2014

Office

OFFICE MARKET SURVEY | JACKSONVILLE 2014

Overall Market

[ MARKET TOTALS ]

The Jacksonville office market showed modest gains in levels of occupancy for both Class “A” and Class “B” space. A retreat in the vacancy rate, from 2012’s 18.9%, to 17.1% in 2013, continues a 5 year trend of moderate vacancy declines. Absorption trends were mixed: there was slightly less overall absorption in 2013 from the previous year, but also unrecognized absorption gains in sublease space inventory, which fell sharply. Despite some positive trends, lease rates remained flat among all building classes, and aggressive landlord concessions (rent abatement, tenant improvement allowance) are a necessary component of any new lease transaction. Following historical trends, health/medical and financial services sectors remained the most active office users.

JAC K SO N VI LLE REAL ESTATE MARKET OVERVIEW (CLASS “A” AND “B”) YEAR END 2012 YEAR END 2013 TOTAL INVENTORY SF 26.5 MILLION TOTAL INVENTORY SF 26.6 MILLION

VACANCY RATE 18.9% VACANCY RATE 17.1%

ABSORPTION 815,000 SF ABSORPTION 536,614 SF

COMPLETED CONSTRUCTION 152,000 SF* COMPLETED CONSTRUCTION 62,400 SF*

* Excludes Build-To-Suits

SIGNIFICANT 2013 LEASES

PROJECT NAME LOCATION SIZE (SF) TENANT SUBMARKET

CAMBRIDGE EAST 8171 BAYMEADOWS WAY W. 66,202 AMERIHEALTH BUTLER/BAYMEADOWS

BUTLER PLAZA 5022 GATE PARKWAY 51,040 DEUTSCHE BANK SOUTHSIDE

PROMENANCE/FREEDOM 8935 DIX ELLIS TRAIL 33 323 INCOMM BUTLER/BAYMEADOWS COMMERCE CENTER

EVERBANK CENTER 301 WEST BAY STREET 31,920 C2C NORTHBANK

QUANDRANT II 4655 SALISBURY ROAD 30,000 FAMILY SUPPORT SERVICES BUTLER/BAYMEADOWS

SIGNIFICANT 2013 SALES

BUILDING/ADDRESS BUYER/SELLER SIZE (SF) PURCHASE PRICE/PSF SUBMARKET

PARKWAY PROPERTIES/ 1,016,689 BUTLER/ DEERWOOD SOUTH $130,000,000/$128 FLAGLER PROPERTIES (8 BUILDINGS) BAYMEADOWS GREENFIELD ACQUISITION/ 948,704 BUTLER/ LIBERTY PORTFOLIO $109,700,000/$116 LIBERTY PROPERTY TRUST (11 BUILDINGS) BAYMEADOWS

IP CAPITAL PARTNERS/ 841 PRUDENTIAL DRIVE 515,000 $55,500,000/$108 SOUTHBANK SOUTHSHORE LLC

282,271 (1 OF 13 BUTLER/ 8001 BAYMEADOWS WAY LONE STAR FUNDS/JDM PROPERTIES $43,800,000/$155 ACQUIRIED) BAYMEADOWS 5200/5210/5220 ROSEMONT REALTY/ BUTLER/ 298,000 $31,300,000/$105 BELFORT ROAD NW MUTUAL BAYMEADOWS

SIGNIFICANT 2013 CONSTRUCTION ACTIVITY

BUILDING COMPLETION DATE SIZE (SF) DEVELOPER SUBMARKET

UF HEALTHCARE/15255 MAX 1ST QUARTER 2015 210,000 LANDMARK HEALTHCARE NORTHSIDE LEGGETT PARKWAY

Information deemed reliable, but not guaranteed.

Peter Crolius Mark Scott 550 Water Street 904.281.0003 904.281.0003 Suite 1225 [email protected] [email protected] Jacksonville, FL 32202 2 2013 OFFICE MARKET

AVERAGE ANNUAL PROJECT NAME INVENTORY (SQ FT) VACANCY RATE ABSORPTION GROSS RATE

DOWNTOWN NORTH BANK 4,990,280 21.7% (24,752) $18.17

DOWNTOWN SOUTH BANK 2,099,453 10.2% 62,961 $20.25

ARLINGTON/NORTHSIDE 705,342 31.7% (38,946) $12.25

SOUTHSIDE 3,046,775 23.5% 42,525 $15.25

BEACHES 786,366 8.3% 21,875 $24.50

MANDARIN 1,487,945 13.6% 52,825 $17.25

BUTLER/BAYMEADOWS 6,387,931 12.4% 279,843 $17.50

WESTSIDE 97,653 10.4% 6,583 $15.47 CLAY COUNTY/ORANGE PARK 683,954 24.4% (14,397) $19.76 TOTAL 20,285,699 17.0% 388,517

2013 FLEX MARKET

AVERAGE ANNUAL NET RATE SUBMARKET INVENTORY (SQ FT) VACANCY RATE ABSORPTION (OFFICE/WAREHOUSE)

ARLINGTON/NORTHSIDE 285,082 24.0% 10,112 $9.00/$5.00

SOUTHSIDE/BUTLER- 5,185,282 20.0% 50,227 $8.00/$6.00 BAYMEADOWS/MANDARIN

BEACHES 103,982 11.3% 5,425 $10.00/$6.00

WESTSIDE 287,507 3.3% 5,500 $8.00/$5.00

CLAY COUNTY/ORANGE PARK 367,632 14.7% 32,687 $9.00/$5.00

TOTAL 6,229,485 18.2% 103,951

2012 FLEX MARKET JACKSONVILLE, FLORIDA

3 ABOUT GRAHAM & COMPANY

Founded in 1978, Graham & Company is a full-service commercial real estate firm based in Birmingham. With offices in Birmingham and Huntsville, Alabama and Jacksonville and Panama City, Florida, the company offers professional services including sales, leasing, property management, appraisal, consulting, investment and development. In response to client demand, Graham has systematically extended its range of services and geographic reach, now serving clients throughout Alabama and several surrounding states.

AFFILIATIONS

NAIOP–National Association of Industrial & Office Properties SIOR–Society of Industrial & Office Realtors CRE–Counselors of Real Estate ICSC–International Council of Shopping Centers IREM–Institute of Real Estate Management CCIM–Certified Commercial Investment Member BOMA–Building Owners and Managers Association LEED–Leadership in Energy and Environmental Design ULI–Urban Land Institute

grahamcompany.com

MEASURE US BY OUR ACTIONS

| BIRMINGHAM | HUNTSVILLE | JACKSONVILLE | GULF COAST

110 Office Park Drive 355 Quality Circle 550 Water Street 100 Richard Jackson Boulevard Suite 200 Suite E Suite 1225 Suite 115 Birmingham, AL 35223 Huntsville, AL 35806 Jacksonville, FL 32202 Panama City Beach, FL 32407 TEL 205.871.7100 TEL 256.382.9010 TEL 904.281.0003 TEL 850.563.1500 FAX 205.871.3331 FAX 256.382.9011 FAX 904.281.0849 FAX 850.563.1504

GRAHAM & COMPANY PERSONNEL – JACKSONVILLE

FOUNDING PRINCIPALS MANAGING BROKER BUILDING ENGINEER Steve Graham, MAI, CRE Peter Crolius, SIOR Rick Lee Mike Graham, CPM, SIOR SENIOR DIRECTOR/INDUSTRIAL GROUP ADMINISTRATION MANAGING PARTNER Mark Scott, SIOR Genny Spence Gardner Lee, CPM, SIOR PROPERTY MANAGEMENT Ron Kirkland, RPA, FMA