INDUSTRIAL MARKET REPORTCHARLOTTE, NORTH CAROLINA

Q4 2014 | INDUSTRIAL

www.colliers.com/charlotte

MARKET INDICATORS

RELATIVE TO PRIOR QUARTER FORECAST

VACANCY

ABSORPTION

RENTAL RATE

CONSTRUCTION

Low Vacancy Rates Make Way for Speculative Building

CHARLOTTE INDUSTRIAL MARKET

> Supply of available industrial facilities continues to decrease as developers race to complete speculative projects.

> In the most established submarkets landlords continue to have the ability to push rental rates.

> A new era of economic growth and innovation is expected in the Queen City with the announcement of Google Fiber.

> Q4 2014 STATISTICS

133,145,101 SFTOTAL MARKET INVENTORY

5.82%OVERALL VACANCY RATE

5.03%WAREHOUSE VACANCY RATE

• Distribution Technology signed a lease for 104,000 SF at 3550 Westinghouse Blvd.

• The Rooms-to-Go Outlet located at 2730 Queen City Drive sold for $23.8 million. New York Life bought the 445,000 SF facility for $53.48 PSF.

• Beacon Partners purchased the Ross Stores Distribution Center for $14,025,000. The 235,321 SF facility located at 1092 Wilson Business Park is fully leased to Ross Stores.

• Ashley Furniture renewed their 124,670 SF lease at 2121 Distribution Center Drive within Charlotte Distribution Center.

• Prologis has started construction on a speculative 205,081 SF industrial building in West Pointe Business Park, located near the intersection of interstates 485 and 85 in West Charlotte. Ta Chen a Taiwan-based distributor of stainless steel products has preleased 101,309 SF Expected to be completed in May, this project is one of several speculative spaces coming to the market in 2015.

• Eaton’s Cooper Wiring Devices renewed their 165,000 SF lease at 5910 Long Creek Park Drive in Charlotte’s North Submarket.

Absorption Deliveries Vacancy %

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5%

10%

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20%

25%

(2,000,000)

(1,000,000)

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1,000,000

2,000,000

3,000,000

4,000,000

2004

2005

2006

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2011

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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 279 8,816,195 342,664 3.89% 0 0.00% 342,664 3.89% 5.39% 132,902 163,160 - - - $4.33FLEX 21 906,103 59,477 6.56% 0 0.00% 59,477 6.56% 6.97% 3,675 15,019 - - - $15.60Total 300 9,722,298 402,141 4.14% 0 0.00% 402,141 4.14% 5.54% 136,577 178,179 - $7.34

AIRPORT/WESTWAREHOUSE 243 12,680,372 525,422 4.14% 0 0.00% 525,422 4.14% 4.60% 57,284 246,544 - - 205,080 $3.72FLEX 46 1,797,321 169,733 9.44% 0 0.00% 169,733 9.44% 8.08% (24,528) (35,949) - - - $7.25Total 289 14,477,693 695,155 4.80% 0 0.00% 695,155 4.80% 5.03% 32,756 210,595 - - 205,080 $4.30

NORTHWAREHOUSE 197 16,279,274 606,641 3.73% 22,000 0.14% 628,641 3.86% 4.28% 68,719 477,487 - 107,200 415,543 $4.73FLEX 93 3,776,495 398,791 10.56% 7,010 0.19% 405,801 10.75% 10.00% (28,136) 4,137 - - - $8.45Total 290 20,055,769 1,005,432 5.01% 29,010 0.14% 1,034,442 5.16% 5.36% 40,583 481,624 - 107,200 415,543 $5.47

NORTHWESTWAREHOUSE 223 13,579,139 1,282,301 9.44% 0 0.00% 1,282,301 9.44% 5.06% (540,970) (407,988) 56,771 - - $3.71FLEX 13 528,593 19,875 3.76% 0 0.00% 19,875 3.76% 3.00% (4,000) (4,750) - - - $0.00Total 236 14,107,732 1,302,176 9.23% 0 0.00% 1,302,176 9.23% 4.98% (544,970) (412,738) 56,771 - - $3.71

EASTWAREHOUSE 503 19,894,093 663,077 3.33% 0 0.00% 663,077 3.33% 4.00% 133,395 139,922 - - - $4.22FLEX 99 3,788,921 381,037 10.06% 0 0.00% 381,037 10.06% 10.51% 17,299 75,889 - - - $7.55Total 602 23,683,014 1,044,114 4.41% 0 0.00% 1,044,114 4.41% 5.04% 150,694 215,811 - - - $4.69

SOUTHWAREHOUSE 683 44,327,065 2,353,873 5.31% 20,160 0.05% 2,374,033 5.36% 5.10% 183,655 578,230 310,960 560,302 162,600 $4.37FLEX 190 6,771,530 868,368 12.82% 26,652 0.39% 895,020 13.22% 15.96% 185,708 374,203 - - - $8.05Total 873 51,098,595 3,222,241 6.31% 46,812 0.09% 3,269,053 6.40% 6.55% 369,363 952,433 310,960 560,302 162,600 $5.13

CHARLOTTE TOTALWAREHOUSE 2,128 115,576,138 5,773,978 5.00% 42,160 0.04% 5,816,138 5.03% 4.76% 34,985 1,197,355 367,731 667,502 783,223 $4.21FLEX 462 17,568,963 1,897,281 10.80% 33,662 0.19% 1,930,943 10.99% 11.84% 150,018 428,549 - - - $8.41Total 2,590 133,145,101 7,671,259 5.76% 75,822 0.06% 7,747,081 5.82% 5.70% 185,003 1,625,904 367,731 667,502 783,223 $4.89

QUARTERLY COMPARISON AND TOTALSQ3-14 2,589 132,576,280 7,342,686 5.54% 99,822 0.1% 7,442,508 5.61% 5.88% 456,735 1,440,901 108,800 356,542 726,503 $4.85Q2-14 2,589 132,467,250 7,956,051 6.01% 84,112 0.1% 8,040,163 6.07% 6.39% 497,716 984,166 78,319 247,742 524,341 $4.94Q1-14 2,589 132,677,635 7,898,612 5.95% 314,412 0.2% 8,213,024 6.19% 6.44% 486,450 486,450 169,423 169,423 498,079 $4.84Q4-13 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

The data tracked is for Mecklenburg County. The data does not reflect the activity in the greater Charlotte Region.

P. 2 | COLLIERS INTERNATIONAL

RESEARCH & FORECAST REPORT | Q4 2014 | CHARLOTTE, NC

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

INDUSTRIAL SALES5301 Terminal St. Northwest Pac Investment 87,337 $18.92

5120 Westinghouse Bvld. Southwest 5120 Westinghouse LLC 71,870 $25.34

3801 Corporation Circle Northwest Skillet LLC 14,678 $32.36

310, 320, 330 Aviation Irdelle County GMS Racing 156,000 $35.26

2014 INDUSTRIAL LEASE & SALES TRANSACTIONS

PROPERTY SUBMARKET TENANT SIZE (SF)

WAREHOUSE/FLEX LEASES205 Enterprise Way Iredell County Dunlop 105,000

2121 Distribution Center Dr. Northwest Ashley Furniture 124,670

1810 West Pointe Drive Airport/West Ta Chen 101,309

2525 Distribution St. Central ACSM 10,000

3550 Westinghouse Blvd. Southwest Distribution Technology 104,000

The

310,320,330 Aviation Way- Colliers International represented Wells Fargo in the sale of 156,000 square feet to GMS Racing. The buildings will be used to house motorsport operations.

GATEWAY PHASE II- Southwest110,000 SFBreaking Ground 1st Quarter 2015

UNDER CONSTRUCTION

• Demand for Class A space has outstripped supply.

• Five buildings are currently under construction.

• Over 2.4 million SF of industrial speculative space planned.

INNERLOOP NORTH (2 BUILDINGS) - North415,541 SF4th Quarter 2014 Delivery

Bold text indicates Colliers International transaction

205 Enterprise Way- Colliers International represented Dunlop Aircraft Tyre lease of 205 Enterprise Way. The 108,000 square foot facility will be used for the retreading of aircraft tires.

COMPANY TYPE PARK SIZE (SF) STATUS

COMPLETED & UNDER CONSTRUCTION BUILDINGS

Beacon Partners Bulk Distribution InnerLoop - North 415,541 Under Contruction

Childress Klein Bulk Distribution Ridge Creek West 310,960 Delivered

Trinity Partners Bulk Distribution 215 International Drive 277,235 Delivered

Exeter Property Group Bulk Distribution Gateway Distribution Park 110,000 Under Construction

Childress Klein Bulk Distribution Afton Ridge 360,000 Under Construction

The Silverman Group Bulk Distribution Concord Airport Park 550,000 Delivered

Pro Logis Bulk Distribution West Pointe 205,081 Under Construction

EastGroup Flex Steele Creek Comm. Park 178,800 Under Construction

900 & 1100 Center Park - Colliers International represented both the buyer and the seller of these multi tenant flex industrial buildings. The seller was Carrier Centers LLC. The two buildings total 150,000 SF and are 100% leased.

P. 3 | COLLIERS INTERNATIONAL

INDUSTRIAL MARKET REPORT | Q4 2014 | CHARLOTTE, NC

(600,000)

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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 | Industrial

Rob Speir Vice President | Industrial

Don Moss | SIOR | CCIM Vice President | Industrial

Justin Smith Associate | Industrial

Deven GriffinAssociate | Industrial

Chris NealAssociate | Industrial

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 485 offices throughout more than 63 countries worldwide.

PROPERTY NAMEADDRESS SUBMARKET TRANSACTION

VALUE RSF PRICE PER RSF

CAP RATE TENANCY BUYER

INVESTMENT SALES

Center Park

PortfolioSouthwest $13,500,000 150,000 $90.00 6.5% Multi Family Trust

Wilson Lakes Southwest $14,025,000 255,168 $55.00 call Single Beacon Partners

Lakemont Portfolio Southwest $44,200,000 680,000 $65.00 call Multi Invesco RE

Perimeter Woods North $28,000,000 310,000 $90.32 7.6% Multi Stockbridge

1200 Atando Ave. East $5,900,000 163,902 $50.00 7.7% Single Beacon Partners

Bonded Logistics Northeast $4,100,000 101,591 $40.36 call Single STAG Industrial

2730 Queen City Dr. Airport/West $23,800,000 445,000 $53.48 call Single New York Life

Investment Highlights

Cap rates for well located and functional general purpose industrial buildings are creeping into the low 6% cap range and in some cases breaking the 6% barrier regardless of remaining term. Valuations on these buildings are translating to $55-$60 PSF. The fourth quarter also saw notable multi-tenant small bay flex industrial transactions highlighted by the 900 & 1110 Center Park deal which sold for $90 PSF and was sub 7% on the cap rate. Industrial remains a favored asset class as the focus now shifts to the 2MM square feet of speculative product being delivered in the first quarter of 2015. As long as capital costs remain at record lows we will continue to see downward pressure on cap rates for quality buildings that stand the test of time.

CLASS A910,171 SF

CLASS B3,265,030 SF EA

ST

NORT

HW

EST

NORT

H

CENT

RAL

AIRP

ORT

/WES

T

Squa

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SOU

TH

CLASS C3,571,880 SF

4TH QUARTER 2014 | Vacant Space By Class 4TH QUARTER 2014 | Net Absorption by Submarket

Class A Class B Class C

INDUSTRIAL MARKET REPORT | Q4 2014 | CHARLOTTE, NC