Fourth Quarter 2016 / Office Market Report. Los Angeles. Market Overview

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1 Los Angeles Market Facts 4.7 Los Angeles County unemployment rate 1,560,200 SF Positive net absorption 14.1 Total vacancy rate $3.14 PSF Weighted average asking rental rate Market Overview The Los Angeles County unemployment rate was recorded at 4.7 in December 2016, down from 5.7 in December Steady job growth has been a major contributor to the health of the Los Angeles County economy overall, with the largest job gains seen in finance, government, education, and health services. The driving force behind the increase in office leasing activity in the county, as of year-end 2016, continues to be office occupants in finance, media, and technology. A positive net absorption of 1,560,200 SF was seen in the fourth quarter of 2016, bringing year-to-date net absorption to 3,160,873 SF. contracted further to 14.1 by the end of the fourth quarter, dropping eighty basis points from the previous quarter. The downward trend in vacancy is expected to continue well in to 2017, and may slightly slow in pace as newly constructed development comes online. There is currently more than 2.5 million square feet of office inventory under construction in the county. As of year-end 2016, demand has driven average asking rents higher for another quarter, to $3.14 psf on a full service gross basis, up approximately twenty basis points from the previous quarter, for the county. The highest submarket rents were found in West LA, with $4.42 psf, while the next highest rents were found in Downtown LA, at $3.30 psf. Between these two submarkets, West LA is experiencing the tightest vacancy rates in the county, while Downtown is now matching the Hollywood/Mid Wilshire submarket with the highest vacancies in the county. At the opposite end of the pricing spectrum, the most affordable rents continue to be found in San Gabriel Valley, at psf, while South Bay follows at $2.36 psf. Photo by Mott Smith

2 Market By The Numbers Submarket Existing Inventory Q Net YTD Net DOWNTOWN 33,480, (67,700) 334,225 - Bunker Hill 8,093, , ,135 - Financial District 19,047, (157,200) (175,859) - Greater Downtown 2,723, ,300 52,281 - South Park 3,615, , ,668 - Completions Under Construction * Weighted Avg Asking Lease Rate 1,176,058 $3.30 $ ,141 $ ,917 $2.97 $3.25 WEST LA 58,287, , ,231 - Beverly Hills 6,954, (83,700) (317,656) - Brentwood 3,339, ,100 1,935 - Century City 10,661, , ,980 - Culver City 3,988, (29,800) 115,482 - Marina Del Rey/Venice 6,579, (85,000) 143,138 - Miracle Mile 5,387, , ,449 - Olympic Corridor 3,073, (54,600) (46,643) - Santa Monica 9,572, , ,656 - West Hollywood 3,009, , ,360 - West Los Angeles 868, ,100 (27,344) - Westwood 4,852, (7,700) TRI CITIES 23,459, , ,713 - Arcadia 622, ,800 4,762 - Burbank 6,832, , ,229 - Glendale 6,374, , ,833 - Monrovia 1,139, , ,372 - Pasadena 8,490, , ,517 - SOUTH BAY 33,580, , , th Street Corridor 3,487, (58,500) (190,032) - Central Torrance 4,460, ,500 90,958 - Downtown Long Beach 5,074, , ,691 - El Segundo/Beach Cities 11,632, , ,778 - LAX 4,416, , ,275 - Long Beach Airport/ 4,508, , ,085 - LA NORTH 31,380, , ,842 - Central SF Valley 4,845, (42,300) 43,985 - Conejo Valley 6,475, ,200 (28,865) - East SF Valley 2,280, (2,600) 47,869 - Santa Clarita Valley 2,298, ,900 42,235 - West SF Valley 15,480, , , ,382 $4.42 $5.08 $4.21 $4.76 $ ,382 $3.88 $3.91 $ ,000 $ ,000 $4.69 $3.42 $4.33 $3.00 $2.28 $3.23 $2.66 $2.60 $ ,874 $2.36 $2.10 $2.60 $ ,874 $3.07 $1.76 $2.17 $2.42 $2.54 $2.37 $2.58 $2.49 $2.38 SAN GABRIEL VALLEY 10,255, (154,300) (89,831) - East San Gabriel Valley 6,569, (169,900) (151,790) - West San Gabriel Valley 3,685, ,600 61,959 - HOLLYWOOD/MID WILSHIRE 14,572, , ,938 - Hollywood 4,013, , ,314 - Mid-Wilshire 10,559, , ,624 - $2.75 $4.22 $2.16 LA COUNTY 205,016, ,560,200 3,160,873-2,532,178 $3.14 * Revisions to weighted average rent methodology were made effective ; current data reported may not match data reported in previous quarters.

3 Inventory Q Net YTD Net Completions Under Construction DOWNTOWN 33,480, (67,700) 334,225-1,176,058 Class A 18,251, (1,700) 353, ,141 Class B 13,383, (84,500) (39,083) - 819,917 Class C 1,845, ,500 19,757 - WEST LA 58,287, , , ,382 Class A 45,301, , , ,382 Class B 11,753, (128,800) (77,723) - 222,000 Class C 1,232, (21,400) (21,146) - - TRI CITIES 23,459, , , Class A 16,646, , , Class B 6,148, , , Class C 664, (7,300) 3, SOUTH BAY 33,580, , , ,874 Class A 13,395, , , Class B 17,250, , , ,874 Class C 2,933, ,900 71, LA NORTH 31,380, , , Class A 18,267, (7,500) 153,387 - Class B 12,039, , , Class C 1,073, ,800 8, SAN GABRIEL 10,255, (154,300) (89,831) - - VALLEY Class A 4,110, ,800 (2,729) - - Class B 5,414, (179,500) (85,063) - - Class C 730, (4,600) (2,039) - - HOLLYWOOD/ MID WILSHIRE 14,572, , ,938 - Class A 6,696, , ,083 - Class B 6,781, , , Class C 1,094, ,200 25, LA COUNTY 205,016, ,560,200 3,160,873 2,532,178 Class A 122,669, ,407,100 2,189,255 1,388,387 Class B 72,773, , ,625-1,143,791 Class C 9,573, , , * Revisions to weighted average rent methodology were made effective ; current data reported may not match data reported in previous quarters. * Weighted Avg Asking Lease Rate $3.30 $3.51 $3.20 $2.78 $4.42 $4.46 $4.19 $4.15 $3.00 $3.08 $2.70 $2.43 $2.36 $2.78 $2.10 $2.21 $2.42 $2.54 $2.11 $2.42 $2.20 $2.14 $2.75 $3.35 $2.47 $2.48 $3.14 $3.53 $2.67 $2.56

4 Rate Asking Rent Net Q Q Q Q Q Q $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $ Q Q Q Q Q Q 2,500,000 2,000,000 1,500,000 1,000, , ,000-1,000,000-1,500,000-2,000,000-2,500, Top Lease Tenant Type Address Submarket SF WARNER MUSIC GROUP CORP. NEW 777 S SANTA FE AVE, LOS ANGELES DOWNTOWN 257,028 CITY NATIONAL BANK NEW 350 S GRAND AVE, LOS ANGELES DOWNTOWN 241,639 KITE PHARMA NEW 2400 BROADWAY, SANTA MONICA WEST LA 159,310 ENTERTAINMENT PARTNERS NEW 2950 N HOLLYWOOD WAY, BURBANK TRI CITIES 125,573 FANDANGO NEW 407 N MAPLE DR, BEVERLY HILLS WEST LA 97,150 Top Sales Address Buyer Seller Price SF P/SF BLUFF CREEK, PLAYA VISTA EDWARD J MINSKOFF EQT JPMORGAN CHASE BANK $413,000, ,943 $824 LANTANA ENTERTAINMENT MEDIA CAMPUS BRIGHTSTONE CAPITAL PRT JAMESTOWN LP $403,000, ,377 $ COLORADO, SANTA MONICA ORACLE CORPORATION WORTHE REAL ESTATE GRP $367,647, ,346 $1,166 CITIGROUP CENTER, DOWNTOWN LA CORETRUST CAPITAL PRT LLC HINES $336,000, ,056 $ WILSHIRE BLVD, MIRACLE MILE CEDARS-SINAI MED CTR LINCOLN PROPERTY CO $295,000, ,679 $646 Under Construction Address Developer SF Completion 801 S BROADWAY, LOS ANGELES WATERBRIDGE CAPTIAL 955,561 Q & W. WATERFRONT DR, LOS ANGELES TISHMAN SPEYER 493, WILSHIRE BLVD, LOS ANGELES KOREAN AIRLINES/AC MARTIN PARTNERS 370,041 Q W SUNSET BLVD, LOS ANGELES HUDSON PACIFIC PROPERTIES, INC. 323,273 Q E 4TH ST, LOS ANGELES HUDSON PACIFIC PROPERTIES, INC. 150,000

5 A Growing, Multinational Presence Avison Young at a Glance Founded: 1978 Total Real Estate Professionals: 2,400 Offices: 79 Brokerage Professionals: 900+ Property Under Management: 100 million sf Avison Young is the world s fastest-growing commercial real estate services firm. Headquartered in Toronto, Canada, Avison Young is a collaborative, global firm owned and operated by its principals. Founded in 1978, the company comprises 2,400 real estate professionals in 79 offices, providing value-added, client-centric investment sales, leasing, advisory, management, financing and mortgage placement services to owners and occupiers of office, retail, industrial and multi-family properties. EDMONTON CALGARY SAN FRANCISCO OAKLAND SAN MATEO VANCOUVER LETHBRIDGE REGINA PITTSBURGH CLEVELAND DETROIT COLUMBUS SACRAMENTO MINNEAPOLIS CHICAGO (2) RENO DENVER ST. LOUIS LAS VEGAS INDIANAPOLIS PHOENIX NASHVILLE DALLAS MEMPHIS HOUSTON AUSTIN KNOXVILLE SAN ANTONIO TAMPA LOS ANGELES (4) ORANGE COUNTY SAN DIEGO WINNIPEG ORLANDO MEXICO CITY TORONTO (2) TORONTO NORTH TORONTO WEST WATERLOO REGION OTTAWA MONTREAL JACKSONVILLE WEST PALM BEACH BOCA RATON FORT LAUDERDALE MIAMI QUEBEC CITY MONCTON HALIFAX BOSTON HARTFORD FAIRFIELD/WESTCHESTER LONG ISLAND NEW YORK CITY PHILADELPHIA NEW JERSEY SUBURBAN MARYLAND WASHINGTON, DC TYSONS CORNER RALEIGH-DURHAM (2) CHARLOTTE GREENVILLE CHARLESTON ATLANTA COVENTRY LONDON (2) THAMES VALLEY HAMBURG BERLIN DUESSELDORF FRANKFURT MUNICH Transaction Services Consulting & Advisory Services Management Services Enterprise Solutions Contact Information Los Angeles - Downtown 555 S Flower St, Ste 3200 Los Angeles, CA Primary Contact: Ted Simpson ted.simpson@ Los Angeles - West Wilshire Blvd, Ste 2100 Los Angeles, CA Primary Contact: Jonathan Larsen jonathan.larsen@ Los Angeles - North 6711 Forest Lawn Dr Los Angeles, CA Primary Contact: Mark Evanoff mark.evanoff@ Regional Managing Director: Chris Cooper - Corporate 555 S Flower St, Ste 3200 Los Angeles, CA chris.cooper@ Orange County - Irvine 2030 Main Street, Ste 150 Irvine, CA Primary Contact: Stan Yoshihara stan.yoshihara@ San Diego - La Jolla 4225 Executive Sqr, Ste 600 La Jolla, CA Primary Contact: Jerry Keeney jerry.keeney@ Los Angeles - Santa Monica 301 Arizona Ave, Ste 303 Santa Monica, CA Primary Contact: Randy Starr randy.starr@ Avison Young [Southern California, Ltd]. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young.