2/6/2013

1

Market knowledge. Insight on trends. Expert forecasts.

OAKLAND CHAMBER OF COMMERCE

Vision 2020Commercial Real Estate Overview

Presented by:

Mike MoranManaging Partner

Cassidy Turley | Office Division

Bay Area Office Market

Total Building Base: 254M Square Feet

Silicon Valley12.6% | $2.91

East Bay Oakland

17.2% | $2.18

East Bay Walnut Creek15.0% | $2.09

East Bay Pleasanton

12.5% | $1.88

Marin16.9% | $2.49

San Mateo13.6% | $3.34

San Francisco8.9% | $3.63

Q4-11 Q4-12

Total Availability SF

34.0M8%

31.5M

Vacancy 13.6%8%

12.4%

Average

Asking (FS)$2.61

8%

$2.81

Gross Abs(4-Quarter Trailing)

36.1M7%

33.5M

Net Abs(4-Quarter Trailing)

7.6M 5.3M

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Bay Area Office Market

Vacancy vs. Unemployment Trend

Va

ca

ncy

Un

em

plo

ym

en

t

Post 9-11 Web 2.0 Credit Crisis

Social Media Boom

CapitalBoom

Tech Bust

0%

2%

4%

6%

8%

10%

12%

0%

5%

10%

15%

20%

25%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Unemployment Vacancy

Bay Area Employment

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Bay Area Office Market

Vacancy Comparison

8%

10%

12%

14%

16%

18%

20%

2007 2008 2009 2010 2011 2012

San Francisco Peninsula Santa Clara Oakland

Tech…Tech…Tech

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Tech…Tech…Tech

Bay Area Office Leases in 2012

77%

8%

13%

2%

Silicon Valley

75%18%

5%

2%

San Francisco

59%

12%

26%

3%

Peninsula

29%18%

24%

29%

East Bay

30% 24%

26%20%

Oakland Market

Technology

Professional & Business Services

Life Science Medical

Government & Non Profit

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Tech Migration to San Francisco

SoMa Tech Transactions

502K SF | 216M$3.92 FS Eff. $75 TI | Q1-12

238K SF | 180M$5.40 FS Eff. $100 TI | Q1-12

170K SF | 129M$4.41 IG Eff. $42 TI | Q2-12

160K SF | 120M$4.31 FS Eff. $95 TI | Q2-12

98K SF | 96M$4.72 IG Eff. $60 TI | Q2-12

1275 Market StDolby Labs354K SF$110M | $310/SF

246K SF | 132MCONFIDENTIAL

83K SF | 120M$4.49 FS Eff. $60 TI | Q2-12

370K SF | 72M$3.92 FS Eff. $75 TI | Q3-1279K SF | 91M

$3.54 FS Eff. $75 TI | Q1-12

73K SF | 66MCONFIDENTIAL

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92 Corridor Transactions

457K SF | 144M$3.18 NNN Eff. $7.50 TI | Q3-11

210K SF | 36M$2.17 NNN Eff. As Is | Q4-11

120K SF | 96M$2.67 NNN Eff. $25 TI | Q3-11

98K SF | 84M$3.61 FS Eff. $35 TI | Q4-11

88K SF | 120M$2.37 NNN Eff. $5 TI | Q1-12

80K SF | 84M$3.61 FS Eff. $5 | Q4-11

303 Velocity WyGilead360K SF$118M | $605/SF

Pac ShoresINFA296K SF$136M | $f60/SF

582K SF | 139M$3.63 NNN Eff. $65 TI | Q3-12

Silicon Valley Transactions

448K SF | 120MConfidentialQ2-11

208K SF | 120M$5.39 NNN Eff. $60 TI | Q1-12

202K SF | 120M$4.88 NNN Eff. As Is | Q3-12

184K SF | 144M$4.73 NNN Eff. $60 TI | Q2-11

97K SF | 84M$3.06 NNN Eff. $20 TI | Q2-11

157K SF | 120MConfidentialQ4-12

88K SF | 120M$3.99 NNN Eff. $50 TI | Q2-12

250K SF | 126M$3.06 NNN Eff. $15 TI | Q4-10

557K SF | 144M$3.62 NNN Eff. $50 TI | Q3-12

157K SF | 120M$2.45 NNN Eff. $80 TI | Q2-10

100K SF | 120M$3.13 NNN Eff. $44 TI | Q3-11

385K SF | 144M$3.90 NNN Eff. $60 TI | Q3-12

341K SF | 180M$3.80 NNN Eff. $60 TI | Q3-11

150K SF | 120M$3.29 NNN Eff. $55 TI | Q3-12

150K SF | 120M$3.29 NNN Eff. $50 TI | Q3-12

300K SF | 120M$3.29 NNN Eff. As Is | Q3-12

136K SF | 84M$3.56 NNN Eff. $50 TI | Q4-12

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Oakland East Bay Transactions

93K SF | 120MConfidentialQ2-12

110K SF | 84M$1.99 FS Eff. $15 | Q4-12

53K SF | 64M$2.84 FS Eff. $20 | Q1-12

52K SF | 128M$1.20 NNN Eff. $40 | Q3-12

48K SF | 84M$2.76 FS Eff. $20 | Q3-12

44K SF ConfidentialQ3-12

36K SF | 54M$1.27 IG Eff. $23 | Q1-12

36K SF | 132M$2.92 FS Eff. $40 | Q1-12

34K SF | 84M$1.64 FS Eff. $12 | Q3-12

30K SF | 61M$3.08 FS Eff. $50 | Q3-12

Bay Area Office Absorption

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Bay Area Office Market

Rental Rate Comparison (Monthly/Square Foot)

$3.62

$3.34

$2.77

$2.49

$2.18$2.09

$1.88

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

SF Pen. SC Marin Oak WC Pls.

Bay Area Venture Capital Funding

Source: PricewaterhouseCoopers Money Tree

Dollar Volume by Region (Q4-2012)

Silicon Valley

New England

NY Metro

LA/Orange County

Northwest

SouthWest

Midwest

Southeast

Texas

San Diego

DC/Metroplex

Colorado

North Central

Philadelphia Metro

South Central

Upstate NY

Funding ($M) Deals

$2,619.43 309

$826.10 114

$512.83 107

$452.96 70

$447.27 38

$241.51 20

$234.23 79

$215.66 36

$194.70 33

$180.83 24

$170.39 39

$127.72 21

$99.77 13

$81.18 43

$57.20 6

$19.95 12

Total US $6,396.80 968

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Bay Area Venture Capital Funding

Source: PricewaterhouseCoopers Money Tree

Quarterly Volume Trend (Dollar Volume; Deals)

0

100

200

300

400

500

600

$0

$2

$4

$6

$8

$10

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Investment $ Amount # of Deals

$3.3B; 359Q4-2007

$2.5B; 309Q4-2012

Bill

ions

$9.3B; 584Q2-2000

De

als

Bay Area Investment Trend

Total Dollar Volume & Cap Rate Trend ($Billions)

5%

6%

7%

8%

9%

10%

$0

$10

$20

$30

$40

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Dollar Volume (Billions) Cap Rate

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Bay Area Investment Trend

Total Dollar Volume ($Billions) by Property Type

OFC80%

IND1%

RET10%

MF9%

San Francisco: $6.7B

OFC67%

IND10%

RET6%

MF17%

Peninsula: $1.1B

OFC14%

IND13%

RET35%

MF38%

North Bay: $1.1B

OFC31%

IND11%

RET41%

MF17%

East Bay: $3.0B

OFC43%

IND30%

RET9%

MF18%

Silicon Valley: $5.8B

OFC55%

IND13%

RET16%

MF16%

Total Bay Area: $17.8B

Bay Area Investment Trend

$2,139

$7,231

$1,800

$3,490

$1,822

$856

-$1,681

-$7,163

-$2,477

-$4,137

-$693-$1,174

-$8,000

-$7,000

-$6,000

-$5,000

-$4,000

-$3,000

-$2,000

-$1,000

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

REIT Private Inst'l Equity Fund User/Other Foreign

Acq

uis

itio

ns

Dis

po

sitio

ns

Capital Sector Activity in 2012 ($Millions)

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Forecast for 2013

Office� West Bay markets to continue to lead the bay area recovery

� Migration out of San Francisco will not be the “answer” to Oakland

� Rental rates to continue rising throughout the Bay Area, Oakland and surrounding East Bay to see more pronounced growth

� Select speculative entitled projects to break ground while build-to-suit sites become of interest

Industrial� Manufacturing and new housing demands in the

region will lead to lower vacancies

� Rental rates to see modest improvement

� Projects in close proximity Port of Oakland, OAK and SFO will see strong demand

Market knowledge. Insight on trends. Expert forecasts.

OAKLAND CHAMBER OF COMMERCE

Vision 2020Commercial Real Estate Overview

Presented by:

Mike MoranManaging PartnerOffice Division