The CoStar Office Report. Y e a r - E n d Richmond VA Office Market

Transcription

1 The CoStar Office Report Y e a r - E n d

2 Year-End 2015 Richmond VA Table of Contents Table of Contents A Methodology B Terms & Definitions C Market Highlights & Overview CoStar Markets & Submarkets Inventory & Development Analysis Inventory & Development Analysis Select Top Deliveries Select Top Under Construction Properties Figures at a Glance Figures at a Glance by Class & Market Figures at a Glance by Class & Submarket Figures at a Glance Grouped by CBD vs Suburban Historical Figures at a Glance Leasing Activity Analysis Select Top Lease Transactions Sales Activity Analysis Sales Activity Analysis Select Top Sales Transactions Analysis of Individual CoStar Submarket Clusters Amelia County Market Charles City County Market Cumberland County Market Dinwiddie County Market Downtown Market East Market Goochland Market King William County Market Louisa County Market New Kent County Market Northwest Market Powhatan Market Prince George Market Southwest Market Sussex County Market TriCities Market 2016 CoStar Group, Inc. The CoStar Office Report A

3 Richmond VA Year-End 2015 Methodology The CoStar Office Report, unless specifically stated otherwise, calculates office statistics using CoStar Group s entire database of existing and under construction office buildings in each metropolitan area. Included are office, office condominium, office loft, office medical, all classes and all sizes, and both multi-tenant and single-tenant buildings, including owner-occupied buildings. CoStar Group's national database includes approximately 80.7 billion square feet of coverage in 3.5 million properties. All rental rates reported in the CoStar Office Report have been converted to a Full Service equivalent rental rate. For information on subscribing to CoStar s other products and services, please contact us at COSTAR, or visit our web site at Copyright 2016 CoStar Group, Inc. All Rights Reserved. Although CoStar makes efforts to ensure the accuracy and reliability of the information contained herein, CoStar makes no guarantee, representation or warranty regarding the quality, accuracy, timeliness or completeness of the information. The publication is provided as is and CoStar expressly disclaims any guarantees, representations or warranties of any kind, including those of MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CoStar Group, Inc L ST NW Washington, DC (800) NASDAQ: CSGP B The CoStar Office Report 2016 CoStar Group, Inc.

4 Year-End 2015 Richmond VA Terms & Definitions Availability Rate: The ratio of available space to total rentable space, calculated by dividing the total available square feet by the total rentable square feet. Available Space: The total amount of space that is currently being marketed as available for lease in a given time period. It includes any space that is available, regardless of whether the space is vacant, occupied, available for sublease, or available at a future date. Build-to-Suit: A term describing a particular property, developed specifically for a certain tenant to occupy, with structural features, systems, or improvement work designed specifically for the needs of that tenant. A build-to-suit can be leased or owned by the tenant. In a leased build-to-suit, a tenant will usually have a long term lease on the space. Buyer: The individual, group, company, or entity that has purchased a commercial real estate asset. Cap Rate: Short for capitalization rate. The Cap Rate is a calculation that reflects the relationship between one year s net operating income and the current market value of a particular property. The Cap Rate is calculated by dividing the annual net operating income by the sales price (or asking sales price). CBD: Abbreviation for Central Business District. (See also: Central Business District) Central Business District: The designations of Central Business District (CBD) and Suburban refer to a particular geographic area within a metropolitan statistical area (MSA) describing the level of real estate development found there. The CBD is characterized by a high density, well organized core within the largest city of a given MSA. Class A: A classification used to describe buildings that generally qualify as extremely desirable investment-grade properties and command the highest rents or sale prices compared to other buildings in the same market. Such buildings are well located and provide efficient tenant layouts as well as high quality, and in some buildings, one-ofa-kind floor plans. They can be an architectural or historical landmark designed by prominent architects. These buildings contain a modern mechanical system, and have above-average maintenance and management as well as the best quality materials and workmanship in their trim and interior fittings. They are generally the most attractive and eagerly sought by investors willing to pay a premium for quality. Class B: A classification used to describe buildings that generally qualify as a more speculative investment, and as such, command lower rents or sale prices compared to Class A properties. Such buildings offer utilitarian space without special attractions, and have ordinary design, if new or fairly new; good to excellent design if an older non-landmark building. These buildings typically have average to good maintenance, management and tenants. They are less appealing to tenants than Class A properties, and may be deficient in a number of respects including floor plans, condition and facilities. They lack prestige and must depend chiefly on a lower price to attract tenants and investors. Class C: A classification used to describe buildings that generally qualify as no-frills, older buildings that offer basic space and command lower rents or sale prices compared to other buildings in the same market. Such buildings typically have below-average maintenance and management, and could have mixed or low tenant prestige, inferior elevators, and/or mechanical/electrical systems. These buildings lack prestige and must depend chiefly on a lower price to attract tenants and investors. Construction Starts: Buildings that began construction during a specific period of time. (See also: Deliveries) Contiguous Blocks of Space: Space within a building that is, or is able to be joined together into a single contiguous space. Deliveries: Buildings that complete construction during a specified period of time. In order for space to be considered delivered, a certificate of occupancy must have been issued for the property. Delivery Date: The date a building completes construction and receives a certificate of occupancy. Developer: The company, entity or individual that transforms raw land to improved property by use of labor, capital and entrepreneurial efforts. Direct Space: Space that is being offered for lease directly from the landlord or owner of a building, as opposed to space being offered in a building by another tenant (or broker of a tenant) trying to sublet a space that has already been leased. : The square footage of buildings that have received a certificate of occupancy and are able to be occupied by tenants. It does not include space in buildings that are either planned, under construction or under renovation. Flex Building: A type of building designed to be versatile, which may be used in combination with office (corporate headquarters), research and development, quasi-retail sales, and including but not limited to industrial, warehouse, and distribution uses. A typical flex building will be one or two stories with at least half of the rentable area being used as office space, have ceiling heights of 16 feet or less, and have some type of drive-in door, even though the door may be glassed in or sealed off. Full Service Rental Rate: Rental rates that include all operating expenses such as utilities, electricity, janitorial services, taxes and insurance. Gross Absorption: The total change in occupied space over a given period of time, counting space that is occupied but not space that is vacated by tenants. Gross absorption differs from leasing Activity, which is the sum of all space leased over a certain period of time. Unless otherwise noted Gross Absorption includes direct and sublease space. Growth in Inventory: The change in size of the existing square footage in a given area over a given period of time, generally due to the construction of new buildings. Industrial Building: A type of building adapted for such uses as the assemblage, processing, and/or manufacturing of products from raw materials or fabricated parts. Additional uses include warehousing, distribution, and maintenance facilities. The primary purpose of the space is for storing, producing, assembling, or distributing product. Landlord Rep: (Landlord Representative) In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the owner/landlord is referred to as the Landlord Rep. Leased Space: All the space that has a financial lease obligation. It includes all leased space, regardless of whether the space is currently occupied by a tenant. Leased space also includes space being offered for sublease. Leasing Activity: The volume of square footage that is committed to and signed under a lease obligation for a specific building or market in a given period of time. It includes direct leases, subleases and renewals of existing leases. It also includes any pre-leasing activity in planned, under construction, or under renovation buildings. Market: Geographic boundaries that serve to delineate core areas that are competitive with each other and constitute a generally accepted primary competitive set of areas. Markets are building-type specific, and are non-overlapping contiguous geographic designations having a cumulative sum that matches the boundaries of the entire Region (See also: Region). Markets can be further subdivided into Submarkets. (See also: Submarkets) Multi-Tenant: Buildings that house more than one tenant at a given time. Usually, multi-tenant buildings were designed and built to accommodate many different floor plans and designs for different 2016 CoStar Group, Inc. The CoStar Office Report C

5 Richmond VA Year-End 2015 tenant needs. (See also: Tenancy). Net Absorption: The net change in occupied space over a given period of time. Unless otherwise noted Net Absorption includes direct and sublease space. Net Rental Rate: A rental rate that excludes certain expenses that a tenant could incur in occupying office space. Such expenses are expected to be paid directly by the tenant and may include janitorial costs, electricity, utilities, taxes, insurance and other related costs. New Space: Sometimes called first generation space, refers to space that has never been occupied and/or leased by a tenant. Occupied Space: Space that is physically occupied by a tenant. It does not include leased space that is not currently occupied by a tenant. Office Building: A type of commercial building used exclusively or primarily for office use (business), as opposed to manufacturing, warehousing, or other uses. Office buildings may sometimes have other associated uses within part of the building, i.e., retail sales, financial, or restaurant, usually on the ground floor. Owner: The company, entity, or individual that holds title on a given building or property. Planned/Proposed: The status of a building that has been announced for future development but not yet started construction. Preleased Space: The amount of space in a building that has been leased prior to its construction completion date, or certificate of occupancy date. Price/SF: Calculated by dividing the price of a building (either sales price or asking sales price) by the Rentable Building Area (RBA). Property Manager: The company and/or person responsible for the day-to-day operations of a building, such as cleaning, trash removal, etc. The property manager also makes sure that the various systems within the building, such as the elevators, HVAC, and electrical systems, are functioning properly. Quoted Rental Rate: The asking rate per square foot for a particular building or unit of space by a broker or property owner. Quoted rental rates may differ from the actual rates paid by tenants following the negotiation of all terms and conditions in a specific lease. RBA: Abbreviation for Rentable Building Area. (See also: Rentable Building Area) Region: Core areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Regions are further divided into market areas, called Markets. (See also: Markets) Relet Space: Sometimes called second generation or direct space, refers to existing space that has previously been occupied by another tenant. Rentable Building Area: (RBA) The total square footage of a building that can be occupied by, or assigned to a tenant for the purpose of determining a tenant s rental obligation. Generally RBA includes a percentage of common areas including all hallways, main lobbies, bathrooms, and telephone closets. Rental Rates: The annual costs of occupancy for a particular space quoted on a per square foot basis. Sales Price: The total dollar amount paid for a particular property at a particular point in time. Sales Volume: The sum of sales prices for a given group of buildings in a given time period. Seller: The individual, group, company, or entity that sells a particular commercial real estate asset. SF: Abbreviation for Square Feet. Single-Tenant: Buildings that are occupied, or intended to be occupied by a single tenant. (See also: Build-to-suit and Tenancy) Sublease Space: Space that has been leased by a tenant and is being offered for lease back to the market by the tenant with the lease obligation. Sublease space is sometimes referred to as sublet space. Submarkets: Specific geographic boundaries that serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted primary competitive set, or peer group. Submarkets are building type specific (office, industrial, retail, etc.), with distinct boundaries dependent on different factors relevant to each building type. Submarkets are non-overlapping, contiguous geographic designations having a cumulative sum that matches the boundaries of the Market they are located within (See also: Market). Suburban: The Suburban and Central Business District (CBD) designations refer to a particular geographic area within a metropolitan statistical area (MSA). Suburban is defined as including all office inventory not located in the CBD. (See also: CBD) Tenancy: A term used to indicate whether or not a building is occupied by multiple tenants (See also: Multi-tenant) or a single tenant. (See also: Single-tenant) Tenant Rep: Tenant Rep stands for Tenant Representative. In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the tenant is referred to as a Tenant Rep. Time On Market: A measure of how long a currently available space has been marketed for lease, regardless of whether it is vacant or occupied. Under Construction: Buildings in a state of construction, up until they receive their certificate of occupancy. In order for CoStar to consider a building under construction, the site must have a concrete foundation in place. Abbreviated UC. Rate: A measurement expressed as a percentage of the total amount of physically vacant space divided by the total amount of existing inventory. Under construction space generally is not included in vacancy calculations. Vacant Space: Space that is not currently occupied by a tenant, regardless of any lease obligation that may be on the space. Vacant space could be space that is either available or not available. For example, sublease space that is currently being paid for by a tenant but not occupied by that tenant, would be considered vacant space. Likewise, space that has been leased but not yet occupied because of finish work being done, would also be considered vacant space. Weighted Average Rental Rate: Rental rates that are calculated by factoring in, or weighting, the square footage associated with each particular rental rate. This has the effect of causing rental rates on larger spaces to affect the average more than that of smaller spaces. The weighted average rental rate is calculated by taking the ratio of the square footage associated with the rental rate on each individual available space to the square footage associated with rental rates on all available spaces, multiplying the rental rate by that ratio, and then adding together all the resulting numbers. Unless specifically specified otherwise, rental rate averages include both Direct and Sublet available spaces. Year Built: The year in which a building completed construction and was issued a certificate of occupancy. YTD: Abbreviation for Year-to-Date. Describes statistics that are cumulative from the beginning of a calendar year through whatever time period is being studied. D The CoStar Office Report 2016 CoStar Group, Inc.

6 Overview Year-End 2015 Richmond VA Richmond VA s Decreases to 9.5% Net Absorption Positive 104,261 SF in the Quarter The Richmond VA Office market ended the fourth quarter 2015 with a vacancy rate of 9.5%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 104,261 square feet in the fourth quarter. Vacant sublease space decreased in the quarter, ending the quarter at 315,448 square feet. Rental rates ended the fourth quarter at $17.06, a decrease over the previous quarter. A total of one building delivered to the market in the quarter totaling 13,209 square feet, with 396,295 square feet still under construction at the end of the quarter. Absorption Net absorption for the overall Richmond VA office market was positive 104,261 square feet in the fourth quarter That compares to positive 304,367 square feet in the third quarter 2015, positive 109,783 square feet in the second quarter 2015, and positive 50,494 square feet in the first quarter Tenants moving out of large blocks of space in 2015 include: McGuireWoods, LLP moving out of 221,737 square feet at One James Center; SunTrust Bank moving out of 83,414 square feet at WestMark Two; and SunTrust Bank moving out of 65,708 square feet at SunTrust Center. Tenants moving into large blocks of space in 2015 include: McGuireWoods, LLP moving into 204,984 square feet at Gateway Plaza; McKesson Corporation moving into 156,533 square feet at Deep Run III; and Elephant Insurance moving into 74,549 square feet at Deep Run I- Allianz Global Assistance HQ. The Class-A office market recorded net absorption of positive 72,918 square feet in the fourth quarter 2015, compared to positive 175,742 square feet in the third quarter 2015, positive 104,431 in the second quarter 2015, and positive 120,407 in the first quarter The Class-B office market recorded net absorption of positive 64,387 square feet in the fourth quarter 2015, compared to positive 144,268 square feet in the third quarter 2015, negative (34,614) in the second quarter 2015, and negative (48,418) in the first quarter The Class-C office market recorded net absorption of negative (33,044) square feet in the fourth quarter 2015 compared to negative (15,643) square feet in the third quarter 2015, positive 39,966 in the second quarter 2015, and negative (21,495) in the first quarter Net absorption for Richmond VA s central business district was positive 40,940 square feet in the fourth quarter That compares to positive 64,579 square feet in the third quarter 2015, positive 7,274 in the second quarter 2015, and negative (36,342) in the first quarter Net absorption for the suburban markets was positive 63,321 square feet in the fourth quarter That compares to positive 239,788 square feet in third quarter 2015, positive 102,509 in the second quarter 2015, and positive 86,836 in the first quarter The office vacancy rate in the Richmond VA market area decreased to 9.5% at the end of the fourth quarter The vacancy rate was 9.7% at the end of the third quarter 2015, 9.7% at the end of the second quarter 2015, and 9.8% at the end of the first quarter Rates by Class A B C Total Market 18% 16% 14% Rate 12% 10% 8% 6% 4% 2% 0% q q q q q q q q q q q 2016 CoStar Group, Inc. The CoStar Office Report 1

7 Richmond VA Year-End 2015 Overview Class-A projects reported a vacancy rate of 9.1% at the end of the fourth quarter 2015, 9.4% at the end of the third quarter 2015, 8.8% at the end of the second quarter 2015, and 9.2% at the end of the first quarter Class-B projects reported a vacancy rate of 10.5% at the end of the fourth quarter 2015, 10.7% at the end of the third quarter 2015, 11.2% at the end of the second quarter 2015, and 11.1% at the end of the first quarter Class-C projects reported a vacancy rate of 7.7% at the end of the fourth quarter 2015, 7.8% at the end of third quarter 2015, 7.7% at the end of the second quarter 2015, and 8.1% at the end of the first quarter The overall vacancy rate in Richmond VA s central business district at the end of the fourth quarter 2015 decreased to 10.4%. The vacancy rate was 10.8% at the end of the third quarter 2015, 9.5% at the end of the second quarter 2015, and 9.6% at the end of the first quarter The vacancy rate in the suburban markets decreased to 9.1% in the fourth quarter The vacancy rate was 9.2% at the end of the third quarter 2015, 9.8% at the end of the second quarter 2015, and 9.9% at the end of the first quarter Largest Lease Signings The largest lease signings occurring in 2015 included: the 110,000-square-foot lease signed by VCU Health Systems at W Broad St in the Northwest market; the 42,539- square-foot deal signed by Retail Data at WestMark Two in the Northwest market; and the 32,679-square-foot lease signed by VCU Health Systems at The Jackson Center in the Downtown market. Sublease The amount of vacant sublease space in the Richmond VA market decreased to 315,448 square feet by the end of the fourth quarter 2015, from 355,379 square feet at the end of U.S. Comparison Past 10 Quarters Rate 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% Richmond VA United States the third quarter There was 407,443 square feet vacant at the end of the second quarter 2015 and 406,789 square feet at the end of the first quarter Richmond VA s Class-A projects reported vacant sublease space of 302,800 square feet at the end of fourth quarter 2015, down from the 335,269 square feet reported at the end of the third quarter There were 388,533 square feet of sublease space vacant at the end of the second quarter 2015, and 378,534 square feet at the end of the first quarter Class-B projects reported vacant sublease space of 12,648 square feet at the end of the fourth quarter 2015, down from the 14,689 square feet reported at the end of the third quarter At the end of the second quarter 2015 there were 13,489 square feet, and at the end of the first quarter 2015 there were 20,451 square feet vacant. Class-C projects reported decreased vacant sublease space from the third quarter 2015 to the fourth quarter Sublease vacancy went from 5,421 square feet to 0 square feet during that time. There was 5,421 square feet at the end of the second quarter 2015, and 7,804 square feet at the end of the first quarter Sublease vacancy in Richmond VA s central business district stood at 9,834 square feet at the end of the fourth quarter It was 27,671 square feet at the end of the third quarter 2015, 85,512 square feet at the end of the second quarter 2015, and 85,512 square feet at the end of the first quarter Sublease vacancy in the suburban markets ended the fourth quarter 2015 at 305,614 square feet. At the end of the third quarter 2015 sublease vacancy was 327,708 square feet, was 321,931 square feet at the end of the second quarter 2015, and was 321,277 square feet at the end of the first quarter Rental Rates The average quoted asking rental rate for available office space, all classes, was $17.06 per square foot per year at the end of the fourth quarter 2015 in the Richmond VA market area. This represented a 2.5% decrease in quoted rental rates from the end of the third quarter 2015, when rents were reported at $17.49 per square foot. The average quoted rate within the Class-A sector was $20.04 at the end of the fourth quarter 2015, while Class-B rates stood at $16.16, and Class-C rates at $ At the end of the third quarter 2015, Class-A rates were $20.47 per square foot, Class-B rates were $16.18, and Class-C rates were $ The average quoted asking rental rate in Richmond VA s CBD was $18.77 at the end of the fourth quarter 2015, and $16.59 in the suburban markets. In the third quarter 2015, quoted rates were $20.06 in the CBD and $16.65 in the suburbs. 0.0% q 2 The CoStar Office Report 2016 CoStar Group, Inc.

8 Overview Year-End 2015 Richmond VA Deliveries and Construction During the fourth quarter 2015, one building totaling 13,209 square feet were completed in the Richmond VA market area. This compares to one building totaling 330,000 square feet that were completed in the third quarter 2015, one building totaling 37,658 square feet completed in the second quarter 2015, and 126,403 square feet in three buildings completed in the first quarter There were 396,295 square feet of office space under construction at the end of the fourth quarter Some of the notable 2015 deliveries include: Gateway Plaza, a 330,000-square-foot facility that delivered in third quarter 2015 and is now 84% occupied, and Memorial Regional Medical Center OrthoVA, a 63,000-square-foot building that delivered in first quarter 2015 and is now 96% occupied. The largest projects underway at the end of fourth quarter 2015 were W Broad St, a 110,000-square-foot building with 100% of its space pre-leased, and Stony Point Building V, a 55,000-square-foot facility that is 100% pre-leased. Inventory Total office inventory in the Richmond VA market area amounted to 61,146,092 square feet in 3,102 buildings as of the end of the fourth quarter The Class-A office sector consisted of 20,650,049 square feet in 153 projects. There were 1,231 Class-B buildings totaling 27,833,185 square feet, and the Class-C sector consisted of 12,662,858 square feet in 1,718 buildings. Within the Office market there were 236 owneroccupied buildings accounting for 10,561,068 square feet of office space. Sales Activity Tallying office building sales of 15,000 square feet or larger, Richmond VA office sales figures fell during the third quarter 2015 in terms of dollar volume compared to the second quarter of In the third quarter, five office transactions closed with a total volume of $31,814,400. The five buildings totaled 230,056 square feet and the average price per square foot equated to Absorption & Deliveries Past 10 Quarters Net Absorption Deliveries q $ per square foot. That compares to six transactions totaling $36,853,632 in the second quarter The total square footage in the second quarter was 313,390 square feet for an average price per square foot of $ Total office building sales activity in 2015 was down compared to In the first nine months of 2015, the market saw 14 office sales transactions with a total volume of $71,918,032. The price per square foot averaged $ In the same first nine months of 2014, the market posted 20 transactions with a total volume of $136,722,868. The price per square foot averaged $ Cap rates have been lower in 2015, averaging 5.83% compared to the same period in 2014 when they averaged 9.06%. One of the largest transactions that has occurred within the last four quarters in the Richmond VA market is the sale of Riverfront Plaza in Richmond. This 951,897-square-foot office building sold for $147,500,000, or $ per square foot. The property sold on 12/17/2015, at a % cap rate. Reports compiled by: Ashley McClain, CoStar Research Manager CoStar Group, Inc. The CoStar Office Report 3

9 Richmond VA Year-End 2015 Markets CoStar Submarket Clusters & Submarkets In analyzing metropolitan areas, CoStar has developed geographic designations to help group properties together, called Markets, Submarket Clusters and Submarkets. Markets are the equivalent of metropolitan areas, or areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Markets are then divided into Submarket Clusters, which are core areas within a metropolitan area that are known to be competitive with each other in terms of attracting and keeping tenants. Markets are then further subdivided into smaller units called Submarkets, which serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted competitive set, or peer group. Submarket Clusters Amelia County Charles City County Cumberland County Dinwiddie County Submarkets Amelia County Charles City County Cumberland County Dinwiddie County Downtown CBD* Monroe Ward* North Broad* Shockoe Bottom* East East End I-95 North/Chamberlayne Mechanicsville Northside Goochland King William County Louisa County New Kent County Goochland King William County Louisa County New Kent County Northwest Far West End Glenside/Broad St I-95 North/Ashland Innsbrook Lakeside Near West End Parham East Parham South West Creek West End Powhatan Prince George Powhatan Prince George Southwest Hull Street Corridor Iron Bridge Corridor Midlothian Corridor Rt 288 Corridor Stony Point/Huguenot Sussex County TriCities Sussex County TriCities * Submarkets comprising the CBD. For statistics reference the CBD vs Suburban Figures at a Glance Page. 4 The CoStar Office Report 2016 CoStar Group, Inc.

10 Inventory & development Year-End 2015 Richmond VA Historical Deliveries Deliveries Average Delivered SF Millions of SF * Future deliveries based on current under construction buildings. Construction Activity Markets Ranked by Under Construction Square Footage Under Construction Inventory Average Bldg Size Market # Bldgs Total RBA Preleased SF Preleased % All Existing U/C Northwest 5 220, , % 21,057 44,019 Southwest 3 113,000 59, % 15,370 37,667 Downtown 2 63,200 6, % 56,512 31,600 Sussex County % 2,727 0 TriCities % 6,212 0 Cumberland County % Dinwiddie County % 6,440 0 Goochland % 6,289 0 Amelia County % 3,915 0 East % 7,825 0 All Other % 6,264 0 Totals , , % 19,712 39,629 Recent Deliveries Leased & Un-Leased SF in Deliveries Since 2011 Future Deliveries Preleased & Un-Leased SF in Properties Scheduled to Deliver 0.6 Leased Un-Leased 300 Preleased Un-Leased Millions of SF Thousands of SF T q q 2016 CoStar Group, Inc. The CoStar Office Report 5

11 Richmond VA Year-End 2015 Inventory & development Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction 0.4 Construction Starts Deliveries Millions of SF q q q q Recent Deliveries by Project Size Breakdown of Year-to-Date Development Based on RBA of Project Building Size # Bldgs RBA SF Leased % Leased Avg Rate Single-Tenant Multi-Tenant < 50,000 SF 3 54,270 54, % $ ,209 41,061 50,000 SF - 99,999 SF 2 123,000 79, % $ , ,000 SF - 249,999 SF % $ ,000 SF - 499,999 SF 1 330, , % $ 0 330,000 >= 500,000 SF % $ 0 0 Recent Development by Tenancy Comparison Based on RBA Developed for Single & Multi Tenant Use Based on Total RBA 2015 Deliveries Currently Under Construction By Class By Space Type 3% 11% 21% 29% 97% 89% 45% 34% 71% Multi Single Multi Single Class A Class B Class C Multi Single 6 The CoStar Office Report 2016 CoStar Group, Inc.

12 Inventory & development Year-End 2015 Richmond VA 2016 CoStar Group, Inc. The CoStar Office Report 7

13 Richmond VA Year-End 2015 Inventory & development 8 The CoStar Office Report 2016 CoStar Group, Inc.

14 Figures at a Glance Year-End 2015 Richmond VA Class A Market Statistics Year-End 2015 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Amelia County % $ Charles City County % $ Cumberland County % $ Dinwiddie County % $ Downtown 23 6,704, , , % 162, ,000 0 $24.34 East 3 243,066 2,544 2, % 60,456 63,000 0 $ Goochland % $ King William County % $ Louisa County % $ New Kent County % $ Northwest 90 10,411, , , % 135,657 97, ,095 $19.37 Powhatan % $ Prince George % $ Southwest 37 3,291, , , % 114, ,000 $18.58 Sussex County % $ TriCities % $ Totals ,650,049 1,568,034 1,870, % 473, , ,095 $20.04 Class B Market Statistics Year-End 2015 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Amelia County 1 6, % $ Charles City County 1 4, % $ Cumberland County % $ Dinwiddie County 2 19, % $ Downtown 90 6,875, , , % (25,637) 0 63,200 $16.96 East 128 1,564, , , % 52, $16.38 Goochland 10 54,216 2,700 2, % 2, $15.75 King William County 4 45, % 5, $12.01 Louisa County 6 39, % 4, $ New Kent County 7 45,636 5,615 5, % $11.35 Northwest ,737,829 1,230,611 1,243, % 43,974 13,209 17,000 $16.16 Powhatan 14 93,902 17,946 17, % (518) 0 0 $12.53 Prince George ,069 21,087 21, % 1, $10.55 Southwest 375 6,468, , , % 78,306 3,403 15,000 $15.61 Sussex County % $ TriCities , , , % (36,855) 0 0 $14.07 Totals 1,231 27,833,185 2,918,896 2,931, % 125,623 16,612 95,200 $ CoStar Group, Inc. The CoStar Office Report 9

15 Richmond VA Year-End 2015 Figures at a Glance Class C Market Statistics Year-End 2015 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Amelia County 3 9,261 1,865 1, % $ Charles City County 1 1, % $ Cumberland County % $ Dinwiddie County 4 19, % $ Downtown 192 3,656, , , % (60,584) 0 0 $13.06 East ,498 39,415 39, % (853) 0 0 $11.16 Goochland 8 58,989 1,800 1, % (150) 0 0 $13.02 King William County 7 18,952 4,638 4, % (4,638) 0 0 $ Louisa County 9 31,247 6,506 6, % $6.00 New Kent County 6 19, % 1, $22.44 Northwest 663 4,297, , , % 55, $13.13 Powhatan 16 63,072 19,994 19, % (14,744) 0 0 $9.66 Prince George 13 77,472 14,300 14, % 2, $10.80 Southwest 393 2,612, , , % (2,395) 0 0 $12.53 Sussex County 5 13,637 2,000 2, % 1, $6.86 TriCities ,090 88,629 88, % (8,089) 0 0 $10.23 Totals 1,718 12,662, , , % (30,216) 0 0 $12.59 Total Office Market Statistics Year-End 2015 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Amelia County 4 15,661 1,865 1, % $ Charles City County 2 5, % $ Cumberland County 2 1, % $ Dinwiddie County 6 38, % $ Downtown ,236,052 1,775,892 1,785, % 76, ,000 63,200 $18.77 East 340 2,660, , , % 112,587 63,000 0 $15.53 Goochland ,205 4,500 4, % 2, $14.48 King William County 11 64,393 4,638 4, % $12.01 Louisa County 15 70,335 6,506 6, % 4, $6.00 New Kent County 13 64,783 5,615 5, % 1, $14.70 Northwest 1,256 26,447,296 2,087,901 2,388, % 235, , ,095 $17.21 Powhatan ,974 37,940 37, % (15,262) 0 0 $11.74 Prince George ,541 35,387 35, % 3, $10.57 Southwest ,372,466 1,063,989 1,069, % 190,624 3, ,000 $16.16 Sussex County 5 13,637 2,000 2, % 1, $6.86 TriCities 264 1,639, , , % (44,944) 0 0 $12.91 Totals 3,102 61,146,092 5,464,582 5,780, % 568, , ,295 $ The CoStar Office Report 2016 CoStar Group, Inc.

16 Figures at a Glance Year-End 2015 Richmond VA Class A Submarket Statistics Year-End 2015 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Amelia County % $ CBD 16 5,426, , , % 159, ,000 0 $24.35 Charles City County % $ Cumberland County % $ Dinwiddie County % $ East End % $ Far West End 2 152,018 2,017 2, % 5, ,000 $22.00 Glenside/Broad St 19 1,775,414 56,765 86, % 45,639 37,658 0 $21.05 Goochland % $ Hull Street Corridor % $ I-95 North/Ashland 1 120, % ,717 $ I-95 North/Chamberla % $ Innsbrook 52 5,633, , , % 88, $18.93 Iron Bridge Corridor 2 97,700 47,221 47, % (10,442) 0 43,000 $17.07 King William County % $ Lakeside % $ Louisa County % $ Mechanicsville 3 243,066 2,544 2, % 60,456 63,000 0 $ Midlothian Corridor 24 2,186, , , % 75, $17.36 Monroe Ward 1 218, % $ Near West End % $ New Kent County % $ North Broad 5 893, % $ Northside % $ Parham East 2 759, % $ Parham South % $ Powhatan % $ Prince George % $ Rt 288 Corridor 7 545,029 57,890 57, % 36, $19.44 Shockoe Bottom 1 165, % 3, $23.00 Stony Point/Huguenot 4 461,526 23,379 28, % 12, ,000 $22.24 Sussex County % $ TriCities % $ West Creek 11 1,551,713 41,059 41, % 18,941 60,000 0 $24.50 West End 3 418,909 38,228 38, % (23,346) 0 66,378 $16.73 Totals ,650,049 1,568,034 1,870, % 473, , ,095 $ CoStar Group, Inc. The CoStar Office Report 11

17 Richmond VA Year-End 2015 Figures at a Glance Class B Submarket Statistics Year-End 2015 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Amelia County 1 6, % $ CBD 32 3,726, , , % (52,138) 0 0 $17.27 Charles City County 1 4, % $ Cumberland County % $ Dinwiddie County 2 19, % $ East End ,066 6,850 6, % 9, $12.59 Far West End ,192 25,659 25, % (975) 0 0 $14.01 Glenside/Broad St 63 3,109, , , % (1,778) 0 0 $16.52 Goochland 10 54,216 2,700 2, % 2, $15.75 Hull Street Corridor 37 1,997,235 44,693 44, % 42, $13.10 I-95 North/Ashland ,569 16,325 23, % (2,988) 0 0 $13.80 I-95 North/Chamberla ,549 35,664 35, % 9, $13.14 Innsbrook 110 2,076, , , % (9,736) 0 0 $18.40 Iron Bridge Corridor 106 1,599, , , % (546) 0 0 $14.75 King William County 4 45, % 5, $12.01 Lakeside ,895 10,253 10, % 2, $10.72 Louisa County 6 39, % 4, $ Mechanicsville , , , % 32, $17.62 Midlothian Corridor 92 1,422, , , % 5, $15.90 Monroe Ward , , , % 11, $15.62 Near West End ,198 87,409 87, % 18,945 13,209 17,000 $16.57 New Kent County 7 45,636 5,615 5, % $11.35 North Broad 12 1,164,168 53,668 53, % $17.60 Northside 8 128,559 3,500 3, % $8.01 Parham East 57 1,662, , , % 12, $16.19 Parham South , , , % 7, $14.07 Powhatan 14 93,902 17,946 17, % (518) 0 0 $12.53 Prince George ,069 21,087 21, % 1, $10.55 Rt 288 Corridor ,680 56,642 56, % 33,482 3,403 15,000 $17.00 Shockoe Bottom 10 1,034,948 11,497 11, % 15, ,200 $16.45 Stony Point/Huguenot ,030 19,501 19, % (2,016) 0 0 $15.02 Sussex County % $ TriCities , , , % (36,855) 0 0 $14.07 West Creek 4 240, % $ West End 93 2,264, , , % 18, $16.29 Totals 1,231 27,833,185 2,918,896 2,931, % 125,623 16,612 95,200 $ The CoStar Office Report 2016 CoStar Group, Inc.

18 Figures at a Glance Year-End 2015 Richmond VA Class C Submarket Statistics Year-End 2015 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Amelia County 3 9,261 1,865 1, % $ CBD 32 1,729, , , % (5,427) 0 0 $13.52 Charles City County 1 1, % $ Cumberland County % $ Dinwiddie County 4 19, % $ East End ,898 8,869 8, % (910) 0 0 $12.09 Far West End ,323 5,827 5, % 3, $13.55 Glenside/Broad St ,671 15,968 15, % (8,847) 0 0 $17.10 Goochland 8 58,989 1,800 1, % (150) 0 0 $13.02 Hull Street Corridor ,028 74,916 74, % (8,667) 0 0 $13.50 I-95 North/Ashland ,008 45,747 45, % (5,459) 0 0 $10.82 I-95 North/Chamberla ,343 7,850 7, % (2,100) 0 0 $11.83 Innsbrook , % 3, $2 Iron Bridge Corridor ,746 65,092 65, % (7,600) 0 0 $11.41 King William County 7 18,952 4,638 4, % (4,638) 0 0 $ Lakeside ,211 9,900 9, % 9, $12.00 Louisa County 9 31,247 6,506 6, % $6.00 Mechanicsville ,340 20,696 20, % 2, $10.63 Midlothian Corridor ,118 60,819 60, % 31, $12.42 Monroe Ward ,671 31,392 31, % (19,936) 0 0 $12.18 Near West End 234 1,298, , , % 49, $13.27 New Kent County 6 19, % 1, $22.44 North Broad ,174 49,560 49, % (36,231) 0 0 $13.61 Northside ,917 2,000 2, % $ Parham East ,450 5,063 5, % $10.64 Parham South ,527 21,859 21, % 7, $12.81 Powhatan 16 63,072 19,994 19, % (14,744) 0 0 $9.66 Prince George 13 77,472 14,300 14, % 2, $10.80 Rt 288 Corridor ,779 33,527 33, % (24,410) 0 0 $10.10 Shockoe Bottom ,101 2,553 2, % 1, $13.67 Stony Point/Huguenot ,093 36,892 36, % 7, $12.55 Sussex County 5 13,637 2,000 2, % 1, $6.86 TriCities ,090 88,629 88, % (8,089) 0 0 $10.23 West Creek 2 1, % $ West End 167 1,185,971 81,926 81, % (3,464) 0 0 $13.21 Totals 1,718 12,662, , , % (30,216) 0 0 $ CoStar Group, Inc. The CoStar Office Report 13

19 Richmond VA Year-End 2015 Figures at a Glance Total Office Submarket Statistics Year-End 2015 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Amelia County 4 15,661 1,865 1, % $ CBD 80 10,882,309 1,525,211 1,535, % 101, ,000 0 $20.24 Charles City County 2 5, % $ Cumberland County 2 1, % $ Dinwiddie County 6 38, % $ East End ,964 15,719 15, % 9, $12.44 Far West End ,533 33,503 33, % 8, ,000 $14.33 Glenside/Broad St 127 5,208, , , % 35,014 37,658 0 $17.96 Goochland ,205 4,500 4, % 2, $14.48 Hull Street Corridor 154 2,808, , , % 33, $13.39 I-95 North/Ashland ,601 62,072 69, % (8,447) 0 26,717 $11.97 I-95 North/Chamberla ,892 43,514 43, % 7, $12.79 Innsbrook 186 8,120, , , % 82, $18.84 Iron Bridge Corridor 166 2,030, , , % (18,588) 0 43,000 $14.65 King William County 11 64,393 4,638 4, % $12.01 Lakeside ,106 20,153 20, % 11, $11.06 Louisa County 15 70,335 6,506 6, % 4, $6.00 Mechanicsville 122 1,344, , , % 95,174 63,000 0 $16.69 Midlothian Corridor 225 4,405, , , % 112, $16.06 Monroe Ward 128 1,871, , , % (8,482) 0 0 $14.60 Near West End 272 1,944, , , % 68,530 13,209 17,000 $14.06 New Kent County 13 64,783 5,615 5, % 1, $14.70 North Broad 63 2,907, , , % (36,231) 0 0 $16.53 Northside ,476 5,500 5, % $8.01 Parham East 97 2,654, , , % 12, $15.96 Parham South 80 1,027, , , % 14, $13.92 Powhatan ,974 37,940 37, % (15,262) 0 0 $11.74 Prince George ,541 35,387 35, % 3, $10.57 Rt 288 Corridor 131 1,641, , , % 45,803 3,403 15,000 $17.63 Shockoe Bottom 34 1,574,892 14,050 14, % 19, ,200 $16.41 Stony Point/Huguenot 129 1,486,649 79,772 84, % 17, ,000 $18.90 Sussex County 5 13,637 2,000 2, % 1, $6.86 TriCities 264 1,639, , , % (44,944) 0 0 $12.91 West Creek 17 1,793,213 41,059 41, % 18,941 60,000 0 $24.50 West End 263 3,869, , , % (8,576) 0 66,378 $15.41 Totals 3,102 61,146,092 5,464,582 5,780, % 568, , ,295 $ The CoStar Office Report 2016 CoStar Group, Inc.

20 Figures at a Glance Year-End 2015 Richmond VA Class A Market Statistics Year-End 2015 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 23 6,704, , , % 162, ,000 0 $24.34 Suburban ,945, ,657 1,198, % 310, , ,095 $19.13 Totals ,650,049 1,568,034 1,870, % 473, , ,095 $20.04 Class B Market Statistics Year-End 2015 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 90 6,875, , , % (25,637) 0 63,200 $16.96 Suburban 1,141 20,958,125 2,015,314 2,027, % 151,260 16,612 32,000 $15.86 Totals 1,231 27,833,185 2,918,896 2,931, % 125,623 16,612 95,200 $16.16 Class C Market Statistics Year-End 2015 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD 192 3,656, , , % (60,584) 0 0 $13.06 Suburban 1,526 9,006, , , % 30, $12.50 Totals 1,718 12,662, , , % (30,216) 0 0 $12.59 Class A & B Market Statistics Year-End 2015 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD ,579,488 1,565,959 1,575, % 137, ,000 63,200 $19.43 Suburban 1,271 34,903,746 2,920,971 3,226, % 462, , ,095 $17.38 Totals 1,384 48,483,234 4,486,930 4,802, % 599, , ,295 $17.85 Total Office Market Statistics Year-End 2015 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates CBD ,236,052 1,775,892 1,785, % 76, ,000 63,200 $18.77 Suburban 2,797 43,910,040 3,688,690 3,994, % 492, , ,095 $16.59 Totals 3,102 61,146,092 5,464,582 5,780, % 568, , ,295 $ CoStar Group, Inc. The CoStar Office Report 15

21 Richmond VA Year-End 2015 Figures at a Glance 16 The CoStar Office Report 2016 CoStar Group, Inc.

22 Leasing Activity Year-End 2015 Richmond VA Historical Rental Rates Based on Full-Service Equivalent Rental Rates A B C Total Market $25.00 $2 $15.00 $1 $5.00 $ q q q q q q by Available Space Type by Class Percent of All Vacant Space in Direct vs. Sublet Percent of All Vacant Space by Class Richmond VA United States Richmond VA United States 5% 4% 17% 16% 51% 32% 48% 36% 95% 96% Direct Sublet Direct Sublet Class A Class B Class C Class A Class B Class C U.S. Rental Rate Comparison Based on Full-Service Equivalent Rental Rates Future Space Available Space Scheduled to be Available for Occupancy* $25.00 $2 Richmond VA United States $15.00 $ $ $ q q q q q q * Includes Under Construction Spaces 2016 CoStar Group, Inc. The CoStar Office Report 17

23 Richmond VA Year-End 2015 Leasing Activity Select Top O ce Leases Based on Leased Square Footage For Deals Signed in 2015 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company W Broad St Far West End 110,000 3rd VCU Health Systems N/A N/A 2 WestMark Two Innsbrook 42,539 3rd Retail Data Cushman & Wake eld Thalhimer Cushman & Wake eld Thalhimer 3 The Jackson Center North Broad 32,679 3rd VCU Health Systems N/A Cushman & Wake eld Thalhimer 4 Libbie Mill: Phase II West End 29,923 2nd Rutherfoord N/A CBRE Richmond 5 Reynolds O ce Building Glenside/Broad St 29,873 4th N/A N/A CBRE Richmond 6 Riverside on the James CBD 27,418 3rd PNC Bank JLL Cushman & Wakefield Thalhimer; Amer 7 The Apex Bldg* Innsbrook 26,924 1st Apex Systems, Inc. N/A N/A 8 Anton Paar USA I-95 North/Ashland 26,717 4th Anton Paar USA INC N/A Anton Paar USA, INC E Franklin St Monroe Ward 24,353 1st Hourigan Construction CBRE Richmond Divaris Real Estate, Inc. 10 Brookstone Parham South 23,434 1st N/A N/A CBRE Richmond 11 One James Center CBD 20,886 1st Dixon Hughes Goodman N/A JLL 12 Westgate II* Far West End 20,049 3rd Progressive Insurance Company N/A Cushman & Wake eld Thalhimer 13 Boulders Center* Midlothian Corridor 19,697 3rd Xerox Corporation N/A Cushman & Wake eld Thalhimer 14 Federal Reserve Bank Of Richmond* CBD 19,355 2nd Diamond Healthcare Corporation N/A Cushman & Wake eld Thalhimer 15 Stony Point IV Stony Point/Huguenot 18,517 1st Movement Mortgage N/A JLL W Broad St West End 17,799 1st Lumber Liquidators Services LLC Colliers International Colliers International 17 Commonwealth Centre Rt 288 Corridor 16,430 2nd Progressive Design, Inc. Cushman & Wake eld Thalhimer Cushman & Wake eld Thalhimer 18 Turning Basin Building* CBD 16,090 3rd Kaleo N/A Cushman & Wake eld Thalhimer 19 Boulders III Midlothian Corridor 14,017 2nd N/A N/A Cushman & Wake eld Thalhimer 20 The Fairfax Building* Midlothian Corridor 13,893 2nd Indivior PLC N/A JLL 21 Turning Basin Building CBD 13,689 3rd N/A N/A Cushman & Wake eld Thalhimer 22 SunTrust Center CBD 13,500 1st Eckert, Seamans, Cherin & Mellott N/A Commonwealth Commercial Partners, L W Marshall St Near West End 13,209 2nd The Frontier Project N/A Colliers International 24 Westerre III* Innsbrook 13,107 1st BusinesSuites West End JLL N/A 25 Arboretum IX* Midlothian Corridor 12,864 2nd Johnson, Mirmiran & Thompson, Inc. N/A Cushman & Wake eld Thalhimer 26 Columbia/HCA Glenside/Broad St 12,518 3rd Total Renal Care, Inc Direct Deal Colliers International 27 Moore eld Commons I Midlothian Corridor 12,436 1st N/A N/A CBRE Richmond Elm Dr Mechanicsville 12,360 1st Team Fishel N/A Bradley Properties Inc 29 Edgeworth Tobacco Row Shockoe Bottom 12,172 2nd Wealthcare Capital Management Cushman & Wake eld Thalhimer CBRE Richmond 30 Continental Building* West End 12,100 4th Coates & Davenport PC N/A Colliers International 31 Center Park V Innsbrook 11,915 1st Law Firm N/A N/A 32 SunTrust Center CBD 11,894 4th Greater Richmond Chamber of Commerce CBRE Richmond Commonwealth Commercial Partners, L 33 Reynolds Commons Glenside/Broad St 11,858 4th Veritas Collaborative Virginia N/A CBRE Richmond 34 Arboretum II Midlothian Corridor 11,407 3rd Med Inc. N/A Brandywine Operating Partnership, L 35 Commerce Center Glenside/Broad St 11,344 2nd N/A N/A Brandywine Operating Partnership, L 36 Corrugated Box* Hull Street Corridor 11,208 3rd Maxx Potential, LLC N/A Cushman & Wake eld Thalhimer 37 Powers-Taylor Building CBD 10,694 2nd 1607 Capital Partners Shockoe Company Cushman & Wake eld Thalhimer Roseneath Road Near West End 10,400 3rd Veil Brewing Co N/A Cushman & Wake eld Thalhimer 39 Featherstone Professional Center Stony Point/Huguenot 10,287 3rd N/A N/A Cushman & Wake eld Thalhimer Staples Mill Rd Parham East 10,057 1st Bon Secours Direct Deal The Wilton Companies * Renewal 18 The CoStar Office Report 2016 CoStar Group, Inc.

24 Sales Activity Year-End 2015 Richmond VA The Optimist Sales Index Average of Two Highest Price/SF's and Two Lowest Cap Rates Per Quarter 16.0% Cap Rate Price/SF $ % $370 Cap Rate Percentage 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% $320 $270 $220 $170 $120 $70 Dollars/SF 0.0% q q q $20 Source: CoStar COMPS Sales Volume & Price Sales Analysis by Building Size Based on Office Building Sales of 15,000 SF and Larger Based on Office Building Sales From Oct Sept $180 Sales Volume Price/SF $400 Bldg Size # RBA $ Volume Price/SF Cap Rate Millions of Sales Volume Dollars $160 $140 $120 $100 $80 $60 $40 $350 $300 $250 $200 $150 $100 Price/SF < 50,000 SF ,711 $48,828,878 $ % 50K-249K SF 250K-499K SF 8 659,626 $79,344,932 $ % $ - - $20 $50 $0 $0 >500K SF $ q q q q Source: CoStar COMPS Source: CoStar COMPS U.S. Price/SF Comparison Based on Office Building Sales of 15,000 SF and Larger U.S. Cap Rate Comparison Based on Office Building Sales of 15,000 SF and Larger $370 Richmond VA US 16.0% Richmond VA US $ % Dollars per SF $270 $220 $170 $120 Cap Rate Percentage 12.0% 10.0% 8.0% 6.0% 4.0% $70 2.0% $20 0.0% q q q q q q q q Source: CoStar COMPS Source: CoStar COMPS 2016 CoStar Group, Inc. The CoStar Office Report 19

25 Richmond VA Year-End 2015 Sales Activity 20 The CoStar Office Report 2016 CoStar Group, Inc.