Available Scarcity: Looking for Space in 2016

Research & Forecast Report PLEASANTON TRI-VALLEY INDUSTRIAL Q4 Available Scarcity: Looking for Space in 2016 > Hitting an all-time low, overall vacancy drops to 4.4 percent. > Overall weighted average asking rate climbs to $0.71 per square foot NNN. > Absorption for the quarter closed at positive 149,059 square feet. The Tri-Valley industrial market experienced a tremendous finish to the year with warehouse and light industrial vacancies at a record low and with overall asking rental rates continuing to push higher. With vacancy rates also at record lows along the Industrial I-880 Corridor and South Bay, user migrations from these markets and user expansions within the Tri-Valley industrial region continue to put pressure on remaining industrial buildings for lease or sale. With a positive net absorption of 330,512 square feet year-end for the Tri-Valley region industrial market, the current quarter s net positive absorption represented 45 percent of the entire year s net absorption combined. With only 4.4 percent vacancy in the Tri-Valley industrial market remaining, one would expect whatever remaining industrial land in Livermore would begin development activity immediately. This is not the case. With the exception of Bentall Kennedy/Trammell Crow s 1.3 million square feet under construction in West Livermore near the airport, the cost of entitled land, development fees and construction costs together cannot justify building additional industrial speculative product against current market rental rates. Industrial brokers in the Tri-Valley region are wondering whether there will be enough inventory to show prospective buyers or sellers before suggesting that users look to other markets. Historical Vacancy and Average Asking Rates Tri-Valley Overall 12% 10% 8% 6% 4% 2% 0% Vacancy Rate Weighted Average Asking $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 The Tri-Valley industrial market experienced a tremendous finish to the year, with warehouse and light industrial vacancies at a record low and with overall asking rental rates continuing to push higher. Market Indicators - Tri-Valley Average Blue Collar Unemployment Household Income Jobs Rate 145,711 Market Trends Relative to prior period Q4 Q1 2016* Vacancy Net Absorption Construction Rental Rate *Projected Summary Statistics Q4 Tri-Valley Industrial Market 9.64% Previous Quarter Current Quarter Vacancy Rate 5.4% 4.4% Overall Asking Rate* $0.67 $0.71 Light Industrial Asking Rate* $0.80 $0.83 Whse/Dist Asking Rate* $0.48 $0.47 Net Absorption 125,209 149,059 Gross Absorption 184,558 237,330 *Asking rates are reported on a triple net monthly basis U.S. Economic Indicators Unemployment Rate 5.1% 5.0% Labor Force Participation Rate 62.4% 62.5% Consumer Price Index 2.4% 2.4% Interest Rate - 10 Yr Treasury 2.0% 2.3% Business Confidence 99.4% 99.1% Consumer Confidence 100.2% 96.5% Data Source: EDD Labor Market Information Division 3.1%

The light industrial market dropped from 6.6 percent vacancy in to 4.8 percent vacancy at the end of, which is a decrease of close to 42 percent year-over-year. Weighted average asking triple net (NNN) rental rates for light industrial jumped 15 percent yearover-year, from $0.73 to $0.83 per square foot. The light industrial market in the Tri-Valley region absorbed only a net 28,157 square feet during the fourth quarter, which represents just 25 percent of the warehouse space that was absorbed during the same quarter. While it is hard to imagine vacancy rates for light industrial declining further in 2016, given the lack of inventory in Dublin and Pleasanton, most of the activity will, again, come from the Livermore market. The warehouse sector was 21.8 percent vacant in the beginning of 2012; now the warehouse sector has an amazing 3.9 percent vacancy. A fourth quarter positive net absorption of 120,902 square feet means that there is very little product remaining in this category. There is virtually no warehouse space available in either Pleasanton or Dublin. With the exception of the Bentall Kennedy/Trammell Crow buildings currently under construction in Livermore, any user greater than 100,000 square feet currently has only one option in the Tri-Valley market. Dublin/Pleasanton Light Industrial Compared to Livermore, the Dublin/Pleasanton light industrial markets represent a quarter of the Tri-Valley industrial product type. With very little vacant space to lease, we expect that rental rates for smaller spaces will remain close to $1.00 per square foot, NNN, for both of these markets. With the 205,515 square foot light industrial building (formerly Chevron) at 6400 Sierra Court under re-development by the Covington Group of Southern California, the new owners expect this building to be fully leased by the second quarter of 2016, with multiple leases out for signature at the end of. Divisible to 20,000 square feet, asking rental rates for this property are $0.80 per square foot, NNN, with $0.17 per square foot in estimated operating expenses. Several of the tenants leasing space in the building are expanding directly from within the local Dublin industrial market. With that building fully leased, Dublin will have virtually no available space for lease. No industrial buildings sold in Dublin during the fourth quarter of, and only one building is available for sale; a 20,825 square foot light industrial building on Sierra Court, with an asking price of $4,477,375 ($215 per square foot). Weighted average asking rental rates increased 11 percent at the end of over the end of, and vacancy rates decreased approximately 4 percent for the year. Historical Vacancy and Average Asking Rates Tri-Valley Light Industrial 10% 8% 6% 4% 2% 0% Vacancy Rate Weighted Average Asking Given the lack of expected near term development... we expect rental rates and sale prices to continue to rise. $0.90 $0.80 $0.70 $0.60 $0.50 Historical Net Absorption and Gross Absorption 600,000 500,000 400,000 300,000 In the Pleasanton industrial market, vacancy remains as tight as ever at 2.0 percent. Transactions were primarily small, at less than 3,000 square feet. Some smaller industrial condominiums sold in the Pleasanton market, which ranged from $175.00 - $212.00 per square foot. The most significant quarterly transaction was the 1.07 acre Mastercraft Boat lot sale to the neighboring owner, Mercedes-Benz of Pleasanton. Year over year, vacancy rates decreased to 2.0 percent, and rental rates increased 10 percent. 200,000 100,000 0-100,000 2013 2013 Net Absorption Gross Absorption 2 Tri-Valley Research & Forecast Report Q4 Industrial Colliers International

Looking forward to 2016, expect these two markets to remain incredibly tight, and any available product for lease or sale will continue to see prices rise. Any users in this market who desire to significantly expand will be forced to look east to Livermore. Significant transactions that occured in the Dublin/Pleasanton industrial market for included: Address Tenant/Buyer Owner Size 6400 Sierra Ct. Covington Group Wells Fargo 205,515 6444 Sierra Ct. New Life Church General Steamship 60,045 3500 Boulder St. Peri Formworks Bormolini Dev. 7.00 AC Livermore Light Industrial/Warehouse The Livermore light industrial/warehouse market consists of 13,091,389 square feet of buildings, and with Bentall Kennedy/ Trammell Crow s soon to be completed addition of 1,300,000 square feet of state-of-the-art warehouse space, this market will grow by over 11 percent. Never in recent history has the Livermore light industrial/ warehouse market been healthier. The total Livermore industrial market vacancy is down to 3.9 percent, declining by a full 25.6 percent over the previous quarter. It is remarkable that the weighted, average, NNN, asking rental rate has remained flat between and the end of, despite the significant positive net absorption and decrease in vacancy rates. This might be the result of fewer Class A buildings left on the market. The overall net absorption for light industrial warehouse space was strong in the fourth quarter, representing 41 percent of Livermore s entire net absorption for. Only two sales occurred in Livermore during the fourth quarter of : a 2,200 square foot industrial condominium sale; and a 13,489 square foot, single standing, light industrial building. Noteworthy lease transactions included the 27,153 square foot, light industrial lease to Mark Richie Woodworking by Arroyo/Livermore Business Park LP; the Bruzzone Family Trust s full lease-up of their building at 4754 Bennett Drive to Flomax Products, Inc. (12,849 square feet) and ScreenTech, Inc. (46,096 square feet); and Exeter Property Group s full lease-up of their Livermore property at 7701 Las Positas Road to LG Houses America (61,957 square feet). Available Space by Square Foot Range 12% 31% 21% 12% 24% 0-5,000 5,001-10,000 10,001-20,000 20,001-50,000 50,001 - Above Comparable Overall Industrial Vacancy Rates 14.0% 13.2% 12.0% 10.0% 8.0% 6.0% 4.0% 3.9% 2.0% 2.0% 0.0% Dublin Livermore Pleasanton GREENVILLE BUSINESS CENTER LG Hausys America signed a 61,957 square foot lease for 5 years. Earlier in the year, the property sold to an investor, Exeter Property Group, who then leased it within 9 months. 3 Tri-Valley Research & Forecast Report Q4 Industrial Colliers International

Looking back at, some of the larger Livermore industrial transactions included: Address Tenant/Buyer Owner Size 7539 Las Positas Rd. MXD Group, Inc. IPT 89,429 7501-7600 Marathon Scannell Properties Callahan Properties 9.9 AC 7150 Patterson Pass* Z-Line Designs Principal Financial 75,886 6611 Preston Ave. Homesite Services, Inc. Tulloch 53,575 5476 Brisa St. Exeter Property Group Gallagher Properties 60,000 6877 Brisa St. Lot 1 Majestic Realty Harvest 6.73 AC 6877 Brisa St. Lot 2 Livermore Sanitation Harvest 6.64 AC 450 Discovery Lot 2/3 CC Industries (Gillig) DGP 5.87 AC Hawthorne Place Majestic Realty G&S, Inc. 12.75 AC 2150 Kitty Hawk Rd. Lambertson LLC Silver 96,852 7501-7587 Las Positas IPT Alere 266,825 7701-7775 Las Positas Exeter Bolliboka 81,717 6242-6269 Preston Ave. BM Tonkin Terrill Co. 56,832 *Renewal Employment By Category White Collar Data Source: The Nielsen Company Blue Collar Service 13% 10% 77% The activity level is strong for the three-building, 1,298,207 square foot, Class A distribution product under construction in the Oaks Business Park. The three buildings (635,533, 367,734 and 294,940 square feet) have significant activity with enough current user-driven demand to lease all three buildings, if the transactions are completed. Given the rarity of these kinds of buildings in the Greater Bay Area today, the developer remains cautious regarding the tenant quality and creditworthiness prior to making any lease commitments. Looking Ahead There is not much room for vacancy rates to fall in 2016. One expects that new industrial development should occur in Livermore, given the availability of entitled, developable land. However, developers that have considered the cost of industrial land ($7.50 - $9.00 per square foot); the cost of industrial permits and fees ($20.00 - $25.00 per building square foot); and the cost to construct a new shell industrial building in the San Francisco Bay Area, have calculated that new, smaller, light industrial buildings for sale would need to be in the $210.00 - $215.00 per square foot range to justify building this type of speculative product. Given the lack of expected near term development (unless there are build-to-suit opportunities such as the Roadrunner transaction), we expect rental rates and sale prices to continue to rise. While the Tri-Valley region will remain a preferred destination for South Bay and I-880 Corridor manufacturers and distributors that wish to be closer to the Central Valley for customers and their employees, the potential lack of available space for lease or sale may drive many of them to look over the Altamont to markets such as Tracy, Manteca, Stockton and others. Case in point is McCarthy Granite, a Livermore distributor of granite slabs, who closed escrow on two light industrial buildings (10,000 and 13,000 square feet) from Mark West III in Tracy at the end of. One expects that new industrial development should occur in Livermore, given the availability of entitled, developable land. Population Data Source: The Nielsen Company 293,461 2020 Projected 315,914 7.65% Growth -2020 4 Tri-Valley Research & Forecast Report Q4 Industrial Colliers International

Significant Lease & Sale Activity Flomax Products Inc. 4754 Bennett Drive, Livermore November 12,849 Warehouse/Distribution 680 SAN RAMON LIVERMORE TruTeam of California 6144 Industrial Way, Livermore December 15,795 Light Industrial DUBLIN PLEASANTON 580 LG Hausys America 7701 Las Positas Road, Livermore November 61,957 Warehouse/Distribution Enterprise Court LLC 672 Enterprise Court, Livermore October 13,489 Light Industrial Majestic Realty Company 6877 Brisa Street, Lot 1, Livermore December 293,072 (6.73 acres) Land = LEASE = SALE Screen-Tech Inc. 4754 Bennett Drive, Livermore November 46,096 Warehouse/Distribution Mark Richey Woodworking 4577 Las Positas Road, Livermore December 27,153 Light Industrial LIVERMORE LOGISTICS CENTER Majestic Realty Company purchased the 6.73 acre site at 6877 Brisa Street in Livermore. The plan is to develop a warehouse/distribution facility. 5 Tri-Valley Research & Forecast Report Q4 Industrial Colliers International

Market Comparisons Tri-Valley INDUSTRIAL MARKET CLASS BLDGS 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 FSG DUBLIN Lt Ind 41 1,302,025 205,515 15.8% - 0.0% 205,515 15.8% 16.5% 8,887 285 33,737 - - $1.00 Whse 2 259,917-0.0% - 0.0% - 0.0% 0,0% - - - - - $0.80 Total 43 1,561,942 205,515 13.2% - 0.0% 205,515 13.2% 13.7% 8,887 285 33,737 - - $1.00 LIVERMORE Lt Ind 309 6,601,394 226,295 3.4% - 0.0% 226,295 3.4% 3.6% 10,766 167,016 430,119 - - $0.60 Whse 50 6,489,995 244,421 3.8% 36,545 0.6% 280,966 4.3% 6.2% 120,902 152,174 545,989-1,298,207 $0.47 Total 359 13,091,389 470,716 3.6% 36,545 0.3% 507,261 3.9% 4.9% 131,668 319,190 976,108-1,298,207 $0.53 PLEASANTON Lt Ind 127 2,251,255 55,702 2.5% - 0.0% 55,702 2.5% 3.5% 8,504 11,037 50,076 - - $1.10 Whse 2 487,405-0.0% - 0.0% - 0.0% 0.0% - - - - - $ - Total 129 2,738,660 55,702 2.0% - 0.0% 55,702 2.0% 2.9% 8,504 11,037 50,076 - - $1.10 MARKET TOTAL Lt Ind 477 10,154,674 487,512 4.8% - 0.0% 487,512 4.8% 5.2% 28,157 178,338 513,932 - - $0.83 Whse 54 7,237,317 244,421 3.4% 36,545 0.5% 280,966 3.9% 5.6% 120,902 152,174 545,989-1,298,207 $0.47 Total 531 17,391,991 731,933 4.2% 36,545 0.2% 768,478 4.4% 5.4% 149,059 330,512 1,059,921-1,298,207 $0.71 QUARTERLY COMPARISON AND TOTALS Q4-15 531 17,391,991 731,933 4.2% 36,545 0.2% 768,478 4.4% 5.4% 149,059 330,512 1,059,921-1,298,207 $0.71 Q3-15 531 17,391,991 890,693 5.1% 41,545 0.2% 932,238 5.4% 6.1% 125,209 181,453 822,591-1,298,207 $0.67 Q2-15 531 17,391,991 1,057,447 6.1% - 0.0% 1,057,447 6.1% 6.4% 62,499 56,244 638,033-1,298,207 $0.67 Q1-15 531 17,391,991 1,096,710 6.3% 23,236 0.1% 1,119,946 6.4% 6.4% (6,255) (6,255) 275,519-1,298,207 $0.65 Q4-14 535 17,508,130 1,000,892 5.7% 112,799 0.6% 1,113,691 6.4% 6.7% 57,826 187,028 717,109 - - $0.65 6 Tri-Valley Research & Forecast Report Q4 Industrial Colliers International

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 COLLIERS INTERNATIONAL PLEASANTON 3825 Hopyard Road, Suite 195 Pleasanton, CA 94588 USA +1 925 463 2300 MARKET CONTACTS: Marshall Snover Executive Managing Director CA License No. 00882591 +1 925 227 6205 marshall.snover@colliers.com Lisa Kohler Research Analyst II +1 925 227 6236 lisa.kohler@colliers.com CONTRIBUTING AUTHOR: Mark Triska, SIOR Executive Vice President 1.7 billion square feet under management 16,300 professionals and staff About Colliers International Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) is a global leader in commercial real estate services with more than 16,300 professionals operating from 502 offices in 67 countries. With an enterprising culture and significant insider ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include brokerage, global corporate solutions, investment sales and capital markets, project management and workplace solutions, property and asset management, consulting, valuation and appraisal services, and customized research and thought leadership. Colliers International has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals Global Outsourcing for 10 consecutive years, more than any other real estate services firm. For the latest news from Colliers International, visit Colliers.com or follow us on Twitter (@ColliersIntl) and LinkedIn. colliers.com Copyright Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.