KEEGAN COPPIN COMPANY INC Commercial Real Estate Forecast Website www by bigpoppamust


                      KEEGAN & COPPIN COMPANY, INC.

                                     Real Estate

                  Website: * Email:

                                                      ONCOR INTERNATIONAL
                     OUR COMPANY

                            SANTA ROSA OFFICE

                                                                PETALUMA OFFICE

                              LARKSPUR OFFICE

                                 BROKER INSIGHTS
       Our company is blessed with the vision of our young agents starting
       out and the wisdom of our 20 year veterans. More and more inves-
       tors rely on us to seek higher returns with diversification.
       Our multi-faceted services and experience has contributed to our
       ability to complete complicated build-to-suits and major develop-
       ment projects.

                            Al Coppin & Jim Keegan
                      and Keegan & Coppin Company, Inc.-ONCOR International
       The Northbay is on a path to solid commercial growth. Vacancies created by the telecom offshoring trends
and the economic slowdown of 2002 are being filled up. New office spaces in Sonoma County and Marin County are
being absorbed notwithstanding an overall remaining vacancy of 20%. Marin has enjoyed much better absorption,
particularly Southern Marin with an overall vacancy of 16%.
       Prospects are excellent for continued job growth especially in the service sector and of course retailing.
However, gradually the entrepreneurial talent in our community is growing new companies. Our wine industry
is bouncing back. In-fill of existing space in Marin County is occurring with financial services, software and
entertainment tech companies.
       All the commercial brokerage companies and especially in our own investment activity is at an all time high.
Capital is chasing every possible real estate deal and driving cap rates down to 5 – 6%. Prices are going through the
roof for office buildings, $400-$500 psf in Marin and $225-$275 in Sonoma County.
       At this writing, while interest rates are up, cap rates are not following yet. Eventually there has to be some
upward pressure on cap rates. For our company, many local investors are going out of state to find single-tenant triple
net offerings to get a point to point and one-half higher return. We have placed investors in investment opportunities
from Atlanta, Texas to Oregon and all over California.
        Our national and worldwide connections to our partner companies, through ONCOR International, has
facilitated our ability to place many of our investors in excellent investment areas of the U.S.
      While leasing activity is picking up significantly, our investment placement and our national and international
work through ONCOR International is the fastest growing part of our business.
       We also are delighted with the growth of our property management and construction divisions posting
significant gain in revenues this past year.
       The most significant contribution to our growth however is linked to our new Office Group led by Managing
Partner, Shawn Johnson. We have continued our lead in Sonoma County for under contract major business park
and office park properties such as Airport Business Park, Fountaingrove Executive Center, Westwind Business park,
Santa Rosa Corporate Center, etc. with our 3 tiers of partnering and expertise we constantly bring in new people to
work with the 15-25 year experienced agents and partners. The Principals, Jim and myself, act as the coaches and
teachers, constantly monitoring and nurturing our tiered teams of new agents and veteran partners. Our clients like our
combination of sage-experienced agents and strongly directed and energetic apprentices to successfully market major
      This has worked very well in Marin County with Matt Storms, John Leydecker partnering with Josh Jones,
Theo Banks in very successful turnarounds such as the leasing of One and Three Harbor Drive in Sausalito.
       We also are proud to have been selected as the exclusive leasing agent for the San Rafael Corporate Center, one
of the most prestigious office projects in Marin County.
      In Napa we are handling the Gateway Business Park project and are proud of the sale of over 20 acres this year
by Randy Wood, our Director of that project.
      In summary, at Keegan & Coppin we are forecasting a strong commercial real estate market and we remain very
optimistic and we are poised for an even stronger response with our deep bench of experienced partners and agents and
energetic creative new apprentices to deliver positive results for all of our clients.
                                 SANTA ROSA OFFICE MARKET
                                                   By: Shawn Johnson, Partner
The Santa Rosa office market showed mixed signs over 2005 and into 2006 with some sectors showing strong activity and others
remaining flat.

The Santa Rosa office vacancy rate continued to climb up 1% to 13.8%. Sublease space continues to be a factor contributing 1.1% to
the overall 13.8% vacancy rate for the Santa Rosa area. The eight quarter office vacancy for the entire county remaining high near 21%
mostly due to Rohnert Park’s overall vacancy rate exceeding 39% due to the Agilent campus coming available for the first time and
flooding the market with over 700,000 sq. ft. of office/R&D space.

Santa Rosa Corporate Center located in the southwest area of Santa Rosa saw good activity with Transworld Systems relocating from
Rohnert Park to 2235 Mercury Way for a 32,000 square foot sublease with Nokia. Builders Exchange completed the purchase of two
14,000 square foot buildings of which they occupied one for their new headquarters.

CEP Investors began construction on a new single story 37,000 square foot office building which should be completed mid year.

The Stony Point Office Park vacancy inched higher due to company’s like Texas Instruments and Bank of Arizona closing their offices.
On a positive note the new residential real estate office of Keller Williams Realty is opening a new Santa Rosa branch and occupying
nearly 9,000 square feet at 120 Stony Point Road. The Santa Rosa Business Park also located in central Santa Rosa remained reasonably
strong with ease of access to and from major arteries, and numerous amenities, such as health clubs playing a major role.

The downtown core remained steady with the continued lease-up of Hugh Futrell’s project, a 41,200 square feet office/retail project.
The mix use high rise projects planned by Monahan Pacific located on the old White House parking lot as well as on the adjacent
property at 700 Third Street appears to be on track to bring mostly new residential to the downtown core with only ground floor retail
and no planned office space.

Existing downtown office tenants and building owners will face the additional challenge of remaining competitive with the overall region
now that the city has adopted the second phase of its downtown parking fee increase which raised its monthly cost for reserved spaces
from $57.00 to $130.00 per month over the last 2 year period.

Equity Office Properties acquisition of the Basin Street Office portfolio quickly made them one of the largest office landlords in
Santa Rosa with projects spread over all the office regions within Santa Rosa.

This will enable companies to consider expansion options with the same landlord over a much larger selection of areas and product
type which will give Equity Office Properties an advantage over other property owners.

Prior to selling the first of its Fountaingrove office building a 37,000 square foot two story building Basin Street completed leases
to CTX Mortgage, Mollin and Filippi and Silicon Valley Bank. With the success of this project they commenced construction on
their next building a 42,000 square foot project which should be completed in early spring and will be the new home of Liberty
Title and Bank of Petaluma. If the market holds strong Basin Street plans to proceed with the last two planned multi-story office
buildings of 55,000 and 80,000 square feet.

The downsizing of Washington Mutual at their 110,000 sq. ft. headquarters facility at 3883 Airway Drive also contributed to an
increase in the office vacancy rate but the facility was sold at the end of the year 2004to Nearon Enterprises which has now allowed
this exceptional property to be marketed to office tenants for the first time since it was built in 1983.

2005 proved to be both challenging due to the additional sublease space put in the market and corporate downsizing that still
occurred and promising with the new development activity and leasing activity that helped stabilize the office market. Rental rates
are firming especially in the higher quality projects due to the scarcity of available land and high construction costs. It is now
typical for Class A office space to be marketed between $2.00-$2.50 psf Full Service with Class B space between $1.65-$1.85 psf
Full Service. Tenant improvement costs also are on the rise and contributing to higher rental cost with a typical build out costing
between $45.00-$55.00psf.

Santa Rosa continued to be the strongest office market countywide in 2005 and it should continue to improve during 2005. The activity
and interest in the new projects under construction have been steady and the sublease space on the market continues to be absorbed.
Tenants continue to look for opportunities to purchase their space and this too leads to stronger market activity and a more stable base.
It appears developers have a good sense of the market and are continuing to provide quality office space to meet the current demand.
                             NAPA COUNTY MARKET OVERVIEW

       While not immune from events that have influenced the national and northern California economy, the Napa
commercial real estate market has held up surprisingly well during the economy turbulence of the last few years,
particularly when compared to most of the Bay Area.

       While the wine industry continues to dominate the market, new businesses moving into the South
County area over the last few years have included pharmaceutical, biotech and software firms. With an
industrial base of over 10.5 million square feet, vacancy rates are currently around 10%. Fully improved
industrial land ranges from $5.00 per square foot in the American Canyon area to $7.00 - $10.00 per square
foot in the Business Parks north of Green Island Road. Lease rates for warehouse space are in the $0.40 to
$0.45 per square foot NNN range with rents for light industrial space in the $0.55 to $0.65 per square foot

      Ranging from newer Class “A” office space in the Business Parks to older smaller buildings in the
downtown areas, there is approximately 2.2 million square feet of office space in the County. With office
vacancy rate is in the 11% range, rental rates for office space in the Business Park areas range from $1.45
to $1.75 per square foot for Class “A” space to $1.10 to $1.40 per square foot NNN for Class “B” office

      After several years of inactivity and prompted in large part by the Napa River Flood Control project and
the new American Center for Wine, Food and the Arts (COPIA) building, downtown Napa has experienced
a renaissance of its own. Having added more than 60,000 square feet of retail space over the last four years,
the downtown retail vacancy rate is below 5%, with rents in the $1.25 to $2.25 per square foot NNN range.
Downtown Napa has recently seen the opening of a new Talbot’s and Trader Joe’s.

      A second Target store and a new Cost Plus opened in 2004 and a Whole Foods Store is currently

      Even in light of current state and local budget issues and events that could affect the overall and
northern California economy in 2006, the outlook for Napa County is very positive. With relatively low
vacancy rates, limited available land for building and continued demand by businesses to locate in the area,
developers continue to build.

      For example, Ledcor Corporation is currently building a new 158 room Meritage Hotel in Napa Valley
Corporate Park; Bedford Property Investors has built a 88,000 square foot two-building office and light-
industrial complex and Panatonni Development plans two 60,000 square foot three-story office buildings in
the Napa Valley Corporate Park.

       Also, the new Montalcino Resort project is due to
begin this spring and work is well underway on the new Napa
Junction mixed use development and super Wal-Mart store
in American Canyon; Panattoni Development Company has
started construction on the first of two 150,000±s.f.industrial
buildings near the airport and the Napa Valley Gateway Plaza
will begin construction of a 100 room business hotel with
77,000±s.f. of office, retail and restaurants this spring.
                                  MARIN COUNTY MARKET OVERVIEW
                                                             OFFICE MARKET
       The Marin office market continues its return to a more stabilized footing with overall vacancy rates dropping to 12% on a
direct basis and 4.5% for sublease space. The more desirable Central Marin market has a vacancy rate of 8%, which is the lowest
rate experienced in quite a few years. Rents for prime Class A buildings have broken back through the $3.00 per square foot level
and tenant improvement allowances and other concessions are decreasing proportionally as landlords can finally afford to be more
aggressive in their pricing as normalcy returns to the market. Absorption for Class A office buildings has increased steadily over the
last two years as tenants are finally showing signs of needing additional space or look to upgrade office facilities before rising rental
rates filter through the entire market. LucasFilm Ltd. and some of its related entities finally moved to new headquarters space in San
Francisco’s Presidio, which put a combination of office and flex warehouse space totaling more than 400,000 square feet of space on
the market in East and North San Rafael, somewhat skewing the overall fourth quarter statistics. Also pushing vacancy rates higher
than what might be expected is the continued vacancy of large blocks of space in buildings with extremely large floorplates, such as
the Fireman’s Fund campus in Novato. The time of companies that employ hundreds of workers and that need such large floorplates
appear to be coming to an end, as Marin’s excessively high housing prices drive these employers to lower cost areas.

      The big news in Marin last year and going forward is the fact that large national property firms aggressively added to or
began buying office buildings in Marin. Equity Office Properties, a huge Chicago based REIT, purchased a large portfolio of Class
A buildings from Petaluma based developer Basin Street Properties which included three buildings in Novato. EOP also owns
the Shoreline Office Center in Mill Valley, several buildings in Larkspur and is reportedly buying One and Three Harbor Drive in
Sausalito. EOP also sold its downtown San Rafael Corporate Center to a joint venture controlled by Hines Interests, which completed
its Marin buying spree by purchasing the 455,000 square foot two-building Marin Tech Center project in Northern San Rafael.

                                                         INDUSTRIAL MARKET
       The market for industrial space in Marin remains extremely tight as owner-users have taken advantage of low interest rates
to purchase industrial properties and remove rental inventory from the market. Marin does not have much industrial space to begin
with, and vacancy rates in most areas hover below 4%. Large industrial users continue to move out of the Marin market either
eastward over the Richmond bridge to Solano County or northward to Sonoma and Napa counties. Lack of developable land and a
fairly low base of industrial space means that there is just not enough opportunity in Marin for local rapidly expanding companies
to secure expansion space and so unfortunately they are forced out of the area, taking their payrolls and sales out of Marin.

      Rents have increased slightly and are generally in a range of $1.00 to $1.50 per square foot. The LucasFilm film move noted
above did add approximately 140,000 square feet of light industrial space to the San Rafael market, but already three of the vacated
buildings have been “recycled” into new uses, and the entire amount of space is expected to be absorbed by year end due to the
overall lack of industrial product in Marin. Industrial sales have remained robust, especially to owner-users, and many of those
buyers are acquiring industrial condominium units. Prices for industrial buildings range from $225 to $285 per square foot. The
Vineyard condominium project in San Rafael, a mix of industrial, light industrial and office units sold out in fairly short order last
year, proving the demand for that type of building.

                                                            RETAIL MARKET
      Retail leasing remains extremely strong in Marin with a vacancy rate of only 3.3%. Many of Marin’s larger centers are either
just completing or are underway with renovation plans, including Strawberry Village and The Village in Corte Madera. The big
news in retail this year has been the planned opening of a number of new grocery stores, as companies either renovate or open new
stores to take advantage of Marin’s good demographics. Trader Joe’s and Whole Foods are opening new stores in Novato, Safeway
plans a new store in Ignacio and it also expanded and remodeled its Strawberry Village location. Best Buy is also constructing a
new 35,000 square foot store in San Rafael. Other “lifestyle” retailers such as Elephant Pharmacy are also opening in Marin to tap
into our wealthy population. Depending on location, retail leasing rates range from $2.00 to in excess of $4.00 per square foot.

                                                       INVESTMENT MARKET
       Rising interest rates may do for the Marin market what no other factor has so far been able to accomplish, and that is to slow
down the rise in demand for good Marin investment properties. Even though there is a relative lack of good investment product as
compared to other suburban areas, well designed and well located buildings continue to sell quickly in the Marin market. Owner
users taking advantage of historically low interest rates drove prices up for unoccupied buildings to higher levels than those of
occupied investment deals on a per square foot basis over the last two years. Vacant buildings often trade at premiums of as much as
25% or more as owner-users will outbid traditional property investors in order to secure good real estate. We expect higher interest
rates to have a moderating effect on this phenomenon during 2006.

       Cap rates remain relatively low in a range of 6% or lower for commercial properties, although as noted above rising interest
rates will put pressure on those low cap rates. Small office buildings range from $275 to in excess of $500 per square foot for well
located buildings in downtown areas. Industrial sales are in a fairly narrow range of $225 to $275 per square foot. Retail prices range
from $200 to more than $300 per square foot and even higher for trophy properties.
                                                        MARKET TRENDS
                         OFFICE MARKET AT A GLANCE
                                                                                                            BUILDINGS      VACANCY        AVG. ASKING
                SUBMARKET                                        AVAILABLE SPACE
                                                                                                            PLANNED          RATE            RATE

                                         BLDG. BASE     Direct      Sublease                 Total                           4th Qtr.

 Santa Rosa                                 5,922,144    751,205       67,089                 818,294            24,000         13.8%               $1.65

 North Corridor (Airport area/Windsor)      1,055,416    233,953       33,906                 267,859           271,939         25.4%               $1.50

 Rohnert Park                               1,583,857    606,481       12,788                 619,269                  0        39.1%               $1.12

 Petaluma                                   2,500,055    405,575      214,063                 619,638           341,934         24.8%               $1.44

 SONOMA COUNTY TOTALS                      11,061,472   1,997,214     327,846                2,325,060          637,873         21.0%

 Sausalito                                    357,647      35,274                              35,274                  0          9.9%              $2.51

 Tiburon                                       17,715       1,886              0                 1,886                 0        10.6%               $2.45

 Mill Valley                                  333,594      21,436      20,000                  41,436                  0        12.4%               $2.71

 Corte Madera                                 366,529      12,605              0               12,605                  0          3.4%              $2.30

 Larkspur-Greenbrae                           610,232      66,794              0               66,794                  0        10.9%               $2.75

 San Rafael                                 2,766,722    436,989        43,911                480,900           114,618         17.4%               $2.17

 Novato                                     2,080,323    205,691      232,626                 438,317            29,044         21.1%               $1.87

 MARIN COUNTY TOTALS                        6,532,762    780,675      296,537                1,077,212          143,662         16.5%

 Downtown Napa                              1,102,586      57,750                              57,750            68,108           5.2%

 Gateway Business Park                        368,790     114,555                             114,555                  0        31.1%               $2.15

 Napa Valley Business Park                    140,660       9,321                                9,321           26,000           6.6%

 Napa Valley Corporate Park                   360,299    196,933                              196,933           240,000         54.7%               $1.30

 American Canyon                               16,145                                                0                 0          0.0%              $2.25

 NAPA COUNTY TOTALS                         1,988,480    378,559                              378,559           334,108         19.0%

                         4th Qtr              4th Qtr
                          2004                 2005                  VACANCY
SONOMA                   21.7%                21.0%          ↓                                           INDUSTRIAL MARKET AT A GLANCE
MARIN                    18.4%                16.5%          ↓
NAPA                     11.0%                11.4%          ↑                                  SUBMARKET                                           AVAILABLE SPACE
                                                                                                                                                                                    BUILDINGS    VACANCY     AVG. ASKING
                                                                                                                                                                                    PLANNED        RATE         RATE

                       INDUSTRIAL                                                                                          BLDG. BASE      Direct       Sublease        Total                     4th Qtr.

                                                                               Santa Rosa                                     8,550,428      438,456         91,100     529,556        214,400        6.2%          $0.80

SONOMA                  8.6%       6.9%                                        North Corridor (Airport area/Windsor)          5,445,734      283,654        150,897     434,551         69,847        8.0%          $0.75

MARIN                   2.7%       3.9%                     ↑                  Rohnert Park









NAPA                    11.2%     10.0%                     ↓                  SONOMA COUNTY TOTALS                          22,778,584    1,228,606        339,585    1,568,191       315,247        6.9%

                                                                               Sausalito                                        455,000             0              0            0           0         0.0%          $1.68

                           RETAIL                                              Mill Valley                                      126,000             0              0            0           0         0.0%

SONOMA                   3.2%                 3.9%          ↑                  Corte Madera                                     295,500        1,374               0       1,374            0         0.5%

MARIN                    5.1%                 3.3%          ↓                  Bahia de Rafael

                                                                               San Rafael


                                                                                                                                              61,669         11,500
                                                                                                                                                                   0     117,711



                                                                                                                                                                                                      2.8%          $1.08

                                                                               Northgate                                        516,188             0              0            0           0         0.0%

                                                                               Novato                                         1,778,659       61,628               0      61,628            0         3.5%          $0.95

                                                                               MARIN COUNTY TOTALS                            6,444,347      242,382         11,500     253,882             0         3.9%

                                                                               Enterprise Industrial Park                       362,114       42,244                      42,244            0        11.7%          $0.75

                                                                               Green Island Industrial Park                   3,791,256       28,862                      28,862            0         0.8%          $0.65

                                                                               Napa Airport Centre                            1,729,322      224,183                    224,183             0        13.0%          $0.80

                                                                               Napa Valley Business Park                        402,710       80,899                      80,899        62,000       20.1%          $0.75

                                                                               Napa Valley Corporate Park                       797,681       66,867                      66,867        88,560        8.4%          $0.90

                                                                               Napa Valley Gateway                            1,230,192      239,304                    239,304         37,500       19.5%          $0.90

                                                                               North Napa                                       581,726      171,878                    171,878             0        29.5%          $0.70

                                                                               South Napa - Hwy. 29                             975,572      278,207                    278,207             0        28.5%          $0.75

                                                                               NAPA COUNTY TOTALS                             9,870,573    1,132,444                   1,132,444       188,060       11.5%

                                         SONOMA COUNTY

                 POPULATION                     477,500

                 MEDIAN HH INCOME               $61,997

                 UNEMPLOYMENT RATE              4.4%

                                         MAJOR EMPLOYERS

                    Agilent Technologies                      Optical Coating Laboratory
                    St. Joseph Health Systems                 JDS Uniphase Corporation
                    Sonoma State University                   Medtronic AVE
                    Santa Rosa Junior College                       Kaiser Permanente

POPULATION          250,200
                                                                         NAPA       SOLANO
MEDIAN HH INCOME            $82,867
                                          POPULATION                     134,400      412,881
UNEMPLOYMENT RATE          3.9%           MEDIAN HH INCOME               $59,416       $64,873

                                          UNEMPLOYMENT RATE 4.4%                        5.9%
                                                           MAJOR EMPLOYERS
Kaiser Permanente                         NAPA                                SOLANO
Marin General Hospital                    Queen of the Valley Hospital    ALZA Corp.
Fireman’s Fund Insurance Company          St. Helena Hospital             Anheuser Busch
Safeway Stores                            Dey Laboratories, Inc.          Genetech
Autodesk                                  County of Napa                  Abertsons Distrib. Ctr.
Green Point Mortgage Funding              Robert Mondavi Corp.            Copart, Inc.
BioMarin                                  Silverado Resort                State Farm Insurance
Contact Us

  For further information on our company or listings please contact us or check out our website at We will be pleased to provide the most up-to-date material on your inquiry.

                                      Santa Rosa Office
                                    1355 North Dutton Avenue
                                     Santa Rosa, CA 95401
                              (707) 528-1400 -- Fax (707) 524-1419

                                       Petaluma Office
                                      1201 North McDowell
                                      Petaluma, CA 94954
                              (707) 664-1400 -- Fax (707) 792-7336

                                         Marin Office
                                   101 Larkspur Landing Circle
                                       Larkspur, CA 94939
                              (415) 461-1010 -- Fax (415) 925-2310

                                         Napa Office
                                      477 Devlin Road #104
                                        Napa, CA 94558
                              (707) 252-1400 -- Fax (707) 252-5375

                                       Sonoma Office
                                       524 Broadway, #B
                                       Sonoma, CA 95476
                              (707) 935-1400 -- Fax (707) 935-1439

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