,421,995 343,713 350,813 7.9% (137,634) 0 0 $6.07 Magnolia Ind 141 2,800,020 23,026 23,026 0.8% 13,295 0 0 $7.12 Mill Creek/N Creek Ind 53 1,457,683 39,426 58,626 4.0% (80) 0 0 $9.30 N Snohomish County Ind 207 4,621,372 422,061 438,061 9.5% (5,640) 0 0 $5.87 Newport/Issaquah Ind 59 1,757,292 36,475 36,475 2.1% (12,072) 0 0 $14.41 North End Tacoma Ind 110 1,968,766 107,718 107,718 5.5% (12,128) 0 0 $7.68 Northgate/N Seattle Ind 127 1,447,296 27,526 27,526 1.9% (8,972) 0 0 $10.37 Parkland/Spanaway Ind 88 3,082,130 212,959 212,959 6.9% (11,301) 0 0 $5.84 Port of Tacoma/Fife Ind 375 18,538,874 1,493,255 1,498,657 8.1% 347,233 0 0 $4.59 Puyallup/S Hill Ind 402 20,822,014 2,882,905 2,882,905 13.8% 4,955 137,028 0 $5.17 Queen Anne Ind 95 1,657,742 98,627 98,627 5.9% 0 0 0 $9.77 Rainier/Beacon Hill Ind 134 3,334,810 187,855 206,923 6.2% (11,104) 0 0 $5.97 Redmond Ind 140 4,175,267 349,715 368,766 8.8% 69,325 0 0 $8.20 Renton Ind 149 12,388,396 324,711 897,882 7.2% (44,507) 0 0 $5.16 S Everett/Harbor Pt Ind 264 23,259,398 974,998 1,003,483 4.3% 52,420 0 8,820 $6.58 S Snohomish County Ind 94 2,555,103 407,625 444,855 17.4% (12,255) 0 0 $6.70 Seatac/Burien Ind 99 3,153,452 301,966 310,508 9.8% 11,162 0 0 $5.88 Seattle CBD Ind 2 10,240 0 0 0.0% 0 0 0 $0.00 SoDo Ind 283 9,382,049 402,335 408,035 4.3% (41,237) 0 0 $7.29 Tacoma CBD Ind 65 1,380,065 148,745 148,745 10.8% 31,776 0 0 $4.71 Tukwila Ind 245 16,785,939 415,683 474,404 2.8% 9,451 0 0 $5.78 U. District/Ravenna Ind 31 581,251 0 0 0.0% 0 0 0 $0.00 University Place Ind 234 4,979,600 173,300 173,300 3.5% 20,335 0 0 $4.99 Vashon/Maury Isl Ind 5 232,750 175,000 175,000 75.2% 0 0 0 $0.00 W Seattle Ind 92 3,194,063 64,424 64,424 2.0% (15,679) 0 0 $8.96 Waterfront Ind 32 1,204,782 62,729 62,729 5.2% 6,196 0 0 $7.13 Woodinville Ind 186 6,005,746 650,421 655,481 10.9% 28,017 0 0 $8.64 Totals 6,896 270,822,157 18,873,968 20,507,578 7.6% 909,248 137,028 8,820 $5.87 12 THE COSTAR INDUSTRIAL REPORT 2011 COSTAR GROUP, INC.

Seattle/Puget Sound Industrial Market FIGURES AT A GLANCE FIRST QUARTER 2011 SEATTLE/PUGET SOUND Total Industrial Submarket Statistics First Quarter 2011 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 520 Corridor Ind 64 1,424,446 93,981 93,981 6.6% (5,598) 0 0 $12.66 Auburn Ind 400 24,097,037 896,438 1,215,977 5.0% 606,824 0 0 $5.39 Ballard Ind 228 2,741,667 101,266 101,266 3.7% 9,169 0 0 $9.39 Bellevue Ind 123 3,717,320 336,678 336,678 9.1% (102,776) 0 0 $10.02 Belltwn/Denny Regrade Ind 15 343,430 1,073 1,073 0.3% 9,918 0 0 $0.00 Bothell/Kenmore Ind 139 4,875,517 629,173 685,555 14.1% (39,913) 0 0 $14.93 Capitol Hill/Ctrl Dist In 48 953,650 30,443 30,443 3.2% (11,499) 0 0 $11.40 Dupont Ind 8 1,417,353 9,552 9,552 0.7% 24,934 0 0 $6.60 E King County Ind 84 2,263,539 196,503 196,503 8.7% 32,852 0 0 $12.44 E Pierce County Ind 33 317,867 14,100 14,100 4.4% 12,300 0 0 $8.06 E Tacoma Ind 206 3,172,973 195,378 247,068 7.8% 7,400 0 0 $4.73 Edmonds/Lynnwood Ind 163 3,230,704 180,716 192,849 6.0% (1,851) 0 0 $8.31 Everett CBD Ind 105 2,396,791 501,279 501,279 20.9% (17,875) 0 0 $4.58 Federal Way Ind 58 1,376,376 291,148 291,148 21.2% (9,489) 0 0 $11.93 Fort Lewis Ind 9 90,834 5,880 11,088 12.2% 0 0 0 $5.52 Gig Harbor/W Pierce Ind 24 390,682 77,768 77,768 19.9% (18,091) 0 0 $11.46 Greenwood/Fremont Ind 130 1,429,931 28,633 37,613 2.6% (4,400) 0 0 $13.97 Gtown/Duwamish N Ind 376 14,451,281 1,212,031 1,237,031 8.6% (62,033) 0 0 $7.76 Gtown/Duwamish S Ind 255 4,910,933 160,939 167,882 3.4% 12,690 0 0 $6.28 Kent Valley N Ind 400 28,926,100 3,385,562 3,693,914 12.8% 119,473 0 0 $4.65 Kent Valley S Ind 436 20,756,662 1,086,037 1,141,822 5.5% 111,809 0 0 $5.59 Kirkland Ind 107 2,681,934 380,698 401,399 15.0% (14,139) 0 0 $9.12 Lake Union Ind 138 2,825,668 426,385 431,237 15.3% 35,951 0 0 $15.88 Lakewood Ind 147 4,551,658 378,700 385,800 8.5% (137,634) 0 0 $6.19 Magnolia Ind 153 3,025,640 58,258 58,258 1.9% 5,341 0 0 $9.80 Mill Creek/N Creek Ind 59 1,554,446 74,026 93,226 6.0% (26,580) 0 0 $10.34 N Snohomish County Ind 225 4,996,767 445,726 461,726 9.2% (5,640) 0 0 $5.87 Newport/Issaquah Ind 80 2,226,663 92,683 92,683 4.2% (10,156) 0 0 $12.55 North End Tacoma Ind 117 2,253,443 107,718 107,718 4.8% (12,128) 0 0 $7.68 Northgate/N Seattle Ind 143 1,569,479 30,726 30,726 2.0% (8,083) 0 0 $11.16 Parkland/Spanaway Ind 101 3,236,129 229,765 229,765 7.1% (11,301) 0 0 $6.04 Port of Tacoma/Fife Ind 387 18,792,639 1,523,406 1,528,808 8.1% 342,658 0 0 $4.69 Puyallup/S Hill Ind 416 20,977,128 2,882,905 2,882,905 13.7% 6,755 137,028 0 $5.18 Queen Anne Ind 103 2,557,219 119,658 119,658 4.7% 0 0 0 $10.27 Rainier/Beacon Hill Ind 146 3,431,230 187,855 206,923 6.0% (11,104) 0 0 $6.25 Redmond Ind 261 8,452,190 826,974 884,208 10.5% 36,666 0 0 $12.13 Renton Ind 165 12,678,949 375,327 948,498 7.5% (44,343) 0 0 $5.44 S Everett/Harbor Pt Ind 304 25,491,042 1,159,680 1,288,165 5.1% 61,026 0 8,820 $7.10 S Snohomish County Ind 103 2,778,428 443,756 480,986 17.3% (14,855) 0 0 $6.72 Seatac/Burien Ind 108 3,333,726 357,811 366,353 11.0% 10,954 0 0 $6.48 Seattle CBD Ind 2 10,240 0 0 0.0% 0 0 0 $0.00 SoDo Ind 304 12,187,642 671,580 677,280 5.6% (42,607) 0 0 $10.12 Tacoma CBD Ind 70 1,531,421 160,297 160,297 10.5% 37,630 0 0 $5.26 Tukwila Ind 316 19,628,916 946,779 1,120,176 5.7% (79,686) 0 0 $7.70 U. District/Ravenna Ind 35 754,635 0 0 0.0% 0 0 0 $0.00 University Place Ind 248 5,276,029 193,571 193,571 3.7% 24,818 0 0 $5.19 Vashon/Maury Isl Ind 5 232,750 175,000 175,000 75.2% 0 0 0 $0.00 W Seattle Ind 97 3,269,256 72,847 72,847 2.2% (15,679) 0 0 $8.96 Waterfront Ind 34 1,308,527 64,629 64,629 4.9% 6,471 0 0 $7.40 Woodinville Ind 207 6,695,568 749,637 772,632 11.5% 40,605 0 0 $9.00 Totals 7,885 301,594,455 22,570,975 24,520,064 8.1% 848,784 137,028 8,820 $7.01 2011 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 13

SEATTLE/PUGET SOUND FIRST QUARTER 2011 Seattle/Puget Sound Industrial Market FIGURES AT A GLANCE Flex Market Statistics First Quarter 2011 Existing Inventory Vacancy Net Deliveries UC Inventory Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates 2011 989 30,772,298 3,697,007 4,012,486 13.0% (60,464) 0 0 0 0 $14.36 2010 4q 989 30,772,298 3,681,482 3,952,022 12.8% (308,678) 0 0 0 0 $14.78 2010 989 30,772,298 3,305,571 3,643,344 11.8% 65,625 0 0 0 0 $15.20 2010 2q 989 30,772,298 3,515,160 3,708,969 12.1% 11,267 1 5,200 0 0 $15.48 2010 988 30,767,098 3,564,050 3,715,036 12.1% (152,386) 1 16,000 1 5,200 $15.09 2009 4q 987 30,751,098 3,380,048 3,546,650 11.5% (112,399) 0 0 2 21,200 $15.25 2009 987 30,751,098 3,292,099 3,434,251 11.2% (218,965) 1 6,000 1 5,200 $14.71 2009 2q 986 30,745,098 3,092,833 3,209,286 10.4% (226,219) 2 15,900 2 11,200 $15.06 2009 984 30,729,198 2,839,191 2,967,167 9.7% (105,950) 0 0 3 21,900 $15.61 2008 987 30,783,902 2,750,169 2,915,921 9.5% (132,951) 15 390,958 2 15,900 $16.36 2007 973 30,394,915 2,316,823 2,393,983 7.9% 610,271 12 175,144 12 333,908 $14.63 2006 964 30,304,481 2,747,881 2,913,820 9.6% 1,731,532 13 425,932 6 182,151 $12.55 2005 951 29,878,549 3,956,710 4,219,420 14.1% 1,002,983 4 94,134 10 358,732 $11.46 2004 947 29,784,415 4,743,274 5,128,269 17.2% 641,821 8 848,225 3 77,054 $11.61 2003 939 28,936,190 4,194,095 4,921,865 17.0% (677,943) 7 215,971 5 770,140 $11.28 2002 933 28,733,179 3,468,076 4,040,911 14.1% (646,759) 7 202,550 4 811,311 $11.18 Quoted Warehouse Market Statistics First Quarter 2011 Existing Inventory Vacancy Net Deliveries Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates 2011 6,896 270,822,157 18,873,968 20,507,578 7.6% 909,248 5 137,028 1 8,820 $5.87 2010 4q 6,891 270,685,129 19,625,146 21,279,798 7.9% 135,083 1 1,920 6 145,848 $5.81 2010 6,890 270,683,209 19,590,983 21,412,961 7.9% 55,917 3 380,600 7 147,768 $5.86 2010 2q 6,887 270,302,609 18,859,915 21,088,278 7.8% 55,467 1 60,000 9 519,548 $5.92 2010 6,887 270,245,809 18,895,476 21,086,945 7.8% (800,013) 2 97,989 9 577,628 $6.07 2009 4q 6,886 270,397,820 18,311,852 20,438,943 7.6% (838,654) 3 27,400 10 365,017 $6.21 2009 6,883 270,370,420 18,136,236 19,572,889 7.2% 306,898 4 1,169,619 13 392,417 $6.41 2009 2q 6,879 269,200,801 17,422,500 18,710,168 7.0% (2,678,364) 5 470,413 9 1,302,645 $6.40 2009 6,876 268,794,572 14,913,309 15,625,575 5.8% (1,246,135) 21 446,918 8 1,610,392 $6.33 2008 6,863 268,508,182 13,560,743 14,093,050 5.2% 2,960,088 60 4,352,658 27 1,958,194 $6.58 2007 6,826 264,732,122 12,409,209 13,277,078 5.0% 6,804,757 76 6,265,877 48 3,801,833 $6.28 2006 6,767 259,076,826 13,680,294 14,426,539 5.6% 5,120,263 98 5,685,077 60 6,635,123 $6.13 2005 6,680 254,252,188 13,431,245 14,722,164 5.8% 6,275,112 67 5,176,455 66 4,573,445 $6.19 2004 6,623 249,470,527 15,045,868 16,215,615 6.5% 6,138,813 53 2,753,048 53 4,890,358 $5.78 2003 6,585 247,063,446 18,068,717 19,947,347 8.1% 1,762,161 39 1,496,141 39 3,266,179 $5.30 2002 6,566 246,760,547 18,821,411 21,406,609 8.7% (3,747,859) 44 2,299,181 30 1,169,550 $5.28 UC Inventory Quoted Total Industrial Market Statistics First Quarter 2011 Existing Inventory Vacancy Net Deliveries UC Inventory Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates 2011 7,885 301,594,455 22,570,975 24,520,064 8.1% 848,784 5 137,028 1 8,820 $7.01 2010 4q 7,880 301,457,427 23,306,628 25,231,820 8.4% (173,595) 1 1,920 6 145,848 $6.97 2010 7,879 301,455,507 22,896,554 25,056,305 8.3% 121,542 3 380,600 7 147,768 $7.06 2010 2q 7,876 301,074,907 22,375,075 24,797,247 8.2% 66,734 2 65,200 9 519,548 $7.11 2010 7,875 301,012,907 22,459,526 24,801,981 8.2% (952,399) 3 113,989 10 582,828 $7.22 2009 4q 7,873 301,148,918 21,691,900 23,985,593 8.0% (951,053) 3 27,400 12 386,217 $7.38 2009 7,870 301,121,518 21,428,335 23,007,140 7.6% 87,933 5 1,175,619 14 397,617 $7.39 2009 2q 7,865 299,945,899 20,515,333 21,919,454 7.3% (2,904,583) 7 486,313 11 1,313,845 $7.47 2009 7,860 299,523,770 17,752,500 18,592,742 6.2% (1,352,085) 21 446,918 11 1,632,292 $7.42 2008 7,850 299,292,084 16,310,912 17,008,971 5.7% 2,827,137 75 4,743,616 29 1,974,094 $7.80 2007 7,799 295,127,037 14,726,032 15,671,061 5.3% 7,415,028 88 6,441,021 60 4,135,741 $7.42 2006 7,731 289,381,307 16,428,175 17,340,359 6.0% 6,851,795 111 6,111,009 66 6,817,274 $7.00 2005 7,631 284,130,737 17,387,955 18,941,584 6.7% 7,278,095 71 5,270,589 76 4,932,177 $7.19 2004 7,570 279,254,942 19,789,142 21,343,884 7.6% 6,780,634 61 3,601,273 56 4,967,412 $7.31 2003 7,524 275,999,636 22,262,812 24,869,212 9.0% 1,084,218 46 1,712,112 44 4,036,319 $6.87 2002 7,499 275,493,726 22,289,487 25,447,520 9.2% (4,394,618) 51 2,501,731 34 1,980,861 $5.79 Quoted 14 THE COSTAR INDUSTRIAL REPORT 2011 COSTAR GROUP, INC.

Seattle/Puget Sound Industrial Market LEASING ACTIVITY FIRST QUARTER 2011 SEATTLE/PUGET SOUND Leasing Highlights in Select CoStar Markets Color Coded by Vacancy Rate 2011 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 15

SEATTLE/PUGET SOUND FIRST QUARTER 2011 Seattle/Puget Sound Industrial Market LEASING ACTIVITY Historical Rental Rates Based on Quoted Rental Rates $18.00 Flex Warehouse Total Market $16.00 $14.00 Dollars/SF/Year $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 2009 2009 4q 2010 2010 2q 2010 2010 4q 2011 Vacancy by Available Space Type Vacancy by Building Type Percent of All Vacant Space in Direct vs. Sublet Percent of All Vacant Space by Building Type Seattle/Puget Sound United States Seattle/Puget Sound United States 8% 3% 16% 14% 84% 86% 92% 97% Direct Sublet Direct Sublet Flex Warehouse Flex Warehouse U.S. Rental Rate Comparison Based on Average Quoted Rental Rates Future Space Available Space Scheduled to be Available for Occupancy* $8.00 $7.00 Seattle/Puget Sound United States 2.0 1.8 1.6 1.8 $6.00 1.4 Dollars/SF/Year $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 2009 2009 4q 2010 2010 2q 2010 2010 4q 2011 Millions 1.2 1.0 0.8 0.6 0.4 0.2 0.0 0.5 0.0 0.0 0.0 0.0 2011 2q 2011 2011 4q 2012 2012 2q 2012 * Includes Under Construction Space 16 THE COSTAR INDUSTRIAL REPORT 2011 COSTAR GROUP, INC.

Seattle/Puget Sound Industrial Market LEASING ACTIVITY FIRST QUARTER 2011 SEATTLE/PUGET SOUND Select Top Industrial Leases Based on Leased Square Footage For Deals Signed in 2011 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company 1 Overlake Ind Park- Honeywell Bldgs* 520 Corridor Ind 233,035 1st Honeywell International Inc Colliers International CB Richard Ellis 2 Carbon Bldg* Puyallup/S Hill Ind 138,386 1st Cooper Tire & Rubber Company Mohr Partners Investco Management Services 3 Van Doren s West - Bldg C* Kent Valley S Ind 102,400 1st United States Postal Service N/A Kidder Mathews 4 Earl Davie Bldg Lake Union Ind 97,365 1st Dendreon Corporation Jones Lang LaSalle Jones Lang LaSalle 5 Pacific Gateway Business Park - Bldg 041* Kent Valley N Ind 85,000 1st Ozburn-Hessey Logistics LLC N/A Segale Properties 6 Former Helly Hansen Bldg Redmond Ind 78,676 1st Clarisonic Kidder Mathews C&W Commerce 7 Frye Distribution* Gtown/Duwamish S Ind 69,296 1st Seattle Transload Kennedy-Wilson Properties Northwest CB Richard Ellis 8 76th Avenue Distribution Center Kent Valley S Ind 40,020 1st Again Co. N/A Kidder Mathews 9 Woodinville Corporate Ctr - Phase II - Bldg A Woodinville Ind 26,795 1st LeMond Fitness Inc., Direct Deal CB Richard Ellis 10 MGI Bldg Bellevue Ind 22,835 1st T Mobile Bellevue Lab Jones Lang LaSalle Rosen-Harbottle Commercial Real Est 11 Seattle Cabinets Bldg S Snohomish County Ind 22,433 1st N/A N/A Kidder Mathews 12 420 8th Ave N Lake Union Ind 21,197 1st ICD Direct Deal Market Associates, Inc. 13 Oakridge Bus Park Bldg 2 Redmond Ind 19,785 1st N/A N/A James J Hill 14 Black River Business Center Renton Ind 18,875 1st The Witt Company Flinn Ferguson Corporate R.E. Kidder Mathews 15 Former Seattle Packaging Rainier/Beacon Hill Ind 17,114 1st N/A N/A Neil Walter Company 16 Segale Business Park - Bldg 734 Kent Valley N Ind 12,891 1st N/A N/A Segale Properties 17 Corporate Park 216 Bldg D Kent Valley S Ind 12,809 1st N/A N/A Kidder Mathews 18 Edlen Electrical Building Gtown/Duwamish N Ind 12,220 1st N/A N/A S W Greg Inc. 19 196th Corridor Bldg Kent Valley N Ind 12,181 1st N/A Kidder Mathews CB Richard Ellis 20 Upland Distribution-Bldg D Tukwila Ind 12,000 1st United Cargo Line, Inc. Direct Deal Grubb & Ellis 21 Mill Creek Dist Center - Bldg 2 Kent Valley S Ind 12,000 1st N/A N/A Kidder Mathews 22 196th Corridor Bldg Kent Valley N Ind 11,309 1st N/A N/A CB Richard Ellis 23 West Valley Business Cntr - Bldg 1* Kent Valley S Ind 11,250 1st NCV Refreshment Services. N/A Kidder Mathews 24 West Valley @ 224th - Bldg B Kent Valley S Ind 10,810 1st N/A N/A Kidder Mathews 25 NRJ Business Park - Bldg A Woodinville Ind 10,723 1st N/A N/A NAI Puget Sound Properties Inc. 26 Lincoln Distribution Ctr-5812* Kent Valley N Ind 10,635 1st Pacific Power Generation N/A Grubb & Ellis 27 Bellevue Distribution Center - Bldg 1 Bellevue Ind 10,550 1st Bensussen Deutsch & Associates, Inc. Direct Deal Kidder Mathews 28 Jenco Industrial Park - Bldg H E Tacoma Ind 10,500 1st N/A N/A Kidder Mathews 29 Segale Business Park - Bldg 731 Kent Valley N Ind 10,368 1st N/A N/A Segale Properties 30 Simpson Hawley Building Woodinville Ind 9,915 1st N/A N/A Colliers International 31 Park 14 Corporate Park - Bldg B Auburn Ind 9,879 1st Tap Handles Kidder Mathews Kidder Mathews 32 Canyon Park 6 Bothell/Kenmore Ind 9,000 1st Detroit Testing Labs N/A New Ventures Group, Inc. 33 1421 52nd Ave E Port of Tacoma/Fife Ind 9,000 1st N/A N/A Lortim Enterprises LLC 34 West Valley Commerce Center - Bldg 2 Kent Valley N Ind 8,720 1st N/A N/A The Andover Company, Inc. 35 Lakewood Industrial Park - Bldg 18 Lakewood Ind 8,581 1st N/A N/A Neil Walter Company 36 5309 22nd Ave NW Ballard Ind 8,000 1st N/A N/A KG Investment Management, LLC 37 Simpson Hawley Building Woodinville Ind 7,810 1st N/A N/A Colliers International 38 NW Corporate Park Kent - Bldg I Kent Valley N Ind 7,800 1st N/A N/A C&W Commerce 39 Pacific Bus. & Tech Cntr - Bldg T Redmond Ind 7,260 1st N/A N/A CB Richard Ellis 40 Gateway North - Bldg 5 Tukwila Ind 7,125 1st N/A N/A Kidder Mathews * Renewal 2011 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 17

SEATTLE/PUGET SOUND FIRST QUARTER 2011 Seattle/Puget Sound Industrial Market SALES ACTIVITY The Optimist Sales Index Average of Two Highest Price/SF's and Two Lowest Cap Rates Per Quarter 9.0% Cap Rate Price/SF $350 Cap Rate Percentage 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% $300 $250 $200 $150 $100 $50 Dollars/SF 0.0% 2008 2008 2q 2008 2008 4q 2009 2009 2q 2009 2009 4q 2010 2010 2q 2010 2010 4q $0 Source: CoStar COMPS Sales Volume & Price Sales Analysis by Building Size Based on Industrial Building Sales of 15,000 SF and Larger Based on Industrial Bldg Sales From Jan. 2010 - Dec. 2010 Sales Volume Price/SF Bldg Size # RBA $ Volume Price/SF Cap Rate $350 $140 $300 $120 < 25,000 SF 75 822,996 $ 101,518,771 $ 123.35 7.84% Millions of Sales Volume Dollars $250 $200 $150 $100 $50 $100 $80 $60 $40 $20 Price/SF 25K-99K SF 25 1,105,130 $ 106,320,464 $ 96.21 8.27% 100K-249K SF 12 1,838,553 $ 145,371,550 $ 79.07 8.18% $0 2007 2007 2008 2008 2009 2009 2010 2010 $0 >250K SF 3 1,752,796 $ 108,225,000 $ 61.74 8.10% Source: CoStar COMPS Source: CoStar COMPS U.S. Price/SF Comparison Based on Industrial Building Sales of 15,000 SF and Larger U.S. Cap Rate Comparison Based on Industrial Building Sales of 15,000 SF and Larger $140 Seattle/Puget Sound US 10.0% Seattle/Puget Sound US Dollars per SF $120 $100 $80 $60 $40 $20 Cap Rate Percentage 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% $0 2007 2007 2008 2008 2009 2009 2010 2010 0.0% 2007 2007 2008 2008 2009 2009 2010 2010 Source: CoStar COMPS Source: CoStar COMPS 18 THE COSTAR INDUSTRIAL REPORT 2011 COSTAR GROUP, INC.

Seattle/Puget Sound Industrial Market SALES ACTIVITY FIRST QUARTER 2011 SEATTLE/PUGET SOUND 2011 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 19

SEATTLE/PUGET SOUND FIRST QUARTER 2011 Seattle/Puget Sound Industrial Market SALES ACTIVITY Select Land Sales Based on Industrial Zoned Land Sales Occurring From Jan. 2010 - March 2011 8215 SW 260th St, Vashon 4302 Chambers Creek Rd, Steilacoom 3623 NW Leary Way, Seattle Sale Price: $36,000,000 Sale Price: $4,500,000 Sale Price: $2,075,000 Acres: 250.06 Acres: 84.00 Acres: 0.46 Price/SF: $3.30 Price/SF: $1.23 Price/SF: $103.07 Closing Date: 12/30/2010 Closing Date: 02/11/2010 Closing Date: 08/10/2010 Zoning: MSO, Vashon Zoning: I, Steilacoom Zoning: IB U45, Seattle Intended Use: MSO Zoned Acerage Intended Use: Industrial Park Site Intended Use: Industrial Site Buyer: King County Buyer: Ralston Investments Buyer: Leary Triangle LLC Seller: CalPortland Company Seller: Abitbi Consolidated Sales Corp Seller: Richard Donald & Shirley A Widrig 1732 4th Ave S, Seattle 1700 Center Dr, Dupont 17075 Beaton Rd SE, Monroe Sale Price: $1,930,000 Sale Price: $1,000,000 Sale Price: $615,000 Acres: 0.37 Acres: 25.41 Acres: 1.00 Price/SF: $119.14 Price/SF: $0.90 Price/SF: $14.12 Closing Date: 06/29/2010 Closing Date: 09/30/2010 Closing Date: 09/16/2010 Zoning: IG2 U/85, Seattle Zoning: MRP, Dupont Zoning: LI, Monroe Intended Use: IG2 U/85 Zoned Acerage Intended Use: R&D Site Intended Use: Industrial Site Buyer: Peter Davis Builders, Inc. Buyer: Dupont Industrial Partners LLC Buyer: Ansel Kent LLC Seller: Van Nhu Huynh Seller: Quadrant Homes Seller: Jeffrey M Cohen Source: CoStar COMPS 20 THE COSTAR INDUSTRIAL REPORT 2011 COSTAR GROUP, INC.