TAMPA BAY,FL

MARKETBEAT SERIES YEAR-END 2006

TAMPA BAY, FL

Research CUSHMAN & WAKEFIELD OF FLORIDA, INC. One Tampa City Center, Suite 3600 Tampa, FL 33602 813-223-6300

TA B L E O F C O N T E N T S 2 Area Map 3 Office Market Overview

Bruce E. Mosler President and CEO

7 Office Submarket Review

Tony Marano CEO, Americas

8 Office Market Highlights

Larry D. Richey Senior Managing Director

9 Office Market Statistics

Maria T. Sicola Executive Managing Director

10 Industrial Market Overview

Rick Siems Senior Associate

14 Industrial Submarket Review 15 Industrial Market Highlights

RESEARCH/MARKETBEAT The award-winning MarketBeat Series profiles real estate conditions in strategic markets throughout the world. Cushman & Wakefield Research offers diverse products and services including real estate forecasts, market and submarket studies, retail research, demographic and economic trend analyses, and peer group studies. For more information on Cushman & Wakefield and our publications and services, refer to our website. http://www.cushmanwakefield.com

16 Industrial Market Statistics 17 Investment Sales Overview 18 Multi-Family Market Overview 20 Multi-Family Market Highlights 21 Land Market Overview 22 Land Market Highlights

AWARD RECIPIENTS 2000, 2001, 2002, 2003, 2005, 2006

AWARD RECIPIENTS 1999, 2001, 2002

23 Retail Market Overview 24 Glossary/Major Market Definitions

Tampa Bay, FL MarketBeat Series $325.00 Report prepared by Cushman & Wakefield, Inc. January 2007 Copyright © 2007 Cushman & Wakefield, Inc. All rights reserved. The data compiled in the Tampa Bay, FL MarketBeat Series is the legal property of Cushman & Wakefield, Inc. Reproduction or dissemination of the information contained herein is strictly prohibited without the expressed written consent of Cushman & Wakefield, Inc.This report contains information, including information available to the public, which has been relied upon by Cushman & Wakefield, Inc. on the assumption that it is accurate and complete without independent verification by Cushman & Wakefield, Inc. Cushman & Wakefield, Inc. accepts no responsibility if this should prove to be inaccurate or incomplete. No warranty or representation, express or implied, is made by Cushman & Wakefield, Inc. as to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions and changes in market conditions.

TA M PA B AY A R E A M A P San Antonio

Bayonet Point Jasmine Estates Port Richey

Saint Leo

75

52

301

Jasmine Estates PASCO

1

New Port Richey

Eva

Land O’ Lakes

Zephyrhills

98

POLK Beacon Square

Tarpon Springs

Providence

589

41

8 11

4 HILLSBOROUGH

75

597

39

Crystal Beach

Kathleen

Palm Harbor

3

586

Dunedin PINELLAS

Oldsmar

10

2 2

14

60

9

Clearwater

7

Highpoint g p

Largo

Alligator Lake

3

8 6

1

92

687

6

275

Pinellas Park

9

4

Tampa p 7 1

301

60

5

Mulberry

Tampa Bay

13

12

Gulfport

Ruskin

St. Pete Beach

674

Wimauma

Sun City 41

205

Fort Green

301

Piney Point Rubonia

62

Parrish

Cortez

Anna Maria Holmes Beach

2 3

INDUSTRIAL SUBMARKETS

8

Mid-Pinellas/Gateway

1

Eastside

Westshore

9

Bayside

2

Northwest

10

Countryside

3

4

I-75 Corridor

11

5

Southwest

12

6

Hyde Park

13

Downtown St. Petersburg

7

Ybor City

14

Downtown Clearwater

2

Duette

Palmetto

OFFICE SUBMARKETS Central Business District

Bartow

37

75 Gibsonton

St. Petersburg

Treasure Island

1

Willow Oak

Brandon

Indian Rocks Beach

Gulf of Mexico

4

92

5

Plant City

580

19

Lakeland

582

Temple Terrace

6

Gateway

Westside

7

West Pinellas/Central

Interbay/South Tampa

8

North Pinellas

North Pinellas

4

Plant City

9

South Pinellas

South St. Petersburg

5

Lakeland

C U S H M A N & WA K E F I E L D M A R K E T B E AT Y E A R - E N D 2 0 0 6

O F F I C E M A R K E T OV E RV I E W The Tampa Bay economy has remained resilient despite being weakened by an economic slowdown which occurred in the first half of the year. Over the past twelve months, the Tampa Bay market can point to two major factors for its sustained economic success – continued strong job creation and a large population influx to supply the labor force. Despite concerns over a tight labor market (Tampa Bay’s unemployment rate is currently 3.3%),Tampa Bay continues to successfully fill the needs of the professional and business services sector, which has posted over a 5% job growth over the past year. Beyond the sheer increase in numbers, the caliber of jobs created recently in the Tampa Bay market has increased beyond “entry level” call center jobs which have characterized this market over the last few years. This job growth continues to have a positive influence on demand for office space, which has remained intense since the beginning of the year.

experienced throughout the market has resulted in a market-wide 1.0 percentage point decrease in overall vacancy from year-end 2005, to a current 11.5%. Further proof of the continued strong tenant demand is readily evident in 2006’s 699,098 square feet (sf) of positive overall absorption, though this total is well below the 2.2 million square feet (msf) of absorption recorded in 2005.

2006 Office Leasing Activity Five Industries 2005Top Leasing Activity by Industry

5.2%

10.7%

8.1%

14.8%

11.4%

Tampa Bay MSA Overall Market Trends Overall Market Trends 7.0

Financial Services

$21.00

Insurance

Business Services

4.2

$19.00

2.8

$18.00

1.4

$17.00

(msf)

$20.00

0.0

4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Available Space

Leasing Activity

(psf/yr)

5.6

$16.00

Rental Rate

The year 2006 has been a true success story for the Tampa Bay office market and the area has re-assured itself as one of Florida’s top business strongholds. Everywhere growth is evident, as the downtown areas are enjoying a commercial and residential rebirth and the suburbs are benefiting from corporate expansions and relocations, proving that the market is finally healthy enough to support the construction of new speculative projects. Stimulated by sustained company expansions and relocations, particularly in the financial services and healthcare/insurance industries,Tampa Bay’s office market fundamentals demonstrated a consistent improvement throughout 2006. This persistent demand

Healthcare

Software/Programming

Leasing activity for the market topped a healthy 3.9 msf in 2006. While this represents a decrease of 18.5% from the total activity recorded last year, this decrease in total leasing is a direct result of the limited vacant space currently on the market. This strong leasing activity, coupled with positive overall absorption, helped foster a new construction cycle, including significant speculative developments. In May of this year, Highwoods Properties began construction on their first 208,606-sf building at Highwoods Bay Center located just south of Interstate 275 in the Westshore submarket. Additionally, Duke Realty Corporation commenced construction in the second quarter on two new buildings in Highland Oaks in the I-75 Corridor. Highland Oaks buildings III and V will total 196,338 sf upon completion in 2007. In all, currently there is 859,154 sf of speculative space under development.While this new product currently underway is expected to help appease the current supply/demand imbalance in 2007, at least four large speculative office projects are projected to begin construction within the next six months. Although this new office product is eagerly anticipated by the real estate community, rental rates in these new buildings are expected to average around $30 per square foot (psf) - $32 psf, which may result in “sticker shock” by prospective tenants.

TA M PA B AY, F L

3

O F F I C E M A R K E T OV E RV I E W $0.19 psf from last year, reaching $19.61 psf at the close of 2006. The Tampa CBD continues to offer some of the most attractive downtown rental rates in all of Florida. Class A direct asking rents average $21.22 psf, and are 21% to 39% lower than the CBD’s of Orlando and Miami.

Tampa CBD Overall Rental vs. Vacancy Rates Rental vs.Vacancy Rates

(psf/yr)

Investment capital continues to flood into the Tampa Bay office market and activity remains red-hot, a trend which has not subsided in over three years. A total of 63 properties, representing over 5.6 msf of investment product with total aggregate sales volume of $863 million, were sold over the course of 2006. Despite a significant decrease (26.1%) in the total square footage sold from last year, the average price per square foot for investment property has swelled from an average of $129.47 psf in 2005 to $153.03 psf in 2006. As quality buildings continue to sell in the Tampa market, investors are finding fewer and fewer opportunities. To offset this setback, many investors who purchased their properties over the past several years, are putting their properties back onto the market in an attempt to obtain the phenomenal prices currently being paid for Tampa Bay office buildings.

C E N T R A L BU S I N E S S D I S T R I C T Tampa’s Central Business District (CBD) contains nearly 6.4 msf of office space. Due to its high visibility and central location, this submarket has long been considered the business center for the Tampa Bay area and is home to a wide range of Fortune 500 companies. The Tampa CBD’s overall vacancy rate ended the year at 15.3%, down a substantial 2.5 percentage points from the fourth quarter of 2005. This decrease in overall vacancy is concurrent with the 30.1% increase in leasing activity recorded over the past year, though there has been a slight slowdown in activity during the past few months. Despite the recent reduction in activity, the market still posted 56,190 sf of positive overall absorption during the year. Low absorption figures and double-digit vacancy rates may lead to the conclusion that it was a slow year in Tampa’s CBD. Quite the opposite is true. Activity included the sale of three major office buildings, including the 735,030-sf Tampa City Center and the 572,132-sf Park Tower. Furthermore, a number of large office leases were closed in 2006, including Morgan & Morgan’s 32,000-sf lease in Tampa City Center and Colonial Bank’s lease of 28,950 sf in Park Tower. As vacancies in the CBD persistently declined and tenant demand continued to be strong, the submarket-wide direct average asking rental rate increased over the past year, though not as substantially as in the suburban submarkets. The average asking rent jumped

4

$20.00

18.0%

$19.50

17.0%

$19.00

16.0%

$18.50

15.0%

$18.00

14.0%

$17.50

2004 Rental Rate

2005

2006

2007

2008

13.0%

Vacancy Rate

In addition to the office activity, there are several residential, mixeduse, and civic projects underway to transform the CBD into a unique 24-hour live, work, and play environment. Leading the way are numerous new residential developments, the ongoing Riverwalk project and the new Tampa Art Museum. More than 25 residential projects, including towering condominiums and warehouse-loft conversions are either proposed or already under construction in the Tampa CBD. Once complete, these projects are expected to deliver 6,000 residential units and an estimated 11,500 residents to the Downtown area. This recent round of development activity has begun to revitalize interest in traditional downtown office space and when completed, should vault the Tampa CBD back into one of the most sought after office submarkets in Florida.

S U BU R B A N O F F I C E The Tampa suburban submarkets account for nearly 22.2 msf or 77.7% of the total office inventory in Hillsborough County. The primary submarkets are Westshore, Florida’s largest suburban office submarket with more than 11.2 msf of office space and the Interstate 75 (I-75) Corridor which is located in the Eastern

C U S H M A N & WA K E F I E L D M A R K E T B E AT Y E A R - E N D 2 0 0 6

O F F I C E M A R K E T OV E RV I E W portion of Hillsborough County and currently has a total of 5.8 msf of inventory. The Northwest, Southwest, Hyde Park and Ybor City submarkets contain the balance of the County’s office inventory with a combined total of almost 5.2 msf of space.

severely diminishing supply of available space. Though down 26.0% over 2005, a very healthy 2.3 msf was leased in 2006. Additionally, overall absorption at year-end in the non-CBD submarkets ended the year in positive figures, posting a respectable 444,665 sf, with the Westshore accounting for over 65.7% of the total.

Overall Rental vs. Vacancy Rates

$22.00

21.0%

$21.00

18.0%

$20.00

15.0%

$19.00

12.0%

$18.00

9.0%

$17.00

2004 Rental Rate

2005

2006

2007

2008

6.0%

Vacancy Rate

Overall vacancy in the suburban submarkets has consistently dropped since the record high of 24.3% which was recorded in 2002. At the close of the 2006 overall vacancy registered an extremely healthy 9.1%, down 1.3 percentage points from year-end 2005. This drop in vacancy has occurred as inventory increased by nearly 150,000 sf since this time last year, reflecting the dynamic demand for space within these submarkets. Several large transactions occurred over the past twelve months which took significant blocks of existing vacant space off the market. Of these transactions, the most significant include: the Department of Defense’s lease of 60,000 sf in the former MacDill Credit Union Building, The Talbot’s, Inc.’s lease of the 51,736 sf in One MetroCenter and BPB America’s lease of 35,000 sf at Colonial Place I. In addition to the large leases which took place in existing buildings, the year’s two largest leases occurred in build-to-suit projects. LifeLink Foundation signed a 125,000-sf lease in the buildto-suit USF Research Park Building II. Additionally, Metropolitan Life Insurance Company is expanding their presence in the I-75 Corridor, signing a 115,230-sf lease in the currently under construction, build-to-suit Highwoods Preserve VII. The Tampa suburban submarkets dominated office activity in 2006, following the trend which developed over the last decade. The suburban markets have shown impressive leasing activity, despite a

The diminishing supply of available office space in the suburban submarkets continues to drive asking rental rates upward. The average suburban asking rent jumped $1.56 psf from year-end 2005, reaching $21.05 psf at the close of 2006. As a direct result of the decreasing supply of class A space in the suburban submarkets, which currently has an overall vacancy rate of 5.3%, class A product experienced the greatest escalation in rents, increasing an astounding $2.63 psf from this time last year to a current $24.87 psf. Instances of rents escalating $2.00 psf - $3.00 psf were not uncommon over the past twelve months, particularly in class A space. This trend was most evident in the extremely tight Westshore submarket. Although the suburban markets have experienced a significant spike in rental rates over the past year, we expect even greater increases in asking rental rates over the next 12 to 18 months (10% to 20%), primarily due to the lack of available space in the market. Additionally, escalating building insurance costs in the Florida markets (200% to 400%) will cause additional increases in rental rates.

Tampa Bay MSA Overall Rental vs. Vacancy Rates Overall Rental vs.Vacancy Rates

(psf/yr)

(psf/yr)

Tampa Non-CBD Rental vs.Vacancy Rates

$23.00

21.0%

$21.00

19.0%

$19.00

17.0%

$17.00

15.0%

$15.00

13.0%

$13.00

4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Class A Rent

Class B Rent

11.0%

Vacancy Rate

Following a year where only 237,000 sf were delivered, construction activity increased considerably over the past year, with a total of 858,171 sf under development. Currently 562,941-sf of speculative projects are presently underway, which include the 208,606-sf

TA M PA B AY, F L

5

O F F I C E M A R K E T OV E RV I E W Highwoods Bay Center I in Westshore, and Highland Oaks Buildings III and V in the I-75 Corridor, totaling 196,338 sf.While pre-leasing activity in these projects stands at 34.3%, the strong interest that they have generated has prompted a number of developers to accelerate plans for their next construction project. Over 3.4 msf of new office space is on the drawing board over the next three years, which will help appease the incredible tenant demand in the suburban markets.

Health Systems leased 47,000 sf in Colonial Center Bayside office complex, Presidion Solutions/CHS’s lease of 25,447 sf also in the Colonial Center Bayside office complex, and the Suncoast Roofer’s Supplies’ lease of 23,195 sf in the Triad Commons office park. Overall Rental vs. Vacancy Rates

Pinellas Non-CBD Overall Rental vs.Vacancy Rates

$21.00

16.5%

$20.00

15.0%

$19.00

13.5%

$18.00

12.0%

$17.00

10.5%

(psf/yr)

PINELLAS OFFICE Pinellas County is one of the Southeast’s most industrialized counties, providing a diversified range of economic benefits to the community while focusing on both office and clean light industry. In Florida’s recently established high-tech corridor, among the 13 counties that make up Florida’s high-tech growth corridor, Pinellas leads the way with nearly one-fifth - 17.7% - of the 1,651 high-tech companies in the corridor. This concentration of high-tech industry, coupled with the County’s 12.4 msf of office space, has resulted in substantial business expansion and increased tenant demand throughout 2006.

ON THE HORIZON

The Pinellas office market’s overall vacancy rate ended the year at 13.8% percent, while class A had a 13.2% vacancy. With only 239,393 sf of new speculative office construction scheduled to deliver in 2007, projected demand pressure should cause overall vacancy to drop slowly over the next twelve months and reach a projected 10.7% by the final quarter of 2007. Concurrently, due to the decreasing amount of available space in the market, the direct average asking rental rate for space is also expected to continue to spike upward over the next year, as it has in 2006, where the average asking rent increased $1.73 psf to a current $19.51 psf.

Heading into 2007, the Tampa Bay office market will continue to experience improved market fundamentals, though at a slower pace than 2006. Although tenant demand continues to remain strong, the lackluster office activity in fourth quarter 2006 might be an early indication that there could be a slowdown in the market in 2007. Despite this indication of a possible slowdown, Cushman & Wakefield expects vacancy to continue to fall, asking rental rates to continue to spike upward, a significant increase in construction levels and office investment activity should remain on par or surpass the levels recorded in 2006.

$16.00

Rental Rate

Leasing activity and absorption levels in the Pinellas market have historically been significantly lower than in Hillsborough County to the east, though tenant demand remains torrid within the market. Despite this demand, limited space options in the market, particularly in class A space, have resulted in a negative slide in leasing activity. The decreased volume of new and expansion lease transactions has caused the 2006 leasing activity total to decrease 20.0% from last year, culminating in only slightly over 1.0 msf of activity, though overall absorption remained positive at 198,243 sf. Despite the decrease in leasing activity, a few significant lease transactions were executed over the past twelve months. BayCare

6

2004

C U S H M A N & WA K E F I E L D M A R K E T B E AT Y E A R - E N D 2 0 0 6

2005

2006

2007

2008

9.0%

Vacancy Rate

OFFICE SUBMARKET REVIEW C E N T R A L BU S I N E S S D I S T R I C T Overall Rental vs. Vacancy Rates

• Concurrent with the decrease in vacancy, quarterly leasing activity continued to demonstrate a strengthening market, consequentially ending the year with a total of 611,783 sf of new and expansion activity, up 30.1% over the same period in 2005.

(psf/yr)

• Although still relatively high, the CBD’s overall vacancy rate registered 15.3% at the close of 2006, a substantial 2.5 percentage point decrease from year-end 2005.

• The most promising trend affecting the Tampa CBD is the residential development currently under construction or planned within the core of downtown Tampa. More than 20 residential projects are either proposed or already under construction.

$22.00

20.0%

$21.00

19.0%

$20.00

18.0%

$19.00

17.0%

$18.00

16.0%

$17.00

15.0%

4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Class A Rent

Class B Rent

Vacancy Rate

WESTSHORE Overall Rental vs. Vacancy Rates

• A significant increase in leasing activity in the Westshore submarket over the past twelve months is the primary cause of this decrease in vacancy and has facilitated 292,241 sf of overall absorption during 2006.

(psf/yr)

• At the close of 2006, overall vacancy in Westshore registered 6.6%, a substantial decrease of 3.3 percentage points from year-end 2005. The most significant change occurred in class B space which currently has an overall vacancy rate of 7.9% compared to 14.3% at the close of 2005.

• As vacancies in Westshore persistently declined and tenant demand continued strong, the submarket-wide direct average asking rental rate increased significantly in 2006. The average asking rent jumped $2.09 psf from this time last year, reaching an average of $22.86 psf at yearend 2006.

$28.00

14.0%

$26.00

12.0%

$24.00

10.0%

$22.00

8.0%

$20.00

6.0%

$18.00

4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Class A Rent

Class B Rent

4.0%

Vacancy Rate

M I D - P I N E L L A S / G AT E WAY Overall Rental vs. Vacancy Rates

• A shortage of larger existing vacancies within the Gateway submarket led to a significant decrease in leasing activity completed in 2006. Total leasing for the year registered 342,745 sf, a decrease of nearly 46.5% from the levels recorded in 2005. • The decrease in available space has had a positive effect on the Gateway’s asking rental rates. Submarket-wide, the direct average asking rent has increased $0.60 psf from this same time last year, to a current average of $18.24 psf.

(psf/yr)

• The overall vacancy rate in the Gateway submarket ended the fourth quarter of 2006 at 15.9%, down four-tenths of a percentage point from this same time last year. Demand is anticipated to remain strong through the first half of 2007, causing market fundamentals in this submarket to tighten further.

$21.00

25.0%

$19.00

22.0%

$17.00

19.0%

$15.00

16.0%

$13.00

13.0%

$11.00

4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Class A Rent

Class B Rent

10.0%

Vacancy Rate

TA M PA B AY, F L

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OFFICE MARKET HIGHLIGHTS SIGNIFICANT 2006 NEW LEASE TRANSACTIONS Building USF Research Park Bld. II Highwoods Preserve VII 6701 South Dale Mabry Hwy. One MetroCenter Colonial Center Bayside II & III Colonial Place II President’s Plaza II Centerpointe netpark@tampabay One MetroCenter

Submarket I-75 Corridor I-75 Corridor Southwest Westshore Bayside Westshore Westshore Westshore I-75 Corridor Westshore

Tenant Square Feet Lifelink Foundation 125,000 Metropolitan Life Insurance 115,230 Department of Defense 60,000 The Talbots, Inc. 51,736 BayCare Health Systems, Inc. 47,000 BPB America 35,000 Zurich American Insurance Company 35,000 Westfield Homes 34,580 Humana Medical Plans 34,016 IndyMac Bank 33,695

Building Class A A B A A A B B B A

SIGNIFICANT 2006 SALE TRANSACTIONS Building One Tampa City Center Park Tower Renaissance Park (5 Bld.) 740, 780, 800 Carrilon Fifth Third Center Regency Corp. Park (3 Bld.) Bay Vista (3 Bld.) Lakeview Center Bridgeport Center

Submarket Tampa CBD Tampa CBD Northwest Mid-Pinellas/Gateway Tampa CBD I-75 Corridor Mid-Pinellas/Gateway I-75 Corridor Westshore

Buyer MainStreet Capital Partners, LLC Sterling American Property, Inc. Liberty Property Trust TA Associates Terrace Tower Tampa, LLC Moorings Development Leder Group, LLC Cypress Creek Capital AEW Capital Management, LP

Square Feet 735,030 572,132 529,618 319,957 278,005 202,076 192,675 187,500 166,545

Purchase Price $87,800,000 $50,000,000 $103,600,000 $38,290,100 $52,000,000 $39,000,000 $21,950,000 $40,600,000 $24,200,000

Square Feet 244,991 85,656 45,459 36,000

Completion Date 12/06 7/06 10/06 12/06

Square Feet 208,606 125,000 125,000 115,230

Completion Date 7/07 11/07 4/07 7/07

Building Class B B A C

Possession Date Immediate Immediate Immediate Immediate

SIGNIFICANT 2006 CONSTRUCTION COMPLETIONS Building Progress Energy Building Regency Corporate Center III Flagship Community Bank Bld. Pinebrooke Bus. Center Bld. A

Submarket St. Petersburg Downtown I-75 Corridor Countryside I-75 Corridor

Major Tenant Progress Energy Coca-Cola Corporation Flagship Community Bank N/A

SIGNIFICANT PROJECTS UNDER CONSTRUCTION Building Highwoods Bay Center I Echelon Pointe USF Research Park Bld. II Highwoods Preserve VII

Submarket Westshore Mid-Pinellas/Gateway I-75 Corridor I-75 Corridor

Major Tenant N/A N/A Lifelink Foundation Metropolitan Life Insurance

SIGNIFICANT LEASE AVAILABILITIES Building 375 Patricia Avenue netpark@tampabay Gateway Technology Center The Franklin Exchange

8

Submarket North Pinellas I-75 Corridor Mid-Pinellas/Gateway Tampa CBD

Direct/ Sublease Direct Direct Direct Direct

C U S H M A N & WA K E F I E L D M A R K E T B E AT Y E A R - E N D 2 0 0 6

Available Square Feet 200,348 114,613 124,983 110,048

O F F I C E M A R K E T S TAT I S T I C S

Inventory

No. of Bldgs.

Overall Vacancy Rate

Direct Vacancy Rate

Tampa CBD

6,368,284

30

15.3%

14.9%

611,783

56,820

0

56,190

$21.22

CBD Total

6,368,284

30

15.3%

14.9%

611,783

56,820

0

56,190

$21.22

Westshore

11,220,082

115

6.6%

5.4%

1,272,504

292,606

0

292,241

$27.53

Northwest

4,268,655

88

8.9%

8.5%

300,555

0

0

156,080

$18.99

I-75 Corridor

5,792,215

28

14.5%

13.5%

626,445

510,565

121,656

(91,000)

$22.93

Southwest

332,300

35

2.5%

2.5%

75,299

0

0

72,505

N/A

Hyde Park

308,673

9

8.2%

8.2%

6,860

0

27,400

20,560

N/A

Ybor City

261,427

8

7.5%

7.5%

4,109

55,000

0

(5,721)

N/A

Non-CBD Total

22,183,352

283

9.1%

8.1%

2,285,772

858,171

149,056

444,665

$24.87

Tampa Total

28,551,636

313

10.5%

9.6%

2,890,017

914,991

149,056

500,855

$22.97

2,609,881

28

5.8%

5.2%

141,405

47,000

244,991

261,783

$25.93

686,591

12

22.4%

22.4%

59,058

0

0

(16,898)

$18.31

Mid-Pinellas/Gateway

3,961,401

70

15.9%

13.3%

342,745

171,390

0

(25,869)

$20.29

Bayside

1,711,752

22

16.1%

16.0%

258,940

0

0

(47,948)

$23.11

Countryside

1,236,820

24

11.2%

10.8%

147,066

21,003

70,459

27,557

$22.18

North Pinellas

1,608,857

21

18.9%

18.7%

35,010

0

0

(2,312)

$21.39

612,830

14

9.9%

9.9%

39,806

0

0

1,930

N/A

Pinellas Total

12,428,132

191

13.8%

12.8%

1,024,030

239,393

315,450

198,243

$21.56

TAMPA MSA TOTAL

40,979,768

504

11.5%

10.6%

3,921,585

1,154,384

464,506

699,098

$22.40

Market/Submarket

Downtown S. Petersburg Downtown Clearwater

South St. Petersburg

YTD YTD Leasing Under Construction Activity Construction Completions

YTD Direct Weighted Overall Avg. Class A Absorption Rental Rate*

* Rental rates reflect $psf/year

TA M PA B AY, F L

9

I N D U S T R I A L M A R K E T OV E RV I E W

$10.00

10.0

$8.00

9.0

$6.00

8.0

$4.00

7.0

$2.00

6.0

(msf)

(psf/yr)

Direct Rental Rates Available Space Tampa Bayvs.MSA Direct Rental Rates vs. Available Space

$0.00

4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 MF Rent

W/D Rent

OS Rent

5.0

Available Space

The overall vacancy rate in the Tampa Bay market ended the year at 4.2%, down four tenths of a percentage point from year-end 2005. The largest decrease in vacancy occurred in the office service sector, declining eight tenths of a percentage point over last year to 12.2%.The warehouse/distribution sector, which encompasses over 57.4% of the industrial space market-wide, also experienced a notable decrease, down to a current 4.1%. Along with the drop in vacancy, overall absorption levels posted an extremely strong 3.6 msf, though slightly off the phenomenal 4.1 msf of overall absorption recorded in 2005.

second half. Supported by the amplified demand of building materials and companies either moving to or expanding in the Bay area, the overall strength of the industrial market has consistently increased. Leasing activity continued strong in 2006 recording a healthy 6.3 msf, an increase of 10.2% from the activity of a year ago. Hillsborough County (Tampa) accounted for the majority (60.4%) of the leasing activity during the year, though both the Pinellas and Lakeland markets recorded impressive leasing totals with 1.5 msf and 1.0 msf, respectively. Concurrent with the increase in total leasing activity, there was a 10.3% increase in lease size, with the average transaction totaling 12,075 sf in 2006, compared to the average transaction of 10,829 sf in 2005. In response to this demand, rental rates increased progressively throughout the year, with a spike in the second half of the year as a result of the increase in activity and the limited availabilities remaining in the market. The Tampa MSA’s average direct net asking rental rate increased for the twelfth straight quarter, and is now $6.61 psf, an increase of $0.85 psf from the year-end 2005 average. Because land prices, impact fees, and construction costs continue to rise and the supply of available space decreases, particularly in the 25,000 sf75,000 sf range, we anticipate significant upward pressure on rental rates over the next 10 to 15 months. As rental rates increase, costs stabilize or recede and demand continues to strengthen, more risk adverse developers will announce new projects. A possible hurdle to overcome is increasing construction costs. At current levels, new speculative development is most easily justified at net rental rates ranging from $5.75 psf to $7.75 psf. At the close of 2006, there was over 1.3 msf of speculative space under construction and this figure is expected to significantly increase over the next year. Tampa Bay MSA Rental Rate RentalComparison Rate Comparison $13.00 $11.00 $9.00 (psf/yr)

The Tampa Bay industrial market in 2006 proved successful in maintaining the momentum experienced over 2005.With an industrial market that totals nearly 148.4 msf of distribution, service center and manufacturing space, the area offers a mixture of industrial product to meet the needs of any industry. The Tampa Bay MSA consists of three major markets. Hillsborough County (Tampa) accounts for approximately 74.8 msf, Pinellas County contains nearly 49.5 msf and Lakeland has 24.1 msf. The downturn in the residential construction market and the recent downward slide in the manufacturing industry have yet to have a negative affect on market indices throughout the market. Market-wide, all indications point to a continued positive outlook for 2007, with strong leasing activity and considerable increases in new construction.

Tenant demand encountered last year has carried over to 2006, though a slight slowdown in activity characterized the first half of the year, followed by an incredible spike in total activity in the

$7.00 $5.00 $3.00

High Technology 2005

10

C U S H M A N & WA K E F I E L D M A R K E T B E AT Y E A R - E N D 2 0 0 6

2006

Manufacturing

Warehouse/ Distribution

Office Service

I N D U S T R I A L M A R K E T OV E RV I E W After turning in the strongest year ever recorded in total industrial sales volume, 2006 results reveal that quality investment and enduser sale opportunities have become limited. Sales activity slowed significantly over the last twelve months, down 39.1% from 2005, though still posting a healthy 7.0 msf of space changing hands. In all, a total of 184 industrial buildings traded over the course of 2006, with a total aggregate sales volume of over $450 million. Interest in purchasing industrial product will continue strong in 2007, with the active buyers consisting of real estate investment trusts (REITs), pension funds, fund advisors and private equity groups, particularly those with institutional partners.

Hillsborough County Direct Rental vs. Available Space Hillsborough CountyRates Direct Rental Rates vs. Available Space

$8.00

5.0

$6.00

4.0

$4.00

3.0

$2.00

2.0

(psf/yr)

6.0

$0.00

(msf)

$10.00

4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 MF Rent

W/D Rent

OS Rent

the close of 2006, slightly less than 2.1 msf, or just 4.3%, of vacant space is available within the submarket. With the increase in activity from tenants currently interested in leasing space in the Eastside submarket, the past twelve months experienced a significant increase in the level of leasing activity completed. Leasing activity in the Eastside totaled slightly under 3.0 msf, an increase of over 13.1% from the total recorded a year ago. Leasing activity continues to be strongest in warehouse/ distribution product, which accounted for 81.7% of the year’s total activity. Significant leases which contributed to the increase in activity in 2006 include: Parksite’s 210,000-sf lease in the first warehouse/distribution building in Madison Industrial Park and Global Warehousing and Distribution, Inc.’s 133,140-sf lease in the Tech Corridor Distribution Center. The Eastside’s direct weighted net asking rent averaged $6.95 psf at the close of 2006, a $1.34 psf increase from the average recorded one year ago. While asking rents increased in all property types, instances of rents escalating $0.75 psf - $1.50 psf were not uncommon in the Eastside over the past twelve months. Warehouse/ distribution asking rents exhibited the most dramatic increase over the past year, rising $1.82 psf to a $5.60 psf average at year-end.

1.0

Available Space

EASTSIDE Tampa’s Eastside industrial market is located along the I-75 and I-4 Corridors, in the eastern portion of Hillsborough County. The Eastside is comprised of 1,085 buildings, containing over 48.2 msf of industrial product and is considered the Bay area's primary market for logistics and distribution tenants. The tight Eastside submarket closed 2006 with a sharp spike in leasing activity and decreased overall vacancy. Although some new product appears to be on the horizon, it remains to be seen if this will allow for more space options within the submarket or whether these too will be snatched up as quickly as existing vacancies. A relative lack of new industrial product and existing vacancies has created extremely constricted market fundamentals over the past few years, with 2006 resulting in the tightest fundamentals yet. At

WESTSIDE The Westside market encompasses slightly more than 16.1 msf, with a diversified mix of distribution facilities, office service properties and manufacturing buildings. This market is predominantly known for its office service product and multi-use industrial parks. Since the completion of the SunCoast Parkway and the Hoover extension, accessibility to and from the Westside has increased popularity for the area. Although the Westside inventory is only one third the size of the Eastside, nearly 50% of the office service (flex) buildings in Hillsborough County are located in the submarket. Demand for space over the past year continues to be strong in the Westside, due in part to the limited availability of vacant land, which has formed a barrier to new development in the market. The Westside consistently records one of the lowest vacancy rates of all of Tampa Bay’s major industrial submarkets. At the end of the fourth quarter of 2006, the overall vacancy rate registered 4.7%, a slight decrease of a half of a percentage point from the vacancy posted twelve months ago. Although overall absorption for the year

TA M PA B AY, F L

11

I N D U S T R I A L M A R K E T OV E RV I E W

Although tenant demand within the market remains hearty, leasing activity during the past year decreased over the 2005 total by 10.8%, with a yearly total of 793,462 sf. This decrease in total leasing activity is primarily due to the submarket-wide lack of large contiguous blocks of vacant space. Additionally, the absence of newer, institutional quality bulk distribution space has caused several tenants to look elsewhere in the market to fulfill their space requirements. Key leases which occurred in the Westside over the past year include: FedEx’s 74,634-sf lease in Duke Realty Corporation’s new development, Eagle Creek Business Center, Piedmont International’s 45,295-sf lease and Sun Metal System, Inc.’s 39,550-sf lease which both took place in Building 5 of the Airport Industrial Park.

$7.50

6.0

$6.00

5.0

$4.50

4.0

$3.00

3.0

$1.50

2.0

$0.00

(msf)

(psf/yr)

Eastside vs.Westside Eastside vs. Westside Direct Rental Rates vs. Available Space Direct Rental Rates vs. Available Space

4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Eastside Ave. Rent

12

Westside Ave. Rent

Available Space

1.0

As the local workforce, population, and economy continue to expand in Pinellas County, vacancy, absorption, rental rates, and leasing activity improved considerably over the past year in the 49.5-msf Pinellas industrial market. Sustained demand, coupled with the deficit of new space in the market, resulted in a decrease in overall vacancy for the sixth quarter in a row and the highest yearly overall absorption total in over six years. Pinellas CountyPinellas Direct Rental Rates vs. Available Space County Direct Rental Rates vs. Available Space $9.00

3.5

$8.00

3.0

$7.00

2.5

$6.00

2.0

$5.00

1.5

(msf)

Although rental rates in the Westside have historically remained relatively consistent, the sustained demand and the resulting decrease in vacant space currently available have caused landlords to increase their asking rents significantly. The average direct net asking rent for the Westside submarket finished the year at $7.43 psf, up $0.80 psf from the average recorded at year-end 2005. Warehouse/distribution space experienced the greatest increase in rents over the year, increasing $1.52 psf to a current average of $6.56 psf.

PINELLAS COUNTY

(psf/yr)

totaled a positive 230,170 sf, this is a substantial decrease from the 441,458 sf recorded in 2005.This mediocre absorption is attributable to the recent availability of older, nearly obsolete space within the submarket.

$4.00

4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 MF Rent

W/D Rent

OS Rent

1.0

Available Space

The overall vacancy rate ended 2006 at a very low 3.9%, down a full percentage point from year-end 2005. Despite a relative lack of vacant space currently available in the market, demand from both new and existing tenants remained rampant, resulting in a significant increase in activity over the past twelve months. Due to this spike in activity, the market nearly doubled the absorption levels of 2005, posting a total of 906,294 sf in 2006. As previously stated, overall leasing activity improved dramatically since 2005, finishing 2006 with just under 1.5 msf of new and expansion activity. Some leases of note include L-3 Communications’ lease of 95,813 sf in Metropointe Commerce Park, 61,874 sf of space leased at 8145-8155 Bryan Dairy Road by GeoPharma Corporation and CCS Medical’s lease of 60,000 sf of space in the Meridian Concourse Center. Although total activity increased during the past twelve months, only fifteen leases were completed over the past year above the 25,000 sf mark.

C U S H M A N & WA K E F I E L D M A R K E T B E AT Y E A R - E N D 2 0 0 6

I N D U S T R I A L M A R K E T OV E RV I E W In light of the strengthening market and high tenant demand, direct rental rates maintained their upward swing and ended the year averaging $7.08 psf, an increase of $0.64 psf from this time last year. Office service rents demonstrated the greatest increase over the past year, up $0.43 psf to a current $8.98 psf.

LAKELAND At the close of 2006, market fundamentals indicate that Lakeland’s industrial market remains on a steadily improving pace.With the local economy thriving and the business base continuing to expand, the market continues to tighten and attract high caliber tenants. While over 1.8 msf has been delivered since the beginning of 2006, overall vacancy, though heightened, has remained at a very healthy level. Likewise, overall absorption levels and rental rates demonstrated significant improvements over 2005. Overall vacancy, which historically has been among the lowest of the industrial markets Cushman & Wakefield tracks nationwide, increased 2.5 percentage points from this time last year to a current 5.9%. This increase can be attributed to the completion of 134,100 sf of new speculative space, which remains over 70.8% vacant. Despite this brief up-tick in overall vacancy, this increase is only expected to be temporary due to the pronounced demand experienced throughout the market.

While demand for space has continued unabated in the Lakeland market, the characteristics of tenant requirements have changed over the past twelve months. There has been a significant increase in large tenants looking for space in excess of 75,000 sf in Lakeland, though there remains a limited number of large, high quality vacant blocks of space available within the market. Despite this limited amount of larger availabilities, leasing velocity remained on par with 2005, ending the year with slightly over 1.0 msf of total activity. This strong leasing activity helped produce nearly 1.1 msf of overall absorption since this time last year. The most significant leases occurring in Lakeland this year included Home Depot Supply’s 240,000-sf lease in the newly built FirstPark@Bridgewater Phase II, Coca-Cola Enterprises’ 100,000-sf lease in Lakeland Interstate Business Park and Keymark Corporation’s 100,000-sf lease in the warehouse/distribution facility at 2520 Knights Station Road. The consistent demand for industrial space in the Lakeland area over the past year has caused the net weighted average asking rent to steadily increase. From a low average rent of $4.67 psf at yearend 2005, the average asking rate has consistently increased and is currently at $4.85 psf. As the quantity of available space declines, landlords of both existing and newly constructed facilities should continue to test the market with higher asking rates well into next year.

ON THE HORIZON Lakeland Direct Lakeland Rental Rates vs. Available Space

$9.00

2.5

$7.50

2.0

$6.00

1.5

$4.50

1.0

$3.00

0.5

(msf)

(psf/yr)

Direct Rental Rates vs. Available Space

$1.50

4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 MF Rent

W/D Rent

OS Rent

With Tampa Bay’s low unemployment rate currently 3.3% and the need for tenants to either move into or expand within the market, the industrial market is expected to remain constricted in 2007. The addition of new construction should help alleviate the current supply/demand imbalance, but due to the scarcity of existing available industrial product, Tampa Bay’s industrial market will remain at a low vacancy rate with asking rental rates continuously increasing due to the high demand and rising operating and insurance costs. Cushman & Wakefield feels that the industrial market will remain tight with continued strong demand during 2007.

0.0

Available Space

TA M PA B AY, F L

13

INDUSTRIAL SUBMARKET REVIEW EASTSIDE $10.00

5.5

$8.00

4.5

$6.00

3.5

$4.00

2.5

$2.00

1.5

• Increased tenant demand has also caused asking rental rates in the Eastside to continue to rise. Market-wide the triple net asking rate averaged $6.95 psf, the highest average rental rate ever achieved in the Eastside submarket.

$0.00

0.5

4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 MF Rent

W/D Rent

OS Rent

(msf)

• Leasing activity in 2006 registered nearly 3.0 msf, an increase of 13.1% from the 2005 total. This increase in new and expansion leasing activity, combined with strong end-user sales, resulted in positive 1.3 msf of overall absorption in 2006.

Direct Rental Rates vs. Available Space

(psf/yr)

• Overall vacancy in the Eastside has consistently dropped since this time last year. Despite the delivery of 357,840 sf of new product, the Eastside’s current overall vacancy is at the lowest point ever recorded at 4.3%.

Available Space

WESTSIDE Direct Rental Rates vs. Available Space

• Sales activity in the Westside dropped off considerably in 2006 as both investors and owner/users struggled to find buildings in the submarket to purchase. Sales activity in the Westside totaled 620,589 sf, a decrease of 29.3% from 2005.

$14.00

1.5

$12.00

1.2

$10.00

0.9

$8.00

0.6

$6.00

0.3

$4.00

(msf)

• A lack of vacant space within the Westside has caused asking rental rates continue to rise. Submarket-wide, the triple net asking rent averaged $7.43 psf, and increase of $0.80 psf from this time last year.

(psf/yr)

• Despite a 10.8% decrease in leasing activity over the past year, the Westside submarket’s overall vacancy fell to 4.7%, a decrease of one half of a percentage point from year-end 2005 and managed to record positive 230,170 sf of overall absorption in 2006.

4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 MF Rent

W/D Rent

OS Rent

0.0

Available Space

G AT E WAY

• The triple net asking rate averaged $7.88 psf, the highest average ever recorded in the Gateway submarket. Warehouse/distribution space experienced the most dramatic increase over the year, rising $0.70 psf from year-end 2005 to $6.23 psf.

$10.00

2.2

$8.00

2.0

$6.00

1.8

$4.00

1.6

$2.00

1.4

(msf)

• The most significant factor influencing Gateway’s substantial increase in overall absorption in 2006 was leasing activity. A sustained increase in tenant demand throughout the year resulted in a total of 1.3 msf of leasing activity in 2006, a considerable increase of 33.2% from the 2005 total.

Direct Rental Rates vs. Available Space

(psf/yr)

• Overall vacancy fell for the seventh straight quarter in the Gateway industrial submarket to a very favorable 4.2%. Overall absorption totals continued to impress in 2006, registering 988,630 sf for the year, an increase of 85.6% from the total recorded in 2005.

$0.00

4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 MF Rent

14

C U S H M A N & WA K E F I E L D M A R K E T B E AT Y E A R - E N D 2 0 0 6

W/D Rent

OS Rent

Available Space

1.2

INDUSTRIAL MARKET HIGHLIGHTS SIGNIFICANT 2006 NEW LEASE TRANSACTIONS Building FirstPark@Bridgewater Ph. II Sabal Park Distribution Ctr. #300 Madison Industrial Park #1 Tech Corridor Dist. Center Tampa Telecom International Center Port Ybor Building 2 1770 Interstate Drive 9700 18th Street 2835 Overpass Road Silo Bend Distribution Center #3

Submarket Northeast Lakeland Eastside Eastside Eastside Eastside Eastside Northwest Lakeland Gateway Eastside Eastside

Tenant Home Depot Supply Confidential Parksite Global Warehousing & Distribution, Inc. Lagasse, Inc. Carrier Sales and Distribution Coca-Cola Enterprises L-3 Communications MMI Products, Inc. Iron Mountain

Square Feet 240,000 214,814 210,000 133,140 113,200 107,925 100,000 95,812 91,508 85,457

Property Type Warehouse/Distribution Warehouse/Distribution Warehouse/Distribution Warehouse/Distribution Warehouse/Distribution Warehouse/Distribution Warehouse/Distribution Warehouse/Distribution Warehouse/Distribution Warehouse/Distribution

Buyer First Industrial Acquisitions, Inc. Realty Associates Fund VII Miles Properties Weingarten Realty Investors Meridian Development Group Tampa Waters, LLC SNS-Tampa Real Estate, LLC Lake Parker Plaza, LLC

Square Feet 497,545 366,568 243,000 223,864 213,557 162,417 160,000 117,000

Purchase Price $40,150,000 $13,425,000 $6,200,000 $8,900,000 $17,000,000 $10,700,000 $2,300,000 $3,500,000

Square Feet 653,000 400,000 250,000 156,000 150,000 110,710 104,000

Completion Date 1/06 9/06 7/06 11/06 1/06 10/06 9/06

Square Feet 600,000 297,500 214,814 160,000 152,880 152,600

Completion Date 2/07 7/07 5/07 5/07 1/07 7/07

Property Type Warehouse/Distribution Warehouse/Distribution Warehouse/Distribution Warehouse/Distribution

Possession Date 60-90 Days Immediate 1/07 7/07

SIGNIFICANT 2006 SALE TRANSACTIONS Building Adler Portfolio (11 Bld.) Gateway Lakes Portfolio (5 Bld.) Witek Business Center Hopewell Distribution Center Meridian Concourse Ctr. (4 Bld.) 3602 West Waters Avenue 4302 Gandy Boulevard Lake Parker Business Center

Submarket Gateway & West Pinellas/Central Gateway South Pinellas Eastside Gateway Airport Area Interbay/South Tampa Southeast Lakeland

SIGNIFICANT 2006 CONSTRUCTION COMPLETIONS Building Southern Wine & Spirits FirstPark@Bridgewater Ph. II Halkey-Roberts Corporation Port Ybor Building 2 Star Center Building 2 Eagle Creek Business Center I 4760 Gateland Drive

Submarket Southwest Lakeland Northeast Lakeland Gateway Eastside Gateway Airport Area Southwest Lakeland

Property Type Warehouse/Distribution Warehouse/Distribution Manufacturing Warehouse/Distribution Manufacturing Warehouse/Distribution Warehouse/Distribution

SIGNIFICANT PROJECTS UNDER CONSTRUCTION Building Valpak Direct Marketing Madison Industrial Park #1 Sabal Park Distribution Ctr. #300 4675 Drane Field Road Interstate Commerce Park Bld. 3 Central Florida Dist. Center

Submarket Gateway Eastside Eastside Southwest Lakeland Northwest Lakeland Northwest Lakeland

Property Type Manufacturing Warehouse/Distribution Warehouse/Distribution Warehouse/Distribution Warehouse/Distribution Warehouse/Distribution

SIGNIFICANT LEASE AVAILABILITIES Building 8285 Bryan Dairy Road 6422 Harney Road Interstate Commerce Park Bld. 3 Central Florida Dist. Center

Submarket West Pinellas/Central Eastside Northwest Lakeland Northwest Lakeland

Direct/ Sublease Direct Direct Direct Direct

Available Square Feet 390,859 160,485 152,880 152,600

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I N D U S T R I A L M A R K E T S TAT I S T I C S Overall Vacancy Rate

YTD Leasing Activity

Under Construction

YTD YTD Construction Overall Completions Absorption

Market/Submarket

Inventory

No. of Bldgs.

Eastside

48,188,696

1,085

4.3%

2,982,800

792,854

859,722

1,285,020

Westside

16,123,108

501

4.7%

793,462

149,595

196,769

Interbay/South Tampa

2,514,831

40

0.7%

0

0

Plant City

7,957,600

98

0.4%

59,500

Tampa Total

74,784,235

1,724

3.9%

Gateway

18,351,236

622

West Pinellas/Central

13,425,880

North Pinellas South Pinellas

Direct Weighted Average Net Rental Rate* HT MF OS W/D $5.95 $9.66

$5.60

230,170

N/A $11.25 $7.87

$6.56

0

(18,504)

N/A

N/A

N/A

$9.50

0

118,000

110,000

N/A

$5.25

N/A

$5.22

3,835,762

942,449

1,174,491

1,606,686

$12.00

$6.97 $8.90

$5.79

5.0%

722,743

600,000

326,796

554,796

N/A

$5.85 $9.28

$6.40

423

3.2%

582,193

30,000

175,000

433,834

N/A

$6.42 $8.53

$5.71

9,453,477

470

1.9%

143,655

0

81,000

(32,252)

N/A

$6.65 $8.55

$6.78

8,263,669

343

5.0%

43,927

0

54,000

(50,084)

N/A

$4.69 $5.27

$3.41

49,494,262

1,858

3.9%

1,492,518

630,000

636,796

906,294

N/A

$5.46 $8.98

$5.78

Southwest Lakeland

9,162,025

89

5.3%

330,450

268,236

1,332,586

1,126,950

N/A

$2.50 $8.00

$4.94

Southeast Lakeland

2,164,238

61

5.9%

142,075

25,000

0

126,975

N/A

N/A $5.74

$5.20

Northwest Lakeland

9,491,397

78

6.5%

230,592

444,980

116,000

(334,219)

N/A

$4.50 $6.50

$4.87

Northeast Lakeland

3,269,259

36

5.7%

320,000

220,000

400,000

219,100

N/A

N/A $5.50

$4.42

24,086,919

264

5.9%

1,023,117

958,216

1,848,586

1,138,806

N/A

$3.82 $6.04

$4.83

TAMPA MSA TOTAL 148,365,416

3,846

4.2%

6,351,397

2,530,665

3,659,873

3,651,786

Pinellas Total

Lakeland Total

* Rental rates reflect $psf/year HT = High Tech

16

MF = Manufacturing

OS = Office Service

W/D = Warehouse/Distribution

C U S H M A N & WA K E F I E L D M A R K E T B E AT Y E A R - E N D 2 0 0 6

$12.00

$12.00 $4.88 $8.72 $5.56

I N V E S T M E N T S A L E S OV E RV I E W Office and industrial investment activity in Tampa Bay experienced a significant decrease over the past twelve months compared to the incredible activity recorded in 2005. Nevertheless, investment capital continued to stream into the market as a diversified mix of buyers, attracted by tightening market fundamentals and strong yields, sought to acquire one or more properties over the past year. A total of 230 office and industrial properties, representing nearly 10.7 msf of investment product was sold over the course of 2006, a 32.3% decrease from 2005. Office sales accounted for 5.2 msf, while industrial transactions comprised 5.5 msf of the year’s total investment activity. The total aggregate sales volume of this activity was $1.12 billion, with office sales representing $863 million and industrial sales accounting for the balance.

Tampa Bay Investment Sales Office Sales vs. Industrial Sales Office Sales vs. Industrial Sales

As with the office market, scorching demand continued for industrial investment opportunities. As the supply of institutional quality, class A offerings remains scarce, both institutional and noninstitutional buyers, concentrated on older class B opportunities which were in greater supply. Warehouse/distribution product remains the favored industrial target for most investor groups. However, office service properties are also being heavily pursued, particularly by groups chasing higher yields than traditional industrial product. Capitalization rates (cap. rates) for stabilized core industrial buildings range from 6.25% to 7.5%, with class B product trading at 75-100 basis points higher. This equates to a 25 basis point decline in yield over the previous year. Office service space is realizing yields for stabilized assets of 8.0% to 8.5% and 50 basis points higher for class B product. In the industrial investment arena, the active buyers included real estate investment trusts (REITs), TICs, fund advisors and private equity groups, particularly those with institutional partners. Massive rental rate increases over the past eighteen months will mitigate the low in-going returns investors are forced to accept as tenants renew and purchasers may be more aggressive on cap. rates as purchasers are becoming more IRR driven.

9.0 7.2 (msf)

INDUSTRIAL INVESTMENT OV E RV I E W

5.4 3.6 1.8 0.0

2002 Office Sales

2003

2004

2005

2006

L O O K I N G F O RWA R D

Industrial Sales

Source: Cushman & Wakefield Research

O F F I C E I N V E S T M E N T OV E RV I E W Torrid demand remains for office product in the Tampa Bay market. There were several marquis asset sales in 2006, including the 735,030-sf Tampa City Center and the five building, 529,618-sf Renaissance Park. Capitalization rates (cap. rates) for stabilized office buildings ranged from 6.1% to 7.3%, with class B product trading at 75-100 basis points higher. This represents a 50 basis point decline over 2005. Over the past year class A core unleveraged internal rate of returns (IRRs) were between 7% and 8% with class B unleveraged IRRs at 8.0%-9.0%.

Similar to the past year, Cushman & Wakefield anticipates aggressive underwriting relative to rental rate increases. Despite large increases in property insurance and taxes, sale prices are expected to remain at their current historic highs. Further, exorbitant construction costs and concurrency enforcement are driving buyers to weight investment decisions heavily against replacement cost with less emphasis on traditional yield parameters than in the past.

The most active buyer groups of office product over the past year included private capital with institutional partners, real estate investment trusts (REITs) and fund advisors. TA M PA B AY, F L

17

M U LT I - FA M I LY M A R K E T OV E RV I E W In the Tampa Bay MSA, approximately 21,000 jobs were created

were several submarkets with average sales price growth over 7.0%.

over the twelve month period ending November 2006. The Tampa

In Hillsborough County, high growth submarkets included Lutz,Town

MSA continues to be the largest employment market in the state

and Country,Temple Terrace/USF, South Tampa and Carrollwood.

and Tampa’s job growth represents a 10% share of all jobs created in Florida. Before adjustment, 2006 job growth was slower than

Looking to 2007, the recent slowdown of single-family development

the 30,000 to 45,000 of previous years, but still created respectable

and continued low levels of rental construction will continue to

demand when compared to supply additions and apartment

have a positive impact on rent growth and the sales prices of

absorption. Tampa’s unemployment rate of 3.3% remains well

condominiums, town homes and single-family homes.

below the national average of 4.5%. Florida’s total employment has expanded steadily since September

A PA RT M E N T M A R K E T

2002. In November 2006, there were approximately 8.2 million nonagricultural jobs, an increase of 2.7% (+212,600 jobs) over the year.

Operating fundamentals for the local apartment market are

The state’s unemployment rate of 3.3% has remained below the

favorable with the positive trend expected to continue for the

national average since 2002.

foreseeable future.There were approximately 1,606 units completed in 2006 with approximately 4,800 planned for 2007. The 2007

Statewide year-to-date residential sales volume was sharply

estimate is significantly less than the market’s peak construction

lower in 2006: down 28% for single-family homes and down 33%

period in 1999, with 8,651 units completed. 2006’s average

for condominiums. Median sales prices were also down for most

occupancy of 97.6% and a same store rent growth of 5.3%

markets in Florida. Tampa and Orlando were clear exceptions to

reflect the strength of Tampa’s apartment market.

this trend. During this period, median sales prices were up 3.0% in the Tampa MSA and up 4.0% in the Orlando MSA.When compared

Sales activity declined in 2006 with a total sales volume of

to 2004,Tampa and Orlando’s 2006 prices represent an increase

approximately $1.4 billion and an average sales price of $83,000 per

of 24.0% and 50.0%, respectively. Within the Tampa MSA, there

unit. Sales in 2006 recorded a decline in volume of 61% from 2005’s record $3.6 billion and a decrease in per unit sale price of 3.4% from 2005’s $86,000. When compared to 2004 sales, 2006 was 7%

Tampa Bay Multi-Family

less than 2004 in total volume and 26% higher in per unit price. A

2005 Sales Activity

mid-year slowdown in sales activity can be attributed in part to 6,918 Units

rising insurance premiums. Near the end of 2006 insurance became less of an issue with a significant step-down in premiums and

12,033 Units

transaction activity now shows signs of increasing. In 2006 income 42,540 Units

buyers returned to the market and acquired class A deals (that 91,769 Units

went to converters last year) in addition to repositioning opportunities. Currently, cash buyers of class A deals are still competing for relatively few assets at premium pricing. Clearly 2006 has been (and 2007 will be) an opportunity for income

Hillsborough

Pinellas

Polk

Pasco

buyers to acquire apartment assets.

Source: Bay Area Apartment Association

18

C U S H M A N & WA K E F I E L D M A R K E T B E AT Y E A R - E N D 2 0 0 6

M U LT I - FA M I LY M A R K E T OV E RV I E W Condominium conversions stalled in 2006. Sales of rental Conversion Activity

communities to condominium converters ended after the first quarter of 2006. Many converters with significant unsold inventory either settled for slower sales velocity or opted to return the units to rental. The strong rental market and strong investor demand for rental properties allowed owners to realize excellent values on

Bay Area Total Units (includes units returning as rentals) Converted Units Units Returning to Rental Market Potential Units Returning and Vacant Returning and Vacant as % of Total Units

160,000 40,000 11,000 2,750 1.7%

several of these properties. Source: Cushman & Wakefield

Tampa Bay Multi-Family Rental vs.Vacancy Rates

Tampa Bay Multifamily Rental vs. Vacancy Rates 10.0%

$900.00

8.0%

$800.00

6.0%

$700.00

4.0%

$600.00

2.0%

(unit/mo)

$1000.00

$500.00

2002 Rental Rate

2003

2004

2005

2006

0.0%

Vacancy Rate

Source: Bay Area Apartment Association

At the end of 2006, approximately 25% of the units that were expected to be converted at the beginning of 2006 are returning to rentals. We estimate that approximately 25% of the “returning” units are vacant. 2,750 units available for rent should be absorbed along with new deliveries based on population and job growth.

TA M PA B AY, F L

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M U LT I - FA M I LY M A R K E T HIGHLIGHTS TAMPA MSA OVERVIEW 3Q 2005

3Q 2006

County

Units

Occupancy

Avg. Rent*

Units

Occupancy

Avg. Rent*

Hillsborough Pinellas Polk Pasco

90,002 43,615 9,415 6,122

96.8% 97.4% 98.5% 97.8%

$807 $793 $656 $658

91,769 42,540 12,033 6,918

97.2% 98.2% 98.9% 97.1%

$855 $842 $693 $714

149,154

97.1%

$786

153,260

97.6%

$830

Tampa Bay TOTAL *Rent Per Month Source: Bay Area Apartment Association

SIGNIFICANT 2006 SALE TRANSACTIONS Property Campus Club Windsor Club at Seven Oaks Bay Club Bay Oaks Carrington at Tampa Palms Citrus Falls Arbors at Fletcher Island Post Bay/Hudson Pointe BaLaye Preserve at Temple Terrace Vinings at Countryside Park Terrace Lakeview Oaks Raintree at Park Village Woodland Pond Summer Landing Court Village Excellence Casa De Seville (Fifth Avenue) Huntington at Sundance

Property Type Student Income Income Redevelop Condo Conv. Condo Conv. Condo Conv. Condo Conv. Income Condo Conv. Income Condo Conv. Income Condo Conv. Income Condo Conv. Income Student Condo Conv. Income

Market Hillsborough Pasco Hillsborough Hillsborough Hillsborough Hillsborough Hillsborough Pinellas Hillsborough Hillsborough Hillsborough Hillsborough Hillsborough Pinellas Hillsborough Polk Pinellas Hillsborough Pinellas Polk

Year Built 2004 2005 1996 1974 1997 2003 1997 1988 2001 1999 1989 1986 1997 1986 1983 1998 1990 1995 1969 1998

Units 64 240 150 176 248 273 352 312 324 392 320 150 252 160 168 288 228 165 193 292

Purchase Price $13,250,000 $39,000,000 $23,300,000 $27,000,000 $35,000,000 $37,550,000 $47,520,000 $40,000,000 $38,500,000 $46,000,000 $34,000,000 $15,250,000 $23,950,000 $14,640,000 $15,300,000 $25,500,000 $19,977,400 $14,000,000 $16,500,000 $24,650,000

Price Per Unit $207,000 $163,000 $155,000 $153,000 $141,000 $138,000 $135,000 $128,000 $119,000 $117,000 $106,000 $102,000 $95,000 $92,000 $91,000 $89,000 $88,000 $85,000 $85,000 $84,000

SIGNIFICANT 2006 CONSTRUCTION COMPLETIONS Property Meridian Pointe Oxford Walk Sweetwater Arlington at Northwood The Delano Landings at Long Lake

Market Hillsborough Hillsborough Pasco Pasco Pasco Polk

Source: Bay Area Apartment Association

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C U S H M A N & WA K E F I E L D M A R K E T B E AT Y E A R - E N D 2 0 0 6

Owner/Developer Richman Group Oxford Edington Sentinel A.G. Spanos Leland LP

Units 360 230 176 312 288 240

L A N D M A R K E T OV E RV I E W Over the past year, townhouse and single family land sales came to almost a complete stop. Office and industrial land sales, on the other hand, came roaring back. 2006 was a year when single family land values peaked and fell back. Numerous transactions fell out of contract in Hillsborough, Manatee and Pasco Counties. Home builders are selling single family and townhome land at a discount. Cushman & Wakefield believes residential land prices will drop through 2007. Multifamily “for rent” product was a very active segment, especially in Pasco County. Land prices per unit rose to between $15,000 and $20,000 per unit. The strength of retail land sales in Tampa Bay is driven by the region’s population growth, income growth and employment growth. Over 1,000 new residents relocate to the Tampa Bay area every week; these new residents create strong demand for retail goods and services, which drives additional retail development. Some retail developers are buying two to three years early.

Industrial land activity is picking up as new developers position themselves for a new wave of speculative construction. As the area’s existing industrial vacancy continues to fall local developers, as well as REITs, are planning to construct new speculative projects in the near future. Most of the industrial land activity is located in the eastern and southern portions of Hillsborough County and western Polk County, within close proximity to I-4 and I-75. We foresee industrial users moving south along the I-75 Corridor and along U.S. Highway 27. In general, the demographics for the future indicate that the Tampa Bay area land market will continue to be very active into 2007 and beyond. The caveats are growth management (traffic concurrency) impact fee increases effects on new development, and the entitlement process in general. Already, traffic concurrency issues have stalled or stopped some projects.

Tampa Bay Land Sales Tampa Bay Land Sales Commercial, Industrial and Residential

The office land market, which had been primarily focused on office condominium development in 2006, experienced many speculative developers buy and contract land in 2006. Cushman & Wakefield closed on 14 acres of office condo land in 2006. With the overall office occupancy rate in Tampa Bay being 88.5%, the demand for multi-tenant office sites in 2007 will increase.

55 44 (acres in thousands)

Average prices for shopping center sites rose by 10% in 2006. The average price of signalized “hard corner” outparcel is now in excess of $25.00 psf (over $1.0 million per acre). The supply of retail land is constrained by an onerous governmental approval process and by insufficient infrastructure (water, sewer, roads, etc.). The enormous inequality between the burgeoning demand for retail land and the limited supply of viable retail sites will continue to escalate the price of retail land for the foreseeable future.

33 22 11 0

2003

2004

2005

Commercial

Industrial

Residential

2006

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LAND MARKET HIGHLIGHTS SIGNIFICANT 2006 RESIDENTIAL/PUD LAND SALE TRANSACTIONS Buyer M I Homes of Tampa, LLC Mosiac Fertilizer, LLC Town Realty, Inc. Forest Brooke Hillsborough, LLC Palmer Investors, LC Pulte Homes Corporation Joshua Land, LLC PGCI IV, LLC L. Baylis Carnes, III Whitehall Homes at Mira Bay, Ltd.

Seller Neil & Rita Rucks Mims Hammocks, LLC McClure Properties, Ltd. Lennar Land Partners Caren Heller Barness Lakeside Land Holdings, LLC A.W.Thornal Jr. Nap Duke Ranch, LLC Jacquelyn G. Piper Trust Terrabrook Apollo Beach, LP

County Pasco Hillsborough Manatee Hillsborough Manatee Pasco Polk Manatee Polk Hillsborough

Net Acres 1,066.7 759.9 700.0 624.9 583.6 437.1 296.5 274.4 268.6 223.3

Purchase Price $16,539,900 $5,625,000 $28,000,000 $42,205,000 $18,372,300 $39,550,000 $5,500,000 $24,000,000 $6,768,000 $7,300,000

Net Acres 480.0 199.9 34.8 29.1 25.5 22.7 20.0 19.4 17.7 13.8

Purchase Price $6,000,000 $4,500,000 $5,350,000 $7,223,100 $1,913,300 $960,000 $2,350,000 $650,000 $4,000,000 $2,000,000

Net Acres 1,664.6 1,200.0 707.1 620.0 520.0 513.8 328.8 294.0 288.9 247.5

Purchase Price $9,083,800 $51,156,000 $22,000,000 $16,160,200 $5,400,000 $36,100,000 $2,583,000 $10,747,900 $1,155,600 $2,064,000

SIGNIFICANT 2006 INDUSTRIAL LAND SALE TRANSACTIONS Buyer Mosiac Fertilizer, LLC Madison Industrial Associates, LLC Southeastern Freight Lines, Inc. Commercial Drive Holdings, LLC Parsons Woods, LLC Estates of Lake Hammock, LLC HR Pasco, LLP Hoover Avenue Investment Co., LLC Tarpon Springs One, LLC Weekes Logan Building Products

Seller US AGRI-Chemicals Corporation Deneb, LLC Hewitt D. Miller Sarasota Commerce Park, LLC Myrtle Stewart C. Linden Davidson Ritchie Brothers Properties, Inc. Foris-Rating Holdings, Inc. Eleanore Nissley Trust Canal Associates, Inc.

County Polk Hillsborough Manatee Sarasota Hillsborough Polk Pasco Hillsborough Pinellas Hillsborough

SIGNIFICANT 2006 COMMERCIAL LAND SALE TRANSACTIONS Buyer Polk County Country Club East Investors, LLC Pasco County Associates I, LLLP Odyssey Residential III, LLC Maconi Pashley, LLC Drew Northport Investments, LLC Ski Lakes, LLC Lee Wetherington Development M & W Ranch, LLC School Board of Hillsborough County

22

Seller Roy Gorud & Karin Scovill Trust Schroeder-Manatee Ranch, Inc. Schickedanz Bros. – Hammock Pines Ltd. The Winter Haven Corporation Colquitt, Inc. Northport Commercial Interchange, LLC Mary E.Vian Daniel & Rebecca Pope David & Carole Council Lisa Agia Trust

C U S H M A N & WA K E F I E L D M A R K E T B E AT Y E A R - E N D 2 0 0 6

County Polk Manatee Pasco Polk Pasco Sarasota Pasco Manatee Manatee Hillsborough

R E TA I L M A R K E T OV E RV I E W

Tampa Bay’s retail market is supported by population growth (65,000+ new residents per annum), employment growth (21,000+ new jobs created per annum) and by rising income levels (3.5% increase during the past 12 months). Tampa Bay’s dynamic growth combined with stringent lending requirements, a conservative approach to new retail development and a time consuming governmental approval process has resulted in a vibrant retail market.

As of year-end 2006,Tampa Bay’s average occupancy rate was 94.2%, an increase of 80 basis points over year-end 2005. The retail market’s inventory increased by 3.0% to 61.3 msf. Average rental rates increased by 4.7% to $16.55 psf. Common area expenses (CAM) increased by over 10% to $5.87 psf, the substantial increase in CAM is largely due to a sizeable rise in insurance costs.

Tampa Bay Retail Rental vs.Vacancy Rates Tampa Bay Retail Rental vs. Vacancy Rates

(psf/yr)

The overall absorption of retail space in Tampa Bay’s MSA (1.9 msf) continued to outpace the delivery of new inventory (1.8 msf) in 2006. For the past five years the demand for retail space has exceeded supply, resulting in higher average rental rates and lower average vacancy rates. Most new retail construction in the Tampa Bay area consists of anchor-dominated neighborhood centers and freestanding buildings.The majority of new retail developments are ninety-five percent pre-leased prior to the completion of construction.

$17.00

8.0%

$15.00

7.5%

$13.00

7.0%

$11.00

6.5%

$9.00

6.0%

$7.00

2002 Rental Rate

2003

2004

2005

2006

5.5%

Vacancy Rate

Source: Maddux Report

The table below summarizes the retail market in Tampa Bay’s MSA: Current Market Conditions (December 31, 2006) Submarket

Number

Existing SF

Occupied SF

Occupancy

Average Rental Rate

35 47 42 15

5,187,000 9,233,000 8,364,000 3,393,000

4,884,598 8,867,373 7,929,908 3,211,814

94.2% 96.0% 94.8% 94.7%

$15.77 $18.34 $17.91 $19.93

North Mid South

40 59 43

7,228,000 7,911,000 6,902,000

6,974,297 7,401,330 6,480,978

96.4% 93.5% 93.9%

$16.09 $14.36 $17.48

Pasco

59

8,675,000

7,923,745

91.3%

$15.50

Hernando

34

4,405,000

4,072,423

92.4%

$14.11

374

61,298,000

51,082,063

94.2%

$16.55

Hillsborough Northeast Northwest Southeast Southwest Pinellas

TOTAL Source: Maddux Report * Rental Rates Reflect $ psf /yr

TA M PA B AY, F L

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G L O S S A RY / M A J O R M A R K E T DEFINITIONS OFFICE Inventory: Includes all existing competitive office buildings that satisfy the rentable square footage cut-off size or larger. Government, medical, office condos, strip centers of mixed use and owner-occupied buildings are not included. Class A: Most prestigious buildings competing 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. 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. Class C: Buildings competing for tenants requiring functional space at below average rents for the area. CBD: Central Business District. The “downtown” area. Non-CBD: The area around a city. The “suburban” area. Asking Rental Rates: Gross asking rates per square foot, weighted by the amount of square footage available.

OFFICE & INDUSTRIAL Direct Available Space: Space vacant and available through the building landlord. Sublease Space: Space vacant and available through the lessee to a third party for the remainder of the lessee’s term. Overall Vacancy Rate: Space vacant and available both directly and through sublease, divided by the inventory. Space in properties under construction or under renovation is not included. Direct Vacancy Rate: Space, vacant and available through the landlord, divided by the inventory. Space in properties under construction or under renovation is not included.

Proposed: Projects which are in the planning stages and may, or may not, have been approved. Construction has not yet begun. Projects that require, and have not secured, a lead tenant to commence are not included. Leasing Activity: The sum of all completed transactions in a given period of time, including sublet space and pre-leasing but excluding renewals. Pre-Leasing Activity: The sum of all completed lease transactions in under construction, under renovation and proposed projects. Sales Activity: Existing building sale transactions executed during a period of time. Cap Rate: The percentage used to determine the value of income property through capitalization.

INDUSTRIAL High Technology: Buildings which contain a significant amount of either lab space, clean rooms, telecom/switching equipment or R&D space.These buildings can be either grade level or dock high and typically have a ceiling height of below 18’. Manufacturing: A building which is primarily used for the manufacturing or production of goods, but may have a small distribution component. Warehouse/Distribution: Buildings designed for warehousing or distribution of goods and have an office finish less than 30%.These facilities are typically dock high with some containing grade level doors. Ceiling heights are usually above 16’. Office Service: Buildings with interior ceiling heights of 12’ to 16’, either by the building’s design or by installed drop ceilings. Buildings have a high concentration (30%+) of office or finished showroom space.These buildings are typically grade level, but sometimes even under 1,000 sf. Asking Rental Rates: Triple net asking rates per square foot, weighted by the amount of square footage available.

Direct Absorption: The net change in occupied built space for a given period of time, excluding sublease space.

MAJOR MARKET DEFINITIONS

Overall Absorption: The change in occupied built space for a given period of time, including sublease space.

CBD Office: Includes the core Tampa downtown area and the area extending south of I-275 and I-4, west of 22nd Street and east of the Hillsborough River and Hyde Park Avenue, to Hillsborough Bay.

Construction Completions: Buildings that received their Certificate of Occupancy.Tenancy may not yet have taken place. Under Construction: Projects which are beyond site preparation. A Certificate of Occupancy has not been issued. Under construction projects do not include projects under renovation.

24

Non-CBD Office: Hillsborough County (excluding downtown Tampa) and all of Pinellas County. Industrial: All of Hillsborough and Pinellas Counties, and the city of Lakeland in Polk County.

C U S H M A N & WA K E F I E L D M A R K E T B E AT Y E A R - E N D 2 0 0 6

Cushman & Wakefield International Offices Through a combination of our Cushman & Wakefield offices, Alliance and Associate offices, we serve the needs of our clients in all business markets around the world. Our more than 11,000 real estate professionals meet the changing needs of their clients with the highest level of quality service and integrity.

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