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Our solid operational performance and significant progress in repositioning the composition of portfolio consistent with our strategic plan resulted in an outstanding year for Duke Realty. I’ll first touch a little bit on the overall market conditions we are experiencing and how that is affecting our business.As the overall economy continues with this new normal recovery at slow growth rates, there continues to be a relatively modest demand for space across all product types, particularly suburban office. There has been virtually no new supply of space over the last few years, so even with only modest demand occupancies continue to increase particularly in the industrial space. The industrial sector continue to gain traction in the fourth quarter of 2011, initial data from the holidays retail season indicates a better than expected growth in sales, consumer spending continues to surprise on the upside, and there has been a choppy yet steady upward improvement in supply chain and trade indicators over the last year. Recently, data has shown relatively strong growth in intermodal traffic across the country and exports have ticked up as well. Both factors will help strengthen industrial demand if trends continue. As a result, barring any global macroeconomic shocks to economy our outlook is for continued (indiscernible) slowly improving demand for warehouse space in our market. We’re still having numerous discussions about potential industrial build-to-suit development opportunities but our customers are slow to make commitments. We are hopeful that some of these discussions will turn into real deals as we move to 2012. The suburban office environment is still slow to recover as questions over the velocity of an economic recovery, business regulations, political uncertainty and overseas sovereign debt risk all still weigh heavily into labor and space decisions for our office tenants. Double digit vacancies persist across the entire suburban office segment and pricing power remains weak. The medical office outlook continues to be solid. Hospitals and health systems are showing signs of needing more medical space on and off campus in 2012 compared to the last couple of years.
Physician practices continue to enjoin hospital system is driving demand for modern competitive space that is typically on campus of the high quality healthcare systems. This trend bodes well for us given our experienced highly regarded medical office real estate platform with deep health system relationships coupled with the strength of our development platform. We have a solid pipeline of medical office development opportunities in various stages of negotiations.With regard of rents landlords are still not commanding much if any pricing power across industrial and suburban office, so vacancies tightening for large Class A industrial space which should bode well for rental increases down the road. We, in fact did see some meaningful rent growth in our industrial product in the fourth quarter. As for the operating results for our portfolio overall occupancy was 90.7% at December 31st, relatively flat for the quarter, yet up a 160 basis points from the yearend 2010 occupancy of 89.1% We are pleased to able to maintain this occupancy level because as I mentioned on our last call, we have few large expirations in the fourth quarter including an 800,000 square foot industrial lease in Atlanta and actually expected a slight decrease in occupancy. Better than expected leasing partially offset these expirations, which combined with strong occupancy levels of our acquisitions helped us achieve our overall occupancy performance. Additionally, over the past two years we’ve improved in-service occupancy 327 basis points from 87.4% and 90.7%. We signed over 24.5 million square feet of leases in 2011 including 5.1 million square feet during the fourth quarter. We also achieved a lease renewal rate of 78.5% for the fourth quarter. Our team did an excellent job in keeping existing tenants and closing on new leases. Same property NOI for the 3 and 12 months ended December 31st was positive 4.7% and positive 3.2% respectively. Compared to original expectations, same store results were roughly 200 basis points ahead of our optimistic expectations primarily due to better than anticipated occupancy gains and our disposition of less productive assets. Read the rest of this transcript for free on seekingalpha.com