The Central Coast industrial market saw a vacancy rate of 8.0% in Q1 2015, unchanged from last quarter but down from 10.4% a year ago. Absorption slowed significantly with just 15,000 SF absorbed compared to an average of 232,000 SF per quarter in 2014. The Salinas/Castroville submarket led the region with 49,000 SF of occupancy growth while Santa Cruz County saw a modest decline of 34,000 SF, increasing its vacancy rate. Monterey County's vacancy rate declined slightly while Santa Cruz warehouse vacancy increased.

1. CENTRAL COAST
Industrial Market Snapshot
First Quarter •••• 2015
Monterey Up, Santa Cruz Down
The Central Coast industrial market closed Q1 2015 with a vacancy
rate of 8.0%. While this is unchanged from the 8.0% last quarter, it
is a sizeable drop from the vacancy rate one year ago when it stood
at 10.4%. The market absorbed just 15,000 square feet (SF) of
previously vacant space to start Q1. This is far below recent
quarterly growth numbers (the market averaged 232,000 SF of
quarterly positive net absorption last year). Deal activity slowed
significantly; we tracked just 96,000 SF of total gross absorption in
Q1. This compares to an average 306,000 SF of deal activity per
quarter in 2014. Activity simply ground to a halt in Q1. Monterey
County saw the bulk of these deals, with about 67,000 SF of
industrial leases while Santa Cruz only recorded 29,000 SF of deals.
Against this backdrop, it should come as little surprise that the
Santa Cruz marketplace ended Q1 in the red.
The Santa Cruz County industrial market consists of 8.7M SF of
industrial product. Q1 2015 was the first time in nearly two years
that it posted declining occupancy levels; just 34,000 SF of space
was returned to the market as vacancy climbed from 4.7% to 5.1%.
Regardless, the current vacancy level is well below the 7.3% rate
that was posted exactly one year ago. Current average asking rent for
industrial space (of all types) in Santa Cruz County is $0.95 per
square foot (PSF). This metric is up 22.5% over where it stood a
year ago, however, the availability of some higher quality industrial
flex space in the Mid-County and Scotts Valley markets has skewed
this number up slightly.
All of Santa Cruz County’s Q1’s declines came from the region’s
warehouse market; vacancy climbed from 5.9% to 6.8% in Q1 as
nearly -42,000 SF of space went dark. The lion’s share of that
vacancy (-33,000 SF) came from one major move-out in Watsonville.
We don’t see this quarter’s modestly negative numbers as the
beginning of a new trend; our tracking of active space requirements
reflect roughly the same level of demand that was in the market at
this time last year (and Santa Cruz County closed 2014 with
288,000 square feet of occupancy growth). The current average
asking rent for warehouse space is $0.86 PSF.
Monterey County’s industrial sector fared better in Q1; it posted
49,000 SF of positive net absorption as local vacancy dropped from
CENTRAL COAST INDUSTRIAL
Economic Indicators
Q1 14 Q1 15
12-Month
Forecast
Central Coast Employment 320K 314K
Central Coast Unemployment 11.9% 10.8%
U.S. Unemployment 6.6% 5.5%
Market Indicators
Q1 14 Q1 15
12-Month
Forecast
Overall Vacancy 10.4% 8.0%
Net Absorption SF 325K 15K
Under Construction SF 0 4.9K
Net Absorption/Asking Rent (NNN)
NET ABSORPTION 1Q TRAILING AVERAGE
Overall Vacancy
Average Asking Rent (NNN) $0.46 $0.71
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
-300
-200
-100
0
100
200
300
400
2011 2012 2013 2014 2015
Net Absorption, KSF
Asking Rent (NNN)
4%
6%
8%
10%
12%
14%
16%
18%
2011 2012 2013 2014 2015
Historical Average = 11.8%

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CENTRAL COAST
Industrial Market Snapshot
First Quarter •••• 2015
9.6% to 9.4%. Last year Monterey averaged 160,000 SF of
occupancy growth per quarter as it recorded its strongest
performance in a decade. But deal activity also slowed here in Q1;
we tracked only 67,000 SF of total transactions during the first
three months of 2015. This compares to a quarterly average of
205,000 SF in 2014. The warehouse sector accounted for the
lion’s share of this quarter’s growth; 41,000 SF of previously
vacant space was backfilled as warehouse vacancy fell from 8.7%
to 8.3%. The current average asking rate for warehouse space in
Monterey County is $0.66 PSF (down slightly from last year’s
average of $0.68 PSF). The Salinas/Castroville submarket had a
strong Q1, most notably with Mission Foods occupying 25,0000
SF at 1520 Moffett Street and the owner/user purchase of a
10,000 SF industrial building at 268 Commission Street.
Demand is slowly increasing, but the challenge of finding modern,
quality space is a real one now that vacancy is below the 10.0%
threshold in a marketplace where virtually nothing has been built
in the past decade. The current dynamic will likely mean organic,
homegrown growth for now at modest levels and the continuance of
the longer term trend of slowly declining vacancy. It also means
greater upward pressure on rents, even if for substandard space.
Direct & Sublease Available Space
SUBLEASE SPACE VIRTUALLY NON-EXISTENT
Availabilities by Size Segment
SMALLER USER TYPES ATTRACTED TO THIS MARKET
Average Asking Rate by Submarket (NNN)
VARYING RATES UP AND DOWN THE COASTOutlook
• The Salinas/Castroville Submarket led the region in
terms of occupancy growth in Q1 as 49,000 SF of
previously vacant space was backfilled.
• The Santa Cruz County Industrial market recorded a
modest occupancy decline of –34,000 SF; this was enough
to send to local vacancy up from 4.7% to 5.1% in Q1.
• Industrial vacancy in the Monterey County marketplace
fell Q1 from 9.6% to 9.4% as 49,000 SF of previously
vacant space ( primarily in the Salinas/Castroville
submarket) was backfilled.
The Salinas/Castroville submarket led the
region in occupancy growth in Q1 as
49,000 SF of previously vacant space was
backfilled.
MSF
NNN
0
1
2
3
4
5
2011 2012 2013 2014 2015
Direct Sublease
65
24
12
32 <2.5K SF
2.5K SF - 4.9K SF
5K SF - 7.49K SF
7.5K SF +
133
Listings
$1.04
$1.00
$0.96 $0.95
$0.91 $0.89
$0.66
$0.25
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
Monterey Mid County Santa Cruz Watsonville Salinas /
Castroville
Scotts
Valley
San City /
Seaside /
Marina
South
County

3. www.dtz.com | 3
CENTRAL COAST
Industrial Market Snapshot
First Quarter •••• 2015
Key Lease Transactions Q1 15
PROPERTY SF TENANT LANDLORD TRANSACTION TYPE SUBMARKET
1520 Moffett St 25,123 Mission Foods Kenneth & Pattie Slama New Lease Salinas
11080 Commercial Pkwy 9,060 Cardinale Moving Russell Johnson New Lease Castroville
11145 Commercial 7,500 Robert Mann Packaging A/J Properties New Lease Castroville
Key Sale Transactions Q1 15
PROPERTY SF BUYER SELLER SALE PRICE SUBMARKET
268 Commercial 10,109 KKCC LLC Commercial Street Partners $1,350,000 Salinas
5 Harris Ct 11,008 Weilian Su Su Yu $325,000 Monterey
BLDGS INVENTORY
SUBLET
VACANT
DIRECT
VACANT
VACANCY
RATE
CURRENT NET
ABSORPTION
YTD NET
ABSORPTION
UNDER
CONSTRUCTION
AVERAGE
ASKING
RENT
Submarket
Scotts Valley 28 547,494 0 46,221 8.44% 1,615 210,065 0 $0.89
Santa Cruz 131 2,670,690 0 79,078 2.96% -6,692 27,517 0 $0.96
Watsonville 173 5,177,812 0 306,773 5.92% -33,914 15,900 0 $0.95
Mid-County 23 261,523 0 11,825 4.52% 4,848 300 0 $1.00
Santa Cruz County 355 8,657,519 0 443,897 5.13% -34,143 253,782 0 $0.95
Sand City / Seaside / Marina 63 859,934 20,000 65,234 9.91% 0 -23,912 0 $0.66
Monterey 24 584,130 0 2,540 0.43% 0 6,914 0 $1.04
Salinas / Castroville 392 13,293,071 102,127 824,523 6.97% 49,263 303,872 0 $0.91
South County 44 2,737,673 0 622,103 22.72% 0 401,520 0 $0.25
Monterey County 523 17,474,808 122,127 1,514,400 9.37% 49,263 688,394 0 $0.65
TOTAL 878 26,132,327 122,127 1,958,297 7.96% 15,120 942,176 0 $0.71

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Industrial Submarkets
Central Coast
Managing Editor:
Garrick Brown
VP of Research, West Region
201 California Street
Suite 800
San Francisco, CA 94111
Tel: 916 329 1558
Fax: 916 375 1500
Garrick.Brown@dtz.com
he information contained within this report is gathered from
multiple sources considered to be reliable. The information may
contain errors or omissions and is presented without any warranty or
representations as to its accuracy.
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CENTRAL COAST
Industrial Market Snapshot
First Quarter •••• 2015