SOUTH METRO ECONOMIC DEVELOPMENT GROUP

Frederic de Loizaga CBRE Sam Slaton CBRE Mike Lindemann CBRE Mark Grillo Grillo Commercial Real Estate Justin Rayburn I-Core Global

SOUTHEAST METRO DENVER | OFFICE REGION REVIEW 2Q12

In the second quarter of 2012 the Southeast

ats

2Q11

3Q11

Denver submarket 1Q12 continued to 2Q12 on build 4Q11 progress made in fundamentals during the previous quarters such as vacancy, absorption, and availability. For the fth straight quarter the Southeast submarket experienced positive net absorption, recording 350,587 SF (square feet) of gain, up from the 195,458 SF recorded in the rst quarter. With the improvement in occupied space, the direct vacancy rate currently rests at 13.8%, reduced from 14.9% in the rst quarter. Accounting for sublease space, the overall availability

Absorption vs. Direct Asking Lease Rate

400 350 300 250 Thousand ds 200 150 100 50 0 2Q11 3Q11 4Q11 1Q12 2Q12

$19.20 $19.00 $18.80 $18.60 $18 60 $18.40 $18.20 $18.00

Absorption

Direct Asking Lease Rate

1Q12
2003

2Q12
2004

also fell to 19.4%. Considering the uncertain conditions in the local and national economy, the Southeast submarket showed resilience
1,400 1,200 1,000 Thous sands 800 600 400 200 0

Activity vs. Direct Vacant

17.0% 16.5%

2005 2006 throughout the past year posting over 2007 100,000

2008

2009

2010

16.0% 15.5% 15.0% 14.5% 14.0% 13.5% 13.0% 12.5%

2011

SF of positive net absorption in each quarter. While large corporate users continue to drive leasing activity, a more diversied spectrum of tenant sizes and industry types have begun
For information, contact: Frederic de Loizaga Associate Ofce Properties T 720.528.6402 frederic.deloizaga@cbre.com www.cbre.com/frederic.deloizaga

exhibiting a moderate amount of condence. As evidence of this, both class A and B experienced a notable decline in availability and vacancy. However, a stark contrast in vacancy levels remains between the classes,, with Class A currently standing at a healthy

2Q11

3Q11

4Q11

1Q12

2Q12

Activity

Direct Vacant Percent

20068390 East Crescent Parkway 2007 CBRE

Suite 300 Greenwood Village, CO 80111 T 720.528.6300 F 720.528.6333 www.cbre.com/denver

2008

Quarterly Stats

2009

2010

2Q11

3Q11

2011
15.9% 666,012 22.1%

4Q11

2012 YTD

1Q12

2Q12

10 Year Avg.
13.8% 516,546 17.9%

Total NRA Direct Vacant % Sub. Available SF Direct Available % Absorption Direct Asking Lease Rate Activity

33,459,513 16.3% 680,745 22.9% 57,143 $18.59 708,963

33,459,513

33,459,513 15.5% 603,244 20.0% 150,028 $18.50 1,173,288

33,459,513 14.9% 399,440 18.8% 194,458 $18.59 1,082,050

33,459,513

144,143 $18.46 910,387

350,587 $19.10 920,544

Annual Stats
# of Buildings

2003

2004

2005

2006

2007

2008

SOUTH METRO ECONOMIC DEVELOPMENT GROUP

# of Buildings Total NRA Under Construction Direct Vacant %

Annual Stats

2003

2004

2005

2006

2007

2008

Quarterly Stats

2Q11

3Q11

4Q11

1Q12

2Q12

Total Available %

Total NRA

Sub. Available SF YTD Change in Avail. Direct Asking Lease Rate Absorption Activity

Direct Vacant % Sub. Available SF

SOUTHEAST METRO DENVER | OFFICE REGION REVIEW 2Q12

Direct Available % Absorption Direct Asking Lease Rate Activity

rate of 9.4%, while Class B product lags at a rate of 19.3%.

1,000 800

Absorption vs Direct Asking Lease Rate vs.

$25.00

Annual Stats
# of Buildings Total NRA Under Construction Direct Vacant % Total Available % Sub. Available SF YTD Change in Avail. Direct Asking Lease Rate Absorption Activity

At

the midpoint 2003 2004

of 2005 2012, 2006sustainable 2007

Thousands

2008
400 200 0 -200 200 -400 -600 -800 -1,000 2003

600

2009

2010

2011

2012 YTD

10 Year Avg.
$15.00

$20.00

appreciation in asking rates appears to have begun. As a sign of this, overall asking lease rates increased in the second quarter to $19.10, 51 cents (2.7%) higher than the previous quarter. This is also elevated almost a dollar (5.0%) from the overall rate of $18.19 achieved at the start of 2011. Class A asking rates also rose substantially in the quarter, increasing by 78 cents (3.5%) from the previous quarter, to average $22.81 per SF, while year over year rates were up by 1.22 cents (5.4%) from $21.59 per SF in the second quarter of 2011. Class B & C rates
Thousands

$10.00 $10 00

$5.00

$0.00 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD

Absorption

Direct Asking Lease Rate

Under Construction vs. Direct Vacant Percent

900 800 700 600 500 400 300 200 100 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%

rose as well, a considerable 39 cents (2.3%) to 17.27 per SF for Class B, and 43 cents to $12.86 per SF for Class C. Numerous tenants have beneted since the recession from large concession packages offered by landlords who were looking to improve occupancy rates, however tenants ability to capitalize on lower
For information, contact:

Under Construction

Direct Vacant Percent

rental rates and large concession packages is

Frederic de Loizaga Year-over-Year Quarterly Trends At A Glance* Associate Ofce Properties Year-over-Year Quarterly Trends At A Glance* T 720.528.6402 Construction frederic.deloizaga@cbre.com Construction Year-over-Year Quarterly Trends At A Glance* www.cbre.com/frederic.deloizaga Vacancy
Vacancy Absorption Construction

Southeast NRA by Class

Absorption Lease Rates Activity

Class Stats
NRA Lease Rates Vacancy

CBRE Lease Rates 8390 East Crescent Parkway Vacancy Suite 300 Activity Greenwood Village, CO 80111 Absorption T 720.528.6300 F 720.528.6333 www.cbre.com/denver

Lease Rates

Activity

Metropolitan Denver Class A 49,902,801 Metropolitan Denver Class B 45,824,813 Class C 11,926,588 Southeast 33,459,513 Class A 18,262,205 Class B 12,779,153 Southeast 2,418,155 Class C

Class Stats107,654,202

Class Stats

$20.00 $23.81 $18.18 $15.53 $19.10 $22.81 $17.27 NRA $12.86

NRA 14.2%
10.5% 17.1% 18.7% 13.8% 9.4% 19.3% 18.4%

Lease Rates

Vacancy

Class A

Class B

Class C

Lease Rates

Vacancy

Metropolitan Denver

SOUTH METRO ECONOMIC DEVELOPMENT GROUP

SOUTHEAST METRO DENVER | A Glance* Year-over-Year Quarterly Trends At OFFICE REGION REVIEW 2Q12
waning in the Southeast market as market fundamentals have shown sustained progress. Looking forward, several notable Construction new deals and renewals occurred in the second quarter including Republic Financials new lease at One DTC, The

Vacancy Travelers Companies renewal at Atrium II, and the signing of Arrow Electronics at 181 Inverness. Among others, these
deals will help to maintain occupancy levels and improve upon absorption in the remainder of 2012 as tenants occupy. Absorption

Although still below pre-recession levels, the second quarter built on the previous quarters active investment sales volume with notable deals occurring. Investment sales were lead by Sir Properties Trusts purchase of 333 Inverness, a 144,766 SF Class A property in the Inverness micro-market, for approximately $19 million, or $131 per SF. Also of note in the Activity second quarter was the sale of Atrium II in the Denver Technology Center, which sold to Grifn Capital for $16 million, Quarterly or $123 per Year-over-Year investment opportunities in the market include Peakview Tower and Park Meadows Corp Center SF. Notable III & IV. Due to the constricted pipeline over the previous two years, no signicant projects were delivered to the market Rates NRA Lease Class Stats in the second quarter. Activity has increased this quarter however, with the 180,000 SF TriZetto Groups build-to-suit

Lease Rates

rends At A Glance*

nstruction

cancy

Metropolitan Denver headquarters project breaking ground. This project marks the rst new construction in the Southeast market since 2009,
and encouraging sign for further development in the future. With the anticipation of improvement in actual property level performance in higher quality buildings, core assets are still being sought out in the market. Given the increased competition for the best assets in 2011 and the beginning of 2012, and attractive spreads on commercial mortgages,

sorption

ase Rates ivity

Southeast lenders in the coming quarters will likely begin to take on more risk. While the increased sales activity seen in the past year
is encouraging, investors are proceeding with caution as global concerns loom and the pending US Presidential elections create uncertainty. As a result, a sharp uptick in investment activity is not expected; rather the gradual improvement seen in the previous year is likely to carry on through 2012.

Class Stats
Metropolitan Denver

NRA
$0.00 Class A Class B

Lease Rates
$5.00 $10.00

LEASE RATES
$15.00

Vacancy
$20.00 $25.00 $30.00

Southeast

Class C

CBRE 8390 East Crescent Parkway Suite 300 Greenwood Village, CO 80111 T 720.528.6300 F 720.528.6333 www.cbre.com/denver
Class A

Southeast

Metropolitan Denver

VACANCY
0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

Class B

Class C

Southeast

Metropolitan Denver

SOUTH METRO ECONOMIC DEVELOPMENT GROUP

SOUTHEAST METRO DENVER | OFFICE REGION REVIEW 2Q12

SUBMARKET

TOTAL SF

AVAILABLE SPACE
1,940,529 SF 1,667,927 SF 449,202 SF 623,839 SF 504,398 SF 580,133 SF 309,588 SF 421,766 SF 6,497,382 SF

AVAILABILITY RATE
19.45% 21.95% 9.81% 16.25% 20.23% 23.89% 24.03% 33.55% 19.42%

VACANT SPACE
1,267,005 SF 1,260,928 SF 335,010 SF 397,613 SF 256,558 SF 459,753 SF 264,042 SF 384,193 SF 4,625,102 SF

VACANCY OVERALL
12.70% 16.59% 7.31% 10.36% 10.29% 18.93% 20.49% 30.56% 13.82% % 9.41%

DENVER TECH CENTER GREENWOOD PLAZA MERIDIAN/DOUGLAS COUNTY INVERNESS PANORAMA/HIGHLAND PARK EAST ARAPAHOE ROAD/SOUTHGATE CENTENNIAL AIRPORT EAST HAMPDEN CORRIDOR
Total

9,974,920 SF 7,598,417 SF 4,580,000 SF 3,839,117 SF 2,493,438 SF 2,428,178 SF 1,288,465 SF 1,256,978 SF 33,459,513 SF

SUBMARKET OVERALL

AVERAGE ASKING LEASE RATES - DIRECT SPACE CLASS A

$22.50 $24.79 $20.96 $19.84 $22.33 $32.50 $0.00 $0.00 $22.81

2Q12 CLASS C
$14.04 $15.54 $0.00 $13.78 $0.00 $12.51 $0.00 $12.55 $12.86

CLASS B
$18.75 $17.54 $21.04 $17.88 $16.81 $16.46 $12.81 $17.15 $17.27

ACTIVITY
273,326 SF 161,363 SF 191,469 SF 63,451 SF 15,746 SF 93,436 SF 72,703 SF 49,050 SF 920,544 SF F

DENVER TECH CENTER GREENWOOD PLAZA MERIDIAN/DOUGLAS COUNTY INVERNESS PANORAMA/HIGHLAND PARK EAST ARAPAHOE ROAD/SOUTHGATE CENTENNIAL AIRPORT EAST HAMPDEN CORRIDOR
TOTAL

$20.85 $20.50 $20.98 $18.30 $18.59 $16.52 $12.81 $14.25 $19.10

2,002,594

CBRE 8390 East Crescent Parkway Suite 300 Greenwood Village, CO 80111 T 720.528.6300 F 720.528.6333 www.cbre.com/denver

SOUTH METRO ECONOMIC DEVELOPMENT GROUP

SOUTHEAST METRO DENVER | INDUSTRIAL REGION REVIEW 2Q12
2Q11 3Q11
The 4Q11 Denver industrial market continued its post-recession growth in the second quarter of 2012, experiencing an appreciation in activity and further stabilization of key performance measures. Although still distant from the ideal picture of a dynamic market, local real estate performance reiterates recovery efforts have been effective, and are anticipated to continue through the remainder of 2012. While the Southeast market felt the repercussions of the economic downturn more so than other Denver submarkets, it continues to produce positive fundamentals and performance measures continue to stabilize. Overall, the

1Q12

2Q12

350 300 250 200 150

Thousan nds

Absorption vs. Lease Rates

$9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00

100 50 0 -50

-100 2Q11 3Q11 4Q11 1Q12 2Q12

Absorption

Lease Rates

Q12 2003

2Q12 2004

Lease 2005 Absorption vs. 2006Rates that is conveniently 2007 industrial and ex space
located in close proximity to high-end housing and ofce parks. Corporate image conscious small and medium sized owner/users and local businesses which desire these attributes often pay a premium in order to be located in the Southeast. This premium includes higher base rental rates due to elevated land values,

Southeast is a niche market characterized by

600 500 400

Thou usands

2008

Activity vs. Vacancy 2009

2010

12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%

300 200 100 0 2Q11 3Q11 4Q11 1Q12 2Q12

For information, contact: Sam Slaton Senior Associate Industrial Properties T 720.528.6406 sam.slaton@cbre.com www.cbre.com/sam.slaton

higher standards of construction and higher operating expenses that are characteristic of the Southeast. These elevated expenses are a result of property taxes that are often twice those found in the Northeast submarkets.

Activity

Vacancy

Quarterly Stats
Total NRA

2Q11
15,976,475 11.21% 4,716 12.89% -28,523 $8.32 168,047

3Q11
15,976,475

4Q11

1Q12

2Q12
15,976,475

Absorp

006

2008 CBRE 8390 East Crescent Parkway Suite 300 Greenwood Village, CO 80111 T 720.528.6300 F 720.528.6333
www.cbre.com/denver

2007

2009

2010

15,976,475 2011 15,976,475 2012YTD 9.30% 4,716 10.87% 185,617 $8.27 277,247 9.65% 4,716 10.94% -54,978 $8.54 66,862

10 Year Avg.
8.22% 9.47%

Direct Vacancy Sublease SF Availability Absorption Asking Lease Rate Activity

10.47% 4,716 12.19% 119,294 $8.31 183,641

293,539 $7.79 477,483

Annual Stats
# of Buildings Total NRA U/C

2003

2004

2005

2006

2007

2008

Asking Lease Rate Activity

SOUTH METRO ECONOMIC DEVELOPMENT GROUP

Annual Stats
2003 2004 2005 2006
# of Buildings Total NRA U/C Direct Vacancy Avail. Sublease . Asking Lease Rate Net Absorption Activity

2007

2008

SOUTHEAST METRO DENVER | INDUSTRIAL REGION REVIEW 2Q12

In the second quarter, average asking lease rates in the Southeast decreased to $7.79 per square foot (SF) across all product types. Asking rates among warehouse/distribution product decreased to $7.18 per SF, manufacturing space rose to $6.82 per SF, and ex space decreased from $9.18 per SF to $9.03 per SF. Vacancy among manufacturing space dropped to 3.5% and warehouse/ distribution decreased slightly to 7.5%. Southeast net absorption in the second quarter of 2012 was 293,539 SF and availability decreased to 9.5%.
Trends At AStability continues to emerge in Quarterly Glance* Year-over-Year the Southeast Construction Vacancy Absorption Lease Rates Activity
200 180 160 140 120
Thousands

Under Construction vs. Vacancy

25.0% 25 0%

20.0%

15.0%

100 80 60 40 20 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012YTD 0.0% 5.0% 10.0%

Under Construction

Vacancy

Southeast NRA by Property Type

market as promising performance measures return

Year-over-Year Quarterly from the lows endured during the recession. Flex/

Trends At Glance* Trends At AAGlance*

Year-over-Year

Quarterly

R&D Construction Construction space, the Vacancy Vacancy

Absorption Absorption large Lease Rates Lease Rates lower Activity Activity which

the most prominent product type in

Southeast, totals 8,501,958 SF, and posted a decrease in vacancy to 9.83%. This remains than the Flex/R&D vacancy in quarter one, reached 12.14%. The demand for 8,000
Warehouse/Distribution Flex/R&D Manufacturing

SF or less incubator space continues to increase as availability shrinks for that product type.
Property landlords remain aggressive Stats** Number of Buildings In general, TypePropertyType Stats** Number Buildings Property Type Stats** Number ofofBuildings NRA Lease Rates
Lease Rates Lease Rates

in attracting new and Metropolitan Denver Denverretaining existing Metropolitan Metropolitan Denver For information, contact: tenants as blend & extend, renewals,
Sam Slaton Senior Associate theme. Industrial Properties Southeast SoutheastSoutheast T 720.528.6406 sam.slaton@cbre.com www.cbre.com/sam.slaton

Trends At A Glance*

NRA NRA

Year-over-Year

Vacancy Vacancy

Vacancy
Quarterly

Construction Vacancy Absorption Lease Rates Activity

and short term leases remain a common

CBRE 8390 East Crescent Parkway Suite 300 Greenwood Village, CO 80111 T 720.528.6300 F 720.528.6333 www.cbre.com/denver

LEASE RATES
Manufacturing
Manufacturing

Property Type Stats**

VACANCY

Number of Buildings

Metropolitan Denver
Flex/R&D

Flex/R&D

Warehouse/Distributi on $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00

Southeast

Warehouse/Distribution

$8.00

$9.00

$10.00

Southeast 0.0%

2.0%
Metropolitan Denver

4.0%

6.0%
Southeast

8.0%

10.0%

12.0%

Metropolitan Denver

SOUTH METRO ECONOMIC DEVELOPMENT GROUP

SOUTHEAST METRO DENVER | INDUSTRIAL REGION REVIEW 2Q12
The second quarter of 2012 saw an increase of activity from the previous quarter, showing signs of an improving market. Major drivers behind the increased transaction volume are lenders being more willing to lend money, advantageous and aggressive SBA funding and an increased level of condence and certainty in the market. The Gordon Composites construction project is completed, providing 120,000 SF to the market. Century Link is also underway on its 43,597 SF facility in Englewood. Signicant deals this quarter include the sale of Arapahoe Business Park I and II as well as Laser Tech moving from its 22,000 SF building to a 46,000 SF building in Centennial. The progress of both sales and leasing activity in the second quarter provides an optimistic outlook for the remainder of 2012. In the second quarter of 2012 development in the Southeast submarket remained subdued with Century Link being the only building under construction at 43,597 SF and the Gordon Composites
Trends At A Glance* Construction Vacancy Absorption Lease Rates Activity

build to suit being completed. With new space lling up, and the lack of spec building, all development is build to suit due to specialized facility needs or no existing large blocks of space over 74,000 SF for users in the market. However, some developers are poised to capitalize on this lack of supply and are beginning to deliver build-to-suit projects to t these requirements. The trend of specialized
Year-over-Year Quarterly

construction in the Southeast, similar to the Blue Bell project in the previous quarter, continues to emerge as developers look for product that is specialized in size and nature. Speculative development is still unjustiable and the Southeast market will not see much in the near future.

Property Type Stats**

For information, contact: Sam Slaton Senior Associate Industrial Properties T 720.528.6406 sam.slaton@cbre.com www.cbre.com/sam.slaton

Number of Buildings

NRA

Lease Rates

Vacancy

Metropolitan Denver Warehouse/Distribution Flex/R&D Manufacturing Southeast Warehouse/Distribution Flex/R&D Manufacturing

4,509 2,696 707 912 349 124 183 29

223,920,729 136,977,969 33,194,097 46,389,034 15,976,475 5,673,062 8,501,958 1,449,038

$6.21 $4.77 $8.58 $4.53 $7.79 $7.18 $9.03 $6.82

5.7% 5.3% 10.1% 4.3% 8.2% 7.5% 9.8% 3.5%

CBRE 8390 East Crescent Parkway Suite 300 Greenwood Village, CO 80111 T 720.528.6300 F 720.528.6333 www.cbre.com/denver

** Denver Metro and Southeast market totals include Warehouse/Distribution, Flex/R&D, and Manufacturing as well as Incubator, Special Use, and Other Industrial space.

Availability Absorption

SOUTH METRO ECONOMIC DEVELOPMENT GROUP

Lease Rates

Activity

ANNUAL STATS

2003

2004

2005

2006

2007

2008

# of Buildings NRA

Construction Vacancy Sublease SF

SOUTHEAST METRO DENVER | RETAIL REGION REVIEW 2Q12

QUARTERLY STATS
NRA

2Q 11

3Q 11

4Q 11

1Q 12

2Q 12

Availability

Absorption Activity

Construction

Through the second quarter of 2012, the Denver Availability

Sublease SF Absorption retail market continued on its path towards Activity Lease Rates stabilization, while creating additional momentum

Vacancy

Lease Rates

Construction vs Vacancy

75

1,200 1,000
Thousands

with ANNUAL STATS property level performance. The2006 strong retail 2003 2004 2005 marketBuildings # of recorded gains across key fundamentals,
NRA consumer condence and retail sales. While

2007

2008

800 600 400 200 0

2009

2010

2011

2012 YTD

national retail sales remained at during the Vacancy

Sublease SF second quarter, the local retail market produced

Construction

a 9.7% increase over year-ago sales, Absorption

Activity

Availability

and in

10.0% 9.0% 8.0% 10 Year Avg. 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%

conjunction with encouraging gains in the labor Lease Rates and housing markets, the retail sector is poised to outpace 2011 recovery expectations. Sustained increases in consumer spending and condence will be necessary for the Denver economy to
Thousands
75

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD
Construction Vacancy

Absorption vs Lease Rates

1,600 1,400 1,200 1,000 800 600 400 200 0 -200 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD Absorption Lease Rates

$25.00 $20.00 $15.00 $10.00 $5.00 $-

regain equilibrium levels and consistent growth. Reductions in foreclosure and new unemployment lings, as well as escalating residential sales activity, have also had a direct impact on the improving economy. Recent market success can be partly attributed to accelerating tenant demand creating downward pressure on vacancy rates. Additionally, disciplined development activity is allowing lease rates to continue stabilizing. In
For information, contact: Mike Lindemann Senior Associate Retail Properties T 720.528.6303 matt.henrichs@cbre.com www.cbre.com/matt.henrichs

TRENDS
Construction Vacancy Absorption Lease Rates Activity

Yearly

Quarterly

addition, the Denver market recorded positive net absorption for the rst time since the third quarter 2011, further supporting an optimistic outlook in which the market will be able to exceed performance and growth expectations for 2012.

QUARTERLY STATS
CBRE 8390 East Crescent Parkway Suite 300 Greenwood Village, CO 80111 T 720.528.6300 F 720.528.6333 www.cbre.com/denver

2Q 11
8,743,317 0 7.2% 48,338 11.4% 109,242 140,324 $17.63

3Q 11

4Q 11
Metropolitan Denver 0

1Q 12
8,743,317 0 5.8% 49,719 10.1% 38,939 79,503 $17.41
VACANCY

2Q 12
Number of Buldings

NRA Construction Vacancy Sublease SF Availability Absorption Activity Lease Rates

PRODUCT 8,743,317 TYPE 8,743,317

0 5.8% 49,719 9.9% 15,329 44,599 $17.10 5.9% 49,719 9.5% Southeast 113,215 190,518 $17.31

8,743,317 11,180 5.6% 84,719 9.9% 14,010 57,109 $18.19

NRA

ANNUAL STATS
# of Buildings NRA

2003

2004

2005

2006

2007

2008

SOUTH METRO ECONOMIC DEVELOPMENT GROUP

PRODUCT TYPE
Number of Buldings

NRA

TRENDS

Yearly

Quarterly

Metropolitan Denver

Construction Vacancy

SOUTHEAST METRO DENVER | RETAIL REGION REVIEW 2Q12

Lease Rates Activity

Absorption

Southeast

Given Denvers diversied economic base, high levels of in-migration and continued progress in real estate fundamentals, the retail sector is well positioned for sustainable growth.
Metropolitan Denver
VACANCY
Neighb/Comm Center

PRODUCT TYPE

Number of Buldings

NRA

Lease Rates

Availability

Vacancy

Measurable progress in key performance indicators dened the Southeast submarket in the second quarter of 2012. The submarket recorded 14,010 square feet (SF) of positive net absorption during the quarter, bring the year-to-date total up to 52,949 SF. Encouraging leasing activity and heightened demand for well located properties resultedVACANCY notable decrease in in a the direct vacancy rate to a healthy 5.6%. Accounting for sublease space, the total vacancy rate stands at 6.0%, a 10 basis point decrease when compared to rst quarter numbers. The average asking lease rate in the Southeast submarket achieved an impressive gain to rest at$18.19 per SF during the second quarter. Occupancy levels have rebounded considerably over the past two years in the Southeast submarket, and further progress is expected through the second
TRENDS of 2012. Yearly half Leasing velocity QuarterlyClass A space for
Southeast

Strip Center

Power Center

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%
Southeast

8.0%

9.0%

10.0%

Metropolitan Denver

LEASE RATES
Neighb/Comm Center

Strip Center

Power Center

$0.00

$5.00

$10.00
Metropolitan Denver

$15.00
Southeast

$20.00

$25.00

Southeast NRA by Product Type

Power Center

continues to outpace that of Class B and C assets. Construction

For information, contact: In fact, the market has seen an escalation in the Vacancy

Absorption Mike Lindemann quality space. The increase in leasing activity has Senior Associate Rates Lease Retail Properties created downward pressure on vacancy rates, and T 720.528.6303 is contributing to the stabilization of lease rates. Activity matt.henrichs@cbre.com www.cbre.com/matt.henrichs Despite Sears Corporation announcing the closure

number of competitive lease offers received for high

Strip Center

Neighb/Comm Center

of The Great Indoors at Park Meadows Mall due

CBRE to a corporate restructuring, the total available rate Number of Buldings NRA PRODUCT TYPE 8390 East Crescent Parkway experienced a slight decrease during the second Suite 300 Metropolitan Denver Greenwood Village, CO 80111 quarter to 9.9%. Even with this announcement, the T 720.528.6300 retail sector continues to gain strength, demonstrated F 720.528.6333
Lease Rates Availability Vacancy

by increased hiring, renewed interest from national

www.cbre.com/denver users and a reduction in bankruptcy llings. Retail Southeast

owners and operators continue to analyze a diverse range of leasing methods and incentives as they seek to maintain occupancy levels and push leasing rates to pre-recession levels.
VACANCY LEASE RATES

SOUTH METRO ECONOMIC DEVELOPMENT GROUP

SOUTHEAST METRO DENVER | RETAIL REGION REVIEW 2Q12
Both the investment and construction markets in Denver remain cautious due to the uncertainty in the timing and strength of the economic recovery. Single tenant net leased assets continue to support investment transaction levels as a result of their ease of operation, stabilized long term tenancy and available nancing. Also, disciplined development activity has contributed to the relative health of the retail market by allowing for the continued absorption of the current building supply and creating an opportunity for growth. Although, given recent performance and the reemergence of small business,
Quarterly TRENDS development activityYearly expected to elevate as demand for high quality, well located properties rise. is

Construction A full rebound in construction activity will rely heavily on the labor and housing markets, where new Vacancy jobs need to be created to incentivize professionals to relocate to Colorado. The Denver retail market, Absorption and specically the Southeast submarket, continues to garner attention from national users in their Lease Rates expansion plans. While there is still uncertainty surrounding the national economic recovery, the positive Activity fundamentals being recorded in the Southeast retail submarket indicate it is well positioned to take

advantage of current market conditions to achieve sustained growth.

PRODUCT TYPE
Metropolitan Denver
Power Center Strip Center Neighborhood/Community Center Number of Buldings 604 62 28 407 52 8 6 33 NRA 78,445,906 24,884,271 1,860,459 42,265,671 8,743,317 4,240,940 407,963 3,775,672 Lease Rates $16.57 $18.39 $16.17 $16.05 $18.19 $22.97 $22.39 $15.63 Availability 12.1% 8.3% 5.5% 13.6% 9.9% 8.9% 4.8% 11.9% Vacancy 7.9% 5.2% 4.3% 8.9% 5.6% 3.8% 4.1% 8.7%

Southeast
Power Center Strip Center Neighborhood/ Community Center

Strip Center - Does not qualify in other categories and which are typically characterized as un-anchored centers, which have dedicated parking. The center may be one or two stories and have a mix of retail and service tenants. Neighborhood Shopping Center (30,000-100,000 SF) - Provides for the sale of convenience goods (foods, drugs, and sundries) and personal services (laundry and dry cleaning, barbering, shoe repairing, etc.) for the day-to-day living needs of the immediate neighborhood. It is built around a supermarket as the principal tenant. Power Center (350,000+ SF) - An open-air low priced oriented center with four or more Big Box/Category Killers (e.g. Circuit City, Toys R Us, Ofce Depot) or two or more Big Box/Category Killers and a discount department store or warehouse club (e.g. Wal-Mart, Kmart, Sams, Price Club).

VACANCY

LEASE RATES

For information, contact: Mike Lindemann Senior Associate Retail Properties T 720.528.6303 matt.henrichs@cbre.com www.cbre.com/matt.henrichs

CBRE 8390 East Crescent Parkway Suite 300 Greenwood Village, CO 80111 T 720.528.6300 F 720.528.6333 www.cbre.com/denver

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