www.lee-associates.com | 1

Change from prior quarter

Absorption (269,716) SF

Vacancy +10 basis points (bps) to 10.3%

Leasing Activity 1,093,788 SF

Direct Lease Rate +$0.03 to $2.58/SF

Under Construction 364,604 SF

Completed Construction 11,200 SF

Office Buildings Sold 27

Median Sale Price $236 PSF

Unemployment Rate LA County: 4.5% (Feb) California: 4.3% (Feb) U.S.: 4.1% (Feb)

The steady decline we have been seeing in leasing activity continued in the first quarter of the year. Leasing velocity dipped to 1,093,788 square feet, down from 1,171,931 square feet in the prior quarter and from 1,419,569 square feet in the year-ago period.

While activity has remained above 1 million square feet since 2012, the year-over-year decline of 23 percent does pose a bit of an enigma since it would suggest a more dramatic increase in vacancy rates than actually occurred.

Vacancy levels rose just 10 basis points (bps) to 10.3 percent in the current quarter, up from 10.2 percent in Q4 2017 and just 20 bps higher than the year-ago period.

Last year we began to see the trend to reduced footprints reflected in leasing velocity, and it would appear that the trend is continuing, especially since asking rates are continuing to rise.

Year over year lease rates have risen $0.11 per square foot to $2.58 per square foot. Rates also rose versus the prior quarter by another $0.04. It is interesting to note that average asking rates still have not reached the pre-recession peak of $2.73 per square foot.

Nonetheless, we are continuing to see absorption weaken, and if indeed companies are opting for fewer square feet even as they actively pursue space it is likely we will continue to see absorption slow.

In the first quarter, there were 269,716 fewer square feet leased than were vacated. That compares with negative

absorption of 170,185 square feet in the final quarter of 2017 and 51,756 square feet of net square feet leased in Q1 2017.

Sale prices rose compared to the prior quarter, but were below median prices a year ago. In Q1, 27 office buildings traded at a median sale price of $236 per square foot compared to 17 office building sales at a median sale price of $207 in Q4 2017. In the first quarter of 2017, 20 office buildings traded at a median sale price of $271 per square foot.

Q12018LA NORTH OFFICEMARKET REPORT

Leasing Velocity Continues to Drop as Tenants Opt for Smaller Footprints, but Rents Still Rising

Q1 TRENDS AT A GLANCE

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Lee & Associates LA North/VenturaA Member of the Lee & Associates Group of Companies

Corporate ID #01191898

LEASING ACTIVITYmillions of SF leased

1.6

1.4

1.3

1.6

1.4

1.11.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

Q113

Q114

Q115

Q116

Q117

Q118

VACANCY

Q113

Q114

Q115

Q116

Q117

Q118

13.8%12.9%

11.5% 10.9%10.1% 10.3%

Ç

Ç

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Ç

Ç

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Ç

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Property Address Class Square FeetSellerBuyer Sale Price PSF

Connexion Burbank303 N. Glenoaks Blvd, 333 N. Glenoaks Blvd300 E. Magnollia, Burbank

A 337,904in 3 buildings

Angelo, Gordon & Co., Lincoln Property Group, Group

Intercontinental Real Estate$123,500,000 $365

The Arbors of Thousand Oaks649 Lawrence Dr, 2535-2545 Hillcrest Dr,2560 Teller Rd, Thousand Oaks

B 275,481in 4 buildings

SteelWaveFelton Properties $47,000,000 $171

Westlake North Phase 1, Building 130700 Russell Ranch Rd, Westlake Village A 138,762 The Blackstone Group, LP

TH Real Estate $33,350,000 $240

535 N. Brand Blvd, Glendale B 107,874 The Blackstone Group, LPOnni Group $28,500,000 $264

Q1 2018 LARGEST SALES

Q12018LA NORTH OFFICE MARKET REPORT

RENTAL RATESaverage per SF, per month

$2.00

$2.10

$2.20

$2.30

$2.40

$2.50

$2.60

Q113

Q114

Q115

Q116

Q117

Q118

$2.24$2.28

$2.26

$2.38

$2.47

$2.58

ABSORPTIONin thousands of SF

-200

49

189

-285

52

-270-400

-300

-200

-100

0

100

200

300

Q113

Q114

Q115

Q116

Q117

Q118

MEDIAN SALE PRICE

$-

$50

$100

$150

$200

$250

$300

2013 2014 2015 2016 2017 Q12018

$161 $180$208

$220

$260$236

SALE TRANSACTIONS

- 10 20 30 40 50 60 70 80 90

100

2012 2013 2014 2015 2016 Q12018

8073

81

58

90

27

Economy at a GlanceBIOPHARMA: The top 50 biopharmaceutical firms, medical device makers and diagnostic service providers in the Los Angeles region saw a combined 10 percent jump in employment over the past year, according to the Los Angeles Business Journal. Employment rose from 23,900 workers to 26,300 workers over the past 12 months. The increase in jobs was accompanied by a 5.3 percent boost in combined revenue to $527 billion.MEDIA: The digital media industry accounted for 206,880 jobs in Los Angeles and Orange counties in 2016, a 12 percent increase since 2006, according to a data just released from the Los Angeles County Economic Development Corp., the Los Angeles Chamber of Commerce and a group of community colleges reported in the Los Angeles Times. The report authors predict that jobs in digital media will increase 7 percent over the next five years, fueled by companies including Amazon and Netflix, both of which are expanding their Los Angeles operations. Digital media wages in 2016 averaged $116,820 compared with the regional average of $59,890.SPENDING: Consumer purchases rose 0.2 percent in February, unchanged from the prior month and despite a 0.4 percent rise in incomes for the third consecutive month, according to data from the Commerce Department reported in BusinessWeek.VEGGIES: Dublin, Ireland-based Total Produce, Europe’s leading fresh produce company, has acquired a 45 percent stake in Dole Food Company for $300 million in cash.

Median sale price excludes distressed sales and those where no price information was recorded.

Q1 2018 LARGEST LEASESProperty Name/Address Class Square Feet Tenant Type

29901 Agoura Rd, Agoura Hills B 37,758 Vitu New

330 N. Brand Blvd, 4th Floor, Glendale A 34,296 Dignity Health Care New

8500 Balboa Blvd, Northridge A 28,702 N/A New

3500 W. Olive Ave, Burbank A 25,334 WB Group New

www.lee-associates.com | 3

SubmarketsTotal

InventoryTotal Vacancy Net Absorption Construction Asking

Total SF % Q1 2018 Underway Completed FS Rate

Agoura Hills 2,147,215 269,301 12.5% (18,529) 18,112 0 $2.23

Burbank (Misc.) 2,334,628 354,890 15.2% 94,667 0 11,200 $3.38

Burbank City Center 1,895,600 152,361 8.0% 19,129 0 0 $2.79

Burbank Media Center 5,996,725 447,065 7.5% 47,349 0 0 $3.65

Calabasas 2,742,685 324,084 11.8% (19,652) 0 0 $2.66

Central Valley 6,133,084 258,056 4.2% 106,049 0 0 $2.15

Chatsworth 1,836,864 84,784 4.6% (7,475) 0 0 $2.10

Conejo Valley 9,737,011 1,163,840 12.0% (14,195) 0 0 $2.36

East Valley 296,763 12,367 4.2% 3,743 0 0 $1.78

Encino 4,795,380 473,270 9.9% (62,947) 0 0 $2.75

Glendale 10,658,965 1,253,774 11.8% (249,762) 39,067 0 $2.79

North Hollywood 2,664,837 214,052 8.0% 6,284 218,267 0 $2.64

Northridge / Reseda 2,192,384 241,673 11.0% 21,948 0 0 $2.45

Santa Clarita Valley 245,207 33,405 13.6% (14,107) 0 0 $1.96

Sherman Oaks 4,195,880 477,006 11.4% 11,472 0 0 $2.60

Tarzana / Woodland Hills 3,203,058 265,043 8.3% 21,028 89,158 0 $2.34

Universal / Studio City 2,125,844 75,947 3.6% 4,036 0 0 $3.02

West Valley 2,254,661 505,108 22.4% 31,679 0 0 $2.25

Warner Center 7,979,313 994,329 12.5% (169,676) 0 0 $2.57

Total 73,436,104 7,600,355 10.3% (269,716) 364,604 11,200 $2.58

Source: CoStar and Lee & Associates

Q12018LA NORTH OFFICE MARKET REPORT

MARKET DEFINITIONS

RENTABLE AREAIncludes all Class A, B and C multi-tenant and sin-gle-tenant office buildings of 10,000 square feet and greater. Excludes buildings under construc-tion, planned or under renovation.

DIRECT VACANCYSpace in existing buildings that is not occupied and is available for direct lease.

TOTAL VACANCYSpace in existing buildings that is not occupied and is available for direct lease and/or sub-lease.

TOTAL NET ABSORPTIONThe square feet leased after deducting space vacated.

DIRECT ASKING LEASE RATECalculated for direct available space using NNN rents. Rents are weighted by total square feet available for direct lease.

UNDER CONSTRUCTIONBuildings in the process of construction. A build-ing is considered complete when issued a certifi-cate of occupancy.

MEDIAN SALE PRICEBased on actual prices of sold buildings as report-ed in public records and by CoStar. Includes all industrial buildings 10,000 SF and more sold at $500,000 or more.

ABOUT LEE & ASSOCIATES®

Celebrating more than 37 years of leadership excellence in com-mercial real estate, Lee & Associates is the largest broker-owned firm in North America with locations across the U.S. and Canada including California, Colorado, Arizona, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Maryland, Michigan, Missouri, Nevada, New Jersey, New York, Ohio, Pennsylvania, South Carolina, Texas, Vancouver BC and Wisconsin. With more than 800 brokers nation-wide, Lee & Associates provides a wide range of specialized com-mercial real estate services on a local, regional and national level. For the latest news from Lee & Associates, visit lee-associates.com or follow us on Facebook, LinkedIn and Twitter.

Lee & Associates-LA North/Ventura, Inc. . is a full service com-mercial brokerage company serving the San Fernando Valley, Conejo Valley, Simi Valley/Moorpark and Ventura County markets. Founded in 1994, Lee LA North/Ventura has grown to become one of the largest commercial brokerage companies in the Los Angeles North and Ventura regions with four offices and 48 agents.

©2018. All rights reserved. No reproduction without prior permission.

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Q12018

Sherman OaksOffice: 818.986.9800 | Fax: 818.783.9260

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LA NORTH OFFICEMARKET REPORT

John Battle, SIOR Managing Director, Investment 818.444.4908Matt Benwitt, Investment 818.444.4964Warren Berzack, Investment 818.933.0350Cheri Blessing, Retail 805.626.1240Jonathan Bruce, Office 818.444.4916Paul Capra, Retail 805.626.1264Darren Casamassima, Office 818.933.0303Scott Caswell, Industrial 818.444.4911Justin Cusumano, Investment 818.933.0312Jennifer Donaldson, Office 818.933.0347Grant Fulkerson, SIOR Managing Director, Industrial 818.449.4401Stephen Geiger, Investment 818.933.0340

Grant Harris, Industrial 805.626.1212Joe Jusko, Industrial 818.223.4397David Kim, Office 805.626.1234Eugene Kim, Office 818.444.4919Joel Kirschenstein, Investment 818.223.4380Randy Kobata, Industrial 818.223.4383Mark Leonard, Office 818.449.4414Cole Martens, Investment 818.444.4909 Bruce Milton, Retail 805.626.1281Jeremy Mintz, Office 818.933.0308Eric Nishimoto, Investment 818.444.4984John Ochoa, SIOR, Industrial 805.626.1208Ryan O’Connor, Investment 818.444.4965

Erica Owens, Industrial 818.444.4912Peter Padden, Industrial 805.626.1283 Phyllis Palin, Office 818.933.0319Scott Patterson, Industrial 818.933.0318Will Poole, Industrial 818.444.4917Patrick Reddy, Industrial 818.933.0348Cory Richmond, Office 818.444.4915Scott Romick Managing Director, Office 818.933.0305Jay Rubin, Office 818.223.4385Barry Schoenbrun, Investment 818.444.4992Jacob Seibert, Multifamily 818.933.0314Scott Silverstein, Office 818.223.4391

Jared Smits, Office 818.444.4986Tom Specker, Office 818.223.4381Cory Stehr, Investment 818.933.0304Larry Steingold, Industrial 805.626.1286Clay Stevens, Industrial 818.933.0311Mike Tingus President 818.223.4380Paulette Toumazos, Office 818.933.0346Ariella Traficante, Office 818.444.4962Brett Warner, Industrial 818.933.0302Hunter Warner, Industrial 818.933.0349George Yessaie, CCIM, Investment 818.933.0324Slavic Zlatkin, Investment 818.933.0325

LA NORTH OFFICE SUBMARKETS

Agoura Hills Agoura Hills, Oak ParkBurbank Includes Burbank Airport submarket and the area East of Buena Vista and West of I-5; North to the city border and Vanowen on the SouthCity Center Downtown BurbankMedia District Burbank Media DistrictCentral Valley Arleta, Granada Hills, Mission Hills, Pacoima, Panorama City, San Fernando, Sun Valley, Sylmar, Van NuysCalabasasChatsworthConejo Valley Newbury Park

Thousand Oaks Westlake VillageEast SFV La Crescenta, Montrose, Sunland, TujungaEncinoGlendaleNorth HollywoodNorthridge/ResedaSherman OaksTarzana/Woodland HillsSanta Clarita Valley Canyon Country NewhallWest SFV Canoga Park West Hills WinnetkaWarner CenterUniversal City/Studio City

CalabasasOffice: 818.223.4388 | Fax: 818.591.1450

Palmdale BlvdOffice: 818.223.4388 | Fax: 818.591.1450

Ventura CountyOffice: 805.626.1200 | Fax: 805.413.7000

Corporate ID # 01191898