OAKLAND FIRST QUARTER 2007 COLLIERS INTERNATIONAL OAKLAND Market Research OVERVIEW FIRST QUARTER 2007 East Bay s Growing Appeal MARKET INDICATORS The San Francisco Bay Area is one of the most dynamic regions in the country. It is no surprise that many companies who specialize in technology, fi nancial services and professional services are expanding and consequently have generated quite a demand for space in San Francisco. But as average asking rental rates for offi ce space in San Francisco continue to rise, we believe that more of these companies will be migrating to the quality spaces in the Oakland Metropolitan Area, as well as the rest of the Bay Area. OFFICE VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE Q1 Q2 2007 2007 Import/export trade through the area has been rising steadily, due to the area s convenient location. The area is home to the Port of Oakland and the Oakland International Airport, as well as an effi cient network of highways. This has made the Oakland Metropolitan Area a magnet for logistics and trucking companies. Because of these factors, the leasing and sale activity for warehouse/distribution space has been strong. The warehouse/distribution vacancy rate ended the first quarter at 3.6%, a six-year low. Lastly, with venture capitalists now investing much of their funds to life science and biotech research, we believe that many new emerging companies will lease R&D/Flex space around the Bay Area. Though most of these companies are based in the Silicon Valley and the San Francisco Peninsula, we believe that submarkets in the Oakland Metropolitan Area that have a sizable inventory of fl ex space will also benefi t. These markets include Alameda s Marina Village and Harbor Bay Business Parks, as well as Hayward and Richmond. INDUSTRIAL Q1 Q2 2007 2007 Oakland Metro Area - Office All Classes Overall Vacancy vs. Full Service Asking Rental Rates I-80/880 Corridor Overall Industrial Market Vacancy vs. Asking NNN Rental Rates VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE COLLIERS INTERNATIONAL www.colliersparrish.com COLLIERS INTERNATIONAL 1
OAKLAND OFFICE FIRST QUARTER 2007 Offi ce Class A The most telling sign of a thriving commercial real estate market lies in its rising asking rental rates, and this has been particularly pertinent for the Class A buildings in the Oakland Metropolitan Area. The average asking rental rate for Class A product has climbed to $2.45 Full Service per square foot per month (psf/mo) since year-end 2006. While most fi rms in the market (Colliers included) have historically based statistical data on a building set that excluded owner occupied properties, we have begun to include those assets in our base inventory. With the inclusion of these assets, the overall base of Class A buildings has increased to over 13 million square feet, with a total vacancy in the Class A market of 7.2%. It is important to note that even with the exclusion of owner occupied buildings, the overall Class A vacancy rate would still be at 8.3%, which is clearly still a tight market. Office Classes B/C/Flex The Class B/C and Flex market also had a very slight decrease to 16.6%. Some flex intensive submarkets like Marina Village and Harbor Bay still had a diffi cult time shedding available space, as vacancy rates surpassed 24% in both markets. However, we believe these submarkets will improve throughout the course of the year, as biotech companies continue to receive more government and venture capital funding for research in the life sciences. LEASING ACTIVITY PROPERTY ADDRESS SIZE SQ. FT. LEASE RATE TYPE 850 Marina Village Pkwy 23,770 $1.10 NNN Offi ce/flex 1111 Broadway 23,869 $3.00 FS Offi ce OFFICE MARKET VACANCY VS. ASKING NNN RENTAL RATES CLASS A, CLASS B&C 2 COLLIERS INTERNATIONAL
OAKLAND OFFICE FIRST QUARTER 2007 OFFICE MARKET EXISTING PROPERTIES NET ABSORPTION GROSS ABSORPTION RENT Market Bldg Total Direct Direct Sublease Sublease Total Vacant Vacancy Vacancy Current Year-to-Date Current Year-to-Date Avg Asking Inventory Vacant Vacancy Vacant Vacancy SF Rate Rate Qtr SF SF Qtr SF SF FS SF SF Rate SF Rate 4Q06 Last Qtr Rental Rate CBD SECTION Oakland DT A 28 9,627,645 401,422 4.2% 157,931 1.6% 559,353 5.8% 5.9% 6,817 6,817 84,878 84,878 $ 2.45 B/C & Flex 114 5,407,729 829,567 15.3% 26,635 0.5% 856,202 15.8% 16.0% 7,053 7,053 78,310 78,310 $ 1.86 Total 15,035,374 1,230,989 8.2% 184,566 1.2% 1,415,555 9.4% 9.5% 13,870 13,870 163,188 163,188 $ 2.24 Oakland JLS B/C & Flex 44 1,662,249 233,263 14.0% - 0.0% 233,263 14.0% 8.6% (89,888) (89,888) 5,681 5,681 $ 1.86 Total 44 1,662,249 233,263 14.0% - 0.0% 233,263 14.0% 12.7% (89,888) (89,888) 5,681 5,681 $ 1.86 CBD TOTAL A 28 9,627,645 401,422 4.2% 157,931 1.6% 559,353 5.8% 5.9% 6,817 6,817 84,878 84,878 $ 2.45 B/C & Flex 158 7,069,978 1,062,830 15.0% 26,635 0.4% 1,089,465 15.4% 14.2% (82,835) (82,835) 83,991 83,991 $ 1.86 Total 186 16,697,623 1,464,252 8.8% 184,566 1.1% 1,648,818 9.9% 12.7% (76,018) (76,018) 168,869 168,869 $ 2.05 SUBURBAN SECTION Richmond B/C & Flex 97 3,436,753 461,974 13.4% - 0.0% 461,974 13.4% 14.7% 42,393 42,393 58,124 58,124 $ 1.45 Total 97 3,436,753 461,974 13.4% - 0.0% 461,974 13.4% 14.7% 42,393 42,393 58,124 58,124 $ 1.45 Berkeley DT A 9 599,882 91,068 15.2% 9,962 1.7% 101,030 16.8% 19.7% 17,418 17,418 20,650 20,650 $ 2.62 B/C & Flex 28 818,538 93,929 11.5% - 0.0% 93,929 11.5% 13.7% 18,400 18,400 16,597 16,597 $ 1.85 Total 37 1,418,420 184,997 13.0% 9,962 0.7% 194,959 13.7% 16.3% 35,818 35,818 37,247 37,247 $ 2.42 Berkeley West B/C & Flex 40 1,219,562 118,443 9.7% 1,751 0.1% 120,194 9.9% 11.1% 15,530 15,530 43,359 43,359 $ 1.85 Total 40 1,219,562 118,443 9.7% 1,751 0.1% 120,194 9.9% 11.1% 15,530 15,530 43,359 43,359 $ 1.85 Emeryville A 13 2,320,648 131,460 5.7% 45,962 2.0% 177,422 7.6% 10.4% 64,526 64,526 66,142 66,142 $ 2.52 B/C & Flex 44 1,683,088 232,414 13.8% 2,685 0.2% 235,099 14.0% 17.8% 64,444 64,444 83,009 83,009 $ 2.03 Total 57 4,003,736 363,874 9.1% 48,647 1.2% 412,521 10.3% 13.5% 128,970 128,970 149,151 149,151 $ 2.31 Alameda - Marina Village B/C & Flex 53 1,545,664 390,631 25.3% 59,897 3.9% 450,528 29.1% 27.8% (21,439) (21,439) 62,945 62,945 $ 1.97 Total 53 1,545,664 390,631 25.3% 59,897 3.9% 450,528 29.1% 27.8% (21,439) (21,439) 62,945 62,945 $ 1.97 Alameda - Harbor Bay B/C & Flex 28 1,684,909 306,003 18.2% 94,192 5.6% 400,195 23.8% 23.3% (6,868) (6,868) 25,996 25,996 $ 1.98 Total 28 1,684,909 306,003 18.2% 94,192 5.6% 400,195 23.8% 23.3% (6,868) (6,868) 25,996 25,996 $ 1.98 Oakland Airport A 3 453,697 83,914 18.5% 12,000 2.6% 95,914 21.1% 22.2% 4,994 4,994 14,274 14,274 $ 1.94 B/C & Flex 32 1,349,867 263,550 19.5% 3,654 0.3% 267,204 19.8% 20.1% 4,304 4,304 7,102 7,102 $ 1.60 Total 35 1,803,564 347,464 19.3% 15,654 0.9% 363,118 20.1% 20.6% 9,298 9,298 21,376 21,376 $ 1.69 SUBURBAN TOTAL A 25 3,374,227 306,442 9.1% 67,924 2.0% 374,366 11.1% 13.7% 86,938 86,938 101,066 101,066 $ 2.36 B/C & Flex 322 11,738,381 1,866,944 15.9% 162,179 1.4% 2,029,123 17.3% 18.3% 116,764 116,764 297,132 297,132 $ 1.82 Total 347 15,112,608 2,173,386 13.4% 230,103 0.0% 2,403,489 13.4% 17.3% 203,702 203,702 398,198 398,198 $ 1.95 MARKET TOTAL A 53 13,001,872 707,864 5.4% 225,855 1.7% 933,719 7.2% 7.9% 93,755 93,755 185,944 185,944 $ 2.45 B/C & Flex 480 18,808,359 2,929,774 15.6% 188,814 1.0% 3,118,588 16.6% 16.8% 33,929 33,929 381,123 381,123 $ 1.82 TOTAL 533 31,810,231 3,637,638 11.4% 414,669 1.3% 4,052,307 12.7% 13.1% 127,684 127,684 567,067 567,067 $ 2.08 QUARTERLY COMPARISON AND TOTALS Q1-07 533 31,810,231 3,637,638 11.4% 414,669 1.3% 4,052,307 12.7% 13.1% 127,684 127,684 567,067 567,067 $ 2.08 Q4-06 526 28,281,483 3,704,060 13.1% 475,931 1.7% 4,179,991 14.8% 14.9% 25,054 85,859 637,059 2,397,669 $ 2.01 Q3-06 526 28,217,008 3,668,249 13.0% 361,945 1.3% 4,212,363 14.9% 15.3% 34,767 53,487 700,697 1,760,610 $ 1.95 Q2-06 534 27,982,087 3,671,538 13.1% 452,888 1.6% 4,330,821 15.5% 15.6% 106,700 (39,401) 760,676 1,067,635 $ 1.89 Q1-06 534 27,982,087 3,615,229 12.9% 548,646 2.0% 4,348,780 15.5% 15.3% 31,368 (31,704) 360,726 363,455 $ 1.82 Q4-05 534 27,981,404 3,611,722 12.9% 500,948 1.8% 4,112,670 15.3% 16.2% 184,912 553,214 526,120 2,157,210 $ 1.80 COLLIERS INTERNATIONAL 3
OAKLAND INDUSTRIAL FIRST QUARTER 2007 Industrial Vacancy and Rental Rates The start of 2007 has been very much like the end of 2006 for the Oakland Metropolitan Area s industrial market. The amount of vacant space has been rare, with the overall vacancy rate at 5.6% at the end of the fi rst quarter. Vacant space for the overall market has been falling for the past two years, so any slight increase in space was probably a welcome sight for prospective tenants. The average asking rental rate for the overall market also rose at a modest pace to $.55 NNN psf/mo. The light industrial market s vacancy rate climbed slightly to 6.0%, with much of the increases coming from the Richmond and Oakland markets. The warehouse market stayed at an ultra low 3.6%, which has prompted an increase in average asking rental rates to $.45 NNN psf/mo. The most signifi cant change occurred in the R&D/Flex sector, where the vacancy rate declined from 15.4% at the end of 2006 to 13.9% by the end of the fi rst quarter. This spells good news for this long ailing subtype, which will continue to improve as activity in the leading R&D markets such as Silicon Valley and the San Francisco Peninsula continues to accelerate. LEASING ACTIVITY PROPERTY ADDRESS SIZE SQ. FT. LEASE RATE TYPE 30108-18 Eigenbrodt Way 135,860 $0.41 NNN Warehouse SALES ACTIVITY PROPERTY ADDRESS SIZE SQ. FT. SALE PRICE TYPE 2235-65 Polvorosa Ave, Bldgs A, B, C 92,254 $12,500,000 Light Industrial INDUSTRIAL MARKET VACANCY VS. ASKING NNN RENTAL RATES LIGHT INDUSTRIAL, WAREHOUSE, FLEX 4 COLLIERS INTERNATIONAL
OAKLAND INDUSTRIAL FIRST QUARTER 2007 INDUSTRIAL MARKET EXISTING PROPERTIES NET ABSORPTION GROSS ABSORPTION RENT Market Bldg Total Direct Direct Sublease Sublease Total Vacant Vacancy Vacancy Current Year-to-Date Current Year-to-Date Avg Asking Inventory Vacant Vacancy Vacant Vacancy SF Rate Rate Qtr SF SF Qtr SF SF NNN SF SF Rate SF Rate 4Q06 Last Qtr Rental Rate Richmond: Industr ial 217 5,094,106 998,969 19.6% 4,878 0.1% 1,003,847 19.7% 20.7% 50,133 50,133 186,074 186,074 $ 0.58 Warehouse 41 4,263,981 158,810 3.7% - 0.0% 158,810 3.7% 3.7% (997) (997) - - $ 0.42 R&D/Flex 93 3,436,753 461,974 13.4% - 0.0% 461,974 13.4% 14.7% 42,393 42,393 58,124 58,124 $ 1.45 Total 351 12,794,840 1,619,753 12.7% 4,878 0.0% 1,624,631 12.7% 13.4% 91,529 91,529 244,198 244,198 $ 0.76 Oakla nd: Industr ial 825 22,601,206 1,081,763 4.8% 20,400 0.1% 1,102,163 4.9% 3.7% (272,317) (272,317) 23,423 23,423 $ 0.57 Warehouse 142 10,616,104 478,740 4.5% 88,410 0.8% 567,150 5.3% 4.9% (46,867) (46,867) 54,934 54,934 $ 0.44 R&D/Flex NA NA NA NA NA NA NA NA NA NA NA NA NA NA Total 967 33,217,310 1,560,503 4.7% 108,810 0.3% 1,669,313 5.0% 4.1% (319,184) (319,184) 78,357 78,357 $ 0.53 San Lea ndro: Industr ial 451 11,661,810 487,361 4.2% 28,678 0.2% 516,039 4.4% 3.7% (88,362) (88,362) 37,255 37,255 $ 0.56 Warehouse 129 14,543,408 325,494 2.2% - 0.0% 325,494 2.2% 2.0% (34,551) (34,551) 12,200 12,200 $ 0.45 R&D/Flex 52 847,380 78,087 9.2% - 0.0% 78,087 9.2% 8.4% (7,289) (7,289) 4,951 4,951 $ 0.82 Total 632 27,052,598 890,942 3.3% 28,678 0.1% 919,620 3.4% 2.9% (130,202) (130,202) 54,406 54,406 $ 0.51 Hayw ard: Industr ial 772 16,504,507 819,051 5.0% 89,635 0.5% 908,686 5.5% 5.5% (755) (755) 195,853 195,853 $ 0.59 Warehouse 208 21,078,545 440,273 2.1% 20,160 0.1% 460,433 2.2% 2.3% 19,662 19,662 213,183 213,183 $ 0.46 R&D/Flex 112 4,579,872 740,293 16.2% 62,639 1.4% 802,932 17.5% 19.6% 95,897 95,897 18,060 18,060 $ 0.82 Total 1092 42,162,924 1,999,617 4.7% 172,434 0.4% 2,172,051 5.2% 5.4% 114,804 114,804 427,096 427,096 $ 0.55 Union City: Industr ial 160 7,883,678 223,336 2.8% 79,360 1.0% 302,696 3.8% 4.7% 66,408 66,408 99,402 99,402 $ 0.56 Warehouse 81 7,187,526 349,275 4.9% 237,760 3.3% 587,035 8.2% 7.9% (18,135) (18,135) 118,470 118,470 $ 0.44 R&D/Flex 16 870,672 9,338 1.1% - 0.0% 9,338 1.1% 2.5% 12,598 12,598 22,626 22,626 $ 1.08 Total 257 15,941,876 581,949 3.7% 317,120 2.0% 899,069 5.6% 6.0% 60,871 60,871 240,498 240,498 $ 0.53 MARKET T OTAL Industr ial 2425 63,745,307 3,610,480 5.7% 222,951 0.3% 3,833,431 6.0% 5.6% (244,893) (244,893) 542,007 542,007 $ 0.57 Warehouse 601 57,689,564 1,752,592 3.0% 346,330 0.6% 2,098,922 3.6% 3.5% (80,888) (80,888) 398,787 398,787 $ 0.45 R&D/Flex 273 9,734,677 1,289,692 13.2% 62,639 0.6% 1,352,331 13.9% 17.9% 143,599 143,599 103,761 103,761 $ 1.07 TOTAL 3299 131,169,548 6,652,764 5.1% 631,920 0.5% 7,284,684 5.6% 5.4% (182,182) (182,182) 1,044,555 1,044,555 $ 0.55 QUARTERLY COMPARISON AND TOTALS Q1-07 3299 131,169,548 6,652,764 5.1% 631,920 0.5% 7,284,684 5.6% 5.4% (182,182) (182,182) 1,044,555 1,044,555 $ 0.55 Q4-06 3299 131,169,548 6,544,124 5.0% 558,678 0.4% 7,102,802 5.4% 5.5% 211,051 1,900,988 2,117,056 8,280,588 $ 0.54 Q3-06 3275 131,077,051 6,325,748 4.8% 895,608 0.7% 7,221,356 5.5% 6.7% 1,311,374 1,500,931 2,333,680 6,163,532 $ 0.54 Q2-06 3275 131,077,051 7,351,862 6.5% 1,180,868 0.9% 8,532,730 6.5% 6.8% 361,440 189,557 2,446,213 3,829,852 $ 0.54 Q1-06 3275 131,077,051 7,215,689 6.6% 1,678,481 1.3% 8,894,170 6.8% 6.7% (171,883) (171,883) 1,383,639 1,383,639 $ 0.51 Q4-05 3285 131,405,835 7,000,695 6.5% 1,795,376 1.4% 8,796,071 6.7% 7.7% 1,403,386 1,754,966 2,395,813 8,118,338 $ 0.50 OAKLAND S VIBRANT DOWNTOWN Oakland is a prime location for business, with it s local Airport, The Port Of Oakland and internal transit systems, no wonder Forbes Magazine ranked Oakland in the Top 10 Best Places for business in 2001 and 2002 1 1 Forbes/Milken Institute List of Best Places for Business and Careers, Forbes, May 27, 2002. Oakland/San Francisco skyline COLLIERS INTERNATIONAL 5
OAKLAND FIRST QUARTER 2007FIRST QUARTER 2007 BROKERS & STAFF MANAGING PARTNER Kenneth W. Meyersieck Managing Partner/SVP (510) 433-5802 kmeyersieck@colliersparrish.com OFFICE Elena Cohen (510) 433-5816 ecohen@colliersparrish.com Mike Corbett (510) 433-5819 mcorbett@colliersparrish.com Aileen Dolby (510) 433-5815 adolby@colliersparrish.com Ben F. Harrison (510) 433-5852 bharrison@colliersparrish.com Trent Holsman (510) 433-5859 tholsman@collierparrish.com Ann Lovi (510) 433-5837 alovi@colliersparrish.com Kenneth W. Meyersieck (510) 433-5802 kmeyersieck@colliersparrish.com Al Musante (510) 433-5817 amusante@colliersparrish.com Anthony Stratton (510) 433-5818 astratton@colliersparrish.com INDUSTRIAL Chet Barney (510) 433-5826 cbarney@colliersparrish.com James B. Bohar (510) 433-5814 jbohar@colliersparrish.com Gabe I. Burke, SIOR (510) 433-5834 gburke@colliersparrish.com Norman J. Eggen, SIOR (925) 283-2221 - remote office neggen@colliersparrish.com David Henderson (510) 433-5823 dhenderson@colliersparrish.com Richard P. Keely (510) 433-5806 rkeely@colliersparrish.com Greig F. Lagomarsino, SIOR (510) 433-5809 glago@colliersparrish.com James E. Morris (510) 433-5811 jmorris@colliersparrish.com Casey Ricksen (510) 433-5805 cricksen@colliersparrish.com Sean Sabarese (510) 433-5803 ssabarese@colliersparrish.com Todd O. Severson, SIOR (510) 433-5810 tseverson@colliersparrish.com Brady Thomas (510) 433-5851 bthomas@colliersparrish.com Joe Yamin (510) 433-5812 jyamin@colliersparrish.com Warren Weber (510) 433-5807 wweber@colliersparrish.com INVESTMENT Kevin Ebrahimi (510) 433-5820 kebrahimi@colliersparrish.com Gerald Kruse (510) 433-5848 gkruse@colliersparrish.com Anna Lee (510) 433-5850 alee@colliersparrish.com RETAIL Reesa Tansey (510) 433-5808 rtansey@colliersparrish.com Sandra Weck (510) 433-5847 sweck@colliersparrish.com ADMINISTRATIVE Patricia Folks Office Manager (510) 433-5825 pfolks@colliersparrish.com Jason Radburn Administrative Assistant (510) 433-5845 jradburn@colliersparrish.com Rodney Williams Receptionist (510) 433-5801 rwilliams@colliersparrish.com RESEARCH Glenda Cheng Research Director (510) 433-5835 gcheng@colliersparrish.com MARKETING Lisa Howard Graphic Designer (510) 433-5843 lhoward@colliersparrish.com 241 OFFICES IN 54 COUNTRIES ON 6 CONTINENTS USA 98 Canada 18 Latin America 14 Asia Pacifi c 46 EMEA 65 $54 billion in annual transaction volume 595.7 million square feet under management 9,327 Professionals CONTACT INFORMATION UNITED STATES Colliers International 1999 Harrison Street 1750 Oakland, CA 94612 Tel: 510-986-6770 Fax: 510-986-6775 Ken Meyersieck Managing Partner/SVP Tel: 510-433-5802 Glenda Cheng Research Director Tel: 510-433-5835 This report and other research materials may be found on our website at www.colliersparrish. com. This report is a research document of Colliers International Oakland, California. Questions related to information herein should be directed to the Research Department at 510-433-5835. Information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Colliers Parrish International is an independently owned and operated business and a member firm of Colliers International Property Consultants, an affiliation of independent companies with over 240 offi ces throughout more than 50 countries worldwide. COLLIERS INTERNATIONAL www.colliersparrish.com 6 COLLIERS INTERNATIONAL