2015 GREATER PHILADELPHIA MID-YEAR OFFICE MARKET REPORT AND OUTLOOK

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2015 GREATER PHILADELPHIA MID-YEAR OFFICE

MARKET REPORT AND OUTLOOK

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$0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% Vacancy Rate Rental Rate

*Represented by SSH Real Estate

TENANT SIZE SUBMARKET

Cigna Corporation 300,000-400,000 Center City Radian Group 175,000 Center City Marketplace Design Center 80,000 Center City Obermayer Rebmann Maxwell

& Hippel

60,000 Center City

TENANTS IN THE MARKET

TENANT SIZE SUBMARKET

Voya 100,000 SF Suburbs & Center City Siemens 100,000 SF Malvern

Cigna 90,000 SF King of Prussia, Conshohocken, Radnor, Malvern

FIS Global 60,000 SF Malvern

TENANTS IN THE MARKET BUILDING SIZE (SF) SALE PRICE PRICE / SF

30 S. 17th Street & 1650 Arch Street

1,170,825 $190.8M $163 1818 Market Street 982,000 $184.75M $188 833 Chestnut Street 654,000 $161M $246

SELECT BUILDING SALES

NAME SIZE (SF) BUILDING TYPE

Comcast 1,300,000 Comcast Innovation and Technology Center

New Lease & Expansion Independence Blue Cross 112,000 1900 Market St. New Lease American Bible Society 92,514 401 Market St. New Lease The Board of Pensions of

the Presbyterian Church

76,998 2000 Market St. Renewal Bank of New York Mellon 48,000 1735 Market St. Renewal &

Reduction

SELECT LEASE TRANSACTIONS

TENANT SIZE (SF) BUILDING TYPE

ABB Process Automation 115,839 101-163 E. County Line Road Renewal and Expansion Oracle Corp 84,000 Five Tower Bridge Renewal and

Expansion Independent Container Lines* 63,400 Chester Creek Business Center New Lease Philador RX Services 62,123 400 Lakeside Drive New Lease

SELECT LEASE TRANSACTIONS

PHILADELPHIA - CENTER CITY

BUILDING SIZE (SF) SALE PRICE PRICE / SF

51 Valley Stream 917,320 91.6M $100 Malvern Executive Center 89,000 5.25M $59 2250 Hickory Road 83,000 8.7M $105 700 South Henderson Road 73,326 18.5M $252 1060 Andrew Drive 43,180 6.55M $152

SELECT BUILDING SALES

SUBURBS

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RENTAL RATES

An influx of companies moving into Center City trophy buildings, lured partly by an educated millennial work force and the Living Wage Job Creation Tax Credit, has increased asking rates in trophy buildings. As a result, rents in other building classes have risen. And this, combined with continued tenant demand for quality space, has bolstered overall rental rates in the Philadelphia CBD. Rental rates will continue to increase due to improving market conditions and increasing tenant demand, recent renovations and upgrades to some buildings have also contributed to the rise in rental rates.

VACANCY

Class A vacancy rates have been pulled down by increased leasing activities at the trophy buildings. Overall rates have decreased from 11.10 to 10.09 percent in the first half of 2015. While class B and C vacancy rates crept up in first half of this year, we expect these rates to decrease as class A space tightens due to continued interest from tenants.

INVESTMENT SALES

The Center City investment market has continued to attract significant interest from national investors in the first half of 2015, as it did in 2014. Philadelphia’s relative affordability, talent pool, and location appeal to investors who might be priced out of areas - such as New York and DC - where they would have to compete with the onslaught of international capital.

833 Chestnut, 30 S. 17th Street (United Plaza), 1650 Arch Street, 1818 Market Street, and 600 Chestnut Street (Public Ledger) have all traded in the first half of 2015. HCP Inc., a California based real estate investment trust that focuses on health care oriented properties, purchased 833 Chestnut for $247 per SF. CBRE Global Investors purchased 30 S. 17th Street and 1650 Arch Street as a portfolio for approximately $190.8 million or $163 per SF. The acquisition of 1818 Market at the price of approximately $188 per SF by Shorenstein Properties establishes the firm’s reentry into the Philadelphia office market. Carlyle Development Group, a New York firm, purchased the Public Ledger building for $58 million or $108 per SF.

With market speculation that the Federal Reserve may raise interest rates by year end, many investors are looking to lock in rates and execute deals in the next few months. Therefore, we expect this trend of investor interest to continue for the rest of 2015 as One Franklin Plaza, 401 Market, and the Wanamaker Building are all being marketed for sale. Long time Independence Mall owner, the Kaiserman Company, is also looking to capitalize on current investment momentum by marketing 400 Market Street, The Bourse Building, and 325 Chestnut for sale as a portfolio.

NEW OFFICE DEVELOPMENT

There is approximately 2,000,000 SF of new trophy office space being constructed in Center City, with the FMC Tower and the Comcast Innovation and Technology Center making up the majority of the office space coming up the pipeline.

Upon completion, the new FMC tower will add 625,000 SF of new office space, retail space and 268 high-end apartments. To anchor the project, the developer, Brandywine Realty Trust, struck leases with FMC Corporation and University of Penn, with the former taking up nearly half of the available office space.

Liberty Property Trust and Comcast are constructing Comcast Innovation and Technology Center, a 1,556,000 SF office tower at 1800 Arch Street. The building will consist of 1,334,000 SF of office space, with Comcast as the only tenant, and a 222 room Four Seasons Hotel.

Tenant demand for new or updated space has caused several landlords to begin redevelopment projects of existing office buildings that have become obsolete. Brandywine has been repositioning 1900 Market Street, an 8-story, 456,000 SF building, since Cozen O'Connor relocated to One Liberty in June 2015.

The developers of the East Market project, National Real Estate Advisors, SSH Real Estate, JOSS Realty and Young Capital, have commenced a $20 million total renovation of the former Family Court building at 34 S. 11th Street. The building is being renovated into 160,000 SF of new, LEED certified office space. The redeveloped building will add unique class A+ space to a submarket that lacks newer product.

CLASS A CLASS B & C OVERALL

Square Feet 26,953,444 14,288,169 41,241,613

Buildings 41 79 120 CBD INVENTORY

CLASS A CLASS B & C AVERAGE

Year-End 2014 $29.36 $22.70 $26.90

Mid-Year 2015 $29.45 $23.40 $27.35 RENTAL RATE

Year-End 2014 10.65% 11.87% 11.10%

Mid-Year 2015 9.01% 12.42% 10.09% VACANCY RATE

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The owners of the 4.3 acre site have completed demolition of the former Snellenburg’s department store along the 1100 block of Market Street; they are in the process of removing the façade of the former Family Court Building at 34 S. 11th Street. The ownership group consists of National Real Estate Advisors, SSH Real Estate, Young Capital, and JOSS Realty. Phase I of the mixed-use development will include 322 apartments at 11th and Market, 130,000 SF of new dining and retail, and 160,000 SF of office space. The project has a lease commitment from Mom’s Organic Market to open its first store in Center City and is getting close to completing deals with several other office and retail tenants. Upon completion, it will help create a connection between Center City and the Independence Mall area. Phase 1 of this project is expected to be completed in mid-2016.

PROJECT UPDATE

:

EAST MARKET

34 S. 11th Street: Before

July 13, 2015 - First day of pouring concrete

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SUBMARKET NEWS

• JLT Re, a reinsurance firm, will relocate from its temporary space at Centre Square to a 31,000 SF space at United Plaza, located at 30 S. 17th Street.

• JP Morgan Chase & Co. is renewing its 21,319 SF lease at One Liberty Place.

• Comcast leased the remaining available office space at the Comcast Innovation and Technology Center. They originally committed to 982,275 SF but now will occupy the entire 1.3 million SF of office space in the building, which is currently under construction and is set to deliver in the first quarter of 2018.

• The Board of Pensions of the Presbyterian Church has renewed its lease at 2000 Market Street. The nonprofit has been in the building since 1996 and will occupy 76,998 SF.

• Bank of New York Mellon has renewed its lease at 1735 Market Street, but will reduce its occupancy by 184,000 SF. The bank will now occupy 48,000 SF at the building.

• HOK, an international design firm, is establishing a Philadelphia office at One Logan Square. They will open the 8,800 SF office later this year.

• After 25 years at the Curtis Center, law firm Wilson Elser has decided to relocate and has signed a 14,600 SF long-term lease at Two Commerce Square.

CLASS A CLASS B & C TOTAL

Square Feet 21,707,836 5,307,021 27,014,857 Buildings 32 37 69

INVENTORY

Year-End 2014 $29.92 $22.88 $28.19 Mid-Year 2015 $29.76 $23.07 $28.45

RENTAL RATE

Year-End 2014 11.07% 10.58% 10.95% Mid-Year 2015 9.65% 10.37% 9.67%

VACANCY RATE

MARKET WEST

Did you know?

William Penn gave the city the nickname “The City of Brotherly Love” because he wanted it to be a place where people could live in peace and

harmony free of religious oppression.

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• CBRE Global Investors purchased the 617,476 SF United Plaza, located at 30 S. 17th Street, and the 553,349 SF 1650 Arch Street as a portfolio for $190.8 million or $163 per SF.

• Shorenstein Properties, a San Francisco real estate company, has purchased 1818 Market Street, a 37-story building totaling 981,743 SF, for $184.75 million, or $188 per SF, from Sovereign Capital Management Group.

• Liberty Property Trust has acquired a 10,720 SF surface parking lot at 19th and Arch Street for $2.45 million. There is speculation that the developer is assembling land to build a third Comcast tower.

• Naulty, Scaricamazza & McDevitt leased 16,321 SF at One Penn Center, located at 1617 John F. Kennedy Blvd.

• Wipfli, a Milwaukee-based accounting firm, has announced plans to open a satellite location at Three Logan Square.

• The University of the Arts renewed its 11,461 SF lease at 1608 Walnut Street. It has been in the building since 2005 and will remain in the building for another 10 years.

• Independence Blue Cross will lease 112,000 SF at 1900 Market in an effort to consolidate offices it has in the suburbs. Brandywine Realty Trust has begun renovating the building since tenant Cozen O'Connor*

moved out in June 2015 into their new headquarters at One Liberty. • Customized Energy Solutions, an advisor on energy market operation platforms and services, signed a 19,645 SF lease at 1528 Walnut.*

• The Burns Group, an engineering and construction company, and Adaptimmune Ltd., a cancer research company, have signed 33,572 and 29,773 SF, respectively, at Two Commerce Square.

• Public Financial Management has signed a 45,131 SF lease at 1735 Market Street.

• ExcellRx, a medication therapy company, has reduced its space at 1601 Cherry Street to 68,090 SF.

*Represented by SSH Real Estate 1650 Arch United Plaza

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SUBMARKET NEWS

• Brandywine Realty Trust has initiated a zoning change on a parking garage at 6th and Market Street that it purchased this April for $17 million.

• HCP Inc., a California based Real Estate Investment Trust that focuses on health care oriented properties, purchased 833 Chestnut from Digital Realty Trust for $161 million or $246 per SF. The building consists of medical office, standard office and data center space. • Developers have completed demolition of the 1100 Market Street building and are currently preparing the site for a mixed-use project at the 1100 block of Market Street, which will bring 322 new apartments, 100,000 SF of retail and dining options, and 150,000 SF of LEED certified office space. Currently at 34 S. 11th Street, the owners are in the process of renovating the façade in preparation for the installation of a new modern façade with floor to ceiling windows.

• Bolstering the investment of the Market East area, Drexel University’s Thomas R. Kline School of Law plans on opening the school’s Institute for Trial Advocacy at the former Beneficial Bank building at 12th and Chestnut Streets in 2016.

• After years of purchasing property around the East Market project, Brickstone has started renovation on 15-21 S. 11th Street. Upon completion, the 30,000 SF building will have creative office space. • PREIT and Macerich have announced a $575 million renovation and redevelopment project for The Gallery. Upon completion, the project will serve as a unique shopping destination in Philadelphia.

MARKET EAST

Square Feet 2,586,110 2,712,228 5,298,338

Buildings 4 17 21

INVENTORY

Year-End 2014 $27.17 $22.64 $24.84 Mid-Year 2015 $28.54 $23.16 $25.78

RENTAL RATE

Year-End 2014 9.29% 17.05% 13.28% Mid-Year 2015 9.07% 18.78% 14.02%

VACANCY RATE

34 S. 11th Street

34 S. 11th Street modulated facade using precast concrete panels & aluminum windows

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SUBMARKET NEWS

• American Bible Society signed a 92,514 SF lease at 401 Market Street and will occupy the space this summer.

• Alliance Partners HSP of Bryn Mawr, the buyer of the former Destination Maternity warehouse in Northern Liberties, plans to spend $60 million to transform the 250,000 SF building into creative office space. The amenities will include exercise rooms, a rooftop deck, open work spaces with skylights, outdoor seating areas with food trucks, and stadium seating for presentation.

• Construction will commence this summer at the Curtis Center. Keystone Property Group and Mack-Cali Realty paid $125 million for the building with plans to reposition the property into a mixed-use environment. Upon completion, the building will offer luxury rental apartments within a portion of the existing office space, and provide enhanced pedestrian experience along the surrounding streetscape.

• After recent upgrades by owner Rubenstein Partners, One

Washington Square, formerly known as Penn Mutual Towers, has signed new leases. Berkshire Hathaway HomeServices, an existing tenant, leased and expanded into 20,443 SF. Another tenant, Foundation for Individual Rights in Education Inc., a nonprofit focusing on free speech at colleges, leased 12,605 SF.

• Carlyle Development Group, a New York real estate firm, purchased 600 Chestnut Street (Public Ledger building) for $58 million or $108 per SF from LNR Partners. The new owner plans to renovate the building to target technology and entertainment companies.

Square Feet 2,659,498 3,415,437 6,074,935

Buildings 5 17 22

INVENTORY

Year-End 2014 $27.79 $21.65 $24.79 Mid-Year 2015 $27.81 $22.56 $24.86

RENTAL RATE

Year-End 2014 9.21% 17.56% 13.29% Mid-Year 2015 11.89% 15.33% 13.83%

VACANCY RATE

INDEPENDENCE HALL

• New York City’s WeWork is leasing 30,000 SF at the Piazza, located in Northern Liberties.

• Philadelphia Youth Network and Alteva, a telecommunications provider, signed a 14,000 and 15,000 SF lease, respectively, at 400 Market Street.

• Regus, a provider of work spaces, has signed a 15,000 SF lease for a full floor at 325 Chestnut Street.

• US Immigration and Customs Enforcement has leased 35,000 SF at 801 Arch Street.

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CORNER VIEW

550 Township Line Rd. Blue Bell, PA

Proposed Wawa 201 S. Broad Street Philadelphia, Pennsylvania March 9, 2015

₂

SOUTH BROAD STREET

ALL CLASSES

Year-End 2014 $23.53 Mid-Year 2015 $24.24

RENTAL RATE SUBMARKET NEWS

• South Broad Street consists of historic 1900s office towers. These buildings represent a rare asset class that has some of the lowest vacancy rates in the city, with affordable rents, proximity to world-class shopping, and popular restaurants.

• SLS Lux Philadelphia is set to begin work in the fall on the 47-story, 152-guest-room SLS Lux Philadelphia Hotel & Residences. Completion is expected in spring 2018.

• FYE will be closing their 25,000 SF store at the Land Title Building at Broad and Chestnut Street.

• Wawa will be opening a location on Broad and Walnut Streets in Center City in the fall.

• Industrious Office moved into 15,814 SF of space at 230 South Broad.

Did you know?

Philadelphia is the mural capital of the country, with more than 2,000 outdoor wall murals. The region ranks third in the country for the

number of health professions and related degrees conferred. ALL CLASSES Square Feet 2,853,483 Buildings 8 INVENTORY ALL CLASSES Year-End 2014 3.25% Mid-Year 2015 3.68% VACANCY RATE Industrious Office Industrious Office

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SUBMARKET NEWS

• The University of Pennsylvania board has approved the renovation of an existing 58,000 SF industrial building that will become the cornerstone of Pennovation Works, a 23-acre hub for innovation, research and entrepreneurialism along the bank of the Schuylkill River. The first phase of this project is expected to be completed by the summer of 2016.

• In a different project, the University City Science Center and Wexford Science + Technology have formed a partnership that seeks to construct up to 4 million SF of mixed-use space in West Philadelphia. • Penn Medicine has taken an additional 56,000 SF at 3737 Market Street and will now occupy a total of 267,800 SF in the Science Center’s newest office building.

SUBMARKET NEWS

• Liberty Property Trust will complete the construction of 4701 League Island Blvd. sometime in mid-2016, a 145,000 SF structure that will be occupied by WuXi AppTec Inc.

• In February, Franklin Square moved into 201 Rouse Blvd., a newly constructed 80,050 SF building at the Navy Yard Corporate Center that was developed by Liberty Property Trust.

• Liberty Property Trust is scheduled to start construction on a 94,000 SF speculative office building at the Philadelphia Navy Yard. Liberty and its joint venture partner, Synterra Partners, are moving forward with the office project even though they have yet to secure any tenants. • Lux Products Corporation, an HVAC controls company formerly based in New Jersey, has relocated its headquarters to the Philadelphia Navy Yard. The company’s employees settled into their new location on April 1st.

Square Feet 1,925,165 1,735,938 3,661,103

Buildings 6 9 15

INVENTORY

Year-End 2014 $37.62 $26.58 $34.90 Mid-Year 2015 $40.18 $27.29 $35.38 RENTAL RATE ALL CLASSES Year-End 2014 $27.48 Mid-Year 2015 $27.89 RENTAL RATE CLASS A CLASS B & C AVERAGE

Year-End 2014 4.46% 5.48% 4.71% Mid-Year 2015 4.45% 6.83% 5.05% VACANCY RATE ALL CLASSES Year-End 2014 4.87% Mid-Year 2015 3.09% VACANCY RATE ALL CLASSES Square Feet 815,737 Buildings 14 INVENTORY INVENTORY

UNIVERSITY CITY

THE NAVY YARD

Pennovation Works Rendering

Wexford Science + Technology Rendering

Franklin Square Capital Partners at 201 Rouse Blvd. Rendering

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RENTAL RATES

Overall rental rates remained relatively flat. Class A rents in markets such as Conshohocken, Bala Cynwyd, Horsham, Fort Washington, and Plymouth have grown slightly from the end of 2014. However, class B and C rents in markets such as King of Prussia, Horsham, Fort Washington, and Plymouth Meeting have exhibited robust growth.

VACANCY

Overall vacancy rates in suburban Philadelphia decreased from 13.15 to 12.53 percent in the first half of 2015, and the class B and C rates have decreased to 13.6 percent. Rates in certain submarkets have decreased as recently renovated space begins to be absorbed. Submarkets such as Conshohocken, King of Prussia, Fort Washington/Springhouse, and Plymouth Meeting/Blue Bell have exhibited improved vacancy rates compared to year end of 2014.

INVESTMENT SALES

Properties located near transit hubs have continued to attract investors. The widening of Route 202 in Malvern in conjunction with the new Pennsylvania Turnpike interchange at Route 29 has opened Malvern up to tenants who would have otherwise checked it off of their list. Investors will likely look for opportunities in Malvern as King of Prussia becomes more expensive.

Assets in core submarkets, such as King of Prussia and West Chester, obtained stronger per square foot sale prices than those of secondary, non-core submarkets. In King of Prussia, the Merion Building, located at 700 South Henderson Road, sold for $254 per SF; 1060 Andrew Drive in West Chester sold for approximately $152 per SF. Buildings in non-core secondary markets sold for a fraction of this cost: Fort Washington Executive Center, located at 600-602 Office Center Drive, in Fort Washington, sold for $77 per SF; and 3600 Horizon Blvd in Lower Bucks County sold for $75 per SF.

We expect investor interest to continue in core submarkets as more properties open up for sale. For example, American Baptist Church has listed its 48.5-acre site in King of Prussia for sale. The property falls within a new zoning district that Upper Merion adopted, which allows for dense mixed-use development. In West Conshohocken, 300 Four Falls Road has been listed for sale. The building last sold in 2006 for a record price of $340 per SF and could once again sell for a record price.

NEW OFFICE DEVELOPMENT

As mentioned above, the widening of Route 202 has increased activity in and between Malvern and King of Prussia. In King of Prussia, Davis Companies of Boston and Hayden Maguire Real Estate Fund of West Conshohocken, Pa., have drawn preliminary plans for a five-story, 240,000 SF office building, named CrossPoint II, at the corner of Swedesford Road and Old Eagle School Road. In Malvern, E. Kahn Development broke ground on a new Residence Inn located at intersection of Route 29 and PA Turnpike. Also in Malvern, Liberty Property Trust has commenced its redevelopment of Great Valley Parkway. The plans include three high-end apartment buildings with 800 units, a hotel with approximately 130 rooms, office space totaling 820,000 SF, 25,000 SF of retail, parking garages, and community space. As part of Liberty’s massive proposed redevelopment, it received a new zoning overlay which permits double FAR. Upon completion, this unique project will offer a walkable, cohesive community, active throughout the entire week and not just during business hours. Investors seeking new development opportunities have also set their sights on Conshohocken, another transit-oriented suburb. This vibrant area boasts a growing list of restaurants and amenities, and has approximately 1.25 million SF of new office space in the pipeline. Keystone Property Group’s One Conshohocken, a mixed-use project along Fayette Street, will include a hotel, retail space, parking, a public plaza, and two office towers totaling 500,000 SF of office space; Equus Capital Partners has announced plans to develop 340,000 SF of office space at 400 West Elm Street, a site that was originally set aside for multifamily; two other projects include Seven Tower Bridge, which will include 260,000 SF, and Millennium Four with 300,000 SF.

CLASS A CLASS B AVERAGE

Year-End 2014 $27.11 $21.65 $24.64

Mid-Year 2015 $27.49 $21.75 $24.88 RENTAL RATE

Year-End 2014 12.26% 14.51% 13.15% Mid-Year 2015 11.86% 13.60% 12.53% VACANCY RATE

OUTLOOK

SQUARE FEET OVERALL 64,674,421 INVENTORY

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SUBMARKET NEWS

• An affiliate of American Healthcare Investors of Irvine, California, acquired Paoli Medical Plaza, a 99,059 SF building located at 4 Industrial Blvd., for $24.8 million from seller Blank Aschkenasy Properties of West Conshohocken.

• The University of Pennsylvania Health System is making a major move into the western suburbs and purchased an 18.2-acre site off King of Prussia Road in Radnor for an estimated $35 million from BioMed Realty Trust. This sale effectively reduced the supply of developable office land in Radnor to zero.

• Thomas Jefferson University Hospitals leased 17,031 SF of office space at the Villanova Office Center, located at 789 Lancaster Avenue. The Marcus Integrative Health at Myrna Brind Center will occupy the space.

• Safeguard Scientifics signed a 20,000 SF lease at 170 North Radnor Chester Road.

SQUARE FEET

OVERALL 2,570,555

INVENTORY

Year-End 2014 $33.77 $23.25 $29.76 Mid-Year 2015 $35.28 $21.62 $30.15

RENTAL RATE

Year-End 2014 4.40% 5.80% 4.90% Mid-Year 2015 4.80% 5.80% 5.20%

VACANCY RATE

RADNOR / MAIN LINE

Did you know?

Pennsylvania is the only original colony not bordered by the Atlantic Ocean and it is first state of the fifty United States to list their web site

URL on a license plate.

Penn Health makes big land grab in Radnor Paoli Medical Plaza

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SUBMARKET NEWS

• Liberty Property Trust is planning a complete redevelopment of the Great Valley Corporate Center, located along Route 202, which will provide a live, work, and play environment for users. The developer plans for a mixed-use development with community space, restaurants, retail, a hotel, luxury residences, and three or four Class-A buildings. • TriPoint Properties of Downingtown purchased 1060 Andrew Drive, a 43,180 SF, single-story building for $6,550,000, or $152 per SF, from Andrews Bridge Associates III, LP. The property was 100% leased at the time of sale.*

• Cerner Health Services purchased the 917,320 SF Siemens building at 51 Valley Stream from Siemens for $91.6 million, or $100 per SF. • Legend Properties and its affiliate, DEPG Associates, are planning a $15 -17 million mixed-use project that spans a block long at the intersection of Route 30 and Route 82 in Coatesville.

• Shire, a pharmaceutical company, will be vacating multiple buildings in the Chesterbrook Corporate Center in 2015, most notably the 220,000 SF building at 725-735 Chesterbrook Blvd. The company recently announced that it will move 300 employees into 730 Stockton Drive in Eagleview Corporate Center in Exton, PA.

• HMP Communications, a publisher of medical journals and research, has signed a 16,300 SF lease to relocate to ArborRidge.

• Acrometis, a claims processing company, has signed a 24,000 SF lease to relocate to 50 Valley Stream Parkway.

• Radiate Media, a software company, has signed a 13,277 SF sub-lease in 3 Country View Drive.

MALVERN / EXTON / WEST CHESTER

• An affiliate of First Eastern Development Company purchased a 26,507 square foot office building, located at 15-17 East Gay Street, from East Gay Street Associates for $5.98 million or $226 per SF. • PNL Companies of Dallas purchased Malvern Executive Center, an 89,000 SF office building at 100 Deerfield Road, from LNR Partners for $5.25 million.

• E. Kahn Development broke ground on a new Residence Inn located at intersection of Route 29 & PA Turnpike in Malvern.

• The Hankin Group announced plans to develop a luxury apartment complex totaling 162 units at Eagleview in Exton. Completion is expected in summer 2016.

Year-End 2014 $24.46 $23.71 $24.13 Mid-Year 2015 $24.60 $23.78 $24.24

RENTAL RATE

Year-End 2014 10.50% 15.30% 12.60% Mid-Year 2015 9.70% 17.10% 12.90%

VACANCY RATE

*Represented by SSH Real Estate SQUARE FEET

OVERALL 4,937,973

INVENTORY

Great Valley Corporate Center Rendering

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SUBMARKET NEWS

• Oracle Corp. has renewed its lease and expanded its occupancy to 84,000 SF in Five Tower Bridge.

• Keystone Property Group, a commercial real estate developer, has relocated its headquarters to a 41,413 SF building, located at 125 E. Elm Street.

• An entity affiliated with Capitol Insurance Company bought 2001 Joshua Road, a 28,000 SF building, for $1.79 million. The insurance company plans to renovate the property, occupy half of it, and lease out the other half.

• Equus Capital Partners has received final approval for its 340,000 SF office building project, located at 400 West Elm Street. The firm is ramping up efforts to secure a tenant for this project.

Year-End 2014 $31.55 $26.81 $30.56 Mid-Year 2015 $32.05 $26.70 $30.93

RENTAL RATE

Year-End 2014 11.90% 7.30% 10.90% Mid-Year 2015 8.20% 3.00% 7.10%

VACANCY RATE

CONSHOHOCKEN

Year-End 2014 8.80% 10.90% 9.80% Mid-Year 2015 10.50% 9.40% 10.0%

VACANCY RATE SUBMARKET NEWS

• FIS, an investment firm, has subleased 50,000 SF at 400 Campus Drive.

Year-End 2014 $22.83 $17.97 $20.62 Mid-Year 2015 $22.85 $17.21 $20.24

RENTAL RATE

NORRISTOWN / VALLEY FORGE

SQUARE FEET OVERALL 2,032,137 INVENTORY SQUARE FEET OVERALL 4,379,258 INVENTORY

Five Tower Bridge 400 Campus Drive

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SUBMARKET NEWS

• The Davis Companies of Boston and Hayden Maguire Real Estate Fund of West Conshohocken, Pa., have drawn preliminary plans for a five-story, 240,000 SF office building, named CrossPoint II, at the corner of Swedesford Road and Old Eagle School Road. The partnership had successfully redeveloped two older office buildings on Swedesford Road into CrossPoint, which completed in 2014 and was more than 90% occupied by year end.

• Griffin-American Healthcare REIT III, Inc. purchased the 73,326 SF class A office building at 700 South Henderson Road from O’Neill Properties Group, LP. For $18.5 million, or approximately $252 per square foot.

• ASI Business Solutions, and Communications Media, Inc., have renewed their 15,000 and 10,000 SF lease, respectively, in 2200 Renaissance Blvd. Telerx Marketing, Inc. has recently signed a 16,000 SF lease at this building.

• GMP Nutraceuticals Inc., a company that makes whey protein products, signed a lease on 25,850 SF for its new headquarters at 711 First Avenue.

Year-End 2014 $28.07 $20.01 $25.31 Mid-Year 2015 $28.07 $20.80 $25.59

RENTAL RATE

Year-End 2014 13.80% 14.90% 14.20% Mid-Year 2015 13.70% 12.90% 13.40% VACANCY RATE

KING OF PRUSSIA

SQUARE FEET OVERALL 12,595,532 INVENTORY CrossPoint II Rendering Did you know?

The ports on the Delaware River are the largest freshwater ports in the world.

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SUBMARKET NEWS

• Live Nation Worldwide, an entertainment company, has signed a 12,000 SF lease to relocate to One Presidential Blvd.

• Brandywine Realty Trust has made a move to re-establish a presence in the Bala Cynwyd office market. It has entered into an agreement to buy 9 Presidential Blvd. for $4 million. The property consists of a two-story, 27,000 SF office building. The developer is planning to construct a 180,000 SF office building on the site.

BALA CYNWYD

SUBMARKET NEWS

• Independent Container Lines signed a 63,400 SF lease at the Chester Creek Business Center, located at 130 Concord Road.*

• Colony Financial, of Dallas TX, purchased 105 and 103 Commerce Drive as a portfolio from Hayden Real Estate Investments. The combined square footage for the two buildings is approximately 650,000 SF. • Endurance Real Estate purchased five flex-industrial buildings as part of a portfolio, totaling 190,000 SF, in Boothyn, PA.*

• Crozer Keystone Health System renewed 49,601 SF and leased another 5,001 SF at Brinton Lake Medical Center, located at Glen Mills, PA.

Year-End 2014 $26.46 $21.53 $24.05 Mid-Year 2015 $26.67 $21.39 $24.08

RENTAL RATE

Year-End 2014 13.2% 10.8% 12.0% Mid-Year 2015 13.50% 12.40% 13.0%

VACANCY RATE

DELAWARE COUNTY

*Represented by SSH Real Estate CLASS A CLASS B AVERAGE

Year-End 2014 $31.54 $29.90 $31.01 Mid-Year 2015 $32.36 $30.75 $31.84

RENTAL RATE

Year-End 2014 8.80% 4.70% 7.50% Mid-Year 2015 10.30% 5.30% 8.70% VACANCY RATE SQUARE FEET OVERALL 3,340,735 INVENTORY SQUARE FEET OVERALL 6,581,678 INVENTORY 9 Presidential Blvd.

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SUBMARKET NEWS

•KVK-Tech Inc., a specialty pharmaceutical company, has entered into an agreement to buy Lockheed Martin’s property at 100 Campus Drive, which consists of 460,514 SF of office, lab and high-tech manufacturing space in a series of buildings. The property is also approved for an additional 192,000 SF of office space. The financial details of the agreement were not disclosed pending a final settlement agreement between KVK and Lockheed Martin.

• Bensalem School Lane Charter School recently purchased two buildings for $8.5 million to convert them into schools for students in grades 7 through 12. The purchase will allow the school to expand the number of students in grades 7 through 10 and to add 11th- and 12th-grade classes.

• Schiller Grounds Care, a maker of lawn and garden-care equipment, leased 36,000 square feet at 1280 Industrial Highway in Southampton as part of an expansion. The company also continues to lease 21,000 SF at nearby 1120 Industrial Highway.

• Rhino Cable Service Inc. leased a building totaling 22,875 SF at 4060 Blanche Road in Bensalem. The company is consolidating two locations and expanding operations.

Year-End 2014 $28.06 $19.75 $23.25 Mid-Year 2015 $27.70 $19.43 $22.94

RENTAL RATE

Year-End 2014 21.80% 15.60% 18.20% Mid-Year 2015 23.40% 14.70% 18.40%

VACANCY RATE

LOWER BUCKS COUNTY

SQUARE FEET

OVERALL 8,486,209

INVENTORY

100 Campus Drive Aerial

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SUBMARKET NEWS

• Kairos Real Estate Partners and Artemis Real Estate Partners acquired the Fort Washington Executive Center, a 400,000 SF property at 600, 601 and 602 Office Center Drive, from CW Capital Asset Management for $30 million or $75 per SF.

• TruMark Financial Credit Union has signed a 74,811 SF lease at 335 Commerce Drive.

Year-End 2014 $25.72 $21.02 $22.50 Mid-Year 2015 $26.68 $20.91 $22.73

RENTAL RATE

Year-End 2014 27.50% 20.10% 22.40% Mid-Year 2015 20.70% 19.70% 20.00%

VACANCY RATE

FORT WASHINGTON / SPRINGHOUSE

HORSHAM / WILLOW GROVE

SUBMARKET NEWS

• Philador RX Services leased 62,123 SF at 400 Lakeside Drive in the Pennsylvania Business Campus in Horsham.

• Catellus Development Corporation, a California based real estate developer, has been chosen by the Horsham Land Redevelopment Agency to fill the former Willow Grove Naval Air Station with 1,500 new homes.

• ABB Process Automation, a provider of automation products, renewed its lease and expanded into additional office space, totaling 115,839 SF, at 101-163 E. County Line Road in Hatboro.

• TNS US, a global research consultancy company, signed a 39,480 SF lease at 700 Dresher Road.

Year-End 2014 $23.37 $22.11 $22.65 Mid-Year 2015 $24.04 $23.08 $23.48

RENTAL RATE

Year-End 2014 5.10% 13.80% 10.10% Mid-Year 2015 8.30% 11.10% 9.90% VACANCY RATE SQUARE FEET OVERALL 9,218,488 INVENTORY SQUARE FEET OVERALL 4,054,066 INVENTORY

Fort Washington Executive Center Did you know?

Authorized by the General Assembly in 1791, the Seal of the Commonwealth of Pennsylvania is a symbol of authenticity which verifies that proclamations,

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SUBMARKET NEWS

• Since early this year, Corporate Office Properties Trust has been on the final stages of transforming Arborcrest, its office campus in Blue Bell, into a series of modern office buildings. Rents run in the high $20s a SF and the roster of tenants include Coredial, McGladry, Integrated Project Services, PRA Health Services, Annodyne Inc., Brokerage Concepts Inc., Mayo Seitz Inc., and others.

• Connolly Healthcare is taking a 30,845 SF lease at Hillcrest III in Arborcrest Park.

• Viewpoint Consulting, Inc., a market research consulting firm, leased 22,782 SF at 600 West Germantown Pike.

• Verizon Wireless signed a 21,462 SF lease at 512 Township Line Road in Plymouth Meeting.

• Somerset Properties purchased 2250 Hickory Road, an 83,000 SF building, from Liberty Property Trust for $8.7 million or approximately $104.82 per SF. The building is approximately 85% leased at the time of the sale.

• After years of neglect by the previous owner, Valley Square Office Park is beginning to see more leasing deals. Corvest Realty Inc. purchased the ill-maintained complex for $8.5 million in 2013 and started extensive renovation. The renovation has attracted new tenants into the complex: in the past year, the owner has signed 100,000 SF of deals.

PLYMOUTH MEETING / BLUE BELL

Year-End 2014 $25.84 $20.09 $23.23 Mid-Year 2015 $26.99 $20.18 $23.90

RENTAL RATE

Year-End 2014 14.90% 21.80% 18.00% Mid-Year 2015 10.00% 16.70% 13.00% VACANCY RATE SQUARE FEET OVERALL 6,477,790 INVENTORY Arborcrest Rendering 2250 Hickory Road

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SELECT TRANSACTIONS:

• Brian Mears and Kevin Hagenberg represented Independent Container Lines and leased 63,400 SF of space in Aston, PA.

• Pete Soens represented Customized Energy Solutions with a 19,645 SF lease in Center City.

• Brian Mears and Pete Soens represented Falcon Capital for a 4,674 SF lease in Wayne, PA.

• Brian Mears and Kevin Hagenberg, in collaboration with outside brokers, helped lease 7,600 SF to Pep Boys.

• Mike Kennedy represented Cozen O'Connor for a 5,078 SF lease in Harrisburg.

• Peter Shrier represented Steven S. Greenbaum Dermatological Surgery for a 5,722 SF lease at 1528 Walnut Street.

NEW ASSIGNMENTS: Tenant Representation

SSH has been appointed as the exclusive agent for the following organizations:

The Graham Company 80,000 SF

JEVS 30,000 SF

Locks Law Firm 16,000 SF

Landlord Resentation

• Brian Mears and Kevin Hagenberg have been appointed leasing agent for the Naaman’s Creek Business Center in Upper Chichester Township, Delaware County.

• Brian Mears represented the ownership, LaSalle Investment Management, in a lease renewal and lease expansion with Crozer Keystone Health System (CKHS) at the Brinton Lake Medical Center. CKHS renewed 49,601 SF for ten (10) years at 300 Evergreen Drive and executed an additional 5,001 SF at 500 Evergreen Drive.

Investment Brokerage

• The investment team has been selected to market a portfolio of four buildings in West Chester and Exton.

• Adam Gillespie sold two apartment complexes in Hazelton in first half of 2015 and has been appointed to represent 7 Melrose Street, another apartment property in Hazelton.

COMPANY NEWS

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Sharon Barnes has over 25 years of extensive experience in property and project management She joined SSH as a Senior Vice President of Property Management. She managed properties through-out the East Coast in her previous position with Canon for over 25 years. She was instrumental in the expansion of numerous facilities through-out her tenure including warehouse relocations, tenant fit outs, and decommissioning of facilities.

MANAGEMENT NEWS:

• SSH has been selected to manage the North American building, a 21-story historic high-rise owned by Allan Domb, located at 121 S. Broad Street.

We are now on Twitter!

Click here to follow and tweet at us: @sshrealestate

Tom Borgese recently joined SSH as Director of Construction Services. He has over 30 years of extensive experience in construction. Since 1983, he has been involved with various types of construction projects from tenant fit-outs to complete building renovations. Also, he has constructed new buildings from ground-up. Overall he has been involved with over $250 Million of construction projects. Prior to SSH, Tom was a Construction Manager for The Flynn Company for 21 years.

Angel Lin recently joined SSH from Sotheby's New York. Originally from Oklahoma City, Angel moved to Philadelphia to study at the Curtis Institute of Music. Upon graduating in 2008, she moved to New York and eventually was recruited by Sotheby’s, where she assisted high net-worth American and Chinese clients with their art collection needs and bid on their behalf. At the same time, she was also studying for her MBA in Real Estate and Marketing at Baruch College of CUNY, which she obtained in December 2014. She is also fluent in Mandarin.

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SERVICES

SSH Real Estate is one of the largest privately held commercial real estate companies in the Greater Philadelphia Region. The firm is unique in that it is the only commercial real estate company in the area with the size and scope of experience in brokerage, property management, and investments. SSH Real Estate’s expertise in each line of service provides a better knowledge base and “big picture view,” which enables the firm to produce superior results for its clients. Our 75 professionals, experienced in all facets of the business – brokerage, management, finance, and construction - provide clients with outstanding results in the full complement of commercial real estate services:

TENANT REPRESENTATION

SSH Real Estate’s 25 brokers provide strategic tenant representation to clients in the Philadelphia area and throughout the country. With an average of 20 years experience, our brokers draw on extensive knowledge, resources and expertise to provide each client with exceptional service and results.

INVESTMENT SERVICES

SSH’s Investment Services Division focuses on investment property sales in the Philadelphia region. Our team has represented owners in the sale of over 24 million SF of income-producing real estate worth more than $2 billion. We also provide capital market services for income-producing real estate including multi-housing, industrial, office, retail, as well as developable land sites.

NON-PROFIT SERVICES

SSH has cultivated an expertise in working with non-profit organizations to ensure that their real estate choices are financially sound and meet the specific needs of their constituents. Clients include associations; educational, health, social service, religious, legal, arts and

cultural organizations.

LANDLORD REPRESENTATION

Representing approximately 2 million SF of office space in Philadelphia and more than 1.1 million SF in the suburban market, SSH is a recognized leader in landlord representation. Our buildings consistently retain high occupancy due to aggressive and creative marketing.

PROPERTY MANAGEMENT

SSH manages approximately 6 million SF of office space in the Greater Philadelphia region. As property owners ourselves, we manage our clients’ assets as we do our own. Our highly experienced staff uses innovative approaches to maximize our clients’ cash flow, while maintaining the highest quality service to our tenants.

CONTACT INFORMATION CENTER CITY OFFICE

123 South Broad Street, 8th Floor Philadelphia, PA 19109

T (215) 893-3000

Jeffrey R. Seligsohn, SIOR, Partner (215) 825-1500

Peter C. Soens, Partner (215) 825-1510

Greg Muller, COO & Partner (215) 825-1513

SUBURBAN OFFICE

New address coming soon. T (610) 995-1010

Brian Mears, Partner (610) 304-3080