Milwaukee, WI 1st Quarter 2015 OFFICE. Market Trends COMMERCIAL REAL ESTATE INFORMATION. In partnership with

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1 Milwaukee, WI 1st Quarter 2015 OFFICE Market Trends COMMERCIAL REAL ESTATE INFORMATION In partnership with

2 Table of Contents/Methodology of Tracked Set Table of Contents/Methodology of Tracked Set 2 Milwaukee Office Market Maps 3-4 Q Overview 5 Overview by Submarket/Property Type 6 Rental Rates 7-8 Vacancy Rates & Absorption 9 Available Space 10 Notable Transactions 11 Vacancy & Absorption Xceligent Milwaukee 14 The Milwaukee tracked set consists of an inventory of buildings considered to be competitive within the brokerage community. All buildings within the competitive tracked set have been reviewed and verified by members of the Advisory Boards for each market area. Inventory Class A Class B Class C Total Available SF Total Vacant SF Direct Vacant SF Sublease SF Net Absorption Weighted Average Direct Lease Rate CBD The total square feet of all existing multi tenant office buildings greater than 20,000 SF, excluding medical, government and owner occupied buildings. Most prestigious buildings competing for premier office users with rents above the market average. Buildings have high quality standard finishes, state of the art systems, exceptional accessibility and a definite market presence. Buildings competing for a wide range of office users with average market rents. Building finishes are fair to good for the area and systems are adequate, but the property does not compete with Class A product. Buildings competing for office users requiring functional office space at rents below the market average for the area. All of the available leasable space within a building, whether it is occupied or vacant, for direct lease or sublease space. Space can be available but not vacant, for example, if the landlord, or his agent, is marketing space that will be coming available at a future date because a tenant is planning to move. The total of all of the vacant square footage within a building, including both direct and sublease space. The total of the vacant square footage in a building that is being marketed by an agent representing the landlord. Space that is offered for lease by a current tenant, or his agent, within a property. Whether the tenant is paying rent or not, the space is considered vacant only if it is unoccupied. The net change in occupancy from quarter to quarter, expressed in square feet. The weighted average of all direct asking lease rates expressed as a full service/gross rental rate and weighted on total direct available square feet. Non-full service rates (such as NNN) have been grossed up to reflect a full service/gross rate. The East and West Downtown submarkets and Third Ward. 2

3 Milwaukee Office Markets Milwaukee Markets 3

4 Milwaukee & Waukesha Office Submarkets Milwaukee Waukesha 4

5 Q Overview The Milwaukee office market experienced 28,713 SF of positive absorption for the quarter. The trend of positive absorption has driven the vacancy rate from 19.5% (2014 Q1) to 18.8% (2015 Q1). Class A properties experienced 54,594 SF of positive absorption for the quarter, outperforming Class B & C properties. SC Johnson purchased the former Diversey HQ for $27.6 million for the biggest transaction of the quarter. Northwestern Mutual leased 2 floors at 411 E. Wisconsin Center for 66,372 SF Historical Direct Vacancy & Net Absorption 19.6% % Total Net Absorption (SF) % 19.0% 18.8% 18.6% Vacancy Rate (%) Q Q Q Q Q1 18.4% Q Market Overview by Property Type # of Bldgs Inventory (SF) Available (SF) Vacant (SF) Vacancy Rate (%) Quarterly Absorption (SF) A ,263,758 2,504,730 1,778, % 54,594 B ,071,896 3,702,010 3,164, % (29,491) C 25 1,213, , , % 3,610 Grand Total ,549,138 6,493,984 5,179, % 28,713 5

6 Overview by Submarket / Property Type # of Bldgs Inventory (SF) Direct Available SF Direct Vacant (SF) Direct Vacancy Rate (%) Direct Qtrly Net Absorption (SF) YTD Direct Net Absorption (SF) Available Sublease (SF) Milwaukee ,236,845 4,665,097 3,765, % 48, , ,282 Downtown East 49 6,935,862 1,330,919 1,139, % 20,239 30,619 36,655 A 10 4,264, , , % 6,393 20,762 16,655 B 34 2,451, , , % 14,246 7,757 20,000 C 5 220,660 48,685 37, % ,100 0 Downtown West 21 2,695, , , % 53, ,387 0 A 8 1,182, , , % 13,772 7,179 0 B 13 1,512, , , % 40, ,208 0 Mayfair/Wauwatosa 42 2,672, , , % -16,048-71,016 97,508 A 14 1,276, , , % -12,009-92,781 94,758 B 25 1,314, , , % -6,609 14,992 2,750 C 3 81,655 15,980 15, % 2,570 6,773 0 North Shore 44 2,180, , , % -8,578 13,853 91,462 A 6 462,480 46,946 46, % ,714 B 33 1,376, , , % -10,209 12,042 71,748 C 5 341, , , % 1,631 1,590 0 Northwest 17 1,342, , , % -5,787-2,756 21,237 A 10 1,063, , , % ,678 21,237 B 7 279, ,434 49, % -4,797-10,434 0 Southeast 8 265, , , % 0-3,368 0 B 8 265, , , % 0-3,368 0 Southwest ,549 82,134 71, % -4,148-19,833 0 A 7 178,687 45,041 36, % -5,229-11,333 0 B 5 167,862 37,093 34, % 1,081-8,500 0 Third Ward/Walker's Point 27 1,857, , , % 7,202 73,899 6,983 A 4 288,909 70,180 66, % -5, B 19 1,269, , , % 15,376 79,437 6,983 C 4 299,174 30,419 30, % -2,323-5,952 0 West Allis 18 1,940, , , % 2, ,726 12,437 B 16 1,852, , , % 2, ,726 12,437 C 2 87, % Waukesha 139 6,646,819 1,315,196 1,135, % 29, , ,557 Brookfield 89 4,172, , , % 26,526 52,933 85,588 A 33 1,948, , , % 7,778 19,994 65,088 B 52 2,093, , , % 16,575 34,066 18,000 C 4 130,587 21,013 15, % 2,173-1,127 2,500 Waukesha/Pewaukee 48 2,352, , , % 3,316 58,542 23,969 A 21 1,224, , , % ,759 23,969 B 25 1,076, , , % 3,596 1,011 0 C 2 52,000 15,794 13, % 0-4,228 0 New Berlin/Muskego 2 121,676 7,351 7, % 0 8,499 0 B 2 121,676 7,351 7, % 0 8,499 0 SE-Ozaukee ,777 89,394 82, % 0 17,460 0 Ozaukee ,777 89,394 82, % 0 17,460 0 A ,607 38,258 33, % 0 23,485 0 B ,170 51,136 48, % 0-6,025 0 Grand Total ,547,441 6,069,687 4,983, % 78, , ,839 6

7 Rental Rates Direct Vacancy Rate % Asking Wtd Direct Lease Rate (FSG) 2014 Q Q Q Q Q Q Q Q Q Q1 Milwaukee 19.31% 19.11% 19.10% 18.61% 18.78% $16.11 $16.37 $16.31 $16.04 $16.65 Downtown East 16.22% 16.58% 16.94% 16.43% 16.53% $18.86 $18.86 $18.27 $18.34 $19.12 A 9.47% 9.85% 9.82% 9.71% 9.98% $22.38 $22.38 $22.33 $21.62 $22.91 B 27.83% 28.21% 29.35% 28.08% 27.89% $12.65 $12.65 $12.50 $12.25 $12.00 C 17.67% 17.45% 16.77% 16.95% 16.95% $16.00 $16.00 $16.00 $16.00 $16.00 Downtown West 23.83% 23.22% 22.06% 19.72% 20.68% $16.98 $14.08 $14.65 $6.66 $14.65 A 29.95% 31.79% 30.56% 29.39% 29.21% $0.00 $0.00 $0.00 $0.00 $0.00 B 19.04% 16.50% 15.41% 12.16% 14.01% $16.98 $14.08 $14.65 $6.66 $14.65 Mayfair/Wauwatosa 21.89% 22.92% 24.18% 24.78% 24.19% $17.80 $16.85 $17.00 $16.62 $16.79 A 9.64% 12.02% 15.49% 16.43% 14.70% $25.33 $25.33 $26.06 $26.06 $26.06 B 33.44% 33.46% 32.71% 33.21% 33.65% $16.81 $15.94 $16.02 $15.38 $15.71 C 27.26% 23.77% 22.72% 19.57% 20.12% $14.00 $14.00 $14.00 $14.00 $14.00 North Shore 20.97% 25.14% 25.28% 25.76% 21.91% $12.18 $12.20 $12.13 $11.95 $11.96 A 10.20% 10.63% 10.15% 10.15% 10.46% $20.78 $20.92 $20.92 $21.04 $21.04 B 20.69% 27.15% 27.53% 28.42% 22.29% $11.01 $11.01 $10.95 $10.92 $11.00 C 36.66% 36.67% 36.67% 36.19% 35.86% $12.00 $12.00 $12.00 $12.00 $12.00 Northwest 12.61% 13.17% 12.68% 13.11% 13.17% $17.04 $16.24 $16.24 $17.37 $17.07 A 12.26% 11.84% 11.82% 11.92% 11.99% $17.10 $16.21 $16.21 $17.42 $17.41 B 13.93% 18.25% 15.95% 17.67% 17.67% $16.58 $16.58 $16.58 $16.58 $14.19 Southeast 40.79% 40.79% 41.26% 41.26% 40.74% $14.57 $14.57 $14.74 $14.72 $14.72 B 40.79% 40.79% 41.26% 41.26% 40.74% $14.57 $14.57 $14.74 $14.72 $14.72 Southwest 17.37% 17.37% 19.33% 20.53% 20.53% $16.00 $16.00 $16.00 $16.00 $16.00 A 13.64% 13.64% 17.45% 20.38% 20.38% $0.00 $0.00 $0.00 $0.00 $0.00 B 21.34% 21.34% 21.34% 20.69% 20.69% $16.00 $16.00 $16.00 $16.00 $16.00 Third Ward/Walker's Point 20.55% 18.81% 17.26% 15.28% 15.82% $16.64 $16.89 $16.94 $17.63 $17.69 A 24.80% 25.88% 21.30% 22.91% 21.87% $18.50 $18.50 $18.73 $18.73 $18.67 B 22.84% 20.19% 18.16% 14.75% 15.80% $16.19 $16.22 $16.08 $16.91 $17.01 C 6.90% 7.49% 9.39% 10.17% 10.04% $15.50 $18.29 $14.83 $15.50 $0.00 West Allis 19.45% 12.10% 11.95% 11.83% 16.64% $11.96 $16.84 $16.83 $16.00 $16.00 B 20.39% 12.67% 12.52% 12.40% 17.43% $11.96 $16.84 $16.83 $16.00 $16.00 C 0.00% 0.00% 0.00% 0.00% 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 Waukesha 18.25% 17.80% 17.75% 17.08% 16.39% $17.93 $17.88 $16.97 $16.84 $17.07 Brookfield 19.99% 19.48% 19.93% 19.11% 18.20% $18.27 $18.10 $16.89 $16.68 $16.46 A 13.91% 14.02% 15.22% 14.74% 13.86% $20.30 $20.10 $19.40 $19.17 $18.91 B 26.12% 24.99% 24.69% 23.62% 22.67% $17.08 $17.04 $15.69 $15.55 $15.37 C 13.82% 13.82% 13.82% 12.15% 11.37% $0.00 $0.00 $0.00 $0.00 $0.00 Waukesha/ Pewaukee 15.42% 15.31% 14.49% 14.05% 13.71% $17.26 $17.54 $17.37 $17.40 $18.67 A 14.86% 14.87% 13.11% 12.57% 11.22% $20.27 $21.23 $22.28 $22.34 $22.04 B 15.81% 15.55% 15.46% 15.12% 16.06% $15.23 $14.79 $13.84 $13.82 $15.74 C 20.64% 20.64% 26.70% 26.70% 23.73% $18.50 $18.50 $18.50 $18.50 $18.50 New Berlin/ Muskego 13.03% 8.10% 6.04% 6.04% 6.04% $11.00 $11.00 $11.00 $11.00 $18.07 B 13.03% 8.10% 6.04% 6.04% 6.04% $11.00 $11.00 $11.00 $11.00 $18.07 C 0.00% 0.00% 0.00% 0.00% 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 Ozaukee 14.37% 13.35% 12.39% 12.39% 12.27% $17.39 $15.42 $16.98 $16.98 $16.16 A 12.97% 10.81% 9.09% 9.09% 8.63% $13.00 $12.12 $11.23 $11.23 $14.88 B 16.16% 16.61% 16.61% 16.61% 16.94% $18.00 $18.50 $18.50 $18.50 $18.50 C 0.00% 0.00% 0.00% 0.00% 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 Grand Total 18.93% 18.66% 18.61% 18.09% 18.05% $16.67 $16.82 $16.52 $16.28 $

8 Rental Rates $35.00 $30.00 Asking Lease Rate Range by Class (FSG) $30.44 Asking Lease Rate (FSG) $25.00 $20.00 $15.00 $10.00 $5.00 $20.19 $10.00 $20.67 $14.23 $7.50 $18.50 $15.13 $12.00 $0.00 A B C 8

9 Biggest Absorption Changes Property Name 411 East Wisconsin Center SF Occupied or Vacated Company Name Market Building Class 66,372 Northwestern Mutual +66,372 SF Milwaukee A CBRE Landlord Rep 400 S Executive Dr 15,364 Symmetry LLC +15,364 SF Waukesha B RFP Commercial, Inc. Brown Deer Business Park 14,089 Otis Elevator +14,089 SF Milwaukee B NAI MLG Commercial Riverwood Corporate Center I 400 N Executive Dr 11,812 12,000 Regus +12,000 SF Waukesha A ProShip +7,767 SF; The Lasik Vision Institute +4,045 SF Waukesha A Colliers International Wisconsin Colliers International Wisconsin Wood Lake III Bus. & 9,807 ZyWave + 9,807 SF Milwaukee A Irgens Partners, LLC Honey Creek Corporate 8,553 EmSystems +6,490 SF; MetLife +2,063 SF Milwaukee A Greywolf Partners, Inc. 300 N Corporate Dr 6,781 Marketplace Home Mortgage +4,820; Software Company +1,961 SF Waukesha A Core Brookfield Lakes W Capitol Dr 6,017 Advantage America Title +4,102 SF Anand Waukesha B NAI MLG Commercial 375 Bishops Way 4,923 Undisclosed Tenant +4,923 SF Waukesha A Colliers International East Mequon Corporate 4,710 Techteriors Business +4,710 SF SE-Ozaukee A Irgens Partners, LLC 222 E Erie St 4,136 Gardner Denver +4,136 SF Milwaukee A Greywolf Partners, Inc. Honey Creek Corporate 3,673 Viola +3,673 SF Milwaukee A Greywolf Partners, Inc. Glen Oaks II -2,758 Trustmark Insurance - 2,758 SF SE-Ozaukee A Mikkelson Builders The Forum -2,952 Americu Mortgage -4,958 SF; Escape MKE Milwaukee B Siegel-Gallagher Mayfair Crossing -3,008 State Farm -3,008 SF Milwaukee B Wangard Partners Inc The Keghouse at Schlitz -3,271 WPS Health Insurance -3,271 SF Milwaukee B RFP Commercial, Inc Mayfair Corporate Center -4,216 OTIE -4,216 SF Milwaukee B Zilber Property Group Glen Oaks I -4,363 Undisclosed Tenant(s) -4,363 SF SE-Ozaukee A Mikkelson Builders 155 S Executive Dr -4,771 Cardinal Stritch University -4,771 SF Waukesha B Commercial United, LLC 633 Building -5,850 Herzing University -5,850 SF Milwaukee B Zilber Property Group Plaza East Office Center -6,075 Undisclosed Tenant -6,075 SF Milwaukee A RFP Commercial, Inc. Brown Deer Business Park -6,152 Catalyst -6,152 SF Milwaukee B NAI MLG Commercial Summit Place -7,145 Vision Insurance -7,145 SF Milwaukee B Summit City Realty, LLC W Watertown Rd -7,633 RiverPark Community Church -7,633 SF Waukesha B NAI MLG Commercial Trade Center Building -10,000 Day Care -10,000 SF Milwaukee B RFP Commercial, Inc. Chase Tower at Water and Wisconsin -67,410 JP Morgan Chase -67,410 SF Milwaukee A RFP Commercial, Inc. 9

10 Available Space Largest Blocks of Available Space Downtown East Downtown West Mayfair/Wauwatosa North Shore Northwest Southeast Third Ward/Walker's Point West Allis Brookfield Waukesha/Pewaukee Milwaukee Waukesha 100K K 25-50K Historical Blocks of Space Quarter 100K K 25-50K 2014 Q Q Q Q Q

11 Notable Transactions Top Leases Property Name SF Leased Company Name Market Building Class Landlord Rep 411 East Wisconsin Center 47,984 Northwestern Mutual Milwaukee - DT East A Matt Hunter 400 S Executive Dr 26,156 Symmetry LLC Waukesha - Brookfield B Ned Purtell 1000 N Water St 22,245 Infosystems Milwaukee - DT East A William Bonifas Brown Deer Business Park Bldg 10 18,379 Otis Elevator Comapny Milwaukee - North Shore B Jack Jacobson The Phoenix Building 18,223 Penworthy Company Milwaukee - 3rd Ward/Walker's Point B Shaun Dempsey Top Sales Property Name Sold SF Company Name Market Building Class Sale Price th St (Former Diversey Headquarters) N86 W12500 Westbrook Crossing 243,287 SC Johnson & Son Inc SE-Racine B $27,575,500 81,503 Lact Menomonee LLC Waukesha - North B $17,050, W Loomis Rd 65,721 Arhc Lmgfdwi01 LLC Milwaukee - SW B $16,000, S Lake Dr 82,546 PH Milwaukee LLC Milwaukee - SW C $12,750,000 Oncology Medical Building 80,472 Aurora Health Care Inc Milwaukee - Wauwatosa B $12,720,000 11

12 Vacancy & Absorption Vacancy Rate (%) Vacancy Rate by Class 25% 22.49% 20% 19.45% 14.50% 15% 10% 5% 0% A B C Net Absorption (SF) Net Absorption by Class 60,000 54,594 50,000 40,000 30,000 20,000 10,000 3,610 - (10,000) (20,000) (30,000) (29,491) (40,000) A B C Vacancy Rate (%) Vacancy Rate by Quarter 19.6% 19.50% 19.4% 19.25% 19.23% 19.2% 19.0% 18.88% 18.80% 18.8% 18.6% Net Absorption (SF) Net Absorption by Quarter 250, , , , ,000 63,494 50,000 40,702 30,512 28, % 2014 Q Q Q Q Q Q12014 Q22014 Q32014 Q42015 Q1 12

13 Vacancy & Absorption [continued] Direct Net Absorption by Class 80,000 60,000 56,703 Net Absorption (SF) 40,000 20,000 - (20,000) (6,432) (4,419) 370 3,240 (40,000) (36,645) (60,000) A B C CBD Suburban 30% Direct Vacancy Rate by Class Vacancy Rate (%) 25% 20% 15% 10% 14.5% 12.9% 20.9% 22.3% 13.0% 23.9% 5% 0% A B C CBD Suburban 13

14 Xceligent Milwaukee Team This information has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy. For additional information about this report or to discuss membership in Xceligent please contact Joe Doyle Director of Client Services (262) James Bertolli Director of Client Services (949) Blake Ayer Director of Analytics (414) COMMERCIAL REAL ESTATE INFORMATION In partnership with 14