T E A R I N G D O W N T H E WA L L S

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1 T E A R I N G D O W N T H E WA L L S T r e n d s & F o r e c a s t s o f M i a m i - D a d e C o u n t y s O f f i c e M a r k e t Vision of Wall Street Labyrinth by Liqen in Wynwood, Miami, FL The LAB Miami in Wynwood, Miami, FL PRESENTED BY: F. Antonio Puente, CCIM Senior Vice President of Fairchild Partners

2 Miami Brings the Heat -Robert Frank, CNBC Miami is becoming more like Monaco, with a lot of wealth and a sophisticated infrastructure and culture to support that. People have been saying for years that the hedge fund guys and financial folks would move here, but now it is really happening. -Jay Phillip Parker, CEO of Douglas Elliman MONACO MIAMI

3 A Look Back at 2010 in Miami Market Indicator Status Comments Supply Supply will grow by over 2.2 rsf during the next twelve months as seven projects are completed. Vacancy Vacancy will continue to increase as a result of these new buildings delivered mostly vacant. Demand/Absorption Rental Rates Tenant demand expected to improve by year-end once employment starts rebounding and companies begin to hire again. Rental rates are predicted to move towards stabilization (as to the new normal ) towards year s end. Source: Diana Parker, CCIM Presentation, 2010

4 2015 Forecast for Miami Market Indicator Status Comments Supply Vacancy Demand/Absorption Rental Rates No new significant buildings will be delivered; several older office buildings are being taken off market for larger, mixed-use developments. Vacancy rates will continue to decrease, a trend that started in This applies to a growing base of existing tenants and new to market companies. Rising employment figures, continued business growth, insignificant amount of sublease activity and few tenant defaults or closures. Continue to rise, potentially 5-10% per year on average over the next two years. Concessions such as free rent, moving costs, reimbursements and high tenant improvement dollars will also

5 Office Building Supply in Miami In 2015, the office market will deliver several small boutique buildings, a total amount of space less than ± 300,000 sf. These buildings will be located in suburban markets such as South Miami, Kendall, Coral Gables, Coconut Grove and Aventura. In addition, they will deliver to market with some significant amount of pre-leasing accomplished a good indicator of a strong landlord market. Future Office Pipeline: we are now seeing several developments targeting and planning office buildings on their sites. Most are planned as large buildings with significant office components, for mixed-use projects, Miami 21 enhanced zoning. These projects are in different stages of design, approval and development. They are mostly due to deliver after The total amount of square footage on the drawing boards is approximately 2.5 M. The office condo market is slowly making a comeback, as smaller boutique buildings are being designed and built in the submarkets like Doral. Sale prices hit a low in 2011/2012 and have risen to date. The SoMi Bldg South Miami

6 Vacancy Trends in Miami-Dade County

7 Office Space Demand/Absorption in Miami-Dade County

8 Office Employment Growth in Miami-Dade County Source: University of Central Florida Institute

9 Source: CoStar Property, JLL Research/FP Research New Proposed/Under Construction in Miami BRICKELL / DOWNTOWN Market SIZE DELIVERY Brickell City Center Green 134,523 sf 2016 (80% pre-leased) Brickell World Plaza ,866 sf 2011 (70% leased) Miami Central (Downtown) Up to 800,000 sf 2017 (2 Buildings) One Brickell City Center 500,000 sf TBD (No pre-leasing) One Bayfront Plaza (Downtown) 650,000 sf TBD (Mixed-use) Two Brickell City Center 128,580 sf 2016 (No pre-leasing) AVENTURA 2900 Waterway Blvd 85,000 sf 2017 (Mixed-use) One Kane Concourse 50,000 sf 2018 COCONUT GROVE /DESIGN DISTRICT Grove Plaza 32,000 sf 2015 (Complete Renovation) Design 41 25,000 sf 2015 (Spec mixed-use)

10 Source: CoStar Property, JLL Research/FP Research New Proposed/Under Construction in Miami Market SIZE DELIVERY CORAL GABLES / SOUTH MIAMI 201 Giralda Avenue 65,000 sf 2017 (Proposed) 2020 Salzedo 24,000 sf 2016 (Codina Partners) 1200 Ponce de Leon Blvd 96,000 sf 2017 (Office condo) SOMI Building 40,000 sf 2015 (Under construction) Sunset Office Center 46,000 sf 2015 (Under construction) Urban Village 205,000 sf 2017 (Ponce Circle / Agave) DORAL / AIRPORT WEST Gateway Center 40,000 sf 2015 (Second floor/medical) Park Place at Downtown Doral 185,000 sf TBD (Codina Partners) Waterford - Core Site 250,000 sf TBD (Hogan Group) Hines New Development 300,000 sf TBD (89 Ave / NW 41 St)

11 Downtown/Brickell Market Size: 14.5 million RSF The market has evolved into a true 24/7 livework-play environment. Traffic congestion and efficient transportation system are the biggest challenges. Prime office space with direct water are very limited! Average Direct Vacancies Downtown 20.5% Brickell 13.5% Quoted Rental Rates Prime spaces - $ RSF Class A - $ $ RSF Class B - $ $ RSF Class C - $ $ RSF HIGHLIGHTS: 2014 Recent Transactions Akerman, LLP (pre-lease) 108,000 DCA Piper, LLC 45,000 Facebook, Inc 10,000 Stearns Weaver Miller Weissler Alhadeff & Sitterson 110,000 TotalBank 55,000 Turner Properties 8,000 VITAS Innovative 34,000 Investment Sales Courvoisier Center I, II offices - $405 SF

12 Kendall / Dadeland Market Size: 2.9 million RSF This submarket continues to expand it s base of amenities in the area to residential, retail, restaurants and tenant services. Live work play environment continues to drive tenancy to these office buildings and get tenants closer to home. Relocations from Downtown in the works. Average Direct Vacancies Class A vacancy 16% Class B vacancy 12% Quoted Rental Rates Class A - $ RSF HIGHLIGHTS: 2014 Recent Transactions ACE American Latin America 18,000 Stokes Macmillan 3,000 Dutton Law 2,400 Liberty Mutual 5,000 Transplant Foundation Inc. 2,000 Investment Sales Dadeland Square at Greenery Mall $193 RSF Class B - $ $ RSF

13 Gables and The Grove Market Size: 6.5 million RSF Trolley, downtown wireless, connectivity, and historical preservation keep Coral Gables at the top of the list for office tenants looking to stay closer to home. Coconut Grove Class A market is under 5% vacancy. Average Direct Vacancies Class A vacancy 15.5% Class B vacancy 10% Quoted Rental Rates Class A - $ $ RSF Class B - $ $ RSF HIGHLIGHTS: 2014 Recent Transactions Beacon Health Strategies 17,200 Biscayne Bank 12,000 Cable and Wireless (Expansion) 10,000 HealthSun Healthcare (Expansion) 17,000 Medina Capital 12,000 UBS Corporation 43,500 Investment Sales 901 Ponce - $207 RSF 550 Biltmore - $309 RSF 220 Alhambra Circle - $426 RSF 2699 S. Bayshore Drive - $388 RSF

14 Doral/Airport West Market Size: 9.6 million RSF Forbes ranked Doral No.2 in 25 best cities in the US to live well. No longer just a value alternative for tenants, it has materialized into a viable option, with office buildings of high quality finishes and LEED certified executive housing all in close proximity. It s evolved into a true livework-play-learn environment. Average Direct Vacancies Class A Vacancy 9.5% Class B vacancy 19.5% Quoted Rental Rates Class A - $ $ RSF Class B - $ $ RSF HIGHLIGHTS: 2014 Recent Transactions ACCOR N. America 14,000 AETNA 15,600 Cisco 29,000 Dentaquest Corporation 23,000 Miami Children s Hospital 73,290 Prestige Health Care 37,500 XAPT Corporation 8,000 Investment Sales Waterford Centre 91,000 RSF $ RSF Airport Corporate Center 1.1 M RSF $ RSF

15 Top Trends in Workplace Design OPEN SPACES: hot desking enables collaboration. BRINGING IN THE OUTDOORS: window views and rooftop terraces to prevent prolonged seating indoors. MORE BREAKROOMS: fosters more collaboration and work/life balance. BRIGHT COLORS & DESIGNS: studies show colors affect productivity. TOUCHDOWN SPACES: areas with small desks for admin work. ACTIVITY-BASED PLANNING: coffee bar, resource centers, private rooms, etc.

16 Large Tenants Looking for Corporate Homes in 2015 ACE Group 15,000 CBIZ 10,000 Gresham Smith & Partners 10,000 Management Resources College 30,000 Oceana Cruises 30,000 SAE Institute 15,000 Sub-Zero 10,000 Telefonica 30,000

17 Key Takeaways OFFICE MARKET GETTING STRONGER as the business recovery is in full swing; unemployment has dipped to 6%. Most tenants and businesses, especially the legal, financial, healthcare, and construction industries are in growth mode. THE LEASING MARKET WILL REMAIN ACTIVE but some caution is worth mentioning as many tenants have already re-casted their leases early to longer terms and locked in today s pricing. There are very few large tenant expirations left for the next 24 months. RENTAL RATES WILL CONTINUE TO INCREASE as very few office buildings are being delivered over the next 24 months; rates will continue rising to 5-10% per year. DEMAND FOR OFFICE INVESTMENTS BY INSTITUTIONS REMAINS STRONG and will continue forward. Prices have continued to increase as CAP rates have compressed. OFFICE CONDO MARKET PRICES HAVE INCREASED FOR SMALLER, BOUTIQUE BUILDINGS. Some developers are now pre-selling units to foreign investors. THE FOR-SUBLEASE MARKET IS NOT SIGNIFICANT and will remain stable for 2015.

18 References R E S E A R C H T E A M

19 Miami has been steadily maturing, albeit largely ignored as an economic center for many years by institutional America. But for the landlords in our market who have believed in Miami for years, they are now being rewarded for their optimism with decreasing vacancies and increasing rates. If you really believed in this magical city, the day has finally come to see Miami shine in the international spotlight. F. Antonio Puente, CCIM Senior Vice President of Fairchild Partners