Brokerage Outlook: North Carolina

• Raleigh/Durham Multifamily

• Charlotte Office

• Charlotte Retail

• Charlotte Industrial

• Raleigh Office

• Raleigh Retail

• Raleigh/Durham Industrial

Raleigh/Durham Multifamily Submitted by Jeff Glenn, senior vice president with the Raleigh, North Carolina, office of CB Richard Ellis. Posted 7-27-06. What area is your expertise? • Multifamily investment (disposition and development) in Raleigh/Durham and the coastal Carolinas. What trends do you see presently in multifamily development in your area? • The most obvious trend is the surge in material costs of new construction. The big question is if the market has improved enough to justify adjusted rental rates due to higher construction costs. So far, demand for newer product has sustained. Another trend is demand for urban living that is generating a moderate wave of condominium development in downtown Raleigh, Durham and Chapel Hill. Who are the active multifamily developers in your area? • Crosland, Wood Partners, Trammell Crow Residential (TCR), Davis Development and Woodfield Investments (formerly of Summit Properties). Please name one or two significant multifamily developments in your area. What impact will these projects have on the market? Alexan North Hills in Raleigh, North Carolina • I would single out Trammell Crow's Alexan North Hills as significant because of its unique mid-rise construction over retail space within the redeveloped North Hills, one of Raleigh's most popular new retail centers. Developed by Trammell Crow, the property was recently purchased by UBS Realty for a significant price to maintain as rental despite TCR's flirting with conversion to condominiums (which the location and product could command). Where is the majority of development taking place? Why is this area doing well? • The Brier Creek area, a mixed-use development and golf course community that was master-developed by New York-based American Asset Corporation, is attracting the largest concentration of development. A prime crossroads location near Research Triangle Park and Interstate 540, the area is the hottest single-family market in the region. There are six major apartment developments underway by Altman Development Corporation, ContraVest, Mid-America Development Partners, Trammell Crow, Davis Development and Flaherty & Collins Properties. I think the area will continue to do well because it has the critical mass and location qualities that sustain growth. What area do you expect to be the next big development market? Why? • West Cary, south of Research Triangle Park near the future intersection of Intersection 540 and Highway 55. New roadway, water and sewer infrastructure investment by Cary are raising eyebrows to the area's potential. Seemingly barren now, more than 20,000 single-family homes are in the cue. Entitlements are still a critical obstacle for multifamily development, but a few speculators with sites planned or underway are Fairfield Residential, ContraVest and Broadstreet Partners. What areas are doing well in terms of apartment leasing? Which areas are struggling with leasing? • North and northwest Raleigh seem to be faring the best due to increasing barriers to entry in our market, which is well-known for minimal barriers to entry. I think the success of North Hills and Brier Creek and access to downtown Raleigh — the other emerging lifestyle district — are driving demand. Please give a measure of apartment vacancy rates. click to view vacancy rate chart click to view average rental rate chart • The Raleigh/Durham market, approaching 95,000 units, is approximately 9 percent vacant and improving modestly. The Wilmington, North Carolina, coastal market is less than 4 percent vacant — but it is a relatively small, fast-growth area with an ample development pipeline. Please give a measure of condo sales activity in the area. • My condominium experience is limited to Raleigh, where new mid-rise and high-rise construction demands prices exceed $300 per square foot. It is a very immature market but appears to be gaining traction, especially with empty nesters and the young, single set. I am excited by the potential for high-rise rentals to be a factor one day. What impact do current interest rates have on the apartfment and condo markets? What predictions do you have for interest rates and their effect on the multifamily market in 2006? • I believe construction financing will be impacted by spreads above LIBOR eclipsing 8 percent but not enough to impede development pro forma. If interest rates rise above my expectations, it only spells better times for the apartment industry as new home buying slows, especially in Raleigh's red-hot housing market, whereby renting replaces entry-level home buying. What is the status of job growth/(un)employment rates and what bearing will it have on the multifamily market? • Job growth is on the upswing, and Raleigh/Durham is definitely over the tech-wreck. Much has been said about Raleigh/Durham as a haven of the "creative class" attracting the jobs of the future. Stories abound every week of small company relocations and job announcements, which only pronounce demand in the housing market. The multifamily market will continue to capture its share of ongoing population growth. Would you like to make any additional observations about the multifamily market in your area? • Investment in multifamily property is at historical levels. The market is on pace to exceed $1 billion in annual sales in Raleigh/Durham alone. Replacement cost hurdles, historically the benchmark for pricing, are rising higher every month. Especially noteworthy is the resurgence of institutional buyers — a nod of confidence in Raleigh/Durham's future prosperity.

Charlotte Office McCleneghan Submitted by Frank A. McCleneghan, partner with the Charlotte, N.C. office of Piedmont Properties of the Carolinas, Inc./CORFAC International. Posted 09/14/07. What area is your expertise? • I will be discussing the office sector in and around Charlotte, N.C. What trends do you see presently in office development in your area? • I see trends in office development as steadily growing in the center city as well as suburbs, particularly Ballantyne. Who are the active office developers in your area? • Active office developers in my area include Childress Klein Properties, Merrifield Partners/Crosland, The Bissell Companies, Wachovia and Bank of America. Please name one or two significant office developments in your area. What impact will these projects have on the market? • Significant office developments in the uptown area include the 46-story Wachovia Tower, the 300,000-square-foot NASCAR building that will be breaking ground in the near future and the 32-story Bank of America building. These three towers will offer much needed availability in the office market with right at 5 percent vacancy. Interestingly, the NASCAR Tower being built next to the NASCAR Museum is the first non-bank anchored building in Uptown Charlotte in a number of years. Where is the majority of development taking place? Why is this area doing well? • In addition to the previously stated Uptown projects, the suburban market is robust. The Ballantyne area has over 150,000 square feet proposed by the Lictin Corporation at Toringdon. The Bissell Companies are planning similar projects as well. The southwest submarket has projects at 200,000 square feet under way by American Asset Company at Whitehall. Cambridge Partners has 60,000 square feet proposed at Arsley. The university area is still seeing smaller developments in both for lease and for sale products. What area do you expect to be the next big development market? Why? • I expect the next big development to be in the Charlotte office market as it is will continue to grow at the fringes. Infill sites are too expensive and difficult to find so the southeast and southwest markets will flourish due to Interstate 485 and new rooftops. What areas are doing well in terms of office leasing? Which areas are struggling with office leasing? • Office leasing is strong in the Charlotte market. Vacancies uptown have hovered below 5 percent for quite some time. The east submarket has probably struggle the most in Charlotte. Rates are flat with little new development. Please give a measure of office vacancy rates and a measure of available sublease space. • In Charlotte, office vacancy rates are around 15 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? • I think interest rates are not negatively effecting office development. In the future I think rates will be ticking up a bit, which will have a negative effect on new development. What is the status of job growth/(un)employment rates and what bearing will it have on the office market? • Obviously a higher unemployment rate would adversely affect the office market. Charlotte has been lucky for the past five to six years experiencing both job and population growth. 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? • The Charlotte office market is dominated by financial institutions especially at Center City with Bank of America and Wachovia. Charlotte has two 800-pound gorillas sitting at opposite ends of Tryon Street that will continue to absorb the largest amount of space. Would you like to make any additional observations about the office market in your area? • The Charlotte office market is anchored by its financial institutions and the ancillary companies that do business with them. The remainder of Fortune 500 companies such as Nucor, SPX and Duke Energy remain here because of the climate and proximity to the bulk of the United States’ population. Charlotte will continue to attract a population that wants to be active year-round and still be in close proximity to the beaches and the mountains. The professional sports franchises, coupled with theme parks like the new White Water Park, add to the momentum that has been created in Charlotte. The office market will continue to grow with businesses to handle the services that the population growth requires.

Charlotte Retail Gustafson Submitted by Trent Gustafson, president of Charlotte, North Carolina’s Percival McGuire Commercial Real Estate/TCN Worldwide. Posted 09/25/07. What area is your expertise? • I will be discussing the Charlotte MSA. What trends do you see presently in retail development in your area? • New international and national tenants are entering the MSA. What type of retail product is doing well in your area? • Expanding regional centers and power centers are doing well. What retailers are new to your area? • IKEA (2009), Whole Foods (2009), REI, Trader Joe’s, and Crate & Barrel are all new to our area. Who are the active retail developers in your area? • Simon Property Group, Crosland, and Childress Klein Properties. Please name one or two significant retail developments in your area. What impact will these projects have on the market? • The Bridges of Mint Hill is planned for Interstate 485 and Lawyer’s Road in Mint Hill, N.C. General Growth Properties and Childress Klein Properties are developing it, which will fill an underserved submarket and create more retail development opportunities along the Eastern perimeter. • IKEA is planned for 2009 near Interstate 85 and University City Blvd., in Charlotte. This will be the first IKEA store in the Carolinas and will draw consumers from a multi-state area (eastern Tennessee, southern Virginia, and the Carolinas. Where is the majority of development taking place? Why is this area doing well? • Continued development around the perimeter of Charlotte (I-485) and development within southern counties of York, Lancaster, and Union. The final legs of I-485 are opening, thus providing the accessibility required and spurring development. The continued residential growth into the southern counties, coupled with lower barriers to entry, is fueling development. What area do you expect to be the next big retail development market? Why? • The panhandle of Lancaster County. Local and state incentives are attracting both commercial and residential development and the existing infrastructure (i.e. North-South Highway 521) provides easy access to many employment areas throughout the Charlotte MSA. Please describe the retail leasing activity in your area. • Retail vacancies have been on the decline over the last 12 months and retail rents have been increasing over the same period. The pre-leasing of power centers continues to be strong. What major leases have been closed recently? REI — 26,000-square-foot store at Carolina Place Mall and NorthCrest. Trader Joe’s — A 20,000-square-foot store at The Arbors and Piper Glen Station. Target — A 174,000-square-foot store at RiverGate and Afton Ridge. Please give a measure of retail vacancy rates and a measure of available sublease space. • Vacancy rates per Karnes fourth quarter 2006 were 4.9 percent and rental rates per Karnes fourth quarter 2006 were $18.82 per square foot. What types of retailers should look into your market in the coming year? What type of retail is needed? • Transit oriented retailers in the next few years will be needed. Would you like to make any additional observations about the retail market in your area? • Transit oriented development is the public focus and the type of retail it attracts will be critical to the success of Charlotte’s planned transit corridors.

Charlotte Industrial Lamm Kent Lamm, commercial real estate broker with the Charlotte, N.C., office of Percival McGuire Commercial Real Estate/TCN Worldwide. Posted 07/25/07. What area is your expertise? • Charlotte, N.C. What trends do you see presently in industrial development in your area? • Trends in industrial development include the continuation of large spec warehouse construction, some movement of tenants to South Carolina and an incredible success in Lincoln County. What type of industrial product is doing well in your area? • The industrial product that is doing well in our area is large modern warehouses. Who are the active industrial developers in your area? • The most active developers include American Asset Corp., Mark Pierce Poole Properties, Childress Klein Properties, The Keith Corp. and Lauth Property Group. Please name one or two significant industrial developments in your area. What impact will these projects have on the market? • Shopton Ridge, located off Shopton Road near the airport, is developed and owned by American Asset Corp., and gives pause to other spec warehouse development in the airport market. Lincoln County Industrial Park, located in Lincoln County on Highway 321, is developed by The Keith Corp. Where is the majority of development taking place? Why is this area doing well?  • The majority is still in the southwest because of the easy access to interstates and reasonable land prices, as well as inertia. What area do you expect to be the next big industrial development market? Why? • The next big industrial development market will be South Carolina. It continues to be a stronger market with tax incentives, as well as cheaper land prices. Please describe the industrial leasing activity in your area. • Industrial leasing is pretty strong as rates are increasing and spec space is getting absorbed. Please describe the industrial sales activity in your area. • There is a continued demand for smaller buildings, where larger blocks of space are typically leased. Please give a measure of industrial vacancy rates and a measure of available sublease space. • Vacancy rates are under 9 percent for Charlotte. 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? • Interest rates are low enough to continue to permit spec development. The rates should hold steady or rise slightly with no effect on the market. What industries do you expect to expand in the next year to absorb a great deal of industrial space? What areas will be affected? • The warehousing, freight and trucking related industries will expand affecting industries such as NASCAR.

Raleigh Office Allen Submitted by William A. Allen IV, vice president/partner with Raleigh, North Carolina-based Grubb & Ellis/Thomas Linderman Graham. Posted 12-21-05. What area is your expertise? · My primary focus is the Class A office market in the Raleigh/Research Triangle region. What trends do you see presently in office development in your area? · Developers have dusted off old plans once shelved due to the recession, and new plans for office buildings are being created with more frequency. Vacancy rates continue to drop, rental rates are slowly creeping back up and tenant concessions are dwindling, all giving way to a more bullish outlook on new office development. Who are the active office developers in your area? · Highwoods Properties, Duke Realty, Tri Properties and American Asset Corporation Please name one or two significant office developments in your area. What impact will these projects have on the market? · I believe the two most notable office developments in our market are Highwoods' GlenLake Office Park (currently underway) and RBC Centura's planned downtown Raleigh high-rise (recently announced for the bank's U.S. headquarters). · Upon its completion, GlenLake will total nine buildings and will arguably be the finest office campus within Raleigh's city limits. The park is located in Crabtree Valley between the Glenwood Avenue and West Raleigh submarkets. According to popular opinion the campus will serve to replace North Raleigh's aging Highwoods Office Park as the new major business center in Raleigh. GlenLake One, containing 160,000 square feet on six floors is complete and fully leased, and construction is underway on the park's second building of similar size, GlenLake Four, which will come online in May 2006 and is 50 percent pre-leased. · RBC Centura confirmed this month that its U.S. headquarters will anchor a 710,000-square-foot, 29-story tower in Downtown Raleigh. In addition to offices, the building will house a mix of shops, restaurants and residential condominiums. Many officials are calling it the most important downtown announcement in decades. The landmark tower will dovetail nicely into what has been a proactive yet painstaking revitalization of Raleigh's Central Business District. This announcement comes on the heels of other recent major downtown investments including Progress Energy's new office tower, continued work on a new convention center and hotel, the re-opening of Fayetteville Street Mall to street traffic, Capital Bank's announcement to move its headquarters downtown and numerous residential developments. Upon completion, which is scheduled for 2008, the project is expected to accommodate an estimated 1,500 workers and residents. Where is the majority of development taking place? Why is this area doing well? · The majority of development is taking place in existing office parks as well as in new and emerging office sites. Conventional wisdom points to land availability and a low cost basis in existing parks. Consequently, Duke Realty and Tri Properties have recently succeeded in luring several significant tenants and are actively developing their respective Perimeter Park and Imperial Center office campuses. As far as emerging sites, due to tightening market conditions and a recent boom in housing and surrounding retail services, developers such as AAC at Brier Creek have found tenants, and in turn have found success by pushing the borders of our traditional office locations. What area do you expect to be the next big development market? Why? · I expect the area surrounding the RBC Center sports arena to continue to flourish. Two office buildings, Arena Centre and Palisades II, are currently under construction and will join five other existing and adjacent office buildings. This area has an abundance of land, much of which is being considered for an extensive master-planned mixed-use project, and it is convenient, visible and centrally located along the I-40/Wade Avenue corridor. What areas are doing well in terms of office leasing? Which areas are struggling with office leasing? · Our strongest office submarkets are North Raleigh, Glenwood Avenue and Downtown, with the direct vacancy rate tracking on average at 10 percent or below. These markets were the quickest to recover due in part to a tenant base that is less tech-sector-oriented and made up more of professional services firms. Our tech-heavy submarkets, which by nature also have a much larger average tenant size, are still on the mend and continue to post direct vacancy rates around 15 percent. These submarkets include Research Triangle Park, Cary, Durham and West Raleigh. Please give a measure of office vacancy rates. Please give a measure of available sublease space. · As of third quarter 2005, the overall Triangle Office market's direct vacancy stood at 14.07 percent. With sublease space included, the total vacancy rate increases to 16.06 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 2006? · Low interest rates and the availability of funds have caused investment sales to flourish in recent years. Tenants who normally lease space have given much more consideration to purchasing due to this climate. With interest rates trending slightly upwards, I see institutional investments continuing into 2006, but I expect activity on the smaller and more localized level to level off. What is the status of job growth/(un)employment rates and what bearing will it have on the office market? · Triangle-wide unemployment stands at 4.1 percent, compared to a state-wide rate of 5.3 percent and a national rate of 5.0 percent. The region outpaced the nation through the first three quarters of the year with 2.5 percent employment growth. The increased hiring is fueling increased demand for office space. Pent-up demand from companies that have grown without adding space will translate into increased leasing activity in 2006. New construction will be triggered within existing business parks where companies need to expand and have little existing space in which to do so. Is there any type of office tenant absorbing a majority of space? What industries do you expect to expand in 2006 to absorb a great deal of office space? What areas will be affected? · Demand appears to be fairly broad based, but there are a few standouts. Suburban markets are enjoying growth from companies thriving on the region's population growth, including law firms, financial services companies, physicians and construction/home-improvement-related industries. High-tech and bio-tech industries are showing signs of life again, driving activity in the Triangle's technology centers, RTP and Cary. Raleigh and Durham's central business districts are benefiting from corporate headquarters moving downtown, including RBC Centura, Capital Bank, Headway Corporate Resources and the American Institute of Certified Public Accountants. 2006 will bring continued expansion among all of these sectors, and the tech market will pick up steam. Lenovo will drive absorption up in RTP late in the year upon completion of the first building on its new 500,000-square-foot campus.

Raleigh Retail La Rocca Submitted by John P. La Rocca, vice president and partner with Raleigh, North Carolina-based Grubb & Ellis/Thomas Linderman Graham. Posted 12-16-05. What area is your expertise? · The Triangle Market (Central North Carolina). What trends do you see presently in retail development in your area? · The Triangle retail market has thrived in recent years, buoyed by low interest rates, a strong housing sector and robust population growth. Development continues to be strong, both in the form of new suburban centers and high-density, mixed-use infill projects. The Triangle is attracting more national retailers as the region's well-educated work force and a continued influx of residents from larger cities are increasing the demand for higher end goods and services. What type of retail product is doing well in your area? · Grocery-anchored shopping centers and lifestyle shopping centers are doing well due to the large number of new communities being developed in our area. Most notable is the development of higher-end residential communities on the outskirts of the Triangle that are large enough to sustain their own shopping centers. Once established, smaller end users and banks begin to fill in. Redevelopment projects are also doing very well, particularly in the North Hills area of Raleigh, Downtown Raleigh and Downtown Durham. What retailers are new to your area? · The most notable new retailer in the Triangle market is Saks Fifth Avenue, which opened at Triangle Town Center on Capital Boulevard in late 2004. The region may welcome its first Bloomingdale's and Macy's stores in 2006 as a result of Federated Department Stores' acquisition of May Department Stores. Also of note, Costco recently announced that it is expanding beyond one point in the Triangle market, and REI has opened its third Triangle location. Who are the active retail developers in your area? · To name a few: Kane Realty Corporation, Wakefield Associates and American Asset Corporation. Please name one or two significant retail developments in your area. What impact will these projects have on the market? · North Hills, on Six Forks Road at the I-440 Beltline in Raleigh. Kane Realty Corporation recently redeveloped what was one of the oldest enclosed malls on the East Coast, turning it into an open air, mixed-use center that has been a resounding success. The center has set the bar for redevelopment of other property located in the immediate area or elsewhere in the city's core. Tenants include Target, REI, The Movies at North Hills 14 and JC Penney. · Brier Creek, located on Glenwood Avenue at I-540 in Raleigh. The Brier Creek community includes a golf course and country club, luxury homes, multifamily homes, office space and retail space. American Asset Corporation has developed much of the retail space in the area, creating what is essentially a new submarket. The center's proximity to I-540 makes it a destination for residents in some of the Triangle's newest and wealthiest communities, many located at the far reaches of Raleigh's city limits. Where is the majority of development taking place? Why is this area doing well? · Brier Creek and North Hills. These two areas represent the regional center-points of population and business. Both are uniquely located close to interstates, have easy access to several of the region's wealthiest residential developments and are easily accessed by commuter traffic. What area do you expect to be the next big retail development market? Why? · Future retail development will be strong in southern Wake County and northern Wake County where residential development is strongest. As I-540 slowly winds its way around Raleigh, retail and residential development will sprout up ahead of each new interchange. The Six Forks Road and Glenwood Avenue Corridors in Raleigh will also be key as high-density infill projects continue to take shape. Please describe the retail leasing activity in your area. · Steady to good. Although we experienced negative absorption in the third quarter of 2005 as a result of the closing of 11 Winn-Dixie stores, demand has otherwise been strong. Several small users will be entering the market in the early part of 2006, and there has been fairly good activity on large blocks of space over the last month. What major leases have been closed recently? · REI leased 25,500 square feet at North Hills, located on Six Forks at I-440 in Raleigh. Gold's Gym leased 28,652 square feet and Bed Bath & Beyond leased 35,335 square feet at Pleasant Valley Promenade, located on Glenwood Avenue in Raleigh. OfficeMax leased 24,700 square feet at Poyner Place, located on Capital Boulevard in Raleigh. Please give a measure of retail vacancy rates. · The Triangle ended the third quarter with retail vacancy of 6.2 percent. What types of retailers should look into your market in the coming year? What type of retail is needed? · Mid-range regional tenants such as Kohl's, Bed Bath & Beyond and Marshalls. Many sites that are too small for big boxes can house them, and they lure smaller tenants. Downtown Raleigh would benefit from having a grocery store to support its growing residential population. It may soon get one. Atlantic Coast Markets is reportedly close to signing a lease at Seaboard Station in Downtown Raleigh. Would you like to make any additional observations about the retail market in your area? · The Triangle market is fairly broad and, for the most part, segmented. Raleigh has a central business district that has very little retail and consists of stand-alone entrainment and restaurant venues. The CBD is surrounded by a highway loop that has several retail hubs. Further, there is an outer loop under construction around the city of Raleigh. With time, many of the retail points on the inner loop are being redeveloped. Simultaneously, the outer loop is developing new power centers that are attracting the larger players. My expectation is that the power centers will continue to grow while arteries that connect the inner and outer loops will fill in over time.

Raleigh/Durham Industrial Linderman Submitted by John B. Linderman Jr., SIOR, executive vice president and partner with Raleigh, North Carolina-based Grubb & Ellis/Thomas Linderman Graham. Posted 1-3-06. What area is your expertise? · Raleigh/Durham, North Carolina -- more commonly referred to as the Triangle region. What trends do you see presently in industrial development in your area? · Speculative construction has ground to a halt in response to soft market conditions. This lack of new product helped the industrial market to absorb existing vacancy in 2005. With virtually no new product in the construction pipeline, 2006 will bring further improvement. What type of industrial product is doing well in your area? · Distribution space being converted to manufacturing space and buildings that can be subdivided to accommodate smaller users. Who are the active industrial developers in your area? · Most recently Duke Realty Corporation, but none at the moment. Please name one or two significant industrial developments in your area. What impact will these projects have on the market? · There are none underway or planned at the moment due to soft market conditions. The most recent construction has taken place at Duke Realty's Walnut Creek in Eastern Wake County. A fourth building was completed in late 2004. The project's success in attracting tenants will make further development in the submarket attractive. Where is the majority of development taking place? Why is this area doing well? · While there is no speculative development underway at the moment, most has historically occurred in and around Research Triangle Park. This area is central to the Raleigh/Durham region and offers access to I-40 and I-85. It is also the hub of the region's technology sector. Eastern Wake County has also emerged as an industrial submarket. Land here is less expensive than that in Research Triangle Park, and the area is convenient to both I-40 and I-95. Please describe the industrial leasing activity in your area. · Leasing activity has picked up in recent months, and absorption through the third quarter of 2006 was the strongest we have seen since 2000, driven in part by discounted rent rates. A great deal of activity was generated by construction, moving, storage and home improvement-related industries that are thriving on the region's explosive population growth. Please describe the industrial sales activity in your area. · Industrial sales have been brisk due to distressed properties being sold for as much as 50 percent below replacement cost. Investors have also begun to show renewed confidence in the region. Earlier in the year, Transwestern Investment purchased 1.7 million square feet of industrial space at Research Tri-Center in Research Triangle Park. The group purchased two more industrial buildings within the park in December. Please give a measure of industrial vacancy rates. Please give a measure of available sublease space. · Industrial vacancy in the Triangle region of North Carolina stands at 22.5 percent. Approximately 245,000 square feet of sublease space is currently available. 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? · Low interest rates have attracted some buyers in the last year. Interest rates will not increase by more than 100 basis points in 2006, which, combined with low asking prices, will continue to fuel industrial sales. What industries do you expect to expand in 2006 to absorb a great deal of industrial space? What areas will be affected? · Manufacturing and distribution companies related to new home construction will continue to grow, primarily in the vicinity of Research Triangle Park because of its central Triangle location. We will also see growth from select pharmaceutical and medical device manufacturers. Would you like to make any additional observations about the industrial market in your area? · It is important to remember that the Triangle has just 35 million square feet of industrial space, five times less than its sister city, Charlotte. As a result, just a few sizeable transactions can translate into a significant drop in vacancy.