1. Q2 2011 | INDUSTRIAL
MARKET REPORT | Q2 2011 | INDUSTRIAL | SAN DIEGO COUNTY
SAN DIEGO COUNTY
512 offices in
MARKET Report
HISTORICAL RENTAL RATE TRENDS RENTAL RATE TRENDS
CY RATES HISTORICAL RENTAL RATES
Industrial, R&D and Combined Rates
Industrial, R&D and Combined Rates Since a historical high point in
61 countries on
Quarterly Average Asking Rate Per SF Per Month (NNN)
12% Quarterly Average Asking Rate Per SF Per Month (NNN)
Q3 2008, average asking
$1.50
$1.50 rental rates for combined
$1.40 10%
$1.30
$1.40
$1.30
industrial and R&D space has
been steadily decreasing. In
6 continents
8%
$ / SF / Month (NNN)
$1.20
$ / SF / Month (NNN)
$1.20 Q2 2011, R&D rental rates United States: 125
Vacancy Rate
$1.10
6%
$1.10 increased while industrial rates Canada: 38
$1.00
$1.00 stayed flat. It is likely that Latin America: 18
$0.90
4% $0.90 rates increase throughout the Asia Pacific: 214
$0.80
$0.80 last half of 2011, but a very EMEA: 117
$0.70
2% $0.70 slow pace.
$0.60 • $59.6 billion in annual transactions
$0.60
$0.50
0% $0.50
billion square feet under
• 1.0
008 2009 2010 2011
Q2
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11
06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11
management Industrial demand softens; asking rents stabilize
Industrial R&D Combined
Industrial R&D Combined
• Over 12,500 professionals
y Vacancy
MARKET OVERVIEW
SAN DIEGO:
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZE
LEASING ACTIVITY INDUSTRIAL LEASING ACTIVITY BY TENANT SIZE
Percentage of Total Leases Completed in Percentage of Total Leases Completed in Q2 2011
Q2 2011
Jim Spain, SIOR After four consecutive quarters of positive net absorption, Q2 ended with slightly negative
Over 500 leases were Regional Managing Director | San Diego Region net absorption of just over 125,000 square feet. The reversal in demand for the quarter
License No. 00804745
completed in Q2 totaling over
11.2% is a clear indication that the industrial market has not fully committed to complete
2.2 million square feet. Over 11.2% 4660 La Jolla Village Drive, Suite 100 recovery and it can be expected that San Diego County will bump along for a few more
81% of all leases were 5,000 4.1% 4.1% San Diego, CA 92122 | USA
quarters. Industrial asking rental rates appear to have bottomed out but increases in
NEW SUPPLY, ABSORPTION AND VACANCY RATES HISTORICAL RENTAL RATE TRENDS
SF or less indicating demand 3.1% 3.1% tel +1 858.677.5311
by smaller tenants continues <= 2,000 SF [231] <= 2,000 SF [231]
asking rents for R&D space have been and Combined Rates
Industrial, R&D recorded in many submarkets countywide.
FAX +1 858.795.4111 Quarterly Average Asking Rate Per SF Per Month (NNN)
36.0%
to increase. 36.0% 4.0 12%
2,001 - 5,000 SF [183] 2,001 - 5,000 SF [183] market indicators
3.0 The May 2011 San Diego County unemployment rate measured 9.6% – a 0.2% decrease
$1.50
5,001 - 10,000 SF [57] 10%
5,001 - 10,000 SF [57] Q2 2011 Q3 2011 (P) from the previous month. The $1.40
California unemployment rate decreased in May and
2.0
10,001 - 20,000 SF [21] 10,001 - 20,000 SF [21]
researcher: stands at 11.4% while the national rate stayed level at 8.7%. As of May 2011, San
8%
$1.30
$ / SF / Month (NNN)
CHRISTOPHER REUTZ
1.0
VACANCY Diego County experienced a year-over-year increase in non-farm employment totaling
$1.20
Vacancy Rate
SF (Millions)
>= 20,001 SF [16] >= 20,001 SF [16] $1.10
Research Director | San Diego Region 0.0 11,200 jobs. 6% combined industry sectors of “Trade, Transportation, and Utilities” and
The
NET ABSORPTION $1.00
4660 La Jolla Village Drive, Suite 100 -1.0 “Manufacturing” – the two predominant industrial-utilizing employment sectors – posted
45.5% 45.5%
$0.90
San Diego, CA 92122 | USA a net increase of 1,500 jobs over the same period.
4%
$0.80
CONSTRUCTION
-2.0
tel +1 858.677.5385 $0.70
2%
FAX +1 858.795.4185 -3.0
RENTAL RATE At the end of May, the USD Index of Leading Economic Indicators for San Diego posted
$0.60
-4.0 its seventh consecutive month $0.50
0% of increases. This contributes to a total of 26 months
The Q2 combined industrial / R&D direct NEW SUPPLY 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 index has either risen or remainedQ1 Q2 Q3 Q4 theQ2 Q3 Q4 Q1months of 2011, the Q1 Q2
where the Q2 Q3 Q4 flat. For Q1 first five Q2 Q3 Q4 Q1 Q2 Q3 Q4
vacancy rate was 11.4% compared to 11.1% at index increased by 5.9% with the February 2011 increase of 2.0% 09 09 09the largest one- 11
Q2 06 06 06 07 07 07 07 08 08 08 08 being 09 10 10 10 10 11
the end of Q1. Sublease vacancy remained No new construction was completed in Net Absorption New Supply month increase on record according to the index’s publisher, Dr. R&D Gin. May’s increase
Vacancy Industrial Alan Combined
unchanged 0.7%. Vacant sublease space Q1. An additional 238,340 feet is under was driven by significant increases in help wanted advertising and the national economic
made up 1.3 million square feet countywide construction within Carlsbad and Escondido. indicators.
Once completed this year, no new industrial This report has been prepared by Colliers International
with 46% of the space concentrated within INDUSTRIAL LEASING ACTIVITY BY TENANT SIZE
space will be under construction in San Diego for general information only. Information contained
INDUSTRIAL VACANCY RATES MARKET TRENDS
the three submarkets of Otay Mesa, Campus County.
herein has been obtained from sources deemed reliable Percentage of Total Leases Completed in Q2 2011
NEW SUPPLY, ABSORPTION AND VACANCY RATES HISTORICAL RENTAL
Q2 2011
Point/Eastgate and Carlsbad. and no representation is made as to the accuracy thereof.
Colliers International does not guarantee, warrant or INDUSTRIAL VACANCY RATES Diminished demandand Combined Rat
Industrial, R&D in
Proposed new development totals about represent that the information contained in this document Q2 2011 4.0 11.2% 12% Q2 drove countywide Asking Rate Pe
Quarterly Average
The industrial market hasn’t been overbuilt is correct. Any interested party should undertake their net absorption to a
6.3 million square feet with nearly 42% of own inquiries as to the accuracy of the information. S.D. County
14.8% 3.0 4.1% $1.50
10% negative 126,046 square
to the same level as the office market. But this space concentrated in Otay Mesa and Colliers International excludes unequivocally all inferred
10.0%
2.0 3.1%
$1.40
feet. Only 202,340
demand dropped off completely from 2007 Oceanside. It is unlikely that any significant or implied terms, conditions and warranties arising out of
Central County
14.5% 8%
$1.30
<= 2,000 SF [231]
square feet remains
$ / SF / Month (NNN)
$1.20
through 2009 while new construction new construction will commence within the this document and excludes all liability for loss and 10.0% 1.0 36.0%
Vacancy Rate
SF (Millions)
damages arising there from. under construction [183]
2,001$1.10
- 5,000 SF
continued. The combined effects of strong next couple of years. Any new development North County
12.0% 0.0 6%
which means new
$1.00
construction activity along with severe will likely favor build-to-suits to accommodate 10.9%
-1.0
5,001 - 10,000 SF [57]
demand will be focused
$0.90
negative absorption over the last few years companies that have little or no options I-15 Corridor
19.4% 4%
in pre-existing spaceSF [21]
10,001 - 20,000
$0.80
7.4% -2.0
had caused vacancy to settle in at the high- available within the current available inventory. 2%
over the couple of years.
$0.70
-3.0
>= 20,001 SF [16]
11% range. Now that new construction 0% 5% 10% 15% 20% 25% $0.60
has nearly ceased, vacancy will continue a R&D Industrial -4.0 0% $0.50
45.5%
downward trend that started in 2010, even if 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q2 Q3 Q4 Q1 Q2 Q
Q2 06 06 06 07 07 0
only moderate demand persists over the next Accelerating success. Net Absorption New Supply Vacancy
couple of years.
INDUSTRIAL LEASING
www.colliers.com/sandiego www.colliers.com/sandiego Percentage of Total Leases Compl
INDUSTRIAL VACANCY RATES

2. MARKET REPORT | Q2 2011 | INDUSTRIAL | SAN DIEGO COUNTY MARKET REPORT | Q2 2011 | INDUSTRIAL | SAN DIEGO COUNTY
INDUSTRIAL OVERVIEW
NET ABSORPTION Leasing activity totaled approximately
2.2 million square feet in Q2. This was San Diego County Industrial Market
north county Q2 2011
Q2 combined industrial / R&D net the fourth quarter of consistent quarterly
decreases in lease signings. The decrease EXISTING PROPERTIES VACANCY NET ABSORPTION CONSTRUCTION
absorption totaled a negative 126,046 Avg
square feet. Countywide net absorption in leasing activity should equate to positive Total Direct Sublease Total Prior Qtr Net Abs Net Abs New Supply Under Rental
i-15 corridor for industrial space (manufacturing, net absorption as tenants take occupancy Inventory Vacancy Vacancy Vacancy Vacancy Current Qtr YTD Current Qtr Construction Proposed Rate
warehouse, distribution, and multi-tenant/ in Q3 and Q4, but the magnitude of will be Submarket / Class Bldgs SF Rate Rate Rate Rate SF SF SF SF SF (NNN)
incubator buildings) totaled a negative considerably less than the last two quarters
of 2010. INDUSTRIAL TOTALS BY MARKET Manufacturing, warehouse, distribution, and multi-tenant/incubator
117,193 square feet and R&D space (flex, Central County 3,059 81,800,037 9.5% 0.5% 10.0% 9.9% (52,362) (202,122) 0 0 2,203,591 $0.62
mcas miramar wet lab and corporate headquarters North County 2,199 40,414,837 10.6% 0.3% 10.9% 10.2% (100,983) 37,339 0 0 1,315,951 $0.69
buildings) totaled a negative 8,853 square For the first time in twelve quarters, an I-15 Corridor 302 10,569,130 6.6% 0.7% 7.4% 7.7% 36,152 102,071 0 0 431,400 $0.89
feet. increase in the combined industrial and TOTAL 5,560 132,784,004 9.6% 0.4% 10.0% 9.8% (117,193) (62,712) 0 0 3,950,942 $0.67
central R&D countywide average asking rent was R&D TOTALS BY MARKET Flex, wet lab and corporate headquarters
Central County 821 34,295,911 12.8% 1.7% 14.5% 13.3% (163,342) (118,145) 0 0 1,524,633 $1.15
county North County was the only market area achieved. While the industrial average North County 344 11,806,967 11.5% 0.4% 12.0% 13.2% 188,937 149,962 0 202,340 1,079,674 $1.02
of the county that posted positive net remained unchanged, the R&D average I-15 Corridor 134 9,331,215 18.0% 1.5% 19.4% 18.9% (34,448) (48,599) 0 0 605,000 $0.98
absorption (87,954 square feet). Carlsbad increased by 2% during the quarter. TOTAL 1,299 55,434,093 13.4% 1.4% 14.8% 14.2% (8,853) (16,782) 0 202,340 3,209,307 $1.08
led all the submarkets with 199,438 square Specifically, R&D rates increased in all COMBINED INDUSTRIAL / R&D BY MARKET AND SUBMARKET
feet of positive net absorption while market areas of the county with Central Central County
County and North County reporting 2% Airport / SA 76 1,878,846 3.6% 0.0% 3.6% 3.9% 5,775 (1,610) 0 0 0 $0.70
Oceanside followed with 81,511 square Campus Pt / Egate 42 4,065,257 15.9% 7.0% 22.9% 21.5% (11,207) (89,132) 0 0 601,967 N/A
SAN DIEGO COUNTY feet. Vista had the largest decrease increases and the I-15 Corridor reporting a Central San Diego 397 8,369,886 5.6% 0.6% 6.2% 5.7% 14,680 (31,727) 0 0 0 $0.68
with 152,574 square feet of negative net 3% increase. East County 604 14,174,371 6.2% 0.1% 6.3% 6.2% (10,185) (79,884) 0 0 1,229,000 $0.68
The San Diego County industrial/R&D absorption while Sorrento Mesa fell close Kearny Mesa 650 17,389,145 6.0% 0.3% 6.3% 5.5% (103,016) (57,014) 0 0 65,691 $0.95
Miramar 586 13,783,010 11.6% 0.3% 11.9% 12.4% 61,164 (14,764) 0 0 0 $0.82
market is comprised of 188.2 million behind with 147,778 square feet. VACANCY Mission Gorge / Vly 100 2,289,328 8.5% 3.3% 11.9% 11.3% (12,752) (57,495) 0 0 0 $0.88
square feet of industrial and R&D space.
Otay Mesa 293 14,579,019 21.5% 1.6% 23.0% 23.5% 67,767 100,793 0 0 1,389,591 $0.47
The county is divided into three major The Q2 overall vacancy rate increased by
The San Diego County industrial market Rose Cyn / Morena 188 4,069,957 3.9% 0.1% 4.0% 3.6% (13,660) 29,868 0 0 72,000 $0.71
market areas with 21 submarkets within
saw considerable improvement in demand 33 basis points to stand at 11.4%. The Sorrento Mesa 273 13,502,553 14.6% 0.6% 15.1% 13.0% (147,778) (89,653) 0 0 236,136 $1.09
them. Just over 61% of countywide Sorrento Valley 106 3,411,705 8.1% 1.9% 10.0% 9.8% (6,184) 35,575 0 0 0 $1.61
industrial/R&D space is located within during 2010. Net absorption of nearly industrial and R&D vacancy components South Bay 498 13,566,612 7.6% 0.1% 7.7% 7.0% (71,739) (85,858) 0 0 0 $0.61
the 13 submarkets of the Central County 1.3 million square feet was the only measured 10.0% and 14.8%, respectively. Torrey Pines 67 5,016,259 14.2% 1.5% 15.7% 15.9% 11,431 20,634 0 0 133,839 N/A
market. Industrial buildings (including positive year of demand in the last four Compared to one year ago, R&D vacancy TOTAL 3,880 116,095,948 10.5% 0.8% 11.3% 10.9% (215,704) (320,267) 0 0 3,728,224 $0.79
manufacturing, warehouse, distribution, years. While leasing demand still remains has dropped by only 2 basis points (14.8% North County
and multi-tenant/incubator) make up Carlsbad 484 14,829,987 11.1% 0.7% 11.8% 13.1% 199,438 221,489 0 176,000 987,832 $1.00
relatively high, several transactions in Q2 2010) while industrial vacancy has
71% of total inventory while R&D Escondido 635 7,149,799 5.9% 0.3% 6.3% 6.2% (6,516) 57,015 0 26,340 30,000 $0.74
during the quarter involved larger tenants decreased by 36 basis points (10.4% in Q2 Oceanside 395 8,026,752 16.8% 0.1% 16.9% 17.4% 81,511 127,095 0 0 1,227,361 $0.63
buildings (including flex, wet lab and
corporate headquarters) make up the relocating and – in several cases – 2010). San Marcos 487 8,697,523 8.9% 0.0% 8.9% 7.7% (33,905) (56,153) 0 0 53,000 $0.72
Vista 542 13,517,743 10.8% 0.2% 11.0% 9.2% (152,574) (162,145) 0 0 97,432 $0.67
remaining 29% of the total inventory. reducing the amount of space they leased.
TOTAL 2,543 52,221,804 10.8% 0.3% 11.1% 10.9% 87,954 187,301 0 202,340 2,395,625 $0.79
Continued on page 4 I-15 Corridor
Poway 215 8,196,451 4.0% 0.9% 4.9% 4.8% 7,406 55,943 0 0 496,400 $0.82
TRANSACTION ACTIVITY - Q2 2011 Rancho Bernardo 146 9,559,699 18.7% 0.6% 19.3% 19.4% 8,176 (94) 0 0 0 $1.00
Scripps Ranch 75 2,144,195 12.1% 3.8% 15.9% 15.9% (13,878) (2,377) 0 0 540,000 $0.88
SALES ACTIVITY TOTAL 436 19,900,345 12.0% 1.1% 13.0% 13.0% 1,704 53,472 0 0 1,036,400 $0.94
SAN DIEGO COUNTY COMBINED INDUSTRIAL / R&D
SIZE SF SALE PRICE PRICE/SF TOTAL 6,859 188,218,097 10.7% 0.7% 11.4% 11.1% (126,046) (79,494) 0 202,340 7,160,249 $0.81
PROPERTY NAME/ADDRESS SUBMARKET TYPE
QUARTERLY COMPARISON
5781 Van Allen Way Carlsbad R&D 328,700 $56,000,000 $170.37 Q2 2011 6,859 188,218,097 10.7% 0.7% 11.4% 11.1% (126,046) (79,494) 0 202,340 7,160,249 $0.81
10770 Wateridge Circle Sorrento Mesa Corp. HQ 176,983 $32.700,000 $184.76 Q1 2011 6,837 188,338,224 10.4% 0.7% 11.1% 11.3% 355,001 355,001 0 238,340 6,264,113 $0.80
Q4 2010 6,835 188,521,231 10.5% 0.9% 11.3% 11.6% 819,595 1,278,337 54,313 212,000 5,853,913 $0.83
Center Pointe Business Park El Cajon R&D 220,360 $22,400,000 $101.65 Q3 2010 6,833 188,440,137 10.7% 1.0% 11.6% 11.7% 861,592 778,591 135,020 230,313 5,823,913 $0.84
Q2 2010 6,837 188,292,664 10.6% 1.1% 11.7% 11.8% 284,835 275,585 98,000 189,333 5,823,913 $0.84
4010 Ocean Ranch Boulevard Oceanside Industrial 203,779 $14,555,000 $71.43
16707 Via Del Campo Court Rancho Bernardo R&D 46,414 $10,311,000 $222.15 Average rental rates are defined as the average asking monthly rate per square foot normalized to a "triple net" basis.
LEASING ACTIVITY
PROPERTY NAME/ADDRESS SUBMARKET TYPE SIZE SF TENANT NAME
2885 E. Loker Avenue Carlsbad R&D 88,329 BREG
9880 Mesa Rim Road Sorrento Mesa R&D 45,540 Biotix, Inc.
7825 Trade Street Miramar Industrial 42,942 Red Bull
7720 Kenamar Court Miramar R&D 29,238 G.B. Sales
2655 Vista Pacific Drive Oceanside Industrial 29,142 Enviremedial Services, Inc.
p. 2 | Colliers International Colliers International | p. 3

3. MARKET REPORT | Q2 2011 | INDUSTRIAL | SAN DIEGO COUNTY MARKET REPORT | Q1 2011 | INDUSTRIAL | SAN DIEGO COUNTY
INDUSTRIAL OVERVIEW
NET ABSORPTION Leasing activity totaled approximately
2.2 million square feet in Q2. This was San Diego County Industrial Market
north county Q2 2011
Q2 combined industrial / R&D net the fourth quarter of consistent quarterly
decreases in lease signings. The decrease EXISTING PROPERTIES VACANCY NET ABSORPTION CONSTRUCTION
absorption totaled a negative 126,046 Avg
square feet. Countywide net absorption in leasing activity should equate to positive Total Direct Sublease Total Prior Qtr Net Abs Net Abs New Supply Under Rental
i-15 corridor for industrial space (manufacturing, net absorption as tenants take occupancy Inventory Vacancy Vacancy Vacancy Vacancy Current Qtr YTD Current Qtr Construction Proposed Rate
warehouse, distribution, and multi-tenant/ in Q3 and Q4, but the magnitude of will be Submarket / Class Bldgs SF Rate Rate Rate Rate SF SF SF SF SF (NNN)
incubator buildings) totaled a negative considerably less than the last two quarters
of 2010. INDUSTRIAL TOTALS BY MARKET Manufacturing, warehouse, distribution, and multi-tenant/incubator
117,193 square feet and R&D space (flex, Central County 3,059 81,800,037 9.5% 0.5% 10.0% 9.9% (52,362) (202,122) 0 0 2,203,591 $0.62
mcas miramar wet lab and corporate headquarters North County 2,199 40,414,837 10.6% 0.3% 10.9% 10.2% (100,983) 37,339 0 0 1,315,951 $0.69
buildings) totaled a negative 8,853 square For the first time in twelve quarters, an I-15 Corridor 302 10,569,130 6.6% 0.7% 7.4% 7.7% 36,152 102,071 0 0 431,400 $0.89
feet. increase in the combined industrial and TOTAL 5,560 132,784,004 9.6% 0.4% 10.0% 9.8% (117,193) (62,712) 0 0 3,950,942 $0.67
central R&D countywide average asking rent was R&D TOTALS BY MARKET Flex, wet lab and corporate headquarters
Central County 821 34,295,911 12.8% 1.7% 14.5% 13.3% (163,342) (118,145) 0 0 1,524,633 $1.15
county North County was the only market area achieved. While the industrial average North County 344 11,806,967 11.5% 0.4% 12.0% 13.2% 188,937 149,962 0 202,340 1,079,674 $1.02
of the county that posted positive net remained unchanged, the R&D average I-15 Corridor 134 9,331,215 18.0% 1.5% 19.4% 18.9% (34,448) (48,599) 0 0 605,000 $0.98
absorption (87,954 square feet). Carlsbad increased by 2% during the quarter. TOTAL 1,299 55,434,093 13.4% 1.4% 14.8% 14.2% (8,853) (16,782) 0 202,340 3,209,307 $1.08
led all the submarkets with 199,438 square Specifically, R&D rates increased in all COMBINED INDUSTRIAL / R&D BY MARKET AND SUBMARKET
feet of positive net absorption while market areas of the county with Central Central County
County and North County reporting 2% Airport / SA 76 1,878,846 3.6% 0.0% 3.6% 3.9% 5,775 (1,610) 0 0 0 $0.70
Oceanside followed with 81,511 square Campus Pt / Egate 42 4,065,257 15.9% 7.0% 22.9% 21.5% (11,207) (89,132) 0 0 601,967 N/A
SAN DIEGO COUNTY feet. Vista had the largest decrease increases and the I-15 Corridor reporting a Central San Diego 397 8,369,886 5.6% 0.6% 6.2% 5.7% 14,680 (31,727) 0 0 0 $0.68
with 152,574 square feet of negative net 3% increase. East County 604 14,174,371 6.2% 0.1% 6.3% 6.2% (10,185) (79,884) 0 0 1,229,000 $0.68
The San Diego County industrial/R&D absorption while Sorrento Mesa fell close Kearny Mesa 650 17,389,145 6.0% 0.3% 6.3% 5.5% (103,016) (57,014) 0 0 65,691 $0.95
Miramar 586 13,783,010 11.6% 0.3% 11.9% 12.4% 61,164 (14,764) 0 0 0 $0.82
market is comprised of 188.2 million behind with 147,778 square feet. VACANCY Mission Gorge / Vly 100 2,289,328 8.5% 3.3% 11.9% 11.3% (12,752) (57,495) 0 0 0 $0.88
square feet of industrial and R&D space.
Otay Mesa 293 14,579,019 21.5% 1.6% 23.0% 23.5% 67,767 100,793 0 0 1,389,591 $0.47
The county is divided into three major The Q2 overall vacancy rate increased by
The San Diego County industrial market Rose Cyn / Morena 188 4,069,957 3.9% 0.1% 4.0% 3.6% (13,660) 29,868 0 0 72,000 $0.71
market areas with 21 submarkets within
saw considerable improvement in demand 33 basis points to stand at 11.4%. The Sorrento Mesa 273 13,502,553 14.6% 0.6% 15.1% 13.0% (147,778) (89,653) 0 0 236,136 $1.09
them. Just over 61% of countywide Sorrento Valley 106 3,411,705 8.1% 1.9% 10.0% 9.8% (6,184) 35,575 0 0 0 $1.61
industrial/R&D space is located within during 2010. Net absorption of nearly industrial and R&D vacancy components South Bay 498 13,566,612 7.6% 0.1% 7.7% 7.0% (71,739) (85,858) 0 0 0 $0.61
the 13 submarkets of the Central County 1.3 million square feet was the only measured 10.0% and 14.8%, respectively. Torrey Pines 67 5,016,259 14.2% 1.5% 15.7% 15.9% 11,431 20,634 0 0 133,839 N/A
market. Industrial buildings (including positive year of demand in the last four Compared to one year ago, R&D vacancy TOTAL 3,880 116,095,948 10.5% 0.8% 11.3% 10.9% (215,704) (320,267) 0 0 3,728,224 $0.79
manufacturing, warehouse, distribution, years. While leasing demand still remains has dropped by only 2 basis points (14.8% North County
and multi-tenant/incubator) make up Carlsbad 484 14,829,987 11.1% 0.7% 11.8% 13.1% 199,438 221,489 0 176,000 987,832 $1.00
relatively high, several transactions in Q2 2010) while industrial vacancy has
71% of total inventory while R&D Escondido 635 7,149,799 5.9% 0.3% 6.3% 6.2% (6,516) 57,015 0 26,340 30,000 $0.74
during the quarter involved larger tenants decreased by 36 basis points (10.4% in Q2 Oceanside 395 8,026,752 16.8% 0.1% 16.9% 17.4% 81,511 127,095 0 0 1,227,361 $0.63
buildings (including flex, wet lab and
corporate headquarters) make up the relocating and – in several cases – 2010). San Marcos 487 8,697,523 8.9% 0.0% 8.9% 7.7% (33,905) (56,153) 0 0 53,000 $0.72
Vista 542 13,517,743 10.8% 0.2% 11.0% 9.2% (152,574) (162,145) 0 0 97,432 $0.67
remaining 29% of the total inventory. reducing the amount of space they leased.
TOTAL 2,543 52,221,804 10.8% 0.3% 11.1% 10.9% 87,954 187,301 0 202,340 2,395,625 $0.79
Continued on back page I-15 Corridor
Poway 215 8,196,451 4.0% 0.9% 4.9% 4.8% 7,406 55,943 0 0 496,400 $0.82
TRANSACTION ACTIVITY - Q2 2011 Rancho Bernardo 146 9,559,699 18.7% 0.6% 19.3% 19.4% 8,176 (94) 0 0 0 $1.00
Scripps Ranch 75 2,144,195 12.1% 3.8% 15.9% 15.9% (13,878) (2,377) 0 0 540,000 $0.88
SALES ACTIVITY TOTAL 436 19,900,345 12.0% 1.1% 13.0% 13.0% 1,704 53,472 0 0 1,036,400 $0.94
SAN DIEGO COUNTY COMBINED INDUSTRIAL / R&D
SIZE SF SALE PRICE PRICE/SF TOTAL 6,859 188,218,097 10.7% 0.7% 11.4% 11.1% (126,046) (79,494) 0 202,340 7,160,249 $0.81
PROPERTY NAME/ADDRESS SUBMARKET TYPE
QUARTERLY COMPARISON
5781 Van Allen Way Carlsbad R&D 328,700 $56,000,000 $170.37 Q2 2011 6,859 188,218,097 10.7% 0.7% 11.4% 11.1% (126,046) (79,494) 0 202,340 7,160,249 $0.81
10770 Wateridge Circle Sorrento Mesa Corp. HQ 176,983 $32.700,000 $184.76 Q1 2011 6,837 188,338,224 10.4% 0.7% 11.1% 11.3% 355,001 355,001 0 238,340 6,264,113 $0.80
Q4 2010 6,835 188,521,231 10.5% 0.9% 11.3% 11.6% 819,595 1,278,337 54,313 212,000 5,853,913 $0.83
Center Pointe Business Park El Cajon R&D 220,360 $22,400,000 $101.65 Q3 2010 6,833 188,440,137 10.7% 1.0% 11.6% 11.7% 861,592 778,591 135,020 230,313 5,823,913 $0.84
Q2 2010 6,837 188,292,664 10.6% 1.1% 11.7% 11.8% 284,835 275,585 98,000 189,333 5,823,913 $0.84
4010 Ocean Ranch Boulevard Oceanside Industrial 203,779 $14,555,000 $71.43
16707 Via Del Campo Court Rancho Bernardo R&D 46,414 $10,311,000 $222.15 Average rental rates are defined as the average asking monthly rate per square foot normalized to a "triple net" basis.
LEASING ACTIVITY
PROPERTY NAME/ADDRESS SUBMARKET TYPE SIZE SF TENANT NAME
2885 E. Loker Avenue Carlsbad R&D 88,329 BREG
9880 Mesa Rim Road Sorrento Mesa R&D 45,540 Biotix, Inc.
7825 Trade Street Miramar Industrial 42,942 Red Bull
7720 Kenamar Court Miramar R&D 29,238 G.B. Sales
2655 Vista Pacific Drive Oceanside Industrial 29,142 Enviremedial Services, Inc.
p. 2 | Colliers International Colliers International | p. 3

4. Q2 2011 | INDUSTRIAL
CARLSBAD
AT A GLANCE
Market Conditions
After moderate activity in Q1 mostly comprised of renewals and movement by existing
Oceanside tenants, Carlsbad enjoyed an influx of tenants from surrounding submarkets that resulted
Vista
in nearly 200,000 s.f. of positive absorption in Q2. Tenants like Aptera Motors, BREG
and Heat Factory recognized an opportunity to upgrade their corporate image and move
San further west with the help of aggressive landlords eager to fill space. The overall vacancy
Carlsbad Marcos
Ocean rate for Industrial/R&D dropped by more than a percentage point to 11.76%.
While leasing activity increased, the relatively limited number of larger buildings available
MARKET INDICATORS for sale in Carlsbad combined with low pricing expectations by prospective buyers
resulted in back to back quarters without an owner user sale above 15,000 s.f. Sale
Q2 Q3 prices in Carlsbad are at or near historical lows, but they still remain higher than those
2011 2011 (forecast)
in neighboring submarkets to the east and north. Owner users looking for a “great
VACANCY buy” must be willing to expand their search parameters to include submarkets such as
Oceanside or Vista. Most of the bank owned buildings offered at a discount have now
NET ABSORPTION traded, including Raceway Point where Prana (owner user) has the last building under
CONSTRUCTION
contract.
RENTAL RATE Land prices have reached a new low with the sale of Lot 16 at Raceway Point in east
Carlsbad. This 3.74 acre parcel was purchased by an investor for $8.75/s.f. and
represented the last of the bank owned land sales. With the close of this chapter we
expect to see land prices stabilize and slowly increase.
INDUSTRIAL/R&D VACANCY RATES RATES
INDUSTRIAL/R&D VACANCY CARLSBAD HISTORICAL MARKET TRENDS VISTA HISTORICAL MARKET
Q2 2011 Q2 2011
INDUSTRIAL/R&D VACANCY RATES CARLSBAD HISTORICAL MARKET TRENDS
700 VISTA HISTORICAL MARKET TRENDS
16%
Q2 2011
Carlsbad 13.1% 600 14%
Carlsbad 10.4%
21.0% 500 12%
Escondido
5.5%
400 10%
Vacancy Rate
SF (000s)
Oceanside 13.1%
17.4%
300 8%
San Marcos 10.2%
8.7% 200 6%
Vista 5.7%
11.8% 100 4%
North County 12.0%
10.9% 0 2%
-100 0%
0% 5% 10% 15% 20% 25%
2003 2004 2005 2006 2007 2008 2009 2010 2011 Q2
R&D Industrial
Net Absorption New Supply Vacancy
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL M
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