WSPE Seminar May 15 2009 Puget Sound Market

Puget Sound Office Market

www.pacific-re.com | realestate@pacific-re.com
BELLEVUE: 225 108th Avenue NE, Suite 550, Bellevue, WA 98004 | (425) 974-4000
PORTLAND: 1 SW Columbia Street, Suite 850, Portland, OR 97258 | (503) 972-8000
SEATTLE: 1700 7th Avenue, Suite 2050, Seattle, WA 98101 | (206) 971-7000

About Pacific Real Estate Partners, Inc.

• Founded in 1993 by four veteran real estate professionals, PREP has
offices in Bellevue, Seattle and Portland

• The organization is currently staffed with a team of 50 professionals who
handle the leasing and sales of office, industrial and retail properties

• 2006-2008 Sales: $2.1 Billion

• 2006-2008 Leasing: 15.7 Million SF


Track Record:
Seattle’s Leading Investment and Leasing Team

• Most active Seattle-based Investment Sales Team
• 2006-2009 YTD 43 Seattle Transactions = $2.1 Billion
– Seattle transactions over $50 Million 8 transactions = $805 Million
– Every deal fosters stronger investor relationships and capital structure knowledge
– Large land sale experience
• Trips: visit 12 domestic and 3-5 international markets annually
– 85 most active buyers nationally
• Events
– PREP hosts region’s prominent annual Investment Dinner
– ONCOR Team International / Domestic investor events
• International / Domestic Capital Market Reach
– International ONCOR Team Benefit: Knowledge of
– Exposure to over 10,000 Investment Candidates
– Unparalleled local Operator/ User relationships
buyer assumptions /
issues

3

Market Statistics – YTD 2009, Class A, B & C

Avg. Rental YTD
Total SF Vacancy
Rate Absorption

Seattle CBD 65,710,036 $30.99 9.5% (556,812)

Eastside 42,928,749 $31.88 10.2% (50,269)

Northend 18,411,983 $23.73 12.2% 80,719

Southend 17,331,189 $21.45 13.0% 26,600

Tacoma 16,396,683 $21.45 10.5% 135,329

Puget Sound
160,778,640 $27.97 10.5% (355, 101)
TOTAL
Source: CoStar 2009


Lease Comparables - Seattle Office

4Q08 1Q09
Seattle CBD
Comparable Letter of Intent

Rent $33.00/FS $31.00/FS

Term 7 years 7 years

TI’s $50.00/SF $70.00/SF -19%
Effective
Free Rent 3-4 months 4-9 months Change
Annual Increases 3% annual $1.00 annual

Moving Allowance $0.00 $1.50-$3.00

Size 7,000 SF 7,000 SF

Industry All All


Lease Comparables - Bellevue Office

4Q08 1Q09
Bellevue CBD
Comparable Letter of Intent

Rent $33.00/NNN $26.00/NNN

Term 60 months 60 months

Turnkey -22%
TI’s $25.00/SF
($28.00/SF) Effective
Change
Free Rent None 5 months free

Annual Increases 3% 3%

Moving Allowance N/A N/A

Size 5,000 SF 16,000 SF

Industry Marketing Firm Technology Firm


Market Drivers - Seattle

SF Occupied Growth

1.6 Million

900,000

1.5 Million

600,000

1.7 Million

Real Estate Services Presentation
7

Market Drivers – Eastside

SF Occupied Growth

14 Million

1 Million

400,000

500,000

1.1 Million

8

Market Drivers – Other

SF Occupied Growth

14.8 Million*

200,000

1.2 Million

400,000

*Includes production facilities

9

Tenants in the Market – 100,000 SF +

SF
Tenant Timing Current Location Current SF
Requirement

2012 /
Frank Russell 350,000 Tacoma 400,000
2013

Washington Mutual
Perkins Coie 260,000 3/2011 300,000
Tower

EPA 175,000 7/2009 Park Place Building 175,000

Dendreon 150,000 7/2011 3005 First Avenue 125,000

1
0

Future Outlook

2009 – 2011 New Construction Projects
Seattle Market
Total Projects Total SF Pre-Leased

2009 Delivery 7 2,238,073 26,000 (5%)

2010 Delivery 1* 774,849 774,849 (100%)

2011 Delivery 1* 569,000 569,000 (100%)

TOTAL 9 3,581,922 1,369,849 (38%)

*Amazon space

1
1

Investment Market – Office Sales over $20MM

2004 2005 2006 2007 2008

Number of
30 43 54 131 7
Sales
Price / SF
$411 $459 $575 $531 $342
(Highest)
Cap Rate
8.08% 6.72% 6.32% 5.17% 6.17%
Average


Current Sales Activity

Building Asking Price Cap
Owner Size Comments
Market $/SF Rate

First & Stewart $21,000,000 Offers on in-place income @ 83%
BlackRock 90,700 8.3% occupancy
Seattle $232/SF

Seattle PI $14,200,000 Five bids: $75-$150/SF.
Legacy 100,000 10.5%
Seattle $142/SF 65% near-term vacancy

Seattle Tower $22,084,790 Cap on in-place income with 23%
8.7% -
Legacy 169,883 vac. Cap on pro-forma with 10%
Seattle $130/SF 10.4% vac. Local interest only

Washington Mutual Potential 250,000 leaseback
Center JP Morgan 1,000,000 N/A includes 250,000 SAM condos
Seattle interest.


Current Sales Activity Cont.

Building Asking Price Cap
Owner Size Comments
Market $/SF Rate
Lincoln Plaza
$29,600,000
Suburban Principal 148,000 8.75%
$200/SF
Bellevue

Northcreek Place $17,000,000 NOI; $1,550,000. 100% leased. 6
Schnitzer 98,831 8.95% tenants, 85% of rollover is after 2013.
Bothell $181/SF

Canyon Park 87% leased. Major tenants are
$23,000,000 Molina/Virgina Mason. True Class A.
Heights BlackRock 144,400 8.6%
$159/SF Offers on in-place income @ 72%
Bothell occupancy
Landmark East & 98.2% leased, 10% cap or $125/SF. Cap
$34,237,500
West BlackRock 273,900 10.0% rate on in-place income; term options
$125/SF 2010
Renton


WSPE Seminar May 15 2009 Puget Sound Market

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