0%

43%

39%

10%

8%

Vacancy Rate by Center Type

Downtown

Anchored

Strip Center/Neighborhood

Power Center

Free-standing

Lee & Associates maintains an up-to-date database of all available properties and sold/leased properties.

For more local commercial real estate news, insight, and gossip visit www.thestorefront.wordpress.com

MARKET SNAPSHOT

MID-YEAR RETAIL REVIEW Lee & Associates Tri-Valley Retail Market Report

2nd Quarter 2015

SUMMARY

Available

SF Inventory

SF Vacancy

2Q15 Total

Vacancy Absorption % Change from 4Q14

Livermore

Downtown

Pleasanton

Downtown

Dublin

San Ramon

Danville

Downtown

Available SF

Inventory SF

Vacancy Rate 2Q15 Absorption

% Change from 4Q14

Shopping Centers

Downtowns

Total

Available

SF Inventory

SF Vacancy

2Q15 Total

Vacancy Absorption % Change from 4Q14

Livermore

Downtown

Pleasanton

Downtown

Dublin

San Ramon

Danville

Downtown

Available SF

Inventory SF

Vacancy Rate 2Q15 Absorption

% Change from 4Q14

Shopping Centers

Downtowns

Total

HISTORIC VACANCY RATES

0%

43%

39%

10%

8%

Vacancy Rate by Center Type

Downtown

Anchored

Strip Center/Neighborhood

Power Center

Free-standing

HISTORIC DOWNTOWN VACANCY RATES

SPACE AVAILABILITY BY CENTER TYPE

TRI-VALLEY2015 is all about fireworks; retail investment sales are the shining star in the first half of the year. With a lack of inventory we are seeing historic low capitalization rates offering buyers very little return on their investment. In a market that typically supports a 6.5% capitalization rate, retail assets are trading as low as 4% with the average about 5.5%. As a result, tenants will be subject to rising rental rates and inevitably, triple net expenses will climb due to property tax assessments. Buyers range from local investors to publicly traded Real Estate Investment Trusts (REITS), many of which are trade buyers. The majority of retail shopping center sales are off-market transactions in the Tri-Valley.

Retail leasing has been steady with minimal fluctuations in vacancy rates. The leasing market will remain relatively flat through the end of 2015 with rental rates nearing a plateau. Class “A” anchored centers are achieving lease rates as high as $60.00 annually (NNN). Strip and unanchored centers continue to see large discrepancies in pricing, the average deal completed a tick above $24.00 annual rent (NNN).

Commercial development continues to thrive, accounting for huge occupancy gains that do not translate into numbers. The majority of commercial developments in the pipeline are pre-leased. Over two million square feet of new inventory has been delivered or will be delivered in the next 18 months, less than 10% will ever make it to market.

It seems fairly evident the commercial market will continue to thrive throughout the end of 2015 and into early 2016. The delivery of projects such as Danville Hotel and the second phase of Fallon Gateway will result in minimal inventory changes, keeping vacancy steady. While I would be surprised to see rents increase at the pace set from 2014 - 2015, stranger things have happened.

Jessica Mauser, Editor & Retail Specialist

SUMMARY BY SUB-MARKET

EXCLUSIVE LEE LISTINGS

Since 1979, our seasoned, motivated shareholders and professionals have been offering comprehensive quality service nationally and locally in a pro-active manner. We develop customized solutions for all of your real estates needs through our market-to-market knowledge in all property types. Our unique business model and extensive experience has helped us become one of the largest commercial real estate providers in the United States.

Services Offered:

Market Value Analysis Tenant Representation Investment Sales Development Analysis Landlord Representation Asset Repositioning

FOR LEASEAmador Center

6046 Dougherty Road, Dublin

* The property information/detail contained herein has been provided by the seller/lessor or has been obtained from other sources believed to be reliable, and Lee & Associates - East Bay, Inc. has not indepen-dently verified such information’s accuracy. Lee & Associates - East Bay, Inc. makes no representations, guarantees, or express or implied warranties of any kind regarding the accuracy or completeness of the information provided herein nor the condition of the property and expressly disclaims all such warranties, including but not limited to the implied warranty of suitability and fitness for a particular purpose. Buyer/Lessee should perform its own due diligence regarding the accuracy of the information upon which buyer/lessee relies when entering into any transaction with seller/lessor herein. Further, the informa-tion provided herein, including any sale/lease terms, are being provided subject to errors, omissions, changes of price or conditions, prior sale or lease, and withdrawal without notice.

For the most up to date market information, follow Jessica on her blog www.TheStrorefront.wordpress.com.

RECENT TENANT/BUYER ASSIGNMENTS

SOLD!First @ Maple, Livermore

Investor Purchase

SOLD!2617 Old First Street, Livermore

Owner/User Purchase

FOR LEASEFirst @ Maple

2491 First Street, Livermore

Inventory: Total square footage of retail space in the market not including malls and downtown storefronts

Availability: Square footage that is marketed for lease which is available within 90 days. This also includes sublease space.

Absorption: The change in availability from the previous year.

Vacancy: The percent of available space based on the total inventory.

Triple Net Expenses (NNN): A lease agreement where the Tenant is responsible for their proportionate share of taxes, insurance, maintenance and building repairs. Triple Net Expenses are in addition to base rent.

*Total inventory has changed due to new construction

KEY TERMS & DEFINITIONS

LEE & ASSOCIATES - Your Retail Connection

Property Tenant Square

Footage Center Type City

Rose Pavilion Party City 22,000 Specialty Pleasanton

Enea Plaza Tesla Motors 23,000 Specialty Dublin

Persimmons Place Urban Plates 5,000 Grocery Anchored Dublin

Property Buyer Type

Square Footage Price $/SF

Product Type

6351 Dublin Blvd Dublin Owner/User 7,000 $2.75m $300 Specialty

Vine Center Livermore Investor 36,000 $7.8m

$216 4.8% CAP Strip Center

2420 San Ramon Valley Blvd San Ramon Investor 15,000 $8.0m

$533 5.5% CAP Strip Center

RENT RANGE: COMPETED TRANSACTIONS

MID-YEAR RETAIL REVIEW Lee & Associates Tri-Valley Retail Market Report

2nd Quarter 2015

$24

$50

$30$26

$26

$60

$36

$52

$12

$18

$24

$30

$36

$42

$48

$54

$60

$66

$72

Strip Center &Neighborhood

Centers

GroceryAnchored: New

Construction

GroceryAnchored

Power Center(N

NN

)

30

Median High/Low Range Lease Rates High/Low

NOTEWORTHY TRANSACTIONS Q1/Q2 RENT SURVEY BY TYPE