No “Frozenomics” Excuses for Industrial Real Estate...No “Frozenomics” Excuses for...

No “Frozenomics” Excuses for Industrial Real Estate

HIGHLIGHTSNORTH AMERICA

WWW.COLLIERS.COM

Q1 2014 | INDUSTRIAL

N.A. INDUSTRIAL MARKETSUMMARY STATISTICS, Q1 2014

US Q1

2014

US Q2

2014*

Canada Q1

2014

Canada Q2

2014*

VACANCY

NET ABSORPTION

CONSTRUCTION

RENTAL RATE**

*Projected, relative to prior period**Warehouse rents

MARKET INDICATORSRelative to prior period

US CAN NA

VACANCY RATE (%) 7.90 4.32 7.52

Change from Q4 2013 (%) -0.17 -0.14 -0.17

ABSORPTION (MSF) 46.4 2.6 49.0

NEW CONSTRUCTION (MSF) 25.7 2.4 28.1

UNDER CONSTRUCTION (MSF) 108.2 12.6 120.8

ASKING RENTS PER SF (USD/CAD) US CAN NA

Average Warehouse/Distribution Center

4.91 8.02 5.40

Change from Q4 2013 (%) 1.2 0.5 1.0

KC CONWAY, MAI, CRE Chief Economist | USA

INDUSTRIAL REAL ESTATE NOT HIBERNATING DURING WINTER/Q1 2014First quarter 2014 started off optimistic on the heels of strong second-half 2013 U.S. economic growth – an annualized 2013 GDP growth rate in excess of 2.5% (2.6%). This growth had translated to improvements across all key industrial real estate metrics. Then in winter 2013-4 brought what some U.S. market observers are calling “frozenomics.” Overall Q1 GDP growth has been revised sharply downward, from +0.1% to -2.9%. However, certain market sectors seem not to be acting as if the U.S. economy is contracting and slipping back into recession. Unlike the transportation and hospitality sectors, industrial real estate experienced tropics-like conditions across all metrics during Winter/Q1 2014. U.S. industrial properties’ vacancy rates have declined from 8.83% a year ago (Q1 2013) to 7.9% (Q1 2014). That decline translates to an average of 23 basis points per quarter in im-proved occupancy rates since Q1 2013 – even with the additions to new supply. Tenants are leasing space, despite the frozen precipitation in Q1 from the Port of Charleston to the Port of Seattle. Q1 2014 saw approximately 50 MSF of net absorption (49 MSF across North America, and 46.4 MSF across the U.S. markets). And new supply remains in balance, with absorption outpacing new supply by a nearly 2:1 ratio (46.4 MSF absorption U.S. in Q1 to 25.7 MSF new supply delivered in Q1). In other words, Q1 2014 can be characterized as a period when industrial real estate participants re-fused to go into hibernation and acted more as though it was springtime.

KEY TAKEAWAYS

• No “frozenomics” for industrial real estate in 1H 2014. Q1 2014 was another quarter when neither wind nor sleet nor snow could impede industrial real estate performance. Absorption outpaced additions to supply, and occupancy improved another 17 basis points as vacancy rates fell, to below 8.0%, in the U.S.

• Q1 2014 was the second consecutive quarter of approximately 50 MSF net absorption (49 MSF across North America, and 46.4 MSF across the U.S. markets).

• The top markets for Q1 absorption were 1) Atlanta (5.81 MSF), 2) Dallas (4.08 MSF), and 3) Los Angeles – Inland Empire (3.14 MSF), followed by Seattle (2.53 MSF), Chicago (2.44 MSF), Port of Los Angeles (2.39 MSF), Houston (1.83 MSF), Washington, D.C. (1.82 MSF), Columbus, OH (1.76 MSF), and Toronto, ON (1.73 MSF). Atlanta is back! It was the standout Colliers market in Q1 as it absorbed better than half of the 10.1 MSF total for all of 2013. Dallas and Houston continue to have unmet needs for space, as entities such as Toyota migrate to Texas from California and other areas.

HIGHLIGHTS | Q1 2014 | INDUSTRIAL | NORTH AMERICA

0

5,000

10,000

15,000

20,000

2005 2006 2007 2008 2009 2010 2011 2012 2013

11,797.812,564.3

13,314.513,961.8 14,219.3 13,898.3

14419.4 14,991.315,684.8

Source: www.tradingeconomics.com | World Bank

U.S. GDP GROWTH | 2005–2013 (BILLIONS OF U.S. DOLLARS)

P. 2 | COLLIERS INTERNATIONAL

MARKET MSF

1 Atlanta 5.81

2 Dallas-Ft. Worth 4.08

3 L.A. – Inland Empire 3.14

4 Seattle 2.53

5 Chicago 2.44

6 Port of Los Angeles 2.39

7 Houston 1.83

8 Washington, DC 1.82

9 Columbus, OH 1.76

10 Toronto, ON 1.73

TOP 10 MARKETS FOR Q1 ABSORPTION | NA

• Overbuilding risk is still nowhere on the horizon. Absorption continues to outpace new supply by a nearly 2:1 ratio (1.8 to 1).

• The U.S. industrial vacancy rate has declined an average of 23 basis points per quarter since Q1 2013, from 8.83% a year ago (Q1 2013) to 7.9% (Q1 2014). This has been despite additions of new supply. The forecast for M.O.T.S. (“more of the same”) is strong.

• The largest looming risk is in the uncertainty about what happens at West Coast ports after the current ILWU labor agreement expires. July 1, 2014 could mark either the dawn of a new era for West Coast ports or the writing of an epitaph for their dominance over East Coast and Gulf Coast ports.

Industrial Economic Indicators

In the year-end 2013 Colliers North American Industrial Outlook, we noted that “[t]he fundamentals of industrial real estate are the strongest they have been in more than a decade, as the U.S. and other regions of the world remake their supply chains in response to growth in e-commerce, expansion of the Panama Canal, and evolution of manufacturing technolo-gies, such as 3-D printing.” Despite “frozenomics” and a -2.9% Q1 GDP reading, the bullish case for investment in industrial real estate is not waning.

WHY? First, on a trailing four-quarter basis, U.S. GDP is still expanding at approxi-mately 2.0 percent. It was in Q1 2014 that GDP decreased at -2.9% com-pared to Q4 2013—it was not an annual contraction. Second, in real dollars, U.S. GDP is at its highest level in history: $15.7 trillion. Third, it’s contrary to the laws of physics and economaic common sense for the U.S. economy

to be contracting when it’s: producing (not losing) approximately 200,000 private sector jobs per month (197,000 jobs three-month average, accord-ing to the ADP jobs report); selling 16.7 million new vehicles (the highest seasonally adjusted annual rate since February 2007); and commencing more than one million housing starts (annualized, the best since the 2008–2009 recession and the financial crisis). Fourth, the Institute for Supply Management’s PMI is also indicating that manufacturing activity is grow-ing—and at a faster month-over-month pace thus far in 2014 (January.-May). The May 2014 PMI of 55.4 is also above the 12-month average of 54.9 (which spans a period in which the 2013 GDP grew at more than 3.0%). And, finally, the Association of American Railroads’ Rail Time Indicators (RTI) is reporting that all railroads are working at better than 78% capacity. Total carload traffic is up 6.1% year-over-year (May 2014 vs. May

U.S. Annual GDP is at highest level in history


COLLIERS INTERNATIONAL | P. 3

0

50

100

150

200

250

May

2013

Jun Jul Aug Sep Oct Nov Dec Jan

2014

Feb Mar Apr May

163

216

188 190

215196

245

191

121

193 198215

179

Thou

sand

s

Source: ADP; Moody’s Analytics; BLS

NATIONAL EMPLOYMENT REPORT

6-Month Average = 183k jobs3-Month Average = 197k jobs

MANUFACTURING AT A GLANCE | MAY 2014

INDEX SERIES INDEX (MAY)

SERIES INDEX (APR)

PERCENTAGE POINT CHANGE DIRECTION RATE OF CHANGE TREND

(MONTHS)

PMI 55.4 54.9 +0.5 Growing Faster 12

New Orders 56.9 55.1 +1.8 Growing Faster 12

Production 31.0 55.7 +2.8 Growing Faster 3

Employment 52.8 54.7 -1.9 Growing Slower 11

Source: ISM

MONTH PMI MONTH PMI

May 2014 55.4 Nov 2013 57.0

Apr 2014 54.9 Oct 2013 56.6

Mar 2014 53.7 Sep 2013 56.0

Feb 2014 53.2 Aug 2013 56.3

Jan 2014 51.3 Jul 2013 54.9

Dec 2013 56.5 Jun 2013 52.5

AVERAGE: 54.9HIGH: 57.0 | LOW: 51.3

PMI | PAST 12 MONTHS

2013), intermodal rail traffic is at its highest level in history, and 17 of the 20 commodities tracked by AAR-RTI are experiencing rising carload vol-umes (since 1989, volume increase in 17 or more of the 20 tracked com-modities has occurred only 5% of the time). In other words, the U.S. economy is not slipping back into recession, and the demand for indus-trial real estate will continue well into 2015 based on all the common-sense economic indicators produced by the likes of ADP, ISM, and RTI.

The Common-Sense Checks

RAILROAD ACTIVITY AND INDUSTRIAL SPACE ABSORPTION The final industrial economic measures to focus upon in determining your 2H 2014 outlook for industrial real estate are intermodal and railroad activity and industrial warehouse space absorption. The Cadillacs of data in these two areas are the monthly Rail Time Indicators (RTI) report from the Association of American Railroads (at AAR.org), and the Colliers North American Industrial Outlook reports.

The Association of American Railroads collects primary data on all that moves by rail and then provides, in its monthly RTI, such meaningful metrics as U.S. freight traffic, changes in rail car capacity and railroad employment,

-25%2008 2009 2010 2011 2012 2013 2014

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Data are based on originations, are not seasonally adjusted, exclude U.S. operations of CN and CP, and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic

% CHANGE IN TOTAL U.S. RAIL CARLOADS | JAN 2008-MAY 2014

2014 poised to be best year since prior to recession

May 2014 was up 6.1% over May 2013 and up 6.3% over May 2012.

and growth in intermodal traffic. The latest May data shows that:

• Railroads are working at better than 78% capacity; • Total carload traffic is up 6.1% year-over-year (May 2014 vs. May

2013);

Source: ISM



• Intermodal rail traffic is at its highest level in history;

170,000

180,000

190,000

200,000

210,000

220,000

230,000

240,000

250,000

260,000

270,000

2013

2009

20122014

2011

Data are based on originations for each month, exclude U.S. operations of CN and CP, and reflect revisions to original reporting; Source: AAR Weekly Railroad Traffic

AVERAGE WEEKLY U.S. RAIL INTERMODAL TRAFFIC

2014 on track to break 2013 record

• 17 of the 20 commodities tracked by AAR-RTI have increasing carload volumes. (As noted above, since 1989, volume increase in 17 or more of the 20 tracked commodities has occurred only 5% of the time);

# OF AAR COMMODITY CATEGORIES [20 TOTAL]

MONTH 2012 2013 2014

January 11 6 7

February 14 10 9

March 12 7 11

April 11 9 14

May 13 11 17

June 9 10

July 8 13

August 11 12

September 10 11

October 9 15

November 13 11

December 11 8

YEAR-OVER-YEAR GAINS | U.S. RAILROADS

*Out of 20. Source: AAR

Note the post-Jan/Feb Frozenomics

recovery

Finally, industrial absorption confirms that the industrial economic indi-cators are translating to lots of real estate leasing activity. Despite the chill in Q1 from the Port of Charleston to the Port of Seattle, tenants leased a lot of space. Q1 2014 was another quarter of approximately 50 MSF net absorption: 49 MSF across North America and 46.4 MSF across the U.S. markets. (See notes on the top 10 markets for Q1 absorption above, under “Key Takeaways.”)

The top three markets for Q1 2014 net absorption by region are as follows:

MSAQ1 2014

NET ABSORPTION

MSACY 2013 TOTAL

ABSORPTION

SOUT

H

Atlanta 5.81 MSF

SOUT

H

Dallas- Ft. Worth 17.10 MSF

Dallas- Ft. Worth 4.08 MSF Atlanta 10.75 MSF

Houston 1.83 MSF Houston 7.02 MSF

WES

T

LA – Inland Empire 3.14 MSF

WES

T

LA – Inland Empire 14.95 MSF

Seattle 2.53 MSF LA – Port 9.87 MSF

LA – Port 2.39 MSF Las Vegas 3.63 MSF

MID

WES

T

Chicago 2.43 MSF

MID

WES

T

Chicago 12.76 MSF

Columbus, OH 1.76 MSF Columbus, OH 5.16 MSF

Cincinnati, OH 1.44 MSF Cincinnati, OH 4.03 MSF

NORT

HEAS

T

Washington, DC 1.82 MSF

NORT

HEAS

T

Philadelphia 6.95 MSF

Central New Jersey 1.00 MSF Central New

Jersey 5.66 MSF

Baltimore 0.88 MSF Washington, DC 2.78 MSF

TOP 3 MARKETS BY REGION | ABSORPTION | U.S.

Source: Colliers International

In summary, record levels of railroad activity (especially post–January/February, the period in which weather so disrupted the transportation in-dustry) and strong warehouse absorption are the common-sense checks for a continuing bullish case for industrial real estate investment. The bull-ish outlook for industrial real estate passes the “tire-kick test”: expanding auto, housing, and manufacturing activity, combined with strong net posi-tive warehouse absorption and declining vacancy rates (now below 8% in the U.S., and heading to 7% or less by year-end 2014) are translating to more industrial real estate demand.



Behind the Statistics and Beyond the Basics

THE SCOPE OF COLLIERS INDUSTRIAL OUTLOOK REPORT:Colliers monitors industrial property conditions in 77 North American mar-kets from Miami to Montréal, totaling 15.9 billion square feet of inventory. Note that in 2H 2013, Colliers inventory numbers were reduced by approxi-mately 1.5 percent, or 191 million square feet, due to a culling of specialty warehouse property types (such as self-storage) to align MSA inventory levels with the industry trend of excluding these specialty warehouse prop-erty types from bulk and distribution warehouse measures. At the MSA level, Colliers warehouse inventory totals correlate with those of other in-dustry data sources, such as CoStar.

Approximately 89 percent (14.2 billion square feet) of this inventory is lo-cated in the United States and 11 percent in 12 primary Canadian markets. On a regional basis, the Midwest and South regions in the U.S. house more than half of the total North American warehouse space (52%, 8.2 BSF), followed by the West (24%, 3.8 BSF), the Northeast (14%, 2.2 BSF), and Canada (11%, 1.7 BSF). But the rankings with respect to both vacancy and absorption rates are materially different from the inventory rankings.

Canada and the U.S. West have the lowest vacancy rates, at 4.3% and 6.4%, respectively; the Northeast has the highest vacancy rate, at 9.2%. The West, with 16.9 MSF, edged out the South, with its 16.1 MSF, for “most absorption” in Q1. The Northeast region absorbed the least: 2.4 MSF.

Influencing the supply and demand metrics – such as vacancy and absorp-tion – is a broad array of variables, commencing with: i) the remaking of the U.S. supply chain in response to growth in e-commerce; ii) the expansion of the Panama Canal lock system; and iii) the remaking of East Coast ports from former military ports (Virginia, Charleston, and Jacksonville) to com-petitive post-Panamax-ready commercial ports capable of competing with the dominant West Coast ports (Los Angeles and Long Beach).

Another variable, which Colliers projects to materially alter 2014 absorp-tion statistics, is the potential ramifications of the June 30, 2014 expiration of the ILWU labor agreement covering West Coast ports. Already Colliers has observed shippers rerouting cargo to East Coast and Gulf Coast ports in anticipation of, at the least, a work slowdown at West Coast ports com-

NORTH AMERICAN INDUSTRIAL OVERVIEW | Q1 2014

MEASURE NORTH AMERICA CANADA UNITED STATES WEST/MIDWEST SOUTH NORTHEAST

# of Markets 77 12 65 35 21 9

Inventory (Millions SF) 15,920.6 1,711.3 14,209.3 7,857.5 4,163.1 2,188.7

% of N.A. Inventory 100.0 10.7 89.3 49.4 26.1 13.7

New Supply (Millions SF) 28.1 2.4 25.7 13.7 10.4 1.6

% of N.A. New Supply 100.0 8.5 91.5 48.9 36.9 5.6

Vacancy (%) 7.52 4.32 7.90 7.06 8.77 9.24

Absorption (Millions SF) 49.0 2.6 46.4 27.9 16.1 2.4

% of N.A. Absorption 100.0 5.2 94.8 57.0 32.8 5.0

Leadership Markets With respect to vacancy, Regina has lowest

at 1.9%, followed by Edmonton (3.55%), and

Toronto (3.61%). With respect to absorption,

Toronto’s 1.73 MSF was more than 2.5x any other

Canadian market (Vancouver was #2,

with 700K SF).

Atlanta was a standout market with the most

absorption in Q1... 1/2 its 2013 total

absorption!

Atlanta (5.8 MSF), Dallas (4.1 MSF),

LA-Inland (3.1 MSF), Seattle (2.5 MSF), CHI (2.4 MSF) and LA-Port

(2.4 MSF) were only U.S. markets with >2.0 MSF absorption in Q1.

In the MW, Omaha, Columbus, OH, and KC have the lowest

vacancy (all <6%); and CHI and Columbus

led in Q1 absorption (2.4 and 1.8 MSF,

respectively).

In the west, Honolulu and LA-Inland have

lowest vacancy (<3%), and LA-Inland, Seattle,

LA-Port & Denver were top in absorption.

Atlanta, Dallas and Houston #’s 1, 2, & 3 in absorption for the South region in Q1.

Houston is the only market in the South with <6% vacancy.

Long Island, Pittsburgh and Northern NJ are

the only 3 markets with vacancy below US

average (7.9%) .

DC, Central NJ, Baltimore and Pittsburgh led Q1 absorption.

Laggard Markets Waterloo and Halifax are the only 2 Canadian

markets with vacancy >6%. Waterloo was the

only market with negative Q1 absorption.

Philadelphia, Northern NJ, Boston, Nashville,

Jacksonville, and Oakland were

major large markets with negative

absorption in Q1.

In the MW, Detroit has the highest vacancy

(>10%) and Grand Rapids, MI, was only market with negative absorption (weather

impact).

Nashville, Greenville/Spartanburg and

Jacksonville were only markets with net

negative absorption. All have vacancy more

than 50 basis points above U.S. average

of 7.9%.

Phila, NJ-Northern and Boston were the only

markets with negative absorption in Q1

(weather impact), but DC and Boston remain

only 2 NE markets with vacancy >10%.




LOWEST INDUSTRIAL VACANCY BY REGION | U.S.

CITY Q1 2014INVENTORY

Q4 2013 VACANCY RATE

Q1 2014 VACANCY RATE

Q1 2014 ABSORPTION

SOUT

H

Houston, TX 488,017,400 5.21% 5.40% 1,826,363

Miami, FL 208,927,580 6.48% 6.22% 669,740

Louisville, KY 173,204,572 7.12% 6.73% 742,724

WES

T

Honolulu, HI 39,187,095 2.71% 2.59% 79,216

Los Angeles – Inland Empire, CA 896,574,700 2.94% 2.66% 2,394,900

Bakersfield, CA 33,982,008 3.20% 3.58% -68,318

Los Angeles, CA 425,110,900 4.27% 3.91% 3,142,000

San Francisco Peninsula, CA 40,844,016 5.65% 3.98% 632,820

MID

WES

T

Omaha, NE 67,759,732 4.67% 4.44% 249,689

Columbus, OH 214,618,178 5.58% 4.93% 1,759,278

Kansas City, MO-KS 235,763,848 5.88% 5.82% 874,776

NORT

HEAS

T

Long Island, NY* 156,329,998 5.21% 5.12% 143,612

Pittsburgh, PA 173,820,760 7.70% 7.33% 682,298

New Jersey – Northern 363,207,111 7.46% 7.87% -1,123,170

New Jersey – Central 340,735,801 8.66% 8.58% 1,000,257

US CAN NA

Q1 2013 8.83 4.13 8.33

Q2 2013 8.66 4.39 8.20

Q3 2013 8.33 4.25 7.89

Q4 2013 8.08 4.41 7.69

Q1 2014 7.90 4.32 7.52

VACANCY RATE | NORTH AMERICA


mencing July 1, 2014. Retailers have learned from their experiences sur-rounding the 2002 and 2012–2013 East Coast port labor negotiations to reroute cargo so as not to risk disruptions to distribution channels for holi-day shopping. Rerouting is underway, and the South is seeing a marked uptick in industrial warehouse absorption—Atlanta, a case in point, evi-denced half as much net absorption in Q1 as it did for all of 2013. Specifics pertaining to the vital statistics by region are presented in the preceding table, along with context as to the leading and lagging markets within each region.

VACANCY U.S. industrial vacancy has declined from 8.83% a year ago (Q1 2013) to 7.9% (Q1 2014). That decline translates to an average of 23 basis points of improved occupancy per quarter—even with the additions to new supply. And despite the frozen precipitation in Q1 from the Port of Charleston to the Port of Seattle, tenants leased space. From all perspectives, looking at North America as a whole, or just at Canada or the U.S., industrial vacancy

rates fell across the board in Q1 2014. And this improved occupancy oc-curred across all U.S. regions, ranging from as little as 2 basis points in the Northeast to as much as 21 basis points in the Midwest. Vacancy trend highlights and statistics regarding each market are shown in the data tables below.

*Q4 2013 data shown for Long Island, NY. Source: Colliers International



CONSTRUCTION ACTIVITYConstruction activity is building in response to: i) improved industrial real estate metrics (occupancy, absorption, and rents); ii) increased urgency among retailers and manufacturers to obtain modern distribution space as they remake their supply chains to align with key post-Panamax ports, in-termodal rail facilities, and air cargo/e-commerce fulfillment paths; iii) strong investor demand for industrial real estate at a time when there is a dearth of quality warehouse buildings for sale; and iv) recognition that as much as 40 percent of North American warehouse space is functionally obsolete (low clear ceiling height, inadequate truck courtyards, etc.) and thus in need of replacement by modern distribution centers with 30- to 36-foot clear ceiling height and modern mechanical and electrical systems designed to accommodate automated conveyor and racking equipment/systems.

From this increase in warehouse construction activity in the past five quar-ters, the question that naturally presents itself relates to overbuilding risk. Previously, Colliers has asked the question: Should this increase in new construction be a concern? While potential overbuilding is worth monitor-

5.6% 1.7% 1.4%

36.4%

66.7% 50.0%50.0% 54.5% 50.0% 50.7%

63.6%

33.3%44.4% 50.0% 45.5% 48.3% 47.9%

5.6% 1.7% 1.4%

36.4%

66.7% 50.0%50.0% 54.5% 50.0% 50.7%

63.6%

33.3%44.4% 50.0% 45.5% 48.3% 47.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Midwest Northeast South West Canada U.S. N.A.

Contract Hold Steady Expand

OF THE LEASES SIGNED THIS QUARTER*, DID MOST TENANTS...?

*Excluding renewals % of reporting markets

Down Same Up

54.5%66.7% 72.2% 68.2%

18.2%

66.7% 59.2%

36.4% 11.1%

27.8% 31.8%

45.5%

28.3%31.0%

9.1%22.2%

36.4%

5.0% 9.9%

54.5%66.7% 72.2% 68.2%

18.2%

66.7% 59.2%

36.4% 11.1%

27.8% 31.8%

45.5%

28.3%31.0%

9.1%22.2%

36.4%

5.0% 9.9%

0%10%20%30%40%50%60%70%80%90%

100%

Midwest Northeast South West Canada U.S. N.A.

3-MONTH FORECAST FOR VACANCY LEVELS (relative to current quarter)

% of reporting markets

9.1%

1.4%

3.3%

2.8%

16.7%

27.3%

18.3%

73.3%

45.5%

69.0%

6.7%

18.2%

8.5%

9.1%

1.4%

3.3%

2.8%

16.7%

27.3%

18.3%

73.3%

45.5%

69.0%

6.7%

18.2%

8.5%

0% 20% 40% 60% 80% 100%

U.S.

Canada

N.A.

Declining Bottoming No Clear Direction Increasing Peaking

CHARACTERIZE CURRENT INDUSTRIAL RENTS IN YOUR MARKET


45.5%

22.2% 27.8% 27.3%

63.6%

30.0% 35.2%

54.5%

77.8% 72.2% 72.7%

36.4%

70.0% 64.8%

45.5%

22.2% 27.8% 27.3%

63.6%

30.0% 35.2%

54.5%

77.8% 72.2% 72.7%

36.4%

70.0% 64.8%

0%10%20%30%40%50%60%70%80%90%

100%

Midwest Northeast South West Canada US N.A.

Down Same Up

3-MONTH FORECAST FOR RENTS (relative to current quarter)



9.81 9.58 9.36 9.13 8.83 8.65 8.33 8.07 7.90

9.81 9.58 9.36 9.13 8.83 8.65 8.33 8.07 7.90

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q12012 2013 2014

Vaca

ncy

%

Absorption MSF Completions MSF Vacancy %

U.S. INDUSTRIAL MARKET | Q1 2012-Q1 2014




ing in 2014 and into 2015, there are still no indications of such risk on the horizon. Even though 28.1 MSF in new supply was added throughout North America in Q1 (which is on par with the preceding four quarters), only 45% of that new supply was speculative. Build-to-suit construction—as opposed to speculative building—is behind the increasing supply of warehouse space, especially in the U.S., where approximately 60% of the 25.7 MSF of new supply in Q1 was build-to-suit. Furthermore, the U.S. has been absorbing approximately 50 MSF of warehouse space per quarter since 2011, compared with approximately half that amount of new supply. In CY 2013, the 65 major U.S. industrial markets absorbed 188 MSF of space, compared with just 80 MSF of new supply being added. In other words, the U.S. industrial markets continue to absorb more than twice the new supply being added.

The regions with the most new supply added in CY 2013 were the South (29.1 MSF) and the Midwest (22.3 MSF), followed by the West (21.3 MSF) and the Northeast (7.6 MSF). That trend is continuing in 2014. The five North American markets with the most new supply added in CY 2013 were Chicago (8.8 MSF); Houston (8.0 MSF); Dallas (7.3 MSF); LA – Inland Empire (5.8 MSF); and Phoenix (5.2 MSF). In 2014, Southeastern, Texas, and Midwest markets will see major additions to new supply, especially in areas such as Atlanta (growth at Georgia ports); Greenville/Spartanburg (new inland South Carolina port); Memphis (e-commerce associated with proximity to FedEx); Dallas (more relocations are coming to Texas, such as Toyota and maybe Tesla); Houston; Chicago; Columbus, Ohio; Indianapolis; and Kansas City (with growth of new intermodal and Kansas City Southern’s Class 1 rail line ac-cess into Mexico).

Conclusion

All in all, Q1 2014 was another quarter in which neither wind nor sleet nor snow could impede the progress of industrial real estate. Overbuilding is still nowhere on the horizon. Absorption continues to outpace new supply by a ratio of nearly 2:1 (1.8 to 1). Can it get any better than this? It probably can, as the U.S. manufacturing renaissance continues and North America remakes its supply chain. At the time of this writing, a looming risk is shrouded in uncertainty: what will happen at the West Coast ports after the current ILWU labor agreement expires. As we said earlier: July 1 could mark either the dawn of a new era for West Coast ports or the writing of an epitaph for their dominance over East Coast and Gulf Coast ports.

-5.0 0.0 5.0 10.0 15.0 20.0

New Jersey - NorthernSavannah, GA

Indianapolis, INNew Jersey - Central

Los Angeles, CAChicago, IL

Los Angeles - Inland Empire, CADallas-Ft. Worth, TX

Atlanta, GA

Millions

Q1-14 Absorption Currently Under Construction

ABSORPTION (SF) | SELECT U.S. MARKETS | Q1 2014 VS. YTD

Millions

Q1-14 Absorption Currently Under Construction

-2.0 0.0 2.0 4.0 6.0

Waterloo Region, ONWinnipeg, MBMontréal, QC

Saskatoon, SKEdmonton, AB

Regina, SKCalgary, AB

Vancouver, BCToronto, ON

ABSORPTION (SF) | CANADIAN MARKETS | Q1 2014 VS. YTD



UNITED STATES | INDUSTRIAL SURVEY | INVENTORY, NEW SUPPLY AND UNDER CONSTRUCTION

MARKETINVENTORY

MAR. 31, 2014 (SF)

NEW SUPPLYQ1 2014

(SF)

CURRENTLY UNDER CONSTRUCTION

(SF)

NORTHEAST

Baltimore, MD 223,728,839 0 0

Boston, MA 151,723,522 0 1,186,000

Hartford, CT 95,613,351 0 1,525,747

Long Island, NY* 156,329,998 0 0

New Jersey – Central 340,735,801 727,244 0

New Jersey – Northern 363,207,111 364,000 0

Philadelphia, PA 413,891,922 125,300 3,573,663

Pittsburgh, PA 173,820,760 40,000 791,403

Washington, DC 269,686,710 326,740 2,212,138

Northeast Total 2,188,738,014 1,583,284 9,288,951

SOUTH

Atlanta, GA 615,504,320 165,000 5,392,843

Birmingham, AL 109,682,848 0 0

Charleston, SC 32,758,481 0 316,000

Charlotte, NC 323,889,429 169,423 1,870,123

Columbia, SC 38,985,727 0 1,688,500

Dallas-Ft. Worth, TX 734,123,532 4,535,195 15,533,666

Ft. Lauderdale-Broward, FL 110,631,868 428,810 364,716

Greenville/Spartanburg, SC 179,310,483 120,000 0

Houston, TX 488,017,400 2,912,939 3,979,987

Jacksonville, FL 122,763,661 0 354,074

Little Rock, AR 45,125,192 18,376 0

Louisville, KY 173,204,572 234,114 0

Memphis, TN 222,177,188 514,980 2,256,252

Miami, FL 208,927,580 185,755 1,529,790

Nashville, TN 113,514,020 346,488 0

Orlando, FL 131,563,647 74,814 1,351,091

Raleigh, NC 110,086,509 30,000 248,305

Richmond, VA 110,752,555 10,400 0

Savannah, GA 45,302,300 0 450,000

Tampa Bay, FL 196,851,910 411,531 1,050,400

West Palm Beach, FL 49,926,063 210,400 650,000South Total 4,163,099,285 10,368,225 37,035,747

*Q3 data displayed for Detroit, Q4 data displayed for Portland, Long Island



UNITED STATES | INDUSTRIAL SURVEY | INVENTORY, NEW SUPPLY AND UNDER CONSTRUCTION

MARKETINVENTORY

MAR. 31, 2014 (SF)

NEW SUPPLYQ1 2014

(SF)

CURRENTLY UNDER CONSTRUCTION

(SF)

MIDWEST

Chicago, IL 1,316,557,873 1,390,585 9,867,130

Cincinnati, OH 243,138,726 0 3,000,000

Cleveland, OH 288,972,948 107,001 169,600

Columbus, OH 214,618,178 400,000 2,865,752

Detroit, MI* 531,466,219 0 0

Grand Rapids, MI 113,226,213 0 1,013,899

Indianapolis, IN 277,079,218 155,000 3,209,414

Kansas City, MO-KS 235,763,848 770,414 2,783,611

Milwaukee, WI 224,373,266 614,062 813,040

Minneapolis/St. Paul, MN 243,161,390 0 1,218,254

Omaha, NE 67,759,732 72,800 504,131

St. Louis, MO 270,271,163 227,500 522,000Midwest Total 4,026,388,774 3,737,362 25,966,831

WEST

Albuquerque, NM 37,181,917 0 0

Bakersfield, CA 33,982,008 62,931 3,137,540

Boise, ID 46,241,707 0 44,000

Denver, CO 216,327,639 162,413 2,277,480

Fairfield, CA 46,659,432 380,281 103,400

Fresno, CA 56,200,000 0 0

Honolulu, HI 39,187,095 0 0

Las Vegas, NV 114,006,765 417,142 412,490

Los Angeles, CA 425,110,900 1,666,800 16,638,300

Los Angeles – Inland Empire, CA 896,574,700 93,900 3,153,100

Oakland, CA 141,989,180 374,725 574,640

Orange County, CA 193,121,615 0 0

Phoenix, AZ 278,993,344 2,942,991 817,668

Pleasanton/Tri-Valley, CA 17,508,130 0 0

Portland, OR* 191,988,539 0 2,416,185

Reno, NV 83,020,048 524,800 1,331,010

Sacramento, CA 161,786,831 0 298,014

San Diego, CA 187,042,908 226,579 286,828

San Francisco Peninsula, CA 40,844,016 0 0

San Jose/Silicon Valley, CA 247,623,940 0 1,171,396

Seattle/Puget Sound, WA 262,545,398 3,116,511 1,413,285

Stockton/San Joaquin County, CA 95,642,985 27,160 1,872,900

Walnut Creek, CA 17,533,715 0 0West Total 3,831,112,812 9,996,233 35,948,236

U.S. TOTAL 14,209,338,885 25,685,104 108,239,765

(continued)




UNITED STATES | INDUSTRIAL SURVEY | ABSORPTION AND VACANCY

MARKETABSORPTION

Q1 2014 (SF)

VACANCY RATE DEC. 31, 2013

(%)

VACANCY RATE MAR. 31, 2014

(%)

NORTHEAST

Baltimore, MD 883,586 9.59 9.20

Boston, MA -779,901 18.83 19.36

Hartford, CT 310,825 9.22 8.90

Long Island, NY* 143,612 5.21 5.12

New Jersey – Central 1,000,257 8.66 8.58

New Jersey – Northern -1,123,170 7.46 7.87

Philadelphia, PA -507,519 8.80 8.95

Pittsburgh, PA 682,298 7.70 7.33

Washington, DC 1,823,352 11.04 10.47

Northeast Total 2,433,340 9.28 9.24SOUTH

Atlanta, GA 5,811,967 11.93 11.01

Birmingham, AL 146,032 9.06 8.92

Charleston, SC 120,251 8.36 8.00

Charlotte, NC 1,681,059 11.62 11.15

Columbia, SC 3,555 7.27 7.26

Dallas-Ft. Worth, TX 4,086,697 7.57 7.58

Ft. Lauderdale-Broward, FL 284,915 8.49 8.58

Greenville/Spartanburg, SC -350,349 8.59 8.85

Houston, TX 1,826,363 5.21 5.40

Jacksonville, FL -287,151 9.22 9.46

Little Rock, AR 403,568 11.20 10.09

Louisville, KY 742,724 7.12 6.73

Memphis, TN 271,911 12.22 12.30

Miami, FL 669,740 6.48 6.22

Nashville, TN -586,099 8.44 8.96

Orlando, FL 5,963 9.65 9.70

Raleigh, NC 31,797 9.75 9.74

Richmond, VA 279,841 8.93 8.69

Savannah, GA 82,550 9.03 8.85

Tampa Bay, FL 686,987 10.15 10.03

West Palm Beach, FL 145,139 6.95 7.05South Total 16,057,460 8.94 8.77




UNITED STATES | INDUSTRIAL SURVEY | ABSORPTION AND VACANCY

MARKETABSORPTION

Q1 2014 (SF)

VACANCY RATE DEC. 31, 2013

(%)

VACANCY RATE MAR. 31, 2014

(%)

MIDWEST

Chicago, IL 2,435,254 8.70 8.53

Cincinnati, OH 1,440,517 7.34 6.74

Cleveland, OH 369,538 6.69 6.58

Columbus, OH 1,759,278 5.58 4.93

Detroit, MI* 1,282,356 10.93 10.69

Grand Rapids, MI -73,615 6.56 6.62

Indianapolis, IN 745,382 6.73 6.52

Kansas City, MO-KS 874,776 5.88 5.82

Milwaukee, WI 801,410 6.53 6.43

Minneapolis/St. Paul, MN 473,256 7.60 7.41

Omaha, NE 249,689 4.67 4.44

St. Louis, MO 684,816 8.23 8.02Midwest Total 11,042,657 7.95 7.74

WEST

Albuquerque, NM 751,116 10.25 8.94

Bakersfield, CA -68,318 3.20 3.58

Boise, ID 956,949 5.31 4.79

Denver, CO 1,633,476 5.62 5.09Fairfield, CA 299,858 7.34 7.42Fresno, CA* 420,000 8.63 7.88

Honolulu, HI 79,216 2.71 2.59

Las Vegas, NV 761,676 11.97 11.62

Los Angeles, CA 2,394,900 2.94 2.66

Los Angeles – Inland Empire, CA 3,142,000 4.27 3.91

Oakland, CA -661,662 6.35 7.08

Orange County, CA 178,800 4.33 4.20

Phoenix, AZ 347,543 12.96 13.60

Pleasanton/Tri-Valley, CA 37,343 7.43 7.28

Portland, OR* 968,606 6.74 6.24

Reno, NV 807,414 9.99 9.59

Sacramento, CA 218,662 12.74 12.59

San Diego, CA 857,822 8.49 8.14

San Francisco Peninsula, CA 632,820 5.65 3.98

San Jose/Silicon Valley, CA -418,783 9.06 8.94

Seattle/Puget Sound, WA 2,531,857 5.48 5.82

Stockton/San Joaquin County, CA 1,060,897 11.52 10.37

Walnut Creek, CA -30,760 7.80 7.97West Total 16,901,432 6.55 6.36

U.S. TOTAL 46,434,889 8.07 7.90

(continued)




UNITED STATES | INDUSTRIAL SURVEY | 3-MONTH FORECASTS, SALES PRICE & CAP RATES

MARKET SALES PRICE (USD PSF)

MEDIANCAP RATE

(%)

VACANCY FORECAST*** (3 MONTHS)

ABSORPTION FORECAST*** (3 MONTHS)

RENT FORECAST*** (3 MONTHS)

NORTHEAST

Baltimore, MD 47.66 7.10 Boston, MA 63.55 Hartford, CT 38.00 8.50

Long Island, NY* 72.85 8.00

New Jersey – Central 63.33 7.10 New Jersey – Northern 70.85 6.50 Philadelphia, PA 53.38 7.40 Pittsburgh, PA 52.00 7.50 Washington, DC 77.05 6.50 Northeast Average** 59.85 7.33

SOUTH

Atlanta, GA 45.06 7.60 Birmingham, AL Close to zero

Charleston, SC 46.00 7.50 Close to zero Columbia, SC 37.00 Dallas-Ft. Worth, TX 69.00 7.20

Ft. Lauderdale-Broward, FL 80.00 Greenville/Spartanburg, SC Houston, TX 59.00 8.38

Jacksonville, FL 44.00 7.60

Little Rock, AR 65.45 9.00 Close to zero

Memphis, TN 33.00 7.50 Miami, FL 115.00 Nashville, TN 50.00 7.00 Orlando, FL 50.00 7.50 Richmond, VA Savannah, GA 34.00 8.50 Tampa Bay, FL 47.38 8.25 West Palm Beach, FL 90.00 South Average** 57.66 7.82

*Q3 data displayed for Detroit, Q4 data displayed for Portland, Long Island**Straight averages used***Forecasts are for Warehouse/Distribution space.



UNITED STATES | INDUSTRIAL SURVEY | 3-MONTH FORECASTS, SALES PRICE & CAP RATES

MARKET SALES PRICE (USD PSF)

MEDIANCAP RATE

(%)

VACANCY FORECAST*** (3 MONTHS)

ABSORPTION FORECAST*** (3 MONTHS)

RENT FORECAST*** (3 MONTHS)

MIDWEST

Chicago, IL 55.00 5.90 Cincinnati, OH 35.00 8.50

Cleveland, OH

Columbus, OH 34.28 - Grand Rapids, MI 41.30 8.00 Indianapolis, IN 53.00 6.80

Kansas City, MO-KS

Milwaukee, WI 50.00 8.75

Minneapolis-St. Paul, MN 48.11 7.30 Omaha, NE Midwest Average** 41.15 7.54 WEST

Albuquerque, NM 86.50 7.85 Close to zero

Bakersfield, CA 38.00 10.00

Boise, ID Denver, CO 46.18 7.20 Fairfield, CA Fresno, CA 44.00 8.75 Close to zero

Honolulu, HI Las Vegas, NV 100.92 9.50 Los Angeles, CA 95.21 6.50 Close to zero Los Angeles – Inland Empire, CA 78.00 6.25 Oakland, CA 98.90 6.50 Orange County, CA 117.00 7.14 Close to zero Phoenix, AZ 63.00 7.70 Pleasanton/Tri-Valley, CA 100.00 7.50 Portland, OR* 89.71 6.12

Sacramento, CA 62.33 7.49 San Diego, CA 99.57 San Francisco Peninsula, CA 275.00 6.00 San Jose/Silicon Valley, CA 129.00 6.00 Close to zero

Seattle/Puget Sound, WA 96.00 7.10

Stockton/San Joaquin County, CA

Walnut Creek, CA West Average** 95.25 7.35

U.S. AVERAGE** 68.41 7.50

(continued)

*Q3 data displayed for Detroit, Q4 data displayed for Portland, Long Island**Straight averages used

***Forecasts are for Warehouse/Distribution space.



UNITED STATES | INDUSTRIAL SURVEY | RENTS AS OF MARCH 2014

MARKETWAREHOUSE/DISTRIBUTION

SPACE (USD PSF)

BULK SPACE

(USD PSF)

FLEX/SERVICE SPACE

(USD PSF)

TECH/R&D SPACE

(USD PSF)

NORTHEAST

Baltimore, MD 4.57 4.45 11.21

Boston, MA 6.03 5.32 6.51 12.26

Hartford, CT 3.95 7.71 6.50

Long Island, NY* 9.30 17.05

New Jersey – Central 4.99 4.80 11.43

New Jersey – Northern 6.11 5.83 10.03

Philadelphia, PA 4.25 4.11 7.25 11.00

Pittsburgh, PA 4.56 4.56 11.94 11.94

Washington, DC 6.96 5.79 11.96 14.39

Northeast Average** 5.64 4.98 10.57 11.22

SOUTH

Atlanta, GA 3.22 2.94 7.21 9.85

Birmingham, AL 3.51 3.33 8.50

Charleston, SC 4.39 4.30 6.25 16.25

Charlotte, NC 3.32 3.50 8.73

Columbia, SC 3.47 2.91 7.92

Dallas-Ft. Worth, TX 3.35 2.80 7.35 8.65

Ft. Lauderdale-Broward, FL 6.54 5.88 11.07 13.88

Greenville/Spartanburg, SC 3.04 2.94 6.66

Houston, TX 5.71 4.39 9.54 11.38

Jacksonville, FL 3.90 3.65 8.43

Little Rock, AR 2.87 2.77 7.35

Louisville, KY 3.52 3.49 6.99

Memphis, TN 2.54 2.71 4.93 9.75

Miami, FL 8.58 6.31 11.06 12.00

Nashville, TN 3.40 3.20 7.50 8.60

Orlando, FL 4.53 4.40 8.60 8.60

Raleigh, NC 3.87 4.51 10.05

Richmond, VA 3.66 3.71 7.42 9.49

Savannah, GA 3.95 3.75 7.00 10.00

Tampa Bay, FL 4.73 4.37 7.35 5.98

West Palm Beach, FL 7.17 6.41 11.28 15.00South Average** 4.25 3.92 8.15 10.73

*Q3 data displayed for Detroit, Q4 data displayed for Portland, Long Island **Straight averages used.



UNITED STATES | INDUSTRIAL SURVEY | RENTS AS OF MARCH 2014


SPACE (USD PSF)

BULK SPACE

(USD PSF)

FLEX/SERVICE SPACE

(USD PSF)

TECH/R&D SPACE

(USD PSF)

MIDWEST

Chicago, IL 4.36 3.32 8.18

Cincinnati, OH 3.27 2.82 5.92 5.92

Cleveland, OH 3.36 2.98 7.95 3.25

Columbus, OH 2.75 2.75 5.15 5.15

Detroit, MI* 3.73 3.62 7.42 7.47

Grand Rapids, MI 3.36 3.31 4.35 4.35

Indianapolis, IN 4.50 3.30 6.65

Kansas City, MO-KS 4.35 3.91 7.99 7.35

Milwaukee, WI 3.96 3.52 6.69

Minneapolis-St. Paul, MN 4.53 4.48 6.85 7.15

Omaha, NE 3.95 4.57 6.57 4.79

St. Louis, MO 3.58 3.70 7.69

Midwest Average** 3.81 3.52 6.78 5.68

WEST

Albuquerque, NM 5.51 4.29 8.93 8.93

Bakersfield, CA 4.00 3.42 8.00

Boise, ID 5.40 5.04 6.84 4.80

Denver, CO 5.16 3.68 9.36 9.09

Fairfield, CA 5.07 5.61 7.28 8.84

Fresno, CA 4.00 3.48 4.80 5.50

Honolulu, HI 12.96

Las Vegas, NV 5.04 4.62 6.24 9.72

Los Angeles, CA 6.63 6.25 9.55 12.45

Los Angeles – Inland Empire, CA 4.80 4.57 7.15 7.75

Oakland, CA 5.16 5.52 6.48 8.64

Orange County, CA 7.32 6.36 15.48 11.52

Phoenix, AZ 5.45 4.42 11.53 11.03

Pleasanton/Tri-Valley, CA 5.40 4.80

Portland, OR* 5.21 5.27 9.97 10.86

Reno, NV 4.01 3.37 7.90

Sacramento, CA 4.80 5.04 8.64 8.88

San Diego, CA 8.04 7.08 10.80 15.96

San Francisco Peninsula, CA 10.08 10.08 24.96 24.96

San Jose/Silicon Valley, CA 6.84 6.11 9.12 16.44

Seattle/Puget Sound, WA 5.94 5.16 14.28

Stockton/San Joaquin County, CA 3.72 4.08 6.66 8.16

Walnut Creek, CA 3.00 13.92West Average** 5.81 5.15 9.70 10.97

U.S. AVERAGE** 4.91 4.39 8.74 9.96

(continued)

*Q3 data displayed for Detroit, Q4 data displayed for Portland, Long Island **Straight averages used.



CANADA | INDUSTRIAL SURVEY | INVENTORY, NEW SUPPLY AND UNDER CONSTRUCTION

MARKETINVENTORY

MAR. 31, 2014 (SF)

NEW SUPPLYQ1 2014

(SF)

CURRENTLY UNDERCONSTRUCTION

(SF)Calgary, AB 130,161,150 465,803 1,833,761Edmonton, AB 82,451,715 242,000 1,898,698

Halifax, NS* 7,624,537 10,200 0

Montréal, QC 323,787,194 140,750 632,201

Ottawa, ON** 28,134,055 64,000 47,500

Regina, SK 17,450,379 10,000 200,000

Saskatoon, SK 21,645,000 121,000 220,000

Toronto, ON 760,453,204 565,487 5,410,602

Vancouver, BC 190,183,278 747,853 2,062,703

Victoria, BC* 9,001,303 0 0

Waterloo Region, ON 60,319,270 11,969 191,103Winnipeg, MB* 80,082,082 0 60,000

CANADA TOTALS 1,711,293,167 2,379,062 12,556,568

CANADA | INDUSTRIAL SURVEY | ABSORPTION AND VACANCY

MARKETABSORPTION

Q1 2014 (SF)

VACANCY RATE DEC. 31, 2013 (%)

VACANCY RATE MAR. 31, 2014 (%)

Calgary, AB 515,536 5.84% 5.79%Edmonton, AB 56,901 3.40% 3.55%

Halifax, NS* 0 11.21% 11.21%

Montréal, QC 13,877 5.02% 5.06%

Ottawa, ON** 133,127 5.76% 5.50%

Regina, SK 170,347 2.81% 1.89%

Saskatoon, SK 21,000 4.18% 4.62%

Toronto, ON 1,725,916 3.99% 3.61%

Vancouver, BC 700,749 4.23% 4.12%

Victoria, BC* 0 4.50% 4.50%

Waterloo Region, ON -786,165 6.72% 7.86%Winnipeg, MB* 0 3.69% 3.69%

CANADA TOTALS 2,551,288 4.46% 4.32%

*Halifax, Victoria, Winnipeg report data semi-annually. Data is from Q4-2013. | **Q1-2013 data displayed for Ottawa



*Halifax, Victoria, Winnipeg report data semi-annually. Data is from Q4 2013.**Q1 2013 data displayed for Ottawa***Straight averages used.

CANADA | INDUSTRIAL SURVEY | FORECASTS, SALES PRICE AND CAP RATES

MARKET SALES PRICE (CAD PSF)

MEDIANCAP RATE

(%)

VACANCY FORECAST** (3 MONTHS)

ABSORPTION FORECAST** (3 MONTHS)

RENT FORECAST (3 MONTHS)

Calgary, AB 165.00 7.00 Edmonton, AB 121.02 7.00

Montréal, QC 62.00 7.50 Close to zero

Ottawa, ON* 110.00 7.50

Regina, SK 142.00 7.15 Close to zero

Saskatoon, SK 160.00 7.15

Toronto, ON 79.28 6.10 Vancouver, BC 180.00 5.50 Victoria, BC*** 195.00 7.50

Waterloo Region, ON 91.00 6.61 Close to zero

Winnipeg, MB*** 80.00 7.50

CANADA AVERAGES**** 125.94 6.96

*Q1 2013 data displayed for Ottawa. **Forecasts are for Warehouse/Distribution space.

***Victoria, Winnipeg report data semi-annually. Data is from Q4 2013 ****Straight averages used.

CANADA | INDUSTRIAL SURVEY | AVERAGE ASKING RENTS


SPACE (CAD PSF)

BULK SPACE

(CAD PSF)

FLEX/SERVICE SPACE

(CAD PSF)

TECH/R&D SPACE

(CAD PSF)

Calgary, AB 9.50 7.75 12.25 12.25Edmonton, AB 8.10 7.72 10.20 16.50

Halifax, NS* 8.15 10.56 10.50 15.00

Montréal, QC 4.75 4.25 6.00 8.00

Ottawa, ON** 8.25 7.50 8.50 11.00

Regina, SK 11.00 10.00 12.00 14.00

Saskatoon, SK 11.00 10.00 13.00 15.00

Toronto, ON 5.09

Vancouver, BC 8.11 7.34 9.28 14.00

Victoria, BC* 11.50 10.00 13.50 13.50

Waterloo Region, ON 4.57 3.68 8.06 8.06Winnipeg, MB* 6.25 5.25 10.95 12.75

CANADA AVERAGES*** 8.02 7.64 10.39 12.73



INDUSTRIAL VACANCY RANKINGS | US

MARKETVACANCY RATEMAR. 31, 2013

(%)Honolulu, HI 2.59Los Angeles, CA 2.66Bakersfield, CA 3.58Los Angeles - Inland Empire, CA 3.91San Francisco Peninsula, CA 3.98Orange County, CA 4.20Omaha, NE 4.44Boise, ID 4.79Columbus, OH 4.93Denver, CO 5.09Long Island, NY 5.12Houston, TX 5.40Kansas City, MO-KS 5.82Seattle/Puget Sound, WA 5.82Miami, FL 6.22Portland, OR 6.24Milwaukee, WI 6.43Indianapolis, IN 6.52Cleveland, OH 6.58Grand Rapids, MI 6.62Louisville, KY 6.73Cincinnati, OH 6.74West Palm Beach, FL 7.05Oakland, CA 7.08Columbia, SC 7.26Pleasanton/Tri-Valley, CA 7.28Pittsburgh, PA 7.33Minneapolis-St. Paul, MN 7.41Fairfield, CA 7.42Dallas-Ft. Worth, TX 7.58New Jersey - Northern 7.87Fresno, CA 7.88U.S. AVERAGE 7.90Walnut Creek, CA 7.97Charleston, SC 8.00St. Louis, MO 8.02San Diego, CA 8.14Chicago, IL 8.53Ft. Lauderdale-Broward, FL 8.58New Jersey - Central 8.58Richmond, VA 8.69Greenville/Spartanburg, SC 8.85Savannah, GA 8.85Hartford, CT 8.90Birmingham, AL 8.92San Jose/Silicon Valley, CA 8.94Albuquerque, NM 8.94Philadelphia, PA 8.95Nashville, TN 8.96Baltimore, MD 9.20Jacksonville, FL 9.46Reno, NV 9.59Orlando, FL 9.70Raleigh, NC 9.74Tampa Bay, FL 10.03Little Rock, AR 10.09Stockton/San Joaquin County, CA 10.37Washington,k DC 10.47Detroit, MI 10.69Atlanta, GA 11.01Charlotte, NC 11.15Las Vegas, NV 11.62Memphis, TN 12.30Sacramento, CA 12.59Phoenix, AZ 13.60Boston, MA 19.36

INDUSTRIAL VACANCY RANKINGS | CANADA

MARKETVACANCY RATE MAR. 31 2013

(%)Regina, SK 1.89Edmonton, AB 3.55Toronto, ON 3.61Winnipeg, MB 3.69Vancouver, BC 4.12CANADA AVERAGE 4.32Victoria, BC 4.50Saskatoon, SK 4.62Montréal, QC 5.06Ottawa, ON 5.50Calgary, AB 5.79Waterloo Region, ON 7.86Halifax, NS 11.21

COLLIERS INTERNATIONAL601 Union Street, Suite 4800Seattle, WA 98101TEL +1 206 695 4200

FOR MORE INFORMATION

K.C. Conway Chief Economist | USATEL + 1 678 458 3477EMAIL [email protected]

CONTRIBUTORS

Jeff Simonson Senior Research Analyst | USA

Jennifer Macatiag Graphic Designer | USA

Cliff Plank National Director | GIS & Mapping

485 offices in 63 countries on 6 continentsUnited States: 146Canada: 44Latin America: 25Asia Pacific: 186EMEA: 84

• $2.1 billion in annual revenue

• 15,800 professionals and staff

• 1.46 billion square feet under management

• $75 billion in total transaction value

Copyright © 2014 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.

Accelerating success.

GlossaryAbsorption – Net change in occupied space over a given period of time.

Bulk Space – Warehouse space 100,000 square feet or more with minimum ceiling heights of 24 feet. All loading is dock-height.

Flex Space – Single-story buildings having 10- to 18-foot ceilings with both floor-height and dock-height loading. Includes wide variation in office space utilization, ranging from retail and personal service, to distribution, light industrial and occasional heavy industrial use.

Inventory – Includes all existing multi- or single-tenant leased and owner-occupied industrial warehouse, light manufacturing, flex and R&D properties greater than or equal to 10,000 square feet.

New Construction – Includes completed speculative and build-to-suit construction. New construction quoted on a net basis after any demolitions or conversions.

Service Space – Single-story (or mezzanine) with 10- to 16-foot ceilings with frontage treatment on one side and dock-height loading or grade-level roll-up doors on the other. Less than 15 percent office space.

Tech/R&D – One- and two-story, 10- to 15-foot ceiling heights with up to 50 office/dry lab space (remainder in wet lab, workshop, storage and other support), with dock-height and floor-height loading.

Triple Net Rent – Includes rent payable to the landlord, and does not include additional expenses such as taxes, insurance, maintenance, janitorial and utilities. All industrial and high-tech/R&D rents in this report are quoted on an annual, triple net per square foot basis in U.S. and Canadian dollars.

Vacancy Rate – Percentage of total inventory available (both vacant and occupied) as at the survey date including direct vacant and sublease space.

Warehouse – 50,000 square feet or more with up to 15 percent office space, the balance being general warehouse space with 18- to 30-foot ceiling heights. All loading is dock-height.

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