New Construction Offers Hope to Larger Users

Research & Forecast Report PLEASANTON TRI-VALLEY INDUSTRIAL Q3 2017 New Construction Offers Hope to Larger Users > Vacancy rates in the Tri-Valley industrial market are now down to a record 0.9 percent > Overall industrial average asking rate remains at a high of $0.92 psf square foot NNN > Net absorption closed the quarter at positive 21,017 square feet The Tri-Valley industrial market continues to be an owner s or landlord s market, given the overall scarcity of existing land and buildings to purchase or lease. Increasingly, tenants are recognizing that staying far ahead of their lease expiration dates is necessary and to their advantage, and increasingly, with the lack of options, tenants are forced to negotiate the best renewal deal they possibly can in a strong landlord market. The overall vacancy rate for light industrial and warehouse buildings in the Tri-Valley region continues its drop to a record low of 0.6 percent. At of the end of September 2017, there was a total of only 169,296 square feet of available industrial product to lease or purchase. Market Indicators Unemployment Rate 10-Year Nominal Consumer Tri-Valley Interest Rate Confidence 4.1% Market Trends Relative to prior period Q3 2017 Q4 2017* Vacancy Net Absorption Construction 2.33 119.8 Rental Rate Historical Vacancy and Average Asking Rates Tri-Valley Overall 5% 4% 3% 2% 1% 0% 4Q 2015 1Q 2Q 3Q 2016 2016 2016 Vacancy Vacancy Rate $1.00 4Q 1Q 2Q 3Q 2016 2017 2017 2017 Wtd Avg Asking Weighted Average Asking Demonstrating the strength of the industrial market, the Tri-Valley s vacancy hit a record low of 0.9 percent by the end of the third quarter. As the vacancy dropped over the past year, average asking rates spiked. Pricing pressure expects to continue in the next coming months and into 2018. *Projected Summary Statistics Q3 2017 Tri-Valley Industrial Market Previous Quarter Current Quarter Vacancy Rate 1.0% 0.9% Overall Asking Rate* $0.92 $0.92 Light Industrial Asking Rate* $1.08 $1.04 Whse/Dist Asking Rate* $0.62 $0.72 Net Absorption 15,793 21,017 Gross Absorption 160,386 161,301 *Asking rates are reported on a triple net monthly basis U.S. Economic Indicators Unemployment Rate 4.4% 4.4% Labor Force Participation Rate 62.8% 62.9% Consumer Price Index 2.44% 2.46% Interest Rate - 10 Yr Treasury 2.31% 2.33% Business Confidence 103.6 101.1 Consumer Confidence 118.9 119.8

Net absorption year-to-date was 133,265 square feet with the current quarter s positive absorption of 21,017 square feet. Given there is very little to purchase or lease, we expect rents and pricing will continue to rise going forward. Currently, there are six industrial projects under construction in the city of Livermore. All of these projects are highcube, state-of-the-art distribution/manufacturing buildings that can accommodate one relatively large tenant (80,000-265,000 square feet), with little intention, currently, to demise the spaces. The weighted average asking rents overall for Tri-Valley industrial have remained at a high of $0.92 per square foot, NNN; however, average industrial rents range widely, from $0.78 per square foot, NNN, in Livermore, to $1.22 per square foot, NNN, in Pleasanton. In the third quarter of 2017, the Tri-Valley light industrial market s vacancy rate declined from 1.2 percent to 1.0 percent from the previous quarter, with weighted average asking NNN rents settling at $1.01 per square foot. Warehouse vacancy remained flat from this quarter to last quarter, at 0.7 percent; however, the weighted average NNN asking rental rate for warehouse rose from $0.62 per square foot to $0.72 per square foot. Given that the new speculative warehouse construction planned for delivery in 2018 will not accommodate a user of less than 80,000 square feet, we expect any smaller spaces (i.e., the traditional 10,000-30,000 square foot Livermore industrial user) will continue to see upward pressure on rents, as we do not expect any new development to occur within that size range. Dublin/Pleasanton Industrial There is not much to report this quarter on the Dublin/Pleasanton light industrial leasing markets. Dublin absorbed 5,420 square feet, and the vacancy rate dropped to 3.1 percent, leaving 48,929 square feet left to lease. The Pleasanton market actually saw the vacancy rate increase to 1.3 percent; however, this only represents 34,551 square feet available for lease. Both markets weighted average asking NNN rental rates ( per square foot for Dublin, and $1.22 per square foot for Pleasanton) represent a significant premium over the Livermore market. Historical Vacancy and Average Asking Rates Tri-Valley Light Industrial 6% 5% 4% 3% 2% 1% 0% 4Q 2015 1Q 2Q 3Q 2016 2016 2016 Vacancy Vacancy Rate $1.10 $1.00 4Q 1Q 2Q 3Q 2016 2017 2017 2017 Wtd Avg Asking Weighted Average Asking Available Space by Square Foot Range 18% 15% 18% 23% 26% 0-5,000 5,001-10,000 10,001-20,000 20,001-50,000 50,001 - Above Asking Rates and Taking Rates (NNN) Tri-Valley Overall $1.00 $0.40 $0.30 $0.20 $0.40 $0.30 $0.20 $0.10 $0.10 $0.00 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017 $0.00 6800 Sierra Court - Dublin Taking Rate Asking Rate 2 Tri-Valley Research & Forecast Report Q3 2017 Industrial Colliers International

Of interest are two new industrial market listings in Pleasanton: 5675 Sunol Boulevard in Pleasanton is on 11.34 acres with improved freezer, cooler and dry storage buildings totaling 96,803 square feet. It previously served as a custom food service distribution facility for MBM. 4225 Hacienda Drive in Pleasanton consists of a 394,000 square foot regional headquarters/distribution building in Hacienda Business Park on 22.38 acres. The building has 41,000 square feet of office, 28 to 30 foot clear heights, 45 dock-high doors and additional excess land for potential expansion. It is currently leased to Veritiv and could be available in July of 2018. Employment By Category Blue Collar Service 13% 10% With no developable land available in these markets for further industrial speculative product development, most users will continue to migrate to Livermore, or further as needed, as their expansion needs dictate. Livermore Light Industrial/Warehouse White Collar 77% Livermore s light industrial vacancy rate declined further this last quarter, from 0.7 percent vacancy to 0.3 percent vacancy, leaving only 22,620 square feet left available for lease. With weighted average asking NNN rental rates at per square foot, this is a record low vacancy rate, as well as a record high asking rent, for light industrial in Livermore. While the warehouse market remained flat at 0.8 percent vacancy for the quarter, rental rates for warehouse space in Livermore now stand at a weighted average asking rental rate of $0.72 per square foot, NNN, compared to $0.56 per square foot, NNN, last year at this time. In the Oaks Business Park, Crow Holdings has just begun the marketing of their 143,000 square foot development near the Oaks Logistics Center. Scannell Properties continues to have good activity on their 85,350 square foot, planned industrial building on Jack London Boulevard. Neither one of these developers have broken ground on their sites. Gillig Corporation is in full operation on their new campus nearby, and both Tesla and Draexlmaier are open for business nearby as well. Walmart has finally decided to sell their 20 acres on the southwest corner of Jack London Boulevard and Highway 84. While the zoning on this parcel is industrial, there are multiple offers on the site from a variety of different users. In East Livermore, the Exeter Property Group has continued to keep their 13.5 acre parcel along Greenville Road on the market, as they make progress on negotiating a build-to-suit with a Fortune 500 logistics company. Crow Holdings has walls tilted, both at Bay Area Commerce Center on Hawthorne Avenue and Bay Area Commerce Center on Brisa, on speculative, high-cube manufacturing/distribution facilities, consisting of 241,591 square feet and 128,622 square feet, respectively. E&E Warehouse, formerly the Circuit City distribution warehouse (610,000 square feet) is currently under contract to a major national industrial investor, as E&E looks eastward to the Central Valley to expand their facilities. Data Source: 2017 Environics Analytics Tri-Valley should continue to see low vacancy, high prices and continued strong rents into 2018. Population 2017 305,334 2022 Projected 328,210 Data Source: 2017 Environics Analytics 7.49% Growth 2017-2022 3 Tri-Valley Research & Forecast Report Q3 2017 Industrial Colliers International

The most significant Livermore industrial sales transaction that occurred during the third quarter of 2017 was DCT Industrial s fully leased investment sale of Vasco Business Center to IPT/Black Creek Group. Built in 1988, this light industrial development consists of 95,624 square feet on 6.56 acres with significant lab space. Additionally, two smaller light industrial properties at 297 Rickenbacker Circle and 4777 Bennett Drive, consisting of 6,004 square feet and 9,019 square feet, also sold during the quarter. Historical Net Absorption and Gross Absorption 2,500,000 2,000,000 1,500,000 1,000,000 Significant Livermore lease transactions included: Pool & Electrical Products, Inc. s renewal at 6277 Industrial Way (25,451 square feet); Dash Performance Center s lease at 4647 Las Positas Road, consisting of 23,382 square feet; SCP Distributors 42,059 square foot renewal at 4671 Las Positas Road; Cingular Wireless renewal at 5771 Las Positas Road (24,166 square feet); and Performance Group, Inc. s renewal and expansion of 89,429 square feet, at 7539 Las Positas Road. This quarter, we reached record high prices for sales of developable industrial land in Livermore. The pricing for this land will undoubtedly show up in the asking prices of industrial speculative development in the year ahead. Looking Ahead If you are a tenant looking to expand your premises in the current Tri-Valley industrial market, the search should begin early, and all possible upcoming market lease expirations or shadow spaces should be considered. The traditional smaller user in the Tri-Valley industrial market (10,000-30,000 square feet) will have no new premises to consider, given that all speculative product is minimally 80,000± square feet and above. Most of the industrial land for speculative development has already traded hands and at increasingly higher prices. Given the activity on the existing speculative developments that are either under construction or shall be soon, it would not be surprising to hear about other developments planned in the near future, if one is so fortunate to be able to control developable land. Given its strategic location between the Central Valley and the I-880 Corridor and the continued strong state of warehouse, distribution and manufacturing business in Northern California, the Tri-Valley should continue to see low vacancy, high prices and continued strong rents into 2018. 500,000 0 4Q 2015 1Q 2016 2Q 2016 Net Absorption Transaction Volume SQUARE FEET 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 1,785,133 2,086,266 1,436,984 1,965,758 2008 2009 2010 2011 3Q 2016 1,849,602 2012 4Q 2016 1Q 2017 2Q 2017 Gross Absorption 2,466,270 2,466,341 2,579,585 3,021,096 2013 2014 2015 2016 3Q 2017 1,492,711 2017 7539 LAS POSITAS ROAD - LIVERMORE Performance Food Group, Inc. expanded and leased an additional 89,429 square feet at Greenville Business Center, a 267,413 square foot warehouse/distribution building. 4 Tri-Valley Research & Forecast Report Q3 2017 Industrial Colliers International

Significant Lease & Sale Activity Keller Supply Company 1 6800 Sierra Court, Dublin July 2017 20,160 Light Industrial Lease 680 SAN RAMON Daltile Corporation 4935 Southfront Road, Livermore August 2017 19,970 Warehouse/Distribution Lease Pool and Electrical Products Inc.* 6277 Industrial Way, Livermore July 2017 25,451 Warehouse/Distribution Lease Performance Food Group Inc. 1 ±25 miles to Port of Oakland DUBLIN PLEASANTON 580 7539 Las Positas Road, Livermore August 2017 89,429 Warehouse/Distribution Lease IPT/Black Creek Group 161 South Vasco Road, Livermore July 2017 LIVERMORE 95,624 Light Industrial Sale Cingular Wireless* 5771 Las Positas Road, Livermore September 2017 24,166 Warehouse/Distribution Lease SCP Distributors LLC* = LEASE 4671 Las Positas Road, Livermore September 2017 = SALE ±25 miles to Silicon Valley 42,059 Light Industrial Lease Dash Performance Center LLC 4647 Las Positas Road, Livermore September 2017 23,382 Light Industrial Lease * Renewal 1 Expansion 5 Tri-Valley Research & Forecast Report Q3 2017 Industrial Colliers International

Market Comparisons Tri-Valley INDUSTRIAL MARKET CLASS TOTAL INVENTORY DIRECT VACANT DIRECT SUBLEASE VACANT SUBLEASE TOTAL VACANT CURRENT QUARTER PRIOR QUARTER NET ABSORPTION CURRENT QTR NET ABSORPTION YTD GROSS ABSORPTION YTD COMPLETIONS CURRENT QTR UNDER CONSTRUCTION WEIGHTED AVG ASKING NNN DUBLIN Lt Ind 1,343,546 47,529 3.5% 1,400 0.1% 48,929 3.6% 4.0% 5,420 (48,929) 18,820 - - Whse 259,917-0.0% - 0.0% - 0.0% 0.0% - - - - - $ - Total 1,603,463 47,529 3.0% 1,400 0.1% 48,929 3.1% 3.4% 5,420 (48,929) 18,820 - - LIVERMORE Lt Ind 7,256,421 22,620 0.3% - 0.0% 22,620 0.3% 0.7% 30,135 91,768 243,044 - - Whse 8,024,897 43,996 0.5% 19,200 0.2% 63,196 0.8% 0.8% 1,759 113,997 267,254-128,622 $0.72 Total 15,281,318 66,616 0.4% 19,200 0.1% 85,816 0.6% 0.8% 31,894 205,765 510,298-128,622 $0.78 PLEASANTON Lt Ind 2,248,861 34,551 1.5% - 0.0% 34,551 1.5% 0.8% (16,297) (23,571) 16,709 - - $1.22 Whse 487,405-0.0% - 0.0% - 0.0% 0.0% - - - - - $ - Total 2,736,266 34,551 1.3% - 0.0% 34,551 1.3% 0.7% (16,297) (23,571) 16,709 - - $1.22 MARKET TOTAL Lt Ind 10,848,828 104,700 1.0% 1,400 0.0% 106,100 1.0% 1.2% 19,258 19,268 278,573 - - $1.01 Whse 8,772,219 43,996 0.5% 19,200 0.2% 63,196 0.7% 0.7% 1,759 113,997 267,254-128,622 $0.72 Total 19,621,047 148,696 0.8% 20,600 0.1% 169,296 0.9% 1.0% 21,017 133,265 545,827-128,622 $0.92 QUARTERLY COMPARSION AND TOTALS Q3-17 19,621,047 148,696 0.8% 20,600 0.1% 169,296 0.9% 1.0% 21,017 133,265 545,827-128,622 $0.92 Q2-17 19,621,047 163,493 0.8% 26,820 0.1% 190,313 1.0% 1.1% 15,793 112,248 384,526 633,566 128,622 $0.92 Q1-17 18,987,481 186,106 1.0% 20,000 0.1% 206,106 1.1% 1.6% 96,455 96,455 224,140-633,566 $0.73 Q4-16 18,755,698 279,616 1.5% 22,945 0.1% 302,561 1.6% 1.6% 91,753 1,850,824 2,145,751 86,700 633,566 $0.64 Q3-16 18,668,998 304,669 1.6% 2,945 0.0% 307,614 1.6% 3.7% 391,855 1,759,071 2,034,541-720,266 $0.67 161 S. VASCO ROAD LIVERMORE IPT/Black Creek Group purchased the 95,624 square foot light industrial buildings located in Vasco Business Center from DCT Industrial. This was an investment sale and was 100 percent occupied at time of sale. 6 Tri-Valley Research & Forecast Report Q3 2017 Industrial Colliers International

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