'07 4Q - Boston

MARKET SMARTSPRINGFIELD‘074QQuarter in ReviewLeasing activity in Springfield remained slow during thefourth quarter, as the rush of tenant demand inresponse to the Base Realignment and Closure act of2005 subsided, and a series of move-outs and newsublet space on the market resulted in negative netabsorption across all asset classes.Key Market IndicatorsSupplyYTD Net Absorption4,577,918 SF374 SFUncertainty remained about the timing andimplementation of BRAC, and new jobs hung in thebalance between Fort Belvoir and the GSA Warehousesite near the Franconia-Springfield Metrorail stop. Thepotential for considerable delays past the original 2011timeframe remained, and government contractorleasing cooled during the second part of the year,following earlier commitments from such firms as theTauri Group and Booze Allen Hamilton.Direct Vacancy Rate 8.0%Total Vacancy Rate 9.0%Average Asking Rent$26.54 PSFUnder Construction0 SFDirect vacancy rates increased a full percentage pointduring the quarter, from 7.0% in the third quarter to8.0% in the fourth. Total vacancy rose from 7.7% to9.0% over the same period, as a large move-out byVerio at 6221 Electronic Drive and the addition ofsublease space by Lockheed Martin at 5270 ShawneeRoad provided roughly 60,000 square feet of newavailable space.Average asking rental rates declined for the thirdconsecutive quarter, and settled at $26.54 per squarefoot. Class A rents rose modestly, and ended thequarter at $33.40 per square foot, with asking rates atselect developments such as MetroPark andKingstowne Towne Center pushing into the mid-to-high$30’s per square foot.Looking AheadA plan to consolidate six National GeospatialIntelligence Agency offices into a single $1.2 billionheadquarters campus moved ahead during the fourthquarter with the selection of a constructionmanagement contractor and the beginning of theschematic design phase. The design process isexpected to be complete in late 2008, with constructioncompletion estimated for late 2011. The new campuswill comprise approximately 755,000 square feet onroughly 127 acres near Springfield.Although no private sector office projects are underconstruction within Springfield, several developers areplanning projects. A variety of projects have beenproposed around Kingstowne Village Parkway andMetroPark, and in the coming years, we will seedevelopers break ground on these new buildings asapproximately 22,000 jobs are shifted to the greaterSpringfield area.SFNet Absorption, New Supply and Total Vacancy RateChange in Supply Net Absorption Total Vacancy500,000400,000300,000200,000100,0000(100,000)(200,000)'00 '01 '02 '03 '04 '05 '06 '07Class A vs. B Average Asking Rental Rates$ PSFClass AClass B$40$35$30$25$20$15$10$5$0'00 '01 '02 '03 '04 '05 '06 '0725%20%15%10%5%0%1801 K Street, NW Suite 1000 Washington, DC 20006 + 202.719.50001600 Tysons Boulevard Suite 1000 McLean, VA 22102 + 703.485.8800www.joneslanglasalle-dc.com