The CoStar Industrial Report

The CoStar Industrial Report M I D - Y E A R 2 0 1 0 Houston Industrial Market

Houston Industrial Market MID-YEAR 2010 HOUSTON Table of Contents Table of Contents.................................................................... A Methodology........................................................................ B Terms & Definitions.................................................................. C Market Highlights & Overview......................................................... 1 CoStar Markets & Submarkets......................................................... 4 Employment & Tenant Analysis........................................................ 5 Employment & Unemployment Analysis Tenant Profiles Inventory & Development Analysis...................................................... 7 Construction Activity Map Inventory & Development Analysis Select Top Deliveries Select Top Under Construction Properties Figures at a Glance.................................................................. 12 Figures at a Glance by Building Type & Market Figures at a Glance by Building Type & Submarket Historical Figures at a Glance Leasing Activity Analysis............................................................. 17 Leasing Activity Map Leasing Activity Analysis Select Top Lease Transactions Sales Activity Analysis............................................................... 20 Sales Activity Analysis Select Top Sales Transactions Select Same Building Sales Select Land Sales Analysis of Individual CoStar Markets.................................................. 23 Austin County Market CBD Market North Corridor Market Northeast Corridor Market Northwest Corridor Market San Jacinto County Market Southeast Corridor Market Southern Corridor Market Southwest Corridor Market 2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT A

HOUSTON MID-YEAR 2010 Houston Industrial Market Methodology The CoStar Industrial Report calculates Industrial statistics using CoStar Group's base of existing, under construction and under renovation Industrial buildings in each given metropolitan area. All Industrial building types are included, including warehouse, flex / research & development, distribution, manufacturing, industrial showroom, and service buildings, in both single-tenant and multi-tenant buildings, including owner-occupied buildings. CoStar Group's national database includes approximately 71.7 billion square feet of coverage in 3 million properties. All rental rates reported in the CoStar Industrial Report are calculated using the quoted rental rate for each property. For information on subscribing to CoStar s other products and services, please contact us at 1-877-7COSTAR, or visit our web site at www.costar.com Copyright 2010 CoStar Group, Inc. All Rights Reserved. Although CoStar makes efforts to ensure the accuracy and reliability of the information contained herein, CoStar makes no guarantee, representation or warranty regarding the quality, accuracy, timeliness or completeness of the information. The publication is provided as is and CoStar expressly disclaims any guarantees, representations or warranties of any kind, including those of MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CoStar Group, Inc. 2 Bethesda Metro Center Bethesda, MD USA 20814 (800) 204-5960 www.costar.com NASDAQ: CSGP B THE COSTAR INDUSTRIAL REPORT 2010 COSTAR GROUP, INC.

Houston Industrial Market MID-YEAR 2010 HOUSTON Terms & Definitions Availability Rate: The ratio of available space to total rentable space, calculated by dividing the total available square feet by the total rentable square feet. Available Space: The total amount of space that is currently being marketed as available for lease in a given time period. It includes any space that is available, regardless of whether the space is vacant, occupied, available for sublease, or available at a future date. Build-to-Suit: A term describing a particular property, developed specifically for a certain tenant to occupy, with structural features, systems, or improvement work designed specifically for the needs of that tenant. A build-to-suit can be leased or owned by the tenant. In a leased build-to-suit, a tenant will usually have a long term lease on the space. Buyer: The individual, group, company, or entity that has purchased a commercial real estate asset. Cap Rate: Short for capitalization rate. The Cap Rate is a calculation that reflects the relationship between one year s net operating income and the current market value of a particular property. The Cap Rate is calculated by dividing the annual net operating income by the sales price (or asking sales price). CBD: Abbreviation for Central Business District. (See also: Central Business District) Central Business District: The designations of Central Business District (CBD) and Suburban refer to a particular geographic area within a metropolitan statistical area (MSA) describing the level of real estate development found there. The CBD is characterized by a high density, well organized core within the largest city of a given MSA. Class A: A classification used to describe buildings that generally qualify as extremely desirable investment-grade properties and command the highest rents or sale prices compared to other buildings in the same market. Such buildings are well located and provide efficient tenant layouts as well as high quality, and in some buildings, one-of-a-kind floor plans. They can be an architectural or historical landmark designed by prominent architects. These buildings contain a modern mechanical system, and have above-average maintenance and management as well as the best quality materials and workmanship in their trim and interior fittings. They are generally the most attractive and eagerly sought by investors willing to pay a premium for quality. Class B: A classification used to describe buildings that generally qualify as a more speculative investment, and as such, command lower rents or sale prices compared to Class A properties. Such buildings offer utilitarian space without special attractions, and have ordinary design, if new or fairly new; good to excellent design if an older non-landmark building. These buildings typically have average to good maintenance, management and tenants. They are less appealing to tenants than Class A properties, and may be deficient in a number of respects including floor plans, condition and facilities. They lack prestige and must depend chiefly on a lower price to attract tenants and investors. Class C: A classification used to describe buildings that generally qualify as no-frills, older buildings that offer basic space and command lower rents or sale prices compared to other buildings in the same market. Such buildings typically have below-average maintenance and management, and could have mixed or low tenant prestige, inferior elevators, and/or mechanical/electrical systems. These buildings lack prestige and must depend chiefly on a lower price to attract tenants and investors. Construction Starts: Buildings that began construction during a specific period of time. (See also: Deliveries) Contiguous Blocks of Space: Space within a building that is, or is able to be joined together into a single contiguous space. Deliveries: Buildings that complete construction during a specified period of time. In order for space to be considered delivered, a certificate of occupancy must have been issued for the property. Delivery Date: The date a building completes construction and receives a certificate of occupancy. Developer: The company, entity or individual that transforms raw land to improved property by use of labor, capital and entrepreneurial efforts. Direct Space: Space that is being offered for lease directly from the landlord or owner of a building, as opposed to space being offered in a building by another tenant (or broker of a tenant) trying to sublet a space that has already been leased. Existing Inventory: The square footage of buildings that have received a certificate of occupancy and are able to be occupied by tenants. It does not include space in buildings that are either planned, under construction or under renovation. Flex Building: A type of building designed to be versatile, which may be used in combination with office (corporate headquarters), research and development, quasi-retail sales, and including but not limited to industrial, warehouse, and distribution uses. A typical flex building will be one or two stories with at least half of the rentable area being used as office space, have ceiling heights of 16 feet or less, and have some type of drive-in door, even though the door may be glassed in or sealed off. Full Service Rental Rate: Rental rates that include all operating expenses such as utilities, electricity, janitorial services, taxes and insurance. Gross Absorption: The total change in occupied space over a given period of time, counting space that is occupied but not space that is vacated by tenants. Gross absorption differs from leasing Activity, which is the sum of all space leased over a certain period of time. Unless otherwise noted Gross Absorption includes direct and sublease space. Growth in Inventory: The change in size of the existing square footage in a given area over a given period of time, generally due to the construction of new buildings. Industrial Building: A type of building adapted for such uses as the assemblage, processing, and/or manufacturing of products from raw materials or fabricated parts. Additional uses include warehousing, distribution, and maintenance facilities. The primary purpose of the space is for storing, producing, assembling, or distributing product. Landlord Rep: (Landlord Representative) In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the owner/landlord is referred to as the Landlord Rep. Leased Space: All the space that has a financial lease obligation. It includes all leased space, regardless of whether the space is currently occupied by a tenant. Leased space also includes space being offered for sublease. Leasing Activity: The volume of square footage that is committed to and signed under a lease obligation for a specific building or market in a given period of time. It includes direct leases, subleases and renewals of existing leases. It also includes any pre-leasing activity in planned, under construction, or under renovation buildings. Market: Geographic boundaries that serve to delineate core areas that are competitive with each other and constitute a generally accepted primary competitive set of areas. Markets are buildingtype specific, and are non-overlapping contiguous geographic designations having a cumulative sum that matches the boundaries of the entire Region (See also: Region). Markets can be further subdivided into Submarkets. (See also: Submarkets) 2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT C

HOUSTON MID-YEAR 2010 Houston Industrial Market Multi-Tenant: Buildings that house more than one tenant at a given time. Usually, multi-tenant buildings were designed and built to accommodate many different floor plans and designs for different tenant needs. (See also: Tenancy). Net Absorption: The net change in occupied space over a given period of time. Unless otherwise noted Net Absorption includes direct and sublease space. Net Rental Rate: A rental rate that excludes certain expenses that a tenant could incur in occupying office space. Such expenses are expected to be paid directly by the tenant and may include janitorial costs, electricity, utilities, taxes, insurance and other related costs. New Space: Sometimes called first generation space, refers to space that has never been occupied and/or leased by a tenant. Occupied Space: Space that is physically occupied by a tenant. It does not include leased space that is not currently occupied by a tenant. Office Building: A type of commercial building used exclusively or primarily for office use (business), as opposed to manufacturing, warehousing, or other uses. Office buildings may sometimes have other associated uses within part of the building, i.e., retail sales, financial, or restaurant, usually on the ground floor. Owner: The company, entity, or individual that holds title on a given building or property. Planned/Proposed: The status of a building that has been announced for future development but not yet started construction. Preleased Space: The amount of space in a building that has been leased prior to its construction completion date, or certificate of occupancy date. Price/SF: Calculated by dividing the price of a building (either sales price or asking sales price) by the Rentable Building Area (RBA). Property Manager: The company and/or person responsible for the day-to-day operations of a building, such as cleaning, trash removal, etc. The property manager also makes sure that the various systems within the building, such as the elevators, HVAC, and electrical systems, are functioning properly. Quoted Rental Rate: The asking rate per square foot for a particular building or unit of space by a broker or property owner. Quoted rental rates may differ from the actual rates paid by tenants following the negotiation of all terms and conditions in a specific lease. RBA: Abbreviation for Rentable Building Area. (See also: Rentable Building Area) Region: Core areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Regions are further divided into market areas, called Markets. (See also: Markets) Relet Space: Sometimes called second generation or direct space, refers to existing space that has previously been occupied by another tenant. Rentable Building Area: (RBA) The total square footage of a building that can be occupied by, or assigned to a tenant for the purpose of determining a tenant s rental obligation. Generally RBA includes a percentage of common areas including all hallways, main lobbies, bathrooms, and telephone closets. Rental Rates: The annual costs of occupancy for a particular space quoted on a per square foot basis. Sales Price: The total dollar amount paid for a particular property at a particular point in time. Sales Volume: The sum of sales prices for a given group of buildings in a given time period. Seller: The individual, group, company, or entity that sells a particular commercial real estate asset. SF: Abbreviation for Square Feet. Single-Tenant: Buildings that are occupied, or intended to be occupied by a single tenant. (See also: Build-to-suit and Tenancy) Sublease Space: Space that has been leased by a tenant and is being offered for lease back to the market by the tenant with the lease obligation. Sublease space is sometimes referred to as sublet space. Submarkets: Specific geographic boundaries that serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted primary competitive set, or peer group. Submarkets are building type specific (office, industrial, retail, etc.), with distinct boundaries dependent on different factors relevant to each building type. Submarkets are non-overlapping, contiguous geographic designations having a cumulative sum that matches the boundaries of the Market they are located within (See also: Market). Suburban: The Suburban and Central Business District (CBD) designations refer to a particular geographic area within a metropolitan statistical area (MSA). Suburban is defined as including all office inventory not located in the CBD. (See also: CBD) Tenancy: A term used to indicate whether or not a building is occupied by multiple tenants (See also: Multi-tenant) or a single tenant. (See also: Single-tenant) Tenant Rep: Tenant Rep stands for Tenant Representative. In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the tenant is referred to as a Tenant Rep. Time On Market: A measure of how long a currently available space has been marketed for lease, regardless of whether it is vacant or occupied. Under Construction: The status of a building that is in the process of being developed, assembled, built or constructed. A building is considered to be under construction after it has begun construction and until it receives a certificate of occupancy. Vacancy Rate: A measurement expressed as a percentage of the total amount of physically vacant space divided by the total amount of existing inventory. Under construction space generally is not included in vacancy calculations. Vacant Space: Space that is not currently occupied by a tenant, regardless of any lease obligation that may be on the space. Vacant space could be space that is either available or not available. For example, sublease space that is currently being paid for by a tenant but not occupied by that tenant, would be considered vacant space. Likewise, space that has been leased but not yet occupied because of finish work being done, would also be considered vacant space. Weighted Average Rental Rate: Rental rates that are calculated by factoring in, or weighting, the square footage associated with each particular rental rate. This has the effect of causing rental rates on larger spaces to affect the average more than that of smaller spaces. The weighted average rental rate is calculated by taking the ratio of the square footage associated with the rental rate on each individual available space to the square footage associated with rental rates on all available spaces, multiplying the rental rate by that ratio, and then adding together all the resulting numbers. Unless specifically specified otherwise, rental rate averages include both Direct and Sublet available spaces. Year Built: The year in which a building completed construction and was issued a certificate of occupancy. YTD: Abbreviation for Year-to-Date. Describes statistics that are cumulative from the beginning of a calendar year through whatever time period is being studied. D THE COSTAR INDUSTRIAL REPORT 2010 COSTAR GROUP, INC.

Houston Industrial Market OVERVIEW Houston s Vacancy Decreases to 6.8% Net Absorption Positive 483,401 SF in the Quarter MID-YEAR 2010 HOUSTON The Houston Industrial market ended the second quarter 2010 with a vacancy rate of 6.8%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 483,401 square feet in the second quarter. Vacant sublease space increased in the quarter, ending the quarter at 859,132 square feet. Rental rates ended the second quarter at $5.26, a decrease over the previous quarter. A total of four buildings delivered to the market in the quarter totaling 178,900 square feet, with 238,518 square feet still under construction at the end of the quarter. Absorption Net absorption for the overall Houston Industrial market was positive 483,401 square feet in the second quarter 2010. That compares to positive 1,785,882 square feet in the first quarter 2010, positive 222,801 square feet in the fourth quarter 2009, and positive 1,089,587 square feet in the third quarter 2009. Tenants moving out of large blocks of space in 2010 include: CADECO Industries, Inc. moving out of (251,000) square feet at 350 Portwall St, American Steel Building Co., Inc. moving out of (105,810) square feet at 750 Almeda Genoa Rd, and Bayou Packaging moving out of (85,450) square feet at 2830 Produce Row. Tenants moving into large blocks of space in 2010 include: Rooms To Go moving into 1,201,280 square feet at 31111 Miller Rd, Jake s Finer Foods moving into 180,000 square feet at 13400 Hollister Dr, and CADECO Industries, Inc. moving into 154,114 square feet at Lockwood Distribution Ctr - Bldg 1. The Flex building market recorded net absorption of positive 100,089 square feet in the second quarter 2010, compared to positive 404,733 square feet in the first quarter 2010, positive 254,275 in the fourth quarter 2009, and positive 452,573 in the third quarter 2009. The Warehouse building market recorded net absorption of positive 383,312 square feet in the second quarter 2010 compared to positive 1,381,149 square feet in the first quarter 2010, negative (31,474) in the fourth quarter 2009, and positive 637,014 in the third quarter 2009. Vacancy The Industrial vacancy rate in the Houston market area decreased to 6.8% at the end of the second quarter 2010. The vacancy rate was 6.9% at the end of the first quarter 2010, 6.9% at the end of the third and fourth quarter 2009. Flex projects reported a vacancy rate of 13.0% at the end of the second quarter 2010, 13.2% at the end of the first quarter 2010, 13.7% at the end of the fourth quarter 2009, and 14.2% at the end of the third quarter 2009. Warehouse projects reported a vacancy rate of 6.2% at the end of the second quarter 2010, 6.3% at the end of first quarter 2010 and at the end of the forth quarter as well. 6.1% at the end of the third quarter 2009. Largest Lease Signings The largest lease signings occurring in 2010 included: the 303,000-square-foot lease signed by Ashley Furniture at Airtex Industrial Center - Phase I in the North Corridor market; the 212,961-square-foot deal signed by Gulf Winds International, Inc. at South Loop one in the Southern Corridor market; and the 210,000-square-foot lease signed by Williamsport Distribution Center at Williamsport Distribution Center - Bldg Two in the Southeast Corridor market. Sublease Vacancy The amount of vacant sublease space in the Houston market increased to 859,132 square feet by the end of the second quarter Vacancy Rates by Building Type 1999-2010 25% Flex Warehouse Total Market 20% Vacancy Rate 15% 10% 5% 0% 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 1

HOUSTON MID-YEAR 2010 Houston Industrial Market OVERVIEW 2010, from 834,704 square feet at the end of the first quarter 2010. There was 1,082,824 square feet vacant at the end of the fourth quarter 2009 and 1,011,192 square feet at the end of the third quarter 2009. Houston s Flex projects reported vacant sublease space of 116,585 square feet at the end of second quarter 2010, up from the 112,422 square feet reported at the end of the first quarter 2010. There were 118,119 square feet of sublease space vacant at the end of the fourth quarter 2009, and 184,259 square feet at the end of the third quarter 2009. Warehouse projects reported increased vacant sublease space from the first quarter 2010 to the second quarter 2010. Sublease vacancy went from 722,282 square feet to 742,547 square feet during that time. There was 964,705 square feet at the end of the fourth quarter 2009, and 826,933 square feet at the end of the third quarter 2009. Rental Rates The average quoted asking rental rate for available Industrial space was $5.26 per square foot per year at the end of the second quarter 2010 in the Houston market area. This represented a 3.5% decrease in quoted rental rates from the end of the first quarter 2010, when rents were reported at $5.45 per square foot. The average quoted rate within the Flex sector was $8.44 per square foot at the end of the second quarter 2010, while Warehouse rates stood at $4.84. At the end of the first quarter 2010, Flex rates were $9.78 per square foot, and Warehouse rates were $4.90. U.S. Vacancy Comparison Past 8 Quarters Vacancy Rate 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2008 Source: CoStar Property 2008 4q Houston 2009 2009 2q 2009 United States 2009 4q 2010 2010 2q Deliveries and Construction During the second quarter 2010, four buildings totaling 178,900 square feet were completed in the Houston market area. This compares to 10 buildings totaling 1,562,986 square feet that were completed in the first quarter 2010, seven buildings totaling 786,483 square feet completed in the fourth quarter 2009, and 283,488 square feet in 12 buildings completed in the third quarter 2009. There were 238,518 square feet of Industrial space under construction at the end of the second quarter 2010. Some of the notable 2010 deliveries include: 31111 Miller Rd, a 1,057,126-square-foot facility that delivered in first quarter 2010 and is now 100% occupied, and 13400 Hollister Dr, a 180,000-square-foot building that delivered in first quarter 2010 and is now 100% occupied. The largest projects underway at the end of second quarter 2010 were Portwall Distribution Center IV, a 148,793-squarefoot building with 0% of its space pre-leased, and 11987 FM- 529, a 34,125-square-foot facility that is 0% pre-leased. Inventory Total Industrial inventory in the Houston market area amounted to 498,619,331 square feet in 14,279 buildings as of the end of the second quarter 2010. The Flex sector consisted of 44,435,734 square feet in 1,660 projects. The Warehouse sector consisted of 454,183,597 square feet in 12,619 buildings. Within the Industrial market there were 3,434 owner-occupied buildings accounting for 151,141,494 square feet of Industrial space. Sales Activity Tallying industrial building sales of 15,000 square feet or larger, Houston industrial sales figures fell during the first quarter 2010 in terms of dollar volume compared to the fourth quarter of 2009. In the first quarter, three industrial transactions closed with a total volume of $12,529,120. The three buildings totaled 312,640 square feet and the average price per square foot equated to $40.08 per square foot. That compares to seven transactions totaling $18,124,000 in the fourth quarter. The total square footage was 310,092 for an average price per square foot of $58.45. Total year-to-date industrial building sales activity in 2010 is up compared to the previous year. In the first three months of 2010, the market saw three industrial sales transactions with a total volume of $12,529,120. The price per square foot has averaged $40.08 this year. In the first three months of 2009, the market posted six transactions with a total volume of $10,895,000. The price per square foot averaged $52.39. Cap rates have been lower in 2010, averaging 7.44%, compared to the first three months of last year when they averaged 7.93%. One of the largest transactions that has occurred within the last four quarters in the Houston market is the sale of Igloo Products Corp. in Katy. This 914,195-square-foot industrial building sold for $38,100,000, or $41.68 per square foot. The property sold on 5/21/2010, at an 8.13% cap rate. Reports compiled by: Alfredo Negron CoStar Research Manager; Jeannie Reamer, CoStar Research Associate; and Shanice Ortiz, CoStar Research Associate. 2 THE COSTAR INDUSTRIAL REPORT 2010 COSTAR GROUP, INC.

Houston Industrial Market OVERVIEW MID-YEAR 2010 HOUSTON. Absorption & Deliveries Past 8 Quarters 5.0 Net Absorption 4.3 Deliveries 4.0 3.7 3.1 3.0 2.0 1.0 1.7 1.2 0.5 1.6 1.1 0.3 0.2 0.8 1.8 1.6 0.5 0.2 0.0 (1.0) (0.4) 2008 2008 4q 2009 2009 2q 2009 2009 4q 2010 2010 2q Source: CoStar Property 2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 3

HOUSTON MID-YEAR 2010 Houston Industrial Market MARKETS CoStar Markets & Submarkets In analyzing metropolitan areas in the U.S., CoStar has developed geographic designations to help group properties together, called Regions, Markets and Submarkets. Regions are the equivalent of metropolitan areas, or areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Regions are then divided into Markets, which are core areas within a metropolitan area that are known to be competitive with each other in terms of attracting and keeping tenants. Markets are then further subdivided into smaller units called Submarkets, which serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted competitive set, or peer group. Markets Austin County Ind CBD Ind North Corridor Ind Northeast Corridor Ind Northwest Corridor Ind San Jacinto County Ind Southeast Corridor Ind Southern Corridor Ind Southwest Corridor Ind Submarkets Austin County Ind CBD-NW Inner Loop Ind Downtown Houston Ind North Inner Loop Ind Southwest Inner Loop Ind North Fwy/Tomball Pky Ind North Hardy Toll Road Ind North Outer Loop Ind Woodland/Conroe Ind Northeast Hwy 321 Ind Northeast Hwy 90 Ind Northeast I-10 Ind Northeast Inner Loop Ind Hwy 290/Tomball Pky Ind Northwest Hwy 6 Ind Northwest Inner Loop Ind Northwest Near Ind Northwest Outliers Ind West Outer Loop Ind San Jacinto County Ind East I-10 Outer Loop Ind East-Southeast Far Ind Southeast Outer Loop Ind South Hwy 35 Ind South Inner Loop Ind Hwy 59/Hwy 90 (Alt) Ind Southwest Far Ind Southwest Outer Loop Ind Sugar Land Ind 4 THE COSTAR INDUSTRIAL REPORT 2010 COSTAR GROUP, INC.

Houston Industrial Market EMPLOYMENT AND TENANT MID-YEAR 2010 HOUSTON Total Employment by Industry Percent of Total Employment by Industry Total Employment Growth Total Number of Jobs Added Per Year 4% 15% 9% 4% 12% 7% Natural Resources & 9% Mining Construction 14% 5% 20% 1% Manufacturing Trade, Transportation & Utilities Information Financial Activities Professional & Business Services Education & Health Services Leisure & Hospitality Other Services Government Percent Growth 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% Houston U.S. Average 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Department of Labor, Bureau of Labor Statistics Source: Department of Labor, Bureau of Labor Statistics Total Employment Growth Cumulative Growth in Jobs Over the Past 5 Years Market Employment Growth Inventory Growth Difference Atlanta -5.00% 3.70% -8.70% Chicago -4.10% 3.90% -8.00% Dallas/Ft Worth 2.40% 6.60% -4.20% Denver -2.10% 3.20% -5.30% Detroit -11.70% 0.80% -12.50% Houston 5.10% 6.30% -1.20% Inland Empire (California) -8.40% 13.70% -22.10% Los Angeles -6.40% 1.20% -7.60% Northern New Jersey -3.70% 2.20% -5.90% Pittsburgh -1.80% 1.80% -3.60% Source: Department of Labor, Bureau of Labor Statistics Historical Unemployment Rates Industrial* Employment Growth Number of Industrial* Jobs Added Per Year Percent Growth 6.0% Houston U.S. Average 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% -7.0% -8.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Department of Labor, Bureau of Labor Statistics. * Industrial employment is defined as jobs in the Manufacturing, and Trade, Transportation & Utilities industries 12.0% Houston U.S. Average 10.0% Percent Unemployment 8.0% 6.0% 4.0% 2.0% 0.0% 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 Source: Department of Labor, Bureau of Labor Statistics 2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 5

HOUSTON MID-YEAR 2010 Houston Industrial Market EMPLOYMENT AND TENANT Flex Tenants by Size Range Based on Total Number of Tenants Warehouse Tenants by Size Range Based on Total Number of Tenants 75,000 SF & Up 2.7% 75,000 SF & Up 11.4% 50,000-74,999 SF 1.6% 50,000-74,999 SF 7.6% 25,000-49,999 SF 5.3% 25,000-49,999 SF 15.8% 10,000-24,999 SF 18.9% 10,000-24,999 SF 30.5% 5,000-9,999 SF 20.0% 5,000-9,999 SF 13.5% 2,500-4,999 SF 24.8% 2,500-4,999 SF 8.7% Up to 2,499 SF 26.7% Up to 2,499 SF 12.5% 0% 5% 10% 15% 20% 25% 30% Percentage of Tenants 0% 5% 10% 15% 20% 25% 30% 35% Percentage of Tenants Source: CoStar Tenant Flex Tenants by Lease Expiration Based on Total Square Footage of Tenants Source: CoStar Tenant Warehouse Lease Expiration Based on Total Square Footage of Tenants 2016 8.6% 2016 4.5% 2015 11.8% 2015 6.9% 2014 9.0% 2014 8.8% 2013 21.2% 2013 11.5% 2012 11.4% 2012 13.1% 2011 17.4% 2011 13.3% 0% 5% 10% 15% 20% 25% Percentage of Tenants 0% 2% 4% 6% 8% 10% 12% 14% Percentage of Tenants 6 THE COSTAR INDUSTRIAL REPORT 2010 COSTAR GROUP, INC.

Houston Industrial Market INVENTORY & DEVELOPMENT MID-YEAR 2010 HOUSTON Construction Highlights in Select CoStar Markets Color Coded by Under Construction Square Footage as a Percentage of Existing Inventory 2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 7

HOUSTON MID-YEAR 2010 Houston Industrial Market INVENTORY & DEVELOPMENT Historical Deliveries 1982-2010 20.0 Deliveries Average Delivered SF 18.0 17.4 16.0 Millions of SF 14.0 12.0 10.0 8.0 6.0 4.0 2.0 12.5 11.7 7.6 3.2 1.8 2.6 1.7 4.0 1.6 1.8 1.7 3.8 4.6 5.1 5.5 8.5 10.8 9.6 8.9 7.6 5.7 5.5 10.9 6.6 10.1 11.0 7.1 2.0 0.0 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 * Future deliveries based on current under construction buildings. Construction Activity Markets Ranked by Under Construction RBA Under Construction Inventory Average Bldg Size Market # Bldgs Total RBA Preleased SF Preleased % All Existing U/C Northeast Corridor Ind 1 148,793 0 0.0% 42,125 148,793 Northwest Corridor Ind 1 34,125 0 0.0% 36,959 34,125 Southwest Corridor Ind 3 29,600 0 0.0% 28,906 9,867 Southern Corridor Ind 1 26,000 0 0.0% 31,008 26,000 San Jacinto County Ind 0 0 0 0.0% 11,450 0 Southeast Corridor Ind 0 0 0 0.0% 50,135 0 CBD Ind 0 0 0 0.0% 31,984 0 North Corridor Ind 0 0 0 0.0% 29,982 0 Austin County Ind 0 0 0 0.0% 32,244 0 Totals 6 238,518 0 0.0% 34,920 39,753 Recent Deliveries Leased & Un-Leased SF in Deliveries Since 2006 Future Deliveries Preleased & Un-Leased SF in Properties Scheduled to Deliver 12.0 Leased Un-Leased 200 Preleased Un-Leased 10.0 180 160 Millions of SF 8.0 6.0 4.0 2.0 Thousands of SF 140 120 100 80 60 40 20 T 0.0 2006 2007 2008 2009 2010 0 2010 2010 4q 8 THE COSTAR INDUSTRIAL REPORT 2010 COSTAR GROUP, INC.

Houston Industrial Market INVENTORY & DEVELOPMENT MID-YEAR 2010 HOUSTON Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction 6.0 Construction Starts Deliveries Millions of SF 5.0 4.0 3.0 2.0 1.0 0.0 4.8 4.3 3.9 3.5 3.2 3.1 3.1 2.9 2.7 2.4 2.2 1.8 1.9 1.9 1.6 1.7 1.6 1.6 1.2 0.9 0.8 0.4 0.3 0.3 0.2 0.2 0.0 0.0 2007 2007 2q 2007 2007 4q 2008 2008 2q 2008 2008 4q 2009 2009 2q 2009 2009 4q 2010 2010 2q 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 7 75,760 32,307 42.6% $9.66 25,200 50,560 50,000 SF - 99,999 SF 4 327,350 195,100 59.6% $6.96 195,100 132,250 100,000 SF - 249,999 SF 2 281,650 255,221 90.6% $5.76 0 281,650 250,000 SF - 499,999 SF 0 0 0 0.0% $ 0 0 >= 500,000 SF 1 1,057,126 1,057,126 100.0% $ 0 1,057,126 Recent Development by Tenancy Existing Inventory Comparison Based on RBA Developed for Single & Multi-Tenant Use Based on Total RBA 2010 Deliveries Currently Under Construction By Building Type By Tenancy Type 13% 25% 9% 52% 48% 87% 75% 91% Multi Single Multi Single Flex Warehouse Multi Single 2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 9

HOUSTON MID-YEAR 2010 Houston Industrial Market INVENTORY & DEVELOPMENT 10 THE COSTAR INDUSTRIAL REPORT 2010 COSTAR GROUP, INC.

Houston Industrial Market INVENTORY & DEVELOPMENT MID-YEAR 2010 HOUSTON 2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 11

HOUSTON MID-YEAR 2010 Houston Industrial Market FIGURES AT A GLANCE Flex Market Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Austin County Ind 0 0 0 0 0.0% 0 0 0 $ CBD Ind 199 4,099,968 388,178 401,342 9.8% (2,791) 0 0 $9.56 North Corridor Ind 276 7,622,424 935,817 960,307 12.6% 19,648 10,000 0 $9.27 Northeast Corridor Ind 55 770,498 30,400 30,400 3.9% 0 0 0 $7.84 Northwest Corridor Ind 468 14,771,095 2,352,595 2,401,307 16.3% 428,998 230,560 0 $8.21 San Jacinto County Ind 0 0 0 0 0.0% 0 0 0 $ Southeast Corridor Ind 146 2,996,648 545,986 545,986 18.2% (7,736) 0 0 $7.99 Southern Corridor Ind 104 2,873,600 295,426 295,426 10.3% 11,370 0 0 $7.88 Southwest Corridor Ind 412 11,301,501 1,119,463 1,149,682 10.2% 55,333 0 0 $8.12 Totals 1,660 44,435,734 5,667,865 5,784,450 13.0% 504,822 240,560 0 $8.44 Warehouse Market Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Austin County Ind 12 386,925 0 0 0.0% 0 0 0 $6.11 CBD Ind 1,886 62,586,652 3,344,656 3,362,851 5.4% 250,907 0 0 $3.90 North Corridor Ind 2,069 62,685,346 4,357,170 4,542,777 7.2% 316,694 262,350 0 $6.11 Northeast Corridor Ind 739 32,676,599 1,264,510 1,264,510 3.9% (326,978) 7,800 148,793 $4.04 Northwest Corridor Ind 3,196 120,647,684 6,655,476 6,922,850 5.7% 604,944 166,650 34,125 $5.30 San Jacinto County Ind 3 34,350 0 0 0.0% 0 0 0 $4.45 Southeast Corridor Ind 1,452 77,119,421 6,407,231 6,519,941 8.5% (458,490) 2,400 0 $4.03 Southern Corridor Ind 1,330 41,591,669 1,846,161 1,866,840 4.5% (201,294) 5,000 26,000 $4.24 Southwest Corridor Ind 1,932 56,454,951 3,558,394 3,696,376 6.5% 1,578,678 1,057,126 29,600 $6.23 Totals 12,619 454,183,597 27,433,598 28,176,145 6.2% 1,764,461 1,501,326 238,518 $4.84 Total Industrial Market Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Austin County Ind 12 386,925 0 0 0.0% 0 0 0 $6.11 CBD Ind 2,085 66,686,620 3,732,834 3,764,193 5.6% 248,116 0 0 $4.19 North Corridor Ind 2,345 70,307,770 5,292,987 5,503,084 7.8% 336,342 272,350 0 $6.58 Northeast Corridor Ind 794 33,447,097 1,294,910 1,294,910 3.9% (326,978) 7,800 148,793 $4.07 Northwest Corridor Ind 3,664 135,418,779 9,008,071 9,324,157 6.9% 1,033,942 397,210 34,125 $5.91 San Jacinto County Ind 3 34,350 0 0 0.0% 0 0 0 $4.45 Southeast Corridor Ind 1,598 80,116,069 6,953,217 7,065,927 8.8% (466,226) 2,400 0 $4.20 Southern Corridor Ind 1,434 44,465,269 2,141,587 2,162,266 4.9% (189,924) 5,000 26,000 $4.40 Southwest Corridor Ind 2,344 67,756,452 4,677,857 4,846,058 7.2% 1,634,011 1,057,126 29,600 $6.55 Totals 14,279 498,619,331 33,101,463 33,960,595 6.8% 2,269,283 1,741,886 238,518 $5.26 12 THE COSTAR INDUSTRIAL REPORT 2010 COSTAR GROUP, INC.

Houston Industrial Market FIGURES AT A GLANCE MID-YEAR 2010 HOUSTON Flex Submarket Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Austin County Ind 0 0 0 0 0.0% 0 0 0 $ CBD-NW Inner Loop Ind 60 1,529,915 131,785 131,785 8.6% 12,786 0 0 $9.92 Downtown Houston Ind 41 886,219 87,233 87,233 9.8% 34,029 0 0 $8.92 East I-10 Outer Loop Ind 2 9,041 0 0 0.0% 0 0 0 $ East-Southeast Far Ind 121 2,451,681 453,304 453,304 18.5% (11,456) 0 0 $8.44 Hwy 290/Tomball Pky Ind 31 1,131,454 90,902 106,926 9.5% 220,699 204,800 0 $10.70 Hwy 59/Hwy 90 (Alt) Ind 123 2,649,137 198,744 200,480 7.6% 105,890 0 0 $8.81 North Fwy/Tomball Pky Ind 69 1,968,873 351,975 359,075 18.2% (59,587) 10,000 0 $8.78 North Hardy Toll Road Ind 78 2,721,715 277,851 277,851 10.2% 68,598 0 0 $6.13 North Inner Loop Ind 10 407,317 169,160 169,160 41.5% (61,690) 0 0 $9.60 North Outer Loop Ind 37 1,137,371 143,310 143,310 12.6% (9,640) 0 0 $7.90 Northeast Hwy 321 Ind 8 96,952 2,600 2,600 2.7% 0 0 0 $16.80 Northeast Hwy 90 Ind 34 378,468 24,675 24,675 6.5% 0 0 0 $6.63 Northeast I-10 Ind 5 72,046 0 0 0.0% 0 0 0 $ Northeast Inner Loop Ind 8 223,032 3,125 3,125 1.4% 0 0 0 $ Northwest Hwy 6 Ind 13 1,165,124 791,649 791,649 67.9% 0 0 0 $7.77 Northwest Inner Loop Ind 243 8,013,417 1,079,478 1,108,488 13.8% 157,024 25,760 0 $8.26 Northwest Near Ind 82 1,686,925 147,101 147,101 8.7% 11,004 0 0 $11.09 Northwest Outliers Ind 40 1,491,443 152,940 152,940 10.3% 7,699 0 0 $7.48 San Jacinto County Ind 0 0 0 0 0.0% 0 0 0 $ South Hwy 35 Ind 70 1,850,771 207,843 207,843 11.2% 5,575 0 0 $3.44 South Inner Loop Ind 34 1,022,829 87,583 87,583 8.6% 5,795 0 0 $9.11 Southeast Outer Loop Ind 23 535,926 92,682 92,682 17.3% 3,720 0 0 $5.75 Southwest Far Ind 49 1,776,620 141,965 141,965 8.0% (23,159) 0 0 $9.61 Southwest Inner Loop Ind 88 1,276,517 0 13,164 1.0% 12,084 0 0 $11.17 Southwest Outer Loop Ind 145 3,879,451 399,487 399,487 10.3% (37,558) 0 0 $7.48 Sugar Land Ind 95 2,996,293 379,267 407,750 13.6% 10,160 0 0 $8.72 West Outer Loop Ind 59 1,282,732 90,525 94,203 7.3% 32,572 0 0 $5.72 Woodland/Conroe Ind 92 1,794,465 162,681 180,071 10.0% 20,277 0 0 $12.93 Totals 1,660 44,435,734 5,667,865 5,784,450 13.0% 504,822 240,560 0 $8.44 2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 13

HOUSTON MID-YEAR 2010 Houston Industrial Market FIGURES AT A GLANCE Warehouse Submarket Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Austin County Ind 12 386,925 0 0 0.0% 0 0 0 $6.11 CBD-NW Inner Loop Ind 442 12,101,166 577,541 595,736 4.9% 110,445 0 0 $4.91 Downtown Houston Ind 856 35,022,320 1,953,780 1,953,780 5.6% 102,420 0 0 $3.51 East I-10 Outer Loop Ind 152 13,092,466 454,945 530,155 4.0% (63,132) 0 0 $3.91 East-Southeast Far Ind 975 42,376,069 5,374,184 5,411,684 12.8% (199,160) 2,400 0 $4.20 Hwy 290/Tomball Pky Ind 350 15,531,512 983,382 983,382 6.3% 68,159 0 0 $5.58 Hwy 59/Hwy 90 (Alt) Ind 785 21,576,038 1,424,730 1,539,814 7.1% 248,752 0 0 $5.42 North Fwy/Tomball Pky Ind 449 12,474,514 1,018,375 1,021,250 8.2% 95,862 0 0 $6.21 North Hardy Toll Road Ind 446 21,522,094 2,113,452 2,288,244 10.6% 177,858 195,100 0 $6.01 North Inner Loop Ind 169 6,005,260 409,716 409,716 6.8% (22,542) 0 0 $3.65 North Outer Loop Ind 802 18,105,234 688,636 689,886 3.8% 55,425 67,250 0 $5.67 Northeast Hwy 321 Ind 37 1,058,761 0 0 0.0% 8,600 0 0 $4.92 Northeast Hwy 90 Ind 424 16,974,670 448,782 448,782 2.6% (135,541) 0 0 $4.55 Northeast I-10 Ind 117 3,358,121 12,800 12,800 0.4% 0 7,800 0 $4.29 Northeast Inner Loop Ind 161 11,285,047 802,928 802,928 7.1% (200,037) 0 148,793 $3.54 Northwest Hwy 6 Ind 123 3,354,368 200,825 200,825 6.0% 22,072 65,000 0 $7.14 Northwest Inner Loop Ind 1,251 54,892,165 2,600,147 2,832,310 5.2% 135,000 0 0 $4.91 Northwest Near Ind 684 16,206,112 999,889 1,013,439 6.3% (56,266) 0 0 $4.47 Northwest Outliers Ind 182 9,820,341 394,951 394,951 4.0% 125,827 0 0 $6.42 San Jacinto County Ind 3 34,350 0 0 0.0% 0 0 0 $4.45 South Hwy 35 Ind 1,005 28,386,804 1,436,157 1,456,836 5.1% (293,334) 5,000 26,000 $4.22 South Inner Loop Ind 325 13,204,865 410,004 410,004 3.1% 92,040 0 0 $4.33 Southeast Outer Loop Ind 325 21,650,886 578,102 578,102 2.7% (196,198) 0 0 $3.55 Southwest Far Ind 335 8,625,148 533,260 533,260 6.2% 96,399 0 0 $7.19 Southwest Inner Loop Ind 419 9,457,906 403,619 403,619 4.3% 60,584 0 0 $5.48 Southwest Outer Loop Ind 521 11,163,806 881,716 881,716 7.9% 156,875 0 0 $6.70 Sugar Land Ind 291 15,089,959 718,688 741,586 4.9% 1,076,652 1,057,126 29,600 $6.19 West Outer Loop Ind 606 20,843,186 1,476,282 1,497,943 7.2% 310,152 101,650 34,125 $5.81 Woodland/Conroe Ind 372 10,583,504 536,707 543,397 5.1% (12,451) 0 0 $6.81 Totals 12,619 454,183,597 27,433,598 28,176,145 6.2% 1,764,461 1,501,326 238,518 $4.84 14 THE COSTAR INDUSTRIAL REPORT 2010 COSTAR GROUP, INC.

Houston Industrial Market FIGURES AT A GLANCE MID-YEAR 2010 HOUSTON Total Industrial Submarket Statistics Mid-Year 2010 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Austin County Ind 12 386,925 0 0 0.0% 0 0 0 $6.11 CBD-NW Inner Loop Ind 502 13,631,081 709,326 727,521 5.3% 123,231 0 0 $5.42 Downtown Houston Ind 897 35,908,539 2,041,013 2,041,013 5.7% 136,449 0 0 $3.66 East I-10 Outer Loop Ind 154 13,101,507 454,945 530,155 4.0% (63,132) 0 0 $3.91 East-Southeast Far Ind 1,096 44,827,750 5,827,488 5,864,988 13.1% (210,616) 2,400 0 $4.43 Hwy 290/Tomball Pky Ind 381 16,662,966 1,074,284 1,090,308 6.5% 288,858 204,800 0 $5.90 Hwy 59/Hwy 90 (Alt) Ind 908 24,225,175 1,623,474 1,740,294 7.2% 354,642 0 0 $5.69 North Fwy/Tomball Pky Ind 518 14,443,387 1,370,350 1,380,325 9.6% 36,275 10,000 0 $6.56 North Hardy Toll Road Ind 524 24,243,809 2,391,303 2,566,095 10.6% 246,456 195,100 0 $6.03 North Inner Loop Ind 179 6,412,577 578,876 578,876 9.0% (84,232) 0 0 $4.28 North Outer Loop Ind 839 19,242,605 831,946 833,196 4.3% 45,785 67,250 0 $5.77 Northeast Hwy 321 Ind 45 1,155,713 2,600 2,600 0.2% 8,600 0 0 $5.38 Northeast Hwy 90 Ind 458 17,353,138 473,457 473,457 2.7% (135,541) 0 0 $4.59 Northeast I-10 Ind 122 3,430,167 12,800 12,800 0.4% 0 7,800 0 $4.29 Northeast Inner Loop Ind 169 11,508,079 806,053 806,053 7.0% (200,037) 0 148,793 $3.54 Northwest Hwy 6 Ind 136 4,519,492 992,474 992,474 22.0% 22,072 65,000 0 $7.65 Northwest Inner Loop Ind 1,494 62,905,582 3,679,625 3,940,798 6.3% 292,024 25,760 0 $5.53 Northwest Near Ind 766 17,893,037 1,146,990 1,160,540 6.5% (45,262) 0 0 $5.85 Northwest Outliers Ind 222 11,311,784 547,891 547,891 4.8% 133,526 0 0 $6.55 San Jacinto County Ind 3 34,350 0 0 0.0% 0 0 0 $4.45 South Hwy 35 Ind 1,075 30,237,575 1,644,000 1,664,679 5.5% (287,759) 5,000 26,000 $4.21 South Inner Loop Ind 359 14,227,694 497,587 497,587 3.5% 97,835 0 0 $4.94 Southeast Outer Loop Ind 348 22,186,812 670,784 670,784 3.0% (192,478) 0 0 $3.63 Southwest Far Ind 384 10,401,768 675,225 675,225 6.5% 73,240 0 0 $7.35 Southwest Inner Loop Ind 507 10,734,423 403,619 416,783 3.9% 72,668 0 0 $5.71 Southwest Outer Loop Ind 666 15,043,257 1,281,203 1,281,203 8.5% 119,317 0 0 $6.94 Sugar Land Ind 386 18,086,252 1,097,955 1,149,336 6.4% 1,086,812 1,057,126 29,600 $6.69 West Outer Loop Ind 665 22,125,918 1,566,807 1,592,146 7.2% 342,724 101,650 34,125 $5.80 Woodland/Conroe Ind 464 12,377,969 699,388 723,468 5.8% 7,826 0 0 $8.30 Totals 14,279 498,619,331 33,101,463 33,960,595 6.8% 2,269,283 1,741,886 238,518 $5.26 2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 15

HOUSTON MID-YEAR 2010 Houston Industrial Market FIGURES AT A GLANCE Flex Market Statistics Mid-Year 2010 Existing Inventory Vacancy Net Deliveries UC Inventory Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates 2010 2q 1,660 44,435,734 5,667,865 5,784,450 13.0% 100,089 2 10,000 0 0 $8.44 2010 1,658 44,425,734 5,762,117 5,874,539 13.2% 404,733 3 230,560 2 10,000 $9.78 2009 4q 1,655 44,195,174 5,930,593 6,048,712 13.7% 254,275 1 37,850 5 240,560 $9.76 2009 1,654 44,157,324 6,080,878 6,265,137 14.2% 452,573 4 40,750 4 268,410 $9.67 2009 2q 1,650 44,116,574 6,507,693 6,676,960 15.1% 240,148 7 367,468 7 283,400 $11.47 2009 1,643 43,749,106 6,341,258 6,549,640 15.0% (113,216) 15 389,777 12 433,018 $11.31 2008 1,628 43,359,329 5,911,185 6,046,647 13.9% 560,841 33 900,681 23 777,195 $11.27 2007 1,595 42,458,648 5,626,436 5,706,807 13.4% 1,551,233 19 623,183 23 481,684 $10.35 2006 1,576 41,835,465 5,864,128 6,634,857 15.9% 482,041 24 718,890 16 648,703 $7.30 2005 1,554 41,823,275 6,266,003 7,104,708 17.0% 892,939 23 946,052 16 702,563 $8.39 2004 1,533 40,931,353 6,197,359 7,105,725 17.4% 1,093,885 16 496,575 20 740,114 $8.12 2003 1,517 40,434,778 6,728,732 7,703,035 19.1% 267,747 28 897,913 13 456,175 $8.78 2002 1,490 39,571,765 6,289,942 7,107,769 18.0% (436,371) 27 713,216 14 532,912 $8.18 2001 1,464 38,888,549 5,617,764 5,988,182 15.4% 494,593 37 1,367,941 24 663,742 $8.12 2000 1,427 37,520,608 4,706,032 5,114,834 13.6% (634,090) 47 1,371,778 28 972,477 $6.58 1999 1,380 36,148,830 2,914,252 3,108,966 8.6% 575,548 36 891,493 32 824,927 $5.72 Quoted Warehouse Market Statistics Mid-Year 2010 Existing Inventory Vacancy Net Deliveries UC Inventory Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates 2010 2q 12,619 454,183,597 27,433,598 28,176,145 6.2% 383,312 2 168,900 6 238,518 $4.84 2010 12,617 454,014,697 27,668,275 28,390,557 6.3% 1,381,149 7 1,332,426 8 407,418 $4.90 2009 4q 12,610 452,682,271 27,474,575 28,439,280 6.3% (31,474) 6 748,633 12 1,530,926 $5.13 2009 12,605 452,015,388 26,913,990 27,740,923 6.1% 637,014 8 242,738 18 2,279,559 $5.35 2009 2q 12,597 451,772,650 27,110,535 28,135,199 6.2% (609,562) 30 1,279,009 19 2,231,947 $5.37 2009 12,567 450,493,641 25,358,091 26,246,628 5.8% 619,186 39 3,947,572 45 3,336,512 $5.27 2008 12,528 446,546,069 21,963,880 22,918,242 5.1% 9,188,860 133 10,045,942 72 5,409,625 $5.34 2007 12,396 436,553,867 21,501,147 22,114,900 5.1% 9,923,362 146 9,379,360 92 7,064,209 $5.02 2006 12,254 427,509,911 22,644,704 22,994,306 5.4% 7,803,148 125 5,782,032 106 6,644,396 $4.56 2005 12,137 422,062,250 24,545,726 25,349,793 6.0% 13,234,371 144 9,607,682 73 3,308,873 $5.24 2004 12,006 413,259,025 28,944,788 29,780,939 7.2% 8,622,817 115 4,431,541 88 7,899,049 $4.60 2003 11,891 408,827,484 32,357,998 33,972,215 8.3% 445,382 127 4,048,647 97 4,246,339 $4.19 2002 11,776 405,169,566 29,217,128 30,759,679 7.6% 1,462,383 131 6,141,390 74 2,967,449 $4.84 2001 11,660 399,407,482 25,234,756 26,459,978 6.6% 4,601,536 130 6,433,062 110 5,120,964 $5.03 2000 11,537 393,088,965 23,308,122 24,742,997 6.3% 3,325,209 200 7,480,631 103 4,614,516 $6.42 1999 11,339 385,636,610 19,841,842 20,615,851 5.3% (1,770,986) 165 8,600,387 144 5,193,181 $4.67 Quoted Total Industrial Market Statistics Mid-Year 2010 Existing Inventory Vacancy Net Deliveries UC Inventory Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates 2010 2q 14,279 498,619,331 33,101,463 33,960,595 6.8% 483,401 4 178,900 6 238,518 $5.26 2010 14,275 498,440,431 33,430,392 34,265,096 6.9% 1,785,882 10 1,562,986 10 417,418 $5.45 2009 4q 14,265 496,877,445 33,405,168 34,487,992 6.9% 222,801 7 786,483 17 1,771,486 $5.68 2009 14,259 496,172,712 32,994,868 34,006,060 6.9% 1,089,587 12 283,488 22 2,547,969 $5.92 2009 2q 14,247 495,889,224 33,618,228 34,812,159 7.0% (369,414) 37 1,646,477 26 2,515,347 $6.29 2009 14,210 494,242,747 31,699,349 32,796,268 6.6% 505,970 54 4,337,349 57 3,769,530 $6.29 2008 14,156 489,905,398 27,875,065 28,964,889 5.9% 9,749,701 166 10,946,623 95 6,186,820 $6.38 2007 13,991 479,012,515 27,127,583 27,821,707 5.8% 11,474,595 165 10,002,543 115 7,545,893 $5.93 2006 13,830 469,345,376 28,508,832 29,629,163 6.3% 8,285,189 149 6,500,922 122 7,293,099 $4.96 2005 13,691 463,885,525 30,811,729 32,454,501 7.0% 14,127,310 167 10,553,734 89 4,011,436 $5.70 2004 13,539 454,190,378 35,142,147 36,886,664 8.1% 9,716,702 131 4,928,116 108 8,639,163 $5.21 2003 13,408 449,262,262 39,086,730 41,675,250 9.3% 713,129 155 4,946,560 110 4,702,514 $5.09 2002 13,266 444,741,331 35,507,070 37,867,448 8.5% 1,026,012 158 6,854,606 88 3,500,361 $5.07 2001 13,124 438,296,031 30,852,520 32,448,160 7.4% 5,096,129 167 7,801,003 134 5,784,706 $5.22 2000 12,964 430,609,573 28,014,154 29,857,831 6.9% 2,691,119 247 8,852,409 131 5,586,993 $6.44 1999 12,719 421,785,440 22,756,094 23,724,817 5.6% (1,195,438) 201 9,491,880 176 6,018,108 $4.80 Quoted 16 THE COSTAR INDUSTRIAL REPORT 2010 COSTAR GROUP, INC.

Houston Industrial Market LEASING ACTIVITY MID-YEAR 2010 HOUSTON Leasing Highlights in Select CoStar Markets Color Coded by Vacancy Rate 2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 17

HOUSTON MID-YEAR 2010 Houston Industrial Market LEASING ACTIVITY Historical Rental Rates Based on Quoted Rental Rates $14.00 Flex Warehouse Total Market $12.00 $1 Dollars/SF/Year $8.00 $6.00 $4.00 $2.00 $ 2008 2008 4q 2009 2009 2q 2009 2009 4q 2010 2010 2q Vacancy by Available Space Type Vacancy by Building Type Percent of All Vacant Space in Direct vs. Sublet Percent of All Vacant Space by Building Type Houston United States Houston United States 3% 4% 17% 14% 83% 86% 97% 96% Direct Sublet Direct Sublet Flex Warehouse Flex Warehouse U.S. Rental Rate Comparison Based on Average Quoted Rental Rates Future Space Available Space Scheduled to be Available for Occupancy* Dollars/SF/Year $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 Houston United States Millions 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.8 1.5 0.7 $1.00 $ 2008 2008 4q 2009 2009 2q 2009 2009 4q 2010 2010 2q 0.2 0.0 0.0 0.0 0.0 2010 2010 4q 2011 2011 2q 2011 2011 4q * Includes Under Construction Space 18 THE COSTAR INDUSTRIAL REPORT 2010 COSTAR GROUP, INC.

Houston Industrial Market LEASING ACTIVITY MID-YEAR 2010 HOUSTON Select Top Industrial Leases Based on Leased Square Footage For Deals Signed in 2010 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company 1 Airtex Industrial Center - Phase I North Hardy Toll Road Ind 303,000 1st Ashley Furniture Jones Lang LaSalle Americas, Inc. Colliers International 2 South Loop 1* South Hwy 35 Ind 212,961 2nd Gulf Winds International, Inc. N/A CB Richard Ellis 3 Williamsport Distribution Center - Bldg 2 Wil East-Southeast Far Ind 210,000 2nd Williamsport Distribution Center CB Richard Ellis Liberty Property Trust 4 Wingfoot Distribution Ctr - Bldg 1 Northwest Inner Loop Ind 201,624 1st N/A N/A ProLogis 5 Lockwood Distribution Ctr - Bldg 1 Downtown Houston Ind 154,114 1st CADECO Industries, Inc. Grubb & Ellis InSite Commercial Real Estate 6 Ellington Trade Center Phase I - Building D East-Southeast Far Ind 146,792 2nd N/A Fischer & Company NAI Houston 7 Bayport North Distribution Center - Phase I East-Southeast Far Ind 144,000 1st N/A N/A The Carson Companies 8 Beltway Crossing - Building 2 Hwy 59/Hwy 90 (Alt) Ind 141,440 1st Charming Charlie Jones Lang LaSalle Americas, Inc. Stream Realty Partners, L.P. 9 10300 N Loop Fwy E Northeast Inner Loop Ind 139,871 2nd xpedx N/A N/A 10 Bay Area Business Park - Bldg 2 East-Southeast Far Ind 120,120 2nd N/A N/A Stream Realty Partners, L.P. 11 1190 W Loop Fwy N* CBD-NW Inner Loop Ind 104,975 1st Prefco Corporation N/A Weingarten Realty Investors 12 Bayport North Distribution Center - Phase II East-Southeast Far Ind 100,000 1st A-International Distribution Corporation Jones Lang LaSalle Americas, Inc. Vantage Houston, Inc. 13 19423 Aldine Westfield Rd North Hardy Toll Road Ind 98,850 1st LKQ Corporation N/A N/A 14 8500 Market St Southeast Outer Loop Ind 98,517 1st N/A N/A Weingarten Realty Investors 15 Jersey Village Corporate Center - Bldg 1* Hwy 290/Tomball Pky Ind 96,000 2nd United Stationers N/A ProLogis 16 6450 Clara Rd* Northwest Inner Loop Ind 81,350 1st The Service Center Ltd Jackson & Cooksey Transwestern 17 5550 Airline Dr* North Outer Loop Ind 78,483 2nd Gowan, Inc. N/A N/A 18 Airtex Industrial Center - Phase I North Hardy Toll Road Ind 75,860 1st Velocity Express Mohr Partners International Colliers International 19 Bayport North Distribution Center - Phase I East-Southeast Far Ind 72,000 1st N/A N/A The Carson Companies 20 Santa Fe Business Park South Hwy 35 Ind 71,000 2nd N/A N/A Garver Real Estate 21 East Belt-Bldg 4 East-Southeast Far Ind 68,883 1st Wrist USA Jones Lang LaSalle Americas, Inc. CB Richard Ellis 22 CDC Spec 15* East-Southeast Far Ind 67,500 1st Desselle Maggard Corporation- DMC NAI Houston Clay Development & Construction 23 Glazier Foods Co. Southwest Inner Loop Ind 65,617 2nd N/A N/A Cushman & Wakefield, Inc. 24 Verde Central Green Corporate Cente - Bldg #5 North Hardy Toll Road Ind 64,462 1st GAC Marine and Energy Direct Deal Verde Corporate Realty Services 25 Beltway Crossing Bldg 6 North Fwy/Tomball Pky Ind 63,763 1st N/A N/A InSite Commercial Real Estate 26 Fortune One Foods CBD-NW Inner Loop Ind 60,000 2nd Fortune One Foods Inc RE/MAX International, Inc. Michael Hill Properties 27 6955 High Life Dr North Fwy/Tomball Pky Ind 56,155 1st Pipestream, Inc The National Realty Group, Inc. Holt Lunsford Commercial, Inc. 28 11236 Brittmoore Park Dr West Outer Loop Ind 52,727 1st N/A Direct Deal Butera Properties, Inc 29 Minimax 1* CBD-NW Inner Loop Ind 52,524 1st Funsource Partners NAI Houston Stream Realty Partners, L.P. 30 Claymoore Business Park - Bldg 1* Northwest Inner Loop Ind 52,200 1st Mohawk Carpet Transportat N/A Transwestern 31 ProLogis NorthPark - 8 North Hardy Toll Road Ind 51,758 1st General Cable Corporation Jones Lang LaSalle Americas, Inc. ProLogis 32 Beltway Crossing BP - Bldg 1* North Fwy/Tomball Pky Ind 50,453 2nd State of Texas N/A InSite Commercial Real Estate 33 Royal Holdings - Building 1 Hwy 290/Tomball Pky Ind 50,000 1st Prime Hardwoods 4M Realty Company The National Realty Group, Inc. 34 Greens Port Industrial Pk - 2G East I-10 Outer Loop Ind 50,000 2nd N/A N/A Cushman & Wakefield, Inc. 35 Alamo Crossing Commerce - Bldg D Northwest Near Ind 50,000 2nd Skyline Display Jones Lang LaSalle Americas, Inc. Colliers International 36 Intercontinental Cargo Ct - Bldg B* North Hardy Toll Road Ind 42,000 2nd Associated Global Systems, Inc. CB Richard Ellis Stream Realty Partners, L.P. 37 Equator Plaza Northwest Inner Loop Ind 40,712 1st Transcore Indermuehle & Company ICON Commercial Interests, LLC 38 Port North West - Bldg 4A West Outer Loop Ind 40,298 1st TSC Apparel Company NAI Houston Transwestern 39 15102 Sommermeyer St* Northwest Inner Loop Ind 36,450 1st Pathfinder Energy Services Jones Lang LaSalle Transwestern * Renewal 2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 19

HOUSTON MID-YEAR 2010 Houston Industrial Market SALES ACTIVITY The Optimist Sales Index Average of Two Highest Price/SF's and Two Lowest Cap Rates Per Quarter 10.0% Cap Rate Price/SF $180 9.0% $160 Cap Rate Percentage 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% $140 $120 $100 $80 $60 $40 Dollars/SF 1.0% $20 0.0% 2007 2q 2007 2007 4q 2008 2008 2q 2008 2008 4q 2009 2009 2q 2009 2009 4q 2010 $0 Source: CoStar COMPS Sales Volume & Price Sales Analysis by Building Size Based on Industrial Building Sales of 15,000 SF and Larger Based on Industrial Bldg Sales From April 2009 - March 2010 Sales Volume Price/SF Bldg Size # RBA $ Volume Price/SF Cap Rate $300 $80 Millions of Sales Volume Dollars $250 $200 $150 $100 $50 $70 $60 $50 $40 $30 $20 $10 Price/SF < 25,000 SF 27 413,499 $ 27,315,739 $ 66.06 8.56% 25K-99K SF 10 469,665 $ 24,745,000 $ 52.69 8.40% 100K-249K SF 3 540,085 $ 48,450,000 $ 89.71 8.20% $0 2005 2q 2005 4q 2006 2q 2006 4q 2007 2q 2007 4q 2008 2q 2008 4q 2009 2q 2009 4q $0 >250K SF 2 646,004 $ 24,829,120 $ 38.43 7.44% Source: CoStar COMPS Source: CoStar COMPS U.S. Price/SF Comparison Based on Industrial Building Sales of 15,000 SF and Larger U.S. Cap Rate Comparison Based on Industrial Building Sales of 15,000 SF and Larger $80 Houston US 12.0% Houston US Dollars per SF $70 $60 $50 $40 $30 $20 $10 Cap Rate Percentage 10.0% 8.0% 6.0% 4.0% 2.0% $0 2005 2q 2005 4q 2006 2q 2006 4q 2007 2q 2007 4q 2008 2q 2008 4q 2009 2q 2009 4q 0.0% 2005 2q 2005 4q 2006 2q 2006 4q 2007 2q 2007 4q 2008 2q 2008 4q 2009 2q 2009 4q Source: CoStar COMPS Source: CoStar COMPS 20 THE COSTAR INDUSTRIAL REPORT 2010 COSTAR GROUP, INC.

Houston Industrial Market SALES ACTIVITY MID-YEAR 2010 HOUSTON 2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 21

HOUSTON MID-YEAR 2010 Houston Industrial Market SALES ACTIVITY Select Land Sales Based on Industrial Zoned Land Sales Occurring From April 2009 - June 2010 7611 Bellaire Blvd, FM 1640, Rosenberg 6942 Fairbanks N Houston Rd, Houston Sale Price: $5,000,000 Sale Price: $655,142 Sale Price: $549,493 Acres: 18.76 Acres: 4.00 Acres: 4.11 Price/SF: $6.72 Price/SF: $3.76 Price/SF: $3.07 Closing Date: 10/06/2009 Closing Date: 05/22/2009 Closing Date: 12/03/2009 Zoning: None Zoning: SY Zoning: Industrial Intended Use: Industrial Intended Use: Self-Storage Intended Use: Hotel Buyer: Kennedy Funding Buyer: Nolan, Pat & Amy Buyer: Fairbanks Ventures Seller: Carnival Night Club Seller: Simron Properties Llp Seller: Guhn Levi A Source: CoStar COMPS 22 THE COSTAR INDUSTRIAL REPORT 2010 COSTAR GROUP, INC.