+0.6%

O�ceEmployment

O�ceSF/Job

SubleaseVacancy

-2.1%

Q42017

+15.7

Market Indicators Relative to prior period Q4 2017 Q1 2018*

VACANCY

NET ABSORPTION

COMPLETIONS

RENTAL RATE

*Projected

Economic Indicators

Historical Vacancy Rates and Asking Lease Rates

Summary StatisticsLas Vegas Market Q4-16 Q3-17 Q4-17

Vacancy Rate 17.2% 15.5% 15.4%

Asking Rent (PSF, NNN) $2.02 $2.01 $2.04

Net Absorption (SF) 40,170 267,963 147,073

New Completions (SF) 160,103 10,000 152,000

“We think that, provided the national economy continues to improve, Southern Nevada’s office market will experience a healthy 2018…”

Overall Asking Rents Per Square Foot Q4-16 Q3-17 Q4-17

Class A $2.70 $2.70 $2.65

Class B $2.03 $2.00 $2.05

Class C $1.68 $1.71 $1.72

Office Phase II

Research & Forecast Report

LAS VEGAS | OFFICEQ4 2017

> 2017 continued Southern Nevada’s slow-and-steady office recovery

> Vacancy fell below 16 percent in 2017, roughly double the long-term average vacancy

> Asking rates have seen little movement since hitting $2.00 psf FSG last year

Net absorption in Southern Nevada’s office market topped 1.0 million square feet in 2017, a distinct improvement over 2016 and roughly equal to net absorption in 2015. The office market has been in a slow recovery since 2012, and demand for office space appears to be increasing. That being said, net absorption remains lower than during the 2002 mini-recovery that followed the 2001 mini-recession, and much lower than the demand surge that took place between 2004 and 2007. Since 2012, vacancy has fallen from 21.1 percent to this quarter’s 15.4 percent, while asking rates have increased from $1.87 to the current $2.04 per square foot (psf) on a Full Service Gross (FSG) basis.

Southern Nevada’s office job market improved in October 2017 compared with October 2016. The Valley added 8,600 jobs over the past twelve months, with the largest gain coming from the professional and business services sector (+6,100 jobs). We estimate approximately 6,780 jobs added over the past twelve months fed directly into professional office

$1.88

$1.90

$1.92

$1.94

$1.96

$1.98

$2.00

$2.02

$2.04

$2.06

14.0%

14.5%

15.0%

15.5%

16.0%

16.5%

17.0%

17.5%

18.0%

18.5% 4 Q 2015

1 Q 2016

2 Q 2016

3 Q 2016

4 Q 2016

1 Q 2017

2 Q 2017

3 Q 2017

4 Q 2017

Vacancy Asking Rental Rate

Historical Net Absorption vs.Completions

Occupancy vs.Office Employment

OCT 2016

OCT 2017 CHANGE

Information 11,000 10,900 - 100

Financial Activities 49,400 50,300 + 900Professional & Business Services 138,100 144,200 + 6,100

Health Care 63,500 65,200 + 1,700

Source: Nevada Department of Employment, Training and Rehabilitation

Vacancy by Size RangeQ3-2017 Q4-2017 DIFFERENCE

Size Range Units Total SF Units Total SF Units Total SF

0 to 2,500 sf 994 2,070,213 990 1,830,245 - 4 - 23,997

2,501 to 5,000 sf 472 1,986,048 442 1,784,385 - 30 - 20,166

5,001 to 10,000 sf 180 1,368,276 190 1,354,821 +10 - 13,455

10,001 to 20,000 sf 76 1,137,639 66 973,972 - 10 - 163,667

20,000 sf + 27 942,238 34 1,168,347 +7 + 226,109

2 Las Vegas Research & Forecast Report | Q4 2017 | Office | Colliers International

space. Over the same period, net absorption totaled 1,088,470 square feet. This represented 161 square feet of occupied space per new office job. By comparison, during the 2005-2007 boom Southern Nevada businesses occupied 534 square feet per office job. Unemployment in the Las Vegas-Paradise MSA stood at 5.1 percent in October 2017, down from 5.5 percent in October 2016. From October 2016 to October 2017, total employment in Southern Nevada increased by 41,600 jobs, a 4.4 percent increase.

Southern Nevada’s office market welcomed 346,000 square feet of new development in 2017, almost half of it in the new Credit One headquarters building completed in the Southwest submarket this quarter. The amount of office space in the construction pipeline increased dramatically in 2017 compared to 2016. There were 1.5 million square feet of office product under construction or planned at the end of 2017, compared to 684,000 square feet of forward supply in 2016. This is significant. Development in Southern Nevada’s industrial sector did not increase significantly until industrial vacancy had drawn fairly close to its long-term average. That we are seeing an increase in office development while vacancy rates are still well above the long-term average suggests that some portion of the current vacant office inventory will have a difficult time competing in the future. In essence, the market has moved on, and some office properties might have been left behind.

Southern Nevada’s office market had 1,088,470 square feet of net absorption in 2017. This was higher than last year, when occupied inventory increased by 654,808 square feet. This extended the current streak of positive net absorption to twelve quarters, and suggests that the market should now be transitioning from recovery to expansion. Year-end net absorption was highest this quarter in the Southwest submarket (472,663 square feet), followed by Henderson (198,944 square feet) and Northwest (185,398 square feet). Three submarkets experienced negative net absorption in 2017, North Las Vegas (negative 6,768 square feet), Downtown (negative 21,966 square feet) and East Las Vegas (negative 22,710 square feet). Throughout this recovery there has been a movement of office tenants from East Las Vegas, the dominant office market in the Valley in the 1980’s and 1990’s, to the west side of the Valley.

Demand for office space over the past two quarters came primarily from professional and business services, financial activities and engineering and

0

100,000

200,000

300,000

400,000

500,000

600,000

4 Q 2015

1 Q 2016

2 Q 2016

3 Q 2016

4 Q 2016

1 Q 2017

2 Q 2017

3 Q 2017

4 Q 2017

Net Absorption Completions

80.0%

81.0%

82.0%

83.0%

84.0%

85.0%

86.0%

110,000

115,000

120,000

125,000

130,000

135,000

140,000

4 Q 2015

1 Q 2016

2 Q 2016

3 Q 2016

4 Q 2016

1 Q 2017

2 Q 2017

3 Q 2017

4 Q 2017

Office Jobs Occupancy Rate

“Net absorption in Southern Nevada’s office market topped 1 million square feet in 2017, a distinct improvement over 2016 …”

3 Las Vegas Research & Forecast Report | Q4 2017 | Office | Colliers International

Office Development Schedule

PROJECT CLASS SUBMARKET SIZE PRE-LEASING

Q1-2018 103,010 SF 39%

GLVAR HQ B Southwest 40,646 SF BTS

St Rose Coronado Center B Henderson 62,364 SF 0%

Q2-2018 220,500 SF 100%

Aristocrat Technologies HQ B Northwest 180,000 SF BTS

Roberts Communication Complex B Henderson 40,500 SF BTS

Q3-2018 202,300 SF 0%One Summerlin 2 A Northwest 152,300 SF 0%

Seven Hills Plaza Bldg D B Henderson 50,000 SF 0%

2018/2019 965,412 SF 18%

Cadence Bldg 2 C Henderson 15,000 SF 0%

Cadence Bldg 3 C Henderson 15,000 SF 0%

Centennial Hills Center B Northwest 87,000 SF 0%

Centennial Hills Center C Northwest 37,100 SF 0%

International Trade & Business Center A Downtown 500,000 SF 0%

Magnum Towers A Southwest 100,000 SF 0%

Pace Plaza B Southwest 42,000 SF BTS

The Square C Southwest 36,722 SF 0%

University Gateway B East Las Vegas 21,885 SF 100%

UNLV Harry Reid Tech Park A Southwest 110,705 SF BTS

Investment Sales Activity

2013 2014 2015 2016 2017

No. Sales 85 67 59 45 94

Square Footage 3,416,000 2,302,000 1,712,000 1,449,000 3,507,698

Sales Volume $522.2 MM $250.0 MM $284.3 MM $200.9 MM $656.8 MM

Average Price/SF $152.84 $108.59 $166.06 $138.70 $187.23

Average Cap Rate 7.6% 7.7% 7.5% 7.8% 7.5%

Average Sale Size (SF) 40,000 34,000 29,000 32,200 37,300

* Note – Data in this graph no longer includes medical office

management companies. In the lease comps to which we had access in 2017, local tenants took 67 percent of the leased space, tenants from the Southwest U.S. (including California) 46.3 percent and tenants from the Southeastern states 17.6 percent. The extent to which the introduction of Chick-fil-A to Southern Nevada increased office demand by Southeastern companies is unknown.

Southern Nevada currently averaged 278 square feet of occupied office space per office job in 2017. This number peaked in 2010 at approximately

347 square feet per job, and has been sliding ever since; it was 288 square feet per job in 2016. The reason behind this trend is technology and smarter use of office space by office users, who are utilizing concepts like shared space or “hoteling” to maximize their efficiency.

The office vacancy rate in Southern Nevada at the end of 2017 was 15.4 percent, a decrease from last year’s rate of 17.2 percent. While this represents a distinct improvement, it remains higher than the pre-2006 average of 9.0 percent vacancy. Office vacancy decreased in four of

4 Las Vegas Research & Forecast Report | Q4 2017 | Office | Colliers International

the Valley’s eight submarkets in 2017, with the Henderson submarket experiencing the largest decrease (3.8 percentage points), followed by West Central (2.8 points) and the Southwest (2.4 points). Vacancy increased by 0.9 points in North Las Vegas and by 0.4 points in the Downtown and East Las Vegas submarkets.

When examined by the size range of vacant units (including vacant units for sub-lease), demand this quarter was highest for spaces between 10,001 and 20,000 square feet, followed by spaces under 2,500 square feet and spaces between 2,501 and 5,000 square feet. The largest size range, units over 20,000 square feet, saw vacancy increase by 226,109 square feet.

The weighted average asking rental rate for office space in Southern Nevada decreased by $0.02 to $2.04 psf FSG basis in 2017 over 2016’s asking rate of $2.02 psf FSG. The Valley’s asking rate has hovered between $2.01 and $2.02 from the third quarter of 2016 to the third quarter of 2017, so the fourth quarter’s bump up to $2.04 psf FSG is notable. The Southwest remained the most expensive submarket in the Valley this quarter, with an asking rental rate of $2.36 psf FSG, ahead of Downtown’s $2.21 psf

FSG. The Valley’s lowest average asking rate is in the North Las Vegas submarket, at $1.64 psf FSG.

Office space available for sublease increased in the fourth quarter of 2017 to 444,132 square feet from last year’s total of 383,923 square feet. Available sublease space can be a “canary in the coal mine” for the office market, pointing to future additions of directly available space to the market.

If investment sales are a good indication of the market’s faith in the future, Southern Nevada’s office market has a bright future ahead of it. In 2017 the Valley’s office market posted sales volume of $656.8 million in 94 sales totaling 3,507,698 square feet with an average price per square foot of $187.23 and an average cap rate of 7.5 percent. The average investment sales price in 2016 was just $138.70 due to the sale of a large building in the Downtown submarket. Sales volume so far in 2017 was the highest in the past five years. At the end of 2017 there were 1.4 million square feet of office available for sale as an investment with an average asking price of $220.58 psf and an average cap rate of 6.7 percent.

After three years of slow and steady recovery, Southern Nevada’s office market may be ready to transition into an expansion phase. Forward supply of office space increased significantly in 2017 over 2016, and investment sales are strong, indicating that investors and developers are bullish on the market’s future. We think that, provided the national economy continues to improve, Southern Nevada’s office market will experience a healthy 2018, with new construction increasing overall demand in the marketplace and putting increased pressure on older properties that are still trying to recover from Great Recession.

NORTHWEST

EASTLAS VEGAS

NORTHLAS VEGAS

SOUTHWEST

WESTCENTRAL

AIRPORT

HENDERSON

DOWNTOWNSUMMERLIN

15

215

215

95

95

Significant Office Sale Activity

Green Valley Corporate Center119,198 SF - $23,900,000

$201.00/SF

October 2017

Class B

Centra Point at the Curve377,406 SF - $76,990,824

$204.00/SF

September 2017

Class B

The Park at Spanish Ridge71,024 SF - $17,600,000

$248.00/SF

September 2017

Class B

Corporate Center the Curve95,002 SF - $30,125,000

$317.00/SF

November 2017

Class B

Canyons Center Summerlin125,118 SF - $28,062,957

$224.00/SF

September 2017

Class A

5 Las Vegas Research & Forecast Report | Q4 2017 | Office | Colliers International

Lease Activity

Property Name Lease Date Lease Term Size Lease Rate Type

Las Vegas Digital Exchange Campus Oct 2017 62 months 30,498 SF $1.54 NNN Class C

Peak Professional Building Oct 2017 37 months 6,783 SF $1.17 MG Class B

Shadow Quail Park Oct 2017 36 months 3,684 SF $1.60 MG Class B

City Center West Oct 2017 27 months 3,524 SF $2.09 FSG Class A

Sunset Ridge Professional Plaza Nov 2017 37 months 2,538 SF $0.70 NNN Class C

Market Comparisons - Las Vegas

Office Market

CLASSTOTAL

INVENTORY SF

DIRECT VACANT

SF

DIRECT VACANCY

RATE

SUBLEASE VACANT

SF

TOTAL VACANT

SF

VACANCY RATE CURRENT QUARTER

VACANCY RATE PRIOR QUARTER

NET ABSORPTION

CURRENT QTR SF

NET ABSORPTION

YTD SF

COMPLETIONS CURRENT QTR SF

COMPLETIONS YTD SF

UNDER CONSTRUCTION

SF

PLANNED CONSTRUCTION

SF

WEIGHTED AVG ASKING

RENTAL RATE

AIRPORT SUBMARKET

A 729,174 205,540 28.2% 15,326 220,866 30.3% 27.0% (8,430) 40,109 - - - - $2.84 B 2,403,646 263,847 11.0% 8,412 272,259 11.3% 12.2% 18,697 81,076 - - - - $1.97 C 3,217,340 515,049 16.0% 25,123 540,172 16.8% 16.8% 1,913 22,156 - - - - $1.79 Total 6,350,160 984,436 15.5% 48,861 1,033,297 16.3% 16.3% 12,180 143,341 - - - - $2.06

DOWNTOWN SUBMARKET

A 1,232,341 249,916 20.3% 12,165 262,081 21.3% 21.0% (533) (19,744) - - - 500,000 $2.66 B 2,355,207 244,866 10.4% 2,353 247,219 10.5% 11.3% 18,432 (2,970) - - - - $2.11 C 1,443,279 170,455 11.8% - 170,455 11.8% 11.4% (6,436) 748 - - - - $1.68 Total 5,030,827 665,237 13.2% 14,518 679,755 13.5% 13.7% 11,463 (21,966) - - - 500,000 $2.21

EAST LAS VEGAS SUBMARKET

A 1,353,083 288,962 21.4% 24,062 313,024 23.1% 23.4% (6,550) 5,102 - - - - $2.81 B 1,542,404 378,334 24.5% 2,967 381,301 24.7% 25.1% 5,901 70,154 - - - 21,885 $1.39 C 2,591,966 620,429 23.9% 8,401 628,830 24.3% 22.2% (50,922) (97,966) - - - - $1.41 Total 5,487,453 1,287,725 23.5% 35,430 1,323,155 24.1% 23.3% (51,571) (22,710) - - - 21,885 $1.72

HENDERSON SUBMARKET

A 583,905 185,319 31.7% 8,523 193,842 33.2% 37.8% 24,690 29,854 - - - - $2.65 B 2,584,971 361,258 14.0% 47,447 408,705 15.8% 16.2% 14,330 50,348 - - 152,864 - $2.08 C 2,162,926 244,703 11.3% 8,034 252,737 11.7% 14.1% 53,878 118,742 - - - 30,000 $1.87 Total 5,331,802 791,280 14.8% 64,004 855,284 16.0% 17.7% 92,898 198,944 - - 152,864 30,000 $2.15

NORTH LAS VEGAS SUBMARKET

A - - n/a - - n/a n/a - - - - - - $- B 245,696 56,227 22.9% - 56,227 22.9% 18.9% (9,681) (23,077) - - - - $1.92 C 543,389 90,244 16.6% - 90,244 16.6% 16.8% (2,823) 16,309 - - - - $1.47 Total 789,085 146,471 18.6% - 146,471 18.6% 23.3% (12,504) (6,768) - - - - $1.64

NORTHWEST SUBMARKET

A 1,960,287 372,115 19.0% 55,927 428,042 21.8% 17.6% (27,443) 119,657 - - 152,300 - $2.45 B 3,546,217 547,639 15.4% 21,261 568,900 16.0% 14.2% (43,413) 42,800 - - 180,000 87,000 $2.22 C 3,369,299 343,959 10.2% 4,665 348,624 10.3% 10.5% 10,337 22,941 - - - 37,100 $1.85 Total 8,875,803 1,263,713 14.2% 81,853 1,345,566 15.2% 13.6% (60,519) 185,398 - - 332,300 124,100 $2.19

SOUTHWEST SUBMARKET

A 597,112 23,187 3.9% - 23,187 3.9% 5.3% 8,551 8,104 - - - 210,705 $2.49 B 3,350,709 467,979 14.0% 8,944 476,923 14.2% 13.8% 97,603 420,800 152,000 336,000 40,646 42,000 $2.54 C 3,525,904 420,162 11.9% 3,000 423,162 12.0% 12.6% 23,986 43,759 - 10,000 - 36,722 $2.15 Total 7,473,725 911,328 12.2% 11,944 923,272 12.4% 12.5% 130,140 472,663 152,000 346,000 40,646 289,427 $2.36

WEST CENTRAL SUBMARKET

A 157,624 18,803 11.9% 2,421 21,224 13.5% 13.5% - - - - - - $2.46 B 1,922,915 398,742 20.7% - 398,742 20.7% 20.8% 1,662 55,443 - - - - $1.90 C 3,025,646 395,307 13.1% 8,151 403,458 13.3% 13.9% 23,324 84,125 - - - - $1.56 Total 5,106,185 812,852 15.9% 10,572 823,424 16.1% 16.5% 24,986 139,568 - - - - $1.75 MARKET TOTALA 6,613,526 1,343,842 20.3% 118,424 1,462,266 22.1% 21.7% (9,715) 183,082 - - 152,300 710,705 $2.65 B 17,951,765 2,718,892 15.1% 91,384 2,810,276 15.7% 15.5% 103,531 694,574 152,000 336,000 373,510 150,885 $2.05 C 19,879,749 2,800,308 14.1% 57,374 2,857,682 14.4% 14.6% 53,257 210,814 - 10,000 - 103,822 $1.72 Total 44,445,040 6,863,042 15.4% 267,182 7,130,224 16.0% 16.0% 147,073 1,088,470 152,000 346,000 525,810 965,412 $2.04

QUARTERLY COMPARISON AND TOTALS

Q4-17 44,445,040 6,863,042 15.4% 267,182 7,130,224 16.0% 16.0% 147,073 1,088,470 152,000 346,000 525,810 965,412 $2.04

Q3-17 44,293,040 6,858,115 15.5% 236,068 7,094,183 16.0% 16.5% 267,963 941,397 10,000 194,000 447,810 798,068 $2.01

Q2-17 44,283,040 7,116,078 16.1% 197,574 7,313,652 16.5% 17.4% 545,955 673,434 184,000 184,000 224,364 946,014 $2.02 Q1-17 44,099,040 7,478,033 17.0% 199,166 7,677,199 17.4% 17.7% 127,479 127,479 - - 256,364 739,046 $2.02 Q4-16 44,099,040 7,605,512 17.2% 192,057 7,797,569 17.7% 17.5% 40,170 654,808 160,103 292,208 194,000 490,400 $2.02 Q3-16 43,938,937 7,485,579 17.0% 204,870 7,690,449 17.5% 17.9% 216,559 614,638 - 132,105 386,603 281,302 $2.01 Q2-16 43,938,937 7,702,138 17.5% 157,956 7,860,094 17.9% 18.0% 119,251 398,079 121,405 132,105 386,603 421,140 $1.99

6 Las Vegas Research & Forecast Report | Q4 2017 | Office | Colliers International

Copyright © 2018 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

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*All statistics are for 2016 and include affiliates.

About Colliers InternationalColliers International Group Inc. (NASDAQ and TSX: CIGI) is an industry leading global real estate services company with 15,000 skilled professionals operating in 68 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting.

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