Market Overview A quarterly publication of the office market by The Axiant Group 2nd Quarter 2019

anchor tenant before break- Leasing activity continued to be robust ing ground. Now with Kaiser’s in the second quarter. Technology tenants commitment, the plan is for continued to dominate the market, which also construction to begin in early 2020. Kaiser owns three of the saw significant activity from traditional users buildings they are vacating in in San Francisco and the East Bay. Oakland: 1950 Franklin Street, 1800 Harrison Street, and 2000 2100 TELEGRAPH Vacancy Rates Remain Low but Stable Broadway. These buildings total Second quarter leasing activity and vacancy rates moved almost 1.1 million square feet. As part of the agreement, Lane slightly, from an adjusted 5.1% in the 1st quarter to 5.3% in Partners has agreed to purchase all of them. Kaiser’s current the 2nd quarter. Gross leasing increased from 1,200,397 s.f. in plan is to name the new complex “The Kaiser Permanente the 1st quarter to 1,969,857 s.f. in the 2nd quarter. Net ab- Thrive Center.” sorption was 385,581 square feet, slightly less than 1st quar- ter absorption of 540,802 square feet. First Republic Expands At One Front

SAN FRANCISCO SOMA SAN FRANCISCO FINANCIAL CORE Average asking First Republic Bank was on the move in the second quarter, Class A Rents Class B Rents Vacancy Class A Rents Class B Rents Vacancy rental rates for taking an additional 265,000 square feet and doubling its 100 11 80 12 Class A space in- footprint at . The 38-floor building has over 70 80 creased to $78.60 650,000 square feet of space. First Republic now occupies 9 60 10 in the 2nd quar- almost 80% of the building. The Paramount Group purchased 50

60 % Vacancy % Vacancy ter from $73.29 the building at the end of 2016. Paramount is a major player 7 40 8 in the 1st quar- in the national real estate market and $ Rental Rate 40 $ Rental Rate 30 ter, an increase owns three other large highrises in San 5 20 6 20 of 6.4%. Average Francisco: , 50 Beale 10 rental rates for Street, and 111 Sutter; they also recently 0 3 0 4 entered into an agreement to acquire Q318 Q418 Q119 Q219 Q318 Q418 Q119 Q219 Class B financial core space, were 55 Second Street. First Republic also MARIN Vacancy Central stable, moving from $66.79 in the 1st quarter to $67.73 in the has a significant presence at 111 Pine South Marin Rents A&B Central Rents A&B Vacancy South Street (also known as the First Republic 60 14 2nd quarter. Class B absorption was positive at 482,264. This was an increase in absorption from the 1st quarter, which had Building) and (both 50 buildings are next door to One Front St.). ONE FRONT STREET 12 negative absorption of 87,060 square feet. South of Market 40 (SOMA) vacancy rates remained the same as the previous % Vacancy quarter at 4.7% Oceanwide’s Mega Project In Flux 10 30 Oceanwide Center located at 50 First Street is a two-tower $ Rental Rate 20 Kaiser Makes Huge Commitment in Oakland mega project: One tower will be comprised of over a million 8 Kaiser made a huge long term commitment to the Oakland square feet of office space and 250 condominium units, while 10 market. They will be consolidating 7,200 employees from sev- the other will house the Waldorf Astoria Hotel. Chinese 0 6 en locations to 2100 Telegraph Ave. This future development, Q318 Q418 Q119 Q219 developer Oceanwide Holdings has been in the market trying currently know as Eastline, will be their national headquarters to secure additional financing to complete the project, but has OAKLAND CBD and total 1.6 million s.f., one of the largest lease commitments Class A Rents Class B Rents Vacancy been slow in doing so. It is rumored that if the developer can 60 15 in Bay Area history. Eastline’s developers, Lane partners and find a clear path to additional funding, SalesForce is ready to Strategic Urban Development Alliance, were waiting for an commit to the majority of the project. 50 13 40

% Vacancy Two , Suite 430 | San Francisco, CA 94111 30 10 www.axiantgroup.com $ Rental Rate 20 7 10

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PENINSULA Class A Rents Class B Rents Vacancy 80 14

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0 6 Q318 Q418 Q119 Q219 SAN FRANCISCO MARKET OVERVIEW 2nd Quarter 2019

SAN FRANCISCO SOMA Where’s theSAN Space?FRANCISCO FINANCIAL CORE Class A Rents Class B Rents Vacancy Class A Rents Class B Rents Vacancy 100 11 Submarket 80 Direct SF Vacancy Sublet SF Vacancy12 Total SF Vacancy

70 (direct) (sublet) (Total) 80 9 Top 10 Build. 60 539,083 4.50% 96,185 10 .80% 635,268 5.20%

Fin. Dist A 50 1,976,208 4.30% 503,845 1.10% 2,480,503 5.30%

60 % Vacancy % Vacancy 7 Fin Dist. B 40 809,958 6.40% 274,497 82.20% 1,084,455 8.60% $ Rental Rate 40 $ Rental Rate SOMA A 30 187,780 5.30% 37,516 1.10% 229.256 6.40%

5 SOMA B 20 342,893 3.40% 69,358 6 .70% 412,251 4.10% 20 10

0 3 Large Tenants0 in the Market 4 Q318 Q418 Q119 Q219 Q318 Q418 Q119 Q219 Tenant Sq. Ft. MARIN Vacancy Central SalesForce 700,000+ South Marin Rents A&B Central Rents A&B Vacancy South 60 14 Credit Karma 110,000 KeepTrucking 51,000 50 12 Skillz 45,000 40 % Vacancy 30 10 Major Leases Completed in the Second Quarter

$ Rental Rate Tenant Sq. Ft. Address 20 8 Kaiser Permanente**** 1,600,000 2100 Telegraph Ave. 10 First Republic Bank*** 265,000 One Front Street

0 6 Slack 208,459 Q318 Q418 Q119 Q219 Sony / Playstation 131,000 303 Second Street OAKLAND CBD Autodesk 117,673 Class A Rents Class B Rents Vacancy 60 15 GlassDoor 116,688 50 Beale Street

50 Workday* *** 74,430 160 Spear Street 13 Hanson Bridgett LLP* 54,103 40

% Vacancy Knotel 50,821 901 Market Street 30 10

$ Rental Rate *Renewal **Sublease ***Expansion ***Oakland lease 20 7 10

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PENINSULA Class A Rents Class B Rents Vacancy 80 14 70 The Axiant Group Can Help You 60 12 Do you want information about rents and space available in your 50

% Vacancy building? Are you interested in subleasing or terminating your 40 10 lease? Is your lease expiring in the next three years? $ Rental Rate 30 Contact The Axiant Group. We have handled transactions from 1,000 to 1,000,000 sq.ft. in the Bay Area and throughout the 8 20 U.S. The average tenure of our brokers is over 20 years. We 10 have handled assignments for clients including Chevron U.S.A., 0 6 Coblentz, Patch, Duffy & Bass, Oracle Corporation, PG&E, Sutro Q318 Q418 Q119 Q219 & Company, Zurich Scudder Investments, Charles Schwab, Texas John Abel – Principal Pacific Group, Club One, Moss Adams, and many others. T 415.374.2103 [email protected] License #00884176

Two Embarcadero Center, Suite 430 | San Francisco, CA 94111 www.axiantgroup.com