HUNTSVILLE MARKET SURVEY OFFICE • INDUSTRIAL • RETAIL 2007 TABLE OF CONTENTS Overall Market . 1 Jetplex Industrial . 2 Chase Industrial. 3 Downtown Offi ce. 4 Jetplex/Madison Offi ce . 5 Cummings Research Park Offi ce . 6 Cummings Research Park Map . 8 Retail Map. 10 Retail Market . 12 For Sale or Lease . 14 Recent Graham Activities. 16 Offi ce & Industrial Group . 18 Property Management Group . 19 About Graham & Company . 20 [MARKET TOTALS] OVERALL OFFICE 14,449,887 SF INDUSTRIAL 17,407,460 SF MARKET RETAIL 11,655,751 SF HUNTSVILLE REAL ESTATE MARKET OVERVIEW OFFICE: The Huntsville offi ce market remains tight with vacancies running below 7%. New offi ce construction in Cummings Research Park (CRP) has exploded with over 1.5 million sf of new product coming online in 2006 and 2007. Much of this growth is in anticipation of the recent Base Realignment and Closure (BRAC) announcement. The BRAC recommendations included the move of seven different entities to Redstone Arsenal that will add 4,714 new jobs to the market. The job growth in the public sector is fueling the new construction in CRP. CRP dictates the Huntsville offi ce market with over 9.5 million sf. The occupancy rate for CRP is 97% while the entire Huntsville offi ce market stands at 93%. The Central Business District (CBD) market and the tertiary offi ce markets remain stable. OFFICE OCCUPIED VACANT 2006 2005 2004 Multi-Tenant 6,566,980 658,628 10.03% 11.32% 16.44% Single Tenant 6,951,016 273,263 3.93% 3.24% 3.31% TOTAL OFFICE MARKET 13,517,996 931,891 6.89% 7.23% 10.34% INDUSTRIAL: Huntsville’s industrial market, dominated by the Jetplex and Chase Industrial Parks, is showing a vacancy rate of less than 5%. Most large blocks of space in the market have been leased and several new industrial developments were announced in 2006. Over 250,000 sf of industrial space is currently under construction, with several hundred thousand additional sf being planned. The majority of this growth is in the Jetplex area, and this new supply should help attract new businesses to the area. INDUSTRIAL OCCUPIED VACANT 2006 2005 2004 Multi-Tenant 4,386,605 467,730 10.66% 8.26% 20.56% Single Tenant 12,219,775 333,350 2.73% 5.69% 3.94% TOTAL INDUSTRIAL MARKET 16,606,380 801,080 4.82% 6.37% 8.64% RETAIL: Huntsville’s retail market is experiencing a period of growth. Bridge Street Town Centre, a new development in Cummings Research Park, will offer 500,000 sf of retail shopping, and many new developments have emerged in the South Huntsville/Jones Valley area as well. North and Middle Huntsville are attracting more quality retailers, and residential growth is spurring much activity in Northwest Huntsville/Madison. RETAIL OCCUPIED VACANT 2006 TOTAL RETAIL MARKET 10,732,388 923,363 8.60% GRAHAM & COMPANY This report includes current spaces available for sublease. HUNTSVILLE MARKET SURVEY 2007 1 JETPLEX [9.17 MILLION SF TOTAL] INDUSTRIAL SINGLE TENANT 5,911,945 SF MARKET MULTI-TENANT 3,267,388 SF THE JETPLEX SUBMARKET IS COMPRISED OF SEVERAL SMALLER MARKETS THAT SUR- ROUND THE HUNTSVILLE INTERNATIONAL AIRPORT AND THE INTERMODAL CENTER. Jetplex Industrial Park contains 1,700 acres and offers Foreign Trade Zone #83, U.S. Customs Port of Entry and interstate access via I-565. Lowe Industrial Park is a 900-acre park originally designed to encompass the growth of Intergraph Corporation. Jetplex South Industrial Park contains 956 acres and should be positively affected by the 12,000 foot extension to the west runway. Recent developments in the Jetplex Market: 1) International Truck and Engine Corporation will assemble its new line of truck diesel engines at a 300,000 sf facility in Jetplex Industrial Park. The new plant will house about 175 employees. Full production is expected to begin in spring of 2008. 2) BASF completed a $5 billion acquisition of Engelhard. The Huntsville plant, which employs approximately 500 people, will be integrated into BASF. 3) Graham & Company began construction on a new 208,000 sf distribution center. Construction on an additional 208,000 sf facility will begin in 2008. Major area tenants include: The Boeing Company, International Truck and Engine Corporation, Cinram, Kohler and Intergraph. Huntsville CBD 20 Lowe Industrial Park BLVD. DUNLOP BLVD. MADISON HWY. HWY. A KELLNER RD. N IA R T - JA ME S RECORD RD. WALL Huntsville International International Intermodal Center RD. ZIERDT Airport Jetplex – INTERNATIONAL TRUCK AND ENGINE – Industrial International announced plans for a new Park 300,000 sf facility that will be used to COUNTY LINE ROAD BLVD assemble its new line of truck engines. G . Redstone IN BOE Arsenal Jetplex South GRAHAM & COMPANY . WALL - TRIANAHWY. 2 RD HUNTSVILLE MARKET SURVEY 2007 SWANCOTT [ 5.1 MILLION SF TOTAL] CHASE SINGLE TENANT 4,753,930 SF INDUSTRIAL MULTI-TENANT 330,000 SF MARKET CHASE INDUSTRIAL PARK IS A 1,500-ACRE PARK LOCATED IN NORTHEAST HUNTSVILLE THAT WAS DEVELOPED BY THE MADISON COUNTY COMMISSION. The park is industrial-oriented and mostly comprised of single tenant employers. Products manufactured in the park include medical instruments, DVD’s, copper and plastic products and pharmaceuticals. Qualitest Pharmaceuticals, a manufacturer of generic drugs, has over 750,000 sf of offi ce and manufacturing space in the park. Cinram, one of Huntsville’s largest employers, uses a 1.1 million sf facility to manufacture compact discs. Transactions of note include: 1) Kömmerling USA expanded its facility by 100,000 sf. More than sixty new jobs will be added with the expansion. 2) Cinram announced plans to expand its current facility by 263,000 sf. Cooper Construction was awarded the construction project. Major area tenants include: – KÖMMERLING – Cinram, Qualitest Pharmaceuticals, Hart & Cooley, Kömmerling expanded its Chase facility by 100,000 sf in 2006. Kömmerling, J & J South Central and PPG. HUNTSVILLE INDUSTRIAL MARKET SF . RD R 6 TE ES CH 5.9 IN 5 MILLION W 4.8 4 MILLION 3 3.3 MILLION 2 MILLIONS MOORES MILL RD. 1 200 300 300 300 THOUSAND 100 THOUSAND THOUSAND HOMER NANCE RD. THOUSAND THOUSAND 0 Jetplex Single Jetplex Multi Chase Single Chase Multi CHA JORDAN RD. SE RD. Total SF Vacant Chase Industrial Park GRAHAM & COMPANY Huntsville HUNTSVILLE MARKET SURVEY 2007 3 CBD DOWNTOWN [ 2.1 MILLION SF TOTAL] OFFICE SINGLE TENANT 429,000 SF MARKET MULTI-TENANT 1,673,676 SF THE HUNTSVILLE DOWNTOWN OFFICE MARKET IS DOMINATED BY LEGAL, BANKING, ACCOUNTING AND BROKERAGE PROFESSIONALS. City, county and government employees also make the downtown Central Business District (CBD) their home. The 91,000 sf former Sanmina - SCI administrative building is being upgraded to serve as a multi-tenant offi ce tower. The former Huntsville Times building and several other smaller downtown offi ce buildings are undergoing similar modernization projects. The downtown offi ce market remains stable. Most Class A buildings are showing vacancies of 5% or less. New construction in the downtown market includes the Summit at Big Spring Park. – AMSOUTH BUILDING – The AmSouth and Regions Transactions of note are as follows: merger was completed in November 2006. 1) AmSouth and Regions Bank completed their merger in November of 2006. The new bank will control 39% of the local banking market. Huntsville’s downtown offi ce market should not be negatively impacted by the consolidation. 2) The redevelopment of the 55 year-old Council Court housing project in downtown Huntsville was announced. An RFP was released to qualify bidders for the project. The project includes demolition of 196 units, building a 75 to 124-unit complex on the site, and selling the remaining available land. Money from the land sale will go back into Huntsville’s public housing project. Major area tenants include: Regions Bank, Madison County Government, Colonial Bank, VERS UNI ITY DR. Wachovia Bank, City of Huntsville and Bradley Arant. C H U R C H W A M S H E M S IN T O . G R T I O A N L S T T. S DOWNTOWN P E O K R W N OFFICE MARKET Y O SF . M 2.0 . HOLMES AVE 1.5 1.7 MILLION AVE. Total SF INTON CL 1.0 Vacant IAMS VE. ILL A W MILLIONS 429 0.5 THOUSAND 245 230 THOUSAND THOUSAND 231 HUNTSVILLE 0 Single Multi GOVERNORS DR GRAHAM & COMPANY HUNTSVILLE MARKET SURVEY 2007 4 JETPLEX/ [1.57 MILLION SF TOTAL] MADISON SINGLE TENANT 700,000 SF OFFICE MULTI-TENANT 927,660 SF MARKET THIS MARKET IS DRIVEN BY TWO MAIN SUBMARKETS: JETPLEX AND MADISON. Jetplex area tenants tend to be industrial or logistics oriented. Boeing and Intergraph dominate the Jetplex offi ce market. The City of Madison has seen multiple banking and healthcare related buildings developed over the past couple of years. That growth, particularly in the health care industry, should remain strong. County Line Road, Hughes Road and Highway 72 look to be the areas that will experience new projects. Y. 72 HW TUR DECA New Developments: HUNTSVILLE 1) Intergraph Corporation announced completion of the acquisition of Intergraph by an investor group led by Hellman & Friedman and Texas Pacifi c Group. The transaction was valued at approximately $1.3 billion. BALCH RD. 2) The battle over construction rights for a Madison hospital HUGHES RD. WALL - TRIANA HWY. - TRIANA HWY. WALL continues. A fi nal decision could be reached in the spring of 2007 which will affect the medical offi ce market surrounding the new hospital. MADISON PIKE MILL RD. Major area tenants include: Huntsville Intergraph, The Boeing Company and Northrop Grumman. Madison CBD Research Park MADISON SULLIVAN ST.