Global Research and Consulting Econometric Advisors CBRE Econometric Advisors Client Conference 2012 October 2, 2012 Session 1 | U.S. Property Market Outlook Presented by: Jon Southard, Managing Director and Director of Forecasting

CBRE | Page 2 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 Two Groups for Vacancy vs. Historical Average Source: CBRE Econometric Advisors. Ratio – Vacancy to Historical Average

CBRE | Page 3 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 Same Two Groups for Current Rent Growth Source: CBRE Econometric Advisors. Year-over-Year, % Rent Change

CBRE | Page 4 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 …Creates Leaders and Laggards in NCREIF Forecasts Source: CBRE Econometric Advisors

CBRE | Page 5 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 Cap Rate Declines Ended, but Reversal At End of Five Year Window Source: CBRE Econometric Advisors

CBRE | Page 6 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 …And The Treasury Rate is Why Source: CBRE Econometric Advisors

CBRE | Page 7 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 But Wait, Using A Different Return Approach… Source: CBRE Econometric Advisors. Ignores Benefits of Property Management and Trading

CBRE | Page 8 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 But Wait, Using A Different Return Approach… Source: CBRE Econometric Advisors. Ignores Benefits of Property Management and Trading

CBRE | Page 9 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 For Unmanaged Office, NOI and Cap Rate Increase Mis-timed Index, 100 = 2012Q2 Source: CBRE Econometric Advisors.

CBRE | Page 10 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 Simple Rent to NOI Relationship Index, 100 = 2012Q2 Source: CBRE Econometric Advisors.

CBRE | Page 11 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 …Whereas Multifamily Takes One Punch Index, 100 = 2012Q2 Sources: CBRE Econometric Advisors.

Global Research and Consulting Econometric Advisors CBRE Econometric Advisors Client Conference 2012 October 2, 2012 Market Strategies

CBRE | Page 13 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 Office Markets that “Give You” Returns Source: CBRE Econometric Advisors. 5 Year IRR (%) NCREIF-based Cap Rate (%)

CBRE | Page 14 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 IRR Looks at Income Return, Rent Growth, and Rent Roll-down Source: CBRE Econometric Advisors. Office Markets IRRCap RateRent Growth % Avg Annual % St. Louis Salt Lake City Houston Pittsburgh San Francisco Sum of Markets Rent Growth Opportunity, But It’s Not Assured Office Markets IRRCap RateRent Growth % Avg Annual % Dallas Austin San Jose Minneapolis Boston Tucson

CBRE | Page 15 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 Can The Tortoise Match The Hare? Office Rent Growth, % Source: CBRE Econometric Advisors.

CBRE | Page 16 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 More Multi-housing Markets that “Give You” Returns Source: CBRE Econometric Advisors. 5 Year IRR (%) NCREIF-based Cap Rate (%)

CBRE | Page 17 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 Multifamily Has No Roll-down Source: CBRE Econometric Advisors. Multi-housing Markets IRRCap RateRent Growth % Avg Annual % Detroit Austin San Francisco San Antonio Boston Salt Lake City Kansas City Orlando Sum of Markets Capital Costs or Low Capitalizations Can Keep Off List Multifamily Markets IRRCap RateRent Growth % Avg Annual % Phoenix Atlanta Las Vegas Tucson Dallas Oakland

CBRE | Page 18 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 Industrial Markets that “Give You” Returns Source: CBRE Econometric Advisors. 5 Year IRR (%) NCREIF-based Cap Rate (%)

CBRE | Page 19 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 IRR Looks at Income Return, Rent Growth, and Rent Roll-down Source: CBRE Econometric Advisors. Industrial Markets IRRCap RateRent Growth % Avg Annual % Wilmington Columbus Denver Kansas City Austin Houston Charlotte Sum of Markets Rent Growth Opportunity, But It’s Not Assured Industrial Markets IRRCap RateRent Growth % Avg Annual % San Jose Jacksonville Newark Orange County Riverside New York

CBRE | Page 20 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 IRR Looks at Income Return, Rent Growth, and Rent Roll-down Source: CBRE Econometric Advisors. Rent Growth Is Only Retail Opportunity Retail Markets IRRCap RateRent Growth % Avg Annual % Denver Oklahoma City Austin Oakland Tucson Las Vegas Retail Markets IRRCap RateRent Growth % Avg Annual % Sum of Markets

CBRE | Page 21 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 Employment Growth Isn’t Everything Source: CBRE Econometric Advisors. Annualized, % Change

CBRE | Page 22 Global Research and Consulting ● Econometric Advisors CBRE Econometric Advisors Client Conference 2012 Tech and Energy Are Common Themes Source: Bureau of Labor Statistics, CBRE Econometric Advisors. Location Quotient = % of Total Emp / US % of Total Emp