SF Office Market Report Q1 2021 by Compass Marin

Office Market Report

San Francisco - CA

PREPARED BY

Roark O'Neill Real Estate Agent

San Francisco Office

OFFICE 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

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Overview San Francisco Office 12 Mo Deliveries in SF

12 Mo Net Absorption in SF

Vacancy Rate

12 Mo Rent Growth

546 K

(9.2 M)

11.6%

-7.9%

The tech sector drove demand for office space in San Francisco to new heights over the past decade, but the coronavirus pandemic has rocked some of the market's major tenants and sent the economy into a recession. Sublease availability was already rising before the coronavirus outbreak, and now overall demand for space in the market is falling quickly as remote work gains traction. Leasing volume quickly dropped to roughly 85% of its pre-pandemic level and has yet to shown signs of a rebound heading into the new year. The market is saturated with coworking space that could be vacated quickly due to social distancing concerns, and corporate occupiers are closely evaluating their use of physical space and location while monitoring their mobile workforce's productivity. Beyond business closures and lost jobs, the emerging trend of working from home could have significant ramifications on San Francisco's tech-heavy office demand, if it holds following the pandemic. Tech firms have been leaders in announcing longer-term mobile work options. For example, Jack Dorsey's Twitter and Square announced working from home will remain an option indefinitely, while Shopify, Coinbase, and Slack rank among the other local office users that are providing a permanent mobile option. Twitter has listed a portion of its downtown headquarters for sublease, but also confirmed plans to retain it for long-term growth. Larger players, including Facebook, Uber, and Google announced policies for remote-based work until summer 2021. Facebook CEO Mark Zuckerberg envisions a measured rise towards a 50% mobile workforce over the next 5-10 years. Remote-based hiring will ramp up, while over the long term, he estimates 20% to 30% of Facebook's existing workforce could become remote. A Bay Area Council survey of CEOs found that almost a fifth of companies are planning to transition to full remote policies and 89% are planning at least partial remote work policies. Occupancy losses were steep and consistent on a quarterly basis through 2020 since the pandemic's effects took hold in 20Q2. The forecast for a return to slightly positive net absorption in the latter half of 2021 is aided by several large tenants moving into new buildings preleased in the prior expansion cycle. This year's

deliveries will be headlined by the Mission Bay headquarters of Uber, and Facebook taking occupancy of two new outposts: Burlingame Point and Menlo Gateway II. Many of the market's largest tenants, including Salesforce, Facebook, and Google, are mature corporations boasting strong balance sheets that are well-positioned to survive the recession with limited losses, but the office market has already endured sharp losses and some unprofitable consumer reliant businesses including Uber are facing dire economic circumstances, while others like Airbnb and Twitter are shifting to a more remote-based or geographically dispersed employment model. Fundamentals are deteriorating as business leaders respond to the sharp economic downturn and implement necessary social distancing measures. The pace of rent growth in the market, on a same-store basis unaffected by new premium inventory, had already slowed dramatically before the coronavirus hit. Now, with landlords adjusting to weaker tenant demand and discounted sublease availabilities flooding the market, asking rents are heading lower at the fastest pace in the nation. Despite the recent downturn in rent trends and elevated tenant risk, San Francisco will likely remain a premier market for office investment over the long term. Following a nearly frozen office investment market in the two quarters immediately following the outbreak of the pandemic, a bevy of banner deals in the works closed in 20Q4, boosting transaction volume back up to prepandemic levels. Institutional investors and large ownerusers are still active, but overall deal velocity is down to a decade-long low. Sales activity has faced a slowdown as many investors and lenders froze during the lockdown, and are now assessing a rapidly changing landscape with far greater uncertainty. Asset values have edged lower based on falling rent potential and weaker tenant credit. Cap rates could drift higher as investors seek higher returns deemed necessary to take on greater risk, and rent losses are affecting operating income projections as underwriters adjust to evolving circumstances, sending CoStar's estimated price of all properties in the market lower.

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Overview San Francisco Office KEY INDICATORS RBA

Vacancy Rate

Market Rent

Availability Rate

Net Absorption SF

Deliveries SF

Under Construction

4 & 5 Star

94,766,547

11.2%

$71.16

18.8%

(1,323,556)

7,653,027

3 Star

52,341,774

12.0%

$57.34

17.3%

(393,676)

327,337

1 & 2 Star

32,555,036

11.9%

$52.54

14.9%

(264,182)

Market

179,663,357

11.6%

$64.05

17.7%

(1,981,414)

7,980,364

12 Month

Historical Average

Forecast Average

Peak

When

Trough

When

5.3%

9.2%

13.5%

16.1%

2003 Q2

1.3%

2000 Q2

Net Absorption SF

(9.2 M)

1,009,222

180,443

7,160,122

2000 Q1

(9,611,266)

2001 Q3

Deliveries SF

546 K

1,834,934

1,782,438

6,038,362

2001 Q4

55,198

2006 Q2

Current Quarter

Annual Trends

Vacancy Change (YOY)

Rent Growth

-7.9%

4.1%

0.3%

30.5%

2000 Q3

-32.9%

2002 Q1

Sales Volume

$2.1 B

$3.5B

N/A

$9.3B

2007 Q3

$294.7M

2002 Q2

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Leasing San Francisco Office San Francisco's office market has experienced strong negative ramifications due to the pandemic. Total occupancy has already declined by nearly 2 million SF for a fourth consecutive quarter in 21Q1. Nearly 7.5 million SF was vacated on net in 2020. Tenant occupancy losses amid the coronavirus pandemic already exceed those of the global financial crisis and are approaching those of the dot-com bust in magnitude. The downturn was partially driven by several trends that emerged prior to the coronavirus outbreak. For example, cost-sensitive tenants have left the market entirely in search of affordability. San Francisco has become the most expensive market in the country for office space, in addition to carrying the nation's second-highest business tax burden and highest employee compensation standards. Average office rents in the East Bay are roughly 40% below those in San Francisco—a difference that widened during the 2010s economic expansion cycle. Most recently, Redwood Shores-based Oracle joined the exodus of large corporations to the low-tax state of Texas. As San Francisco tenants still face steep rent hikes upon lease expirations and an ever-growing tax burden, relocations are hampering demand. Beyond high flying tech firms, many small and mid-sized professional service providers have vacated offices, a trend that could persist as businesses without cash reserves struggle to survive on weaker income streams. Vacancy in the market has already increased from a cyclical low of 5.9% to 11.6%, and is forecast to rise further, as victims of the pandemic's social distancing measures shed space. Elevated levels of available sublease space suggest that underlying fundamentals are already weaker than the market's headline vacancy rate suggests. Driven by the rise in sublease space, total availability has steadily climbed higher since last year and now registers 17.7%, which compares to the national average of 15.7%. A staggering 10.8 million SF of sublease space is currently listed as available, which equates to 5.8% of market inventory, and represents roughly a third of the market's 33.2 million SF of total space availability. San Francisco registers the highest sublease availability rate across the country by far. Beyond tenants leaving the market due to its rising cost, many tech tenants that banked space for future growth are coming to the realization that they will not fulfill aggressive real estate growth plans, particularly as they transition to a hybrid of in-office and remote working models. Financial victims of the coronavirus

pandemic's shelter-in-place and social distancing measures are also shedding space. For example, at 55 Hawthorne St., over 68,000 SF formerly occupied by KeepTruckin and Yelp! has recently been offered for sublease. Both companies laid off hundreds as revenues dwindled due to social distancing. In 20Q3, Twitter listed over 100,000 SF of its headquarters space or sublease, AirBnB listed 61,000 SF, and in 20Q4, Zendesk added a 75,000 SF sublease. Vacancy is forecast to rise further into 2021, but a few large scheduled move-ins should help negate tenant occupancy losses of 2020's magnitude. Facebook alone is scheduled to take occupancy of nearly 1.3 million square feet of new space at two developments south of the city, Burlingame Point and Menlo Gateway II, which are both pure expansion plays. Several technology firms boasting quickly rising revenue streams that expanded aggressively in San Francisco remain unprofitable, which presents a lingering element of elevated tenant risk in the market. Start-ups are susceptible to quick changes in real estate needs and are generally designed to grow fast or fail. Real estate start-ups including Sonder, WeWork, Knotel, and Convene, a collection of travel-related businesses including Airbnb and TripActions, and technology firms reliant on social interaction, like Yelp!, Eventbrite, and Stubhub each laid off hundreds in the downturn. In addition, San Francisco is saturated with coworking space, which is acutely exposed to a downturn and social distancing needs. More than a quarter of coworking memberships are month-to-month and the average lease term including longer-term corporate tenants is slightly over a year. Several tenants, including Delta Dental, Blue Shield, Aecom, and more recently, Square and Credit Karma have moved to Oakland in search of more affordable office space in the Bay Area. Furthermore, several Fortune 500 firms with longstanding roots in San Francisco are also moving out of the region, to parts of the country where the cost of doing business is much lower. Engineering and construction firm Bechtel Group is moving to Virginia, while McKesson and Core-Mark are relocating to Texas. A significant shift to working from home on a permanent basis could devastate demand for office space, assuming businesses fundamentally change the way they operate and reduce office footprints as a result. However, cities

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Leasing San Francisco Office have been at the center of disease outbreaks throughout history, and it may be premature to declare the longterm trend to urbanization and tech clustering over. If fear of infection does persist though, a draw out of the city to suburbs and remote-based work poses an acute threat to demand in San Francisco, where density and public transportation reliance is high. Prior to the pandemic, San Francisco's office market was thriving in the mature stages of a tech-led economic expansion. Absorption soared to record levels in 2018,

and remained strong in 2019, totaling over 2 million SF. Despite an abundance of new inventory, tenant demand placed downward pressure on vacancy in the 2010's expansion cycle. Developments are still reaching completion, most fully preleased. However, San Francisco's historically strong market had already begun to show some signs of weakening before the coronavirus outbreak, and now the city has been hit by devastating job losses and stay at home orders that have impacted all segments of its economy, especially tech firms.

NET ABSORPTION, NET DELIVERIES & VACANCY

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Leasing San Francisco Office VACANCY RATE

AVAILABILITY RATE

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Leasing San Francisco Office 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

1500 Mission St

MidMarket

466,000

29,502

436,498

One Front Street

Financial District

643,307

18,769

(11,248)

143,425

Foundry Square

South Financial District

521,555

68,682

(60,593)

139,381

2 North Point St

Waterfront/North Bea…

123,936

Rincon Center

South Financial District

279,354

26,499

72,177

First Market Tower

South Financial District

1,034,329

82,765

86,115

63,177

45 Fremont St

South Financial District

613,957

18,388

17,898

61,443

Redwood LIFE

Foster City/Redwood…

50,305

Parkside Towers

Foster City/Redwood…

399,422

99,195

9,927

48,660

Broadway Station

Redwood City

114,859

47,219

101 Redwood Shores Pky

Foster City/Redwood…

100,328

41,245

657 Mission St

South Financial District

105,389

40,516

300 Mission St

South Financial District

665,254

122,721

175,652

38,149

Fog Bldg

Mission/Potrero

57,729

14,743

29,486

155 5th St

Yerba Buena

351,858

28,744

University Circle

Menlo Park

165,000

38,936

28,284

99 Rhode Island St

Showplace Square

63,780

26,220

520,200

341,687

Subtotal Primary Competitors

1,418,865

Remaining San Francisco Market

173,906,995

5,756,362

20,275,532 (2,323,101)

(10,585,048)

Total San Francisco Market

179,663,357

20,795,732 (1,981,414)

(9,166,183)

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Leasing San Francisco Office TOP OFFICE LEASES PAST 12 MONTHS Building Name/Address

Submarket

Leased SF

Qtr Tenant Name

Tenant Rep Compa… Leasing Rep Company

Bank of America Tower *

Financial District

247,000

Q4 20 Bank of America

CBRE

One Market Plaza *

South Financial District

149,182

Q2 20 Morgan, Lewis & Bockius…

The Exchange on Sixteenth

Mission Bay/China Basin

133,896

Q4 20 Vir Biotechnology

CBRE

1180-1190 Main St

Redwood City

118,136

Q1 20 Chan Zuckerberg Initiative

Newmark

388 Market St *

Financial District

116,805

Q2 20 First Republic Bank

Avison Young

CBRE

Mariposa Square

Mission/Potrero

96,960

Q3 20 Open AI

Savills

Touchstone Commerci…

The Alexandria District

Belmont/San Carlos

93,332

Q1 20 Allakos

Newmark;Newmark Kni…

Bank of America Tower *

Financial District

88,370

Q1 21 Goldman Sachs & Co. - G… -

CBRE

20 Davis Dr *

Belmont/San Carlos

84,416

Q3 20 RingCentral

Newmark

Cushman & Wakefield

The Alexandria District

Belmont/San Carlos

77,734

Q1 21 Vaxcyte, Inc.

425 Market *

South Financial District

53,323

Q3 20 IBM Corporation

Cushman & Wakefield

Menlo Business Park *

Menlo Park

50,373

Q4 20 Intersect ENT, Inc.

33 Gough St

South of Market

49,000

Q1 20 City and County of San Fr… Sequoia Commercia… Sequoia Commercial G…

1455 Market

MidMarket

48,845

Q1 20 Front

CBRE

JLL

155 5th St

Yerba Buena

48,812

Q2 20 Airtable

CBRE

Raise Commercial Real…

Britannia Seaport Centre

Redwood City

45,784

Q3 20 Bolt Biotherapeutics

Savills

1033-1045 Market St *

MidMarket

45,322

Q2 20 San Francisco Aids Foun…

144 Townsend St

Rincon/South Beach

45,000

Q2 20 User Testing

Ground Matrix

Fog Bldg

Mission/Potrero

44,229

Q3 20 City and County of San Fr… -

Colliers International

50 California St *

Financial District

43,194

Q2 20 Woodruff-Sawyer & Co

Shorenstein Properties…

360 Spear St

Rincon/South Beach

39,786

Q4 20 Lattice Inc

Newmark Knight Frank

Brisbane Technology Park

Brisbane/Daly City

38,699

Q1 21 -

CBRE

7000 Shoreline Ct

South San Francisco

36,182

Q4 20 -

Alexandria Real Estate…

617-629 Bryant St

South of Market

36,000

Q4 20 -

Touchstone Commerci…

Keynote Plaza *

San Mateo

35,600

Q2 20 Model N, Inc

Newmark

Alexandria Technology Campus

South San Francisco

35,000

Q1 20 -

JLL

Mission Bay Office Campus *

Mission Bay/China Basin

33,564

Q1 20 Wix

Newmark Knight Frank

360 Spear St

Rincon/South Beach

33,318

Q3 20 Vitalant

Newmark Knight Frank

795 Folsom St

Yerba Buena

32,566

Q1 21 -

JLL

100 Redwood Shores Pky

Belmont/San Carlos

30,250

Q2 20 Amobee

Cushman & Wakefield

450-460 Pacific Ave *

Jackson Square

28,616

Q2 20 Keesal, Young & Logan

CBRE

101 Mission St

South Financial District

26,914

Q2 20 Constellation Brands Inc

JLL

Britannia Seaport Centre

Redwood City

25,956

Q3 20 Bolt Biotherapeutics

Savills

San Mateo Gateway *

San Mateo

25,809

Q3 20 CAMICO Mutual Insuranc… -

Cushman & Wakefield

101 California St *

Financial District

24,907

Q2 20 Sitecore

CBRE

Mission Bay *

Mission Bay/China Basin

24,877

Q1 20 Clovis Oncology, Inc

100 Montgomery St

Financial District

24,793

Q1 21 Varo

Cushman & Wakefield

Bay Park Plaza

Burlingame

24,435

Q1 20 Alaska Airlines

Newmark

101 California St

Financial District

24,424

Q1 20 The Blackstone Group Inc.

Cushman & Wakefield CBRE

Market Center

South Financial District

24,218

Q2 20 Castle Global

Cushman & Wakefield

Renewal

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Rent San Francisco Office While weighted average asking rents did not show a substantial downturn until July 2020, CoStar's unique same-store rent series shows that asking rents in San Francisco office properties peaked in 2019, with rent growth on a trailing-year basis turning negative in 2020. Same-store rents are down -7.9% over the past year and are falling at the fastest pace of any market across the country. In what could be considered direct evidence of the downturn, landlords and brokers have commonly been revising asking rents for available spaces listed on CoStar's platform lower. Leasing velocity remains subdued into the new year, and businesses are facing unprecedented challenges that could curtail office space demand for some time and lead landlords to lower rents more substantially. Office space costs in San Francisco skyrocketed in the 2010s economic expansion cycle. Asking rents in the metro average have fallen to $64.05/FS on average, still up an incredible 105.9% over the past decade. Boasting the strongest 2010s expansion cycle rent growth in the nation, San Francisco now ranks as the most expensive office market in the country, having surpassed New York in 2015. In San Francisco, asking rents more than doubled in the 2010s expansion cycle. However, rents are historically volatile in the market, and the coronavirus poses a unique threat to demand, while more supply is on the way and sublet availability is soaring higher.

Annual rent growth soared in double-digit territory early in the 2010s expansion cycle, but 2019 saw a slowdown in momentum well before the coronavirus pandemic hit. The completion of new office buildings was already helping balance tenant demand and sublease space availability had ticked up rather substantially as tech tenants banked space for future growth or left for cheaper pastures, tempering the leverage landlords held in the market. The days of soaring asking rents in the market have reversed, but rent levels climbed exceedingly high for years, both in San Francisco and in the San Jose metro directly south. Cost-sensitive tenants may be looking to the East Bay, where average rents are 40% lower, or out of the Bay Area entirely in search of affordability. Rent potential will come under greater pressure if demand for office space weakens for an extended period of time. Oxford and most economic forecasters are predicting a return to pre-covid employment levels sometime in 2022 at the earliest now. Asking rents fell 23% over 8 quarters during the global financial crisis recession and a staggering 56% over 14 quarters following the dot-com crash that hit the local market acutely. A further slide in asking rents into double-digit territory may be in store unless the economic recovery takes off, workers return to offices quickly having received a vaccination, or space requirements grow to accommodate social distancing.

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Rent San Francisco Office MARKET RENT GROWTH (YOY)

MARKET RENT PER SQUARE FEET

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Rent San Francisco Office 4 & 5 STAR EXPENSES PER SF (ANNUAL) Market / Cluster

San Francisco

Utilities

Cleaning

Insurance

Taxes

Other

Total

$1.09

$2.07

$1.41

$7.19

$18.95

San Mateo Central County

$1.07

$1.46

$1.36

$7.96

$6.12

$17.97

San Mateo North County

$0.99

$1.52

$1.46

$8.93

$5.45

$18.35

San Mateo South County

$0.98

$1.53

$1.46

$5.99

$5.18

$15.14

SF Downtown Core

$1.04

$3.06

$1.51

$7.44

$10.01

$23.06

SF Downtown North

$0.91

$2.41

$1.39

$8.24

$8.81

$21.76

SF Downtown South

$1.44

$2.34

$1.21

$5.34

$7.30

$17.63

SF Downtown West

$0.73

$2.40

$1.43

$7.44

$8.32

$20.32

SF Outer Areas

$1.01

$2.58

$1.87

$4.17

$9.24

$18.87

SF Southeast

$1.81

$1.73

$1.13

$8.01

$7.39

$20.07

Expenses are estimated using NCREIF, Trepp, IREM, and CoStar data using the narrowest possible geographical definition from Zip Code to region.

3 STAR EXPENSES PER SF (ANNUAL) Market / Cluster

San Francisco

Utilities

Cleaning

Insurance

Taxes

Other

Total

$0.93

$1.62

$1.10

$5.80

$5.49

$14.94

San Mateo Central County

$0.94

$0.89

$0.95

$6.69

$5.32

$14.79

San Mateo North County

$0.91

$0.89

$0.95

$6.73

$4.76

$14.24

San Mateo South County

$0.91

$0.90

$0.99

$8.45

$4.77

$16.02

San Mateo West County

$0.65

$0.82

$0.89

$5.02

$5.05

$12.43

SF Downtown Core

$0.97

$2.87

$1.36

$5.54

$6.42

$17.16

SF Downtown North

$0.85

$2.31

$1.26

$4.63

$5.72

$14.77

SF Downtown South

$1.28

$2.21

$1.15

$4.77

$5.39

$14.80

SF Downtown West

$0.67

$2.25

$1.28

$4.45

$5.99

$14.64

SF Outer Areas

$0.60

$0.97

$1.00

$4.21

$5.97

$12.75

SF Southeast

$1.01

$1.56

$1.07

$5.51

$5.72

$14.87

Expenses are estimated using NCREIF, Trepp, IREM, and CoStar data using the narrowest possible geographical definition from Zip Code to region.

1 & 2 STAR EXPENSES PER SF (ANNUAL) Market / Cluster

Utilities

Cleaning

Insurance

Taxes

Other

Total

$0.69

$1.33

$0.88

$4.80

$2.15

$9.85

San Mateo Central County

$0.64

$0.86

$0.91

$5.24

$2.36

$10.01

San Mateo North County

$0.65

$0.87

$0.92

$4.10

$1.68

$8.22

San Mateo South County

$0.64

$0.87

$0.96

$5.77

$1.54

$9.78

San Mateo West County

$0.60

$0.89

$0.96

$5.17

$1.85

$9.47

SF Downtown Core

$0.90

$2.49

$0.77

$5.31

$3.17

$12.64

SF Downtown North

$0.79

$2.10

$0.72

$5.50

$2.54

$11.65

SF Downtown South

$0.85

$2.12

$0.74

$3.95

$2.55

$10.21

SF Downtown West

$0.67

$2.04

$0.72

$4.57

$2.61

$10.61

SF Outer Areas

$0.61

$0.99

$4.65

$2.01

$9.25

SF Southeast

$0.64

$1.20

$0.89

$2.84

$2.03

$7.60

Treasure/Yerba Buena Island

$0.46

$0.89

$0.97

$3.24

$2.38

$7.94

San Francisco

Expenses are estimated using NCREIF, Trepp, IREM, and CoStar data using the narrowest possible geographical definition from Zip Code to region.

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Construction San Francisco Office The office building development cycle in San Francisco remains in full swing, with 8.0 million SF currently under construction throughout the metro. Supply growth was robust in the past two years and will remain for several more, with Uber's Mission Bay headquarters heading for completion and Facebook-preleased Menlo Gateway II and Burlingame Point campus also expected for delivery this year. Central SoMa's recent up zoning clears a path for the development of taller buildings in the area, essentially extending the downtown core. Several large mixed-use developments in the area are already approved and positioned to accommodate growth. Developers were encouraged by the market's exceptionally strong demand for new space in the expansion cycle, but with a wave of new projects just receiving development allocations, it remains to be seen how many will go vertical on spec while fundamentals weaken. Key Central SoMa projects recently awarded Prop M allocations for development include phase 1 of Kilroy Realty's Flower Mart redevelopment, and 88 Bluxome, a project led by TMG Partners and Alexandria. Also, Tishman Speyer received allocation to build 711,000 square feet of office space at 598 Brannan St, another mixed-use development that as planned, will add just under 1 million square feet of commercial space when completed. Lastly, in December 2019, Boston Properties received an allocation for phase one of Harrison Gardens, a 14 story SoMa project between 3rd and 4th street. The project was expected to break ground in 2020 but has been placed on hold along with other Boston Properties projects around the country. Over the long term, the city's annual limit program for office development, known locally as Prop M, will inhibit the pace at which proposed projects obtain approval moving forward, and Prop E passed in March 2020 will limit office construction even more by tying Prop M allocations to the city's ability to meet its affordable housing goals determined by California's Housing Element and Regional Housing Needs Allocation (RHNA). Historically, San Francisco has failed to meet its RHNA goals substantially. From 2015-2019, San Francisco missed its affordable housing development target by 40%, which reduced 2020's allocation pool equally. In the two prior eight-year spans, the city only reached 35% and 46% of its target. San Francisco is not an anomaly, as nearly every city in California fails to meet its full RHNA goals, but it is the only major city in California that limits office development and the first to

limit office development based on affordable housing production. The city's unique regulatory constraint on office construction limits growth, but also guards against the potential risk of overdevelopment. The backlog of space available for allocation to large projects (over 50,000 SF) was depleted in the 2010's development cycle, and with a max of only 875,000 SF becoming available annually, developers have lobbied the planning commission for approval of their projects ahead of others. More than 4.5 million SF of pending office space remains in queue for awaiting Prop M allocation, and another 5 million SF is in the preapplication pipeline. Developers continue to push proposals through San Francisco's arduous and lengthy planning process, anticipating tenant demand could return by the time the projects would theoretically reach completion. Some already approved developments will be delayed or even shelved due to unforeseen economic challenges stemming from the coronavirus pandemic, but others may be counting on a quick comeback in demand, and push forward cognizant of risks, but also of how long it takes to build in the city. In part due to Prop M's limitation, preleasing activity for the market's active construction projects is fairly strong. Expanding tech companies have secured space for future growth, as large-sized blocks of available space are limited in the market's existing inventory stock. Several tenants even preleased space in buildings prior to development approval. Salesforce in 18Q4 preleased the office portion of 550 Howard St., which as proposed will become the fourth tallest tower in the city, and provide 325,000 SF of future expansion space for the company. Pinterest, just ahead of its IPO at the end of 19Q1, agreed to anchor 1 of 2 nearly half-a-millionsquare-foot connected buildings at 88 Bluxome that were approved for development in the following quarter, although that agreement was canceled by Pinterest in August 2020 as the firm rethinks where future employees could be based in the post-covid world. The largest and more established tech firms in the market continue to grow local roots though. Facebook is expanding its own headquarters in Menlo Park in will move into Bohannon Development Company's Menlo Gateway II campus nearby, when completed. With a flurry of leasing at the tail end of the 2010's expansion cycle, the social media giant enabled itself to establish multiple satellite locations throughout the Bay Area over

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Construction San Francisco Office the next several years. Following their 2019 move into Park Tower at Transbay, the firm's second building in the city's downtown core, Facebook will soon take occupancy of Burlingame Point, an 803,000 SF under construction campus located midway between their Menlo Park headquarters and Downtown San Francisco. Burlingame Point is expected to house Facebook's virtual reality arm Oculus, and will also be ready for occupancy in 2021. In total, roughly 60% of the market's under construction inventory has been preleased, ahead of the U.S. national average and ranking San Francisco among the strongest markets in the country for preleasing. Less than 5 million SF of office space currently under construction

throughout the metro is available for lease. New building availability is rare, but growing in the economic downturn as developers push forward. The largest available office development in the market stems from Oceanwide Center, a 1.25 million SF building that paused construction in October 2020 due to unforeseen circumstances resulting from the coronavirus pandemic, according to the property's owner, Beijingbased Oceanwide Holdings. Oceanwide was in contact to sell the development to Beijing-based private equity firm Honey Capital, but the deal dissolved following several delays, and the cash-strapped owner is seeking another buyer for the development.

DELIVERIES & DEMOLITIONS

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Construction San Francisco Office 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

Menlo Park

1,478

1,201

81.3%

33,804

123,128

South Financial District

1,250

293

23.4%

187,734

1,250,000

Mission Bay/China Basin

1,162

1,089

93.7%

134,350

290,436

Burlingame

848

817

96.4%

26,157

141,282

Yerba Buena

699

110

15.8%

53,197

349,669

Belmont/San Carlos

526

340

64.5%

15,103

263,089

San Mateo

433

31,057

216,500

South San Francisco

421

100%

51,849

210,436

Redwood City

282

118

41.9%

23,763

94,028

Rincon/South Beach

268

100%

53,562

268,000

All Other

614

272

44.3%

40,794

102,320

7,980

4,929

61.8%

44,604

194,643

Totals

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Under Construction Properties San Francisco Office Properties

Square Feet

Percent of Inventory

Preleased

7,980,364

4.4%

61.8%

UNDER CONSTRUCTION PROPERTIES

UNDER CONSTRUCTION Property Name/Address

Rating

Bldg SF

Stories

Start

Complete

1,250,000

Jun 2018

Mar 2023

First Street Tower 50 1st St

5M 415 Natoma St

640,000

Feb 2020

Mar 2021

MPK 22 301-309 Constitution Dr

449,500

Apr 2019

Jul 2021

UBER HQ 1455-1515 3rd St

422,980

Sep 2016

Apr 2021

Uber South Street 1655 3rd St

312,998

Jul 2017

Apr 2021

Alexandria District for S… 825 Industrial Rd

282,190

Jun 2019

Jul 2021

Uber 16th Street 1715-1725 3rd St

280,767

Jul 2017

Apr 2021

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Developer/Owner

China Oceanwide Holdings Co. Ltd. China Oceanwide Holdings Co. Ltd. Brookfield Properties Hearst Corporation Facebook Facebook Alexandria Real Estate Equities, I… Alexandria Real Estate Equities, I… Strada Investment Group Alexandria Real Estate Equities, I… Alexandria Real Estate Equities, I… Alexandria Real Estate Equities, I… Strada Investment Group Alexandria Real Estate Equities, I…

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

633 Folsom St

Rating

Bldg SF

Stories

Start

Complete

268,000

Jun 2018

May 2021

Office - Phase II 135 Constitution Dr

260,500

Oct 2017

Mar 2021

Office - Phase II 125 Constitution Dr

260,488

Oct 2017

Mar 2021

Alexandria District for S… 835 Industrial Rd

243,988

Jun 2019

Mar 2021

Bldg 4 311 Airport Blvd

243,553

Jan 2017

Jun 2021

N1 Inception - Bldg C 370 Oyster Point Blvd

220,872

Oct 2018

Jul 2021

Station 1 2750 S Delaware St

219,000

Jan 2020

Dec 2021

Bldg 3 333 Airport Blvd

215,321

Jan 2017

Jun 2021

Station 5 3150 S Delaware St

213,999

Jan 2020

Dec 2021

N1 Inception - Bldg B Oyster Point Blvd & Gull Dr

200,000

Oct 2018

Jun 2021

173,000

Jan 2020

Nov 2021

100 Garden Ln

Bldg 1 322 Airport Blvd

155,806

Jan 2017

Jun 2021

Bldg 2 300 Airport Blvd

155,482

Jan 2017

Jun 2021

Softbank 500 El Camino Real

154,000

Aug 2020

Aug 2022

Pier 70 - Bldg 12 Pier 70

145,000

Oct 2020

Sep 2021

One De Haro 1 De Haro St

126,537

Feb 2019

Jul 2021

North Bldg 1302 El Camino Real

119,454

May 2018

Mar 2021

118,136

Jun 2020

Jun 2022

115,766

Jul 2019

Mar 2021

101,782

Mar 2020

Mar 2021

100,000

May 2018

Mar 2021

25 26 27 28

1180-1190 Main St 420 Taylor St 200 Rhode Island St South Bldg 1300 El Camino Real

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Developer/Owner

The Swig Company The Swig Company Bohannon Development Company Alexandria Real Estate Equities, I… Bohannon Development Company Alexandria Real Estate Equities, I… Alexandria Real Estate Equities, I… Alexandria Real Estate Equities, I… Genzon Investment Group Genzon Investment Group Kilroy Realty Corporation Kilroy Realty Corporation Wilson Meany Stockbridge Capital Group, LLC Genzon Investment Group Genzon Investment Group Wilson Meany Stockbridge Capital Group, LLC Kilroy Realty Corporation Kilroy Realty Corporation Republic Urban Properties Republic Urban Properties Genzon Investment Group Genzon Investment Group Genzon Investment Group Genzon Investment Group Stanford Land, Buildings, & Real… Stanford University Brookfield Properties SKS Partners, LLC Presidio Bay Ventures Greenheart Land Company Premia Capital Premia Capital Seven Equity Group Westbrook Partners Presidio Bay Ventures Greenheart Land Company

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Sales San Francisco Office San Francisco will likely remain a premier market for office investment in the long term, but sales activity has been slowed by the pandemic and shifting market fundamentals. Credit availability has tightened in response to growing uncertainty, while some investors are avoiding risk, and fewer purchase opportunities are coming to market. Roughly 80 office sale transactions closed in 2020, compared to the 227 that closed in 2019. A contraction in transaction volume was expected as investors take stock of the challenges and opportunities at hand. The market's red-hot investment demand, which is partially driven by foreign capital, appears to have moderated. Sales volume soared to a record high of roughly $9 billion in 2019 and managed to reach $3.7 billion in 2020.

some owners to divest down the line, providing a limited pool for opportunistic investors. Despite falling rents and elevated tenant risk, San Francisco remains a premier coastal market with a strong track record that is ripe for office investment.

Following a nearly frozen office investment market in San Francisco during the second and third quarters of 2020 following the outbreak of the pandemic, a bevy of banner deals in the works closed in the fourth quarter, boosting transaction volume back up to pre-pandemic levels.

Market pricing in San Francisco is typically volatile. However, investors who choose to sell, even in a downturn, often realize strong capital gains during their holding periods. Investors who accepted the market's volatility were rewarded with the nation's strongest price appreciation in the 2010's expansion period. Average pricing rose nearly 10% in 2019, but asset values appear to have topped out last year, with rents trending lower in 2020, and cap rates rising ever so slightly, if at all.

Several marquee deals in the market have recently closed at a slight discount from pre-covid pricing guidance. The iconic Transamerica Pyramid Center was sold for the first time ever, to New-York investor Michael Shvo, BVK, and Deutsche Finance. The deal was originally in negotiation for $711 million but eventually closed in 20Q4 at a price point roughly 9% lower, for $650 million with Transamerica financing the deal. In the most significant trade of 20Q3, CBRE Global Investors acquired The Townsend Building in South Beach for $140 million from Manchester Capital Management based out of Vermont. The Townsend Building was initially slated to sell to Alexandria Real Estate Equities at a reported $150 to $160 million dollar price tag, but the investment company forfeited a $10 million dollar deposit to walk away from the deal amid the coronavirus pandemic. Appreciation in the market was strong heading into 2020, but as exemplified in these two key recent trades, pricing power has been restrained as some buyers and lenders took to the sidelines to maintain caution in response to the pandemic and economic downturn. Active buyers have negotiated pricing lower based on elevated tenant risk and declining rent potential. However, rent collections remain high and institutional investors, and their lenders, remain well-capitalized so distressed asset sales at fire-sale prices have yet to emerge. The recession and occupancy losses may eventually lead

Institutional investors are still targeting global gateway cities like San Francisco, and enduring demand generated by buyers attracted to the region's expanding tech industry in conjunction with lower loan interest rates have prevented more substantial upward cap rate pressures from forming. Furthermore, national investors may return to core markets in a flight towards safety as they consider the ramifications of an economic slowdown.

The repeated sales of 123 Mission St., a 345,600-SF high-rise in the South Financial District, provide an excellent example of rising asset pricing in the market, as well as investor interest. Initially developed by Walter Shorenstein in 1987, the 29-story, 4 Star building traded four times in the expansion period at escalating pricing, most recently, to electronic cigarette company Juul Labs for $397 million ($1,149/SF) in June 2019, essentially twice what the building traded for less than six years earlier. Several other large owner/user sales closed in 2019. Gap Inc. exercised its right of first offer to purchase 550 Terry A. Francois Blvd. for $342.5 million ($1,211/SF). The 5 Star, 280,000-SF asset built in 2002 serves as Old Navy's headquarters. The property had previously sold in 2012 for $180 million ($636/SF), representing a 90% increase in seven years. While some corporate occupiers like Juul and Gap Inc. are acquiring real estate in order to stabilize occupancy costs and secure long-term homes in San Francisco's competitive leasing market, other owner/users are disposing of assets through sale-leaseback deals that take advantage of the market's high pricing and strong appreciation. For example, Levi's Plaza was sold for

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Sales San Francisco Office $826 million to Atlanta-based Jamestown LP., and online game maker Zynga unloaded 650 Townsend St., which was purchased by Boston-based Beacon Capital Partners for $602 million ($900/SF) in July 2019, more than 2.5 times the price Zynga paid for the asset in 2012. Global investors continue to place capital in San Francisco office assets. However, local rents are declining, global economic growth took a deep nosedive, and overall business investment has weakened. These headwinds, along with the ongoing economic threat of the coronavirus, has given some investors pause for the time being. On the bright side, technology-sector sales

are strong, and the world's largest tech firms are still growing deeper roots in the San Francisco Bay Area. San Francisco's historically solid market fundamentals and high barriers to entry provide an attractive investment market. However, the rapid price appreciation achieved throughout the expansion cycle could not last indefinitely. CoStar expects cap rates to face slight but further upward pressure amid restrained credit conditions, reduced volume, and softening price pressures. Valuations will remain sensitive to investor sentiment, and sellers may find that buyer uncertainty impacts underwriting assumptions, bids and negotiations.

SALES VOLUME & MARKET SALE PRICE PER SF

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Sales San Francisco Office MARKET CAP RATE

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Sales Past 12 Months San Francisco Office Sale Comparables

Avg. Cap Rate

Avg. Price/SF

Avg. Vacancy At Sale

4.4%

$900

4.9%

SALE COMPARABLE LOCATIONS

SALE COMPARABLES SUMMARY STATISTICS Sales Attributes

Low

Average

Median

High

$433,500

$43,635,904

$3,000,000

$478,000,000

Price/SF

$4.57

$900

$775

$3,357

Cap Rate

4.3%

4.4%

4.5%

Time Since Sale in Months

0.3

5.5

5.2

11.3

Property Attributes

Low

Average

Median

High

Building SF

968

53,602

7,564

512,395

Typical Floor SF

873

8,829

3,848

42,190

Vacancy Rate At Sale

4.9%

100%

1900

1953

1957

2020

Sale Price

Stories

Year Built Star Rating

2.5

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

Transamerica Pyramid 600 Montgomery St

Stripe, Inc 510 Townsend St

Pinterest Building 505 Brannan St

221 Main 221 Main St

Terminal Plaza 440-450 Mission St

Townsend Bldg 123 Townsend St

505 Sansome 505 Sansome St

4000 Shoreline Ct

130-150 Shoreline Dr

634 2nd St

1098 Harrison St

545 Sansome St

Fresenius Kidney Care 160 Country Club Dr

809 Montgomery St

1785 San Carlos Ave

1331 Columbus Ave

Clocktower Lofts 461 2nd St

600 Alabama St

409 S Spruce Ave

456 Clementina St

Sale

Rating

Yr Built

Bldg SF

Vacancy

Sale Date

Price

Price/SF

Cap Rate

1972

512,395

9.0%

10/28/2020

$478,000,000

$933

2018

295,333

11/23/2020

$363,700,000

$1,231

2017

148,146

11/23/2020

$196,500,000

$1,326

1974

381,000

5.1%

10/8/2020

$180,000,000

$1,050

1920

75,800

3/17/2020

$145,566,000

$1,920

1903

146,521

29.5%

7/10/2020

$140,000,000

$955

1981

191,142

14.8%

10/28/2020

$135,000,000

$706

2001

73,295

10/15/2020

$86,652,198

$1,182

1986

81,569

4/23/2020

$81,000,000

$993

1927

45,032

12/16/2020

$55,000,000

$1,221

1924

44,794

9/9/2020

$52,000,000

$1,161

1927

59,669

5.7%

10/28/2020

$35,612,383

$597

2020

10,814

11/24/2020

$12,404,000

$1,147

1906

7,752

8/31/2020

$8,483,000

$1,094

8,799

7/15/2020

$6,000,000

$682

1987

7,564

4/8/2020

$4,999,000

$661

1907

3,000

1.6%

3/23/2020

$4,850,000

$1,617

1911

25,682

12/29/2020

$4,500,000

$175

1975

8,132

10/22/2020

$4,300,000

$529

1950

4,950

4/23/2020

$4,162,500

$841

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Economy San Francisco Office 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

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Economy San Francisco Office 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.

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Economy San Francisco Office 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 24

Economy San Francisco Office 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 25

Submarkets San Francisco Office SAN FRANCISCO SUBMARKETS

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 26

Submarkets San Francisco Office 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

654

0.4%

Belmont/San Carlos

153

2,311

1.3%

526

22.8%

Brisbane/Daly City

2,891

1.6%

Burlingame

122

3,191

1.8%

848

26.6%

Civic Center

4,414

2.5%

Financial District

173

30,568

17.0%

Foster City/Redwood Shrs

111

9,691

5.4%

Jackson Square

123

3,321

1.8%

Menlo Park

269

9,093

5.1%

0.1%

1,478

16.2%

MidMarket

7,581

4.2%

466

6.1%

Mission Bay/China Basin

4,165

2.3%

1,162

27.9%

Mission/Potrero

185

3,605

2.0%

Peninsula Coastline

137

674

0.4%

Redwood City

314

7,462

4.2%

0.9%

282

3.8%

Rincon/South Beach

133

7,124

4.0%

268

3.8%

San Bruno/Millbrae

2,259

1.3%

173

7.7%

San Mateo

318

9,876

5.5%

433

4.4%

Showplace Square

3,779

2.1%

228

6.0%

South Financial District

166

31,164

17.3%

1,250

4.0%

South of Market

230

4,749

2.6%

0.5%

South San Francisco

137

7,103

4.0%

0.1%

421

5.9%

Southern City

180

1,342

0.7%

Treasure/Yerba Buena Isl…

Union Square

116

5,558

3.1%

188

3.4%

Van Ness/Chinatown

167

3,295

1.8%

Waterfront/North Beach

103

4,469

2.5%

West of Van Ness

389

5,502

3.1%

Yerba Buena

3,777

2.1%

699

18.5%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 27

Submarkets San Francisco Office SUBMARKET RENT Market Rent No.

12 Month Market Rent

QTD Annualized Market Rent

Submarket

Per SF

Rank

Growth

Rank

Growth

Rank

Bayview/Hunters Point

$39.37

-7.3%

-1.0%

Belmont/San Carlos

$58.57

-7.2%

-0.7%

Brisbane/Daly City

$48.71

-6.6%

-1.4%

Burlingame

$53.80

-5.4%

-1.0%

Civic Center

$57.04

-9.1%

-0.9%

Financial District

$68.65

-7.9%

-2.1%

Foster City/Redwood Shrs

$63.74

-5.5%

-1.3%

Jackson Square

$59.42

-10.2%

-0.5%

Menlo Park

$80.76

-6.8%

-0.6%

MidMarket

$59.93

-10.0%

-1.0%

Mission Bay/China Basin

$69.89

-6.8%

-1.8%

Mission/Potrero

$48.24

-10.8%

-0.4%

Peninsula Coastline

$41.83

-9.9%

-0.5%

Redwood City

$66.44

-6.7%

-1.2%

Rincon/South Beach

$62.02

-11.0%

-1.2%

San Bruno/Millbrae

$49.81

-7.5%

-0.3%

San Mateo

$60.60

-6.2%

-0.6%

Showplace Square

$58.74

-11.4%

-0.7%

South Financial District

$73.08

-7.1%

-2.0%

South of Market

$54.80

-11.0%

-1.0%

South San Francisco

$54.60

-6.4%

-1.6%

Southern City

$51.17

-9.5%

-0.6%

Treasure/Yerba Buena Isl…

$49.48

-8.9%

-1.2%

Union Square

$59.03

-9.5%

-0.5%

Van Ness/Chinatown

$49.51

-8.1%

-0.9%

Waterfront/North Beach

$56.07

-10.0%

-6.6%

West of Van Ness

$58.96

-8.7%

-0.8%

Yerba Buena

$61.86

-10.0%

-1.3%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 28

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

Submarket

12 Month Absorption

Percent

Rank

% of Inv

Rank

Construc. Ratio

Bayview/Hunters Point

42,077

6.4%

(22,878)

-3.5%

Belmont/San Carlos

279,545

12.1%

(123,109)

-5.3%

Brisbane/Daly City

225,387

7.8%

(17,516)

-0.6%

Burlingame

395,442

12.4%

(116,332)

-3.6%

Civic Center

199,554

4.5%

(114,597)

-2.6%

Financial District

4,790,894

15.7%

(2,662,790)

-8.7%

Foster City/Redwood Shrs

1,132,540

11.7%

(262,252)

-2.7%

Jackson Square

596,937

18.0%

(502,814)

-15.1%

Menlo Park

637,508

7.0%

(205,795)

-2.3%

MidMarket

724,612

9.6%

63,890

0.8%

7.3

Mission Bay/China Basin

301,602

7.2%

(270,185)

-6.5%

Mission/Potrero

266,498

7.4%

(77,449)

-2.1%

Peninsula Coastline

29,653

4.4%

(6,668)

-1.0%

Redwood City

504,660

6.8%

(187,382)

-2.5%

Rincon/South Beach

941,199

13.2%

(520,071)

-7.3%

San Bruno/Millbrae

209,595

9.3%

(21,742)

-1.0%

San Mateo

1,384,831

14.0%

(481,971)

-4.9%

Showplace Square

South Financial District

20 21

275,118

7.3%

(150,487)

-4.0%

3,402,143

10.9%

(1,519,958)

-4.9%

South of Market

818,477

17.2%

(550,529)

-11.6%

South San Francisco

494,084

7.0%

(148,124)

-2.1%

Southern City

68,358

5.1%

(27,741)

-2.1%

Treasure/Yerba Buena Isl…

Union Square

25 26

1,026,465

18.5%

(435,116)

-7.8%

Van Ness/Chinatown

342,244

10.4%

(70,542)

-2.1%

Waterfront/North Beach

675,468

15.1%

(266,046)

-6.0%

West of Van Ness

315,959

5.7%

(97,808)

-1.8%

Yerba Buena

714,882

18.9%

(370,172)

-9.8%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 29

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

Net Absorption

Year

SF Growth

% Growth

% of Inv

Construction Ratio

2025

187,201,002

559,199

0.3%

1,386,561

0.7%

0.4

2024

186,641,803

(79,853)

1,980,114

1.1%

2023

186,721,656

919,612

0.5%

3,814,893

2.0%

0.2

2022

185,802,044

430,081

0.2%

1,928,932

1.0%

0.2

2021

185,371,963

5,708,606

3.2%

(4,281,833)

-2.3%

YTD

179,663,357

(1,981,414)

-1.1%

2020

179,663,357

362,984

0.2%

(7,485,767)

-4.2%

2019

179,300,373

3,310,619

1.9%

2,844,273

1.6%

1.2

2018

175,989,754

3,812,759

2.2%

4,743,176

2.7%

0.8

2017

172,176,995

598,490

0.3%

203,014

0.1%

2.9

2016

171,578,505

2,729,009

1.6%

1,919,588

1.1%

1.4

2015

168,849,496

2,019,389

1.2%

2,911,071

1.7%

0.7

2014

166,830,107

167,382

0.1%

3,507,182

2.1%

2013

166,662,725

(584,208)

-0.3%

2,184,750

1.3%

2012

167,246,933

287,209

0.2%

1,309,296

0.8%

0.2

2011

166,959,724

(618,976)

-0.4%

3,038,483

1.8%

2010

167,578,700

39,345

(650,100)

-0.4%

2009

167,539,355

294,522

0.2%

(4,513,640)

-2.7%

4 & 5 STAR SUPPLY & DEMAND Inventory

Net Absorption

Year

SF Growth

% Growth

% of Inv

Construction Ratio

2025

103,446,484

820,785

0.8%

1,196,566

1.2%

0.7

2024

102,625,699

206,125

0.2%

1,383,527

1.3%

0.1

2023

102,419,574

1,250,000

1.2%

2,778,524

2.7%

0.4

2022

101,169,574

769,740

0.8%

2,229,302

2.2%

0.3

2021

100,399,834

5,633,287

5.9%

(1,300,834)

-1.3%

YTD

94,766,547

(1,323,556)

-1.4%

2020

94,766,547

467,859

0.5%

(3,045,957)

-3.2%

2019

94,298,688

3,114,210

3.4%

2,925,853

3.1%

1.1

2018

91,184,478

4,117,032

4.7%

4,886,141

5.4%

0.8

2017

87,067,446

839,891

1.0%

423,894

0.5%

2.0

2016

86,227,555

2,182,188

2.6%

1,839,828

2.1%

1.2

2015

84,045,367

2,036,622

2.5%

2,305,857

2.7%

0.9

2014

82,008,745

668,078

0.8%

2,317,828

2.8%

0.3

2013

81,340,667

39,359

1,617,952

2.0%

2012

81,301,308

492,599

0.6%

1,801,538

2.2%

0.3

2011

80,808,709

145,205

0.2%

1,282,688

1.6%

0.1

2010

80,663,504

299,397

0.4%

(66,408)

-0.1%

2009

80,364,107

158,267

0.2%

(2,289,621)

-2.8%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 30

Supply & Demand Trends San Francisco Office 3 STAR SUPPLY & DEMAND Inventory

Net Absorption

Year

SF Growth

% Growth

% of Inv

Construction Ratio

2025

52,669,744

528

201,846

0.4%

2024

52,669,216

105

440,789

0.8%

2023

52,669,111

728,661

1.4%

2022

52,669,111

10,327

2021

52,669,111

327,337

0.6%

(1,651,408)

-3.1%

YTD

52,341,774

(393,676)

-0.8%

2020

52,341,774

(57,497)

-0.1%

(2,974,085)

-5.7%

2019

52,399,271

183,229

0.4%

371,232

0.7%

0.5

2018

52,216,042

(103,261)

-0.2%

64,690

0.1%

2017

52,319,303

(195,893)

-0.4%

(334,136)

-0.6%

2016

52,515,196

744,655

1.4%

443,610

0.8%

1.7

2015

51,770,541

115,338

0.2%

430,687

0.8%

0.3

2014

51,655,203

(352,969)

-0.7%

1,010,278

2.0%

2013

52,008,172

(122,392)

-0.2%

647,974

1.2%

2012

52,130,564

(38,528)

-0.1%

(409,374)

-0.8%

2011

52,169,092

(525,525)

-1.0%

1,577,995

3.0%

2010

52,694,617

(14,751)

(371,880)

-0.7%

2009

52,709,368

398,287

0.8%

(1,114,873)

-2.1%

1 & 2 STAR SUPPLY & DEMAND Inventory

Net Absorption

Year

SF Growth

% Growth

% of Inv

Construction Ratio

2025

31,084,774

(262,114)

-0.8%

(11,851)

2024

31,346,888

(286,083)

-0.9%

155,798

0.5%

2023

31,632,971

(330,388)

-1.0%

307,708

1.0%

2022

31,963,359

(339,659)

-1.1%

(310,697)

-1.0%

2021

32,303,018

(252,018)

-0.8%

(1,329,591)

-4.1%

YTD

32,555,036

(264,182)

-0.8%

2020

32,555,036

(47,378)

-0.1%

(1,465,725)

-4.5%

2019

32,602,414

13,180

(452,812)

-1.4%

2018

32,589,234

(201,012)

-0.6%

(207,655)

-0.6%

2017

32,790,246

(45,508)

-0.1%

113,256

0.3%

2016

32,835,754

(197,834)

-0.6%

(363,850)

-1.1%

2015

33,033,588

(132,571)

-0.4%

174,527

0.5%

2014

33,166,159

(147,727)

-0.4%

179,076

0.5%

2013

33,313,886

(501,175)

-1.5%

(81,176)

-0.2%

2012

33,815,061

(166,862)

-0.5%

(82,868)

-0.2%

2011

33,981,923

(238,656)

-0.7%

177,800

0.5%

2010

34,220,579

(245,301)

-0.7%

(211,812)

-0.6%

2009

34,465,880

(262,032)

-0.8%

(1,109,146)

-3.2%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 31

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

Vacancy

Year

Per SF

Index

% Growth

Vs Hist Peak

Percent

Ppts Chg

2025

$67.48

186

3.3%

-4.1%

21,771,763

11.6%

-0.5%

2024

$65.33

180

3.5%

-7.1%

22,553,434

12.1%

-1.0%

2023

$63.11

174

3.6%

-10.3%

24,458,422

13.1%

-1.6%

2022

$60.91

168

1.3%

-13.4%

27,312,732

14.7%

-0.8%

2021

$60.12

166

-6.3%

-14.5%

28,803,837

15.5%

5.1%

YTD

$64.05

176

-0.2%

-9.0%

20,795,732

11.6%

1.1%

2020

$64.19

177

-8.8%

18,814,318

10.5%

4.4%

2019

$70.35

194

4.7%

10,965,567

6.1%

0.1%

2018

$67.20

185

9.4%

-4.5%

10,568,560

6.0%

-0.7%

2017

$61.40

169

2.8%

-12.7%

11,498,977

6.7%

0.2%

2016

$59.71

165

1.8%

-15.1%

11,103,508

6.5%

0.2%

2015

$58.64

162

15.1%

-16.7%

10,528,087

6.2%

-0.6%

2014

$50.96

140

10.6%

-27.6%

11,419,769

6.8%

-2.0%

2013

$46.07

127

13.1%

-34.5%

14,759,569

8.9%

-1.6%

2012

$40.74

112

13.5%

-42.1%

17,528,527

10.5%

-0.6%

2011

$35.89

17.7%

-49.0%

18,550,614

11.1%

-2.1%

2010

$30.49

0.5%

-56.7%

22,208,073

13.3%

0.4%

2009

$30.33

-16.4%

-56.9%

21,521,628

12.8%

2.9%

4 & 5 STAR RENT & VACANCY Market Rent

Vacancy

Year

Per SF

Index

% Growth

Vs Hist Peak

Percent

Ppts Chg

2025

$74.98

187

3.3%

-2.4%

11,711,998

11.3%

-0.5%

2024

$72.57

181

3.6%

-5.5%

12,088,563

11.8%

-1.2%

2023

$70.08

175

3.6%

-8.8%

13,266,492

13.0%

-1.7%

2022

$67.62

168

1.3%

-12.0%

14,795,016

14.6%

-1.6%

2021

$66.75

166

-6.5%

-13.1%

16,254,578

16.2%

6.4%

YTD

$71.16

177

-0.3%

-7.4%

10,644,011

11.2%

1.4%

2020

$71.40

178

-7.0%

9,320,455

9.8%

3.7%

2019

$76.81

191

5.7%

5,806,639

6.2%

2018

$72.69

181

10.7%

-5.4%

5,618,282

6.2%

-1.2%

2017

$65.69

164

2.6%

-14.5%

6,387,391

7.3%

0.4%

2016

$64.05

160

1.3%

-16.6%

5,971,401

6.9%

-0.1%

2015

$63.22

158

14.3%

-17.7%

5,863,041

7.0%

-0.5%

2014

$55.29

138

9.3%

-28.0%

6,132,276

7.5%

-2.1%

2013

$50.57

126

12.2%

-34.2%

7,782,026

9.6%

-1.9%

2012

$45.06

112

12.1%

-41.3%

9,360,619

11.5%

-1.7%

2011

$40.21

100

20.0%

-47.6%

10,669,558

13.2%

-1.4%

2010

$33.52

0.7%

-56.4%

11,807,041

14.6%

0.4%

2009

$33.30

-17.0%

-56.7%

11,441,236

14.2%

3.0%

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2/22/2021 Page 32

Rent & Vacancy San Francisco Office 3 STAR RENT & VACANCY Market Rent

Vacancy

Year

Per SF

Index

% Growth

Vs Hist Peak

Percent

Ppts Chg

2025

$60.61

194

3.3%

-8.1%

6,471,570

12.3%

-0.4%

2024

$58.66

188

3.5%

-11.0%

6,673,000

12.7%

-0.8%

2023

$56.66

182

3.6%

-14.0%

7,113,717

13.5%

-1.4%

2022

$54.66

175

1.4%

-17.1%

7,842,378

14.9%

2021

$53.93

173

-5.9%

-18.2%

7,852,705

14.9%

3.7%

YTD

$57.34

184

0.1%

-13.0%

6,267,631

12.0%

0.8%

2020

$57.30

184

-13.1%

5,873,955

11.2%

5.6%

2019

$65.92

211

4.4%

2,957,367

5.6%

-0.4%

2018

$63.16

203

8.7%

-4.2%

3,169,915

6.1%

-0.3%

2017

$58.10

186

4.1%

-11.9%

3,337,866

6.4%

0.3%

2016

$55.84

179

0.9%

-15.3%

3,199,623

6.1%

0.5%

2015

$55.32

177

17.4%

-16.1%

2,898,578

5.6%

-0.6%

2014

$47.12

151

12.4%

-28.5%

3,213,927

6.2%

-2.6%

2013

$41.92

134

14.0%

-36.4%

4,577,174

8.8%

-1.5%

2012

$36.77

118

17.3%

-44.2%

5,347,540

10.3%

0.7%

2011

$31.34

101

16.2%

-52.4%

4,976,694

9.5%

-3.9%

2010

$26.97

1.6%

-59.1%

7,080,214

13.4%

0.7%

2009

$26.54

-14.9%

-59.7%

6,726,085

12.8%

2.8%

1 & 2 STAR RENT & VACANCY Market Rent

Vacancy

Year

Per SF

Index

% Growth

Vs Hist Peak

Percent

Ppts Chg

2025

$55.01

169

3.1%

-3.8%

3,588,195

11.5%

-0.6%

2024

$53.34

164

3.3%

-6.7%

3,791,871

12.1%

-0.8%

2023

$51.62

159

3.4%

-9.7%

4,078,213

12.9%

-1.7%

2022

$49.90

154

1.2%

-12.7%

4,675,338

14.6%

0.1%

2021

$49.31

152

-6.3%

-13.8%

4,696,554

14.5%

3.4%

YTD

$52.54

162

-0.2%

-8.1%

3,884,090

11.9%

0.8%

2020

$52.62

162

-8.0%

3,619,908

11.1%

4.4%

2019

$57.19

176

1.3%

2,201,561

6.8%

1.3%

2018

$56.46

174

6.1%

-1.3%

1,780,363

5.5%

0.1%

2017

$53.22

164

1.8%

-6.9%

1,773,720

5.4%

-0.5%

2016

$52.31

161

5.5%

-8.5%

1,932,484

5.9%

0.5%

2015

$49.59

153

13.9%

-13.3%

1,766,468

5.3%

-0.9%

2014

$43.52

134

12.7%

-23.9%

2,073,566

6.3%

-1.0%

2013

$38.62

119

15.1%

-32.5%

2,400,369

7.2%

-1.1%

2012

$33.56

103

13.2%

-41.3%

2,820,368

8.3%

-0.2%

2011

$29.65

11.3%

-48.1%

2,904,362

8.5%

-1.2%

2010

$26.63

-1.9%

-53.4%

3,320,818

9.7%

2009

$27.15

-16.4%

-52.5%

3,354,307

9.7%

2.5%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 33

Sale Trends San Francisco Office 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

$882.28

286

4.2%

2024

$844.41

274

4.2%

2023

$799.06

259

4.2%

2022

$752.80

244

4.3%

2021

$736.32

239

4.4%

YTD

$8M

$2,666,667

$730.73

$798.94

259

4.5%

2020

$3.7B

2.0%

$51,365,084

$1,014.92

4.4%

$799.99

260

4.5%

2019

227

$9B

6.1%

$64,738,130

$841.91

5.1%

$843.23

274

4.4%

2018

188

$4.2B

4.2%

$37,321,825

$662.36

4.7%

$790.86

257

4.4%

2017

219

$4.3B

4.6%

$40,973,139

$615.40

5.1%

$725.12

235

4.5%

2016

215

$6.9B

7.9%

$50,853,617

$596.25

4.8%

$705.95

229

4.4%

2015

243

$5.2B

7.3%

$40,063,114

$634.76

4.8%

$667.36

217

4.5%

2014

283

$8.1B

9.4%

$46,556,116

$538.09

4.9%

$571.17

185

4.8%

2013

223

$2.9B

4.8%

$21,177,447

$383.44

5.3%

$484.98

157

5.2%

2012

305

$6.3B

9.5%

$40,144,322

$446.91

5.3%

$415.12

135

5.6%

2011

212

$3.1B

7.8%

$22,047,052

$259.26

6.4%

$367.99

119

6.0%

2010

125

$2B

4.8%

$22,358,637

$261.58

6.6%

$298.67

6.8%

(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.

4 & 5 STAR 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

$932.41

272

4.2%

2024

$892.05

260

4.2%

2023

$843.73

246

4.2%

2022

$794.53

231

4.2%

2021

$776.98

226

4.4%

YTD

$842.66

245

4.5%

2020

$2.3B

2.3%

$254,000,244

$1,046.63

$845.14

246

4.5%

2019

$6B

7.3%

$158,115,360

$876.34

4.7%

$891.92

260

4.3%

2018

$2.5B

4.4%

$107,866,103

$727.21

4.8%

$840.88

245

4.4%

2017

$3.2B

5.9%

$119,520,399

$657.68

5.5%

$771.68

225

4.4%

2016

$4.6B

8.3%

$152,368,766

$665.99

4.4%

$755.51

220

4.3%

2015

$3.3B

8.1%

$144,599,433

$715.19

4.6%

$717.37

209

4.4%

2014

$6.1B

12.5%

$134,905,390

$594.64

4.0%

$618.99

180

4.6%

2013

$1.9B

5.0%

$93,201,983

$462.48

4.9%

$531.73

155

5.0%

2012

$5.1B

12.3%

$140,668,072

$507.73

4.9%

$458.59

134

5.4%

2011

$1.3B

5.7%

$72,488,754

$285.34

5.5%

$409.73

119

5.7%

2010

$1.4B

5.4%

$106,529,759

$351.26

5.3%

$334.49

6.5%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 34

Sale Trends San Francisco Office 3 STAR 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

$829.11

311

4.3%

2024

$793.46

298

4.3%

2023

$750.99

282

4.3%

2022

$707.63

266

4.4%

2021

$692.16

260

4.5%

YTD

$749.97

282

4.6%

2020

$891.3M

1.9%

$44,179,001

$876.70

$750.23

282

4.6%

2019

$2.4B

5.9%

$47,257,779

$779.73

5.5%

$784.73

295

4.5%

2018

$1.2B

4.1%

$33,463,268

$588.23

5.2%

$725.82

273

4.6%

2017

$566.3M

2.4%

$21,755,772

$491.80

5.8%

$664.86

250

4.6%

2016

$1.8B

9.8%

$38,055,808

$484.41

5.2%

$643.14

242

4.6%

2015

$1.4B

7.7%

$43,761,855

$547.34

5.0%

$605.46

227

4.7%

2014

$1.4B

6.9%

$28,704,605

$421.50

5.3%

$514.77

193

4.9%

2013

$706.6M

4.1%

$17,881,440

$345.38

5.2%

$430.08

162

5.4%

2012

$891.6M

6.3%

$23,343,859

$325.78

5.8%

$365.90

137

5.9%

2011

$1.6B

13.6%

$23,131,776

$242.91

6.5%

$320.71

120

6.3%

2010

$456.1M

5.9%

$14,192,176

$149.39

8.0%

$258.09

7.2%

1 & 2 STAR 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

$811.18

305

Cap Rate

4.2%

2024

$777.50

292

4.2%

2023

$736.84

277

4.3%

2022

$695.07

261

4.3%

2021

$680.36

256

4.4%

YTD

$8M

$2,666,667

$730.73

$741.15

279

4.6%

2020

$487M

1.3%

$11,365,208

$1,188.83

4.4%

$738.97

278

4.6%

2019

113

$567.3M

3.0%

$11,251,787

$778.32

3.8%

$785.29

295

4.4%

2018

114

$512.1M

3.6%

$9,401,980

$588.50

4.5%

$739.39

278

4.5%

2017

143

$503.9M

4.5%

$9,428,104

$544.85

4.6%

$676.71

255

4.5%

2016

101

$521.3M

3.8%

$8,937,072

$539.42

4.6%

$652.29

245

4.5%

2015

140

$516.6M

4.4%

$6,937,653

$498.52

4.6%

$610.81

230

4.6%

2014

153

$633.3M

5.9%

$7,611,080

$408.91

5.4%

$512.54

193

4.9%

2013

134

$330.2M

5.7%

$4,139,181

$221.79

6.2%

$427.31

161

5.3%

2012

195

$393.6M

7.5%

$4,662,924

$263.05

5.4%

$358.53

135

5.8%

2011

$209.6M

4.0%

$3,867,204

$243.92

6.8%

$313.69

118

6.3%

2010

$113.2M

1.6%

$2,527,737

$238.31

6.3%

$252.05

7.2%

Copyrighted report licensed to COMPASS - 1028085

2/22/2021 Page 35