Industrial Market Report Q1 2021 | SF by Compass Marin

Industrial Market Report

San Francisco - CA

PREPARED BY

Roark O'Neill Real Estate Agent

San Francisco Industrial

INDUSTRIAL MARKET REPORT

Market Key Statistics

Leasing

Rent

Construction

Under Construction Properties

Sales

Sales Past 12 Months

Economy

Market Submarkets

Supply & Demand Trends

Rent & Vacancy

Sale Trends

Copyrighted report licensed to COMPASS - 1028085

2/22/2021

Overview San Francisco Industrial 12 Mo Deliveries in SF

12 Mo Net Absorption in SF

Vacancy Rate

12 Mo Rent Growth

1.5 M

(994 K)

6.9%

1.5%

Demand for San Francisco's generally small-sized industrial market has been generated by last-mile logistics tenants, tech firms absorbing flex space, and biotech firms taking lab space. Industrial and flex vacancy fell to extreme lows during the 2010's expansion cycle, but have lifted higher over the past few years. Vacancy has increased in the peninsula and city, particularly among flex buildings and smaller dated warehouses that don't easily tie into e-commerce distribution. Tenants are often facing unenviable options upon lease expiration: renewing at a significantly higher rate, closing shop, or moving out of town due to a lack of alternative viable space availabilities.

Structural factors such as a lack of available industriallyzoned land, weak infrastructure, and confined port capacity limit the market's distribution facility potential. Severe supply constraints and high land values have constrained new development for decades. The market's demand drivers and historically strong rent growth are appealing to investors, but it's relatively limited and aged inventory mutes sales volume. Pricing is well above the national average, and cap rates remain among the lowest in the nation but may face upward pressure as lenders and investors take caution amid the coronavirus pandemic induced recession.

KEY INDICATORS RBA

Vacancy Rate

Market Rent

Availability Rate

Net Absorption SF

Deliveries SF

Under Construction

Logistics

49,556,840

5.6%

$18.06

7.7%

(275,157)

Specialized Industrial

17,715,856

4.1%

$19.40

6.5%

(66,359)

187,000

Flex

27,852,395

11.2%

$32.51

16.9%

188

585,404

1,788,892

Market

95,125,091

6.9%

$22.73

10.3%

(341,328)

585,404

1,975,892

12 Month

Historical Average

Forecast Average

Peak

When

Trough

When

Current Quarter

Annual Trends

Vacancy Change (YOY)

2.4%

5.6%

7.5%

10.3%

2003 Q4

1.2%

2000 Q2

(994 K)

(403,368)

(148,662)

1,945,329

2007 Q3

(4,791,557)

2001 Q4

Deliveries SF

1.5 M

363,710

754,554

1,095,963

2002 Q2

2,800

2016 Q2

Rent Growth

1.5%

2.4%

5.3%

6.9%

1998 Q1

-3.9%

2003 Q2

Sales Volume

$1.8 B

$532M

N/A

$1.7B

2020 Q4

$100.8M

2010 Q1

Net Absorption SF

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 2

Leasing San Francisco Industrial Exaggerating and trending in conjunction with national trends, vacancy in San Francisco's industrial market has increased over the past few years. Now standing at 6.9%, vacancy in San Francisco exceeds that the national average of 5.5%, having risen at a faster pace recently. Net absorption in the market has registered strongly negative in four of the last five quarters, including 20Q4. The delivery and occupancy of new supply pulled absorption into positive territory in 20Q2, but move-outs outpaced move-ins within the existing stock even in that quarter. Over the past year, the occupancy losses in the market total -990,000SF in net. Vacancy among flex properties has ticked up to 11.2%, while logistics (distribution and warehouse) and special industrial vacancy (including heavy manufacturing buildings) has also risen, up to 5.6% and 4.1%, respectively. Due to the shelter in place orders issued in response to the coronavirus pandemic, the nation experienced its sharpest decline in industrial production since the postWWII demobilization from wartime to peacetime in 2020. Job losses related to the coronavirus were also been severe, and the sharp global economic downturn has weakened the Bay Area's industrial tenant base. Leasing activity fell off quickly at the onset of the pandemic in

2020, but rebounded gradually as the year progressed, which is an encouraging sign for the market moving forward. For the entire year, leasing volume in 2020 fell roughly 45% from 2019's total. San Francisco is one of the most expensive metros in the country for both industrial space and workers, and it is located geographically on a Peninsula absent of a major freight rail or port. Highways leading up the Peninsula into San Francisco are often chocked with traffic, which makes moving and storing goods in the market cumbersome. Distribution facilities are more prevalent in the East Bay, which also contains far more manufacturing and warehouse space, land for development, and infrastructure conducive to distribution. San Francisco's industrial market is more localized, and many tenants are in the area by necessity, either to be in very close proximity to their delivery points, or a highly skilled employee base. These tenants include food distributors, select retailers, and delivery services such as the USPS and FedEx, as well as biotech and flex tenants. The biggest threat to the market may be the metro's diseconomies of scale—caused by its high rents and business costs. Due to the rising costs of business, including a high tax burden and expensive lease rates, it has become increasingly difficult to maintain lowerrevenue generating business operations in the Bay Area.

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 3

Leasing San Francisco Industrial NET ABSORPTION, NET DELIVERIES & VACANCY

VACANCY RATE

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 4

Leasing San Francisco Industrial AVAILABILITY RATE

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 5

Leasing San Francisco Industrial 12 MONTH NET ABSORPTION SF IN SELECTED BUILDINGS

Net Absorption SF Building Name/Address

Submarket

Bldg SF

Vacant SF 1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

12 Month

Gateway of Pacific

South San Francisco

512,000

29,000

483,000

Genesis South San Francisco

South San Francisco

374,433

19,872

196,918

The Cove at Oyster Point

South San Francisco

164,150

The Shore at Sierra Point (1)

Brisbane/Daly City

135,202

The Shore at Sierra Point (2)

Brisbane/Daly City

133,983

The Shore at Sierra Point (3)

Brisbane/Daly City

106,490

Crocker Industrial Park (1)

Brisbane/Daly City

118,320

79,400

200-204 Littlefield Ave

South San Francisco

63,700

1535 Rollins Rd

Burlingame

52,150

33 Gough St

South of Market

50,000

49,000

Cabot Business Park

South San Francisco

78,851

45,362

Crocker Industrial Park (2)

Brisbane/Daly City

40,601

360 Spear St

Rincon/South Beach

173,907

39,786

41,604

39,704

901 Rankin St

Bayview/Hunters Point

82,480

56,615

33,339

MBC BioLabs

Belmont/San Carlos

26,561

455 Allan St

Brisbane/Daly City

42,500

25,027

1501 Tennessee St

Mission Bay/China B…

21,110

Subtotal Primary Competitors

2,176,438

88,658

254,531

1,695,697

Remaining San Francisco Market

92,948,653

6,514,741

(595,859)

(2,689,675)

Total San Francisco Market

95,125,091

6,603,399

(341,328)

(993,978)

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 6

Leasing San Francisco Industrial TOP INDUSTRIAL LEASES PAST 12 MONTHS Building Name/Address

Submarket

Leased SF

Qtr Tenant Name

Tenant Rep Company Leasing Rep Company

240-246 Valley Dr

Brisbane/Daly City

79,400

Q3 20 Trove

CBRE;Prologis, Inc.

206 Utah Ave

South San Francisco

45,355

Q4 20 Rivian

JLL

455 Allan St

Brisbane/Daly City

42,500

Q2 20 SF Storage

Vanguard Properties

60 Park Ln

Brisbane/Daly City

40,601

Q3 20 -

Avison Young;Cushma…

435 Harbor Blvd

Belmont/San Carlos

40,000

Q4 20 Da Vinci Marble, Inc.

CBRE

1535 Rollins Rd

Burlingame

34,000

Q2 20 Accel Gymnastics

CBRE

50 Broderick Rd

Burlingame

32,761

Q1 21 -

Kidder Mathews

201 Toland St

Mission/Potrero

32,000

Q3 20 Waymo

Kidder Mathews

Calco Commercial, Inc.

240-246 Valley Dr *

Brisbane/Daly City

25,431

Q2 20 Nestle Waters

Colliers International

3003-3095 3rd St

Mission Bay/China Basin

24,700

Q4 20 -

HC&M Commercial Pro…

1501 Tennessee St

Mission Bay/China Basin

21,110

Q1 21 -

Calco Commercial, Inc.

1320 San Mateo Ave

South San Francisco

20,060

Q4 20 Amazon

Kidder Mathews

405 Allerton Ave

South San Francisco

20,000

Q1 21 -

Kidder Mathews

955 Egbert Ave

Bayview/Hunters Point

19,861

Q4 20 Bauman Construction

Touchstone Comme… Touchstone Commerci…

299 Lawrence Ave

South San Francisco

19,247

Q2 20 Corfini Gourmet

JLL

Cushman & Wakefield

1280 Van Dyke Ave

Bayview/Hunters Point

19,110

Q4 20 -

Colliers International

1535 Rollins Rd

Burlingame

18,150

Q2 20 Farmstead

CBRE

765 Harrison St

South of Market

18,000

Q1 20 Eur-Asia Motors

Cushman & Wakefield

955-1055 Cesar Chavez St

Mission Bay/China Basin

17,400

Q2 20 -

Cushman & Wakefield HC&M Commercial Pro…

455 Toland St

Mission/Potrero

17,185

Q1 20 -

Cushman & Wakefield

3030 17th St

Mission/Potrero

16,238

Q3 20 Fisker, Inc.

JLL

Touchstone Commerci…

225 Barneveld Ave

Mission/Potrero

15,576

Q2 20 Discount Builders Supply

Calco Commercial, I… HC&M Commercial Pro…

928 Harrison St

Yerba Buena

15,482

Q4 20 -

Rodrigo Enriquez

121 Beech St

Redwood City

14,800

Q4 20 ZaiNar

CBRE

Sequoia Realty Services

241 E Harris Ave

South San Francisco

14,000

Q3 20 -

Kidder Mathews

170 W Hill Pl

Brisbane/Daly City

13,945

Q3 20 -

HC&M Commercial…

HC&M Commercial Pro…

345-367 Swift Ave

South San Francisco

13,900

Q1 21 -

Cushman & Wakefield

1805 Rollins Rd

Burlingame

13,720

Q2 20 Dimerco Express USA

CBRE

JLL

150 Potrero Ave

Mission/Potrero

13,000

Q3 20 -

HC&M Commercial Pro…

724 Brannan St

South of Market

12,975

Q2 20 Shaper Tools

HC&M Commercial…

HC&M Commercial Pro…

950 O'Brien Dr

Menlo Park

12,800

Q3 20 -

Cushman & Wakefield

2520 Pulgas Ave

Menlo Park

12,620

Q1 20 -

Colliers International

870 Mahler Rd

Burlingame

12,500

Q1 21 -

CBRE

214-218 Shaw Rd *

South San Francisco

11,600

Q3 20 EYC Rental

Calco Commercial, Inc.

200-218 Shaw Rd

South San Francisco

11,600

Q4 20 Remoov

BEACON Commerci… Urban Properties

1240 Fitzgerald Ave

Bayview/Hunters Point

10,000

Q4 20 Mint Staging

Touchstone Comme… Touchstone Commerci…

820 Willow St

Redwood City

9,600

Q1 21 -

840 Harrison St

Yerba Buena

9,360

Q1 20 -

The Hawthorne Group Cushman & Wakefield

320-350 Industrial Rd

Belmont/San Carlos

9,180

Q4 20 Kelly Moore

Northgate Commerci… CBRE

989 Shasta St

Redwood City

9,100

Q4 20 Weedmo

CBRE

COMPASS

*Renewal

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 7

Rent San Francisco Industrial San Francisco ranked among the strongest markets for rent growth in the 2010s economic expansion. The market-wide industrial/flex average asking rate has soared to $23.00/SF, having risen by 49.4% over the past decade. Asking rents have increased for ten consecutive years through 2020, as enduring demand provided landlords leverage in lease negotiations, but rent growth has dissipated lately with leverage shifting away from landlords. Rent growth in San Francisco outpaced the national average from 2013 through 2016, and again in 2018. However, local rent growth has slowed dramatically as of late. Annual rent growth registered above 6% in 2018, but slowed to less than 4% in 2019, and currently measures 1.5% on a trailing-year basis, below the national average of 3.5%.

Flex properties have seen the sharpest decline, where asking rents have actually fallen by 0.2% over the past year. The specialized industrial sector, which includes manufacturing buildings, has also seen a quick downturn in rent growth, which has faded to just 1.9% on a yearover-year basis. True to form, rents are historically volatile in San Francisco. Asking rents are typically hit hard during downturns, and the global financial crisis recession was not an exception. Local rents fell by roughly 7% from 2008 to 2011 in total, outpacing the national average. The coronavirus pandemic presents a unique shock to the economy, and rents will face further headwinds in 2021, but the industrial sector is expected to fare best among all property types, particularly in San Francisco.

MARKET RENT GROWTH (YOY)

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 8

Rent San Francisco Industrial MARKET RENT PER SQUARE FEET

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 9

Construction San Francisco Industrial Primarily due to land constraints and construction costs that necessitate higher use, few industrial properties have been built in San Francisco over the past decade, a trend that may continue after the crop of developments currently underway deliver. The majority of space currently under construction is located in South San Francisco and Brisbane and consists largely of Flex R&D projects geared towards biotech tenants. BioMed Realty's Gateway of Pacific development in South San Francisco has completed a 512,000 SF building, which was preleased to AbbVie in November 2018. Following AbbVie's deal, Amgen preleased 240,000 SF in Phase II of the project, a 440,000 SF building, 750 Gateway which is currently under construction. That building remains partially available, but based on the developments leasing success, BioMed was encouraged enough to initiate construction of the developments Phase III building, the 350,000 SF 700 Gateway, in 2019. When Phase IV's 250,000 SF building is completed, the campus will encompass 1.4 million SF. Also in South San Francisco, the second largest recent biotech development in the market, The Cove at Oyster Point has performed well. Alector Inc and Harpoon Therapeutics moved into the largest buildings at Healthpeak Properties' five-building, 1 million SF campus in 19Q2. Most recently in 20Q2, Global Blood Therapeutics moved into 181 Oyster Point Blvd - Building 5, The Cove's final delivery. Healthpeak Properties The Shore at Sierra Point Brisbane also delivered new biotech space in 20Q2: a 134,000 square foot building preleased to MyoKardia, and a second 106,000 SF building that preleased to Celgene. Healthpeak initiated construction on Phase II of the campus, which consists of two additional 135,000 SF buildings, in 2019 based on the strong biotech tenant interest, and the speculative development is leasing up.

Annexon preleased 65,818 SF at one of the underconstruction buildings in December 2020, at an effective rent of $76.92 NNN, and in January 2020, Healthpeak Properties announced that it had executed a long-term lease with Janssen BioPharma, Inc., part of the Johnson & Johnson Family of Companies, for approximately 60% of Phase II of the campus. The lease is expected to commence in January 2022, upon completion of construction. Janssen BioPharma, Inc. has expansion rights under the lease that can be exercised over the course of 2020. The project's final fifth building, still proposed, will bring the total campus size to 616,000 SF. Several new biotech campuses have boosted market supply over the past few years, representing a reversal in trend. Typically in San Francisco, more industrial space is set for demolition than for development. Prior to 2019, supply levels had declined for ten consecutive years. San Francisco saw a 9% total inventory reduction from 2000 through 2018, but finally received substantial development additions recently, which have been well received. New biotech space, and really any new industrial or flex space, with ample clear height and high power capacity, has been highly prized in a region where most inventory has aged, and development has been limited. Historically, some of the largest demolitions of industrial properties have occurred in the Mission and Potrero districts (rapidly gentrifying residential areas) and in Oyster Point in South San Francisco, where Genentech demolished older industrial buildings to build their flex R&D headquarters campus. Only a few large projects outside of biotech are in planning, since warehouse development typically does not pencil in the market, and residential or office developers target the few open brownfield or greenfield sites that do exist.

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 10

Construction San Francisco Industrial DELIVERIES & DEMOLITIONS

SUBMARKET CONSTRUCTION Under Construction Inventory No.

Submarket

Average Building Size

Bldgs

SF (000)

Pre-Leased SF (000)

Pre-Leased %

Rank

All Existing

Under Constr

Rank

South San Francisco

1,025

475

46.3%

38,566

341,630

Brisbane/Daly City

628

37,023

209,333

Bayview/Hunters Point

187

17,414

187,000

South of Market

10,351

93,138

Showplace Square

24,564

42,864

Belmont/San Carlos

14,848

Burlingame

22,685

Civic Center

5,179

Financial District

Foster City/Redwood Shrs

34,962

All Other

16,696

1,976

475

24.0%

19,938

219,544

Totals

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 11

Under Construction Properties San Francisco Industrial Properties

Square Feet

Percent of Inventory

Preleased

1,975,892

2.9%

24.0%

UNDER CONSTRUCTION PROPERTIES

UNDER CONSTRUCTION Property Name/Address

Rating

Bldg SF

Stories

Start

Complete

Phase II 750 Gateway Blvd

440,000

Apr 2019

Mar 2021

Phase III 700 Gateway Blvd

349,998

Dec 2019

Sep 2021

Bldg 1 3000 Marina Blvd

250,000

Oct 2020

Mar 2023

N1 Inception - Bldg A Oyster Point Blvd

234,892

Oct 2018

Mar 2021

Bldg 3 3500 Marina Blvd

198,000

Feb 2021

Apr 2023

Powered Shell Data Center 400 Paul Ave

187,000

Jun 2018

Mar 2021

Bldg 2 3250 Marina Blvd

180,000

Feb 2021

Apr 2023

Copyrighted report licensed to COMPASS - 1028085

Developer/Owner

BioMed Realty L.P. BioMed Realty L.P. BioMed Realty L.P. Phase 3 Real Estate Partners, Inc. Phase 3 Real Estate Partners, Inc. Kilroy Realty Corporation Kilroy Realty Corporation Phase 3 Real Estate Partners, Inc. Phase 3 Real Estate Partners, Inc. The Cambay Group, Inc. CIM Group, LP Phase 3 Real Estate Partners, Inc. Phase 3 Real Estate Partners, Inc.

2/22/2021 Page 12

Under Construction Properties San Francisco Industrial UNDER CONSTRUCTION Property Name/Address

8 9

1035 Howard St Building E 188 Utah St

Rating

Bldg SF

Stories

Start

Complete

93,138

Jun 2020

Jul 2022

42,864

Jul 2020

Apr 2021

Copyrighted report licensed to COMPASS - 1028085

Developer/Owner

Embarcadero Capital Partners LLC Embarcadero Capital Partners -

2/22/2021 Page 13

Sales San Francisco Industrial Investment demand for San Francisco's limited supply of industrial and flex properties intensified in the 2010s expansion cycle and the market even set a new record for sales volume in 2020 amid the pandemic, though deal flow was down overall. Absent of the tenant risk prevalent in many other commercial real estate investment vehicles, bio life science enabled buildings have remained in strong demand from investors. Meanwhile, the nation's rapid adoption of e-commerce attracted institutional capital into the sector, with investment interest for infill logistics properties and bulk distribution centers soaring. The coronavirus pandemic and resulting recession increased uncertainty among investors and lenders for certain industrial assets, but so far volume has remained elevated, and pricing has not deteriorated. CoStar will be closely monitoring investment activity into 2021 to evaluate the extent to which activity and demand adjust to an evolving economic landscape. Sales volume continued to rise in 2020 based on a few high-profile major transactions, but overall deal flow fell to roughly a third of the prior year's velocity. Deal flow had already slowed moderately since midway through the 2010s expansion cycle, and in 2020 sales activity curtailed sharply as investors paused to take stock of the challenges and opportunities at hand. Higher-quality flex and biotech assets have been trading of late, driving pricing on a transactional basis ahead of the market average, as well as the recent growth in sales volume. Inventory turnover had exceeded 4% since 2011 but fell just below that threshold in 2019 and slowed to 2.3% in 2020. Recent sales volume has been robust for market history, but San Francisco's industrial market is comparatively static for deal flow and turnover, perhaps due to its aged and largely lackluster inventory. Inventory turnover across the country was stronger over the past decade and rose to a record-high 6.6% in 2019, only fading moderately in 2020 to 5.0%, more than double San Francisco's prior year turnover. Among active players in the market, REIT and institutional ownership has been on the rise. Historically, institutional investors only account for 13% of the market's buyer volume while REITs account for 23%, but their share of acquisition volume has grown recently.

In October 2020, Ventas REIT acquired Genesis South San Francisco and Sierra Point Opus Center, three premier life sciences R&D flex buildings totaling nearly 800,000 SF, for $1 billion, or $1,297/SF from Phase 3 Real Estate Partners and Bain Capital Real Estate. Regarding the deal, Ventas Chairman and CEO said, "Strong and growing capital flows into the life science sector are accelerating innovation and discovery. These flows support the demand for first-class lab space in dynamic markets like South San Francisco." In January 2020, Chicago-based institutional investment manager Kinship Capital and San Francisco-based Presidio Bay Ventures acquired 200 Kansas St., in San Francisco's Showplace Square Submarket. The 90,000SF light manufacturing building traded for $77.3 million ($858/SF). Presidio Bay Ventures was motivated to acquire a high-quality property in a supply-constrained market where it can also add value for tenants. New York-based institutional investment manager Clarion Partners, acquired a 90% interest in 500 Forbes Blvd. in August 2019 for $139.5 million ($995/SF). The 156,000-SF flex building in South San Francisco is fully leased to Genentech. Flex and R&D properties outfitted for biotech use drive much of the metro's investment volume. Another flex building, 120-150 Industrial Road in San Carlos, sold for $99 million ($431/SF) in 2019 to Nuveen, another New York-based institutional investor. The older 1950s-built, 230,000-SF building is fully leased to Mylan Pharmaceuticals. The seller, Vica Capital, acquired the asset for $22 million back in 2012, reaping substantial gains on its hold. While REIT and institutional ownership is on the rise, private investors have still maintained their overall dominance in the market, accounting for nearly half of the market's recent buyer volume. Due to its geographical constraints and high land values, the San Francisco metro division contains a limited supply of high-quality manufacturing and distribution facilities large enough to attract institutional investors or REIT ownership. Smaller private individuals, trusts, and users own the majority of industrial and flex buildings in San Francisco, many of which are dated. In fact, beyond Prologis, Healthpeak Properties, Alexandria Real Estate Equities, The Blackstone Group, and the City and County of San Francisco, only a few other players own more than 1

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 14

Sales San Francisco Industrial million SF of industrial inventory in the market. With the cost of capital dropping to historic lows and new investors entering the market, cap rates have fallen across the nation since 2010. San Francisco maintains one of the lowest cap rate environments in the entire country at an average of 4.6%, nearly matching nationwide low's found in Southern California. Investors have been willing to pay up for assets in San Francisco, as the national average cap rate prevails significantly higher at 6.6%. However, cap rates have not fallen more dramatically in San Francisco, as the market has maintained a consistent spread of roughly 170 basis points below the national average over the past 10 years. Beyond cap rate compression, above-average rent growth has driven rapid price growth in the market. Average pricing has risen to $420/SF, outpacing gains in most other metros. Logistics properties trade at a market average of $360/SF, while flex properties trade at $530/SF, on average.

Strong fundamentals and rent growth have helped drive gains in pricing, but the pace of rent growth in the market has been decelerating of late, and vacancy has increased since 2016. In addition, the coronavirus outbreak is causing significant economic disruption, particularly to supply chains dependent on warehousing and distributing goods. It remains to be seen what effect the coronavirus will have on San Francisco's industrial sales market, but stronger growth in e-commerce as social distancing is maintained could have a positive impact. On the downside, some deals have been delayed, and demand could be negatively affected if the economy experiences a more severe downturn. Valuations will remain sensitive to investor sentiment, and sellers may find that buyer uncertainty impacts underwriting assumptions, bids, and negotiations. Pricing power will likely be restrained as buyers and lenders potentially take to the sidelines to maintain caution during the early stages of this new economic period. CoStar also expects cap rates to face very slight upward pressure amid restrained credit conditions and rising risk in some industrial sectors.

SALES VOLUME & MARKET SALE PRICE PER SF

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 15

Sales San Francisco Industrial MARKET CAP RATE

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 16

Sales Past 12 Months San Francisco Industrial Sale Comparables

Avg. Cap Rate

Avg. Price/SF

Avg. Vacancy At Sale

5.3%

$796

16.9%

SALE COMPARABLE LOCATIONS

SALE COMPARABLES SUMMARY STATISTICS Sales Attributes

Low

Average

Median

High

$305,500

$23,142,813

$3,300,000

$504,323,328

Price/SF

$58

$796

$423

$1,437

Cap Rate

2.8%

5.3%

7.2%

Time Since Sale in Months

0.2

6.4

6.1

11.8

Property Attributes

Low

Average

Median

High

1,200

30,533

8,060

374,433

10'

16'1"

16'

24'

16.9%

100%

1900

1962

1964

2020

Sale Price

Building SF Ceiling Height Docks Vacancy Rate At Sale Year Built Star Rating

2.0

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 17

Sales Past 12 Months San Francisco Industrial RECENT SIGNIFICANT SALES Property Property Name - Address

Genesis SSF - North Tower 2 Tower Pl

Genesis SSF - South To… 1 Tower Pl

360 Spear St

274 Brannan St

1000 San Mateo Ave

2000 Marin St

590-598 Brannan St

301 Toland St

199 Potrero Ave

201 Toland St

Dalziel Bldg 2741 16th St

1155 Bryant St

1011 Commercial St

Fox Marble 1313 Armstrong Ave

425-439 Littlefield Ave

2136-2140 Palou Ave

950 Charter St

1300 Carroll Ave

Crespi Center 580 Crespi Dr

783-785 Broadway Ave

Sale

Rating

Yr Built

Bldg SF

Vacancy

Sale Date

Price

Price/SF

Cap Rate

2019

374,433

5.3%

10/15/2020

$504,323,328

$1,347

2009

336,360

25.9%

10/15/2020

$424,024,474

$1,261

1942

173,907

22.9%

1/14/2021

$165,468,922

$951

1923

105,800

4/1/2020

$98,000,000

$926

1964

222,500

100%

6/25/2020

$84,720,018

$381

1989

74,122

4/30/2020

$63,600,000

$858

1952

38,200

5/1/2020

$54,891,000

$1,437

1942

110,000

3/11/2020

$52,656,626

$479

1928

44,786

3/5/2020

$33,067,809

$738

1965

32,000

3/11/2020

$22,343,374

$698

1950

24,030

11/13/2020

$22,200,000

$924

7.2%

1919

32,421

9/16/2020

$18,350,000

$566

1974

12,000

4/15/2020

$14,140,113

$1,178

1960

24,410

3/2/2020

$12,000,000

$492

1979

32,800

19.5%

3/12/2020

$11,644,000

$355

6.7%

1960

22,003

5/27/2020

$9,300,000

$423

1965

17,760

100%

9/18/2020

$9,000,000

$507

6,242

2/28/2020

$8,500,000

$1,362

1980

48,960

12/23/2020

$7,956,000

$206

1980

15,800

100%

6/5/2020

$7,500,000

$475

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 18

Economy San Francisco Industrial San Francisco's economy grew rapidly in the 2010's expansion cycle and maintained strength heading into 2020 before the coronavirus pandemic hit. Annual job growth prevailed at 3% in February, but social distancing measures have caused significant economic disruption, leading to the sharpest employment downturn on record and a migration out of the city. Layoffs and furloughs in the hospitality, restaurant, retail, and entertainment sectors were severe. Professional employment sectors were also hit in the downturn, though not as sharply. A modest recovery of lost jobs ensued in May and gained steam in June as the measured reopening of San Francisco's economy helped drive a rebound. However, plans to reopen businesses were stalled as coronavirus cases climbed again. Outdoor dining and indoor retail were allowed, but the reopening of salons, bars, and museums initially planned for late June was paused, and the pace of job recovery has been uneven and weak as a result. Hotels, indoor malls, gyms, indoor restaurants, and hair and nail salons were finally allowed to open at a limited capacity in September. But, a resurgence of coronavirus cases in December led to a renewed shutdown of establishments, including all restaurant dining including outdoor patios and parklets, as well as nonessential office work. Public schools are distance learning, while entertainment venues including movie theaters, night clubs, and music halls have remained shuttered since the pandemic hit. Total employment in the metro division is down 9.1%, or by 109,000 as of December's jobs report released in January, while employment within typical office-using job sectors is still down 2.1% or by 10,200, from their prepandemic peaks reached in February. Start-ups in hardhit segments of the economy have slashed headcounts considerably, while mainstays like Google have slowed their rate of hiring and real estate expansions as ad revenue declines. Most industries are recovering now, though as the economy slowly reopens. Unemployment had fallen below 2% prior to the pandemic, according to the U.S. Department of Labor. Job opportunities were abundant and outnumbered qualified job seekers, but job listings have fallen dramatically over the past few months, and unemployment skyrocketed into the double-digits in the Springtime, ticking back to 5.4% as of November, but rising in December to 6.1%. The labor force has declined slightly since the pandemic hit due to a migration out of

the market. The trajectory of San Francisco's economy and commercial real estate markets will depend on how widely the virus and its variants spread, how quickly the vaccine is distributed, how long containment policies like social distancing need to be maintained, and how quickly those with lost jobs can find employment again. On the positive side, Oxford Economics projects that San Francisco's economic recovery will outpace most other markets due to its industry makeup. San Francisco does not rely as heavily on leisure & hospitality employment as Las Vegas, Orlando, or New Orleans does, but it is a popular tourist destination and will be negatively impacted by a slowdown in travel. Large tech firms reliant on advertising like Facebook and Google saw lower revenues in 20Q2, but have seen a rebound to new record levels. Google and Facebook capture the majority of all internet ad revenue and are well-positioned for an economic rebound. Internet ad revenue was rising at a 17% annual growth rate before the pandemic hit, according to the Interactive Advertising Bureau. Some digital products have seen soaring demand amid the pandemic. For example, communications platforms like Zoom Video and Microsoft Teams have become necessary tools for business survival, and Netflix has seen an influx of new subscribers. Business software investment growth overall has slowed a touch but continues to rise through the downturn, while ecommerce retail sales have spiked. Venture capitalists have invested heavily in locallybased start-ups, as well as mature, but still privatelyheld "unicorn" companies valued over $1 billion. Venture capital funding remained fairly robust in 2020 all things considered, but has faded from 2019 and 2018's recordsetting pace, according to PwC's MoneyTree Report, and may decline further if an uncertain economic environment shakes confidence among investors. A handful of VC firms are leaving for Texas, but Silicon Valley will remain the leading capital provider for start-ups as both are entrenched in the area, and feed off of its educational institutions, and mega tech and biotech firms. Locally based Okta, Roku, and Mulesoft each went public in 2017 with successful results, as did DocuSign and Survey Monkey in 2018. However, a number of Bay Area companies that went public in the 2010's economic expansion period are now trading below their initial IPO

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 19

Economy San Francisco Industrial price. Fitbit, Lending Club, Cloudera, Dropbox, and Eventbrite have all seen their valuations deteriorate since going public, and 2020 was particularly rough for tech unicorns going public. The IPO's of Lyft, Uber, and Slack were considered flops, while market valuations for Pinterest and PagerDuty have declined after initially rising. Some local start-ups like Zoom Video did launch public offerings that performed well in 2019, but the majority were disappointing as high private market valuations, profitability concerns and the prospect of tighter regulations weighed on investors. AirBnB went public in December 2020 despite a loss in bookings due to the pandemic. AirBnB secured two billion-dollar loans in April at a slashed internal valuation as financial losses mounted, and laid off 1,900 employees or roughly a quarter of its global workforce in May. The travel company's stock soared at the onset of 2021 though, and they announced an expansion to Atlanta most recently.AirBnB's local staff had grown larger than 3,000 before the recent cuts. Despite the notable downturns among several highprofile newcomers, the NASDAQ index, which is heavily dominated by San Francisco Bay Area-based tech companies and correlates with local office using employment historically, has already recovered its coronavirus pandemic and oil shock sell-off losses of early 2020. Large-scale expansion plans from several publicly traded technology companies appear to have slowed, yet remain intact, though it will be critical to watch how the fallout from the pandemic and mobile work adoption affects the tech sector and local real estate demand moving forward. Emblematic of San Francisco's transition to a tech industry-led economy, Salesforce surpassed Wells Fargo as the city's largest employer in 2018. The customer relationship management software company continued to grow its headcount after taking occupancy in the recently delivered Salesforce Tower, but in a sign of the times, announced the adoption of remote work options. Salesforce now employs more than 9,000 based in San Francisco. Led by tech firms, roughly 350,000 jobs were created in the metro division in the 2010's economic expansion period, including more than 35,000 jobs added in 2019. On a national scale, coronavirus recession job losses wiped out all gains made in the 2010's expansion cycle, but job growth was so strong in San Francisco over the past decade, the market did not give up all of its expansion cycle gains in the recent downturn.

Facebook has added capacity for well over 5,000 employees at 181 Fremont Street and Park Tower at Transbay, two new skyscrapers recently completed in the South Financial District. Lyft, Dropbox, and Affirm more than doubled their headcounts in the past several years. Uber had aggressively increased its San Francisco headcount to more than 5,000, but rising profitability concerns led to recent job cuts, including several hundred throughout the Bay Area in the second half of 2019, and the elimination of 6,700 positions globally or 25% of its workforce and shuttering of 25 offices including Pier 70's in 2020 in response to the coronavirus pandemic and economic downfall that hit the company. In the finance sector, Wells Fargo's employment in the Bay Area has declined moderately for several years. Wells closed its historic Crocker building branch in late 2019 and may eventually move its headquarters out of town. Charles Schwab has also relocated many positions to lower-cost markets and reassigned its headquarters to Dallas effective 2021, in conjunction with its acquisition of TD Ameritrade, but still maintains a downtown office. Fintech start-ups like SoFi, Affirm, and Lending Club had been a bright spot, boosting employment within the sector, which was gaining momentum heading into 2020 since stagnating in 2017. However, even financial service firms have suffered losses in the coronavirus -pandemic recession. Lending Club laid off 460 employees in April 2020, accounting for 30% of its workforce. The local finance sector was devastated in the dot-com crash and slowly recovered from 2007–09 credit crisis consolidations. Employment in financial activities finally rose above its 2007 prerecession peak late in the 2010's economic expansion cycle, but never returned to levels achieved in the 1990's. San Francisco's economy was roaring ahead into 2020, as it typically does in expansion periods. Professional and business services - by far the market's largest employment and office using sector - was expanding by more than 3% annually before the coronavirus pandemic hit in March. Since the city's early gold rush founding, San Francisco has experienced rapid booms and busts, and the pandemic recession has once again impacted the local economy sharply, as history repeats itself. Based on rapid rent and pricing gains during the expansion, pockets of commercial real estate contained a heightened vulnerability to a downfall.

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 20

Economy San Francisco Industrial Access to cheap capital and an expanding global economy led by technological advancements drove Bay Area commercial real estate markets to new heights over the past decade. Changes in trade policy and slowing global growth presented headwinds to the economy in the mature phases of the expansion cycle, but the lingering shutdown in response to the coronavirus pandemic has sent the country into a deep and rapid recession. The success of mitigation efforts and federal bailouts, in addition to behavior changes in response to the pandemic, will have a profound impact on national economic recovery and commercial real estate demand.

Real estate investment trusts have stockpiled cash amid the uncertain economic times and lenders were swamped by small-business owners looking for relief as emergency actions in response to the coronavirus closed down tens of thousands of restaurants, bars, theaters, gyms and stores across the country. Business closures in San Francisco are already elevated well above that of other metro's according to Yelp, and the Bay Area is still slowly opening in the new year following a second surge of coronavirus cases. Non-essential workers are advised to remain away from offices again, and most are planning for a potential return in the summer of 2021 at this point. We will be updating our analysis as more information becomes available.

SAN FRANCISCO EMPLOYMENT BY INDUSTRY IN THOUSANDS Current Level

12 Month Change

10 Year Change

5 Year Forecast

NAICS Industry

Jobs

Market

Manufacturing

0.4

-6.31%

-4.05%

0.51%

0.59%

0.56%

0.53%

Trade, Transportation and Utilities

142

0.7

-7.09%

-3.01%

1.29%

0.86%

1.35%

0.61%

0.6

-6.10%

-3.10%

-0.05%

0.42%

1.28%

0.70%

Financial Activities

1.3

0.88%

-0.99%

2.55%

1.29%

0.09%

0.74%

Government

118

0.7

-9.83%

-5.42%

-0.12%

-0.35%

1.87%

0.99%

Natural Resources, Mining and Construction

0.7

-3.38%

-3.37%

4.49%

2.59%

1.80%

1.14%

Education and Health Services

141

0.8

-4.11%

-3.89%

2.23%

1.56%

1.82%

1.87%

Professional and Business Services

291

1.8

-2.31%

-4.23%

4.84%

1.87%

1.98%

1.63%

Information

4.6

-6.15%

-6.86%

9.44%

0.02%

4.39%

2.28%

Leisure and Hospitality

106

1.0

-29.33%

-18.15%

-0.66%

0.35%

7.32%

4.38%

Other Services

0.9

-13.47%

-6.68%

0.66%

0.33%

2.92%

1.37%

1,098

1.0

-8.01%

-5.55%

2.51%

0.92%

2.48%

1.49%

Retail Trade

Total Employment

Source: Oxford Economics LQ = Location Quotient

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 21

Economy San Francisco Industrial YEAR OVER YEAR JOB GROWTH

Source: Oxford Economics

DEMOGRAPHIC TRENDS Current Level Demographic Category

12 Month Change

10 Year Change

5 Year Forecast

Metro

1,656,102

330,665,094

0.3%

0.5%

0.8%

0.6%

0.3%

0.5%

Households

627,954

123,592,047

0.3%

0.4%

0.5%

0.7%

0.3%

0.5%

Median Household Income

$127,226

$69,274

1.4%

4.4%

4.6%

3.3%

3.9%

2.1%

Labor Force

997,831

160,791,656

-5.2%

-2.1%

1.3%

0.5%

2.2%

0.8%

5.9%

6.7%

3.8%

3.0%

-0.2%

-0.3%

Population

Unemployment

Source: Oxford Economics

POPULATION GROWTH

LABOR FORCE GROWTH

INCOME GROWTH

Source: Oxford Economics

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 22

Submarkets San Francisco Industrial SAN FRANCISCO SUBMARKETS

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 23

Submarkets San Francisco Industrial SUBMARKET INVENTORY Inventory No.

Submarket

12 Month Deliveries

Under Construction

Bldgs

SF (000)

% Market

Rank

Bldgs

SF (000)

Percent

Rank

Bldgs

SF (000)

Percent

Rank

Bayview/Hunters Point

469

8,167

8.6%

187

2.3%

Belmont/San Carlos

480

7,127

7.5%

Brisbane/Daly City

172

6,368

6.7%

511

8.0%

628

9.9%

Burlingame

224

5,081

5.3%

Civic Center

Foster City/Redwood Shrs

1,748

1.8%

Menlo Park

180

5,298

5.6%

MidMarket

318

0.3%

Mission Bay/China Basin

149

4,806

5.1%

Mission/Potrero

560

11,095

11.7%

0.3%

Peninsula Coastline

101

598

0.6%

Redwood City

536

6,795

7.1%

Rincon/South Beach

1,205

1.3%

San Bruno/Millbrae

118

1,411

1.5%

San Mateo

225

1,537

1.6%

Showplace Square

2,235

2.3%

1.9%

South Financial District

0.1%

South of Market

483

5,000

5.3%

1.9%

South San Francisco

580

22,368

23.5%

991

4.4%

1,025

4.6%

Southern City

347

0.4%

Treasure/Yerba Buena Isl…

467

0.5%

Van Ness/Chinatown

543

0.6%

Waterfront/North Beach

1,002

1.1%

West of Van Ness

846

0.9%

Yerba Buena

645

0.7%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 24

Submarkets San Francisco Industrial SUBMARKET RENT Market Rent No.

12 Month Market Rent

QTD Annualized Market Rent

Submarket

Per SF

Rank

Growth

Rank

Growth

Rank

Bayview/Hunters Point

$17.72

2.1%

0.7%

Belmont/San Carlos

$21.34

1.7%

Brisbane/Daly City

$17.35

2.5%

2.4%

Burlingame

$19.19

1.8%

1.2%

Civic Center

$20.00

1.8%

-0.6%

Foster City/Redwood Shrs

$33.17

0.4%

5.1%

Menlo Park

$21.83

1.0%

3.5%

MidMarket

$26.01

-1.1%

1.4%

Mission Bay/China Basin

$24.52

1.8%

2.6%

Mission/Potrero

$22.16

1.8%

1.4%

Peninsula Coastline

$18.51

1.1%

-0.8%

Redwood City

$22.32

1.1%

1.9%

Rincon/South Beach

$44.37

0.7%

4.3%

San Bruno/Millbrae

$20.83

3.2%

3.6%

San Mateo

$21.58

1.0%

-0.2%

Showplace Square

$32.53

1.0%

3.5%

South Financial District

$25.17

0.5%

3.9%

South of Market

$33.01

0.9%

4.0%

South San Francisco

$22.53

1.6%

3.0%

Southern City

$22.07

1.2%

-0.1%

Treasure/Yerba Buena Isl…

$11.14

1.9%

3.0%

Van Ness/Chinatown

$20.27

-0.7%

Waterfront/North Beach

$26.08

2.4%

4.4%

West of Van Ness

$23.48

1.4%

0.7%

Yerba Buena

$34.03

-0.4%

1.9%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 25

Submarkets San Francisco Industrial SUBMARKET VACANCY & NET ABSORPTION Vacancy No.

Submarket

12 Month Absorption

Percent

Rank

% of Inv

Rank

Construc. Ratio

Bayview/Hunters Point

288,189

3.5%

(3,995)

Belmont/San Carlos

344,638

4.8%

(38,155)

-0.5%

Brisbane/Daly City

271,221

4.3%

485,365

7.6%

1.1

Burlingame

346,481

6.8%

(124,176)

-2.4%

Civic Center

Foster City/Redwood Shrs

63,264

3.6%

(63,264)

-3.6%

Menlo Park

169,116

3.2%

(65,905)

-1.2%

MidMarket

Mission Bay/China Basin

Mission/Potrero

Peninsula Coastline

9,550

3.0%

(4,544)

-1.4%

214,490

4.5%

(260,229)

-5.4%

1,060,194

9.6%

(391,533)

-3.5%

38,714

6.5%

(36,314)

-6.1%

Redwood City

189,143

2.8%

(91,953)

-1.4%

Rincon/South Beach

120,309

10.0%

(35,841)

-3.0%

San Bruno/Millbrae

290,507

20.6%

(103,938)

-7.4%

San Mateo

157,935

10.3%

(27,080)

-1.8%

Showplace Square

291,850

13.1%

(155,175)

-6.9%

South Financial District

24,885

29.0%

South of Market

South San Francisco

Southern City

Treasure/Yerba Buena Isl…

521,444

10.4%

(244,843)

-4.9%

1,967,724

8.8%

284,570

1.3%

3.5

5,670

1.6%

8,738

2.5%

11,689

2.5%

Van Ness/Chinatown

73,501

13.5%

(80,511)

-14.8%

Waterfront/North Beach

21,248

2.1%

West of Van Ness

68,007

8.0%

(32,674)

-3.9%

Yerba Buena

65,319

10.1%

(24,211)

-3.8%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 26

Supply & Demand Trends San Francisco Industrial OVERALL SUPPLY & DEMAND Inventory

Net Absorption

Year

SF Growth

% Growth

% of Inv

Construction Ratio

2025

96,067,858

141,473

0.1%

(177,591)

-0.2%

2024

95,926,385

47,508

96,972

0.1%

0.5

2023

95,878,877

368,529

0.4%

1,177,195

1.2%

0.3

2022

95,510,348

(503,454)

-0.5%

164,492

0.2%

2021

96,013,802

1,323,750

1.4%

(1,656,916)

-1.7%

YTD

95,125,091

435,039

0.5%

(341,328)

-0.4%

2020

94,690,052

722,062

0.8%

(1,116,718)

-1.2%

2019

93,967,990

422,702

0.5%

(162,406)

-0.2%

2018

93,545,288

(93,507)

-0.1%

(380,022)

-0.4%

2017

93,638,795

(863,694)

-0.9%

(17,742)

2016

94,502,489

(322,674)

-0.3%

(915,846)

-1.0%

2015

94,825,163

(1,053,483)

-1.1%

(350,522)

-0.4%

2014

95,878,646

(551,297)

-0.6%

1,108,410

1.2%

2013

96,429,943

(1,150,107)

-1.2%

862,724

0.9%

2012

97,580,050

(723,856)

-0.7%

(959,538)

-1.0%

2011

98,303,906

(995,644)

-1.0%

(287,424)

-0.3%

2010

99,299,550

(1,772,870)

-1.8%

(2,217,937)

-2.2%

2009

101,072,420

(86,669)

-0.1%

(2,717,405)

-2.7%

SPECIALIZED INDUSTRIAL SUPPLY & DEMAND Inventory

Net Absorption

Year

SF Growth

% Growth

% of Inv

Construction Ratio

2025

17,825,229

(8,735)

(23,172)

-0.1%

2024

17,833,964

(8,152)

30,660

0.2%

2023

17,842,116

(17,446)

-0.1%

145,667

0.8%

2022

17,859,562

(24,737)

-0.1%

25,785

0.1%

2021

17,884,299

128,250

0.7%

(183,776)

-1.0%

YTD

17,715,856

(40,193)

-0.2%

(66,359)

-0.4%

2020

17,756,049

(49,000)

-0.3%

(201,472)

-1.1%

2019

17,805,049

(36,789)

-0.2%

(144,749)

-0.8%

2018

17,841,838

(85,824)

-0.5%

(268,975)

-1.5%

2017

17,927,662

(134,736)

-0.7%

(75,293)

-0.4%

2016

18,062,398

(153,518)

-0.8%

229,036

1.3%

2015

18,215,916

(308,866)

-1.7%

(382,795)

-2.1%

2014

18,524,782

(298,582)

-1.6%

(159,947)

-0.9%

2013

18,823,364

(164,005)

-0.9%

(153,792)

-0.8%

2012

18,987,369

(49,152)

-0.3%

(92,285)

-0.5%

2011

19,036,521

(44,062)

-0.2%

(70,539)

-0.4%

2010

19,080,583

(475,074)

-2.4%

(582,353)

-3.1%

2009

19,555,657

(13,151)

-0.1%

(277,353)

-1.4%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 27

Supply & Demand Trends San Francisco Industrial LOGISTICS SUPPLY & DEMAND Inventory

Net Absorption

Year

SF Growth

% Growth

% of Inv

Construction Ratio

2025

49,509,371

(4,906)

20,106

2024

49,514,277

(4,542)

173,562

0.4%

2023

49,518,819

(10,665)

320,818

0.6%

2022

49,529,484

(15,620)

(151,448)

-0.3%

2021

49,545,104

(121,908)

-0.2%

(886,994)

-1.8%

YTD

49,556,840

(110,172)

-0.2%

(275,157)

-0.6%

2020

49,667,012

(196,372)

-0.4%

(914,725)

-1.8%

2019

49,863,384

(269,240)

-0.5%

(925,160)

-1.9%

2018

50,132,624

(98,464)

-0.2%

(152,548)

-0.3%

2017

50,231,088

(275,505)

-0.5%

90,238

0.2%

2016

50,506,593

(284,323)

-0.6%

(179,158)

-0.4%

2015

50,790,916

(605,623)

-1.2%

(334,979)

-0.7%

2014

51,396,539

(169,950)

-0.3%

620,799

1.2%

2013

51,566,489

(899,091)

-1.7%

528,221

1.0%

2012

52,465,580

(630,707)

-1.2%

(975,423)

-1.9%

2011

53,096,287

(784,761)

-1.5%

(438,683)

-0.8%

2010

53,881,048

(1,055,789)

-1.9%

(1,389,230)

-2.6%

2009

54,936,837

(488,139)

-0.9%

(1,976,674)

-3.6%

FLEX SUPPLY & DEMAND Inventory

Net Absorption

Year

SF Growth

% Growth

% of Inv

Construction Ratio

2025

28,733,258

155,114

0.5%

(174,525)

-0.6%

2024

28,578,144

60,202

0.2%

(107,250)

-0.4%

2023

28,517,942

396,640

1.4%

710,710

2.5%

0.6

2022

28,121,302

(463,097)

-1.6%

290,155

1.0%

2021

28,584,399

1,317,408

4.8%

(586,146)

-2.1%

YTD

27,852,395

585,404

2.1%

188

3,113.9

2020

27,266,991

967,434

3.7%

(521)

2019

26,299,557

728,731

2.8%

907,503

3.5%

0.8

2018

25,570,826

90,781

0.4%

41,501

0.2%

2.2

2017

25,480,045

(453,453)

-1.7%

(32,687)

-0.1%

2016

25,933,498

115,167

0.4%

(965,724)

-3.7%

2015

25,818,331

(138,994)

-0.5%

367,252

1.4%

2014

25,957,325

(82,765)

-0.3%

647,558

2.5%

2013

26,040,090

(87,011)

-0.3%

488,295

1.9%

2012

26,127,101

(43,997)

-0.2%

108,170

0.4%

2011

26,171,098

(166,821)

-0.6%

221,798

0.8%

2010

26,337,919

(242,007)

-0.9%

(246,354)

-0.9%

2009

26,579,926

414,621

1.6%

(463,378)

-1.7%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 28

Rent & Vacancy San Francisco Industrial OVERALL RENT & VACANCY Market Rent

Vacancy

Year

Per SF

Index

% Growth

Vs Hist Peak

Percent

Ppts Chg

2025

$29.47

182

2.9%

30.1%

6,932,614

7.2%

0.3%

2024

$28.64

177

4.0%

26.5%

6,618,687

6.9%

-0.1%

2023

$27.55

170

6.1%

21.6%

6,666,432

7.0%

-0.9%

2022

$25.96

160

9.3%

14.6%

7,470,804

7.8%

-0.6%

2021

$23.74

146

4.8%

8,131,669

8.5%

2.4%

YTD

$22.73

140

0.4%

6,603,399

6.9%

0.9%

2020

$22.65

140

1.6%

5,713,747

6.0%

1.9%

2019

$22.29

137

3.8%

-1.6%

3,893,823

4.1%

0.6%

2018

$21.48

132

5.9%

-5.2%

3,333,888

3.6%

0.3%

2017

$20.28

125

5.5%

-10.5%

3,040,898

3.2%

-0.9%

2016

$19.21

118

6.4%

-15.2%

3,929,450

4.2%

0.6%

2015

$18.05

111

6.3%

-20.3%

3,336,278

3.5%

-0.7%

2014

$16.98

105

5.9%

-25.0%

4,039,239

4.2%

-1.7%

2013

$16.03

3.9%

-29.2%

5,698,946

5.9%

-2.0%

2012

$15.43

1.3%

-31.9%

7,711,777

7.9%

0.3%

2011

$15.22

-0.1%

-32.8%

7,476,096

7.6%

-0.6%

2010

$15.23

-2.3%

-32.7%

8,184,316

8.2%

0.6%

2009

$15.59

-3.9%

-31.2%

7,739,843

7.7%

2.6%

SPECIALIZED INDUSTRIAL RENT & VACANCY Market Rent

Vacancy

Year

Per SF

Index

% Growth

Vs Hist Peak

Percent

Ppts Chg

2025

$25.29

183

3.0%

30.2%

773,108

4.3%

0.1%

2024

$24.55

177

4.2%

26.3%

758,662

4.3%

-0.2%

2023

$23.57

170

6.3%

21.3%

797,467

4.5%

-0.9%

2022

$22.17

160

9.5%

14.1%

960,569

5.4%

-0.3%

2021

$20.25

146

4.2%

1,011,083

5.7%

1.7%

YTD

$19.40

140

-0.2%

725,214

4.1%

0.2%

2020

$19.43

140

2.5%

699,048

3.9%

0.9%

2019

$18.96

137

3.5%

-2.4%

546,576

3.1%

0.6%

2018

$18.33

132

5.9%

-5.7%

438,616

2.5%

1.0%

2017

$17.31

125

6.4%

-10.9%

255,465

1.4%

-0.3%

2016

$16.27

118

6.5%

-16.3%

314,908

1.7%

-2.1%

2015

$15.28

110

6.0%

-21.4%

697,462

3.8%

0.5%

2014

$14.41

104

5.9%

-25.8%

623,533

3.4%

-0.7%

2013

$13.61

3.5%

-30.0%

762,168

4.0%

2012

$13.15

1.2%

-32.3%

772,381

4.1%

0.2%

2011

$13.00

0.4%

-33.1%

729,248

3.8%

0.1%

2010

$12.95

-2.6%

-33.4%

702,771

3.7%

0.6%

2009

$13.29

-3.9%

-31.6%

595,492

3.0%

1.4%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 29

Rent & Vacancy San Francisco Industrial LOGISTICS RENT & VACANCY Market Rent

Vacancy

Year

Per SF

Index

% Growth

Vs Hist Peak

Percent

Ppts Chg

2025

$23.53

185

3.0%

30.4%

2,970,740

6.0%

-0.1%

2024

$22.85

180

4.1%

26.6%

2,998,738

6.1%

-0.4%

2023

$21.95

173

6.2%

21.6%

3,176,572

6.4%

-0.7%

2022

$20.67

163

9.5%

14.5%

3,507,395

7.1%

0.3%

2021

$18.88

149

4.6%

3,370,770

6.8%

1.6%

YTD

$18.06

142

0.1%

2,770,188

5.6%

0.3%

2020

$18.05

142

3.3%

2,605,203

5.2%

1.4%

2019

$17.47

138

4.8%

-3.2%

1,920,879

3.9%

1.3%

2018

$16.66

131

6.7%

-7.7%

1,264,959

2.5%

0.1%

2017

$15.62

123

6.4%

-13.4%

1,210,875

2.4%

-0.8%

2016

$14.68

116

6.4%

-18.7%

1,619,218

3.2%

-0.2%

2015

$13.79

109

6.5%

-23.6%

1,724,383

3.4%

-0.5%

2014

$12.96

102

5.6%

-28.2%

1,995,027

3.9%

-1.5%

2013

$12.27

3.9%

-32.0%

2,785,776

5.4%

-2.6%

2012

$11.81

0.5%

-34.6%

4,213,088

8.0%

0.7%

2011

$11.75

-0.3%

-34.9%

3,868,373

7.3%

-0.5%

2010

$11.78

-2.8%

-34.7%

4,214,451

7.8%

0.8%

2009

$12.12

-4.5%

-32.8%

3,881,010

7.1%

2.7%

FLEX RENT & VACANCY Market Rent

Vacancy

Year

Per SF

Index

% Growth

Vs Hist Peak

Percent

Ppts Chg

2025

$41.87

178

2.7%

29.5%

3,188,766

11.1%

1.1%

2024

$40.76

173

3.8%

26.1%

2,861,287

10.0%

0.6%

2023

$39.27

167

6.0%

21.5%

2,692,393

9.4%

-1.2%

2022

$37.04

158

9.1%

14.6%

3,002,840

10.7%

-2.4%

2021

$33.94

144

5.2%

5.0%

3,749,816

13.1%

4.3%

YTD

$32.51

138

0.8%

0.6%

3,107,997

11.2%

2.3%

2020

$32.25

137

-0.2%

2,409,496

8.8%

3.4%

2019

$32.32

137

2.9%

1,426,368

5.4%

-1.0%

2018

$31.39

133

5.3%

-2.9%

1,630,313

6.4%

0.2%

2017

$29.82

127

4.5%

-7.7%

1,574,558

6.2%

-1.5%

2016

$28.54

121

6.4%

-11.7%

1,995,324

7.7%

4.2%

2015

$26.82

114

6.3%

-17.0%

914,433

3.5%

-1.9%

2014

$25.22

107

6.1%

-22.0%

1,420,679

5.5%

-2.8%

2013

$23.76

101

4.1%

-26.5%

2,151,002

8.3%

-2.2%

2012

$22.84

2.1%

-29.3%

2,726,308

10.4%

-0.6%

2011

$22.36

-30.8%

2,878,475

11.0%

-1.4%

2010

$22.36

-1.6%

-30.8%

3,267,094

12.4%

0.1%

2009

$22.73

-3.3%

-29.7%

3,263,341

12.3%

3.2%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 30

Sale Trends San Francisco Industrial OVERALL SALES Completed Transactions (1)

Market Pricing Trends (2)

Year

Deals

Volume

Turnover

Avg Price

Avg Price/SF

Avg Cap Rate

Price/SF

Price Index

Cap Rate

2025

$574.89

296

4.3%

2024

$556.33

286

4.3%

2023

$529.60

273

4.3%

2022

$489.57

252

4.3%

2021

$436.12

224

4.4%

YTD

$170.4M

0.2%

$56,789,641

$907.81

$419.49

216

4.6%

2020

$1.7B

2.5%

$20,118,482

$782.15

5.3%

$416.78

214

4.6%

2019

281

$1.2B

3.8%

$8,885,700

$478.07

4.0%

$388.43

200

4.6%

2018

269

$1.3B

4.9%

$11,779,128

$394.00

4.7%

$362.83

187

4.7%

2017

268

$584.9M

4.1%

$6,274,903

$350.22

5.6%

$328.16

169

4.8%

2016

282

$757.6M

4.7%

$5,829,547

$298.99

3.6%

$304.46

157

4.9%

2015

330

$1.4B

7.4%

$7,355,093

$285.62

4.6%

$273.91

141

5.0%

2014

327

$800.6M

7.5%

$4,734,877

$171.58

6.3%

$238.13

123

5.4%

2013

278

$492.5M

4.4%

$3,693,726

$172.42

6.7%

$213.28

110

5.7%

2012

396

$429.4M

5.6%

$2,839,344

$154.25

5.9%

$197.95

102

5.9%

2011

183

$376M

3.1%

$4,697,690

$173.84

6.8%

$187.54

6.1%

2010

126

$391.7M

1.4%

$5,398,645

$330.37

7.9%

$178.54

6.3%

(1) Completed transaction data is based on actual arms-length sales transactions and levels are dependent on the mix of what happened to sell in the period. (2) Market price trends data is based on the estimated price movement of all properties in the market, informed by actual transactions that have occurred.

SPECIALIZED INDUSTRIAL SALES Completed Transactions (1)

Market Pricing Trends (2)

Year

Deals

Volume

Turnover

Avg Price

Avg Price/SF

Avg Cap Rate

Price/SF

Price Index

Cap Rate

2025

$520.87

279

4.4%

2024

$503.40

270

4.4%

2023

$478.62

257

4.4%

2022

$441.95

237

4.4%

2021

$393.33

211

4.5%

YTD

$1.7M

$1,700,000

$322.27

$379.04

203

4.7%

2020

$82.9M

1.9%

$3,592,461

$425.21

5.5%

$376.88

202

4.7%

2019

$78M

2.3%

$2,963,508

$422.31

3.8%

$359.01

193

4.7%

2018

$202.3M

4.8%

$5,591,479

$336.42

3.4%

$337.18

181

4.7%

2017

$133.4M

4.3%

$4,231,209

$408.67

7.0%

$308.02

165

4.8%

2016

$123.4M

5.0%

$3,688,094

$260.42

2.4%

$283.59

152

4.9%

2015

$171.7M

5.2%

$3,504,460

$258.96

4.4%

$257.31

138

5.1%

2014

$86.9M

4.4%

$2,517,247

$247.94

6.0%

$226.52

122

5.4%

2013

$76.6M

4.4%

$2,104,866

$140.97

5.1%

$202.51

109

5.6%

2012

122

$61.8M

5.2%

$1,544,932

$137.21

6.2%

$188.33

101

5.8%

2011

$48M

3.1%

$2,432,763

$164.60

7.3%

$180.20

6.0%

2010

$32.3M

1.2%

$1,473,116

$172.91

$171.47

6.2%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 31

Sale Trends San Francisco Industrial LOGISTICS SALES Completed Transactions (1)

Market Pricing Trends (2)

Year

Deals

Volume

Turnover

Avg Price

Avg Price/SF

Avg Cap Rate

Price/SF

Price Index

Cap Rate

2025

$501.62

295

4.3%

2024

$484.99

286

4.3%

2023

$461.25

272

4.3%

2022

$426.04

251

4.4%

2021

$379.10

223

4.5%

YTD

$3.2M

$3,200,000

$377.00

$364.54

215

4.6%

2020

$438.5M

1.9%

$10,066,990

$475.00

4.7%

$362.17

213

4.6%

2019

152

$556.7M

3.7%

$6,752,957

$394.31

3.8%

$333.05

196

4.7%

2018

119

$408.5M

4.0%

$9,259,293

$352.22

4.8%

$311.41

183

4.7%

2017

134

$189.9M

3.7%

$4,845,862

$233.29

$282.95

167

4.8%

2016

146

$237.2M

4.4%

$3,798,488

$219.51

3.8%

$260.91

154

4.9%

2015

154

$455M

7.4%

$5,632,317

$210.21

3.9%

$236.52

139

5.1%

2014

161

$259.9M

6.0%

$3,441,970

$170.15

7.0%

$205.67

121

5.5%

2013

130

$265.2M

3.8%

$4,672,469

$197.27

7.0%

$184.75

109

5.7%

2012

219

$242.3M

6.8%

$2,908,731

$156.00

6.0%

$172.37

101

5.9%

2011

$205.8M

3.5%

$4,794,080

$144.06

7.2%

$164.08

6.1%

2010

$101M

1.3%

$2,322,416

$177.99

7.9%

$156.07

6.4%

FLEX SALES Completed Transactions (1)

Market Pricing Trends (2)

Year

Deals

Volume

Turnover

Avg Price

Avg Price/SF

Avg Cap Rate

Price/SF

Price Index

2025

$728.88

304

Cap Rate

4.2%

2024

$706.43

295

4.2%

2023

$673.62

281

4.2%

2022

$623.57

260

4.2%

2021

$556.42

232

4.3%

YTD

$165.5M

0.6%

$165,468,922

$951.48

$534.80

223

4.4%

2020

$1.2B

4.0%

$59,907,814

$1,107.86

5.3%

$531.34

222

4.4%

2019

$615.1M

5.1%

$19,029,339

$604.40

5.0%

$498.00

208

4.5%

2018

$713.6M

6.8%

$22,126,261

$445.93

5.4%

$463.59

193

4.5%

2017

$261.5M

4.6%

$11,493,083

$493.99

5.3%

$415.33

173

4.7%

2016

$397M

5.0%

$11,156,358

$405.33

$389.30

162

4.7%

2015

$748.2M

9.1%

$12,985,439

$376.71

5.0%

$345.95

144

4.9%

2014

$453.7M

12.6%

$7,612,532

$162.76

5.7%

$299.00

125

5.3%

2013

$150.7M

5.6%

$3,808,117

$155.56

6.7%

$267.13

111

5.6%

2012

$125.2M

3.5%

$4,614,577

$160.59

5.7%

$246.20

103

5.8%

2011

$122.2M

2.3%

$6,990,941

$275.95

5.0%

$230.92

6.1%

2010

$258.4M

1.8%

$31,468,835

$598.97

$220.11

6.3%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 32