Cornish & Carey Q3 Report

8/14/2019 Cornish & Carey Q3 Report

1/22

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T: 415.445.8888 | Fax: 415.445.8889

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4/22

2

SAN FRANCISCO OFFICETHIRD QUARTER

SAN FRANCISCO

OFFICE UPDATE AND Q3 2008 IN REVIEW

By Dave Karol, Senior Financial Analyst & Sales Associate

This third quarter was one of the mosttumultuous quarters in recent history.Headline after headline of the crisis in thefinancial markets spilled over into all sectorsof the economy. While San Franciscostenancy is more diverse than that of NewYork, the fallout of Wall Street is still felthere. Here is a brief summary of SanFranciscos exposure to the turmoil in themarket:

Lehman Brothers Was the first

investment bank to file for bankruptcy since1990, and based on assets it is the largestbankruptcy in American history. Relative toLehmans 1.1 Million Square footheadquarters in New York, their space inSan Francisco is minimal: 555 California 60,766 sq. ft. on floors 30

& 41. The lease expires in September,2011.

AIG Received an $85 Billion bailout fromthe federal government to preventbankruptcy. In return the governmentreceived 100,000 convertible stock sharesthat equate to a 79.9% equity stake in thecompany. AIG signed a renewal and

expansion of their space in 2007: Rincon Center (101 & 121 Spear Street)

190,152 sq. ft. (42% of the property). Thelease expires in July, 2017. AIG recentlyput $10.8M into their space as part oftheir renewal. Work to be completed inMarch, 2009. When the work iscompleted 23,395 sq. ft. of temporaryspace will be given back.

50 California 4,443 sq. ft. on the 33rdfloor. Lease expires June, 2009.

555 California 10,271 sq. ft. on the 31stfloor. Lease expires July, 2010.

Washington Mutual (WaMu) Withover $300 Billion in assets, made headlines as

the biggest bank failure in U.S. history. Theysaw a run on the bank resulting incustomer withdraws of $16.7 Billion in the10 days following Lehmans bankruptcy. TheSeattle-based company was seized by federalregulators who, in the interest of protectingdepositors savings, sold the companysbanking assets to JP Morgan Chase foralmost $2 Billion. 123 Mission 105,543 sq. ft. (32% of the

property) on Floors 4-9, 19 & 27. Thelease expires December, 2010 excludingthe 27th floor which expires June, 2012.

201 Mission 62,591 sq. ft. (13% of theproperty) on floors 7 & 10-12. The lease

expires November, 2010. The spacehouses WaMu Card Services.

Merrill Lynch After being battered bythe housing crisis and seeing their stockdrop 78% in 12 months, Merrill Lynch wasable to dodge a complete failure by optingfor a $50 billion stock buy-out by Bank ofAmerica. Merrill Lynch leases over 275,000sq. ft in the city: 101 California 184,434 sq. ft. (65,000

subleased) on floors 9, 11-14, 19-21, 24 &

25. The lease expires October 2012 600 California 47,789 sq. ft. on floors 7,8 & 15 through October, 2014.

220 Montgomery 15,410 sq. ft. on the6th floor through January, 2011.

First Republic Having been acquired byMerrill Lynch in 2007 for $1.8 billion, theirfuture has now been put into question dueto the sale of their parent company. Thereare several possibilities: B of A may roll upsome or all of First Republics operations,they might leave the bank untouched, andits reportedly possible that First Republicmay purchase itself back from B of A andreturn to independent banking. First

Republic is headquartered in San Francisco: 111 Pine 113,777 sq. ft. (15,107 sq. ft. is

retail space) on floors 1-9. 388 Market (1 Pine) 83,000 sq. ft. on

floors 2-5, 11&12.

Wachovia Currently Citigroup andWells Fargo are competing to purchase all,or a portion of, the company. 4 Embarcadero Center 63,000 sq. ft.

(21,000 subleased) on floors 7-9. Thelease expires October, 2010.

555 California 30,087 sq. ft. on the 23rdfloor. The lease expires January, 2015.

Heller Ehrman LLP - After failing to find

a Merger and Acquisition partner the 119-year old firm is in dissolution mode. 333 Bush 251,300 sq. ft. on floors 7-11

& 26-34. The lease expires June, 2018.

DevelopmentIn July you could hear the pylons beingpounded into the ground at 535 Mission.It is the first new office project to breakground in the financial district since 555Mission began construction in 2006. The293,750 square foot building is scheduledfor completion in 2010. The developer,Beacon Capital Partners, is seeking LEEDcertification for Core & Shell.

LeasingAfter an upward trend lasting over 4 years,rental rates are beginning to show signs ofslippage. Class A asking rates have droppedto an average of $44.07, a decline of 6% fromlast quarter. Some submarkets have been moreresilient than others. SOMA, which hashistorically been favored by creative companiesas opposed to financial services, saw no drop inaverage asking rates. For landlords withpremier view and creative spaces, premiumrental rates can still be achieved. Some owners

have already reassessed their pro-forma andbacked down from their ambitiousunderwriting. In this market, the only tenantsmaking decisions are those who have expiringleases or are in need of expansion space. Forthose who still have some term left and wereconsidering signing an early renewal, the generalattitude in the market has been to wait andsee.


5/22

SAN FRANCISCO SAN FRANCISCO OFFICETHIRD QUARTER

OFFICE MARKET SUMMARY

3rd Quarter, 2008

Submarket Net Rentable Area * Availability Total Vacancy 3 Total Availability Class A Class B Class C Q Net Absorption 2

North Financial District 28,86,470 3,608,96 9.67% 2.52% $45.30 $37.00 $30.00 (290,850)

South Financial District 24,46,886 2,52,679 7.40% 0.4% $44.20 $37.00 $29.00 (65,582)

North Waterfront/Jackson Sq. 6,886,774 645,664 7.07% 9.38% $42.40 $36.50 $29.00 (75,596)Van Ness/Civic Center 6,769,29 64,377 7.26% 9.08% $37.20 $32.00 $30.00 (35,366)

Union Square 5,887,90 525,054 8.2% 8.92% $39.70 $36.00 $30.00 (32,96)

SoMa** 0,630,65 2,2,764 9.87% 9.87% $39.79 $35.87 $29.67 (26,908)***

San Francisco Office Market 83,137,190 10,019,454 9.80% 12.05% $44.07 $36.00 $29.67 (862,263)***** SoMa Inventory includes the following markets: South of the Market; Yerba Buena; Multimedia Gulch; Mission Bay; South Beach; Inner Mission & Potrero Hill

Average Asking Rate 1

*** 90,000 square feet at 70 Third Street were added to SOMA inventory Q 2008

Historical TrendsClass A Quarter Total RSF Direct Vacant Sublet Vacant Vacancy Absorption Rental Rates 1

2004/Q3 43,979,849 5,565,37 ,890,83 7.0% 354,905 $28.60

Q4 44,284,268 5,544,64 ,78,343 6.5% 29,56 $28.60

2005/Q 44,430,772 5,828,447 ,3,954 5.7% 365,583 $29.70

Q2 45,526,350 5,773,84 ,30,434 5.2% 60,24 $3.57

Q3 45,34,630 4,934,788 ,408,976 4.% 464,534 $32.56

Q4 44,794,249 4,644,55 ,246,239 3.2% 303,27 $33.40

2006/Q 45,8,682 3,802,372 77,040 0.0% 283,495 $33.46

Q2 45,265,952 3,899,723 692,683 0.% ,350 $35.27

Q3 45,267,770 3,42,272 583,28 8.8% 23,537 $35.88

Q4 45,278,227 3,224,700 643,023 8.5% 20,84 $36.80

2007/Q 46,668,376 3,422,734 44,075 8.3% 9,954 $42.02

Q2 46,663,509 3,286,066 487,9 8.% 92,522 $43.32

Q3 46,663,509 3,083,395 355,42 7.4% 240,597 $46.82

Q4 46,663,509 2,976,387 352,776 7.% 54,49 $46.82

2008/Q 47,322,203 2,754,242 365,733 6.6% 28,808 $46.9

Q2 47,595,475 3,243,799 393,792 7.7% (325,48) $46.94

Q3 47,595,475 3,448,0 744,607 8.8% (253,332) $44.07

HISTORICAL VACANCY VS. LEASE RATES

1 Rates are Quoted as Full Service2 Absorption is based on available square footage and may vary from Vacancy 0 %3 Vacancy is based on vacant square footage* Includes all Classes of Office Space


6/22

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SAN FRANCISCO

OFFICE MARKET HIGHLIGHTS - LEASING

455 Mission Bay Boulevard

BY THE NUMBERS

105,000 Square feet of space was taken by Pfizer,Inc. at 455 Mission Bay Boulevard. Pfizerssubsidiary, Rinat Neuroscience out of South SanFrancisco, will occupy the entire South Wing of455 Mission Bay Boulevard when the project iscompleted in January, 2010. Pfizer also has anoption on 50,000 square feet in the adjacentbuilding (the East Wing). They signed a fifteen year

lease.

Significant Leases (By Square Foot)

Top 5 Leases

Tenant Lessor (Sublessor) Address Sq. Ft.

Pfizer, Inc. Alexandria Real Estate 455 Mission Bay Boulevard 05,000

Squire, Sanders & Dempsey LLP TIAA-CREF 275 Battery Street 67,000

Arup ( S ) JP Morgan Chase 560 Mission Street 49,726

Carroll Burdick & McDonough ( R ) State Teachers Retirement System of Ohio 44 Montgomery Street 49,528

Symantec ( R ) ( E ) Kennedy & Associates 303 2nd Street 44,963

Pending Leases

Tenant Lessor (Sublessor) Address Sq. Ft.

Autodesk Glenborough Realty Trust, Inc. 60 Spear Street 6,32

Lieff Cabraser Heimann & Bernstein LLP ( R ) TIAA-CREF 275 Battery Street 46,000

OpenTable.com CFRI Market Street, LLC 799 Market Street 35,000

Norcal Waste Systems, Inc. ( R ) Arden Realty Golden Gateway Commons 25,000

Top 5 Contiguous Spaces (available in 2 months)

Address Lessor (Sublessor) Sq. Ft.

355 Market Street (Connects w/ 875 Stevenson) The Adco Group 405,000

370 Third Street JER / Lane Partners 358,582

555 Mission Street (Under Construction) Tishman Speyer 39,850

650 Townsend Street TMG Partners 33,376500 Terry Francois Blvd. CBRE Investors Strategic Partners 268,245

R: Renewal

E: Expansion

S: Sublease


7/22

5


SAN FRANCISCO

OFFICE MARKET HIGHLIGHTS - SALES

BY THE NUMBERS

267,446 Square feet of class B Union Square space at760 Market Street has been sold by Westcore Properties ofSan Diego who owned the building since 2007. The newownership, Thor Equities, is looking to reposition thebuilding. Best Buy just subleased +0,584 square feet ofretail space on the ground floor.

760 Market StreetSignificant Sales

Top Building Sales for Q3 2008

Building Sq. Ft. Seller Buyer Class

760 Market Street (Phelan Build ing) 267,446 Westcore Properties Thor Equities B

Top Buildings for Sale Over 50,000 Square Feet

Building Sq. Ft. Seller Buyer Class

One Montgomery Tower (20 Kearny St) * 777,20 Nippon Life (NPI) TBD A

555-575 Market Street (Market Center) 770,044 RREEF TBD A

One Sansome Street 652,463 Broadway Partners Real Estate Fund III Mirae Asset MAPS Investment Management A

Rincon Center (0/2 Spear St) 580,850 Beacon Capital Partners TBD A

20 Mission Street 483,582 PruUk (LaSalle Investment Management) TBD A

2 Main Street 373,769 The Booth Family TBD B

22 Main Street 350,000 The Booth Family TBD B

400 Howard Street (Froundry Square I) 335,000 Morgan Stanley / Glenborough TBD A

60 California Street 253,809 Lincoln Properties / State of Illinois TBD A

235 Pine Street 207,500 Alecta RE TA Realty A

035 Market Street 98,023 Seligman Western Enterprises TBD B

0 Howard Street 83,500 The Booth Family TBD B

* Represents a 50% Interest. Includes Crocker Galleria (52,704 square feet of retail space)

Building Sq. Ft. Owner Location Completion Date Major Tenant(s)

499/409 Illinois Street * 450,000 Shorenstein Company Mission Bay Q4-2008 Fibrogen

555 Mission Street 550,000 Tishman Speyer Properties South Financial District Q4-2008 DLA Piper / Gibson D

500 Owens Street 57,929 Alexandria Mission Bay Q-2009 None

Kearny Street ( R ) ( E ) 94,000 Joseph & Maria Fang North Financial District Q2 -2009 None535 Mission Street 293,750 Beacon Capital Partners South Financial District 200+ None

680 Folsom Street ( R ) 350,000 RREEF / CalPERS South Financial District 200+ None

* 240,000 square feet leased to Fibrogen

R: Renovation

E: Expansion

Building Sq. Ft. Owner Location Status

222 Second Street 67,000 Tishman Speyer Properties South Financial District Planning

350 Bush Street / 500 Pine Street 350,000 Lincoln Properties North Financial District Approved

350 Mission Street 385,000 GLL Real Estate Partners South Financial District Planning

Piers 27-3 300,000 Shorenstein Company North Waterfront Planning

505 Howard Street (Foundry Sq. III) 252,500 Wilson Meany Sullivan / Stockbridge South Financial District Approved

Projects Planned

Projects Under Construction (By Completion Date)


8/22

6


SAN FRANCISCO

LEED - Certified

C&C FOCUS TIER 1, 2, & 3

ENERGY STAR LEED - Pending


9/22

7


SAN FRANCISCO

C&C FOCUS TIER 1, 2, & 3

LEED - CertifiedENERGY STAR LEED - Pending


10/22

8


NORTH FINANCIAL DISTRICT MARKET SUMMARY

3rd Quarter, 2008

Building Class Total RSF Overall Direct Sublet Overall Direct Sublet Current Quarter Q2 '08 Rental Rates1

A 2,482,945 9.3% 7.% 2.2% 2,576,484 ,959,59 66,965 (286,09) (34,6) $45.30

B 6,477,223 .3% 0.4% 0.8% 973,77 906,967 66,750 (9,504) (47,760) $37.00

C 856,302 6.3% 6.3% 0.0% 58,75 57,762 953 4,673 626 $30.00

28,816,470 9.67% 7.83% 1.84% 3,608,916 2,924,248 684,668 (290,850) (181,745)

Vacancy Rate Availability (SF) Net Absorption

Historical Trends

Class A Quarter Total RSF Direct Vacant Sublet Vacant Vacancy Absorption Rental Rates

2004/Q3 9,838,32 2,680,889 777,290 6.5% (04,547) $29.90Q4 9,838,32 2,669,307 535,675 7.4% (9,053) $30.60

2005/Q 9,838,32 2,88,36 449,393 6.2% 253,97 $3.0

Q2 9,89,889 2,828,293 487,826 6.5% (62,593) $32.75

Q3 9,805,988 2,365,59 507,236 6.7% (4,960) $33.0

Q4 9,87,460 ,922,272 637,96 4.5% 57,926 $34.3

2006/Q 9,87,460 ,773,27 34,449 2.9% 243,229 $34.75

Q2 9,890,90 ,73,564 337,550 0.5% 08,358 $34.75

Q3 9,895,09 ,557,068 292,97 0.4% 5,837 $36.40

Q4 9,895,09 ,505,6 289,094 9.3% 225,65 $37.00

2007/Q 20,968,597 ,703,435 202,698 9.0% (3,396) $37.60

Q2 20,968,597 ,654,847 268,598 9.% (2,277) $43.24

Q3 20,968,597 ,38,444 8,956 9.2% (7,32) $45.5

Q4 20,968,597 ,252,588 77,665 7.5% 83,823 $48.30

2008/Q 2,482,945* ,294,006 3,722 6.6% 55,87 $48.30

Q2 2,482,945 ,430,829 53,364 7.4% (34,6) $48.30

Q3 2,482,945 ,525,829 477,404 9.3% (286,09) $45.30


1 Rates are quoted as Full Service* The Piers 1.5, , 5 were added to North Financial District Class A Q1 2008


11/22

9


SAN FRANCISCO

NORTH FINANCIAL DISTRICT MARKET SUMMARY

BY THE NUMBERS

251,300 Square feet is going to be available at Bush Street as Heller Ehrman LLP closes its doors.

9.3% Class A vacancy for the North FinancialDistrict submarket, increasing 1.8% since last quarter.

$45.30 Per Square foot (Full Service) for Class Aspace, a decline of 6.21% quarter-over-quarter.

HISTORICAL DIRECT VS. SUBLEASE AVAILABLE SPACE


12/22

10


SAN FRANCISCO

SOUTH FINANCIAL DISTRICT MARKET SUMMARY

3rd Quarter, 2008


A 9,62,763 7.9% 6.9% .0% 2,053,54 ,76,070 292,444 (73,457) 37,426 $44.20

B 3,3,89 5.7% 5.2% 0.5% 37,809 293,949 77,860 (87,97) 37,338 $37.00

C ,222,232 4.4% 4.% 0.2% 87,356 84,533 2,823 (4,928) 7,266 $29.00

24,146,886 7.40% 6.54% 0.86% 2,512,679 2,139,552 373,127 (165,582) 82,030


Historical Trends

Class A Quarter Total RSF Direct Vacant Sublet Vacant Vacancy Absorption Rental Rates

2004/Q3 9,687,636 2,353,253 755,277 5.8% 259,685 $29.20

Q4 20,08,48 2,382,289 804,855 5.9% (78,64) $30.30

2005/Q 20,6,732 2,322,85 609,930 4.6% 254,244 $3.0

Q2 20,6,732 2,72,607 603,502 3.8% 27,66 $3.75

Q3 20,23,93 ,80,78 562,883 .8% 2,402 $32.53

Q4 9,772,060 ,934,028 477,22 2.2% (38,490) $33.40

2006/Q 20,59,493 ,328,836 358,395 8.4% 63,342 $33.40

Q2 9,086,992 ,354,408 325,959 8.8% 4,720 $35.70

Q3 9,094,438 ,27,296 257,646 8.0% (70,444) $36.00

Q4 9,094,438 ,038,200 262,045 6.8% 228,697 $37.0

2007/Q 9,28,276 99,788 60,72 6.0% 252,536 $42.67

Q2 9,28,276 998,88 42,02 6.0% 3,586 $43.40

Q3 9,28,276 ,57,348 92,02 6.5% 4,922 $47.60Q4 9,28,276 ,294,077 83,682 7.2% (28,390) $47.60

2008/Q 9,62,763* ,064,770 49,049 6.2% (32,660) $47.60

Q2 9,62,763 ,53,898 58,734 6.7% 37,426 $47.60

Q3 9,62,763 ,357,040 87,752 7.9% (73,457) $44.20


1 Rates are quoted as Full Service* 45 Spear (Hills Plaza) was moved from SOMA to South Financial District Class A Q1 2008


13/22

11


SAN FRANCISCO

SOUTH FINANCIAL DISTRICT SUMMARY

BY THE NUMBERS

535 Mission Street began construction in July. This29,750 square foot building is scheduled forcompletion in 2010. Currently without any signedleases, the property is being built on spec.

50 Beale Street pulled off the market. Offers came inwell below Broadway Partners desired selling price.

Blue Shield occupies 41.7% of the building throughDecember, 2018.

7.4% Overall vacancy and 7.9% Class A vacancy forthe South Financial District submarket, increasing1.04% and 1.2% respectively quarter-over-quarter.

HISTORICAL DIRECT VS. SUBLEASE AVAILABLE SPACE


14/22

12


SAN FRANCISCO

NORTH WATERFRONT/JACKSON SQUARE MARKET SUMMARY

BY THE NUMBERS

+11,306 Square foot early renewal along with a+6,700 square foot expansion signed by SBArchitects, Inc. at 1 Beach Street was the largestdeal of the quarter in North Waterfront/JacksonSquare. SB Architects, Inc. was represented by

Jonathan Allen and John Norton of Cornish &Carey Commercial.

11,907 Square feet of positive Class Aabsorption in the North Waterfront / JacksonSquare submarket.

7.07% Overall vacancy for the NorthWaterfront / Jackson Square submarket.


A ,678,73 5.9% 5.8% 0.2% 36,673 30,386 6,287 ,907 7,02 $42.40

B 3,707,546 8.2% 8.% 0.% 48,870 382,665 36,205 (56,22) (27 ,478) $36.50C ,500,55 5.5% 5.5% 0.0% 90,2 89,32 800 (3,38) 280 $29.00

6,886,774 7.07% 6.97% 0.10% 645,664 602,372 43,292 (75,596) (10,177)

Availability (SF)Vacancy Rate Net Absorption


15/22

1


SAN FRANCISCO

VAN NESS/CIVIC CENTER MARKET SUMMARY

BY THE NUMBERS

7.26% Overall vacancy for the Van Ness / Civic Centersubmarket.

4.3% Class A vacancy for the Van Ness / Civic Centersubmarket, making it one of the tightest markets to findClass A space in San Francisco.

6,964 Square feet of negative Class A absorption in theVan Ness / Civic Center submarket.

Building Class Total RSF Overall Direct Sublet Overall Direct Sublet Current Quarter Q2 '08 Rental Rates1A 2,05,547 4.3% 4.2% 0.% 08,277 06,239 2,038 (6,964) 27,254 $37.20

B 2,653,592 .9% .8% 0.% 409,370 34,206 95,64 ,92 4,238 $32.00

C 2,00,080 4.3% 4.0% 0.3% 96,730 9,362 5,368 (29,594) (38,06) $30.00

6,769,219 7.26% 7.12% 0.14% 614,377 511,807 102,570 (35,366) (6,524)



16/22

14


SAN FRANCISCO

UNION SQUARE MARKET SUMMARY

BY THE NUMBERS

5.0% Class A vacancy for the Union Squaresubmarket, unchanged from Q2 2008.

$39.70 Per Square foot (Full Service) for Class Aspace.

32,961 Square feet of negative absorption for allclasses of space in the Union Square submarket.


A 8,75 5.0% 5.0% 0.0% 9,075 9,075 0 0 662 $39.70B 3,037,002 6.9% 6.6% 0.3% 228,89 22,855 6,036 (32,6) 64,645 $36.00

C 2,668,473 0.0% 9.8% 0.2% 287,088 263,95 23,893 (350) (28,66) $30.00

5,887,190 8.21% 7.99% 0.22% 525,054 485,125 39,929 (32,961) 36,646



17/22

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SAN FRANCISCO

THIRD QUARTER


18/22

16


SAN FRANCISCO

SOMA MARKET SUMMARY

By Riccardo Gale & Marc Trovato

In light of current economic conditions, theSOMA market remained fairly strongthroughout the third quarter of 2008.Average asking rates held firm at $34.52 andtenants absorbed 128,000 square feet of officespace. However, the re-introduction of at 370Third Street added 390,000 square feet ofnew supply to the market, resulting in262,000 square feet of negative netabsorption and a modest increase in vacancyto 19.87%.

Core SOMA properties continue tocommand premium rents. For example, Slideleased 36,000 square feet at 301 Brannan inthe low $40s Industrial Gross, and Coverityrelocated and expanded at China Basin to26,000 square feet in the high $40s perrentable square foot, fully serviced. However,asking rents in non-core properties continueto fall, as landlords react to softening demandfor these properties and competition fromnew sublease availabilities. For example, 539Bryant completed two leases in the low $30s,and 642 Harrison is being marketed at thatsame rate.

Availability of high quality, creative, open-planspace remains limited. Some of the moredesirable available spaces in the marketinclude:

410 Townsend Street up to 40,000RSF (in 10,000 RSF increments) of brick& timber office space

500 Third Street 8,000 RSF of bright,open, high-ceiling space with downtownviews

139 Townsend Street 11,000 RSF ofcreative brick and timber, full floor spacenear the Ballpark

185 Berry Street 17,500 RSF of qualitycreative space with waterfront views

72 Townsend Street - 30,000 RSFcreative full building lease opportunitywith turn-key improvements

Despite the strong performance of the SOMAmarket this quarter, concerns loom on thehorizon. Significant pending leases are fewand far between. Venture capital funding,which is so vital to the growth of thetechnology sector, is at its lowest level in

recent memory. According to Dow JonesVentureSource, the IPOs and M&As ofventure-backed companies generated just$4.57 billion this quarter, down 66% from thethird quarter of 2007. Tempered demand andincreased supply of office space, such as the190,000 square feet of office space to be re-introduced at 875 Howard Street nextquarter, may suppress rental rates in the nearfuture. It is anticipated that some companieswill downsize and/or cease operations, addingsublease space to the market and furtherlowering asking rates on direct space.Tenants who can afford to delay major leasecommitments may be well suited to do so.

In conclusion, the SOMA office market hasremained relatively strong through the thirdquarter, primarily due to the continuedstrength of the technology sector. Theleasing market has seen robust activity andsustained rent levels, though a lack of accessto capital has all but silenced the investmentsmarket, with no significant transactionsoccurring for the second consecutive quarter.General economic conditions will likelytemper demand across all sectors, while anincreasing supply of direct and sublease spacein SOMA and in the central business district

(where sublease availability has increasedsignificantly) may continue to push rentslower.

Overall Rent vs. Vacancy 3Q 07 to 3Q 08


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SOMA MARKET SUMMARY

3rd Quarter, 2008

Submarket # of Buildings Total Sq. Ft. Available Sq. Ft. Vacancy Rate Average Asking Rent Absorption Sq. Ft.

South Beach 9 2,24,87 253,637 .32% $35.96 7,765

Multimedia Gulch 39 3,964,074 946,50 23.88% $40.5 2,205

Yerba Buena / South of Market 9 2,59,70 454,042 7.52% $39.60 (337,479)

Potrero Hill / Inner Mission 3 ,29,32 85,303 5.20% $32.78 (8,399)

Mission Bay 5 64,548 273,272 44.47% $55.00 0

Totals: 95 0,630,65 2,2,764 9.87% $34.52* (26,908)**

* Excludes 500 Terry Francois & China Basin Landing addition; Rates are based on a weighted average for available space only

** 90,000 square feet at 70 Third Street were added to SOMA inventory Q 2008

SOMA Top Ten Buildings

Building StoriesBuilding

Sq. ft. Total

1Rates

Direct Avg.

Direct

Sq. Ft.

Sublease

Sq. Ft.

Total Avail.

Sq. Ft.

Avail. Total

Percent

85 Berry Street 6 939,549 $58.25* 229,44 0 229,44 24.4%

475 Brannan Street 4 255,000 $48.00 0 0 0 0.0%

444 DeHaro Street 2 52,000 $35.00 5,23 0 5,23 33.7%

60 King Street 0 67,983 $46.00 6,300 69,656 75,956 45.2%

350 Rhode Island St. South 4 39,509 $38.00 34,84 0 34,84 25.0%

50 2nd Street 7 207,809 $4.00 9,603 4,992 4,595 7.0%

625 2nd Street 4 34,447 $46.00 0 0 0 0.0%

39 Townsend Street 5 57,782 $42.00 2,34 0 2,34 36.9%

40 Townsend Street 4 80,000 $34.00 39,28 0 39,28 49.0%

650 Townsend Street 6 70,400 $33.00 376,527 6,865 393,392 55.4%

1 Rates are Quoted as Full Service* Rate includes new addition of approximately 175,000 RSF

Largest Contiguous Spaces

Address Square Feet Available

370 3rd Street 358,582

650 Townsend Street 33,376

500 Terry Francois Blvd. 268,245

85 Berry Street 75,000

60 King Street 56,963

303 2nd Street 40,45

40 Townsend Street 39,28

350 Rhode Island Street 34,84


20/22

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SAN FRANCISCO

SOMA MARKET SUMMARY

Top Leases

Tenant Lessor Square Feet Address

Pfizer, Inc. Alexandria Real Estate 05,000 455 Mission Bay Boulevard

Symantec ( R ) ( E ) Kennedy & Associates 44,963 303 2nd Street

Nokia ( R ) TMG Partners 39,706 650 Townsend Street

Kennedy Jenks Kennedy & Associates 38,75 303 2nd Street

Slide Watson Breevast 35,373 30 Brannan Street

SF Unified School District Amerimar 35,000 550 Bryant Street

Comcast JER / Lane Partners 3,48 370 3rd Street

Coverity ( C ) ( E ) RREEF 26,000 85 Berry Street

Live Nation 25 Rhode Island, LLC 20,42 25 Rhode Island Street

RG/A Sherman Clay 6,242 35 South Park

Global IP Solutions 642 Harrison & Hawthorne, LLC 2,448 642 Harrison Street

Jaspersoft PMI 9,779 539 Bryant Street

OPSWAT ( S ) Paul Hockett 8,032 640 2nd Street

Top Pending Leases

Tenant Lessor Square Feet Address

OpenTable.com CFRI Market Street, LLC 35,000 799 Market Street

Undisclosed Tenant ( S ) Macy's.com 16,000 22 4th Street

Undisclosed Tenant TMG Partners 15,000 650 Townsend Street

Undisclosed Tenant Apollo Real Estate Advisors 8,300 444 De Haro Street

Top Building Sales

*No SOMA Sale Transactions this Quarter.

SOMA Top Picks

Location Floor(s) Minimum Size Maximum Size Asking Rent Comments

40 Townsend Street 2nd & 3rd 0,000 40,000 $34.00 Creative Brick & Timber with Parking. Nicely finished.

500 3rd Street Partial 5th 0,200 0,200 $35.00 Great lofty, open concrete ceiling space. Good City view.

39 Townsend Street 2nd ,000 ,000 $40.00 Creative Brick & Timber full floor. Great location.

85 Berry Street 2nd 7,500 7,500 $45.00 Creative, high ceiling space with Bay views.

72 Townsend Street Ground 25,000 30,000 $38.00 Very creative full building. Landlord will turn-key improvements.

(E) = Expansion

(R) = Renewal

(S) = Sublease

(C) = Cornish & Carey Involvement


21/22

19


SAN FRANCISCO

AGENT ROSTER

LEASING

Jonathan Allen415.445.518

[email protected]

Karl Baldauf415.445.5117

[email protected]

John Cashin415.445.5112

[email protected]

Donnette Clarens415.445.5120

[email protected]

Shannon Dolan415.445.5105

[email protected]

Riccardo Gale415.445.5119

[email protected]

John Norton415.445.517

[email protected]

Bart OConnor415.445.5102

[email protected]

Will Scovill*415.445.514

[email protected]

Nick Slonek415.445.5100

[email protected]

Marc Trovato415.445.5118

[email protected]

INVESTMENTS

David Karol415.445.51

[email protected]

Michael Leggett415.445.5101

[email protected]

Rita Meehan415.445.515

[email protected]

Chris Pawlik415.445.510

[email protected]

Gerry Rohm415.445.5104

[email protected]

Jacki Wong415.445.5107

[email protected]

MARKET RESEARCH

El Beh415.445.5114

[email protected]

Raquel Ledesma

[email protected]

Sam Liss415.445.54109

[email protected]

Jim Lucas415.445.5106

[email protected]

Melinda Miyagishima415.445.5108

[email protected]

Todd Motoyoshi415.445.5122

[email protected]

RETAIL LEASING

Tracy Chiao415.445.5140

[email protected]

Erika Elliott415.445.5124

[email protected]

Marissa Miller415.445.519

[email protected]

Rachel Pagan

[email protected]

Julie Taylor415.445.5128

[email protected]

C&C CAPITAL

Matthew Gum415.445.5116

[email protected]

J.P. Hailer415.445.5111

[email protected]

Eric Movsessian415.445.512

[email protected]

Brad Zampa

[email protected]

OFFICE ADMIN.

BK Masterson415.445.5150

[email protected]

* Indicates Life Science Specialist


22/22

Cornish & Carey Q3 Report

Documents

Transcript of Cornish & Carey Q3 Report