$28 $26 $24 $22 $20 $18 1,500,000 1,000, , ,000 -1,000,000. Vacancy Rate 15.9% 16.0% 15.3% Deliveries 1,043,969 1,171, ,089

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1 RESEARCH 2Q 2018 DENVER OFFICE MARKET CORPORATE EXPANSIONS DROVE NET ABSORPTION OF 1 MSF Denver s office market continued full steam ahead in its ninth straight year of expansion, as net absorption in the second quarter of 2018 surpassed 1.0 million square feet. Vacancy was 15.9%, down slightly from 16.0% in the prior quarter and up from 15.3% one year ago. Vacancy will likely continue to fall over the next several quarters, as tenants, many of them new to the Denver market, occupy space leased in both new and existing buildings. The Denver office market has enjoyed an impressive expansion run lasting 34 consecutive quarters, resulting in a total of 10.7 million square feet of net absorption, 8.4 million square feet of new deliveries and a 412-basispoint plunge in vacancy. All of Denver s nine submarkets posted positive net absorption for second-quarter 2018, led by the Southeast Suburban (SES) submarket with 405,647 square feet and followed by the Downtown and Northwest submarkets with quarterly net absorption of 324,490 square feet and 113,119 square feet, respectively. Eight of nine submarkets logged positive year-to-date (YTD) net absorption, with only the Southeast submarket in the red at negative 18,076 square feet. Direct asking rates increased year-over-year in all submarkets, and rates in the core submarkets continued to reach record highs. The Downtown submarket ended the quarter with YTD net absorption of 511,038 square feet, the highest in the entire Denver market. Activity was concentrated in the Class A sector, which posted YTD net absorption of 539,179 square feet. The Class B and Class C sectors were relatively flat, with absorption of negative 78,499 square feet and 50,358 square feet, respectively. Overall vacancy stood at 17.6%, up slightly from 17.5% in the prior quarter and from 16. one year ago. This year-over-year vacancy increase was largely due to the delivery in first-quarter 2018 of the 643,563-square-foot th Street, which delivered 80.0% pre-leased with the majority of move-ins scheduled for later this year. The SES submarket posted YTD net absorption of 444,737 square feet, and vacancy increased to 16.8% from 16.5% in first-quarter 2018 and from 16.0% one year ago. The Class A sector expanded with YTD net absorption of 685,220 square feet, partially offset by the absorption of negative 207,913 square feet in the Class B sector, driven by Travelers Insurance s and National Cinemedia s migration from Class B to Class A space in the first and second quarters, respectively. Charter Communications occupied its new 335,000-square-foot build-to-suit (BTS) project this quarter to accommodate massive growth and other large move-ins scheduled for later this year, including Western Union, will further boost absorption and decrease vacancy. CURRENT CONDITIONS Quarterly net absorption of 1 MSF driven by corporate expansions Vacancy rate of 15.9% 1.4 MSF under construction 1 MSF delivered MARKET ANALYSIS Asking Rent and Availability $28 $26 $24 $22 $20 $18 1 2Q08 2Q09 2Q10 2Q11 2Q12 2Q13 2Q14 2Q15 2Q16 2Q17 2Q18 Net (SF, Millions) 1,500,000 1,000, , ,000 Average Asking Rent (Price/SF) Vacancy (%) MARKET SUMMARY Current Quarter Prior Quarter Year Ago Period 12 Month Forecast Inventory 98.3 MSF 97.3 MSF X MSF Vacancy Rate 15.9% 16.0% 15.3% Quarterly Net 1,006, , ,283 Median Asking Rent $28.12 $26.73 $26.12 Under Construction 1.4 MSF 2.3 MSF 3.5 MSF Deliveries 1,043,969 1,171, , % 18% 16% 14% -1,000,000 2Q08 2Q09 2Q10 2Q11 2Q12 2Q13 2Q14 2Q15 2Q16 2Q17 2Q18 NEWMARK KNIGHT FRANK 2018 RESEARCH 1

2 CONTINUED STRONG DEMAND FOR NEW PRODUCT Eleven projects totaling 1.4 million square feet are currently under construction or renovation. Six projects totaling 1.0 million square feet delivered during second-quarter In the SES, Charter Communications 335,000-square-foot BTS building at Village Center Station was completed and occupied, driving pure positive absorption. One DTC West was delivered with Kentwood Real Estate in place and Stonebridge scheduled to occupy in the third quarter, and 50 FIFTY DTC was completed with no pre-leasing. In the Downtown submarket, Riverview at 1700 Platte, now home to BP Lower 48 s new 120,000- square-foot regional headquarters, was delivered. Flight was completed with anchor tenant BOA occupying its new, 100,000-squarefoot space, and Catalyst delivered 71% pre-leased with tenants occupying later in the year. Eight projects are under construction in the Downtown submarket: 16 Chestnut (428,219 square feet), HUB (245,002 square feet with Home Advisor as its anchor tenant), Platte Fifteen (136,368 square feet), Market Station (the 95,000-square-foot office portion of the mixed-use redevelopment of the former RTD bus hub), Prism (93,816 square feet), Circa Building (87,776 square feet) and 4100 Wynkoop (63,000 square feet). Also Downtown, the SugarSquare project will add 12,240 square feet to the Sugar Building. Seven owner/user projects are also under construction: Partners Group s and Viega s headquarters and Trimble s second building (100,000 square feet, 79,000 square feet and 125,282 square feet), in the NW submarket, and new buildings for the Colorado Department of Transportation, All Copy Products and the Denver Housing Authority and the Global Down Syndrome Foundation s headquarters (175,000 square feet, 81,000 square feet, 65,805 square feet and 41,666 square feet), in the Midtown submarket. Per NKF methodology, these buildings will not be included in the office inventory upon completion, although the proliferation of owner/user projects is indicative of Denver s robust economy. LOOKING FORWARD Denver s economy continues to consistently outperform the nation in terms of job and population growth, home price appreciation, state GDP and personal income levels. Job growth in the state is forecast to slow a bit in 2018, the result of self-limiting effects of the tight labor market, but remain among the top 10 in the nation. There is strong activity planned for the next 12 to 18 months, based on recently signed leases and tenants actively seeking space, setting the stage for continued expansion of Denver s office market. In the Midtown submarket, Civica Cherry Creek (100,231 square feet), Financial House (70,000 square feet) and 3060 Brighton Boulevard (a 44,802-square-foot renovation project), are under construction. LEASE TRANSACTIONS Tenant Building Submarket Type Square Feet WeWork th Street Downtown Expansion 84,000 Pax South Quebec Street SES New 74,000 Alterra 3501 Wazee Street Downtown New 35,000 P2ES Holdings 1670 Broadway Downtown New 33,000 Lennar Colorado 9193 South Jamaica Street SES New 27,000 SELECT SALES TRANSACTIONS Building Submarket Sale Price Price/SF Square Feet 1801 California Downtown $285,000,000 (51% interest) $407 1,372, & th Street Downtown $189,000,000 $ , East 1st Avenue Midtown $37,550,000 $402 93, & 134 Union Boulevard West $25,000,000 $ , & 1865 West 121st Avenue Northwest $17,100,000 $ ,945 NEWMARK KNIGHT FRANK 2018 RESEARCH 2

3 SUBMARKET STATISTICS Inventory Under Construction Vacancy Rate Qtr YTD Direct Asking Rent (Price/SF) Overall (Classes A, B & C) Aurora 4,492, ,655 39,226 $16.00 Downtown 29,223,390 1,161, % 324, ,038 $35.05 Midtown 5,682, , % 30,767 42,754 $26.50 Northeast 2,140, % 25,252 21,929 $22.44 Northwest 8,343, % 113,119 65,865 $24.40 Southeast 6,534, % 45,854-18,076 $21.68 Southeast Suburban 30,444, % 405, ,737 $24.45 Southwest 2,835, % 26,072 24,700 $19.25 West 8,643, % 26,756 30,749 $20.00 TOTAL MARKET 98,340,395 1,376, % 1,006,612 1,162,922 $28.12 Class A Aurora 225, % 0 0 $24.50 Downtown 20,062,174 1,161, % 388, ,179 $40.22 Midtown 2,543, , % 10,588 50,800 $37.50 Northeast 977, % 19,992-7,884 $26.75 Northwest 5,223, % 104,902 79,811 $28.31 Southeast 2,658, % 26,574 21,532 $25.75 Southeast Suburban 17,485, % 519, ,220 $27.30 Southwest 1,046, % -1,673-8,108 $25.00 West 1,255, % 39,518 31,803 $24.50 TOTAL CLASS A 51,477,958 1,331, % 1,107,480 1,392,353 $33.23 Class B Aurora 3,421, % 8,655 39,226 $18.50 Downtown 7,142, % -49,986-78,499 $30.30 Midtown 2,045,147 44, % 15, $25.00 Northeast 738, % 13,725 44,280 $21.72 Northwest 2,626, % ,959 $20.50 Southeast 2,451, % 25,433-41,894 $20.25 Southeast Suburban 10,990, % -100, ,913 $23.45 Southwest 1,202, % -4, $18.00 West 6,337, % -12,824-28,366 $18.75 TOTAL CLASS B 36,956,508 44, % -91, ,875 $23.12 NEWMARK KNIGHT FRANK 2018 RESEARCH 3

4 ECONOMIC CONDITIONS The local economy maintained its trend of steady growth, with payroll employment in May growing 2.8% over the past year. This followed annual job growth of 3.8% in 2015 and 2.6% in EMPLOYMENT BY INDUSTRY Denver, May 2018 Nine of the 10 industry sectors enjoyed year-over-year job creation in May The information and mining, logging and construction sectors logged the largest year-over-year growth at 6.5% and 5.9%, respectively, followed by the manufacturing sector at 4. and the professional and business services sector at 4.1%. Only the other services sector lost jobs, posting a negative 1. job growth. Among the office-occupying sectors, the financial activities sector grew by 1.1%, and the information and professional and business services sectors expanded as previously described. The professional and business services sector has grown to become Denver s largest employment sector, making up 18. of total non-farm employment. 18.1% % 3.3% 3.7% 4.8% 12.6% 7.1% 7.3% 11.5% Information Other Services Manufacturing Mining, Logging & Construction Financial Activities Leisure & Hospitality Education & Health Government Unemployment in Denver stood at 2.5% in April and has been at or less than 3.0% since mid Denver s unemployment rate remained among the lowest in the nation and well below the national rate of 3.9%. UNEMPLOYMENT RATE PAYROLL EMPLOYMENT Trade/Transportation/Utilities Professional & Business Seasonally Adjusted Nonfarm, Not Seasonally Adjusted, 12-Month % Change 8% 6% 4% 0% Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 5% 4% 3% 1% 0% May-13 May-14 May-15 May-16 May-17 May-18 United States Denver United States Denver EMPLOYMENT GROWTH AND ABSORPTION Denver YOY Employment Growth and Office Annual EMPLOYMENT GROWTH BY INDUSTRY Denver, May 2018, 12-Month % Change, Not Seasonally Adjusted 4,000,000 5% 2,400, ,000-1% -800,000-3% -2,400,000-6% -4,000,000-8% Annual Net % Job Growth Mining, Logging & Construction Trade/Transportation/Utilities Manufacturing Professional & Business Financial Activities Information Education & Health Government Other Services Leisure & Hospitality -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% NEWMARK KNIGHT FRANK 2018 RESEARCH 4

5 LAUREN DOUGLAS Director of Research DENVER 1800 Larimer Street, Suite 1800 Denver, CO Newmark Knight Frank has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our data, there may be adjustments in historical statistics including availability, asking rents, absorption and effective rents. Newmark Knight Frank Research Reports are available at All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark Knight Frank (NKF) has not verified any such information, and the same constitutes the statements and representations only of the source thereof, and not of NKF. Any recipient of this publication should independently verify such information and all other information that may be material to any decision that recipient may make in response to this publication, and should consult with professionals of the recipient s choice with regard to all aspects of that decision, including its legal, financial, and tax aspects and implications. Any recipient of this publication may not, without the prior written approval of NGKF, distribute, disseminate, publish, transmit, copy, broadcast, upload, download, or in any other way reproduce this publication or any of the information it contains. NEWMARK KNIGHT FRANK 2018 RESEARCH 5