OFFICE TRENDS REPORTGREATER COLUMBUS REGION

www.colliers.com/columbus

CBD Leads Columbus Office RecoveryCOLUMBUS REGION OVERVIEWThe Columbus office market gained 244,558 square feet of positive absorption in the second quarter. This is the ninth consecutive quarter (twelve of the last thirteen) of positive absorption in the Central Ohio market. Year-to-date, the Columbus vacancy rate has fallen from 10.9 percent to 9.7 percent and the market recorded over a half million square feet of positive net absorption.

Central Ohio did not see any new developments break ground during the third quarter but did see a number of projects near completion. More than 1.2 million square feet of new construction broke ground over the last 7 quarters with completions projected to fall heavily in the fourth quarter of 2014 and the first quarter of 2015. Construction is progressing at Columbia Gas of Ohio’s 280,000-square-foot headquarters at 240 W. Nationwide Blvd. in the Arena District, as well as the 60,000-square-foot Joseph project at 621-629 N. High St. in the Short North. Both projects will be completed next quarter along with the Daimler Group’s speculative construction on phase two (67,500 SF) of the New Albany Center of Technology at 7525 W. Campus Road. Daimler Group and Kaufman Development, continue construction on their 12-story, $50 million mixed-use development project at 250 S. High St. downtown. Daimler is also working to complete their speculative suburban office projects including Westar V (106,340 SF) located at 380 Polaris Parkway in Westerville, and Water’s Edge III (42,000 SF) located at 7815 Walton Parkway in New Albany.

Other noteworthy projects nearing completion are Nationwide Realty Investors’ Keystone on Yard in Grandview (30,000 SF) and 800 Yard Street in Grandview (75,000 SF). Those buildings projected completions are in the fourth quarter of 2014 and first quarter of 2015 respectively.

There were several significant lease transactions that took place in the third quarter. The largest leases were CoverMyMeds sublease (64,059 SF) at 2 Miranova Place, Shremshock Architects (35,723 SF) move to 7400 W. Campus Road, Zulily signed for 34,000 square feet at 775 Taylor Road, Red Capital (28,984 SF) at 10 W. Broad Street and the business services company, Maximus signed a renewal for 28,647 square feet at 5150 E. Dublin Granville Road.

MARKET INDICATORS

ASKING RENTAL RATES

Q3-14 Q4-14*

VACANCY —

NET ABSORPTION

CONSTRUCTION

RENTAL RATES

*Projected trend for next quarter

Q3 2014 | OFFICE

$14.00

$15.00

$16.00

$17.00

$18.00

$19.00

$20.00

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

Q313

Q413

Q114

Q214

Q314

Class A Rental Rates Class B

ASKING RATES AND AVAILABILITIES

Rental rates declined over the past quarter, as Class A full service rates averaged $19.54, down from $19.75. Class B full service rates also declined from $16.38 to $16.35. However, despite slight declines in asking rates, vacancy rates continued the downward trend to 9.7% vacancy.

9.7%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

(400,000)

(300,000)

(200,000)

(100,000)

0

100,000

200,000

300,000

400,000

500,000

600,000

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

Q313

Q413

Q114

Q214

Q314

Completions Absorption Vacancy Rate

ABSORPTION, COMPLETIONS, AND VACANCY RATES

MARKET ACTIVITYMarket Activity Volume is the sum of the absolute value of each absorption change in the market, and it tells us how much space was in transition in the quarter. The market outlook appears strong even though leasing activity was down from the prior quarter. In the third quarter, market activity posted 583,745 square feet, down significantly from 927,615 last quarter. This is likely the calm before the storm as the new development that nears completion will increase market activity in the coming quarters, once that space comes online. Colliers International tracks demand for office space by tracking tenants in the market. The average number of tenants in the market has decreased slightly through 2014. The number of tenants currently in the market is 85, down from an annual high of 93 in May. The primary focus continues to be on small to mid size spaces as almost half of the active tenants in the market are seeking 2,500 to 7,500 square feet. The types of tenants seen most frequently in the market continue to be general medical, insurance, and higher education. Law and engineering firms also continue to be sought after and the market may see their activity maintain high levels as new Class A space comes online over the next few quarters. Technology users have seen the most growth throughout 2014 and that is expected to continue into 2015.

EMPLOYMENT DATAThe preliminary unemployment rate for Columbus at the end of the third quarter decreased to 4.4 percent according to the Bureau of Labor Statistics. Year-over-year unemployment has seen a decrease from the high 6.6 percent unemployment levels recorded at the beginning of June 2013. Over 99 percent of the unemployment jobs have returned to pre-recessionary levels and Columbus’s growing economy is beginning to attract national attention. Forbes recently voted Columbus, OH as the number one city of opportunity in the country. Top qualifiers for the award were affordable real estate and the strong GDP per capita growth.

There has been mixed growth among industries demanding large quantities of office space over the quarter. The Information sector was down slightly throughout the third quarter which may be delaying some firms’ plans to expand in 2014. Employment for Financial Activities had a third consecutive down quarter following a strong 2013. The Professional and Business Services sector gave back some of the progress it has seen this year but market professionals maintain confidence that this could be one area seeing strong growth in 2015. Education and Health Services continued a relatively strong year with another slight increase in jobs from the second to third quarter.

The Columbus office market consists of 15 suburban submarkets plus the Central Business District submarket. The Columbus region features a total of 63 million square feet, 43.7 million of which is suburban. Colliers International’s office dataset includes all 10,000 square foot, Class A, B, and C buildings, not owned and fully leased by the government.

MARKET ACTIVITY

SALES ACTIVITY

PROPERTY ADDRESS SALES DATE SALE PRICE SIZE SF BUYER SELLER PRICE / SF TYPE SUBMARKET

3455 Mill Run Dr 8/21/2014 $18,000,000 174,323 IMC Real Estate Management Talcott Realty Investors $103.26 Sale Hilliard/West

9200 Worthington Rd 8/13/2014 $12,040,000 140,000 Alidade Capital UH Investment LP $86.00 Sale Westerville

7965 N High St 7/30/2014 $8,025,000 119,000 Northwoods One LP Pace Properties Inc $67.44 Sale Worthington

505 N Cleveland Ave 8/15/2014 $10,350,000 75,000 American Realty Capital Properties of America Inc $138.00 Sale Westerville

4079 Executive Pkwy 7/22/2014 $6,500,000 43,595 Esplanade Sr. Residences Omni Chagrin $149.10 Sale Westerville

1233 Dublin Rd 9/25/2014 $1,212,500 26,841 Clarus Ventures LLC 1234 Dublin Road LLC $45.17 Sale Arlington

800 Michigan Ave 9/2/2014 $2,325,000 20,000 Barker/Snyder Investments U.S. Trotting Association $116.25 Sale Short North

4461 S Broadway 9/8/2014 $1,720,000 14,044 SEHGAL FAMILY LLC Southwester Obstetrics $122.47 Sale Southwest

299 Outerbelt St 7/11/2014 $2,147,667 7,429 National Retail Properties LP Brauvin Capital Trust Inc $289.09 Sale Gahanna

Powell Polaris

Worthington

Westerville

NewAlbany

LickingCounty

Fairfield County

Madison County

Union County

Delaware County

Pickaway County

DublinBethel

Easton

East

Gahanna/Airport

CBD

Hilliard

SouthwestSoutheast

Arlington/Grandview

NorthCentral

LEASE ACTIVITY

PROPERTY ADDRESS LEASE DATE LEASE SF TENANT ASKING PRICE (NNN) TYPE SUBMARKET

2 Miranova Pl 9/11/2014 64,059 CoverMyMeds $13.50 Lease CBD

7400 W Campus Rd 9/19/2014 35,723 Shremshock Architects $8.95 Lease New Albany

775 Taylor Rd 7/28/2014 34,000 Zulily $10.95 Lease Gahanna

10 W Broad St 9/15/2014 28,984 Red Capital $12.00 Lease CBD

5150 E Dublin Granville Rd 9/16/2014 28,647 Maximus (Renewal) $12.50 Lease New Albany

800 E Yard St 9/11/2014 18,747 Northwestern Mutual $16.00 Lease Arlington/Grandview

10 W Broad St 9/1/2014 17,241 Medical Mutual $11.00 Lease Capitol Square

250 Old Wilson Bridge Rd 8/11/2014 15,403 The Whiting Turner Contracting Company $17.50 Lease Worthington

600 N Cleveland Ave 8/26/2014 13,222 Revolution Group $13.75 Lease Westerville

P. 2 | COLLIERS INTERNATIONAL

RESEARCH & FORECAST REPORT | Q3 2014 | OFFICE | GREATER COLUMBUS REGION

UPDATE Market Comparisons

OFFICE MARKET

Net Absorption Construction Asking Rental Rates

SUBMARKET Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions Class A ($) Class B ($)

CBD 19,343,367 1,967,542 10.2% 116,364 356,649 490,000 - $19.00 $17.47

ARLINGTON/GRANDVIEW 4,901,788 341,296 7.0% 42,972 55,687 78,000 - $19.65 $17.13

DUBLIN 9,336,132 1,097,735 11.8% (37,837) 18,993 - - $18.90 $16.61

EAST 3,869,477 513,456 13.3% (7,671) (31,864) - - $16.07 $15.61

EASTON 2,705,095 173,226 6.4% (1,632) 6,943 40,000 - $22.24 $18.00

GAHANNA/AIRPORT 1,235,246 66,998 5.4% 37,692 32,688 - - $19.51 $17.55

HILLIARD 2,421,083 323,905 13.4% 6,064 24,526 39,000 - $20.12 $16.19

NEW ALBANY 2,192,057 67,033 3.1% 41,744 60,506 110,500 - $20.47 $20.22

NORTH CENTRAL 1,147,668 51,871 4.5% (3,060) (3,060) - - - $13.81

POLARIS 4,405,927 202,914 4.6% (9,736) (8,614) 106,340 - $19.23 $18.92

POWELL 273,589 22,975 8.4% (1,574) (14,573) - - - $17.07

SOUTHEAST 434,658 91,698 21.1% 2,500 3,125 - - - -

SOUTHWEST 219,119 14,426 6.6% - (7,926) - - - $16.05

WESTERVILLE 4,383,103 440,257 10.0% 32,978 68,529 - - $19.88 $15.68

WORTHINGTON 6,240,847 740,369 11.9% (5,976) (61,193) 23,000 - $18.84 $15.29

SUBURBAN TOTAL 43,765,789 4,320,056 9.9% (11,388) 36,460 396,840 - $19.67 $16.08

TOTAL 62,843,132 6,057,568 9.6% 244,558 535,831 990,840 - $19.54 $16.35

Net Absorption Construction Asking Rental Rates

PROPERTY TYPE Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions By Product Type

CLASS A 26,852,927 2,560,069 9.5% 102,113 297,635 990,840 0 $19.53

CLASS B 22,292,269 2,259,343 10.1% 90,715 141,864 - 0 $16.36

CLASS C 13,697,936 1,238,156 9.0% 51,730 96,332 - 0 $13.39

TOTALS 62,843,132 6,057,568 9.6% 244,558 535,831 990,840 0 $17.40

QUARTERLY COMPARISON AND TOTALS

Net Absorption Construction Asking Rental Rates

QUARTER, YEAR Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions By Product Type

Q2, 2014 63,109,156 6,405,771 10.2% 181,075 283,289 886,840 - $19.75 $16.37

Q1, 2014 63,109,156 6,742,763 10.6% 102,214 102,214 886,840 - $19.60 $16.08

Q4, 2013 63,083,156 6,844,977 10.8% 95,572 694,262 772,840 - $19.56 $16.03

Q3, 2013 62,820,156 6,940,549 11.0% 229,419 598,690 669,000 131,500 $19.32 $15.91

Q2, 2013 62,688,656 7,158,279 11.4% 229,080 378,347 642,500 - $19.19 $15.87

THE MODERN OFFICE SPACEThe picture of the modern office space is no longer the traditional manila box companies have grown accustomed to. Today’s office space has become more than a place to work, but rather a physical representation of a companies brand. In a world where technology allows employees to do so much from anywhere around the globe, the office space has transformed from a field of hard wall cubicles to a space of collaboration. Not only does a space need to cater to companies at work, but life within that same work place. For this reason, owners are developing or rebranding their buildings to better conform to a more modern environment and one that looks, feels, and functions just a little more like home.

RESEARCH & FORECAST REPORT | Q3 2014 | OFFICE | GREATER COLUMBUS REGION

COLLIERS INTERNATIONAL | P. 3

CENTRAL BUSINESS DISTRICTThe CBD gained 116,364 square feet of positive absorption this quarter (356,649 square feet of positive absorption year-to-date). The vacancy rate has dropped to 10.2 percent, and continues to trend downward as the lure of being downtown picks up. However, the completion of several projects over the next two quarters will retract submarket vacancy rates as tenants shift to newer buildings, and leave older product vacant behind them. Two large tenant leases occured in the CBD this quarter. Red Capital signed a lease at 10 W. Broad Street for 28,984 square feet while CoverMyMeds subleased the space (64,059 square feet) Red Capital left at 2 Miranova Place.

WEST MARKETThe West submarkets are Arlington/Grandview and Hilliard. After experiencing a positive second quarter, the Arlington/Grandview submarket recorded 42,972 square feet of positive absorption. The submarket, typically home to many small and mid-size firms, has continued to attract those types of companies. However, the submarket continues to experience a considerable amount of transition and redevelopment. Last quarter, Nationwide announced its plans to consolidate suburban employees to its new office park in Grandview Yard. The insurance company released plans that included 500,000 square feet of brand new, Class A space that will house over 3,600 employees. Still under construction is the 75,000-square-foot Offices at 800 Yard Street development and the Keystone on Yard offices off Goodale Boulevard which will offer 30,000 square feet of Class A space for potential users in the fourth quarter. The only area sale came from Clarus Ventures who purchased the 26,841-square-foot building at 1233 Dublin Road for $1.2 million ($45.17 per square foot).

Hilliard’s vacancy decreased 60 basis points this quarter (13.4% from 14.0%), and posted 6,064 square feet of positive absorption in the third quarter. Construction continues on the 39,000 square-foot Britton Parkway Medical Office at 4363 All Seasons Drive. Completion is set for fourth quarter. The largest sale for the quarter took place in the Hilliard submarket with the sale of the One Mill Run office building for $18 million. The building is 174,323 square feet and sold for $103.25 per square foot.

NORTH COLUMBUS MARKET

The North submarkets are Dublin, Powell, Polaris, North Central, Worthington and Westerville. After a strong first half of 2014, the third quarter took a step back. Dublin saw a drop off with negative absorption of 37,837 square feet. Farmers Insurance contributed by downsizing their office by 16,000 square feet.

Powell and North Central also saw slight negative absorption changes but overall saw limited activity. Powell had negative 1,574 square feet of absorption and an 8.4 percent vacancy while North Central stayed strong with a 4.5 percent vacancy.

Westerville was a well performing submarket last quarter with 32,978 square feet of absorption. One significant lease from the quarter was Revolution Group’s lease of 13,222 square feet at 600 Cleveland Ave. The vacancy rate dropped significantly to 10 percent. There were several significant sales in Westerville this quarter. Talcott Realty sold 9200 Worthington Road for $12.04 million ($86 per square foot) and 4079 Executive Parkway sold for $6.5 million ($149.10 per square foot).

Polaris remained relatively flat with negative 9,736 square feet of absorption. The vacancy rate in the submarket remained very strong at just 4.6%.Daimler’s Westar V, located at 380 Polaris Parkway, continues construction and will provide an additional 106,340 square feet of Class A space in the coming year. Worthington posted negative absorption of 5,976 square feet. There were a few small leases completed but the submarket was relatively calm through the third quarter. One notable sale was Northwoods I at 7965 N. High St. for $8 million ($67.44 per square foot).

EAST MARKET

The East submarkets are the East side, Easton, Gahanna/Airport, and New Albany. These submarkets were the most active in the first half of 2014. Absorption in Easton was flat as tenants gave back 1,632 square feet of space. The 40,000-square-foot Easton Gateway Offices, located at 4210 Worth Ave., are moving forward quickly and should be completed in the forth quarter.

Gahanna had a strong quarter and posted 37,692 square feet of positive absorption. Vacancy fell from 8.5 percent last quarter to 5.4 percent this quarter.

New Albany remains a major focal point for new construction, as 110,500 square feet of projects are in progress. New Albany Center of Technology II (67,500 square feet), as well as Water’s Edge III (43,000 square feet) broke ground in the first quarter, with targeted completion dates of the fourth quarter. The submarket also had strong leasing activity to lead suburban submarkets for the quarter with 41,744 square feet of positive absorption. The majority of that absorption came from a new lease signed by Zulily at 7400 W. Campus Oval for 34,000 square feet.

UNITED STATES:

Greater Columbus Region

Richard B. Schuen SIOR CCIMCEO | Principal | ColumbusTwo Miranova PlaceSuite 900Columbus, Ohio 43215TEL +1 614 410 5612

Brian GrahamDirector of Research | Ohio425 Walnut StreetSuite 1200Cincinnati, Ohio 45202TEL +1 513 562 2214

Grant ChaneyResearch AnalystTwo Miranova PlaceSuite 900Columbus, Ohio 43215TEL +1 614 437 4569

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This document/email has been prepared by Colliers International for advertising purposes. Colliers International statistics and data are audited annually and may result in revisions to previously reported quarterly and final year-end figures. Sources include Columbus Dispatch, Business First, Xceligent, CoStar, Chain Store Age, Wall Street Journal, Bureau of Labor Statistics, Bureau of Economic Analysis, Property and Portfolio, Gallup and the Cleveland Federal Reserve.

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RESEARCH & FORECAST REPORT | Q3 2014 | OFFICE | GREATER COLUMBUS REGION