CoStar Office Statistics Y e a r - E n d 2 0 1 7
Year-End 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 2018 CoStar Group, Inc. CoStar Office Statistics A
Portland Year-End 2017 Methodology The CoStar Office Report, 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 119 billion square feet of coverage in 5.4 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 2018 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 2018 CoStar Group, Inc.
Year-End 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 2018 CoStar Group, Inc. CoStar Office Statistics C
Portland Year-End 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 2018 CoStar Group, Inc.
Overview Year-End 2017 Portland Portland s Decreases to 6.8% Net Absorption Positive 283,479 SF in the Quarter The Portland Office market ended the fourth quarter 2017 with a vacancy rate of 6.8%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 283,479 square feet in the fourth quarter. Vacant sublease space decreased in the quarter, ending the quarter at 185,644 square feet. Rental rates ended the fourth quarter at $25.31, an increase over the previous quarter. A total of five buildings delivered to the market in the quarter totaling 241,619 square feet, with 3,192,252 square feet still under construction at the end of the quarter. Absorption Net absorption for the overall Portland office market was positive 283,479 square feet in the fourth quarter 2017. That compares to positive 537,584 square feet in the third quarter 2017, positive 130,057 square feet in the second quarter 2017, and negative 78,470 square feet in the first quarter 2017. Tenants moving out of large blocks of space in 2017 include: Liberty Northwest Insurance Corporation moving out of 109,856 square feet at 650 NE Holladay St; Farmers Group, Inc. moving out of 103,279 square feet at 23175 NW Bennett St; and American Red Cross: Oregon Trail Chapter moving out of 85,556 square feet at 3131 N Vancouver Ave. Tenants moving into large blocks of space in 2017 include: Adidas moving into 79,657 square feet at 2701 NW Vaughn St; City of Portland moving into 67,438 square feet at 1001 SW 5th Ave; and City of Portland moving into 56,856 square feet at 400 SW 6th Ave. The Class-A office market recorded net absorption of positive 147,593 square feet in the fourth quarter 2017, compared to positive 343,604 square feet in the third quarter 2017, positive 33,893 in the second quarter 2017, and negative 105,260 in the first quarter 2017. The Class-B office market recorded net absorption of positive 176,243 square feet in the fourth quarter 2017, compared to positive 245,489 square feet in the third quarter 2017, positive 133,951 in the second quarter 2017, and negative 2,300 in the first quarter 2017. The Class-C office market recorded net absorption of negative 40,357 square feet in the fourth quarter 2017 compared to negative 51,509 square feet in the third quarter 2017, negative 37,787 in the second quarter 2017, and positive 29,090 in the first quarter 2017. Net absorption for Portland s central business district was positive 208,380 square feet in the fourth quarter 2017. That compares to positive 171,859 square feet in the third quarter 2017, positive 125,476 in the second quarter 2017, and negative 100,095 in the first quarter 2017. Net absorption for the suburban markets was positive 75,099 square feet in the fourth quarter 2017. That compares to positive 365,725 square feet in third quarter 2017, positive 4,581 in the second quarter 2017, and positive 21,625 in the first quarter 2017. The office vacancy rate in the Portland market area decreased to 6.8% at the end of the fourth quarter 2017. The vacancy rate was 6.9% at the end of the third quarter 2017, 7.2% at the end of the second quarter 2017, and 7.3% at the end of the first quarter 2017. 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 2018 CoStar Group, Inc. CoStar Office Statistics 1
Portland Year-End 2017 Overview Class-A projects reported a vacancy rate of 7.7% at the end of the fourth quarter 2017, 7.8% at the end of the third quarter 2017, 9.0% at the end of the second quarter 2017, and 9.1% at the end of the first quarter 2017. Class-B projects reported a vacancy rate of 7.6% at the end of the fourth quarter 2017, 7.7% at the end of the third quarter 2017, 7.7% at the end of the second quarter 2017, and 8.0% at the end of the first quarter 2017. Class-C projects reported a vacancy rate of 4.1% at the end of the fourth quarter 2017, 4.0% at the end of third quarter 2017, 3.9% at the end of the second quarter 2017, and 3.8% at the end of the first quarter 2017. The overall vacancy rate in Portland s central business district at the end of the fourth quarter 2017 decreased to 8.7%. The vacancy rate was 9.3% at the end of the third quarter 2017, 10.1% at the end of the second quarter 2017, and 10.5% at the end of the first quarter 2017. The vacancy rate in the suburban markets increased to 6.1% in the fourth quarter 2017. The vacancy rate was 6.0% at the end of the third quarter 2017, 6.1% at the end of the second quarter 2017, and 6.1% at the end of the first quarter 2017. Largest Lease Signings The largest lease signings occurring in 2017 included: the 100,022-square-foot lease signed by Autodesk, Inc. at 17 SE 3rd Ave in the Lloyd District market; the 79,657-square-foot deal signed by Adidas at 2701 NW Vaughn in the Northwest market; and the 67,438-square-foot lease signed by City of Portland at 1001 SW 5th Ave in the CBD market. Sublease The amount of vacant sublease space in the Portland market decreased to 185,644 square feet by the end of the fourth quarter 2017, from 254,950 square feet at the end of the third quarter 2017. There was 389,880 square feet vacant at the end of the second quarter 2017 and 470,615 square feet U.S. Comparison Past 10 Quarters Rate 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Portland United States 2015 3q at the end of the first quarter 2017. Portland s Class-A projects reported vacant sublease space of 84,094 square feet at the end of fourth quarter 2017, down from the 147,795 square feet reported at the end of the third quarter 2017. There were 265,395 square feet of sublease space vacant at the end of the second quarter 2017, and 354,210 square feet at the end of the first quarter 2017. Class-B projects reported vacant sublease space of 85,698 square feet at the end of the fourth quarter 2017, down from the 89,188 square feet reported at the end of the third quarter 2017. At the end of the second quarter 2017 there were 117,010 square feet, and at the end of the first quarter 2017 there were 109,437 square feet vacant. Class-C projects reported decreased vacant sublease space from the third quarter 2017 to the fourth quarter 2017. Sublease vacancy went from 17,967 square feet to 15,852 square feet during that time. There was 7,475 square feet at the end of the second quarter 2017, and 6,968 square feet at the end of the first quarter 2017. Sublease vacancy in Portland s central business district stood at 45,932 square feet at the end of the fourth quarter 2017. It was 100,642 square feet at the end of the third quarter 2017, 216,554 square feet at the end of the second quarter 2017, and 271,325 square feet at the end of the first quarter 2017. Sublease vacancy in the suburban markets ended the fourth quarter 2017 at 139,712 square feet. At the end of the third quarter 2017 sublease vacancy was 154,308 square feet, was 173,326 square feet at the end of the second quarter 2017, and was 199,290 square feet at the end of the first quarter 2017. Rental Rates The average quoted asking rental rate for available office space, all classes, was $25.31 per square foot per year at the end of the fourth quarter 2017 in the Portland market area. This represented a 3.3% increase in quoted rental rates from the end of the third quarter 2017, when rents were reported at $24.49 per square foot. The average quoted rate within the Class-A sector was $29.95 at the end of the fourth quarter 2017, while Class-B rates stood at $23.70, and Class-C rates at $19.99. At the end of the third quarter 2017, Class-A rates were $29.32 per square foot, Class-B rates were $23.23, and Class-C rates were $18.66. The average quoted asking rental rate in Portland s CBD was $30.64 at the end of the fourth quarter 2017, and $22.86 in the suburban markets. In the third quarter 2017, quoted rates were $30.12 in the CBD and $22.05 in the suburbs. Deliveries and Construction During the fourth quarter 2017, five buildings totaling 241,619 square feet were completed in the Portland market area. This compares to four buildings totaling 272,726 square 2 CoStar Office Statistics 2018 CoStar Group, Inc.
Overview Year-End 2017 Portland feet that were completed in the third quarter 2017, one building totaling 9,000 square feet completed in the second quarter 2017, and 82,511 square feet in four buildings completed in the first quarter 2017. There were 3,192,252 square feet of office space under construction at the end of the fourth quarter 2017. Some of the notable 2017 deliveries include: 2175 NW Raleigh St, a 118,000-square-foot facility that delivered in fourth quarter 2017 and is now 3% occupied, and Under Armour Inc, a 108,698-square-foot building that delivered in third quarter 2017 and is now 100% occupied. The largest projects underway at the end of fourth quarter 2017 were 1 SW Bowerman Dr Bldg B, an 887,000- square-foot building with 100% of its space pre-leased, and 1 Bowerman Dr - Bldg A, a 412,000-square-foot facility that is 100% pre-leased. Inventory Total office inventory in the Portland market area amounted to 100,896,141 square feet in 5,374 buildings as of the end of the fourth quarter 2017. The Class-A office sector consisted of 29,883,090 square feet in 202 projects. There were 1,574 Class-B buildings totaling 46,683,356 square feet, and the Class-C sector consisted of 24,329,695 square feet in 3,598 buildings. Within the Office market there were 268 owner-occupied buildings accounting for 11,123,958 square feet of office space. Sales Activity Tallying office building sales of 15,000 square feet or larger, Portland office sales figures rose during the third quarter 2017 in terms of dollar volume compared to the second quarter of 2017. In the third quarter, 12 office transactions closed with a total volume of $422,427,425. The 12 buildings totaled 1,036,189 square feet and the average price per square foot equated to $407.67 per square foot. That compares to nine transactions totaling $190,079,353 in the second quarter 2017. The total square footage in the second quarter was 637,641 square feet Absorption & Deliveries Past 10 Quarters 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.62 0.2 0.13 0.09 0.1 0.03 0.06 0.0 (0.1) (0.2) Net Absorption 0.23 0.79 0.78 0.34 0.17 0.18 0.12 0.13 0.08 0.01 (0.08) Deliveries 0.54 0.270.28 0.24 2015 3q for an average price per square foot of $298.10. Total office building sales activity in 2017 was up compared to 2016. In the first nine months of 2017, the market saw 33 office sales transactions with a total volume of $926,223,778. The price per square foot averaged $319.03. In the same first nine months of 2016, the market posted 49 transactions with a total volume of $637,166,531. The price per square foot averaged $205.87. Cap rates have been higher in 2017, averaging 6.19% compared to the same period in 2016 when they averaged 6.15%. One of the largest transactions that has occurred within the last four quarters in the Portland market is the sale of Wells Fargo Center in Portland. This 884,941-square-foot office building sold for $188,000,000, or $212.44 per square foot. The property sold on 11/15/2017. Report compiled and edited by: James Broaddus Portfolio Research Manager 2018 CoStar Group, Inc. CoStar Office Statistics 3
Portland Year-End 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 2018 CoStar Group, Inc.
Inventory & development Year-End 2017 Portland Historical Deliveries 1982-2017 4.0 3.5 Deliveries 3.6 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 2.0 2.1 1.9 1.9 1.8 1.8 1.7 1.5 1.4 1.3 1.2 1.2 1.3 1.2 1.2 1.0 1.0 0.9 0.8 0.7 0.7 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 0.7 * 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 3 1,304,280 1,304,280 100.0% 33,108 434,760 Southwest 3 709,000 694,380 97.9% 15,917 236,333 CBD 3 450,670 100,275 22.3% 71,960 150,223 Northwest 3 390,208 101,562 26.0% 16,608 130,069 Southeast 4 181,594 81,250 44.7% 9,157 45,398 Clark County 2 80,200 34,650 43.2% 13,387 40,100 Northeast 2 55,300 12,057 21.8% 9,766 27,650 I-5 Corridor 1 21,000 17,430 83.0% 16,809 21,000 Skamania County 0 0 0 0.0% 5,916 0 Lloyd District 0 0 0 0.0% 24,433 0 Totals 21 3,192,252 2,345,884 73.5% 18,775 152,012 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 1,400 Preleased Un-Leased 1.4 1,200 Millions of SF 1.2 1.0 0.8 0.6 0.4 Thousands of SF 1,000 800 600 400 T 0.2 200 0.0 2013 2015 2017 0 2018 1q 2018 3q 2018 CoStar Group, Inc. CoStar Office Statistics 5
Portland Year-End 2017 Inventory & development Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction 1.4 Construction Starts 1.30 Deliveries 1.2 1.0 1.01 Millions of SF 0.8 0.6 0.4 0.2 0.0 0.070.05 0.08 0.02 0.02 0.01 0.05 0.61 0.09 0.37 0.04 0.020.03 0.63 0.06 0.25 0.13 0.78 0.52 0.12 0.18 0.70 0.08 0.12 0.01 0.17 0.27 0.02 0.24 (0.2) (0.04) 2014 1q 2015 1q 2016 1q 2017 1q 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 11 227,555 138,292 60.8% $25.50 17,160 210,395 50,000 SF - 99,999 SF 1 62,381 33,686 54.0% $0.00 0 62,381 100,000 SF - 249,999 SF 3 326,720 212,260 65.0% $33.00 208,720 118,000 250,000 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 37% 24% 21% 63% 41% 59% 46% 30% 79% Multi Single Multi Single Class A Class B Class C Multi Single 6 CoStar Office Statistics 2018 CoStar Group, Inc.
Inventory & development Year-End 2017 Portland 2018 CoStar Group, Inc. CoStar Office Statistics 7
Portland Year-End 2017 Inventory & development 8 CoStar Office Statistics 2018 CoStar Group, Inc.
Figures at a Glance Year-End 2017 Portland Class A Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 46 12,192,778 949,737 988,677 8.1% 413,392 0 450,670 $33.31 Clark County 34 2,534,498 164,062 164,062 6.5% 47,641 0 77,000 $25.69 I-5 Corridor 39 3,403,818 459,554 473,863 13.9% (74,131) 0 0 $30.02 Lloyd District 7 2,021,026 29,999 29,999 1.5% 22,425 0 0 $31.96 Northeast 12 1,292,956 6,728 6,728 0.5% 52,987 0 55,300 $27.70 Northwest 2 415,780 114,559 114,559 27.6% 3,441 118,000 330,208 $0.00 Skamania County 0 0 0 0 0.0% 0 0 0 $0.00 Southeast 9 701,282 25,959 25,959 3.7% 2,421 0 75,000 $25.89 Southwest 20 2,145,840 248,243 274,517 12.8% 21,812 0 692,000 $25.28 Westside 33 5,175,112 214,850 219,421 4.2% (70,158) 0 1,299,000 $24.45 Totals 202 29,883,090 2,213,691 2,297,785 7.7% 419,830 118,000 2,979,178 $29.95 Class B Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 147 10,448,086 998,805 998,805 9.6% 121,451 89,566 0 $29.78 Clark County 286 6,044,673 481,485 487,934 8.1% 85,210 34,700 3,200 $17.01 I-5 Corridor 238 4,549,949 507,584 533,981 11.7% (82,576) 0 21,000 $22.44 Lloyd District 60 2,041,795 205,252 206,612 10.1% 26,939 154,693 0 $29.93 Northeast 195 4,041,451 86,121 91,413 2.3% 91,656 9,000 0 $18.77 Northwest 46 1,707,418 82,153 82,153 4.8% 49,202 0 60,000 $25.22 Skamania County 1 6,332 0 0 0.0% 0 0 0 $0.00 Southeast 204 4,349,080 141,791 155,706 3.6% 117,150 91,199 106,594 $25.99 Southwest 239 6,632,553 582,727 589,181 8.9% 118,569 108,698 17,000 $21.28 Westside 158 6,862,019 376,445 402,276 5.9% 25,782 0 5,280 $21.05 Totals 1,574 46,683,356 3,462,363 3,548,061 7.6% 553,383 487,856 213,074 $23.70 2018 CoStar Group, Inc. CoStar Office Statistics 9
Portland Year-End 2017 Figures at a Glance Class C Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 177 3,984,478 333,562 340,554 8.5% (129,223) 0 0 $24.53 Clark County 518 2,639,267 83,913 83,913 3.2% 7,078 0 0 $17.54 I-5 Corridor 326 2,182,186 67,682 67,682 3.1% 18,129 0 0 $19.88 Lloyd District 156 1,385,647 40,401 40,401 2.9% (22,410) 0 0 $23.16 Northeast 782 4,324,350 160,367 160,367 3.7% 12,854 0 0 $17.38 Northwest 171 1,514,030 31,169 31,169 2.1% (16,585) 0 0 $25.06 Skamania County 3 17,332 2,500 2,500 14.4% 6,000 0 0 $12.00 Southeast 748 3,749,087 90,138 90,138 2.4% 19,852 0 0 $16.88 Southwest 514 3,525,806 144,021 152,881 4.3% (2,125) 0 0 $16.73 Westside 203 1,007,512 27,589 27,589 2.7% 5,867 0 0 $15.77 Totals 3,598 24,329,695 981,342 997,194 4.1% (100,563) 0 0 $19.99 Total Office Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 370 26,625,342 2,282,104 2,328,036 8.7% 405,620 89,566 450,670 $30.64 Clark County 838 11,218,438 729,460 735,909 6.6% 139,929 34,700 80,200 $19.66 I-5 Corridor 603 10,135,953 1,034,820 1,075,526 10.6% (138,578) 0 21,000 $26.16 Lloyd District 223 5,448,468 275,652 277,012 5.1% 26,954 154,693 0 $29.27 Northeast 989 9,658,757 253,216 258,508 2.7% 157,497 9,000 55,300 $20.01 Northwest 219 3,637,228 227,881 227,881 6.3% 36,058 118,000 390,208 $25.19 Skamania County 4 23,664 2,500 2,500 10.6% 6,000 0 0 $12.00 Southeast 961 8,799,449 257,888 271,803 3.1% 139,423 91,199 181,594 $22.37 Southwest 773 12,304,199 974,991 1,016,579 8.3% 138,256 108,698 709,000 $21.52 Westside 394 13,044,643 618,884 649,286 5.0% (38,509) 0 1,304,280 $21.82 Totals 5,374 100,896,141 6,657,396 6,843,040 6.8% 872,650 605,856 3,192,252 $25.31 10 CoStar Office Statistics 2018 CoStar Group, Inc.
Figures at a Glance Year-End 2017 Portland Class A Submarket Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 217 Corridor/Beavert. 12 1,143,228 205,729 215,965 18.9% 11,091 0 0 $24.71 Airport Way 5 404,821 6,728 6,728 1.7% 42,053 0 0 $23.04 Barbur Blvd/Capitol. 1 32,537 1,812 1,812 5.6% (260) 0 0 $0.00 Camas/Washougal 1 114,000 0 0 0.0% 0 0 0 $0.00 Cascade Park 15 892,156 55,891 55,891 6.3% 50,240 0 0 $23.57 CBD 46 12,192,778 949,737 988,677 8.1% 413,392 0 450,670 $33.31 CBD/West Vancouver 8 875,203 75,690 75,690 8.6% 6,766 0 77,000 $27.71 Clackamas/Milwaukie 8 629,282 14,840 14,840 2.4% 13,540 0 0 $24.82 East Columbia Corrid. 0 0 0 0 0.0% 0 0 0 $0.00 Gateway 2 339,142 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 0 330,208 $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 19,138 19,138 15.3% 1,688 0 0 $26.97 Johns Landing 3 607,473 18,705 22,636 3.7% (16,054) 0 692,000 $29.79 Kruse Way 24 2,188,159 325,379 337,359 15.4% (86,398) 0 0 $31.16 Lake Oswego/West Lin. 1 64,916 4,160 4,160 6.4% 7,815 0 0 $28.50 Lloyd District 7 2,021,026 29,999 29,999 1.5% 22,425 0 0 $31.96 Mall 205 0 0 0 0 0.0% 0 0 0 $0.00 NE Close-In 2 69,671 0 0 0.0% 10,934 0 55,300 $29.32 North Beaverton 3 290,602 21,997 34,104 11.7% 8,365 0 0 $26.03 NW Close-In 2 415,780 114,559 114,559 27.6% 3,441 118,000 0 $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 1 72,000 11,119 11,119 15.4% (11,119) 0 75,000 $32.00 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 $30.50 Sunset Corridor/Hill. 33 5,175,112 214,850 219,421 4.2% (70,158) 0 1,299,000 $24.45 SW Close-In 0 0 0 0 0.0% 0 0 0 $0.00 Sylvan/Hillsdale 1 72,000 0 0 0.0% 18,670 0 0 $25.00 Tigard 8 599,442 51,591 53,920 9.0% (3,507) 0 0 $25.65 Tualatin 2 225,800 77,329 77,329 34.2% (13,344) 0 0 $26.00 Vancouver Mall 5 340,804 13,343 13,343 3.9% (11,053) 0 0 $24.92 Wilsonville 4 325,501 1,095 1,095 0.3% 21,303 0 0 $27.88 Totals 202 29,883,090 2,213,691 2,297,785 7.7% 419,830 118,000 2,979,178 $29.95 2018 CoStar Group, Inc. CoStar Office Statistics 11
Portland Year-End 2017 Figures at a Glance Class B Submarket Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 217 Corridor/Beavert. 86 2,105,835 279,516 280,431 13.3% 55,231 0 0 $18.98 Airport Way 20 487,840 15,431 15,431 3.2% 1,557 0 0 $21.43 Barbur Blvd/Capitol. 48 770,755 80,202 80,202 10.4% 72,169 108,698 0 $17.63 Camas/Washougal 25 433,459 13,842 13,842 3.2% 10,540 0 0 $21.02 Cascade Park 73 1,970,393 159,859 159,859 8.1% 22,085 34,700 3,200 $17.84 CBD 147 10,448,086 998,805 998,805 9.6% 121,451 89,566 0 $29.78 CBD/West Vancouver 50 995,352 76,355 76,355 7.7% 7,242 0 0 $20.52 Clackamas/Milwaukie 97 1,467,695 29,089 29,089 2.0% 89,245 19,696 0 $22.46 East Columbia Corrid. 30 632,179 1,800 1,800 0.3% 17,930 0 0 $16.40 Gateway 50 1,122,247 6,864 6,864 0.6% 12,414 0 0 $19.51 Gresham 37 691,797 34,149 34,149 4.9% 38,663 0 0 $19.19 Guilds Lake 5 107,622 32,874 32,874 30.5% 3,002 0 60,000 $17.83 Hayden Island/Swan I. 15 526,181 17,871 17,871 3.4% (677) 0 0 $13.00 Hazel Dell/Salmon Cr. 40 554,231 22,871 22,871 4.1% (10,620) 0 0 $21.17 Johns Landing 25 961,684 64,681 67,020 7.0% 12,521 0 17,000 $24.74 Kruse Way 23 428,163 9,138 9,138 2.1% 6,523 0 0 $24.82 Lake Oswego/West Lin. 49 586,487 56,192 60,107 10.2% (23,878) 0 0 $24.21 Lloyd District 60 2,041,795 205,252 206,612 10.1% 26,939 154,693 0 $29.93 Mall 205 35 384,807 20,973 20,973 5.5% (6,785) 0 0 $21.65 NE Close-In 42 571,517 10,006 15,298 2.7% 21,769 9,000 0 $20.48 North Beaverton 48 2,173,848 73,719 76,919 3.5% 29,735 0 0 $25.37 NW Close-In 41 1,599,796 49,279 49,279 3.1% 46,200 0 0 $28.26 Orchards 29 391,702 68,250 68,250 17.4% 11,746 0 0 $19.72 Oregon City 27 558,069 1,766 1,766 0.3% 3,734 0 0 $16.93 Rivergate 1 9,690 0 0 0.0% 0 0 0 $0.00 SE Close-In 45 1,938,509 89,963 103,878 5.4% 30,956 71,503 106,594 $28.29 Sherwood 14 163,462 22,400 22,400 13.7% (1,754) 0 0 $22.91 Skamania County 1 6,332 0 0 0.0% 0 0 0 $0.00 St Johns/Cntrl Vanco. 45 1,200,032 94,885 99,885 8.3% 53,257 0 0 $11.50 Sunset Corridor/Hill. 158 6,862,019 376,445 402,276 5.9% 25,782 0 5,280 $21.05 SW Close-In 15 291,587 31,142 31,142 10.7% (22,362) 0 0 $19.30 Sylvan/Hillsdale 17 328,844 53,467 53,467 16.3% (28,725) 0 0 $24.11 Tigard 91 1,911,581 279,504 301,986 15.8% (64,993) 0 21,000 $22.07 Tualatin 36 867,634 123,565 123,565 14.2% (50) 0 0 $22.29 Vancouver Mall 24 499,504 45,423 46,872 9.4% (9,040) 0 0 $16.63 Wilsonville 25 592,622 16,785 16,785 2.8% 1,576 0 0 $19.92 Totals 1,574 46,683,356 3,462,363 3,548,061 7.6% 553,383 487,856 213,074 $23.70 12 CoStar Office Statistics 2018 CoStar Group, Inc.
Figures at a Glance Year-End 2017 Portland Class C Submarket Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 217 Corridor/Beavert. 136 782,543 63,800 63,800 8.2% 9,953 0 0 $15.21 Airport Way 44 328,196 74,003 74,003 22.5% 11,414 0 0 $12.50 Barbur Blvd/Capitol. 136 761,837 15,345 15,345 2.0% (8,049) 0 0 $17.94 Camas/Washougal 30 147,183 0 0 0.0% 0 0 0 $19.92 Cascade Park 38 225,950 8,325 8,325 3.7% 1,070 0 0 $16.80 CBD 177 3,984,478 333,562 340,554 8.5% (129,223) 0 0 $24.53 CBD/West Vancouver 195 1,107,321 45,574 45,574 4.1% (1,474) 0 0 $18.70 Clackamas/Milwaukie 278 1,181,744 14,686 14,686 1.2% 18,790 0 0 $14.22 East Columbia Corrid. 90 408,069 7,126 7,126 1.7% 3,302 0 0 $13.66 Gateway 285 1,442,710 58,403 58,403 4.0% (20,442) 0 0 $18.55 Gresham 108 560,896 12,776 12,776 2.3% 1,568 0 0 $16.73 Guilds Lake 40 548,330 15,617 15,617 2.8% (10,107) 0 0 $24.20 Hayden Island/Swan I. 77 406,031 0 0 0.0% 9,967 0 0 $14.06 Hazel Dell/Salmon Cr. 47 271,490 6,373 6,373 2.3% 2,476 0 0 $14.46 Johns Landing 41 449,165 17,115 17,115 3.8% 7,469 0 0 $19.75 Kruse Way 29 275,643 0 0 0.0% 15,637 0 0 $27.22 Lake Oswego/West Lin. 93 467,672 11,857 11,857 2.5% 11,597 0 0 $19.64 Lloyd District 156 1,385,647 40,401 40,401 2.9% (22,410) 0 0 $23.16 Mall 205 210 962,559 22,843 22,843 2.4% 13,460 0 0 $15.35 NE Close-In 155 1,066,323 8,059 8,059 0.8% 7,045 0 0 $20.13 North Beaverton 106 796,144 8,746 8,746 1.1% (569) 0 0 $17.05 NW Close-In 131 965,700 15,552 15,552 1.6% (6,478) 0 0 $25.43 Orchards 53 252,844 20,600 20,600 8.1% (8,851) 0 0 $13.53 Oregon City 109 473,425 28,646 28,646 6.1% 940 0 0 $15.52 Rivergate 23 112,125 0 0 0.0% 0 0 0 $0.00 SE Close-In 151 1,131,359 23,963 23,963 2.1% (13,338) 0 0 $21.61 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 $12.00 St Johns/Cntrl Vanco. 151 627,331 3,041 3,041 0.5% 13,857 0 0 $16.48 Sunset Corridor/Hill. 203 1,007,512 27,589 27,589 2.7% 5,867 0 0 $15.77 SW Close-In 49 379,093 12,930 21,790 5.7% (9,453) 0 0 $18.80 Sylvan/Hillsdale 46 357,024 26,085 26,085 7.3% (1,476) 0 0 $15.89 Tigard 132 921,318 52,153 52,153 5.7% (9,785) 0 0 $18.27 Tualatin 26 142,353 2,472 2,472 1.7% (1,120) 0 0 $17.00 Vancouver Mall 4 7,148 0 0 0.0% 0 0 0 $0.00 Wilsonville 30 327,377 1,200 1,200 0.4% 1,800 0 0 $14.96 Totals 3,598 24,329,695 981,342 997,194 4.1% (100,563) 0 0 $19.99 2018 CoStar Group, Inc. CoStar Office Statistics 13
Portland Year-End 2017 Figures at a Glance Total Office Submarket Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 217 Corridor/Beavert. 234 4,031,606 549,045 560,196 13.9% 76,275 0 0 $20.67 Airport Way 69 1,220,857 96,162 96,162 7.9% 55,024 0 0 $21.42 Barbur Blvd/Capitol. 185 1,565,129 97,359 97,359 6.2% 63,860 108,698 0 $17.68 Camas/Washougal 56 694,642 13,842 13,842 2.0% 10,540 0 0 $20.92 Cascade Park 126 3,088,499 224,075 224,075 7.3% 73,395 34,700 3,200 $19.98 CBD 370 26,625,342 2,282,104 2,328,036 8.7% 405,620 89,566 450,670 $30.64 CBD/West Vancouver 253 2,977,876 197,619 197,619 6.6% 12,534 0 77,000 $23.02 Clackamas/Milwaukie 383 3,278,721 58,615 58,615 1.8% 121,575 19,696 0 $18.89 East Columbia Corrid. 120 1,040,248 8,926 8,926 0.9% 21,232 0 0 $15.47 Gateway 337 2,904,099 65,267 65,267 2.2% (8,028) 0 0 $18.93 Gresham 145 1,252,693 46,925 46,925 3.7% 40,231 0 0 $18.25 Guilds Lake 45 655,952 48,491 48,491 7.4% (7,105) 0 390,208 $19.17 Hayden Island/Swan I. 95 1,411,534 17,871 17,871 1.3% 9,290 0 0 $13.18 Hazel Dell/Salmon Cr. 90 950,892 48,382 48,382 5.1% (6,456) 0 0 $23.05 Johns Landing 69 2,018,322 100,501 106,771 5.3% 3,936 0 709,000 $25.01 Kruse Way 76 2,891,965 334,517 346,497 12.0% (64,238) 0 0 $30.64 Lake Oswego/West Lin. 143 1,119,075 72,209 76,124 6.8% (4,466) 0 0 $23.67 Lloyd District 223 5,448,468 275,652 277,012 5.1% 26,954 154,693 0 $29.27 Mall 205 245 1,347,366 43,816 43,816 3.3% 6,675 0 0 $16.92 NE Close-In 199 1,707,511 18,065 23,357 1.4% 39,748 9,000 55,300 $25.02 North Beaverton 157 3,260,594 104,462 119,769 3.7% 37,531 0 0 $24.83 NW Close-In 174 2,981,276 179,390 179,390 6.0% 43,163 118,000 0 $27.70 Orchards 83 765,710 88,850 88,850 11.6% 2,895 0 0 $18.71 Oregon City 136 1,031,494 30,412 30,412 2.9% 4,674 0 0 $16.31 Rivergate 24 121,815 0 0 0.0% 0 0 0 $0.00 SE Close-In 197 3,141,868 125,045 138,960 4.4% 6,499 71,503 181,594 $26.73 Sherwood 30 211,285 22,400 22,400 10.6% (1,754) 0 0 $23.02 Skamania County 4 23,664 2,500 2,500 10.6% 6,000 0 0 $12.00 St Johns/Cntrl Vanco. 197 1,893,363 97,926 102,926 5.4% 67,114 0 0 $12.48 Sunset Corridor/Hill. 394 13,044,643 618,884 649,286 5.0% (38,509) 0 1,304,280 $21.82 SW Close-In 64 670,680 44,072 52,932 7.9% (31,815) 0 0 $19.01 Sylvan/Hillsdale 64 757,868 79,552 79,552 10.5% (11,531) 0 0 $21.31 Tigard 231 3,432,341 383,248 408,059 11.9% (78,285) 0 21,000 $21.98 Tualatin 64 1,235,787 203,366 203,366 16.5% (14,514) 0 0 $23.63 Vancouver Mall 33 847,456 58,766 60,215 7.1% (20,093) 0 0 $19.06 Wilsonville 59 1,245,500 19,080 19,080 1.5% 24,679 0 0 $20.79 Totals 5,374 100,896,141 6,657,396 6,843,040 6.8% 872,650 605,856 3,192,252 $25.31 14 CoStar Office Statistics 2018 CoStar Group, Inc.
Figures at a Glance Year-End 2017 Portland Class A Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 46 12,192,778 949,737 988,677 8.1% 413,392 0 450,670 $33.31 Suburban 156 17,690,312 1,263,954 1,309,108 7.4% 6,438 118,000 2,528,508 $27.53 Totals 202 29,883,090 2,213,691 2,297,785 7.7% 419,830 118,000 2,979,178 $29.95 Class B Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 147 10,448,086 998,805 998,805 9.6% 121,451 89,566 0 $29.78 Suburban 1,427 36,235,270 2,463,558 2,549,256 7.0% 431,932 398,290 213,074 $21.73 Totals 1,574 46,683,356 3,462,363 3,548,061 7.6% 553,383 487,856 213,074 $23.70 Class C Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 177 3,984,478 333,562 340,554 8.5% (129,223) 0 0 $24.53 Suburban 3,421 20,345,217 647,780 656,640 3.2% 28,660 0 0 $17.95 Totals 3,598 24,329,695 981,342 997,194 4.1% (100,563) 0 0 $19.99 Class A & B Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 193 22,640,864 1,948,542 1,987,482 8.8% 534,843 89,566 450,670 $31.68 Suburban 1,583 53,925,582 3,727,512 3,858,364 7.2% 438,370 516,290 2,741,582 $23.72 Totals 1,776 76,566,446 5,676,054 5,845,846 7.6% 973,213 605,856 3,192,252 $26.23 Total Office Market Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 370 26,625,342 2,282,104 2,328,036 8.7% 405,620 89,566 450,670 $30.64 Suburban 5,004 74,270,799 4,375,292 4,515,004 6.1% 467,030 516,290 2,741,582 $22.86 Totals 5,374 100,896,141 6,657,396 6,843,040 6.8% 872,650 605,856 3,192,252 $25.31 2018 CoStar Group, Inc. CoStar Office Statistics 15
Portland Year-End 2017 Figures at a Glance 16 CoStar Office Statistics 2018 CoStar Group, Inc.
Leasing Activity Year-End 2017 Portland Historical Rental Rates Based on Full-Service Equivalent Rental Rates A B C Total Market $35.00 $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 3% 5% 15% 13% 51% 34% 45% 42% 97% 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* $30.00 Portland United States 0.9 0.8 0.80 $25.00 0.7 $20.00 $15.00 $10.00 0.6 0.5 0.4 0.3 0.43 0.49 0.2 $5.00 $0.00 2015 3q 2016 3q 2017 3q 0.1 0.0 0.04 0.00 0.00 2018 1q 2018 3q 2019 1q * Includes Under Construction Spaces 2018 CoStar Group, Inc. CoStar Office Statistics 17
Portland Year-End 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 100,022 2nd Autodesk, Inc. Colliers International Apex Real Estate Partners 2 55 West - Bldg 3 Sunset Corridor/Hillsboro 98,820 4th N/A N/A Newmark Knight Frank 3 Broadway Tower - Oce CBD 83,995 4th N/A JLL Kidder Mathews 4 Montgomery Park NW Close-In 79,657 2nd Adidas JLL Kidder Mathews 5 Congress Center CBD 67,438 1st City of Portland N/A JLL 6 US Bancorp Tower & Plaza CBD 62,033 4th N/A N/A Cushman & Wakeeld of Oregon, Inc. 7 400 Building CBD 56,856 1st City of Portland JLL Newmark Knight Frank 8 Tanasbourne Commerce Center I Sunset Corridor/Hillsboro 55,250 1st Tokyo Electron N/A JLL 9 Kruse Oaks II Kruse Way 43,076 4th N/A N/A JLL; CBRE 10 6600 SW Hampton St Tigard 40,250 3rd N/A N/A N/A 11 6600 SW Hampton St Tigard 40,250 2nd Farmer s Insurance JLL Direct Deal 12 Columbia Tech Center - Bldg 649 Cascade Park 34,700 4th N/A N/A PacTrust 13 Columbia Square CBD 33,088 1st City of Portland JLL Melvin Mark Companies 14 Three Centerpointe Kruse Way 31,660 2nd Power Engineers Cushman & Wakeeld of Oregon, Inc. Colliers International 15 Salmon Creek Medical Oce* Hazel Dell/Salmon Creek 31,256 4th Salmon Creek Specialty Clinic N/A PMB Real Estate Services 16 Field Oce - West Guilds Lake 30,865 4th N/A N/A JLL 17 Field Oce - East Guilds Lake 30,027 4th N/A N/A JLL 18 Administration Building* St Johns/Cntrl Vancouver 27,312 4th Peacehealth Southwest Medical Center N/A PMB Real Estate Services 19 12th & Morrison CBD 26,871 2nd N/A N/A Menashe Properties 20 Oregon Clinic Gateway 25,400 3rd Oregon Clinic Gateway Medical Direct Deal Direct Deal 21 The Pittock Block CBD 24,983 4th N/A N/A Kidder Mathews 22 Kruse Oaks I Kruse Way 24,945 4th N/A N/A JLL; CBRE 23 Kruse Woods V Kruse Way 24,232 4th N/A N/A JLL; CBRE 24 Montgomery Park NW Close-In 23,464 4th N/A N/A Kidder Mathews 25 Block 300 CBD 22,781 1st U.S. Army Corps of Engineers Direct Deal JLL 26 334 NW 11th Ave CBD 22,591 1st Cloudability JLL Apex Real Estate Partners 27 Lloyd Center Tower Lloyd District 22,338 1st Social Security Administration Cushman & Wakeeld of Oregon, Inc. Capacity Commercial Group 28 Field Oce - West Guilds Lake 20,109 4th N/A N/A JLL 29 Machine Works CBD 19,258 1st Zapproved CBRE JLL 30 CH2M Center CBD 18,652 1st N/A N/A Fischer & Company 31 The Yeon Bldg CBD 18,369 3rd N/A N/A JLL 32 6430 SE Lake Rd Clackamas/Milwaukie 17,495 2nd Stanley Black & Decker JLL; Cushman & Wakeeld Direct Deal 33 Mason Ehrman Annex CBD 17,082 1st Work & Co. N/A Apex Real Estate Partners 34 200 Market Building CBD 16,680 1st ShiftWise N/A Cushman & Wakeeld of Oregon, Inc. 35 Pacic Center CBD 16,537 2nd Kittelson & Associates, Inc. Cushman & Wakeeld of Oregon, Inc. Colliers International 36 KOIN Tower CBD 16,003 1st N/A N/A JLL 37 First & Main Bldg* CBD 15,717 1st Interface Engineering Colliers International Kidder Mathews 38 World Trade Center CBD 15,337 4th N/A N/A CBRE 39 1320 SW Broadway St CBD 14,822 2nd SRG Partnership Colliers International JLL * Renewal 18 CoStar Office Statistics 2018 CoStar Group, Inc.
Sales Activity Year-End 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 $620 7.0% $570 Cap Rate Percentage 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% $520 $470 $420 $370 $320 $270 Dollars/SF 0.0% 2014 4q 2015 4q 2016 4q $220 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 Oct. 2016 - Sept. 2017 $700 Sales Volume Price/SF $450 Bldg Size # RBA $ Volume Price/SF Cap Rate Millions of Sales Volume Dollars $600 $500 $400 $300 $200 $400 $350 $300 $250 $200 $150 $100 Price/SF < 50,000 SF 140 1,481,225 $291,741,475 $ 196.96 6.68% 50K-249K SF 250K-499K SF 18 2,134,112 $717,252,425 $ 336.09 6.32% 3 957,416 $269,475,000 $ 281.46 4.77% $100 $50 $0 $0 >500K SF 1 545,522 $170,000,000 $ 311.63-2014 1q 2015 1q 2016 1q 2017 1q 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 $470 Portland US 10.0% Portland US $420 9.0% Dollars per SF $370 $320 $270 $220 Cap Rate Percentage 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% $170 2.0% $120 1.0% 2014 1q 2015 1q 2016 1q 2017 1q 2014 1q 2015 1q 2016 1q 2017 1q Source: CoStar COMPS Source: CoStar COMPS 2018 CoStar Group, Inc. CoStar Office Statistics 19
20 CoStar Office Statistics 2018 CoStar Group, Inc. Portland Year-End 2017 Sales Activity