South Bay Records Nine Straight Quarters of Rate Increases

office SOUTH BAY market report South Bay Records Nine Straight Quarters of Rate Increases Market overview MARKET indicators - VACANCY 20.0% NET ABSORPTION 210,400 CONSTRUCTION 365,300 RENTAL RATE $2.27 FSG UNEMPLOYMENT 5.9% The South Bay office market saw total vacancy decrease during the fourth quarter of 2015 by 50 basis points to 20.0% from 20.5% last quarter. Direct weighted average asking rents increased for the 9th straight quarter to $2.27 per square foot (P), per month Full Service Gross (FSG) from $2.24 P FSG last quarter. Demand for space was positive with 210,400 of net absorption, while leasing activity increased by 1,800 from last quarter s 493,100 to 494,900. The El Segundo submarket led all submarkets in both asking rents and leasing activity as tenants continue to flock to the increasingly tech-rich area while landlords look to take advantage of their interest. Investment sales volume kept pace with last quarter s total of 5 transactions. Ocean West Capital Partners acquired 100 W. Broadway in Long Beach from Adler Realty Investments, Inc. for $35.2M ($168 P). Also in Long Beach, the Ruth Group bought 211 E. Ocean Blvd. from Jamison Services, Inc. for $17.0M ($161 P) and 200 W. Ocean Blvd. sold for $10.8M ($106 P) from Milan Capital Management to MEIAO Investment. In the El Segundo/Beach Cities submarket, 1700 E. Walnut Ave. sold from USAA Real Estate Co. to a JV consisting of the Roxborough Group and Montana Avenue Capital Partners LLC for $33.5M ($280 P), while 2200 Pacific Coast Highway sold from CMD Real Esate Group to Vectra Management group for $14.3M ($398 P). MARKET trends - >> Total vacancy rate drops to 20.0% from 20.5% HISTORICAL VACANCY VS RENTS Q4 2011 - HISTORICAL net absorption & Construction COMPLETIONS Q4 2011 - >> Weighted average asking rental rate increases to $2.27 FSG >> Leasing activity drops to 494,900 55 >> There was positive absorption of 210,400 $ P FSG PER MONTH (WEIGHTED) $2.40 $2.30 $2.20 $2.10 $2.00 $1.90 $1.80 $1.70 RENTS VACANCY 24% 22% 20% 18% 16% 14% 12% % VACANT (TOTAL) 400,000 300,000 200,000 0 () (200,000) (300,000) (400,000) NET ABSORPTION CONSTRUCTION COMPLETIONS >> Construction activity at 365,300 $1.60 4Q11 4Q12 4Q13 4Q14 4Q15 10% (500,000) 4Q11 4Q12 4Q13 4Q14 4Q15 1 Colliers International continuously refines its database. As a result, data reflected in this report may not be consistent with data reported in previous quarters. www.colliers.com/losangeles

market Report OFFICE SOUTH BAY los angeles DEMOGRAPHICS >> Population: 10,136,509 (2015 Estimate) 10,510,281 (2020 Projection) 3.69% (Growth 2015-2020) >> Household income: $78,309 (Average) $54,514 (Median) >> Job growth: 1.6% (past 12 months) >> Unemployment rate: 5.9% (as of November 2015) VACANCY The total vacancy rate decreased to 20.0%, down 50 basis points from 20.5% reported last quarter. A longer historical perspective of the total vacancy rate shows the rate a year ago at 20.5% as well. As demand increases and new or renovated properties deliver in varying states of prelease, the market will continue to experience fluctuations in vacancy. Total vacancy rates continued to be highest in the LAX/Los Angeles/Westchester submarket at 38.5%. Central Torrance recorded the lowest at a rate of 12.1%. rates were highest for Class B space (23.5%) and lowest for Class A space (15.6%) with Class C space in-between at 18.3%. Classes B and A saw decreases in vacancy for the quarter. NET ABSORPTION Net absorption was 210,400 in fourth quarter 2015, with all submarkets recording positive absorption numbers. For the year, absorption was a healthy 237,000, the second highest total since 2008 and only exceeded by 2014 s total of 273,400. Major move-ins for the quarter included: Ignited USA occupying 41,874 at 800 Apollo St. in El Segundo, Regus Executive Suites taking 12,590 at 2447 Pacific Coast Highway in Hermosa Beach and indoor cycling company Zwift moved into 10,295 of space at 301 E. Ocean Blvd. in Downtown Long Beach. UNEMPLOYMENT November 2015 figures for nonfarm employment in Los Angeles County showed the lowest unemployment decrease in eight years recording at 5.9%. This is a 55.3% decrease from unemployment recording at 13.2% in July of 2010. Over the past 12 months, Los Angeles County has gained 73,200 jobs for an increase of 1.7%. Educational and Health Services (+22,400), Leisure and Hospitality (+19,700) and Professional and Business Services (+15,900) posted the largest gains. Government (+10,700), and Trade, Transportation and Utilities (+10,100) also increased year-over-year. VACANCY BY SUBMARKET NET ABSORPTION BY SUBMARKET 45% DIRECT VACANCY SUBLEASE VACANCY 300,000 % VACANT 40% 35% 30% 25% 20% 15% 10% 5% 0% 0.0% 38.5% 0.2% 19.5% 0.0% 21.2% 0.7% 0.1% 17.1% 14.5% 0.0% 12.1% 250,000 200,000 150,000 50,000 0 39,800 8,000 20,300 66,300 48,400 27,600 EL SEGUNDO/BEACH CITIES p. 2 Colliers International

market Report OFFICE SOUTH BAY office OVERVIEW EXISTING PROPERTIES VACANCY ACTIVITY ABSORPTION CONSTRUCTION RENTS Submarket/ Class Bldgs Total Inventory Direct Sublease Total Total Prior Qtr Leasing Activity Current Qtr Leasing Activity YTD Net Absorption Current Qtr Net Absorption YTD Completions Current Qtr Under Construction Weighted Avg Asking Lease Rate BUILDING CLASS/SIZE A 10,000-24,999 - - - - - - - - - - - - - 25,000 + 60 12,522,400 15.1% 0.5% 15.6% 16.7% 317,600 926,600 132,700 81,600 0 0 $2.62 Subtotal 60 12,522,400 15.1% 0.5% 15.6% 16.7% 317,600 926,600 132,700 81,600 0 0 $2.62 B 10,000-24,999 86 1,376,200 9.3% 0.0% 9.3% 10.8% 9,800 67,900 34,300 47,000 15,500 0 $1.95 25,000 + 179 15,725,100 24.6% 0.1% 24.7% 25.0% 118,800 950,300 48,700 62,000 0 365,600 $2.12 Subtotal 265 17,101,300 23.4% 0.1% 23.5% 23.9% 128,600 1,018,200 83,000 109,000 15,500 365,600 $2.11 c 10,000-24,999 76 1,202,100 8.0% 0.0% 8.0% 8.6% 13,100 61,400 7,200 30,100 0 0 $1.84 25,000 + 36 2,277,700 23.5% 0.3% 23.8% 23.2% 35,600 116,400 (12,500) 16,300 0 0 $1.76 Subtotal 112 3,479,800 18.1% 0.2% 18.3% 18.3% 48,700 177,800 (5,300) 46,400 0 0 $1.77 SUBMARKET/BUILDING SIZE 10,000-24,999 10 162,500 16.4% 0.0% 16.4% 14.3% 4,300 18,500 (3,400) 8,200 0 0 $1.92 25,000 + 25 4,190,800 39.3% 0.0% 39.3% 39.6% 64,200 142,700 11,400 54,700 0 0 $1.61 Subtotal 35 4,353,300 38.5% 0.0% 38.5% 38.7% 68,500 161,200 8,000 62,900 0 0 $1.61 10,000-24,999 40 570,700 3.1% 0.0% 3.1% 3.4% 2,300 33,300 1,500 18,100 0 0 $2.60 25,000 + 78 10,605,600 17.8% 0.7% 18.5% 18.8% 143,900 983,800 26,100 (159,500) 0 365,300 $2.96 Subtotal 118 11,176,300 17.1% 0.7% 17.7% 18.0% 146,200 1,017,100 27,600 (141,400) 0 365,300 $2.96 10,000-24,999 60 1,030,400 9.7% 0.0% 9.7% 10.9% 14,800 54,600 12,300 13,900 0 0 $1.95 25,000 + 52 3,239,200 12.9% 0.0% 12.9% 14.5% 43,600 186,900 54,000 47,200 0 0 $2.55 Subtotal 112 4,269,600 12.1% 0.0% 12.1% 13.6% 58,400 241,500 66,300 61,100 0 0 $2.43 10,000-24,999 12 178,000 6.6% 0.0% 6.6% 13.0% 800 2,400 11,400 (500) 0 0 $1.42 25,000 + 35 3,374,200 22.0% 0.0% 22.0% 22.3% 73,300 207,800 8,900 61,100 0 0 $2.07 Subtotal 47 3,552,200 21.2% 0.0% 21.2% 21.8% 74,100 210,200 20,300 60,600 0 0 $2.06 10,000-24,999 24 387,000 14.4% 0.0% 14.4% 16.1% 300 2,500 19,400 15,200 15,500 0 $1.44 25,000 + 53 4,409,400 14.6% 0.1% 14.6% 15.1% 37,200 180,500 20,400 113,500 0 0 $2.06 Subtotal 77 4,796,400 14.5% 0.1% 14.6% 15.0% 37,500 183,000 39,800 128,700 15,500 0 $2.01 10,000-24,999 16 249,700 4.5% 0.0% 4.5% 4.6% 400 18,000 300 22,200 0 0 $1.82 25,000 + 32 4,706,000 20.3% 0.2% 20.5% 21.5% 109,800 291,600 48,100 42,900 0 0 $2.32 Subtotal 48 4,955,700 19.5% 0.2% 19.7% 20.6% 110,200 309,600 48,400 65,100 0 0 $2.31 MARKET TOTAL Total 437 33,103,500 19.7% 0.3% 20.0% 20.5% 494,900 2,122,600 210,400 237,000 15,500 365,300 $2.27 Colliers International p. 3

market Report OFFICE SOUTH BAY >> The South Bay market saw steady investment sales activity in Long Beach as investor continue to look south for opportunities >> Construction activity remains robust with 269,300 of office space under renovation and another 96,000 under construction >> The average asking rates in El Segundo have escalated from $2.48 P in Q3 2013 to $2.96 P in CONSTRUCTION One new project delivered to the market in fourth quarter 2015. Building #3 at Douglas Park, a creative office campus in the Long Beach Airport/Lakewood submarket, delivered 15,500 of space to the market. Construction and renovation activity in El Segundo remains strong, as 2040 E. Mariposa Ave. (88,700 ), 2175 E. Park Place (130,000 ) and 2400 Marine Ave (50,600 ) in El Segundo are slated to complete their renovations in the first quarter of 2016. SteelWave s 96,000 project at 2030 E. Maple Ave. remains on track to deliver by fall of next year. ACTIVITY New leasing activity during the fourth quarter totaled 494,900 compared to 493,100 in the third quarter of 2015, a relatively flat increase of.36%. The El Segundo/Beach Cities submarket continues to lead the South Bay market in leasing activity, recording 30% of the total activity. Major leasing activity this quarter included Nexon America renewing and expanding to 47,000 at 222 N. Sepulveda Blvd., Skechers agreeing to occupy 38,900 at 1240 Rosecrans Ave. in Manhattan Beach and GoGuardian signing for 32,300 at 200 N. Sepulveda Blvd. in El Segundo. Rounding out the major leases for the quarter were Artissimo Design signing for 14,300 at Campus 2100 in El Segundo and Team Rubicon taking 10,600 at 6171 W. Century Blvd. in Los Angeles. RENTAL RATES The weighted average asking rent for direct space increased to $2.27 P from $2.24 P last quarter. This represents the 9th consecutive quarter of rate increases for the market, a 13.5% increase over that period of time. Average asking rents remained highest in the El Segundo/Beach Cities submarket ($2.96 P), and lowest in the LAX/Los Angeles/Westchester submarket ($1.61 P). In some top-tier buildings, particularly in El Segundo, asking rates continue to push past the $3.00 P mark and will continue to do so until supply begins to outstrip demand. WEIGHTED AVERAGE ASKING LEASE RATES BY SUBMARKET LEASING ACTIVITY BY SUBMARKET $ P PER MONTH (FSG) $3.50 $3.00 $2.50 $2.00 $1.50 $1.61 $2.01 $2.06 $2.43 $2.31 $2.96 160,000 140,000 120,000 80,000 60,000 40,000 20,000 37,500 110,200 68,500 58,400 $1.00 74,100 146,200 0 p. 4 Colliers International

market Report OFFICE SOUTH BAY outlook The South Bay market continues to see increased velocity as demand has remained steady. Rental rates have climbed for 9 straight quarters as tenants demonstrate strong interest in space comparable to West Los Angeles at a relatively significant price discount, especially compared to Playa Vista and Santa Monica. Leasing activity registered a 32% increase year-over-year and is expected to remain robust through 2016. Value-add properties and strong tenant demand for creative space will continue to produce profitable opportunities for developers willing to take on renovation projects. The outlook for the overall South Bay market remains positive. market description The South Bay office market is comprised of 33.1 million, representing 11% of the total office space in buildings 30,000 square feet and greater in the Los Angeles Basin. Most of the space (64%) was built in the 1980s, and only 8% was built 1990 current. Nearly half (49%) of its space is contained within mid-rise buildings (5 13 stories), followed by 32 percent in lowrise buildings and 19% in high-rise. It has a large concentration of firms in aerospace (although much less than in the 1980s), automotive, telecommunications, information technology, healthcare, and business services, and is served by a highly educated labor force. HISTORICAL leasing ACTIVITY - UNEMPLOYMENT RATE United States, California & Los Angeles County November 2015 1, 6.0% 5.9% 1,000,000 5.8% 5.7% 900,000 5.6% 800,000 700,000 5.4% 600,000 500,000 5.2% 5.0% 5.0% 400,000 300,000 4.8% 200,000 4.6% 4Q11 4Q12 4Q13 4Q14 4Q15 4.4% United States California Los Angeles County RECENT TRANSACTIONS & MAJOR DEVELOPMENTS SALES ACTIVITY PROPERTY ADDRESS SIZE SALE PRICE PRICE P BUYER SELLER 100 W. Broadway, Long Beach 209,900 $35,200,000 $168 P Ocean West Capital Partners Adler Realty Investments, Inc. 1700 E. Walnut Ave., El Segundo 119,500 $33,500,000 $280 P Roxborough Group/Montana Avenue USAA Real Estate Co./Admiral Capital 211 E. Ocean Blvd., Long Beach 105,300 $17,000,000 $161 P The Ruth Group Jamison Services, Inc. 2200 Pacific Coast Highway., Hermosa Beach 35,900 $14,300,000 $398 P Vectra Management Group CMD Real Estate Group, LLC 200 W. Ocean Blvd., Long Beach 102,400 $10,800,000 $106 P MEIAO Investment Milan Capital Management LEASING ACTIVITY PROPERTY ADDRESS LEASED LEASE TYPE BLDG TYPE LESSEE LESSOR 222 N. Sepulveda Blvd., El Segundo 47,000 Renewal A Nexon America, Inc. Pacific Corporate Towers, LLC 1240 Rosecrans Ave., Manhattan Beach 38,900 Direct A Skechers Onni Group 200 N. Sepulveda Blvd., El Segundo 15,600 Direct A GoGuardian Pacific Corporate Towers, LLC 2100 E. Grand Ave., El Segundo 14,300 Direct A Artissimo Design Rockwood Capital, LLC 6171 W. Century Blvd., Los Angeles 10,600 Direct B Team Rubicon 6171 Century LLC MAJOR DEVELOPMENTS PROJECT DEVELOPER SIZE SUBMARKET STATUS ESTIMATED COMPLETION 2175 E Park Place, El Segundo Invesco 130,000 El Segundo/Beach Under Renovation Q1 2016 2030 E. Maple Ave., El Segundo SteelWave, Inc. 96,000 El Segundo/Beach Under Construction Q3 2016 2040 E Mariposa Ave, El Segundo Overton Moore Properties 88,700 El Segundo/Beach Under Renovation Q1 2016 2400 Marine Ave., El Segundo Montana Avenue Capital LLC 50,600 El Segundo/Beach Under Renovation Q1 2016 Trisonic-El Segundo Live Oak Properties, LLC 72,000 El Segundo/Beach Proposed TBD Colliers International p. 5

market Report OFFICE SOUTH BAY DEFINITIONS OF KEY TERMS USED IN THIS REPORT Total Rentable Square Feet: Office space in buildings with 10,000 or more of speculative office space. Includes competitive space in Class A, B and C single-tenant and multi-tenant buildings. Excludes noncompetitive owner-occupied buildings, buildings that include 30% or greater of medical or retail space, and space that is under-construction, under-renovation or off-market. Net Absorption: Net change in occupied square feet from one period to the next (includes the impact of change in vacant space available for sublease). Leasing Activity: Square feet leased from all known transactions completed during the quarter. Excludes lease renewals. 502 offices in 67 countries on 6 continents United States: 140 Canada: 31 Latin America: 24 Asia Pacific: 199 EMEA: 108 >> $2.3 billion in annual revenue >> 1.7 billion square feet under management >> Over 16,200 professionals Class A Space: Space that an image-conscious company would lease for its headquarters. Typically, this space has a very high level of finish and an excellent location, and commands the highest rents in the market. Class B Space: Highly functional, attractive space, but less prestigious than Class A Space, and commanding lower rental rates. Class C Space: Functional, competitive space, but with a lower level of finish and/or a less desirable location than with Class B Space, and commanding lower rental rates. Low-Rise: Buildings with a total of 4 floors or less. Mid-Rise: Buildings with a total of 5 to 13 floors. High-Rise: Buildings with 14 or more floors. Direct : Space in existing buildings that is vacant and immediately available during the quarter for direct lease, plus space that is vacant but not available for direct lease or sublease (for example, that is being held for a future commitment). Total : Space in existing buildings that is vacant and immediately available during the quarter for direct lease or for sublease, plus space that is vacant but not available for direct lease or sublease. Weighted Average Asking Rental Rates: Weighted by the total square feet available for direct lease. Data is based on Full Service Gross rents, and includes all costs associated with occupying the space, including taxes, insurance, maintenance, janitorial service and utilities. Reported on a monthly, per basis. Space Added (Net): Total square feet added during the quarter via construction completions, including renovated space returned to market, less total square feet taken off-market due to demolitions or conversions. Under-Construction/Renovation: Includes buildings that are in some phase of construction, beginning with foundation work and ending with the issuance of a Certificate of Occupancy. Also includes buildings that are under going substantial renovation. Technical Note Colliers International is continuously refining its database. The data shown in the historical tables and graphics in this report have been adjusted to take into account these changes in the database. This report has been prepared by Colliers International for general information only. Information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Colliers International does not guarantee, warrant or represent that the information contained in this document is correct. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This report and other research materials may be found on our website at www.colliers.com/greaterlosangeles. united states: South Bay Office License No. 01908231 2121 Rosecrans Ave, Suite 3301 El Segundo, CA. 90245 tel +1 310 787 1000 FAX +1 310 381 2500 HOLLINGSWORTH, JOHN Executive Managing Director MATTESON, CAITLIN Research Director Research Services WONG, CHRISTOPHER Research Analyst Research Services Accelerating success. p. 6 Colliers International www.colliers.com/marketname