QUARTERLY - CCIM Institute

RERCsCCIMInvestmentTrendsQUARTERLYFourth Quarter 2010 Report s Vol. 6, No. 4Sponsored by:

F o r e w o r dNovember 2010Dear Readers,We heard from more than a few CCIM members who attended the CCIM 2010 conference in Orlando last monththat the investment climate for commercial real estate is more uncertain than what the majority of us have seenin our lifetime. The troubling thing about this situation is that we do not see the economy or the investment environmentimproving significantly for quite some time. As noted at the ReFocus event in Orlando, one thing we cando, however, is to face the reality of a very sluggish economy with slow job growth, and to reset our expectations.It is going to take time to work through the various challenges that we are facing, including repricing and furtherdeleveraging.RERC’s research and analysis indicates that we are seeing some improvement in total volume and pricing on a12-month trailing basis for all property types. The great majority of the increases in total volume and pricing occurredin transactions greater than $5 million. However, for those transactions that totaled less than $5 million,volume increased only slightly, and in fact, the size-weighted average price per square foot/unit declined for allproperty types. The increases in top-tier property prices, juxtaposed with deteriorating pricing for properties at thelower-tier levels, is in keeping with the mixed views we are seeing in returns versus risk and in value versus priceratings, and as outlined in this issue of the RERC/CCIM Investment Trends Quarterly.We would also like to take this opportunity to thank all of you who responded to RERC’s research surveys. Thecomments and the raw data you share provide solid insight into the state of the commercial real estate marketand to the returns we can expect, and we appreciate your contributions.Sincerely,Kenneth P. Riggs, Jr., CCIM, CRE, MAIPresident & CEOReal Estate Research Corporation (RERC)Frank N. Simpson, CCIM2011 CCIM Institute PresidentPresident, The Simpson CompanyInvestment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.1

compared to second quarter conditions. Many respondentsnoted that their firms saw a rise in demand for goods andservices, as well as an increase in business profits, for thefifth consecutive quarter. This offers one of the more hopefulsigns that hiring may improve in the coming months.Consumers Still WaryWhile retailers are hoping that the upcoming holiday seasonwill prompt consumers to loosen their purse strings, accordingto recent survey results issued by First Command FinancialServices, more than half of the survey respondentssaid they will reduce overall spending on gifts this year andwill not be traveling for the holidays. Further, over the next6 months, 49 percent of consumers plan to avoid shoppingaltogether or to shop only for those things that are “absolutelyneeded,” according to results of a consumer surveyissued by Citi.However, retail sales were positive throughout third quarter2010, due primarily to back-to-school shopping. Accordingto the U.S. Census Bureau, advance estimates of retailand food services sales for September increased 0.6 percentfrom August, and 5.7 percent from the same perioda year ago. Consumers continue to struggle, as inflationadjustedmedian household income declined 4.8-percentbetween 2000 and 2009 (4.2 percent between 2007 and2009 alone), according to the Census Bureau. This, on topof the average 48-percent loss in home values ($6.5 trillionnationwide since 2006) and increasing foreclosures, allowsone to understand why U.S. households continue to bemore discriminating about spending.Foreclosures Pull Housing Market Down FurtherDespite low interest rates, low prices, and ample inventory,the overall outlook for home sales remains weak. By yearend 2010, there are expected to be fewer total home salesthan in 2009, reports the National Association of REAL-TORS® (NAR).Although a slow recovery in the housing market appears tobe underway, only modest improvement is expected andsales activity will remain slow until stronger job growth occurs.Existing-home sales have been increasing during thirdquarter, rising 10.0 percent in September 2010 and bringingthe annualized existing home sales number up to 4.53million units. Although new home sales are priced near ahistoric low, sales increased by 6.6 percent in September, atan annualized pace of 307,000 units. Pending home salesalso increased in September. The supply of homes reacheda record high of 12.5 months in July, but fell to 10.7 monthsin September.Almost one-fourth of U.S. home sales in second quarter2010 were for properties in some stage of mortgage distress,according to Realty Trac. Although we have yet to seewhat will become of the foreclosure delays due to the “robosigning”controversy, deficient titles, and resulting lawsuits,the number of foreclosures is expected to number in themillions, and home prices are likely to fall well into next year.The concern is that if the foreclosure process is prolongedfor too long, home prices may drop further.CCIM Members Lower Their Economic OutlookCCIM members felt the national economy continued to decline,and in third quarter 2010, they lowered their rating ofthe national economy to 3.7 on a scale of 1 to 10, with 10 beinghigh. Ratings for the regional economies declined fromthe previous quarter too, however all the regional economiesreceived higher ratings than the national economy,indicating that respondents felt their regional economieswere stronger than the national economy overall. The Eastregional economy was rated highest at 4.9, while the Westregional economy received the lowest rating of 3.8. With allthe economic ratings remaining below the mid-point of thescale, it is clear that there is great uncertainty and a senseof caution regarding the state of the economy.Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.3

decline negates the improvement to 5.4 from the previousquarter, as reflected in Exhibit 4, and indicates that respondentsare generally less confident in commercial real estatereturns over the risk of this investment.In fact, the return versus risk ratings for all the property typesfell or remained flat during third quarter 2010, indicating thatCCIM members have less confidence in the return prospectsof these property types. At 6.2 on a scale of 1 to 10, with 10being high, the return versus risk rating for the apartmentsector remained the highest. Next highest was the industrialsector, with a return versus risk rating of 4.8. As demonstratedin Exhibit 4, the apartment and industrial sectors were theonly property types where this rating remained unchanged.In general, the amount of risk involved in investing in theseproperty types (with the exception of the apartment sector)significantly outweighs the return one can expect.Regarding the value versus price of commercial real estate,ratings were mixed during third quarter 2010, indicating thatCCIM members felt that the value of commercial propertyis very uncertain and is barely equal to its price. As shownin Exhibit 4, the value versus price rating of real estate fellslightly to 5.1 on a scale of 1 to 10, with 10 being high, duringthird quarter 2010.With respect to the value versus price rating of the specificproperty types, the apartment sector continued to receivethe highest rating, increasing to 5.4 on a scale of 1 to 10,with 10 being high, during third quarter 2010. In addition, thevalue versus price rating for the retail sector increased to4.8 from 4.5 in the previous quarter. The value versus priceratings for the office and industrial sectors held their ownfrom the previous quarter, at 4.7 and 5.1, respectively, whilethe rating for the hotel sector fell to 4.5 during third quarter.The ratings indicate that survey respondents believe that theoffice, retail, and hotel properties are generally of less valuethan their price would indicate.RERC’s transaction analysis showed significantly greatertotal volume on a 12-month trailing basis during third quarter2010. Hotel sector volume showed the largest increaseat nearly 50 percent, while at 15 percent, retail sector volumeincreased the least. Compared to previous quarters,there was a steady increase in volume of sales greater than$5 million for all of the property sectors during third quarter.However, third quarter volume for transactions of lessthan $5 million remains quite flat compared to the previousquarter.The size-weighted average price per square foot/unit for alltransactions held steady or increased for all property typeson a 12-month trailing basis during third quarter 2010. However,the size-weighted average price per square foot/unitExhibit 2. RERC Historical Buy, Sell, Hold RecommendationsRating10864203Q 2001HoldSellBuy3Q 2002Exhibit 3. Real Estate Investment Conditions Ratings3Q20103Q 20033Q 20042Q20103Q 20053Q 20063Q 20071Q2010Exhibit 4. Historical Return/Risk and Value/Price Ratings3Q 2010 2Q 2010 1Q 2010 4Q 2009 3Q 2009Return vs. RiskOverall 4.9 5.4 5.1 4.8 5.0Office 4.1 4.4 4.1 4.1 4.2Industrial 4.8 4.8 4.7 4.7 4.9Retail 4.2 4.7 4.1 3.9 4.0Apartment 6.2 6.2 6.1 5.8 5.8Hotel 4.1 4.4 3.9 3.9 3.8Value vs. PriceOverall 5.1 5.2 5.5 4.7 4.8Office 4.7 4.7 5.0 4.3 4.4Industrial 5.1 5.1 5.0 4.7 5.0Retail 4.8 4.5 4.9 4.2 4.4Apartment 5.4 5.2 5.6 4.9 5.3Hotel 4.5 4.7 4.7 4.0 4.1Ratings are based on a scale of 1 to 10, where 1 is poor and 10 is excellent.Source: RERC/CCIM Investment Trends Quarterly Survey, 3Q 2010.4Q20093Q2009Office 3.8 4.0 3.8 3.8 3.8Industrial 4.5 4.4 4.2 4.1 4.3Retail 3.9 4.2 3.7 3.8 3.8Apartment 6.0 5.9 5.5 5.4 5.5Hotel 3.9 4.2 3.8 3.8 3.6Ratings are based on a scale of 1 to 10, where 1 is poor and 10 is excellent.Source: RERC/CCIM Investment Trends Quarterly Survey, 3Q 2010.3Q 2008Ratings are based on a scale of 1 to 10, where 1 is poor and 10 is excellent.Source: RERC Institutional Investment Survey, 3Q 2010.3Q 20093Q 20101086420Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.5

for transactions less than $5 million decreased forall property types except hotels. The weightedaveragecapitalization rate for each of the propertysectors declined.Although we have seen significant improvementin the stock market during third quarter 2010, ourmemories are not so short that we have forgottenhow quickly stocks can fall. The volatility ofthe stock market and the relatively low returnsof the bond market make the real estate marketeven more attractive to investors, especially withthe continued weakness in the economy. However,by the end of September 2010, the DowJones Industrial Average (DJIA) rose by nearly 8percent to 10,788, which was the highest it hadbeen since April, and the Standard & Poor’s (S&P)500 increased to 1,080. As shown by the returnsreported by the National Association of Real EstateInvestment Trusts (NAREIT) and the NationalCouncil of Real Estate Investment Fiduciaries(NCREIF) in Exhibit 5, however, commercial realestate is generally outperforming the major stockmarket indices as well.Exhibit 5. What Do the Financial Markets Tell Us?Compounded Annual Rates of Return as of 9/30/2010Market Indices YTD 1-Year 3-Year 5-Year 10-Year 15-YearConsumer Price Index 1 0.38% 1.20% 1.55% 1.90% 2.32% 2.40%10-Year Treasury Bond 2 3.33% 3.24% 3.46% 3.97% 4.23% 4.81%Dow Jones Industrial Average 0.38% 8.51% -6.96% 2.09% 2.00% 7.52%NASDAQ Composite 3 4.38% 11.60% -4.29% 1.94% -4.29% 5.62%NYSE Composite 3 1.34% 5.36% -10.15% -0.94% 0.38% 5.39%S&P 500 3.89% 10.16% -7.16% 0.64% -0.43% 6.45%NCREIF Index 8.12% 5.84% -4.61% 3.67% 7.25% 8.91%NAREIT Index (Equity REITS) 19.10% 30.28% -6.06% 1.88% 10.38% 10.31%1 Based on the published data from the Bureau of Labor Statistics (Seasonally Adjusted).2 Based on Average End of Day T-Bond Rates.3 Based on Price Index, and does not include the dividend yield.Sources: BLS, Federal Reserve Board, S&P, Dow Jones, NCREIF, NAREIT, compiled by RERC.S u m m a r yAs the economy continues to struggle and the investmentenvironment remains uncertain, the commercial real estatemarket is increasingly divided. Some of the highest pricesever are being paid for institutional properties in top-tier markets,while other markets are seeing little or no transactionactivity other than distressed property sales. Economic andreal estate related highlights from third quarter 2010 include:• The fear of a double-dip recession continues. Slowgrowth is expected to continue for the foreseeable future,and the unemployment rate is likely to move little fromcurrent levels.• The short-term interest rate will remain near zero “for anextended period,” as the Federal Reserve buys morebonds to stimulate the economy. Yields will decrease,stock and commodity prices (along with inflation) arelikely to increase, and the dollar is expected to weaken.• Expect investors to head back to the stock market, despitethe volatility, if returns continue to climb.• The housing market remains weak, and the halt in foreclosurescould hinder the recovery. Many believe that wecannot see a solid recovery in the economy until the difficultiesin the residential market are resolved.• Interestingly, CCIM members lowered their performanceratings for the economy during third quarter 2010. Asgenerally noted, the commercial real estate market willrecover after the economy, and although it is expected tobe a long time before a recovery becomes widely felt, weare seeing early signs of it in the commercial real estatemarket.• With more capital available from some sources and withincreased demand for less volatile investments, commercialreal estate property prices have been rising.• Various space market experts report that commercialreal estate vacancy will continue to decline next year, asjob growth gets underway, new household formations occur,and there is a lack of new supply.Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.6

Snapshot of Real Estate Market Performance – 3Q 2010Going-In Cap Rates vs. Unemployment12%12%10%10%8%8%6%6%4%2%0%3Q 19803Q 19813Q 19823Q 19833Q 19843Q 19853Q 19863Q 19873Q 19883Q 19893Q 19903Q 19913Q 19923Q 1993Sources: RERC, BLS, NBER, 3Q 2010.UnemploymentGoing-In Cap RateRecessionPerformance Indicator Recent Data Impact on Commercial Real Estate3Q 19943Q 19953Q 19963Q 19973Q 19983Q 19993Q 20003Q 20013Q 20023Q 20033Q 20043Q 20053Q 20063Q 20073Q 20083Q 20093Q 20104%2%0%Vacancy RatesOffice: 17.6%Industrial: 14.0%Retail: 10.9%Apartment: 7.1%Hotel: 64.2% (occupancy)According to Reis, Inc., vacancy for the office sector increased, whilethat for the retail sector remained unchanged during third quarter. Incomparison, the apartment sector vacancy rate decreased. The industrialsector availability rate also fell during third quarter, accordingto CBRE-EA. Smith Travel Research reported that hotel occupancy increasedduring third quarter.Rental Rates(RERC’s surveyed rentgrowth expectations)Office: 1.6% to 2.1%Industrial: 1.7% to 2.0%Retail: 1.6% to 1.8%Apartment: 2.9%Hotel: 2.1%RERC’s third quarter 2010 rental rate expectations were slightly higherfor the office, retail, apartment, and hotel sectors when compared tothose for second quarter 2010. The rental rate expectation for the industrialsector fell slightly from the previous quarter.Real Estate ReturnsRERC Required Returns:Office: 8.6% to 9.5%Industrial: 9.0% to 9.7%Retail: 9.1% to 9.3%Apartment: 8.5%Hotel: 10.8%NCREIF Realized Returns:Office: 1.7% to 9.0%Industrial: 0.5% to 6.9%Retail: 4.8% to 8.8%Apartment: 9.2%Hotel: 1.6%RERC’s required returns declined slightly for all property sectors duringthird quarter 2010. In comparison, NCREIF’s realized returns continuedto improve during third quarter, as all property sectors showed positivereturns.Capitalization RatesRERC Realized Cap Rates:Office: 6.8%Industrial: 8.2%Retail: 8.4%Apartment: 6.2%Hotel: 8.0%NCREIF Implied Cap Rates:Office: 6.6% to 7.2%Industrial: 7.3% to 7.6%Retail: 7.0% to 7.7%Apartment: 5.9%Hotel: 6.0%RERC’s realized cap rates declined during third quarter for all propertysectors. NCREIF’s implied cap rates were higher in each property sectorduring third quarter, with the exception of the industrial sector, whererates remained unchanged compared to the previous quarter.Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.7

N a t i o n a l M a r k e t A n a l y s i s< $2 MillionNational Transaction Breakdown12-Month Trailing Averages (10/01/09 - 09/30/10)Office Industrial Retail Apartment HotelVolume (Mil) $1,256 $2,436 $2,492 $1,103 $71Size Weighted Avg. ($ per sf/unit) $82 $46 $80 $43,993 $23,690Price Weighted Avg. ($ per sf/unit) $118 $72 $123 $68,540 $33,993Median ($ per sf/unit) $87 $55 $85 $50,000 $23,404$2 - $5 MillionVolume (Mil) $1,617 $2,694 $2,938 $2,132 $325Size Weighted Avg. ($ per sf/unit) $106 $52 $124 $53,505 $35,286Price Weighted Avg. ($ per sf/unit) $177 $85 $228 $106,016 $46,964Median ($ per sf/unit) $142 $72 $186 $83,382 $36,228> $5 MillionVolume (Mil) $32,144 $9,086 $18,590 $20,798 $6,223Size Weighted Avg. ($ per sf/unit) $208 $56 $160 $103,843 $131,348Price Weighted Avg. ($ per sf/unit) $351 $136 $236 $181,417 $233,592Median ($ per sf/unit) $173 $71 $160 $95,444 $111,631All TransactionsVolume (Mil) $35,017 $14,215 $24,021 $24,033 $6,620Size Weighted Avg. ($ per sf/unit) $189 $53 $141 $90,621 $111,062Price Weighted Avg. ($ per sf/unit) $335 $115 $223 $169,548 $222,273Median ($ per sf/unit) $115 $59 $111 $70,423 $62,024Capitalization Rates (All Transactions)Range (%) 4.1 - 12.9 4.2 - 12.2 4.2 - 12.7 4.2 - 11.1 6.8 - 11.9Weighted Avg. (%) 6.8 8.2 8.4 6.2 8.0Median (%) 7.9 8.8 7.8 6.6 8.0Source: RERC.Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.8

N a t i o n a l M a r k e t A n a l y s i s< $2 MillionNational Transaction BreakdownCurrent Quarter Rates (07/01/10 - 9/30/10)Office Industrial Retail Apartment HotelVolume (Mil) $307 $672 $720 $305 $20Size Weighted Avg. ($ per sf/unit) $82 $42 $78 $38,266 $17,782Price Weighted Avg. ($ per sf/unit) $113 $69 $121 $66,161 $26,745Median ($ per sf/unit) $85 $53 $85 $46,750 $21,129$2 - $5 MillionVolume (Mil) $438 $746 $936 $615 $89Size Weighted Avg. ($ per sf/unit) $107 $48 $107 $48,729 $37,995Price Weighted Avg. ($ per sf/unit) $177 $81 $212 $105,902 $59,473Median ($ per sf/unit) $132 $70 $171 $81,635 $41,333> $5 MillionVolume (Mil) $11,210 $3,390 $5,452 $7,919 $2,877Size Weighted Avg. ($ per sf/unit) $220 $63 $168 $116,084 $165,190Price Weighted Avg. ($ per sf/unit) $370 $181 $260 $192,264 $307,391Median ($ per sf/unit) $161 $76 $176 $97,583 $142,683All TransactionsVolume (Mil) $11,955 $4,807 $7,108 $8,839 $2,986Size Weighted Avg. ($ per sf/unit) $203 $56 $141 $99,526 $143,128Price Weighted Avg. ($ per sf/unit) $356 $150 $239 $181,903 $298,164Median ($ per sf/unit) $115 $57 $108 $72,917 $82,143Capitalization Rates (All Transactions)Range (%) 4.1 - 10.9 5.9 - 10.0 5.9 - 12.7 4.2 - 10.0 7.0 - 8.3Weighted Avg. (%) 6.3 7.9 7.8 5.7 7.5Median (%) 7.1 8.5 7.8 5.9 7.9Source: RERC.Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.9

N a t i o n a l I n d u s t r i a l P r o p e r t y S e c t o rRERC Weighted Average Capitalization Rate(12-Month Trailing Average)9.0%8.5%8.0%7.5%7.0%$100$75$50$25SouthEast3Q09WestMidwest4Q091Q10National2Q103Q10RERC Size-Weighted Average PPSF(12-Month Trailing Average)SouthEastWestMidwestNational9.0%8.5%8.0%7.5%7.0%$100$75$50$25• According to the RERC/CCIM Investment Trends Quarterlysurvey respondents, the industrial sector is a goodinvestment option. Some respondents stated that industrialproperty tenants are becoming confident enough to expandtheir space usage because the economy is startingto improve. In addition, there is also less risk and fair pricingassociated with this property type. Another positivesign is that according to the Federal Reserve’s October20, 2010 Beige Book, manufacturing activity continues tostrengthen, with production and new orders rising acrossmost districts.• Total transaction volume for the industrial sector rosenearly 25 percent on a 12-month trailing basis during thirdquarter 2010. This was the first significant increase sincevolume began leveling out for this property type during firstquarter 2009. The size-weighted average price per squarefoot of industrial space continued to trend upward, whilethe weighted-average capitalization rate declined to 8.2percent.• According to RERC’s 12-month trailing transaction analysis,the price of industrial properties where the transactionprice was greater than $5 million rose slightly from theprevious quarter, following the upward trend of transactionsoverall. However, the size-weighted average price ofindustrial properties where the transaction price was lessthan $5 million fell during third quarter.$03Q094Q091Q102Q103Q10RERC Price-Weighted Average PPSF(12-Month Trailing Average)$0• The national industrial availability rate declined by 10 basispoints to 14.0 percent during third quarter, the first drop in3 years, reported CBRE-Econometric Advisors. Despite theslight decline, the industrial market is flooded with excesssupply, and the availability rate remains near a record high.$150$125SouthEastWestMidwestNational$150$125$100$100$75$75$50$50$253Q094Q091Q102Q103Q10$25Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.11

N a t i o n a l A p a r t m e n t P r o p e r t y S e c t o rRERC Weighted Average Capitalization Rate(12-Month Trailing Average)8.0%7.5%7.0%8.0%7.5%7.0%• Respondents to the RERC/CCIM’s Investment TrendsQuarterly survey said that the apartment sector continuesto be the most popular property type among commercialreal estate investors again during third quarter 2010, asnoted by the increased number of property sales. In addition,apartment sector pricing has increased, which reflectshigher demand, lower vacancy rates, and increasing rents.6.5%6.0%5.5%SouthEast3Q09WestMidwest4Q09National1Q102Q103Q106.5%6.0%5.5%• The apartment market continued to improve, with 12-monthtrailing apartment sector total volume increasing nearly 25percent. In addition, the 12-month trailing size-weighted averageprice per unit increased 5 percent, while the weightedaverage capitalization rate continued to fall, reaching6.2 percent.$150,000$125,000$100,000$75,000$50,000RERC Size-Weighted Average PPU(12-Month Trailing Average)SouthEastWestMidwestNational$150,000$125,000$100,000$75,000$50,000• Although, the size-weighted average price per apartmentunit increased for transactions that totaled more than $5million, the size-weighted average price per apartment unitfor transactions that totaled less than $2 million declined10 percent.• The vacancy rate for the apartment sector dropped to 7.1percent during third quarter 2010, according to Reis, Inc.This is one of the sharpest drops in apartment vacancy onrecord. Net absorption increased by nearly 94,000 units,the largest quarterly addition to occupied stock since 1999.In addition, asking rents and effective rents grew by 0.5percent and 0.6 percent, respectively.$25,0003Q094Q091Q102Q103Q10$25,000$250,000$200,000RERC Price-Weighted Average PPU(12-Month Trailing Average)SouthEastWestMidwestNational$250,000$200,000$150,000$150,000$100,000$100,000$50,000$50,000$03Q094Q091Q102Q103Q10$0Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.13

N a t i o n a l H o t e l P r o p e r t y S e c t o rRERC Weighted Average Capitalization Rate(12-Month Trailing Average)9.5%9.0%8.5%9.5%9.0%8.5%• According to respondents to the survey for the RERC/CCIMInvestment Trends Quarterly, the hotel sector is improvingand deals can be found. Purchases have been increasingmore rapidly for hotels than for office buildings, shoppingcenters, and other types of commercial property, althoughsome respondents noted that many hotel deals are for distressedassets.8.0%7.5%7.0%3Q094Q091Q10NationalEast2Q103Q108.0%7.5%7.0%• According to RERC’s 12-month trailing transaction analysis,the total volume for the hotel sector increased nearly 50 percentduring third quarter 2010. This was the largest volumeincrease over the previous quarter among the various propertytypes. The size-weighted average price per hotel unitcontinued to increase, rising 20 percent overall during thirdquarter 2010, while the weighted-average capitalization ratedeclined to 8.0 percent.$150,000$125,000RERC Size-Weighted Average PPU(12-Month Trailing Average)SouthEastWestMidwestNational$150,000$125,000• The size-weighted average price per hotel unit for transactionsthat were greater than $2 million increased on a12-month trailing basis during third quarter 2010. In comparison,the size-weighted average price per hotel unit amongtransactions that totaled less than $2 million fell 10 percent.$100,000$75,000$50,000$100,000$75,000$50,000• Hotel sector occupancy rose 7.5 percent to 64.2 percent inSeptember 2010, according to Smith Travel Research. Theaverage daily rate (ADR) increased 2.6 percent to $103.09.Likewise, the revenue per available room (RevPAR) was up10.3 percent to $108.57.$25,0003Q094Q091Q102Q103Q10$25,000RERC Price-Weighted Average PPU(12-Month Trailing Average)$300,000$250,000SouthEastWestMidwestNational$300,000$250,000$200,000$200,000$150,000$150,000$100,000$100,000$50,000$50,000$03Q094Q091Q102Q103Q10$0Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.14

E a s t R e g i o nTr a n s a c t i o n B r e a k d o w n< $2 MillionEast Transaction Breakdown12-Month Trailing Averages (10/01/09 - 09/30/10)Office Industrial Retail Apartment HotelVolume (Mil) $260 $574 $668 $182 $9Size Weighted Avg. ($ per sf/unit) $74 $44 $81 $44,207 $20,356Price Weighted Avg. ($ per sf/unit) $111 $71 $123 $61,731 $35,953Median ($ per sf/unit) $75 $52 $86 $50,000 $34,706$2 - $5 MillionVolume (Mil) $396 $734 $884 $600 $56Size Weighted Avg. ($ per sf/unit) $106 $48 $125 $71,342 $31,461Price Weighted Avg. ($ per sf/unit) $175 $81 $243 $96,059 $36,609Median ($ per sf/unit) $139 $67 $191 $79,259 $32,424> $5 MillionVolume (Mil) $15,518 $2,417 $5,712 $7,916 $2,525Size Weighted Avg. ($ per sf/unit) $252 $50 $166 $141,398 $154,364Price Weighted Avg. ($ per sf/unit) $427 $140 $255 $229,336 $268,929Median ($ per sf/unit) $218 $56 $158 $120,611 $128,737All TransactionsVolume (Mil) $16,174 $3,725 $7,265 $8,697 $2,590Size Weighted Avg. ($ per sf/unit) $235 $49 $146 $126,972 $139,509Price Weighted Avg. ($ per sf/unit) $416 $118 $242 $216,646 $263,121Median ($ per sf/unit) $118 $55 $115 $84,932 $77,897Capitalization Rates (All Transactions)Range (%) 4.1 - 10.9 5.8 - 11.7 4.2 - 10.0 4.5 - 9.3 6.8 - 9.0Weighted Avg. (%) 6.6 8.0 8.0 6.2 7.6Median (%) 7.5 8.4 7.6 6.8 8.0Source: RERC.Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.15

S o u t h R e g i o nTr a n s a c t i o n B r e a k d o w n< $2 MillionSouth Transaction Breakdown12-Month Trailing Averages (10/01/09 - 09/30/10)Office Industrial Retail Apartment HotelVolume (Mil) $363 $537 $756 $199 $18Size Weighted Avg. ($ per sf/unit) $83 $40 $76 $29,678 $24,156Price Weighted Avg. ($ per sf/unit) $113 $57 $118 $48,027 $34,658Median ($ per sf/unit) $88 $47 $79 $35,208 $22,565$2 - $5 MillionVolume (Mil) $321 $338 $757 $325 $82Size Weighted Avg. ($ per sf/unit) $92 $36 $110 $28,486 $32,671Price Weighted Avg. ($ per sf/unit) $134 $55 $191 $52,240 $50,250Median ($ per sf/unit) $105 $43 $152 $31,311 $29,137> $5 MillionVolume (Mil) $3,384 $1,595 $5,882 $5,060 $1,608Size Weighted Avg. ($ per sf/unit) $133 $57 $139 $69,979 $111,329Price Weighted Avg. ($ per sf/unit) $196 $92 $209 $119,266 $245,043Median ($ per sf/unit) $143 $59 $156 $63,405 $92,752All TransactionsVolume (Mil) $4,068 $2,471 $7,394 $5,584 $1,709Size Weighted Avg. ($ per sf/unit) $122 $49 $125 $61,756 $96,492Price Weighted Avg. ($ per sf/unit) $184 $79 $198 $112,827 $233,454Median ($ per sf/unit) $100 $48 $97 $45,000 $56,426Capitalization Rates (All Transactions)Range (%) 6.8 - 10.4 7.5 - 9.5 5.8 - 12.7 5.0 - 10.1 7.9 - 10.7Weighted Avg. (%) 7.8 8.3 8.7 6.7 9.2Median (%) 8.8 8.6 8.0 7.5 9.3Source: RERC.Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.16

M i d w e s t R e g i o nTr a n s a c t i o n B r e a k d o w n< $2 MillionMidwest Transaction Breakdown12-Month Trailing Averages (10/01/09 - 09/30/10)Office Industrial Retail Apartment HotelVolume (Mil) $198 $376 $391 $121 $16Size Weighted Avg. ($ per sf/unit) $59 $26 $62 $29,902 $17,802Price Weighted Avg. ($ per sf/unit) $81 $41 $102 $41,646 $22,419Median ($ per sf/unit) $63 $34 $63 $31,905 $18,081$2 - $5 MillionVolume (Mil) $143 $350 $297 $193 $45Size Weighted Avg. ($ per sf/unit) $64 $31 $97 $28,107 $28,027Price Weighted Avg. ($ per sf/unit) $121 $49 $195 $43,845 $36,407Median ($ per sf/unit) $85 $41 $136 $36,002 $35,000> $5 MillionVolume (Mil) $3,312 $1,311 $2,350 $1,452 $774Size Weighted Avg. ($ per sf/unit) $146 $40 $169 $90,758 $121,548Price Weighted Avg. ($ per sf/unit) $291 $84 $270 $173,755 $148,861Median ($ per sf/unit) $119 $44 $158 $63,393 $111,512All TransactionsVolume (Mil) $3,652 $2,037 $3,038 $1,766 $835Size Weighted Avg. ($ per sf/unit) $129 $35 $130 $65,600 $94,214Price Weighted Avg. ($ per sf/unit) $273 $70 $241 $150,478 $140,411Median ($ per sf/unit) $71 $36 $80 $36,085 $52,134Capitalization Rates (All Transactions)Range (%) 6.2 - 9.7 6.8 - 11.0 6.7 - 10.0 5.0 - 10.1 -Weighted Avg. (%) 6.9 8.8 8.0 6.4 -Median (%) 8.5 9.0 7.9 8.0 -Source: RERC.Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.17

W e s t R e g i o nTr a n s a c t i o n B r e a k d o w n< $2 MillionWest Transaction Breakdown12-Month Trailing Averages (10/01/09 - 09/30/10)Office Industrial Retail Apartment HotelVolume (Mil) $435 $948 $677 $602 $29Size Weighted Avg. ($ per sf/unit) $109 $75 $103 $58,867 $30,302Price Weighted Avg. ($ per sf/unit) $144 $95 $140 $82,781 $39,350Median ($ per sf/unit) $116 $83 $108 $66,667 $28,261$2 - $5 MillionVolume (Mil) $753 $1,266 $1,000 $1,014 $142Size Weighted Avg. ($ per sf/unit) $131 $79 $149 $77,109 $42,847Price Weighted Avg. ($ per sf/unit) $209 $105 $254 $141,010 $52,492Median ($ per sf/unit) $184 $93 $212 $122,000 $43,171> $5 MillionVolume (Mil) $9,924 $3,751 $4,646 $6,371 $1,315Size Weighted Avg. ($ per sf/unit) $222 $71 $182 $113,761 $128,907Price Weighted Avg. ($ per sf/unit) $305 $169 $230 $172,987 $201,599Median ($ per sf/unit) $180 $89 $185 $117,750 $115,629All TransactionsVolume (Mil) $11,113 $5,965 $6,323 $7,986 $1,486Size Weighted Avg. ($ per sf/unit) $204 $73 $163 $100,621 $102,709Price Weighted Avg. ($ per sf/unit) $293 $144 $224 $162,132 $184,205Median ($ per sf/unit) $147 $86 $139 $88,182 $60,606Capitalization Rates (All Transactions)Range (%) 5.0 - 12.9 4.2 - 12.2 5.9 - 12.6 4.2 - 11.1 -Weighted Avg. (%) 7.0 8.4 8.6 5.9 -Median (%) 7.9 8.8 7.7 6.1 -Source: RERC.Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.18

Percent Change Quarter Ago97531-1-3-5-73Q 20001Q 20013Q 20011Q 20023Q 20021Q 2003Source: Bureau of Economic Analysis.GDP3Q 20031Q 20043Q 20041Q 20053Q 20051Q 20063Q 20061Q 20073Q 20071Q 20083Q 20081Q 20093Q 20091Q 20103Q 2010According to the Bureau of Economic Analysis(BEA), real gross domestic product (GDP)growth increased to 2.0 percent on an annualized basis in third quarter 2010, and was reviseddown to 1.7 percent in second quarter. This was the fifth consecutive quarterly increase.Compared to a year ago, GDP increased 3.1%, the largest year-over-year increase since firstquarter 2005.97531-1-3-5-7Percent76543210Aug-00Jan-01Source: Federal Reserve.Jun-01Nov-01May-02Nov-02FOMC Policy DecisionsDiscount RateFed Funds RateMay-03Oct-03May-04Nov-04Apr-05Nov-05May-06Oct-06May-07Oct-07Apr-08Dec-08Jun-09Oct-09Mar-10Sep-10The Federal Open Market Committee (FOMC) expressed concern about the pace of recoveryat its September 2010 meeting, and noted that to boost economic growth and inflation, it willlikely provide more quantitative easing. The federal funds rate remained in the 0.0-percent to0.25-percent range, and the discount rate remained at 0.75 percent. Short-term interest ratesare not expected to rise until early 2012.7654321012Unemployment1285Manufacturing Utilization85Percent108642Jul-00Nov-00Mar-01Jul-01Nov-01Mar-02Jul-02Nov-02Mar-03Source: Bureau of Labor Statistics.Jul-03Nov-03Mar-04Jul-04Nov-04Mar-05Jul-05Nov-05Mar-06Jul-06Nov-06Mar-07Jul-07Nov-07Mar-08Jul-08Nov-08Mar-09Jul-09Nov-09Mar-10Jul-10The unemployment rate was 9.6 percent in August and September 2010. Compared to theprevious quarter, job creation has tapered off. Employment remains weak as few people enterthe labor force and more workers are left waiting on the sidelines. The private sector continuesto struggle, and government payrolls decline. Based on third quarter data, the unemploymentrate is expected to climb to 10 percent and remain above 9 percent through 2011.108642Percent8075706560Aug-00Jan-01Jun-01Nov-01Source: Federal Reserve.Apr-02Sep-02Feb-03Jul-03Dec-03May-04Oct-04Mar-05Aug-05Jan-06Jun-06Nov-06Apr-07Sep-07Feb-08Jul-08Dec-08May-09Oct-09Mar-10Aug-10In September 2010, total factory output decreased 0.2 percent, the biggest decline since June2009. Manufacturing utilization decreased slightly to 72.4 percent and has not moved muchduring third quarter. Surveys suggest that the manufacturing slowdown will be temporary.8075706560Percent Change Month Ago0.50.40.30.20.1-0.0-0.1-0.2Source: Bureau of Labor Statistics.Consumer Price IndexSep-09Oct-09Nov-09Dec-09Jan-10Feb-10Mar-10Apr-10May-10Jun-10July-10Aug-10Sep-10The Consumer Price Index (CPI) rose 0.1 percent to 218.37 in September 2010, the thirdconsecutive month it has increased, although not as much as the past 2 months. Compared toa year ago, the CPI was up 1.1 percent. Core inflation remained near zero, although food andenergy prices rose slightly. In the next few months, inflation is expected to strengthen, while thethreat of deflation should remain low.0.50.40.30.20.1-0.0-0.1-0.2Year To Year Percent Change1086420-2-4-6-8-10-12Jul-07Source: Census Bureau.Sep-07Nov-07Jan-08Mar-08May-08Retail SalesJul-08Sep-08Nov-08Jan-09Mar-09May-09Jul-09Sep-09Nov-09Jan-10Mar-10May-10Jul-10Sep-10Retail sales increased steadily by approximately 0.5 percent every month during third quarterdue mostly to back-to-school spending. In addition, year-over-year growth has accelerated,with the strongest categories including auto dealers, electronics and appliance retailers, miscellaneousretailers, and nonstore retailers. Despite the increase in retail sales, consumers remainfinancially constrained and consumer confidence is consistent with a deep recession.1086420-2-4-6-8-10-12Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.19

120Consumer Confidence120190Housing Affordability190180180100100170170Index80604020Dec-01May-02Oct-02Mar-03Aug-03Source: The Conference Board.Jan-04Jun-04Nov-04Apr-05Sep-05Feb-06Jul-06Dec-06May-07Oct-07Mar-08Aug-08Jan-09Jun-09Nov-09Apr-10Sep-10Consumer confidence declined in third quarter 2010, although it increased slightly to 50.2 inOctober. Confidence remains low, due mostly to concerns about the lack of job growth andthe overall economic recovery. Additional concerns include added healthcare expenses andfinancial and environmental regulations.80604020Index160150140130120110100Source: NAR.Jul-07Sep-07Nov-07Jan-08Mar-08May-08Jul-08Sep-08Nov-08Jan-09Mar-09May-09Jul-09Sep-09Nov-09Jan-10Mar-10May-10Jul-10Sep-10The National Association of REALTORS® (NAR) Housing Affordability Index measures whetheror not a typical family could qualify for a mortgage on a typical home. During third quarter2010, the housing affordability index steadily increased and reached 179.1. This indicates thata family is more than able to afford a median-priced home.160150140130120110100Beginning of Month Adjusted Closing Price1600150014001300120011001000900800700600Source: S&P.Dec-00Apr-01Aug-01Dec-01S&P 500Apr-02Aug-02Dec-02Apr-03Aug-03Dec-03Apr-04Aug-04Dec-04Apr-05Aug-05Dec-05Apr-06Aug-06Dec-06Apr-07Aug-07Dec-07Apr-08Aug-08Dec-08Apr-09Aug-09Dec-09Apr-10Aug-101600150014001300120011001000900800700600The S&P 500 ended September 2010 at 1,141.20, up 0.06 percent from August. The S&P 500continues to be volatile, but we have seen some improvement since July with the expectationthat the Fed will put more cash into the economy in order to safeguard the recovery.Millions8.07.06.05.04.03.0Source: NAR.Nov-01Mar-02Jul-02Nov-02Mar-03Jul-03Nov-03Mar-04Existing Home SalesJul-04Nov-04Mar-05Jul-05Nov-05Mar-06Jul-06Nov-06Mar-07Jul-07Nov-07Mar-08Jul-08Nov-08Mar-09Jul-09Nov-09Mar-10Sep-10Existing home sales increased by 10 percent in September 2010, at an annualized rate of 4.53million units. Weak job growth, negative equity, and a lack of confidence continue to plaguethe housing market. Access to mortgage credit is also limited, and foreclosure halts are goingto cause further difficulties. The housing outlook appears soft, with 2010 sales likely to be lessthan 2009 sales, and there will be minimal gains until the latter half of 2011.8.07.06.05.04.03.0Percent Change Quarter Ago1.61.41.21.00.80.60.40.20.0-0.2-0.4Source: The Conference Board.Index of Leading IndicatorsOct-09Nov-09Dec-09Jan-10Feb-10Mar-10Apr-10May-10Jun-10Jul-10Aug-10Sep-101.61.41.21.00.80.60.40.20.0-0.2-0.4The Conference Board’s Index of Leading Indicators rose 0.3 percent in September 2010,indicating that the pace of recovery is likely to remain slow in coming months. Compared toa year ago, the leading index grew 5.9 percent. The labor market and housing indicators arethe main sources of weakness in the recovery, and the risk of a double-dip recession remains.While struggling at present, the leading index is expected to gradually gain strength in 2011.Months131211109876Source: NAR.Aug-09Sep-09Oct-09Single Family Home SupplyNov-09Dec-09Jan-10Feb-10Mar-10Apr-10May-10Jun-10Jul-10Aug-10Sep-10The July 2010 single-family home supply increased to a record high of 12.5 months, more thandouble the normal rate of around 6.0 months. Since July, however, the monthly home supplyhas continued to decline, falling to 10.7 months in September. Housing demand increasedslightly in September, due to record low mortgage rates.131211109876Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.20

S c o p e & M e t h o d o l o g yThe analysis provided in the RERC/CCIM Investment Trends Quarterly is conducted by Real Estate Research Corporation (RERC). The information is gathered in raw form from surveys sent toCCIM designees and candidates, and from sales transactions collected from various sources, including CCIM members, various key commercial information exchange organizations (CIEs), themedia, assessors’ offices, RERC contacts in the marketplace, and other reliable public and private resources. All sales transactions are aggregated, analyzed, and reported on by RERC. Additionaldata and forecasts are provided courtesy of the REALTORS® Commercial Alliance and Torto Wheaton Research.Published quarterly, the RERC/CCIM Investment Trends Quarterly report provides timely insight into transaction volume, pricing, and capitalization rates for the core income-producing properties.RERC DefinitionsCapitalization Rate: The capitalization rate is defined as the first year “stabilized” net operating income (NOI) (NOI is before capital expenditures – tenant improvements, leasing commissions,reserves – and debt service) divided by the present value (or purchase price). Capitalization rates included are transaction-based medians and price-weighted averages.RERC Capitalization Rate and Ranges: Capitalization rates and ranges listed throughout this report are based on RERC’s proprietary realized capitalization rate model, which includes availabletransaction-based capitalization rates, NCREIF Index Returns, and other market factors, but is heavily weighted toward transaction-based capitalization rates for each property type within each market.Price-Weighted Average: The price-weighted average is developed through weighting each asset based on the gross sales price. Therefore, larger dollar properties are given more weight than thesmaller dollar properties, with the weighted average reflecting more weight towards institutional real estate.Size-Weighted Average: The size-weighted average is developed through weighting each asset based on its gross square footage – simply an aggregation of all the gross sales prices divided bythe aggregation of the gross square footage.National/Regional Market Analysis: RERC ranks the investment potential of the metros and property types it covers based on various space market and financial market criteria, including pricing,capitalization rates, vacancy rates, and other factors.Investment Conditions Rating: A rating of 1 through 10 (with 10 being high) reflecting survey respondents’ collective views of the investment environment for a particular property type in comparisonwith other property types. The rating may take into account supply and demand, economic conditions, pricing, rental rates, or other factors.NCREIF DefinitionsNCREIF: The National Council of Real Estate Investment Fiduciaries (NCREIF) is an independent organization dedicated to the compilation, validation, and distribution of performance data for theinstitutional real estate investment community.Total Return: The total return includes appreciation (or depreciation), realized capital gain (or loss), and income. It is computed by adding the income and capital appreciation return on a quarterlybasis.Implied Cap Rate (Income Return): The implied capitalization rate measures the portion of return attributable to each property’s NOI. It is computed by dividing the total NOI by the total quarterlyinvestment.Capital Appreciation Return: The capital appreciation return measures the change in market value adjusted for any capital improvements/expenditures and partial sales divided by the averagequarterly investment.Annual and Annualized Returns: Annual returns are computed by chain-linking quarterly rates of return to produce time-weighted rates of return for the annual and annualized periods under study.For time periods beyond 1 year, the annualized returns are expressed as the annual compounded rate of return.Allocation: The distribution, expressed as a percentage of the overall investment, in a particular geographic area by property type.For a detailed description of the proceeding returns, as well as the calculations used by NCREIF to derive these figures, please visit http://www.ncreif.org/indices.The combined returns are the weighted average of the returns for each property type according to the proportionate market value of properties surveyed relative to the total market values surveyedduring a time period.RERC Defined Regions and MSAsWest: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, WyomingMidwest: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, WisconsinSouth: Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee, TexasEast: Connecticut, Delaware, Kentucky, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia,Washington D.C., West VirginiaMetropolitan Statistical Area (MSA): A geographic unit comprised of one or more counties around a central city or urbanized area with 50,000 or more population. Contiguous counties areincluded if they have close social and economic links with the area’s population nucleus.With a few exceptions, the MSAs within this report coincide with the U.S. Office of Management and Budget’s December 2005 definitions for each MSA. For example, St. Paul, Minn., and Bloomington,Minn., as well as many other suburbs, are included within the Minneapolis MSA.Note of Caution: It is imperative to exercise caution when comparing the data contained herein to previous reports published by RERC. The data herein is not “fixed,” and will be updated andchanged as additional transaction information is gathered and analyzed.Disclaimer: This publication is designed to provide accurate information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in renderinglegal or accounting service. The publisher advises that no statement in this issue is to be construed as a recommendation to make any real estate investment or to buy or sell a security or asinvestment advice. The examples contained in the publication are intended for use as background on the real estate industry as a whole, not as support for any particular real estate investment orsecurity. Although the RERC/CCIM Investment Trends Quarterly uses only sources that it deems reliable and accurate, Real Estate Research Corporation (RERC) does not warrant the accuracy ofthe information contained herein.Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.21

A c k n o w l e d g e m e n t sRERCsCCIM Investment Trends QUARTERLYThe RERC/CCIM Investment Trends Quarterly is produced byReal Estate Research Corporation (RERC) in association withand for members of the CCIM Institute.Real Estate Research CorporationFounded more than 75 years ago, Real Estate Research Corporation(RERC) was the nation’s first independent real estate firm that specializedin both real estate research and analysis. Recognized as a pioneer in theart of real estate management and for monitoring key sectors of the economythat influence the real estate industry, RERC has retained its place asone of the industry’s leading real estate investment trends analysts throughthe publication of such reports as Expectations & Market Realities in RealEstate and the RERC Real Estate Report. Today, RERC is known for itsresearch publications and market studies, commercial property valuations,complex consulting assignments, portfoliomanagement and technology services, andindependent fiduciary services.The CCIM InstituteSince 1969, the Chicago-based CCIM Institute has conferred the CertifiedCommercial Investment Member (CCIM) designation to commercialreal estate and allied professionals through an extensive curriculum of 200classroom hours and professional experiential requirements. Currently,there are 9,000 CCIMs in 1,000 markets in the U.S. and 31 additional countries.Another 7,000 practitioners are pursuing the designation, making theinstitute the governing body of one of the largest commercial real estatenetworks in the world. An affiliate of the National Association of Realtors®,the CCIM Institute’s recognized curriculum, networking programs, andpowerful technology tools such as the Site To Do Business (site analysisand demographics resource) and CCIMREDEX (commercial property dataexchange), impact and influencethe commercial real estateindustry. Visit www.ccim.com, www.stdbonline.com,and www.ccimredex.com formore information.Copyright Notice for RERC~CCIM Investment Trends QuarterlyCopyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute. All rightsreserved. No part of this publication may be reproduced, duplicated, or copied in any form, includingelectronic forwarding or copying, xerography, microfilm, or other methods, or incorporated intoany information retrieval system, without the written permission of RERC and the CCIM Institute.RERC Editorial StaffPublisherKenneth P. Riggs, Jr.CFA, CRE, FRICS, MAI, CCIMEditor-in-ChiefBarb BushLead AnalystBrian Velky, CFAResearch AnalystsGreg PhilippKyle CorcoranCliff CarlsonCharles GohrDavid KellyLindsey KuhlmannMeredith SteffenYe ThwayMorgan WestpfahlLayout & DesignJeff CarrData ManagementScott HamerlinckBen NeilDaniel WarnerProduction CommitteeTerri CotterNicole HardyResearch AssistantJeffrey HarmsCCIM InstitutePresidentFrank N. Simpson, CCIMPresident-ElectLeil Koch, CCIMFirst Vice PresidentWayne D’Amico, CCIMTreasurerCharles C. Connely IV, CCIMExecutive Vice President/CEOHenry F. White, Jr.Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.22

C o n t r i b u t o r sShahid K. Abdulla Broadway National Bank San Antonio, TXDenise AdamsDue Diligence ResearchGroupRaleigh, NCAlan Apt Aptcor Commercial Philadelphia, PAG. Anthony Baldwin Baldwin Realty Group Boston, MABo BarronSperry Van Ness/TheBarron GroupKentuckyBeau Beery AMJ Inc. of Gainesville Gainesville, FLAndy Bell Anderson Bell, Inc. Atlanta, GATim J. BesawBonnie BrownCurtis A. BurgeBesaw and AssociatesRealty Ltd.J D Property ManagementCoveStar InvestmentRealty AdvisorsMilwaukee, WIOrange County, CAWestern NorthCarolinaDavid Butchello Thalhimer Norfolk, New JerseyJacob Cannon Nationwide Insurance Denver, COTony CarlsonJuan CarlosCarrasquelGrandbridge Real EstateCapitalPrudential Indiana RealtyGroupMinneapolis, MNBloomington, INQuentin Caruso Realty Capital Advisors Orlando, FLSusan Cerone RealtyUSA EastMick Cluck Tucson Realty and Trust Tucson, AZRaymond D. CollinsRalph ContiCollins CommercialPropertiesRa Co Real EstateAdvisorsGreensboro/WinstonSalem, NCSouthSalvatore Crifasi Crifasi Real Estate, Inc New York, NYDavid L. DavenportCentury21 Davenport &AssociatesMidwestLuke Davidson Colliers International Denver, CODale DeBoerCentral Valley ofCaliforniaEdward DeLaurier JAX Realty Advisors Jacksonville, FLBob Dikman The Dikman Company Tampa, FLJohn DohmMark DouglasRoy DrakeThalhimer/Cushman &WakefieldRE/MAX CommercialAllianceMiami, FLRichmond, VADenver, COSkip Duemeland Duemelands Bismarck, NDAlexander EagleAsset ManagementGroupSan Francisco, CARandi Erickson KW Commercial Minneapolis, MNBill EshenbaughEshenbaugh LandCompanyTampa, FLMatthew Farrell CORE Partners Detroit, MIW Darrow Fiedler KW Commercial Los Angeles, CADavid Fisher Colliers International WestGregory FitzgeraldTri-Oak CommercialGroupIndianapolis, INPatrick Fitzgerald BankUnited Orlando, FLElizabeth KingForstnegerPeter A. FrandanoSara FredericksGrubb & Ellis CompanySouthport Realty-Carolina AcreageHudson PetersCommercialChicago, ILWilmington, NCDallas, TXCarlos A. Fuentes VET Realty Tampa, FLSam Fung Oregon Commercial OregonGina Gamble NAI Las Vegas Las Vegas, NVTodd GannetPaul GardapheCentury 21 Golden PostCommercialQ10 | Amegy MortgageCapitalNorthern New JerseyHouston, TXBetty Gonzalez Keyes Commercial RE Miami, FLRick Gonzalez Rick Gonzalez Inc. Orlando, FLInvestment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.23

C o n t r i b u t o r sCarolyn Graden The Rants Group Seattle, WANorman W. GregoryCCIN Real EstateServicesSouthJag Grewal Ian Black Real Estate Tampa, FLLouise Giuliano Brokers Network New York, NYThomas Hankins NAI Realvest Orlando, FLRyan Harrison Magi Real Estate San Antonio, TXTim Hearn Hearn Burkley Baltimore, MDDennis Hearst Cushman & Wakefield San Diego, CAW Farley HelmsJerry HempeniusRobert J. HockensmithOstendorf MorrisCompanyCom-Spec Properties,Inc.Roy Wheeler Realty Co.Cleveland, OHLos Angeles, CAEastKamil Homsi Global Realty Capital EastDavid Huffman Wiggin Properties Oklahoma City, OKStephen Jacquemin S.J. Financial Group St. Louis, MOMichael P. JakubiecMichael P. JakubiecInvestment Real Estate,Inc.Chicago, ILElliott Jamison Realty Capital Orlando, FLBryan JeromeCornerstone CommercialRealtyTampa, FLRichard Jgue RE/MAX Commercial New Orleans, LAJohn JoyceNewmark Knight FrankEpicChicago, ILTodd Kamps Kwekel Companies MidwestKatherine WilliamsKaneDave KanneyThe Maestro FundDeegan-SanglynCommercial Real EstateBoston, MANew York, NYJuanita Kiesling WestMark, Realtors West TexasKenneth Krawczyk K.S.K. Services, Inc. Milwaukee, WIKenneth M. KujawaChristina S. Kurtz-ClarkKarl LandreneauCentury 21 SignatureRealtyCBC Atlantic PropertiesNAI Latter and BlumRealtorsMidwestOrlando, FLNew Orleans, LALance Langenhoven KW Commercial Houston, TXNicholas E. LedvoraEquity InvestmentServicesOrlando, FLBecky Leebens KW Commercial Minneapolis, MNChris Leon Realty World San Francisco, CARobert A. Liebeck MJ Peterson Commercial New York, NYMichael LunnRe/Max CommercialProperty SolutionsChicago, ILNed Madonia Tryskelion Las Vegas, NVJanet ManglitzInvestment PropertyAdvisorsPortland, ORCharles A. McClure McClure Partners Dallas, TXMicah McCulloughKayvan MehrbakhshUCR Properties/Underwood CompaniesSperry Van NessMississippiWashington D.C.Joe Milkes Milkes Realty Valuation Dallas, TXNick MinerCommercial PropertiesIncBill Mohr Mohr Financial WestPhoenix, AZDaniel A. Molello Jones-Healy Realtors Denver, COChase Monroe Keystone Partners Charlotte, NCGuy MoreauCharlene MossCoco Plum Realtors IncCharlene Moss Realty,Inc.Florida Keys / MonroeCounty, FLWasilla, AKRichard Murdock Grubb & Ellis Company San Diego, CAInvestment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.24

C o n t r i b u t o r sScott Naugle RPIMLLC Washington, D.C.Nick Nicketakis CBSRE Chicago, ILEd Nutting Marcus & Millichap Atlanta, GARick PadelfordRealty ExecutivesInternationalPhoenix, AZSean Patrick Ackerman & Co AtlantaSusan PfeilAviva Investors NorthAmericaMidwestPeter Rasmusson Lee & Associates Northern New JerseyDavid ReeseDan RobinsonCommercial ChoiceRealtyLidstrom CommercialRealtorsPittsburgh, PAMidwestBob Rosenberg Investnet Inc. Sacramento, CABjorn RosinusAlico Commercial GroupSouthwest Florida /Fort MyersElliott M. Ross Ross Realty Group Inc. Tampa, FLBob RourkeAlpha Commercial RealEstateCharlotte, NCSuheil Sahouria The Trafton Group San Francisco, CANat SantoroStephen M. SobleThomas Songer IIIPhil SpinneyRob StefkaKinlin GroverCommercial GroupErnest Soble CommercialPropertiesGambone, Songer &AssociatesMagic Properties &InvestmentsCommercial InvestmentServicesBoston, MASan Antonio, TXPittsburgh, PAOrlando, FLOmaha, NEBlaine Strickland Remora Partners Orlando, FLDewey Struble Sperry Van Ness Reno-Sparks, NevadaAngie SumnerJack Fowler &AssociatesNorthern AZRob Sutton The Royston Group Los Angeles, CADuke Suwyn Colliers International Detroit, MIMark Vellinga Graham Organization Souix Falls, SDNeil Victor Sperry Van Ness AlabamaTodd Walsh The Colorado Group Denver, COBruce WatersTom WatsonLong McBughuyCommercialRE/MAX of Spokane-CommercialDean Weitenhagen Fleetwood CRES IowaNew Hampshire/VermontSpokane, WABrian Whitmer Cushman & Wakefield Northern New JerseyJeff Wilke Graham & Company Huntsville, ALNicole Wiloughby M&I Bank Milwaukee, WIRobert Wilson REMAX Southwest Houston, TXPatrick Wolford Patrick Henry Properties Houston, TXJason Wong Red Point Development Tucson, AZAllan WoodruffValentine Sales andManagementPhoenix, AZJim Wright Jim Wright Company Killeen-Temple, TXDiane Baer Yecko BT Property Associates Pittsburgh, PAOscar ZamudioDaniel ZelonkerColdwell BankerCommercial NRTMizrach RealtyAssociatesChicago, ILMiami, FLThank you to allwho sharedinformationfor this report.Investment Trends Quarterly s Copyright© 2010 by Real Estate Research Corporation (RERC) and the CCIM Institute.25