Industrial Market September, 2009 Houston’s Keynote Speaker: Mark Nicholas, SIOR Senior Vice President

Houston Industrial Market: Then and Now

Commercial Real Estate Lending Outlook Not all banks are lending - must speak with many Will still do non-recourse but will require a higher down payment; rate will be from 6.5 – 8.0% Subject to financial strength of client All banks want long-term relationship – business, real estate, FFE, etc.

Houston Industrial Real Estate Outlook Asking rents continue to fall The gap between asking rents and effective rents is widening With demand weak through at least the end of the year, concession packages will continue to be lucrative Tenants can relocate from a Class B to a Class A building for the same rate - Good credit - Longer term commitment (i.e years) 2010 (2nd half) will likely show increase in activity for Build-to-Suits and Design-Builds for reasons as follows: - Pent up demand from 4th Quarter st Quarter Lack of existing product that meets long-term needs of credit companies - Developers with 'shovel ready' sites are well positioned to deliver inside 9-10 months Energy Service Companies: - 225,000/SF Under Construction in West Houston - 165,000/sf Completed Lease transaction in May 2009 in East Houston - 77,000/Sf Build To Suit Completed September 2009 in North Houston