Year-End Wrap up What to Know About Real Estate Going Into 2016

MIAMI OFFICE MARKET

YEAR-END WRAP UP WHAT TO KNOW ABOUT REAL ESTATE GOING INTO 2016

CBD SURGE RATES CONTINUE TO RISE CORAL GABLES – THE COMEBACK ELEVATED OCCUPANCIES, RATES AND ACQUISITIONS MIAMI AIRPORT READIES FOR NEW SUPPLY EXTREMELY LOW CLASS A VACANCY

REAL ESTATE OUTLOOK 4Q -2015 2015 REAL ESTATE OUTLOOK 4Q MIAMI OFFICE MARKET FOURTH QUARTER 2015

Encouraging market fundamentals boost investor and landlord confidence with elevated acquisitions and persistent rental rate hikes Near term for-lease office construction remains relatively restrained – with pre-leasing reported in most buildings

ECONOMY Miami’s office using industry sectors ended 2015 with positive gains OFFICE TRENDS - OVERALL MARKET On the national front, 2015’s underlying data remained generally strong – despite 8.0 YEARS CURRENT QUARTER long term wage stagnation, both lower and higher paying jobs are coming back. VACANCY U.S. jobs data showed good pick up in hiring - Professional/Business Services, Healthcare, Construction and Restaurant/Bar industries – essential South Florida 12.5% sectors. Overall labor force participation in the nation was just over 60%+, up from 8-year low in supply previous decades due in large part to demographics i.e. aging population. levels

ABSORPTION Both the state and the region continue to attract residents with population growth in the three-county South Florida market among the fastest-growing in Florida. 804,862 SF Unemployment in the Miami metro was back to early 2015’s 5.5% and down from YTD 2015 most of the monthly 6.0+% rates posted during the year - still among the lowest Six consecutive years of since midyear 2008. Lower rates were posted among the two other South Florida positive occupancy gains counties, Broward (4.5%) and Palm Beach (4.6%). A 5.0% unemployment rate was RENTAL RATE recorded for both Florida and the U.S. – marking the first time since January 2015 that Florida’s unemployment rate has not been higher than the nation. $34.54 PSF 6-year high – up 8.4% Leading the Miami metro was the Leisure and Hospitality segment registering the since 2011 highest growth rate at 5.0%. This coincides with Miami garnering a record-breaking year in its travel, tourism and hotel occupancy numbers. Trade, Transportation, and UNDER CONSTRUCTION Utilities is the single largest employment sector comprising 26.0% of the area’s SF total. Going forward from 2015 through 2023, the highest growth rates for Miami 541,228 are projected to be in the Construction (22.6%), Education/Healthcare (17.0%) and CBD No new CBD deliveries the prime office using sector of Professional/Business Services (15.2%). A tally of all since 2011 industries during the projected timeframe point to office using jobs accounting for one-quarter of this total. 56,000 SF SUBURBS

OFFICE USING INDUSTRY SECTORS INBOUND: PROJECTED EMPLOYMENT GROWTH (2015 – 2023) RESIDENTS/EMPLOYEES TO INCREASE PROJECTED POPULATION GROWTH (2015 – 2025) 10.4% PROFESSIONAL FINANCIAL INFORMATION & BUSINESS ACTIVITIES 15.2% 6.1% 2.2%

Additional sources: FREIDA, Florida DEO, Bureau of Labor Statistics, Miami Herald MIAMI OFFICE MARKET FOURTH QUARTER 2015

SUPPLY AND DEVELOPMENT

HALLANDALE BEACH BLVD FLORIDA’S New occupancy gains of 4.0 MSF since 2010 have more TURNPIKE than offset 2008-2009’s 1.4 MSF of negative absorption. BROWARD EXTENSION FLORIDA’S 441 The year ended with an overall vacancy rate of 12.5% - marking MIAMI-DADE TURNPIKE AVENTURA a near 70% drop since the decade high peak of almost 21% posted in late 2010. Consistent positive absorption reduced 826 826 supply levels as 2015 closed with over 800,000 SF in new MIAMI LAKES occupancy gains; on average, the market has absorbed

680,000+ SF annually since 2010. Sublet vacancies, while 27 FLORIDA’S remaining under 100,000 SF consistently during the year and TURNPIKE A1A EXTENSION among the decade’s lowest, are anticipated to increase going 95 into 2016 due to several large consolidations and out of market 1 MIAMI BEACH relocations. Overall leasing volumes have kept a near identical MIAMI AIRPORT 112 pace during the last three years, averaging 3.5 MSF. 826 DOWNTOWNMIAMI 836 Office construction market-wide now stands at just under

600,000 SF. These are refreshing statistics compared to the 41 beginning of the 2007 recession when 2.7 MSF were underway. CORAL GABLES BRICKELL The current construction activity is largely confined to the CBD.

KEY However, 2016 will see new Suburban development in the BISCAYNE 1 Airport where two buildings totaling just under 400,000 SF will COCONUT GROVE be built. The good news is that almost 40% will be pre-leased for Burger King’s 150,000 SF build-to-suit headquarters while the other asset is scheduled to break ground in 1Q 2016 and KENDAL/DADELAND will be a 246,000 SF spec building. These developments are FLORIDA’S part of the highly successful TIAA-CREF/Allianz Real Estate of TURNPIKE EXTENSION America portfolio of Class A buildings at the Waterford office park. OLD CUTTLER RD

DEMAND Going into 2016, 65% of the 1.0 MSF of tenants touring CBD NEW CLASS A are comprised of large (20,000+ SF) requirements – OFFICE DELIVERIES half of which are occupiers in the Banking/Financing Chart Title industries 1999 - 2017 1,600,000 Year-to-date lasing volumes were nearly evenly divided between the CBD and Suburbs. Within the CBD, the usual 1,400,000 industry sectors of Banking/Finance and Law Firms dominated 1,200,000 transactional activity, accounting for 42% of the total.

Increasingly, Real Estate and Tech firms are following suit as 1,000,000 they were the next largest group of users to execute leases this year. 800,000

600,000 Suburban activity was led by Healthcare, where well over

400,000 SF were executed. Similar to the CBD, tenants in the 400,000 PROJECTED SUPPLY Real Estate and the Banking/Financial Services employment sectors followed in volumes of square feet leased. 200,000

0 MIAMI OFFICE MARKET FOURTH QUARTER 2015

RENTAL RATES INVESTMENT SALES ACTIVITY The last few years have seen landlords bump rates, Reduced supply levels and upward trending rental oftentimes several times a year rates continue to lure the extremely high levels of 2015 followed suit with year-end seeing incremental hikes institutional and foreign capital available and eager still being implemented for both Class A and Class B space. to invest in Miami office product Direct rates for Class A product have increased by 6.0% since Of the 22 competitive buildings traded during 2015, the 2010 and have averaged above $40.00 PSF for the last two great majority (over 75%) were Class B product. The year quarters. Fourth quarter posted the highest quote since produced three sales well above the $500 PSF mark – two in 2Q 2009. Several high floor prime spaces in Brickell (CBD) the CBD Brickell market, including a Class B building, and raised quotes by 6.0% - 8,0% just this quarter. Higher pricing another Class B asset in Suburban Miami Beach. increases have occurred in the Class B segment, where asking rates have grown by 13% since 2010. Most of the year’s sales occurred in the Suburban markets. Going into 2016, five new Suburban (Class B) assets were Some of the more substantial pricing surges have occurred put on the market. in the Suburbs, where one Class A Coral Gables asset hiked quotes by 12% this quarter while two Suburban Airport Class B buildings increased their pricing at year-end by 14% and 29%, respectively. Within this heightened pricing environment, Class B buildings are being renovated, repositioned and increasingly, traded.

Fourth quarter 2015 did end with some of the 2015 ends with lower vacancies while 2016 largest – 90,000+ SF – leases signed by office begins with construction announcements occupiers

MIAMI - DIRECT VACANCY TRENDS, 2010 - 2015 MIAMI - DIRECT QUOTED RENTAL RATE TRENDS, 2010 - 2015 MIAMI - Direct Vacancy Trends, 2010 - 2015 MIAMI - Direct Rental Rate Trends, 2010 - 2015 25.0% $45.00

$40.00 20.0% $35.00

$30.00 15.0% $25.00

$20.00 10.0% $15.00

$10.00 5.0% $5.00

$0.00 0.0% 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 Class A Class B Class A Class B

TOP 2015 LEASE TRANSACTIONS

SUBMARKET OFFICE BUILDING TENANT SF EXECUTED LEASE TYPE INDUSTRY SECTOR Airport Waterford Burger King 150,000 (4Q 2015) Relocation Retail Trade Build to Suit Downtown Miami Center Citi 125,000 (2Q 2015 Renewal Banking Downtown Security Building WeWork 97,000 (4Q 2015) New Real Estate Downtown UM Life Science & Tech Park Cambridge Innovation Center 90,000 (4Q 2015) New Tech Airport Flagler Corporate Center Simply Healthcare 85,000 (2Q 2015) Relocation Healthcare Downtown The Omni Offices Crystal Cruises 75,000 (3Q 2015) New Leisure & Hospitality MIAMI SUBMARKET SPOTLIGHT 2015 DOWNTOWN OFFICE MARKET - CBD 4Q FOURTH QUARTER 2015

SUPPLY AND COMPETITIVE ENVIRONMENT DOWNTOWN Downtown continues to carry the largest amount of available space of any single Direct Vacancy Trends, 2010 - 2015 submarket, accounting for nearly one-third of Miami’s overall vacancy. This Direct Vacancy Trends, 2010 - 2015 30.0% includes three of the largest contiguous availabilities on a Class A basis with three buildings marketing three blocks of space in excess of 100,000 SF each, 25.0% due mostly to several large law firms in the process of relocating to other CBD 20.0% buildings. Nonetheless, on a statistical basis, Class A vacancy has dropped 2010 Delivery considerably - by 6.0 percentage points since 2010. 15.0% of new Class A supply 753,000 SF 10.0% DEMAND– LEASING AND TENANT TOUR ACTIVITY Office users executed almost 1.0 MSF in total 2015 Downtown transactions, 5.0% accounting for the majority (nearly two-thirds) of all CBD leasing during the 0.0% year. Over half of the volume was due in part to extremely large deal sizes – 2010 2011 2012 2013 2014 2015 from 50,000 to 125,000 SF. The majority continue to execute leases in seven Class A Class B competitive Class A buildings. DOWNTOWN Market Share % of Total Transactions by Industry While lawyers, bankers and increasingly real estate-related firms comprise the lion’s share of leasing, three substantial government transactions were executed during the latter part of the year. 2016 will see 350,000 SF of CBD tours. LAW FIRM 22% Banking/Finance, among Miami’s largest occupiers, account for one-third of all CBD tour requirements. REAL ESTATE 17% PRICING GOVERNMENT Class A pricing, at just shy of quotes at $43.00 PSF on average, remains among 15% the market’s highest – one of only three Class A segments to post at this level (following Brickell and Suburban Aventura). Prime high floor spaces, particularly BANKING/FINANCE 14% with unobstructed views, continue to command substantially higher pricing – above the $50.00 PSF mark and extending as high as $65.00 PSF. TECH 11%

Acquisition of both land and other commercial properties intended for DOWNTOWN redevelopment activity remains robust. Benefiting greatly from the elevated Direct Quoted Rental Rate Trends, 2010 - 2015 rental rate and sales pricing activity has been the Class B segment of the market Direct Rental Rate Trends, 2010 - 2015 $50.00 where asking rates remain above $26.00 PSF – a 20% gain since 2010. $45.00 $40.00 CONSTRUCTION $35.00 The second MiamiCentral building began construction at year-end bringing $30.00 total Downtown construction activity to just under 300,000 SF. Of this total, $25.00 approximately 30% has been pre-leased. Both office buildings are scheduled $20.00 for completion by first quarter 2017 in conjunction with the start of the new rail $15.00 $10.00 service/station. Part of the mixed-use, billion dollar All Aboard Florida Rail and $5.00 Grand Central Station Development, a future phase does include a 600,000 SF $0.00 office tower after completion of the rail station. 2010 2011 2012 2013 2014 2015 Class A Class B

DOWNTOWN - 2015 TOP LEASES

OFFICE BUILDING TENANT SF EXECUTED LEASE TYPE INDUSTRY SECTOR Miami Center Citi 125,000 (2Q 2015) Renewal Banking 117 NE 1st Ave - Security Building WeWork 97,000 (4Q 2015) New Real Estate UM Life Science & Technology Cambridge Innovation Center 90,000 (4Q 2015) New to market Tech Park The Omni Offices Cyrstal Cruises 75,000 (3Q 2015) New to market Leisure & Hospitality Miami Center Shook, Hardy & Bacon 55,000 (4Q 2015) Renewal Law Firm The Omni Offices GSA 55,000 (3Q 2015) New Government Miami Tower GSA 50,000 (2Q 2015) Renewal Government SunTrust International Center Attorney General 42,000 (4Q 2015) Expansion/Relocation Government One Biscayne Tower Broad and Cassel Law Firm 26,000 (3Q 2015) Renewal Law Firm One Biscayne Tower Synergy Workspaces 26,000 (1Q 2015) New to market Real Estate DOWNTOWN OFFICE MARKET - CBD FOURTH QUARTER 2015

NEW DEVELOPMENT, REPOSITIONING AND RENOVATION 7

Moore 195 Park NW 36th St

933 6 WYNWOOD

95 1 -MiamiCentral Rail Station EDGEWATER Two Office Towers and Mixed-Use Development

604 NW 1st Ave; 160 NW 7th St

Miami Ave Miami

NE 2nd Ave 2nd NE Biscayne Boulevard Biscayne

A1A ISLAND 95 395 3 GARDENS 2 Bicentennial -Miami Worldcenter 4 Park 27 Acre Mixed Use Project 1,000 Condos & Apartments, 1,800-Room Hotel, 1 2 Port Blvd Convention Center - 2nd and Miami Avenues to 11th St DOWNTOWN DODGE ISLAND 5 Flagler St

Miami Ave Miami Bayfront Park Biscayne Bay

M 8 ia iver 3 -Museum Park m i R BRICKELL Two New Waterfront Museums and an KEY Open 22-acre Park Plaza 41 1075 Biscayne Blvd – I-395 and Biscayne Blvd BRICKELL

Brickell Ave

Park

4 1000 Museum

NEW DEVELOPMENT, REPOSITIONING AND RENOVATION 7

Moore 195 Park NW 36th St

933 6 WYNWOOD 5 Langford Hotel Renovation/Repositioning of Iconic Beaux-Arts 95

Building into a 126-Room Hotel - 121 SE 1st Street EDGEWATER

Miami Ave Miami

NE 2nd Ave 2nd NE Biscayne Boulevard Biscayne

6 The Shops at Midtown 645,000 SF Largest Critical Mass of Value-Oriented Retailers in A1A ISLAND the City - N Miami Ave and NW 36th St 95 395 3 GARDENS Bicentennial 4 Park

1 2 Port Blvd

DOWNTOWN DODGE ISLAND 5 Flagler St 7 Design District Ave Miami Bayfront Park Biscayne Cutting-Edge/Global Brand Luxury Fashion, Art, Bay Design and Culture Destination; Restaurants, Condos, New Contemporary Art 8 M r Museum and Hotels iam ive I-95, North Miami Ave, 38th to 42nd Streets i R BRICKELL KEY 41

BRICKELL

Brickell Ave

Park

8 One River Point 60-Story Condo With Private Club on the Miami River; © 2016 Pricing: $750,000-$12M - 24 SW 4th St 0.5 mi TRANSWESTERN MIAMI SUBMARKET SPOTLIGHT 2015 BRICKELL OFFICE MARKET - CBD 4Q FOURTH QUARTER 2015

SUPPLY AND COMPETITIVE ENVIRONMENT BRICKELL Persistent demand for a Class A Brickell address has lowered vacancy by over Direct VacancyDirect Trends,Vacancy 2010Trends, - 20152010 - 2015 30.0% 50%, ending the year at the one-half million mark. A few years ago, vacant Delivery of new Class A supply 1.2 MSF square footage exceeded the record peak level of 1.3 MSF. The Class B segment 2010-2011 25.0% mirrored this performance and closed fourth quarter at virtually the same vacancy rate. Large office occupiers have extremely limited options for prime, high full 20.0% floor offices, especially with desirable views. 15.0%

The choices going into early 2016 for contiguous trophy space at or in excess of 10.0% 20,000 SF were restricted to two options available directly from the landlord (one of which is in lease negotiation); the remaining option is a sublet. 5.0% 0.0% 2010 2011 2012 2013 2014 2015 DEMAND– LEASING AND TENANT TOUR ACTIVITY Brickell dominated CBD 2015 activity in terms of deal volume execution – 122 Class A Class B leases signed compared to 56 in Downtown. Brickell’s volume of leasing on a SF basis (610,000 SF), however, was less than the 1.0 MSF closed in Downtown. BRICKELL Market Share % of Total Transactions by Industry This is due to the relatively small deal sizes recorded in 2015, as the largest transaction was EFG Capital’s 45,000 SF renewal/expansion. Banking/Finance led the industries executing leases in 2015. Somewhat under typical levels were law BANKING/FINANCE 36% firms as many of the largest occupiers completed their space needs over the last few years. REAL ESTATE 14% Going forward, 2016 CBD law firm tours total only 33,000 SF as of this writing. Bankers, Real Estate and Professional Business services comprise the largest SF requirements, presently at a combined 250,000 SF. LAW FIRM 12%

PRICING Direct rates in Brickell for Class A buildings are the highest quoted rates in Miami. TECH 11% Rising occupancy levels and diminished premier office space for larger users continues to boost landlord pricing hikes in both Class A and Class B buildings. BRICKELL Direct Quoted Rental Rate Trends, 2010 - 2015 Class A tenants touring in 2016 can start the year with asking rate expectations in Direct Rental Rate Trends, 2010 - 2015 the $48.00 - $56.00 PSF range. For tenants looking at the best spaces in well- $50.00 located Class B buildings, quotes will be in the $42.00 to $44.00 PSF. Class B $45.00 $40.00 rates have increased over 17% since 2010. $35.00 $30.00 CONSTRUCTION $25.00 2016 will see delivery of the two Brickell City Centre buildings underway. Totaling $20.00 264,000 SF, 40% of the space has been pre-leased with delivery scheduled during $15.00 the first part of the year. Also scheduled for a later phase is another 600,000 SF $10.00 office tower with important frontage along and at the Brickell Avenue and S.W. $5.00 $0.00 8th Street intersection. 2010 2011 2012 2013 2014 2015 Class A Class B

BRICKELL - 2015 TOP LEASES

OFFICE BUILDING TENANT SF EXECUTED LEASE TYPE INDUSTRY SECTOR 701 Brickell EFG Capital 45,100 (4Q 2015) Renewal/Expansion Financial Services 701 Brickell Expedia 23,000 (3Q 2015) New to market Technology 21,400 Brickell World Plaza Greenspoon Marder Law Firm YTD Expansions Law Firm (1Q-4Q 2015) 801 Brickell Regus 18,000 (4Q 2015) Renewal Real Estate Brickell City Tower Consulate General of Japan 16,000 (4Q 2015) Renewal Other Sabadell Financial Center Kelley Kronenberg Law Firm 15,000 (1Q 2015) New Law Firm Brickell World Plaza Alexion 14,172 (1Q 2015) New to market/ Sublease Healthcare 701 Brickell SCOR Reinsurance 13,000 (1Q 2015) Renewal Financial Services 701 Brickell WE Family Offices, LLC 12,195 (1Q 2015) New Financial Services Sabadell Financial Center Barclays 12,000 (1Q 2015) Renewal Banking BRICKELL OFFICE MARKET - CBD FOURTH QUARTER 2015

NEW DEVELOPMENT, REPOSITIONING AND RENOVATION

Moore 195 Park NW 36th St

933

WYNWOOD

95 EDGEWATER 1 Brickell City Centre 5.4MSF Mixed-Use Project

Two Office Towers, Retail, Condo & Hotel Uses Miami Ave Miami

98 SE 7th St; 78 SW 7th St Ave 2nd NE Biscayne Boulevard Biscayne

A1A 395 ISLAND 95 GARDENS Bicentennial Park

Port Blvd DOWNTOWN

DODGE ISLAND Bayfront Park Flagler St Miami Ave Miami Biscayne Bay

M ia iver 2 SLS Lux Brickell m i R BRICKELL 450 Luxury Condos and 84 Hotel Suites 1 KEY 801 S. Miami Ave 41 6 3 BRICKELL 2 95 4

Brickell Ave

Brickell Bay Dr

Park 5 1

NEW DEVELOPMENT, REPOSITIONING AND RENOVATION

Moore 195 Park NW 36th St

933

WYNWOOD

EDGEWATER

Miami Ave Miami

NE 2nd Ave 2nd NE Biscayne Boulevard Biscayne

1 4 Panorama Tower 83-Story Luxury Rental Apartments Medical Office and Retail Development 1101 Brickell Ave - Brickell Ave on the west and Brickell Bay Drive on the east A1A 395 ISLAND 95 GARDENS Bicentennial Park

Port Blvd DOWNTOWN

DODGE ISLAND Bayfront Park Flagler St Miami Ave Miami Biscayne Bay

M 5 Echo Brickell ia iver m i R BRICKELL 60+-Story 190-Unit Luxury Condo 1 KEY Pricing: $2M up to $8M 1451 Brickell Ave 41 6 3 BRICKELL 2 95 4

Brickell Ave

Brickell Bay Dr

Park 5 1

SUPPLY AND COMPETITIVE ENVIRONMENT CORAL GABLES Direct Vacancy Trends, 2010 - 2015 Gables office buildings for both A and B product ended 2015 with the fourth Direct Vacancy Trends, 2010 - 2015 consecutive year of declining vacancy. Supply was reduced for both sectors by 30.0% Delivery of new supply 396 Alhambra North Tower half, with the Class B segment down to 7.6%, a rate which has not been seen (170,000 SF) since 2006. Among competitive Class A buildings, half are posting direct single 25.0% vacancies with all (but one) under 5.0% - a noted performance considering this set 20.0% of buildings had a collective average vacancy of nearly 26% in mid-2012. Large contiguous offices of 20,000 SF+ are limited to only a few. 15.0%

10.0% DEMAND– LEASING AND TENANT TOUR ACTIVITY

2015 leasing activity totaled 438,000 SF. While down by approximately 10% 5.0% over last year, the number of transactions executed was up by 20% this year. Combined, the Real Estate, Banking/Finance, Law Firm and Media/Entertainment 0.0% sectors executed the bulk of 2015 transactions. 2010 2011 2012 2013 2014 2015 Class A Class B

Looking at upcoming 2016 demand, 367,000 SF will be touring here, many CORAL GABLES of whom will also consider Suburban Airport. By SF requirement, the leading Market Share % of Total Transactions by Industry employment sectors are Transportation/ Utilities, comprising one-third of the total Gables’ requirements, followed by tenants in Financial Services, composed of 20% of the total. REAL ESTATE 22%

PRICING Direct asking rates for the entire Gables market reached a seven-year high. BANKING/FINANCE 19% Average quotes among the 16 competitive Class A assets reached $39.61 with six of the buildings posting average asking rates beginning at $41.15 and extending to $46.29 PSF, on average. Corresponding to low supply levels, Class B product LAW FIRM 15% had year-end rates rising consistently since 2010, with a near $6.00 PSF or 22% gain over this period. MEDIA & ENTERTAINMENT 10% On the investment sales front, the pace of acquisitions (five this year) matched 2014’s sales of institutional-interest office product – a most active environment CORAL GABLES compared to the previous five-year period, when only four buildings in total traded. Direct Quoted Rental Rate Trends, 2010 - 2015 Direct Quoted Rental Rate Trends, 2010 - 2015 $40.00 CONSTRUCTION Only one small office building with 40% reported as pre-leased remains underway $35.00 and scheduled for completion by 2Q 2016. Current availabilities total 27,000 SF of $30.00 office space, with an asking rate of $45.00 per SF. Planned development includes $25.00

Mediterranean Village at Ponce Circle, located on 6.7 acres east of Ponce de Leon $20.00 Boulevard in between Sevilla and Palermo Avenues. The $500 million mixed- $15.00 use development has received its zoning approvals and is now scheduled for construction by third quarter 2016. The office portion will comprise 290,000 SF. $10.00 $5.00 Two other small, mixed-use projects with an office component remain proposed $0.00 but with no further construction/completion dates. The office segments are 2010 2011 2012 2013 2014 2015 Class A Class B slated to have 60,000 SF each. CORAL GABLES - 2015 TOP LEASES

OFFICE BUILDING TENANT SF EXECUTED LEASE TYPE INDUSTRY SECTOR Bacardi HQ Quirch Foods 30,000 (2Q 2015) Expansion Manufacturing Columbus Center Regus 18,000 (1Q 2015) New Real Estate 2020 Ponce AMC Networks Int'l Latin America 16,400 (4Q 2015) Expansion/Relocation Media & Entertainment Merrick Plaza Ascendant Insurance 15,000 (1Q 2015) Relocation Financial Services 2020 Salzedo (UC) Codina Partners 14,000 (2Q 2015) New Real Estate 255 Alhambra Amadeus 13,000 (3Q 2015) Renewal/Expansion Business Services 2600 Douglas GEICO 10,000 (4Q 2015) Relocation Financial Services 396 Alhambra Terra Networks 10,000 (4Q 2015) Sublease Tech 255 Alhambra Coral Gables Trust 7,800 (4Q 2015) Renewal/Expansion Banking BAC Colonnade Taipei Economic & Cultural Office 7,000 (4Q 2015) Renewal Other CORAL GABLES OFFICE MARKET FOURTH QUARTER 2015

NEW DEVELOPMENT, REPOSITIONING AND RENOVATION

To CBD

SW 8th St 41 95

9 2 1 3 Coral Way 8 Miracle Mile CORAL 10 1 Mediterranean Village at 1 Douglas Rd Ponce Circle GABLES $500M Mixed-Use to Include One Office Tower 3001 Ponce de Leon Blvd 1 Bird Ave 7 4

Le Jeune Rd / SW 42nd Ave Red Rd Biscayne Bay

UNIVERSITY OF MIAMI

6 SW 72nd St 1 5

COCONUT GROVE 2 2020 Salzedo 214-Luxury Apartments, One Office Building and

3 2222 Ponce 4 4311 Ponce 5 The Shops and Offices at Two Office Towers with Retail Mixed-Use Building to Include Office, Luxury Sunset Place 2222 Ponce de Leon Blvd Residential Villas and Retail Space Repositioning 515,000 SF Retail/Entertainment/ 4311 Ponce de Leon Blvd Office Lifestyle Center - 5701 Sunset Dr CORAL GABLES OFFICE MARKET FOURTH QUARTER 2015

NEW DEVELOPMENT, REPOSITIONING AND RENOVATION

To CBD

SW 8th St 41 95

9 2 1 3 Coral Way 8 Miracle Mile CORAL 10

GABLES 1 Douglas Rd 6 Sunset Office Center Mixed-Use Building 1 To Include Office and Retail Space Bird Ave 7 1515 Sunset Dr 4

Le Jeune Rd / SW 42nd Ave Red Rd Biscayne Bay

UNIVERSITY OF MIAMI

6 SW 72nd St 1 5

COCONUT GROVE 7 Aviva Coral Gables Two Luxury Rental Apartment Buildings

8 Aloft Hotel 9 Marriott Residence Inn 10 The Mile 137-Room Hotel 167-Room Hotel 120-Unit Apartment Building 2425 Le Jeune Rd 2051 Le Jeune Rd 3622 Coral Way MIAMI SUBMARKET SPOTLIGHT 2015 MIAMI AIRPORT OFFICE MARKET 4Q FOURTH QUARTER 2015

SUPPLY AND COMPETITIVE ENVIRONMENT MIAMI AIRPORT The strength of the Class A segment proved itself with year-end’s 6.6% vacancy Direct Vacancy Trends, 2010 - 2015 – a decade low for supply levels. Positive absorption was the highest of any Direct Vacancy Trends, 2010 - 2015 submarket and accounted for 41% of Miami’s total new occupancy gains during 25.0% the year. 20.0%

Reduced supply has also limited large contiguous (direct, 20,000+ SF) Class A 15.0% offerings; with the relocation of Univision, look to a new 37,000 SF space in 2016 at Downtown Doral. Despite Class B vacancy posting twice as high, that positive 10.0% absorption also ranked highest among the metro’s B submarkets. 5.0%

DEMAND– LEASING AND TENANT TOUR ACTIVITY 0.0% 2010 2011 2012 2013 2014 2015 Good leasing activity abounds, made up of new-to-market and internal growth. Class A Class B Over1.1 MSF were executed in 2015, accounting for one-third of the metro’s total leasing activity. Healthcare led all industries in leasing with some of the largest MIAMI AIRPORT transactions signed metro-wide. Combined with Retail, Banking/Finance and Real Market Share % of Total Transactions by Industry Estate, these office users executed a total of 825,000 SF or 71% of the Airport’s total activity year-to-date. HEALTHCARE 33% 2016 demand based on tracked tour activity of just under 350,000 SF indicates most are existing Airport users. The largest industry sector is Transportation/ RETAIL TRADE 14% Utilities.

PRICING BANKING/FINANCE 14% Continued rent appreciation has marked Class A buildings, with average rates remaining well-above $30.00 PSF for all of the last four quarters. Among the prime competitive set, the last two quarters have witnessed increases in asking REAL ESTATE 10% rates mostly on the high end and with hikes at just under 5.0%. Look for a continuation of either reduced or no free rent. MIAMI AIRPORT Direct QuotedDirect Quoted Rental Rental Rate Rate Trends, Trends, 20102010 - 2015 - 2015 CONSTRUCTION $35.00 In addition to Burger King’s 150,000 SF lease commitment at the prestigious $30.00 Waterford office park for its new build-to-suit headquarters, the TIAA-CREF/Allianz Real Estate of America ownership will begin a new spec building at the park for $25.00 just under 250,000 SF. Look to asking rates at the 10-story asset to fall within the $20.00

$35.00 full service range, which includes operating expenses of approximately $15.00 $10.00. $10.00

$5.00

$0.00 2010 2011 2012 2013 2014 2015 Class A Class B

MIAMI AIRPORT - 2015 TOP LEASES

OFFICE BUILDING TENANT SF EXECUTED LEASE TYPE INDUSTRY SECTOR Relocation Build Waterford Burger King 150,000 (4Q 2015) Retail Trade to Suit Flagler Corporate Center Simply Healthcare 85,000 (2Q 2015) Relocation Healthcare Crossroads at Dolpin Comm Ctr Undisclosed 55,000 (2Q 2015) Renewal/Expansion Healthcare Waterford Humana CAC 55,000 (3Q 2015) Relocation/New to market Healthcare Waterford Regus 48,400 (2Q 2015) Renewal Real Estate 9250 Doral Univision 40,000 (3Q 2015) New Media & Entertainment Doral Office Tower U.S. Century Bank 35,000 (3Q 2015) Renewal Banking Waterford National General Insurance 30,000 (4Q 2015) Relocation Financial Services The Landing at MIA Norwegian Cruise Line 28,400 (2Q 2015) Expansion Leisure & Hospitality The Landing at MIA TissueTech, Inc. 28,000 (4Q 2015) New Healthcare MIAMI AIRPORT OFFICE MARKET FOURTH QUARTER 2015

NEW DEVELOPMENT, REPOSITIONING AND RENOVATION

NW 74th St 1 MIAMI AIRPORT 27 FLORIDA’S TURNPIKE 2 Le Jeune Rd

EXTENSION 3 7 NW 36th St 4 5 1 Doral Commons 300 Homes and 140,000 SF Retail Community

DOLPHIN MALL

Dolphin Expy 6

Flagler St

3 Downtown Doral 4 Oasis and Park Square at Doral 5 Aloft Hotel/Retail $1.0 Billion Redevelopment of Existing Park into Office Development; 300,000 SF of Redevelopment of Old Office Asset into 125- Master Planned Upscale Office/Residential/ Retail/Entertainment Room Hotel with 9,000 SF of Retail Retail Village

6 Waterford Office Park 7 3565 NW 36th St 8 CityPlace Doral New 10-Story, 246,000 SF Spec Office Building 9.7 Acre Vacant Site for Large Scale 2.2 MSF to Include New HQ for Burger King Development Potential 300,000 SF Retail/Entertainment 280,000 SF Office/1,000 Residences MIAMI OFFICE MARKET FOURTH QUARTER 2015

MIAMI OFFICE MARKET STATISTICS

AVERAGE DIRECT OVERALL QUOTED RENT INVENTORY DIRECT SF VACANCY SUBLEASE TOTAL SF VACANCY Q4 NET YTD NET UNDER PSF (FULL SUBMARKET (SF) VACANT RATE SF VACANT RATE ABSORPTION ABSORPTION CONSTR. (SF) SERVICE) URBAN SUBMARKETS Downtown Class A 4,783,477 806,095 16.9% 6,300 812,395 17.0% 3,828 69,504 277,000 $42.87 Downtown Class B 2,045,283 425,097 20.8% 2,918 428,015 20.9% 11,292 -2,400 0 $26.28 Downtown Overall 6,828,760 1,231,192 18.0% 9,218 1,240,410 18.2% 15,120 67,104 277,000 $37.38 Brickell Class A 4,366,276 540,932 12.4% 18,708 559,640 12.8% 2,705 32,134 264,228 $46.23 Brickell Class B 1,917,476 242,340 12.6% 21,829 264,169 13.8% 28,759 42,488 0 $33.49 Brickell Overall 6,283,752 783,272 12.5% 40,537 823,809 13.1% 31,464 74,622 264,228 $41.32 Urban Submarkets Total CBD Class A 9,149,753 1,347,027 14.7% 25,008 1,372,035 15.0% 6,533 101,638 541,228 $44.07 CBD Class B 3,962,759 667,437 16.8% 24,747 692,184 17.5% 40,051 40,088 0 $29.27 CBD Overall 13,112,512 2,014,464 15.4% 49,755 2,064,219 15.7% 46,584 141,726 541,228 $38.87 SUBURBAN SUBMARKETS Aventura Class A 724,301 48,387 6.7% 3,128 51,515 7.1% 25,342 64,180 0 $45.33 Aventura Class B 323,257 2,935 0.9% 2,068 5,003 1.5% 0 14,830 0 $38.41 Aventura Overall 1,047,558 51,322 4.9% 5,196 56,518 5.4% 25,342 79,010 0 $43.51 Coconut Grove Class A 515,332 17,968 3.5% 1,700 19,668 3.8% 4,900 527 0 $32.47 Coconut Grove Class B 378,642 29,821 7.9% 0 29,821 7.9% 6,730 8,360 0 $33.92 Coconut Grove Overall 893,974 47,789 5.3% 1,700 49,489 5.5% 11,630 8,887 0 $33.61 Coral Gables Class A 3,590,605 431,790 12.0% 5,640 437,430 12.2% 16,835 125,326 56,000 $38.87 Coral Gables Class B 1,880,741 143,556 7.6% 0 143,556 7.6% 5,767 28,744 0 $32.74 Coral Gables Overall 5,471,346 575,346 10.5% 5,640 580,986 10.6% 22,602 154,070 56,000 $36.93 Kendall Class A 831,145 106,039 12.8% 0 106,039 12.8% 4,103 31,969 0 $37.58 Kendall Class B 1,578,693 146,899 9.3% 0 146,899 9.3% 40,906 79,932 $25.61 Kendall Overall 2,409,838 252,938 10.5% 0 252,938 10.5% 45,009 111,901 0 $28.91 Miami Airport Class A 4,834,936 318,818 6.6% 0 318,818 6.6% 91,656 208,551 0 $30.50 Miami Airport Class B 3,967,084 535,780 13.5% 19,714 555,494 14.0% 124,602 123,934 0 $25.05 Miami Airport Overall 8,802,020 854,598 9.7% 19,714 874,312 9.9% 216,258 332,485 0 $26.97 Miami Beach Class A 762,682 25,889 3.4% 4,140 30,029 3.9% 11,383 -330 0 $37.84 Miami Beach Class B 947,426 146,665 15.5% 0 146,665 15.5% 2,628 16,852 0 $36.07 Miami Beach Overall 1,710,108 172,554 10.1% 4,140 176,694 10.3% 14,011 16,522 0 $36.60 Miami Lakes Class A 314,647 89,858 28.6% 0 89,858 28.6% -810 -26,520 0 $27.28 Miami Lakes Class B 541,508 123,721 22.8% 5,426 129,147 23.8% -6,459 -13,219 0 $21.81 Miami Lakes Overall 856,155 213,579 24.9% 5,426 219,005 25.6% -7,269 -39,739 0 $23.71 Suburban Submarkets Total Suburban Class A 11,573,648 1,038,749 9.0% 14,608 1,053,357 9.1% 153,409 403,703 56,000 $35.57 Suburban Class B 9,617,351 1,129,377 11.7% 27,208 1,156,585 12.0% 174,174 259,433 0 $27.21 Suburban Overall 21,190,999 2,168,126 10.2% 41,816 2,209,942 10.4% 327,583 663,136 56,000 $30.86 MIAMI-DADE TOTAL Overall Class A 20,723,401 2,385,776 11.5% 39,616 2,425,392 11.7% 159,942 505,341 597,228 $40.32 Overall Class B 13,580,110 1,796,814 13.2% 51,955 1,848,769 13.6% 214,225 299,521 0 $27.93 Overall Class A & B 34,303,511 4,182,590 12.2% 91,571 4,274,161 12.5% 374,167 804,862 597,228 $34.54

CONTACT METHODOLOGY Roberta Steen│Market Analyst The information in this report is the result of Transwestern’s ongoing analysis of key for 305.808.7315 lease office buildings. Quarterly statistics are based on a defined inventory of multi-tenant, [email protected] Class A and Class B product of 30,000 SF+; this excludes medical, government and most office condos.

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