Life Science: Great Promise & Rapid Growth

MARKET SUMMARY

20.2 MSF MARKET SQUARE FOOTAGE FAST LAB STATS

The San Francisco Bay Area, supported by Stanford, UCSF, and UC Berkeley, has a long history as a major life science hub, most notably with Genentech coining South San Francisco as the “Birthplace of Biotechnology” in 1976. The bulk of the life science activity is located on the San Francisco Peninsula, but the surrounding markets are active and growing. On the Peninsula, demand for lab space has warranted the conversion of over 2.7 msf of traditional office to accommodate life science users. Additionally, new developers are combating the Peninsula’s lack of available land by building upwards. The recently constructed Genesis Towers Phase II is the first high-rise lab structure of its kind with 20 stories of lab and office space. Most of the recent large deals have been pre-leased new construction with significant organic growth as well as tenants coming from out of the market. These companies range from big pharma to early stage venture-backed firms. Pre-leasing activity has been so high that new construction prices are often not reflected in the quoted average asking rate due to how fast space is absorbed. San Francisco’s main driver is UCSF and the ecosystem it has created in Mission Bay. The largest issue facing the market is the lack of land to expand the submarket. The average asking rate for projects under construction in South San Francisco is $66 NNN.

AVERAGE RENT (PER SF) $60.09 127.5K TOTAL EMPLOYEES* 6.2% VACANCY

& PENINSULA

* Employment for San Francisco, Peninsula and Oakland combined

TOP TEN LIFE SCIENCE EMPLOYERS

RENT VS. VACANCY COMPARISON

$55

COMPANY

TYPE

10% 12% 14% 16% 18%

$50

Roche / Genentech

Pharmaceutical / Biotechnology

Gilead Sciences

Pharmaceutical / Biotechnology

$45

AbbVie

Pharmaceutical

$40

Verily

Biotechnology

0% 2% 4% 6% 8%

$35

SAN FRANCISCO Illumina Biotechnology Amgen Biotechnology Merck Pharmaceutical Gladstone Institutes $25 $30

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Asking Rent, $ PSF (NNN) Overall Vacancy Rate

Biotechnology Bristol Meyers-Squibb Pharmaceutical FibroGen Biotechnology

TOTAL BAY AREA STATS

SUBMARKET STATS

AVG. ASKING RENT (NNN) INVENTORY VACANCY

AVG. ASKING RENT (NNN) INVENTORY VACANCY

San Francisco (Mission Bay)

$57.84*

2,287,404 0.0%

San Francisco (Mission Bay)

$57.84*

2,287,404

0.0%

San Mateo County (Peninsula) Santa Clara County

$60.09

17,875,076 7.0%

North San Mateo Cty Central San Mateo Cty South San Mateo Cty

$63.87

10,359,792

8.3%

$31.03

4,918,223

7.6%

$47.60

3,762,728

6.9%

East Bay

$34.83 $47.83

7,988,067 8.8% 33,068,770 7.0%

$59.80

3,752,556

3.4%

TOTAL BAY AREA

*SF Asking Rate - Nothing is available and figure is reverting back to previous known rate. Recent deals done at $69.00 NNN

TOP THREE NIH-FUNDED INSTITUTIONS

UNIVERSITY OF CALIFORNIA, SAN FRANCISCO $640M

STANFORD UNIVERSITY $504M

UNIVERSITY OF CALIFORNIA, BERKELEY $128M

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