The South Florida office market saw a decline in leasing activity in Q3 2012, with overall leasing down 13.2% from the previous quarter. Availability rates continued to decline modestly, with the overall rate falling to 22.0% and the Class A rate declining to 23.9%. Rents remained largely unchanged, with overall rents at $27.12/sf and Class A rents at $31.18/sf. The economy and upcoming election were causing businesses to be cautious, slowing leasing activity. Large blocks of space continued to decline in availability in major submarkets.

1. 3Q 2012
SOUTH
Report
Report
FLORIDA
S T U D L E Y O F F I C E M A R K E T A N D S PA C E D ATA R E P O R T
MARKET HIGHLIGHTS The Mood is Cautious
AVAILABILITY RATES INCH DOWN
South Florida’s overall availability rate, As South Florida’s economy and office market attempt to regain equilibrium, the unstable U.S.
22.0%,dipped by 0.7 pp for the quarter. economy and the November election are giving businesses cause for concern. The U.S. economy
The Class A rate, 23.9%, dropped by 0.9 faltered in the second and third quarters. GDP growth has fallen from an average of 3.0% in 2011
pp. to a sub-2.0% range in 2012 as the impact of the federal stimulus wanes. Corporations have
reverted to more tentative and risk-averse hiring and spending patterns. Businesses don’t need
any more reasons to second-guess themselves, but the upcoming election and the so-called “fiscal
RENTS HOLD STEADY
cliff” that will follow are adding to companies’ nervousness. Leasing in South Florida stumbled
during the third quarter, dipping by 13.2% from 1.6 msf to 1.4 msf. Class A activity dropped by
Overall rent ($27.12) was unchanged 20.1% to 636,287 sf. Class A volume in Miami-Dade has been lackluster for a while now, totaling
quarter-on-quarter. Class A rent ($31.18) only 1.6 msf over the last four quarters, the weakest it has been since early 2010.
declined by 0.1%.
Despite the slow hiring and leasing activity, South Florida has recorded solid declines in availability
QUARTERLY LEASING SLOWS during the last two quarters. The overall availability rate fell by 0.7 pp to 22.0% and the Class A
rate declined by 0.9 pp to 23.9%. Broward County registered the region’s steepest decrease in
Overall leasing totaled 1.4 msf, a decrease Class A availability rate, which dipped by 1.8 pp to 22.8%. In Miami-Dade County, the Class A rate
of 17.8% from the previous quarter. Trailing slipped by 1.0 pp to 22.9% due to a decrease of 1.7 pp to 18.7% in Northeast Dade and a 1.3 pp
four-quarter volume reached 5.8 msf, down drop to 21.4% in Coral Gables. In contrast, the Class A rate rose for the second straight quarter in
by 6.8%. Palm Beach County, by 0.6 pp to 27.1%
Many believe that the state of the economy and the upcoming election are not influencing tenants
FEWER LARGE BLOCKS to delay their decisions on space use – it may simply be that most tenants have little cause for
urgency. Ample supply remains for smaller and mid-sized space-users, and only a sliver of the
In Miami-Dade County, the number of market can be described as “tightening.” Although Class A availability has started to decline, the
large contiguous blocks of space (50,000 region still has 12.1 msf of Class A space on the market, 136.0% more than in late 2006, when
sf or more) fell from 23 last quarter to 21. the market was last at its tightest. Compared to late 2006, South Florida has about 68,000 fewer
In Broward County, the number of blocks office-using workers, and companies signing leases are being wise to allocate less space per
remained stable at 14. The number of employee.
blocks in Palm Beach County stands at 8,
versus 10 last quarter. Most landlords are consequently not in a position to increase rents. Overall asking rents have been
stagnant since the first quarter of 2011, ranging from $27.32 psf at that time to $27.12 psf in the
third quarter – the second quarter in a row that rents have maintained this average. Class A rents
ticked down from $31.20 psf to $31.18 psf in the third quarter. They have fallen even in submarkets
Miami-Dade Transaction Barometer
MIAMI-DADE TRANSACTION BAROMETER Broward Transaction Barometer
BROWARD TRANSACTION BAROMETER PALM BEACH TRANSACTION BAROMETER
Palm Beach Transaction Barometer
One Qtr One Qtr One Qtr One Qtr One Qtr One Qtr
CBD Change Suburban Change CBD Change Suburban Change CBD Change Suburban Change
Average Term: 10 yrs 7 yrs Average Term: 7 yrs 5 yrs Average Term: 7 yrs 5 yrs
Concessions: Concessions: Concessions:
Free Rent 6-12 months 6 months Free Rent 8 months 5 months Free Rent 12 months 7 months
Tenant Improvements $50.00/sf $35.00/sf Tenant Improvements $40.00/sf $25.00/sf Tenant Improvements $40.00/sf $30.00/sf
Parking 1.5 spaces/1,000 sf 3.5 spaces/1,000 sf Parking 2 spaces/1,000 sf 4 spaces/1,000 sf Parking 2 spaces/1,000 sf 4 spaces/1,000 sf
Outlook: Supply continues to exceed demand in most Outlook: Landlords remain aggressive in competing for quality Outlook: Leasing activity remains steady throughout this
submarkets. tenants. submarket.
Up Down Unchanged

2. ($/sf)
Rental Rate Trends with the greatest amount of new product. Class A rents in Downtown Miami declined by
$40 3.1% to $35.83 psf in the third quarter and have decreased by 6.1% year-on-year. Class
$35 $31.11 $31.18
A rents in Brickell dropped for the year by a more modest 0.3%.
$30
$25 Even the highest-caliber buildings in Brickell, Coral Gables, Downtown Fort Lauderdale
$20
$24.99
$23.50 and West Palm Beach have had to scramble to compete for tenants. Some properties
$15
built two or three years ago are still trying to lease first-generation space. Some of the
$10
protracted leasing campaigns appear to finally be paying off, providing evidence that
$5
tenants will respond positively to competitively priced quality product. Bank of America
Class A Class B & C Plaza at Las Olas City Centre, for example, has completed more than 110,000 sf of
$0
2007 3Q 2008 3Q 2009 3Q 2010 3Q 2011 3Q 2012 3Q leases and is now more than 99% occupied. On the other hand, 600 Brickell and Wells
Fargo Center each have nearly 500,000 sf available for lease. In Coral Gables, 396
Four-Quarter Trailing Leasing Activity* Alhambra has more than 80,000 sf available.
(msf)
4.5
Class A Class B & C
4.0 Tenants looking for large blocks of quality space are facing some challenges, though.
3.5
2.9
South Florida does not have very many tenants looking for this type of space, but the
3.0 supply of large blocks still has dropped off enough to make it difficult for larger companies
2.5 2.9
2.1 currently in the market. Some of these tenants with imminent lease expirations have
2.0
2.1 invested a great deal in their current infrastructure, so they are unwilling to move unless
1.5
they can find the right fit and negotiate generous tenant improvement allowances. On the
1.0
0.5
flip side of this, though, most landlords remain very eager to retain their current roster or
0.0
*Sum of leasing activity in prior four quarters
attract larger creditworthy tenants.
2007 3Q 2008 3Q 2009 3Q 2010 3Q 2011 3Q 2012 3Q
On an annual comparison, the number of blocks of space of more than 50,000 sf in
(%) Availability Rate Trends Miami-Dade County has declined from 24 to 21. Eleven of these blocks are in Class
30% A buildings. Broward County (six) and Palm Beach County (three) have even smaller
25%
23.9% supplies of large blocks of Class A space. The next two years should be pivotal, as there
are 13 leases in Miami-Dade County in the 30,000-sf-plus range, with a combined total of
20%
15.4% 20.5% over 800,000 sf, due to expire.
15%
10%
Colleges and continuing education institutions, as well as healthcare companies, have
10.6% played a big role in filling in some of the void in demand caused by reduced activity and
5% heightened efficiency on the part of banks, law firms and other professional/business
services. Prior to the recession, some of these companies were pushed to the side by
Class A Class B & C
0%
2007 3Q 2008 3Q 2009 3Q 2010 3Q 2011 3Q 2012 3Q professional/business services, but now they are front and center in leasing activity.
Healthsun Health Plans, for example, inked a 19,000-sf lease at 3250 Mary Street in
Overall Large Block Trends*
Coconut Grove. In West Miami, San Ignacio College completed a 14,000-sf lease at
30
3805 N.W. 107th Avenue. In the largest deal of the quarter, OneBlood, a blood donation
25 center, acquired 3000 W. Cypress Creek Road, a 75,000-sf building, for $9.8 million. The
20 20 21 ability of tenants to acquire their own properties at prices well below replacement cost
further undercuts the leasing market.
15 16
14
10 Some core office-space users such as law firms and banks have been somewhat more
9
8 active of late, but not enough to make much of a dent in the region’s excess supply.
5 *Contiguous spaces >=50,000 sf
Miami-Dade Broward Palm Beach
Hogan Lovells committed to a 12-year, 47,508-sf lease at 600 Brickell. The law firm was
0 attracted to the property’s stellar amenities and location, as well as to its on-site data
2010 3Q 2011 1Q 2011 3Q 2012 1Q 2012 3Q
center. Brickell Bay Office Tower snared several tenants in the first quarter – pushing its
leased rate to just above 97.0%. As in prior quarters, many of the tenants are new to the
MAJOR TRANSACTIONS
Major Transactions
Tenant Sq Feet Address Market Area
OneBlood, Inc. 75,000 3000 W Cypress Creek Road Cypress Creek/Fort Lauderdale
Hogan Lovells 47,508 600 Brickell Avenue Brickell
Right Space Management 24,575 1951 NW 7th Avenue NE Dade
Healthsun Health Plans, Inc. 19,000 3250 Mary Street Coral Gables/Grove
Thales 17,170 900 S Pine Island Road Sunrise/Plantation
NBC Television 17,120 2555 Ponce De Leon Boulevard Coral Gables/Grove
Pipeline 14,000 1101 Brickell Avenue Brickell
Infinity 12,928 3750 NW 87th Avenue West Miami/Airport
Vector Group, Ltd. 12,390 4400 Biscayne Boulevard NE Dade
Landmark Education 12,265 6451 N Federal Highway Cypress Creek/Fort Lauderdale
Consulate General of France 9,654 1395 Brickell Avenue Brickell
Emerson Climate Technologies 9,258 1300 Concord Terrace Sunrise/Plantation
Barakat Law, Inc. 8,745 255 Alhambra Circle Coral Gables/Grove
Hinshaw Law Firm 8,031 2525 Ponce De Leon Boulevard Coral Gables/Grove
Cherry Bekaert & Holland 7,917 200 E Broward Boulevard Downtown Fort Lauderdale
Sum of Top 15 Leases 295,561 Sum of 3rd Quarter Leasing Activity 1.4 MSF

3. area. Houston-based health care firm Domus Prime Services; MP & Silva, a European Overall Rental Rate Comparison
sports broadcasting company; and law firm Alvarez, Arrieta & Diaz-Silveira completed Brickell $38.45
new leases in this building. Landlords have pulled back slightly on concessions, free rent Downtown Miami $32.47
periods have been dialed back a bit and some landlords with higher occupancy are not Coral Gables/Grove $32.39
Miami-Dade County $29.83
as willing to restructure leases as they were a few quarters ago, although most are still US Index $29.55
being accommodating. NE Dade $28.69
SW Broward $28.27
South Dade $27.35
Capital markets have started to improve in many U.S. markets and in South Florida
Downtown Frt Ldrdle $27.16
as well. Weaker fundamentals have kept some institutional lenders and insurance South Florida $27.12
companies out of the market, but regional banks are starting to dip their toes back into Palm Beach $27.05
the water. Lenders continue to stick to very high loan-to-value ratios and more rigid Boca Raton $25.85
Broward County $24.62
valuation standards, but funding is more available. Owners of properties built several Sunrise/Plantation $24.56
cycles ago are finding that renovations and upgrades are critical to being competitive in Palm Beach County $24.36
this market. Properties that are struggling to cover debt service do not have the funds Hollywood/Hallandale $24.33
West Miami/Airport $23.62
for such upgrades or in some cases even to provide the generous tenant improvement Cypress Cr/Ft Ldrdle $23.01
allowances that tenants expect. Refinancing activity has been critical to giving some of N Palm Beach $22.81
these owners the key funds for renovations and concessions. More importantly, it has Miami Lakes/Hialeah $22.49
Market
kept some owners from having to hold a fire sale in a market that exacts a stiff penalty North Broward $22.23
Submarket
Boynton/Delray $21.14
for low occupancy rates. Type
New $34.85
Negligible lending for construction and development activity has helped restrain Relet $25.74
Sublet $24.59
overbuilding, and most developers remain cautious. Swire Properties broke ground in
$0 $10 $20 $30 $40
late June on Brickell CitiCentre, one of South Florida’s biggest projects in quite some ($/sf)
time. The 5.4-msf, $1.0-billion project will include two office buildings, 520,000 sf of
retail shops, 800 condominium units and a hotel. The first office building, a 220,000-sf Availability Rate Comparison
property, is slated for completion in 2015. Other owners are poised to start construction Hollywood/Hallandale 14.7%
Market
once they sign an anchor tenant or see clearer signs that a more widespread recovery South Dade 15.5%
Submarket
has begun. The Hogan Group, for example, has plans in place for the next building at NE Dade 16.3%
Waterford at Blue Lagoon in the West Miami/Airport submarket. Miami Lakes/Hialeah 16.9%
SW Broward 17.0%
Coral Gables/Grove 17.1%
Looking Forward US Index 17.4%
Most economists project that weaker GDP growth and hiring will carry through much of Miami-Dade County 19.9%
2013. The fall elections, and another likely confrontation in Washington regarding taxes West Miami/Airport 20.0%
and spending after the elections, will provide added cause for business and consumer N Palm Beach 20.5%
caution. Even if the “fiscal cliff” is averted and other crises such as turbulence in the Brickell 20.6%
Eurozone or violence in the Middle East are contained, most economists call for growth Sunrise/Plantation 21.4%
in the 2.0% to 2.5% range. Conditions in South Florida’s office market are not likely Broward County 21.6%
to change much in the next several quarters. Tenants willing to sign long-term lease South Florida 22.0%
commitments should still be able to command quite favorable terms. Downtown Frt Ldrdle 22.5%
North Broward 22.6%
Palm Beach 22.7%
ABOUT OUR FIRM Cypress Cr/Ft Ldrdle 25.2%
Palm Beach County 26.8%
is the only global tenant advisory firm with a pure tenant representative delivery platform.
Boca Raton 28.8%
Founded in 1954, Studley pioneered this conflict-free business model. Today, with 22 offices nationwide
Downtown Miami 29.7%
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Boynton/Delray 45.7%
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agencies and institutions of higher education. Information about Studley is available at www.studley.com. (%) 0% 10% 20% 30% 40% 50%
OFFICE-USING EMPLOYMENT TRENDS
Millions South Florida Millions National
0.7 10.0% 30 Total Empl.
4.0%
Total Empl. % Ann. Change
% Ann. Change
8.0%
29 2.0%
0.6 6.0%
4.0% 28
0.0%
0.5 2.0%
2009
27
0.0% -2.0%
2009
0.4 -2.0% 26
-4.0%
-4.0% 25
0.3 -6.0%
24 -6.0%
-8.0%
2002
2003
2004
2005
2006
2007
2008
2010
2012
2002
2003
2004
2005
2006
2007
2008
2010
2012
2011
2011
0.2 -10.0% 23 -8.0%
Source: Bureau of Labor Statistics
STUDLEY OFFICE MARKET AND SPACEDATA REPORT

4. MARKET SNAPSHOT: 3Q 2012
SUBMARKET TOTAL LEASING ACTIVITY VACANT AVAILABLE AVAILABILITY RATE ASKING RENTS PER SF
Inventory Last 5 % 5 pp 5 % 5
SF 12 Yr This Change Yr Yrs This Change Yr Yrs This Change Yr Yrs
(1,000’s) Mos Average Qtr from Ago Ago Qtr from Last Ago Ago Qtr from Ago Ago
(1)
Last Qtr Qtr Last Qtr
Miami Lakes/Hialeah 3,539 83 94 598 2.5% 516 266 16.9% 0.4% 14.6% 8.6% $22.49 0.1% $23.68 $23.01
Miami Lakes/Hialeah - Class A 885 15 30 266 0.0% 259 63 30.1% 0.0% 29.3% 13.0% $24.16 -0.5% $25.60 $24.39
West Miami/Airport 12,035 901 757 2,412 -4.7% 2,273 1,194 20.0% -1.0% 20.7% 11.4% $23.62 -0.3% $23.60 $23.49
West Miami/Airport - Class A 5,355 637 482 890 -9.4% 933 438 16.6% -1.7% 18.1% 9.5% $25.76 -0.1% $26.03 $23.92
Downtown Miami 7,988 342 303 2,373 -1.1% 2,171 803 29.7% -0.3% 31.0% 12.7% $32.47 -0.9% $33.11 $30.65
Downtown Miami - Class A 5,027 169 226 1,405 -1.5% 1,445 401 27.9% -0.4% 28.7% 10.4% $35.83 -3.1% $38.18 $35.36
Brickell 6,967 649 456 1,438 -5.0% 1,757 743 20.6% -1.1% 25.2% 12.9% $38.45 1.0% $37.33 $36.43
Brickell - Class A 4,100 415 300 1,106 -2.9% 1,197 268 27.0% -0.8% 29.2% 8.1% $41.30 -0.4% $41.43 $40.04
Coral Gables/Grove 8,557 582 428 1,462 -4.1% 1,524 532 17.1% -0.7% 18.1% 6.9% $32.39 0.3% $30.67 $34.07
Coral Gables/Grove - Class A 4,180 310 254 896 -5.9% 838 321 21.4% -1.3% 20.1% 8.6% $35.52 0.8% $34.20 $36.97
North Broward 4,255 112 163 962 1.4% 938 468 22.6% 0.3% 22.3% 11.0% $22.23 0.2% $22.63 $22.73
North Broward - Class A 928 2 54 343 -6.8% 379 110 37.0% -2.7% 40.8% 12.0% $24.63 -0.3% $25.79 $24.67
Cypress Creek/Fort Lauderdale 8,610 500 408 2,172 -2.1% 1,989 1,143 25.2% -0.5% 23.2% 13.5% $23.01 -0.2% $22.63 $21.26
Cypress Creek/Fort Lauderdale -
2,992 158 136 539 -2.6% 637 310 18.0% -0.5% 21.3% 11.2% $24.91 0.8% $25.63 $25.19
Class A
Sunrise/Plantation 7,288 260 441 1,559 -4.8% 1,338 884 21.4% -1.1% 19.3% 14.3% $24.56 -2.2% $24.62 $26.34
Sunrise/Plantation - Class A 4,579 178 331 1,118 -7.1% 959 607 24.4% -1.9% 21.3% 16.1% $26.93 -1.6% $27.50 $27.65
Downtown Fort Lauderdale 6,090 309 333 1,369 -7.0% 1,411 1,272 22.5% -1.7% 23.4% 21.3% $27.16 -1.5% $27.75 $29.72
Downtown Fort Lauderdale -
4,479 243 274 1,055 -8.8% 1,089 1,092 23.6% -2.3% 24.3% 23.8% $28.09 -1.0% $28.43 $30.11
Class A
Southwest Broward 3,715 161 179 630 -10.4% 537 415 17.0% -2.0% 15.7% 11.8% $28.27 -1.1% $28.03 $28.31
Southwest Broward - Class A 2,329 103 139 482 -11.8% 390 346 20.7% -2.8% 17.3% 15.9% $29.32 -0.7% $29.18 $29.37
North Palm Beach 4,875 180 162 998 2.9% 889 601 20.5% 0.6% 19.0% 13.7% $22.81 -2.8% $22.91 $25.23
North Palm Beach - Class A 1,775 96 72 412 8.9% 405 123 23.2% 1.9% 22.8% 8.4% $24.82 -5.6% $25.70 $29.76
Palm Beach 7,543 402 351 1,709 -2.5% 1,828 1,366 22.7% -0.6% 25.1% 19.3% $27.05 -0.1% $27.29 $32.51
Palm Beach - Class A 3,151 125 164 622 0.9% 645 673 19.8% 0.2% 20.9% 25.8% $32.26 -0.1% $32.42 $36.27
Boynton/Delray 2,047 83 107 934 -1.9% 544 379 45.7% -0.9% 27.9% 22.4% $21.14 -0.8% $21.64 $23.41
Boynton/Delray - Class A 304 7 26 68 1.7% 35 42 22.5% 0.4% 11.4% 19.9% $18.79 -3.6% $20.34 $24.94
Boca Raton 11,784 620 751 3,394 -1.4% 3,064 1,875 28.8% -0.4% 27.4% 17.7% $25.85 -0.1% $26.11 $27.47
Boca Raton - Class A 6,706 328 475 2,135 1.4% 1,935 1,569 31.8% 0.4% 29.2% 24.8% $26.95 0.1% $27.11 $27.42
MIAMI-DADE TOTAL 52,094 2,991 2,419 10,365 -4.3% 10,138 4,433 19.9% -0.9% 20.5% 9.8% $29.83 0.7% $29.78 $29.50
MIAMI-DADE TOTAL - Class A 23,298 1,624 1,424 5,343 -4.3% 5,306 1,901 22.9% -1.0% 23.3% 10.0% $34.27 0.0% $35.05 $32.93
BROWARD COUNTY TOTAL 33,290 1,516 1,674 7,181 -3.5% 6,752 4,393 21.6% -0.8% 20.7% 14.1% $24.62 -1.2% $24.68 $25.74
BROWARD COUNTY TOTAL -
15,786 713 963 3,596 -7.3% 3,515 2,503 22.8% -1.8% 22.5% 17.1% $27.13 -0.9% $27.46 $28.57
Class A
PALM BEACH COUNTY TOTAL 26,249 1,284 1,371 7,035 -1.1% 6,325 3,915 26.8% -0.3% 24.9% 16.5% $24.36 -1.0% $25.13 $29.10
PALM BEACH COUNTY TOTAL -
11,936 556 737 3,237 2.2% 3,020 2,408 27.1% 0.6% 25.6% 22.7% $28.61 -2.3% $29.55 $34.68
Class A
SOUTH FLORIDA TOTAL 111,633 5,791 5,464 24,581 -3.2% 23,215 12,740 22.0% -0.7% 21.6% 12.7% $27.12 0.0% $27.33 $27.91
SOUTH FLORIDA TOTAL -
51,020 2,893 3,123 12,176 -3.6% 11,840 6,812 23.9% -0.9% 23.6% 15.4% $31.18 -0.1% $31.81 $31.11
Class A
SOUTH FLORIDA CONTACTS
200 S. Biscayne Blvd.
Suite 1830
Miami, FL 33131
(305) 423-1919
Corporate Research Contact The information in this report is obtained from sources deemed
Steve Coutts - SVP, National Research reliable, but no representation is made as to the accuracy thereof.
scoutts@studley.com Statistics compiled with the support of The CoStar Group.
Copyright © 2012 Studley
(212) 326-8610
(1) Percentage point change for availability rates.
Unless otherwise noted, all rents quoted throughout this report are average asking
gross (full service) rents psf. Statistics are calculated using both direct and sublease
information.
STUDLEY OFFICE MARKET AND SPACEDATA REPORT