Net absorption was negative 67,299 square feet this quarter, marking a second consecutive quarter of negative net absorption.

Transcription

1 NAI Earle MEMBER Furman, NAME LLC Office Report First Second Quarter Quarter

2 Upstate Market TRENDS: STATISTICS: Vacancy Rate Net Absorption Number of Buildings...3,288 Market Size (SF)...31,367,198 Overall Vacancy Space (SF)...3,390,056 Overall Vacancy (%) % Direct Vacancy (SF)...3,295,353 Sublease Vacancy (SF)...94,703 Net Absorption...(67,299) Average Asking Rental Rate ($/SF/YR)...$ % 10.5% 10.0% 9.5% 9.0% Overall Vacancy (%) OVERVIEW: Average Asking Rental Rate Construction Asking Rents The pattern of rising vacancy rates and declining rental rates continued this quarter. The amount of vacant sublease space also increased this quarter to 94,703 square feet. Net absorption was negative 67,299 square feet this quarter, marking a second consecutive quarter of negative net absorption. $15.00 $14.50 $14.00 $13.50 $13.00 $12.50 $12.00 NAI Earle Furman completed two of the largest office transactions in recent quarters by representing FRI Investors in leasing 25,000 square feet to Brown Mackie College. In addition, NAI Earle Furman represented the owners of Park East for a new 10,000 square foot lease to Fabric Editions. Major Lease Transactions Tenant: Size (SF): Submarket: Address/Building: Brown Mackie College 25,000 Greenville CBD Liberty Square New Spring Church, Inc. 11,000 Greenville Suburban 81 Rocky Slope Road Fabric Editions 10,000 Greenville Suburban 700 Executive Center Drive Pricewaterhouse Coopers, LLP 8,716 Spartanburg 320 E Main St. Phase II US Census Bureau 6,825 Greenville Suburban 850 S Pleasantburg Drive The Upstate Market is defined by: Greenville, Anderson, Spartanburg, Cherokee and Pickens counties.

3 NAI Earle Furman, LLC Office Report Second Quarter 2009 SUBMARKET/ # BLDGS. TOTAL RBA TOTAL AVAIL. TOTAL VACANT TOTAL NET TOTAL AVERAGE UNDER CLASS (SF) (SF) AVAIL (%) Absorption (SF) RATE ($/SF/YR) CONSTRUCTION (SF) Greenville CBD 425 5,643, , % 1,670 $ ,000 Class A 17 1,646, , % (340) $ ,000 Class B 143 2,944, , % 16,140 $ Class C 264 1,045, , % (14,130) $ % Overall Vacancy (%) Greenville CBD $17.00 Average Asking Rental Rate - Greenville CBD 13.0% $ % $ % $ % $15.00 Greenville Suburban 1,593 16,002,141 2,297, % (89,673) $ ,000 Class A 53 3,270, , % (42,023) $ ,000 Class B 747 8,758,930 1,344, % (28,136) $ Class C 793 3,972, , % (19,514) $ % 11.5% 11.0% 10.5% 10.0% 9.5% 9.0% Overall Vacancy (%) Greenville Suburban $15.00 $14.50 $14.00 $13.50 $13.00 Average Asking Rental Rate - Greenville Suburban Spartanburg 716 6,178, , % 23,777 $ Class A 22 1,100, , % 8,716 $ Class B 417 3,852, , % 24,204 $ Class C 276 1,223, , % (9,143) $ Overall Vacancy (%) Spartanburg Average Asking Rental Rate - Spartanburg 12.0% 11.5% 11.0% 10.5% 10.0% 9.5% 9.0% $14.00 $13.50 $13.00 $12.50 $12.00 Some of the data in this report has been gathered from third party sources including CoStar Group, Inc. and has not been independently verified by NAI Earle Furman, LLC. NAI Earle Furman, LLC makes no warranties or representations as to the completeness or accuracy thereof. Construction is defined as total RBA under construction.

4 NAI Earle Furman, LLC Methodology / Definitions / Submarket Map Absorption (Net) The change in occupied space in a given time period. Available Square Footage Net rentable area considered available for lease; excludes sublease space. Spartanburg Average Asking Rental Rate Rental rate as quoted from each building s owner/ management company, For office space, a full service rate was requested; for retail, a triple net rate requested; for industrial, a triple net basis. Building Class Class A Product is office Space of steel and concrete construction, built after 1980, quality tenants, excellent amenities & premium rates. Class B product is office space built after 1980, fair to good finishes & wide range of tenants. Direct Vacancy Space currently available for lease directly with the landlord or building owner. Market Size Includes all existing and under construction office buildings (office, office condo, office loft, office medical, all classes and all sizes, both multi-tenant and singletenant, including owner-occupied buildings) within each market. Overall Vacancy All unoccupied lease space, either direct or sublease. SF/PSF Square foot/per square foot, used as a unit of measurement. Greenville Downtown Greenville (CBD) Sublease Arrangement in which a tenant leases rental property to another, and the tenant becomes the landlord to the subtenant. Sublease Space Total square footage being marketed for lease by the tenant. Sublease space is not considered in the overall occupancy or absorption numbers - only direct leases are included. Sublease Vacancy Space currently available in the market for sublease with an existing tenant within a building acting as the landlord.

5 Upstate in the News College Lease Space in Downtown - Brown Mackie takes 25,000 SF in high-rise; plans to be announced The Greenville News By Rudolph Bell, Business Writer May 14, 2009 A for-profit college has leased about 25,000 square feet of space in one of the Liberty Square towers in a sign of health for a downtown office market that's been ailing in the recession. Brown Mackie College, one of four school brands operated by Education Management Holdings LLC of Pittsburgh, will bring new jobs and spending downtown. That differs from other downtown office deals in recent months that have consisted of law firms moving from one building to another. Another company, Cambridge Financial & Insurance Group, recently leased 2,800 square feet of space at Liberty Square and four other tenants are eyeing another 20,000 square feet in the glass-sided towers, said Clay Mardre, a broker with NAI Earle Furman. We have really seen the activity level pick up in the last few months, particularly for downtown space, Mardre said. Even so, there will have to be many more deals for the downtown office market to return to its previous health. More than 16 percent of about 3.1 million square feet of office space in the Central Business District was vacant at the end of the first quarter, according to research by Grubb & Ellis/The Furman Co. The vacancy rate could shoot to 25 percent when leases expire for about 500,000 square feet that tenants are currently trying to sublease, said Doug Webster, a Furman Co. broker. Still, Webster said he's encouraged to see banks starting to lend again on reasonable terms, and he's hoping to complete a deal to lease 8,600 square feet downtown. Windsor/Aughtry Co. has been trying for more than a year to lease a 55,000-square-foot office building under construction at the Broad development. We had a bank and a law firm that were basically taking the whole building and the economy caught them, said Bo Aughtry, president of Windsor/Aughtry. A 135-room Courtyard by Marriott hotel and Rick Erwin's Nantucket Seafood Grill will occupy other space in the $45 million development. Leases have been elusive, too, for Kym Petrie, hired last year by a public/private coalition to recruit outside companies to fill downtown office space. Petrie said she's talking with 22 companies interested in establishing a small presence downtown, some of them from overseas. Petrie works for the Greater Greenville Chamber of Commerce, the city of Greenville and a group of downtown office property owners. Jonathan Cameron-Hayes, president of FRI Investors, owner of Liberty Square, said Petrie is doing an excellent job in a tough environment. Earle Furman, managing member of NAI Earle Furman, leasing agent for Liberty Square, said Petrie is responsible for one of the four tenants eyeing space in the towers. Mark Toth, a spokesman for Education Management, said Brown Mackie College isn't ready to disclose details of its plans for Greenville. Copyright (c) The Greenville News. All rights reserved.

6 Upstate in the News The South Financial Group Announces Headquarters Will Remain in Downtown Greenville GREENVILLE, S.C., Jun 02, 2009 (BUSINESS WIRE) ----The South Financial Group, Inc. (NASDAQ: TSFG: 1.18, -0.05, -4.07%) today announced that the headquarters for TSFG and Carolina First Bank will remain at Poinsett Plaza in downtown Greenville, South Carolina. TSFG will begin a targeted marketing program to maximize the value of its investment in its planned campus facility adjacent to the International Center for Automotive Research ("ICAR"). "We determined that the best course of action for our shareholders is to keep our headquarters in downtown Greenville," said H. Lynn Harton, President and Chief Executive Officer of The South Financial Group. "Our downtown location offers space for our headquarters at an attractive long-term cost. Remaining in our current location has the added benefit of helping to anchor the ongoing development of Greenville's vibrant downtown business community. "This decision also places the Upstate Community in an enviable position relative to other competing locations for the attraction of significant new business development. The facilities we will be marketing are highly desirable 'green' facilities in one of the most exciting high-tech parks in the country. It will make a great home for the right company." TSFG plans to work with local city, county, and state authorities to assist in the recruitment of new business to the area to maximize the use and value of the site for TSFG's shareholders. TSFG expects to work with real estate advisors to help identify potential buyers both nationally and internationally, given the Upstate's strong attractiveness to international investment. In the interim, TSFG expects to take advantage of the campus facility to house some operations that are currently located in facilities with leases expiring in Approximately 50,000 square feet, or approximately 20% of the available space in the two office buildings at the campus, will be occupied by these operations. Through May 31, 2009, TSFG has invested approximately $80 million in the project and has entered into additional commitments of approximately $8 million. Based on the current environment, initial estimates of value, and an 18 to 36 month marketing period, TSFG expects to record a second quarter 2009 pre-tax impairment charge of approximately $16 million. Campus Background The campus site contains approximately 60 acres. During 2005, TSFG acquired the site and initiated plans for a "corporate campus." Site infrastructure and landscaping is nearing completion and is expected to be finished in fall Three buildings - two office buildings and a conference center - are under construction, and ten additional building sites are available. The buildings have been designed and constructed to meet LEEDS Silver Standards, and the entire campus has been constructed so that additional buildings receive site points toward LEEDS accreditation. page 1 of 2

7 Upstate in the News The South Financial Group Announces Headquarters Will Remain in Downtown Greenville Details for the buildings under construction follow: -- Office Building "A" - 127,000 square feet with loading dock, fitness facility, security, and campus infrastructure operations; ready for occupancy in July Office Building "B" - 107,000 square feet and is a mirror image of "A" without the underground level; ready for occupancy in July Conference Center - approximately 41,000 square feet; the core and shell of the building will be completed in September 2009, and the interior build-out will not be completed until further development of the location. General Information The South Financial Group is a bank holding company dedicated to serving small businesses, middle market companies, and retail customers in the Carolinas and Florida. At March 31, 2009, it had approximately $13.3 billion in total assets and 180 branch offices. TSFG operates Carolina First Bank, which conducts banking operations in North Carolina and South Carolina (as Carolina First Bank), in Florida (as Mercantile Bank), and on the Internet (as Bank CaroLine). At March 31, 2009, approximately 45% of TSFG's total customer deposits were in South Carolina, 42% were in Florida, and 13% were in North Carolina. Investor information is available at This news release contains forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995) that are provided to assist in the understanding of anticipated future financial performance. These statements include, but are not limited to, descriptions of management's plans, objectives, or goals for future operations, and predictions, forecasts, or other statements about future operations. They also include such items as the initial estimated value of the campus facility, marketing period, and impairment charge. However, such statements necessarily involve risks and uncertainties, and there are a number of factors - many of which are beyond TSFG's control -- that could cause the actual conditions, events, or results to differ materially from those in such statements. The South Financial Group undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release.

8 Contact Us Glenn Batson J. Peter Couchell, CCIM Principal & Tommy Diangikes David Feild, CCIM For more information on the Upstate Office Market please contact one of our specialists. J. Earle Furman, Jr., SIOR Principal and -in-charge Keith Jones W. Scott Jones, SIOR Greg Koch Stuart Wyeth

9 Additional Resources Complete listings of NAI Earle Furman s available properties Greenville Economic Development s goal is to promote and enhance the economic growth of Greenville County by serving as the single source contact for economic development in the greater Greenville area. Upstate Alliance is a public/private regional economic development organization designed to market the dynamic 10-county Upstate region to the world. - The Greater Greenville Chamber at its core is dedicated to promoting quality development of Upstate South Carolina through managed growth, service to members and the public, and a community-wide approach to issues shaping the region's future. Official website of Spartanburg County government Official website of Greenville County government - Officical website of Anderson county government - Provides information on trade, grants, rural development, and recycling. Includes databases of community profiles, labor market information, etc South Carolina's Information Highway is the largest directory of South Carolina information on the Internet.