www.lee-associates.com | 1

Change from prior quarter

Absorption 210,100 SF

Vacancy -30 basis points to 15.5%

Direct Lease Rate +$0.03 to $2.27/SF

Under Construction 299,700 SF

Completed Construction Unchanged

Office Buildings Sold 12

Median Sale Price $196 PSF

Leasing Activity 1,355,898 SF

Unemployment Rate LA County: 8.2% (June) California: 7.4% (June) U.S.: 6.1% (June)

Another surge of leasing activity and marked improvement in employment levels drove office vacancy rates down to 15.5 percent in the second quarter compared to 15.8 percent in the prior period. Vacancy has improved by 150 basis points (bps) compared to the year-ago period.

There were 1,355,898 square feet leased in the quarter, up nearly 20 percent over the prior quarter although 365,762 square feet less than the space leased in the year-ago period. Velocity declined 18 percent from the first half of 2013 as well. A total of 2,492,863 square feet was leased in the first half of 2014 versus 3,039,301 square feet leased in the first half of 2013.

But the modest slowdown comes as lease rates show increasing strength. The average lease rate in Q2 was $2.27 per square foot, up $0.03 per square foot from the prior quarter and $0.05 per square foot compared to the year-ago period. Indeed, much of the pressure landlords were feeling to lease their buildings last year has subsided, and the average asking rate in the current quarter is the highest we have seen in the market since the fourth quarter of 2010.

It should be noted however, that average asking rates are still16.5 percent off their highs of $2.72 per square foot in Q2 2008

Absorption has been positive for the past four quarters with another 210,100 square feet absorbed on a net basis in Q2. This follows a Q1 absorption rate of just 59,131 square feet and a significant improvement from the year ago period when 179,715 fewer square feet were leased than were vacated.

Median sale prices for office buildings have been trending upward for the past three quarters and registered $196 per square foot in Q2 with a total of 10 buildings sold. Including distressed sales and those for which no sale price was reported, the median price was $230 per square foot with a total of 12 building sales.

Year to date the median price of buildings sold in the region was $190 per square foot. There were 22 office buildings sold in the period. Prices have risen 6 percent compared to 2013 when the median price of buildings sold was $179 per square foot.

Q22014LA NORTH OFFICEMARKET REPORT

A Surge in Leasing Activity and Marked Improvement in Employment Drives Vacancies Down and Lease Rates Up

Q2 TRENDS AT A GLANCE

Ç

Å Æ

Ç

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

Corporate ID #01191898

LEASING ACTIVITYmillions of SF leased

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

Q209

Q210

Q211

Q212

Q213

Q214

VACANCY

Q209

Q210

Q211

Q212

Q213

Q214

16.3%

18.7% 18.5%17.5% 17.0%

15.5%

Ç

Ç

Ç

ÇÇ

Ç

Ç

Ç

2 | www.lee-associates.com

Q2 2014 LARGEST LEASES

Q2 2014 LARGEST SALESProperty Address Class Square Feet Sale Price PSF

The Arbors - 4 Building Portfolio2545, 2525 W. Hillcrest Dr / 2560 Teller Rd / 649 Lawrence Dr Westlake Village B 275,329 $50,000,000 $181.60

Burbank Civic Plaza250 E. Olive Ave, Burbank A 79,763 $22,000,000 $275.82

Occidental Business Center9400 Topanga Canyon Blvd, Chatsworth B 25,175 $3,652,000 $145.06

Q22014LA NORTH OFFICE MARKET REPORT

RENTAL RATESaverage per SF, per month

$2.05

$2.10

$2.15

$2.20

$2.25

$2.30

$2.35

$2.40

$2.45

Q209

Q210

Q211

Q212

Q213

Q214

$2.45

$2.32

$2.23 $2.23 $2.22

$2.27

ABSORPTIONin thousands of SF

-205

168

280

422

-180

210

-300

-200

-100

0

100

200

300

400

500

Q209

Q210

Q211

Q212

Q213

Q214

MEDIAN SALE PRICE

$-

$50

$100

$150

$200

$250

2009 2010 2011 2012 2013 YTD2014

$185

$225

$154

$201$179

$190

SALE TRANSACTIONS

-

10

20

30

40

50

60

70

80

90

2009 2010 2011 2012 2013 YTD2014

1116

3139

81

22

Economy at a GlanceFIDO: This year consumers in the U.S. are expected to spend $58.5 billion on their pets, a 4.9 percent increase over 2013, according to projections by the American Pet Products Association (APPA) reported in the Los Angeles Daily News. Among the products and services driving the growth in the category are travel kits for animals, pet hotels and Halloween costumes.

ENTERTAINMENT: The number of motion picture and sound recording jobs in Los Angeles County grew 5.3 percent to 126,400 jobs in April versus the same month in 2013, according to figures from the state Employment Development Department reported in the Los Angeles Times. The category outpaced all private sector job growth, which showed a 2.2 percent increase for the same month.

HOME FURNISHINGS: Furniture and home furnishings sales reached $8.55 billion nationally in May, the highest levels in the past six years, according to data from the U.S. Commerce Department reported in National Real Estate Investor. Housing sector recovery, improved consumer spending and the economy were all cited as reasons for the rebound.

MILLIONAIRES: The U.S. ranked highest in the world in the number of millionaire households and new millionaires in 2013, according to a report by Boston Consulting Group reported in Commercial Property Executive. The group found 7.1 millionaire households in the U.S. including 1.1 million new millionaires in its latest report. Worldwide, the number of millionaire households increased to 16.3 million, up from 13.7 million in 2012.

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

Property Name/Address Class Square Feet Tenant Type

LNR Warner Center21301 Burbank Blve, Woodland Hills A 146,600 Universal Music Group Relocation/

Consolidation

Westlake Landmark30870 Russell Ranch Road, Westlake Village A 75,221 Prodovis New

Townsgate Technology Center*2475 Townsgate Rd, Westlake Village B 31,941 The Walking Company Renewal/

Expansion

Tower at Sherman Oaks*14724 Ventura Blvd, #600, Sherman Oaks A 10,900 Eye Productions New

*Denotes Lee & Associates Transaction

www.lee-associates.com | 3

MARKET DEFINITIONS

RENTABLE AREAIncludes all Class A, B multi-tenant and single-tenant office buildings of 10,000 square feet and greater. Excludes buildings under construction, 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 full service gross 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 re-ported in public records and by CoStar. Includes all office buildings 10,000 SF and more sold at $1 million or more.

Q22014LA NORTH OFFICE MARKET REPORT

SubmarketsTotal

Inventory

Total Vacancy Net Absorption Construction AskingFS Rate

Changefrom

Previous QTotal SF % Q2 2014 YTD 2014 Underway Completed

Agoura Hills 1,614,100 370,900 23.0% 53,100 37,600 0 0 $1.97 9.1%

Burbank (Misc.) 2,548,700 314,500 12.3% 74,200 33,200 0 0 $2.61 -1.9%

Burbank City Center 1,284,600 137,500 10.7% (10,100) (11,500) 0 0 $2.32 -1.1%

Burbank Media Center 4,264,200 933,100 21.9% (300) 41,100 0 0 $3.16 0.8%

Calabasas 2,269,000 264,100 11.6% (8,800) (23,300) 0 0 $2.24 7.8%

Central Valley 2,981,600 362,000 12.1% (20,000) (16,500) 37,000 0 $1.85 0.7%

Chatsworth 1,555,000 247,300 15.9% 2,000 10,300 0 0 $1.98 2.6%

Conejo Valley 6,101,000 1,012,800 16.6% 7,400 58,300 162,700 0 $2.07 2.1%

East Valley 132,100 13,500 10.2% 5,000 5,600 0 0 $1.79 -1.5%

Encino 3,749,400 460,000 12.3% 1,100 9,400 0 0 $2.37 1.1%

Glendale 7,664,300 1,369,700 17.9% 126,700 124,000 0 0 $2.36 0.1%

North Hollywood 1,386,300 251,400 18.1% 19,300 38,500 0 0 $2.46 0.9%

Northridge / Reseda 1,004,000 55,600 5.5% (2,600) (7,100) 0 0 $1.78 -0.4%

Santa Clarita Valley 2,887,400 350,700 12.1% (14,600) (7,400) 100,000 0 $2.30 -1.6%

Sherman Oaks 3,182,100 340,300 10.7% (12,700) (35,700) 0 0 $2.36 1.1%

Tarzana / Woodland Hills 1,849,500 282,200 15.3% (34,500) (28,600) 0 0 $1.96 0.6%

Universal / Studio City 1,243,400 97,100 7.8% 9,900 6,700 0 0 $2.49 1.7%

West Valley 1,511,400 511,000 33.8% 11,600 24,400 0 0 $2.09 0.5%

Warner Center 7,005,800 1,008,900 14.4% 3,400 10,100 0 0 $2.31 2.4%

Total 54,233,900 8,382,600 15.5% 210,100 269,100 299,700 0 $2.27 1.0%

Source: CoStar and Lee & Associates

ABOUT LEE & ASSOCIATES®

Celebrating more than 34 years of leadership excellence in commercial real estate, Lee & Associates is the largest broker-owned firm in the nation with 49 locations including Arizona, California, Georgia, Idaho, Indiana, Illinois, Kansas, Maryland, Michigan, Missouri, Nevada, New Jersey, New York, Texas and Wisconsin.

Lee & Associates-LA North/Ventura, Inc., a member of the Lee & Associates Group of Companies, is a full service com-mercial brokerage company with offices in Sherman Oaks, Cal-abasas, Ventura and Antelope Valley. LA North is celebrating its 20th anniversary this year. Additional information is avail-able at www.lee-associates.com.

©2014. All rights reserved. No reproduction without prior permission.

19941994 20142014

4 | www.lee-associates.com

Q22014

15250 Ventura Blvd, Suite 100, Sherman Oaks, CA 91403Office: 818.986.9800 | Fax: 818.783.9260

Follow us on:

LA NORTH OFFICEMARKET REPORT

Brian Barasch, Investment 818.933.0308

John Battle, SIOR, Investment 818.444.4908

Matt Benwitt, Investment 818.444.4964

Warren Berzack, Investment 818.933.0350

Cheri Blessing, Retail 805.626.1240

Paul Capra, Retail 805.626.1264

Darren Casamassima, Office 818.933.0303

Gary Cohen, Office 805.626.1283

Justin Cusumano, Investment 818.933.0312

Jennifer Donaldson, Office 818.933.0347

Jim Fisher, Investment 818.933.0339

Grant Fulkerson, Industrial 818.449.4401

Stephen Geiger, Investment 818.933.0340

Grant Harris, Industrial 805.626.1212

Joe Jusko, Industrial 818.223.4397

David Kim, Office 805.626.1234

Joel Kirschenstein, Investment 818.444.4961

Randy Kobata, Industrial 818.223.4383

Mark Leonard, Office 818.449.4414

Cole Martens, Office 818.444.4909

Jeff McGuire, Investment 818.444.4960

Bruce Milton, Retail 805.626.1281

Eric Nishimoto, Investment 818.444.4984

John Ochoa, SIOR, Industrial 805.626.1208

Ryan O’Connor, Investment 818.444.4965

Phyllis Palin, Office 818.933.0319

Cory Richmond, Office 818.444.4915

Scott Romick, Office 818.933.0305

Jay Rubin, Office 818.223.4385

Scott Silverstein, Office 818.223.4391

Stephanie Skrbin, Retail 818.933.0349

Mike Smith, Investment 818.933.0334

Jared Smits, Office 818.444.4986

Tom Specker, Office 818.223.4381

Marc Spellman, Office 818.223.4392

Cory Stehr, Investment 818.933.0304

Kirk Thompson, Investment 818.933.0309

Mike Tingus, President/Industrial 818.223.4380

Paulette Toumazos, Office 818.933.0346

Gary Wagmeister, Office Tenant Rep 818.444.4925

Brett Warner, Industrial 818.933.0302

George Yessaie, CCIM, Investment 818.933.0324

Slavic 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

26050 Mureau Rd, Suite 101, Calabasas, CA 91302Office: 818.223.4388 | Fax: 818.591.1450

38460 5th Street West, Suite G, Palmdale, CA 93551Office: 661.341.3300 | Fax: 661.341.3200

1000 Town Center Dr, Suite 310, Oxnard, CA 93036Office: 805.626.1200 | Fax: 805.413.7000