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4Q AUSTIN

MARKET REPORT 2015

AQUILA KNOWS AUSTIN

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EAGLE'S NEST Welcome to 2016, Austin! 2015 was a year of strong commercial real estate growth in the stateâ€™s capital. A number of records across individual submarkets and micromarkets were broken over the course of the year with regard to vacancy rates and asking full service rental rates. In 2015, Austin as a whole absorbed 2,806,508 sf of space in both direct and subleasable space. This year also had 2,671,968 sf of office space delivered as new product. At the end of 2014, the citywide vacancy rate

Ryan Parzick Market Research Director AQUILA Commercial parzick@aquilacommercial.com

was 10.56% and now it is at 9.64%. Those two sets of numbers illustrate the continuous strength of the office market in Austin. More space was absorbed than delivered and the vacancy rate went down even with an extraordinary amount of new product coming online. Asking full service rental rates also increased by $1.03/sf from $34.78/sf in 4Q 2014 to $35.81/sf. There is more to come, too. Oracle announced that it will be breaking ground on a three building 560,000 sf campus just outside of downtown while increasing their already large Austin workforce by more than 50% over the next couple of years. Multiple buildings are currently under construction downtown that will deliver within the next two years that have already been 40% pre-leased.

Forbes recently tabbed Austin as the No. 1 Boom-

academic departments. In addition to the creation

town in the U.S., which ranks the cities most likely

of the Innovation District, the University Medical

to prosper in the next ten years.¹ They used eight

Center Brackenridge, Austin’s primary trauma hos-

metrics, equally weighted: the percentage of chil-

pital, will be decommissioned and have its func-

dren in the population aged 5 to 14 (families with

tions absorbed into the new teaching hospital. After

younger children often move when school looms or

the transition is complete, UMC Brackenridge is to

more space is need-

be torn down and

ed); the birth rate

redeveloped

from 2010-14; net

domestic

migra-

tion

2010-

from

14; the percentage of the population aged 25-44 with a

2015 WAS A YEAR OF STRONG COMMERCIAL REAL ESTATE GROWTH IN THE STATE'S CAPITAL.

health-focused

mixed use project incorporating housing, offices, hospitality, and retail.

bachelor’s degree;

With

income

growth

grandiose informa-

from 2010-15; the

tion regarding the

all

this

unemployment rate; and population growth from

vibrancy of the Austin market, there are some mark-

2010-14. Austin came out on top “in terms of

ers to keep an eye on. In the Special Report section

population growth, up 13.2% between 2010 and

of this quarter’s Market Report (see pages 7 – 10),

2014, in large part driven by the strongest rate of

we are focusing on the role property taxes play in

net domestic in-migration of the 53 largest metro-

the operating expenses of Austin’s office buildings.

politan areas over the same span: 16.4 per 1,000

Changes in the way Travis County has conducted its

residents. The educated proportion of its population

tax assessments on commercial properties has led

between 25 and 44 is 43.7%, well ahead of the

to higher valuations and therefore higher operating

national average of 33.6%.” Forbes wasn’t the only

expenses. In 2015, our sample data showed prop-

publication to pay attention to Austin. Throughout

erty taxes comprised 45.81% (up from 31.36% in

2015, Austin was ranked highly on a number of

2011) of the overall operating expense value. Large

publications’ lists for top cities.

jumps in operating expenses have the potential to

The addition of the soon-to-be completed University of Texas Dell Medical School should increase the presence of the biotech and medtech industries due to 600,000 sf of education, care, and research space opening in 2016. The area around the new medical school has been designated as an Innovation District with the intent of attracting research facilities, startups, and other innovators in the life sciences field to not only work with the medical school,

depress some of the office growth Austin has seen recently (two buildings in the CBD have operating expenses of $21.75 for 2016). Additionally, the perennial issues of traffic/mobility and affordability for housing have the ability to undermine the strong economic growth of the city. Again, the positive indicators are very strong for Austin as we head into 2016, so we are continuing to anticipate more upbeat news in future Market Reports.

but with the University of Texas’s other world-class

¹ Kotkin, Joel. “America's Next Boom Towns.” Forbes, 14 January 2016. Web. 14 January 2016.

into

AUSTIN

TOPS THE CHARTS In 2015, Austin came out on top of a number of lists ranking quality of life, education, jobs and housing. Here is a sampling of Austin’s notable accolades:

RANKED NO. 1 IN:

• • • • • • • • • • • •

Best Large City to Live In (WalletHub) Best Place for Startup Activity (Kauffman Foundation) Top Cities for Tech Businesses (Savills World Research) Highest Job Creation Index Score (Gallup) Tech Job Leaders (Business Facilities) Top Cities for Startups (Business Facilities) Startup Activity (Ewing Marion Kauffman Foundation) Cities Building the Most Housing (Forbes) Cities with the Largest Net Migration Growth (Forbes) U.S. Markets to Watch: Development (Urban Land Institute) Best Public University - University of Texas - Austin (Niche) Healthiest Housing Markets for Cities Over 300,000 Residents (WalletHub)

RANKED NO. 2 IN:

• • • •

Top Cities with Economic Growth Potential (Business Facilities) Multi-Indicator Market Index Score (Top Cities for Stable Housing Market) (Freddie Mac) U.S. Markets to Watch: Overall Real Estate Prospects (Urban Land Institute) U.S. Markets to Watch: Homebuilding (Urban Land Institute)

OTHER TOP TEN RANKINGS: 3rd Best Cities to Start a Career (WalletHub) 4th Most Competitive Cities for the Electronic Industry (Site Selection Magazine) 4th Top Best-Performing Large Cities (Milken Institute) 4th U.S. Markets to Watch: Investment (Urban Land Institute) 5th Most Competitive Cities for the Energy Industry (Site Selection Magazine) 6th Best Cities for Job Seekers (nerdwallet)

"In this world nothing can be said to be certain, except death and [op/ex]." -Ben Franklin

SPECIAL REPORT

WHAT’S THE DEAL WITH

ALL THE OP/EX?

The beginning of the calendar year generally is the time landlords adjust their properties’ budgets. Operating expenses (op/ex) are a key component of this fine-tuning, which includes variables such as property taxes, utility costs, janitorial costs, etc. When looking at the appendix of this report (pages 46 – 62), you will notice an almost universal increase in each building’s operating expenses when compared to their previous quarters’ values (84 up arrows, 7 down arrows), which makes sense because utility rates have been raised over the years, labor rates have increased for maintenance and services, and inflation, in general, makes things cost more. What’s staggering, however, is the amount by which these operating expenses have increased. When analyzing all of our competitive set buildings¹ since 2007, the average operating expenses per building increased more this year than any other by a long-shot: an astounding $1.18 more than their 2015 values.

$1.25

$20.00

$1.00

$15.00

$0.75

$10.00

$0.50

$5.00

$0.25

$0.00

-$5.00

2008

2009

2010

2011

2012

2013

2014

Average Year Over Year Change in Op/Ex per Building

2015

2016

-$0.25

Average YOY Change in OpEx

Average Operating Expenses

Changes in Operating Expenses $25.00

So, why is there this suddenly drastic spike in operating expenses? For this quarter’s special report, we delve deeper into one of the primary underlying components of operating expenses: property taxes.

Average Op/Ex

The Travis County Appraisal District (TCAD) has been under some scrutiny lately in regards to its appraisal methods of commercial properties. The City of Austin filed a lawsuit against the appraisal district in the Fall of 2015 stating that they value commercial and vacant land properties well below market values, thereby placing the majority of the tax burden on homeowners². In a 2015 study done by The University of Texas at Austin, it was found in a sample of 417 transactions done between 2012 and 2014 that the average undervaluation by TCAD of the commercial properties sold was 47% of their fair market value³. One of the primary causes of this discrepancy is the fact that Texas is one of only five states to not mandate the disclosure of sales price data for commercial properties. This has undoubtedly caused some eyebrows to raise—including our own—to observe how TCAD sought to alleviate this problem in 2015 and 2016, and the effects it has on property owners as well as tenants.

Ben Franklin Statue; Photo by Mara Buchi

SPECIAL REPORT METHODOLOGY: For our study, we took a random sample of thirty buildings across the three primary Austin submarkets (CBD, Northwest and Southwest) whose op/ex numbers we track each quarter, and whose op/ex values changed from the previous quarter, to ensure that the op/ex values are updated and currently reflective of their 2016 values. For these thirty buildings, we then found their appraised values and tax rate for each year from 2011-2015 (TCAD only lists appraisals going back five years, and has not yet released 2016 appraised values). From these values,

Appraised Value × Tax Rate

we were able to calculate the percentage of

Net Rentable Area

Taxes as % of Op/Ex =

operating expenses that is comprised of property taxes for that year using the following formula:

Op/Ex

Where “Op/Ex” is the value charged by landlords for operating expenses per square foot of rentable area. We then averaged the following values for each year across all thirty buildings: Op/Ex ($/sf), Assessed Value ($/sf), and Taxes as % of Op/Ex. We were left with the following summary (see Table 1). To compare these values against one another, we plotted them as percent changes over time with 2011 being the reference point (see Graph 1). Table 1

RESULTS: From Graph 1 the most notable takeaways are:

Year

Average Op/Ex

Average Assessed Value ($/SF)

Average Tax Rate

Average Taxes as % of Op/Ex

2011

$11.79

$158.45

2.36%

31.36%

2012

$11.78

$180.41

2.39%

36.34%

• Dramatic increases in both the

2013

$12.15

$193.54

2.45%

38.74%

Average

and

2014

$12.88

$219.65

2.36%

40.11%

Average Taxes as % of Op/Ex

2015

$13.89

$278.26

2.30%

45.81%

from 2014 to 2015 relative to

2016

$15.71

N/A

Assessed

Value

previous years, despite the fact that the actual tax rates decreased over this same time period • Dramatic increase in Average

Graph 1 Percent Changes - Since 2011 80%

Op/Ex from 2015 to 2016 relative to previous years

60%

What does this mean? Primarily, it shows that TCAD has indeed

40%

stepped up their appraisal values of commercial properties drastically since coming under pressure

20%

by the city of Austin, as seen in the 0%

2011 Average Op/Ex

2012 2013 2014 Average Assessed Value $/SF

2015 2016 Average Taxes as % of Op/Ex

SPECIAL REPORT

nearly 80% increase in appraised value per square foot over four years, with nearly half of that increase occurring in the last year. Secondly, Average Taxes as % of Op/Ex increased drastically in 2015, whereas Average Op/Ex remained on a relatively steady incline over the same. This shows that landlords were not quite prepared to pass the cost of the higher property taxes onto their tenants. They seem to have made up for this discrepancy in the new op/ex figures, though, as the dramatic spike in Average Op/Ex occurs in 2016.

University Park

WHAT DOES THIS MEAN FOR YOU? Landlords: While we do not expect 2016 appraisal values to decrease from their 2015 values by any means, we believe that the spike experienced in 2015 will help curb the increases in 2016 values as TCAD’s appraisal methods bring commercial properties’ appraisal values nearer to actual fair market values. However, you might drive prospective tenants away with too high of operating expenses in the future if nothing is done to lower the non-tax portion of your op/ex. If money is invested now in equipment that require less maintenance and consume less energy, you will be able to dampen the rate of increase for your operating expenses, thereby making your properties more competitive and attractive to prospective tenants.

Tenants: Don’t let the sticker shock of drastically higher 2016 operating expenses scare you! This spike likely represents a very short-term trend, and while operating expenses will probably not get any cheaper in the near future, they should not continue to grow at the rate they did this year as TCAD’s commercial property appraisals approach true fair market values. Therefore, it would behoove you to factor in these increases into your 2017 budget. Furthermore, if you are a tenant out in the market looking for new space, you can use this year’s high operating expenses as a tool to negotiate for a lower base rental rate. For example, being that operating expenses jumped several dollars per square foot for buildings downtown, that submarket may be an unviable option now. Point to this spike in operating expenses as what has made the space out of your budget, and negotiate the base rental rate down to an affordable level.

¹Competitive set buildings are considered Class A office buildings located in, or near the core of downtown, and newer suburban office buildings that typically have structured parking and amenities such as conference rooms, workout facilities and/or delis. ²City of Austin v. Travis Central Appraisal District Et Al. 126th Judicial District Court of Travis County, Texas. 18 Sept. 2015. ³Gau, George W., Ph.D. An Analysis of TCAD's Commercial Valuations For City of Austin. 11 Mar. 2015.

AUSTIN CITYWIDE 4Q UPDATE 4Q 2015 was another great quarter for the Austin market, building on a very healthy 2015. 4Q 2015 added another 581,073 sf of new office space, bringing 2015â€™s total of new product to 2,671,968 sf. Outpacing the new deliveries was absorption, as this metric cracked the 1 million sf mark this quarter, with 1,070,732 sf of space absorbed. For the year, a hefty 2,806,508 sf was absorbed, bringing down the overall vacancy rate to 9.64% from 4Q 2014â€™s 10.56%. The overall Class A full service asking rate did decline this quarter to $35.81/sf, but is still $1.03/sf higher than it was at the close of 2014.

Inside 7700 Parmer; Photo by: Third Eye Photography

1,070,732 SF Net Absorption

9.64%

Direct & Sublease Vacancy Rate

$35.81

Avg. Class A Full Service Rental Rate

SNAPSHOT:

CAPITAL MARKETS MAJOR SALES TRANSACTIONS 301

7700 PARMER

SOLD CONGRESS

SOLD LANE

Market

CBD

Market

South

Class

Size (SF)

428,419

Size (SF)

1,023,000

Size (SF)

68,058

Buyer

Prudential Real Estate

Buyer

Accesso Partners

Buyer

OakPoint Real Estate

Seller

Commonwealth Partners

Seller

Spear Street Capital

Seller

Braun Enterprises

Price

N/A

Price

N/A

Price

$7,705,000

Price/SF

N/A

Price/SF

N/A

Price/SF

$113.21

ENCINO TRACE

SOLD I & II

301 Congress

PARK PLACE

SOLD I & II

ENTERPRISE

SOLD PLAZA

Market

North

Class

Size (SF)

320,000

Size (SF)

64,155

Buyer

Brandywine Realty Trust and DRA Advisors

Buyer

OPRE

Seller

Brandywine Realty Trust

Seller

Farahani Family

Price

$91,300,000

Price

$5,950,000

Price/SF

$285.31

Price/SF

$92.74

Notes

Brandywine retained 50% interest in the deal

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

CBD

• Main Street Hub increased their office space by moving to 46,960 sf in One Congress Plaza. They are currently subleasing their previous space in the Perry Brooks Tower.

• Outbound Engine signed a 40,207 sf lease in San Jacinto Center.

CENTRAL

• WeWork continued their expansion into Austin by signing a lease for a whole floor at University Park, occupying 24,747 sf.

• Kendra Scott expanded their recently signed lease at Lamar Central for another 20,000 sf of office space.

NORTHWEST

• LDR Spine renewed and expanded their lease at Aspen Lake One to occupy a total of 88,000 sf. • BancVue renewed their lease at Lakeview Plaza for 62,193 sf. • Planview was the first tenant to sign at the newly delivered Research Park Plaza V by leasing 51,624 sf of space.

AUSTIN SUBMARKET MAP CBD Central East/Northeast North Northwest Round Rock South/Southeast Southwest

AUSTIN OFFICE

DEVELOPMENT PIPELINE This timeline shows office projects over 30,000 SF that have either broken ground or will be breaking ground soon and the estimated year and quarter of delivery.





2016

2017

5th + Colorado

179,000 SF

CBD

Domain 1

124,571 SF

Northwest

Eastside Village

94,500 SF

East

Lakes at TechRidge Building C

39,400 SF

East

NorthShore

23,592 SF

CBD

905 & 906 Broadmoor*

345,000 SF

Northwest

La Frontera Plaza

97,941 SF

Round Rock

Domain 5

74,787 SF

Northwest

*Already existing-coming to market 2Q 2016

Braker Point 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 3Q 2016 4Q

489,404 SF

CBD

801 Barton Springs

90,500

South

Domain 8

500 W 2nd

255,000 SF

Northwest

Shoal Creek Walk

218,432 SF

CBD

îƒĄ PLANNED Future Developments

Future Developments

10721 Domain Dr.

308,000 SF

Northwest

310 Comal

37,500 SF

East

405 Colorado

TBD SF

CBD

604 W 6th Street

31,035 SF

CBD

Amber Oaks Phase I

90,300 SF

Amber Oaks Phase II Amber Oaks Phase III

The Backyard Buildings B, J, & H

171,450 SF

Southwest

The Lakes at TechRidge Building A

48,800 SF

East

Northwest

The Lakes at TechRidge Building B

48,800 SF

East

90,300 SF

Northwest

The Park @ Mueller

116,000 SF

East

45,000 SF

Northwest

The Terrace 3

203,130 SF

Southwest

Aspen Lake Three

128,700 SF

Northwest

The Terrace 4

285,663 SF

Southwest

Austin American Statesman

TBD SF

CBD

The Terrace 5

218,809 SF

Southwest

Cityline at MLK

150,000 SF

East

The Waterfront

625,000 SF

South

Four Points Centre Building 3

250,000 SF

Northwest

Third + Shoal

338,279 SF

CBD

Four Points Centre Building 4

80,000 SF

Northwest

Waller Creek Center

325,000 SF

CBD

Frontera Ridge

400,000 SF

Round Rock

Lantana Ridge I

87,500 SF

Southwest

Lantana Ridge II

87,500 SF

Southwest

Mueller Market District

2,000,000 SF

East

Novare/Post Office

TBD SF

CBD

Paloma Ridge C

112,500 SF

Northwest

Plaza Saltillo

125,000 SF

East

Rainey Gateway

355,000 SF

CBD

Regency Park

90,000 SF

Southwest

Rollingwood Center III

107,000 SF

Southwest

St. Elmo

225,000 SF

South

CENTRAL BUSINESS DISTRICT 4Q UPDATE Another quarter of vacancy rate decline occurred this quarter across the CBD for all office building classes. The rate dropped 76 basis points from an already low 7.83% to 7.07% for all direct and subleasable space. Our competitive set of downtown office buildings (the list of Class A buildings located in, or near, the core of downtown can be found on page 50), moved to a shockingly low 4.53%. Next quarter, the competitive set of buildings will grow larger with the delivery of the NorthShore office building (23,592 sf) and 5th + Colorado (179,000 sf).

Interior of 301 Congress; Photo by: Scott Mason Photography



3,066 SF Net Absorption



7.07%

Direct & Sublease Vacancy Rate



$43.64

Avg. Class A Full Service Rental Rate

CBD UPDATE As of the end of 4Q 2015, NorthShore is 100% pre-leased and 5th + Colorado is 31% pre-leased with some other deals reportedly in the works. There will not be another new office building delivered until 1Q 2017, when the already 42% pre-leased 500 W 2nd will bring 489,404 sf to the downtown skyline. With that being noted, vacancy rates should remain low for the foreseeable future. For the year, vacancy

19 Hartland Plaza Lobby; Photo by: Scott Mason Photography

rates in the competitive set of buildings dropped almost three whole percentage points from 7.52% in 1Q 2015 to 4.53% in 4Q 2015. This drop occurred even with the addition of 143,151 sf of office space that came with the delivery of the Seaholm Power Plant redevelopment. Even more impressive was the lowering of the vacancy rate across all class types during 2015, plummeting from 12.81% to the 7.07% of this quarter.

Class A asking full service rental rates are showing a decline for the overall CBD market this quarter, falling from $44.17/sf last quarter to $43.64/sf in 4Q 2015. Conversely, the competitive set has spiked upward by $3.33/sf this quarter, surging from a previous record of $48.70/sf to a new all-time high of $52.03/sf. The competitive set of buildings include the new operating expense values for the upcoming year, whereas it appears this is not the case for the CBRE dataset (please see the Special Report found on pages 7 â€“ 10 of this report to see why operating expenses have climbed so quickly for 2016). The large upswing in operating expenses plays a major role in the large jump in full service rates for the CBD.

There were not any new deliveries this quarter in the CBD, but there are four buildings currently under construction. The previously mentioned buildings under construction (NorthShore, 5th + Colorado, and 500 W 2nd St) are joined by Shoal Creek Walk, which will deliver 218,432 sf of leasable office space in 3Q 2017 and is already 39% preleased to Cirrus Logic. Like last quarter, only two existing buildings have blocks of available space above 20,000 sf this quarter. The low vacancy rates and limited large blocks are continuing to limit companies looking to grow downtown or move into the CBD.

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 Q1

9,084,414

1,032,112

17,164

11.81%

$41.45

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%

*Absorption includes sublease space

15%

1,200

12%

900

600

300

0% 2014 Q2

Direct Available SF

2014 Q3

2014 Q4

2015 Q1

Sublease Available SF

2015 Q2

2015 Q3

2015 Q4

$45

20%

$44

16%

$43

12%

$42

$41

0% 2014 Q2

2014 Q3

2014 Q4

Average Class A Full Service Rental Rate

Vacancy Rate

Rental Rate

VACANCY RATES VS. RENTAL RATES

2014 Q1

2015 Q1

2015 Q2

2015 Q3

95%

250

93%

200

91%

150

89%

100

87%

85%

83%

(50)

81% 2014 Q1

Direct & Sublease Vacancy Rate

$40

300

2015 Q4

Direct & Sublease Vacancy Rate

2014 Q2

Net Absorption*

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 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 Q1

$43.64 Numbers based on CBRE statistics.

AUSTIN CBD OFFICE RENTAL RATE PROJECTIONS $55 3% Job Growth

$50

1% Job Growth

Full Service Rental Rates ($)

$45 $40 $35 $30 $25 $20 $15

Historic Rental Rate

AQUILA Model

3% Job Growth

1% Job Growth

AUSTIN CBD OFFICE VACANCY RATE PROJECTIONS 35%

11.0 Shoal Creek Walk

30%

10.5 500 W 2nd

10.0

5th + Colorado NorthShore

20%

9.5

15%

9.0

10%

1% Job Growth

3% Job Growth

Market Size

8.5 8.0

Market Size (Millions of SF)

Total Vacancy Rate (%)

25%

7.5

Historic Vacancy Rate

AQUILA Model

3% Job Growth

1% Job Growth

CBD DEVELOPMENT & LARGE AVAILABILITY Stre

SHO CRE AL E WA K LK

Lam

604 W. SIX TH

5TH WES & T

ar B

lvd.

5th

NO POS VARE/ TO FFIC E HOT ZAZ EL 5 GAB A/ COL TH + LES ORA DO

TH EPE E NDE

IND

NT T HIR THE D AUS S HOA + TIN L PRO G PER RES REEN W 500 IDEN W. TIAL ATER 2ND TOW ER NO RTH SHO RE

PER R BRO Y O TOW KS ER ALO F ELEM T & ENT

4 COL 05 ORA D

801 BA SPR RTON ING S

Con g

Rd.

ings

tre

Spr

S. 1st S

ton

Ces ar

Cha

vez

St.

WA LL CRE CEN EK TER

ress

Ave .

O CON NE G PLA RESS ZA

Bar

AU AM STIN E STA RICAN TESM AN

RAI

LARGE BLOCKS OF CONTIGUOUS AVAILABILITY Building OFFICE UNDER CONSTRUCTION HOTEL/RESIDENTIAL UNDER CONSTRUCTION One Congress Plaza FUTURE DEVELOPMENTS Perry Brooks Tower EXISTING AVAILABILITIES 20,000 SF + of available space

Max. Contiguous

44,055 SF

31,037 SF

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

22,400 SF (sublease)

OFFICE PROJECTS UNDER CONSTRUCTION Building

H HOU YATT SE H OTE L HOL & H IDAY OTE I L IN NN DIG O

11th

Stree

treet

Est. Delivery

% Preleased

Total SF

500 W 2nd

42%

489,404 SF

1Q 2017

5th + Colorado

28%

179,000 SF

1Q 2016

100%

23,592 SF

1Q 2016

90,500 SF

2Q 2017

42%

218,432 SF

3Q 2017

NorthShore 801 Barton Springs Shoal Creek Walk

OTHER PROJECTS UNDER CONSTRUCTION Units/Rooms

6th S

Available SF

5th & West

Est. Delivery

Max. Contiguous

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

FAIR M HOT ONT EL

LER RAI K GAT NEY R EWA Y

70 INE Y

Units/Rooms

405 Colorado 604 W 6th Street

Est. Delivery

Max. Contiguous

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

164 Units

Multifamily

TBD

Multifamily

226 Units, 160 Rooms

Hotel/Multifamily

70 Rainey Green Water Residential Tower Hotel Zaza/Gables

AVAILABILITY SUMMARY

CBD CLASS A SUBLEASE SPACE AVAILABLE SPACE

3 29

2,177 SF

31,051 SF

32,603 SF

33,931 SF

1,421 SF

7,165 SF

33,931 SF

31,822 SF

31,530 SF

23,798 SF

10 9

2,502 SF

1,648 SF

1,414 SF

19,000 SF

2,960 SF

19,000 SF

2,018 SF

6,500 SF

4,136 SF

19,000 SF

1,455 SF

782 SF

19,000 SF

7,254 SF

3,000 SF

1,620 SF

6,593 SF

4,669 SF

6,432 SF 2,358 SF

7,887 SF

2,195 SF

2,893 SF

2,809 SF

17,218 SF

18,922 SF

2 12,405 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

418,338 SF 22 Floors 96% Leased $33.00 - $35.00 NNN $17.95 Op/Ex $50.95 - $52.95 Gross

281,196 SF 17 Floors 97% Leased $24.50 NNN $15.92 Op/Ex $40.42 Gross

489,404 SF 29 Floors 42% Pre-Leased $36.50 NNN $15.50 Op/Ex $52.00 Gross

122,747 SF 5 Floors 85% Leased $20.00 - $32.00 NNN $21.27 Op/Ex $41.27 - $53.27 Gross

258,176 SF 26 Floors 97% Leased $32.00 NNN $18.05 Op/Ex $50.05 Gross

179,000 SF 18 Floors 31% Pre-Leased $34.00 - $35.00 NNN $15.20 Op/Ex $49.20 - $50.20 Gross

503,951 SF 32 Floors 97% Leased $33.00 NNN $15.80 Op/Ex $48.80 Gross

33 32

16,711

21,218 SF

7,332 SF

21,218 SF

5,638 SF

21,218 SF

3,715 SF

1,881 SF

8,022 SF

5,275 SF

10,821 SF

4,900 SF

1,761 SF

23,142 SF

5,818 SF

2,118 SF

693 SF 3,520 SF

11,216 SF

850 SF 1,716 SF

3,113 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 94% Leased $27.00 - $29.00 NNN $17.59 Op/Ex $44.59 - 46.59 Gross

326,335 SF 16 Floors 96% Leased $28.00 NNN $17.65 Op/Ex $45.65 Gross

389,503 SF 21 Floors 96% Leased $31.00 NNN $19.84 Op/Ex $50.84 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 NNN $21.75 Op/Ex $59.75 Gross

194,749 SF 13 Floors 100% Leased $30.00 NNN $21.00 Op/Ex $51.00 Gross

518,385 SF 30 Floors 92% Leased $38.00 - $40.00 NNN $17.77 Op/Ex $55.77 - $57.77 Gross

406,279 SF 21 Floors 100% Leased $38.00 - $40.00 NNN $18.75 Op/Ex $56.75 - $58.75 Gross

218,432 SF 14 Floors 42% Pre-Leased $31.00 - $35.00 NNN $16.50 Op/Ex $47.50 - $51.50 Gross

AUSTIN, TX

UFCU Plaza; Photo of: by Name Scott Mason Photography Photo Name; Photo Courtesy

NORTHWEST SUBMARKET 4Q UPDATE The vacancy rate for all classes of buildings in the Northwest (NW) submarket fell from 9.96% to 8.99%. The competitive set of buildings (the list of newer suburban office buildings that typically have structured parking, amenities such as conference rooms, workout facilities and/or delis can be found on page 55) also saw a drop in the vacancy rate, dipping down to 9.91% from last quarter’s 10.64%.



410,012 SF Net Absorption



8.99%

Direct & Sublease Vacancy Rate



$34.14

Avg. Class A Full Service Rental Rate

NORTHWEST

SUBMARKET UPDATE One item of note that was mentioned in last quarter’s report, the overall market net rentable area tracked by CBRE for both 3Q 2015 and 4Q 2015 does not include Paloma Ridge A & B, two Class A buildings combining for 212,400 sf that delivered in 3Q 2015. These two buildings are 100% vacant and their exclusion from the overall office vacancy rate significantly deflates its value. The Paloma Ridge buildings are included in the competitive set, though. Impressively, the competitive set vacancy rate still dropped even with the delivery of three new buildings (Research Park Plaza V, Quarry Oaks III, and Aspen Lake Two). As 2015 came to a close, all-time records were set across each of the three micromarkets. Records were broken in the NW submarket’s full service asking rental rates in 4Q 2015, as well. Across all Class A buildings, full service asking rental rates increased for the eighth straight quar-

Aspen Lake Rendering

ter, jumping from $33.26/sf to $34.14/sf. The competitive set rates also increased this quarter, climbing to $34.30/sf from $33.55/sf. In our competitive set, 36% of the buildings we track raised their base asking rates, whereas only 1.5% lowered their rate. As mentioned previously, there were three deliveries this quarter in the NW submarket. Both Research Park Plaza V (172,854 sf – 30% pre-leased to Planview) and Aspen Lake Two (129,000 sf – 100% pre-leased to Q2) are located in the Far Northwest micromarket and Quarry Oaks III (137,615 sf – 100% pre-leased to Bazaarvoice) is located in the Arboretum/Domain micromarket. As 2015 closes, there are only three projects currently under construction in the NW submarket, all located in the Domain and 0% pre-leased (Domain 1 – 1Q 2016 delivery – 124,571 sf, Domain 5 – 2Q 2016 delivery – 74,787 sf, and Domain 8 – 4Q 2016 delivery – 255,000 sf).

NORTHWEST MICRO MARKETS Arboretum/Domain Far Northwest Shepherd Mountain

The Arboretum/Domain $35.16/sf asking rental micromarket’s vacancy rate is the highest value rate went down and of the three NW microasking rental rate went markets. AS 2015 CAME TO A CLOSE, up from last quarter, ALL-TIME RECORDS WERE The Far Northwest saw rebounding from a SET ACROSS EACH OF THE a large net absorption quarter that saw oppoTHREE MICROMARKETS. this quarter, yet still had site movement for each vacancy rates increase metric. Both the 5.99% to 16.70% from last vacancy rate and the quarter’s 15.48%. Palo$34.82/sf average asking full service rental rate ma Ridge A & B still sits vacant and the newly are all-time records for this micromarket. The three delivered Research Park Plaza V added 121,229 Domain projects will be entering the market at a sf of vacant space to the micromarket. The 100% time when new product is warranted. pre-leased Aspen Lake Two delivery helped mitiThe Shepherd Mountain micromarket continues gate the vacancy rate increase, though. The asking to strengthen as it decreased vacancy rates for full service rental rate did rise, though, to a record the fourth straight quarter (now at 9.42%) and $32.77 for this micromarket. Prior to last quarter’s increased asking full service rental rates for a decline in asking rental rates, the Far Northwest staggering fifteenth straight quarter. Just like the micromarket had fourteen straight quarters of inArboretum/Domain micromarket, both of these creasing rental rates. measurements are all-time records. Additionally, the

NORTHWEST

BY THE NUMBERS NORTHWEST OVERALL SUBMARKET PERFORMANCE Quarter

Net Rentable Area

Direct Available SF

Net Absorption*

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

2014 Q1

16,747,039

1,635,834

102,128

10.21%

$29.20

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

*Absorption includes sublease space

Numbers based on CBRE statistics.

15%

600

95%

2,000

12%

450

93%

1,500

300

91%

1,000

150

89%

500

87%

0% 2014 Q1

2014 Q2

Direct Available SF

2014 Q3

2014 Q4

2015 Q1

Sublease Available SF

2015 Q2

2015 Q3

(150)

2015 Q4

$36

16%

$34

13%

$32

10%

$30

4% 2014 Q2

2014 Q3

2014 Q4

2015 Q1

Average Class A Full Service Rental Rate

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

VACANCY RATES VS. RENTAL RATES

2014 Q1

85% 2014 Q1

Direct & Sublease Vacancy Rate

$28

Absorption (Thousands of SF)

2,500

2014 Q2

Net Absorption*

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Occupancy Rate

Occupancy Rate

NET ABSORPTION

Vacancy Rate

Availability (Thousands of SF)

AVAILABLE SF VS. VACANCY RATE

NORTHWEST SUBMARKET OFFICE RENTAL RATE PROJECTIONS $40

Full Service Rental Rates ($)

$35

3% Job Growth

1% Job Growth

$30

$25

$20

$15

Historic Rental Rate

AQUILA Model

3% Job Growth

1% Job Growth

NORTHWEST SUBMARKET OFFICE VACANCY RATE PROJECTIONS Braker Pointe III 905 & 906 Broadmoor Domain 5

25%

16.7 1% Job Growth

15%

20.0

18.3

Domain 1

20% Total Vacancy Rate (%)

Domain 8

15.0

3% Job Growth

10%

13.3

11.7

10.0

Market Size

Historic Vacancy Rate

AQUILA Model

3% Job Growth

Market Size (Millions of SF)

30%

1% Job Growth 32

CEDAR PARK

ROUND ROCK 9 8

PFLUGERVILLE

4 3 1 2

1413 16 151718

LAKE TRAVIS

ARBORETUM

DOMAIN

SHEPHERD MOUNTAIN

5 7

22 20

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

Direct Available SF

Sublease Available SF

Total Available SF

7700 Parmer - Bldg B

31,500

7700 Parmer - Bldg C

23,693

Amber Oaks F

79,732

Amber Oaks J

6,245

33,147

39,392

Atrium Office Centre

20,340

Domain 3

20,816

Lakewood Center I

45,020

Paloma Ridge A

106,200

Paloma Ridge B

106,200

Park Central I

15,375

23,326

38,701

Park Centre Bldg. 3

57,562

Prominent Pointe I

28,979

Research Park Number Five

39,237

Research Park Place 8

33,518

Research Park Plaza V

121,229

Research Tech Center Bldg 2

22,295

Riata Corporate Park Bldg 4

93,737

Riata Corporate Park Bldg 5

23,783

River Place Corp Park Bldg VII

21,477

The Park at 8300 N. MoPac

6,911

31,958

38,869

Travesia Corporate Park 1-3

33,555

33,945

67,500

UFCU Plaza

28,695

33,518

NORTHWEST AUSTIN OFFICE DEVELOPMENT Building

Total SF

Percent Preleased

Estimated Delivery

Status

Domain 1

124,571

1Q 2016

Under Construction

Domain 5

74,787

2Q 2016

Under Construction

905 & 906 Broadmoor*

345,000

2Q 2016

Coming to Market

Braker Point III†

195,230

3Q 2016

Coming to Market

Domain 8

291,000

4Q 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

Four Points Centre Bldg 3

250,000

Planned

Four Points Centre Bldg 4

80,000

Planned

Paloma Ridge C

112,500

Planned

*Already existing - Coming to market 2Q 2016 †Already existing - Coming to market 3Q 2016

Under Construction

Planned

ROUND ROCK

CEDAR PARK

LAKE TRAVIS

PFLUGERVILLE

7 8 9

11 12

ARBORETUM

15 4 6 2

DOMAIN SHEPHERD MOUNTAIN 34

SOUTHWEST SUBMARKET 4Q UPDATE Across all classes of buildings, the Southwest (SW) submarket had a vacancy rate drop of 349 basis points from last quarter to 9.80%. Juxtaposing that large drop with the rise in competitive set vacancy rates (moving from 7.77% to 10.80%) can be somewhat confusing. This can be explained by the methodology CBRE employs when collecting vacancy data. They count leased space that has not been moved into as vacant, hence “available.” Since we use CBRE’s data for the overall market, this contradicts the dataset for the competitive set buildings (the list of newer suburban office buildings that typically have structured parking, amenities such as conference rooms, workout facilities and/ or delis can be found on page 61).



460,460 SF Net Absorption



9.80%

Direct & Sublease Vacancy Rate



$35.85

Avg. Class A Full Service Rental Rate

SOUTHWEST

SUBMARKET UPDATE In 2Q 2015, three buildings delivered, bringing a total of 680,968 sf to the SW submarket. As the tenants have been moving into these buildings, the CBRE availabilities are going down. In the competitive set, we had already counted those leases, so we had a drop in vacancy last quarter. This quarter, Encino Trace II has delivered with only 17.8% of the 158,137 sf leased, while

Bazaarvoice has moved out of 3900 San Clemente building to go into their new space in Quarry Oaks III in the NW submarket. These two events have brought 265,436 sf to the market and has pushed the competitive set vacancy rate upwards, to be more in line with the CBRE value for this quarter (9.80% vs 10.80%).

SOUTHWEST MICRO MARKETS Far Southwest Near Southwest

Last quarter, the asking full service rental rates for all Class A buildings in the SW submarket climbed to a record high $35.03/sf. This quarter pushed the record even higher to $35.85/sf. The competitive set moved even higher to $38.15/ sf, escalating $0.54/sf over the course of the last quarter. This was the sixteenth consecutive quarter that the competitive set grew in asking rental rates. With Encino Trace II delivering this quarter, no additional major projects are currently under construction in SW Austin. Last quarter, we predicted a bump up in the competitive set’s vacancy rate with Encino Trace II’s delivery and the Bazaarvoice departure, but also noted that we felt vacancy rates would start to drop again. We are not budging from that stance as the SW submarket remains a big draw for tenants due to its unique views, access and proximity to downtown, desirable neighborhoods and a rich talent pool. The Near Southwest micromarket saw its overall vacancy rate climb again from 9.61% to 10.76%, after last quarter’s 235 basis point increase. Both The Park on Barton Creek 2 and Barton Skyway II had over 20,000 sf come available. The Near

Southwest micromarket has continued the trend of increasing asking rental rates every quarter for 19 consecutive quarters. The 4Q 2015 full service asking rate is another record for this micromarket, crossing over the $40/sf threshold for the first time at $40.59/sf. After last quarter’s large drop in vacancy rates for the Far Southwest micromarket, this quarter swung the other way with an increase in 410 basis points in the total vacancy rate. The 10.81% vacancy rate is the highest this micromarket has seen since 2Q 2012. The two primary causes for this rapid increase are the Bazaarvoice departure from the submarket to the NW submarket and the delivery of the partially leased Encino Trace II. Otherwise, there has been normal movement of tenants within this micromarket that should not be cause for much alarm. Landlords continue to take advantage of the strong market by increasing the asking full service rental rates, as illustrated by the increase to $36.75/sf from last quarter’s $36.31/sf.

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 Q1

9,382,293

703,789

(22,457)

8.66%

$31.19

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

*Absorption includes sublease space

Numbers based on CBRE statistics.

15%

1,200

12%

900

600

300

0% 2014 Q1

2014 Q2

Direct Available SF

2014 Q3

2014 Q4

2015 Q1

Sublease Available SF

2015 Q2

2015 Q3

Direct & Sublease Vacancy Rate

$36

12%

$34

$32

$30

0% 2014 Q1

2014 Q2

2014 Q3

2014 Q4

Average Class A Full Service Rental Rate

2015 Q1

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

VACANCY RATES VS. RENTAL RATES 16%

94%

400

92%

200

90%

88%

(200)

2015 Q4

$38

600

86% 2014 Q1

2014 Q2

Net Absorption*

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 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

SOUTHWEST SUBMARKET OFFICE RENTAL RATE PROJECTIONS $40

3% Job Growth

$35

Full Service Rental Rates ($)

1% Job Growth

$30

$25

$20

$15

Historic Rental Rate

AQUILA Model

3% Job Growth

1% Job Growth

25%

12.0

20%

10.6

15%

1% Job Growth

3% Job Growth

10%

9.2

7.8

6.4

5.0

Market Size

Historic Vacancy Rate

AQUILA Model

3% Job Growth

Market Size (Millions of SF)

Total Vacancy Rate (%)

SOUTHWEST SUBMARKET OFFICE VACANCY RATE PROJECTIONS

1% Job Growth

WEST LAKE HILLS BEE CAVE

BARTON CREEK TH SOU TP ES W

4 8

11 2

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

Direct Available SF

Sublease Available SF

Total Available SF

3900 San Clemente

135,366

Encino Trace II

130,070

Rollingwood Center I & II

7,878

110,108

117,986

The Summit 1-5

52,939

3700 San Clemente

51,934

The Park on Barton Creek 1

The Park on Barton Creek 2

38,900

Rialto II

CityView Center

Parkway at Oak Hill 1 & II

23,644

The Terrace 6

22,771

Barton Skyway II

21,435

51,934 42,527

42,527 38,900

1,588

36,421

38,009

24,478

24,478 23,644

SOUTHWEST AUSTIN OFFICE DEVELOPMENT Building

Total SF

Percent Preleased

Estimated Delivery

Status

171,450

Planned

The Backyard - Buildings B, J, & H

Lantana Ridge I

87,500

Planned

Lantana Ridge II

87,500

Planned

Regency Park

90,000

Planned

Rollingwood Center III

107,000

Planned

The Terrace 3

203,130

Planned

The Terrace 4

285,663

Planned

The Terrace 5

218,809

Planned

WEST LAKE HILLS

BEE CAVE

BARTON CREEK TH SOU TP ES W

6 8 7

AVAILABILITY SUMMARY SOUTHWEST CLASS A 4,901 SF

NSW

11,073 SF

NSW

7,237 SF

NSW

6,026 SF

4 3,596 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 94% Leased $26.50 NNN $14.59 Op/Ex $41.09 Gross

5 Floors 112,000 SF 100% Leased

5 Floors 119,549 SF 95% Leased $26.00 NNN $14.47 Op/Ex $40.47 Gross

4 Floors 195,324 SF 98% Leased $25.50 - $26.00 NNN $13.40 Op/Ex $38.90 - $39.40 Gross

$41.00 Gross

5 42,671 SF

42,369 SF

12,782 SF

33,214 SF

FSW

7,048 SF

6,726 SF

FSW

1,590 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 $11.00 Op/Ex $34.50 Gross

4 floors 158,137 SF 18% Leased $23.50 NNN $11.00 Op/Ex $34.50 Gross

3 Floors 85,000 SF 92% Leased $24.50 NNN $14.29 Op/Ex $38.79 Gross

4 Floors 156,069 SF 100% Leased $26.00 NNN $13.83 Op/Ex $39.83 Gross

4 Floors 157,418 SF 96% Leased $26.00 NNN $13.93 Op/Ex $39.93 Gross

5 Floors 138,008 SF 100% Leased $26.75 NNN $14.58 Op/Ex $41.33 Gross

51,534 SF 37,883 SF

37,883 SF

27,276 SF

NSW

11,874 SF

50,798 SF

7,704 SF

50,798 SF

7,878 SF

21,896 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 89% 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

FSW

3700 San Clemente 3700 N Capital of Tx Hwy 5 Floors 249,870 SF 79% 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 46% Leased $25.00 NNN $13.81 Op/Ex $38.81 Gross

52,939 SF

FSW

The Summit at Lantana Bldg 300 7171 Southwest Pkwy 4 Floors 217,077 SF 76% Leased $24.00 NNN $13.06 Op/Ex $37.06 Gross

Southwest Submark

7 6

4 15,796 SF

5,639 SF

2,429 SF

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 89% Leased $25.50 - $26.00 NNN $13.79 Op/Ex $39.29 - $39.79 Gross

4 Floors 173,302 SF 96% Leased $25.50 - $26.00 NNN $13.70 Op/Ex $39.20 - $39.70 Gross

5 Floors 222,580 SF 100% Leased $25.50 - $26.00 NNN $12.86 Op/Ex $38.36 - $38.86 Gross

7 floors 216,511 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 $24.00 NNN $12.42 Op/Ex $36.42 Gross

21,265 SF

21,262 SF

20,228 SF

18,762 SF

NSW

Mira Vista 2705 Bee Caves Rd

NSW

The Park on Barton Creek One 3711 S Mopac Expy 5 floors 102,608 SF 100% Leased $24.50 NNN $13.33 Op/Ex $37.83 Gross

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

FSW

5,725 SF

9,716 SF

2,974 SF

2,559 SF

2,042 SF

NSW

FSW

Plaza on the Lake II 4801 Plaza on the Lake Dr. 3 Floors 111,166 SF 100% Leased $26.50 NNN $14.96 Op/Ex $41.85 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 89% Leased $24.50 NNN $15.99 Op/Ex $40.49 Gross

5 Floors 114,635 SF 100% Leased $24.50 NNN $15.65 Op/Ex $40.15 Gross

6 Floors 197,909 SF 88% Leased $27.50 - $28.00 NNN $15.92 Op/Ex $43.42 - $43.92 Gross

6 Floors 192,214 SF 99% Leased $27.50 - $28.00 NNN $15.99 Op/Ex $43.49 - $43.99 Gross

AUSTIN, TX Q4 2015 CLASS A AVAILABILITY SUMMARY

2 1

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

6,354 SF

3 8,936 SF

ket

3,406 SF

The Summit at Lantana Bldg 400 7171 Southwest Pkwy 4 Floors 220,218 SF 100% Leased $24.00 NNN $13.06 Op/Ex $37.06 Gross

5000 Plaza on the Lake 5000 Plaza on the Lake Dr. 3 Floors 118,063 SF 100% Leased $26.75 NNN $15.57 Op/Ex $42.32 Gross

NSW

FSW

The Park on Barton Creek Two 3711 S Mopac Expy 5 floors 102,587 SF 62% Leased $24.50 NNN $13.33 Op/Ex $37.83 Gross

FSW

9,980 SF

SUBLEASE SPACE AVAILABLE SPACE

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

University Park Conference Room; Photo by Third Eye Photography

LONG TERM PERFORMANCE OF SUBMARKETS Numbers based on CBRE statistics.

20%

15%

10%

Citywide Sublease Availability

40%

32%

24%

16%

Northwest Direct Availability

Northwest Sublease Availability

Northwest Vacancy Rate

Citywide Vacancy Rate

CITYWIDE AVERAGE CLASS A ASKING RATES

$45 Full Service Rental Rate

1,500

18%

1,000

12%

$40 $35 $30 $25 $20

CBD

Northwest

Southwest

500

Citywide

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

Southwest Direct Availability

Southwest Sublease Availability

Southwest Vacancy Rate

Citywide Vacancy Rate

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

$50

Direct & Sublease Vacancy Rate

Availability (Millions of SF)

NORTHWEST AVAILABLE SF VS. VACANCY RATE

24%

Citywide Vacancy Rate

Availability (Thousands of SF)

Citywide Direct Availability

2,000

Direct & Sublease Vacancy Rate

25%

30%

95%

90%

85%

80%

75%

-1

70%

-2

65%

CBD

Northwest

Southwest

Citywide Occupancy Rate

Direct & Sublease Vacancy Rate

2,500

Direct & Sublease Occupancy Rate

30% Availability (Thousands of SF)

CBD AVAILABLE SF VS. VACANCY RATE Direct & Sublease Vacancy Rate

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

Full Service Rental Rate

$40

$30

$20

$10

15% 10% 5%

Suburban

CBD Vacancy Rate

Citywide

DIRECT & SUBLEASE AVAILABILITY 30%

25%

20%

15%

10%

Suburban

Citywide Vacancy Rate

4 Direct & Sublease Vacancy Rate

CBD

Suburban Vacancy Rate

SF UNDER CONSTRUCTION Area Under Construction (Millions of SF)

CBD

Direct & Sublease Availability (Millions of SF)

20%

CBD

Northwest

Southwest

CENTRAL BUSINESS DISTRICT COMPETITIVE SET PERFORMANCE CBD 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 Q1

5,637,136

2014 Q2

5,637,136

618,961

4,210

86,100

11.05%

$44.03

576,465

25,189

21,517

10.67%

$44.81

2014 Q3 2014 Q4

5,827,916

483,868

81,356

227,210

9.70%

$45.13

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

*Absorption includes sublease space

16%

600

12%

400

200

2014 2014 2014 2014 2015 Q1 Q2 Q3 Q4 Q1 Direct Available SF Sublease Available SF

0% 2015 2015 2015 Q2 Q3 Q4 Direct & Sublease Vacancy Rate

$53

14%

$51

12%

$49

10%

$47

$45

$43

2014 Q1

2014 Q2

2014 Q3

2014 Q4

Average Class A Full Service Rental Rate

2015 Q1

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES

700

96%

600

95%

500

94%

400

93%

300

92%

200

91%

100

90%

0 (100)

2014 Q1

2014 Q2

Net Absorption*

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Occupancy Rate

89% 88%

Occupancy Rate

800

Absorption (Thousands of SF)

NET ABSORPTION

Vacancy Rate

Availability (Thousands of SF)

AVAILABLE SF VS. VACANCY RATE

CBD COMPETITIVE SET BUILDINGS Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

100 Congress

411,536

20,182 ↓

2,177 ↑

$37.00

$20.84 ↑

300 West 6th

454,225

1,421

0↓

$36.00

$21.75 ↑

301 Congress

418,338

17,934 ↓

$35.00 ↑

$17.95

400 West 15th

281,196

8,627

21,224 ↑

$24.50

$15.92

501 Congress

122,551

18,922

$32.00

$21.27 ↑

515 Congress

263,058

7,568 ↓

4,415 ↑

$32.00

$18.05 ↑

600 Congress Ave.

503,951

13,187 ↓

$33.00

$15.80

816 Congress

434,081

24,118 ↑

$29.00

$17.59 ↑

Austin Centre

326,335

14,471 ↓

10,874 ↑

$28.00

$17.65 ↑

Capitol Center

164,044

7,920 ↓

7,245 ↑

$28.00

$19.51 ↑

Capitol Tower

172,837

$29.00

$16.52 ↑

Chase Tower

389,503

16,711

$31.00

$19.84 ↑

Colorado Tower

373,334

$34.00

$16.83 ↑

Frost Bank Tower

535,078

0↓

$38.00

$21.75 ↑

IBC Bank Plaza

194,749

4,900 ↑

$30.00

$21.00 ↑

Lavaca Plaza

118,635

$32.50 ↑

$21.74 ↑

Littlefield Building

109,779

30,424

1,800 ↑

$29.00

$15.96 ↑

One Congress Plaza

518,385

44,055 ↓

3,113 ↑

$40.00 ↑

$17.77 ↑

San Jacinto Center

406,279

0↓

$40.00 ↑

$18.75 ↑

Scarbrough Building

130,789

12,178

$32.00 ↑

$17.96 ↑

Seaholm

143,151

$28.00

$12.00

Building Name

NORTHWEST SUBMARKET COMPETITIVE SET PERFORMANCE NORTHWEST COMPETITIVE SET Quarter

Net Rentable Area

Direct Available SF

Sublease Available SF

Direct & Sublease Vacancy Rate

Average Class A Full Service Rental Rate

2014 Q1

12,293,184

1,050,027

135,810

2014 Q2

12,242,690

1,030,332

246,257

56,257

9.65%

$31.21

(141,246)

10.43%

$31.61

2014 Q3

12,389,252

911,833

321,739

2014 Q4

12,845,611

1,197,426

320,587

189,579

9.96%

$32.12

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

2015 Q3

13,310,232

897,208

284,035

292,309

9.00%

$33.83

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

Net Absorption*

*Absorption includes sublease space

16%

1,200

12%

800

400

2014 Q1

2014 Q2

Direct Available SF

2014 Q3

2014 Q4

2015 Q1

Sublease Available SF

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Vacancy Rate

$34

13%

$33

11%

$32

$31

$30

2014 Q1

2014 Q2

2014 Q3

2014 Q4

Average Class A Full Service Rental Rate

2015 Q1

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES 15%

92%

600

91%

400

90%

200

89%

88%

(200)

$35

800

2014 Q1

2014 Q2

Net Absorption*

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Occupancy Rate

87%

Occupancy Rate

1,600

Absorption (Thousands of SF)

NET ABSORPTION

Vacancy Rate

Availability (Thousands of SF)

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 Q1

6,106,452

433,079

55,206

(18,356)

8.00%

$32.55

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

*Absorption includes sublease space

12%

600

400

200

0% 2014 Q1

2014 Q2

Direct Available SF

2014 Q3

2014 Q4

2015 Q1

Sublease Available SF

2015 Q2

2015 Q3

400

95%

300

93%

200

91%

100

89%

87%

(100)

2015 Q4

Direct & Sublease Vacancy Rate

Occupancy Rate

800

Absorption (Thousands of SF)

NET ABSORPTION

Vacancy Rate

Availability (Thousands of SF)

AVAILABLE SF VS. VACANCY RATE

85% 2014 Q1

2014 Q2

Net Absorption*

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Occupancy Rate

$36

11%

$35

$34

$33

$32

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES

3% 2014 Q1

2014 Q2

2014 Q3

2014 Q4

Average Class A Full Service Rental Rate

2015 Q1

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Vacancy Rate

SHEPHERD MOUNTAIN/2222 MICROMARKET PERFORMANCE SHEPHERD MOUNTAIN/2222 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 Q1

2,453,857

276,447

2014 Q2

2,453,857

241,923

29,559

8,688

12.47%

$31.43

46,956

17,127

11.77%

$31.95

2014 Q3

2,453,857

2014 Q4

2,688,442

211,437

92,007

(14,565)

12.37%

$32.28

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

*Absorption includes sublease space

24%

525

18%

350

12%

175

0 2014 Q2

Direct Available SF

2014 Q3

2014 Q4

2015 Q1

Sublease Available SF

2015 Q2

2015 Q3

Direct & Sublease Vacancy Rate

16%

$32

Rental Rate

$34

$30

0% 2014 Q1

2014 Q2

2014 Q3

2014 Q4

2015 Q1

Average Class A Full Service Rental Rate

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Vacancy Rate

Vacancy Rate

VACANCY VS. RENTAL RATES 24%

120

91%

87%

83%

79%

75% 2014 Q1

2015 Q4

$36

95%

(40)

0% 2014 Q1

160

2014 Q2

2014 Q3

Net Absorption*

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Occupancy Rate

Occupancy Rate

700

Absorption (Thousands of SF)

NET ABSORPTION

Vacancy Rate

Availability (Thousands of SF)

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 Q1

3,732,875

340,501

51,045

65,925

10.49%

$28.88

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

*Absorption includes sublease space

24%

600

18%

400

12%

200

0 2014 Q2

Direct Available SF

2014 Q3

2014 Q4

2015 Q1

Sublease Available SF

2015 Q2

2015 Q3

96%

200

92%

100

88%

84%

(100)

0% 2014 Q1

300

80% 2014 Q1

2015 Q4

Direct & Sublease Vacancy Rate

Occupancy Rate

800

Absorption (Thousands of SF)

NET ABSORPTION

Vacancy Rate

Availability (Thousands of SF)

AVAILABLE SF VS. VACANCY RATE

2014 Q2

Net Absorption*

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Occupancy Rate

$34

24%

$32

18%

$30

12%

$28

$26

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES

0% 2014 Q1

2014 Q2

2014 Q3

2014 Q4

Average Class A Full Service Rental Rate

2015 Q1

2015 Q2

2015 Q3

2015 Q4

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

552 ↓

$17.50 ↑

$11.05 ↑

9500 Arboretum

182,331

18,319

$22.00

$13.00

Arboretum Atrium

90,280

2,515

$21.00

$14.38 ↑

Arboretum Plaza One

146,347

$27.00

$15.72 ↑

Arboretum Plaza Two

98,828

$27.00

$15.72 ↑

Arboretum Point

150,033

$23.00

$13.44

Atrium Office Centre

199,858

20,340 ↓

$17.50

$7.89

Austin Oaks

445,240

13,254

3,981

$18.00

$10.90

Balcones Centre

74,876

3,919

$24.00

$9.86

Braker Pointe I

77,454

15,370

$22.50 ↑

$13.16

Braker Pointe II

103,114

1,953

5,162 ↓

$22.50 ↑

$12.89

Braker Pointe III

196,380

$25.00

$12.84

Colina West

69,299

203 ↑

1,150 ↑

$21.00 ↑

$10.71

Domain 2

143,331

$29.00

$11.00

Domain 3

179,006

20,816

$25.50

$10.34

Domain 4

152,012

$24.00

$11.16

Domain 7

221,973

13,000 ↓

$28.00

$11.33

Domain Gateway

173,962

$21.00

$14.95

Great Hills Corporate Center I

59,228

3,601 ↑

$18.50 ↑

$11.52 ↑

Great Hills Corporate Center II

60,429

3,593 ↑

$18.50 ↑

$11.52 ↑

Great Hills Corporate Center III

56,422

8,164 ↓

$18.50 ↑

$11.52 ↑

Great Hills Plaza

139,252

19,458 ↑

$20.00

$12.93 ↑

Greystone Plaza

78,248

8,095 ↓

$18.00 ↑

$12.63

Heritage Plaza

74,736

11,798

$28.00

$11.29

Kaleido I & II

73,149

7,522 ↓

$16.50 ↑

$9.93 ↓

Lakeview Plaza

120,956

6,266

$20.00

$13.10 ↑

Northpoint Centre I & II

151,126

1,527 ↓

$22.00

$11.22

Offices at the Domain Bldg 1

92,955

7,428

$26.50

$15.49 ↑

Offices at the Domain Bldg 2

75,509

$26.50

$14.75 ↑

Building Name

One Far West Plaza

70,642

4,123 ↓

$18.00 ↑

$12.87 ↑

Park North I & II

133,568

8,696 ↑

$18.00

$11.83

Plaza 7000

155,076

17,983 ↓

$26.00 ↑

$13.82 ↑

Prominent Pointe I

150,376

28,979 ↑

$24.50

$13.65

Prominent Pointe II

102,567

0↓

$24.50

$14.70

Quarry Lake Business Center

117,512

5,048

$20.00

$13.75 ↑

Quarry Oaks I

165,435

7,155

$24.00

$11.82

Quarry Oaks II

126,000

$25.00

$11.48

Quarry Oaks III

137,615

11,814

N/A

TBD

Reunion Park

118,142

15,903 ↑

$19.00 ↓

$11.16

Stone Creek I

76,860

$22.00

$0.00

Stone Creek II

162,723

5,077 ↓

$22.00

$12.60

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 ↓

0↓

$21.00 ↑

$14.12 ↑

Stratum Executive Center Bldg B

61,000

0↓

$21.00 ↑

$14.12 ↑

Building Name

Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

Stratum Executive Center Bldg C

61,000

6,175 ↓

$21.00 ↑

$14.12 ↑

Stratum Executive Center Bldg D

61,000

$21.00 ↑

$14.12 ↑

The Campus at Arboretum 1

60,059

2,733 ↓

$23.00 ↑

$14.13 ↑

The Campus at Arboretum 2

33,135

0↓

$23.00 ↑

$13.60 ↓

The Campus at Arboretum 3

32,765

$23.00 ↑

$14.53

The Campus at Arboretum 4

85,916

6,852 ↑

$23.00 ↑

$14.17

The Campus at Arboretum 5

105,000

0↓

$23.00 ↑

$13.94 ↓

The Park at 8300 N. MoPac

93,317

6,911

31,958 ↑

$23.00

$13.40

UFCU Plaza

246,869

28,695 ↑

$20.00

$12.15

Westech 360 Bldgs 1-4

175,529

8,579 ↓

$20.00

$13.60 ↑

Westpark Office 1-4

97,034

2,100 ↓

$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 ↑

$23.50

$13.54 ↑

Bridgepoint Square 1

84,692

6,636

$23.00

$13.54 ↑

Bridgepoint Square 2

92,459

9,359 ↓

$23.75 ↑

$12.43

Bridgepoint Square 3

78,352

$23.75 ↑

$12.43

Bridgepoint Square 4

109,175

$23.75 ↑

$12.43

Bridgepoint Square 5

76,793

$23.75 ↑

$12.43

Champion Office Park I & II

230,000

$26.50

$11.00

Four Points Centre I & II

192,396

$23.50

$12.62

Ladera Bend 1

56,466

$21.50

$16.34

Ladera Bend 2

45,732

0↓

$21.50

$13.88

Ladera Bend 3

56,196

0↓

$21.50

$13.83

Lakewood Center I

47,389

45,020

$22.00

$13.20

Lakewood Center II

44,611

13,206

$22.00

$13.20

102,086

16,556 ↑

$19.50

$9.60

Lakewood on the Park C

78,596

12,808

$19.50

$11.80

Millennium Building

125,612

$24.00 ↑

$12.58 ↑

Park Centre Bldg 1

89,822

3,970 ↓

$18.00

$12.60 ↑

Park Centre Bldg 2

35,095

18,730

$18.00

$12.60 ↑

Park Centre Bldg 3

78,270

57,562

$18.00

$12.60 ↑

Reserve at Bull Creek A

43,867

6,694 ↓

$18.00

$12.28

Reserve at Bull Creek B

43,713

$20.00

$10.86

Reserve at Bull Creek C

43,695

$20.00

$11.44

Lakewood on the Park B

River Place Corporate Park I

76,529

$22.00 ↑

$12.79

River Place Corporate Park II

114,491

4,695 ↓

$22.00 ↑

$12.43

River Place Corporate Park III

113,465

4,339

$22.00 ↑

$12.50

River Place Corporate Park IV

87,639

10,538 ↑

$22.00 ↑

$13.53

River Place Corporate Park V

67,601

0↓

$22.00 ↑

$12.01

River Place Corporate Park VI

62,037

$22.00 ↑

$13.33

River Place Corporate Park VII

69,119

21,477

$22.00 ↑

$14.15

Shepherd Mountain Plaza

100,937

$33.00

$12.49 ↑

Stone Cliff

66,027

11,938

$18.00

$12.73 56

FAR NORTHWEST MICROMARKET COMPETITIVE SET BUILDINGS Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

Amber Oaks A

78,164

0↓

$19.50 ↑

$10.94

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

78,034

79,732 ↑

$19.50 ↑

$10.09

Amber Oaks G

106,455

4,572 ↓

0↓

$19.50 ↑

$10.01

Amber Oaks H

101,045

$19.50 ↑

$10.93

Amber Oaks I

50,313

10,828

$19.50 ↑

$11.63

Building Name

Amber Oaks J

50,111

6,245

33,147

$19.50 ↑

$10.90

Aspen Lake One

204,940

$18.50

$13.26

Aspen Lake Two

129,000

$24.50

$10.00

Crossings at Lakeline I

114,726

4,078

10,445 ↑

$21.50

$10.98

Crossings at Lakeline II

118,046

10,652 ↑

2,189 ↑

$21.50

$11.10

Paloma Ridge A

106,200

$18.00

$9.50

Paloma Ridge B

106,200

$18.00

$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

$22.00

$11.55

Research Park Place 8

125,700

33,518

$22.00

$11.55

Research Park Plaza I

136,068

11,747

$23.00 ↑

$14.98 ↑

Research Park Plaza II

135,813

$23.00 ↑

$14.98 ↑

Research Park Plaza III

173,530

$23.00

$13.08

Research Park Plaza IV

184,114

11,342

$23.00

$13.08

Research Park Plaza V

172,854

121,229

$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

$22.00

$13.30 ↑

Riata Corporate Park Bldg 5

93,828

23,783

$22.00

$13.30 ↑

Riata Corporate Park Bldg 6

93,835

$22.00

$13.30 ↑

Riata Corporate Park Bldg 7

92,719

$22.00

$13.30 ↑

Riata Corporate Park Bldg 8

93,718

16,522

$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 Q1

7,102,874

480,177

202,095

(37,795)

9.61%

$34.71

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

*Absorption includes sublease space

15%

800

95%

800

12%

600

93%

600

400

91%

400

200

89%

200

87%

(200)

0% 2014 Q1

2014 Q2

Direct Available SF

2014 Q3

2014 Q4

2015 Q1

Sublease Available SF

2015 Q2

2015 Q3

Absorption (Thousands of SF)

1,000

85% 2014 Q1

2015 Q4

Direct & Sublease Vacancy Rate

Occupancy Rate

NET ABSORPTION

Vacancy Rate

Availability (Thousands of SF)

AVAILABLE SF VS. VACANCY RATE

2014 Q2

Net Absorption*

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Occupancy Rate

$40

12%

$38

10%

$36

$34

$32

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES

4% 2014 Q1

2014 Q2

2014 Q3

2014 Q4

Average Class A Full Service Rental Rate

2015 Q1

2015 Q2

2015 Q3

2015 Q4

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 Q1

2,712,851

209,356

143,888

(89,075)

13.02%

$37.18

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

*Absorption includes sublease space

16%

300

12%

200

100

0% 2014 Q1

2014 Q2

Direct Available SF

2014 Q3

2014 Q4

2015 Q1

Sublease Available SF

2015 Q2

2015 Q3

Direct & Sublease Vacancy Rate

18%

$41

15%

$39

12%

$37

6% 2014 Q3

2014 Q4

Average Class A Full Service Rental Rate

2015 Q1

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Vacancy Rate

Vacancy Rate

Rental Rate

$43

2014 Q2

200

96%

100

92%

88%

84% 2014 Q1

VACANCY VS. RENTAL RATES

2014 Q1

100%

(100)

2015 Q4

$35

300

2014 Q2

Net Absorption*

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Occupancy Rate

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 Q1

4,390,023

270,821

58,207

51,280

7.49%

$33.19

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

*Absorption includes sublease space

12%

450

300

150

0% 2014 Q1

2014 Q2

Direct Available SF

2014 Q3

2014 Q4

2015 Q1

Sublease Available SF

2015 Q2

2015 Q3

450

100%

300

97%

150

94%

91%

(150)

2015 Q4

88% 2014 Q1

Direct & Sublease Vacancy Rate

Occupancy Rate

600

Absorption (Thousands of SF)

NET ABSORPTION

Vacancy Rate

Availability (Thousands of SF)

AVAILABLE SF VS. VACANCY RATE

2014 Q2

Net Absorption*

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Occupancy Rate

$38

16%

$36

12%

$34

$32

$30

Vacancy Rate

Rental Rate

VACANCY VS. RENTAL RATES

0% 2014 Q1

2014 Q2

2014 Q3

2014 Q4

Average Class A Full Service Rental Rate

2015 Q1

2015 Q2

2015 Q3

2015 Q4

Direct & Sublease Vacancy Rate

NEAR SOUTHWEST MICROMARKET COMPETITIVE SET BUILDINGS Net Rentable Area

Direct Available SF

Sublease Available SF

Asking Rental Rate

Estimated OpEx

Barton Creek Plaza I

72,974

9,617 ↓

$23.00 ↑

$13.65 ↑

Barton Creek Plaza II

64,718

0↓

$23.00

$11.69

Barton Creek Plaza III

64,842

0↓

$23.00

$11.83

Barton Oaks Plaza I

99,404

4,901 ↓

$27.00

$15.98 ↑

Barton Oaks Plaza II

116,368

11,073

$26.50 ↑

$15.56 ↑

Barton Oaks Plaza III

121,467

7,237

$26.50 ↑

$14.59 ↑

Barton Oaks Plaza IV

112,000

$41.00 ↑

$14.73 ↑

Barton Oaks Plaza V

119,549

6,026 ↑

0↓

$26.00

$14.47 ↑

Barton Skyway I

195,324

3,596 ↑

$26.00 ↑

$13.40

Barton Skyway II

195,639

21,435 ↑

$26.00 ↑

$13.79

Barton Skyway III

173,302

7,330 ↑

4,901 ↑

$26.00 ↑

$13.70

Barton Skyway IV

222,580

$26.00 ↑

$12.86

Centre I

39,903

$21.00

$12.50

Centre II

54,610

$19.50

$11.82

Mira Vista

121,147

$27.50 ↑

$14.02 ↓

Overlook at Gaines Ranch

50,725

$26.50

$14.17

Rollingwood Center I & II

214,587

7,878

110,108 ↑

$29.00

$12.00

Spyglass Point

58,576

$22.00 ↑

$13.45

The Park on Barton Creek 1

102,608

42,527

$24.50

$13.33

The Park on Barton Creek 2

102,587

38,900 ↑

$24.50

$13.33

The Terrace 1

115,460

6,354

4,601 ↑

$24.50 ↑

$15.99 ↑

The Terrace 2

114,635

$24.50 ↑

$15.65 ↑

The Terrace 6

196,717

22,771

$28.00 ↑

$15.92 ↑

The Terrace 7

196,215

2,052 ↑

0↓

$28.00 ↑

$15.99 ↑

Building Name

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

51,934

$29.50

$13.27 ↑

3900 San Clemente

251,146

135,366 ↑

$25.00

$13.81 ↓

5000 Plaza on the Lake

118,063

0↓

13,388 ↑

$26.75 ↑

$15.57 ↑

7000 West at Lantana 1 & 2

136,075

DND

$13.14 ↑

Canyon at Wild Basin

74,580

8,034 ↓

0↓

$24.00

$11.60

Capital Ridge

216,511

$30.00

$10.56

Cielo Center

270,711

0↓

1,320 ↓

$19.50

$12.55

CityView 1

46,702

$21.00 ↑

$13.55 ↑

CityView 2

47,809

922 ↑

$21.00 ↑

$13.55 ↑

CityView 3

48,044

0↓

2,015 ↑

$21.00 ↑

$13.55 ↑

CityView Center

137,763

24,478

$26.00 ↑

$11.79

Crystal Mountain 1, 2 & 3

61,762

11,322 ↑

0↓

$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

$11.00

Encino Trace II

158,137

130,070

$23.50

$11.00

Escalade Bldg A

56,701

9,440

$19.50

$13.46 ↑

Escalade Bldg B

56,701

2,083

$19.50

$13.46 ↑

Lake Pointe II

42,933

5,489 ↑

$24.00

$8.42

Las Cimas I

85,000

6,726 ↑

$24.50

$14.29 ↑

Las Cimas II

156,069

0↓

$26.00

$13.83

Las Cimas III

157,418

7,048 ↑

0↓

$26.00

$13.93

Las Cimas IV

138,008

0↓

1,590

$26.75 ↑

$14.58 ↑

Lost Creek Point

73,026

6,800 ↑

$18.00

$12.29 ↓

Parkway at Oak Hill I & II

145,475

23,644 ↑

$24.00 ↑

$13.07

Plaza 290

63,163

1,633 ↓

0↓

$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

77,872

2,213 ↓

$23.00

$13.64 ↑

Rialto II

77,508

1,588

36,421

$23.00

$13.64 ↑

The Enclave Bldgs 1-4

44,704

$17.00

$8.37

The Summit at Lantana Bldgs 1-5

865,832

52,939

$24.00 ↓

$13.06 ↑

Travis Oaks

123,434

5,078 ↓

0↓

$23.50 ↑

$13.30 ↑

Vista Ridge I

75,131

2,199 ↓

$19.00 ↑

$11.33

Westlake Place

61,184

8,836

1,547 ↑

$20.00 ↑

$12.98 ↑

Wild Basin Atrium Bldg A & B

118,910

$17.00

$9.31

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

Stevie Ray Vaughn Statue; Photo by: Katie Haugland