RESEARCH REPORTMETRO DETROIT & WASHTENAW MARKET

www.colliers.com/detroit

Detroit Industrial Market

DETROIT INDUSTRIAL MARKET REPORTS NEGATIVE RESULTS FOR FOURTH

QUARTER 2010

Metro Detroit’s industrial/fl ex market began 2010’s fourth quarter with negative net absorption and an increase in vacancy. Rental rates slightly decreased $0.02. A continued drop in activity is expected throughout 2011 in all submarkets for both fl ex and warehouse type industrial product.

Property owners must continue to focus on retaining their existing tenants by enticing them with lease concessions and rate reductions. Land sales and new construction are expected to remain at a standstill until the overall absorption improves.

Q4 2010 | INDUSTRIAL

MARKET INDICATORS Q4

2009 2010

VACANCY

NET ABSORPTION

CONSTRUCTION

RENTAL RATE

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

-4,000,000

-3,000,000

-2,000,000

-1,000,000

0

1,000,000

2,000,000

4Q 07

1Q 08

2Q 08

3Q 08

4Q 08

1Q 09

2Q 09

3Q 09

4Q 09

1Q 10

2Q 10

3Q 10

4Q 10

Completions Absorption Vacancy Rate (%)

Vaca

ncy

(^)

Mill

ion

Squa

re F

eet

INVENTORY

Total industrial inventory amounted to 480,579,732 square feet in 9,573 buildings in the fourth quarter 2010. The fl ex sector consisted of 40,527,644 square feet and the Warehouse/Distribution sector consisted of 440,052,088 square feet.

RENTAL RATES

This quarter the average overall asking rental rate slightly decreased $0.02 and currently stands at $4.33 per square foot.

R&D and Flex rates are double that of warehouse & distribution in almost all submarkets and continue to fl uctuate signifi cantly among the geographic market

sectors. Rates range as high as $11.95 per square foot in the Airport I-275 market to as low as $4.89 per square foot in the Detroit submarket. Most of the rental rates range from $7.00 to $9 per square foot; with the average settling at $8.17 per square foot in the overall market.

Asking warehouse/distribution rates are averaging $3.97 per square foot. Eff ective rental rates are usually up to 20% less than asking rates, due to concessions and face rate reductions used as incentives for tenants to commit to a lease.

SALES ACTIVITY

PROPERTY ADDRESS CITY SALE DATE SALE PRICE SIZE PRICE PER SF

32000 John R Rd Madison Heights 10/7/2010 4,650,000 95,618 48.63

28000 Dylan Dr Novi 12/20/2010 3,387,000 47,782 70.88

2550 Auburn Ct Auburn Hills 10/22/2010 2,000,000 148,000 13.51

1045 Durant Dr Howell 12/6/2010 1,900,000 112,500 16.89

20189-20201 Northline Rd Taylor 11/24/2010 1,840,000 54,400 33.82

35935 Ecorse Rd Romulus 11/1/2010 1,600,000 43,000 37.21

2329-2333 E Walton Blvd Auburn Hills 10/8/2010 1,165,000 46,600 25

795 S Oakwood Blvd Detroit 10/6/2010 921,000 23,350 39.44

40805 Mound Rd Sterling Heights 10/15/2010 801,000 28,751 27.86

1693 Thunderbird Dr Troy 10/19/2010 800,000 18,875 42.38

19800 Gibraltar Rd Gibraltar 11/30/2010 800,000 67,865 11.79

8000 Ronda Dr Canton 11/2/2010 775,000 47,326 16.38

50500 Mound Rd Shelby Township 10/19/2010 N/A 1,870,480 N/A

continued on page 4

LEASE ACTIVITY

BUILDING NAME SUBMARKET TENANT SIZE SF

10401 Harrison Rd Airport District N/A 142,500

8747 Brandt St. Downriver North Ind The Edison Insitute 101,400

2800 Superior Ct. I-75 Corr/N Oak Dokka Fasteners 100180

1350 W Hamlin Rd. I-75 Corr/N Oak Kostal Kontakt Systeme 93,000

36501 Van Born Airport District Penske Logistics 81,608

754 W Maple Troy US Farathane Corp. 78,000

Total industrial inventory in the Detroit market area amounted to 480,579,732 square feet in 9,573 buildings at the end of the fourth quarter 2010.

Fourth quarter reports a negative absorption compromised of 3,685,375 square feet, with the highest absorption this quarter found in the I-75 corridor submarket.

P. 2 | COLLIERS INTERNATIONAL

RESEARCH REPORT | Q4 2010 | INDUSTRIAL | DETROIT

Existing Properties Direct Vacancy Sublease Vacancy Total Vacancy Net Absorption New Supply - Sq.Ft. Construction Avg. RentMarket Bldgs. Total Inventory SF SF Rate SF Rate SF Rate 4th QTR YTD Current Period YTD Under Constr. Proposed RateDETROITDetroitW/D 1027 84,249,312 18,387,084 21.8% 641,000 0.8% 19,028,084 22.6% (729,892) (635,393) $2.83Flex 37 1,928,822 403,650 20.9% - 0.0% 403,650 20.9% (6,000) (1,100) - - $4.89Total 1064 86,178,134 18,790,734 21.8% - 0.0% 19,431,734 22.5% (735,892) (636,493) - - - - $2.88DownriverW/D 395 41,223,044 5,260,372 12.8% 93,051 0.2% 5,353,423 13.0% 233,049 152,649 - 55,500 $3.94Flex 10 1,116,409 227,139 20.3% - 0.0% 227,139 20.3% 4,525 - - $7.00Total 405 42,339,453 5,487,511 13.0% 93,051 0.2% 5,580,562 13.2% 233,049 157,174 - - - 55,500 $4.02DearbornW/D 228 12,471,156 1,624,002 13.0% - 0.0% 1,624,002 13.0% (245,908) (260,269) - - $3.52Flex 56 3,141,418 1,508,054 48.0% 39,114 1.2% 1,547,168 49.3% 71,242 (91,105) - - $7.13Total 284 15,612,574 3,132,056 20.1% 39,114 0.3% 3,171,170 20.3% (174,666) (351,374) - - - - $4.25I-275 CORRIDORAirportW/D 659 36,100,867 6,599,511 18.3% 215,390 0.6% 6,814,901 18.9% 142,989 (537,396) 1,249,745 $3.92Flex 21 1,608,846 133,307 8.3% - 0.0% 133,307 8.3% 61,150 (29,372) - - $11.95Total 680 37,709,713 6,732,818 17.9% 215,390 0.6% 6,948,208 18.4% 204,139 (566,768) - - - 1,249,745 $4.26Southern I-275W/D 327 15,841,646 1,912,049 12.1% 1,074,888 6.8% 2,986,937 18.9% 83,974 2,741 - - 691,766 $4.02Flex 25 927,256 149,932 16.2% - 0.0% 149,932 16.2% (26,529) 112,547 - - $7.94Total 352 16,768,902 2,061,981 12.3% 1,074,888 6.4% 3,136,869 18.7% 57,445 115,288 - - - 691,766 $4.24LivoniaW/D 711 34,289,034 3,556,644 10.4% 172,082 0.5% 3,728,726 10.9% 243,684 935,728 860,289 $4.36Flex 76 3,724,348 557,572 15.0% 800 0.0% 558,372 15.0% 21,961 60,722 - - 80,000 $6.83Total 787 38,013,382 4,114,216 10.8% 172,882 0.5% 4,287,098 11.3% 265,645 996,450 - - - 940,289 $4.60EASTI-75 CorridorW/D 675 44,845,974 3,719,006 8.3% 134,096 0.3% 3,853,102 8.6% 367,154 76,321 240,000 240,000 1,152,612 $4.53Flex 109 5,191,824 828,284 16.0% 37,126 0.7% 865,410 16.7% 2,650 15,940 - - 114,036 $7.09Total 784 50,037,798 4,547,290 9.1% 171,222 0.3% 4,718,512 9.4% 369,804 92,261 240,000 240,000 1,266,648 $4.80MacombW/D 1666 55,761,480 5,670,411 10.2% 139,656 0.3% 5,810,067 10.4% 204,490 175,315 2,204,233 $3.61Flex 43 1,274,034 275,469 21.6% 10,000 0.8% 285,469 22.4% 9,329 23,063 - - $6.16Total 1709 57,035,514 5,945,880 10.4% 149,656 0.3% 6,095,536 10.7% 213,819 198,378 - - - 2,204,233 $3.67Royal OakW/D 371 10,780,190 1,002,730 9.3% - 0.0% 1,002,730 9.3% 74,229 (160,698) - - 962,568 $3.40Flex 24 853,126 130,439 15.3% - 0.0% 130,439 15.3% (19,325) (40,951) - $7.41Total 395 11,633,316 1,133,169 9.7% - 0.0% 1,133,169 9.7% 54,904 (201,649) - - - 962,568 $3.69TroyW/D 866 25,614,849 3,247,656 12.7% 31,434 0.1% 3,279,090 12.8% 46,158 202,495 - - $4.33Flex 120 4,474,602 784,788 17.5% 19,871 0.4% 804,659 18.0% 66,922 172,913 - - 170,000 $6.59Total 986 30,089,451 4,032,444 13.4% 51,305 0.2% 4,083,749 13.6% 113,080 375,408 - - - 170,000 $4.67WESTCentral I-96W/D 672 28,569,853 3,030,958 10.6% 8,000 0.0% 3,038,958 10.6% 284,226 250,718 1,166,691 $5.00Flex 129 4,307,336 966,043 22.4% 134,087 3.1% 1,100,130 25.5% (49,569) (166,543) 39,523 407,455 $9.31Total 801 32,877,189 3,997,001 12.2% 142,087 0.4% 4,139,088 12.6% 234,657 84,175 - 39,523 - 1,574,146 $5.56Farm. HillsW/D 244 9,039,661 683,784 7.6% 15,900 0.2% 699,684 7.7% 190,122 90,486 - - $5.10Flex 83 3,009,623 592,037 19.7% - 0.0% 592,037 19.7% (16,122) (73,401) - - $7.32Total 327 12,049,284 1,275,821 10.6% 15,900 0.1% 1,291,721 10.7% 174,000 17,085 - - - - $5.65Howell/BrightonW/D 228 9,015,060 878,147 9.7% 42,356 0.5% 920,503 10.2% 59,964 146,688 - - 96,534 $5.34Flex 13 294,751 82,363 27.9% - 0.0% 82,363 27.9% 5,258 37,886 21,000 $7.60Total 241 9,309,811 960,510 10.3% 42,356 0.5% 1,002,866 10.8% 65,222 184,574 - 21,000 - 96,534 $5.41Southfi eldW/D 118 3,856,947 166,647 4.3% 30,200 0.8% 196,847 5.1% (3,360) 994 - - $4.52Flex 41 1,771,692 582,409 32.9% - 0.0% 582,409 32.9% (4,650) (41,468) - - 60,000 $10.95Total 159 5,628,639 749,056 13.3% 30,200 0.5% 779,256 13.8% (8,010) (40,474) - - - 60,000 $6.54WASHTENAW COUNTYW/D 461 28,393,015 7,523,866 26.5% 45,565 0.2% 7,569,431 26.7% (5,026,695) (4,728,067) - - $5.02Flex 138 6,903,557 555,964 8.1% 7,000 0.1% 562,964 8.2% 274,124 408,864 - - $10.90Total 599 35,296,572 8,079,830 22.9% 52,565 0.1% 8,132,395 23.0% (4,752,571) (4,319,203) - - - - $6.17TOTALSW/D 8,648 440,052,088 63,262,867 14.4% 2,643,618 0.6% 65,906,485 15.0% (4,075,816) (4,287,688) 240,000 240,000 - 8,439,938 $3.97Flex 925 40,527,644 7,777,450 19.2% 247,998 0.6% 8,025,448 19.8% 390,441 392,520 - 60,523 - 831,491 $8.17Total 9,573 480,579,732 71,040,317 14.8% 2,250,616 0.5% 73,931,933 15.4% (3,685,375) (3,895,168) 240,000 300,523 - 9,271,429 $4.33QUARTERLY COMPARISON AND TOTALSQ4-10 9,573 480,579,732 71,040,317 14.8% 2,250,616 0.5% 73,931,933 15.4% (3,685,375) (3,895,168) 240,000 300,523 - 9,271,429 $4.33Q3-10 9,487 469,785,434 66,221,100 14.1% 2,466,808 0.5% 69,368,292 14.8% (209,793) 21,000 60,523 240,000 9,832,769 $4.35Q2-10 9,456 465,259,376 64,343,953 13.8% 2,515,016 0.5% 67,520,969 14.5% 120,011 21,000 60,523 250,127 10,219,875 $4.37Q1-10 9,419 463,944,034 65,441,898 14.1% 2,408,261 0.5% 68,512,159 14.8% (959,150) 39,523 39,523 10,127 9,201,771 $4.44Q4-09 9,395 461,158,849 63,100,091 13.7% 2,353,794 0.5% 66,115,885 14.3% (5,433,274) 45,000 289,514 25,996 9,887,898 $4.52Q3-09 9,362 457,072,564 61,040,019 13.4% 2,212,501 0.5% 63,914,520 14.0% (3,624,326) 18,650 244,514 46,600 10,903,302 $4.64Q2-09 9,335 456,220,593 60,532,645 13.3% 2,101,200 0.5% 63,274,845 13.9% (1,871,891) 90,864 225,864 65,250 11,610,439 $4.77Q1-09 9,325 452,663,524 56,761,669 12.5% 1,742,247 0.4% 59,144,916 13.1% (776,074) 135,000 135,000 112,118 15,306,447 $4.86Q4-08 9,284 449,173,375 54,124,559 12.0% 1,789,026 0.4% 56,554,585 12.6% 1,292,628 133,878 252,594 190,020 16,787,880 $4.98

RESEARCH REPORT | Q4 2010 | INDUSTRIAL | DETROIT

COLLIERS INTERNATIONAL | P. 3

CONSTRUCTION

With new construction at all time lows, fourth quarter of 2010 saw a total of 240,000 square feet added to the industrial market.

At the end of 2010, no signifi cant square footage reported under construction.

ABSORPTION/LEASING ACTIVITY

The Detroit market reported a negative absorption of 3,685,375 square feet in 2010’s fourth quarter. The highest absorption reported is in the I-75 submarket with a positive 369,804 square feet. Year to date, 2010’s net absorption amounted to a negative 3,895,168 square feet.

SALE ACTIVITY

Total year to date, sales activity of industrial/fl ex product increased compared to the same time last year. The fi rst nine months of 2010’s industrial market fi nalized around 99 industrial sales with a total volume of over $158 million, while the nine months of 2009 recorded 94 transactions and a total volume of over $155 million. The price per square foot this year has averaged around $20.00 per square foot.

On a local level, sales are averaging approximately $25-$50 per square foot. Capitalization rates are averaging around 9.8%. Nationally, sale prices range from $60-$85 per square foot, with capitalization rates ranging from 6.9% to 8.9%.

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RESEARCH REPORT | Q4 2010 | INDUSTRIAL | DETROIT