BALTIMORE

3Q11
Emptying Construction Pipeline
In the third quarter of 2011, a total of 488,000 sf of class A office product delivered in the Baltimore office market. Fueled by anticipated government and government contractor demand, third quarter deliveries included: the 228,000-sf 7205 Windsor Boulevard, the 110,000-sf 430 National Business Parkway, the 75,000-sf 6210 Guardian Gateway and the 75,000-sf 6200 Guardian Gateway. The quarter deliveries boasted significant tenants such as Northrop Grumman and Center for Medicare and Medicaid Services (CMS) at 7205 Windsor Boulevard, and Science Applications International Corporation (SAIC) at 6210 Guardian Gateway. Located in close proximity to both the CMS and Social Security Administration (SSA) headquarters in Woodlawn, MD, Northrop Grumman leased 54,626 sf at 7205 Windsor Boulevard to service their CMS contract. Construction deliveries in Harford County continued to increase the submarkets overall vacancy rate, at 28.5%, as supply has increased 432,520 sf, or 48.9%, in 2011 and limited tenant activity has resulted in a 22 percentage point jump in its overall vacancy rate from the first quarter of 2011. A total of 113,637 sf of vacant space at an asking rental rate of $34.00 psf came onto the market with the deliveries of 6200 and 6210 Guardian Gateway. 6200 Guardian Gateway delivered completely vacant and 6210 Guardian Gateway delivered with an occupancy rate of 48.5% as SAIC leased 32,500 sf. Activity was also slow at other 2011 deliveries as the 128,120-sf 206 Research Boulevard sat completely vacant and the 125,000-sf 4696 Millennium Drive held 49,182 sf of vacant space in the third quarter.

Overview
Economic uncertainties lingered in the third quarter of 2011 as job creation numbers fell short of market expectations and government budgetary concerns further weakened consumer and investor confidence. Anticipated federal budget cuts were and remain a primary concern for states like Maryland, which depend on federal funding and the government contract industry. Although budgetary cuts are not expected to impact Maryland dramatically, due to the governments commitment to cyber security and health care, the states dependency on federal funding may limit its recovery efforts. The preliminary unemployment rate for Maryland in August 2011 was 7.3%, according to the Bureau of Labor Statistics, a 0.1 percentage point decrease from August 2010.

Steady Leasing and Sales Activity

Leasing activity was steady in the third quarter of 2011, at 554,456 square feet (sf), with activity concentrated in Baltimore County. Class A product continued to see the largest volume of lease transactions as it accounted for 78.3% of the year-to-date leasing activity in the Baltimore office market. Significant third quarter class A new lease transactions included: the 75,000-sf EA Engineering, Science & Technology Incorporated prelease at 225 Schilling Circle, the 54,626-sf Northrop Grumman lease at 7205 Windsor Boulevard and the 30,784-sf William Scotsman lease at 901 Bond Street. A total of 130,323 sf of class B new lease transactions were executed in the quarter as the Office of Immigration leased 38,055 sf at 3701 Koppers Street and ClearEdge IT Solutions leased 36,213 sf at 10620 Guilford Street. User sales dominated the third quarter sales activity as a total of 619,749 sf of user sales transactions closed in Baltimore City. The largest user sale of the quarter was Under Armours portfolio sale purchase of the 385,749-sf 10101050 Hull Street for $60.2 million. Under Armour is expected to eventually expand its new corporate headquarters, at 1010-1050 Hull Street, by an additional 400,000 sf. The other notable user sale transaction in the third quarter was Chase Brexton Health Services, Inc.s $6.7 million purchase, or $28.63 per square foot (psf), of 1111 North Charles Street from AEGON USA Realty Advisors, LLC.

Outlook
Vacancy rates are expected to largely hold in the Baltimore office market at yearend 2011, with the exception of Harford County due to construction activity. The 95,200-sf 650 McHenry Row is anticipated to deliver completely vacant in the fourth quarter of 2011 as preleasing activity has been limited in the market. Construction activity will remain concentrated in Baltimores non-CBD submarkets as it will service activity near Fort Meade and Aberdeen Proving Ground (APG). Overall net absorption for Baltimores CBD in the fourth quarter is expected to be positive as Transamerica takes 140,526 sf at 100 Light Street. Asking rental rates will most likely remain flat as the market continues its recovery by year-end 2011.

Stats on the Go

Under Construction vs. Completions

Under Construction Completions

Overall Rental Rate vs. Overall Vacancy Rate

Rent Vacancy

3Q10

3Q11

Y-o-Y Change +0.8 pp

12 month Forecast

3.0 2.5

$36.00 $30.00 $24.00

18.0% 15.0% 12.0% 9.0% 6.0% 3.0% 2008 2009 2010 2011F 2012F

Overall Vacancy Direct Asking Rents YTD Leasing Activity (sf)

13.8%

14.6%

2.0 $24.14 $24.18 +0.2% psf/yr 2007 2008 2009 2010 YTD 2011 msf 1.5 1.0 2,046,914 1,770,883 -13.5% 0.5 0.0

$18.00 $12.00 $6.00

BALTIMORE OFFICE REPORT 3Q11

Market/Submarket Statistics
Marke t / Submarke t
CBD M idto wn No rthwe s t No rthe a s t S o uthe a s t S o uthwe s t B a lt im o re C it y C o lum bia No rth C o lum bia S o uth To wn C e nte r Ellic o tt C ity B WI Ho wa rd C o unty H o wa rd C o u n t y Anna po lis R o ute 2 No rth R o ute 2 S o uth B WI/Anne Arunde l B WI/Linthic um I-97/C ra in Hwy A n n e A ru n d e l B a ltim o re C o unty Ea s t To ws o n R o ute 83 S o uth R o ute 83 No rth R e is te rs to wn R o a d C o rrido r Wo o dla wn/C a to ns ville B a lt im o re C o u n t y Ha rfo rd H a rf o rd N ON -C B D B A LT IM O R E T O T A L * R e nta l ra te s re fle c t a s king $ ps f/ye a r.

Inve ntory
13,381,776 1,592,922 911,610 77,016 4,496,353 1,743,662 2 2 ,2 0 3 ,3 3 9 1,167,713 7,086,842 2,078,844 206,770 643,685 11,18 3 ,8 5 4 2,308,268 202,611 261,913 4,564,117 2,628,627 290,988 10 ,2 5 6 ,5 2 4 868,351 3,674,204 1,846,429 3,870,364 4,422,650 3,055,760 17 ,7 3 7 ,7 5 8 1,316,717 1,3 16 ,7 17 4 9 ,3 16 ,4 16 6 2 ,6 9 8 ,19 2

O ve rall Vacancy Rate

17.9% 2.1% 4.4% 0.0% 15.5% 30.4% 16 .6 % 11.4% 14.5% 19.3% 1.6% 37.9% 16 .2 % 5.7% 9.7% 12.9% 11.0% 13.4% 5.6% 10 .3 % 16.6% 13.8% 10.6% 13.5% 12.8% 10.5% 12 .7 % 28.5% 2 8 .5 % 13 .8 % 14 .6 %

Dire ct Vacancy Rate

16.4% 2.0% 4.2% 0.0% 14.8% 29.7% 15 .5 % 10.4% 14.2% 19.3% 1.6% 37.9% 15 .9 % 4.8% 9.7% 12.9% 11.0% 13.3% 5.6% 10 .1% 12.8% 13.6% 10.4% 12.7% 12.5% 10.5% 12 .2 % 28.0% 2 8 .0 % 13 .4 % 14 .0 %

YTD Le asing Activity

376,233 0 0 0 218,722 51,990 6 4 6 ,9 4 5 41,959 243,291 71,445 0 85,881 4 4 2 ,5 7 6 23,692 614 0 117,945 31,165 0 17 3 ,4 16 17,457 46,926 78,713 184,938 37,138 98,144 4 6 3 ,3 16 44,630 4 4 ,6 3 0 1,3 9 4 ,6 5 0 1,7 7 0 ,8 8 3

YTD Unde r Construction Construction Completions

0 0 0 0 0 0 0 68,779 97,345 0 0 0 16 6 ,12 4 0 0 0 401,625 0 0 4 0 1,6 2 5 0 0 0 126,460 0 0 12 6 ,4 6 0 215,200 2 15 ,2 0 0 9 0 9 ,4 0 9 9 0 9 ,4 0 9 0 0 0 0 0 0 0 0 153,500 0 0 0 15 3 ,5 0 0 0 0 0 173,753 0 0 17 3 ,7 5 3 0 0 0 0 0 228,000 2 2 8 ,0 0 0 432,520 4 3 2 ,5 2 0 9 8 7 ,7 7 3 9 8 7 ,7 7 3

YTD Dire ct Absorption

(11,963) 19,421 5,143 0 84,158 14,625 111,3 8 4 982 (10,431) (16,107) 2,703 51,006 2 8 ,15 3 45,644 (562) 151 123,963 (86,494) 0 8 2 ,7 0 2 15,493 (15,712) 25,377 (28,953) 10,125 119,769 12 6 ,0 9 9 120,160 12 0 ,16 0 4 8 0 ,4 6 1 4 6 8 ,4 9 8

YTD O ve rall Absorption

39,859 19,421 4,267 0 83,761 19,060 16 6 ,3 6 8 (10,769) 40,637 (16,107) 2,703 51,006 6 7 ,4 7 0 42,788 (562) 151 129,963 (81,903) 0 9 0 ,4 3 7 (16,848) (12,330) 21,996 (13,055) 4,373 120,471 10 4 ,6 0 7 113,831 113 ,8 3 1 5 0 2 ,8 5 4 5 4 2 ,7 13

O ve rall Wtd. Dire ct Wtd. Avg. Avg. All Classe s Class A Gross Gross Re ntal Re ntal Rate * Rate *
$ 20.80 $ 19.26 $ 22.74 N/A $ 31.38 $ 22.08 $ 2 2 .8 0 $ 22.00 $ 26.82 $ 23.91 $ 23.16 $ 24.21 $ 2 5 .3 0 $ 26.54 $ 15.52 $ 23.80 $ 29.01 $ 23.48 $ 23.50 $ 2 7 .0 1 $ 19.02 $ 20.57 $ 23.71 $ 22.82 $ 19.60 $ 20.95 $ 2 1.2 8 $ 33.62 $ 3 3 .6 2 $ 2 5 .0 6 $ 2 3 .8 4 $ 23.27 $ 25.25 N/A N/A $ 36.58 $ 40.00 $ 2 6 .7 0 $ 23.13 $ 27.85 $ 24.61 $ 23.16 $ 25.35 $ 2 6 .3 0 $ 30.88 N/A $ 25.75 $ 29.49 $ 22.98 $ 23.50 $ 2 8 .8 1 $ 23.66 $ 23.55 $ 24.85 $ 23.37 $ 20.17 $ 23.12 $ 2 3 .2 2 $ 33.78 $ 3 3 .7 8 $ 2 7 .7 8 $ 2 6 .5 4

Market Highlights
SIGNIFICANT 3Q11 LEASE TRANSACTIONS
BUILDING
225 S c hilling C ir 7205 Winds o r B lvd 3701 Ko ppe rs S t 10620 Guilfo rd R d

SUBMARKET
R o ute 83 No rth Wo o dla wn/C a ts o nville S o uthwe s t B WI Ho wa rd C o unty

TENANT
EA Engine e ring, S c ie nc e & Te c hno lo gy Inc No rthro p Grum m a n Offic e o f Im m igra tio n C le a rEdge IT S o lutio ns

SQUARE FEET
75,000 54,626 38,055 36,213

BUILDING CLASS
A A B B

SIGNIFICANT 3Q11 SALE TRANSACTIONS

BUILDING
1010-1050 Hull S t (P o rtfo lio S a le ) 1111 N C ha rle s S t

SUBMARKET
S o uthe a s t M idto wn

BUYER
Unde r Arm o ur C ha s e B re xto n He a lth S e rvic e s , Inc .

SQUARE FEET
385,749 234,000

PURCHASE PRICE
$ 60,200,000 $ 6,700,000

SIGNIFICANT 3Q11 CONSTRUCTION COMPLETIONS

BUILDING
7205 Winds o r B lvd 430 Na tio na l B us ine s s P ky 6210 Gua rdia n Ga te wa y

SUBMARKET
Wo o dla wn/C a ts o nville B WI/Anne Arunde l Ha rfo rd

MAJOR TENANT
C e nte r fo r M e dic a re a nd M e dic a id S e rvic e s (C M S ) N/A S c ie nc e Applic a tio ns Inte rna tio na l C o rpo ra tio n (S AIC )

SQUARE FEET
228,000 110,000 75,000

COMPLETION DATE
3Q11 3Q11 3Q11

SIGNIFICANT PROJECTS UNDER CONSTRUCTION/RENOVATION

BUILDING
801 Lo ng Dr 410 Na tio na l B us ine s s P kwy 6514 M e a do wridge R d

SUBMARKET
Ha rfo rd B WI/Anne Arunde l C o lum bia No rth

MAJOR TENANT
N/A N/A N/A

SQUARE FEET
120,000 110,000 68,779

COMPLETION DATE
1Q12 4Q11 1Q12

Cushman & Wakefield of Maryland, Inc. 500 E. Pratt Street, Suite 500, Baltimore, MD 21202 (410) 685-9595

www.cushmanwakefield.com

* The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. 2011 Cushman & Wakefield, Inc. All rights reserved.