CoStar Industrial Statistics Y e a r - E n d 2 0 1 7
Year-End 2017 Orange County Table of Contents Table of Contents................................................................. A Methodology...................................................................... B Terms & Definitions................................................................ C Market Highlights & Overview........................................................ 1 CoStar Markets & Submarkets........................................................ 3 Inventory & Development Analysis..................................................... 4 Inventory & Development Analysis Select Top Deliveries Select Top Under Construction Properties Figures at a Glance................................................................. 8 Figures at a Glance by Building Type & Market Figures at a Glance by Building Type & Submarket Historical Figures at a Glance Leasing Activity Analysis............................................................ 12 Select Top Lease Transactions Sales Activity Analysis.............................................................. 14 Sales Activity Analysis Select Top Sales Transactions Analysis of Individual CoStar Submarket Clusters........................................ 16 Airport Area Market North County Market South County Market West County Market 2018 CoStar Group, Inc. CoStar Industrial Statistics A
Orange County Year-End 2017 Methodology The CoStar Industrial Statistics calculates Industrial statistics using CoStar Group's base of existing, under construction and under renovation Industrial buildings in each given metropolitan area. All Industrial building types are included, including warehouse, flex / research & development, distribution, manufacturing, industrial showroom, and service buildings, in both single-tenant and multi-tenant buildings, including owner-occupied buildings. CoStar Group's global database includes approximately 119 billion square feet of coverage in 5.4 million properties. All rental rates reported in the CoStar Industrial Report are calculated using the quoted rental rate for each property. For information on subscribing to CoStar s other products and services, please contact us at 1-877-7COSTAR, or visit our web site at www.costar.com Copyright 2018 CoStar Group, Inc. All Rights Reserved. Although CoStar makes efforts to ensure the accuracy and reliability of the information contained herein, CoStar makes no guarantee, representation or warranty regarding the quality, accuracy, timeliness or completeness of the information. The publication is provided as is and CoStar expressly disclaims any guarantees, representations or warranties of any kind, including those of MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CoStar Group, Inc. 1331 L ST NW Washington, DC 20005 (800) 204-5960 www.costar.com NASDAQ: CSGP B CoStar Industrial Statistics 2018 CoStar Group, Inc.
Year-End 2017 Orange County Terms & Definitions Availability Rate: The ratio of available space to total rentable space, calculated by dividing the total available square feet by the total rentable square feet. Available Space: The total amount of space that is currently being marketed as available for lease in a given time period. It includes any space that is available, regardless of whether the space is vacant, occupied, available for sublease, or available at a future date. Build-to-Suit: A term describing a particular property, developed specifically for a certain tenant to occupy, with structural features, systems, or improvement work designed specifically for the needs of that tenant. A build-to-suit can be leased or owned by the tenant. In a leased build-to-suit, a tenant will usually have a long term lease on the space. Buyer: The individual, group, company, or entity that has purchased a commercial real estate asset. Cap Rate: Short for capitalization rate. The Cap Rate is a calculation that reflects the relationship between one year s net operating income and the current market value of a particular property. The Cap Rate is calculated by dividing the annual net operating income by the sales price (or asking sales price). CBD: Abbreviation for Central Business District. (See also: Central Business District) Central Business District: The designations of Central Business District (CBD) and Suburban refer to a particular geographic area within a metropolitan statistical area (MSA) describing the level of real estate development found there. The CBD is characterized by a high density, well organized core within the largest city of a given MSA. Class A: A classification used to describe buildings that generally qualify as extremely desirable investment-grade properties and command the highest rents or sale prices compared to other buildings in the same market. Such buildings are well located and provide efficient tenant layouts as well as high quality, and in some buildings, one-ofa-kind floor plans. They can be an architectural or historical landmark designed by prominent architects. These buildings contain a modern mechanical system, and have above-average maintenance and management as well as the best quality materials and workmanship in their trim and interior fittings. They are generally the most attractive and eagerly sought by investors willing to pay a premium for quality. Class B: A classification used to describe buildings that generally qualify as a more speculative investment, and as such, command lower rents or sale prices compared to Class A properties. Such buildings offer utilitarian space without special attractions, and have ordinary design, if new or fairly new; good to excellent design if an older non-landmark building. These buildings typically have average to good maintenance, management and tenants. They are less appealing to tenants than Class A properties, and may be deficient in a number of respects including floor plans, condition and facilities. They lack prestige and must depend chiefly on a lower price to attract tenants and investors. Class C: A classification used to describe buildings that generally qualify as no-frills, older buildings that offer basic space and command lower rents or sale prices compared to other buildings in the same market. Such buildings typically have below-average maintenance and management, and could have mixed or low tenant prestige, inferior elevators, and/or mechanical/electrical systems. These buildings lack prestige and must depend chiefly on a lower price to attract tenants and investors. Construction Starts: Buildings that began construction during a specific period of time. (See also: Deliveries) Contiguous Blocks of Space: Space within a building that is, or is able to be joined together into a single contiguous space. Deliveries: Buildings that complete construction during a specified period of time. In order for space to be considered delivered, a certificate of occupancy must have been issued for the property. Delivery Date: The date a building completes construction and receives a certificate of occupancy. Developer: The company, entity or individual that transforms raw land to improved property by use of labor, capital and entrepreneurial efforts. Direct Space: Space that is being offered for lease directly from the landlord or owner of a building, as opposed to space being offered in a building by another tenant (or broker of a tenant) trying to sublet a space that has already been leased. Existing Inventory: The square footage of buildings that have received a certificate of occupancy and are able to be occupied by tenants. It does not include space in buildings that are either planned, under construction or under renovation. Flex Building: A type of building designed to be versatile, which may be used in combination with office (corporate headquarters), research and development, quasi-retail sales, and including but not limited to industrial, warehouse, and distribution uses. A typical flex building will be one or two stories with at least half of the rentable area being used as office space, have ceiling heights of 16 feet or less, and have some type of drive-in door, even though the door may be glassed in or sealed off. Full Service Rental Rate: Rental rates that include all operating expenses such as utilities, electricity, janitorial services, taxes and insurance. Gross Absorption: The total change in occupied space over a given period of time, counting space that is occupied but not space that is vacated by tenants. Gross absorption differs from leasing Activity, which is the sum of all space leased over a certain period of time. Unless otherwise noted Gross Absorption includes direct and sublease space. Growth in Inventory: The change in size of the existing square footage in a given area over a given period of time, generally due to the construction of new buildings. Industrial Building: A type of building adapted for such uses as the assemblage, processing, and/or manufacturing of products from raw materials or fabricated parts. Additional uses include warehousing, distribution, and maintenance facilities. The primary purpose of the space is for storing, producing, assembling, or distributing product. Landlord Rep: (Landlord Representative) In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the owner/landlord is referred to as the Landlord Rep. Leased Space: All the space that has a financial lease obligation. It includes all leased space, regardless of whether the space is currently occupied by a tenant. Leased space also includes space being offered for sublease. Leasing Activity: The volume of square footage that is committed to and signed under a lease obligation for a specific building or market in a given period of time. It includes direct leases, subleases and renewals of existing leases. It also includes any pre-leasing activity in planned, under construction, or under renovation buildings. Market: Geographic boundaries that serve to delineate core areas that are competitive with each other and constitute a generally accepted primary competitive set of areas. Markets are building-type specific, and are non-overlapping contiguous geographic designations having a cumulative sum that matches the boundaries of the entire Region (See also: Region). Markets can be further subdivided into Submarkets. (See also: Submarkets) Multi-Tenant: Buildings that house more than one tenant at a given time. Usually, multi-tenant buildings were designed and built to accommodate many different floor plans and designs for different 2018 CoStar Group, Inc. CoStar Industrial Statistics C
Orange County Year-End 2017 tenant needs. (See also: Tenancy). Net Absorption: The net change in occupied space over a given period of time. Unless otherwise noted Net Absorption includes direct and sublease space. Net Rental Rate: A rental rate that excludes certain expenses that a tenant could incur in occupying office space. Such expenses are expected to be paid directly by the tenant and may include janitorial costs, electricity, utilities, taxes, insurance and other related costs. New Space: Sometimes called first generation space, refers to space that has never been occupied and/or leased by a tenant. Occupied Space: Space that is physically occupied by a tenant. It does not include leased space that is not currently occupied by a tenant. Office Building: A type of commercial building used exclusively or primarily for office use (business), as opposed to manufacturing, warehousing, or other uses. Office buildings may sometimes have other associated uses within part of the building, i.e., retail sales, financial, or restaurant, usually on the ground floor. Owner: The company, entity, or individual that holds title on a given building or property. Planned/Proposed: The status of a building that has been announced for future development but not yet started construction. Preleased Space: The amount of space in a building that has been leased prior to its construction completion date, or certificate of occupancy date. Price/SF: Calculated by dividing the price of a building (either sales price or asking sales price) by the Rentable Building Area (RBA). Property Manager: The company and/or person responsible for the day-to-day operations of a building, such as cleaning, trash removal, etc. The property manager also makes sure that the various systems within the building, such as the elevators, HVAC, and electrical systems, are functioning properly. Quoted Rental Rate: The asking rate per square foot for a particular building or unit of space by a broker or property owner. Quoted rental rates may differ from the actual rates paid by tenants following the negotiation of all terms and conditions in a specific lease. RBA: Abbreviation for Rentable Building Area. (See also: Rentable Building Area) Region: Core areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Regions are further divided into market areas, called Markets. (See also: Markets) Relet Space: Sometimes called second generation or direct space, refers to existing space that has previously been occupied by another tenant. Rentable Building Area: (RBA) The total square footage of a building that can be occupied by, or assigned to a tenant for the purpose of determining a tenant s rental obligation. Generally RBA includes a percentage of common areas including all hallways, main lobbies, bathrooms, and telephone closets. Rental Rates: The annual costs of occupancy for a particular space quoted on a per square foot basis. Sales Price: The total dollar amount paid for a particular property at a particular point in time. Sales Volume: The sum of sales prices for a given group of buildings in a given time period. Seller: The individual, group, company, or entity that sells a particular commercial real estate asset. SF: Abbreviation for Square Feet. Single-Tenant: Buildings that are occupied, or intended to be occupied by a single tenant. (See also: Build-to-suit and Tenancy) Sublease Space: Space that has been leased by a tenant and is being offered for lease back to the market by the tenant with the lease obligation. Sublease space is sometimes referred to as sublet space. Submarkets: Specific geographic boundaries that serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted primary competitive set, or peer group. Submarkets are building type specific (office, industrial, retail, etc.), with distinct boundaries dependent on different factors relevant to each building type. Submarkets are non-overlapping, contiguous geographic designations having a cumulative sum that matches the boundaries of the Market they are located within (See also: Market). Suburban: The Suburban and Central Business District (CBD) designations refer to a particular geographic area within a metropolitan statistical area (MSA). Suburban is defined as including all office inventory not located in the CBD. (See also: CBD) Tenancy: A term used to indicate whether or not a building is occupied by multiple tenants (See also: Multi-tenant) or a single tenant. (See also: Single-tenant) Tenant Rep: Tenant Rep stands for Tenant Representative. In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the tenant is referred to as a Tenant Rep. Time On Market: A measure of how long a currently available space has been marketed for lease, regardless of whether it is vacant or occupied. Under Construction: Buildings in a state of construction, up until they receive their certificate of occupancy. In order for CoStar to consider a building under construction, the site must have a concrete foundation in place. Abbreviated UC. Vacancy Rate: A measurement expressed as a percentage of the total amount of physically vacant space divided by the total amount of existing inventory. Under construction space generally is not included in vacancy calculations. Vacant Space: Space that is not currently occupied by a tenant, regardless of any lease obligation that may be on the space. Vacant space could be space that is either available or not available. For example, sublease space that is currently being paid for by a tenant but not occupied by that tenant, would be considered vacant space. Likewise, space that has been leased but not yet occupied because of finish work being done, would also be considered vacant space. Weighted Average Rental Rate: Rental rates that are calculated by factoring in, or weighting, the square footage associated with each particular rental rate. This has the effect of causing rental rates on larger spaces to affect the average more than that of smaller spaces. The weighted average rental rate is calculated by taking the ratio of the square footage associated with the rental rate on each individual available space to the square footage associated with rental rates on all available spaces, multiplying the rental rate by that ratio, and then adding together all the resulting numbers. Unless specifically specified otherwise, rental rate averages include both Direct and Sublet available spaces. Year Built: The year in which a building completed construction and was issued a certificate of occupancy. YTD: Abbreviation for Year-to-Date. Describes statistics that are cumulative from the beginning of a calendar year through whatever time period is being studied. D CoStar Industrial Statistics 2018 CoStar Group, Inc.
Overview Year-End 2017 Orange County Orange County s Vacancy Increases to 2.7% Net Absorption Negative (24,034) SF in the Quarter The Orange County Industrial market ended the fourth quarter 2017 with a vacancy rate of 2.7%. The vacancy rate was up over the previous quarter, with net absorption totaling negative (24,034) square feet in the fourth quarter. Vacant sublease space increased in the quarter, ending the quarter at 1,026,559 square feet. Rental rates ended the fourth quarter at $12.15, an increase over the previous quarter. A total of one building delivered to the market in the quarter totaling 200,000 square feet, with 963,138 square feet still under construction at the end of the quarter. Absorption Net absorption for the overall Orange County Industrial market was negative (24,034) square feet in the fourth quarter 2017. That compares to positive 244,736 square feet in the third quarter 2017, negative (300,566) square feet in the second quarter 2017, and negative (669,748) square feet in the first quarter 2017. Tenants moving into large blocks of space in 2017 include: Amazon moving into 238,270 square feet at 6400 Valley View St., Shaw Industries, Inc. moving into 234,763 square feet at 6550 Katelle Ave., and Southland Industries moving into 207,953 square feet at 12131 Western Ave. The Flex building market recorded net absorption of negative (42,071) square feet in the fourth quarter 2017, compared to positive 114,896 square feet in the third quarter 2017, positive 128,199 in the second quarter 2017, and negative (329,544) in the first quarter 2017. The Warehouse building market recorded net absorption of positive 18,037 square feet in the fourth quarter 2017 compared to positive 129,840 square feet in the third quarter 2017, negative (428,765) in the second quarter 2017, and negative (340,204) in the first quarter 2017. Vacancy The Industrial vacancy rate in the Orange County market area increased to 2.7% at the end of the fourth quarter 2017. The vacancy rate was 2.6% at the end of the third quarter 2017, 2.7% at the end of the second quarter 2017, and 2.5% at the end of the first quarter 2017. Flex projects reported a vacancy rate of 3.1% at the end of the fourth quarter 2017, 3.0% at the end of the third quarter 2017, 3.2% at the end of the second quarter 2017, and 3.4% at the end of the first quarter 2017. Warehouse projects reported a vacancy rate of 2.6% at the end of the fourth quarter 2017, 2.5% at the end of third quarter 2017, 2.5% at the end of the second quarter 2017, and 2.3% at the end of the first quarter 2017. Largest Lease Signings The largest lease signings occurring in 2017 included: the 238,270-square-foot lease signed by Amazon at 6400 Valley View St in the North County market; the 234,763-square-foot deal signed by Shaw Industries, Inc. at Cypress Distribution Center - Bldg 2 in the West County market; and the 207,953- square-foot lease signed by Southland Industries at 12131 Western Ave in the West County market. Sublease Vacancy The amount of vacant sublease space in the Orange County market increased to 1,026,559 square feet by the end of the fourth quarter 2017, from 490,281 square feet at the end of the third quarter 2017. There was 417,524 square feet vacant Vacancy Rates by Building Type 1996-2017 10% Flex Warehouse Total Market 9% 8% 7% Vacancy Rate 6% 5% 4% 3% 2% 1% 0% 2001 4q 2002 4q 2003 4q 2004 4q 2005 4q 2006 4q 2007 4q 2008 4q 2009 4q 2010 4q 2011 4q 2012 4q 2013 4q 2014 4q 2015 4q 2016 4q 20174 2018 CoStar Group, Inc. CoStar Industrial Statistics 1
Orange County Year-End 2017 Overview at the end of the second quarter 2017 and 411,262 square feet at the end of the first quarter 2017. Orange County s Flex projects reported vacant sublease space of 138,582 square feet at the end of fourth quarter 2017, up from the 113,001 square feet reported at the end of the third quarter 2017. There were 75,413 square feet of sublease space vacant at the end of the second quarter 2017, and 34,285 square feet at the end of the first quarter 2017. Warehouse projects reported increased vacant sublease space from the third quarter 2017 to the fourth quarter 2017. Sublease vacancy went from 377,280 square feet to 887,977 square feet during that time. There was 342,111 square feet at the end of the second quarter 2017, and 376,977 square feet at the end of the first quarter 2017. Rental Rates The average quoted asking rental rate for available Industrial space was $12.15 per square foot per year at the end of the fourth quarter 2017 in the Orange County market area. This represented a 10.6% increase in quoted rental rates from the end of the third quarter 2017, when rents were reported at $10.99 per square foot. The average quoted rate within the Flex sector was $15.38 per square foot at the end of the fourth quarter 2017, while Warehouse rates stood at $10.93. At the end of the third quarter 2017, Flex rates were $14.77 per square foot, and Warehouse rates were $9.76. Deliveries and Construction During the fourth quarter 2017, one building totaling 200,000 square feet were completed in the Orange County market area. This compares to one building totaling 51,450 square feet that were completed in the third quarter 2017, one building totaling 181,069 square feet completed in the second quarter 2017, and 64,859 square feet in two buildings completed in the first quarter 2017. There were 963,138 square feet of Industrial space under construction at the end of the fourth quarter 2017. U.S. Vacancy Comparison Past 10 Quarters Vacancy Rate 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Orange County (California) United States 2015 3q 2016 1q 2016 3q 2017 1q 2017 3q Some of the notable 2017 deliveries include: Jellco Container, a 200,000-square-foot facility that delivered in fourth quarter 2017 and is now 100% occupied, and 4150 N Palm St, a 181,069-square-foot building that delivered in second quarter 2017 and is now 100% occupied. The largest projects underway at the end of fourth quarter 2017 were Beckman Business Center - Building 1, a 309,439-square-foot building with 0% of its space pre-leased, and Beckman Business Center - Bldg 2, a 212,202-square-foot facility that is 0% pre-leased. Inventory Total Industrial inventory in the Orange County market area amounted to 304,176,904 square feet in 12,601 buildings as of the end of the fourth quarter 2017. The Flex sector consisted of 69,099,017 square feet in 3,248 projects. The Warehouse sector consisted of 235,077,887 square feet in 9,353 buildings. Within the Industrial market there were 1,768 owner-occupied buildings accounting for 60,105,787 square feet of Industrial space. Sales Activity Tallying industrial building sales of 15,000 square feet or larger, Orange County (California) industrial sales figures rose during the third quarter 2017 in terms of dollar volume compared to the second quarter of 2017. In the third quarter, 33 industrial transactions closed with a total volume of $342,208,368. The 33 buildings totaled 2,065,742 square feet and the average price per square foot equated to $165.66 per square foot. That compares to 32 transactions totaling $296,739,596 in the second quarter. The total square footage was 1,692,425 for an average price per square foot of $175.33. Total year-to-date industrial building sales activity in 2017 is up compared to the previous year. In the first nine months of 2017, the market saw 98 industrial sales transactions with a total volume of $1,105,000,334. The price per square foot has averaged $165.52 this year. In the first nine months of 2016, the market posted 105 transactions with a total volume of $860,044,824. The price per square foot averaged $167.22. Cap rates have been lower in 2017, averaging 5.10%, compared to the first nine months of last year when they averaged 5.26%. One of the largest transactions that has occurred within the last four quarters in the Orange County (California) market is the sale of CenterPoint SoCal Logistics Center in Buena Park. This 1,084,963-square-foot industrial building sold for $131,300,000, or $121.02 per square foot. The property sold on 3/31/2017. Reports compiled by: Jan Rasmussen, CoStar Senior Research Manager and Dusty McClure, Certified Research Analyst. 2 CoStar Industrial Statistics 2018 CoStar Group, Inc.
Markets Year-End 2017 Orange County CoStar Submarket Clusters & Submarkets In analyzing metropolitan areas, CoStar has developed geographic designations to help group properties together, called Markets, Submarket Clusters and Submarkets. Markets are the equivalent of metropolitan areas, or areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Markets are then divided into Submarket Clusters, which are core areas within a metropolitan area that are known to be competitive with each other in terms of attracting and keeping tenants. Markets are then further subdivided into smaller units called Submarkets, which serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted competitive set, or peer group. Submarket Clusters Airport Area Ind North County Ind South County Ind West County Ind Submarkets Costa Mesa Ind Fountain Valley Ind Irvine Ind Newport Beach Ind Santa Ana Ind Tustin Ind Anaheim Ind Brea/La Habra Ind Buena Park Ind Fullerton Ind Orange Ind Placentia/Yorba Linda Ind Irvine Spectrum Ind Laguna Hills/Aliso Viejo Ind Laguna Niguel/Laguna Beach Ind Lake Forest/Foothill Ranch/RSM Ind Mission Viejo Ind San Juan Cap/S Clemente/Dana Point Ind Cypress Ind Garden Grove Ind Huntington Beach Ind La Palma Ind Los Alamitos/Stanton Ind Seal Beach Ind Westminster Ind 2018 CoStar Group, Inc. CoStar Industrial Statistics 3
Orange County Year-End 2017 Inventory & development Historical Deliveries 1982-2017 12.0 Deliveries Average Delivered SF 10.4 10.0 Millions of SF 8.0 6.0 4.0 6.3 3.2 5.9 7.8 6.9 7.0 6.5 6.2 6.7 6.4 5.2 3.7 3.4 3.6 2.0 0.0 2.1 2.0 2.2 1.5 1.5 1.7 1.5 1.4 1.2 1.0 0.6 0.5 0.7 0.7 0.8 0.9 0.3 0.0 0.0 0.0 0.5 1982 1986 1990 1994 1998 2002 2006 2010 2014 * Future deliveries based on current under construction buildings. Construction Activity Markets Ranked by Under Construction RBA Under Construction Inventory Average Bldg Size Market # Bldgs Total RBA Preleased SF Preleased % All Existing U/C North County Ind 7 963,138 170,000 17.7% 26,585 137,591 West County Ind 0 0 0 0.0% 23,123 0 Airport Area Ind 0 0 0 0.0% 21,421 0 South County Ind 0 0 0 0.0% 24,509 0 Totals 7 963,138 170,000 17.7% 24,139 137,591 Recent Deliveries Leased & Un-Leased SF in Deliveries Since 2013 1.4 Leased Un-Leased 1.2 Millions of SF 1.0 0.8 0.6 0.4 0.2 0.0 2013 2015 2017 4 CoStar Industrial Statistics 2018 CoStar Group, Inc.
Inventory & development Year-End 2017 Orange County Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction 0.8 Construction Starts 0.7 Deliveries 0.7 0.7 0.6 Millions of SF 0.6 0.5 0.4 0.3 0.2 0.2 0.3 0.3 0.2 0.4 0.4 0.1 0.5 0.2 0.3 0.4 0.2 0.2 0.3 0.2 0.2 0.2 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.1 0.1 (0.1) (0.2) 2014 1q 2015 1q 2016 1q 2017 1q (0.1) Recent Deliveries by Project Size Breakdown of Year-to-Date Development Based on RBA of Project Building Size # Bldgs RBA SF Leased % Leased Avg Rate Single-Tenant Multi-Tenant < 50,000 SF 2 64,859 64,859 100.0% $0.00 23,191 41,668 50,000 SF - 99,999 SF 2 119,400 51,450 43.1% $0.00 119,400 0 100,000 SF - 249,999 SF 3 522,685 381,069 72.9% $0.00 141,616 381,069 250,000 SF - 499,999 SF 0 0 0 0.0% $0.00 0 0 >= 500,000 SF 0 0 0 0.0% $0.00 0 0 Recent Development by Tenancy Existing Inventory Comparison Based on RBA Developed for Single & Multi-Tenant Use Based on Total RBA 2017 Deliveries Currently Under Construction By Building Type By Tenancy Type 15% 0% 77% 23% 47% 53% 85% 100% Multi Single Multi Single Flex Warehouse Multi Single 2018 CoStar Group, Inc. CoStar Industrial Statistics 5
Orange County Year-End 2017 Inventory & development 6 CoStar Industrial Statistics 2018 CoStar Group, Inc.
Inventory & development Year-End 2017 Orange County 2018 CoStar Group, Inc. CoStar Industrial Statistics 7
Orange County Year-End 2017 Figures at a Glance Flex Market Statistics Year-End 2017 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Area Ind 1,125 22,710,020 886,710 925,375 4.1% (278,351) 0 0 $14.59 North County Ind 772 15,965,389 276,142 293,906 1.8% 188,576 23,191 0 $14.49 South County Ind 920 20,956,768 565,615 619,226 3.0% 40,699 0 0 $17.20 West County Ind 431 9,466,840 274,062 302,604 3.2% (79,444) 0 0 $13.56 Totals 3,248 69,099,017 2,002,529 2,141,111 3.1% (128,520) 23,191 0 $15.38 Warehouse Market Statistics Year-End 2017 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Area Ind 2,657 58,303,336 1,924,389 1,962,824 3.4% (678,073) 51,450 0 $10.69 North County Ind 4,038 111,909,965 2,077,194 2,164,732 1.9% 652,905 381,069 963,138 $10.67 South County Ind 947 24,801,590 583,333 822,650 3.3% (20,982) 0 0 $11.89 West County Ind 1,711 40,062,996 634,224 1,156,911 2.9% (574,942) 41,668 0 $10.95 Totals 9,353 235,077,887 5,219,140 6,107,117 2.6% (621,092) 474,187 963,138 $10.93 Total Industrial Market Statistics Year-End 2017 Existing Inventory Vacancy YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Area Ind 3,782 81,013,356 2,811,099 2,888,199 3.6% (956,424) 51,450 0 $11.84 North County Ind 4,810 127,875,354 2,353,336 2,458,638 1.9% 841,481 404,260 963,138 $11.17 South County Ind 1,867 45,758,358 1,148,948 1,441,876 3.2% 19,717 0 0 $14.20 West County Ind 2,142 49,529,836 908,286 1,459,515 2.9% (654,386) 41,668 0 $11.67 Totals 12,601 304,176,904 7,221,669 8,248,228 2.7% (749,612) 497,378 963,138 $12.15 8 CoStar Industrial Statistics 2018 CoStar Group, Inc.
Figures at a Glance Year-End 2017 Orange County Flex Submarket Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Anaheim Ind 291 6,038,828 124,877 130,237 2.2% 74,726 0 0 $15.99 Brea/La Habra Ind 92 1,833,540 14,475 21,215 1.2% 111,006 0 0 $14.14 Buena Park Ind 54 1,106,115 5,183 5,183 0.5% 32,775 23,191 0 $12.91 Costa Mesa Ind 377 5,489,158 178,577 193,205 3.5% (57,363) 0 0 $15.71 Cypress Ind 69 2,723,035 135,121 159,206 5.8% (74,455) 0 0 $13.98 Fountain Valley Ind 54 1,458,158 17,838 17,838 1.2% (9,159) 0 0 $13.53 Fullerton Ind 77 2,129,504 39,007 39,007 1.8% (12,453) 0 0 $12.43 Garden Grove Ind 89 1,892,609 76,169 80,626 4.3% (34,256) 0 0 $14.59 Huntington Beach Ind 172 3,013,542 48,848 48,848 1.6% 10,221 0 0 $11.74 Irvine Ind 279 6,428,080 221,488 241,622 3.8% (107,616) 0 0 $16.29 Irvine Spectrum Ind 362 10,736,856 349,463 386,170 3.6% 21,909 0 0 $17.69 La Palma Ind 1 78,980 0 0 0.0% 0 0 0 $0.00 Laguna Hills/Aliso Viejo Ind 116 2,615,229 61,168 65,571 2.5% (25,097) 0 0 $16.58 Laguna Niguel/Laguna Beach I 29 472,625 9,520 9,520 2.0% 4,820 0 0 $22.42 Lake Forest/Foothill Ranch/RS M 237 3,851,214 82,582 93,643 2.4% (11,217) 0 0 $15.01 Los Alamitos/Stanton Ind 74 1,215,966 12,104 12,104 1.0% 10,364 0 0 $14.69 Mission Viejo Ind 41 954,006 7,165 8,605 0.9% 6,436 0 0 $15.77 Newport Beach Ind 24 552,957 8,500 8,500 1.5% 6,095 0 0 $18.83 Orange Ind 149 2,547,179 36,634 41,406 1.6% (24,260) 0 0 $12.45 Placentia/Yorba Linda Ind 109 2,310,223 55,966 56,858 2.5% 6,782 0 0 $13.33 San Juan Cap/S Clemente/Da n 135 2,326,838 55,717 55,717 2.4% 43,848 0 0 $18.87 Santa Ana Ind 253 5,347,982 207,991 207,991 3.9% (77,531) 0 0 $12.13 Seal Beach Ind 1 4,360 0 0 0.0% 0 0 0 $0.00 Tustin Ind 138 3,433,685 252,316 256,219 7.5% (32,777) 0 0 $14.09 Westminster Ind 25 538,348 1,820 1,820 0.3% 8,682 0 0 $17.51 Totals 3,248 69,099,017 2,002,529 2,141,111 3.1% (128,520) 23,191 0 $15.38 Existing Inventory Vacancy Warehouse Submarket Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Anaheim Ind 1,833 44,895,977 496,534 514,457 1.1% 150,632 200,000 170,000 $11.31 Brea/La Habra Ind 529 15,549,387 320,301 378,607 2.4% 353,952 0 0 $10.27 Buena Park Ind 226 13,364,549 344,736 344,736 2.6% (274,283) 0 0 $10.20 Costa Mesa Ind 429 7,632,915 466,675 482,890 6.3% (20,835) 0 0 $13.19 Cypress Ind 99 4,262,922 108,222 108,222 2.5% (108,222) 0 0 $10.61 Fountain Valley Ind 186 3,857,245 38,008 40,528 1.1% 23,533 0 0 $11.91 Fullerton Ind 444 19,494,435 581,227 592,536 3.0% 575,938 181,069 793,138 $9.39 Garden Grove Ind 477 12,038,598 377,281 398,911 3.3% (54,592) 0 0 $11.09 Huntington Beach Ind 682 14,455,111 108,680 478,737 3.3% (285,142) 41,668 0 $11.02 Irvine Ind 319 12,221,403 205,294 219,294 1.8% (96,928) 51,450 0 $10.06 Irvine Spectrum Ind 212 9,925,722 243,563 405,138 4.1% (291,534) 0 0 $12.04 La Palma Ind 16 1,780,025 0 131,000 7.4% (131,000) 0 0 $0.00 Laguna Hills/Aliso Viejo Ind 90 1,722,597 9,910 9,910 0.6% 17,082 0 0 $14.28 Laguna Niguel/Laguna Beach I 39 370,148 15,356 15,356 4.1% (12,076) 0 0 $34.07 Lake Forest/Foothill Ranch/RS M 360 9,318,252 247,702 325,444 3.5% 276,258 0 0 $10.90 Los Alamitos/Stanton Ind 268 4,153,988 33,501 33,501 0.8% (13,039) 0 0 $11.43 Mission Viejo Ind 31 484,264 14,378 14,378 3.0% (12,068) 0 0 $17.23 Newport Beach Ind 39 441,594 17,723 17,723 4.0% (17,723) 0 0 $20.06 Orange Ind 737 13,673,301 256,698 256,698 1.9% (124,536) 0 0 $10.75 Placentia/Yorba Linda Ind 269 4,932,316 77,698 77,698 1.6% (28,798) 0 0 $12.01 San Juan Cap/S Clemente/Da n 215 2,980,607 52,424 52,424 1.8% 1,356 0 0 $13.90 Santa Ana Ind 1,567 29,667,168 960,496 960,496 3.2% (609,020) 0 0 $10.44 Seal Beach Ind 16 994,446 0 0 0.0% 0 0 0 $9.00 Tustin Ind 117 4,483,011 236,193 241,893 5.4% 42,900 0 0 $9.83 Westminster Ind 153 2,377,906 6,540 6,540 0.3% 17,053 0 0 $16.28 Totals 9,353 235,077,887 5,219,140 6,107,117 2.6% (621,092) 474,187 963,138 $10.93 Existing Inventory Vacancy 2018 CoStar Group, Inc. CoStar Industrial Statistics 9
Orange County Year-End 2017 Figures at a Glance Total Industrial Submarket Statistics Year-End 2017 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Anaheim Ind 2,124 50,934,805 621,411 644,694 1.3% 225,358 200,000 170,000 $12.05 Brea/La Habra Ind 621 17,382,927 334,776 399,822 2.3% 464,958 0 0 $10.57 Buena Park Ind 280 14,470,664 349,919 349,919 2.4% (241,508) 23,191 0 $10.48 Costa Mesa Ind 806 13,122,073 645,252 676,095 5.2% (78,198) 0 0 $14.51 Cypress Ind 168 6,985,957 243,343 267,428 3.8% (182,677) 0 0 $12.30 Fountain Valley Ind 240 5,315,403 55,846 58,366 1.1% 14,374 0 0 $12.04 Fullerton Ind 521 21,623,939 620,234 631,543 2.9% 563,485 181,069 793,138 $9.54 Garden Grove Ind 566 13,931,207 453,450 479,537 3.4% (88,848) 0 0 $11.71 Huntington Beach Ind 854 17,468,653 157,528 527,585 3.0% (274,921) 41,668 0 $11.22 Irvine Ind 598 18,649,483 426,782 460,916 2.5% (204,544) 51,450 0 $11.88 Irvine Spectrum Ind 574 20,662,578 593,026 791,308 3.8% (269,625) 0 0 $15.09 La Palma Ind 17 1,859,005 0 131,000 7.0% (131,000) 0 0 $0.00 Laguna Hills/Aliso Viejo Ind 206 4,337,826 71,078 75,481 1.7% (8,015) 0 0 $15.66 Laguna Niguel/Laguna Beach I 68 842,773 24,876 24,876 3.0% (7,256) 0 0 $27.29 Lake Forest/Foothill Ranch/RS M 597 13,169,466 330,284 419,087 3.2% 265,041 0 0 $11.86 Los Alamitos/Stanton Ind 342 5,369,954 45,605 45,605 0.8% (2,675) 0 0 $12.43 Mission Viejo Ind 72 1,438,270 21,543 22,983 1.6% (5,632) 0 0 $16.02 Newport Beach Ind 63 994,551 26,223 26,223 2.6% (11,628) 0 0 $19.50 Orange Ind 886 16,220,480 293,332 298,104 1.8% (148,796) 0 0 $10.97 Placentia/Yorba Linda Ind 378 7,242,539 133,664 134,556 1.9% (22,016) 0 0 $12.43 San Juan Cap/S Clemente/Da n 350 5,307,445 108,141 108,141 2.0% 45,204 0 0 $16.01 Santa Ana Ind 1,820 35,015,150 1,168,487 1,168,487 3.3% (686,551) 0 0 $10.76 Seal Beach Ind 17 998,806 0 0 0.0% 0 0 0 $9.00 Tustin Ind 255 7,916,696 488,509 498,112 6.3% 10,123 0 0 $12.18 Westminster Ind 178 2,916,254 8,360 8,360 0.3% 25,735 0 0 $16.67 Totals 12,601 304,176,904 7,221,669 8,248,228 2.7% (749,612) 497,378 963,138 $12.15 Existing Inventory Vacancy 10 CoStar Industrial Statistics 2018 CoStar Group, Inc.
Figures at a Glance Year-End 2017 Orange County 2018 CoStar Group, Inc. CoStar Industrial Statistics 11
Orange County Year-End 2017 Leasing Activity Historical Rental Rates Based on Quoted Rental Rates $18.00 Flex Warehouse Total Market $16.00 $14.00 Dollars/SF/Year $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 2001 4q 2003 4q 2005 4q 2007 4q 2009 4q 2011 4q 2013 4q 2015 4q 20174q Vacancy by Available Space Type Vacancy by Building Type Percent of All Vacant Space in Direct vs. Sublet Percent of All Vacant Space by Building Type Orange County (California) United States Orange County (California) United States 12% 4% 74% 26% 14% 86% 88% 96% Direct Sublet Direct Sublet Flex Warehouse Flex Warehouse U.S. Rental Rate Comparison Based on Average Quoted Rental Rates Future Space Available Space Scheduled to be Available for Occupancy* $14.00 $12.00 Orange County (California) United States 3.5 3.0 3.0 Dollars/SF/Year $10.00 $8.00 $6.00 $4.00 Millions 2.5 2.0 1.5 1.0 1.2 0.6 $2.00 $0.00 2015 3q 2016 1q 2016 3q 2017 1q 2017 3q 0.5 0.0 0.0 0.0 0.0 2018 1q 2018 3q 2019 1q * Includes Under Construction Space 12 CoStar Industrial Statistics 2018 CoStar Group, Inc.
Leasing Activity Year-End 2017 Orange County Select Top Industrial Leases Based on Leased Square Footage For Deals Signed in 2017 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company 1 6400 Valley View St Buena Park Ind 238,270 3rd Amazon N/A JLL 2 6550 Katella Ave Cypress Ind 234,763 3rd Shaw Industries, Inc. CBRE Cushman & Wakeeld 3 12131 Western Ave Garden Grove Ind 207,953 4th Southland Industries Savills Studley Voit Real Estate Services; Colliers 4 11130 Holder St Cypress Ind 187,465 2nd Primary Color Systems Corporation JLL; CBRE Cushman & Wakeeld 5 1701 S Anaheim Way Anaheim Ind 144,008 1st Rosendin Electric Inc. Newmark Knight Frank Newmark Knight Frank 6 3335 E La Palma Ave - Bldg D Anaheim Ind 132,231 3rd Daisy Nail Products Hopkins Global Advisors, Inc. CBRE 7 5911 Fresca Dr* La Palma Ind 131,222 1st Travelers Club, Inc. Direct Deal Direct Deal 8 14000 E 183rd St La Palma Ind 131,000 3rd Priority One Direct Deal Direct Deal 9 1765 Penhall Way Anaheim Ind 128,372 4th N/A N/A CBRE 10 675 S Placentia Ave* Fullerton Ind 127,375 4th CJ Foods Direct Deal Transwestern Property Management 11 2100 E Valencia Dr - Phase I Fullerton Ind 112,746 2nd California Hi-Lites, Inc. Lee & Associates CBRE 12 1650 Sunower Ave* Costa Mesa Ind 112,000 2nd FedEx Corporation Colliers International Colliers International 13 5600 Knott Ave Buena Park Ind 110,609 2nd RCUSA Holdings N/A Lee & Associates 14 3300 E Birch St Brea/La Habra Ind 106,969 3rd Whynter LLC CBRE Newmark Knight Frank 15 6201-6251 Knott Ave Buena Park Ind 102,367 2nd Flexport N/A CBRE 16 1709 Apollo Ct Seal Beach Ind 88,507 1st Limbach Lee & Associates Colliers International 17 15342 Graham St Huntington Beach Ind 84,754 4th Titan Footwear LLC N/A CBRE 18 4040 Carriage Dr Santa Ana Ind 81,916 1st McGu Company Newmark Knight Frank Myers - Erickson Properties, Inc. 19 9700 Toledo Way Irvine Spectrum Ind 77,313 4th NN, Inc. N/A CBRE 20 1360 S Vernon St* Anaheim Ind 70,145 2nd Eurowest Decorative Surface Direct Deal Direct Deal 21 3701 W Warner Ave Santa Ana Ind 63,982 1st Robinson Pharma Lee & Associates Myers - Erickson Properties, Inc. 22 210 W Baywood Ave* Orange Ind 62,500 2nd American Technologies, Inc. Direct Deal CBRE 23 1321 S State College Blvd Fullerton Ind 62,396 2nd Rexel N/A CBRE 24 11552 Monarch St Garden Grove Ind 58,317 3rd Service West CBRE Colliers International 25 501 Burning Tree Rd Fullerton Ind 55,740 3rd Toshiba Logistics N/A CBRE 26 333 N Euclid Way Anaheim Ind 55,175 3rd Nutrition Corp Food Properties Group Cushman & Wakeeld 27 5455 E La Palma Anaheim Ind 53,562 4th Smartex Lee & Associates DAUM Commercial Real Estate Service 28 1030 E Valencia Dr Fullerton Ind 52,591 3rd Cor-O-Van N/A Newmark Knight Frank 29 17817 Gillette Ave Irvine Ind 51,216 1st Custom Hardware Manufacturing, Inc. Direct Deal Direct Deal 30 1800 E Orangethorpe Ave Fullerton Ind 50,000 3rd Mckenna Labs CBRE Lee & Associates 31 900 E Arlee Pl Anaheim Ind 49,813 4th N/A N/A CBRE 32 337 W Freedom Ave* Orange Ind 49,515 4th SECURITYBASE.COM N/A Voit Real Estate Services 33 2091 Raymer Ave Fullerton Ind 48,772 1st Van Law Food Products Cushman & Wakeeld Voit Real Estate Services 34 20531 Crescent Bay Dr Lake Forest/Foothill Ranc 46,178 1st Ethica First Team Real Estate Lee & Associates 35 501 Airpark Dr Fullerton Ind 45,536 3rd Chefmaster Direct Deal Direct Deal 36 675 Endeavor Cir - Bldg 2 Brea/La Habra Ind 45,227 1st Terra Universal Cushman & Wakeeld CBRE 37 70 Icon Lake Forest/Foothill Ranc 45,190 4th A & J Manufacturing Company N/A CBRE 38 1830 Raymer Ave Fullerton Ind 45,000 1st Component Hardware Group Colliers International CBRE 39 189 Technology Dr Irvine Spectrum Ind 44,937 1st Kelley Blue Book N/A The Irvine Company 40 2890 E White Star Ave Anaheim Ind 44,395 4th N/A N/A Cushman & Wakeeld * Renewal 2018 CoStar Group, Inc. CoStar Industrial Statistics 13
Orange County Year-End 2017 Sales Activity The Optimist Sales Index Average of Two Highest Price/SF's and Two Lowest Cap Rates Per Quarter 6.0% Cap Rate Price/SF $380 $360 5.0% $340 Cap Rate Percentage 4.0% 3.0% 2.0% 1.0% $320 $300 $280 $260 $240 $220 $200 Dollars/SF 0.0% 2014 4q 2015 4q 2016 4q $180 Source: CoStar COMPS Sales Volume & Price Sales Analysis by Building Size Based on Industrial Building Sales of 15,000 SF and Larger Based on Industrial Bldg Sales From Oct. 2016 - Sept. 2017 $500 Sales Volume Price/SF $200 Bldg Size # RBA $ Volume Price/SF Cap Rate Millions of Sales Volume Dollars $450 $400 $350 $300 $250 $200 $150 $100 $180 $160 $140 $120 $100 $80 $60 $40 Price/SF < 25,000 SF 25K-99K SF 100K-249K SF 289 2,826,802 $628,627,159 $ 222.38 5.20% 54 2,480,935 $417,337,065 $ 168.22 5.10% 14 1,946,392 $335,127,780 $ 172.18 5.31% $50 $20 $0 2014 1q 2015 1q 2016 1q 2017 1q $0 >250K SF 7 2,964,696 $391,257,000 $ 131.97 5.30% Source: CoStar COMPS Source: CoStar COMPS U.S. Price/SF Comparison Based on Industrial Building Sales of 15,000 SF and Larger U.S. Cap Rate Comparison Based on Industrial Building Sales of 15,000 SF and Larger $190 Orange County (California) US 9.0% Orange County (California) US $180 8.0% $170 $160 $150 $140 $130 $120 Cap Rate Percentage 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% $110 1.0% $100 0.0% 2014 1q 2015 1q 2016 1q 2017 1q 2014 1q 2015 1q 2016 1q 2017 1q Source: CoStar COMPS Source: CoStar COMPS 14 CoStar Industrial Statistics 2018 CoStar Group, Inc.
Year-End 2017 Orange County 2018 CoStar Group, Inc. CoStar Industrial Statistics 15 Sales Activity
Orange County Year-End 2017 Deliveries, Absorption & Vacancy A i r p o r t A r e a M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse Historical Analysis, Flex and Warehouse Millions SF 0.600 0.400 0.200 0.000 (0.200) (0.400) Delivered SF Absorption SF Vacancy 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% Percent Vacant (0.600) 2014 1q 2014 2q 2014 3q 2014 4q 2015 1q 2015 2q 2015 3q 2015 4q 2016 1q 2016 2q 2016 3q 2016 4q 2017 1q 2017 2q 2017 3q 2017 4q 0.0% Vacant Space Historical Analysis, Flex and Warehouse Quoted Rental Rates Historical Analysis, Flex and Warehouse 3.50 Direct SF Sublet SF $12.00 3.00 $11.50 Millions SF 2.50 2.00 1.50 1.00 0.50 Dollars/SF/Year $11.00 $10.50 $10.00 $9.50 0.00 2016 1q 2016 3q 2017 1q 2017 3q $9.00 2016 1q 2016 3q 2017 1q 2017 3q Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2017 4q 3,782 81,013,356 2,888,199 3.6% (92,613) 0 0 0 0 $11.84 2017 3q 3,783 81,183,822 2,966,052 3.7% 65,171 1 51,450 0 0 $10.94 2017 2q 3,782 81,132,372 2,979,773 3.7% (457,361) 0 0 1 51,450 $10.91 2017 1q 3,782 81,132,372 2,522,412 3.1% (471,621) 0 0 1 51,450 $10.59 2016 4q 3,783 81,194,409 2,112,828 2.6% 248,364 0 0 1 51,450 $10.56 2016 3q 3,783 81,194,409 2,361,192 2.9% 165,319 0 0 1 51,450 $10.38 2016 2q 3,783 81,194,409 2,526,511 3.1% (131,044) 1 12,100 1 51,450 $10.15 2016 1q 3,783 81,192,309 2,393,367 2.9% 69,447 2 172,713 2 63,550 $10.18 2015 4q 3,782 81,210,114 2,480,619 3.1% (91,848) 0 0 3 184,813 $9.91 2015 3q 3,782 81,210,114 2,388,771 2.9% 258,749 0 0 3 184,813 $9.83 2015 2q 3,782 81,210,114 2,647,520 3.3% 493,977 0 0 2 172,713 $9.68 2015 1q 3,783 81,226,064 3,157,447 3.9% (233,735) 0 0 2 172,713 $9.58 2014 4q 3,786 81,356,559 3,054,207 3.8% (145,106) 0 0 0 0 $9.63 2014 3q 3,788 81,479,559 3,032,101 3.7% (68,478) 0 0 0 0 $9.54 2014 2q 3,789 81,589,559 3,073,623 3.8% 268,108 1 13,530 0 0 $9.44 2014 1q 3,789 81,720,733 3,472,905 4.2% (207,134) 1 31,098 1 13,530 $9.34 16 CoStar Industrial Statistics 2018 CoStar Group, Inc.
Deliveries, Absorption & Vacancy N o r t h C o u n t y M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse Year-End 2017 Orange County Historical Analysis, Flex and Warehouse Millions SF 0.800 0.700 0.600 0.500 0.400 0.300 0.200 0.100 0.000 (0.100) Delivered SF Absorption SF Vacancy 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% Percent Vacant (0.200) 2014 1q 2014 2q 2014 3q 2014 4q 2015 1q 2015 2q 2015 3q 2015 4q 2016 1q 2016 2q 2016 3q 2016 4q 2017 1q 2017 2q 2017 3q 2017 4q 0.0% Vacant Space Historical Analysis, Flex and Warehouse Quoted Rental Rates Historical Analysis, Flex and Warehouse 3.00 Direct SF Sublet SF $12.00 2.50 $10.00 Millions SF 2.00 1.50 1.00 Dollars/SF/Year $8.00 $6.00 $4.00 0.50 $2.00 0.00 2016 1q 2016 3q 2017 1q 2017 3q $0.00 2016 1q 2016 3q 2017 1q 2017 3q Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2017 4q 4,810 127,875,354 2,458,638 1.9% 476,901 1 200,000 7 963,138 $11.17 2017 3q 4,808 127,533,738 2,593,923 2.0% 223,684 0 0 9 1,304,754 $9.74 2017 2q 4,807 127,465,788 2,749,657 2.2% 98,139 1 181,069 4 579,566 $9.45 2017 1q 4,806 127,284,719 2,666,727 2.1% 42,757 1 23,191 4 590,635 $9.26 2016 4q 4,805 127,261,528 2,686,293 2.1% (64,058) 1 218,648 3 272,210 $9.11 2016 3q 4,804 127,042,880 2,403,587 1.9% 245,091 0 0 2 241,839 $8.85 2016 2q 4,805 127,158,669 2,764,467 2.2% 189,445 1 367,194 2 241,839 $8.86 2016 1q 4,804 126,791,475 2,586,718 2.0% 312,003 0 0 2 390,385 $8.73 2015 4q 4,804 126,791,475 2,898,721 2.3% 750,858 6 481,821 1 367,194 $8.45 2015 3q 4,798 126,309,654 3,167,758 2.5% 444,692 0 0 7 849,015 $8.27 2015 2q 4,798 126,367,549 3,670,345 2.9% 581,359 3 358,128 7 492,733 $8.10 2015 1q 4,796 126,026,533 3,910,688 3.1% (86,577) 0 0 10 850,861 $7.95 2014 4q 4,798 126,959,328 4,756,906 3.7% (115,815) 4 625,950 3 358,128 $7.79 2014 3q 4,794 126,333,378 4,015,141 3.2% 633,195 5 339,445 6 888,808 $7.78 2014 2q 4,789 125,993,933 4,308,891 3.4% 251,077 0 0 9 965,395 $7.68 2014 1q 4,789 125,993,933 4,559,968 3.6% 459,679 1 209,715 9 965,395 $7.82 2018 CoStar Group, Inc. CoStar Industrial Statistics 17
Orange County Year-End 2017 Deliveries, Absorption & Vacancy S o u t h C o u n t y M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse Historical Analysis, Flex and Warehouse Millions SF 0.600 0.500 0.400 0.300 0.200 0.100 0.000 (0.100) (0.200) Delivered SF Absorption SF Vacancy 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Percent Vacant (0.300) 2014 1q 2014 2q 2014 3q 2014 4q 2015 1q 2015 2q 2015 3q 2015 4q 2016 1q 2016 2q 2016 3q 2016 4q 2017 1q 2017 2q 2017 3q 2017 4q 0.0% Vacant Space Historical Analysis, Flex and Warehouse Quoted Rental Rates Historical Analysis, Flex and Warehouse 1.80 Direct SF Sublet SF $14.50 1.60 $14.00 Millions SF 1.40 1.20 1.00 0.80 0.60 Dollars/SF/Year $13.50 $13.00 $12.50 $12.00 0.40 0.20 $11.50 0.00 2016 1q 2016 3q 2017 1q 2017 3q $11.00 2016 1q 2016 3q 2017 1q 2017 3q Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates 2017 4q 1,867 45,758,358 1,441,876 3.2% (258,599) 0 0 0 0 $14.20 2017 3q 1,867 45,758,358 1,183,277 2.6% 40,568 0 0 0 0 $13.51 2017 2q 1,867 45,758,358 1,223,845 2.7% 387,698 0 0 0 0 $13.43 2017 1q 1,867 45,758,358 1,611,543 3.5% (149,950) 0 0 0 0 $13.18 2016 4q 1,867 45,758,358 1,461,593 3.2% (126,333) 0 0 0 0 $12.89 2016 3q 1,867 45,758,358 1,335,260 2.9% 268,110 0 0 0 0 $12.79 2016 2q 1,867 45,758,358 1,603,370 3.5% (62,466) 0 0 0 0 $12.61 2016 1q 1,867 45,758,358 1,540,904 3.4% (12,536) 2 43,920 0 0 $12.33 2015 4q 1,865 45,714,438 1,484,448 3.2% 336,456 1 26,382 2 43,920 $12.26 2015 3q 1,864 45,688,056 1,794,522 3.9% 108,886 0 0 3 70,302 $11.89 2015 2q 1,867 45,754,725 1,970,077 4.3% (61,389) 0 0 2 45,302 $11.96 2015 1q 1,867 45,754,725 1,908,688 4.2% (196,059) 0 0 1 26,382 $11.68 2014 4q 1,867 45,754,725 1,712,629 3.7% 151,464 0 0 1 26,382 $11.46 2014 3q 1,867 45,754,725 1,864,093 4.1% 516,676 0 0 1 26,382 $11.31 2014 2q 1,867 45,754,725 2,380,769 5.2% 10,948 0 0 0 0 $11.24 2014 1q 1,867 45,754,725 2,391,717 5.2% 50,363 0 0 0 0 $10.94 18 CoStar Industrial Statistics 2018 CoStar Group, Inc.