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WASHINGTON DC METRO

MARKET OVERVIEW

www.grubb-ellis.com

grubb-ellis.com

Susan Pepper

2010 President

GREATER WASHINGTON COMMERCIAL ASSOCIATION OF

REALTORS

Senior Vice President

Grubb & Ellis Company

Greater Washington Office Market

• Total SF: 297,376,507*

• Overall Vacancy: 14.9%

• Year To Date Net Absorption: (1,007,442)

• Under Construction: 7,931,938 SF

• Average Asking Rental Rates

– Class A: $39.97

– Class B: $30.90

* Stats compiled by Grubb & Ellis Research do not include Owner Occupied Buildings

Center of the Universe

Source: Grubb & Ellis Research

D.C. Metro – Best of the Biggest

Washington – 37,000

Unemployment Rate Year-End

Source: U.S. Bureau of Labor Statistics

10.2%

7.6%

6.2%

2%

7%

12%

'01 '03 '05 '07 '09

Baltimore Metro Washington Metro

U.S.

Loss of Jobs Rising Vacancy

But there’s more to it…

D.C. Metro Office Deliveries

Source: Grubb & Ellis Research, CoStar

Square Feet (Millions)

*Anticipated Deliveries

Vacancy and Average Asking Rental Rates

Dollars per Square Foot Vacancy Rate

D.C. Office Market

Source: Grubb & Ellis Research*Projection

Vacancy and Average Asking Rental Rates

Dollars per Square Foot Vacancy Rate

Source: Grubb & Ellis Research*Projection

Northern VA Office Market

Vacancy and Average Asking Rental Rates

Dollars per Square Foot Vacancy Rate

Suburban MD Office Market

Source: Grubb & Ellis Research*Projection

2009 at a Glance in Greater Washington

1st Quarter

• Overall Vacancy: 13.5%

• Net Absorption: (732,458) SF

• Average Asking Rental Rates– Class A: $39.70

– Class B: $32.67

2nd Quarter

• Overall Vacancy: 14.2%

• Net Absorption: 72,759 SF

• Average Asking Rental Rates– Class A: $40.01

– Class B: $31.75

3rd Quarter

• Overall Vacancy: 14.9%

• Net Absorption: (281,723) SF

• Average Asking Rental Rates– Class A: $39.97

– Class B: $30.90Source: Grubb & Ellis Research

Available Sublease Space

Source: Grubb & Ellis Research

Increasing at a Decreasing rate… Square Feet

Office Sales Volume

(In Billions)

D.C. Metro Investment

* Projection Source: Real Capital Analytics, Grubb & Ellis

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

2002 2003 2004 2005 2006 2007 2008 2009 YTD

2010*

$4.6

$6.5$7.5

$10.8

$14.8 $14.9

$3.1

$1.20 $1.50

1099 New York Avenue – 178,000 SFSale Price: $90.5 millionBuyer: Credit SuisseSeller: Tishman Speyer

What would we do without foreign money?

1999 K Street – 249,000 SFSale Price: $207.8 millionBuyer: Deka Immobilien InvestmentSeller: Vornado Realty trust

*ProjectionSource: General Services Administration, Grubb & Ellis

GSA Regional Inventory of Leased Space

GSA…YEA!

(SF in Millions)

• Economic and job growth expected to continue in 2010

• New deliveries increased vacancy in Greater Washington

• Rental Rates – relatively flat – major concessions to continue

• Office Investment Sales expected to see an uptick in activity

• Government leasing – drive market in 2010

• Don’t shoot the MESSENGER!

Summary