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					Portland, Oregon
Te n a n t ’ s     Guide               North        American             Markets               First           Quarter                 2010




Overview                                                                   Major Transactions
The Portland market remains in the tenant's favor, though                  Tenant/Buyer                 Size        Type           Lease/Sale
momentum is building towards a market recovery. Portland's office          GSA (IRS)                    63,897      Office         Lease
market ended the first quarter of 2010 with a vacancy rate of              GSA (IRS)                    69,941      Office         Lease
11.3%, with robust renewal and relocation activity. Portland's             GSA (Veteran Affairs)        85,785      Office         Lease
industrial market ended the first quarter of 2010 with an overall          LP                           28,222      Office         Lease
vacancy rate of 8.2%.
                                                                           Black & Veatch Corp          25,116      Office         Lease
                                                                           Opus                         17,770      Office         Lease
Market Trends                                                              Fiserv                       77,226      Office         Lease
  Ÿ The CBD market will absorb over 300,000 SF of government               Danner Boot                  80,000      Industrial     Lease
    tenants as federal buildings are upgraded.                             Owens Corning                123,100     Industrial     Lease
  Ÿ Manage your expectations regarding lease concessions as                Mission Foods                60,200      Industrial     Lease
    landlords start to test their leverage and as there is possibility
    for market recovery. Some landlords still have limited cash,
    and it pays to learn if terms are subject to lender approval
    before proceeding too far with negotiations.
                                                                           Vacancy Rate
  Ÿ Early lease restructuring remains an excellent option to right-                               Q3 2009      Q4 2009       Q1 2010
    size or reduce costs. Some landlords are overwhelmed with




                                                                                                                                         24.4%
    restructure requests and cannot handle the back-log.                    25%
    Suburban class A vacancies will continue to rise as tenants
                                                                            20%
    reduce needed space and move to less expensive space to




                                                                                                                               14.3%
                                                                                                                               14.3%
                                                                                                                              13.7%
                                                                                                                    12.8%
                                                                                                                    12.8%
    reduce costs.




                                                                                                                   12.2%




                                                                                                                                                 12.3%
                                                                                                                                                 12.3%
                                                                                              11.5%
                                                                                              11.2%
                                                                                              11.2%
                                                                            15%
                                                                                    8.1%
                                                                                    8.1%
                                                                                    7.8%




                                                                            10%
Tenant's Perspective
The market continues to reset, demand lags, and a moderate level             5%

of commercial foreclosures continue. For the second quarter of
                                                                             0%
2010, we expect market firming downtown while suburban areas                        Class A   Class B              Class A    Class B      R&D
continue to provide opportunities for tenant side lease                              CBD       CBD                Suburban   Suburban

negotiations.

Our recommendation for CBD tenants is to pursue 15-20%
reduction in average rent from 2007 market highs and secure                Average Rental Rates
long-term, flexible lease terms to lock-in available savings. We           CBD                   Q3 2009         Q4 2009        Q1 2010
continue our caution against pursuing a short-term extension and           Class A Office        $24.35          $25.80         $25.80
then waiting for the right opportunity. If your industrial space size      Class B Office        $20.67          $21.95         $21.95
is larger than average, has a unique configuration, or you don't
have flexibility with location, then the pendulum may swing                Suburban              Q3 2009         Q4 2009        Q1 2010
                                                                           Class A Office        $23.58          $23.01         $23.01
sharply from the tenant's to the landlord's favor in 2011, catching
                                                                           Class B Office        $18.12          $18.20         $18.20
some tenants unaware.                                                      R&D                   $10.08          $10.25         $10.25

Be decisive as good deals may disappear if a landlord's
circumstances change. Consider negotiating all the way to leases
to two equally suitable properties to preserve leverage and
mitigate risk.

                                                                           Prepared By CresaPartners
                                                                           One SW Columbia St., Suite 1610, Portland, Oregon 97258
                                                                           503.598.3900 www.cresapartners.com

				
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