ECONOMY The San Francisco Peninsula’ unemployment rate was 8.7% at the end of 2009 and ended 2010 at 9.3%, With demand for prodacts and services sill down, employers have not had the need to increase their headcount Redwood City based Pear Therapeutics, life sciences company that focuses on developing treatments for chronic respieatory diseases, led venture eapital (ve) funding for the quarter with $69 million In allie seience companies generated $191.0 million n ve funding compared to $96.3 million received by software companies and $89.0 OVERVIEW The 15.5% regional overall office vacancy rate is dawn from 17.0% at year-end 2000. The Sun Francisco Peninsula’ north and south counties overall vacancy rates o 15.6% and 14.9 respectively, are down from the 19.% and 15.8%, respectively, a i due to continued strong leas the San Francisco Peninsula office market during the year which ended at 3.8 million square feet (mst) compared to the 2.2 msf recorded during 2009. The Downtown Palo Alto submarket appeared to be immune to the slugeis ‘economic recovery ending the year with 4.0% overall vacancy compared to the Non Stanford Research Park market of 8.1%, Leasing highlights for this submarket include ‘Sheppard Mollin's lease of 30,255 square feet (6), Palantir Technologies lease of 28,219 sf and Jive So svare’s lease of 18,541 sf Fourth quarter 2010 new leasing activity Juded Nextag leasing 49,000 sf in San Mateo, Volkswagen C $9,762 sf in Belmont oup of America lea leasing 30,073 sf in Foster Cit. Lease renewal activity forthe quarter was 15.4% of the total leasing activity and ncluded TSA’s (Transportation Security Administration) renewal of 27,049 sfin South San Francisco and Shopping.com’s renewal of 25,028 sf in Brisbane. One investment class A sale was recorded for the quarter: BioMed RealtyTeust purchased a 108,00K iotechnology building in South San Francisco, No speculative offic are curtently under construction or cutrently scheduled to break ground in 201 FORECAST New mergers, acquisitions, and the inherent consolidation associated with both have nand for expansion space non-existent. ‘This has resulted in of the newly-constructed office buildings remaining vacant. This new shell inventory will have to be significantly reduced before any significant reduction in vacancy and increase in absorption can occu, ‘SAN FRANCISCO PENINSULA OFFICE REPORT 4010 fetes 3) WAKEFIELD PERN mo suns “The Bay Area Counc announced that business confidence increasod from 56% to 58% dung the past three month. The results indicate that more companies in the Bay Area willbe hiring employees in the next six months, We've already sent some excellent office tenant activity during 2010 and expect ‘even better for 2011. Office rent on the SF Peninsula wil increase in the Cental and South Peninsula duting 2011 ‘Scott Ennis, Senior Droctor Een enue) Natonal 20002010 2011F GOP Grown 26% 28% 28% CPI Growth 03% 18% 1.5% Regions Unemployment 8.7% 9.3% 8.9% Employment 54% 28% 0.1% Growth Priam LEASING ACTIVITY forthe year was 66.2% higher than in 2009 and is ‘expected love off during the at halt of2011 DIRECT ABSORPTION for the year \was a postive 172,046 sf forthe year and is expected to remain Sable the frst half of 201 “CONSTRUCTION: There are Seite props under Cenetrcion orscnediedobeak syound ti oar GearedMARKET BEAT Teed aN Ne Cela (ol REPORT 4Q10 MARKET/SUBMARKET STATISTICS ARRET SUBUARKET RWENTORY BLOGS. "RATE “RATE ACTIVITY. CONSTRUCTION COMPLETIONS. ABSORPTION ABSORPTION RENTAL RATE" South SanFrancisco 4048651 42,—=« 28.9% 159% 190.221 0 D588) 21990 $2.19 ‘Sen Bruno 1s89d58 15 112% 104% 384,757 ° 2 (iogaa) dos s2o7 Daly cay aerzor 12 57% 5.7% 32033 ° Ce ee smiteae 100087 78% 7.9% ° ° 2 (13.000) (13.000) sao Buringame 2600074 55 16% TASH 173500 o 0 ngs 75,380 $208 aretone 7oeest = 10S OK TRK (08,732 o 0 agg A206 $235 ‘San Mateo 6555246 87 18% «158% 835.441 0 0 77295 Beare $235 Foster City 2053603 22«116% 101% 260.994 0 0 arm) = @n0ss) 8276 Belmont sr 784K 340% BTS 0 2 1.362 2887 5225 Sen Calor es «9 «SLOKAT7% 105,568 ° 0 arm == @aee 82.0 Reowood Ciy 3et0270 64 180% 81% 220.402 o 0 7787 (159558) S800 Menlo Pare 264908 87 130% © 80% 156281 0 zaorr 62.172), (95184) $52 PaloAto(NonSRP) 4231769 «02ST: CLAS 0 0 nga 227 399, sar Palo Ato (SRP) saoe7s 21-32% 32% 82.210 ° 2 (aos) 43.388 sto Reawood Shores 3101962 2 166% 15.4% 508,563 0 0 sass ens s2se Tota 34,883.45 582 155% 122% 3.769.843 0 zaor 72086 2a3,705, S202 * RENTAL RATES REFLECT SPSFMONTH MARKET HIGHLIGHTS a Ee _ — — 1 Chery Aen ma rE = . Se aE = a ESRI OE TOS ry aa — mere | [SIGNIFICANT PROJ NA SQUARE FEET COMPLETIONOATE CUSHMANE cxssra sweet of catia ne ~ Le H00010095 Wanerieno, osteitis Se (aoa) 8 ss00