'07 4Q - Boston

MARKET SMARTTYSONS CORNER‘074QQuarter in ReviewWith just 5.3% direct vacancy in the Class A marketand 2.2% direct vacancy in the Trophy market, tenantsin Tysons Corner faced limited options andexceptionally tight conditions at the end of the fourthquarter.Key Market IndicatorsSupplyYTD Net Absorption21,876,630 SF-102,196 SFBoth direct and total vacancy rates remainedunchanged during the fourth quarter, with rates holdingsteady at 8.9% and 10.9%, respectively. In theabsence of new large vacant blocks of spacebecoming available, absorption was largelynonexistent, with just 7,462 square feet of positive netabsorption in the fourth quarter.The small fourth quarter gain served to offset a fractionof the 102,196 square feet of negative net absorptionexperienced year-to-date in Tysons Corner, which wasprimarily the result of a third quarter move-out by LCCInternational at 7925 Jones Branch Drive and a seriesof smaller relocations.The average asking rental rate in Tysons Corneracross all market segments was disproportionatelyweighted by vast available space in the Class B and Csegments. Available space averaged $29.40 persquare foot, an increase of 4.2% over the past year.Direct space at Trophy properties averaged $40.24 persquare foot.Looking AheadUtility work for the new Metrorail project is scheduled tobegin in late January 2008. The project has thepotential to redefine Tysons Corner as a more efficient,pedestrian-friendly environment, although the shorttermbenefits to the area will be minimal. Constructionis planned for off-peak driving times, but additionaldelays are likely, particularly in locations situated nearthe Route 7 service roads.While the potential exists for short term delays, theaddition of high-speed rail service to the TysonsCorner market will only strengthen its position as aregional business hub. Tysons Corner has fueledNorthern Virginia’s job growth over the past five years,and is expected to capture the largest share of federalspending in the area over years ahead.SFDirect Vacancy Rate 8.9%Total Vacancy Rate 10.9%Average Asking Rent$29.40 PSFUnder Construction616,793 SFNet Absorption, New Supply and Total Vacancy RateChange in Supply Net Absorption Total Vacancy2,000,0001,500,00030%25%1,000,00020%500,00015%010%(500,000)(1,000,000)5%(1,500,000)0%'00 '01 '02 '03 '04 '05 '06 '07Class A vs. B Average Asking Rental Rates$ PSF$40$35$30$25$20Class AClass BAs quality space remains scarce, absorption in themarket will occur mainly in new developments, such asTowers Crescent, Park Place and MRP’s Gannett site,as these will be the only sources of large blocks ofcontiguous Class A space available to the multinationalprofessional service and law firms that comprise thebulk of Tysons Corner’s tenant base.1801 K Street, NW Suite 1000 Washington, DC 20006 + 202.719.50001600 Tysons Boulevard Suite 1000 McLean, VA 22102 + 703.485.8800$15$10$5$0'00 '01 '02 '03 '04 '05 '06 '07www.joneslanglasalle-dc.com