cCARE | Offering Memorandum

M A R K E T SAN DIEGO MEDICAL OFFICE SNAPSHOT 4Q 2018 ECONOMY

• The San Diego employment market continued to record job growth, adding 28,400 jobs (+1.9%) year-over-year through December 2018.1 During the same time period, the unemployment rate decreased 10 basis points (bps), dropping to 3.2%. Also worth noting, the current rate is 270 bps below the 28-year average of 5.9%. • All employment sectors are expected to grow at a combined growth rate of 1.3% in 2019. San Diego’s economy of $231.8 billion2 as measured by gross regional product is forecasted to grow an additional 3.1% in 2019, above its 10-year average of 2.7%. MARKET OVERVIEW • Positive absorption of medical office continued throughout the county, totaling 148,000 sf in Q4 2018, which equates to 1.2% of total inventory. As every submarket enters 2019 with single-digit vacancy rates, the demand for new development or conversion of office buildings to medical office buildings continues. • Direct net absorption countywide totaled 148,000 sf in Q4 2018, but only 140,000 sf in 2018, indicating a year of flat absorption outside of Q4. The significant positive absorption was found in the I-15 Corridor, driven by UCSD and Rogers Behavioral Health, and throughout the North County.

6.4% OVERALL VACANCY 390 TOTAL # OF PROJECTS

139,606 YTD NET ABSORPTION SF 364,330 SF YTD LEASING ACTIVITY $3.15/SF AVERAGE ASKING RENT (FSG) 12,622,755 SF TOTAL INVENTORY 3.2% SAN DIEGO UNEMPLOYMENT RATE

PALOMAR MEDICAL CENTER ESCONDIDO

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CCARE | 838 NORDAHL ROAD, SUITE 300, SAN MARCOS