Globl Reserch nd onsulting www.cbre.com/reserch RIR EI Globl rketview Office Rentl ycle Q4 2009 Rents Qurterly hnge 17 key globl mrkets: ecline ccelerting ecline slowing Growth ccelerting Growth slowing 6 10 1 0 OVERVIEW he globl recession hit hrd nd fst in 2009, with few countries escping the impct of the finncil crisis. Even si cific, which continued to post positive economic growth in 2009, experienced significnt slowdown. he outlook for 2010 is fr more optimistic (though from low bse) nd, led by si nd prticulrly hin the globl economy is expected to grow 3% this yer. owever, the pttern of recovery is vried; the mture economies re expected to expnd by round 2%, with the wekest growth in Europe. In rel estte terms, however, ondon remins t the forefront of the recovery. he mrket surpssed expecttions for the end of the yer by registering rentl growth in the ity mrket. he supply picture is constrined nd demnd is expected to support degree of rentl growth in 2010. ong Kong is lso thought to hve reched the bottom of the cycle. Rents re expected to remin t lest stble for the next few qurters. lmost ll mrkets in Europe nd si moved forwrd on the cycle nd re expected to see slowdown in rentl flls s they experience improved tke-up (e.g. ris, nd ingpore) nd more stble vcncy. In mny mrkets, however, the improvement in tke-up in the finl qurter is not yet sustinble. For exmple, the pick-up in drid reflects the completion of number of lrge dels which hve been under negotition for some time rther thn the strt of meningful recovery. Office demnd t the end of the yer in meric hs been more subdued thn either si cific or Europe. he mjor mericn mrkets continue to lg, with mny cities still expecting to see significnt rentl flls in 2010. oronto, for exmple, is expected to see declining rents throughout the yer. his will be driven by incresing mounts of vcnt spce s tennts relocte to newer buildings. Economic recovery will grdully led to improved occupier demnd nd thus rentl stbility. owever, demnd continues to lg the wider economy nd mny mrkets re expected to see further flls in employment before recovery tkes hold. ositive signs will emerge in 2010, but overll prospects remin ptchy t present. Globl Rentl ycle, Q4 2009 Rentl ecline ccelerting Rentl ecline lowing Rentl Growth ccelerting Rentl Growth lowing hicgo oronto Wshington.. W os ngeles exico ity drid ingpore ucklnd okyo N New York ris hnghi ydney Frnkfurt F ondon ity ondon West End ong Kong 2010, Richrd Ellis, Inc.

Q4 2009 Globl rketview Office Rentl ycle I- IFI sin-cific Rentl ycle rket ommentry okyo Grde rents dropped 4.7% q-on-q (similr to lst qurter) to U$10.8/sq ft/month. Negtive net bsorption ws recorded in Q4 s more compnies opt to relocte to Grde office fcilities outside the city core. s result of these reloctions, nd wek demnd, the Grde vcncy rte jumped 150 bps this qurter (300 bps y-on-y) to 6.5% in Q4. ong Kong rime rents in ong Kong re expected to sty stble in 1 2010. espite smll increses in rents for one or two premium Grde offices in the (3.6% this qurter) this is not representtive of the prime mrket, which remins frgile. Vcncy rtes on ong Kong Islnd hve risen from n verge 1.8% in July 2008 to 5.8% in Q4 2009 s compnies continue to cut costs by relocting their opertions to decentrlized loctions in Kowloon. hnghi rime office rents fell by 1.1% q-on-q to U$2.78/sq ft/month, nd re likely to bottom out in 1 2010. Net bsorption ws positive for the second qurter running t 1.44m sq ft. verge vcncy edged up by 40 bps to 15.7% s six new buildings completed during the qurter, dding 2.86m sq ft of prime office stock to the city. ge 2 Rentl ecline ccelerting Rentl ecline lowing Rentl Growth ccelerting Rentl Growth lowing eoul ipei 2010, Richrd Ellis, Inc. ngkok K Kul umpur ucklnd G Gungzhou ingpore noi okyo nil eijing hnghi ity ydney N ong Kong New elhi umbi nglore Jkrt ingpore Office rents fell for the fifth consecutive qurter nd prime rents verged $6.75/sq ft/month in Q4. his reflected 10% q-on-q fll compred with 13% decline in Q3 2009. rgely due to the completion of one new Grde building, office vcncy rose to 6.2% this qurter. It ws under 1% yer go. esing demnd improved in Q4 nd net bsorption ws bout 94,000 sq ft - the first qurter in 2009 to report positive net bsorption. ydney Rents continued to fll in the ydney ore precinct in Q4 2009. owever, the qurterly rte of decline in effective rents is now very low nd lesing sentiment nd enquiries hve incresed. ndlord incentives hve lso stbilised. No mjor office spce is set to come into the mrket in the short term. We estimte tht vcncy is now very close to the forecst pek of the cycle of 8.8%. ucklnd Improved business confidence nd tennt ctivity hs resulted in slowing rte of rentl decline in Q4. entiment however remins low in the office lesing mrket. his minly reflects the substntil volume of new supply in the pipeline for completion during 2011. J

EE Europen Rentl ycle G Genev thens Rentl ecline ccelerting Rentl ecline lowing Rentl Growth ccelerting Rentl Growth lowing elsinki Rome udpest uchrest rcelon iln mburg yon isbon unich R E V Z erlin tockholm Wrsw oscow Edinburgh rgue openhgen Vienn ondon V msterdm drid russels Zurich ublin W O irminghm Oslo Frnkfurt usseldorf ris nchester F ondon ity ondon West End Globl rketview Office Rentl ycle rket ommentry Frnkfurt Following modest increses during the upturn, prime rents in Frnkfurt hve only fllen 2.6% from their pek, remining unchnged in the pst yer t 38/sq m/month. Rent frees hve incresed in the lst six months but remined stble this qurter. he bsence of lrge-volume dels pushed the finl qurter tke-up below ny of the previous three qurters but the mrket ws not fundmentlly weker. ke-up is expected to improve in 2010. Vcncy rose mrginlly this qurter to 12.9% nd is not expected to increse drmticlly. ondon West End rime rents hve fllen by third from their pek but remined stble t 80/sq ft/nnum for the third qurter running in Q4. hey re expected to rise in the first hlf of 2010. ke-up rose to 1.1m sq ft this qurter. Whilst this is bove trend the rebound ws not s strong s in the ity mrket. vilbility fell by 10% to 6.8m sq ft. ondon ity Rents rebounded in ondon ity by 3.5% to 43.50/sq ft/nnum this qurter (they were expected to remin stble), this follows fll of 2.3% the previous qurter. he number of months rent free hve lso fllen. Qurterly tke-up rose shrply for the third successive qurter nd, t 1.7m sq ft, ws bove trend this qurter. Occupiers re mking the most of lower rents whilst there is still spce vilble. he vcncy rte peked t 10% this cycle (compred with 16% in the 1990s) nd hs now fllen to 8.5%. With few development schemes due to complete the short-term supply picture is restrined. drid Rents fell 1.6% to 354/sq m/nnum nd re expected to fll further. els towrds the prime end of the rentl rnge continue to be ccompnied by generous incentive pckges. drid sw strong fourth qurter of tke-up, but minly through the completion of number of dels tht hd been in negotition for some months rther thn from n emerging upturn. urprisingly, vcncy rtes fell to 10.2%, down 30 bsis points. ris rime rents fell 4% this qurter to 720/sq m/nnum fter remining stble lst qurter. hey hve fllen totl of 15% pek to trough nd re expected to stbilise in ris centre West in 1. ris sw shrp surge in tke-up, prtly driven by smll nd medium-sized firms tking dvntge of lower rents, mking the fourth qurter the strongest of the yer for lesing ctivity. Vcncy incresed 30 bsis points to 6.8% this qurter. Whist vcncy continues to grow, it is t slower rte thn the previous 3 qurters. ge 3 2010, Richrd Ellis, Inc. Q4 2009

ERI Q4 2009 Globl rketview Office Rentl ycle North nd tin mericn Rentl ycle rket ommentry hicgo Gross sking rents fell 1.4% in the fourth qurter to $31.80/sq ft/nnum. sking rtes re expected to continue flling through 2010. Net bsorption in Q4 ws negtive 507,474 sq ft, driving the direct vcncy rte to 13.8% indicting tht 2009 ws yer with decresed tennt demnd nd incresed contrction. os ngeles sking rents re down 6.8% on n nnul bsis, ending the qurter t $29.64/sq ft/nnum. he owntown os ngeles nd id-ounties sub-mrkets re the most stble rentl mrkets whilst the West os ngeles sking rents hve decresed 16.5% yer-onyer. otl vcncy is now 16.5% nd net bsorption in Greter os ngeles ws -171,359 sq ft for Q4 2009, with totl yer-end net bsorption t -4.9 m sq ft. exico ity Rents for lss spce fell 4% this qurter to n verge of $23.88/sq m/month, pushed by new spce entering the mrket nd ggressive mrketing of sublese spce (in the $16-$20 rnge). ke-up incresed this qurter from round 25,000sq m in Q3 to pproximtely 41,000 sq m in the fourth qurter. Vcncy rtes for premier spce declined slightly to 5.6%, while lss vilbility incresed to 8.4%. ge 2 Rentl ecline ccelerting Rentl ecline lowing Rentl Growth ccelerting Rentl Growth lowing hicgo Ft uderdle ouston oronto Wshington.. 2010, Richrd Ellis, Inc. F ustin hrlotte imi lgry Edmonton O E W O.. N O New York tlnt oston enver n iego n Frncisco ettle uenos ires exico ity lls Northern New Jersey os ngeles hoenix Orlndo rcs im N R ntigo Rio de Jneiro o ulo V Vncouver New York Rents fell 3.5% q-on-q from $50.78/sq ft/nnum to $49.01/sq ft/nnum nd re beginning to level off. esing ctivity decresed very slightly to 5.42m sq ft in the fourth qurter due to low levels of lesing ctivity in October. Vcncy rtes incresed q-on-q by 52 bsis points from 9.3% to 9.8%. oronto In the second hlf of 2009 3.1m sq ft of new supply ws dded to the downtown mrket. he y delide entre (1.1m sq ft) ws the only remier lss building dded in the Finncil ore. he verge rent in the remier lss mrket hs decresed by round 16% since the middle of the yer nd is expected to fll further in 2010 s tennts vcte older remier lss spce, incresing vcncy. Wshington.. irect full service sking rents ended the yer t $48.48/sq ft/nnum, slight increse over the qurter but 2.3% decrese from yer go. emnd from the federl government for new spce supported the mrket s it sought over 495,000 sq ft of dditionl office spce during the yer, helping offset the limited growth in the privte sector. 5.9m sq ft of new, lss construction ws delivered during 2009.

EFINIION ycle ositions Rentl ecline ccelerting Rentl ecline lowing Rentl Growth ccelerting Rentl Growth lowing 1 1 2 16 3 4 5 6 12 13 14 15 Globl rketview Office Rentl ycle 7 11 8 9 10 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 osition efinitions egment Number escription Rents ttic Rentl ecline ccelerting Rentl ecline ccelerting Rentl ecline ccelerting Rentl ecline oderting Rentl ecline lowing Rentl ecline lowing Rentl ecline lowing Rents ttic Rentl Growth ccelerting Rentl Growth ccelerting Rentl Growth ccelerting Rentl Growth oderting Rentl Growth lowing Rentl Growth lowing Rentl Growth lowing 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Rents re t their pek nd hve stbilised. No further growth expected nd next move likely to be downwrds. Rents hve strted to decline. Further flls nticipted, rte of decline likely to increse. Rents hve clerly been flling for while nd re expected to continue to do so. Rte of decline still ccelerting. Rents hve been flling. Further declines nticipted but rte of decline expected to strt moderting. Rents still flling but rte of decline beginning to moderte. st the worst periods if rentl decline. Rte of decline hs reduced. Further flls expected but some signs of future improvement my be evident. Rte of decline continues to slow. Vcncy now probbly declining, bottom of the cycle in sight. Rentl decline slowed significntly, mybe even stopped, but my be some further flls. lmost bottom of the cycle. Rents sttic t the bottom of the cycle. Next move lmost certinly upwrds, though no significnt increse yet. Erly stges of recovery. ler signs tht rents hve strted to move up, rte of growth expected to increse. Rents hve been rising for while, expected to continue to ccelerte for t lest the next 3-6months. Rents hve been rising strongly; further increses definitely expected, but rte of growth reching its pek soon. Rte of rentl growth hs peked. Not the top of the mrket s rents will rise further, but rte of growth will slow. Rents still rising but rte of growth hs clerly begun to slow. Next moves still clerly upwrds. Rents still rising but rte of growth well below its pek. No specific signs of growth stlling in the ner future. till possibility of some upwrds movement, but rents lmost t their pek. Increses now smll nd spordic. Q3 2009 ge 6 2010, Richrd Ellis, Inc. Q4 2009

Q4 2009 Globl rketview Office Rentl ycle RIR EI GO REER N ONUING Globl Reserch nd onsulting is network of pre-eminent RE reserchers nd consultnts cross Richrd Ellis, who provide rel estte mrket reserch, econometric forecsting nd consulting solutions to clients of the compny worldwide. For more informtion regrding this rketview, or to find out more bout ny spect of our services, plese contct: Ry orto, RE, h,. Globl hief Economist Globl Reserch nd onsulting t: +617 912 5225 e: rymond.torto@cbre.com Nick xford ed of Reserch nd onsulting EE t: +44 20 7182 3039 e: nick.xford@cbre.com ndrew Ness ed of Reserch si t: +852 2820 2845 e: ndrew.ness@cbre.com.hk ge 8 2010, Richrd Ellis, Inc. Kevin tnley Executive irector, Globl Reserch nd onsulting cific t: +61 2 9333 3490 e: kevin.stnley@cbre.com.u Rymond Wong Executive irector of Reserch Opertions merics t: +416 815 2353 e: rymond.wong@cbre.com isclimer 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