Lease Accounting Standards & Proposed Regulations

1. Lease Accounting Standards & Proposed Regulations The Effects on Leasing & Buying in the Washington, D.C. Metropolitan Area Prepared by: Mr. Eric H. West, LEED AP, Principal Mr. Richard F. Siegel, Principal

2. State of the Washington, D.C. Market All indicators suggest that the Washington, D.C. office market is in a strong recovery phase: The vacancy rate peaked 12.7% in early 2009 and is currently at 9.3% Since 2009, the total amount of available space has declined by 3M square feet There is less than 2.4M square feet of space under construction Net absorption was 4.0M square feet in 2010, up from negative 615,000 square feet in 2009. *All numbers reflect Class A office space. New Lease Accounting Standards & Proposed Regulations Strategic Real Estate Discussion

3. Vacancy Rates – Washington, D.C. New Lease Accounting Standards & Proposed Regulations Strategic Real Estate Discussion

4. Absorption – Washington, D.C. New Lease Accounting Standards & Proposed Regulations Strategic Real Estate Discussion

5. Average Rental Rates & Average PSF Sales Prices – Washington, D.C. New Lease Accounting Standards & Proposed Regulations Strategic Real Estate Discussion

6. Office Volume & User Purchases – Washington, D.C. Office Sales Volume ($ Billions) User Purchases – Washington, D.C. 2001-2010 62 64 65 35 34 16 New Lease Accounting Standards & Proposed Regulations Strategic Real Estate Discussion

7. Leasing vs. Buying – Washington, D.C. New Lease Accounting Standards & Proposed Regulations Strategic Real Estate Discussion

8. Leasing vs. Buying – Washington, D.C. New Lease Accounting Standards & Proposed Regulations Strategic Real Estate Discussion