Current Market Trends in Commercial Real Estate on the Westside Tanasbourne

1
Current Market Trends in CommercialReal Estate
on the WestsideTanasbourne Sunset Corridor
Sub-Market

• Presented by
• Tim Parker
• Vice President
• Melvin Mark Brokerage Company

2

• BRIEF HISTORY OF THE SUB-MARKET

• 1999 2001
• Prior to the Tech Wreck
• Speculative developers add up to 1,000,000 sf of
  combined flex office space in one year
• Historical absorbtion rates had been in the
  300,000 sf range annually
• Major tenant types include call centers, telco
  switches and other back office financial centers

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• BRIEF HISTORY OF THE SUB-MARKET

• 2002 - 2006
• Vacancy grow to record highs over 35
• Vacancy reasons include
• Telco switch industry consolidates downward
• High tech moves light manufacturing off-shore
• New speculative space isnt leased
• Vacancy grows in existing flex office space
• Most speculative development comes to a stand
  still
• Tenant representation brokers use these factors
  for leverage to obtain better close-in lease
  rates
• Core developers sell to speculative value-added
  investors waiting for recovery

4

• BRIEF HISTORY OF THE SUB-MARKET

• 2007
• Absorbtion begins to take place as other core
  submarkets vacancy rates decline

5

• SNAP SHOT OF THE CURRENT MARKET

Flex Office Space Total RBA Vacancy Absorbtion R
ents Sunset/Hillsboro 6.3 million
20.80 106,207 sf 10.39 Total
Market Area 19.0 million 12.10 (2007)
485,353 sf 10.57 14.90
(2006) 24.10 (2003)
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• SNAP SHOT OF THE CURRENT MARKET

Industrial Warehouse Total RBA Vacancy Absorbtio
n Rents Sunset/Hillsboro 10.8 million
3.40 726,018 sf 5.40 Total Market
Area 124.0 million 6.10 (2007)
2,602,681 sf 5.41 8.90
(2006) 14.70 (2003)
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• SNAP SHOT OF THE CURRENT MARKET

Office Total RBA Vacancy Absorbtion Rents Sunset
/Hillsboro Class A 4.9 million
4.90 30,941 sf 19.38 Class B
3.4 million 24.90 -99,598 sf
17.69 Total Market Area 73.0 million
10.10 (2007) 1,017,684 sf 19.39
10.70 (2006) 14.30
(2003) Major Leases Farmers Insurance Call
Center lease former GM On-Star Center 104,000
sf Yahoo! Renews and expands current location
95,000 sf
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• BUILDING SALES

Average Sale Cost Per Square Foot Low 57/sf
High 134/sf Office
Cost/SF Total SF Sale Price SolarWorld
95.00/sf 419,158 sf
40 million E-Tech
57.98/sf 176,800 sf 10.25 million AmberGlen
Equastone 126.90/sf 535,238 sf 67.92
million AmberGlen 134.60/sf 210,625
sf 28.35 million Ronler Corp. Center
120.28/sf 157,138 sf 18.9 million
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• AVAILABLE LAND LAND PRICES

• Industrial land price range is 6.00/sf to
  8.00/sf
• Average industrial land price is 6.50/sf
• Intel land banks the balance of the major land
  in area
• There are less than 5 sites in the 40 to 50 acre
  range left
• Genetechs 75 acre purchase is the most recent
  major sale

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• SUMMARY

• Lows
• When close-in markets have high vacancy rates
  the Sunset Corridor is the first to empty and
  last to fill up
• Driving distance and traffic delays
• Available land for additional major corporations
  to locate or expand is extremely limited

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• SUMMARY

• Highs
• When the market is tight its a great place to
  be if you are already in the market
• Washington County and Hillsboro are possibility
  the most pro-business and make the process for
  expansion as reasonable as possible
• Typically rates are less expensive for leasing
  or buying space as compared to the core market

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Current Market Trends in CommercialReal Estate
on the WestsideTanasbourne Sunset Corridor
Sub-Market

• Presented by
• Tim Parker
• Vice President
• Melvin Mark Brokerage Company