Tech Giants Commit to the Valley

Transcription

1 Research & Forecast Report SAN JOSE SILICON VALLEY Q Tech Giants Commit to the Valley > > More than 6.0 million square feet of commercial space is under construction in the Silicon Valley. > > Total available space increased 6.0 percent compared to the first quarter last year, for all product types combined. > > 3.7 million square feet of improved space came onto the market during the first quarter of The first quarter of the year came to a close and Silicon Valley s economy continues to thrive. While job reports indicate a slight decline in hiring, the unemployment rate remains at a healthy 3.0 percent. The Valley remains a hotbed for innovation and technological advancement, and demand for quality real estate for all product types is outpacing supply, substantiated by rising rents and accelerated construction. The start of the year saw a number of marquis transactions from technology giants cementing their commitment to Silicon Valley, including Google, Facebook, and Amazon resulting in a solid quarter in both commercial property leasing and sales activity. Market Indicators - Santa Clara County Average Household Income Population Growth White Collar Jobs Market Trends Relative to prior quarter Q Q2 2018* Vacancy $162,249 Net Absorption Under Construction Office Rental Rate 9.38% % Silicon Valley leasing activity reached 5.3 million square feet in the first quarter, up 8.2 percent year over year, from Q1 2017, but down 27.1 percent from the previous quarter. Silicon Valley experienced a strong 1.6 million square feet of positive net absorption, marking the fifth consecutive positive quarter. Total availability sits at 29.9 million square feet, translating to an overall availability rate of 8.6 percent, 29 basis points higher than one year earlier. Vacancy vs. Availability Rates Silicon Valley All Products R&D Rental Rate Industrial/Warehouse Rental Rate *Projected Summary Statistics Silicon Valley All Products Previous Quarter Current Quarter Overall Vacancy Rate 6.22% 5.71% Net Absorption 1,300,034 1,643,505 Construction Completed 1,728, ,415 Under Construction 4,126,603 6,084,539 Office Asking Rents* $4.27 FS $4.25 FS R&D Asking Rents* $2.12 NNN $2.21 NNN Industrial Asking Rents* $1.11 NNN $1.29 NNN Warehouse Asking Rents* $0.96 NNN $0.96 NNN *Asking Rents Reported Monthly Previous Quarter Current Quarter Economic Indicators Unemployment Rate 2.7% 3.0% Availability Rate Vacancy Rate

2 Office > > Gross absorption measured 2.3 million square feet. > > Silicon Valley s office market recorded 1.2 million square feet of positive net absorption. > > Total availability sits at 11.8 percent, unchanged from the first quarter of last year. During the first quarter of 2018 office activity slowed in the Silicon Valley, registering a total of 2.3 million square feet of gross absorption. This level of activity is down 37.3 percent from that recorded in the previous quarter, but up 31.6 percent from the same period one year earlier. The most notable transaction included the leasing of the 1.8-millionsquare-foot Moffett Towers II project in Sunnyvale: Facebook took 1.1 million square feet and Amazon leased the balance. The second largest deal was Analog Devices signing 445,000 square feet at Santa Clara Square. As anticipated, the Silicon Valley office market recorded another occupancy gain during the first quarter, measuring 1.2 million square feet. Historical Office Vacancy Historical Average = 12.7% Office Availability Rates Select Silicon Valley Cities Vacancy within the Silicon Valley office market measured a slight decrease during the first quarter. This was largely due to the 795,000 square feet added to the building base. Total available space measured 10.9 million square feet. This translates to an overall availability rate of 11.8 percent, unchanged from the first quarter of last year. Three new projects broke ground during the first quarter, all of which are fully preleased. These include Sobrato Organization s 204,000-squarefoot building in the River Corporate Center in San Jose, fully leased to Santa Clara County; Jay Paul Company s 1.8 million-square-foot Moffett Towers II in Sunnyvale, fully leased to Facebook and Amazon; and Irvine Company s 1.1 million-square-foot Pathline Peery Park in Sunnyvale which broke ground on Phase I, totaling 350,000 square feet, which is fully leased to Synopsys. New office completions during the first quarter include Midpoint@237 in San Jose totaling 415,000 square feet comprising three buildings and 3181 Porter Drive in Palo Alto totaling 99,415 square feet in a single building. The office portion of Midpoint@237 remains unleased while 3181 Porter Drive is occupied by Stanford University. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Office Availability Breakdown by Size Range Weighted asking rents for office space in the Silicon Valley measured another decrease during the first quarter opening the year at an average of $4.25 per square foot full service. This is a 2.4 percent decrease year over year. 2 Silicon Valley Research & Forecast Report First Quarter 2018 Colliers International

3 SAN FRANCISCO BAY FREMONT 680 Select Colliers Transactions Office Lease Activity MILPITAS Avid Technology 2903 Bunker Hill Lane, Suite 200, Santa Clara Sublease 280 PALO ALTO MTN. VIEW ,924 Interviewstreet, Inc. 700 E El Camino Real, Suite 300, Mountain View SUNNYVALE LOS ALTOS SANTA CLARA 16, CUPERTINO/ SARATOGA SAN JOSE 87 VTA Gateway Place, San Jose 41,126 CAMPBELL/ LOS GATOS Invensense 1745 Technology Drive, San Jose 138,942 MORGAN HILL/ GILROY Analog Devices, Inc Augustine Drive, Santa Clara 445,058 Select Colliers Transactions - Office Sale Activity PROPERTY ADDRESS SIZE SELLER BUYER 4410 El Camino Real, Los Altos 34, Los Altos, LP Briggs Development 1038 Leigh Avenue, San Jose 13,376 BYK Properties Tri Corp Industries, LLC Woodward Avenue, Santa Clara 12,480 Horton Properties, LLC Fenwick Properties, LLC. Silicon Valley Research & Forecast Report First Quarter 2018 Colliers International 3

4 R&D > > Gross absorption decreased 16.2 percent from previous quarter. > > Availability rate is at 10.4 percent, down 19 basis points from the previous quarter. > > Average asking rents increased to $2.21 NNN per square foot, up $0.09 from previous quarter. Silicon Valley s R&D market started off the year with a decrease in demand, measuring 2.0 million square feet of gross absorption. This was a 16.2 percent decrease from the fourth quarter of 2017, which saw 2.4 million square feet of gross absorption. Vacancy rate dropped 21 basis points to 7.3 percent quarter over quarter, and 47 basis points compared to the first quarter of The R&D sector experienced an occupancy loss of 62,111 square feet in the first quarter. The reason for the decline is two-fold. First, Cisco and Western Digital vacated more than 1.0 million square feet across their San Jose locations, and second, a significant amount of R&D space was demolished at Peery Park in Sunnyvale by Irvine Company to make way for the new Pathline buildings. Historical R&D Vacancy Historical Average = 12.9% R&D Availability Rates Select Silicon Valley Cities With less space in the market and rents rising, sublease space is proving to be a more attractive option for companies; tallying 3.3 million square feet, up 6.0 percent from the previous quarter. The R&D sector saw no completed projects in the first three months of the year. Two developments are still under construction, with 36,120 square feet expected to complete in the third quarter of this year and 119,700 square feet expected to complete in the beginning of The largest R&D deal completed by Colliers this quarter was the NVIDIA renewal at San Tomas Expressway in Santa Clara for 500,000 square feet. NVIDIA also signed a 46,640-square-foot deal in Fremont. NuvoSun also renewed 102,668 square feet at 1565 Barber Lane in Milpitas, and Varian Medical Systems renewed 53,284 square feet at 660 North McCarthy Boulevard in Milpitas. Average asking rents increased to $2.21 NNN per square foot, up $0.09 from the previous quarter. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% R&D Availability Breakdown by Size Range 4 Silicon Valley Research & Forecast Report First Quarter 2018 Colliers International

5 SAN FRANCISCO BAY FREMONT 680 Select Colliers Transactions R&D Lease Activity Aehr Test Systems Kato Terrace, Fremont MILPITAS 51, PALO ALTO MTN. VIEW 237 Varian Medical Systems 660 N McCarthy Boulevard, Milpitas 53,284 SUNNYVALE NuvoSun LOS ALTOS SANTA CLARA 1565 Barber Lane, Milpitas ,668 CUPERTINO/ SARATOGA SAN JOSE 87 NVIDIA San Tomas Expressway, Santa Clara CAMPBELL/ LOS GATOS 500,000 MORGAN HILL/ GILROY NVIDIA San Tomas Expressway, Santa Clara Direct 46,640 Volvo Car USA 380 Pastoria Avenue, Sunnyvale Direct 45,383 Select Colliers Transactions - R&D Sale Activity PROPERTY ADDRESS SIZE SELLER BUYER Betsy Ross Drive, Santa Clara 120,200 SVF Waterford Dublin Corporation TG USA Development 1315 Dell Avenue, Campbell 46,780 Carlyle Group Vista Investment Group Silicon Valley Research & Forecast Report First Quarter 2018 Colliers International 5

6 Industrial > > Gross absorption totaled 853,392 square feet. > > Availability rate dropped to 2.8 percent. > > Average asking rents are $1.29 NNN, up $0.18 from previous quarter. Silicon Valley s industrial sector activity started off with a bang. Gross absorption spiked to 853,392 square feet in the first quarter, up 59.8 percent from the prior quarter. The dramatic uptick came from one albatross user-sale in which Google bought 563,211 square feet at Midpoint@237. This one deal alone accounted for 34 percent of quarterly industrial absorption and was the only transaction involving industrial product greater than 50,000 square feet. Scarcity of available industrial product continued to plague the Valley and contributed to a low number of transactions. The availability rate declined for the third consecutive quarter, standing at 2.8 percent. Following suit, vacancy rate fell to 1.4 percent from 2.3 percent in the previous quarter, leaving tenants in the market with limited options. Historical Industrial Vacancy Historical Average = 5.9% Industrial Availability Rates Select Silicon Valley Cities Mid-size and large tenants in the market face especially difficult conditions with only six spaces available in the 40, ,000 square foot range and just two availabilities measuring over 100,000 square feet. No new industrial projects broke ground in the first quarter and there is only one project currently under construction a 155,909 square foot project at 5995 Hellyer Avenue in San Jose. Given the lack of new inventory coming online in the near future, availability rates are expect to remain low. Leasing activity was slow with only two leases signed measuring over 20,000 square feet. The largest lease was Brightview Landscape Maintenance Inc. signing 33,105 square feet at 490 Phelan Avenue in San Jose. On the sales side, Google s appetite spilled over to industrial product with the $117,250,000 purchase of three industrial buildings at Midpoint@237 in San Jose, totaling 563,211 square feet. The 35-acre site sold for $208 per square foot. 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% Industrial Availability Breakdown by Size Range With a lack of new product in the pipeline, it is not surprising that asking rents climbed as tenants compete for quality space. At the end of the first quarter average industrial asking rents stood at $1.29 NNN, up $0.18 from the previous quarter. 6 Silicon Valley Research & Forecast Report First Quarter 2018 Colliers International

7 SAN FRANCISCO BAY FREMONT 680 Select Colliers Transactions Industrial Lease Activity PDF Solutions MILPITAS N Milpitas Boulevard, Milpitas 17,749 PALO ALTO 280 MTN. VIEW 237 Averatek 550 Nuttman Street, Santa Clara LOS ALTOS SUNNYVALE SANTA CLARA 8, CUPERTINO/ SARATOGA SAN JOSE 87 Evocative Stockton Avenue, San Jose 20,000 CAMPBELL/ LOS GATOS Lightwave Construction Stockton Avenue, San Jose 15,000 MORGAN HILL/ GILROY Select Colliers Transactions - Industrial Sale Activity PROPERTY ADDRESS SIZE SELLER BUYER 561 Division Street, Campbell 25,600 Hosmer-Dorrance Corporation John and Kerstin Dryden Adams Court 2, Morgan Hill 25,000 MH Adams Court, LLC RNO Prop LLC 300 Pioneer Way, Mountain View 14,500 Michael & Valerie McElroy Monotime Principate Silicon Valley Research & Forecast Report First Quarter 2018 Colliers International 7

8 Warehouse > > Leasing activity measured 141,753 square feet during the first quarter. > > The market remains tight as vacancy rates rose slightly quarter over quarter, remaining just under 1.0 percent. > > Asking lease rates remained the same quarter over quarter at $0.96, maintaining historical high levels. With availability in the Silicon Valley warehouse market below 3.0 percent, growth within the sector was slow in the first quarter of Gross absorption totaled 141,753 square feet of new tenant activity, a 78 percent drop from the fourth quarter. Despite this drop, vacancy increased just 2.0 basis points from 0.93 percent to 0.95 percent, indicating a consistent level of demand for warehouse product. The year started sluggishly but activity picked up in the month of March, when Motors leased the 136,632 square foot building in Phase 1 of McCarthy Creekside Industrial Center. Despite this project s designation as a warehouse building, lack of available space between both product types have forced industrial and warehouse tenants alike to seek space wherever they can. Total existing availability in the Valley is currently at 1.2 million square feet, a 5.9 percent decrease from the last quarter and a 19.8 percent increase from the first quarter last year. However, this space is spread over just 28 spaces in the entire Valley. Though weighted asking lease rates have remained steady at $0.96 NNN per square foot this quarter, given the lack of space in the region, even a single new availability has the potential to drive this figure up dramatically. There is currently one development under construction: the 450,610-square-foot McCarthy Creekside project, now partially leased to Motors, set to complete next quarter. Unless it is preleased, it will breathe an additional 313,978 square feet of vacant space into the market -- perfect for a large user to consolidate its holdings and possibly free up space in other parts of the region. Due to the current constrained state of the warehouse market, notable moves in the region are unlikely except in the case of new construction. Warehouse tenants in the region have been priced out, and are seeking space further outside the boundaries of Silicon Valley Oakland, Tracy, and Monterey, to name a few secondary markets. Going forward, it is likely that existing warehouse users will stay put in their current spaces, while tenants seeking warehouse space will have to either build it themselves or move outside the Valley. Historical Warehouse Vacancy Historical Average = 6.2% Warehouse Availability Rates Select Silicon Valley Cities 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Warehouse Availability Breakdown by Size Range 8 Silicon Valley Research & Forecast Report First Quarter 2018 Colliers International

9 SAN FRANCISCO BAY FREMONT 680 Select Colliers Transactions Warehouse Lease Activity Pack-Rat, LLC MILPITAS Osgood Road, Fremont 48,334 PALO ALTO 280 MTN. VIEW 237 East Bay Tire Charcot Avenue, San Jose SUNNYVALE 23,612 LOS ALTOS SANTA CLARA Cal Wine McLaughlin Avenue, Fremont CUPERTINO/ SARATOGA SAN JOSE 87 Sublease 40,756 CAMPBELL/ LOS GATOS Lockheed Martin Corporation Kifer Road, Santa Clara 100,170 MORGAN HILL/ GILROY NV Towing and Transport Peet Road, Morgan Hill 30,000 Select Colliers Transactions - Warehouse Sale Activity PROPERTY ADDRESS SIZE SELLER BUYER 501 Cinnabar Street, San Jose 105,000 Storage Solutions DC Agoge Associates Silicon Valley Research & Forecast Report First Quarter 2018 Colliers International 9

10 Market Comparisons Silicon Valley OFFICE MARKET CLASS TOTAL INVENTORY DIRECT VACANT SUBLEASE VACANT DIRECT OCCUPIED SUBLEASE OCCUPIED TOTAL AVAILABLE AVAILABILITY RATE CURR QTR AVAILABILITY RATE PREV QTR NET ABSORPTION CURR QTR YTD COMPLETED CURR QTR UNDER CONST. FS WTD AVG ASKING CAMPBELL / LOS GATOS A 1,920, ,782 41, ,545 36, , % 22.6% (16,007) (16,007) - - $4.41 B 2,306,320 84,191 4,781 86,870 12, , % 7.8% (2,025) (2,025) - - $3.44 C 235,576 4,778 4, , % 4.4% 1,460 1, $- Total 4,462, ,751 50, ,415 49, , % 14.0% (16,572) (16,572) - - $4.16 CUPERTINO / SARATOGA A 4,303,562 32,824 36,111 60,218 9, , % 2.5% (1,469) (1,469) - - $4.95 B 2,991,430 54,248 40,532 35, , % 4.7% (5,743) (5,743) - - $3.81 C 178,010 9, , % 5.4% (2,093) (2,093) - - $3.17 Total 7,473,002 96,693 76,643 95,695 9, , % 3.4% (9,305) (9,305) - - $4.47 FREMONT / MILPITAS A 884, ,764 2,147 66,783 3, , % 19.9% (1,669) (1,669) - - $2.44 B 1,700,941 80,535 4,140 26,509 20, , % 7.4% (78) (78) - - $2.56 C 581,654 3,363 2,147 6,132-11, % 1.8% 4,900 4, $1.65 Total 3,167, ,662 8,434 99,424 23, , % 9.9% 3,153 3, $2.49 GILROY / MORGAN HILL A 418,491 7, , % 2.9% 3,946 3, $2.40 B 434,902 5, , % 1.3% $1.75 C 287,004 21, ,031 27, % 9.3% $2.10 Total 1,140,397 34, ,031 40, % 3.9% 3,946 3, $2.10 LOS ALTOS A 295,515 9,454 7, , % 4.1% (6,341) (6,341) - - $6.87 B 510,553 26,459-4,347 6,159 36, % 18.1% 14,868 14, $4.76 C 382,892 4,290 1,732 5,380 3,471 14, % 4.1% 2,370 2, $5.47 Total 1,188,960 40,203 9,054 9,727 9,630 68, % 10.1% 10,897 10, $5.64 MOUNTAIN VIEW A 4,467, ,334 13, , , , % 7.0% 49,499 49, ,918 $7.28 B 1,314,133 23,628 9,508 27,760 17,952 78, % 8.9% 45,853 45, $5.47 C 512,873 4,491 5,850 11,980-22, % 3.8% 2,900 2, $4.69 Total 6,294, ,453 28, , , , % 7.2% 98,252 98, ,918 $6.98 PALO ALTO A 5,139,973 51,059 20, ,433 90, , % 7.8% 114, ,234 99, ,707 $7.79 B 4,453,155 62,262 19,660 24,163 98, , % 5.3% 16,934 16, $6.42 C 1,277,707 15,889-15,071 3,710 34, % 3.5% 5,146 5, $7.13 Total 10,870, ,210 40, , , , % 6.3% 136, ,314 99, ,707 $7.25 SAN JOSE A 15,741,626 2,192, , , ,978 3,319, % 21.4% 506, , , ,000 $3.90 B 9,695, ,541 55, , ,524 1,033, % 10.4% 9,971 9, $3.14 C 3,976, ,446-90,640 9, , % 9.9% (971) (971) - - $2.84 Total 29,413,481 3,132, ,049 1,041, ,691 4,733, % 16.1% 515, , , ,000 $3.67 SANTA CLARA A 10,507, , , , ,729 2,477, % 27.1% 477, , ,000 $4.00 B 4,262, ,800 30,910 92,132 34, , % 13.3% (38,236) (38,236) - - $3.22 C 431,892 39,923 2,689 1,299-43, % 11.6% 7,310 7, $2.80 Total 15,202,205 1,391,611 1,027, , ,418 3,108, % 22.8% 446, , ,000 $3.83 SUNNYVALE A 11,371, ,369 19, ,362 29, , % 3.4% (5,265) (5,265) - 3,383,575 $6.02 B 1,553,772 53,940 8,533 6,333 13,748 82, % 6.1% 16,175 16, $3.42 C 490,595 2, , % 0.3% (1,120) (1,120) - - $2.95 Total 13,415, ,869 28, ,695 43, , % 3.6% 9,790 9,790-3,383,575 $5.81 SILICON VALLEY TOTALS A 55,051,187 3,943,840 1,401,625 1,772, ,718 7,891, % 14.6% 1,120,786 1,120, ,415 5,321,200 $4.50 B 29,223,843 1,479, , , ,389 2,479, % 8.8% 57,719 57, $3.51 C 8,354, ,126 16, ,402 21, , % 7.0% 19,902 19, $3.30 Total 92,629,441 5,810,230 1,591,325 2,416,968 1,109,508 10,928, % 12.1% 1,198,407 1,198, ,415 5,321,200 $4.25 QUARTERLY COMPARISON AND TOTALS 1Q-18 92,629,441 5,810,230 1,591,325 2,416,968 1,109,508 10,928, % 12.1% 1,198,407 1,198, ,415 5,321,200 $4.25 4Q-17 91,834,042 6,433,489 1,817,975 1,990, ,923 11,068, % 12.2% 1,473,550 5,772,461 1,728,351 3,639,873 $4.27 3Q-17 89,909,440 5,853,504 2,203,083 1,781,618 1,106,564 10,944, % 11.7% 1,468,728 4,298,911 2,236,017 5,131,403 $4.33 2Q-17 87,580,374 5,633,294 1,789,215 1,577,070 1,218,946 10,218, % 11.7% 2,666,093 2,830,183 3,447,606 6,661,318 $4.40 1Q-17 84,144,876 5,663,121 1,041,698 1,442,899 1,736,242 9,883, % 10.6% 164, ,090 1,133,270 9,843,293 $ Silicon Valley Research & Forecast Report First Quarter 2018 Colliers International

11 Market Comparisons Silicon Valley R&D, INDUSTRIAL & WAREHOUSE MARKETS TYPE TOTAL INVENTORY DIRECT VACANT SUBLEASE VACANT DIRECT OCCUPIED SUBLEASE OCCUPIED TOTAL AVAILABLE AVAILABILITY RATE CURR QTR AVAILABILITY RATE PREV QTR NET ABSORPTION CURR QTR YTD COMPLETED CURR QTR UNDER CONSTR. NNN WTD AVG ASKING CAMPBELL R&D 1,378,087 68,323-85,386 2, , % 8.8% $2.37 IND 995,329 9, , % 1.0% (10) (10) - - $2.49 TOTAL 2,373,416 78,148-85,386 2, , % 5.5% (10) (10) - - $2.38 CUPERTINO R&D 3,098,845 26, , % 0.9% $3.34 TOTAL 3,098,845 26, , % 0.9% $3.34 FREMONT R&D 20,570,256 1,686, , , ,896 2,424, % 13.0% 178, , $1.53 IND 10,264, ,174 47, , , , % 3.6% (55,766) (55,766) - - $1.06 WSE 8,446, , , % 1.1% $0.79 TOTAL 39,281,241 1,868, , , ,896 3,161, % 8.0% 122, , $1.47 GILROY R&D 372,117 27,042-89, , % 31.2% $0.92 IND 1,813,262 23, , % 1.5% 4,386 4, $- WSE 3,812,905-14, , % 0.0% (14,909) (14,909) - - $0.95 TOTAL 5,998,284 50,675 14,909 89, , % 2.4% (10,523) (10,523) - - $0.92 LOS GATOS R&D 337, % 0.0% $- TOTAL 337, % 0.0% $- MILPITAS R&D 13,826,894 1,493,720 43, , ,594 2,557, % 19.1% 256, , $1.87 IND 2,943,652 1,078-66,552 12,858 80, % 2.8% 10,018 10, $1.10 WSE 4,715,290 82, , , , % 11.8% ,610 $0.99 TOTAL 21,485,836 1,576,977 43,895 1,226, ,625 3,162, % 15.3% 266, , ,610 $1.68 MORGAN HILL R&D 2,874,866 76,808-17,600-94, % 3.8% 13,683 13, $0.91 IND 2,447,065 53, ,496 85, % 2.2% (1,898) (1,898) - - $1.19 WSE 482, % 0.0% TOTAL 5,804, ,359-17,600 31, , % 2.8% 11,785 11, $0.98 MOUNTAIN VIEW R&D 13,956, , , ,957 90, , % 4.6% (128,851) (128,851) - - $3.57 IND 1,612, ,478-12, , % 6.1% (17,599) (17,599) - - $3.08 TOTAL 15,568, , , ,557 90, , % 4.7% (146,450) (146,450) - - $3.52 PALO ALTO R&D 13,746,912 36, ,852 98, , , % 4.1% 77,634 77, ,820 $6.43 TOTAL 13,746,912 36, ,852 98, , , % 4.1% 77,634 77, ,820 $6.43 SAN JOSE R&D 42,381,449 4,363, , , ,858 6,493, % 14.8% (701,402) (701,402) - - $1.98 IND 24,859, ,752 74, ,074 61, , % 4.3% 606, , ,909 $0.99 WSE 17,080, , ,292 40, , % 2.9% (13,661) (13,661) - - $0.93 TOTAL 84,321,496 4,879, ,100 1,159, ,394 7,476, % 9.3% (108,763) (108,763) - 155,909 $1.85 SANTA CLARA R&D 19,091,819 1,227, , , ,131 1,772, % 10.1% 153, , $2.08 IND 11,470,011 84,333 6,417 93,394 19, , % 1.8% (9,982) (9,982) - - $1.29 WSE 3,354,755 24,700-36,700-61, % 3.1% (5,200) (5,200) - - $0.97 TOTAL 33,916,585 1,336, , , ,131 2,036, % 6.6% 138, , $2.02 SUNNYVALE R&D 22,074, , , , ,269 1,115, % 5.5% 88,816 88, $2.73 IND 6,050,081 46,390-10,000 5,620 62, % 1.1% 7,450 7, $1.74 WSE 1,672, % 0.0% $- TOTAL 29,797, , , , ,889 1,177, % 4.3% 96,266 96, $2.71 SILICON VALLEY TOTALS R&D 153,708,762 9,730,324 1,544,118 3,058,570 1,707,648 16,040, % 10.6% (62,111) (62,111) - 155,820 $2.21 IND 63,665, , , , ,710 1,758, % 3.2% 542, , ,909 $1.29 WSE 39,745, ,189 14, , ,973 1,180, % 3.2% (33,770) (33,770) - 450,610 $0.96 TOTAL 257,119,272 10,869,927 1,694,970 4,217,647 2,197,331 18,979, % 7.6% 447, , ,339 $2.08 QUARTERLY COMPARISON AND TOTALS 1Q ,119,272 10,869,927 1,694,970 4,217,647 2,197,331 18,979, % 7.6% 447, , ,339 $2.08 4Q ,470,315 11,868,163 1,612,940 4,283,652 1,909,358 19,674, % 8.0% (173,516) (681,905) - 642,639 $1.96 3Q ,478,522 12,379,628 1,646,586 4,492,318 2,066,994 20,585, % 7.4% (622,479) (508,389), ,730 $1.92 2Q ,983,032 11,999,386 1,512,372 3,407,995 1,981,581 18,901, % 7.1% 35, , ,104 $1.86 1Q ,251,978 12,380,440 1,479,305 2,559,598 1,899,311 18,318, % 7.4% 79,026 79,026 1,145, ,610 $1.88 Silicon Valley Research & Forecast Report First Quarter 2018 Colliers International 11

12 69 countries $2.7 billion in annual revenue 2.0 billion square feet under management 15,400 professionals and staff FOR MORE INFORMATION: André Walewski Executive Vice President CA License No RESEARCH DEPARTMENT: Lena Tutko Research Manager COLLIERS INTERNATIONAL SILICON VALLEY 450 West Santa Clara Street San Jose, CA USA colliers.com/siliconvalley $116 billion in total transaction value *All statistics are for 2017, are in U.S. dollars and include affiliates. About Colliers International Group Colliers International Group Inc. (NASDAQ: CIGI) (TSX: CIGI) is an industry-leading real estate services company with a global brand operating in 69 countries and a workforce of more than 12,000 skilled professionals serving clients in the world's most important markets. Colliers is the fastest-growing publicly listed global real estate services company, with 2017 corporate revenues of $2.3 billion ($2.7 billion including affiliates). With an enterprising culture and significant employee ownership and control, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting. Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 global outsourcing firms by the International Association of Outsourcing Professionals for 13 consecutive years, more than any other real estate services firm. Colliers has also been ranked the number one property manager in the world by Commercial Property Executive for two years in a row. For the latest news from Colliers, visit Colliers.com or follow us on and LinkedIn. colliers.com/siliconvalley Copyright 2018 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.