Office Overview

Boston Cambridge Suburbs Q2 2011
Highlights
Vacancy Rate Decreased to 14.9% Asking Rate Decreased to $26.05/SF Cambridge Absorbed 250,000+ SF Sublease Remained at 2.5% Vertex: Game Changer for Boston
Research
Downtown: Quarter in Review
Positives
Average Asking Rate Jumped to $39.27/SF Total Availability Continued to Fall Sublease Rate Fell to 1.6% Back Bay Vacancy Rate Below 5.0% Year-Over-Year Growth in Class B Market Tower Assets Hit the Market
Q2 2011
Negatives
Over (750,000) SF in Year-Over-Year Net Absorption for Class A Market Columbia Managements Space Not Backfilled Class B Asking Rate Decreases to $28.32/SF Financial District Vacancy Increased to 15.0%
10 Year Vacancy Rate

High: Low: Current: 11.9% 4.5% 11.9% Q2 11 Q2 01 Q2 11
(In the Market)
Market Trends
Downtown Team
Direct Vacancy 11.9% Sublease Availability 1.6% Asking Rate $39.27/SF Brian G Smallman G. Vice President bsmallman@lpc.com Jeffrey C. Moore Assistant Vice President jmoore@lpc.com Roberto Magno Assistant Vice President rmagno@lpc.com Brendan W. Miller Senior Associate bmiller@lpc.com Carolyn M. Molloy Associate cmolloy@lpc.com John D. Miller Senior Vice President jmiller@lpc.com
Net Absorption (YOY) (725,200) SF
Net Absorption & Total Availability

800,000 SF 600,000 SF 400,000 SF 200,000 SF 0 SF -200,000 SF -400,000 SF -600,000 SF -800,000 SF
2007 2008 2009 2010 2011
20.0%
Net Absorption Total Availability
17.5% 15.0% 12.5% 10.0% 7.5% 5.0% 2.5% 0.0%
(617) 951-4100 www.lpcboston.com
Research
Downtown: Class A
Total Availability Drops Below 15%
Thus far in 2011, the Class A downtown market has been able to dodge any significant blows and is slowly, but surely, absorbing the delivery of 770,000 square feet of office space at Atlantic W harf. Unfortunately, the graceless ballet of tenant musical chairs continued to affect one of Bostons prime office towers in the second quarter. One Financial Center, which lost Columbia Management in 2010 to 225 Franklin Street, has yet to lease the result of that move with a net loss of over 100,000 square feet in the first half of the year. On the other hand, 75 State Street, which lost Wellington Management to Atlantic W harf in the first quarter, has slowly chipped away at the buildings vacancy in the second quarter with the following leases: New Boston Fund, LPL Financial and LEK Consulting. The uptick in leasing for the owner Brookfield Properties resulted in over 150,000 square feet of new tenants to occupy low to mid-rise space at 75 State Street in Q2. With the total vacancy rate at 4.1 percent in the Back Bay, the submarkets opportunity to capitalize on large requirements has dwindled leaving sizable Class A tenants limited to options in the Financial District and Seaport. These options are by no means inferior space, however. The brand new buildings of Two Financial Center, Fan Pier and Atlantic W harf all still offer attractive options for users that exceed 70,000 square feet. Second generation space at One International Place, as well as towers along High and State Street offer some of the best amenities in the city. Discounted sublease options continue to fall with the Class A sublease rate measuring a no-change at 1.8 percent and the total availability falling by 10 basis points in Q2 to 14.9 percent.
Q2 2011
Submarket Thermometer
Six Month Change in Asking Rate & Vacancy
Hot
Rents Climbing/Vacancy Falling
Back Bay
Warm
Rents Holding/Vacancy Decreases
South Station North Station
Landlord Market
Equilibrium
Cold
Rents Decline/Vacancy Inches Up
Frozen
Slumping Rents/Vacancy Increases
Data Points
Net Absorption (YOY*) (864,500) SF
*Year-Over-Year
Direct Vacancy 11.6%
Sublease Availability 1.8%
Total Availability 14.9%
Asking Rate $45.70/SF
Recent Significant Leases
Net Absorption and Direct Vacancy

800,000 SF 600,000 SF 400,000 SF 200,000 SF 0 SF
2007 2008 2009 2010 2011 2012 Net Absorption - Projection Net Absorption Direct Vacancy
20.0% 17.5% 15.0% 12.5% 10.0% 7.5% 5.0% 2.5% 0.0%
LPL Financial 75 State Street - 68,000 SF Financial District - Relocation LEK Consulting Group 75 State Street - 61,000 SF Financial District - Relocation Duane Morris, LLP 100 High Street - 28,400 SF Financial District - Relocation Massachusetts General Hospital Corp. 100 Cambridge Street - 27,000 SF North Station - Sublease
-200,000 SF -400,000 SF -600,000 SF -800,000 SF
Te n a n t M a r k e t
Financial District Midtown Seaport Charlestown
Research
Downtown: Class A
Financial District
Average Asking Rate Sublease Availability (RSF)
Q2 2011
Back Bay
Average Asking Rate
$70 $60 $50 $40 $30 $20 $10
750,000 RSF 625,000 RSF 500,000 RSF 375,000 RSF 250,000 RSF 125,000 RSF 0 RSF
Sublease Availability (RSF)
$70 $60 $50 $40 $30 $20 $10

Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009 Q2 2010 Q4 2010 Q2 2011
750,000 RSF
625,000 RSF
500,000 RSF
375,000 RSF
250,000 RSF
125,000 RSF
Q4 2007
Q2 2008
Q4 2008
Q2 2009
Q4 2009
Q2 2010
Q4 2010
Q2 2011
0 RSF
West End North End North Station Beacon Hill

7 3 2
Although absorption numbers have been disappointing, average asking rates have shown some tentative signs of improvement in the first half of 2011. The Class A rate increased to $45.70 per square foot with some help from rent growth in the Financial District ($46.18 per square foot). The Back Bays average asking rate for Class A slipped slightly to $44.85 per square foot, but that was due to the limited premium options available above the 20th floor. The Seaport Districts average asking rate remained unchanged at $44.67 per square foot. Since it is a relatively new building, One Marina Drive has inflated the weighted asking rate in that submarket due to the 340,700 square feet available in that building (the submarket was only 507,200 square feet vacant in Q2).
Back Bay Mid Town China Town

5 10
Financial District
4 9 6 8 1
Seaport District
Largest Contiguous Blocks of Space

#
1 2 3 4 5 6 7 8 9 10
Contiguous Blocks by # of Options

Type
Direct Direct Direct Direct Direct Direct Direct Direct Direct Direct
25K - 49K 10K - 24K 5k - 9K 100K+ 75K - 99K 50K - 74K
Building Address
One Marina Park Drive 75 State Street One Federal Street One International Place One Financial Center 125 High Street 53 State Street Atlantic Wharf 99 High Street Two Financial Center
Submarket
Seaport District Financial District Financial District Financial District Financial District Financial District Financial District Financial District Financial District Financial District
Building Size
504,000 813,300 1,120,600 1,025,000 1,194,100 550,900 1,222,700 700,000 730,200 217,000
Contiguous RSF Available

340,700 237,747 283,800 188,100 / 85,000 142,300 131,900 126,500 / 93,600 83,300 82,300 75,700
7 96 38 103
116
Research
Downtown: Class B
Sublease Continues to Decline
As the Financial Districts Class B market remained mired in troubled assets and a vacancy rate of 15.2 percent, the fringe submarkets of the Back Bay, Seaport District and South Station have slowly absorbed space throughout 2011. Year-over-year, the submarket with the highest absorption was South Station at the conclusion of Q2. 1000 Washington Street leased 28,000 square feet of vacant space to the National Indemntity Company, which accounted for a majority of the 30,000 square feet that the small submarket absorbed in Q2. Furthermore, the Seaport District continued to chip away at its vacancy (10.6 percent as of Q2) with over 36,000 square feet of absorption. Smaller deals along Summer Street and Congress Street led to the growth measured in that submarket. Although falling flat in the second quarter of 2011, the Class B Back Bay submarket is certainly heating up due to the limited availability in the Class A market. Unfortunately, the availability rate of 12.2 percent in the Class B Back Bay submarket will surely lead to some negative net absorption in the coming quarters since the vacancy rate sits at about half that number (6.8 percent). The Financial District, which measured a year-over-year net absorption total of approximately 90,000 square feet, will continue to rebound in the second half of 2011 as downtown tenants slowly expand due to improved economic conditions and expected hiring increases. In North Station, the Class B submarket maintained the highest total availability rate of 23.5 percent, with the submarkets vacancy rate calculated at 22.7 percent as of Q2.
Q2 2011
Hot
Warm
Back Bay Seaport South Station
Landlord Market
Equilibrium
Cold
Frozen
Data Points
Net Absorption (YOY*) 139,300 SF
*Year-Over-Year
Total Availability 15.7%

20.0% 17.5% 15.0% 12.5% 10.0% 7.5% 5.0% 2.5% 0.0%
National Indemnity Company 1000 Washington Street - 28,000 SF South Station - Relocation Trader Joes 711 Atlantic Avenue - 14,300 SF South Station - Relocation ISM Consulting 420 Boylston Street - 10,000 SF Back Bay - Relocation Apperian Inc. 321 Summer Street - 8,900 SF Seaport District - Relocation
Financial District North Station Midtown Charlestown
Research
Downtown: Class B
Financial District
Q2 2011
Back Bay
$45.00 $37.50 $30.00 $22.50 $15.00 $7.50 $0.00
$45.00 $37.50 $30.00 $22.50 $15.00 $7.50 $0.00
Q4 2007
Q2 2008
Q4 2008
Q2 2009
Q4 2009
Q2 2010
Q4 2010
Q2 2011
Q4 2007
Q2 2008
Q4 2008
Q2 2009
Q4 2009
Q2 2010
Q4 2010
Q2 2011
Seaport
$45.00 $37.50 $30.00 $22.50 $15.00 $7.50 $0.00
The Class B average asking rate calculated a limited change in Q2, settling at $28.32 per square foot. The Financial District rebounded after a disappointing first quarter, increasing by $.20 for a weighted average of $28.77 per square foot. Back Bays Class B average asking rent fell the other direction in the second quarter to $33.37 per square foot. It too displayed a change of $.20 per square foot. The Seaport Districts average asking rate ($27.39 per square foot) slipped slightly in the second quarter. Although the Seaport District has preformed better than the Financial District in terms of vacancy as of late, the asking rate for the Seaport District historically trends a dollar or more lower than the Financial District.
Q4 2007
Q2 2008
Q4 2008
Q2 2009
Q4 2009
Q2 2010
Q4 2010
Q2 2011

Building Address
1 Congress Street 27-42 Wormwood Street 1 South Station 24 Farnsworth Street 255 State Street 1000 Washington Street Seaport Center 131 Clarendon Street 285-297 Summer Street 31 St. James Avenue
Submarket
North Station Seaport District South Station Seaport District Financial District South Station Seaport District Back Bay Seaport District Back Bay
Building Size
287,000 153,500 210,200 68,000 231,200 242,200 479,900 62,100 48,700 445,800

185,000 121,500 70,300 63,700 58,600 54,700 50,700 50,000 45,700 45,500
Type
Direct Direct Direct Direct Direct Direct Direct Direct Direct Sublease

2 15 6
55
122
25K - 49K 10K - 24K 5k - 9K
100K+ 75K - 99K 50K - 74K
Research
Downtown
Investment Sales
The investment sales market within the city of Boston has come to life and it is not just Class B distressed assets that are looking to change hands, but premium tower assets. With the astronomical sale (yet-to-close) of 33 Arch Street in the Financial District to TIAA CREF for close to $610 per square foot ($368 million) in the second quarter, the tower investment sale frenzy has begun. State Streets headquarters, One Lincoln Street near South Station, and 53 State Street have both jumped on the bandwagon to test the market. One Lincoln includes a State Street lease term that continues for an additional ten years and a highly productive parking garage; leaving industry professionals to believe that the asset will draw a one billion dollar price tag (over $1,000 per square foot). Moreover, 53 State Street is certainly an iconic Boston asset, but the vacancy in that building might concern many investors. But since many national and international investors have been twiddling their thumbs for years waiting for solid tower opportunities in the Boston market, many may be able to overlook some underlying concerns in order to own an iconic Boston tower. In addition to tower assets, low rise office assets have become hot items as well. 121 High Street sold in the second quarter for over $246 per square foot and 131 Clarendon Street, the vacant Back Bay asset, secured a $13.9 million price tag (approximately $225 per square foot). As the market heats up, Bickman has agreed to market 230 Congress Street in the Financial District, which houses both telecom and office space. In the Back Bay, 535/545 Boylston Street will likely attract a significant number of potential investors, due to the low vacancy rate in that submarket. Thus far in 2011, the Boston investment sales market appears to have capitalized on the pent-up demand for Boston office product with a new cash flowing asset trying its luck each week.
Q2 2011
33 Arch Street (Financial District)
230 Congress Street (Financial District)
Development
Bostons Seaport District is on track to become a thriving lab and office market with the new addition of Vertex Pharmaceuticals for 1.1 million square feet of new lab and office space. The two buildings are certainly a game changer for the Seaport District, but it would be unprofessional to get too giddy about the opportunities for the upand-coming submarket. Especially when you consider the history of the neighborhood. Fidelity and Manulife Financial have both been in the Seaport District for a decade and JP Morgans move, as well as Fish and Richardsons, over the last few years has yet to generate further enthusiasm for development of a 24/7 city scene. But, Vertexs move will likely be the tipping point to change the Seaport District from a sea of parking lots, to a thriving metropolis due to the thousands of new employees in the submarket. Hundreds of thousands of apartments and condos have been planned for the neighborhood in addition to new hotels and retail spaces; all of which would benefit from the new life in the neighborhood. Overall, with a Vertex presence in four years, its highly likely that at least a few of these projects be brought to fruition.
53 State Street (Financial District)
Research
Cambridge Office: Quarter in Review
West Cambridge
Q2 2011
Positives
Pegasystems Committed to One Rogers 400 Technology Center Slated for Lab Total Availability Rate Drops to 11.4% Vacancy Rate Drops to 8.9% Biogen Moving Back to Cambridge East Cambridge Absorbs 209,400 RSF in Q2
Negatives Mid Cambridge

Year-Over-Year Negative Growth in Mid & West East Cambridge West Cambridge Class A Vacancy: 32.2% Average Rent Decreases to $35.10/RSF Build-to-Suits Hindering Absorption
10 Year Vacancy Rate: Office & Lab

Market Trends: Office
Cambridge Team
Sublease Availability 2.6% Asking Rate $35.10/SF John D. Miller Senior Vice President jmiller@lpc.com
Net Absorption (YOY) 122,500 SF
Direct Vacancy 8.9%

2007 2008 2009 2010 2011 Office Net Absorption Office Availability
Jeffrey C. Moore Assistant Vice President jmoore@lpc.com

20.0% 17.5% 15.0% 12.5% 10.0% 7.5% 5.0% 2.5% 0.0%
Jesse Flynn Senior Associate jeflynn@lpc.com
Research
Cambridge: Office
Pegasystems Relocates
East Cambridge office continued to impress in the second quarter of 2011. The submarket absorbed over 210,000 square feet in the second quarter with the relocation of Pegasystems from 101 Main Street to One Rogers Street. Additionally, the vacancy rate plummeted to 6.8 percent, which was assisted by the scheduled conversation of 400 Technology Square from office to lab. The space was previously occupied by Forrester Research, which left the East Cambridge submarket for a build-to-suit in West Cambridges Discovery Park. Like East Cambridge, Mid Cambridges vacancy rate has decreased to 6.7 percent in the first half of 2011. Due to some limited leasing at 19 Blackstone Street (Good Start Genetics leased 15,700 square feet), the Mid Cambridge office market absorbed close to 25,000 square feet in Q2. Unlike its neighboring submarkets, West Cambridge office has not seen as much success in the first half of 2011. With over 43,000 square feet of year-over-year negative net absorption and a Class A vacancy rate at 32.2 percent, the West Cambridge office market has seen better days. Although a majority of the vacancy was tracked to two troubled assets, 125/150 Cambridgepark Drive, the fact that East Cambridge tenants have begun to favor the Seaport District over West Cambridge does not help. Technology tenants from the Route 128 market are expected to help West Cambridge regain its footing, but that will likely take 3 to 6 quarters.
Q2 2011
Hot
East Cambridge - Class A
Warm
East Cambridge - Class B Mid Cambridge - Class A/B
Landlord Market
Equilibrium
Cold
Frozen
West Cambridge - Class A
Data Points
Net Absorption (YOY) 122,500 SF Direct Vacancy 8.9% Sublease Availability 2.6% Total Availability 11.4% Asking Rate $35.10/SF

Pegasystems
One Rogers Street - 163,000 SF
20.0% 17.5% 15.0% 12.5% 10.0% 7.5% 5.0% 2.5% 0.0%
East Cambridge - Relocation & Expansion
Millennium Pharmaceuticals
350 Massachusetts Avenue - 37,000 SF Mid Cambridge - Expansion
Enobia Pharmaceuticals
55 Cambridge Parkway - 21,000 SF East Cambridge - Sublease
SAP America
One Charles Park - 21,100 SF East Cambridge - Renewal
West Cambridge - Class B
Research
Cambridge: Office
Class A
Q2 2011
Class B
$60 $50 $40 $30 $20 $10 $0
$45.00 $37.50 $30.00 $22.50 $15.00 $7.50 $0.00
Q4 2007
Q2 2008
Q4 2008
Q2 2009
Q4 2009
Q2 2010
Q4 2010
Q2 2011
Q4 2007
Q2 2008
Q4 2008
Q2 2009
Q4 2009
Q2 2010
Q4 2010
Q2 2011
East Cambridge: Class A

$60 $50 $40 $30 $20 $10 $0
The average asking rate in East Cambridge climbed a few dollars to $40.76 per square foot. Further down Massachusetts Avenue, the overall asking rate for Mid Cambridge trailed behind East Cambridge at $38.18 per square foot, but the Class B asking rate was one of the highest of all Class B submarkets in Greater Boston at $33.93 per square foot (Back Bay was a close second). Overall, the average asking rate decreased for Cambridge office in the second quarter of 2011 due to the plethora of space available in West Cambridge. The asking rate in that submarket averaged $28.49 per square foot; a significant discount from East and Mid Cambridge, pulling the overall weighted average of the Cambridge office market down to $35.10 per square foot.
Q4 2007
Q2 2008
Q4 2008
Q2 2009
Q4 2009
Q2 2010
Q4 2010
Q2 2011

Building Address
4 Cambridge Center 150 Cambridgepark Drive 1 Broadway 125 Cambridgepark Drive One Main Street 215 First Street 210 Broadway 101 Main Street 10 Fawcett Street 20 University Road
Submarket
East West East West East East Mid East West Mid
Class
A A A A A A A A B A
Building Size
198,300 252,200 312,000 183,900 305,600 380,000 64,800 341,800 130,300 110,000

81,300 / 77,900 57,500 / 53,700 36,000 32,200 31,600 26,100 25,500 23,350 23,200 21,600
Type
Direct/Sublease Direct Direct Direct Sublease Direct Direct Direct Direct Direct

5 2 2
31
35
25K - 49K 10K - 24K 5k - 9K
100K+ 75K - 99K 50K - 74K
10
Research
Suburban Office: Quarter in Review
Positives
Lojack Filled Troubled 40 Pequot Way Route 128 Absorbed 93,700 SF Acme Packet Leased 262,000 SF in Bedford 690 Canton Street Traded for $209/SF Year-Over-Year Positive Absorption: 452,900 SF Sublease Dropped to 3.0%
Q2 2011
Negatives
Overall Availability Jumped to 23.1% I-495 Net Absorption Neutral in Q2 Suburban Asking Rate Slipped to $19.62/SF Class A Products Vacancy Increased to 16.5%
10 Year Vacancy Rate

Market Trends
Suburban Team
Gregory H. Cahill, SIOR Senior Vice President gcahill@lpc.com
Net Absorption (YOY) 364,000 SF
Kevin P. Malloy Senior Vice President kmalloy@lpc.com Rob Cronin Vice President rcronin@lpc.com Tim Latham, CCIM Vice President tlatham@lpc.com Ellison Patten Vice President epatten@lpc.com Ned Halloran Assistant Vice President nhalloran@lpc.com Rich Modliszewski Associate rmodliszewski@lpc.com Craig MacDonald Associate cmacdonald@lpc.com

1,600,000 SF 1,200,000 SF 800,000 SF 400,000 SF 0 SF -400,000 SF -800,000 SF -1,200,000 SF -1,600,000 SF
2007 2008 2009 2010 2011 Net Absorption Total Availability
24% 21% 18% 15% 12% 9% 6% 3% 0%
11
Research
Suburban Office: Route 128
Trouble in Route 128 South
The Route 128 market gained some ground in the second quarter with over 93,000 square feet of positive net absorption. Year-over-year, Route 128s net absorption total exceeded 825,000 square feet; the most totaled of all the major Greater Boston markets. Route 128 South fell negative in the second quarter by 26,400 square feet mostly due to State Street vacating 93,000 square feet of back-office space at 2 Granite Avenue in Milton and space at 105 Rosemont in Westwood. In Norwell, the Norwell Visiting Nurse Association relocated into 28,000 square feet at 120 Longwater Drive. However, the overall negative absorption total measured in Q2 along Route 128 South erased the gains that submarket displayed in 2010, leaving the year-over-year net absorption figure for that submarket at 34,000 square feet. The vacancy rate for Class A product (16.5 percent) in Route 128 exceeded that measured in the Class B market (15.7 percent) due to the 19.6 percent direct vacancy rate calculated in the Class A Route 128 North submarket. The amount of sublease space also remained higher in the Class A market (3.4 percent) than the Class B (2.0 percent) for Route 128 office. Overall, the amount of available Class A product as of Q2 2011 in Route 128 exceeded seven million square feet compared to 4.25 million in the Class B market. These numbers are expected to gradually change as tenants look to upgrade their office requirements over the next few quarters.
Q2 2011
Hot
Warm
128 West Equilibrium
Cold
Frozen
Data Points
Net Absorption (YOY) 826,200 SF Direct Vacancy 16.2% Sublease Availability 2.9% Total Availability 21.2% Asking Rate $21.57/SF

Lojack
1,000,000 SF 750,000 SF 500,000 SF 250,000 SF 0 SF -250,000 SF -500,000 SF -750,000 SF -1,000,000 SF
20.0% 17.5% 15.0% 12.5% 10.0% 7.5% 5.0% 2.5% 0.0%
40 Pequot Way, Canton - 68,000 RSF 128 South - Relocation
inVentiv Health
One Van de Graaff, Burlington - 59,000 RSF 128 North - Renewal & Expansion
DynamicOps
One Wall Street, Burlington - 37,200 RSF 128 North - Sublease
Acquia
25 Corporate Drive, Burlington - 35,800 RSF 128 North - Relocation
Inner Suburbs 128 North 128 South
Landlord Market
12
Research
Route 128
Route 128 West
Q2 2011
Route 128 North

Average Asking Rate
$32.50 $30.00 $27.50 $25.00 $22.50 $20.00 $17.50

Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009 Q2 2010 Q4 2010 Q2 2011
1,200,000 RSF 1,000,000 RSF 800,000 RSF 600,000 RSF 400,000 RSF 200,000 RSF 0 RSF
$27.50 $25.00 $22.50 $20.00 $17.50 $15.00 $12.50

Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009 Q2 2010 Q4 2010 Q2 2011
Route 128 South

$27.50 $25.00 $22.50 $20.00 $17.50 $15.00 $12.50

Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009 Q2 2010 Q4 2010 Q2 2011
For average asking rates along Route 128, all three submarkets exhibited a slight dip after all gained some ground in Q1 2011. The dip in rents was entirely associated with a drop in Class A rents, which fell from an average of $24.22 per square foot in Q1 to $23.91 in Q2. The Class B average asking rate increased to $20.03 per square foot in the second quarter from the measured rate of $19.82 in Q1. The dip in Class A rents is expected to subside by the end of the year with a year-to-date growth rate of over two percent expected to improve to five percent.

Building Address
105 Rosemont Road 300 Trade Center Avenue 108 Myrtle Street 100-180 Rustcraft Road 150 Royall Street 174 Middlesex Turnpike 480 Pleasant Street 3 Batterymarch Park 10 Corporate Drive 50 Dunham Road

208,000 206,700 172,000 160,000 125,000 120,000 116,000 107,300 107,000 103,000
City (Submarket)
Westwood (South) Woburn (North) Quincy (South) Dedham (South) Canton (South) Burlington (North) Watertown (West) Quincy (South) Burlington (North) Beverly (North)
Class
B A A B A A B A A A
Building Size
208,000 550,000 172,000 500,000 262,800 150,000 116,000 107,300 107,000 103,000
Type
Direct Direct Direct Direct Direct Direct Direct Sublease Direct Direct
4 14 13 76 271 193
25K - 49K 10K - 24K 5k - 9K
100K+ 75K - 99K 50K - 74K
13
Research
Suburban Office: Interstate 495
Year-Over-Year Negative Absorption
The Interstate 495 office market totaled a net neutral change in the first half of 2011, even as Dassault Systemes vacated the companys Lowell and Concord campuses for the brand new buildings on Wyman Street in Watham. Route 3 North, which includes the CrossPoint complex in Lowell, lost the most space to vacancy along Interstate 495 in Q2 for a total that exceeded 100,000 square feet. In fact, all other submarkets were positive, but not by enough to drive overall growth for the quarter. Although overall availability and sublease rates remained unchanged or decreased in the second quarter, the Interstate 495 market has struggled to rebound in the first half of 2011 due to a few handicaps the market has developed. First of all, the market has lost tenants to the Route 128 belt due to the cyclically lower rents and newer product that exists there. Typically, tenants naturally look outside of the Interstate 495 markets for options closer to Boston in order to capitalize on the timing of an economic cycle. The second issue remains the amount of available space (27.4 percent) along Interstate 495, which is the most of all the Greater Boston markets. All Interstate 495 submarkets are subject to the high availability, with all exceeding 23 percent. Additionally, the high availability has impacted values since some landlords are not able to pay lenders after failing to capitalize on the limited demand that exists in the market. Therefore, increased foreclosure activity has proceeded along Interstate 495, further dragging down values.
Q2 2011
Hot
Warm
495 Mass Pike Equilibrium
Cold
Frozen
495 Route 2
Data Points
Net Absorption (YOY) (383,600) SF Direct Vacancy 20.0% Sublease Availability 3.5% Total Availability 27.0% Asking Rate $17.08/SF

Acme Packet
100 Croby Drive, Bedford - 262,000 SF
1,000,000 SF 800,000 SF 600,000 SF 400,000 SF 200,000 SF 0 SF -200,000 SF -400,000 SF -600,000 SF -800,000 SF -1,000,000 SF
20.0% 17.5% 15.0% 12.5% 10.0% 7.5% 5.0% 2.5% 0.0%
Route 3 North - Relocation & Expansion
Staples
One Research Drive, Westborough - 63,000 SF 495 Mass Pike - Renewal
Gyrus ACMI Corporation

136 Turnpike Road, Southborough - 55,000 SF 495 Mass Pike - Renewal/Expansion
Conservation Services Group

50 Washington Street, Westborough - 52,000 SF 495 Mass Pike - Renewal
495 South Route 3 North 495 Northeast
Landlord Market
14
Research
Interstate 495
Mass Pike West
Q2 2011
Route 3 North
Average Asking Rate
$25.00 $22.50 $20.00 $17.50 $15.00 $12.50 $10.00
$25.00 $22.50 $20.00 $17.50 $15.00 $12.50 $10.00
Q4 2007
Q2 2008
Q4 2008
Q2 2009
Q4 2009
Q2 2010
Q4 2010
Q2 2011
Q4 2007
Q2 2008
Q4 2008
Q2 2009
Q4 2009
Q2 2010
Q4 2010
Q2 2011
Route 2 West
The average asking rate for product along the Interstate 495 market has dropped to $17.08 per square foot in the second quarter of 2011. Interstate 495 Route 2 West measured the lowest average asking rate at $15.94 per square foot, whereas Interstate 495 Mass Pike measured the highest at $17.69 per square foot. The Class A average asking rents in Interstate 495 totalled $17.48 per square foot, a significant drop from last quarters $18.87 per square foot mark. Additionally, the Class B rate fell to $16.13 per square foot from $16.59 a quarter ago.

Building Address
300 Puritan Way 400 Puritan Way 300 Baker Way 900 Chelmsford Street 1 Constitution Way 100 Nagog Park 4 Robbins Road 35 Parkwood Drive 800 Federal Street 5 Omni Way

356,900 302,000 257,000 217,200 208,900 194,800 160,000 159,800 158,700 131,000
City (Submarket)
Marlborough (Mass Pike) Marlborough (Mass Pike) Concord (Route 2) Lowell (Route 3) Foxborough (South) Acton (Route 2) Westford (Route 3) Hopkinton (Mass Pike) Andover (Northeast) Chelmsford (Route 3)
Class
A A A A A B B B A
Building Size
356,900 302,000 409,300 450,800 208,900 194,800 160,000 159,800 158,700 131,300
Type
Direct Direct Direct Direct Direct Direct Sublease Direct Mixed Direct
15 5 13 44 150
136
25K - 49K 10K - 24K 5k - 9K
100K+ 75K - 99K 50K - 74K
15
Research
Suburban Office
Investment Sales
The number of Core and Value Add suburban office properties that have come to the market in the first half of 2011 has greatly increased from the previous years. New sale comparables hit the market every day for not just distressed assets, but for premium Core buildings as well. The most recent Core recorded sales include 690 Canton Street in Westwood for $34.5 million and 343 Winter Street in Waltham for $14.7 million. Core Suburban assets currently on the market include the Raytheon Woburn campus at 225/235 Presidential Way, 250 Royall Street in Canton and 80 Central Street in Boxborough. Core assets in the suburban market are currently drawing pricing from $175 to $225 depending on the submarket. In addition to Core assets, a few Value Add transactions (some have yet to close by the conclusion of Q2) included: 25 Research Drive in Westborough for $20.1 million; Unicorn Park in Woburn for $80 million; 100 Hancock Street in Quincy for $25 million and Edgewater Drive in Wakefield for approximately $37 million. Current Value Add deals on the market include 825 University Avenue in Norwood and 1432-1440 Main Street in Waltham to name a few. Although pricing for these types of assets draw more of a $125 to $150 per square foot price mark in todays climate, they also tend to draw a competitive crowd of investors due to the potential upside if the market recovers.
Q2 2011
TCAM, Marlborough
Unicorn Park, Woburn
690 Canton, Westwood
Significant Sales
Building Address
45/55 Hayden Ave, Lexington 343 Winter Street, Waltham 690 Canton Street, Westwood TCAM, Marlborough 200 Newport Avenue, Quincy
* At Due Diligence
Submarket Class
128 West 128 West 128 South 495 Mass Pike 128 South
Building Size
212,405 65,820 164,695 530,894 146,000
Seller Buyer
TA Associates Cubist Pharma National Development TA Associates Colony Realty Partners L&B Realty Advisors Eaton Vance Hines ING Clarion Partners Synergy
Price/SF
$251* $223 $209 $194* $171
A
A A A A
825 University Avenue, Norwood
16
Research
2011 R ecently Completed Leases/Sales
Esdaile, Barrett & Esdaile 7,600 RSF 75 Federal Street, Boston Tenant Rep. - Roberto Magno, CPA
Q2 2011
L I N C O LN U PD AT ES INC P D A TE S
Beckwith Realty LLC 177,350 RSF (Sale) 30 Industrial Way, Wilmington Landlord Rep. - Gregory H. Cahill & Rob Cronin Lattice Engines 8,100 RSF 85 Devonshire Street, Boston Landlord Rep. - Roberto Magno, CPA & Brendan Miller Shore Educational Collaborative 20,000 RSF 10 Forbes Road, Braintree Landlord Rep. - Ellison Patten
Taylor & Partners 2,300 RSF 77 Summer Street, Boston Tenant Rep. - Brian Smallman
Broadview Networks 10,800 RSF Presidents Place, Quincy Landlord Rep. - Ellison Patten
Peregrine Financial Corporation 2,300 RSF 84 State Street, Boston Landlord Rep. - John D. Miller & Jeffrey C. Moore & Brendan Miller
About Women by Women 7,000 RSF 30 Washington Street, Wellesley Tenant Rep. - Kevin P. Malloy & Tim Latham
LPC in MA
LPC Thank s
Cambridge
1 property: 277,800 RSF 3 properties: 287,000 RSF 5 properties: 229,800 RSF
Boston
3 properties: 270,600 RSF 5 properties: 572,600 RSF 29 properties: 4,196,600 RSF
Leasing Leasing & Management Management Route 495 Route 128 Inner Suburbs Cambridge Boston
L&B Realty for awarding Lincoln Property Companys management team with the 690 Canton Street assignment in Westwood. LPC welcomes L&B as a new client in the Boston market and congratulates them on their acquisition of the premium Class A asset.
17
Research
Q2 2011
T ER M I N O L O G Y ER LO
Asking Rental Rate: the dollar per square foot amount that is quoted by the entity that is representing the space being marketed. Core Assets: Buildings that are typically Class A, located in a premium market and well leased for an extended period. Deliveries: newly completed product that was recently under construction or renovation that are available for immediate occupancy. Direct: space that is marketed on behalf of the Landlord. Flex: product that is capable of hosting tenants that vary in their use of commercial real estate. Including office, lab, R&D, warehouse, manufacturing and distribution tenants. Free Rent: the time period the tenant does not have to pay any rent, which is agreed upon by the tenant and landlord during lease negotiations. Net Absorption: the change in direct vacancy over a measured time frame. Includes newly delivered product ready for occupancy, but does not include sublease. Sublease: space that is marketed on behalf of the current Tenant. Tenant Improvements (T.I.): typically a dollar per square foot amount negotiated during the lease transaction that is paid to a tenant by the landlord, or sublandlord, for the means of improving the condition of the agreed upon space. Total Availability (A.K.A. Overall Availability): all space that is available for lease. Includes marketed occupied space, sublease, and product under construction that will be delivered within two (2) years. Vacant Available: all space that is currently available to lease and immediately occupy; therefore, space that is not hosting a tenant. Unoccupied space with a future commitment are excluded. Value Add Assets: Buildings that are under 90 percent leased, not necessarily Class A and in a market with upside potential.
Lincoln Property Companys Office Overview is produced by the Boston Offices research team in collaboration with our Downtown and Suburban Brokerage Group. If you have any questions regarding market conditions and the information found in this report, please contact Scott Faber, Director of Research at sfaber@lpc.com.
All information provided in Lincoln Property Companys Office Overview are from sources deemed reliable, but no warranty or representation is made as to its accuracy thereof and same is submitted subject to errors, omissions, or other conditions.
18
Research
Market
Boston Total Back Bay Charlestown Financial District Midtown North Station Seaport South Station CAMBRIDGE East Cambridge Mid Cambridge West Cambridge SUBURBAN Inner Suburbs ROUTE 128 128 West 128 North 128 South INTERSTATE 495 495/Mass Pike West 495/Route 2 West 495 North East Route 3 North 495 South All Ofce
Total Q2 2011 ~ Office Statistics

%
11.9% 4.9% 3.6% 15.0% 10.6% 12.4% 15.0% 8.9% 8.9% 6.8% 6.7% 17.2% 17.5% 12.0% 16.2% 14.5% 18.2% 16.1% 20.0% 16.1% 24.6% 26.7% 18.6% 23.2% 14.9%
Rentable Square Feet (RSF)

62,214,489 13,116,953 2,515,546 33,167,695 1,338,329 3,057,086 6,116,542 2,902,338 9,439,486 5,149,880 2,403,337 1,886,269 92,144,226 2,736,814 55,019,272 21,727,520 19,375,687 13,916,065 34,388,140 14,420,013 6,306,932 3,518,633 6,463,020 3,679,542 163,798,201
Direct Vacancy (sf)

7,414,388 638,107 91,536 4,987,916 141,682 379,442 917,135 258,570 836,931 351,599 161,702 323,630 16,123,780 329,490 8,922,871 3,153,492 3,529,949 2,239,430 6,871,419 2,324,790 1,551,138 938,869 1,203,840 852,782 24,375,099
Total Sublease Available (sf)

974,567 268,963 52,564 492,445 6,677 20,891 78,724 54,303 248,713 214,473 19,148 15,092 2,795,156 18,371 1,587,127 905,631 406,097 275,399 1,189,658 515,273 425,175 20,446 131,378 97,386 4,018,436
%
1.6% 2.1% 2.1% 1.5% 0.5% 0.7% 1.3% 1.9% 2.6% 4.2% 0.8% 0.8% 3.0% 0.7% 2.9% 4.2% 2.1% 2.0% 3.5% 3.6% 6.7% 0.6% 2.0% 2.6% 2.5%
Total Availability (sf)

9,427,698 1,119,672 222,382 6,070,338 149,412 406,375 1,137,993 321,526 1,076,579 513,927 200,742 361,910 21,312,059 363,971 11,646,600 4,691,695 4,105,695 2,849,210 9,301,488 3,758,388 2,262,436 979,423 1,377,373 923,868 31,816,336
%
15.2% 8.5% 8.8% 18.3% 11.2% 13.3% 18.6% 11.1% 11.4% 10.0% 8.4% 19.2% 23.1% 13.3% 21.2% 21.6% 21.2% 20.5% 27.0% 26.1% 35.9% 27.8% 21.3% 25.1% 19.4%
Q2 2011 Absorption (sf)

(83,792) 17,496 (24,843) (85,290) (3,421) (29,602) 11,778 30,090 256,669 209,354 24,412 22,903 119,720 26,481 93,741 50,468 69,632 (26,359) (502) 25,592 51,750 13,550 (102,288) 10,894 292,597
Year-Over-Year Absorption (sf)

(725,206) 271,197 (17,774) (906,873) (72,153) (109,106) (12,703) 122,206 122,460 224,191 (57,940) (43,791) 364,034 (78,546) 826,214 549,530 242,644 34,040 (383,634) 110,413 (291,828) (42,985) (121,185) (38,049) (238,712)
Average Asking Rate

$39.27 $40.06 $27.05 $42.21 $23.71 $25.92 $36.08 $23.32 $35.10 $40.88 $38.18 $28.49 $19.62 $22.21 $21.57 $24.84 $20.01 $19.00 $17.08 $17.69 $15.94 $16.14 $17.57 $17.62 $26.05
All information provided in Lincoln Property Companys Market Statistics are from sources deemed reliable, but no warranty or representation is made as to its accuracy thereof and same is submitted subject to errors, omissions, or other conditions.
Net Absorption: the change in direct vacancy over a measured time frame. Includes newly delivered product ready for occupancy, but does not include sublease Total Availability: all space that is available for lease. Includes marketed occupied space and product under construction that will be vacated within two (2) years Vacant Available: all space that is currently available to lease and occupy; therefore, space that is not hosting a tenant. Spaces with future commitments are excluded Direct: space that is marketed on behalf of the Landlord Sublease: space that is marketed on behalf of the current Tenant Average Asking Rate: the average of a compiled set of direct asking rates per market as quoted by the landlord representative. In the Suburban markets, the average asking rate is plus tenant electric.
Research
Market
BOSTON Back Bay Charlestown Financial District Midtown North Station Seaport South Station CAMBRIDGE East Cambridge Mid Cambridge West Cambridge SUBURBAN Inner Suburbs ROUTE 128 128 West 128 North 128 South INTERSTATE 495 495/Mass Pike West 495/Route 2 West 495 North East Route 3 North 495 South TOTAL CLASS A
Class A Q2 2011 ~ Office Statistics

% Total Sublease Available (sf)
725,218 186,598 27,989 423,914 12,382 32,300 42,035 230,753 205,813 9,848 15,092 1,826,751 7,371 1,151,260 674,653 271,122 205,485 668,120 318,521 195,805 18,546 114,520 20,728 2,782,722

40,610,396 9,275,565 903,771 25,107,596 568,137 1,388,388 2,232,384 1,134,555 6,924,111 4,618,883 1,370,255 934,973 53,501,217 2,037,747 33,455,366 13,343,546 13,270,008 6,841,812 18,008,104 7,905,223 3,258,432 1,732,763 3,781,245 1,330,441 101,035,724
Direct Vacancy (sf)

4,691,170 376,422 39,591 3,759,135 8,805 507,217 717,155 295,511 120,742 300,902 8,825,332 294,606 5,526,986 1,850,705 2,607,188 1,069,093 3,003,740 1,069,403 436,573 327,840 790,877 379,047 14,233,657
%
1.8% 2.0% 3.1% 1.7% 0.0% 0.9% 1.4% 3.7% 3.3% 4.5% 0.7% 0.0% 3.4% 0.4% 3.4% 5.1% 2.0% 3.0% 3.7% 4.0% 6.0% 1.1% 3.0% 1.6% 2.8%

6,044,290 652,462 67,580 4,686,285 8,805 15,024 572,099 42,035 919,513 454,683 148,834 315,997 12,319,968 315,642 7,150,198 2,802,731 2,995,460 1,352,007 4,854,128 2,272,324 884,285 366,494 931,250 399,775 19,283,772
%
14.9% 7.0% 7.5% 18.7% 1.5% 1.1% 25.6% 3.7% 13.3% 9.8% 10.9% 33.8% 23.0% 15.5% 21.4% 21.0% 22.6% 19.8% 27.0% 28.7% 27.1% 21.2% 24.6% 30.0% 19.1%

(53,390) 21,782 (24,737) (31,431) 5,473 (24,477) 219,493 212,205 7,288 (15,792) 19,798 (312) 56,904 49,469 (106,685) (35,278) 9,247 4,159 33,514 (88,291) 6,093 150,311

(864,490) 202,403 (22,159) (996,622) 1,155 6,383 (55,650) 131,780 229,237 (43,763) (53,694) 429,906 (94,859) 459,604 488,891 (24,723) (4,564) 65,161 107,970 87,497 18,271 (169,635) 21,058 (302,804)
Average Asking Rate

$45.70 $44.85 $25.50 $46.18 $26.00 $$44.67 $$36.02 $42.32 $39.67 $29.13 $21.03 $22.50 $23.91 $27.52 $22.28 $21.08 $18.48 $18.76 $16.25 $18.57 $19.00 $19.90 $29.60
11.6% 4.1% 4.4% 15.0% 1.5% 0.0% 22.7% 0.0% 10.4% 6.4% 8.8% 32.2% 16.5% 14.5% 16.5% 13.9% 19.6% 15.6% 16.7% 13.5% 13.4% 18.9% 20.9% 28.5% 14.1%
Research
Market
BOSTON Back Bay Charlestown Financial District Midtown North Station Seaport South Station CAMBRIDGE East Cambridge Mid Cambridge West Cambridge SUBURBAN Inner Suburbs ROUTE 128 128 West 128 North 128 South INTERSTATE 495 495/Mass Pike West 495/Route 2 West 495 North East Route 3 North 495 South TOTAL CLASS B
Class B Q2 2011 ~ Office Statistics

%
12.6% 6.8% 3.2% 15.2% 17.3% 22.7% 10.6% 14.6% 4.8% 10.6% 4.0% 2.4% 18.9% 5.0% 15.7% 15.5% 15.1% 16.5% 23.6% 19.3% 36.6% 34.2% 15.4% 20.2% 16.2%

21,604,093 3,841,388 1,611,775 8,060,099 770,192 1,668,698 3,884,158 1,767,783 2,515,375 530,997 1,033,082 951,296 38,643,009 699,067 21,563,906 8,383,974 6,105,679 7,074,253 16,380,036 6,514,790 3,048,500 1,785,870 2,681,775 2,349,101 62,762,477
Direct Vacancy (sf)

2,723,218 261,685 51,945 1,228,781 132,877 379,442 409,918 258,570 119,776 56,088 40,960 22,728 7,298,448 34,884 3,395,885 1,302,787 922,761 1,170,337 3,867,679 1,255,387 1,114,565 611,029 412,963 473,735 10,141,442
Total Sublease Available (sf)

249,349 82,365 24,575 68,531 6,677 8,509 46,424 12,268 17,960 8,660 9,300 968,405 11,000 435,867 230,978 134,975 69,914 521,538 196,752 229,370 1,900 16,858 76,658 1,235,714
%
1.2% 2.1% 1.5% 0.9% 0.9% 0.5% 1.2% 0.7% 0.7% 1.6% 0.9% 0.0% 2.5% 1.6% 2.0% 2.8% 2.2% 1.0% 3.2% 3.0% 7.5% 0.1% 0.6% 3.3% 2.0%

3,383,408 467,210 154,802 1,384,053 140,607 391,351 565,894 279,491 157,065 59,244 51,908 45,913 8,992,091 48,329 4,496,402 1,888,964 1,110,235 1,497,203 4,447,360 1,486,064 1,378,151 612,929 446,123 524,093 12,532,564
%
15.7% 12.2% 9.6% 17.2% 18.3% 23.5% 14.6% 15.8% 6.2% 11.2% 5.0% 4.8% 23.3% 6.9% 20.9% 22.5% 18.2% 21.2% 27.2% 22.8% 45.2% 34.3% 16.6% 22.3% 20.0%

(30,402) (4,286) (106) (53,859) (8,894) (29,602) 36,255 30,090 37,176 (2,851) 24,412 15,615 135,512 6,683 94,053 (6,436) 20,163 80,326 34,776 16,345 47,591 (19,964) (13,997) 4,801 142,286

139,284 68,794 4,385 89,749 (73,308) (115,489) 42,947 122,206 (9,320) (5,046) (14,177) 9,903 (65,872) 16,313 366,610 60,639 267,367 38,604 (448,795) 2,443 (379,325) (61,256) 48,450 (59,107) 64,092
Average Asking Rate

$28.32 $33.37 $27.50 $28.77 $23.57 $25.92 $27.39 $26.83 $29.21 $29.83 $33.93 $24.14 $18.06 $21.63 $19.90 $23.08 $18.05 $17.48 $16.13 $16.83 $15.73 $14.43 $16.62 $16.99 $21.05

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Boston Cambridge Suburbs Q2 2011

10 Year Vacancy Rate

Net Absorption (YOY) (725,200) SF

Net Absorption & Total Availability

17.5% 15.0% 12.5% 10.0% 7.5% 5.0% 2.5% 0.0%

(617) 951-4100 www.lpcboston.com

South Station North Station

Direct Vacancy 11.6%

Sublease Availability 1.8%

Total Availability 14.9%

Asking Rate $45.70/SF

Recent Significant Leases

Net Absorption and Direct Vacancy

20.0% 17.5% 15.0% 12.5% 10.0% 7.5% 5.0% 2.5% 0.0%

-200,000 SF -400,000 SF -600,000 SF -800,000 SF

Financial District Midtown Seaport Charlestown

$70 $60 $50 $40 $30 $20 $10

Sublease Availability (RSF)

$70 $60 $50 $40 $30 $20 $10

West End North End North Station Beacon Hill

Back Bay Mid Town China Town

Largest Contiguous Blocks of Space

Contiguous Blocks by # of Options

Contiguous RSF Available

(617) 951-4100 www.lpcboston.com

Back Bay Seaport South Station

Direct Vacancy 12.6%

Sublease Availability 1.2%

Total Availability 15.7%

Asking Rate $28.32/SF

Recent Significant Leases

Net Absorption and Direct Vacancy

20.0% 17.5% 15.0% 12.5% 10.0% 7.5% 5.0% 2.5% 0.0%

Financial District North Station Midtown Charlestown

$45.00 $37.50 $30.00 $22.50 $15.00 $7.50 $0.00

$45.00 $37.50 $30.00 $22.50 $15.00 $7.50 $0.00

$45.00 $37.50 $30.00 $22.50 $15.00 $7.50 $0.00

Largest Contiguous Blocks of Space

Contiguous RSF Available

Contiguous Blocks by # of Options

25K - 49K 10K - 24K 5k - 9K

100K+ 75K - 99K 50K - 74K

(617) 951-4100 www.lpcboston.com

33 Arch Street (Financial District)

230 Congress Street (Financial District)

53 State Street (Financial District)

(617) 951-4100 www.lpcboston.com

Negatives Mid Cambridge

10 Year Vacancy Rate: Office & Lab

Market Trends: Office

Net Absorption (YOY) 122,500 SF

Direct Vacancy 8.9%

Net Absorption and Direct Vacancy

Jeffrey C. Moore Assistant Vice President jmoore@lpc.com

Jesse Flynn Senior Associate jeflynn@lpc.com

(617) 951-4100 www.lpcboston.com

East Cambridge - Class A

East Cambridge - Class B Mid Cambridge - Class A/B

West Cambridge - Class A

Recent Significant Leases

Net Absorption and Direct Vacancy

20.0% 17.5% 15.0% 12.5% 10.0% 7.5% 5.0% 2.5% 0.0%

East Cambridge - Relocation & Expansion