CBRE CAP RATE SURVEY

A CBRE Publication
February 2013
In This Issue: Overview pg 2 Office pg 5 Multihousing pg 12 Retail pg 19 Industrial pg 27 Hotels pg 31 Appendix pg 34

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Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

United States | Overview

<< | >>

2012 was a stand-out year for U.S. commercial real estate investment. Investors expanded their activity in the sector due to the stable yields offered amid an environment where low and unstable returns in other asset classes prevailed. Figures from Real Capital Analytics (RCA) show that transaction activity in 2012 returned to the average pace set in 2004 and 2005. The combination of individual property sales, portfolio plays and entity-level transactions in the main commercial property sectors hit $261.7 billion for the year. This level represents a 35% increase from year-end 2011.

Office

Multihousing

Among the major property sectors, multihousing is the clear leader in terms of increases in sales volume over the last year. Transaction activity totaled $84.6 billion, up 47% from year-end 2011. The same-store price index from RCA, the Commercial Property Price Index (CPPI), shows a 9.6% gain in asset values over the year. The retail and office sectors came in at a distant second to the multihousing sector in terms of increases in transaction volume in 2012, with growth of 19.7% and 19.4%, respectively. In reality, these are both significant growth trends, and only look small by comparison to the tremendous growth in the multihousing sector. With a 6.1% increase according to the CPPI, the office sectors growth in sales prices achieved outpaced that of the retail sector, which recorded only a 1.2% increase. The industrial sector came in at the bottom on total sales volume with only 4.2% growth seen over year-end 2011. The headline figures, though,

Retail

Industrial

Hotels Hotel

are distorted by a major entity-level transaction in 2011 with the AMB/Prologis merger. For sales of individual assets, growth reached 29.3%, to reach $25.7 billion in transactions for the year. Portfolio deals grew even faster, at a pace of 34.9%, totaling $10.3 billion in transaction value. Clearly, there was investor interest in the industrial sector as well.

Appendix

Looking at some of the major property subtypes, there are signs of a tentative move towards taking on risk. CBD office assets are perceived to be less risky by investors, given the notion that there is more durable exit pricing and exit liquidity. This has significantly increased the appetite of investors for these types of assets in the past couple of years, with deals in CBD submarkets accounting for nearly 54% of all office transactions in 2010 and 2011. This figure may not sound large, but the data from our local research teams suggest that CBD submarkets represent only about 36% of all competitive office inventory in the U.S. Another example of a move to get exposure to risk assets can be seen among some cap rate spreads for different subtypes in the retail sector of commercial properties. Our year-end Cap Rate Survey shows that for Class A stabilized neighborhood centers, the weighted average cap rate was 6.4% across the 40 major markets surveyed. For Class A stabilized power centers, this figure stood at 6.9%, a roughly 60 basis point (bps)
2

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

United States | Overview (continued)

<< | >>

pricing premium for this subtype, which is often viewed as riskier. By comparison, as recorded in our year-end 2010 survey, the cap rate for Class A stabilized neighborhood centers stood at 6.9%. So investors are using the same cap rates today for these riskier assets as they did in 2010 for the asset class viewed as less risky. By this point in the cycle, many investors will need to look to somewhat riskier assets in search of greater returns. The NCREIF ODCE Index shows that returns came in at 10.9% for year-end 2012. By contrast, in 2011 and 2010, average annual returns were a much stronger 16.2%. The

Office

Multihousing

downshift in returns is a result of a slowdown in cap rate compression. The data from NCREIF show that roughly 50% of the value gains at the property level in 2010 and 2011 came from the cap rate compression that accompanied the new flow of capital to the sector from yield-hungry investors. Only one-quarter of the value gains in the last year came from cap rate compression. To achieve stronger returns, investors will need to focus on asset types and markets with stronger income growth. This shift, however, often involves taking on more risks. At year-end 2012, the office vacancy rate was 15.4% nationally, versus 16.0% for year-end 2011. This 60-bps decline in the national vacancy

Retail

Industrial

rate came about from declining vacancy in both CBD and suburban submarkets; however, the composition of this decline was more heavily weighted towards suburban submarkets. The vacancy rate for CBD submarkets fell 40 bps from a year earlier to hit 12.4%. The vacancy rate for suburban submarkets fell more quickly, however, dropping some 60 bps from a year earlier to hit 17.1%. Overall, there is still more slack capacity in the suburban submarkets, for while the current 17.1% is far better than the 18.7% level seen in 2010, it is still higher than the average of 16.1% recorded since 1988. CBD vacancy rates, by contrast, are now below the long-term average of 12.8%. The increasing pace of suburban vacancy declines and the slack capacity that still exists represent an opportunity for an investor looking to generate additional income by taking on the leasing risks of office assets in suburban submarkets. Industrial availability registered at 12.8% for year-end 2012. This level is well above the long-term average for availability, which is 10%. Despite the fact that these figures suggest a fair amount of slack capacity in the industrial markets, average asking rents are actually increasing, having posted a 3.3% rise over a year earlier. One of the issues at play is the fact that there is a fair amount of functionally obsolete space built into the overall availability figure. Some types of markets are outperforming on the income side. Key distribution hubs like the Inland Empire, Dallas, Atlanta and Chicago experienced year-over-year rent growth ranging from 3% to 1%. Meanwhile, metro areas where the industrial market is focused on the high-tech sector such as San Francisco and San Jose have seen rent growth in excess of 7%. Despite stronger rent growth in these

Hotels Hotel

Appendix

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

United States | Overview (continued)

<< | >>

technology-focused markets, our survey of cap rates shows that stabilized Class A assets in these markets are in the 5.5% range. By contrast, the distribution hubs noted have cap rates in the 5.25% range.

Office

The retail sector has lagged other property types throughout the recovery period. The leasing side has been weak relative to other sectors, with year-end availability rates for neighborhood and community centers down a mere 40 bps from the high-water mark set in the middle of 2011. Still, even though demand is weak, the growth in supply has been weaker with only about a one quarter of one percent of existing stock having

Multihousing

been built in 2012. When looking at the income potential of the sector, the results of our Cap Rate Survey suggest two patterns in investor behavior. Broadly speaking, the markets with the most inventory have the lowest cap rates. Chicago, Atlanta and Houston have cap rates ranging from 6% to 6.25% for stabilized Class A neighborhood centers. Investors always place value on the exit liquidity implied by larger markets. Some markets stand out from this pattern, however, with Gateway markets posting lower cap rates even if they are smaller than other major markets. Boston and Seattle have stabilized Class A cap rates of 5.9% and 5.6%, respectively, with San Francisco posting a 4.9% cap rate.

Retail

Industrial

Multihousing continues to enjoy the healthiest fundamentals of the main property sectors. Vacancy stood at 5.3% at year-end, down from 5.6% at the end of 2011. The long-term average vacancy rate for the sector is anywhere between 5% and 6%, and as demand continues to grow, rents continue to climb as well. Effective market rents are up 4.2% from year-end 2011. Still, rents were up nearly 5% in 2011. Renters can absorb only so much of a rent increase, and demand for apartment units actually cooled in 2012. Net absorption came in at some 38,000 units in 2012, versus roughly 41,000 in 2011. Still, despite this slight slowdown in demand, cap rates for the multihousing sector are the lowest across the major property sectors. For Class A stabilized assets in urban locations, cap rates came in at 3.8% at yearend in San Francisco and at 3.9% in Los Angeles. Suburban assets in markets like San Jose and Orange County have stabilized Class A cap rates at 4% as well. In the hotel sector the revenue per available room (RevPAR) continued to grow in 2012. In the full-service segment, RevPAR was up 7.5% from a year earlier, while the limited-service sector is up 8.4% from 2011. This pace of RevPAR growth has been fairly constant since the economic recovery started in 2010. With a one-night lease term, the hotel sector was the first to show an improvement. Our Cap Rate Survey shows that investors are placing the most value on the RevPAR trends from the luxury segments, with an average 7% cap rate across markets. The economy segments have an average cap rate of 9.6%, though the range is fairly wide, with markets falling anywhere from 8% to 11.5% on the spectrum.

Hotels Hotel

Appendix

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Ofce | Overview

<< | >>

Investment volume in the office sector in 2012 was up 19.4% compared to 2011. The total volume came in at $77.6 billion, according to figures from RCA. To put this figure into perspective, office transaction volume averaged about $76 billion per year from 2003 to 2005. Volume is still down from the average pace of $176 billion per year recorded in 2006 and 2007, but those figures represented an artificial high. Suburban submarkets accounted for more than 71% of 2012s volume. This shift is significant, as this segment has seen sales grow at a slower pace in the recent past.

Office

Multihousing

While total volume is up and starting to lift suburban office markets, the CBRE Cap Rate Survey provides insight into market expectations on how these trends will evolve in 2013. CBRE Capital Markets and Valuation professionals expect that across the 38 suburban markets surveyed, cap rates for Stabilized Class A assets will continue to compress in 2013 in 12 of these markets. By contrast, in the CBD submarkets, it is expected that only 12 out of 38 will continue to see cap rate compression. With current cap rates at 8.75% for this high-quality product-type in Memphis, our professionals expect cap rates to increase in the CBD there in the year ahead.

Retail

Industrial

Select from the list below to access the current CBD office cap rates and forecast. Download a Complete Office CBD Current Cap Rates Chart (PDF)

Hotels Hotel

Download a Complete Office CBD Cap Rate Forecast Chart (PDF) Select from the list below to access the current suburban office cap rates and forecast.

Appendix

Download a Complete Office Suburban Current Cap Rates Chart (PDF) Download a Complete Office Suburban Cap Rate Forecast Chart (PDF)

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Ofce CBD | Eastern Region

Class A Stabilized
Atlanta 6.50% - 7.00% 7.50% - 8.00% 4.75% - 5.25% 6.50% - 7.00% 7.50% - 8.50% 4.00% - 5.00% 8.50% - 9.00% 5.50% - 6.25% 6.60% - 7.00% 5.00% - 7.00% 7.00% - 7.75% 7.00% - 7.50% 6.50% - 7.50% 6.50% - 7.50% 4.75% - 5.75%

<< | >>

Class B Value-Add Trend* Stabilized

7.50% - 8.00% 8.75% - 9.25% 5.50% - 6.00% 7.25% - 7.75% 9.50% - 10.50% 5.00% - 6.00% 9.00% - 10.00% 6.00% - 6.75% 8.00% - 8.50% 7.00% - 8.50% 8.50% - 9.00% 8.50% - 9.00% 8.50% - 9.00% 8.00% - 9.25% 6.00% - 7.50%

Class C Value-Add Trend*

9.00% - 9.50% 10.00% 6.50% - 7.00%

Trend* I I I I Class A

Trend* I I I I I

Stabilized
8.50% - 10.00% 11.00% - 12.00% 6.50% - 7.00% 9.00% - 10.00% 10.50% + N/A 11.00% - 12.00% 6.75% - 7.50% 8.75% - 9.50% 8.50% - 9.50% 9.00% - 9.50% 10.50% - 11.00% 9.00% - 10.00% 9.25% - 10.25% 7.00% - 8.00%

Trend* I I
N/A

Value-Add Trend*
12.00% 8.00% - 8.50% 10.00% - 12.00% 10.50% + N/A 11.00% - 12.00% 7.50% - 8.50% 9.50% - 9.75% 9.50% - 10.00% 9.50% - 10.00% 11.00% - 12.00% 9.50% - 10.50% 9.75% - 10.75% 8.00% - 9.50%

Boston Charlotte Jacksonville Manhattan

5.00% - 6.00% 9.00% - 10.00% 6.50% - 7.50% 7.50% - 8.00% 6.00% - 8.00% 7.50% - 8.25% 8.00% - 8.50% 8.00% - 8.50% 7.50% - 8.50% 5.50% - 6.50%

6.00% - 6.50% 10.00% - 11.00% 6.75% - 7.75% 8.50% - 9.00% 8.00% - 9.00% 9.00% - 9.50% 9.50% - 10.50% 9.00% - 9.50% 8.75% - 9.75% 6.50% - 7.50%

Miami Nashville Orlando

Raleigh Tampa Washington, DC

Industrial

* Compared to 1st half 2012

Hotels Hotel
Stabilized
Atlanta Baltimore Boston Charlotte Jacksonville Manhattan Memphis Miami Nashville Orlando Pittsburgh Philadelphia Raleigh Tampa Washington, DC

CAP RATE FORECAST* Class B Value-Add Stabilized Value-Add Stabilized Class C Value-Add

Appendix

N/A

* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

Retail

Pittsburgh

Decrease

N/A

Remain Flat Increase

I I

I I I

Philadelphia

I I

I I I

Multihousing

Memphis

9.00% - 10.00%

10.00% - 10.50%

N/A

7.50% - 8.50%

I I I I

8.50% - 10.00%

Office

Baltimore

9.00% 5.50% - 6.00%

8.00% - 8.50%

10.00% - 12.00%

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Ofce CBD | Central Region

Class A Stabilized
Austin 5.75% - 6.00% 5.50% - 6.50% 8.50% - 9.00% 7.00% - 8.0 0% 6.50% - 7.50% 9.00% - 10.00% 5.50% - 6.00% 7.75% - 8.75% 8.25% - 8.75% 6.50% - 7.50% 7.00% - 7.75% 10.50% - 11.00%

<< | >>

Class B Value-Add Trend*

7.00% - 8.00% 9.00% - 9.50% 8.50% - 9.50% 8.00% - 8.50%

Class C Value-Add Trend*

8.00% - 9.00%

Trend* I I I I I

Stabilized
7.25% - 7.50% 7.00% - 7.50% 10.00% - 10.50% 8.50% - 10.00% 8.00% - 9.00% 10.00% - 12.00% 7.00% - 8.00% 9.00% - 10.00% 9.50% - 10.50% 9.50% 8.00% - 9.00% 12.00% - 12.50%

Trend* I I I I I I I

Stabilized
9.00% - 9.25% 8.00% - 9.00% 11.00% - 11.50% 10.50% - 12.50% 9.50% - 12.00% 12.00% - 14.00% 8.00% - 9.00% 9.25% - 10.25% 11.00% - 12.00% 10.00% - 11.50% 10.00% - 11.00% 13.00% - 14.00%

Trend* I I I I
Decrease Remain Flat Increase

Value-Add Trend* I I I
9.00% - 11.00% 11.50% - 12.50% 11.00% - 13.00% 9.50% - 12.00% 14.00% - 16.00% 12.00% - 14.00% 9.75% - 10.75% 12.00% + 12.00% - 13.00% 10.50% - 11.00% 15.00% - 16.00%

Office

Chicago Cincinnati Columbus Dallas Detroit Houston Indianapolis Kansas City Minneapolis

10.50% - 11.00% 9.50% - 10.50% 9.00% - 10.00% 10.00% - 14.00% 9.00% - 10.00% 9.50% - 10.50% 11.00% - 12.00% 9.75% - 10.75% 8.50% - 9.50% 14.00% - 14.50%

I I I I

Multihousing

10.00% - 12.00% 7.00% - 8.00% 8.25% - 10.25% 9.50% - 10.00% 7.50% - 8.50% 8.00% - 8.75% 12.00% - 12.50%

Retail

San Antonio St. Louis

* Compared to 1st half 2012

Industrial
CAP RATE FORECAST* Class A Class B Stabilized Value-Add Stabilized Class C Value-Add Stabilized
Austin Chicago Cincinnati Columbus Dallas Detroit Houston Indianapolis Kansas City Minneapolis San Antonio St. Louis
* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

Hotels Hotel

Value-Add

Appendix

I I

I I

6.50% - 6.75%

7.75% - 8.00%

9.25% - 10.00%

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Ofce CBD | Western Region

Class A Stabilized
Albuquerque 7.50% - 8.50% 5.50% - 6.00% 7.00% - 8.00% 5.00% - 5.50% 5.75% - 6.25% 6.50% - 7.00% 6.25% - 7.25% 7.50% - 8.50% 7.00% - 8.00% 6.25% - 6.75% 3.00% - 4.50% 6.50% - 7.50% 5.00% - 5.75%

<< | >>

Class B Value-Add Trend* Stabilized

8.50% - 9.25% 6.50% - 7.00% 8.00% - 9.00% 6.50% - 7.25% 7.00% - 8.00% 7.50% - 8.00% 7.00% - 8.00% 8.50% - 9.50% 7.00% - 8.50% 7.00% - 7.50% 4.00% - 6.00% 7.00% - 8.00% 5.50% - 6.50%

Class C Value-Add Trend* Stabilized

9.50% - 11.00% 8.00% - 8.50% 9.00% - 10.00% 7.50% - 8.50% 9.00% - 9.75% 8.50% - 9.00% 8.00% - 9.00% 9.00% + 8.00% - 10.00% 8.00% - 8.50% 6.75% - 7.25% 8.00% - 9.00% 7.50% - 8.50%

Trend* I Class A I I I I I

Trend*
N/A

Trend*
N/A

Value-Add Trend*
12.00% - 13.50% 8.50% - 9.00% 9.00% - 11.00% 8.00% - 10.00% 9.25% - 10.50% 10.00% - 12.00% 8.50% - 10.00% 9.50% + 8.50% - 10.50% 9.00% - 9.50% 7.25% - 8.00% 8.50% - 9.50% 9.00% - 10.00%

9.00% - 10.00% 7.00% - 7.25% 7.00% - 9.50% 6.00% - 6.50% 6.75% - 7.50% 7.25% - 7.75% 6.75% - 7.75% 7.75% - 9.00% 7.50% - 8.50% 6.75% - 7.25% 5.50% - 6.00% 7.00% - 8.00% 6.00% - 7.00%

Office

Las Vegas Los Angeles Orange County Phoenix Portland Sacramento Salt Lake City San Diego

N/A

8.75% - 10.50% 6.50% - 8.00% 8.25% - 9.00% 8.50% - 10.00% 7.50% - 8.50% 8.75% - 10.00% 7.50% - 9.50% 7.50% - 8.00% 6.00% - 7.00% 7.50% - 8.50% 7.00% - 8.00%

N/A

I I

San Jose Seattle

* Compared to 1st half 2012

Industrial
CAP RATE FORECAST*

Hotels Hotel
Albuquerque Denver Las Vegas Los Angeles Orange County Phoenix Portland Sacramento Salt Lake City San Diego San Francisco San Jose Seattle

Class B Value-Add Stabilized Value-Add Stabilized

Class C Value-Add

Stabilized

Appendix

Decrease Remain Flat Increase

* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

Retail

San Francisco

I I I

Multihousing

I I

I I I I

Denver

N/A

9.75% - 10.50% 7.75% - 8.00%

I I I

I I I

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Ofce Suburban | Eastern Region

Class A Stabilized
Atlanta 6.50% - 7.50% 7.00% - 7.25% 5.75% - 6.25% 7.00% - 7.50% 7.25% - 8.00% 7.75% - 8.25% 6.00% - 7.00% 6.75% - 7.50% 7.50% - 8.50% 7.50% - 7.75% 7.50% - 8.00% 6.50% - 7.50% 7.00% - 8.00% 5.75% - 7.00%

<< | >>

Class B Value-Add Trend*

9.00%

Class C Value-Add Trend*

10.00% 8.00% - 8.50%

Trend* I I I I I I

Stabilized
7.50% - 8.75% 8.50% - 9.25% 6.50% - 7.00% 7.75% - 8.25% 9.00% - 10.00% 8.75% - 9.25% 7.25% - 8.50% 8.25% - 8.75% 8.50% - 9.50% 8.50% - 9.00% 8.50% - 9.00% 8.50% - 9.00% 8.00% - 9.00% 6.50% - 8.00%

Trend* I I I I I

Stabilized
9.00% - 10.50% 10.00% 7.50% - 8.00% 9.50% - 10.50% 10.00% + 9.00% - 10.00% 8.00% - 9.00% 9.50% - 10.50% 10.00% - 11.00% 9.00% - 9.50% 11.00% - 12.00% 9.00% - 10.00% 9.25% - 10.25% 8.50% - 10.00%

Trend* I I I I I
Decrease Remain Flat Increase

Value-Add Trend*
12.00% 10.00% - 11.00% 10.50% - 12.50% 10.00% + 11.00% - 12.00% 9.00% - 11.00% 10.00% - 10.75% 10.00% - 12.00% 10.00% - 10.50% 12.00% - 13.00% 9.50% - 10.50% 10.00% - 12.00% 9.50% - 10.50%

Boston Charlotte Jacksonville Memphis

8.50% - 9.00% 8.50% - 9.00% 7.00% - 8.00% 7.50% - 7.75% 8.00% - 8.50% 8.00% - 9.00% 8.00% - 8.50% 8.00% - 8.50% 8.00% - 9.00% 6.50% - 7.50%

9.50% - 10.50% 9.00% - 10.00% 8.25% - 9.50% 9.00% - 9.50% 9.00% - 10.00% 9.50% - 10.00% 9.00% - 10.00% 9.00% - 9.50% 8.75% - 9.50% 8.00% - 8.50%

Multihousing

Miami Nashville Orlando Pittsburgh

I I I I

Raleigh Tampa Washington, DC

Industrial

* Compared to 1st half 2012

Hotels Hotel
Stabilized
Atlanta

CAP RATE FORECAST* Class A Value-Add Stabilized Class B Value-Add Stabilized Class C Value-Add

Appendix

Baltimore Boston Charlotte Jacksonville Memphis Miami Nashville Orlando Philadelphia Pittsburgh Raleigh Tampa Washington, DC
* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

Retail

Philadelphia

7.50% - 8.00%

9.00% - 10.00%

I I I I

Office

Baltimore

6.75% - 7.25%

7.50% - 8.25%

8.50% - 9.00%

10.50% - 12.00%

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Ofce Suburban | Central Region

Class A Stabilized
Austin 6.50% - 6.75% 7.25% - 7.75% 8.00% - 8.50% 7.50% - 8.00% 6.50% - 8.00% 8.75% - 10.00% 6.00% - 6.50% 8.00% - 9.00% 7.25% - 7.75% 6.50% - 8.25% 6.75% - 7.50% 8.25% - 8.75% Chicago Cincinnati Columbus Dallas Detroit

<< | >>

Class B Value-Add Trend* Stabilized

7.75% - 8.00% 8.00% - 9.50% 9.00% - 9.50% 8.50% - 10.00% 7.50% - 9.00% 9.50% - 12.00% 7.50% - 8.50% 8.50% - 9.50% 8.50% - 9.50% 8.75% - 9.75% 8.00% - 9.00% 9.25% - 9.75%

Class C Value-Add Trend* Stabilized

9.25% - 9.50% 11.25% - 13.25% 10.50% - 11.50% 10.50% - 12.50% 8.75% - 10.00% 10.00% - 14.00% 8.50% - 10.00% 9.00% - 10.00% 10.00% - 11.00% 10.00% - 12.00% 10.00% - 11.00% 10.00% - 12.00%

Trend* I I I I Class A

Trend* I I I

Trend* I I I
Decrease Remain Flat Increase

Value-Add Trend*
14.00% - 15.00% 11.00% - 12.50% 11.00% - 13.00% 10.00% - 12.00% 12.00% - 15.00% 12.00% - 14.00% 9.50% - 10.50% 12.00% + 12.00% - 13.00% 10.50% - 11.50% 12.00% - 15.00%

8.50% - 9.50% 7.00% - 8.00% 10.00% - 12.00% 7.50% - 8.00% 8.50% - 9.50% 9.00% - 10.00% 8.00% - 9.00% 7.75% - 8.50% 8.50% - 9.50%

I I I I I

9.50% - 10.50% 8.00% - 9.00% 10.00% - 14.00% 9.00% - 10.00% 9.00% - 10.00% 10.00% - 11.00% 9.75% - 10.75% 8.50% - 9.50% 9.75% - 10.50%

Indianapolis Kansas City Minneapolis San Antonio St. Louis

Retail

* Compared to 1st half 2012

Industrial

CAP RATE FORECAST* Class B Stabilized Value-Add Stabilized Class C Value-Add Stabilized
Austin Chicago Cincinnati Columbus

Hotels Hotel

Value-Add

Appendix

Dallas Detroit Houston Indianapolis Kansas City Minneapolis San Antonio St. Louis
* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

Multihousing

Houston

I I

Office

9.00% - 10.00% 8.50% - 9.00%

10.00% - 11.00% 9.50% - 10.50%

I I I

7.00% - 7.25%

8.25% - 8.50%

9.75% - 10.00%

10

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Ofce Suburban | Western Region

Class A Stabilized
Albuquerque 8.00% - 8.50% 6.50% - 7.00% 7.00% - 8.00% 5.00% - 5.50% 5.75% - 6.25% 6.50% - 7.25% 7.25% - 8.25% 7.50% - 8.50% 7.00% - 8.00% 5.75% - 6.25% 6.00% - 7.00% 7.00% - 8.00% 6.00% - 6.50% Denver Las Vegas Los Angeles Orange County Phoenix

<< | >>

Class B Value-Add Trend* Stabilized

8.50% - 9.25% 7.50% - 8.00% 8.00% - 9.00% 6.50% - 7.25% 7.00% - 8.00% 7.50% - 8.25% 8.00% - 9.00% 8.50% - 9.50% 7.00% - 8.50% 7.00% - 7.50% 6.75% - 7.50% 7.50% - 8.00% 6.50% - 7.50%

Class C Value-Add Trend* Stabilized

9.50% - 11.00% 9.50% - 10.00% 9.00% - 10.00% 7.50% - 8.50% 9.00% - 9.75% 10.00% - 11.00% 8.75% - 9.75% 9.50% - 11.00% 8.00% - 10.00% 8.00% - 8.50% 7.00% - 8.00% 8.00% - 9.00% 7.50% - 9.00%

Trend* I I I I

9.00% - 10.00% 7.50% - 8.00% 7.00% - 9.50% 6.00% - 6.50% 6.75% - 7.50% 7.50% - 8.25% 7.75% - 8.75% 7.75% - 9.00% 7.50% - 8.50% 6.25% - 6.75% 6.50% - 7.50% 7.50% - 8.50% 6.00% - 8.00%

8.25% - 9.00% 8.50% - 9.25% 8.50% - 9.50% 8.75% - 10.00% 7.50% - 9.50% 7.50% - 8.00% 7.00% - 7.50% 8.00% - 8.50% 7.00% - 8.00%

Sacramento Salt Lake City San Diego San Francisco San Jose Seattle

Retail

8.25% - 9.50% 9.00% - 10.00%

* Compared to 1st half 2012

Industrial
CAP RATE FORECAST* Class A Class B Stabilized Value-Add Stabilized Class C Value-Add

Hotels Hotel
Albuquerque Denver Las Vegas Los Angeles Orange County Phoenix Portland Sacramento Salt Lake City San Diego San Francisco San Jose Seattle

Stabilized

Value-Add

Decrease Remain Flat Increase

Appendix

* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

I I I

I I

8.50% - 9.00% 7.50% - 8.25%

I I I

Multihousing

12.00% - 14.00% 9.00% - 11.00%

Portland

I I

I I

I I

6.50% - 8.00%

8.00% - 10.00% 9.25% - 10.50% 11.00% - 13.00% 9.50% - 10.75%

Office

8.75% - 10.50%

9.00% - 11.00%

I I

Trend* I

Trend*

Value-Add Trend*
12.00% - 14.00% 10.00% - 11.00%

10.50% - 11.50% 8.00% - 8.50%

11

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Multihousing | Overview

<< | >>

Office

Among all sectors of commercial real estate investment, multihousing saw the earliest turnaround of investor interest, as the positive trends in income fundamentals seen over the last two years had been widely expected. The stabilizing influence of the debt provided by the governmentsponsored enterprises (Freddie Mac and Fannie Mae) was an enormous help for market liquidity as well. Total multihousing transaction volume in 2012 came in at $84.6 billion, according to RCA. This figure is still off from the high-water mark of $105.6 billion set in 2007, but when one thinks about the recent pace of growth, it is not quite so far off from the peak. The dollar value increase in volume from 2011 to 2012 was $27 billion. 2013 would only need to see an increase of $21 billion in volume to hit the 2007 record. CBRE Capital Markets and Valuation professionals expect that, for the 42 markets surveyed, cap rates for Class A stabilized assets for only eight will continue to compress in 2013. With the exception of Washington, DC, the markets where further compression is expected are secondary and tertiary markets. That said, CBRE does not expect further compression in all secondary and tertiary markets. With Class A stabilized assets in suburban submarkets, the expectations for further compression are even smaller. Only 7 out of the 42 markets surveyed are expected to experience further compression in cap rates for these types of assets. Select from the list below to access the current multihousing infill/urban cap rates and forecast. Download a Complete Multihousing Infill/Urban Current Cap Rates Chart (PDF)

Multihousing

Retail

Industrial

Hotels Hotel

Download a Complete Multihousing Infill/Urban Cap Rate Forecast Chart (PDF)

Appendix

Select from the list below to access the current multihousing suburban cap rates and forecast. Download a Complete Multihousing Suburban Current Cap Rates Chart (PDF) Download a Complete Multihousing Suburban Cap Rate Forecast Chart (PDF)

12

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Multihousing Infill/Urban | Eastern Region

Class A Stabilized
Atlanta 4.75% - 5.25% 4.25% - 4.75% 4.00% - 4.50% 4.50% - 5.00% 5.20% - 5.40% 3.50% - 4.50% 5.75% - 6.25% 4.00% - 4.50% 5.00% - 5.50% 4.75% - 5.25% 5.00% - 5.50% 6.00% - 6.50% 4.50% - 5.75% 5.00% - 5.50% 4.00% - 4.40% Baltimore Boston Charlotte Jacksonville Manhattan

<< | >>

Class B Value-Add
5.25% - 5.75% 4.50% - 5.00% 4.00% - 4.75% 5.25% - 5.75% 5.75% - 6.25% 4.00% - 5.00% 5.75% - 6.25% 4.75% - 5.00% 5.75% - 6.25% 5.25% - 5.75% 5.00% - 5.50% 6.50% - 7.00% 5.75% - 6.50% N/A 4.25% - 4.75%

Class C Value-Add
6.00% - 6.50% 5.75% - 6.50% 4.75% - 5.25% 6.00% - 6.50% 6.75% - 7.00% 4.50% - 5.50% 6.50% - 7.50% 5.25% - 5.50% 6.50% - 7.00% 6.00% - 6.50% 6.25% - 6.75% 7.00% - 7.50% 6.50% - 7.50% 6.00% - 6.50% 5.75% - 6.50%

Stabilized
5.25% - 5.75% 5.50% - 6.00% 4.75% - 5.25% 5.50% - 6.00% 6.00% - 6.30% 4.00% - 5.00% 6.50% - 7.50% 5.00% - 5.25% 6.00% - 6.50% 5.75% - 6.25% 6.00% - 6.50% 6.50% - 7.00% 5.50% - 6.50% 5.75% - 6.25% 5.25% - 5.75%

Stabilized
7.00% - 7.50% 6.50% - 7.00% N/A 7.00% - 7.50% 6.75% - 7.25% 5.25% - 6.25% 8.00%+ 6.00% - 6.50% 6.75% - 7.25% 6.50% - 7.00% 7.00% - 7.50% 8.00% - 8.50% 7.50% - 9.50% 6.25% - 6.75% 6.50% - 7.00%

Value-Add
8.00% - 8.50% 7.25% - 7.75% N/A 7.50% + 9.00% - 9.50% 5.50% - 6.50% 8.00%+ 6.25% - 7.00% 7.25% - 7.75% 7.00% - 8.25% 7.50% - 8.00% 8.50% - 9.00% 9.50% - 10.50% 6.75% - 7.25% 7.25% - 7.75%

Office

Multihousing

Memphis Miami Nashville Orlando

Retail

Philadelphia Pittsburgh Raleigh Tampa Washington, DC

Industrial

CAPE RATE FORECAST*

Hotels Hotel
Stabilized
Atlanta Baltimore Boston Charlotte Jacksonville Manhattan Memphis Miami Nashville Orlando Philadelphia Pittsburgh Raleigh Tampa Washington, DC

Class A Value-Add
N/A

Class B Stabilized Value-Add Stabilized

Class C Value-Add

Appendix

Decrease Remain Flat Increase

N/A

* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

13

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Multihousing Infill/Urban | Central Region

Class A Stabilized
Austin 4.50% - 5.00% 4.50% - 5.00% 5.50% - 6.00% 7.50% - 8.00% 6.00% - 6.50% 4.25% - 5.25% 6.75% - 7.50% 4.50% - 5.00% 5.50% - 6.00% 5.25% - 5.75% 5.25% - 5.50% 6.00% - 6.50% 5.25% - 5.75% 5.50% - 6.00% Chicago Cincinnati Cleveland Columbus Dallas

<< | >>

Class B Value-Add
4.50% - 5.00% 4.75% - 5.25% 6.25% - 6.75% N/A 6.25% - 6.75% 5.75% - 6.25% 7.50% - 8.50% 5.50% - 6.00% 5.75% - 6.25% N/A 5.50% - 5.75% N/A N/A 5.75% - 6.25%

Class C Value-Add
5.25% - 5.75% 5.25% - 5.75% 7.25% - 7.75% 8.25% - 8.75% 7.50% - 8.00% 6.50% - 7.25% 8.00% - 9.00% 6.25% - 6.75% 6.50% - 7.00% N/A 6.50% - 6.75% 6.75% - 7.25% 6.50% - 7.00% 6.50% - 6.90%

Stabilized
5.25% - 5.75% 5.00% - 5.25% 6.50% - 7.00% 8.00% - 8.50% 7.00% - 7.50% 6.25% - 6.75% 7.50% - 8.25% 6.00% - 6.50% 6.00% - 6.50% N/A 6.00% - 6.25% 6.50% - 7.00% 6.25% - 6.75% 6.10% - 6.75%

Stabilized
6.00% - 6.50% 5.75% - 6.25% 8.00% - 8.50% 8.50% - 9.00% 8.25% - 8.75% 7.25% - 7.75% 8.75% - 9.50% 7.00% - 7.50% 7.50% - 8.00% N/A 7.25% - 7.75% 9.00% - 9.50% 7.00% - 7.50% 8.00% - 9.50%

Value-Add
6.00% - 6.50% 6.25% - 7.00% 9.00% - 9.50% 10.00% - 10.50% 8.75% - 9.00% 7.75% - 8.25% 9.50% - 11.00% 7.75% - 8.25% 8.00% - 8.50% N/A 8.00% - 8.50% 9.50% - 10.00% 7.50% - 8.00% 8.25% - 9.50%

Office

Multihousing

Detroit Houston Indianapolis Kansas City

Retail

Minneapolis Oklahoma City San Antonio St. Louis

Industrial
CAP RATE FORECAST* Class A Class B Stabilized Value-Add Stabilized Class C Value-Add

Hotels Hotel
Austin Chicago Cincinnati

Stabilized

Value-Add

Appendix

Cleveland Columbus Dallas Detroit Houston Indianapolis Kansas City Oklahoma City Minneapolis San Antonio St. Louis
* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

Decrease Remain Flat Increase

N/A

14

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Multihousing Infill/Urban | Western Region

Class A Stabilized
Albuquerque 5.75% - 6.25% 4.75% - 5.25% 4.75% - 5.25% 3.75% - 4.00% 3.75% - 4.25% 4.75% - 5.00% 4.75% - 5.00% 5.00% - 5.50% 5.25% - 5.75% 3.75% - 4.25% 3.50% - 4.00% 3.75% - 4.25% 3.75% - 4.25% Denver Inland Empire Los Angeles Orange County Phoenix

<< | >>

Class B Value-Add
6.00% - 6.50% 5.50% - 5.75% 5.00% - 5.50% 4.50% - 4.75% 4.00% - 4.50% 5.25% 5.00% - 5.25% 5.50% - 6.00% 5.50% - 6.00% 4.25% - 4.75% 4.00% - 4.25% 4.00% - 4.50% 4.50% - 5.00%

Class C Value-Add
6.50% - 7.00% 5.50% - 6.00% 5.25% - 5.75% 4.75% - 5.25% 5.00% - 5.50% 5.25% - 5.75% 5.25% - 5.75% 5.50% - 6.00% 6.00% - 6.50% 5.00% - 5.50% 5.25% - 5.75% 5.75% - 6.25% 5.50% - 6.00%

Stabilized
6.25% - 6.75% 5.25% - 5.75% 5.00% - 5.50% 4.00% - 4.50% 4.50% - 4.75% 5.25% - 5.75% 5.25% - 5.75% 5.25% - 5.75% 5.75% - 6.00% 4.50% - 5.00% 4.75% - 5.25% 5.00% - 5.50% 5.00% - 5.50%

Stabilized
7.00% - 7.50% 6.50% - 7.00% 6.00% + 5.00% - 5.50% 5.50% - 6.00% 6.00% - 6.50% 5.75% - 6.25% 6.00% - 6.50% 6.00% - 6.25% 5.50% - 6.00% 5.50% - 6.00% 5.50% - 6.00% 5.50% - 6.00%

Value-Add
7.50% - 8.00% 6.75% - 7.25% 6.00% + 5.50% - 6.00% 6.00% - 6.50% 6.00% - 6.50% 6.00% - 6.50% 6.50% - 7.00% 6.50% - 7.00% 5.50% - 6.00% 6.00% - 6.50% 6.00% - 6.50% 6.25% - 7.25%

Office

Multihousing

Portland Sacramento Salt Lake City San Diego

Retail

San Francisco San Jose Seattle

Industrial
CAP RATE FORECAST* Class A Class B Stabilized Value-Add Stabilized Class C Value-Add Stabilized
Albuquerque Denver Inland Empire Los Angeles Orange County Phoenix Portland Sacramento Salt Lake City San Diego San Francisco San Jose Seattle
* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

Hotels Hotel

Value-Add

Decrease Remain Flat Increase

Appendix

15

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Multihousing Suburban | Eastern Region

Class A Stabilized
Atlanta 5.25% - 5.75% 4.50% - 5.00% 4.25% - 5.25% 5.00% - 5.50% 5.25% - 5.65% 5.75% - 6.50% 4.50% - 4.75% 5.50% - 6.00% 5.00% - 5.75% 5.00% - 5.50% 6.00% - 6.50% 4.75% - 6.00% 5.25% - 5.75% 4.25% - 4.75% Baltimore Boston Charlotte Jacksonville Memphis

<< | >>

Class B Value-Add
5.50% - 6.00% 4.75% - 5.25% 4.50% - 5.25% 5.50% - 6.00% 6.00% - 6.50% 5.75% - 6.75% 5.00% - 5.25% 5.75% - 6.25% 6.00% - 6.75% 5.00% - 5.50% 6.50% - 7.00% 6.00% - 6.50% 5.50% - 6.0% 4.50% - 5.00%

Class C Value-Add
6.25% - 6.75% 6.00% - 6.50% 4.75% - 5.50% 6.00% - 6.50% 7.00% - 7.25% 6.75% - 7.75% 5.50% - 6.00% 6.50% - 7.00% 6.75% - 7.25% 6.25% - 6.75% 7.00% - 7.50% 6.75% - 7.50% 6.00% - 6.5% 6.00% - 6.50%

Stabilized
5.75% - 6.25% 5.75% - 6.25% 5.25% - 5.50% 5.50% - 6.00% 6.00% - 6.30% 6.75% - 7.75% 5.00% - 5.50% 6.00% - 6.50% 5.75% - 6.50% 6.00% - 6.50% 6.50% - 7.00% 5.75% - 6.75% 5.75% - 6.25% 5.50% - 6.00%

Stabilized
7.25% - 7.75% 6.50% - 7.00% 6.50% - 6.75% 7.00% - 7.50% 7.00% - 7.50% 9.00% + 6.25% - 6.75% 7.00% - 7.50% 6.50% - 7.50% 7.00% - 7.50% 8.00% - 8.50% 7.75% - 9.75% 6.25% - 6.75% 6.50% - 7.00%

Value-Add
8.25% - 8.75% 7.25% - 7.75% 6.50% - 7.00% 7.50% - 8.00% 9.25% - 9.75% 9.00% + 6.50% - 7.00% 7.50% - 8.00% 7.25% - 8.25% 7.50% - 8.00% 8.50% - 9.00% 9.75% - 10.50% 6.75% - 7.25% 7.25% - 7.75%

Office

Multihousing

Miami Nashville Orlando Philadelphia

Retail

Pittsburgh Raleigh Tampa Washington, DC

Industrial

Hotels Hotel
Stabilized
Atlanta

CAP RATE FORECAST* Class A Value-Add

N/A Decrease Remain Flat Increase

Class B Stabilized Value-Add Stabilized

Class C Value-Add

Appendix

Baltimore Boston Charlotte Jacksonville Memphis Miami Nashville Orlando Philadelphia Pittsburgh Raleigh Tampa Washington, DC

N/A

* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

16

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Multihousing Suburban | Central Region

Class A Stabilized
Austin 5.00% - 5.50% 5.00% - 5.50% 6.00% - 6.50% 6.50% - 7.00% 6.00% - 6.50% 5.75% - 6.25% 6.75% - 7.50% 5.75% - 6.25% 5.75% - 6.25% 6.00% - 6.25% 5.50% - 5.75% 6.25% - 6.75% 5.50% - 6.00% 5.50% - 6.00%

<< | >>

Class B Value-Add
5.00% - 5.50% 5.25% - 5.75% 6.50% - 7.00% N/A 6.25% - 6.75% 6.00% - 6.50% 7.50% - 8.50% 6.25% - 6.75% 6.00% - 6.50% 6.00% - 6.50% 5.75% - 6.00% 6.50% - 6.75% N/A 5.75% - 6.25%

Class C Value-Add
5.75% - 6.25% 6.00% - 6.50% 7.50% - 8.00% 8.25% - 8.75% 7.50% - 8.00% 6.50% - 7.25% 8.00% - 9.00% 7.25% - 7.75% 6.75% - 7.25% 7.50% - 7.75% 6.75% - 7.00% 6.85% - 7.35% 6.75% - 7.25% 6.50% - 6.90%

Stabilized
5.75% - 6.25% 5.75% - 6.25% 7.00% - 7.50% 8.00% - 8.50% 7.25% - 7.75% 6.25% - 6.75% 7.50% - 8.25% 6.75% - 7.25% 6.25% - 6.75% 7.00% - 7.25% 6.25% - 6.50% 6.75% - 7.25% 6.50% - 7.00% 6.10% - 6.75%

Stabilized
6.50% - 7.00% 7.00% - 7.50% 8.00% - 8.50% 8.50% - 9.00% 8.75% - 9.25% 7.25% - 7.75% 8.75% - 9.50% 7.75% - 8.25% 7.75% - 8.25% 8.50% - 9.00% 8.00% - 8.50% 9.00% - 9.50% 7.00% - 7.50% 8.00% - 9.50%

Value-Add
6.50% - 7.00% 7.25% - 7.75% 9.00% - 9.50% 9.00% - 9.50% 9.50% - 10.00% 7.75% - 8.25% 9.50% - 11.00% 8.25% - 8.75% 8.25% - 8.75% 9.50% - 10.00% 8.75% - 9.25% 9.50% - 10.00% 7.50% - 8.00% 8.25% - 9.50%

Office

Chicago Cincinnati Cleveland Columbus Dallas Detroit Houston Indianapolis Kansas City

Multihousing

Retail

Minneapolis Oklahoma City San Antonio St. Louis

Industrial
CAP RATE FORECAST*

Hotels Hotel
Austin Chicago

Class A Stabilized Value-Add Stabilized

Class B Value-Add Stabilized

Class C Value-Add

Appendix

Cincinnati Cleveland Columbus Dallas Detroit Houston Indianapolis Kansas City Oklahoma City Minneapolis San Antonio St. Louis
* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

Decrease Remain Flat Increase

N/A

17

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Multihousing Suburban | Western Region

Class A Stabilized
Albuquerque 5.75% - 6.50% 5.25% - 5.75% 5.00% - 5.50% 5.25% - 5.75% 4.00% - 4.50% 3.75% - 4.25% 5.00% - 5.50% 5.00% - 5.25% 5.25% - 5.75% 5.25% - 5.75% 4.00% - 4.50% 4.00% - 4.50% 3.75% - 4.25% 4.00% - 4.50% Denver Inland Empire Las Vegas Los Angeles Orange County

<< | >>

Class B Value-Add
6.00% - 6.50% 5.50% - 6.00% 5.25% - 5.75% 5.25% - 5.75% 4.75% - 5.00% 4.00% - 4.50% 5.00% - 5.50% 5.00% - 5.25% 5.50% - 6.00% 5.50% - 6.00% 4.50% - 5.00% 4.25% - 4.75% 4.00% - 4.50% 4.50% - 5.00%

Class C Value-Add
6.75% - 7.25% 5.75% - 6.25% 5.50% - 6.00% 6.00% - 6.50% 5.25% - 5.75% 5.00% - 5.50% 5.00% - 5.50% 5.25% - 5.75% 6.00% - 6.50% 6.00% - 6.50% 5.50% - 6.00% 5.00% - 5.50% 5.75% - 6.25% 5.50% - 6.25%

Stabilized
6.00% - 7.50% 5.60% - 6.10% 5.25% - 5.75% 6.00% - 6.50% 4.50% - 4.25% 4.50% - 4.75% 5.00% - 5.50% 5.25% - 5.75% 5.75% - 6.25% 5.75% - 6.00% 5.00% - 5.50% 5.00% - 5.50% 5.00% - 5.25% 5.25% - 5.75%

Stabilized
7.00% - 7.75% 6.75% - 7.25% 6.00% + 7.00% - 7.50% 5.25% - 5.75% 5.50% - 6.00% 6.00% - 6.50% 6.00% - 6.50% 6.75% - 7.25% 6.00% - 6.25% 5.50% - 6.00% 5.75% - 6.25% 5.50% - 6.00% 5.75% - 6.25%

Value-Add
7.75% - 8.25% 7.00% - 7.75% 6.00% + 7.00% - 7.50% 6.00% - 6.50% 6.00% - 6.50% 6.00% - 6.50% 6.00% - 6.50% 7.25% - 7.75% 6.50% - 7.00% 6.00% - 7.00% 5.75% - 6.25% 5.50% - 6.00% 6.75% - 7.25%

Office

Multihousing

Phoenix Portland Sacramento Salt Lake City

Retail

San Diego San Francisco San Jose Seattle

Industrial
CAP RATE FORECAST*

Hotels Hotel
Albuquerque Denver

Class A Stabilized Value-Add Stabilized

Class B Value-Add Stabilized

Class C Value-Add

Appendix

Inland Empire Las Vegas Los Angeles Orange County Phoenix Portland Sacramento Salt Lake City San Diego San Francisco San Jose Seattle
* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

Decrease Remain Flat Increase

18

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Retail | Overview

<< | >>

The retail sector continues to see increases in sales volume despite lagging other property sectors into the early stages of the recovery. In 2012, sales volume reached $52.8 billion, up from the $44.1 billion pace set in 2011. This 19.7% increase for retail overall masks divergent trends among retail sub-types. Sales volume for strip-center retail was down in 2012, falling to $20.7 billion from the $25.6 billion recorded in 2011. The mall segment, though, saw tremendous growth, jumping from $18.5 billion in sales volume in 2011 to $32.1 billion in 2012. This shift reflects a bit of a change in investor perception of risk. For much of the recovery, investors who were interested in retail were only pursuing

Office

Multihousing

safe, stable, grocery-anchored centers. Investors regarded anything tied to the discretionary spending patterns of consumers with some caution, and thus, investment in the mall segment fell to a low of $8 billion in 2009.

Retail

Evidence from our survey suggests that there is further room for cap rate compression in the year ahead. For Class A stabilized neighborhood center assets, our professionals expect further compression in 18 of the 40 markets surveyed, and, for Class A stabilized power center assets, 19 of the markets surveyed. With average Class A stabilized cap rates of 6.4% and 6.9% for neighborhood and power centers, respectively, and debt costs somewhere in the 4%-to-5% range according to the results of the quarterly CBRE Lender Forum report, there is some room for further compression. There is still some untapped opportunity here, given that investors were hesitant about the sector for so many years.

Industrial

Hotels Hotel

Select from the list below to access the current neighborhood/community center (grocery anchored) retail cap rates and forecast. Download a Complete Retail Neighborhood/Community Center (Grocery Anchored) Current Cap Rates Chart (PDF) Download a Complete Retail Neighborhood/Community Center (Grocery Anchored) Cap Rate Forecast Chart (PDF) Select from the list below to access the current power center retail cap rates and forecast. Download a Complete Retail Power Center Current Cap Rates Chart (PDF) Download a Complete Retail Power Center Cap Rate Forecast Chart (PDF) Select below to access the current high street retail cap rates and forecast. Download a Complete High Street Retail Current Cap Rates and Forecast Chart (PDF)
19

Appendix

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Retail Neighborhood/Community Center (Grocery Anchored) | Eastern Region

Class A Stabilized Trend*
Atlanta Baltimore Boston Charlotte Jacksonville Memphis 5.50% - 6.50% 5.50% - 6.25% 6.75% - 7.25% 6.50% - 7.00% 7.75% - 8.25% 5.50% - 6.25% 7.00% - 7.50% 6.50% - 7.00% 7.00% - 7.25% 6.50% - 7.25% 6.00% - 7.25% 6.50% - 7.00% 5.50% - 6.50%

<< | >>

Class B Stabilized Trend*

6.00% - 7.50% 7.00% - 7.50% 7.75% - 8.75% 7.25% - 7.75% 8.50% - 9.00% 6.50% - 7.25% 8.00% - 8.50% 7.25% - 7.75% 8.00% - 8.50% 8.25% - 9.25% 7.00% - 8.75% 7.25% - 7.75% 6.00% - 7.50%

Class C Stabilized Trend*

7.00% - 9.50% 8.00% - 9.00% 8.50% - 9.50% 8.00% - 11.00% 10.00% - 11.00% 8.00% - 9.00% 9.00% - 9.50% 8.00% - 11.00% 9.00% - 10.50% 9.50% - 10.50% 8.00% - 9.50% 8.00% - 11.00% 7.00% - 9.50%

Office

Nashville Orlando Philadelphia Pittsburgh Raleigh Tampa Washington, DC

Industrial

* Compared to 1st half 2012

CAP RATE FORECAST*

Hotels Hotel
Atlanta Baltimore

Class A Stabilized

Class B Stabilized

Class C Stabilized

Appendix

Boston Charlotte Jacksonville Memphis Miami Nashville Orlando Philadelphia Pittsburgh Raleigh Tampa Washington, DC
* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

Retail

I I I

Multihousing

Miami

I I I I I I I I I

I I I I

I I I I I I
Decrease Remain Flat Increase

5.20% - 7.00%

7.00% - 8.25%

8.25% - 9.50%

20

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Retail Neighborhood/Community Center (Grocery Anchored) | Central Region

Class A
Austin Chicago

<< | >>

Class B Stabilized Trend*

7.50% - 8.00% 8.50% - 9.00% 8.25% - 8.75% 7.75% - 8.25% 7.25% - 8.00% 8.25% - 8.75% 7.00% - 8.75% 7.75% - 8.25% 7.75% - 8.25% 7.50% - 8.00% 7.50% - 8.75% 7.75% - 8.25%

Class C Stabilized Trend* 9.50% - 9.75% 9.00% - 10.50%

10.00% - 12.00% 9.50% - 10.50% 8.50% - 9.75% 10.00% - 12.00% 9.00% - 12.00% 9.50% - 10.50% 9.50% - 10.50% 9.00% - 10.50% 9.00% - 12.00% 9.50% - 10.50%

Cincinnati Cleveland Columbus Dallas Detroit Houston Indianapolis Kansas City Minneapolis

7.00% - 7.50% 6.50% - 7.00% 5.75% - 6.75% 7.00% - 7.50% 5.50% - 7.00% 6.50% - 7.00% 6.50% - 7.00% 5.75% - 6.25% 6.00% - 7.25% 6.50% - 7.00%

I I I

I I

Multihousing

St. Louis

* Compared to 1st half 2012

Industrial
CAP RATE FORECAST*

Hotels Hotel
Austin Chicago Cincinnati

Class A Stabilized

Class B Stabilized

Appendix

Cleveland Columbus Dallas Detroit Houston Indianapolis Kansas City Minneapolis San Antonio St. Louis

* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

Retail

San Antonio

Class C Stabilized

I I
Decrease Remain Flat Increase

Office

7.50% - 8.25%

5.75% - 6.25%

Stabilized Trend* 6.00% - 6.25% I

7.00% - 7.25%

9.00% - 10.00%

21

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Retail Neighborhood/Community Center (Grocery Anchored) | Western Region

Class A Stabilized Trend*
Albuquerque Denver Las Vegas Los Angeles Orange County Phoenix 6.50% - 7.00% 6.50% - 7.50% 5.25% - 5.75% 5.25% - 5.75% 5.75% - 6.25% 5.50% - 6.25% 7.00% - 8.00% 7.50% - 8.20% 5.25% - 5.75% 4.50% - 5.25% 6.00% - 6.75% 5.50% - 5.75%

<< | >>

Class B Stabilized Trend*

7.50% - 8.00% 7.00% - 8.00% 6.25% - 6.75% 6.25% - 6.75% 6.50% - 7.00% 6.75% - 7.75% 8.00% - 9.00% 8.20% - 8.60% 6.25% - 6.75% 6.00% - 6.75% 7.00% - 7.75% 6.50% - 7.50%

Class C Stabilized Trend*

9.00% - 9.50% 7.50% - 10.00% 8.00% - 8.75% 8.00% - 8.75% 8.00% - 9.00% 8.00% - 10.00% 9.00% + 9.00% - 10.00% 8.00% - 8.75% 7.25% - 7.75% 7.75% - 9.00% 7.50% - 9.50%

I I I

Multihousing

Portland Sacramento Salt Lake City San Diego San Francisco San Jose Seattle

I I

I I I

Retail

* Compared to 1st half 2012

Industrial
CAP RATE FORECAST* Class A Class B Stabilized Class C Stabilized

Hotels Hotel
Albuquerque Denver Las Vegas Los Angeles Orange County Phoenix Portland Sacramento Salt Lake City San Diego San Francisco San Jose Seattle

Stabilized

Appendix

* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

I I I
Decrease Remain Flat Increase

Office

7.50% - 8.50%

8.00% - 9.00%

9.00% - 10.00%

22

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Retail Power Center | Eastern Region

Class A Stabilized Trend*
Atlanta Baltimore Boston Charlotte Jacksonville Memphis 6.75% - 8.00% 6.50% - 7.00% 7.00% - 7.50% 7.00% - 7.50% 8.25% - 8.50% 6.50% - 7.25% 7.00% - 7.50% 7.00% - 7.50% 7.00% - 7.25% 7.50% - 8.00% 6.50% - 7.50% 7.00% - 7.50% 6.75% - 8.00%

<< | >>

Class B Stabilized Trend*

7.50% - 8.50% 7.25% - 8.00% 8.00% - 8.75% 7.50% - 8.25% 8.75% - 9.75% 7.00% - 7.75% 8.00% - 8.50% 7.50% - 8.25% 8.00% - 8.50% 9.00% - 10.00% 7.50% - 8.75% 7.50% - 8.25% 7.50% - 8.50%

Class C Stabilized Trend* 10.00% - 12.00%

8.00% - 9.50% 9.00% - 10.00% 8.00% - 11.00% 9.50% - 11.50% N/A 9.00% - 9.50% 8.00% - 11.00% 9.00% - 10.50% 10.00% - 11.00% 8.50% - 10.00% 8.00% - 11.00% 8.00% - 10.00%

Office

I I I I I I I

I I

Nashville Orlando Philadelphia Pittsburgh

I I

Tampa Washington, DC

* Compared to 1st half 2012

Industrial

CAP RATE FORECAST*

Hotels Hotel
Atlanta

Class A Stabilized
Baltimore Boston Charlotte Jacksonville Memphis Miami Nashville Orlando Philadelphia Pittsburgh Raleigh Tampa Washington, DC

Class B Stabilized

Class C Stabilized

Appendix

* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

Retail

Raleigh

N/A

I I

Multihousing

Miami

N/A

I I I
Decrease Remain Flat Increase

I I

7.25% - 7.75%

8.00% - 9.00%

8.00% - 10.00%

23

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Retail Power Center | Central Region

Class A Stabilized Trend*
Austin Chicago 6.00% - 6.50% 7.00% - 8.00% 7.50% - 8.00% 7.00% - 7.50% 5.75% - 7.25% 7.50% - 8.00% 6.25% - 7.25% 7.00% - 7.50% 7.00% - 7.50% 6.00% - 6.50% 6.75% - 7.50% 7.00% - 7.50%

<< | >>

Class B Stabilized Trend* 8.00% - 8.25%

8.00% - 9.00% 8.75% - 9.25% 8.25% - 8.75% 7.50% - 8.75% 8.75% - 9.25% 7.50% - 9.00% 8.25% - 8.75% 8.25% - 8.75% 8.00% - 8.50% 7.75% - 9.00% 8.25% - 8.75%

Class C Stabilized Trend* 10.00% - 10.25% I 10.00% - 12.00%

10.00% - 14.00% 10.00% - 12.00% 9.25% - 10.75% 10.00% - 14.00% 9.00% - 12.00% 10.00% - 12.00% 10.00% - 12.00% 10.00% - 12.00% 9.25% - 12.00% 10.00% - 12.00%

Cincinnati Cleveland Columbus Dallas

Multihousing

Detroit Houston Indianapolis Kansas City Minneapolis

Retail

San Antonio St. Louis

* Compared to 1st half 2012

Industrial
CAP RATE FORECAST*

Hotels Hotel
Austin Chicago Cincinnati

Class A Stabilized

Class B Stabilized

Class C Stabilized

Appendix

Cleveland Columbus Dallas Detroit Houston Indianapolis Kansas City Minneapolis San Antonio St. Louis

* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

I I I I I
Decrease Remain Flat Increase

Office

I I I I I

6.25% - 6.50%

8.00% - 8.50%

9.00% - 10.00%

24

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Retail Power Center | Western Region

Class A
Albuquerque Denver

<< | >>

Class B Stabilized Trend* 8.00% - 9.00% 7.75% - 8.25% I 7.00% - 8.00% 7.00% - 8.00% 7.00% - 8.00% I 6.50% - 7.50% I
7.00% - 8.50% 7.00% - 8.50% 7.00% - 8.00% 6.00% - 6.75% 7.25% - 7.75% 7.00% - 8.50%

Class C Stabilized Trend*

9.00% - 10.00% 7.50% - 9.00% 8.50% - 9.50% 8.50% - 9.50% 8.00% - 9.00% 8.50% - 10.50% 8.50% - 10.50% 8.50% - 10.50% 8.50% - 9.50% 8.00% - 9.00% 9.00% - 9.50% 8.00% - 10.00%

Las Vegas Los Angeles Orange County Phoenix Portland Sacramento Salt Lake City San Diego San Francisco

I I

6.00% - 6.75% 6.00% - 6.75% 6.00% - 6.50% 6.00% - 6.75% 6.50% - 7.50% 7.50% - 8.50% 6.00% - 6.75% 5.25% - 6.25% 6.25% - 6.75% 6.25% - 7.50%

Multihousing

Retail

San Jose Seattle

I I

* Compared to 1st half 2012

Industrial
CAP RATE FORECAST* Class A Class B Stabilized Class C Stabilized

Hotels Hotel
Albuquerque Denver Las Vegas

Stabilized

Appendix

Los Angeles Orange County Phoenix Portland Sacramento Salt Lake City San Diego San Francisco San Jose Seattle

* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

I I

7.25% - 8.25%

I I I I I I
Decrease Remain Flat Increase

Office

6.50% - 7.50%

6.75% - 7.25%

Stabilized Trend* 7.00% - 8.00%

9.00% - 10.00%

25

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

High Street Retail | National

Class A
Boston

<< | >>

Office

Chicago Los Angeles Manhattan Miami Philadelphia

Stabilized Trend* I 5.00% - 5.50% 4.50% - 5.50%

3.75% - 5.00% 4.00% - 5.00% 4.00% - 6.00% 5.75% - 6.25% 4.50% - 5.50% 4.50% - 5.50% 5.50% - 6.00%

Multihousing

San Francisco Seattle Washington, DC

* Compared to 1st half 2012

Retail
CAP RATE FORECAST* Class A

Industrial
Boston Chicago Los Angeles

Stabilized
Decrease Remain Flat Increase

Hotels Hotel

Manhattan Miami Philadelphia San Francisco Seattle Washington, DC

* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

Appendix

26

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Industrial | Overview

<< | >>

Transaction activity in the industrial sector was up only slightly in 2012. According to figures from RCA, volume for the year came in at $36.9 billion, up only $1.5 billion from a year earlier. However, this slow growth is partly an artifact of the accounting behind the AMB/Prologis merger in 2011, which is reported as a $4.2 billion sale, according to RCA. Without this transaction, volume would be up 18.4% from a year ago, closer to the pace of growth for investment volume in the office and retail sectors. CBRE Capital Markets and Valuation professionals expect that cap rates for stabilized Class A industrial assets will continue to compress in 2013 in 21 out of 41 markets surveyed. Here too there is room for further compression, with the average cap rate for this asset class at 6.5%, according to the results of the survey. It is interesting to note that these professionals expect less investor appetite to move out on the risk spectrum within

Office

Multihousing

Retail

the industrial sector. In the Class B segment of the market, only in 19 out of 41 markets is further compression anticipated, with expectations for compression really falling off in the Class C segment. In that segment, only nine markets are expected to see enough interest to generate further cap rate compression.

Industrial Select from the list below to access the current industrial cap rates and forecast. Hotels Hotel Download a Complete Industrial Current Cap Rates Chart (PDF) Download a Complete Industrial Cap Rate Forecast Chart (PDF) Appendix

27

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Industrial | Eastern Region

Class A
Atlanta Baltimore/Washington Corridor Boston Charlotte Eastern PA (I-78/I-81) Corridor Jacksonville 6.25% - 7.50% 5.75% - 6.25% 7.00% - 7.50% 6.75% - 7.50% 5.75% - 6.25% 7.50% - 7.75% 7.25% - 8.25% 5.25% - 5.75% 6.50% - 8.00% 5.00% - 5.50% 6.75% - 7.50% 7.50% - 8.25% 6.50% - 7.50% 6.50% - 7.50%

<< | >>

Class B Stabilized Trend* I I

N/A 7.25% - 8.50% 6.50% - 7.00% 7.75% - 8.75% 7.25% - 8.00% 6.75% - 7.50% 8.50% - 9.50% 8.25% - 9.00% 5.50% - 6.25% 8.00% - 10.00% 5.75% - 6.50% 8.00% - 9.00% 8.50% - 9.50% 7.50% - 8.50% 7.25% - 8.25%

Class C Stabilized Trend* I I

N/A 8.50% - 10.00% 7.00% - 7.75% 10.00% - 11.00% 8.00% - 8.25% 7.75% - 8.50% 9.50% - 12.00% 9.00% - 10.00% 6.00% - 7.00% 9.00% - 11.00% 6.50% - 7.25% 9.00% - 11.00% 9.50% - 10.50% 9.00% - 12.00% 9.00% - 9.75%

Stabilized Trend* I I I I
N/A

Office

Multihousing

Memphis Miami Nashville Northern New Jersey Orlando

Raleigh Tampa * Compared to 1st half 2012

Industrial
CAP RATE FORECAST* Class A Class B Stabilized Class C Stabilized

Hotels Hotel
Atlanta Baltimore/Washington Corridor Boston

Stabilized

Appendix

Charlotte Eastern PA (I-78/I-81) Corridor Jacksonville Memphis Miami Nashville Northern New Jersey Orlando Pittsburgh Raleigh Tampa

* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

Retail

Pittsburgh

I I

I I I I

Decrease Remain Flat Increase

28

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Industrial | Central Region

Class A
Austin

<< | >>

Class B Stabilized Trend*

6.75% - 7.25% 8.00% - 9.00% 8.50% - 9.00% 8.00% - 9.00% 7.00% - 8.00% 8.50% - 10.00% 6.75% - 7.75% 8.00% - 9.00% 8.00% - 8.50% 7.50% - 8.50% 7.75% - 8.50% 8.25% - 9.00%

Class C Stabilized Trend*

8.00% - 9.00% 9.00% - 10.00% 11.00% 10.00% - 13.00% 8.50% - 9.50% 10.00% - 13.00% 8.50% - 9.50% 9.50% - 10.50% 9.00% - 10.00% 9.00 % - 11.00% 9.00% - 10.50% 9.00% - 11.00%

Office

Chicago Cincinnati Cleveland Columbus Dallas Detroit Houston Indianapolis Kansas City Minneapolis

7.00% - 7.75% 7.25% - 8.00% 7.00% - 8.00% 5.90% - 6.80% 7.00% - 8.50% 5.80% - 6.75% 6.75% - 7.25% 7.00% - 7.50% 6.50% - 7.25% 6.50% - 7.50% 7.75% - 8.25%

I I I I I I

I I

Retail

San Antonio St. Louis

* Compared to 1st half 2012

Industrial
CAP RATE FORECAST* Class A Class B Stabilized Class C Stabilized

Hotels Hotel
Austin Chicago Cincinnati

Stabilized

Appendix

Cleveland Columbus Dallas Detroit Houston Indianapolis Kansas City Minneapolis San Antonio St. Louis

* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

Multihousing

5.75% - 6.00%

I I I
Decrease Remain Flat Increase

Stabilized Trend* 6.75% - 7.75% I

7.75% - 8.25%

8.50% - 8.75%

29

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Industrial | Western Region

Class A Stabilized Trend*
Albuquerque Denver Inland Empire Las Vegas Los Angeles Orange County Phoenix Portland Sacramento Salt Lake City San Diego 6.00% - 6.50% 4.75% - 5.75% 7.50% - 8.50% 4.75% - 5.75% 5.00% - 5.50% 6.50% - 7.50% 7.00% - 8.00% 7.50% - 8.00% 7.00% - 7.50% 5.50% - 6.00% 5.00% - 6.00% 5.00% - 6.00% 5.00% - 5.75%

<< | >>

Class B Stabilized Trend*

6.50% - 7.00% 5.85% - 6.50% 8.50% - 9.50% 5.85% - 6.50% 5.75% - 6.25% 7.50% - 8.50% 8.50% - 9.50% 8.00% - 8.50% 7.00% - 8.00% 6.00% - 6.50% 6.00% - 7.25% 6.00% - 7.25% 6.00% - 6.75%

Class C Stabilized
9.00% - 10.00% 8.50% - 9.50% 6.50% - 7.00% 9.50% - 10.50% 6.50% - 7.00% 7.00% - 7.75% 8.50% - 9.25% 9.50% - 10.50% 8.50% + 8.00% - 10.00% 7.25% - 7.75% 8.00% - 10.00% 8.00% - 10.00% 6.75% - 7.25%

Office

I I I I

Multihousing

Retail

San Francisco San Jose Seattle

* Compared to 1st half 2012

Industrial
Class A Stabilized

CAP RATE FORECAST* Class B Stabilized Class C Stabilized

Hotels Hotel

Albuquerque Denver Inland Empire Las Vegas Decrease Remain Flat Increase

Appendix

Los Angeles Orange County Phoenix Portland Sacramento Salt Lake City San Diego San Francisco San Jose Seattle

* Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

I I I

I I I

I I I

I I I I

7.50% - 8.50%

8.00% - 9.25%

Trend*

30

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Hotels | Overview

<< | >>

The CBRE Cap Rate Survey provides information on the hotel sector that is unavailable elsewhere. With total transaction activity in the sector representing roughly 10% of annual activity across all commercial property sectors, often times there are simply not enough transactions to develop reliable benchmarks of sales comparables. For a market where comparable sales are thin, our approach of combining the insights of the CBRE Capital Markets and Valuation professionals as to the levels at which assets will trade is good way to get a relative sense of pricing. Transaction activity for 2012 is off from a year earlier. According to the figures from RCA, investment volume in 2012 stood at $19.6 billion, versus the $20 billion seen in 2011. This decline was a bit front-loaded, with declines starting in the fourth quarter of 2011 and continuing through the third quarter of 2012. Activity turned the corner in Q4 2012, rising 49.5% from a year earlier, but it is too soon to tell if this

Office

Multihousing

Retail

increase is a just blip, or rather a trend toward recovery. The evidence from the CBRE Cap Rate survey suggests that the fourth-quarter increase may continue into 2013 for certain hotel sub-types. Across

Industrial

the 36 markets surveyed, 13 markets in the limited-service segment and 8 markets in the economy segment are expected to see continued cap rate compression in 2013. In the luxury and full-service segments, however, only three markets are earmarked for such compression.

Hotels Hotel

Select from the list below to access the current hotels cap rates and forecast. Download a Complete Hotels Current Cap Rates Chart (PDF)

Appendix

Download a Complete Hotels Cap Rate Forecast Chart (PDF)

31

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Hotels | National
Luxury
Stabilized
Albuquerque 7.00% - 7.25% 7.00% - 8.00% 7.25% - 7.50% 6.50% - 7.50% 6.50% - 7.00% 7.00% - 8.00% 6.00% - 7.50% 6.50% - 9.00% 6.50% - 9.00% 8.00% - 9.00% 7.00% - 8.00% 6.25% - 6.75% 8.00% - 8.50% 6.00% - 8.00% 8.00% - 8.50% 7.00% - 8.00% 7.00% - 7.75% 4.50% - 5.50% 6.00% - 7.00% 6.00% - 7.75% 7.00% - 8.00% 7.00% - 7.75% 6.00% - 8.00% 7.00% - 8.00% 6.50% - 8.00% 7.00% - 7.50% 6.00% - 8.00% 7.50% - 8.50% 8.00% - 9.00% 7.00% - 8.00% 7.00% - 7.75% 5.50% - 6.50% 6.50% - 7.50% 6.00% - 8.00% 6.00% - 8.00% 6.50% - 7.50%

<< | >>

Full Service
Trend* I I
N/A N/A N/A

Select Service
Trend* I Stabilized
8.25% - 9.50% 8.50% - 10.00% 8.75% - 9.00% 7.00% - 8.00% 8.00% - 10.00% 9.00% - 10.00% 7.00% - 9.00% 8.00% - 10.00% 8.00% - 10.00% 9.00% - 10.00% 7.50% - 8.50% 7.75% - 8.75% 9.50% - 10.50% 8.00% - 10.00% 8.50% - 9.00% 7.50% - 9.00% 7.00% - 8.00% 6.50% - 7.50% 7.50% - 9.00% 8.00% - 10.00% 8.50% - 10.00% 7.00% - 8.00% 8.00% - 10.00% 7.00% - 7.50% 7.75% - 9.00% 8.25% - 9.00% 8.50% - 10.50% 8.25% - 8.75% 9.00% - 10.00% 7.50% - 8.50% 7.00% - 8.00% 7.50% - 9.50% 7.50% - 9.50% 8.50% - 10.50% 8.00% - 10.00% 7.00% - 8.00%

Economy
Stabilized
9.50% - 11.00% 9.00% - 11.00% 9.75% - 10.00% 8.00% - 8.50% 9.00% - 11.00% 11.00% - 12.00% 7.00% - 9.00% 8.50% - 11.00% 8.50% - 11.00% 9.50% - 12.00% 9.00% - 11.00% 9.25% - 9.75% 10.50% - 11.50% 9.00% - 11.00% 10.00% - 11.00% 9.00% - 11.00% 8.00% - 8.50% 8.00% - 9.00% 8.00% - 9.50% 8.50% - 11.00% 9.00% - 11.00% 8.00% - 8.50% 9.00% - 11.00% 8.00% - 8.50% 9.50% - 12.00% 9.00% - 10.00% 9.00% - 11.00% 10.00% - 11.00% 9.00% - 10.50% 9.00% - 11.00% 8.00% - 8.50% 9.00% - 11.00% 9.00% - 11.00% 9.50% - 11.00% 9.00% - 11.00% 8.00% - 8.50%

Stabilized
8.00% - 9.00% 8.00% - 9.50% 8.00% - 8.25% 7.00% - 7.50% 7.00% - 8.00% 8.00% - 9.00% 6.00% - 7.50% 7.00% - 9.50% 7.00% - 9.50% 9.00% - 10.00% 7.50% - 8.50% 7.75% - 8.25% 9.00% - 10.00% 7.00% - 9.00% 9.25% - 10.00% 7.00% - 8.00% 7.00% - 8.00% 6.00% - 7.00% 7.00% - 8.00% 7.50% - 9.50% 8.00% - 9.50% 7.00% - 8.00% 7.00% - 9.00% 7.00% - 7.50% 7.50% - 9.00% 8.00% - 8.50% 7.00% - 9.00% 7.75% - 8.75% 8.50% - 9.50% 7.50% - 8.50% 7.00% - 8.00% 6.50% - 7.50% 7.00% - 8.00% 7.00% - 9.00% 7.00% - 9.00% 7.00% - 7.50%

Trend* I I

Trend* I I I I I I
N/A

Office

Atlanta Austin Baltimore Boston Charlotte Chicago Cincinnati Cleveland Columbus

Multihousing

I I I I I
N/A

Denver Detroit Jacksonville Kansas City Las Vegas Los Angeles Manhattan Miami

Nashville Orange County Orlando

Appendix

Philadelphia Phoenix Pittsburgh Portland Raleigh Sacramento San Antonio San Diego San Francisco San Jose Seattle Tampa Washington, DC * Compared to 1st half 2012

N/A

N/A

I I

N/A

Hotels Hotel

Minneapolis

I I

I I

Industrial

I I

Retail

Dallas

I I

32

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Hotels | National

<< | >>

Luxury Stabilized

Full Service Stabilized

Select Service Stabilized

Economy Stabilized

Office

Albuquerque Atlanta Austin Baltimore Boston Charlotte Chicago Cincinnati Cleveland

Multihousing

Retail

Columbus Dallas Denver Detroit Jacksonville

Industrial

Kansas City Las Vegas Los Angeles Miami

Decrease Remain Flat Increase

Hotels Hotel

Minneapolis Nashville New York City Orange County Orlando

Appendix

Philadelphia Phoenix Pittsburgh Portland Raleigh Sacramento San Antonio San Diego San Francisco San Jose Seattle Tampa Washington, DC
*

Cap Rate Forecast represents the CBRE professionals opinion of where cap rates are likely to trend in 1st half of 2013 in their local market.

33

Cap Rate Survey

February 2013

IN THIS ISSUE: Overview

Appendix | Definitions
Cap Rate

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The going-in cap rate usually refers to the initial yield and is calculated as the ratio of the projected net income in the first year of the holding Office period over the acquisition price of the property. This measure also represents the investors income return in the first year, but also in subsequent years if NOI remains stable. Stabilized Property Cap Rates To derive the cap rate for a stabilized property assume the asset is leased at current market rents and has an occupancy rate in line with the longrun market average. Based on these assumptions, use the in-place NOI and the probable sales price to calculate the stabilized cap rate. Retail Cap Rates (Office, Industrial, Retail, and Hotel) Cap rate ranges are best estimates provided by CBRE professionals based on recent trades in their respective market as well as recent interactions Industrial with investors. The ranges represent those cap rates that a given property will trade at in this current market. Stabilized cap rates are based on in-place NOI for the latest year, before being adjusted for reserves. Value-add cap rates are based on projected stabilized NOI. Actual cap rates within each asset class will vary, occasionally outside of the stated ranges, based on asset location/quality and property-specific opportunities for Hotels Hotel NOI enhancement. Cap Rates (Multihousing only) Appendix Cap rate ranges are based on an estimated NOI derived by annualizing the last 90 days of revenue and subtracting what buyers would estimate as stabilized, year one expenses after adjustments for real estate taxes and reserves. Actual cap rates within each asset class will vary, occasionally outside of the stated ranges, based on asset location/quality and property-specific opportunities for NOI enhancement. Value-Add Property Cap Rates (Office only) To derive the value-add cap rate use a sales prices that would be achieved by a property underperforming in its market, whether through abnormally high vacancy rates or through rents below those that are currently being achieved in the market. Assume the property is then stabilized to achieve market rents and an occupancy rate in line with the markets long run average to arrive at a stabilized NOI. Use the stabilized NOI when calculating the Value-Add Cap Rate.
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Multihousing

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Appendix | Definitions (continued)

Value-Add Property Cap Rates (Multihousing only) To derive the value-add cap rate use the return on cost based on the projected stabilized NOI value divided by the total investment.

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Office

Stabilized Property A property that has an occupancy level at or above the local average and is leased at market rents.

Multihousing

Value-Add Property (Office & Multihousing only) An underperforming property that has an occupancy level below the local average and/or is leased at below-market rents.

Retail

CBD The Central Business District of a major city.

Industrial

Suburban Mainly residential area located within close proximity to a major city.

Hotels Hotel

Class A Best-of-class product, attract larger, top quality tenants with 5- and 10-year leases, often newer construction.

Appendix

Class B Older product, mostly 5-year leases, typically previously owned. Class C Typically an older building that offers space without amenities. Attracts moderate to low income tenants.

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Appendix | Definitions (continued)

HOTEL-SPECIFIC DEFINITIONS
Full Service

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Office

A hotel property with more than 150 rooms, room service, an on-site restaurant and a concierge service. Luxury

Multihousing

Hotel chains that are priced in the top 15.0% in terms of average annual room rates, according to Smith Travel Research. Select Service

Retail

A hotel property with less than 150 rooms, no room service and no on-site restaurant or concierge service. Economy

Industrial

Hotel chains that are priced within the 20.0% to 40.0% range in terms of average annual room rates, according to Smith Travel Research.

RETAIL-SPECIFIC DEFINITIONS
Hotels Hotel Neighborhood/Community Center (Grocery Anchored) Open-air retail center that is anchored by a grocery store and, in the case of community centers, a second major retail anchor. Can range from Appendix 75,000 to 350,000 square feet. Power Center Open-air retail center typically occupied by large format, big box, and value-oriented retailers, with very limited small shop tenant space. Can range in size from 100,000 square feet to over 600,000 square feet. HighStreet The primary retail shopping thoroughfare in the premiere location of an urban sub-market, serving as a focal point for high end shops and luxury retailers.

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Appendix | Definitions (continued)

MULTIHOUSING-SPECIFIC DEFINITIONS
Infill/Urban

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Office

Area considered inner-city plus built up environs, characterized by high population density and vast human features in comparison to areas surrounding it.

Multihousing

Suburban Surrounding residential areas of a larger city. Outer edge of a large city, or several aggregates of distant residential areas.

Retail

Industrial

Hotels Hotel

Appendix

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BRIAN STOFFERS
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THOMAS MCDONNELL
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ASIEH MANSOUR
Head of Research, Americas CBRE Global Research & Consulting

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Managing Director, Americas Research CBRE Global Research & Consulting

RAY WONG
Executive Director, Americas Research CBRE Global Research & Consulting

Copyright 2013 CBRE Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of the CBRE Global Chief Economist.