Sperry Van Ness | Miller Commercial Real Estate Chesapeake Beach Bay Club August 18, 2011 ULI Presentation Wesley Cox, CCIM Bradley Gillis, CCIM

Topic Outline 2 The changing face of the Eastern Shore Key economic drivers on the Eastern Shore Why companies choose to locate on the Eastern Shore Types of deals being completed & current opportunities Forecast

The Changing Face of the Eastern Shore 3 “Textiles to Technology” “Graying of the Shore” “Brain Drain” “Ocean City-National Destination”

The Changing Face of the Eastern Shore 4 Salisbury University – Seagull Square, T.E.T.C Building, Perdue School of Business Wor-Wic Community College – Allied Health Building Perdue Farm’s L.E.E.D Renovation & Solar Field Ocean City Convention Center Expansion Shore Health-proposed expansion P.R.M.C-expansion Airport Runway Expansions – Salisbury & Easton

Key Economic Drivers on the Shore Universities & Community Colleges – Chesapeake College, Wor-Wic, Salisbury University, University of Maryland, Washington College, etc… Regional Medical Centers – Peninsula Regional Medical Center, Atlantic General Hospital, Shore Health Systems, University of Maryland Medical Center Diverse employment base – Shown in the pie chart Wallops Island / NASA

Additional Economic Drivers Salisbury/Wicomico County Airport Perdue Farms & Amick Farms Harvard Custom Manufacturing (Labinal) Northrop Grumman Lankford Sysco Hyatt Regency - Cambridge Ocean City!! Key Economic Drivers on the Shore

Our Diversified Economy

Why Companies Choose the Shore Transportation Network –Airports, Rail, Ports Maryland Broadband Cooperative Financing & Incentives Quality of Life Access to a strong labor pool Within a 4 hour drive of 45 million people

Current projects on the Shore 9 Achievement Park-Easton – Former Cadmus building – 150,000 SQ FT Medical/Professional Office Building Shore Health System-Grasonville – 60,000 SQ FT Medical Office Building AC Wind-Salisbury –150,000 SQ FT Tri County Council Building-Salisbury – 75,000 SQ FT Government Office Building

Types of Completed Deals 10 White Marlin Mall / Tanger Outlets-West Ocean City Bayliner Marine-Salisbury-2010 – $1.3M-130,000 SF of warehouse/office GKD-Expansion-Cambridge Foodswing-start up-Cambridge Cadmus Printing-2011 – $3.0M-200,000 SF of warehouse/office Powerwave Building-2009 – $4.0M-75,000 SF of office/manufacturing

Current Opportunities 11 Industrial buildings Shadow inventory Income producing real estate Distressed Real Estate – REO’s

Shore Statistics Vacancy Rates – Industrial, Retail, Office, Multi-family 7th in the Nation – Retail SF per Capita (Salisbury) Retail Demand – 90% of national retailers plan to boost store counts over the next 12 months – 70% of them felt the economy is stable or improving

Forecast 13 Lending is loosing up – Feds are saying ‘Lend money!’ – User focused Interest rates still low – 4.5%-6% for a user/occupier purchase 3-5 Year ARM – 5%-7% for qualified investor purchase Buyers are seeing opportunity – Deals are happening

Forecast 14 Nationwide CRE is seeing a pick-up – Trickle down effect Today’s Reality More distressed properties to hit the market Land is not selling – Existing Buildings are cheap, no reason to build – If the building exists A/E firms are hearing chatter - However lack of financing Construction will continue to hurt - Replacement Cost vs. “Today’s Values”

Forecast 15 Users are King Banks will begin selling more REO properties - Shadow inventory – Bank controlled properties not currently being marketed Auctioneers are dealing only with – Estates – Banks

Thank You!! 206 East Main Street 206 East Main Street Salisbury, MD Salisbury, MD (410) (410) Wesley Cox, CCIM Senior Advisor Bradley Gillis, CCIM Senior Advisor