OAKLAND INDUSTRIAL REPORT ECONOMY The employment situation ret sins stagnant as companies have taken a wait-and-see approach tw hiring, The unemployment rate in Alameda County has mostly remained in the 11.5% to 11.9% range throughout 2010. While the economic landscape remains uncertain, TEU activity ut the Port of Oakland continved its upward trend, with total activity 14.7% above the August 2009 year-to-date level OVERVIEW ‘The industrial market in the Oakland Metro area continued its downward trend during the third quarter, asthe overall vacancy rate increased 60 basis points (bps) to 10.7%, up from 10.1% mid-year (evised). Contsibuting to this trend, Guardian Services Group, a thied part logistics company, exercised a buyout right From 115,151 square feet (s) in North Hayward as its contract was terminated, While some submarkets have posted positive absorption during the quarter, year-to-date absorption continues to be negative overal Heading into the fourth quarter of 2010, total gross leasing activity is on tack to surpass 20097s year end volume (leased sf). Transaction volume decreased 23.8% compared to last ‘quarter, although the number of transactions has remained relatively steady throughout the year. While this is a step back, leasing activity should remain steady or rise as landlords offer flexible terms and concessions, and tenants are showing a willingness to take advantage of this competitive market. \With that in mind, the largest deals of 2010 thus far in the Oakland Metro area, excluding, renewals, were signed during the third quarter, ‘The largest was Pet Food Express at 500 85 Avenue in Oakland, leasing the entice 147,500-sf building from ProLogis. That was backed by 2 sFat 1345 Doolittle Daive in San Leandro from AMB, Short after, Annex expanded by an additional 34,238 sf and now occupies a total of 254,930 sf on Doolitle Drive The Annex leasing 143, ‘Overall asking rents continued to tend downwaed as vacant space remains abundant. Direct asking rental rates for warchouse/distribution space decreased 2.6% from the mid year rate, 0 30. through their space, to ulkimately move a tenant in, to raise occupancy levels and generate psf/mo. Landlords are looking at lowering asking rates a8 a way to increase f rental revenue. Given the current environment, warehouse owners are willing to write shorter Maintaining the momentum of sale transactions completed in the second quarter of 2010, Industrial Income Trust acquired a 721,000-sf portfolio from Sares-Regis Group for $60 million. Pinole Point Business park in Richmond made up 475,000 sf of the sale and the balance came from Bayside Business Park in Fremont. There isa significant amount of capital targeting core industrial opportunities and supply is limited, While counterintuitive inthis overall down market, it sa good time to be a seller of quality, leased industrial asets FORECAST Overall, demand has heen more than offset by the new space coming on the market, The submarkers that have been able to post positive absorption during the quarter have done so due to tenants relocating from surrounding submarkets, vacating similar blocks of space Market fundamentals will kely improve as political and economic uncertainties cleat after the November elections OAKLAND INDUSTRIAL REPORT 310 fr ey a) WAKEFIELD. Genesis ‘While counterintuitive inthis overall down market, itis a good time to be a seller of ually, leased industrial assets, Een enue) Natonal 209 200F201F GOP Growth 28% 27% 3.1% CPI Growth 03% 1.6% 1.6% Regions Unemployment 10.5% 11.5% 11.1% Employment 62% 28% 0.3% Growth Rredncec LEASING ACTIVITY ison track to super 000% yeacand gore vokme gg 2s tenans take advantage of favorable ‘market cantons ‘OVERALL ABSORPTION wil ikely remain negatve over the sorter as ‘demand is more than offset by new ‘pace coming on the market ‘ASKING RENTAL RATES for the overall Ita ayo competiv sug landlords focus on maintaining feccupancy and generating revenue. GEuneea ees a mm When a faatte Spe ef iso “ e025 PPESESS ESMARKETBEAT RECON Th MARKET/SUBMARKET STATISTICS ° oases) S078 aT 8028 Suro nerate Rw ok TRE ae ° 0 tse) ism) S079 75 so71 Oulwainenean sani Toe sees er ° °aieze)—omeanr) tos spat S08 SmrisanieSon lawns 36070108 10H0 eat ° @ ores ae) _s06a_woat_ $030 Maer Maicewio ——wetans sxx tgmens raza ° ‘issrasa (i2@am) e078 woas sea ape S00 aavessr crac ° oosae) —m7r) $086 saat 028 tinoncay prin tou ° ‘aon air) fom _toan_3038, apron Bars 7 a rE cos TaaSTE Tae 7 3 ataseg Tse) —t070 toa 037 “Renal aes rfc Spstino Hrafigh Teen MP = Manuscuing OS = Ofce Service WID = WarehowserDatibuion MARKET HIGHLIGHTS TEEPE 500 35th Avenue Oaxtna/Alameda Pel Food Exess 147,500 Warencuse/Ostibuton 1245 Doolitla Dive SanLaandroSanLorenzo The Annex 143882 Waerause/Ostibuton 29000 Egenbroat Way Union cy Somaion Intemational 118953 Warenouse/Ostrbuton 7265.05 Davis Coun Hayward Now Kowal 68621 Waehause/Ostibuton 30955 Hurtwcod Avenue Hayward South 1 Patt 62.031 High Tech ISIGNIFICANT 3010 SALE TRANSACTIONS Pinde Prom Business Park Richmond Indust income Tost 475000 * $60,00,000 909 Haron Steet BerkoleylEmeryile Berkeley Repertory Theat 62,700 $6,009.00 14600 Cataina Steet SenLeandroSanLarenzo __ Aamedn County Aprenticesip 45,606 $2,800.00 CUSHMANS — stzicieetteceerrmnmuntmmene gyre snieinrnmtermatnnace WAKEFIELD. Le Eat aa pen Cushman & Woes one bus nt scm an copa, soacee See eee ences