2 Q11 Market Beat Office Lv

2Q11

MARKETBEATLas VegasOffice RepORt

expanded MaRket cOVeRage RepORt www.cOMRe.cOM

Cushman & Wakefield Commerce Real Estate Solutions of Clark County3800 Howard Hughes Parkway, Suite 1200, Las Vegas, 89169 (702) 796-7900 www.comre.com©2011, Commerce Real Estate Solutions. Disclaimer: The above information is given with the obligation that all negotiations relating to the purchase, renting, or leasing of the property described above shall be conducted through Commerce Real Estate Solutions. No warranty or representation, express or implied, is made as to the accuracy of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other encumbrances, withdrawal without notice, and to any special listing conditions imposed by the seller. Prospective buyers should conduct their own due diligence.

National and State Employment and Unemployment OverviewNevada is showing signs of a stabilizing market. Tourism has increased, visitor volume is up, conventions are up and we now have former Mayor Oscar Goodman working part time with the Convention Authority to promote Las Vegas. Things are looking up for the Las Vegas Market. We should not see any more major jumps in the labor market like we have seen in the past few years. We may however, still see a wave effect of job growth quarter by quarter, for the next few years. The market may see job growth one quarter and then losses the next quarter, but no big jumps. The Department of Employment, Training and Rehabilitation (DETR) reported that “Through the first five months of 2011, job levels in Nevada are essentially unchanged from the same period in 2010, down by just 0.1 percent. To put that in perspective, at the height of the recession in Nevada, in 2009, job losses came in at 9.1 percent. These results are certainly consistent with the “stable” theme evident in many of our recent assessments of Nevada’s labor market.” The construction industry lost 1,500 jobs at the end of 2010; however throughout 2011 it has recovered 1,400 jobs. Due to the re-opening of a casino in Reno, the leisure and hospitality industry added 900 jobs. The professional and business sector saw another job loss of 1,100 jobs, adding to 2,100 jobs lost in 2011. The Center for Business and Economic Research (CBER) at UNLV reported that they “expect little change in future job growth through the first half of 2011.”

The national unemployment rate is currently 9.1 percent, a rise from 8.8 percent we witnessed last quarter. This unemployment rate is equal to roughly 13.9 million unemployed workers that are now drawing unemployment insurance benefits. In May,

Stats on the Go Average Lease Rates Average Sale Prices

Change since:

Current 1Q11 2Q10

Office Vacancy 23.28%

Lease Rates $1.95 (FSG)

Net Absorption* 335,700

New Supply 204,500

AT A GLANCE

Overall vacancy rates decreased slightly • from 23.46 percent in the first quarter to the current rate of 23.28 percent.

Developers have halted any new de-• velopment based on the current funda-mentals of limited to no financing, high vacancy and reduced tenant demand at lower effective rates.

Average asking rental rates in the Las • Vegas office market are at $1.95 per square foot per month (psf/mo) full service gross (FSG). This is a decrease from last quarter rental rates of $2.00 psf/mo (FSG).

The economic outlook is starting to • show signs of stabilization, as net ab-sorption is in the positive for the first time since 2008.

Tourism has increased, visitor volume is • up, conventions are up and we now have former Mayor Oscar Goodman working part time with the Convention Authority to promote Las Vegas.

*The arrows are trend indicators over the specified time period and do not represent a positive or negative value. (e.g., absorption could be negative, but still represent a positive trend over a specified period.)

User Investment

050,000

100,000150,000200,000250,000

300,000350,000400,000450,000500,000

2Q10 3Q10 4Q10 1Q11 2Q11

msf

$0.00

$7.00

$14.00

$21.00

$28.00

$35.00

psf/y

r

5.0%7.0%9.0%11.0%13.0%15.0%17.0%19.0%21.0%23.0%25.0%

Rent Vacancy

2008 2009 2010 2011F 2012F

MARKETBEAT Las VegasOffice RepORt

2Q11


22 states recorded unemployment rate increases, however 27 states posted jobless rates significantly lower than the national rate. The highest regional jobless rates were again in the Western part of the country, while the Northeast recorded the lowest rates. Nevada continues to show the highest unemployment rates in the nation and has been in the double-digits for the past 28 months. The last time we were in the double-digits for this length of time was in 1980 and that only lasted for 15 months straight. The states with the next highest rates were California at 11.7 percent and Rhode Island at 10.9 percent unemployment rates. North Dakota reported the lowest jobless rate, 3.2 percent, followed by South Dakota and Nebraska, 4.8 and 4.1 percent, respectively. Nevada also held the record this quarter as the state with the largest over-the-month unemployment rate decrease, which shows a good sign of stabilization.

Las Vegas Market OverviewOffice Market

Vacancies

The office vacancy rate saw a slight decrease during the second quarter to 23.28 percent, in comparison to 23.46 percent in the first quarter. The Central West submarket has replaced the Downtown submarket with the lowest vacancy rate. Currently, the Central West submarket has a vacancy rate of 18.18 percent. Downtown is not far behind with a vacancy rate of 18.71 percent and the Southwest submarket is at 20.93 percent. The high vacancy rates in the Northwest (42.5 percent), Southeast (25.87 percent) and Airport (24.54 percent) submarkets are driven by weak tenant demand and marginal stability, combined with lease concessions, defaults and downsizing. Vacancy rates by class types all have shown decreases during the quarter with Class A decreasing to 33.42 percent from 34.74 percent, Class C showing a decrease in vacancy rates to 22.10 percent from 22.38 percent, and Class B office space showing another increase to 22.09 percent from 21.99 percent. Available sublease space showed another huge gain from fourth quarter at 212,189 sf, first quarter at 329,384 to the current total of sublease space of 421,467 sf (1.01 percent of the

total market). Net absorption, the measure of space leased from one reporting period to the next, for the second quarter, showed a positive increase once again from a -23,097 sf in first quarter to 162,577 sf during second quarter. This is the first time since third quarter 2008, when net absorption was 457,505 sf, that the Las Vegas office market has seen a positive net absorption number. Gross space leased followed suit with positive growth, growing from 907,528 sf during first quarter 2011 to 923,628 sf of gross space leased in the second quarter 2011. The Southwest submarket showed the greatest amount of positive change in absorption with over 181,102 sf for the quarter, while the Airport submarket posted the least amount with -41,116 sf of negative absorption.

Note: Due to reclassifications of, and adjustments to, data between reporting periods, the commercial market data for the latest quarter may not necessarily be comparable to a previously reported quarter.

-1%1%3%5%7%9%

11%13%15%

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

Las Vegas – 12.4%Nevada – 12.1%US – 9.1%Unemployment rates 2Q11

Professional Office: Quarterly Vacancy

12.45

%13

.18%

13.66

%14

.80% 16

.80%

16.98

%17

.30% 19

.83%

20.11

%20

.50%

20.79

% 23.31

%

23.18

%23

.08%

23.46

%

23.28

%

23.05

%

0%

5%

10%

15%

20%

25%

Q2 07

Q3 07

Q4 07

Q1 08

Q208

Q308

Q408

Q109

Q209

Q309

Q409

Q110

Q210

Q310

Q410

Q111

Q211

Professional Office: Quarterly Absorption (SF)

(1,000,000)

(800,000)

(600,000)

(400,000)

(200,000)

-

200,000

400,000

600,000

800,000

1,000,000

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q308

Q408

Q109

Q209

Q309

Q409

Q110

Q210

Q310

Q410

Q111

Q211

Professional Office: Inventory (SF) and Vacancy Rate (%)

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

50,000,000

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q308

Q408

Q109

Q209

Q309

Q409

Q110

Q210

Q310

Q410

Q111

Q211

0%

5%

10%

15%

20%

25%

Quarterly Inventory Overall Vacancy Rates


2Q11


Pricing (Sales and Average Asking Rents)

With the growth of bank owned / foreclosed properties that have come on in the market, we are also starting to see a growth in office building sales. Starting in fourth quarter 2010, there was a total of 676,240 sf of inventory sold. This is the largest amount of sold product since fourth quarter 2007. The start of 2011 is also showing positive sales results. During first quarter 2011, there was a total of 372,088 sf of sold inventory with an average price per building sf of $168.26; and second quarter is showing even better numbers with 506,200 sf of sold inventory with an average price per building sf of $164.40. Compared to first quarter 2010’s 127,269 sf of inventory sold, the current numbers show the improvement. This is a great time for investors or owner users to invest in office properties in the Las Vegas market due to the quality inventory and current asking prices.

With the growth of building sales, lease rates are expected to remain low for many more years to come. By second quarter 2011, the market reported average asking rents of $1.95 sf/FSG, a drop from the first quarter of $2.00 sf/FSG rate. The current asking lease rate is higher however, than the rate we witnessed in second quarter 2010 at $1.89 sf/FSG. Landlords are starting to level off with price adjustments and still with high concessions, lease rates are stabilizing but are still lower than the rates we have seen in the past.

Six out of the nine submarkets showed asking rental rate decreases. The highest decrease was in the Northwest submarket at $1.73 sf/FSG from $2.36 sf/FSG. Two submarkets that saw an increase in asking rental rates were the North submarket to $2.01 sf/FSG from $1.87 sf/FSG and the West submarket to $2.02 sf/FSG from $1.91 sf/FSG.

Average asking rents by class from the Top Tier Class A segment, showing $2.80 sf/FSG to the Lower Tier Class A building rates dropping to $2.50 sf/FSG. Also above the average asking rates in the valley were Top Tier Class B buildings that reported average asking rents of $2.16 sf/FSG. Pricing for properties that are below the market average are in the Lower Tier Class B buildings at $1.82 sf/FSG and Class C properties at average rates from $1.56 sf/FSG (Top Tier C) to $1.48 sf/FSG (Lower Tier C). Please Note: the average asking rates do not take into consideration free rent and rental concessions. Actual lease rates are found to be 10-30 percent lower than the published asking lease rates.

Professional Office: Office Employment vs Vacancy Rate (%)

23.08%

20.79%

17.30%

13.22%10.88%

23.28%

200,000

225,000

250,000

275,000

300,000

325,000

350,000

Q4 06

Q4 07

Q408

Q409

Q410

Q211

0%

5%

10%

15%

20%

25%

Professional Office Submarket - Direct vs Sublease Vacancy

40.38%

18.71%

23.92%

18.18%21.32% 20.93%

24.54%25.87%

21.56%23.28%

0.00% 0.45% 1.28% 1.25% 1.75% 0.99% 0.90% 0.69% 0.00% 1.01%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

Vacacny % 40.38% 18.71% 23.92% 18.18% 21.32% 20.93% 24.54% 25.87% 21.56% 23.28%

Sublease % 0.00% 0.45% 1.28% 1.25% 1.75% 0.99% 0.90% 0.69% 0.00% 1.01%

Northwest Downtown Central East Central West West Southwest Airport Southeast North Las Vegas Area Total

Professional Office: Building Class

Class A

Class B

Class C

Sublease SF 474,99348,832051,38

Vacancy 285,487,4323,294,3539,744,1

Existing SF 4,331,526 15,808,103 21,640,196

Class A Class B Class C

Office Owner User Sales: User Sales (SF) and Average Price Per Bldg (SF) ($)

-

50,000

100,000

150,000

200,000

250,000

300,000

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Q3 07

Q4 07

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Q111

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$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

$300.00

Owner user sales sf Average Price Per Bldg sf

Office Investment Sales: Investment (SF) and Average Price Per Bldg (SF) ($)

-

100,000

200,000

300,000

400,000

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$0.00

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$450.00

Investment sales sf Average Price Per Bldg sf


2Q11


Full Service Gross (FSG): A lease requiring the owner to pay • all operating expenses, such as cleaning, maintenance and repairs, utilities, insurance and ad valorem taxes.

Medical Office MarketSimilar to general office complexes around Las Vegas, for medical offices, the past years have been filled with challenges from rising construction costs and overbuilding of the medical condos in certain submarkets. A slowdown of an employed workforce in the Las Vegas market has caused medical care to be too expensive for most or not a necessity. This has caused a slowdown in medical professionals needing additional medical office space in the Las Vegas area. This ripple effect of slowdowns has had a significant impact causing vacancies to rise in the medical office product type. Out of 11,348,368 sf of medical office space there is currently 2,151,264 sf of vacant space which equates to an 18.96 percent vacancy rate. In the past, the Southwest submarket had been the hot location to build medical offices, with two major hospitals opening up fairly close to each other. This over-building of medical offices in the southwest area has caused this submarket to have the highest vacancy rate of 26.78 percent for many months. The submarkets with the lowest vacancy rates are the North Las Vegas area with only 3.35 percent vacancy and the Central West with 10.46 percent vacancy.

As vacancy rates have seen a rise in the medical specialty, it has also been hit hard in the retail sector over the past few years. One trend that is to be watched in the coming years is the trend of turning vacant retail space into medical uses. With retail locations offering ideal parking, good visibility and signage, and shopping centers now at a much more affordable rate, it could be an option for medical office users. If this trend of using retail space as medical does catch on, the Las Vegas market may not see any new medical construction for many years.

Professional Office Submarket - Rates

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

FSG Rate $1.73 $2.07 $1.88 $1.65 $2.02 $1.97 $1.92 $2.35 $2.01 $1.95

MG Rate $1.70 $1.33 $1.17 $1.17 $1.43 $1.74 $1.41 $1.80 $1.63 $1.49

NNN Rate $1.24 $1.58 $0.93 $1.07 $1.33 $1.31 $0.97 $1.29 $0.92 $1.18


Medical Office Submarket - Rates

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

FSG Rate $ 1.75 $ 0.00 $ 1.18 $ 1.88 $ 1.43 $ 1.90 $ 1.50 $ 2.36 $ 1.69 $ 1.71

MG Rate $ 1.41 $ 0.00 $ 1.13 $ 1.37 $ 1.44 $ 1.90 $ 1.50 $ 1.33 $ 1.63 $ 1.46

NNN Rate $ 1.36 $ 0.00 $ 1.17 $ 1.39 $ 1.57 $ 1.42 $ 0.99 $ 1.42 $ 0.79 $ 1.26

No rthwes t Do wnto wn Central Eas tCentra l

Wes tWes t So uthwes t Airpo rt So utheas t No rth

Las Vegas Area To ta l

No. of Existing Under Const. Planned Net Space Gross Space New SubBldgs. SF SF SF SF Rate Occupied Leased Supply Lease Low High W Avg.

(FSG)Northwest 77 2,086,597 - - 265,418 12.72% (14,081) 19,770 - 4,631 $0.85 $2.25 $1.75Downtown 2 29,985 - - - 0.00% - - - - Central East 52 1,872,055 - - 399,266 21.33% 19,154 30,044 - 8,668 $0.62 $1.65 $1.18Central West 70 1,776,921 - - 185,909 10.46% (29,550) 1,605 - 5,454 $0.80 $2.00 $1.88West 46 1,532,909 366,684 23.92% (82,392) 2,618 - - $0.70 $2.25 $1.43Southwest 53 1,550,080 - - 415,085 26.78% 10,281 12,737 - 1,769 $0.60 $2.25 $1.90Airport 8 82,043 - 11,308 13.78% 9,239 9,239 - - $0.99 $1.85 $1.50Southeast 93 1,926,111 - - 491,146 25.50% (9,836) 6,985 - 2,200 $0.65 $2.80 $2.36North 14 491,667 - - 16,448 3.35% - - - - $0.50 $1.15 $1.69

Total 415 11,348,368 - - 2,151,264 18.96% (97,185) 82,998 - 22,722 $0.50 $2.80 $1.71

PricingAsking RentVacancy

Inventory Vacancy Demand & Supply

Medical Buildings

Commerce / Cushman & WakefieldLas Vegas Office Market Report Q2 2011


2Q11


OutlookRecovery is starting. The office specialty will still need to be cautious, as the Las Vegas economy as a whole continues to be impacted by high unemployment rates and consumer/company activity, causing vacancies to remain elevated. In a report produced by UNLV’s CBER, it was stated that the local economy will not pick up until we see robust growth in hiring. According to the survey, with only 10 percent of businesses anticipated to hire more workers, the recovery will be very slow for the Las Vegas area. We are optimistic that the bottom is near and compared to last year, vacancy is not rising and lease rates are not falling as fast or as far as we were witnessing. Some early signs of stabilization may come from the growth from the federal government, health care sector, and energy and clean technology companies needing office space. Building sales are expected to continue to grow and there has not been a better time to invest in the Las Vegas market as sales prices remain at low levels. This growth in sales will also continue to put downward pressure to keep lease rates low. While lease rates remain low, Class A and B buildings will be ideal for tenants, due to the affordability of this product type. This will however cause Class C buildings to struggle to gain tenants causing upward pressure on vacancy rates for this product type for a while.

Performance by Product Type & ClassificationWhile broader market trends are clear, providing the basic break-out of the office product types, it is important to understand the performance of detailed key sectors within the commercial office market. At Cushman & Wakefield, Commerce, we know the importance of updating the classification of buildings as the market grows older. We have taken the steps to start with a new classification process. As a team, we have separated and reclassified all office buildings in a “Tier” format. The Tier format

Medical Office Submarket - Rates

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

FSG Rate $ 1.75 $ 0.00 $ 1.18 $ 1.88 $ 1.43 $ 1.90 $ 1.50 $ 2.36 $ 1.69 $ 1.71

MG Rate $ 1.41 $ 0.00 $ 1.13 $ 1.37 $ 1.44 $ 1.90 $ 1.50 $ 1.33 $ 1.63 $ 1.46

NNN Rate $ 1.36 $ 0.00 $ 1.17 $ 1.39 $ 1.57 $ 1.42 $ 0.99 $ 1.42 $ 0.79 $ 1.26

No rthwes t Do wnto wn Central Eas tCentra l

Wes tWes t So uthwes t Airpo rt So utheas t No rth

Las Vegas Area To ta l

Professional Medical Office Submarket - Direct vs Sublease Vacancy

12.72%

0.00%

21.33%

10.46%

23.92%

26.78%

13.78%

25.50%

3.35%

18.96%

0.22% 0.00% 0.46% 0.31% 0.00% 0.11% 0.00% 0.11% 0.00% 0.20%0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

Vacacny % 12.72% 0.00% 21.33% 10.46% 23.92% 26.78% 13.78% 25.50% 3.35% 18.96%

Sublease % 0.22% 0.00% 0.46% 0.31% 0.00% 0.11% 0.00% 0.11% 0.00% 0.20%


Medical Office: Quarterly Vacancy

14.21

%14

.50%

14.11

%16

.90%

16.30

%

14.08

%14

.62%

14.87

%15

.18%

15.61

%15

.66% 17

.33%

17.83

% 18.96

%

11.30

%

10.04

%

14.92

%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Q2 07

Q3 07

Q4 07

Q1 08

Q208

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Q111

Q211

Building sales are expected to continue to grow and there has not been a better time to invest in the Las Vegas market


2Q11


Please Note: the average asking rates do not take into consideration free rent & rental concessions. Actual lease rates are found to be 10%-30% lower than the published asking lease rates.

No. of Existing Under Const. Planned Net Space Gross Space New SubBldgs. SF SF SF SF Rate Occupied Leased Supply Lease Low High W Avg.

Northwest (FSG)Class TTA 1 187,410 - - 187,410 100.00% - - - - Class LTA 1 126,915 - - 108,390 85.40% - - - - $1.75 $1.90 $2.03Class TTB 1 49,532 - - 15,948 32.20% - - - - $1.45 $1.85 $1.69Class LTB 26 826,279 - - 242,012 29.29% 4,391 8,691 - - $0.75 $2.50 $1.69Class TTC 75 1,254,170 - - 433,146 34.54% 4,674 39,415 - - $0.40 $2.25 $1.49Class LTC - - - - - 0.00% - - - -Total 104 2,444,306 - - 986,906 40.38% 9,065 48,106 - - $0.40 $2.50 $1.73

DowntownClass TTA 3 655,254 - - 54,611 8.33% (2,635) - - 6,143 $2.50 $2.95 $2.61Class LTA 1 103,951 - - 12,123 11.66% - - - - $2.50 $2.75 $2.63Class TTB - - - - - 0.00% - - - - Class LTB 12 484,895 - - 153,312 31.62% (12,511) 15,554 - 3,126 $1.35 $2.80 $2.18Class TTC 5 193,602 - - 50,237 25.95% (1,871) - - - $1.20 $1.90 $1.35Class LTC 38 638,701 - - 118,213 18.51% (4,821) 1,350 - - $0.75 $2.25 $1.60Total 59 2,076,403 - - 388,496 18.71% (21,838) 16,904 - 9,269 $0.75 $2.95 $2.07

Central EastClass TTA 5 995,120 - - 207,294 20.83% (17,024) 8,517 - 54,035 $3.05 $3.55 $3.02Class LTA 5 387,590 - - 102,882 26.54% 13,139 13,139 - 8,332 $2.65 $3.00 $2.74Class TTB - - - - - 0.00% - - - - Class LTB 6 529,138 - - 211,766 40.02% 9,896 25,163 - - $0.85 $1.65 $1.24Class TTC 82 2,736,916 - - 695,677 25.42% (13,537) 41,629 - - $0.32 $1.55 $1.17Class LTC 49 1,175,494 - - 175,785 14.95% 6,503 14,892 - 12,287 $0.50 $1.50 $1.22Total 147 5,824,258 - - 1,393,404 23.92% (1,023) 103,340 - 74,654 $0.32 $3.55 $1.88

Central WestClass TTA - - - - - 0.00% - - - - Class LTA 1 157,624 - - 4,310 2.73% 14,000 14,000 - 7,291 $2.75 $2.75 $2.18Class TTB - - - - - 0.00% - - - - Class LTB 62 2,551,369 - - 446,207 17.49% 16,205 71,835 - 66,672 0.75 $1.95 $1.39Class TTC 132 2,816,605 - - 580,695 20.62% (34,100) 38,042 - 4,929 $0.49 $2.00 $1.37Class LTC 52 779,961 - - 115,209 14.77% 22,349 25,318 - - $0.35 $2.00 $1.65Total 247 6,305,559 - - 1,146,421 18.18% 18,454 149,195 - 78,892 $0.35 $2.75 $1.65

WestClass TTA 1 143,633 - - 46,777 32.57% - - - 7,349 $2.50 $2.85 $2.58Class LTA 3 293,255 - - 19,961 6.81% 41,168 41,168 - - $1.95 $2.40 $2.23Class TTB 15 1,124,268 - - 398,055 35.41% (16,555) 37,402 200,000 5,955 $1.00 $2.50 $2.10Class LTB 58 1,639,728 - - 199,884 12.19% 21,745 34,864 - 50,549 $0.75 $2.75 $1.75Class TTC 250 3,371,317 - - 749,103 22.22% (4,847) 25,132 - 55,230 $0.49 $3.00 $2.00Class LTC 10 237,829 - - 38,239 16.08% 15,070 19,533 - - $0.70 $1.35 $1.43Total 337 6,810,030 - - 1,452,019 21.32% 56,581 158,099 200,000 119,083 $0.49 $3.00 $2.02

SouthwestClass TTA - - - - - 0.00% - - - - Class LTA 2 329,251 - - 174,484 52.99% 59,740 59,740 - - $2.45 $3.25 $2.96Class TTB 31 1,580,457 - - 401,340 25.39% 2,905 60,118 - 26,894 $1.35 $2.40 $2.28Class LTB 90 1,688,423 - - 217,077 12.86% 71,762 79,920 - 18,498 $0.70 $2.75 $1.70Class TTC 86 1,147,481 - - 185,647 16.18% 46,695 52,754 - 2,500 $0.70 $2.32 $1.44Class LTC 6 115,851 - - 38,886 33.57% - - - - $0.40 $2.75 $1.48Total 215 4,861,463 - - 1,017,434 20.93% 181,102 252,532 - 47,892 $0.40 $3.25 $1.97

AirportClass TTA - - - - - 0.00% - - - - Class LTA 5 433,464 - - 204,024 47.07% 6,812 6,812 - - $2.25 $2.75 $2.51Class TTB 16 1,108,964 - - 213,715 19.27% (4,868) 1,575 - 21,498 $0.85 $3.33 $1.69Class LTB 36 1,748,912 - - 315,574 18.04% (34,478) 31,153 - 23,679 $0.29 $2.35 $1.99Class TTC 152 1,724,003 - - 497,395 28.85% (8,582) 14,617 - - $0.70 $2.00 $1.47Class LTC - - - - - 0.00% - - - - Total 209 5,015,343 - - 1,230,708 24.54% (41,116) 54,157 - 45,177 $0.29 $3.33 $1.92

SoutheastClass TTA - - - - - 0.00% - - - - Class LTA 4 318,059 - - 187,870 59.07% 13,461 14,745 - - $1.85 $3.05 $2.74Class TTB 25 1,164,864 - - 365,130 31.35% (33,803) - - - $1.69 $2.95 $2.95Class LTB 43 1,377,356 - - 390,976 28.39% (31,279) 55,132 - 21,972 $0.90 $2.95 $2.23Class TTC 311 3,857,311 - - 793,663 20.58% 24,914 69,353 4,500 24,528 $0.45 $2.25 $1.46Class LTC - - - - - 0.00% - - - - Total 383 6,717,590 - - 1,737,639 25.87% (26,707) 139,230 4,500 46,500 $0.45 $3.05 $2.35

NorthClass TTA - - - - - 0.00% - - - - Class LTA - - - - - 0.00% - - - - Class TTB - - - - - 0.00% - - - - Class LTB 4 133,918 - - 59,126 44.15% - - - - $1.00 $2.05 $2.25Class TTC 67 1,325,383 - - 286,734 21.63% (11,941) 2,065 - - $0.50 $2.45 $2.29Class LTC 18 265,572 - - 25,953 9.77% - - - - $0.70 $1.35 $1.50Total 89 1,724,873 - - 371,813 21.56% (11,941) 2,065 - - $0.50 $2.45 $2.01

Las Vegas TotalClass TTA 10 1,981,417 - - 496,092 25.04% (19,659) 8,517 - 67,527 $2.50 $3.55 $2.74Class LTA 22 2,150,109 - - 814,044 37.86% 148,320 149,604 - 15,623 $1.75 $3.25 $2.50Class TTB 88 5,028,085 - - 1,394,188 27.73% (52,321) 99,095 200,000 54,347 $0.85 $3.33 $2.14Class LTB 337 10,980,018 - - 2,235,934 20.36% 45,731 322,312 - 184,496 $0.29 $2.95 $1.82Class TTC 1,160 18,426,788 - - 4,272,297 23.19% 1,405 283,007 4,500 87,187 $0.32 $3.00 $1.56Class LTC 173 3,213,408 - - 512,285 15.94% 39,101 61,093 - 12,287 $0.35 $2.75 $1.48Total 1,790 41,779,825 - - 9,724,840 23.28% 162,577 923,628 204,500 421,467 $0.29 $3.55 $1.95

Vacancy Asking RentInventory Vacancy Demand & Supply Pricing

Commerce / Cushman & WakefieldLas Vegas Office Market Report Q2 2011

Professional Buildings


2Q11


will separate out classes in a Top Tier Class and Lower Tier Class. This will help our clients to better understand, for example, the number of “real” Class A buildings that the Las Vegas area has that would qualify as Class A in other markets such as Los Angeles and New York.

The following is the Cushman & Wakefield, Commerce’s Second Quarter Market report which highlights market conditions by building type and classification.

Note: Due to reclassifications of, and adjustments to, data between reporting periods, the commercial market data for the latest quarter may not necessarily be comparable to a previously reported quarter.

significant 2011 new Lease tRansactiOns

BUiLding tenant sf BUiLding cLass

freeway Office park/southtech

excelsior Media corp 14,524 c

Valley View surgery center

west Las Vegas surgery center LLc

14,912 Medical

tropicana executive center

UnLV 19,095 B

significant 2011 saLe tRansactiOns

BUiLding BUYeR sf pURcHase pRice

8560 s eastern fRB note 85408560 LLc

28,190 $1,600,000

777 n Rainbow Blvd Rainbow Business center LLc

151,662 $14,000,000

significant 2011 cOnstRUctiOn cOMpLetiOns

BUiLding MaJOR tenant sf cOMpLetiOn date

tivoli Village at Queensridge

Merrill Lynch 200,000 4/1/11

Commerce Classification Definitions:Glossary/Major Market DefinitionsTop Tier Class A: Describes the highest quality office space locally available. The architecture of Class A office structures always prioritizes design and visual appeal over cost, and sometimes over practicality - a Class A building can be considered a monument and a testament to the success and power of its tenants. Class A: Generally 100,000 sf or larger (five or more floors), concrete and steel construction, built since 1980, business/support amenities, strong identifiable location/access. Most prestigious buildings compete for premier office users with above average rents for the area. Buildings have high quality standard finishes, state-of-the-art systems, exceptional accessibility, and suggest a definitive market presence.

Lower Tier Class A: Investment – grade property, well located and offering high-quality space. Good design, above-average workmanship and materials. Well maintained and managed,

exceptionally so if an older building, with quality tenants. Building(s) location considered premier with high market perception standards. Typically higher rent with excellent building finishes, multiple building amenities and high efficiencies. Lower Tier Class A will have three or more floors and concrete and steel construction.

Top Tier Class B: Building(s) location considered excellent within medium market perception standards and is renovated. Typically lower rent than Class A with good building finishes, some building amenities, medium efficiencies, and built after 2000 with concrete and steel construction.

Lower Tier Class B: Buildings competing for a wide range of office users with average rents for the area. Building finishes are fair to good for the area and systems are adequate, but the buildings do not compete with Class A at the same price. They are less appealing to tenants than Class A properties, and may be deficient in a number of respects including floor plans, condition and facilities. They lack prestige and must depend chiefly on a lower price to attract tenants and investors. Such buildings offer utilitarian space without special attractions and have ordinary

Las Vegas Professional Office Market Overview 2000-2011 YTD

23.28%

11.59%

15.77%14.42% 14.72%

9.32%

15.28%17.30%

20.79%23.08%

13.61%11.48%

-1,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0008,000,0009,000,000

10,000,00011,000,00012,000,000

15,781,031 17,337,169 18,496,038

20,020,895

22,621,906

21,752,133

25,241,786

30,199,552

48,551,573

43,975,459

42,275,163

41,779,825

$2.00 $1.94 $1.88 $1.87 $1.91 $2.03 $1.86 $1.91 $2.34 $2.10 $2.10 $1.95

$2.27 $2.26 $2.23 $2.16 $2.22 $2.36 $2.27 $2.29 $2.70 $2.33 $2.33 $2.07

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Base

Ave. Lease Rate Sub

Ave. Lease Rate DT

Squa

re F

eet

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Vac

ancy

Built Net Absorption Vacant Inventory Vacancy


2Q11


designs. Lower Tier Class B buildings were built before 2000 with wood frame and tilt wall construction.

Top Tier Class C: A classification used to describe buildings that generally qualify as no-frills, older buildings that offer basic space and command lower rents or sale prices compared to other buildings in the same market. Such buildings typically have below-average maintenance and management, and could have mixed or low tenant prestige, inferior elevators, and/or mechanical/electrical systems. These buildings lack prestige and must depend chiefly on a lower price to attract tenants and investors. They are 15 to 25 years old with wood frame and tilt wall construction and are smaller buildings and garden style designs.

Lower Tier Class C: Older, un-renovated and of any size, in average to fair condition. This is basic space in a no-frills older building with below–average maintenance and management with mixed or low tenant prestige. With inferior elevators and mechanical/ electrical systems, Class C Buildings are typically 15 to 25 years old but are maintaining steady occupancy.

Medical: A building is considered medical if greater than 55 percent of its rentable area is occupied by medical tenants.

Full Service Gross (FSG): A lease requiring the owner to pay all operating expenses, such as cleaning, maintenance and repairs, utilities, insurance and ad valorem taxes.


2Q11


Commerce Real Estate Solutions has been among the top commercial real estate brokerage firms in the Intermountain West for over 30 years.

From our headquarters in Salt Lake City and offices in Provo/Orem, Clearfield, Park City and St. George, Utah, Las Vegas, Nevada and Seattle and Bellevue Washington we offer a full range of brokerage services, valuation and consulting, client representation and property/facility management. Our alliance with Cushman & Wakefield extends our reach worldwide.

Meeting your real estate objectives is our number one goal at Commerce Real Estate Solutions. Whether you’re looking to lease, own, develop or sell commercial properties, we have the team of professionals to get it done for you. Our seasoned agents are recognized both regionally and nationally for their first-rate performance; and because of their success, they tend to stay with our company longer. The average tenure of Commerce agents is one of the longest in the industry.

That means you’re getting an experienced agent when you do business with us. You’re also gaining access to our Information Services Group, which includes our Geographic Information System (GIS), the industry standard-bearer in mapping, Graphic Design and Marketing, and Research.

At Commerce we have a complete understanding of the real estate market. Our comprehensive database allows our agents to feel, track and analyze every movement in the industry and to see opportunities as soon as they arise. Combine this with the global resources of Cushman & Wakefield and you get the most innovative and progressive real estate brokerage in the Intermountain West: Commerce Real Estate Solutions.

Doing business in a brisk and nuanced marketplace is complex and difficult. We can help. Our experience, knowledge, innovative thinking, networking infrastructure and unmatched service make Commerce the clear choice for your commercial real estate needs.

Cushman & WakefieldCushman & Wakefield is the world’s largest privately-held commercial real estate services firm. Founded in 1917, it has 234 offices in 61 countries and more than 13,000 employees. The firm represents a diverse customer base ranging from small businesses to Fortune 500 companies. It offers a complete range of services within five primary disciplines: Transaction Services, including tenant and landlord representation in office, industrial and retail real estate; Capital Markets, including property sales, investment management, investment banking, debt and equity financing; Corporate Occupier & Investor Services, including integrated real estate strategies for large corporations and property owners; Consulting Services, including business and real estate consulting; and Valuation & Advisory, including appraisals, highest and best use analysis, dispute resolution and litigation support, along with specialized expertise in various industry sectors. A recognized leader in global real estate research, the firm publishes a broad array of proprietary reports available on its online Knowledge Center at www.cushmanwakefield.com.

C&W Global Offices

AS OF MARCH 2011

Australia Melbourne Sydney

China BeijingChengduGuangzhou Hong KongShanghaiShenzhen

FijiIndia Bangalore ChennaiGurgaonHyderabadKolkataMumbai – CityMumbai – SuburbsNew DelhiPune

IndonesiaJakarta

JapanTokyo

MalaysiaKuala Lumpur

New ZealandAuckland Wellington

PakistanKarachi

PhilippinesManila

Singapore South KoreaBusanSeoul

TaiwanTaipei

ThailandBangkok

VietnamHanoiHo Chi Minh City

Alberta Calgary Edmonton

British ColumbiaVancouver

NewfoundlandSt. John's

Nova ScotiaHalifax

OntarioLondonNewmarketOttawa Toronto CentralToronto EastToronto West

Quebec Montreal CentralMontreal Suburban

ManitobaWinnipeg

New BrunswickMonctonSaint John

IsraelTel Aviv

LebanonBeirut

Middle East/AfricaSouth AfricaCape TownDurban JohannesburgPretoria

ArgentinaBuenos Aires

Brazil ManausPorto AlegreRio de JaneiroSão Paulo

São Paulo-Barueri

ChileSantiago

Colombia Bogota

Latin America

AustriaVienna

BahrainManama

BelgiumBrussels

BulgariaSofia

Channel IslandsJersey

Czech RepublicPrague

DenmarkCopenhagen

England BirminghamLondon-City London-West EndManchesterThames Valley

FranceParis

GermanyBerlinDusseldorfFrankfurtHamburgMunich

GreeceAthens

HungaryBudapest

Ireland Cork Dublin

Northern IrelandBelfast

NorwayDrammenOsloStavanger

PolandWarsaw

PortugalLisbon

RomaniaBucharestTimisoara

Russia Moscow

Scotland Edinburgh Glasgow

Serbia Belgrade

Slovakia Bratislava

Spain Barcelona Madrid

Sweden Stockholm

SwitzerlandBasel Geneva Zurich

TurkeyIstanbul

Canada

Asia Pacific

Europe

Mexico Ciudad JuarezGuadalajaraMexico CityMonterrey

Peru Lima

VenezuelaCaracas

SyriaDamascus

United Arab EmiratesDubai

Italy Bologna Milan Rome

KazakhstanAlmaty

KosovoPristina

LuxembourgLuxembourg

MacedoniaSkopje

The NetherlandsAmsterdamRotterdam

United StatesAlabamaBirminghamArizonaPhoenixTempeTucson

CaliforniaInland EmpireL.A. L.A. South BayL.A. WestMarin/Sonoma CtyOaklandOrange CountySacramento San Diego - DowntownSan Diego - EastgateSan FranciscoSan JoseWalnut Creek

ColoradoColorado SpringsDenver

ConnecticutHartfordStamford

DelawareWilmington

District of ColumbiaWashington, D.C.

Florida Ft. LauderdaleFt. MyersJacksonvilleMiami OrlandoPalm Beach Gardens Tampa

GeorgiaAtlantaSavannah

Hawaii Honolulu

Illinois Chicago Chicago Suburban

IndianaBloomingtonIndianapolis

KentuckyLouisville

MainePortland

MarylandBaltimoreBethesda

MassachusettsBoston

MichiganDetroitGrand RapidsHollandKalamazooLansingMuskegon

MinnesotaMinneapolisMinneapolis Suburban

MissouriKansas CitySt. Louis

NevadaLas Vegas

New HampshireManchester

New JerseyEast RutherfordEdisonMorristown

New York AlbanyBinghamtonBuffaloCorning/ElmiraHudson ValleyIslandiaIthacaMelville, LIN.Y. Downtown N.Y. MidtownRochesterSyracuse (2)UticaWatertownWestchester County

North CarolinaCharlotteRaleigh/CaryRaleigh/Durham

OhioCincinnatiClevelandColumbusToledo

OklahomaOklahoma CityTulsa

OregonPortland

PennsylvaniaPhiladelphiaPhiladelphia SuburbanPittsburgh

Puerto RicoSan Juan

South Carolina Charleston Greenville/Spartanburg

Tennessee ChattanoogaKnoxvilleMemphisNashville

Texas AustinDallasEl Paso HoustonSan Antonio

Utah Clearfield/Ogden Park CityProvo/OremSalt Lake CitySt. George

VirginiaFredicksburgLynchburgMcLeanNewport NewsNorfolk/Virginia BeachRichmondRoanoke

WashingtonBellevue Seattle

WisconsinMilwaukee

234 Offices in 61 Countries

Commerce | Full Service Commercial Real Estate Solutions


2Q11


Bob Hawkins

Liz Clare, CCIMKeith W. Bassett

Michael Dunn, CCIM, SIOR Monty Montierth, CCIMScott Kendrick

Gary Moreria

Dana Berggren, LEED AP, CCIM

Neil Sorkin

Carolyn Curtis, CCIM

Las Vegas Office Team


2Q11


The Las Vegas OfficeGIS / Mapping DepartmentThe GIS / Mapping services group provides our agents and clients with the most current information available. Using GIS (Geographic Information Services) allows our clients a unique opportunity to visualize where their property is located. Additional market information includes:

Daily traffic count information•

Local drive times•

Demographic information•

Population growth•

Major tenants in the region and trade areas•

Some clients that have benefited from our mapping / GIS technology are; Wal-Mart, JoAnn’s, Carmax, Toys-R-Us, Discount Tire, Lowe’s Home Improvement, Shoe Carnival, Chase Bank, Staples, PacifiCorp, GSA, Intel, Fidelity Investments, Social Security Administration, Salt Lake City School District and JP Morgan Bank.

Research DepartmentThe Commerce Real Estate Solutions Research team is charged with tracking the Utah, Nevada and Seattle commercial real estate markets and providing current market information. With access to industry databases and prime real estate tools, the research team is well-equipped to support the information needs of the local offices.

The Las Vegas researcher tracks leasing activity for 182 million square feet of office, medical office, industrial and retail properties.

In addition to tracking local properties, the research team prepares quality market reports and research economic and demographic trends. Working in tandem with the other office specialty support groups such as mapping, graphic design and marketing, the Research team strives to provide timely and quality information to enable Commerce professionals to better serve their clients.

Marketing DepartmentThe graphic design department at Commerce Real Estate Solutions employs eight full time graphic designers. Each of our designers has a number of years of experience.

Chris Valentin, the design director, has been with Commerce Real Estate Solutions for over fourteen years, and along with Matt Liapis, who has taught graphic design and mapping at the University of Utah. Our Las Vegas office consists a team of two well trained and professional designers with a combined 12 plus years of experience.

The founding principal behind the design department is “to provide our agents with whatever materials necessary to successfully market their projects”. This resource allows us to vividly show the retail prospect why they need to be located in a certain segment of town. This department uses the latest in Adobe design programs, and is integrated with our mapping and research departments.

Web: www.comre.comCommerce Real Estate Solutions was at the forefront in the use of the World Wide Web by commercial real estate firms and has maintained a web site for over ten years. All of our commercial properties are listed and searchable by use, size, price, and location.

In addition to commercial properties, our Web site has agent profiles, information about Commerce Real Estate Solutions offices throughout the intermountain west, a company history, and links to valuable information including a link to the Cushman and Wakefield Web site. The Web site also has downloadable copies of all our Market Reviews dating back to 1996.