San Antonio Commercial Real Estate Market Overview

Ernest L. Brown IV, CCIM

EVP, Managing Director Central Texas
Grubb & Ellis Company

Location in Texas and within the US

Population Growth
Healthy rate of population growth & in-migration

2.2 2.1

2.0
Population

1.9
2 1.8 1.7

1.6 1.5
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: U.S. Bureau of Labor Statistics

Percent Change

Unemployment Rate
San Antonios unemployment rate as of May 2011 was 7.3%, decreased from 7.8% in January 2011 vs. the U.S. unemployment rate which stood at 9.1 as of May 2011.
10 9 8 7 6 5 4 3 2 99 '00 '01 '02 '03 '04 '05 '06 '07 '08 09 10 11
Source: U.S. Bureau of Labor Statistics

Percent

Annual Employment: San Antonio

40 30
Thousands

20,400 new jobs projected

20 10 0 -10 -20 -30 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 *2011
Source: U.S. Bureau of Labor Statistics, Economy.com * Projections by Moodys Economy.com

San Antonio Office Market

Job Sector Employment Growth

Percentage Change from Prior Year

Source: U.S. Bureau of Labor Statistics Employment data is as of December 2010

Costs of Doing Business

Far lower costs of doing business in San Antonio, a long-term driver
112 108 104 100 96 92 88 84 Dallas Austin Houston Fort Worth San Antonio
Cost of Doing Business, U.S. = 100, 2006

Source: Moodys Economy.com

San Antonio Economic Generators

Bioscience & Healthcare (South Texas Medical Center) Military Services (Randolph AFB, Lackland AFB, Fort Sam Houston) Tourism (rich in historical landmarks and entertainment attractions)

Financial Services (USAA, Citicorp, Frost National Bank, JPMorgan Chase, Wells Fargo)
Information/Technology (Microsoft, Rackspace) Manufacturing (Toyota, Caterpillar) International Trade (proximity to Mexico, NAFTA Corridor)
8

San Antonio Fortune 500 Companies

Other Major Regional Employers

10

Recent Announcements

San Antonio Welcomes BD

San Antonio city leaders celebrated the grand opening of BD (Becton, Dickinson and Company), a leading global medical technology company, during a ribbon cutting ceremony at the company's new North American Professional Service Center in San Antonio on June 3. The company adds to San Antonio's leading industry, healthcare and bioscience, which makes an annual economic impact of nearly $19 billion with more than 140,000 employees. BD is expected to bring nearly 300 new jobs to the Alamo City when fully operational.

Texas A&M San Antonio to open second campus

The Brooks Development Authority announced that Texas A&M University San Antonio has signed a deal to lease more than 77,000 square feet of space at Brooks City-Base.

Brooks City-Base lands VMC and 600 new jobs

VMC Consulting, a Redmond, Washington-based technology consulting and outsourcing company, selected San Antonio for its new 600-seat Customer Care and Technical Support Center. The company leased 34,954 square feet in Building 532 (72,890 square feet) located at 3300 Sidney Brooks Road at Brooks City-Base (formerly known as Brooks Air Force Base).

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Recent Announcements

CPS announced five new partners, who will be opening or moving operations to San Antonio:
Consert Communications software for intelligent lighting (Expected to reach 150 professional and technical jobs by 2014) Greenstar LED light manufacturer (Initially will employ 38) Coldcar manufacturer of all electric delivery trucks (Initially will employ 38, 60-100K SF facility built on 12-15 acres) Summitt Texas Clean Energy going to be building the worlds cleanest fossil fuel burning power plant (something like 25% of the total emissions) (Will open a customer relations office by 2012) Sun Edison 30 megawatt solar power farm to be (60-90 construction jobs per 10 megawatt facility) 12

Recent Announcements

Oil-field Service Companies establishing bases to serve clients drilling in the Eagle Ford Shale in South Texas.
Halliburton purchased 150 acres and is hiring 100 people Weatherford will also hire 100 people for Bexar County location

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Eagle Ford Shale Play

Eagle Ford Leaseholders/Stake in Formation

San Antonio Office Market

San Antonio Office Submarkets

San Antonio Office Statistics

Second Quarter- 2011
Class
A B C Total

Total SF

Vacant SF Vacant %
17.2% 19.8% 12.1% 17.7%

2Q11 Net Absorption 76,152

Average Asking Rent $26.28 $18.79 $16.52 $21.20

10,598,786 1,819,288 11,972,080 2,368,388 3,288,597 399,495

(52,278)
26,457 52,530

25,859,463 4,587,171

Source: Grubb & Ellis

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San Antonio Office Market Trends

Net Absorption vs. Vacancy Rate
1,000 800 600 23% 21% 19% 17% 15% 13% 11% 9% 7% 5%

In Thousands

400 200 0 -200 -400 -600 -800

20 01

20 02

20 03

20 04

20 05

20 06

20 07

20 08

20 09

20 10

Net Absorption

Vacancy Rate

Source: Grubb & Ellis

* Year-to-date

*2 01 1

San Antonio Industrial Market

Population Growth

Region: Strategic Location

More than 50% of all goods flowing between the United States and Mexico travel through San Antonio Centrally located approximately 1,400 miles from Los Angeles, Baltimore, Philadelphia and Detroit Distance to Monterrey, Nuevo Leon is 300 miles and 900 miles to Mexico City San Antonio has direct access to the ports of Long Beach, Houston, and Corpus Christi

San Antonio Industrial Submarkets

San Antonio Industrial Statistics

Second Quarter- 2011
Type Total SF Vacant SF Vacant %
9.7% 11.0% 2Q11 Net Absorption 60,787 38,106 362,937 461,830 Average Asking Rent $4.35 $8.38

General 18,816,505 1,827,062 Industrial R&D/Flex 10,271,319 1,134,330

WH/Dist. 38,966,105 3,851,966

Total 68,053,929 6,813,358

9.9%
10.0%

$4.19
$4.97

Source: Grubb & Ellis

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San Antonio Retail Market

San Antonio Retail Inventory

Power Center, 9.0%

San Antonio Retail

Specialty Center, 0.2%

Mall, 11.5%

General Retail General Retail, 43.4% Shopping Center Specialty Center Mall Power Center

Shopping Center, 35.8%

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San Antonio Retail Market Trends

Supply vs. Demand

Source: REIS, Grubb & Ellis

Commercial RE Investment Volume

Up 100% in 2010, 75% in 2011

Billions

Source: Real Capital Analytics, Grubb & Ellis

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Property Pricing

Source: MIT Center for Real Estate, RCA, Grubb & Ellis

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CRE Loans Maturing by Year

Source: Property & Portfolio Research, Grubb & Ellis

Central Texas Higher Education Institutions

31

Central Texas Higher Education Institution Locations

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Top 10 Central Texas Higher Education Institutions

(By Enrollment)

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Institution Austin Community College Central Texas College Northwest Vista College Palo Alto College San Antonio College St. Phillips College Texas State University University of Texas Austin University of the Incarnate Word University of Texas San Antonio

Enrollment 44,100 24,133 14,584 8,047 21,589 10,731 32,586 51,233 7,708 30,395

Total Enrollment of all 61 Institutions: 298,314

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Recent San Antonio Accolades

The San Antonio economy recently ranked 11 th in the U.S. according to a Brookings Institution study to determine the level of cities recovery from the recession. San Antonio recently ranked 2nd in Forbes list of Americas Fastest-Recovering Cities. In 2010, the San Antonio-New Braunfels region ranked 2nd in Forbes list of Best Big Cities for Job Growth. In 2010, the Alamo city was ranked among the top five cities on Forbes list of fastest growing cities in America. San Antonios economy driven by sectors such as health care and insurance has benefited greatly from military expansions and relatively stable housing prices. Forbes Magazine ranked San Antonio 16th on their recent list of best places for business and careers. The list was strongly dominated by Texas metro areas. Forbes.com rated San Antonio 9th among the best cities for young adults.

Four Texas cities are among the top places in the nation for young professionals to live and work, according to a list released yesterday by Next Generation Consulting (NGC). On NGCs Next Cities list, San Antonio landed 17th.
Milken Institute ranked the San Antonio MSA as 14 th in their list of 2010 Best-Performing Cities. Forbes Magazine recently ranked San Antonio number 6 on their list of 10 Cities Where Americans Are Relocating. Metro Monitor ranked San Antonio among its list of Top 20 Strongest-Performing Metro Areas in 2010. In 2010, Brookings Institute ranked San Antonio among its list of The Top 21 Recession-Proof Cities.

San Antonio Market Overview

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