Avison Young Commercial Real Estate Investment Review ... Commercial Real Estate Investment Volume By Property Type (USD) Mid-Year 2013 Mid-Year 2014 Fall 2014 Canada, U.S. and U.K

Partnership. Performance.

FALL 2014

Avison Young Commercial Real Estate Investment ReviewCanada, U.S. and U.K.

Canada & U.S. Office Market Overview 3

Canada & U.S. Office Market Highlights 4

Canada

Calgary 10

Edmonton 11

Montreal 12

Ottawa 13

Toronto 14

Vancouver 15

United States

Atlanta 16

Austin 17

Boston 18

Chicago 19

Columbus, OH 20

Dallas 21

Denver 22

Houston 23

Las Vegas 24

Contents

United States cont’d.

Los Angeles 25

New Jersey 26

New York 27

Orange County 28

Philadelphia 29

Pittsburgh 30

Raleigh-Durham 31

San Diego County 32

San Francisco 33

San Mateo 34

South Florida 35

Tampa 36

Washington, DC 37

Europe

London, U.K. 38

Our Contacts 39

Canada Overview

The Canadian commercial real estate investment market continues to see a large surplus of capital chasing a limited supply of quality

product available for sale. This trend, coupled with buyers being more selective, has kept total investment dollar volume in check in 2014. Sales of office, industrial, retail, multi-residential and land properties across Canada’s six major markets totalled slightly more than $13 billion (CAD) in the first half of 2014 – down $1.5 billion, or 10%, compared with the first half of 2013. Pension funds and private investors have filled the acquisition gap left by some of the REITs. Large office and retail portfolio and single-asset sales propelled Toronto to the highest dollar volume ($5.6 billion / 43% share) in Canada in the first half of 2014. Toronto led all asset classes; however, sales declined 14% relative to the first half of 2013. Vancouver ($2.3 billion / 18% share) recorded the greatest year-over-year improvement (+16%) as the market was characterized more by what was not sold than what was traded. Attributed to the rapid pace of development, land sales lifted Edmonton’s six-month tally to $1.7 billion (+6% / 13% share). In Calgary, office replaced land sales from one year ago as institutional transactions represented a significant portion of overall capital allocated to the office sector. However, Calgary’s investment activity plunged 36% below the first half of 2013 as $1.4 billion (11% share) worth of property changed hands. Boosted by multi-residential transactions, Montreal ($1.4 billion / 11% share) matched Edmonton’s performance, but fell short (-9%) of the 2013 tally, while Ottawa managed only $545 million (-12% / 4% share) in sales.By asset class, office buildings ($3.3 billion / 25% share / +2%) were high on investors’ lists; however, tight supply kept investment volume at bay. Toronto captured almost half of the national office sales total, while Vancouver boasted the greatest year-over-year increase (+101%). Retail witnessed the greatest improvement over 2014 levels ($2.9 billion / 22% share / +25%), with sales up in every market and led by Calgary (+106%). Land sales dipped 13% to $2.8 billion (21% share), while industrial, the first-half 2013 leader, posted $2.3 billion (-36% / 17% share) in trades. Industrial sales dropped in every market except Edmonton (+7%). Multi-residential sales ($1.8 billion / 14% share) declined 19%, but more than doubled in Vancouver. Capitalization (cap) rates across six markets and five property types were flat, or marginally lower than one year ago, with multi-residential properties having the lowest yields. Vancouver remains the most expensive market, except for suburban class A office (tied with Calgary) and tier I regional mall investments (second to Toronto). Historically-low yields and a limited availability of high-quality investment properties have prompted some Canadians to look abroad, especially in the U.S. Led by institutional capital, Canadians bought $5.4 billion worth of U.S. properties in the first six months of 2014, with Boston and Manhattan the top destinations.A shift in product availability could see 2014 total investment match or exceed 2012 and 2013 levels.

U.S. Overview

Commercial real estate sales rose in Avison Young’s U.S. markets during the first half of 2014 compared with the first half of 2013,

driven in large part by a resurgence in office dispositions. Sales volume for office, industrial, retail and multi-residential properties rose 11% to $85.4 billion at mid-year 2014 from $76.7 billion at mid-year 2013. Volume increased in all but two U.S. markets: Los Angeles (-3%) and Washington, DC (-38%). Seven markets registered volume increases in excess of 60%, with the standouts being Philadelphia (+117%), San Francisco (+97%), San Diego (+93%) and Orange County (+87%). Multi-residential sales continued to account for a significant portion of overall volume (29%), but activity in this segment is beginning to moderate following several years of robust activity. Multi-residential sales totaled $24.5 billion in the first half of 2014, down 15% compared with the same period in 2013. The lower volume was more than offset by gains in the office, industrial and retail sectors, where improving leasing fundamentals are driving increased investor demand. The steepest declines were witnessed in Washington, DC (-75%) and San Mateo (-62%), while a handful of cities posted significant gains: Pittsburgh (+360%), Columbus (+239%) and Orange County (+215%).Office sales accounted for the largest portion (44%, $37.8 billion) of the total dollar volume, a 27% increase compared with the first half of 2013. Office volume was highest in the coastal urban centers of New York ($9.4 billion), Los Angeles ($4.6 billion), Washington, DC ($3.4 billion) and Boston ($3.1 billion). Five Avison Young markets posted gains of more than 100%, with the largest increases witnessed in San Mateo (+400%), Orange County (+210%) and Philadelphia (+159%). Industrial sales in the first half of 2014 rose almost 30% to $10.2 billion. Chicago, Los Angeles and Dallas led sales in this category with total dollar volume of $1.4, $1.3 and $1.1 billion, respectively. The largest increases in volume were recorded in Denver (+328%), San Mateo (+260%) and Las Vegas (+209%).In the retail sector, year-over-year sales volume increased 25% to $13 billion by mid-year 2014. Los Angeles reported the highest volume of retail sales at $1.8 billion, while markets with the greatest positive change were Boston (+364%) and San Francisco (+273%).Cap rates in the U.S. moved lower in the first half of 2014 for all asset classes, averaging 6.7% versus 6.9% one year earlier. Multi-residential properties witnessed the greatest decline (-30 bps), followed by industrial (-29 bps), retail (-24 bps) and office (-10 bps) assets. The largest overall cap-rate decline among Avison Young’s U.S. markets was reported in Las Vegas (-138 bps), where rates fell by more than 100 bps across all product types.Look for continued strong activity through the second half of 2014, with overall volume poised to exceed 2013 levels. New supply could put upward pressure on multi-residential cap rates, while pricing for office, industrial and retail assets is expected to increase.

Demand for assets underscores healthy commercial real estate investmentDispositions continue to drive healthy investment levels in most Canadian markets, while the lack of quality product being offered for sale masks investors’ true demand for acquisitions. This situation has prompted some Canadian investors to deploy capital to other countries – especially the U.S., where some markets are seen as being undervalued. In the U.S., improving leasing fundamentals have led to a robust investment environment with sales performance either on par with, or up from, one year ago.

3Fall 2014 Canada, U.S. and U.K. Commercial Real Estate Investment Review

Canada & U.S. Commercial Real Estate Investment Market Overview

Fall 2014 Canada, U.S. and U.K. Commercial Real Estate Investment Review4

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Canada & U.S. Investment Market Highlights

Fall 2014 Canada, U.S. and U.K. Commercial Real Estate Investment Review 5


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Edmonton

Montreal

Ottawa

Toronto

Vancouver

Canada Average Capitalization Rates By Market

(All Property Types)

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Canada Average Capitalization Rates By Property Type

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Atlanta

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U.S. Average Capitalization Rates By Market



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Canadian Commercial Real EstateInvestment Capital Flow into U.S.First Half 2014

$5.4 billion+79% YoY

O�ce$3.6B

Multi-Residential

$870MIndustrial

$430MRetail

$363MLand

$189M

Buyer Capital

Type Volume$ million (CAD)

Institutional $3,421

Public $898

Private $801

Equity Fund $150

User / Other $13

Top 10 U.S. Destination Markets for Canadian Capital

Rank Destination Volume$ million (CAD)

1. Boston $2,167

2. Manhattan $1,151

3. Phoenix $207

4. Houston $188

5. Atlanta $165

6. Chicago $148

7. Washington, DC $116

8. Austin $108

9. Denver $101

10. Orlando $99


$ in billions(CAD)

The first half of 2014 saw investment activity fall slightly below that of the first half of 2013, with $1.4 billion worth

of property changing hands versus $2.1 billion one year prior. An outlier within this activity was Calgary’s retail market, which witnessed a substantial increase in investment dollar volume. Retail transactions totalled $181 million from January through June 2014 – more than double the $88 million invested during the same period in 2013. The most significant property sold during the first half of 2014 was the Seton Gateway Shopping Centre, which was acquired by First Capital Realty and the Insurance Corporation of British Columbia. Calgary’s industrial market has been a darling of the local commercial real estate scene as the city continues to establish itself as a primary Western Canadian distribution hub. Major retailers, such as Home Depot, Sears and Walmart, have recently established, or expanded, their distribution-centre presence. More than $266 million was allocated to industrial properties in the first half of 2014, a decrease of $106 million from the first half of 2013 due primarily to a lack of supply. A noteworthy industrial transaction was Nova Chemicals Corporation’s $29-million industrial investment at 2928 16th Street N.E. In the office investment sector, total dollar volume was slightly lower during the first half of 2014 compared with the first half of 2013. Transactions totalled $595 million in the first half of 2014 versus $654 million one year prior. A major acquisition was the Ontario Pension Board’s purchase of Centre 10, a recently developed 330,000-sf, class A Beltline office building. This transaction typified the source of funds for this asset class, that being institutional in nature.From a residential perspective, the relative scarcity of multi-residential rental product transacting in the market has driven institutional players to begin developing new properties. Alberta Investment Management Corporation and the British Columbia Investment Management Corporation have multiple purpose-built rental projects in the works, while Intergulf Cidex has completed phase I of Allure, a 154-unit rental project with construction of phase II already underway.

Centre 10

Calgary

TOP 5 INVESTMENT SALES BY PRICE - MID-YEAR 2014Address Property Type Total Price (CAD) Vendor Purchaser

1 517 10th Avenue SW / Centre 10 Office $274,000,000 Centre 10 Corp. Ontario Pension Board

2 University Centre Office $82,750,000 NorthWest Value Partner Fiera Properties

3 Seton Gateway Shopping Centre Retail $73,000,000 Brookfield Residential First Capital Realty / Insurance Corporation of

British Columbia

4 6301 106th Avenue S.E. Land $31,752,000 The City of Calgary Home Depot of Canada Inc.

5 2928 16th Street N.E. Industrial $29,300,000 2928 16th Street Portfolio Inc. Nova Chemicals Corporation

Calgary Investment Activity

Edmonton Investment Activity

Montreal Investment Activity

Ottawa Investment Activity

Toronto Investment Activity

Vancouver Investment Activity

Mid-Year2014

Calgary Investment Activity(By Property Type)

Calgary Investment Volume

Select Average Capitalization Rates


Downtown Class AA Office 5.3% 5.4%

Suburban Class A Office 5.9% 6.1%

Single-Tenant Industrial 5.8% 5.9%

Multi-Tenant Industrial 6.0% 6.0%

Tier I Regional Mall 4.8% 5.0%

Multi-Residential 4.7% 4.7%


Mid-Year2014

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43% 30% Office

20% 42% Land

19% 17% Industrial

13% 4% Retail

4% 6% Multi-Residential

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The Edmonton investment market continues to be impeded by minimal deal volume across most asset classes. With

vacancy rates at very low levels, except for the office market, rental-rate growth and absorption are strong, underpinned by a booming job market resulting from a buoyant resource-driven economy. The result is robust rental-rate growth, which has created an environment where owners are hanging on to properties longer and realizing strong net operating income growth in comparison with other regions of Canada. This is expected to continue as the resource sector continues to expand, putting upward pressure on the cost of labour and, thus, the cost of construction.The Edmonton office market has been significantly shaken up with the announcement of two new office buildings, to be completed in 2017 and 2018. With a combined area of more than 1.1 msf, they mark the highest rate of downtown development since the late 1980s. The speculative space in the new towers (as well as vacated space from relocating tenants) will significantly alter the income base many office properties have enjoyed in Edmonton during the past decade. This will mean investment levels in the office sector may subside periodically until this vacancy normalizes and allows for strong asset liquidity once again. As these towers open and tenants begin to move, lower-quality and poorly located buildings are expected to suffer from increased vacancy, while existing buildings will likely see only modest rental-rate cuts. Once this stabilization occurs, investment activity will return to the market. The rapid pace of development in the downtown area spurred a secondary boom of apartment and condo construction projects during the first half of 2014. Several groups have purchased bare land or parking lots with the intent to build upwards of 2,500 units in, or just outside, the financial/government districts. Land sales, industrial, retail and multi-residential development are currently strong overall with low vacancy, strong absorption and consistent rental-rate growth that is expected to continue for the near-to-medium term, all driven by a red-hot Alberta economy.

The Nova Park Apartments

Edmonton







Edmonton Investment Activity(By Property Type)

Edmonton Investment Volume

$ in billions(CAD)

Select Average Capitalization RatesMid-Year 2014 Mid-Year 2013








Mid-Year2014

Mid-Year2013

45% 42% Land

20% 20% Industrial

15% 15% Retail

11% 10% Office



1 The Nova Park Apartments Multi-Residential $47,300,000 994552 NWT Ltd. Hollick Kenyon Apartments Ltd.

2 Mayfair Village South Multi-Residential $46,500,000 Mayfair Housing Co. Ltd. Morguard Mayfair Village South Ltd.

3 Plaza 124 Office $37,100,000 Plaza 124 Nominee Company LaSalle Investment Management

4 Winterburn Industrial land Land $36,677,800Walton Yellowhead Development Corp

Yellowhead Lands GP Inc.

5Edmonton Energy &

Technology Park landLand $25,000,000 Rowswell Farms Ltd Nanaksar Gurdwara - Gursikh Temple

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The Montreal commercial real estate market performed well during the first half of 2014, recording investment sales

volume of $1.4 billion. Compared with the same period in 2013, sales decreased by 9%, or $145 million. Multi-residential investment experienced the highest level of activity, ending the first half of 2014 at $441 million. This figure, however, represented a 20% drop compared with the same period in 2013. The office and retail sectors recorded sales volumes of $317 million and $319 million, respectively – up sharply by 53% and 43% from the previous year. The industrial sector fared relatively poorly, with sales of $196 million – a 55% decrease compared with the same period in 2013. Land sales remained essentially flat at $169 million, a 4% year-over-year decrease.The five largest transactions consisted of a portfolio of office buildings, two shopping centres, an industrial building and a hotel. At $63.5 million, the largest transaction was the sale of the Holiday Inn Montreal Midtown to N-HIM Sherbrooke Properties Inc., a joint-venture specializing in student residences. Cominar REIT acquired a portfolio of seven office buildings (389,000 sf ) from Redbourne Group, located in the borough of Saint-Laurent, for $63.3 million. In Saint-Jean-sur-Richelieu, a major LEED-certified distribution centre (400,000 sf ) was acquired for $34.6 million by a subsidiary of Fiera Capital, while the Galeries Richelieu mall (227,000 sf ) was acquired by BTB REIT for $31.6 million. On the North Shore, Cominar REIT purchased Carrefour Lachenaie, a 120,000-sf power centre, for $28.2 million.The second half of 2014 appears promising. The largest year-to-date transaction occurred in August when Cominar REIT acquired 10 shopping centres, three office buildings and one industrial property (largely in Quebec) from Ivanhoe Cambridge for $1.24 billion. In early July, the sale of the Liberty portfolio was finalized, at an estimated price of $280 million. Located in the borough of Saint-Laurent, this portfolio consisted of 17 office and industrial buildings (1.7 msf). The purchasers were the Healthcare of Ontario Pension Plan (HOOPP), Forgestone Capital, and Canderel. Given the stability of the economy and low interest rates, attractive investment opportunities can still be found in every real estate asset category in the Greater Montreal area.

420 Sherbrooke West

Montreal


1 Holiday Inn Montreal Midtown Multi-Residential $63,500,000 109454 Canada Inc. N-HIM Sherbrooke Properties Inc.

2 RRSL portfolio, St-Laurent Office $63,253,389 Redbourne Group Cominar REIT

3760 du Grand-Bernier North,

St-Jean-sur-RichelieuIndustrial $34,650,000 Exel Canada Ltd. 760 Grand Bernier Inc. (Fiera Properties)

4 Les Galeries Richelieu Retail $31,600,000 LaSalle Investment Management BTB REIT

5 Carrefour Lachenaie Retail $28,200,000Investissements Carrefour

Lachenaie Inc.Cominar REIT

Montreal Investment Activity(By Property Type)










Mid-Year2014

Mid-Year2013


22% 14% Retail

22% 13% Office

14% 27% Industrial

12% 11% Land

Mid-Year2014








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Ottawa’s investment environment remained stable through the first half of 2014. Although investment dollar volumes

across all asset classes have dropped (save for multi-residential and retail), capitalization (cap) rates have experienced slight decreases. This correlation can be attributed to a lack of available opportunities in the market following a surge in activity in 2012 and 2013. Given the lack of product, vendors are demanding premium prices for their assets.The largest transaction in the first half of 2014 was Outcore Equities’ acquisition of a 50% ownership stake in 234 Laurier Avenue from Gillin Properties. The 452,000-sf office building is fully leased to the Bank of Canada as renovations continue at the Bank’s former location at 234 Wellington Street. As vacancy rates continue to trend upward in Ottawa’s downtown, some jostling for position is expected as older stock is retrofitted to meet current standards and new development projects get underway to compete for large-block, private- and public-sector tenants looking for change. Spear Street Capital’s acquisition of the BlackBerry portfolio (which included four assets in Kanata) provided some answers surrounding the future of the company’s real-estate presence in that market going forward. The Kanata investment submarket remains very active, as indicated not only in the BlackBerry transaction, but also BMO Life Assurance’s acquisition of a 75% ownership stake in 501 Palladium, the continued development of the Tanger Outlets mall and a few other new development projects in the pipeline that span multiple asset classes.In terms of land transactions, as larger-scale condominium projects remain on hold, the Regional Group’s acquisition of 175 Main Street proves that developers still have an appetite for high-quality urban development sites. This project will include a mix of low-density residential, a few select mid- to high-density residential and limited commercial uses along Main Street. Overall, Ottawa’s capital market in the first half of 2014 was stable with a positive outlook. Although dollar-volume activity across most asset classes declined compared with 2012 and 2013 numbers, overall activity remains strong when looking back over the previous five years.

234 Laurier Avenue West

Ottawa

Ottawa Investment Activity(By Property Type)










Mid-Year2014

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28% 32% Office

15% 14% Land

14% 12% Retail

13% 19% Industrial


1 234 Laurier Avenue West Office $75,750,000 Gillin Properties Outcore Equities (c/o Greystone)

21971 & 1975 St Laurent

BoulevardMulti-Residential $64,950,000

1971-1975 St Laurent Inc. (c/o District Realty)

Homestead

34000 & 5050 Innovation,

110 & 119 Hines RoadOffice $37,539,000 BlackBerry Ltd. Spear Street Capital

4 175 Main Street Land $32,000,000 Les Oeuvres Oblates de l'Ontario The Regional Group

5 501 Palladium Drive Industrial $25,294,287 Summit REIT BMO Life Assurance Co.

Mid-Year2014








Large office and retail portfolio and single-asset sales greater than $100 million fuelled the Greater Toronto Area (GTA) commercial

real estate investment market in the first half of 2014. Sales of office, industrial, retail, multi-residential and land properties reached $5.6 billion – 14% below the first-half 2013 tally – accounting for 45% of the Canadian total. Ample acquisition capital remains; however, lower sales are attributed mostly to the lack of quality product and buyers being more selective in their acquisition approach. REITs, while carefully culling assets, were net buyers ($484 million), outpacing sellers four to one. Low cap rates for quality assets persist and, while private investors and pension funds have filled some of the void left by REITs, buyers are undertaking development to augment their growth strategies.Retail sales narrowly edged out office to lead all asset categories with $1.6 billion in trades (29% share) – one of two sectors to see a year-over-year increase in sales (+25%). The sale of Bayview Village Shopping Centre by Orlando Corporation to the British Columbia Investment Management Corporation (bcIMC) was both the largest GTA and Canadian deal ($505 million) in the first half of 2014. Office sales followed closely with nearly $1.6 billion (28% share), down almost $200 million (-11%) from the first-half 2013 result. The Simpson’s Tower, part of the office and retail sale/leaseback transaction between Hudson’s Bay Company and Cadillac Fairview, was the biggest office deal ($410 million), while Cominar REIT purchased a suburban office portfolio ($165 million) from Redbourne Group.Industrial building sales plunged 42%, with a first-half total of $1.1 billion (19% share). Cominar REIT, KingSett Capital, PIRET and Northam Realty Advisors were active, trading more than $308 million worth of industrial product. Land recorded the greatest year-over-year increase (+36%) with $842 million (15% share) in sales. Despite falling short of the billion-dollar mark, the land sector is on pace to eclipse 2013’s tally ($1.2 billion). Anchored by the $106-million Tridel-Starlight portfolio sale, multi-residential properties were the least-traded asset class ($505 million / 9% share) – representing the greatest year-over-year decline in sales (-49%). A shift in product availability could push 2014 total sales to $11 billion, slightly ahead of 2012-2013 levels.

Simpson’s Tower and Hudson’s Bay Store

Toronto


1 Bayview Village Shopping Centre Retail $505,500,000 Orlando Corporation British Columbia Investment Management

Corporation (bcIMC)

2 Simpson's Tower Office $410,190,000 Hudson's Bay Company Cadillac Fairview

3 Hudson's Bay Retail $263,310,000 Hudson's Bay Company Cadillac Fairview

4Westbury International-Fengate Capital Halton

portfolioOffice $214,000,000 Westbury International Fengate Capital Management

5 Redbourne-Cominar REIT GTA portfolio Office $165,750,249 Redbourne Group Cominar REIT

Toronto Investment Activity(By Property Type)


$ in billions(CAD)









Mid-Year2014

Mid-Year2013

29% 20% Retail

28% 27% Office

19% 29% Industrial

15% 9% Land


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Mid-Year2014








Healthy demand for BC investment product propelled sales activity in the first half of 2014 to more than $2.3 billion

– a 16% increase when compared with the first half of 2013. The first half of 2014 was characterized more by what was not sold versus what was. No single property (excluding land, share dispositions and portfolio sales) exceeded $50 million as no trophy assets changed hands. Industrial investment dropped significantly, and retail deals and dollar volumes were substantially influenced by transactions mandated by the federal government’s Competition Bureau. By asset class, office investment climbed 101% to $433 million by the midway point of 2014 compared with $215 million during the same period in 2013. Retail investment also improved by 16% to $500 million from $430 million in the first half of 2013. These improvements were more the result of increased deal flow rather than the sale of large-scale assets. Multi-residential investment surged by 108% to $489 million in the first half of 2014 from $235 million in the same period in 2013, primarily due to two transactions. Industrial investment plunged by one-third as supply tightened, sliding to $295 million in the first half of 2014 from $440 million in the first half of 2013. The value of land acquisitions declined year-over-year, dropping 11% to $624 million in the first half of 2014 from $703 million in the first half of 2013.The $140-million sale of Boardwalk REIT’s BC apartment portfolio was both the largest multi-residential and overall transaction recorded in the first half of 2014. Government dispositions, which included the City of Vancouver, the Province of British Columbia and the City of New Westminster, combined for five sales valued at $255 million. The largest office transaction in the first half was the $87-million disposition of a 50% interest in an office building at 3777 Kingsway in the suburb of Burnaby. The lack of noteworthy transactions can be traced to the ongoing reluctance by all owner types to sell commercial real estate assets located in Metro Vancouver despite premium pricing and strong demand.

3777 Kingsway

Vancouver

Vancouver Investment Activity(By Property Type)


$ in billions(CAD)









Mid-Year2014

Mid-Year2013

27% 35% Land

21% 21% Retail


18% 11% Office

13% 22% Industrial


1 Boardwalk REIT BC portfolio Multi-Residential $140,000,000 Boardwalk REIT Realstar Group

2Olympic Village

(interest in 61 units)Multi-Residential $91,000,000 City of Vancouver Aquilini Investment Group

3 3777 Kingsway (50% interest) Office $86,900,000 H&R REIT Crestpoint Real Estate Investments Ltd.

4 3405 Willingdon Avenue Land $57,908,000 Province of BCMusqueam Indian Band / Tsleil-Waututh

Nation / Aquilini Investment Group

5 South Burnaby Corporate Centre Industrial $47,600,000 Westbank Projects Corp. Investors Group

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Atlanta Investment Activity

Austin Investment Activity

Boston Investment Activity

Chicago Investment Activity

Columbus Investment Activity

Dallas Investment Activity

Denver Investment Activity

Fairfield County Investment Activity

Atlanta’s commercial real estate investment sales market maintained a steady pace during the first half of 2014.

Overall market sales were up 7% compared with the same period in 2013. Investment sales in the office, industrial, retail and multi-residential sectors topped $4.6 billion in the first half of 2014 - continuing a trend of steady increases since 2010. Bolstered by the $106.5-million sale of The Elle of Buckhead, multi-residential sales volume totaled nearly $2 billion during the first half of 2014, representing 43% of all sales in the first two quarters. Multi-residential sales for the first half of 2014 outperformed mid-year 2013 sales by 20% and reached 65% of the total sales in 2013. Multi-residential development is significant with approximately $5 billion of product recently completed, under construction or planned during the next 36 months.The retail market was a surprisingly close second with transactions totaling $1 billion during the first half of 2014 – a $489-million (93%) increase compared with the same period in 2013. The sale of Camp Creek Marketplace power center (558,000 sf ) for $76.8 million, or $137.60 psf, ranked as one of the largest transactions in the first half of 2014.Industrial investment saw the largest sales volume increase in the first half of 2014 compared with the same period in 2013. Industrial market sales through the second quarter of 2014 increased 150% year-over-year, with total sales of $806 million. With less new product being developed, rents have pushed upward, making Atlanta more appealing to local, national and international investors. The pace of office investment slowed in the first half of 2014 with investment sales totaling $800 million at the mid-year mark – down 55% from the same time period in 2013. The reduction was understandable given that several large assets traded in 2013 with total office sales volume exceeding $4 billion. Atlanta has recovered all of the jobs lost during the Great Recession and has a continually improving, diversified economic climate. Investment sales volume is expected to continue to increase during the next 12 months as leasing volume also improves.

3630 Peachtree Road

Atlanta

TOP 5 INVESTMENT SALES BY PRICE - MID-YEAR 2014Address Property Type Total Price (USD) Vendor Purchaser

1 3630 Peachtree Road Office $170,000,000 Pope & Land Enterprises / Duke Realty / Novare Group / Post Properties Heitman

2 The Elle of Buckhead Multi-Residential $106,500,000 USAA Real Estate / JLB Partners MetLife RE Investors

3 200 King Mill Road Industrial $97,400,000 Millard Refrigerated Services Lineage Logistics

4 Primerica HQ Office $83,979,124 Cole RE Investments ARCP

5 Camp Creek Marketplace Retail $76,769,749 ARCP Blackstone / DDR

Atlanta Investment Activity(By Property Type)

Atlanta Investment Volume

$ in billions(USD)


Office 7.1% 8.2%

Industrial 7.5% 7.7%

Retail 7.6% 8.1%



Mid-Year2014

Mid-Year2013


22% 12% Retail

17% 8% Industrial

17% 42% Office

Mid-Year2014

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As the Texas economy continued to flourish in the first half of 2014, Austin remained a strong contributor to

the state’s job creation. In the 12 months ending June 2014, Austin’s unemployment rate fell to 4.4% from 5.7%. According to the Bureau of Labor Statistics, the Austin metropolitan area added more than 30,000 jobs during those 12 months, amounting to nearly 10% of the jobs created in the state during the same time period. Much of Austin’s job growth has been driven by the city’s growing technology industry, which has drawn the attention of major companies and investors alike. In the first half of 2014, total commercial real estate investment volume increased by 6.4% compared with the first half of 2013. Most importantly, multi-residential real estate investment volume totaled slightly more than $1 billion in the first half of 2014 – more than office, industrial and retail investment combined. By far the area’s hottest real estate investment sector, multi-residential investment increased by more than 60% in the first six months of 2014 compared with the first half of 2013. The office and industrial investment sectors totaled $402 million and $429 million in volume, respectively, in the first half of 2014, while retail investment volume totaled $142 million. Several office buildings traded hands in the first half of 2014. Some notable transactions in this sector included DivcoWest Properties’ purchase of The Avallon from Highbrook Investment Management for $63.5 million, as well as KBS REIT’s $43.2-million sale of Las Cimas IV to Gateway Sherman Inc. and Clarion Partners in a joint venture. One of the largest confirmed transactions in the first half of 2014 came from the multi-residential sector as Hamilton Zanze & Co. sold the Retreat at Barton Creek to Paydar Properties Inc. for $75.3 million. Geographically, Austin’s Northwest, Southwest and CBD submarkets continue to offer numerous investment opportunities.As the favorable outlook on Central Texas’ economy and employment growth continues, Austin’s commercial real estate investment market should have a strong finish in 2014.

The Avallon Building I

Austin

Austin Investment Activity(By Property Type)

Austin Investment Volume

$ in billions(USD)


Office 7.3% 7.9%


Retail 6.0% 6.7%



Mid-Year2014

Mid-Year2013


22% 11% Industrial

20% 42% Office

7% 13% Retail


1 Retreat at Barton Creek Multi-Residential $75,300,000 Hamilton Zanze & Co. / New York Life Paydar Properties Inc.

2 The Avallon Office $63,500,000Highbrook Investment

ManagementDivcoWest Properties

3 Las Cimas IV Office $43,200,000 KBS REIT Gateway Sherman Inc. / Clarion Partners

4 Overwatch Campus Office $42,500,000 CBRE Global Investors Drawbridge Realty Trust

5 Four Points Centre Office $41,500,000 Brandywine Realty Trust DRA Advisors

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Rising occupancy rates, sustainable growth buoyed by regional economic fundamentals, a scarcity of prime

development sites, and access to capital provided a backdrop for continued robust investment in the Greater Boston market in the first half of 2014. Investment sales volume increased for office, retail and multi-residential assets compared with the first half of 2013. The sale of the 1.1-msf, two-building build-to-suit facility occupied by Vertex Pharmaceuticals for nearly $1,000 psf vaulted total sales of office product to nearly twice the level seen in the first half of 2013, despite the divestiture of the Equity Office portfolio having boosted year-end 2013 volume. Capitalization (cap) rates, which dipped across all product types, fell most dramatically for office product, to 4.9% at mid-year 2014 from 6.6% at mid-year 2013. This reduction was partially the result of the sale of a large number of highly occupied core facilities, such as the Vertex complex, One Kendall Square in Cambridge’s Kendall submarket, and 28 State Street in Boston’s core. A decrease in volume among industrial facilities reflected a notable surge in large divestitures in the first half of 2014 as cap rates dropped nearly 60 bps, a dip even more pronounced for better-located and more modern facilities. In the first half of 2014, multi-residential cap rates dipped to 5% from 5.2% in the first half of 2013, spurred on by continued strong job and population growth. The same factors drove an even stronger decrease in cap rates for retail facilities.With access to capital expected to remain robust for Boston-area investment, potential buyers are likely to face heightened competition for the best core assets as well as select improvable properties and value-add opportunities. Investors will likely find that an unusually high volume of investment in urban Boston office assets during the last two years has left a relatively small pool of potential sellers. Buyers seeking state-of-the-art warehouses may experience similar conditions in the industrial investment market.With occupancy levels expected to continue to rise across all product types, a seller’s market is likely to persist in coming quarters.

28 State Street

Boston

Boston Investment Activity(By Property Type)


$ in billions(USD)


Office 4.9% 6.6%


Retail 6.6% 7.2%



Mid-Year2014

Mid-Year2013

70% 63% Office


13% 5% Retail

3% 12% Industrial


1 Fan Pier (Vertex portfolio) Office $1,125,420,000The Fallon Company /

Mass Mutual Life InsuranceSenior Housing Properties Trust

2 One Kendall Square Office $395,000,000Rockwood Captial / The Beal Companies

DivcoWest Properties

3 28 State Street Office $343,292,000 The Blackstone Group Rockefeller Group / Mitsubishi Estate

4 1101 Kirkbride Drive, Danvers Multi-Residential $108,500,000 AvalonBay Communities The DSF Group

5 283 & 321 Summer Street Office $94,922,440 Spear Street Capital Deutsche Asset & Wealth Management

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Chicago commercial real estate investment sales rose 13% during the first half of 2014 compared with the same period in 2013.

Overall dollar volume was recorded at $5.3 billion as all property sectors experienced an uptick in activity. The office sector led in sales volume, totaling $1.8 billion – a 4% increase year-over-year – as institutional investors continued to prefer the CBD over the suburbs. Several notable properties are expected to trade at premiums throughout the remainder of 2014. Irvine Company’s purchase of 300 N. LaSalle from KBS Realty Advisors was expected to close during the third quarter. KBS purchased the trophy tower in 2010 for $655 million, which at the time represented the highest per-square-foot price for a CBD office building. As a result of investors seeking well-leased core product, the asset is expected to sell for a 29% premium. In the first half of 2014, foreign investors continued to pour capital into office product, accounting for roughly 7% of equity investment. Chinese-based Cindat Capital Management, along with Zeller Realty, purchased 311 S. Wacker for $302 million. With the local economy stabilizing and several impending relocations from the suburbs to the CBD, investors will continue to pay premiums for downtown office product. Demand for industrial assets skyrocketed during the first half of 2014. Industrial sales volume experienced the greatest year-over-year shift, a 59% rise to $1.4 billion at mid-2014, up from $891 million a year earlier. With an influx of capital, investors have flooded the market, acquiring both core and value-add opportunities. W.P. Carey purchased the 1.5-msf Solo Cup distribution facility for $85 million, or $54 psf – the largest single-tenant transaction since 2006. Buyers remain optimistic about future rent growth based on several recent large lease transactions. The retail and multi-residential sectors reported minimal growth year-over-year at 1% and 3%, respectively, in the first half of 2014. Improving market conditions and heightened consumer confidence have contributed to increased investor demand for retail product, primarily in well-located big-box space and grocery-anchored strip centers. Starwood Capital made another substantial investment, purchasing the Promenade Bolingbrook, which is 96% leased, for $81 million. Multi-residential investment remained stable as activity began to move from downtown to suburban markets.

311 S. Wacker Drive

Chicago


1 311 S. Wacker Drive Office $302,400,000 Shorenstein Realty Services Zeller Realty Group

2 30 N. LaSalle Street Office $237,500,000 Tishman Speyer Amtrust Realty Corp.

3 One Tellabs Center Office $187,500,000 Tellabs, Inc. Select Income REIT

4 180 N. LaSalle Street Office $126,000,000 Berkley Properties Beacon Capital Partners

5 701 Central Avenue Industrial $85,000,000 Fulcrum Asset Advisors W.P. Carey & Co.

Chicago Investment Activity(By Property Type)


$ in billions(USD)


Office 7.9% 6.9%


Retail 6.5% 7.1%



Mid-Year2014

Mid-Year2013

34% 37% Office

26% 19% Industrial

20% 23% Retail


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During the first half of 2014, a total of 52 project announcements created 3,773 jobs in Columbus.

Manufacturing and logistics projects represented 40% and 29% of this number, respectively. Between March and June, the region’s unemployment rate dipped to 4.6% from 4.8%, falling below the state average of 5.5% and the national average of 6.1%. With the majority of technology giants located on the coast, their sights are set on Columbus. In August 2014, Amazon’s data center subsidiary was approved for a state tax incentive at a proposed $1.1 billion. Announced in August 2013, a Daimler Group/Kaufman Development joint venture is constructing a $50-million apartment and office project at S. High St. This project will consist of 150,000 sf of retail space, five levels of office space and 120 apartments on the top six floors. Construction completion is estimated for spring 2015.Industrial sales led all asset classes in the first six months of 2014 at $247 million, up 85% compared with first-half 2013 sales of $134 million. Capitalization (cap) rates dropped to 6.4% at mid-year 2014 from 7.8% at mid-year 2013.Office sales lowered to $77 million in the first half of 2014 from $98 million during the same period in 2013. Cap rates have remained steady in the office market at 8.2% versus 8.1% at mid-year 2013.Having already grossed $190 million at mid-year 2014, multi-residential properties were only $26 million shy of matching the year-end 2013 total of $216 million. The retail market also showed tremendous progress, totaling $155 million in the first half of 2014 - up significantly from $87 million in the first half of 2013.Two of the top transactions by sale price in the first half of 2014 included Champion Real Estate Services purchasing Hilliard Station Apartment Complex for $37.2 million, and Somerset Partners acquiring Marble Cliff Commons apartment complex for $36.1 million. With total sales for all asset classes at slightly more than $670 million for the first half of 2014, the Columbus investment sales market is on pace for a strong year.

Marble Cliff Commons

Columbus, OH

Columbus, OH Investment Activity(By Property Type)

Columbus, OH Investment Volume

$ in billions(USD)


Office 8.2% 8.1%


Retail 8.5% 6.5%



Mid-Year2014

Mid-Year2013

37% 36% Industrial


23% 23% Retail

12% 26% Office


1 Hilliard Station Multi-Residential $37,200,000 George S. Prabhu Champion Real Estate Services

2 Marble Cliff Commons Multi-Residential $36,100,000 CMBS Somerset Partners

3 Chelsea Square West Multi-Residential $31,200,000 Preferred Living Wolff Company

42750 Creekside Pkwy,

LockbourneIndustrial $30,100,000 Cardinal Industrial / Fortress American Realty Capital

5 6499 Adelaide Ct, Lockbourne Industrial $27,800,000 Invesco Real Estate Exeter Property Group

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Dallas is a magnet for large corporations seeking an affordable location to do business, which is driving

favorable market fundamentals in the city. The Dallas-Fort Worth market continues to be a top performer in the nation, adding 120,800 jobs during the 12 months ending in July 2014 – a 3.9% increase in employment. An increased amount of capital has flowed into the Dallas commercial real estate market in the past year. Investment activity increased for all product types in the first half of 2014, totaling nearly $5.8 billion compared with $4.9 billion in the first half of 2013. Retail and industrial investment improved substantially in the first half of 2014, increasing by 37% and 28%, respectively, from the first half of 2013. AEW Capital purchased Highland Village, a 378,000-sf upscale retail center that includes a new Whole Foods Market. The retail investment market is incredibly tight for buyers, resulting in significant capitalization-rate compression. Multi-residential properties continue to accrue the largest amount of capital, as demonstrated by more than $2.2 billion in sales volume in the first half of 2014. Corporate relocations are generating thousands of high-paying jobs, which will further benefit the luxury-apartment market.Office investment sales volume remained relatively flat in the first half of 2014 compared with the first half of 2013. Downtown Dallas is undergoing revitalization as companies relocate back to the urban core after decades of leaving the city for the suburbs. An estimated $3 billion has been spent on capital improvements in the CBD. Value-add properties ready for repositioning in the downtown market are gaining traction with investors. Fountain Place, an iconic Dallas landmark located in the CBD, was sold to Goddard Investments by J.P. Morgan Asset Management after six months on the market. Tenet Healthcare recently expanded its headquarters in the building by 30%. Goddard plans to renovate the 60-storey, 1.2-msf building to re-establish it as a premier downtown structure. This transaction is the latest in a recent series of downtown office tower sales.Similar trends are expected to continue through to year-end 2014 and into 2015.

Fountain Place

Dallas

Dallas Investment Activity(By Property Type)


$ in billions(USD)


Office 7.2% 7.0%


Retail 7.1% 7.4%



Mid-Year2014

Mid-Year2013


27% 31% Office

19% 18% Industrial

16% 14% Retail


1 The Shops at Willow Bend Retail $224,554,621 Taubman Centers Starwood Capital Group

2 Fountain Place Office $200,000,000 J.P. Morgan Asset Management Goddard Investments

3 The Shops at Highland Village Retail $112,700,000 Brixmore AEW Capital

4 Allstate Freeport Campus Office $105,454,311 Cole RE Investments ARCP

5 Galleria North Tower I Office $86,000,000 Franklin Street Properties Deutsche AWM

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The Denver investment market displayed strong sales results across all property types in the first half of 2014. Mid-year

investment dollar volume was mostly on par with that of the previous year, and there is still potential for several more transactions during the remainder of 2014. Industrial investments saw the biggest jump in activity in the first half of 2014, a 328% increase compared with the same period in 2013. Industrial sales totaled $583 million, already exceeding the $544 million recorded in 2013 as a whole. This boost was largely due to the legalized-marijuana market and the high demand for industrial warehouse space needed for growing facilities. Industrial capitalization (cap) rates declined 150 bps year-over-year to 7.3% from 8.8%.Office investments continue to thrive with $1.2 billion in sales recorded during the first half of 2014. A number of high-profile downtown buildings changed hands, including Republic Plaza, Park Central and Union Station’s North and South wings. The average capitalization rate for office assets remained flat at 7.3% for the second year in a row. Cap rates will likely fall in coming quarters due to rising demand from local and foreign investors. Despite a pre-recession overbuild, the retail investment market saw sales rise 114% year-over-year as informed investors capitalized on good opportunities. A further increase is likely over the final six months given that the retail sector has historically been busier in the second half. Cap rates rose slightly to 7.7% at mid-year 2014 from 7.4% at mid-year 2013.The multi-residential market is prosperous in many U.S. cities, and Denver is no exception. During 2013, approximately $2.2 billion was invested in multi-residential assets with cap rates averaging 6.8%. As of June 2014, multi-residential sales totaled $677 million, and cap rates had fallen to 6%. During the final months of 2014, cap rates will likely continue to decline, while investment sales are expected to increase. The $6.5 billion in sales recorded in 2013 - the most successful pre-recession year - will be hard to match. But many pending deals could make the second half of 2014 one of the busiest periods yet.

Republic Plaza

Denver


1 Republic Plaza Office $240,000,000 Brookfield Office Properties, Inc. MetLife, Inc.

2 Park Central Office $212,850,000 Walton Street Capital, LLC Invesco Ltd.

3 Berkshires at Lowry Multi-Residential $124,574,795 Berkshire Property Advisors, LLC TruAmerica Multifamily

4 Cascade Village Multi-Residential $106,105,422 Henderson Global Investors TIAA-CREF

5 Ashford Belmar Multi-Residential $95,330,000 Grand Peaks Property Management The RADCO Companies

Denver Investment Activity(By Property Type)


$ in billions(USD)


Office 7.3% 7.3%


Retail 7.7% 7.4%



Mid-Year2014

Mid-Year2013

41% 43% Office


21% 6% Industrial

14% 8% Retail

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Houston Investment Activity

Las Vegas Investment Activity

Los Angeles Investment Activity

New Jersey Investment Activity

New York Investment Activity

Orange County Investment Activity

Philadelphia Investment Activity

Pittsburgh Investment Activity

While Houston’s economy continues to receive national and international recognition, large-scale investment

activity has gained traction. In the first half of 2014, the American shale revolution helped benefit the region, as a large number of major energy industry players made long-term office investments. The healthy local job market, substantial population growth and strong long-term leases have drawn investors to the Bayou City. The Urban Land Institute, in its Emerging Trends in Real Estate 2014 report, ranked Houston as the No. 2 market to watch. According to Forbes, by 2023, Houston will be widely acknowledged as America’s next great global city.Overall investment volume in the first half of 2014 increased by a modest 4% compared with the first half of 2013. Retail properties reported the largest year-over-year percentage gains with investment dollar volume up 46%. Investors continue to target grocery-anchored assets, particularly those found in high-density, well-located areas. Industrial investment, driven by energy services and petrochemical development, totaled $485 million in the first half of 2014 compared with $379 million in the same period in 2013. Population growth is causing a multi-residential boom, with more than $2 billion in investment sales in the first half of 2014. Although office investment dollar volume was down by 20% in the first half of 2014 compared with the first half of 2013, many large deals have been completed in the last 12 months. In one of the largest transactions, Cousins Properties purchased Greenway Plaza for $950 million, or $219 psf, in September 2013. Greenway Plaza totals 4.4 msf over 10 buildings and was 92% leased at the time of the sale. Occidental Petroleum, a Fortune 500 company that recently relocated its headquarters to Houston, extended its 725,000-sf lease at Greenway Plaza in early 2014. Investment in downtown trophy-class assets remained active. AEW Capital, a Boston-based investment firm, purchased a majority interest in Heritage Plaza from Brookfield Properties for $475 million.Healthy commercial real estate market fundamentals are expected to continue into 2015, further stimulating investment activity in the Houston market.

Heritage Plaza

Houston

Houston Investment Activity(By Property Type)

Houston Investment Volume

$ in billions(USD)


Office 7.7% 7.5%


Retail 7.5% 7.4%



Mid-Year2014

Mid-Year2013


31% 40% Office

14% 10% Retail

11% 9% Industrial


1 Heritage Plaza Office $473,000,000 Brookfield Office Properties AEW Capital

2 Pearland Town Center Retail $149,166,666 APG CBL

3 Noble Energy Center I Office $114,349,656 Cole RE Investments ARCP

4 Lakes on Post Oak Office $100,000,000 Five Mile Capital Sinopec

5 Energy Crossing II Office $99,802,511 Lincoln Property Co. Invesco RE

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These are exciting times for the Las Vegas commercial real estate investment market. Many economic indicators

are showing signs of continued improvement for the city, which has had one of the longest recovery periods in the country. Since the beginning of 2014, residential construction permit applications have ranged from 400 to 700 per month. Furthermore, the city has received 15 to 30 commercial construction permit applications each month. More than 3 million visitors come through McCarran International Airport every month, with almost 4 million in March and May. New and existing home sales are both on the rise, and new multi-residential projects are underway.Several significant developments scheduled to open or commence construction in the second half of 2014 will greatly affect the investment marketplace. The Elysian at the District is a class A, 410,000-sf, 360-unit multi-residential complex scheduled for completion in the first quarter of 2015. The $51-million project is expected to set the bar for future multi-residential developments in Las Vegas. Downtown Summerlin is a 1.6-msf, mixed-use development by the Howard Hughes Corporation. This premier site will feature more than 125 shops and restaurants, office space and multi-residential units located in the heart of a 22,500-acre, master-planned community. Phase one completed in October 2014.To prepare for the influx of visitors created by this massive project, the adjoining Red Rock Resort/Casino has invested $35 million in renovations to improve its image, after being open for only eight years. Lastly, Union Village will be the first Integrated Health Village in the world. The $1.6-billion, 228-acre project will offer a world-class hospital, residential and specialty retail space, a retirement community and a cultural arts center. Union Village is expected to start construction in 2015 with an estimated completion in 2022.The Las Vegas market has always been a popular target for California investors. With many newsworthy projects underway, combined with the positive turn in the local economy, Las Vegas is poised for significant growth in the years ahead.

Showcase Mall

Las Vegas


1 Showcase Mall Retail $145,000,000 CCR/AG Showcase Phase I Owner, LLC N&G Showcase, LLC

2 Destinations Living Multi-Residential $71,000,000 CW Capital Angelo, Gordon & Co.

3 Spectrum Apartments Multi-Residential $30,800,000 Trio Spectrum Associates, LLC Tilden-Spectrum, LLC

4 CVS on the Las Vegas Strip Retail $30,150,000 Sky Las Vegas Condo CSRA 2700 Las Vegas DST

5 7235 S Buffalo Drive Office $28,011,749 3822 SW Las Vegas, LLC Grouper VA Vegas, LLC

Las Vegas Investment Activity(By Property Type)

Las Vegas Investment Volume

$ in billions(USD)


Office 8.0% 9.0%


Retail 7.0% 8.0%



Mid-Year2014

Mid-Year2013


30% 26% Retail

17% 7% Industrial

15% 11% Office

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Los Angeles County attracted strong investment interest in the first half of 2014 as transaction dollar volume amounted

to $11 billion. The office sector led the way with $4.6 billion in transaction volume, followed by $3.2 billion from multi-residential, $1.8 billion from retail and $1.3 billion from industrial. Capitalization (cap) rates continued to compress at mid-year 2014 relative to mid-year 2013. The majority of sectors, with the exception of industrial, experienced a decrease in cap rates between mid-year 2013 and mid-year 2014. The office sector saw the largest compression in cap rates, to 6.3% at mid-year 2014 from 7.2% at mid-year 2013, due to job growth and increased availability of financing. The industrial sector continues to attract investment demand; however, desirable and stabilized product is in short supply. Historically, Los Angeles has gained from strong foreign capital flow. As of the mid-point of 2014, transaction volume from foreign investors totaled $2.1 billion in the office, multi-residential, retail and industrial sectors. The largest first-half 2014 transaction involving foreign capital was the partial-interest (67%) transfer of 2000 Avenue of the Stars, 2049 Century Park East and 2029 Century Park East in the Century City submarket of West Los Angeles. The strong demographics and growth expectations of Hollywood, Downtown Los Angeles and West Los Angeles are evident in the high investment interest in these areas. An indication of the appeal Downtown Los Angeles reaps from foreign capital is the acquisition of Metropolis by a Chinese firm and a planned $1-billion, mixed-use development on the site.As bidding wars continue to intensify, escalating valuations and unsolicited purchase offers are expected throughout the second half of 2014. That said, while Los Angeles remains both a gateway market and a high-barrier market, it will likely continue to trade at values lower than premium markets such as San Francisco, Manhattan and Washington, DC.The strong investor interest and attractive pricing in relation to other major U.S. markets will likely continue through to year-end 2014 and into 2015.

Howard Hughes Center

Los Angeles

Los Angeles Investment Activity(By Property Type)


$ in billions(USD)


Office 6.3% 7.2%


Retail 5.7% 6.4%



Mid-Year2014

Mid-Year2013

42% 30% Office


16% 17% Retail

12% 11% Industrial


12000 Ave. of the Stars/2029 &

2049 Century Park EastOffice $1,641,500,000 AT&T / General Motors

JP Morgan, Hines & Hong Kong Monetary Authority

2 Howard Hughes Center Office $516,000,000 Equity Office Hines

3 The Vermont Multi-Residential $283,000,000 J.H. Snyder Company Capri Capital Partners

4Beverly Connection Shopping

Center Retail $260,000,000 Vornado Realty Trust Ashkenazy Acquisition Corp.

5 UTA Plaza and the Ice House Office $210,000,000 Tishman Speyer The Rockefeller Group

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Investor activity increased during the first half of 2014 in three of the four major property sectors (office, retail and multi-

residential) in New Jersey compared with the same period in 2013. As a result, overall sales dollar volume improved by more than 16% as nearly $3.2 billion in transactions were completed. Improving economic conditions were a factor as private-sector employment growth reduced the state’s unemployment rate to 6.5%. In addition, buyers migrated to the state as rising property prices in New York City triggered increased interest in New Jersey product, especially along the Hudson Waterfront.Office product sales dollar volume got off to a strong start in 2014 after increasing by almost 24% from 2012 to 2013. Nearly $1.3 billion in sales occurred during the first half of 2014, a 51% increase year-over-year. The largest trade occurred in Jersey City. After receiving $224 million in tax credits, JPMorgan Chase acquired 575 Washington Boulevard for $315 million (more than $390 psf ). The bank already occupied the property and expects to retain more than 2,600 jobs in New Jersey while adding 1,000 jobs in the state during the next 10 years.JPMorgan was also the buyer in the largest multi-residential sale during the first half of 2014, acquiring the Curling Club in Hoboken, a 240-unit property, for $125.5 million. The market for this product type remains very strong, and sales volume is on pace to slightly surpass its 2013 output.Large blocks of space continued to be absorbed in the industrial market. During the first half of 2014, sales dollar volume of $805 million put the sector in step to continue outpacing the previous full-year total in each year since 2006 – excluding 2013, when record sales volume of nearly $2.2 billion occurred. Extreme demand has inspired a bidding war for high-end product as well as increased interest in developable land and potential redevelopment opportunities.Retail expansion continues, assisted by strong job growth and consumer spending. Through mid-year 2014, sales volume for retail property was $430 million, up 53% year-over-year and on pace to record the retail asset class’ highest level since 2007.

575 Washington Boulevard

New Jersey


1 575 Washington Boulevard Office $315,000,000 Lefrak Organization JPMorgan Chase

2 1130 Grand Street Multi-Residential $125,500,000 PNC Realty Investors Inc. J.P. Morgan Asset Management

3 1 Meadowlands Plaza Office $108,700,000 KBS REIT II, Inc. Vision Properties, LLC

4 22 Sylvan Way Office $96,600,000 Mack-Cali Realty Corp. Griffin Capital Essential Asset REIT

5 148 Princeton Hightstown Road Industrial $75,000,000 McGraw Hill Financial, Inc. QTS Realty Trust, Inc.

New Jersey Investment Activity(By Property Type)


$ in billions(USD)


Office 6.8% 6.3%


Retail 7.2% 6.5%



Mid-Year2014

Mid-Year2013

41% 31% Office

25% 36% Industrial


14% 10% Retail

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The New York investment market performed exceedingly well in the first half of 2014 with $13.7 billion in trades,

largely due to a strong second quarter. In fact, the second quarter of 2014 recorded the highest total dollar volume ($9.1 billion) for any second quarter since 2007. The definitive strength was further reinforced when compared to 2013, as the second quarter of 2014 outperformed the first two quarters of 2013 combined. In addition, there is a possibility Stuyvesant Town and Peter Cooper Village will trade in 2014, which would add approximately $5 billion in transactional volume, helping cement 2014 as an exceptional year for Manhattan real estate sales.As typically seen in recent real estate bull markets, the office sector led all asset classes in the first half of 2014, representing 69% of the total sales volume. Driving this activity were three primary transactions: the acquisition of 5 Times Square by David Werner for $1.5 billion (the largest office sale since Google’s $1.6-billion purchase of a 90% interest in 111 Eighth Avenue in December 2010), SL Green’s acquisition of a 49.4% interest in 388-390 Greenwich Street for approximately $778 million, and Oxford Properties Group’s $575-million acquisition of 450 Park Avenue.Office market assets priced greater than $150 million flourished in the first half of 2014, speaking to the demand for quality assets that has increased in comparison with 2013, when assets between $10 million and $150 million were the most sought after. Following recent affirmations by the Federal Reserve to maintain low interest rates, the real estate market is expected to remain strong through year-end 2014. The 2015 outlook will hinge on the Fed’s likelihood of raising interest rates, which will play a major part in investor activities in the coming year.

5 Times Square

New York

New York Investment Activity(By Property Type)


$ in billions(USD)


Office 4.7% 4.6%

Industrial N/A N/A

Retail 4.0% 5.1%



Mid-Year2014

Mid-Year2013

69% 73% Office


10% 7% Retail

N/A N/A Industrial


1 5 Times Square Office $1,470,547,123 AVR Realty / Eastdil Secured David Werner RE

2 450 Park Avenue Office $545,750,000 Somerset Partners Oxford Properties Group / Crown Acquisitions

3 683-685 Fifth Avenue Office $460,000,000 Gucci Thor Equities / General Growth Properties

4 61 Broadway Avenue Office $330,000,000 Broad Street Development / Heyman Properties RXR Realty

5 110 William Street Office $261,100,000 Swig Burris Equities / Silverpeak RE Partners Savanna / KBS Strategic Opportunity REIT

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Robust demand for commercial real estate continued to impact every sector of the Orange County market in the

first half of 2014. As employment rates improved, outpacing the rest of the region and the nation, demand for space increased. Vacancy rates declined and rental rates rose as companies shifted to a more permanent workforce. This trend spelled an increase in property values that investors readily acknowledged. Investors showed strong demand for every property type, with the subset of class A assets seeing a proportionally faster increase in trading volume.The multi-residential sector led the way with $1.2 billion in sales dollar volume in the first half of 2014. The advancement of this property type is directly related to the growing population and the draw of employment. Professional and business services have seen the greatest increase in job growth. These trends are keeping office-leasing activity on the rise. Office assets recorded nearly $1 billion in trading volume in the first half of 2014. The diverse demands of a growing population are also keeping retail investments attractive. Although retail was outpaced by the other property types, investment dollar volume for 2014 is projected to match the 2013 total. Increased demand for housing is leading to conversions of older and smaller industrial buildings to multi-residential properties, yet the need for specific sizes of industrial space is an ongoing factor. Continued GDP growth is expected to fuel industrial demand for the next two years, with vacancy rates low enough and rents high enough to trigger new development. Industrial investments remain on par with 2013 trades.Construction and trading dollar volume are expected to surge in 2015. Developers are cautious in the wake of the recession; however, demand for new inventory is building. With inflation nudging upward, interest rates are destined to elevate from their record lows, but only a minimal increase should be expected from the Federal Reserve. Continued low returns are freeing up capital, thereby retaining investor interest in commercial real estate. This holds true especially for class A assets, which will likely sustain their popularity among the most active investors.

7777 Center Avenue

Orange County


1 5 & 6 Hutton Centre Drive Office $129,000,000Angelo, Gordon & Co. /

Lincoln Property Co.Equity Office

27711, 7755, 7777 Center

AvenueOffice $93,700,000

Lincoln Property Company / GEM Realty Capital, Inc.

Prudential Real Estate Investors

3 24555 Los Alisos Boulevard Multi-Residential $88,000,000 TGM Associates, LP Pacific Urban Residential

4 100-145 S State College Boulevard Office $70,600,000 RBS Global Securities Hines, and Oaktree Capital Management, LP

5 4311 & 4321 Jamboree Road Industrial $68,000,000 The Shopoff Group The Picerne Group

Orange County Investment Activity(By Property Type)


$ in billions(USD)


Office 6.7% 6.0%


Retail 5.8% 5.6%



Mid-Year2014

Mid-Year2013


32% 19% Office

22% 38% Industrial

8% 20% Retail

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Philadelphia’s commercial real estate investment market witnessed significant activity in the first half of 2014. Sales

volume exceeded $1.9 billion, representing an increase of more than $1 billion (117%) compared with the same period in 2013. Year-over-year figures have seen a steady increase since hitting a low of $560 million in 2009. At this rate, year-end volume could exceed $4 billion for the first time since 2007.The Philadelphia office market was responsible for 71% of the mid-year investment dollar volume total, primarily due to the sales of Comcast Center and The Curtis Center. Comcast Center was a user purchase by Comcast ABB Management Corp. for nearly $797 million. The 12-storey, 885,000-sf Curtis Center was purchased for $125 million in June 2014 by a joint venture of Mack-Cali Realty Corp. and Keystone Property Group. They acquired the building for the purpose of converting it to a mixed-use property with a focus on adapting vacant office space for luxury apartments. With more than a dozen properties changing hands, the multi-residential sector was the next most active asset class, with an investment dollar volume of $361 million in the first half of 2014. Notable transactions in the past year included the $114-million apartment complex The Granary, the $113-million Edgewater Luxury Apartments, and Presidential City ($34 million). Retail and industrial investments both saw a decrease in activity in the first two quarters of 2014. Compared with mid-year 2013, retail and industrial were down $70 million and $66 million, respectively. The largest retail investment was the sale of the Quartermaster Plaza Shopping Center in Southwest Philadelphia to Cedar Realty Trust for slightly more than $78 million.The first half of 2014 showed an improving economic climate in Philadelphia and its surrounding suburbs. The average capitalization rate for the first two quarters was 8% with retail on the low end and industrial on the high end. Overall, the declining vacancy rate helped drive the secondary and tertiary markets and the daily traction is proving to resemble pre-recession times.

Comcast Center

Philadelphia

Philadelphia Investment Activity(By Property Type)


$ in millions(USD)


Office 8.0% 7.2%


Retail 7.1% 6.8%



Mid-Year2014

Mid-Year2013

71% 60% Office


8% 25% Retail

3% 13% Industrial


1 Comcast Center Office $797,088,200 Commerzleasing und Immobilien AG Comcast ABB Management Corp.

2 Curtis Center Office $125,000,000 CPI Capital Partners Keystone Property Group / Mack-Cali

3 1000 Continental Drive Office $60,333,333 Equus Capital Partners KBS Realty Advisors

4 Presidential City Multi-Residential $33,945,000 BLDG Management Post Brothers

5 3601 Filbert Street Land $25,150,000 School District of Philadelphia Drexel University / BioMed Realty Trust

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Headlined by portfolio transactions, Pittsburgh investment sales totaled $421 million in the first half of 2014. The

investment market, up 37% compared with the same period last year, is rebounding from a slight decline in 2013 as year-over-year investment sale transactions have risen every year since 2009. A tight-knit owners’ market has historically kept numbers modest compared with the national standard, but the region’s recent success captured the attention of outside investors with the ability to infuse liquidity into the market. Investors have gravitated toward Pittsburgh’s multi-residential market due to low vacancy, limited delivery of new construction and strong rental rates. Major multi-residential deals include the acquisition of the 297-unit Cork Factory and the 97-unit Lot 24 by GMH Capital Partners, and Faros Properties’ purchase of Allegheny Center, a four-building apartment complex. Due to an increase in demand, capitalization (cap) rates declined to 6.8% at mid-year 2014 from 7.3% at mid-year 2013. Consistent with the national market, Pittsburgh’s multi-residential investment sector is very active.The office market, which enjoyed noteworthy transaction dollar volume in the first half of 2014, has attracted outside investors such as JDI Realty and The Davis Companies, which were both active in the region throughout 2013. In the first half of 2014, the JDI Realty and Market Street Real Estate Partners joint venture purchased seven office buildings at Parkway Center for just under $40 million. Downtown’s historic Union Trust Building was acquired by The Davis Companies for $14.3 million.The retail market realized a decrease in transaction volume in the first half of 2014, but continued to perform well overall. Notable retail investment deals were headed by the $32.3-million purchase of The Village at Pittsburgh Mills. While the Century III submarket continued to slide and the owner of the nearby 260,000-sf Curry Hollow Centre declared bankruptcy, the balance of the retail market remains strong in rental rates and occupancy.Across all property types, outside investors continue to develop an interest in the Pittsburgh region. As a result, investment activity increased throughout the first half of 2014, setting the bar high for the remainder of the year.

Cork Factory Lofts

Pittsburgh

Pittsburgh Investment Activity(By Property Type)


$ in millions(USD)


Office 7.9% 7.6%


Retail 7.1% 7.1%



Mid-Year2014

Mid-Year2013

40% 55% Retail

34% 25% Office


4% 13% Industrial


1 Allegheny Center Multi-Residential $45,449,910Allegheny Center Associates / James Krasne / Penn Cal Co.

Faros Properties

2Parkway Center

(1, 2, 4, 6, 7, 9, 10)Office $39,459,094 Bill Bairel

Market Street Real Estate Partners / JDI Realty

3 Village at Pittsburgh Mills Retail $32,283,725 Pitt Village LP VPM Associates

4 500-502 N. Lewis Run Road Office $25,091,000 Southwestern Group, Ltd. Complete HealthCare Resources, Inc.

5 Cork Factory/Lot 24 Multi-Residential $20,500,000 Big River Development LP GMH Capital Partners

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Raleigh-Durham Investment Activity

San Diego County Investment Activity

San Francisco Investment Activity

San Mateo Investment Activity

South Florida Investment Activity

Tampa Investment Activity

Washington, DC Investment Activity

Raleigh-Durham commercial real estate sales totaled $1.3 billion in the first half of 2014, up 13% compared with the

first half of 2013. Multi-residential transactions continued to lead the way with $592 million in volume during the first and second quarters, down slightly from the dollar volume recorded during the same period in 2013. Multi-residential sales have accounted for more than 50% of investment volume for the last four years. While demand from apartment renters remains strong thanks to an improving job market and robust population growth, development activity has ramped up significantly with more than 10,000 units under construction. A wave of new deliveries in the next 12 to 18 months will likely push vacancy higher and dampen rent growth. Meanwhile, fundamentals have improved substantially in the office, industrial and retail sectors, where construction activity remains low by historical standards. Multi-residential assets will stay in high demand, but should become less dominant heading into 2015 and beyond. Retail and industrial sales increased notably in the first half of 2014. Retail volume totaled $331 million, more than double the volume witnessed during the same period in 2013. Industrial volume totaled $194 million, also up by more than 100%. Office sales totaled $184 million through the first half of 2014, down 36% year-over-year. However, with several large property sales scheduled to close in the next few months, the office sector should make up lost ground by the end of the year. A lack of construction in recent years has driven class A vacancy below 10%, leaving tenants in need of large blocks of space with few quality options. While office development activity has ramped up in recent months, product currently underway is substantially preleased and will not be enough to meet the increasing demand. This trend should help fuel an increase in investment activity for the office sector, which has traditionally made up a larger share of the region’s annual sales dollar volume.

Crossroads Plaza

Raleigh-Durham


1 Crossroads Plaza Retail $91,000,000 Ronus Properties Kimco

2 Heights at South LaSalle Multi-Residential $53,500,000 Worthing Companies AEW Capital

3 The Columns at Wakefield Multi-Residential $39,161,625 Guardian Life Passco Companies

4 Carrington at Brier Creek Multi-Residential $37,850,000 The Connor Group Passco Companies

5 Crescent Green Office $37,437,514 KBS REIT I Grupo Haddad

Raleigh-Durham Investment Activity(By Property Type)

Raleigh-Durham Investment Volume

$ in billions(USD)


Office 8.1% 8.3%


Retail 8.2% 8.7%



Mid-Year2014

Mid-Year2013


25% 14% Retail

15% 8% Industrial

14% 25% Office

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The San Diego commercial real estate investment market was on course midway into 2014 to exceed the total trading dollar

volume of 2013. While 2013 was slower to ramp up, it closed ahead of the previous year, perpetuating a trend of year-over-year growth going back to 2010. This trend is expected to continue for the next two years as the market continues its economic recovery. Population growth combined with improving employment rates and corporate growth in the region are fueling the need for housing. There is demand for multi-residential properties located near metro centers and coastal jobs. The multi-residential sales market expanded by nearly $600 million to $1.1 billion in the first half of 2014 compared with the same period in 2013, making this asset class the leading commercial real estate sector in San Diego for the third year running. Employment rates are also driving the office market in San Diego. Companies are beginning to invest in a permanent workforce, as opposed to temporary staff, boosting investor confidence. There is demand for creative and flexible office space as businesses are able to use space more efficiently. Technology companies are at the forefront of the growth, and San Diego is a leader in supplying employees for these companies. Office investment volume increased $443 million to $925 million at mid-year 2014. As multi-residential carved out a larger proportion of investment activity, retail activity subsided after its temporary surge. Population growth maintains a strong influence on retail, and retail leasing activity will ultimately recover, albeit at a slower pace. Industrial sale pricing is currently below its peak and expected to grow as industrial construction begins to surge in 2015.The most resilient investment properties are class A assets. Markets such as San Diego are becoming more popular as investors start looking beyond larger metropolitan areas for institutional-grade properties. Investors are making high-quality assets more competitive and expensive, as low returns on alternative types of investments are making capital more available for real estate. Capitalization (cap) rates will likely remain compressed and investors will be driven towards real estate as long as interest rates stay low.

701 B Street

San Diego County

San Diego County Investment Activity(By Property Type)

San Diego County Investment Volume

$ in billions(USD)


Office 7.2% 6.0%


Retail 6.0% 6.5%



Mid-Year2014

Mid-Year2013


31% 31% Office

19% 17% Industrial

10% 15% Retail


1Sorrento Valley & Carmel

Mountain portfolioOffice $295,000,000 Kilroy Realty Corporation Starwood Capital Group

2 701 & 707 Broadway Office $154,900,000 The Blackstone Group, LP Emmes Group of Companies

3 10201-10241 Waterridge Circle Office $72,500,000 Beacon Capital Partners Parallel Capital Partners, Inc.

4 3545 Cray Court Industrial $64,000,000 Lankford & Associates, Inc. Alexandria Real Estate Equities, Inc.

52750-2765 Progress Street,

990 & 995 Joshua Way, VistaIndustrial $57,650,000 I&G Direct Real Estate Cornerstone Real Estate Advisers, LLC

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Investment activity nearly doubled in San Francisco during the first half of 2014 compared with the first half

of 2013. The city recorded $2.8 billion worth of commercial investment sales during the first half of 2014 – a 97% increase year-over-year.Office activity dominated the first half of 2014, accounting for $2.1 billion in total volume, while all of the top five investment transactions involved office properties. Most of the first-half activity was focused in the South Financial District and South of Market (SoMa) areas, where tech demand continues to be a driving force along with financial services companies. Investors are drawn to San Francisco’s wealth of expanding companies, the development of the new Transbay Terminal and projected future rent growth. Office sales recorded an average cap rate of 4.2% at mid-year 2014, the lowest in the Bay Area and fourth-lowest quarterly average on record in San Francisco. Demand for office space remains high in San Francisco, and with a flood of new office development in the pipeline, Proposition M is back in play to tighten up the market with restrictions on the amount of new office space that can be allocated in a given year. In 1986, San Francisco supervisors passed a bill to limit the amount of new office development in the city. Known as Prop M, it limits the amount of new large office developments in San Francisco to 875,000 sf per year. This law has not been a factor since the first tech boom in 2000, but strong forecasted demand has developers eager to build in the city. Prop M was put in place to slow down the office boom that occurred in the 1980s and to ensure there is adequate transit and enough affordable housing to support the increase in jobs that would result from increased development. This legislation has helped create rising office rents in San Francisco. Coupled with decreasing vacancy and a strong economy, investment activity is expected to remain high throughout the rest of 2014.

225 Bush Street

San Francisco


1 225 Bush Street Office $350,000,000 Flynn Properties Genzon Group

2 101 Second Street Office $297,000,000 Hines Invesco

3 55 2nd Street Office $274,000,000 Hines TIAA-CREF

4 221 Main Street Office $228,800,000 Beacon Capital Partners Columbia Property Trust

5 888 Brannan Street Office $188,000,000 SKS Investments Beacon Capital Partners

San Francisco Investment Activity(By Property Type)


$ in billions(USD)


Office 4.2% 5.1%


Retail 6.0% 6.0%



Mid-Year2014

Mid-Year2013

75% 59% Office


11% 6% Retail

1% 3% Industrial

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More than $1.5 billion worth of commercial investment sales occurred throughout San Mateo County in the first

half of 2014. This total was a 66% increase in dollar volume compared with the first half of 2013, when only $931 million in property changed hands. San Mateo County recorded the second lowest average capitalization rate in the Bay Area during the first half of 2014, at 5.2%, down from 5.7% during the first half of 2013 – a clear sign that investors are projecting further rent growth in this market. While multi-residential sales dominated investment activity during the first half of 2013, office sales accounted for 73% of total dollar volume during the first half of 2014. Office sales totaled $1.1 billion in the first six months of 2014 – a 57% increase over all of 2013. The largest investment deal during the first half of 2014 involved Parkside Towers in Foster City. This 398,000-sf, class A office complex was sold for $206 million by Invesco to Heitman during the first quarter of the year. The second-largest deal was Clearview Business Park in neighboring San Mateo. This 270,000-sf, six-building office complex occupied by GoPro and SolarCity sold for $126 million to Deutsche Bank from Lowe Enterprises during the second quarter of 2014. Social media giant Facebook also agreed to purchase the 59-acre TE Connectivity campus adjacent to its existing campus in Menlo Park. Under the terms of the deal, which closed in early September for a reported price of nearly $102 million, or almost $40 psf of land, Facebook is leasing an undisclosed portion of the campus back to TE Connectivity for five years. The deal includes a three-year option and early-termination clause. The sale/leaseback will secure future growth across all asset types around Facebook’s existing 1-msf campus in Menlo Park, which is already spurring residential development.With the combination of low interest rates and rising asking rates for all property types, it is anticipated that the San Mateo County investment market will continue to stay active throughout the rest of 2014 and into 2015.

Parkside Towers

San Mateo

San Mateo Investment Activity(By Property Type)


$ in billions(USD)


Office 5.8% 5.7%


Retail 5.8% 5.9%



Mid-Year2014

Mid-Year2013

73% 24% Office


6% 7% Retail

6% 3% Industrial


1 Parkside Towers Office $206,000,000 Invesco Heitman

2 Clearview Business Park Office $125,500,000 Lowe Enterprises Deutsche Bank

3 850 Cherry Avenue Office $121,000,000 Gap Walmart

4 Menlo Business Park Office $118,350,000 Tarlton Properties Principal RE Investors

5 Century Centre Office $100,000,000 Fisher Investments Harvest Properties

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South Florida, which consists of Miami-Dade, Broward and Palm Beach counties, ranks as the seventh-largest

metropolitan statistical area in the nation and accounts for roughly one-third of the state’s total population. Though hit hard by the recent recession, the South Florida economy has begun to spring back to life on the back of a declining unemployment rate, which stood at 6% as of July 2014, a dramatic 130-bps decrease from 7.3% in July 2013. The multi-residential sector, due to its lower risk, led the charge out of the Great Recession. However, as the market begins to gain momentum, other property types – most notably office product – have caught the eye of both institutional and private investors, who have begun searching for higher yields. Total sales volume in the office sector in the first half of 2014 was slightly more than $1.5 billion, a 149% year-over-year increase. If demand for office product continues at its established first-half pace, the sector’s total 2014 dollar volume will exceed $3 billion – a number not achieved since the height of the market in 2007, and a 555% increase from its trough in 2009, when total sales reached only $462 million. Due to the increased demand for office product, capitalization (cap) rates began to decline, dropping to a 7.2% average for this asset type at mid-year 2014. This decline represents a 20-bps decrease from the first half of 2013 and a 50-bps decrease from the high of 7.7% seen in 2010. Class A core properties have also seen continued cap-rate compression with assets trading in the low- to mid-6% range between mid-year 2013 and mid-year 2014.Overall, the largest transactions by total sales price in the first half of 2014 involved office properties. Las Olas Centre I and II – a 469,000-sf portfolio consisting of two core, trophy assets located in the heart of the Fort Lauderdale CBD – traded for $204 million, or $435 psf.With the U.S. economy continuing to recover and strong demand from Latin American investors prevalent, the South Florida multi-residential and office markets should remain vibrant through year-end 2014 and into 2015 while other asset classes gain momentum.

Las Olas Center

South Florida


1 Las Olas Center I & II Office $204,000,000 USAA Real Estate Deutsche AWM

2 Courvoisier Centre Office $145,806,667Tishman Speyer / Madison

International RealtyParkway Properties

3 Douglas Entrance Complex Office $100,750,000 Aslan Realty Partners Banyan Street Capital / Oaktree

4San Marco at Broken Sound

ApartmentsMulti-Residential $80,300,000 Capri Capital Partners BC Property Investments

5 Mizner Court at Broken Sound Multi-Residential $74,787,000 CNL Financial Group BC Property Investments

South Florida Investment Activity(By Property Type)


$ in billions(USD)


Office 7.2% 7.4%


Retail 6.5% 7.2%



Mid-Year2014

Mid-Year2013

41% 17% Office

25% 32% Retail


11% 20% Industrial

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The Tampa Bay region, which comprises Hernando, Hillsborough, Pasco and Pinellas counties, is the second-

largest metropolitan statistical area in Florida, reflecting approximately 14% of the state’s total population. The regional economy continues to show signs of strengthening, as demonstrated by the declining unemployment rate, which stood at 6.2% as of July 2014 - a solid 110-bps decrease from 7.3% in July 2013. The multi-residential segment had the swiftest recovery due to its lower inherent risk. Though multi-residential product remains in high demand throughout the region and the state, another asset class, the industrial segment, has shown signs of initial gains. At mid-year 2014, total industrial sales were slightly more than $152 million, a 121% year-over-year increase. Assuming demand for industrial assets continues at its established first-half 2014 pace, total projected 2014 sales volume will exceed $304 million – a high not achieved since the 2007 market peak, and a 375% increase since the market low in 2009, when recorded sales totaled a mere $64 million. During this uptick in demand for industrial product, average industrial capitalization (cap) rates remained unchanged year-over-year, standing at 7.9% through mid-year 2014. Despite remaining flat year-over-year, the 7.9% average is a 280-bps decrease from the peak of 10.7% seen at year-end 2009. Also, with this surge in demand, cap rates are expected to compress as interest rates remain near historic lows and pricing elevates.Due to the strong multi-residential demand, apartment trades represented four of the top five sales transactions by dollar in the first half of 2014. The largest of these sales was the West Park Village Apartments – a 617-unit, class A apartment and townhome complex located in the Westchase submarket – which transacted at $122.5 million, or almost $200,000 per unit.Overall, the continuing U.S. economic recovery and strength of the multi-residential segment, along with a resurgence in the industrial and office sectors, is expected to bode well for Tampa Bay through year-end 2014 and towards mid-year 2015.Continuing employment growth should also elevate demand for other asset classes in the same time span.

West Park Village Apartments

Tampa


1International Plaza

(49.9% interest)Retail $499,000,000 Taubman Centers TIAA-CREF / APG

2 West Park Village Apartments Multi-Residential $122,500,000 J.P. Morgan Asset Management Carroll Organization / Goldman Sachs

3 PierHouse Channelside Multi-Residential $76,500,000 Related Group Florida State Board of Administration

4 Lansbrook Village Multi-Residential $58,500,000 Waterton AssociatesCarroll Organization / Bluerock Residential

Growth REIT

5 The Cove Apartments Multi-Residential $50,500,000 LNR Partners OBO LB 2007-C3 Lubert-Adler / Laramar Group

Tampa Investment Activity(By Property Type)


$ in billions(USD)


Office 8.1% 8.3%


Retail 6.7% 8.2%



Mid-Year2014

Mid-Year2013


38% 46% Retail

10% 18% Office

8% 4% Industrial

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First-half 2014 investment activity in Metropolitan Washington was headlined by a series of large office

transactions, significant multi-residential sales and a renaissance of industrial and flex sales. Office-leasing market indicators lost some ground overall; however, job creation and the federal budget have stabilized, and the end to sequestration forecasts a more active General Services Administration (GSA), boding well for the Washington region. One area of promise is the increased volume of acquisitions by cross-border investors. Foreign investment activity has doubled year-to-date and has tripled since 2011.Middle-market deals, which tapered in 2013, began to blossom in the first half of 2014. Class B office space continued to provide value-add opportunities for the investment market. Well-located properties, acquired for upgrading to class A standards, show a continuing ability to compete very effectively. Many owners determined that first-half 2014 offered the best environment for the disposition of class B assets, with such deals expected to continue for the foreseeable future; buyers and sellers started to establish a more balanced understanding in underwriting vacancy and re-leasing.In the first half of 2014, office and multi-residential properties led in number of sales, square footage and investment dollar value for the region with $3.4 billion and $1.9 billion in sales, respectively. Office sale transactions exceeded first-half 2013 sales volume by more than $1 billion; multi-residential investment, though lower when compared with the first half of 2013, continues to be extremely active in both investment and development with impressive absorption. Industrial sale transactions, totaling nearly $440 million at mid-year 2014, eclipsed first-half 2013 sales volume ($356 million), and first-half 2014 retail sales volume ($928 million) rose by more than one-third on a year-over-year basis.It would appear that the pendulum is starting to swing in a more positive direction in several of the region’s submarkets. All property types have demonstrated some resilience, and it is anticipated that the next six months will be extremely active in investment sales.

555 12th Street NW

Washington, DC

Washington, DC Investment Activity(By Property Type)


$ in billions(USD)


Office 6.0% 6.6%


Retail 6.5% 6.6%



Mid-Year2014

Mid-Year2013

51% 21% Office


14% 6% Retail

7% 3% Industrial


1 555 12th Street NW Office $500,750,000 Manulife Financial MetLife Real Estate Investors / Norges Bank Investment Management

2 800 K Street & 801 Eye Street NW Office $325,000,000 The JBG Companies The Meridian Group

3 801 17th Street NW Office $229,215,000 Property Group Partners OBO W.R. Berkley Prime Property Fund

4 700 13th Street NW Office $220,000,000 Beacon Capital Partners Fosterlane Management

5 2700 Woodley Road NW Multi-Residential $195,000,000 The JBG Companies / CIM Group TIAA-CREF

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London Investment Activity

London remains a favourite investment destination for both domestic and international buyers. It was inevitable

that the first half of 2014 would appear to be relatively quiet following the high level of activity at year-end 2013. There has been continuing strong investor demand for offices, but a reduced level of transactions as a result of the lack of supply of investment stock. Investors are buying into rental growth due to high occupational demand across all of London’s office submarkets. This is the result of increased economic activity, the lack of new developments coming on stream and the loss of some office space to residential use. The prospects for existing investors remain good with improving credit conditions and overseas buyers underpinning current yields. There is now the additional impetus of rental growth driving capital growth for the next few years.Two main themes are being played out in the marketplace. Global investors have been active in the £100-million-plus lot size. More than 25 different nationalities bought investments in London between mid-year 2013 and mid-year 2014. The two largest purchases involved buyers from Kuwait (More London) and Singapore (Broadgate Office Complex), with both properties selling for £1.7 billion each. Domestic investors, meanwhile, have been active in the sub-£100-million category. The domestic investor has seen more performance to be gained investing in active management situations and buildings outside the traditional core areas. Outlying areas have been clearly flagged to local investors by rapidly improving public infrastructure (such as the Crossrail and Thameslink rail lines) and occupiers moving out of high-cost areas, such as the W1 postcode – prime West End. The main beneficiary has been the Farringdon/Clerkenwell area.Looking forward, the investment market has the potential for a record year in 2014, subject to the availability of stock, and even more activity in 2015. As was the case in 2013, the level of activity will likely result in some property owners considering the upcoming year to be a great opportunity to sell into an incredible wave of investor demand.

More London Estate SE1

London, U.K.

London, U.K. Investment Activity(By Property Type)

London, U.K. Investment Volume

$ in billions(USD)

Office Industrial Retail

Mid-Year2014

Mid-Year2013

70% 84% Office

29% 13% Retail

1% 3% Industrial

TOP 5 INVESTMENT SALES BY PRICE - MID-YEAR 2014Address Property Type Total Price (£) Vendor Purchaser

1 More London Estate SE1 Office £1,700,000,000 London Bridge Holdings St Martins

2 Broadgate Office Complex Office £1,700,000,000 Blackstone Real Estate Partners British Land & GIC

3 10 Upper Bank Street Office £795,000,000 Canary Wharf Group China Life Insurance / Qatar Holding / Canary Wharf Group

4 Ram Brewery Site, Wandsworth

Office / Multi-Residential £600,000,000 Minerva Greenland Group

5 Hyperion Portfolio Office £556,500,000 Telereal Trillium Legal & General Property

Mid-Year2014

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London Investment Volume







Multi-Residential N/A N/A


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© 2014, Avison Young (Canada) Inc. The statistics contained in this report were obtained from sources deemed reliable, including Altus InSite, Avison Young, Collette, Plante & Associés, CoStar Group Inc., Desjarlais Prévost Inc., Gettel Network, Real Capital Analytics, Inc., RealNet Canada, RealTrack, Reis Services, LLC. How-ever, Avison Young (Canada) Inc. does not guarantee the accuracy or completeness of the information presented, nor does it assume any re-sponsibility or liability for any errors or omissions. All opinions expressed and data provided herein are subject to change without notice. This report cannot be reproduced in part or in full in any format without the prior written consent of Avison Young (Canada) Inc.

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Avison Young Commercial Real Estate Investment Review ... Commercial Real Estate Investment Volume By Property Type (USD) Mid-Year 2013 Mid-Year 2014 Fall 2014 Canada, U.S. and U.K