Boston Market Overview BostonBoston OfficeOffice SubmarketSubmarket MapMap Q3Q3 StatisticsStatistics North Station Market Size: 2.8 MSF Vacancy: 12.0% YTD Absorption: 76K Avg. Class A: $33.00
Overall Market Size: 67.3 MSF Vacancy: 11.7% Financial District YTD Absorption: 1,736K Market Size: 33.8 MSF Avg. Class A: $43.30 Vacancy: 11.2% YTD Absorption: 896K Avg. Class A: $43.74
South Station Market Size: 1.5 MSF Back Bay Vacancy: 12.3% Market Size: 12.6 MSF YTD Absorption: 8K Vacancy: 10.1% Avg. Class B: $21.86 YTD Absorption: 364K Avg. Class A: $44.30 Seaport District Market Size: 4.9 MSF Vacancy: 15.3% YTD Absorption: 271K Avg. Class A: $29.50 Where Is the Class “A” Market ? TaleTale ofof TwoTwo CitiesCities
Average Rent $70 Market Driver Small Tenant
J.M. Connors Jr. $65 Spectrum Equity • One International Pl. • 200 Clarendon Street ABN-AMRO • One International Pl. Martingale Asset Mgmt. $60 • 222 Berkeley Street CC Growth • One International Pl.
$55 UBS • 1 Post Office Square Bingham McCutchen • 1 Federal Street $50
$45 Lahive & Cockfield • 1 Post Office Square $40 DLA Piper Wellington Spaulding & Slye Shepherd Kaplan LLC • 33 Arch Street Management • 1 Post Office Square • 125 Summer Street $35 • 100 Federal Street
$30 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 AskingAsking RatesRates onon thethe RiseRise
Building Name Floor Old Asking New % Q4 2005 Asking* Increase 600 Atlantic Avenue 26 $36.00 $47.00 31%
101 Federal Street 20 $38.00 $45.00 18%
Prudential Tower 33 $45.00 $53.00 18%
1 Post Office Square 37 $49.00 $64.00 31%
Asking lease rate trends in selected premium view suites As of 9/28/06 Renew vs. Relocate — Who Wins? Where Are The Rents Going? Complete SF Complete 1,000,000 1,200,000 1,400,000 1,600,000 200,000 400,000 600,000 800,000 Forecasting FutureRents Forecasting FutureRents 0
1990 268,672 1991 1,449,782 1992 508,157 1993 750,000
1994 0
1995 0
1996 0
1997 0
1998 0
1999 0 2000 1,089,000 2001 913,933 2002 942,143 2003 1,024,000
2004 1,023,309
2005
2006
2007
2008
2009 2010 Russia Wharf/Fan Pier (1) 1,000,000 2011 South Station 960,000 Complete SF Complete 1,000,000 1,200,000 1,400,000 1,600,000 200,000 400,000 600,000 800,000 Forecasting FutureRents Forecasting FutureRents 0
1990 268,672
1991 1,449,782 • • • Average TI: $47.10 Average TI: Average RR:$28.10 TRG Scudder Fleet 1992 508,157 1993 750,000
1994 0
1995 0
1996 0 Rental Rate 0 1997 70%
1998 0
1999 0 • • • Average TI: $51.50 Average TI: Average RR:$48.80 2000 1,089,000 Palmer &Dodge Holland &Knight Foley Hoag&Nutter 2001 913,933 2002 942,143 2003 1,024,000
2004 1,023,309
2005
2006 Rental $63.44 $58.56 $68.32 Rate 30% 20% 2007 40%
2008
2009 2010 Russia Wharf/Fan Pier (1) 1,000,000 2011 South Station 960,000 Where Is The Demand? LargeLarge TenantsTenants inin thethe MarketMarket 24-3624-36 MonthsMonths PriorPrior toto LEDLED
Company Address Commitment Date LED
One Post Office Square 10/31/07 152,575 SF March ‘05
399 Boylston Street 11/1/07 93,865 SF December ‘05
75 State Street 3/31/08 110,323 SF December ‘05
2 International Place 4/30/09 229,537 SF September ‘06 FinancialFinancial ServicesServices ChangingChanging ofof thethe GuardGuard
Negative Absorption Positive Absorption
150,000 SF
Expanding Outside of Boston 100,000 SF
150,000 SF
140,000 SF Uncertain Futures, For Sale LawLaw FirmsFirms Who Will Be the First to Develop? NewNew ConstructionConstruction PermittedPermitted SitesSites
Russia Wharf • Equity Office • 500,000 SF of Office Space • 31,000 SF Retail/ Restaurants • Occupancy 2010 South Station • Hines/Tufts • 960,000 SF • 680 Ft Tower • 41 Stories Russia Wharf • Occupancy 2010
South Station NewNew ConstructionConstruction PermittedPermitted SitesSites
Fallon Development Fan Pier • Fallon/Mass Mutual • 2.9 MSF • 1.2 MSF Office Building • 18 Stories • Occupancy 2009
Boston Properties 888 Boylston • Boston Properties • 258,000 SF • 31,000 Retail Space • 11 Stories • Occupancy 2010 NewNew ConstructionConstruction Non-PermittedNon-Permitted SitesSites
Morgan Stanley Development Filene’s at Downtown Crossing
Congress/Purchase Street 133 Federal Street
Suburban Market Overview Suburban Office Market Inventory
2006 Q3 Total Suburban Market: 80M s.f.
495/NORTH495/NORTH NORTHWESTNORTHWEST 10.510.5 MM s.f.s.f. NORTHNORTH 12.612.6 MM s.f.s.f. 29.7%29.7% AvailableAvailable 11.311.3 MM s.f.s.f. 24.2%24.2% AvailableAvailable 18.6%18.6% AvailableAvailable
CAMBRIDGECAMBRIDGE.. 15.915.9 MM s.f.s.f. 495/MASS495/MASS PIKEPIKE 128/MASS128/MASS PIKEPIKE 11.4%11.4% AvailableAvailable 12.912.9 MM s.f.s.f. 18.818.8 MM s.f.s.f. 22.7%22.7% AvailableAvailable 13.7%13.7% AvailableAvailable BOSTONBOSTON 58.258.2 MM s.f.s.f. 13.9%13.9% AvailableAvailable
SOUTHSOUTH 495/SOUTH495/SOUTH 11.511.5 MM s.f.s.f. 2.22.2 MM s.f.s.f. 19.7%19.7% AvailableAvailable 21.6%21.6% AvailableAvailable Availability/Rents by Quarter (2004-2006)
Rent Bar = Average Class A (at Top) – Average Class B (at Bottom) Boston Cambridge Suburbs 128/Mass Pike $60.00 35.0%
$55.00 30.0% $50.00
$45.00 25.0%
$40.00 20.0% $35.00 15.0% $30.00
$25.00 10.0%
$20.00 5.0% $15.00
$10.00 0.0% ‘04 ’05 ’06 YTD ’04 ‘05 ‘06 YTD ‘04 ‘05 ‘06 YTD ‘04 ’05 ‘06 YTD
Rents (Top = A / Bottom = B ) % Available Path of Improvement in the Suburbs Class A Office | 2006 Q3
Avail High 42.5% Current Avail 21.6% Rent Low $20.36 psf Current Rent $32.00 psf
Avail High 42.0% Avail High 40.9% Current Avail 34.3% Current Avail 32.1% Rent Low $12.00 psf Rent Low $16.84 psf Current Rent $17.00 psf Current Rent $23.00 psf BURLINGTON
Avail High 39.2% Current Avail 23.4% LITTLETON CONCORD Rent Low $20.02 psf Current Rent $31.00 psf
Avail High 26.6% Current Avail 11.3% LEXINGTON Rent Low $25.00 psf Current Rent $38.00 psf
Avail High 18.7% Current Avail 7.9% WALTHAM Rent Low $19.00 psf Current Rent $26.00 psf CAMBRIDGE
Avail High 32.5% Current Avail 12.2% BOSTON
Rent Low $24.00 psf FRAMINGHAM Current Rent $40.00 psf MARLBOROUGH/ Avail High 20.8% WESTBOROUGH Current Avail 12.6%
Rent Low $40.00 psf Current Rent $60.00 psf
Avail High 46.7% Current Avail 32.4%
Rent Low $17.00 psf Current Rent $24.00 psf Suburban Active Requirements By Target Market As Of 10/10/06
Northeast North 3% (4) 9% (17) 495/North 20% (45) South 11% (23)
495/South 495/Mass Pike 17% (35) 12% (15)
128/Mass Pike 12% (94) Northwest 16% (51) Required Square Feet: 9,907,850 s.f. Average Requirement Size: 34,887 s.f. Median Requirement Size: 15,000 s.f. Number of Requirements: 284 Suburban Active Requirements By Type As Of 10/12/06
New to Market Looking to Buy 2% (18) 2% (4)
Additional Space 9% (21)
Relocation w/Contraction 12% (24)
Relocation 56% (163)
Relocation w/ Additional Space 19% (54)
Required Square Feet: 9,907,850 s.f. Average Requirement Size: 34,887 s.f. Median Requirement Size: 15,000 s.f. Number of Requirements: 284 128 Mass Pike Proposed Developments
How many projects are in the pipe line in Waltham today? 13 Proposed Developments
Lexington Technology Park 1 125 Spring Street, 200-500 Patriot Way, Lexington Owner: Patriot Partners Proposed Square Feet: 631,600 1 Reservoir Woods 920-940 Winter Street, Waltham 2 Owner: Davis Marcus Partners Proposed Square Feet: 650,000
175 Wyman Street, Waltham 3 Owner: Equity Office Properties Proposed Square Feet: 400,000
4 Waltham Office Center 12 470,486,504 Totten Pond Road, Waltham Owner: Boston Properties Proposed Square Feet
130 Third Avenue, Waltham 5 Owner: Boston Properties 2 Proposed Square Feet: 230,000
6 77 Fourth Avenue, Waltham 3 Owner: Boston Properties Proposed Square Feet: 204,000 4 Overlook Center 21 Hickory Drive, Waltham 7 13 5 Owner: Neelon Properties 6 Proposed Square Feet: 110,000
8 Polaroid, Waltham 7 Owner: Related Companies Land Proposed Square Feet: 1.5 million Area: 106 Acres 8 9 201 Jones Road, Waltham Owner: Boston Properties 9 11 Proposed Square Feet: 150,000
133 Boston Post Road, Weston 10 Owner: Boston Properties 10 Proposed Square Feet: 359,000
11 40 Green Street, Waltham Owner: Opus Development/Sam Park Proposed Square Feet: 524,000
1560 Trapelo Road, Waltham 12 Owner: Bulfinch Co. Proposed Square Feet: 61,000
13 40 Sylvan Road, Waltham Owner: Davis Marcus Partners Proposed Square Feet: 400,000 Suburban Market Trends
• Migration to secondary markets • Class A rates are climbing • Class B will benefit • Large blocks virtually gone • Lack of plug & play • Average size requirement is growing • Sublease space – No longer a factor • Speculative development has begun