2018 MARKET UPDATE

PRESENTED TO

PRESENTED BY

BRIAN HATCHER Kidder Mathews Executive Vice President, Brokerage

MARCH 14, 2018 Seattle/Eastside Office Markets EASTSIDE 2017 Year-End Review

SEATTLE

2017 MARKET HIGHLIGHTS

SEATTLE EASTSIDE Total Market Size 78,771,784 s.f. 49,901,562 s.f. Strong rent growth in all markets is projected as vacancy rates are at all-time lows Year-End Vacancy Rate 5.17% 4.84% Net Absorption - SF 1,532,346 s.f. 1,232,120 s.f. Net Absorption - SF/New Job 74.73 s.f. 60.09 s.f. There is 7.4 million sf currently under construction, with over 70% pre-leased Under Construction 6,993,250 s.f. 403,000 s.f. Sales Volume Over (>$10M) $2,048,723,183 $1,039,496,253 The Urban Land Institute (ULI) ranks Seattle Seattle MSA Job Growth 20,506 as the No. 1 market in the country for Rate of Growth 1.31% investment in 2018 Unemployment Rate 3.90% AMAZON MICROSOFT

Year-End Occupancy 10,940,500 sf Year-End Occupancy 14,735,144 sf

% of Seattle Market 13.89% % of Eastside Market 29.53%

2017 Absorption 884,000 sf Year-End Puget Sound Employees 47,121

% of Total Seattle Absorption 57.69%

Year-End Seattle Employees 41,000 (est) 2017 Greater Seattle Office Sales

10-YEAR HISTORICAL YEAR-END OFFICE SALES > $10M 10-YEAR TOTALS $7.5B

Total $6.5B Sales Volume $24.212B $5.5B

$4.5B $4.552B Total # $4.295B Transactions $4.125B 315 $3.5B 32 $142.3M Transactions

$2.638B 43 $3.141B Average Value Average Transaction 50 $99.88M $2.5B Transactions $82.5M Transactions

Transaction Value Average Transaction

$1.733B Value Average Transaction Value $1.698B $76.14M $1.5B 35

$1.235B 47 $75.37M Transactions $66.8M Transactions Average Transaction Value Average Transaction Average Transaction Value Average Transaction 500M $459M 37 26 $46.85M Transactions 16 $65.31M Average $336M Transactions Average Transaction Value Average Transaction $77.19M Transactions Average Transaction Value Average Transaction 24

/ Year Value 5

$2.42B Average Average Transaction Value Average Transaction

0 Value Transactions Transaction Transaction $19.13M Average $67.2M Transaction Transaction Transactions

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 MILLENNIUM TOWER MIDTOWN 21 8TH & OLIVE CENTRE 425 URBAN UNION TILT 49 TILT Seattle Office Market

2017 saw an increase in net absorption added per new job at nearly 75 sf

2018 will produce much stronger net absorption, with over 1.8 million square feet of pre-committed new construction delivering

An upswing in job creation is expected, based on existing demand in excess of 90,000 of current openings in greater Seattle

SEATTLE EMPLOYMENT GROWTH - ABSORPTION RELATIONS GROWTH OFFICE SF / NEW YEAR JOB TOTAL RATE CHANGE ABSORPTION JOB 2002 1,231,931 -0.32% (3,968) 77,415 (19.51) 2003 1,256,474 1.99% 24,543 1,089,853 44.41 2004 1,283,133 2.12% 26,659 732,065 27.46 2005 1,324,824 3.25% 41,691 637,448 15.29 2006 1,364,194 2.97% 39,370 2,831,005 71.91 2007 1,396,665 2.38% 32,471 1,198,685 36.92 2008 1,390,932 -0.41% (5,733) 867,126 (151.25) 2009 1,353,126 -2.72% (37,806) (1,271,930) 33.64 2010 1,362,287 0.68% 9,161 1,607,678 175.49 2011 1,390,967 2.11% 28,680 1,910,587 66.62 2012 1,430,711 2.86% 39,744 1,724,942 43.40 2013 1,459,011 1.98% 28,300 1,131,056 39.97 2014 1,481,297 1.53% 22,286 1,293,126 58.02 2015 1,505,578 1.64% 24,281 3,924,292 161.62 2016 1,565,330 5.67% 59,752 3,771,384 63.12 2017 (P) 1,585,836 1.31% 20,506 1,532,346 74.73 2018 1,633,411 3.00% 47,575 3,253,495 68.39 2019 1,682,413 3.00% 49,002 3,351,100 68.39 2020 1,732,886 3.00% 50,472 3,451,633 68.39 2003-2007 Last Recovery 13.11% 164,734 6,489,056 39.39 2011-2017 Current Recovery 16.07% 223,549 15,287,733 68.39

Employment figures from Seattle MSA (Seattle-Bellevue-Everett) (P) Projected annual SEATTLE SUBMARKET SUMMARY

Overall office vacancy rates declined 40 basis points in 2017 to end the year at near historic lows of 5.17%. Very strong net absorption was highlighted by South Lake Union, with over 817,000 square feet, Seattle CBD, and the Financial District. Average asking rates were up as much as 10% in several sub-markets.

The table below summarizes the 2017 year-end status of each Seattle submarket:

AVAILABILITY AND VACANCY ANALYSIS - SEATTLE OFFICE MARKET YEAR-END 2017

# Bldgs w/ Total SF Projected # Bldgs w/ Existing Class A Contiguous Existing Vacant Vacancy Total SF Availability YTD Net Average Rent Contiguous Market Driving Influential Submarket Rentable Average Spaces Buildings (Direct / Rate Available Rate % Absorption Asking Rate Growth Spaces Job Sectors Companies Building Area Asking Rate 50K-100K Sublet) 2018 100K SF+ SF

University of Ballard/U District 100 4,544,506 183,425 4.04% 208,071 4.58% 48,962 $35.00/FS $40.00/FS 3.00% 0 0 Tech/Maritime Washington

Belltown/Denny Gates 85 8,574,469 320,680 3.74% 476,826 5.56% (45,030) $34.00/FS $40.00/FS 3.00% 0 0 Tech/Services Regrade Foundation

Capitol Hill/ 98 5,173,233 96,015 1.86% 100,504 1.94% (42,654) $35.00/FS $42.00/FS 5.00% 0 0 Medical Swedish Central District Amazon, Lake Union 131 12,917,383 369,150 2.86% 681,631 5.28% 817,224 $41.00/FS $48.00/FS 7.00% 1 0 Tech/Life Sc. Google, Facebook Pioneer Square/ Wayerhaeuser, 96 6,674,376 370,418 5.55% 571,241 8.56% (38,190) $34.00/FS $40.00/FS 7.00% 1 0 Tech/Services Waterfront Saltchuk

Queen Anne/ Expedia, 97 5,463,623 129,269 2.37% 767,745 14.05% 101,135 $33.00/FS $38.00/FS 3.00% 0 4 Tech/Services Magnolia Big Fish

South Seattle 94 4,244,775 263,524 6.21% 376,109 8.86% 165,459 $33.00/FS $38.00/FS 0.00% 1 1 Manufacturing Starbucks

Seattle CBD 61 14,396,840 771,231 5.36% 1,298,566 9.02% 353,351 $41.00/FS $50.00/FS 5.00% 4 0 Financial/Serv F5

Seattle Financial 52 16,782,579 1,566,540 9.33% 2,413,199 14.38% 172,089 $40.00/FS $48.00/FS 3.00% 3 3 Financial/Legal District

Total 814 78,771,784 4,070,252 5.17% 6,893,892 8.75% 1,532,346 10 8

* All buildings 10K SF+, not including properties under construction. Availability includes any space that is available, regardless of whether space is vacant, available for sublease, or available at a future date. SEATTLE PROPOSED AND RECENTLY COMPLETED OFFICE BUILDINGS Scheduled Project Name Address Project Proponent New SF % Preleased SF Available Building Status Completion Year 2017 Troy Block North Lake Union Urban Renaissance Group/ USAA 422,000 100.0% 0 Q1 2017 Completed Third & Harrison Queen Anne/Magnolia Martin Selig Real Estate 185,000 100.0% 0 Q1 2017 Completed Tilt49 Seattle CBD Urban Renaissance Group 291,000 100.0% 0 Q2 2017 Completed 400 Dexter Lake Union Alexandria Real Estate 289,000 96.5% 10,237 Q2 2017 Completed 450 Alaskan Pioneer Square/ Waterfront Hudson Pacific Properties 167,000 72.2% 46,469 Q3 2017 Completed 744 N 34th Street Ballard/U District CoU LLC 123,500 100.0% 0 Q3 2017 Completed Madison Centre (505 Madison) Seattle CBD Schnitzer West 764,000 30.4% 532,078 Q4 2017 Completed F5 Tower (The Mark) Seattle CBD Stockbridge/ Daniel's Development 528,000 100.0% 0 Q4 2017 Completed 9th & Thomas Lake Union Sellen 157,500 100.0% 0 Q4 2017 Completed SUBTOTAL 2,927,000 20.1% 588,784 Year 2018 and Beyond Hawk Tower Pioneer Square/ Waterfront American Life/ Daniel's Development 209,000 64.5% 74,250 Q2 2018 Under Constr. 503 Westlake Lake Union SE Grainger Development Group 37,000 49.7% 18,600 Q2 2018 Under Constr. Maritime Building Pioneer Square/ Waterfront Beacon Capital 187,000 100.0% 0 Q2 2018 Under Constr. Arbor Blocks East Lake Union Vulcan 196,000 100.0% 0 Q4 2018 Under Constr. Arbor Blocks West Lake Union Vulcan 193,000 100.0% 0 Q4 2018 Under Constr. Amazon Tower Phase III (Rufus 2.2) Belltown/Denny Regrade Amazon 1,100,000 100.0% 0 Q1 2019 Under Constr. 333 Dexter Lake Union Kilroy Realty 630,000 0.0% 630,000 Q1 2019 Under Constr. The Atrium (1818 Fairview) Lake Union Alexandria Real Estate 212,000 0.0% 212,000 Q1 2019 Under Constr. 2+U (2nd & University) Seattle CBD Skanska 665,000 0.0% 665,000 Q1 2019 Under Constr. 1525 11th Avenue Capitol Hill/Central District Legacy Commercial 75,500 0.0% 75,500 Q2 2019 Under Constr. Building Cure (Stewart & Terry) Seattle CBD Seattle Children's Hospital 540,000 100.0% 0 Q2 2019 Under Constr. 15th & Market Ballard/U District Martin Selig Real Estate 204,000 59.8% 82,000 Q3 2019 Under Constr. Block 21 (Hurricane Block) Belltown/Denny Regrade Amazon 835,000 100.0% 0 Q4 2019 Under Constr. Lakefront Blocks Lake Union Vulcan 607,000 100.0% 0 Q1 2019 Under Constr. Rainier Square Block Seattle CBD UW/ Wright Runstad & Co. 750,000 100.0% 0 Q2 2020 Under Constr. Third & Lenora Belltown/Denny Regrade Martin Selig Real Estate 552,750 100.0% 0 Q2 2020 Under Constr. Watershed Ballard/U District CoU LLC 57,655 0.0% 57,655 TBD Proposed Ballard Blocks II Ballard/U District Principal/ KG 267,000 0.0% 267,000 TBD Proposed Block 18 Belltown/Denny Regrade Amazon 405,000 100.0% 0 TBD Proposed 515 Minor Capitol Hill/Central District HR Acquisition I Corp. 136,000 0.0% 136,000 TBD Proposed 111 Westlake Lake Union Vulcan 420,000 0.0% 420,000 TBD Proposed 520 Westlake (Block 38) Lake Union Vulcan 322,000 0.0% 322,000 TBD Proposed 1150 Eastlake Lake Union Alexandria Real Estate 280,000 0.0% 280,000 TBD Proposed Yale & Thomas Expansion Lake Union Unico Properties 200,000 100.0% 0 TBD Proposed 400 Westlake Lake Union Martin Selig Real Estate 190,500 0.0% 190,500 TBD Proposed Dexter Station Expansion Lake Union Tristar Capital/ RFR Realty 165,000 0.0% 165,000 TBD Proposed 1165 Eastlake Lake Union Alexandria Real Estate 134,250 0.0% 134,250 TBD Proposed S: A-F (1001 6th Ave S) Pioneer Square/ Waterfront Urban Visions 1,200,000 0.0% 1,200,000 TBD Proposed Amgen Campus (Expedia HQ) Queen Anne/Magnolia Expedia 600,000 100.0% 0 TBD Proposed 831 Airport Way S Seattle Urban Visions 155,000 0.0% 155,000 TBD Proposed The Net Seattle CBD Urban Visions 675,000 0.0% 675,000 TBD Proposed Federal Reserve Redevelopment Seattle CBD Martin Selig Real Estate 540,000 0.0% 540,000 TBD Proposed Photos from top to bottom SUB TOTAL 12,740,655 50.6% 6,299,755 The Atrium, The Mark, Troy Block North 54.9% UNDER CONSTRUCTION 6,993,250 74.9% 1,757,350 45.1% PROPOSED 5,747,405 21.0% 4,542,405 Eastside Office Market

The Eastside market overachieved relative to historical models with 60.09 sf of net absorption per new job

Overall net absorption during the year was more than double the historic annual average of roughly 550,00 sf

In 2018 the strength of the market will be driven by leasing of second generation space left vacant by recent expansions/relocations

EASTSIDE EMPLOYMENT GROWTH - ABSORPTION RELATIONS GROWTH OFFICE SF / NEW YEAR JOB TOTAL RATE CHANGE ABSORPTION JOB 2002 1,231,931 -0.32% (3,968) 40,412 (10.18) 2003 1,256,474 1.99% 24,543 227,746 9.28 2004 1,283,133 2.12% 26,659 657,337 24.66 2005 1,324,824 3.25% 41,691 1,243,985 29.84 2006 1,364,194 2.97% 39,370 579,668 14.72 2007 1,396,665 2.38% 32,471 782,520 24.10 2008 1,390,932 -0.41% (5,733) 411,144 (71.72) 2009 1,353,126 -2.72% (37,806) (93,287) 2.47 2010 1,362,287 0.68% 9,161 285,308 31.14 2011 1,390,967 2.11% 28,680 888,634 30.98 2012 1,430,711 2.86% 39,744 601,613 15.14 2013 1,460,104 2.05% 29,393 (77,762) (2.65) 2014 1,481,297 1.45% 21,193 827,101 39.03 2015 1,505,578 1.64% 24,281 109,748 4.52 2016 1,565,330 5.67% 59,752 546,701 9.15 2017 (P) 1,585,836 1.31% 20,506 1,232,120 60.09 2018 1,633,411 3.00% 47,575 878,543 18.47 2019 1,682,413 3.00% 49,002 904,899 18.47 2020 1,732,886 3.00% 50,472 932,046 18.47 2003-2007 Last Recovery 13.11% 164,734 3,491,256 21.19 2011-2017 Current Recovery 16.07% 223,549 4,128,155 18.47

Employment figures from Seattle MSA (Seattle-Bellevue-Everett) (P) Projected annual EASTSIDE SUBMARKET SUMMARY Overall office vacancy rates decreased over 40 basis points during 2017 to end the year at 4.84%, which is the first sub 5.0% rate since 2000. The strongest sub-markets for net absorption included the Bellevue CBD, Suburban Bellevue, and the I-90 Corridor. These sub-markets are also showed substantial gains of 5-10% in asking rates over the past year.

AVAILABILITY AND VACANCY ANALYSIS - EASTSIDE OFFICE MARKET YEAR-END 2017

# Bldgs w/ Total SF Projected # Bldgs w/ Existing Class A Contiguous Existing Vacant Vacancy Total SF Availability YTD Net Average Rent Contiguous Market Driving Influential Submarket Rentable Average Spaces Buildings (Direct / Rate Available Rate % Absorption Asking Rate Growth Spaces Job Sectors Companies Building Area Asking Rate 50K-100K Sublet) 2018 100K SF+ SF North Creek/ Life Sc./ Seattle 52 3,779,625 417,354 11.04% 712,982 18.86% (87,114) $17.00/NNN $20.00/NNN 0.00% 4 0 Canyon Park Telecom Genetics, PSE Google, Kirkland CBD 56 2,280,064 84,943 3.73% 127,819 5.61% 16,127 $26.00/NNN $32.00/NNN 5.00% 0 0 Tech/Services Tableau Evergreen Totem Lake 12 526,190 27,042 5.14% 80,458 15.29% 39,580 $18.50/NNN $20.00/NNN 7.00% 0 0 Eng./Medical Hospital Redmond (Excluding 71 4,007,620 260,109 6.49% 559,878 13.97% (261,574) $19.50/NNN $22.00/NNN 10.00% 1 0 - - Microsoft) Redmond (Including 97 7,157,109 260,109 3.63% 559,878 7.82% (261,574) - - - - - Tech/Services Microsoft Microsoft) 520 Corridor 89 3,365,657 205,749 6.11% 386,746 11.49% 24,135 $25.00/NNN $26.00/NNN 5.00% 1 0 - - (Excluding Microsoft) 520 Corridor Microsoft, 135 9,667,476 205,749 2.13% 386,746 4.00% 24,135 - - - - - Tech/Services (Including Microsoft) Nintendo University of Suburban Bellevue 195 6,041,383 280,504 4.64% 406,148 6.72% 152,262 $24.00/NNN $26.00/NNN 5.00% 1 0 Services Washington T-Mobile, I-90 Corridor 66 6,153,181 359,767 5.85% 957,547 15.56% 88,551 $24.00/NNN $26.00/NNN 10.00% 3 1 Tech/ Telecom Verizon

Coal Creek Issaquah 47 2,265,120 301,775 13.32% 324,246 14.31% 41,647 $20.00/NNN $25.00/NNN 0.00% 2 1 Tech/Services Costco

E. King County 36 859,624 14,288 1.66% 18,693 2.17% 43,434 $20.00/NNN $24.00/NNN 0.00% 0 0 Services Sanmar

Mercer Island 18 547,753 9,068 1.66% 9,717 1.77% 31,383 $24.00/NNN $26.00/NNN 0.00% 0 0 Services Farmer’s

Microsoft, Bellevue CBD 58 10,624,037 453,743 4.27% 1,108,789 10.44% 1,143,689 $36.00/NNN $45.00/NNN 10.00% 1 2 Tech/Services Concur, Amazon Total (Including 772 49,901,562 2,414,342 4.84% 4,693,023 9.40% 1,232,120 13 4 Microsoft)

* All buildings 10K SF+, not including properties under construction. Availability includes any space that is available, regardless of whether space is vacant, available for sublease, or available at a future date. EASTSIDE PROPOSED AND RECENTLY COMPLETED OFFICE BUILDINGS

Scheduled Building Project Name Address Project Proponent New SF % Preleased SF Available Completion Status Year 2017 Lincoln Square II Bellevue CBD Kemper Development 720,000 100.0% 0 Q3 2017 Complete The Spring District - GIX Suburban Bellevue Wright Runstad 100,000 100.0% 0 Q3 2017 Complete SUBTOTAL 820,000 0.0% 0 Year 2017 and Beyond Kirkland Urban North Kirkland CBD Prudential/ Talon 203,000 46.8% 108,000 Q4 2018 Under Constr. Kirkland Urban Central Kirkland CBD Prudential/ Talon 200,000 46.0% 108,000 Q1 2019 Under Constr. 600 Bellevue Bellevue CBD Equity Office/ Urban Renaissance 800,000 0.0% 800,000 TBD Proposed Summit Phase III Bellevue CBD Hines 330,500 0.0% 330,500 TBD Proposed 305 Tower Bellevue CBD Fana Group 210,000 0.0% 210,000 TBD Proposed Kirkland Urban South Kirkland CBD Prudential/ Talon 202,000 0.0% 202,000 TBD Proposed Lake Street Place Kirkland CBD McLeod Development 110,000 0.0% 110,000 TBD Proposed 5501 Lakeview Kirkland BMGI 45,750 0.0% 45,750 TBD Proposed Lincoln Executive Center Expansion I-90 Corridor Miller Global/ Urban Renaissance 500,000 0.0% 500,000 TBD Proposed The Spring District - REI HQ Suburban Bellevue Wright Runstad 750,000 100.0% 0 TBD Proposed Burnstead (TOD) Suburban Bellevue Burnstead Development 400,000 0.0% 400,000 TBD Proposed The Spring District - Block 16 Suburban Bellevue Wright Runstad 324,000 0.0% 324,000 TBD Proposed Esterra Park Four Suburban Bellevue Capstone 230,000 0.0% 230,000 TBD Proposed Esterra Park Five Suburban Bellevue Capstone 225,000 0.0% 225,000 TBD Proposed Esterra Park Three Suburban Bellevue Capstone 223,000 0.0% 223,000 TBD Proposed Esterra Park Two Suburban Bellevue Capstone 180,000 0.0% 180,000 TBD Proposed Esterra Park One Suburban Bellevue Capstone 172,000 0.0% 172,000 TBD Proposed The Spring District - Block 24 Suburban Bellevue Wright Runstad 167,000 0.0% 167,000 TBD Proposed Woodlands Technology Campus II Bothell/Kenmore TIAA-CREF 647,000 0.0% 647,000 TBD Proposed Canyon Park XVIII Bothell/Kenmore Martin Development 126,750 0.0% 126,750 TBD Proposed North Creek Office Plaza Bothell/Kenmore MBA North Creek Plaza 101,000 0.0% 101,000 TBD Proposed SUBTOTAL 6,147,000 15.2% 5,210,000 6.6% UNDER CONSTRUCTION 403,000 46.4% 216,000 93.4% PROPOSED 5,744,000 13.1% 4,994,000 ELLIOTT BAY

SEATTLE DEVELOPMENT Boren Ave Pike St PIPELINE 9th Ave

Pine St 4th Ave PROPERTY TYPES

11 Westlake AveLenora St Office Olive Way 6th Ave Blanchard St Residential Virginia St 7th Ave Battery St Stewart St Bell St Vine St Mixed-Use Denny Way Biotech/Medical Broad St Retail John St Hotel Convention Center Thomas St

Harrison St AMAZON

Amazon - Owned Republican St

Amazon - Leased Yale Ave N

9th Ave 9th 8th Ave N Ave 8th

Eastlake Ave E Terry Ave N Ave Terry

Fairview Ave N Aurora Ave N Pontius Ave N Dexter Ave N Minor Ave N

Amazon - In-Development N Ave Boren

5th Ave N Mercer St Amazon - Option to Buy Roy St (or right of first offer) Valley St

GOOGLE Aloha St Google 6th Ave N Taylor Ave N

FACEBOOK Facebook Fairview Ave N

PROJECT STATUS Westlake Ave N

Completed Projects LAKE UNION Under Construction Planned Projects BELLEVUE DEVELOPMENT PIPELINE MEYDENBAUER BAY PROJECT TYPE Office 100th Ave NE Residential Residential Mixed-Use Retail Hotel Performance Hall Bellevue Way NE Convention Center 104th Ave NE Transportation

PROJECT STATUS Under Construction Planned Projects Completed 108th Ave NE

110th Ave NE NE 12th St

NE 6th St NE 4th St NE 8th St NE 10th St 112th Ave NE

Main St Seattle vs. San Francisco vs. Portland

MARKET COMPARISON CROSS-MARKET TENANTS

Given the recent migration of many tech related companies to Seattle and Portland from the San Francisco Bay Area, the comparison of the three office markets has never been more relevant. Following are the basic market metrics for all three markets and a representative list of the companies that now have offices in multi-market locations.

SEATTLE VS. SAN FRANCISCO VS. PORTLAND SEATTLE SAN FRANCISCO PORTLAND OFFICE MARKET COMPARISON 20,506 40,600 22,300 SEATTLE/ SAN FRANCISCO/ PORTLAND 2017 Job Growth 2017 Job Growth 2017 Job Growth EASTSIDE SILICON VALLEY Market Size 128,673,346 sf 296,075,471 sf 90,638,830 sf 2017 YE Vacancy 5.01% 8.27% 6.50% 1.31% 1.80% 2.34% 2017 Net Absorption 2,764,466 7,082,153 532,299 2017 2017 2017 Unemployment Unemployment Unemployment YE Total Employment 1,585,836 2,253,300 973,800 Rate Rate Rate 2017 Job Growth 20,506 40,600 22,300 2017 Job Growth Rate 1.31% 1.80% 2.34% $45-$48 $46-$75 $32-$40 2017 YE Unemployment Rate 3.90% 2.45% 3.90% 2017 Average 2017 Average 2017 Average Class A Rates/SF Class A Rates/SF Class A Rates/SF High Water Mark - Class A $60.00 $110-115 $46.50 Fully Serviced Fully Serviced Fully Serviced Average Class A Rates $45-$48 $46-$75 $32-$40 2017 Sale Transactions > $10M 3,141,469,436 $4,232,000,000 1,229,709,800 5.37% 6.05% 4.70% Occupancy Cost Impact Occupancy Cost Occupancy Cost Occupancy Cost Impact Impact Impact - 150sf/employee x average 5.37% 6.05% 4.70% - Class A rate/average employee salary ($130k/Seattle; $150k/SF; $115k/Portland) Seattle & Eastside Major Lease Transactions

SEATTLE LEASE TRANSACTIONS EASTSIDE LEASE TRANSACTIONS

SQUARE SQUARE TENANT BUILDING TENANT BUILDING FOOTAGE FOOTAGE BALLARD/ U DISTRICT BELLEVUE CBD WeWork 15th & Market 122,000 Expedia Skyline Tower 112,250 BELLTOWN/ DENNY REGRADE Salesforce (Expansion) 929 Tower 77,500 Industrious 6th & Lenora 122,000 Wells Fargo Civca Office Commons 50,000 Snap Inc. Market Place Tower 28,750 Clark Nuber Skyline Tower 46,750 LAKE UNION HDR Engineering 929 Tower 42,500 Netmotion Wireless Westlake Union Center 24,500 XEVO Plaza Center 39,500 Privateer Holdings 2701 Eastlake 27,000 Sony/ SuckerPunch 929 Tower 36,250 Capital One 501 Eastlake 39,500 Chempoint One Bellevue Center 35,500 Delta Dental 400 Fairview 61,000 HUB International North Creek Place 30,000 Facebook 1101 Westlake 150,500 Sterling Talent Solutions 929 Tower 26,250 98point6 Columbia Center 23,000 I-90 CORRIDOR SEATTLE CBD Sinclair Broadcast Group I-90 Corporate Center 32,500 Russell Investments NORTH CREEK/ CANYON PARK Zillow 38,750 Center EKOS Parklands North Creek 36,000 AirBNB 8th & Olive 42,750 REDMOND Indeed Russell Investments Center 44,750 Golder Associates Millennium Corporate 37,000 Coupbang 8th & Olive 47,000 Clarisonic Bear Creek Corporate Center 26,000 University of Washington Fifth & Bell 50,500 GeoEngineers Bear Creek Corporate Center 25,500 King County Defenders Dexter Horton Building 88,000 SUBURBAN BELLEVUE Russell Investments Oracle 100,000 Center OfferUp Mercer Pointe 71,500 Amazon Macy's Building 475,000 K2 Bellefield Office Park 31,000 F5 Networks F5 Tower (The Mark) 515,000 Amazon Rainier Tower Development 750,000 Research & Development Expenditure - Fiscal Year 2017...... $13.04B Total Current Assets - Ending Fiscal Year 2017...... $24.10B Microsoft Impact on the Region

Employment Information - 9/30/2017 and the Eastside

Worldwide...... 124,293 U.S...... 74,191 Puget Sound...... 47,212

Real Estate Summary - Total Portfolio

Puget Sound Region...... 14,735,144 sf REVENUE AND HEADCOUNT (6/30/17) Other U.S...... 11,387,652 sf Period Employee Revenue 12 Month Net Income 12 Month International...... 19,951,742 sf Ending Count (Billions) Growth (Billions) Growth TOTAL 46,074,538 sf 6/30/2017 124,293 $89.50 4.9% $21.20 26.3% 6/30/2016 114,074 $85.32 -8.8% $16.79 37.7% 6/30/2015 117,354 $93.58 7.8% $12.19 -44.8% Puget Sound Real Estate - 14,735,144 sf 6/30/2014 128,076 $86.83 12.3% $22.07 -0.2% LEASED 6/30/2013 99,139 $77.31 4.1% $22.12 -6.3% Seattle...... 0 sf 6/30/2012 94,290 $74.30 6.2% $23.60 1.9% Eastside...... 4,540,930 sf 6/30/2011 90,412 $69.94 11.9% $23.15 23.4% 6/30/2010 88,596 $62.48 6.9% $18.76 28.8% TOTAL 4,540,930 sf 6/30/2009 92,736 $58.44 -3.3% $14.57 -17.6% OWNED 6/30/2008 91,259 $60.42 18.2% $17.68 25.7% Seattle...... 0 sf 6/30/2007 78,565 $51.12 15.4% $14.07 11.7% Eastside...... 10,194,214 sf 6/30/2006 71,172 $44.28 11.3% $12.60 2.9% TOTAL 10,194,214 sf 6/30/2005 61,000 $39.79 $12.25

Eastside Impact on Market Statistics MICROSOFT EMPLOYMENT FIGURES

% of Total Market Incl Leased & Owned...... 29.53% 150K % of Total Market Leased Space Only...... 9.10% Market Vacancy Excl all Microsoft Leased Buildings...... 5.32% Market Vacancy Excl all Microsoft Owned Buildings...... 6.08% 120K Market Vacancy Excl all Microsoft Leased & Owned Buildings...... 6.87%

90K Economic Impacts • Microsoft has spawned over 250 companies in the Puget Sound Region 60K • The company has an estimated 3.4 implied employment multiplier, 6/30/08 6/30/09 6/30/10 6/30/11 6/30/12 6/30/13 6/30/14 6/30/15 6/30/16 6/30/17 which means it produces over 153K indirect jobs in the region • Microsoft is estimated to have created over 10K millionaires residing in the Seattle MSA Amazon Impact on the Region

REVENUE AND HEADCOUNT (9/30/17) AMAZON EMPLOYMENT FIGURES Period Employee Revenue 12 Month Net Income 12 Month Ending Count (Billions) Growth (Billions) Growth 600K Q3 2017 541,900 $43,744 33.7% $256 1.6% Q2 2017 382,400 $37,955 24.8% $197 -77.0%

Q1 2017 351,000 $35,714 22.6% $724 41.1% 400K Q4 2016 341,400 $43,741 22.4% $749 55.4% Q3 2016 306,800 $32,714 29.0% $252 219.0% Q2 2016 268,900 $30,404 31.1% $857 831.5% 200K Q1 2016 245,200 $29,128 28.2% $513 -1000.0% Q4 2015 230,800 $35,747 21.9% $482 125.2% Q3 2015 222,400 $25,358 23.2% $79 118.1% 0 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Q2 2015 183,100 $23,185 19.9% $92 -173.0%

Amazon Real Estate Summary - Total Portfolio SF Economic Impacts Owned 4,054,250 • Since 2008, Amazon has grown Owned - Under Construction 1,100,000 from roughly 800K sf to over 9M Owned - Proposed 1,240,000 sf in the Seattle office market Leased 6,886,250 • Employment totals are Leased - Under Construction 722,000 above 35K Revenue - Q3 2016...... $43,744B Leased - Proposed 200,000 • Since its inception, Amazon has 12-Month Change...... 33.7% Total 14,202,500 sf acquired 29 companies, like Total 10,940,500 sf Zappos.com, and invested in Employment Information Potential Employee Base (140/SF/Emp) 101,446 various others

Worldwide...... 541,900 Total Owned % of Total Total Leased % of Total Puget Sound...... 41,000 (est.) 6,394,250 45.8% 7,808,250 55.0% Thank You

PRESENTED BY

BRIAN HATCHER Kidder Mathews Executive Vice President, Brokerage 206.296.9634 [email protected]