To Media Representatives, Our Clients and the Public:

As Colliers International pursues the highest level of clarity in our market research efforts, we have made several changes to the process we use in gathering and presenting market data. As a result of these changes, Colliers market reports and statistics will now give a more accurate snapshot of the state of the Puget Sound commercial real estate market.

• Our submarket boundaries have been redefined to reflect the consensus of property owners and tenants.
• The set of properties which we report upon has been expanded to include owner-occupied buildings.
• Office building classifications have been changed to reflect the evolving standards of the market.

We sincerely hope these changes will not cause confusion to those who rely upon our statistics and reports. Readers should be aware that our new reports are not directly comparable with reports released by Colliers in the past.

For updated historical rental rate, vacancy and other statistics which include the newly expanded property set, please contact the Colliers Market Research Department. In addition, please feel free to contact us with any other questions or comments regarding the Puget Sound commercial real estate market.

Sincerely,

Peter B. Truex

Senior Manager - Puget Sound

Seattle

• Economic conditions are impacting the Seattle office market in the first quarter. Vacancy rates have nearly risen one full percentage point since fourth quarter 2008 to 8.93% in first quarter 2009.
• Only one building was delivered in the Seattle office market since the new year totaling a mere 30,992 square feet of new product.
• The Seattle office market gave back over 400,000 square feet of product this quarter with the majority of the negative absorption coming from the Seattle CBD (-270,000 square feet of negative absorption) and Pioneer Square/Waterfront (-115,000 square feet of negative absorption) submarkets.
• In contrast to the Seattle office market, Lake Union office space remains in high demand with only 6.79% vacancy while North Seattle was the only market to experience positive absorption (25,000 square feet).
• Pioneer Square/Waterfront submarket accounts for a higher proportion of vacant sublet space. The Pioneer Square/Waterfront submarket only accounts for 12.4% of total office inventory, but accounts for more than 30.8% of total sublet vacant space in the market.

Eastside

• With the delivery of 18 office projects, the Eastside office market grew nearly 2.1 million square feet in the last 12 months to post a current total inventory of 39 million square feet – an increase of 5.3%.
• Economic conditions are impacting the Eastside office market in the first quarter. Direct vacancy rates increased 70 basis points from a fourth quarter rate of 7.87% to 8.57%, and nearly doubled since a year ago (4.71% Q1 2008).
• Three buildings were delivered to the Eastside office market during the first quarter: Northwest Tech Centers buildings A-1 and A-2 (totaling 70,000 SF) in the Redmond submarket and City Center Plaza (561,500 SF of office and 18,500 SF of retail) in Bellevue CBD. The office component of City Center Plaza is completely leased by Microsoft; the company plans to occupy Q4 2009.
• The Eastside office market gave back nearly 240,000 square feet of product this quarter due largely to move outs concentrated in Redmond and Kirkland. The 520-Corridor was the only submarket to report positive absorption with 16,000 square feet.
• The 520 Corridor submarket remains in high demand with only 2.02% vacant, or 134,000 square feet of vacant product in a submarket totaling approximately 6,750,000 SF.
• Leased space being brought to market for sublease increased substantially in the 1st qtr with over 570,000 sf being Advertised as available

Northend

• Despite current economic conditions, vacancy decreased in the Northend office market from 13.29% (Q4 2008) to 13.72% (Q1 2009) with a net 143,000 square feet absorbed. This can largely be attributed to the 175,000 square foot move in by T-Mobile at Canyon Pointe in the Bothell/Kenmore submarket.
• Bothell/Kenmore and Everett CBD were the strongest submarkets with a combined net absorption of 197,000 square feet.
• The Edmonds/Lynnwood submarket posted the highest negative absorption with -46,000 square feet and a 14.4% vacancy rate.

South King County

• Despite current economic conditions, vacancy decreased in the South King County office market from 12.52% (Q4 2009) to 11.94% Q4 2009 with a net 108,452 square feet absorbed. This is due largely to the high volume of fully occupied owner/user buildings in the market.
• South Seattle and Renton were the strongest submarkets with a combined net absorption of 89,029 square feet.
• Tukwila posted the highest negative absorption with -22,424 square feet and a 15.7% vacancy rate.

Pierce County

• Total vacancy rose slightly from 10.54% to 10.62% as a result of new deliveries with vacancy.
• Pierce boasts 116,000 square feet of positive absorption in Q1 2009, driven in large part by the Gig Harbor/West Pierce and University Place/Lakewood submarkets with nearly 100,000 square feet of positive net absorption.
• Puyallup’s 32% vacancy continues to be the highest in the county driven by large specialized office building vacancy.
• Pierce County saw 141,373 square feet of new deliveries this quarter, 65% pre-leased.
• Despite the weakened economy, Pierce County office development is still thriving. Multiple buildings are expected to be delivered in the 2nd quarter including Tacoma CBD’s newest 66,000 square foot Class A Pacific Plaza office building. About Colliers International

Colliers Macaulay Nicolls Inc. (CMN), operating as Colliers International, is a leading global real estate services company that provides a full range of services to real estate users, owners and investors worldwide. Colliers operates in 293 offices in 61 countries. Services include brokerage, property management, hotel investment sales and consulting, corporate services, valuation, consulting and appraisal services, mortgage banking and research. Colliers International is a worldwide affiliation of independently owned and operated companies. Locally, Colliers professionals serve clients throughout the Puget Sound area. Find out more at www.colliersmn.com/Seattle.

Puget Sound 1Q09 Office Release.pdf