Global Corporate Real Estate Advisors

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Global Corporate Real Estate Advisors Mohr Partners, Inc. GLOBAL CORPORATE REAL ESTATE ADVISORS MARKET REPORT 3rd QUARTER 2013 Seattle, WA National Office Market The U.S. Office Market ended the second quarter of 2013 with a vacancy rate of 11.7%, down from 11.8% in the first quarter. Net Absorption totaled positive 21,265,937 square feet in the first quarter, up from 14,566,628. Vacant sublease space increased, ending the quarter at 46,562,481 square feet. Rental rates ended at $21.60, an increase from $21.46 in the first quarter. A total of 219 buildings were delivered to the market in the first quarter totaling 10,257,523 square feet, with 71,063,217 square feet still under construction. Seattle Office Market Investor sentiment that Seattle is an improving office market is ringing true. Following a series of record prices paid in Downtown Seattle, Lake Union, and Bellevue, vacancy is falling and Class A rents are on the rise. The driving force is primarily the rapid expansion of the technology sector lead primarily by Amazon.com but also seeing expansion from Google, Microsoft, Zulily, and other tech giants. The Puget Sound Region is currently at a 10.2% vacancy rate with over 1.5 million SF absorbed year-to-date. Forecasts have the Puget Sound Region dipping below 10% vacancy by year- end which will be one of the lowest vacancies in the nation and equaling the rate last seen in Q2, 2008. The quoted rental rates in Downtown Bellevue are the highest in the region reaching $42/SF and expected to go higher as the Bellevue CBD Class A market is experiencing a 6.8% vacancy rate. Mohr Partners, Inc. GLOBAL CORPORATE REAL ESTATE ADVISORS Lease Rates Rental Rate Previous Quarter Total Average $26.44 $26.36 Class A $32.54 $31.92 Class B $24.51 $24.47 Class C $19.19 N/A CBD $29.82 $29.08 Suburban $25.23 $25.39 Absorption Net Absorption Previous Quarter Total 616,750 SF 397,655 SF Class A 646,986 SF 387,945 SF Class B (3,327) SF (50,269) SF Class C (26,909) SF 59,976 SF CBD 214,736 SF (82,909) SF Suburban 402,014 SF 480,564 SF Vacancy Rates Vacancy Rate Previous Quarter Total 10.2% 10.5% Class A 11.7% 12.6% Class B 10.5% 10.5% Class C 6.4% 6.4% CBD 12.3% 12.8% Suburban 9.5% 9.7% Mohr Partners, Inc. GLOBAL CORPORATE REAL ESTATE ADVISORS Local Market Drivers & Economics ▪ Seattle’s (King County’s) economy is outpacing the rest of the U.S. when it comes to job growth and wage increases. According to the Bureau of Labor and Statistics (BLS), employment and wage growth in King County grew twice as fast as the U.S. average in the first quarter of 2013. This surge was fueled by an 11.2% increase in hiring in the construction industry. BLS data reveals every major job sector in King County saw employment growth in the past year, but the county’s 1.6% wage growth was the highest among the nation’s 10 largest counties. ▪ The unemployment rate for Washington State is currently 7.0%, compared to 8.2% last year at this time. ▪ The unemployment rate for Seattle is currently at 4.7%, compared to 7.2% a year ago. TOP 20 OFFICE LEASES Building Submarket SF Tenant The Russell Building Tacoma CBD 218,900 State Farm Insurance 2601 Elliot Beltown/Denny Regrade 148,112 Zulily Metropolitan Park North Tower Seattle CBD 133,582 Amazon.com Millennium Corporate Park Redmond 99,945 Microsoft Sammamish Park Place Coal Creek/Issaquah 95,600 Costco Home Place Center S. Seattle 85,676 RealNetworks Columbia Bank Center Tacoma CBD 73,004 State Farm Insurance One Union Square Seattle CBD 71,461 Stoel Rives LLP City Center Seattle CBD 65,548 Callison Architecture Columbia Center Seattle CBD 64,838 US Dept. of Health and Human Services City Center Bellevue Bellevue CBD 54,290 HDR Engineering Second & Spring Seattle CBD 51,190 N/A 705 Union Station Pioneer Sq/Waterfront 49,724 Intel Overlake Medical Pavilion Suburban Bellevue 47,427 Overlake Hospital Russell Investments Center Seattle CBD 45,166 Zillow, Inc. West Building Puyallup 44,661 N/A 4000 Carillon Point Kirkland 42,122 Service Now Sixty 1 Hundred S. Seattle 40,321 N/A Sunset Corporate Campus - Bld. 2 I-90 Corridor 37,468 Booking.com One Bellevue Center Bellevue CBD 37,458 Ebay TOP FIVE SALES TRANSACTIONS Building SF Sales Price Price/SF Wells Fargo Center 983,600 $389,900,000 $396.40 Seattle Spear Street Capital Portfolio 836,417 $368,600,000 $440.69 Westlake Terry 318,547 $170,000,000 $533.67 Mohr Partners, Inc. GLOBAL CORPORATE REAL ESTATE ADVISORS Submarket Statistics CLASS A MARKET STATISTICS YTD Net Market Vacancy Absorption Quoted Rates Downtown Seattle 13.0% 939,705 SF $32.73 Eastside 8.0% 23,027 SF $33.46 Northend 11.7% 167,913 SF $26.00 Southend 14.5% 17,354 SF $25.39 Tacoma 23.0% 120,293 SF $28.53 CLASS B MARKET STATISTICS YTD Net Market Vacancy Absorption Quoted Rates Downtown Seattle 9.3% 62,234 SF $27.55 Eastside 9.4% 6,236 SF $27.01 Northend 11.7% 3,908 SF $22.83 Southend 13.4% 93,047 SF $20.13 Tacoma 10.7% 33,417 SF $21.19 ABOUT MOHR PARTNERS Mohr Partners, Inc. is a global corporate real estate firm offering advisory and consulting services. Mohr Partners has 20 offices in North America, providing corporate tenants with portfolio services including strategic planning, portfolio and lease administration, research and site selection, project and construction management, comprehensive demographic analysis, and eco- nomic incentive negotiation. Since 1986, Mohr Partners has been managing real estate portfolios for corporations in all 50 U.S. states, all Canadian provinces, and many locations around the world through its strategic alliance partners. For more information please visit our website at www.mohrpartners.com..
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