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AUSTIN MARKET REPORT 1Q 2016

AQUILA KNOWS AUSTIN

KEEPING YOU INFORMED AQUILA Commercial is dedicated to

DISCLAIMER This report utilizes various

providing quality service to our clients. We

real estate and economic data sources. The

understand that real time market data helps

information contained herein is confidential

our clients make smart, informed real estate

and proprietary in nature. No warranties or

decisions. This report is produced and

guarantees are made as to the accuracy of

distributed quarterly. To receive our

the information contained herein.

updates, opt in at aquilacommercial.com.

VIEW FROM THE

EAGLE'S NEST The city of Austin is a funny place. In the thirty minutes it takes to drive the two miles through downtown, it is not out of the question to find cowboy boots walking alongside a pair of flip flops, a suit and tie talking politics with a tie-dye t-shirt, and a street guitarist singing a Willie Nelson song between bites of his street taco—all on the same avenue that lies in the shadows of the dozens of cranes dotting our city’s skyline these days. The most impressive part of such a street is that everyone there is

Clayton Schleimer

more than likely employed—hell, they might

Market Research Analyst

one hundred people moving to the city every

AQUILA Commercial

day, will Austin run out of jobs for all these

schleimer@aquilacommercial.com

even work at the same company. With over

newcomers? Over the last two decades, Austin has maintained one of the lowest unemployment

rates in the country and the lowest among the largest metropolitan areas in Texas, consistently outperforming Dallas-Fort Worth, Houston and San Antonio. Austin's widespread appeal has drawn a diverse pool of talent to the city’s job market, and our commercial real estate industry has undoubtedly been a great beneficiary. When looking at citywide performance over the past twenty years, the current cycle sees overall office vacancy rates at their lowest levels in fifteen years and rental rates at all-time highs, with new records being broken nearly every quarter. The recent strength of the market has begged the question of when the Austin market will peak.

VIEW FROM THE EAGLE'S NEST

Unemployment Rates - Seasonally Adjusted Source: Federal Reserve Bank of St. Louis

12%

10%

Austin-Round Rock

Dallas-Fort Worth-Arlington

Houston-The Woodlands-Sugar Land

San Antonio-New Braunfels

U.S.

Two early indications that a market may be facing a

large, long-term leases, anticipating rapid growth and

downturn are the overall vacancy rate and sublease

taking space defensively, but most of these spaces

activity. While both of these metrics increased this

were not filled with employees. After the tech bubble

quarter, they are not necessarily cause for concern

burst, giant blocks of space were left vacant and rental

upon further examination. While the overall vacancy

rates dropped by more than seven dollars per square

rate increased this quarter, absorption was still positive,

foot (27%). Less than a decade later, the credit crisis

signaling that the increased vacancy rate is largely

hit and unemployment rates rose. Landlords were

due to the delivery of new product. Furthermore,

building new product in a high vacancy market and in a period of low demand.

activity is strong among the newly

delivered

buildings,

indicating that demand is still healthy and

for

well-conceived

well-located

projects.

For a deep-dive into Austin's sublease activity, please refer to this quarter’s special report located on page 7.

“While we’ve seen a slight uptick in sublease space and direct vacancy, activity across all sectors appears to be healthy, and we don’t foresee any major, long-term spikes in vacancy, although we will remain vigilant as the current cycle has seen sustained, robust growth for a very long time.” – Bart Matheney, AQUILA Principal

The current cycle stands apart

Texas

This time around, it seems as though tenants, landlords and lenders have taken some lessons away from previous cycles. Unemployment rates are low, leasing activity and rental rates are up, and new office product in the pipeline is mostly well-justified. All signs point to a much more mature

from those in recent history. Although rental rates are

and healthy Austin office market – one where the

continuously reaching new heights, they are rising at

hippies and cowboys alike can carry on in harmony,

a much more deliberate rate than the previous two

knowing that the cranes overhead will continue to

cycles, and they are rising for much healthier reasons.

provide them a desirable place to live, work and eat

In the early 2000’s, tech companies were signing

tacos. At least for now.

VIEW FROM THE EAGLE'S NEST

20 Year Citywide Performance

$45

27%

$40

24%

$35

21%

$30

18%

$25

15%

$20

12%

$15

$10

Class A Full Service Rental Rate

Vacancy Rate

30%

Direct & Sublease Vacancy Rate

Citywide Construction vs Vacancy Rate 5,000,000

30%

4,500,000

27%

4,000,000

24%

3,500,000

21%

3,000,000

18%

2,500,000

15%

2,000,000

12%

1,500,000

1,000,000

500,000

SF Under Construction Pre-Leased

SF Under Construction Available

Vacancy Rate

Source: CBRE Statistics

SF Under Construction

Rental Rate

Source: CBRE Statistics

$50

Overall Vacancy Rate

Research Park Plaza IV

SUBLEASE SURGE: INSIDE AUSTIN'S GROWING SUBLEASE MARKET A hot topic in the commercial real estate world recently has been the topic of sublease space. As the U.S. market comes off a historic year in 2015, analysts around the country are pointing to subleases as a leading indicator of what might be expected in the future. Often, an increase in sublease availability can be indicative of some other macro-level factor1. For example, in 2015, plummeting oil prices caused Houston’s sublease availability to grow to nearly 15% of its total available office space2, and San Francisco is seeing its highest sublease availabilities since 2010, due to slowing venture capital investments and overall hiring3. Given recent interest in the topic, AQUILA decided to take a deeper dive into the data to understand the composition of Austin’s subleases and what effect these subleases may have on our overall market. In examining a set of 200+ class A & B office buildings totaling 29,666,500 sf of rentable area in Austin’s three major submarkets (AQUILA’s “competitive set”), there is 728,849 square feet available for sublease this quarter— the highest amount since 2010. This accounts for 22.81% of total available space, but only 2.34% of total rentable area. Absorption in these buildings is consistently high, indicating that, while some tenants are putting sublease space on the market, there are more tenants ready to take those availabilities off the market.

SPECIAL REPORT Figure 1: Competitive Set Sublease Availability as % of NRA vs Net Absorption Figure 1: Competitive Set Sublease Availability as % of NRA vs Net Absorption Source: AQUILA Market Research

1,500,000

12.5%

1,250,000

10.0%

1,000,000

Net Absorption

Sublease Availability as % of Net Rentable Area

2016 Q1

2015 Q4

2015 Q3

2015 Q2

2015 Q1

2014 Q4

2014 Q3

2014 Q2

2014 Q1

2013 Q4

2013 Q3

2013 Q2

2013 Q1

2012 Q4

2012 Q3

2012 Q2

2012 Q1

2011 Q4

2011 Q3

2011 Q2

2011 Q1

2010 Q4

2010 Q3

2010 Q2

2010 Q1

2009 Q4

2009 Q3

2009 Q2

2009 Q1

2008 Q4

-500,000 2008 Q3

-5.0% 2008 Q2

-250,000

2008 Q1

-2.5%

2007 Q4

2007 Q3

0.0%

2007 Q2

250,000

2007 Q1

2.5%

2006 Q4

500,000

2006 Q3

5.0%

2006 Q2

750,000

2006 Q1

7.5%

Net Absorption (SF)

Source: AQUILA Market Research

15.0%

Average Sublease Availability as % of Net Rentable Area

Figure 2: Competitive Set Market Size and Availability Source: AQUILA Market Figure 2: Competitive Set Market SizeResearch and Availability Source: AQUILA Market Research

35,000,000

30,000,000

20,000,000

15,000,000

10,000,000

5,000,000

Sublease Available SF

Direct Available SF

2016 Q1

2015 Q4

2015 Q3

2015 Q2

2015 Q1

2014 Q4

2014 Q3

2014 Q2

2014 Q1

2013 Q4

2013 Q3

2013 Q2

2013 Q1

2012 Q4

2012 Q3

2012 Q2

2012 Q1

2011 Q4

2011 Q3

2011 Q2

2011 Q1

2010 Q4

2010 Q3

2010 Q2

2010 Q1

2009 Q4

2009 Q3

2009 Q2

2009 Q1

2008 Q4

2008 Q3

2008 Q2

2008 Q1

2007 Q4

2007 Q3

2007 Q2

2007 Q1

2006 Q4

2006 Q3

2006 Q2

0 2006 Q1

Square Feet

25,000,000

Occupied SF

SPECIAL REPORT

THE NITTY-GRITTY: AQUILA analyzed over one hundred individual subleases active as of January 2016 to get a better idea of what is happening on a more granular level with each availability. We sought to understand if there is a specific industry unloading the majority of space on the market (i.e. Houston or San Francisco) as well as determine how increased sublease availability competes with directly available space. When analyzing the individual subleases, we first narrowed our focus to availabilities in competitive set buildings. Next, we broke them down by size ranges, determining that subleases greater than ten thousand square feet would have the most impact on the market, and then proceeded to break those down by years remaining on their term and the industry of the sublessor. Out of the 115 subleases analyzed, 77 were in the competitive set buildings, 23 of those 77 were larger than ten thousand square feet (78% of total sf), and only nine of those 23 had more than three years remaining on their term, totaling 275,577 sf. A visual breakdown of these subleases by total square feet can be seen in Figure 3.

Subleases by Size

All Subleases

(Competitive SubleasesSet byBuildings) Size

All Subleases

Non-Competitive Set Building

Competitive Set Building

Sublessors by Industry (Greater than 3 years) Sublessors by Industry

Technology

Financial Services

Other

Business Services

Technology

Financial Services

Other

Business Services

Less than 10,000 SF Less than 10,000 SF

Greater than 10,000 SF

Subleases by Term Remaining (Greater 10,000 SF) Subleases bythan Term Remaining

Less than 3 Years

Less than 3 years

Greater than 3 Years

Greater than 3 years

SPECIAL REPORT

NOT ALL SUBLEASES ARE CREATED EQUAL Even though there has been an increase in the supply of available space for sublease, this does not mean that the universe of Austin sublessors are all putting their space on the market for negative reasons: downsizing; bankruptcy; moving to a different market; etc. Many of the smaller, shorter-term subleases (those with less than three years of remaining term) are available simply due to tenants signing new leases elsewhere near the end of their current leases. In fact, several of the larger, longer-term subleases are available due to a positive event within the company, such as outgrowing their current space. Some of the notable larger subleases are explained below:

•

Charles Schwab (SCHW) has the largest competitive long-term sublease available: 96,334 sf at Research Park Plaza IV with a term through the end of March 2022. This large block of two full floors is not enough space for the financial services company’s expanding IT division, so it will be moving within the northwest submarket to its new campus near the Domain.

•

Apple (AAPL) is listing its old 24,478 sf space at CityView Centre as the technology giant continues to grow and consolidate its presence in Austin to accommodate up to 7,000 employees. Apple currently occupies space in the northwest submarket at Riata Crossing and are waiting tenant finishouts at Capital Ridge in the Southwest submarket, where it signed a 215,000 sf lease last spring.

•

Main Street Hub took 47,000 sf at One Congress Plaza in October 2015, leading the company to sublease its four floors at Perry Brooks Tower with a term through February 2019. Two floors are already taken, with two remaining available, totaling 11,200 sf. The social media marketing company’s explosive growth resulted in it becoming one of the largest tech tenants in downtown Austin.

•

Outbound Engine—another email and social media marketing company—is experiencing similar growth. It is currently marketing 11,199 sf for sublease at Lavaca Plaza after its recent expansion into 40,000 sf at San Jacinto Center. Its Lavaca space is available through April 2020.

•

EZ Corp (EZPW) currently has the longest available term remaining on its sublease offering. The pawn shop chain eliminated its payday-lending service in August of 20154, less than a year after it signed a 140,000 sf lease in Rollingwood Center, unloading 2 full floors totaling about 65,000 sf on to the market with a term through August 2028. These large blocks of space are quickly getting absorbed, however, as Data Foundry signed for the second floor in February 2016, and another transaction is in the works to take part of the third floor as of March 2016.

•

Dropbox is marketing the third floor at 501 Congress: 20,396 sf through August 2019. The San Francisco tech startup recently had its valuation cut from $10 billion to $2 billion as investors are skeptical about its growth potential in a competitive market5.

•

Parsley Energy (PE) will be listing the 21st floor in Colorado Tower for sublease as it feels the effects of the recent drop in oil prices, less than a year after they relocated their headquarters from Midland, Texas to Austin. This 24,148 sf sublease—the largest downtown—accounts for less than twenty percent of their 135,000 sf footprint in the building and is only marketed as an 18-month term with a target commencement date of July 2016.

Capital Ridge by Miguel Segura, courtesy of Riverside Resources

WHAT DOES THIS MEAN FOR YOU? Landlords: With an increased supply of product on the market, keep in mind that you might have more competition for your space. Because underlying rental rates for subleases could have been locked in years ago, their rates could be significantly lower than the direct market rates in comparable buildings. Also, with higher direct rental rates, tenants could be looking for shorter-term deals in hope of a slow-down in the market. It is also important to note that, despite the increasing supply of sublease availabilities, overall absorption is still healthy, signifying that, while tenants might be moving out of their spaces early, there are still plenty more looking for new office space. The sublease market should not be ignored, and we will certainly be keeping an eye on it to see how it affects the overall market in coming quarters.

Tenants: If you are looking for a smaller space that is less than 10,000 sf, you would be well-served to check out the sublease market â€“ particularly if you are looking for lower rental rates. Also, because it is currently a landlordâ€™s market, owners are pushing longer terms on new deals, so a sublease would allow for extra flexibility. However, proceed with caution, because after the sublease term is up, you will be brought up to market rate, likely with no options or rights to extend your lease.

Weber, J. (2016, February 12). Availability of Sublease Space as an Economic Indicator. Retrieved from https://www.linkedin.com/pulse/availability-sublease-space-economicindicator-jesse-weber

Henry, M. (2016, March 11). Just how bad is Houston's sublease market? Retrieved from http://www.bizjournals.com/houston/news/2016/03/11/just-how-bad-is-houstonssublease-market.html

Vekshin, A. (2016, March 24). Tech Slowdown Seen in San Francisco's Commercial-Property Market. Retrieved from http://www.bloomberg.com/news/articles/2016-03-24/ tech-slowdown-seen-in-san-francisco-s-commercial-property-market

Theis, M. (2015, August 10). After layoffs, EZCorp cuts back on HQ space; Rollingwood subleases available. Retrieved from http://www.bizjournals.com/austin/blog/realestate/2015/08/after-layoffs-ezcorp-cuts-back-on-hq-space.html

Manjoo, F. (2016, February 03). Dropbox May Not Be LeBron James, but It Is Still in the Game. Retrieved from http://www.nytimes.com/2016/02/04/technology/dropboxmay-not-be-lebron-james-but-it-is-still-in-the-game.html?em_pos=large

AUSTIN CITYWIDE 1Q UPDATE 225,653 SF Net Absorption

10.14%

Direct & Sublease Vacancy Rate

$37.08

Avg. Class A Full Service Rental Rate

Conference room in University Park; By Third Eye Photography

SNAPSHOT:

CAPITAL MARKETS MAJOR SALES TRANSACTIONS 900

SOLD CONGRESS Market

BRIARCROFT

SOLD BUILDING Market

CBD

Market

North B

Class

Size (SF)

64,644

Size (SF)

63,825

Size (SF)

60,485

Buyer

Cielo

Buyer

Valor Capital

Buyer

Valor Capital

Seller

900 Congress I, Ltd.

Seller

Oak Point

Seller

Oak Point

Price

N/A

Price

$10,200,000

Price

$9,700,000

Price/SF

N/A

Price/SF

$160

Price/SF

$160

PARMER BUSINESS

SOLD PARK

900 Congress

THE CONTINENTAL

SOLD BUILDING

UNIVERSITY

SOLD PARK

Market

Central

Class

Size (SF)

257,468

Size (SF)

206,657

Buyer

US Real Estate Investment Fund, LLC

Buyer

Lionstone

Seller

Parmer Business Park, LLC; RREEF America, LLC

Seller

Spear Street Capital

Price

$55,550,000

Price

N/A

Price/SF

$215.75

Price/SF

N/A

MAJOR LEASES SIGNED Leases signed this quarter over 20,000 sf:

NORTHWEST • Navitus Health Solutions signed a 25,937 sf lease at the recently delivered Research Park Plaza V building. • CalAtlantic Homes took 22,285 sf at Paloma Ridge Bldg B. They are the first tenant to sign a deal at Paloma Ridge, a project that delivered in 2015.

• Oracle renewed its 44,712 sf lease at Stonebridge Plaza II while its new campus is being built just southeast of downtown.

• TriNet signed a new lease at Riata Corporate Park Bldg 4 for 33,557 sf. • Accruent is relocating and consolidating its Austin headquarters into 104,448 sf at Domain 4. The real estate software firm will be moving from its offices at Braker Pointe II and Quarry Oaks II.

SOUTHWEST

• Data Foundry signed a sublease for 37,883 sf of EZ Corp’s space at Rollingwood Center. • BPL Plasma signed a new lease for 25,216 sf at The Terrace 7.

• Q2ebanking, who is located at Aspen Lake Two, signed for 21,262 sf at The Park on Barton Creek Bldg 2, which will be their first office in Southwest Austin.

OFFICE SUBMARKET MAP:MAP: OFFICE SUBMARKET

Round Round Rock Rock Cedar Park

Cedar Park

CBD

Pﬂugerville Pﬂugerville

Lake Travis

North

McNeil

Arboretum Arboretum

Central

North

McNeil

Lake Travis

Central

Northwest

Domain

Southwest

Domain

Southwest

South/Southeast

East/Northeast

East/Northeast Round Rock Round Rock

Tarrytown West Lake Hills West Lake Hills

Tarrytown

Austin Austin

Sunset Valley

ABIA

Buda

AUSTIN OFFICE

DEVELOPMENT PIPELINE This timeline shows office projects over 30,000 SF that have either broken ground or will be breaking ground soon.





2016

2017

Eastside Village

94,500 SF

East

5th + Colorado

179,000 SF

CBD

La Frontera Plaza

97,941 SF

Round Rock

Braker Pointe III*

195,230 SF

Northwest

Pioneer Bank Building

46,000 SF

Central

The Diamond Building at Mueller

35,015 SF

East

*Already existing-coming to market 2Q 2016

290,983

Northwest

489,404 SF

CBD

801 Barton Springs

Domain 8

500 W 2nd

90,500

South

Shoal Creek Walk

218,432 SF

CBD

îƒĄ PLANNED Future Developments

Future Developments

405 Colorado

TBD SF

CBD

Riata Crossing Bldg 6

49,716 SF

Northwest

604 W 6th Street

31,035 SF

CBD

Frontera Ridge

400,000 SF

Round Rock

Austin American Statesman

TBD SF

CBD

St. Elmo

225,000 SF

South

Novare/Post Office

TBD SF

CBD

Galleria Oaks I & II

147,928 SF

Southwest

Rainey Gateway

355,000 SF

CBD

Lantana Ridge I & II

175,000 SF

Southwest

Third + Shoal

338,279 SF

CBD

Overwatch Campus Phase II

123,525 SF

Southwest

Waller Creek Center

325,000 SF

CBD

Regency Park

90,000 SF

Southwest

310 Comal

37,500 SF

East

Rollingwood Center III

107,000 SF

Southwest

Cityline at MLK

150,000 SF

East

Southwest

2,000,000 SF

East

The Backyard Buildings B, J, & H

171,450 SF

Mueller Market District Plaza Saltillo

125,000 SF

East

The Lakes at TechRidge Buildings A & B

97,600 SF

East

The Park @ Mueller

116,000 SF

East

10721 Domain Dr.

308,000 SF

Northwest

Amber Oaks Phase I

90,300 SF

Northwest

Amber Oaks Phase II

90,300 SF

Northwest

Amber Oaks Phase III

45,000 SF

Northwest

Aspen Lake Three

128,700 SF

Northwest

Four Points Centre Building 3

250,000 SF

Northwest

Four Points Centre Building 4

80,000 SF

Northwest

Paloma Ridge C

112,500 SF

Northwest

Research Park Bldg 6

117,314 SF

Northwest

Riata Corporate Park Bldg 1

65,000 SF

Northwest

The Terrace 3

203,130 SF

Southwest

The Terrace 4

285,663 SF

Southwest

The Terrace 5

218,809 SF

Southwest

CENTRAL BUSINESS DISTRICT 1Q UPDATE The streets of downtown Austin are more crowded than ever as CBD vacancy rates fell even further this quarter to a staggeringly low 5.94%, down from an already-low 7.07% last quarter. The CBD also accounted for nearly half of the office space absorbed this quarter: 109,480 sf out of 225,653 sf citywide, indicating that the CBD is the best performing of the three primary submarkets in Austin.

109,480 SF Net Absorption

5.94%

Direct & Sublease Vacancy Rate

$47.52

Avg. Class A Full Service Rental Rate

View from 4th Floor of 900 Congress; Photo by: Scott Mason Photography

CBD UPDATE This increased occupancy comes in the

$43.83. The last time the CBD experienced

wake of significantly higher full service

a year-over-year increase in rental rates this large was in early 2008, when rates were

asking rates as 2016 property valuations are now accounted for in all of the buildings’ operating expenses. The high demand for quality office space downtown, coupled

$4.13 higher than their 2007 Q1 value of $31.53. Today’s record high asking rates led to three downtown office properties

with significantly higher operating expenses,

breaking the $600.00/sf1 valuation mark:

brought the average Class A full service asking rate to $47.52–up nearly four dollars from last year’s first quarter value of

501 Congress ($651.86/sf); Perry Brooks Tower ($646.14/sf); and Frost Bank Tower ($626.36/sf).

When focusing in on AQUILA’s CBD competitive set (this list of Class A buildings

the delivery date, however, was delayed to Q2 2016. The building is now 82% pre-

located in, or near, the core of downtown can be found on page 49), existing vacancy

leased after two major leases were signed

dropped to 5.26%. It’s worth noting that a

this quarter by co-working space Industrious and local fashion designer Sherri Hill. The

significant portion of this available space comes from sublease availabilities, which

other two major CBD office projects under development and set to deliver in 2017,

account for over 100,000 sf of the 239,406

500 West 2nd Street and Shoal Creek Walk,

sf available. (For a more in-depth analysis of Austin’s recent sublease activity, refer to this

reached preleasing rates of 43% and 61% respectively. With this strong preleasing

quarter’s special report on page 7.)

activity and controlled development pipeline, downtown Austin appears to be bursting at the seams—which is undoubtedly impacting the rest of the market.

Lincoln Property Group’s downtown project, 5th + Colorado, was set to deliver this quarter and add 179,000 sf to our competitive set;

Property values based upon Travis County Appraisal District’s 2016 assessed values. Image: Bicycles at Park Plaza; By: Scott Mason Photography 1

CBD

BY THE NUMBERS CBD SUBMARKET Quarter

Net Rentable Area

Direct Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

2014 Q2

9,084,414

1,021,461

(13,728)

11.96%

$40.88

2014 Q3

9,252,285

1,041,014

153,098

11.90%

$41.39

2014 Q4

9,252,285

802,517

227,661

9.44%

$43.13

2015 Q1

9,768,770

1,135,835

139,236

12.81%

$43.83

2015 Q2

9,809,755

870,240

291,638

10.20%

$41.90

2015 Q3

9,809,755

672,222

232,375

7.83%

$44.17

2015 Q4

9,732,884

631,228

3,066

7.07%

$43.64

2016 Q1

9,732,884

565,112

109,480

5.94%

*Absorption includes sublease space

NET ABSORPTION 15%

12%

900

600

300

2014 Q2

2014 Q3

Direct Available SF

2014 Q4

2015 Q1

2015 Q2

Sublease Available SF

2015 Q3

2015 Q4

2016 Q1

Absorption (Thousands of SF)

1,200

Vacancy Rate

Availability (Thousands of SF)

1,500

Direct & Sublease Vacancy Rate

24%

$47

21%

$46

18%

$45

15%

$44

12%

$43

$42

$41

2014 Q3

2014 Q4

2015 Q1

Average Class A Full Service Rental Rate

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Vacancy Rate

Rental Rate

$48

2014 Q2

95%

250

93%

200

91%

150

89%

100

87%

85%

83%

(50)

VACANCY RATES VS. RENTAL RATES

$40

300

Direct & Sublease Vacancy Rate

2014 Q2

2014 Q3

Net Absorption*

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

81%

Direct & Sublease Occupancy Rate

Occupancy Rate

AVAILABLE SF VS. VACANCY RATE

$47.52 Numbers based on CBRE statistics.

AUSTIN CBD OFFICE RENTAL RATE PROJECTIONS $60 $55

3% Job Growth

$50

Full Service Rental Rates

1% Job Growth $45 $40 $35 $30 $25 $20 $15 2004

2005

2006

2007

2008

2009

Historic Rental Rate

2010

2011

AQUILA Model

2012

2013

3% Job Growth

2014

2015

2016

2017

2018

1% Job Growth

AUSTIN CBD OFFICE VACANCY RATE PROJECTIONS Shoal Creek Walk

35%

11.0

500 W. 2nd

25%

Total Vacancy Rate

10.5

5th + Colorado Northshore

10.0

20%

9.5

15%

9.0

10%

8.5

8.0

0% 2004

2005

2006

2007 Market Size

2008

2009

2010

Historic Vacancy Rate

2011

2012

AQUILA Model

2013

2014

3% Job Growth

2015

2016

2017

Market Size (Millions of SF)

30%

7.5

1% Job Growth

CBD DEVELOPMENT & LARGE AVAILABILITY

LARGE BLOCKS OF CONTIGUOUS AVAILABILITY Building

One Congress Plaza Perry Brooks Tower

Available SF

Max. Contiguous

44,055 SF

31,037 SF

1,409 (direct) + 28,000 SF (sublease)

22,400 SF (sublease)

20,000 SF + of available space

OFFICE PROJECTS UNDER CONSTRUCTION Building

Est. Delivery

% Preleased

Total SF

500 W 2nd

43%

489,404 SF

1Q 2017

5th + Colorado

28%

179,000 SF

1Q 2016

NorthShore 801 Barton Springs Shoal Creek Walk

100%

23,592 SF

1Q 2016

90,500 SF

2Q 2017

61%

218,432 SF

3Q 2017

HOTEL/RESIDENTIAL UNDER CONSTRUCTION Units/Rooms

5th & West

Units/Rooms

Est. Delivery

154 Units

4Q 2017

422 Rooms

3Q 2017

1,066 Rooms

3Q 2017

Hotel Indigo/Holiday Inn Express

300 Rooms

2Q 2016

Hyatt House Hotel

190 Rooms

4Q 2016

436 Units

1Q 2017

The Austin Proper

250 Rooms, 120 Units

2Q 2017

The Independent

370 Units

3Q 2018

Aloft & Element Fairmont

NorthShore

FUTURE/PLANNED DEVELOPMENTS Units/Rooms

405 Colorado 604 W 6th Street

Size/Units

Use

TBD

Office

31,035 SF

Office

Austin American Statesman

TBD

Office

Novare/Post Office

TBD

Office

Rainey Gateway

355,000 SF

Office

Third + Shoal

338,279 SF

Office

Waller Creek Center

325,000 SF

Office

70 Rainey

164 Units

Multifamily

TBD

Multifamily

Rise - 8th & Nueces

196 Units

Multifamily

Hotel Zaza/Gables

226 Units, 160 Rooms

Hotel/Multifamily

Green Water Residential Tower

AVAILABILITY SUMMARY

CBD CLASS A SUBLEASE SPACE AVAILABLE SPACE

32 31 30

31,051 SF

32,603 SF

1,414 SF

32,603 SF

33,931 SF

31,822 SF

2,960 SF

31,530 SF

2,018 SF

23,798 SF

6,914 SF

4,965 SF

5,487 SF

4,118 SF5,651 SF

6,593 SF

4,669 SF

6,432 SF2,358 SF

3,545 SF

7,887 SF

2,195 SF

8,860 SF

20 19

15 5,855 SF

2,809 SF

2,893 SF

20 1,421 SF

942 SF

1,889 SF

7,254 SF3,722 SF

1,648 SF

17,436 SF

4,214 SF

20,396 SF

18,927 SF

19,087 SF

2,985 SF

782 SF

100 Congress 100 Congress Ave.

300 W 6th 300 W 6th St.

301 Congress 301 Congress Ave.

400 W 15th 400 W 15th St.

500 W 2nd 500 W 2nd St.

501 Congress 501 Congress Ave.

515 Congress 515 Congress Ave.

5th + Colorado 201 W 5th St.

600 Congress 600 Congress Ave.

411,536 SF 22 Floors 95% Leased $36.50 - $37.00 NNN $20.84 Op/Ex $57.34 - $57.84 Gross

454,225 SF 23 Floors 99% Leased $36.00 NNN $21.75 Op/Ex $57.75 Gross

428,419 SF 22 Floors 96% Leased $34.00 - $35.00 NNN $19.55 Op/Ex $53.55 - $54.55 Gross

281,196 SF 17 Floors 97% Leased $26.00 NNN $15.92 Op/Ex $41.92 Gross

500,436 SF 29 Floors 43% Pre-Leased $36.50 NNN $15.50 Op/Ex $52.00 Gross

122,551 SF 5 Floors 85% Leased $20.00 - $35.00 NNN 20.93 Op/Ex $40.93 - $55.93 Gross

258,176 SF 26 Floors 98% Leased $33.00 NNN $18.05 Op/Ex $51.05 Gross

179,000 SF 18 Floors 82% Pre-Leased $33.00 - $40.00 NNN $15.20 Op/Ex $48.20 - $55.20 Gross

503,951 SF 32 Floors 97% Leased $34.00 NNN $18.75 Op/Ex $52.75 Gross

Availability Summary

33 32 31 30

16,711 SF

18 17

21,218 SF

1,761 SF

21,218 SF

23,142 SF

7,322 SF

10 9

2,110 SF

7 6

12,648 SF 2,522 SF

5,418 SF

9 1,993 SF

7,895 SF

2,118 SF

11,216 SF

963 SF 3,520 SF

1,716 SF

2 10,821 SF

26 4,471

4,428 SF

6,072 SF

816 Congress 816 Congress Ave.

Austin Centre 701 Brazos St.

Chase Tower 221 W 6th St.

Colorado Tower 303 Colorado St.

Frost Bank Tower 401 Congress Ave.

IBC Bank Plaza 500 W 5th St.

One Congress Plaza 111 Congress Ave.

San Jacinto Center 98 San Jacinto Blvd.

Shoal Creek Walk 835 W 6th St.

434,081 SF 20 Floors 97% Leased $27.00 - $32.00 NNN $17.59 Op/Ex $44.59 - $49.59 Gross

326,335 SF 16 Floors 93% Leased $28.00 NNN $17.65 Op/Ex $45.65 Gross

389,503 SF 21 Floors 95% Leased $32.00 NNN $19.84 Op/Ex $51.84 Gross

373,334 SF 30 Floors 100% Leased $34.00 NNN $16.83 Op/Ex $50.83 Gross

535,078 SF 33 Floors 100% Leased $38.00 - $40.00 NNN $21.75 Op/Ex $59.75 - $61.75 Gross

194,749 SF 13 Floors 100% Leased $33.00 NNN $21.0 Op/Ex $54.00 Gross

518,385 SF 30 Floors 89% Leased $32.00 - $40.00 NNN $17.77 Op/Ex $49.77 - $57.77 Gross

406,279 SF 21 Floors 100% Leased $36.00 NNN $18.75 Op/Ex $54.75 Gross

218,432 SF 14 Floors 61% Pre-Leased $31.00 - $35.00 NNN $16.50 Op/Ex $47.50 - $51.50 Gross

Park Forest Building B; Photo by Scott Mason Photography

NORTHWEST SUBMARKET 1Q UPDATE The Northwest submarket was the only submarket to see increased vacancy rates and decreased asking rental rates; however, the Northwest submarket still holds great opportunity for both landlords and tenants alike depending on where within the market you look. New product has been delivered in five of the last eight quarters, making it appear as though supply is catching up with demand in this area.

64,911 SF Net Absorption

11.17%

Direct & Sublease Vacancy Rate

$33.77

Avg. Class A Full Service Rental Rate

NORTHWEST

SUBMARKET UPDATE This quarter AQUILAâ€™s dataset grew by over 1.3

to fill the remainder of the building. Domain 5 is

million square feet in the Northwest submarket. The

completely leased by Trend Micro, keeping in line with the tech-heavy tenant mix in northwest Aus-

bulk of this space comes from IBMâ€™s Broadmoor Campus. Late last year, IBM sold its 50% interest in the 1.1 million sf site to Brandywine Realty Trust, who is now leasing the available space. The majority of the campus is still occupied by IBM, with only 13% (144,818 sf) available for lease now. Two other projects also delivered this quarter: Domain 1 (124,571 sf) and Domain 5 (78,987 sf). Domain 1 is currently vacant, but has one lease signed and several other active deals in the works

tin. All three of these buildings are within the Domain/Arboretum Micromarket, bringing its overall vacancy rate to its highest level since Q4 2014. However, with several deals in negotiations in The Domain and surrounding area, we project that this vacancy rate jump is not indicative of future micromarket performance. The newly available Broadmoor campus and Domain buildings paint an interesting picture for the future of Northwest Austin. As demand and rental rates downtown continue to grow, employers are

Northwest Micromarkets Round Rock Cedar Park

FAR NORTHWEST/ ROUND ROCK PďŹ‚ugerville

Lake Travis

McNeil

Arboretum

Domain

ARBORETUM

SHEPHERD MOUNTAIN

West Lake Hills

Tarrytown

Austin

looking for areas with comparable amenities and several dollars cheaper per square foot than the Dolower rental rates. Brandywine plans to redevelop main. This is even evident on an individual campus the IBM campus into a mixed-use development, level, as projects like 7700 Parmer continuously hoping to ride the momentum at the Domain. outperform those closer to the core of Austin due to Charles Schwab will its plethora of builtalso be moving closer in amenities. As to the action in the Austinâ€™s population Domain as the comcontinues to grow, AS DEMAND AND RENTAL RATES pany puts its current relying on traditionDOWNTOWN CONTINUE TO GROW, space at Research al modes of transEMPLOYERS ARE LOOKING FOR AREAS Park Plaza IV on the portation to move WITH COMPARABLE AMENITIES AND sublease market this around our city will LOWER RENTAL RATES. quarter and begins only become more its transition to its new challenging. Accampus. Other projcordingly, we exects in the Northwest, such as Paloma Ridge and pect to see tenants continue to demonstrate a prefResearch Park Plaza, are experiencing more diffi- erential bias toward sites and buildings that afford culty filling their space, despite offering rental rates the live/work/play lifestyle for their employees. Left page photo: 7700 Parmer has many on-site amenities, including a state-of-the-art fitness center. Photo by Third Eye Photography

NORTHWEST

BY THE NUMBERS NORTHWEST OVERALL SUBMARKET PERFORMANCE Net Rentable Area

Direct Available SF

Direct & Sublease Vacancy Rate

Net Absorption*

2014 Q2

16,697,337

1,493,813

(12,658)

10.02%

$29.89

2014 Q3

16,697,337

1,566,544

(103,939)

10.64%

$30.65

2014 Q4

16,817,337

1,540,054

137,486

10.46%

$30.83

2015 Q1

17,154,310

1,879,975

98,887

11.65%

$32.06

2015 Q2

17,269,310

1,819,734

116,457

11.56%

$32.74

2015 Q3

17,269,310

1,665,124

276,295

9.96%

$33.26

2015 Q4

17,535,625

1,283,335

410,012

8.99%

$34.14

2016 Q1

18,039,828

1,868,483

64,911

11.17%

$33.77

*Absorption includes sublease space

Numbers based on CBRE statistics.

2,500

15%

2,000

12%

1,500

1,000

500

2014 Q2

2014 Q3

Direct Available SF

2014 Q4

2015 Q1

2015 Q2

2015 Q3

Sublease Available SF

2015 Q4

2016 Q1

Direct & Sublease Vacancy Rate

16%

$34

13%

$32

10%

$30

2014 Q3

2014 Q4

2015 Q1

Average Class A Full Service Rental Rate

2015 Q2

2015 Q3

2015 Q4

2016 Q1

95%

450

93%

300

91%

150

89%

87%

Direct & Sublease Vacancy Rate

2014 Q2

2014 Q3

Net Absorption*

Vacancy Rate

Rental Rate

$36

2014 Q2

600

(150)

VACANCY RATES VS. RENTAL RATES

$28

Absorption (Thousands of SF)

NET ABSORPTION

Vacancy Rate

Availability (Thousands of SF)

AVAILABLE SF VS. VACANCY RATE

Average Class A Full Service Rental Rate

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

85%

Direct & Sublease Occupancy Rate

Occupancy Rate

Quarter

NORTHWEST SUBMARKET OFFICE RENTAL RATE PROJECTIONS $40

3% Job Growth

Full Service Rental Rates

$35

1% Job Growth $30

$25

$20

$15 2004

2005

2006

2007

2008

2009

Historic Rental Rate

2010

2011

AQUILA Model

2012

2013

3% Job Growth

2014

2015

2016

2017

2018

1% Job Growth

NORTHWEST SUBMARKET OFFICE VACANCY RATE PROJECTIONS 30%

Braker Pointe III

Domain 8

Total Vacancy Rate

20%

1% Job Growth 14

15%

3% Job Growth

10%

0% 2004

Market Size (Millions of SF)

25%

2005

2006

2007 Market Size

2008

2009

2010

Historic Vacancy Rate

2011

2012

AQUILA Model

2013

2014

3% Job Growth

2015

2016

2017

1% Job Growth

NORTHWEST AUSTIN LARGE OFFICE AVAILABILITY 20,000 SF + of available space

Building

7700 Parmer - Bldg B

Direct Available SF

Sublease Available SF

Total Available SF

31,500

Direct Available SF

Sublease Available SF

Total Available SF

Research Park Number Five

43,172

Building

7700 Parmer - Bldg C

23,693

Research Park Place 8

33,518

Amber Oaks F

79,732

Research Park Plaza IV

3,355

96,334

99,689

Amber Oaks J

6,245

33,147

39,392

Research Park Plaza V

95,292

Atrium Office Centre

23,732

Research Tech Center Bldg 2

22,295

Austin Oaks

43,080

2,659

45,739

Reserve at Bull Creek B

43,713

Domain 1

86,271

Reserve at Bull Creek C

43,695

Domain 3

IBM Broadmoor Campus

Lakewood Center I

20,041

Riata Corporate Park Bldg 4

57,118

144,818

Riata Corporate Park Bldg 5

22,867

45,020

Riata Corporate Park Bldg 7

21,477

144,818 -

Paloma Ridge A

106,200

Riata Corporate Park Bldg 8

45,457

Paloma Ridge B

83,915

River Place Corp Park Bldg VII

21,477

Park Central I

15,375

23,326

38,701

The Park at 8300 N. MoPac

6,911

31,958

38,869

Park Centre Bldg. 3

49,828

5,397

55,225

Travesia Corporate Park 1-3

34,226

33,945

68,171

Prominent Pointe I

37,597

UFCU Plaza

32,797

NORTHWEST AUSTIN OFFICE DEVELOPMENT Building

Total SF

Percent Preleased

Estimated Delivery

Status

Braker Point III*

195,230

3Q 2016

Coming to Market

Domain 8

290,983

3Q 2017

Under Construction

La Frontera Plaza

97,941

89%

2Q 2016

Under Construction

10721 Domain Dr.

308,000

Planned

Amber Oaks Phase I

90,300

Planned

Amber Oaks Phase II

90,300

Planned

Amber Oaks Phase III

45,000

Planned

Aspen Lake Three

128,700

Planned

Frontera Ridge

400,000

Planned

Four Points Centre Bldg 3

250,000

Planned

Four Points Centre Bldg 4

80,000

Planned

Paloma Ridge C

112,500

Planned

Research Park Bldg 6

117,314

Planned

Riata Corporate Park Bldg 1

65,000

Planned

Riata Crossing Bldg 6

49,716

Planned

*Already existing - Coming to market 3Q 2016

Planned

Under Construction

SOUTHWEST SUBMARKET 1Q UPDATE The first three months of 2016 witnessed increased growth in the Southwest submarket. Last quarter, the asking full service rental rates for all Class A buildings in the Southwest submarket climbed to a record high $35.85/sf. This quarter topped the previous record at $36.65/sf. That is almost a 9% growth rate if annualized. The competitive set mimicked this trend, jumping to a new record at $38.67/sf.

View from Latinworks in Rollingwood Center

57,396 SF Net Absorption

9.25%

Direct & Sublease Vacancy Rate

$36.65

Avg. Class A Full Service Rental Rate

SOUTHWEST

SUBMARKET UPDATE Lake Travis

The vacancy rate remained low at 9.25%— over three hundred basis points lower than the 3Q 2015 vacancy rate of 12.29%. The steady rise in rental rates and the decline in the vacancy rate point to the continued popularity of the Southwest submarket.

McNeil

Arboretum

Domain

FAR SW West Lake Hills

Barton Creek

Tarrytown

Austin

Lost Creek

NEAR SW

Sunset Valley

ABIA

Southwest Micromarkets

Notable activity this quarter comes from EZ Corp and Yeti – two significant leaseholders in this submarket. EZ Corp is offering significant space for sublease—originally over 65,000 sf, but now around 44,000 sf—within Rollingwood Center due to internal restructuring. Also, in anticipation of its relocation to its new headquarters in the Southwest submarket next year, Yeti offered 45,000 sf of sublease space in its current office at 5301 Southwest Parkway—but now only 20,000 sf of sublease space is available. The rapid backfilling of this space suggests that there is still healthy demand for space within the Southwest submarket.

There were no major deliveries this quarter in the Southwest submarket. The vacancy rate has decreased more than three whole percentage points since 3Q 2015, following the delivery of 680,968 sf to the submarket in 2Q 2015. If vacancy rates continue to fall, several of the projects in the planning stages could break ground in the next several quarters. The Near Southwest micromarket witnessed a fairly significant drop in the vacancy rate from 10.76% to 8.57% as both direct and sublease availability decreased from 4Q 2015. Asking rental rates increased for the twentieth consecutive quarter, reaching a record $41.09. The 1Q 2016 full service asking rental rate is almost two dollars higher than the 1Q 2015 asking rental rate, indicating a healthy, growing market. The vacancy rate in the Far Southwest submarket continued to rise. From 6.71%

two quarters ago, the 2016 Q1 vacancy rate is over five hundred basis points higher at 11.94%, resulting from a dramatic increase in direct availability since 2015 Q3. This underscores the thesis that buildings proximate to amenities are outperforming those that are somewhat isolated. While the vacancy rate is uncharacteristically high for this less convenient micromarket relative to the last two years, the vacancy rate and direct availability remained level over last quarter, which witnessed the departure of Bazaarvoice and the delivery of Encino Trace II. The effects of these two events on vacancy and direct availability may continue to be seen in the Far Southwest micromarket into the second quarter of 2016. However, the continued increase in full service asking rental rates points to an otherwise robust market. Photo: View of Downtown Austin from Rollingwood Center

SOUTHWEST

BY THE NUMBERS SOUTHWEST OVERALL SUBMARKET PERFORMANCE Quarter

Net Rentable Area

Direct Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

2014 Q2

9,382,293

853,812

(150,296)

10.26%

$30.72

2014 Q3

9,458,793

653,880

164,619

9.24%

$31.38

2014 Q4

9,418,793

640,998

42,081

8.41%

$34.87

2015 Q1

9,446,430

589,875

66,172

7.98%

$34.35

2015 Q2

10,109,725

1,070,609

182,561

12.21%

$33.76

2015 Q3

10,257,625

1,192,565

121,673

12.29%

$35.03

2015 Q4

10,484,922

769,552

460,460

9.80%

$35.85

2016 Q1

10,484,886

777,581

57,396

9.25%

*Absorption includes sublease space

15%

1,200

12%

900

600

300

2014 Q3

Direct Available SF

2014 Q4

2015 Q1

2015 Q2

Sublease Available SF

2015 Q3

2015 Q4

2016 Q1

600

94%

400

92%

200

90%

88%

(200)

2014 Q2

2014 Q3

$38

16%

$36

12%

$34

$32

2014 Q3

2014 Q4

2015 Q1

Average Class A Full Service Rental Rate

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

VACANCY RATES VS. RENTAL RATES

2014 Q2

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

86%

Direct & Sublease Vacancy Rate

Net Absorption*

$30

2014 Q4

Direct & Sublease Occupancy Rate

Occupancy Rate

1,500

Absorption (Thousands of SF)

NET ABSORPTION

Vacancy Rate

Availability (Thousands of SF)

AVAILABLE SF VS. VACANCY RATE

2014 Q2

$36.65 Numbers based on CBRE statistics.

SOUTHWEST SUBMARKET OFFICE RENTAL RATE PROJECTIONS $40

3% Job Growth

Full Service Rental Rates

$35

1% Job Growth

$30

$25

$20

$15 2004

2005

2006

2007

2008

2009

Historic Rental Rate

2010

2011

AQUILA Model

2012

2013

3% Job Growth

2014

2015

2016

2017

2018

1% Job Growth

25%

20%

15%

1% Job Growth

10%

3% Job Growth 5%

0% 2004

Market Size (Millions of SF)

Total Vacancy Rate

SOUTHWEST SUBMARKET OFFICE VACANCY RATE PROJECTIONS

2005

2006

2007 Market Size

2008

2009

2010

Historic Vacancy Rate

2011

2012

AQUILA Model

2013

2014

3% Job Growth

2015

2016

2017

1% Job Growth

SOUTHWEST AUSTIN LARGE OFFICE AVAILABILITY 20,000 SF + of available space Building

Direct Available SF

Sublease Available SF

Total Available SF

3700 San Clemente

85,436

3900 San Clemente

135,366

Barton Skyway II

15,796

24,275

40,071

CityView Center

Encino Trace II

Parkway at Oak Hill I & II

24,478

135,036

23,644

Rialto II

36,421

Rollingwood Center I & II

65,169

The Park on Barton Creek 1

23,465

2,203

25,668

The Park on Barton Creek 2

38,900

The Summit 1-5

52,934

The Terrace 6

22,771

8,258

31,029

SOUTHWEST AUSTIN OFFICE DEVELOPMENT Building

Total SF

Percent Preleased

Estimated Delivery

Status

The Backyard - Buildings B, J, & H

171,450

Planned

Galleria Oaks I & II

147,928

Planned

Lantana Ridge I & II

175,000

Planned

123,525

Planned

90,000

Planned

107,000

Planned

Overwatch Campus Phase II

Regency Park

Rollingwood Center III

The Terrace 3

203,130

Planned

The Terrace 4

285,663

Planned

The Terrace 5

218,809

Planned

AVAILABILITY SUMMARY SOUTHWEST CLASS A 4,901 SF

NSW

11,073 SF

NSW

5,438 SF

NSW

3,647 SF

4 3,240 SF

NSW

Barton Oaks Plaza I 901 S Mopac Expy

Barton Oaks Plaza II 901 S Mopac Expy

Barton Oaks Plaza III 901 S Mopac Expy

Barton Oaks Plaza IV 901 S Mopac Expy

Barton Oaks Plaza V 901 S Mopac Expy

One Barton Skyway 1501 S Mopac Expy

5 Floors 99,404 SF 95% Leased $27.00 NNN $15.98 Op/Ex $42.98 Gross

5 Floors 116,368 SF 90% Leased $26.50 NNN $15.56 Op/Ex $42.06 Gross

5 Floors 121,467 SF 96% Leased $26.50 NNN $14.59 Op/Ex $41.09 Gross

5 Floors 104,324 SF 100% Leased $14.73 NNN $14.473 Op/Ex $41.00 Gross

5 Floors 119,549 SF 97% Leased $27.00 NNN $14.47 Op/Ex $41.47 Gross

4 Floors 195,324 SF 98% Leased $25.50 - $26.50 NNN $14.95 Op/Ex $40.45 - $41.45 Gross

5 4

42,671 SF

42,369 SF

16,782 SF

33,214 SF

FSW

7,048 SF 3

6,726 SF

19,402 SF

3,694 SF

FSW

Encino Trace I 5707 Southwest Pkwy

Encino Trace II 5707 Southwest Pkwy

Las Cimas I 804 Las Cimas Pkwy

Las Cimas II 807 Las Cimas Pkwy

Las Cimas III 805 Las Cimas Pkwy

Las Cimas IV 900 S Capital of Tx Hwy

4 floors 161,606 SF 100% Leased $23.50 NNN $13.15 Op/Ex $36.65 Gross

4 floors 158,137 SF 15% Leased $23.50 NNN $13.15 Op/Ex $36.65 Gross

3 Floors 82,853 SF 92% Leased $24.50 NNN $14.29 Op/Ex $38.79 Gross

4 Floors 156,682 SF 88% Leased $26.50 NNN $14.92 Op/Ex $41.42 Gross

4 Floors 156,682 SF 96% Leased $26.50 NNN $14.73 Op/Ex $41.23 Gross

5 Floors 142,000 SF 100% Leased $27.00 NNN $14.58 Op/Ex $41.58 Gross

33,902 SF 4 37,883 SF

27,276 SF

NSW

11,874 SF

50,798 SF

15,528 SF

NSW

Rollingwood Center I 2500 Bee Caves Rd

Rollingwood Center II 2500 Bee Caves Rd

4 Floors 145,437 SF 100% Leased $29.00 NNN $12.00 Op/Ex $41.00 Gross

2 Floors 69,150 SF 100% Leased $29.00 NNN $12.00 Op/Ex $41.00 Gross

FSW

3600 San Clemente B 3600 N Capital of Tx Hwy 3 Floors 90,267 Sf 100% Leased $26.50 NNN $15.63 Op/Ex $42.13 Gross

51,534 SF

FSW

3700 San Clemente 3700 N Capital of Tx Hwy 5 Floors 249,870 SF 66% Leased $29.50 NNN $13.27 Op/Ex $42.77 Gross

FSW

3900 San Clemente 3900 N Capital of Tx Hwy 5 Floors 251,146 SF 49% Leased $24.50 NNN $13.81 Op/Ex $38.31 Gross

Availability Summary 43

1,590 SF

FSW

Southwest Submarket

3 52,934 SF

FSW

The Summit at Lantana Bldg 300 7171 Southwest Pkwy 4 Floors 217,077 SF 76% Leased $25.00 NNN $13.06 Op/Ex $38.06 Gross

7 6

15,796 SF

NSW

4,901 SF

NSW

FSW

Two Barton Skyway 1601 S Mopac Expy

Three Barton Skyway 1221 S Mopac Expy

Four Barton Skyway 1301 S Mopac Expy

Capital Ridge 320 Capital of Tx Hwy

Dimensional Place 1 6304 Bee Caves Rd

Dimensional Place 2 6300 Bee Caves Rd

4 Floors 195,639 SF 92% Leased $25.50 - $26.50 NNN $14.61 Op/Ex $40.11 - $41.11 Gross

4 Floors 173,302 SF 97% Leased $25.50 - $26.50 NNN $14.52 Op/Ex $40.02 - $41.02 Gross

5 Floors 222,580 SF 100% Leased $25.50 - $26.00 NNN $13.86 Op/Ex $39.36 - $39.86 Gross

7 floors 238,000 SF 100% Leased $27.00 - $30.00 NNN $10.56 Op/Ex $37.56 - $40.56 Gross

7 Floors 220,000 SF 100% Leased $24.00 NNN $12.42 Op/Ex $36.42 Gross

5 Floors 156,000 SF 100% Leased $22.50 NNN $15.00 Op/Ex $37.50 Gross

5 4

NSW

5 21,262 SF

2,203 SF

4 3

NSW

Mira Vista 2705 Bee Caves Rd

NSW

The Park on Barton Creek One 3711 S Mopac Expy 5 floors 102,608 SF 79% Leased $25.00 NNN $14.02 Op/Ex $39.02 Gross

3 Floors 121,147 SF 100% Leased $27.50 NNN $14.02 Op/Ex $41.52 Gross

2 3,270 SF

5,725 SF

9,716 SF

2,974 SF

2,559 SF

2,042 SF

3,447 SF

NSW

FSW

Plaza on the Lake II 4801 Plaza on the Lake Dr. 3 Floors 114,261 SF 100% Leased $26.50 NNN $14.96 Op/Ex $41.46 Gross

2,052 SF

3 2 4,356 SF

NSW

The Terrace I 2600 Via Fortuna

The Terrace II 2700 Via Fortuna

The Terrace VI 2901 Via Fortuna

The Terrace VII 2801 Via Fortuna

5 Floors 115,460 SF 91% Leased $25.00 NNN $15.99 Op/Ex $40.99 Gross

5 Floors 114,635 SF 97% Leased $25.00 NNN $15.65 Op/Ex $40.65 Gross

6 Floors 197,909 SF 88% Leased $28.00 NNN $15.92 Op/Ex $43.92 Gross

6 Floors 192,214 SF 99% Leased $28.00 NNN $15.99 Op/Ex $43.99 Gross

Austin, TX Q1 2016 Class A Office Space

2 1

FSW

6,354 SF

8,936 SF

Plaza on the Lake I 5001 Plaza on the Lake Dr. 3 Floors 122,530 SF 93% Leased $26.50 NNN $15.35 Op/Ex $41.85 Gross

NSW

5000 Plaza on the Lake 5000 Plaza on the Lake Dr. 3 Floors 119,463 SF 96% Leased $27.50 NNN $15.85 Op/Ex $43.35 Gross

FSW

9,980 SF

FSW

The Park on Barton Creek Two 3711 S Mopac Expy 5 floors 102,587 SF 100% Leased $25.00 NNN $14.47 Op/Ex $39.47 Gross

The Summit at Lantana Bldg 400 7171 Southwest Pkwy 4 Floors 220,218 SF 100% Leased $25.00 NNN $13.06 Op/Ex $38.06 Gross

1,806 SF

To find out more, visit:

SUBLEASE SPACE AVAILABLE SPACE

aquilacommercial.com/reports

TheAppendix Long Term Performance of Submarkets

Long Term Performance: CBD vs. Suburban

Central Business District Competitive Set Performance

Competitive Set Buildings

Northwest Submarket Competitive Set Performance

Micromarket Performance

Competitive Set Buildings by Micromarket

Southwest Submarket Competitive Set Performance

Micromarket Performance

Competitive Set Buildings by Micromarket

LONG TERM PERFORMANCE OF SUBMARKETS Numbers based on CBRE statistics.

20%

15%

10%

Citywide Direct Availability

Citywide Sublease Availability

40%

32%

24%

16%

Direct & Sublease Vacancy Rate

Availability (Millions of SF)

1,500

18%

1,000

12%

500

CBD Direct Availability

CBD Sublease Availability

CBD Vacancy Rate

Citywide Vacancy Rate

SOUTHWEST AVAILABLE SF VS. VACANCY RATE 2,500

30%

2,000

24%

1,500

18%

1,000

12%

500

Northwest Direct Availability

Northwest Sublease Availability

Southwest Direct Availability

Southwest Sublease Availability

Northwest Vacancy Rate

Citywide Vacancy Rate

Southwest Vacancy Rate

Citywide Vacancy Rate

CITYWIDE AVERAGE CLASS A ASKING RATES

ABSORPTION & OCCUPANCY RATE *Absorption includes sublease space. Year Over Year Direct & Sublease Absorption (Millions of SF)

$50 $45 Full Service Rental Rate

24%

Citywide Vacancy Rate

NORTHWEST AVAILABLE SF VS. VACANCY RATE

$40 $35 $30 $25 $20

CBD

2,000

Northwest

Southwest

Citywide

Direct & Sublease Vacancy Rate

25%

30%

95%

90%

85%

80%

75%

-1

70%

-2

65%

CBD

Northwest

Southwest

Citywide Occupancy Rate

Direct & Sublease Occupancy Rate

2,500

Direct & Sublease Vacancy Rate

30% Availability (Thousands of SF)

Direct & Sublease Vacancy Rate

CBD AVAILABLE SF VS. VACANCY RATE

Availability (Thousands of SF)

Availability (Millions of SF)

CITYWIDE AVAILABLE SF VS. VACANCY RATE

LONG TERM PERFORMANCE CBD VS. SUBURBAN Numbers based on CBRE statistics.

AVERAGE CLASS A ASKING RATES

DIRECT & SUBLEASE VACANCY RATES

$50

30% 25%

Vacancy Rate

$30

$20

15% 10% 5%

CBD

Suburban

CBD Vacancy Rate

Citywide

DIRECT & SUBLEASE AVAILABILITY 12

30%

25%

20%

15%

10%

CBD

Suburban

Citywide Vacancy Rate

Suburban Vacancy Rate

Citywide Vacancy Rate

SF UNDER CONSTRUCTION 4 Direct & Sublease Vacancy Rate

Direct & Sublease Availability (Millions of SF)

20%

$10

Area Under Construction (Millions of SF)

Full Service Rental Rate

$40

CBD

Northwest

Southwest

CENTRAL BUSINESS DISTRICT COMPETITIVE SET PERFORMANCE CBD COMPETITIVE SET Net Rentable Area

Quarter

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

2014 Q2

5,637,136

576,465

25,189

21,517

10.67%

$44.81

2014 Q3

5,827,916

483,868

81,356

227,210

9.70%

$45.13

2014 Q4

5,827,916

503,540

69,160

(7,476)

9.83%

$46.49

2015 Q1

6,344,401

421,858

55,200

612,127

7.52%

$47.28

2015 Q2

6,466,952

479,092

40,409

80,108

8.03%

$47.74

2015 Q3

6,466,952

370,193

38,822

110,486

6.32%

$48.70

2015 Q4

6,471,834

237,718

55,748

120,431

4.53%

$52.03

2016 Q1

6,471,834

239,406

101,083

(47,023)

5.26%

$52.80

*Absorption includes sublease space

NET ABSORPTION

600

12%

400

200

2014 Q2

2014 Q3

Direct Available SF

2014 Q4

2015 Q1

2015 Q2

Sublease Available SF

2015 Q3

2015 Q4

2016 Q1

VACANCY VS. RENTAL RATES 14% 12%

$51

10%

$49 8%

$47

$45 $43

2014 Q2

2014 Q3

2014 Q4

2015 Q1

Average Class A Full Service Rental Rate

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

$53

700

96%

600

95%

500

94%

400

93%

300

92%

200

91%

100

90%

89%

(100)

Direct & Sublease Vacancy Rate

$55

Absorption (Thousands of SF)

16%

Vacancy Rate

Availability (Thousands of SF)

800

2014 Q2

2014 Q3

Net Absorption*

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Direct & Sublease Occupancy Rate

88%

Occupancy Rate

AVAILABLE SF VS. VACANCY RATE

CBD COMPETITIVE SET BUILDINGS Net Rentable Area

Direct Available SF

Sublease Available SF

100 Congress

411,536

20,182

5,855 ↑

$37.00

$20.84

300 West 6th

454,225

1,421

942 ↑

$36.00

$21.75

301 Congress

418,338

17,930 ↓

9,373 ↑

$35.00

$19.55 ↑

Building Name

Asking Rental Rate

Estimated OpEx

400 West 15th

281,196

8,627

21,442 ↑

$26.00 ↑

$15.92

501 Congress

122,551

18,927 ↑

20,396 ↑

$35.00 ↑

$20.93 ↓

515 Congress

263,058

3,432 ↓

7,174 ↑

$33.00 ↑

$18.05

600 Congress Ave.

503,951

13,187

$34.00 ↑

$18.75 ↑

816 Congress

434,081

10,821 ↓

$27.00 ↓

$17.59

Austin Centre

326,335

23,455 ↑

7,346 ↓

$28.00

$17.65

Capitol Center

164,044

7,852 ↓

8,205 ↑

$30.00 ↑

$19.70 ↑

Capitol Tower

172,837

10,208 ↑

$31.00 ↑

$16.52

Chase Tower

389,503

18,704 ↑

5,418 ↑

$32.00 ↑

$19.84

Colorado Tower

373,334

$34.00

$16.83

Frost Bank Tower

535,078

$40.00 ↑

$21.75

IBC Bank Plaza

194,749

0↓

$33.00 ↑

$21.00

Lavaca Plaza

118,635

1,070 ↑

11,199 ↑

$32.50

$21.74

Littlefield Building

109,779

15,614 ↓

0↓

$35.00 ↑

$18.08 ↑

One Congress Plaza

518,385

56,675 ↑

3,733 ↑

$40.00

$17.77

San Jacinto Center

406,279

$36.00 ↓

$18.75

Scarbrough Building

130,789

11,301 ↓

$32.00

$19.04 ↑

Seaholm

143,151

$28.00

$12.00

NORTHWEST SUBMARKET COMPETITIVE SET PERFORMANCE NORTHWEST COMPETITIVE SET Quarter

Net Rentable Area

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

2014 Q2

12,242,690

1,030,332

246,257

(141,246)

10.43%

$31.61

2014 Q3

12,389,252

911,833

321,739

189,579

9.96%

$32.12

2014 Q4

12,845,611

1,197,426

320,587

171,918

11.82%

$32.93

2015 Q1

12,931,909

992,203

292,334

319,774

9.93%

$33.39

2015 Q2

13,120,924

897,208

284,035

292,309

9.00%

$33.83

2015 Q3

13,310,232

1,129,335

287,248

(46,032)

10.64%

$33.55

2015 Q4

13,831,583

1,135,749

235,206

566,979

9.91%

$34.30

2016 Q1

15,142,863

1,422,335

395,496

864,404

12.00%

$35.14

*Absorption includes sublease space

1,600

12%

1,200

800

400

2014 Q2

2014 Q3

Direct Available SF

2014 Q4

2015 Q1

2015 Q2

Sublease Available SF

2015 Q3

2015 Q4

2016 Q1

15% 13%

$34

11%

$33

$32

$31

$30

2014 Q2

2014 Q3

2014 Q4

2015 Q1

Average Class A Full Service Rental Rate

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES $35

1,000

93%

800

92%

600

91%

400

90%

200

89%

88%

(200)

Direct & Sublease Vacancy Rate

$36

Absorption (Thousands of SF)

15%

Vacancy Rate

Availability (Thousands of SF)

2,000

NET ABSORPTION

2014 Q2

2014 Q3

Net Absorption*

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Direct & Sublease Occupancy Rate

87%

Occupancy Rate

AVAILABLE SF VS. VACANCY RATE

ARBORETUM/DOMAIN MICROMARKET PERFORMANCE ARBORETUM/DOMAIN COMPETITIVE SET Quarter

Net Rentable Area

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

2014 Q2

6,106,452

476,360

109,332

(97,407)

9.59%

$33.04

2014 Q3

6,253,014

401,651

157,535

173,068

8.94%

$33.66

2014 Q4

6,474,987

445,544

121,157

214,458

8.75%

$34.38

2015 Q1

6,553,774

447,850

71,595

126,043

7.93%

$34.46

2015 Q2

6,742,789

389,248

63,891

255,321

6.72%

$34.77

2015 Q3

6,719,697

407,169

76,078

(53,200)

7.19%

$34.38

2015 Q4

6,938,611

322,314

93,200

286,647

5.99%

$34.82

2016 Q1

8,253,506

617,666

88,016

1,024,727

8.55%

$35.76

*Absorption includes sublease space

12%

600

400

200

2014 Q2

2014 Q3

Direct Available SF

2014 Q4

2015 Q1

2015 Q2

Sublease Available SF

2015 Q3

2015 Q4

2016 Q1

Direct & Sublease Vacancy Rate

1,100 1,000 900 800 700 600 500 400 300 200 100 0 (100)

97% 95% 93% 91% 89%

Occupancy Rate

800

Absorption (Thousands of SF)

NET ABSORPTION

Vacancy Rate

Availability (Thousands of SF)

AVAILABLE SF VS. VACANCY RATE

87%

2014 Q2

2014 Q3

Net Absorption*

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

85%

Direct & Sublease Occupancy Rate

$36

11%

$35

$34

$33

$32

2014 Q2

2014 Q3

2014 Q4

2015 Q1

Average Class A Full Service Rental Rate

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES

Direct & Sublease Vacancy Rate

SHEPHERD MOUNTAIN/2222 MICROMARKET PERFORMANCE SHEPHERD MOUNTAIN/2222 COMPETITIVE SET Net Rentable Area

Quarter

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

2014 Q2

2,453,857

241,923

46,956

17,127

11.77%

$31.95

2014 Q3

2,453,857

211,437

92,007

(14,565)

12.37%

$32.28

2014 Q4

2,688,442

389,788

127,233

21,008

19.23%

$33.10

2015 Q1

2,690,750

207,238

179,538

132,553

14.37%

$34.17

2015 Q2

2,690,750

181,807

152,245

52,724

12.41%

$34.45

2015 Q3

2,690,750

193,874

135,899

4,279

12.26%

$34.55

2015 Q4

2,690,835

173,907

79,703

76,248

9.42%

$35.16

2016 Q1

2,690,835

266,741

97,821

(110,952)

13.55%

$36.11

*Absorption includes sublease space

525

18%

350

12%

175

2014 Q2

2014 Q3

Direct Available SF

2014 Q4

2015 Q1

2015 Q2

Sublease Available SF

2015 Q3

2015 Q4

2016 Q1

Direct & Sublease Vacancy Rate

$36

18%

$34

12%

$32

$30

2014 Q2

2014 Q3

2014 Q4

2015 Q1

2015 Q2

Average Class A Full Service Rental Rate

2015 Q3

2015 Q4

2016 Q1

Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES 24%

160

91%

120

89%

87%

85%

83%

(40)

81%

(80)

79%

(120)

77%

(160)

$38

Absorption (Thousands of SF)

24%

Vacancy Rate

Availability (Thousands of SF)

700

NET ABSORPTION

2014 Q2

2014 Q3

2014 Q4

Net Absorption*

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Direct & Sublease Occupancy Rate

75%

Occupancy Rate

AVAILABLE SF VS. VACANCY RATE

FAR NORTHWEST MICROMARKET PERFORMANCE FAR NORTHWEST COMPETITIVE SET Quarter

Net Rentable Area

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

2014 Q2

3,682,381

312,049

89,969

(60,966)

10.92%

$29.02

2014 Q3

3,682,381

298,745

72,197

31,076

10.07%

$29.40

2014 Q4

3,682,182

362,094

72,197

(63,548)

11.79%

$30.26

2015 Q1

3,687,385

337,115

41,201

61,178

10.26%

$30.93

2015 Q2

3,687,385

326,153

67,899

(15,736)

10.69%

$31.66

2015 Q3

3,899,785

528,292

75,271

2,889

15.48%

$31.42

2015 Q4

4,202,137

639,528

62,303

204,084

16.70%

$32.77

2016 Q1

4,198,522

537,928

209,659

(49,371)

17.81%

$33.30

*Absorption includes sublease space

24%

600

18%

400

12%

200

2014 Q2

2014 Q3

Direct Available SF

2014 Q4

2015 Q1

2015 Q2

Sublease Available SF

2015 Q3

2015 Q4

2016 Q1

300

96%

200

92%

100

88%

84%

(100)

Direct & Sublease Vacancy Rate

2014 Q2

2014 Q3

Net Absorption*

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Occupancy Rate

800

Absorption (Thousands of SF)

NET ABSORPTION

Vacancy Rate

Availability (Thousands of SF)

AVAILABLE SF VS. VACANCY RATE

80%

Direct & Sublease Occupancy Rate

$34

24%

$32

18%

$30

12%

$28

$26

2014 Q2

2014 Q3

2014 Q4

2015 Q1

Average Class A Full Service Rental Rate

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES

Direct & Sublease Vacancy Rate

ARBORETUM/DOMAIN MICROMARKET COMPETITIVE SET BUILDINGS Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

3307 Northland

98,888

1,655 ↑

$17.50

$11.05

Building Name

9500 Arboretum

182,331

0↓

$22.00

$13.51 ↑

Arboretum Atrium

90,280

2,515

$21.00

$14.38

Arboretum Plaza One

146,347

2,189 ↑

$27.00

$15.53 ↓

Arboretum Plaza Two

98,828

$27.00

$15.53 ↓

Arboretum Point

150,033

$23.00

$13.44

Atrium Office Centre

199,858

23,732 ↑

$18.00 ↑

$8.05 ↑

Austin Oaks

445,240

43,080 ↑

2,659 ↓

$19.00 ↑

$11.60 ↑

Balcones Centre

74,876

0↓

$24.00

$9.86

Braker Pointe I

77,454

15,370

$22.50

$13.31 ↑

Braker Pointe II

103,114

1,953

5,162

$22.50

$13.07 ↑

Braker Pointe III

196,380

$25.00

$12.84

Colina West

69,299

203

1,150

$20.50 ↓

$11.73 ↑

Domain 1

124,571

86,271

$30.00

$11.00

Domain 2

143,331

$29.00

$11.00

Domain 3

179,006

20,041 ↓

$25.50

$10.34

Domain 4

152,012

$24.00

$11.16

Domain 5

78,987

$26.00

$11.00

Domain 7

221,973

13,348 ↑

$29.00 ↑

$12.00 ↑

Domain Gateway

173,962

$21.00

$14.95

Great Hills Corporate Center I

59,228

17,140 ↑

$18.50

$11.39 ↓

Great Hills Corporate Center II

60,429

3,593

$18.00 ↓

$11.39 ↓

Great Hills Corporate Center III

56,422

13,200 ↑

$18.50

$11.39 ↓

Great Hills Plaza

139,252

19,458

$20.00

$12.93

Greystone Plaza

78,248

8,095

$20.00 ↑

$13.04 ↑

Heritage Plaza

74,736

7,677 ↓

$28.00

$12.49 ↑

1,111,734

144,818

TBD

Neg.

IBM Broadmoor Campus

Kaleido I & II

73,149

2,588 ↓

$18.50 ↑

$9.93

Lakeview Plaza

120,559

6,266

$21.00 ↑

$12.22 ↓

Northpoint Centre I & II

151,126

1,527

$23.00 ↑

$12.33 ↑

Offices at the Domain Bldg 1

92,955

7,428

$27.50 ↑

$15.49

Offices at the Domain Bldg 2

75,509

$27.50 ↑

$14.75

One Far West Plaza

70,642

885 ↓

$18.00

$12.87

Park North I & II

133,568

1,337 ↓

$19.50 ↑

$11.83

Plaza 7000

155,076

17,395 ↓

2,653 ↑

$26.00

$13.82

Prominent Pointe I

150,376

37,597 ↑

$24.50

$14.72 ↑

Prominent Pointe II

102,567

18,419 ↑

12,579 ↑

$24.50

$15.67 ↑

Quarry Lake Business Center

117,512

5,048

$21.00 ↑

$13.75

Quarry Oaks I

165,435

0↓

$26.00 ↑

$11.82

Quarry Oaks II

126,000

2,044 ↑

$26.00 ↑

$11.48

Quarry Oaks III

137,615

11,814

$26.00 ↓

$12.25 ↓

Reunion Park

118,142

15,903

$19.00

$11.16

Stone Creek I

76,860

$24.00 ↑

$10.90 ↑

Stone Creek II

162,723

5,077

$24.00 ↑

$13.31 ↑

Stone Creek Park

77,185

$20.00

$13.45

Stonebridge Plaza I

193,200

3,794

$26.00

$14.97

Stonebridge Plaza II

192,864

10,898

$26.00

$15.04

Stratum Executive Center Bldg A

61,000

4,055

$21.00

$14.12

Building Name

Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

Stratum Executive Center Bldg B

61,000

$21.00

$14.12

Stratum Executive Center Bldg C

61,000

6,169 ↓

$21.00

$14.12

Stratum Executive Center Bldg D

61,000

$21.00

$14.12

The Campus at Arboretum 1

60,059

2,733

$23.50 ↑

$14.13

The Campus at Arboretum 2

33,135

$23.50 ↑

$13.60

The Campus at Arboretum 3

32,765

$23.50 ↑

$14.53

The Campus at Arboretum 4

85,916

12,572 ↑

$23.50 ↑

$14.17

The Campus at Arboretum 5

105,000

$23.50 ↑

$13.94

The Park at 8300 N. MoPac

93,317

6,911

31,958

$23.00

$14.01 ↑

UFCU Plaza

246,869

32,797 ↑

$20.50 ↑

$13.30 ↑

Westech 360 Bldgs 1-4

175,529

3,670 ↓

$20.00

$13.60

Westpark Office 1-4

97,034

8,256 ↑

$18.50

$10.89

SHEPHERD MOUNTAIN/2222 MICROMARKET COMPETITIVE SET BUILDINGS Building Name

Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

Bridgepoint Plaza I

105,333

$23.50

$12.81

Bridgepoint Plaza II

72,640

10,082

6,287 ↑

$23.50

$13.54

Bridgepoint Square 1

84,692

9,359 ↑

3,933 ↑

$24.50 ↑

$13.22 ↓

Bridgepoint Square 2

92,459

4,814 ↓

$24.50 ↑

$13.22 ↑

Bridgepoint Square 3

78,352

$24.50 ↑

$13.22 ↑

Bridgepoint Square 4

109,175

10,987 ↑

$24.50 ↑

$13.22 ↑

Bridgepoint Square 5

76,793

5,646 ↑

$24.50 ↑

$13.22 ↑

Champion Office Park I & II

230,000

$26.50

$11.00

Four Points Centre I & II

192,396

$23.50

$13.44 ↑

Ladera Bend 1

56,466

$22.00 ↑

$16.34

Ladera Bend 2

45,732

$22.00 ↑

$13.88

Ladera Bend 3

56,196

$22.00 ↑

$13.83

Lakewood Center I

47,389

45,020

$22.50 ↑

$13.49 ↑

Lakewood Center II

44,611

0↓

$22.50 ↑

$13.49 ↑

102,086

12,781 ↓

$21.50 ↑

$12.51 ↑

Lakewood on the Park C

78,596

12,808

$21.50 ↑

$12.51 ↑

Millennium Building

125,612

$24.00

$12.58

Lakewood on the Park B

Park Centre Bldg 1

89,822

760 ↓

$18.00

$12.60

Park Centre Bldg 2

35,095

18,730

$18.00

$12.60

Park Centre Bldg 3

78,270

49,828 ↓

5,397 ↑

$18.00

$12.60

Reserve at Bull Creek A

43,867

11,365 ↑

$20.00 ↑

$12.20 ↓

Reserve at Bull Creek B

43,713

43,713 ↑

$20.00

$12.20 ↑

Reserve at Bull Creek C

43,695

43,695 ↑

$20.00

$12.20 ↑

River Place Corporate Park I

76,529

$22.00

$14.50 ↑

River Place Corporate Park II

114,491

12,857 ↑

$22.00

$14.12 ↑

River Place Corporate Park III

113,465

0↓

15,707 ↑

$22.00

$13.82 ↑

River Place Corporate Park IV

87,639

8,601 ↓

$22.00

$14.07 ↑

River Place Corporate Park V

67,601

$22.00

$14.21 ↑

River Place Corporate Park VI

62,037

$22.00

$14.13 ↑

River Place Corporate Park VII

69,119

21,477

$22.00

$14.39 ↑

Shepherd Mountain Plaza

100,937

$33.00

$12.39 ↓

Stone Cliff

66,027

10,715 ↓

$18.00

$12.46 ↓

FAR NORTHWEST MICROMARKET COMPETITIVE SET BUILDINGS Building Name

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

Amber Oaks A

78,164

$19.50

$11.67 ↑

Amber Oaks B

44,184

$19.50

$8.30

Amber Oaks C

44,184

$19.50

$8.60

Amber Oaks D

28,733

$19.50

$10.45

Amber Oaks E

63,111

$19.50

$8.03

Amber Oaks F

79,732

$19.50

$11.64 ↑

Amber Oaks G

106,455

4,572

$19.50

$11.61 ↑

Amber Oaks H

101,045

$19.50

$10.93

Amber Oaks I

50,313

10,828

$19.50

$13.03 ↑

Amber Oaks J

Net Rentable Area

50,111

6,245

33,147

$19.50

$12.14 ↑

Aspen Lake One

204,940

$18.50

$13.26

Aspen Lake Two

129,000

$24.50

$10.00

Crossings at Lakeline I

114,726

0↓

10,445

$21.50

$12.67 ↑

Crossings at Lakeline II

118,046

6,874 ↓

0↓

$21.50

$12.03 ↑

Paloma Ridge A

106,200

$19.00 ↑

$9.50

Paloma Ridge B

106,200

83,915 ↓

$19.00 ↑

$9.50

Parmer Business Park 7, 8, 9

123,731

$18.50

$5.60

Parmer Business Park D, E, F

107,283

$18.50

$5.60

Pecan Park I

136,444

$21.50

$10.72

Pecan Park II

136,245

$19.50

$9.45

Research Park Place 7

125,701

3,790

2,799 ↑

$22.00

$13.00 ↑

Research Park Place 8

125,700

33,518

$22.00

$13.00 ↑

Research Park Plaza I

135,541

11,747

$23.00

$14.98

Research Park Plaza II

131,027

$23.00

$14.98

Research Park Plaza III

173,530

$24.00 ↑

$13.08

Research Park Plaza IV

184,114

3,355 ↓

96,334 ↑

$24.00 ↑

$14.93 ↑

Research Park Plaza V

172,854

95,292 ↓

$24.00

$11.06

Riata Corporate Park Bldg 2

63,372

7,054

$22.00

$13.30

Riata Corporate Park Bldg 3

63,849

$22.00

$13.30

Riata Corporate Park Bldg 4

93,737

57,118 ↓

$22.00

$13.30

Riata Corporate Park Bldg 5

93,828

22,867 ↓

$22.00

$13.30

Riata Corporate Park Bldg 6

93,835

$22.00

$13.30

Riata Corporate Park Bldg 7

92,719

21,477 ↑

$22.00

$13.30

Riata Corporate Park Bldg 8

93,718

45,457 ↑

$22.00

$13.30

Riata Corporate Park Bldg 9

92,973

$22.00

$13.30

Riata Crossing Bldg 1

81,775

N/A

Riata Crossing Bldg 2

114,906

N/A

Riata Crossing Bldg 3

81,229

N/A

Riata Crossing Bldg 4

79,465

N/A

Tower of the Hills/Tower Point

175,802

4,821

$25.00

$12.85

SOUTHWEST COMPETITIVE SET PERFORMANCE SOUTHWEST COMPETITIVE SET Quarter

Net Rentable Area

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

2014 Q2

7,102,874

387,913

208,978

85,381

8.40%

$35.06

2014 Q3

7,102,874

294,587

169,604

132,700

6.54%

$35.47

2014 Q4

7,102,547

386,333

182,477

(104,946)

8.01%

$36.07

2015 Q1

7,100,750

399,919

188,613

(21,519)

8.29%

$36.98

2015 Q2

7,782,464

428,605

213,812

627,829

8.25%

$37.55

2015 Q3

7,949,325

353,625

264,345

191,308

7.77%

$37.61

2015 Q4

8,158,872

634,326

246,492

(53,301)

10.80%

$38.15

2016 Q1

8,161,143

680,309

195,638

7,142

10.73%

$38.67

*Absorption includes sublease space

15%

800

12%

600

400

200

2014 Q2

2014 Q3

Direct Available SF

2014 Q4

2015 Q1

2015 Q2

Sublease Available SF

2015 Q3

2015 Q4

2016 Q1

800

95%

600

93%

400

91%

200

89%

87%

(200)

Direct & Sublease Vacancy Rate

2014 Q2

2014 Q3

Net Absorption*

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Occupancy Rate

1,000

Absorption (Thousands of SF)

NET ABSORPTION

Vacancy Rate

Availability (Thousands of SF)

AVAILABLE SF VS. VACANCY RATE

85%

Direct & Sublease Occupancy Rate

$40

12%

$38

10%

$36

$34

$32

2014 Q2

2014 Q3

2014 Q4

2015 Q1

Average Class A Full Service Rental Rate

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES

Direct & Sublease Vacancy Rate

NEAR SOUTHWEST MICROMARKET PERFORMANCE NEAR SOUTHWEST COMPETITIVE SET Quarter

Net Rentable Area

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

2014 Q2

2,712,851

191,624

165,931

(4,311)

13.18%

$37.40

2014 Q3

2,712,851

174,207

126,557

56,791

11.09%

$37.59

2014 Q4

2,713,137

158,703

124,248

18,099

10.43%

$38.03

2015 Q1

2,711,340

143,863

125,110

12,181

9.92%

$39.26

2015 Q2

2,925,937

110,815

101,710

271,045

7.26%

$39.49

2015 Q3

2,925,937

105,532

175,528

(68,535)

9.61%

$39.84

2015 Q4

2,925,937

149,170

165,733

(33,843)

10.76%

$40.59

2016 Q1

2,926,017

137,847

113,003

64,133

8.57%

$41.09

*Absorption includes sublease space

16%

300

12%

200

100

2014 Q2

2014 Q3

Direct Available SF

2014 Q4

2015 Q1

2015 Q2

Sublease Available SF

2015 Q3

2015 Q4

2016 Q1

Direct & Sublease Vacancy Rate

$41

15%

$39

12%

$37

$35

2014 Q2

2014 Q3

2014 Q4

2015 Q1

Average Class A Full Service Rental Rate

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES 18%

100%

200

96%

100

92%

88%

(100)

$43

300

2014 Q2

2014 Q3

Net Absorption*

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Direct & Sublease Occupancy Rate

84%

Occupancy Rate

400

Absorption (Thousands of SF)

NET ABSORPTION

Vacancy Rate

Availability (Thousands of SF)

AVAILABLE SF VS. VACANCY RATE

FAR SOUTHWEST MICROMARKET PERFORMANCE FAR SOUTHWEST COMPETITIVE SET Quarter

Net Rentable Area

Direct Available SF

Sublease Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

2014 Q2

4,390,023

196,289

43,047

89,692

5.45%

$33.62

2014 Q3

4,390,023

120,380

43,047

75,909

3.72%

$34.16

2014 Q4

4,389,410

227,630

58,229

(123,045)

6.51%

$34.86

2015 Q1

4,389,410

256,056

63,503

(33,700)

7.28%

$35.57

2015 Q2

4,856,527

317,790

112,102

356,784

8.85%

$36.39

2015 Q3

5,023,388

248,093

88,817

259,843

6.71%

$36.31

2015 Q4

5,232,935

485,156

80,759

(19,458)

10.81%

$36.75

2016 Q1

5,235,126

542,462

82,635

(56,991)

11.94%

$37.28

*Absorption includes sublease space

12%

450

9% 300 6% 150 0

2014 Q2

2014 Q3

Direct Available SF

2014 Q4

2015 Q1

2015 Q2

Sublease Available SF

2015 Q3

2015 Q4

2016 Q1

Absorption (Thousands of SF)

15%

Vacancy Rate

Availability (Thousands of SF)

600

NET ABSORPTION 450

100%

300

97%

150

94%

91%

(150)

Direct & Sublease Vacancy Rate

2014 Q2

2014 Q3

Net Absorption*

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Occupancy Rate

AVAILABLE SF VS. VACANCY RATE

88%

Direct & Sublease Occupancy Rate

$38

16%

$36

12%

$34

$32

$30

2014 Q2

2014 Q3

2014 Q4

2015 Q1

Average Class A Full Service Rental Rate

2015 Q2

2015 Q3

2015 Q4

2016 Q1

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES

Direct & Sublease Vacancy Rate

NEAR SOUTHWEST MICROMARKET COMPETITIVE SET BUILDINGS Building Name

Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

Barton Creek Plaza I

72,974

7,415 ↓

$23.50 ↑

$13.65

Barton Creek Plaza II

64,718

6,466 ↑

$24.00 ↑

$11.69

Barton Creek Plaza III

64,842

$24.00 ↑

$11.83

Barton Oaks Plaza I

99,404

4,901

$27.00

$15.98

Barton Oaks Plaza II

116,448

11,073

$26.50

$15.56

Barton Oaks Plaza III

121,467

5,438 ↓

$26.50

$14.59

Barton Oaks Plaza IV

112,000

$41.00

$14.73

Barton Oaks Plaza V

119,549

3,647 ↓

$27.00 ↑

$14.47

Barton Skyway I

195,324

3,240 ↓

3,596

$25.50 ↓

$14.95 ↑

Barton Skyway II

195,639

15,796 ↓

24,275 ↑

$26.00

$14.61 ↑

Barton Skyway III

173,302

4,901 ↓

4,901

$26.00

$14.52 ↑

Barton Skyway IV

222,580

$26.00

$13.86 ↑

Centre I

39,903

$21.00

$12.50

Centre II

54,610

14,443 ↑

$19.50

$12.47 ↑

Mira Vista

121,147

$27.50

$14.02

Overlook at Gaines Ranch

50,725

$26.50

$14.62 ↑

Rollingwood Center I & II

214,587

0↓

65,169 ↓

$29.00

$12.00

Spyglass Point

58,576

$22.00

$13.45

The Park on Barton Creek 1

102,608

21,262 ↑

2,203 ↓

$25.00 ↑

$14.02 ↑

The Park on Barton Creek 2

102,587

0↓

$25.00 ↑

$14.47 ↑

The Terrace 1

115,460

10,995 ↑

4,601

$25.00 ↑

$15.99

The Terrace 2

114,635

3,447 ↑

$25.00 ↑

$15.65

The Terrace 6

196,717

22,771

8,258 ↑

$28.00

$15.92

The Terrace 7

196,215

2,052

$28.00

$15.99

FAR SOUTHWEST MICROMARKET COMPETITIVE SET BUILDINGS Building Name

Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

3600 San Clemente Bldg B

90,267

$26.50

$15.63

3700 San Clemente

249,870

85,436 ↑

$29.50

$13.27

3900 San Clemente

251,146

128,998 ↓

$24.50 ↓

$13.81

5000 Plaza on the Lake

118,063

5,076 ↑

9,980 ↓

$27.50 ↑

$15.85 ↑

7000 West at Lantana 1 & 2

136,075

DND

DND ↑

Canyon at Wild Basin

74,580

10,234 ↑

$24.50 ↑

$11.60

Capital Ridge

216,511

$30.00

$10.56

Cielo Center

270,711

1,320

$19.50

$13.32 ↑

Cityview 1

46,702

$21.00

$13.55

Cityview 2

47,809

0↓

$21.00

$13.55

Cityview 3

48,044

2,015

$21.00

$13.55

Cityview Center

137,763

24,478

$26.00

$11.79

Crystal Mountain 1, 2 & 3

61,762

10,517 ↓

1,590 ↑

$26.00

$9.41

Dimensional Place I

220,000

$24.00

$12.42

Dimensional Place II

156,000

$24.00

$12.42

Encino Trace I

161,606

$23.50

$13.15 ↑

Encino Trace II

158,137

135,036 ↑

$23.50

$13.15 ↑

Escalade Bldg A

58,344

9,440

$19.50

$13.46

Escalade Bldg B

57,142

4,621 ↑

$19.50

$13.46

Lake Pointe II

42,933

5,489

$14.00 ↓

$10.09 ↑

Las Cimas I

85,000

6,726

$24.00 ↓

$14.29

Las Cimas II

156,069

19,402 ↑

3,694 ↑

$26.50 ↑

$14.92 ↑

Las Cimas III

157,418

7,048

$26.50 ↑

$14.73 ↑

Las Cimas IV

138,008

1,590

$27.00 ↑

$14.58

Lost Creek Point

73,026

4,132 ↓

$18.00

$12.29

Parkway at Oak Hill I & II

145,475

23,644

$24.00

$13.07

Plaza 290

63,163

1,633

$18.50

$12.50

Plaza on the Lake I

122,530

8,936

$26.50

$15.35

Plaza on the Lake II

111,166

$26.50

$14.96

Rialto I

77,755

2,213

$23.50 ↑

$13.64

Rialto II

77,732

0↓

36,421

$23.50 ↑

$13.64

The Enclave Bldgs 1-4

44,704

$19.00 ↑

$9.97 ↑

The Summit at Lantana Bldgs 1-5

865,832

52,934 ↓

$25.00 ↑

$13.06

Travis Oaks

123,434

3,425 ↓

$23.50

$13.30

Vista Ridge I

75,131

2,199

$19.00

$11.00 ↓

Westlake Place

61,184

5,608 ↓

1,547

$20.00

$13.39 ↑

Wild Basin Atrium Bldg A & B

118,910

6,859 ↑

$18.00 ↑

$13.54 ↑

Wild Basin I

60,498

2,856

$19.00

$11.81

Wild Basin II

74,626

$19.00

$10.87

YOUR

NOTES:

1717 W. Sixth Street, Suite 400 Austin, Texas 78703 512 684-3800 aquilacommercial.com 1

Texas State Capitol; Photo by Scott Mason Photography for Cielo