Market Report ////////// Inland Empire //////////// ///////// Los Angeles Industrial ///////////////////////////////////////// LA North

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///////////////////////////////////////// ////////////Ventura///////////////// Q2 | 2019 ///////////////////////////////////////// Market Report ////////// Inland Empire //////////// ///////// Los Angeles Industrial ///////////////////////////////////////// LA North

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///////////////////////////////////////// Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental or other conditions, prior sale, lease or financing, or withdrawal without notice.

www.daumcommercial.com | O N C O R I N T E R N A T I O N A L MARKET Industrial 2019 Los Angeles North REPORT Q2

MARKET ACTIVITY KEY TAKE AWAYS ECONOMIC OUTLOOK

MARKET D • Vacancy Rate: Holds steady at 2.2%. Direct Vacancy Net Absorption • Net Absorption: Was flat in Q2. Totaling a little under U.S. Employment U6 Rate 22,659 SF 23K SF of positive absorption. 2.0% • Industrial Supply: The new supply under 3.6% 7.1% construction in the Santa Clarita Valley is long overdue for the LA North market. V • Asking Rents: Pushed to all-time highs. • Sale Prices: The LA North market saw the median Overall Vacancy Gross Absorption price PSF increase by 6% to $214.46. Volume Interest Rate Changing GDP 2.2% 1,518,433 SF increased by a factor of 124.7% due to the sale of 3.7% large portfolios. (30 year fixed) 1.5%

ECONOMIC OUTLOOK

Under Construction Rental Rates (NNN) • Interest Rates: The yield curve inverted in Q2. A Port Traffic Y/Y Δ NYSE Performance 1,270,099 SF sign that a potential recession could happen in $1.06 the future. The Fed is not expected to cut rates 32.5% 3.3% this year. Remains cautious about the economy. • Trade: U.S. talks with China stalled in Q2. After a meeting between the 2 countries at the G20, they agreed to pause additional tariffs & resume Sale Price Change Deal Volume trade talks. Inflation Change 10 Yr. - 2 Yr. Spread • Stock Market: Indexes were volatile in Q2, but 6.0% 124.7% posted positive returns. +1.8% 25 BPS • Oil: Crude Oil was down 5% in Q2.

EXPERIENCE IN A CHANGING MARKET ///////////////////////////////////////// @DAUMCOMMERCIAL

Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental or other conditions, prior sale, lease or financing, or withdrawal without notice. www.daumcommercial.com | O N C O R I N T E R N A T I O N A L ///////// Market Report Q2

OVERALL VACANCY NET ABSORPTION HOLDS STEADY AT 2.2% DIRECT FIGURES DIPPED INTO THE NEGATIVE, BUT MARGINALLY

Direct Vacancy Total Vacancy Historical Average Net Absorption SF Direct Overall Vacancy

6.00% 2,000,000 6.00%

5.00% 1,500,000 5.00% 1,000,000

4.00% 4.00% 2019

500,000 3.00% 3.00% 0 Q2 2.00% 2.00%

(500,000) //// //// 1.00% (1,000,000) 1.00%

0.00% (1,500,000) 0.00%

2002 2003 2004 2005 2006 2008 2009 2010 2011 2013 2014 2015 2016 2018 2019 2001 2007 2012 2017

2002 2003 2004 2006 2007 2008 2010 2011 2012 2013 2014 2015 2016 2017 2019 2001 2005 2009 2018

Industrial

GROSS ABORPTION ASKING RENTS | FALLS SIGNIFICANTLY TO BELOW HISTORIC AVERAGE REMAIN AT ALL-TIME HIGHS

Gross Absorption SF Total Historical Average NNN Rent Direct Overall Vacancy

3,500,000 $1.20 6.00% $1.10

3,000,000 North L.A. $1.00 5.00% 2,500,000 $0.90 4.00% $0.80 2,000,000 $0.70 3.00% 1,500,000 $0.60 2.00% 1,000,000 $0.50 $0.40 1.00% 500,000 $0.30

0 $0.20 0.00%

2001 2002 2003 2006 2007 2008 2009 2010 2011 2012 2014 2015 2016 2017 2018 2019 2004 2005 2013 2001 2003 2004 2005 2007 2008 2009 2010 2011 2012 2013 2014 2016 2017 2018 2002 2006 2015 2019

www.daumcommercial.com | O N C O R I N T E R N A T I O N A L ///////// Market Report Q2 LEASING ACTIVITY CONSTRUCTION ACTIVITY DECLINED IN Q2 FROM STRONG Q1 INCREASED IN Q2 WITH NEW DEVELOPMENTS IN THE SCV

Leasing Activity SF Direct Leasing Activity SF Sublet Under Construction SF

3,000,000 2,500,000

2,500,000 2,000,000 2,000,000

1,500,000 2019 1,500,000 1,000,000 1,000,000 Q2 500,000

500,000 //// ////

0 0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 2014 2015 2016 2017 2018 2019 2001 2012

2001 2002 2003 2006 2007 2008 2009 2010 2011 2012 2014 2015 2016 2017 2018 2019 2004 2005 2013

SALES PRICES INCREASED 6% FROM Q1 TO $214.46 PSF Industrial

VOLUME SKYROCKETED TO HISTORIC HIGH IN Q2 |

Antelope Valley Conejo Valley Santa Clarita Valley SFV-East SFV-West Med. Price PSF $400,000,000 $300.00 $350,000,000

$250.00 North L.A. $300,000,000 $250,000,000 $200.00 $200,000,000 $150.00

$150,000,000 $100.00 $100,000,000 $50,000,000 $50.00

$0 $0.00

2001 2002 2004 2005 2006 2008 2009 2010 2012 2013 2014 2016 2017 2018 2019 2003 2007 2011 2015

www.daumcommercial.com | O N C O R I N T E R N A T I O N A L ///////// Market Report Q2

SQUARE FOOT BREAKDOWN– 166,486,073 SF MARKET SIZE VACANCY BREAKDOWN

Direct Vacancy Rate Overall Vacancy Rate 6% 2% 5.0% 4.5% 28% 4.0% 4.4% 14% Antelope Valley 4.2% 3.5% Conejo Valley 3.5% 3.6%

3.0% 2019 Santa Clarita Valley 2.5% 2.5%

2.0% 2.4% Q2 SFV-East 2.2% 1.5% SFV-West 1.0% 1.2% 1.3% 0.5% //// 0.0% 50% Antelope Conejo Santa Clarita SFV-East SFV-West

Valley Valley Valley

Industrial

| AVERAGE RENT PSF VOLUME BREAKDOWN

Average Industral Rent Sales Volume Price PSF

$1.60 $350,000,000.00 $250.00 $1.40 $300,000,000.00

$200.00 North L.A. $1.43 $250,000,000.00 $1.20 $1.26 $200,000,000.00 $150.00 $1.00 $1.13 $150,000,000.00 $100.00 $0.80 $100,000,000.00 $0.87 $50.00 $0.60 $0.77 $50,000,000.00 $0.00 $0.00 $0.40 $0.20 $0.00 Antelope Conejo Santa SFV-East SFV-West Valley Valley Clarita Valley

www.daumcommercial.com | O N C O R I N T E R N A T I O N A L /////////////////////////////////////////

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////////////Ventura///////////////// ///////////////////////////////////////// Economic Overview ////////// Inland Empire //////////// ///////// Q2 2019 /////////////////////////////////////////

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www.daumcommercial.com | O N C O R I N T E R N A T I O N A L Q *1.5% for 10% 12% 14% 16% 18% -10% 0% 2% 4% 6% 8% 10% -8% -6% -4% -2% 0% 2% 4% 6% 8% '00 '00 '01 2 Q19 based 2Q19 on Fed Reserve Bank of Atlanta "GDP Forecast Now" '01 UNEMPLOYMENT CONTINU UNEMPLOYMENT GDP IN Q1 UPDATED TO 3.1%. Q2 ESTIMATE I Q2 ESTIMATE 3.1%. TO UPDATED Q1 GDP IN '02 '02 '03 '03 '04 '04 Recession '05 '05 Real GDPReal '06 '06 '07 '07 '08 '08 orother conditions, prior sale, lease orfinancing, orwithdrawal withoutnotice. expressrepresentation is nor made isany be to implied as the to accuracy thereof, and itis submitted subjecterrors, to om Althoughall information is furnishedregarding forrental sale, or financingis fromsources deemed reliable, suchinformati '09 U6 RateU6 '09 '10 ES DOWNWARD TREND DOWNWARD ES Average Average GDPReal '10 '11 '11 '12 '12 Official Rate '13 '13 '14 '14 '15 '15 S 1.5% '16 '16 '17 '17

'18 '18 '19 '19 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 PORT ACTIVITY INCREA ACTIVITY PORT Mining Mining and Logging Construction Manufacturing Wholesale Trade Retail Trade Transportationand Warehousing Utilities Information Financial Activities Professional and Business Services Education and Health Services Leisure and Hospitality Services Other Government 0 MOST INDUSTRY SECTOR INDUSTRY MOST 1Q 2009 3Q 1Q 2010 3Q

1Q www.daumcommercial.com 2011 Imports 3Q SED IN Q1, GREATER AMOUNTOF EMPTIES Q1, GREATER IN SED 1Q 2012 -50 - 3Q 36 1Q S CONTINUE TO SEE GROWTH SEE TO CONTINUE S Exports -25 - 11 2013 - 1.2 3Q 0 1Q 2 3.2 4 5 2014 25 3Q 18 Empties 26 32 1Q 50 2015 49 3Q 75 |

1Q 75 O N C O R I N T E R N A T IL O A T A N RN E T N I R O C N O on 2016 iss 100 3Q hasnot been verified and no ions,changes of price, rental 125 1Q 114 2017 3Q 150 1Q

2018 175 3Q 172 2019 200 1Q

National Economic Overview //// Q2 2019 Q2

CPI JUST BELOW 2% TARGET THE YIELD CURVE HAS INVERTED

Recession CPI All Item Recessions 10-Yr Treasury Rates

Less Food & Energy Fed Inflation Target Federal Funds Rate 30-Yr. Fixed Rate Mortgage 6% 10%

5% 9% 2019 8% 4%

7% Q2 3% 6% 2% 5%

1% 4% //// 3% 0% 2% -1% 1% -2% 0% '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

NYSE INDEXES HAD POSITIVE RETURN IN VOLATILE Q2 BOND SPREAD INCREASED FROM END OF Q1 TO 25 BASIS POINTS

Recession DOW Jones S&P 500 NASDAQ Recession Bond Spread

150% 3.0%

2.5% 100% 2.0% 50%

1.5% National Economic Overview Overview National Economic 0% 1.0%

0.5% -50% 0.0% -100% -0.5%

-150% -1.0% '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

www.daumcommercial.com | O N C O R I N T E R N A T I O N A L ///////// Market Report Q2

METHODOLOGY Gross Absorption & TERMINOLOGY The total change in occupied space over a given period of time, counting space that is Methodology

occupied but not space that is Industrial and flex (R & D) vacated by tenants. Gross buildings that are 5,000 square absorption differs from leasing feet and greater.

activity, which is the sum of all 2019 space leased over a certain Direct Vacant SF period of time. Space that is vacant and ready Q2 for occupancy by a user. The Net Absorption

space is being offered for lease The net change in occupied //// //// or sale directly from the landlord. space over a given period of time, calculated by summing Total Vacant W/ Sublet SF all the positive changes in Space that is vacant and ready occupancy (move ins) and for occupancy by a user. The subtracting all the negative

space is being offered for lease changes in occupancy DAUM OFFICES Industrial or sale by the landlord or for (move outs). LOS ANGELES, CALIFORNIA MID-COUNTIES, CALIFORNIA sublease by the current tenant. 801 S. Figueroa Street, Suite 600 13810 Cerritos Corporate Drive, Suite C | Los Angeles, CA 90017 213-626-9101 Cerritos, CA 90703 Under Construction 562-207-3300 Direct Vacancy Rate Planned buildings for which LOS ANGELES NORTH, CALIFORNIA Total vacant direct space construction has started but 21820 Burbank Boulevard, Suite 201 ORANGE COUNTY, CALIFORNIA (vacant space for lease or sale have not yet been granted Woodland Hills, CA 91367 4400 MacArthur from the landlord or owner) a Certificate of Occupancy. 818-887-3600 Boulevard, Suite 950 Newport Beach, CA 92660

divided by the total rentable Planned buildings are 949-724-1900 L.A. North L.A. square footage for existing not included. SANTA CLARITA VALLEY, CALIFORNIA buildings only. 28494 Westinghouse Place, Suite 312 VENTURA & SANTA BARBARA, CALIFORNIA Valencia, CA 91355 751 Daily Drive, Suite 105 Camarillo, CA 93010 Completed in 2018 661-705-2299 805-987-8866 Vacancy W/ Sublet Rate New buildings with original Total vacant direct space and construction completed in SAN GABRIEL VALLEY, CALIFORNIA INLAND EMPIRE, CALIFORNIA sublease space divided by the the year 2018 and granted 13181 Crossroads Pkwy. N, Suite 100 3595 E. Inland Empire Boulevard, Bldg. 5 total rentable square footage for a Certificate of Occupancy. City of Industry, CA 91746 562-695-7244 Ontario, CA 91764 909-980-1234 existing buildings only. Renovated buildings are not included SOUTH BAY, CALIFORNIA 1025 W. 190th Street, Suite 420 PHOENIX ARIZONA Gardena, CA 90248 1702 E. Highland Avenue, Suite 120 310-538-6700 Phoenix, AZ 85016 602-957-7300