Oklahoma City2014 Year-End

Office Market Summary

TABLE OF CONTENTS

Office Market Summary 1

Central Business District Submarket 2–3

Northwest Submarket 4-7

North Submarket 8-10

Medical Office Submarket 10

Midtown Submarket 11

West Submarket 12–13

Suburban Submarket 13

2014 Office Building Sales Summary Back Cover

The information contained herein has been obtained from reasonably reliable sources. Price Edwards & Company makes no guarantee, either express or implied, as to the accuracy of such information.All data contained herein is subject to errors, omissions and changes. Reproduction in whole or in part, without prior written consent is prohibited.

Submarket Map

1

The 2014 calendar year was certainly an eventful period with abnormally high activity, including large moves, even larger announcements. However, what began as a very upbeat market ends the year with much trepidation as energy prices have slumped to 5-year lows. Overall, the market had an outstanding year in 2014 as citywide vacancy shrunk from 17.5% to 15.2% and average rental rates rose from $16.74 to $17.46 per square foot.

The Central Business District continued to improve as the overall vacancy dropped from 21.7% to 20.7% and rental rates climbed from $16.63 to $18.15 per square foot. The Class A buildings were particularly strong as vacancy fell from 9.3% to 0.7% and rental rates climbed from $19.62 to $21.75 per square foot. There is virtually no Class A vacancy in the downtown area and rental rates reflect the imbalance that existed in 2014 between supply and demand. As a by-product of a strong Class A downtown market, the average rental rate in the CBD eclipsed that of the suburbs for the first time in over 20 years.

It should also be noted that 84% of the vacant downtown space exists in buildings that were constructed in the 1920’s and 1930’s and nearly two-thirds of all the vacant space in the CBD exists in one building – the First National Center. That building’s dated systems and troubled ownership has virtually taken this building off the market for the past couple of years and any hope for new ownership and a revitalization of the project through a pending sale is now clouded by monetary claims from a partner in a previous ownership group. The point is, most of the available space downtown is vacant for a good reason and good space is nearly impossible to find in the CBD.

A similar situation exists in the North submarket where rental rates held fairly steady at $17.50 per square foot and vacancy rates dropped from 16.5% to 14.6%. More than half of this submarket’s vacancy can be found in the Class C Lincoln Plaza, which took a huge hit to its occupancy in 2011 due to massive roof leaks and ultimately fell into receivership.

The Northwest submarket, which is the city’s largest, experienced reduced vacancy form 8.9 to 8.5% and saw rates climb from $17.20 to $17.95 per square foot. Class A space in this submarket is tight as well; currently standing at just 3.1%, down

from 4.1% at the beginning of 2014. 2015 will be a critical year for this submarket as it contains and inordinate amount of space leased to large energy companies, who may reign in staff and space needs in the coming year.

Many new projects were announced in 2014, with at least two set to dramatically impact the downtown skyline. Hines announced in December that it will move forward with the construction of a 690,000 SF, 27-story tower at 499 West Sheridan and OG&E announced earlier in the year that it had chosen Chicago-based Clayco to construct its 25-story, approximately 500,000 SF tower. Devon Energy will anchor the multi-tenant Hines project with approximately one-half of the building available for other users. Approximately 100,000 to 150,000 SF of the OG&E building will be available for lease to others. As we have said in previous reports, these new Class A projects will test local tenants’ willingness to pay significantly more than current market rates for higher quality space. That challenge was already a significant hurdle for developers when the price of oil was $107 a barrel. It becomes a far greater challenge now that oil is less than half that price.

Oklahoma City has continued to diversify over the years, but the fact remains the local economy and especially the local office market, is still largely dependent upon energy prices and the strength and growth of local energy companies. A recent report indicated that one-quarter of all jobs in Oklahoma are tied to the energy industry and that impact is certainly felt in the Oklahoma City office market. As we look ahead to 2015, it is impossible to know when energy prices will rebound, but if it extends beyond just a few months, it will begin to have an impact on the office market. One impact that is already being felt is market activity as we are seeing tenants hold off on decisions regarding new space until they feel more certain about the economic impact of falling energy prices. We are forecasting that 2015 vacancy rates will hold steady and rental rates will plateau after several years of steady growth.

If there is a silver lining to the abrupt drop in energy pricing it is that several buildings that were on the drawing boards, particularly in the suburban markets, never broke ground and likely will be shelved for some period of time. Otherwise, we could have been facing a major glut in inventory.

The market was just beginning to get frothy and fortunately hadn’t yet become overheated, but at this point we can’t be sure if the market is just tapping the brakes or coming to a screeching halt. That question should be answered in the coming year.

2014 Year-End OKC Office Market Totals RSF15,174,523

Vacant SF2,311,591

Vacant %15.2%

Rate$17.46

Oklahoma City2014 Year-End Office Market Summary

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HISTORICAL CBD VACANCY

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2014 Year-End Oklahoma City Office Market SummaryCENTRAL BUSINESS DISTRICT SUBMARKET

2014 MID-YEAR CENTRAL BUSINESS DISTRICT REVIEW

• Aggregate vacancy rates decreased from 21.7% to 20.7%

• Class A vacancy decreased from 9.3% to 0.7%

• Class B vacancy decreased from 21.6% to 17.3%%

• Class C vacancy decreased 62.7% to 55.5%

• Aggregate rental rates increased from $16.63 per SF to $18.15 per SF

• Class A rates increased from $19.62 per SF to $21.75 per SF

• Class B rates increased from $16.40 per SF to $18.07 per SF

• Class C rates remained at $13.19 per SF

• The CBD experienced positive absorption of 53,000 SF during 2014 largely due to gains in Class A occupancy.

2015 CENTRAL BUSINESS DISTRICT FORECAST

• Vacancy rates will remain near current levels until new buildings hit the market. Rental rates will only increase slightly as low energy prices weigh on the market.

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Downtown Oklahoma City

CBD Year Built Floors RSF Vacant SF Vacant % Rate CAF

100 Park Ave Building 1923/64 12 99,752 21,329 21% $14.50 12%100 Park Ave101 Park Avenue Building 1936 14 197,042 68,987 35% $14.50 16.3%101 Park Ave.20 N. Broadway 1981 19 307,388 0 0% $20.00 20%20 N BroadwayBank of Oklahoma Plaza 1972 16 212,816 5,298 2% $17.00 20%201 Robert S. KerrBraniff Building 2013 10 90,000 0 0% $21.00 20%324 N. RobinsonChase Tower 1971 36 514,317 139,147 27% $18.00 15%100 N. BroadwayCity Place 1931/85 33 251,449 50,929 20% $18.00 14%204 N. RobinsonCorporate Tower 1980 14 277,849 6,982 2% $20.00 17.5%101 N. RobinsonCourt Plaza 1923/79 10 78,381 18,757 23% $12.00 14%228 Robert S. KerrFirst National Center 1931 32 980,941 660,079 67% $13.00 19%120 N. RobinsonHightower Building 1929 10 107,152 9,038 8% $15.00 15%105 N. HudsonLeadership Square 1984 21 735,514 7,431 1% $22.00 20%211 N. RobinsonOklahoma Tower 1982 31 568,960 4,924 0% $22.00 20%210 Park Ave.One North Hudson 1927 11 73,000 0 0% $12.00 12%401 W. SheridanRobinson Plaza 1992 10 195,702 0 0% $23.00 17.8%55 N. RobinsonRobinson Renaissance 1927/88 12 174,840 51,741 29% $18.00 25%119 N. RobinsonSonic Building 2003 4 100,654 0 0% $24.50 8%300 Johnny Bench DriveThe Reserve 1922/97 4 71,616 0 0% $16.00 20%226 Dean A. McGee AvenueTotals 5,037,373 1,044,642 20.7% $18.15

CBD Construction Year Built Floors RSF Vacant SF Vacant % Rate CAFCentury Center Building 2014 2 98,000 10,992 11% $20.00 20%100 W MainJournal Record Building 1923/2014 6 100,000 73,267 73% $25.00 10%621 N. RobinsonTotals 198,000 84,259 42.6% $22.53

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2014 Year-End Oklahoma City Office Market SummaryCENTRAL BUSINESS DISTRICT SUBMARKET

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HISTORICAL NORTHWEST VACANCY

HISTORICAL NORTHWEST RENTAL RATES BY CLASS

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HISTORICAL NORTHWEST ABSORPTION

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2014 YEAR-END NORTHWEST SUBMARKET REVIEW

• Aggregate vacancy rates decreased from 8.9% to 8.5%

• Class A vacancy decreased from 4.1% to 3.1%

• Class B vacancy increased from 9.0% to 9.2%

• Class C vacancy decreased from 16.5% to 14.7%

• Aggregate rental rates increased from $17.20 per SF to $17.95 per SF

• Class A rental rates increased from $21.89 per SF to $22.37 per SF

• Class B rental rates increased from $16.54 per SF to $17.15 per SF

• Class C rental rates increased from $13.48 per SF to $13.65 per SF

• The Northwest Oklahoma City submarket experienced absorption of 102,000 SF during 2014.

2015 NORTHWEST SUBMARKET FORECAST

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T2014 Year-End Oklahoma City Office Market SummaryNORTHWEST SUBMARKET

• Vacancy rates will increase slightly amid lower oil and gas prices

• Quoted rates will hold steady as landlords brace for potential cutbacks in the energy industry, which is heavily weighted toward this submarket.

IBC Center

14101-14201 Wireless Way 2001 3 147,852 0 0% $22.50 16%14101-14201 Wireless Way2525 Expressway 1974 6 62,410 20,924 33% $13.50 15%2525 Northwest Expressway4100 Perimeter Center 1982 3 47,317 3,825 8% $13.00 15%4100 Perimeter Center Dr.4101 Perimeter Center 1982 3 47,317 1,256 3% $13.00 15%4101 Perimeter Center Dr.4141 Northwest Expressway 1982 3 46,464 0 0% $16.00 16%4141 Northwest Expressway4200 Perimeter Center 1982 2 61,327 3,561 6% $13.00 15%4200 Perimeter Center Dr.4700 Gaillardia 2007 2 42,970 0 0% $25.00 15%4700 Gaillardia Parkway4727 Gaillardia 2009 2 37,624 0 0% $25.00 18%4727 Gaillardia Parkway4747 Gaillardia 2009 2 26,016 0 0% $25.00 18%4747 Gaillardia Parkway4801 Gaillardia 2000 3 74,432 0 0% $25.00 18.4%4801 Gaillardia Parkway4811 Gaillardia 2008 3 41,450 0 0% $24.00 15%4811 Gaillardia Parkway5100 Brookline 1974 10 107,496 2,205 2% $17.00 15%5100 Brookline5909 NW 1982 7 101,146 19,730 19% $15.00 15%5909 Northwest Expressway

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Quail Springs Parkway Plaza

2014 Year-End Oklahoma City Office Market SummaryNORTHWEST SUBMARKET

Northwest Year Built Floors RSF Vacant SF Vacant % Rate CAF

AAA Operations Center 2009 3 145,635 0 0% $20.00 0%3100 Quail Springs ParkwayAmerican Cancer Society 2001 1 45,000 0 0% $17.50 0%8400 Silver CrossingAtrium Towers 1980 6 156,106 0 0% $19.50 15%3501-3503 N.W. 63rdAvaya Building 1998 1 57,000 0 0% $20.00 0%14400 Hertz Quail Springs ParkwayBradley Square 1984 1 30,000 1,800 6% $16.50 0%2932 N.W. 122ndBrookline Offices 1972 1 40,009 4,190 10% $12.00 0%6051 N. BrooklineCaliber Park One & Two 2007 6 83,208 0 0% $22.00 17.2%14201-14301 Caliber DriveCenter 3000 1972 2 115,800 30,928 26% $13.00 12%3000 United Founders Blvd.Chase Bank Building 1976 4 54,793 10,066 18% $17.50 15%6303 N Portland AveChase Park 1981 2 30,281 4,972 16% $13.50 16.5%4323 NW 63rd St

Commerce Center South 1982 3 65,857 0 0% $14.00 11%9520 N. MayCoppertree Centre 1982 3 26,928 0 0% $13.00 10%3727 N.W. 63rdCross Rock Place 1992 2 60,049 0 0% $22.00 12%3595 W Memorial RdCross Rock Plaza I 1984 3 61,289 0 0% $22.00 15%13801 Wireless WayEnterprise Plaza 1981 3 92,180 3,875 4% $17.00 15%5600 N. MayFBI Building 1999 1 110,000 0 0% $24.00 0%3301 W. MemorialFifty-Six Expressway Place 1982 3 58,340 14,009 24% $12.50 0%5601 N.W. 72ndFive Corporate Plaza 1980 3 49,486 0 0% $16.00 15%3625 N.W. 56thGrand Centre 1979 5 101,217 5,484 5% $18.00 15%5400 N.W. Grand Blvd.Hartford Insurance 1999 1 100,000 0 0% $18.00 0%7800 N.W. 85th TerraceHealthSmart Building 1999 2 40,000 3,147 7% $18.00 12%3121 Quail Springs ParkwayIBC Center 1983 10 278,843 11,991 4% $22.00 15%3817 Northwest ExpresswayJamestown Office Park 1972/79 2 74,000 7,580 10% $13.00 10%3037 N.W 63rdLake Park Tower 1983 6 105,036 34,472 32% $16.00 15%6525 N. MeridianLakepointe Towers 1981 6 183,600 33,663 18% $17.00 15%4005-4013 Northwest ExpresswayLakepointe West 1982 6 85,246 12,200 14% $15.00 15%4045 N.W. 64thLakeshore Tower 1982 3 33,900 4,380 13% $13.00 15%4301 N.W. 63rdLandmark Towers 1969/72 10 306,960 44,000 14% $15.00 12%3535-3545-3555 NW 58thMercury Insurance Building 1986 2 100,103 14,514 14% $15.00 12.5%7301 Northwest ExpresswayNorth Shore Office Plaza 2001 5 56,418 0 0% $23.00 16%10900 Hefner DriveNorthwest Office Center 1973 2 85,833 3,295 3% $14.00 15%4334 Northwest ExpresswayOil Center 1973/1994 12 249,657 72,823 29% $17.00 13%2601 Northwest ExpresswayOne Corporate Plaza 1979 1 63,011 2,845 4% $16.00 15%3525 NW. 56th

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T2014 Year-End Oklahoma City Office Market SummaryNORTHWEST SUBMARKETNorthwest Year Built Floors RSF Vacant SF Vacant % Rate CAF

4801 Gaillardia

Parkway Commons 2003 2 40,729 0 0% $20.00 15%13900 N. PortlandPortland Plaza 1969 3 35,425 1,383 3% $13.00 14%5700 N. PortlandQuail Commerce Center 1998 1 128,500 0 0% $18.50 0%3201 Quail Springs ParkwayQuail Creek North 1973 2 36,124 777 2% $12.50 15%11032 Quail Creek Rd.Quail Ridge Tower 1975 4 49,600 12,448 25% $12.50 16.5%11212 N. MayQuail Springs Parkway Plaza I & II 1986 6 298,610 3,450 1% $22.00 14%14000 Quail Springs ParkwayRees Plaza at East Wharf 2002 3 40,998 0 0% $28.00 16.8%9211 Lake Hefner ParkwaySprint PCS Building 1999 1 89,132 0 0% $15.00 0%8525 Silver CrossingSt. Martins Building 1990 2 59,712 2,671 4% $16.50 13%9020 N. MayThe Parkway Building 1977 6 71,619 26,572 37% $18.50 15%3401 NW 63rd StreetThe Summit Building 1975 5 50,000 0 0% $12.00 13%5929 N. MayThree Corporate Plaza 1980 3 49,920 6,287 12% $17.50 15%3613 NW. 56thTwo Corporate Plaza 1982 3 85,551 0 0% $15.00 14%5555 NW. Grand Blvd.Union Plaza 1982 18 248,802 26,511 10% $20.00 14%3030 Northwest ExpresswayWilliams Sonoma 1998 1 35,862 0 0% $17.50 0%7720 NW 84th StTotals 5,310,190 451,834 8.5% $17.95

Northwest Construction Year Built Floors RSF Vacant SF Vacant % Rate CAF3250 Parkway Center 2015 2 40,000 30,000 75% $24.00 15%3250 Quail Springs ParkwayTotals 40,000 20,000 50% $24.00

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2014 Year-End Oklahoma City Office Market SummaryNORTHWEST SUBMARKET

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HISTORICAL NORTH ABSORPTION

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2014 YEAR-END NORTH SUBMARKET REVIEW

• Aggregate vacancy rates decreased from 16.5% to 14.6%

• Class A vacancy decreased from 9.3% to 7.5%

• Class B vacancy decreased from 7.7% to 6.9%

• Class C vacancy decreased from 62.6% to 61.3%

• Aggregate rental rates increased from $17.42 per SF to $17.50 per SF

• Class A rental rates remained $21.85 per SF

• Class B rental rates increased from $16.95 per SF to $17.14 per SF

• Class C rental rates held steady at $12.52 per SF

• The Oklahoma City North submarket experienced positive absorption of 265,000 SF in 2014, largely due to the relocation of the Oklahoma Healthcare Authority from the Midtown submarket.

2015 NORTH SUBMARKET FORECAST

• Vacancy rates should contine to trend downward

• Rental rates will remain near current levels.

2014 Year-End Oklahoma City Office Market SummaryNORTH SUBMARKET

North Year Built Floors RSF Vacant SF Vacant % Rate CAF1001 Wilshire 2003 4 43,316 0 0% $20.00 13%1001 W Wilshire Ave4345 N. Lincoln 2014 3 160,000 0 0% $13.50 0%4335 N. Lincoln

The Waterford

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2014 Year-End Oklahoma City Office Market SummaryNORTH SUBMARKET

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50 Penn Place 1973 16 178,315 14,469 8% $17.50 12%5100 N. Pennsylvania5100 Circle Building 1981 6 74,799 0 0% $17.50 14%5100 N. Classen Blvd.5701 N. Shartel 1982 4 97,102 0 0% $18.00 13%5701 N. Shartel7 & 9 Broadway Executive Park 1979 1 30,505 0 0% $18.00 0%200 NW 66thBroadway North 1974 2 25,703 1,824 7% $16.00 13%7301 N. Broadway Broadway Plaza 2003 3 50,726 0 0% $12.00 13%16 NW 63rdBroadway Sixty-Eight 1979 3 40,000 0 0% $14.50 14%6801 N. BroadwayCentral Park One 1982 6 113,134 0 0% $18.00 14%525 Central Park Dr.Central Park Two 1984 6 124,463 0 0% $18.00 14%515 Central Park Dr.Chase Bank Building 1981 4 34,701 14,500 41% $20.00 9%1200 NW 63rd StColumbus Square 1982 3 36,559 2,078 6% $17.00 15%1001 NW 63rdFive North Broadway 1972 3 44,805 0 0% $16.00 15%6601 N. BroadwayHarvey Parkway 1982 6 97,912 0 0% $17.00 17%301 NW 63rdLincoln Plaza Office Park 1968 2 243,423 226,093 92% $12.00 12%4545 Lincoln Blvd.Market Center I 2008 2 46,368 0 0% $22.75 0%701 Market DrMarket Center II 2009 2 50,000 0 0% $22.75 12%713 Market DrNichols Hills Executive Center 1979 2 52,426 1,806 3% $18.00 0%1000 W. WilshireNichols Hills Tower 1975 4 29,101 9,309 32% $15.00 11%6410 Avondale DrOne Benham Place 1984 8 152,959 29,534 19% $18.50 15%9400 N. BroadwayOne Broadway Center 1980 3 34,984 0 0% $14.00 9%100 NW 63rdOne Broadway Executive Park 1979 3 58,832 1,077 1% $17.00 12%201 NW 63rdOne Western Plaza 1989 2 50,948 14,546 28% $14.00 16.5%5500 N. WesternParagon Building 1981 5 110,791 5,282 4% $18.00 15%5801 N. BroadwayPavilion Building 1974 3 39,895 0 0% $12.50 12%6701 N. BroadwayPenn Park 1974 3 78,643 18,928 24% $13.50 13%5001-5005-5009-5015 N. PennRegistry 1980 2 93,167 15,341 16% $14.00 15%2200 NW 50thRichmond Square 1982 2 27,606 5,393 19% $15.00 12%4900 Richmond SquareSanta Fe North 1981 4 44,000 2,000 5% $17.00 14%6 NE. 63rdThe Commons on Broadway 2009 3 50,188 4,971 9% $23.00 18%11600 Broadway ExtensionThree Broadway Executive Park 1977 3 45,256 16,868 37% $17.00 10%6501 N. BroadwayTwo Broadway Executive Park 1980 3 52,205 13,247 25% $17.00 11%205 NW 63rdValliance Tower 1983 22 299,137 22,982 7% $22.00 17.8%1601 Northwest ExpresswayWaterford A 1983 4 150,048 2,794 21% $21.50 16%6301 Waterford Blvd.Waterford B 1983 2 35,468 11,461 32% $21.50 16%6303 Waterford Blvd.Waterford C 1983 4 81,575 4,777 5% $21.50 16%6305 Waterford Blvd.Waterford D 1983 2 34,087 2,042 6% $21.50 16%6307 Waterford Blvd.Totals 3,013,147 441,322 14.6% $17.50

North Year Built Floors RSF Vacant SF Vacant % Rate CAF

2014 Mid-Year Oklahoma City Office Market SummaryMEDICAL OFFICE SUBMARKETMedical Year Built Floors RSF Vacant SF Vacant % Rate CAFDeaconess Medical North 1996 3 55,209 4,159 7% $21.00 0%5701 N Portland AveDeaconess Medical South 1991 6 119,726 34,396 28% $21.00 0%5401 N Portland AveMcAuley Physician Offices 1986 4 42,246 1,099 2% $17.00 0%4205 McAuley BlvdNeuroScience Institute 1998 3 54,558 1,272 2% $19.00 0%4120 W Memorial RdNorthwest Medical Center 1981 6 82,664 0 0% $17.00 13.40%3330 NW 56th StParkway Commons Medical Center 2008 2 27,000 0 0% $20.00 15%14100 Parkway Commons DrParkway Medical Center 1980 2 44,983 0 0% $19.00 10%3500 NW 56th StPasteur Medical Building 1959 5 83,858 13,465 16% $16.50 15%1111 N. Lee Ave.Physicians & Surgeons Bldg 1962 11 75,000 11,031 14% $15.00 0%1211 N Shartel AvePhysicians Bldg - A 1970 9 68,349 4,640 6% $16.00 14%3435 NW 56th StPhysicians Bldg - B 1986 9 128,030 6,136 4% $19.50 14%3433 NW 56th StPhysicians Bldg - C 1975 8 75,158 0 0% $16.00 14%3400 NW ExpresswayPhysicians Bldg - D 1994 8 120,813 2,167 1% $18.00 14%3366 NW ExpresswayPlaza Physician Offices 1992 7 70,050 2,890 4% $18.00 0%4140 W Memorial RdPresbyterian Professional Bldg 1995 4 91,122 0 0% $14.00 15%711 Stanton L YoungQuail Brook Medical 2008 3 34,222 8,425 24% $20.00 15%13901 McAuley BlvdSaints Medical Plaza 2008 5 82,010 0 0% $24.36 16.90%NW 9th St & N Walker AveSMC Medical Office Bldg 1967 3 29,054 1,598 5% $13.50 0%4200 S Douglas AveSMC Medical Plaza 1994 5 58,648 688 1% $16.50 0%4221 S Western AveSt. Anthony ASC 1998 2 36,551 5,348 14% $17.50 14%6205 N Santa Fe AveSt. Anthony Healthplex East 2012 3 52,675 10,738 20% $26.00 12%3400 S. Douglas Blvd.St. Anthony Healthplex North 2015 4 96,422 6,956 7% $26.00 0%13401 N. WesternSt. Anthony Healthplex South 2011 3 52,675 11,286 21% $26.00 12%13500 S. Tulsa AveSt. Anthony North POB 1990 2 28,281 11,286 39% $17.50 19.40%6201 N Santa Fe AveSt. Anthony Prof. Bldg 1987 6 83,898 11,718 13% $17.50 11%608 NW 9th StTower Physicians Offices 1986 11 93,639 6,845 7% $16.00 0%4200 W Memorial RdTotals 1,786,841 156,143 8.7% $18.82

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St. Anthony Healthplex

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HISTORICAL MIDTOWN VACANCY

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HISTORICAL MIDTOWN ABSORPTION

Midtown Year Built Floors RSF Vacant SF Vacant % Rate CAF2000 Classen Center 1965 10 318,605 0 0% $17.50 13%2000 N Classen Blvd4801 Classen Building 1974 2 33,151 6,216 18% $10.50 0%4801 N Classen BlvdCameron Building 1955/57 5 81,493 2,000 2% $12.00 10%2901 Classen BlvdClassen Park I 1980 2 52,800 3,700 7% $12.00 13%3700 N Classen BlvdClassen Park II 1982 3 52,800 0 0% $12.00 13%3800 N Classen BlvdSanta Fe Building 1954/82 4 55,203 2,000 3% $12.50 10%3814 N. Santa Fe Ave.Shepherd Mall Office Complex 1964/95 2 709,000 199,981 28% $14.50 0%2401 NW 23rd StreetTotals 1,303,052 213,897 16.4% $14.69

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2014 Year-End Oklahoma City Office Market SummaryMIDTOWN SUBMARKET

2014 Year-End Oklahoma City Office Market SummaryMIDTOWN SUBMARKET

2014 YEAR-END MIDTOWN SUBMARKET REVIEW

• Aggregate vacancy rates increased from 6.9% to 16.4%

• Class B vacancy rates increased from 7.0% to 17.3%

• Class C vacancy rates increased from 6.9% to 7.2%

• Aggregate rental rates increased from $14.62 per SF to $14.69 per SF

• Class B rental rates increased from $14.90 per SF to $14.99 per SF

• Class C rental rates decreased from $11.71 per SF to $11.57 per SF

• The Midtown Submarket experienced negative absorption of 124,000 SF due to the Oklahoma Healcare Authority’s relocation to its new building on Lincoln Boulevard.

2015 MIDTOWN SUBMARKET FORECAST

• Vacancy rates will likely remain near current levels for the remainder of the year.

• Rental rates will remain at or near current levels.

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HISTORICAL WEST ABSORPTION

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2014 Year-End Oklahoma City Office Market SummaryWEST SUBMARKET

2015 YEAR-END WEST SUBMARKET REVIEW

• Aggregate vacancy rates increased from 24.4% to 31.8%

• Class B vacancy totals increased from 13.5% to 30.3%

• Class C vacancy totals decreased from 40.3% to 34.1%

• Aggregate rental rates increased from $12.38 per SF to $12.45 per SF

• Class B rental rates remained flat at $12.63 per SF

• Class C rental rates increased from $12.02 per SF to $12.18 per SF

• The West Oklahoma City Office Market experienced negative absorption of 37,000 SF during 2014.

2015 WEST SUBMARKET FORECAST

• Vacancy rates should improve slightly

• Rental rates in the submarket should remain flat

WES

T

The Parkway

0

50000

100000

150000

200000

250000

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HISTORICAL SUBURBAN ABSORPTION

HISTORICAL SUBURBAN RENTAL RATES BY CLASS

$10.00

$15.00

$20.00

$25.00 Class CClass BClass A

20142013201220112010

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Class CClass BClass A

SUBURBAN OCCUPANCY BY CLASS

13

2014 Year-End Oklahoma City Office Market SummaryWEST SUBMARKET

WEST

2014 YEAR-END SUBURBAN SUBMARKET REVIEW

• Aggregate vacancy rates increased from 11.6% to 12.5%

• Class A vacancy decreased from 5.8% to 4.5%

• Class B vacancy increased from 8.5% to 11.0%

• Class C vacancy decreased from 31.0% to 29.0%

• Aggregate rental rates increased from $16.74 per SF to $17.46 per SF

• Class A rental rates increased from $21.87 per SF to $22.20 per SF

• Class B rental rates increased from $16.15 per SF to $16.55 per SF

• Class C rental increased from $12.92 per SF to $13.04 per SF

• Suburban Oklahoma City experienced absorption of 206,000 SF during 2014.

2015 SUBURBAN SUBMARKET FORECAST

• Suburban rental rates should hold steady at current levels

• Suburban vacancy rates should increase slightly until oil prices stabilize and improve.

2014 Year-End Oklahoma City Office Market SummarySUBURBAN SUBMARKET

Suburban Submarket Totals 10,137,150 1,266,591 12.50% $17.12

West Year Built Floors RSF Vacant SF Vacant % Rate CAF300 Meridian Place 1982 2 78,650 34,405 43% $12.00 11%300 N Meridian AveBank 2 Tower 1975 7 65,520 12,451 19% $13.50 12%909 S. MeridianMetro Office Park 1981 3 60,750 22,976 37% $11.00 0%4300 Highline Blvd.Sovereign Office Park 1983 1 42,260 35,500 84% $12.00 0%1220 Sovereign RowThe Parkway 1982 6 96,960 54,564 56% $14.00 15%1300 S. MeridianWest Park Office Center 1986 1 58,786 0 0% $12.75 0%715 MetropolitanWill Rogers Office Park 1 1984 1 52,779 0 0% $11.50 16%4400 Will Rogers ParkwayWill Rogers Office Park 2 1985 1 46,748 0 0% $11.50 10%4350 Will Rogers ParkwayTotals 502,453 159,896 31.8% $12.45

Price Edwards & Company | 210 Park Avenue, Suite 1000, Oklahoma City, OK 73102 | Phone (405) 843–7474 | Fax (405) 236–1849www.priceedwards.com

2014 Year-End Office Building Sales Summary

Oklahoma City experienced one of the most active years on record for office building sales. For general office buildings containing a minimum of 25,000 square feet, 17 transactions closed in 2014 having an aggregate value of just over $100 million and involving roughly 1 million square feet. It is worth noting that not a single Class A asset traded hands in 2014. As such, an average price of $100 per square foot for Class B and C assets is instructive.

As predicted last year, Chesapeake Energy completed the sales of its larger non-campus office assets. Of the five Chesapeake sales, four were purchased by companies looking to ultimately use the space, not lease out to third-party tenants. This is also true of several of the other sales transactions, indicating a healthy expansion of Oklahoma City’s business community and its ability to acquire office assets at well below replacement cost.

As is typically the case, the suburbs are where most of the transactions occurred, accounting for 13 of the 17 transactions. MidFirst was able to acquire the One & Two Grand Park office buildings, as well as additional land, to ultimately house its corporate activities in one location. Seventy Seven Energy, a Chesapeake spin-off, also purchased two facilities for its use: Regency Center on NW 63rd as well as a building in south Oklahoma City.

In the downtown and immediately surrounding areas of Bricktown and Film Row there were four sales. The largest was Robinson Renaissance in the core CBD which contains approximately 175,000 square feet and sold for just under $9 million.

The unmistakable conclusion is that 2014 real estate asset values continued the upward climb we have been experiencing the last several years. A healthy economy, low interest rates, a volatile stock market, and the availability of both equity and debt capital have converged to create a near optimum environment for investment in the real estate sector. However, as the year ended, a drop in oil prices from over $100 per barrel to under $50 has not only caught most owners/investors very surprised but also very concerned about whether the pricing environment is a temporary 6 to 12 month phenomenon, or rather something much more structural in the long term supply and demand equation. While opinions vary widely, it does ring true that some exploration and development companies will not survive the new pricing environment due to excessive debt loads, and thus some industry consolidation is probable. On the other hand, to think this is a replay of the early 1980’s with record bank failures and personal bankruptcies is very unlikely.

Looking into 2015, it will be interesting to see whether the sale of First National Center happens, and what the redevelopment plan for this historic asset entails. There are other potentially significant transactions in the works so, notwithstanding the current concerns relating to commodity pricing, activity at this point remains steady.

Oklahoma City continues to be very fortunate. Unlike the early 1980’s where the city did not reinvest in itself when times were good, the exact opposite has occurred this time around. And the rest of the nation has taken note. Oklahoma City is overwhelmed

with accolades about how far it has come in such a short amount of time. We are literally one of the most exciting cities in the United States, and it has resulted in tremendous job growth and economic vitality. As long as we remain on track with effective leadership at both the city and state levels, commercial real estate markets should provide very attractive risk adjusted returns for the foreseeable future to those with a good grasp of market conditions and able to properly underwrite revenues, operating costs and capital expenditures.

Regency Center

One Grand Park