Seattle Office 600 University Street, Suite 2220 Seattle, Washington 98101 Commercial Real Estate Services broderickgroup.com SEATTLE OFFICE MARKET OVERVIEW First Quarter 2016 DOWNTOWN SEATTLE OFFICE MARKET STATISTICS Entire Seattle Market # of buildings w/ 50,000 SF or more of contiguous Total SF: 53,760,829 Qtr Change YTD Change available space within Vacant SF: 3,545,443 each category Vacant %: 6.59% ( -0.52%) ( -0.52%) Asking Rates: $35.36/SF, G ( +$0.00) ( +$0.00) Entire Seattle Market Absorption Qtr: 533,619 SF Absorption YTD: 533,619 SF Class A Buildings 15 Total SF: 34,876,090 Vacant SF: 2,299,700 Qtr Change YTD Change Class A Buildings Vacant %: 6.59% ( -1.03%) ( -1.03%) Asking Rates: $40.28/SF, G ( +$0.41) ( +$0.41) Absorption Qtr: 509,901 SF 10/ Absorption YTD: 509,901 SF 15 Class A CBD Class A CBD Total SF: 18,844,936 Vacant SF: 1,211,539 Qtr Change YTD Change Vacant %: 6.43% ( -1.90%) ( -1.90%) 5/ Asking Rates: $40.66/SF, G ( +$0.59) ( +$0.59) 15 Absorption Qtr: 354,152 SF Absorption YTD: 354,152 SF Class A+* Class A+ * Total SF: 6,102,368 Vacant SF: 408,583 Qtr Change YTD Change 1 / Vacant %: 6.70% ( -1.14%) ( -1.14%) 15 Asking Rates: $44.00/SF, G ( -$0.29) ( -$0.29) Absorption Qtr: 94,307 SF Absorption YTD: 94,307 SF Two Union Square, US Bank Centre, Fourth & Madison, 1201 Third Avenue, * broderickgroup.com | pg. 2 Russell Investments Center, 1918 Eighth, West 8th SEATTLE OFFICE MARKET OVERVIEW First Quarter 2016 SIGNIFICANT LEASES Significant Leases LEASING ACTIVITY Quarter Tenant Building Submarket Size (SF) Significant leases in the Seattle area for the First Quarter were Q1 2016 Google 625 Boren Lake Union 607,000 dominated by technology market movers leasing space in both existing and future space. The largest deal of the quarter was Google’s Q1 2017 Amazon Urban Union Lake Union 287,000 Seattle campus move by pre-leasing 607,000 SF at Vulcan’s 625 Boren Q1 2016 Saltchuk 450 Alaskan Pioneer Square 91,357 development. Additionally, Amazon leased 287,000 SF of Urban Union, which has an expected Q2 2016 delivery. Additional notable leases Q1 2016 Oracle (Expansion) Century Square CBD 88,000 were Saltchuk’s 91,357 SF lease at 450 Alaskan (Q3 2017), making it the Q1 2016 Qumulo (Expansion) Century Square CBD 67,000 first tenant of the development. In Century Square, both Oracle and Qumulo expanded to 88,000 SF and 67,000 SF respectively. Expedia Q1 2016 Expedia 645 Elliott Waterfront 38,000 leased a full floor of 38,000 SF at 645 Elliott and F5 Networks leased Q1 2016 F5 Networks Elliott Bay Office Park Queen Anne 20,000 20,000 SF at Elliott Bay Office Park. Q4 2015 Safeco Insurance (Expansion + Renewal) Safeco Plaza CBD 504,000 LARGESTLargest CONTIGUOUS Contiguous Blocks BLOCKS Q4 2015 DocuSign 999 Third CBD 119,000 Available Square Rank Building Submarket Floors Feet 1 300 Pine CBD 5-8 312,691 Q4 2015 Moss Adams (Renewal) 999 Third CBD 77,274 2 2nd & Seneca CBD 2-9 204,620 Q4 2015 URS Aecom 1111 Third CBD 55,000 3 Elliott Bay Office Park Queen Anne 1-5 179,017 4 Hill7 Denny Regrade 2-7 168,203 Q4 2015 Seattle Credit Union Home Plate Center (S) SODO 43,500 5 325 Eastlake - Yale & Thomas Lake Union 1-7 161,095 6 1101 Westlake Lake Union 1-6 150,621 Q4 2015 Groupon 1201 Third CBD 42,000 7 Met Park East CBD 2-7 117,835 Q4 2015 Antioch University 3rd & Battery Denny Regrade 38,000 8 800 5th CBD 23-28 117,601 9 8th & Olive CBD 1-7 97,301 Q3 2015 Tableau Software North Edge Lake Union 210,000 10 800 Fifth CBD 4-5 81,272 Q3 2015 Avvo 8th & Olive CBD 100,000 MostMOST Vacant VACANT Buildings BUILDINGS (Sorted By (BY Percentage AVAILABLE Available) SF) Available Percent Rank Building Submarket Q3 2015 Uber Second & Seneca CBD 50,000 Square Feet Available 1 300 Pine CBD 312,691 100% Q3 2015 Hillis Clark Martin 999 Third CBD 32,000 2 1101 Westlake Lake Union 150,621 100% 3 325 Eastlake - Yale & Thomas Lake Union 161,095 88% Q3 2015 Perkins + Will Rainier Tower CBD 20,300 4 Elliott Bay Office Park Queen Anne 179,017 72% Q2 2015 Holland America Line Holland America Building Queen Anne 175,000 5 Hill7 Denny Regrade 170,064 57% 6 2nd & Seneca CBD 221,661 42% Q2 2015 Community Health Plan 1111 Third CBD 91,816 7 800 Fifth CBD 331,397 35% Q2 2015 Juno Therapeutics 400 Dexter Lake Union 80,000 8 Fourth & Madison CBD 141,932 17% Stadium Innovation 9 1201 Third CBD 144,406 13% Q2 2015 Oculus VR SODO 51,000 Center 10 Columbia Center CBD 194,260 12% Q2 2015 Pitchbook 901 Fifth CBD 35,000 broderickgroup.com | pg. 3 SEATTLE OFFICE MARKET OVERVIEW First Quarter 2016 Seattle Office Market Class A Historical Overview Seattle ClassHistorical A Office MarketSummary 2005 - First Quarter 2016 Historical Overview Forecast 2016 - 2019 Avg. Gross Year-End Vacant Net Vacancy Annual Rent Rate Year Rental Rate New Construction Inventory SquareSeattle Feet ClassAbsorption A Office MarketRate Growth Growth SEATTLE OFFICE MARKET FORECAST (Direct) Historical Overview 2005 $26.13 25,624,369 Avg. Gross 0 2,685,342 376,601 10.5% 1.5% -1.7% Year-End Vacant Net Vacancy Annual Rent Rate Year Rental Rate New Construction Inventory Square Feet Absorption Rate Growth Growth The Seattle Class A vacancy rate is projected 2006 $29.41 26,695,478 (Direct)1,071,109 2,009,591 1,888,918 7.5% 7.1% 12.6% Seattle Class A Office Market 2005 $26.13 25,624,369 0 2,685,342 376,601 10.5% 1.5% -1.7% to continue decreasing throughout the Historicalsecond Overview 2007 $37.31 26,917,043 221,565 2,121,980 124,752 7.9% 0.5% 26.9% 2006 $29.41 26,695,478 1,071,109 2,009,591 1,888,918 7.5% 7.1% 12.6% quarter of 2016.Avg. Gross With new buildings delivering 2008 $37.91 27,446,933 529,890 2,963,393 (119,506) 10.8% -0.4% 1.6% Year-End Vacant Net Vacancy Annual Rent 2007Rate $37.31 26,917,043 221,565 2,121,980 124,752 7.9% 0.5% 26.9% Year Rental Rate New Construction Inventory Square Feet Absorption Rate Growth Growth in 2016, vacancy(Direct) should slightly increase later 2009 $31.41 29,861,3352008 $37.912,414,402 27,446,933 5,936,082529,890 (644,971)2,963,393 (119,506)19.9% 10.8%-2.2% -0.4%-17.1%1.6% 2005 $26.13 25,624,369 0 2,685,342 376,601 10.5% 1.5% -1.7%2009 $31.41 29,861,335 2,414,402 5,936,082 (644,971) 19.9% -2.2% -17.1% this year. 2010 $31.38 30,762,677 901,342 5,554,673 994,359 18.1% 3.2% -0.1% 2006 $29.41 26,695,478 1,071,109 2,009,591 1,888,918 7.5% 7.1% 12.6%2010 $31.38 30,762,677 901,342 5,554,673 994,359 18.1% 3.2% -0.1% 2011 $31.20 31,608,885 846,208 4,590,319 1,178,488 14.5% 3.7% -0.6% 2007 $37.31 26,917,043 221,565 2,121,980 124,752 7.9% 0.5% 26.9%2011 $31.20 31,608,885 846,208 4,590,319 1,178,488 14.5% 3.7% -0.6% In addition,2008 high$37.91 price 27,446,933sales of Class529,890 A office2,963,393 (119,506)2012 10.8%$31.80 -0.4% 31,985,9041.6%2012 $31.80400,563 31,985,904 4,254,955400,563 1,490,4424,254,955 1,490,44213.3% 13.3%4.7% 4.7% 1.9% 1.9% 2009 $31.41 29,861,335 2,414,402 5,936,082 (644,971) 19.9% -2.2% -17.1% buildings in 2015 will continue the upwards 2013 $33.62 32,027,0222013 $33.62180,710 32,027,022 3,702,487180,710 800,7123,702,487 800,71211.6% 11.6%2.5% 2.5% 5.7% 5.7% 2010 $31.38 30,762,677 901,342 5,554,673 994,359 18.1% 3.2% -0.1%2014 $34.95 32,661,260 480,000 3,018,471 1,029,132 9.2% 3.2% 4.0% 2014 $34.95 32,661,260 480,000 3,018,471 1,029,132 9.2% 3.2% 4.0% momentum2011 on$31.20 rents as 31,608,885the new owners846,208 aim to4,590,319 1,178,488 14.5% 3.7% -0.6%2015 $39.87 34,707,290 1,778,064 2,646,575 969,059 7.6% 2.8% 14.1% $31.80 31,985,904 400,563 4,254,955 1,490,4422015 13.3%$39.87 4.7% 34,707,2901.9% 1,778,064 2,646,575 969,059 7.6% 2.8% 14.1% hit their2012 underwriting projections while taking Q1 2016 $40.28 34,847,290 140,000 2,276,674 509,901 6.5% 1.5% 1.0% 2013 $33.62 32,027,022 180,710 3,702,487 800,712 11.6% 2.5% 5.7% advantage of the lack of expected deliveries – Q1 2016 $40.28 34,847,290Projected - End of Year 140,000 2,276,674 509,901 6.5% 1.5% 1.0% 2014 $34.95 32,661,260 480,000 3,018,471 1,029,132 9.2% 3.2% 4.0%2016 $41.86 36,620,481 1,913,191 2,609,766 1,950,000 7.1% 2.8% 5.0% Projected - End of Year with available2015 $39.87 space – 34,707,290in the first and1,778,064 second2,646,575 969,059 7.6% 2.8% 14.1%2017 $43.54 39,772,770 3,152,289 3,852,942 1,909,113 9.7% 4.8% 4.0% 2016 $41.86 36,620,481 1,913,191 2,609,766 1,950,000 7.1% 2.8% 5.0% quartersQ1 2016 of 2016.$40.28 34,847,290 140,000 2,276,674 509,901 6.5% 1.5% 1.0%2018 $45.28 42,190,770 2,418,000 4,718,321 1,552,620 11.2% 3.7% 4.0% Projected - End of Year 2017 $43.54 39,772,7702019 $42.523,152,28943,660,770 3,852,9421,470,000 1,909,1134,580,169 1,608,1529.7% 10.5%4.8% 3.7% 4.0% 4.0% 2016 $41.86 36,620,481 1,913,191 2,609,766 1,950,000 7.1% 2.8% Summary5.0% 2016-2019 Total Average Total Average Average Average 2018 $45.28 42,190,770 2,418,000 4,718,321 1,552,620 11.2% 3.7% 4.0% 2017 $43.54 39,772,770 3,152,289 3,852,942 1,909,113 9.7% 4.8% 4.0% 8,953,480 3,940,300 7,019,886 9.6% 3.7% 4.3% 2019 $42.52 43,660,770Notes: 1,470,000 4,580,169 1,608,152 10.5% 3.7% 4.0% 2018 $45.28 42,190,770 2,418,000 4,718,321 1,552,620 11.2% 3.7% 14.0% Year end inventory, (CBD, Denny, Lk Union, Pioneer Sq, Waterfront, Fremont/UW), Class A, 20,000 SF and greater buildings (CoStar).