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					        Southern California

The Inland Region’s Emerging White-
 Collar Workforce and the expected
     Challenges & Opportunities
Office Vacancy Rates



   30%
   25%
   20%                                                   U.S.
                                                         LA
   15%
                                                         OC
   10%
                                                         IE
    5%
    0%




                                                    07
    91

          93

                95

                      97

                            99

                                  01

                                        03

                                              05
                                                   3Q
         19

               19




                           19




                                       20

                                             20
   19




                     19




                                 20
Office Vacancy Rates by Market
Third Quarter 2007




                      0%   5%    10%   15%

       Los Angeles

      Inland Empire

    Orange County

          San Diego

       U.S. Average
Office - Class A Asking Rent by Market (FSG)
Third Quarter 2007




                     $0   $10   $20   $30      $40   $50

     Los Angeles

    Inland Empire

      Orange Co.

        San Diego

     U.S. Average
Office - % of Under Construction, by Market
Third Quarter 2007

                                        Inland Empire,
                                             29.3%




    Los Angeles ,
        24.3%




                                                         Orange County
                                                             17.8%




                     San Diego, 28.6%
Inland Empire Office Market
Competitive Base, Completed Inventory


                      24,000,000



                      18,000,000
      (square feet)




                      12,000,000



                       6,000,000



                              0




                                                                                         07
                                   98

                                         99

                                               00

                                                     01

                                                           02

                                                                 03

                                                                       04

                                                                             05

                                                                                   06
                                                                                        3Q
                               19

                                        19

                                              20

                                                    20

                                                          20

                                                                20

                                                                      20

                                                                            20

                                                                                  20
Inland Empire Office Market
Absorption Activity (& Vacancy)



   2,000,000                                                       24%

                                                                   20%
   1,600,000

                                                                   16%
   1,200,000
                                                                   12%
    800,000
                                                                   8%

    400,000
                                                                   4%

          0                                                        0%
               1998 1999 2000 2001 2002 2003 2004 2005 2006 3Q07

                              Absorption Activity    Vacancy
Inland Empire Office Market
Under Construction


                      3,000,000


                      2,500,000


                      2,000,000
      (square feet)




                      1,500,000


                      1,000,000


                       500,000


                             0
                                  1998 1999 2000 2001 2002 2003 2004 2005 2006 3Q07
Office Permit Valuations
in millions, Inland Empire



                                                                                                                  $307.9




                                                                                                             $233.0
                                                                                                        $211.4




                                                                                                   $146.4
    $135.3



             $84.3
                                                                                     $63.4 $65.8
                     $55.6 $57.6
                                           $41.6                             $46.4
                                   $33.8                             $39.9
                                                   $31.6 $33.9 $31.1
   90

   91

   92

   93

   94

   95

   96

   97

   98

   99

   00

   01

   02

   03

   04

   05

   06
 19

 19

 19

 19

 19

 19

 19

 19

 19

 19

 20

 20

 20

 20

 20

 20

 20
                                                            Source: Construction Industry Research Board
California Consumer Confidence



   130.0

   120.0

   110.0

   100.0

    90.0

    80.0
      Sep-06   Dec      Mar      Jun   Sep-07
Inland Empire Office Market
Average Asking Lease Rates



      $2.20

      $2.00

      $1.80

      $1.60

      $1.40

      $1.20

      $1.00




                                                                    07
              98

                    99

                          00

                                01

                                      02

                                            03

                                                  04

                                                        05

                                                              06
                                                                   3Q
          19

                   19

                         20

                               20

                                     20

                                           20

                                                 20

                                                       20

                                                             20
                                Class A          Class B
High Profile Office Developments
Inland Empire

   Regency Tower
   10-Story, 250,000 sq. ft.
   Asking Rental Rate: $3.05 – 3.15 FSG
   Completion: Summer 2009




   Ontario Airport Towers
   Potentially 500,000 sq. ft.
   Asking Rental Rate: $2.65 FSG
   Completion: 2008 (Phase I)
High Profile Office Developments
Inland Empire

   Lakeshore Plaza
   (1) 4-Story, (2) 6-Story Buildings
   Total: 473,000 sq. ft.
   Asking Rental Rate: $3.05 – 3.15 FSG
   Completion: 2008 (Phase I)


   Tri-City Corporate Centre
   1.2 million sq. ft.
   Mixed-Use Development
   (6) Class “A” Office Towers;
   (4) 2-Story Office Buildings;
   (2) Single Story Buildings
High Profile Office Developments
Inland Empire
   The Towers at Riverwalk
   (2) 4-Story, Buildings (Final Phase)
   Total: 200,000 sq. ft.
   Completion: 2008
   Total Office Portion of
   Turner Riverwalk: 500,000 sq. ft.


   Intellicenter Riverside
   Green Development
   (1) 3 or 4-Story Building
   Situated within the 1,000-acre,
   master planned, Meridian
   business park
Notable Tenant Move-Ins
2007

  Just Mortgage Inc.
  Rancho Cucamonga / Pre-Lease     60,000 sq. ft.


  Kaiser Health Foundation Plan
  Rancho Cucamonga / Pre-Lease     41,800 sq. ft.


  David Evans & Associates, Inc.
  Ontario / Sublease               25,960 sq. ft.
Notable Tenant Move-Ins
2007 (continued)

   Co-Op Financial Services
   Rancho Cucamonga / Pre-Lease    75,000 sq. ft.


   Freemont Investment & Loan
   Ontario / Pre-Lease            48,000 sq. ft.


   Wells Fargo Home Mortgage
   San Bernardino / BTS           230,728 sq. ft.
Educated Workers Migrating Inland
BA or Higher Education (Adults 25 & Up)

        Educated Workers are Migrating Inland
                             441,491



                                                                    41.4%
            312,257




                                                129,234




             2000             2006            2000-2006            Percent

                      Source: John Husing, 2000 Census, 2005 American Community Survey
Professional, Scientific & Engineering Job Gains
Inland Empire



       3rd Fastest Growing Sector in 2006:                                                                          5,800

               Up 58.4% in 2 Years
                                                                                                            4,000



                                                                              2,500 2,500
                                                                                                    2,300

                                                              1,600                         1,600
                                                                      1,400
                                                        900
       700
                                  100


                                                 -300
      91

      92

      93

      94

      95

      96

      97

      98

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      00

      01

      02

      03

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      05

      06
             -600
    19

    19

    19

    19

    19

    19

    19

    19

    19

    20

    20

    20

    20

    20

    20

    20
                         -1,700
                                        -2,100
                    -2,300




                                         Source: John Husing, CA Employment Development Department
White Collar Job Base & Number of Firms
Inland Empire, San Diego Co. & Orange Co., 2006 or 2007


                   Job Base, Feb-2007       Firms, Mar-2006

                                                              1,523,800

           1,308,500
                                1,305,700




                       87,509                 91,639                      95,503



           Inland Empire        San Diego County              Orange County
Office Square Feet Per Job
Southern CA Areas, 2006



                                                                         52.3
                                  48.1
                                                      44




             18.6




         Inland Empire      Orange County         LA County        San Diego Co.

                    Source: John Husing, CA Employment Development Dept., CA Dept. of Finance

				
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