S eptember 23, 2009 Jim Casey Industrial Forecast Luncheon

Industrial Development Current Market Trends - Houston  New spec project pipeline is shut down  There is reasonable tenant leasing activity, but commitments are slow  There has not been major give-backs of space  Generally, the markets are declining slightly, but pretty stable  Need to see job growth to generate meaningful absorption

 Values have declined; but little volume to establish values  Lenders terms have shifted significantly; they don’t want to make new loans right now  Equity is waiting on sidelines for more clarity on values  Effects of long term debt roll-overs yet to come  REIT’s are recovering, raising equity Capital Markets

Northwest  Largest and most diverse  Oilfield services, computer industry, furniture, general goods  Modest amount of big new space  Sub Market is in balance Houston Submarkets vary significantly

Southwest  Fort Bend County is one of the fastest growing counties in the country  Electronics, engineering, oilfield services  Several new projects delivered in 2008 / 2009  Proximity and access to residential areas is key

East  Most forward looking submarket  Petrochemical commodities, container traffic  Big projects delivered; need to see new major increases in are housing to absorb the space  Long-term factors should promote growth, but near-term is going to be difficult

North  Proximity to IAH is key  Freight forwarding, oilfield services  Export and import activities  New international cargo routes developing

Summary  Houston industrial market is trending down, but the slope is shallow  Need to watch job losses;….. will there be job gains in 2010?  New construction pipeline has slowed to a trickle  Houston should out-perform most of the country long-term