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Investment Office Industrial Retail Land

Commercial
Partners, Inc.
Commercial Real Estate Services, Worldwide.
® tel +1 609 945 4000
fax +1 609 945 4001
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4 Independence Way
Suite 400
Princeton NJ 08540

Jeffrey M. Finn
President &
Chief Executive Officer
January 2010

Dear Real Estate Executive:

No matter where you look, 2009 was a very challenging year for commercial real estate. As the global recession took hold,
local and regional economies stagnated or declined and market fundamentals eroded. Investors remained on the sidelines,
cut off from the capital needed to finance acquisitions, while those with cash waited patiently for signs the market truly
had bottomed. As the recession wore on, most major corporate tenants adopted a wait-and-see position, deferring major
decisions. As expected, vacancy rates climbed and rental rates fell as a result.

As the year progressed, government-led stimulus programs in the Unites States, Europe and elsewhere began to take hold
and by year’s end we began seeing signs that the recession had finally ended. But not before US unemployment topped 10%.
While we don’t expect much new demand in 2010 as companies recover, we are starting to see corporate tenants act by
taking advantage of the tenants’ market to negotiate more favorable lease terms today in exchange for a longer commitment.
We’ve come to call this practice “extend and blend,” and it’s a trend we expect will continue well into 2010. We also expect
investment sales to increase in 2010 as banks and financial institutions clean up their balance sheets and move more
aggressively to dispose of commercial real estate loans and financially distressed real estate assets.

NAI Global is pleased to present its 2010 Global Market Report. Now in its 24th year, the Global Market Report provides
comprehensive market data and overviews on over 200 property markets around the world. This year’s edition is our most
comprehensive report ever, with coverage of all primary markets and most secondary and tertiary markets worldwide. Using
both narrative market reports and statistical charts, we provide you with market highlights, trends, demographic and business
profiles, rental rates, vacancy rates and land prices. The 2010 Global Market Report puts a wealth of market intelligence at
your fingertips in a succinct and consistent market profile format.

Dr. Peter Linneman, NAI Global’s Chief Economist and Principal of Linneman Associates, the leading real estate economics
consulting firm, worked with us again this year to prepare the Global Outlook. Linneman Associates has added its expert
economic analysis and insights to the detailed local market information from NAI professionals worldwide to deliver the
information you need on commercial real estate costs and market conditions around the world. We are proud of our relationship
with Dr. Linneman and are pleased to be able to share his insights with you.

All of the market information in the 2010 Global Market Report is available online at www.naiglobal.com and major markets
are updated periodically throughout the year. For the latest in commercial real estate industry news and trends, Global
Economic Outlook briefings, market updates and much more, visit www.naiglobal.com.

Just as NAI Global provides you with in-depth knowledge and insight on markets around the world, our global managed
network can help you achieve your real estate objectives no matter how large or small, anywhere in the world. Our clients
come to us for our deep local knowledge, which leads to results that are tangible, measurable and visible on their bottom line.

We welcome the opportunity to serve you. If we can assist you with a current or future real estate requirement anywhere in
the world, please contact us at + 1 609 945 4000 or call your local NAI professional.

Sincerely,

Jeffrey M. Finn
President & Chief Executive Officer

Build on the power of our network.TM Over 325 offices worldwide. www.naiglobal.com

1
   Table of Contents
GENERAL INFORMATION Mexico (continued) Montana
NAI Global President's Letter ..........................................................1 Matamoros, Tamaulipas ............................................................65 Bozeman ..............................................................................101
Table of Contents...........................................................................2 Mexicali, Baja California ............................................................65 Missoula...............................................................................102
Note from Dr. Peter Linneman ........................................................3 Monterrey, Nuevo Leon .............................................................66 Nebraska
About Your Global Market Report ....................................................3 Querétaro, Querétaro ................................................................66 Lincoln .................................................................................102
GLOBAL OUTLOOK Reynosa...................................................................................67 Omaha .................................................................................103
Global Outlook ...............................................................................4 Saltillo, Coahuila .......................................................................67 Nevada
San Luis Potosi (SLP)................................................................68 Las Vegas.............................................................................103
REGIONAL HIGHLIGHTS Tijuana, Baja California..............................................................68 Reno ....................................................................................104
Northeast Highlights.....................................................................21 Torreon, Coahulia......................................................................69 New Hampshire
Southeast Highlights ....................................................................22 Caracas, Venezuela ......................................................................69 Manchester...........................................................................104
Midwest Highlights.......................................................................23 UNITED STATES Portsmouth ...........................................................................105
Southwest Highlights....................................................................24 Alabama New Jersey
West Highlights............................................................................25 Birmingham ..............................................................................71 Atlantic County......................................................................105
ASIA PACIFIC Huntsville/Decatur County ..........................................................71 Middlesex/Somerset Counties ................................................106
Melbourne, Australia ....................................................................27 Mobile/Baldwin County ..............................................................72 Northern New Jersey.............................................................106
China Arizona Ocean/Monmouth Counties (“Shore Market”)..........................107
Beijing .....................................................................................27 Phoenix ....................................................................................72 Princeton/Mercer County .......................................................107
Chengdu ..................................................................................28 Arkansas Southern New Jersey ............................................................108
Hong Kong ...............................................................................28 Jonesboro.................................................................................73 New Mexico
Shanghai..................................................................................29 Little Rock.................................................................................73 Albuquerque .........................................................................108
Xiamen ....................................................................................29 California Las Cruces ...........................................................................109
Guam..........................................................................................30 Inland Empire (Riverside/San Bernardino) .................................74 New York
India Los Angeles County.................................................................74 Albany ..................................................................................109
Chennai ...................................................................................30 Marin County ..........................................................................75 New York City........................................................................110
Delhi, Gurgaon .........................................................................31 Monterey County.....................................................................75 Long Island ...........................................................................110
Hyderabad, Pradesh..................................................................31 Oakland..................................................................................76 North Carolina
Kolkata.....................................................................................32 Orange County........................................................................76 Asheville ...............................................................................111
Pune, Maharashtra ...................................................................32 Sacramento ...........................................................................77 Charlotte...............................................................................111
Punjab .....................................................................................33 San Diego...............................................................................77 Greensboro/High Point/Winston-Salem ...................................112
Tokyo, Japan ...............................................................................33 San Francisco County..............................................................78 Raleigh/Durham ....................................................................112
Kuala Lumpur Malaysia ................................................................34 San Mateo County...................................................................78 North Dakota
Singapore....................................................................................34 Santa Clara County (Silicon Valley) ...........................................79 Fargo....................................................................................113
Seoul, South Korea ......................................................................35 Santa Cruz County ..................................................................79 Ohio
Taipei, Taiwan ..............................................................................35 Sonoma County.......................................................................80 Akron ...................................................................................113
Ventura County .......................................................................80 Canton .................................................................................114
CANADA Colorado Cincinnati .............................................................................114
Alberta Colorado Springs.....................................................................81 Cleveland..............................................................................115
Calgary ....................................................................................37 Denver....................................................................................81 Columbus .............................................................................115
Edmonton ................................................................................37 Delaware Dayton..................................................................................116
British Columbia Delaware & Cecil County Maryland...........................................82 Oklahoma
Vancouver................................................................................38 District of Columbia Oklahoma City.......................................................................116
Victoria ....................................................................................38 Washington, D.C. ....................................................................82 Tulsa ....................................................................................117
Nova Scotia Florida Oregon
Halifax .....................................................................................39 Fort Lauderdale.......................................................................83 Portland................................................................................117
Ontario Ft. Myers/Naples/Port Charlotte/Bonita Springs .........................83 Pennsylvania
Ottawa.....................................................................................39 Jacksonville ............................................................................84 Allentown..............................................................................118
Toronto ....................................................................................40 Marin & St. Lucie Counties ......................................................84 Berks County ........................................................................118
Montreal ..................................................................................40 Miami.....................................................................................85 Bucks County........................................................................119
Regina, Saskatchewan...............................................................41 Orlando ..................................................................................85 Harrisburg/York/Lebanon .......................................................119
EUROPE MIDDLE EAST AFRICA Palm Beach County .................................................................86 Lancaster .............................................................................120
Vienna, Austria.............................................................................43 Tampa Bay..............................................................................86 Philadelphia ..........................................................................120
The Baltics (Latvia/Estonia/Lithuania) ............................................43 Georgia Pittsburgh .............................................................................121
Sofia, Bulgaria .............................................................................44 Atlanta....................................................................................87 Schuylkill County ...................................................................121
Prague, Czech Republic................................................................44 Hawaii Wilkes-Barre/Scranton/Hazleton .............................................122
Copenhagen, Denmark.................................................................45 Honolulu .................................................................................87 South Carolina
Finland ........................................................................................45 Idaho Columbia ..............................................................................122
Paris, France ...............................................................................46 Boise......................................................................................88 Greenville/Spatanburg/Anderson Counties ..............................123
Frankfurt am Main, Germany ........................................................46 Southeast (Idaho Falls/Pocatello) ..............................................88 South Dakota
Atehens, Greece ..........................................................................47 Illinois Sioux Falls ............................................................................123
Reykjavik, Iceland.........................................................................47 Chicago .................................................................................89 Tennessee
Tel Aviv, Isreal ..............................................................................48 Springfield ..............................................................................89 Chattanooga .........................................................................124
Almaty, Kazakhstan ......................................................................48 Indiana Clarksville .............................................................................124
Kuwait.........................................................................................49 Fort Wayne .............................................................................90 Knoxville ...............................................................................125
Oslo, Norway ...............................................................................49 Indianapolis ............................................................................90 Memphis ..............................................................................125
Doha, Qatar .................................................................................50 Iowa Nashville...............................................................................126
Bucharest, Romania .....................................................................50 Cedar Rapids, Iowa City...........................................................91 Texas
Moscow, Russian Federation ........................................................51 Davenport/Bettendorf, Iowa & Rock Island/Moline, Illinois ..........91 Austin...................................................................................126
St. Petersburg, Russian Federation................................................51 Des Moines.............................................................................92 Beaumont .............................................................................127
Belgrade, Serbia ..........................................................................52 Sioux City ...............................................................................92 Corpus Christi .......................................................................127
Johannesburg South, Africa..........................................................52 Kansas Dallas ...................................................................................128
Madrid, Spain ..............................................................................53 Wichita ...................................................................................93 El Paso .................................................................................128
Stockholm, Sweden......................................................................53 Kentucky Fort Worth.............................................................................129
Geneva, Switzerland.....................................................................54 Lexington................................................................................93 Houston................................................................................129
Zurich, Switzerland.......................................................................54 Louisville ................................................................................94 Rio Grande Valley (McAllen/Mission/Brownsville/Harlingen) ......130
Istanbul, Turkey............................................................................55 Louisiana San Antonio ..........................................................................130
Kiev (Kyiv), Ukraine.......................................................................55 Baton Rouge ...........................................................................94 Texarkana (Bowie County, Texas/Miller County, Arkansas) ........131
London, England United Kingdom..................................................56 Monroe...................................................................................95 Utah
New Orleans ...........................................................................95 Salt Lake City........................................................................131
LATIN AMERICA AND THE CARIBBEAN
Maine Washington County ...............................................................132
Buenos, Aires Argentina ...............................................................58
Greater Portland/Southern Maine .............................................96 Vermont
Nassau, Bahamas ........................................................................58
Maryland Burlington .............................................................................132
Brazil
Baltimore ................................................................................96 Virginia
Campinas.................................................................................59
Suburban Maryland .................................................................97 Northern Virginia ...................................................................133
Curitiba ....................................................................................59
Massachusetts Washington
Porto Alegre .............................................................................60
Boston....................................................................................97 Seattle/Puget Sound..............................................................133
Rio de Janeiro ..........................................................................60
Western (Greater Springfield) ...................................................98 Spokane ...............................................................................134
Sao Paulo.................................................................................61
Michigan Tri-Cities ...............................................................................134
Santiago, Chile.............................................................................61
Detroit ....................................................................................98 Wisconsin
San Jose, Costa Rica ...................................................................62
Grand Rapids ..........................................................................99 Madison ...............................................................................135
Kingston, Jamaica........................................................................62
Lansing ..................................................................................99 Milwaukee ............................................................................135
Mexico
Minnesota Northeastern Wisconsin (Fox Valley/Green Bay) .......................136
Ciudad Juarez, Chihuahua.........................................................63
Minneapolis/St. Paul..............................................................100 Wyoming
Guadalajara..............................................................................63
Missouri Casper..................................................................................136
Guanajuato, Guanajuato ............................................................64
Kansas City...........................................................................100 Jackson Hole ........................................................................137
Mexico City ..............................................................................64
St. Louis ...............................................................................101
Glossary ....................................................................................138

2010 Global Market Report  www.naiglobal.com 2


 A Note From  About Your
 
Dr. Peter Linneman Global Market Report
The 2010 Global Market Report is a unique tool that reviews
and summarizes the real estate activities of the past year on
more than 200 property markets worldwide. As a reference
Once again, Linneman Associates is pleased to join tool, it reviews values, economies, social factors and other
NAI Global in the production of the 2010 Global Market conditions that impact a market.
Report. For years, NAI Global has created this annual
report, the industry’s source for in-depth market-by-market Each analysis was completed by the NAI Global Member
data, at a level of detail unavailable from other resources. representing the given market. These local professionals are
Since our two organizations forged a strategic alliance expert at reviewing their markets, identifying trends and
in 2003, we have provided NAI professionals and clients reporting market activity. The NAI Global Member making the
with comprehensive market analyses, customized reports analysis for each market is identified and may be contacted
and our perspective on macroeconomic indicators as they for further information. Most of the data in the Global Market
pertain to real estate markets. Report was collected during the fourth quarter of 2009.

By combining NAI Global’s local market data with our real Rental rates for Class A and Class B office space, retail and
estate economics expertise and proprietary projections, new construction are expressed in gross costs per unit area,
we jointly provide the reader with unmatched insight into indicating the landlord pays all expenses except for Europe,
the state of local, regional, national and international real where rental rates are reported as net. Industrial space rents
estate markets. Linneman Associates and NAI Global are quoted in terms of net rental rates, meaning the tenant
continue to jointly offer customized real estate market pays for most of the operating costs, such as utilities, mainte-
analyses and reports. Enrich your business and investment nance, and repairs and cleaning. On all charts, N/A means the
efforts by utilizing this combination of real estate expertise, information was not applicable or not available at press time.
including the Linneman Associates and NAI market analyses
and real estate decision making tools. For more information, For more information about this report, or to order your own
call your local NAI office. copy for $695, please call 609 945 4000. Additional research
reports and whitepapers are available at www.naiglobal.com.
Dr. Linneman holds both Masters and Doctorate degrees
in economics from the University of Chicago and is the Visit the NAI Global blog for real time commentary on industry
Principal of Linneman Associates. For over 25 years he news and trends at blogs.naiglobal.com
has provided strategic and financial advice to leading
corporations. Dr. Linneman is the author of the leading
real estate finance textbook, Real Estate Finance and
Investments: Risks and Opportunities. His teaching and
research focuses on real estate and investment strategies,
mergers and acquisitions and international markets. He
has published over 60 articles during his career. He is
widely recognized as one of the leading strategic thinkers
in the real estate industry.

Dr. Linneman also serves as the Albert Sussman The 2009 Global Market Report is a copyrighted publication
Professor of Real Estate, Finance, Business and Public of NAI Global, published in December 2009, and should not
Policy at the Wharton School of Business, University of be reproduced without full permission. Additional copies are
Pennsylvania. A member of Wharton’s faculty since 1979, available from NAI Global. Demographic data and indices
he served as the founding chairman of Wharton’s Real were provided by SRC, LLC.
Estate Department and the Director of Wharton’s Zell-Lurie
Real Estate Center for 13 years. He is the founding
co-editor of The Wharton Real Estate Review.

Dr. Peter Linneman, Chief Economist


NAI Global

© 2009 NAI Global. All rights reserved.

3
2010 Global Market Report  www.naiglobal.com
Global Outlook
Commercial real estate markets across the United States
experienced the full impact of the global recession in 2009. National Average Rental Rates
The precipitous decline in transaction volume that began in
2008 continued unabated throughout most of 2009 as rising
unemployment and general uncertainty about the near-term
economic outlook weighed on demand.
Rising vacancy rates and declining rental rates were evident in vir-
tually every market and property type, with weak demand and a
growing supply of sublease space further eroding market
fundamentals. Office space in the central business districts
was especially hard hit; the national average vacancy rate for
downtown Class A office space reached 13.9% in 2009, an
increase of 35% over 2008, and the national average rental
rate fell 21.6% to $37.09/SF/YR. Suburban Class A space fared National Average Rental Rates
only slightly better as the national average vacancy rate rose to
16.9% in 2009, up from 13% in 2008, and the national average
rental rate slipped 4.6% to $25.11/SF/YR.
The retail segment was also hit hard as several notable retailers
and chain restaurant operators filed for bankruptcy and countless
others closed stores to cut costs. The national average vacancy
rate in regional malls reached 7.1% in 2009, up from 5.6% in
2008, and the national average rental rate for mall space fell
10.6% to $32.76/SF/YR. The vacancy rate in power centers, a
favorite of the struggling big-box retailers, soared to 9.8% in 2009,
up from 5.9% in 2008, and the average rental rate fell 6.3% to
$19.46/SF/YR.
National Average Vacancy Rates
The impact of weak consumer demand was also evident in the
industrial sector, where new supply compounded market woes.
The national average vacancy rate for bulk warehouse space
topped 11.1% in 2009, the highest level in five years, but the
national average rental rate dipped only 1.3% to $4.57/SF/YR.
Fortunately, these negative movements followed a very healthy
peak, and tight credit has greatly curtailed new construction
starts. While it is clearly a “tenant’s market” in all commercial
sectors, many markets already have begun to stabilize, and
should begin to improve in mid-2010 as space users act to
take advantage of the most favorable market conditions seen in
years. We expect a healthy balance between supply and demand
at that time. National Average Vacancy Rates
The investment market, stagnant throughout 2009, is also expect-
ed to return in 2010. Billion of dollars have been amassed in pri-
vate equity funds ready to pounce on the impending
wave of distressed assets and REO properties expected to
hit the market in the coming year.

2010 Global Market Report  www.naiglobal.com 4


US Overview
By Dr. Peter Linneman, Chief Economist, NAI Global
The current recession is the worst downturn in economic activity since the Great
Depression, a downtown that has been hurt more than helped by government intervention
and inconsistent—and often unpredictable—government policy. But barring more govern-
ment “salvation,” we hit bottom in May 2009. Without disastrous government “salvation,”
we probably would have bottomed in January 2009. Contrary to rhetoric, government
interventions both lengthened and massively deepened the current super-recession.
GDP grew at an annualized rate of 2.8% in the third quarter and employment will lag by
about a year. When job declines end, there will be a net loss of about 8.5 million jobs.
This is equivalent to more than four years of normal job growth.
To put the situation in perspective, real GDP was about $14.8 trillion (2008 $) at the start
of September 2008, falling by 3.8% (US$566 billion) year-over-year.
The US trade deficit has plunged, reflecting the horrific loss of global confidence in the
integrity and productivity of US capital markets. The US trade deficit has fallen to -2.8%
of US GDP, and -0.9% of rest-of-world GDP. Always remember that the US trade deficit
is not a reflection of the lack of competitiveness of our goods and services, but rather a
reflection of our capital market superiority.
The fundamental problem remains: It is impossible to predict what will happen next,
as every day brings new seemingly ad hoc rules. A perfect example occurred when
the list of autos eligible for clunker tax rebates was suddenly revised on the eve of the
program without any explanation. And tax, healthcare and regulatory proposals abound,
with little clarity as to the ultimate outcomes or costs.
Early in 2009, monthly job declines were wiping out 500,000-750,000 jobs. In July, that
number had diminished to just over 3,000,000, diminishing even further to 111,000 in
October and 11,000 in November. Year over year through November 2009, the US lost Real GDP Growth Rate
Year-Over-Year Percent Growth
3.5% of all payroll jobs. 10
8
6
On a 12-month moving average basis through September, just 26% of industries are adding
Percent

workers, versus the eight-year average of 46%. Not surprisingly, all sectors by major SIC 2
0
code, except the government (+132,000), experienced significant losses from the beginning -2
-4
of the recession in December 2007 through November 2009. On an absolute basis, the -6
1984 1989 1994 1999 2004 2009
biggest losers were the manufacturing (-2.1 million); trade, transportation, and utilities
(-1.7 million); construction (-1.6 million); and professional and business services (-1.3 million)
sectors. On a percentage basis, construction (-20%) and manufacturing (-15.5%) were the
worst performers. However, job losses continue to slow with a decline of just 11,000 in
November 2009. Professional and business services bottomed in August 2009 and
gained 148,000 (0.9%) over three months through November. This was driven largely by
education and health services, which increased throughout the recession by 858,000
(4.6%) between December 2007 through November 2009.
In November 2009, the unemployment rate stood at 10%, an increase of 510 basis
points since December 2007. Over the same period, the median unemployment dura-
tion has risen by 11.7 weeks, to 20.1 weeks (a nearly 140% rise), with the percent
unemployed more than 27 weeks rising from a low of 17.5% in December 2007 to

2010 Global Market Report  www.naiglobal.com 5


38.3% in November 2009. At the same time, short-term (five weeks or less) unemploy-
ment spells are back to the same level (1.8%) as December 2007, after peaking at 2.4%
in January 2009. The truth is that many more people are unemployed, and for longer,
as a result of rule-destroying government interventions, though modest improvements Manufacturing as a % of Total Employment
(with trendline)
are emerging. 40
35

Teen workers accounted for about 19% of the 7.2 million jobs lost between January 30

Percent
25
2008 and November 2009. Thank you, Congress, for the minimum wage increase. Job 20
15
losses continue to be extraordinarily male-centric, with 4.75 million of the 7.2 million total 10
5
lost jobs concentrated among males older than 19, and only 1.69 million among women 0
older than 19. This reflects the high concentration of males in manufacturing, construc- 1940 1950 1960 1970 1980 1990 2000

tion and finance, while women are disproportionately employed in the less adversely
impacted healthcare and education sectors. As a result, females now hold half of all US
jobs for the first time in US history.
The biggest uncertainty is not the capital markets; it is the Capitol markets. Despite the
serial ineffectiveness of government interventions, investors are slowly coming out of their
tortoise shells. The early signs of recovery are fragile because of the surge in oil prices
back to $70 per barrel. At $70 per barrel, it will take much longer to rebuild consumer con-
fidence, a precursor for a recovery. GDP bottomed in the third quarter, and employment
will lag by about a year.
In early December 2009, yields on 10-year Treasuries were around 3.5%. We believe 10-
year Treasury yields are still some 125 basis points too low. If all were normal, 10-year
Treasury yields would be around 4.75-5%, where they hovered before October 2007.
Recently, LIBOR and 30-day Treasuries have raced to zero. A low LIBOR has become
the life blood for many borrowers with floating rate debt, and a rate spike has the poten-
tial to crush many borrowers. Long-term Treasury Inflated-Protected Securities (TIPS)
returns have narrowed remarkably, even as inflationary threats loom. They experienced
a yield increase to 3.09% in November 2008, and stood at 1.87% in November 2009.
Residential mortgage delinquencies have risen among all products since hitting lows in
late 2005. However, these delinquencies are highly concentrated in recession torn
greater-Ohio (Ohio plus 100 miles beyond the Ohio border) and the boom markets of
south/central Florida, Arizona, Nevada and California. Elsewhere in the US, delinquen-
cies remain at cyclical norms.
Commercial mortgage delinquency rates have risen across the board, most visibly at
U.S. National Home Price Indices
banks and thrifts, and CMBS. CMBS issuance in the US remains nearly comatose, with 300

no new issues in eight out of the first 10 months of the year. The only positive glimmer 260
Index Value

was that the CMBS market managed to eke out a handful of deals in June (US$600 220

180
million) and July 2009 (US$300 million). And the recent DDR issuance is decidedly a
140
positive sign. 100
1989 1992 1995 1998 2001 2004 2007
The best news for the US economy continues to be that the US. housing market bot- Case-Shiller NAR FHFA

tomed in February 2009. Single family starts hit (a very low) bottom of roughly 355,000
units in January and February, increasing unsteadily to 511,000 in September and
476,000 in October. The inventory of homes held by builders for sale has plummeted to
239,000, as new home production over the past two years has been insufficient to
replace the more than 350,000 units destroyed each year. MLS home prices (which

2010 Global Market Report  www.naiglobal.com 6


exclude sheriff sales) have risen nationally, and in almost every MSA, for the past six S&P 500 Index
1,600
months. Thus, while many foreclosure sales in the weakest markets continue to drag 1,400
1,200
down the Case-Shiller and NAR indices, the preponderance of homes sold by resident 1,000
owners has seen price rebounds. This sector’s rebound over the next three to four years 800
600
will be a powerful growth engine. 400
200
The good news is that broad equity markets have rebounded, reflecting both improved 0
1955 1961 1967 1973 1979 1985 1991 1997 2003 2009
prices and cyclically low earning levels. Since bottoming at 676 in March, the S&P 500
has risen by 62%, and stood at 1,095 in early December, though still 29% below its peak
of October 2007. This rebound in broad equity pricing is good news for commercial real
estate, as it will slowly work its way through to real estate. While real estate pricing will Real Estate (Under) Over Pricing Using:
50 CAPM BBB Yld Benchmark
lag public markets, the rebound should serve to re-equitize many properties crushed by 0
-50

Percent
the collapse in late 2008 and early 2009. After steadily declining since the end of 2006, -100
REIT FFO multiples showed the first sign of changing course in the third quarter of 2009. -150
-200
In December, the overall REIT FFO multiple rose to approximately 14.1, compared to the -250
-300
long-term average of 12.1. 1994 1996 1998 2000 2002 2004 2006 2008
Liquidity premium assumed to be zero.
The Capital Asset Pricing Model (CAPM) indicates that public real estate pricing has
improved dramatically relative to its long-term risk during the past six months. In
particular, the under-pricing of REITs has gone from 230% in March, to 3% in December.
A comparative risk analysis, which assumes that the ownership of the perpetuity lease Vacancy Rates by Property Type
claim should generate approximately the same expected return as the perpetuity BBB 20

debt claim, suggests that real estate has gone from almost 70% under-priced to 9.5% Percent 15

over-priced. Research indicates that public pricing leads private pricing by roughly 18 10

months. This suggests a rebound in private pricing remains about a year away. 5

0
US Property Sectors 1983 1988 1993 1998 2003 2008
Source: NCREIF Office Retail Apartment Industrial

Office. In the third quarter of 2009, the national office vacancy rate rose to 14.3%, a 70-
basis point increase from last quarter, according to NCREIF. This puts US office vacancy
above the “natural rate” of roughly 10%. Severe job losses have resulted in increasing
shadow or sublease space along with tenant inducements. These availabilities are U.S. Commercial Construction
expected to increase through 2010. The first quarter of 2008 marked the first time the 120

100 Office Industrial Retail Hotel Multifamily


national office vacancy rate surpassed 13% since the third quarter of 2006, and it has
$ Billions

80
been rising since. 60

40
Industrial. NCREIF’s US industrial vacancy rate (primarily for institutional quality properties) 20

continued to increase, from 10% in the second quarter of 2009 to 10.8% in the third 0
1993 1995 1997 1999 2001 2003 2005 2007 2009
quarter. The two data series moved in lock step from 1987 to 2004. Since then, the
NCREIF series has trended downward more sharply, but changed course over the last
three quarters. This initial divergence indicates that the institutional-grade properties in
the NCREIF survey enjoyed greater demand than the overall market, but are now being
Multifamily Construction and Vacancy Trends
affected by the wide-reaching economic downturn.
Thousands of Units

Multifamily. The Census Bureau’s quarterly Housing Vacancy Survey indicates that the US 350 11
Vacancy Percent

300 10
250 9
multifamily vacancy rate rose in the third quarter to 11.1%, from 10.6% in the second 200 8
150 7
quarter of 2009. This series has generally been hovering around 10% since late 2003. 100
50
6
5
For NCREIF’s institutional properties, the national vacancy rate declined by 20 basis 0 4
1990199219941996199820002002200420062008
points, from 7.4% in the second quarter to 7.6% in the third quarter of 2009. This Total in Bldgs w/ 5 or More Units (Thousands) Vacancy

discrepancy in vacancy rates is due to the fact that the NCREIF properties are of higher

2010 Global Market Report  www.naiglobal.com 7


quality than the Census properties. Thus, better-quality properties are exhibiting better
fundamentals. Over the last 10 quarters, the Census vacancy rate has been relatively
flat, while the NCREIF series had exhibited a sharp increase, as unsold high-end
condos were converted to rental units. The first quarter decline indicated that the condo
market overhang may be subsiding.
Multifamily starts are about a quarter of their historic norm. They have fallen 75% in
about seven months, and will remain low due to the shortage of available construction
capital. This is not such a horrible thing in the near term, because there is a fair amount
of vacancy due to the fact that as the economy shed jobs, people doubled up. Young
graduates stayed with their parents, immigrants stayed with their cousins and brothers,
etc. This will continue until labor markets improve and we start to add jobs to the econ-
omy. The lack of construction means that excess inventory is being absorbed, but it is
tough on the construction business. The multifamily sector will take longer to rebound
and we will not see a recovery until late 2010.
Retail. NCREIF reported that the national retail vacancy rate jumped to 10.7% from
9.8% in the second quarter of 2009, after breaking 6% in the second quarter of last year,
the first time since 1999. The vacancy rate rose 300 basis points from year-end 2008,
and just over 315 basis points from a year earlier. The University of Michigan consumer
confidence index rose to 70.6 in November 2009, compared to its low of 55.3
in November 2008. The index had not seen the low of 2008 since 1980. Real retail sales
peaked in November 2007 at US$337 billion, declined to US$293 billion in April 2009,
and stood at US$296 billion in October through September 2009. On a monthly annu-
alized basis, retail construction has been declining steadily, and as of September 2009
was recorded at US$34.7 billion, down from its October 2007 high of US$62.6 billion.

Canada
Canadian growth, led by export and commodity sectors (base metals, oil and gas)
performed well through early 2008. However, the financial crisis, the declining US
market and general softening of the global economy slowed the Canadian economy in
late 2008 and forced a sharp downturn in 2009. A rebound in commodity demand
enabled the economy to stabilize in late 2009. The Canadian economy is expected to
fall 2% year-over-year in 2009, recovering in 2010 with real GDP rising by 3%.
The country continues to be subjected to multiple elections and the constraints of a
minority-led government. Unemployment remains above 8%, and is expected to ease
slightly in 2010 as the country emerges from recession. The Canadian dollar has mar-
ginally strengthened against the US dollar in 2009: in March the CAD/USD was $1.26
compared to $1.06 in November.
The ownership of commercial real estate in Canada is concentrated in large pension
funds, REITs and large domestic corporate investors. The best assets remain in rela-
tively strong financial hands with conservative leverage. Pools of capital are looking to
the US, Europe and Asia to satisfy the demand for high quality real estate investment
opportunities.
Land prices softened and cap rates increased in 2009. Overall, 2010 is expected to be
a challenging year, with pockets of strength in western Canada. Transaction volume is
slowly beginning to improve despite a slow economy. The fundamentals of commercial

2010 Global Market Report  www.naiglobal.com 8


real estate are stabilizing. Prudent lending practices for home buyers, developers and
investors differentiate the Canadian reality from the US experience. As liquidity slowly
normalizes, many sectors of the domestic economy will recover sooner than expected.
The retail sector will suffer the longest as consumer spending and consumer confidence
will remain sluggish through 2010.
There are two distinct operating environments in commercial real estate: eastern
Canada (e.g., Toronto, Ottawa and Montreal) and the western provinces (e.g.,
Vancouver, Victoria). Provincial markets such as Saskatchewan have emerged in the
past few years.
Toronto and Eastern Canada
Because Eastern Canada is the country’s manufacturing base, both the Ontario and
Quebec economies are straining under slow business conditions. In Toronto, a recent
surge in office and condominium construction will continue to overhang well into 2010 as
developers struggle with fewer tenants and a difficult credit environment. Downtown
Toronto and suburban Class A vacancies are about 9%. Retail space in Toronto is hard-
er hit with a 10% vacancy rate.
The greater Montreal area accounts for more than 21% of the entire Canadian office
market, with an office vacancy rate of 8%. The hotel industry in Montreal continues to
expand, although industrial development has slowed with the expectation of a recovery
in 2010. With its reliance on the government sector, Ottawa remains stable while Halifax
retains stability from a solid base of educational, medical and research facilities.
British Columbia (Vancouver and Victoria)
The western regions of the country possess abundant natural resources (oil and gas,
agriculture, potash, uranium, diamonds, gold, etc.), allowing them to weather the reces-
sion. Looking forward, the 2010 Winter Olympics will provide a boost to the regional
economy via tourism inflows. Commercial real estate remains strong in British Columbia.
The Vancouver office market has a vacancy rate of 7%, but with little new product com-
ing online in 2010-2011. This market will improve as the regional economy strengthens.
The Victoria office market, which is dependent on the space demands of the provincial
government, has seen increasing vacancies as government spending is cut.
Industrial real estate in Vancouver continues to outperform other areas with average
vacancy rates at about 4%. In Victoria, the industrial rents are stable due to lack of new
supply and vacancy rates less than 1%.
Retail space continues to be hit as the credit/financing environment remains tight, mut-
ing consumer demand. The retail vacancy rate is 8% in Victoria and is expected to
improve very little through 2010. Similarly the Vancouver retail market is under pressure.
However, the 2010 Winter Olympics coupled with population growth near the CBD will
help this sector recover.
Investment in commercial product in this region has been resilient with cap rates around
6-7% for Victoria and 6.5-8% for Vancouver. The Greater Vancouver investment market
showed signs of recovery in the third quarter of 2009, after five quarters of flat or declining
levels of activity. Investment products in the rest of Canada remain in low supply.

2010 Global Market Report  www.naiglobal.com 9


Saskatchewan
Saskatchewan is a smaller, resource-and-farm based economy that has blossomed
in the past four years, attracting small- to mid-sized investors. In 2009, Saskatchewan
has resisted the general economic downturn and proven to be an “oasis” due to its
abundant natural resources. The two largest cities are Regina and Saskatoon; with a
combined population over 500,000 and unemployment rate below 5%, Saskatchewan
has weathered this recession best of all Canadian markets.
Industrial market vacancies are at an all-time low, while rental rates continue to hold up
due to low supply and little new construction. Although the Regina office market has
experienced declining absorption, vacancy rates remain extremely low at 1.75%. Rental
rates will spike up in 2010 as the economy emerges from recession and drives up
demand for office product. Expansion continues in the retail sector in Regina with the
new neighborhood of Harbor Landing.
The Saskatchewan investment market remains strong with interest from local investors.
Cap rates are between 8-9% for well-located, well-tenanted projects.
Demand for agricultural land has risen steadily in the past three years. As pent-up demand
for natural resources and commodities re-emerges, rural land values are expected to
improve.

Europe-Middle East-Africa
While most of Europe remains firmly in the grip of recession, the worst is over and the
recovery is within sight. Within the Euro area, GDP growth is forecast at -3.8% for 2009
(as of mid October 2009), recovering to +1.2% in 2010. Within those figures, France is
expected to show -2.1% in 2009, and +1.3% in 2010. Germany growth rates for 2009
and 2010 are expected to be -4.9% and +1.6%; and for the UK, -4.4% and +1.4%,
respectively. Both Germany and France returned to positive GDP in the third quarter, but
the UK lagged at -0.4%. While the figures in Central and Eastern Europe are bleaker for
2009, they too will see recovery in 2010. Russia for example, will shrink by 7.0% in 2009
and rise 2.5% for 2010. Major Middle Eastern countries are expected to reverse decline
in 2010, with GDP growth for UAE and Saudi Arabia predicted to be 3.3% and 4.1%,
respectively.
Unemployment in the Euro area was 9.6% (as of August 2009) while industrial production
had fallen by 15.4%. Inflation is forecast at 0.4% for 2009. The Euro has strengthened
further against the US dollar (currently 1.50) in the last 12 months, as the European
Repo rate has fallen to 2%, with the UK Base Rate remaining at 0.5%. Consumer
demand across Europe remains weak with zero growth in Central and Eastern Europe.
However, industrial statistics in the 16-country Euro area increased by 0.9% in August,
following 0.2% in July.
Space demand in the EMEA region remains weak in all sectors with office vacancy rates
climbing to their highest levels since 2004. Fortunately, most of the western cities
entered the recession with little office development. But cities like Moscow, Dubai or Kiev,
where construction was booming, are being crushed. Development activity has declined
dramatically, and in all markets, many tenants have put space up for sub-letting.

2010 Global Market Report  www.naiglobal.com 10


Office rents have fallen across the region, with prime rents down by about 10% on
average from mid-2008 to mid-2009. Markets in Austria, Germany (excluding Berlin),
Switzerland and Netherlands have proven more resilient than others. Vienna, for example,
has seen a 5% decline in rental values, whereas markets such as Dubai, Dublin, Tel-Aviv,
London, Madrid, Moscow, Oslo and Warsaw have seen far more significant declines.
Rents in Moscow and Kiev are off more than 50% from their peak. In virtually all markets,
property owners are offering increased incentives, such as extended rent-free periods
(several years in some markets), and contributions to fit-out costs.
Retail rents, particularly in Western Europe, have withstood the recession better than
those in the office sector. Rents have held steady in Austria, Belgium, France, Germany,
Israel, Italy, The Netherlands, Portugal, Sweden, Switzerland and London (West End).
However retailers, apart from select discounters and those in the food sector, have
placed expansion plans on hold, and there have been some notable failures in the
sector. As in previous recessions, the gap between prime and secondary space has
widened as retailers upgrade from secondary to prime locations. As in the office sector,
development activity has been sharply curtailed, particularly in the Central and Eastern
European (CEE) markets.
The recession has also hit the warehouse/industrial sector. The most adversely affected
are Hungary, Ireland, Israel, Poland, Portugal, Russia, Spain, Ukraine and Dubai, all of
which experienced rental declines in excess of 20%. Most notably, industrial production
experienced a 15% per annum decline, while retail volume dropped by 2.6% per annum
through August 2009. Food and discount retailers are faring relatively well, but many
occupiers are downsizing, seeking to rationalize their existing space. Industrial develop-
ment activity has virtually stopped across the continent.
Investment volumes have fallen sharply across the region. In the first half of 2009,
approximately €25 billion were invested in European property – a mere 20% of the cor-
responding 2007 volume as institutional investors have adopted a wait-and-see attitude.
Due to concerns about the security of income streams, buyers are exclusively seeking
prime properties with long-term leases with notable transactions completed in France and
the UK. The latter has attracted some international investors, as values are expected to
rebound as economies bottom. German open-ended funds are slowly returning to the
market, but are restricting their search to prime, well-leased properties. Foreign
investors are taking advantage of the weakness of the UK Pound, the availability of long
term leases with upward-only rent reviews and historically high yield levels. A shortage
of prime stock is beginning to nudge yields down.
Prime office yields have increased across the region, with the exception of Switzerland,
though the rate of increase has slowed in the more mature western markets. In the UK,
for example, yields in the City of London are now around 6.5%, an increase of 225 basis
points from the peak. Yields in London’s West End are now 5.25%, an increase of 175
basis points. Current prime yields in Paris are around 5.75%, an increase of 215 basis
points. In Frankfurt they are 5.4%, an increase of 40 basis points. These corrections look
relatively small compared with shifts of 650 and 450 basis points in Kiev and Moscow,
respectively. The focus of investors on prime sector properties has widened the gap
between the prime and secondary yields.

2010 Global Market Report  www.naiglobal.com 11


As 2009 draws to a close, there is a mood of cautious optimism for 2010 and 2011.
However, a slow recovery will generate further value declines in many locations, partic-
ularly in the CEE markets.

Latin America and the Caribbean


In the first quarter of 2009, the global economic slowdown clearly affected Latin America
and Caribbean countries. However, the “hit” during the year was not as great as feared,
with Brazil, Peru, Panama and Colombia registering positive growth. However, real
estate development slowed in all countries as many developers decided to either wait
out the storm before breaking ground, or deliberately slow the pace of construction.
Consumer demand remained comparatively healthy in most of the larger countries, with
the notable exceptions of Argentina and Mexico. However decreased flow of investment
capital, corporate credit and the greatly diminished overseas demand for goods and raw
materials has adversely impacted the region.
Projections for the region in 2010 are optimistic, depending upon the country. But
growth will depend to a large degree on the depth and breadth of a global economic
recovery. The increasing level of construction and manufacturing worldwide will positively
impact the region, especially for raw materials and commodities. Many countries in the
region have been growing domestic demand, but most remain dependent upon over-
seas demand. Along with the implementation of measured fiscal policies and the
maintenance of adequate reserves, most Latin American and Caribbean countries are
positioned to prosper in the upcoming recovery.
The Latin America and Caribbean region has been able to weather the economic crisis
because most real estate projects and capital investments are done with equity rather
than debt. This served to insulate the region from the credit/financing crisis with the
exception of Mexico, whose economy is heavily tied to the US and Canada and where
much financing is done in dollar denominated debt. Even with the continued diversion
of credit to the tier one countries during 2010, most real estate markets in the region
will prosper.
The likely scenario is that demand for real estate will rise in 2010; and development
will increase as developers and investors regain their confidence. Positive real estate
supply growth will occur in the larger economies (Brazil, Chile, Peru, Panama and
Colombia), but there will also be a modest revival in the smaller economies and Mexico.
However, growth in resort and hotel development will lag. Greenfield development in the
industrial and office sectors is expected to continue due to the lack of true Class A
product throughout the region (with the exception of Mexico). Class A office vacancy
rates continue below 2-5% in Santiago, Buenos Aires, Bogota and Sao Paulo.
With the notable exceptions of Venezuela, Ecuador and Bolivia, most Latin American
and Caribbean countries will experience economic growth in 2010. The challenge
remains for governments to provide adequate infrastructure to meet the ever-growing
needs of industry.
Argentina
The economy and growth were very impacted negatively during 2009 due to lower
agricultural commodity prices and weak external demand. Global exports should

2010 Global Market Report  www.naiglobal.com 12


increase, as should the agricultural, textile and service sectors. Inflation is expected to
stay high through 2010.
There continues to be a shortage of available Class A product in the office, industrial and
retail sectors. The office vacancy continues to be below 2%; industrial and downtown
retail are below 3%. The construction pipeline is insufficient to meet current and future
demand. Although in previous years the tight supply drove up prices, the slower rate of
absorption in 2009 resulted in the softening of rental rates.
The Bahamas
Both the tourism and banking industry – the two key economic drivers – were negatively
impacted in 2009. US and European tourist travel to the islands slowed as did construc-
tion of new hotel, resort and residential projects. The projected recovery in the US
and Europe in 2010 will provide some relief; but tourism is not projected to increase
significantly until 2011.
Downtown retail and office market absorption continues to slow, but the rate of decline
has decreased. Due to abundant parking and better access, suburban markets continue
to attract new growth and expansion. Demand has kept vacancy rates low and spurred
build-to-suit opportunities, although demand for suburban retail rents dropped some-
what in 2009. Demand is expected to increase during 2010, especially for industrial
space and more modern Class A space. Foreign investment in residential development
and hotels is largely on hold, while cap rates range from 7-11%.
Brazil
Brazil has proved to be one of the world’s most resilient economies, emerging from the
recession in the second quarter of 2009 with 1% quarter-over-quarter growth. The
expectations of a continued economic boom are partially due to oil in the country’s large
offshore oil deposits; Brazil’s hosting of the World Cup in 2014 and of the Olympics in
2016; alternative energy sources (e.g., ethanol); and continued policy and bureaucratic
reforms. In the short term, high business loan rates and bureaucracy will limit the coun-
try’s growth. Risk perception among international investors continues to decrease, and
the Brazilian Real continues to strengthen against the US dollar, from its low of 2.16 in
late 2008 to 1.76 in late 2009.
During 2009, the Brazilian real estate market continued to grow, albeit at a slightly slower
rate than previous years. The country remains an attractive target for Greenfield Class A
office, retail and industrial development and speculative real estate acquisition. Lease
rates for all product types remain stable while cap rates hover between 9-11%.
Colombia
Colombia continues to be the region’s secret success. Over the last 15 years, the
country has steadily grown and improved its democratic credentials. The Peso has
remained relatively stable rate at about 2,000 to the US dollar. The imminent finalization
of the Free Trade Agreement with the US will further benefit the economy.
Real estate development continued to be relatively strong during 2009 with demand
exceeding supply. Prices for office, retail and industrial space increased slightly in the first
half of the year, but flattened in the second half as the global recession began to hit the
country’s economy. International investment funds still have yet to venture strongly into
Colombia, but the domestic capital sources are investing actively in Greenfield projects.
2010 Global Market Report  www.naiglobal.com 13
Global investment interest largely disappeared during 2009, but is expected to return in
2011. Given the lack of a transparent investment market for existing product, cap rates
are difficult to identify, but are estimated to be 12% or greater.
Chile
Chile continues to be the benchmark for most countries in the region as the Chilean
economy recorded another respectable year of growth. Inflation dropped while the 7%
unemployment rate is among the lowest in Latin America and well below the US rate. The
drop in the prices for copper and other commodities paired with the decline in global
demand adversely affected the Chilean economy. However, Chile largely avoided any cri-
sis due to capital reserves built up when commodity prices were high in 2007-2008. Its
continued attempts to decrease its dependence on imports of natural gas by developing
hydroelectric projects in the Andes is hindered by ecological groups. Nevertheless, Chile
increased its domestic electricity supply by 7%. Chilean companies, profiting from their
strong macroeconomic climate, continued to cautiously expand operations into other
countries, including Peru, Colombia, Argentina and Brazil.
Demand for quality commercial real estate continues to be strong, albeit slightly dimin-
ished, with vacancies remaining below 3%. Of the developments slated for completion
in 2009, about 35% were completed on time, 50% were delivered a few months late,
with the rest expected in 2010. Rental rates remained stable and cap rates are about
8-10%.
Costa Rica
Although the US-Costa Rica Free Trade Agreement went into effect on January 1, 2009,
strong benefits have yet to be achieved. The opening up of the telephony sector in 2010
with the combined surge of insurance operators (from the 2009 sector opening) should
provide a boost to the economy; however, the pace of reform remains slow.
Real estate activity slowed during 2009 with resort, hotel and second home sectors on
the Pacific Coast hit hard, with activity dropping about 65%. In the municipal area of San
José, activity decreased 15-20% in the office and industrial sectors, but the retail
market declined by even more. Rental rates have softened in the office and industrial
sectors, dropping 10-15% for retail. For 2010, absorption in the commercial sectors is
expected to increase slightly, with a lesser increase in retail. Rental rates are expected
to be stable in 2010, but will firm up in the office and industrial sectors as absorption
increases. Along the Pacific Coast, recovery and renewed investor interest should start
in early 2011. Land prices are weak as owners try to cash out. Cap rates are above 9%
and project IRRs are above 18%.
Mexico
Mexico was the hardest hit of the larger economies given falling auto demand from the
US and the impact of swine flu on tourism. GDP is expected to contract 7.1% in 2009.
Mexico began to explore outsourcing of some of its oil-related activities, such as
joint-ventures with Petrobras. The positive effects of these efforts will only be felt after
2013, but should increase investment flows to upgrade the Pemex infrastructure for
greater exploration.

2010 Global Market Report  www.naiglobal.com 14


The exchange rate has hovered at 13.5 pesos to the US dollar throughout 2009. Interest
rates remain stable after having dropped in mid-2008 to their lowest levels (7.3%). The
demand for maquiladora product dropped significantly, but by year-end 2009, interest
has surged due to increasing labor and transport costs from Asian operations.
While real estate activity declined significantly, Mexico City fared better than most markets.
The office and the industrial sectors generally experienced positive absorption, though
about 20% lower than the previous year. Demand is expected to increase slightly during
2010. Lease rates in Mexico City are relatively stable, but softened by about 15% in the
secondary and tertiary submarkets. Sale prices across the country are also stable with
cap rates about 9.5% for quality product, and IRRs in the 15-20% range.
Venezuela
2009 was a difficult year for Venezuela as the global recession, plunging oil prices
and poor economic micro-management policies plagued the country. The next few
years will be particularly difficult with shortages expected in many sectors including
power and water. Except for activity from political bedfellows such as Iran, China,
Libya and Russia, there is virtually no new foreign investment in Venezuela outside of
the petroleum industry. That said, the petroleum industry remains a powerful and
profitable economic engine.
The country’s administration and policy environment hampers recovery. Vacancy rates
are still near zero in office, industrial and retail properties and rental rates are rising due
to high inflation rates. Investors and developers remain very cautious due to the lack
of transparency and political risks.

Asia Pacific
The general feeling across most of Asia is that the worst of the recession is over.
Most Asian countries have experienced a major rebound of stock markets, as well
as some improvement of real estate values, especially on the residential side. The
main indices in Hong Kong, mainland China, South Korea and Singapore have risen
more than 50% since January 1, 2009. The Indian Sensex has climbed 72% and
stands 20% above where it was just before Lehman’s demise. However, there
remains an underlying cautiousness.
Countries like Singapore, Hong Kong and South Korea that have seen quick
turnarounds in their residential property market values since the beginning of 2009 also
see their governments testing new regulations to manage another bubble. Hong Kong
has seen more than a 25% rise in its mid-priced residential sector, and a 40% rise in the
luxury sector since the beginning of the year. Recently, a Hong Kong apartment
was sold for a record price of HK$71,280 per square foot (US$9,197 per square foot),
setting a world record price per square foot. In response, the Hong Kong government
has cut mortgage limits and freed up more government land for residential develop-
ment. Nonetheless, wealthy mainland Chinese buyers continue buying luxury residential
properties all cash, and often on all-expense-paid property viewing tours by Hong Kong
developers.

2010 Global Market Report  www.naiglobal.com 15


Commercial rents have been dropping since late 2008. Class A office rents are down
from their peak 2007 levels by as much as 50% in the Singapore CBD and the Central
District of Hong Kong, and as much as 25% in Shanghai. Coinciding with the rental
compression, yields have risen, as sellers have fewer “real” buyers. Credit markets have
lower loan-to-value ratios, more stringent underwriting and higher interest rates.
Since the start of the global recession, institutional investors have changed their focus to
the developed countries with lower risks. The Asian market players learned from the
1990s Asian Financial Crisis and worked together to avoid a fire sale environment by
allowing borrowers to extend on modified terms. Some of the REITS and listed property
developers were also able to raise fresh capital in the public markets to reduce their debt
levels. Many properties that were listed for sale were later pulled off the market as the
bid-ask spreads were too large. In most of the major Asian financial centers (Tokyo,
Hong Kong and Singapore), institutional buyers were not on the playing field. The only
buyers in town were high net worth private buyers, so market activity through most of
2009 tended to involve transactions under US$100 million. In China, foreign investors
who were very active buyers in 2005-2008 became sellers in 2009, with domestic buyers
dominating the investment activity. Capital values have been hit hard, resulting
in a significant amount of transaction activity. In India, 2009 was a wait-and-see period, as
high land prices paid in 2006-2008 could not justify new projects at greatly reduced rents.
In the face of the global recession, wealthy Asians have staged a flight to safety, choos-
ing to invest in home markets instead of the US or Europe. As the wealth of the high net
worth investor class is expected to grow by 8.8% annually through 2015, China and
India should lead the way.
Australia
Australia was one of the few economies that never entered a deep recession. GDP
growth was 0.7% in 2009 and is projected at 2% for 2010. Estimates for consumer
price increases in 2009 and 2010 are 1.6% and 1.5%, respectively.
Office markets have been hit the hardest, with values falling by 15-25%. This has meant
yields for prime quality assets increasing by approximately 100 basis points in most
cities to 7-8%. Sydney had very few large office transactions in 2009 (only four sales
over A$50 million); whereas, Melbourne had more sales and some in excess of A$100
million. Perth and Brisbane have had very few transactions in 2009, with a drop in
demand for office space and massive new supply under construction. Australia’s capital,
Canberra, has had a disproportionate number of large transactions as buyers sought
assets with long-term leases to government bodies.
Retail investment activity has declined as access to debt was limited. The impact of the
government’s A$52 billion stimulus package has enabled households to continue
spending supporting sales and employment in many parts of the country. Industrial
markets are likely to see yields remain high, while demand remains muted.

2010 Global Market Report  www.naiglobal.com 16


China
China continued to post large GDP growth. Projections for GDP growth in 2009 and
2010 are 8.5% and 9%, respectively, while consumer price increases in 2009 and
2010 are just -0.1% and 0.6%, respectively. China’s RMB4,000 billion (US$586 billion)
fiscal stimulus package announced in late 2008 continued to work its way into the
economy. By the third quarter of 2009, China began to see a sharp rise in foreign
direct investment in its manufacturing sector.
In Beijing, the overall retail vacancy rate is over 30% due to Olympic construction. In
contrast, Shanghai’s prime retail vacancy rate is closer to 3.3%, but this could increase
with significant retail development for the 2010 World Expo under way.
Investment in the industrial sector is expected to rise as investors see opportunity in the
current pricing while owner-occupiers seek cheap buys. US-based Blackstone Group
L.P. has set up a fund manager in Shanghai to focus on local opportunities. Disneyland
will establish a “Magic Kingdom-style theme park with characteristics tailored to the
Shanghai region.”
Chinese will replace foreign investors as the main buyers of commercial real estate in
the country over the next few years. The domestic share of total property investment
grew to 70% in the first half of 2009, up from 36% in 2008.
Hong Kong
With Hong Kong’s strong dependence on finance and global trade, it felt the full brunt
of the global recession. Projections for GDP growth in 2009 and 2010 are -3.6% and
3.5%, respectively. Estimates for consumer price increases in 2009 and 2010 are -1%
and 0.5%, respectively.
For much of 2009, absorption of office space was negative. Meanwhile, occupiers upgrad-
ed from industrial or Grade B buildings to newer, attractively priced office buildings in
Kowloon. China's super-rich are still purchasing homes and sweeping luxury brand
items off the shelf. Although total retail sales have dropped 4% this year, luxury brands
are doing brisk business thanks to mainland shoppers. Industrial tenants continued to
cut costs by downsizing and relocating to more affordable premises, which has fueled
a high vacancy.
India
India continued to post large GDP growth through the recession. Projections for GDP
growth in 2009 and 2010 are 5.4% and 6.4%, respectively. Estimates for consumer
price increases in 2009 and 2010 are 8.7% and 8.4%, respectively.
The office property market is experiencing an increase in confidence as banks and
financial services companies buy, but the IT and Information Technology Enterprise
Solutions (ITeS) sectors have yet to enter the growth spree. Delhi and Mumbai have
grown the most in new properties available for rent. For example, vacancy levels rose
to 30% in the Bandra-Kurla Complex and Kalina districts of Mumbai while vacancy

2010 Global Market Report  www.naiglobal.com 17


levels in Noida (near Delhi) were 40%. The new government and falling interest rates in
the second quarter of 2009 have improved local business sentiment in India. But
despite improved confidence, office rentals slid in major cities as tenants moved to
cheaper locations or upgraded at no cost. Commercial property markets will likely
remain soft in the short- to medium-term. Landlords in secondary office locations will
struggle with the consequences of overbuilding and will increase tenant incentives. The
commercial market will follow the growth spurt of the residential sector, but slowly.
On the industrial front, market players are positioning themselves for leadership in
logistics and manufacturing platforms. Higher-quality buildings and infrastructure
are desperately needed but challenges remain in land acquisition and aggregating
land assemblage.
Indonesia
With a strong domestic economy and less dependence on foreign investment and
capital flows, Indonesia has weathered the storm well. Projections for GDP growth in
2009 and 2010 are 4% and 4.8%, respectively. Estimates for consumer price increases
in 2009 and 2010 are 5% and 6.2%, respectively.
Many multinational companies have put expansion plans on hold. Investment yields in
Indonesia are 7-9%, but there very few transactions closed in the last 12 months. The
office rental rate in Jakarta remained stable, even as the office vacancy rate will increase
to 15% by year-end 2010.
Rental prices fell due to weak economic growth. Supply is predicted to be high for the
next two years (around 290,000 SM during 2009-2010). As retailers consolidate stores,
absorption will be negative.
Japan
Heavy investment in residential and commercial property markets in the last few years has
led to extraordinary buying opportunities due to the current lack of liquidity. Projections for
GDP growth in 2009 and 2010 are -5.4% and 1.7%, respectively. Estimates for consumer
price increases in 2009 and 2010 are -1.1% and -0.8%, respectively.
The property sector has been badly bruised, with developers and managers accounting
for eight of the 10 biggest bankruptcies of listed Japanese companies this year. Many
large investment funds are proposing to start buying Japanese property in the first half
of 2010 when prices are expected to bottom. However, to date there has not been as
much distress in the market as most expected. One reason is that the leniency of
Japanese banks allows borrowers to refinance rather than forcing liquidation.
Commercial land prices in Japan fell 4.7% to a three-year low in 2008, with the decline
increasing to 5.4% in Tokyo, Osaka and Nagoya. Office vacancies in Tokyo's main
business districts increased for the 17th month in a row in June 2009 to 7.25%.
Financially strong office tenants have been upgrading their locations to better buildings
without increasing rents.

2010 Global Market Report  www.naiglobal.com 18


Malaysia
With Malaysia’s dependence on exports and FDI, the impact of the global recession
has been severe. Projections for GDP growth in 2009 and 2010 are -3.6% and 2.5%,
respectively. Estimates for consumer price increases in 2009 and 2010 are -2.2% and
2.2%, respectively.
Tourism is one of the country's biggest revenue sources, accounting for 12-13% of
gross domestic product. State investment agency Khazanah Nasional plans to invest
over RM1 billion in the leisure industry over the next two to three years in leisure
projects. Over the next few years, Malaysia will have some RM2.5 billion worth of new
tourism attractions (including Nujasaya, Legoland and Kidzania) which are expected to
attract nearly 2 million visitors combined annually.
New Zealand
The global recession has greatly impacted New Zealand and its commercial property
markets. Projections for GDP growth in 2009 and 2010 are -2.2% and 2.2%, respec-
tively. Estimates for consumer price increases in 2009 and 2010 are 1.5% and 1%,
respectively.
Commercial landlords continue to struggle with declining values, lower rents and
increasing incentive packages. Office and industrial vacancies continue to climb.
While the residential market in New Zealand has come back with significant strength,
the global markets to need to correct further before similar results in the commercial
sector occur.
Singapore
The global recession has been felt strongly in Singapore, as it is highly trade-depend-
ent. Projections for GDP growth in 2009 and 2010 are -3.3% and 4.1%, respectively.
Estimates for consumer price increases in 2009 and 2010 are -0.2% and 1.6%,
respectively.
Defying all expectations, Singapore's residential property market has rebounded in the
thick of the nation’s worst recession. New home sales between January and August of
2009 were already 80% of the total homes sold for the whole of 2007. But going
forward, prices of mass market and mid-tier projects will face resistance. The government
has announced anti-speculation measures to moderate sales volume and prices:
immediate removal of the interest absorption scheme (IAS) and the interest-only
housing loans (IOL) scheme for projects yet to be launched.
In the office market, Singapore recorded positive take-up in the third quarter of 2009
after three quarters of negative take-up. The island-wide vacancy rate for Class A office
space increased from 10.8% in the second quarter of 2009 to 12.2% in the third
quarter, a trend that is expected to continue as supply comes online.
The emphasis for retailers has shifted from store openings to streamlining operations,
prompting a 14.4% fall in rents over the year through June 2009. Rents in the Orchard
Road area will remain under pressure due to the large volume of new supply in the next
12-18 months.

2010 Global Market Report  www.naiglobal.com 19


Investment sales have jumped tenfold from S$304 million in the first quarter of 2009
to S$3.1 billion in the third quarter. Nearly half of the transactions are for the residential
sector while the commercial real estate sector makes up the remainder.
South Korea
With South Korea’s strong dependence on exports and weakened currency, the global
recession has been felt strongly. Projections for GDP growth in 2009 and 2010 are -1%
and 3.6%, respectively. Estimates for consumer price increases in 2009 and 2010 are
2.6% and 2.5%, respectively.
Investor demand in commercial property revived in the second quarter of 2009, with
capitalization rates at 5.5-6%. Class A office rents remained stable, while all others
experienced pressure on rents and occupancy. However, as new buildings are delivered
in the Seoul CBD in the fourth quarter of 2009 and through 2010, landlords expect to
face further pressure. The industrial market is also seeing vacancy rates of 15-20%, with
rents down 20% from the previous year. Retail sector rents were also decreased from
the previous year.
Taiwan
With Taiwan’s strong dependence on exports, the global recession has been felt.
Projections for GDP growth in 2009 and 2010 are -3.3% and 4.1%, respectively. Estimates
for consumer price increases in 2009 and 2010 are -0.2% and 1.6%, respectively.
Taiwan’s economy is extremely dependent on export goods factories, many of which
are cutting back in the wake of the global recession. Industrial vacancy rates ranged
from 13-20%.
The Taipei office market is strengthening because of closer economic ties with China
(particularly, the Cross-Straits Summit) enabling investment flows. Taiwan recorded its
highest overseas capital inflow ever in the third quarter of 2009 at nearly $13 billion.
Office vacancy rates are slowly improving. Retail sector vacancy rates ranged from
1-6%, although rents were slashed 40% or more across the board.

2010 Global Market Report  www.naiglobal.com 20


 US Highlights – Northeast Region
 Connecticut New Jersey Leading Price Class A Markets
Delaware New York
Maine Pennsylvania
Maryland Vermont Market Effective Avg. High Rent Vacancy

Downtown Office
Massachusetts Washington, DC New York City-Midtown $60.00 $110.00 14.7%

Class A
New Hampshire Washington, DC $51.00 $70.00 14.0%
New York City-Downtown $48.00 $75.00 10.5%
Boston, Massachusetts $42.50 $52.00 9.5%
Wilmington, Delaware $26.00 $28.00 20.0%

Market Effective Avg. High Rent Vacancy

Office
SuburbanOffice
Office Long Island, New York $31.00 $34.00 11.0%

ClassAA
Boston, Massachusetts $30.00 $35.00 16.5%
The downtown Baltimore office market continues to gravitate to the water as Inner Harbor East

Class
Suburban
Suburban, Maryland $28.45 $45.75 15.0%
continues to build out. The new 600,000 SF headquarters for Legg Mason opened in 2009 as the
Northern New Jersey $28.00 $50.50 20.0%
largest office presence to date in that area. What will happen to the former Legg headquarters
Ocean/Monmouth Counties, New Jersey $27.50 $32.00 11.0%
at 100 Light Street remains a question.
With vacancy rates climbing to 9.5% in the Boston CBD and 16.5% in the suburbs, there is no
shortage of supply, allowing tenants with solid financials to take advantage of tenant-favorable Leading Price Retail Markets
conditions.
The Q3 vacancy rate of 11.9 is the highest New York City has seen in four years, but was up
Market Effective Avg. High Rent Vacancy
only slightly from the previous quarter. Average asking rates are now $52.05/SF, down from

Office
New York City-Midtown $200.00 $1,200.00 7.6%

Downtown
almost $70/SF in late 2008. However, the rate of decline, as well as the supply of sublease

Downtown
Retail
Boston, Massachusetts $70.00 $120.00 15.0%

A
Retail
space weighing on the market, has stabilized. On the investment side, Manhattan sales have

Downtown
Class
Washington, DC $55.00 $80.00 2.5%
been few; however distressed assets are starting to appear in greater number and it is expected
Pittsburgh, Pennsylvania $26.37 $36.00 7.6%
that foreign investors and well capitalized investment groups will seek to take advantage of a
Philadelphia, Pennsylvania $26.00 $100.00 11.0%
new pricing structure, spurring the expected turnaround.
The amount of vacant office space in the Washington market has trended up over the Market Effective Avg. High Rent Vacancy
past four quarters. With over 2 million SF still scheduled to deliver in 2009, and an additional Centers
ClassCenters
Office
Washington, DC $30.00 $45.00 3.0%
3.8 million scheduled for 2010, an easy prediction is an increase in the Washington, DC, office Suburban Maryland (DC Metro) $25.22 $55.00 7.9%
Retail
Retail
A
Suburban

vacancy rate through 2010. However, a potential tightening of supply may occur within the CBD Pittsburgh, Pennsylvania $25.00 $30.00 7.7%
Service
Service

during the first half of 2010. Long Island, New York $24.00 $30.00 10.8%
Baltimore, Maryland $23.00 $50.00 10.8%
Industrial
Centers

With asking rates hovering just shy of $5 NNN, Baltimore developers have sharpened their Market Effective Avg. High Rent Vacancy
Centers

Long Island, New York $30.00 $40.00 20.0%


Retail

pencils after sitting on recently delivered product in a market that was flooded with new
Retail

construction for most of 2008. Southern New Jersey $28.00 $38.00 5.0%
Power
Power

Philadelphia, Pennsylvania $27.00 $38.00 18.0%


Asking rates for Boston industrial space have dropped to an average of $6/SF NNN and vacancy
Western Massachusetts(Greater Springfield) $25.00 $30.00 10.0%
rates hit their highest level since Q1 2005. The lack of liquidity continued to plague the invest-
Suburban Maryland (DC Metro) $24.12 $44.00 2.4%
ment market in 2009. A majority of investment sales have been limited to smaller deals that can
MallsMalls

be locally financed.
Market Effective Avg. High Rent Vacancy
RetailRetail

The vacancy factor in Northern New Jersey’s industrial sector is approaching a 10-year high. Long Island, New York $90.00 $120.00 12.0%
Regional

However, there have been transactions, especially in the second half of the year. Asking rates Washington, DC $62.00 $90.00 12.0%
Regional

have decreased approximately 20% and deals are being made off of those numbers. Landlords Wilmington, Delaware $60.00 $75.00 5.0%
are making shorter term deals more frequently than in the past, and tenants have also been Middlesex/Somerset Counties, NJ $50.00 $60.00 7.0%
reluctant to make long term commitments. Northern New Jersey $50.00 $60.00 3.8%
The vacancy rate in Philadelphia increased almost 4% to total 13% in 2009. Large land parcels
are scarce throughout the Delaware Valley, but Philadelphia features large tracts in the
Philadelphia Navy Yard and smaller parcels located in controlled industrial parks. Leading Price Industrial Markets
Warehouse

Retail Market Effective Avg. High Rent Vacancy


Industrial
Warehouse

Boston’s retail market has also felt the impact of the economic turmoil with lower rental rates Washington, DC $9.50 $16.00 16.0%
Industrial

and significantly higher vacancy in the downtown. Northern New Jersey $6.10 $9.50 12.0%
BulkBulk

The Northern New Jersey retail sector has experienced the most difficult market in the past 20 Suburban Maryland (DC Metro) $5.95 $14.00 12.5%
years. Vacancies in major corridors that would normally be leased right away are remaining Boston, Massachusetts $5.75 $7.00 11.0%
vacant for extended periods of time. The sector is suffering from a lack of activity as opposed to Long Island, New York $5.75 $7.00 9.0%
Manufacturing

the other sectors where there are deals to be made at a price.


Industrial

Market Effective Avg. High Rent Vacancy


The Philadelphia County retail vacancy rate increased slightly to 11.9% in 2009. Strong con-
Manufacturing

Pittsburgh, Pennsylvania $7.50 $13.00 10.0%


Industrial

vention and tourism business continues to stimulate the economy. New restaurants continue to Suburban Maryland (DC Metro) $6.42 $11.25 8.7%
open and the $550 million dollar Sugar House Casino is under construction along the Delaware Boston, Massachusetts $6.00 $8.00 13.5%
River. There is still strong redevelopment activity of existing retail shops and retail centers within Northern New Jersey $5.75 $6.50 11.0%
the county. Albany, New York $5.55 $7.50 12.0%
Industrial
Flex

Market Effective Avg. High Rent Vacancy


High Tech/R&D

Long Island, New York $16.00 $18.00 8.5%


Industrial

Washington, DC $16.00 $18.00 23.0%


Wilmington, Delaware $14.00 $20.00 18.0%
Pittsburgh, Pennsylvania $13.00 $16.00 10.0%
Suburban Maryland (DC Metro) $11.42 $16.00 7.8%

2010 Global Market Report  www.naiglobal.com 21


 US Highlights – Southeast Region
 Alabama North Carolina Leading Price Class A Markets
Florida South Carolina
Georgia Tennessee
Market Effective Avg. High Rent Vacancy

Downtown Office
Kentucky Virginia
Mississippi Miami, Florida $38.23 $43.73 14.5%

Class A
Fort Lauderdale, Florida $30.00 $32.00 17.0%
Palm Beach County, Florida $30.00 $37.50 22.7%
Tampa Bay, Florida $28.00 $32.00 15.0%
Office Charlotte, North Carolina $27.25 $32.00 7.5%
The Atlanta office market’s supply has outweighed the demand, pushing the vacancy rate up in
the 19-22% range, creating negative net absorption and declining rental rates. With over 196 Market Effective Avg. High Rent Vacancy

Suburban Office
million SF of inventory, it is anticipated that the office market will experience more negative net Miami, Florida $33.25 $38.03 22.3%

Class A
absorption and remain flat for 2010. Northern Virginia $31.00 $50.00 20.0%
Palm Beach County, Florida $30.90 $40.00 19.0%
Miami office vacancy rose while rents dropped by more than 10%. Certain submarkets, most
Tampa Bay, Florida $28.00 $32.00 15.0%
notably the CBD & Brickell, are hardest hit as approximately 2 million SF are scheduled to be
Atlanta, Georgia $23.00 $25.34 12.2%
delivered in 2010 and 2011.
Net absorption in Orlando was negative in four of the last five quarters from Q2 2008-Q3 2009.
Vacancies are highest in Class A properties where average rents have declined by 6% over the
past year. Vacant sublease space has increased in all submarkets.
Leading Price Retail Markets
Many companies have been inclined to shed jobs or consolidate their office requirements in
Market Effective Avg. High Rent Vacancy
order to cut expenses, leading to a decrease in Northern Virginia’s overall demand for office
Miami, Florida $31.86 $43.92 4.7%

Downtown
space. At the close of 2009, 13 buildings were under construction in Northern Virginia for a total

Retail
Charlotte, North Carolina $28.93 $34.00 10.5%
of 3.67 million SF, of which 67% was pre-leased.
Orlando, Florida $28.00 $35.00 10.4%
Concerns about the national economy were reflected in the RaleighDurham office market, Palm Beach County, Florida $25.63 $50.00 20.0%
which pointed to a rise in vacancy as tenants downsized and new sublease space brought Atlanta, Georgia $25.00 $40.00 8.0%
additional pressures. Vacancy hovered close to 19% with negative net demand.
Market Effective Avg. High Rent Vacancy
Industrial Service Centers Northern Virginia $35.00 $50.00 10.8%
Palm Beach County, Florida $26.50 $40.00 18.5%
Retail

Absorption slowed in Atlanta’s 560 million SF industrial market. The amount of new construc-
tion has dropped considerably and although vacancy rates have climbed over the past several Miami, Florida $24.48 $45.17 7.0%
quarters and rental rates decreased slightly, leasing activity remains active. Nashville, Tennessee $20.88 $33.00 7.2%
Mobile/Baldwin Counties, Alabama $18.75 $27.50 10.0%
With over 1.6 million SF coming off the market in two large deals, the amount of large ware-
house space available in Memphis has decreased. Several national companies looking for large
blocks of space could edge lease rates upward next year. Market Effective Avg. High Rent Vacancy
Power Centers

Fort Lauderdale, Florida $30.00 $40.00 8.0%


Miami’s industrial sector suffered from the recession as transshipping slowed, smaller tenants
Retail

Palm Beach County, Florida $24.63 $35.00 17.5%


failed and bankruptcies in the automotive and construction industries intensified problems.
Chattanooga, Tennessee $24.00 $30.00 10.0%
Vacancies increased on a weekly basis throughout the year.
Columbia, South Carolina $23.00 $30.00 9.1%
Orlando’s overall industrial vacancy rate stands at 13.2%, up from 8.3% a year ago. Average lease Miami, Florida $21.37 $45.00 6.8%
rates have dropped by more than 10.5% over the past year in response to four consecutive
quarters of negative absorption. Vacancy rates are highest for flex product at 17.6%. New Market Effective Avg. High Rent Vacancy
Regional Malls

construction is non-existent. Fort Lauderdale, Florida $30.00 $40.00 8.0%


Palm Beach County, Florida $24.63 $35.00 17.5%
Retail

Retail Chattanooga, Tennessee $24.00 $30.00 10.0%


Columbia, South Carolina $23.00 $30.00 9.1%
Atlanta’s retail market, with over 298 million SF of inventory, reported a slight deterioration in
Miami, Florida $21.37 $45.00 6.8%
market conditions. Vacancy rates are hovering in the 10-14% range with negative net absorption
and rental rates are down from the last several quarters.
Boca Raton and Delray have weathered the storm best because of the density of population
and strong demographics. Discount tenants of all types have benefited from the decreased
Leading Price Industrial Markets
rental rates and increased vacancy and have used that as an opportunity to expand. Palm
Beach County has seen retail rents retreat 20-30% from the 2006-2007 peak. Market Effective Avg. High Rent Vacancy
Bulk Warehouse

Northern Virginia $9.00 $18.00 12.0%


Increasing unemployment and a decline in tourism have impacted Orlando’s retail sector. Asking
Industrial

Miami, Florida $7.41 $10.83 10.1%


and effective rents have dropped, while concessions now amount to more than 10% of asking
Fort Lauderdale, Florida $7.00 $8.00 8.0%
rents. The retail vacancy rate is 8.3% market-wide, up from 5.7% one year ago. New deliveries
Palm Beach County, Florida $6.70 $9.50 11.7%
have been dominated by single-tenant super centers.
Orlando, Florida $5.65 $7.001 2.3%
Over 2 million SF of retail space was completed in the RaleighDurham market with an addition-
al 900,000 SF under construction. Despite a rise in vacancy to 7%, overall net absorption was Market Effective Avg. High Rent Vacancy
positive, and rental rates declined. As construction continues on the Outer Loop (I-540) around
Manufacturing

Palm Beach County, Florida $6.70 $9.50 10.5%


Industrial

Raleigh, new retail opportunities will be opened at major interchanges. Fort Lauderdale, Florida $6.00 $7.00 9.0%
Tampa Bay, Florida $5.50 $7.50 20.0%
Orlando, Florida $4.70 $8.00 12.5%
Jacksonville, Florida $4.28 $6.22 12.8%

Market Effective Avg. High Rent Vacancy


High Tech/R&D

Orlando, Florida $26.50 $30.00 6.2%


Industrial

Mobile/Baldwin Counties, Alabama $17.50 $20.00 15.0%


Miami, Florida $13.11 $19.33 9.3%
Northern Virginia $12.00 $23.00 18.0%
Lexington, Kentucky $11.50 $15.00 9.4%

2010 Global Market Report  www.naiglobal.com 22


 US Highlights – Midwest Region
 Illinois Nebraska Leading Price Class A Markets
Indiana North Dakota
Iowa Ohio
Michigan South Dakota Market Effective Avg. High Rent Vacancy

Downtown Office
Minnesota Wisconsin Chicago, Illinois $42.00 $55.00 16.1%

Class A
Missouri Detroit, Michigan $23.09 $30.00 9.8%
Grand Rapids, Michigan $19.00 $24.00 20.0%
St. Louis, Missouri $18.80 $22.00 13.0%
Office Kansas City, Missouri $18.64 $23.50 24.0%
Chicago’s downtown office market experienced four consecutive quarters of negative net
absorption and rising vacancies during 2009. Class A and Class B buildings are suffering from Market Effective Avg. High Rent Vacancy

Suburban Office
the highest vacancies, each above 16%. Suburban vacancy rates have been rising steadily since St. Louis, Missouri $25.00 $30.00 11.6%

Class A
2008, eclipsing 22% in 2009. Leasing activity is expected to pick up during 2010 as asking Chicago, Illinois $23.15 $30.00 23.4%
rents continue to slide and landlords offer aggressive concession packages. This should result Detroit, Michigan $22.50 $45.00 17.1%
in stabilizing vacancy rates. Kansas City, Missouri $20.81 $28.50 19.1%
Downtown Cleveland is positioned to capture momentum from several large public-sector Minneapolis/St. Paul, Minnesota $20.70 $31.00 9.8%
projects either planned or under way. The suburban office market was a more difficult
environment, hampered by widespread financial hardship among tenants.
The Detroit office market has developed a churning trend with many users taking advantage
Leading Price Retail Markets
of small spreads in rates between classes. Though rate gaps have narrowed, landlords are
hesitant to offer tenant improvement incentives as financing and cash remain scarce. New Market Effective Avg. High Rent Vacancy
demand is evident in the form of renewable energy and film production, yet these industries do Chicago, Illinois $30.00 $220.00 8.2%

Downtown
Retail
not have the critical mass to benefit the entire market. Madison, Wisconsin $20.00 $40.00 7.6%
Milwaukee, Wisconsin $20.00 $30.00 11.0%
Rental rates in the Milwaukee office market are down 20-25% and absorption is heavily
Kansas City, Missouri $17.88 $26.00 7.8%
negative with vacancy climbing to 18.5%. Tenants with lease expirations two to three years out
Minneapolis/St. Paul, Minnesota $16.83 $25.00 5.0%
can realize dramatic savings by renegotiating their leases through blend and extend transactions.
Office vacancy market-wide is 12% in Minneapolis with the highest vacancy in Class B space. Market Effective Avg. High Rent Vacancy
Tenants are renewing existing leases rather than absorb relocation costs. Landlords are Service Centers St. Louis, Missouri $16.24 $25.00 13.0%
offering discounted rates to tenants renewing 12-18 months in advance to ensure spaces Indianapolis, Indiana $16.00 $17.50 14.0%
Retail

remain filled. Davenport/Bettendorf, Iowa $15.00 $28.00 7.0%


Milwaukee, Wisconsin $15.00 $22.00 15.0%
Industrial Lincoln, Nebraska $14.75 $22.00 9.3%
The second largest industrial market and the most important transportation hub in the country,
Chicago’s industrial market also was challenged during 2009 due to lack of consumer spend- Market Effective Avg. High Rent Vacancy
Power Centers

ing, difficulty obtaining credit and economic uncertainty. Lack of new deliveries, combined with Indianapolis, Indiana $22.00 $26.00 10.2%
Retail

an increase in transactional activity, will help the market eventually rebound. St. Louis, Missouri $20.12 $28.00 4.9%
Detroit’s industrial vacancy continues to rise above 20%, primarily due to the hard hit automotive Kansas City, Missouri $17.01 $28.25 7.6%
industry. While there is minimal traditional industrial demand, renewable energy firms are Milwaukee, Wisconsin $17.00 $25.00 10.0%
beginning to look at flex space as an attractive option for solar and wind technologies. Grand Rapids, Michigan $16.00 $23.00 4.0%

Investors remain interested in the Indianapolis industrial market as modern bulk facilities are
Market Effective Avg. High Rent Vacancy
still being delivered throughout the market. New construction is trending toward smaller
Regional Malls

Chicago, Illinois $50.00 $80.00 7.8%


warehouse/distribution facilities.
St. Louis, Missouri $48.79 $60.00 7.2%
Retail

Rental rates and vacancy rates in Milwaukee have remained relatively stable with landlords Northeastern, Wisconsin (Fox Valley/Green Bay) $35.00 $55.00 10.0%
requiring at or near asking rates while giving concessions on tenant improvements or rent Sioux City, Iowa $35.00 $45.00 7.5%
abatement. Larger transactions are stewing, but may not occur until Q1 2010. Wisconsin lost Lincoln, Nebraska $32.00 $85.00 17.5%
large employers like General Motors and other large employers, like Harley Davidson, have dras-
tically reduced their workforce.
The St. Louis industrial market continues to suffer from an excess of speculative space Leading Price Industrial Markets
resulting in elevated vacancy rates and decreased rental rates. Vacancy rates increased to 9%
in 2009, up almost a full point from the end of 2008. Average rental rates dipped slightly
Market Effective Avg. High Rent Vacancy
Bulk Warehouse

to $4.21/SF.
Minneapolis/St. Paul, Minnesota $5.91 $14.75 10.2%
Industrial

Fargo, North Dakota $5.50 $6.00 9.9%


Retail Omaha, Nebraska $5.02 $6.67 5.7%
Power centers in Detroit have begun to feel the effects of falling consumer spending Milwaukee, Wisconsin $4.60 $5.00 13.0%
and increasing unemployment with many anchor and smaller tenants vacating. Significant Cedar Rapids, Iowa $4.50 $6.50 7.8%
investments by Meijer and LA Fitness helped mitigate the impact of the closing of Circuit City
locations throughout the Metro Area. Market Effective Avg. High Rent Vacancy
Manufacturing

Cedar Rapids, Iowa $6.50 $10.00 5.0%


New retailers in Milwaukee included Erewhon, Dave & Buster’s and Gold’s Gym. Local and
Industrial

Detroit, Michigan $6.50 $8.00 24.0%


regional grocers such as Pick ‘n Save, Sendiks and Woodman’s will continue to expand in 2010.
Fargo, North Dakota $6.50 $6.90 9.9%
Expect vacancies to increase and effective market rents to drop until the market levels out.
Minneapolis/St. Paul, Minnesota $5.76 $11.00 7.9%
Nordstrom Rack and Von Maur have announced plans to enter the St. Louis retail market, but Des Moines, Iowa $4.60 $6.25 6.9%
the timing remains uncertain. They’ll be joined by CVS Pharmacy, Dunkin Donuts, Five Guys
Burgers & Fries and Chick-fil-A, which are expected to open multiple locations in the next year.
Market Effective Avg. High Rent Vacancy
High Tech/R&D

Indianapolis, Indiana $16.50 $17.50 13.4%


Industrial

Canton, Ohio $12.00 $14.00 6.0%


St. Louis, Missouri $10.29 $12.00 14.8%
Dayton, Ohio $10.07 $13.33 25.1%
Cedar Rapids, Iowa $9.00 $15.00 10.0%

2010 Global Market Report  www.naiglobal.com 23


 US Highlights – Southwest Region
 Arkansas Oklahoma Leading Price Class A Markets
Kansas Texas
Louisiana
Market Effective Avg. High Rent Vacancy

Downtown Office
Austin, Texas $35.96 $26.30 15.1%

Class A
Houston, Texas $34.66 $45.00 7.0%
Office Fort Worth, Texas $26.00 $29.00 6.0%
The Austin market failed to absorb 600,000 SF in the first half of 2009. Luckily almost 300,000 San Antonio, Texas $21.05 $24.00 12.8%
SF of mostly Class A space was absorbed in Q3. Landlords are working hard to keep existing Baton Rouge, Louisiana $20.75 $21.50 9.7%
tenants and make attractive deals through rent concessions.
Market Effective Avg. High Rent Vacancy
The Dallas/Ft. Worth market leads the nation in employment gains for 2009 and the posi-

Suburban Office
tive numbers are reflected in what appears to be a healthy office market. Overall vacancy in Houston, Texas $27.47 $40.55 16.0%

Class A
Dallas remains flat from a year ago at 17.2%. Market rents have dramatically increased to Austin, Texas $26.29 $19.50 21.4%
an averaging of $20.05 for all classes of office space. Many companies are choosing to do San Antonio, Texas $24.49 $28.00 14.1%
short-term renewals versus making long term decisions. Dallas, Texas $24.30 $45.00 16.0%
New Orleans, Louisiana $21.50 $23.00 9.4%
Houston’s office vacancy rate across all classes was 14.2% in mid-2009 but a low 8.1% in the
CBD. A total of 15 buildings totaling 1.1 million SF delivered in 2009 with 3.8 million SF still
under construction. The CBD saw its share of large lease transactions, with three deals alone
accounting for over 1.4 million SF.
Leading Price Retail Markets
The New Orleans office market has remained relatively stable in terms of occupancy and rental
rates in the CBD and suburbs. No speculative inventory has been added in either market, and Market Effective Avg. High Rent Vacancy
Houston, Texas $37.71 $50.00 8.0%

Downtown
the adaptive re-use of older Class B and C buildings has actually reduced available supply.

Retail
Austin, Texas $27.50 $41.00 4.0%
The Oklahoma City office market remains strong with overall vacancy at 10%, up from 8.9% a
New Orleans, Louisiana $27.50 $40.00 14.0%
year ago. Rents are very stable with Class A at $22/SF. No new construction is planned except
San Antonio, Texas $24.33 $34.00 17.3%
for Devon Energy’s 750,000 SF corporate headquarters in the CBD, to be completed in 2012.
Fort Worth, Texas $19.47 $38.00 2.0%

Industrial Market Effective Avg. High Rent Vacancy


Austin added 3.4 million SF of industrial space from year-end 2007 through mid-2009, an Service Centers Little Rock, Arkansas $27.75 $35.00 40.0%
McAllen/Mission, Texas $23.00 $22.00 12.0%
Retail

increase of 10% of gross inventory over an 18-month period. There is no institutional grade
product currently under construction and rents continue to erode. Austin, Texas $21.00 $32.00 16.0%
Corpus Christi, Texas $19.00 $28.00 14.0%
The vacancy rate in the Dallas industrial market stands at about 12%. There is heavy competi-
San Antonio, Texas $16.14 $31.00 17.1%
tion for every tenant, pushing rental rates down while also increasing move-in incentives.
Absorption rates are in the negative territory for the first time in a while.
Market Effective Avg. High Rent Vacancy
Houston’s industrial market has remained stable with an overall vacancy rate of 6.9% and
Power Centers

McAllen/Mission, Texas $31.00 $32.00 15.0%


average asking rental rates of $5.70/SF per year.
Retail

Baton Rouge, Louisiana $28.00 $40.00 6.6%


The industrial sector is booming in Jonesboro, Arkansas, with the announcement of Nordex Beaumont, TX $18.50 $22.00 12.0%
USA’s plan to construct a $100 million wind-energy plant in the Jonesboro Industrial Park and Dallas, Texas $17.47 $30.00 13.2%
Alberto Culver expanding to allow for even more jobs and production outside of Jonesboro. Wichita, Kansas $15.00 $22.00 6.0%
More than 1.5 million SF of industrial space absorbed by contractors, utility crews and relief
workers in New Orleans in the months following Hurricane Katrina has been returned to the Market Effective Avg. High Rent Vacancy
Regional Malls

market. That, combined with new inventory, produced a vacancy rate of more than 13%. The McAllen/Mission, Texas $80.00 $100.00 4.0%
first softening in rental rates and pricing is evident. San Antonio, Texas $42.50 $60.00 10.4%
Retail

New Orleans, Louisiana $41.25 $62.50 5.0%


Baton Rouge, Louisiana $35.00 $80.00 5.3%
Retail
Austin, Texas $33.50 $45.00 5.0%
About 618,940 SF of retail was delivered in Austin in 2009 while only 278,130 SF was
absorbed. This resulted in average rental rates decreasing by $2.81/SF from December of 2008
to June of 2009.
Leading Price Industrial Markets
The Dallas/Ft. Worth retail market has a 9.4% vacancy rate and a retail rental rate of
$13.37/SF. Net absorption has been in excess of 1 million SF and the average rental rate has
Market Effective Avg. High Rent Vacancy
Bulk Warehouse

increased 0.8%. Some 21 buildings were delivered totaling just over 300,000 SF. Cap rates
McAllen/Mission, Texas $7.20 $7.801 5.0%
have averaged 7.90%.
Industrial

Houston, Texas $5.31 $7.14 7.0%


Houston’s retail market has experienced a decrease in vacancy to 9.2% overall, but the Corpus Christi, Texas $4.80 $6.00 4.0%
average quoted asking rental rate still dropped to $15.15/SF, a 1.9% decrease over the San Antonio, Texas $4.40 $6.00 12.8%
past year. Average sales prices rose year over year to $171/SF, compared with $147 in the Austin, Texas $4.20 $5.40 20.0%
previous period.
Market Effective Avg. High Rent Vacancy
Manufacturing

McAllen/Mission, Texas $9.75 $11.00 6.0%


Industrial

Beaumont, TX $6.30 $7.00 6.0%


Oklahoma City, Oklahoma $5.75 $9.25 14.0%
Austin, Texas $5.70 $7.20 20.0%
Houston, Texas $5.17 $7.80 3.0%

Market Effective Avg. High Rent Vacancy


High Tech/R&D

Texarkana $14.50 $16.00 0.0%


Industrial

New Orleans, Louisiana $12.00 $15.00 10.0%


Wichita, Kansas $10.00 $11.00 5.6%
San Antonio, Texas $9.52 $16.75 17.2%
Beaumont, TX $9.00 $10.00 5.0%

2010 Global Market Report  www.naiglobal.com 24


 US Highlights – West Region
 Arizona Nevada Leading Price Class A Markets
California New Mexico
Colorado Oregon Market Effective Avg. High Rent Vacancy

Downtown Office
Hawaii Utah Santa Clara County (Silicon Valley), California $43.44 $85.20 24.1%

Class A
Idaho Washington San Francisco County, California $36.42 $70.00 14.4%
Montana Wyoming Los Angeles County, California $34.19 $52.54 13.7%
Sacramento, California $34.08 $39.60 9.6%
Jackson Hole, Wyoming $32.50 $35.00 10.0%
San Diego, California $31.50 $36.00 18.0%
Office
The entertainment industry, a primary component of the Los Angeles market, has weathered Market Effective Avg. High Rent Vacancy

Suburban Office
the economic crisis well, but demand is off in most other sectors. Tenants are giving back excess Santa Clara County (Silicon Valley), California $35.60 $78.96 23.9%

Class A
space and renegotiating leases to reduce their operating costs. Higher vacancy rates, lower San Mateo County, California $35.04 $162.00 18.7%
lease rates and tight credit have almost eliminated new construction. Los Angeles County, California $32.67 $77.40 14.8%
Marin County, California $30.96 $60.00 27.9%
The office vacancy rate in Phoenix is 25% overall, but vacancy at Class A+ product downtown
Ventura County, California $30.00 $35.00 19.6%
and in suburban submarkets has reached a staggering 60%. Relief won’t come anytime soon
with over 2 million SF currently under construction.
Portland office vacancy increased considerably during 2009, but Class A space in the CBD Leading Price Retail Markets
remained tight at around 6%. No new CBD projects will deliver until summer 2010.
Positive net absorption of almost 300,000 SF of office space in San Diego in Q3 provided some
Market Effective Avg. High Rent Vacancy
welcome positive news in an otherwise very difficult year. Investment activity is well off the 2007
San Francisco County, California $76.33 $750.00 6.7%

Downtown
peak in velocity and volume. Excluding buildings under 15,000 SF, sale prices in 2009 averaged

Retail
Santa Clara County (Silicon Valley), California $48.00 $72.00 7.6%
$140/SF, down from $230/SF in 2008.
Seattle, Washington $42.00 $65.00 8.1%
The San Francisco commercial market remained plagued by rising vacancy, declining rents and San Diego, California $33.33 $60.00 6.6%
occupancy loss with the September 2009 preliminary unemployment rate reaching 10.4%. The Los Angeles County, California $32.61 $45.24 4.6%
market-wide vacancy rate rose to 15.3% at the end of Q3 with nearly 1.7 million SF of nega-
tive absorption year to date. Rental rates dropped $3.75 to $33.01/SF full service. Market Effective Avg. High Rent Vacancy
San Mateo office vacancy peaked above 18% in 2009, climbing 680 basis points from 2008. Service Centers San Francisco County, California $45.06 $65.00 3.6%
Santa Clara County (Silicon Valley), California $36.00 $48.00 10.8%
Retail

The average asking rate decreased a dramatic $10.32 in the past year to $31.92/SF full serv-
ice per year. Since 2007, nearly 5.7 million SF of office space has been absorbed from San San Mateo County, California $33.66 $54.00 3.8%
Mateo County's available marketplace. Ventura County, California $25.70 $39.00 9.1%
Los Angeles County, California $25.31 $41.68 6.8%

Industrial
Market Effective Avg. High Rent Vacancy
Denver’s vacancy rate is nearing 9%. The good news is there are several large transactions
Power Centers

Santa Clara County (Silicon Valley), California $43.50 $60.00 8.0%


in the market, which should fill some voids that have been created due to the downturn in
Retail

Marin County, California $39.09 $45.00 2.7%


the economy.
San Diego, California $28.07 $28.00 5.8%
Las Vegas industrial inventory grew to 103 million SF, pushing the vacancy rate beyond 12%. San Mateo County, California $27.49 $45.00 5.1%
Current vacancies are significantly higher than the 10-year historical average of 8%. Speculative Seattle, Washington $27.00 $38.00 5.0%
development in the sector remains limited while net absorption remained negative throughout
the year. Market Effective Avg. High Rent Vacancy
Regional Malls

Offsetting Los Angeles’ gains in entertainment are losses in international trade. Total shipments Santa Clara County (Silicon Valley), California $85.00 $125.00 12.0%
through September at the Port of Long Beach decreased 24.6 % from the previous year, and San Francisco County, California $71.37 $150.00 1.5%
Retail

contributed to rising vacancy and weakening rents in the L.A. County industrial sector. Phoenix, Arizona $50.00 $80.00 10.0%
Demand for industrial space in Reno was down for the third consecutive year and the vacancy Albuquerque, New Mexico $42.00 $50.00 22.8%
rate reached an all-time high above 15%. Even with virtually no speculative development Seattle, Washington $39.00 $90.00 4.8%
during 2009, occupancy receded by more than 3% (almost 2 million SF) and effective rents
dropped 15% to 25%, with a concomitant decrease in property values.
Leading Price Industrial Markets
Retail
In December 2009, MGM Mirage’s $8.5 billion CityCenter mixed-use development debuts with Market Effective Avg. High Rent Vacancy
Bulk Warehouse

18.5 million SF of resort and residential development along the famous Las Vegas Strip. The Ventura County, California $15.00 $10.80 5.9%
Industrial

property is expected to act as a catalyst for increased visitation, which should have rippling Marin County, California $13.80 $15.60 10.0%
effects throughout the local economy. San Mateo County, California $9.48 $18.00 13.5%
San Francisco County, California $9.12 $16.20 5.1%
While economic conditions in Los Angeles County remain weak, one bright spot is discount
San Diego, California $8.34 $12.00 9.4%
retailers such as Big Lots, Dollar Tree, 99 Cents Only and Wal-Mart, continue to expand.
Retail landlords in Phoenix have been aggressive with rental rates and concessions for both Market Effective Avg. High Rent Vacancy
Manufacturing

new and existing tenants. In spite of those efforts, overall vacancy has risen from 10.3% at the Marin County, California $13.80 $15.60 10.0%
Industrial

beginning of 2009 to the current level of 11%. New construction has exacerbated the problem Ventura County, California $12.60 $7.80 6.3%
with 2.8 million SF added over the past year and another 1 million SF is due to delivered by Santa Cruz County, California $10.08 $16.20 5.4%
mid-2010. San Diego, California $9.24 $18.00 10.9%
San Mateo County, California $9.24 $18.00 11.0%

Market Effective Avg. High Rent Vacancy


High Tech/R&D

San Mateo County, California $27.96 $45.00 16.1%


Industrial

Marin County, California $20.10 $20.10 10.0%


Santa Clara County (Silicon Valley), California $12.96 $46.80 19.1%
Santa Cruz County, California $12.24 $18.60 14.7%
Las Vegas, Nevada $12.00 $18.00 18.0%

2010 Global Market Report  www.naiglobal.com 25


Asia Pacific
SECTION CONTENTS
Melbourne, Australia Hyderabad, Pradesh, India

Beijing, China Kolkata, India

Chengdu, China Pune, India

Hong Kong, China Punjab, India

Shanghai, China Tokyo, Japan

Xiamen, China Kuala Lumpur, Malaysia

Guam Seoul, South Korea

Chennai, India Taipei, Taiwan

Delhi, Gurgaon, India Singapore


Melbourne, Australia Beijing, China
In mid-2009, investors are again showing interest in Beijing’s economic growth declined slowly in 2009 due to
Australia’s retail property sector. The market has been the global financial crisis. In Q2 2009, Beijing’s GDP
educated by recent transactions in respect to possible re- increased by 7.8% year-over-year. Until August 2009, total
turns, and investors are now actively seeking retail assets fixed asset investment in Beijing increased by 44.3% year-
around the country with the realization that conditions are over-year. Investment in real estate development increased
becoming increasingly favorable. As signs of improving global by 44.2% year-over-year. The consumer price index de-
and local economic conditions emerge, private investors and clined by 1.5%.
owner occupiers are leading activity levels within Melbourne’s As the support industry of china’s economy, the real estate
industrial market. industry is also confronted with severe challenges and
Following a subdued first quarter, sales volumes increased threats. Despite the government’s series of preferential
during the last three months where more than 70% of policies, such as lowering interest rates and cutting taxes,
investment sales transactions occurred. Investor demand most consumers still adopted a wait-and-see attitude,
for quality assets in prime locations with long term leases in which caused a drop in demand for properties and a decline
place is expected to continue during the second half of in prices.
2009. Overall, rents for prime facilities softened by 13% The office market was affected by the global financial crisis
across Melbourne as a result of decreased demand. In an and greatly increased new supplies. The overall vacancy rate
Contact effort to secure tenants, landlords increased incentive Contact
in the Beijing office market maintained an upward tendency
NAI Melbourne levels by an average of 3%, now averaging 16% for prime NAI Imperial Real Estate
in 2009 and rental rates showed a sharp decline, especially
+61 3 9670 1255 buildings and 18% for secondary properties. Rents and +86 10 5870 0399
in the CBD. Even though rental rates dropped by 15%, the
incentive levels are now expected to stabilize across overall vacancy rate is still trending upward.
Melbourne, with the exception of the South East region,
where it is likely landlords will further increase incentives In addition, because of the economic decline, the retail and
and soften rents to secure tenants. industrial markets are still in a negative state. In the invest-
ment sector, declining property prices and a generally
The Australian economy has slowed significantly and 2009 favorable outlook for the Chinese market led to a significant
will be remembered as the year when the global economic volume of transactions registered in 2009. But the main
crisis had its full impact on the local economy. Currently, investors have changed from the original foreign buyers to
access to finance is still a barrier for many domestic buyers.
Country Data investors. However, market conditions have shifted and the Country Data*
risk premiums for investments in commercial property have In the residential market, although sale prices decreased,
Area (KM2) 1334.3 increased notably. Investors in the current market are Area (KM2) 9,596,960 sales volume did not increase substantially. However, since
assessing their property requirements and necessary the government’s relaxation of policies in the resale housing
GDP Growth (%) 0.73% investment returns. Transactions above US $100 million will GDP Growth (%) 7.7% market, the residential market has now become very active.
be limited in the near future. However, the level of Because of the relatively large new supply, rental rates and
GDP 2009 (US$ B) $920.01 activity is expected to increase considerably in late 2009. GDP 2009 (US$ B) $3189.12 overall vacancy rates are not expected to return to the
It is expected that the retail investment sector will see the previous strong level. However, with high expectations and
GDP/Capita (US$) $41,981.70 majority of transactions occur for neighborhood and GDP/Capita (US$) $2,390.11 confidence in Beijing from both home and abroad, the
sub-regional center types in the price bracket of US $10 demand for different types of properties should continue
Inflation Rate (%) 1.63% million - $60 million in the next 12 months. Inflation Rate (%) -1.1% to increase.

Unemployment 6.0% Unemployment 4.3%


Rate (%) Rate (%)

Interest Rate(%) 3.5% Interest Rate(%) 5.4%

Population (Millions) 21.915 Population (Millions) 1334.3


*National Bureau of Statistics of China
in 3Q2009

Melbourne At A Glance Beijing At A Glance


Conversion: 1.30 AUD = 1 US$ RENT/M2/MO US$ RENT/SF/YEAR Conversion: 6.83 RMB = 1 US$ RENT/M2/MO US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) AUD 450.00 AUD 500.00 $ 39.07 $ 43.41 4.0% New Construction (AAA) RMB 2,160.00 RMB 2,520.00 $ 29.38 $ 34.28 60.0%
Class A (Prime) AUD 400.00 AUD 450.00 $ 34.73 $ 39.07 5.0% Class A (Prime) RMB 1,740.00 RMB 4,320.00 $ 23.67 $ 58.76 10.0%
Class B (Secondary) AUD 300.00 AUD 350.00 $ 26.05 $ 30.39 6.0% Class B (Secondary) RMB 794.00 RMB 1,440.00 $ 10.80 $ 19.59 15.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) AUD 250.00 AUD 270.00 $ 21.71 $ 23.44 5.0% New Construction (AAA) RMB 2,400.00 RMB 3,300.00 $ 32.65 $ 44.89 40.0%
Class A (Prime) AUD 220.00 AUD 230.00 $ 19.10 $ 19.97 5.0% Class A (Prime) RMB 1,680.00 RMB 3,600.00 $ 22.85 $ 48.97 10.0%
Class B (Secondary) AUD 180.00 AUD 190.00 $ 15.63 $ 16.50 7.0% Class B (Secondary) RMB 840.00 RMB 1,560.00 $ 11.43 $ 21.22 13.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse AUD 130.00 AUD 40.00 $ 11.29 $ 12.16 6.0% Bulk Warehouse RMB 216.00 RMB 540.00 $ 2.94 $ 7.35 N/A
Manufacturing AUD 130.00 AUD 140.00 $ 11.29 $ 12.16 9.0% Manufacturing RMB 216.00 RMB 468.00 $ 2.94 $ 6.37 N/A
High Tech/R&D AUD 150.00 AUD 160.00 $ 13.02 $ 13.89 5.0% High Tech/R&D RMB 648.00 RMB 1,008.00 $ 8.81 $ 13.71 N/A
RETAIL RETAIL
Downtown AUD 800.00 AUD 900.00 $ 69.46 $ 78.14 3.0% Downtown RMB 3,000.00 RMB 14,880.00 $ 40.81 $ 202.40 13.0%
Neighborhood Service Centers AUD 450.00 AUD 500.00 $ 39.07 $ 43.41 6.0% Neighborhood Service Centers RMB 420.00 RMB 1,620.00 $ 5.71 $ 22.04 25.0%
Community Power Center N/A N/A N/A N/A N/A Community Power Center RMB 300.00 RMB 1,920.00 $ 4.08 $ 26.12 17.0%
Regional Malls AUD 1,700.00 AUD 2,000.00 $147.60 $173.65 2.0% Regional Malls N/A N/A N/A N/A N/A
Solus Food Stores N/A N/A N/A N/A N/A Solus Food Stores RMB 1,080.00 RMB 7,560.00 $ 14.69 $ 102.83 9.0%
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF DEVELOPMENT LAND Low/M2 High/M2 Low/Acre High/Acre
Office in CBD N/A N/A N/A N/A Office in CBD RMB 5,990.00 RMB 12,905.00 $ 81.48 $ 175.53
Land in Office Parks AUD 150.00 AUD 160.00 $ 140.19 $ 149.53 Land in Office Parks RMB 3,745.00 RMB 9,975.00 $ 50.94 $ 135.68
Land in Industrial Parks AUD 110.00 AUD 120.00 $ 102.80 $ 112.15 Land in Industrial Parks RMB 395.00 RMB 4,594.00 $ 5.37 $ 62.49
Office/Industrial Land - Non-park AUD 120.00 AUD 130.00 $ 112.15 $ 121.50 Office/Industrial Land - Non-park RMB 8,840.00 RMB 14,840.00 $ 120.24 $ 201.85
Retail/Commercial Land AUD 850.00 AUD 900.00 $ 794.39 $ 841.12 Retail/Commercial Land RMB 4,407.00 RMB 15,270.00 $ 59.94 $ 207.70
Residential AUD 1,400.00 AUD 1,500.00 $1,308.41 $1,401.87 Residential RMB 1,079.00 RMB 14,920.00 $ 14.68 $ 202.94

2010 Global Market Report I www.naiglobal.com 27


Chengdu, China Hong Kong, China
The capital city of the Sichuan province and a key commercial Buffered by low levels of real estate debt and by capital
center in western China, Chengdu maintained the trend of inflows from China, Hong Kong did not see a contraction in
rapid growth in 2009 despite the current economic its real estate markets until October 2008. However,
situation. According to statistics published by the Chengdu the steep decline in Q4 2008 continued into 2009, as
Statistical Bureau, by the end of Q3 2009, the city’s GDP Hong Kong’s GDP growth contracted by 7.8% in Q1. With
amounted to RMB 316.46 billion, up 14.2% compared with the government’s announced stimulus package of HK
the same period in 2008.Invetsment in fixed assets totaled $87.6 billion (approximately 5.2% of GDP), the contraction
RMB 290.58 billion, up 40% compared with the same decreased to -3.8% in Q2 2009 and helped stabilize the
period in 2008. Meanwhile, the consumer price index markets, coupled with a change in global sentiment.
increased 0.1% in Q3, up 0.3% over the previous quarter. Commercial real estate followed a similar pattern. Rents
During the last three quarters, total investment in fixed across all sectors declined 20-30% from their peaks in
assets in Chengdu reached RMB 29.058 billion, up 40%. Q3 2008, and began to stabilize in the second half of 2009.
Investment in commercial and residential development and In the office market, Lehman Brothers’ collapse triggered
real estate sales is strong and continuing to increase. a rapid contraction and relocation of the financial sector,
According to statistics, during the first nine months of 2009, creating a surge in CBD vacancies to 8% and a 30% decline
overall investment in Chengdu totaled RMB 15.705 billion, in rents. However, the historically limited supply of prime
Contact an increase of 73.6%, outpacing the increase of investment Contact offices led some replacement tenants to move into the CBD
NAI New Space Real in fixed assets by 33.6%. Sales of commercial real estate NAI Asia Pacific once liquidity returned in mid-2009 and vacancies fell to 5%.
Estate Co., Ltd. in the city reached 1.8 million SM, up 73.6%; and sales of Properties, Ltd. Industrial demand fell sharply in the first half of 2009 as the
+86 28 6653 6999 residential real estate reach 1.7 million SM, up 40% compared + 852 2281 7800 trade and logistics sectors suffered, though rents fell by only
with the same period in 2008. 20% from already low levels. Exits from the industrial
The Chengdu market has a total inventory of approximately investment sector by several prominent institutions and
continued high vacancies have dampened the rebound in
460,000 SM of Class A space and 891,000 SM of Class B
capital values. The crisis also triggered several retail chain
space. Office vacancy rates continue to decline and currently
consolidations and rents fell by 20% in the first half of the
stand at 23.1%. However, leasing activity has slowed and
year. Supported by the return of Mainland Chinese tourists,
net rental rates for top quality space has come down to
rents and value in core districts have rebounded to pre-crisis
attract and retain tenants. In the short term, we expect the levels during the second half of 2009.
Country Data leasing market will be stable in Grade A office space and Country Data
Area (KM2) 1334.3 vacant space will be absorbed. However, a large number of Area (KM2) 1334.3 From an investment perspective, high yields of 6-7% in Q4
new office developments will add to the existing supply 2008 triggered speculative purchases of over HK $4 billion
GDP Growth (%) 8.5% in Chengdu from 2010 to 2011. Over 740,000 SM are GDP Growth (%) 8.5% of assets in Q2 and Q3 2009, with yields dropping to 3.5%.
expected to be delivered over the next three years. Capital values rebounded 30% despite continued declines
GDP 2009 (US$ B) $4,757.74 GDP 2009 (US$ B) $4,757.74
in rents and yields. Conversely, in early Q4 2009 rents began
The industrial sector is driven by Chengdu’s location and stabilizing while capital values showed signs of weakening.
rising prominence as a hub city for logistics/distribution, and This paradox highlights the volatile nature of Hong Kong’s
GDP/Capita (US$) $3,565.73 the retail market is dominated by department stores and big GDP/Capita (US$) $3,565.73
real estate market, which does not always follow current
box retailers. fundamentals, but rather a mix of long term sentiment and
Inflation Rate (%) -0.06% Inflation Rate (%) -0.06% near term speculation, while heavily influenced by capital
All property sectors in Chengdu should continue to benefit
from a growing headquarters presence of multinational inflows from China.
Unemployment 4.3% Unemployment 4.3%
Rate (%) companies, along with economic development efforts and Rate (%) At the end of 2009 the outlook for 2010 was mixed, with
preferential policies designed to boost investment in the city market pundits promoting a 5-15% recovery in 2010, despite
Interest Rate(%) 5.31% Interest Rate(%) 5.31%
and the region. economists worldwide predicting a weak global economy and
Population (Millions) 1334.3 Population (Millions) 1334.3 bubble-like symptoms in Hong kong and China. Our view
is that long term investment into China will support HK’s
economy and real estate market and any retraction will be
limited in 2010.

Chengdu At A Glance Hong Kong At A Glance


Conversion: 6.83 RMB = 1 US$ RENT/M2/MO US$ RENT/SF/YR Conversion 7.75 HKD = 1 US$ RENT/SF/MO US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) RMB 1,380.00 RMB 1,440.00 $ 18.77 $ 19.59 N/A New Construction (AAA) HKD 80.00 HKD 120.00 $ 0.96 $ 1.44 5.0%
Class A (Prime) RMB 1,380.00 RMB 1,440.00 $ 18.77 $ 19.59 N/A Class A (Prime) HKD 45.00 HKD 105.00 $ 0.54 $ 1.26 8.0%
Class B (Secondary) RMB 648.00 RMB 720.00 $ 8.81 $ 9.79 N/A Class B (Secondary) HKD 20.00 HKD 50.00 $ 0.24 $ 0.60 10.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) RMB 1,080.00 RMB 1,200.00 $ 14.69 $ 16.32 N/A New Construction (AAA) HKD 25.00 HKD 40.00 $ 0.30 $ 0.48 25.0%
Class A (Prime) RMB 1,080.00 RMB 1,200.00 $ 14.69 $ 16.32 N/A Class A (Prime) HKD 20.00 HKD 25.00 $ 0.24 $ 0.30 10.0%
Class B (Secondary) RMB 540.00 RMB 600.00 $ 7.35 $ 8.16 N/A Class B (Secondary) HKD 12.00 HKD 15.00 $ 0.14 $ 0.18 15.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse RMB 108.00 RMB 120.00 $ 1.47 $ 1.63 N/A Bulk Warehouse HKD 8.00 HKD 15.00 $ 0.10 $ 0.18 15.0%
Manufacturing RMB 108.00 RMB 120.00 $ 1.47 $ 1.63 N/A Manufacturing HKD 10.00 HKD 15.00 $ 0.12 $ 0.18 10.0%
High Tech/R&D RMB 432.00 RMB 480.00 $ 5.88 $ 6.53 N/A High Tech/R&D HKD 15.00 HKD 20.00 $ 0.18 $ 0.24 15.0%
RETAIL RETAIL
Downtown RMB 432.00 RMB 480.00 $ 5.88 $ 6.53 N/A Downtown HKD 250.00 HKD 800.00 $ 3.00 $ 9.59 3.0%
Neighborhood Service Centers RMB 648.00 RMB 720.00 $ 8.81 $ 9.79 N/A Neighborhood Service Centers HKD 50.00 HKD 100.00 $ 0.60 $ 1.20 15.0%
Community Power Center RMB 648.00 RMB 720.00 $ 8.81 $ 9.79 N/A Community Power Center HKD 25.00 HKD 40.00 $ 0.30 $ 0.48 10.0%
Regional Malls RMB 432.00 RMB 480.00 $ 5.88 $ 6.53 N/A Regional Malls HKD 100.00 HKD 300.00 $ 1.20 $ 3.60 5.0%
Solus Food Stores RMB 648.00 RMB 720.00 $ 8.81 $ 9.79 N/A Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/M2 High/M2 Low/Acre High/Acre DEVELOPMENT LAND Low/M2 High/M2 Low/Acre High/Acre
Office in CBD N/A N/A N/A N/A Office in CBD N/A N/A N/A N/A
Land in Office Parks N/A N/A N/A N/A Land in Office Parks N/A N/A N/A N/A
Land in Industrial Parks N/A N/A N/A N/A Land in Industrial Parks N/A N/A N/A N/A
Office/Industrial Land - Non-park N/A N/A N/A N/A Office/Industrial Land - Non-park N/A N/A N/A N/A
Retail/Commercial Land N/A N/A N/A N/A Retail/Commercial Land N/A N/A N/A N/A
Residential N/A N/A N/A N/A Residential N/A N/A N/A N/A

2010 Global Market Report I www.naiglobal.com 28


Shanghai, China Xiamen, China
During the first half of 2009, the overall Chinese economy Xiamen is not only ranked as the center of high-end
in general was dominated by a state of deflation character- consumption in the Golden Delta of South Fujian Province,
ized by a slide in consumer and producer prices. Beijing’s US but is also the bridgehead for dealing across the Taiwan
$586 billion stimulus package, coupled with Shanghai’s own Strait and Southeast Asia.
US $14.5 billion 2010 Expo expenditure, combined to mit- Land prices in Xiamen’s construction areas increased
igate the consequences of the downturn. sharply in 2009, influenced by the financial crisis; however,
A wave of new supply to the office market during the first housing sales and values saw a decrease early in the year
half of 2009 and declining demand fueled a rise in citywide with a rebound for both realized after August. The residential
vacancy rates as rental rates dropped by as much as market is currently operating with prices at higher levels
25% year-over-year. Although demand has improved, than in years past, resulting in fewer transactions. An adjust-
approximately 800,000 SM of office space arrived on the ment in price is predicted, which is expected to bring costs
market in 2009, and is likely to have a negative impact on down in both the housing and land sectors.
occupancy and rental rates in 2010. During a “wait-and- Xiamen has witnessed an increase in development of new
see” stance in the first half of 2009 by most Class A office buildings as well as high-end hotels during the
international organizations, the government adjusted its past few years. Although there continues to be sufficient
policies on allocating land. Vacancy rates increased supply, the leasing transactions of Class A office buildings
Contact with several companies, including Intel, closing offices or Contact
remain at a brisk pace in the CBD, especially in areas like
NAI Asia Pacific relocating outside of the CBD, and rental rates/prices NAI Derun
North Hubin Street and Lianyue Street. Room rates at both
Properties declined, particularly in the suburban areas of the city. The +86 592 5168098
high-end and mid-level hotels continue to rise.
+86 21 6288 7333 market registered increased activity in the second half of
the year, but did not affect the depressed market rates, In 2009, the Xiamen retail market encompassed a total of
which we expect to persist into most of 2010. 3.5 million SM of space with 43,000 retail units/stores, or
about 1.44 SM per capita. The strongest demand is in the
Demand throughout 2009 was steady in the retail market high-end luxury niche segment, where space fills up very
compared to other sectors with minor reductions in quickly even though there are many new projects opening
price/rentals and occupancy rates. Limited new supply of to accommodate the demand. Among the new high-end
prime space in the run-up to Expo 2010 is likely to cause luxury centers are the 12,000 SM Paragon shopping mall,
increases in prices/rentals for most of 2010. Local which opened in December 2008 as part of a 100,000 SM
Country Data investors dominated the market, especially at the start of Country Data
Area (KM2)
mixed-use development, and the 110,000 SM SMII Life
Area (KM2) 6.345 2009 when valuations were attractive. The Exchange in Puxi 1334.3
Style shopping mall, which opened in October 2009. Several
and the Pufa Tower in Pudong were sold to local luxury brands entered the Xiamen retail market for the first
GDP Growth (%) 8.5% investors. It was only during the second half of 2009 that GDP Growth (%) 8.5%
time in 2009, including Gucci, Versace, Prada, Armani,
more conservative foreign financial institutions began to Hermes and Montblanc.
GDP 2009 (US$ B) $4,757.74 show interest again in the real estate market. GDP 2009 (US$ B) $4,757.74
Industrial parks saw an increase in activity, keeping many
The stimulus package, 2010 Expo expenditure and tax tenants from moving from downtown (Xiamen Island) to the
GDP/Capita (US$) $3,565.73 rebates combined to reduce Shanghai’s economic fallout GDP/Capita (US$) $3,565.73
suburban areas like Haicang, Jimei, Xiang’an and Tong’an
from a sharp decline in exports during 2009. However, these districts. The municipal industrial development bureau
Inflation Rate (%) -0.06% packages cannot fully support the export-oriented economy Inflation Rate (%) -0.06%
continued to focus on attracting technology, automotive,
indefinitely and what the post-stimulus future holds for logistics, manufacturing and high-end agriculture to the
Unemployment 4.3% Shanghai's economy and real estate remains to be seen. Unemployment 4.3%
Rate (%) Rate (%) suburban area.
Interest Rate(%) 5.31% Interest Rate(%) 5.31% Office rental rates are staggeringly high, which reflects the
increased demand for Class A and B office buildings. After
Population (Millions) 1334.3 Population (Millions) 1334.3 the increase in the housing market after August 2009,
prices are expected to adjust to a stable level in 2010.

Shanghai At A Glance Xiamen At A Glance


Conversion: RMB 6.82 = 1 US$ RENT/M2YR US$ RENT/SF/YR Conversion: 6.82 RMB = 1 US$ RENT/M2/MO US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) RMB 1,640.00 RMB 2,920.00 $ 22.34 $ 39.78 60.0% New Construction (AAA) RMB 14.00 RMB 23.00 $ 15.61 $ 25.64 5.0%
Class A (Prime) RMB 1,460.00 RMB 3,066.00 $ 19.89 $ 41.77 18.0% Class A (Prime) RMB 15.00 RMB 28.50 $ 16.72 $ 31.77 N/A
Class B (Secondary) RMB 1,095.00 RMB 2,190.00 $ 14.92 $ 29.83 10.0% Class B (Secondary) RMB 8.00 RMB 15.00 $ 8.92 $ 16.72 3.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) RMB 1,022.00 RMB 1,643.00 $ 13.92 $ 22.38 N/A New Construction (AAA) N/A N/A N/A N/A N/A
Class A (Prime) RMB 912.00 RMB 1,570.00 $ 12.42 $ 21.39 N/A Class A (Prime) RMB 7.00 RMB 13.00 $ 7.80 $ 14.49 8.0%
Class B (Secondary) RMB 657.00 RMB 800.00 $ 8.95 $10.90 N/A Class B (Secondary) RMB 5.00 RMB 10.00 $ 5.57 $ 11.15 10.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse RMB 255.00 RMB 438.00 $ 3.47 $ 5.97 30.0% Bulk Warehouse RMB 1.00 RMB 3.50 $ 1.11 $ 3.90 15.0%
Manufacturing RMB 183.00 RMB 365.00 $ 2.49 $ 4.97 N/A Manufacturing RMB 1.00 RMB 3.00 $ 1.11 $ 3.34 28.0%
High Tech/R&D RMB 365.00 RMB 1,460.00 $ 4.97 $ 19.89 N/A High Tech/R&D RMB 5.20 RMB 13.80 $ 5.80 $ 15.38 10.0%
RETAIL RETAIL
Downtown RMB10,950.00 RMB 16,425.00 $ 149.16 $ 223.74 N/A Downtown RMB 70.00 RMB 180.00 $ 78.04 $ 200.67 2.0%
Neighborhood Service Centers N/A N/A N/A N/A N/A Neighborhood Service Centers RMB 10.00 RMB 55.00 $ 11.15 $ 61.32 8.0%
Community Power Center N/A N/A N/A N/A N/A Community Power Center (Big Box) RMB 5.00 RMB 25.00 $ .57 $ 27.87 12.0%
Regional Malls $ 109.00 $ 437.00 $ 14.85 $ 59.53 N/A Regional Malls RMB 48.00 RMB 65.00 $ 53.51 $ 72.46 9.0%
Solus Food Stores N/A N/A N/A N/A N/A Solus Food Stores RMB 6.00 RMB 35.00 $ 6.69 $ 39.02 23.0%
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF DEVELOPMENT LAND Low/M2 High/M2 Low/Acre High/Acre
Office in CBD N/A N/A N/A N/A Office in CBD N/A N/A N/A N/A
Land in Office Parks RMB 1,500.00 RMB 2,000.00 $ 219.94 $ 293.26 Land in Office Parks) N/A N/A N/A N/A
Land in Industrial Parks RMB 450.00 RMB 2,000.00 $ 65.98 $ 293.26 Land in Industrial Parks N/A N/A N/A N/A
Office/Industrial Land - Non-park N/A N/A N/A N/A Office/Industrial Land - Non-park N/A N/A N/A N/A
Retail/Commercial Land N/A N/A N/A N/A Retail/Commercial Land N/A N/A N/A N/A
Residential N/A N/A N/A N/A Residential N/A N/A N/A N/A

2010 Global Market Report I www.naiglobal.com 29


Guam Chennai, India
Massive construction is expected to take place to accommo- Commercial real estate transactions, considered a key
date the transfer of approximately 8,000 US Marines and indicator of economic activity in Chennai, began showing the
9,000 military dependents plus support personnel from first signs of stability with over 1.7 million SF of space having
Okinawa to Guam by 2015. Island population is projected been absorbed in Chennai during the first three quarters of
to grow as much as 25% over the five-year period. In 2009. Suburban markets of Manapakkam, Perungudi and
anticipation of the build-up, more than 15,000 foreign Ambattur continue to be most favored by companies because
laborers, primarily from the Philippines and South East of proximity and quality space available.
Asia, are in Guam, representing the first wave of popula- The commercial real estate market in 2009 saw a decline
tion growth. in rentals, lower absorption and increasing vacancy rates.
Meanwhile, Guam continues to remain one of the most Following the financial turmoil, a paradigm shift in the
popular tourist destinations for the Asian markets, primarily perception of risk was witnessed, resulting in a weakening
for the Japanese and Koreans. Industry experts continue to of demand, the slow-down of expansion plans and migration
debate the impact of the construction and military build-up to more cost-effective locations, all of which put pressure on
on the island’s allure as a resort destination. The growth is lease rentals.
expected to result in pent up demand for industrial, residential A pick-up in inquiries for space from the hospitality, health-
and office products, in this order. Hotels and shopping care and educational sectors was witnessed in Q2 and Q3.
Contact centers should also see an immediate benefit from the influx Contact
Residential land transactions saw more activity in Q2 and
NAI ChaneyBrooks of new residents and transient workers. Guam’s office NAI Hemdev's
Q3 in central areas of the city for fairly priced properties by
+1 671 649 8742 market is expected to gradually show steady gains as International Realty
Services end-users.
contractors and government-related offices begin setting up
operations in the island. Due to the lack of quality office +91 44 2822 9595 Most retail micro markets saw a correction in rental
product, the market will be ripe for new office building values in line with the downward rental trends witnessed in
development, especially in the Hagatna and Tamuning India. There has been a slight upward trend in the
regions. Until new inventory is introduced, the demand for number of inquiries for retail space since Q2 with retailers
office property should begin to drive up office rents. taking into account the corrections seen in rentals, and land-
lords being more open to reasonable prices.
Guam’s future looks bright and continues to benefit from a
general sense of optimism from both opportunistic US and One of the highlights in the retail market in Chennai was the
Country Data foreign investors. Over the course of the next three years Country Data opening of The Ampa Skywalk Mall. Mall space supply is set
Area (KM2) 1334.3 Guam’s real estate market should prove to be one of the Area (KM2) 1334.3 to increase in 2010 with the opening of Express
most stable markets in the United States. Avenue and Coromandel Plaza. The market for return on
GDP Growth (%) N/A GDP Growth (%) 5.36% investment properties saw a pick up with buyers scouting for
tenanted office spaces as the prices reached realistic levels.
GDP 2009 (US$ B) $2.70 GDP 2009 (US$ B) $1,242.65 With good quality supply readily available, it will take some
time for the supply-demand gap to be bridged. Therefore,
GDP/Capita (US$) $15,000.00 GDP/Capita (US$) $1,032.71 rates in the commercial real estate market are expected to
remain stagnant or under downward pressure for the
Inflation Rate (%) 2.50% Inflation Rate (%) 8.66% medium term.

Unemployment 11.40% Unemployment 7.32%


Rate (%) Rate (%)

Interest Rate(%) N/A Interest Rate(%) 4.75%

Population (Millions) 0.178 Population (Millions) 1203.28

Guam At A Glance Chennai At A Glance


(Rent/SF/YR) Low High Effective Avg. Vacancy Conversion: 46 INR = 1 US$ RENT/SF/MO US$ RENT/SF/YR
DOWNTOWN OFFICE Low High Low High Vacancy
New Construction (AAA) N/A N/A N/A N/A DOWNTOWN OFFICE
Class A (Prime) N/A N/A N/A N/A New Construction (AAA) INR 60.00 INR 70.00 $ 15.65 $ 18.26 N/A
Class B (Secondary) $ 26.00 $ 42.00 $ 28.20 18.0% Class A (Prime) INR 60.00 INR 75.00 $ 15.65 $ 19.57 N/A
SUBURBAN OFFICE Class B (Secondary) INR 35.00 INR 50.00 $ 9.13 $ 13.04 N/A
New Construction (AAA) N/A N/A N/A N/A SUBURBAN OFFICE
Class A (Prime) N/A N/A N/A N/A New Construction (AAA) INR 25.00 INR 45.00 $ 6.52 $ 11.74 N/A
Class B (Secondary) $ 14.00 $ 36.00 $ 19.75 23.0% Class A (Prime) INR 25.00 INR 45.00 $ 6.52 $ 11.74 N/A
INDUSTRIAL Class B (Secondary) INR 20.00 INR 35.00 $ 5.22 $ 9.13 N/A
Bulk Warehouse $ 7.80 $ 18.00 $ 12.35 12.0% INDUSTRIAL
Manufacturing $ 7.80 $ 18.00 $ 12.35 12.0% Bulk Warehouse INR 12.00 INR 20.00 $ 3.13 $ 5.22 N/A
High Tech/R&D N/A N/A N/A N/A Manufacturing INR 17.00 INR 22.00 $ 4.43 $ 5.74 N/A
High Tech/R&D INR 18.00 INR 25.00 $ 4.70 $ 6.52 N/A
RETAIL
Downtown $ 33.00 $ 108.00 $ 72.00 16.0% RETAIL
Downtown INR 100.00 INR 150.00 $ 26.09 $ 39.13 N/A
Neighborhood Service Centers $ 13.00 $ 60.00 $ 31.00 N/A
Neighborhood Service Centers INR 50.00 INR 80.00 $ 13.04 $ 20.87 N/A
Community Power Center $ 9.60 $ 15.00 $ 11.25 N/A
Community Power Center N/A N/A N/A N/A N/A
Regional Malls $ 36.00 $ 72.00 $ 54.00 N/A
Regional Malls INR 35.00 INR 60.00 $ 9.13 $ 15.65 N/A
Solus Food Stores INR 39.00 INR 45.00 $ 10.17 $ 11.74 N/A
DEVELOPMENT LAND Low(Price/Acre) High(Price/Acre)
DEVELOPMENT LAND Low/Acre High/Acre Low/Acre High/Acre
Office in CBD N/A N/A
Office in CBD INR 4,000 INR 6,000 $ 86.96 $ 130.43
Land in Office Parks N/A N/A
Land in Office Parks N/A N/A N/A N/A
Land in Industrial Parks N/A N/A
Land in Industrial Parks INR 3,200,000 INR 10,000,000 $ 69,565.22 $ 217,391.30
Office/Industrial Land - Non-park $ 753,000.00 $1,077,000.00
Office/Industrial Land - Non-park N/A N/A N/A N/A
Retail/Commercial Land $2,018,000.00 $2,023,000.00
Retail/Commercial Land INR 540,000,000 INR 720,000,000 $ 11,739,130.43 $ 15,652,173.91
Residential $ 108,000.00 $ 680,000.00
Residential INR 270,000,000 INR 600,000,000 $ 5,869,565.22 $13,043,478.26

2010 Global Market Report I www.naiglobal.com 30


Delhi, Gurgaon, India Hyderabad, Pradesh, India
The current real estate inventory in India is estimated to be With a projected growth ratio of around 7%, India is making
worth US $15 billion and anticipated to develop at the rate progress towards becoming one of the leading economies
of 25% annually in the coming decade due to the booming in the world over the next several years. Hyderabad, the fifth
economy, favorable demographics and liberalized Foreign largest city in the country, is on the radar for top IT, Pharma-
Direct Investment (FDI) regime. Economic recovery during ceutical and Aviation conglomerates in the world. NAI
2010-2011 is likely to revive the interest of foreign investors Hyderabad expects robust growth in 2010.
in India’s real estate market. Despite the global economic With a stable Government in place, the Hyderabad market is
downturn, India has been able to retain its position as a expected to stabilize and grow quickly over the next few years
preferred investment destination. due to a strong commitment from the Government
The economy is regaining momentum, with India adding up to improve basic infrastructure and connectivity. Major
to 40 million SF of office space by the end of 2009. The infrastructure projects such as the 262 KM Outer Ring Road
huge addition of new supply is expected to result in a (ORR), 13.5 KM elevated expressway, 22 KM eight lane
correction. The CBD witnessed a rise in vacancy levels due expressway connecting Gachibowli to Shamshabad, Metro
to high rental rates, limited and poor quality of buildings, Rail and Shamshabad International Airport have been instru-
relocation of companies to more cost effective options or mental in making Hyderabad one of the leading cities in India.
lease renegotiations. As a result, the CBD witnessed Commercial real estate transactions have seen a substantial
Contact a correction in rental rates back to more realistic levels. Contact
increase post elections and are expected to stabilize with
NAI Collaborators India Outlying areas are becoming more viable and NAI Hyderabad
better occupancy rates in the coming months. The post
+91 11 4668 7000 demand is increasing due to better Metro connectivity. +91 40 233105712
election months have seen a rush in the end user market in
Upcoming areas like Saket & Jasola, witnessed the delivery the segment of 2 BHK and 3 BHK with sales happening in
of a large amount of new office space, thereby escalating the mid-market segment of prices between US $1.5 million
the vacancy level. Even Gurgaon and Noida witnessed an to US $5 million. The retail market in Hyderabad has
upsurge in the vacancy level due to an increase in the supply not seen a material increase or decrease in the past few
and the completion of various projects, along with availability quarters due to limited availability of new retail space and
of sublease options, thus keeping downward pressure on the current market slump. Despite the announcement of
the rental rates. more than 50 malls and retail buildings during the boom
The residential sector witnessed a fall due to the global period, only a few malls in Prasads, City Center, and GVK
Country Data Country Data have been successfully operational. Inorbit (the largest mall
Area (KM2) 1334.3
economic outlook in 2009, but is expected to pick up in Area (KM2) 1334.3
2010 due to a shortfall of over 25 million new homes, mostly in South India) and Night Bazar at Shilparamam are sched-
in the low and middle-income groups, leading to prices uled for launch in the near future.
GDP Growth (%) 5.36% GDP Growth (%) 5.36%
moving higher. Delhi’s retail market was slow in 2009 with The overall market scenario in Hyderabad is expected to be
just 10% of the transactions happening in the last few positive in the Corporate, IT, Pharmaceutical, medium cost
GDP 2009 (US$ B) $1,242.65 months. India’s retail market is expected to see the addition GDP 2009 (US$ B) $1,242.65 residential and Warehousing sectors. Negative trends are
of over 1 million SF with 100 new malls. expected in Land, Investment and Retail segments.
GDP/Capita (US$) $1,032.71 GDP/Capita (US$) $1,032.71
Revival is on its way in the real estate market, spurred by
price corrections, new launches and lowering of interest
Inflation Rate (%) 8.66% Inflation Rate (%) 8.66%
rates. The commercial market has also started showing
Unemployment
signs of revival, driven by a spurt in office space resulting in Unemployment
7.32% 7.32%
Rate (%) more conversions taking place in CBD and PBD areas with Rate (%)
initial rise in demand for less costly premises. Though most
Interest Rate(%) 4.75% Interest Rate(%) 4.75%
of the deals that happened were of relocation. The office
Population (Millions) 1203.28
market is showing visible signs of renewal in demand. Population (Millions) 1203.28

Delhi At A Glance Hyderabad At A Glance


RENT/SF/YR RENT/SF/YR Conversion 50 Rs = 1 US$ RENT/M2/MONTH US$ NET RENT/SF/YEAR
Low High Low High Vacancy Low High Low/SF High/SF Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE Rs 7,750.00 Rs 12,917.00 $ 15.56 $ 25.94 N/A
New Construction (AAA) $ 67.00 $ 73.00 $ 67.00 $ 73.00 25.0% New Construction (AAA) Rs 6,458.00 Rs 11,625.00 $ 12.97 $ 23.34 N/A
Class A (Prime) $ 60.00 $ 80.00 $ 60.00 $ 80.00 10.0% Class A (Prime) Rs 5,167.00 Rs 9,688.00 $ 10.37 $ 19.45 N/A
Class B (Secondary) $ 25.00 $ 53.00 $ 25.00 $ 53.00 15.0% Class B (Secondary)
SUBURBAN OFFICE SUBURBAN OFFICE Rs 6,458.00 Rs 9,042.00 $ 12.97 $ 18.15 N/A
New Construction (AAA) $ 29.00 $ 53.00 $ 29.00 $ 53.00 50.0% New Construction (AAA) Rs 5,813.00 Rs 7,750.00 $ 11.67 $ 15.56 N/A
Class A (Prime) $ 40.00 $ 53.00 $ 40.00 $ 53.00 20.0% Class A (Prime) Rs 3,875.00 Rs 5,813.00 $ 7.78 $ 11.67 N/A
Class B (Secondary) $ 21.00 $ 33.00 $ 21.00 $ 33.00 50.0% Class B (Secondary)
INDUSTRIAL INDUSTRIAL Rs 1,162.00 Rs 2,325.00 $ 2.33 $ 4.67 N/A
$ 3.00 $ 5.00 $ 3.00 $ 5.00 50.0% Bulk Warehouse Rs 1,292.00 Rs 2,583.00 $ 2.59 $ 5.19 N/A
Bulk Warehouse
$ 4.00 $ 12.00 $ 4.00 $ 12.00 40.0% Manufacturing Rs 1,550.00 Rs 3,229.00 $ 3.11 $ 6.48 N/A
Manufacturing
High Tech/R&D $ 4.00 $ 12.00 $ 4.00 $ 12.00 40.0% High Tech/R&D
RETAIL RETAIL Rs 12,917.00 Rs 32,292.00 $ 25.94 $ 64.84 N/A
Downtown $ 40.00 $ 160.00 $ 40.00 $ 160.00 20.0% Downtown Rs 9,688.00 Rs 16,146.00 $ 19.45 $ 32.42 N/A
Neighborhood Service Centers N/A N/A N/A N/A N/A Neighborhood Service Centers Rs 7,750.00 Rs 9,688.00 $ 15.56 $ 19.45 N/A
Community Power Center N/A N/A N/A N/A N/A Community Power Center Rs 7,750.00 Rs 11,625.00 $ 15.56 $ 23.34 N/A
Regional Malls $ 13.00 $ 67.00 $13.00 $ 67.00 20.0% Regional Malls N/A N/A N/A N/A N/A
Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/Acre High/Acre Low/Acre High/Acre DEVELOPMENT LAND Low High Low/SF High/SF
Office in CBD Office in CBD Rs 435,600,000 Rs 580,800,000 $ 9,414,307.33 $12,552,409.77
$ 120.00 $ 180.00 $ 120.00 $180.00
Land in Office Parks $ 7,000,000 $ 14,000,000 $ 7,000,000 $ 14,000,000 Land in Office Parks Rs 290,400,000 Rs 363,000,000 $ 6,276,204.88 $ 7,845,256.11
Land in Industrial Parks $ 2,800,000 $ 8,400,000 $ 2,800,000 $ 8,400,000 Land in Industrial Parks Rs 96,800,000 Rs 145,200,000 $ 2,092,068.29 $ 3,138,102.44
Office/Industrial Land - Non-park $ 1,100,000 $ 1,900,000 $ 1,100,000 $ 1,900,000 Office/Industrial Land - Non-park Rs 72,600,000 Rs 121,000,000 $ 1,569,051.22 $ 2,615,085.37
Retail/Commercial Land $ 18,000,000 $ 19,000,000 $ 18,000,000 $ 19,000,000 Retail/Commercial Land Rs 338,800,000 Rs 435,600,000 $ 7,322,239.03 $ 9,414,307.33
Residential $ 250,000 $ 800,000 $ 250,000 $ 800,000 Residential Rs 193,600,000 Rs 290,400,000 $ 4,184,136.59 $ 6,276,204.88

2010 Global Market Report I www.naiglobal.com 31


Kolkata, India Pune, Maharashtra, India
With a population of more than 15 million people, Kolkata is Pune is strategically located 150 kilometers from Mumbai,
the world’s 8th largest and India’s third largest metropolitan the financial capital of India. The key drivers of this city stem
city. It is the capital of the Indian state of West Bengal and from the turbine industries like Alfa-Laval, Thermax, etc.
a main center for commerce and financial services in east- Bharat Forge is the world's second largest forging company.
ern India and northeastern states. The city is home to many Pune also is home to large IT companies like HSBC and
regional and corporate headquarters. Infosys. The auto industry and telecommunications sectors
The total office inventory in Kolkata is in excess of 26 million are on an upward trend, while IT remains reticent.
SF. About 85% of the inventory is in the suburban areas Pune has not escaped the effects of the global slowdown,
such as Topsia, Kasba, Sector-V and Rajarhat, including with rentals decreasing in the range of 10-40% .Vacancy
IT parks and IT SEZ’s. Downtown Class A office property rates reached a new high, the retail market crashed and the
rental rates have fallen from INR 150-160/SF per month in gloom of uncertainty spread fast even through the residential
September 2008 to INR 90-100/SF per month in September sector.
2009. Vacancy in Class A space in the CBD was at 4%, In Q3, Pune began to bounce back after a positive change
while Sector-V experienced 50% vacancy overall with rental in the economy. The markets were definitely abuzz with
rates of INR 40-45/SF per month. A significant portion of hectic shopping heralded by massive sales in gold. Lack of
the current office demand came from the telecom sector confidence in the market was replaced by vibrant buoyancy
Contact due to the telecom boom and recorded over 365,000 SF in Contact
and a spirit of cheer and celebration prevails. Genuine
NAI NK Realtors Pvt. Ltd. transactions since January 2009. NAI Property Terminus
investors are taking advantage of the market correction and
+91 33 24868016/ +91 20 25511900
7017/7519 The retail sector in Kolkata suffered the most over the last builders are threatening to hike rates. Finally, the much
12 months due to plunging sales and high occupancy costs. awaited stability is having an impact.
Rental values started falling in October 2008. Rental rates Some of the larger deals recorded in Pune were Synechron
in downtown mall space declined around 40% and average Technologies Pvt. Ltd in. Embassy for 75,000 SF, SEZ at
rentals in suburban malls fell around 17%. Hinjewadi TietoEnator at EON SEZ in Kharadi at 60,000 SF,
Kolkata’s residential market has experienced a moderate Aegis BPO at Commerzone in Yerwada with 50,000 SF, BNY
recovery since March 2009 due to the growing demand for Mellon at Magarpatta Cybercity in Hadapsar at 125,000 SF,
affordable housing. A number of such housing projects like and Sungard at EON SEZ in Kharadi with 60,000 SF.
Country Data Parvati Garden in Birati, Sugam Sabuj in Narendrapur and Country Data Construction that had been put on hold is now opening up
Area (KM2) 1334.3
Green Field City near Behala Chowrasta are coming up in Area (KM2) 1334.3 with new developments like ZerO 1ne at Ghorpadi; Prabhavee
the Kolkata market. Tech Park, Nano Space, Amar Synergy Connaught Road, and
GDP Growth (%) 5.36% Kolkata had been successful in pulling significant industrial GDP Growth (%) 7.90% Amar Paradigm at Baner; and several more. Pune’s future
investments over the last couple of years. But the exit appears to be bright in all commercial property sectors.
GDP 2009 (US$ B) $1,242.65 of TATA Motors small car project impacted the overall GDP 2009 (US$ B) $1,242.65 Pune is known as the Oxford of the east, boasting some
investment climate. In May 2009, the government’s proactive of the finest educational institutions, namely the highly
GDP/Capita (US$) $1,032.71
measures towards industrialization have brought Bengal GDP/Capita (US$) $1,032.71 regarded Pune University. Pune is the seventh largest metro
back into focus of global investors. city in India and has the highest per capita income in
Inflation Rate (%) 8.66% Inflation Rate (%) 8.66% the country.

Unemployment 7.32% Unemployment 7.32%


Rate (%) Rate (%)

Interest Rate(%) 4.75% Interest Rate(%) 4.75%

Population (Millions) 1203.28 Population (Millions) 1203.28

Kolkata At A Glance Pune At A Glance


Conversion: 46 INR = 1 US$ NET RENT/SF/MO US$ RENT/SF/YR Conversion: 45 INR = 1 US$ RENT/SF/MO US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
DOWNTOWN OFFICE CITY CENTER OFFICE
New Construction (AAA) INR 128.00 INR 156.00 $ 33.39 $ 40.70 25.0% New Construction (AAA) INR 45.00 INR 75.00 $ 12.00 $ 20.00 80.0%
Class A (Prime) INR 100.00 INR 111.00 $ 26.09 $ 28.96 4.0% Class A (Prime) INR 50.00 INR 60.00 $ 13.33 $ 16.00 40.0%
Class B (Secondary) INR 67.00 INR 100.00 $ 17.48 $ 26.09 5.0% Class B (Secondary) INR 35.00 INR 45.00 $ 9.33 $ 12.00 50.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) INR 50.00 INR 61.00 $ 13.04 $ 15.91 70.0% New Construction (AAA) INR 30.00 INR 50.00 $ 8.00 $ 13.33 55.0%
Class A (Prime) INR 45.00 INR 50.00 $ 11.74 $ 13.04 60.0% Class A (Prime) INR 50.00 INR 60.00 $ 13.33 $ 16.00 60.0%
Class B (Secondary) INR 39.00 INR 45.00 $ 10.17 $ 11.74 40.0% Class B (Secondary) INR 35.00 INR 45.00 $ 9.33 $ 12.00 72.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse INR 12.00 INR 20.00 $ 3.13 $ 5.22 25.0% Bulk Warehouse INR 12.00 INR 26.00 $ 3.20 $ 6.93 5.0%
Manufacturing N/A N/A N/A N/A N/A Manufacturing INR 18.00 INR 45.00 $ 4.80 $ 12.00 0.5%
High Tech/R&D N/A N/A N/A N/A N/A High Tech/R&D INR 18.00 INR 45.00 $ 4.80 $ 12.00 N/A
RETAIL RETAIL
Downtown INR 91.00 INR 245.00 $ 23.74 $ 63.91 15.0% Downtown INR 70.00 INR 150.00 $ 18.67 $ 40.00 15.0%
Neighborhood Service Centers INR 95.00 INR 145.00 $ 23.74 $ 63.91 14.0% Neighborhood Service Centers INR 70.00 INR 120.00 $ 18.67 $ 32.00 20.0%
Community Power Center INR 95.00 INR 162.00 $ 24.78 $ 42.26 71.0% Community Power Center INR 70.00 INR 120.00 $ 18.67 $ 32.00 25.0%
Regional Malls INR 123.00 INR 251.00 $ 32.09 $ 65.48 2.0% Regional Malls INR 60.00 INR 100.00 $ 16.00 $ 26.67 35.0%
Solus Food Stores INR 33.00 INR 39.00 $ 8.61 $10.17 N/A Solus Food Stores INR 100.00 INR 125.00 $ 26.67 $ 33.33 20.0%
DEVELOPMENT LAND Low/Acre High/Acre Low/SF High/SF
DEVELOPMENT LAND Low/Acre High/Acre Low/Acre High/Acre
INR 420,000,000 INR 600,000,000 $ 209.61 $ 299.44 Office in CBD INR 6,000.00 INR 8,000.00 $ 133.00 $ 177.00
Office in CBD
INR 150,000,000 INR 200,000,000 $ 74.86 $ 99.81 Land in Office Parks INR 700.00 INR 5,000.00 $ 15.00 $ 111.00
Land in Office Parks
Land in Industrial Parks INR 50.00 INR 500.00 $ 1.00 $ 11.00
Land in Industrial Parks INR 15,000,000 INR 20,000,000 $ 7.49 $ 9.98
Office/Industrial Land - Non-park INR 3,000.00 INR 10,000.00 $ 67.00 $ 222.00
Office/Industrial Land - Non-park INR 12,000,000 INR 30,000,000 $ 5.99 $ 14.97
Retail/Commercial Land INR 1,200.00 INR 10,000.00 $ 27.00 $ 222.00
Retail/Commercial Land INR 400,000,000 INR 600,000,000 $ 199.62 $ 299.44
Residential INR 2,500.00 INR 8,500.00 $ 55.00 $ 189.00
Residential INR 12,000,000 INR 600,000,000 $ 5.99 $ 299.44

2010 Global Market Report I www.naiglobal.com 32


Punjab, India Tokyo, Japan
The past year in Punjab brought much anxiety as demand With the deepening decline in all sectors in 2009, real estate
in the real estate market fell sharply. The global economic markets in Japan’s key centers of Tokyo and Osaka have
meltdown and slowing demand, coupled with a liquidity remained in a depressed state. The inability for organizations
crisis, resulted in mega projects moving at a snail’s pace. to obtain loans, whether new or extensions on already
The first half of 2009 was even tougher than 2008 existing loans, has resulted in many large and small defaults
as demand across all sectors--commercial, retail and that have continued to only worsen an already stagnant
residential--continued to remain weak. In 2009, almost situation. A record number of developers have gone bank-
every developer had reported a decline in leases and sales rupt as lenders refuse to roll-over loans that had previously
in all markets. been readily available with easy terms.
The office market saw a downward trend with several Despite this, many sellers have remained quite defiant and
companies choosing to shut down operations. Even local the massive drop in sale prices that many had expected has
developers have closed their marketing offices at different not yet been realized. A relatively large amount of product
locations and many deferred their expansion plans, further has made its way to the market, yet much of it remains at
impacting rates and leading to a drop in rentals by 15%. pricing that is not appealing to many potential investors. The
Major industry in Punjab includes a wide range of products investor interest in the Japanese market, particularly in
from ready made garments and hosiery to machine tools Tokyo assets, has risen continually this year with many funds
Contact Contact poised to take advantage of opportunities that offer signifi-
and auto parts. This sector has seen a 45% dip in Q3 2009
NAI Space Alliance NAI Japan cant yields.
compared to last year.
+91 11 55854444 +81 3 5418 8747
The retail sector also felt the pinch of the economic slow- The remainder of 2009 will likely see an increase in trans-
down. High rentals in up-market locations in Punjab forced actions as the gaps between buyer and seller expectations
retailers to slow expansion and to shut down unproductive close. With the prevailing economic conditions there has
stores. Ludhiana, the industrial town of Punjab and the hub been a continuing low demand for rental of office, retail
of retail expansion, also showed signs of a slowdown with (particularly for medium to high-end imported brands),
fewer inquiries from retailers in Q3 2009. residential, industrial and hospitality properties. Rents have
been in a steady decline particularly in the retail and office
The price of residential properties also continued to decline sectors with terms becoming more and more favorable
in 2009. Reduced real estate rates, lower interest rates and for tenants. Class A office rents show evidence of this down-
Country Data better incentives for customers to purchase homes will go Country Data ward trend.
Area (KM2) 1334.3 a long way in rebuilding the entire real estate industry. The Area (KM2) 1334.3
remainder of 2009 saw customers who had deferred home Many major office buildings have relatively high levels of
purchases in 2008 take action and purchase homes given vacancy at 5.5 % for Class A office buildings and 5.8 % for
GDP Growth (%) 5.36% GDP Growth (%) -5.37%
the affordability of product on the market. Class B. As a result, after years of absence, free rent periods,
on top of already reduced rental rates, have returned to
GDP 2009 (US$ B) $1,242.65 Punjab carries good potential for the real estate sector in GDP 2009 (US$ B) $5,048.63 the market.
the long term. The past year was not excellent for this sector
GDP/Capita (US$) $1,032.71 as there was no demand at all. The impact of the economic GDP/Capita (US$) $39,573.49
slowdown is going to stay for another six months.
Inflation Rate (%) 8.66% Inflation Rate (%) -1.13%

Unemployment 7.32% Unemployment 5.4%


Rate (%) Rate (%)

Interest Rate(%) 4.75% Interest Rate(%) 0.1%

Population (Millions) 1203.28 Population (Millions) 127.576

Punjab At A Glance Tokyo At A Glance


Conversion: 45 INR = 1 US$ RENT/M2/MO US$ RENT/SF/YR Conversion:90 JPY = 1 US$ RENT/M2/MO US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
CITY CENTER OFFICE DOWNTOWN OFFICE
New Construction (AAA) N/A N/A N/A N/A N/A New Construction (AAA) JPY 6,667.00 JPY 12,727.00 $ 82.58 $ 157.65 N/A
Class A (Prime) INR 370.00 INR 540.00 $ 9.17 $ 13.38 18.0% Class A (Prime) JPY 5,455.00 JPY 12,120.00 $ 67.57 $ 150.13 5.5%
Class B (Secondary) INR 209.00 INR 301.00 $ 5.18 $ 7.46 16.0% Class B (Secondary) JPY 3,636.00 JPY 11,515.00 $ 45.04 $ 142.64 5.8%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) N/A N/A N/A N/A N/A New Construction (AAA) JPY 6,969.00 JPY 8,789.00 $ 86.32 $ 108.87 N/A
Class A (Prime) N/A N/A N/A N/A N/A Class A (Prime) JPY 4,849.00 JPY 7,273.00 $ 60.06 $ 90.09 10.1%
Class B (Secondary) N/A N/A N/A N/A N/A Class B (Secondary) JPY 1,818.00 JPY 6,060.00 $ 22.52 $ 75.07 18.3%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse INR 126.00 INR 232.00 $ 3.12 $ 5.75 14.0% Bulk Warehouse JPY 1,045.00 JPY 3,203.00 $ 12.94 $ 39.68 N/A
Manufacturing N/A N/A N/A N/A N/A Manufacturing JPY 1,358.00 JPY 2,732.00 $ 16.82 $ 33.84 N/A
High Tech/R&D N/A N/A N/A N/A N/A High Tech/R&D N/A N/A N/A N/A N/A
RETAIL RETAIL
Downtown N/A N/A N/A N/A N/A Downtown JPY 5,890.00 JPY 18,023.00 $ 72.96 $ 223.25 N/A
Neighborhood Service Centers N/A N/A N/A N/A N/A Neighborhood Service Centers JPY 4,385.00 JPY 8,770.00 $ 54.32 $ 108.63 N/A
Community Power Center INR 1,088.00 INR 1,586.00 $ 26.95 $ 39.29 11.0% Community Power Center JPY 3,775.00 JPY 7,260.00 $ 46.76 $ 89.93 N/A
Regional Malls INR 1,060.00 INR 1,836.00 $ 26.26 $ 45.48 15.0% Regional Malls JPY 1,890.00 JPY 3,500.00 $ 23.41 $ 43.35 N/A
Solus Food Stores N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/Acre High/Acre Low/Acre High/Acre DEVELOPMENT LAND Low/SF High/SF Low/SF High/SF
Office in CBD N/A N/A N/A N/A Office in CBD JPY 6,330,000 JPY 67,000,000 $ 70,333.33 $ 744,444.44
Land in Office Parks N/A N/A N/A N/A Land in Office Parks N/A N/A N/A N/A
Land in Industrial Parks N/A N/A N/A N/A Land in Industrial Parks JPY 330,000 JPY 1,500,000 $ 3,666.67 $ 16,666.67
Office/Industrial Land - Non-park N/A N/A N/A N/A Office/Industrial Land - Non-park JPY 786,000 JPY 5,790,000 $ 8,733.33 $ 64,333.33
Retail/Commercial Land N/A N/A N/A N/A Retail/Commercial Land JPY 1,700,000 JPY 36,340,000 $ 18,888.89 $ 403,777.78
Residential N/A N/A N/A N/A Residential (per M2) JPY 1,300,000 JPY 6,300,000 $ 14,444.44 $ 70,000.00

2010 Global Market Report I www.naiglobal.com 33


Kuala Lumpur, Malaysia Singapore
The dark clouds of late 2008 and early 2009 gave way In a concerted manner similar to other parts of Asia, Singapore
to optimism as the Kuala Lumpur market adjusted to the emerged from the recession that ended with the release of
current regional and global economies. An equities rally Q3 2009 economic data. The manufacturing sector expanded
midway through the year also aided the property market. by 35% quarter-over-quarter and the service producing
The economy continued to be driven by the service and industries expanded by 9%. However, the construction sector
manufacturing sector. The Malaysian Institute of Economic declined by 0.6%.
Research revised its forecast for 2009 GDP upward to a The office market in 2009 saw a sharp decline of almost 40-
contraction of 3.3% from 4.2%. A rise from the earlier 50% in prime office rental rates in the first half of the year
predicted 2.8% to a positive 3.7% is expected for 2010. stemming from the economic downturn. The decline of prime
Rental rates in the market were strong for newly launched office rentals moderated in Q3 2009. We forecast the decline
iconic buildings like UOA Bangsar (suburban) at RM 5.30 of prime office rentals in 2010 will moderate given the
and G Tower (CBD) at RM 6.50. The average occupancy in stronger economic momentum, even with greater office
Kuala Lumpur in the first half of 2009 was 83%. Roughly 12 supply coming on stream with MBFC, Asia Square and other
million SF of new space is expected to enter the market by new developments in 2010. Class A vacancy rose to 4% in
the end of 2010. Q2 2009, up from 3.5% in the previous quarter.
Contact Darul Takaful, Wisma Chase Perdana, Wisma Dijaya, Wisma Contact Large transactions in 2009 included the S $172 million
Glomac 3, Citibank Tower (50%) and Block B GBC transac- purchase of three separate office buildings in a collective
NAI Reapfield NAI Singapore
tions brought confidence to the office market, with the sale; Aviva Building, Ceil House and VTB Building with a total
+60 3 2713 3399 +65 63337738
Citibank Tower partial sale in August valued at RM 828/SF strate area of 185,019 SF at a cost of S$929 SF. Strata titled
and the Darul Takaful sale in March valued at RM 636/SF, floors in Prudential Towers at level 20 to 25 were sold to
indicating positive investor appetite. KREIT who paid S$106.29 million or S$1,579 SF.
The manufacturing sector embraced the challenges of In the retail market, Prime Orchard Road continues to trans-
reduced demand from major markets in Europe and the US. form and three major shopping centers will have opened by
Industrial properties saw a correction of 20-30% for Christmas 2009; ION Orchard, Orchard Central and 313
detached and semi-detached properties in the Klang Valley; Sommerset. There are major additions and renovations at
however, detached buildings in prime locations continued Park Hotel, Meritus Mandarin Hotel and 111 Sommerset
Country Data to attract interest. Country Data Road. Prime Orchard Road rent averaged S$33/SF/month in
Area (KM2)
Q3 2009, a decrease of 3.0% quarter over quarter. However,
Area (KM2) 1334.3 Retail rates experienced a 10-20% decrease. Average 1334.3
prime suburban rents inched up 0.7% quarter over quarter to
occupancy rates stood at 85-90%. An estimated 1 million average $28/SF/month in Q3 2009.
GDP Growth (%) -3.3% SF is expected to enter the already crowded Klang Valley GDP Growth (%) -3.33%
market in 2009 with an additional 2.3 million SF in 2010. The top five investments in 2009 were: SPA-led consortium
GDP 2009 (US$ B) $207.35 GDP 2009 (US$ B) $163.13 puts in a top bid of S$541.9m for a mall being developed in
The conditional sale of a prime 2.62-acre parcel of land clements by Housing & Development Board. UOL’s successful
along Jalan Ampang in the City’s Golden Triangle for RM bid in the government residential land tender for the land
GDP/Capita (US$) $7,468.99 GDP/Capita (US$) $34,346.03
148.2 million made headlines in early 2009. The market parcel at Dakota Crescent for S$329 million (S$509/SF
seems set for a selective play by developers who are plot ratio); Swissotel Merchant Court was sold for S$260
Inflation Rate (%) -0.10% expected to introduce new and modern designed industrial Inflation Rate (%) -0.21%
million to TA Enterprise; Katong Mall is sold for S$247.6
buildings. million bought bu a consortium of investors led by former
Unemployment Unemployment 3.63%
3.60% capital and retail head. ARA purchased Suntec International
Rate (%) Rate (%)
Convention & Exhibition Centre for S$235 million.
Interest Rate(%) 5.5% Interest Rate(%) 0.38%

Population (Millions) 27.761 Population (Millions) 4.75

Kuala Lumpur At A Glance Singapore At A Glance


Conversion:3.375 RM = 1 US$ RENT/SF/MO US$ RENT/SF/YR Conversion: 1.38 SGD = 1 US$ RENT/SF/YR US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
DOWNTOWN OFFICE CITY CENTER OFFICE
New Construction (AAA) RM 5.30 RM 6.50 $ 18.84 $ 23.11 N/A New Construction (AAA) SGD 72.00 SGD 120.00 $ 52.17 $ 86.96 20.0%
Class A (Prime) RM 5.50 RM 9.00 $ 19.56 $ 32.00 3.0% Class A (Prime) SGD 72.00 SGD 120.00 $ 52.17 $ 86.96 5.0%
Class B (Secondary) RM 3.50 RM 4.50 $ 12.44 $ 16.00 15.0% Class B (Secondary) SGD 60.00 SGD 90.00 $ 43.48 $ 65.22 10.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) RM 3.50 RM 4.50 $ 12.44 $ 16.00 N/A New Construction (AAA) SGD 54.00 SGD 72.00 $ 39.13 $ 52.17 20.0%
Class A (Prime) RM 4.00 RM 4.50 $ 14.22 $ 16.00 15.0% Class A (Prime) SGD 54.00 SGD 72.00 $ 39.13 $ 52.17 10.0%
Class B (Secondary) RM 2.50 RM 3.50 $ 8.89 $ 12.44 20.0% Class B (Secondary) SGD 36.00 SGD 54.00 $ 26.09 $ 39.13 15.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse RM 1.20 RM 1.40 $ 4.27 $ 4.98 N/A Bulk Warehouse N/A N/A N/A N/A N/A
Manufacturing RM 1.50 RM 2.00 $ 5.33 $ 7.11 N/A Manufacturing SGD 14.00 SGD 17.00 $ 10.14 $ 12.32 25.0%
High Tech/R&D RM 2.00 RM 2.50 $ 7.11 $ 8.89 N/A High Tech/R&D SGD 30.00 SGD 33.00 $ 21.74 $ 23.91 15.0%
RETAIL RETAIL
Downtown RM 13.50 RM 14.40 $ 48.00 $ 51.20 10.0% Downtown SGD 264.00 SGD 480.00 $ 191.30 $ 347.83 3.0%
Neighborhood Service Centers RM 7.00 RM 20.00 $ 24.89 $ 71.11 10.0% Neighborhood Service Centers N/A N/A N/A N/A N/A
Community Power Center RM 2.50 RM 12.00 $ 8.89 $ 42.67 15.0% Community Power Center N/A N/A N/A N/A N/A
Regional Malls RM 22.00 RM 28.00 $ 78.22 $ 99.56 5.0% Regional Malls SGD 144.00 SGD 300.00 $ 104.35 $ 217.39 2.0%
N/A N/A N/A N/A N/A Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/SF High/SF Low/SF High/SF DEVELOPMENT LAND Low/SF High/SF Low/SF High/SF
Office in CBD RM 1,000.00 RM 1,500.00 $ 296.30 $ 444.44 Office in CBD SGD 800.00 SGD 1,200.00 $ 579.71 $ 869.57
Land in Office Parks RM 200.00 RM 259.00 $ 59.26 $ 76.74 Land in Office Parks SGD 500.00 SGD 800.00 $ 362.32 $ 579.71
Land in Industrial Parks RM 50.00 RM 70.00 $ 14.81 $ 20.74 Land in Industrial Parks SGD 30.00 SGD 100.00 $ 21.74 $ 72.46
Office/Industrial Land - Non-park RM 25.00 RM 35.00 $ 7.41 $ 10.37 Office/Industrial Land - Non-park SGD 20.00 SGD 50.00 $ 14.49 $ 36.23
Retail/Commercial Land RM 300.00 RM 400.00 $ 88.89 $ 118.52 Retail/Commercial Land SGD 1,000.00 SGD 1,500.00 $ 724.64 $1,086.96
Residential (per M2) RM 50.00 RM 70.00 $ 14.81 $ 20.74 Residential SGD 600.00 SGD 2,000.00 $ 434.78 $1,449.28

2010 Global Market Report I www.naiglobal.com 34


Seoul, South Korea Taipei, Taiwan
The Korean economy has improved faster than expected. Taipei, the capital of Taiwan, has had the most rapid economic
The global market share of products such as automobile, development in the country and has become a global hub for
semiconductor and cell phones increased and conglomerates the technology industry. Economic growth has reached an
such as Samsung, Hyundai and LG recorded high profits. average of 2.11%. Taipei is the world’s number-one provider
Korea's quarterly GDP growth of 2.3% for the April-to-June of notebook PCs, with 72% of the market share. Taipei is also
period was the highest among members of the OECD. the world’s leading provider of LCD monitors, with 68% of
Overall, Class A office buildings remain stable with low the market share and of chip foundry services, with 70% of
vacancy rates but Class B buildings are experiencing high the market share.
vacancy rates with rents decreased by landlords’ incentives The office inventory in the Taipei metropolitan area totals 7.12
such as longer free rent periods, not seen before in Class B million SM with an average rental rate of NT $599/SM/month,
office buildings. It is expected that the rent of prime buildings and NT $709/SM/month for Class A office space. Vacancy
will decrease in Q4 due to an increase in vacancy rates and rates have risen slightly to 13.92% from 13.80%.
a new supply of office space in the CBD. The dawn is approaching the Taipei office market after the
The investor demand for commercial properties revived from global finance crisis. The success of the Cross-Strait Summit
Q2 was due to the government's drive to prevent a residential has revitalized the real estate market. Several major trans-
Contact real estate bubble from growing larger. The notable transac- Contact actions occurred after Q1 2009, stimulated by the Summit,
tions this year are the ING Tower (KRW 400 billion), DACOM leading to increasing closer economic ties with China. The
NAI Korea NAI Taiwan
(KRW 182 billion), and Pacific Tower (KRW 153 billion). The overall absorption was 28,007 SM in Q3 2009. The demand
+82 2 6205 3500 + 886 2 8770 6699
capitalization rate has seen a slight decrease to 5.5%-6%. in the suburban office market remains steady and the
The industrial market is also suffering from high vacancy absorption rate has continued upward. The overall vacancy
rates of 15%-20% with rent down 20% from the previous rate of Nangang Economy Trading Park Phase III went down
year. Sellers outnumbered buyers in 2009, but transactions 16.34% year over year to 34.81%.
are not active. Ssangyong factory (KRW 95 billion) and The Taipei suburban area saw more major transactions
DAEWOO factory (KRW 100 billion) are among the largest compared to Taipei downtown areas such as Nei-Hu
transactions of the year. Technology Park and Nangang Economy Trading Park. The
In the retail market, the overall rent decreased, except inflow of overseas capital reached to US $12.99 billion
Country Data in Myungdong, the most active retail district in Seoul. Country Data in Q2 2009, the highest ever recorded, according to the
Area (KM2) Myungdong benefited from a new supply of retail space with Area (KM2)
central bank. The increased inflow of foreign capital helped
1334.3 1334.3
Noonsquare (23,869 SM) and from tourists visiting the area. both the local financial and real estate markets in Q3 2009.
GDP Growth (%) -0.99% The opening of Times Square shopping mall (370,000 SM) GDP Growth (%) -4.13% The agreements on Financial MOU and ECFA between
in Youndeungpo, is drawing attention to the district. Taiwan and China encouraged Taiwanese corporations in
GDP 2009 (US$ B) $800.29 A large scale urban redevelopment is under way in the CBD, GDP 2009 (US$ B) $357.34 China to reinvest back in Taiwan and also allowed for certain
and a new supply of large office buildings and a high-rise forms of Chinese investments in companies on the island.
GDP/Capita (US$) $16,449.90 residential complex are expected in two to three years. GDP/Capita (US$) $15,373.34

Inflation Rate (%) 2.6% Inflation Rate (%) -0.5%

Unemployment 3.77% Unemployment 6.08%


Rate (%) Rate (%)

Interest Rate(%) 2.0% Interest Rate(%) 1.25%

Population (Millions) 48.65 Population (Millions) 23.244

Seoul At A Glance Taipei At A Glance


Conversion: 1179.20 KRW = 1 US$ RENT/M2/YR US$ RENT/SF/YR Conversion: 32.3 TWD = 1 US$ RENT/M2/MO US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
CITY CENTER OFFICE CITY CENTER OFFICE
New Construction (AAA) N/A N/A N/A N/A N/A New Construction (AAA) TWD 756.00 TWD 1,059.00 $ 26.09 $ 36.55 45.2%
Class A (Prime) KRW 290,400 KRW 435,600 $ 22.88 $ 34.32 3.0% Class A (Prime) TWD 711.00 TWD 998.00 $ 24.54 $ 34.45 14.0%
Class B (Secondary) KRW 200,400 KRW 290,400 $ 15.79 $ 22.88 4.2% Class B (Secondary) TWD 499.00 TWD 635.00 $ 17.22 $ 21.92 13.9%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) N/A N/A N/A N/A N/A New Construction (AAA) TWD 393.00 TWD 484.00 $ 13.56 $ 16.71 61.0%
Class A (Prime) KRW 144,000 KRW 217,800 $ 11.34 $ 17.16 4.5% Class A (Prime) TWD 303.00 TWD 454.00 $ 10.46 $ 15.67 15.9%
Class B (Secondary) KRW 108,900 KRW 127,200 $ 8.58 $ 10.02 N/A Class B (Secondary) TWD 257.00 TWD 378.00 $ 8.87 $ 13.05 22.5%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse KRW 54,480 KRW 72,600 $ 4.29 $ 5.72 15.0% Bulk Warehouse TWD 151.00 TWD 212.00 $ 5.21 $ 7.32 16.8%
Manufacturing N/A N/A N/A N/A N/A Manufacturing TWD 136.00 TWD 197.00 $ 4.69 $ 6.80 13.4%
High Tech/R&D N/A N/A N/A N/A N/A High Tech/R&D TWD 330.00 TWD 378.00 $ 11.39 $ 13.05 19.0%
RETAIL RETAIL
Downtown KRW 4,800,000 KRW 500,000 $ 37.82 $ 39.39 N/A Downtown TWD 3,781.00 TWD 6,723.00 $ 130.50 $ 232.04 1.0%
Neighborhood Service Centers KRW 156,000 KRW 300,000 $ 12.29 $ 23.64 N/A Neighborhood Service Centers TWD 968.00 TWD 1,966.00 $ 33.41 $ 67.86 5.9%
Community Power Center N/A N/A N/A N/A N/A Community Power Center TWD 378.00 TWD 678.00 $ 13.05 $ 23.40 1.9%
Regional Malls N/A N/A N/A N/A N/A Regional Malls TWD 1,573.00 TWD 3,267.00 $ 54.29 $ 112.76 2.4%
Solus Food Stores N/A N/A N/A N/A N/A Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/M2 High/M2 Low/M2 High/M2 DEVELOPMENT LAND Low/M2 High/M2 Low/Acre High/Acre
Office in CBD N/A N/A N/A N/A Office in CBD N/A N/A N/A N/A
Land in Office Parks N/A N/A N/A N/A Land in Office Parks N/A N/A N/A N/A
Land in Industrial Parks N/A N/A N/A N/A Land in Industrial Parks N/A N/A N/A N/A
Office/Industrial Land - Non-park N/A N/A N/A N/A Office/Industrial Land - Non-park N/A N/A N/A N/A
Retail/Commercial Land N/A N/A N/A N/A Retail/Commercial Land N/A N/A N/A N/A
Residential N/A N/A N/A N/A Residential N/A N/A N/A N/A

2010 Global Market Report I www.naiglobal.com 35


Canada

SECTION CONTENTS
Calgary, Alberta, Canada
Edmonton, Alberta, Canada
Vancouver, British Columbia, Canada
Victoria, British Columbia, Canada
Halifax, Nova Scotia, Canada
Ottawa, Ontario, Canada
Toronto, Ontario, Canada
Montréal, Quebec, Canada
Regina, Saskatchewan, Canada

36
Calgary, Alberta, Canada Edmonton, Alberta, Canada
The global economic downturn continued to have a negative Edmonton and Northern Alberta weathered the economic
impact on the city of Calgary due to the influence the oil and storm longer than most markets throughout Canada. Of
gas industry has on our market. On top of that, the over built a provincial total of $240 billion in major projects proposed,
downtown office boom in Calgary has led to vacancy that currently under construction or recently completed, $189
exceeds anything that we have experienced in the past. billion are slated for Northern Alberta. Oil and gas
Downtown office leasing continues to be the major story in projects make up 52.19% of this total. Throughout 2009, the
real estate in Calgary. There is currently over 1.8 million SF investment market has seen a tightening of available credit
of vacant sublease space and 1.3 million SF of head lease and the creation of a vast disconnect between seller’s
vacancy in the downtown core, with another 3.5 million SF of expectations and buyer’s opinions of value.
new space coming to the market in 2010. Companies are Even while the economy appears to be improving, credit and
continuing to reduce space in order to cut costs. If the current lending parameters remain tight from the effect of the
economic conditions continue, there is a potential for these sub-prime correction. Given these conditions, many owners
vacancy numbers to double by 2012. remain in a holding position and investment volumes are
On the positive side, the industrial and retail markets have down.
remained relatively stable because they were not overbuilt. With a total office inventory of 24,155,355 SF, vacancies
Contact The industrial developers adapted quickly to the recession Contact increased to 6.45% in 2009 up from 4.01% in 2008. Office
and as a result, inventory growth was very low in 2009. There rents from the peak in 2008 have been in decline. The
NAI Commercial Calgary NAI Commercial Edmonton
was continued strength in the sale of freestanding buildings 28-story, 618,000 SF Epcor Tower, still under construction,
+1 403 214 2344 +1 780 436 7410
in 2009 as prices saw a slight decrease and interest rates is now 70% committed. Redevelopment of the former
remained low. Professional Building (240,000 SF) continues and the
The investment market had reduced activity due to a shortage province has also announced a $356 million upgrade of the
of top-quality, wel-priced products being offered for sale, Federal Building which has been vacant since 1989.
which was not related to the weak economic conditions. All Edmonton’s retail inventory is reported at 25,438,598 SF
segments of the investment market are starting to show signs with a vacancy rate of 2.96% in 2009, down from 3.11% in
of new life. It is anticipated that positive recovery of this 2008. Despite challenging economic times, this segment
segment will continue over the next 12 to 18 months. remains strong with the expansion of existing players and
Country Data Although the downtown office leasing market is looking Country Data the introduction of new entrants to the market.
bleak, investors still view Calgary as a relatively strong The total inventory of industrial space grew by 6.7% to
Area 9,200,000 investment market. A prime example is the recent purchase Area 9,200,000 88,289,785 SF in 2009. The overall vacancy in 2009 was
of a new $74 million office development, Stampede Station 1.92% compared to 1.30% in 2008. Despite such a low
GDP Growth (%) -2.48% Phase One, by German Investors. GDP Growth (%) -2.48% vacancy rate, industrial activity has been down with the
largest vacancy increases being seen in the multi-bay
GDP 2008 (US$ B) $1,319.14 GDP 2008 (US$ B) $1,319.14
market. Given the economic news throughout 2009, tenants’
expectations were that rents should be significantly reduced.
GDP/Capita (USD) $39,217.29 GDP/Capita (USD) $39,217.29 Throughout the latter half of 2009, asking rents in varying
areas have moderated by about 10% with landlords offering
Inflation Rate (%) 0.15% Inflation Rate (%) 0.15% leasehold inducements in order to compete for lease deals.

Unemployment 8.33% Unemployment 8.33%


Rate (%) Rate (%)

Interest Rate (%) 0.25% Interest Rate (%) 0.25%

Population (Millions) 33.637 Population (Millions) 33.637

Calgary At A Glance Edmonton At A Glance


Conversion .96 CDN = 1 US$ NET RENT/SF/YR US$ NET RENT/SF/YR Conversion .96 CDN = 1 US$ NET RENT/SF/YR US$ NET RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) CDN 32.00 CDN 42.00 $ 33.33 $ 43.75 7.8% New Construction (AAA) CDN 28.00 CDN 35.00 $ 29.17 $ 36.46 N/A
Class A (Prime) CDN 24.00 CDN 28.00 $ 25.00 $ 29.17 9.2% Class A (Prime) CDN 25.00 CDN 32.00 $ 26.04 $ 33.33 6.5%
Class B (Secondary) CDN 14.00 CDN 24.00 $ 14.58 $ 25.00 13.7% Class B (Secondary) CDN 15.00 CDN 25.00 $ 15.63 $ 26.04 6.5%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) CDN 23.00 CDN 28.00 $ 23.96 $ 29.17 6.3% New Construction (AAA) CDN 23.00 CDN 28.00 $ 23.96 $ 29.17 6.5%
Class A (Prime) CDN 20.00 CDN 25.00 $ 20.83 $ 26.04 24.6% Class A (Prime) CDN 18.00 CDN 22.00 $ 18.75 $ 22.92 6.5%
Class B (Secondary) CDN 13.00 CDN 20.00 $ 13.54 $ 20.83 12.6% Class B (Secondary) CDN 11.00 CDN 18.00 $ 11.46 $ 18.75 6.5%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse CDN 4.75 CDN 7.00 $ 4.95 $ 7.29 5.7% Bulk Warehouse CDN 5.00 CDN 11.50 $ 5.21 $ 11.98 1.9%
Manufacturing CDN 5.00 CDN 8.50 $ 5.21 $ 8.85 4.0% Manufacturing CDN 5.00 CDN 13.00 $ 5.21 $ 13.54 1.9%
High Tech/R&D CDN 7.50 CDN 14.00 $ 7.81 $ 14.58 2.4% High Tech/R&D CDN 5.00 CDN 13.00 $ 5.21 $ 13.54 1.9%
RETAIL RETAIL
Downtown CDN 25.00 CDN 95.00 $ 26.04 $ 98.96 3.1% Downtown CDN 18.00 CDN 37.00 $ 18.75 $ 38.54 4.6%
Neighborhood Service Centers CDN 23.00 CDN 30.00 $ 23.96 $ 31.25 3.5% Neighborhood Service Centers CDN 16.00 CDN 32.00 $ 16.67 $ 33.33 2.8%
Community Power Center CDN 26.00 CDN 35.00 $ 27.08 $ 36.46 2.1% Community Power Center CDN 24.00 CDN 35.00 $ 25.00 $ 36.46 2.6%
Regional Malls CDN 60.00 CDN 150.00 $ 62.50 $ 156.25 3.1% Regional Malls CDN 30.00 CDN 125.00 $ 31.25 $ 130.21 3.4%
Solus Food Stores N/A N/A N/A N/A N/A Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low//Acre High/Acre Low/Acre High/Acre DEVELOPMENT LAND Low//Acre High/Acre Low/Acre High/Acre
Office in CBD CDN 35.00 CDN 250.00 $ 36.46 $ 260.42 Office in CBD N/A N/A N/A N/A
Land in Office Parks CDN 400,000 CDN 1,000,000 $ 416,666.67 $1,041,666.67 Land in Office Parks N/A N/A N/A N/A
Land in Industrial Parks CDN 400,000 CDN 600,000 $ 416,666.67 $ 625,000.00 Land in Industrial Parks CDN 200,000 CDN 650,000 $ 208,333.33 $ 677,083.33
Office/Industrial Land - Non-park CDN 350,000 CDN 800,000 $ 364,583.33 $ 833,333.33 Office/Industrial Land - Non-park CDN 300,000 CDN 750,000 $ 312,500.00 $ 781,250.00
Retail/Commercial Land CDN 600,000 CDN 1,600,000 $ 625,000.00 $1,666,666.67 Retail/Commercial Land CDN 350,000 CDN 1,000,000 $ 364,583.33 $1,041,666.67
Residential Residential CDN 85,000 CDN 1,000,000 $ 88,541.67 $1,041,666.67
CDN 50,000 CDN 600,000 $ 52,083.33 $ 625,000.00

2010 Global Market Report I www.naiglobal.com 37


Vancouver, British Columbia, Canada Victoria, British Columbia, Canada
Vancouver is the largest city in British Columbia and the third Victoria, British Columbia, is the capital city of the Province
largest in Canada. Metropolitan Vancouver is home to of British Columbia, which employs some 10,000 people in
2.4 million people and is one of the largest ports on North the downtown area. It has five primary economic drivers that
America’s west coast. Vancouver is set to host the 2010 include the provincial government, the University of Victoria,
Winter Olympics and expects 2.5% growth in the regional high technology, tourism and the Department of National
economy for 2010. Defense, which operates Canada’s largest naval base on
Overall the region has fared better than most during 2009. the Pacific Coast.
The office market in the CBD has an overall vacancy rate Since the fall of 2008, the provincial government has seen
of 7.0%, and absorption is expected to be negative until a decline in revenue resulting in spending cuts. Tourism has
mid-2010. In recent years, demand for high-rise residential been damaged by a drop in both US and international
development sites in the urban core has led to reduced visitors. A relatively healthy local economy and low interest
office space inventory with little new office product coming rates have resulted in a robust housing market that has seen
to market in 2010-2011. The office markets in Richmond, increases in sales volumes and strengthening of prices. The
Burnaby and Surrey have rebounded as tenants look to the median single family house price is $500,000.
suburbs for space. The industrial market is challenging for buyers and tenants
Contact The industrial market continues to outperform most other Contact with a very low vacancy rate of less than 1% and limited
Canadian industrial markets due to insufficient supply, with new supply. Rents for industrial space have remained stable.
NAI Commercial NAI Commercial Victoria
average vacancy rates of approximately 4%. Land prices Lack of capacity in existing industrial areas in the Victoria
Vancouver +1 250 381 2265
are expected to be stable in 2010, ranging between area continues to be a problem.
+1 604 691 6643
C $750,000 and C $1.3 million/acre. Overall absorption The office market has seen an increase in vacancy rates. A
remains positive. Rental rates average C $8.00/SF net. The notable impact on the downtown office market has been the
retail market is under increasing pressure due to slowing downsizing of the provincial government as it struggles with
consumer spending. Steady population growth especially in its budget deficit. A new mall under construction anchored
the CBD and near the rapid transit lines will keep this sector by Wal-Mart includes an office component of 200,000 SF of
active in 2010. Market rents will remain fairly stable as well. space. It will be interesting to see how readily the market
The investment market is recovering slowly. After five quarters absorbs this new product in the current economic environment.
Country Data of either flat or declining levels of investment activity, the Country Data The retail market in the downtown core continues to show
Greater Vancouver property market showed signs of recovery weakness due to a diminished tourism sector. The 8%
in Q3 2009. vacancy rate is expected to hold. Regional and community
Area 9,200,000 Area 9,200,000
The multifamily market is particularly active with cap rates retail centers in Victoria have a 2-3% vacancy rate with
GDP Growth (%) -2.48% of approximately 5.0%. Cap rates for most other product GDP Growth (%) -2.48% lease rates stable.
types range between 6.5% and 8.0% in the Vancouver re- Investment sales continue to be limited by a lack of product.
GDP 2008 (US$ B) $1,319.14
gion and between 8.0% and 10% in secondary markets out- GDP 2008 (US$ B) $1,319.14 An abundance of qualified purchasers and the limited number
side the Vancouver area depending on product type and of investment properties have resulted in capitalization rates
location. remaining resilient to the recessionary pressures. Prime com-
GDP/Capita (USD) $39,217.29 GDP/Capita (USD) $39,217.29
mercial property capitalization rates are 6-7%. Residential
Inflation Rate (%) 0.15% Inflation Rate (%) 0.15% apartment capitalization rates are around 5%.

Unemployment 8.33% Unemployment 8.33%


Rate (%) Rate (%)

Interest Rate (%) 0.25% Interest Rate (%) 0.25%

Population (Millions) 33.637 Population (Millions) 33.637

Vancouver At A Glance Victoria At A Glance


Conversion .96 CDN = 1 US$ NET RENT/SF/YR US$ NET RENT/SF/YR Conversion .96 CDN = 1 US$ NET RENT/SF/YR US$ NET RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) CDN 30.00 CDN 40.00 $ 31.25 $ 41.67 5.0% New Construction (AAA) CDN 42.00 CDN 48.00 $ 43.75 $ 50.00 N/A
Class A (Prime) CDN 28.00 CDN 38.00 $ 29.17 $ 39.58 6.0% Class A (Prime) CDN 36.00 CDN 40.00 $ 37.50 $ 41.67 1.8%
Class B (Secondary) CDN 25.00 CDN 33.00 $ 26.04 $ 34.38 8.0% Class B (Secondary) CDN 30.00 CDN 34.00 $ 31.25 $ 35.42 5.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) CDN 29.00 CDN 35.00 $ 30.21 $ 36.46 8.0% New Construction (AAA) CDN 38.00 CDN 42.00 $ 39.58 $ 43.75 N/A
Class A (Prime) CDN 25.00 CDN 32.00 $ 30.21 $ 36.46 7.5% Class A (Prime) CDN 32.00 CDN 36.00 $ 33.33 $ 37.50 7.0%
Class B (Secondary) CDN 20.00 CDN 25.00 $ 20.83 $ 26.04 12.0% Class B (Secondary) CDN 26.00 CDN 30.00 $ 27.08 $ 31.25 10.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse CDN 6.00 CDN 9.00 $ 6.25 $ 9.38 4.0% Bulk Warehouse CDN 10.00 CDN 12.00 $ 10.42 $ 12.50 1.0%
Manufacturing CDN 6.50 CDN 10.00 $ 6.77 $ 10.42 4.0% Manufacturing CDN 12.00 CDN 14.00 $ 12.50 $ 14.58 1.0%
High Tech/R&D CDN 8.50 CDN 14.00 $ 8.85 $ 14.58 4.5% High Tech/R&D CDN 12.00 CDN 18.00 $ 12.50 $ 18.75 1.0%
RETAIL RETAIL
Downtown CDN 105.00 CDN 180.00 $109.38 $187.50 4.0% Downtown CDN 38.00 CDN 90.00 $ 39.58 $ 93.75 9.0%
Neighborhood Service Centers CDN 30.00 CDN 60.00 $ 31.25 $ 62.50 4.0% Neighborhood Service Centers CDN 26.00 CDN 32.00 $ 27.08 $ 33.33 5.0%
Community Power Center CDN 30.00 CDN 40.00 $ 31.25 $ 41.67 4.5% Community Power Center CDN 24.00 CDN 28.00 $ 25.00 $ 29.17 2.0%
Regional Malls CDN 25.00 CDN 40.00 $ 26.04 $ 41.67 4.5% Regional Malls CDN 50.00 CDN 70.00 $ 52.08 $ 72.92 3.0%
Solus Food Stores N/A N/A N/A N/A N/A Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low//Acre High/Acre Low/Acre High/Acre DEVELOPMENT LAND Low//Acre High/Acre Low/Acre High/Acre
Office in CBD CDN 75.00 CDN 135.00 $ 78.13 $ 140.63 Office in CBD CDN 1,500,000 CDN 2,000,000 $1,562,500.00 $ 2,083,333.33
Land in Office Parks CDN 900,000 CDN 1,300,000 $ 937,500.00 $ 1,354,166.67 Land in Office Parks CDN 600,000 CDN 1,000,000 $ 625,000.00 $ 1,041,666.67
Land in Industrial Parks CDN 850,000 CDN 1,300,000 $ 885,416.67 $ 1,354,166.67 Land in Industrial Parks CDN 500,000 CDN 750,000 $ 520,833.33 $ 781,250.00
Office/Industrial Land - Non-park CDN 750,000 CDN 1,200,000 $ 781,250.00 $ 1,250,000.00 Office/Industrial Land - Non-park CDN 600,000 CDN 900,000 $ 625,000.00 $ 937,500.00
Retail/Commercial Land CDN 750,000 CDN 1,500,000 $ 781,250.00 $ 1,562,500.00 Retail/Commercial Land CDN 1,000,000 CDN 1,500,000 $1,041,666.67 $ 1,562,500.00
Residential CDN 750,000 CDN 1,500,000 $ 781,250.00 $ 1,562,500.00 Residential CDN 400,000 CDN 1,000,000 $ 416,666.67 $ 1,041,666.67

2010 Global Market Report I www.naiglobal.com 38


Halifax, Nova Scotia, Canada Ottawa, Ontario, Canada
Halifax Regional Municipality (HRM) is the economic hub of The Ottawa Federal Government has been hiring steadily, with
Atlantic Canada and appears to have weathered the current an expectation that hiring will be reevaluated based on the
global financial crisis better than other parts of the country. economic setback of 2009. The high-tech sector continues to
Perhaps this is because HRM has the Canadian Navy’s East strengthen; sector employment numbers are now exceeding
Coast base, is the location of many federal government the exaggerated pre-high tech bust of 2000. Although the
offices and six universities, and as a result is home to a large public sector and high-tech sectors are still growing soundly,
concentration of educational, medical and research facilities. this growth is being offset by downturns in other sectors
affected by the global recession. Employment is expected
The vacancy rate for all classes of office buildings is up this to remain stable.
year to 7.44%, an overall increase of 1.2%. The current
vacancy rate for Class A space is 4.97%, Class B 8.38% Growth in the local economy is expected to decline 0.5%
and Class C 7.17%. Although several projects have been this year before rebounding 3.1% in 2010. The industrial
market performed well with inventory exceeding 22 million
approved for the CBD, rental rates need to be at least
SF. The overall vacancy rate, excluding Kanata, dropped to
$25/SF net to make construction worthwhile. Class A rents
below 3.9%. With limited new construction, 2010 vacancy
currently are at $18/SF. However, office development should decline further and rental rates are expected to
continues in the suburban market where land is cheaper. increase. Larger industrial building space blocks are limited,
Construction has recently commenced on a 15-acre site rental rates have increased and demand is strong for high-
Contact known as The Wright and Burnside Business Campus. It will Contact
quality high-ceiling modern industrial space.
NAI Turner Drake include six office buildings totaling 400,000 SF. NAI Commercial Ottawa
& Partners Ltd. +1 613 230 2100 Office market inventory exceeds 47 million SF, with over 2.5
Warehouse vacancy is up in HRM to 8.14% overall and net million SF of vacant space; over half of this vacancy is in
+1 902 429 1811
rental rates have remained virtually unchanged from last Kanata (western suburban market). Vacancy rates elsewhere
year. Burnside/City of The Lakes is the largest of HRM’s are in decline. Expectations in Kanata indicate a softening of
industrial parks and has a 4.91% vacancy. There are several the market with multiple companies, including Nortel’s
new buildings under construction for owner/occupiers in demise, offering space in the sublet market. In Ottawa core,
this Park. a new 370,000 SF building was constructed by Ottawa
On the retail front, Dartmouth Crossing continues to expand developer Minto Group. The building is over 70% occupied
with the remainder expected to be occupied by the Federal
its retail park. Costco recently opened its second HRM
government. Export Development Corporation will relocate
Country Data location here and Hampton Inn and Suites welcomed its first Country Data with a new high-rise tower of 535,000 SF under construction
guests earlier this year. Bedford Commons, also known as by Broccolini in the core.
NorthGate Power Centre, a retail project, is under construction. Area 9,200,000
Area 9,200,000 The local retail market sustained a vacancy rate of 2.7%
Wal-Mart, Canadian Tire, Future Shop and other national
retailers are due to occupy space in this development. There with an increase of 0.03% in the previous six months.
GDP Growth (%) -2.48%
is a shortage of available investment product and the market GDP Growth (%) -2.48% Effects of the unanticipated Canadian dollar strengthening,
has been slow. and concerns over economic downturn, will not be reflected
GDP 2008 (US$ B) $1,319.14 GDP 2008 (US$ B) $1,319.14 in this sector. Vacancy rental rates continued to escalate
Council passed “HRM By Design” a blueprint for the future with rates averaging $19.75 SF. New retail construction has
of Downtown Halifax. The plan is a balance between heritage GDP/Capita (USD) $39,217.29 adopted a “wait and see” approach. There continues to be
GDP/Capita (USD) $39,217.29
preservation and growth. Plans were unveiled recently for a development of small neighborhood infill projects serving
new Trade and Convention Centre in the Halifax downtown. the rapidly growing suburbs.
Inflation Rate (%) 0.15% Inflation Rate (%) 0.15%
Also in the works is a new commercial/residential subdivi- Long-term investors are keeping a large percentage of cap-
sion in Bedford West. ital on the sidelines. Substantial assets offered for sale are
Unemployment 8.33% Unemployment 8.33%
Rate (%) Rate (%) beginning to receive attention. Capitalization rates increased
slightly. Offshore and international investors have expressed
0.25% 0.25%
continued interest in low-risk products. It has yet to be seen
Interest Rate (%) Interest Rate (%)
if the extraordinary difficulty experienced in the capital mar-
kets will alter commercial real estate markets in dramatic,
Population (Millions) 33.637 Population (Millions) 33.637 unforeseen ways.

Halifax At A Glance Ottawa At A Glance


Conversion: .96 CDN = 1 US$ NET RENT/SF/YR US$ NET RENT/SF/YR Conversion: 94 CDN = 1 US$ NET RENT/SF/YR US$ NET RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) N/A N/A N/A N/A N/A New Construction (AAA) N/A N/A N/A N/A N/A
Class A (Prime) CDN 31.22 CDN 34.89 $ 32.52 $ 36.34 2.8% Class A (Prime) CDN 30.00 CDN 35.00 $ 31.91 $ 37.23 2.9%
Class B (Secondary) CDN 18.00 CDN 29.04 $ 18.75 $ 30.25 3.4% Class B (Secondary) CDN 18.00 CDN 25.00 $ 19.15 $ 26.60 5.8%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) CDN 26.50 CDN 26.50 $ 27.60 $ 27.60 32.0% New Construction (AAA) N/A N/A N/A N/A N/A
Class A (Prime) CDN 20.29 CDN 30.60 $ 21.14 $ 31.88 7.5% Class A (Prime) CDN 14.00 CDN 15.00 $ 14.89 $ 15.96 7.6%
Class B (Secondary) CDN 13.50 CDN 29.75 $ 14.06 $ 30.99 12.4% Class B (Secondary) CDN 9.00 CDN 12.00 $ 9.57 $ 12.77 7.6%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse CDN 6.55 CDN 15.00 $ 6.82 $ 15.63 10.7% Bulk Warehouse CDN 4.00 CDN 6.00 $ 4.26 $ 6.38 5.0%
Manufacturing CDN 5.00 CDN 16.00 $ 7.97 $ 23.96 6.5% Manufacturing CDN 7.00 CDN 11.00 $ 7.45 $ 11.70 5.0%
High Tech/R&D CDN 7.65 CDN 23.00 $ 7.97 $ 23.96 6.7% High Tech/R&D CDN 8.00 CDN 13.00 $ 8.51 $ 13.83 18.0%
RETAIL RETAIL
Downtown CDN 35.00 CDN 65.00 $ 36.46 $ 67.71 N/A Downtown CDN 50.00 CDN 195.00 $ 53.19 $ 207.45 4.9%
Neighborhood Service Centers CDN 22.00 CDN 28.00 $ 22.92 $ 29.17 N/A Neighborhood Service Centers CDN 20.00 CDN 35.00 $ 21.28 $ 37.23 4.3%
Community Power Center CDN 28.00 CDN 31.00 $ 29.17 $ 32.29 N/A Community Power Center CDN 35.00 CDN 65.00 $ 37.23 $ 69.15 1.2%
Regional Malls CDN 65.00 CDN 75.00 $ 67.71 $ 78.13 N/A Regional Malls CDN 30.00 CDN 68.00 $ 37.23 $ 69.15 1.0%
Solus Food Stores N/A N/A N/A N/A N/A Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/Acre High/Acre Low/Acre High/Acre DEVELOPMENT LAND Low/Acre High/Acre Low/Acre High/Acre
Office in CBD N/A N/A N/A N/A Office in CBD CDN 17,000,000 CDN 17,000,000 $ 18,085,106.38 $ 18,085,106.38
Land in Office Parks CDN 239,580 CDN 326,700 $ 249,562.50 $ 340,312.50 Land in Office Parks CDN 350,000 CDN 400,000 $ 372,340.43 $ 425,531.91
Land in Industrial Parks CDN 163,350 CDN 239,580 $ 170,156.25 $ 249,562.50 Land in Industrial Parks CDN 275,000 CDN 375,000 $ 292,553.19 $ 398,936.17
Office/Industrial Land - Non-park CDN 270,115 CDN 521,413 $ 281,369.79 $ 543,138.54 Office/Industrial Land - Non-park N/A N/A N/A N/A
Retail/Commercial Land CDN 270,115 CDN 544,500 $ 281,369.79 $ 567,187.50 Retail/Commercial Land CDN 350,000 CDN 2,000,000 $ 372,340.43 $ 2,127,659.57
Residential CDN 206,358 CDN 317,117 $ 214,956.25 $ 330,330.21 Residential CDN 375,000 CDN 3,000,000 $ 372,340.43 $ 2,127,659.57

2010 Global Market Report I www.naiglobal.com 39


Toronto, Ontario, Canada Montreal, Quebec, Canada
Toronto is North America’s fifth largest city and Canada’s Enjoying a strategic position within North America, Montreal
largest economic center. With a population of approximately is a genuine international business center, one that forms a
5.5 million people, Toronto is home to one-sixth of Canada’s bridge between the economy of the European Union and
workforce. As Canada’s center for commerce, Toronto is that of the US. Montreal has not suffered excessively from
the hub of the banking and investment community and the worldwide recession that dominated the market in 2009.
also acts as the gateway for other major industries in Classed among the 20 largest cities in North America, it
Canada including, medical, film, tourism, fashion, food and appears that Montreal is a city that has been able to weather
information technology. the crisis without incurring too much damage.
Toronto’s downtown office market fundamentals continue The city of Montreal is ranked second in North America with
to reflect the current economic condition with the availability respect to jobs related to the design and production of video
rate remaining at approximately 10%, up from 6.9% in games. The city is also a major center for corporations
2008. Of note, the downtown financial core will see a operating in the aerospace, pharmaceutical and biotechnology
dramatic increase in inventory with the addition of just over fields, and a leader in electronic commerce, multimedia
3 million SF expected to come online by the end of 2009. production and information technology. The film industry
These new completions, which include the Bay Adelaide also continues to experience interesting growth in Montreal.
Centre, Maple Leaf Square, RBC Centre and the Telus Tower, The market for office space in the greater Montreal area
Contact will consist primarily of tenants who have relocated from Contact
represents more than 21% of the entire Canadian market.
NAI Ashlar Urban within the downtown core. NAI Commercial
The total inventory in this market is more than 72 million
+1 416 205 9222 Montreal
With the availability of new back-fill space, we expect an SF, 60% of which is in the downtown core. The overall office
+1 514 866 3333
increase in the vacancy rate in the downtown financial core. vacancy rate is 8%. No large projects have been started
Not withstanding the softening of net rents in the financial during this period, but in both Laval and the South Shore,
core, the downtown east and west markets have fared com- situated adjacent to Montreal, several building projects have
paratively well as lower occupancy costs and strong demand been developed.
have helped keep vacancy rates stable. The hotel sector in Montreal continues to develop, with
Toronto has remained very forward thinking in terms of its several new projects under way. There is approximately
environmental standards. All major new developments sched- 326.5 million SF of leasable industrial space in the greater
Country Data uled for the next 24 months have been registered for LEED Country Data Montreal area. The vacancy rate in the industrial sector is
certification, and smaller developments are starting to bring 7%. The majority of unoccupied space is found in older
a new generation of “green buildings” to the market. New Area 9,200,000
buildings with lower headroom, with more recent buildings
Area 9,200,000
energy alternatives such as deep lake water cooling, have offering greater headroom. However, industrial development
been embraced by some of the major new developments has been on the slow side, keeping demand steady with the
GDP Growth (%) -2.48% GDP Growth (%) -2.48%
(Telus Tower and RBC Centre) in Toronto. A chief objective of expectation of an improvement in the world economy in 2010.
the city of Toronto is to have 80% of the downtown area Montreal has made its mark this year by implementing its
GDP 2009 (US$ B) $1,319.14 GDP 2009 (US$ B) $1,319.14
serviced by Enwave by 2050. BIXI program, a bicycle transportation system offering over
GDP/Capita (USD) $39,217.29
6,000 bicycles at some 400 locations in the downtown core
GDP/Capita (USD) $39,217.29
and adjacent suburbs. This innovative project is now being
exported to other major cities such as London and Boston.
Inflation Rate (%) 0.15% Inflation Rate (%) 0.15%

Unemployment 8.33% Unemployment 8.33%


Rate (%) Rate (%)

Interest Rate (%) 0.25% Interest Rate (%) 0.25%

Population (Millions) 33.637 Population (Millions) 33.637

Toronto At A Glance Montreal At A Glance


Conversion: .96 CDN = 1 US$ NET RENT/SF/YR US$ NET RENT/SF/YR Conversion: .96 CDN = 1 US$ NET RENT/SF/YR US$ NET RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) CDN 28.00 CDN 40.00 $ 29.17 $ 41.67 9.7% New Construction (AAA) CDN 28.50 CDN 55.00 $ 29.69 $ 57.29 6.8%
Class A (Prime) CDN 25.00 CDN 32.00 $ 26.04 $ 33.33 9.8% Class A (Prime) CDN 35.00 CDN 42.00 $ 36.46 $ 43.75 7.2%
Class B (Secondary) CDN 15.00 CDN 25.00 $ 15.63 $ 26.04 7.5% Class B (Secondary) CDN 12.00 CDN 20.00 $ 12.50 $ 20.83 7.6%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) CDN 12.00 CDN 16.00 $ 12.50 $ 16.67 9.0% New Construction (AAA) N/A N/A N/A N/A 11.0%
Class A (Prime) N/A N/A N/A N/A N/A Class A (Prime) CDN 25.00 CDN 31.00 $ 26.04 $ 32.29 11.5%
Class B (Secondary) N/A N/A N/A N/A N/A Class B (Secondary) CDN 15.00 CDN 20.00 $ 15.63 $ 20.83 N/A
INDUSTRIAL INDUSTRIAL
Bulk Warehouse CDN 4.00 CDN 6.50 $ 4.17 $ 6.77 9.0% Bulk Warehouse CDN 4.75 CDN 6.50 $ 4.95 $ 6.77 6.0%
Manufacturing N/A N/A N/A N/A N/A Manufacturing CDN 4.25 CDN 6.00 $ 4.43 $ 6.25 6.5%
High Tech/R&D N/A N/A N/A N/A N/A High Tech/R&D CDN 5.75 CDN 7.25 $ 5.99 $ 7.55 7.0%
RETAIL RETAIL
Downtown CDN 30.00 CDN 130.00 $ 31.25 $ 135.42 10.0% Downtown CDN 45.00 CDN 200.00 $ 46.88 $ 208.33 5.0%
Neighborhood Service Centers N/A N/A N/A N/A N/A Neighborhood Service Centers CDN 13.00 CDN 25.00 $ 13.54 $ 26.04 6.5%
Community Power Center N/A N/A N/A N/A N/A Community Power Center CDN 22.00 CDN 32.00 $ 22.92 $ 33.33 3.5%
Regional Malls N/A N/A N/A N/A N/A Regional Malls CDN 30.00 CDN 55.00 $ 31.25 $ 57.29 6.0%
Solus Food Stores N/A N/A N/A N/A N/A Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/Acre High/Acre Low/Acre High/Acre DEVELOPMENT LAND Low/Acre High/Acre Low/Acre High/Acre
Office in CBD N/A N/A N/A N/A Office in CBD CDN 6.50 CDN 15.00 $ 6.77 $ 15.63
Land in Office Parks N/A N/A N/A N/A Land in Office Parks CDN 5.50 CDN 15.00 $ 5.73 $ 15.63
Land in Industrial Parks N/A N/A N/A N/A Land in Industrial Parks CDN 4.50 CDN 14.00 $ 4.69 $ 14.58
Office/Industrial Land - Non-park N/A N/A N/A N/A Office/Industrial Land - Non-park CDN 4.50 CDN 15.00 $ 4.69 $ 15.63
Retail/Commercial Land N/A N/A N/A N/A Retail/Commercial Land CDN 8.00 CDN 15.00 $ 8.33 $ 15.63
Residential N/A N/A N/A N/A Residential CDN 6.00 CDN 28.00 $ 6.25 $ 29.17

2010 Global Market Report I www.naiglobal.com 40


Regina, Saskatchewan, Canada
The Saskatchewan market appears to be an "oasis" amid a
general economic downturn. After years of being a "have not"
province it is apparent that it is Saskatchewan's time in the
sun. Saskatchewan has abundant resources and a strong
economy. Agriculture, oil, gas, potash, uranium, diamonds,
gold, and coal have diversified the economy. Unemployment
is below 5% and is predicted to remain steady. The two
largest cities, Regina and Saskatoon, with a combined
population of 500,000, enjoy a diversified economy.
After 10 years of expansion on the east side of Regina, and
five years’ growth in the northwest, look for the focus in the
retail market to shift to Harbour Landing (800,000 SF)
in the southwest corner of Regina. Rental rates for all other
areas are expected to remain constant in 2010. The
Saskatchewan investment market remains strong. While
investor appetite globally has waned, the local Saskatchewan
Contact market has investor appeal. Capitalization rates range
NAI Commercial between 8% -9% for well-located, well-tenanted projects.
(SASK)
The vacancy factor for industrial space is at an all time low.
+1 306 525 3344
Lack of construction and low supply will invariably continue
to push rental rates up. Industrial rates are in the range of
US $8.00-$9.00 for existing projects and US $13.00-
$15.00 for new construction. Land remains in good supply
at US $225,000-$250,000/acre.
The Regina office market witnessed a reduction of net
absorption to 80,000 SF in early 2009. Vacancy is at an
Country Data overall rate of 1.73%. Lease rates will continue upward as
we emerge from the recession. Pent up demand before the
recession will remain and no new projects are expected for
Area 9,200,000
2010. Interest in agricultural land in Saskatchewan has risen
steadily for the past three years. Rising commodity prices
GDP Growth (%) -2.48% have led to increased demand for rural land. Values are
expected to improve in 2010.
GDP 2008 (US$ B) $1,319.14
To summarize, the Saskatchewan market remains strong
and is predicted to experience continued steady growth into
GDP/Capita (USD) $39,217.29
2010. Look for rates in all sectors to continue upward as
steady demand, low vacancy rates, and a lack of new
Inflation Rate (%) 0.15% product will naturally force rates upward.
Unemployment 8.33%
Rate (%)

Interest Rate (%) 0.25%

Population (Millions) 33.637

Regina At A Glance
Conversion .97 CDN = 1 US$ NET RENT/SF/YR US$ NET RENT/SF/YR
Low High Low High Vacancy
DOWNTOWN OFFICE
New Construction (AAA) CDN $ 35.00 CDN $ 40.00 $ 3.35 $ 3.83 N/A
Class A (Prime) CDN $ 18.00 CDN $ 22.00 $ 1.72 $ 2.11 N/A
Class B (Secondary) CDN $ 12.00 CDN $ 14.00 $ 1.15 $ 1.34 N/A
SUBURBAN OFFICE
New Construction (AAA) N/A N/A N/A N/A N/A
Class A (Prime) N/A N/A N/A N/A N/A
Class B (Secondary) N/A N/A N/A N/A N/A
INDUSTRIAL
Bulk Warehouse CDN$ 6.00 CDN $ 8.00 $ 0.57 $ 0.77 N/A
Manufacturing N/A N/A N/A N/A N/A
High Tech/R&D N/A N/A N/A N/A N/A
RETAIL
Downtown CDN $ 20.00 CDN $ 25.00 $ 1.92 $ 2.39 N/A
Neighborhood Service Centers CDN $ 12.00 CDN $ 15.00 $ 1.15 $ 1.44 N/A
Community Power Center N/A N/A N/A N/A N/A
Regional Malls CDN $ 35.00 CDN $ 50.00 $ 3.35 $ 4.79 N/A
Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low//Acre High/Acre Low/Acre High/Acre
Office in CBD CDN $ 50.00 CDN $ 75.00 $ 51.55 $ 77.32
Land in Office Parks N/A N/A N/A N/A
Land in Industrial Parks CDN $ 4.00 CDN $ 6.00 $ 4.12 $ 6.19
Office/Industrial Land - Non-park N/A N/A N/A N/A
Retail/Commercial Land CDN $ 12.00 CDN $ 25.00 $ 12.37 $ 25.77
Residential N/A N/A N/A N/A

41 2010 Global Market Report I www.naiglobal.com 41


EMEA

SECTION CONTENTS
Vienna, Austria
The Baltics (Latvia/Estonia/Lithuania)
Sofia, Bulgaria
Prague, Czech Republic
Copenhagen, Denmark
Finland
Paris - Ile de France (Paris Region), France
Frankfurt am Main, Germany
Athens Greece
Iceland
Tel Aviv, Israel
Almaty, Kazakhstan
Kuwait
Oslo, Norway
Doha City, Qatar
Bucharest, Romania
Moscow, Russian Federation
St. Petersburg, Russian Federation
Belgrade, Serbia
Johannesburg, South Africa
Madrid, Spain
Stockholm, Sweden
Geneva, Switzerland
Zurich, Switzerland
Kiev, Ukraine
Istanbul, Turkey
London, England, United Kingdom

42 42
Vienna, Austria The Baltics (Latvia/Estonia/Lithuania)
Vienna is the capital of Austria and has a population of 1.7 Until recently, the Baltic States have been among the fastest
million. The city has historically been a focus for commerce growing economies in Europe. However, the unbalanced
between East and the West. Growth in the Austrian economy growth from 2005 through 2008, influenced by rapidly
is estimated at -3.4% for 2009 with inflation at 0.5%. The growing domestic demand and availability of advantageous
unemployment rate was 4.4% in July 2009, compared to credit resources, is the primary cause for the current crisis
9% for the EU 27. in the three Baltic countries. The economic activities
The new supply of office space was approximately 240,000 decreased most significantly in trade, manufacturing and
SM in 2008. For 2009 about 220,000 SM are estimated. construction sectors. With the decline of domestic demand,
Demand in the office space rental market has slackened. the consumer price inflation has been gradually decreasing.
Nevertheless, with approximately 280,000 SM of activity, The office market faces a severe slowdown due to lack of
the leasing performance will level off at a respectable value financing and a decrease in demand. Vacancy rates
due to numerous relocations and location consolidations. continue to rise. Vacancy in Class A offices is about 10% on
Annual leasing activity totaled approximately 340,000 average and 10.5% to 27% in Class B offices. Landlords
SM during the record years of 2005-2008. are offering attractive incentives and discounted rentals.
In recent months, increased space demand has come from Compared to 2008, the average rental decrease was 25%
the trade, financial and leisure sectors. Top rents as well as for Class B and 15% for Class A offices.
Contact Contact
the average rent are stable at €24.00, respectively Over the last few years more than 15 shopping centers
NAI Otto Immobilien NAI Baltics
€12.10/SM/month. The vacancy rate remains at 5.7%. opened or were significantly expanded in the Baltic States.
+43 1 512 77 77 +371 6731 2396
Demand for industrial and warehousing facilities has weak- However, the large scale retail developments have been
ened significantly. Rents have softened to around temporarily postponed. The retail space market has changed
€5.00/SM/month. Owner-occupation is still a dominant from a landlords’ market to a tenants’ market, and many
feature of the market. Retail sales in Austria continued to international companies have chosen to enter the Baltic
be strong during the first six months of 2009. Prime rents States retail market under the new preferential conditions.
for unit shops achieve approximately €2,400/SM/year. One major advantage of the three Baltic countries is strategic
Within the framework of Vienna’s main railway stations a lot location at the crossroads between Eastern and Western
of retail space is going to enter the market during Europe, hence new entrant international companies are
the next few years. Investment market demand, as well as seeing the benefits of setting up manufacturing or logistics
Country Data the requirements concerning property quality and yields, Country Data
activities in the Baltic States. Due to current economic
have risen (as much as 1% beyond the top segment). Pricing conditions, rental rates for industrial/warehouse facilities
Area (KM2) 1334.3 continues to be difficult for both sides. The massive Area (KM2) 175015
have shown instability and a major decrease.
purchase price reductions some expected have not materi-
GDP Growth (%) -3.82% alized due to market participants’ wait and see stance. GDP Growth (%) 15.5% Investment volumes were diminished in 2009, mostly due to
limitations on real estate financing imposed by the Scandi-
In recent months, the commercial properties changing navian banks, which play a leading role in the Baltics, as
GDP 2009 (US$ B) $374.42 GDP 2009 (US$ B) $83.70
ownership have been mostly special-use properties like well as the influence of the sub-prime mortgage crisis on the
garages and supermarkets, rather than typical offices. European markets.
GDP/Capita (US$) $45,090.49 Nowadays a trend to less risky real estate investments is GDP/Capita (US$) $11,900
clearly noticeable on the demand side. Experiencing a current downturn, the Baltic real estate
Inflation Rate (%) 0.47% Inflation Rate (%) 2.5% market provides excellent possibilities to attain high returns
and future prospects of capital appreciation when the
Unemployment 5.27% Unemployment 14.7% market stabilizes. The Baltic States will remain an interesting
Rate (%) Rate (%) arena for investors and professional developers due to its
Interest Rate(%) 1.00% Interest Rate(%) 7.5% excellent strategic location between Eastern and Western
Europe.
Population (Millions) 8.304 Population (Millions) 7.0

Vienna At A Glance The Baltics At A Glance


Conversion: 0.70 € = 1 US$ RENT/M2/YR US$ RENT/SF/YR Conversion: 0.6664 Euro = 1 US$ RENT/M2/YR US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
CITY CENTER OFFICE CITY CENTER OFFICE
New Construction (AAA) € 156.00 € 288.00 $ 20.70 $ 38.22 5.7% New Construction (AAA) € 108.00 € 144.00 $ 15.06 $ 20.07 15.0%
Class A (Prime) € 156.00 € 288.00 $ 20.70 $ 38.22 5.7% Class A (Prime) € 120.00 € 180.00 $ 16.73 $ 25.09 10.5%
Class B (Secondary) € 131.00 € 156.00 $ 17.39 $ 20.70 5.7% Class B (Secondary) € 84.00 € 108.00 $ 11.71 $ 15.06 18.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) € 140.00 € 156.00 $ 18.58 $ 20.70 5.7% New Construction (AAA) € 84.00 € 120.00 $ 11.71 $ 16.73 25.0%
Class A (Prime) € 131.00 € 156.00 $ 17.39 $ 20.70 5.7% Class A (Prime) N/A N/A N/A N/A N/A
Class B (Secondary) € 90.00 € 140.00 $ 11.94 $ 18.58 5.7% Class B (Secondary) € 60.00 € 84.00 $ 8.36 $ 11.71 27.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse € 30.00 € 60.00 $ 3.98 $ 7.96 9.0% Bulk Warehouse € 42.00 € 72.00 $ 5.86 $ 10.04 20.0%
Manufacturing € 50.00 € 70.00 $ 6.64 $ 9.29 9.0% Manufacturing N/A N/A N/A N/A N/A
High Tech/R&D € 60.00 € 78.00 $ 7.96 $ 10.35 8.0% High Tech/R&D N/A N/A N/A N/A N/A
RETAIL RETAIL
City Center € 872.00 € 2,400.00 $115.73 $ 318.52 7.5% City Center € 216.00 € 540.00 $ 30.11 $ 75.28 3.0%
Neighborhood Service Centers € 260.00 € 430.00 $ 34.51 $ 57.07 7.5% Retail Units in Parks € 96.00 € 144.00 $ 13.38 $ 20.07 8.0%
Community Power Center (Big Box) € 70.00 € 87.00 $ 9.29 $ 11.55 7.5% Community Power Center (Big Box) € 60.00 € 240.00 $ 8.36 $ 33.46 1.0%
Regional Malls N/A N/A N/A N/A N/A Regional Shopping Centers/Malls N/A N/A N/A N/A N/A
Solus Food Stores € 62.00 € 70.00 $ 8.23 $ 9.29 9.0% Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF
Office in CBD € 4,360.00 € 13,081.00 $ 578.65 $ 1,736.08 Office in CBD € 250.00 € 1,000.00 $34.85 $139.41
Land in Office Parks € 2,100.00 € 3,200.00 $ 278.71 $ 424.70 Land in Office Parks N/A N/A N/A N/A
Land in Industrial Parks € 2,000.00 € 3,052.00 $ 265.44 $ 405.05 Land in Industrial Parks € 20.00 € 50.00 $ 2.79 $ 6.97
Office/Industrial Land - Non-park € 2,180.00 € 3,488.00 $ 289.32 $ 462.92 Office/Industrial Land - Non-park € 10.00 € 50.00 $ 1.39 $ 6.97
Retail/Commercial Land € 2,000.00 € 3,052.00 $ 265.44 $ 405.05 Retail/Commercial Land € 20.00 € 200.00 $ 2.79 $ 27.88
Residential € 2,620.00 € 8,000.00 $ 347.72 $ 1,061.74 Residential € 10.00 € 170.00 $ 1.39 $ 23.70

2010 Global Market Report I www.naiglobal.com 43


Sofia, Bulgaria Prague, Czech Republic
The downturn was first felt in October 2008. Deteriorating With a global economic downturn and GDP in negative
domestic demand has led to a contraction of Bulgaria’s territory, the Czech Republic has witnessed a slowdown in
economy by 5.8-7.1% in Q2 2009. The country's economy development and investment throughout all of 2009. New
deteriorated significantly throughout 2009. Investment volume office, retail and industrial development has significantly
is off 60% compared to 2008. Most commercial development diminished due to a lack of financing and reduced tenant
plans have either been stopped or are on hold. demand. This also applies to shopping centre development,
The market was characterized by weakened domestic which has almost come to a halt.
demand in comparison to the previous year. Rising exports Prague has 2.6 million SM of modern office space composed
will help offset that weakened demand, but expectations are of 50% inner city, 30% outer city and 20% city centre with
for continued negative GDP. Mostly because the adjustment 70% new buildings and 30% refurbished. Vacancy is around
process is still going on and because the currency is fixed, 13%. Prague will see about 130,000 SM of new space in
most of this adjustment takes place at a slower pace. Recent 2009, a year over year drop of 60%. Pankrac Budejovicka’s
data indicates that inflation is heading to a negative territory office hub continued to be the preferred location. Significant
which, in turn, is also hurting the GDP growth. Bulgaria projects include Prague Marina, Factory Futurama and
reported a monthly deflation of non-EU harmonized Prague 8. Only 85,000 SM of modern office space will come
consumer prices for July, for a third month in a row. We are on the Prague market in 2010. This will ease the
Contact seeing a further deterioration in domestic demand, which is Contact demand/supply situation and help to maintain rents.
NAI ProCon the key factor for the deepening erosion of GDP. At the same NAI MIPA
The Czech Republic has 240 SM of shopping centre space
+359 2 943 43 75 time, net exports should be contributing positively but that +420 224 818 677
per 1,000 inhabitants. Of this, 1.9 million is in shopping
will not be enough to offset the slump of the domestic centres and 600,000 SM in retail parks. Openings
demand component. include Forum Liberec (20,000 SM), Liberec Plaza (19,500
Plans to start development of nine industrial parks are on SM), Skodovka Klatovy (16,000 SM), Forum Usti nad labem
hold. Most of the transactions are done by local players. The (26,400 SM), Olympia Brno (25,000 SM), Area Bory Phase
only property transactions that are continuing are the sea- II (15,000 SM), Atrium Hradec Kralove (7,300 SM) and retail
sonal and holiday properties along the Black Sea coast, but Park Kladno (6,000 SM). There are currently two outlet
even those are moving along at a much slower pace. Banks centers. There is a total inventory of 3,277,000 SM of indus-
have gradually started to open up for credit but at much trial space in the region; 1,600,000 SM in Prague and
Country Data higher interest rates than a year ago. Country Data* 1,680,000 SM in the rest of the Czech Republic. Vacancy is
The office market has remained the most developed at 20%. Rent remains low at €3-€4.5/SM/month.
Area (KM2) 1334.3 Area (KM2) 1334.3
commercial property sector in Bulgaria, primarily concen- The commercial real estate investment market is experi-
trated in Sofia. Vacancy rates are in the range of 13.5% with encing a surprisingly low level of activity and of the four
GDP Growth (%) -6.50% GDP Growth (%) -4.32%
vacancy rates of 19.6% in the suburban areas. Four new significant office investments transacted in 2009, two were
shopping malls opened and reached 220,000 SM. The first agreements made from previous years. The most signifi-
GDP 2009 (US$ B) $44.78 GDP 2009 (US$ B) $189.67
Carrefour hypermarket opened n Burgas. cant transactions have been the purchase of Jungmannova
Plaza Gemini and Prague 4 by Deka. Yields were 7% and
GDP/Capita (US$) $5,916.22 GDP/Capita (US$) $18,193.65 7.5%, respectively.
Financing of new developments remains key. Rates are
Inflation Rate (%) 0.61% Inflation Rate (%) 1.04%
down but pre-leasing requirements are up. Since demand
Unemployment
for space is dramatically reduced, this has led to many
Unemployment 8.23% 7.93%
Rate (%) Rate (%) development sites being put on hold.
Interest Rate(%) 1.00% Interest Rate(%) 1.25%

Population (Millions) 7.569 Population (Millions) 10.425

Sofia At A Glance Prague At A Glance


Conversion: 0.6681 € = 1 US$ RENT/M2/MO US$ RENT/SF/YR Conversion: .793 EUR = 1 US$ RENT/M2/MO US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
CITY CENTER OFFICE CITY CENTER OFFICE
New Construction (AAA) € 25.00 € 35.00 $ 41.72 $ 58.40 N/A New Construction (AAA) € 220.00 € 240.00 $ 29.62 $ 32.31 13.0%
Class A (Prime) € 10.00 € 16.00 $ 16.69 $ 26.70 N/A Class A (Prime) € 140.00 € 180.00 $ 18.85 $ 24.24 13.5%
Class B (Secondary) € 5.00 € 10.00 $ 8.34 $ 16.69 N/A Class B (Secondary) € 130.00 € 160.00 $ 17.50 $ 21.54 14.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) € 15.00 € 25.00 $ 25.03 $ 41.72 N/A New Construction (AAA) € 160.00 € 180.00 $ 21.54 $ 24.24 13.0%
Class A (Prime) € 8.00 € 12.00 $ 13.35 $ 20.02 N/A Class A (Prime) € 140.00 € 160.00 $ 18.85 $ 21.54 11.0%
Class B (Secondary) € 5.00 € 7.00 $ 8.34 $ 11.68 N/A Class B (Secondary) € 100.00 € 130.00 $ 13.46 $ 17.50 10.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse € 3.00 € 5.00 $ 5.01 $ 8.34 N/A Bulk Warehouse € 66.00 € 72.00 $ 8.89 $ 9.69 3.0%
Manufacturing € 2.00 € 4.00 $ 3.34 $ 6.67 N/A Manufacturing € 55.00 € 60.00 $ 7.41 $ 8.08 3.0%
High Tech/R&D € 4.00 € 6.00 $ 6.67 $ 10.01 N/A High Tech/R&D € 40.00 € 50.00 $ 5.39 $ 6.73 3.0%
RETAIL RETAIL
City Center (High Street Shop) € 50.00 € 100.00 $ 83.43 $ 166.87 N/A City Center € 1,320.00 € 1,800.00 $ 177.73 $ 242.35 2.0%
Neighborhood Service Centers € 20.00 € 40.00 $ 33.37 $ 66.75 N/A Neighborhood Service Centers € 420.00 € 480.00 $ 56.55 $ 64.63 5.0%
Community Power Center(Big Box) € 6.00 € 8.00 $ 10.01 $ 13.35 N/A Community Power Center (Big Box) € 100.00 € 140.00 $ 13.46 $ 18.85 3.0%
Regional Shopping Centers/Mall € 15.00 € 25.00 $ 25.03 $ 41.72 N/A Regional Shopping Centers/Malls € 480.00 € 660.00 $ 64.63 $ 88.86 5.0%
Solus Food Stores € 6.00 € 8.00 $ 10.01 $ 13.35 N/A Solus Food Stores € 120.00 € 140.00 $ 16.16 $ 18.85 N/A
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF
Office in CBD N/A N/A N/A N/A Office in CBD € 300.00 € 1,000.00 $ 40.39 $ 134.64
Land in Office Parks N/A N/A N/A N/A Land in Office Parks € 116.00 € 166.00 $ 15.62 $ 22.35
Land in Industrial Parks N/A N/A N/A N/A Land in Industrial Parks € 30.00 € 60.00 $ 4.04 $ 8.08
Office/Industrial Land - Non-park N/A N/A N/A N/A Office/Industrial Land - Non-park € 16.00 € 33.00 $ 2.15 $ 4.44
Retail/Commercial Land N/A N/A N/A N/A Retail/Commercial Land € 40.00 € 70.00 $ 5.39 $ 9.42
Residential N/A N/A N/A N/A Residential € 30.00 € 90.00 $ 4.04 $ 12.12

2010 Global Market Report I www.naiglobal.com 44


Copenhagen, Denmark Finland
Forced sales of properties and asset management have The Finnish economy seems to have reached the bottom
been a dominant part of the 2009 market in Copenhagen. but Finland’s recovery from the recession will take time.
The interest rate had fallen steadily during 2009 to the Finland became a victim of the global crisis mainly due to
current 1.25% but is expected to increase during 2010. The its export-driven economy while its domestic business
unemployment rate has increased to approximately 4% and remained relatively healthy. Since approximately 45% of
is expected to increase in 2010. GDP in 2009 is expected Finnish GDP accounts from foreign trade, Finland’s recovery
to end negative at -4.1% but turn around to 1.5% in 2010. is very much based on the recovery of its trade partners. An
Office vacancy increased in 2009 to the current level of upward turn in the Finnish economy is expected to start late
4.7 % in the CBD. We expect the vacancy rate to increase 2010 into early 2011.
further in 2010. One of the largest new office developments During 2009 the transaction volume in the Finnish property
is the 25,000 SM SEB Bank property. Jeudan has just market has been very low. Reasons for this stem from poor
acquired office properties totaling approximately €400 million. availability, high financing margins and the fact that sellers
Prime industrial locations along the highways and attractive and buyers have a wide gap in their yield expectations. From
facilities are still hard to find in Copenhagen, which has kept its highest volume in 2007, transaction volume has
the rent level stable. We believe that the rent will stay level decreased approximately 80%. At the moment, 65% of
in 2010. The vacancy rate rose from 1.9% in the capital investors are domestic compared to 54% in 2008 and 35%
Contact Contact in 2007. In the Helsinki Metropolitan Area (HMA), over the
area to approximately 2.8%.
NAI Denmark NAI Premises span of the past year the prime office yield level has risen
+45 70 23 00 26 The retail market has been severely affected by the financial +358 46 712 2197 from 5% to 6%. During the past year, more than 400,000
crisis and rent levels have fallen by approximately 20% in SM of new office space has been completed in the HMA
the Copenhagen area. In the primary retail streets, there area. This has increased the vacancy rates almost 40%
is still no real vacancy. The vacancy has primarily hit the compared to last year’s figures. At the same time, rents have
secondary locations. The vacancy rate for the greater decreased, which has affected Net Operating Income at
Copenhagen area is 3%, which is expected to increase the property level and decreased transaction volumes. The
slightly in 2010. current vacancy rate for 2009 in HMA is approximately
The demand for properties in general, is still very low due to 6.8% compared to 4.6% in 2008.
financial uncertainty. Even a very low interest rate has not The past year was not without significant transactions. In
Country Data helped much. Yields in general have increased. Distressed Country Data Q1 Google bought an old paper industry property from Stora
properties have, on many occasions, been bought by the Enso for €40,000,000. In Q2, Etera Mutual Pension Insur-
Area (KM2) 1334.3 banks that have the largest securities. We are expecting the Area (KM2) 338,424 ance Company sold its office properties, Swing Life Science
prices will find a stable level in the beginning of 2010. Center, for €120,000,000 to Fund of Commerz Real AG. In
GDP Growth (%) -2.43% The investment market is slowly starting to loosen up and GDP Growth (%) -7.00% Q3, Finnair Facilities Management made a sale-leaseback
during 2009 there have been a few large transactions. The transaction and sold its properties for €77,000.000 to NV
GDP 2009 (US$ B) $308.32 pension funds are willing to buy at competitive levels, but the GDP 2009 (US$ B) $242.33 Property Fund I.
core properties they are targeting are very scarce. Unemployment has been relatively low during the past several
GDP/Capita (US$) $55,942.17 GDP/Capita (US$) $45,876.38 years due to the strong growth of the Finnish economy.
While the employment rate was near 6.4% in 2008, it is
Inflation Rate (%) 1.68% Inflation Rate (%) 3.00% expected to increase to almost 10% in 2010 based on the
GDP’s 1% growth in 2008 versus the prediction of -7%
Unemployment 3.50% Unemployment 8.74% growth in 2009.
Rate (%) Rate (%)

Interest Rate(%) 1.00% Interest Rate(%) 1.00%

Population (Millions) 5.511 Population (Millions) 5.34

Copenhagen At A Glance Finland At A Glance


Conversion: 5.4824 DKK = 1 US$ RENT/M2/YR US$ RENT/SF/YR Conversion: .793 EUR = 1 US$ RENT/M2/MO US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
CENTER CITY OFFICE CITY CENTER OFFICE
New Construction (AAA) DKK 1,300.00 DKK 1,900.00 $ 22.03 $ 32.20 5.0% New Construction (AAA) € 22.00 € 27.00 $ 30.93 $ 37.96 N/A
Class A (Prime) DKK 1,200.00 DKK 1,700.00 $ 20.33 $ 28.81 4.7% Class A (Prime) € 22.00 € 27.00 $ 30.93 $ 37.96 4.7%
Class B (Secondary) DKK 700.00 DKK 1,000.00 $ 11.86 $ 16.95 7.0% Class B (Secondary) € 17.00 € 21.00 $ 23.90 $ 29.52 6.2%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) DKK 900.00 DKK 1,300.00 $ 15.25 $ 22.03 5.0% New Construction (AAA) € 17.00 € 19.00 $ 23.90 $ 26.71 10.5%
Class A (Prime) DKK 850.00 DKK 1,100.00 $ 14.40 $ 18.64 5.0% Class A (Prime) € 15.00 € 18.00 $ 21.09 $ 25.31 11.1%
Class B (Secondary) DKK 500.00 DKK 850.00 $ 8.47 $ 14.40 6.5% Class B (Secondary) € 9.00 € 14.00 $ 12.65 $ 19.68 14.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse DKK 350.00 DKK 600.00 $ 5.93 $ 10.17 2.5% Bulk Warehouse € 6.00 € 7.50 $ 8.44 $ 10.54 5.3%
Manufacturing DKK 350.00 DKK 600.00 $ 5.93 $ 10.17 3.0% Manufacturing € 5.00 € 7.00 $ 7.03 $ 9.84 5.3%
High Tech/R&D DKK 400.00 DKK 650.00 $ 6.78 $ 11.01 2.5% High Tech/R&D € 6.00 € 8.00 $ 8.44 $ 11.25 5.3%
RETAIL RETAIL
Downtown DKK 3,500.00 DKK 15,000.00 $ 59.31 $ 254.18 1.3% Downtown € 25.00 € 140.00 $ 35.15 $ 196.82 2.3%
Neighborhood Service Centers DKK 900.00 DKK 2,500.00 $ 15.25 $ 42.36 4.5% Neighborhood Service Centers € 11.00 € 40.00 $ 15.46 $ 56.23 2.8%
Community Power Center DKK 1,000.00 DKK 2,200.00 $ 16.95 $ 37.28 3.0% Community Power Center € 11.00 € 40.00 $ 15.46 $ 56.23 2.9%
Regional Malls DKK 100.00 DKK 2,200.00 $ 16.95 $ 37.28 3.0% Regional Malls € 11.00 € 40.00 $ 15.46 $ 56.23 2.9%
Solus Food Stores DKK 900.00 DKK 1 ,500.00 $ 15.25 $ 25.42 1.5% Solus Food Stores € 9.00 € 16.00 $ 15.46 $ 56.23 3.0%
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF
Office in CBD DKK 1,800.00 DKK 4,000.00 $ 30.50 $ 67.78 Office in CBD N/A N/A N/A N/A
Land in Office Parks DKK 1,500.00 DKK 3,500.00 $ 25.42 $ 59.31 Land in Office Parks € 275.00 € 500.00 $ 346.78 $ 630.52
Land in Industrial Parks DKK 1,200.00 DKK 3,000.00 $ 20.33 $ 50.84 Land in Industrial Parks € 175.00 € 300.00 $ 220.68 $ 378.31
Office/Industrial Land - Non-park DKK 1,500.00 DKK 2,750.00 $ 25.42 $ 46.60 Office/Industrial Land - Non-park € 225.00 € 275.00 $ 283.73 $ 346.78
Retail/Commercial Land DKK 1,800.00 DKK 4,000.00 $ 30.50 $ 67.78 Retail/Commercial Land € 250.00 € 400.00 $ 315.26 $ 504.41
Residential DKK 1,000.00 DKK 3,000.00 $ 16.95 $ 50.84 Residential € 250.00 € 600.00 $ 315.26 $ 756.62

2010 Global Market Report I www.naiglobal.com 45


Paris  lle de France (Paris Region), France Frankfurt am Main, Germany
Despite technical factors such as the impact of companies The German market seems to be overcoming the crisis
restocking their inventories or the ramp-up of government faster than anticipated. GDP for 2010 will increase by
stimulus packages, the French government has maintained 0.75%. Unemployment is at 8.0%, up from 7.4% in 2008
its prediction that the economy in France will not emerge with an increase expected in 2010. The real estate market
from recession until sometime in 2010. The employment shows falling prices and modest levels of activity in most
market suffers of this context, in particular in Greater Paris. sectors.
The real estate market has been hit hard by this challenging For many companies, the weak economy, combined
economic environment. Adding to the difficulties is investment with the ongoing restrictive loan environment, represents a
activity hit by the freeze in the volume of capital committed threat to their very existence. These factors continue to
following the onset of the financial crisis, ongoing tight credit impact demand in all real estate sectors. A clear recovery
conditions, hesitancy among market players and the persistent in the market is unlikely in the next six to nine months. If
gap between appraisal values and market values. improvement in the global economic situation is sustained,
Office property accounted for 53% of total investments com- the real estate market should show a slight improvement in
pared to 80% during the peak in the investment cycle. Q3 2010, and then move laterally for a year or two.
A total of 1.8 million SM is expected to enter Greater Paris The investment market saw weakened demand from
Contact in 2009, which is 36% less than 2008. This level of take-up Contact investors during the first half of 2009, which impacted
should remain stable in 2010. Demand for office space was investment volume in the most important German business
NAI Evolis NAI apollo
stifled by worsening employment conditions and deteriorating centers: Berlin, Düsseldorf, Frankfurt, Hamburg, Munich and
+33 1 81 72 00 00 +49 69 970 50 50
corporate balance sheets. Furthermore, many tenants opted Stuttgart. Transaction volume dropped almost 65% to €715
to renegotiate their leases rather than move to cheaper million, down from €2 billion in 2008. Prime yields were
premises. 5.5%, up from 4.6% in 2008. Prime property prices have
An exception has been the public sector, which was very fallen by 17% reflecting the weakening demand for office
active, led by 22,000 SM of office space leased by SNCF space and the resultant increase in vacancy with rates
(national train company) in the CNIT in La Défense. This was predicted to increase.
the largest transaction of the year. On the supply side, the Leased office space in Frankfurt in the first nine months was
arrival on the market of a significant volume of new office approximately 273,000 SM, a 30% decrease from 395,000
Country Data space launched in 2007 contributed to an increase in the Country Data SM in 2008. Locations with the highest demand included
office stock that is expected to reach 5 million SM at the the financial district/trade fair district with 125,132 SM, the
Area (KM2) 1334.3
end of the year. This would represent a vacancy rate of 8% Area (KM2) 356,854
city center/railway station at 20,330 SM and the City
by the end of 2009. West/Bockenheim area at 18,526 SM. Roughly 340,000
The 2010 French real estate market should look nearly the SM is forecast to be absorbed in the market in 2009.
GDP Growth (%) -2.36% GDP Growth (%) 1.9
same as in 2009, even with expectations that the invest- New development and refurbishments in the first six months
GDP 2009 (US$ B) $2,634.82 ment market will recover thanks to an adjustment between GDP 2008 (US$ B) 3,818.47 of 2009 were at 100,450 SM up from 92,000 SM in 2008.
seller prices and buyer expectations. A decline is expected for 2010 and 2011 due to finance
GDP/Capita (US$) $42,091.33 GDP/Capita (US$) 46,498.65
problems for projects without pre-leasing. Prime rent is at
€34.00/SM/month, down from €42.00/SM/month in 2008.
Average rent is at €16.00/SM/month, down from
Inflation Rate (%) 0.34% Inflation Rate (%) 2.9
€21.50/SM/month in 2008. The vacancy rate is 14.4% with
Unemployment 1,699,000 SM, slightly up from 1,650,000 SM in 2008.
9.54% Unemployment
Rate (%) The industrial market in Frankfurt and surrounding areas
Rate (%) 8.0
Interest Rate(%) 1.00% leased approximately 225,000 SM in the first nine months.
Population (Millions) 82.1 Prime rents were at €6.00/SM/month and the average rent
Population (Millions) 62.598 was €4.50/SM/month, both unchanged from 2008. The
2009 forecast for absorption is approximately 250,000-
300,000 SM.
Paris At A Glance Frankfurt am Main At A Glance
Conversion: 0.6727 € = 1 US$ RENT/M2/YR US$ RENT/SF/YR Conversion: .793 EUR = 1 US$ RENT/M2/YR US$ RENT/SF/MO
Low High Low High Vacancy Low High Low High Vacancy
CITY CENTER OFFICE CITY CENTER OFFICE
New Construction (AAA) € 550.00 € 700.00 $ 75.96 $ 96.67 6.5% Class A (Prime) € 270.00 € 471.00 $ 35.83 $ 62.51 14.09%
Class A (Prime) € 420.00 € 600.00 $ 58.00 $ 82.86 6.0% Class B (Secondary) € 147.00 € 234.00 $ 19.51 $ 31.06 14.09%
Class B (Secondary) € 250.00 € 450.00 $ 34.53 $ 62.15 6.5% Average City Center € 225.00 € 360.00 $ 29.86 $ 47.78 14.09%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) € 180.00 € 320.00 $ 24.86 $ 44.19 8.0% Westend Class A (Prime) € 252.00 € 456.00 $ 33.44 $ 60.52 14.09%
Class A (Prime) € 150.00 € 250.00 $ 20.72 $ 34.53 10.0% Westend Class B (Secondary) € 162.00 € 288.00 $ 21.50 $ 38.22 14.09%
Class B (Secondary) € 120.00 € 200.00 $ 16.57 $ 27.62 11.0% Suburban Class A (Prime) € 150.00 € 192.00 $ 19.91 $ 25.48 14.09%
INDUSTRIAL Suburban Class B (Secondary) € 138.00 € 150.00 $ 18.32 $ 19.91 N/A
Bulk Warehouse € 45.00 € 50.00 $ 6.21 $ 6.91 N/A INDUSTRIAL
Manufacturing € 55.00 € 75.00 $ 6.21 $ 6.91 N/A Bulk Warehouse € 42.00 € 81.00 $ 5.57 $ 10.75 N/A
High Tech/R&D € 50.00 € 130.00 $ 6.91 $ 17.95 N/A Manufacturing € 48.00 € 81.00 $ 6.37 $ 10.75 N/A
RETAIL High Tech/R&D € 54.00 € 180.00 $ 7.17 $ 23.89 N/A
City Center € 7,500.00 € 10,500.00 $1,035.78 $1,450.09 N/A RETAIL
Retail Units in Parks € 170.00 € 190.00 $ 23.48 $ 26.24 N/A Zeil (Prime Shop Units) € 2,400.00 € 3,120.00 $ 318.52 $ 414.08 N/A
Community Power Center (Big Box) N/A N/A N/A N/A N/A Goethe Strasse (Prime Shop Units) € 1,470.00 € 2,640.00 $195.09 $ 350.37 N/A
Regional Shopping Centers/Malls € 150.00 € 180.00 $ 20.72 $ 24.86 N/A Community Power Center (Big Box) € 96.00 € 180.00 $ 12.74 $ 23.89 N/A
Solus Food Stores N/A N/A N/A N/A N/A Regional Centers/Malls € 96.00 € 180.00 $ 12.74 $ 23.89 N/A
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF Solus Food Stores € 144.00 € 92.00 $ 19.11 $ 25.48 N/A
Office in CBD N/A N/A N/A N/A DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF

Land in Office Parks N/A N/A N/A N/A Office in CBD € 3,000.00 € 19,600.00 $ 398.15 $ 2,601.26
Land in Industrial Parks N/A N/A N/A N/A Land in Office Parks € 400.00 € 1,000.00 $ 53.09 $ 132.72
N/A N/A N/A N/A Land in Industrial Parks € 160.00 € 250.00 $ 21.23 $ 33.18
Office/Industrial Land - Non-park
N/A N/A N/A N/A Office/Industrial Land - Non-park € 170.00 € 250.00 $ 22.56 $ 33.18
Retail/Commercial Land
N/A N/A N/A N/A Retail/Commercial Land € 180.00 € 250.00 $ 23.89 $ 33.18
Residential
Residential € 500.00 € 1,000.00 $ 66.36 $ 132.72
2010 Global Market Report I www.naiglobal.com 46
Athens, Greece Reykjavik Iceland
Greece weathered the economic crisis fairly well despite a The economic situation in Iceland has been uncertain
15.8% drop in building permits. The market is looking to the throughout 2009 because of the collapse of 80% of the
new government for a way out from Ministry decisions con- banking system in October 2008. The property market has
cerning matters of semi-sheltered spaces. Property taxation been extremely slow. The number of commercial real estate
is another major issue for 2010. The market awaiting gov- sales is only about 10-20% of the volume recorded in 2007.
ernment provided incentives to boost construction through The economy is export driven with fish and aluminum
cheaper loans, radical changes in urban planning laws and the primary exports, and the domestic tourist business is
efforts towards tying up loose ends that deter foreign in- booming because of the low value of the Icelandic krona.
vestors from investing. Further, the market is eagerly await- The property market in Iceland has been slow or almost
ing resolution of major projects Votanikos, Galatsi and frozen throughout 2009. Most deals that occur involve
Mesogeia malls. smaller units where buyers are using the opportunity to
The office market in Athens is estimated at over 2 million SM buy into a good location now at a lower price than in the
with the vast majority being under 500 SM floor plates. Re- last few years. Many of the Icelandic real estate holding
cent Class A buildings tend to be from 800 SM to 1,000 companies have gone or are going bankrupt, so the owner-
SM. Older buildings have limited or no parking. Current ex- ship of a large part of the leased out real estate base is
isting inventory is estimated between 50,000 SM to 75,000 changing hands, mostly to the new government-owned
Contact SM with less than 25,000 SM under construction. Vacancy Contact banks. It is not yet known if or when these properties will be
NAI Ktimatiki rates are estimated at 7-8% for all classes, mainly due to NAI Reykjavik sold in the market.
+30 210 3628559 corporate consolidations. Demand for over 2,000 SM to + 354 5331122
The fundamentals in the Icelandic economy are the export
8,000 SM is high, however, supply is limited. Yields in- of fish and aluminum, which have been enjoying the very
creased from their low of 6% to reach 7-7.5%. weak Icelandic krona. Also the tourism in Iceland has been
Property prices on prime locations in Thessaloniki high- booming, which again has resulted in increasing demand
streets have dropped by an estimated 5-10%, while in other for hotel rooms. Banks have been more willing to lend into
locations prices have dropped by over 15% in some cases. hotel development projects than any other type of projects.
On Tsimiski Street, ground retail spaces are leased for €100- Many office, retail and residential development projects have
€150/SM and sale prices reach €30,000 to €35,000/SM, been delayed or cancelled, and in the immediate future such
while the same numbers for Mitropoleos Street are €50/SM new projects are not likely to be started. The Icelandic
Country Data and €8,000 to €10,000/SM, respectively. Country Data government has applied for Iceland to become a member of
Retail investments in Thessaloniki seem undeterred by the the EU. Some investors may see that as an opportunity to
Area (KM2) 1334.3 Area (KM2) 1334.3 invest in Iceland.
crisis. Louis Vuitton leased a further 100 SM for its store,
while Inditex signed deals for four city center stores, includ- The value of the Icelandic krona is very low now. Prices of
GDP Growth (%) -0.75% GDP Growth (%) -8.51%
ing an €8.2 million leasing deal for its Pull & Bear brand. properties have come down. Iceland may join the EU within
Eurobank Properties REIC purchased three retail stores to- the next two years and adopting the Euro within five years.
GDP 2009 (US$ B) $338.25 GDP 2009 (US$ B) $11.78
taling 33,000 SM leased to Praktiker Hellas, a subsidiary of
German Praktiker AG. The deal closed at a reported price of
GDP/Capita (US$) $30,304.75 €46 million, which is an estimated 9.5% reduction from a GDP/Capita (US$) $36,873.43
2006 reported value. The yield is at 8.3%.
Inflation Rate (%) 1.13% Inflation Rate (%) 11.67%
Tourism income fell 10.7% and shipping income dropped
Unemployment
38.7% in August 2009 compared to the same period in Unemployment
9.50% 8.62%
Rate (%) 2008, while current account balance remained unchanged Rate (%)
at €425 million. Travel expenditure from non-locals dropped
Interest Rate(%) 1.00% Interest Rate(%) 12.00%
10.7% over August 2008, while locals increased spending
Population (Millions) 11.162 9.7%. Transportation gross receipts (mostly shipping) Population (Millions) 0.319
dropped 38.7%, while income account deficit dropped by
€56 million.

Athens At A Glance Reykjavik At A Glance


Conversion .793 EUR = 1 US$ RENT/M2/MONTH US$ RENT/SF/YEAR Conversion: 122 ISK = 1 US$ RENT/M2/MO US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
CENTER CITY OFFICE CITY CENTER OFFICE
New Construction (AAA) € 16.00 € 22.00 $ 26.62 $ 36.61 10.0% New Construction (AAA) ISK 1,322.00 ISK 1,983.00 $ 12.08 $ 18.12 N/A
Class A (Prime) € 15.00 € 21.00 $ 24.96 $ 34.94 10.0% Class A (Prime) ISK 1,322.00 ISK 1,983.00 $ 12.08 $ 18.12 N/A
Class B (Secondary) € 9.00 € 12.00 $ 14.98 $ 19.97 15.0% Class B (Secondary) ISK 1,133.00 ISK 1,416.00 $ 10.35 $ 12.94 N/A
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) € 16.00 € 21.00 $ 26.62 $ 34.94 10.0% New Construction (AAA) ISK 850.00 ISK 1,133.00 $ 7.77 $ 10.35 N/A
Class A (Prime) € 14.00 € 20.00 $ 23.29 $ 33.28 10.0% Class A (Prime) ISK 850.00 ISK 1,133.00 $ 7.77 $ 10.35 N/A
Class B (Secondary) € 10.00 € 13.00 $ 16.64 $ 21.63 15.0% Class B (Secondary) ISK 708.00 ISK 945.00 $ 6.47 $ 8.64 N/A
INDUSTRIAL INDUSTRIAL
Bulk Warehouse € 4.50 € 7.50 $ 7.49 $ 12.48 5.0% Bulk Warehouse ISK 708.00 ISK 1,039.00 $ 6.47 $ 9.49 N/A
Manufacturing € 6.00 € 8.00 $ 9.98 $ 13.31 N/A Manufacturing ISK 708.00 ISK 1,039.00 $ 6.47 $ 9.49 N/A
High Tech/R&D € 7.00 € 8.50 $ 11.65 $ 14.14 N/A High Tech/R&D ISK 850.00 ISK 1,322.00 $ 7.77 $ 12.08 N/A
RETAIL RETAIL
Downtown € 35.00 € 290.00 $ 58.24 $ 482.54 15.0% City Center ISK 1,417.00 ISK 2,834.00 $ 12.95 $ 25.90 N/A
Neighborhood Service Centers € 20.00 € 40.00 $ 33.28 $ 66.56 15.0% Neighborhood Service Centers ISK 1,133.00 ISK 1,700.00 $ 10.35 $ 15.53 N/A
Community Power Center (Big Box) € 11.00 € 18.00 $ 18.30 $ 29.95 N/A Community Power Center (Big Box) ISK 1,133.00 ISK 1,606.00 $ 10.35 $ 14.68 N/A
Regional Malls € 20.00 € 150.00 $ 33.28 $ 249.59 N/A Regional Shopping Centers/Malls ISK 1,606.00 ISK 2,361.00 $ 14.68 $ 21.57 N/A
Solus Food Stores € 9.00 € 14.00 $ 14.98 $ 23.29 N/A Solus Food Stores ISK 1,417.00 ISK 1,983.00 $ 12.95 $ 18.12 N/A
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF
Office in CBD € 5,000.00 € 12,000.00 $ 7,462.69 $ 17,910.45 Office in CBD ISK 6,100,000 ISK 9,760,000 $ 4,645.11 $ 7,432.18
Land in Office Parks N/A N/A N/A N/A Land in Office Parks ISK 1,220,000 ISK 3,660,000 $ 929.02 $ 2,787.07
Land in Industrial Parks € 120.00 € 245.00 $ 179.10 $ 365.67 Land in Industrial Parks ISK 1,220,000 ISK 3,660,000 $ 929.02 $ 2,787.07
Office/Industrial Land - Non-park € 150.00 € 300.00 $ 223.88 $ 447.76 Office/Industrial Land - Non-park ISK 1,220,000 ISK 3,660,000 $ 929.02 $ 2,787.07
Retail/Commercial Land € 1,600.00 € 2,700.00 $ 2,388.06 $ 4,029.85 Retail/Commercial Land ISK 1,220,000 ISK 3,660,000 $ 929.02 $ 2,787.07
Residential € 1,000.00 € 3,000.00 $ 1,492.54 $ 4,477.61 Residential ISK 2,440,000 ISK 9,760,000 $ 1,858.05 $ 7,432.18

2010 Global Market Report I www.naiglobal.com 47


Tel Aviv, Israel Almaty, Kazakhstan
The condition of the Israeli economy in the last year is rela- Almaty is the largest city in Kazakhstan with a population
tively stable compared to the current global crisis. Israeli of more than 1.5 million. It plays an important role as the
banks did not collapse and most of their losses are a result business hub for all of Central Asia. According to official
of real estate investments abroad that the banks funded for statistics, GDP growth in 2008 was 3.3% and is forecasted
their Israeli clients, mainly in Eastern Europe. to drop to 2% in 2009. The inflation rate was fixed at 9.5%
In 2009, the Israeli real estate market acted contrary to the by the end of 2008. The economy of Kazakhstan is based on
trends. The residential market had a significant increase of oil and gas, mining, metals, grain and the production of other
15% compared with 2008. The activity in the commercial natural resources.
real estate market divided as follows: In the office market, no Office rental rates fell significantly by an average of more
new projects started construction and some of the projects than 40-50% during 2008 and Q1 2009. The market seems
under construction were halted. New sublease properties to have stabilized in Q3 2009 when the rental rates hit
entered the market and caused a price drop of about 17%, bottom. By October 2009, the average net rent office space
causing the demand to decline significantly. fell to US $35/SM/month US $20/SM/month for Class A
Most of the activity in the market focused in yield deals. The space and US $20/SM/month for Class B.
beginning of the year reflected a yield of about 9.5%, while International mass market retailers such as Mango, Promod,
Contact end of the year yields declined to 8% reflecting the growing Contact Celio and Sinequanone all reported a robust increase in their
demand for yield properties. sales volumes in Kazakhstan and noted they are positioned
NAI Yair Levy Strategy NAI Aristan
In the industrial market, the building of new structures or among the top compared with similar stores worldwide. This
+ 972 3 613 66 99 7 727 278 94 08
sites has not begun and the rent prices are in decline since has resulted in many global retailers looking for regional and
the demand for traditional industries has decreased. In local partners for franchise cooperation in Kazakhstan.
the last year, several new commercial centers opened in However, one of the main obstacles for global retailers to
central Israel, which stimulated great interest among clients. expand in Kazakhstan is a limited number of modern profes-
In Israel, four main groups have formed specializing in retail. sional properties both in shopping centers and the street
In our opinion, most of their future development lies in the retail sector.
expansion of neighborhood commercial centers. We anticipate During 2008 and the first half of 2009, the investment
the start of 2010 will be characterized by serious damage to market was not active. There were almost no inquiries and
Country Data the commercial real estate market and we estimate that the Country Data* institutional foreign investors have stopped financing
residential sector will moderate in the near future. real estate projects seemingly everywhere in the world.
Area (KM2) In the coming year, public companies in the field of the real Area (KM2)
Most of the investment transactions were between local
1334.3 1334.3
estate in Israel will find it difficult to return their bonds, which investors and such deals were not as visible. Local
will force them to sell many properties in the country and commercial banks have disposed of a large number of real
GDP Growth (%) -0.09% GDP Growth (%) -2%
abroad. In our opinion, this may result in further declining estate assets that were pledged over the past few years.
GDP 2009 (US$ B) $215.73 prices in the commercial field. GDP 2009 (US$ B) $107.04 Metro C&C opened its first store in 4Q 2009 in Astana with
plans to open up to 14 centers over the next several years.
GDP/Capita (US$) GDP/Capita (US$) $6,875.50
Inditex Group and Al Hokair Group signed lease agreements
$29,671.59
to open the first Zara store in Almaty by the end of 2009
and the second store in February 2010.
Inflation Rate (%) 3.60% Inflation Rate (%) 7.53%

Unemployment 8.20% Unemployment 7.40%


Rate (%) Rate (%)

Interest Rate(%) 0.75% Interest Rate(%) 9.00%

Population (Millions) 7.27 Population (Millions) 15.568

Tel Aviv At A Glance Almaty At A Glance


Conversion 3.75 NIS = 1 US$ RENT/M2/MO US$ RENT/SF/YR Conversion 151 KZT = 1 US$ RENT/M2/MO US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
CENTER CITY OFFICE CITY CENTER OFFICE
New Construction (AAA) NIS 90.00 NIS 120.00 $ 26.76 $ 35.67 12.0% New Construction (AAA) KZT 4,228.00 KZT 5,285.00 $ 31.22 $ 39.02 30.0%
Class A (Prime) NIS 85.00 NIS 110.00 $ 25.27 $ 32.70 8.0% Class A (Prime) KZT 4,077.00 KZT 5,285.00 $ 30.10 $ 39.02 15.0%
Class B (Secondary) NIS 60.00 NIS 70.00 $ 17.84 $ 20.81 15.0% Class B (Secondary) KZT 2,114.00 KZT 3,926.00 $ 15.61 $ 28.99 20.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) NIS 70.00 NIS 75.00 $ 20.81 $ 22.30 25.0% New Construction (AAA) KZT 2,718.00 KZT 3,775.00 $ 20.07 $ 27.87 20.0%
Class A (Prime) NIS 60.00 NIS 65.00 $ 17.84 $ 19.32 14.0% Class A (Prime) KZT 3,020.00 KZT 4,228.00 $ 22.30 $ 31.22 14.0%
Class B (Secondary) NIS 45.00 NIS 50.00 $ 13.38 $ 14.86 15.0% Class B (Secondary) KZT 1,812.00 KZT 2,567.00 $ 13.38 $ 18.95 10.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse NIS 34.00 NIS 38.00 $ 10.11 $ 11.30 10.0% Bulk Warehouse KZT 755.00 KZT 1,510.00 $ 5.57 $ 11.15 N/A
Manufacturing NIS 26.00 NIS 28.00 $ 7.73 $ 8.32 5.0% Manufacturing KZT 1,057.00 KZT 1,963.00 $ 7.80 $ 14.49 N/A
High Tech/R&D N/A N/A N/A N/A N/A High Tech/R&D KZT 1,057.00 KZT 1,963.00 $ 7.80 $ 14.49 N/A
RETAIL RETAIL
Downtown NIS 110.00 NIS 140.00 $ 32.70 $ 41.62 5.0% Downtown KZT 7,550.00 KZT 18,120.00 $ 55.74 $ 133.78 N/A
Neighborhood Service Centers NIS 130.00 NIS 150.00 $ 38.65 $ 44.59 N/A Neighborhood Service Centers KZT 4,530.00 KZT 10,570.00 $ 33.44 $ 78.04 N/A
Community Power Center (Big Box) NIS 70.00 NIS 80.00 $ 20.81 $ 23.78 N/A Community Power Center N/A N/A N/A N/A N/A
Regional Malls NIS 80.00 NIS 100.00 $ 23.78 $ 29.73 N/A Regional Shopping Centres/Malls KZT 3,775.00 KZT 9,815.00 $ 27.87 $ 72.46 N/A
Solus Food Stores N/A N/A N/A N/A N/A Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF
Office in CBD NIS 2,000.00 NIS 2,500.00 $ 49.55 $ 61.93 Office in CBD KZT 226,500.00 KZT 679,500.00 $ 0.01 $ 0.04
Land in Office Parks NIS 1,600.00 NIS 1,800.00 $ 39.64 $ 44.59 Land in Office Parks KZT 120,800.00 KZT 377,500.00 $ 0.01 $ 0.02
Land in Industrial Parks NIS 1,000.00 NIS 1,400.00 $ 24.77 $ 34.68 Land in Industrial Parks KZT 90,600.00 KZT 226,500.00 $ 0.01 $ 0.01
Office/Industrial Land - Non-park N/A N/A N/A N/A Office/Industrial Land - Non-park KZT 105,700.00 KZT 256,700.00 $ 0.01 $ 0.02
Retail/Commercial Land N/A N/A N/A N/A Retail/Commercial Land KZT 151,000.00 KZT 453,000.00 $ 0.01 $ 0.03
Residential N/A N/A N/A N/A Residential KZT 135,900.00 KZT 302,000.00 $ 0.01 $ 0.02

2010 Global Market Report I www.naiglobal.com 48


Kuwait Oslo, Norway
Kuwait, like most world economies, slowed down in 2008- Given the international economic environment Norwegian
09 with negative GDP growth, a decline in exports and industries in general performed quite well during and
struggling credit conditions. However, with oil prices pushing subsequent to the crisis in 2008 and 2009. This can be
$70 a barrel, Kuwait could run a budget surplus of KD 6 credited to rising oil prices and confidence returning to the
billion (US $20 billion) in 2009-10 riding on higher than bank systems in the mid-2009. The Norwegian Economy is
expected oil prices. The real estate sector is expected to moving forward positively.
reenergize with the slowly but steadily improving economic The Norwegian commercial property market was very quiet
backdrop and the impact of a recent legal ruling permitting at the beginning of 2009, but towards the summer activity
financial institutions to trade residential property. started to pick up. During the second half of 2009 more and
2009 saw the opening of the 360° Mall by Tamdeen featuring larger transactions occurred and capital was again available.
a great mix of high-end luxury icons like Yves Saint Laurent, Total transaction volume for 2009 will be less than in 2008,
Burberry, Dolce & Gabbana and the Géant Hypermarket. The but the prospects for 2010 are better. The estimated trans-
average asking rent for retail space in the ground Floor in action volume in 2009 is about US $2.3 billion to $2.7
Kuwait stood at KD 27.5/SM. There is demand for retail billion. There has been a significant increase in prime office
space. This sector was least affected during the economic yields, from 5.75% in July 2008 to 6.75% in July 2009.
crisis and did not witness any drop in rentals. As we approach 2010 the prime yield is decreasing slightly
Contact Contact to 6.5%. Yields in other sectors show similar trends but
In the office sector, 2009 saw the completion of a number
NAI Kuwait NAI FirstPartners less marked.
of high rise office towers, including the Arraya Tower, Al
+1 965 2437717 +47 2301 1400
Tijaria tower and many office towers of smaller scale. This In 2009 rentals decreased dramatically from the record high
has resulted in an oversupply of office space in Kuwait City levels before the crisis, but rentals have now started to
but there is demand for office space towards internal areas. flatten out, and it is expected that this will continue in 2010
The average asking rent for office space in Kuwait stood in most sectors. The industrial market is the least volatile
at KD 7.5/SM. The Al Hamra Tower, currently under con- sector but we did experience a slight correction of rents
struction in downtown Kuwait City, will become the tallest during 2009 and this will level out in 2010. As bankruptcies
building in Kuwait at 412 meters on completion in 2010 and and unemployment did not increase to the anticipated level
will include 98,000 SM of commercial and office space. we have not seen the number of sublettings in the leasing
The expatriate workforce in Kuwait registered a decline market, which at last crisis brought down the rental prices to
Country Data Country Data even lower levels. Vacancies are increasing but absorption is
of 0.85% due to the economic crisis, which resulted in low
demand and increased vacancy in the apartment sector. picking up and is expected to limit the impact on rental prices.
Area (KM2) 1334.3 Area (KM2) 1334.3
The average asking rate for single-bedroom units stands Norway had a soft landing compared to our neighboring
at KD 170, two-bedroom at KD 220 and three bedroom countries and the rapid adjustment in 2009 has revealed
GDP Growth (%) -1.51% GDP Growth (%) 0.11%
at KD 380. opportunities. The economic fundamentals are stable in
The Kuwait government has allocated its largest ever budget Norway and the commercial property market is picking up
GDP 2009 (US$ B) $114.88 GDP 2009 (US$ B) $368.96
of KD 1 billion for housing projects for its citizens. Kuwait at its new levels.
GDP/Capita (US$)
has about 124 projects under construction worth about US GDP/Capita (US$)
$32,491.46 $76,692.09
$114 billion, including major infrastructure projects like the
$7 billion Kuwait Metro, island development projects,
Inflation Rate (%) 4.65% Inflation Rate (%) 2.33%
enlargement of road networks, developments of ports and
Unemployment
other infrastructure. Unemployment
7.10% 3.30%
Rate (%) Rate (%)

Interest Rate(%) 6.20% Interest Rate(%) 1.50%

Population (Millions) 3.536 Population (Millions) 4.811

Kuwait At A Glance Oslo At A Glance


Conversion .2781 KD = 1 US$ RENT/M2/MO US$ RENT/SF/YR Conversion: 5.63 NOK = 1 US$ RENT/M2/YR US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
CITY CENTER OFFICE CITY CENTER OFFICE
New Construction (AAA) KD 7.00 KD 12.00 $ 28.06 $ 48.10 6.0% New Construction NOK 2,600.00 NOK 3,100.00 $ 42.90 $ 51.15 2.0%
Class A (Prime) KD 9.00 KD 13.00 $ 36.08 $ 52.11 4.0% Class A (Prime) NOK 2,400.00 NOK 3,000.00 $ 39.60 $ 49.50 6.0%
Class B (Secondary) KD 5.00 KD 8.00 $ 20.04 $ 32.07 2.0% Class B (Secondary) NOK 1,600.00 NOK 2,300.00 $ 26.40 $ 37.95 9.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) KD 7.00 KD 8.00 $ 28.06 $ 32.07 3.0% New Construction (AAA) NOK 1,700.00 NOK 2,100.00 $ 28.05 $ 34.65 5.0%
Class A (Prime) KD 7.00 KD 10.00 $ 28.06 $ 32.07 2.0% Class A (Prime) NOK 1 ,700.00 NOK 2,000.00 $ 28.05 $ 33.00 5.0%
Class B (Secondary) KD 5.00 KD 7.00 $ 20.04 $ 28.06 1.0% Class B (Secondary) NOK 1,200.00 NOK 1,400.00 $ 19.80 $ 23.10 10.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse KD 2.00 KD 5.00 $ 8.02 $ 20.04 3.0% Bulk Warehouse NOK 550.00 NOK 950.00 $ 9.08 $ 15.68 5.0%
Manufacturing KD 3.00 KD 10.00 $ 12.03 $ 40.09 3.0% Manufacturing NOK 450.00 NOK 700.00 $ 7.43 $ 11.55 6.0%
High Tech/R&D N/A N/A N/A N/A N/A High Tech/R&D NOK 750.00 NOK 1 ,050.00 $ 12.38 $ 17.33 6.0%
RETAIL RETAIL
Downtown KD 15.00 KD 28.00 $ 60.13 $ 112.24 2.0% City Center NOK 2,500.00 NOK11,000.00 $ 41.25 $ 181.51 4.0%
Neighborhood Service Centers KD 8.00 KD 20.00 $ 32.07 $ 80.17 1.0% Neighborhood Service Centers NOK 1,200.00 NOK 1,500.00 $ 41.25 $ 181.51 6.0%
Community Power Center (Big Box) KD 20.00 KD 30.00 $ 80.17 $ 120.26 2.0% Community Power Center(Big Box) NOK 1,300.00 NOK 2,500.00 $ 21.45 $ 41.25 7.0%
Regional Shopping Centres/Malls KD 20.00 KD 35.00 $ 80.17 $ 140.31 2.0% Regional Shopping Centers/Malls NOK 1,800.00 NOK 5,000.00 $ 29.70 $ 82.51 7.0%
Solus Food Stores KD 9.00 KD 20.00 $ 36.08 $ 80.17 1.0% Solus Food Stores NOK 900.00 NOK 1,500.00 $ 14.85 $ 24.75 7.0%
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF DEVELOPMENT LAND Low/M2 High/M2 Low/M2 High/M2
Office in CBD KD 5,000.00 KD 8,500.00 $ 17,979.14 $ 30,564.55 Office in CBD NOK 10,000.00 NOK 20,000.00 $ 1,776.20 $ 3,552.40
Land in Office Parks N/A N/A N/A N/A Land in Office Parks NOK 3,000.00 NOK 6,000.00 $ 532.86 $ 1,065.72
Land in Industrial Parks KD 400.00 KD 1,250.00 $1,438.33 $ 4,494.79 Land in Industrial Parks NOK 1,500.00 NOK 3,000.00 $ 266.43 $ 532.86
Office/Industrial Land - Non-park N/A N/A N/A N/A Office/Industrial Land - Non-park NOK 1,000.00 NOK 2,500.00 $ 177.62 $ 444.05
Retail/Commercial Land KD 3,000.00 KD 4,500.00 $10,787.49 $ 16,181.23 Retail/Commercial Land NOK 1,500.00 NOK 4,000.00 $ 177.62 $ 444.05
Residential KD 250.00 KD 1,000.00 $ 898.96 $ 3,595.83 Residential NOK 1,000.00 NOK 5,000.00 $ 177.62 $ 888.10

2010 Global Market Report I www.naiglobal.com 49


Doha, Qatar Bucharest, Romania
The State of Qatar is a peninsula located on the Western side Romania is currently experiencing a severe economic
of the Arabian Gulf. Doha is the capital of the country. Qatar recession with GDP expected to contract by 8.5% in 2009.
is one of the fastest growing economies in the world and is However, the country is expected to return to economic
one of the richest countries in the world with the second growth in 2010, and the government has set a target date
largest GDP per capita income. Qatar has the third-largest of 2014 for joining the EU. Due to the political crisis,
natural gas reserves in the world and it has shaped the Romania is in jeopardy of losing the second loan installment
country into one of the most competitive Arab economies. from the World Bank.
Qatar’s construction sector is propelled by the country’s The past year marked a major shift in the supply and
powerful economy and thriving real estate sector. The most demand equilibrium. Tenants have retained a position of
positive aspects in the real estate sector stem from devel- power as the result of a record amount of new office space
opers bringing together timely transfers of high quality, being delivered to the market, falling demand for space and
value-added projects, banks’ improvement in managing increased vacancy rates. The total GLA of modern office
the risks associated with over exposure to the real estate stock has now surpassed the 1 million SM mark following
sector and government efforts to overcome the difficulties. 245,000 SM of new space delivered in the first half of
All of these factors are responsible for creating good the year.
fundamentals in the real estate market in Qatar. Reduced consumption has resulted in falling rents, higher
Contact Contact
There is an excellent demand for office spaces in Doha. The vacancy rates and suspended construction of new projects.
NAI Qatar NAI Property Partners
vacancy rate in the CBD is around 7% and 5% in suburban The total modern retail space in Romania currently stands
+974 4316717 +1 40 21 667 7105
areas where the average rate per SM is low compared to the at approximately 1.16 million SM, with Bucharest claiming
CBD, but with similar facilities. The average asking rate for 450,000 SM of that amount. Despite the economic slow-
office space in the CBD is US $65/SM and in suburban down, some retailers are once again showing an appetite for
areas, the average rate is US $51/SM. expansion encouraged by the flexibility and incentives
The retail sector has a very promising future. The average offered by the landlords.
rate of growth in the retail sector is 21.3%. The growth is During the first half of 2009, both the supply and demand
mainly attributed to the decrease in inflation and increase in of industrial properties declined. Bucharest saw only 40,000
consumer spending. There is a good demand for warehouse SM of new product delivered despite earlier predictions of
Country Data space in Qatar with the average rate of growth at 24.5%. Country Data 175,000 SM. Negligible new supply came to the market in
There is a promising growth in the demand for residential the second half of 2009. The total stock of modern industrial
Area (KM2) apartment units/flats. The average rate (leasehold) for a properties is currently 920,000 SM in the greater
11,437 Area (KM2) 238,391
three-bedroom apartment is US $2,910, US $2,300 for Bucharest-Ilfov area. Following record years in 2007 and
a two-bedroom apartment, and US $1,790 for a single- 2008, the lack of available financing has pushed yields to
GDP Growth (%) 40.90% GDP Growth (%) -8.5%
bedroom apartment. The average asking rate for a villa is US between 9-10% for institutional investment stock.
GDP 2009 (US$ B) $100.40 $4,485 with rates ranging from US $3,560 to US GDP 2009 (US$ B) RON 497.4
The most important acquisition of the year was a takeover
$5,770/SM for freehold properties. on the London Stock Exchange of Fabian Romania Property
GDP/Capita (US$) $75,956.31
Fund by Black Sea Global Properties (BSGS). This deal, worth
GDP/Capita (US$) $ 12,200
€50 million, included six office buildings in Bucharest and
five development sites in other Romanian cities. Following
Inflation Rate (%) 15.10% Inflation Rate (%) 4.94%
record years of 2007 and 2008, the lack of available finance
Unemployment
has pushed yields out to 9-10% for institutional investment
0.50% Unemployment 9.6%
Rate (%) Rate (%) stock.
Interest Rate(%) 5.55% Interest Rate(%) 8.00%

Population (Millions) 16.23 Population (Millions) 22,215,000

Doha At A Glance Bucharest At A Glance


Conversion: 3.64 QAR = 1 US$ RENT/M2/Mo US$ RENT/SF/YR Conversion: 0.793 EUR = 1 US$ RENT/M2/MO US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
CITY CENTER OFFICE CITY CENTER OFFICE
New Construction QAR 180.00 QAR 300.00 $ 55.13 $ 91.88 7.0% New Construction (AAA) € 15.00 € 20.00 $ 21.09 $ 28.12 5.0%
Class A (Prime) QAR 160.00 QAR 250.00 $ 49.00 $ 76.57 2.0% Class A (Prime) € 18.00 € 22.00 $ 25.31 $ 30.93 5.0%
Class B (Secondary) N/A N/A N/A N/A N/A Class B (Secondary) € 10.00 € 15.00 $ 14.06 $ 21.09 5.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) QAR 170.00 QAR 230.00 $ 52.07 $ 70.44 5.0% New Construction (AAA) € 10.00 € 14.00 $ 14.06 $ 19.68 N/A
Class A (Prime) QAR 135.00 QAR 195.00 $ 41.35 $ 59.72 3.0% Class A (Prime) N/A N/A N/A N/A 10.0%
Class B (Secondary) QAR 90.00 QAR 120.00 $ 27.56 $ 36.75 4.0% Class B (Secondary) € 7.00 € 9.00 $ 9.84 $ 12.65 10.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse QAR 65.00 QAR 90.00 $ 19.91 $ 27.56 20.0% Bulk Warehouse € 3.00 € 4.00 $ 4.22 $ 5.62 10.0%
Manufacturing N/A N/A N/A N/A N/A Manufacturing € 1.50 € 4.00 $ 2.11 $ 5.62 10.0%
High Tech/R&D N/A N/A N/A N/A N/A High Tech/R&D N/A N/A N/A N/A N/A
RETAIL RETAIL
City Center QAR 740.00 QAR 825.00 $ 226.64 $ 252.67 N/A City Center € 25.00 € 70.00 $ 35.15 $ 98.41 5.0%
Neighborhood Service Centers QAR 250.00 QAR 475.00 $ 76.57 $ 145.48 N/A Neighborhood Service Centers € 5.00 € 20.00 $ 7.03 $ 28.12 N/A
Community Power Center(Big Box) N/A N/A N/A N/A N/A Community Power Center (Big Box) N/A N/A N/A N/A N/A
Regional Shopping Centers/Malls QAR 575.00 QAR 770.00 $ 176.11 $235.83 N/A Regional Shopping Centers/Malls € 6.00 € 25.00 $ 8.44 $ 35.15 15.0%
Solus Food Stores QAR 225.00 QAR 275.00 $ 68.91 $84.22 5.0% Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/M2 High/M2 Low/M2 High/M2 DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF
Office in CBD QAR 17,500.00 QAR 24,000.00 $ 4,807.69 $ 6,593.41 Office in CBD € 2,000.00 € 4,000.00 $ 2,522.07 $ 5,044.14
Land in Office Parks N/A N/A N/A N/A Land in Office Parks € 450.00 € 800.00 $ 567.47 $ 1,008.83
Land in Industrial Parks N/A N/A N/A N/A Land in Industrial Parks € 20.00 € 60.00 $ 25.22 $ 75.66
Office/Industrial Land - Non-park N/A N/A N/A N/A Office/Industrial Land - Non-park € 15.00 € 100.00 $ 18.92 $ 126.10
Retail/Commercial Land QAR 7,500.00 QAR 17,250.00 $ 2,060.44 $ 4,739.01 Retail/Commercial Land € 150.00 € 800.00 $ 189.16 $ 1,008.83
Residential QAR 1,200.00 QAR 5,900.00 $ 329.67 $ 1,620.88 Residential € 80.00 € 2,000.00 $ 100.88 $ 2,522.07

2010 Global Market Report I www.naiglobal.com 50


Moscow, Russian Federation St. Petersburg, Russian Federation
Among other BRIC emerging markets Russia has been the The second largest city in Russia, St. Petersburg is located
most impacted by the global economic crisis. Nevertheless, at the crossroads of Finland and Baltic countries, and
the economy, still very dependent on raw materials and oil historically has benefited from the positive influence of the
prices, started showing some signs of recovery in fall 2009. dynamic economy in this region. Large international and
Moscow, as the capital and largest city of Russia, has been Russian companies generally decide to be headquartered
hit the hardest over the past 12 months, but is also expected in Moscow, so St. Petersburg has been less impacted by
to see the fastest recovery. the global economic crisis than the rival capital city.
The overall vacancy rate is now higher than 15% for every Over 2009, rents decreased relatively slower than in
type of office and retail property, compared with less than Moscow. Prime office and retail rents, which used to be
3% a year ago. In particular, the vacancy rate for Class A and much lower than in Moscow, are now almost equivalent.
Class B office space reached more than 20%, its highest Rental rates reach $800/SM per year for the best office
level in a decade. Prime rents are at a historically low level, buildings in the city, and $2,500/SM for prime retail prop-
down 40% to 60% compared with 2008, and the share of erties. The industrial market is still largely under supplied,
subleases has significantly increased. It is now possible to and rents resisted the impact of the crisis better than other
lease excellent Class A office space for less than $500/SM sectors. Prime warehouse rental rates are now around
per year in Moscow. Prime retail properties in main retail $170/SM per year and for the first time are at a higher level
Contact corridors can be leased for $2,000/SM per year, compared Contact than in Moscow. The hospitality market has been strongly hit
NAI Becar with $5,000 a year ago. NAI Becar in 2009 with occupancy rates dropping below 50%. But
+7 495 787 42 97 +7 812 490 70 01 hospitality remains attractive to many investors due to the
The Russian hospitality market is doing comparatively better:
Average occupancy is around 50%, versus 70% in 2008. strong tourism potential of the region and lack of European
There were several transactions in this sector in 2009 with standard two- and three-stars hotels.
opportunistic investors buying old assets in Moscow at Investment yields are lower than in Moscow but are
extremely low prices to reconvert them into western hotels. expected to increase as office and retail prices go down over
Other major Russian cities are still largely under-supplied in the coming months. At the current 12% office and retail
hotel rooms, and we expect local and foreign investors to capitalization rates, only local Russian investors are now
remain active in this market throughout 2010. ready to purchase real estate assets. International investors
A significant number of distressed office and retail assets considering larger volumes of investment, $40 million and
Country Data Country Data up, believe the risk reward for investing in St. Petersburg
are now available for sale. Yields for Class A office centers
in Moscow and St. Petersburg are now around 12% to 13%, should be higher than in Moscow, and therefore yields of
Area (KM2) 1334.3 Area (KM2) 1334.3 14% to 15% should be achieved.
or 60% to 100% higher than in 2008.
A majority of investors believe that the market reached its The St. Petersburg market seems to be about to reach its
GDP Growth (%) -7.55% GDP Growth (%) -7.55%
bottom in Q3 2009. Office yields should remain relatively bottom, a few month after Moscow. Paradoxically, many
stable over 2010 as prices are expected to go up while very owners are still trying to lease or sell properties at pre-crisis
GDP 2009 (US$ B) $1,254.64 GDP 2009 (US$ B) $1,254.64
low current rental rates and occupancy levels should prices, which results in a large gap between the offer and
mechanically increase in Moscow’s still structurally under- the demand. This imbalance is expected to progressively
GDP/Capita (US$) $8,873.61 GDP/Capita (US$) $8,873.61 disappear over 2010.
supplied office market.
Inflation Rate (%) 12.27% Inflation Rate (%) 12.27%

Unemployment 7.60% Unemployment 7.60%


Rate (%) Rate (%)

Interest Rate(%) 9.50% Interest Rate(%) 9.50%

Population (Millions) 141.391 Population (Millions) 141.391

Moscow At A Glance St. Petersberg At A Glance


Conversion: 1 USD = 1 US$ RENT/M2/YR US$ RENT/SF/YR Conversion: 0.793 EUR = 1 US$ RENT/M2/YR US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
CITY CENTER OFFICE CITY CENTER OFFICE
New Construction (AAA) $ 650.00 $ 800.00 $ 60.39 $ 74.32 N/A New Construction (AAA) $ 500.00 $ 800.00 $ 46.45 $ 74.32 N/A
Class A (Prime) $ 550.00 $ 800.00 $ 51.10 $ 74.32 N/A Class A (Prime) $ 400.00 $ 800.00 $ 37.16 $ 74.32 N/A
Class B (Secondary) $ 200.00 $ 500.00 $ 18.58 $ 46.45 N/A Class B (Secondary) $ 300.00 $ 400.00 $ 27.87 $ 37.16 N/A
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) N/A N/A N/A N/A N/A New Construction (AAA) $ 300.00 $ 450.00 $ 27.87 $ 41.81 N/A
Class A (Prime) $ 250.00 $ 500.00 $ 23.23 $ 46.45 N/A Class A (Prime) $ 300.00 $ 450.00 $ 27.87 $ 41.81 N/A
Class B (Secondary) $ 150.00 $ 300.00 $ 13.94 $ 27.87 N/A Class B (Secondary) $ 150.00 $ 300.00 $ 13.94 $ 27.87 N/A
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 100.00 $ 130.00 $ 9.29 $ 12.08 N/A Bulk Warehouse $ 90.00 $ 100.00 $ 8.36 $ 9.29 N/A
Manufacturing $ 100.00 $ 140.00 $ 9.29 $ 13.01 N/A Manufacturing $ 100.00 $ 140.00 $ 9.29 $ 13.01 N/A
High Tech/R&D $ 120.00 $ 140.00 $ 11.15 $ 13.01 N/A High Tech/R&D $ 120.00 $ 170.00 $ 11.15 $ 15.79 N/A
RETAIL RETAIL
Downtown $ 1,200.00 $ 3,000.00 $ 111.48 $ 278.71 N/A City Center $ 1,600.00 $ 2,500.00 $ 148.64 $ 232.26 N/A
Neighborhood Service Centers $ 500.00 $ 1,500.00 $ 46.45 $ 139.35 N/A Neighborhood Service Centers $ 550.00 $ 1,100.00 $ 51.10 $ 102.19 N/A
Community Power Center $ 1,000.00 $ 2,500.00 $ 92.90 $ 232.26 N/A Community Power Center (Big Box) $ 150.00 $ 300.00 $ 13.94 $ 27.87 N/A
Regional Malls $ 1,200.00 $ 2,500.00 $ 111.48 $ 232.26 N/A Regional Shopping Centers/Malls $ 120.00 $ 260.00 $ 11.15 $ 24.15 N/A
Solus Food Stores $ 400.00 $ 1,300.00 $ 37.16 $ 120.77 N/A Solus Food Stores $ 100.00 $ 200.00 $ 9.29 $ 18.58 N/A
DEVELOPMENT LAND Low/ Hectare High/Hectare Low/Acre High/Acre DEVELOPMENT LAND Low/ Hectare High/Hectare Low/Acre High/Acre
Office in CBD 1,000.00 1,500.00 N/A N/A Office in CBD 700.00 1500.00 N/A N/A
Land in Office Parks 300.00 1,000.00 N/A N/A Land in Office Parks 25.00 1000.00 N/A N/A
Land in Industrial Parks 150.00 750.00 N/A N/A Land in Industrial Parks 50.00 150.00 N/A N/A
Office/Industrial Land - Non-park 150.00 500.00 N/A N/A Office/Industrial Land - Non-park 200.00 1000.00 N/A N/A
Retail/Commercial Land 150.00 2,000.00 N/A N/A Retail/Commercial Land 300.00 1500.00 N/A N/A
Residential 200.00 2,000.00 Residential 200.00 2000.00 N/A N/A

2010 Global Market Report I www.naiglobal.com 51


Belgrade, Serbia Johannesburg, South Africa
In the first half of 2009, Serbia’s GDP decreased by 4.1%. Our real estate markets have succumbed to negative capital
The main contributors were manufacturing (-20%), trade growth (source: IPD SA), returning a nominal -0.8% for
(-8%) and construction (-16.1%). Positive to mention are January-June 2009. The retail and industrial sectors both
the latest arrangements with China and Russia, providing recorded a 4.1% total return and offices recorded a total
loans for infrastructural investments worth more than 1.2 return of 1.6%. CPI has surprised everyone by falling to
billion Euros. 2010 will bring a slight recovery, but the return 6.1%, close to the Reserve Bank’s targeted 3-6% range.
to the strong growth rates will not be seen before 2011. While World Cup Soccer 2010 is set to positively affect retail
The total stock of Class A office space increased by 22,000 & hospitality sectors alike, there is concern for employment
SM. to 292,000 SM. An additional 30,000 SM will be deliv- once all related infrastructure initiatives have been completed.
ered by year-end 2009 and an estimated 55,000 SM is B-grade office vacancies increased to 17% in the City
expected to deliver in 2010. The trend looks positive, since Centre and 21.8% in suburban markets, while other office
the reduced rent levels are generating more clients. As a vacancies remained relatively consistent. New development
result of increased supply, the short-term vacancy reached continues on a demand basis only.
28%. But the latest occupier requests are stronger than ex- The industrial sector forms the backbone of the South
pected, leading to absorption of vacant space until 2011. African economy, which has been substantially affected by
Prime rents are currently set at €18/SM/month. Besides the global financial crisis. While rental decrease has been
Contact USCE shopping mall, which opened in March 2009 with Contact
minimal and vacancy rates stagnant in 2009, both will be
NAI Atrium 50,000 SM of net leasable area, only single-box retail NAI FINLAY
adversely affected in 2010.
+ 381 11 2205880 concepts such as KIKA furniture, MERKUR DIY, and Mr. + 27 11 807 4724
Bricolage are under development. All major shopping center Consumer spending is still down and retail turnover is under
developments have been put on hold, explained by the lack immense pressure, but with minimal casualties at this stage.
of finance and increased uncertainty of the rental market. We are likely to see smaller businesses struggle to stay
The Austrian EYEMAXX announced two large-scale logistic afloat in 2010. Larger retail chains have performed well in
projects, in Nis and Belgrade. Both projects are planned to 2009 under the circumstances, but 2010 will prove much
be completed with its first phases in early 2011 offering tougher. However, most retailers anticipate a turnaround by
30,000 SM of leasable area. The entire project comprises mid-2010. Steady increases in retrenchments alongside the
more than 200,000 SM. It is expected that more interna- looming drastic electricity tariff hikes will dictate retail
Country Data tional developers will enter the Serbian market in 2011. The Country Data performance in 2010.
investment market is relatively immature with few available Investment yields have stayed relatively constant year over
Area (KM2) 1334.3 “products.” Though there has been no known transaction in Area (KM2) 1334.3 year, and minimal large sales/mergers/acquisitions have
2009, the expected yield for office buildings is estimated occurred this year. Financial institutions have halted funding,
GDP Growth (%) -4%
between 8-12%. GDP Growth (%) -2.17% in turn slowing the development market to a near standstill.
2010 is the year of opportunities. The boom premiums are There are still a few funds and developers who are being
GDP 2009 (US$ B) $42.39 out of the markets and not many players are able to acquire. GDP 2009 (US$ B) $277.38
very aggressive in an advantageous market, and on the
Certainly, some property owners will look to cash out and whole, transactions have occurred in-house. Hospitality is
GDP/Capita (US$) $5,742.04 sell parts of their properties, not necessarily for distressed struggling at present, although construction is currently
GDP/Capita (US$) $5,635.19
conditions but for decent price/value ratios. under way to cater to the World Cup Soccer 2010 tourist
influx.
Inflation Rate (%) 9.85% Inflation Rate (%) 7.20%
Anticipated 45% annual increases in electricity tariffs
Unemployment 14.00% Unemployment 23.20% for 2010-12, could lead to thousands of retrenchments,
Rate (%) Rate (%) liquidations, and consumer debt rising dramatically. Gautrain
Interest Rate(%) 10.00% Interest Rate(%) 7.00% (Johannesburg’s rapid-rail link) will be activated in July
2010. Hosting 2010 World Cup Soccer should attract over
Population (Millions) 7.382 Population (Millions) 49.223 450 000 soccer fans to South Africa in May/June 2010.

Belgrade At A Glance Johannesburg At A Glance


Conversion: 0.793 EUR = 1 US$ RENT/M2/MO US$ RENT/SF/YR Conversion: 9.8104 SAR = 1 US$ NET RENT/M2/YR US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
CITY CENTER OFFICE CITY CENTER OFFICE
New Construction (AAA) € 14.50 € 18.00 $ 23.09 $ 28.67 N/A New Construction (AAA) SAR 2,100.00 SAR 2,100.00 $ 25.71 $ 25.71 N/A
Class A (Prime) € 14.50 € 18.00 $ 23.09 $ 28.67 29.0% Class A (Prime) SAR 360.00 SAR 924.00 $ 4.41 $ 11.31 3.9%
Class B (Secondary) € 12.50 € 16.00 $ 19.91 $ 25.48 17.0% Class B (Secondary) SAR 240.00 SAR 660.00 $ 2.94 $ 8.08 21.8%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) € 8.00 € 16.00 $ 12.74 $ 25.48 N/A New Construction (AAA) SAR 2,100.00 SAR 2,100.00 $ 25.71 $ 25.71 N/A
Class A (Prime) € 14.50 € 16.00 $ 23.09 $ 25.48 11.0% Class A (Prime) SAR 780.00 SAR 1,440.00 $ 9.55 $ 17.63 3.9%
Class B (Secondary) € 8.00 € 16.00 $ 12.74 $ 25.48 52.0% Class B (Secondary) SAR 588.00 SAR 1,140.00 $ 7.20 $ 13.96 17.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse € 2.00 € 7.00 $ 3.19 $ 11.15 N/A Bulk Warehouse SAR 216.00 SAR 456.00 $ 2.64 $ 5.58 3.0%
Manufacturing € 4.50 € 7.00 $ 7.17 $ 11.15 N/A Manufacturing SAR 216.00 SAR 420.00 $ 2.64 $ 5.14 3.3%
High Tech/R&D N/A N/A N/A N/A N/A High Tech/R&D SAR 336.00 SAR 600.00 $ 4.11 $ 7.35 3.7%
RETAIL RETAIL
City Center € 80.00 € 150.00 $ 127.41 $ 238.89 N/A City Center SAR 264.00 SAR 3,900.00 $ 3.23 $ 47.74 N/A
Neighborhood Service Centers € 15.00 € 60.00 $ 23.89 $ 95.56 N/A Neighborhood Service Centers SAR 1,020.00 SAR 4,200.00 $ 12.49 $ 51.42 N/A
Community Power Center (Big Box) € 7.00 € 15.00 $ 11.15 $ 23.89 N/A Community Power Center (Big Box) SAR 840.00 SAR 3,360.00 $ 10.28 $ 41.13 N/A
Regional Malls € 15.00 € 60.00 $ 23.89 $ 95.56 N/A Regional Malls SAR 2,040.00 SAR 8,400.00 $ 24.97 $ 102.83 N/A
Solus Food Stores € 10.00 € 18.00 $ 15.93 $ 28.67 N/A Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF DEVELOPMENT LAND Low/Hectare High/Hectare Low/Hectare High/Hectare
Office in CBD € 400.00 € 1,200.00 N/A N/A Office in CBD SAR 15,000,000 SAR 20,000,000 $ 799,889.92 $ 1,066,519.90
Land in Office Parks € 200.00 € 450.00 N/A N/A Land in Office Parks SAR 17,500,000 SAR 22,500,000 $ 933,204.91 $ 1,199,834.88
Land in Industrial Parks € 30.00 € 100.00 N/A N/A Land in Industrial Parks SAR 6,500,000 SAR 9,000,000 $ 346,618.97 $ 479,933.95
Office/Industrial Land - Non-park N/A N/A N/A N/A Office/Industrial Land - Non-park SAR 9,000,000 SAR 12,000,000 $ 479,933.95 $ 639,911.94
Retail/Commercial Land € 50.00 € 100.00 N/A N/A Retail/Commercial Land SAR 15,000,000 SAR 20,000,000 $ 799,889.92 $ 1,066,519.90
Residential € 200.00 € 500.00 N/A N/A Residential SAR 2,500,000 SAR 6,500,000 $ 133,314.99 $ 346,618.97

2010 Global Market Report I www.naiglobal.com 52


Madrid, Spain Stockholm, Sweden
The International Monetary Fund expects Spanish GDP to Despite the past year’s international economic turmoil, Swe-
contract 3.8% in 2009 and 0.7% in 2010. New construction den has been doing relatively well. GDP has been decreas-
permits declined 40.1%. Unemployment could reach 20% ing but the exceptionally low rate has supported the
in 2010. Public deficit rose 5.9% of GDP. Rents have fallen, consumption and kept the prices on a stable level for the
especially in secondary locations with high vacancy. residential market. The Repo rate is now on a historically
New development is currently on hold. Prime yields are and extremely low level of 0.25%. The prime rent in the
increasing with stable demand in prime locations. Tenants Stockholm CBD has declined approximately 10% during
continue to remain very selective. Banks and savings banks the past year.
are divesting after going from €2 billion in December 2007 The vacancies for offices have not increased substantially
to €15.3 billion worth of assets due to foreclosures and debt yet but higher vacancy levels are expected. An increase in
in March 2009. sublets or second-hand lease agreements with lower rents
Only 15 of the predicted 20 to 25 shopping centers opened has been observed. No bigger office construction projects
in the retail sector (600,000 SM) as rents continued to fall. have been started during the year and the decline of rent
Rental rates are down 15% on prime space and 25% on levels is noticeable. Almost no construction of new bigger
secondary properties. Demand for well operated and oppor- retail areas has started during the last year. Slightly higher
tunistic assets is rising. vacancy rates than before have been noticed. However,
Contact Contact turnover-based rents may prevent rising vacancies.
NAI Sol The office market saw a decline of 25% in the number of NAI Svefa
deals completed compared to 2008. The average deal size Some investors fear that the retail market doesn’t need too
+ 34 91 181 1567 +46 8 441 15 50
fell to roughly 620 SM. Companies are relocating and/or much additional expansion during the upcoming years. The
taking advantage of lower rents as a cost savings measure industrial market is relatively stable and has, as the other
and many are reducing space. The prime rents in Madrid markets, experienced a very low transaction volume.
fell to €32 SM/month, about a 28% decrease from the Increasingly companies are doing sale-leasebacks in order
previous year. Landlords are offering rent free periods and to improve their balance sheets. Yields for industrial real-
more flexible lease conditions. estate have been relatively stable throughout the year. Rental
regulation for the residential market has kept rents on a
Although some industrial space is being converted to mixed relatively low level, especially in the city of Stockholm. New
use, manufacturing companies are vacating older industrial agreements between different negotiating parties have
Country Data parks in favor of more modern facilities. Logistic demand Country Data made it clear that bigger consideration of location should
remained steady. be taken into account in the Stockholm area in the future
Area (KM2) 1334.3 Area (KM2) 1334.3 regarding rent levels. Even government level changes of the
Almost 40% of transactions were sale-leasebacks with
tenant covenants being a key factor. Banco Pastor, Caixa law in this area have been taken into consideration and
GDP Growth (%) -3.77% Catalunya and BBVA’s €1.5 billion transaction, by Deutsche GDP Growth (%) -4.83% might be changed to allow more differentiated and higher
Bank are prime examples. The current economic climate top rents.
GDP 2009 (US$ B) $1,438.36 has brought a return of foreign funds and investors to the GDP 2009 (US$ B) $397.70
The transaction market has experienced higher yield levels.
market. Colonial sold its Principe Pío mall in Madrid for €125 The Swedish banks had some problems about a year ago
GDP/Capita (US$) $31,141.50 million to Dutch investor Corio. GDP/Capita (US$) $43,146.74 and the government gave credit guaranties to some of them.
Mostly it was investments in Baltic countries that caused
Inflation Rate (%) -0.29% Inflation Rate (%) 2.25% problems. Since funds are relatively accessible again, the
number of transactions has increased.
Unemployment 18.20% Unemployment 8.50%
Rate (%) Rate (%)

Interest Rate(%) 1.00% Interest Rate(%) 0.25%

Population (Millions) 46.188 Population (Millions) 9.217

Madrid At A Glance Stockholm At A Glance


Conversion: 0.793 EUR = 1 US$ NET RENT/M2/MO US$ RENT/SF/YR Conversion: 6.8275 SEK = 1 US$ RENT/M2/MO US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
CITY CENTER OFFICE CITY CENTER OFFICE
New Construction (AAA) € 22.00 € 32.00 $ 30.93 $ 44.99 5.5% New Construction (AAA) SEK 3,500.00 SEK 4,000.00 $ 47.62 $ 54.43 10.0%
Class A (Prime) € 16.00 € 24.00 $ 22.49 $ 33.74 8.0% Class A (Prime) SEK 3,700.00 SEK 4,200.00 $ 50.35 $ 57.15 7.0%
Class B (Secondary) € 14.00 € 18.00 $ 19.68 $ 25.31 15.0% Class B (Secondary) SEK 2,000.00 SEK 3,200.00 $ 27.21 $ 43.54 12.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) € 20.00 € 30.00 $ 28.12 $ 42.18 30.0% New Construction SEK 1,700.00 SEK 2,400.00 $ 23.13 $ 32.66 6.0%
Class A (Prime) € 8.00 € 19.00 $ 11.25 $ 26.71 15.0% Class A (Prime) SEK 1,700.00 SEK 2,300.00 $ 23.13 $ 31.30 10.0%
Class B (Secondary) € 5.00 € 10.00 $ 7.03 $ 14.06 N/A Class B (Secondary) SEK 1,100.00 SEK 1,500.00 $ 14.97 $ 20.41 15.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse € 4.00 € 6.00 $ 5.62 $ 8.44 N/A Bulk Warehouse SEK 800.00 SEK 1,100.00 $ 10.89 $ 14.97 6.0%
Manufacturing € 3.50 € 6.00 $ 5.62 $ 8.44 N/A Manufacturing SEK 600.00 SEK 900.00 $ 8.16 $ 12.25 9.0%
High Tech/R&D € 5.00 € 6.00 $ 7.03 $ 8.44 N/A High Tech/R&D SEK 800.00 SEK 1,150.00 $ 10.89 $ 15.65 6.0%
RETAIL RETAIL
City Center € 55.00 € 126.00 $ 77.32 $ 177.14 N/A City Center SEK 10,000.00 SEK 15,000.00 $ 136.07 $ 204.11 N/A
Neighborhood Service Centers € 10.00 € 11.00 $ 14.06 $ 15.46 N/A Neighborhood Service Centers SEK 1,700.00 SEK 2,500.00 $ 23.13 $ 34.02 N/A
Community Power Center (Big Box) € 4.00 € 5.60 $ 5.62 $ 7.87 N/A Community Power Center (Big Box) SEK 1,500.00 SEK 2,500.00 $ 20.41 $ 34.02 N/A
Regional Malls € 6.00 € 7.00 $ 8.44 $ 9.84 N/A Regional Shopping Centers/Malls SEK 1,000.00 SEK 4,000.00 $ 13.61 $ 54.43 N/A
Solus Food Stores € 8.00 € 10.00 $ 14.06 $ 19.68 N/A Solus Food Stores SEK 1,000.00 SEK 1,800.00 $ 13.61 $ 24.49 N/A
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF DEVELOPMENT LAND Low/ M2 High/M2 Low/SF High/SF
Office in CBD € 700.00 € 1,050.00 $ 82.01 $ 123.01 Office in CBD SEK 8,000.00 SEK 13,000.00 $ 1,171.73 $ 1,904.06
Land in Office Parks € 210.00 € 630.00 $ 24.60 $ 73.81 Land in Office Parks SEK 1,500.00 SEK 2,900.00 $ 219.70 $ 424.75
Land in Industrial Parks € 525.00 € 210.00 $ 61.51 $ 24.60 Land in Industrial Parks SEK 650.00 SEK 1,300.00 $ 95.20 $ 190.41
Office/Industrial Land - Non-park N/A N/A N/A N/A Office/Industrial Land - Non-park SEK 500.00 SEK 950.00 $ 73.23 $ 139.14
Retail/Commercial Land € 175.00 € 630.00 $ 20.50 $ 73.81 Retail/Commercial Land SEK 1,300.00 SEK 2,300.00 $ 190.41 $ 336.87
Residential € 525.00 € 2,275.00 $ 61.51 $ 266.52 Residential SEK 2,500.00 SEK 4,000.00 $ 366.17 $ 585.87

2010 Global Market Report I www.naiglobal.com 53


Geneva, Switzerland Zürich, Switzerland
The Geneva area has weathered the economic storm relatively The Greater Zürich Area (GZA) is known for the financial,
well within the traditional sectors of finance and bio-pharma, insurance and industrial sectors together with growing IT,
although a greater impact has been apparent within the pharma and life-science industries. A gradual slowdown was
watch making industry. Inflation has revolved around zero noted in the economy in the first two quarters of 2009, how-
since March 2009 and at the time of publication the average ever since June a positive change has been noted. Projected
inflation rate for 2009 is -0.5%. Unemployment rose during GDP figures for 2009 are estimated at -1.7% year over year.
2009 to 3.9%, which remains low in European terms, Compared with the GDP fall to -4.6% in the Eurozone,
though Geneva has suffered more than other zones in this Switzerland appears fairly stable.
respect. Despite weak demand, office projects have proceeded in the
The office market has seen strong take-up in the CBD and financial, insurance and IT sectors as they benefit from
airport areas. Waterfront premises remain in short supply realignment within the Zürich marketplace. Google, Microsoft
with tenants prepared to drive up rental values. and Red Herring have all announced new expansion plans.
The interest of hedge funds has been sustained throughout Other players include Draper Investment, Meltwater News and
2009. Combined with the effect of the “winners and losers” Diamond Systems. Allianz has announced the re-grouping of
among the private banks and financial sector in general, the its organization to Wallisellen (ZH) and New Reinsurance has
Geneva area will see a rise in occupation by April 2010, as relocated from Geneva to Zürich. ACM has also opened a
Contact Contact new branch along Bahnhofstrasse.
the financial players seek to position themselves.
NAI Commercial CRE NAI Commercial CRE
Prime rents remained buoyant in 2009, with waterfront Zürich prime rents peaked in Q1, having reached a level
+ 41 22 707 44 44 + 41 44 221 04 04
properties renting for around CHF 1,000/SM per year and between CHF 850-900/SM per year. The industrial sector
well above for exceptional properties. The industrial market has been stagnant, with many decisions being postponed
has been more subdued throughout 2009 with many proj- or cancelled. Rents remain stable, though take-up is slow.
ects put on hold or postponed. Despite this, developments Foreign investment interest remains strong, although major
have seen take-up from certain sectors such as bio-pharma, Swiss funds rapidly acquire suitable prime properties, which
micro-technology and life science sectors. Rents remain at are in short supply. Owner-occupation remains stable, with
CHF 120-150/SM per year for production areas and CHF the majority of the activity in the pharmaceutical, biotech,
200-360/SM per year for high tech office space. life science or financial sectors. The volume of sales remains
Country Data The investment market for landmark buildings has remained Country Data low; however, prime yields have barely softened with net
strong with prime properties still commanding net yields yields continuing to perform at sub -4% for prime locations.
Area (KM2) 1334.3 between 3.25-3.85% as demand outstrips supply. The sec- Area (KM2) 1334.3 Bahnhofstrasse added the new Apple store to its world
ondary areas have seen a softening of yields and a reduction brand, however with the exception of a few newcomers the
GDP Growth (%) -1.95% in the volume of sales. GDP Growth (%) -1.95% retail sector has suffered from the sluggish economy. Rents
The retail market has been under pressure since September, are in the order of CHF 3,500-3,800/SM per year, though
GDP 2009 (US$ B) $484.13 suffering from an over-heated market during 2008 coupled GDP 2009 (US$ B) $484.13
some deals have resulted in achieved rents in excess of CHF
with the world economic downturn. Although still relatively 7,500/SM per year.
GDP/Capita (US$) $66,126.80 scarce, marketed units are reverting in line with sustainable GDP/Capita (US$) $66,126.80 Numerous commercial projects on the outskirts of the CBD
market values. may prevent stagnation at a later date. However, quality
Inflation Rate (%) -0.40% In general, prospects appear good for Geneva, which has Inflation Rate (%) -0.40% office accommodations with large floor plans have already
suffered less than many European neighbors, benefiting secured occupants, notably in the WestPark Areal and Ernst
Unemployment 3.48% from its traditional “safe-haven” effect. While prime down- Unemployment 3.48% & Young set to occupy the Platform area of the Prime Tower
Rate (%) Rate (%) development.
town areas will remain stable, a number of developments
Interest Rate(%) 0.25% on the outskirts of Geneva and around the airport may find Interest Rate(%) 0.25%
take-up slow in 2010.
Population (Millions) 7.321 Population (Millions) 7.321

Geneva At A Glance Zürich At A Glance


Conversion: 1.2237 CHF = 1 US$ RENT/M2/MO US$ RENT/SF/YR Conversion: 1.00746 CHF = 1 US$ RENT/M2/YR US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
CITY CENTER OFFICE CITY CENTER OFFICE
New Construction (AAA) CHF 900.00 CHF 1,200.00 $ 82.99 $ 110.66 1.0% New Construction (AAA) CHF 800.00 CHF 1,000.00 $ 73.77 $ 92.21 1.0%
Class A (Prime) CHF 850.00 CHF 1,000.00 $ 78.38 $ 92.21 1.0% Class A (Prime) CHF 750.00 CHF 900.00 $ 69.16 $ 82.99 1.5%
Class B (Secondary) CHF 550.00 CHF 800.00 $ 50.72 $ 73.77 5.0% Class B (Secondary) CHF 450.00 CHF 650.00 $ 41.50 $ 59.94 4.5%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) CHF 450.00 CHF 600.00 $ 41.50 $ 55.33 2.5% New Construction (AAA) CHF 450.00 CHF 550.00 $ 41.50 $ 50.72 4.0%
Class A (Prime) CHF 450.00 CHF 550.00 $ 41.50 $ 50.72 3.5% Class A (Prime) CHF 300.00 CHF 450.00 $ 27.66 $ 41.50 4.5%
Class B (Secondary) CHF 300.00 CHF 450.00 $ 27.66 $ 41.50 5.0% Class B (Secondary) CHF 300.00 CHF 450.00 $ 27.66 $ 41.50 6.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse CHF 70.00 CHF 90.00 $ 6.46 $ 8.30 1.0% Bulk Warehouse CHF 70.00 CHF 90.00 $ 6.46 $ 8.30 1.0%
Manufacturing CHF 90.00 CHF 150.00 $ 8.30 $ 13.83 1.0% Manufacturing CHF 80.00 CHF 150.00 $ 7.38 $ 13.83 1.0%
High Tech/R&D CHF 250.00 CHF 360.00 $ 23.05 $ 33.20 2.0% High Tech/R&D CHF 200.00 CHF 380.00 $ 18.44 $ 35.04 2.5%
RETAIL RETAIL
City Center CHF 3,250.00 CHF 4,500.00 $ 299.70 $ 414.96 1.0% City Center CHF 3,500.00 CHF 5,000.00 $ 322.75 $ 461.07 1.0%
Neighborhood Service Centers CHF 450.00 CHF 500.00 $ 41.50 $ 46.11 4.0% Neighborhood Service Centers CHF 450.00 CHF 500.00 $ 41.50 $ 46.11 4.0%
Community Power Center (Big Box) N/A N/A N/A N/A N/A Community Power Center (Big Box) N/A N/A N/A N/A N/A
Regional Shopping Centers/Malls CHF 350.00 CHF 600.00 $ 32.28 $ 55.33 1.5% Regional Shopping Centers/Malls CHF 450.00 CHF 800.00 $ 41.50 $ 73.77 2.0%
Solus Food Stores N/A N/A N/A N/A N/A Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF
Office in CBD CHF 30,000 CHF 40,000 $ 2,766.43 $ 3,688.57 Office in CBD CHF 30,000 CHF 40,000 $ 2,766.43 $ 3,688.57
Land in Office Parks CHF 700 CHF 900 $ 64.55 $ 82.99 Land in Office Parks CHF 700 CHF 900 $ 64.55 $ 82.99
Land in Industrial Parks CHF 200 CHF 300 $ 18.44 $ 27.66 Land in Industrial Parks CHF 250 CHF 350 $ 23.05 $ 32.28
Office/Industrial Land - Non-park CHF 250 CHF 400 $ 23.05 $ 36.89 Office/Industrial Land - Non-park CHF 250 CHF 650 $ 23.05 $ 59.94
Retail/Commercial Land CHF 1,000 CHF 1,500 $ 92.21 $ 138.32 Retail/Commercial Land CHF 1,000 CHF 1,600 $ 92.21 $ 147.54
Residential N/A N/A N/A N/A Residential N/A N/A N/A N/A

2010 Global Market Report I www.naiglobal.com 54


Istanbul, Turkey Kiev, Ukraine
Turkey’s economy shows the impact of the global recession In Q2 of 2009 Ukraine’s real GDP dropped 17.8 %. However
in 2009. The inflation rate reached 5.39% in May, which is the speed of decline has decreased. The construction sector
slightly higher than the lowest level of 5.24% in the past 39 has decreased more than others (-47%). Its part of GDP
years. Turkey’s currency has depreciated 20% compared to structure makes up 2.8%. Agriculture is the only sector that
the first half of 2008. Construction activity declined 7.6%in demonstrated growth (+2.3%). The processing industry,
2009, and the steel industry declined about 15%. Turkey’s which is the basis of country’s GDP, had fallen 33% through
major export manufacturing sectors such as textile and Q2 2009.
automotive have also been impacted negatively. Demand for professional office space has decreased consid-
Occupancy rates in CBD routes like Levent and Zincirlikuyu erably. In Kiev, the vacancy rate is about 15%. The fall in rental
are still high, while Umraniye and Kozyatagi in the Asian Part rates from their 2008 peak is roughly 60%. Prime rents are
of Istanbul kept their popularity to become new districts for now about US $30-35/SM/month. Despite the decline, new
offices. One of the biggest office projects is the 90,000 SM office buildings continue to be commissioned in Kiev. During
Akkom office project, which will be built by Eroglu Holding the first half of 2009 three new centers were commissioned,
in Umraniye. In addition, Emaar Properties has purchased accounting for 20,500 SM growth.
a 74,000 SM land parcel in the Asian Side of Istanbul for From the beginning of 2009, prime rents for modern ware-
approximately $400 million from Toprak Holding. There will house facilities within a 30km zone from Kiev dropped by
Contact be residence blocks as well as a 120,000 SM shopping Contact
30% to US $6.00-$7.00/SM/month excluding operating
NAI Treas center, a five-star hotel and office buildings. NAI Pickard
expenses. Vacancy rates are currently 35%-40%. Most ware-
+90 216 481 47 00 +380 44 278 00 02
The retail market, which registered fast growth in recent housing developments are now on hold and their delivery is
years, showed signs of slowing in the first nine months of rescheduled to 2010-2011. Only 70,000-80,000 SM is likely
2009. By September 2009, retail supply had reached 6.06 to be delivered onto the market by the end of 2009.
million SM in 276 retail centers. Istanbul accounts for 2.2 The occupancy rate for shopping centers in Kiev has
million SM of this total in 88 shopping centers. There decreased but it is still rather high; only about 3.5% of total
are 135 shopping centers under construction and in the retail spaces are vacant. Yet a decrease of consumer de-
planning stage in Turkey, of which 67 are in Istanbul. There mand and devaluation of the Hrivna led to a substantial de-
has been an increase in the number of warehouses due cline in rental rates, dropping 60% since 2008. The average
to increased demand for industrial real estate in Turkey. rental rates today are about US $45-50/SM/month. Growth
Country Data Logiturk B2B Real Estate Solutions Company is planning Country Data
of retail space in shopping centers in the first half of 2009
to complete a 126,000 SM warehouse park in Istanbul. is at 14.3% (66,900 SM).
Area (KM2) 1334.3 Area (KM2) 1334.3
Total international direct investment in 2008 reached Ukraine is still desperately short of hotels especially in the
$17.96 billion in Turkey, where $2.94 billion of this amount genuine three-star category. The authorities are offering to
GDP Growth (%) -6.50% GDP Growth (%) -14.00%
was invested in real estate. The amount of international fast track approvals but money remains tight.
direct investment in July 2009 totaled $4.938 billion, down
GDP 2009 (US$ B) $593.53 significantly from $9.735 billion in July 2008. GDP 2009 (US$ B) $115.71 FDI is virtually non-existent this year and will probably
remain flat until after the presidential elections slated for
GDP/Capita (US$) $8,427.11 GDP/Capita (US$) $2,537.80 January 2010. However sales on yields of 20% on current
low rental levels are possible. The opportunity for rental
Inflation Rate (%) 6.20% Inflation Rate (%) 16.28% growth and consequent capital growth is still strong.

Unemployment 12.80% Unemployment 9.00%


Rate (%) Rate (%)

Interest Rate(%) 6.75% Interest Rate(%) 10.25%

Population (Millions) 70.431 Population (Millions) 45.593

Istanbul At A Glance Kiev At A Glance


Conversion: 1.49 = 1 US$ RENT/M2/YR US$ RENT/SF/YR Conversion: 7,64 UAH = 1 US$ RENT/M2/MO US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
CITY CENTER OFFICE CITY CENTER OFFICE
New Construction (AAA) $ 204.00 $ 360.00 $ 18.95 $ 33.44 N/A New Construction N/A N/A N/A N/A N/A
Class A (Prime) $ 126.00 $ 306.00 $ 11.71 $ 28.43 15.0% Class A (Prime) UAH 360.00 UAH 420.00 $ 52.53 $ 61.29 17.0%
Class B (Secondary) $ 108.00 $ 138.00 $ 10.03 $ 12.82 N/A Class B (Secondary) UAH 216.00 UAH 264.00 $ 31.52 $ 38.52 14.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) $ 114.00 $ 138.00 $ 10.59 $ 12.82 N/A New Construction N/A N/A N/A N/A N/A
Class A (Prime) $ 78.00 $ 120.00 $ 7.25 $ 11.15 20.0% Class A (Prime) N/A N/A N/A N/A N/A
Class B (Secondary) $ 54.00 $ 120.00 $ 5.02 $ 11.15 N/A Class B (Secondary) N/A N/A N/A N/A N/A
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 48.00 $ 84.00 $ 4.46 $ 7.80 N/A Bulk Warehouse UAH 70.00 UAH 85.00 $ 10.21 $ 12.40 35.0%
Manufacturing $ 48.00 $ 72.00 $ 4.46 $ 6.69 N/A Manufacturing N/A N/A N/A N/A N/A
High Tech/R&D $ 72.00 $ 96.00 $ 6.69 $ 8.92 N/A High Tech/R&D N/A N/A N/A N/A N/A
RETAIL RETAIL
City Center $ 432.00 $ 1,560.00 $ 40.13 $ 144.93 20.0% City Center UAH 490.00 UAH 720.00 $ 71.50 $ 105.06 6.2%
Neighborhood Service Centers $ 264.00 $ 768.00 $ 24.53 $ 71.35 N/A Neighborhood Service Centers UAH 360.00 UAH 600.00 $ 52.53 $ 87.55 N/A
Community Power Center (Big Box) $ 216.00 $ 576.00 $ 20.07 $ 53.51 N/A Community Power Center (Big Box) UAH 480.00 UAH 660.00 $ 70.04 $ 96.31 2.0%
Regional Shopping Centers/Malls $ 216.00 $ 768.00 $ 20.07 $ 71.35 18.0% Regional Shopping Centers/Malls UAH 480.00 UAH 720.00 $ 70.04 $ 96.31 2.0%
Solus Food Stores $ 162.00 $ 240.00 $ 15.05 $ 22.30 N/A Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF
Office in CBD $ 850.00 $ 4,015.00 $ 78.97 $ 373.00 Office in CBD N/A N/A N/A N/A
Land in Office Parks N/A N/A N/A N/A Land in Office Parks N/A N/A N/A N/A
Land in Industrial Parks $ 265.00 $ 825.00 $ 24.62 $ 76.64 Land in Industrial Parks N/A N/A N/A N/A
Office/Industrial Land - Non-park $ 210.00 $ 1,950.00 $ 19.51 $ 181.16 Office/Industrial Land - Non-park N/A N/A N/A N/A
Retail/Commercial Land $ 425.00 $ 3,010.00 $ 39.48 $ 279.64 Retail/Commercial Land N/A N/A N/A N/A
Residential $ 45.00 $ 3,010.00 $ 4.18 $ 279.64 Residential N/A N/A N/A N/A

2010 Global Market Report I www.naiglobal.com 55


London, United Kingdom
The UK economy is currently (Q2) contracting at 5.5%. With
GDP expected to return to growth in the fourth quarter, the
current forecast for 2009 is -4.40%. Economists are fore-
casting GDP growth of 1.40% for 2010. The UK Base rate
is 0.5%, credit remains tight, monetary stimulus has been
extended and Sterling is relatively weak. In line with GDP
forecasts, there is the perception that the real estate
markets are at or close to bottom.
Office rents have fallen 40% to 50% from the peak. Incentives
of two or three years rent free are common on 10-year
leases in the West End and City, respectively. Development
activity is declining. Leasing activity remains low. Unsurpris-
ingly, warehouse rents have been falling (3.2% in the year to
June 2009) and the availability of large buildings in
excess of 10,000 SM increased by about 15%. Development
activity has slowed dramatically.
Contact
Retail sales were up 2.4% year over year through September.
NAI Global
Non-food retail figures were flat at around 1.1% annual
+1 609 945 4000
growth while food store volumes grew at 2.8%. Central
London rental values have fallen 5.9% in the last 12 months
but some key central London streets have bucked the trend,
boosted by tourism and the weak Pound. For example, Bond
Street still commands rents of £750/SF Zone A. Leasing
incentives are increasing. Development activity has virtually
stopped.
Investment activity is improving with £1.98 billion invested
Country Data in the City and West End in the first half of the year. Yields
are hardening. Overseas investors have been attracted by
Area (KM2) 244,100
the weak pound, the length of UK leases (10-15 years),
upward-only rent reviews, historically high yields and
the perception that the prime property market is close to
GDP Growth (%) 1.0
bottom. Some UK funds have recently started to re-enter
the market.
GDP 2008 (US$ B) 2,787.37
While the UK economy remains difficult and the emergence
GDP/Capita (US$) 45,681.00
from recession is slower than economists were forecasting,
the rate of rental decline in the different sectors is slowing
and there are clear signs of a recovery in the investment
Inflation Rate (%) 3.8
market.
Unemployment 5.4
Rate (%)

Population (Millions) 61.1

London At A Glance
Conversion: 0.6162 £ = 1 US$ RENT/M2/YR RENT/SF/YR
Low High Low High Vacancy
OFFICE WEST END 6.7%
Mayfair £ 700.00 £ 800.00 $ 105.54 $ 120.61 N/A
Victoria £ 500.00 £ 565.00 $ 75.38 $ 85.18 N/A
OFFICE CITY 8.5%
Core £ 400.00 £ 450.00 $ 60.31 $ 67.84 N/A
Fringe £ 300.00 £ 350.00 $ 45.23 $ 52.77 N/A
Mid-town £ 400.00 £ 450.00 $ 60.31 $ 67.84 N/A
INDUSTRIAL SPACE
South East (excluding Heathrow) £ 85.00 £ 120.00 $ 12.82 $ 18.09 N/A
Heathrow £ 130.00 £ 140.00 $ 19.60 $ 21.11 N/A
RETAIL SPACE (ZONE A)
Brompton Road N/A £ 5,167.00 N/A $ 779.01 N/A
Canary Wharf N/A £ 3,606.00 N/A $ 543.66 N/A
City N/A £ 2,153.00 N/A $ 324.60 N/A
Convent Garden N/A £ 5,920.00 N/A $ 892.54 N/A
Oxford Street N/A £ 5,813.00 N/A $ 876.41 N/A
New Bond Street N/A £ 8,234.00 N/A $ 1,241.41 N/A
Marylebone High Street N/A £ 2,153.00 N/A $ 324.60 N/A
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF
Office in CBD N/A N/A N/A N/A
Land in Office Parks N/A N/A N/A N/A
Land in Industrial Parks N/A N/A N/A N/A
Office/Industrial Land - Non-park N/A N/A N/A N/A
Retail/Commercial Land N/A N/A N/A N/A
Residential N/A N/A N/A N/A

2010 Global Market Report I www.naiglobal.com 56


Latin America
SECTION CONTENTS
Buenos Aires, Argentina
Nassau, Bahamas
Campinas, Brazil
Curitiba, Brazil
Porto Alegre, Brazil
Rio de Janeiro, Brazil
Sao Paulo, Brazil
Santiago, Chile
San Jose, Costa Rica
Kingston, Jamaica
Ciudad Juarez, Mexico
Guadalajara, Mexico
Guanajuato, Mexico
Matamoros, Tamaulipas, Mexico
Mexicali, Baja California, Mexico
Mexico City, Mexico
Monterrey, Nuevo Leon, Mexico
Querétaro, Mexico
Reynosa, Mexico
Saltillo, Mexico
San Luis Potosí (SLP), Mexico
Tijuana, Baja California, Mexico
Torreon, Mexico
Caracas, Venezuela
Buenos Aires, Argentina Nassau, The Bahamas
The Argentine economy is expected to shrink 2% in 2009 The Bahamas is known worldwide as a great destination for
as the agricultural and commodities sectors suffer from travelers and, with over 5 million tourists per year, the
lower global prices and local draught, as well as lower hospitality sector is growing. The Bahamas Government
investments due to internal political conflicts. In 2010 the along with the Bahamas Financial Services Board is looking
economy is expected to bounce back and grow 2% to at creating a commercial court system to resolve commercial
3% based on the country’s relative competitive advantage matters quickly and efficiently. It is hoped that a well func-
in sectors like agribusiness, back office services and tioning judiciary would create confidence and attract more
specialized manufacturing. international investors.
Lower demand in the office market sector has caused The CBD Class A and B office market is slow as more
lease prices to fall 10%-15% in Class A office space in companies are willing to move out of the core. In suburban
the Buenos Aires CBD, to an average of US $28- areas the demand for office space is quite high but the
$32/SM/month. Vacancy rates jumped from 3% to 9%. The availability of space is restricted due to land availability and
drop in value in Class B space and suburban offices has cost. Offshore banking is still a mainstay of the economy
been approximately 20% in 2009 with transactions ranging and there have been some large mergers in 2009. The
in the US $15-$20/SM range as corporations emphasize demand is still high for land in suburban areas as land and
cost savings. Accenture, for example, took 8,000 SM in a development costs in these areas are still reasonable.
Contact refurbished Class B building paying approximately US Contact
The Airport Industrial Park is growing as businesses move
NAI Castro Cranwell $16/SM. Symantex and PepsiCo moved to suburban office NAI Lowes Realty
there from the more congested and costly areas. This activity
& Weiss S.A. buildings at US $18/SM. Premium industrial parks and +1 242 322 1741
is mostly warehouse and back offices. The retail market is
+54 11 5031 1600 logistics facilities maintained their values and the vacancy still growing; with more residential developments in the
level is still in the low single digits as this segment in western district of New Providence there is a need for more
Argentina continues to be under serviced and as demand retail centers.
continues to increase with the overall economy.
The downtown core has seen a downturn recently due to a
In the other market segments, warehouse space vacancy lack of cleanliness and safety. One of the major problems in
has increased slightly and values have become marginally this area is the lack of parking and this impacts greatly the
softer. Top retail lease values have softened in this market amount of local traffic. Investment sales have slowed in the
during 2009, both in high street space and in shopping second home market but there has been more interest by
Country Data centers. Nevertheless, the retail market continues to be Country Data
investors looking at either hospitality or office complexes as
Area 2,766,890 under serviced as is evidenced by the inauguration of IRSA’s an investment. The Bahamar project on Cable Beach has
DOT Shopping Center with full occupancy of its 140 stores. Area 13,940
drawn the interest of the Chinese and they have started
GDP Growth (%) -2.5% Capitalization rates have increased in 2009 and are generally investing quite heavily in the Bahamas.
in the 12%-14% range although there continues to be a GDP Growth (%) -3.9%
GDP 2008 (US$ B) $301.33 lack of sellers, particularly of premium properties. The outlook for 2010 is a slow start in Q1 but increased
GDP 2008 (US$ B) $7.40
activity in the latter part of the year as the Bahamar devel-
Overall, the real estate market has entered into a down cycle opment on Cable Beach should be progressing and other
GDP/Capita (USD) $7,508.05 in 2009 with lower demand causing vacancies to increase planned projects will be getting off the ground.
5%-10% and prices to soften 10%-25%. GDP/Capita (USD) $21,727.86
Inflation Rate (%) 5.58%
Inflation Rate (%) 1.84%
Unemployment 8.8%
Rate (%) Unemployment 14.2%
Rate (%)
Interest Rate (%) 10.5%
Interest Rate (%) 5.5%
Population (Millions) 40.134
Population (Millions) 0.341

Buenos Aires At A Glance Nassau At A Glance


RENT/M2/Mo US$ RENT/SF/YR RENT/SF/YR
Low High Low High Vacancy Low High Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) $ 30.00 $ 35.00 $ 0.73 $ 0.86 0.5% New Construction (AAA) N/A N/A N/A
Class A (Prime) $ 24.00 $ 32.00 $ 0.59 $ 0.78 8.0% Class A (Prime) $ 25.00 $ 33.00 10.2%
Class B (Secondary) $ 12.00 $ 20.00 $ 0.29 $ 0.49 12.0% Class B (Secondary) $ 18.00 $ 25.00 15.7%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) $ 18.00 $ 22.00 $ 0.44 $ 0.54 2.0% New Construction (AAA) N/A N/A N/A
Class A (Prime) $ 15.00 $ 20.00 $ 0.37 $ 0.49 2.0% Class A (Prime) $ 25.00 $ 35.00 N/A
Class B (Secondary) $ 10.00 $ 12.00 $ 0.24 $ 0.29 2.0% Class B (Secondary) $ 12.00 $ 18.00 N/A
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 3.50 $ 6.00 $ 0.09 $ 0.15 N/A Bulk Warehouse $ 10.00 $ 20.00 N/A
Manufacturing $ 3.50 $ 5.50 $ 0.09 $ 0.13 N/A Manufacturing N/A N/A N/A
High Tech/R&D $ 5.00 $ 8.00 $ 0.12 $ 0.20 N/A High Tech/R&D N/A N/A N/A
RETAIL RETAIL
Downtown $ 35.00 $ 70.00 $ 0.86 $ 1.71 5.0% Downtown $ 45.00 $ 95.00 8.0%
Neighborhood Service Centers $ 15.00 $ 20.00 $ 0.37 $ 0.49 15.0% Neighborhood Service Centers N/A N/A N/A
Community Power Center N/A N/A N/A N/A N/A Community Power Center $ 35.00 $ 100.00 N/A
Regional Malls $ 18.00 $ 50.00 $ 0.44 $ 1.22 10.0% Regional Malls $ 15.00 $ 25.00 N/A
Solus Food Storesl N/A N/A N/A N/A N/A Solus Food Stores N/A N/A N/A
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF DEVELOPMENT LAND Low/Acres High/Acres Low/SF
Office in CBD $ 400.00 $ 1.00 $ 0.01 $ 0.00 Office in CBD N/A N/A N/A
Land in Office Parks N/A N/A N/A N/A Land in Office Parks N/A N/A N/A
Land in Industrial Parks $ 30.00 $ 60.00 $ 0.00 $ 0.00 Land in Industrial Parks N/A N/A N/A
Office/Industrial Land - Non-park $ 5.00 $ 70.00 $ 0.00 $ 0.00 Office/Industrial Land - Non-park $ 10.00 $ 18.00 0.02
Retail/Commercial Land $ 200.00 $ 1.00 $ 0.01 $ 0.00 Retail/Commercial Land $ 18.00 $ 25.00 0.0
Residential $ 400.00 $ 1,000.00 $ 0.01 $ 0.03 Residential $ 10.00 $ 50.00 0.0

2010 Global Market Report I www.naiglobal.com 58


Campinas, Brazil Curitiba, Brazil
Campinas is located in the state of São Paulo, about 90km Curitiba is the capital of Paraná, located in the southern part
from the capital of the same name – São Paulo. Campinas of Brazil. The city occupies 435 square kilometers and has
occupies an area of 796 km² and has a population of a population of almost 1.8 million inhabitants. For many, this
1.064.664 inhabitants. Eleventh richest city of Brazil and city has the best quality of life in the country. It is the seventh
third most populous city of the country, Campinas is part of most populous city of Brazil and the largest of the southern
the Metropolitan Complex Extended of São Paulo. As such, region. The city’s initial and famous diverse town planning
it is an important logistics hub for the area. and legislation that aimed to contain its growth has started
The Campinas market comprises approximately one-third to lose control.
of the industrial output of the state of São Paulo, including Curitiba is the fifth largest city in Brazil and one of the best
high technology and metallurgy. The region is home to more cities for investments in Latin America. It has important
than 10,000 companies, including prominent global names companies in the sectors of commerce, service and financial.
such as: Honda, Toyota, Unilever, 3M of Brazil, Sherwin- It has a 43 million SM industrial park, the second-largest
Williams, Bosch, Pirelli, Dell, IBM, BASF, Dow Chemical, automotive center for the country and the Alfonso Pena
Ericsson, Singer, Goodyear, Valero, International Paper, Nor- International Airport. The rate of companies moving into the
tel, Lucent, Samsung, Motorola, AmBev, Caterpillar, Bom- market has increased so land and property values are
bardier and many others. The petrochemical complex is increasing and the supply rate is falling. The vacancy rate for
Contact centered in Paulínia, about 13 kilometers from Campinas, Contact Class A office space remained low at less than 6%. The
NAI Commercial next to the Petrobrás Refinery of the Plateau (REPLAN). This NAI Commercial average rental rates for office space in the city of Curitiba also
Properties Brazil complex is the largest in Brazil and one of the largest in all Properties Brazil are low compared to other cities, about 15% to 20% lower.
+1 55 11 5506 5655 of Latin America, and hosts companies such DuPont, +55 11 5506 5655
Single-purpose industrial condominiums, built primarily for
Chevron, Shell, Exxon, Rhodia and others. The Campinas certain sectors’ needs, characterize the industrial property
airport claims the largest volume of import/export shipments market in Curitiba. During 2009, the industrial sector stabi-
for the country. lized and is now considered one of the city’s best property
Campinas is also an important and diversified commercial investments. In the retail sector, the most important
center, and home to two of the largest shopping malls in the submarket is Ahú, now that the Ahú Prison has been
country—The Shopping Iguatemi of Campinas and the mall shuttered and its tenants relocated to other areas. The Anita
Park D. Pedro—and the International Airport Viracopos, Garibaldi submarket has undergone one of Brazil’s biggest
Country Data which is involved in the international transport of shipments. Country Data urban changes in recent years; many older structures are
The city of Campinas should attract more investors in 2010 now being redeveloped for commercial uses.
Area 8,511,965 due to fiscal incentives put in place. The town has healthy Area 8,511,965
vacancy and growth potential to more than the double its
GDP Growth (%) -0.66% present market size. GDP Growth (%) -0.66%

The economy showed signs of recovery. Presidential elections


GDP 2008 (US$ B) $1,481.55 in 2010, the World Cup of soccer in 2014 and the selection GDP 2008 (US$ B) $1,481.55
of Brazil to host the 2016 Olympic Games should attract
GDP/Capita (USD) $7,737.32 additional investment that will support overall economic GDP/Capita (USD) 4.85%
stability in the country.
Inflation Rate (%) 4.85% Inflation Rate (%) 5.7%

Unemployment 7.7% Unemployment 7.7%


Rate (%) Rate (%)

Interest Rate (%) 8.75% Interest Rate (%) 8.75%

Population (Millions) 191.481 Population (Millions) 191.481

Campinas At A Glance Curitiba At A Glance


Conversion 1.72 BRL = 1 US$ RENT/M2/MO US$ NET RENT/SF/YR Conversion: 1.72 BRL = 1 US$ RENT/M2/MO US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) BRL 35.00 BRL 50.00 $ 22.69 $ 32.41 5.5% New Construction (AAA) BRL 15.00 BRL 23.00 $ 9.72 $ 14.91 5.0%
Class A (Prime) BRL 25.00 BRL 30.00 $ 16.20 $ 19.44 6.0% Class A (Prime) BRL 9.00 BRL 15.00 $ 5.83 $ 9.72 5.5%
Class B (Secondary) BRL 15.00 BRL 20.00 $ 9.72 $ 12.96 6.5% Class B (Secondary) BRL 7.00 BRL 10.00 $ 4.54 $ 6.48 6.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) BRL 9.00 BRL 15.00 $ 5.83 $ 9.72 5.5% New Construction (AAA) BRL 11.00 BRL 18.00 $ 7.13 $ 11.67 5.0%
Class A (Prime) BRL 9.00 BRL 14.00 $ 5.83 $ 9.07 6.5% Class A (Prime) BRL 10.00 BRL 13.00 $ 6.48 $ 8.43 4.5%
Class B (Secondary) BRL 9.00 BRL 16.00 $ 5.83 $ 10.37 6.5% Class B (Secondary) BRL 9.00 BRL 10.00 $ 5.83 $ 6.48 5.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse BRL 10.00 BRL 16.00 $ 6.48 $ 10.37 4.0% Bulk Warehouse BRL 10.00 BRL 16.00 $ 6.48 $ 10.37 4.5%
Manufacturing BRL 3.00 BRL 10.00 $ 1.94 $ 6.48 5.0% Manufacturing BRL 3.00 BRL 10.00 $ 1.94 $ 6.48 4.5%
High Tech/R&D BRL 6.00 BRL 12.00 $ 3.89 $ 7.78 6.0% High Tech/R&D BRL 6.00 BRL 12.00 $ 3.89 $ 7.78 5.0%
RETAIL RETAIL
Downtown BRL 16.00 BRL 40.00 $ 10.37 $ 25.93 6.0% Downtown BRL 10.00 BRL 18.00 $ 6.48 $ 11.67 4.5%
Neighborhood Service Centers BRL 18.00 BRL 30.00 $ 11.67 $ 19.44 5.1% Neighborhood Service Centers BRL 6.00 BRL 11.00 $ 3.89 $ 7.13 5.0%
Community Power Center BRL 22.00 BRL 32.00 $ 14.26 $ 20.74 5.0% Community Power Center BRL 7.00 BRL 11.00 $ 4.54 $ 7.13 4.5%
Regional Malls BRL 35.00 BRL 50.00 $ 22.69 $ 32.41 5.0% Regional Malls BRL 10.00 BRL 14.00 $ 6.48 $ 9.07 3.0%
Solus Food Stores BRL 22.00 BRL 30.00 $ 14.26 $ 19.44 4.2% BRL 9.00 BRL 11.00 $ 5.83 $ 7.13 3.0%
DEVELOPMENT LAND Low/Acre High/Acre Low/Acre High/Acre DEVELOPMENT LAND Low/Acre High/Acre Low/Acre High/Acre
Office in CBD N/A N/A N/A N/A Office in CBD N/A N/A N/A N/A
Land in Office Parks N/A N/A N/A N/A Land in Office Parks N/A N/A N/A N/A
Land in Industrial Parks N/A N/A N/A N/A Land in Industrial Parks N/A N/A N/A N/A
Office/Industrial Land - Non-park N/A N/A N/A N/A Office/Industrial Land - Non-park N/A N/A N/A N/A
Retail/Commercial Land N/A N/A N/A N/A Retail/Commercial Land N/A N/A N/A N/A
Residential N/A N/A N/A N/A Residential N/A N/A N/A N/A

2010 Global Market Report I www.naiglobal.com 59


Porto Alegre, Brazil Rio de Janeiro, Brazil
Porto Alegre occupies 497 square kilometers and is located The second largest economy of Brazil, Rio de Janeiro occu-
in the extreme south of Brazil. Porto Alegre is the capital of pies an area of 1,182 km², has a population of 6,093,472 in-
RIo Grande do Sul state and it is in the Southern Region of habitants and is located in the Southeast part of the country.
the country. With a population of 1.4 million inhabitants, it Its industrial areas are utilized primarily by chemical,
has the highest per capita density and is the fourth most pharmaceuticals, steel, metallurgy, petroleum, processed
populous city in Brazil. foods, printing and publishing industries. Rio’s main eco-
The economy of the city is primarily based on the service nomic source is tourism—40% of the foreigners that visit
sector, followed by industrial and farming. The high output Brazil choose Rio de Janeiro as their destination—followed
of fruits and vegetables makes Porto Alegre the largest rural by the services sector and the oil industry.
zone between the Brazilian capitals. It will be one of the 12 The cautious approach that most companies, builders and
headquarters cities for the soccer World Cup in 2014. It will developers had has now been replaced with optimism. Many
also be a host city for the 2016 Olympic Games; these two companies are now looking to expand, and investors have
factors should bring significant infrastructure investment, returned to inject capital into the economy. In the office
including improvements in the infrastructure such as new market, the high-end product did not suffer from the global
streets and an expansion of the subway. This should provide economic malaise, primarily due to the low vacancies that
an impulse to the local economy and increase the activity in already existed. The class-A building towers completed
Contact the property market. Contact during the last few months are, by all accounts, leasing well.
NAI Commercial NAI Commercial In Barra da Tijuca, the newest and most desirable area, the
Several major commercial developments are also under
Properties Brazil Properties Brazil activity is even higher due to the completion of numerous
way. The developer, Rossi, is going to invest R $500 million
+1 55 11 5506 5655 +1 55 11 5506 5655 buildings and the expected completion of several more.
in the construction of a condominium and commercial com-
plex that will form a neighborhood planned in the eastern Rental rates have remained stable, also as a consequence of
portion of the city. Another major construction project, Center the low vacancy. The rental of retail space in Rio de Janeiro
Home Mall, will have more than 60,000 SM of buildings. is very active due to the strong presence of corporate users
Located in the Av. Sertório and Assis Brazil, this development and the city’s diverse tourist areas that attract foreigners
solidifies the region as a business and commercial hub. and Brazilians. The Southeast area of Brazil is the most
Upon completion it will have 120 shops, a food plaza, important region for industrial operations. The Rio de Janeiro
service operations and parking for 1,200 cars. Beyond the industrial inventory and average pricing remained relatively
Country Data jobs it generates, it also brings significant improvement to Country Data stable during 2009.
the infrastructure in the region. Rio de Janeiro is expected to get a major economic boost
Area 8,511,965 Area 8,511,965
from infrastructure improvements and investments resulting
from its selection as the host city for the 2016 Summer
GDP Growth (%) -0.66% GDP Growth (%) -0.66%
Olympics.
GDP 2008 (US$ B) $1,481.55 GDP 2008 (US$ B) $1,481.55

GDP/Capita (USD) $7,737.32 GDP/Capita (USD) $7,737.32

Inflation Rate (%) 4.85% Inflation Rate (%) 4.85%

Unemployment 7.7% Unemployment 7.7%


Rate (%) Rate (%)

Interest Rate (%) 8.75% Interest Rate (%) 8.75%

Population (Millions) 191.481 Population (Millions) 191.481

Porto Alegre At A Glance Rio de Janeiro At A Glance


Conversion 1.72 BRL = 1 US$ RENT/M2/MO US$ NET RENT/SF/YR Conversion1.72 BRL = 1 US$ RENT/M2/MO US$ NET RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) BRL 13.00 BRL 20.00 $ 8.43 $ 12.96 4.5% New Construction (AAA) BRL $ 80.00 BRL $ 150.00 $ 51.85 $ 97.22 1.0%
Class A (Prime) BRL 16.00 BRL 18.00 $ 10.37 $ 11.67 5.0% Class A (Prime) BRL $ 70.00 BRL $ 140.00 $ 45.37 $ 90.74 1.4%
Class B (Secondary) BRL 7.00 BRL 14.00 $ 4.54 $ 9.07 5.0% Class B (Secondary) BRL $ 60.00 BRL $ 100.00 $ 38.89 $ 64.82 1.9%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) BRL 12.00 BRL 18.00 $ 7.78 $ 11.67 5.5% New Construction (AAA) BRL $ 80.00 BRL $ 140.00 $ 51.85 $ 90.74 1.0%
Class A (Prime) BRL 10.00 BRL 16.00 $ 6.48 $ 10.37 4.0% Class A (Prime) BRL $ 70.00 BRL $ 140.00 $ 45.37 $ 90.74 5.5%
Class B (Secondary) BRL 7.00 BRL 12.00 $ 4.54 $ 7.78 5.0% Class B (Secondary) BRL $ 60.00 BRL $ 100.00 $ 38.89 $ 64.82 9.7%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse BRL 9.00 BRL 15.00 $ 5.83 $ 9.72 3.5% Bulk Warehouse BRL $ 11.00 BRL $ 18.00 $ 7.13 $11.67 6.5%
Manufacturing BRL 9.00 BRL 10.00 $ 5.83 $ 6.48 3.0% Manufacturing BRL $ 11.00 BRL $ 15.00 $ 7.13 $9.72 7.0%
High Tech/R&D BRL 9.00 BRL 12.00 $ 5.83 $ 7.78 3.5% High Tech/R&D BRL $ 12.00 BRL $ 18.00 $ 7.78 $11.67 6.5%
RETAIL RETAIL
Downtown BRL 10.00 BRL 16.00 $ 6.48 $ 10.37 4.0% Downtown BRL $ 80.00 BRL $ 250.00 $ 51.85 $ 162.04 9.0%
Neighborhood Service Centers BRL 11.00 BRL 14.00 $ 7.13 $ 9.07 3.5% Neighborhood Service Centers BRL $ 40.00 BRL $ 100.00 $ 25.93 $ 64.82 7.5%
Community Power Center BRL 11.00 BRL 16.00 $ 7.13 $ 10.37 3.0% Community Power Center BRL $ 80.00 BRL $ 250.00 $ 51.85 $ 162.04 8.5%
Regional Malls BRL 14.00 BRL 16.00 $ 9.07 $ 10.37 3.0% Regional Malls BRL $ 1 50.00 BRL $ 400.00 $ 97.22 $ 259.26 7.0%
Solus Food Stores BRL 11.00 BRL 14.00 $ 7.13 $ 9.07 2.5% Solus Food Stores BRL $ 150.00 BRL $ 350.00 $ 97.22 $ 226.85 7.5%
DEVELOPMENT LAND Low/Acre High/Acre Low/Acre High/Acre DEVELOPMENT LAND Low/Acre High/Acre Low/Acre High/Acre
Office in CBD N/A N/A N/A N/A Office in CBD N/A N/A N/A N/A
Land in Office Parks N/A N/A N/A N/A Land in Office Parks N/A N/A N/A N/A
Land in Industrial Parks N/A N/A N/A N/A Land in Industrial Parks N/A N/A N/A N/A
Office/Industrial Land - Non-park N/A N/A N/A N/A Office/Industrial Land - Non-park N/A N/A N/A N/A
Retail/Commercial Land N/A N/A N/A N/A Retail/Commercial Land N/A N/A N/A N/A
Residential N/A N/A N/A N/A Residential N/A N/A N/A N/A

2010 Global Market Report I www.naiglobal.com 60


Sao Paulo, Brazil Santiago, Chile
São Paulo is located in the southeast region of Brazil and Chile has a dynamic market-oriented economy characterized
occupies an area of approximately 1,523 square kilometers. by a high level of foreign trade. Chile’s economy is based on
It is one of the most important mercantile, corporate and the export of minerals, mainly cooper, which accounts for
financial centers of Latin America. São Paulo is the largest about half of the total value of exports. Other fast growing
city in the country and the most globally influential Brazilian sectors are agriculture (fruits and cereals), cellulose, salmon
city. The city of São Paulo has 11 million inhabitants, and if and wine exports. Major developments are expected in the
the entire metropolitan region is considered, the population extraction of gold, since more than three high-grade gold
grows to 22 million inhabitants. deposits were discovered recently.
The high growth rate that occurred during 2008 was not The office market has experienced major growth. In the last
repeated in 2009. However, the market continues to grow at 12 months a total of 14 Class A office buildings entered the
a solid pace. Due to the presidential elections that will occur market, increasing Santiago office stock by 7% and reaching
in 2010, the pace of the construction has been accelerated a total inventory of 1.6 million SM. Vacancy rates have
on the southern stretch of the "Rodoanel Mario Covas," ring shown an upward trend, due to the large amount of projects
road for political reasons. Given this unexpected push, the that entered the market during Q3 2009. Vacancy levels
anticipated delivery date of this logistically important road is reached 5.75% for Class A office buildings. In the next 24
now early 2010. months we expect explosive growth of 456,000 SM of Class
Contact Contact A office space.
The office inventory continues to grow and developers in the
NAI Commercial NAI Sarra
region are beginning to offer Class A office property in modular Lease and sale rates have maintained stable levels. The
Properties Brazil +56 2 347 7000
condominiums and Build to Suits. However, availability of average leasing rate in the Santiago CBD is US $24/SM.
+1 55 11 5506 5655
high quality industrial property still is insufficient to meet the Strip centers have become very popular in the last five years
strong demand, keeping the vacancy rates low and prices with a projected investment of US $500 million in the near
stable and high. The retail market suffered less than other future by the main player in this area. Lease rates in the
sectors, mainly due to the low availability and the continued most popular retail zones in downtown Santiago have
high demand throughout the year. Its outlook is expected reached US $190/SM/month. In these areas there is virtually
to be strong for the near term; especially in the shopping no space available.
centers and supermarkets. Industrial supply has grown, especially the number of
Country Data The office market did feel some effects of the crisis with Country Data industrial parks. Prices have not significantly changed during
decreasing demand starting in early 2009. At present, as 2009. The average sale value for land in industrial parks is
Area 756,950
a result of the government’s ad hoc national economic US $120/SM. Investment returns have stabilized between
Area 756,950
measures, a return to increased activity in the real estate 7-9% for office, 9-11% for retail and 11-12% for industrial.
market is already on the horizon. Companies are back looking Chile is regarded as the first economy in the region likely to
GDP Growth (%) -1.74% GDP Growth (%) -1.74%
to expand. And both Brazilian and international investors bounce back in 2010 from the current economic downturn,
have returned to inject their capital into the economy. and its economy is already showing signs of recovery after
GDP 2008 (US$ B) $150.36 GDP 2008 (US$ B) $150.36
The economic setting present today in Brazil is unprece- the economic slump. A favorable scenario for the real estate
GDP/Capita (USD) $8,852.96
dented. The general feeling is that as availability of credit market is forecasted in 2010.
GDP/Capita (USD) $8,852.96
improves Brazil will be able to foment an expansion never
seen before. The changes will be visible mainly in four
Inflation Rate (%) 2.04% Inflation Rate (%) 2.04%
principal areas: capital, infrastructure, retail and real estate.
Unemployment 10.20% Unemployment 10.20%
Rate (%) Rate (%)

Interest Rate (%) 0.50% Interest Rate (%) 0.50%

Population (Millions) 16.984 Population (Millions) 16.984

Sao Paulo At A Glance Santiago At A Glance


Conversion 1.72 BRL = 1 US$ RENT/M2/YR US$ NET RENT/SF/YR RENT/M2/YR US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) BRL 75.00 BRL 110.00 $ 48.61 $ 71.30 4.3% New Construction (AAA) CLP$ 147,851 CLP$ 197,970 $ 25.16 $ 33.68 4.0%
Class A (Prime) BRL 70.00 BRL 100.00 $ 45.37 $ 64.82 5.5% Class A (Prime) CLP$ 122,792 CLP$ 145,345 $ 20.89 $ 24.73 5.8%
Class B (Secondary) BRL 50.00 BRL 90.00 $ 32.41 $ 58.33 6.1% Class B (Secondary) CLP$ 105,250 CLP$ 125,298 $ 17.91 $ 21.32 2.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) BRL 55.00 BRL 65.00 $ 35.65 $ 42.13 5.0% New Construction (AAA) N/A N/A N/A N/A N/A
Class A (Prime) BRL 52.00 BRL 62.00 $ 33.70 $ 40.19 5.5% Class A (Prime) N/A N/A N/A N/A N/A
Class B (Secondary) BRL 50.00 BRL 60.00 $ 32.41 $ 38.89 10.2% Class B (Secondary) CLP$ 85,202 CLP$ 98,985 $ 14.50 $ 16.84 13.5%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse BRL 18.00 BRL 25.00 $ 11.67 $ 16.20 2.0% Bulk Warehouse CLP$ 15,035 CLP$ 25,059 $ 2.56 $ 4.26 6.5%
Manufacturing BRL 16.00 BRL 18.00 $ 10.37 $ 11.67 5.0% Manufacturing CLP$ 17,541 CLP$ 22,553 $ 2.98 $ 3.84 3.5%
High Tech/R&D BRL 16.00 BRL 22.00 $ 10.37 $ 14.26 3.0% High Tech/R&D CLP$ 30,071 CLP$ 39,343 $ 5.12 $ 6.69 5.0%
RETAIL RETAIL
Downtown BRL 20.00 BRL 180.00 $ 12.96 $ 116.67 5.0% Downtown CLP$ 250,596 CLP$ 1,252,980 $ 42.64 $ 213.20 N/A
Neighborhood Service Centers BRL 50.00 BRL 100.00 $ 32.41 $ 64.82 8.0% Neighborhood Service Centers CLP$ 200,476 CLP$ 300,712 $ 34.11 $ 51.17 4.00%
Community Power Center BRL 60.00 BRL 150.00 $ 38.89 $ 97.22 6.0% Community Power Center CLP$ 30,071 CLP$ 37,589 $ 5.12 $ 6.40 4.00%
Regional Malls BRL 150.00 BRL 400.00 $ 97.22 $ 259.26 8.0% Regional Malls N/A N/A N/A N/A N/A
Solus Food Stores BRL 100.00 BRL 200.00 $ 64.82 $ 129.63 6.0% Solus Food Stores CLP$ 37,589 CLP$ 62,649 $ 6.40 $ 10.66 N/A
DEVELOPMENT LAND Low/Acre High/Acre Low/Acre High/Acre DEVELOPMENT LAND Low/M2 High/M2 Low/M2 High/M2
Office in CBD N/A N/A N/A N/A Office in CBD CLP$ 392,600 CLP$ 584,724 $ 66.80 $ 99.49
Land in Office Parks N/A N/A N/A N/A Land in Office Parks CLP$ 208,830 CLP$ 261,037 $ 35.53 $ 44.42
Land in Industrial Parks N/A N/A N/A N/A Land in Industrial Parks CLP$ 52,207 CLP$ 83,532 $ 8.88 $ 14.21
Office/Industrial Land - Non-park N/A N/A N/A N/A Office/Industrial Land - Non-park CLP$ 20,883 CLP$ 125,298 $ 3.55 $ 21.32
Retail/Commercial Land N/A N/A N/A N/A Retail/Commercial Land CLP$ 208,830 CLP$ 417,660 $ 35.53 $ 71.07
Residential N/A N/A N/A N/A Residential CLP$ 104,415 CLP$ 229,713 $ 17.77 $ 39.09

2010 Global Market Report I www.naiglobal.com 61


San Jose, Costa Rica Kingston, Jamaica
Like most markets, Costa Rica felt the impact of the financial The Jamaican property market has suffered less than many
world crisis. Almost immediately affected was the tourism of the developed overseas markets. The banking system
sector which generated our own internal crisis in the pacific remains strong with no significant fallout or failures. Growth
coast due to the considerable reduction in the flow of in the property sector has been restricted mainly by
tourists which had a negative impact on all industries the Government decision to initially raise interest rates in
supported by tourism. The investment in on going projects response to the global crisis. Currently, interest rates are
as well as projects ready to break ground, stagnated due to falling, but benchmark rates are still in the high teens.
a near total credit restriction. Higher mortgage rates, particularly in the residential sector,
The office market is beginning to experience a higher have stifled the market.
absorption rate with almost 50,000 SM, also approximately There remains a shortage of quality office units with
20,000 SM of new projects came into the market increasing adequate parking facilities. Little new space has been built
the inventory and several international companies arrived in recent years as development costs for new buildings have
leasing new spaces. A good sign of recover is the reduction exceeded the developed value. The situation is changing
in the vacancy rate from 12% in Q3 to the current 8%. There and, currently a number of developers are seeking sites
was a 3% increase in inventory from 724,955 SM to to develop. Local planning regulations are insisting on
745,469 SM. According to our projections, the office market adequate parking for staff and clients, which adds a new
Contact could expect a considerable recovery by mid 2010, return- Contact element to development costs. Actual rental rates obtained
NAI Costa Rica ing to its normal behavior, where supply and demand works NAI Jamaica by landlords are somewhat capped due to the high monthly
+ 506 2228 7760 hand in hand with the growth of the economy. +1 876 925 7861 maintenance charges, which can be higher than rentals.
The retail market is still realizing positive demand. Inside Electricity and security costs are the main factor in this cost.
the malls, occupancy and pricing has remained stable. At Office yields have risen from around 9% over a year ago
the strip and neighborhood centers, occupancy is lower, towards 12%, currently. Rental levels remain firm.
with some retailers having closed or changed locations to The only activity in the industrial market has been a small
less expensive sites. However, this market continues to number of large owner-occupier developments, mainly in
grow quickly. the warehousing and distribution sectors. Rental demand
On the industrial side, exportation decreased in the last for units in the more desirable areas (for staff and
quarter. Absorption is lower, but the development of new customers) often dictates rental levels. Such space
Country Data Country Data over10,000 SF is limited.
space is more controlled than in other markets. The FTZ’s
Area 1,972,550
have been receiving interest from and negotiating with, more There has been little new expansion in the retail market.
Area 13,940
companies and are expected to welcome around 20 inter- Fallout, with the reduction in retail activity, has been minimal.
GDP Growth (%) -1.30%
national companies in the next 18 months, creating a good Yields in this market tend to follow the office market. New
opportunity in the marketplace. GDP Growth (%) -3.61% development in the resort market has been virtually non-
GDP 2008 (US$ B) $29.29 existent this year
In 2009 the most significant transactions were: Forum II with GDP 2008 (US$ B) $11.92
8000 SM, Plaza Roble with 6000 SM, Zona Franca de Este The main factors governing desirability of property in
GDP/Capita (USD) $6,361.30
with 11100 SM and Zona Franca America with 4000 SM. Jamaica is the location in relation to the areas perceived as
GDP/Capita (USD) $4,397.48
unsafe for staff and customers. Areas of the main cities are
Inflation Rate (%) 8.37%
well defined with distinct value levels.
Inflation Rate (%) 9.43%
Unemployment
Rate (%) 4.90% 11.00%
Unemployment
Rate (%)
Interest Rate (%) 9.00%
Interest Rate (%) 19.00%
Population (Millions) 4.605
Population (Millions) 2.711

San Jose At A Glance Kingston At A Glance


Conversion: 550 COL = 1 US$ RENT/M2/MO US$ RENT/SF/YR Conversion: 89 J$ = 1 US$ RENT/M2/MO US$ RENT/SF/YR
Low High Low High Vacancy Low High Low High Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) N/A N/A N/A N/A N/A New Construction (AAA) N/A N/A N/A N/A N/A
Class A (Prime) COL 111,360 COL 125,280 $ 17.84 $ 20.07 24.0% Class A (Prime) J$ 484.00 J $ 807.00 $ 6.06 $ 10.11 N/A
Class B (Secondary) COL 69,600 COL 111,360 $ 11.15 $ 17.84 7.0% Class B (Secondary) J$ 242.00 J $ 484.00 $ 3.03 $ 6.06 N/A
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) COL 139,200 COL 180,960 $ 22.30 $ 28.99 3.0% New Construction (AAA) J $ 1,130.00 J $ 1,453.00 $ 14.15 $ 18.20 N/A
Class A (Prime) COL 111,360 COL 174,000 $ 17.84 $ 27.87 8.0% Class A (Prime) J $ 1,130.00 J $ 1,453.00 $ 14.15 $ 18.20 N/A
Class B (Secondary) COL 69,600 COL 139,200 $ 11.15 $ 22.30 8.0% Class B (Secondary) J $ 969.00 J $ 1,130.00 $ 12.14 $ 14.15 N/A
INDUSTRIAL INDUSTRIAL
Bulk Warehouse COL 27,840 COL 69,600 $ 4.46 $ 11.15 12.0% Bulk Warehouse J$ 404.00 J$ 969.00 $ 5.06 $ 12.14 N/A
Manufacturing COL 31,320 COL 45,240 $ 5.02 $ 7.25 4.0% Manufacturing J$ 404.00 J$ 969.00 $ 5.06 $ 12.14 N/A
High Tech/R&D COL 24,360 COL 34,800 $ 3.90 $ 5.57 1.0% High Tech/R&D N/A J $ 1,130.00 N/A $ 14.15 N/A
RETAIL RETAIL
Downtown COL 55,680 COL 153,120 $ 8.92 $ 24.53 9.7% Downtown (High Street Shops) J$ 807.00 J $ 1,453.00 $ 10.11 $ 18.20 N/A
Neighborhood Service Centers COL 69,600 COL 180,960 $ 11.15 $ 28.99 3.6% Neighborhood Service Centers N/A N/A N/A N/A N/A
Community Power Center COL 76,560 COL 208,800 $ 12.26 $ 33.44 0.8% Community Power Center (Big Box) N/A N/A N/A N/A N/A
Regional Malls COL 160,080 COL 236,640 $ 25.64 $ 37.90 N/A Regional Malls J$ 1,211.00 J$ 1,776.00 $ 15.17 $ 22.25 N/A
Solus Food Stores COL 41,760 COL 76,560. $ 6.69 $ 12.26 1.1% Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF DEVELOPMENT LAND Low/ M2 High/M2 Low/SF High/SF
Office in CBD N/A N/A N/A N/A Office in CBD J$ 12.00 J$ 30.00 $ 0.13 $ 0.34
Land in Office Parks N/A N/A N/A N/A Land in Office Parks J$ 12.00 J$ 20.00 $ 0.13 $ 0.22
Land in Industrial Parks N/A N/A N/A N/A Land in Industrial Parks J$ 5.00 J$ 8.00 $ 0.06 $ 0.09
Office/Industrial Land - Non-park N/A N/A N/A N/A Office/Industrial Land - Non-park J$ 10.00 J$ 13.00 $ 0.11 $ 0.15
Retail/Commercial Land N/A N/A N/A N/A Retail/Commercial Land J$ 10.00 J$ 13.00 $ 0.11 $ 0.15
Residential N/A N/A N/A N/A Residential J$ 6.00 J$ 15.00 $ 0.07 $ 0.17

2010 Global Market Report I www.naiglobal.com 62


Ciudad Juarez, Chihuahua, Mexico Guadalajara, Mexico
Juarez is the largest city in Chihuahua, with a population of As Mexico’s second-largest city, Guadalajara has managed
2 million inhabitants. It is located across from El Paso, Texas, to modernize without seriously altering its centuries old city
and has been a destination for foreign manufacturing since plan or endangering the quality of life of its inhabitants.
the 1960s. Manufacturing facilities known as “maquiladoras” Guadalajara is known as the "Silicon Valley of Mexico” with
drive the economy. Of Mexico’s foreign manufacturing the establishment of multinational technology firms such as
plants, 90% are situated along the US-Mexico border and IBM, HP, Foxxcon, Flextronics, SCI-Sanmina and Freescale.
33% are found in Juarez. Most of the new office projects initiated during 2008 and
Approximately 330 registered maquiladora operations are 2009 are expected to reach the market in late 2010 due to
located in Juarez, employing more than 200,000 people. slowed construction by most developers. New projects in
Juarez is home to companies such as Philips, Thomson, GM, 2010 will include Class A+ (AAA) buildings in Puerta de
Electrolux, Yazaki, Foxconn, Lear, Johnson & Johnson, GE Hierro and Americas-Country corridor. The majority of demand
Medical, Johnson Controls, Delphi and Ford. is from Mexican national firms; however, multinational compa-
At the outset of 2010, the market is expected to change nies are also securing space from 1,500 to 10,000 SF. Office
from a landlords’ market to at tenants’ market with this market vacancy in Class B buildings is projected to average
trend continuing into 2011. Early signs of expansion were 20-25%. Nevertheless, finding buildings with 10,000 SF con-
noted by the end of 2009 with another wave of projects on tinuous is challenging.
Contact Contact
the horizon. Guadalajara has become a destination market for major
NAI Mexico NAI Mexico
At the outset of 2010, only one new industrial facility is industrial developers. Aggressive promotion has nearly
+1 619 690 3029 +1 619 690 3029
under construction. The global economic crisis during 2009 doubled the city’s industrial base during the past four
slowed investment by manufacturers and as demand fell so years. Industrial land and facility rental rates are expensive
did lease rates. Juarez vacancy rates rose for the first time in Guadalajara. Sale prices range from $80-$150/SM,
to over 10%. As a result, lease rates fell by about 20-30% ranking Guadalajara among the most expensive areas in
and developer incentives, such as free rent, were noted. Mexico. Lease rates for assembly and manufacturing space
are above Mexico’s national average. During 2009, demand
The office market remains flat. The limited amount of Class has been flat and lease rates did not increase, resulting
A space is occupied by local firms, government agencies in landlords continuing to experience excess inventories
and global service providers with regional operations. Activity during 2010. Guadalajara will remain a “tenants’ market”
Country Data was slower with lease rates falling and vacancies rising Country Data during 2010.
Area 1,972,550 in the range of 10-20% during 2009. Overall rates are Area 1,972,550
predicted to remain stable during 2010. The retail sector in Guadalajara experienced decreased
vacancy in 2009 and it is projected to continue throughout
GDP Growth (%) -7.34% US retailers such as Costco, Wal-Mart, Sam's, Auto Zone GDP Growth (%) -7.34%
2010. Convenience stores such as Oxxo, 7 Eleven and
and Home Depot are following Mexican retailers into the Waldo’s are seeking both in-line and pad sites. Retail space
GDP 2008 (US$ B) $866.34 market and prospects for 2010 are improving. GDP 2008 (US$ B) $866.34 rates and land values remained flat in most commercial
Juarez’s critical mass of industrial firms, proximity to all US submarkets during 2009.
GDP/Capita (USD) $8,040.24 markets and a 50-year history with foreign manufacturers GDP/Capita (USD) $8,040.24
Guadalajara remains a core market in central Mexico with a
ensure the future will be bright. Most believe 2010 will be strong mix of foreign and national firms active in the market.
Inflation Rate (%) 5.43% a rebound year with increased activity by the second half Inflation Rate (%) 5.43%
Projections are positive with sharp increases in demand
and continuing in force through 2012 and beyond. forecast for Q3 and Q4 2010.
Unemployment 6.06% Unemployment 6.06%
Rate (%) Rate (%)

Interest Rate (%) 4.50% Interest Rate (%) 4.5%

Population (Millions) 107.75 Population (Millions) 107.75

Juarez At A Glance Guadalajara At A Glance


RENT/SF/YR RENT/SF/YR
Low High Effective Avg. Vacancy Low High Effective Avg. Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) $ 12.00 $ 17.00 $ 14.50 N/A New Construction (AAA) N/A N/A N/A N/A
Class A (Prime) $ 9.00 $ 13.00 $ 11.00 8.0% Class A (Prime) $ 10.37 $ 15.55 N/A 20.0%
Class B (Secondary) $ 8.00 $ 10.00 $ 8.75 20.0% Class B (Secondary) $ 8.29 $ 10.37 N/A 25.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) $ 12.00 $ 17.00 $ 14.50 15.0% New Construction (AAA) $ 23.41 $ 27.87 N/A N/A
Class A (Prime) $ 9.00 $ 13.00 $ 11.00 10.0% Class A (Prime) $ 19.50 $ 21.18 N/A 20.0%
Class B (Secondary) $ 8.00 $ 10.00 $ 8.75 20.0% Class B (Secondary) N/A N/A N/A N/A
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 3.30 $ 4.00 $ 3.60 11.5% Bulk Warehouse $ 4.15 $ 5.18 N/A 9.0%
Manufacturing $ 4.00 $ 6.00 $ 4.80 11.5% Manufacturing $ 5.18 $ 6.82 N/A 8.0%
High Tech/R&D N/A N/A N/A N/A High Tech/R&D $ 11.15 $ 16.72 N/A 2.0%
RETAIL RETAIL
Downtown $ 15.00 $ 20.00 $ 13.00 N/A Downtown $ 15.00 $ 20.00 N/A 7.0%
Neighborhood Service Centers $ 10.00 $ 12.00 $ 9.50 27.5% Neighborhood Service Centers $ 15.00 $ 20.00 N/A 8.0%
Community Power Center N/A N/A N/A N/A Community Power Center $ 15.00 $ 20.00 N/A 2.0%
Regional Malls N/A N/A N/A N/A Regional Malls $ 20.00 $ 50.00 N/A 15.0%

DEVELOPMENT LAND Low/SF High/SF DEVELOPMENT LAND Low/M2 High/M2


Office in CBD N/A N/A Office in CBD $ 700.00 $ 1,500.00
Land in Office Parks $ 5.57 $ 180.00 Land in Office Parks $ 250.00 $ 500.00
Land in Industrial Parks $ 3.25 $ 50.00 Land in Industrial Parks $ 80.00 $ 150.00
Office/Industrial Land - Non-park) N/A N/A Office/Industrial Land - Non-park $ 100.00 $ 300.00
Retail/Commercial Land $7.45 $ 24.00 Retail/Commercial Land $ 350.00 $ 800.00
Residential $ 9.00 $ 19.00 Residential $ 250.00 $ 750.00

63 2010 Global Market Report I www.naiglobal.com 63


Guanajuato, Guanajuato, Mexico Mexico City, Mexico
The city of Guanajuato has approximately 5 million inhabi- Mexico City, the capital of Mexico, is located in South-Cen-
tants and is located in the area of Mexico known as “El tral Mexico and has over 23 million inhabitants. Mexico City
Bajio.” Guanajuato is centrally located in Mexico with five is often seen as the first stop for foreign investors interested
neighboring states: Jalisco to the west, San Luis Potosi and in development, industrial, retail and office investments. In
Zacatecas to the south, Queretaro to the east and Michoacan 2008, Mexico joined the group of top 12 economies in the
to the north. world ($1 trillion GDP), maintains an investment grade rating
Guanajuato is at the crossroads of two major industrial and is the eighth largest world exporter.
corridors: Highway 45 (The Pan American Highway) Mexico City is host to major corporate headquarters from a
and Highway 57 (the NAFTA Highway), which links South variety of global sectors. National firms with headquarters in
America, Mexico and North America. Multimodal capabilities Mexico City include Grupo Modelo, Grupo Carso, Telmex,
are available in several locations. Guanajuato also hosts the DESC, GICSA and BIMBO. Automotive firms include GM,
only intersection of the Kansas City and Ferromex railroads Ford, Volkswagen, Nissan, Honda and Chrysler. Most multi-
in Mexico. Major corporations based in Guanajuato include nationals like Coca Cola, Pepsi, Honeywell, Siemens,
GM, American Axle, Colgate Palmolive, Flex-n Gate, Fiberweb, Motorola, USG, IBM, HP, Samsung, Sony, INTEL, LG, P&G
Avon, Faurecia, Hino Motors, Getrag Ford, Flexi and Hella. and Wal-Mart maintain headquarters in Mexico City.

Contact Completed transactions during 2009 included Hino Motors Contact Mexico City and Toluca encompass more than 17 million
(Automotive), Samot (Metal Mecanic) and Teco Westing- SM of industrial land. At the end of 2009, the largest
NAI Mexico NAI Mexico
house (Power Solutions), all of them build-to-suit projects. vacancy among the main industrial submarkets in the
+1 619 690 3029 +1 619 690 3029
Vacancy rates during 2009 decreased from 10.14% to Mexico City metro area was registered in Cuautitlan with
9.8% as a result of the lease of “Pisa Company” and “TLG” 20% of the total industrial inventory. Recent developments
in Castro Del Rio Industrial Park and the delivery of 247,572 include Tlalnepantla, Toluca-Lerma and now Huehuetoca.
SF of build-to-suit projects in Santa Fe Industrial Park. Lease rates and land values have not fallen and are
Guanajuato’s office market is small and most space is expected to remain unchanged during 2010.
composed of low rise, garden office type projects that host The retail sector cooled rapidly during 2009 although
Mexican local firms and global service providers. Lease rates Amway, Wal-Mart, Costco, Home Depot, Best Buy and other
and land values are steady and not projected to rise during big box retailers experienced some growth, even under the
Country Data 2010. Country Data negative economic conditions. However, the rate of expan-
The retail sector consists of large multi-tenant shopping sion for these retailers decreased across the board.
centers located in middle and low income areas such as Area 1,972,550
Investors are now looking for stand-alone sites, strip centers
Area 1,972,550
Plaza El Suez. Lease rates and land value are expected to and anchored retail centers for 2010.
GDP Growth (%) -7.34% remain stable through 2010. GDP Growth (%) -7.34% Office market vacancies were under 10% in 2009 due to
Guanajuato’s unique central location in Mexico and its high demand from the number of companies seeking office
GDP 2008 (US$ B) $866.34 position at the crossroads of the nation’s two largest rail GDP 2008 (US$ B) $866.34 space and limited inventory due to the lack of new buildings
lines and highways position it to become a major trade on the market. New construction projected for late 2009
corridor into North America for many years to come. GDP/Capita (USD) $8,040.24
has been delayed and only those buildings with over 80%
GDP/Capita (USD) $8,040.24
completion are being finalized. Lease rates are running from
$24-$40/SM per month. In general, the Mexico City office
Inflation Rate (%) 5.43% Inflation Rate (%) 5.43%
market remains strong and a constant demand for product
promises a robust market for 2010.
Unemployment 6.06% Unemployment 6.06%
Rate (%) Rate (%) Mexico City will continue to be a first stop for foreign in-
vestors. Its critical mass, domestic market demand and po-
Interest Rate (%) 4.5% Interest Rate (%) 4.5% sition as a place for Latin American regional headquarters
ensure continued growth and a positive forecast for 2010
Population (Millions) 107.75 and beyond. Mexico City will remain a global destination for
Population (Millions) 107.75
both corporate users and investors for many years to come.
Guanajuato At A Glance Mexico City At A Glance
RENT/SF/YR RENT/M2/MO US$ RENT/SF/YR
Low High Effective Avg. Vacancy Low High Low High Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) N/A N/A N/A N/A New Construction (AAA) $ 24.00 $ 40.00 $ 26.76 $ 44.59 10.0%
Class A (Prime) $ 9.60 $ 12.86 $ 11.23 12.0% Class A (Prime) $ 18.00 $ 24.00 $ 20.07 $ 26.76 20.0%
Class B (Secondary) $ 4.40 $ 8.76 $ 6.58 12.0% Class B (Secondary) $ 8.00 $ 15.00 $ 8.92 $ 16.72 35.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) N/A N/A N/A N/A New Construction (AAA) $ 20.00 $ 25.00 $ 22.30 $ 27.87 30.0%
Class A (Prime) $ 7.48 $ 14.57 $ 11.02 4.0% Class A (Prime) $ 15.00 $ 20.00 $ 16.72 $ 22.30 35.0%
Class B (Secondary) $ 4.33 $ 8.68 $ 6.50 4.0% Class B (Secondary) $ 10.00 $ 16.00 $ 11.15 $ 17.84 25.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 3.48 $ 4.40 $ 3.94 9.8% Bulk Warehouse $ 4.00 $ 6.00 $ 4.46 $ 6.69 16.0%
Manufacturing $ 4.35 $ 4.70 $ 4.52 9.8% Manufacturing $ 4.00 $ 7.00 $ 4.46 $ 7.80 15.0%
High Tech/R&D N/A N/A N/A N/A High Tech/R&D $ 5.00 $ 7.00 $ 5.57 $ 7.80 20.0%
RETAIL RETAIL
Downtown $ 13.50 $ 24.25 $ 18.87 N/A Downtown (High Street Shops) $ 12.00 $ 50.00 $ 13.38 $ 55.74 15.0%
Neighborhood Service Centers $ 15.90 $ 27.50 $ 21.70 N/A Neighborhood Service Centers $ 18.00 $ 26.00 $ 20.07 $ 28.99 20.0%
Community Power Center N/A N/A N/A N/A Community Power Center (Big Box) $ 25.00 $ 40.00 $ 27.87 $ 44.59 12.0%
Regional Malls $ 15.50 $ 33.37 $ 24.43 N/A Regional Malls $ 35.00 $ 40.00 $ 39.02 $ 44.59 20.0%
Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/M2 High/M2
DEVELOPMENT LAND Low/ M2 High/M2 Low/SF High/SF

N/A N/A Office in CBD $ 1,280.00 $ 3,000.00 $ 118.91 $ 278.71


Office in CBD
N/A N/A Land in Office Parks $ 408.00 $ 878.00 $ 37.90 $ 81.57
Land in Office Parks
$ 25.00 $ 37.00 Land in Industrial Parks $ 60.00 $ 243.00 $ 5.57 $ 22.58
Land in Industrial Parks
$ 22.00 $ 33.00 Office/Industrial Land - Non-park $ 100.00 $ 325.00 $ 9.29 $ 30.19
Office/Industrial Land - Non-park
$ 100.00 $ 300.00 Retail/Commercial Land $ 215.00 $ 690.00 $ 19.97 $ 64.10
Retail/Commercial Land
Residential $ 265.00 $ 560.00 $ 24.62 $ 52.03
Residential $ 150.00 $ 500.00

2010 Global Market Report I www.naiglobal.com 64


Matamoros, Tamaulipas, Mexico Mexicali, Baja California, Mexico
Matamoros is an important maquiladora center with over Mexicali, a thriving metropolitan area with 900,000 residents,
65,000 workers in approximately 140 plants. Major sectors is the capital of Baja California and home to approximately
for industrial export range from heavy steel products to 200 maquiladora operations. Mexicali is an industrial center
metal mechanics, automotive and electronic products. with a high work ethic, which has been a contributing factor
Besides proximity to Brownsville, Texas, it is located on the in the relocation of more than 100 new manufacturing com-
major trade corridor serving the Midwest and Eastern US. panies to Mexicali from 1996 to 2009.
During 2009, industrial lease rates fell 10-20% for Class B Industrial activity was slow during 2009. Crystal automotive
and C facilities. Shell rates averaged $0.36/SF/month. assumed Fleetwood’s 100,000 SF facility, Newell Rubber-
During 2010, tenants should experience a “tenants’ market” maid expanded its operation, Global Logistics relocated to a
and receive additional incentives for free rent and time to larger building with 62,000 SF and Judco Manufacturing
retrofit space. purchased the 40,000 SF. LG Innotek facility. La Moderna
2009 reflected the same fall in demand and consolidation from Central Mexico acquired land in Ejido Pueblo for pasta
in Matamoros as the rest of the Mexican industrial markets. production and Fabrica de Papel San Francisco purchased
Delphi placed three facilities of 700,000 SF on the market land for its distribution center.
at the end of 2009. New projects included Hilti, Inteva, Tyco During 2009, several firms consolidated to other markets,
Contact and Core. More demand will occur in 2010 due to projected Contact including Sony, LG Electronics, Mag Technology, Kwang
expansions from existing operations. Industrial land values Sung, Starion, and Kyomex. During 2009, Silicon Border
NAI Mexico NAI Mexico
remained consistent during 2009 with asking prices ranging Science Park was selected by Q-Cells, the world’s largest
+1 619 690 3029 +1 619 690 3029
from $30-$40/SM. No change is expected for 2010. solar cell manufacturer for its $3.5 billion project.
Matamoros’ office market is primarily composed of small Prices for industrial land have remained flat since the
projects hosting local service industries. Only one small purchase of large development tracts by Thompson
office building was constructed during 2009 in the down- Electronics and Alen Industries. Industrial lease rates will re-
town area. The outlook for the office market in 2010 projects main flat and competitive for 2010.
rates will remain the same and demand will be generated The office market is small with most office projects no larger
from local and regional operations. than three stories and located in one of three commercial
Retail centers in Matamoros host a blend of domestic brands corridors in the city. During 2009, construction began for
Country Data with a mix of US franchisees and big box operations. The Country Data the three-story “Solarium Building.” Most retail centers are
growth in 2008 and 2009 has been limited to the Area 1,972,550 small strip or food and drug anchored neighborhood centers.
Area 1,972,550 expansion of Mexican retailers (Soriana, Coppel, Home Mart, Lease rates are expected to remain flat during 2010 and
SMart) with the exception of HEB and Sam’s Club. 2010 GDP Growth (%) -7.34% Mexicali is expected to remain a destination for national
GDP Growth (%) -7.34% lease rates and land prices are expected to remain the same. retailers and new US firms entering the market.
Matamoros’ unique location on the NAFTA Highway, its GDP 2008 (US$ B) $866.34 Mexicali holds a unique position on the Mexican border with
GDP 2008 (US$ B) $866.34 border location, strong industrial tradition and ability to ship overnight drive times to most Western US markets. Its
overnight to much of the US make it a destination for foreign GDP/Capita (USD) $8,040.24 industrial culture, abundant water and natural gas supply
GDP/Capita (USD) $8,040.24 firms to locate new projects in Mexico. The long term outlook will help to maintain it as a destination for foreign operations
is very favorable through 2010 and beyond. Inflation Rate (%) 5.43% through 2010 and many years to come.
Inflation Rate (%) 5.43%
Unemployment 6.06%
Unemployment 6.06% Rate (%)
Rate (%)
Interest Rate (%) 4.5%
Interest Rate (%) 4.5%
Population (Millions) 107.75
Population (Millions) 107.75

Matamoros At A Glance Mexicali At A Glance


(Rent/SF/YR) (Rent/SF/YR)
Low High Effective Avg. Vacancy Low High Effective Avg. Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) $ 8.40 $ 18.00 $ 12.00 20.0% New Construction (AAA) N/A N/A N/A N/A
Class A (Prime) $ 6.00 $ 8.40 $ 8.40 30.0% Class A (Prime) $ 12.00 $ 21.60 $ 10.80 14.0%
Class B (Secondary) $ 2.40 $ 6.00 $ 4.80 30.0% Class B (Secondary) $ 3.60 $ 10.00 $ 6.00 10.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) $ 8.40 $ 18.00 $ 12.00 10.0% New Construction (AAA) N/A N/A N/A N/A
Class A (Prime) $ 6.00 $ 8.40 $ 8.40 10.0% Class A (Prime) N/A N/A N/A N/A
Class B (Secondary) $ 2.40 $ 6.00 $ 4.80 10.0% Class B (Secondary) N/A N/A N/A N/A
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 3.84 $ 4.56 $ 4.56 10.0% Bulk Warehouse $ 3.36 $ 4.32 $ 3.84 6.0%
Manufacturing $ 4.56 $ 6.00 $ 5.76 N/A Manufacturing $ 4.08 $ 5.52 $ 5.28 8.0%
High Tech/R&D $ 6.00 $ 6.60 $ 6.36 N/A High Tech/R&D N/A N/A N/A N/A
RETAIL RETAIL
Downtown $ 11.40 $ 14.40 $ 12.96 15.0% Downtown $ 3.60 $ 6.00 $ 4.80 3.0%
Neighborhood Service Centers $ 8.40 $ 9.60 $ 9.00 30.0% Neighborhood Service Centers $ 6.00 $ 7.20 $ 6.60 10.0%
Community Power Center $ 11.16 $ 12.00 $ 11.64 20.0% Community Power Center N/A N/A N/A N/A
Regional Malls $ 9.60 $ 10.80 $ 10.20 10.0% Regional Malls $ 8.40 $ 16.00 N/A 4.0%

DEVELOPMENT LAND Low/Acre High/Acre DEVELOPMENT LAND Low/Acre High/Acre


Office in CBD N/A N/A Office in CBD $ 283,400.00 $ 607,287.00
Land in Office Parks N/A N/A Land in Office Parks N/A N/A
Land in Industrial Parks $ 100,000.00 $ 160,000.00 Land in Industrial Parks $ 101,215.00 $ 202,409.00
Office/Industrial Land - Non-park $ 75,000.00 $ 90,000.00 Office/Industrial Land - Non-park $ 80,972.00 $ 182,186.00
Retail/Commercial Land $ 95,000.00 $ 140,000.00 Retail/Commercial Land $ 202,429.00 $ 607,287.00
Residential $ 140,000 $ 200,000 Residential $ 485,830.00 $ 931,174.00

2010 Global Market Report I www.naiglobal.com 65


Monterrey, Nuevo Leon, Mexico Querétaro, Querétaro, Mexico
Monterrey, Nuevo Leon is located in North Central México, Queretaro, with an estimated population of 1.34 million, is
140 miles southwest of Laredo, Texas. It is the third largest one of the smallest but most active and productive states for
metropolitan area in Mexico, with a population of approxi- business in Mexico. Located in Central Mexico in the famous
mately 4.5 million. An industrial city with a 100-year “El Bajio” region, Queretaro occupies a strategic location
operating history, it is sometimes referred to as the Chicago adjacent to nine neighboring states. Additionally, Queretaro
of Mexico. is positioned on a critical trade corridor, the NAFTA Highway
Monterrey is well positioned as the major industrial market (57), linking South America, Mexico and North America.
in Northeast Mexico. It is host to many multinational The unique advantage of being located in Central Mexico
corporations such as BASF, Carplastics, Brachs, Caterpillar, and within four hours driving distance of 70% of Mexico’s
Daewoo, Denso, GE, JCI, Navistar, Mattel, Panasonic, Parker, population makes Queretaro a major logistics hub. More
LG, Whirlpool, Sara Lee, Saturn, Elcoteq LG, Rockwell and than 45 million inhabitants live within a 135-mile radius.
many more. Monterrey offers more than 30 industrial parks. Queretaro hosts 19 industrial parks and zones. The automo-
Compared with other markets in Mexico, industrial lease tive sector has four assembly plants, 57 Tier-one suppliers,
rates have only dropped to a small degree, although more 100 Tier-two suppliers and more than 30,000 workers. The
concessions are being offered. Vacancy rates are hovering Aerospace sector is the next emerging market. At the end of
near 11%. Activity in the industrial market was very slow 2009, 2.1 million SF was under construction for Grupo
Contact during the first half of 2009; only five new foreign compa- Contact
Safran and Calamanda Distribution. Construction for 2010
NAI Mexico nies commenced operations in that period. However, there NAI Mexico
will be primarily for build-to-suits.
+1 619 690 3029 are more than 15 companies negotiating new spaces at the +1 619 690 3029
end of 2009 as they take advantage of landlord concessions During 2009, Queretaro promoted large capital investments
and recently discounted labor rates. with Bombardier, Meggitt, Metrocolor and Exco. Industrial
lease rates fell 10-15% in existing industrial space. Strong
The office market experienced slow but positive growth competition among developers to offer creative incentives
during 2009 with vacancy rates ranging from 5-12% in var- and flexible lease contracts ensures that 2010 will be a
ious submarkets. Although vacancy rates are slowly falling, “tenants’ market” through 2011.
rental rates have not begun to rise and range from
$15-$25/SM. At the end of 2009 there are four projects Queretaro’s office sector is composed mainly of low rise,
under construction ranging from 20,000-70,000 SF. garden, office type projects. Lease rates and land values in
Country Data Country Data 2010 for office facilities are projected to remain stable.
Retail is positive even with the global slowdown during 2009 Retail growth was steady during 2009. Retail construction in
Area 1,972,550
as Wal-Mart, Sams, Costco, Sears and other franchisees 2010 will continue with the launch of mixed use projects
Area 1,972,550
searched for sites in Monterrey. The future for 2010 through and strip centers.
GDP Growth (%) -7.34% 2012 is bright. Home Depot and Lowes will continue to
GDP Growth (%) -7.34% Queretaro’s unique location on the NAFTA Highway, its
expand their presence.
GDP 2008 (US$ B) $866.34 Central Mexico proximity to distribute to major population
Monterrey’s growth prospects are excellent. Its long indus- GDP 2008 (US$ B) $866.34 centers and free trade zones, make it a destination for
trial history, proximity to the US and unique technical foreign firms to locate new projects in Mexico. The long term
GDP/Capita (USD) $8,040.24
infrastructure ensure that it will be one of the strongest outlook is extremely favorable through 2010 and beyond.
GDP/Capita (USD) $8,040.24
industrial locations in Mexico during 2010.
Inflation Rate (%) 5.43%
Inflation Rate (%) 5.43%
Unemployment 6.06%
Rate (%) Unemployment 6.06%
Rate (%)
Interest Rate (%) 4.5%
Interest Rate (%) 4.5%
Population (Millions) 107.75
Population (Millions) 107.75

Monterrey At A Glance Querétaro At A Glance


RENT/SF/YEAR (Rent/SF/YR)
Low High Effective Avg. Vacancy Low High Effective Avg. Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) $ 14.91 $ 19.89 $ 17.83 5.0% New Construction (AAA) $ 14.93 $ 20.81 $ 17.87 15.0%
Class A (Prime) $ 13.66 $ 18.63 $ 16.72 7.0% Class A (Prime) $ 10.40 $ 12.10 $ 11.25 20.0%
Class B (Secondary) $ 9.94 $ 14.91 $ 14.49 6.0% Class B (Secondary) $ 4.45 $ 9.48 $ 6.97 10.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) $ 18.63 $ 29.83 $ 27.87 10.0% New Construction (AAA) $ 17.18 $ 20.39 $ 18.78 25.0%
Class A (Prime) $ 22.37 $ 26.09 $ 23.41 11.0% Class A (Prime) $ 10.28 $ 16.53 $ 13.41 10.0%
Class B (Secondary) $ 14.91 $ 21.12 $ 16.72 12.0% Class B (Secondary) $ 6.66 $ 10.00 $ 8.33 20.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 3.00 $ 3.96 $ 3.20 10.0% Bulk Warehouse $ 2.98 $ 4.10 $ 3.54 30.0%
Manufacturing $ 4.32 $ 5.04 $ 4.35 9.0% Manufacturing $ 3.82 $ 4.82 $ 4.32 10.0%
High Tech/R&D N/A N/A N/A N/A High Tech/R&D $ 7.80 $ 12.24 $ 10.02 5.0%
RETAIL RETAIL
Downtown $ 27.34 $ 45.98 $ 27.87 6.0%
Downtown $ 13.32 $ 22.32 $ 17.82 N/A
Neighborhood Service Centers $ 19.88 $ 24.86 $ 21.18 12.0%
Neighborhood Service Centers $ 14.76 $ 24.48 $ 19.62 N/A
Community Power Center N/A N/A N/A N/A
Community Power Center $ 25.68 $ 34.56 $ 30.12 N/A
Regional Malls $ 25.47 $ 62.45 $ 44.59 4.00%
Regional Malls $ 24.12 $ 44.64 $ 34.38 N/A

DEVELOPMENT LAND Low/SF High/SF


DEVELOPMENT LAND Low/M2 High/M2
Office in CBD N/A N/A Office in CBD N/A N/A
Land in Office Parks $ 4.18 $ 18.58 Land in Office Parks N/A N/A
Land in Industrial Parks $ 3.72 $ 10.00 Land in Industrial Parks $ 32.00 $ 48.00
Office/Industrial Land - Non-park $ 1.39 $ 9.29
Office/Industrial Land - Non-park $ 25.00 $ 35.00
Retail/Commercial Land $ 5.57 $ 46.45
Retail/Commercial Land $ 100.00 $ 300.00
Residential $ 13.94 $ 90.00
Residential $ 150.00 $ 570.00

2010 Global Market Report I www.naiglobal.com 66


Reynosa, Mexico Saltillo, Coahuila, Mexico
Reynosa is a dynamic city on the northeast border of Mexico, Saltillo, located in Northeast Mexico, is the capital city of
nine miles south of McAllen, Texas, and located along the Coahuila. Saltillo ranks second in the country in international
well established NAFTA Highway. Its third international exports. It is located 180 miles south of the US border from
crossing, Anzalduas Bridge, will generate even more growth Laredo, Texas, and has a population of approximately
in 2010 based on construction of a multi-modal service 700,000 inhabitants. Saltillo is recognized as a key center
center in McAllen, which will provide even lower distribution for servicing the global automotive industry.
costs. There are five main sectors that make up the Saltillo
Reynosa is one of the top five maquiladora markets in Mexico economy; automotive, metal-mechanic, electrical-electronic,
with 13 industrial parks accommodating more than 350 plastic and aerospace. Corporations such as General
manufacturing operations. During the global consolidation Motors, Daimler Chrysler and Freightliner support Saltillo’s
of 2008-2009, Reynosa proved to be a preferred relocation automobile industry while global suppliers such as ITT,
destination for many operations, including Motorola, LG Magna, Quimmco, Johnson Controls, and John Deere are
Electronics, Panasonic and Invensys. also located here.
In 2009, industrial lease rates fell 20-30%. During 2010, 2009 reflected the same fall in demand and consolidation
tenants can look forward to a “tenants’ market” and will in Saltillo as the rest of the Mexican industrial markets.
Contact receive additional incentives for free rent and time to retrofit Contact Recent projects include Whirlpool, Aventec, GSC and Trinity.
space. 2009 resulted in the same fall in demand and More demand will occur in 2010 due to projected expan-
NAI Mexico NAI Mexico
consolidation of product as the rest of the Mexican industrial sions from existing operations. During 2009, industrial lease
+1 619 690 3029 +1 619 690 3029
markets. Escalade and others offered facilities for lease or rates fell 10-20% for Class B and C facilities. During 2010,
sale. More demand will occur in 2010 due to projected tenants will experience a “tenants’ market” and receive
expansions from existing operations. additional incentives for free rent and time to retrofit space.
Reynosa’s office market is composed of small projects Industrial land values remained consistent during 2009 with
hosting local service industries. Most are located near major no change expected for 2010. Two new industrial parks are
arteries or close to the border and industrial housing com- under development: Amistad Airport and Santa Monica.
munities. No changes in lease rates are expected for 2010. During 2009, there were no changes in rates or prices in the
Retail availability in Reynosa is limited and lease rates office sector. Saltillo only offers two high-rise buildings and
Country Data remained stable during 2009. Vacancies remained low due Country Data smaller two- or three-story office buildings. In the retail
to strong demand from Mexican retail tenants. US retailers sector during 2009, two new shopping malls were launched:
will continue to evolve in Reynosa in 2010. New franchises Sendero Saltillo and Liverpoll. The trend for small strip cen-
Area 1,972,550 Area 11,972,550
such as Holiday Inn, Fiesta Inn, City Express, Best Western, ters continued during 2009 with more projected for 2010.
Little Cesar’s, Sirloin Stockade, Chili’s, Subway, Applebee’s, Saltillo’s unique location on the trade corridor to Texas, its
GDP Growth (%) -7.34% GDP Growth (%) -7.34%
Baskin Robbins, Popeye’s and 7-11 have recently opened strong industrial tradition and its ability to ship overnight to
locations. much of the US, make it a destination for foreign firms to
GDP 2008 (US$ B) $866.34 GDP 2008 (US$ B) $866.34
Reynosa’s unique location on the NAFTA Highway, its border locate new projects in Mexico. The long term outlook is
location, strong industrial tradition and its ability to ship positive for 2010 and beyond.
GDP/Capita (USD) $8,040.24 GDP/Capita (USD) $8,040.24
overnight to much of the US make it a desirable destination
for foreign firms to locate new projects in Mexico. The long
Inflation Rate (%) 5.43% Inflation Rate (%) 5.43%
term outlook is very favorable through 2010 and beyond.
Unemployment 6.06% Unemployment 6.06%
Rate (%) Rate (%)

Interest Rate (%) 4.5% Interest Rate (%) 4.5%

Population (Millions) 107.75 Population (Millions) 107.75

Reynosa At A Glance Saltillo At A Glance


(Rent/SF/YR) RENT/SF/YR
Low High Effective Avg. Vacancy Low High Effective Avg. Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) $ 8.40 $ 18.00 $ 12.00 7.0% New Construction (AAA) $ 11.14 $ 16.72 $ 13.37 3.0%
Class A (Prime) $ 6.00 $ 8.40 $ 8.00 1.0% Class A (Prime) $ 7.80 $ 10.03 $ 8.91 4.0%
Class B (Secondary) $ 2.40 $ 6.00 $ 4.00 3.0% Class B (Secondary) $ 6.68 $ 7.80 $ 6.68 3.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) $ 8.40 $ 18.00 $ 17.50 7.0% New Construction (AAA) $ 13.37 $ 16.72 $ 13.37 2.0%
Class A (Prime) $ 6.00 $ 8.40 $ 8.00 1.0% Class A (Prime) $ 7.80 $ 8.91 $ 8.91 3.0%
Class B (Secondary) $ 2.40 $ 6.00 $ 4.50 3.0% Class B (Secondary) $ 6.74 $ 7.80 $ 6.74 3.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 3.48 $ 3.96 $ 3.72 19.0% Bulk Warehouse $ 3.60 $ 4.44 $ 3.84 6.0%
Manufacturing $3.96 $ 4.56 $ 4.32 13.0% Manufacturing $ 4.50 $ 5.04 $ 4.68 6.0%
High Tech/R&D N/A N/A N/A N/A High Tech/R&D $ 5.40 $ 6.24 $ 6.00 N/A
RETAIL RETAIL
Downtown $ 4.00 $ 5.50 $ 5.33 N/A Downtown $ 10.03 $ 15.60 $ 11.14 10.0%
Neighborhood Service Centers $ 7.80 $ 10.03 $ 8.91 12.0%
Neighborhood Service Centers $ 3.00 $ 5.00 $ 4.85 2.0%
Community Power Center N/A N/A N/A N/A
Community Power Center $ 3.00 $ 5.50 $ 5.33 N/A
Regional Malls $ 11.14 $ 28.42 $ 15.00 11.0%
Regional Malls $ 4.00 $ 5.50 $ 5.33 6.0%

DEVELOPMENT LAND Low/Acre High/Acre


DEVELOPMENT LAND Low/SF High/SF
Office in CBD N/A N/A
Office in CBD $ 100,000.00 $ 145,000.00
Land in Office Parks N/A N/A
Land in Office Parks $ 100,000.00 $ 130,000.00
Land in Industrial Parks $ 2.78 $ 3.71
Land in Industrial Parks $ 75,000.00 $ 110,000.00
Office/Industrial Land - Non-park $ 1.67 $ 3.71
Office/Industrial Land - Non-park $ 75,000.00 $ 85,000.00
Retail/Commercial Land $ 13.93 $ 27.87
Retail/Commercial Land $ 95,000.00 $ 140,000.00
Residential $ 11.14 $ 18.58
Residential $ 140,000.00 $ 200,000.00

2010 Global Market Report I www.naiglobal.com 67


San Luis Potosi (SLP), Mexico Tijuana, Baja California, Mexico
San Luis Potosi with a population of 1 million is located in Tijuana is located on the northwest tip of Mexico in the state
Central Mexico in the famous “El Bajio” region. San Luis Potosi of Baja California. Tijuana is primarily an industrial city with
occupies a strategic location adjacent to 10 neighboring a limited availability of high-end office space but boasts an
states. Additionally, SLP is positioned on a critical trade emerging retail sector. Tijuana has played host to the largest
corridor along the NAFTA Highway (57), linking South America, concentration of foreign manufacturing firms in Mexico
Mexico and North America. for over 40 years.
The San Luis Potosi market is centrally located within a five- At the outset of 2009, four new industrial developments
hour drive of 70% of Mexico’s population, making it a major were under construction, lease rates were at an all-time
logistics hub. San Luis Potosi now hosts Mexico’s two most high and investors had flocked to the Tijuana market.
important inland ports and free trade zones: Borderless and However, the global economic crisis slowed investment by
Interpuerto. manufacturers and as demand fell so did lease rates.
No new construction for speculative industrial projects was Tijuana’s vacancy rates rose to over 10%, a number
initiated during 2009. Construction for new projects for 2010 unmatched in any year prior. As a result, lease rates fell by
will be for build-to-suits only. San Luis Potosi now hosts large 20-30% and developer incentives such as free rent were
capital investments with General Motors. During 2009, SLP noted for the first time. At the outset of 2010, the market has
also welcomed Becton Dickinson (medical), Cosma Interna- changed from a landlords’ market to a tenants’ market and
Contact Contact this trend will continue into 2011.
tional (automotive), Perennials Fabrics Outdoors (textile) and
NAI Mexico NAI Mexico
Aztek Technologies (steel) to the market. During 2009, Early signs of expansion were noted by the end of 2009,
+1 619 690 3029 +1 619 690 3029
industrial lease rates fell approximately 10-15% for all and it is anticipated that another wave of projects will be
classes of industrial space. Strong competition among scheduled for Tijuana throughout 2010. During 2009, Fisher
developers to offer creative incentives and flexible lease & Pakel from New Zealand was the first major operator to
contracts ensures that San Luis Potosi will be a “tenants’ take advantage of the profitable situation in the market by
market” through 2011. securing a 10-year, 200,000 SF lease.
San Luis Potosi’s office sector is composed mainly of low During 2009, one new retail project was completed on Blvd.
rise, garden, office type projects. Minor speculative office 2000 and one additional development is projected in the El
construction is projected for 2010; therefore lease rates and Florido area for 2010. US retailers such as Auto Zone, Carl’s
Country Data land values for office facilities are projected to remain stable. Country Data Jr. and Wal-Mart continue to expand their business in
During 2009, Soriana & MAZDA anchored the new “Lomas Tijuana. The Zona Rio and Agua Caliente corridors offer a
de Chapultepec.” Office Depot, Office Max, BANREGIO, Area 1,972,550
limited number of Class A office projects. Only one new Class
Area 11,972,550
Chili’s and Starbucks were the most active firms. Retail A office project completed construction in October 2009.
construction in 2010 will continue with the launch of three Tijuana’s critical mass of industrial firms, proximity to western
GDP Growth (%) -7.34% GDP Growth (%) -7.34%
new mixed-use developments. US markets and 40-year history with foreign manufacturers
GDP 2008 (US$ B) $866.34 San Luis Potosi’s unique location on the NAFTA Highway, its GDP 2008 (US$ B) $866.34 project a bright future for the real estate market. Although
proximity in Central Mexico to distribute to major population 2010 is expected to be a rebound year, increased activity is
centers and several free trade zones make it a destination GDP/Capita (USD) $8,040.24
projected by the second half and anticipated through 2012
GDP/Capita (USD) $8,040.24
for foreign firms to locate new projects in Mexico. The long- and beyond.
term outlook is extremely favorable through 2010 and
Inflation Rate (%) 5.43% Inflation Rate (%) 5.43%
beyond.
Unemployment 6.06% Unemployment 6.06%
Rate (%) Rate (%)

Interest Rate (%) 4.5% Interest Rate (%) 4.5%

Population (Millions) 107.75 Population (Millions) 107.75

San Luis Potosi At A Glance Tijuana At A Glance


RENT/SF/YEAR RENT/SF/YR
Low High Effective Average Vacancy Low High Effective Avg. Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) N/A N/A N/A N/A New Construction (AAA) $ 20.00 $ 30.00 $ 25.00 40.0%
Class A (Prime) $ 4.56 $ 7.80 $ 6.20 20.0% Class A (Prime) $ 13.00 $ 20.00 $ 16.50 15.0%
Class B (Secondary) $ 4.20 $ 4.32 $ 4.32 18.0% Class B (Secondary) $ 8.00 $ 13.00 $ 10.00 20.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) N/A N/A N/A N/A New Construction (AAA) N/A N/A N/A N/A
Class A (Prime) $ 7.44 $ 10.20 $ 8.76 5.0% Class A (Prime) N/A N/A N/A N/A
Class B (Secondary) $ 5.16 $ 8.76 $ 6.96 5.0% Class B (Secondary) $ 5.50 $ 11.00 $ 8.00 25.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 3.45 $ 3.84 $ 3.54 18.0% Bulk Warehouse $ 3.00 $ 4.80 $ 3.96 33.0%
Manufacturing $ 4.32 $ 5.28 $ 4.68 13.0% Manufacturing $ 3.00 $ 4.80 $ 3.96 15.0%
High Tech/R&D N/A N/A N/A N/A High Tech/R&D N/A N/A N/A N/A
RETAIL RETAIL
Downtown $ 12.84 $ 23.88 $ 18.33 10.0% Downtown N/A N/A N/A N/A
Neighborhood Service Centers $ 14.40 $ 25.80 $ 20.16 3.0% Neighborhood Service Centers $ 12.19 $ 16.60 $ 14.39 4.0%
Community Power Center N/A N/A N/A 7.0% Community Power Center N/A N/A N/A N/A
Regional Malls $ 15.72 $ 33.60 $ 24.72 5.0% Regional Malls $ 16.00 $ 50.16 $ 33.10 6.0%

DEVELOPMENT LAND Low/M2 High/M2 DEVELOPMENT LAND Low/SF High/SF


Office in CBD $ 300.00 $ 1,000.00 Office in CBD $ 43.00 $ 1,500.00
Land in Office Parks N/A N/A Land in Office Parks N/A N/A
Land in Industrial Parks $ 20.00 $ 32.00 Land in Industrial Parks $ 60.00 $ 100.00
Office/Industrial Land - Non-park $ 216.60 $ 658.84 Office/Industrial Land - Non-park $ 50.00 $ 130.00
Retail/Commercial Land $ 315.88 $ 1,263.53 Retail/Commercial Land $ 30.00 $ 1,500.00
Residential $ 361.01 $ 496.38 Residential $ 80.00 $ 450.00

2010 Global Market Report I www.naiglobal.com 68


Torreon, Coahulia, Mexico Caracas, Venezuela
Torreon is situated in a unique region of Mexico known as Venezuela offers excellent opportunities for investment due
La Laguna. This region is located in north central Mexico, to extraordinary oil revenues. Although oil prices went from
between the limits of Coahuila and Durango States. This US $147 to US $78 (Oct. 20, 2009), oil revenues are still an
area called “La Laguna” has a population of approximately important commodity. The level of Venezuela cash reserves
1.3 million people and is host to 20 of the Fortune 500 at the beginning of the economic crisis allowed that macro-
companies from various sectors. This region is sustained in economic imbalances did not translate into a severe
part by the apparel, automotive and educational sectors. contraction in the market. The oil sector and oil related
Automotive firms include John Deere, Takata, Delphi, JCI, industries are the key drivers of the Venezuela economy.
Linar, Alcoa, Sumitomo, Cooper and Metzler. Metal fabricators The office market in Caracas, mostly dependent on foreign
include Lincoln Electric, Caterpillar and Superior Essex, while companies, has become thin. Sale and rental prices
the major textile firms are Parras, RKI, Wrangler, Libra, and increased due to very low inventory, while construction of
Lajat Denim. The seven regional industrial parks in the new projects started but only a few have entered the market
area are Amistad, Ferropuerto Laguna, Jumbo Plaza, in 2009; more projects will be finished in 2010, which will not
Las Americas, Lagunero, Matamoros Industrial Park, San be enough to catch up with demand for Class AAA offices.
Pedro and Oriente Industrial Park. The industrial real estate market has also seen low inventory
Contact 2009 reflected the same fall in demand and consolidation Contact levels in 2009 with rental and sale prices above 2008 levels.
in Torreon as the rest of the Mexican industrial markets. It is expected that this trend will continue in 2010 due to an
NAI Mexico (Baja) NAI Ferca
More demand is anticipated to occur in 2010 due to increase in oil revenue and plans from the Chavez adminis-
+619 690 3029 +58 212 286 8124
projected expansions from existing operations. During 2009, tration to reduce unemployment through development of the
industrial lease rates fell 10-15% for Class B and C facilities. manufacturing, construction and agricultural sectors. Retail
During 2010, tenants will experience a “tenants’ market” has also seen low inventory and increased prices. Vacancy
and should receive additional incentives for free rent and rates at Class AAA shopping centers are extremely low. The
time to retrofit space. Industrial land values remained retail sector has benefited from the government policy of
consistent during 2009 with no change expected for 2010. increasing consumption of the lower income population,
No new Industrial parks are under development. which increased the demand of retail outlets.
During 2009, there were no changes in rates or prices in the Investment in real estate among transnational companies
Country Data office sector. Torreon offers few high-rise buildings with most Country Data has improved as many companies use this type of invest-
offices in the market housed in smaller, two or three-story ment to hedge their Bolívar cash balances against inflation.
Area 1,972,550
projects. In the retail sector, only five small strip centers were Due to the exchange control system in force since 2006,
Area 912,050
launched during 2009. This trend will continue in 2010 with repatriation of dividends at an official exchange rate of US
only a few additional projects expected to be delivered to the $1 = Bs. 2.15 is very difficult leaving many companies to
GDP Growth (%) -7.34% GDP Growth (%) -2.0%
market. SORIANA, one of the biggest supermarket retailers invest their Bolívar cash surplus in offices/warehouses.
in Mexico, is based out of Torreon. Venezuela has the biggest oil reserves in the world, a
GDP 2008 (US$ B) $866.34 GDP 2008 (US$ B) $353.47
Torreon’s unique location on the trade corridor to Texas, its commodity that will continue to be key to the world
GDP/Capita (USD) $8,040.24
strong industrial tradition and its ability to ship overnight to economy. Due to its foreign exchange reserves, it is
GDP/Capita (USD) $12,354.30
much of the US make it a destination for foreign firms to estimated that Venezuela will be able to cope with any
locate new projects in Mexico. The Torreon market looks to temporary variation of oil prices.
Inflation Rate (%) 5.43% Inflation Rate (%) 29.45%
be very encouraging in 2010 and beyond.
Unemployment 6.06% Unemployment 8.4%
Rate (%) Rate (%)

Interest Rate (%) 4.5% Interest Rate (%) 18.66%

Population (Millions) 107.75 Population (Millions) 28.611

Torreon At A Glance San Jose At A Glance


RENT/SF/YR Conversion: 2.15 Bs. = 1 US$ RENT/M2/MO US$ RENT/SF/YR
Low High Effective Avg. Vacancy Low High Low High Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) $ 10.25 $ 21.57 $ 16.20 10.0% New Construction (AAA) Bs. 240.00 Bs. 350.00 $ 10.37 $ 15.12 1.8%
Class A (Prime) $ 10.25 $ 18.84 $ 13.37 9.0% Class A (Prime) Bs. 163.00 Bs. 220.00 $ 7.04 $ 9.51 0.6%
Class B (Secondary) $ 5.40 $ 12.96 $ 8.64 9.0% Class B (Secondary) Bs. 137.00 Bs. 190.00 $ 7.04 $ 9.51 2.3%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) $ 16.72 $ 22.29 $ 16.72 11.0% New Construction (AAA) N/A N/A N/A N/A N/A
Class A (Prime) N/A N/A N/A N/A Class A (Prime) N/A N/A N/A N/A N/A
Class B (Secondary) N/A N/A N/A N/A Class B (Secondary) N/A N/A N/A N/A N/A
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 1.60 $ 2.81 $ 1.93 8.0% Bulk Warehouse Bs. 21.00 Bs. 44.10 $ 0.91 $ 1.91 N/A
Manufacturing $ 2.80 $ 4.00 $ 3.50 4.0% Manufacturing Bs. 9.80 Bs. 23.09 $ 0.42 $ 1.00 N/A
High Tech/R&D N/A N/A N/A N/A High Tech/R&D N/A N/A N/A N/A N/A
RETAIL RETAIL
Downtown $ 5.40 $ 12.97 $ 8.63 5.0% Downtown Bs. 70.00 Bs. 250.00 $ 3.02 $ 10.80 N/A
Neighborhood Service Centers $ 9.72 $ 16.16 $ 12.96 8.0% Neighborhood Service Centers N/A N/A N/A N/A N/A
Community Power Center N/A N/A N/A N/A Community Power Center N/A N/A $ 2.38 $ 3.54 N/A
Regional Malls $ 29.28 $37.84 $ 32.44 10.0% Regional Malls Bs. 55.00 Bs. 82.00 $ 2.38 $ 3.54 N/A
Solus Food Stores N/A N/A N/A N/A N/A
DEVELOPMENT LAND Low/SF High/SF DEVELOPMENT LAND Low/M2 High/M2 Low/SF High/SF
Office in CBD N/A N/A Office in CBD N/A Bs. 6,000.00 N/A $ 2,790.70
Land in Office Parks N/A N/A Land in Office Parks N/A N/A N/A N/A
Land in Industrial Parks $ 1.75 $ 4.36 Land in Industrial Parks N/A N/A N/A N/A
Office/Industrial Land - Non-park $ 3.20 $ 4.84 Office/Industrial Land - Non-park N/A N/A N/A N/A
Retail/Commercial Land $ 16.00 $ 28.00 Retail/Commercial Land N/A N/A N/A N/A
Residential $ 7.00 $ 30.00 Residential Bs. 210.00 Bs. 2,800.00 $ 97.67 $ 1,302.33

2010 Global Market Report I www.naiglobal.com 69


United States

SECTION CONTENTS
Birmingham, AL Boise, ID Manchester, NH Schuylkill County, PA
Huntsville, AL Southeast Idaho (Idaho Falls/Pocatello) Portsmouth, NH Wilkes-Barre, PA
Mobile, AL Chicago, IL Atlantic County, NJ Columbia, SC
Phoenix, AZ Springfield, IL Middlesex/Somerset Counties, NJ Greenville/Spartanburg/
Jonesboro, AR Fort Wayne, IN Northern, NJ Anderson Counties, SC
Little Rock, AR Indianapolis, IN Ocean County, NJ Sioux Falls, SD
Inland Empire, CA Cedar Rapids, Iowa City, IA Princeton, NJ Chattanooga, TN
Los Angeles, CA Davenport, Bettendorf IA Southern, NJ Clarksville, TN
Marin County, CA and Rock Island, Moline, IL Albuquerque, NM Knoxville, TN
Monterey County, CA Des Moines, IA Las Cruces, NM Memphis, TN
Oakland, CA Sioux City IA Albany, NY Nashville, TN
Orange Couny, CA Wichita, KS Long Island, NY Austin, TX
Sacramento, CA Lexington, KY New York, NY Beaumont, TX
San Diego, CA Louisville, KY Asheville, NC Corpus Christi, TX
San Francisco County, CA Batten Rouge, LA Charlotte, NC Dallas, TX
San Mateo County, CA Monroe, LA Greensboro, NC Houston, TX
Santa Clara County, CA New Orleans, LA Raleigh, NC El Paso, TX
Santa Cruz County, CA Greater Portland, ME Fargo, ND Fort Worth, TX
Sonoma County, CA Baltimore, MD Akron, OH Rio Grande Valley, TX
Ventura County, CA Suburban Maryland, MD Canton, OH San Antonio, TX
Colorado Springs, CO Boston, MA Cincinnati, OH Texarkana, TX
Denver, CO Western (Greater Springfield), MA Cleveland, OH Salt Lake City, UT
Delaware & Cecil County, Maryland Detroit, MI Columbus, OH Washington County, UT
Washington D.C. Grand Rapids, MI Dayton, OH Burlington, VT
Fort Lauderdale, FL Lansing, MI Oklahoma City, OK Northern Virginia, VA
Ft. Myers, FL Minneapolis/St. Pau, MN Tulsa, OK Seattle/Puget Sound, WA
Jacksonville, FL Kansas City, MO Portland, OR Spokane, WA
Martin & St. Lucie Counties, FL St. Louis, MO Allentown, PA Tri-Cities WA
Miami, FL Bozeman, MT Berks County, PA Madison, WI
Orlando, FL Missoula, MT Bucks County, PA Milwaukee, WI
Palm Beach, FL Lincoln, NE Harrisburg/York/Lebanaon, PA Northeastern (Fox Valley/Green Bay), WI
Tampa Bay, FL Omaha, NE Lancaster, PA Casper, WY
Atlanta, GA Las Vegas, NV Philadelphia, PA Jackson Hole, WY
Honolulu, HI Reno, NV Pittsburgh, PA
Birmingham, Alabama Huntsville, Decatur County, Alabama
Birmingham is Alabama’s largest metropolitan area and one The Huntsville/Madison County commercial real estate market
of the largest urban regions in the South. This area has a continues to remain stable throughout the first three
diverse workforce of over 900,000 and a thriving economic quarters of 2009. Although the local economy remains in
base, including a mixture of corporate headquarters, biotech- recession, the jobs Huntsville will gain from Base Realign-
related industries, operations centers, distribution facilities ment and Closure (BRAC) consolidation will lift the city out
and automotive manufacturing and related suppliers. of the nationwide recession before the rest of the country.
Most sectors of Birmingham’s commercial market showed The Huntsville/Madison County community once again led
continued signs of contraction in 2009 with rental rates Alabama in both population growth and the new and
and occupancies declining. Negative absorption for the expanding job markets.
multi-tenant markets also continued, though there was The Huntsville/Decatur office market has remained stable in
some absorption in freestanding industrial buildings and the 2009. Absorption of office space has slowed, but continued
service-center sector. There has been little new product defense spending has allowed several companies to build
brought to the market due to the credit freeze, although a new buildings in 2009. The office market should remain
few office developments were under construction based on stable with slower growth for the next two years sustained
previous commitments. by the planned growth due the BRAC realignment. Rental
The Birmingham office market overall, saw a direct rates in the office market have remained consistent at
Contact Contact $17.75-$25/SF for Class A space and $13 -$17/SF
negative absorption of 62,897 SF during Q2 and an
NAI Chase Commercial NAI Chase Commercial for Class B. New construction completed in 2009 has kept
occupancy rate of 91.6%, a slight decrease from 92% at
Realty, Inc. RE Services, Inc. vacancy rates higher at an 11% average. Office vacancy
the end of Q1. The Birmingham office market continues to
+1 888 539 1686 +1 888 539 1686 rates should begin to decrease by year’s end. Much of the
see negative absorption each quarter, however the gap is
narrowing. The CBD showed positive activity in Class A vacant space should be absorbed by the end of 2010.
space adding 10,000 SF to overall occupancy in Q3. The Overall, the 2010 forecast for office remains stable.
midtown market continues to demonstrate strength with an Huntsville’s industrial market is currently seeing vacancy in
overall occupancy of 95%. excess of 9%. The market is reacting by providing additional
Retail has also experienced a slide in occupancy due to the concessions and reduced rent, but vacancy is expected to
economy. Economic conditions have had the most inch higher during the first half of 2010.

Metropolitan Area
effect on the retail sector. Retail development has also Metropolitan Area The retail market has experienced anemic performance due
slowed dramatically. Homewood, Mountain Brook and to the economic downturn. More vacancies are increasing in
Economic Overview Vestavia maintain the highest occupancy for retail with a Economic Overview big block space and niche shopping centers. The Huntsville
2009 year-to-date level of 91%. However, it too has experienced 200 retail market ended 2008 with a 12% vacancy rate. Vacancy
Population 1,105,506 negative absorption of 7,000 SF for the year. Population 402,764 rates have continued to rise in 2009. Construction starts
The Birmingham industrial market experienced a negative came to a near halt during 2009. To combat low absorption
2014 Estimated 2014 Estimated
absorption of 126,262 SF in Q2. The overall occupancy rate Population 441,760 and the decline in retail activity, landlords have begun
Population 1,191,674
was 81.4%, a decrease from 83.2% in Q1. Despite a lowering rental rates and offering more concessions.
Employment Employment
negative absorption of 18,906 SF for the quarter, the 193,101
Huntsville remains the shining star of the state of Alabama
Population 569,945 Population
midtown submarket continues to demonstrate strength with with national recognition and rankings. The Huntsville/Madison
Household the highest occupancy rate in the market of 95.8% and an Household County community has received unprecedented rankings
Average Income $65,470 occupancy rate of 97.1% in Class A space. Average Income $64,222 and recognition for job growth, technology and quality of life.
In 2009, it received its most lofty ranking yet when it was
Median Median
Household Income $48,949 Household Income $55,903
named by Kiplinger as the number one city in the US.

Total Population Total Population


38
Median Age 37.95 Median Age

Birmingham At A Glance Huntsville, Decatur County At A Glance


(Rent/SF/YR) Low High Effective Avg. Vacancy (Rent/SF/YR) Low High Effective Avg. Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) N/A N/A N/A N/A New Construction (AAA) N/A N/A N/A N/A
Class A (Prime) $ 17.50 $ 23.50 $ 21.07 9.1% Class A (Prime) $ 18.00 $ 25.00 $ 20.00 8.0%
Class B (Secondary) $ 13.00 $ 17.50 $1 6.48 13.0% Class B (Secondary) $ 14.00 $ 17.00 $ 15.00 12.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) $ 23.00 $ 28.00 $ 27.00 N/A New Construction (AAA) $ 19.00 $ 25.00 N/A 25.0%
Class A (Prime) $ 18.00 $ 23.00 $ 21.26 8.0% Class A (Prime) $ 18.00 $ 22.00 N/A 4.0%
Class B (Secondary) $ 13.50 $1 8.00 $ 15.75 12.5% Class B (Secondary) $ 13.00 $ 17.00 $ 15.00 12.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 2.80 $4.54 $ 3.58 19.0% Bulk Warehouse $ 2.00 $ 3.50 $ 3.00 9.0%
Manufacturing $ 2.00 $4.00 $ 3.20 16.0% Manufacturing $ 3.00 $ 5.00 $ 3.75 15.0%
High Tech/R&D $ 9.00 $12.00 $ 9.25 12.0% High Tech/R&D $ 8.00 $ 10.00 $ 9.25 12.0%
RETAIL RETAIL
Downtown $ 9.00 $ 15.00 $ 13.79 9.3% Downtown N/A N/A N/A N/A
Neighborhood Service Centers $ 8.00 $ 19.00 $ 11.50 12.0% Neighborhood Service Centers $ 8.00 $ 18.00 $ 15.00 8.0%
Community Power Center $ 9.00 $ 17.00 $ 11.00 12.0% Community Power Center $ 8.00 $ 10.00 $ 7.00 10.0%
Regional Malls $ 18.00 $ 35.00 $1 9.00 13.0% Regional Malls $ 20.00 $ 60.00 $ 30.00 8.0%

DEVELOPMENT LAND Low/Acre High/Acre DEVELOPMENT LAND Low High


Office in CBD $ 305,000.00 $ 850,000.00 Office in CBD (per buildable SF) $ 40,000.00 $ 75,000.00
Land in Office Parks $ 195,000.00 $ 310,000.00 Land in Office Parks (per acre) $ 50,000.00 $ 120,000.00
Land in Industrial Parks $50,000.00 $ 125,000.00 Land in Industrial Parks (per acre) $ 25,000.00 $ 50,000.00
Office/Industrial Land - Non-park $ 40,000.00 $ 240,000.00 Office/Industrial Land - Non-park (per acre) $ 50,000.00 $ 150,000.00
Retail/Commercial Land $ 320,000.00 $ 850,000.00 Retail/Commercial Land (per acre) $ 225,000.00 $ 750,000.00
Residential N/A N/A Residential (per acre) $ 15,000.00 $ 125,000.00

2010 Global Market Report I www.naiglobal.com 71


Mobile, Alabama Phoenix, Arizona
While somewhat resistant to the recessionary pressures The Phoenix commercial real estate market is experiencing
in 2008, the Mobile area definitely experienced a major its most difficult challenges since the early 1990s.
slowdown in 2009. Despite the current downward economic Impacted by the continuing increase in unemployment, the
trends in the area, Mobile is noted as a leader for ship demand for space has been stymied by uncertainty and
building,aerospace and medical research within the state of corporate contraction. After ranking second in population
Alabama. Mobile remains a global player with its deepwater growth in the US for 25 years, Arizona has fallen to 49th
port currently ranked in the top 10 with regard to bulk and and is experiencing negative job growth due to the loss of
container handling. thousands of construction related jobs.
The office sector shows a slight decrease in absorption from The office vacancy rate is at 25% overall. Due to the
2008, with very little Class A space available. Rents overbuilding of new office space that is delivered but not yet
remained stable with an overall 10% vacancy. Class B space occupied, vacancy of office space in the downtown and
is experiencing a 20% vacancy with ample sublease oppor- some suburban submarkets has reached a staggering 60%
tunities. There is no new construction at the present time. vacancy rate. Asking rates are just over $26/SF for Class A
The industrial market has realized a substantial increase office space. Effective rates on completed new leases are at
in vacancy during 2009. Vacancy levels are approaching $23/SF. The market is experiencing negative net absorption
approximately 25%. Mobile is fortunate to have the nearly that will be compounded with the delivery of over 2 million
Contact Contact SF currently under construction.
completed Thyssen-Krupp Steel Mill in its northern sector
NAI Heggeman Realty NAI Horizon
scheduled to open in mid 2010 with a capital investment Industrial vacancy stands at nearly 17% with negative net
Company, Inc +1 602 955 4000
of roughly $4.5 billion. Mobile Container Terminal located absorption of just over 6 million SF in 2009. Achieved rental
+1 251 479 8606
on the deepwater port, continues to expand despite rates have declined 15-18% year over year. With the delivery
the economic climate. General cargo and bulk activity of another 2.2 million SF over the next three quarters,
remain below average at the port due to the trends in the vacancy will undoubtedly increase and rental rates will
global market. continue to erode.
The retail sector continues to soften and is very reflective of Retail landlords have been the most aggressive with rental
the trend nationwide. There is virtually no new construction rates and concessions for both new and existing tenants. In
under way in either Mobile or Baldwin County. Retail rents spite of those efforts, overall vacancy has risen from 10.3%
Metropolitan Area are flat with many national tenants renegotiating early Metropolitan Area
at the beginning of 2009 to the current level of 11%. New
renewals at lower rates. The lending environment continues construction has exacerbated the problem with 2.8 million
Economic Overview Economic Overview
to challenge developers for permanent financing to close SF added to the base over the past four quarters. Another
2009 deals. Virtually no “big box” projects are under way at the 2009 1 million SF is currently under construction and due to be
Population 401,171 present time. Surprisingly, the multifamily market in Population 4,456,884 delivered over the next three quarters. As the economy con-
Mobile/Baldwin remains steady with approximately 3,000 tinues to struggle and new product is completed and deliv-
2014 Estimated 2014 Estimated
Population 393,638
units under construction. The multifamily market is one of 5,149,033
ered, vacancy rates can be expected to climb another 3-5%.
Population
the few real estate products that remain favorable in the Today’s market offers opportunities with upside potential
Employment capital markets with permanent financing available. Employment for tenants and investors. More opportunities are expected
Population 199,986 Population 1,852,413
Overall expectations for 2010 remain unclear. In the event as foreclosure looms for properties not measuring up to their
Household that Northrop Grumman/Airbus is awarded a major contract Household purchase pro formas. Prosperity will return to the Phoenix
Average Income $48,705 to manufacture aircraft for the US Air Force in Mobile, every Average Income $71,428 market once positive growth is realized through increased
sector of the market would feel a direct surge in activity with consumer confidence, job growth and access to credit
Median Median
Household Income $43,051 major growth returning. Household Income $58,328
markets.

Total Population Total Population


Median Age 36 Median Age 34

Mobile At A Glance Phoenix At A Glance


(Rent/SF/YR) Low High Effective Avg. Vacancy (Rent/SF/YR) Low High Effective Avg. Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) $ 20.00 $ 25.00 $ 22.15 N/A New Construction (AAA) $ 28.00 $ 37.00 $ 34.00 60.0%
Class A (Prime) $ 17.00 $ 20.00 $ 18.50 10.0% Class A (Prime) $ 20.00 $ 32.00 $ 26.00 16.0%
Class B (Secondary) $ 10.00 $ 15.00 $ 12.50 20.0% Class B (Secondary) $ 14.00 $ 28.00 $ 21.00 17.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) $ 20.00 $ 22.00 $ 21.00 N/A New Construction (AAA) $ 20.00 $ 37.00 $ 28.00 60.0%
Class A (Prime) $ 15.00 $ 18.00 $ 16.50 10.0% Class A (Prime) $ 18.00 $ 36.00 $ 26.00 28.0%
Class B (Secondary) $ 9.00 $ 13.00 $ 11.00 20.0% Class B (Secondary) $ 15.00 $ 34.00 $ 22.00 23.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 3.00 $ 4.25 $ 3.65 25.0% Bulk Warehouse $ 2.50 $ 15.00 $ 6.00 18.0%
Manufacturing $ 2.75 $ 4.00 $ 3.37 15.0% Manufacturing $ 3.00 $ 16.00 $ 7.00 13.0%
High Tech/R&D $ 15.00 $ 20.00 $ 17.50 10.0% High Tech/R&D $ 4.50 $ 17.00 $ 8.50 19.0%
RETAIL RETAIL
Downtown $ 8.00 $ 10.00 $ 9.00 10.0% Downtown $ 10.00 $ 32.00 $ 19.00 15.0%
Neighborhood Service Centers $ 10.00 $ 27.50 $ 18.75 10.0% Neighborhood Service Centers $ 11.00 $ 28.00 $ 17.00 13.0%
Community Power Center $ 16.00 $ 20.00 $ 18.00 10.0% Community Power Center $ 16.00 $ 38.00 $ 22.00 12.0%
Regional Malls $ 18.00 $ 25.00 $ 21.50 10.0% Regional Malls $ 25.00 $ 80.00 $ 50.00 10.0%

DEVELOPMENT LAND Low/Acre High/Acre DEVELOPMENT LAND Low/Acre High/Acre


Office in CBD $ 200,000.00 $ 1,200,000.00 Office in CBD $ 800,000.00 $ 7,500,000.00
Land in Office Parks $ 120,000.00 $ 217,800.00 Land in Office Parks $ 108,000.00 $ 500,000.00
Land in Industrial Parks $ 35,000.00 $ 87,120.00 Land in Industrial Parks $ 100,000.00 $ 450,000.00
Office/Industrial Land - Non-park $ 40,000.00 $ 261,360.00 Office/Industrial Land - Non-park $ 15,000.00 $ 2,000,000.00
Retail/Commercial Land $ 261,360.00 $ 871,200.00 Retail/Commercial Land $ 10,000.00 $ 8,000,000.00
Residential $ 20,000.00 $ 50,000.00 Residential $ 2,000.00 $ 1,500,000.00

2010 Global Market Report I www.naiglobal.com 72


Jonesboro, Arkansas Little Rock, Arkansas
Jonesboro experienced growth in many sectors during Little Rock's growth sectors are medical, government and
2009, including education, medical and industrial. Arkansas institutional. Suburban Little Rock is experiencing a
State University enjoyed record enrollment for the second much slower absorption in retail growth and multifamily
year in a row. Key industries in Jonesboro continue to be development. The SMA has been positively impacted with
retail, industrial, office and education. natural gas exploration (Fayetteville Shale) and wind energy
The industrial sector boomed in 2009 between the related manufacturing. The bedroom communities are also
announcement of Nordex USA’s plan to construct a $100 developing their identities as potential corporate office
million wind-energy plant in the Jonesboro Industrial Park locations.
and Alberto Culver, also located in the Jonesboro Industrial Office market activity is occurring in the bedroom
Park, expanding to allow for even more jobs and production communities of Benton, Maumelle and particularly Conway.
outside of Jonesboro. Startek, an in-bound call center Internal growth is absorbing the second generation office
that fields calls for AT&T customers, had a huge hiring space in the CBD and West Little Rock. With Verizon's
upswing at the beginning of 2009, expanding to well over purchase of Alltel's corporate campus (Midtown) the antic-
600 employees. ipation is this campus will become available. Production
The retail sector contracted in 2009 as shown by the closure facilities for natural gas and wind energy are being
of Steinmart, Steve & Barry’s and Circuit City, but made completed. Food grade production facilities are also
Contact Contact coming online.
progress to regain ground with the arrivals of Olive Garden,
NAI Halsey NAI Dan Robinson
Murphy Oil Convenience Store, Sport Clips for Men, Office There is an abundance of first generation retail space in
+1 870 972 9191 & Associates
Depot, a third Burger King location, and a Best Buy. The place or approved in high income areas or along high
+1 501 224 7500
multifamily market showed a slight upturn with the traffic corridors. City-wide limited infill activity will continue.
construction of The Grove student housing, fully furnished The most prominent infill location is just north of I-630 on
apartments located just off campus from Arkansas State University Ave.
University. The largest announcement of 2009 was that NEA The Little Rock investment market is primarily an owner/user
Baptist Memorial Hospital was approved for construction of market. Fast food facilities tend to be the segment most
a $200 million, 250 bed hospital on the Northeastern side prone to investment activity. However, this activity is moving
of Jonesboro. This has called for area growth and many into the bedroom communities. Multifamily activity has
residential zones being quickly re-zoned to commercial, slowed. Projects are on the drawing board seeking sources
Metropolitan Area which is expected to continue well into 2010. Metropolitan Area
of funding.
Economic Overview Jonesboro saw several significant transactions in 2009 Economic Overview
Time, distance and available infrastructure in close proximity
2009 including the sale of a new office building valued at 2009
to major employment centers have caused developers to
Population 121,875 $1.5 million to Merrill Lynch, the new location of E.C. Population 690,000
redirect their site searchs along the I-430 corridor.
Barton's Surplus Warehouse and the purchase of property Arkansas's favorable tourism industry entices the entrepre-
2014 Estimated 2014 Estimated
Population 135,082 for Ritter's corporate campus, an internet, TV, and phone Population 746,933 neurial spirit and restaurants and hotel facilities continue to
provider headquartered here. emerge but at a slower pace in the CBD and suburban
Employment Employment
53,430 423,829
markets. There is serious competition for market share.
Population Population
The community of Conway recently announced that it will
Household Household house corporate offices for two major companies, Hewlett
Average Income $52,949 Average Income $60,500
Packard and Southwestern Energy Company. Searcy
Median Median announced the facility expansion of Schulze & Burch Biscuit
Household Income $39,936 Household Income $49,636 Co., a specialty baking company out of Chicago, IL.
Total Population Total Population
35 37
Median Age Median Age

Jonesboro At A Glance Little Rock At A Glance


(Rent/SF/YR) Low High Effective Avg. Vacancy (Rent/SF/YR) Low High Effective Avg. Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) N/A N/A N/A N/A New Construction (AAA) $ 20.00 $ 24.00 N/A N/A
Class A (Prime) $ 14.00 $ 22.00 $ 12.00 N/A Class A (Prime) $ 17.00 $ 19.50 N/A 10.0%
Class B (Secondary) $ 10.00 $ 16.00 $ 15.00 N/A Class B (Secondary) $ 10.00 $ 14.00 N/A 13.0%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) $ 18.00 $ 22.00 $ 18.00 10.0% New Construction (AAA) $ 22.00 $ 24.00 N/A 5.0%
Class A (Prime) $ 14.00 $ 20.00 $ 18.00 10.0% Class A (Prime) $ 16.00 $ 20.00 N/A 12.0%
Class B (Secondary) $ 8.00 $ 15.00 $ 12.00 10.0% Class B (Secondary) $ 14.00 $ 16.50 N/A 7.0%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 3.00 $ 6.00 $ 3.50 10.0% Bulk Warehouse $ 2.50 $ 5.00 N/A 5.0%
Manufacturing N/A N/A N/A N/A Manufacturing $ 1.50 $ 6.90 N/A 8.0%
High Tech/R&D N/A N/A N/A N/A High Tech/R&D $ 6.00 $ 9.50 N/A 5.0%
RETAIL RETAIL
Downtown N/A N/A N/A N/A Downtown N/A N/A N/A N/A
Neighborhood Service Centers $ 10.00 $ 20.00 $ 14.00 N/A Neighborhood Service Centers $ 20.00 $ 35.00 N/A 40.0%
Community Power Center N/A N/A N/A N/A Community Power Center $ 14.00 $ 30.00 N/A 60.0%
Regional Malls $ 18.00 $ 32.00 $ 25.00 10.0% Regional Malls $ 25.00 $ 40.00 N/A N/A

DEVELOPMENT LAND Low/Acre High/Acre DEVELOPMENT LAND Low/Acre High/Acre


Office in CBD N/A N/A Office in CBD $ 435,600.00 $ 1,306,800.00
Land in Office Parks $ 120,000.00 $ 330,000.00 Land in Office Parks $ 174,240.00 $ 522,760.00
Land in Industrial Parks $ 5,000.00 $ 20,000.00 Land in Industrial Parks $ 32,670.00 $ 108,900.00
Office/Industrial Land - Non-park $ 5,000.00 $ 15,000.00 Office/Industrial Land - Non-park $ 1.50 $ 261,360.00
Retail/Commercial Land N/A N/A Retail/Commercial Land $ 108,900.00 $ 1,306,800.00
Residential $ 8,000.00 $ 20,000.00 Residential N/A N/A

2010 Global Market Report I www.naiglobal.com 73


Inland Empire (Riverside/ San Bernardino), California Los Angeles, California
The Inland Empire has suffered during the recession mainly The entertainment industry, a primary component of the
due to a strong development surge over the last 10 years. market in Los Angeles, has weathered the current crisis
Residential foreclosures have subsided as median home quite well. The October 25th year-to-date box office receipts
prices fell. Lease rates for all types of commercial property increased 7.3% from 2008. Offsetting the gains in enter-
declined, which increased absorption in a double-digit tainment are losses in international trade. Total shipments
vacancy factor environment throughout the commercial through September at the Port of Long Beach decreased
spectrum. 24.6 % from the previous year. In general, economic
The good news is that the Inland Empire has returned to its conditions in Los Angeles County remain weak. However,
historical position as the lower cost alternative to the Los there is a bright spot as discount retailers, such as Big Lots,
Angeles basin. Affordable housing, low cost commercial Dollar Tree, 99 Cents Only, and Wal-Mart, continue to expand.
space, and a strong employee base are likely to encourage Concerns regarding future economic growth have kept
economic growth in the Inland Empire. demand for commercial real estate in Los Angeles County
The office market experienced a significant contraction subdued. Companies throughout Los Angeles are looking
during the recession. Vacancy rates rose to unprecedented for ways to reduce lease expenses. For some, this means
levels over the last two years causing highly aggressive base vacating their existing space. This has led to higher vacancy
rental rates and concession packages to attract the Inland Contact rates for office, retail, and industrial space. Other companies
Contact NAI Capital (Encino) are asking for rent reductions. This, combined with higher
Empire office user. With the exception of malls, retail
NAI Capital +1 818 905 2400 vacancy rates, led to lower lease rates in all three markets.
vacancy rates in the Inland Empire exceed 10%. Although
(Riverside) NAI Capital (West Los Angeles)
high, these rates are likely to remain constant or decrease +1 310 440 8500 Tight credit markets and an unwillingness to lend have
+1 951 346 0800
NAI Capital slightly over the next 12 months. Enticed by low lease rates, NAI Capital (South Bay) negatively impacted the number of sales transactions. The
(Ontario/San Bernardino) discount retailers, who have experienced an increase in sales +1 310 532 9080 number and dollar value of sales transactions declined
+1 909 945 2339 during the recession, are inquiring about additional space. NAI Capital (Commerce) significantly compared with 2008 figures. The velocity of
+1 323 201 3600 sales transactions is expected to increase as owners shift to
NAI Capital The industrial market remains weak due to negative
NAI Capital (Pasadena) SBA financing.
(Temecula Valley) absorption and approximately three years of available +1 626 564 4800
+1 951 491 7590 inventory proliferating throughout the Inland market in NAI Capital (Santa Clarita) Higher vacancy rates, lower lease rates and tight credit have
all size spectrums. The optimistic aspect is that the +1 661 705 3550 almost eliminated new construction. Very little construction
Metropolitan Area gap between buyers and sellers and landlords and tenants took place in Los Angeles County during 2009 and is not
has finally narrowed, which is stimulating transactions. Metropolitan Area likely to pick up in the near future. However, several new
Economic Overview Distressed property owners are moving product lateral construction sites are slated for 2011.
Economic Overview
2009 with the late 1980s market. With prices at a 15-year low, We have experienced a significant decline in lease rates and
Population 4,189,781 opportunity has been created for the investor looking to 2009
Population 12,721,592 sales prices with some categories at lower levels than we
purchase at or below replacement cost. have seen for almost 10 years. However, with the current
2014 Estimated
Population 4,458,827 Private Equity Funds are taking to this market due to the 2014 Estimated increase in activity, some improvement in credit lending and
Population 12,341,926
tremendous upside potential of where they can buy now as the existing low prices in the market, we expect to see a
Employment
1,321,430
opposed to where the product topped out during the height Employment significant increase in lease and sale transactions in the next
Population
of the market. Population 5,950,383 12 months.
Household
Average Income $74,095 Household
Average Income $82,944
Median
Household Income $55,131 Median
Household Income $57,887
Total Population
32 Total Population
Median Age 35
Median Age

Inland Empire (Riverside/ San Bernardino) At A Glance Los Angeles At A Glance


(Rent/SF/YR) Low High Effective Avg. Vacancy (Rent/SF/YR) Low High Effective Avg. Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) N/A N/A N/A N/A New Construction (AAA) N/A N/A N/A N/A
Class A (Prime) N/A N/A N/A N/A Class A (Prime) $ 18.00 $ 52.54 $ 34.19 13.7%
Class B (Secondary) N/A N/A N/A N/A Class B (Secondary) $ 9.81 $ 44.35 $ 21.74 12.2%
SUBURBAN OFFICE DOWNTOWN OFFICE
New Construction (AAA) $ 29.40 $ 41.40 $ 37.41 80.2% New Construction (AAA) $ 24.75 $ 64.37 $ 41.01 69.8%
Class A (Prime) $ 13.97 $ 49.76 $ 26.80 32.8% Class A (Prime) $ 14.71 $ 77.40 $ 32.67 14.80%
Class B (Secondary) $ 5.64 $ 39.51 $ 20.50 19.5% Class B (Secondary) $ 6.00 $ 54.32 $ 25.20 12.7%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 2.04 $ 15.47 $ 4.57 15.0% Bulk Warehouse $ 0.59 $ 29.88 $ 6.72 9.2%
Manufacturing $ 1.80 $ 25.80 $ 4.02 16.7% Manufacturing $ 2.40 $ 17.36 $ 6.81 6.8%
High Tech/R&D $ 4.20 $ 13.44 $ 6.86 7.4% High Tech/R&D $ 4.68 $ 12.60 $ 7.00 11.6%
RETAIL RETAIL
Downtown N/A N/A N/A N/A Downtown $ 7.08 $ 45.24 $ 32.61 4.6%
Neighborhood Service Centers $ 3.48 $ 45.00 $ 19.60 10.5% Neighborhood Service Centers $ 10.80 $ 41.68 $ 25.31 6.8%
Sub Regional Centers $ 4.80 $ 47.24 $ 26.25 11.4% Community Power Center $ 3.24 $ 37.00 $ 23.85 7.6%
Regional Malls $ 15.00 $ 42.00 $ 30.77 2.8% Regional Malls $ 18.00 $ 25.00 $ 24.46 3.3%

DEVELOPMENT LAND Low High DEVELOPMENT LAND Low/Acre High/Acre


Office in CBD N/A N/A Office in CBD $ 4,375,000.00 $ 10,937,500.00
Land in Office Parks $ 881,928.00 $ 1,033,057.00 Land in Office Parks $ 1,066,666.00 $ 3,849,206.00
Land in Industrial Parks $ 153,932.00 $ 653,400.00 Land in Industrial Parks $ 1,034,031.00 $ 3,120,000.00
Office/Industrial Land - Non-park N/A N/A Office/Industrial Land - Non-park N/A N/A
Retail/Commercial Land $ 403,846.00 $ 1,520,270.00 Retail/Commercial Land $ 1,306,801.00 $ 3,975,000.00
Residential (per acre) N/A N/A Residential N/A N/A

2010 Global Market Report I www.naiglobal.com 74


Marin County, California Monterey, California
Marin County, bordered by the San Francisco Bay, the Pacific Monterey County’s major economic generators are agriculture
Ocean and the vineyards of Sonoma Valley, is considered and tourism. The Monterey Peninsula, home to Pebble
one of the most affluent counties in the nation. Located just Beach, Cannery Row and the Monterey Bay Aquarium, is
north of San Francisco’s Golden Gate Bridge, Marin, home heavily dependent on tourism. The Salinas Valley is one of
to Mt. Tamalpais, has an excellent climate, lavish open space the state’s most significant agricultural regions producing a
and spectacular views. variety of lettuces, strawberries, grapes and other products.
Marin County office vacancy peaked above 16.8% in 2003, Vacancy numbers rose across the board from Q3 2008 to
but has since increased to 21.1% by Q3 2009. Vacancy Q3 2009; Class A office vacancy countywide increased from
increased 570 basis points since Q3 2008. The average 9.3% in Q3 2008 to approximately 13.1% in Q3 2009,
asking rate decreased a substantial $2.52/SF in the past while Class B office vacancy rose from 5.1% to 7.8% during
year to $30.72/SF full service per year. Since 2004, nearly the same period. Average rents for Class A office remained
5 million SF of available office space has been absorbed steady, rising from $27.96/SF to $28.20/SF while Class B
from the county’s marketplace. office saw a decrease from $23.40/SF to $22.80/SF.
A rare occurrence, the City of San Rafael vacancy, at 27.3% Industrial vacancy rose from 4.4% in Q3 2008 to 8.2% in
in Q3 2009 compared to 17.7% a year ago, is higher Q3 2009 and posted an average rent of $5.64/SF.
Contact compared to its northern counterpart, Novato. This vacancy Contact Water use remains a driving force behind the current state
increase is due to the completion of the second phase of of future growth as the Monterey Peninsula looks for an al-
NAI Global NAI Global
the San Rafael Corporate Center bringing 160,000 SF of ternative water source other than the Carmel River. Currently
+1 609 945 4000 +1 609 945 4000
new construction to the market. the PUC is considering three solutions for a desalination
In Southern Marin, the overall average asking rate in Q3 plant in the area: the proposed Cal-Am desalinization plant
2009 decreased $0.52/SF to $3.19/SF full service in Moss Landing, another proposed Cal-Am desalinization
compared to a year ago. This part of the county holds the plant in Marina, and the Regional Water Project, also located
highest average asking rates that shelters many of the in Marina. In the Salinas Valley, efforts to combat saltwater
county’s successful financial firms. intrusion have proceeded well. The Monterey County Water
Resources Agency is in the process of completing a project
Commercial sale activity experienced a stalemate during that includes modifications to the Nacimiento Dam spillway
2009. The largest transaction in the county closed at the and the installation of a rubber dam and diversion facility on
Metropolitan Area beginning of the year as Inland Western Larkspur LLC sold Metropolitan Area the Salinas River near Marina.
Economic Overview its 172,443 SF shopping center to JS Rosenfield & Co. Economic Overview
Other sale activity includes MEPT, a pension fund selling 55, Most new development will continue to be focused on the
2009
75 & 88 Rowland Way in Novato, totaling 168,072 SF, to 2009 former Fort Ord and Salinas Valley. Additional development
Population 246,713
Barker Pacific Group and Rockwood Capital.
Population 402,398 on the Monterey Peninsula will be limited by water availability
and local politics.
2014 Estimated Investment activity remained quiet for 2009. We anticipate 2014 Estimated
Population 243,128 Population 4389,312
continued softening in values as capitalization rates rise to
Employment accommodate perceived risks. The Marin market is relatively Employment
Population 132,909 stable due to the high barriers of entry for new development, Population 184,867
the active small tenant population and relatively lower use
Household of debt. Household
Average Income $121,815 Average Income $76,236

Median Median
Household Income $90,312 Household Income $60,077

Total Population Total Population


Median Age 45 Median Age 32.9

Marin County At A Glance Monterey At A Glance


(Rent/SF/YR) Low High Effective Avg. Vacancy (Rent/SF/YR) Low High Effective Avg. Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) N/A N/A N/A N/A New Construction (AAA) N/A N/A N/A N/A
Class A (Prime) N/A N/A N/A N/A Class A (Prime) N/A N/A N/A N/A
Class B (Secondary) N/A N/A N/A N/A Class B (Secondary) N/A N/A N/A N/A
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) $ 42.00 $ 42.00 $ 42.00 100.0% New Construction (AAA) N/A N/A N/A N/A
Class A (Prime) $ 23.40 $ 60.00 $ 30.96 27.9% Class A (Prime) $ 12.00 $ 46.32 $ 28.20 13.1%
Class B (Secondary) $ 23.40 $ 42.00 $ 30.24 16.6% Class B (Secondary) $ 6.72 $ 27.00 $ 22.80 7.8%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 12.00 $ 15.60 $ 13.80 N/A Bulk Warehouse N/A N/A N/A N/A
Manufacturing $ 12.00 $ 15.60 $ 13.80 N/A Manufacturing $ 3.00 $ 17.76 $ 5.64 8.2%
High Tech/R&D $ 15.00 $ 20.10 $ 20.10 N/A High Tech/R&D N/A N/A N/A N/A
RETAIL RETAIL
Downtown N/A N/A N/A N/A Downtown N/A N/A N/A N/A
Neighborhood Service Centers $ 15.00 $ 45.00 $ 21.29 8.1% Neighborhood Service Centers N/A N/A N/A N/A
Community Power Center $ 36.00 $ 45.00 $ 39.09 2.7% Community Power Center N/A N/A N/A N/A
Regional Malls N/A N/A N/A N/A Regional Malls N/A N/A N/A N/A

DEVELOPMENT LAND Low High DEVELOPMENT LAND Low High


Office in CBD (per buildable acre) N/A N/A Office in CBD (per buildable acre) $ 15.00 $ 40.00
Land in Office Parks (per acre) $ 1,306,800.00 $ 1,742,400.00 Land in Office Parks (per acre) $ 261,360.00 $ 609,840.00
Land in Industrial Parks (per acre) $ 871,200.00 $ 1,306,800.00 Land in Industrial Parks (per acre) $ 174,240.00 $ 609,840.00
Office/Industrial Land - Non-park (per acre) $ 871,200.00 $ 1,306,800.00 Office/Industrial Land - Non-park (per acre) $ 261,360.00 $ 1,524,600.00
Retail/Commercial Land (per acre) $ 1,524,600.00 $ 1,960,200.00 Retail/Commercial Land (per acre) $ 435,600.00 $ 1,742,400.00
Residential (per acre) $ 2,395,800.00 $ 2,831,400.00 Residential (per acre) N/A N/A

2010 Global Market Report I www.naiglobal.com 75


Oakland, California Orange County, California
The East Bay office market has risen to a 17.7% vacancy, The Orange County office, retail and industrial markets have
a 3.2% increase since Q3 2008. Vacancy had steadily begun to recover from the last two years of economic slow
remained around 14% since Q3 2005 until this year when down. The Orange County market was particularly hard
vacancy climbed each successive quarter to its current level. hit during the recession due to the downfall of the national
The average asking rate decreased $2.28 in the past year sub-prime lenders headquartered in Orange County, the
to $25.92/SF per year for full-service properties. construction of 4 million SF of Class A office projects and
The “core” East Bay office market accounts for a total building unemployment rising from 3.5% to 9.5%.
base of 21 million SF. Vacancy is at 14.3% and the average The good news is that the worst is likely over in Orange
asking rate is $27.12/SF per year for full-service properties. County. Many existing companies are beginning to lock
R&D vacancy continues to hover above 20%, climbing from in long term leases at rates that are the lowest in 10 years.
20.6% in Q3 2008 to 23.1% in Q3 2009. The average Conditions may deteriorate further but not to the extent
asking rate has dropped from $13.28/SF in Q3 2008 to witnessed over the last 24 months. Although leasing activity
$11.22/SF NNN. Year-to-date 2009, the R&D market has has been driven primarily by existing companies renewing
recorded over 3 million SF of gross absorption, an improve- their leases early, the Orange County market has been
ment over 2008, which totaled less than 3.5 million SF. one of the most active in the US, according to real estate
Manufacturing vacancy closed Q3 2009 at 7.6%, up from information provided by CoStar. We are beginning to see a
Contact Contact migration from low rise to Class A high rise space as tenants
5.2% in Q3 2008. The average asking rate fell from $6.83
NAI Global NAI Capital take advantage of lower lease rates.
to $6.00/SF per year NNN during the same time span.
+1 609 945 4000 +1 949 854 6600
Year-to-date 2009, the manufacturing market has amassed Orange County retail markets have fared well. Vacancy rates
over 4.7 million SF in gross absorption, which is already have crept above 5% while lease rates declined only 1%
greater than 2008’s total gross absorption of 4.6 million SF. from last year. These trends may continue as consumers
The retail shopping centers market ended mid-year 2009 continue to cut spending in favor of savings. However, a
with vacancy climbing and asking rates steadily dropping. weak dollar combined with economic growth in Asia, is likely
Vacancy was 7.2% on gross leasable area of 25 million SF to boost tourism in Orange County. Increased tourism will
with the average asking rate $24.83/SF NNN. help to offset weak domestic retail spending.
Metropolitan Area The Orange County industrial market experienced a contraction
Investment activity has been steady through Q3 2009.
Economic Overview HRPT properties secured the largest sale of 2009 with the during the recession. Vacancy rates rose above 10% in two of
Metropolitan Area
2009 purchase of TMG/JER’s Bayside Business Park in Fremont the markets tracked. On average, lease rates declined 4.1%
Economic Overview from Q3 2008 levels. Due to these conditions, construction
Population 4,249,644 with the four-building portfolio measuring 392,488 SF of
R&D space. 2009 activity came to a halt. While this is certainly a negative, it is
2014 Estimated Population 2,985,498 the first step for recovery in the market. At the moment, overall
Population 4,362,644 Many large construction projects have been put on hold capacity is capped at current levels.
due to the poor economic forecast. Earlier this year, Ellis 2014 Estimated
Employment
Partners completed their 110,000 SF office/retail building Population 2,956,048 As economic conditions improve, low lease rates are likely
Population 2,274,988 to entice new entrants into the market. With capacity
in Jack London Square; however, the building is currently Employment
Household 100% vacant. capped, vacancy rates will decline. Lease rates will increase
Population 1,413,475
Average Income $100,489 as the market eventually tightens.
Household
Median Average Income $98,346
Household Income $77,440
Median
Total Population Household Income $75,638
Median Age 40
Total Population
Median Age 36.5

Oakland At A Glance Orange County At A Glance


(Rent/SF/YR) Low High Effective Avg. Vacancy (Rent/SF/YR) Low High Effective Avg. Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) N/A N/A N/A N/A New Construction (AAA) N/A N/A N/A N/A
Class A (Prime) $ 12.00 $ 37.20 $ 29.90 14.9% Class A (Prime) N/A N/A N/A N/A
Class B (Secondary) $ 10.08 $ 34.32 $ 25.01 22.1% Class B (Secondary) N/A N/A N/A N/A
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) N/A N/A N/A N/A New Construction (AAA) $ 23.15 $ 45.40 $ 37.48 11.7%
Class A (Prime) $ 13.20 $ 30.00 $ 28.76 14.1% Class A (Prime) $ 9.00 $ 60.00 $ 28.94 21.2%
Class B (Secondary) $ 9.00 $ 31.20 $ 19.37 24.4% Class B (Secondary) $ 8.52 $ 48.40 $ 24.39 17.5%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 1.80 $ 7.20 $ 3.88 6.1% Bulk Warehouse $ 3.00 $ 22.80 $ 7.92 8.6%
Manufacturing $ 2.40 $ 12.00 $ 4.50 6.1% Manufacturing $ 2.40 $ 21.00 $ 7.33 11.0%
High Tech/R&D $ 3.60 $ 42.00 $ 11.42 23.1% High Tech/R&D $ 3.00 $ 22.80 $ 7.63 10.1%
RETAIL RETAIL
Downtown N/A N/A N/A N/A Downtown N/A N/A N/A N/A
Neighborhood Service Centers $ 6.00 $ 48.00 $ 24.83 4.4% Neighborhood Service Centers $ 10.20 $ 60.00 $ 24.93 6.0%
Community Power Center $ 6.00 $ 48.00 $ 24.83 4.4% Community Power Center $ 12.00 $ 72.00 $ 25.15 5.0%
Regional Malls N/A N/A N/A N/A Regional Malls $ 18.61 $ 51.00 $ 26.11 3.6%

DEVELOPMENT LAND Low/Acre High/Acre DEVELOPMENT LAND Low/Acre High/Acre


Office in CBD N/A N/A Office in CBD N/A N/A
Land in Office Parks N/A N/A Land in Office Parks) $ 1,392,857.00 $ 2,333,333.00
Land in Industrial Parks N/A N/A Land in Industrial Parks $ 1,286,434.00 $ 2,000,000.00
Office/Industrial Land - Non-park N/A N/A Office/Industrial Land - Non-park N/A N/A
Retail/Commercial Land N/A N/A Retail/Commercial Land $ 1,200,000.00 $ 3,076,923.00
Residential N/A N/A Residential N/A N/A

2010 Global Market Report I www.naiglobal.com 76


Sacramento, California San Diego, California
Located in the north-central region of California, the Sacramento The San Diego County commercial real estate market has
Valley has benefited from the migration of Bay Area compa- softened significantly during the past year, but with a glim-
nies seeking high quality facilities, affordable rental rates and mer of positive indications towards Q4 2010. Overall, rental
lower employment costs. Additionally, the Sacramento Valley rates, occupancy rates and new construction have trended
market is accessible to major thoroughfares (I-80, US-50, I- downward, as has net absorption in retail and industrial
5 and Highway 99). The Port of Sacramento is an inland port properties. But positive net absorption of almost 300,000
that handles mainly agricultural commodities. SF of office space in Q3 provided some welcome positive
Sacramento Valley office vacancy closed Q3 2009 at 17.2%, news in an otherwise very difficult year.
more than a 300 basis point increase from a year ago. Total At the end of Q3 2009, office vacancy rates were 15.3%,
availability grew 2.8 million SF during this time to 13.7 retail vacancy rates 5.1% and industrial vacancy was 10.9%.
million SF. A substantial amount of new construction has Both retail and industrial properties experienced substantial
played a key role in the vacancy/availability increase. The net negative absorption, approximately 1.5 million SF and
average asking rate was $23.76/SF full service, a sizable 3.75 million SF, respectively, resulting in reduced asking rental
decrease of $3.36/SF, or 12%, from a year ago. The market rates across all product types.
continues to remain favorable for tenants as landlords offer Investment sales and owner user sales have continued to be
rental rate discounts plus other concessions such as free slow compared with sales from two to four years ago, as
Contact rent and higher TI allowance dollars. Lease terms also Contact
the credit environment has remained challenging. Loan to
NAI Global remain shorter, typically ranging between one and two years. NAI San Diego
value ratios have decreased to 50-60% of appraised values,
+1 609 945 4000 +1 619 497 2255
The R&D/manufacturing/warehouse market ended Q3 2009 increasing equity requirements substantially, with the
with a vacancy of 10.4%. Total availability in the industrial exception of SBA financing. Owner users are waiting on the
market was 14.5 million SF, composed predominantly of sidelines for prices to drop further, leading to fewer SBA
direct space accounting for 92% of the total. Sublease financed transactions.
space increased nearly 700,000 SF in Q3 2009 alone, to Among the largest office lease signings this year is the law
more than 1.15 million SF. This surge was mainly attributed firm Procopio, Cory, Hargreaves & Savitch downtown for
to Optisolar’s massive industrial facility hitting the market. 102,000 SF, eBioscience for 49,000 SF in North City and the
The average industrial asking rate was $4.56/SF NNN, down Department of Homeland Security for 45,000 SF. Industrial
$0.84, or 15% from a year ago. leases include 200,000 SF by MOR Furniture and 129,000
Metropolitan Area Metropolitan Area
Office construction continued to trickle on to the market during SF by FedEx Ground, both in Otay Mesa near the Mexico
Economic Overview Q3 as projects that were funded over a year or two ago are Economic Overview Border. The largest sale was the 175,000 SF office building
2009 just now being completed. The development pipeline, how- 2009 purchased by Kaiser Permanente for approximately $52
Population 2,138,182 ever, is quickly tightening as today’s developers wait on the Population 3,040,388 million, just under $300/SF. Excluding small buildings (under
sidelines until market conditions become favorable again. 15,000 SF), six office buildings totaling $61 million sold in
2014 Estimated 2014 Estimated
Population 2,255,358 3,202,143
the first half of 2009 for an average of $140/SF, down from
Population
an average price of $230/SF in 2008.
Employment Employment
944,031 1,460,337
Sales activity for 2009 has been especially slow due to the
Population Population
combined forces of the aforementioned credit tightening and
Household Household buyer reluctance. Continued downward pressure from prices
Average Income $75,478 Average Income $81,825 is forecast for 2010 as concessions and capitalization rates
rise, rents decline, CMBS loans mature and refinancing
Median Median
Household Income $61,395 Household Income $60,331
becomes problematic.

Total Population Total Population


Median Age 35 35
Median Age

Sacramento At A Glance San Diego At A Glance


(Rent/SF/YR) Low High Effective Avg. Vacancy (Rent/SF/YR) Low High Effective Avg. Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) $ 33.00 $ 37.80 $ 37.56 61.4% New Construction (AAA) N/A N/A N/A N/A
Class A (Prime) $ 28.20 $ 39.60 $ 34.08 9.6% Class A (Prime) $ 27.00 $ 36.00 $ 31.50 18.00%
Class B (Secondary) $ 15.00 $ 42.36 $ 24.72 10.7% Class B (Secondary) $ 21.00 $ 30.00 $ 25.50 13.20%
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) $ 23.40 $ 32.40 $ 27.36 49.1% New Construction (AAA) $ 30.00 $ 33.00 $ 31.50 N/A
Class A (Prime) $ 16.68 $ 37.80 $ 25.20 25.3% Class A (Prime) $ 24.00 $ 30.00 $ 27.00 21.00%
Class B (Secondary) $ 9.60 $ 36.72 $ 22.20 19.0% Class B (Secondary) $ 18.00 $ 30.00 $ 24.00 11.00%
INDUSTRIAL INDUSTRIAL
Industrial & Warehouse N/A N/A $ 4.56 10.4% Bulk Warehouse $ 4.68 $ 12.00 $ 8.34 9.40%
RETAIL Manufacturing $ 4.80 $ 18.00 $ 9.24 10.90%
Downtown $ 7.20 $ 34.20 $ 20.40 2.8% High Tech/R&D $ 9.00 $ 14.40 $ 9.00 16.20%
Neighborhood Service Centers $ 6.60 $ 37.44 $ 18.36 12.9% RETAIL
Community Power Center $ 15.48 $ 37.56 $ 24.48 7.1% Downtown $ 21.18 $ 60.00 $ 33.33 6.60%
Regional Malls $ 21.00 $ 36.00 $ 27.00 26.8% Neighborhood Service Centers $ 12.00 $ 36.00 $ 23.00 7.10%
Community Power Center $ 20.00 $ 28.00 $ 28.07 5.80%
DEVELOPMENT LAND Low High Regional Malls $ 30.00 $ 44.47 $ 38.50 1.80%
Office in CBD (per buildable acre) N/A N/A
Land in Office Parks (per acre) $ 217,800.00 $ 435,600.00 DEVELOPMENT LAND Low/Acre High/Acre
Land in Industrial Parks (per acre) $ 130,680.00 $ 348,480.00 Office in CBD $ 4,356,000.00 $13,000,000.00
Office/Industrial Land - Non-park (per acre) $ 87,120.00 $ 217,800.00 Land in Office Parks N/A N/A
Retail/Commercial Land (per acre) $ 174,240.00 $ 522,720.00 Land in Industrial Parks $ 436,500.00 $ 1,000,000.00
Residential (per acre) N/A N/A Office/Industrial Land - Non-park $ 436,500.00 $ 1,300,000.00
Retail/Commercial Land $ 871,200.00 $ 2,000,000.00
Residential $ 100,000.00 $ 4,000,000.00

2010 Global Market Report I www.naiglobal.com 77


San Francisco County, California San Mateo County, California
The San Francisco commercial market remained plagued by San Mateo County is home to the San Francisco Interna-
rising vacancy, declining rents and occupancy loss with the tional Airport and some of the world’s leading technology
September 2009 preliminary unemployment rate reaching companies. World-class universities, world-class cultural
10.4%. The market-wide vacancy rate rose to 15.3% at the venues, a diverse labor pool and abundant intellectual
end of 3rd quarter 2009. The San Francisco office market resources of working capital make this region one of the
continued to experience deterioration, though at a continu- best locations to conduct business in the United States.
ing lesser pace, despite signs of increased leasing activity
San Mateo office vacancy peaked above 18% in 2009,
as major companies looked to lock in long-term deals and
climbing 680 basis points from 2008. The average asking
take advantage of attractive rents with generous conces-
rate decreased a dramatic $10.32 in the past year to
sions currently offered by Landlords. The market-wide
$31.92/SF per year for full service properties. Since 2007,
vacancy rate rose to 15.3% at the end of 3rd quarter 2009.
nearly 5.7 million SF of office space has been absorbed from
The overall market continued to show occupancy loss
San Mateo County's available marketplace. The city of South
ending Q3 at 247,870 SF of negative net absorption. The
San Francisco’s vacancy rate remained high at 25.7% in
year-to-date total amounted to nearly 1.7 million square feet
Q3 2009 compared to 26.4% a year ago and 13.9% in
of negative absorption, already exceeding 2008’s annual
2007. Belmont/San Carlos also remains among the highest
total of negative 1.3 million square feet. The overall annual
in San Mateo County at 24.9%.
Contact market rental rates dropped $3.75 to $33.01 per square Contact
NAI Global foot full service. NAI Global R&D vacancy continues to increase, closing Q3 2009 at
+1 609 945 4000 +1 609 945 4000
16.11%, an increase of 239 basis points from 2008. The
The amount of sublease space remained flat during the
average asking rate closed Q3 2009 at $27.96/SF NNN per
3rd quarter at about 2.7 million square feet, or 3.2% of
year, down $2.88 from 2008. The County has recorded over
the total building inventory, showing early signs of some
36,000 SF of negative net activity year-to-date in 2009.
companies now shedding less excess space onto the
sublease market and other companies leasing up the Manufacturing vacancy closed Q3 2009 at 4.57% with an
bargain sublease opportunities. average asking rate of $10.68/SF NNN. San Mateo County’s
warehouse vacancy pushed into double-digit territory from
San Francisco’s industrial/warehouse market contains 19.3
5.3% in Q3 2008 to 11.0% in Q3 2009. The average asking
million sf of base and includes users in both distribution and
rate closed Q3 2009 at $9.24/SF NNN. In the past year, the
manufacturing industries. The overall market-wide vacancy
Metropolitan Area Metropolitan Area warehouse market has absorbed 2 million SF of inventory.
rate rose to 5.1% as it lost occupancy at negative 110,500
Economic Overview square feet of net activity. Year-to-date net absorption has Economic Overview Future retail developments include a redevelopment and
already tallied a negative 413,180 square feet, nearly equiv- new construction at 1450 Howard Avenue in Burlingame
2009 2009
Population 4,249,644 alent to its highest amount of annual occupancy loss seen Population 709,558
with a new 44,000 SF Safeway store with an additional
in 2001. Market-wide industrial asking rates dropped lower 13,000 SF of retail space.
2014 Estimated to $0.76 per square foot industrial gross. The market 2014 Estimated
Population 4,362,644 recovery still remains to be seen. The availability rate is Population 715,897

Employment
expected to continue to go up as demand remains slow. Employment
Population 2,274,988 San Francisco’s first quarter 2009 retail vacancy rate was Population 374,088

Household
the lowest in the country at 2 percent, remaining unchanged Household
Average Income $100,489 from year end 2008, and far below the national average of Average Income $116,511
7.2 percent. Average asking rates dropped 4.6 percent to
Median $38.14 per square foot. Of the top metropolitan areas Median
Household Income $77,440 throughout the country, San Francisco’s low vacancy rate is Household Income $89,763

Total Population
reflective of our individual market demand in our supply- Total Population
Median Age 40 constrained urban environment. Median Age 40.8

San Francisco At A Glance San Mateo County At A Glance


(Rent/SF/YR) Low High Effective Avg. Vacancy (Rent/SF/YR) Low High Effective Avg. Vacancy
DOWNTOWN OFFICE DOWNTOWN OFFICE
New Construction (AAA) N/A N/A N/A N/A New Construction (AAA) N/A N/A N/A N/A
Class A (Prime) $ 19.00 $ 70.00 $ 36.42 14.4% Class A (Prime) N/A N/A N/A N/A
Class B (Secondary) $ 18.00 $ 40.00 $2 8.72 13.8% Class B (Secondary) N/A N/A N/A N/A
SUBURBAN OFFICE SUBURBAN OFFICE
New Construction (AAA) N/A N/A N/A N/A New Construction (AAA) N/A N/A N/A N/A
Class A (Prime) N/A N/A N/A N/A Class A (Prime) $ 11.40 $ 162.00 $ 35.04 18.7%
Class B (Secondary) N/A N/A N/A N/A Class B (Secondary) $ 6.00 $ 66.00 $ 25.20 24.8%
INDUSTRIAL INDUSTRIAL
Bulk Warehouse $ 5.40 $ 16.20 $ 9.12 5.1% Bulk Warehouse $ 4.56 $ 18.00 $ 9.48 13.5%
Manufacturing N/A N/A N/A N/A Manufacturing $ 4.56 $ 18.00 $ 9.24 11.0%
High Tech/R&D N/A N/A N/A N/A High Tech/R&D $ 9.00 $ 45.00 $ 27.96 16.1%
RETAIL RETAIL
Downtown $ 28.50 $ 750.00 $ 76.33 6.7% Downtown N/A N/A N/A N/A
Neighborhood Service Centers $ 28.20 $ 65.00 $ 45.06 3.6% Neighborhood Service Centers $ 18.00 $ 54.00 $ 33.66 3.8%
Community Power Center N/A N/A N/A N/A Community Power Center $ 15.00 $ 45.00 $ 27.49 5.1%
Regional Malls $ 24.00 $ 150.00 $ 71.37 1.5% Regional Malls N/A N/A N/A N/A

DEVELOPMENT LAND Low High DEVELOPMENT LAND Low High


Office in CBD (per buildableSF) N/A N/A Office in CBD (per buildable acre) $ 111.00 $ 870.00
Land in Office Parks (per acre) N/A N/A Land in Office Parks (per acre) $ 1,500,000.00 $ 2,300,000.00
Land in Industrial Parks (per acre) N/A N/A Land in Industrial Parks (per acre) $ 1,100,000.00 $ 2,645,000.00
Office/Industrial Land - Non-park (per acre) $ 1,700,000.00 $ 6,000,000.00 Office/Industrial Land - Non-park (per acre) $ 1,110,000.00 $ 2,900,000.00
Retail/Commercial Land (per acre) $ 1,800,000.00 $ 10,000,000.00 Retail/Commercial Land (per acre) $ 4,200,000.00 $ 5,500,000.00
Residential (per acre) $ 2,000,000.00 $ 13,000,000.00 Residential (per acre) $ 775,000.00 $ 9,032,000.00

2010 Global Market Report I www.naiglobal.com 78


Santa Clara County (Silicon Valley), California Santa Cruz County, California
Santa Clara County has one of the highest median family Santa Cruz County, an area rich in natural beauty, covers
incomes and boasts some of the highest rated educational 439 square miles, making it the second smallest county by
systems nationwide. Many consider this county one of the area in California. With its six state parks, attractive beaches
best places in the country to live and work. This area had been and famous Santa Cruz beach boardwalk, the county
a main target for new office/R&D development in recent years, remains one of the West Coast’s most famous seaside play-
but due to weak demand stemming from economic decline grounds. The economy is still largely dependent on seasonal
and rising unemployment, developers have halted most new tourism and agriculture, but is becoming more diversified
projects altogether or until the economy recovers. with businesses in the high-tech, software and educational
Silicon Valley office vacancy hit 19.1% in Q3 2009 industries.
compared to 13.6% a year ago, while availability was 14.2 In accordance with the slumping economy, Santa Cruz
million SF, compared to 9.8 million SF in 2008. Both are County office/R&D vacancy increased for eight consecutive
record high levels. The average asking rate slid $2.04 the quarters, rising from 9.8% in Q3 2007 to 12.9% in Q3
past year to $32.76/SF per year for full service properties. 2009. Meanwhile, the average asking rate fell by $1.20/SF
R&D vacancy also grew to 19.1% in Q3 2009, a hefty over the past year to $22.32/SF for full service properties.
increase of 5.7 million SF from 15.6% a year ago. The Total availability grew to 954,000 SF countywide in Q3
average asking rate was $12.96/SF NNN, down $2.52 2009. This market has not hit the 1 million SF mark since
Contact from Q3 2008. The velocity in these sectors softened and Contact 2004. Sublease space totaled 134,000 SF, or 14% of the
NAI Global decelerated as Q2 and Q3 consecutively fared much better NAI Global county’s total office availability, compared to 185,000 SF,
+1 609 945 4000 than the horrendous Q1 2009. +1 609 945 4000 or 23%, a year ago. Through the first three quarters of
Manufacturing vacancy was 8.35% with an average asking