8/6/2019 Raleigh OFF 2Q11[1]

1/2

Stats on the Go

OverviewAs of the second quarter 2011, the Triangle office market continued

the path to recovery, boasting another quarter of positive absorption

and decreased overall vacancy rates across the nineteen submarkets.

The positive outlook is due to a slowly improving national economy

as well as a local economy that has remained strong throughout the

recession over the past three years. The Triangle market continues to

lead the nation in many surveyed categories and is consistently

awarded the recognition of Best Place to do Business by Forbes

Magazine.

The US Census reports that the Raleigh-Cary market is the fastest

growing metro area in the country. The combined population of

North Carolinas capital city and Cary increased to 1.1 million a 4.3

percent increase according to the US Census Bureau data. Charles

Hayes, chief executive of the Research Triangle Regional

Partnership, said the Raleigh area has experienced steady growth,

especially from the clusters its recruiters focus on, such as green

technology, advanced medical care, biotechnology, and

pharmaceuticals. Those sectors have resulted in more than 11,000

new job announcements since January 2009, compared with about

3,000 for non-cluster sectors, Hayes said.

Vacancy RateApproximately 13.9% of the Triangle office inventory was vacant at

the end of the second quarter 2011. The rate is down from the 14.9%

vacancy rate this time last year. The improvement has been due to

lack of new development in the pipeline with no significant new

construction being delivered in the first two quarters of 2011.

Coupling no new construction deliveries with increased absorption,

the future of the Triangle market looks to continue tightening.

Absorption Net demand outpaced net contractions equaling in an overall direct

absorption increase of 153,326 square feet (sf) for the yearto-date. A

majority of this increase was due to increased levels of leasing activity

in the RTP/RDU and Glenwood / Creedmoor submarkets. Major

transactions included Inspire Pharmaceuticals absorbing 48,442 sf inthe Glenwood/Creedmoor submarket, Computer Sciences Corporation

absorbing 30,000 sf and two new tenants leasing 26,358 sf in the

RTP/RDU submarket, the Triangles largest submarket boasting over

12,782,432 sf of inventory.

OutlookAs shown in the Under Construction vs. Completions graph below,

new construction steadily declined over the past four years and is now

non-existent. Although the Triangle market is experiencing decreasing

vacancy and positive absorption, significant new construction is not

likely to occur until that trend continues for at least another year.

Overall asking rents have been slowly trending down, but not

significantly. They are only down 3.5% from 2008. However,

effective rents are down as landlords offer concessions such as free

rent and tenant improvement dollars. Asking rents should stay flat,

and effective rents will rise as the economy improves and concessions

become less common.

Under Construction vs.Completions

OverallRental vs. Vacancy Rates

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2007 2008 2009 2010 2011

YTD

Under Construction Completions

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

2008 2009 2010 2011F 2012F

5.0%

7.0%

9.0%

11.0 %

13.0%

15.0%

17.0%

Rent Vacancy2Q10 2Q11 Y-o-Y

change12 monthForecast

OverallVacancy

14.9% 13.9% -1.0pp

Direct AskingRents

$19.53 $19.46 -0.4%

YTD LeasingActivity (sf)

2,373,299 1,362,404 -42.6%

RALEIGH

2Q11

8/6/2019 Raleigh OFF 2Q11[1]

2/2

* The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy orcompleteness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal withoutnotice, and to any special listing conditions imposed by our principals. 2011 Cushman & Wakefield, Inc. All rights reserved.

Thalhimer

3131 RDU Center Drive, Suite 140, Morrisville, NC 27560 (919) 576-2680 www.thalhimer.com

RALEIGHOFFICE REPORT

2Q11

Market/Submarket Statistics

Market Hi hli hts

Ma rk e t / Su bm ark e t In ve n to ry

Overall

Vacancy

Rate

Direct

Vacancy

Rate

YTD

Leasing

Activity

Under

Construction

YTD

Construction

Completions

YTD

Direct

Absorption

YTD

Overall

Absorption

Overall Wtd.

Avg. All Classe s

Gross Rental

Rate*

Direct Wt

Avg. Class

Gross Ren

Rate*

Downtown Durham 3,795,317 7.7% 7.5% 21,206 0 0 (70,158) (67,572) $20.26 $23

Downtown Raleigh 4,374,209 5.2% 4.8% 43,561 0 0 (45,368) (45,368) $20.63 $22

C BD 8,169,526 6.3% 6.0% 64,767 0 0 (115,526) (112,940) $20.45 $22

6 For ks Falls of Neuse 7,374,573 15.0% 14.6% 366,873 0 15,500 (62,519) (60,717) $19.76 $22

Cary 7,321,622 12.7% 12.2% 155,703 0 0 86,323 118,354 $18.76 $20

Chatham County 142,385 26.4% 26.4% 0 0 0 (10,583) (10,583) $18.22 $18

East Raleigh 1,015,343 1.2% 1.2% 0 87,000 0 0 2,000 $15.06

Franklin County 117,579 11.0% 11.0% 0 0 0 0 0 $15.61

Glenwood/Creedmoor 2,724,392 11.9% 11.9% 94,947 0 0 89,640 92,708 $19.60 $22

Johnston County 584,586 10.5% 10.5% 0 0 0 13,600 13,600 $15.05 $20

North Durham 1,326,228 30.9% 30.5% 0 0 0 (46,496) (46,496) $16.29

Northeast Wake County 312,713 10.2% 10.2% 28,189 0 0 785 785 $21.13

Orange County 1,996,594 14.9% 14.9% 23,123 0 0 34,783 33,320 $24.18 $25

Person County 34,875 12.9% 12.9% 0 0 0 0 0 N/A

Route 1 2,669,872 17.3% 15.8% 81,634 0 0 9,943 (15,478) $19.17 $21

RTP /RDU 12,782,432 17.3% 16.4% 237,144 50,304 86,968 185,394 168,160 $18.68 $20

South Durham 3,819,133 21.6% 21.4% 37,116 0 0 40,688 41,354 $20.14 $20

Southeast Wake County 740,447 6.0% 3.6% 0 0 0 (5,175) (5,175) $14.53

Southwest Wake County 419,652 13.7% 13.7% 5,700 0 0 2,653 2,653 $18.83 $22

West Raleigh 7,990,387 11.4% 10.8% 267,208 0 0 (70,184) (94,134) $20.36 $22

NO N-C B D 51,372,813 15.1% 14.5% 1,297,637 137,304 102,468 268,852 240,351 $19.24 $21

RALEIGH TO TAL 59,542,339 13.9% 13.3% 1,362,404 137,304 102,468 153,326 127,411 $19.32 $21

* Rental rates reflect asking $psf/year.

SIGNIFICANT 2Q11 LEASE TRAN SACTIONS

BUILDING SUBM A RKET TENA NT SQUA RE FEET BUILDING CLA SS

5565 Centerview Drive West Raleigh N /A 18,048 A

1500 W Perimeter Park D rive RT P/RDU RadarFind 17,067 A

8540 Colonnade Center D rive 6 Forks Falls of N euse Jubilant Clinsy s 13,441 A

SIGNIFICANT 2Q11 SALE TRAN SACTIONS

BUILDING M A RKET BUYER SQUA RE FEET PURCHA SE PRICE

4201 Lake Boone T rail West Raleigh H ighw oods Prop erties 47,754 $9,000,000

2609 N D uke Street North Durham D uke University 30,464 $3,800,000

SIGNIFICANT 2Q11 CONSTRUCTION COMPLETIONSBUILDING M A RKET M A JOR TENA NT SQUA RE FEET COM PLETION DA TE

7025 K it Creek Road RT P/RDU Cisco 86,968 2Q11

11001 Raven Ridge Drive 6 Forks Falls of N euse N /A 15,500 2Q11

SIGNIFICANT PROJECTS UNDER CO NSTRUCTION/RENOVATION

BUILDING M A RKET M A JOR TENA NT SQUA RE FEET COM PLETION DA TE

23 Sunny brook Road East Raleigh N /A 87,000 2Q12

6523 N C-55 RT P/RDU T riangle Brick 26,367 3Q11

2001 Carrington M ill Road RT P/RDU T he Chef's A cademy 23,937 3Q11