% $ Market Report NEW JERSEY OFFICE 4Q Leasing Activity MSF. Net Absorption

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1 Market Report NEW JERSEY OFFICE 4Q 2015 Accelerating success. ± % $ Leasing Activity MSF Absorption SF 4Q 2015 Quarter-to- Quarter Change Year-to- Year Change YTD ,926, % -21.6% 15,287,319 (948) (1,948,692) (397,260) 2,661,771 Availability Rate 20.5% No Change -0.9pp N/A Average Asking Rent ($/SF/YR) $ % 2.2% N/A Note: pp (percentage points) Unable to keep up with the record demand seen in the third quarter, leasing activity slowed in the fourth quarter, to 2.9 million SF down 45% from the prior quarter. As a result, net absorption turned slightly negative for the first time since 2Q 2014, closing the fourth quarter at negative 948 SF. As was the case in the third quarter, renewals drove activity this quarter, accounting for 42% of the total leasing activity. And, again activity was focused in the Hudson Waterfront, Somerset/Route 78 and Metropark submarkets, which accounted for 38% of all leasing. Continued activity in these submarkets, has led to upward repricing on available blocks of space. At $25.74/SF, the average asking rent increased for the third consecutive quarter up 2.2% from the prior year. With a slowdown in leasing activity this quarter, the availability rate remained flat quarter-over quarter at 20.5, however saw an improvement of 90 basis points from the prior year ANNUAL LEASING ACTIVITY REACHES HIGHEST LEVEL SINCE 2002 Despite the tepid activity in the fourth quarter, New Jersey s annual leasing activity totaled 15.3 million SF in 2015, which marked the highest annual total since This growth can be attributed to the increase in the number of large transactions completed in In total, there were 21 transactions over 100,000 SF, which amounted to 6.1 million SF of leasing activity, compared to 12 transactions in 2014, which totaled 2.4 million SF. As a result, annual net absorption totaled, 2.7 million SF up 23.3% from the prior year. This dynamic improved the overall availability rate by 90 basis points to 20.5%, which marks the greatest year-over-year improvement since NEW JERSEY EXPERIENCES STRONG EMPLOYMENT GROWTH IN 2015 New Jersey has seen strong private sector growth this year, with private sector employers adding 8,000 jobs in November, after adding 15,900 jobs in October, to bring the total to 55,100 jobs so far in Furthermore, private sector employment has added 224,100 jobs since February 2010, the recessionary low point for private sector employment in New Jersey, which represents an increase of 7%. Office-using jobs have also steadily increased, adding 15,200 jobs since July Additionally, the State s unemployment rate continued to show improvement in November, hitting 5.3%, down from 5.7% last quarter and down significantly from its high of 9.8% recorded in January New Jersey Overall Availability Rate vs. Average Asking Rent New Jersey Overall Leasing vs. Net Absorption 25% % Available Asking Rent (+TE) $27 6,000,000 Leasing Net Absorption 20% 15% 10% 5% $26 $25 $24 5,000,000 4,000,000 3,000,000 2,000,000 1,000, % $23 (1,000,000) 1 New Jersey Office Market Report 4Q 2015 Colliers International 300 Interpace Parkway, Bldg. C, 3 rd Floor Parsippany, NJ

2 New Jersey Office Market Report 4Q 2015 NORTHERN NEW JERSEY While the Northern New Jersey office market has shown signs of improvement in 2015, corporate relocations and consolidations continued to inhibit sustained growth. A slow down in leasing activity this quarter coupled with large new blocks of space put on the market, kept the availability rate flat at 22.2%. At $26.56/SF, average asking rent was up 2.6% from last year. This increase is solely attributed to upward repricing on the Hudson Waterfront, specifically at 101 Hudson Street and Harborside Plaza 5, both in Jersey City. Major new blocks of space that became available this quarter include: 295,652 SF at 95 Greene Street in Jersey City - the space was vacated by Bank of America as part of a regional consolidation; and, 150,074 SF at 200 Kimball Drive which was formerly occupied by Novartis. As a result, net absorption turned slightly negative this quarter at negative 2,645 SF. However, demand in New Jersey s core office submarkets, particularly in the Meadowlands and Hudson Waterfront, counteracted further declines in net absorption this quarter. Major transactions in these submarkets include: The Hudson Group s expansion and renewal at 1 Meadowlands Plaza in East Rutherford, leasing an additional 31,860 SF within the building, bringing their total footprint to 93,308 SF; and, both BNP Paribas and Amazon expanded in Jersey City, leasing an additional 39,698 SF at 525 Washington Boulevard and 35,239 SF at 10 Exchange Place, respectively. At 1.3 million SF, leasing activity slowed this quarter, down 37% from last quarter and down 50% from the prior year. Despite the reduced leasing activity this quarter, full-year activity totaled 6.6 million SF, up 4.6% from the 10-year annual average of 6.3 million SF. At 226,463 SF, the Hudson Waterfront submarket showed the strongest fourth quarter leasing activity driven by NICE Systems 59,900 SF relocation from Bergen County to 221 River Street in Hoboken. Following the Hudson Waterfront, Route 280 Corridor recorded 214,194 SF of activity largely driven by Lowenstein Sandler's 170,000 SF new lease at 56 Livingston Avenue in Roseland. Although leasing activity in Northern New Jersey slowed, the average asking rental rates improved for the third consecutive quarter. The average asking rent increased 2.1% from $26.01/SF last quarter to $26.56/SF. The Hudson Waterfront submarket experienced the largest quarter-over-quarter rental rate growth. At 14.9%, the Hudson Waterfront s availability rate improved 300 basis points since its high of 17.9% recorded in Q1 2014, which has driven landlords to increase their asking rents. The average asking rent increased 11.9% from last quarter, closing the fourth quarter at $35.14/SF. Northern New Jersey Availability Rate vs. Average Asking Rent 25% 20% 15% 10% 5% 0% % Available Asking Rent (+TE) $27.00 $26.50 $26.00 $25.50 $25.00 $24.50 $24.00 Northern New Jersey Leasing Activity vs. Net Absorption 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 Leasing Net Absorption (500,000) 2 New Jersey Office Market Report 4Q 2015 Colliers International 300 Interpace Parkway, Bldg. C, 3 rd Floor Parsippany, NJ

3 New Jersey Office Market Report 4Q 2015 CENTRAL NEW JERSEY After a strong 3Q 2015, leasing activity slowed this quarter to 1.6 million SF down 50% from last quarter. Despite tepid leasing activity this quarter, year-to-date leasing activity totaled 8.7 million SF, the highest annual total on record, and more than double the total from The robust leasing figures were driven by major tenant expansions and renewals throughout the year, such as AT&T s 879,000 SF renewal in Bedminster, Vonage s 350,000 SF renewal in Holmdel and Verizon s 1.3 million SF sale/leaseback in Basking Ridge. The Somerset/Route 78 and Metropark submarkets drove leasing activity this quarter, accounting for over 53% of Central New Jersey s total activity. The Metropark submarket has continued to attract users throughout 2015 due to its central location and desirable transportation and amenities. Major transactions in these submarkets include; New Jersey Turnpike Authority s 205,000 SF new lease at 1 HessPlazainWoodbridge,Qualcomm s122,000sfrenewalat500somerset Corporate Center in Bridgewater, and Barnes & Noble 81,054 SF renewal at 120 Mountainview Boulevard in Basking Ridge. As leasing activity slowed this quarter, Central New Jersey was unable to demonstrate any significant improvement in its availability rate whichremainedflatat18.0%forthesecondconsecutivequarter.despite the leasing slow-down in the fourth quarter, year-to-date net absorption totaled 552,917 SF, which resulted in a 50 basis point drop in the availability rate year-over-year. However, a number of large blocks coming online in 2016 may slow the pace of improvement in Central New Jersey s availability rate. The completion of the Bell Works campus in Holmdel will add 880,000 SF of available space to the market, while 650,000 SF will become available at 777 Scudders Mill Road in Plainsboro, as Bristol-Myers Squibb prepares to occupy their new facility in Lawrenceville by late At $24.60/SF, the average asking rent increased this quarter, up $0.43/SF from last quarter. This increase can be attributed to upward repricing at 343 and 333 Thornall Street in Edison. As a result, the Metropark submarket posted the highest growth in rental rates quarterover-quarter, up 10% to close the fourth quarter at $28.58/SF. This also impacted, Central New Jersey s Class A average asking rent which increased $0.35/SF from last quarter to $26.80/SF, with the Metropark and Princeton submarkets continuing to command the highest Class A average asking rents at $30.54/SF and $28.75/SF, respectively. Central New Jersey Availability Rate vs. Average Asking Rent 25% % Available Asking Rent (+TE) $ % 15% 10% 5% $24.50 $24.00 $ % $23.00 Central New Jersey Leasing Activity vs. Net Absorption 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 (500,000) Leasing Net Absorption 3 New Jersey Office Market Report 4Q 2015 Colliers International 300 Interpace Parkway, Bldg. C, 3 rd Floor Parsippany, NJ

4 New Jersey Office Market Report 4Q 2015 CAPITAL MARKETS New Jersey s office investment market had a banner year with annual sales volume reaching pre-recession levels. At $2.5 billion, the annual sales volume in 2015 is up 24% from last years total and has reached its highest level since Investors continued to place capital in well-located Class A assets during the fourth quarter. For example, JFR Global Investments purchased the eight office properties comprising the Princeton Pike Corporate Center in Lawrenceville from Prism Capital Partners for $155 million or $179.89/SF at a 7% cap rate. Also sold this quarter was 2 Tower Center in East Brunswick. The property was purchased by BHN Associates for $61.9 million or $153/SF at an 8% cap rate. As expected the Federal Reserve raised its key interest rate by 25 basis points in December for the first time in almost a decade. This interest rate hike is expected to have minimal impact on the New Jersey commercial real estate markets in the near term as the market largely anticipated the increase. New Jersey Annual Investment Volume Billions Based on sales of $2.5 million and greater OUTLOOK Although leasing activity slowed in the fourth quarter, we expect tenant demand in the coming quarters to rebound as several notable tenants remain in the market with requirements in excess of 100,000 SF. However, while demand is expected to improve in 2016, the availability rate is anticipated to increase as several large blocks of space will hit the market in the coming quarters. The largest block coming to market will be 880,000 SF at 101 Crawfords Corner Road in Holmdel. The former Bell Labs campus is on schedule to be delivered in the second quarter of Additionally, Bristol-Myers Squibb will vacate 650,000 SF at 777 Scudders Mill Road in Plainsboro, and Quest Diagnostics will vacate 141,000 SF at 3 Giralda Farms in Madison. In addition, office users continue to look for opportunities to create more efficient work environments by increasing their space density, which is causing parking issues. As new space requirements are becoming more dense, the 4.00/1,000 parking ratios, which were once standard, are no longer able to accommodate these users, causing landlords to rethink their parking infrastructure. As a result, properties that are accessible to public transportation have become more desirable; and, with such access needs likely to continue to drive demand in 2016, submarkets that are serviced by rail lines such as Hudson Waterfront, Morristown, Metropark and Princeton will likely benefit most from tenant activity. ECONOMIC INDICATORS GDP Gross Domestic Product CCI Consumer Confidence Index NJ Unemployment Rate $18,060 (3Q 2015) [in billions] Increase from 2Q (Dec. 2015) Increase from Nov % (Nov.2015) Decrease from Oct Source: U.S. Department of Commerce, The Conference Board Bureau of Labor Statistics 4 New Jersey Office Market Report 4Q 2015 Colliers International 300 Interpace Parkway, Bldg. C, 3 rd Floor Parsippany, NJ

5 New Jersey Market Overview Recent Transactions & Major Sales Top 4Q 2015 Transactions Submarket Property Address City Leased SF Tenant Lease Type Monmouth County 23 Main Street Holmdel 350,000 Vonage Renewal Metropark 1 Hess Plaza Woodbridge 205,000 NJ Turnpike Authority New Lease Route 280 Corridor 56 Livingston Avenue Roseland 170,000 Lowenstein Sandler New Lease Somerset/Route Somerset Corporate Center Bridgewater 122,000 Qualcomm Expansion/Renewal Meadowlands 1 Meadowlands Plaza East Rutherford 93,308 Hudson Group Expansion/Renewal Somerset/Route Mountainview Boulevard Basking Ridge 81,054 Barnes & Noble Expansion/Renewal Somerset/Route Independence Way Warren 73,476 USGA New Lease Upper Parkway 1 Sony Drive Park Ridge 60,000 BMW New Lease Hudson Waterfront 221 River Street Hoboken 59,900 Nice Systems New Lease Top 4Q 2015 Sales Property Address, City Princeton Pike Corporate Center, Lawrenceville (8 Properties) Building RBA 861,616 JFR Global Investments Buyer Seller Sale Price Price PSF Cap Rate Prism Capital Partners $155,000,000 $ % 556 Morris Ave, Summit 1,545,433 Celgene Merck & Co $90,000,000 $ Tower Center Blvd, East Brunswick 404,500 BHN Associates Inc Alaska Permanent Fund Corporation Sold to User $61,925,000 $ % 333 Thornall St, Edison 196,128 Mack-Cali TA Realty $53,100,000 $ % 41 Slater Dr, Elmwood Park (2 Properties) 180,000 The Hampshire Companies, LLC Prism Capital Partners $22,600,000 $ % 1 Hess Plz, Woodbridge 205,000 Onyx Equities Hess Corporation $14,000,000 $68.29 Sold Vacant 5 New Jersey Office Market Report 4Q 2015 Colliers International 300 Interpace Parkway, Bldg. C, 3 rd Floor Parsippany, NJ

6 New Jersey Market Overview Existing Properties Submarket Northern NJ Stock Total Inventory Availability Rate (%) Average Asking Rent ($) Leasing Activity (QTR.) Net Absorption (QTR.) Palisades 70 6,631, % $ ,930 96,609 Upper Parkway 53 4,875, % $ , ,603 North 17 Corridor 43 5,347, % $ ,222 (18,509) Central Bergen 103 9,153, % $ ,459 (88,650) Route 46/23/ ,384, % $ , ,485 Hudson Waterfront 72 21,800, % $ ,463 (141,939) Meadowlands 42 6,438, % $ ,012 (59,828) Newark 47 15,539, % $ ,045 (35,999) Route 280 Corridor 60 8,482, % $ ,194 8,458 Parsippany ,056, % $ ,046 (186,237) Morristown 94 13,989, % $ ,461 (45,907) Western Morris 22 2,268, % $ ,051 15,130 Chatham/Millburn 16 1,433, % $ ,284 69,139 Total NNJ ,401, % $ ,305,103 (2,645) Central NJ Parkway/Route 22 Corridor 45 2,860, % $ ,579 (13,970) Metropark 57 7,829, % $ ,089 16,030 Somerset/Route ,487, % $ ,548 (88,487) Route 78 West 28 3,929, % $ ,105 20, Corridor 81 9,858, % $ ,451 19,614 Brunswick s 23 2,849, % $ ,238 (10,814) Monmouth County 121 9,309, % $ ,634 (10,814) Princeton ,933, % $ ,242 31,632 Total CNJ ,057, % $ ,621,886 1,697 NJ Overall Class A ,871, % $ ,385,944 (59,854) Class B ,522, % $ ,741 32,457 Class C 168 7,064, % $ ,304 26,449 Market Total 1, ,458, % $ ,926,989 (948) 6 New Jersey Office Market Report 4Q 2015 Colliers International 300 Interpace Parkway, Bldg. C, 3 rd Floor Parsippany, NJ

7 New Jersey Market Overview 7 New Jersey Office Market Report 4Q 2015 Colliers International 300 Interpace Parkway, Bldg. C, 3 rd Floor Parsippany, NJ

8 502 offices in 67 countries on 6 continents United States: 140 Canada: 31 Latin America: 24 Asia Pacific: 199 EMEA: 108 FOR MORE INFORMATION David A. Simon, SIOR Executive Managing Director David.Simon@colliers.com John Obeid Senior Director Research John.Obeid@colliers.com $2.3 billion in annual revenue 1.7 billion square feet under management 16,300 professionals and staff COLLIERS INTERNATIONAL PARSIPPANY 300 Interpace Parkway Bldg. C 3rd Fl. Parsippany, NJ PRINCETON 500 Alexander Park Suite 202 Princeton, NJ About Colliers International Colliers International is a global leader in commercial real estate services, with more than 16,300 professionals operating out of 502 offices in 67 countries. A subsidiary of FirstService Corporation, Colliers International delivers a full range of services to real estate occupiers, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. Colliers International has been recognized and ranked by the International Association of Outsourcing Professionals Global Outsourcing 100 for 10 consecutive years, more than any other real estate services firm. colliers.com Copyright 2015 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. Accelerating success.