INDUSTRIAL MARKET REPORT

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Marianna Owens
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3 rd Q ua I-88 Corridor rte r2 1 7 INDUSTRIAL MARKET REPORT MARKET SNAPSHOT The Industrial market situated along the I-88 Corridor continues its long run with vacancy rates remaining very tight and

Additionally, we see more speculative construction all along the I-88 Corridor from Richmond through North San Jose; see our Under Construction section for details on the latest developments.

The ongoing question we are all asking is: How much longer will this run last?

47% I-88 Industrial Inventory: I-88 Industrial Availability: I-88 Industrial Availability Rate: 79,665,686 2,688,357 3.

1 3 rd Q ua I-88 Corridor rte r2 1 7 INDUSTRIAL MARKET REPORT MARKET SNAPSHOT The Industrial market situated along the I-88 Corridor continues its long run with vacancy rates remaining very tight and lease rates continuing to increase. Additionally, we see more speculative construction all along the I-88 Corridor from Richmond through North San Jose; see our Under Construction section for details on the latest developments. The demand continues to focus on Class A warehouse/distribution space for companies seeking last mile delivery in the Bay Area marketplace. The ongoing question we are all asking is: How much longer will this run last? North I-88 Industrial Inventory: North I-88 Industrial Availability: North I-88 Industrial Availability Rate: 57,136,732 1,412,5 2.47% I-88 Industrial Inventory: I-88 Industrial Availability: I-88 Industrial Availability Rate: 79,665,686 2,688, % Fremont/Newark Industrial Inventory: Fremont/Newark Industrial Availability: Fremont/Newark Industrial Availability Rate: 55,613,739 1,975, % KEY TERMS & DEFINITIONS Availability: Square footage that is marketed for lease which is available within 9 days. This also includes sublease space. Industrial Buildings are defined as buildings with a clearance of less than 22 with drive in truck doors; some may have dock doors. These buildings can be used by a wide variety of users. Parking is usually limited. This is the most prevalent type of industrial building. Multi-tenant/incubator is defined as an industrial building that divides into units of less than 5,± SF, with drive in truck doors and a ceiling clearance of less than 18. These buildings are ideal for expanding small businesses. Warehouse and distribution buildings have a ceiling clearance of 22 or greater, dock high doors, limited parking and an adequate apron for truck deliveries. Office/Flex/R&D buildings are characterized by having a parking ratio of at least 3/1,± SF of building. They usually have a lower clearance height and can be one or two stories. The parking enables these buildings to be flexible in the type of user they can accommodate. Any user from pure office to research & development can take advantage of the flexibility of this type of building. We recently added to our Oakland Team with the addition of Nathan Vance as our newest Associate. Nathan will be focusing on sales and leasing of industrial product along the I-88 Corridor. Welcome to the Oakland office, Nathan! We appreciate your business and invite you to contact us with any questions or comments you may have regarding commercial properties in the East Bay. We look forward to working with you in 217 and beyond! - Craig Hagglund, SIOR, Managing Principal Lee & Associates - Oakland Visit us at Lee & Associates maintains an up-to-date database of all available properties and sold/leased properties.

Lee & Associates I-88 Corridor - Industrial Market Report QUARTER IN REVIEW 3 rd Quarter 217 NORTH I-88 MARKET STATISTICS - 3 rd Quarter 217 MARKET INVENTORY RATE Buildings Total SF Direct SF

2 Lee & Associates I-88 Corridor - Industrial Market Report QUARTER IN REVIEW 3 rd Quarter 217 NORTH I-88 MARKET STATISTICS - 3 rd Quarter 217 MARKET INVENTORY RATE Buildings Total SF Direct SF Sublease SF Available SF Direct Total BERKELEY/EMERYVILLE INDUSTRIAL/WAREHOUSE 423 9,213, ,148 51, ,26 2.1% 2.65% 79 3,328,66 7,335 7,335.22%.22% TOTAL 52 12,542,25 2,483 51, , % 2.1% OAKLAND INDUSTRIAL 1,241 22,649, ,778 3, 451, % 1.99% MULTI TENANT/INCUBATOR ,246 18,287 18, % 6.28% 117 2,6,26 5,942 5, % 2.54% WAREHOUSE/DIST 83 6,314, ,5 11, , % 4.43% TOTAL 1,483 31,262, ,57 113,329 8, % 2.56% RICHMOND INDUSTRIAL 286 6,999, ,244 7,5 26, % 2.95% MULTI TENANT/INCUBATOR 23 1,142,316 17,826 3, 2, % 1.82% ,87 23,76 23,76 3.4% 3.4% WAREHOUSE/DIST 39 4,411,299 18,298 18, % 2.46% TOTAL ,332, ,74 1,5 359, % 2.7% MARKET TOTAL 2,354 57,136,732 1,237,64 174,941 1,412,5 2.17% 2.47% I-88 MARKET STATISTICS - 3 rd Quarter 217 MARKET INVENTORY RATE Buildings Total SF Direct SF Sublease SF Available SF Direct Total HAYWARD INDUSTRIAL 86 16,363,635 17,84 17,84.66%.66% MULTI TENANT/INCUBATOR 166 2,174,644 35,3 35,3 1.61% 1.61% 72 3,31, ,435 4, ,38 5.4% 5.19% WAREHOUSE/DIST ,549,229 1,23, ,841 1,143, % 5.31% TOTAL 1,323 43,388,696 1,332, ,714 1,457,6 3.7% 3.36% SAN LEANDRO INDUSTRIAL ,554, ,478 7,92 323,57 2.2% 2.58% MULTI TENANT/INCUBATOR ,162 1,511 1,511.25%.25% 34 1,386,848 2,61 2,61.19%.19% WAREHOUSE/DIST 94 7,571, ,562 9, , % 4.44% TOTAL ,17,865 53,161 16, , % 3.% UNION CITY INDUSTRIAL 19 3,443,29 24,261 24,261.7%.7% MULTI TENANT/INCUBATOR ,632.%.% ,41 13,5 13,5 2.97% 2.97% WAREHOUSE/DIST 15 9,91,63 384, , , % 5.35% TOTAL 25 14,169, ,57 145, , % 4.% MARKET TOTAL 2,142 79,665,686 2,257,554 43,83 2,688, % 3.37% FREMONT/NEWARK MARKET STATISTICS - 3 rd Quarter 217 MARKET INVENTORY RATE Total SF Direct SF Sublease SF Available SF Direct Total FREMONT/NEWARK INDUSTRIAL/WAREHOUSE 31,938, ,688 48, , % 3.11% 23,675, 888,587 93, , % 4.15% MARKET TOTAL 55,613,739 1,834, ,684 1,975, % 3.55% 2

3 Lee & Associates I-88 Corridor - Industrial Market Report QUARTER IN REVIEW 3 rd Quarter 217 HAYWARD INDUSTRIAL The Hayward market consists of roughly 43 million square feet of warehouse/distribution, industrial, multi-tenant/incubator and flex/r&d space. The Hayward market has a 3.36% vacancy rate and demand remains very high. Notable Sales from the 3 rd Quarter: 77,±SF to Ramorino Properties San Antonio Street (owner/user) Notable Leases from the 3 rd Quarter: 8,±SF to Crane Logistics Danti Court (relocation & expansion) 36,±SF to Pan Pacific Plastics Danti Court (expansion) - Craig Hagglund, SIOR SAN LEANDRO INDUSTRIAL The San Leandro market encompasses roughly 22 million square feet of warehouse/distribution, industrial, multi-tenant/ 1,4, 1,2, 1,, 8, 6, 4, 2, 4, 35, INDUSTRIAL MULTI TENANT/INCUBATOR WAREHOUSE/DIST Market surveys show the overall vacancy at 3%, which is up slightly from the end of the 2nd Quarter. Due to a continued lack of inventory, very few new leases and sales were completed in the 3 rd Quarter. Notable Sales from the 3 rd Quarter: 75,±SF to ASA Trading 23 Polvorosa Avenue (owner/user) 5,±SF to Zone 171,LLC Neptune Avenue (owner/user) 3, 25, 2, 15, 1, 5, INDUSTRIAL Notable Leases from the 3 rd Quarter: 92,±SF to Creative Energy 151 Doolittle Drive (renewal & expansion) MULTI TENANT/INCUBATOR WAREHOUSE/DIST - Doug Pearson UNION CITY INDUSTRIAL The Union City market consists of roughly 14 million square feet of warehouse/distribution, industrial, multi-tenant/ Union City has a direct vacancy rate of 4%. We continue to see rental rates and property value appreciation. No notable transactions took place in Union City in the 3 rd Quarter, in part because there is nothing on the market for sale. 6, 5, 4, Prologis put Eigenbrodt Way, the former Spicers Paper space, on the market for lease and they are expecting $.8/NNN for the ESFR equipped 135,86±SF warehouse with 28 clear height. The building was built roughly seventeen years ago. 3, 2, 1, -Jesse Lucas INDUSTRIAL MULTI TENANT/INCUBATOR WAREHOUSE/DIST 3

4 Lee & Associates I-88 Corridor - Industrial Market Report QUARTER IN REVIEW 3 rd Quarter 217 FREMONT/NEWARK INDUSTRIAL The Fremont/Newark market encompasses roughly 55 million square feet of warehouse/distribution, industrial, multi-tenant/ 1,15, The Fremont/Newark market has now posted its 17 th straight Quarter of positive net absorption. Due to historically low vacancy rates, developers continue to push forward with new projects. Overton Moore Properties & Connor Commercial recently gained approval for a spec development project totaling 11 buildings/2.53 million square feet. We forecast steady growth for the remained of 217 with continued strong demand with minimal supply. 1,1, 1,5, 1,, 95, Notable Sale from the 3 rd Quarter: 9, 8,354±SF to Dermody Properties 271 Lakeview Court 21,725±SF to RAM Properties Cedar Boulevard (transacted by Lee & Associates) INDUSTRIAL/WAREHOUSE Notable Leases from the 3 rd Quarter: 747,454±SF to Office Depot 67 Auto Mall Parkway (renewal) 47,73±SF to RK Logistics 4149 Boyce Road (transacted by Lee & Associates) -Andrew Stoddard & Garrett Drew OAKLAND INDUSTRIAL The Oakland market encompasses roughly 31 million square feet of warehouse/distribution, industrial, multi-tenant/ The 3 rd Quarter in the Oakland industrial market showed another strong performance with prices taking a big move upwards for both sale and lease transactions. The continuing lack of availability in the marketplace and the ever growing cannabis cultivation related activity has pushed rents for warehouse space under 2,±SF to over $1./SF. In many areas of Oakland, this represents 8-9% increases over a five year span. 5, 45, 4, 35, 3, 25, 2, 15, 1, 5, Notable Sales from the 3 rd Quarter: 13,68±SF to 85 Pardee Drive, LLC 852 Pardee Drive 168,±SF to Hager Pacific Properties Dennison Street 61,885±SF to TNP Real Estate Investments 24 Filbert Street INDUSTRIAL MULTI TENANT/INCUBATOR WAREHOUSE/DIST Notable Leases from the 3 rd Quarter: 36,7±SF to CFS, Inc th Avenue (renewal) 16,514±SF to SSF Imported Auto Parts 39 4 th Street (new tenant to the Oakland market) - Drew Fischer 4

5 Lee & Associates I-88 Corridor - Industrial Market Report QUARTER IN REVIEW 3 rd Quarter 217 BERKELEY/EMERYVILLE INDUSTRIAL The Berkeley & Emeryville markets consist of 12 million square feet of warehouse/distribution, industrial, multi-tenant/ 35, The Berkeley/Emeryville market saw a handful of significant sale and lease transactions in the 3 rd Quarter of , 25, In Berkeley, we have been tracking continued leasing activity at the Pyramid Brewery redevelopment project on Gilman Street, which is rumored to be fully leased with the last 3,±SF vacancy claimed by Tesla as a service facility. Berkeley is also reporting two significant sales this quarter with sale of a 2,±SF freeway frontage building at 11 Eastshore Highway to Save On Glass & Metal for $218/SF and the sale of a 3,±SF multi-tenant investment building at th Street to Berkeley Properties for $22/SF. 2, 15, 1, 5, INDUSTRIAL/WAREHOUSE Emeryville is reporting one of the larger industrial sales in the East Bay Area with the sale of the 155,±SF multi-tenant Corder property to the Yasuda Family of Berkeley Bold Grocery Store for $155/ SF, which is considered a high watermark for buildings of this type and location in the market. These sales are indicative of the continued strong appetite and competition for well-located infill assets from investors and owner-users in this small market. - Ryan Davidson RICHMOND INDUSTRIAL The Richmond market consists of roughly 13 million square feet of warehouse/distribution, industrial, multi-tenant/ The Richmond market is seeing some of its most robust growth and activity in recent years. Land is at peak value as this region is seen as one of the last areas of the I-88 Corridor with space to develop. 25, 2, 15, One Corp recently purchased a 6± Acre industrial site in the Pt. Pinole region, represented by Craig Hagglund and Ryan Davidson in our Lee & Associates Oakland office, and is building a 22,±SF Class A warehouse for Mattress City, with plans to build another 11,±SF Class A spec warehouse that will be available for lease. 1, 5, INDUSTRIAL MULTI TENANT/INCUBATOR WAREHOUSE/DIST Additionally, Serena & Lily, represented by Brian Barden and Craig Hagglund in our Lee & Associates Oakland office, leased an additional 8,±SF on Collins Avenue from Jones Development for expansion purposes. Blackcreek Group has plans to build 18,±SF in the Harbor Way area, with construction starting very soon on this speculative Class A warehouse. Lastly, Ryan Davidson & Brian Barden in our Lee & Associates Oakland office sold a 83,±SF multi-tenant industrial project on Collins Avenue to Walden Management. -Craig Hagglund, SIOR 5

6 Lee & Associates I-88 Corridor - Industrial Market Report QUARTER IN REVIEW 3 rd Quarter 217 NORTH I-88 HISTORY NORTH I-88 AVAILABLE HISTORY NORTH I-88 HISTORY 6,, 4, 5,5, 3, 5,, 2, 4,5, 1, 4,, 3,5, 3,, 2,5, 2,, 1,5, 1,, 5, , -2, -3, -4, -5, -6, -7, -8, -9, I-88 HISTORY I-88 AVAILABLE HISTORY I-88 HISTORY 1,, 75, 9,, 5, 8,, 25, 7,, 6,, -25, ,, -5, 4,, 3,, 2,, 1,, , -1,, -1,25, -1,5, -1,75, -2,, FREMONT/NEWARK HISTORY 8,, FREMONT/NEWARK AVAILABLE HISTORY 4, FREMONT/NEWARK HISTORY 325,784 7,, 6,, 5,, 4,, 3,, 2,, 5,441,426 6,7,653 6,682,74 6,389,177 6,132,581 5,539,123 4,989,579 7,18,173 6,6,955 5,525,583 5,43,362 4,663,711 4,141,778 3,193,324 3,167,29 2,42,644 1,984,778 1,683,585 2,412,836 2,229,566 2,719,642 2,176,34 1,975,959 2, -2, -4, -114,96 12,595 69, , 62,151 23, , , , ,866-1,45-316, , ,26-122, , ,174 1,, -463,86-6, , -79,637-1,, -916,344 6

I-88 Corridor NEW CONSTRUCTION 84,16±SF, MILPITAS

OVERTON MOORE & CONNOR COMMERCIAL Phase I Currently

Totaling 45,61±SF (313,978±SF & 136,632±SF) 11 Buildings

218 275,±SF, HAYWARD DEVELOPER: SHEA 296,698±SF, SAN

DEVELOPER: EVERWEST Under Construction, 4 Building

Acres Under Construction, Freestanding Class A Warehouse

DEVELOPER: TRAMMEL CROW 256,136±SF, OAKLAND DEVELOPER:

Development Class A Warehouse Development State of the

7 I-88 Corridor NEW CONSTRUCTION 84,16±SF, MILPITAS DEVELOPER: MCCARTHY RANCH 2,53,±SF, FREMONT DEVELOPER: OVERTON MOORE & CONNOR COMMERCIAL Phase I Currently Under Construction; Delivery Q2 218: Two Buildings Totaling 45,61±SF (313,978±SF & 136,632±SF) 11 Buildings on 143±Acres; Project Approved & Construction Slated For ,±SF, HAYWARD DEVELOPER: SHEA 296,698±SF, SAN LEANDRO DEVELOPER: OVERTON MOORE 5,±SF, HAYWARD DEVELOPER: EVERWEST Under Construction, 4 Building Industrial Complex Class A Warehouse Situated on 13± Acres Under Construction, Freestanding Class A Warehouse 181,75±SF, RICHMOND DEVELOPER: IPT 555,±SF, SAN LEANDRO DEVELOPER: TRAMMEL CROW 256,136±SF, OAKLAND DEVELOPER: PROLOGIS Class A Warehouse Industrial Property Trust Development Class A Warehouse Development State of the Art Class A Warehouse Development Warehouse Spec Development & New Construction on the I-88 Corridor 7

8 I-88 Corridor TRANSACTIONS Industrial - 474,454± SF Leased 67 Auto Mall Parkway, Fremont OFFICE DEPOT Industrial - 191,483± SF Leased 4177 Christy Street, Fremont RK LOGISTICS Industrial - 92,986±SF Leased 151 Doolittle Drive, Suite A-C, San Leandro CREATIVE ENERGY Industrial - 82,944± SF Leased Danti Court, Hayward CRANE WORLDWIDE LOGISTICS Industrial - 75,963± SF Leased Christy Street, Fremont THREE WAY LOGISTICS Industrial - 72,± SF Leased 3655 Collins Avenue, Richmond SERENA & LILY, INC. Industrial - 168,± SF Sold Dennison Street, Oakland HAGER PACIFIC PROPERTIES Industrial - 155,174± SF Sold 66th & 67th Street, Emeryville YASUDA FAMILY TRUST Industrial - 142,322± SF Sold Davis Court, Hayward CENTERPOINT PROPERTIES Industrial - 83,± SF Sold 371 Collins Avenue, Richmond WALDEN MANAGEMENT Industrial - 75,414± SF Sold 23 Polvorosa Avenue, San Leandro ASA TRADING Industrial - 5,4± SF Sold 151 Zephyr Avenue, Hayward CAM YUEN Go to for complete property listings 8

9 I-88 Corridor LEE AVAILABLES FOR LEASE AVAILABLE: 5.47± ACRES Smith Avenue, Newark FOR SUBLEASE AVAILABLE: 72,775± SF 3536 Arden Road, Hayward FOR LEASE AVAILABLE: 142,322± SF Davis Court, Hayward FOR SALE AVAILABLE: 1.39± ACRES 123 San Pablo Avenue, Pinole FOR LEASE AVAILABLE: 88,995± SF 71 Dwight Way, Berkeley FOR LEASE/SALE AVAILABLE: 5,3± SF 315 Hayman Street, Hayward FOR SUBLEASE AVAILABLE: 48,343± SF 3625 Arden Road, Hayward FOR SALE AVAILABLE: 44,28± SF 1833 Stearman Avenue, Hayward FOR SALE AVAILABLE: 29,45± SF O Neil Avenue, Hayward FOR LEASE AVAILABLE: 18,748± SF 3119 Huntwood Avenue, Hayward FOR SALE AVAILABLE: 12,8± SF 848 Enterprise Way, Oakland FOR SALE AVAILABLE: 7,254± SF 2 E. 14th Street, San Leandro Go to for complete property listings 9

52 3 rd Street, Suite 15, Oakland, CA 9467 www.lee-associates.

10 52 3 rd Street, Suite 15, Oakland, CA Oakland Office YOUR TEAM INDUSTRIAL AGENTS NAME TITLE PHONE NUMBER ADDRESS Brian Barden Associate bbarden@lee-associates.com Zack Barnes Associate zbarnes@lee-associates.com Ryan Davidson Principal rdavidson@lee-associates.com Garrett Drew Principal gdrew@lee-associates.com Drew Fischer Principal Craig Hagglund Principal chagglund@lee-associates.com Jesse Lucas Principal jlucas@lee-associates.com Ryan Martens Principal rmartens@lee-associates.com Doug Pearson Principal dpearson@lee-associates.com Chris Schofield Principal cschofield@lee-associates.com Michael Schofield Principal mschofield@lee-associates.com Andrew Stoddard Principal astoddard@lee-associates.com Nate Vance Associate nvance@lee-associates.com INVESTMENT AGENTS NAME TITLE PHONE NUMBER ADDRESS Rick Bland Principal rbland@lee-associates.com David Scarpinato Principal dscarpinato@lee-associates.com Winston Street Associate wstreet@lee-associates.com Guy Warren Principal gwarren@lee-associates.com OFFICE AGENTS NAME TITLE PHONE NUMBER ADDRESS Neil Cowperthwaite Associate ncowperthwaite@lee-associates.com Ben Jones Principal bjones@lee-associates.com Dave McCarty Principal dmccarty@lee-associates.com Joseph McGlynn Associate jmcglynn@lee-associates.com RETAIL AGENT NAME TITLE PHONE NUMBER ADDRESS Cass Gulden Associate cgulden@lee-associates.com MANAGING PRINCIPAL NAME TITLE PHONE NUMBER ADDRESS Mike Furay Managing Principal mfuray@lee-associates.com ABOUT LEE & ASSOCIATES Lee & Associates, founded in 1979, is one of the largest regional commercial real estate providers in the United States. Since 1979, our seasoned, motivated shareholders and professionals have been offering comprehensive quality service nationally and locally in a pro-active manner. We develop customized solutions for all of your real estates needs through our market-to-market knowledge in all property types. Our unique business model and extensive experience has helped us become one of the largest commercial real estate providers in the United States. Stay Connected: 1

INDUSTRIAL MARKET REPORT

4 th Q ua I-88 Corridor rte r2 1 7 INDUSTRIAL MARKET REPORT MARKET SNAPSHOT North I-88 Industrial Inventory: North I-88 Industrial Availability: North I-88 Industrial Availability Rate: 57,62,328 1,681,614