north american office highlights 1q 2011

HIGHLIGHTSNORTH AMERICA

WWW.COLLIERS.COM

Q1 2011 | OFFICE

ROSS J. MOORE Chief Economist | USA

The U.S. office market began the year on a more muted note with only a modest increase in occupied space and little change in vacancy. Rents continued to languish, but for the first time in three years both downtown and suburban rents managed to eke out small gains. With the economy not yet firing on all cylinders and total employment showing only lackluster growth, the outlook for the office space market is far from certain. Higher energy costs are starting to impact business decisions and, as a result, demand for office space. By comparison, Canadian markets enjoyed a reasonably good quarter on the back of robust economic growth and a healthy labor market. Both U.S. and Canadian econo-mies are expected to make gains in 2011, but the sudden surge in energy prices is a fairly stiff headwind that is likely to put a damper on corporate expansion and add to inflation concerns.

First-quarter data confirms our view that the U.S. office market recovery will be uneven in nature and fairly volatile. Manhattan, Washington, San Francisco and Boston remain the clear leaders in terms of fundamentals; yet Dallas, Denver, Houston, Northern New Jersey, Philadelphia, Raleigh, San Diego, San Jose, Seattle and West Los Angeles all showing encouraging signs. Also somewhat positive is the thirteen-month-long gain in private-sector employment. Furthermore, office-using employment was reasonably strong during the January-March period, with professional and businesses employment in particular up 3.2% year-over-year (March). Widespread increases in rents are unlikely to occur in 2011

U.S. office market took a breather in Q1, but all signs suggest the recovery begun last year will only accelerate in the coming quarters.

MARKET INDICATORSRelative to prior period

U.S. OFFICE MARKETSUMMARY STATISTICS, Q1 2011

U.S. Office Market Begins the Year on a Soft Note

Q1 2011

Q2 2011*

VACANCY

NET ABSORPTION

CONSTRUCTION

RENTAL RATE

*Projected

U.S. OFFICE MARKET Q1 2009 – Q1 2011

Mill

ion

Squa

reFe

et

Vaca

ncy

(%)

-35

-25

-15

-5

5

15

25

35

Q1Q4Q3Q2Q1Q4Q3Q2Q1

Absorption Completions Vacancy2009 2010 2011

13.814.014.214.414.614.815.015.215.415.615.8

Vacancy Rate: 15.46% Change from Q4 2010: –0.01

Absorption: 8.1 Million Square Feet

New Construction: 7.5 Million Square Feet

Under Construction: 25.7 Million Square Feet

Asking Rents Per Square Foot (Change from Q4 2010): Downtown Class A: $39.55 (0.7%) Suburban Class A: $26.20 (0.6%)

continued on page 6

P. 2 | COLLIERS INTERNATIONAL

HIGHLIGHTS | Q1 2011 | OFFICE | NORTH AMERICA

UNITED STATES | DOWNTOWN OFFICE | ALL INVENTORY

MARKET

EXISTING INVENTORY (SF)

MAR. 31, 2011

NEW SUPPLY Q1 2011

(SF)

UNDER CONSTRUCTION

(SF)

VACANCY RATE (%)

DEC. 31, 2010

VACANCY RATE (%)

MAR. 31, 2011

ABSORPTION Q1 2011

(SF)

NORTHEAST

Baltimore, MD 21,677,000 0 0 16.6 15.6 143,000

Boston, MA 60,163,000 0 760,000 16.6 16.6 (35,000)

Hartford, CT 9,626,000 0 180,000 22.9 22.8 9,000

New York, NY – Downtown Manhattan 109,357,000 0 4,707,000 14.2 14.1 165,000

New York, NY – Midtown Manhattan 228,627,000 0 1,876,000 12.3 12.3 (100,000)

New York, NY – Midtown S. Manhattan 167,392,000 0 0 9.6 9.4 197,000

Philadelphia, PA 42,672,000 0 0 12.4 12.1 115,000

Stamford, CT 18,854,000 260,000 0 18.3 19.0 96,000

Washington, DC 141,797,000 573,000 799,000 11.1 11.1 659,000

White Plains, NY 7,845,000 0 0 13.7 13.2 38,000

NORTHEAST TOTAL/AVERAGE 808,009,000 833,000 8,323,000 12.49 12.42 1,288,000

SOUTH

Atlanta, GA 48,560,000 0 0 17.1 18.1 (449,000)

Charleston, SC 1,995,000 0 0 10.0 10.2 (4,000)

Charlotte, NC 22,510,000 0 0 13.0 11.1 399,000

Columbia, SC 4,986,000 0 0 23.5 22.0 46,000

Dallas/Fort Worth, TX 45,961,000 0 0 22.6 22.5 56,000

Ft. Lauderdale/Broward Co., FL 8,274,000 0 0 15.7 16.1 (32,000)

Greenville, SC 3,125,000 0 0 18.9 18.0 21,000

Houston, TX 37,666,000 972,000 845,000 15.4 16.0 (13,000)

Jacksonville, FL 16,211,000 0 0 13.8 13.6 13,000

Little Rock, AR 6,577,000 0 0 14.5 14.5 0

Louisville, KY 16,076,000 0 60,000 10.3 10.4 (20,000)

Memphis, TN 8,338,000 0 0 16.5 16.4 7,000

Miami-Dade, FL 17,427,000 0 615,000 21.3 21.0 52,000

Nashville, TN 7,857,000 0 44,000 23.3 22.2 61,000

Orlando, FL 12,522,000 105,000 0 13.6 13.1 153,000

Raleigh/Durham/Chapel Hill, NC 11,632,000 0 324,000 6.2 6.4 22,000

Tampa, FL 8,565,000 0 0 15.7 14.9 72,000

West Palm Beach/Palm Beach Co., FL 10,053,000 0 0 19.4 19.6 (20,000)

SOUTH TOTAL/AVERAGE 288,334,000 1,077,000 1,888,000 16.72 16.67 363,000


COLLIERS INTERNATIONAL | P. 3

UNITED STATES | DOWNTOWN OFFICE | ALL INVENTORY

MARKET


MAR. 31, 2011

NEW SUPPLY Q1 2011

(SF)

UNDER CONSTRUCTION

(SF)

VACANCY RATE (%)

DEC. 31, 2010

VACANCY RATE (%)

MAR. 31, 2011

ABSORPTION Q1 2011

(SF)

MIDWEST

Chicago, IL 158,223,000 0 0 14.9 14.9 73,000

Cincinnati, OH 19,342,000 805,000 0 11.4 19.2 (109,000)

Cleveland, OH 34,785,000 0 475,000 18.7 19.3 (267,000)

Columbus, OH 19,091,000 0 0 11.9 11.6 58,000

Detroit, MI 30,910,000 0 0 16.8 17.1 37,000

Grand Rapids, MI 5,498,000 0 0 24.3 24.2 7,000

Indianapolis, IN 24,046,000 0 0 10.3 10.8 (112,000)

Kansas City, MO-KS 33,224,000 0 0 14.2 13.4 256,000

St. Louis, MO 30,010,000 0 0 15.6 15.9 (91,000)

MIDWEST TOTAL/AVERAGE 355,129,000 805,000 475,000 14.93 15.38 (148,000)

WEST

Bakersfield, CA 2,952,000 0 0 10.0 9.8 3,000

Boise, ID 3,473,000 0 0 11.9 11.7 8,000

Denver, CO 31,037,000 30,000 270,000 14.0 13.9 44,000

Fresno, CA 3,263,000 0 0 11.4 12.1 (23,000)

Honolulu, HI 8,074,000 0 0 12.3 12.1 17,000

Las Vegas, NV 3,847,000 0 300,000 12.9 12.9 4,000

Los Angeles, CA 33,368,000 0 0 17.3 17.4 (62,000)

Oakland, CA 16,892,000 0 0 12.2 11.2 155,000

Phoenix, AZ 19,473,000 0 0 21.1 22.1 (214,028)

Pleasanton/Walnut Creek, CA 12,110,000 0 0 16.9 17.3 (42,000)

Portland, OR 20,173,000 0 0 9.1 9.2 (11,000)

Reno, NV 1,327,000 0 0 26.3 28.8 (34,000)

Sacramento, CA 18,286,000 0 155,000 9.9 10.2 57,000

San Diego County, CA 10,225,000 0 0 19.3 20.8 (115,000)

San Francisco, CA 85,635,000 0 288,000 14.7 14.2 487,000

San Jose/Silicon Valley, CA 7,593,000 0 0 22.0 25.3 (135,000)

Seattle/Puget Sound, WA 58,776,000 762,000 931,000 15.0 15.2 518,000

Stockton/San Joaquin County, CA 8,345,000 0 0 18.5 19.5 (83,000)

WEST TOTAL/AVERAGE 344,849,000 792,000 1,944,000 14.92 15.03 620,000

U.S. TOTAL/AVERAGE 1,796,321,000 3,508,000 12,629,000 14.12 14.19 2,123,000



UNITED STATES | DOWNTOWN OFFICE | CLASS A

MARKET


MAR. 31, 2011

VACANCY RATE (%)

DEC. 31, 2010

VACANCY RATE (%)

MAR. 31, 2011

ABSORPTION Q1 2011

(SF)

AVERAGE ANNUAL QUOTED RENT

(USD PDF) MAR. 31, 2011

QUARTERLY CHANGE IN

RENT (%)

ANNUAL CHANGE IN

RENT (%)

NORTHEAST

Baltimore, MD 9,811,000 18.0 16.4 157,000 25.20 9.7 3.2

Boston, MA 41,168,000 15.7 16.0 (127,000) 45.90 -0.3 -1.9

Hartford, CT 6,369,000 22.7 22.5 4,000 23.00 -0.1 -1.6

New York, NY – Downtown Manhattan 75,928,000 15.7 15.2 407,000 38.50 -3.0 -3.2

New York, NY – Midtown Manhattan 193,066,000 12.9 13.1 (330,000) 63.40 -2.6 -0.7

New York, NY – Midtown S. Manhattan 33,457,000 11.4 9.6 603,000 47.30 9.5 14.8

Philadelphia, PA 32,830,000 12.2 11.8 106,000 26.10 0.0 0.2

Stamford, CT 13,177,000 19.7 20.4 116,000 38.60 1.7 4.2

Washington, DC 83,401,000 13.9 13.7 776,000 52.90 -1.2 3.7

White Plains, NY 4,958,000 15.4 15.1 (6,000) 30.00 5.4 2.7

NORTHEAST TOTAL/AVERAGE 494,165,000 14.02 13.84 1,708,000 50.48

SOUTH

Atlanta, GA 29,639,000 20.4 19.4 285,000 22.70 6.2 5.7

Charleston, SC 1,102,000 9.3 7.6 19,000 28.80 0.1 20.4

Charlotte, NC 16,587,000 14.7 12.5 402,000 24.00 -3.9 -12.2

Columbia, SC 2,194,000 14.1 12.7 2,000 19.50 -1.6 1.4

Dallas/Fort Worth, TX 28,005,000 19.4 19.4 (4,000) 25.30 0.2 -0.4

Ft. Lauderdale/Broward Co., FL 4,464,000 22.7 23.1 (20,000) 32.10 1.1 -1.8

Greenville, SC 1,844,000 8.8 7.9 7,000 20.50 5.3 1.3

Houston, TX 26,814,000 11.1 12.6 (34,000) 34.20 -1.2 -3.9

Jacksonville, FL 6,654,000 15.2 15.0 12,000 18.90 0.1 -6.5

Little Rock, AR 2,636,000 11.5 11.4 3,000 16.60 0.6 0.6

Louisville, KY 3,880,000 10.3 9.0 52,000 20.40 -8.5 -11.0

Memphis, TN 1,938,000 18.1 17.2 18,000 17.40 -1.5 2.0

Miami-Dade, FL 8,770,000 24.5 23.3 105,000 41.40 -0.2 -2.0

Nashville, TN 3,845,000 24.8 22.9 52,000 22.70 -4.3 0.8

Orlando, FL 5,674,000 17.5 16.4 147,000 23.00 -4.1 -6.4

Raleigh/Durham/Chapel Hill, NC 4,733,000 7.8 8.1 (17,000) 24.10 3.8 1.3

Tampa, FL 4,809,000 17.2 15.4 90,000 22.50 -1.7 -1.1

West Palm Beach/Palm Beach Co., FL 3,364,000 23.9 24.3 (14,000) 36.90 0.8 -3.9

SOUTH TOTAL/AVERAGE 156,952,000 17.01 16.54 1,105,000 26.52



UNITED STATES | DOWNTOWN OFFICE | CLASS A

MARKET


MAR. 31, 2011

VACANCY RATE (%)

DEC. 31, 2010

VACANCY RATE (%)

MAR. 31, 2011

ABSORPTION Q1 2011

(SF)


(USD PDF) MAR. 31, 2011

QUARTERLY CHANGE IN

RENT (%)

ANNUAL CHANGE IN

RENT (%)

MIDWEST

Chicago, IL 57,355,000 16.1 16.1 0 32.50 1.6 1.6

Cincinnati, OH 8,867,000 14.2 23.4 (38,000) 21.30 -2.5 -2.0

Cleveland, OH 9,728,000 13.1 13.7 (65,000) 21.10 3.4 2.2

Columbus, OH 7,840,000 13.1 13.0 5,000 19.30 -0.3 -6.6

Detroit, MI 11,613,000 17.4 17.1 1,000 23.00 0.0 1.1

Grand Rapids, MI 1,567,000 18.6 18.3 5,000 20.90 -4.7 -2.3

Indianapolis, IN 10,109,000 12.5 13.1 (59,000) 19.20 0.0 –

Kansas City, MO-KS 10,403,000 19.7 17.6 219,000 19.60 14.5 -5.1

St. Louis, MO 12,841,000 11.5 11.4 15,000 18.60 5.2 -4.4

MIDWEST TOTAL/AVERAGE 130,323,000 15.26 15.77 83,000 25.67

WEST

Bakersfield, CA 670,000 6.3 6.3 0 17.40 0.0 0.0

Boise, ID 2,038,000 5.1 4.7 9,000 18.00 0.0 0.0

Denver, CO 19,195,000 13.1 12.6 92,000 27.00 0.1 0.1

Fresno, CA 1,039,000 9.6 11.8 (23,000) 24.60 0.0 0.0

Honolulu, HI 4,709,000 12.2 12.6 (18,000) 35.10 -0.7 -1.1

Las Vegas, NV 794,000 8.9 9.1 0 34.80 0.7 2.6

Los Angeles, CA 17,734,000 14.7 14.2 95,000 38.50 -1.2 -0.9

Oakland, CA 10,198,000 10.0 9.9 2,000 31.20 1.2 2.0

Phoenix, AZ 9,470,000 21.9 23.1 (118,000) 27.20 -3.6 1.3

Pleasanton/Walnut Creek, CA 7,787,000 18.8 19.0 (13,000) 27.60 5.0 8.5

Portland, OR 9,954,000 7.9 6.9 105,000 25.40 3.0 4.1

Reno, NV 548,000 19.7 22.3 (14,000) 23.40 0.0 -2.5

Sacramento, CA 8,912,000 9.4 9.5 (8,000) 32.20 -1.8 -5.7

San Diego County, CA 7,254,000 16.3 18.3 (85,000) 28.70 0.0 -5.5

San Francisco, CA 52,333,000 15.2 14.5 363,000 36.00 0.0 9.9

San Jose/Silicon Valley, CA 3,365,000 27.9 31.2 (22,000) 32.40 -5.6 -11.2

Seattle/Puget Sound, WA 32,289,000 20.9 18.9 468,000 29.10 -4.5 9.6

Stockton/San Joaquin County, CA 2,774,000 27.6 28.0 (11,000) 21.60 2.3 0.0

WEST TOTAL/AVERAGE 191,065,000 15.60 15.19 823,000 31.47

U.S. TOTAL/AVERAGE 972,505,000 14.98 14.80 3,720,000 39.60 0.68 3.71

28.10 -0.20 -0.30

weighted

equal



and any boost is likely to be foreshadowed by a reduction in inducements which have not yet materialized beyond a handful of markets.

U.S. office vacancy rate holds steady. The U.S. national office vacancy rate barely budged during the first quarter, shifting just one basis point higher (100 basis points equals one percent). Office vacancies finished the quarter at 15.46 percent but are still on track to finish the year below 15.00 percent. During the first quarter, downtown vacancies increased 7 basis points to register 14.19 percent. Suburban vacancy rates nudged lower, falling 3 basis points to 16.07 percent. Over the past 12 months, the U.S. national office vacancy rate has fallen 21 basis points. The flight to quality was particularly evident this quarter reflected by Class A vacancies, which shrunk 21 basis points. Canadian office vacancy rates were mixed for the quarter, with central business district (CBD) vacancies falling 26 basis points to 6.75 percent, and suburban vacancies increasing 16 basis points to 8.76 percent.

Office absorption positive for fourth consecutive quarter. The U.S. office market registered a fourth straight quarter of rising occupancies. First-quarter absorption came in at 8.1 million square feet (MSF)—substantially below the fourth quarter of 2010, when occupied space increased by 14.8 MSF, but a considerable improvement from a year ago, when occupied space contracted by 5.1 MSF. Repeating a trend witnessed last quarter, Class A buildings continued to attract “move-up” tenants with Class A absorption totaling 10.4 MSF, compared to Class B and C buildings which saw a mild contraction in occupied space. Canadian markets also recorded an increase in occupied space during the first quarter, with absorption totaling 2.6 MSF. This was just marginally below the 2.3 MSF recorded in the fourth quarter.

Rents continue to form a bottom. First-quarter data shows CBD rents increased by 0.7 percent to average $39.55 per square foot. This came on top of 0.9 percent increase in the fourth quarter. Suburban rents increased by 0.6 percent to register $26.20 per square foot. Although small, this was the first increase in suburban rents since Q1 2008. Taking out the effects of some of the larger, higher-priced markets, both downtown and subur-ban rents held steady during the quarter. Canadian downtown office rents moved higher during Q1 with CBD quoted rents increasing 4.2 percent while suburban rents increased 3.1 percent.

Office construction takes a surprising jump. First-quarter office comple-tions totaled 7.5 MSF, nearly doubling the fourth quarter, when construc-tion totaled 3.8 MSF. By historic standards, however, first-quarter comple-tions were extremely low—a trend that is expected to continue. It should also be noted that four markets account for more than 50 percent of Q1 new supply: downtown Cincinnati, downtown Houston, downtown Seattle, and Menlo Park on the San Francisco Peninsula. Going forward, office development will remain extremely subdued, reflected in construction activity which registered just 25.7 MSF at the end of the quarter. Last quarter, construction underway registered 22.3 MSF. The Canadian office market had very little new construction during the first quarter, adding just 336,000 square feet; however, across the country 6.6 MSF was under construction at the end of the quarter.

U.S. Office Market Begins the Year on a Soft NoteContinued from page 1

MARKET ABSORPTION (SF)

San Francisco Peninsula 1,586,000

Northern New Jersey 1,281,000

Dallas 766,000

Raleigh/Durham 641,000

San Jose/Silicon Valley 416,000

Houston 391,000

San Diego 296,000

Denver 231,000

Mon

th to

Mon

th C

hang

e, th

ousa

nds

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar-10

0

10

20

30

40

50

60

70

80

90

2010 2011

EMPLOYMENT, PROFESSIONAL & BUSINESS SERVICES

-100,000 100,000 300,000 500,000 700,000

Midtown Manhattan

Boston

Philadelphia

Downtown Manhattan

Midtown S. Manhattan

San Francisco

Seattle

Washington, DC

ABSORPTION (SF) | SELECT DOWNTOWN MARKETS | Q1 2011

0 400,000 800,000 1,200,000 1,600,000

Denver

San Diego

Houston

San Jose/Silicon Valley

Raleigh/Durham

Dallas

Northern New Jersey

San Francisco Peninsula

ABSORPTION (SF) | SELECT SUBURBAN MARKETS | Q1 2011

Source: U.S. Bureau of Labor Statistics



Source: U.S. Bureau of Labor Statistics

UNITED STATES | SUBURBAN OFFICE | ALL INVENTORY

MARKET


MAR. 31, 2011

NEW SUPPLY Q1 2011

(SF)

UNDER CONSTRUCTION

(SF)

VACANCY RATE (%)

DEC. 31, 2010

VACANCY RATE (%)

MAR. 31, 2011

ABSORPTION Q1 2011

(SF)

NORTHEAST

Baltimore, MD 94,701,000 339,000 1,342,000 13.4 13.7 (152,000)

Boston, MA 106,500,000 0 59,000 19.1 19.2 60,000

Fairfield County, CT 60,091,000 278,000 0 13.1 13.3 138,000

Hartford, CT 12,374,000 0 0 14.8 14.5 82,000

Long Island – Nassau, NY 41,762,000 40,000 55,000 10.7 10.7 54,000

Long Island – Suffolk, NY 29,607,000 0 94,000 11.6 11.1 159,000

New Jersey – Central 104,455,000 26,000 358,000 15.2 15.4 (251,000)

New Jersey – Northern 138,911,000 0 406,000 14.2 13.3 1,281,000

Philadelphia, PA 109,239,000 0 285,000 16.2 15.7 563,000

Washington, DC 310,547,000 70,000 3,262,000 13.7 14.0 (307,000)

Westchester County, NY 38,224,000 0 0 10.8 11.0 (35,000)

NORTHEAST TOTAL/AVERAGE 1,046,412,000 753,000 5,860,000 14.39 14.38 1,592,000

SOUTH

Atlanta, GA 165,736,000 0 314,000 18.6 18.4 296,000

Charleston, SC 9,394,000 0 0 19.1 17.4 163,000

Charlotte, NC 71,606,000 5,000 325,000 14.0 13.8 249,000

Columbia, SC 4,782,000 0 0 19.7 20.3 3,000

Dallas/Fort Worth, TX 255,335,000 50,000 488,000 17.1 16.9 766,000

Ft. Lauderdale/Broward Co., FL 44,225,000 0 0 14.7 14.2 195,000

Greenville, SC 4,291,000 0 14,000 23.3 23.3 110,000

Houston, TX 158,632,000 0 406,000 16.1 15.8 391,000

Jacksonville, FL 43,346,000 0 15,000 15.4 14.8 301,000

Little Rock, AR 7,364,000 0 23,000 11.0 10.7 19,000

Louisville, KY 35,350,000 54,000 20,000 13.1 11.8 521,000

Memphis, TN 28,542,000 0 12,000 13.0 13.0 61,000

Miami-Dade, FL 64,224,000 90,000 485,000 14.6 14.8 (22,000)

Nashville, TN 23,472,000 0 457,000 10.5 10.8 18,000

Orlando, FL 54,867,000 0 213,000 16.6 16.3 151,000

Raleigh/Durham/Chapel Hill, NC 75,286,000 188,000 126,000 12.8 12.6 641,000

Tampa, FL 71,526,000 0 0 15.8 16.0 (166,000)

West Palm Beach/Palm Beach Co., FL 29,133,000 73,000 32,000 20.7 20.1 255,000

SOUTH TOTAL/AVERAGE 1,147,111,000 461,000 2,930,000 16.06 15.81 3,953,000



UNITED STATES | SUBURBAN OFFICE | ALL INVENTORY

MARKET


MAR. 31, 2011

NEW SUPPLY Q1 2011

(SF)

UNDER CONSTRUCTION

(SF)

VACANCY RATE (%)

DEC. 31, 2010

VACANCY RATE (%)

MAR. 31, 2011

ABSORPTION Q1 2011

(SF)

MIDWEST

Chicago, IL 152,351,000 0 416,000 18.0 18.2 (196,000)

Cincinnati, OH 32,624,000 16,000 195,000 19.0 21.2 70,000

Cleveland, OH 92,075,000 14,000 872,000 10.2 10.4 (141,000)

Columbus, OH 43,748,000 65,000 140,000 14.2 14.0 (73,000)

Detroit, MI 99,591,000 27,000 4,000 21.1 21.8 (117,000)

Grand Rapids, MI 12,750,000 0 0 25.5 25.5 12,000

Indianapolis, IN 57,189,000 0 0 12.2 12.1 90,000

Kansas City, MO-KS 58,416,000 66,000 0 14.0 13.8 190,000

St. Louis, MO 54,475,000 0 0 11.2 11.8 (337,000)

MIDWEST TOTAL/AVERAGE 603,220,000 188,000 1,627,000 15.70 16.02 (501,000)

WEST

Bakersfield, CA 5,975,000 7,000 0 9.8 10.2 (16,000)

Boise, ID 10,819,000 0 16,000 22.2 22.0 20,000

Denver, CO 100,907,000 286,000 68,000 15.8 15.6 231,000

Fairfield, CA 4,221,000 0 0 25.1 27.5 (103,000)

Fresno, CA 17,829,000 30,000 0 13.6 13.4 29,000

Honolulu, HI 7,593,000 0 0 11.3 12.1 (64,000)

Las Vegas, NV 35,009,000 255,000 32,000 26.3 27.0 (81,000)

Los Angeles – Inland Empire, CA 21,667,000 0 0 24.8 25.7 (172,000)

Los Angeles, CA 171,405,000 191,000 921,000 17.6 18.0 (516,000)

Oakland, CA 15,877,000 0 0 17.4 19.4 (319,000)

Orange County, CA 79,486,000 0 0 22.0 21.7 290,000

Phoenix, AZ 107,537,000 0 649,000 22.5 22.6 (203,000)

Pleasanton/Walnut Creek, CA 32,975,000 0 0 14.3 16.1 (580,000)

Portland, OR 44,643,000 63,000 0 13.8 12.9 460,000

Reno, NV 5,548,000 0 0 18.9 19.9 (69,000)

Sacramento, CA 72,768,000 80,000 147,000 18.8 19.2 (202,000)

San Diego County, CA 67,861,000 0 87,000 16.1 15.7 296,000

San Francisco Peninsula, CA 35,153,000 1,635,000 0 17.6 15.3 1,586,000

San Jose/Silicon Valley, CA 54,009,000 0 538,000 19.9 18.9 416,000

Seattle/Puget Sound, WA 75,311,000 0 199,000 13.5 13.7 (112,000)

WEST TOTAL/AVERAGE 966,593,000 2,547,000 2,657,000 18.24 18.25 890,000

U.S. TOTAL/AVERAGE 3,763,336,000 3,949,000 13,073,000 16.10 16.07 5,934,000



UNITED STATES | SUBURBAN OFFICE | CLASS A

MARKET


MAR. 31, 2011

VACANCY RATE (%)

DEC. 31, 2010

VACANCY RATE (%)

MAR. 31, 2011

ABSORPTION Q1 2011

(SF)


(USD PDF) MAR. 31, 2011

QUARTERLY CHANGE IN

RENT (%)

ANNUAL CHANGE IN

RENT (%)

NORTHEAST

Baltimore, MD 32,243,000 17.9 19.3 153,000 25.10 -3.6 2.7

Boston, MA 44,718,000 18.0 18.1 (33,000) 26.20 1.5 -0.2

Fairfield County, CT 30,692,000 15.1 15.2 188,000 35.00 1.1 –

Hartford, CT 7,472,000 14.7 14.3 46,000 20.50 0.6 0.2

Long Island – Nassau, NY 13,695,000 11.5 10.7 108,000 31.50 – –

Long Island – Suffolk, NY 10,614,000 14.4 14.3 5,000 27.90 – –

New Jersey – Central 61,860,000 16.9 16.9 23,000 22.80 -2.3 -11.6

New Jersey – Northern 84,041,000 14.1 14.0 24,000 24.70 1.0 0.9

Philadelphia, PA 67,408,000 16.2 15.5 486,000 24.10 0.1 -1.4

Washington, DC 161,908,000 15.6 15.8 2,000 31.30 0.1 2.4

Westchester County, NY 18,423,000 13.3 13.4 (24,000) 27.40 0.7 –

NORTHEAST TOTAL/AVERAGE 533,073,000 15.68 15.73 979,000 27.42

SOUTH

Atlanta, GA 77,122,000 18.8 18.1 509,000 21.90 2.0 0.1

Charleston, SC 4,425,000 16.0 14.1 85,000 23.10 -1.8 2.5

Charlotte, NC 18,192,000 17.4 16.5 149,000 20.20 -0.6 0.1

Columbia, SC 888,000 16.3 16.3 35,000 17.40 2.2 -0.7

Dallas/Fort Worth, TX 90,438,000 18.6 18.4 184,000 24.80 0.0 -0.4

Ft. Lauderdale/Broward Co., FL 10,810,000 19.7 18.9 95,000 28.60 2.4 0.5

Greenville, SC 1,772,000 19.8 20.6 (8,000) 17.60 0.1 -1.0

Houston, TX 69,828,000 17.4 16.6 538,000 26.90 -0.7 -3.5

Jacksonville, FL 9,785,000 12.9 11.6 147,000 19.60 1.6 -2.8

Little Rock, AR 2,689,000 15.1 14.6 13,000 18.50 0.0 0.0

Louisville, KY 7,025,000 24.2 17.3 352,000 20.00 -0.2 4.2

Memphis, TN 7,132,000 10.2 10.2 (5,000) 21.40 -1.3 -3.6

Miami-Dade, FL 15,346,000 21.6 22.0 2,000 32.00 -0.4 -0.2

Nashville, TN 12,809,000 7.5 8.5 (9,000) 22.40 0.1 7.3

Orlando, FL 16,924,000 20.5 20.6 (16,000) 22.70 -1.1 -1.5

Raleigh/Durham/Chapel Hill, NC 25,217,000 16.2 17.0 152,000 21.70 0.6 1.8

Tampa, FL 23,536,000 17.3 17.6 (65,000) 23.10 -1.0 -3.1

West Palm Beach/Palm Beach Co., FL 9,224,000 20.4 20.0 102,000 30.20 0.5 -1.0

SOUTH TOTAL/AVERAGE 403,163,000 17.81 17.38 2,258,000 24.04



UNITED STATES | SUBURBAN OFFICE | CLASS A

MARKET


MAR. 31, 2011

VACANCY RATE (%)

DEC. 31, 2010

VACANCY RATE (%)

MAR. 31, 2011

ABSORPTION Q1 2011

(SF)


(USD PDF) MAR. 31, 2011

QUARTERLY CHANGE IN

RENT (%)

ANNUAL CHANGE IN

RENT (%)

MIDWEST

Chicago, IL 75,688,000 19.2 18.8 281,000 27.30 0.0 -1.0

Cincinnati, OH 16,175,000 20.4 19.6 87,000 20.20 -1.1 -1.5

Cleveland, OH 12,937,000 12.1 12.6 (76,000) 21.60 -2.0 -0.7

Columbus, OH 25,563,000 8.1 8.4 (80,000) 17.30 -3.0 -7.2

Detroit, MI 25,659,000 18.1 19.7 (108,000) 22.20 0.0 -1.1

Grand Rapids, MI 2,819,000 32.8 32.8 (2,000) 18.70 0.0 2.1

Indianapolis, IN 15,074,000 16.0 15.2 116,000 16.90 -7.7 –

Kansas City, MO-KS 12,400,000 17.4 17.8 7,000 20.60 -2.3 -8.6

St. Louis, MO 24,153,000 13.2 13.3 (12,000) 21.80 0.6 -5.9

MIDWEST TOTAL/AVERAGE 210,467,000 16.54 16.57 213,000 27.42

WEST

Bakersfield, CA 2,698,000 6.5 6.5 5,000 24.00 0.0 0.0

Boise, ID 4,684,000 24.1 24.2 (3,000) 18.00 0.0 -1.4

Denver, CO 32,750,000 14.2 13.1 467,000 21.50 3.7 3.7

Fairfield, CA 1,763,000 24.9 29.5 (82,000) 25.60 -1.4 -2.7

Fresno, CA 3,850,000 18.0 17.9 28,000 25.20 0.0 0.0

Las Vegas, NV 4,923,000 39.0 38.0 97,000 31.40 -2.9 -6.8

Los Angeles – Inland Empire, CA 4,970,000 32.0 31.9 (3,000) 24.10 -2.9 -11.5

Los Angeles, CA 102,537,000 18.1 18.4 (247,000) 34.60 7.1 -2.0

Oakland, CA 3,582,000 26.8 29.1 (83,000) 25.90 0.9 -9.6

Orange County, CA 32,936,000 23.6 23.6 16,000 26.00 -0.5 -6.9

Phoenix, AZ 31,583,000 26.5 25.8 232,000 23.80 -0.8 -6.0

Pleasanton/Walnut Creek, CA 16,299,000 14.8 14.2 106,000 22.80 -3.6 0.5

Portland, OR 12,549,000 13.6 11.9 221,000 23.20 0.1 1.7

Reno, NV 3,001,000 17.1 20.0 (86,000) 19.90 0.0 -2.9

Sacramento, CA 16,388,000 25.9 25.0 219,000 23.60 -0.8 -4.5

San Diego County, CA 23,983,000 17.3 15.8 286,000 31.60 -0.8 -5.1

San Francisco Peninsula, CA 22,246,000 16.8 13.8 1,605,000 33.10 3.0 1.1

San Jose/Silicon Valley, CA 26,212,000 23.4 20.8 571,000 34.10 -1.7 -5.4

Seattle/Puget Sound, WA 27,263,000 16.0 16.5 (130,000) 27.50 -3.1 7.0

WEST TOTAL/AVERAGE 374,216,000 19.65 19.08 3,216,000 28.76

U.S. TOTAL/AVERAGE 1,520,920,000 17.34 17.11 6,665,000 26.20 0.63 -1.47

24.40 0.11 -1.23

weighted

equal



CANADA | DOWNTOWN OFFICE | ALL INVENTORY

MARKET


MAR. 31, 2011

NEW SUPPLY Q1 2011

(SF)

UNDER CONSTRUCTION

(SF)

VACANCY RATE (%)

DEC. 31, 2010

VACANCY RATE (%)

MAR. 31, 2011

ABSORPTION Q1 2011

(SF)

Calgary, AB 37,809,000 0 1,940,000 12.0 10.9 393,000

Edmonton, AB 10,632,000 0 630,000 8.0 7.6 30,000

Guelph, ON 383,000 0 55,000 12.2 13.8 (6,000)

Halifax, NS 4,913,000 0 4,000 9.2 6.5 4,000

Kitchener-Waterloo, ON 3,592,000 0 176,000 14.1 13.3 29,000

Montreal, QC 49,429,000 0 0 7.2 7.4 (73,000)

Ottawa, ON 14,992,000 0 550,000 5.6 5.6 (2,000)

Regina, SK 3,549,000 33,000 200,000 1.4 1.8 (10,000)

Saskatoon, SK 2,092,000 20,000 70,000 5.8 4.6 24,000

Toronto, ON 88,032,000 0 645,000 5.4 5.5 928,000

Vancouver, BC 24,237,000 0 127,000 4.6 3.7 215,000

Winnipeg, MB 11,139,000 0 0 7.2 6.8 38,000

CANADA TOTAL/AVERAGE 250,797,000 53,000 4,396,000 7.02 6.75 1,570,000

CANADA | DOWNTOWN OFFICE | CLASS A

MARKETEXISTING INVENTORY (SF)

MAR. 31, 2011

VACANCY RATE (%) DEC. 31,

2010

VACANCY RATE (%) MAR. 31,

2011

ABSORPTION Q1 2011

(SF)


(CAD PSF) MAR. 31, 2011

QUARTERLY CHANGE IN RENT

(%)

ANNUAL CHANGE IN RENT

(%)

Calgary, AB 24,787,000 9.8 8.8 253,000 39.50 0.0 -2.5

Edmonton, AB 8,254,000 7.2 7.2 (1,000) 39.20 1.9 -5.9

Guelph, ON 203,000 6.9 0.0 14,000 27.40 5.2 5.2

Halifax, NS 1,916,000 4.7 6.7 (4,000) 32.40 2.6 1.6

Kitchener-Waterloo, ON 1,425,000 10.0 8.2 26,000 23.20 -6.4 -16.1

Montreal, QC 23,076,000 7.5 7.3 50,000 37.00 5.7 15.6

Ottawa, ON 9,001,000 6.6 6.6 4,000 48.40 0.2 0.3

Regina, SK 1,031,000 1.1 1.5 (5,000) 37.10 6.1 6.7

Saskatoon, SK 492,000 0.2 0.2 0 34.00 0.0 7.9

Toronto, ON 41,585,000 6.7 6.1 571,000 55.70 8.5 9.4

Vancouver, BC 9,843,000 2.8 2.4 40,000 53.50 0.9 9.2

Winnipeg, MB 2,619,000 6.6 6.6 1,000 30.00 0.0 –

CANADA TOTAL/AVERAGE 124,232,000 7.11 6.64 949,000 45.60 4.21 5.34

38.10 2.33 1.23

weighted

equal



CANADA | SUBURBAN OFFICE | ALL INVENTORY

MARKET


MAR. 31, 2011

NEW SUPPLY Q1 2011

(SF)

UNDER CONSTRUCTION

(SF)

VACANCY RATE (%)

DEC. 31, 2010

VACANCY RATE (%)

MAR. 31, 2011

ABSORPTION Q1 2011

(SF)

Calgary, AB 23,303,000 0 606,000 11.2 9.8 322,000

Edmonton, AB 8,817,000 0 40,000 15.5 15.4 23,000

Guelph, ON 1,353,000 0 0 3.8 4.3 (6,000)

Halifax, NS 6,256,000 59,000 50,000 11.0 9.7 6,000

Kitchener-Waterloo, ON 5,889,000 52,000 519,000 6.3 8.0 (49,000)

Montreal, QC 23,621,000 0 112,000 9.8 9.9 (30,000)

Ottawa, ON 20,619,000 60,000 122,000 8.0 7.9 (52,000)

Regina, SK 659,000 0 0 0.6 0.3 2,000

Toronto, ON 97,815,000 0 0 6.6 7.2 830,000

Vancouver, BC 27,273,000 113,000 668,000 10.8 10.9 45,000

Winnipeg, MB 3,173,000 0 37,000 11.8 12.5 (17,000)

CANADA TOTAL/AVERAGE 218,777,000 283,000 2,154,000 8.60 8.76 1,074,000

CANADA | SUBURBAN OFFICE | CLASS A

MARKET


MAR. 31, 2011

VACANCY RATE (%) DEC. 31,

2010

VACANCY RATE (%) MAR. 31,

2011

ABSORPTION Q1 2011

(SF)


(CAD PSF) MAR. 31, 2011

QUARTERLY CHANGE IN RENT

(%)

ANNUAL CHANGE IN RENT

(%)

Calgary, AB 10,609,000 12.1 9.9 229,000 37.00 5.7 0.0

Guelph, ON 821,000 0.4 1.1 (6,000) 25.60 -1.3 -3.8

Halifax, NS 2,650,000 8.8 7.8 24,000 28.30 5.9 8.3

Kitchener-Waterloo, ON 2,413,000 7.7 10.4 (18,000) 23.00 -3.1 -13.8

Montreal, QC 13,226,000 8.6 8.6 (2,000) 30.00 15.4 25.0

Ottawa, ON 11,626,000 7.4 7.8 9,000 32.70 2.0 0.8

Regina, SK 659,000 0.6 0.3 2,000 28.50 0.0 16.3

Toronto, ON 43,062,000 6.8 8.1 434,000 30.40 -0.4 6.0

Vancouver, BC 13,132,000 13.0 13.3 28,000 38.50 1.3 40.0

CANADA TOTAL/AVERAGE 98,198,000 8.49 8.96 700,000 32.10 3.09 10.54

30.40 2.83 8.07

weighted

equal

Inventory – Includes all existing multi- or single-tenant leased and owner-occupied office properties greater than or equal to 10,000 square feet (net rentable area). In some larger markets this minimum size threshold may vary up to 50,000 square feet. Does not include medical or government buildings.

Vacancy Rate – Percentage of total inventory physically vacant as at the survey date including direct vacant and sublease space.

Absorption – Net change in physically occupied space over a given period of time.

New Supply – Includes completed speculative and build-to-suit construction. New supply quoted on a net basis after any demolitions or conversions.

Annual Quoted Rent – Includes all costs associated with occupying a full floor in the mid-rise portion of a Class A building inclusive of taxes, insurance, maintenance, janitorial and utilities (electricity surcharges added where applicable). All office rents in this report are quoted on an annual, gross per square foot basis. Rent calculations do not include sublease space.

Cap Rate – (Or going-in cap rate) Capitalization rates in this survey are based on multi-tenant institutional grade buildings fully leased at market rents. Cap rates are calculated by dividing net operating income (NOI) by purchase price.

Note: SF = square feetPSF = per square footCBD = central business district

Glossary


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UNITED STATES | OFFICE INVESTMENT

MARKET

CBD SALES PRICE

(USD PSF)

CBD CAP RATE

(%)

SUBURBAN SALES PRICE

(USD PSF)

SUBURBAN CAP RATE

(%)Atlanta, GA 125.00 8.52 141.00 9.08 Bakersfield, CA – – 178.56 7.25 Baltimore, MD – – 181.00 7.50 Boston, MA 558.00 5.70 128.00 –Charleston, SC 250.00 8.00 135.00 11.00 Chicago, IL 165.00 7.25 106.00 8.50 Columbus, OH – 105.00 7.00 Dallas/Fort Worth, TX 80.00 8.00 110.00 7.50 Denver, CO 280.00 7.50 150.00 8.20 Fairfield County, CT – – 250.00 8.00 Fresno, CA 105.00 9.00 140.00 8.50 Ft. Lauderdale/Broward Co., FL – – 94.00 7.00 Greenville, SC – – – –Hartford, CT – – 34.00 9.45 Houston, TX 191.50 7.50 175.00 8.10 Jacksonville, FL 90.95 9.80 116.25 8.75 Kansas City, MO-KS – 8.00 – 8.00 Las Vegas, NV – – 51.43 –Little Rock, AR 88.00 9.50 110.00 9.25 Long Island – Nassau, NY – – 75.00 6.10 Long Island – Suffolk, NY – – 75.00 6.10 Los Angeles – Inland Empire, CA – – 89.00 –Los Angeles, CA 300.00 5.50 250.00 8.00 Miami-Dade, FL – – 225.00 –Nashville, TN – – 65.00 7.75 New York, NY – Downtown Manhattan 97.00 6.90 – –New York, NY – Midtown Manhattan 404.00 5.00 – –New York, NY – Midtown S. Manhattan 404.00 5.00 – –Oakland, CA – 8.00 – 9.00 Orange County, CA – – 175.00 8.00 Philadelphia, PA 132.00 9.00 117.00 9.00 Phoenix, AZ 129.00 – 70.00 10.00 Pleasanton/Walnut Creek, CA 112.50 8.00 87.50 8.50 Raleigh/Durham/Chapel Hill, NC 292.07 – 129.22 –Sacramento, CA 180.00 8.10 135.00 8.30 San Diego County, CA – – 190.08 –San Francisco Peninsula, CA – – 250.00 6.50 San Francisco, CA 317.00 6.50 – –Seattle/Puget Sound, WA 152.16 8.14 90.53 7.02 St. Louis, MO 90.00 9.00 127.00 8.50 Stamford, CT 350.00 8.00 – –Stockton/San Joaquin County, CA 125.00 8.60 – –Tampa, FL – – 191.50 9.50 West Palm Beach/Palm Beach Co., FL – – 217.00 9.25 Westchester County, NY – – 250.00 8.00 White Plains, NY 350.00 8.00 – –

CANADA | OFFICE INVESTMENT

MARKET

CBD SALES PRICE

(CAD PSF)

CBD CAP RATE

(%)

SUBURBAN SALES PRICE

(CAD PSF)

SUBURBAN CAP RATE

(%)Calgary, AB 380.00 6.50 350.00 7.00 Edmonton – – 360.59 6.43 Guelph, ON 140.00 7.50 150.00 7.50 Halifax, NS – – 125.00 8.25 Kitchener-Waterloo, ON 140.00 7.50 150.00 7.50 Montreal, QC 275.00 7.00 190.00 7.50 Ottawa, ON 270.00 7.25 145.00 7.60 Regina, SK 98.00 8.00 – –Saskatoon, SK 240.00 7.00 – –Toronto, ON – – – –Vancouver, BC 400.00 5.75 300.00 6.50 Winnipeg, MB 155.00 7.75 135.00 7.75

north american office highlights 1q 2011

Real Estate

office market q1

office market recovery

office space vacancy

highlights q1

new york

new construction

ny downtown manhattan

healthy labor market