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1 Globl Reserch nd onsulting RIRD EI Globl rketview Office Rentl ycle Q Rents Qurterly hnge 17 key globl mrkets: Decline ccelerting Decline slowing Growth ccelerting Growth slowing OVERVIEW s economic sentiment hs picked up in most regions cross the globe, levels of occupier demnd re strting to show signs of improvement. ore compnies re looking to expnd nd net bsorption is positive in number of mrkets this qurter including ong Kong, Wshington D. nd ondon s ity nd West End. here re still concerns over high unemployment forecsts, prticulrly in pin, but this is true of fewer mrkets thn before. upply side fctors lso indicte subtle shift in mrket fundmentls. Vcncy is pproching its pek or strting to fll in most mrkets. In ondon, for exmple, shrp rise in pre-letting ctivity reflects tighter supply conditions nd the limited number of schemes now under construction. In the coming yer the squeeze on development finnce is going to led to further tightening in supply, not just in ondon but lso elsewhere, prticulrly in Europe nd the merics. he shift in the blnce between supply nd demnd mens tht most of the key mrkets in Europe nd si Pcific re now showing some degree of rentl growth. here is lso n expecttion tht this will ccelerte over the coming months. he ity of ondon hs shown exceptionlly strong rentl growth over the pst yer, with n nnul increse of 25% in prime rents nd further double digit growth expected in the coming yer. imilrly, in ong Kong rents hve risen strongly over the pst few months s compnies hve become more ctive on the bck of helthier finncil results nd expecttions of regionl economic growth. he mericn mrkets continue to lg Europe nd si Pcific but there re now signs tht the rentl decline is slowing nd tht some mrkets, such s ew York nd Wshington D.., hve reched the bottom of the cycle. Overll, the outlook for globl office mrkets is stronger thn it ws t the strt of the yer when rents were still flling in the mjority of office loctions. Globl Rentl ycle, Q Rentl Decline ccelerting Rentl Decline lowing Rentl Growth ccelerting Rentl Growth lowing hicgo oronto ucklnd drid exico ity os ngeles Pris ondon West End ong Kong P ondon ity okyo Wshington D.. ew York Frnkfurt W F hnghi ingpore ydney 2010, Richrd Ellis, Inc.

2 Q Globl rketview Office Rentl ycle I- PIFI sin-pcific Rentl ycle rket ommentry okyo Demnd for Grde office spce improved slightly in Q3 s reloction ctivity remined moderte. Grde rents in inner okyo nevertheless decresed by 2.3% q- o-q to JPY 31,250 per tsubo per month (excluding nd tx) in Q3, s mny lndlords of selected Grde buildings were forced to lower rents to help combt long-term vcncy. ong Kong Demnd for prime office spce on ong Kong Islnd continued to rise stedily in Q3 s compnies becme more ctive on the bck of helthier finncil results nd expecttions of regionl economic growth. keup in the entrl district totlled round 110,000 sq ft, with vcncy flling to 3%. his helped push rents 11% higher over the qurter to verge K$105 psf, the highest qurterly growth in entrl office rents since the mrket bottomed out in Q he jump in rents ws led by increses in premium buildings in the district. hnghi hnghi s citywide verge sking rent recorded q- o-q growth of 1% to R 212 psm (U$ 2.94 psf) per month nd this hs been the third consecutive qurter chieving positive rentl movement. In Q3, demnd for prime office spce ws lrgely driven by occupiers in professionl, mnufcturing nd finncil sectors. Pge 2 Rentl Decline ccelerting Rentl Decline lowing Rentl Growth ccelerting Rentl Growth lowing 2010, Richrd Ellis, Inc. eoul ucklnd Kul umpur K ipei noi nil okyo ydney hnghi ingpore nglore ew Delhi umbi ity ngkok ong Kong eijing Gungzhou ingpore he ingpore office mrket continued to rebound strongly from the downturn fter turning round in Q2. Prime office rents verged $7.40 psf per month, up from $6.90 psf per month in the previous qurter, rise of 7.2% q-o-q. In the pst yer the vcncy rte hs lmost hlved in the core D nd fringe D res to 4.8% nd 7.0% respectively. ydney grdul recovery in rents is underwy in the ydney D mrket with prime rents incresing slightly for the first time since 2009 to rech U$709/sqm/p. esing ctivity hs lso begun to pick up, lthough vcncy continues to increse s result of newly completed stock being brought to the mrket. s employment growth is expected to continue into 2011 further recovery in rents in the prime D mrket is nticipted. ucklnd combintion of deteriortion in economic conditions, decline in mrket confidence nd concerns over the supply pipeline tht will be entering the mrket during 2011 hs resulted in return to rentl decline in the office sector. Prime rents in the re declined by 0.6% in Q3 to Z$359/sqm/p, while incentives hve incresed to 17% of the rentl vlue. G

3 EE Europen Rentl ycle Rentl Decline ccelerting Rentl Decline lowing Rentl Growth ccelerting Rentl Growth lowing thens elsinki msterdm Vienn unich nchester irminghm udpest drid F Frnkfurt openhgen rcelon oscow iln isbon ondon V Dublin D uchrest G Genev Rome R P Prgue W mburg D Z Zurich Edinburgh E rket ommentry V ondon ity P Pris O ondon West End Oslo Wrsw Dusseldorf tockholm russels erlin Globl rketview Office Rentl ycle Frnkfurt Prime rents hve remined stble t 38/sq m/month since Q Interest in well-priced, high qulity office spce in the best centrl loctions continues nd rents re therefore expected to remin stble for the short/medium term. ke-up ws down on lst qurter (which ws exceptionlly high due to one prticulr del) but yerto-dte levels re round 25% more thn in Vcncy incresed slightly to 17.2% nd is believed to be close to it s pek. ondon West End Prime rents remined stble t 85/sq ft/nnum for the second qurter in row nd rent free periods remin unchnged. ke-up remined bove trend t 1.3m sq ft nd vilbility hs fllen in line with the long-term verge for the first time in two yers. his reflects fll of 31% since its pek. ondon ity Rents hve incresed gin this qurter in ondon ity to 52.50/sq ft/nnum n nnul chnge of 25% since the mrket low. Rent frees fell to 24months for 10-yer lese. ke-up rose bove trend nd ws 22% higher thn the sme qurter lst yer. he vcncy rte rose slightly to 6.7% but supply is still 26% lower thn the recent pek in Q drid Rents fell gin this qurter to 324/sq m/nnum, 3.6% drop. It is difficult to envisge the bottom of the mrket before 2012 given the wek economic outlook nd high unemployment forecsts. ke-up fell by over 55% this qurter becuse (i) Q2 dt ws exceptionlly high due to compny reloctions, nd (ii) Q3 coincides with the holidy seson in which July / ugust re trditionlly slow months for the mrket. he vcncy rte incresed to 11.5% this qurter but is thought to be close to it s pek. Pris Prime rents remined stble this qurter t 770/sq m/nnum but rents in some secondry loctions decresed this qurter. Demnd ptterns remin the sme s lst qurter, with low levels of ctivity but incresing signs of genuine demnd s more compnies look to expnd. Vcncy ws stble for the third qurter in row t 6.8%. Pge , Richrd Ellis, Inc. Q3 2010

4 ERI Q Globl rketview Office Rentl ycle orth nd tin mericn Rentl ycle Rentl Decline ccelerting Rentl Decline lowing Rentl Growth ccelerting Rentl Growth lowing ntigo P Pnm ity hicgo rket ommentry hicgo he direct vcncy rte fell 10 bps to 15.1% in Q3. Further declines in vcncy re expected to be mild s miniml employment growth continues to weigh on office spce demnd. Gross sking rents incresed slightly in Q3 to $31.67/sq ft/nnum nd re expected to continue to fluctute over the next few qurters. os ngeles sking rents re down 2.3% on n nnul bsis, ending the qurter t $29.23/sq ft/nnum. he ri- ities nd outh y submrkets re the most stble rentl mrkets whilst the n Gbriel Vlley sking rents hve decresed 11.0% y-o-y. otl vcncy incresed slightly this qurter to 18.0%. et bsorption in Greter os ngeles ws negtive for the 13th qurter t -916,503 sq ft. exico ity Rents fell 3.3% in Q3 to n verge of $22.73/ sq m/ m nd re expected to fll further with the increse in supply. Despite the 4.2% increse in tke-up, vcncy rose to 9.6%, s 92,000 sq m of lss product cme to mrket during Q3. vilbility will continue to rise s n dditionl 950,000 sq m is under construction, nerly 30% of which is scheduled to be completed before the end of the yer. Pge , Richrd Ellis, Inc. tlnt lgry Ornge ounty Edmonton O E ustin Ft uderdle ouston oronto F hrlotte uenos ires Orlndo Phoenix orthern ew Jersey os ngeles imi n Diego exico ity ettle O P W D D oston im Wshington D.. Denver n Frncisco Dlls V Vncouver ew York R Rio de Jneiro ão Pulo ew York he verge sking rent ticked up 0.3% q-o-q to $47.74/sq ft/nnum nd verge rents continue to level off. esing ctivity fell in the third qurter to 5.6 million sq ft. Vcncy rtes decresed q-o-q by 30 bsis points to 9.0%. oronto Rents remin under pressure in the suburbn mrket s vcncy remins high, however the downtown mrket is performing reltively well with positive net bsorption of 116,073 sq ft in Q3. he vcncy rte fell 20 bps in Q3 to 9.4% in the oronto mrket with the downtown submrket experiencing similr decline to 6.9%. Downtown lss sking net rents incresed by 0.4% this qurter to $24.45/sq ft/nnum. With few lrge blocks of spce coming to the mrket next qurter nd dding to the vcncy, rents re expected to decrese. Wshington D.. et bsorption totlled 3.9 million sq ft yer-to-dte - the first time demnd hs outpced supply since sking rentl rents incresed by 1.8% over the qurter due to the delivery of new trophy building in the D. Rents re expected to remin t current levels or increse slightly over the next 6-12 months. Vcncy declined lmost 200 bsis points over the pst six months to 10.3% which is the lrgest decline in U.. office mrket.

5 DEFIIIO ycle Positions Rentl Decline ccelerting Rentl Decline lowing Rentl Growth ccelerting Rentl Growth lowing Globl rketview Office Rentl ycle he rentl cycle is intended to show the trend in net effective rents. rkets cn be positioned t 16 points on the rent cycle. rkets re positioned in reltion to their own cycle nd do not necessrily move long the cycle in the sme direction or t the sme speed s other mrkets. he positioned re defined s follows: ycle Position Definitions egment umber Description Rents ttic 1 Rents re t their pek nd hve stbilised. o further growth expected nd next move likely to be downwrds. Rentl Decline ccelerting 2 Rents hve strted to decline. Further flls nticipted, rte of decline likely to increse. Rentl Decline ccelerting 3 Rents hve clerly been flling for while nd re expected to continue to do so. Rte of decline still ccelerting. Rentl Decline ccelerting 4 Rents hve been flling. Further declines nticipted but rte of decline expected to strt moderting. Rentl Decline oderting 5 Rents still flling but rte of decline beginning to moderte. Pst the worst periods of rentl decline. Rentl Decline lowing 6 Rte of decline hs reduced. Further flls expected but some signs of future improvement my be evident. Rentl Decline lowing 7 Rte of decline continues to slow. Vcncy now probbly declining, bottom of the cycle in sight. Rentl Decline lowing 8 Rentl decline slowed significntly, mybe even stopped, but my be some further flls. lmost bottom of the cycle. Rents ttic 9 Rents sttic t the bottom of the cycle. ext move lmost certinly upwrds, though no significnt increse yet. Rentl Growth ccelerting 10 Erly stges of recovery. ler signs tht rents hve strted to move up, rte of growth expected to increse. Rentl Growth ccelerting 11 Rents hve been rising for while, expected to continue to ccelerte for t lest the next 3-6months. Rentl Growth ccelerting 12 Rents hve been rising strongly; further increses definitely expected, but rte of growth reching its pek soon. Rentl Growth oderting 13 Rte of rentl growth hs peked. ot the top of the mrket s rents will rise further, but rte of growth will slow. Rentl Growth lowing 14 Rents still rising but rte of growth hs clerly begun to slow. ext moves still clerly upwrds. Rentl Growth lowing 15 Rents still rising but rte of growth well below its pek. o specific signs of growth stlling in the ner future. Rentl Growth lowing 16 till possibility of some upwrds movement, but rents lmost t their pek. Increses now smll nd spordic. Pge , Richrd Ellis, Inc. Q3 2010

6 Q Globl rketview Office Rentl ycle RIRD EI GO REER D OUIG Globl Reserch nd onsulting is Richrd Ellis network of pre-eminent RE reserchers nd consultnts who provide strtegic dvisory nd reserch services nd econometric forecsting to investors nd occupiers round the globe. For more informtion regrding this rketview, or to find out more bout ny spect of our services, plese contct: Ry orto, Ph.D., RE Globl hief Economist & Executive nging Director, Globl Reserch [email protected] ick xford ed of Reserch si & enior nging Director, Globl Reserch [email protected] Richrd olberton Director, EE Reserch [email protected] Pge , Richrd Ellis, Inc. ndrew ess Executive Director, si Reserch [email protected] Kevin tnley Executive Director, Globl Reserch & onsulting Pcific Region [email protected] Rymond Wong Executive Director, merics Reserch Opertions [email protected] Disclimer 2010 Richrd Ellis Informtion herein hs been obtined from sources believed to be relible. While we do not doubt its ccurcy, we hve not verified it nd mke no gurntee, wrrnty or representtion bout it. It is your responsibility to independently confirm its ccurcy nd completeness. ny projections, opinions, ssumptions or estimtes used re for exmple only nd do not represent the current or future performnce of the mrket. his informtion is designed exclusively for use by Richrd Ellis clients, nd cnnot be reproduced without prior written permission of Richrd Ellis. opyright 2010 Richrd Ellis