New Supply Increases Vacant Space

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1 Research & Forecast Report SAN JOSE SILICON VALLEY Q New Supply Increases Vacant Space > > There is now more than 5.6 million square feet of commercial space under construction in the Silicon Valley > > Total available space has increased 21.2 percent year-over-year for all product types combined > > 4.2 million square feet of improved space came onto the market during the third quarter of 2017 The third quarter of the year came to a close and the Silicon Valley economy continued to move forward yet at somewhat of a slower pace. Job reports coming out indicate a slump in hiring as the unemployment rate climbed to 3.9 in August, the highest it has been year to date. During the third quarter of 2017 Silicon Valley start-ups raked in less funding in fewer deals. Total funding in the third quarter totaled $2.2 billion across 146 deals, down from $4.1 billion recorded in the second quarter, according to data from PricewaterhouseCoopers. Leasing activity was stable in the Silicon Valley during the third quarter, gross absorption for all product types totaled 5.0 million square feet. This amount of tenant demand is a 33.6 percent decrease quarter over quarter. During the third quarter, the Silicon Valley measured an increase in total occupancy, at 846,249 square feet of positive net absorption. Total availability sits just above 31 million square feet in the Silicon Valley, this translates to an overall availability rate of 9.1 percent, 141 basis points higher than one year earlier. Vacancy Vs. Availability Rates Silicon Valley All Products 10.00% 8.00% 6.00% Market Indicators - Santa Clara County Average Household Income Population Growth White Collar Jobs Market Trends Relative to prior quarter Q Q4 2017* Vacancy Net Absorption Construction Rental Rate *Projected $145,553 Summary Statistics Q Silicon Valley All Products Previous Quarter Current Quarter Overall Vacancy Rate 6.08% 6.36% Net Absorption 2,701, ,249 Construction Completed 3,447,606 2,337,391 Under Construction 6,716,422 5,618,133 Office Asking Rents* $4.40 FS $4.33 FS R&D Asking Rents* $2.04 NNN $2.11 NNN Industrial Asking Rents* $1.13 NNN $1.13 NNN Warehouse Asking Rents* $0.94 NNN $0.95 NNN *Asking Rents Reported Monthly 9.75% % 4.00% 2.00% 0.00% Economic Indicators Previous Quarter Current Quarter Total VC Funding $4.1 Billion $2.2 Billion Total Number of Deals Unemployment Rate 3.0% 3.9% Availability Rate Vacancy Rate Overall availability increased 63 basis points to 9.1% during the third quarter, while vacancy increased 28 basis points to 6.4%

2 Office > > Leasing activity measured 3.0 million square feet during the third quarter of > > The Silicon Valley s office market recorded its twenty-first consecutive quarterly occupancy gain during the third quarter of > > Total availability sits at 12.2 percent, up 257 basis points from one year earlier. During the third quarter of 2017 office activity was steady in the Silicon Valley, registering a total of 3.0 million square feet of gross absorption. With the strong demand measured during the third quarter of the year, gross absorption year to date totals 9.3 million square feet in the Silicon Valley office market. In only three quarters the office market has surpassed the 7.9 million square feet of demand measured in all of As anticipated, the Silicon Valley office market recorded another occupancy gain during the third quarter, measuring 1.4 million square feet. This is the twenty-first straight quarter that the office market has recorded positive net absorption, bringing the total occupancy gain in the Valley to more than 15.8 million square feet over the five plus year period of continued growth. The most noteworthy move-in during the third quarter of the year was Palo Alto Networks, as their newly constructed headquarters reached completion in August. The network security company preleased approximately 940,000 square feet from Menlo Equities back in Despite the positive net absorption measured during the third quarter, the Silicon Valley office market measured an increase in vacancy. This is largely due to new sublease space coming to the market. Total vacant sublease space increased from 1.7 million square feet to 2.2 million during the third quarter, a 23.1 percent increase quarter over quarter. Total available space in the Silicon Valley office market measures 10.9 million square feet. This amount of space translates to an overall availability rate of 12.2 percent, up 257 basis points from one year earlier when the availability rate stood at 9.6 percent. Currently more than 5.1 million square feet of office space is under construction, with total potential development reaching more than an astounding 70.0 million square feet in the form of proposed developments. Speculative office space currently under construction totals 2.2 million square feet, with 1.9 million of that unspoken for, the availability rate for spec development stood at just over 84 percent at the close of the third quarter. New completions during the quarter included Palo Alto Network s new headquarters totaling over 940,000 square feet in Santa Clara as well as 1001 Shoreline, a 132,000 square foot office building fully leased to Google in Mountain View. Weighted average asking rates for office space in the Silicon Valley measured a decrease during the third quarter of the year. Closing the period at an average of $4.33 per square foot, full service, this is a 5.9 percent increase year over year. Historical Office Vacancy 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Office Availability Rates Select Silicon Valley Cities Palo Alto Mountain View Sunnyvale Santa Clara West Valley San Jose Morgan Hill 6.1% 5.4% 5.3% 7.6% 14.6% 13.6% 24.8% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Office Availability Breakdown by Size Range 17% 9% 8% 36% 30% Historical Average = 12.5% 3,000-5,000 5,001-10,000 10,001-20,000 20,001-50,000 50,001-99,999 2 Silicon Valley Research & Forecast Report Third Quarter 2017 Colliers International

3 SAN FRANCISCO BAY FREMONT 680 Select Colliers Transactions Office Lease Activity MILPITAS TeleNav, Inc 4655 Great America Parkway, Santa Clara 280 PALO ALTO MT. VIEW ,635 Hologic Corporation SUNNYVALE 2520 Mission College Blvd, Santa Clara LOS ALTOS SANTA CLARA 14, CUPERTINO/ SARATOGA SAN JOSE 87 Whitehat Security 1741 Technology Drive, San Jose 28,930 CAMPBELL/ LOS GATOS Lumenis Inc 2077 Gateway Place, San Jose 13,573 MORGAN HILL/ GILROY Sensiba San Filippo LLP 181 Metro Drive, San Jose 12,611 Select Colliers Transactions - Office Sale Activity PROPERTY ADDRESS SIZE SELLER BUYER Tannery Way, Santa Clara 940,564 Menlo Equities LLC CBRE Global Investors 237 Moffett Park Drive, Sunnyvale 265,200 Four Corners Properties & Rockwood Capital Google N 1st Street, San Jose 264,964 Pure Blue Investment, LLC, NDR Development LLC & RVPR, LLC Fang Holdings 2025 Gateway Place, San Jose 158,332 Westport Capital Partners LLC Angus Group Silicon Valley Research & Forecast Report Third Quarter 2017 Colliers International 3

4 R&D > > Total leasing activity decreased 47.8 percent during the third quarter of the year to 1.08 million square feet. > > The R&D availability rate sits at 10.8 percent, up 100 basis points from one year earlier. > > The Silicon Valley R&D sector measured an occupancy loss during the third quarter. The Silicon Valley R&D sector measured subdued activity during the third quarter of Totaling 1.08 million square feet of gross absorption, this is down 47.8 percent from the 2.08 million square feet recorded during the second quarter of Tenant demand in the R&D market has measured less than 2.0 million square feet in six out of the last eight quarters, which is trending below the ten year average of 2.2 million square feet of quarterly demand. As tenant demand decreased during the quarter, so did occupancy levels. The Silicon Valley R&D market measured a 482,959 square foot decline in total occupancy during the third quarter of the year, following a modest gain in occupancy during the second quarter. This is also the highest quarterly occupancy loss measured year to date, bringing net absorption into the red for the year. On the supply side, the pipeline of pre-improved R&D space that came on the market during the third quarter decreased 12.1 percent from totals measured during the second quarter, to 1.5 million square feet. This marks the fourth consecutive quarter that the R&D tenants in the Silicon Valley have kicked back less space to the market quarter over quarter. Total available space in the Silicon Valley R&D market tallies 16.7 million square feet. This amount of space translates to an overall availability rate of 10.8 percent, up 100 basis points from one year earlier. Sublease space in the R&D sector accounts for 19.3 percent of total availability, this is an increase from the third quarter of 2016, when sublease space accounted for 17.2 percent of total available supply. The largest new deals signed for R&D space during the second quarter were Boehringer Ingelheim inking a deal for a 217,962 square foot expansion in Fremont and Renesas Electronics America, Inc. commiting to an 89,944 square foot lease on Murphy Ranch Road in Milpitas. Electronic Interface Company, Inc also inked a deal for 43,182 square feet of R&D space on San Ignacio Avenue in San Jose during the third quarter of the year. Historical R&D Vacancy 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% R&D Availability Rates Select Silicon Valley Cities Mountain View Sunnyvale Santa Clara San Jose Milpitas Fremont Morgan Hill 3.2% 5.2% 5.9% 12.5% 14.1% 13.3% 19.4% 0.0% 5.0% 10.0% 15.0% 20.0% R&D Availability Breakdown by Size Range 8% 8% 8% Historical Average = 12.6% 37% 5,000-20,000 20,001-40,000 40,001-60,000 Starting rates for deals completed measured an uptick during the third quarter of Average starting rates recorded during the third quarter topped out at $2.01 per square foot, NNN, up 9.8 percent from the previous quarter. Weighted average asking rates for R&D space in the Silicon Valley total $2.11 per square foot, NNN, up 9.6 percent year over year. 16% 23% 60,001-80,000 80, , ,001 and Above 4 Silicon Valley Research & Forecast Report Third Quarter 2017 Colliers International

5 SAN FRANCISCO BAY FREMONT 680 Select Colliers Transactions R&D Lease Activity Ball Screws & Actuators Co. Inc Kato Road, Fremont MILPITAS 38,783 PALO ALTO 280 MT. VIEW 237 NuvoSun 1565 Barber Lane, Milpitas SUNNYVALE LOS ALTOS SANTA CLARA 102,668 CUPERTINO/ SARATOGA 85 SAN JOSE 87 Trimble Navigation 510 De Guigne Drive, Sunnyvale 75,093 CAMPBELL/ LOS GATOS Trimble Navigation 935 Stewart Drive, Sunnyvale 63,781 MORGAN HILL/ GILROY CoAdna Photonics, Inc. 2 Stewart Drive, Sunnyvale 19,975 Select Colliers Transactions - R&D Sale Activity PROPERTY ADDRESS SIZE SELLER BUYER 250 Caribbean Drive, Sunnyvale 36,324 TA Associates Deerfield Realty Corporation Woodview Avenue, Morgan Hill 20,922 Cochrane Business Ranch Kellogg Family LLC Silicon Valley Research & Forecast Report Third Quarter 2017 Colliers International 5

6 Industrial > > Leasing activity measured 480,953 square feet during the third quarter of > > Occupancy levels were relatively flat during the third quarter in the Silicon Valley industrial sector. > > New vacant space coming back to the market measured 560,099 square feet during the third quarter. > > Overall availability in the industrial market remained below 4.0 percent for the tenth consecutive quarter. It was a modest quarter for the Silicon Valley s industrial sector. Quarterly gross absorption tallied 480,953 square feet and new leasing and user activity was down 16.9 percent from the previous quarter, however this is up 15.0 percent from the same period one year earlier. The pipeline of pre-improved rollover space was relatively flat quarter over quarter. The amount of space kicked back by tenants decreased 1.7 percent during the quarter to measure 560,099 square feet of space that found its way back to the market. This marks the second consecutive quarter that rollover space has measured a quarterly decline. Despite this decline in pre-improved space that came back to the market, the industrial sector closed the third quarter with negative net absorption of just 79,146 square feet. As anticipated, it will be tough for the industrial market to see large occupancy gains quarterover-quarter if the amount of available space on the market remains at historically low levels. Total available space in the Silicon Valley industrial market climbed 10.6 percent quarter over quarter, jumping from 1.9 million square feet available to just over 2.1 million square feet of available space at the close of the quarter. This translates to an overall availability rate of just 3.4 percent which remains at historic lows in the Silicon Valley s industrial sector. There were three new deals signed in the Silicon Valley industrial market during the third quarter that were greater than 20,000 square feet. Year to date, no new industrial deals greater than 82,000 square feet have been inked. Notable new transactions recorded during the third quarter of the year included a 44,130 square foot user purchase by Google on Terminal Boulevard in Mountain View, followed by PMP Tech, Inc s lease of 19,000 square feet on Ringwood Avenue in San Jose. Weighted average asking rates remained flat quarter over quarter in the industrial sector. At the close of the quarter, average asking rates for industrial space tallied at $1.13 per square-foot, NNN, up 4.0 percent from one year earlier. When comparing average starting rates for deals closed, the weighted average starting rents measured during the third quarter were $1.23 per square foot, NNN. Starting rates measured an increase quarter over quarter and were up 8.8 percent from those recorded during the second quarter of the year. Historical Industrial Vacancy 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Industrial Availability Rates Select Silicon Valley Cities Campbell Sunnyvale Santa Clara San Jose Milpitas Fremont Morgan Hill 1.4% 1.6% 2.2% 2.5% 2.4% 4.1% 4.8% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Industrial Availability Breakdown by Size Range 18% 70% Historical Average = 5.8% 3% 5% 5,000-20,000 4% 20,001-40,000 40,001-60,000 60,001-80,000 80, , ,001 and Above 6 Silicon Valley Research & Forecast Report Third Quarter 2017 Colliers International

7 SAN FRANCISCO BAY FREMONT 680 Select Colliers Transactions Industrial Lease Activity Clay Hudson MILPITAS 398 Railroad Court, Milpitas 14,400 PALO ALTO 280 MT. VIEW 237 NVIDIA LOS ALTOS SUNNYVALE SANTA CLARA 3500 Thomas Road, Santa Clara 9, CUPERTINO/ SARATOGA SAN JOSE 87 Esanda Networks, LLC 894 Commercial Street, San Jose 10,000 CAMPBELL/ LOS GATOS WorldPac 1500 Dell Avenue, Campbell 23,278 MORGAN HILL/ GILROY Noel Technologies 1510 Dell Avenue, Campbell 22,925 Select Colliers Transactions - Industrial Sale Activity PROPERTY ADDRESS SIZE SELLER BUYER 1330 Memorex Drive, Santa Clara 9,600 Simer International, LLC 1200 Partners LLC Silicon Valley Research & Forecast Report Third Quarter 2017 Colliers International 7

8 Warehouse > > Leasing activity measured 478,154 square feet of new tenant demand during the third quarter. > > Net absorption was negative for the second consecutive quarter in the Silicon Valley warehouse market. > > Total available warehouse space measures 1.6 million square feet in the Silicon Valley. Activity was relatively strong in the Silicon Valley warehouse market during the third quarter. Gross absorption totaled 478,154 square feet of new tenant activity, this is up 73.4 percent from the 275,700 square feet of tenant demand recorded during the second quarter. Total demand year to date now measures just over 1.2 million square feet. Despite the increase in new demand, the warehouse market measured 60,374 square feet of negative net absorption during the quarter, making this the second consecutive quarter in which warehouse tenants have kicked back space to the market. During the third quarter the warehouse market measured a decrease in the levels of pre-improved space coming onto the market. Down 3.0 percent from the second quarter, warehouse tenants in the Silicon Valley kicked back 538,528 square feet of vacant space to the market. Currently in the Silicon Valley, only 1.6 million square feet of space remain available in the warehouse sector, up 57.5 percent from total availability recorded during the third quarter of The overall availability rate now stands at 4.0 percent in the Silicon Valley up 154 basis points from one year earlier. Tenants looking for warehouse space in the Silicon Valley have limited options to choose from. At the close of the third quarter there were only thirty-two warehouse spaces available. More than 75 percent of the spaces available offer tenants less than 60,000 square feet. Leaving larger warehouse users only seven spaces to choose from in the search for new space. Nine new deals were inked for warehouse space during the third quarter, with an average deal size of 53,128 square feet, up from the average deal size of 27,570 square feet signed during the second quarter. With limited available warehouse options throughout the Silicon Valley at the close of the third quarter, tenants are restricted in their search for new space and may begin looking in neighboring regions. The largest new deal signed during the quarter was Apple s sublease of 149,758 square feet on Fremont Boulevard, followed by DGA Services, who committed to 120,835 square feet on Osgood Road in Fremont. Historical Warehouse Vacancy 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Warehouse Availability Rates Select Silicon Valley Cities Sunnyvale Santa Clara San Jose Milpitas Fremont Morgan Hill Gilroy 0.0% 0.3% 0.0% 2.6% 2.7% 4.7% 12.9% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% Warehouse Availability Breakdown by Size Range 6% 15% 6% 9% 17% Historical Average = 6.1% 5,000-20,000 20,001-40,000 40,001-60,000 60,001-80,000 80, ,000 With limited supply, weighted average asking rates for warehouse space are beginning to increase throughout the Silicon Valley. At the close of the second quarter, average asking rates for warehouse space were $0.95 per square-foot, NNN, up 6.6 percent year over year. 47% 100,001 and Above 8 Silicon Valley Research & Forecast Report Third Quarter 2017 Colliers International

9 SAN FRANCISCO BAY FREMONT 680 Select Colliers Transactions Warehouse Lease Activity MILPITAS DGA Services Osgood Road, Fremont 280 PALO ALTO MT. VIEW ,835 LOS ALTOS SUNNYVALE SANTA CLARA Triple Play Services, Inc Christy Street, Fremont 75, CUPERTINO/ SARATOGA SAN JOSE 87 DHL International 450 Trimble Road, San Jose CAMPBELL/ LOS GATOS 82,800 Applied Materials, Inc Walsh Avenue, Santa Clara 150,480 MORGAN HILL/ GILROY Select Colliers Transactions - Warehouse Sale Activity PROPERTY ADDRESS SIZE SELLER BUYER 610 E Gish Road, San Jose 44,980 Airdrome Orchards Greenwaste Recovery Silicon Valley Research & Forecast Report Third Quarter 2017 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 1,733,025 85,453 46,119 62,218 43, , % 12.9% (17,561) 207, ,815 $4.39 B 2,247,431 86,341 6,669 72,609 20, , % 6.0% (16,719) (30,278) - - $3.45 C 235,572 12,658 4, , % 5.0% (6,500) (7,044) - - $3.92 Total 4,216, ,452 56, ,827 64, , % 8.7% (40,780) 170, ,815 $4.11 CUPERTINO / SARATOGA A 4,299,983 31,355 42,768 29,660 35, , % 3.2% 10,137 3,110, $4.47 B 3,017,596 63,395 40,274 44,987 8, , % 5.2% (1,555) 7, $3.83 C 163,010 1,301-2,000-3, % 0.8% (982) 4, $- Total 7,480,589 96,051 83,042 76,647 44, 299, % 4.0% 7,600 3,122, $4.17 FREMONT / MILPITAS A 884, ,770 7,609 42,669 2, , % 17.8% 5,092 54, $2.35 B 1,768,290 91,156 1,825 28,081 18, , % 8.5% 10,782 52, $2.39 C 581,654 8, ,147 10, % 2.2% 4,650 4, $1.65 Total 3,234, ,189 9,434 70,750 23, , % 9.9% 20, , $2.36 GILROY / MORGAN HILL A 418,491 12, , % 2.7% (1,565) (3,592) - - $2.30 B 397,907 5,660-1,500-7, % 1.7% 1, $1.82 C 289,137 23, ,031 28, % 8.0% - 3, $2.00 Total 1,105,535 41,080-1,500 5,031 47, % 3.8% (265) $2.11 LOS ALTOS A 295,515 31, , % 11.7% 2,774 (6,581) - - $7.42 B 510,397 37,838-6,646 15,007 59, % 12.2% (125) (346) - - $4.83 C 382,892 7,615-4,652-12, % 5.6% (434) (2,093) - - $4.96 Total 1,188,804 77,171-11,298 15, , % 9.9% 2,215 (9,020) - - $5.81 MOUNTAIN VIEW A 4,489, , , ,231 52, , % 7.1% 126, , , ,918 $7.32 B 1,314,133 57,342 9,508 30,449 9, , % 7.7% (8,955) (3,572) - - $5.58 C 512,873 2,391 5,800 6,342 10,850 25, % 3.2% (5,800) (2,547) - - $3.68 Total 6,316, , , ,022 72, , % 6.9% 111, , , ,918 $7.09 PALO ALTO A 5,010,558 65,857 12,348 92, , , % 7.5% 1, , ,376 $8.49 B 4,342,224 71,089 26,274 63,196 98, , % 7.0% (18,254) (17,385) - - $6.65 C 1,267,705 12,018-10,231 12,492 34, % 3.4% 3,111 13, $7.31 Total 10,620, ,964 38, , , , % 6.8% (13,377) 237, ,376 $7.91 SAN JOSE A 14,572,751 1,658, , , ,758 2,488, % 17.2% (9,121) (26,783) - 1,273,798 $3.70 B 9,759, ,382 63, ,142 64, , % 9.2% (109,226) (79,311) - - $3.04 C 3,922, ,436 4,112 78,226 1, , % 9.4% (42,767) (41,921) - - $2.29 Total 28,255,586 2,575, , , ,955 3,856, % 13.4% (161,114) (148,015) - 1,273,798 $3.50 SANTA CLARA A 9,966,383 1,531,917 1,090, , ,487 3,026, % 35.5% 1,295, ,081 1,379, ,000 $4.11 B 4,055, ,679 24,924 79,305 42, , % 11.9% (14,852) (54,508) - - $3.16 C 637,322 86,859-1,165 2,689 90, % 14.7% (6,220) (19,300) - - $2.12 Total 14,659,597 1,986,455 1,115, , ,184 3,631, % 27.3% 1,273, ,273 1,379, ,000 $3.94 SUNNYVALE A 10,787, ,967 19, ,221 76, , % 3.2% 272, , ,316 1,478,496 $5.26 B 1,553, ,220 6,283 8,832 11, , % 14.1% (4,639) (181,079) - - $3.88 C 490, % 0.3% 720 1, $2.60 Total 12,832, ,907 25, ,053 88, , % 4.4% 268, , ,316 1,478,496 $4.95 SILICON VALLEY TOTALS A 52,458,203 3,793,936 2,009,447 1,105, ,164 7,691, % 14.2% 1,685,193 4,651,350 2,236,017 5,131,403 $4.56 B 28,967,577 1,588, , , ,562 2,630, % 8.7% (162,243) (305,707) - - $3.66 C 8,483, ,466 13, ,616 34, , % 7.0% (54,222) (46,732) - - $2.70 Total 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 QUARTERLY COMPARISON AND TOTALS 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 $4.35 4Q-16 82,861,783 5,143, ,462 1,041,630 1,782,172 8,810, % 9.6% 501,669 1,682, ,665 10,607,669 $4.23 3Q-16 82,403,798 5,058, ,639 1,100,560 1,058,077 7,914, % 10.3% 610,155 1,180, ,694 9,023,145 $ Silicon Valley Research & Forecast Report Third Quarter 2017 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 61,212-69,277 20, , % 9.2% - 27, $2.53 IND 995,329 25, , % 3.5% - (19,062) - - $2.50 TOTAL 2,373,416 86,528-69,277 20, , % 6.8% - 8, $2.52 CUPERTINO R&D 3,098,845 26, , % 0.5% (9,926) 273, $3.34 TOTAL 3,098,845 26, , % 0.5% (9,926) 273, $3.34 FREMONT R&D 20,787,854 1,890,259 20, , ,242 2,759, % 13.2% (12,005) 13, $1.57 IND 9,926, ,963 25, , , % 2.2% (63,434) (64,972) - - $0.94 WSE 8,446, ,000-27, % 2.6% 149,758 8, $- TOTAL 39,160,253 2,104,222 46, , ,242 3,193, % 8.1% 74,319 (42,278) - - $1.52 GILROY R&D 372,117 27,042-89, , % 31.2% (8,221) (6,111) - - $0.92 IND 1,813,262 15, , % 0.8% (2,400) $1.10 WSE 3,812, , , % 0.0% $0.95 TOTAL 5,998,284 42, , , % 2.2% (10,621) (5,511) - - $0.94 LOS GATOS R&D 337, % 0.0% - 1, $- TOTAL 337, % 0.0% - 1, $- MILPITAS R&D 13,744,534 1,253,246 43,264 1,289,589 83,363 2,669, % 16.0% (43,070) 45, $1.83 IND 2,943,652 1,078-50,891 12,858 64, % 2.1% - 10, ,610 $0.95 WSE 4,715, , , , , % 8.5% (115,999) (115,999) - - $1.07 TOTAL 21,403,476 1,370,323 43,264 1,703, ,394 3,341, % 12.4% (159,069) (59,986) - 450,610 $1.56 MORGAN HILL R&D 2,874,930 90, , % 3.7% 15,998 (11,987) - - $0.87 IND 2,374,297 51,683-4,104-55, % 2.1% (6,958) 46, $1.14 WSE 482, % 0.0% TOTAL 5,731, ,174-4, , % 2.7% 9,040 34, $0.94 MOUNTAIN VIEW R&D 13,955, , , , , , % 4.0% (107,297) (131,434) - - $4.05 IND 1,741,468 71, - 30,150 4, , % 5.6% (31,516) (24,169) - - $2.56 TOTAL 15,697, , , , , , % 4.2% (138,813) (155,603) - - $3.87 PALO ALTO R&D 13,737,412 36,154 88, , , , % 3.1% (18,885) (90,004) - 36,120 $6.20 TOTAL 13,737,412 36,154 88, , , , % 3.1% (18,885) (90,004) - 36,120 $6.20 SAN JOSE R&D 42,463,474 4,319, , , ,710 5,980, % 13.8% (287,289) (93,040),374 - $1.90 IND 24,651, ,474 87, ,603 39,838 1,176, % 4.4% (59,314) 4, $0.92 WSE 16,859, ,885 32, ,831 93, , % 3.2% (94,133) (193,313) - - $0.84 TOTAL 83,974,454 5,592, , , ,152 7,943, % 8.9% (440,736) (281,502),374 - $1.66 SANTA CLARA R&D 19,139,217 1,755, ,341 86, ,807 2,386, % 11.9% (12,815) (124,005) - - $2.15 IND 11,424,339 67,676 19,000 95, , % 1.6% (5,263) (30,881) - - $1.26 WSE 3,354,755 22,000 25,000 41,362-88, % 2.9% - (40,969) - - $1.00 TOTAL 33,918,311 1,845, , , ,807 2,656, % 7.5% (18,078) (195,855) - - $2.11 SUNNYVALE R&D 22,845, , , , ,334 1,351, % 5.6% 551 (113,109) - - $2.73 IND 6,162,125 60,225-23,033-83, % 1.1% (4,831) (18,987) - - $2.25 WSE 1,672, % 0.0% - 56, $- TOTAL 30,680, , , , ,334 1,434, % 4.4% (4,280) (75,323) - - $2.71 SILICON VALLEY TOTALS R&D 154,734,729 10,409,647 1,457,604 3,140,307 1,787,721 16,795, % 10.1% (482,959) (207,729),374 36,120 $2.11 IND 63,220,177 1,469, , ,527 57,496 2,178, % 3.1% (79,146) (16,102) - 450,610 $1.13 WSE 39,523, ,884 57, , ,777 1,611, % 3.2% (60,374) (284,558) - - $0.95 TOTAL 257,478,522 12,379,628 1,646,586 4,492,318 2,066,994 20,585, % 7.4% (622,479) (508,389), ,730 $1.92 QUARTERLY COMPARISON AND TOTALS 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 4Q ,798,490 12,156,427 1,102,412 3,543,600 2,056,995 18,859, % 7.1% (716,222) (7,402) - 1,261,992 $1.83 3Q ,471,062 11,377,688 1,293,887 3,632,197 1,785,892 18,089, % 6.7% (115,732) 708, , ,067 $1.77 Silicon Valley Research & Forecast Report Third Quarter 2017 Colliers International 11

12 Understanding Absorption Colliers uses several measurements to track market conditions and deal flow. While related, the formulas to arrive at these measurements differ. Using the results of the most recent quarter, here is how Colliers measures change in availability, net absorption and effective net absorption. Change in Availability: This measurement is simply the difference between the amounts of space available at the end of one period to the next. The table below shows that total available space decreased by 1,408,401 square feet in the year s third quarter. Note that change in availability includes adjustments for space that is taken off the market. Space taken off the market is not a factor in net absorption measurements. Total Available end of 2Q17 34,363,281 Plus: Vacant & Occupied Space that came available in 3Q17 4,490,168 Plus: New Shell added in 3Q17 2,337,391 2Q17 Available + Newly Available in 3Q17 41,190,840 Less: 3Q17 Gross Absorption -5,050,311 Less: 3Q17 Adjustments/Taken off Market -3,185,649 Total Available end of 3Q17 32,954, Net Absorption: Net absorption measures the change in occupied space from one period to the next. In this measurement, it is important to distinguish that a building may be available, but not vacant (often the case in a sublease situation, for example). Therefore, occupancy is not reduced (negative net absorption) until the space is vacated, and sometimes that does not happen until the space is leased, creating a net absorption wash for the deal and for that particular period. New Vacant Space that came available 3Q17-680,913 Previously Available Space that was vacated in 3Q17-3,523,149 3Q17 Total Vacant added (Occupancy Loss) -4,204,062 3Q17 Gross Absorption (occupancy gain) 5,050,311 3Q17 Net Absorption (change in Occupancy) 846,249 Effective Net Absorption: In 2003, Colliers created a measurement of effective net absorption. Effective net absorption uses the same formula as the net absorption formula, except that it treats any space that comes available as if it is vacant, whether it is or it is not. The purpose of the measurement is to get a better real time gauge of occupancy flow in and out of the market, acknowledging that space that is available for lease is likely to be vacated shortly and underutilized presently. 396 offices in 68 countries on 6 continents United States: 153 Canada: 29 Latin America: 24 Asia Pacific: 78 EMEA: 111 $2.6 billion in annual revenue* 2.0 billion square feet under management 15,000 professionals and staff * All statistics are for 2016 and include affiliates New Vacant Space that came available 3Q17-680,913 Occupied Space that came available 3Q17-3,809,255 3Q17 Total Available added -4,490,168 3Q17 Gross Absorption 5,050,311 3Q17 Effective Net Absorption 560,143 FOR MORE INFORMATION Andre Walewski CEO & President San Francisco East Bay Silicon Valley Northern California Central Valley Nevada andre.walewski@colliers.com tel CA License No Mike Pham Senior Research Analyst San Jose Silicon Valley mike.pham@colliers.com tel Colliers International San Jose 450 West Santa Clara Street San Jose, CA United States tel fax CA License No Copyright 2017 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.