SUBMARKET UPDATE

444 Castro Street, Mountain View

6.3%

6.3%

8.3%

8.3%

8.0%

$2.60

$2.80

$3.00

$3.20

$3.40

$3.60

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

Q3'08 Q4'08 Q1'09 Q2'09 Q3'09

Mountain View Office Market H istorical Vacancy vs Asking Rates

Vacancy (%) Asking Rate ($)

800 El Camino Real, Mountain View

PPRREEPPAARREEDD BBYY CCHHRRIISSTTIINNEE SSLLOONNEEKK AANNDD EELLIIZZAABBEETTHH HHAARRTT

408-727-9600 Mountain View Office Market cslonek@ccarey.com Submarket Update – 3rd Quarter, 2009

ehart@ccarey.com _______________________________________________________________________________________________________________________________

Market Statistics

Availability

Total Available (sf)

Direct (sf)

Sublease (sf)

DOWNTOWN MOUNTAIN VIEW 110,738 79,346 31,392 MOUNTAIN VIEW 471,805 411,201 60,604 SILICON VALLEY 11,740,004 10,191,181 1,548,823

After sitting at 8.3% for the previous two quarters, the vacancy rate in the Mountain View office market actually dipped to 8.27% in the Second Quarter. In the downtown Mountain View submarket, two deals completed at the end of the Second Quarter drove the vacancy rate down by two percentage points from 12.39% to 10.39%. One of these deals was a 17,589 square foot sublease between eBay/PayPal (sublessor) and Webjuice Media (sublessee) at 303 Bryant Avenue. Two buildings in the downtown market, 650 Castro Street and 800 W. El Camino, have been fully leased for several quarters but now have direct space available. There are also three large spaces available for sublease, ranging from 10,120 square feet at 444 Castro Street to another 17,589 square feet space at 303 Bryant. Although the asking rates on these spaces are lower than on direct spaces, they are not significantly lower because either the master leases were signed at a time when the rents were

trend of companies doing short term renewals as they wait to see what the economic future brings.

Total Inventory (sf)

Vacancy (%)

Net Absorption (sf)

DOWNTOWN MOUNTAIN VIEW 1,243,024 8.91% 18,397

MOUNTAIN VIEW 5,879,609 8.02% (32,312)

SILICON VALLEY 59,767,739 19.64% (207,287)

Vacancy Rate Decreases While across the Bay Area vacancy continued to rise, Mountain View was one of the few markets this quarter to see vacancy rates decrease by .3%. Relative to many markets with double digit vacancy, Mountain View has remained in the single digits throughout this downturn due to its continued attractiveness to the technology community. One contributor to the decrease in vacancy was an 11,790 sf transaction by Red Hat at 444 Castro in downtown Mountain View. While Red Hat evaluated other markets, they elected to complete a 7 year transaction/expansion and stay in Mountain View. While larger deals are still relatively few and far between, deal flow in the sub 5,000 sf range has picked up within the quarter.

Asking rates decreased by $.13 this quarter to an average of $2.85 Full Service. The year-over-year reduction has been more than 20%, which, while severe, is a much lower percentage than many of the markets who have seen up to a 50% reduction in asking rates. Notable assets in downtown Mountain View dropped their asking rates this quarter, like 800 El Camino going from $4.00 to $3.75 Full Service and 100 View Street dropping from $3.75 to $3.25 Full Service. Overall, many transactions are still being completed at a lower rate than is being asked by landlords as landlords continue to fight to maintain and increase occupancy of their assets.

SUBMARKET UPDATE

Office Availability by Submarket (Millions of SF)

0.520.59

0.47

5.041.59

3.13

0.16

0.20

0.03

Campbell Cupertino Los Gatos

Milpitas Mountain View San Jose

Santa Clara Saratoga Sunnyvale

PPRREEPPAARREEDD BBYY CCHHRRIISSTTIINNEE SSLLOONNEEKK AANNDD EELLIIZZAABBEETTHH HHAARRTT

408-727-9600 Mountain View Office Market cslonek@ccarey.com Submarket Update – 3rd Quarter, 2009

ehart@ccarey.com _________________________________________________________________________

Significant Lease Transactions

Tenant Square

Feet Type Location Red Hat 11,790 Direct Lease 444 Castro Street Suites 500 & 1110, Mountain View

Rhythm New Media 5,177 Renewal 800 El Camino Real (W) Suite 100, Mountain View Flashbay Limited 3,784 Direct Lease 569 Clyde Avenue Suites 400 & 510, Mountain View

University Of Southern California 3,249 Direct Lease 480 San Antonio Road (S) Suite 100, Mountain View

Significant Lease Availabilities Property Landlord SF Type Price

2440 El Camino Real (W), Mountain View Tishman Speyer Properties 55,290 Direct Lease $2.75 NNN 465 Fairchild Drive, Mountain View Nearon Enterprises, LLC 21,784 Direct Lease $2.00 Gross 2700 Garcia Avenue, Mountain View BE-Witched, LLC 18,522 Direct Lease $1.25 NNN

301 Whisman Road (N), Mountain View Peery/Arrillaga 17,100 Direct Lease $1.95 NNN 1981 Landings Drive, Mountain View Broadreach Capital Partners 16,388 Direct Lease $2.65 FS

2440 El Camino Real (W), Mountain View

Forecast Steady vacancy with small dips and rallies throughout the next few quarters as the general market begins to recover. Asking rates continue to decline in order to compete and maintain its tenants in a Valley where there are many other economical submarkets that can be considered. Continued expansion by tech tenants taking advantage of the downward market.