Going Up for the Rebound

Going Up for the Rebound On Behalf of ULI Washington By: Anirban Basu Sage Policy Group, Inc. April 10, 2013

First Pitch

Historic and Projected World Output Growth 2004 through 2014* Annual % Change 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 4.9% 4.6% 5.2% 5.4% 2.9% 5.3% 3.9% 3.2% 3.5% 4.1% -1.0% -0.5% -2.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: International Monetary Fund *2013-2014 data are projections

Estimated Growth in Output by Select Global Areas 2013 Projected Advanced economies Euro area France Germany Italy Spain Japan United Kingdom Canada United States Emerging/developing countries Sub-Saharan Africa Central/eastern Europe Russia Developing Asia China India Middle East and North Africa Latin America and Caribbean Brazil Mexico Source: International Monetary Fund -1.0% -1.5% -0.2% 0.3% 0.6% 1.4% 1.2% 1.0% 1.8% 2.0% 2.4% 3.7% 3.4% 3.6% 3.5% 3.5% 5.5% 5.8% 5.9% 7.1% 8.2% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Annual % Change

Source: IMF Debt by Country 2012 Japan Italy United States Spain France United Kingdom Canada Germany India Brazil Argentina Mexico South Africa Indonesia China Russia Saudi Arabia 0 50 100 150 200 250 General Government Gross Debt in Percent of GDP

Top 12 Stock Exchanges 2011 Growth Rank Exchange Index % Change 1 NYSE Group DJI A 5.5% 2 Nasdaq NASDAQ Composite -1.8% 3 London SE FTSE 100-5.6% 12 Swiss Exchange Swiss Market -7.8% 9 TSX Group S&P TSX Composite -9.2% 8 Bolsa De Medrid IGBM -14.6% 6 Frankfurt SE DAX -14.7% 5 Euronext CAC 40-17.0% 4 Tokyo SE Nikkei 225-17.3% 11 Hong Kong Exchanges Hang Seng Index -20.0% 7 Shanghai SE Shanghai Composite -21.7% 10 Borsa Italiana FTSE MIB -25.2% Source: Yahoo! Finance

Top 12 Stock Exchanges 2012 Growth Rank Exchange Index % Change 6 Frankfurt SE DAX 29.1% 11 Hong Kong Exchanges Hang Seng Index 22.9% 4 Tokyo SE Nikkei 225 22.9% 2 Nasdaq NASDAQ Composite 15.9% 5 Euronext CAC 40 15.2% 12 Swiss Exchange Swiss Market 14.9% 10 Borsa Italiana FTSE MIB 7.8% 1 NYSE Group DJI A 7.3% 3 London SE FTSE 100 5.8% 9 TSX Group S&P TSX Composite 4.0% 7 Shanghai SE Shanghai Composite 3.2% 8 Bolsa De Madrid IBEX 35-4.7% Source: Yahoo! Finance

S&P Select Sector Performance 2012 Financial 23.5% Consumer Discretionary 19.9% Health Care 14.2% Technology 11.7% Industrials Materials Consumer Staples 8.5% 8.0% 9.4% Energy 0.3% Utilities 0.7% 5% 0% 5% 10% 15% 20% 25% 12 month percent change Source: Dow Jones, Standard & Poor s

Third Quarter Earnings for Select Corporations Earnings per Share Symbol 3Q 2011 3Q 2012 Estimated 3Q 2012 Reported Surprise Symbol 3Q 2011 3Q 2012 Estimated 3Q 2012 Reported Surprise COF $1.77 $1.66 $2.01 $0.35 MMM $1.52 $1.65 $1.65 $0.00 UTX $1.47 $1.18 $1.37 $0.19 XRX $0.26 $0.25 $0.25 $0.00 BTU $0.87 $0.33 $0.51 $0.18 GE $0.31 $0.36 $0.36 $0.00 YHOO $0.23 $0.25 $0.35 $0.10 STI $0.39 $1.99 $1.98 $0.01 HON $1.10 $1.14 $1.20 $0.06 CMG $1.90 $2.30 $2.27 $0.03 TXN $0.61 $0.46 $0.52 $0.06 MSFT $0.68 $0.56 $0.53 $0.03 CAT $1.71 $2.22 $2.26 $0.04 MCD $1.45 $1.47 $1.43 $0.04 VFC $2.87 $3.49 $3.52 $0.03 FCX $1.10 $0.73 $0.68 $0.05 COH $0.73 $0.76 $0.77 $0.01 AMD $0.15 $0.15 $0.20 $0.05 UPS $1.06 $1.06 $1.06 $0.00 DD $0.60 $0.46 $0.32 $0.14 Source: Dow Jones, Standard & Poor s

Recession Watch as of February 2013 Source: Moody s Economy

Industrial Production February 2001 through February 2013 105 100 (Base year: 2007) 95 90 85 80 Feb 01 Jun 01 Oct 01 Feb 02 Jun 02 Oct 02 Feb 03 Jun 03 Oct 03 Feb 04 Jun 04 Oct 04 Feb 05 Jun 05 Oct 05 Feb 06 Jun 06 Oct 06 Feb 07 Jun 07 Oct 07 Feb 08 Jun 08 Oct 08 Feb 09 Jun 09 Oct 09 Feb 10 Jun 10 Oct 10 Feb 11 Jun 11 Oct 11 Feb 12 Jun 12 Oct 12 Feb 13 Index (2007 = 100) Source: Federal Reserve The industrial production index measures the real output of the manufacturing, mining, and electric and gas utilities industries.

10% Gross Domestic Product 1990Q1 through 2012Q4 8% 2012Q4: 0.4% 6% 4% 2% 0% 2% 4% 6% 8% 10% 1990Q1 1990Q4 1991Q3 1992Q2 1993Q1 1993Q4 1994Q3 1995Q2 1996Q1 1996Q4 1997Q3 1998Q2 1999Q1 1999Q4 2000Q3 2001Q2 2002Q1 2002Q4 2003Q3 2004Q2 2005Q1 2005Q4 2006Q3 2007Q2 2008Q1 2008Q4 2009Q3 2010Q2 2011Q1 2011Q4 2012Q3 Source: Bureau of Economic Analysis Percent Change from Preceding Period (SAAR)

Red Card/ Pink Slip

Net Change in U.S. Jobs, BLS January 2002 through March 2013 600 400 200 Thousands 0-200 -400-600 Mar. 2013: +88K -800-1000 Source: Bureau of Labor Statistics

National Nonfarm Employment by Industry Sector March 2013 v. March 2012 Professional and Business Services 533 Trade, Transportation, and Utilities Education and Health Services 365 394 Leisure and Hospitality 291 Construction 162 Financial Activities Manufacturing 81 71 Other Services 47 Information Mining and Logging Government -76 25 17 All told 1,910K Jobs gained 200 100 0 100 200 300 400 500 600 Thousands, SA Source: Bureau of Labor Statistics

Baltimore Towson MSA Nonfarm Employment by Industry Sector Groups (NSA) February 2013 v. February 2012 Absolute Change Professional & Business Services 11,100 Trade, Transportation & Utilities 8,400 Education & Health Services 5,800 Leisure & Hospitality 5,300 Construction, Etc. 5,000 Financial Activities Other Services Information -200 600 300 Baltimore Total: +30.3K; +2.3% MD Total (NSA): +37.5K; +1.5% Government Manufacturing -4,100-1,900 US Total (SA): +1,966K; +1.5% 6,000 4,000 2,000 0 2,000 4,000 6,000 8,000 10,000 12,000 Source: Bureau of Labor Statistics

Washington, DC Arlington Alexandria MSA Nonfarm Employment by Industry Sector Groups (NSA) February 2013 v. February 2012 Absolute Change Leisure and Hospitality 11,700 Education and Health Services Professional and Business Services Government 8,800 8,800 8,300 Financial Activities 4,400 Construction, Etc. Information 200 2,000 DC MSA Total: +39.7K; +1.3% Manufacturing Trade, Transportation, and Utilities -500-1,100 US Total (SA): +1,966K; +1.5% Other Services -2,900-5,000 0 5,000 10,000 15,000 Source: Bureau of Labor Statistics

Employment Growth, U.S. States (SA) February 2013 v. February 2012 Percent Change Rank State % Rank State % Rank State % 1 North Dakota 5.0 16 South Dakota 1.7 35 Illinois 1.1 2 Utah 4.1 19 Delaware 1.6 35 Virginia 1.1 3 Texas 3.3 20 Hawaii 1.5 37 New York 1.0 4 Colorado 2.7 20 Maryland 1.5 38 Nebraska 0.9 4 Idaho 2.7 20 Mississippi 1.5 39 Missouri 0.7 6 Washington 2.4 20 New Jersey 1.5 40 Ohio 0.6 7 Minnesota 2.3 20 South Carolina 1.5 41 Alabama 0.5 8 Tennessee 2.2 25 Oklahoma 1.4 41 District of Columbia 0.5 9 California 2.1 25 Oregon 1.4 43 New Mexico 0.4 9 Montana 2.1 25 Vermont 1.4 44 Pennsylvania 0.3 9 Nevada 2.1 28 Iowa 1.3 45 Arkansas 0.2 12 North Carolina 2.0 28 Kentucky 1.3 46 Alaska 0.1 13 Arizona 1.9 28 Louisiana 1.3 46 Connecticut 0.1 14 Georgia 1.8 28 Michigan 1.3 46 Maine 0.1 14 Massachusetts 1.8 32 Kansas 1.2 46 West Virginia 0.1 16 Florida 1.7 32 New Hampshire 1.2 50 Rhode Island 0.0 16 Indiana 1.7 32 Wisconsin 1.2 51 Wyoming -0.3 Source: Bureau of Labor Statistics U.S. Year-over-year Percent Change: 1.5%

Unemployment Rates, U.S. States (SA) February 2013 Rank State Rate Rank State Rate Rank State Rate 1 North Dakota 3.3 18 Alaska 6.5 34 Kentucky 7.9 2 Nebraska 3.8 18 Massachusetts 6.5 36 Connecticut 8.0 3 South Dakota 4.4 20 Maryland 6.6 37 Pennsylvania 8.1 3 Vermont 4.4 21 Missouri 6.7 38 New York 8.4 5 Wyoming 4.9 22 New Mexico 6.8 38 Oregon 8.4 6 Iowa 5.0 23 Ohio 7.0 40 District of Columbia 8.6 6 Oklahoma 5.0 24 Alabama 7.2 40 Georgia 8.6 8 Hawaii 5.2 24 Arkansas 7.2 40 South Carolina 8.6 8 Utah 5.2 24 Colorado 7.2 43 Indiana 8.7 10 Kansas 5.5 24 Delaware 7.2 44 Michigan 8.8 10 Minnesota 5.5 24 Wisconsin 7.2 45 New Jersey 9.3 12 Montana 5.6 29 Maine 7.3 46 North Carolina 9.4 12 Virginia 5.6 29 West Virginia 7.3 46 Rhode Island 9.4 14 New Hampshire 5.8 31 Washington 7.5 48 Illinois 9.5 15 Louisiana 6.0 32 Florida 7.7 49 California 9.6 16 Idaho 6.2 33 Tennessee 7.8 49 Mississippi 9.6 17 Texas 6.4 34 Arizona 7.9 49 Nevada 9.6 Source: Bureau of Labor Statistics U.S. Unemployment Rate: 7.7%

Unemployment Rates, 20 Largest Metros (NSA) January 2013 Rank MSA UR Rank MSA UR 1 Washington Arlington Alexandria, DC VA MD WV 5.8 10 Tampa St. Petersburg Clearwater, FL 8.0 2 Minneapolis St. Paul Bloomington, MN WI 6.1 12 Miami Fort Lauderdale Pompano Beach, 8.2 FL 3 Boston Cambridge Quincy, MA NH 6.5 13 San Diego Carlsbad San Marcos, CA 8.6 4 Dallas Fort Worth Arlington, TX 6.7 14 Atlanta Sandy Springs Marietta, GA 8.7 4 Houston Sugar Land Baytown, TX 6.7 15 Philadelphia Camden Wilmington, PA NJ DE MD 9.4 6 Seattle Tacoma Bellevue, WA 7.1 15 New York Northern New Jersey Long Island, NY NJ PA 9.4 7 Phoenix Mesa Glendale, AZ 7.2 17 Chicago Joliet Naperville, IL IN WI 9.9 8 Baltimore Towson, MD 7.5 18 Los Angeles Long Beach Santa Ana, CA 10.0 9 San Francisco Oakland Fremont, CA 7.7 19 Detroit Warren Livonia, MI 11.3 10 St. Louis, MO IL 8.0 20 Riverside San Bernardino Ontario, CA 11.5 Source: Bureau of Labor Statistics

Pad Save

15 Year & 30 Year Fixed Mortgage Rates January 1995 through February 2013 10% 9% 15-yr 30-yr 8% 7% 6% 5% 4% 3.57% 3% 2% 2.76% 1% 0% Jan-95 Aug-95 Mar-96 Oct-96 May-97 Dec-97 Jul-98 Feb-99 Sep-99 Apr-00 Nov-00 Jun-01 Jan-02 Aug-02 Mar-03 Oct-03 May-04 Dec-04 Jul-05 Feb-06 Sep-06 Apr-07 Nov-07 Jun-08 Jan-09 Aug-09 Mar-10 Oct-10 May-11 Dec-11 Jul-12 Feb-13 Source: Freddie Mac Rate

Supply and Demand for Residential Mortgage Loans 1995Q2 through 2013Q1* 100 80 60 40 20 0 20 40 60 80 2010Q2 1995Q2 1996Q1 1996Q4 1997Q3 1998Q2 1999Q1 1999Q4 2000Q3 2001Q2 2002Q1 2002Q4 2003Q3 2004Q2 2005Q1 2005Q4 2006Q3 2007Q2 2008Q1 2008Q4 2009Q3 Net Percentage of Domestic Respondents 2011Q1 2011Q4 2012Q3 Tightening Standards for Loans Stronger Demand for Loans Source: Federal Reserve 1995 through 2006 = All Mortgage Loans 2007 through Present = Prime Mortgage Loans

1,600 U.S. New Home Sales January 1999 through February 2013 1,400 1,200 1,000 800 600 400 200 0 May 10 Oct 10 Mar 11 Aug 11 Jan 12 Jun 12 Nov 12 Feb 99 Jul 99 Dec 99 May 00 Oct 00 Mar 01 Aug 01 Jan 02 Jun 02 Nov 02 Apr 03 Sep 03 Feb 04 Jul 04 Dec 04 May 05 Oct 05 Mar 06 Aug 06 Jan 07 Jun 07 Nov 07 Apr 08 Sep 08 Feb 09 Jul 09 Dec 09 Source: Census Bureau Thousands, SAAR

2,500 U.S. Housing Starts January 1999 through February 2013 2,000 1,500 1,000 500 0 Apr 10 Sep 10 Feb 11 Jul 11 Dec 11 May 12 Oct 12 Jan 99 Jun 99 Nov 99 Apr 00 Sep 00 Feb 01 Jul 01 Dec 01 May 02 Oct 02 Mar 03 Aug 03 Jan 04 Jun 04 Nov 04 Apr 05 Sep 05 Feb 06 Jul 06 Dec 06 May 07 Oct 07 Mar 08 Aug 08 Jan 09 Jun 09 Nov 09 Source: Census Bureau Thousands, SAAR

Median Sales Price of Existing Single Family Homes 2013Q1, 12 Month % Change Rank Metro % Rank Metro % Rank Metro % 1 Phoenix-Mesa-Scottsdale, AZ 33.9 17 Columbus, OH 11.5 35 Boston-Cambridge-Quincy, MA-NH 5.8 Portland-Vancouver-Beaverton, OR- 2 Detroit-Warren-Livonia, MI 31.3 19 WA 10.6 36 El Paso, TX 5.5 3 San Francisco-Oakland-Fremont, CA 28.3 20 Denver-Aurora, CO 10.4 37 Indianapolis, IN 5.4 San Jose-Sunnyvale-Santa Clara, Nashville-Davidson--Murfreesboro, 4 CA 24.8 21 TN 9.9 38 Baltimore-Towson, MD 5.2 5 Tucson, AZ 21.5 22 Cleveland-Elyria-Mentor, OH 9.5 38 Winston-Salem, NC 5.2 Riverside-San Bernardino-Ontario, 5 CA 21.5 23 Greensboro-High Point, NC 8.6 40 Saint Louis, MO-IL 4.8 7 Las Vegas-Paradise, NV 20.1 24 Orlando, FL 8.5 40 Cincinnati-Middletown, OH-KY-IN 4.8 8 Toledo, OH 19.7 25 Buffalo-Niagara Falls, NY 8.2 42 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 4.4 9 Sacramento--Arden-Arcade-- Roseville, CA 18.4 26 Austin-Round Rock, TX 7.9 43 Baton Rouge, LA 3.7 10 Atlanta-Sandy Springs-Marietta, GA 18.0 27 Kansas City, MO-KS 7.8 44 New York-Northern New Jersey-Long Island, NY-NJ-PA 3.6 11 Los Angeles-Long Beach-Santa Ana, CA 17.9 28 Houston-Baytown-Sugar Land, TX 7.6 45 New Orleans-Metairie-Kenner, LA 3.5 12 Seattle-Tacoma-Bellevue, WA 17.1 29 Dallas-Fort Worth-Arlington, TX 7.5 46 Albuquerque, NM 3.3 13 Minneapolis-St. Paul-Bloomington, MN-WI 15.7 29 Des Moines, IA 7.5 47 Raleigh-Cary, NC 2.6 14 Miami-Fort Lauderdale-Miami Beach, FL 15.3 31 Jacksonville, FL 7.3 48 Chicago-Naperville-Joliet, IL 1.9 15 San Diego-Carlsbad-San Marcos, CA 13.2 32 Charlotte-Gastonia-Concord, NC-SC 7.2 49 Milwaukee-Waukesha-West Allis, WI 1.4 16 Washington-Arlington-Alexandria, DC-VA-MD-WV 12.7 33 San Antonio, TX 6.8 50 Tampa-St. Petersburg-Clearwater, FL 1.3 17 Colorado Springs, CO 11.5 34 Corpus Christi, TX 6.7 51 Hartford-West Hartford-East Hartford, CT 0.5 Source: National Association of Realtors Select Cities, based on data availability

Median Sales Price of Existing Condos 2012Q4, 12 Month % Change Rank Metro % Rank Metro % Rank Metro % 1 Atlanta-Sandy Springs-Marietta, GA 97.7 18 Sacramento--Arden-Arcade-- Roseville, CA 12.5 35 Syracuse, NY 3.1 2 Reno-Sparks, NV 60.4 19 Winston-Salem, NC 11.0 36 Manchester-Nashua, NH 2.9 Tampa-St. Petersburg-Clearwater, 3 FL 41.6 20 Austin-Round Rock, TX 9.9 37 Cincinnati-Middletown, OH-KY-IN 2.2 4 Phoenix-Mesa-Scottsdale, AZ 35.9 21 Bridgeport-Stamford-Norwalk, CT 9.3 38 Louisville, KY-IN 1.8 5 Los Angeles-Long Beach-Santa Ana, CA 28.6 22 Colorado Springs, CO 9.0 39 Portland-Vancouver-Beaverton, OR- WA 1.4 6 San Francisco-Oakland-Fremont, CA 26.9 23 Norwich-New London, CT 8.7 40 Portland-South Portland-Biddeford, ME 1.2 7 Greensboro-High Point, NC 26.0 24 Columbus, OH 8.6 41 Springfield, MA 0.8 8 Las Vegas-Paradise, NV 25.4 25 Boston-Cambridge-Quincy, MA-NH 8.4 42 Worcester, MA 0.7 9 Tallahassee, FL 25.1 26 Houston-Baytown-Sugar Land, TX 6.1 43 New Orleans-Metairie-Kenner, LA 0.5 10 Miami-Fort Lauderdale-Miami Beach, FL 24.6 27 Trenton-Ewing, NJ 6.0 44 Indianapolis, IN 0.4 11 San Diego-Carlsbad-San Marcos, CA 21.3 28 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 5.3 45 New York-Wayne-White Plains, NY- NJ -0.8 12 Jacksonville, FL 20.2 29 Baltimore-Towson, MD 4.9 46 Rochester, NY -1.3 Providence-New Bedford-Fall River, 13 RI-MA 19.4 30 Toledo, OH 4.7 47 Newark-Union, NJ-PA -1.7 14 Honolulu, HI 13.7 31 Milwaukee-Waukesha-West Allis, WI 3.9 48 Knoxville, TN -7.4 Washington-Arlington-Alexandria, 15 DC-VA-MD-WV 13.5 32 Boulder, CO 3.6 49 Madison, WI -9.1 16 Tucson, AZ 13.1 33 Chicago-Naperville-Joliet, IL 3.6 50 Wichita, KS -9.3 Hartford-West Hartford-East Hartford, 17 Dallas-Fort Worth-Arlington, TX 12.8 34 CT 3.3 51 New Haven-Milford, CT -9.8 Source: National Association of Realtors Select Cities, based on data availability

Rent Growth of Top and Bottom Five Metros 2013 Q1 Seattle, WA San Diego, CA Nashville TN Palm Beach, FL Richmond, VA 1.1% 1.1% 0.9% 0.9% 1.5% Ventura County, CA Central New Jersey Knoxville, TN Long Island, NY Washington, DC 0.1% 0.1% 0.1% 0.1% 0.0% 0.5% 0.0% 0.5% 1.0% 1.5% 2.0% % Change from last quarter Source: Reis Washington, D.C., was the only one of the 79 markets Reis tracks to see rents decline. WSJ.com

Multifamily Vacancy Rate, Select Metropolitan Areas 2013Q1 Estimate Rank Metro Rate Rank Metro Rate Rank Metro Rate 1 New York, NY 2.1 18 Milwaukee, WI 3.4 34 Raleigh-Durham, NC 4.5 2 Minneapolis, MN 2.5 18 Philadelphia, PA 3.4 36 Austin, TX 4.7 3 San Diego, CA 2.6 20 Denver, CO 3.5 37 Indianapolis, IN 4.9 4 Oakland-East Bay, CA 2.8 20 Miami, FL 3.5 37 Orlando, FL 4.9 5 Hartford, CT 2.9 20 San Bernardino/Riverside, CA 3.5 37 Palm Beach, FL 4.9 5 Portland, OR 2.9 23 Salt Lake City, UT 3.6 40 Columbus, OH 5.0 7 Long Island, NY 3.0 24 Baltimore, MD 3.7 40 St. Louis, MO 5.0 7 Pittsburgh, PA 3.0 24 Suburban Maryland 3.7 42 Fort Worth, TX 5.1 7 San Francisco, CA 3.0 26 Albuquerque, NM 3.8 42 Tampa-St. Petersburg, FL 5.1 10 Ventura County, CA 3.1 26 Chicago, IL 3.8 44 Charlotte, NC 5.2 11 Cleveland, OH 3.2 28 Cincinnati, OH 3.9 45 Tucson, AZ 5.4 11 San Jose, CA 3.2 28 Detroit, MI 3.9 46 Dallas, TX 5.5 13 Boston, MA 3.3 28 Fort Lauderdale, FL 3.9 46 Phoenix, AZ 5.5 13 Los Angeles, CA 3.3 28 Washington, D.C. 3.9 48 Las Vegas, NV 5.9 13 Northern NJ 3.3 32 Nashville, TN 4.0 49 Atlanta, GA 6.5 13 Orange County, CA 3.3 33 Seattle, WA 4.2 50 Houston, TX 6.9 13 Sacramento, CA 3.3 34 Kansas City, MO 4.5 51 Jacksonville, FL 7.0 Source: National Association of Realtors Since D.C. is currently in the midst of an especially aggressive building period, it s not surprising that Baltimore is posting the stronger price increases among the two metros... Baltimore s annual jump in effective rents for new leases in calendar 2012... was nearly twice the rent increase... recorded in Washington, D.C. Property Management Insider

Area Office Market Statistics 2012 Q4 Area Inventory SF Vacancy Rate % YTD Net Absorption SF Under Construction SF Avg Asking Rent ($/SF/YR) Baltimore CBD 12,441,037 19.2% 30,514 0 $20.69 Columbia 11,977,446 15.4% 122,460 420,000 $22.10 BWI 8,143,704 13.8% 384,848 140,000 $24.18 Towson/Timonium 6,374,909 14.4% 52,855 0 $20.59 Frederick County 4,591,514 22.1% 90,716 0 $23.00 Silver Spring 6,369,705 10.2% 36,014 $26.36 Rockville 6,549,700 12.5% 82,150 688,718 $32.48 Bethesda/Chevy Chase 10,965,290 9.5% 91,401 0 $38.38 Northern Virginia 179,825,509 15.3% 2,007,059 2,295,149 $31.95 Washington, DC CBD 38,710,591 11.5% 36,321 331,607 $54.32 Washington, DC (Total) 124,050,270 10.6% 605,118 2,375,905 $52.08 Source: CBRE

Architecture Billings Index December 2007 through February 2013 60 55 50 45 40 35 30 Dec 07 Feb 08 Apr 08 Jun 08 Aug 08 Oct 08 Dec 08 Feb 09 Apr 09 Jun 09 Aug 09 Oct 09 Dec 09 Feb 10 Apr 10 Jun 10 Aug 10 Oct 10 Dec 10 Feb 11 Apr 11 Jun 11 Aug 11 Oct 11 Dec 11 Feb 12 Apr 12 Jun 12 Aug 12 Oct 12 Dec 12 Feb 13 Source: The American Institute of Architects

National Nonresidential Construction Spending by Subsector February 2013 v. February 2012 Transportation 18.3 Lodging 16.0 Office 10.5 Manufacturing 9.5 Power 6.0 Highway and street 5.3 Commercial 3.5 Conservation and development 1.6 Water supply 0.9 Health care 0.4 Educational 5.9 Communication 7.2 Religious 9.7 Amusement and recreation 10.0 Sewage and waste disposal 12.7 Public safety 13.1 15 10 5 0 5 10 15 20 Source: U.S. Census Bureau 12 month % Change

Inputs to Construction PPI January 2001 February 2013 15% 10% 5% 0% 5% 10% Jan 01 Jul 01 Jan 02 Jul 02 Jan 03 Jul 03 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 12 month Percent Change Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Source: Bureau of Labor Statistics

Key Commodity Prices January 2001 February 2013 50 40 30 20 10 0-10 -20-30 -40 Iron & Steel PPI 40 30 20 10 0-10 Jan-01 Aug-01 Mar-02 Oct-02 May-03 Dec-03 Jul-04 Feb-05 Sep-05 Apr-06 Nov-06 Jun-07 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 Feb-12 Sep-12 12-month % Change -20 Jan-01 Sep-01 12-month % Change Sep-09 May-10 Jan-11 May-02 Jan-03 Sep-03 May-04 Jan-05 Sep-05 May-06 Jan-07 Sep-07 May-08 Jan-09 Sep-11 May-12 Jan-13 12 10 8 6 4 2 0-2 -4 Concrete Products PPI 100 80 60 40 20 0-20 -40-60 Source: BLS: EIA Softwood Lumber PPI Sep-09 May-10 Jan-11 Jan-01 Sep-01 May-02 Jan-03 Sep-03 May-04 Jan-05 Sep-05 May-06 Jan-07 Sep-07 May-08 Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12 Jan-13 Jan-01 Sep-01 12-month % Change 12-month % Change May-02 Jan-03 Sep-03 May-04 Jan-05 Sep-05 May-06 Jan-07 Sep-07 May-08 Jan-09 Sep-11 May-12 Jan-13 NYMEX Crude Oil

Conference Board Leading Economic Indicators Index August 2007 through February 2013 1.5% 1.0% 0.5% 0.0% 0.5% 1.0% 1.5% Nov 12 Aug 07 Nov 07 Feb 08 May 08 Aug 08 Nov 08 Feb 09 May 09 Aug 09 Nov 09 Feb 10 May 10 Aug 10 Nov 10 Feb 11 May 11 Aug 11 Nov 11 Feb 12 May 12 Aug 12 One month Percent Change Feb 13 February 2013 = 94.8 where 2004=100 Source: Conference Board

Fourth Quarter Economy slowed markedly during last year s fourth quarter; First half of 2013 also shaping up to be quite soft, though first two months of the year were a bit better than expected sequester will gradually grind into the economy and impact the data; Black swan threats: (1) Iran (2) Israel/Iran (3) Europe; Many headwinds remain and the recovery could easily falter; One of the greatest sources of concern is the growing divergence between financial market performance and economic performance; and Interest rates will remain low, but materials prices likely to become more volatile going forward

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