wspe seminar may 15 2009 puget sound market

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

Puget Sound Office MarketPuget Sound Office Market


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


3

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– Exposure to over 10,000 Investment Candidates– Unparalleled local Operator/ User relationships

Benefit: Knowledge of buyer assumptions /

issues

Benefit: Knowledge of buyer assumptions /

issues


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

Total SF Avg. Rental Rate Vacancy YTD

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 TOTAL 160,778,640 $27.97 10.5% (355, 101)

Source: CoStar 2009


Lease Comparables - Seattle Office

Seattle CBD 4Q08Comparable

1Q09Letter of Intent

Rent $33.00/FS $31.00/FS

Term 7 years 7 years

TI’s $50.00/SF $70.00/SF

Free Rent 3-4 months 4-9 months

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

-19% Effective Change


Lease Comparables - Bellevue Office

Bellevue CBD 4Q08Comparable

1Q09Letter of Intent

Rent $33.00/NNN $26.00/NNN

Term 60 months 60 months

TI’s $25.00/SF Turnkey($28.00/SF)

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

-22% Effective Change


Real Estate Services Presentation 7

Market Drivers - Seattle

SF Occupied Growth

1.6 Million

900,000

1.5 Million

600,000

1.7 Million



Market Drivers – Eastside

SF Occupied Growth

14 Million

1 Million

400,000

500,000

1.1 Million



Market Drivers – Other

SF Occupied Growth

14.8 Million*

200,000

1.2 Million

400,000

*Includes production facilities



Tenants in the Market – 100,000 SF +

Tenant SF Requirement Timing Current Location Current SF

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

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

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

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



Future Outlook

2009 – 2011 New Construction ProjectsSeattle 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


Investment Market – Office Sales over $20MM

2004 2005 2006 2007 2008

Number of Sales 30 43 54 131 7

Price / SF (Highest) $411 $459 $575 $531 $342

Cap Rate Average 8.08% 6.72% 6.32% 5.17% 6.17%


Current Sales Activity

BuildingMarket

Owner SizeAsking Price

$/SFCap Rate Comments

First & StewartSeattle

BlackRock 90,700$21,000,000

$232/SF8.3% Offers on in-place income @ 83%

occupancy

Seattle PISeattle

Legacy 100,000$14,200,000

$142/SF10.5% Five bids: $75-$150/SF.

65% near-term vacancy

Seattle TowerSeattle

Legacy 169,883$22,084,790

$130/SF8.7% -10.4%

Cap on in-place income with 23% vac. Cap on pro-forma with 10%

vac. Local interest only

Washington Mutual CenterSeattle

JP Morgan 1,000,000 N/APotential 250,000 leaseback

includes 250,000 SAM condos interest.


Current Sales Activity Cont.

BuildingMarket

Owner SizeAsking Price

$/SFCap Rate Comments

Lincoln PlazaSuburban Bellevue

Principal 148,000$29,600,000

$200/SF8.75%

Northcreek PlaceBothell

Schnitzer 98,831$17,000,000

$181/SF8.95% NOI; $1,550,000. 100% leased. 6

tenants, 85% of rollover is after 2013.

Canyon Park HeightsBothell

BlackRock 144,400$23,000,000

$159/SF8.6%

87% leased. Major tenants are Molina/Virgina Mason. True Class A.

Offers on in-place income @ 72% occupancy

Landmark East & WestRenton

BlackRock 273,900$34,237,500

$125/SF10.0%

98.2% leased, 10% cap or $125/SF. Cap rate on in-place income; term options

2010

wspe seminar may 15 2009 puget sound market

Business

buyer assumptions

owner sizeasking

sf occupied

market drivers

rate comments

lease comparables

place income

1700 7th avenue