2020 Office Update...2020 Office Update Alexis Garrett. Progress, progress! Hilton Home2Suites ... Sacramento CBD location. These Trophy assets tower above Sacramento’s metropolitan

2

2020 Office Update Alexis Garrett

Progress, progress!

HiltonHome2Suites

©2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof. Jones Lang LaSalle Brokerage, Inc. Real Estate License #: 01856260

The RailyardsTwo office buildings with more than 300,000 SF of office space, ground floor retail and restaurant space, plus an urban plaza. Construction begins 2020.

2555 Natomas Park Drive3-story 90,000SF LEED certified building with free 4/1,000 SF parking. Completion is planned for August 2019.

Waterfront PlaceOwned by CalSTRS, Waterfront Place is a will have 6 floors, totaling 150,000 square feet available in the Fall of 2022. Waterfront Place is a 17 story, 409,000 square foot, LEED® Platinum building located on West Sacramento’s dynamic waterfront.

301 Capitol MallDeveloper CIM Group, in partnership with CalPERS, has proposed an 800,000 SF Class A high rise office development. It will feature ground floor retail, several floors of market rate apartments, parking and green space. Office floor plates ±25,000 RSF. Projected completion date is 2021/2022.

1800 3rd StreetOwned by CalPERS . This 4-story building has ±200,000 SF available for lease.

400 R StreetOwned by CIM and CalPERS. The first floor is available for lease ±35,000 SF.

4

Fundamentals San Francisco Silicon Valley Oakland Sacramento

Inventory 78,743,933 s.f. ▲ 74,709,272 s.f. ▲ 12,030,944 s.f. ▲ 44,245,603 s.f. ▲

YTD Net Absorption 2,718,764 s.f. ▲ 5,277,433 s.f. ▲ 262,843 s.f. ▲ 771,051 s.f. ▲

QTD Net Absorption 374,419 s.f. ▲ 1,464,888 s.f. ▲ 187,738 s.f. ▲ 196,871 s.f. ▲

Under Construction 3,481,494 s.f. ▲ 5,629,720 s.f. ▲ 726,922 s.f. ▲ 90,000 s.f. ▲

Total Vacancy 5.2 % ▼ 11.6 % ▼ 11.5 % ▼ 12.1 % ▼

Total Vacant s.f. 4,094,684 s.f. 8,666,275 s.f. 1,383,558 s.f. 5,353,717 s.f.

Average Asking Rate $7.76 p.s.f $4.95 p.s.f $5.59 p.s.f $2.11 p.s.f

Northern California Market Fundamentals


© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. 5

Sacramento Class A Submarket Stats – Q4 2019

6

Sacramento Over the Last Decade

21.80% 21.80%22.50% 22%

19.40%18.40%

16%

13.20%12.20%

14.10%

12.10%15%13.50%

14.30%12.90%

18.70%

15.50%14%

11.60%

9.70%11%

6.30%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Sacramento Vacancy Rates

Sacramento Overall Vacancy Sacramento CBD Class A Vacancy


$2.05 $1.95

$1.85 $1.79 $1.86 $1.86 $1.92 $1.98 $1.99 $2.02 $2.11

$2.84 $2.73 $2.77 $2.70

$2.62 $2.59 $2.72

$2.88 $2.95 $3.03

$3.31

$2.20 $2.26 $2.33 $2.40 $2.48 $2.52

$2.60 $2.70

$2.79 $2.87

$2.96

$1.50

$1.70

$1.90

$2.10

$2.30

$2.50

$2.70

$2.90

$3.10

$3.30

$3.50

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Sacramento vs National Rent Growth

Sacramento Overall Sacramento Class A CBD US National Rent

7

Sacramento Skyline

1325JStreet

One Capitol Mall Meridian Plaza The Senator Emerald Tower 12th K Tower Esquire Plaza Wells Fargo Center Bank ofthe WestTower Plaza Five Fifty Five US Bank

Tower 770 L Street Renaissance Tower Capitol Place 925 L Street Park Tower

Address 1325 J St. 1 Capitol Mall 1415 L St. 1121-1123 L St. 300 Capitol Mall 1201 K St. 1215 K St. 400 Capitol Mall 500 CapitolMall

555 Capitol Mall 621 CapitolMall

770 L Street 801 K St. 915 L St. 925 L St. 980 9th St.

RBA (s.f.) 363,723 185,950 229,109 180,123 383,238 241,996 270,712 511,184 445,984 385,178 366,337 170,267 337,811 163,840 165,919 463,556

Percent leased 97.3% 98.9% 93.3% 96.2% 93.4% 99.2% 97% 96.5% 95.1% 95.1% 96.8% 95.7% 94.5% 95% 93.8% 93.9%

Yearbuilt/ renovated 1989 1992 2003 1924/1982 1984/1996 1989 1999 1992 2009 1970 2008 1984 1989 1988 1973 1991

The Skyline market for Sacramento is defined as the Trophy market, which is further defined as a top-tier Class A product, larger than 100,000 square feet in a centralized core Sacramento CBD location. These Trophy assets tower above Sacramento’s metropolitan market and are considered the premier business addresses in our region. The key indicators for inclusion or exclusion are based on product type, location and rent levels.

30

4.4 %Skyline Vacancy Rate

$3.63Direct average asking rent ($

p.s.f.)

Skylineanalysis

Occupied Direct vacant Future available


***All buildings under construction are state owned and occupied so they will not be reflected in our statistics as well as effect our skyline report.

1.6 MSF*Under construction

20

10

8

Aging Product and Supply Shortage

11

2

3

2

2

32

18

8

4

1

0 5 10 15 20 25 30 35

30,000 - 49,999

50,000 - 74,999

75,000 - 99,999

100,000 - 149,999

150,000 +

Number of Vacant Large Blocks –Greater Sacramento

Class B Large Blocks Class A Large Blocks

2

0

0

0

0

5

5

2

1

1

0 1 2 3 4 5 6

30,000 - 49,999

50,000 - 74,999

75,000 - 99,999

100,000 - 149,999

150,000 +

Number of Vacant Large Blocks –Downtown Sacramento

Class B Large Blocks Class A Large Blocks



10

Office Assets are Attracting out of Market Institutional Investors

$213 $171 $385

$187 $223

$618 $600

$1,240 $1,110 $1,145

$1,270

55

7287

98

115

160

135

205

171160

143

0

50

100

150

200

250

$100

$300

$500

$700

$900

$1,100

$1,300

$1,500

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Office Investment Over the Decade

Sales Volume Number of Transactions

Office investment volume has surpassed $1 billion for the fourth consecutive year.



Sacramento Commercial Real Estate is EvolvingLocation & Tenant Experience


What Want

Collaborative meeting areas

Onsitecafés

&retail

Outdoor gathering spaces

Break / gamerooms

Large, efficient

floorplates

Fitnessfacility

Natural light

Authenticity

Bike storage, showers

andlockers

Open, exposedceilings

Building conference

room

Central location / access to

transportation

Tenants

Renewal Options


Trends to Watch

TechnologyCoworking

14

Coworking total SF accounts for 1% of total inventory.

155,082 169,215 191,715224,337 239,784 259,784 287,484

336,535396,235

514,984550,000

646,146

10 1113

16 17

21

25

30

37

4649 50

0

10

20

30

40

50

60

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Co-Working Growth – Greater Sacramento

Total CoWorking SF Number of Locations


Thank you!

Documents

2020 Office Update...2020 Office Update Alexis Garrett. Progress, progress! Hilton Home2Suites ... Sacramento CBD location. These Trophy assets tower above Sacramento’s metropolitan