12-Month Forecast. 12-Month Forecast

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1 LOS ANGELES OFFICE Q4 17 Q4 18 Los Angeles Employment 4.47M 4.52M Los Angeles Unemployment % U.S. Unemployment 4.1% 3.7% *Q4 18 data represents November Q4 17 Q4 18 Vacancy 15.1% 14. YTD Net Absorption (sf) 1.8M 3.0M Under Construction (sf) 2.0M 2.5M Average Asking Rent* $3.29 $3.34 *Rental rates reflect gross asking $psf/mo 4-QTR TRAILING AVERAGE 1,500, Month Forecast 12-Month Forecast $4 With the addition of 155,000 jobs, U.S. job growth rose less than forecast in November while the unemployment rate remained at the lowest level in almost five decades, indicating some moderation in a still-healthy labor market. Locally, Los Angeles (LA) County s unemployment rate increased to 4.7% in November from 4. one year ago, with nonfarm employment increasing by 60,400 or 1.3% over the last year. The prolonged run in office-using job growth continues, albeit slower, with the professional and business services sector adding 18,600 jobs and the information sector gaining 3,800 jobs. Most industries will add jobs over the next five years, but overall, the strongest job growth will be in service providing industries, including health services and information, which is projected to add 26,000 jobs over the next five years driven by the continued adoption of more advanced technologies. Greater LA s rental growth has slowed with only a 1. annual increase, closing out the year with an average rate of $3.34 price per square foot per month (psf/mo), while direct Class A rates posted $3.64 psf/mo. LA West continues to record the highest overall asking rental rates at $4.63 psf/mo. Direct Class A asking rental rates in Beverly Hills reached $5.82 psf/mo, locking in the highest rates across the LA region. The highest year-over-year rental growth across the market was LA South, with a runaway increase of 15.3%, driven by double-digit gains in El Segundo. This submarket s average rent jumped to $3.78 psf/mo, 12.2% higher than a year ago and is now only 13.9% lower than Lower Westside s average rent of $4.39 psf/mo. 1,000,000 $3 A strong close to the year, the fourth quarter 2018 posted 1.3 million square feet (msf) of overall positive net absorption, taking the year-end total to 3.0 msf, 61.9% 500,000 $2 higher than a year ago. Downtown LA CBD and the Westside contributed 2.0 msf of that total, while the Tri-Cities submarket posted negative net absorption of -91,361 0 $1 sf. With 173,000 sf of occupancy gains in the fourth quarter, Tri-Cities was able to offset a large number of move-outs that distressed the market throughout the year. In large part due to healthy occupancy gains, the overall vacancy rate of , $0 across Greater LA mirrored post recession vacancy lows reported in 2015 and 2016, 14.4% and 14.1% respectively. The 90 basis point (bp) delta between overall Net Absorption Asking Rent, $psf/mo and direct is 1.8 msf of sublease space available, year-end saw a much lower direct vacancy of 13.6% Previous 5-Year Average = 16.3% Quarterly leasing activity averaged 3.5 msf throughout the year, the fourth quarter closed with 3.3 msf and just shy of the quarterly average. Total leasing activity of 14.0 msf for the year surpassed 2017 s leasing activity by 16.9%. Trending with the previous quarters, mega deals of 100,000 sf or more was the tale of the tape in the fourth quarter with the top five leases accounting for over 1.0 msf of total activity. Netflix furthered its commitment to Hollywood by taking down 660,000 sf at the Academy on Vine and the EPIC. With 88 sales totaling 10.5 msf in 2018, sale activity was down quarter-over-quarter both in the number of sales and total volume. However, four deals of $100 million or more traded hands in four of the major submarkets across LA. cushmanwakefield.com I 1

2 $2.65 $2.59 $2.87 $2.87 $2.99 $3.04 $3.43 $3.61 $3.94 $4.29 $4.60 $4.63 $2.99 $3.18 $3.22 $3.38 $3.53 $3.54 The overall vacancy rate continued to decline with a reported 260 bps change year-over-year to 18.6%, with direct vacancy posting at 17.9%. Occupancy gains of 865,000 sf in Bunker Hill throughout the year was the major factor in the lowest vacancy rates recorded in the CBD since Fueling these occupancy gains in Bunker Hill, the State of CA took possession of their 140,000-sf space at Wells Fargo South and City National occupied the remainder of space and expansion space for 180,000 sf at 350 S Grand. Fourth quarter leasing activity was healthy with 330,481 sf and was slightly lower than the 375,000 sf quarterly average in 2018, with year-end locking in 1.5 msf of new leases. Leasing activity was driving by Capital Groups renewal for 78,900 sf at 355 S Grand, Lockton Insurance direct lease of 69,500 sf at 777 S Figueroa and American Business Bank deal for 42,300 sf at 400 S Hope. Another coworking/flexible space provider, Carr Workplace entered the downtown market with 24,000 sf at the Bloc. Trending similar to other submarkets rental growth has slowed, closing out the year with an overall asking rate of $3.54 psf/mo. CENTRAL BUSINESS DISTRICT LOS ANGELES WEST A reduction in new office project deliveries in the fourth quarter resulted in a larger decline in LA West overall vacancy, decreasing by 50 bps to 12., the $ lowest rate since fourth quarter Strong lease-up of Class A space has reduced the amount of premium space available in the market and average 1 asking rents have increased for this product to $4.80 psf/mo. The largest increase over the year occurred in Beverly Hills where asking rental rates hiked 8.9% to $5.51 psf/mo. ByteDance, a Chinese internet tech company secured 118,975 sf of office space at 5800 Bristol Pkwy/C3. It is one of the most valuable private companies and has made a huge commitment to Culver City. Despite healthy leasing in the fourth quarter, year-to-date leasing activity decreased just 5.8% from one year ago to 3.8 msf. Occupancy growth continues with seven consecutive quarters of positive net absorption, bringing the year-to-date total to over 1.2 msf for direct space. This is more than triple the amount recorded in 2017 and paints positive market conditions and performance ahead for Rental growth slowed with a 1.7% annual increase, closing out the year with an TRI-CITIES average rate of $3.04 psf/mo, with Burbank having the highest growth of 4.. Tri-Cites direct Class A rental rates were $3.31 psf/mo at year-end. Leasing 2 activity of 380,841 sf in the fourth quarter was the highest quarter of the year, 18.7% above the quarterly average, pushing activity to 1.3 msf at year-end. The 1 largest lease was at 443 South Raymond with Bluebeam Inc. leasing 77,810 sf, while Spaces signed a lease of 48,437 sf at 680 East Colorado Blvd. At 611 Brand Blvd, Bank of America occupied 51,056 sf of space and ACCO Engineering began occupying 134,000 sf of space at 888 Walnut, an asset they purchased earlier in the year. Prior quarters had an onslaught of large move- outs, but large occupancy gains in the fourth quarter reduced negative absorption to -91,361 sf for the year. Overall vacancy declined 80 bps to 13.3%, and direct vacancy dropped to 11.2%. Sales activity finished strong with four of the top ten transactions across the GLA occurring in Tri-Cities, two in Pasadena and two in Glendale. cushmanwakefield.com I 2

3 $2.02 $2.13 $2.17 $2.29 $2.48 $2.86 $2.13 $2.21 $2.26 $2.40 $2.46 $2.52 $1.99 $2.05 $2.14 $2.15 $2.29 Although San Gabriel Valley (SGV) leasing activity in fourth quarter was the one of the lowest of the year, year-to-date leasing activity of 765,312 sf has exceeded that of the previous year by 22.. The largest lease of the quarter was signed by PBS Engineers Inc., taking 15,297 sf at Glendora Technology Center. Overall vacancy has improved 160 bps from this time last year to 12.9%. This dip in vacancy is in large part attributed to a number of large-scale move-ins this quarter for leases signed earlier in the year, with the most significant being the 79,036 sf by UTAS Aerospace Systems at the recently renovated Overland Court in San Dimas. SGV overall absorption remained positive, recording 44,968 sf at the close of the quarter, bringing the year-end figure to 230,960 sf. Despite recording only incremental rent growth over the previous quarter, overall asking rents in SGV rose $0.14 psf, or 6. year-over-year, to $2.29 psf/mo. The 210 Corridor recorded the most significant rent growth over this period, increasing $0.19 psf or 9. to $2.30 psf/mo. The strong close to the year and robust market fundamentals reflect the growing demand for the market s office product. SAN GABRIEL VALLEY 2 1 LOS ANGELES NORTH LA North average asking rental rate rose slightly by 2.8% year-over-year to $2.54 psf/mo. Strongest rent growth occurred in West Valley, increasing 4.2%, however Central Valley and Simi/Conejo Valley command the highest rates at $2.57 psf/mo and $2.58 psf/mo. Overall vacancy rate of 12. was down 60 bps from the previous quarter, as 387,612 sf of occupancy gains occurred this quarter. West 2 1 Valley and Central Valley contributed the most positive net absorption this quarter, with 195,226 sf and 107,861 sf, respectively. Several large tenants including health insurance giant Anthem Blue Cross occupied 169,320 sf at Burbank Blvd and pharmaceutical company Pharmavite took 98,397 sf at 8531 Fallbrook Ave. Leasing activity slowed in the fourth quarter posting 360,150 sf of new leasing. Despite this dip, total leasing activity reached 2.5 msf exceeding the 1.9 msf recorded in Demand was highest in West Valley in 2018 with 879,035 sf of new leasing. The South Bay office market ended the year on a strong note with a 37. yearover-year increase in leasing activity and a 15.3% annual rent growth. Even with a slight slowdown in demand in the fourth quarter, the year ended with 2.3 msf of leasing and 262,43 sf of net demand. Although the year started with an uptick in vacancy (17.9% during the first quarter), healthy demand pushed the vacancy down 120 bps by year-end, to 16.7%. Continued job growth in office-using sectors, especially those in fields related to technology, media, and entertainment has kept demand healthy, especially in El Segundo. In the last five years, this submarket has absorbed 1.1 msf of space with its overall vacancy rate decreasing by more than 300 bps during this time period. Strong demand has resulted in significant upward pressure on rents and this submarket s average rent jumped to $3.78 psf/mo. Benefitting from El Segundo's strong market momentum, the Torrance market has also seen healthy rent growth with both 190th Corridor and Central Torrance posting over 8. annual rent growth. Investor demand also continues to be healthy with 3.1 msf in sales in Overall leasing velocity is anticipated to increase in 2019 and the South Bay office market will continue to improve from both a rental and pricing perspective. LOS ANGELES SOUTH $ cushmanwakefield.com I 3

4 SUBMARKET INVENTORY SUBLET VACANT DIRECT VACANT VACANCY RATE CURRENT QTR NET ABSORPTION YTD NET ABSORPTION YTD LEASING ACTIVITY ** UNDER CONSTRUCTION AVERAGE ASKING RENT (ALL CLASSES)* AVERAGE ASKING RENT (CLASS A)* Los Angeles Downtown CBD 27,574, ,051 4,926, % 335, ,786 1,500,118 0 $3.54 $3.61 Los Angeles Downtown (Non-CBD) 8,745,597 15,042 2,186, % -5, , ,607 41,715 $3.74 $4.41 Mid-Wilshire 11,714,043 35,516 1,612, % 48, ,776 1,095, ,503 $2.63 $2.72 Los Angeles West 53,178, ,310 5,770, ,066 1,180,668 3,751,209 1,079,591 $4.63 $4.76 Los Angeles North 31,571, ,729 3,656, , ,612 2,518, ,334 $2.52 $2.62 Los Angeles South 31,012, ,587 4,843, % 46, ,043 2,290,416 0 $2.86 $3.18 Tri-Cities 24,273, ,205 2,713, % 172,924-91,361 1,283, ,267 $3.04 $3.11 San Gabriel Valley 12,505,743 33,261 1,576, % 44, , ,312 0 $2.29 $2.48 GREATER LOS ANGELES TOTALS 200,679,627 1,829,701 27,285, ,262,169 2,973,249 14,001,852 2,483,410 $3.34 $3.64 *Rental rates reflect gross asking $psf/mo **Leasing Activity does not include Renewals Key Lease Transactions Q Sunset Boulevard / Epic 327,913 Netflix, Inc. New Lease LA Central / Hollywood 1355 Vine Street / Academy South 176,273 Netflix, Inc. New Lease LA Central / Hollywood 1375 Vine Street / Academy North 159,236 Netflix, Inc. New Lease LA Central / Hollywood 5800 Bristol Parkway / C3 118,975 ByteDance New Lease LA West / Culver City 355 South Grand Avenue / Wells Fargo Center - South 78,899 Capital Group Renewal* LA Central / Bunker Hill 443 South Raymond / The Royal 77,810 Bluebeam, Inc. New Lease Tri-Cities / Pasadena 777 South Figueroa Street / 777 Tower 69,544 Lockton Insurance New Lease LA Central / Financial District 2330 Utah Avenue / Ascend 63,280 Radiology Partners New Lease LA South / El Segundo 2029 Century Park East / Century Plaza - North 52,000 Katten Muchin Rosenman Renewal* LA West / Century City 680 East Colorado Boulevard 48,437 Spaces New Lease Tri-Cities / Pasadena *Renewals not included in leasing statistics Key Sales Transactions Q North Brand Boulevard 502,200 Piedmont REIT / Beacon Capital Partners $147,000,000 / $293 Tri-Cities / Glendale 12015, 12025, & Waterfront Drive Campus at Playa Vista 306,144 Hines Securities / Heitman $330,100,000 / $970 LA West / Playa Vista 601 West 5th Street / The CalEdison Building 284,954 Lionstone Investments / GreenOak $130,100,000 / $457 LA Central / Bunker Hill 301 North Lake Avenue / Lake Carson 220,402 Operating Engineers Trust Fund / Barker Pacific Rockwood Capital JV $82,000,000 / $372 Tri-Cities / Pasadena 990 West 190th Street / Gateway Towers 217,807 The Blackstone Group / The Ruth Group $101,000,000 / $201* LA South / 190 th Street Corridor 100 Broadway / The Hubb 209,882 Singerman Real Estate Ocean West Capital Partners / Redwood Partners $60,500,000 / $288 LA South / Downtown Long Beach 700 North Central Avenue 130,666 CBRE Global Investors / Harbor Associates $28,000,000 / $214 Tri-Cities / Glendale 70 South Lake Avenue / Union Bank Building 116,458 Alliance Bernstein & Steelewave / Jade Enterprises $44,000,000 / $378 Tri-Cities / Pasadena 1333 South Mayflower Avenue / Huntington Office Center 86,000 Kare Youth League / Chase Partners $18,500,000 / $215 San Gabriel Valley / 210 Corridor Agoura Road / Malibu Canyon Business Park 44,000 Coast United Advertising / Majestic Asset Mgmt. $10,054,500 / $229 LA North / Calabasas *Price includes 4.58 acres of land and psf shown is for the two office bldgs. cushmanwakefield.com I 4

5 Explanation of Terms Total Inventory: The total amount of office space (in buildings of a predetermined size by market) that can be rented by a third party. Overall Vacancy Rate: The amount of unoccupied space (new, relet, and sublet) expressed as a percentage of total inventory. Direct Vacancy Rate: The amount of unoccupied space available directly through the landlord (excludes sublease space). Absorption: The net change in occupied space between two points in time. (Total occupied space in the present quarter minus total occupied space from the previous quarter, quoted on a net, not gross, basis.) Leasing Activity: The sum of all leases over a period of time. This includes pre-leasing activity as well as expansions. It does not include renewals. Under Construction: Industrial and office square footage that are being built and have not received certificates of occupancy (C of O). Projects which are beyond site preparation (concrete slab poured and construction is actively progressing). For C&W statistical purposes, these buildings will not be complete by the last day of the reporting quarter. Under Renovation: Office and industrial buildings that are undergoing renovation, rehabilitation or conversion and require a certificate of occupancy to be habitable. Overall Weighted Asking Rents: Gross average asking rents weighted by the amount of available direct and sublease space in Class A, B and C properties. Class A Asking Rents: Gross average asking rents weighted by the amount of available Class A direct and sublease space. Cushman & Wakefield 900 Wilshire Blvd, 24 th Floor Los Angeles, CA cushmanwakefield.com For more information, contact: Eric Kenas, Market Director, Research Tel: eric.kenas@cushwake.com Vincent Chang, Assoc. Market Director Tel: vincent.chang@cushwake.com About Cushman & Wakefield Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value by putting ideas into action for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with 48,000 employees in approximately 400 offices and 70 countries. In 2017, the firm had revenue of $6.9 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit or on Twitter Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy. cushmanwakefield.com I 5