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San Mateo County 2007 Office Market Overview

This report provides an overview of the office market in San Mateo County, including vacancy rates, absorption rates, and rental rate trends. It also highlights the major industries in the area and makes recommendations for rental rates.

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San Mateo County 2007 Office Market Overview

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  1. San Mateo County2007 Office Market Overview January 17, 2007 • Prepared by • Mike Moran 1350 Bayshore Hwy, Suite 900 Burlingame, CA 94010 Tel 650/347-3700 Fax 650/347-4307 www.naibtcommercial.com

  2. Bay Area Dominance : NAI BT Commercial • 25 years and growing • Privately owned partnership • Among the nation’s largest Regional Commercial Real Estate Firms • 14 Offices & 216 Agents throughout Northern California • Over $3.1 Billion in transaction value in 2005 • 1981 - Founded in San Jose • 1984 - Soquel • 1986 - Palo Alto • 1987 - Monterey • 1988 - Affiliated with the Woodmont Companies • 1989 - Burlingame • 1990 - San Francisco • 1994 - Joined NAI as Bay Area Wide Member • 1994 - Oakland • 1997 - Acquired Damon Raike • 1998 - Acquired Terranomics • 2000 - Acquired SF office of Epsteen & Associates • 2001 - San Rafael • 2003 - Salinas • 2003 - Santa Rosa/Napa/Petaluma • 2005 - Sacramento • 2005 - Walnut Creek

  3. North Central South Office Market : San Mateo County

  4. San Mateo County : Highlights • Building Base – Office Space in San Mateo County: 30.7 MM SF • Total Office Space Available in San Mateo County: 4.5 MM SF • Overall San Mateo County Vacancy: 14.7% • Reduction of Vacant Space within San Mateo County: 750K SF • Gross Absorption in 101 Tech Corridor (2006): 4.3 MM SF • Majority of vacancy consolidated into just a few projects

  5. San Mateo County : Historical Office Vacancy & Rents

  6. San Mateo County : Historical Absorption Square Feet Average 10 year Absorption Gross: 4,634,575 SF Net: 452,903 SF

  7. Overview : North San Mateo County • Cities of • Burlingame • Millbrae • San Bruno • South San Francisco • Brisbane • Daly City • Current Building Base • 6,850,000 Square Feet • Current Vacancy • 10.3% • Rent Ranges (FS) • $2.25-$3.05

  8. North San Mateo County : County Highlights • North County Overall Office Vacancy: 30% pts. • Total Office Space Available in North SM County: 700K SF • Average Time on the Market North SM County: 22 mo. • North County Office Gross Absorption 2006: 850K SF • North County Net Absorption 2006: 5K SF

  9. Overview : Central San Mateo County • Cities of • San Mateo • Foster City • Redwood Shores • Current Building Base • 15 M Square Feet • Current Vacancy • 16.5% • Average Asking Rate (FS) • $2.43 • Rent Ranges (FS) • $1.95 - $3.65

  10. Central San Mateo Co: Highlights Q3-06 • CSMC Overall Office Vacancy: 17.7% • Total Office Space Available in CSMC: 2.5M SF • Average Time on the Market CSMC Office: 23 mo. • CSMC Office Gross Absorption 2006: 2.2 MM SF • CSMC Office Net Absorption 2006: -150K SF

  11. Overview : South San Mateo County • Cities of • Belmont • San Carlos • Redwood City • Menlo Park • Current Building Base • 8.8 MM Square Feet • Current Vacancy • 15% • Average Asking Rate (FS) • $2.62 FS • Rent Ranges (FS) • $2.15 - $3.50 (w/out Sand Hill)

  12. South San Mateo Co: Highlights • Total Office Space Available in SSMC: 1.3 MM SF • SSMC Office Vacancy: 15% • Average Time on the Market CSMC: 35 mo. • # of Options > 20,000 SF w/in CSMC: 24 spaces

  13. Major Industries : San Francisco Bay Area

  14. Tenant Supply & Demand: San Mateo County Supply Demand 700 Units 9.5 Million SF 89 Tenants 3,187,500 Square Feet

  15. Largest Employers : San Mateo County

  16. Asking Rent Recommendations 10% - 20% 20% - 25% $4.13 NNN 20% - 25% $3.37 FS $2.75 FS 2008 2009 2007

  17. Conclusion • Effective vacancy 5+ percentage points lower than statistics • Quality, large block space becoming scarce • Freeway signage to become a price-able commodity • Projected rental rate growth for 2007 20%-25% • Understand your product and its true competition in order to minimize vacancy • Questions?

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