West Los Angeles Rents Continue to Rise

Research & Forecast Report

West Los Angeles | OFFICE Accelerating success. Q2 2019

>> West Los Angeles Rents Continue to Rise

Key Takeaways Market Indicators | Relative to Prior Period > The average asking monthly rent for West Los Angeles Q2 2019 Forecast sustained its second straight quarter of $0.10 increases, Vacancy   moving to $4.92 per square foot (PSF) full service gross Net Absorption   (FSG). Construction   > Demand recorded 315,900 square feet, the ninth straight Rental Rate   quarter of positive absorption. > No new projects delivered from the under-construction pipeline. A total of 18 buildings remain in the pipeline. Summary Statistics | West Los Angeles, Q2 2019 > Investment activity maintained momentum with four Class A Class B All Classes properties trading, highlighted by Onni Group’s long-awaited Vacancy Rate 13.4% 9.4% 12.4% acquisition of Wilshire Courtyard. Change from Q1 ‘19 -40 +80 -60 > Leasing activity recorded 1,348,500 square feet, marking (Basis Points) six consecutive quarters of velocity exceeding 1.1 million Net Absorption* +208.5 +92.4 +315.9 square feet. Century City, Culver City and Beverly Hills drove Construction Completions* 0.0 0.0 0.0 velocity for the quarter. Under Construction* 1,273.5 694.6 1,968.1 *SF, Thousands

West Los Angeles Office Market Asking Rents | West Los Angeles, Q2 2019 Vacancy in the West L.A. market dropped by 60 basis points from the previous quarter, driven by absorption gains in Class A Class B All Classes Santa Monica and Brentwood. High leasing activity from legal, Average Asking Rent $4.93 $4.27 $4.92 Change from Q1 ‘19 entertainment and consumer product tenants in Century City, +$0.07 +$0.06 +$0.10 Culver City and Beverly Hills will help maintain demand levels ($) through the rest of 2019 and into 2020. Rental growth slightly Y.O.Y. Change (%) 1.4% 1.9% 3.7% slid, posting growth of 3.7%. The West L.A. market is poised to add just under two million Labor Force | Los Angeles County, May 2019 square feet over 18 projects construction and creative conversions deliver over the next two years. Developers’ Total Prof. & Financial Nonfarm Business Activities attraction to submarkets dense with technology and Services entertainment figures to continue through 2019. 12-mo Employment 1.3% 2.2% -1.5% Growth (%) 12-mo Actual 58,900 13,600 -3,400 Employment Change West Los Angeles | OFFICE Q2 2019

Vacancy Historical Vacancy v. Rents | West Los Angeles Office > Vacancy decreased 60 basis points to 12.4%, 50 basis Market Q2 ‘15-’19 points short of the current cycle low of 11.7% recorded in the fourth quarter of 2016. RENTS VACANCY > For the second straight quarter, a lack of new projects $5.10 18% $4.90 delivering to the market helped push vacancy down. 16% $4.70 > Santa Monica and Brentwood accounted for most of the 14% movement in vacancy, accounting for 250- and 180-basis- $4.50 $4.30 point drops respectively. 12% $4.10 > Forecast: With preleasing activity becoming the new 10% $3.90 normal in West Los Angeles, no major jumps in vacancy are %(TOTAL) VACANT expected through the duration of 2019. $3.70 8% $3.50

$ PSFFSG PERMONTH (WEIGHTED) 6% $3.30

Absorption and Leasing Activity $3.10 4% > Absorption recorded 315,900 square feet for the quarter. 2Q15 2Q16 2Q17 2Q18 2Q19 Leasing velocity reached 1,348,500 square feet. > Manatt Phelps & Phillips agreed to relocate from Olympic Corridor to 116,400 square feet at 2049 Century Park East, Net Absorption by Submarket | West Los Angeles Office while Greenberg Glusker signed for 84,000 square feet Market Q2 ’19 at the same building. Scopely preleased the entirety of 234,300 Runyon Group’s 66,000-square-foot Platform project. In the 250,000 burgeoning West Adams district, Sweetgreen preleased all 200,000 of 3100 Exposition Place. The 50,000-square-foot has yet to 150,000 100,000

SF 79,200 60,500 start being converted from its current industrial use. 46,600 35,300 50,000 > McDermott Will & Emery LLP downsized into 56,500 24,100 square feet at 2029 Century Park East from its former 0 (17,800) (1,000) (50,000) (19,200) 80,400-square-foot space at sister tower 2049 Century Park (50,100) East. In Santa Monica, both Tennis Channel and Entertainment (100,000) (76,000) One moved into respective spaces at Lantana Center (69,500 square feet) and 2700 Pennsylvania Ave (41,000 square feet). WESTWOOD BRENTWOOD CULVER CITY MIRACLE MILE CENTURY CITY SANTA MONICA > Forecast: Legal and preleasing activity from the BEVERLYHILLS WESTHOLLYWOOD OLYMPICCORRIDOR coworking, entertainment and technology industries, along WEST LOS ANGELES

with anticipated activity in the second half of 2019, will keep MARINADEL REY/VENICE demand moderate for West Los Angeles into 2020. Rental Rates Historical Leasing Activity | West Los Angeles Office Market Q2 ‘15 - ‘19 > Increases in Century City, Marina Del Rey/Venice and Olympic Corridor provided most of the stimulus for increased rental rates in the West Los Angeles market. 1,900,000 > Year-over-year growth slowed to 3.6% after posting a 4.2% 1,700,000 growth rate last quarter 1,500,000 1,300,000 > In some markets, the absorption of high-quality new space 1,100,000 put the brakes on rental growth that, up to now, had been SF 900,000 approaching 10%. 700,000

> Forecast: Demand in the entertainment and content 500,000 generation industries will continue to propel West L.A. rental 300,000 rates. 100,000 2Q15 2Q16 2Q17 2Q18 2Q19

2 West Los Angeles | OFFICE Q2 2019

Construction Historical Net Absorption & Construction Completions > The West L.A. construction pipeline remains active. Culver West Los Angeles Office Market Q2 ‘15-’19 City alone accounts for 49% of all new construction across the market. NET ABSORPTION CONSTRUCTION COMPLETIONS > Northwood Investors will begin renovations on Trident 800,000

Center once its current anchor tenant, Manatt Phelps & 600,000

Phillips, moves out in early 2020. The Olympic Corridor 400,000 property will be rebranded as LUMEN West LA, a Class A 200,000 creative office project. 0 SF > Forecast: West Los Angeles constitutes 32% of new (200,000) office construction in Los Angeles County, and robust (400,000) construction activity will persist through 2019 and 2020. (600,000)

(800,000)

(1,000,000) Investment Trends (1,200,000) > Activity for properties greater than 25,000 square feet 2Q15 2Q16 2Q17 2Q18 2Q19 recorded $1,067.2 million in investment sale volume. > The lion’s share of activity came from Onni Group’s purchase of Wilshire Courtyard for $630 million ($628 PSF) Investment Trends Chart from Tishman Speyer, which purchased the property for $422 West Los Angeles Office Market 2013-2019 million in 2012. The property was 59% leased at time of sale. Average Price PSF Cap Rate > IDS Real Estate and PNC Realty Investors recapitalized $900 6

5800 Bristol Parkway, bringing in Morgan Stanley for $800 approximately $260 million, or $836 PSF. 5 $700 > Forecast: Robust demand from the entertainment and $600 4 media industries will continue to keep West Los Angeles on the radar of institutional investors looking for both value-add $500 3 and core opportunities, as evidenced by the numerous office $/PSF $400 Rate Cap properties currently under contract or on the market. $300 2

$200 1 Outlook $100

The West L.A. market finished the first half of 2019 with $- 0 continued momentum. Demand remained positive for the 2013 2014 2015 2016 2017 2018 2019 quarter, and should continue to be in the black despite new construction deliveries due to strong preleasing activity. Rent growth slid from last quarter, but growth should remain Unemployment Rate | U.S., CA & Los Angeles County | May 2019 positive for the near future.

West Los Angeles continues to be one of the premier office 4.6% 4.5% markets for entertainment and technology tenants, and we expect this to remain so for the foreseeable future, whether 4.4% rent growth continues or not. Developers seem to agree, as 4.2% 4.2% new projects loom on the horizon to fill demand in the major creative markets of Santa Monica, Culver City and Marina 4.0% Del Rey/Venice. Once those submarkets reach saturation, 3.8% look for interest to spread to other outlying markets, similar 3.8% to how West Adams has seen raised levels of leasing and construction activity in recent quarters 3.6%

3.4% United States California Los Angeles County

3 West Los Angeles | OFFICE Q2 2019

Market Description Submarket Map West Los Angeles is a moderately large office market comprised of 56.2 million square feet, representing 19% of the total office space in buildings 25,000 square feet and greater in the Los Angeles Basin. It is also a moderately young and dense market, with 40% of its space built in 1985 or later, and 70% of its space contained within mid-rise and high-rise buildings. It has a large concentration of high- margin firms (including those in the entertainment, digital media, software, and finance sectors), and is situated in the midst of some of the most affluent neighborhoods nationally.

RECENT TRANSACTIONS & MAJOR DEVELOPMENTS West Los Angeles Office Market Q2 2019 SALES ACTIVITY PROPERTY ADDRESS SIZE SF SALE PRICE PRICE PSF BUYER SELLER Wilshire Courtyard (2 Bldgs.)., Los Angeles 1,002,800 $630,000,000 $628 PSF Onni Group Tishman Speyer 5800 Bristol Pky., Culver City (Recapitalization) 311,000 $260,000,000 $836 PSF Morgan Stanley PNC/IDS 520 Broadway, Santa Monica (Recapitalization) 113,000 $119,225,000 $1,055 PSF Artemis Real Estate Partners Olive Hill Group, LLC 11611 W. San Vicente Blvd., Brentwood 104,700 $58,000,000 $554 PSF Fortress Investment Group Vintage Real Estate LLC

LEASING ACTIVITY PROPERTY ADDRESS LEASED SF LEASE TYPE BLDG TYPE LESSEE LESSOR 100 N. Crescent Dr., Beverly Hills 118,000 Direct A Hollywood Reporter/Billboard/Dick Clark Cain Hoy Enterprises 2049 Century Park E., Los Angeles 116,400 Direct A Manatt, Phelps & Phillips, LLP NES Financial 2049 Century Park E., Los Angeles 83,000 Direct A Greenberg Glusker NES Financial 8888 Washington Blvd., Culver City 66,000 Pre-Lease B Scopely Runyon Group 3100 Exposition Pl., Culver City 50,000 Pre-Lease B Sweetgreen The Luzzatto Company MAJOR DEVELOPMENTS PROJECT DEVELOPER SIZE SF SUBMARKET STATUS ESTIMATED COMPLETION 8830 National Blvd., Culver City City of Culver City 241,200 Culver City Under Construction Q2 2021 10730 W. Pico Blvd., Los Angeles Hudson Pacific 230,200 West Los Angeles Under Construction Q2 2020 9336 Washington Blvd., Culver City Hackman Capital Partners 200,000 Culver City Under Construction Q3 2020 5533 EA Way, Playa Vista MPG Office Trust, Inc 192,100 Marina Del Rey/Venice Under Construction Q2 2020 5790 W. Jefferson Blvd., Culver City Samitaur Constructs 180,600 Culver City Under Construction Q1 2021 4800 Alla Rd., Marina Del Rey (3 Bldgs) CDC Mar Panama LLC 161,000 Marina Del Rey/Venice Under Construction Q1 2020 8777 Washington Blvd., Culver City Clarion Partners 128,000 Culver City Under Construction Q1 2020 1041 N. Formosa Ave., West Hollywood CIM Group 97,700 West Hollywood Under Construction Q1 2020 12414 Exposition Blvd., Los Angeles 12414 Exposition Owner Llc 80,400 Olympic Corridor Under Construction Q3 2019 9300 Culver Blvd., Culver City City of Culver City 70,500 Culver City Under Construction Q4 2019 8888 Washington Blvd., Culver City Runyon Group 66,000 Culver City Under Construction Q1 2020 4065 Glencoe Ave., Marina Del Rey Steaven Jones Development Co 65,200 Marina Del Rey/Venice Under Construction Q3 2019 5005 McConnell Ave., Marina Del Rey Marina Creative Office LP 56,300 Marina Del Rey/Venice Under Renovation Q4 2019 3339 Exposition Pl., Culver City The Luzzatto Company 56,000 Culver City Under Construction Q4 2019 302 Colorado Ave., Santa Monica Seritage Growth Properties 52,800 Santa Monica Under Renovation Q4 2019 2041-2105 Colorado Ave., Santa Monica Colorado Campus Owner LLC 37,000 Santa Monica Under Construction Q3 2019 1305 2nd St., Santa Monica 1305 2nd Street Sm LLC 27,900 Santa Monica Under Construction Q1 2020

4 West Los Angeles | OFFICE Q2 2019

OFFICE OVERVIEW West Los Angeles Office Market Q2 2019

EXISTING PROPERTIES VACANCY ACTIVITY ABSORPTION CONSTRUCTION RENTS

Leasing Leasing Net Net Total Total Completions Under Weighted Submarket/ Direct Sublease Total Activity Activity Absorption Absorption Bldgs Inventory Vacancy Current Qtr Construction Avg Asking Class Vacancy Vacancy Vacancy Current Qtr YTD Current Qtr YTD SF Prior Qtr SF SF Lease Rate SF SF SF SF

A 246 46,142,100 12.0% 1.4% 13.4% 13.8% 1,064,400 2,522,600 208,500 388,500 0 1,273,500 $4.93 B 184 11,213,300 8.2% 1.2% 9.4% 10.2% 284,000 620,800 92,400 62,700 0 694,600 $4.27 C 19 735,100 1.7% 0.0% 1.7% 3.7% 0 3,900 15,000 10,600 0 0 $3.45

CENTURY CITY Subtotal 20 10,594,100 4.6% 0.8% 5.4% 5.3% 274,200 324,500 (19,200) 134,400 0 0 $5.16

SANTA MONICA Subtotal 102 9,503,700 9.2% 1.9% 11.1% 13.6% 77,400 357,300 234,300 307,700 0 117,700 $5.56

BEVERLY HILLS Subtotal 74 6,964,300 12.6% 0.6% 13.2% 13.7% 237,800 397,200 35,300 (5,000) 0 0 $5.73

MIRACLE MILE Subtotal 24 5,237,400 16.7% 1.5% 18.2% 17.3% 87,900 114,800 (50,100) 33,800 0 0 $4.12

WESTWOOD Subtotal 27 4,743,100 12.2% 1.3% 13.5% 15.2% 111,800 153,700 79,200 (3,100) 0 0 $4.50

CULVER CITY Subtotal 54 4,298,200 16.9% 0.2% 17.1% 18.1% 224,200 444,400 46,600 196,800 0 967,500 $4.25

MARINA DEL REY/VENICE Subtotal 60 6,536,200 16.3% 2.3% 18.7% 17.5% 161,300 361,000 (76,000) (94,900) 0 474,600 $5.14

BRENTWOOD Subtotal 20 3,370,100 10.3% 1.0% 11.2% 13.0% 59,500 126,300 60,500 32,900 0 0 $4.75

OLYMPIC CORRIDOR Subtotal 27 3,301,100 9.8% 1.7% 11.5% 10.9% 60,100 135,000 (17,800) (178,800) 0 80,400 $4.80

WEST HOLLYWOOD Subtotal 32 2,939,200 7.0% 2.3% 9.3% 10.1% 44,400 129,600 24,100 75,100 0 97,700 $4.74

WEST LOS ANGELES Subtotal 9 603,100 12.1% 1.5% 13.5% 13.3% 9,900 603,600 (1,000) (37,200) 0 230,200 $3.64

MARKET TOTAL Total 449 58,090,500 11.1% 1.3% 12.4% 13.0% 1,348,500 3,147,400 315,900 461,700 0 1,968,100 $4.92 Note: revisions to the inventory base were made effective Q2 2019, historical data reported here reflect these revisions and may not match data reported inrevious p quarters.

5 West Los Angeles | OFFICE Q2 2019

Definitions of key terms in this report Space Added (Net): Total square feet added during the quarter via construction Total Rentable Square Feet: completions, including renovated space returned to market, Office space in buildings with 25,000 square feet or more less total square feet taken off-market due to demolitions or of speculative office space, including competitive space in conversions. Class A, B and C single-tenant and multi-tenant buildings. Under Construction: Excludes non-competitive owner-occupied buildings, Includes buildings that are in some phase of construction, buildings that include 30 percent or greater of medical or beginning with foundation work and ending with the retail space, and space that is under-construction, under- issuance of a Certificate of Occupancy. renovation or off-market.

Class A Space: Technical Note: Space that an image-conscious company would lease for its Colliers International is continuously refining its database. The data shown in headquarters. Typically, this space has a very high level of the historical tables and graphics in this report have been adjusted to take into finish, an excellent location and commands the highest rents account these changes in the database. in the market. This report has been prepared by Colliers International for general information Class B Space: only. Information contained herein has been obtained from sources deemed Highly functional, attractive space that is less prestigious reliable and no representation is made as to the accuracy thereof. Colliers than Class A Space and commands lower rental rates. International does not guarantee, warrant or represent that the information contained in this document is correct. Any interested party should undertake Class C Space: their own inquiries as to the accuracy of the information. Colliers International Functional, competitive space with a lower level of finish excludes unequivocally all inferred or implied terms, conditions and warranties and/or a less desirable location than Class B Space and arising out of this document and excludes all liability for loss and damages commands lower rental rates. arising there from. This report and other research materials may be found on Low-Rise: our website at www.colliers.com/greaterlosangeles. Buildings with four or fewer total floors. Mid-Rise: Buildings with five or 13 total floors. 438 offices in68 countries High-Rise: Buildings with 14 or more floors. on 6 continents Direct Vacancy: United States: 155 > $3.3 billion in annual revenue Space in existing buildings that is vacant and immediately Canada: 48 > 2.0 billion square feet under available during the quarter for direct lease, plus space that management is vacant but not available for direct lease or sublease (for Latin America: 20 example, space being held for a future commitment). Asia Pacific: 94 > Over 17,300 professionals Total Vacancy: EMEA: 119 Space in existing buildings that is vacant and immediately available during the quarter for direct lease or for sublease, plus space that is vacant but not available for direct lease or sublease. UNITED STATES: Downtown LA Office Net Absorption: TEL: +1 213 627 1214 Net change in occupied square feet from one period to License No. 01908231 the next (including the impact of change in vacant space 865 S. Figueroa St., Ste. 3500 FAX: +1 213 327 3200 available for sublease). Los Angeles, CA 90017 Leasing Activity: Square feet leased from all known transactions completed during the quarter, excluding lease renewals. JAMES MALONE CAITLIN MATTESON Weighted Average Asking Rental Rates: Rental rates weighted by the total square feet available for Senior Managing Director Research Director direct lease. Data, reported on a monthly basis, is based Greater Los Angeles Research Services on per square foot (PSF) full service gross (FSG) rents and includes all costs associated with occupying the space, CHRIS WONG including taxes, insurance, maintenance, janitorial service Senior Research Analyst and utilities. Research Services 6