ECONOMY San Francisco Peninsuli’s unemployment « atthe end of 2009 is Forecasted to tise to 9.4% by the end of 2010. With demand for their products and services still clown, employers do not have any incentives to increase thei full time employee Venture Capital (VC) funding was led by Menlo Patk based Pacific Biosciences Inc. a life sciences company, with $109 million. ‘This was followed by the investment of $106 millon into the Redwood City based clean technology company Teilian, In San Mateo County isthe Bay Area's largest life sciences submmarket and recorded zillion in venture eapital funding forthe quater. OVERVIEW The region's industrial inventory totals 64.2 million square feet (msf) and is primarily comprised of warehouse/disteibution space, with 64.2%, high-technology space, with a 35.1% share, and manufacturing space, with 3.6%, At 88% overall vacancy, the San Francisco Peninsula’s industrial market is up from 8.1% at year-end 2009 primarily due to Roche vacating its former Hillview Avenue headquarters campus in Palo Alto, The campus consists of eighteen high-technology ings totaling 85844 strong enough; averagin ui square feet sf. New leasing activity so far this year has been plas 700,000 sf per quarter, and helped to offset some of the negative effect on the market by Roche placing its former campus on the marker. There are no new speculative develop nent projects in the pipeline for 2010, which should help to prevent any further vacaney spikes for the rest of year. Life science companies led by Onyx Pharmaceuticals, Ine. recorded 246,641 sf of new Tease transactions for the quartet. Onyx Pharmaceuticals, Inc. leased two high technology spaces in South San Francisco; sublease of 68,738 sf and direct on 63,25: sf, The other life science lease transactions were Arstass's sublease of 60,862 sf of high-technology space in Redwood City and Haleyon Moleculae‘s sublease of 48,787 sf of high-technology space aso in Redwood City. ‘The top non-life science ease transactions for the quarter was recorded by Lucille Packard Children’s Hospitals further expansion into Menlo Pack by leasing 10 k 109,534 sf in the Menlo Oaks Corporate Center. technology spaces totaling Thete were no significant lease renewals for the quarter and sale activity was highlighted by Terreno Realty Corporation purchasing two warehouse/ distribution building totaling 80,524 sf in South San Francisco and Northwestern Mutual Life in Palo Alu purchase of a 76,500-sf high technology build FORECAST Vacancy, asking rental rates and leasing activity are expected to remain stable the rest ofyear. It is projected that forth quarter leasing activity will be strong enough to push 2010 leasing activity ahead of 2009 leasing activity. SAN FRANCISCO PENINSULA INDUSTRIAL REPORT 3010 PoE WAKEFIELD. Penne “The leasing activity of large blocks of warehouse space has been lackluster at best for the San Francisco Peninsula Industrial market. We anticipate thatthe economic recovery, although far from robust, will sur demand and the large blocks will bein short supply: ‘Scott Ennis, Senior Director Eerie! GOP Grown 26% 27% 31% PI Growth 03% 16% 1.6% Resional Unemployment 8.7% 9.4% 8.8% Employment 54% 27% 03% Growin Redon LEASING ACTIVITY has increased consecutively his year buts expected tolevet offing te foun gare ot 2010. DIRECT ABSORPTION is negative 1,220,095 s and is expected to remain negative for the remainder of Z 2010 as companies continue to put ‘major expansion plans onhol, CONSTRUCTION: No speculative aaecam ere erway Scheduled to break ground during 2010. Gye Game ee) 9h wo gsm nook “ect tor 3007 1010 SOIMARKETBEAT NWNTs MARKET/SUBMARKET STATISTICS sn ure wane emo ° como 12 S977 som NA S000 Sutpame demms 128 wna ° ° sors sol $118 $o@m NA so7e xine sim 128 tam ° ° wz0 wm 00 $00 NA. sons sun cate asm teu ° 2 cere am) St” SoaT NA. sto abn hy sree 100% wa tha ° ee ee ee ee eT) Ment Pu come wax aso ° 0 zzz ronsta) ssa soos NA $078 Pao mois aun wae annus ° 0 eues96 ots) S58 S00 NA $000 Ratvont Som zs ook rsa ° ° 402 502 00 $000 NA $000 at Gezmms ax 2Maost aa ° 0 2mm — (omy 174 som NA $027 “Rental cates rete Sptmontn Hisfigh Tech MF'=Manulacureg OS" = Ofice Serve (ventory is ol racked in ths market) WD = WarehovseDetibuton MARKET HIGHLIGHTS sane Sana Teun SSOURE FEST PROPERTY PE 249 East Grand Avenue ‘South San Francisco (Onyx Pharmaceutals, ne 131,902 —High-Technology ‘2210 Poner Drive Po Ato Skype 91,000 High-Techroiogy {4700 Bohannon Orve Menlo Park Lucite Packard Chidren's Hospital £2920 High-Techroiogy 740 Bay Road Rodwood City Arsiasis 60.862 High-Techrotogy 505.596 Penobscot Ove Fodwood City Halcyon Molecular High-Tecnnaiogy ee ESAS ‘baame “Sane? our SSOUGE FEsT PURGE PCE 109412 Hl Avenue Pao Ato Nerthwostem Mutual Life 7500 $31,900,500 238 Lawrence Avenue South San Francisco Terreno Realty Corporation 4420 $41.72 204-242 Lawrence Avenue South San Francisco Torrone Realy Corporation 40.106 7.080.515 ETS NCSC ESSN NSN CUSHMANS = SSSGSESEWERAE NT ee eee eee cenee, ‘maton conta matin male he peas tn eed ei Suimand Won beta rts cos fRecae no wat oasis oredr he WAKEFIELD. $8 Viet Boos Setter rc See en erat (aon e500 bya ema :