Kootenai CountyCommercial MarketReview & Forecast

2008

Activity, Trends & Indicators

SCHNEIDMILLER REALTY

Coldwell Banker Commercial Schneidmiller Realty is pleased to present aKootenai County Commercial Real Estate Market Report. Our purpose is topresent valuable information for investors and building owners who are affectedby our evolving market. We have collected statistics from many different sourcesand compiled the data in a concise manner.This report focuses on the most populous places within Kootenai County, namelyCoeur d’Alene (34,785), Post Falls (17,028), Hayden (9,361), Rathdrum (4,891), and

Dalton Gardens (2,260). Our analysis attempts to give a denitive study of past

trends and future indicators that both have and will characterize our market.New data from a Kootenai County survey by Auble, Jolicoeur & Gentry andColdwell Banker Commercial Schneidmiller Realty gives insight into our marketthat was not possible before. The 2007 survey sampling encompassed over8.5 million square feet of commercial buildings which equates to 32% of the

commercial buildings identied in our market. Going forward, we will continue

with a semi-annual survey that will give us the ability to track historical trends invacancy rates, rental rates and absorption rates.

The data in this report largely reects the continuation of a strong market for

commercial real estate activity in Kootenai County. Low interest rates andeconomic growth have contributed to a relatively stable commercial market.At Coldwell Banker Commercial Schneidmiller Realty, we appreciate theopportunity to work with our valued clients and build relationships based onsuperior service. Each member of our team strives to meet your needs and help

you fulll your goals. We thank you for your business.

Phone: (208) 765-4300Toll Free: (800) 829-2555

435 W. Hanley Ave.Coeur d’Alene, ID 83815Fax: (208) 765-9150www.nwinvest.com

surveymethodology 1office 2retail 3land / newconstruction 4multi-family 5industrial 6sources 7

Survey

Methodology

SCHNEIDMILLER REALTY

Table

Contents

review

The ofce sector of our market claimed the lowest

vacancy rate across all sectors surveyed. Overallvacancy is at 2.37% with over 1.5 million square feet

surveyed. Ofce tenants have trended towards fewer

turnovers and a greater amount of lease renewals.Lessees have found it clearly more cost effective torenew or expand in their current location than move to a new space. Risingtenant improvement costs have contributed to the increased level of renewals. Inaddition, rising land prices and construction costs are driving up asking rents onnew projects.Existing buildings have continued to increase rents tocompensate for higher operating costs. However, rents at

existing buildings are still signicantly more economicalthan new ofce space entering the market.

One major new project to note is the recently completed46,300 square foot Riverview Tower on NorthwestBoulevard. Parkwood Business Properties is offeringspace in this project at an annual rate of $18/sq. ft. net.As of the end of February 2008, they have successfullyleased 90% of available lease space in this property.

forecast

Year end 2007 unemployment for Kootenai County

remained remarkably low at 3.5%, signicantly better

than the 4.8% national year-end unemployment rate. Jobgrowth and unemployment trends are a key indicator

of future ofce space needs. These positive factorstypically foreshadow upward movement in ofce leasing

activity as job growth and business expansion continues.Expect to see increased build-to-suit activity in the

ofce market as rising land and building prices make

speculative construction cost-prohibitive, and developersrisk ongoing holding expenses. The “credit-crunch”will remain a pervasive problem that could limit

sales of ofce condos and new ofce development.

Completion of the federal courthouse should keep marketconditions stable throughout the year. Completion of thefederal courthouse in North Coeur d’Alene will drive

development of ofce space for tenants in associated

professions. A combination of modest growth and

minimal planned ofce construction should keep market

conditions stable throughout the year.

Ofce

Kootenai countynonfarm Payroll JoBs

010,000