Orlando - CCIM

1 Copyright 2006 by Real Estate Research Corporation (RERC) and the CCIM TrendsQuarterlyOrlando89 OfficeThe fundamentals within the Orlando office market remain strong. Even with the additional supply of office space, absorption is increasing, es-pecially in the Orlando CBD, and rental rates have continue to move upward. Although all submarkets are improving, the downtown market has seen the greatest strengthening. RERC s transaction analysis indi-cates the average sale price of office space in Orlando is $157 per square foot, higher than the South regional average of $130 per square foot, but slightly below the national average of $167 per square foot.

2 The average capitalization rate for Or-lando office properties is percent, slightly lower than both the regional and national averages. With fundamentals expected to improve, and the average price and capitalization rate below national levels, Orlando office properties present a strong investment opportunity overall when compared to those in many other regions. IndustrialOrlando industrial market funda-mentals continue to improve. With a shortage of available land for new industrial development, availability rates remain low, rents are steady, and rental concessions have all but disappeared. These trends are ex-pected to continue.

3 RERC s transaction analysis indi-cates that industrial space in the Orlando area is selling for $73 per square foot, midway between the re-gional average of $64 per square foot and the national average of $83 per square average capitalization rate for Orlando area industrial properties is percent, about 100 basis points below both the regional and national average capitalization positive investment traits characterizing Orlando s office market also describe Orlando s industrial market. Fundamentals are expected to continue to improve, as land for new development becomes scarcer. RetailRERC s transaction analysis indi-cates retail properties in the area are selling for an average of $194 per square foot, well above the South regional average of $140 per square foot and the national average of $169 per square transaction-based capitalization rate for retail properties is percent, 10 basis points below the national av-erage and 30 basis points below the South regional average sale price for Orlando retail space is slightly higher than that found on a regional and national basis, and the capitalization rate is lower.

4 Despite slow retail sales in some parts of the nation, Orlando is expected to see continued economic growth, fueling retail sales and keeping retail properties performing well for the coming market fundamentals re-main positive in the Orlando area, due to strong job and population growth and increasing interest rates making homeownership less feasible. Re-duced supply has lowered the vacan-cy rate to levels that have not been seen since the end of 2000, which has increased rental rates. However, these trends may slow and supply may increase as seasonal demand declines and as failed condominium conversions re-enter the s transaction analysis indi-cates apartment space in the Or-lando area is selling for $91,810 per unit, higher than the regional average price of $75,192 per unit, but below the national average of $107,833 per average capitalization rate for the Orlando apartment market is percent, lower than both the South regional and national average capi-talization fundamentals in the Orlando apartment market are strong.

5 Some experts are suggesting a market slowdown may be in sight, with vacancy rates returning to levels closer The Orlando economy is one of the strongest in the nation, and the Orlando commercial real estate market is expected to follow suit. With continued strong employment expected, more demand and stronger fundamentals will likely be found in all property & EconomyPopulation: 2006 (est.): million2011 (proj.): millionUnemployment Rate: Orlando - - - 2006 by Real Estate Research Corporation (RERC) and the CCIM TrendsQuarterlyOrlando90 South Region Transaction Breakdown (Jan. 1, 2006 - Dec. 31, 2006)OfficeIndustrialRetailApartmentHote lTotalVolume (in millions)<$2 million$624 $1,016 $1,310 $924 $68 $3,940$2-5 milion$938 $1,223 $2,081 $1,073 $330 $5,646>$5 million$25,735 $7,093 $13,161 $23,008 $8,648 $77,644 All$27,256 $9,281 $16,472 $24,975 $9,031 $87,015 Unit Price Averages<$2 million$96 $57 $99 $62,693 $65,336 $2-5 milion$147 $72 $181 $73,179 $60,230 >$5 million$153 $77 $183 $90,463 $109,868 All$130 $64 $140 $75,192 $94,532 Median of all$112 $54 $106 $60,648 $82,562 Capitalization Rates (All) - - - - - - * Transaction Breakdown (Jan.)

6 1, 2006 - Dec. 31, 2006)OfficeIndustrialRetailApartmentHote lTotalVolume (in millions)<$2 million$2,307 $4,047 $4,070 $5,669 $220 $16,312$2-5 milion$3,910 $5,701 $6,222 $5,910 $926 $22,668>$5 million$155,131 $32,581 $50,896 $87,663 $33,689 $359,961 All$161,348 $42,328 $61,188 $99,242 $34,835 $398,942 Unit Price Averages<$2 million$103 $68 $103 $92,566 $53,998 $2-5 milion$167 $96 $216 $128,810 $59,767 >$5 million$209 $104 $250 $126,410 $137,649 All$167 $83 $169 $107,833 $110,713 Median of all$137 $66 $123 $86,170 $82,776 Capitalization Rates (All) - - - - - - equilibrium. Capitalization rates for the Orlando apartment market are still well below national and regional levels, reflecting their investment s transaction analysis indi-cates hotel properties in the Orlando area are selling for an average price of $77,102 per unit, well below both the regional and national average sale prices of $94,532 per unit and $110,713 per unit, average capitalization rate for Orlando hotel properties is per-cent, 30 basis points above the re-gional average rate and 50 basis points above the national average rate.

7 Copyright 2006 by Real Estate Research Corporation (RERC) and the CCIM TrendsQuarterlyOrlando91 NCREIF Real Estate Index Returns - 4Q 2006 OfficeIndustrialRetailApartmentAverageTo tal Returns: 1-Year Return1-Year Average20%12%43%23%2%3-Year Average19%17%30%33%2%5-Year Average20%19%25%34%1%10-Year Average21%16%25%37%1%15-Year Average15%16%29%32%8%Sources: RERC and National Council of Real Estate Investment FiduciariesOrlando Transaction Breakdown (Jan. 1, 2006 - Dec. 31, 2006)OfficeIndustrialRetailApartmentHote lTotalVolume<$5 million$141 $137 $158 $12 $20 $468 >$5 million$969 $246 $1,184 $1,770 $2,018 $6,187 All$1,111 $383 $1,341 $1,782 $2,038 $6,655 Unit Price Averages<$5 million$156 $72 $169 $91,898 $39,348 ->$5 million$160 $76 $235 $91,801 $83,814 -All$157 $73 $194 $91,810 $77,102 -Median of all$157 $67 $160 $81,009 $60,833 -Capitalization rates (all) - - - - - - Transactions The 327,561-square-foot retail center located at 7506-7600 Dr.

8 Phillips Blvd. sold for more than $85 million, or approxi-mately $260 per square foot, slightly higher than the average price of $235 per square foot for retail space in the area with a total selling price above $5 in large part to the size of the facility, the 1,103-room Sheraton World Orlando Resort hotel sold for $55 million, or $49,864 per unit, well below the average sale price of $83,814 per unit for properties with a sale price above $5 million. The 400-unit Falcon Parc apartment complex sold for $55 million, or approximately $139,500 per unit, well above the average price of $91,801 per unit for apartment properties in this price of America Center, a 420,000-square-foot office prop-erty located at 390 North Orange Ave.

9 , sold for slightly more than $96 million, or $229 per square foot, much more than the area average sale price of $160 per square foot for office buildings selling for more than $5 81,924-square-foot industrial property located at 8210 Presidents Drive sold for $7 million, or around $85 per square foot, slightly more than the average sale price of $76 per square foot for industrial properties in this price category.