Brokerage Outlook: Florida

• Miami Retail    

• Orlando Retail

• Tampa Retail

• Jacksonville Retail

• Jacksonville Multifamily

• Miami Industrial    

• Jacksonville Industrial

• Miami Office    

• Jacksonville Office

• Orlando Office

Miami Retail Wolfe Submitted by Barry Wolfe, VP Investments and Michael Zimmerman, senior associate with the Fort Lauderdale, Florida, office of Marcus & Millichap Real Estate Investment Services.  Posted Online 5-28-08. What area is your expertise? Broward County (Fort Lauderdale)/Miami-Dade County (Miami), Florida What trends do you see presently in retail development in your area? The housing market downturn and credit market shake up have caused retail development in South Florida to slow.  Developers are having difficulty getting as much leverage as they had grown accustomed and lenders are now requiring either total or partial recourse. Another reason for the decrease in construction is simply that there is not a lot of available land for new development. What we are seeing in the pipeline is discount retail centers, such as Super Wal-Mart and Super Target, adding locations throughout both counties. Zimmerman What type of retail product is doing well in your area? Class A assets, such as grocery anchored (and in particular Publix-anchored centers) are always viable whereas un-anchored Class B/C shopping centers are struggling with vacancies, in part due to increasing expense pass-throughs.  What retailers are new to your area? One of the largest new South Florida retailers is Ikea, which recently opened in Sunrise. The well-known international brand has created quite a bit of competition with local furniture stores. Sunrise is Ikea’s first location in South Florida. Also, Five Guys Famous Burger & Fries and Firehouse Subs are adding locations throughout both counties.  Who are the active retail developers in your area? Two active developers are Stiles Corporation and Woolbright Development. Please name one or two significant retail developments in your area. What impact will these projects have on the market? In Broward County, the 300,000-square-foot Ikea was a significant delivery. Davie Commons, a planned 152-acre, 2 million-square-foot, office and shopping center is in the pipeline. The center is being developed by Turnberry Associates in the suburban town of West Davie.  It will be the first major lifestyle center of its kind in this submarket. In Miami-Dade County, a 450,000-square-foot center in Kendall is projected for delivery this year.  Anchored by Costco, the center’s tenants will also include TJ Maxx and Ross Dress for Less. Where is the majority of development taking place? Why is this area doing well?  In Fort Lauderdale, builders added 1.8 million square feet of retail space in 2007, almost double the output from 2006. This year, 1.2 million square feet is anticipated with 942,000 square feet headed for the Coral Springs/Margate submarket. With strong demographics and market fundamentals, this suburban area has not been hit as hard by the housing market. In Miami-Dade County, builders also added about 1.8 million square feet of new retail space, but this number is down almost 12.5 percent from deliveries in the previous year.  The majority of development is taking place in the Coral Gables/Kendall submarket where there are currently 580,000 square feet of retail space under construction. What area do you expect to be the next big retail development market? Why? In Broward County, developers are forecast to shift their focus to the Dania/Hollywood/Hallandale and Plantation/Sunrise/Tamarac submarkets, as 63 percent of planned projects are currently being scheduled for those areas. The Dania/Hollywood/Hallandale submarket thrives on its gaming entertainment centers whereas the large outlet-shopping center, Sawgrass Mills Mall, brings traffic to the Plantation/Sunrise/Tamarac market. In Miami-Dade County, the largest proposed development found in the planning pipeline is the 700,000-square-foot Hialeah Gateway retail center at NW 97th Avenue and NW 138th Street.  There are about 37 projects in the planning pipeline that could add 4.7 million square feet of inventory to Miami-Dade, if all reach fruition. Please describe the retail leasing activity in your area. I doubt we will see rent growth this year in South Florida. Leasing is hard in particular for non-anchored centers as vacancies are increasing and owners are having trouble collecting rents. Rent concessions are back on the market in some areas because there are not as many tenants actively seeking space.  What major leases have been closed recently? In Broward County, two of the largest lease signings included: Garment & Linen Services (84,959 square feet, Federal Highway) and Pompano Auto Property (46,516 square feet, Ford of Pompano). In Miami-Dade, a few of the largest lease signings included: the 59,000-square-foot lease signed by Floor and Decor Outlets at 3250 W 18th Ave., and the 45,000-square-foot deal signed by David Barton Gym at Gansevoort South Hotel. Please give a measure of retail vacancy rates and a measure of available sublease space. The prolonged housing market downturn and credit crunch — not just in the debt market but for all credit lines — coupled with the inflation of food and gas prices could lead to a vacancy rate of eight to 10 percent for unanchored centers. This will be evident in both Broward and Miami-Dade counties. What types of retailers should look into your market in the coming year? What type of retail is needed? Quick-serve, moderately-priced restaurants such as Chipotle Mexican Grill and Five Guys — or restaurants with similar concepts — should seek space in South Florida.

Orlando Retail Streep Submitted by Jeff Streep, associate — retail investments and leasing with the Orlando, Florida office of Carter. Posted 12/07/07. What area is your expertise? • Orlando/Central Florida What trends do you see presently in retail development in your area? • Orlando is still very much on an upward trend for retail development. With the population growth we have experienced over the past few years, the need for consumer services still exists which is being met by numerous local and national developers. What type of retail product is doing well in your area? • Big box with some smaller in line space centers are doing very well along with smaller strip centers ranging from 10,000 to 20,000 square feet that have a majority of regional national tenants. Some owners of older shopping centers are also doing well because they have committed funds to major capital improvements, which have given their dated centers a facelift to compete with newer retail. They remain competitive by having a good-looking product, but at a lower rental rate. What retailers are new to your area? • Two of the most promising and innovative retailers are Dagwood’s Sandwich Shoppes and Teriyaki Experience. Both of them are franchises that will see major growth throughout Central Florida in the next 1 to 2 years. They truly offer a competitive alternative to existing retailers and give the consumer something new. Who are the active retail developers in your area? • National developers: Sembler and Weingarten • Local developers: Century Retail, Hessburg Carlson Companies and Real Property Specialists Please name one or two significant retail developments in your area. • Lake Nona Medical City — This is the new home of the Burnham Institute and UCF College of Medicine. With this addition to Orlando, it will draw companies from all over the nation to set up offices. Tavistock Group is the driving force behind this project and has plans for major retail developments that will service the surrounding communities and office parks. Where is the majority of development taking place? Why is this area doing well? • Development is occurring everywhere in Central Florida. What area do you expect to be the next big retail development market? Why? • I expect Orlando as a whole to keep growing with retail development. The tertiary cities that surround Orlando will experience some booms as we move into the next five years. Please describe the retail leasing activity in your area. • New projects are still pre-leasing, but at a slower rate than just a year ago. With the slow down of the residential market and tightening of funds from lending institutions, retail has experienced some of the fall out. With the New Year approaching, retail leasing will regain momentum and projects will push forward out of the ground.

Tampa Retail Submitted by Ann McKinney and Bob Gounaud, broker and leasing agent with the Norfolk, Va., and Apollo Beach, Fla., offices of Wheeler Real Estate Company. Posted 06/26/07. Ann McKinney What area is your expertise? • The Tampa area in central Florida. What trends do you see presently in retail development in your area? • Grocery-based centers of 150,000 to 300,000 square feet with strip centers close that are 40,000 to 60,000 square feet is a big trend in Tampa. These shopping areas are based around new residential developments and represent the majority of the retail development. Tampa is also participating in the newer trend towards mixed-use town centers and larger open-air centers. Bob Gounaud What type of retail product is doing well in your area? • Grocery and other basic needs retail stores have and always will do well here. The demand for nationally branded restaurants in Tampa is high. This area is a mixing bowl of full-time residents that keep the retailers busy, temporary vacationers that help with retail spikes and snowbirds heading south after retirement. Temporary residents typically drive development of eateries and other novelty vacation types of retail that offers souvenirs and gifts. What retailers are new to your area? • New development by the big retailers have popped up in Tampa during the past few years due to the large number of new residents. Wal-Mart, The Home Depot and Lowe’s Home Improvement Warehouse are just a few of the big retailers capitalizing on the residential boom. New chain stores have begun opening, as well. Applebee’s, Perkins, Rita’s, Toppers Creamery, The Cheesecake Factory and, of course, Starbucks Coffee. The Hispanic market is really taking off with Bravo Super Markets and a flurry of small businesses catering to the Spanish speaking population. Who are the active retail developers in your area? • Century Retail, Weingarten Realty and Ram Realty Services. Please name one or two significant retail developments in your area. What impact will these projects have on the market? • Ram Realty Services in partnership with Pinnacle Realty Advisors will develop 23 acres in Temple Terrace into a mixed-use retail, residential and office complex to begin construction early next year. Expected tenants include: restaurants; post office; arts and education center with a theater, classrooms and dance studios; Sweetbay grocery store; and two parking garages. Retail tenants will help boost the area, making the progress of this project worth following. Generating more local traffic for the area, a project like this will benefit the city in many ways but primarily in tax revenue from both sales and real estate. Where is the majority of development taking place? Why is this area doing well? • Tampa is experiencing most of its growth in the least developed outlying areas of New Tampa in the northeast and South County to the south. These areas were used for farming but developers have purchased the land to build new residential communities with retail development typically following the residential. The City of Tampa is also experiencing major growth directly downtown as old factories and warehouse facilities are either destroyed or renovated into condominium sites. More downtown retail is expected to follow as more people move into the city from the suburbs.Three factors can be attributed to these new development’s successes: their proximity to the cities, the network of roads surrounding them and availability of land for development. What area do you expect to be the next big retail development market? Why? • I expect the retail development to continue to follow the residential market’s growth as it moves to outlying areas with access roads and highways linking them to the bigger cities like Tampa. This is similar to what is going on in Clermont to the west of Orlando on U.S. Highway 50. In these areas, where the cities are almost totally built up, development must follow the available land. Please describe the retail leasing activity in your area. • The retail leasing activity in the Tampa area is very active and continually growing. What major leases have been closed recently? • Publix super market at 45,000 square feet; Shoppes at Apollo Beach on U.S. 41 in Apollo Beach; and Sweet Bay super market at 45,000 square feet on U.S. 301 in Riverview. Please give a measure of retail vacancy rates and a measure of available sublease space. • The vacancy rates in the Tampa area are approximately 4 percent. This compares well with a national level of 7 to 8 percent. Many area shopping centers are enjoying 100 percent occupancy. The three centers in the area owned and operated by Wheeler Interests consist of more than 245,000 square feet and have a low vacancy rate of 1.2 percent. What types of retailers should look into your market in the coming year? What type of retail is needed? • The waiting lines at all the restaurants in the area are too lengthy for most people. Without a reservation (and sometimes with) you may not eat for an hour or more. Restaurants of all types should be working on this market because the demand is high yet the supply is still lacking. Would you like to make any additional observations about the retail market in your area? • Because we enjoy good weather year round here in Florida, this area is a magnet for retailers who don’t have to worry about losing business to bad weather days. Retail has been the best sector of the commercial real Estate market in the Central Florida area with industrial and office also doing well. As long as the economy holds up and the job market remains stable, I see no reason to think anything will change in the near future.

Jacksonville Retail Montour Submitted by Gary Montour, senior vice president at the Jacksonville office of Colliers Dickinson and Colliers International. Posted 9-15-06. What area is your expertise? • My area of expertise lies in retail sales, leasing and investments in Jacksonville, Tallahassee, Daytona Beach, Melbourne, Gainesville and Ocala. What trends do you see presently in retail development in your area? • There is a trend of continued growth in big box stores, such as Wal-Mart, Super Wal-Mart, Super Target, Lowe's and Home Depot. These stores seem to be the driving force in most of the new retail development. What type of retail product is doing well in your area? • We are seeing several more lifestyle malls where Target, Dillard's, Dick's Clothing and Sporting Goods and Macy's are creating an open-air type of retailing. What retailers are new to your area? • Macy's, Neiman Marcus, Gander Mountain Sporting Goods, and Nordstrom are tenants that are knocking on our doors. Who are the active retail developers in your area? • Retail shopping centers, both anchored and unanchored, continue to lease up well in areas of high residential growth. We are also seeing some of the retail condo developers come in and develop retail shopping centers to be sold back to retailers who want to own their own space. Please name one or two significant retail developments in your area. What impact will these projects have on the market? • Some of the most significant retail developments include St. Johns Town Center Mall at J. Turner Butler Boulevard and Town Center Parkway, and the River City Market Place at I-95 near the Jacksonville Airport. There is also a planned mall at the World Golf Village at I-95. It will mirror the St. Johns Town Center. The developers are Ben Carter Properties and Simon Property Group. Where is the majority of development taking place? Why is this area doing well? • The majority of the growth taking place is in high residential growth areas of Fleming Island, the northside near River City Market Place, the westside at Oakleaf Plantation at Brannan Field Road and Chaffee Road at Argyle Forrest Boulevard. Also I-95, St. Augustine Road, Ponte Vedra and Nocatee. What area do you expect to be the next big retail development market? Why? • St. Augustine, The World Golf Village, and the rest of St. Augustine. Also Green Cove Springs on the Westside of the river. The growth is heading south. Please describe the retail leasing activity in your area. • Rental rates and occupancy rates continue to stay high; however, with the gas prices and inflation and the recent downturn in the economy, you will see more spaces become available and occupancy levels drop. What major leases have been closed recently? • Sonic (2,000 square feet), McAllister's Deli (4,000 square feet), Walgreens, H&R Block, America's Mattress, About Floors and More, Kids Clips, Sherwin Williams, Auto Toy Store. Please give a measure of retail vacancy rates. Please give a measure of available sublease space. • The retail rates for new space are generally in the $20 to $25 per square foot range. Existing space goes for around $15 to $20 per square foot, depending on the market. What types of retailers should look into your market in the coming year? What type of retail is needed? • The same retailers continue to do the same thing in different trade areas. The same types of retail are needed for new residential growth. Hair salons, drug stores, grocery stores, banks, fast food and casual dining seem to dominate this market. Would you like to make any additional observations about the retail market in your area? • The retail looks very strong and should continue to be strong because residential areas continue to have new residents move to Florida every day.

Jacksonville Multifamily Phillips Submitted by Larry Phillips, senior associate with the Jacksonville, Fla., office of Colliers Dickinson. Posted 9-15-06. What area is your expertise? • My expertise is in multi-family apartments in Jacksonville and all surrounding counties. What trends do you see presently in multifamily development in your area? • The purchase of apartments for condo conversion is lessening, and more realistic pricing is occurring. This is indicated by higher capitalization rates. There is less construction of new apartment complexes - this will help to elevate rents for current owners. Who are the active multifamily developers in your area? • The Devlin Group, Julian Lecraw and Vestcorp are all active multifamily developers in Jacksonville. The condo conversion industry has taken a significant portion of the rental market. As a result, the vacancy rate has decreased and rents are rising. Please name one or two significant multifamily developments in your area. • Some of the significant multifamily developments include Normandy Oaks Apartments in West Jacksonville (336 units developed by a local group called Lake Gray, LLC) and The Carling by Vestcorp in the downtown area of Jacksonville. Where is the majority of development taking place? Why is this area doing well? • The majority of development seems to be taking place downtown and in west Jacksonville. What area do you expect to be the next big development market? Why? • I expect the northside of Jacksonville to move to the forefront of development primarily due to the arrival of Mitsui. This company will be the first transportation company to link Asia directly with the Jacksonville market. It will bring numerous jobs to the northside area of Jacksonville. What areas are doing well in terms of apartment leasing? Which areas are struggling with leasing? • Currently, south Jacksonville and Mandarin are doing very well with apartment rentals. Please give a measure of apartment vacancy rates. • The vacancy rate has decreased from 8 percent to approximately 6 percent. Please give a measure of condo sales activity in the area. • Northeastern Florida has experienced a major glut on high-end condominiums. These condominiums have saturated the market; however, affordable housing and midrange condominiums seem to be in high demand. What impact do current interest rates have on the apartment and condo markets? What predictions do you have for interest rates and their effect on the multifamily market in 2006? • The interest rates have had some effect on the condo market, however, the most relevant concern is the massive availability of luxury condominiums and the lack of demand. Out-of-state investors own a large number of those condominiums and are currently unable to lease their properties. What is the status of job growth/(un)employment rates and what bearing will it have on the multifamily market? • Jacksonville continues to grow. The Jacksonville unemployment rate is lower than the average of unemployment in the United States. This trend is likely to continue.

Miami Industrial Cioci Submitted by Dan Cioci, associate, National Office and Industrial Properties Group with the Ft. Lauderdale, Florida, office of Marcus & Millichap.  Posted 04/25/08. What area is your expertise? Industrial properties in Miami-Dade County (Miami) and Broward County (Fort Lauderdale). What trends do you see presently in industrial development in your area? Industrial development in South Florida is at a slow down and absorption is creeping along. Given the land constraints of the Atlantic Ocean and Florida Everglades, build-to-suits are also harder to find in Broward and Dade counties. What type of industrial product is doing well in your area? Multi-bay and multi-tenant warehouses are in high demand because they continue to absorb space for a variety of tenants from 500 square feet to 5,000 square feet.  Many businesses that can function without their storefront locations are downsizing and moving their business to warehouses where they do not have to pay the high retail rental rates.  Big box industrial warehouses over 65,000 square feet are also doing well.  There is less demand for space over 10,000 square feet and under 65,000 square feet, as tenants desiring this size space are feeling more of the effects of the current economic downturn. Please name one or two significant industrial developments in your area. What impact will these projects have on the market? In Broward County, two of the largest deliveries are the additions to Seneca North Industrial Park located in Pembroke Park and Miramar Business Center in Miramar.  Seneca North Industrial Park added a 261,300-square-foot facility and Miramar Business Center added a 238,390-square-foot building. In Miami-Dade County, two of the largest projects scheduled for delivery are Flagler Station Bldg #29, a 171,730-square-foot building in the Airport West market and 3355 NW 114th St, a 130,000-square-foot building constructed as part of a build-to-suit project.  Where is the majority of development taking place? Why is this area doing well? Lincoln Logistics Park is one of the largest planned speculative warehouse distribution centers. It broke ground in Medley (Miami-Dade County) in fall 2007. What area do you expect to be the next big industrial development market? Why? There is not a lot of available land in South Florida for new development, let alone room for large industrial parks.  What we will see in the pipeline is the addition of buildings to existing parks and also redevelopment within those parks. Please describe the industrial leasing activity in your area. With the current economic condition, owners would rather take short-term lease tenants (two years or less) at below market rents than to have vacant space.  This is the timeframe in which owners believe the market/economy will start to improve.  Owners are also starting to offer concessions to fill vacancies. Please describe the industrial sales activity in your area. Investors are starting to purchase vacant, functionally obsolete warehouse buildings located in established industrial parks.  If owners were to replace the buildings, the floor area ratio (FAR) would be significantly less than the existing building square footage and replacement costs would be high.  By purchasing the buildings at a very low price per square foot, owners can invest significant dollars into rehabbing the properties.  They are adding more dock doors, increasing the ceiling height and reconfiguring the space so that trucks can turn onsite. This allows them to compete with newer properties on the market. Please give a measure of industrial vacancy rates and a measure of available sublease space. Through year end 2007, vacancy in Fort Lauderdale was 5.2 percent, up 140 basis points from year end 2006.  In Miami, year end 2007 vacancy was 6.1 percent, 80 basis points higher than year end 2006.  I believe vacancy rates will rise in both markets. What impact do current interest rates have on the industrial market? What predictions do you have for interest rates and their effect on the industrial market in the next year? In first quarter 2008 there was a definite disparity in price between sellers and buyers. As we enter the second quarter, the difference between the price at which a seller is willing to sell and the price a buyer is willing to pay will narrow.  However they will still need to overcome that gap. Sellers who realize the implications of holding onto an under performing asset in the current market and who still seek a cash position are the same sellers who have now come to terms with the normalized market and lenders’ 2008 underwriting standards.  They will come to realize and accept the expectations of the experts in the financial arena. Low interest rates are helping to offset elevated lender spreads and buyers must consider the potential for increases in long-term rates. If interest rates rise and lender spreads do not narrow, investors will be faced with higher borrowing costs. What industries do you expect to expand in the next year to absorb a great deal of industrial space? What areas will be affected? I foresee an increased demand for industrial space for import and export businesses, particularly for companies that trade with South and Central America.  The drayage for goods in South Florida has increased- in part due to the increase in fuels costs.  Users/tenants are beginning to think more in terms of cubic square footage rather than floor area square feet. They want to increase their storage capacity and decrease the drayage. The areas that will absorb most of the space will be the Port of Miami, Miami International Airport and Port Everglades/Hollywood/Fort Lauderdale Airport’s surrounding areas.  Miami-Dade has more export-oriented space while Broward offers more of a mix of industrial properties.

Jacksonville Industrial Lining Submitted by John Lining, senior vice president, and Phillip Parsons, vice president with Colliers Dickinson / Colliers International in Jacksonville, Florida. Posted 9-15-06. What area is your expertise? • Lining: My area of expertise is in industrial land sales and industrial building sales and leasing. I have more than 20 years of industrial experience in Jacksonville and Northeast Florida. • Parsons: My area of expertise is in industrial and land sales in Jacksonville. Parsons What trends do you see presently in industrial development in your area? • Lining: I see that industrial land acreage activity is the highest it has been in over 20 years. Zoned industrial acreage tracts are getting hard to find. It is going up in price rapidly. Industrial Acreage prices have doubled in the last 3 to 4 years. • Parsons: Availability of land. It is hard to find good sites for development. Prices for industrial sites have risen from $1 per square foot to $4 per square foot if you can find it. What type of industrial product is doing well in your area? • Lining: Industrial land and bulk warehousing are doing the best in Jacksonville. All areas of industrial real estate are doing well. • Parsons: All industrial products here in Jacksonville have done well from condos to lease and purchase of large warehouses. Who are the active industrial developers in your area? • Lining: Majestic Realty, Patillo, and Liberty Property Trust are all active industrial developers in Jacksonville. • Parsons: Pattillo Construction, Majestic Realty Co., Johnson Development, Panattonni. Please name one or two significant industrial developments in your area. What impact will these projects have on the market? • Lining: North Port by Pattillo and Alta Lakes Industrial Park are located close to the marine terminals. These will probably absorb the first Mitsui users needs. • Parsons: Pattillo Construction has been in this market for 15 years and has done very well. They now have two locations in Jacksonville. One on the west side is more build to suit but some land is available. Their development of regional impact calls for brick construction, which is very nice, but at a cost. The other location is north side on Alta Road. Again, mostly build-to-suit. Majestic Realty has leased land from the Jacksonville International Airport to build warehouses. They have leased the land and will build the warehouse and, once completed and leased, then they will repay the port. One of the best deals I have ever seen. Where is the majority of development taking place? Why is this area doing well? • Lining: The majority of the industrial development will take place in the north and west Jacksonville quadrants. The infrastructure is in place. The increased international trade created by the new Mitsui Marine Terminal ($200 million investment) is doubling the marine container volume by 800,000 20-foot containers annually. Bulk warehousing and refrigerated/freezer warehousing is in short supply to handle this great increase in international trade. • Parsons: Mostly near the port or it is port related. Mitsui leased 200 acres from the port for 30 years on the river to bring in containers. They have broken ground and are putting in $200 million of improvements. This is big business for Jacksonville. It will move 1,800 containers a day with a large work force. What area do you expect to be the next big industrial development market? Why? • Lining: Again, it is the northside and westside of Jacksonville. The demand is exceeding the current supply. • Parsons: The west side and north side. They are close to the port and residential lots are being developed in the area. It is the hottest area of Jacksonville. Please describe the industrial leasing activity in your area. • Lining: Leasing activity and lease rates are increasing. The 100,000-square-foot tilt-wall bulk warehouse lease rates have increased from $3.50 per square foot to $4.25 per square foot in the last 3 to 4 years. The rates will continue to rise as demand continues to increase. • Parsons: Leasing is good if you can find the product you need. Inventory is down with vacancy rate of 6 percent to 8 percent. Our rates are still below $4 per square foot and the developers are having a hard time getting it above the $4 range. It will go up by the first of the year just because of costs of new construction and demand. Our unemployment rate is around 3 percent. Please describe the industrial sales activity in your area. • Lining: Sales are very good in all sections of town due to the pressure created by increased international trade. The strongest demand is for the approximately 100,000-square foot industrial space. • Parsons: Sales are very good. Most of the old warehouses are on the West side are second generation, excluding Pattillo's and the new or first generation warehouses are on the southside. Rate reflects the age. Please give a measure of industrial vacancy rates. Please give a measure of available sublease space. • Lining: The vacancy has been 6 to 7 percent, but the vacancy rate is going down due to demand for warehousing exceeding the increase in inventory of available buildings. • Parsons: Lease rates are below $4 per square foot for Jacksonville. Vacancy rates for the west side are 5.7 percent and 7.9 percent for the southside. What impact do current interest rates have on the industrial market? What predictions do you have for interest rates and their effect on the industrial market in 2006? • Lining: Current interest rates are having a minimal impact on the industrial market. Lease rates are rising to meet the costs. • Parsons: Interest rates are as important in real estate. Interest rates have leveled off and so you will see a more active market. We feel that inflation has level off and interest rates will follow, hopefully. What industries do you expect to expand in 2006 to absorb a great deal of industrial space? What areas will be affected? • Lining: International trade is driving everything industrial. All of northeast Florida is and will be effected. • Parsons: With Mitsui coming to town, it is going to impact all aspects of our market from the local gas stations to the grocery stores. Not to mention the work force, mostly in the blue collar sector. Would you like to make any additional observations about the industrial market in your area? • Lining: We are selling land, building industrial buildings, and leasing space at a speed that I have not seen in more than 20 years in the industrial real estate market in northeast Florida. It will not stop for at least 5 years. There is a shortage of industrial buildings for sale or lease in northeast Florida.

Miami Office Submitted by Alex Zylberglait CCIM, SIOR and Ryan Shaw, associate vice president and associate with the Miami office of Marcus & Millichap Real Estate Investment Services.  Posted Online 05-06-08. Click here for chart Zylberglait What area is your expertise? Our primary focus of business is office properties in Miami-Dade County, Florida. What trends do you see presently in office development in your area? Office developments over the past few years have been limited to mostly office condominiums and build to suit. The office condo market was short lived and non-existent at this point. Unfinished condo projects are currently going back to for rent product and therefore adding nominal supply back to the market. The majority of office development for Dade is focused in the downtown Miami and Airport West submarkets. Downtown has seen three projects break ground for approximately 1.77 million square feet of Class A space. The airport area is targeted for many of the import and export companies that see much of the business go through the Miami International Airport as cargo planes transport much of the imports that come into the Port of Miami. Broward county is a little bit different in respect to they have had little new development in the office sector but have several projects that are planned mostly in downtown Ft. Lauderdale, Hollywood and Plantation. Both Miami and Ft. Lauderdale are enhancing their respective urban cores with several projects.    Who are the active office developers in your area? There are a number of active developers in South Florida and in Miami-Dade who play a key role in the South Florida economy. Two that have been particularly active for a long time include Procacci Development Corp. and Stiles Corp.  As for a developer who has looked long term and really embraced and started the LEED certification movement here in Miami, that would be The Foram Group.  They have the Brickell Financial Center, which is currently under construction.   Please name one or two significant office developments in your area. What impact will these projects have on the market? For Dade County it would have to be the Brickell Financial Center and GSA Immigration buildings that are being constructed in three different locations. The Brickell Financial Center was one of the first LEED pre-certified buildings in Florida and is going to really be a landmark building for Miami which you see the likes of in New York or Chicago with the Empire State Building or Sears Tower, respectively. The building is going to be first class with retail, office, luxury condominiums and hotel rooms. Loretta Cockrum and her Family-Owned Foram Group have done a tremendous job putting the project together and were willing to put in extra time and money that will make this one of the nicest office buildings south of New York City. The other projects I mentioned have not received the press and are not as sexy as most of the projects that are taking place in downtown, but with over 1.5 million square feet of GSA leased space for immigration it will facilitate the logistics for users that these properties serve. South Florida has a tremendous influx of immigration and these buildings have been located to make the number of people visiting immigration services daily much easier than the old buildings they are currently in. The new facilities will also be an improvement for the employees and help create new jobs. Where is the majority of development taking place? Why is this area doing well? The majority of development is in the urban core of each city. Downtown Miami has had a tremendous amount of residential condo developed and as people move into these units it will make it a friendlier environment if they could use public transportation or walk a short distance to their office. This holds true for downtown Ft. Lauderdale as well. When I say urban core of each city; in the past you have had suburban sprawl but with the land constraints of South Florida that sprawl could only go so far, so you are seeing other cities develop a smaller scale of a downtown to keep the residents close to home. The other major office areas in Dade are Coral Gables and Doral. The City of Doral, which is close to the Miami airport caters to many businesses in the import/export industries. What area do you expect to be the next big development market? Why? South Florida has just gone through a strong development period and there are several projects that just broke ground or are still on the books. Those projects are going to have to be completed and start seeing absorption before you see a lot of new development. What areas are doing well in terms of office leasing? Which areas are struggling with office leasing? The economy is worsening as everybody reads on a daily basis, but I truly believe that the media is playing a bigger role in the uncertainty. While some mortgage brokers, real estate brokers (especially residential) and aspiring developers are closing their doors, the overall occupancy rates for office properties in Dade County are high. In general, demand for office space is softening more in the lower quality assets in inferior locations or those not offering much in terms of amenities. Offices in strong locations are doing a lot better and buildings that offer full service leases are also favored by tenants since business owners prefer to know with more certainty their occupancy costs instead of having expense pass through exposure.  Please give a measure of office vacancy rates. Please give a measure of available sublease space. Miami vacancy rate is pushing closer to 10 percent this year compared to around 7 percent a year ago. Class A sublease space currently represents 10 percent of all vacant high-end space. What impact do current interest rates have on the office market? What predictions do you have for interest rates and their effect on the office market in the next year? Interest rates are historically low. What is affecting real estate and businesses is the lack of liquidity. A year ago anyone who could sign their name could get a loan now someone has to show that that they have the financial backing and experience to support any loan dollars, and even those people are having a difficult time. There are a number of challenges ahead in the economy that will likely act to suppress any significant increase in interest rates in the coming 12 to 18 months including the continued debacle of the sub-prime mortgages, the high cost of energy, and the increased levels of unemployment. Therefore we don’t believe there will be a significant shift in valuations for office markets as a whole though lower quality assets may see a moderate upward push on cap rates. What is the status of job growth/(un)employment rates and what bearing will it have on the office market? Unemployment is on the rise, but Florida has boasted the lowest unemployment rates in the country for years. Many people in the construction and financials might have to find work elsewhere. I just read somewhere that Florida’s ranking for venture capital was very high as well as science related developments. If we can diversify our economy to science related fields, technology and really improve our education system, then that will not only the help the office sector but it will be hard to compete with Florida. Is there any type of office tenant absorbing a majority of space? What industries do you expect to expand in the next year to absorb a great deal of office space? What areas will be affected? Most likely businesses in the import/export area will have most of the absorption along with foreign companies that want to increase their exposure and access to Latin America. In addition, government related users continue to maintain a strong presence.

Jacksonville Office Pepis Submitted by Fran Pepis, senior vice president with the Jacksonville, Florida office of Colliers Dickinson. Posted 12/07/07. Click here for Chart 1 and Chart 2 What area is your expertise? • This report is for Jacksonville, Florida. Specifically, the geographic area of Duval and Northern St. Johns counties. What trends do you see presently in office development in your area? • As space becomes absorbed new construction is being planned for downtown and on the Southside. With the relative lack of new construction for 2006, current vacancy rates have hit an all time low of 11.6 percent, at the end of the third quarter. At some point in the first half of 2008, the market should see the vacancy rate drop to 10 percent indicating a reasonable healthy office market. Higher occupancy levels will likely mean an uptick in asking rents by next year. For the first half of 2007, investors spent over $212 million dollars for various prime Jacksonville office buildings. This is a new sales record for the city during a six-month period. Their actions represent a solid vote of confidence in Jacksonville’s future and a clear signal that better times are ahead for the local office market. Supporting improving conditions in the office sector is the overall strength of the local economy. Jacksonville’s location, diversified workforce and its anticipated port expansion, combined with existing superior transportation and logistical systems, produces the kind of business, employment and population growth that creates opportunities for the office market. Who are the active office developers in your area? • Flagler Development is developing Flagler Center in south Duval County, which is a 1,022-acre business park. The center holds entitlements for 2.7 million square feet of office development. Lakeside One and Lakeside Two are 112,000 square feet each and are 90 percent leased and Lakeside Three, consisting of 112,300 square feet, was delivered in fourth quarter 2007. Lakeside Five, consisting of 142,000 square feet, will be delivered in third quarter 2008. Liberty Property Trust is developing Butler Plaza 111, in the core of the suburban office market, better known as Butler/Baymeadows.  This building will consist of 82,000 square feet and will be designed as a Leadership in Energy and Environmental Design (LEED) building, which is the first of its kind for Jacksonville. Delivery is anticipated by second quarter 2008.  Liberty Property Trust has 2.28 million square feet of office product and flex product in the Jacksonville market Please name one or two significant office developments in your area. What impact will these projects have on the market? • As mentioned above, Flagler Development’s Lakeside Buildings and Liberty Property Trust’s Butler Plaza 111 building will add to the exiting 11.7 million square feet of Class A office product.  As demand for Class A product increases, so will rental rates. It is projected that rental rates will increase by 3 percent to 5 percent in early 2008. Where is the majority of development taking place? Why is this area doing well? • The majority of development is taking place in the southern part of Duval County and the northern part of St. Johns County. New housing markets have emerged in this area as well as new retail centers. Office growth and development will continue to shift with the expanding population. What area do you expect to be the next big development market? Why? • Northeast St. Johns County, in particular, Nocatee — northeast Florida’s largest planned community. By the year 2025, Nocatee is projected to have 4.2 million square feet of office space, one million square feet of commercial space, and 35,000 residents, about three times the population of St. Augustine. What areas are doing well in terms of office leasing? Which areas are struggling with office leasing? • The epicenter of the suburban office market is along Butler Boulevard in the Butler/Baymeadows and Southside submarkets. This area will continue to do well because it is the most densely populated area and supports a large office inventory, which consists of 16.1 million square feet. The Jacksonville Beach area has an 8.4 percent vacancy rate with the highest average rents of $22.50 per square foot due to the lack of office inventory and the desire to be at the beach. The downtown CBD seems to lag behind most markets due to its increased cost in doing business with regards to the parking expense. Parking rates on average are $85 per month for surface space and $110 per month for covered/garage space. This can add another $2 -$3 per square foot to the employers cost of doing business. Please give a measure of office vacancy rates and a measure of available sublease space. • Jacksonville’s vacancy rates in the office market are 11.6 percent for third quarter 2007. This represents a gradual decline that began at the end of 2005. Sublease space in Jacksonville represents less than 12 percent of the overall office market and currently has a vacancy of .5 percent. What impact do current interest rates have on the office market? What predictions do you have for interest rates and their effect on the office market in the next year? • The consensus among industry experts is that as long as interest rates stay below 8 percent the effect on the overall office market should be minimal. Current interest rates are well below that level and show every indication of going lower which will only be beneficial to the Jacksonville office market. What is the status of job growth/ (un) employment rates and what bearing will it have on the office market? • Jacksonville reports a 4.2 percent unemployment rate in the Jacksonville MSA, which is less than the national average of 4.9 percent.  Employment growth remains steady at 2 percent per year, which is also above the national average of 1.1 percent. The Florida Chamber of Commerce reports 1,000 people move into Florida a day and approximately 7 percent of those are settling in Jacksonville. In Time magazine’s May 2006 issue of Business 2.0, Jacksonville was ranked in the top 10 ‘Hottest Cities’ that will lead job growth through 2015. Is there any type of office tenant absorbing a majority of space? What industries do you expect to expand in the next year to absorb a great deal of office space? What areas will be affected? • Despite positive net migration of approximately 7,400 people in 2006, the relatively strong pace of job creation over the past year had pushed Jacksonville’s unemployment rate down to 3.1 percent in March 2007. The unemployment rate has risen to 3.9 percent as of September 2007, according to the U.S. Dept of Labor Bureau of Labor Statistics. This contrasts with an unemployment rate of 4.3 percent for the state of Florida and 4.7 percent nationally. Job growth and population growth have been strong and steady and the office market will grow to keep pace. Would you like to make any additional observations about the office market in your area? • The office markets will continue to remain attractive for financial institutions, health care, government, law firms and business seeking a signature address as well as investors and developers, capitalizing on the office market recovery.

Orlando Office Davis Submitted by Todd Davis, vice president with the Orlando, Florida office of Carter. Posted 12/07/07. What area is your expertise? • Maitland Center Office Market What trends do you see presently in office development in your area? • No speculative development at this time. Who are the active office developers in your area? • Battaglia Fruit Company and Liberty Property Trust Please name one or two significant office developments in your area. What impact will these projects have on the market? • None immediately planned. Where is the majority of development taking place? Why is this area doing well? • The majority of development taking place is in Southwest Orlando.  The driving factors behind this are the lack of Class A buildings in the area as well as the expansion of the timeshare and tourism industries. What area do you expect to be the next big development market? Why? • Lake Mary. This is the only market besides Southwest Orlando that has expansion capabilities without venturing past the metropolitan Orlando area. What areas are doing well in terms of office leasing? Which areas are struggling with office leasing? • Orlando as a whole is a healthy office market. The obvious weaknesses are in the sectors that deal directly and indirectly in the residential real estate market (i.e. developers, mortgage, title, planners, etc.) Please give a measure of office vacancy rates. Please give a measure of available sublease space. • Vacancy overall in Orlando is around 11 to 13 percent inclusive of sublease space, and will most likely rise a little bit over the next several months due to a slightly soft market as well as new product coming on line. Is there any type of office tenant absorbing a majority of space? What industries do you expect to expand in the next year to absorb a great deal of office space? What areas will be affected? • There are two industries that continue to show growth: the medical R&D industry, as well as defense and simulation related industry. This is good for the Central Florida Research Park as well as Lake Mary and Maitland Center office markets.

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