Impacts of Recovery, Regulation and Technology on the U.S ... · Source: The Pulse of Fintech, 2015...

CBRE Research

Impacts of Recovery, Regulation and Technology on the U.S. Financial Services Industry and Office Markets

© 2016 CBRE, Inc.

04© 2016 CBRE, Inc.

The financial services industry is evolving and this report highlights the tremendous forces driving that change and its

impact on markets across the country. It is not intended to cover financial services activity in every major market, but

rather focuses on metros where these changes are taking place most prominently. Additionally, there is more to this

story than jobs shifting from one market to another; it is also about the diversification of industry and demand for real

estate across markets. The markets identified in this study are broken down into the following categories:

These markets remain large U.S. financial centers with deep, top-tier talent pools, fueling the continued growth of highly skilled financial occupations. But with strong tech industry

growth, their industry bases are diversifying, providing additional sources of real estate demand in these markets.

Since 2006, financial services employment has grown substantially and more quickly than other industries in these

markets. Real estate options and skilled labor are more affordable for occupiers compared with established markets.

These markets were identified based on proprietary analytics from CBRE’s Labor Analytics Group (LAG). Financial services

occupiers have smaller footprints in these markets, but affordable real estate and growing skilled labor pools make

them attractive options going forward.

ESTABLISHED MARKETS

ACTIVE MARKETS

NEXT GEN MARKETS

New economic realities, continued regulatory pressure and the threat of disruption from technology are unrelenting forces driving changes in the financial services industry, particularly since the global financial crisis. These forces have compelled financial services firms to focus on controlling expenses while balancing the need for top talent, which has profoundly impacted their market presence and real estate decisions.

INDUSTRY MIX IN ESTABLISHED MARKETS SHIFTINGCost containment pressure continues to weigh on financial activities hiring in established financial centers, yet these markets have seen employment growth in highly skilled finance occupations, which have climbed above pre-recession levels. This trend is happening simultaneously with the overall economic diversification of these established markets, which have seen a dramatic rise in tech employment—now at 118% of pre-recession levels. Both of these trends are supported by the abundance of top-tier talent in these markets.

LOWER-COST GROWTH MARKETS HAVE EMERGEDAggregate financial activities employment in recently “active” markets is at 112% of pre-recession employment levels, reflecting the attractiveness of cost-efficient labor and real estate markets.

REAL ESTATE MARKETS ARE HEALTHYAsking rents in “historically established” markets have increased by 35% since 2010 (vs. 15% in active markets) due to robust tech demand in gateway cities. Active markets have become even more affordable on a relative basis as a result.

TECHNOLOGY DISRUPTION IS REALInvestment in North American financial-technology startups increased by 250% between 2013 and 2015 to $7.7 billion, indicative of the array of technological changes impacting financial institutions. The San Francisco Bay Area, New York and Los Angeles are capturing the bulk of fin-tech investment, reflecting the deep tech talent pools in these markets.

TALENT COMPETENCIES ARE SHIFTINGA focus on shared services is giving way to a broader mix of talent objectives, including compliance and technology competencies that must be filled using the right balance of labor cost and supply.

THE ULTIMATE DISRUPTIVE FORCETechnology is the ultimate disruptive force. New technologies are enabling automation and more efficient execution of transactions, all of which are putting pressure on traditional business models, thus impacting real estate strategies and demand.

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Shifts in the economy, regulation and technology are the megatrends driving the transformation of finance and causing financial services firms to expand cost-saving measures that enhance their profitability. From evaluating new markets based on balancing labor cost and supply, to efficiently managing their footprints in established markets, the real estate strategies employed by financial services firms responding to these megatrends will have lasting impacts on U.S. property markets.

NEW ECONOMIC REALITIES The financial system’s interactions with the global economy are complex and constantly evolving. Shifting economic realities affect the performance of financial services firms, but the relationship is symbiotic and the health of these firms also impacts the economy. During the global financial crisis, broad and deep connections between the economy and the financial system were laid bare, the effects of which are still felt today. As a result, the ability of financial services firms to generate revenue is much more challenging, requiring them to lower operating leverage to maintain profitability (Figure 1).

INCREASED REGULATIONSIn a recent CBRE survey of more than 80 financial institutions, tighter regulation—mandated by Dodd Frank and Basel III—is one of the greatest concerns for CRE executives in the banking and finance industry (Figure 2). In addition, revised FASB Lease Accounting rules—requiring balance-sheet capitalization of most leases—may place the onus of one element of these regulations on the corporate real estate department. Although uncertain, the potential treatment of these capitalized leases could impact the regulatory capital asset base required under Basel III. All of these regulations carry a significant cost for financial firms, which must navigate and respond to compliance issues in an increasingly complicated regulatory environment. This regulatory scrutiny presents challenges to more than just policy and process; it also drives demand for highly specialized talent to handle complex regulatory and compliance functions.

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Source: CBRE Research, 2016.

Source: CBRE Global Occupier Survey 2015/16.

2006

ECONOMICUNCERTAINTY

TIGHTERREGULATION

SKILLED LABORSHORTAGE

TECHNOLOGYDISRUPTION

COST ESCALATION

2007 2008 2009 2010 2011 2012 2013 2014 2015

13.5% reduction in revenue

2006-2015

Figure 1: Fortune 100 Financial Services Firms Revenue 2006-2015 (billions)

Figure 2: CRE Executive Concerns - Americas

60%- Banking and Finance - All Industries

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Figure 3: VC-Backed Fin-tech Company Funding - North America

- Investment (L) - Deals (R)

Source: The Pulse of Fintech, 2015 in Review, KPMG and CB Insights.

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TECHNOLOGY DISRUPTING THE LANDSCAPETechnology is disrupting the financial services industry on multiple fronts. Investment in North American fin-tech startups increased by 250% between 2013 and 2015 to $7.7 billion (Figure 3). Nearly half of the 2015 fin-tech venture capital (VC) went to firms in San Francisco ($3.7 billion), followed by New York ($442 million), Palo Alto ($323 million) and Los Angeles ($156 million). The top regions for VC funding in 2015—the San Francisco Bay Area and New York—possess deep, highly skilled technology labor pools. Fin-tech firms with the highest valuations include those offering payroll, online payment, peer-to-peer lending and credit-monitoring platforms. Corporate investors accounted for 20% or more of North American VC fin-tech funding in four of the five quarters between Q4 2014 and Q4 2015, with a large amount of funding flowing from established financial institutions as well as large, non-financial tech firms.

The rapid advancement of emerging technologies in the areas of payments, peer-to-peer lending, data analytics, personal wealth management and blockchain—a digitized ledger which underpins Bitcoin transactions—could revolutionize the way banks transfer funds, lower associated costs and eventually lead to reduced employee headcount. The ability of financial services firms to adapt to current and future disruptive technologies is paramount. Financial companies’ staffing and real estate plans will reflect the critical need to attract and retain the talent that will make them nimble, adaptable and competitive in a rapidly evolving and uncertain environment. Developing technologies—like blockchain—will transform traditional business models and alter the composition of employment in the finance industry, thereby creating winners and losers in property markets.

10© 2016 CBRE, Inc.

Historical Hubs of Finance

The established markets have historically been the nation’s finance hubs. Today, the composition of these markets is changing, in part due to strong growth in tech and other creative industries. As a result, the economies of these traditional financial centers are diversifying.

HIGHLY SKILLED FINANCIAL OCCUPATIONS EXPANDING Financial activities employment in established markets has returned to positive growth since the last recession, yet remains well below pre-recession levels. Boston is the exception: It is the only one of the top-five markets on par with pre-recession employment levels. While overall financial activities employment has failed to fully recover in these markets, growth in highly skilled financial occupations has surpassed the pre-recession peak (Figure 5). Although the occupational data covers all industries, the growth in these positions in part reflects continued expansion of highly skilled financial services industry jobs in the established markets amid the ongoing shift of shared services and back-office functions to lower-cost locations.

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Figure 4: Established Markets Growing and Diversifying

* Representsmetroareaswithfinancialactivitiesemp.>50KSource: Bureau of Labor Statistics, 2016.

Financial Activities Total Employment Concentration Growth (Since 2010) Growth (Since 2010)

Employment 2006 2015 Percent Absolute Percent AbsoluteNew York 769,100 9.2% 8.2% 3.5% 25,700 10.0% 855,300Los Angeles 332,800 6.7% 5.7% 5.1% 16,300 9.9% 523,400Chicago 293,700 7.3% 6.4% 2.5% 7,300 8.1% 343,200Philadelphia 210,400 7.9% 7.4% 4.8% 9,600 4.6% 123,800Boston 189,200 7.9% 6.9% 7.0% 12,400 8.8% 214,100Established Markets 1,795,200 7.8% 6.9% 4.2% 71,300 8.9% 2,059,800United States* - 7.4% 6.8% 7.7% 459,800 10.9% 11,210,500

** Financial Activities Employment:thenumberofemployeesatestablishmentsprimarilyengagedinfinancialtransactionsand/orinfacilitatingfinancialtransactions.** Financial Occupations:thenumberofemployeesinfinance-specificjobsthatmayormaynotbeatafinancialinstitution,suchasbudget,financialandcreditanalysts. Source: Bureau of Labor Statistics, 2016.

Figure 5: Established Markets See Strong Growth in Specialized Financial Occupations**

- FA Industry Employment -FinanceSpecificOccupations - Total Nonfarm Employment110

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85 201120102009200820072006 2012 2013 2014 2015

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92.9

THE TRANSITION TO TECH-TALENT MARKETS The five historically established financial services markets are also ranked within the top 15 tech-talent markets thanks to their deep labor pools and significant tech employment growth over the past five years. Tech occupations grew at a much faster rate than core financial services occupations in these markets. Even during the Great Recession, tech employment did not fall below its 2006 baseline level (Figure 6). The growth in tech during this time supported demand for office space, even as financial activities employment growth lagged. Also, fin-tech start-ups and tech arms of traditional financial institutions are expanding in several of the established markets due to their concentrations of traditional financial institutions and their large, highly skilled tech labor forces. The ties between the finance and technology industries will only deepen going forward, which likely will further benefit these markets.

This loss of financial activities employment and change in the composition of core financial occupations in established markets are the result of financial firms using labor and real estate strategies to enhance their profitability. Talent-rich, lower-cost locations are benefiting from this shift of industry employment in established markets.

12© 2016 CBRE, Inc.

Source: Bureau of Labor Statistics, 2016.

Occupation Level Index

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Figure 6: Established Market Occupation Growth – Financial vs. Technology

Change in Occupations (000s)125 50120 40115 30110 20105 10100 095 -1090 -2085 -3080 -40

- Change in Financial Occupations (R) -FinanceSpecificOccupations(L)- Change in Tech Occupations (R) -TechSpecificOccupations(L)

118.0

105.5

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The Growth Story:New Cities of Finance

The growth of financial services employment in non-traditional markets

has turbocharged demand for office space in many lower-cost markets in the

South and West.

DEFINING ACTIVE MARKETSAlthough each of the “active” markets possesses unique attributes, they also share key commonalities: Each of them had more than 50,000 financial activities jobs in 2015, positive financial services employment growth in aggregate since 2006, and a higher-than-average concentration of financial services employment and/or significant sustained employment growth in this sector (Figure 7).

ACTIVE MARKETS EXCEED PRE-RECESSION EMPLOYMENT LEVELS These active markets experienced a relatively small contraction in aggregate finan-cial activities employment during and after the Great Recession, and have registered healthy employment growth since 2010 (Figure 8). As of Q1 2016, total financial activities employment in these markets was 12.3% higher than the previous peak in Q4 2006. Additionally, financial activities employment growth since 2006 far exceeded the national average and in many cases outpaced overall metro employment growth, which is remarkable given that overall employment growth rates in several markets (San Antonio, Nashville, Dallas/Ft. Worth, Charlotte and Salt Lake City) were among the highest in the nation during this period. Low costs of living and doing business make these markets attractive for both talent and organizations alike, driving the in-migration of financial services firms and other industries from higher-cost markets.

Figure 7: Most Active Markets for Financial Activities Employment Growth

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Figure 8: Financial Activities Employment Growth Index

Source: Bureau of Labor Statistics, 2016.

- Established Markets - Active Markets115110105100959085

201120102009200820072006 2012 2013 2014 2015

Index

(200

6=10

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92.9

112.3



Employment 2006 2015 Percent Absolute Percent AbsoluteDallas/Ft. Worth 284,600 8.1% 8.2% 20.4% 48,200 17.9% 527,300Phoenix 173,700 8.2% 8.7% 22.0% 31,400 15.2% 258,100Tampa 106,000 8.5% 8.3% 18.4% 16,500 14.5% 161,500Charlotte 86,000 8.3% 7.7% 14.6% 10,900 16.4% 157,400San Antonio 84,900 8.0% 8.5% 22.5% 15,600 16.6% 142,400Columbus 80,700 7.8% 7.8% 15.4% 10,800 14.2% 131,100Jacksonville 62,600 9.6% 9.5% 10.5% 5,900 13.3% 77,600Nashville 60,700 6.1% 6.6% 24.0% 11,700 20.8% 160,700Salt Lake City 55,900 8.0% 8.1% 21.9% 10,000 15.9% 93,900Richmond 51,200 7.5% 7.7% 20.2% 8,600 13.0% 77,000Active Markets 1,046,300 8.0% 8.1% 19.4% 169,600 16.2% 1,787,000United States* - 7.4% 6.8% 7.7% 459,800 10.9% 11,210,500

16© 2016 CBRE, Inc.

Talent is always the primary consideration of companies when they examine markets in which to locate. Therefore, it is important for real estate professionals and investors to understand which markets—including established markets—can meet these new and evolving needs. The active markets identified in this report have experienced financial activities growth because their workforces possess skills that employers seek.

CBRE Labor Analytics was engaged to gather insights and data on the cost-and-supply dynamic of labor markets as it relates to the skill set a firm wants to employ. CBRE Labor Analytics’ current market intelligence—along with the group’s proprietary tool, Global Labor View—informed this report’s assessment regarding the viability of certain markets as they relate to the cost-and-supply dynamic for the skillsets associated with shared services, risk/compliance and tech. Previously mentioned active markets were studied along with some “next-generation” markets that are increasingly desirable for smaller requirements.

NEXT GENERATION MARKETS FOR FINANCIAL SERVICES These next-generation markets include Boise, Indianapolis, Kansas City, Provo, UT and Raleigh (Figure 9). Notably, Raleigh has strong rankings across all three talent categories, making it a prime target for financial services growth.

CHOOSING MARKETS TO MEET THE NEED In the following analysis, the cost-and-supply dynamic for markets is broken down by the type of skill set required. This analysis was general in nature, providing directional guidance only; as such, specific requirements would benefit from a more detailed analysis by CBRE Labor Analytics to determine the best path forward depending onspecific organizational needs. Established markets have deep pools of talent and high costs, so these markets were not plotted graphically for this section of the report.

Figure 9: Next Generation Markets

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Employment 2006 2015 Percent Absolute Percent AbsoluteKansas City 76,600 7.4% 7.2% 7.7% 5,500 8.6% 83,800Indianapolis 64,500 6.9% 6.2% 7.3% 4,400 12.5% 114,900Raleigh-Durham 43,300 3.9% 4.9% 10.4% 4,100 15.1% 117,400Boise 16,700 5.5% 5.7% 20.4% 2,800 16.2% 41,100Provo, UT 7,400 3.7% 3.2% 24.5% 1,500 26.8% 52,200Next Gen Markets 208,500 6.2% 6.0% 9.6% 18,300 13.1% 409,400United States* - 7.4% 6.8% 7.7% 459,800 10.9% 11,210,500

SHARED SERVICESWhile the relocation of back-office jobs to low-cost hubs is not new, economic realities following the Great Recession put renewed importance on this strategy in order to maintain profitability. Over the past several years, financial firms have increasingly sought to relocate a wider variety of jobs, including accounting, marketing and human resources, to low-cost markets. This consolidation into lower-cost markets has resulted in the creation of shared-services centers for various firms.

The primary consideration for shared-services talent strategies is cost. Many of the active markets achieved a strong score for shared services. Charlotte achieved the highest index for shared services, followed by Columbus, Phoenix and Salt Lake City.

TECHNOLOGYAs the role of technology in providing financial services increases, so too will the demand for tech talent. Consider this: More than 50% of tech projects undertaken by CBRE Labor Analytics in 2015 were conducted for financial services firms. The tech-talent category includes software developers, engineers, architects and security specialists.

The primary consideration for tech-talent strategies is finding the right balance between labor costs and availability. New York and Boston achieved the highest scores among the established markets; however, the competition for this talent in these markets is strong. Within the active market category, Dallas/Ft. Worth and Charlotte ranked highest. These findings were also corroborated by CBRE’s 2016 Scoring Tech Talent report.

Source: CBRE Labor Analytics Group, 2016.


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Figure 10: Strong Shared Services Markets

Figure 11: Strong Technology Markets

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RISK AND COMPLIANCERisk and compliance jobs require quantitative analytical skill sets and a deep understanding of statistics and mathematical modeling. Such skills are in high demand across a range of industries, as companies use “big data” to gain competitive market advantage. The financial services sector has a great need for these skills due to increasing regulations, as banks must improve and expand the evaluation of risks to their balance sheet. Quantitative analysts (commonly referred to as “quants”) are in high demand for such assessments.

The primary driver for risk and compliance talent strategies is labor supply. The highly skilled and specialized nature of these jobs, and increasing demand for them, means these types of workers are in short supply. Consequently, businesses are often forced to locate such positions in high-cost established markets where there is a greater supply of this specialized skill set. Boston achieved the highest score among the established markets. In terms of lower-cost alternatives, options are limited, with Charlotte and Columbus ranking highest among the smaller active markets.

TALENT CONCLUSIONAs the financial services industry evolves, its talent needs also change. Each market has unique characteristics that will appeal to firms for different reasons, depending on their needs. The ability of companies to fully exploit each market’s potential and scale depends on more than just the labor cost-and-supply dynamic. Other factors include competition in the market, strength of the brand, and the wages each firm is willing to offer.

Once a market is chosen, site selection becomes the next focus. Although real estate costs are minimal compared to labor costs, they are still long-term binding liabilities that must be strategically approached in terms of location, amenities and cost.

Figure 12: Strong Risk Markets

- Strong - Moderate


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Although labor accounts for most savings when relocating jobs to lower-cost locations, savings on real estate costs are also realized. Established markets rank among the most expensive U.S. office markets, and the difference (spread) between office rents in established and active/next-generation markets has only widened in recent years.

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22© 2016 CBRE, Inc.

THE LEASE RATE DIVIDEIn Q1 2010, the spread between average asking rents in established and active marketswas about $14 per sq. ft. By Q2 2016, the difference had risen to $23 per sq. ft.What has led to this increase? The tech industry has been a particularly strongdriver of demand, pushing rents higher in established markets. In short, establishedmarkets that have historically been expensive relative to the active markets are evenmore so today. This may further motivate companies to move certain functions tolower-cost markets.

VACANCY UNIFORMLY DECLININGWith the improving economy and office-using job growth, office vacancy rates havebeen decreasing in all three market categories since 2010. The overall vacancy rate inestablished markets historically has been lower than in active and next-generationmarkets, and this trend has continued through the current cycle. The gap isnarrowing, however, as robust job growth has pushed down vacancy rates in nearly allof the active markets.

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Source: CBRE Research, Q2 2016.

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Figure 13: Asking Lease Rates

- Established - Next Gen- Active

$14.38 Difference in Asking Lease Rates

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Figure 14: Vacancy Rates

- Established - Next Gen- Active

ACTIVE MARKETS RANK AMONG TOP FOR CONSTRUCTION Most of the active and next-generation markets have lower barriers to new development than the established markets, enabling a faster supply response to tightening market conditions. Indeed, several of the active markets—Nashville, Salt Lake City, Charlotte and Dallas/Ft. Worth—rank among the top U.S. office markets for construction activity relative to the size of their existing inventory base (Figure 15). Despite this strong supply response, tenant demand has largely outstripped new supply. Vacancy rates in Nashville, Charlotte and Salt Lake City ranked among the 10 lowest in the U.S. as of Q2 2016, and the Dallas/Ft. Worth vacancy rate has decreased as well, despite a very active development pipeline. In other active and next-generation markets—including Tampa, Jacksonville, Richmond and Indianapolis—little or no construction currently is underway due to slower overall office market recoveries and/or rent levels that do not justify new construction. As vacancy rates fall, tenants have fewer location options. Consequently, construction activity has not kept up with surging tenant demand in many of the active and next-generation markets.

FINANCIAL SERVICES MARKETS LIKELY TO SEE FURTHER RENT GROWTH IN NEAR TERMThe decrease in space availability for occupiers has shifted the balance of power towards landlords in recent years. Although rent growth in the active and next-generation markets has been more muted than in the established markets, tightening conditions will likely fuel rent growth in the near term. This will be especially true in markets where construction activity has been low during the current cycle. Occupiers may find it increasingly difficult to secure large blocks of space. Consequently, landlords will likely benefit from further rent growth in most markets during the near term.

Figure 15: Top 10 U.S. Office Markets - SF Under Construction as % of Existing NRA*

* NRA = Net Rentable Area Source: CBRE Research, Q2 2016.

- Other Markets- Active Financial Services Markets

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WORKPLACE STRATEGYIn both historically established and active markets, financial services firms face strong competition for talent. This competition makes real estate even more important in their recruitment and retention strategies.

In established markets, the need to fill high-skill financial services jobs will continue to shape occupier strategies aimed at recruiting and retaining the best talent available. Competition—especially from tech and media firms—for highly skilled workers will require financial firms to provide exceptional work environments that match or exceed employee preferences. Landlords should be aware of these trends and expect more demand for premium Class A space in established markets.

Occupiers in both the established and active markets seek features that offer their employees more than the traditional office environment. These features include ample services, expanded amenities, a greater focus on wellness in the workplace, and more social and collaborative office designs. All of these elements are crucial to attract top young talent and provide a functional and inspirational work environment.

Note: Market cycle positions are unique to this report and should not be compared with other rent cycle charts. Source: CBRE Research, Q2 2016.

Figure 16: Office Market Rent Cycle: Position Definitions

Position 1RENTS AT PEAKRents are at their peak and are expected to decline over the next 6-12 months.

Rental Decline Accelerating Rental Decline Slowing

Position 2RENTAL DECLINE ACCELERATINGRents have started to fall, and the rate of decline is expected to accelerate over the next 6-12 months. Position 3

RENTAL DECLINE MODERATINGThe rate of rental decline is nearing its peak. Rents are expected to continue declining but at a slower rate.

Position 4RENTAL DECLINE SLOWINGThe rate of rental decline has slowed. Rents are not yet at their trough, and are expected to decline further, but at a slower rate.

Position 5RENTS AT TROUGH

Rents are at their trough. The next movement is expected to be upwards.

24© 2016 CBRE, Inc.

Rental Growth Accelerating

Rental Growth Accelerating Rental Growth Slowing

Position 6RENTAL GROWTH ACCELERATINGRents have started to rise, and the rate of increase is expected to accelerate over the next 6-12 months.

PhiladelphiaCharlotteRichmondJacksonville

Los AngelesChicagoDallas/Ft. WorthNashvillePhoenix

BostonColumbusSalt Lake CitySan AntonioTampa IndianapolisKansas CityRaleigh-Durham

New York

Position 7RENTAL GROWTH MODERATINGThe rate of rental growth is nearing its peak. Rents are expected to continue rising but at a slower rate.

Position 8RENTAL GROWTH SLOWINGThe rate of rental growth has slowed. Rents are not yet at their peak and are expected to increase further, but at a slower rate.

Position 9RENTS AT PEAK PLATEAURents are at their peak and are considered to have reached a plateau. Marginal further growth still possible,andasignificantdeclinenotyetexpected.

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Markets Established -

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26© 2016 CBRE, Inc.

The megatrends identified in this report will continue to drive structural shifts in the financial services industry, impacting real estate market performance and trends across the country. Markets offering lower labor and real estate costs will benefit from the drive to reduce costs among financial firms. But cost is only part of the equation that firms must consider. Labor market skills and depth are determining factors for firms evaluating the best path forward.

Risk and compliance talent generally is in short supply due to the advanced, specialized skill set required. Raleigh, Charlotte and Columbus are the highest-ranking active markets for this talent. For shared services, many of the active markets score high for both talent availability and low cost, including Dallas/Ft. Worth, Columbus, Charlotte, Raleigh, Phoenix and Richmond. For technology talent, Raleigh, Dallas/Ft. Worth and Charlotte rank high for availability at a relatively low cost. Because of strong competition for talent among both financial and non-financial firms in the active markets, we expect occupier interest to grow in the next-generation markets, which also offer real estate costs well below the traditional financial centers, as well as an emerging supply of low-cost, skilled labor.

Despite their relatively high cost, established markets will likely see strong demand from certain segments of the finance industry, including hedge funds, private equity firms, fin-tech hubs (both start-ups and tech arms of traditional financial institutions) and other functions that require highly skilled, specialized talent. As firms compete for this talent, owners of high-quality, well-located, amenity-rich office properties preferred by many employees are poised to benefit.

Even as institutions evolve to meet current challenges, new trends and threats will emerge, making operating efficiency even more critical and likely altering the financial landscape further. Among these are the evolving shared-services economy, the anticipated widespread use of blockchain, and the automation of back-office functions. Automation is most likely the next source of operating efficiency improvements for occupiers, although the process will take a significant amount of time, effort and expense. In the long term, automation could reduce costs for occupiers but pose risks for landlords in active and next-generation markets where financial institutions have been locating back-office and shared-services jobs. The ongoing integration of finance and technology is a rapidly changing and unpredictable variable affecting both finance industry occupiers and real estate landlords.

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Featured Markets Established

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PROVO, UT*

BOISE*

* Contact CBRE for additional market information

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Financial Services Statistics For Markets Covered in this Report by Type

THE COST OF TALENT AND REAL ESTATE

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*AdjustedCostofOccupancyiscurrentaskingrentadjustedbythecostofdoingbusinessinaspecificmetroarea.Note:Circlerepresentssizeoffinancialactivitiesemploymentsectorineachmarket.Source: BLS, OES, CBRE Research, CBRE LAG, Q2 2016.

- Active- Established

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Chicago

Philadelphia

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30© 2016 CBRE, Inc.

New York

- Active- Established - Next Gen

FINANCIAL ACTIVITIES (FA) EMPLOYMENTFA

Employment% Total Employment Change in FA

Jobs Since 20102006 2015

New York 769,100 9.2% 8.2% 25,700 Los Angeles 332,800 6.7% 5.7% 16,300 Chicago 293,700 7.3% 6.4% 7,300 Philadelphia 210,400 7.9% 7.4% 9,600 Boston 189,200 7.9% 6.9% 12,400 Dallas/Ft. Worth 284,600 8.1% 8.2% 48,200Phoenix 173,700 8.2% 8.7% 31,400Tampa 106,000 8.5% 8.3% 16,500Charlotte 86,000 8.3% 7.7% 10,900San Antonio 84,900 8.0% 8.5% 15,600Columbus 80,700 7.8% 7.8% 10,800Jacksonville 62,600 9.6% 9.5% 5,900Nashville 60,700 6.1% 6.6% 11,700Salt Lake City 55,900 8.0% 8.1% 10,000Richmond 51,200 7.5% 7.7% 8,600Kansas City 76,600 7.4% 7.2% 5,500 Indianapolis 64,500 6.9% 6.2% 4,400Raleigh-Durham 43,300 3.9% 4.9% 4,100

Source: BLS, CBRE Research, Q2 2016.

FINANCIAL OCCUPATION (FO) AVG. SALARYFO Adjusted

SalaryCost of Living

2015 FO Salary

New York $86,337 122% $105,331 Philadelphia $74,889 112% $83,875 Chicago $73,129 111% $81,174 Boston $67,681 136% $92,046 Los Angeles $57,997 144% $83,516 San Antonio $80,369 94% $75,547 Dallas/Ft. Worth $80,320 102% $81,927 Charlotte $79,114 105% $83,070 Nashville $77,372 95% $73,503 Tampa $74,594 99% $73,848 Richmond $73,568 102% $75,040 Columbus $72,120 96% $69,235 Jacksonville $68,111 103% $70,155 Phoenix $67,858 102% $69,216 Salt Lake City $66,758 104% $69,428 Kansas City $76,265 97% $73,977 Raleigh-Durham $70,406 108% $76,038 Indianapolis $68,313 96% $65,580

Source: BLS, OES, CBRE Research, Q2 2016.

FINANCIAL MARKETS AVG. ASKING RENT/SFOffice Average

Asking RentAverage Growth

Since 2010*

New York $75.32 10.2%Los Angeles $36.20 4.9%Boston $35.97 5.1%Chicago $28.41 1.5%Philadelphia $26.58 2.1%Charlotte $23.82 3.7%Phoenix $23.63 1.6%Nashville $23.41 4.6%Dallas/Ft. Worth $22.86 4.6%Salt Lake City $22.53 2.8%Tampa $21.16 0.5%San Antonio $21.12 2.5%Richmond $19.68 2.0%Columbus $18.82 2.6%Jacksonville $18.50 1.0%Raleigh-Durham $24.80 4.7%Indianapolis $18.11 0.6%Kansas City $17.84 0.5%

*Signifiesaverageyear-over-yearrentgrowth.Source: CBRE Research, Q2 2016.

Boston, MA Top Finance Submarket: CBD ESTABLISHED MARKET

+ Boston is the most attractive established market in terms of the availability of IT and risk/compliance employees.

+ Real estate and labor costs in the market are second highest among established markets, outpaced only by New York.

LABOR TRENDS LABOR ANALYTICS SCORING

WEAK

SHARED SERVICES

STRONG

RISK & COMPLIANCEINFORMATION TECHNOLOGY

STRONG

RELATIVE COSTS**

136%cost of living

122%cost of business

TALENT COSTS & TRENDS

44.2%% of Bachelor’s Degree or Higher(US Average is 30.1%)

$92,046avg.salaryforfinancespecificoccupations12.7% increase since 2010

$2,185 avg. apartment rent (per unit/mo)20.3% increase since 2010

Boston CBD

Asking Rent (FSG/SF) $35.97 $55.23

Average Growth Since 2010 5.1% 5.6%

Vacancy (%) 12.9% 7.4%

Change Since 2010 -2.2% -5.3%

Financial Services Tenants as a % of the Overall Market

18% 28%

MARKET STATISTICS*

115

95

110

105

100

2007 2008 2009 2010 2011 2012 2013 2014

INDUSTRY & OCCUPATIONAL EMPLOYMENT (INDEX, 2006=100)125

120

902006 2015

99.7

111.1

OFFICE RENT & VACANCY TRENDS$60/SF

$50/SF

$40/SF

$30/SF

$20/SF

$10/SF

18.0%

16.0%

14.0%

12.0%

10.0%

8.0%

$0/SF

Boston Rent (L) Boston Vacancy (R) CBD Vacancy (R)CBD Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q166.0%

PRIMARY SECTORS OF FINANCIAL SERVICES TENANTS

InsuranceBanking Lending

2,648,000total employment

214,100jobsaddedsince2010

8.8%growth since 2010

189,200total employment






EMPLOYMENT CHARACTERISTICS

OVERALLMARKET

EMPLOYMENT

FINANCIAL ACTIVITIES INDUSTRY

FINANCE SPECIFIC

OCCUPATIONS

31

* Boston Market Statistics include Boston/Cambridge/Suburbs.** 100% represents US average for cost of living and cost of doing business.Sources: BLS, OES, Moody’s, Census, CBRE Research, CBRE LAG, CBRE Econometric Advisors, Q2 2016.

Financial Activities Industry Employment FinanceSpecificOccupations

Chicago, IL Top Finance Submarket: Central Loop ESTABLISHED MARKET

+ Chicagoisanotherestablishedmarketthathasyettofullyrecoverfinancialactivitiesjobslostsince2006,withgrowthrelativelyflatsincethecrisis.

+ Cost-saving efforts have driven the relocationofmany“backoffice”jobstolower-costmetros.

+ In terms of real estate costs, Chicago is one of the more affordable established markets and has a moderate tech and risk/compliance labor force.


WEAK

SHARED SERVICES

MODERATE

RISK & COMPLIANCE

MODERATE

INFORMATION TECHNOLOGY

RELATIVE COSTS*

111%cost of living

99%cost of business





Chicago Central Loop



Vacancy (%) 15.1% 9.3%

Change Since 2010 -3.0% -4.0%


14% 24%

MARKET STATISTICS

100

95

90

85

2007 2008 2009 2010 2011 2012 2013 2014


802006 2015

88.4

93.2


$35/SF

$30/SF

$25/SF

$20/SF

20.0%

18.0%

16.0%

14.0%

12.0%

10.0%

8.0%

$15/SF

Chicago Rent (L) Chicago Vacancy (R) Central Loop Vacancy (R)Central Loop Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q166.0%













OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS

* 100% represents US average for cost of living and cost of doing business.Sources: BLS, OES, Moody’s, Census, CBRE Research, CBRE LAG, CBRE Econometric Advisors, Q2 2016.


32© 2016 CBRE, Inc.

Los Angeles, CA Top Finance Submarket: Downtown ESTABLISHED MARKET

+ As an established market, Los Angeles boasts a large, but costly labor force.

+ The emergence of Silicon Beach has made Los Angeles more attractive from an IT talent standpoint.


SHARED SERVICES

WEAK

WEAK

RISK & COMPLIANCE

MODERATE


RELATIVE COSTS*

144%cost of living



32%% of Bachelor’s Degree or Higher(US Average is 30.1%)



Los Angeles Downtown



Vacancy (%) 14.0% 16.9%

Change Since 2010 -4.0% -0.8%


20% 22%

MARKET STATISTICS


105

85

100

95

90

802006 2007 2008 2009 2010 2011 2012 2013 2014 2015

86.8

96.8

OFFICE RENT & VACANCY TRENDS$40/SF 21.0%

20.0%

19.0%

18.0%

17.0%

16.0%

15.0%

14.0%

$15/SF

$20/SF

$25/SF

$30/SF

$35/SF

Los Angeles Rent (L) Los Angeles Vacancy (R) Downtown Vacancy (R)Downtown Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q1613.0%













OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS



33


New York, NY Top Finance Submarket: Midtown ESTABLISHED MARKET

+ NewYork’slaborpoolissignificantlylargerthananyothermarket,butitisalsomoreexpensive.

+ NewYorkexemplifiesthegeneralcharacteristicsofestablishedmarketswithhighcosts, but large pools of skilled workers.

LABOR TRENDS

Manhattan Midtown



Vacancy (%) 7.4% 7.5%

Change Since 2010 -1.2% -0.8%


28% 31%

MARKET STATISTICS

LABOR ANALYTICS SCORING

WEAK

SHARED SERVICES

MODERATE


STRONG

RELATIVE COSTS*

122%cost of living







115

95

110

105

100

902006 2007 2008 2009 2010 2011 2012 2013 2014 2015


95.3

115.8

OFFICE RENT & VACANCY TRENDS$90/SF 11.0%

10.0%

9.0%

8.0%

7.0%

6.0%

$80/SF

$70/SF

$60/SF

$50/SF

$40/SF1Q10

Manhattan Rent (L) Manhattan Vacancy (R) Midtown Vacancy (R)Midtown Rent (L)

1Q11 1Q12 1Q13 1Q14 1Q15 1Q16











OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS



34© 2016 CBRE, Inc.

Philadelphia, PA Top Finance Submarket: Market West ESTABLISHED MARKET

+ Philadelphia is on the affordable end of the established markets in terms of both labor and real estate costs.

+Financeemploymenthasbeenrecoveringoverthepastthreeyearsandisnowjust5% off previous peak employment.

+ Similar to other established markets, there are ample IT and risk/compliance workers and fewer shared-services employees.


WEAK

SHARED SERVICES

MODERATE

RISK & COMPLIANCE

MODERATE


RELATIVE COSTS*

112%cost of living






Philadelphia Market West



Vacancy (%) 14.6% 11.4%

Change Since 2010 -3.9% -4.6%


15% 24%

MARKET STATISTICS

104

94

96

92

102

100

98

2007 2008 2009 2010 2011 2012 2013 2014


902006 2015

95.2

102.5


$29/SF

$27/SF

$25/SF

$23/SF

$21/SF

$19/SF

$17/SF

22.0%

20.0%

18.0%

16.0%

14.0%

12.0%

10.0%

8.0%

$15/SF

Philadelphia Rent (L) Philadelphia Vacancy (R) Market West Vacancy (R)Market West Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q166.0%













OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS



35

Charlotte, NC Top Finance Submarket: CBD ACTIVE MARKET

+ Dominatedbymajorfinancialinstitutions’presence,bothinheadquartersandoperationcenters,Charlotte’sskilldepthisfavorableforfinancialservices.

+ Strengths range from a growing IT workforce to specialized and highly sought-after risk and compliance positions.


STRONG

SHARED SERVICES

STRONG


STRONG

RELATIVE COSTS*

105%cost of living

89%cost of business




$979 avg. apartment rent (per unit/mo)28.3% increase since 2010

Charlotte CBD



Vacancy (%) 8.9% 11.7%

Change Since 2010 -10.7% 2.2%


20% 60%

MARKET STATISTICS

140

150

100

130

120

110

2007 2008 2009 2010 2011 2012 2013 2014


902006 2015

102.4

151.4


$25/SF

$20/SF

$15/SF

$10/SF

$5/SF

25.0%

20.0%

15.0%

10.0%

5.0%

$0/SF

Charlotte Rent (L) Charlotte Vacancy (R) CBD Vacancy (R)CBD Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q160.0%












OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS




36© 2016 CBRE, Inc.

Columbus, OH Top Finance Submarket: Downtown ACTIVE MARKET

+ Strongacrossmostfinancialservicesfunctions,Columbusoffersuniqueaccesstoriskand compliance positions that are in short supply in other markets, in addition to a large pool of shared services and IT talent.


STRONG

SHARED SERVICES

STRONG


STRONG

RELATIVE COSTS*

96%cost of living

95%cost of business





Columbus Downtown



Vacancy (%) 13.7% 12.1%

Change Since 2010 -6.4% -5.7%


14% 12%

MARKET STATISTICS

115

95

110

105

100

2007 2008 2009 2010 2011 2012 2013 2014


902006 2015

107.4

118.1


$20/SF

$15/SF

$10/SF

$5/SF

25.0%

20.0%

15.0%

10.0%

5.0%

$0/SF

Columbus Rent (L) Columbus Vacancy (R) Downtown Vacancy (R)Downtown Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q160.0%













OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS



37

38© 2016 CBRE, Inc.

Dallas/Ft. Worth, TX Top Finance Submarket: Far North Dallas ACTIVE MARKET

+ Analternativetomorematurefinancialservicesmarkets,thestrengthsof Dallas/Ft. Worth’s workforce are in both scale for shared services as well as an ever-expanding IT skill set.


STRONG

SHARED SERVICES

MODERATE


STRONG

RELATIVE COSTS*

102%cost of living

93%cost of business





Dallas/Ft. Worth Far North Dallas



Vacancy (%) 17.5% 14.8%

Change Since 2010 -3.6% -5.2%


17% 20%

MARKET STATISTICS

120115

95

110105100

2007 2008 2009 2010 2011 2012 2013 2014

INDUSTRY & OCCUPATIONAL EMPLOYMENT (INDEX, 2006=100)

130135

125

902006 2015

118.1

132.0


$25/SF

$20/SF

$15/SF

$10/SF

$5/SF

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

$0/SF

Dallas/Ft. Worth Rent (L) Dallas/Ft. Worth Vacancy (R) Far N. Dallas Vacancy (R)Far N. Dallas Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q160.0%













OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS



Jacksonville, FL Top Finance Submarket: I-95/9A Corridor ACTIVE MARKET

115

95

110105100

2007 2008 2009 2010 2011 2012 2013 2014


902006 2015

102.9

127.6


$19/SF

$18/SF

$17/SF

$16/SF

$15/SF

Jacksonville Rent (L) Jacksonville Vacancy (R) I-95/9A Vacancy (R)I-95/9A Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

LABOR TRENDS LABOR ANALYTICS SCORING+ Jacksonville predominantly serves the mortgage industry.

+ Thelabormarketiswellpositionedforsmallershared-servicesandback-officefunctions.

MARKET STATISTICSJacksonville I-95/9A



Vacancy (%) 15.8% 12.9%

Change Since 2010 -6.6% -8.8%


21% 25%











OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS






RELATIVE COSTS*

103%cost of living

96%cost of business

SHARED SERVICES

WEAK

WEAK

RISK & COMPLIANCE

MODERATE


39




Nashville, TN Top Finance Submarket: Downtown ACTIVE MARKET

110120130140150160170

100

2007 2008 2009 2010 2011 2012 2013 2014


902006 2015

123.7

162.1

OFFICE RENT & VACANCY TRENDS

Nashville Rent (L) Nashville Vacancy (R) Downtown Vacancy (R)Downtown Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16

$30/SF

$25/SF

$20/SF

$15/SF

$10/SF

$5/SF

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

$0/SF 0.0%

LABOR TRENDS LABOR ANALYTICS SCORING+ A smaller, low cost alternative to Dallas/Ft. Worth and Tampa, Nashville’s shared-servicesworkforceisattractivetofinancialservicesfirmsformoderate-sizedoperationcenters.

MARKET STATISTICSNashville Downtown



Vacancy (%) 6.0% 11.9%

Change Since 2010 -8.4% -12.0%


7% 8%











OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS






RELATIVE COSTS*

95%cost of living

94%cost of business

SHARED SERVICES

WEAK

WEAK

RISK & COMPLIANCE

MODERATE





40© 2016 CBRE, Inc.

Phoenix, AZ Top Finance Submarket: Camelback Corridor ACTIVE MARKET

115

95

110

105

100

2007 2008 2009 2010 2011 2012 2013 2014


80

85

90

2006 2015

107.4

92.0


Phoenix Rent (L) Phoenix Vacancy (R) Camelback Vacancy (R)Camelback Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16

$35/SF

$30/SF

$25/SF

$20/SF

$15/SF

$10/SF

$5/SF

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

$0/SF 0.0%

LABOR TRENDS LABOR ANALYTICS SCORING+ With low costs of living and wages, and a diverse and scalable workforce, Phoenix is a

stable and low-cost location for large shared-services centers, with IT skills developing and diversifying.

MARKET STATISTICSPhoenix Camelback



Vacancy (%) 18.1% 18.5%

Change Since 2010 -8.1% -12.3%


22% 29%









-3,900jobsaddedsince2010

-9.7%growth since 2010

OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS






RELATIVE COSTS*

102%cost of living

98%cost of business

SHARED SERVICES

MODERATE

MODERATE


STRONG




41

Richmond, VA Top Finance Submarket: CBD ACTIVE MARKET

95

110

105

100

2007 2008 2009 2010 2011 2012 2013 2014


902006 2015

108.8

108.1


Richmond Rent (L) Richmond Vacancy (R) CBD Vacancy (R)CBD Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16

$25/SF

$20/SF

$15/SF

$10/SF

$5/SF

25.0%

20.0%

15.0%

10.0%

5.0%

$0/SF 0.0%

LABOR TRENDS LABOR ANALYTICS SCORING+ A lower cost East Coast alternative, Richmond’s shared-services talent is well

positioned for moderate-sized operations.

MARKET STATISTICSRichmond CBD



Vacancy (%) 12.0% 14.5%

Change Since 2010 -6.6% -1.5%


21% 26%









600jobsaddedsince2010


OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS






RELATIVE COSTS*

102%cost of living

94%cost of business

SHARED SERVICES

WEAK

MODERATE


STRONG




42© 2016 CBRE, Inc.

Salt Lake City, UT Top Finance Submarket: CBD ACTIVE MARKET

2007 2008 2009 2010 2011 2012 2013 2014


2006 2015

115

95

110105100

120125130

90

135

112.8

130.2


Salt Lake City Rent (L) Salt Lake City Vacancy (R) CBD Vacancy (R)CBD Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

$30/SF

$25/SF

$20/SF

$15/SF

$10/SF

$5/SF

$0/SF

LABOR TRENDS LABOR ANALYTICS SCORING+ A consistently expanding market, Salt Lake City has been highly active due to a

talented shared-services and skilled-sales workforce.

+ IT is developing in the region and is especially concentrated in areas around the border of Salt Lake and Utah counties.

MARKET STATISTICSSalt Lake City CBD


Average Growth Since 2010 2.8% -0.9%

Vacancy (%) 9.7% 11.7%

Change Since 2010 -7.4% -6.9%


7% 14%











OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS






RELATIVE COSTS*

104%cost of living

87%cost of business

SHARED SERVICESRISK & COMPLIANCE

MODERATE

MODERATE


STRONG




43

San Antonio, TX Top Finance Submarket: Northwest ACTIVE MARKET

115

95

110105100

2007 2008 2009 2010 2011 2012 2013 2014


120125130135

902006 2015

140

129.1

137.5

OFFICE RENT & VACANCY TRENDS**

San Antonio Rent (L) San Antonio Vacancy (R) Northwest Vacancy (R)Northwest Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16

$25/SF

$20/SF

$15/SF

$10/SF

$5/SF

25.0%

20.0%

15.0%

10.0%

5.0%

$0/SF 0.0%

LABOR ANALYTICS SCORINGLABOR TRENDS+ Activity in San Antonio has been driven by its low labor costs and low cost of living, withdepthinback-officeandcall-centerfunctions.

MARKET STATISTICSSan Antonio Northwest



Vacancy (%) 16.8% 19.9%

Change Since 2010 -0.4% 3.3%


7% 39%











OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS






RELATIVE COSTS*

94%cost of living

84%cost of business

SHARED SERVICES

WEAK

RISK & COMPLIANCE

MODERATE


STRONG



* 100% represents US average for cost of living and cost of doing business.** Data Through Q1 2016.Sources: BLS, OES, Moody’s, Census, CBRE Research, CBRE LAG, CBRE Econometric Advisors, Q2 2016.

44© 2016 CBRE, Inc.

Tampa, FL Top Finance Submarket: Westshore ACTIVE MARKET

115

95

90

85

110

105

100

2007 2008 2009 2010 2011 2012 2013 2014


802006 2015

99.9

113.9


Tampa Rent (L) Tampa Vacancy (R) Westshore Vacancy (R)Westshore Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

$30/SF

$25/SF

$20/SF

$15/SF

$10/SF

$5/SF

$0/SF

LABOR TRENDS LABOR ANALYTICS SCORING+ WithitslowcostsandeasyaccesstoEastCoastfinancehubs,Tampahasbeenhighly

active since the recession.

+ Labor market strengths are focused on shared-services positions, with the ability to scale sizable operations.

MARKET STATISTICSTampa Westshore



Vacancy (%) 12.2% 9.2%

Change Since 2010 -10.1% -12.5%


5% 10%











OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS


Lending





RELATIVE COSTS*

99%cost of living

99%cost of business

SHARED SERVICESRISK & COMPLIANCEINFORMATION TECHNOLOGY

WEAK

MODERATE

STRONG

InsuranceBanking



45

Indianapolis, IN Top Finance Submarket: Carmel NEXT GEN MARKET

+ IndianapolisisemergingasanattractiveMidwestlocationforfinancialservicesfirms,particularly for shared services.


STRONG

SHARED SERVICES

WEAK


WEAK

RELATIVE COSTS*

96%cost of living

88%cost of business





Indianapolis Carmel



Vacancy (%) 15.8% 7.7%

Change Since 2010 -5.6% -9.5%


16% 25%

MARKET STATISTICS

115

95

110

105

100

2007 2008 2009 2010 2011 2012 2013 2014


902006 2015

96.4

97.3


$20/SF

$19/SF

$18/SF

$17/SF

$16/SF

25.0%

20.0%

15.0%

10.0%

5.0%

$15/SF

Indianapolis Rent (L) Indianapolis Vacancy (R) Carmel Vacancy (R)Carmel Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q160.0%









-600jobsaddedsince2010

-3.7%growth since 2010


OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS




46© 2016 CBRE, Inc.

Kansas City, KS-MO Top Finance Submarket: S. Johnson County NEXT GEN MARKET

+ Lowcostsandagrowingback-officeandshared-servicestalentbasehavedrawnattention to Kansas City as a possible alternative to other active markets.


MODERATE

SHARED SERVICES

MODERATE


MODERATE

RELATIVE COSTS*

97%cost of living

93%cost of business





Kansas City South Johnson



Vacancy (%) 13.6% 10.1%

Change Since 2010 -3.2% -6.3%


11% 9%

MARKET STATISTICS

110

95

105

100

2007 2008 2009 2010 2011 2012 2013 2014


902006 2015

103.2

106.9


$20/SF

$15/SF

$10/SF

$5/SF

25.0%

20.0%

15.0%

10.0%

5.0%

$0/SF

Kansas City Rent (L) Kansas City Vacancy (R) S. Johnson Vacancy (R)S. Johnson Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q160.0%









700jobsaddedsince2010



OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS




47

Raleigh-Durham, NC Top Finance Submarket: RTP/I-40 NEXT GEN MARKET

+ Dominated by the technology industry for years with Research Triangle Park, Raleigh-Durham’s workforce has continued to diversify, also making it an attractive location forsharedservicesandrisk/compliancefunctionsforfinancialservicesfirms.

+ Risk and compliance positions are developing in the area.


STRONG

SHARED SERVICES

STRONG


STRONG

RELATIVE COSTS*

108%cost of living

87%cost of business





Raleigh-Durham RTP/I-40



Vacancy (%) 14.6% 24.4%

Change Since 2010 -4.6% -2.4%


20% 15%

MARKET STATISTICS

115

95

110

105

100

2007 2008 2009 2010 2011 2012 2013 2014


125

120

902006 2015

125.0

120.1


$25/SF

$20/SF

$15/SF

$10/SF

$5/SF

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

$0/SF

Raleigh-Durham Rent (L) Raleigh-Durham Vacancy (R) RTP/I-40 Vacancy (R)RTP/I-40 Rent (L)

1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q160.0%












OVERALLMARKET

EMPLOYMENT


FINANCE SPECIFIC

OCCUPATIONS

48© 2016 CBRE, Inc.




CBRE Research

Whitley CollinsGlobal President

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