overview Colliers International Q4 Market Report Oakland Year-End 2004 B&C Fourth Quarter Office Overview COLLIERS

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1 overview Oakland Year-End 2004 A % 1 B&C Oakland Metro Area Class A Market Overall vs. Full Service Asking Rental Rates Oakland Metro Area Class B/C Market Overall vs. Full Service Asking Rental Rates Fourth Quarter Office Overview The office market in the Oakland Metropolitan Area hummed along at a balanced pace in 2004.The vacancy rate for Class A properties dropped down to 16.8%, which was nearly a decrease since the beginning of the year. Incidentally, this rate was $4.75 $4.25 $3.75 $3.25 $2.75 $1.25 $3.55 $3.30 $3.05 $2.80 $2.55 $2.30 $2.05 $1.80 $1.55 $1.05 also the lowest it has been in three years.this was due to the gradual improvement in the area s economy and speaks to the expansion of the local labor force. Average asking rents for the Class A sector continued to decline however and ended the year at $2.01 Full Service per square foot per month (psf/mo).this is down from $2.18 at the beginning of the year and we attribute the trend to the weighting of the rates. Larger spaces are more aggressively priced while the quality small spaces in the region are beginning to demand a premium. Absorption for the year was negative and most of that came out of the B and C buildings in the region. By contrast, Emeryville led the market with 166,403 square feet of net positive absorption, much of that coming from aggressive subleasing of the Siebel space. Several significant investment transactions were completed in the second half of the year, which speaks to the level of confidence that investors have in the Oakland area. Of note, Prentiss Properties purchased the 459,000 square foot Class A facility at 2101 Webster Street and CBRE Investors on behalf of California State Teachers' Retirement acquired the 279,000 square foot Class A building at 180 Grand Avenue. Additionally, Seagate Properties also closed escrow on 2850 Telegraph Avenue in Berkeley, which is a 70,510 square foot Class B facility. in the area s Class B/C and Flex market gradually increased throughout the year to close at 18.2%. Much of the impact came from three submarkets, with nearly 241,410 square feet of vacant space coming onto the market in Marina Village, Harbor Bay, and the Oakland Airport submarkets alone. Despite the overall softness in the Oakland Airport market and Harbor Bay, new construction is stimulating both markets.with the near completion of the Walmart on Hegenberger we anticipate more activity on the Hegenberger corridor. Likewise, SRM is completing several build to suit to own projects in Harbor Bay something we have not seen in quite sometime out there. We look forward to 2005 with cautious optimism. Market activity should continue to increase as the economy continues to improve and companies start to look for room to expand. Infill housing will continue to be a local economic stimulus and with that we feel the office and office/flex markets will also continue to improve. COLLIERS INTERNATIONAL colliersparrish.com 1999 Harrison St., Ste Oakland, CA USA Tel: (510) Fax: (510)

2 B ROKERS AND S TAFF MANAGING PARTNER Kenneth W. Meyersieck Managing Partner/SVP (510) kmeyersieck@colliersparrish.com INDUSTRIAL James B. Bohar Vice President (510) jbohar@colliersparrish.com RETAIL Sandra Weck Senior Vice President (510) sweck@colliersparrish.com OFFICE Aileen Dolby Vice President (510) adolby@colliersparrish.com Q4 Kevin Ebrahimi Ben F. Harrison Associate (510) bharrison@colliersparrish.com Kenneth W. Meyersieck Senior Vice President (510) kmeyersieck@colliersparrish.com Al Musante Vice President (510) amusante@colliersparrish.com Anthony Stratton Associate (510) astratton@colliersparrish.com Associate (510) kebrahimi@colliersparrish.com Trent Holsman Associate (510) tholsman@collierparrish.com Gabe I. Burke, SIOR Vice President (510) gburke@colliersparrish.com Norman J. Eggen, SIOR Senior Vice President (925) remote office neggen@colliersparrish.com David Henderson Vice President (510) dhenderson@colliersparrish.com Richard P. Keely Vice President (510) rkeely@colliersparrish.com Greig F. Lagomarsino, SIOR Senior Vice President (510) glago@colliersparrish.com James E. Morris Senior Vice President (510) jmorris@colliersparrish.com Casey Ricksen Senior Vice President (510) cricksen@colliersparrish.com Todd O. Severson, SIOR Senior Vice President (510) tseverson@colliersparrish.com Gina Mozingo Associate (510) gmozingo@colliersparrish.com ADMINISTRATIVE Patricia Folks Office Manager (510) pfolks@colliersparrish.com Kerri Nelson Administrative Assistant (510) knelson@colliersparrish.com De Anna Rivas Marketing Assistant (510) drivas@colliersparrish.com Karina Villasenor Administrative Assistant (510) kvillasenor@colliersparrish.com RESEARCH Glenda Cheng Research Director (510) gcheng@colliersparrish.com MARKETING Lisa Howard Graphic Designer (510) lhoward@colliersparrish.com

3 Oakland Downtown o f f i c e Class A Downtown Oakland s Class A market showed signs of tightening in the fourth quarter. Since the fourth quarter of 2003 direct and sublease space have seen significant declines in availability. The vacancy rate has dropped from 15.6% in the first quarter, to 13.4% by the end of the year. Tenants with smaller space requirements are beginning to run low on options as spaces below 5,000 square feet are starting to dry up. With Shorenstein s smallest available space being 2,281sf at 555 City Center, small space is becoming harder to come by. Despite this reduction in the amount of space the weighted average rental rates have actually dropped as owners with large blocks of space are dropping asking rates, while the market for smaller spaces continues to tighten and rents are starting to rise. We expect this trend of flat rates for large space and rising rates for small spaces to continue into There several significant investment deals in the last half of the year. Prentiss Properties acquired the 459,000 square foot facility on 2101 Webster Street from Pankow and the California State Teachers Retirement System bought the 279,000 square foot building on 180 Grand Avenue from Simeon Properties. There are several pending transactions as 1333 Broadway is on the market along with 1440 Broadway. The Central Building closed at $16.2 million or $119 per square foot. Class B/C The Downtown Oakland Class B/C market was relatively flat for the past year, with vacancy rates staying in the 17% to 18% range. Like other urban centers in the region there was a flight to quality as tenants moved to higher quality buildings taking advantage of the soft market and competitive rates. Leasing activity started to pick up by the end of the year however, especially for smaller space as the Class A small space market tightened. We do not anticipate significant change in the B/C market in 2005 as we believe owners of larger blocks of space will begin to divide floors to meet the demand in the market for smaller, quality spaces. Average rents in Oakland s Jack London Square rose slightly through the year to $1.69 Full Service, predominantly due to the area s hip conversion appeal. The year-end vacancy rate was 8.7% in this waterfront area, where most buildings are classified as B or C.Vacancies in these offices were 50% lower than the same class of buildings in the adjacent central business district. Most of the market dynamic in JLS has been infill residential development. At least four projects representing 350 for sale condo units were approved and scheduled to begin construction in A 21.0% 1 B&C % 1 Oakland Downtown Class A Space vs. Asking Rental Rates Oakland Class B/C Space vs. Asking Rental Rates $4.50 $4.25 $4.00 $3.75 $3.50 $3.25 $3.00 $2.75 $2.50 $2.00 $3.50 $3.25 $3.00 $2.75 $2.50 $2.00 $1.25 $1.00 As in 2004, we expect the Downtown Oakland Class A market to continue to burn off sublease spaces in 2005, either through lease transactions or lease expirations. The good news is that activity has continued to improve.

4 office Oakland Airport A B&C Oakland Airport Class A Space vs. Asking Rental Rates 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 Oakland Airport Class B/C Space vs. Asking Rental Rates $2.55 $2.40 $2.10 $1.95 $1.80 $1.65 $1.90 $1.85 $1.80 $1.70 The Oakland Airport office market continued to languish in 2004, with a significant jump in the available inventory as the year came to a close. The vacancy rate for Class A space vaulted up to 24.6%, an increase of 7% from the same time last year. As a result, rents for Class A space plummeted to $1.81 Full Service psf/mo. The vacancy rate for Class B product also saw an increase from a year ago, with numbers hovering at the 28% level and rents averaging at $1.58 Full Service psf/mo. Tenants that were actively searching in this market continued to be smaller users whose primary motivations were price and an abundance of parking. BAPR, an East Bay non-profit, leased 7,800 square feet at 7801 Edgewater Drive, while Evergreen America Corporation leased 2,500 square feet at Oakland Airport Corporate Centre. Zhone Way adjacent from the current Lexus dealership. As retail development continues to flourish, the increase in business activity should also help stimulate leasing in the office sector. $1.65 $1.60 $1.55 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q also saw the completion of the Ron Cowen Highway Road, which connects Alameda s Harbor Bay area with the Oakland Airport corridor. This will make the area even more accessible and hopefully help boost business to this submarket. On the bright side, there was positive news for the retail sector in Construction has commenced at the new Wal Mart location at Hegenberger Road and Edgewater Drives. Wal Mart signed on to be the anchor tenant in Simeon Commercial s big box site, and has helped attract other retailers to the area. Starbucks, In-N- Out Burger and Panda Express are some of the tenants who have also committed to this project. In other retail news, the Hendrick s Automotive Infinity dealership is also under construction on

5 Berkeley office Downtown Berkeley West Berkeley Urban markets with access to public transit are experiencing decreasing vacancy and increasing rental rates. Downtown Berkeley is no exception.the downtown Berkeley market had several large blocks of Class A and B office space come available in mid 4th quarter. Nearly 116,700 square feet of direct and sublease space was on the market in the fourth quarter alone, three of which are greater than 20,000 square feet.the good news is that these spaces either have activity, remaining lease term, or are in the process of being remodeled, meaning that these spaces either will not be on the market for long or will take awhile before they impact the market. Asking rents are also starting to increase, with Class A and selective Class B building rents being poised for a 5 to 15% increase in 2005 over 4th quarter rental rates. Two factors are causing rental increases; limited large blocks of space, despite the aforementioned spaces, and the continued flight to quality. Asking rental rates in the West Berkeley market remained flat throughout the year, with vacancy rates going up a little during the fourth quarter.the major transactions for this submarket consisted of sales. Meyer Crest purchased a 5,800 square foot building on 725 Folger Street at $ per square foot to house their operations. On the investment front, the Goldin Family purchased the site on 600 Bancroft Street.This parcel is in an excellent location with older buildings and will make a great rehab or residential site. DT Downtown Berkeley Office Space vs. Asking Rental Rates $3.25 $3.00 $2.75 $2.50 $2.00 The second half of the year turned out to be a good time for sale transactions. Peter Calthorpe bought the 23,520 square foot office facility on 2095 Rose Street as an owner/user for approximately $ per square foot. Prudential currently occupies the ground floor while his company will occupy the second floor. Investors were also bullish on the market. Seagate Properties closed escrow on 2850 Telegraph, which is leased partially to Alta Bates and MSRI and currently has three vacant floors of 10,000 square feet each. W West Berkeley Office Space vs. Asking Rental Rates $2.75 $2.50 $2.00 $1.25 The market was still affected by the large vacancy rates in the neighboring market of Emeryville. This market is making very aggressive deals to attract tenants.

6 office Emeryville A B/C Emeryville Class A Office Space vs. Asking Rental Rates Emeryville Class B/C & Flex Office Space vs. Asking Rental Rates $4.50 $4.25 $4.00 $3.75 $3.50 $3.25 $3.00 $2.75 $2.50 $2.00 $4.25 $4.00 $3.75 $3.50 $3.25 $3.00 $2.75 $2.50 $2.00 $1.25 $1.00 The continued interest in the City of Emeryville from residential developers, retailers and commercial tenants provided a positive outlook to the overall real estate market in the East Bay in The fourth quarter of 2004 saw Class A office vacancy rates at 26.7%, which was down 5% from this time last year. This rate is the lowest it s been in three years since the dot com implosion. And with its vacancy rate dropping steadily for the past two years it should be safe to say that Emeryville is on the mend, albeit slowly. Rents for Class A space stayed under the $2.00/psf range while Class B space commanded /psf rents on average. O-Foto, a Kodak Company and an existing Emeryville tenant, completed one of the most significant deals in the fourth quarter. They relocated from the Hollis Street Project to Simeon Commercial s Hollis Business Center, where they took 30,470 square feet for five years. Other noteworthy Class A transactions in the last half of the year included New York Life Insurance s lease for 12,000 square feet and Electronic Arts lease for 8,700 square feet at Wareham s EmeryStation Project. Several tenants migrated from the I-680 Corridor in order to retain employees and to recruit future employees to their companies. For example, E-Vault and ManageStar were two companies in 2004 that left Walnut Creek and relocated to Emeryville in an attempt to expand their businesses. state of the art Cineplex. SNK, another developer, also brought more retail space to the market during the fourth quarter. Their new project,andante, is at the corner of San Pablo Avenue and 40th Street and features approximately 15,000 square feet of retail space and 125 residential units. Continuing on the residential note, the Sares Regis Group also completed The Courtyards at 65th Street in 2004, which is a 331-unit project for lease. There are approximately twelve residential projects in the pipeline slated for completion in the next months.this has led Mavericks, a physical fitness club operator, to lease 26,000 square feet at the Marketplace in order to take advantage of Emeryville s residential growth. Though Emeryville s commercial real estate market might still be considered soft, we do believe that the tide will continue to turn in As retailers and residents continue to move into the area, we expect more companies to lease more office space to attract more employees. Emeryville s retail market continued to see positive gains. Madison Marquette s Bay Street shopping center has consistently brought new retailers to the area throughout the year. Since its inception, approximately fifty retailers have leased space at Bay Street with tenants that range from Pottery Barn,Abercrombie & Fitch, and PF Chang s to the 16 screen

7 Alameda office Ambitious projections for the beginning of an Alameda turnaround in 2004 never materialized. Improving activity at the end of the year was dampened by larger spaces returning to the market. Alameda mirrored the Oakland metro trend of marking time with no appreciable movement toward recovery. A 27.6% overall vacancy was 16.6% higher than a year ago leading to123,544 square feet in negative absorption.the two year proliferation of vacant larger space blocks continues to hamper meaningful progress. Similar to year-end 2003, these spaces were 73 % of the vacancy, totaling 635,932 square feet. The 20 spaces, which were 15,000 square feet or greater, were split between the island s two business parks. Six of the spaces were larger than 40,000 square feet, including 5 entire buildings. Marina Village, the culprit in vacancy increase during the first half of 2004, improved in the second half to finish the year in better shape than Harbor Bay. Marina Village had a vacancy rate of 26.6%, which was an increase of 16.2% from December Computer Associates, the park s major tenant, caused much of the damage when it did not renew its lease. This backslide was partially overcome by leases signed in the second half of 2004: Berkeley Heart Lab for 20,100 square feet; Weinberg Roger & Rosenfeld law firm for 20,000 square feet; Informed Decisions, 8,500 square feet; Metaswitch, 7,000 square feet. Starting rents for most lease transactions were in the range of $1.55 to $1.70 Full Service psf/mo. The last 4 acres of developable land is rumored to be close to being in contract for a housing development. Harbor Bay, the other major business park in Alameda, finished the year with a 28.7% vacancy rate, up 16.7% from the start of The fourth quarter was not kind to Harbor Bay as over 60,000 square feet was dumped on the market when Genteric left the park and the Good Guys put its space up for sublease. Positive 2004 news included: Therasense/Abbott leased 50,000 square feet of expansion in 2 buildings; the Cheese Works, a national distributor of specialty food products, moved into a new 30,000 square foot distribution building at The Waterfront project; ONE Color Communications took over 20,000 square feet in The Waterfront project; and Farmers Insurance renewed for over 16,000 square feet. Most of the signed leases had starting rents in the range of $1.55 to $1.65 Full Service psf/mo. New development in the area continued with a 40,000 square foot commercial condominium project by Venture Corporation under construction at The Waterfront. Optimism will be the key word for the first part of 2005.The steady recovery of the overall Oakland metropolitan office market along with the favorable characteristics of the island community and its housing supply should bring better news than HB MV Harbor Bay Office/Flex Space vs. Asking Rental Rates Marina Village Office/Flex Space vs. Asking Rental Rates $2.50 $2.30 $2.10 $1.90 $1.70 $3.80 $3.55 $3.30 $3.05 $2.80 $2.55 $2.30 $2.05 $1.80 $1.55

8 industrial Industrial Overview IO 1 I 1 7.0% 1.0% W 1 I-80/880 Corridor Overall Industrial Market vs. al Rates I-80/880 Corridor Light Industrial Market vs. al Rates $0.75 $0.65 $0.80 $0.75 $0.65 I-80/880 Corridor Warehouse/Distribution Market vs. al Rates Slowly, but surely, conditions in the Oakland Metropolitan Area seem to be improving. rates have slowly declined each quarter for the past year, down to by the fourth quarter. In fact, the overall industrial vacancy rate is the lowest it has been in the last three years. But even at the peak of the recession, vacancy rates for the industrial and warehouse sectors managed to stay below 10%. The R&D/Flex market was the exception, and is still struggling to recover. Though vacancy rates for the Oakland Metro were never as high as they were in neighboring metropolitan areas, they were still historically high for these strategically located submarkets. The warehouse/distribution sector made the most marked improvement, with vacancy dropping to 7.9% after finishing the year with 4.7 million square feet of combined leasing and sale activity. Though average asking rates for this sector have been relatively flat for the past year, we do expect rents to increase as the occupancy levels continue to rise. The industrial sector continued to be the healthiest segment type in the Metro Area at 6.9%. went down in most of the submarkets except Union City, which was the only submarket to post negative absorption. We believe that industrial product in the I- 80/880 Corridor is on its way to recovery and should continue to improve in 2005, barring any significant layoffs or relocations. The Bay Area s economic health is better, generally speaking, which bodes well for the Oakland Metropolitan Area. R&D I-80/880 Corridor R&D/Flex Market vs. al Rates $1.70 $1.60 $1.40 $1.20 $1.10 $1.00 $0.90 $0.80 Despite such sluggish market conditions for the R&D/Flex sector, there were signs that market activity had picked up by the mid-year juncture. Tinnsely Lab inked a lease for 30,700 square feet at 4050 Lakeside Drive in Richmond and Thermage, Inc. leased 88,391 square feet at Mt. Eden Business Park in Hayward. We expect the R&D/Flex sector in the I- 80/880 Corridor to languish until more investment in bioscience or other hightech industries can spur further growth for local companies.

9 Richmond industrial The Richmond submarket does seem to be headed towards a rebound. rates for the industrial and warehouse sectors have decreased steadily to end the year at and respectively. Much of the activity centered on sale transactions. Richmond is the only market left in the I-80/880 Corridor with large tracts of affordable developable land, which should continue to attract tenants and investors alike. There were plenty of sale transactions in the Richmond submarket in 2004, most of which were orchestrated by investors. On the industrial front, AMB Property Company purchased the Ford Distribution Center on National Court. This is a 273,660 square foot warehouse that s situated on 26-acres for $11.25 million. AMB then immediately sold the existing building on the site to Bay Area Beverage for $8.8 million, which they are renovating for their new East Bay home. Corovan Moving and Storage also purchased 10-acres of the excess land on the site are currently constructing a 140,000 square foot distribution building.amb plans to use the remaining 6 acres to construct five mid-size buildings ranging from 20,000 to 50,000 square feet. AMB has not commenced construction on this project though, and probably will not do so without precommitments from buyers. Legacy Partners also purchased 9.98-acres on Regatta Boulevard to construct nine light industrial buildings. With housing in the Bay Area becoming even more of a scarcity, residential developers continued to focus on acquiring more land to meet the demand for single family homes. KB Homes purchased 19.5-acres on the Richmond Parkway and Gertrude Street for $8.5 million with plans to build 170 single family residences. Castle Company also bought 26-acres on Atlas Road for $16.5 million with plans to build 200 single family homes. EBAID acquired 6.8-acres on 2832 Giant Road to build more affordable housing in the area. We expect the Richmond submarket to keep improving, especially as more residents move into the area. Companies will then want to lease or buy more spaces to be near their workforce. Because of this, Richmond should perform even better in I 1 1 W R&D Richmond Light Industrial Market vs. al Rates Richmond Warehouse/Distribution Market vs. al Rates Richmond R&D/Flex Market vs. al Rates $0.75 $0.65 $0.25 $0.25 $1.80 $1.70 $1.60 $1.40 $1.20 $1.10 $1.00

10 industrial Oakland I 7.0% 1.0% W 1 Oakland Industrial Space vs. Asking Rental Rates 1Q992Q993Q99 4Q991Q002Q003Q00 4Q001Q012Q01 3Q014Q011Q022Q02 3Q024Q021Q03 2Q033Q034Q031Q04 2Q043Q044Q04 Downtown Berkeley Office Space vs. Asking Rental Rates 1Q992Q993Q994Q991Q002Q003Q004Q001Q012Q013Q014Q01 1Q022Q023Q024Q021Q032Q033Q034Q031Q042Q043Q044Q04 $0.65 $0.25 $0.53 $0.48 $0.43 $0.38 $0.33 While the leasing market remained lackluster, low interest rates kept the sale market strong, and 2004 was stable for the Oakland market. The overall vacancy rate was amongst the lowest in the Metro Area, which dropped slightly during 2004 to 6.4%. The bulk of the area s leasing and sale activity occurred in the industrial sector, whose vacancy rate has steadily declined down to 4.6%. The warehouse sector was an exception however, which increased substantially from 6.6% to 9.4% in a span of one year.the explanation lies in the fact that several sizeable spaces became available in the fourth quarter, like the 133,500 square foot warehouse on th Avenue. Significant sale transactions included the Alameda County Community Food Bank s purchase of an 118,733 square foot warehouse building at 7900 Edgewater Drive. This acquisition facilitated their relocation from their leased facility at the Port of Oakland. Jack London Technology Center, a private investor, bought the Oakland Telecommunications Access Center near Jack London Square on 2nd and Brush Streets.The facility had sat vacant for several years in the wake of the dot com and telecom decline. The new owner will most likely convert the building to office space. As the retail sector at the Airport area and Jack London Square continue to flourish, the increased foot traffic should help boost industrial activity in the area as well. Simeon Properties also broke ground on a large retail complex at the corner of Hegenberger Road and I-880. The project is anchored by Walmart and includes Starbucks, Panda Express, Raiders Image, and a host of other retailers.

11 San Leandro industrial The San Leandro vacancy rate dropped even lower throughout 2004! San Leandro s overall vacancy rate has continued to decline from 7.8% at year-end 2003 to 6.5% by mid-year 2004 and now down to a year-end rate of only 5.4%. Landlords adhered to the advice of their real estate agents by lowering their asking rentals rates while increasing incentives, resulting in an increased volume of leasing activity. This leasing activity has lowered the warehouse product vacancy to 4.9%, the lowest in the I-80/880 Corridor. One of the area s largest warehouse deals was the 115,000 square foot lease to Cadbury Pacific, Snapple s Distributor, at Farallon & Wicks Boulevard, just a few blocks from the Coca Cola Bottling Plant. In fact Coca Cola, a longtime San Leandro tenant, is building a new facility, which shows their firm commitment to the area. The industrial sector s vacancy rate was reduced down to 5.4% from 6.9% a year earlier. The large manufacturers in the area continued to show fortitude as all of them remained in place, not closing down or relocating to other areas. This record of business retention produced 162,282 square feet of positive net absorption, or 25% of the available supply in the industrial sector. The Industrial asking rentals rates have adjusted lower to $.46 NNN psf/mo, down two cents from the prior year. Shifting over to the R&D/Flex sector, with a base product supply of just below 1 million square feet, we are working through a vacancy of 13.9%.This rate is lower than those of neighboring markets in Hayward and Oakland, who will need to sport extreme incentives to reduce their 20% vacancies. Volvo opened the doors of a new 40,000 square foot two-story sales center and Saturn of San Leandro is building next door along The Marina Boulevard Auto Row. Both sales centers were in-fill development sites. Other dealers in the area include Ford, GMC, Nissan, Honda and Chevrolet. Development activity continued in the retail sector with a major overhaul and upgrades going on at the BayFair Mall in South San Leandro. New tenants for the shopping center will include Kohl s Department Store and a Cinema Complex. 7.0% 1.0% I W 1 7.0% 1.0% San Leandro Light Industrial Market vs. al Rates 1Q992Q993Q99 4Q991Q002Q00 3Q004Q001Q01 2Q013Q014Q01 1Q022Q023Q02 4Q021Q032Q03 3Q034Q031Q04 2Q043Q044Q04 San Leandro Warehouse/Distribution Market vs. al Rates $0.80 $0.75 $0.65 $0.25 $0.25 Select Transactions: AMB/LEGACY PARTNERS leasing 39,000 sf to Drilling & Trenching Supplies - $.42 NNN Class A Distribution Type on Fairway Drive. MANUFACTURERS PFLUG PACKAGING AND AGRIBAG leased 65 & 62,000 sf respectively at the former Kelloggs and Simmons Mattress. PFG/LEGACY PARTNERS leased 26,000 sf to Prime Time Nutrition, from So. Calif. - $.35 NNN Class A Distribution Type on Davis Street. GEORGIA PACIFIC purchased its 250,000 sf plant and warehouse facility on Alvarado Street. BERKELEY LAND COMPANY finally sold an old 67,000 sf Class C Warehouse type on Williams Street. A user paid just under 4 million. BAYSIDE BUSINESS CENTER on Davis Street sold its first building of 37,325 sf to a user for a price tag of $89 per sf for the cold shell. DIVERSIFIED COLLECTION SERVICES vacated 32,000 sf of office space at St. Paul s, San Leandro Business Center, moving to Livermore. R&D 27.0% % 1 San Leandro R&D/Flex Market vs. al Rates $1.40 $1.20 $1.10 $1.00 $0.90 $0.80

12 industrial Hayward I 1 W R&D 2 2 Hayward Light Industrial Market vs. al Rates Hayward Warehouse/Distribution Market vs. al Rates Hayward R&D/Flex Market vs. al Rates $0.85 $0.80 $0.75 $0.65 $0.25 $0.25 $1.70 $1.10 Hayward's overall vacancy rate ended the year at 9.5% which is a 2% improvement over last year. Both sales and leasing activity was improved over 2003 resulting in approximately 885,000 SF of Net Absorption for the year. Warehouse was the most improved segment of the market with a nearly 5% drop in vacancy, 11.2% (2003) to 6.3% by year end The industrial and R&D segments vacancy rates remained virtually unchanged for the year (Industrial 10.9%, R&D 19.5%). Even with the decline in overall vacancy, the average asking rental rates slipped slightly further to $0.46 NNN psf/mo (Average asking rents, NNN:Warehouse - $0.36; Industrial - $0.49; and R&D, $0.83). Sales were active in Low interest rates, an improving economic outlook, and a continued demand to live and work in the San Francisco Bay Area resulted in a record number of building sales in Hayward. Some notable transactions were: Sprinkler Fitters Union purchase of a 32,120 square foot single story office/r&d building located on Barrington Court for $115/sf; R&B Wholesale Distributors purchase from Simeon Properties a 61,306 square foot warehouse on Industrial Boulevard for $74.50/square foot; Stafanac Trust purchase of the Bridge Point Park, 2 buildings totaling 153,819 square feet; and Royola's purchase of AMB's 230,000 square foot Wiegman Road warehouse. feet from East Group for an effective rate of $0.37 NNN psf/mo; USF Logistics 3 year lease from the Anderson Trust on 150,000 square feet on Industrial Boulevard for an effective rate of $0.33 NNN psf/mo; and Bay Wire's 5 year lease on 54,000 square feet from ProLogis on Lincoln Avenue for an effective rate of $0.37 NNN psf/mo. The overall improved sales and leasing activity in 2004 is definitely good news for the Hayward market and one positive indicator that the Bay Area economy is starting on its road to recovery. 1 $0.90 Warehouse leasing activity lead the way to improving the overall vacancy rate. Some notable lease transactions were: Uni-Marble Inc.'s 10 year lease on 57,600 square feet from Emerick Properties on Cabot Boulevard for an effective rate of $0.34 NNN psf/mo; Harington Industrial Plastics' 10 year lease on 37,000 square

13 Union City industrial The overall industrial vacancy rate for Union City stood at 11.8% as of the fourth quarter 2004, which is the highest overall vacancy rate of the five industrial submarkets in the Oakland Metropolitan area. The warehouse/distribution segment of the market has been particularily hard hit with a vacancy rate at year end of 17.3%. Both the light industrial and R&D/Flex segments of the market have remained relatively healthy with vacancy rates of 7.2% and 9.2% respectively. Average asking rates for these product types held firm at $0.53 psf per month NNN and $1.07 psf per month NNN. Warehouse/distribution asking rental rates dipped to $0.37 psf per month NNN. There were several transactions completed at the end of the year and others pending which will begin to have a meaningful impact on the Union City market in early AMB Property Corporation/Harvest Properties' Central Bay Industrial Park has sold 6 of the 7 new light industrial buildings completed at Central Avenue. The historically low interest rate environment combined with strong owner/user demand allowed AMB/Harvest to sell these light industrial buildings for record prices, ranging from $115 - $140 psf. In another noteworthy transaction, RREEF completed a lease for 78,000 square feet with Lagasse, Inc., a distributor of janitorial supplies, for 6 years at Alvarado Business Park. The effective rent for the transaction was approximately $0.38 psf per month NNN. This lease resulted from a relocation from Hayward where the tenant previously occupied 56,000 square feet at Winton Industrial Park. The second significant transaction occurred at Transit Avenue in Tulloch's Western Distribution Center. Blommers Chocolate leased 81,450 square feet in late December for a six (6) year term. The effective rent was $0.43 psf per month Industrial Gross. These transactions outlined above demonstrate some solid leasing and sales activity which will provide strong momentum as the New Year begins. We anticipate continued improvement over all product types as the general economy improves throughout the Bay Area. I 1 W % 1 R&D Union City Light Industrial Market vs. al Rates Union City Warehouse/Distribution Market vs. al Rates Union City R&D/Flex Market vs. al Rates $0.85 $0.80 $0.75 $0.65 $1.60 $1.40 $1.20 $1.10 $1.00 $0.90 $0.80

14 overview Oakland United States Akron, OH Minneapolis, MN Allentown, PA Nashville,TN Atlanta, GA New Haven, CT Austin,TX New Jersey, NJ Bakersfield, CA New York, NY Baltimore, MD Oakland, CA Beachwood, OH Ogden, UT Bellevue,WA Orlando, FL Boca Raton, FL Palo Alto, CA Boise, ID Park City, UT Boston, MA Philadelphia, PA Carlsbad, CA Phoenix, AZ Charleston, SC Pittsburgh, PA Charlotte, NC Pleasanton, CA Chicago, IL Plymouth Meeting, PA Cincinnati, OH Portland, OR Clearwater, FL Provo, UT Cleveland, OH Raleigh, NC Columbia, SC Reno, NV Dallas/Ft.Worth,TX Roseville, CA Dayton, OH Sacramento, CA Denver, CO Salt Lake City, UT Detroit, MI San Diego, CA Fairfield, CA San Francisco, CA Fort Myers, FL San Jose, CA Fresno, CA San Mateo, CA Ft. Lauderdale, FL Scottsdale, AZ Gilroy, CA Seattle,WA Greenville, SC St. Charles, MO Hartford, CT St. George, UT Honolulu, HI St. Louis, MO Houston,TX St. Paul, MN Indianapolis, IN Stamford, CT Jacksonville, FL Stockton, CA Kansas City, MO Sun Valley, ID Las Vegas, NV Tacoma,WA Los Angeles, CA Tampa, FL Louisville, KY Walnut Creek, CA Memphis,TN Washington, DC Miami, FL Wilmington, DE Milwaukee,WI Oakland Metropolitan Office Statistics Available Overall Wtd Average Asking Net Leasing Market Inventory Square Feet Full Service Rental Rate Absorption Activity Current Current 4Q03 4Q04 4Q03 4Q04 YTD 2004 YTD 2004 Class A Office Oakland DT 6,865, , % 13.4% $2.18 $ , ,908 South Richmond 0 0 NA NA NA NA 0 0 Berkeley DT 442,721 45, % 10.3% $2.30-8,359 30,198 Berkeley West 0 0 NA NA NA NA 0 0 Emeryville 2,235, , % 26.7% $1.98 $ , ,915 Marina Village 0 0 NA NA NA NA 0 0 Harbor Bay 0 0 NA NA NA NA 0 0 Oakland Airport 453, , % 24.6% $1.87 $ ,899 26,211 9,997,785 1,676, % 16.8% $2.12 $ , ,453 Class B/C & Flex Oakland DT 6,010, , % 1 $1.71 $ , ,884 South Richmond 3,436, , % 12.8% $1.29 $ ,113 98,733 Berkeley DT 1,015, , % 18.8% $2.05 $ ,241 46,781 Berkeley West 1,332, , % 14.3% $1.63 $ , ,401 Emeryville 1,749, , % 11.1% $1.60 $ , ,231 Marina Village 1,543, , % 26.6% $1.53 $ , ,117 Harbor Bay 1,610, , % 28.7% $ , ,908 Oakland Airport 1,176, , % 28.2% $1.65 $ ,530 34,534 17,875,471 3,184, % 17.8% $1.61 $ ,034 1,020,589 Totals Oakland DT 12,875,875 1,885, % 14.6% $1.96 $ , ,013 South Richmond 3,436, , % 12.8% $1.29 $ ,113 98,733 Berkeley DT 1,458, , % 16.2% $2.11 $ ,600 76,979 Berkeley West 1,332, , % 14.3% $1.63 $ , ,401 Emeryville 3,985, , % $ , ,146 Marina Village 1,543, , % 26.6% $1.53 $ , ,117 Harbor Bay 1,610, , % 28.7% $ , ,908 Oakland Airport 1,630, , % 27.2% $1.71 $ ,429 60,745 Grand Total 27,873,256 4,860, % 17.4% $1.79 $ ,576 1,848,042 Oakland Metropolitan Industrial Statistics Available Overall Wtd Average Asking Net Lease/Sale Market Inventory Square Feet NNN Rental Rate Absorption Activity Current Current 4Q03 4Q04 4Q03 4Q04 YTD 2004 YTD 2004 Industrial Richmond 5,056, , % $0.59 $ , ,301 Oakland 22,186,314 1,013, % 4.6% $0.51 $ , ,856 San Leandro 11,750, , % 5.4% $0.48 $ , ,663 Hayward 16,504,507 1,802, % 10.9% $0.49 $ ,740 1,197,914 Union City 7,883, , % 5.9% $0.54 $ , ,865 63,382,296 4,370, % 6.9% $ ,408 3,060,047 Warehouse Richmond 4,144, , % $ , ,592 Oakland 10,938,500 1,067, % 9.8% $0.39 $ , ,856 San Leandro 14,454, , % 4.9% $ , ,278 Hayward 21,078,545 1,321, % 6.3% $0.37 $0.36 1,045,048 2,083,743 Union City 7,187,526 1,161, % 16.2% $0.39 $ , ,677 57,802,946 4,587, % 7.9% $0.37 1,104,247 4,742,146 R&D/Flex Richmond 3,436, , % 12.8% $1.29 $ ,113 98,733 Oakland 328,784 73, % 22.4% $1.23 $ San Leandro 847, , % 13.9% $0.82 $ ,159 91,499 Hayward 4,579, , % 19.5% $0.89 $ , ,610 Union City 870,672 79, % 9.2% $1.08 $ ,359 19,829 10,063,461 1,606, % 1 $1.05 $ , ,671 Totals Richmond 12,637,707 1,227, % 9.7% $ , ,626 Oakland 33,453,598 2,155, % 6.4% $0.48 $ ,253 1,204,160 San Leandro 27,052,598 1,457, % 5.4% $0.42 $ ,671 1,435,440 Hayward 42,162,924 4,018, % 9.5% $0.47 $ ,603 3,693,267 Union City 15,941,876 1,706, % 10.7% $ ,268 1,376,371 Grand Total 131,248,703 10,563,998 $0.49 $0.48 1,456,637 8,423,864 COLLIERS INTERNATIONAL colliersparrish.com 1999 Harrison St., Ste Oakland, CA USA Tel: (510) Fax: (510)