Survey of Emerging Market Conditions

Survey of Emerging Market Conditions Quarter 2 2014 Published September 2014 Warrington College of Business Administration

Lead Researcher Dr. Wayne R. Archer, Executive Director University of Florida Bergstrom Center for Real Estate Studies Professor of Real Estate Warrington College of Business Administration Researcher and Analyst Timothy S. Becker, CCIM, Director University of Florida Bergstrom Center for Real Estate Studies Editorial Board Mr. Lewis Goodkin, President Goodkin Consulting, Miami, FL Dr. Hank Fishkind, President Fishkind & Associates, Inc., Orlando, FL Mr. Jeff Conn, Principal The Survey of Emerging Market Conditions is provided to all invited survey respondents who completed the survey during the July 2014 fielding. For more information about the survey or the Bergstrom Center for Real Estate Studies, visit our website at realestate.ufl.edu

Table of Contents Executive Summary & Conclusions...5 Highlights...5 The Survey...6 General...6 Single Family & Condominium Development...6 Apartments...6 Industrial...6 Office...6 Retail...6 Land Investment...6 Capital Availability...7 UF Commercial Real Estate Sentiment Index...7 Section 1:...8 Section 2: Residential Development...8 Expected Absorption Rates...8 Expected Price Changes...9...9 Section 3: Apartments... 9 Expected...9 Expected Rental Rates...10...10...10... 11 Section 4: Industrial... 12 Expected...12 Expected Rental Rates...12...12...13...13 Section 5: Office...14 Expected...14 Expected Rental Rates...14...14...15...16 Section 6: Retail...16 Expected...16 Expected Rental Rates... 17... 17...18...18 Section 7: Outlook for Investment in Undeveloped Land...19 Land Without Entitlements or with Residential Entitlements...19 Land with Office or Retail Entitlements...19 Land with Hospitality Entitlements...19 Land with Entitlements for Warehouse or R&D... 20 Land for Urban Renewal... 20 Section 8: Business and Capital Availability Outlook... 20 Capital Availability... 20 UF Commercial Real Estate...21 Sentiment Index...21 Section 9: Dominant Investors...22 Section 10: Characteristics of Survey Respondents...22 Profession of Respondents... 22 Markets of Familiarity... 23 Property types of Familiarity... 23 Section 11: Details of, and Expected Changes... 24 Section 12: Local Markets... 26 Regional Market Report for Dade...27 Multi-Family Properties... 27 Industrial Properties... 28 Office Properties... 29 Retail Properties... 30

Regional Market Report for Broward... 31 Multi-Family Properties...31 Industrial Properties... 32 Office Properties... 33 Retail Properties...34 Regional Market Report for Palm Beach...35 Multi-Family Properties... 35 Industrial Properties... 36 Office Properties... 37 Retail Properties... 38 Regional Market Report for Treasure Coast... 39 Multi-Family Properties... 39 Industrial Properties...40 Office Properties... 41 Retail Properties...42 Regional Market Report for Southwest Coast... 43 Multi-Family Properties...43 Industrial Properties...44 Office Properties...45 Retail Properties...46 Regional Market Report for Daytona Beach...47 Multi-Family Properties...47 Industrial Properties...48 Office Properties...49 Retail Properties...50 Regional Market Report for Orlando... 51 Multi-Family Properties...51 Industrial Properties... 52 Office Properties... 53 Retail Properties...54 Regional Market Report for Lakeland...55 Multi-Family Properties... 55 Industrial Properties... 56 Office Properties... 57 Retail Properties... 58 Regional Market Report for Tampa... 59 Multi-Family Properties... 59 Industrial Properties...60 Office Properties...61 Retail Properties...62 Regional Market Report for Sarasota... 63 Multi-Family Properties... 63 Industrial Properties...64 Office Properties... 65 Retail Properties...66 Regional Market Report for Jacksonville...67 Multi-Family Properties... 67 Industrial Properties...68 Office Properties...69 Retail Properties...70 Regional Market Report for Gainesville/ Ocala... 71 Multi-Family Properties...71 Industrial Properties... 72 Office Properties... 73 Retail Properties... 74 Regional Market Report for Tallahassee/ Panhandle...75 Multi-Family Properties... 75 Industrial Properties... 76 Office Properties... 77 Retail Properties... 78

Executive Summary & Conclusions Florida s real estate practitioners remain optimistic about the state s real estate markets. UF s Commercial Real Estate Sentiment Index, an outlook of our respondents own businesses, improved to its highest level since the fourth quarter of 2006. Their optimism continues to be driven by the improving Florida economy and the improving job market. The overall Florida unemployment rate declined slightly to 6.2% this quarter with overall Florida employment reaching 7.8 million jobs. The overall employment represents an increase of almost 240,000 new jobs from the same period last year. Additionally, those new jobs are spread across a number of the employment sectors with Trade, Transportation and Utilities; Professional and Business Services; Construction; and Leisure and Hospitality leading the way. The increase in employment for hospitality is being driven by record tourism. According to Visit Florida, the state continues to see record setting levels of tourism with total visitation up 3% from the 2nd quarter of 2013 at 24.0 million visitors. Florida continues to see growth in overseas visitation, which is up 4% over a record setting 2013. The continued improvement in the job market along with tremendous growth in the tourism industry has been positive for consumer confidence. The UF Bureau of Economic and Business Research (BEBR) consumer sentiment index remained at post-recession highs this quarter at 82. However, uncertainty continues to play a part in tempering that improvement. The uncertainty created by government policy and inaction continues to prevent companies from moving forward aggressively with expansion. Our respondents continue to be concerned about the impact and timing of the Fed s forthcoming increases in interest rates. However, despite that concern, the rate on the 10 year treasury remains low and declined 20 basis points from the end of the first quarter. A measured increase by the Federal Reserve would allow real estate markets to absorb the increases through compression of the historically high spreads between cap rates and the 10 year yield. Additionally, the increased interest rates may be offset by improving rents and net operating incomes. Despite the uncertainties, Florida s economy and therefore the real estate markets continue to improve and that trend should continue. HIGHLIGHTS The UF Commercial Real Estate Sentiment Index increased this quarter to its highest level since the 4th quarter of 2006. The outlook for occupancy and rents remained positive across most property types with expectations that they will increase. Cap rates remained stable or declined slightly across most property types. However, with increasing interest rates, expectations are for a rise in cap rates over the next year. have remained relatively stable across most property types. As with cap rates, rising interest rates are pushing expectations for higher yields across property types. The outlook for investment remained positive across all property types. Respondents outlook for capital availability remained stable this quarter with most expecting it to increase in the future.

THE SURVEY Our quarterly survey, conducted by the Bergstrom Center for Real Estate Studies, Warrington College of Business Administration, University of Florida is in its thirty-second fielding. The total number of participants, at 73, is the most extensive survey of Florida professional real estate analysts and investors conducted on an ongoing basis. It includes respondents representing thirteen urban regions of the state and up to fifteen property types. GENERAL INVESTMENT OUTLOOK Our general index of real estate investment outlook, weighted 40 percent for single family and condo development, 40 percent for apartments and commercial rental property and 20 percent for developable land, improved this quarter close to a survey high. Most respondents continue believe it is a good time to invest in Florida real estate and land continues to improve as an investment alternative. SINGLE FAMILY & CONDOMINIUM DEVELOPMENT The outlook for new single family development remained remains positive. Florida continues to have positive population growth and employment growth which is driving demand for new homes. Extreme winter conditions prompt more people to consider Florida, particularly retirees or near retirees. However, higher interest rates, declining incomes and higher land prices will dampen optimism slightly in this sector. APARTMENTS The outlook for multi-family properties continues to be positive. After many quarters of increasing occupany, respondents believe that occupancy will level off with the addition of new inventory. However, they remain optimistic that rents will rise with inflation. Cap rates remained steady this quarter with more respondents believing they will increase in the next year. INDUSTRIAL The outlook for investment in industrial properties declined again this quarter from its peak in the first quarter but remains positive. and occupancy are expected to increase in coming quarters. Cap rates and yields increased sharply for Flex Space and decreased slightly for Warehouse. Respondents expect rates to remain relatively stable in future quarters for both industrial sectors. OFFICE The outlook for the office market improved dramatically for Class A office with almost 80% of respondents believing that occupancy will increase. This pushed the outlook for investment higher and cap rates lower this quarter. The Class B office outlook remained positive and stable this quarter. Continued improvement in office employment is driving higher expectations. RETAIL The outlook for retail properties continued to improve this quarter for all sectors except Large Centers. Growth in rents and occupancy are driving the optimism. However increasing interest rates and declining consumer incomes will have an impact on this segment. The positive fundamentals continue to drive cap rates and yields lower across all but one segment of this sector. Respondents believe that cap rates should remain stable while yields increase over the coming quarters. LAND INVESTMENT The outlook for investment in land continues a steady upward trend across all property types this quarter. More respondents believe that now is a good time to buy land across all types. Improving fundamentals and limited supply are starting to drive development particularly in the multi-family sector. Land with residential entitlements reached another survey high.

CAPITAL AVAILABILITY Respondents continue to believe that capital availability will increase in future quarters. An improving economy and increased lending activity by banks is driving respondents opinions. Additionally, private equity continues to pour into this asset class looking for higher yields. UF COMMERCIAL REAL ESTATE SENTIMENT INDEX The Sentiment index increased this quarter to its highest level since the 4th quarter of 2006. Surprisingly, Developers now have the most optimistic outlook of their own businesses, reaching a new survey high. Brokers and owners are close behind in their optimism. Surprisingly, the steadiest group is the least optimistic with appraiser s have the lowest outlook.

Section 1: The investment outlook for Florida improved to a near survey high this quarter, increasing from last quarter s decline. Despite uncertainty in the national economic view, Florida s economy continues to improve. Increased employment, record tourism and international investment have proven a catalyst for the real estate markets. These factors are leading respondents to believe that fundamentals will continue improving in future quarters across all sectors. These improving fundamentals along with a shortage of supply are increasing development activity and therefore the outlook for investment in land, which continues to improve the overall investment outlook. Respondents remain concerned about the uncertainty in Washington D.C. and the effect on interest rates. Consensus among the respondents is that interest rates will increase but worry about the rate of increase and the timing. This investment index is weighted 40 percent on single family and residential condominium development, 40 percent on rental property of all types, and 20 percent on undeveloped land. Thus, it is at least fifty percent driven by the residential development outlook. Section 2: Residential Development EXPECTED ABSORPTION RATES The outlook for residential absorption improved this quarter with respondents continuing to believe that absorption will increase. The improved Florida economy will help the housing market as we continue to see net population growth and job growth in the state. Additionally, a robust winter selling season boosted expectations and drove builders to expand lot inventories to drive growth. Banks are starting to lend more in this market which will help additional potential borrowers take advantage of the current interest rates before they go up again. However, there remains a credit crunch in the housing market that continues to hold down growth opportunities. The condo market is primarily driven by South Florida. Foreign buyers and all cash transaction continue to dominate the marketplace.

EXPECTED PRICE CHANGES Expectations for price changes increased this quarter for both single family and condo developments after several quarters of decline. Continued improvement of Florida s economy will continue to have a positive impact on pricing. However, there are increasing headwinds as real employee wages are declining and expectations that interest rates will again start increasing. Continuation of these trends will have a significant impact on builders ability to increase pricing. In the meantime, builders are able to increase pricing to offset the increased cost of materials and labor. INVESTMENT OUTLOOK The outlook for investment in residential development remained positive this quarter. An improved economy continues to drive additional investment in the residential market. All-time highs in the stock market will drive additional investment in the second/vacation home market in Florida with the season starting in November. Additionally, continued job growth and population growth will drive the need for additional housing in key markets which will spur investment. Investors will continue to keep a close eye on the interest rates as they make investment decisions in this sector. Section 3: Apartments EXPECTED OCCUPANCY The outlook for occupancy in market rate apartments continued a steady decline over the past two years as new inventory is delivered to the market, affecting occupancy projections. Respondents continue to believe that demographics are favorable for this sector in the near future, which will have a positive impact on absorbing the additional supply. Also, increasing interest rates will prevent more buyers from purchasing and force them to remain renters. If developers remain disciplined and don t overbuild, the apartment sector will remain a good investment.

EXPECTED RENTAL RATES Expectations for rental rates improved slightly this quarter for market rent apartments as respondents continue to expect rental rates to increase with inflation. Demand continues to outweigh supply which has driven both occupancy and rents higher. This trend will continue as demographic preferences lean toward rental living in urban areas. However as the large number of new units under construction are delivered to the market there will be increased pressure on rents to maintain occupancy at older well located properties. This should continue over the near future. INVESTMENT OUTLOOK With strong occupancy and rent expectations, the investment outlook remains positive for apartments. Despite rising interest rates that may impact cap rates, investors still like this market. In part, they are buffered from rising cap rates because occupancy and rent has grown faster than inflation over the past couple years. This sector continues to benefit from a tremendous amount of capital availability, however, rising interest rates will make core deals harder to underwrite. Another potential risk, although more long term, is the ultimate resolution of Fannie Mae and Freddie Mac. The GSAs provide a lot of the liquidity in the apartment market and winding them down will have a negative impact on the market. CAP RATES Cap rates remained stable at 6.3% this quarter for market rent apartments. Despite the outlook for higher interest rates, rental growth continues at rates above inflation. This, along with the large amount of capital chasing multi-family investments, keep cap rates stable for core deals. However, respondents believe that increasing interest rates and the additional supply coming to the market will work together to slightly increase caps rates over the next year.

YIELDS Required yields increased dramatically this quarter, reflecting respondents view that interest rate increases and a lack of quality assets are driving up return requirements. Investors are shifting to secondary and in some cases, tertiary markets which drives up yield expectations. Demographics, population growth and preferences will continue to drive investment in this sector and that competition for deals should insure that yields remain low in the coming quarters.

Section 4: Industrial EXPECTED OCCUPANCY The outlook for occupancy in the industrial sector improved this quarter across both sectors, with the Warehouse sector reaching new survey highs. Continued improvement in the economy is generating more construction employment and small business starts which traditionally use flex space. Additionally, the continued strong trade with Latin America is having a positive impact on warehouse space. Retailers continue reinvent their business models in a race to provide next day or same day delivery. This is changing the face of industrial real estate as warehouse space is becoming a necessity to get closer to the end consumer. Amazon s two distribution facilities in the Tampa/Lakeland markets are just the start of what will be a continuous expansion of warehouse space. EXPECTED RENTAL RATES Industrial rent expectations have steadily improved since the bottom in the second quarter of 2009. Improving demand for space and limited new development is driving expectations for rental rates higher over the next year. Availability of land for industrial development will be a big factor in which communities will benefit the most from the industrial expansion needs. Locations with multimodal connections will continue to command the highest rents and rent growth along with technology parks. INVESTMENT OUTLOOK The outlook for investment in industrial real estate remains positive, but declined slightly this quarter. Improving fundamentals continue to influence respondents view of investment in this sector. Continued positive trade with South America and the expected positive impact of the Panama Canal expansion along with a limited amount of new supply coming to market will have positive effects on this sector. However, rising interest rates pose a threat to those

fundamentals and investors will maintain a close watch. Additionally, technology, particularly the rise of the 3-D printer may have a negative impact on this sector. CAP RATES Cap rates for flex space increased this quarter to 8.7%, while cap rates for warehouse space decreased slightly to 7.2%. This sector continues to benefit from improving fundamentals and an inflow of capital looking for higher yields. Additionally, debt financing is starting to open up in this sector which is making investment more attractive. However, rising interest rates may influence the positive fundamentals and financing options for investors. YIELDS Required yields for warehouse space decreased to 8.9% while yields for flex space increased to 11.5%. Improving fundaments and demand are positively affecting warehouse yields. Despite positive growth in construction, investors remain cautious in the flex space sector. Rising interest rates may threaten the fundamentals and impact the required yields in this sector; however, respondents currently believe that yields will remain steady over the next 12 months.

Section 5: Office EXPECTED OCCUPANCY The outlook for occupancy in Class A office continued to improve dramatically with almost all respondents believing that occupancy will increase over the coming year. The outlook for Class B declined slightly but remained positive with almost 60% of respondents believing occupancy will grow. The continued recovery of jobs in Florida, particularly office space jobs is influencing respondents outlook. This segment is also benefitting from little new development which is allowing current buildings time to improve occupancies with a slowly improving economy. Despite the improvement in office jobs, companies continue to be very cautious about the amount of space they need per worker. As these companies bring in new staff, they do so in existing office space. This trend will continue to regulate new development and continue to have a positive impact on occupancy. However, the continued reduction in office space per worker puts tremendous demands on current space that was not designed for the number of people using the space. Demands on plumbing, heating and air systems and parking will provide challenges to landlords and may drive new development that can plan for these trends. Given these competing trends, we should expect that occupancy will continue to improve in the short term but level off as development starts. EXPECTED RENTAL RATES levels are finally starting to increase in the office sector which has allowed landlords to reduce concessions and increase rent. However, even with increasing job growth, companies continue to add workers in existing space. Given that, respondents believe that rents will only grow with inflation in the coming year. In the face of increasing demand from job growth and more companies moving to Florida, development of new office space should be needed over the next year. However current rents in most markets don t justify the new development. In the short term this will positively impact existing buildings with better rental rates. INVESTMENT OUTLOOK The outlook for investment continued to improve this quarter in both office sectors. Improving occupancy and growing rents favor new investment. Buildings that are designed to reduce operational costs will continue to be in favor with investors to ensure a good

yield. Additionally, growing demand from job growth and limited new supply will also benefit investors in this sector. CAP RATES With an improving investment outlook and fundamentals, Cap rates declined this quarter in both subsectors with Class A cap rates at 7.2% and Class B rates at 8.4%. Limited development in this sector will keep fundamentals improving for the next several quarters to the benefit of current investors. These factors are reducing risk in this sector. Despite an outlook of increasing interest rates, continued improvement in the Florida economy and job growth, along with stronger fundamentals, lead respondent to believe that cap rates will be stable in future quarters.

YIELDS Required yields were mixed this quarter with Class A yields declining to 9% while Class B yields increased to 11.2%. The Class A yield reached a survey low which reflects investors continued preference for high quality class A assets in core locations. With interest rates projected to rise we would expect required yields will certainly increase. However, several factors are working to counteract any future rise in interest rates, including continued growth in Florida office jobs and limited new supply in office space. These factors are influencing respondents to project not change in yields over the next year for either sector. Section 6: Retail EXPECTED OCCUPANCY The outlook for occupancy remains strong for retail occupancy across all sectors this quarter. This optimism is being driven by the improving economy, consumer confidence, and growth within Florida. Retailers continue to look for quality locations throughout Florida and have increased their store openings for the coming year. The University of Florida Bureau of Business and Economic Research s consumer sentiment index was 82 in June, the highest level since 2007. Additionally, the state continues to set records with the number of visitors coming to Florida which is also helping to boost retail sales. These factors should continue to drive occupancy in retail going forward.

EXPECTED RENTAL RATES The outlook for rental rates remained positive this quarter with most respondents believing that rental rates will rise with inflation. Given the strong outlook for occupancy, we would expect that rental rates will grow in the absence of new supply and reduction in available space. Continued growth in job production and an improving economy should maintain consumers confidence which will encourage continued spending. Retailer expansion and competition for the best locations will continue to have a positive effect on rental rates. INVESTMENT OUTLOOK The outlook for investment in retail remains positive across all subsectors with the exception of Large Retail. Improving fundamentals continue to drive investment outlook. Florida s economy and job growth are having a positive impact on consumers which will benefit retailers. As long as Washington does nothing to negatively impact consumers, this trend will continue. Retailers are continuing to look for ways to increase efficiency while decreasing store size, which explains the decline in outlook for Large Retail. Additionally, online retailing continues to exert pressure on retailers particularly in the electronics and book sectors. Grocery anchored centers continue to be the favored investment option for investors, who prefer best in class grocers in primary locations. Interest rates will also factor into the outlook as higher rates will drive higher cap rates and yields.t

CAP RATES Cap rates continue to decline in the retail sector with rates for large centers, neighborhood centers, strip centers and free standing retail at 6.4%, 6.7%, 8.4% and 6.9% respectively. However, the rising interest rates and the expectation that they will continue to increase impacted respondents view on the future direction of cap rates. Respondents believe that rates will either remain stable or increase in coming quarters. YIELDS were mixed this quarter with Neighborhood Centers and Free Standing retail increasing and the other two sectors decreasing. for Large Centers, Neighborhood Centers and Free Standing retail reached 8.5%, 10%, and 8.9% respectively. While Strip Center yields increased to 10.9%. reflected improved fundamentals this quarter along with increased competition for investment capital. Increasing interest rates will impact this sector and influenced respondents views. They believe that yields will increase in coming quarters.

Section 7: Outlook for Investment in Undeveloped Land LAND WITHOUT ENTITLEMENTS OR WITH RESIDENTIAL ENTITLEMENTS The outlook for investment in land continues to be positive in both sectors with both reaching survey highs. The improving housing sector is driving land pricing higher as they continue to buy entitled property to help maintain the current growth levels. This is in turn driving investment in non-entitled land as investors look to entitle the land and capture the home builders attention. Additionally, land for apartment investment is in high demand and driving pricing significantly higher. Investors will continue to keep an eye on interest rates as that could have a negative impact on the housing market. LAND WITH OFFICE OR RETAIL ENTITLEMENTS The outlook for investment in land with office or retail entitlements increased this quarter reaching a new survey high. Respondents believe that office and retail fundamentals are improving to the point that new development is warranted. The retail sector is still the favored of the two sectors and new retail entitled land will be purchased for investment and development. However, with an improving office market and office job growth, investors will start buying land for future office development. LAND WITH HOSPITALITY ENTITLEMENTS The investment outlook for land with hospitality entitlements improved again this quarter reaching a survey high. Tourism in Florida continues to set records through the second quarter and is driving resurgence in the hotel sector. This trend is having the most impact in Orlando and Miami which will see the bulk of the new hotel development. This trend should continue with a higher percentage of visitors from foreign markets.

LAND WITH ENTITLEMENTS FOR WAREHOUSE OR R&D The investment outlook for land with warehouse or R&D entitlements improved this again this quarter. Investment in warehouse projects is picking up in port areas, particularly Miami, where exports to South America are up and require additional warehouse space. Ports throughout Florida continue to focus on expansion in preparation for the expansion of the Panama Canal. Retail companies continue to refine their business models to compete with online shopping which is driving additional demand for warehouse space closer to the end consumer. This trend will have a positive impact on areas connected with major roads and multi-modal sites. LAND FOR URBAN RENEWAL The outlook for investment in urban renewal improved this quarter. As more people move toward urban areas investment in land for urban renewal will increase. We are starting to see more projects, particularly in Miami, but projects in small cities like Gainesville, with Innovation Square, are leading the state in urban renewal. This is a trend that will continue over the next several years. Section 8: Business and Capital Availability Outlook CAPITAL AVAILABILITY The outlook for capital availability increased slightly this quarter for both acquisition and development capital. Respondents continue to believe that capital will increase over the coming year. An increase in interest rates will not impact the capital flowing to real estate unless the risk adjusted returns decline in relation to other asset classes. Additionally, in an inflationary economy, more investors will look for hard assets to invest in, which will keep real estate in a favorable position. Debt capital is continuing to increase for all asset classes as more banks get back into the lending business. Improving asset prices are improving bank balance sheets and allowing them to loan more. This should continue, albeit with higher rates as interest rates continue to rise.

UF COMMERCIAL REAL ESTATE SENTIMENT INDEX The UF Commercial Real Estate Sentiment Index increased this quarter to its highest level since the 4th quarter of 2006. Florida s improved economy along with improved job growth and record tourism are having a positive impact on our respondents outlook. The increase in the index was driven by growing optimism from developers, owners and brokers. Improved fundamentals are generating the need for new development across several sectors, which is boosting the outlook for developers and other service providers who generally focus on the development side of the business. Surprisingly the least optimistic of the respondents are the appraisers, who continue to face tremendous pressure from the Dodd-Frank legislation which is pushing prices and quality lower. Our respondents believe there could be a growing crisis in the appraisal industry as the industry grows older with fewer young professionals entering the business.

Section 9: Dominant Investors Respondents were asked to indicate which of five investor groups they perceived to be the most active for each type of property they analyze. Not surprisingly, REITs and Institutions remain very active buyers, but private investors are very active as fewer core properties are available to purchase. Section 10: Characteristics of Survey Respondents PROFESSION OF RESPONDENTS Survey responses increased this quarter to 78 respondents. Approximately 64 percent of the respondents reported being an appraiser; 81% with designations of MAI, SREA or SRPA. The next largest groups were other service providers and brokers.

MARKETS OF FAMILIARITY Each respondent was asked to select up to four regional markets with which they are familiar. In the latest survey, these choices accumulated to 107 observations. The highest number of responses was for the Tampa-St. Pete, which had 18 observations. The lowest respondent support came from the Gainesville with 2. PROPERTY TYPES OF FAMILIARITY Each respondent was asked to select up to three property types with which they were familiar. Altogether, 152 selections were made in the latest survey round. Single family development was selected by 15 respondents while condominium development was selected by 8. The largest response for commercial property was in Strip Centers with 23 responses. The lowest response was for Condo Conversion with 0.

Section 11: Details of, and Expected Changes Table 1 summarizes estimates of cap rates and yields for twelve property types over the last four quarters of the survey. In addition, this table shows the distribution of expectations for changes in each reported cap rate and yield. In particular, the table reports the percent of respondents expecting each cap rate and yield to either rise or fall in the future. Excluded from this table is the percentage of respondents whom are expecting no change. This third percentage can be computed as 100 less the two percentages reported. Since prior sections discuss the content of Table 1, further comment is not given here. The table is simply provided as a reference to facilitate application of the survey results.

Section 12: Local Markets Starting with the 3rd quarter of 2011, we have changed the presentation of the local market data to a more graphical format. This makes it easier, at a glance, to get a sense of what is happening in each market. As part of the transition you will notice that each report is broken up into property types. Additionally, you will see a table with indicating the direction of our respondents expectations for the various indicators. Please use the following legend to interpret the results. For future expectations you will see the following symbols. Please refer to their definition for interpretation: An upward pointing arrow indicates an increasing trend. An upward but diagonal pointing arrow indicates a slightly positive or increasing trend. A side pointing arrow indicates a neutral trend. A downward but diagonal pointing arrow indicates a slightly negative or slightly declining trend. A downward pointing arrow indicates a decreasing or negative trend.

Regional Market Report for Dade MULTI-FAMILY PROPERTIES 4.00 5.58 4.78 6.02 5.95 5.72 8.72 7.57 6.58 6.09 9.43 3.00 2.00 4.00 3.00 2.00 1.00 1.00 0.00 Apartments Market Condo Conversions 0.00 Apartments Market Condo Conversions Apartments Condo Conversion Apartments Foreign Buyers 25% R.E. Companies 25% Condo Conversion REITs 50%

INDUSTRIAL PROPERTIES 7.20 7.10 6.90 6.80 7.02 6.97 7.11 7.15 12.00 10.76 8.94 10.14 8.28 8.12 6.70 6.60 6.50 6.58 4.00 6.40 6.30 2.00 6.20 0.00 Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Institutions

OFFICE PROPERTIES 7.60 8.14 7.46 9.50 9.67 6.80 6.53 8.75 4.00 3.00 8.50 8.71 8.19 8.32 2.00 1.00 7.50 0.00 Office:Class A Office:Class B Office:Class A Office:Class B Office: Class A Office: Class B Office: Class A Office: Class B R.E. Companies

RETAIL PROPERTIES Retail Large REITs 8.50 7.50 6.50 5.50 Retail Large 6.58 7.54 5.85 Neighborhood Retail 6.44 7.10 5.87 Strip Centers 8.10 7.54 7.60 Free Standing 6.17 6.31 5.87 9.50 8.50 7.50 6.50 5.50 Retail Large 9.15 9.45 7.68 Neighborhood Retail 8.56 8.75 8.98 Strip Centers 9.50 8.48 9.67 Free Standing 6.82 7.66 7.92 Neighborhood Center Strip Centers Free Standing Foreign Buyers, Private Buyers Private Buyers Retail Large Neighborhood Centers Strip Centers Free Standing

Regional Market Report for Broward MULTI-FAMILY PROPERTIES 4.00 5.57 4.77 6.17 6.23 5.73 8.45 7.30 7.39 6.89 9.11 3.00 2.00 4.00 3.00 2.00 1.00 1.00 0.00 Apartments Market Condo Conversions 0.00 Apartments Market Condo Conversions Apartments Condo Conversion Foreign Buyers 50% Apartments R.E. Companies 50% Condo Conversion

INDUSTRIAL PROPERTIES 7.60 7.40 7.20 6.80 6.95 7.32 7.37 12.00 10.49 8.68 10.95 9.09 7.80 6.60 6.40 6.59 4.00 6.20 2.00 0.00 Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Institutions

OFFICE PROPERTIES 4.00 7.59 6.79 8.35 7.67 7.72 6.54 9.50 8.50 9.41 8.45 9.56 8.99 9.13 3.00 2.00 1.00 7.50 0.00 Office:Class A Office:Class B Office:Class A Office:Class B Office: Class A Office: Class B Office: Class A Office: Class B R.E. Companies Private Buyers,

RETAIL PROPERTIES Retail Large 8.50 11.00 7.50 6.50 5.50 REITs Retail Large 6.57 7.75 5.85 Neighborhood Retail 6.43 7.31 5.88 Strip Centers 8.09 7.76 7.61 Free Standing 6.15 6.52 5.88 Retail Large 8.88 10.25 7.36 Neighborhood Retail 8.30 9.55 8.66 Strip Centers 9.24 9.28 9.35 Free Standing 6.55 8.46 7.61 Neighborhood Center Strip Centers Free Standing Foreign Buyers, 50% R.E. Companies, 50% Private Buyers Private Buyers Retail Large Neighborhood Centers Strip Centers Free Standing

Regional Market Report for Palm Beach MULTI-FAMILY PROPERTIES 12.00 4.00 5.78 4.98 6.17 6.23 6.08 8.95 7.79 7.39 6.89 9.71 3.00 4.00 2.00 1.00 0.00 Apartments Market Condo Conversions 2.00 0.00 Apartments Market Condo Conversions Apartments Condo Conversion Apartments R.E. Companies Condo Conversion

INDUSTRIAL PROPERTIES 8.50 8.29 12.00 10.98 10.95 9.09 9.99 7.50 7.22 7.32 7.37 9.17 8.40 7.17 6.94 4.00 6.50 2.00 0.00 Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Institutions 33% Private Buyers 34% REITs 33% Private Buyers,

OFFICE PROPERTIES 7.80 8.35 8.08 9.90 9.56 9.72 9.50 4.00 3.00 6.89 8.50 8.94 8.60 2.00 1.00 0.00 7.50 Office:Class A Office:Class B Office:Class A Office:Class B Office: Class A Office: Class B Office: Class A Office: Class B R.E. Companies Private Buyers,

RETAIL PROPERTIES Retail Large 8.50 11.00 7.50 6.50 5.50 REITs Retail Large 6.78 6.21 Neighborhood Retail 6.64 7.31 6.23 Strip Centers 8.30 7.76 7.96 Free Standing 6.37 6.52 6.23 Retail Large 9.38 7.96 Neighborhood Retail 8.79 9.55 9.26 Strip Centers 9.73 9.28 9.95 Free Standing 7.05 8.46 8.20 Neighborhood Center Strip Centers Free Standing R.E. Companies, Private Buyers R.E. Companies 33% Private Buyers Retail Large Neighborhood Centers Strip Centers Free Standing

Regional Market Report for Treasure Coast MULTI-FAMILY PROPERTIES 6.40 6.35 6.30 6.25 6.20 6.35 6.28 7.80 7.60 7.40 7.20 7.81 7.32 6.15 6.10 6.05 5.95 5.90 6.07 Apartments Market Condo Conversions 6.80 6.60 6.40 6.20 6.83 Apartments Market Condo Conversions Apartments Condo Conversion Apartments Condo Conversion

INDUSTRIAL PROPERTIES 7.50 7.43 7.45 7.48 9.32 7.97 12.00 11.00 9.18 10.88 9.02 9.67 8.08 4.00 3.00 4.00 2.00 1.00 2.00 0.00 0.00 Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Private Buyers Private Buyers,

OFFICE PROPERTIES 9.20 9.11 9.90 9.91 8.80 9.80 8.60 9.70 8.40 9.60 8.20 8.09 9.50 9.40 9.40 7.80 9.30 7.60 9.20 7.40 9.10 Office:Class A Office:Class B Office:Class A Office:Class B Office: Class A Office: Class B Office: Class A Office: Class B

RETAIL PROPERTIES Retail Large 8.50 7.50 6.50 5.50 Retail Large 7.06 Neighborhood Retail 6.92 7.43 Strip Centers 8.59 7.87 Free Standing 6.65 6.63 7.26 9.50 8.50 7.50 6.50 5.50 Retail Large 9.39 Neighborhood Retail 8.80 9.49 Strip Centers 9.74 9.22 Free Standing 7.06 8.40 7.88 Neighborhood Center Strip Centers Free Standing R.E. Companies 33% Private Buyers Retail Large Neighborhood Centers Strip Centers Free Standing

Regional Market Report for Southwest Coast MULTI-FAMILY PROPERTIES 6.20 5.80 5.60 6.06 9.80 9.60 9.40 9.20 9.90 5.40 5.20 5.26 8.80 8.60 8.40 8.75 8.20 4.80 Apartments Market Condo Conversions Apartments Market Condo Conversions Apartments Condo Conversion Apartments Condo Conversion

INDUSTRIAL PROPERTIES 8.50 8.39 14.00 7.50 7.49 7.44 12.00 11.94 10.12 9.85 8.26 7.04 4.00 6.50 2.00 0.00 Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Foreign Buyers 50% Institutions 50% Private Buyers,

OFFICE PROPERTIES 8.08 7.27 9.13 8.45 6.99 12.00 10.85 10.48 9.89 9.91 8.45 4.00 3.00 4.00 2.00 1.00 2.00 0.00 0.00 Office:Class A Office:Class B Office:Class A Office:Class B Office: Class A Office: Class B Office: Class A Office: Class B R.E. Companies 33% Private Buyers 67%

RETAIL PROPERTIES Retail Large Foreign Buyers 33% Institutions 33% REITs 34% 8.50 7.50 6.50 5.50 Retail Large 7.06 8.53 6.30 Neighborhood Retail 6.92 6.33 Strip Centers 8.58 8.54 8.06 Free Standing 6.64 7.30 12.00 11.00 Retail Large 10.33 11.17 7.82 Neighborhood Retail 9.74 9.12 Strip Centers 10.68 10.21 9.81 Free Standing 9.39 Neighborhood Center Strip Centers Free Standing Private Buyers, Private Buyers Retail Large Neighborhood Centers Strip Centers Free Standing

Regional Market Report for Daytona Beach MULTI-FAMILY PROPERTIES 6.47 1 14.00 12.00 13.79 4.00 3.00 2.00 4.00 1.00 2.00 0.00 Apartments Market Condo Conversions 0.00 Apartments Market Condo Conversions Apartments Condo Conversion Apartments Private Buyers Condo Conversion

INDUSTRIAL PROPERTIES 8.50 8.36 8.68 1 14.00 12.00 11.58 14.08 12.48 7.50 7.33 4.00 2.00 6.50 0.00 Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Private Buyers Private Buyers,

OFFICE PROPERTIES 9.60 9.40 9.20 9.42 1 14.00 12.00 12.31 11.39 13.81 8.80 11.35 8.60 8.40 8.47 8.20 7.80 7.60 8.20 4.00 2.00 7.40 0.00 Office:Class A Office:Class B Office:Class A Office:Class B Office: Class A Office: Class B Office: Class A Office: Class B Private Buyers,

RETAIL PROPERTIES Retail Large Foreign Buyers 50% REITs 50% 9.50 8.50 7.50 6.50 5.50 Retail Large 7.98 6.60 Neighborhood Retail 7.84 6.62 Strip Centers 9.50 8.83 8.35 Free Standing 7.56 6.62 1 14.00 13.00 12.00 11.00 Retail Large 11.79 12.04 Neighborhood Retail 11.20 13.34 Strip Centers 12.14 11.11 14.03 Free Standing 9.46 12.29 Neighborhood Center Strip Centers Free Standing REITs, 33% Private Buyers, Private Buyers Private Buyers Retail Large Neighborhood Centers Strip Centers Free Standing

Regional Market Report for Orlando MULTI-FAMILY PROPERTIES 6.40 6.20 6.27 6.06 6.18 12.00 9.86 8.70 8.98 11.18 5.80 5.60 4.00 5.40 5.20 5.47 Apartments Market Condo Conversions 2.00 0.00 Apartments Market Condo Conversions Apartments Condo Conversion REITs 50% Apartments Private Buyers 25% R.E. Companies 25% Condo Conversion

INDUSTRIAL PROPERTIES 8.50 8.39 14.00 7.50 7.70 7.65 7.21 12.00 11.89 11.46 10.68 10.08 9.87 7.04 4.00 6.50 2.00 0.00 Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space REITs Private Buyers,

OFFICE PROPERTIES 8.50 8.29 8.25 8.18 11.50 11.15 11.19 11.00 10.81 7.50 7.49 7.56 10.50 10.58 6.99 9.85 10.07 6.50 9.50 Office:Class A Office:Class B Office:Class A Office:Class B Office: Class A Office: Class B Office: Class A Office: Class B R.E. Companies Private Buyers,

RETAIL PROPERTIES Retail Large REITs 8.50 7.50 6.50 5.50 Retail Large 7.27 7.65 6.31 Neighborhood Retail 7.13 7.21 6.33 Strip Centers 8.79 7.65 8.06 Free Standing 6.85 6.41 13.00 12.00 11.00 Retail Large 10.29 11.84 9.43 Neighborhood Retail 9.70 11.14 10.73 Strip Centers 10.64 10.87 11.42 Free Standing 7.95 10.05 Neighborhood Center Strip Centers Free Standing REITs, 67% Private Buyers, Retail Large Neighborhood Centers Strip Centers Free Standing Private Buyers

Regional Market Report for Lakeland MULTI-FAMILY PROPERTIES 6.90 9.90 6.80 6.70 6.60 6.50 6.80 9.85 9.80 9.75 9.84 6.40 9.70 6.30 6.20 6.10 6.37 Apartments Market Condo Conversions 9.65 9.60 9.68 Apartments Market Condo Conversions Apartments Condo Conversion Apartments Condo Conversion REITs

INDUSTRIAL PROPERTIES 12.00 8.50 8.58 11.05 10.13 8.19 8.53 7.50 4.00 7.23 2.00 6.50 0.00 Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Private Buyers Private Buyers,

OFFICE PROPERTIES 8.90 8.82 12.00 11.78 8.80 11.50 8.70 11.00 8.60 8.50 8.40 8.37 10.50 9.86 8.30 9.50 8.20 8.10 8.50 Office:Class A Office:Class B Office:Class A Office:Class B Office: Class A Office: Class B Office: Class A Office: Class B

RETAIL PROPERTIES Retail Large Foreign Buyers 9.50 8.50 7.50 6.50 5.50 Retail Large 6.50 Neighborhood Retail 6.52 Strip Centers 9.32 8.50 8.26 Free Standing 7.38 7.26 6.53 1 1 13.00 11.00 Retail Large 8.09 Neighborhood Retail 9.39 Strip Centers 11.61 1 10.08 Free Standing 8.93 14.18 8.34 Neighborhood Center Strip Centers Free Standing Private Buyers, Private Buyers Private Buyers Retail Large Neighborhood Centers Strip Centers Free Standing

Regional Market Report for Tampa MULTI-FAMILY PROPERTIES 6.80 12.00 6.60 6.40 6.65 9.39 10.43 6.20 6.34 6.55 5.80 5.60 5.40 5.92 Apartments Market Condo Conversions 4.00 2.00 0.00 Apartments Market Condo Conversions Apartments Condo Conversion Apartments Institutions 20% REITs 40% Private Buyers 40% Condo Conversion

INDUSTRIAL PROPERTIES 8.20 8.09 8.04 14.00 12.00 12.58 7.80 7.60 7.40 10.76 10.11 8.25 9.13 7.20 6.80 7.08 7.12 7.20 4.00 6.60 2.00 6.40 0.00 Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Foreign Buyers 33% R.E. Companies 34% REITs 33%

OFFICE PROPERTIES 14.00 8.67 7.87 8.11 7.43 8.34 7.15 12.00 11.49 10.53 8.72 8.16 10.45 9.32 4.00 3.00 4.00 2.00 1.00 2.00 0.00 0.00 Office:Class A Office:Class B Office:Class A Office:Class B Office: Class A Office: Class B Office: Class A Office: Class B Institutions 33% R.E. Companies 34% R.E. Companies, 25% Private Buyers, 75% REITs 33%

RETAIL PROPERTIES Retail Large Foreign Buyers 33% REITs 67% 9.50 8.50 7.50 6.50 5.50 Retail Large 7.65 7.51 6.47 Neighborhood Retail 7.51 7.07 6.49 Strip Centers 9.17 7.52 8.22 Free Standing 7.24 6.49 12.00 11.00 Retail Large 10.97 9.42 8.68 Neighborhood Retail 10.38 8.72 9.98 Strip Centers 11.32 8.45 10.68 Free Standing 8.64 8.93 Neighborhood Center Strip Centers Free Standing Private Buyers, R.E. Companies 14% Private Buyers 86% Private Buyers Retail Large Neighborhood Centers Strip Centers Free Standing

Regional Market Report for Sarasota MULTI-FAMILY PROPERTIES 6.80 12.00 6.70 6.60 6.69 8.81 10.13 6.50 6.40 6.56 4.00 5.53 6.30 6.37 2.00 6.20 Apartments Market Condo Conversions 0.00 Apartments Market Condo Conversions Apartments Condo Conversion Apartments Private Buyers Condo Conversion

INDUSTRIAL PROPERTIES 9.50 12.00 8.90 10.18 10.42 8.50 9.09 7.23 8.83 7.71 7.50 7.75 7.76 7.55 4.00 2.00 6.50 0.00 Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Foreign Buyers 50% Private Buyers 50% Institutions,

OFFICE PROPERTIES 8.80 8.60 8.40 8.20 8.39 8.75 8.69 12.00 10.91 9.95 7.70 10.15 9.02 7.80 8.06 7.13 7.60 7.40 7.58 7.51 4.00 7.20 2.00 6.80 0.00 Office:Class A Office:Class B Office:Class A Office:Class B Office: Class A Office: Class B Office: Class A Office: Class B REITs 50% R.E. Companies 50% Private Buyers,

RETAIL PROPERTIES Retail Large REITs 9.50 8.50 7.50 6.50 5.50 Retail Large 6.82 Neighborhood Retail 7.23 6.84 Strip Centers 8.89 8.15 8.57 Free Standing 6.95 12.00 11.00 Retail Large 8.39 Neighborhood Retail 9.80 9.69 Strip Centers 10.74 7.42 10.38 Free Standing 8.06 Neighborhood Center Strip Centers Free Standing Private Buyers, R.E. Companies 33% Private Buyers 67% Retail Large Neighborhood Centers Strip Centers Free Standing

Regional Market Report for Jacksonville MULTI-FAMILY PROPERTIES 6.70 6.65 6.60 6.63 6.68 6.62 9.50 8.50 8.62 9.51 6.55 8.12 8.13 6.50 6.53 7.50 6.45 Apartments Market Condo Conversions Apartments Market Condo Conversions Apartments Condo Conversion Apartments Private Buyers Condo Conversion

INDUSTRIAL PROPERTIES 8.74 14.00 8.50 12.00 12.18 10.32 9.80 7.50 8.02 7.77 7.81 9.49 8.20 7.39 4.00 2.00 6.50 0.00 Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Institutions 33% Foreign Buyers 67% Private Buyers,

OFFICE PROPERTIES 8.50 8.65 8.80 8.52 12.00 10.22 10.79 10.23 9.53 8.12 9.26 8.40 7.85 7.50 7.34 4.00 2.00 6.50 0.00 Office:Class A Office:Class B Office:Class A Office:Class B Office: Class A Office: Class B Office: Class A Office: Class B Institutions Private Buyers,

RETAIL PROPERTIES Retail Large 9.50 8.50 7.50 6.50 5.50 Retail Large 7.63 Neighborhood Retail 7.49 7.76 6.68 Strip Centers 9.15 8.21 8.41 Free Standing 7.22 6.97 6.68 12.00 11.00 Retail Large 9.70 Neighborhood Retail 9.11 10.79 9.06 Strip Centers 10.05 10.52 9.75 Free Standing 7.37 9.70 8.01 Neighborhood Center Strip Centers Free Standing R.E. Companies, Private Buyers R.E. Companies Retail Large Neighborhood Centers Strip Centers Free Standing

Regional Market Report for Gainesville/Ocala MULTI-FAMILY PROPERTIES 6.60 6.59 6.59 6.58 6.58 6.57 6.57 6.56 6.56 6.55 6.55 6.54 6.59 6.56 Apartments Market Condo Conversions 8.50 8.45 8.40 8.35 8.30 8.25 8.20 8.15 8.10 8.48 8.23 Apartments Market Condo Conversions Apartments Condo Conversion Apartments Condo Conversion

INDUSTRIAL PROPERTIES 12.00 7.95 7.90 7.95 11.50 11.00 11.79 7.85 7.80 7.75 7.70 7.79 7.75 10.50 9.50 9.85 9.93 7.65 7.60 8.50 Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space Warehouse Flex Space

OFFICE PROPERTIES 9.50 12.00 8.50 8.58 8.78 9.10 10.58 10.40 9.63 9.84 9.44 8.32 7.50 7.78 8.10 7.92 4.00 2.00 0.00 Office:Class A Office:Class B Office:Class A Office:Class B Office: Class A Office: Class B Office: Class A Office: Class B R.E. Companies Private Buyers,