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SILICON VALLEY
REAL ESTATE TRENDS 2011
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SILICON VALLEY AVAILABILITY
Silicon Valley All Products
35,000,000
40,000,000
45,000,000
50,000,000
55,000,000
60,000,000
4Q103Q102Q101Q104Q093Q092Q091Q094Q083Q082Q081Q084Q073Q072Q071Q074Q063Q062Q061Q06
Squa
re Feet
Available Space
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GROSS ABSORPTION
Silicon Valley All Products
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
201020092008200720062005200420032002200120001999199819971996
Squar
e Feet
Gross Absorption
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QUARTERLY GROSS ABSORPTION
Silicon Valley All Products
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
4Q103Q102Q101Q104Q093Q092Q091Q094Q083Q082Q081Q084Q073Q072Q071Q074Q063Q062Q061Q06
Squar
e Feet
Gross Absorption
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PREIMPROVED SPACE ADDED TO SUPPLY
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
4Q103Q102Q101Q104Q093Q092Q091Q09
R&D
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
4Q103Q102Q101Q104Q093Q092Q091Q09
Office
500,000
1,000,000
1,500,000
2,000,000
4Q103Q102Q101Q104Q093Q092Q091Q09
Industrial
0
500,000
1,000,000
1,500,000
2,000,000
4Q103Q102Q101Q104Q093Q092Q091Q09
Warehouse
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PREIMPROVED SPACE ADDED TO SUPPLY
Silicon Valley All Products
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Squa
re Feet
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NET ABSORPTION
Silicon Valley All Products
(20,000,000)
(15,000,000)
(10,000,000)
(5,000,000)
0
5,000,000
10,000,000
15,000,000
20,000,000
201020092008200720062005200420032002200120001999199819971996
Square Feet
Net Absorption
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R&D GROSS ABSORPTION
Silicon Valley R&D
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
201020092008200720062005200420032002200120001999
Square Feet
Gross Absorption
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R&D NET ABSORPTION
Silicon Valley R&D
(15,000,000)
(10,000,000)
(5,000,000)
0
5,000,000
10,000,000
201020092008200720062005200420032002200120001999
Square Feet
Net Absorption
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SILICON VALLEY
Office and R&D Absorption as a Percentage of Total
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
R&D Building Base as % of Total Building Base
Office Gross Absorption as a % of Total Gross Absorption
R&D Gross Absorption as a % of Total Gross Absorption
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HISTORICAL GROSS ABSORPTION
Silicon Valley R&D
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
20102009200820072006200520042003200220012000199919981997199619951994199319921991199019891988
Square
Feet
Gross Absorption
First 10 Years Average
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HISTORICAL GROSS ABSORPTION
Silicon Valley Office
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
20102009200820072006200520042003200220012000199919981997199619951994199319921991199019891988
Square
Feet
Gross Absorption
First 10 Years Average
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OFFICE GROSS ABSORPTION
Silicon Valley Office
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
201020092008200720062005200420032002200120001999
Square Feet
Gross Absorption
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OFFICE NET ABSORPTION
Silicon Valley Office
(3,000,000)
(2,000,000)
(1,000,000)
0
1,000,000
2,000,000
3,000,000
4,000,000
201020092008200720062005200420032002200120001999
Square Feet
Net Absorption
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SAN FRANCISCO PENINSULA
OFFICE MARKET
• San Mateo County finished 2010 with a positive net absorptionof 343,000 square feet, the first positive year since 2007.
• The fourth quarter of 2010 accounted for the sixth consecutivequarter of decreased vacancy rates – San Mateo Countycurrent stands at 17.6% compared to 19.0% a year ago.
• Peninsula Downtown markets are extremely tight, mostly drivenby access to rail transportation – Downtown Palo Alto availabilityrate is 7.3% compared to 16.8% for the entire city.
• The year end San Mateo County Unemployment Rate is 8.3%compared to 8.9% a year ago.
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SAN FRANCISCO PENINSULA
OFFICE MARKETVacancy Rate vs. Average Asking Rent
10.00%
12.50%
15.00%
17.50%
20.00%
1Q114Q103Q102Q101Q104Q093Q092Q09
Vacancy R
ate
$2.00
$2.25
$2.50
$2.75
$3.00
Monthly Rent Per Sq. Ft. (FS)
Vacancy Rate
Avg. Asking Rent
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SAN FRANCISCO PENINSULA
OFFICE MARKET
• We expect several large transactions to occur in the first quarterof 2011
– Facebook Inc. recently committed to the 57-Acre, 1 MSF formerSun Microsystems campus in Menlo Park.
– County of San Mateo to purchase and occupy 200,000 square feet
in San Carlos.– Bristol Myers Squibb to lease 85,000 square feet in Redwood City.
– DreamWorks expanding by 70,000 square feet in Redwood City toa total of 190,000 square feet.
• Vacancy rates will continue to decline and positive netabsorption will continue.
• Rental Rates will slowly increase throughout 2011.
Looking Forward…
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INDUSTRIAL GROSS ABSORPTION
Silicon Valley Industrial
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
201020092008200720062005200420032002200120001999
Squa
re Feet
Gross Absorption
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INDUSTRIAL NET ABSORPTION
Silicon Valley Industrial
(2,500,000)
(2,000,000)
(1,500,000)
(1,000,000)
(500,000)
0
500,000
1,000,000
1,500,000
2,000,000
201020092008200720062005200420032002200120001999
Squa
re Feet
Net Absorption
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WAREHOUSE GROSS ABSORPTION
Silicon Valley Warehouse
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
201020092008200720062005200420032002200120001999
Squa
re Feet
Gross Absorption
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WAREHOUSE NET ABSORPTION
Silicon Valley Warehouse
(3,000,000)
(2,500,000)
(2,000,000)
(1,500,000)
(1,000,000)
(500,000)
0
500,000
1,000,000
1,500,000
201020092008200720062005200420032002200120001999
Squa
re Feet
Net Absorption
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SILICON VALLEY R&D RENTS
Average Start Rate Per Square Foot NNN
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
Monthly Re
nt Per Sq. Ft.
Avg. Starting Rate
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SILICON VALLEY OFFICE RENTS
Average Start Rate Per Square Foot Full Service
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
Monthly Re
nt Per Sq. Ft.
Avg. Starting Rate
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SILICON VALLEY INDUSTRIAL RENTS
Average Start Rate Per Square Foot NNN
$0.00
$0.15
$0.30
$0.45
$0.60
$0.75
$0.90
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
Monthly Re
nt Per Sq. Ft.
Avg. Starting Rate
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SILICON VALLEY WAREHOUSE RENTS
Average Start Rate Per Square Foot NNN
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
Monthly Re
nt Per Sq. Ft.
Avg. Starting Rate
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