INDUSTRIAL MARKET REPORTCHARLOTTE, NORTH CAROLINA

Q1 2014 | INDUSTRIAL

www.colliers.com/charlotte

MARKET INDICATORS

RELATIVE TO PRIOR QUARTER FORECAST

VACANCY

ABSORPTION

RENTAL RATE

CONSTRUCTION

Developers are One Step Away From Breaking Ground

CHARLOTTE INDUSTRIAL MARKET > E-commerce and Manufacturing

demands will drive developers to build larger distribution centers.

> Single Tenant free standing buildings are in demand for purchase.

> Landlords continue to push warehouse and flex rents.

> Q1 2014 STATISTICS

132,677,635 SFTOTAL MARKET INVENTORY

6.19%OVERALL VACANCY RATE

5.05%WAREHOUSE VACANCY RATE

• In the first quarter, net absorption in the Charlotte Industrial Market was a positive 486,450 square feet bringing the vacancy rate to 6.19% as both medium and large users continue to return from the sidelines.

• The largest lease signed in the 1st quarter was 950,000 square feet within Riverwalk Business Park in Rock Hill, SC.

• Due to dwindling large blocks of Class A space, the average warehouse rents are hovering at $4.18 psf. At this level it will create the momentum needed for additional developers to enter our market place.

• Beginning in the second half of last year, tenants have capitalized on favorable financing

terms and have actively been pursuing purchasing their existing leased buildings. An example of this is Inteplast Group, Ltd., located within Beacon Commerce Park, acquired their 178,442 SF building from landlord Beacon Partners.

• Speculative momentum in the market has continued within the southern corridor.

Developers East Group and Childress Klein will add to their portfolios at Steele Creek Commerce Business Park and Ridge Creek West.

• Along I-85 N Childress Klein, Silverman Group and Trinity Capital are under construction with speculitive projects.

Absorption Deliveries Vacancy %

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25%

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(1,000,000)

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2004

2005

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2014

CLASS A BULK BUILDINGS - Lease rates derived from a representative set of newer tilt-up, concrete buildings averaging 250,000 SF with bulk ceiling height and standard dock door configuration.

CLASS B WAREHOUSES - Lease rates derived from a representative set of facilities from 50,000 SF to 150,000 SF with 20’+ clear height and a functional dock loading configuration.

COMPARISON OF LEASE RATES

Class A & B Existing Buildings

$4.05AVERAGECURRENT

RATE

$3.25AVERAGECURRENT

RATE

CHARLOTTE, NORTH CAROLINA INDUSTRIAL MARKET

BldgsTotal

InventorySq Ft

Direct VacantSq Ft

DirectVacancy

Rate

Sublease Vacant Sq Ft

Sublease Vacancy

Rate

Total Vacant Sq Ft

VacancyRate

Current

VacancyRate

Prior Qtr

Net AbsorptionCurrent Qtr

SF

Net Absorption

YTD SF

Net New Supply Current Qtr

SF

Net New Supply YTD SF

UnderConstruction

Sq Ft

AvgRentalRate

CENTRALWAREHOUSE 281 8,865,730 488,374 5.51% 0 0.00% 488,374 5.51% 5.52% 1,446 1,446 - - - $4.21FLEX 22 904,329 76,946 8.51% 0 0.00% 76,946 8.51% 8.24% (2,450) (2,450) - - - $16.57Total 303 9,770,059 565,320 5.79% 0 0.00% 565,320 5.79% 5.78% (1,004) (1,004) - $6.76

AIRPORT/WESTWAREHOUSE 243 12,468,568 684,326 5.49% 0 0.00% 684,326 5.49% 5.69% 25,295 25,295 - - - $3.91FLEX 48 1,863,727 162,567 8.72% 0 0.00% 162,567 8.72% 8.91% 3,438 3,438 - - - $6.99Total 291 14,332,295 846,893 5.91% 0 0.00% 846,893 5.91% 6.11% 28,733 28,733 - - - $4.30

NORTHWAREHOUSE 195 16,077,197 521,635 3.24% 46,000 0.29% 567,635 3.53% 4.82% 234,689 234,689 28,881 28,881 78,319 $4.84FLEX 93 3,741,275 433,607 11.59% 3,300 0.09% 436,907 11.68% 10.53% (42,867) (42,867) - - - $8.31Total 288 19,818,472 955,242 4.82% 49,300 0.25% 1,004,542 5.07% 5.90% 191,822 191,822 28,881 28,881 78,319 $5.66

NORTHWESTWAREHOUSE 222 13,487,987 841,107 6.24% 0 0.00% 841,107 6.24% 6.43% 26,206 26,206 - - - $3.93FLEX 13 528,593 20,125 3.81% 0 0.00% 20,125 3.81% 3.24% (3,000) (3,000) - - - $5.96Total 235 14,016,580 861,232 6.14% 0 0.00% 861,232 6.14% 6.31% 23,206 23,206 - - - $3.94

EASTWAREHOUSE 503 19,908,264 717,090 3.60% 0 0.00% 717,090 3.60% 3.86% 50,611 50,611 - - - $4.36FLEX 97 3,751,567 510,117 13.60% 0 0.00% 510,117 13.60% 15.70% 78,727 78,727 - - - $7.91Total 600 23,659,831 1,227,207 5.19% 0 0.00% 1,227,207 5.19% 5.73% 129,338 129,338 - - - $5.01

SOUTHWAREHOUSE 681 44,218,023 2,259,755 5.11% 255,260 0.58% 2,515,015 5.69% 5.56% 77,538 77,538 140,542 140,542 419,760 $4.06FLEX 191 6,862,375 1,182,963 17.24% 9,852 0.14% 1,192,815 17.38% 17.92% 36,817 36,817 - - - $7.45Total 872 51,080,398 3,442,718 6.74% 265,112 0.52% 3,707,830 7.26% 7.23% 114,355 114,355 140,542 140,542 419,760 $4.76

CHARLOTTE TOTALWAREHOUSE 2,125 115,025,769 5,512,287 4.79% 301,260 0.26% 5,813,547 5.05% 5.28% 415,785 415,785 169,423 169,423 498,079 $4.18FLEX 464 17,651,866 2,386,325 13.52% 13,152 0.07% 2,399,477 13.59% 13.99% 70,665 70,665 - - - $7.99Total 2,589 132,677,635 7,898,612 5.95% 314,412 0.24% 8,213,024 6.19% 6.44% 486,450 486,450 169,423 169,423 498,079 $4.84

QUARTERLY COMPARISON AND TOTALSQ4-13 2,589 132,572,116 8,234,754 6.21% 426,577 0.3% 8,661,331 6.53% 7.65% 1,503,530 3,307,646 19,554 31,554 199,342 $4.76Q3-13 2,584 132,103,407 9,828,229 7.44% 342,577 0.3% 10,170,806 7.70% 8.22% 704,842 1,804,116 12,000 12,000 109,554 $4.82Q2-13 2,588 132,193,965 10,859,123 8.21% 320,800 0.2% 11,179,923 8.46% 9.10% 844,061 1,099,274 0 0 12,000 $4.82Q1-13 2,588 132,174,406 11,647,284 8.81% 376,700 0.3% 12,023,984 9.10% 8.50% 275,352 275,352 46,000 46,000 12,000 $4.60Q4-12 2,721 139,718,727 11,368,747 8.10% 437,923 0.3% 11,806,670 8.50% 9.00% 823,715 1,907,785 46,237 369,114 270,400 $4.75Q3-12 2,716 138,447,289 12,075,139 8.7% 639,914 0.5% 12,715,053 9.2% 9.7% 709,880 1,084,070 64,456 102,421 472,637 $4.65Q2-12 2,713 139,546,710 13,320,871 9.5% 727,169 0.5% 14,048,040 10.1% 9.7% (464,342) (157,144) 102,421 266,693 $4.65Q1-12 2,712 140,432,884 13,155,044 9.40% 654,649 0.50% 13,809,693 9.80% 10.00% 265,776 265,776 102,421 102,421 220,456 $4.60Q4-11 2,710 140,330,463 13,391,864 9.5% 581,184 0.40% 13,973,048 10.0% 9.9% (8,290) 2,017,623 14,900 51,220 258,421 $4.43Q3-11 2,709 140,315,563 13,351,718 9.5% 598,140 0.4% 13,653,964 9.9% 10.3% 937,898 2,108,235 36,320 36,320 29,900 $4.28Q2-11 2,708 140,279,243 14,224,496 10.1% 248,724 0.2% 14,473,220 10.3% 11.2% 1,192,949 1,170,337 - - 66,220 $4.27Q1-11 2,708 140,279,243 15,260,984 10.9% 405,185 0.3% 15,666,169 11.2% #REF! (22,612) (22,612) - - - $4.27

P. 2 | COLLIERS INTERNATIONAL

RESEARCH & FORECAST REPORT | Q1 2014 | CHARLOTTE, NC

PROPERTY SUBMARKET BUYER SIZE (SF) $ / SF OR ACRE

INDUSTRIAL SALES

3678 Centre Circle Drive York Weima America 10,000 $105

10701 S. Commerce Southwest Pinnacle Films Corporation 178,000 $61

11601 Feuehauf Dr. Southwest OSI Properties LLC 53,000 $31

12345 Steele Creek Road Southwest InChem Corp. 140,313 $53

2014 INDUSTRIAL LEASE & SALES TRANSACTIONS

PROPERTY SUBMARKET TENANT SIZE (SF)

WAREHOUSE LEASES999 Paragon Way York Exel 950,000

1087 Lincoln County Parkway Lincoln Room & Board 148,000

10325 Ridge Creek Southwest Genco 81,000

Crosspoint II North Brooks Equipment Co. 64,800

PROPERTY SUBMARKET TENANT SIZE (SF)

FLEX LEASES5900 Northwoods Business Parkway North LabCorp 24,819

The

222 Rampart St.- Colliers International sold the 24,210 SF Headquarters for GMI to Carolina Capital Investment Partners for $2,550,000. The building is 100% leased by Global Medical Imaging.

2900 Gray Fox Rd.- The 45,000 SF distribution building is 100% leased to WESCO Distributors and sold for $2.15 million. Colliers represented Tal Investments, the buyer in the acquisition.

Eclipse Packaging- Colliers International represented Eclipse for their first US location at 2920 Whitehall Park Dr. in Charlotte. The 25,000 square foot facility will be used for automated filling and assembly line components for the manufacturing industry.

STEELE CREEK COMMERCE PARK- Southwest108,200 SF4th Quarter 2014 Delivery

UNDER CONSTRUCTION

• Demand for Class A space has outstripped supply.

• Five buildings are currently under construction.

CONCORD AIRPORT BUSINESS PARK- Concord400,000 SF1st Quarter 2014 Delivery

Bold text indicates Colliers International transaction

225 Mooresville Blvd.- Colliers International represented both seller and purchaser of the building located at 225 Mooresville Blvd. in Mooresville, NC. Toyo Seal was the seller and Reger Holdings was the buyer. It is a 51,200 SF building situated on ±25 acres.

COMPANY TYPE PARK SIZE (SF) STATUS

COMPLETED & UNDER CONSTRUCTION BUILDINGS

996 Paragon Way Bulk Distribution River Walk 950,000 Completed

Childress Klein Bulk Distribution Afton Ridge 360,000 Under Construction

Silverman Bulk DistributionConcord Airport Business Park

400,000 Under Construction

Childress Klein Bulk Distribution Ridge Creek West 310,960 Under Construction

Trinity Partners Bulk Distribution 215 International Drive 277,235 Under Construction

P. 3 | COLLIERS INTERNATIONAL

INDUSTRIAL MARKET REPORT | Q1 2014 | CHARLOTTE, NC

(50,000)

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www.colliers.com/marketname

UNITED STATES:

Charlotte Industrial Team

Greg Copps | SIOR Managing Partner

Lawrence Shaw | SIOR Managing Partner

Grant Miller Vice President

Rob Speir Vice President

Don Moss | SIOR | CCIM Vice President

Justin Smith Industrial Specialist

Adam RussInvestment Services Group

301 S College Street | Suite 3350Charlotte, NC 28202

485 offices in 63 countries on 6 continents• $2.1 billion in annual revenue

• Over 1.46 billion square feet under management

• Over 15,800 professionals

Accelerating success.

This market report is a research document of Colliers International.

Information herein has been deemed reliable and no representation

is made as to the accuracy thereof. Colliers International-Charlotte,

Inc., and certain of its subsidiaries, is an independently owned and

operated business and a member firm of Colliers International

Property Consultants, an affiliation of independent companies with

over 482 offices throughout more than 62 countries worldwide.

PROPERTY NAMEADDRESS

SUBMAR-KET

TRANSAC-TION VALUE RSF

PRICE PER RSF

CAP RATE TENANCY BUYER

INVESTMENT SALES

Catawba Distribu-tion Center

South-west

$18,000,000 478,000 $37.65 NA MultiExeter Property

Group

Charlotte Business Park

Chemway $10,500,000 387,745 $27.08 8.00% MultiEquity Industrial

Partners

Arrowridge Business Park

South-west

$11,100,000 194,553 $57.05 NAMulti (Flex)

Medalist Properties JV

Global Medical Imaging HQ

Southend $2,550,000 24,120 $106 NA SingleCarolina Capital In-vestment Partners

Wesco Distribution Center

Monroe $2,150,000 45,000 $47.78 9.20% SingleTal Investment

Holdings

Harris Corners North $11,000,000 125,156 $87.89 NAMulti (Flex)

Stockbridge

Harris Ridge North $15,500,000 160,354 $96.66 NAMulti (Flex)

Stockbridge

Northridge Business Center

North $7,500,000 174,506 $42.98 NAMulti (Flex)

Stockbridge

Investment Highlights

The first quarter saw several notable transactions of both multi-tenant flex and bulk industrial distribution space. The Stockbridge acquisitions represent the highest price per square foot trades in the multi-tenant flex market since 2007 and are indicative of the continued interest from regional and national investors in the Charlotte market. Exeter Property Group continued with its bullish strategy in acquiring Catawba DC and, in doing so, has added another bulk Industrial property to its southwest holdings. The private client market remains active with the two notable single tenant sub $5 million trades at healthy cap rates.

CLASS A629,307 SF

CLASS B3,853,861 SF

EASTNO

RTH

WES

T

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RAL

AIRP

ORT

/WES

T

Squa

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CLASS C3,729,856 SF

1ST QTR 2014 | Vacant Space By Class 1ST QUARTER 2014 | Net Absorption by Submarket

Class A Class B Class C

Bold text indicates Colliers International transaction

INDUSTRIAL MARKET REPORT | Q1 2014 | CHARLOTTE, NC