CoStar Office Statistics M i d - Y e a r 2 0 1 7
Mid-Year 2017 Portland Table of Contents Table of Contents................................................................. A Methodology...................................................................... B Terms & Definitions................................................................ C Market Highlights & Overview........................................................ 1 CoStar Markets & Submarkets........................................................ 4 Inventory & Development Analysis..................................................... 5 Inventory & Development Analysis Select Top Deliveries Select Top Under Construction Properties Figures at a Glance................................................................. 9 Figures at a Glance by Class & Market Figures at a Glance by Class & Submarket Figures at a Glance Grouped by CBD vs Suburban Historical Figures at a Glance Leasing Activity Analysis............................................................ 17 Select Top Lease Transactions Sales Activity Analysis.............................................................. 19 Sales Activity Analysis Select Top Sales Transactions Analysis of Individual CoStar Submarket Clusters........................................ 21 CBD Market Clark County Market I-5 Corridor Market Lloyd District Market Northeast Market Northwest Market Skamania County Market Southeast Market Southwest Market Westside Market 2017 CoStar Group, Inc. CoStar Office Statistics A
Portland Mid-Year 2017 Methodology The CoStar Office Statistics, unless specifically stated otherwise, calculates office statistics using CoStar Group s entire database of existing and under construction office buildings in each metropolitan area. Included are office, office condominium, office loft, office medical, all classes and all sizes, and both multi-tenant and single-tenant buildings, including owner-occupied buildings. CoStar Group's global database includes approximately 95.6 billion square feet of coverage in 4.4 million properties. All rental rates reported in the CoStar Office Report have been converted to a Full Service equivalent rental rate. 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 2017 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 20005 (800) 204-5960 www.costar.com NASDAQ: CSGP B CoStar Office Statistics 2017 CoStar Group, Inc.
Mid-Year 2017 Portland 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-ofa-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. : 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 building-type 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) 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 2017 CoStar Group, Inc. CoStar Office Statistics C
Portland Mid-Year 2017 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: Buildings in a state of construction, up until they receive their certificate of occupancy. In order for CoStar to consider a building under construction, the site must have a concrete foundation in place. Abbreviated UC. 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 CoStar Office Statistics 2017 CoStar Group, Inc.
Overview Mid-Year 2017 Portland Portland s Decreases to 7.2% Net Absorption Positive 188,736 SF in the Quarter The Portland Office market ended the second quarter 2017 with a vacancy rate of 7.2%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 188,736 square feet in the second quarter. Vacant sublease space decreased in the quarter, ending the quarter at 331,105 square feet. Rental rates ended the second quarter at $24.10, a decrease over the previous quarter. One building delivered to the market in the quarter totaling 9,000 square feet, with 3,489,155 square feet still under construction at the end of the quarter. Absorption Net absorption for the overall Portland office market was positive 188,736 square feet in the second quarter 2017. That compares to negative (45,754) square feet in the first quarter 2017, positive 169,372 square feet in the fourth quarter 2016, and positive 318,347 square feet in the third quarter 2016. Tenants moving out of large blocks of space in 2017 include: WE Communications moving out of 43,190 square feet at Three Centerpointe; Huron Consulting moving out of 34,816 square feet at AmberGlen Business Center; and Cardno moving out of 25,627 square feet at Sylvan Medical Center. Tenants moving into large blocks of space in 2017 include: Virginia Garcia Memorial Health Center moving into 40,294 square feet at 3305 NW Aloclek Dr; Zoomcare moving into 30,193 square feet at Pearl West; and Cloudability moving into 22,591 square feet at 334 NW 11th Ave. The Class-A office market recorded net absorption of positive 80,887 square feet in the second quarter 2017, compared to negative (89,776) square feet in the first quarter 2017, positive 44,300 in the fourth quarter 2016, and positive 15,507 in the third quarter 2016. The Class-B office market recorded net absorption of positive 128,039 square feet in the second quarter 2017, compared to positive 13,371 square feet in the first quarter 2017, positive 96,901 in the fourth quarter 2016, and positive 228,126 in the third quarter 2016. The Class-C office market recorded net absorption of negative (20,190) square feet in the second quarter 2017 compared to positive 30,651 square feet in the first quarter 2017, positive 28,171 in the fourth quarter 2016, and positive 74,714 in the third quarter 2016. Net absorption for Portland s central business district was positive 152,063 square feet in the second quarter 2017. That compares to negative (50,525) square feet in the first quarter 2017, negative (27,909) in the fourth quarter 2016, and positive 72,935 in the third quarter 2016. Net absorption for the suburban markets was positive 36,673 square feet in the second quarter 2017. That compares to positive 4,771 square feet in first quarter 2017, positive 197,281 in the fourth quarter 2016, and positive 245,412 in the third quarter 2016. The office vacancy rate in the Portland market area decreased to 7.2% at the end of the second quarter 2017. The vacancy rate was 7.4% at the end of the first quarter 2017, 7.3% at the end of the fourth quarter 2016, and 7.3% at the end of the third quarter 2016. Class-A projects reported a vacancy rate of 8.7% at the Rates by Class 2003-2017 A B C Total Market 18% 16% 14% Rate 12% 10% 8% 6% 4% 2% 0% 2003 1q 2004 1q 2005 1q 2006 1q 2007 1q 2008 1q 2009 1q 2010 1q 2011 1q 2012 1q 2013 1q 2014 1q 2015 1q 2016 1q 2017 1q 2017 CoStar Group, Inc. CoStar Office Statistics 1
Portland Mid-Year 2017 Overview end of the second quarter 2017, 9.0% at the end of the first quarter 2017, 8.7% at the end of the fourth quarter 2016, and 8.5% at the end of the third quarter 2016. Class-B projects reported a vacancy rate of 7.9% at the end of the second quarter 2017, 8.2% at the end of the first quarter 2017, 8.0% at the end of the fourth quarter 2016, and 8.0% at the end of the third quarter 2016. Class-C projects reported a vacancy rate of 4.1% at the end of the second quarter 2017, 4.0% at the end of first quarter 2017, 4.2% at the end of the fourth quarter 2016, and 4.3% at the end of the third quarter 2016. The overall vacancy rate in Portland s central business district at the end of the second quarter 2017 decreased to 9.8%. The vacancy rate was 10.3% at the end of the first quarter 2017, 10.1% at the end of the fourth quarter 2016, and 9.6% at the end of the third quarter 2016. The vacancy rate in the suburban markets remained the same at 6.3% for the past three quarters, and 6.5% at the end of the third quarter 2016. Largest Lease Signings The largest lease signings occurring in 2017 included: the 108,750-square-foot lease signed by Autodesk, Inc. at Towne Storage in the Lloyd District market; the 67,438-square-foot deal signed by City of Portland at Congress Center in the CBD market; and the 60,507-square-foot lease signed by City of Portland at 400 Sixth Avenue Building in the CBD market. Sublease The amount of vacant sublease space in the Portland market decreased to 331,105 square feet by the end of the second quarter 2017, from 408,582 square feet at the end of the first quarter 2017. There was 385,399 square feet vacant at the end of the fourth quarter 2016 and 323,562 square feet at the end of the third quarter 2016. Portland s Class-A projects reported vacant sublease U.S. Comparison Past 8 Quarters Rate 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Portland United States 2015 3q space of 203,362 square feet at the end of second quarter 2017, down from the 292,177 square feet reported at the end of the first quarter 2017. There were 260,267 square feet of sublease space vacant at the end of the fourth quarter 2016, and 185,170 square feet at the end of the third quarter 2016. Class-B projects reported vacant sublease space of 117,010 square feet at the end of the second quarter 2017, up from the 109,437 square feet reported at the end of the first quarter 2017. At the end of the fourth quarter 2016 there were 118,176 square feet, and at the end of the third quarter 2016 there were 124,948 square feet vacant. Class-C projects reported increased vacant sublease space from the first quarter 2017 to the second quarter 2017. Sublease vacancy went from 6,968 square feet to 10,733 square feet during that time. There was 6,956 square feet at the end of the fourth quarter 2016, and 13,444 square feet at the end of the third quarter 2016. Sublease vacancy in Portland s central business district stood at 154,521 square feet at the end of the second quarter 2017. It was 209,292 square feet at the end of the first quarter 2017, 162,956 square feet at the end of the fourth quarter 2016, and 109,468 square feet at the end of the third quarter 2016. Sublease vacancy in the suburban markets ended the second quarter 2017 at 176,584 square feet. At the end of the first quarter 2017 sublease vacancy was 199,290 square feet, was 222,443 square feet at the end of the fourth quarter 2016, and was 214,094 square feet at the end of the third quarter 2016. Rental Rates The average quoted asking rental rate for available office space, all classes, was $24.10 per square foot per year at the end of the second quarter 2017 in the Portland market area. This represented a slight decrease in quoted rental rates from the end of the first quarter 2017, when rents were reported at $24.11 per square foot. The average quoted rate within the Class-A sector was $28.36 at the end of the second quarter 2017, while Class-B rates stood at $23.00, and Class-C rates at $19.14. At the end of the first quarter 2017, Class-A rates were $28.08 per square foot, Class-B rates were $23.18, and Class-C rates were $18.48. The average quoted asking rental rate in Portland s CBD was $29.54 at the end of the second quarter 2017, and $21.77 in the suburban markets. In the first quarter 2017, quoted rates were $29.29 in the CBD and $21.84 in the suburbs. Deliveries and Construction During the second quarter 2017, one building totaling 9,000 square feet was completed in the Portland market area. This compares to three buildings totaling 82,188 square feet that were completed in the first quarter 2017, seven buildings totaling 193,434 square feet completed in the fourth quarter 2 CoStar Office Statistics 2017 CoStar Group, Inc.
Overview Mid-Year 2017 Portland 2016, and 122,300 square feet in two buildings completed in the third quarter 2016. There were 3,489,155 square feet of office space under construction at the end of the second quarter 2017. Some of the notable 2017 deliveries include: The Dairy Building, a 46,503-square-foot facility that delivered in first quarter 2017 and is now 28% occupied, and Mason Ehrman Annex, a 27,525-square-foot building that delivered in first quarter 2017 and is now 63% occupied. The largest projects underway at the end of second quarter 2017 were Nike North Expansion Building B, an 887,000- square-foot building with 100% of its space pre-leased, and Nike North Expansion Bldg A, a 412,000-square-foot facility that is 100% pre-leased. Inventory Total office inventory in the Portland market area amounted to 99,775,255 square feet in 5,333 buildings as of the end of the second quarter 2017. The Class-A office sector consisted of 29,549,355 square feet in 202 projects. There were 1,552 Class-B buildings totaling 46,084,418 square feet, and the Class-C sector consisted of 24,141,482 square feet in 3,579 buildings. Within the Office market there were 266 owneroccupied buildings accounting for 10,975,913 square feet of office space. Sales Activity Tallying office building sales of 15,000 square feet or larger, Portland office sales figures fell during the first quarter 2017 in terms of dollar volume compared to the fourth quarter of 2016. In the first quarter, 12 office transactions closed with a total volume of $313,717,000. The 12 buildings totaled 1,229,440 square feet and the average price per square foot equated to $255.17 per square foot. That compares to 16 transactions totaling $361,995,330 in the fourth quarter 2016. The total square footage in the fourth quarter was 1,395,016 square feet Absorption & Deliveries Past 8 Quarters 1.0 0.8 0.6 0.4 0.2 0.0 (0.2) 0.15 0.03 Net Absorption 0.63 0.06 0.22 0.13 0.78 0.94 0.32 Deliveries 0.17 0.19 0.12 0.08 (0.05) 2015 3q 0.19 0.01 for an average price per square foot of $259.49. Total office building sales activity in 2017 was up compared to 2016. In the first three months of 2017, the market saw 12 office sales transactions with a total volume of $313,717,000. The price per square foot averaged $255.17. In the same first three months of 2016, the market posted 18 transactions with a total volume of $155,477,500. The price per square foot averaged $188.97. Cap rates have been higher in 2017, averaging 6.49% compared to the same period in 2016 when they averaged 5.77%. One of the largest transactions that has occurred within the last four quarters in the Portland market is the sale of Pacwest Center in Portland. This 545,522-square-foot office building sold for $170,000,000, or $311.63 per square foot. The property sold on 12/21/2016. Report compiled and edited by: Certified Research Analyst - John D. Walz 2017 CoStar Group, Inc. CoStar Office Statistics 3
Portland Mid-Year 2017 Markets CoStar Submarket Clusters & Submarkets In analyzing metropolitan areas, CoStar has developed geographic designations to help group properties together, called Markets, Submarket Clusters and Submarkets. Markets 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. Markets are then divided into Submarket Clusters, 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. Submarket Clusters CBD Submarkets CBD* Clark County Camas/Washougal Cascade Park CBD*/West Vancouver Hazel Dell/Salmon Creek Orchards St Johns/Cntrl Vancouver Vancouver Mall I-5 Corridor Kruse Way Lake Oswego/West Linn Sherwood Tigard Tualatin Wilsonville Lloyd District Lloyd District Northeast Airport Way East Columbia Corridor Gateway Gresham Hayden Island/Swan Island NE Close-In Rivergate Northwest Guilds Lake NW Close-In Skamania County Skamania County Southeast Clackamas/Milwaukie Mall 205 Oregon City SE Close-In Southwest 217 Corridor/Beaverton Barbur Blvd/Capitol Hwy Johns Landing North Beaverton SW Close-In Sylvan/Hillsdale Westside Sunset Corridor/Hillsboro * Submarkets comprising the CBD. For statistics reference the CBD vs Suburban Figures at a Glance Page. 4 CoStar Office Statistics 2017 CoStar Group, Inc.
Inventory & development Mid-Year 2017 Portland Historical Deliveries 1982-2017 4.0 3.5 Deliveries 3.5 Average Delivered SF 3.0 2.8 Millions of SF 2.5 2.0 1.5 1.0 0.5 0.0 2.1 2.1 2.2 2.0 1.9 2.1 1.9 1.7 1.8 1.8 1.7 1.5 1.4 1.3 1.2 1.1 1.3 1.3 1.2 1.0 1.0 0.9 0.8 0.7 0.8 0.9 0.5 0.6 0.5 0.3 0.2 0.1 1982 1986 1990 1994 1998 2002 2006 2010 2014 1.4 1.2 * Future deliveries based on current under construction buildings. Construction Activity Markets Ranked by Under Construction Square Footage Under Construction Inventory Average Bldg Size Market # Bldgs Total RBA Preleased SF Preleased % All Existing U/C Westside 2 1,299,000 1,299,000 100.0% 33,210 649,500 Southwest 3 800,698 800,698 100.0% 15,823 266,899 CBD 4 513,051 23,041 4.5% 71,649 128,263 Northwest 3 417,056 30,315 7.3% 16,138 139,019 Southeast 6 224,089 86,945 38.8% 9,216 37,348 Lloyd District 2 155,261 122,238 78.7% 23,807 77,630 Clark County 1 34,700 0 0.0% 13,359 34,700 Northeast 1 24,300 5,832 24.0% 9,749 24,300 I-5 Corridor 1 21,000 14,490 69.0% 16,773 21,000 Skamania County 0 0 0 0.0% 5,916 0 Totals 23 3,489,155 2,382,559 68.3% 18,709 151,702 Recent Deliveries Leased & Un-Leased SF in Deliveries Since 2013 Future Deliveries Preleased & Un-Leased SF in Properties Scheduled to Deliver 1.6 Leased Un-Leased 1,200 Preleased Un-Leased 1.4 1,000 1.2 Millions of SF 1.0 0.8 0.6 Thousands of SF 800 600 400 T 0.4 0.2 200 0.0 2013 2015 2017 0 2017 3q 2018 1q 2017 CoStar Group, Inc. CoStar Office Statistics 5
Portland Mid-Year 2017 Inventory & development Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction 1.4 1.2 Construction Starts Deliveries 1.27 1.0 1.01 0.94 Millions of SF 0.8 0.6 0.61 0.64 0.52 0.70 0.4 0.2 0.0 0.37 0.25 0.19 0.13 0.12 0.12 0.07 0.08 0.09 0.05 0.02 0.02 0.04 0.04 0.06 0.08 0.01 0.020.03 2014 1q 2015 1q 2016 1q 2017 1q 0.12 0.01 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 91,188 47,522 52.1% $29.75 17,160 74,028 50,000 SF - 99,999 SF 0 0 0 0.0% $0.00 0 0 100,000 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 Comparison Based on RBA Developed for Single & Multi Tenant Use Based on Total RBA 2017 Deliveries Currently Under Construction By Class By Space Type 19% 24% 22% 37% 81% 63% 46% 30% 78% Multi Single Multi Single Class A Class B Class C Multi Single 6 CoStar Office Statistics 2017 CoStar Group, Inc.
Inventory & development Mid-Year 2017 Portland 2017 CoStar Group, Inc. CoStar Office Statistics 7
Portland Mid-Year 2017 Inventory & development 8 CoStar Office Statistics 2017 CoStar Group, Inc.
Figures at a Glance Mid-Year 2017 Portland Class A Market Statistics Mid-Year 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 45 11,961,952 1,205,265 1,342,664 11.2% (2,628) 0 450,670 $31.15 Clark County 34 2,534,498 207,572 207,572 8.2% 4,131 0 0 $24.90 I-5 Corridor 39 3,403,818 455,923 473,158 13.9% (73,426) 0 0 $28.61 Lloyd District 7 2,021,026 46,417 46,417 2.3% 6,007 0 0 $31.62 Northeast 12 1,293,414 13,275 17,581 1.4% 42,134 0 24,300 $23.70 Northwest 1 297,780 0 0 0.0% 0 0 417,056 $0.00 Skamania County 0 0 0 0 0.0% 0 0 0 $0.00 Southeast 9 681,768 33,477 33,477 4.9% 14,391 0 75,000 $25.07 Southwest 20 2,141,708 275,941 311,270 14.5% (14,941) 0 692,000 $24.57 Westside 35 5,213,391 129,727 138,820 2.7% 15,443 0 1,299,000 $23.99 Totals 202 29,549,355 2,367,597 2,570,959 8.7% (8,889) 0 2,958,026 $28.36 Class B Market Statistics Mid-Year 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 148 10,360,848 935,345 950,165 9.2% 106,415 27,525 62,381 $29.73 Clark County 280 5,924,958 516,806 521,806 8.8% 4,698 0 34,700 $16.72 I-5 Corridor 237 4,537,910 465,994 522,434 11.5% (36,827) 0 21,000 $22.45 Lloyd District 58 1,894,028 102,237 103,597 5.5% (16,579) 8,160 155,261 $28.52 Northeast 193 4,002,448 161,392 161,392 4.0% 21,677 9,000 0 $18.34 Northwest 45 1,703,913 161,443 162,664 9.5% (31,309) 0 0 $23.00 Skamania County 1 6,332 0 0 0.0% 0 0 0 $0.00 Southeast 199 4,344,255 198,455 208,948 4.8% 14,002 46,503 149,089 $23.95 Southwest 235 6,496,794 571,494 592,565 9.1% 10,494 0 108,698 $20.49 Westside 156 6,812,932 414,394 420,999 6.2% 68,839 0 0 $20.42 Totals 1,552 46,084,418 3,527,560 3,644,570 7.9% 141,410 91,188 531,129 $23.00 2017 CoStar Group, Inc. CoStar Office Statistics 9
Portland Mid-Year 2017 Figures at a Glance Class C Market Statistics Mid-Year 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 174 3,972,258 273,727 276,029 6.9% (2,249) 0 0 $23.99 Clark County 511 2,561,942 87,810 87,810 3.4% 2,681 0 0 $18.88 I-5 Corridor 326 2,155,727 83,649 86,907 4.0% (196) 0 0 $17.79 Lloyd District 157 1,370,128 32,388 37,561 2.7% (4,213) 0 0 $18.75 Northeast 780 4,307,174 191,967 191,967 4.5% (14,348) 0 0 $13.66 Northwest 172 1,516,363 33,062 33,062 2.2% 4,356 0 0 $22.63 Skamania County 3 17,332 2,500 2,500 14.4% 6,000 0 0 $0.00 Southeast 741 3,719,509 107,431 107,431 2.9% (441) 0 0 $16.53 Southwest 514 3,529,003 135,623 135,623 3.8% 15,133 0 0 $17.64 Westside 201 992,046 29,718 29,718 3.0% 3,738 0 0 $16.65 Totals 3,579 24,141,482 977,875 988,608 4.1% 10,461 0 0 $19.14 Total Office Market Statistics Mid-Year 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 367 26,295,058 2,414,337 2,568,858 9.8% 101,538 27,525 513,051 $29.54 Clark County 825 11,021,398 812,188 817,188 7.4% 11,510 0 34,700 $19.06 I-5 Corridor 602 10,097,455 1,005,566 1,082,499 10.7% (110,449) 0 21,000 $24.62 Lloyd District 222 5,285,182 181,042 187,575 3.5% (14,785) 8,160 155,261 $27.20 Northeast 985 9,603,036 366,634 370,940 3.9% 49,463 9,000 24,300 $17.37 Northwest 218 3,518,056 194,505 195,726 5.6% (26,953) 0 417,056 $22.86 Skamania County 4 23,664 2,500 2,500 10.6% 6,000 0 0 $0.00 Southeast 949 8,745,532 339,363 349,856 4.0% 27,952 46,503 224,089 $22.08 Southwest 769 12,167,505 983,058 1,039,458 8.5% 10,686 0 800,698 $21.11 Westside 392 13,018,369 573,839 589,537 4.5% 88,020 0 1,299,000 $21.19 Totals 5,333 99,775,255 6,873,032 7,204,137 7.2% 142,982 91,188 3,489,155 $24.10 10 CoStar Office Statistics 2017 CoStar Group, Inc.
Figures at a Glance Mid-Year 2017 Portland Class A Submarket Statistics Mid-Year 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 217 Corridor/Beavert. 12 1,139,096 215,346 238,568 20.9% (11,512) 0 0 $23.69 Airport Way 5 404,821 9,475 13,781 3.4% 35,000 0 0 $22.79 Barbur Blvd/Capitol. 1 32,537 1,784 1,784 5.5% (232) 0 0 $21.60 Camas/Washougal 1 114,000 0 0 0.0% 0 0 0 $0.00 Cascade Park 15 892,156 109,674 109,674 12.3% (3,543) 0 0 $23.46 CBD 45 11,961,952 1,205,265 1,342,664 11.2% (2,628) 0 450,670 $31.15 CBD/West Vancouver 8 875,203 73,431 73,431 8.4% 9,025 0 0 $25.84 Clackamas/Milwaukie 9 681,768 33,477 33,477 4.9% 14,391 0 0 $25.07 East Columbia Corrid. 0 0 0 0 0.0% 0 0 0 $0.00 Gateway 2 339,600 0 0 0.0% 0 0 0 $0.00 Gresham 0 0 0 0 0.0% 0 0 0 $0.00 Guilds Lake 0 0 0 0 0.0% 0 0 299,056 $0.00 Hayden Island/Swan I. 3 479,322 0 0 0.0% 0 0 0 $0.00 Hazel Dell/Salmon Cr. 3 125,171 22,177 22,177 17.7% (1,351) 0 0 $26.71 Johns Landing 3 607,473 25,635 25,635 4.2% (19,053) 0 692,000 $29.93 Kruse Way 24 2,188,159 326,095 329,192 15.0% (78,231) 0 0 $29.67 Lake Oswego/West Lin. 1 64,916 1,607 1,607 2.5% 10,368 0 0 $28.50 Lloyd District 7 2,021,026 46,417 46,417 2.3% 6,007 0 0 $31.62 Mall 205 0 0 0 0 0.0% 0 0 0 $0.00 NE Close-In 2 69,671 3,800 3,800 5.5% 7,134 0 24,300 $27.93 North Beaverton 3 290,602 29,310 41,417 14.3% 1,052 0 0 $26.43 NW Close-In 1 297,780 0 0 0.0% 0 0 118,000 $0.00 Orchards 1 121,164 0 0 0.0% 0 0 0 $0.00 Oregon City 0 0 0 0 0.0% 0 0 0 $0.00 Rivergate 0 0 0 0 0.0% 0 0 0 $0.00 SE Close-In 0 0 0 0 0.0% 0 0 75,000 $0.00 Sherwood 0 0 0 0 0.0% 0 0 0 $0.00 Skamania County 0 0 0 0 0.0% 0 0 0 $0.00 St Johns/Cntrl Vanco. 1 66,000 0 0 0.0% 0 0 0 $26.21 Sunset Corridor/Hill. 35 5,213,391 129,727 138,820 2.7% 15,443 0 1,299,000 $23.99 SW Close-In 0 0 0 0 0.0% 0 0 0 $0.00 Sylvan/Hillsdale 1 72,000 3,866 3,866 5.4% 14,804 0 0 $25.00 Tigard 8 599,442 52,661 66,799 11.1% (16,386) 0 0 $25.59 Tualatin 2 225,800 75,560 75,560 33.5% (11,575) 0 0 $26.24 Vancouver Mall 5 340,804 2,290 2,290 0.7% 0 0 0 $24.00 Wilsonville 4 325,501 0 0 0.0% 22,398 0 0 $23.88 Totals 202 29,549,355 2,367,597 2,570,959 8.7% (8,889) 0 2,958,026 $28.36 2017 CoStar Group, Inc. CoStar Office Statistics 11
Portland Mid-Year 2017 Figures at a Glance Class B Submarket Statistics Mid-Year 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 217 Corridor/Beavert. 85 2,099,735 323,042 329,422 15.7% 10,247 0 0 $18.05 Airport Way 19 451,094 2,398 2,398 0.5% 14,590 0 0 $17.28 Barbur Blvd/Capitol. 45 642,954 47,117 47,117 7.3% (3,444) 0 108,698 $17.57 Camas/Washougal 23 418,024 25,384 25,384 6.1% (1,002) 0 0 $20.39 Cascade Park 72 1,931,341 134,813 134,813 7.0% 11,731 0 34,700 $17.40 CBD 148 10,360,848 935,345 950,165 9.2% 106,415 27,525 62,381 $29.73 CBD/West Vancouver 49 975,352 89,957 89,957 9.2% (8,360) 0 0 $16.26 Clackamas/Milwaukie 94 1,446,266 60,216 60,216 4.2% 38,422 0 17,495 $22.17 East Columbia Corrid. 30 632,038 19,369 19,369 3.1% 361 0 0 $17.50 Gateway 49 1,120,311 18,397 18,397 1.6% 881 0 0 $18.21 Gresham 38 694,599 87,004 87,004 12.5% (14,192) 0 0 $18.73 Guilds Lake 5 107,622 30,774 30,774 28.6% 5,102 0 0 $20.88 Hayden Island/Swan I. 15 526,181 14,231 14,231 2.7% 2,963 0 0 $13.00 Hazel Dell/Salmon Cr. 40 554,231 5,618 5,618 1.0% 6,633 0 0 $19.54 Johns Landing 25 961,684 63,415 68,951 7.2% 10,590 0 0 $25.23 Kruse Way 23 428,163 38,760 38,760 9.1% (349) 0 0 $24.23 Lake Oswego/West Lin. 49 585,799 32,708 32,708 5.6% 3,521 0 0 $24.17 Lloyd District 58 1,894,028 102,237 103,597 5.5% (16,579) 8,160 155,261 $28.52 Mall 205 35 384,807 16,285 16,285 4.2% (2,097) 0 0 $18.71 NE Close-In 41 568,535 19,993 19,993 3.5% 17,074 9,000 0 $21.28 North Beaverton 48 2,173,848 77,270 85,071 3.9% 21,583 0 0 $25.08 NW Close-In 40 1,596,291 130,669 131,890 8.3% (36,411) 0 0 $26.64 Orchards 27 353,270 59,804 59,804 16.9% 10,952 0 0 $20.49 Oregon City 27 558,069 7,487 7,487 1.3% (1,987) 0 0 $17.76 Rivergate 1 9,690 0 0 0.0% 0 0 0 $0.00 SE Close-In 43 1,955,113 114,467 124,960 6.4% (20,336) 46,503 131,594 $26.62 Sherwood 14 153,462 20,646 20,646 13.5% 0 0 0 $23.09 Skamania County 1 6,332 0 0 0.0% 0 0 0 $0.00 St Johns/Cntrl Vanco. 45 1,193,236 162,292 167,292 14.0% (14,150) 0 0 $13.82 Sunset Corridor/Hill. 156 6,812,932 414,394 420,999 6.2% 68,839 0 0 $20.42 SW Close-In 15 289,729 11,939 11,939 4.1% (3,159) 0 0 $21.45 Sylvan/Hillsdale 17 328,844 48,711 50,065 15.2% (25,323) 0 0 $22.92 Tigard 90 1,909,822 245,266 287,601 15.1% (39,156) 0 21,000 $21.91 Tualatin 36 867,634 116,302 130,407 15.0% (6,892) 0 0 $22.67 Vancouver Mall 24 499,504 38,938 38,938 7.8% (1,106) 0 0 $17.11 Wilsonville 25 593,030 12,312 12,312 2.1% 6,049 0 0 $20.96 Totals 1,552 46,084,418 3,527,560 3,644,570 7.9% 141,410 91,188 531,129 $23.00 12 CoStar Office Statistics 2017 CoStar Group, Inc.
Figures at a Glance Mid-Year 2017 Portland Class C Submarket Statistics Mid-Year 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 217 Corridor/Beavert. 136 783,231 58,744 58,744 7.5% 15,009 0 0 $15.70 Airport Way 45 330,756 76,057 76,057 23.0% 9,360 0 0 $6.35 Barbur Blvd/Capitol. 136 761,837 18,886 18,886 2.5% (11,590) 0 0 $16.28 Camas/Washougal 30 147,183 0 0 0.0% 0 0 0 $0.00 Cascade Park 38 226,381 10,161 10,161 4.5% (766) 0 0 $23.02 CBD 174 3,972,258 273,727 276,029 6.9% (2,249) 0 0 $23.99 CBD/West Vancouver 194 1,105,230 45,904 45,904 4.2% (1,804) 0 0 $15.84 Clackamas/Milwaukie 274 1,167,956 32,290 32,290 2.8% 1,186 0 0 $15.06 East Columbia Corrid. 88 403,098 13,404 13,404 3.3% (2,976) 0 0 $16.79 Gateway 284 1,428,386 61,089 61,089 4.3% (18,730) 0 0 $18.27 Gresham 108 560,958 25,573 25,573 4.6% (11,229) 0 0 $16.68 Guilds Lake 40 546,848 26,964 26,964 4.9% 1,380 0 0 $22.10 Hayden Island/Swan I. 77 406,031 3,000 3,000 0.7% 6,967 0 0 $14.42 Hazel Dell/Salmon Cr. 46 276,830 3,084 3,084 1.1% 5,765 0 0 $21.67 Johns Landing 41 449,165 13,007 13,007 2.9% 11,577 0 0 $29.79 Kruse Way 29 274,518 202 202 0.1% 15,435 0 0 $25.99 Lake Oswego/West Lin. 92 461,336 20,930 20,930 4.5% 2,024 0 0 $18.02 Lloyd District 157 1,370,128 32,388 37,561 2.7% (4,213) 0 0 $18.75 Mall 205 209 961,217 18,648 18,648 1.9% 17,655 0 0 $16.86 NE Close-In 155 1,065,820 12,844 12,844 1.2% 2,260 0 0 $27.52 North Beaverton 106 796,633 6,295 6,295 0.8% 1,882 0 0 $15.53 NW Close-In 132 969,515 6,098 6,098 0.6% 2,976 0 0 $23.11 Orchards 50 228,665 17,548 17,548 7.7% (6,299) 0 0 $13.75 Oregon City 107 465,526 30,591 30,591 6.6% (4,005) 0 0 $14.54 Rivergate 23 112,125 0 0 0.0% 0 0 0 $0.00 SE Close-In 151 1,124,810 25,902 25,902 2.3% (15,277) 0 0 $18.85 Sherwood 16 47,823 0 0 0.0% 0 0 0 $43.55 Skamania County 3 17,332 2,500 2,500 14.4% 6,000 0 0 $0.00 St Johns/Cntrl Vanco. 150 571,657 11,113 11,113 1.9% 5,785 0 0 $19.43 Sunset Corridor/Hill. 201 992,046 29,718 29,718 3.0% 3,738 0 0 $16.65 SW Close-In 49 379,093 12,974 12,974 3.4% (637) 0 0 $18.67 Sylvan/Hillsdale 46 359,044 25,717 25,717 7.2% (1,108) 0 0 $16.43 Tigard 133 902,320 56,612 59,870 6.6% (16,102) 0 0 $16.38 Tualatin 26 142,353 400 400 0.3% 952 0 0 $24.00 Vancouver Mall 3 5,996 0 0 0.0% 0 0 0 $0.00 Wilsonville 30 327,377 5,505 5,505 1.7% (2,505) 0 0 $15.20 Totals 3,579 24,141,482 977,875 988,608 4.1% 10,461 0 0 $19.14 2017 CoStar Group, Inc. CoStar Office Statistics 13
Portland Mid-Year 2017 Figures at a Glance Total Office Submarket Statistics Mid-Year 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 217 Corridor/Beavert. 233 4,022,062 597,132 626,734 15.6% 13,744 0 0 $19.85 Airport Way 69 1,186,671 87,930 92,236 7.8% 58,950 0 0 $14.98 Barbur Blvd/Capitol. 182 1,437,328 67,787 67,787 4.7% (15,266) 0 108,698 $17.24 Camas/Washougal 54 679,207 25,384 25,384 3.7% (1,002) 0 0 $20.39 Cascade Park 125 3,049,878 254,648 254,648 8.3% 7,422 0 34,700 $19.59 CBD 367 26,295,058 2,414,337 2,568,858 9.8% 101,538 27,525 513,051 $29.54 CBD/West Vancouver 251 2,955,785 209,292 209,292 7.1% (1,139) 0 0 $20.48 Clackamas/Milwaukie 377 3,295,990 125,983 125,983 3.8% 53,999 0 17,495 $21.03 East Columbia Corrid. 118 1,035,136 32,773 32,773 3.2% (2,615) 0 0 $17.36 Gateway 335 2,888,297 79,486 79,486 2.8% (17,849) 0 0 $18.25 Gresham 146 1,255,557 112,577 112,577 9.0% (25,421) 0 0 $17.99 Guilds Lake 45 654,470 57,738 57,738 8.8% 6,482 0 299,056 $21.26 Hayden Island/Swan I. 95 1,411,534 17,231 17,231 1.2% 9,930 0 0 $13.49 Hazel Dell/Salmon Cr. 89 956,232 30,879 30,879 3.2% 11,047 0 0 $22.42 Johns Landing 69 2,018,322 102,057 107,593 5.3% 3,114 0 692,000 $26.87 Kruse Way 76 2,890,840 365,057 368,154 12.7% (63,145) 0 0 $29.03 Lake Oswego/West Lin. 142 1,112,051 55,245 55,245 5.0% 15,913 0 0 $22.65 Lloyd District 222 5,285,182 181,042 187,575 3.5% (14,785) 8,160 155,261 $27.20 Mall 205 244 1,346,024 34,933 34,933 2.6% 15,558 0 0 $17.56 NE Close-In 198 1,704,026 36,637 36,637 2.2% 26,468 9,000 24,300 $23.34 North Beaverton 157 3,261,083 112,875 132,783 4.1% 24,517 0 0 $24.27 NW Close-In 173 2,863,586 136,767 137,988 4.8% (33,435) 0 118,000 $25.00 Orchards 78 703,099 77,352 77,352 11.0% 4,653 0 0 $19.02 Oregon City 134 1,023,595 38,078 38,078 3.7% (5,992) 0 0 $16.65 Rivergate 24 121,815 0 0 0.0% 0 0 0 $0.00 SE Close-In 194 3,079,923 140,369 150,862 4.9% (35,613) 46,503 206,594 $25.19 Sherwood 30 201,285 20,646 20,646 10.3% 0 0 0 $23.20 Skamania County 4 23,664 2,500 2,500 10.6% 6,000 0 0 $0.00 St Johns/Cntrl Vanco. 196 1,830,893 173,405 178,405 9.7% (8,365) 0 0 $15.88 Sunset Corridor/Hill. 392 13,018,369 573,839 589,537 4.5% 88,020 0 1,299,000 $21.19 SW Close-In 64 668,822 24,913 24,913 3.7% (3,796) 0 0 $20.53 Sylvan/Hillsdale 64 759,888 78,294 79,648 10.5% (11,627) 0 0 $20.71 Tigard 231 3,411,584 354,539 414,270 12.1% (71,644) 0 21,000 $21.30 Tualatin 64 1,235,787 192,262 206,367 16.7% (17,515) 0 0 $23.94 Vancouver Mall 32 846,304 41,228 41,228 4.9% (1,106) 0 0 $17.43 Wilsonville 59 1,245,908 17,817 17,817 1.4% 25,942 0 0 $20.78 Totals 5,333 99,775,255 6,873,032 7,204,137 7.2% 142,982 91,188 3,489,155 $24.10 14 CoStar Office Statistics 2017 CoStar Group, Inc.
Figures at a Glance Mid-Year 2017 Portland Class A Market Statistics Mid-Year 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 45 11,961,952 1,205,265 1,342,664 11.2% (2,628) 0 450,670 $31.15 Suburban 157 17,587,403 1,162,332 1,228,295 7.0% (6,261) 0 2,507,356 $26.23 Totals 202 29,549,355 2,367,597 2,570,959 8.7% (8,889) 0 2,958,026 $28.36 Class B Market Statistics Mid-Year 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 148 10,360,848 935,345 950,165 9.2% 106,415 27,525 62,381 $29.73 Suburban 1,404 35,723,570 2,592,215 2,694,405 7.5% 34,995 63,663 468,748 $21.05 Totals 1,552 46,084,418 3,527,560 3,644,570 7.9% 141,410 91,188 531,129 $23.00 Class C Market Statistics Mid-Year 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 174 3,972,258 273,727 276,029 6.9% (2,249) 0 0 $23.99 Suburban 3,405 20,169,224 704,148 712,579 3.5% 12,710 0 0 $17.26 Totals 3,579 24,141,482 977,875 988,608 4.1% 10,461 0 0 $19.14 Class A & B Market Statistics Mid-Year 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 193 22,322,800 2,140,610 2,292,829 10.3% 103,787 27,525 513,051 $30.49 Suburban 1,561 53,310,973 3,754,547 3,922,700 7.4% 28,734 63,663 2,976,104 $22.64 Totals 1,754 75,633,773 5,895,157 6,215,529 8.2% 132,521 91,188 3,489,155 $25.02 Total Office Market Statistics Mid-Year 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 367 26,295,058 2,414,337 2,568,858 9.8% 101,538 27,525 513,051 $29.54 Suburban 4,966 73,480,197 4,458,695 4,635,279 6.3% 41,444 63,663 2,976,104 $21.77 Totals 5,333 99,775,255 6,873,032 7,204,137 7.2% 142,982 91,188 3,489,155 $24.10 2017 CoStar Group, Inc. CoStar Office Statistics 15
Portland Mid-Year 2017 Figures at a Glance 16 CoStar Office Statistics 2017 CoStar Group, Inc.
Leasing Activity Mid-Year 2017 Portland Historical Rental Rates Based on Full-Service Equivalent Rental Rates A B C Total Market $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 2003 1q 2005 1q 2007 1q 2009 1q 2011 1q 2013 1q 2015 1q 2017 1q by Available Space Type by Class Percent of All Vacant Space in Direct vs. Sublet Percent of All Vacant Space by Class Portland United States Portland United States 5% 5% 14% 13% 50% 36% 46% 41% 95% 95% Direct Sublet Direct Sublet Class A Class B Class C Class A Class B Class C U.S. Rental Rate Comparison Based on Full-Service Equivalent Rental Rates Future Space Available Space Scheduled to be Available for Occupancy* Portland United States $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 2015 3q 2016 3q 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 1.74 0.26 0.30 0.02 0.00 0.00 2017 3q 2018 1q 2018 3q * Includes Under Construction Spaces 2017 CoStar Group, Inc. CoStar Office Statistics 17
Portland Mid-Year 2017 Leasing Activity Select Top Oce Leases Based on Leased Square Footage For Deals Signed in 2017 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company 1 Towne Storage Lloyd District 108,750 2nd Autodesk, Inc. Colliers International Apex Real Estate Partners 2 Montgomery Park NW Close-In 79,657 2nd N/A JLL Kidder Mathews 3 Congress Center CBD 67,438 1st City of Portland N/A JLL 4 400 Sixth Avenue Building CBD 60,507 1st City of Portland JLL Newmark Grubb Knight Frank 5 Columbia Square CBD 41,381 1st City of Portland JLL Melvin Mark Companies 6 6600 SW Hampton St Tigard 40,250 2nd Farmer s Insurance JLL Direct Deal 7 Three Centerpointe Kruse Way 31,660 2nd Power Engineers Cushman & Wakeeld Colliers International 8 Block 300 CBD 22,781 1st US Army Corps of Engineers Direct Deal JLL 9 334 NW 11th Ave CBD 22,591 1st Cloudability JLL Apex Real Estate Partners 10 Lloyd Center Tower Lloyd District 22,338 1st Social Security Administration Cushman & Wakeeld Capacity Commercial Group 11 Machine Works CBD 19,258 1st Zapproved CBRE JLL 12 CH2M Center CBD 18,652 1st N/A N/A Fischer & Company 13 6430 SE Lake Rd Clackamas/Milwaukie 17,495 2nd Stanley Black & Decker JLL; Cushman & Wakeeld Direct Deal 14 Mason Ehrman Annex CBD 17,082 1st Work & Co. N/A Apex Real Estate Partners 15 200 Market Building CBD 16,680 1st ShiftWise N/A Cushman & Wakeeld 16 Pacic Center CBD 16,537 2nd Kittelson & Associates, Inc. Cushman & Wakeeld Colliers International 17 1320 SW Broadway St CBD 14,822 2nd SRG Partnership Colliers International JLL 18 525 SE Martin Luther King Blvd SE Close-In 14,400 2nd N/A N/A JLL 19 Design Center Portland* SW Close-In 12,433 2nd Adpearance, Inc. N/A Colliers International 20 One Thousand Broadway Bldg CBD 12,156 2nd 2300 Associates Macadam Forbes Inc. Kidder Mathews 21 Lincoln Place SW Close-In 11,000 2nd Opensesame Cushman & Wakeeld Cushman & Wakeeld 22 Three Town Center Clackamas/Milwaukie 10,830 1st N/A N/A Doug Bean & Associates, Inc. 23 Union Bank Building CBD 10,820 1st N/A N/A Melvin Mark Companies 24 Nimbus Corporate Center - Building 13 217 Corridor/Beaverton 10,559 2nd CarePayment Technologies, Inc. JLL Colliers International 25 Kruse Way Plaza II Kruse Way 10,036 2nd N/A Newmark Grubb Knight Frank JLL; CBRE 26 New Market Theater Block CBD 9,731 2nd N/A N/A CBRE 27 The Marquam Bldg CBD 9,436 1st Blue Volt N/A American Property Management 28 New Market Theater Block CBD 9,380 1st N/A Colliers International CBRE 29 Mt. Scott Professional Center II Clackamas/Milwaukie 9,214 1st Kaiser Dental N/A KW Commercial Realty 30 The Crane Building CBD 9,201 1st MA Mortenson Construction Colliers International Newmark Grubb Knight Frank 31 Park Avenue West CBD 9,040 2nd Newmark Grubb Knight Frank Newmark Grubb Knight Frank Capacity Commercial Group 32 714 N Fremont St NE Close-In 9,035 2nd N/A N/A Melvin Mark Companies 33 Power + Light Building CBD 8,791 1st City of Portland JLL Fischer & Company 34 Centennial Block CBD 8,588 1st N/A Colliers International Colliers International 35 Columbia Square CBD 8,470 2nd N/A Direct Deal Melvin Mark Companies 36 Pacic Corporate Center - Bldg 2 Tigard 8,377 1st N/A N/A Direct Deal 37 Kruse Woods II Kruse Way 8,265 2nd N/A N/A JLL; CBRE 38 One Thousand Broadway Bldg CBD 8,218 2nd Novogradac & Company LLP CBRE Kidder Mathews 39 Creekside Corporate Park - Bldg 8 217 Corridor/Beaverton 7,870 2nd N/A N/A Melvin Mark Companies 40 6000 Meadows Kruse Way 7,738 2nd N/A Cushman & Wakeeld JLL; CBRE * Renewal 18 CoStar Office Statistics 2017 CoStar Group, Inc.
Sales Activity Mid-Year 2017 Portland The Optimist Sales Index Average of Two Highest Price/SF's and Two Lowest Cap Rates Per Quarter 8.0% Cap Rate Price/SF $550 7.0% $500 Cap Rate Percentage 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% $450 $400 $350 $300 $250 Dollars/SF 0.0% 2014 2q 2015 2q 2016 2q $200 Source: CoStar COMPS Sales Volume & Price Sales Analysis by Building Size Based on Office Building Sales of 15,000 SF and Larger Based on Office Building Sales From April 2016 - March 2017 $700 Sales Volume Price/SF $350 Bldg Size # RBA $ Volume Price/SF Cap Rate Millions of Sales Volume Dollars $600 $500 $400 $300 $200 $300 $250 $200 $150 $100 Price/SF < 50,000 SF 202 1,899,221 $353,864,545 $ 186.32 6.51% 50K-249K SF 250K-499K SF 16 1,606,542 $339,556,835 $ 211.36 6.63% 6 1,862,589 $480,975,000 $ 258.23 5.07% $100 $50 $0 2014 1q 2015 1q 2016 1q 2017 1q $0 >500K SF 1 545,522 $170,000,000 $ 311.63 - Source: CoStar COMPS Source: CoStar COMPS U.S. Price/SF Comparison Based on Office Building Sales of 15,000 SF and Larger U.S. Cap Rate Comparison Based on Office Building Sales of 15,000 SF and Larger $320 Portland US 10.0% Portland US Dollars per SF $300 $280 $260 $240 $220 $200 $180 Cap Rate Percentage 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% $160 3.0% $140 2.0% $120 Source: CoStar COMPS 2014 1q 2015 1q 2016 1q 2017 1q 1.0% Source: CoStar COMPS 2014 1q 2015 1q 2016 1q 2017 1q 2017 CoStar Group, Inc. CoStar Office Statistics 19
20 CoStar Office Statistics 2017 CoStar Group, Inc. Portland Mid-Year 2017 Sales Activity