National Airport-Area Office-Warehouse Rental Rate Survey Ed Riggins, CCIM Executive Vice President ACI-NA March 29, 2007

The 7-10-Year Real Estate Cycle Low vacancies Increasing prices and rents Accelerated new construction Oversupply High vacancies Declining prices, rents, construction Absorption of excess supply

City Inclusion Criteria Heavy cargo traffic per ACI Presence of airport related functions per D&B forwarders expedited truckers airline parts suppliers

Survey Property Criteria 3 properties per city – average of net asking rates 4th quarter data collection Dock high truck doors Off airport-owned property but, w/in 5 miles Sized for hypothetical user 20,000 sq. ft. 20% office finish

2007 Rental Rate Survey Results

2001 – 2007 National Average

Lessons Learned Subleases at 20-50% off in for months Some new development by Expenses now 10-25% of rental costs Leases more net – mgt. fees, roof/parking repair, etc. Free rent still preferred to rate reduction Cap rates down from 9-10% on 2000 to 5-6% now For tenants - More time = more choices = more leverage

How Properties Are Valued Net Income Sales Price Capitalization Rate =

How Properties Are Valued $6.5 per sq. ft $100 per sq. ft 6.5% =

How Properties Are Valued $6.5 per sq. ft $108 per sq. ft …this goes up If this goes down… 6.0% =

The 7-10 Year Real Estate Cycle Low vacancies Increasing prices and rents Accelerated new construction Oversupply High vacancies Declining prices, rents, construction Absorption of excess supply Didnt happen

The 7-10 Year Real Estate Cycle Here Now? Low vacancies Increasing prices and rents Accelerated new construction Oversupply High vacancies Declining prices, rents, construction Absorption of excess supply