2015

Office

OFFICE MARKET SURVEY | JACKSONVILLE 2015

Overall Market

[ MARKET TOTALS ] The Jacksonville office market showed evidence of a continuing slow-but-steady recovery in 2014 from its recessionary past. By traditional standards, both Class “A” and Class “B” office space showed modest gains, though offset by a persistent lack of rent growth. The overall vacancy rate decreased slightly year-over-year (15.9% vs 17.1%), and absorption grew slightly over the previous year. Any evidence of rate growth was limited to the Butler/Baymeadows submarket, where relatively strong demand for Class “A” suburban space continued to follow historical trends. While leasing activity advanced modestly, office building sale activity was remarkably strong, as investors sought relatively higher yield opportunities in an undervalued market. Investment sales included both downtown buildings (Bank of America Tower, Wells Fargo Centre and the Aetna Building), as well as suburban portfolios (Flagler Center and DRA portfolio). JAC K SO N VI LLE REAL ESTATE MARKET OVERVIEW (CLASS “A” AND “B”) YEAR END 2013 YEAR END 2014 TOTAL INVENTORY SF 51,767,024 MILLION TOTAL INVENTORY SF 51,767,024 MILLION

VACANCY RATE 17.1% VACANCY RATE 15.9%

ABSORPTION 536,614 SF ABSORPTION 608,230 SF

COMPLETED CONSTRUCTION 62,400 SF* COMPLETED CONSTRUCTION N/A

* Excludes Build-To-Suits SIGNIFICANT 2014 LEASES

PROJECT NAME LOCATION SIZE (SF) TENANT SUBMARKET

CYPRESS POINT BUSINESS PARK CYPRESS PLAZA DRIVE 34,000 SELENE FINANCE BUTLER/BAYMEADOWS

MERIDIAN BUILDING 5022 GATE PARKWAY 34,000 DB SERVICES, INC. BUTLER/BAYMEADOWS

JACKSONVILLE 121 W. FORSYTH STREET 33,000 TRANSIT AUTHORITY BUTLER/BAYMEADOWS

RIVERPLACE TOWER 1301 RIVERPLACE BLVD. 30,000 ADECCO DOWNTOWN

GRAN PARK @ AVENUES 7406 FULLERTON STREET 29,000 ADVANTAGE SALES BUTLER/BAYMEADOWS SIGNIFICANT 2014 SALES

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

CROCKER PARTNERS/ BUTLER/ FLAGLER CENTER 1,378,350 $133,200,000/$97 (12 BUILDINGS) FLAGLER DEVELOPMENT BAYMEADOWS

301 W. BAY STREET RILEA GROUP, LLC/EIAD 956,201 $47,400,000/$50 NORTHBANK

HERTZ INVESTMENT GROUP/ 50 N. 724,852 $88,000,000/$121 NORTHBANK PARMENTER BANYAN STREET CAPITAL/ ONE INDEPENDENT DRIVE 662,307 $75,300,000/$114 NORTHBANK PARKWAY/EOLA DEERWOOD PORTFOLIO PARKWAY PROPERTIES/ 251,302 $33,300,000/$133 SOUTHSIDE (3 BUILDINGS) FLAGLER DEVELOPMENT

LINGERFELT COMMONWEALTH/ 1301 RIVERSIDE BOULEVARD 420,000 $29,000,000/$69 SOUTHBANK GATE PROPERTIES

550 WATER STREET CSX/ BP GRAHAM 220,000 $30,000,000/$136 NORTHBANK

KAUFMAN REALTY GROUP/ BUTLER/ QUADRANT AT SOUTHPOINT 216,510 $23,500,000/$108.54 COHASSET CAPITAL BAYMEADOWS

550 WATER STREET CSX/BP GRAHAM, LLC 220,000 $30,000,000/$136 NORTHBANK SIGNIFICANT 2014 CONSTRUCTION ACTIVITY

BUILDING COMPLETION DATE SIZE (SF) DEVELOPER SUBMARKET

UF HEALTHCARE/15255 MAX 1ST QUARTER 2015 210,000 LANDMARK HEALTHCARE NORTHSIDE LEGGETT PARKWAY BUTLER/ 7741 POINT MEADOWS DRIVE 1ST QUARTER 2015 28,000 1ST QUARTER 2015 BAYMEADOWS

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 2014 OFFICE MARKET

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

DOWNTOWN NORTH BANK 4,990,280 24.2% (187,139) $19.00

DOWNTOWN SOUTH BANK 2,099,453 8.2% 57,824 $20.50

ARLINGTON/NORTHSIDE 705,342 27.6% 97,074 $13.00

SOUTHSIDE 3,046,775 17.8% (57,642) $16.15

BEACHES 786,366 5.1% 37,874 $24.50

MANDARIN 1,487,945 14.2% (18.742) $17.25

BUTLER/BAYMEADOWS 6,387,931 13.8% 171,233 $17.50

WESTSIDE 97,653 9.2% 1,817 $15.25 CLAY COUNTY/ORANGE PARK 683,954 21.4% 9,207 $19.76 TOTAL 20,285,699 16.7% 111,506

2014 FLEX MARKET

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

ARLINGTON/NORTHSIDE 285,082 23.7% 855 $9.00/$5.00

SOUTHSIDE/BUTLER- 5,185,252 18.5% 77,779 $8.00/$6.00 BAYMEADOWS/MANDARIN

BEACHES 103,982 14.3% -3,120 $10.00/$6.00

WESTSIDE 287,507 6.8% -10,062 $8.00/$5.00

CLAY COUNTY/ORANGE PARK 367,632 15.2% -1,839 $9.00/$5.00

TOTAL 6,229,485 17.9% 35,512

2012 FLEX MARKET JACKSONVILLE,

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 PROPERTY MANAGEMENT Mark Scott, SIOR Genny Spence Ron Kirkland, RPA, FMA