VOIT REPORTS POSITIVE ABSORPTION FOR OFFICE AND LOW INDUSTRIAL VACANCY IN ORANGE COUNTY Q1 MARKET REPORTS

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1 Contact: Jerry Holdner Voit Real Estate Services (949) VOIT REPORTS POSITIVE ABSORPTION FOR OFFICE AND LOW INDUSTRIAL VACANCY IN ORANGE COUNTY Q1 MARKET REPORTS Orange County, Calif., (April 10, 2013) In the first quarter of 2013, the Orange County office market posted nearly 700,000 square feet of positive net absorption, giving the market approximately 2.4 million square feet of positive absorption for the last four quarters, according to the First Quarter Market Report from Voit Real Estate Services. In addition, the industrial market in Orange County posted one of the lowest vacancy rates seen in 15 quarters, finishing the quarter at 4.52 percent. These are encouraging numbers across the board, and we anticipate that this improvement will continue steadily throughout 2013, says Jerry Holdner, Vice President of Market Research at Voit. The big news is that lease rates have likely hit bottom in the office market, where Class B office product is now the most desired space and that low vacancy and availability are driving up value and rental rates in the industrial market.

2 Class B Office Space Fuels Activity in Orange County Voit s Q market report indicates ongoing signs of recovery in the Orange County office market, which ended the quarter at percent vacancy, a substantial decrease from the previous year s rate of percent and significantly down from both the Great-Recession peak of nearly 18 percent in Q and the market high of 23 percent recorded in Availability followed the same trend, ending the first quarter at percent - a decrease of nearly one full percentage point when compared to Q Class B space is fueling the activity in Orange County, according to Voit s report, which indicates that Class B space had the greatest amount of positive absorption in the first quarter of 2013, coming in at over 770,000 square feet. Companies continue to expand in Orange County, which is bringing ongoing stability to the market, explains Holdner, who notes that Allergan, CoreLogic, Western Digital, LA Fitness, Greenlight Financial and Gateway One all expanded in Research-oriented businesses, including IT, defense, medical and alternative energy companies, are most likely to lead the charge of positive absorption over the next few years, comments Holdner. In addition to improving occupancy, the Orange County office market also demonstrated encouraging average lease rate numbers. Office rents have finally flattened, and we are beginning to see concessions back off, says Holdner. Both are strong indications that we have reached a bottom in the downward trend of asking office lease rates; we anticipate that rates will begin to increase in the second half of 2013.

3 The average asking lease rate per month per square foot in the Orange County office market was $1.88 at the end of 2013 s first quarter, unchanged since Q In addition, some construction projects began to resurface in the Orange County office market recently, and Voit s report indicates that the total office space under construction came in at just over one million square feet for the first quarter of the year. Voit s report identifies two build-to-suits as the most notable construction projects in the office market during the quarter, including a 469,000 square-foot project for Hyundai in Fountain Valley, as well as a 479,800 square-foot project for PIMCO at Fashion Island in Newport Beach. Overall, the future appears to be bright for the office market in Orange County. As we move into 2013, we expect the amount of vacant and available space to continue to decrease, which will prompt continued positive absorption and an increase in lease rates, says Holdner. Increasing Occupancy and Decreasing Supply Drives Industrial Values Up The Orange County industrial market continued to display promising numbers in the first quarter of 2013, posting over 365,000 square feet of positive net absorption during the quarter. Overall, the Orange County industrial market has posted over five million square feet of positive absorption since Q2 of 2010, says Holdner. We anticipate that net absorption will continue its positive trend in Both vacancy and availability continued trending downward trend in Q1, as the 4.52 percent vacancy rate seen at the close of the quarter was a decrease of 5.04 percent when compared to Q In addition, availability of direct/sublease space

4 being marketed ended the first quarter at 6.62 percent, a decrease of percent from 2012 s Q1 rate of 7.90 percent. As net occupancy continues to improve and availability declines, lease rates will continue to rise, which is a strong indication of future stability, explains Holdner. The average asking triple-net industrial lease rate checked in at $.58 per square foot per month, one cent higher than the previous quarter and three cents higher than the $.55 rate seen in Q We are forecasting that lease rates will continue to rise, ending 2013 at around $.61 per square foot per month, predicts Holdner. As lease rates rise, sale prices are also ticking up, notes Holdner, who attributes this trend to the diminishing supply of industrial product for sale in Orange County, particularly in buildings smaller than 100,000 square feet. Currently, only around 2.5 percent of the inventory in the Orange County industrial market is available for sale. This lack of supply will continue to place upward pressure on pricing going forward, he explains. The average asking sales price in the first quarter of 2013 was $ per square foot, a 1.20 percent increase from the previous year s price of $ Overall, we continue to be cautiously optimistic about the Orange County market, says Holdner. We continue to see improvement in both the office and industrial markets, and we anticipate positive gains moving forward, provided job creation continues and consumer confidence stabilizes. About Voit Real Estate Services Voit Real Estate Services is now a 10 office commercial real estate firm that, through its brokerage and real estate management professionals working together,

5 provides strategic property solutions tailored to clients' needs. Combining 40 years of expertise in brokerage, investment advisory, financial analysis, market research, real estate management and tenant advisory, Voit provides clients with forward looking strategiesthat create value for their assets and portfolios. Voit is a privately held, debt-free firm that has successfully navigated numerous market cycles since 1971 and currently employs more than 250 people. Voit has owned, developed and managed over 53 million square feet of commercial real estate, participated in $1.4 billion of construction projects and completed over $36 billion in brokerage transaction volume. Further information is available at # # #