Q1 2013 North Peninsula Quarterly Report

First Quarter 2013 • North Peninsula Office, Flex and Industrial Space

SAN MATEO OFFICE 901 Mariners Island Boulevard, Suite 125 • San Mateo, CA 94404 • Tel: 650.341.5800 • Fax: 650.341.7024

www.ccareynkf.com

Cornish & Carey Commercial Newmark Knight Frank North Peninsula Quarterly Report is based on a quarterly survey of competitive Office, Industrial and R&D buildings. The data included in this report incorporates not only space presently available on the market, but also space that we have been led to believe will come onto the market in the foreseeable future. Information contained herein has been given to us by the owner of the property or other sources we deem reliable. We have no reason to doubt its accuracy, but make no guarantee, warranty or representation about it. All information should be verified prior to lease or purchase.

North Peninsula Office, Flex and Industrial Space • First Quarter

TABLE OF CONTENTS

Coverage Map 1

North Peninsula - Office Market Office Market Summary 2 Office Market Class A 3 Office Market Highlights 4 Office Historical Statistics 5-6 North Peninsula - R&D Market R&D Market Summary 7 R&D Market Highlights 8 R&D Historical Statistics 9-10 North Peninsula – Industrial Market Industrial Market Summary 11 Industrial Market Highlights 12 Industrial Historical Statistics 13-14 Agent Roster 15

1


COVERAGE MAP

2


OFFICE MARKET SUMMARY

Gross Net AbsorptionCity Inventory Overall Direct Sublease Overall Direct Sublease Absorption (SF) (SF) Rental Rates

Belmont 865,259 20.24% 13.60% 6.63% 175,103 117,707 57,396 5,705 (21,651) $2.62

Brisbane 801,779 57.08% 55.83% 1.25% 457,623 447,623 10,000 0 0 $3.21

Burlingame 3,063,035 10.75% 10.60% 0.15% 329,235 324,626 4,609 18,813 (24,763) $2.09

Daly City 1,063,255 23.89% 22.97% 0.92% 254,015 244,195 9,820 0 (1,638) $3.04

Foster City 3,221,179 8.77% 7.73% 1.04% 282,581 249,054 33,527 45,917 (3,080) $3.28

Menlo Park 4,982,074 10.41% 9.74% 0.68% 518,741 485,009 33,732 85,757 54,230 $5.14

Redwood City 4,532,588 14.00% 11.61% 2.39% 634,394 526,057 108,337 138,390 (108,261) $3.62

Redwood Shores 4,238,361 9.03% 7.07% 1.96% 382,824 299,815 83,009 34,206 (99,284) $3.65

San Bruno 1,570,160 9.74% 8.88% 0.85% 152,871 139,506 13,365 22,139 (16,455) $2.50

San Carlos 1,206,247 13.29% 12.61% 0.68% 160,290 152,104 8,186 105,897 98,443 $3.07

San Mateo 7,718,038 14.52% 13.25% 1.27% 1,120,961 1,022,843 98,118 349,322 49,088 $2.95

South San Francisco 2,802,066 19.33% 18.52% 0.81% 541,601 518,960 22,641 18,857 7,594 $3.02

Total 36,064,041 13.89% 12.55% 1.34% 5,010,239 4,527,499 482,740 825,003 (65,777) $3.29*Office Rental Rates are weighted averages of rate and available square footage of direct lease space. All rates are quoted as Full Service.

Availability Rate Availability (SF)

3


OFFICE MARKET CLASS A

Gross

Inventory Overall Direct Sublease Overall Direct Sublease Absorption (SF) Rental Rates

Belmont 377,400 15.21% 0.00% 15.21% 57,396 0 57,396 0 0 $3.00

Brisbane 682,009 82.07% 80.60% 1.47% 559,718 549,718 10,000 0 0 $3.22

Burlingame 761,231 16.90% 16.29% 0.61% 128,633 124,024 4,609 0 (13,035) $2.50

Daly City 657,509 31.16% 30.70% 0.46% 204,872 201,864 3,008 0 (1,638) $3.32

Foster City 2,429,243 7.35% 7.06% 0.29% 178,444 171,478 6,966 18,839 (82,817) $3.62

Menlo Park 3,076,277 11.05% 10.02% 1.03% 339,905 308,173 31,732 52,995 50,241 $5.78

Redwood City 2,723,239 14.39% 10.53% 3.86% 391,948 286,771 105,177 97,555 46,434 $3.76

Redwood Shores 3,884,464 8.97% 6.83% 2.14% 348,222 265,213 83,009 34,206 (100,335) $3.72

San Bruno 827,253 2.11% 2.11% 0.00% 17,415 17,415 0 18,703 (55) $3.25

San Carlos 450,240 28.29% 28.29% 0.00% 127,363 127,363 0 103,948 103,948 $3.36

San Mateo 4,450,592 13.72% 11.83% 1.89% 610,676 526,495 84,181 241,077 80,478 $3.18

South San Francisco 1,750,765 23.26% 21.97% 1.29% 407,309 384,668 22,641 10,666 8,790 $3.42Total 22,070,222 15.28% 13.43% 1.85% 3,371,901 2,963,182 408,719 577,989 92,011 $3.56*Office Rental Rates are weighted averages of rate and available square footage of direct lease space. All rates are quoted as Full Service.

Net Absorption (SF)


4


OFFICE MARKET HIGHLIGHTS

Building City Lessee/Sublessee Lessor/Sublessor Size (SF)

900 Concar Drive (Renewal) San Mateo Salesforce.Com JP Morgan 114,2681 Circle Star Way San Carlos Starburst I, Inc. County of San Mateo 103,948305 Main Street (N) Redwood City Sumo Logic Brugger Corporation 36,6711300 El Camino Real (S) San Mateo Platfora, Inc. TA Realty 30,2091600 Seaport Blvd (Sublease) Redwood City Zenbanx, Inc. Starwood Capital Group 24,4761850 Gateway Drive (Renewal) San Mateo Cafe Press Legacy Partners 21,441303 Twin Dolphin Drive Redwood Shores Kenandy, Inc. Provident Credit Union 18,021305 Walnut Street (Sublease) Redwood City Endurance Evernote 18,0002121 El Camino Real (S) San Mateo New York Life Insurance Company Swift Real Estate Partners 17,8061020 Marsh Road (Sublease) Menlo Park Procopio Bohannon Development Company 17,145378 Vintage Park Drive (Renewal) Foster City Gilead Sciences, Inc. CFRE Holdings I, LLC 17,0102955 Campus Drive (Expansion) San Mateo NetSuite Equity Office 14,6741350 Willow Road (Renewal) Menlo Park Poshmark Prologis 14,001

Building City Available Direct/Sublease Size (SF)

100 Cardinal Way Redwood City Now Direct 79,675200 Cardinal Way Redwood City Now Direct 79,675100 Redwood Shores Parkway Redwood Shores Now Direct 62,7212600 Campus Drive San Mateo Now Direct 30,511149 Commonwealth Drive Menlo Park Now Sublease 30,1742 Waters Park Drive San Mateo Now Direct 26,716110 Marsh Drive Foster City Jun. 2013 Sublease 22,0391400 Seaport Blvd Redwood City Now Sublease 20,275999 Baker Way San Mateo Now Sublease 13,5102121 El Camino Real (S) San Mateo Now Direct 11,516555 Twin Dolphin Drive Redwood Shores Now Direct 10,302

Building City Buyer Seller Size (SF)

350 Twin Dolphin Drive Redwood Shores Sobrato Development Companies CAC Real Estate Management Co., Inc. 75,402150 Hill Drive (N) Brisbane West Valley Properties, Inc. Dlc Brisbane 70,150330 Twin Dolphin Drive Redwood Shores Sobrato Development Companies CAC Real Estate Management Co., Inc. 45,792

Building City Available Size (SF)

1201-1235 Radio Road Redwood Shores Now 91,000

LARGEST FIRST QUARTER 2013 LEASE TRANSACTIONS

SIGNIFICANT FIRST QUARTER 2013 PROPERTIES MARKETED FOR SALE

SIGNIFICANT FIRST QUARTER 2013 SALE TRANSACTIONS

SIGNIFICANT FIRST QUARTER 2013 PROPERTIES MARKETED FOR LEASE

5


OFFICE HISTORICAL STATISTICS

Year Quarter Inventory Direct Available Sublease Available Availability Absorption Rental Rates*2008 2008/Q1 35,170,008 3,388,872 951,878 12.43% (843,094) $3.30

2008/Q2 34,928,919 3,519,686 982,969 12.89% (161,905) $3.272008/Q3 34,864,560 3,936,244 1,076,332 14.38% (509,921) $3.202008/Q4 35,170,008 4,244,208 1,231,311 15.57% (463,039) $3.04

2009 2009/Q1 35,170,008 4,549,768 1,466,782 17.11% (520,611) $2.702009/Q2 35,170,008 5,327,543 1,724,098 20.05% (945,091) $2.502009/Q3 35,112,856 5,197,926 1,653,401 19.51% (41,539) $2.502009/Q4 35,112,856 5,145,260 1,625,123 19.28% 21,259 $2.44

2010 2010/Q1 35,118,436 5,104,984 1,491,717 18.78% 110,393 $2.352010/Q2 35,123,368 5,052,103 1,212,951 17.84% 254,049 $2.322010/Q3 35,024,458 5,172,751 1,115,411 17.95% (90,759) $2.342010/Q4 35,027,712 4,971,543 1,080,901 17.28% 200,573 $2.37

2011 2011/Q1 35,027,712 4,825,469 734,256 15.87% 485,585 $2.452011/Q2 35,130,495 4,967,316 724,631 16.20% (140,626) $2.522011/Q3 35,066,274 4,736,942 631,313 15.31% 249,246 $2.752011/Q4 35,113,532 4,123,406 623,469 13.52% 541,495 $2.80

2012 2012/Q1 35,124,069 4,252,296 681,046 14.05% (228,588) $2.912012/Q2 36,842,692 4,269,053 665,339 13.39% (46,552) $3.152012/Q3 35,888,112 4,311,764 665,925 13.87% (282,059) $3.272012/Q4 35,907,638 4,468,891 586,097 14.08% (22,082) $3.27

2013 2013/Q1 36,064,041 4,526,735 482,740 13.89% (65,013) $3.29*Effective Q1 2005, Office Rental Rates are weighted averages of rate and available square footage of direct lease space. All rates are quoted as Full Service.

6


OFFICE HISTORICAL STATISTICS

7


R&D MARKET SUMMARY


Belmont 302,370 21.18% 21.18% 0.00% 64,040 64,040 0 1,000 1,000 $1.18

Brisbane 223,342 13.76% 0.00% 13.76% 30,722 0 30,722 0 0 $0.75

Burlingame 511,463 11.99% 11.09% 0.90% 61,322 56,713 4,609 0 (1,000) $1.96

Foster City 1,738,863 1.04% 0.46% 0.59% 18,140 7,940 10,200 24,872 23,414 $1.19

Menlo Park 4,483,853 8.49% 8.20% 0.30% 380,879 367,624 13,255 64,859 1,824 $1.63

Redwood City 2,604,635 12.66% 11.26% 1.40% 329,719 293,298 36,421 58,674 13,601 $1.68

Redwood Shores 1,110,504 14.03% 9.48% 4.54% 155,759 105,315 50,444 17,078 (8,794) $2.64

San Carlos 751,421 24.32% 19.00% 5.32% 182,780 142,780 40,000 9,438 (2,680) $1.61

San Mateo 36,693 0.00% 0.00% 0.00% 0 0 0 0 0 $0.00

South San Francisco 8,582,344 11.60% 5.10% 6.49% 995,443 438,040 557,403 575,740 24,358 $2.69Total 20,345,488 10.91% 7.25% 3.65% 2,218,804 1,475,750 743,054 751,661 51,723 $2.16*Average Rental Rates for R&D space are weighted averages of asking prices of available space for direct lease. All R&D rates are quoted as NNN.


8


R&D MARKET HIGHLIGHTS


180 Oyster Point Blvd South San Francisco Life Technologies, Inc. BioMed Realty Trust Inc. 115,888200 Oyster Point Blvd South San Francisco Life Technologies, Inc. BioMed Realty Trust Inc. 88,9991505 O'Brien Drive Menlo Park Circuit Therapeutics, Inc. Tarlton Properties 34,809450 Jamie Court (E) South San Francisco StemCentrix Alexandria Real Estate Equities 27,000343 Oyster Point Blvd South San Francisco Cytomx Therapeutics, Inc ARE-Technology Center SSF, LLC 24,900230 Constitution Drive Menlo Park BioTime Bohannon Development Company 24,080900 Chesapeake Drive (Sublease) Redwood City Undisclosed Tenant Health Care Property Investors, Inc. 21,620525 Chesapeake Drive Redwood City Maraxi, Inc. Metropolitan Life Insurance Company 15,3933600 Bridge Parkway Redwood Shores Merchant E-Solutions Prudential/Harvest Properties 11,897575 Chesapeake Drive Redwood City Armo Biosciences, Inc. Metropolitan Life Insurance Company 11,305600 Galveston Drive Redwood City Maraxi, Inc. Metropolitan Life Insurance Company 10,356


7000 Shoreline Court South San Francisco Jun. 2013 Sublease 41,242500 Broadway Redwood City Now Direct 26,048450 Jamie Court (E) South San Francisco Now Direct 26,0001330 O'Brien Drive Menlo Park Now Direct 25,366701 Galveston Drive Redwood City Now Direct 18,121955 Charter Street Redwood City Now Direct 13,833600 Gateway Blvd South San Francisco Now Direct 13,6091490 O'Brien Drive Menlo Park Now Direct 12,5001501 Industrial Road San Carlos Now Direct 10,875900 Island Drive Redwood Shores Now Direct 10,814


200-800 Lincoln Center Drive Foster City BioMed Realty Trust Inc. Life Technologies, Inc. 279,687700-740 Bay Road Redwood City Biomed Realty Trust, Inc. RREEF 254,358



SIGNIFICANT FIRST QUARTER 2013 SALE TRANSACTIONS

9


R&D HISTORICAL STATISTICS

Quarter Inventory Direct Available Sublease Available Availability Absorption Rental Rates*2008 2008/Q1 18,485,728 1,602,291 772,319 12.85% (219,574) $2.34

2008/Q2 18,485,728 1,664,156 976,237 14.28% (250,183) $2.562008/Q3 18,485,728 1,632,606 1,112,063 14.85% (104,276) $2.552008/Q4 18,485,728 1,774,175 1,118,929 15.65% (148,435) $2.49

2009 2009/Q1 18,485,728 2,024,141 1,165,749 17.26% (296,786) $2.222009/Q2 18,485,728 2,103,666 1,098,428 17.32% (12,204) $2.112009/Q3 18,485,728 1,774,754 1,058,062 15.32% 345,278 $1.922009/Q4 18,506,275 1,886,902 1,007,288 15.64% (61,374) $1.92

2010 2010/Q1 18,557,913 1,834,939 853,253 14.49% 178,378 $1.732010/Q2 18,557,903 1,928,037 745,445 14.41% (55,470) $1.862010/Q3 18,453,143 1,797,283 812,873 14.14% 33,216 $2.032010/Q4 18,468,143 1,825,618 872,749 14.61% (147,865) $2.06

2011 2011/Q1 18,468,143 1,649,896 865,186 13.62% 122,538 $2.142011/Q2 18,176,937 1,567,621 661,818 12.27% 97,032 $2.042011/Q3 18,176,937 1,486,441 637,821 11.69% 105,368 $2.022011/Q4 18,181,324 1,610,219 633,770 12.34% (38,985) $2.01

2012 2012/Q1 18,203,408 1,687,833 736,207 13.32% (231,800) $2.052012/Q2 19,206,906 1,677,954 628,276 12.01% (63,605) $2.152012/Q3 19,159,963 1,473,238 677,379 11.22% 126,415 $2.182012/Q4 20,203,278 1,561,255 777,079 11.57% (219,826) $2.23

2013 2013/Q1 20,345,488 1,475,750 743,054 10.91% 51,723 $2.16*Average Rental Rates for R&D space are weighted averages of asking prices of available space for direct lease. All R&D rates are quoted as NNN

10


R&D HISTORICAL STATISTICS

11


INDUSTRIAL MARKET SUMMARY


Belmont 1,753,113 3.45% 3.45% 0.00% 60,545 60,545 0 8,482 (2,124) $1.02

Brisbane 4,312,394 14.43% 8.21% 6.22% 622,357 354,105 268,252 19,200 19,200 $0.70

Burlingame 4,338,363 4.65% 3.65% 1.01% 201,942 158,254 43,688 71,680 2,478 $0.80

Daly City 1,016,311 1.03% 1.03% 0.00% 10,500 10,500 0 0 0 $0.65

Foster City 577,211 6.29% 5.63% 0.66% 36,302 32,500 3,802 1,973 (17,302) $1.75

Menlo Park 3,233,470 6.88% 6.53% 0.36% 222,590 211,090 11,500 3,382 (22,084) $0.85

Redwood City 4,075,926 6.21% 6.21% 0.00% 253,197 253,197 0 13,028 (5,480) $0.77

Millbrae 228,991 0.00% 0.00% 0.00% 0 0 0 0 0 $0.65

San Bruno 291,042 3.58% 1.24% 2.35% 10,425 3,600 6,825 9,324 5,724 $0.65

San Carlos 3,212,475 3.90% 3.90% 0.00% 125,418 125,418 0 68,293 38,841 $0.90

San Mateo 1,144,722 3.22% 3.22% 0.00% 36,813 36,813 0 0 0 $0.57

South San Francisco 15,381,974 9.23% 8.28% 0.95% 1,419,321 1,273,955 145,366 621,472 463,237 $0.69

Total 39,565,992 7.58% 6.37% 1.21% 2,999,410 2,519,977 479,433 816,834 482,490 $0.75* Industrial Rental Rates are weighted averages on asking rates during this quarter. All Industrial rates are quoted as NNN.


12


INDUSTRIAL MARKET HIGHLIGHTS


1070 San Mateo Avenue South San Francisco FedEx AG Orchard Centrum SSF, LLC 418,000370 Shaw Road South San Francisco Cintas Corporation ARES Commercial Properties, Inc. 38,400439 Eccles Avenue (Renewal) South San Francisco Service Master Allan & Henry Inc. 28,200470 Airport Blvd (S) South San Francisco Famous Furnishings Atlas Metal Spinning 25,000301 Swift Avenue (Sublease) South San Francisco BioSurplus Blake Properties 22,6601744 Rollins Road Burlingame Mixed Bag Designs, Inc. MP Building Investments 22,400935 Washington Street San Carlos Devil's Canyon Boris Wolper 22,000345 Swift Avenue South San Francisco Jet Delivery & CFI Marin County Employees Retirement Assoc. 19,900551 Eccles Avenue South San Francisco Jangho Monfredini Properties, LLC 19,800499 Valley Drive Brisbane Towne Air Freight Frito Lay 19,2002690 Middlefield Road Redwood City Specialty's Redwood Junction, LLC 15,000


1200 San Mateo Avenue South San Francisco Now Direct 33,600405 Victory Avenue South San Francisco Now Direct 28,3754020 Campbell Avenue Menlo Park Now Direct 19,4661805 Rollins Road Burlingame Now Direct 13,7201119 Chess Drive Foster City Now Direct 13,5001634 Rollins Road Burlingame Now Sublease 13,410830 Second Avenue Redwood City Now Direct 10,9321027 American Street San Carlos Now Direct 10,5001616 Rollins Road Burlingame Now Direct 10,221


708 Warrington Avenue Redwood City Ignacio & Trinidad Del Rio Vince M & Deborah Zammit 8,280150 Starlite Street South San Francisco Hughston Properties Larry & Connie Hegre 8,200551 Industrial Road San Carlos Black Mountain Properties, LLC Bay Area SMACNA 8,160

Building City Available Size (SF)

312 Grand Avenue (E) South San Francisco Now 21,3501019-1027 American Street San Carlos Now 12,8001300 Rollins Road Burlingame Now 10,877

SIGNIFICANT FIRST QUARTER 2013 PROPERTIES MARKETED FOR SALE



LARGEST FIRST QUARTER 2013 SALE TRANSACTIONS

13


INDUSTRIAL HISTORICAL STATISTICS

Year Quarter Inventory (SF) Direct Available Sublease Available Availability Absorption Rental Rates*2008 2008/Q1 41,754,288 2,028,189 258,743 5.48% (39,129) $0.85

2008/Q2 41,754,288 2,724,750 184,532 6.97% (622,350) $0.872008/Q3 39,826,900 2,810,260 184,891 7.52% (85,869) $0.852008/Q4 39,826,900 3,041,714 269,308 8.31% (315,871) $0.84

2009 2009/Q1 39,976,900 3,881,044 380,848 10.66% (950,870) $0.812009/Q2 39,976,900 4,135,691 417,706 11.39% (291,505) $0.802009/Q3 39,976,900 4,398,711 467,040 12.17% (312,354) $0.792009/Q4 39,976,900 4,311,653 362,191 11.69% 191,907 $0.77

2010 2010/Q1 39,976,891 4,412,087 419,290 12.09% (99,375) $0.772010/Q2 39,976,891 4,107,305 401,172 11.28% 322,900 $0.752010/Q3 39,976,891 4,047,381 450,020 11.25% (119,526) $0.752010/Q4 39,976,891 3,940,314 431,522 10.94% 125,565 $0.74

2011 2011/Q1 39,976,891 3,968,408 353,600 10.81% 49,828 $0.752011/Q2 39,976,891 3,984,139 362,551 10.87% (24,682) $0.742011/Q3 39,976,891 4,026,526 358,201 10.97% (38,037) $0.742011/Q4 40,079,156 4,044,833 344,348 10.95% (4,684) $0.75

2012 2012/Q1 40,196,226 4,412,396 346,639 11.84% (369,854) $0.732012/Q2 42,015,287 4,264,670 329,917 10.94% 164,448 $0.722012/Q3 39,524,214 3,367,268 564,783 9.95% (191,327) $0.732012/Q4 39,551,674 3,255,335 489,107 9.47% 26,051 $0.72

2013 2013/Q1 39,565,992 2,519,977 479,433 7.58% 482,490 $0.75*Industrial Rental Rates are weighted averages on asking rates during this quarter. All industrial rates are quoted as NNN.

14


INDUSTRIAL HISTORICAL STATISTICS

15


AGENT ROSTER SALES MANAGER

Josh Rowell Senior Vice President Managing Director 650.358.5261 [email protected]

STAFF

Virginia Kramer Administrative Office Manager 650.341.5800 [email protected]

Antonia Malhi Market Research Coordinator 650.358.5248 [email protected] Simran Atwal Associate Marketing Specialist 650.358.5244 [email protected] Melina Campos Receptionist/Admin Assistant 650.358.5200 [email protected] Maria Morales Word Processor/Admin Assistant 650.358.5288 [email protected]

INDUSTRIAL DIVISION

Jesse Cardenas 650.358.5251 [email protected]

Doug Finney 650.358.5250 [email protected] Jay Leslie 650.358.5273 [email protected] Mark Lockenmeyer 650.358.5257 [email protected] Michelle Margiotta Fraedrich 650.358.5255 [email protected] Dan Matteucci 650.358.5276 [email protected] John Weatherby 650.358.5269 [email protected] Brett Yoshihara 650.358.5247 [email protected] OFFICE DIVISION Brad Altick 650.358.5268 [email protected] Rob Conlon 650.358.5259 [email protected] Mark Courson 650.358.5272 [email protected] Kevin Delehanty [email protected] 650.358.5260 Bob Garner 650.358.5266 [email protected]

Todd Graves 650.358.5271 [email protected] Craig Kalinowski 650.358.5287 [email protected] Nick Kappler 650.358.5265 [email protected] John Kraft 650.358.5277 [email protected] Jon Mackey 650.358.5249 [email protected] Dan Matteucci 650.358.5276 [email protected] Deborah O’Reilly 650.358.5256 [email protected] Roger Oser 650.358.5262 [email protected] Josh Rowell 650.358.5261 [email protected] Graham Woodall 650.358.5274 [email protected]

mailto:[email protected]