NORTH I-680 CORRIDOR > VACANCY VS. ASKING RENTS

RESEARCH & FORECAST REPORTWALNUT CREEK | NORTH I-680 CORRIDOR

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Market Fundamentals Improve Across All Office Classes The North I-680 Office leasing market improved across all class segments during the first quarter 2014. Class A vacancy decreased 40 basis points to 15.0 percent, Class B vacancy fell 130 basis points to 13.8 percent and Class C vacancy decreased 20 basis points to 21.4 percent. These changes combined to result in total vacancy falling 60 basis points to 15.6 percent. The market as a whole absorbed 117,436 square feet.

The Walnut Creek Downtown submarket absorbed space in the first quarter. Class A vacancy decreased 10 basis points to 14.2 percent. Class A registered 3,482 square feet of net absorption during the quarter. Class B registered 15,163 square feet of net absorption as vacancy fell 100 basis points to 12.3 percent. At 1850 Mt. Diablo Boulevard, Legacy Risk & Insurance Services leased 9,620 square feet on the fourth floor. Rudolph & Sletten took 3,320 square feet at 800 S Broadway. At 1801 Oakland Boulevard, Proforma Partners leased 2,760 square feet on the second floor.

The Walnut Creek Pleasant Hill BART Class A submarket registered a 230 basis point decrease in vacancy. The submarket tracked 41,011 square feet of net absorption. Vacancy now stands at 11.5 percent returning to a level seen one year ago. The most significant lease transaction was Del Monte Foods 26,835 square foot, sixth floor lease at PMI Plaza.

The North I-680 corridor improved across all class segments. Rents have increased for six consecu-tive quarters.

MARKET INDICATORS

Q1PROJECTED

Q2

VACANCY RATE

NET ABSORPTION

CONSTRUCTION

RENTAL RATE

Q1 2014 | OFFICE

VACANCY RATE ASKING RENTAL RATE

$1.70

$1.80

$1.90

$2.00

$2.10

$2.20

10%

12%

14%

16%

18%

20%

2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

Vacancy Rate Asking Rents

Concord as a whole improved during the first quarter. Class A vacancy gave back space as vacancy increased 20 basis points to 16.2 percent. Class B vacancy fell 90 basis points to 16.8 percent. Class C vacancy dipped 40 basis points to 27.8 percent. The Class A submarket tracked 7,579 square feet of negative net absorption for the quarter. There were several significant transactions during the first quarter. At Concord Gateway II, Old Republic Title leased 10,787 square feet on the second floor. At Concord Gateway I, Dekra Certification renewed 7,457 square feet on the ninth floor. Anka Behavioral leased 7,051 square feet at 1957 Parkside Drive. At One Concord Center, Equifax renewed 3,872 square feet on the fifth floor. Ambitech took 2,759 square feet on the third floor.

The Shadelands submarket registered negative net absorption in the first quarter as vacancy increased 30 basis points to 26.9 percent. The Shadelands and Lamorinda submarkets were the only markets to post negative net absorption for the quarter.

There were several significant sales transactions in the first quarter. In Concord, One and Two Corporate Centre sold. Prudential Realty Investors purchased the two office buildings totaling 338,989 square feet from Westcore Properties. In Danville, the 74,599 square foot Danville San Ramon Medical Center on San Ramon Valley Boulevard sold, Rassier Properties was the buyer. Two buildings within Civic Executive Park in Concord sold. Prosper Holdings purchased the buildings from Thomas Properties. Shadelands Executive Center on North Wiget Lane traded, with Steve Kafka purchasing the two office buildings totaling 43,832 square feet from The Charles Company. 2055 North Broadway in Walnut Creek sold; the 11,818 square foot building was purchased by Mark O’Brien. Hall Equities purchased a 3,524 square foot office building on Alpine Road.

SIGNIFICANT TRANSACTIONS

SALES ACTIVITY

PROPERTY NAME/ADDRESS SALES DATE SIZE SF BUYER CLASS

One & Two Corporate Centre Mar-14 338,989 Highridge Partners A

Danville San Ramon Medical Center Feb-14 74,599 Rassier Properties C

1465-1485 Civic Court Feb-14 64,266 Prosper Holdings B

Shadelands Executive Center Jan-14 53,832 Steve Kafka B

2055 N Broadway Mar-14 11,818 Mark O'Brien C

1204 Alpine Road Jan-14 3,524 Hall Equities C

LEASING ACTIVITY

PROPERTY NAME/ADDRESS LEASE DATE SIZE SF TENANT CLASS

PMI Plaza Feb-14 26,835 Del Monte Foods A

Concord Gateway II Mar-14 10,787 Old Republic Title Company A

Gateway Centre Mar-14 9,620 Legacy Risk & Insurance Services A

Concord Gateway I Feb-14 7,457 Dekra Certification Inc A

1957 Parkside Drive Feb-14 7,051 Anka Behavioral Health C

One Concord Center Mar-14 3,872 Equifax A

325 N Wiget Lane Feb-14 3,848 Entegris Inc C

800 S Broadway Feb-14 3,320 Rudulph & Sletten B

SUBMARKET MAP1. Walnut Creek / Pleasant Hill BART Station2. Walnut Creek Downtown3. Shadelands4. Pleasant Hill5. Lamorinda6. Martinez7. Concord8. Alamo / Danville

P. 2 | COLLIERS INTERNATIONAL

RESEARCH & FORECAST REPORT | Q1 2014 | OFFICE

Q1 2014 | MARKET COMPARISONS

OFFICE MARKETExisting Properties Absorption Construction Rents

TYPE BLDGSTOTAL

INVENTORY SF

DIRECT VACANCY

SF

DIRECT VACANCY

RATE

SUBLEASE VACANT

SF

SUBLEASE VACANCY

RATE

TOTAL VACANT

SF

VACANCY RATE

CURRENT QUARTER

VACANCY RATE

PREVIOUS QUARTER

NET ABSORPTION CURRENT SF

NET ABSORPTION

YTD SF

COMPLETED CURRENT QTR SF

UNDER CONSTRUCT.

SF

WEIGHTED ASKING

RENTAL RATE

WALNUT CREEK DT

A 20 2,745,998 321,628 11.7% 68,539 2.5% 390,167 14.2% 14.3% 3,482 3,482 - - $2.78

B 54 1,521,893 186,677 12.3% 867 0.1% 187,544 12.3% 13.3% 15,163 15,163 - - $2.20

C 22 487,569 37,513 7.7% 1,268 0.3% 38,781 8.0% 8.2% 1,158 1,158 - - $1.94

Total 96 4,755,460 545,818 11.5% 70,674 1.5% 616,492 13.0% 13.4% 19,803 19,803 - - $2.55

WALNUT CREEK PH BART

A 10 1,623,999 187,706 11.6% 0 0.0% 187,706 11.6% 14.4% 45,649 45,649 - - $2.91

B 4 164,226 13,452 8.2% 4,952 3.0% 18,404 11.2% 8.4% (4,638) (4,638) - - $2.07

Total 14 1,788,225 201,158 11.2% 4,952 0.3% 206,110 11.5% 13.8% 41,011 41,011 - - $2.83

CONCORD

A 17 3,901,864 551,474 14.1% 80,090 2.1% 631,564 16.2% 16.0% (7,579) (7,579) - - $1.89

B 36 1,028,347 172,750 16.8% 0 0.0% 172,750 16.8% 18.7% 19,215 19,215 - - $1.65

C 36 988,165 275,132 27.8% 0 0.0% 275,132 27.8% 28.2% 3,299 3,299 - - $1.17

Total 89 5,918,376 999,356 16.9% 80,090 1.4% 1,079,446 18.2% 18.5% 14,935 14,935 - - $1.67

PLEASANT HILL

A 2 188,131 64,241 34.1% 0 0.0% 64,241 34.1% 31.8% (4,485) (4,485) - - $2.25

B 16 752,263 50,335 6.7% 0 0.0% 50,335 6.7% 6.7% (113) (113) - - $1.84

C 14 240,671 13,266 5.5% 0 0.0% 13,266 5.5% 8.5% 7,104 7,104 - - $1.75

Total 32 1,181,065 127,842 10.8% 0 0.0% 127,842 10.8% 11.0% 2,506 2,506 - - $1.84

SHADELANDS

A 2 174,807 67,567 38.7% 0 0.0% 67,567 38.7% 36.0% (4,604) (4,604) - - $1.85

B 30 1,327,320 318,598 24.0% 18,400 1.4% 336,998 25.4% 25.6% 2,203 2,203 - - $1.79

C 16 423,477 109,477 25.9% 3,548 0.8% 113,025 26.7% 26.1% (2,629) (2,629) - - $1.65

Total 48 1,925,604 495,642 25.7% 21,948 1.1% 517,590 26.9% 26.6% (5,030) (5,030) - - $1.75

MARTINEZ

B 8 258,326 14,398 5.6% 0 0.0% 14,398 5.6% 26.3% 53,443 53,443 - - $1.50

C 9 266,864 107,389 40.2% 0 0.0% 107,389 40.2% 40.2% - - - - $1.40

Total 17 525,190 121,787 23.2% 0 0.0% 121,787 23.2% 33.4% 53,443 53,443 - - $1.41

LAMORINDA

A 6 248,205 4,887 2.0% 0 0.0% 4,887 2.0% 2.0% - - - - $3.35

B 26 621,572 55,147 8.9% 0 0.0% 55,147 8.9% 7.8% (6,625) (6,625) - - $2.78

C 5 128,454 20,673 16.1% 0 0.0% 20,673 16.1% 11.7% (5,609) (5,609) - - $2.25

Total 37 998,231 80,707 8.1% 0 0.0% 80,707 8.1% 6.9% (12,234) (12,234) - - $2.68

ALAMO/DANVILLE

A 3 126,821 4,464 3.5% 0 0.0% 4,464 3.5% 5.2% 2,110 2,110 - - $2.35

B 28 552,793 26,351 4.8% 0 0.0% 26,351 4.8% 4.9% 892 892 - - $2.29

C 12 203,913 18,461 9.1% 0 0.0% 18,461 9.1% 9.1% - - - - $2.23

Total 43 883,527 49,276 5.6% 0 0.0% 49,276 5.6% 5.9% 3,002 3,002 - - $2.27

MARKET TOTAL

A 60 9,009,825 1,201,967 13.3% 148,629 1.6% 1,350,596 15.0% 15.4% 34,573 34,573 - - $2.11

B 202 6,226,740 837,708 13.5% 24,219 0.4% 861,927 13.8% 15.1% 79,540 79,540 - - $1.93

C 114 2,739,113 581,911 21.2% 4,816 0.2% 586,727 21.4% 21.6% 3,323 3,323 - - $1.44

Total 376 17,975,678 2,621,586 14.6% 177,664 1.0% 2,799,250 15.6% 16.2% 117,436 117,436 - - $1.92

QUARTERLY COMPARISON AND TOTALS

1Q-14 376 17,975,678 2,621,586 14.6% 177,664 1.0% 2,799,250 15.6% 16.2% 117,436 117,436 - - $1.92

4Q-13 376 17,975,678 2,690,266 15.0% 226,420 1.3% 2,916,686 16.2% 16.2% (8,987) (93,527) $1.88

3Q-13 376 17,975,678 2,702,205 15.0% 205,494 1.1% 2,907,699 16.2% 15.4% (126,297) (84,540) - - $1.87

2Q-13 376 18,031,548 2,625,368 14.6% 159,688 0.9% 2,785,056 15.4% 15.6% 20,936 41,757 - - $1.84

1Q-13 376 18,031,548 2,682,706 14.9% 123,286 0.7% 2,805,992 15.6% 15.7% 20,821 20,821 - - $1.83

RESEARCH & FORECAST REPORT | Q1 2014 | OFFICE

COLLIERS INTERNATIONAL | P. 3

COLLIERS INTERNATIONAL

1850 Mt. Diablo Blvd. Suite 200 Walnut Creek, CA 94596TEL +1 925 279 0120FAX +1 925 279 0450

MANAGING PARTNER:

Brooks Pedder, SIORExecutive Managing Director Executive Vice PresidentTEL +1 925 279 5581 CA License No. 00902154

RESEARCHER:

Derek Daniels, CPRCResearch Analyst IITEL +1 925 279 4620

485 offices in 63 countries on 6 continentsUnited States: 146Canada: 44Latin America: 25Asia Pacific: 186EMEA: 84

> $2.1 Billion in annual revenue> 1.46 Billion* square feet under management> Over 15,800 professionals

*Square footage includes office, industrial and retail property under management. Residential property is excluded from this total. All statistics are for 2013.

This report and other research materials may be found at www.colliers.com. This report is a research document of Colliers International - Walnut Creek, California. Questions related to information herein should be directed to the Research Department at +1 925 279 4620. Information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports. © 2014 Colliers International.

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Accelerating success.

NORTH I-680 > TOTAL VACANCY VS. UNEMPLOYMENT Unemployment continues to hover above 5%.

VACANCY RATE UNEMPLOYMENT

CLASS A > DOWNTOWN WALNUT CREEK / PLEASANT HILL BART > VACANCY RATE VS. NET ABSORPTION VS. ASKING RENTS

Walnut Creek has seen a considerable upward shift in asking rents.

VACANCY RATE NET ABSORPTION ASKING RENTS

$1.00

$1.25

$1.50

$1.75

$2.00

$2.25

$2.50

$2.75

$3.00

-100,000

200,000

500,000

800,000

1,100,000

2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

Walnut  Creek  (no  Shadelands)  

Vacant SF Net Absorption Asking Rents

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

0%

4%

8%

12%

16%

20%

2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

Vacancy Rate Unemployment

RESEARCH & FORECAST REPORT | Q1 2014 | OFFICE