The CoStar Office Report

The CoStar Office Report T H I R D Q U A R T E R 2 0 1 2

THIRD QUARTER 2012 PHOENIX 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 Under Construction Properties Select Top Deliveries Figures at a Glance................................................................... 8 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............................................................. 15 Select Top Lease Transactions Sales Activity Analysis............................................................... 17 Sales Activity Analysis Select Top Sales Transactions Select Same Building Sales Select Land Sales Analysis of Individual CoStar Markets.................................................. 20 Airport Area Market Central Corridor Market East Phoenix Market East Valley Market North Phoenix Market Northwest Phoenix Market Scottsdale Market West Phoenix Market 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT A

PHOENIX THIRD QUARTER 2012 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 national database includes approximately 80.7 billion square feet of coverage in 3.5 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 2012 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 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

THIRD QUARTER 2012 PHOENIX 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. : 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) 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT C

PHOENIX THIRD QUARTER 2012 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. 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 OFFICE REPORT 2012 COSTAR GROUP, INC.

OVERVIEW THIRD QUARTER 2012 PHOENIX Phoenix s Decreases to 20.1% Net Absorption Positive 440,359 SF in the Quarter The Phoenix Office market ended the third quarter 2012 with a vacancy rate of 20.1%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 440,359 square feet in the third quarter. Vacant sublease space decreased in the quarter, ending the quarter at 1,088,435 square feet. Rental rates ended the third quarter at $20.01, a decrease over the previous quarter. A total of four buildings delivered to the market in the quarter totaling 56,048 square feet, with 374,390 square feet still under construction at the end of the quarter. Absorption Net absorption for the overall Phoenix office market was positive 440,359 square feet in the third quarter 2012. That compares to positive 840,772 square feet in the second quarter 2012, positive 368,633 square feet in the first quarter 2012, and positive 631,481 square feet in the fourth quarter. The Class-A office market recorded net absorption of positive 358,712 square feet in the third quarter 2012, compared to positive 343,280 square feet in the second quarter 2012, negative (37,423) in the first quarter 2012, and positive 128,108 in the fourth quarter. The Class-B office market recorded net absorption of positive 169,842 square feet in the third quarter 2012, compared to positive 514,052 square feet in the second quarter 2012, positive 394,695 in the first quarter 2012, and positive 400,416 in the fourth quarter. The Class-C office market recorded net absorption of negative (88,195) square feet in the third quarter 2012 compared to negative (16,560) square feet in the second quarter 2012, positive 11,361 in the first quarter 2012, and positive 102,957 in the fourth quarter. Net absorption for Phoenix s central business district was positive 108,848 square feet in the third quarter 2012. That compares to positive 22,053 square feet in the second quarter 2012, positive 356,500 in the first quarter 2012, and positive 13,723 in the fourth quarter. Net absorption for the suburban markets was positive 331,511 square feet in the third quarter 2012. That compares to positive 818,719 square feet in second quarter 2012, positive 12,133 in the first quarter 2012, and positive 617,758 in the fourth quarter. The office vacancy rate in the Phoenix market area decreased to 20.1% at the end of the third quarter 2012. The vacancy rate was 20.4% at the end of the second quarter 2012, 20.9% at the end of the first quarter 2012, and 20.7% at the end of the fourth quarter. Class-A projects reported a vacancy rate of 22.0% at the end of the third quarter 2012, 22.9% at the end of the second quarter 2012, 23.8% at the end of the first quarter 2012, and 23.7% at the end of the fourth quarter. Class-B projects reported a vacancy rate of 20.8% at the end of the third quarter 2012, 21.0% at the end of the second quarter 2012, 21.5% at the end of the first quarter 2012, and 21.2% at the end of the fourth quarter. Class-C projects reported a vacancy rate of 13.5% at the Rates by Class 1999-2012 A B C Total Market 30% 25% Rate 20% 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 2012 2012 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 1

PHOENIX THIRD QUARTER 2012 OVERVIEW end of the third quarter 2012, 13.1% at the end of second quarter 2012, 13.0% at the end of the first quarter 2012, and 13.1% at the end of the fourth quarter. The overall vacancy rate in Phoenix s central business district at the end of the third quarter 2012 decreased to 19.7%. The vacancy rate was 20.2% at the end of the second quarter 2012, 20.3% at the end of the first quarter 2012, and 19.4% at the end of the fourth quarter. The vacancy rate in the suburban markets decreased to 20.2% in the third quarter 2012. The vacancy rate was 20.4% at the end of the second quarter 2012, 21.0% at the end of the first quarter 2012, and 20.9% at the end of the fourth quarter. Largest Lease Signings The largest lease signings occurring in 2012 included: the 183,000-square-foot lease signed by QBE Insurance Group at 2700 W Frye Rd in the East Valley market; the 140,000-squarefoot deal signed by State Farm Insurance at 1500 N Priest Dr in the East Phoenix market; and the 139,404-square-foot lease signed by Aetna at Liberty Cotton Center at 4500 E Cotton Center Blvd in the Airport Area market. Sublease The amount of vacant sublease space in the Phoenix market decreased to 1,088,435 square feet by the end of the third quarter 2012, from 1,150,537 square feet at the end of the second quarter 2012. There was 1,376,914 square feet vacant at the end of the first quarter 2012 and 1,100,005 square feet at the end of the fourth quarter. Phoenix s Class-A projects reported vacant sublease space of 606,092 square feet at the end of third quarter 2012, down from the 704,516 square feet reported at the end of the second quarter 2012. There were 854,643 square feet of sublease space vacant at the end of the first quarter 2012, and 678,565 square feet at the end of the fourth quarter. Class-B projects reported vacant sublease space of 438,965 U.S. Comparison Past 9 Quarters Rate 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2010 2010 4q Phoenix 2q 4q United States 2012 2012 2q 2012 square feet at the end of the third quarter 2012, up from the 402,530 square feet reported at the end of the second quarter 2012. At the end of the first quarter 2012 there were 481,032 square feet, and at the end of the fourth quarter there were 397,488 square feet vacant. Class-C projects reported decreased vacant sublease space from the second quarter 2012 to the third quarter 2012. Sublease vacancy went from 43,491 square feet to 43,378 square feet during that time. There was 41,239 square feet at the end of the first quarter 2012, and 23,952 square feet at the end of the fourth quarter. Sublease vacancy in Phoenix s central business district stood at 157,684 square feet at the end of the third quarter 2012. It was 234,022 square feet at the end of the second quarter 2012, 235,016 square feet at the end of the first quarter 2012, and 226,112 square feet at the end of the fourth quarter. Sublease vacancy in the suburban markets ended the third quarter 2012 at 930,751 square feet. At the end of the second quarter 2012 sublease vacancy was 916,515 square feet, was 1,141,898 square feet at the end of the first quarter 2012, and was 873,893 square feet at the end of the fourth quarter. Rental Rates The average quoted asking rental rate for available office space, all classes, was $20.01 per square foot per year at the end of the third quarter 2012 in the Phoenix market area. This represented a 0.3% decrease in quoted rental rates from the end of the second quarter 2012, when rents were reported at $20.07 per square foot. The average quoted rate within the Class-A sector was $23.15 at the end of the third quarter 2012, while Class-B rates stood at $19.27, and Class-C rates at $14.50. At the end of the second quarter 2012, Class-A rates were $23.24 per square foot, Class-B rates were $19.28, and Class-C rates were $14.55. The average quoted asking rental rate in Phoenix s CBD was $20.29 at the end of the third quarter 2012, and $19.96 in the suburban markets. In the second quarter 2012, quoted rates were $20.24 in the CBD and $20.04 in the suburbs. Deliveries and Construction During the third quarter 2012, four buildings totaling 56,048 square feet were completed in the Phoenix market area. This compares to two buildings totaling 46,326 square feet that were completed in the second quarter 2012, two buildings totaling 905,202 square feet completed in the first quarter 2012, and 27,845 square feet in two buildings completed in the fourth quarter. There were 374,390 square feet of office space under construction at the end of the third quarter 2012. Some of the notable 2012 deliveries include: Maricopa County Court Tower, a 695,000-square-foot facility that delivered in first quarter 2012 and is now 100% occupied, and FBI Source: CoStar Property 2 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

OVERVIEW THIRD QUARTER 2012 PHOENIX Regional HQ, a 210,202-square-foot building that delivered in first quarter 2012 and is now 100% occupied. The largest projects underway at the end of third quarter 2012 were AZ Department of Economic Security, a 114,412- square-foot building with 100% of its space pre-leased, and CIGNA Medical Group, a 95,000-square-foot facility that is 100% pre-leased. Inventory Total office inventory in the Phoenix market area amounted to 158,208,491 square feet in 8,052 buildings as of the end of the third quarter 2012. The Class-A office sector consisted of 40,590,977 square feet in 248 projects. There were 4,439 Class-B buildings totaling 94,794,974 square feet, and the Class-C sector consisted of 22,822,540 square feet in 3,365 buildings. Within the Office market there were 803 owner-occupied buildings accounting for 14,767,961 square feet of office space. Sales Activity Tallying office building sales of 15,000 square feet or larger, Phoenix office sales figures fell during the second quarter 2012 in terms of dollar volume compared to the first quarter of 2012. In the second quarter, 25 office transactions closed with a total volume of $157,381,873. The 25 buildings totaled 1,648,653 square feet and the average price per square foot equated to $95.46 per square foot. That compares to 20 transactions totaling $320,466,960 in the first quarter 2012. The total square footage in the first quarter was 1,723,586 square feet for an average price per square foot of $185.93. Total office building sales activity in 2012 was down compared to. In the first six months of 2012, the market saw 45 office sales transactions with a total volume of $477,848,833. Absorption & Deliveries Past 9 Quarters 1.0 0.8 0.6 0.4 0.2 0.0 (0.2) (0.4) (0.6) 0.13 0.07 0.08 2010 Source: CoStar Property 0.51 2010 4q Net Absorption 0.19 0.150.17 (0.36) 2q The price per square foot averaged $141.70. In the same first six months of, the market posted 40 transactions with a total volume of $503,539,582. The price per square foot averaged $103.22. Cap rates have been lower in 2012, averaging 6.64% compared to the same period in when they averaged 8.71%. One of the largest transactions that has occurred within the last four quarters in the Phoenix market is the sale of 16220 N Scottsdale Rd in Scottsdale. This 258,312-square-foot office building sold for $79,000,000, or $305.83 per square foot. The property sold on 5/25/2012, at a 6.50% cap rate. Reports compiled by: Adam Jarrett, CoStar Property Research Manager; Tom Summers, CoStar COMPS Research Manager. 0.88 0.33 0.63 0.03 4q Deliveries 0.37 0.91 2012 0.84 0.44 0.05 0.06 2012 2q 2012 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 3

PHOENIX THIRD QUARTER 2012 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 Airport Area Central Corridor East Phoenix East Valley North Phoenix Northwest Phoenix Scottsdale West Phoenix Submarkets Airport Area South Tempe/Ahwatukee Downtown* Midtown* 44th Street Corridor Camelback Corridor Midtown*/Central Phoenix Chandler Gateway Airport/Loop 202 Mesa Downtown* Mesa East Superstition Corridor Tempe N Phoenix/Cave Creek Paradise Valley Piestewa Peak Corridor Arrowhead Deer Valley/Airport North I-17 Northwest Phoenix Central Scottsdale N Scottsdale/Carefree Scottsdale Airpark Scottsdale South Glendale Loop 303/Surprise Southwest Phoenix West I-10 * Submarkets comprising the CBD. For statistics reference the CBD vs Suburban Figures at a Glance Page. 4 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

INVENTORY & DEVELOPMENT THIRD QUARTER 2012 PHOENIX Historical Deliveries 1982-2012 Millions of SF 9.0 8.0 7.0 6.0 5.0 4.0 3.0 4.8 2.9 6.1 8.0 7.3 3.7 3.0 Deliveries 4.0 3.5 3.4 4.9 6.8 5.3 7.6 Average Delivered SF 7.8 8.1 6.2 5.2 4.0 4.2 4.3 2.5 2.0 1.0 1.8 0.5 0.6 0.7 0.9 1.3 1.5 0.7 1.2 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 2012 * 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 East Valley 4 257,821 223,021 86.5% 12,570 64,455 Central Corridor 1 95,000 95,000 100.0% 39,554 95,000 Northwest Phoenix 1 21,569 17,255 80.0% 17,419 21,569 West Phoenix 0 0 0 0.0% 14,413 0 Airport Area 0 0 0 0.0% 33,787 0 North Phoenix 0 0 0 0.0% 17,778 0 East Phoenix 0 0 0 0.0% 23,366 0 Scottsdale 0 0 0 0.0% 20,145 0 Totals 6 374,390 335,276 89.6% 19,648 62,398 Recent Deliveries Leased & Un-Leased SF in Deliveries Since 2008 Future Deliveries Preleased & Un-Leased SF in Properties Scheduled to Deliver 9.0 Leased Un-Leased 250 Preleased Un-Leased 8.0 7.0 200 Millions of SF 6.0 5.0 4.0 3.0 Thousands of SF 150 100 T 2.0 50 1.0 0.0 2008 2009 2010 2012 0 2012 4q 2013 2013 4q 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 5

PHOENIX THIRD QUARTER 2012 INVENTORY & DEVELOPMENT Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction 1.4 Construction Starts 1.31 Deliveries 1.2 1.0 0.90 0.91 Millions of SF 0.8 0.6 0.4 0.2 0.0 0.70 0.60 0.50 0.47 0.49 0.36 0.30 0.33 0.26 0.19 0.15 0.17 0.10 0.07 0.08 0.04 0.00.01 0.01 0.01 0.03 0.03 0.03 0.030.05 0.06 0.00 2009 2009 2q 2009 2009 4q 2010 2010 2q 2010 2010 4q 2q 4q 2012 2012 2q 2012 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 6 102,374 94,202 92.0% $29.69 47,000 55,374 50,000 SF - 99,999 SF 0 0 0 0.0% $0.00 0 0 100,000 SF - 249,999 SF 1 210,202 210,202 100.0% $0.00 210,202 0 250,000 SF - 499,999 SF 0 0 0 0.0% $0.00 0 0 >= 500,000 SF 1 695,000 695,000 100.0% $0.00 695,000 0 Recent Development by Tenancy Comparison Based on RBA Developed for Single & Multi Tenant Use Based on Total RBA 2012 Deliveries Currently Under Construction By Class By Space Type 5% 15% 14% 21% 26% 95% 85% 60% 79% Multi Single Multi Single Class A Class B Class C Multi Single 6 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

INVENTORY & DEVELOPMENT THIRD QUARTER 2012 PHOENIX 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 7

PHOENIX THIRD QUARTER 2012 FIGURES AT A GLANCE Class A Market Statistics Third Quarter 2012 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Area 13 1,760,473 186,330 357,442 20.3% 102,347 0 0 $22.43 Central Corridor 26 9,627,620 1,791,507 1,896,409 19.7% (43,645) 0 0 $22.85 East Phoenix 43 7,581,937 2,022,029 2,098,821 27.7% 241,312 0 0 $24.53 East Valley 25 3,629,068 739,722 746,775 20.6% 312,562 0 92,109 $23.00 North Phoenix 16 1,879,946 438,196 462,620 24.6% 63,943 0 0 $22.18 Northwest Phoenix 31 4,783,662 594,998 625,162 13.1% (173,713) 0 0 $20.74 Scottsdale 85 10,101,282 2,208,669 2,400,314 23.8% 80,946 0 0 $23.37 West Phoenix 9 1,226,989 354,752 354,752 28.9% 80,817 0 0 $23.65 Totals 248 40,590,977 8,336,203 8,942,295 22.0% 664,569 0 92,109 $23.15 Class B Market Statistics Third Quarter 2012 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Area 368 13,027,864 2,140,833 2,178,755 16.7% (77,805) 0 0 $18.48 Central Corridor 184 10,280,548 2,169,938 2,219,894 21.6% 472,789 695,000 95,000 $18.64 East Phoenix 297 9,222,115 1,722,827 1,806,411 19.6% 192,938 40,000 0 $18.60 East Valley 1,307 17,870,629 3,330,594 3,385,099 18.9% 23,736 22,000 165,712 $19.08 North Phoenix 240 4,994,866 1,121,783 1,136,598 22.8% (624) 0 0 $18.93 Northwest Phoenix 751 16,690,248 4,187,854 4,310,779 25.8% 200,993 216,528 21,569 $18.78 Scottsdale 907 16,734,424 3,307,181 3,374,536 20.2% 210,160 0 0 $20.53 West Phoenix 385 5,974,280 1,344,016 1,351,919 22.6% 56,402 34,048 0 $22.17 Totals 4,439 94,794,974 19,325,026 19,763,991 20.8% 1,078,589 1,007,576 282,281 $19.27 Class C Market Statistics Third Quarter 2012 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Area 90 1,125,222 165,953 165,953 14.7% (30,323) 0 0 $17.68 Central Corridor 363 2,756,242 343,370 346,196 12.6% 58,257 0 0 $14.16 East Phoenix 535 3,640,778 517,174 528,252 14.5% (40,147) 0 0 $13.65 East Valley 722 4,319,935 565,064 570,118 13.2% (19,074) 0 0 $13.57 North Phoenix 215 1,498,504 151,154 151,514 10.1% (3,974) 0 0 $14.25 Northwest Phoenix 731 4,880,384 828,615 828,968 17.0% (60,726) 0 0 $13.76 Scottsdale 481 2,837,793 264,262 264,262 9.3% 58,186 0 0 $16.58 West Phoenix 228 1,763,682 198,023 221,730 12.6% (55,593) 0 0 $14.21 Totals 3,365 22,822,540 3,033,615 3,076,993 13.5% (93,394) 0 0 $14.50 Total Office Market Statistics Third Quarter 2012 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Area 471 15,913,559 2,493,116 2,702,150 17.0% (5,781) 0 0 $18.88 Central Corridor 573 22,664,410 4,304,815 4,462,499 19.7% 487,401 695,000 95,000 $20.29 East Phoenix 875 20,444,830 4,262,030 4,433,484 21.7% 394,103 40,000 0 $20.89 East Valley 2,054 25,819,632 4,635,380 4,701,992 18.2% 317,224 22,000 257,821 $19.12 North Phoenix 471 8,373,316 1,711,133 1,750,732 20.9% 59,345 0 0 $19.42 Northwest Phoenix 1,513 26,354,294 5,611,467 5,764,909 21.9% (33,446) 216,528 21,569 $18.46 Scottsdale 1,473 29,673,499 5,780,112 6,039,112 20.4% 349,292 0 0 $21.57 West Phoenix 622 8,964,951 1,896,791 1,928,401 21.5% 81,626 34,048 0 $21.65 Totals 8,052 158,208,491 30,694,844 31,783,279 20.1% 1,649,764 1,007,576 374,390 $20.01 8 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

FIGURES AT A GLANCE THIRD QUARTER 2012 PHOENIX Class A Submarket Statistics Third Quarter 2012 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 44th Street Corridor 19 3,003,254 652,156 652,156 21.7% 101,665 0 0 $22.61 Airport Area 9 1,278,654 116,825 287,937 22.5% 97,066 0 0 $22.16 Arrowhead 1 80,849 6,900 6,900 8.5% 1,400 0 0 $20.00 Camelback Corridor 24 4,578,683 1,369,873 1,446,665 31.6% 139,647 0 0 $25.41 Central Scottsdale 22 2,312,714 467,080 487,610 21.1% 81,868 0 0 $23.40 Chandler 8 1,254,790 239,634 239,634 19.1% 0 0 92,109 $24.95 Deer Valley/Airport 20 3,384,603 292,181 322,345 9.5% (72,748) 0 0 $20.69 Downtown 12 5,059,206 592,744 647,583 12.8% 8,023 0 0 $25.58 Gateway Airport/Loop 202 1 46,721 4,965 4,965 10.6% 0 0 0 $30.46 Glendale 5 522,494 166,659 166,659 31.9% 80,817 0 0 $26.64 Loop 303/Surprise 0 0 0 0 0.0% 0 0 0 $0.00 Mesa Downtown 0 0 0 0 0.0% 0 0 0 $0.00 Mesa East 0 0 0 0 0.0% 0 0 0 $0.00 Midtown 14 4,568,414 1,198,763 1,248,826 27.3% (51,668) 0 0 $21.50 Midtown/Central Phoenix 0 0 0 0 0.0% 0 0 0 $0.00 N Phoenix/Cave Creek 0 0 0 0 0.0% 0 0 0 $0.00 N Scottsdale/Carefree 0 0 0 0 0.0% 0 0 0 $0.00 North I-17 0 0 0 0 0.0% 0 0 0 $0.00 Northwest Phoenix 10 1,318,210 295,917 295,917 22.4% (102,365) 0 0 $20.83 Paradise Valley 13 1,470,552 420,912 445,336 30.3% 21,453 0 0 $22.22 Piestewa Peak Corridor 3 409,394 17,284 17,284 4.2% 42,490 0 0 $21.00 Scottsdale Airpark 52 6,155,991 1,486,163 1,616,039 26.3% (10,055) 0 0 $23.34 Scottsdale South 11 1,632,577 255,426 296,665 18.2% 9,133 0 0 $23.44 South Tempe/Ahwatukee 4 481,819 69,505 69,505 14.4% 5,281 0 0 $23.77 Southwest Phoenix 4 704,495 188,093 188,093 26.7% 0 0 0 $21.00 Superstition Corridor 5 671,991 274,304 274,304 40.8% 17,934 0 0 $21.34 Tempe 11 1,655,566 220,819 227,872 13.8% 294,628 0 0 $22.98 West I-10 0 0 0 0 0.0% 0 0 0 $0.00 Totals 248 40,590,977 8,336,203 8,942,295 22.0% 664,569 0 92,109 $23.15 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 9

PHOENIX THIRD QUARTER 2012 FIGURES AT A GLANCE Class B Submarket Statistics Third Quarter 2012 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 44th Street Corridor 58 2,168,650 310,993 329,517 15.2% 8,597 0 0 $17.95 Airport Area 141 8,192,278 1,096,984 1,134,906 13.9% (299,942) 0 0 $17.58 Arrowhead 289 3,350,900 704,167 714,250 21.3% (41,405) 6,326 21,569 $21.56 Camelback Corridor 110 4,046,238 989,481 1,039,631 25.7% 112,383 0 0 $19.60 Central Scottsdale 298 5,856,876 1,116,701 1,127,530 19.3% 92,647 0 0 $20.77 Chandler 351 5,059,448 834,684 872,489 17.2% 81,000 15,000 0 $20.93 Deer Valley/Airport 199 7,194,489 1,772,459 1,867,290 26.0% 252,383 210,202 0 $20.21 Downtown 59 3,400,700 471,819 474,056 13.9% 629,678 695,000 0 $20.84 Gateway Airport/Loop 202 239 2,130,034 541,467 543,525 25.5% 10,740 0 51,300 $22.87 Glendale 99 1,829,269 544,746 550,222 30.1% 49,329 0 0 $22.02 Loop 303/Surprise 123 1,486,894 414,474 416,641 28.0% 14,216 34,048 0 $23.15 Mesa Downtown 34 646,053 106,679 115,511 17.9% (1,219) 0 114,412 $16.49 Mesa East 221 2,138,837 352,360 352,360 16.5% (22,659) 0 0 $16.52 Midtown 125 6,879,848 1,698,119 1,745,838 25.4% (156,889) 0 95,000 $18.11 Midtown/Central Phoenix 129 3,007,227 422,353 437,263 14.5% 71,958 40,000 0 $17.32 N Phoenix/Cave Creek 9 88,247 29,306 29,306 33.2% 7,143 0 0 $24.48 N Scottsdale/Carefree 153 1,695,738 609,435 646,119 38.1% (35,747) 0 0 $20.75 North I-17 56 722,679 232,647 238,472 33.0% 1,741 0 0 $21.55 Northwest Phoenix 207 5,422,180 1,478,581 1,490,767 27.5% (11,726) 0 0 $15.37 Paradise Valley 150 2,557,627 493,238 498,254 19.5% 28,398 0 0 $20.24 Piestewa Peak Corridor 81 2,348,992 599,239 609,038 25.9% (36,165) 0 0 $17.92 Scottsdale Airpark 300 5,911,251 940,488 948,686 16.0% 128,792 0 0 $20.50 Scottsdale South 156 3,270,559 640,557 652,201 19.9% 24,468 0 0 $19.82 South Tempe/Ahwatukee 227 4,835,586 1,043,849 1,043,849 21.6% 222,137 0 0 $19.47 Southwest Phoenix 52 1,056,534 97,895 97,895 9.3% 6,104 0 0 $18.21 Superstition Corridor 316 4,551,223 920,375 920,375 20.2% (62,178) 7,000 0 $17.25 Tempe 146 3,345,034 575,029 580,839 17.4% 18,052 0 0 $18.01 West I-10 111 1,601,583 286,901 287,161 17.9% (13,247) 0 0 $22.07 Totals 4,439 94,794,974 19,325,026 19,763,991 20.8% 1,078,589 1,007,576 282,281 $19.27 10 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

FIGURES AT A GLANCE THIRD QUARTER 2012 PHOENIX Class C Submarket Statistics Third Quarter 2012 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 44th Street Corridor 79 844,854 102,103 102,103 12.1% (17,073) 0 0 $15.03 Airport Area 57 603,758 98,138 98,138 16.3% (21,499) 0 0 $13.22 Arrowhead 76 562,127 81,804 81,804 14.6% (7,830) 0 0 $18.10 Camelback Corridor 102 794,199 106,254 108,756 13.7% 19,822 0 0 $14.18 Central Scottsdale 74 433,063 26,094 26,094 6.0% (2,065) 0 0 $15.38 Chandler 72 423,444 36,943 36,943 8.7% 10,924 0 0 $14.08 Deer Valley/Airport 46 401,029 90,559 90,559 22.6% (12,496) 0 0 $16.08 Downtown 98 914,377 198,117 198,117 21.7% 22,657 0 0 $14.15 Gateway Airport/Loop 202 8 30,845 2,820 2,820 9.1% (2,820) 0 0 $17.61 Glendale 78 613,736 79,638 79,638 13.0% 649 0 0 $15.70 Loop 303/Surprise 21 233,249 11,677 11,677 5.0% (3,595) 0 0 $14.47 Mesa Downtown 171 740,025 148,977 148,977 20.1% (32,146) 0 0 $12.45 Mesa East 194 1,205,172 174,333 179,387 14.9% 6,979 0 0 $13.18 Midtown 265 1,841,865 145,253 148,079 8.0% 35,600 0 0 $14.16 Midtown/Central Phoenix 354 2,001,725 308,817 317,393 15.9% (42,896) 0 0 $12.73 N Phoenix/Cave Creek 4 20,843 3,850 3,850 18.5% 0 0 0 $15.58 N Scottsdale/Carefree 32 195,157 48,800 48,800 25.0% 3,944 0 0 $18.18 North I-17 1 2,310 0 0 0.0% 0 0 0 $0.00 Northwest Phoenix 608 3,914,918 656,252 656,605 16.8% (40,400) 0 0 $12.90 Paradise Valley 96 791,948 105,471 105,831 13.4% (8,588) 0 0 $14.19 Piestewa Peak Corridor 115 685,713 41,833 41,833 6.1% 4,614 0 0 $14.28 Scottsdale Airpark 27 320,308 31,180 31,180 9.7% 5,086 0 0 $13.84 Scottsdale South 348 1,889,265 158,188 158,188 8.4% 51,221 0 0 $16.88 South Tempe/Ahwatukee 33 521,464 67,815 67,815 13.0% (8,824) 0 0 $19.16 Southwest Phoenix 102 651,253 91,224 114,931 17.6% (49,892) 0 0 $13.37 Superstition Corridor 71 616,495 81,774 81,774 13.3% (13,123) 0 0 $12.65 Tempe 206 1,303,954 120,217 120,217 9.2% 11,112 0 0 $15.10 West I-10 27 265,444 15,484 15,484 5.8% (2,755) 0 0 $15.88 Totals 3,365 22,822,540 3,033,615 3,076,993 13.5% (93,394) 0 0 $14.50 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 11

PHOENIX THIRD QUARTER 2012 FIGURES AT A GLANCE Total Office Submarket Statistics Third Quarter 2012 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates 44th Street Corridor 156 6,016,758 1,065,252 1,083,776 18.0% 93,189 0 0 $20.30 Airport Area 207 10,074,690 1,311,947 1,520,981 15.1% (224,375) 0 0 $18.24 Arrowhead 366 3,993,876 792,871 802,954 20.1% (47,835) 6,326 21,569 $21.17 Camelback Corridor 236 9,419,120 2,465,608 2,595,052 27.6% 271,852 0 0 $22.77 Central Scottsdale 394 8,602,653 1,609,875 1,641,234 19.1% 172,450 0 0 $21.48 Chandler 431 6,737,682 1,111,261 1,149,066 17.1% 91,924 15,000 92,109 $21.31 Deer Valley/Airport 265 10,980,121 2,155,199 2,280,194 20.8% 167,139 210,202 0 $20.14 Downtown 169 9,374,283 1,262,680 1,319,756 14.1% 660,358 695,000 0 $22.99 Gateway Airport/Loop 202 248 2,207,600 549,252 551,310 25.0% 7,920 0 51,300 $22.94 Glendale 182 2,965,499 791,043 796,519 26.9% 130,795 0 0 $22.72 Loop 303/Surprise 144 1,720,143 426,151 428,318 24.9% 10,621 34,048 0 $22.97 Mesa Downtown 205 1,386,078 255,656 264,488 19.1% (33,365) 0 114,412 $14.03 Mesa East 415 3,344,009 526,693 531,747 15.9% (15,680) 0 0 $15.40 Midtown 404 13,290,127 3,042,135 3,142,743 23.6% (172,957) 0 95,000 $19.32 Midtown/Central Phoenix 483 5,008,952 731,170 754,656 15.1% 29,062 40,000 0 $15.95 N Phoenix/Cave Creek 13 109,090 33,156 33,156 30.4% 7,143 0 0 $23.50 N Scottsdale/Carefree 185 1,890,895 658,235 694,919 36.8% (31,803) 0 0 $20.61 North I-17 57 724,989 232,647 238,472 32.9% 1,741 0 0 $21.55 Northwest Phoenix 825 10,655,308 2,430,750 2,443,289 22.9% (154,491) 0 0 $15.88 Paradise Valley 259 4,820,127 1,019,621 1,049,421 21.8% 41,263 0 0 $20.57 Piestewa Peak Corridor 199 3,444,099 658,356 668,155 19.4% 10,939 0 0 $17.76 Scottsdale Airpark 379 12,387,550 2,457,831 2,595,905 21.0% 123,823 0 0 $22.23 Scottsdale South 515 6,792,401 1,054,171 1,107,054 16.3% 84,822 0 0 $20.29 South Tempe/Ahwatukee 264 5,838,869 1,181,169 1,181,169 20.2% 218,594 0 0 $19.61 Southwest Phoenix 158 2,412,282 377,212 400,919 16.6% (43,788) 0 0 $18.11 Superstition Corridor 392 5,839,709 1,276,453 1,276,453 21.9% (57,367) 7,000 0 $17.90 Tempe 363 6,304,554 916,065 928,928 14.7% 323,792 0 0 $19.08 West I-10 138 1,867,027 302,385 302,645 16.2% (16,002) 0 0 $21.67 Totals 8,052 158,208,491 30,694,844 31,783,279 20.1% 1,649,764 1,007,576 374,390 $20.01 12 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

FIGURES AT A GLANCE THIRD QUARTER 2012 PHOENIX Class A Market Statistics Third Quarter 2012 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 26 9,627,620 1,791,507 1,896,409 19.7% (43,645) 0 0 $22.85 Suburban 222 30,963,357 6,544,696 7,045,886 22.8% 708,214 0 92,109 $23.23 Totals 248 40,590,977 8,336,203 8,942,295 22.0% 664,569 0 92,109 $23.15 Class B Market Statistics Third Quarter 2012 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 184 10,280,548 2,169,938 2,219,894 21.6% 472,789 695,000 95,000 $18.64 Suburban 4,255 84,514,426 17,155,088 17,544,097 20.8% 605,800 312,576 187,281 $19.35 Totals 4,439 94,794,974 19,325,026 19,763,991 20.8% 1,078,589 1,007,576 282,281 $19.27 Class C Market Statistics Third Quarter 2012 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 363 2,756,242 343,370 346,196 12.6% 58,257 0 0 $14.16 Suburban 3,002 20,066,298 2,690,245 2,730,797 13.6% (151,651) 0 0 $14.53 Totals 3,365 22,822,540 3,033,615 3,076,993 13.5% (93,394) 0 0 $14.50 Class A & B Market Statistics Third Quarter 2012 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 210 19,908,168 3,961,445 4,116,303 20.7% 429,144 695,000 95,000 $20.67 Suburban 4,477 115,477,783 23,699,784 24,589,983 21.3% 1,314,014 312,576 279,390 $20.55 Totals 4,687 135,385,951 27,661,229 28,706,286 21.2% 1,743,158 1,007,576 374,390 $20.56 Total Office Market Statistics Third Quarter 2012 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 573 22,664,410 4,304,815 4,462,499 19.7% 487,401 695,000 95,000 $20.29 Suburban 7,479 135,544,081 26,390,029 27,320,780 20.2% 1,162,363 312,576 279,390 $19.96 Totals 8,052 158,208,491 30,694,844 31,783,279 20.1% 1,649,764 1,007,576 374,390 $20.01 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 13

PHOENIX THIRD QUARTER 2012 FIGURES AT A GLANCE Class A Market Statistics Third Quarter 2012 Net Deliveries UC Inventory Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates 2012 248 40,590,977 8,336,203 8,942,295 22.0% 358,712 0 0 1 92,109 $23.15 2012 2q 248 40,590,977 8,596,491 9,301,007 22.9% 343,280 0 0 1 92,109 $23.24 2012 248 40,590,977 8,789,644 9,644,287 23.8% (37,423) 0 0 1 92,109 $23.31 4q 248 40,590,977 8,928,299 9,606,864 23.7% 128,108 0 0 0 0 $23.38 248 40,590,977 8,984,366 9,734,972 24.0% 566,326 1 273,780 0 0 $23.84 2q 247 40,317,197 9,442,625 10,027,518 24.9% 123,897 1 165,290 1 273,780 $24.10 246 40,151,907 9,189,437 9,986,125 24.9% 116,748 1 183,000 2 439,070 $24.10 2010 245 39,968,907 9,168,586 9,919,873 24.8% 667,353 5 1,298,606 3 622,070 $24.36 2009 240 38,670,301 8,741,191 9,288,620 24.0% 188,502 12 1,454,989 6 1,708,665 $26.67 2008 228 37,215,312 7,330,829 8,022,133 21.6% (208,100) 26 3,063,893 15 2,586,374 $29.65 2007 202 34,151,419 4,336,128 4,750,140 13.9% 997,839 22 2,789,536 32 4,279,261 $30.03 2006 180 31,361,883 2,637,306 2,958,443 9.4% 1,319,327 13 1,350,854 26 3,527,777 $28.47 2005 167 30,011,029 2,470,830 2,926,916 9.8% 1,687,886 2 253,733 20 2,415,755 $24.94 2004 165 29,757,296 4,003,648 4,361,069 14.7% 1,871,508 14 1,855,011 1 104,213 $22.11 2003 151 27,902,285 3,994,114 4,377,566 15.7% 1,694,519 2 749,486 13 1,640,739 $22.16 2002 149 27,152,799 4,593,210 5,322,599 19.6% 1,402,201 11 1,843,533 3 816,121 $22.18 Quoted Class B Market Statistics Third Quarter 2012 Net Deliveries UC Inventory Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates 2012 4,439 94,794,974 19,325,026 19,763,991 20.8% 169,842 4 56,048 5 282,281 $19.27 2012 2q 4,436 94,786,802 19,523,131 19,925,661 21.0% 514,052 2 46,326 9 338,329 $19.28 2012 4,434 94,740,476 19,912,355 20,393,387 21.5% 394,695 2 905,202 10 349,855 $19.51 4q 4,432 93,835,274 19,485,392 19,882,880 21.2% 400,416 2 27,845 5 985,576 $19.67 4,430 93,807,429 19,812,156 20,255,451 21.6% 242,442 3 53,257 6 979,373 $19.69 2q 4,428 93,799,352 20,104,634 20,489,816 21.8% (53,078) 0 0 7 1,005,159 $19.95 4,428 93,799,352 20,012,490 20,436,738 21.8% (351,240) 1 7,056 6 965,159 $20.03 2010 4,427 93,792,296 19,635,580 20,078,442 21.4% 371,019 10 167,399 6 965,515 $20.44 2009 4,417 93,624,897 19,641,436 20,282,062 21.7% (1,450,257) 43 1,033,390 7 774,130 $21.57 2008 4,375 92,768,433 17,175,741 17,975,341 19.4% 14,743 256 4,975,373 35 967,245 $23.91 2007 4,121 87,859,570 12,428,489 13,081,221 14.9% 2,151,896 390 5,038,315 227 4,505,882 $24.53 2006 3,733 82,903,828 9,789,773 10,277,375 12.4% 5,388,085 442 4,803,978 398 5,779,446 $23.32 2005 3,292 78,293,728 10,724,090 11,055,360 14.1% 5,531,195 399 3,910,425 425 4,961,936 $21.44 2004 2,896 74,416,960 12,060,173 12,709,787 17.1% 1,854,277 281 3,138,741 351 3,570,583 $19.73 2003 2,615 71,278,219 10,597,160 11,425,323 16.0% 3,142,310 221 3,387,125 211 2,551,639 $19.03 2002 2,394 67,891,094 10,293,096 11,180,508 16.5% 463,960 142 2,098,797 150 3,028,836 $19.66 Quoted Total Office Market Statistics Third Quarter 2012 Net Deliveries UC Inventory Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates 2012 8,052 158,208,491 30,694,844 31,783,279 20.1% 440,359 4 56,048 6 374,390 $20.01 2012 2q 8,049 158,200,319 31,064,929 32,215,466 20.4% 840,772 2 46,326 10 430,438 $20.07 2012 8,048 158,157,404 31,636,409 33,013,323 20.9% 368,633 2 905,202 11 441,964 $20.21 4q 8,046 157,252,202 31,376,749 32,476,754 20.7% 631,481 2 27,845 5 985,576 $20.43 8,044 157,224,357 31,866,255 33,080,390 21.0% 882,884 4 327,037 6 979,373 $20.55 2q 8,041 156,942,500 32,673,274 33,681,417 21.5% 147,015 1 165,290 8 1,278,939 $20.82 8,041 156,786,499 32,420,850 33,672,431 21.5% (364,112) 2 190,056 8 1,404,229 $20.86 2010 8,039 156,596,443 31,901,045 33,118,263 21.1% 821,835 15 1,466,005 9 1,587,585 $21.35 2009 8,024 155,130,438 31,218,059 32,474,093 20.9% (1,956,383) 55 2,488,379 13 2,482,795 $22.87 2008 7,975 152,841,833 26,695,804 28,229,105 18.5% (558,856) 284 8,065,119 50 3,553,619 $25.39 2007 7,697 144,910,834 18,646,271 19,739,250 13.6% 2,657,159 416 7,844,540 261 8,810,996 $26.05 2006 7,286 137,169,101 13,830,845 14,654,676 10.7% 7,011,289 464 6,212,211 427 9,315,576 $24.36 2005 6,825 131,313,840 14,977,425 15,810,704 12.0% 7,373,647 412 4,307,604 453 7,432,307 $21.88 2004 6,420 127,082,236 17,909,384 18,952,747 14.9% 4,139,240 308 5,231,439 358 3,715,300 $19.82 2003 6,112 121,850,797 16,589,434 17,860,548 14.7% 4,844,175 228 4,160,852 235 4,418,745 $19.54 2002 5,888 117,732,316 16,904,389 18,586,242 15.8% 1,600,773 162 3,986,564 156 3,863,819 $19.97 Quoted 14 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

LEASING ACTIVITY THIRD QUARTER 2012 PHOENIX Historical Rental Rates Based on Full-Service Equivalent Rental Rates A B C Total Market $35.00 $30.00 Dollars/SF/Year $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2012 2012 by Available Space Type by Class Percent of All Vacant Space in Direct vs. Sublet Percent of All Vacant Space by Class Phoenix United States Phoenix United States 3% 4% 10% 17% 62% 28% 49% 34% 97% 96% 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* $25.00 Phoenix United States 1.2 $20.00 1.0 0.97 Dollars/SF/Year $15.00 $10.00 Millions 0.8 0.6 0.4 0.39 $5.00 0.2 $0.00 2010 2010 4q 2q 4q 2012 2012 2q 2012 0.0 0.00 0.00 0.00 0.00 2012 4q 2013 2014 2q 2014 2014 4q 2015 * Includes Under Construction Spaces 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 15

PHOENIX THIRD QUARTER 2012 LEASING ACTIVITY Select Top Office Leases Based on Leased Square Footage For Deals Signed in 2012 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company 1 2700 W Frye Rd Chandler 183,000 2nd QBE Insurance Group Jones Lang LaSalle Lee & Associates 2 1500 N Priest Dr 44th Street Corridor 140,000 2nd State Farm Insurance Jones Lang LaSalle Jones Lang LaSalle 3 4500 E Cotton Center Blvd Airport Area 139,404 3rd Aetna Jones Lang LaSalle Cushman & Wakefield, Inc. 4 444 N 44th St 44th Street Corridor 138,240 3rd State Farm Mutual Automobile N/A Cushman & Wakefield, Inc. 5 432 N 44th St 44th Street Corridor 105,974 1st State Farm Mutual Automobile Jones Lang LaSalle Transwestern 6 1260 S Spectrum Blvd Chandler 92,109 2nd Infusionsoft, Inc. Commercial Properties, Inc. CBRE 7 9180 E Via de Ventura Central Scottsdale 80,158 1st Rancho Solano Private School CBRE Lee & Associates 8 1500 N Priest Dr 44th Street Corridor 70,000 1st IPOWER Lee & Associates Jones Lang LaSalle 9 222 S Mill Ave Tempe 65,604 1st Allstate Insurance Colliers International CBRE 10 4129 E Van Buren St 44th Street Corridor 63,426 2nd Dignity Health Cushman & Wakefield, Inc. CBRE 11 3110 N Central Ave Midtown 56,530 2nd District Medical Group Kasten Long Commercial Group Colliers International 12 8667 E Hartford Dr Scottsdale Airpark 54,045 1st North Central University N/A CBRE 13 80 E Rio Salado Pky Tempe 49,374 1st Silicon Valley Bank Jones Lang LaSalle CBRE 14 225 E Main St Mesa Downtown 43,862 2nd Benedictine University N/A Direct Deal 15 16610 N Black Canyon Fwy Deer Valley/Airport 42,213 1st TeleTech CBRE CBRE 16 201 N Central Ave Downtown 39,186 1st N/A N/A CBRE 17 2510 W Dunlap Ave Northwest Phoenix 37,123 2nd Liberty Mutual Group Studley Transwestern 18 16404 N Black Canyon Hwy Deer Valley/Airport 36,749 1st Paychex, Inc. Cassidy Turley BRE Commercial Jones Lang LaSalle 19 5323 N 99th Ave Glendale 34,667 1st Bechtel Corporation CBRE CBRE 20 4900 N Scottsdale Rd Scottsdale South 31,889 1st Integrate Software Sperry Van Ness Orion Realty Group 21 2625 S Plaza Dr Airport Area 30,400 2nd Aerotek, Inc. Cassidy Turley BRE Commercial Cushman & Wakefield, Inc. 22 3200 E Camelback Rd Camelback Corridor 29,388 3rd Miller/Russell & Associates Lee & Associates Cassidy Turley BRE Commercial 23 1840 S Stapley Dr Superstition Corridor 28,978 3rd Ulthera Cresa Cushman & Wakefield, Inc. 24 4150 N Drinkwater Blvd Scottsdale South 28,769 2nd Concord Servicing Corporation First Commercial Realty Advisors CBRE 25 410 N 44th St 44th Street Corridor 28,213 2nd Arcadis US, Inc Pickron, Turner & Associates Transwestern 26 16454 N 28th Ave Deer Valley/Airport 26,625 1st Sequoia Schools Colliers International Colliers International 27 5301 N Pima Rd Scottsdale South 26,455 1st Regenesis Biomedical, Inc. Cresa CBRE 28 16404 N Black Canyon Hwy Deer Valley/Airport 25,678 3rd Teletech Sevices Corp CBRE Jones Lang LaSalle 29 8701 E Hartford Dr Scottsdale Airpark 24,408 3rd NCU N/A CBRE 30 163 N Dobson Rd Tempe 24,000 3rd N/A N/A Cassidy Turley BRE Commercial 31 5310 E High St Paradise Valley 23,562 2nd CIGNA Corporation CBRE Jones Lang LaSalle 32 1201 S Alma School Rd Superstition Corridor 23,502 2nd N/A N/A Direct Deal 33 1230 W Washington St 44th Street Corridor 22,900 2nd N/A N/A CBRE 34 4451 E Oak St 44th Street Corridor 22,240 3rd Avesis Colliers International Cutler Commercial 35 1501 W Fountainhead Pky Airport Area 22,186 1st CH2M HILL Companies, Ltd. Cushman & Wakefield, Inc. Cushman & Wakefield, Inc. 36 16425 N Pima Rd Scottsdale Airpark 21,417 2nd Quicken Loans Inc. Friedman Integrated R. E. Solutions CBRE 37 19820 N 7th Ave Deer Valley/Airport 20,936 2nd Maldonado Medical Transwestern CBRE 38 8260 S Hardy Dr South Tempe/Ahwatukee 20,179 1st Verifications, Inc. Cushman & Wakefield, Inc. Voit Real Estate Services 39 7580 N Dobson Rd Central Scottsdale 19,959 2nd Sorenson Communications, Inc. Jones Lang LaSalle Cushman & Wakefield, Inc. 40 2325 E Camelback Rd Camelback Corridor 19,322 2nd Bonnett, Fairbourn, Friedman & Balint, PC Cushman & Wakefield, Inc. Cassidy Turley BRE Commercial * Renewal 16 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

SALES ACTIVITY THIRD QUARTER 2012 PHOENIX The Optimist Sales Index Average of Two Highest Price/SF's and Two Lowest Cap Rates Per Quarter 10.0% Cap Rate Price/SF $400 Cap Rate Percentage 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% $350 $300 $250 $200 $150 $100 $50 Dollars/SF 0.0% 2009 2009 4q 2010 2010 2q 2010 2010 4q 2q 4q 2012 2012 2q $0 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 July - June 2012 Sales Volume Price/SF Bldg Size # RBA $ Volume Price/SF Cap Rate $450 $200 Millions of Sales Volume Dollars $400 $350 $300 $250 $200 $150 $100 $180 $160 $140 $120 $100 $80 $60 $40 Price/SF < 50,000 SF 402 2,389,971 $ 210,622,734 $ 88.13 9.05% 50K-249K SF 27 3,086,259 $ 355,589,800 $ 115.22 7.58% 250K-499K SF 8 2,724,427 $ 563,400,000 $ 206.80 7.02% $50 $20 $0 2009 2009 2010 2010 2012 $0 >500K SF - - - $ - - 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 $270 Phoenix US 11.0% Phoenix US Dollars per SF $220 $170 $120 $70 Cap Rate Percentage 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% $20 2009 2009 2q 2009 2009 4q 2010 2010 2q 2010 2010 4q 2q 4q 2012 2012 2q 3.0% 2009 2009 2q 2009 2009 4q 2010 2010 2q 2010 2010 4q 2q 4q 2012 2012 2q Source: CoStar COMPS Source: CoStar COMPS 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 17

PHOENIX THIRD QUARTER 2012 SALES ACTIVITY 18 THE COSTAR OFFICE REPORT 2012 COSTAR GROUP, INC.

SALES ACTIVITY THIRD QUARTER 2012 PHOENIX Select Land Sales Based on Commercially Zoned Land Sales Occurring From July - Sept. 2012 SW Bethany Home Rd & 95th Ave, Glendale SW US 60 & Pierpont, Mesa SWC 99th Ave & Northern, Glendale Sale Price: $11,611,968 Sale Price: $6,289,485 Sale Price: $5,336,177 Acres: 66.64 Acres: 22.21 Acres: 35.00 Price/SF: $4.00 Price/SF: $6.50 Price/SF: $3.50 Closing Date: 03/23/2012 Closing Date: 05/18/2012 Closing Date: 05/31/2012 Zoning: PAD, Glendale Zoning: M-1, Mesa Zoning: PAD Intended Use: Hold for Development Intended Use: Medical Intended Use: Medical Buyer: Belmont Investments, LLC Buyer: Banner Health Buyer: Dignity Health Seller: Walker & Dunlop, LLC Seller: Crisko, LLC Seller: Wells Fargo Bank NA SWC S Price Rd & W Willis Rd, Chandler 600 W Grant St, Phoenix NE Dobson Rd & Elliot Rd, Chandler Sale Price: $4,380,000 Sale Price: $3,150,000 Sale Price: $3,000,000 Acres: 28.98 Acres: 16.76 Acres: 8.90 Price/SF: $3.47 Price/SF: $4.32 Price/SF: $7.74 Closing Date: 08/23/2012 Closing Date: 04/20/2012 Closing Date: 06/11/2012 Zoning: AG-1 Zoning: A-1/C-3, Phoenix Zoning: C-2, Chandler Intended Use: Office Intended Use: Mixed Use Intended Use: Commercial Buyer: Douglas Allred Company Buyer: LKY Development Company, Inc. Buyer: Chandler Opportunity Development Seller: Harold Kuiper Trust Seller: Enterprise Bank & Trust Seller: Bashas Inc Source: CoStar COMPS 2012 COSTAR GROUP, INC. THE COSTAR OFFICE REPORT 19