OklahomaOklahoma CityCity Office Market Summary Year End 2005 OklahomaOklahoma CityCity Office Market Summary

Contents During 2005 the office market continued to stabilize and actually showed marked improvement in key suburban submarkets. Office Market Summary...... 2-3 Overall, the market’s vacancy rate dropped from 19.9% to 18.0%. Office Submarket Map...... 3 The suburban markets fared well in almost every submarket and building Central Business District...... 4-5 classification. The overall suburban vacancy rate fell from 12.9% to 11.7%. Northwest...... 6-9 Class A suburban space is a particularly healthy market with a vacancy North...... 10-12 rate of only 8.2%. Just 3 years ago, the Class A suburban vacancy rate Midtown...... 13 stood at 34.6%. As it stands, there are virtually no large blocks of available West...... 14-15 Class A space in the suburban submarkets and very few large blocks of Class B availabilities. With options that limited, it is only natural that Suburban Analysis...... 15 the suburban markets begin to experience the construction of additional inventory and that is certainly the case. The general health of the suburban market has given rise to the construction of two new Class A buildings that are either under construction or soon will be in the Gaillardia commercial development. The addition of these new buildings will only add approximately 90,000 square feet of new inventory however, and the market should be easily able to absorb the additional space with no adverse effect. The continued improvement in the suburban markets is also reflected in rental rates. At the end of 2005 the average asking rate for suburban space had risen to $14.30 per square foot, with Class A rates averaging a robust $18.80 per square foot. Just as a high tide raises all ships, the Class A rate increase is pulling Class B and C rates up as well. Class B rates increased from $13.61 to $13.79 per square foot and Class C rates rose from $11.13 to $11.24 per square foot. Suburban Class B vacancy rates could especially tighten in the next few years for several reasons. The first being the limited amount of Class A options and the second being that available Class B

The information contained herein has been obtained inventory may shrink due to some recent Chesapeake Energy acquisitions. from reasonably reliable sources. Price Edwards & While it is not known for certain what Chesapeake’s immediate plans are Company makes no guarantee, either express or implied, as to the accuracy of such information. All for several Class B buildings they have recently purchased, the potential data contained herein is subject to errors, omissions and changes. Reproduction in whole or in part, without exists that this inventory could eventually be removed from the market prior written consent is prohibited. depending upon what Chesapeake’s own office requirements are.

2 Oklahoma City Office Submarket Map Oklahoma City Office Vacancy

35% 30% 25% 20% Kilpatrick Turnpike urnpike Turner T 44 Lake Hefner Parkway 15% 3 10%

Northwest Expressway 77 35 5%

urnpike 0% North 96 97 98 99 00 01 02 03 04 05 Submarket market vacancy cBd vacancy suburban vacancy

Kilpatrick T Northwest 40 Submarket 235 State Capital Complex

44 Midtown CBD 40 Interstate 40 West Submarket Interstate 40 Oklahoma City Office Inventory 35 20

Interstate 240 240 15

10 (millions)

Interstate 44 squre Feet 5

0 96 97 98 99 00 01 02 03 04 05 sq.Ft. occupied sq.Ft. vacant Although the Central Business District’s vacancy decreased from 31.7% to 29.1%, that improvement is actually quite misleading. The decrease in the vacancy rate was a function of two older buildings being dropped from the available inventory by their conversion to a hotel and an apartment building. Interestingly, Office Market Vacancy the CBD actually had less occupied space at the end of 2005 than 25% it did at the end of 2004, but the deletion of those two mostly 20% vacant buildings managed to positively impact the vacancy rate. It 15% should also be noted that similar to past years, more than 57% of the CBD’s available space lies within its older, less functional, Class 10% C buildings. The Class A vacancy rate is actually only 18.3% and 5% the Class B vacancy rate is 16.1%. The outlook for 2006 should be 0% 2001 2002 2003 2004 2005 more of the same. The better buildings will continue to perform well and the lesser buildings will continue to flounder. 2006 should prove to be another positive year for the local office market. The national economy is experiencing a steady recovery and leasing activity is brisk. The local economy, which is still Total Market Absorption influenced by the petroleum industry is even more robust with an expected growth rate of 1.9% in 2006. Existing tenants are 2001 expanding much more than contracting and more new companies 2002 are opening offices in Oklahoma City. And, as noted earlier, for 2003 the first time in three years new construction will add inventory to 2004 the market. 2005

-300000 -200000 -100000 0 100000 200000 square Feet

3 OklahomaOklahoma CityCity Central Business District

CBD Vacancy

35% 30% 25% 20% 15% 10% 5% 0% 2001 2002 2003 2004 2005

CBD Rental Rates

$13 2005 Oklahoma city central business district Review $12 • Aggregate vacancy rates decreased from 31.7% to 29.1%.

$11 • Class A vacancy increased from 16.9% to 18.4%. • Class B vacancy decreased from 20.2% to 16.1%. $10 2001 2002 2003 2004 2005 • Class C vacancy increased from 60.7% to 61.1%. • Aggregate rental rates increased from $12.77 to $13.23 per SF. • Class A rates remained flat at $15.93 per SF. • Class B rates increased from $12.06 per SF to $12.62 per SF. CBD Occupancy • Class C rates increased from $10.44 per SF to $10.84 per SF. 100% • The Oklahoma City Central Business District had negative absorption of 57,000 80% square feet during 2005.

60%

40%

20% 2006 Oklahoma city central business district Forecast

0% • Vacancy rates should remain near current levels throughout 2006. class a class B class c • Rental rates will also remain near current levels.

CBD Absorption

2001

2002

2003

2004

2005

-200000 -100000 0 100000 200000 square Feet

4 Central Business District rentable Sq. ft. Percent Common Building Year Built FloorS Sq. ft. Vacant vacant Rate Area Factor

100 Park Avenue Building 1923/1964 12 99,752 7,882 8% $10.50 12% 100 Park Ave.

101 Park Avenue Building 1936/1974 14 189,090 112,013 59% $13.00 15% 101 Park Ave.

20 N. Broadway 1981 19 307,388 0 0% $14.00 20% 20 N. Broadway

BancFirst Building 1921/1970 11 105,840 0 0% $12.50 12% 101 N. Broadway

Bank of Oklahoma Plaza 1972 16 233,808 26,538 11% $14.50 20% 201 Robert S. Kerr

Chase Tower 1971 36 514,642 0 0% $12.50 15% 100 N. Broadway

City Place 1931/1985 33 292,304 66,671 23% $11.00 14% 204 N. Robinson

Corporate Tower 1980 14 277,849 87,987 32% $15.00 17.5% 101 N. Robinson

Court Plaza 1923/1979 10 78,381 22,811 29% $10.00 14% 228 Robert S. Kerr

Dowell Center 1926 20 190,000 175,000 92% $9.50 15% 134 Robert S. Kerr

First National Center 1931`/1974 28 975,025 650,788 67% $11.00 16.5% 120 N. Robinson

Hightower Building 1929 10 107,152 12,901 12% $13.00 15% 105 N. Hudson

Leadership Square 1984 21N/16S 735,514 123,667 18% $16.00 20% 211 N. Robinson 11777 (S)

Oklahoma Tower 1982 31 568,960 166,048 30% $16.00 20% 210 Park Ave. 5254 (S)

One North Hudson 1931/1981 11 73,000 8,500 12% $10.00 12% 401 W. Sheridan

Robinson Plaza 1992 10 183,000 0 0% $11.00 0% 50 N. Robinson

Robinson Renaissance 1927/1987 12 174,840 31,304 18% $12.00 25% 119 N. Robinson

Sonic Building 2003 4 100,654 7,530 7% $21.00 8.57% 300 Johnny Bench Drive

SUBMARKET TOTAL 5,207,199 1,516,671 29.1% $13.23

5 OklahomaOklahoma CityCity Northwest Submarket

Northwest Vacancy

20%

15%

10%

5%

0% 2001 2002 2003 2004 2005

Northwest Rental Rates

$15.00 2005 northwest Oklahoma city submarket Review

$14.00 • Aggregate vacancy rates decreased from 13.9% to 11.3%. • Class A vacancy decreased from 7.3% to 6.5%. • Class B vacancy decreased from 13.7% to 12.2%. $13.00 2001 2002 2003 2004 2005 • Class C vacancy decreased from 22.1% to 14.5%. • Aggregate rental rates increased from $14.50 per SF to $14.75 per SF. • Class A rental rates increased from $18.76 per SF to $18.82 per SF. • Class B rental rates increased from $13.87 per SF to $14.04 per SF. Northwest Occupancy • Class C rental rates increased from $11.34 to $11.43 per SF. 100% • The Northwest Oklahoma City Submarket experienced an absorption of 60,000 80% SF during 2005.

60%

40% 2006 northwest Oklahoma city submarket Forecast 20% • Vacancy rates should remain flat as this submarket remains strong but also deals 0% class a class B class c with the addition of approximately 50,000 SF of new construction. • Quoted rates will rise due to a small amount of available Class A Space.

Northwest Absorption

2001

2002

2003

2004

2005

-250000 -150000 -50000 50000 150000 250000 Square Feet

6 Northwest Submarket rentable Sq. ft. Percent Common Building Year Built FloorS Sq. ft. Vacant vacant Rate Area Factor

4100 Perimeter Center 1982 3 47,317 0 0% $11.00 15% 4100 Perimeter Center Dr.

4101 Perimeter Center 1982 3 47,317 1,266 3% $11.00 15% 4101 Perimeter Center Dr.

4141 Northwest Expressway 1982 3 46,464 425 1% $11.00 15% 4141 Northwest Expressway

4200 Perimeter Center 1981 2 61,327 4,536 7% $11.00 15% 4200 Perimeter Center Dr.

5100 Brookline 1974 10 107,496 12,227 11% $13.00 15% 5100 Brookline

American Cancer Society 2001 1 45,000 0 0% $16.50 0% 8400 Silver Crossing

Atrium Towers 1980 6 156,106 33,526 21% $13.00 16% 3501-3503 N.W. 63rd

Avaya Building 1998 1 57,000 0 0% $15.00 0% 14400 Hertz Quail Springs Parkway

Bradley Square 1984 1 30,000 1,600 5% $12.50 10% 2932 N.W. 122nd

Brookline Offices 1971 1 40,920 13,228 32% $10.00 0% 6051 N. Brookline

Center 3000 1972 3 100,942 35,019 35% $11.00 12% 3000 United Founders Blvd.

Chase Park 1981 2 30,281 6,789 22% $12.50 16.5% 4323 N.W. 63rd

Commerce Center South 1982 3 65,857 0 0% $14.00 11% 9520 N. May

Coppertree Centre 1982 3 26,928 1,564 6% $14.00 10% 3727 N.W. 63rd

Cross Rock Office Plaza-I 1984 3 52,090 0 0% $18.00 0% 13801 Continental Dr.

Cross Rock Office Plaza-II 1992 2 52,000 52,000 100% $16.00 10% 3600 NW. 138th

Dobson Communications 2001 3 144,420 0 0% $22.50 16% 14101-14201 Wireless Way

Enterprise Plaza 1981 3 92,542 3,583 4% $13.00 14% 5600 N. May

FBI Building 1999 1 73,380 0 0% $17.00 0% 3301 W. Memorial

Fifty-Six Expressway Place 1982 3 54,592 16,491 30% $12.00 11% 5601 N.W. 72nd

Five Corporate Plaza 1980 3 49,486 0 0% $15.00 15% 3625 N.W. 56th

4801 Gaillardia 2000 3 71,867 0 0% $21.50 15% 4801 Gaillardia Parkway

Grand Centre 1982 5 101,217 30,095 30% $15.50 15% 5400 N.W. Grand Blvd.

7 Northwest Submarket (continued) rentable Sq. ft. Percent Common Building Year Built FloorS Sq. ft. Vacant vacant Rate Area Factor

Hartford Insurance 1999 1 100,000 0 0% $16.00 0% 7800 N.W. 85th Terrace

Hertz Financial Center 1983 10 276,246 8,800 3% $18.50 15% 3817 Northwest Expressway

Jamestown Office Park 1972/1979 2 78,283 650 1% $12.50 10% 3037 N.W 63rd

Lakepark Tower 1983 6 103,084 22,628 22% $13.50 13% 6525 N. Meridian

Lakepointe Towers 1981 6 177,746 25,510 14% $14.00 10% 4005-4013 Northwest Expressway

Lakepointe West 1982 6 85,286 11,410 13% $12.50 12% 4045 N.W. 64th

Lakeshore Tower 1982 3 29,761 2,087 7% $11.00 15% 4301 N.W. 63rd

Landmark Towers 1969/1972 10 290,000 23,981 10% $11.50 12% 3535-3545-3555 NW 58th 4,306 (S)

Mercury Insurance Building 1986 2 100,103 34,008 34% $12.50 12.5% 7301 Northwest Expressway

Mutual Assurance Building 1999 2 40,000 3,147 8% $18.00 12% 3121 Quail Springs Parkway

North Shore Office Plaza 2001 5 55,570 0 0% $20.50 15% 10900 Hefner Drive

Northwest Office Center 1973 2 85,833 20,387 24% $12.00 13% 4334 Northwest Expressway

Oil Center 1973/1978 13 249,654 32,327 15% $13.50 13% 2601 Northwest Expressway 5,032 (S)

One Corporate Plaza 1979 1 63,011 2,895 5% $14.00 15% 3525 NW. 56th

Portland Plaza 1969 3 35,425 2,392 7% $11.00 14% 5700 N. Portland

Quail Creek Commerce Center 1998 1 128,500 0 0% $15.50 0% 3201 Quail Springs Parkway

Quail Creek North 1973 2 34,780 750 2% $10.00 15% 11032 Quail Creek Rd.

Quail Ridge Tower 1975 4 46,950 15,327 33% $12.00 16.5% 11212 N. May

Quail Springs Parkway Plaza I & II 1986 6 321,312 7,017 2% $18.50 14% 14000 Quail Springs Parkway

Quail Springs Professional Building 2002 2 25,420 0 0% $17.50 16% 14313 N. May Avenue

Rees Plaza at East Wharf Nov-2002 3 42,000 0 0% $20.50 15.3% 9211 Lake Hefner Parkway

Rockwell Office Center 1982 2 30,000 6,231 21% $12.00 13% 8621 N. Rockwell

Signature Place 1982 7 101,146 9,006 12% $12.50 13% 5909 Northwest Expressway 2,896 (S)

8 Northwest Submarket (continued) rentable Sq. ft. Percent Common Building Year Built FloorS Sq. ft. Vacant vacant Rate Area Factor

Sprint PCS Building 1999 1 90,000 0 0% $18.00 0% 8525 Silver Crossing

St. Martins Building 1990 2 59,712 0 0% $14.00 13% 9020 N. May

Summit Executive Building 1975 5 50,000 1,665 3% $10.50 10% 5929 N. May

The Expressways 1974 6 65,737 6,400 10% $12.00 13% 2525 Northwest Expressway

Three Corporate Plaza 1980 3 49,920 14,375 29% $15.00 12% 3613 NW. 56th

Two Corporate Plaza 1982 3 85,551 0 0% $14.00 14.5% 5555 NW. Grand Blvd.

Union Plaza 1982 18 247,379 59,750 24% $16.00 14% 3030 Northwest Expressway

Williams Sonoma 1998 1 36,000 0 0% $16.00 0% 7720 NW. 4th St.

Submarket Total 4,738,958 535,326 11.3% $14.75

Northwest Construction rentable Sq. ft. Percent Common Building Year Built FloorS Sq. ft. Vacant vacant Rate Area Factor

4701 gallardia july - 06 2 42,000 42,000 100% $20.00 N/A 4701 Gallardia Parkway

Construction Total 42,000 42,000 100%

9 OklahomaOklahoma CityCity North Submarket

North Vacancy

20%

15%

10%

5%

0% 2001 2002 2003 2004 2005

North Rental Rates

$15.00 2005 north Oklahoma city submarket Review

$14.00 • Aggregate vacancy rates decreased from 12.4% to 12.2%. • Class A vacancy decreased from 14.2% to 11.9%. • Class B vacancy increased from 10.6% to 11.3%. $13.00 2001 2002 2003 2004 2005 • Class C vacancy decreased from 17.2% to 16.4%. • Aggregate rental rates increased from $14.33 per SF to $14.48 per SF. • Class A rental rates increased from $18.25 per SF to $18.75 per SF. • Class B rental rates increased from $14.07 per SF to $14.13 per SF. North Occupancy • Class C rental rates increased from $10.96 per SF to $11.07 per SF. 100% • The Oklahoma City North Submarket absorbed 7,000 SF during 2005. 80%

60%

40% 2006 north Oklahoma city submarket Forecast

20% • Vacancy rates should drop.

0% • Rental rates will show a slight increase particularly in the Class B segment of class a class B class c this submarket.

North Absorption

2001

2002

2003

2004

2005

-80000 -50000 -20000 10000 40000 square Feet

10 North Submarket rentable Sq. ft. Percent Common Building Year Built FloorS Sq. ft. Vacant vacant Rate Area Factor

1001 Wilshire 2003 4 43,316 0 0% $19.50 13% 1001 West Wilshire

50 Penn Place 1973 16 175,619 28,210 16% $14.50 10% 5100 N. Pennsylvania

5101 Circle Building 1982 6 74,799 775 1% $14.00 14% 5101 N. Classen Blvd.

7 & 9 Broadway Executive Park 1979 1 29,201 5,500 19% $14.00 0% NW. 63rd and Broadway

Bank One Building 1981 4 41,943 8,302 20% $13.50 15% 6303 N. Portland

Broadway Plaza 1982 3 38,726 0 0% $13.50 13% 16 N.W. 63rd

Broadway Sixty-Eight 1979 3 40,000 3,386 8% $12.50 14% 6801 N. Broadway

Central Park One 1982 6 113,134 20,444 18% $14.50 14% 525 Central Park Dr.

Central Park Two 1984 6 124,463 13,119 11% $14.50 14% 515 Central Park Dr.

Columbus Square 1982 3 36,559 0 0% $14.50 10% 1001 N.W. 63rd

Five North Broadway 1972 3 44,805 0 0% $16.00 15% 6601 N. Broadway

Glenbrook Centre East 1970 3 62,503 5,141 8% $12.00 14% 1120 N.W. 63rd

Glenbrook Centre West 1972 5 52,905 3,098 6% $12.00 10% 1140 N.W. 63rd

Harvey Parkway 1982 6 98,807 18,544 19% $13.00 14% 301 N.W. 63rd

Lincoln Plaza Office Park 1970 2 238,300 22,206 9% $10.50 10% 4545 Lincoln Blvd.

MidFirst Plaza 1982 6 95,043 0 0% $13.00 12% 501 Northwest Expressway

Nichols Hills Executive Center 1981 2 53,996 2,000 4% $14.00 14 % 1000 W. Wilshire

Northgate 1974 2 48,704 13,000 27% $10.00 0% 4010-4020-4024-4030 Lincoln Blvd.

One Benham Place 1983 8 152,959 9,953 7% $16.50 15% 9400 N. Broadway

One Broadway Center 1980 3 34,984 0 0% $13.00 9% 100 N.W. 63rd

One Broadway Executive Park 1979 3 58,832 4,557 44% $14.00 12.32% 201 NW. 63rd 21,174 (S)

One Grand Park 1982 6 100,694 18,544 18% $13.00 14% 777 NW. Grand Blvd.

One Western Plaza 1972 2 50,948 19,214 38% $12.00 16.5% 5500 N. Western

11 North Submarket (continued) rentable Sq. ft. Percent Common Building Year Built FloorS Sq. ft. Vacant vacant Rate Area Factor

Paragon Building 1981 5 110,791 20,567 19% $15.00 15% 5801 N. Broadway

Pavilion Building 1974 3 39,895 5,536 14% $11.50 15% 6701 N. Broadway

Penn Park 1973 2 78,643 24,349 31% $11.50 13% 5001-5005-5009-5015 N. Penn

Regency Center 1982 5 67,272 5,306 8% $15.00 12% 701 NW. 63rd

Registry 1980 2 93,493 32,373 35% $12.00 15% 2200 NW. 50th

Richmond Square 1982 2 27,352 5,825 21% $13.50 12% 4900 Richmond Square

Santa Fe North 1981 4 44,000 0 0% $13.50 11% 6 NE. 63rd

Six Broadway Executive Park 1981 3 50,347 0 0% $14.00 12% 6600 N. Harvey

The Tower 1984 22 299,137 50,910 23% $19.00 17.8% 1601 Northwest Expressway 16,733 (S)

Three Broadway Executive Park 1977 3 45,256 1,791 4% $14.00 10% 6501 N. Broadway

Three Grand Park 1985 6 100,813 0 0% $14.00 13% 999 NW. Grand Blvd.

Two Broadway Executive Park 1980 3 52,205 9,678 19% $14.00 11.42% 205 NW. 63rd

Two Grand Park 1982 4 97,102 0 0% $13.00 17% 5701 N. Shartel

Waterford A 1983 4 147,000 3,468 2% $18.50 16% 6301 Waterford Blvd.

Waterford B 1983 2 35,468 0 0% $18.50 16% 6303 Waterford Blvd.

Waterford C 1984 2 81,575 0 0% $18.50 16% 6305 Waterford Blvd.

Waterford D 1984 2 34,087 0 0% $18.50 16% 6307 Waterford Blvd.

Submarket Total 3,215,676 393,703 12.2% $14.48

12 Oklahoma City 2005 Midtown Oklahoma Midtown Rental Rates Oklahoma City City submarket Review $12.00 Midtown Submarket • Aggregate vacancy rates decreased from 10.1% to 9.2% $11.00 • Class B vacancy rates decreased from 11.6% to 11.1%.

• Class C vacancy rates decreased $10.00 2001 2002 2003 2004 2005 from 4.1% to 1.1%. • Aggregate rental rates increased from $11.45 per SF to $12.00 per SF.

• Class B rental rates average Midtown Vacancy $12.32. 20% • Class C rental rates average $10.64. 15% • The Midtown Submarket experi- 10%

enced absorption of 5,000 SF dur- 5% ing 2005. 0% 2006 Midtown Oklahoma 2001 2002 2003 2004 2005 City Submarket Forecast • Vacancy rates will remain low as more users recognize Midtown as the most economical submarket. Midtown Absorption • Rental rates will remain at or near current levels. 2001 2002

2003

2004

2005

-35000 -30000 -25000 -20000 -15000 -10000 -5000 0 5000 10000 square Feet

rentable Sq. ft. Percent Common Building Year Built FloorS Sq. ft. Vacant vacant Rate Area Factor

2000 Classen Center 1966/1976 6 318,321 33,249 10% $13.50 10% 2000 Classen Blvd.

3700 Classen Building 1980 2 52,800 14,500 27% $10.50 13% 3700 Classen Blvd.

3800 Classen Building 1982 3 52,800 5,500 10% $10.50 13% 3800 Classen Blvd.

4801 Classen Building 1974 2 33,151 0 0% $9.75 0% 4801 Classen Blvd.

Cameron Building 1955/1957 5 81,493 1,286 2% $11.00 10% 2901 Classen Blvd.

Santa Fe Building 1954/1982 4 55,203 0 0% $9.00 10% 3814 N. Santa Fe Ave.

Submarket Total 593,768 54,535 9.2% $12.00

13 OklahomaOklahoma CityCity West Submarket

West Vacancy

15%

12%

9%

6%

3%

0% 2001 2002 2003 2004 2005

West Rental Rates

$12.00 2005 west Oklahoma city submarket Review

$11.00 • Aggregate vacancy rates increased from 10.9% to 14.4%. • Class B vacancy totals increased from 9.2% to 9.8%. • Class C vacancy totals increased from 14.7% to 24.8%. $10.00 2001 2002 2003 2004 2005 • Aggregate rental rates increased from $11.58 per SF to $11.94 per SF. • Class B rental rates increased from $11.91per SF to $12.25 per SF. • Class C rental rates increased from $10.84 per SF to $11.23 per SF. • The West Oklahoma City Office Market experienced negative absorption West Occupancy of 23,000 SF during 2005.

100% 80% 2006 west Oklahoma city submarket Forecast 60% • Vacancy rates should remain near current levels in 2006. 40% • Rental rates in the Oklahoma City West Submarket will also stay near 20% current levels. 0% class B class c

West Absorption

2001

2002

2003

2004

2005

-25000 -15000 -5000 0 10000 20000 30000 square Feet

14 West Submarket rentable Sq. ft. Percent Common Building Year Built FloorS Sq. ft. Vacant vacant Rate Area Factor

300 Meridian Place 1982 2 77,559 12,972 17% $12.00 11% 300 N. Meridian

Bank 2 Tower 1975 7 58,598 17,903 31% $12.00 12% 909 S. Meridian

Corporate West One 1980 3 38,031 19,101 50% $12.00 10% 5208 W. Reno

Corporate West Two 1983 3 39,000 0 0% $9.00 8% 309 S. Ann Arbor

Metro Office Park 1981 3 60,750 18,000 30% $9.50 0% 4300 Highline Blvd.

Sovereign Office Park 1983 1 42,260 8,000 19% $10.00 0% 1300 Sovereign Row

The Parkway 1982 6 96,960 10,844 11% $13.00 15% 1300 S. Meridian

Tinker Federal Credit Union 1986 2 69,229 0 0% $12.00 12% 4140 West I-40

Westpark Office Center 1986 1 58,786 0 0% $16.00 0% 715 Metropolitan

Will Rogers Office Park 1 1984 1 54,170 5,657 10% $12.50 16% 4400 Will Rogers Parkway

Will Rogers Office Park 2 1985 1 46,748 0 0% $11.00 10% 4350 Will Rogers Parkway

Submarket Total 642,091 92,477 14.4% $11.94

OklahomaOklahoma CityCity 2005 Suburban Oklahoma city Office market Review Suburban Submarket • Aggregate vacancy rates decreased from 12.9% to 11.7%. • Class A vacancy decreased from 9.7% to 8.2%. Suburban Rental Rates • Class B vacancy decreased from 12.1% to 11.6%. north northwest west midtown

$15.00 • Class C vacancy decreased from 18.8% to 15.6%. • Aggregate rental rates increased from $14.05 per SF to $14.23 per SF. $13.00 • Class A rental rates increased from $18.59 per SF to $18.80 per SF. $11.00 • Class B rental rates increased from $13.61 per SF to $13.79 per SF.

$9.00 • Class C rental rates increased from $11.13 per SF to $11.24 per SF 1999 2000 2001 2002 2003 2004 2005 • Suburban Oklahoma City experienced absorption of 49,000 SF during 2005.

Suburban Absorption 2006 Suburban Oklahoma city Office market Forecast 2001 • Suburban rental rates will continue to climb. 2002

2003 • Suburban vacancy rates will decrease particularly in Class B projects. 2004 • Class A space vacancies should also remain very low. 2005 • Some new construction will commence and possibly be completed in 2006 -150000 -50000 50000 150000 250000 square Feet

Suburban Oklahoma City Market Total 9,217,143 1,076,041 11.7% $11.30

Oklahoma City Market Grand Total 14,424,342 2,592,712 18.0% $13.91 15 Oklahoma City 2005 OfficeOklahoma Market Sales City Summary

The Oklahoma City office market experienced more investment sales activity in 2005 than in any year since Price Edwards & Company began charting transactions in1992. As in years past, we include in our analysis only “major” transactions, which this year has a minimum square footage threshold of 30,000 square feet. With that as a backdrop, a total of 28 properties changed hands, representing just under 3.8 million square feet and a total aggregate value of $256 million.

The suburban market dominated the activity with 23 closed transactions. Interestingly, 18 of the 23 were for properties generally considered to be class “C” assets. The average per square foot price of $57.55 for those assets was very close to what was being paid only two years ago for class “B” suburban assets. Clearly, the influx of capital from out of state, primarilyC alifornia, combined with the expansion of Chesapeake Energy’s corporate campus is impacting suburban office property values. The largest suburban transaction of the year was Shepard Mall which sold for approximately $48 million, having been converted to office use roughly 10 years ago by local developer Jim Williams.

Similarly, experienced heightened investment activity in 2005. The acquisition of and by Roy Oliver was the most significant transaction of the year, in excess of $90 million. Bank of Oklahoma sold to an REIT for over $20 million, and two buildings, The Colcord and Park Harvey were acquired for redevelopment into alternative uses; one a boutique hotel and the other housing. Clearly, these are all significant bets on the continued evolution of Oklahoma City’s downtown, from a stale 8-5 business only environment to a vibrant and active place for citizens to work, live, and play in first class fashion.

2006 will likely see similar investment activity as 2005. While interest rate increases by the Federal Reserve have caused some to speculate the beginning of a cooling off period for investment real estate, the 10 year treasury rate remains historically low and numerous lending sources offer very good financing alternatives, which will, in part, help maintain higher asset values. Further, the historically high commodity pricing of both crude oil and natural gas, should continue to help stimulate our local economy for the foreseeable future, and provide some measure of downside risk should the national economy slow. It is also anticipated that out of state real estate capital, both individual and institutional, will continue to seek a home in Oklahoma City where capitalization rates range from 8% to 9%, compared to 5% to 6% in many cities on the east and west coasts.

Member 210 Park Avenue • Suite 1000 • Oklahoma City, OK 73102 • (405) 843‑7474 • www.priceedwards.com