The Northern/Central New Jersey office market continued to see a rough balance between the supply and demand for office space, leading to no significant changes in overall rent levels or net absorption. As owners in all classes of assets compete for limited demand of quality space, buildings that are “best in class” generally prevail. Another bright spot is obsolete and/or over-leveraged assets are being quietly traded, generally at a discount to replacement cost or the existing book value, which allows the new owners to offer occupiers the opportunity to lease or purchase space at attractive terms. With

such a low cost basis, tenants can spend the capital necessary to modernize or repurpose the properties. Several large occupiers such as Haier Group, Valeant, GAF, Merck and Bayer initiated or completed relocations and/or expansions this quarter. The re- development and redeployment of distressed properties or properties vacated by such companies as Sanofi Aventis or Alcatel Lucent have benefitted from the revised economic incentives programs; which have paved the way to make many of these deals possible.

Haier Group relocated its U.S. headquarters from 1356 Broadway

in Manhattan to 58,000 square feet at 1800 Valley Road in Wayne, New Jersey, signing a 13 year lease at the new location. Haier’s existing work force includes a substantial number of employees who live in New Jersey, and it believes that this relocation will provide these employees with a better quality of life. Haier Group employs more than 80,000 people globally and distributes products in more than 100 countries and regions. Haier Group’s global revenues reached $25.8 billion in 2012. Haier will be moving in after renovations are completed by the building’s owner, BET Investments.

MARKET REPORTNORTHERN & CENTRAL NEW JERSEY

WWW.COLLIERS.COM/NEWJERSEY

Q4 2013 | OFFICE

Several Major Occupiers Make Moves, Creating Momentum Heading into 2014

WWW.COLLIERS.COM/PARSIPPANYPRINCETON

NJ OVERALL AVAILABILITY VS AVERAGE ASKING RENTAL RATE NJ OVERALL NET ABSORPTION (SF)

Valeant Pharmaceuticals signed a 310,000-square-foot lease at 400 Somerset Corporate Boulevard in Bridgewater, NJ, moving its Bausch & Lomb subsidiary from Rochester, NY. Valeant purchased Bausch & Lomb in the spring of 2013. Valeant received a 10 year, $39.5 million Grow New Jersey Grant from the State of New Jersey by agreeing to maintain the 274 jobs it already has in the state as well as adding 500 jobs in the state. Valeant Pharmaceuticals is a multinational specialty pharma- ceutical company that is head- quartered in Quebec, Canada. It has 7,500 worldwide employees and had $3.55 bil l ion in ful l year revenues for 2012.

The Northern/Central New Jersey Office availability rate remained relatively flat, dropping from 20.1 percent in the third quarter of

2013 to 20.0 percent in the fourth quarter of 2013, as the demand for space remains steady and obso- lete or distressed properties are redeployed for alternate uses, reducing the supply of office space.

The average asking rent barely moved, increasing by two cents from the third quarter of 2013 to the fourth, from $23.56/sf to $23.58/sf. Net absorption came in at negative 882,850 square feet during the fourth quarter, a decrease of 2,027,988 square feet from third quarter of 2013’s figure of 1,145,138 square feet and a decrease of 1,039,960 square feet from the year earlier figure of 157,110 square feet.

ECONOMY & JOB GROWTH

New Jersey’s employment picture continued to brighten as total employment grew by 70,000 jobs from November 2012 to November 2013, almost double November 2011

to November 2012’s growth pace of 36,800 jobs and more than triple the 21,500 increase in jobs recorded from November 2010 to November 2011. At 4,002,500 jobs New Jersey is at 97% of the previous peak employment level of 4,125,200 jobs reached in December 2007.

The New Jersey economy produced employment growth of nearly 1.8 percent in 2013, which is a solid performance. As 2013 ended and 2014 began, however, concerns about the pace of growth going forward began to creep back into the public discussions, particularly at the national level. In fact the housing sector did slow with fewer sales in November and December, and the employment numbers were particularly weak for the month of December. Also, the impact of the Fed’s change in monetary policy has yet to be fully realized. As a result decision makers remain cautious, holding the economy back from a stronger expansion.

OUTLOOK

According to ULI/PWC’s 2014 Emerging Trends in Real Estate report, 2014 will see market fundamentals and property en- hancements driving returns. The consensus in the report looks for good job growth, solid corporate

NJ TOTAL NONFARM PAYROLL EMPLOYMENT

2 – COLLIERS INTERNATIONAL

OFFICE MARKET REPORT | Q4 2013 | NORTHERN & CENTRAL NEW JERSEY

profits and a recovery in the housing market.

The Conference Board predicts that U.S. Real GDP will come in at 0.9 percent in the fourth quarter of 2013, which would be down from the unexpectedly strong 4.1 percent attained in the third quarter of 2013. The Board looks for a much improved reading of 2.4 percent for the first quarter of 2014 and a reading of 2.3 percent for 2014 as a whole. The Conference Board predicts that 2015 will outperform 2014, coming in at 2.6 percent for the entire year. If these growth pro -jections prove to be on target, the New Jersey office market will see increased deal volume in 2014 as occupiers become more confident. Steady and moderate growth should result in more employment growth in New Jersey; perhaps matching the growth seen in 2013.

NORTHERN NEW JERSEY

The Northern New Jersey avail-abi l i ty rate at 20.6 Percent remained within its trading range, with the availability rate staying between 20.4 percent and 20.9 percent over the last five quarters. The average asking rent stayed remarkably constant this quarter, changing by only one cent, as it rose from $24.19/sf in the third quarter of

2013 to $24.20/sf in the fourth. The pace of net absorption also showed little change from the third quarter, coming in at 546,139 square feet in the fourth quarter of 2013 after reaching 545,357 square feet in the third quarter. Leasing activity for the fourth quarter declined by 304,674 square feet from last year’s fourth quarter, with 1,456,427 square feet in the fourth quarter of 2013 versus 1,761,101 square feet in the fourth

quarter of 2012.

GAF, North America’s largest

manufacturer of commercial and

residential roofing, purchased 1

Campus Drive in Parsippany,

which totals 380,000 square feet,

relocating from its 29-acre-campus

at 1361 Alps Road in Wayne. Realogy,

the former tenant at 1 Campus,

Drive, relocated in May 2013 to a

270,000 square foot building at 175

Park Avenue in Madison that had

been redeveloped for its use by The Hampshire Companies. The new location provides GAF with more modern and efficient workspace and room to expand. GAF will move in once renovations to the building are complete. GAF was founded in 1886 and has annual sales of approximately $3 billion.

The list of reconstructions and

redevelopments of existing prop- erties in New Jersey got even longer

in the fourth quarter. Earlier, Realogy

redeveloped 175 Park Avenue in

Madison with a total of 270,000

square feet; Novo Nordisk redid 800

Scudders Mill Road in Plainsboro,

with a total of 770,000 square

feet and Alcatel Lucent’s

1.7 million square foot campus in

Holmdel was transformed to

mixed use. In the fourth quarter,

US TOTAL NONFARM PAYROLL EMPLOYMENT

COLLIERS INTERNATIONAL – 3

the reconstruction of two buildings,

with a total of 650,000 square feet, in the Whippany section of Hanover was completed. The drug maker Bayer will be occupying this space in Hanover.

Vision Equities reconstructed the two obsolete office buildings orig- inally occupied by Alcatel-Lucent and connected them with a five story Atrium. Bayer signed a lease for the building in October 2011 that was contingent upon the renovations and construction approvals.

Bayer consolidated its locations in Montville, Morristown, Montville, Wayne and Tarrytown, NY to this location in order to improve comm - unication and innovation in the complex field of drug development. The entire Alcatel Lucent campus totals 1.35 million square feet, with the remainder being industrial space

that is being converted to retail, residential, and medical uses. CENTRAL NEW JERSEY

Central New Jersey’s availability rate came in at 19.3 percent during fourth quarter of 2013, dropping two-tenths of a percentage point from third quarter’s 19.5 percent. The average asking rent increased two cents from last quarter, from $22.83/sf in the third quarter to $22.85/sf in the fourth quarter of 2013. The Central New Jersey average asking rent was fifty two

cents higher last year at this time, coming in at $23.37/sf in the last quarter of 2012.

The Central New Jersey net absorption figure was 537,173 square feet for the last quarter of 2013, slightly lower than the third quarter’s reading of 599,781 square feet; but a big improvement from the fourth quarter 2012’s weak showing of 174,071 square feet.

Merck Pharmaceuticals announced it will keep its global headquarters

RECENT TENANT ACTIVITY: NORTHERN NEW JERSEY

TENANT ADDRESS CITY COUNTY SQ. FT.

Bio Reference Laboratories Inc. 41 Slater Drive Elmwood Park Bergen 140,000

Orthodox Union 499 Washington Boulevard Jersey City Hudson 100,000

Haier Group 1800 Valley Road Wayne Passaic 58,000

VF Corp. 545 Washington Boulevard Jersey City Hudson 38,736

Bergen County Blood Center 102 Chestnut Ridge Road Montvale Bergen 30,000

Groupe SEB USA 1 Boland Drive West Orange Essex 24,986

McElroy Deutsch 570 Broad Street Newark Essex 21,000

Angels & Edwards 44 Whippany Morristown Morris 20,000

World Wide Packaging 15 Vreeland Road Florham Park Morris 18,787

NORTHERN NJ OVERALL AVAILABILITY VS AVERAGE ASKING RENTAL RATE CENTRAL NJ OVERALL AVAILABILITY VS AVERAGE ASKING RENTAL RATE

4 – COLLIERS INTERNATIONAL

OFFICE MARKET REPORT | Q4 2013 | NORTHERN & CENTRAL NEW JERSEY

in New Jersey, relocating from 900,000 square feet at 1 Merck Drive in Whitehouse Station to its

100-acre campus in Kenilworth that

it acquired during its merger with

Shering-Plough. Merck will also

close its Summit campus with 1.7

million square feet of manufact-

uring and office space. 2 Merck

Drive in Whitehouse Station, which

measures 223,357 square feet of

office, will remain open. Merck

plans to cut its annual costs by

$2.5 billion by 2015, which includes eliminating 8,500 jobs.

CAPITAL MARKETS OVERVIEW

The Northern/Central New Jersey average cap rate based on a twenty four month rolling average on sales $2.5 million and greater dropped only slightly, decreasing by eight basis points when comparing the period stretching from the third

quarter of 2011 to the third quarter of 2013 against the fourth quarter of 2011 to the fourth quarter of 2013 period, from 7.34 to 7.26.

KABR Real Estate Investment Partners consummated one of the largest office sales of the quarter, purchasing 100 Challenger Road, with 150,000 square feet and 65 Challenger Road totaling 165,000 square feet for $16,000,000; or $50.79/sf. Both 65 and 100 Challenger were approximately 60% vacant at the time of the sale which contributed to the lower sale price. KABR intends to invest $35-$40 million in capital improvements on the two properties. The KABR Group was founded in 2008, targeting returns in excess of 18 percent as it employs a fresh balance sheet approach to acquire and work

through distressed, mismanaged

RECENT TENANT ACTIVITY: CENTRAL NEW JERSEY

TENANT ADDRESS CITY COUNTY SQ. FT.

Valeant (User Purchase) 400 Somerset Corporate Blvd. Bridgewater Somerset 310,000

AT&T 30 Knightsbridge Road Piscataway Middlesex 275,000

URS 510 Carnegie Center Princeton Mercer 234,160

Avaya 211 Mount Airy Road Basking Ridge Somerset 135,000

NRG Energy (Build to Suit) Carnegie Center Princeton Mercer 130,000

Johnson & Johnson 23 Orchard Princeton Mercer 112,000

Berlitz 7 Roszel Road West Windsor Mercer 79,000

Real Estate Mortgage Network, Inc. 194 Wood Avenue South Iselin Middlesex 50,327

SIGNIFICANT SALES TRANSACTIONS

Property Name Address City County Square Feet Sale Price Sale Price PSF Buyer Seller

Telecordia Technologies, Inc. 444 Hoes Lane Piscataway Middlesex 885,608 $27,400,000

(Tenant Purchase) $30.94 Ericcson (Tenant) W.P. Carey & Co. LLC

Former Pfizer Campus 5 Giralda Farms Madison Morris 463,435 $30,000,000 (High

Vacancy Property) $64.73 Lakestar Properties & Lincoln Equities Group Pfizer

Mack Cali Business Campus 1 Campus Drive Parsippany Morris 377,000 $8,350,000

(100% Vacant) $22.15 GAF Materials Corporation (User) CMBS Trust

65 & 100 Challenger Road Ridgefield Park Bergen 314,092 $16,000,000

(Note Purchase) $50.94KABR Real Estate

Investment Partners LLC

Hartz Mountain Industries

30 Montgomery Street Jersey City Hudson 300,000$57,000,000

(Partial Ownership Interest Sale)

$190.00 Onyx Equities, LLC/Rubenstein Partners, L.P.

Onyx Equities/Rockwood Real Estate Advisors

Atrium 1 100 Plaza Drive Secaucus Hudson 265,000 $47,000,000 $177.36 Harbor Group International

Hartz Mountain Industries

COLLIERS INTERNATIONAL – 5

Accelerating success.

ROBERT R. MARTIEExecutive Vice President /

New Jersey Region973 299 3000

robert.martie@colliers.com

PETER P. KOZEL, Ph.D.Executive

Managing Director / Chief Economist

212.716.3853peter.kozel@colliers.com

MARK PETERSENSenior Research Analyst

973.299.3032mark.petersen@colliers.com

NORTHERN NEW JERSEY119 Cherry Hill Road

Parsippany, NJ 07054973 299 3000

CENTRAL NEW JERSEY731 Alexander Road

Princeton, NJ 08540609 269 1111

Information contained herein has been obtained from sources that we deem reliable. We have no reason to doubt its accuracy, but we do not guarantee it. Some statements in this report are forward-looking statements or statements regarding future events, which involve risk and uncertainty, and there can be no assurance that the results described in such statements will be realized.

ABOUT COLLIERS INTERNATIONAL Colliers International is the third-largest commercial real estate services company in the world, with over 12,300 professionals operating out of more than 520 offices in 62 countries. A subsidiary of FirstService Corporation (NASDAQ: FSRV; TSX: FSV and FSV.PR.U), it focuses on accelerating success for its clients by seamlessly providing a full range of services to real estate users, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and research. Commercial Property Executive and Multi-Housing News magazines ranked Colliers International the top U.S. real estate company. The latest annual survey by the Lipsey Company ranked Colliers International as the second-most recognized commercial real estate firm in the world.

MARKET STATISTICS4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 change:

last yearchange:

last Quarter

NORTHERN & CENTRAL NJ OVERALL

Availability Rate A 21.8% 21.9% 21.9% 22.2% 22.5% 0.7% 0.3%

B 19.9% 20.2% 20.0% 16.5% 18.5% -1.4% 2.0%

C 17.1% 17.6% 17.1% 17.8% 17.2% 0.1% -0.6%

TOTAL 20.4% 20.6% 20.5% 20.1% 20.3% -0.1% 0.2%

Asking Rental Rate A $26.50 $26.39 $26.25 $26.39 $26.33 -$0.17 -$0.06

B $21.56 $21.34 $21.31 $21.22 $21.30 -$0.26 $0.08

C $18.26 $18.49 $18.56 $18.82 $19.03 $0.77 $0.21

TOTAL $23.63 $23.53 $23.48 $23.56 $23.49 -$0.14 -$0.07

Vacancy Rate (%) TOTAL 16.6% 16.2% 16.0% 15.5% 15.8% -0.8% 0.3%

Leasing Activity (qtr) TOTAL 3,177,228 2,275,139 1,937,785 2,105,761 2,647,436 -529,792 541,675

Absorption TOTAL 157,110 (817,031) 481,790 1,145,138 (882,850) -1,039,960 -2,027,988

NORTHERN NJ OVERALL

Availability Rate A 21.6% 21.9% 22.5% 23.4% 23.5% 1.9% 0.1%

B 20.1% 20.6% 20.6% 19.9% 20.3% 0.2% 0.4%

C 16.7% 16.6% 16.1% 11.9% 11.1% -5.6% -0.8%

TOTAL 20.4% 20.6% 20.9% 20.5% 20.6% 0.2% 0.1%

Asking Rental Rate A $26.29 $26.29 $26.08 $26.70 $26.97 $0.68 $0.27

B $22.31 $21.86 $21.90 $21.63 $21.76 -$0.55 $0.13

C $18.56 $19.27 $19.37 $19.70 $20.11 $1.55 $0.41

TOTAL $23.87 $23.85 $23.83 $24.19 $24.33 $0.46 $0.14

Vacancy Rate (%) TOTAL 16.0% 15.5% 15.3% 15.1% 15.6% -0.4% 0.5%

Leasing Activity (qtr) TOTAL 1,761,101 1,110,629 1,087,501 1,065,711 1,456,427 -304,674 390,716

Absorption TOTAL (16,961) (477,378) (457,273) 545,357 53,951 70,912 -491,406

CENTRAL NJ OVERALL

Availability Rate A 22.1% 22.1% 21.1% 20.3% 21.0% -1.1% 0.7%

B 19.6% 19.7% 19.4% 15.9% 16.6% -3.0% 0.7%

C 17.5% 18.9% 18.2% 24.4% 23.9% 6.4% -0.5%

TOTAL 20.4% 20.7% 20.0% 19.5% 20.0% -0.4% 0.5%

Asking Rental Rate A $26.73 $26.50 $26.45 $25.98 $25.51 -$1.22 -$0.47

B $20.69 $20.78 $20.69 $20.79 $20.80 $0.11 $0.01

C $18.01 $17.87 $17.88 $18.08 $18.18 $0.17 $0.10

TOTAL $23.37 $23.20 $23.10 $22.83 $22.55 -$0.82 -$0.28

Vacancy Rate (%) TOTAL 17.4% 17.0% 16.9% 16.1% 16.1% -1.3% 0.0%

Leasing Activity (qtr) TOTAL 1,416,127 1,164,510 850,284 1,040,050 1,191,009 -225,118 150,959

Absorption TOTAL 174,071 339,653 939,063 599,781 (936,801) -1,110,872 -1,536,582

OFFICE MARKET REPORT | Q4 2013 | NORTHERN & CENTRAL NEW JERSEYMARKET REPORT | Q4 2012 OFFICE MARKET REPORT | Q3 2013 | NORTHERN & CENTRAL NEW JERSEY