This document provides an overview and forecast of the commercial real estate market from Robert Bach, Chief Economist at Grubb & Ellis. The summary includes: - Key economic indicators such as GDP, inflation, unemployment and interest rates are expected to improve modestly in 2012, supporting stable commercial real estate fundamentals. - Office, industrial, retail and apartment vacancy rates are forecasted to decline slightly in 2012, while rents are expected to increase across most property types. - Investment activity in commercial real estate is projected to increase 25% in 2012 after rising 75% in 2011, though cap rates remain elevated relative to historical averages. - Distressed commercial real estate assets remain substantial but are expected to continue declining

4. Our Professionals
Jeremy Chris Jon Johnny
Willits Fraser, CCIM Chalfie Bevon
Todd Mike Gregg Bill
Garrett, CCIM Ferrer, CCIM Legerton Goodwin

5. Our Staff
Charlene Taylor Courtney
Aydelotte Massey Ray

6. Robert Bach
Senior Vice President
Chief Economist
Grubb&Ellis

7. 2012 Commercial RE Forecast
Robert Bach
SVP, Chief Economist

8. Gross Domestic Product, Historic & Forecast
Annualized Percent Change
4%
2%
Historic
Wells Fargo
0%
PNC
Goldman
-2%
-4%
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12- '13-
F F
Source: BEA, Goldman Sachs, PNC, Wells Fargo
8

9. Consumer Price Index, Historic & Forecast
Annual Percent Change
6%
4%
Historic
Wells Fargo
2%
PNC
Goldman
0%
-2%
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12- '13-
F F
Source: BLS, Goldman Sachs, PNC, Wells Fargo
9

10. 10 Year Treasury Yield, Historic & Forecast
End of Quarter
5%
4%
Historic
Wells Fargo
3%
PNC
Goldman
2%
1%
2008 2009 2010 2011 2012
Source: Federal Reserve, Goldman Sachs, PNC, Wells Fargo
10

11. Payroll Job Change
Annual
3
Millions
2
1
0 Historic
-1 Wells Fargo
-2 PNC
-3 Grubb & Ellis
-4
-5
-6
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12- '13-
F F
Source: BLS, PNC, Wells Fargo, Grubb & Ellis
11

12. Job Losses Since Recession Began 12/2007
U.S. vs. Selected South Carolina Metros
2%
0%
-2%
-4%
U.S.
-6% G'ville
Columbia
-8% Charleston
-10% Myrtle Bch
-12%
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11
Source: BLS, Grubb & Ellis 12

13. Office Vacancy & Class A Rent*
National Forecast
% Vacant Rent*
19% $38
18% $36
17% $34
16% $32
15% $30 % Vacant
14% $28 $ Rent*
13% $26
12% $24
11% $22
10% '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12-F
$20
% Vacant 17.4% 17.7% 16.8% 14.6% 13.6% 13.0% 14.8% 17.4% 17.7% 17.3% 16.0%
* Weighted average
$ Rent* 28.72 30.09 30.32 33.91 35.95 36.69 35.74 32.50 32.93 33.49 34.16 asking rent $/SF/year
gross
Source: Grubb & Ellis 13

14. Industrial Demand Drivers
ISM Manufacturing Index DOT Freight Index
Values > 50 = Expansion 2000 = 100
65 115
60
110
55
50 105
45 100
40
95
35
30 90
'00 '02 '04 '06 '08 10 '00 '02 '04 '06 '08 10
Source: ISM, DOT, Grubb & Ellis 14

15. Industrial Vacancy & Warehouse Rent*
National Forecast
% Vacant Rent*
11% $5.00
10%
$4.75
9%
% Vacant
8% $4.50
$ Rent*
7%
$4.25
6%
5% '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12-F
$4.00 * Weighted average
% Vacant 9.5% 9.8% 9.4% 8.1% 7.7% 7.7% 8.8% 10.7% 10.4% 9.7% 8.7% asking rent $/SF/year
$ Rent* 4.33 4.21 4.38 4.54 4.67 4.79 4.68 4.36 4.33 4.26 4.47
NNN
Source: Grubb & Ellis 15

16. Retail Demand Drivers
Monthly Retail Sales Personal Saving Rate
% Change Year Over Year, SA SAAR
15% 14%
10% 12%
10%
5%
8%
0%
6%
-5%
4%
-10% 2%
-15% 0%
'07 '08 '09 '10 '11 80 85 90 95 '00 '05 10
Total Core
Source: Census, CoStar, Grubb & Ellis 16

17. Retail Vacancy & Rent*
National Forecast
% Vacant Rent*
12% $20
11%
$19
10%
9% $18
% Vacant
8% $ Rent*
$17
7%
$16
6%
5% '02 '03 '04 '05 '06 '07 '08 '09 '10 '11-F '12-F
$15 * Neighborhood &
% Vacant 7.3% 7.2% 7.0% 6.8% 7.1% 7.5% 8.9% 10.6% 11.0% 11.1% 11.0% community centers,
$ Rent* 16.68 17.14 17.62 18.22 18.92 19.46 19.52 19.13 18.99 18.96 19.10
asking rent $/SF/year
NNN
Source: Reis, Grubb & Ellis 17

18. Apartment Demand Drivers
20-34 Year-Old Cohort Homeownership Rate
Change by Decade By Quarter, Seasonally Adjusted
Millions Percent
6 70%
4 4.7 68%
3.9 4.3
2 66%
0 64%
-2 62%
-3.5
-4 60%
1980s 1990s 2000s 2010s '80 '90 '00 '10
Source: Census, Grubb & Ellis 18

19. Apartment Vacancy & Rent*
National Forecast
% Vacant Rent*
9% $1,200
8%
$1,100
7%
% Vacant
$1,000
$ Rent*
6%
$900
5%
4% '02 '03 '04 '05 '06 '07 '08 '09 '10-F '11-F '12-F
$800 * Projects w/ at least
% Vacant 6.3% 6.9% 6.7% 5.7% 5.8% 5.7% 6.7% 8.0% 6.6% 5.3% 4.9% 50 units, asking rent
$ Rent* 889.0 902.0 921.0 944.0 982.0 1,025 1,050 1,026 1,043 1,066 1,096
Source: Reis, Grubb & Ellis 19

20. Investment Market Outlook
CRE Investment by Quarter Moody's/REAL CPPI
+75% in 2011, + 25% in 2012 2000-Q4 = 1.0
Billions
$600 2.0
1.9
$500 1.8
514
1.7
1.6
$400
1.5
363 1.4
$300 312 1.3
250 1.2
$200 232 1.1
200
1.0
146
$100 127 126 0.9
104
0.8
55
$0 0.7
'02 '04 '06 '08 '10 '12-F '00 '02 '04 '06 '08 '10
All 6-city Trophy Distress
Source: Real Capital Analytics, Grubb & Ellis

21. Average Cap Rates
By Property Type
9%
8.4%
8%
7.8% 7.8%
7.6% 7.5% 2010
7.4% 7.3%
7% 2011
6.6%
6.4%
6.3%
6%
5%
Apartment Hotel Industrial Office Retail
Source: Real Capital Analytics, Grubb & Ellis

22. Distressed Assets
Total Outstanding Distress Monthly Additions &
Billions Billions Reductions to Distress
$400 $25,000
$20,000
$300 $15,000
$10,000
$200 $5,000
$0
$100 -$5,000
-$10,000
$0 -$15,000
2008 2009 2010 2011 2008 2009 2010 2011
Troubled REO Restructured Resolved Additions Workouts
Source: Real Capital Analytics, Grubb & Ellis

23. Avg. Cap Rate vs. 10-year Treasury Yield
Quarterly
Cap Rate & 10-year Yield 10% 500
8% 400
Spread (basis points)
6% 300
4% 200
2% 100
0% 0
'01 '03 '05 '07 '09 '11
10-yr. Yield Cap Rate Spread
Source: Real Capital Analytics 23

24. 2012 Commercial RE Forecast
Robert Bach
SVP, Chief Economist

25. Mary Graham
Senior Vice President
Charleston Metro Chamber of Commerce

26. The Charleston Region:
2012 and Beyond
Grubb&Ellis|WRS
February 15, 2012
char l est on m r o cham
et ber of com er ce
m

27. Top Three Globally
• Building wide-body
commercial aircraft
• R&D wind turbines
• Tourism Destination

28. Charleston Has Biggest
Brain Gain in U.S.

29. Charleston’s Recognition & Rankings
Best Cities for Job Growth
Charleston region ranked 8th,
up 17 spots from last year.
2010 Best Performing Cities New Geography May 2011
Charleston ranked among nation’s top
20 “large cities” America's Favorite Cities
Milken Institute Charleston ranks #1
October 2010 Travel + Leisure Magazine
November 2010
Best Towns of 2011
Charleston ranked 5th World's Best City
Outside Magazine Charleston ranked #3 in
September 2011 the world
CNNGo October 2011
Best Places for Business
& Careers #1 in North America
Charleston MSA ranked in #3 in the world
top 50 Tourist Destination
Forbes July 2011 Conde’ Nast Traveler
October 2011

30. Significant Developments
Boeing’s 2nd 787
Dreamliner assembly line
• Est: 15,000 jobs (direct & indirect)
$5.9 billion statewide impact
Wind Turbine Drive Train Testing Facility
• $98 million DOE-backed facility – one of only
three and largest in the world
• Est: 20,000 jobs (direct & indirect) statewide
• Opportunity to attract global manufacturing &
R&D investments
Southwest Airlines
• Began service March 13, 2011

31. Population Trends
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
1950 1960 1970 1980 1990 2000 2010 2020 est.

32. Employment Growth
2000 - 2011
350,000
300,000
250,000
200,000
Labor Force
150,000
Employment
100,000
50,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

33. Employment By Sector
Natural Resources, Mining, &
Construction
Manufacturing
5%
20% 8% Wholesale Trade
3% Retail Trade
Transportation and Utilities
3% Information
13%
Financial Activities
12% Professional and Business Services
4% Education and Health Services
2%
Leisure and Hospitality
4%
12% Other Services
14% Government

34. Target Industries

35. Target Tactics
Advanced Wind
Security & IT Aerospace Biomedical Energy
Recruit
Recruit Recruit Recruit
Retain/
Expand
Retain/ Retain/
Expand Expand Retain/
Expand
Startup Startup Startup Startup
Immediate Immediate Mid- to Mid- to
To Mid-Term Long-Term Long-Term

36. Aerospace
Boeing 787 Assembly Operation
– 5,900 employees
– $ 4.6 billion annual economic impact
– One of three places in world
– First delivery 2nd Qtr 2012

37. The Port of Charleston
$44.8 billion economic impact
($7 billion in the Charleston region)
260,800 jobs
(50,000+ in the Charleston region)
Cargo Diversification Strategy
– 1.4 million TEUs
– BMW – RO/RO
– Breakbulk Cargo
New $500 million terminal

38. Panama Canal Game Changer
33.5m
(110’) Current Locks
Vessel Max: 4,800 TEUs
Draft
12.04 m (39.5’)
12.8m (42’)
Draft
15.2 m (50’) 55m (180’)
New Locks
18.3m (60’) Vessel Max : 12,600 TEUs
*Courtesy of Panama Canal Authority

39. MSC Northern Justice
8,440 TEU / 1090’ LOA
Charleston Harbor / May 12, 2010

40. Medical Industry
• 10 major medical centers
• 2,000 physicians
• Medical centers locally employ 20,000 +
• 26,000 total workers in healthcare services
industry
• $243 million R&D at MUSC for fiscal year
2011, marking the 15th consecutive year of
continuous growth

41. Joint Base Charleston
• $4.7 billion annual economic impact
• 29,000 active, civilian and contract
personnel
• Airlift, Sealift and Prepositioning
- One of top ranked military strategic ports
- One of 12 Joint Base initiatives
• SPAWAR Atlantic
- 2,600 employees
- 8,000 contract workers / 80+ defense contractors
- 6,000 visitors per year

42. Joint Base Charleston
• Navy Nuclear Training Command /
Training School
- 3,200 students per year
• Federal Law Enforcement Training Center
- Maritime Law Enforcement Training
- 12,500 annual graduates
• State Department
- 800 employees
- Global Financial Services, Passport Office

43. Key Challenges
• Workforce Skills/Education
• Infrastructure
• International Business
Location
• Managing Growth

44. Mary Graham, CCR, IOM, CCE
Sr. Vice President Business Advocacy
843.805.3043
mgraham@charlestonchamber.org
char l est on m r o cham
et ber of com er ce
m

45. Chris Fraser, CCIM
President
Grubb&Ellis|WRS

46. How are we doing?

47. Residential Inventory

48. Employment

49. Industrial Market

50. Industrial Vacancy
30%
25%
20%
15%
10%
5%
2008 2009 2010 2011
General Industrial R&D/Flex
WH/Dist Combined

51. Avg. Asking Rental Rates
$10
$8
$6
$4
$2
2008 2009 2010 2011
General Industrial R&D/Flex
WH/Dist Combined

53. DOD to Ask for Two New
BRAC Rounds, Sources Say
January 25, 2012
The Pentagon is planning to request
Congress authorize two new base
closure rounds to help the department
cut almost a half a trillion dollars in
spending over the next decade, Air
Force Times reported Wednesday.
Officials would request one BRAC round in 2013 and
the next in 2015, one source told the publication. The
department’s intention to conduct one or more BRAC
rounds is not unexpected given the current budget
environment. Many officials already believed the 2005
round failed to eliminate all of the department’s
excess capacity. Also, the spending cuts imposed on
the military are expected to result in the elimination
of tens of thousands of troops and cuts in aircraft
orders, further reducing the need for military
infrastructure.
Closures likely would
disproportionately fall on Army and
Air Force installations due to the
specific cuts planned, the Times
reported.

54. Panama Canal???

55. Norfolk Southern Intermodal Terminal at
Charlotte Douglas Airport planned…volume up!
2006 – 58% of N&S freight moved from West Coast
2011 – 61% of N&S freight moved from East Coast

56. Four extra feet of depth is equal to 8600 extra
tons of wheat!

57. Industrial Occupancy & TEU

58. Charleston
Source – Integra Realty Resources

59. Industrial 2012 Vacancy Forecast
30%
25%
20%
15%
10%
5%
2008 2009 2010 2011 2012-F
General Industrial R&D/Flex
WH/Dist Combined

60. Office Market

61. Office Vacancy
30%
25%
20%
15%
10%
5%
0%
2007 2008 2009 2010 2011
CBD Suburban Combined

62. Avg. Asking Rental Rates
$28
$26
$24
$22
$20
$18
2007 2008 2009 2010 2011
Class A Class B

63. 22 Relevant Office Properties
Changed Hands in 2011
3 (14% of total sales) Bank owned buildings
• average of $96/sf in partial shell condition
9 (41% of total sales) Bank owned condos
• average of $129/sf in completed condition
7 (32% of total sales) Market type buildings arms length transactions
• average of $182/sf
3 (14% of total sales) Market type condo transactions
• averaging $130/sf

64. Healthcare / Medical Sector

65. Institutional Movement
• Hospitals purchasing medical practices to control
referral sources & income stream
• Doctors selling for fixed income/security during uncertain
times especially regarding possible future cuts in reimbursements

66. Mt. Pleasant since 4/2010
• MUSC – Specialty Care 84,000 SF
 Dr.’s will relocate in the 2nd and 3rd quarter of 2012
 Vacancy will rise throughout Mt. Pleasant
• East Cooper Hospital
 250,000 SF
 130 Beds
• Roper Hospital
 200,000 SF
 85 Beds

67. Carnes Crossroads / Moncks Corner
Carnes Crossroads Plans Moncks Corner Plans
 146,000 SF 145,000 SF
 50 Beds  50 Beds
* Appeals from both parties need to be worked out in the courts before final approval.

68. Biomedical Research

69. Horizon Project
MUSC, SCRA and City of Charleston

70. Business Incubators Thrive!
•Over 61,000 SF
•Assisted over 100 Companies
•Notable
•PeopleMatter
•Avista Solutions

71. Charleston

72. Charleston

73. Office 2012 Vacancy Forecast
30%
25%
20%
15%
10%
5%
0%
2007 2008 2009 2010 2011 2012-F
CBD Suburban Combined

74. Retail Market

76. Retail Vacancy
10%
8%
6%
4%
2009 2010 2011
CBD Suburban Combined

77. Avg. Asking Rental Rates
$18
$16
$14
$12
2009 2010 2011

78. Value Based Trend

79. Charleston

80. Retail 2012 Vacancy Forecast
10%
8%
6%
4%
2009 2010 2011 2012-F
CBD Suburban Combined

81. Investment Market

86. What is the Outlook for 2012?

87. Thank you!