MARKETBE EAT

OF FFICE SNAPSH S HOT

RIC CHMOND D, VA
A Cu ushman & Wak kefield Researc ch Publication

Q2 2013
Innsbro rook submarket. This means the e market is conti inuing its path toward ds a healthy reco overy. Downt town, construct tion has begun o on the third phas se of BioTech 8, a six-st tory tower in th he Biotechnology y Research Park k that will comple ete a $100 millio on, three-buildin ng headquarters complex for Health h Diagnostics Lab boratory. A 40,0 000-sf building w will go up in the Reyno olds Crossing pro oject on West B Broad Street in H Henrico County, with F irst Tennessee B Bank as an announced tenant. STAT TS ON THE G O
Q2 2012 2 Overa all Vacancy Direct t Asking Rents (ps f/yr) YTD L Leasing Activity (sf f) 10.3% % $16.79 9 720,213 3 Q2 2013 10.3% $17.01 947,461 Y-O-Y CHANGE 0.0pp 1.3% 31.6% 12 MONTH H FORECAST T

ECONOMIC OVERVIEW
A measure of U.S. U consumer co onfidence in May y jumped to its highest h level in al lmost six years, lifted by rising home h prices and d an improving job market. Vir rginia's unemploy yment rate fell slightly in April to 5.2%, the low west it has been in 4 years. The joble ess rate dropped d from 5.3% in March M and from 5.9% in April 2012. Br rokers hope the renewed optim mism will prompt t compa anies to take on more space and d are expressing g confidence in the W West End and dow wntown market ts.

MAJO OR TRANSACTIONS
With new tenants Ho ome Care Delive ered and EMC, Westmark W Two on West Broad Street t in Glen Allen is 98% leased, which means anothe er large block of f space is off the e market. Home Care took 42,357 7 square feet (sf f), and EMC lease ed 8,932 sf. Essex Bank leased 27,487 sf in Deep Run R III at 9954 Mayland M Dr. in Henric co County. This s 348,174-sf class s A, six-story bu uilding was previo ously the headqu uarters facility fo or Circuit City. Digital D Insurance e Holdin ngs, Inc. leased 13,057 1 sf in the building. b Deep Run R IIIs owner anticip pates Deep Run III to be 40% to o 45% committed d by summer 2013. Essex Bank is almost doubling it ts square footag ge from its curren nt headquarters in Innsbrook Co orporate Center. In the Midlothian corr ridor, Shaw Systems Associates renewed its lease f for 17,261 sf in Moorefield M II at 808 Moorefield Park Dr., and Sweet t Frog Enterprise es leased 7,382 sf s in the Winche ester Building at 10800 0 Midlothian Tur rnpike. Down ntown, Health Diagnostic D Labora atory leased an additional a 6,184 sf in Ja ackson Center at a 501 N. Second d St., and Heritage Wealth Adviso ors leased 6,000 0 sf in the SunTrust Center at 91 19 E. Main St. Absor rption was only slightly s lower in the second quarter year-to-dat te versus s the same perio od last year, at 173,000 sf and 17 79,000 sf respec ctively. For the market m as a who ole, vacancy in th he second quarte er was 10.3%, with leasing activit ty of 947,461 sf for the year. The va acancy rate in se econd quarter 2012 also was 10 0.3%, with leasing g activit ty of 720,213 sf.

DIRE ECT RENTAL V VS. VACANCY Y RATES

$ $17.20 $ $17.00 psf/yr $ $16.80 $ $16.60 $ $16.40 $ $16.20 2009 2010 2011 2012 Q2 2 2013 10.5% 10.0% 9.5% 9.0% 8.5%

DIRECT GROS SS RENTAL RATE

DIRECT VACANCY V RATE

OVER RALL ACTIVIT TY VS. ABSOR RPTION

sf (thousands) 3 3,000.0 1,700 1,837 2,544 543 496 399 947 173 1 1 1,000.0 0.0 -1 1,000.0 -2 2,000.0 1,558 2 2,000.0

OUTLOOK

Broke ers anticipate sev veral large leases s to be announced in Richmonds West End and downto own. There are still a couple big g-block space oppor rtunities in the In nnsbrook area, but b if those big-b block vacancies are re emoved from the e availabilities, va acancy is sub 10% in the

9 2009

-1 313 -1,313

2010

2011

2012
ABSORPTION

2013 YTD

LEASIN G ACTIVITY

Thalhim mer 11100 W W. Broad St. Glen Allen, VA 23060 ushmanwakefield.c com/knowledge www.cu

For more information, conta act: B Service s Brad McGetrick, Director, Brokerage 804 697 35 558 brad.mcge etrick@thalhimer.c com

The market terms an nd definitions in this report a are based on NAIOP standards. No warranty or represen ntation, express or implied, is made to the accuracy or co ompleteness of the information co ontained herein, and same is submitted subject to errors, , omissions, change of price, renta al or other conditions, withd drawal without notice, and to o any special listing conditions imp posed by our principals. 2013 Cushman & W Wakefield, Inc. All rights rese erved.

RICHMOND, VA
SUBMARKET INVENTORY OVERALL VACANCY RATE 14.9% 1.7% 5.6% 6.7% 5.0% 9.9% 22.0% 13.6% 10.6% 13.2% 12.1% 14.2% 7.1% 8.5% 4.1% 3.9% 14.4% 21.6% 6.2% 3.4% 8.9% 0.0% 7.1% 10.3% DIRECT VACANCY RATE 12.9% 1.7% 5.6% 5.7% 5.0% 8.9% 22.0% 10.8% 10.6% 13.2% 11.9% 14.2% 7.1% 8.5% 4.1% 3.9% 14.4% 21.6% 6.2% 3.4% 4.1% 0.0% 7.1% 9.3% YTD LEASING ACTIVITY 115,348 7,500 10,508 161,669 22,607 99,182 499 257,899 6,349 3,000 11,232 103,526 9,396 31,172 3,994 0 5,102 11,802 29,975 2,347 20,426 750 33,178 947,461 UNDER CONSTRUCTION 0 0 0 0 0 0 0 0 0 0 0 0 0 0 200,600 0 0 0 0 0 0 0 0 200,600 YTD CONSTRUCTION COMPLETIONS 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 YTD DIRECT NET ABSORPTION (4,843) 7,436 2,927 (21,031) (1,622) (3,645) (3,546) 343,571 18,517 (1,119) (12,468) 7,889 (39,425) 1,928 (484) 0 (1,495) (36,288) 13,147 (33,212) 8,583 0 23,588 268,408 YTD OVERALL NET ABSORPTION (86,411) 7,436 2,927 (26,661) (1,622) (3,645) (3,546) 343,239 17,288 (1,119) (13,768) 34,577 (39,425) 1,928 (484) 0 (1,495) (36,288) 9,402 (33,212) (19,254) 0 23,588 173,455 OVERALL WTD. AVG ALL CLASSES GROSS RENTAL RATE* $19.29 $15.47 $15.94 $17.66 $11.94 $13.19 $13.42 $18.25 $14.00 $12.03 $16.03 $16.44 $15.03 $15.37 $16.47 $11.67 $14.08 $13.38 $16.10 $18.06 $14.69 $18.23 $13.91 $16.98 DIRECT WTD. AVG. CLASS A GROSS RENTAL RATE* $25.30 N/A $22.00 $19.70 N/A N/A N/A $18.97 $17.17 N/A N/A $17.74 N/A N/A N/A N/A N/A N/A $19.49 $20.50 $17.98 N/A $20.69 $20.81

CBD East End Far West End Glenside/Broad St Hull Street Corridor I-95 N/Ashland I-95 N/Chamberlayne Innsbrook Iron Bridge Corridor Lakeside Mechanicsville Midlothian Corridor Monroe Ward Near West End North Broad Northside Parham East Parham South Rt 288 Corridor Shockoe Bottom Stony Point/Huguenot West Creek West End TOTALS

10,846,989 623,816 803,255 4,741,165 2,712,469 688,456 363,973 8,159,380 2,013,241 334,259 1,245,646 4,376,418 2,529,511 2,156,295 3,020,271 288,495 2,798,443 1,013,346 1,577,860 1,541,169 1,496,015 1,740,213 3,844,086 58,914,771

* RENTAL RATES REFLECT ASKING $PSF/YEAR

MARKET HIGHLIGHTS
SIGNIFICANT Q2 2013 LEASE TRANSACTIONS WestMark Two Deep Run III Deep Run III WestMark Two Winchester Building SIGNIFICANT Q2 2013 SALE TRANSACTIONS NA SIGNIFICANT Q2 2013 CONSTRUCTION COMPLETIONS NA SIGNIFICANT PROJECTS UNDER CONSTRUCTION Biotech 8 Phase 2 Biotech 8 Phase 3 SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET SUBMARKET Innsbrook Innsbrook Innsbrook Innsbrook Midlothian Corridor SUBMARKET TENANT Home Care Delivered Inc. Essex Bank Digital Insurance Holdings Inc. EMC Corporation Sweet Frog Enterprises BUYER BUILDING CLASS A A A A A PURCHASE PRICE / $PSF SQUARE FEET 42,357 27,487 13,057 8,932 7,382 SQUARE FEET

SUBMARKET North Broad North Broad

MAJOR TENANT NA NA

COMPLETION DATE Q1 2014 Q2 2014

BUILDING SQUARE FEET 112,000 88,600

Thalhimer 11100 W. Broad St. Glen Allen, VA 23060 www.cushmanwakefield.com/knowledge

For more information, contact: Brad McGetrick, Director, Brokerage Services 804 697 3558 brad.mcgetrick@thalhimer.com

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 or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. 2013 Cushman & Wakefield, Inc. All rights reserved.