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Q1 2014 | OFFICE

WALNUT CREEK | NORTH I-680 CORRIDOR

RESEARCH & FORECAST REPORT

Market Fundamentals
Improve Across All Office Classes
The North I-680 Office leasing market improved across all class segments during the first
quarter 2014. Class A vacancy decreased 40 basis points to 15.0 percent, Class B vacancy fell
130 basis points to 13.8 percent and Class C vacancy decreased 20 basis points to 21.4 percent.
These changes combined to result in total vacancy falling 60 basis points to 15.6 percent. The
market as a whole absorbed 117,436 square feet.

MARKET INDICATORS
Q1

PROJECTED

Q2

VACANCY RATE
NET ABSORPTION
CONSTRUCTION
RENTAL RATE

The Walnut Creek Downtown submarket absorbed space in the first quarter. Class A vacancy
decreased 10 basis points to 14.2 percent. Class A registered 3,482 square feet of net absorption
during the quarter. Class B registered 15,163 square feet of net absorption as vacancy fell 100 basis
points to 12.3 percent. At 1850 Mt. Diablo Boulevard, Legacy Risk & Insurance Services leased 9,620
square feet on the fourth floor. Rudolph & Sletten took 3,320 square feet at 800 S Broadway. At 1801
Oakland Boulevard, Proforma Partners leased 2,760 square feet on the second floor.
The Walnut Creek Pleasant Hill BART Class A submarket registered a 230 basis point decrease
in vacancy. The submarket tracked 41,011 square feet of net absorption. Vacancy now stands at
11.5 percent returning to a level seen one year ago. The most significant lease transaction was
Del Monte Foods 26,835 square foot, sixth floor lease at PMI Plaza.

NORTH I-680 CORRIDOR > VACANCY VS. ASKING RENTS


20%

$2.20

18%

$2.10

16%

$2.00

14%

$1.90

12%

$1.80

10%

2Q12

3Q12

4Q12

1Q13
Vacancy Rate

VACANCY RATE

www.colliers.com/walnutcreek

2Q13

3Q13

Asking Rents

4Q13

1Q14

ASKING RENTAL RATE

$1.70

The North I-680


corridor improved
across all class
segments. Rents
have increased
for six consecutive quarters.

RESEARCH & FORECAST REPORT | Q1 2014 | OFFICE

SUBMARKET MAP
1. Walnut Creek / Pleasant Hill

BART Station
2. Walnut Creek Downtown
3. Shadelands
4. Pleasant Hill
5. Lamorinda
6. Martinez
7. Concord
8. Alamo / Danville

Concord as a whole improved during the first


quarter. Class A vacancy gave back space as
vacancy increased 20 basis points to 16.2
percent. Class B vacancy fell 90 basis points
to 16.8 percent. Class C vacancy dipped 40
basis points to 27.8 percent. The Class A
submarket tracked 7,579 square feet of
negative net absorption for the quarter. There
were several significant transactions during
the first quarter. At Concord Gateway II, Old
Republic Title leased 10,787 square feet on
the second floor. At Concord Gateway I, Dekra
Certification renewed 7,457 square feet on
the ninth floor. Anka Behavioral leased 7,051
square feet at 1957 Parkside Drive. At One
Concord Center, Equifax renewed 3,872
square feet on the fifth floor. Ambitech took
2,759 square feet on the third floor.
The Shadelands submarket registered
negative net absorption in the first quarter as
vacancy increased 30 basis points to 26.9
percent. The Shadelands and Lamorinda
submarkets were the only markets to post
negative net absorption for the quarter.

There were several significant sales


transactions in the first quarter. In Concord,
One and Two Corporate Centre sold.
Prudential Realty Investors purchased the two
office buildings totaling 338,989 square feet
from Westcore Properties. In Danville, the
74,599 square foot Danville San Ramon
Medical Center on San Ramon Valley
Boulevard sold, Rassier Properties was the
buyer. Two buildings within Civic Executive
Park in Concord sold. Prosper Holdings
purchased the buildings from Thomas
Properties. Shadelands Executive Center on
North Wiget Lane traded, with Steve Kafka
purchasing the two office buildings totaling
43,832 square feet from The Charles
Company. 2055 North Broadway in Walnut
Creek sold; the 11,818 square foot building was
purchased by Mark OBrien. Hall Equities
purchased a 3,524 square foot office building
on Alpine Road.

SIGNIFICANT TRANSACTIONS
SALES ACTIVITY
PROPERTY NAME/ADDRESS

SALES DATE

SIZE SF

BUYER

CLASS

One & Two Corporate Centre

Mar-14

338,989

Highridge Partners

Danville San Ramon Medical Center

Feb-14

74,599

Rassier Properties

1465-1485 Civic Court

Feb-14

64,266

Prosper Holdings

Shadelands Executive Center

Jan-14

53,832

Steve Kafka

2055 N Broadway

Mar-14

11,818

Mark O'Brien

1204 Alpine Road

Jan-14

3,524

Hall Equities

PROPERTY NAME/ADDRESS

LEASE DATE

SIZE SF

TENANT

CLASS

PMI Plaza

Feb-14

26,835

Del Monte Foods

Concord Gateway II

Mar-14

10,787

Old Republic Title Company

Gateway Centre

Mar-14

9,620

Legacy Risk & Insurance Services

Concord Gateway I

Feb-14

7,457

Dekra Certification Inc

1957 Parkside Drive

Feb-14

7,051

Anka Behavioral Health

One Concord Center

Mar-14

3,872

Equifax

325 N Wiget Lane

Feb-14

3,848

Entegris Inc

800 S Broadway

Feb-14

3,320

Rudulph & Sletten

LEASING ACTIVITY

P. 2

| COLLIERS INTERNATIONAL

RESEARCH & FORECAST REPORT | Q1 2014 | OFFICE


Q1 2014 | MARKET COMPARISONS
OFFICE MARKET
Existing Properties

TYPE

BLDGS

Absorption

TOTAL

DIRECT

DIRECT

SUBLEASE

SUBLEASE

TOTAL

INVENTORY

VACANCY

VACANCY

VACANT

VACANCY

VACANT

SF

SF

RATE

SF

RATE

SF

VACANCY

VACANCY

RATE

RATE

CURRENT

PREVIOUS

QUARTER

QUARTER

Construction

Rents

NET

NET

COMPLETED

UNDER

ABSORPTION

ABSORPTION

CURRENT

CONSTRUCT.

WEIGHTED
ASKING

CURRENT SF

YTD SF

QTR SF

SF

RENTAL RATE

WALNUT CREEK DT
A

20

2,745,998

321,628

11.7%

68,539

2.5%

390,167

14.2%

14.3%

3,482

3,482

$2.78

54

1,521,893

186,677

12.3%

867

0.1%

187,544

12.3%

13.3%

15,163

15,163

$2.20

22

487,569

37,513

7.7%

1,268

0.3%

38,781

8.0%

8.2%

1,158

1,158

$1.94

Total

96

4,755,460

545,818

11.5%

70,674

1.5%

616,492

13.0%

13.4%

19,803

19,803

$2.55

WALNUT CREEK PH BART


A

10

1,623,999

187,706

11.6%

0.0%

187,706

11.6%

14.4%

45,649

45,649

$2.91

164,226

13,452

8.2%

4,952

3.0%

18,404

11.2%

8.4%

(4,638)

(4,638)

$2.07

Total

14

1,788,225

201,158

11.2%

4,952

0.3%

206,110

11.5%

13.8%

41,011

41,011

$2.83

17

3,901,864

551,474

14.1%

80,090

2.1%

631,564

16.2%

16.0%

(7,579)

(7,579)

$1.89

36

1,028,347

172,750

16.8%

0.0%

172,750

16.8%

18.7%

19,215

19,215

$1.65

CONCORD

36

988,165

275,132

27.8%

0.0%

275,132

27.8%

28.2%

3,299

3,299

$1.17

Total

89

5,918,376

999,356

16.9%

80,090

1.4%

1,079,446

18.2%

18.5%

14,935

14,935

$1.67

188,131

64,241

34.1%

0.0%

64,241

34.1%

31.8%

(4,485)

(4,485)

$2.25

16

752,263

50,335

6.7%

0.0%

50,335

6.7%

6.7%

(113)

(113)

$1.84

14

240,671

13,266

5.5%

0.0%

13,266

5.5%

8.5%

7,104

7,104

$1.75

Total

32

1,181,065

127,842

10.8%

0.0%

127,842

10.8%

11.0%

2,506

2,506

$1.84

$1.85

PLEASANT HILL
A

SHADELANDS
A

174,807

67,567

38.7%

0.0%

67,567

38.7%

36.0%

(4,604)

(4,604)

30

1,327,320

318,598

24.0%

18,400

1.4%

336,998

25.4%

25.6%

2,203

2,203

$1.79

16

423,477

109,477

25.9%

3,548

0.8%

113,025

26.7%

26.1%

(2,629)

(2,629)

$1.65

Total

48

1,925,604

495,642

25.7%

21,948

1.1%

517,590

26.9%

26.6%

(5,030)

(5,030)

$1.75

MARTINEZ
B

258,326

14,398

5.6%

0.0%

14,398

5.6%

26.3%

53,443

53,443

$1.50

266,864

107,389

40.2%

0.0%

107,389

40.2%

40.2%

$1.40

Total

17

525,190

121,787

23.2%

0.0%

121,787

23.2%

33.4%

53,443

53,443

$1.41

248,205

4,887

2.0%

0.0%

4,887

2.0%

2.0%

$3.35

26

621,572

55,147

8.9%

0.0%

55,147

8.9%

7.8%

(6,625)

(6,625)

$2.78

128,454

20,673

16.1%

0.0%

20,673

16.1%

11.7%

(5,609)

(5,609)

$2.25

Total

37

998,231

80,707

8.1%

0.0%

80,707

8.1%

6.9%

(12,234)

(12,234)

$2.68

LAMORINDA

ALAMO/DANVILLE
A

126,821

4,464

3.5%

0.0%

4,464

3.5%

5.2%

2,110

2,110

$2.35

28

552,793

26,351

4.8%

0.0%

26,351

4.8%

4.9%

892

892

$2.29

12

203,913

18,461

9.1%

0.0%

18,461

9.1%

9.1%

$2.23

Total

43

883,527

49,276

5.6%

0.0%

49,276

5.6%

5.9%

3,002

3,002

$2.27

MARKET TOTAL
A

60

9,009,825

1,201,967

13.3%

148,629

1.6%

1,350,596

15.0%

15.4%

34,573

34,573

$2.11

202

6,226,740

837,708

13.5%

24,219

0.4%

861,927

13.8%

15.1%

79,540

79,540

$1.93

114

2,739,113

581,911

21.2%

4,816

0.2%

586,727

21.4%

21.6%

3,323

3,323

$1.44

Total

376

17,975,678

2,621,586

14.6%

177,664

1.0%

2,799,250

15.6%

16.2%

117,436

117,436

$1.92

QUARTERLY COMPARISON AND TOTALS


1Q-14

376

17,975,678

2,621,586

14.6%

177,664

1.0%

2,799,250

15.6%

16.2%

117,436

117,436

4Q-13

376

17,975,678

2,690,266

15.0%

226,420

1.3%

2,916,686

16.2%

16.2%

(8,987)

(93,527)

$1.92
$1.88

3Q-13

376

17,975,678

2,702,205

15.0%

205,494

1.1%

2,907,699

16.2%

15.4%

(126,297)

(84,540)

2Q-13

376

18,031,548

2,625,368

14.6%

159,688

0.9%

2,785,056

15.4%

15.6%

20,936

41,757

1Q-13

376

18,031,548

2,682,706

14.9%

123,286

0.7%

2,805,992

15.6%

15.7%

20,821

20,821

COLLIERS INTERNATIONAL |

$1.87
$1.84
$1.83

P. 3

RESEARCH & FORECAST REPORT | Q1 2014 | OFFICE

NORTH I-680 > TOTAL VACANCY VS. UNEMPLOYMENT


20%

10.0%

16%

8.0%

12%

6.0%

8%

4.0%

4%

2.0%

0%

2Q12

3Q12

4Q12

1Q13
Vacancy Rate

VACANCY RATE

2Q13

3Q13

4Q13

1Q14

Unemployment
continues to hover
above 5%.

485 offices in
63 countries on
6 continents
United States: 146
Canada: 44
Latin America: 25
Asia Pacific: 186
EMEA: 84
> $2.1 Billion in annual revenue
> 1.46 Billion* square feet under management
> Over 15,800 professionals

0.0%

*Square footage includes office, industrial and retail property under management.
Residential property is excluded from this total. All statistics are for 2013.

Unemployment

UNEMPLOYMENT

COLLIERS INTERNATIONAL

CLASS A > DOWNTOWN WALNUT CREEK / PLEASANT HILL BART


> VACANCY RATE VS. NET ABSORPTION VS. ASKING RENTS
1,100,000

$3.00

Walnut Creek (no Shadelands)

$2.75

800,000

$2.50
$2.25

500,000

$2.00
$1.75

200,000

$1.50
$1.25

-100,000

2Q12

3Q12

4Q12
Vacant SF
Asking Rents

VACANCY RATE

1Q13

2Q13
Net Absorption

3Q13

NET ABSORPTION

4Q13

1Q14

Walnut Creek has


seen a considerable
upward shift in
asking rents.

1850 Mt. Diablo Blvd. Suite 200


Walnut Creek, CA 94596
TEL +1 925 279 0120
FAX +1 925 279 0450

MANAGING PARTNER:
Brooks Pedder, SIOR
Executive Managing Director
Executive Vice President
TEL +1 925 279 5581
CA License No. 00902154
RESEARCHER:
Derek Daniels, CPRC
Research Analyst II
TEL +1 925 279 4620

$1.00

ASKING RENTS

This report and other research materials may be found at


www.colliers.com. This report is a research document of
Colliers International - Walnut Creek, California. Questions
related to information herein should be directed to the Research
Department at +1 925 279 4620. Information contained herein
has been obtained from sources deemed reliable and no
representation is made as to the accuracy thereof. As new,
corrected or updated information is obtained, it is incorporated into
both current and historical data, which may invalidate comparison
to previously issued reports. 2014 Colliers International.

Accelerating success.

www.colliers.com/walnutcreek