ISSUE ISSUE 2010 2008 2011

ENDING

Q1 Q2

20 & 40 Pacifica

this issue
Building Spotlight Executive Summary Market Graphs Team Information 1 1 3 5

PROJECT SPOTLIGHT: 20 & 40 Pacifica, Irvine
Twin 15-story two-tone Italian travertine marble towers located in the heart of Irvine Spectrum with attractively landscaped courtyards, peaceful pathways and sitting areas. A parking structure with on-site attendants and auto detailing adds convenience and quality.

A GUIDE FOR DECISION MAKING BY: SCOTT W. JOHNSTONE

ORANGE COUNTY OFFICE MARKET

EXECUTIVE SUMMARY: Mixed Emotions
Local economic optimism during the beginning of the year culminated into a solid quarter of absorbtion for the Orange County office market. From April to June it achieved over half a million square feet of positive net absorbtion, a level not reached since third quarter of 2006. Tenant move-ins from technology, professional services, law firms, and healthcare tenants lowered the vacancy rate by 120 basis points to 18.4 percent, down from the peak of 20.5 percent recorded one year ago. Laterla moves for same size spaces are decreasing and there have been numerous lease ezpansions. Many companies that downsized in prior years to save money - buoyed by rising consumer confidence and a decreasing unemployment rate - are looking to expand. The Conference’s Board ‘s consumer confidence index reached lending 70 points in february 2011; a new peak over the past three years. Orange County’s May unemployment rate - currently the lowest in Southern California - fell 70 basis points to 8.5 percent over the previous 12 months. Improvement, rather than erosion, of such indicators since the beginning of the year led to healthy absorbtion in the second quarter. Emerging out of the hampered industry, mortgage company LoanDepot.com is an example of companies’ expectations of forecoming growth. The company leased almost 70,000 square feet in Foothill Ranch with plans to move its headquarters as well as begin a new wholesale lending company in the adjacent building. Cont’d on Page 2...

Two twin towers totaling 630,000 sq/ft Easy access to the 405 and 55 Freeways and 73 Toll Road Ample surface structure parking. and

On-site Specialty’s Café and Bakery with outdoor dining area. On-site Mickey Fine sundries store and dry cleaners. Rental Rates: $2.20 - $2.35 FSG

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...Cont’d from Page 1:

Despite the recent soft patch in the economy, investment activity is picking up as well, and some of this demand is coming from outside the country. In one of the largest office sales in Orange County this year, 4 Hutton Drive in Santa Ana was purchased by an Asian investor for $37 million ($176 per square foot). It was sold by Legacy partners for 40 percent less than what they paid for it back in 2007. This is an indication of where values are now, relative to the height of the market a few years ago. Overall asking rents continued to decline, albeit at a slower rate, in all submarkets. West County was the only exception, where asking rents increased $0.06 to $1.73 over the past three months. The Airport submarket, specifically class A Propoerties, attained the largest net absrbtion of over 220,000 square feet during the quarter, as tenants took advantage of the $0.04 drop in asking rents in the highly sought-after area. Orange County’s office availability rate was 23.1 percent, down 50 basis points when compared to the first quarter. The availability rate’s quarter-to-quarter decline was lower than vacancy’s, illustrating the abundance of space still available in the marketplace.

Orange County Second QuarterMarket Trends Second Quarter 2011 Office 2011 Market Trends
Rentable Square Feet Airport Area Corona Del Mar Costa Mesa Irvine Newport Beach Santa Ana Tustin Total North Orange County Anaheim Brea Buena Park Fullerton La Habra La Palma Orange Placentia Yorba Linda Total South Orange County Aliso Viejo Dana Point Foothill Ranch Irvine Spectrum* Laguna Beach Laguna Hills Laguna Niguel Lake Forest Mission Viejo Rancho Santa Margarita San Clemente San Juan Capistrano Total Central Orange County Anaheim Orange Santa Ana Tustin Total West Orange County Cypress Fountain Valley Garden Grove Huntington Beach Los Alamitos Seal Beach Stanton Westminster Total Orange County Total Source: G&E Genie Under Construction Square Feet 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Vacant Square Feet Vacancy Rate 2Q11 Available Square Feet Availability Rate Average Asking Rent (FSG) Net Absorption 2Q11 Year-to-Date Net Absorption

Orange County

139,347 5,417,532 21,260,061 8,002,355 4,036,709 379,658 39,235,662 1,050,641 3,105,389 530,251 992,428 313,469 462,396 290,696 239,347 329,914 7,314,531 2,235,010 210,660 496,314 7,355,478 90,845 1,530,609 600,991 2,111,441 1,370,017 293,615 278,316 937,471 17,510,767 3,577,473 5,828,625 5,379,406 701,071 15,486,575 1,698,482 983,665 646,135 1,844,352 466,847 294,524 85,917 584,400 6,604,322 86,151,857

2,916 1,205,385 4,724,102 1,302,929 762,179 102,800 8,100,311 128,014 671,868 95,610 119,868 12,611 61,493 137,827 37,733 30,304 1,295,328 512,411 0 269,737 1,063,070 4,300 225,556 59,435 372,747 258,687 33,361 34,264 104,984 2,938,552 550,018 1,108,933 993,226 124,007 2,776,184 135,177 80,166 47,284 361,001 40,040 24,851 6,009 73,834 768,362 15,878,737

2.1% 22.2% 22.2% 16.3% 18.9% 27.1% 20.6% 12.2% 21.6% 18.0% 12.1% 4.0% 13.3% 47.4% 15.8% 9.2% 17.7% 22.9% 0.0% 54.3% 14.5% 4.7% 14.7% 9.9% 17.7% 18.9% 11.4% 12.3% 11.2% 16.8% 15.4% 19.0% 18.5% 17.7% 17.9% 8.0% 8.1% 7.3% 19.6% 8.6% 8.4% 7.0% 12.6% 11.6% 18.4%

2,916 1,348,752 5,630,099 1,696,179 941,692 111,596 9,731,234 113,604 735,405 138,262 148,027 19,365 73,488 137,827 41,192 34,415 1,441,585 695,991 0 243,708 1,723,620 4,300 278,061 97,105 598,182 331,352 35,201 47,632 105,568 4,160,720 787,298 1,373,430 1,036,112 184,061 3,380,901 378,563 111,292 60,373 400,028 39,898 75,580 7,190 90,819 1,163,743 19,878,183

2.1% 24.9% 26.5% 21.2% 23.3% 29.4% 24.8% 10.8% 23.7% 26.1% 14.9% 6.2% 15.9% 47.4% 17.2% 10.4% 19.7% 31.1% 0.0% 49.1% 23.4% 4.7% 18.2% 16.2% 28.3% 24.2% 12.0% 17.1% 11.3% 23.8% 22.0% 23.6% 19.3% 26.3% 21.8% 22.3% 11.3% 9.3% 21.7% 8.5% 25.7% 8.4% 15.5% 17.6% 23.1%

$2.75 $1.92 $2.10 $2.32 $1.82 $1.51 $2.09 $1.32 $1.95 $1.64 $1.59 $1.58 $2.01 $2.16 $1.48 $1.67 $1.83 $2.00 $0.00 $1.94 $2.01 $3.60 $1.85 $1.91 $1.74 $1.73 $1.50 $2.03 $1.91 $1.77 $1.90 $1.61 $1.78 $1.77 $1.59 $1.65 $1.36 $1.86 $1.79 $2.29 $1.22 $1.61 $1.76 $1.96

0 10,683 135,250 22,159 93,444 (5,528) 256,008 (245) 7,285 (2,936) (5,590) 1,026 24,058 (2,000) 777 (435) 21,940 6,661 0 (2,459) 123,797 (3,400) 1,766 (1,740) 38,249 25,626 1,854 5,357 7,709 203,420 48,235 52,657 (5,744) 1,561 96,709 (14,233) (598) 1,100 10,856 (2,290) (550) 2,033 1,942 (1,740) 576,337

0 25,877 239,840 104,704 158,696 (5,528) 523,589 36,550 (16,962) 24,199 (14,901) 1,026 27,460 (2,000) 28,345 3,051 86,768 (56,076) 0 40,499 519,761 (3,400) 27,976 8,343 46,081 26,467 4,229 (666) (6,107) 607,107 47,915 25,502 6,837 29,403 109,657 (18,416) (7,090) 2,521 9,126 (1,057) (3,549) 2,033 2,742 (13,690) 1,159,795

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Vacant Space by Submarket
Vacancy Rates by Submarket Orange County Office Space, Second Quarter 2011 25.0%
20.6%

20.0% 15.0%

17.9%

17.7% 16.8%

11.6%

10.0% 5.0% 0.0% Airport Area Central County North County South County West County

Vacancy Rates by Submarket Orange County Office Space, Second Quarter 2011 25.0%
20.6%

Vacancy Rates by Submarket
17.9% 17.7% 16.8%

20.0%

Vacant Space by Submarket Orange County Office Space, Second Quarter 2011 15.0%

10.0%

10,000,000 9,000,000 7,000,000
8,100,311

11.6%

5.0%8,000,000 0.0%6,000,000
5,000,000 Airport Area 4,000,000 3,000,000 2,000,000 1,000,000 0

Central County

North County

South County
2,938,552

West County

Net Absorption Square Footage by Submarket 2,776,184 Orange County Office Space, Second Quarter 2011 300,000
256,008

Net Absorbtion Square Footage by Submarket
1,295,328 768,362

250,000 Area Airport

Central County

North County

South County
203,420

West County

200,000 Vacant Space by Submarket Orange County Office Space, Second Quarter 2011 150,000

10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Airport Area Absorption Square Footage 1997-2011 Central County Historical Net North County South County
0
(1,740)

100,000
8,100,311

96,709

50,000
21,940

(50,000)

Airport Area

Central County
2,776,184

North County

South County

West County
2,938,552

1,295,328

768,362

West County

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Historical Average Sale Price Per Square Foot Orange County Office Space, 2000-2011, Second Quarter 2011 $400 $350 $300 $250 $200 $150 $100 $50 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $132 $125 $135 $182 $171 $144 $151 $156 $222 $255

Historical Average Sale Price Per Square Foot
$314 $268

Notable Sale Transactions:
2600 Michaelson Dr - Sale Irvine 7700 Irvine Center Dr - Sale Irvine 4 Hutton Centre Dr - Sale Santa Ana Size: 210,041 Square Feet Price Per SF: $176.16 1063 McGaw Ave - Sale Irvine Size: 56,741 Square Feet Price Per SF: $128.21 1200 N Main St - Sale Santa Ana Size: 143,456 Square Feet Price Per SF: $64.13

Size: 308,000 Square Feet Size: 210,000 Square Feet Under Construction History Price Per SF: $230.00 Price Per 2011 Orange County Office Space, 1990-2011, Second Quarter SF: $269.00

3,500,000 1201 Dove - Sale
Newport Beach 3,000,000 Size: 82,007 Square Feet Price Per SF: $219.49 2,500,000 27184 Ortega Hwy - Sale San2,000,000 Juan Capistrano Size: 25,561 Square Feet 1,500,000 Price Per SF: $179.96

Pacific Corporate Plaza - Sale

Aliso Viejo Size: 124,710 Square Feet Price Per SF: $141.93 35 Tesla Drive - Sale Irvine Size: 36,000 Square Feet Price Per SF: $208.33

Total Square Feet

1,000,000
3161 Michelson - Lease 500,000 Irvine Lessee: Jacobs Engineering 0 Size: 50,000 Square Feet 1994 1991 1992 1993 26880 Aliso Viejo - Lease Aliso Viejo Lessee: Xpert Marketing Size: 16,278 Square Feet

Notable Lease Transactions:
3501 Jamboree Rd - Lease Newport Beach Lessee: CB Richard Ellis 2121 Alton Pkwy - Lease Irvine Lessee: Ayn Rand Institute

Size: 22,393 Square 2010 1995 1996 Size: 1998 1999 Square Feet 1997 87,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Feet 2011

Year 2050 Main St - Lease
Irvine Lessee: Orrick Law Firm Size: 24,000 Square Feet

18101 Von Karman - Lease Irvine Lessee: Epicor Software Size: 68,235 Square Feet

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TEAM EXPERIENCE

Notable Team Transactions:

With over 25 years in the business, we pride ourselves as market makers, providing our clients the most udpated and in-depth perspective on todays marketplace. Our experience and historical knowledge allows our clients to make smarter decisions, resulting in more profit and cost saving opportunities. The combination of a sole proprietors mentality and attention to detail mixed with institutional experience truly makes us a single source solution for all of your Corporate Real Estate needs.
TEAM CAPABILITIES

85 Enterprise - Lease Aliso Viejo Lessee: Buy.com Size: 33,781 Square Feet Term: 49 Months Average Rate: $1.72/SF

• • • • • •

Lease Renegotiation Multimarket Corporate Representation Property Analysis + Space Optimization Architectural Review Relocation Analysis Site Aquisition

• • • • • •

Employee Location Optimization Construction Management Lease Administration Market Data & Analysis Property Analysis Lease Negotiations

120 Vantis - Lease Aliso Viejo Lessee: Sunstone Hotels Size: 24,546 Square Feet Term: 8 years Average Rate: $1.70/SF PBS SoCal: “By combining the company’s headquarters and TV studio under one location, PBS SoCal has finally found a home in Orange County. We found your team’s attention to detail, market knowledge, negotiation tactics and professionalism paramount in getting us the best deal possible for the foundation. We appreciate your ability to align our short and long term goals for the foundation with our new office lease and location. Without your team’s help, this would not have been possible. On behalf of PBS SoCal Foundation, we would recommend you to anybody who would need representation or information on the Real Estate Market ” -Mr. Mel Rogers, CEO/ President

SCOTT JOHNSTONE President Bridge Commercial Properties
CA License # 00950979

HANA PARADEISER Marketing Coordinator Bridge Commercial Properties P 818.620.4376 F 949.798.5501
hana@bridgecre.com

P 949.978.5659 C 949.300.1057
scott@bridgecre.com

The information contained herein was obtained from third parties, and has not been independently verified by the real estate brokers. Buyers/tenants should have the experts of their choice inspect the property and verify all information. Real estate brokers are not qualified to act as or select experts with respect to legal, tax, environmental, building construction, soils-drainage or other such matters.