Outlook DENVER METRO SNAPSHOT AT YEAR-END Office Market Cycle Position Year-End Office Vacancy Rates Selected Metro Areas

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1 DENVER METRO SNAPSHOT AT YEAR-END 21 Economy: Continued Gradual Improvement 12-month job losses through October 21: 1,9 Unemployment rate: 8.% in October 21, down from 8.2% in March. U.S. at 9.6% in October. Outlook: 12-month job change to turn positive very soon; unemployment rate to decline during 211. Payroll Jobs in 's 5-5 Payroll Job Growth Large Metro Areas 12 Months Ending October 21 Office Market: Continued Improvement Q4 net absorption: 188, SF; all of 21: 1.8 million SF. Overall vacancy rate: 13.9%, down from 14.1% in the 3 rd quarter and 14.5% a year ago. Asking rents: Holding steady; modest traction likely by mid % 2% 15% 1% 5% % 11.2% 11.2% Office Vacancy Rates Selected Metro Areas National Vacancy Rate: 14.6% 11.9% 12.6% 13.1% 13.4% 13.9% 15.2% 15.6% 15.8% 17.6% 18.4% NY Bos Was Hou LA SF Bay Den S Fla Chi OC Atl DFW Phx 21.7% -1 Was DFW Bos Phx Atl Hou S. Fla Den NY SF Bay LA Basin Chi Source: CoStar, Delta Associates; December 21. Source: Bureau of Labor Statistics, Delta Associates; December 21. Office Market Cycle Position Expansion Phase Correction/Contraction Phase 6 Atlanta Chicago Phoenix 7 8 Source: Delta Associates; December DENVER Austin Baltimore Boston Dallas/Ft. Worth Houston Los Angeles New York Orange County San Antonio San Francisco S. Florida Washington The Denver office market continues its gradual improvement, suggesting the following strategies: Tenants: Take advantage of market conditions by renegotiating leases, signing extensions at favorable terms, or moving to better space before balance shifts toward landlords. Developers: Look to acquire discounted assets for redevelopment as the next expansion unfolds. Take steps to ensure future projects are shovel-ready. Actively market planned projects to ensure high pre-lease rates in pursuit of construction financing. Investors: Optimize performance of existing assets to ensure stable tenancy. Pursue discounted assets soon with an eye to long-term growth. Seek well-located buildings with shortterm occupancy or financial challenges. Denver Metro 1

2 Job Growth in s Year Average = 17, Job Growth Denver-Boulder Metro * * Source: BLS, Delta Associates; December 21. Unemployment Rate 13% 12% 11% 1% 9% 8% 7% 6% 5% 4% 3% 2% Was Bos Den DFW Hou NY Source: Bureau of Labor Statistics; December 21. Unemployment Rates Large Metro Areas October 21 vs. October 29 Phx *12 months ending October. Note: Figures reported in this chart are annual average job growth. Chi Atl Core Industries Denver-Boulder CSA SF S. Fla LA Bay Basin National Average* 1.1% 9.6% 1/9 1/1 * National average is seasonally adjusted. 29 Core Industries $ (Bil) % GRP Financial, Professional and Business Services $23 18% State & Federal Government $14 11% Construction $1 8% Educational and Health Services $9 7% Tech/Telecom Services $6 5% Manufacturing $6 5% Hospitality/Tourism $5 4% Transportation & Warehousing $4 3% Total Core Industries: $77 59% Other $54 41% Total GRP: $131 1% Note: Subcomponents of core industries were redefined in June 27. GRP = Gross Regional Product Source: GMU Center for Regional Analysis, Delta Associates; December 21. Totals may not add due to rounding. THE DENVER METRO ECONOMY Gradual Improvement Continues The Denver metro economic recovery continues to make strides, as monthly employment increases. As a result, Denver metro s 12-month payroll employment losses scaled back to 1,9 through October 21, a.1% rate of contraction, compared to a.6% gain nationally. Growth is slowly spreading across Denver s industries, particularly in Professional/Business Services, Hospitality/Tourism, and Education/Health. Meanwhile, the residential real estate sector continues to recover, with prices up in 21 and foreclosure filings declining. The Colorado Business Conditions Index, as reported by The Goss Institute, remains in positive-growth (a value above 5) territory for the 13 th straight month. The October index increased to 53.4, from 5.6 in September and 53. in August. A level above 5 indicates expectations of an expanding economy over the next six months. The region s unemployment rate declined to 8.% in October 21, from 8.2% in March, but is up from 7.2% in October 29. The cyclical peak was 8.6% in June 29. The national unemployment rate was 9.6% in October 21, compared to 1.1% in October 29; it rose to 9.8% in November 21. The Denver metro unemployment rate is the third-lowest among large metro areas. Metro Denver s core industries continue to strengthen, but employment gains have moderated lately. Gains since February, when many sectors bottomed out locally: Professional/Business Services: 12,8 Hospitality/Tourism: 9,5 Transportation/Warehousing: 6,6 Mining, Logging, Construction: 6,1 Education/Health: 5,3 Financial Services sector employment declined by 1,8 jobs a 1.8% decline and the Professional and Business Services sector gained 2, jobs a.9% increase in metro Denver for the 12 months ending October 21. The Professional Services sector has added 12,8 jobs since February, the cyclical trough. In November, two new loan programs became available to Colorado businesses, particularly for those in the renewable-energy and energy-efficiency sectors, with the objective of creating new jobs in the sector. There will be $13 million available; $12 million in Federal stimulus money is intended for larger renewable-energy companies to sustain and expand their business. The remaining $1 million is allotted for 2 Denver Metro

3 $ in Millions $4,5 $4, $3,5 $3, $2,5 $2, $1,5 $1, $5 $ Venture Capital Invested in Colorado Firms * Source: PricewaterhouseCoopers, Delta Associates; December 21. *YTD Through 3 rd Quarter Annualized. small businesses to help install clean-energy-powered systems or to improve their energy efficiency and reduce long-term energy costs. Investment activity in the 3 rd quarter increased but remains modest. According to the latest PricewaterhouseCoopers MoneyTree report, Colorado firms raised $83 million in venture capital in the 3 rd quarter of 21, compared to $51 million in the 2 nd quarter. The software and electronics/instrumentation industries attracted the majority of funding in the 3 rd quarter. In the largest financing deal of the quarter, Infinite Power Solutions, an electronics/instrumentation firm that manufactures energy storage devices for microelectronic applications, received $2 million from a syndicate of investors including Applied Ventures LLC, Polaris Venture Partners and Generation Investment Management LLP. Mining, Logging and Construction sector employment declined by 3,5 jobs a 4.4% reduction in metro Denver over the 12 months ending October 21. Since October 29, Weld County has been experiencing a flurry of activity with oil and gas companies interested in tapping into the huge potential of the Niobrara oil field. Now Denver International Airport (DIA) is getting in the game. DIA plans to offer mineral rights agreements in 211, which would allow oil and gas companies to drill on its 53 square miles of land. A deal with DIA is very appealing because interested parties would have access to 34, acres of land and only have to deal with one owner. In the surrounding area, mineral rights have sold for about $1,/acre, which could result in $34 million for DIA. Any deal would include an upfront bonus on a per acre basis and ongoing royalty payments tied to the amount of oil or natural gas produced at the price it gets on the market. The Education/Health sector added 5,4 jobs, a 3.4% increase, over the 12 months ending October 21. Under the health care reform legislation, $23 million in Federal government grants and tax credits were made available to several Colorado biotech and medical device companies. Grants made up $22.8 million of the amount companies in the state won; the remainder was in tax credits. In November, 59 Colorado companies began receiving notice that they qualified for money to help fund 12 projects. Colorado has the nation s 1 th largest bioscience industry and was ranked 1 th in the amount of money received under the program. Denver Metro 3

4 Manufacturing activity has ramped up in the Denver area recently. The Purchasing Managers Index for Denver increased to 69.6 in October from 54 in September and 47.2 back in January. A reading of 5 is neutral. This sector lost 2,6 jobs a 3.4% decline over the 12 months ending in October 21. Vestas, a Danish wind turbine manufacturer with a large presence in Colorado, is ready to open its fourth plant in 211. Presently, Vestas has about 1,6 employees working at three manufacturing plants in Colorado. The fourth plant will open in Brighton and will have about 65 employees at full capacity. In the 4 th quarter of 21, approximately 4 people were hired at the Windsor blade plant. An additional 6 people will be hired over the next nine months with the expectation that the plant will have 75 employees by the end of 211. The Hospitality/Tourism sector gained 1,7 jobs a 1.2% increase in the Denver metro over the 12 months ending October 21. Denver continues to add jobs in this sector as new hotels are added to the skyline. After three years of construction, the Four Seasons Hotel Denver opened its doors in October. The 45-story building is Denver s 4 th largest building. It has 239 hotel rooms, 12 private residences, and features the Edge Restaurant and Bar, 17, SF of meeting space, a spa, and rooftop pool. The hotel has 28 employees. The Denver metro area residential real estate market is seeing continued signs of improvement. The median sales price of an existing single family home in the Denver metro area jumped to $238,5 in the 3 rd quarter of 21, up 4.1% from $229,1 in the 3 rd quarter of 29, according to the National Association of Realtors. Also, according to the Colorado Division of Housing, new foreclosure filings in Denver fell 5.4% in October 21, when compared with the same month one year earlier. Additionally, foreclosure sales at auction dropped to a 19-month low in October and are down 13.9% from October 29. Median Single-Family Home Price Denver/Boulder Metro Areas 27 3 rd Quarter 21 Median Single-Family Home Price $4, $35, $3, $25, $2, $15, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Denver Boulder Source: National Association of Realtors, Delta Associates; December 21. Note: Denver and Boulder are considered separate metro areas by NAR. 4 Denver Metro

5 More Flexibility for Developers In September, the Regional Transportation District (RTD) approved revisions to its 28 Strategic Plan for Transit Oriented Development (TOD). The revisions make it easier to develop land around a transit station by addressing parking issues and land cost. The RTD will be more flexible with its requirement to replace parking spaces at a 1:1 ratio. It is also going to be more malleable when selling land for a fair market value and be agreeable to different ways of getting its money. In addition to these significant changes that will save developers money, RTD is expected to pick four pilot projects and throw its support behind them. RTD believes its support could open doors to Federal grant money or loans for affordable housing. Annual Payroll Job Growth 4, 3, 2, 1, -1, -2, -3, -4, -5, -6, -7, Job Forecast Denver-Boulder CSA Avg. Annual Growth 25/6 = 26,4/annum Projected Avg. Annual Growth 211/12 = 24,8/annum THE DENVER METRO ECONOMIC OUTLOOK The Denver metro economy will likely experience steady growth in 211, fueled by growth in Professional/Business Services, Hospitality/Tourism and a strengthening consumer sector. The annual employment loss for 21 will likely settle around 18,, before stronger growth in drives positive job growth in the 23, to 27, range per year. We expect employment growth over the next two years comparable to what the Denver metro experienced in Source: BLS, Delta Associates; December Office Absorption and Employment Denver Metro Job Growth '89 '9 '91 '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 1* Source: BLS, Delta Associates; December 21. Net Absorption 7, 6, 5, 4, 3, 2, 1, -1, -2, -3, -4, -5, -6, -7, Annual Job Growth *12-month job growth through October. Improvement at Year-End THE DENVER METRO OFFICE MARKET The metro Denver office market continued to experience modest improvement in the 4 th quarter of 21, as a result of job growth in the Professional/Business Services sector during the year. Moderate leasing activity maintained positive absorption, while vacancy declined and asking rents held relatively steady. Net Absorption Modest but Steady Net absorption of office space totaled 188, SF in metro Denver in the 4 th quarter of 21. For the year, net absorption totaled 1.8 million SF. Significant leases by Catholic Health Initiatives in Inverness and U.S. Bureau of Prisons in Aurora fueled absorption in the 4 th quarter. Denver Metro 5

6 Net Absorption in Select Submarkets (in SF): Q4 21 All of 21 Inverness 1, 2, Aurora/Northeast 88, 56, Cher. Crk/Glendale 81, 54, Available sublease space in metro Denver decreased by 1, SF in the 4 th quarter of 21. For the year, sublease space decreased by 357, SF. There is approximately 1.1 million SF of sublease space on the market, representing.8% of the standing inventory. Net Absorption in s of SF 7, 6, 5, 4, 3, 2, 1, -1, -2, -3, Net Absorption of Office Space and Direct Vacancy Rate Trends Denver Metro Net Absorption Sources: Vacancy Delta Associates analysis of CoStar data; Net Absorption Delta Associates; December 21. 2% 16% 12% 8% Vacancy Rate Office Vacancy Rate Denver Metro % 14% 12% 1% 8% 6% 4% 2% % Vacancy Rate Vacancy Rate Declines Metro Denver s overall office vacancy rate (including sublet space) decreased to 13.9% at year-end 21, from 14.1% in the 3 rd quarter and 14.5% a year ago. The direct office vacancy rate edged down to 13.1% in December 21, from 13.2% in September and 13.5% a year ago. Overall Vacancy Rates in Select Submarkets: Boulder 8.9% CBD 13.3% Denver Tech Center 14.6% The metro Denver overall office vacancy rate will likely decline gradually over the next two years, as demand for space outpaces the limited pipeline of new supply. As a result, overall vacancy will likely decline to the mid-12% range by yearend % % '88 '89 '9 '91 '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 Source: Delta Associates analysis of CoStar data; December 21. Construction Pipeline Remains Modest There is 653,739 SF of office space under construction or renovation at year-end 21, compared to 826,512 SF in the 3 rd quarter and 1.8 million SF a year ago. Space under construction at December 21 is 51% pre-leased, compared to 45% a year ago. Notable projects under construction include Fitzsimons Village 1 in Aurora and Red Rocks Medical Center in West Denver. Construction remains modest at just.5% of metro Denver s standing inventory. 6 Denver Metro

7 $25 $2 $15 $1 $5 $16.33 Average Class A Office Rents Denver Metro $11.4 $24.5 $18.97 $22.58 $ Source: Delta Associates analysis of CoStar data; December 21. Billions of $ $4 $3 $2 $1 $ Comparative Investment Sales Volume Office Product Source: Real Capital Analytics, graphic by Delta Associates; December 21. DFW Houston Phoenix Denver Office Space U/C and Renovation Denver Metro Area Submarket SF % Pre-leased CBD 62,145 17% Midtown 4, 1% Northwest 18,787 1% Aurora/Northeast 258,81 47% West 238,6 44% Boulder 36, 1% Total 653,739 51% Source: Delta Associates, CoStar; December 21. Metro Denver office deliveries totaled 1.7 million SF in 21, compared to 1.6 million SF in 29. Space delivered in 21 was 57% leased upon delivery, compared to 58% in 29. There was one new delivery in the 4 th quarter TAXI Freight s 3, SF building in Platte River. Office Asking Rents: Relatively Steady Overall asking office rents held relatively steady in 21 in metro Denver. Class A asking rents edged up late in the year. In general, landlords maintained stable face rents while making substantial concessions to close deals, which pushed effective rents down. Class A asking rents averaged $21.1/SF, full service, at year-end 21 across the Denver metro area. Some premium space at prime locations is priced much higher than this metro-wide average. Asking rents will likely remain relatively steady in early 211 before gaining modest traction by mid-year as demand increases, particularly given the limited amount of new supply in the pipeline. Concessions are likely to burn off gradually during 211. Investment Sales Increase We recorded $632 million of investment sales in metro Denver in 21, compared to $19 million in 29. We expect to see increased activity in the period ahead as market conditions improve and credit becomes more available. The average investment sale price in metro Denver in 21 was $164/SF, down 7% from the average price in 29. However, the limited number of transactions makes pricing volatile and difficult to gauge. In the 4 th quarter, Walton Street Capital bought Broadway Station from The Lionstone Group for $49.5 million or $151/SF. In mid-december, KBS REIT II purchased Granite Tower in the CBD for $149 million Denver Metro 7

8 . Average Office Sale Price Denver Metro or $265/SF. Sale prices will likely gain traction in 211 as a result of increased demand for office assets and improved market fundamentals. Selected Q4 21 Office Building Transactions: Average Sale Price Per SF $25 $225 $215 $2 $177 $175 $165 $164 $149 $148 $15 $125 $19 $113 $115 $1 $75 $ Source: Real Capital Analytics, graphic by Delta Associates; December 21. Building/Submarket Sale Price/Buyer Granite Tower $149. million ($265/SF) CBD KBS REIT II Broadway Station $49.5 million ($151/SF) Colorado Blvd./I-25 Walton Street Capital Urology Center of Colorado $23.3 million ($422/SF) West Denver Arny Porath Source: Real Capital Analytics; December % 1% 9% 8% 7% 6% Cap Rates for Core Office Assets Metro Denver 24 October 21 Cap rates were 8.5% on a trailing 12-month basis for core office assets that sold in metro Denver as of October 21, down from a cyclical peak of 8.8% first reached in November 29. Recent trades for core office product are occurring in the 8.% range or lower. We may see cap rates edge down further in the period ahead, as rents firm, credit gradually becomes more available and more competition enters the market. However, if interest rates rise in 211 as many economists expect, that could cause cap rates to hold steady or edge up. 5% * Source: Real Capital Analytics, graphic by Delta Associates; December 21. *Trailing 12-month average, through October THE DENVER METRO OFFICE MARKET OUTLOOK The Denver metro office market will likely experience steady improvement in 211 as the economic recovery continues to gain strength. As job growth accelerates, particularly in Professional/Business Services and the financial arena, demand for office space will follow suit. The overall vacancy rate will decline steadily, likely dropping to the mid-12% range by year-end 212. Rents will likely begin to gain traction by mid-211 as market conditions strengthen noticeably. With construction equating to just.5% of the standing inventory and demand on the rise, concessions are likely to burn off gradually throughout Denver Metro

9 SUMMARY OF OFFICE MARKET INDICATORS - ALL SPACE DENVER METRO AREA 27 THROUGH 21 December 21 December 21 # Total SF Avail. Vacancy SF Under of Rentable SF Immediately Direct Vacancy Rate at End of: Rate Constr. or Net Absorption (SF) Submarket Bldgs. All Bldgs. 1/ All Bldgs. 2/ w/ Sublet Renovation Q CBD ,772,74 3,876,27 1.4% 11.6% 12.6% 12.2% 13.3% 62, , (136,) 21, (69,) 936, Midtown 99 4,979, , % 5.4% 5.% 6.6% 6.6% 4, (21,) 7, 37, (4,) (8,) Cherry Creek/Glendale 97 6,757,58 885, % 13.3% 13.9% 13.1% 13.4% - (25,) 119, (42,) 81, 54, Colorado Blvd./I ,323,1 782, % 15.7% 17.5% 18.1% 18.3% - 229, 142, (78,) 13, (26,) Cherry Crk/Co. Blvd Total ,8,68 1,667, % 14..2% 15.1% 15.1% 15.3% - 24, 261, (12,) 94, 28, Northwest ,745,882 1,427, % 11.% 11.% 11.2% 12.8% 18, , 99, (59,) (13,) 239, North 66 3,163,75 487, % 11.8% 13.5% 15.4% 15.4% - (38,) 94, 8, (22,) (6,) Aurora/Northeast 176 9,831,72 1,415, % 17.9% 17.7% 14.4% 14.9% 258,81 59, (292,) 9, 88, 56, Southwest 155 6,793, , % 12.6% 13.5% 12.8% 13.2% - 86, 55, (61,) 7, 47, West 2 1,851,48 1,323, % 9.4% 1.6% 12.2% 12.8% 238,6 395, 219, (13,) 22, (148,) Denver Tech Center 89 11,7,467 1,527, % 13.2% 16.8% 13.8% 14.6% - 265, (188,) (399,) 77, 331, Greenwood Village 87 8,121,319 1,486, % 13.4% 14.5% 18.3% 19.3% - 91, 16, 353, (57,) (39,) Inverness 68 4,984,69 558, % 14.2% 15.2% 11.2% 11.5% - 96, (17,) (63,) 1, 2, Balance of Southeast ,446,828 2,843, % 14.4% 16.6% 16.3% 16.9% - (321,) 188, (34,) 17, 52, Southeast Total ,623,223 6,416, % 13.9% 16.1% 15.4% 16.1% - 131, 143, (449,) 137, 274, Boulder 27 8,44,59 651, % 9.2% 8.6% 8.1% 8.9% 36, 263, 131, 118, (16,) 41, TOTAL - Denver Metro 2,53 14,885,192 18,464, % 12.4% 13.5% 13.1% 13.9% 653,739 1,936, 644, (365,) 188, 1,783, Vacancy Rate With Sublet Space 12.6% 13.6% 14.5% 13.9% 1/ Includes buildings 15, SF RBA and greater; includes multi and single tenant buildings. Does not include buildings under construction or buildings owned by the government. 2/ Does not include sublet space. Note: Net absorption occurs when a lease is signed, not when space is physically occupied; pre-leased space counts as net absorption when a building delivers. Source: Inventory and Vacancy from analysis of CoStar data, Net Absorption computed by Delta Associates; December 21. Delta Associates, the research affiliate of Transwestern, is headquartered at: 5 Montgomery Street, Suite 6, Alexandria, VA Phone: DeltaAssociates.com Denver Metro 9

10 Net Absorption in s of SF 1, Net Absorption of Office/Flex Space and Direct Vacancy Rate Trends Denver Metro Net Absorption Source: Vacancy Delta Associates analysis of CoStar data; Net Absorption Delta Associates; December 21. Vacancy Rate 2% 18% 16% 14% 12% 1% 8% 6% 4% 2% % Direct Vacancy Rate Market Improving Steadily THE DENVER METRO OFFICE/FLEX MARKET The metro Denver office/flex market experienced 72, SF of net absorption in the 4 th quarter of 21. In all of 21, net absorption totaled 346, SF. Net Absorption in Select Submarkets (in SF): Q4 21 All of 21 Aurora/NE 5, 11, Inverness 45, 79, Southwest 3, 19, There is currently 63, SF of available office/flex sublease space on the market in metro Denver, representing.3% of the standing inventory. Available sublease space decreased by 88, SF in 21. Office/Flex Vacancy Declines Metro Denver s overall office/flex vacancy rate declined to 13.2% at year-end 21, from 13.5% in the 3 rd quarter and 16.1% a year ago. The direct vacancy rate is 12.9% at December 21, down from 13.2% in September and 15.2% at year-end 29. Overall Vacancy Rate in Select Submarkets: Boulder 7.7% Aurora/Northeast 15.5% Southeast 17.4% We expect the overall office/flex vacancy rate in metro Denver to decline to the mid-12% range by year-end 211 as increased demand outpaces a limited pipeline of new supply. Office/Flex Construction: No Activity There were no office/flex buildings under construction or renovation at year-end 21. We expect the pipeline to remain very limited in the near-term as demand remains modest and construction financing difficult to secure. 1 Denver Metro

11 Office/Flex Rents Holding Steady Office/flex asking rents held relatively steady in the 4 th quarter of 21 in metro Denver, but slipped about 1% during the year. Office/flex rents will likely remain relatively stable in early 211 due to modest demand. However, as demand increases during the year, rents likely will gain traction quickly, given the lack of new product in the pipeline. Investment Sales: Activity Picking Up We recorded $14 million of office/flex investment sales in metro Denver in 21, compared to $99 million in 29. Sales prices averaged $75/SF in 21, compared to $16/SF during 29. Sales activity will likely increase moving forward as credit becomes more available and investor demand for office/flex assets rises. Denver Metro 11

12 SUMMARY OF OFFICE/FLEX MARKET INDICATORS - ALL SPACE DENVER METRO AREA 27 THROUGH 21 December 21 December 21 # Total SF Avail. Vacancy SF Under of Rentable SF Immediately Direct Vacancy Rate at End of: Rate Constr. or Net Absorption (SF) Submarket Bldgs. All Bldgs. 1/ All Bldgs. 2/ w/ Sublet Renovation Q CBD 4 147,4 15, %.6% 12.7% 1.8% 1.8% - 9, 22, (21,) 1, 1, Midtown 3 77,5 -.2%.%.%.%.% - (1,) 1, Cherry Creek/Glendale Colorado Blvd./I , %.%.%.%.% - (3,) 17, Cherry Crk/Co. Blvd Total 3 55, %.%.%.%.% - (3,) 17, Northwest 85 2,682,18 431, % 15.% 15.8% 16.1% 17.1% - 154, 39, (9,) (13,) (8,) North ,388 24, % 15.1% 9.3% 2.8% 2.8% - 26, (4,) 48, (2,) 38, Aurora/Northeast 85 2,868, , % 18.9% 18.3% 15.5% 15.5% - 44, (25,) 35, 5, 11, Southwest 7 2,75, , % 1.4% 13.2% 9.2% 9.2% - 144, (7,) (75,) 3, 19, West 45 1,79, , % 14.4% 14.5% 14.1% 14.4% - (31,) (29,) (2,) 5, 7, Denver Tech Center 5 172,316 46,87 8.6% 1.9% 29.% 27.2% 27.2% - 8, (1,) (54,) 3, 3, Greenwood Village Inverness 41 1,623, , % 15.8% 2.5% 15.6% 16.5% - 16, 29, (76,) 45, 79, Balance of Southeast 66 2,63,129 45, % 19.4% 17.9% 17.3% 17.3% - 21, (37,) (29,) (42,) 16, Southeast Total 112 4,398,982 75, % 17.6% 19.3% 17.1% 17.4% - 234, 66, (159,) 6, 98, Boulder 73 2,744, , % 8.7% 8.2% 7.1% 7.7% - (8,) 7, 17, 22, - TOTAL - Denver Metro ,251,923 2,351, % 14.2% 15.2% 12.9% 13.2% - 496, 336, (166,) 72, 346, Vacancy Rate With Sublet Space 13.8% 14.9% 16.1% 13.2% 1/ Includes buildings 15, SF RBA and greater; includes multi and single tenant buildings. Does not include buildings under construction or buildings owned by the government. 2/ Does not include sublet space. Note: Net absorption occurs when a lease is signed, not when space is physically occupied; pre-leased space counts as net absorption when a building delivers. Source: Inventory and Vacancy from analysis of CoStar data, Net Absorption computed by Delta Associates; December 21. Delta Associates, the research affiliate of Transwestern, is headquartered at: 5 Montgomery Street, Suite 6, Alexandria, VA Phone: DeltaAssociates.com National Economy and Methodology Please visit Transwestern.net for: Our National Economic Outlook Explanation of our methodology Note on data contained herein Our inventory, vacancy and absorption figures include owneroccupied and single-tenant buildings. We include these buildings to capture the entire market so that we may derive correlations between job growth and occupancy of inventory. Our reported vacancy rate is based on immediate availability. 21. All rights reserved. You may neither copy nor disseminate this report. If quoted, proper attribution is required. 12 Denver Metro

13 Delta Associates Delta Associates, the research affiliate of Transwestern, is a firm of experienced professionals offering valuation, consulting and data services to the commercial real estate industry for over 3 years. The firm s practice is organized in four related areas: 1. Valuation services for partial interests in commercial real estate assets. 2. Consulting, research and advisory services for commercial real estate projects, including market studies, market entry strategies, asset performance enhancement studies, pre-acquisition due diligence, and financial and fiscal impact analyses. 3. Distressed asset recovery services to include property performance analyses and enhancement studies, debt structuring evaluation and note valuations, portfolio assembly due diligence, and litigation support. 4. Subscription data for selected metro regions for office, industrial, retail, condominium, and apartment markets. For further information about Delta Associates and to see all of our publications, please browse our web site at: DeltaAssociates.com. Headquarters Gregory H. Leisch, CRE Chief Executive 5 Montgomery Street, Suite 6 Alexandria, VA /836-57; Fax: 73/ Greg.Leisch@DeltaAssociates.com Consulting and Advisory Services David Weisel President, Consulting Division 5 Montgomery Street, Suite 6 Alexandria, VA / ; Fax: 73/ David.Weisel@DeltaAssociates.com Transwestern Support Group Alexander (Sandy) Paul President, TSG 5 Montgomery Street, Suite 6 Alexandria, VA / ; Fax 73/ Alexander.Paul@DeltaAssociates.com Cyber Contacts Website: DeltaAssociates.com General box: info@deltaassociates.com Report Author: Janette Pepper Report Editor: Scott Price Transwestern With 15 team members in major markets coast to coast, Transwestern operates through six distinct functional lines of business agency leasing, property and facility management, investment services, tenant advisory, development and research for a broad range of property types, including office, industrial, retail, healthcare and multifamily. Denver, Colorado 4643 S. Ulster Street Suite 9 Denver, CO kevin.mckinnon@transwestern.net Kevin McKinnon Atlanta Detroit New Orleans Salt Lake City David Shapiro Austin Ft. Lauderdale Northern Virginia San Antonio Peter Thomas Baltimore Houston Oklahoma City San Diego Andrew Piepgras Bethesda Los Angeles Orange County San Francisco Lyla Gambow Chicago Miami Orlando Washington, DC Dallas Milwaukee Philadelphia Denver Minn.-St. Paul Phoenix In 29, the firm completed leasing, sales and finance transactions totaling $3.3 billion. Within that same time period, Transwestern oversaw the leasing and management of 1,113 properties, representing 233 million square feet leased and managed combined. Transwestern Outlook is published quarterly by Transwestern and its research affiliate, Delta Associates. All information is from sources deemed reliable; however, no representation is made as to the accuracy thereof. Sources: Bureau of Labor Statistics, Colorado Division of Housing, CoStar, Denver Business Journal, GMU Center for Regional Analysis, The Goss Institute, National Association of Purchasing Management - Denver, National Association of Realtors, PricewaterhouseCoopers, Real Capital Analytics. Denver Metro 13