Market Report ////////// Inland Empire //////////// ///////// Ventura County Industrial

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///////////////Los Angeles/////////////

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///////////Orange County///////////

///////////////////////////////////////// ////////////Ventura///////////////// Q2 | 2019 ///////////////////////////////////////// Market Report ////////// Inland Empire //////////// ///////// Ventura County Industrial /////////////////////////////////////////

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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 Ventura County REPORT Q2

MARKET ACTIVITY KEY TAKE AWAYS ECONOMIC OUTLOOK

MARKET D • Vacancy Rate: Increases to 3.3%. Q2 was the first Direct Vacancy Net Absorption reading above 3% since Q1 2017. U.S. Employment U6 Rate Net Absorption -353,060 SF • : Continues to be negative. Signs of 3.1% a softening market. 3.6% 7.1% • Gross Absorption: Down from Q1. 2019 YTD gross absorption nearly 800K SF less than same period in V 2018. • Sales: Both pricing & volume were down after Overall Vacancy Gross Absorption impressive Q1. Pricing levels above historic trend. Interest Rate Changing GDP 3.3% 432,329 SF 3.7% (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 sign that a potential recession could happen in 134,531 SF $0.72 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 -25.1% -56.7% 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 INCREASED FOR 4TH CONSECUTIVE QUARTER 3RD STRIAGHT QUARTER OF NEGATIVE READINGS. DOWN FROM Q1

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

9.00% 2,500,000 9.00%

8.00% 2,000,000 8.00% 7.00% 7.00% 1,500,000 2019 6.00% 6.00%

5.00% 1,000,000 5.00% Q2 4.00% 500,000 4.00% 3.00% 3.00% 0 2.00% 2.00% //// 1.00% (500,000) 1.00%

0.00% (1,000,000) 0.00%

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

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

Industrial

GROSS ABORPTION ASKING RENTS | DOWN FROM Q1. REMAINS WELL BELOW HISTORIC AVERAGE FELL BY $0.01 IN Q2 TO $0.72

Gross Absorption SF Total Historical Average NNN Rent Direct Overall Vacancy

3,500,000 $0.80 9.00% 8.00% 3,000,000 $0.70 7.00% 2,500,000 $0.60 6.00% 2,000,000 5.00% CountyVentura $0.50 1,500,000 4.00% $0.40 3.00% 1,000,000 2.00% $0.30 500,000 1.00%

0 $0.20 0.00%

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

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 INCREASED FROM Q1 TO JUST UNDER 400K SF UNDER CONSTRUCTION LESS 150K SF AFTER 1 DELIVERY IN Q2

Leasing Activity SF Direct Leasing Activity SF Sublet Under Construction SF

1,600,000 2,000,000

1,400,000 1,800,000 1,600,000 1,200,000 1,400,000

1,000,000 2019 1,200,000 800,000 1,000,000

800,000 Q2 600,000 600,000 400,000 400,000 200,000 200,000 ////

0 0

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

SALES

MEDIAN PRICE PSF IN Q2 WAS $152.42. VOLUME DOWN OVER 56% |

Camarillo Conejo Valley North VC Oxnard/Port Hueneme Moorpark/Simi Ventura Med. Price PSF Linear (Med. Price PSF) $200,000,000 $250.00 $180,000,000 $160,000,000 $200.00 $140,000,000 $120,000,000 $150.00

$100,000,000 CountyVentura $80,000,000 $100.00 $60,000,000 $40,000,000 $50.00 $20,000,000

$0 $0.00

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

SQUARE FOOT BREAKDOWN– 69,604,929 SF MARKET SIZE VACANCY BREAKDOWN

Direct Vacancy Rate Overall Vacancy Rate Camarillo 16% 16% 8.00% 7.00% Conejo Valley 6.97% 6.00% 6.64% 5.00%

North VC 5.16% 2019

12% 4.00% 4.46% 18% 3.78% Oxnard/ 3.00% 3.46% Q2 Port Hueneme 2.00% 4% 1.90% 1.82% Moorpark/ 1.00%

1.68% //// Simi Valley 0.68% 0.00% Ventura Camarillo Conejo North VC Oxnard/ Moorpark/ Ventura 34% Valley Port Simi Valley

Hueneme

Industrial

| AVERAGE RENT PSF VOLUME BREAKDOWN

Average Industrial Rent Sales Volume Price PSF

$1.20 $25,000,000.00 $350.00 $300.00 $1.00 $20,000,000.00 $250.00 $0.96 $15,000,000.00 $200.00 $0.80 $0.86 $0.81 $10,000,000.00 $150.00 $0.60 $0.71 $0.70 $100.00 CountyVentura $0.67 $5,000,000.00 $50.00 $0.40 $0.00 $0.00

$0.20

$0.00 Ventura

North VC North

Camarillo Simi ValleySimi

Camarillo Conejo North VC Oxnard/ Moorpark/ Ventura Moorpark/

Valley Port Simi Valley Oxnard/ Conejo Valley Conejo Hueneme PortHueneme 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 /////////////////////////////////////////

///////////////Los Angeles/////////////

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///////////Orange County///////////

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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. 2019 activity, which is the sum of all space leased over a certain

Direct Vacant SF period of time. Q2 Space that is vacant and ready 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 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 CountyVentura 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