The Need For Direction = NAI Carolantic Realty, Inc.

We were pleased to welcome over 1,300 invited business and community leaders to our 24th Annual Triangle Commercial Real Estate Conference held in Raleigh on January 22nd at the RBC Center. My message was clear. Despite the economic downturn that has buffeted the Triangle's real estate market, strong and coordinated action by the private and public sectors will encourage the swiftest recovery.

Our theme this year was "The Need For Direction." We urged our attendees to act together to keep the region strong, and offered innovative approaches for fostering sustainable economic growth and opportunity.

Our guest presenter was John Davies, CEO & President of the Baton Rouge Area Foundation. Mr. Davies commented on the importance of sustainability for future growth. He indicated these are times that demand creativity, courage and a commitment to those values that we all know and will make our communities stronger and better for the long haul. The Baton Rouge Area Foundation has grown from $5 million to more than $550 million in assets under Davies, and has been awarded more than $210 million in charitable grants. Under his leadership, the Foundation has undertaken ambitious initiatives with wide-ranging economic and social impacts across southern Louisiana. They have now turned their attention to our own region with the 400-acre walkable development currently called 5401 North located at I-540 and US 401N in Raleigh.

As active participants in our community for more than 37 years, NAI Carolantic is working harder than ever to help keep our region first and foremost In the minds of businesses looking to expand or relocate their operations from around the world. The basics in the Raleigh/Durham region are strong and we will recover ahead of the rest of the country. There are several emerging challenges ahead but with each one, there is an opportunity for collaboration and innovation.

Special thanks to our conference partners this year who included: Bobbitt Design Build; Dixon Hughes; Edge Office; JDavis Architects; Manning Fulton & Skinner; The Title Company of North Carolina; Wachovia; a Wells Fargo Company; and Withers & Ravenel.

If you would like a free copy of our summary report or a DVD of the conference, please send your request via email to questions@naicarolantic.com. Whether looking to expand or relocate to the Triangle area or elsewhere in the world, we would welcome the opportunity to be of service. Give us a call.

Local Market Update:
jbarnes@naicarolantic.com

At the 24th Annual Conference, NAI Carolantic President Jimmy Barnes reviewed the past year's commercial real estate landscape and offered our forecast for 2009. "Our market is changing monthly if not weekly. We expect vacancy to continue to rise and sublease space to increase in all categories as our market now becomes a tenant and buyer's market," said Barnes. "2009 will be a year of preparation, new beginnings...a time to work harder and smarter. Our adaptability has been a proven reason we always rebound before other areas."

In a market of over 222 million square feet of office, multipurpose and shopping center space, almost 27 million square feet remained vacant at year-end. "Vacancy rose in the multipurpose sector, office vacancy remained the same, and retail actually dropped. We expect to see retail vacancy rise over the coming months due to additional store closings,"
said Barnes. There is 3.4 million square feet of space currently under construction for 2009 with the majority in the office category.

Barnes noted that some land tracts will trade at cents on the dollar during 2009 with minimal investment activity expected. With any resurgence of a positive economy, the residential markets will try to recover by year-end.

2009 Forecast and Category Summaries:
Highlights of Mr. Barnes's commercial real estate presentation:

2009 Investor Outlook for Land:

• Land sales will be user driven
  
• More land opportunities than in the past
  
• Some price adjustments due to the sale of troubled assets
  
• Sellers willing to negotiate for the first time in years
  
• Time to buy if you have cash or the ability to service debt

2009 Investor Outlook for Income Property:

• Credit underwriting tightens
  
• Cap rates continue to rise
  
• More properties come to the market
  
• Investors will continue to proceed with caution
  
• But will still have great interest in the Triangle region

Summary: NAI Carolantic's research showed a rise in area-wide vacancy rates in the multipurpose category from 13% in 2007 to 16% in 2008. This category includes warehouse, industrial and flex space. The office market maintained at 13% vacancy for 2007 and 2008, but expects to see 1.6 million square feet added in 2009. The shopping center category experienced a drop in vacancy from 7% in 2007 to 4% in 2008. However, we fully expect this number to rise given the downturn in the economy and store closings.

Absorption slowed in 2008 with the office category dropping from 4% in 2007 to 2% in 2008. The multipurpose category saw negative absorption down from 4% in 2007. The retail/shopping center category managed to have 3% absorption in 2008, rising 2% over 2007.

For more information on Mr. Barnes presentation, please visit our website: www.naicarolantic.com.

Featured Property:
Industrial Investment Portfolio

NAI Carolantic Realty and NAI Piedmont Triad are pleased to have been awarded the exclusive listing for an industrial portfolio comprised of four properties located in Mebane, NC and Dallas, GA. The four buildings total approximately 896,915 square feet. Offering stable cash flows and returns for owners, these strong, long-term tenants have leases which extend to 2025 for the majority of the portfolio. Most of the buildings are less than five years old having mechanical systems, roofs and functionality all in excellent condition.

The Mebane, NC facilities have great marquee visibility to I-85 and I-40, which provide easy North/South and East/West access. They are strategically located for regional and/or national distribution as well as manufacturing and are in close proximity to the world renowned Research Triangle region and the Piedmont Triad region of North Carolina. The Dallas, Georgia facility is approximately 30 miles just west of Atlanta.

For additional information, please contact Ed Brown, SIOR, CCIM at ebrown@naicarolantic.com.

NAI Carolantic's Winning Team

NAI Carolantic Realty's brokers, Ed Brown, SIOR, CCIM and Kyle Greer, were presented awards during the Annual Triangle Business Journal Space Awards ceremony for significant commercial real estate transactions completed in 2008. The dinner event was held at North Ridge Country Club on January 29th with approximately 200 people in attendance.

Mr. Brown won second place for the Top Warehouse Lease Deal having closed a transaction valued at $5.1 million. Mr. Brown and Mike Green with BPG Management represented Mosswood Partners LLC of Raleigh, owners of the approximately 140,000 square foot building in Youngsville. A 124-month lease was signed with Eaton's Power Quality Division. This facility enabled Eaton to provide more manufacturing space for its product lines in its growing electrical manufacturing operations. The facility had been vacated by Flextronics earlier in the year.

Mr. Greer won second place for the Top Land Sales Transaction having represented Wake Technical Community College in the procuring of 75.36 acres of land near the intersection of NC 54 and Watkins Road in Morrisville. Thetransaction was valued at $8,000,000. Wake Tech's Western Wake CountyCampus is scheduled to open by 2011 and at full build out, isexpected to accommodate 10,000 students annually.

We are also proud to recognize Al Tadych in beingelected President of theWake Forest Rotary Club.

Broker Profile:

David Stroud
dstroud@naicarolantic.com

Mr. Stroud joined NAI Carolantic in 2005 after working with Colliers ABR, Inc. in New York as a commercial broker focusing primarily on tenant representation. With a strong background in leasing, Mr. Stroud has worked with both Landlords and Tenants to negotiate leases for office, industrial and medical facilities. When Mr. Stroud joined NAI Carolantic, he worked directly with Steve Stroud, gaining invaluable experiential knowledge of land sales. Currently Mr. Stroud is working with numerous investors and business owners locating sites for future projects.

A few of the clients represented by Mr. Stroud have included Roper Brothers Lumber Company, Capitol Funds, Inc., Evmoor Associates, Surgical Specialist of NC, Optometric Eye Care Center and Choice Hotels International.

Mr. Stroud is a graduate of Leadership Durham, a program sponsored by the Greater Durham Chamber of Commerce which recognizes local leadership potential and trains its participants to be effective, contributing members of their communities.

Mr. Stroud received a Bachelor of Arts in English from North Carolina State University. Prior to attending North Carolina State University, Mr. Stroud was a graduate of Woodberry Forest School in Virginia.

Company Profile:

NAI Carolantic is the Raleigh/Research Triangle area's leading commercial real estate firm

• Sixteen Brokers with an average of ten year's experience
  
• Full-service Property Management Division
  
• Experienced Marketing & Research Division

Established in 1972, NAI Carolantic is a member firm of NAI Global, the leading international provider of commercial real estate services and solutions.

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