Colton Commercial & Partners, Inc.

State of the Market NEWSLETTERQ2 2013

Quick Trends Boom or Bust Statistics The San Francisco office market in Citywide Average Vacancy both sales and leasing activity is still moving forward at an unprec- Citywide Average Asking Rates edented rate. Vacancy levels are currently at 9.5% on an average Class A Buildings Asking Rates direct basis citywide and current average asking rental rents are Class B Buildings Asking Rates now at $40.50 per square foot, per year citywide. Sublease Inventory Considering there are currently 3.2 Unemployment Rate million square feet of new office towers under construction, within a quarter mile radius in the South Financial district, developers are betting the bank the growth will “Yesterday’s home continue at the 2011-2012 levels. The new towers are as follows: Transbay runs, don’t win Office Tower ➢ • 101 First Street (Transbay Tower) - 1.3 million rsf +/- today’s games.” ➢ • - 452,000 rsf +/- ➢ • 350 * - 450,000 rsf +/- ➢ • Street - 420,000 rsf +/- - Babe Ruth ➢ • - 307,000 rsf +/- ➢ • Foundry Square III - 286,000 rsf +/- * 100% pre-leased by Salesforce

Especially noteworthy is the fact that most of the above buildings will be modern high rises that are being built in a market that is being fueled by technology companies. Will technology companies find these super towers suitable to their needs??? Only time will tell.

Although the market has been red hot as of late, one interesting note is that spaces over 5,000 square feet citywide have taken an average of 22 months to lease.

COLTON commercial & 565 Commercial St Street, 4th Floor San Francisco, CA 94111 PARTNERS P: 415.834.1600 • F: 415.834.1601 • www.coltoncommercialsf.com State of San Francisco the Market NEWSLETTERQ2 2013

COLTON COMMERCIAL Top 10 Recent Leases* & PARTNERS RECENTLY CLOSED TENANT ADDRESS LEASE TYPE SQUARE FEET TRANSACTIONS SalesForce.com 101 Spear St Direct 228,721

Direct Property: Development Site Sale Square Inc. 1455 Market St. 85,111 Expansion Size: 143,062 sqft. +/- Location: 100 Hooper Street Represented: Multiple Rocket Space 180 Sansome St. Direct 48,938 Broker: B. Walker & M. Walker

Property: Office Building McKenna Long & 1 Market St. Direct 42,288 Location: 301 Howard Street Aldridge LLP Represented: Dropcam Broker: J. Shaffer & T. Cademartori Everest College 814 Mission St. Renewal 30,691 Property: Office Building Location: 950 Battery Street Willis Insurance Represented: Chevalier Partners 525 Market St. Direct 28,500 Broker: J. Shaffer & T. Cademartori Services of CA

Property: Office Building IMS Healthcare 425 Market St. Direct 26,164 Location: 52 2nd Street Represented: 52 2nd Street Associates Broker: B. Walker & M. Walker Meltwater 225 Bush St. Direct 26,000

Property: Office Building Location: 109 Stevenson Street Stripe 3180 18th St. Direct 25,943 Represented: Eishaus Investments Broker: B. Colton

Property: Office Building Go Grid 2 Harrison St. Direct 22,596 Location: 221 Pine Street Represented: Shop It To Me * Year to date Broker: J. Shaffer

Property: Office Building Location: Represented: Jaffe & Abkin Top 5 Recent Sales** Broker: B. Colton

Property: Office Building ADDRESS PRICE PRICE perSF RBA BUYER Location: 149 Bluxome Street Represented: Rainbeau Building Associates Broker: J. Shaffer & M. Walker 101 California St. $864,500,000 $735.28 1,175,749 GIC Real Estate

Property: Office Building The Union Investment Location: 221 Main Street 555 Mission St. $446,500,000 $801.59 557,015 Represented: Bio Ventures Group Broker: B. Colton Wells Real Estate 333 Market St. $395,250,000 $601.49 657,115 Property: Office/Industrial Building Investment Trust II Location: 450 Townsend Street Represented: Townsend Street Associates, LLC Rockefeller Group 50 Beale St. $305,000,000 $460.68 662,060 Broker: M. Walker & B. Walker Development

Property: Office Building Location: 2625 Bridgeway, Sausalito Foundry Square I $238,000,000 $712.08 334,230 Ohio STRS Represented: Schulberg Media Works Broker: B. McCubbin ** Within the past 12 months State of San Francisco the Market NEWSLETTERQ2 2013

Market Data

Asking Rents Are Being Driven By The Top 5% of the Market

SUB MARKET AVG ANNUAL ASKING RATE PER SF VACANCY RATE RENTAL RATE TREND

N. Financial District $47.00 8.5% x

S. Financial District $48.00 7.5% x

Jackson Square $38.75 8.0% x

North Waterfront $34.00 10.0% x

Union Square $40.00 8.6% x

Yerba Buena $42.00 9.8%

Civic Center $39.00 11.0%

Rincon / South Beach $50.00 6.0% x

SOMA $44.00 8.6% x

Mission $31.50 12.5% x

S.F. Historical Unemployment Data 11 % 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013

Citywide San Francisco Vacancy

16%

14%

12%

10%

8%

6%

4%

2%

0%

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 Colton Commercial & Partners, Inc.

Colton Commercial & Partners is a full-service commercial real estate firm specializing in Leasing, Investment Sales and Property Management in San Francisco and the Greater Bay Area. With over 150 years of combined experience, our team of commercial real estate brokers bring service and expertise to a whole new level.

Bradley L. Colton President [email protected] Bryant Place License #: 00805116 329 Bryant Street Jay D. Shaffer Partner & Co-Founder [email protected] License #: 01444640

William J. McCubbin Senior Vice President [email protected] License #00242620

Mark D. Walker Senior Vice President [email protected] License #: 00878051

Colton Commercial & Partners is pleased to announce that it has been named the Robert J. Walker property manager for 329 Bryant Street, a 21,000 square foot office complex located Broker Associate adjacent to the 2nd Street corridor. The complex is better known as Bryant Place. This [email protected] unique property has a multi-variety of spaces and sizes. The property is blessed with License #00442500 abundant parking for Tenant use. The ownership made the decision to reposition the property and retain us to implement Ty J. Cademartori that plan. Senior Sales & Leasing Associate Day to day management services are handled by Maeghan Brown with leasing [email protected] responsibilities handled by Mark D Walker. License #01756563

COLTON commercial & PARTNERS 565 Commercial St Street, 4th Floor San Francisco, CA 94111 P: 415.834.1600 • F: 415.834.1601 • www.coltoncommercialsf.com

The foregoing is based upon information provided by others which we believe is accurate, however, no guarantee, warranty or representation is made. We recommend that all interested parties independently verify its accuracy and completeness.