Growth seen in corporate services and investment properties.

After a slow and somewhat unspectacular first half of 1996, the commercial real estate industry in the New York region showed strong growth in the last six months of the year. This was particularly true for CB Commercial, which closed many of its major transactions during the third and fourth

For CB Commercial, specifically, significant growth was experienced in all major business practices, including our National Capital Markets Group, a team of investment property specialists that had an outstanding year, which included their involvement in some of the largest and most prestigious sales of institutional properties in the New York region and around the country. This included the sale of the BP Building, British Petroleum's (BP) U.S. headquarters in Cleveland, for $145 million, making this one of the largest sales of an office tower in a central business district. Other notable sales included representing KLM Pensioen Fondsen in the sale of two land developments in North Hill, North Carolina, the sale of Town Center in Southfield Michigan and Bala Plaza in Philadelphia.

In the northeast, CB Commercial'S National Capital Markets Group negotiated the $13.8 million sale of Two Wall Street on behalf of ORIX Real Estate Equities, establishing a new square foot pricing benchmark of $78 per square foot in Downtown Manhattan. Other significant regional transactions included the sale of Parsippany Commerce Center in Parsippany, NJ for $14.925 million, and the $24.85 million dollar sale of 1145 19th Street, NW in Washington D.C. on behalf of Associations Building Limited Partnership.

Corporate Consulting & Brokerage Services also showed significant growth. In 1996 there was a real trend towards clients needing a wide variety of real estates services, beyond just brokerage. Consulting and financial analysis became increasingly important services to provide to clients throughout the region and around the country.

We also saw the outsourcing trend grow, as more companies mined to real estate firms to satisfy their real estate needs. Prudential, First Union, Bloomberg Financial Services and NEC all outsourced account-based multi-market transaction services to CB Commercial's Madison Advisor Group during 1996. This brings the number of major corporations who have outsourced multi-market transactions services to CBC/Madison to more than 60 nationwide.

In addition, CBC/Madison recently prepared state-wide real estate plan for the State of New Jersey and is providing lease administration services for First Union in New Jersey, New York, Pennsylvania, Florida, North and South Carolina.

Clearly, in 1997 and into the 21st Century, the need to support clients with expertise in emerging as well as traditional areas of brokerage services will become increasingly important.

CB Commercial/Hampshire, a joint venture formed in 1995 between CB Commercial Real Estate Group and Hampshire Management Co., has become one of our fastest growing ventures. Having greatly exceeded its early goals, CB Commercial/Hampshire has expanded the square footage they manage throughout the region to over $6 million square feet, a 40 percent increase over the previous year. It has become increasingly apparent that building owners are looking for firms to provide full-service ownership capabilities.

The activity and growth seen during the last six months of 1996 is expected to carry over into 1997, making CB Commercial extremely optimistic that this could be one of the best years the commercial real estate industry has seen since the late 1980's.