U.S. Research ReportINDUSTRIAL MARKET OUTLOOKQ3 2017

Featured Highlights > The U.S. industrial sector continues to far outperform all other segments in the industry, with record levels of absorption, rent growth, construction and occupancy, all fueled by positive economic drivers and structural shifts favoring warehouse space.

> U.S. e-commerce sales grew 16% in Q2 2017 compared with the same time last year and now represent 10% of total non-auto retail sales. E-commerce will be a driving force in industrial real estate for the foreseeable future.

> The national industrial vacancy rate dropped 0.2 percentage points (pps) compared with the previous quarter to 5.2%—the lowest rate on record despite more than 170 million square feet of new supply completing in the first three quarters of 2017.

> Product under construction remained high at 222 million square feet, the second-greatest quarterly level on record. Accordingly, vacancies could rise modestly in coming quarters if absorption does not keep pace.

> Tightening markets and new, higher-quality Class A industrial space hitting the market drove up asking rents to $6.32 per square foot/per year (psf/yr) for all product types in Q3 2017, 10% higher than the same time last year and the highest asking rent on record.

> Essential indicators for industrial real estate, including loaded inbound container volumes and intermodal rail volume, continue to move in a positive direction. U.S. seaports are booming, with all major locations posting year-over-year increases in loaded inbound container volumes. Rail traffic also remains robust as year-to-date volumes are up more than 3% compared with the previous year.

> Growth in investor demand for industrial properties continues to surpass all other property types. More than $51 billion in industrial assets were purchased in the first three quarters of 2017, 23% higher than the same period a year ago. While single-asset sales dominated the first half of the year, large portfolio sales surged in third quarter, with more than $9 billion closing in the third quarter alone.

Demand Continues to Outpace Supply Leading to Record Low Vacancies James Breeze, National Director of Industrial Research | USA

Summary Statistics | Q3 2017 U.S. Industrial Market

Vacancy Rate 5.2%

Change From Q3 2016 -0.5%

Markets With Lower Vacancies Compared With Q3 2016

83.6%

Q3 2017 Absorption (MSF) 68.7

Markets With Positive Absorption

82.6%

Q3 2017 New Supply (MSF) 63.4

New Supply to Inventory 0.4%

Under Construction (MSF) 222.8

ASKING RENTS PER SQUARE FOOT PER YEAR

Average Warehouse/Distribution Center

$5.37

Average Manufacturing Space $5.68

Average Flex Space $11.90

Market IndicatorsRelative to Prior Quarter

Q3 2017

Q4 2017*

VACANCY

NET ABSORPTION

CONSTRUCTION

RENTAL RATE**

* Projected** Warehouse rents

2 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

U.S. Industrial Market Q1 2016 to Q3 2017

Source: Colliers International

U.S. Industrial Indicators | Q3 2017

INDEXSERIES INDEX

(OCT. 2017)

SERIES INDEX (SEP. 2017)

PERCENTAGE POINT

CHANGEDIRECTION RATE OF

CHANGETREND*

(MONTHS)

PMI® 58.7 60.8 -2.1 Growing Slower 14

New Orders 63.4 64.6 -1.2 Growing Slower 14

Production 61.0 62.2 -1.2 Growing Slower 14

Employment 59.8 60.3 -0.5 Growing Slower 13

Supplier Deliveries 61.4 64.4 -3.0 Slowing Slower 18

Inventories 48.0 52.5 -4.5 Contracting From Growing 1

Customers' Inventories 43.5 42.0 1.5 Too Low Slower 4

Prices 68.5 71.5 -3.0 Increasing Slower 20

Backlog of Orders 55.0 58.0 -3.0 Growing Slower 9

Exports 56.5 57.0 -0.5 Growing Slower 20

Imports 54.0 54.0 0.0 Growing Same 9

Overall Economy Growing Slower 101

Manufacturing Sector Growing Slower 14

*Number of months moving in current directionSource: ISM

The U.S. industrial market rebounded from a relatively slow first half of 2017 with just under 69 million square feet absorbed, the third highest quarter on record, and the thirtieth consecutive quarter of positive net absorption. Year-to-date, continued demand from e-commerce and third-party logistics (3PL) users led to more than 183 million square feet of occupancy gains, lowering the overall vacancy rate to 5.2%, the lowest vacancy rate on record.

Essential indicators for industrial real estate—including loaded inbound container volumes and intermodal rail volume—continue to move in a positive direction. Year-to-date loaded inbound container volumes increased in all major seaports at the end of September (according to the most recent data available). While volumes continue to grow at a brisk pace in most markets, the largest year-over-year gains were seen at the ports of Long Beach, Savannah and Houston, all increasing more than 10% compared with the same time a year ago, driving strong industrial demands. Rail traffic, too, is experiencing solid growth, with total annual volumes up 3% at the end of October. Strong traffic continues to increase demand in 2017 for industrial product in the major rail hub markets of Chicago, Kansas City, St. Louis and Atlanta.

The manufacturing sector also continues to post robust fundamentals. The Institute for Supply Management’s Purchasing Managers’ Index remained strong at 58.7 in October. The index has been in expansionary territory for 14 consecutive months. New orders, a key figure in the forecasting of manufacturing demand, finished October at a solid 63.4. With manufacturing output projected to remain strong into 2018 and the trend of reshoring continuing, look for industrial demand from manufacturers to increase in the coming quarters and push up demand in markets with robust manufacturing capabilities including Grand Rapids, Detroit and Cincinnati.

A possible headwind arising in the industrial market is labor availability. With the U.S. economy near full employment and the industrial market needing more workers due to consumer shifts to e-commerce, intensifying warehouse demand, many occupiers are having difficulty finding adequate labor. This trend could have a negative effect on occupier expansion plans in the coming quarters. Despite this, import levels are strong, manufacturing is on the rise and the U.S. economy remains solid, all of which points to strong industrial fundamentals for the foreseeable future.

4.6%

4.8%

5.0%

5.2%

5.4%

5.6%

5.8%

6.0%

6.2%

0

10

20

30

40

50

60

70

80

90

100

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

MSF

New Supply Absorption Vacancy Rate (%)

3 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

Moderate Economic Expansion ContinuesEconomic growth remains moderate, with a mix of stronger and weaker indicators, but no policy changes out of Washington or other economic drivers have materialized to fundamentally alter the course of recent trends. The only change has been the weather, as Hurricanes Harvey (Texas) and Irma (Florida) caused meaningful but temporary hits to employment, industrial output and consumption. All exhibited sharp declines in the affected zones in the immediate aftermath of the storms, followed by strong bounce backs in the following month. But the net impact on the economy in the long term will be slight. Impacts from Hurricane Maria (Puerto Rico) will be longer lasting though minor in scale given the region’s relatively small economic output.

Overall, growth during the rest of the year should be a bit faster than in the first half of 2017, but down from the surge we saw in the second quarter. GDP jumped to a revised 3.1% in Q2, up from just 1.2% in Q1, for an average of 2.2%. The government’s first estimate for third-quarter GDP came in at 3%, somewhat above consensus, as consumer spending and inventories were modestly higher than expected, but offset by declines in residential investment and business investment in structures. The expectation for all of 2017 is 2.2%, rising slightly to 2.3% next year.

Significantly, this forecast is virtually identical to the survey results from a year ago, before the last election, largely due to many economists strongly questioning Washington’s ability to execute on its policy promises, notwithstanding the election of more a business-friendly Congress and administration.

One positive change, however, is that global GDP continues to strengthen. The International Monetary Fund (IMF) again raised its outlook, this time to 3.6% in 2017, up from 3.2% last year and the fastest since the recession as the world finally experiences synchronized growth in both developing and advanced nations. Global growth is forecast to rise to 3.7% in 2018. These trends bode well for the U.S. economy and for the industrial market, which gains from improving international trade, investment and manufacturing.

U.S. job growth seems to have peaked and continues to slow as we near full employment. No doubt the job losses sustained in the September employment report were a one-off consequence of the hurricanes. Employment fell last month for the first time since September 2010, after 84 consecutive monthly job gains. Still, the longer-term trend has been falling. Since job growth peaked in early 2014, job gains have dropped in nine of the past 13 quarters.

U.S. Economic Indicators GDP

Q3 2017 +3.0%

Q2 2017 +3.1%

ISM

October 2017 PMI® 58.7, up 6.8 pctg. pts from October 2016

RAIL TIME INDICATORS

Total Railcar Traffic +3.3% since October 2016

Intermodal Traffic +3.6% since October 2016

Sources: BEA, ISM, AAR

4 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

Top 30 Markets: Absorption YTD

YTD 2017 Absorption (SF)2.06M 17.12M

2.06M 5.00M

10.00M 17.12M

Sacramento, CA3.51M

Los Angeles, CA3.17M

Inland Empire, CA14.83M

Phoenix, AZ6.34M

Las Vegas, NV5.63M

Kansas City, MO-KS6.60M

Dallas-Fort Worth, TX13.62M

Houston, TX6.53M

Grand Rapids, MI2.24M

Atlanta, GA17.12M

Indianapolis, IN4.24M

Cincinnati, OH4.46M

Greenville-Spartanburg-Anderson, SC2.54M

Philadelphia, PA8.64M

Central New Jersey5.17M

Baltimore, MD4.85M

Denver, CO2.76M

Charlotte, NC3.07M

Stockton, CA3.82M

Chicago, IL13.46M

Minneapolis-St. Paul, MN2.33M

Savannah, GA4.10M

St. Louis, MO3.46M

Northern New Jersey3.09M

Hartford, CT3.10M

Boston, MA2.49MLehigh Valley

2.31M

Tampa Bay, FL1.95M

Tacoma, WA2.06M

Memphis, TN2.47M

South Florida2.33M

Top 30 Markets: Absorption in Q3 2017

Vacancy Drops to Record Low Despite Robust DevelopmentU.S. e-commerce sales rose an impressive 16% in Q2 2017 compared with the same time last year and now represent 10% of total non-auto retail sales. The continued surge in online sales and the need to get products to consumers quickly while minimizing supply chain costs are forcing retailers and wholesalers into modern facilities and rapidly changing supply chain strategy. These changes will be a major contributor to industrial real estate demand for the foreseeable future.

The overall industrial vacancy rate declined 0.2 pps from the previous quarter to 5.2%, the lowest vacancy rate on record. Vacancies fell in 67% of the markets we track compared with the previous quarter. Net absorption was positive for the thirtieth consecutive quarter at nearly 69 million square feet, the third highest quarterly net absorption on record. The increase in absorption can be attributed to multiple factors including a resurgence in big box demand, strong interest in smaller product and a plethora of pre-leased buildings completing construction.

Significant demand, record low vacancy rates and additional class A space on the market from new construction increased asking rental rates in the U.S. to $6.32 psf/yr in the third quarter, 10% higher than this time last year and the highest asking rate on record. In previous cycles, higher asking rates ultimately reduced demand. However, in this cycle the importance of securing well-placed, modern distribution centers because of e-commerce, coupled with higher transportation costs, have rendered rising asking rates less pertinent. Eventually, asking rents will increase to a level where demand will be impacted, but the market has yet to reach this point.

Development remains strong in core industrial markets, with Dallas-Fort Worth leading the way at nearly 20 million square feet completed in 2017. The Inland Empire, which continues to post robust fundamentals, has the most product under construction at a record 26 million square feet. Nearly 172 million square feet of new construction has been completed in 2017, 8% lower than this time last year. However, development appears set to pick up pace in the coming quarters with 222 million square feet currently under construction—the second-highest amount on record. With a large amount of new development slated to hit the market in the next year, any drop off in leasing could cause modest increases in the overall vacancy rate.

5 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

Industrial Real Estate Stands Out in Sales GrowthIndustrial sales volume was robust for the third consecutive quarter leading to an impressive 23% increase in year-to-date sales compared with this time last year. Industrial was the only commercial product type to post year-over-year sales volume gains, according to Real Capital Analytics. Deal activity totaled nearly $52 billion for the first three quarters of 2017. The growth in sales volume remained strong for single-building sales which were up 10% compared with this time last year. However, portfolio sales experienced a robust quarter thanks to two large purchases by Blackstone, creating an 118% increase in third-quarter portfolio sales compared with last year and a 52% annual increase.

Sales growth remains strong in secondary and tertiary locations, up 24% and 36% respectively compared with this time last year. Investors continue to pour into these markets because of the availability of product to purchase and a significant increase in occupier demand, which has improved fundamentals profoundly. Core market sales, which were down 9% for the first half of the year because of lack of product available to purchase, rebounded in third quarter thanks primarily to the increase in portfolio sales, and are now up 17% for the year. Capitalization rates have remained relatively stable since 2015 but did decline 0.2 percentage points compared with the previous quarter to a record low of 6.7%.

What’s Ahead for Industrial Real Estate?The industrial sector should continue to benefit from supply chain modernization brought on by e-commerce demand for the foreseeable future. With trade war fears declining in the short term, cargo volumes at U.S. ports are expected to remain strong and heighten demand for warehousing near these locations. NAFTA negotiations continue and the potential long-term effects on U.S. trade policy will be important to monitor—although any impact from the renegotiation will not take effect until 2018 or later.

The continued shift to more localized distribution—the deployment of more warehouses in more locations to get products to consumers quickly—has driven activity in many secondary markets with seaports, inland ports or growing population centers such as Phoenix, Indianapolis, Memphis, Savannah and Greenville, and will continue for the foreseeable future as occupiers increase their footprints in these strategic markets to better service their customers.

A headwind to keep an eye out for is labor availability. Occupier demand for labor in modern fulfillment centers combined with an economy at or near full employment could delay or lower size requirements in the coming quarters. While the availability of labor will gain in importance in industrial site selection, look for the use of automation and other technologies to increase as a way of combating labor shortages throughout the country.

All in all, U.S. industrial real estate continued its positive momentum in the third quarter and fundamentals are expected to stay strong with record low vacancies, record high asking rents and robust activity in the coming quarters.

*Metropolitan Statistical AreaSource: Colliers International

Top 5 MSAs* in Mid-2017: Transaction Volume

Los Angeles $4,397 million

Chicago $2,950 million

Dallas $2,280 million

Washington DC/Virginia Suburbs $2,279 million

Inland Empire $2,092 million

Top 5 MSAs* in YTD 2017: Net Absorption

Atlanta 17.1 MSF

Inland Empire 14.8 MSF

Dallas-Fort Worth 13.6 MSF

Chicago 13.5 MSF

Philadelphia 8.6 MSF

*Metropolitan Statistical AreaSource: Colliers International

Supplemental Data: Largest 20 MarketsVacancy vs. Absorption By Port Location and Region

Source: Colliers Q3 2017 Industrial Survey Source: Colliers Q3 2017 Industrial survey

Q2 2017 Warehouse Rent History & OutlookRent Outlook Over Next 12 Months

Vacancy vs. YOY Change in VacancyBy Port Location and Region

Source: Colliers Q3 2017 Industrial Survey

Absorption vs. New Supply by Port Location Absorption Outlook Over Next 12 Months

Source: Colliers Q3 2017 Industrial Survey

6 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

0M 1M 2M 3M 4M 5M 6M

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Q3 2

017

Vaca

ncy

Rate

Q3 2017 Absorption (SF)7M

Port LocationEastern U.S.Great LakesGulf CoastInlandWest CoastNo port

RegionMidwestNortheastSouthWest

Median

Median

Phoenix, AZ2.0M

Atlanta, GA4.1M

Kansas City, MO-KS3.0M

Indianapolis, IN1.3M

Chicago, IL3.5M

Dallas-Ft. Worth, TX4.4M

Philadelphia, PA3.2M

Houston, TX3.0M

Inland Empire, CA6.6MDetroit, MI

1.0M

Los Angeles, CA1.2M

Silicon Valley, CA0.1M

New Jersey-Central2.0M

Milwaukee, WI0.9M

Cleveland, OH-0.1M

Cincinnati, OH0.1M

Minneapolis-St. Paul, MN1.0M

New Jersey-Northern1.8M

Columbus, OH1.9M

Memphis, TN1.7M

0% 2% 4% 6% 8% 10% 12% 14%

$0

$1

$2

$3

$4

$5

$6

$7

$8

Q3

2017

Ave

rage

War

ehou

se/D

istr

ibut

ion

Rent

(S/S

F/Ye

ar)

YOY Change in Warehouse/Distribution Rent (since Q3 2016)16% 18%-2%

Median

Median

Port LocationEastern U.S.Great LakesGulf CoastInlandWest CoastNo port

Rent Outlook

Down

UpSame

Indianapolis, IN

Los Angeles, CA

New Jersey-Northern

New Jersey-Central

Houston, TXPhoenix, AZ

Philadelphia, PAKansas City, MO-KS

Chicago, ILDetroit, MI

Milwaukee, WI

Memphis, TN

Atlanta, GA

Dallas-Ft. Worth, TX

Inland Empire, CA

Cincinnati, OH

Columbus, OH

Cleveland, OH

YOY Change in Vacancy (since Q3 2016)-2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5%

-2%

0%

2%

4%

6%

8%

10%

Q3 2

017

Vaca

ncy

Rate

-1%

1%

3%

5%

7%

9%

Median

Median

Port LocationEastern U.S.Great LakesGulf CoastInlandWest CoastNo port

Vacancy Outlook(Over Next 12 Months)

UpSameDown

Los Angeles, CA

Phoenix, AZ

Atlanta, GA

Kansas City, MO-KS Houston, TX Dallas-Ft. Worth, TX

Chicago, IL

Indianapolis, INPhiladelphia, PA

Memphis, TN

Milwaukee, WI

Minneapolis-St. Paul, MN

New Jersey-Northern

New Jersey-Central

Columbus, OH

Cincinnati, OH

Inland Empire, CA

Cleveland, OH

Detroit, MI

Port LocationEastern U.S.Great LakesGulf CoastInlandWest CoastNo port

Absorption Outlook(Over Next 12 Months)

PositiveClose to zeroNegative

YTD 2017 New Supply (SF)

Q3

2017

Abs

orpt

ion

(SF)

-6M -4M -2M 0M 2M 4M 6M

-2M

0M

1M

2M

3M

4M

5M

6M

8M 10M 12M 14M 16M 18M 20M

7M

8M

-1M

Median

Median

Chicago, IL

Dallas-Ft. Worth, TX

Philadelphia, PA

Columbus, OH

Atlanta, GA

Houston, TX

Indianapolis, IN

Kansas City, MO-KS

Detroit, MI

Silicon Valley, CA

Milwaukee, WI

Phoenix, AZNew Jersey-Central

Cincinnati, OH

Minneapolis-St. Paul, MNLos Angeles, CA

Cleveland, OH

New Jersey-Northern

Memphis, TN

Inland Empire, CA

7 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

United States | Industrial Survey | Inventory, New Supply, Under Construction

MARKET INVENTORY SEP. 30, 2017 (SF)

TOTAL NEW SUPPLY Q3 2017 (SF) TOTAL UNDER CONSTRUCTION (SF)

NORTHEAST

Baltimore, MD 215,617,882 1,188,010 5,886,489

Boston, MA 148,069,748 0 772,500

Hartford, CT 107,217,170 0 10,000

New Hampshire 61,908,706 0 240,000

New York City Metro 809,919,248 2,409,192 15,143,982

> Central New Jersey 318,376,573 1,807,980 9,220,985

> Long Island 132,272,149 53,052 123,774

> Northern New Jersey 359,270,526 548,160 5,799,223

Philadelphia-Lehigh Valley, PA 445,493,492 3,867,544 6,878,410

Pittsburgh, PA 160,299,468 17,800 105,920

Washington, D.C. 196,053,956 698,510 2,101,355

Northeast Total 2,144,579,670 8,181,056 31,138,656

SOUTH

Atlanta, GA 675,926,215 5,517,400 10,916,915

Augusta-Aiken, GA 9,620,480 0 0

Austin, TX 54,089,965 120,773 303,839

Birmingham, AL 115,023,251 0 0

Charleston, SC 47,706,605 307,353 2,389,875

Charlotte, NC 207,891,974 933,399 3,979,733

Columbia, SC 66,633,442 45,600 1,018,056

Dallas-Fort Worth, TX 791,567,171 5,847,870 21,479,141

Florence-Myrtle Beach, SC 35,667,735 22,270 0

Greenville-Spartanburg-Anderson, SC 191,336,153 499,000 6,143,926

Houston, TX 547,370,838 2,672,549 5,416,045

Huntsville, AL 46,679,825 0 0

Jacksonville, MI 127,311,328 416,435 1,849,491

Little Rock, AR 46,497,775 0 333,760

Memphis, TN 240,776,737 37,990 4,418,984

Nashville, TN 193,013,926 2,353,253 3,443,050

Norfolk, VA 68,452,374 180,405 0

Orlando, FL 141,202,180 325,871 1,842,906

Raleigh-Durham, NC 71,142,395 336,000 531,300

Richmond, VA 97,307,201 153,480 0

Savannah, GA 63,045,383 2,439,269 3,920,475

Shenandoah Valley-I-81 Corridor 90,575,618 0 2,749,273

South Florida 359,398,544 732,252 2,936,631

> Fort Lauderdale 106,051,691 166,370 1,397,791

> Miami 202,486,865 562,595 1,321,174

> Palm Beach 50,859,988 3,287 217,666

Tampa Bay, FL 209,796,956 155,000 2,878,166

South Total 4,498,034,071 23,096,169 76,551,566Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals.

8 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International8

United States | Industrial Survey | Inventory, New Supply, Under Construction

MARKET INVENTORY SEP. 30, 2017 (SF)

TOTAL NEW SUPPLY Q3 2017 (SF) TOTAL UNDER CONSTRUCTION (SF)

MIDWEST

Chicago, IL 1,372,239,345 6,272,371 12,042,863

Cincinnati, OH 256,722,206 937,658 3,757,514

Cleveland, OH 396,279,109 142,117 1,993,914

Columbus, OH 233,287,970 514,031 5,186,710

Dayton, OH 104,940,619 0 496,000

Detroit, MI 753,892,654 590,000 7,633,683

Grand Rapids, MI 116,867,615 237,069 1,111,890

Indianapolis, IN 241,955,400 1,500,015 7,000,348

Kansas City, MO 242,909,954 2,676,222 5,987,934

Milwaukee, WI 250,958,625 251,000 1,068,240

Minneapolis-St. Paul, MN 250,660,306 1,143,540 2,170,500

Omaha, NE 68,888,299 499,680 970,862

St. Louis, MO 234,378,054 892,660 3,627,018

Midwest Total 4,523,980,156 15,656,363 53,047,476

WEST

Albuquerque, NM 39,333,554 0 0

Bakersfield, CA 32,278,056 0 0

Boise, ID 44,711,971 143,000 0

Denver, CO 230,567,825 1,591,158 4,001,246

Fresno, CA 47,840,327 37,402 0

Greater Los Angeles, CA 1,590,802,600 9,098,766 32,153,600

> Inland Empire 494,061,800 6,209,000 26,138,500

> Los Angeles 903,993,400 2,838,766 5,964,100

> Orange County 192,747,400 51,000 51,000

Honolulu, HI 40,040,303 0 0

Las Vegas, NV 128,993,445 1,413,231 3,462,663

Phoenix, AZ 294,852,325 1,516,616 3,895,681

Sacramento, CA 146,549,563 35,800 1,433,855

San Diego, CA 188,955,277 138,213 2,176,268

San Francisco Bay Area, CA 529,477,907 449,979 2,988,304

> East Bay 182,297,577 348,605 2,041,304

> Fairfield, CA 50,410,721 0 460,270

> San Francisco Peninsula 39,291,087 0 0

> Silicon Valley 257,478,522 101,374 486,730

Seattle-Puget Sound, WA 272,246,681 993,120 4,922,983

Stockton, CA 104,465,030 1,095,143 6,992,397

West Total 3,691,114,864 16,512,428 62,026,997

U.S. TOTAL 14,857,708,761 63,446,016 222,764,695

(continued)

Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals.

9 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

United States | Industrial Survey | Absorption, Vacancy

MARKET ABSORPTION Q3 2017 (SF)

YTD ABSORPTION

VACANCY RATE JUN. 30, 2017

VACANCY RATE SEP. 30, 2017

NORTHEAST

Baltimore, MD 2,086,900 4,850,153 7.2% 6.7%

Boston, MA 731,341 2,487,917 10.3% 9.7%

Hartford, CT 1,376,320 3,104,807 5.8% 5.2%

New Hampshire 478,305 1,533,918 5.7% 6.4%

New York City Metro 3,602,299 8,047,362 4.3% 4.1%

> Central New Jersey 2,021,356 5,167,315 4.0% 3.8%

> Long Island -246,554 -210,289 3.5% 3.8%

> Northern New Jersey 1,827,497 3,090,336 4.9% 4.4%

Philadelphia-Lehigh Valley, PA 4,327,436 10,949,853 5.7% 5.6%

Pittsburgh, PA -988,464 345,482 5.7% 5.7%

Washington, D.C. 1,080,201 1,380,151 8.6% 8.4%

Northeast Total 12,694,338 32,699,643 5.9% 5.7%

SOUTH

Atlanta, GA 4,079,431 17,118,449 7.2% 7.4%

Augusta-Aiken, GA -193,056 -134,756 13.3% 15.3%

Austin, TX -77,897 -412,689 6.9% 6.0%

Birmingham, AL 109,155 482,836 8.0% 6.5%

Charleston, SC -354,927 148,886 5.8% 7.1%

Charlotte, NC 736,525 3,074,066 5.3% 5.3%

Columbia, SC 395,388 1,074,789 10.1% 9.5%

Dallas-Fort Worth, TX 4,387,014 13,617,918 6.2% 6.3%

Florence-Myrtle Beach, SC -766,274 -1,917,875 11.7% 13.9%

Greenville-Spartanburg-Anderson, SC 639,170 2,544,337 6.8% 6.7%

Houston, TX 2,992,207 6,529,862 6.1% 5.9%

Huntsville, AL 197,462 300,998 7.8% 5.5%

Jacksonville, MI 148,617 915,609 4.4% 4.6%

Little Rock, AR -12,470 520,248 10.2% 10.3%

Memphis, TN 1,714,166 2,465,493 7.5% 6.8%

Nashville, TN 1,270,579 633,320 5.2% 4.2%

Norfolk, VA 492,718 1,730,514 4.8% 4.6%

Orlando, FL 623,011 1,542,458 5.3% 5.3%

Raleigh-Durham, NC 423,048 679,109 6.3% 6.1%

Richmond, VA 899,223 1,366,437 5.1% 4.6%

Savannah, GA 2,891,765 4,101,655 2.9% 2.0%

Shenandoah Valley-I-81 Corridor 35,126 1,264,027 6.5% 6.5%

South Florida 640,029 2,333,806 4.2% 4.1%

> Fort Lauderdale 134,297 837,580 4.1% 4.0%

> Miami 155,826 733,792 4.3% 4.4%

> Palm Beach 349,906 762,434 3.9% 3.1%

Tampa Bay, FL 550,734 1,949,115 6.2% 5.7%

South Total 21,820,744 61,928,612 6.3% 6.1%Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals.

10 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International10

United States | Industrial Survey | Absorption, Vacancy

MARKET ABSORPTION Q3 2017 (SF)

YTD ABSORPTION

VACANCY RATE JUN. 30, 2017

VACANCY RATE SEP. 30, 2017

MIDWEST

Chicago, IL 3,497,179 13,463,405 6.7% 6.9%

Cincinnati, OH 129,510 4,463,759 3.9% 4.0%

Cleveland, OH -72,781 1,761,477 4.4% 4.5%

Columbus, OH 1,869,600 1,437,052 5.8% 5.1%

Dayton, OH 499,018 1,598,721 6.2% 5.7%

Detroit, MI 1,045,987 -302,521 3.6% 3.2%

Grand Rapids, MI 378,850 2,243,350 5.1% 5.1%

Indianapolis, IN 1,259,004 4,241,168 5.4% 5.6%

Kansas City, MO 2,953,520 6,595,289 6.1% 5.9%

Milwaukee, WI 922,705 1,260,861 4.4% 3.8%

Minneapolis-St. Paul, MN 1,041,481 2,330,477 5.1% 5.0%

Omaha, NE 349,921 678,757 3.3% 3.6%

St. Louis, MO 2,154,202 3,460,082 6.9% 6.4%

Midwest Total 16,028,196 43,231,877 5.4% 5.2%

WEST

Albuquerque, NM 134,893 130,048 5.3% 5.0%

Bakersfield, CA -86,670 -72,146 3.9% 3.2%

Boise, ID 70,619 219,333 2.3% 2.5%

Denver, CO 1,576,813 2,759,174 4.7% 4.7%

Fresno, CA -124,610 492,542 4.2% 4.5%

Greater Los Angeles, CA 7,398,900 17,378,700 2.2% 2.1%

> Inland Empire 6,624,800 14,826,200 3.8% 3.4%

> Los Angeles 1,248,800 3,171,900 1.2% 1.3%

> Orange County -474,700 -619,400 2.5% 2.7%

Honolulu, HI -57,776 -109,480 1.7% 1.9%

Las Vegas, NV 1,829,265 5,627,774 5.4% 5.1%

Phoenix, AZ 2,033,590 6,344,634 9.4% 9.3%

Sacramento, CA 1,638,292 3,506,220 7.4% 6.3%

San Diego, CA 522,609 1,464,321 4.8% 4.5%

San Francisco Bay Area, CA 735,897 2,365,654 4.1% 4.2%

> East Bay 537 425,147 2.5% 2.7%

> Fairfield, CA 680,784 1,737,657 5.9% 5.3%

> San Francisco Peninsula -24,450 9,734 1.6% 1.6%

> Silicon Valley 79,026 193,116 5.3% 5.4%

Seattle-Puget Sound, WA 1,170,843 1,537,451 3.1% 2.8%

Stockton, CA 1,357,531 3,821,463 4.8% 4.5%

West Total 18,200,196 45,465,688 3.9% 3.7%

U.S. TOTAL 68,743,474 183,325,820 5.4% 5.2%

(continued)

Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals.

11 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

United States | Industrial Survey | Average Asking NNN Rents as of Q3 2017

MARKET MANUFACTURING SPACE (USD/SF/YR)

FLEX / SERVICE SPACE (USD/SF/YR)

WAREHOUSE / DISTRIBUTION SPACE

(USD/SF/YR)

NORTHEAST

Baltimore, MD $4.07 $10.14 $5.17

Boston, MA $7.09 $9.65 $6.44

Hartford, CT $4.41 $7.01 $5.01

New Hampshire $6.01 $9.41 $5.31

New York City Metro $7.22 $11.76 $7.43

> Central New Jersey $6.48 $12.20 $6.34

> Long Island $10.68 $14.80 $10.00

> Northern New Jersey $6.51 $9.76 $7.47

Philadelphia-Lehigh Valley, PA $3.98 $9.03 $4.92

Pittsburgh, PA $4.05 $9.69 $5.46

Washington, D.C. $7.20 $12.32 $7.88

Northeast Total $5.46 $10.76 $6.27

SOUTH

Atlanta, GA $3.56 $9.13 $3.89

Augusta-Aiken, GA $1.51 $3.30

Austin, TX $13.36 $8.85

Birmingham, AL $7.14 $4.39

Charleston, SC $4.71 $8.14 $5.23

Charlotte, NC $2.79 $8.95 $4.72

Columbia, SC $2.85 $9.82 $3.25

Dallas-Fort Worth, TX $5.15 $9.28 $4.31

Florence-Myrtle Beach, SC $2.13 $7.31 $2.70

Greenville-Spartanburg-Anderson, SC $4.32 $7.84 $3.64

Houston, TX $10.43 $6.57

Huntsville, AL $8.41 $4.56

Jacksonville, MI $9.71 $4.11

Little Rock, AR $3.99 $3.34

Memphis, TN $6.44 $2.87

Nashville, TN $4.31 $9.84 $5.93

Norfolk, VA $5.97 $12.37 $4.62

Orlando, FL $9.81 $5.80

Raleigh-Durham, NC $13.82 $5.51

Richmond, VA $4.94 $9.85 $4.54

Savannah, GA $3.70 $7.00 $4.19

Shenandoah Valley-I-81 Corridor $4.39 $5.77 $3.62

South Florida $10.23 $15.35 $10.71

> Fort Lauderdale $8.76 $12.94 $8.58

> Miami $14.33 $19.86 $11.73

> Palm Beach $8.09 $13.54 $8.83

Tampa Bay, FL $9.46 $4.84

South Total $4.12 $9.78 $4.88Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals. * Straight averages used

12 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International12

United States | Industrial Survey | Average Asking NNN Rents as of Q3 2017

MARKET MANUFACTURING SPACE (USD/SF/YR)

FLEX / SERVICE SPACE (USD/SF/YR)

WAREHOUSE / DISTRIBUTION SPACE

(USD/SF/YR)

MIDWEST

Chicago, IL $5.06

Cincinnati, OH $3.78 $6.64 $4.03

Cleveland, OH $3.29 $7.11 $4.27

Columbus, OH $6.42 $3.25

Dayton, OH $2.52 $4.69 $3.43

Detroit, MI $8.17 $5.11

Grand Rapids, MI $3.66 $3.77 $3.67

Indianapolis, IN $5.50 $6.48 $3.54

Kansas City, MO $4.35 $8.89 $4.58

Milwaukee, WI $4.75 $5.86 $4.90

Minneapolis-St. Paul, MN $4.86 $5.05 $4.70

Omaha, NE $5.92 $4.93

St. Louis, MO $4.46 $7.54 $4.33

Midwest Total $4.25 $6.84 $4.65

WEST

Albuquerque, NM $8.68 $7.82 $6.72

Bakersfield, CA $9.49 $6.49

Boise, ID $6.55

Denver, CO $9.20 $11.03 $7.59

Fresno, CA $3.07 $11.44 $5.18

Greater Los Angeles, CA $7.87

> Inland Empire $6.76

> Los Angeles $8.40

> Orange County $10.32

Honolulu, HI $14.97

Las Vegas, NV $9.32 $11.11 $7.09

Phoenix, AZ $7.44 $12.76 $6.35

Sacramento, CA $5.95 $9.13 $5.01

San Diego, CA $11.09 $22.93 $10.88

San Francisco Bay Area, CA $11.19 $24.50 $8.41

> East Bay $10.11 $20.04 $7.51

> Fairfield, CA $8.10 $7.26 $5.52

> San Francisco Peninsula $18.15

> Silicon Valley $14.13 $24.78 $10.52

Seattle-Puget Sound, WA $8.88 $18.10 $7.71

Stockton, CA $7.83 $5.47 $5.76

West Total $9.19 $19.28 $7.32

U.S. TOTAL $5.68 $11.90 $5.37

(continued)

Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals. * Straight averages used

Copyright © 2017 Colliers International.The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

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CONTRIBUTORSAndrew Nelson

Chief Economist | USA

Jeff Simonson U.S. Senior Research Analyst | USA

AJ Paniagua U.S. Research Analyst | USA