q2 2013 north peninsula quarterly report

Second 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 • Second 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 8.25% 8.25% 0.00% 71,386 71,386 0 62,919 46,321 $2.91

Brisbane 801,779 58.37% 57.13% 1.25% 468,034 458,034 10,000 0 (13,766) $3.01

Burlingame 3,056,035 10.29% 10.14% 0.15% 314,429 309,820 4,609 38,085 7,613 $2.11

Daly City 1,063,255 23.89% 22.96% 0.92% 253,973 244,153 9,820 0 0 $3.06

Foster City 3,221,179 18.95% 18.53% 0.42% 610,256 596,730 13,526 77,288 16,253 $3.44

Menlo Park 4,987,918 11.19% 9.16% 2.03% 558,200 457,091 101,103 78,705 (17,757) $4.90

Redwood City 4,522,588 15.30% 12.93% 2.37% 691,764 584,779 106,985 39,382 (53,311) $3.70

Redwood Shores 4,238,361 7.00% 4.51% 2.48% 296,477 191,165 105,312 136,162 36,654 $3.58

San Bruno 1,570,160 9.27% 9.27% 0.00% 145,629 145,629 0 20,102 7,242 $2.55

San Carlos 1,206,247 13.19% 12.51% 0.68% 159,130 150,944 8,186 1,160 1,160 $3.08

San Mateo 7,718,038 14.23% 13.33% 0.90% 1,098,067 1,028,578 69,489 203,401 (14,325) $3.17

South San Francisco 2,822,717 19.46% 18.39% 1.07% 549,206 518,960 30,246 26,465 (7,605) $3.02

Total 36,073,536 14.46% 13.19% 1.27% 5,216,545 4,757,269 459,276 683,669 8,479 $3.36*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

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

Belmont 377,400 0.00% 0.00% 0.00% 0 0 0 0 0 $0.00

Brisbane 682,009 82.07% 80.60% 1.47% 559,718 549,718 10,000 0 0 $3.03

Burlingame 761,231 16.44% 15.83% 0.61% 125,139 120,530 4,609 19,022 3,494 $2.51

Daly City 657,509 31.15% 30.69% 0.46% 204,830 201,822 3,008 0 0 $3.34

Foster City 2,429,243 21.53% 21.25% 0.28% 523,073 516,170 6,903 45,909 (701) $3.57

Menlo Park 3,076,277 11.99% 9.79% 2.20% 368,667 301,082 67,585 44,824 (28,762) $5.89

Redwood City 2,723,239 15.72% 11.78% 3.94% 428,064 320,860 107,204 20,704 (36,116) $3.76

Redwood Shores 3,884,464 6.74% 4.03% 2.71% 261,875 156,563 105,312 136,162 86,347 $3.76

San Bruno 827,253 3.27% 3.27% 0.00% 27,062 27,062 0 1,837 (9,647) $3.25

San Carlos 450,240 28.29% 28.29% 0.00% 127,363 127,363 0 0 0 $3.38

San Mateo 4,450,592 14.30% 13.05% 1.25% 636,520 580,968 55,552 119,063 (27,163) $3.48

South San Francisco 1,750,765 23.37% 21.97% 1.40% 409,180 384,668 24,512 22,641 (1,871) $3.47Total 22,070,222 16.64% 14.89% 1.74% 3,671,491 3,286,806 384,685 410,162 (14,419) $3.67*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)

100 Redwood Shores Parkway Redwood Shores Acxiom LBA Realty 62,7211001 Hillsdale Blvd (Sublease) Foster City Zoura Rearden Commerce 41,7062 Waters Park Drive San Mateo AdapTV TA Associates 26,934900 Concar Drive (Sublease) San Mateo Indeed Salesforce.com 22,7914000 Shoreline Court (Sublease) South San Francisco CollabNet Future US, Inc. 22,641110 Marsh Drive (Sublease) Foster City Arena Solutions AB Sciex 22,039160 Scott Drive Menlo Park DSSD, Inc. Bohannon Development Company 20,2771875 Grant Street (S) San Mateo Alienvault LLC Crossroads Associates 14,1221825 Grant Street (S) San Mateo NetSpend, Inc Crossroads Associates 12,1311810 Gateway Drive San Mateo Nexant Equity Office Properties 12,041303 Twin Dolphin Drive Redwood Shores Vindicia Provident Credit Union 12,0361818 Gilbreth Road Burlingame Women's Recovery Association Certosa Inc. 11,870101 Redwood Shores Parkway (Sublease) Redwood Shores Host Analytics Perfect World Entertainment Inc. 11,488800 Concar Drive (Renewal) San Mateo Bertram Capital Management, LLC JP Morgan 10,4021700 Seaport Blvd (Sublease) Redwood City Course Hero, Inc. Starwood Capital Group 10,133

Building City Available Direct/Sublease Size (SF)

1001 Hillsdale Blvd (E) West Tower Foster City Now Sublease 41,7064400 Bohannon Drive Menlo Park Now Sublease 28,556611 Gateway Blvd South San Francisco Now Sublease 24,5121600 Seaport Blvd Redwood City Sep. 2013 Direct 23,082275 Shoreline Drive Redwood Shores Now Sublease 20,1981200 Park Place -Bldg 4 San Mateo Now Direct 18,2001300 Seaport Blvd Redwood City Now Sublease 17,1023400 Bridge Parkway Redwood Shores Now Sublease 15,7601300 El Camino Real (S) San Mateo Now Direct 15,230348 Hatch Drive Foster City Now Direct 13,0881200 Park Place -Bldg 4 San Mateo Now Direct 11,900

Building City Buyer Seller Size (SF)

1633 Bayshore Highway Burlingame Han Qi Investments ATC Partners 104,0001235 Radio Road Redwood Shores Kennedy Wilson Properties Ltd. Premia Capital, LLC 89,000

Building City Available Size (SF)

1850 Gateway Drive San Mateo Now 142,911343 Gellert Blvd Daly City Now 7,200

LARGEST SECOND QUARTER 2013 LEASE TRANSACTIONS

SIGNIFICANT SECOND QUARTER 2013 PROPERTIES MARKETED FOR SALE

SIGNIFICANT SECOND QUARTER 2013 SALE TRANSACTIONS

SIGNIFICANT SECOND QUARTER 2013 PROPERTIES MARKETED FOR LEASE

5


OFFICE HISTORICAL STATISTICS

Year Quarter Inventory Direct Available Sublease Available Availability Absorption Rental Rates*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 4,527,499 482,740 13.89% (65,777) $3.292013/Q2 36,073,536 4,757,269 459,276 14.46% 8,479 $3.36

*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 16.38% 16.38% 0.00% 49,540 49,540 0 14,500 14,500 $1.25

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

Burlingame 512,281 6.05% 5.15% 0.90% 30,980 26,371 4,609 30,372 30,342 $2.98

Foster City 1,738,963 2.84% 2.26% 0.59% 49,443 39,243 10,200 6,391 (31,303) $1.88

Menlo Park 4,483,853 7.76% 7.58% 0.18% 347,893 33,962 7,931 30,182 (3,784) $1.59

Redwood City 2,604,635 12.10% 10.70% 1.40% 315,196 278,624 36,421 16,885 (39,623) $1.79

Redwood Shores 1,110,504 16.12% 11.58% 4.54% 179,068 128,624 50,444 48,107 (23,309) $2.83

San Carlos 751,421 19.00% 19.00% 0.00% 142,780 142,780 0 40,775 40,000 $1.36

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

South San Francisco 8,582,344 12.32% 5.29% 7.02% 1,057,059 454,151 602,908 253,090 (74,200) $2.62Total 20,346,406 10.83% 5.67% 3.65% 2,202,681 1,153,295 743,235 440,302 (87,377) $2.20*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


201 Industrial Road (Sublease) San Carlos Novartis BioMed Realty 40,7751400 Bridge Parkway (Renewal) Redwood Shores X-Time Prudential/Harvest Properties 25,637181 Constitution Drive Menlo Park InnVision Shelter Network Bohannon Trust Partnership II 16,1341100 Island Drive (Renewal) Redwood Shores Atieva, Inc. Prudential/Harvest Properties 8,171333 Allerton Avenue South San Francisco Second Genome Inc. HCP, Inc. 5,500


333 Allerton Avenue South San Francisco Now Sublease 45,505595 Penobscot Drive Redwood City Now Direct 18,512610 Galveston Drive Redwood City Now Direct 15,121111 Independence Drive Menlo Park Now Direct 15,000900 Island Drive Redwood Shores Now Direct 12,8741400 Bridge Parkway Redwood Shores Now Direct 11,620341 Oyster Point Blvd South San Francisco Now Direct 11,547323 Vintage Park Drive Foster City Now Direct 10,080


3565 Haven Avenue Menlo Park CapRock Partners Beals Martin & Associates Inc. 31,162828 Airport Blvd Burlingame Phoenix Pharmaceuticals 828 Owners, LLC 25,5582761 Fair Oaks Avenue Redwood City West Bay Housing Vela Corporation 15,0002731 Fair Oaks Avenue Redwood City North Mountain Investors, LLC Vela Corporation 10,000


333 Hatch Drive Foster City Now 33,2282731 Fair Oaks Avenue Redwood City Now 10,500




SIGNIFICANT SECOND QUARTER 2013 SALE TRANSACTIONS

9


R&D HISTORICAL STATISTICS

Quarter Inventory Direct Available Sublease Available Availability Absorption Rental Rates*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 $2.162013/Q2 20,346,406 1,153,295 743,235 10.83% (87,377) $2.20

*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 1,767,217 3.43% 3.43% 0.00% 60,545 60,545 0 880 (7,200) $1.02

Brisbane 4,312,394 12.88% 6.66% 6.22% 555,444 287,192 268,252 72,913 66,913 $0.74

Burlingame 4,345,763 5.42% 4.79% 0.63% 235,462 208,200 27,262 33,000 (20,094) $0.85

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

Foster City 577,291 3.96% 3.31% 0.66% 22,882 19,080 3,802 13,500 13,420 $1.75

Menlo Park 3,233,470 7.67% 7.31% 0.36% 247,966 236,466 11,500 5,000 (25,376) $0.83

Redwood City 4,075,726 6.57% 6.18% 0.39% 267,797 251,997 15,800 1,200 (19,275) $0.79

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 0 0 $0.78

San Carlos 3,212,475 2.14% 2.14% 0.00% 68,627 68,627 0 54,491 43,991 $0.96

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 8.23% 7.35% 0.89% 1,266,619 1,130,478 136,141 279,590 72,911 $0.68

Total 39,587,376 7.03% 5.84% 1.19% 2,783,080 2,313,498 469,582 460,574 125,290 $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


245 Spruce Avenue (S) South San Francisco Stitch Fix Prologis 83,588145 Hill Drive (S) Brisbane Del Monte Meat Company, Inc. BiRite Corp. 50,753439 Eccles Avenue South San Francisco LD Alliance Allan & Henry Inc. 40,20054 Tanforan Avenue South San Francisco SF Bus Company Phillip L & Maryann L Rogers 26,500340 Shaw Road South San Francisco CHEP Krieger Properties 25,000350 Harbor Way (Renewal) South San Francisco Target 350 Harbor Way Associates 24,624480 Valley Drive Brisbane Gizmo Spencer Trust 22,160405 Victory Avenue South San Francisco Garage Master, Inc. SSF Industrial, LLC 20,0231728 Gilbreth Road (Sublease) Burlingame Petit Pains Bay Bread, LLC 20,000400 Grandview Drive South San Francisco Hellman Worldwide Logistics Genentech Inc. 19,750238 Lawrence Avenue South San Francisco Transgroup Worldwide Lawrence Littlefield 17,500642 Quarry Road (Expansion) San Carlos DryFast Angelo & Irma Ferro 16,000503 Quarry Road San Carlos Flowers Baking Company Al Schick 14,400


437 Rozzi Place South San Francisco Now Direct 36,9421511 Adrian Road Burlingame Now Direct 28,1681200 Hamilton Court Menlo Park Sep. 2013 Direct 26,234239 Utah Avenue South San Francisco Now Direct 25,2621140 Hamilton Court Menlo Park Now Direct 22,320820 Stanton Road Burlingame Now Direct 21,500783 Broadway Redwood City Now Sublease 15,8001465 Carolan Avenue (N) Burlingame Now Direct 14,3781250 Rollins Road Burlingame Sep. 2013 Sublease 13,8521170 Hamilton Court Menlo Park Now Direct 11,176


1200-1220 San Mateo Avenue South San Francisco IIT Acquisitions, LLC Kelly & Tony Investment Company 87,230240 Littlefield Avenue South San Francisco Terreno Realty Arthur, Gilbert & Rosalinde (Trs) 85,0001050 Broadway Street Redwood City Suncap Redwood, LLC Arthur & Carol Graham 45,347480 Valley Drive Brisbane W.D. Spencer San Bruno Association 22,1603639 Haven Avenue Menlo Park Apik 7, LLC Ronald Ball 32,720490 Eccles Avenue South San Francisco Fruit Guys Llc Yasutomo & Company 31,104


233 Michelle Court South San Francisco Now 46,700820 Stanton Road Burlingame Now 21,5002900 Spring Street Redwood City Now 10,190




LARGEST SECOND QUARTER 2013 SALE TRANSACTIONS

13


INDUSTRIAL HISTORICAL STATISTICS

Year Quarter Inventory (SF) Direct Available Sublease Available Availability Absorption Rental Rates*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 $0.752013/Q2 39,587,376 2,329,498 469,582 7.07% 109,290 $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 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

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]

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q2 2013 north peninsula quarterly report

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