good times continue to roll - but supply threat looms · u.s. industrial market q3 2013 - q3...

United States Research Report

INDUSTRIAL MARKET OUTLOOKQ3 2015

Key Takeaways > The U.S. industrial vacancy rate declined by 20 basis points (bps) to 6.6%, the 22nd straight quarter of rising industrial demand. Industrial vacancy rates have steadily declined since peaking at 11.2% in Q1 2010.

> U.S. industrial demand has remained positive with net absorption totaling 59.1 million square feet this quarter

> Healthy occupier demand and the need for modern industrial space has continued to spur industrial construction. More than 41 million square feet of space was added to the industrial base, much of which was in built-to-suit projects.

> Positive industrial demand and tightening market conditions continue to put upward pressure on average asking rents, which now stand at $5.28 PSF per year. Asking rents have been steadily rising over the past 16 quarters since bottoming out at $4.53 PSF in Q3 2011. However, rents are still below the prior peak of $5.63 reached in Q2 2008.

> Some markets are seeing outsized increases in rents. The asking rent for warehouse space was up significantly year-over-year in the following markets: Austin (30.0%), Oakland (24.4%) and Sacramento (17.1%). Bulk asking rents were up year-over-year in Chicago (31.5%), Seattle / Puget Sound (24.9%) and San Francisco (24.5%). Markets where flex/service asking rents were up year-over-year include: San Francisco (35.5%), Nashville (28.9%) and Houston (23.5%).

> The results of Colliers’ U.S. Q3 survey remained optimistic. Of the 70 U.S. markets surveyed by Colliers, 63% expected further tightening in vacancy rates and 66% expect industrial rents to continue to rise in upcoming quarters.

> Demand for U.S. industrial assets remains strong for both foreign and domestic buyers. This year saw record acquisition on a wholesale level in the entry of Global Logistics Properties and the sale of KTR to ProLogis. Year to date, investment activity in U.S. industrial assets is up 43% over 2014.

> Looking forward, prospects for future industrial investment into the U.S. are cloudy Expected interest rates increase in the U.S. would likely induce capital inflow from emerging markets, further compressing already low cap rates. On the other hand, global trade is slowing with the slowing global economy, perhaps reducing near-term demand for industrial space.

Good Times Continue to Roll - But Supply Threat LoomsPete Culliney Director of Research | Global Thomas Galvin Regional Research Analyst | Research Services

Summary Statistics, Q3 2015 United States Industrial Market

Vacancy Rate 6.6%

Change from Q2 2015 (Basis Points)

-20

Absorption (MSF)

59.1

New Supply (MSF)

41.3

Under Construction (MSF)

181.3

ASKING RENTS PER SQUARE FOOT PER YEAR

Average Warehouse/Distribution Center

$5.28

Change from Q2 2015 1.6%

Market IndicatorsRelative to prior period

Q3 2015

Q4 2015*

VACANCY

NET ABSORPTION

CONSTRUCTION

RENTAL RATE**

* Projected, relative to prior period** Warehouse rents

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N O R T H E A S TM I D W E S T

S O U T H

W E S T

Absorption Per Market (SF)q2 '15 - q3 '15

4,200,000

2,100,000

420,000

-420,000

-2,100,000

-4,200,000

4.5 billion

2.25 billion

450 mil.

Occupied SF

Vacant SF

SF By Region

U.S. Industrial Economic Indicators

GDP

Q3 2015 1.5% (advance estimate)

Q2 2015 3.9%, up from 0.6% in Q1 2015

ISM

Oct-15 PMI® Oct-15 PMI 50.1, down .1 pctg. pts. from Sept-15

RAIL TIME INDICATORS: AAR.ORG

Total Railcar Traffic - 4.6% YOY since Oct-14

Intermodal Traffic + 2.1% YOY since Oct-14

2 United States Research Report | Q3 2015 | Industrial Market Outlook | Colliers International

Sources: BEA, ISM, AAR

4.6% year-over-year decrease in total railcar traffic. A major reason for this decline in railroad traffic has been decreased demand for petroleum, metallic ores and coal.

In the third quarter imports into the U.S. have increased faster than exports, due to both the relative strength of the dollar and slowing global economic growth. Imports are up 5.5% from one year ago while exports have increased only 1.5% over this same time period. Canada remains the largest export market for U.S. goods and services accounting for 10.3% of U.S. exports, while China remains the largest exporter to the U.S., accounting for 12.7% of imports into the United States.

The Trans-Pacific Partnership (TPP), a trade agreement among twelve countries, was reached in October after seven years of negation, though it still must be ratified by the signatory nations. The TPP contains measures to lower trade barriers, enhance the development of production and supply chains, and open up foreign markets among other provisions. The effects of the TPP are far reaching and it will take time before the winners and losers of this agreement are made clear. In the long run, the reduction of tariffs and taxes should benefit both consumers and producers across all

The U.S. industrial market is at a post-recession high, recording the lowest levels of vacancy coupled with very strong absorption. This is leading to upward pressure on asking rental rates, which have increased 1.6% from the previous quarter.

Some caution is warranted, however, as the market currently has over 181 million SF currently under construction, more than at any other time in the last 10 years. More than other property types, industrial is prone to boom / bust cycles dues to the low barriers to entry and relatively short delivery time. Market fundamentals currently suggest that newer and more modern industrial space is needed; however 56% of space currently under construction is speculative in nature. This poses a significant risk of supply overshoot if global economic conditions were to unexpectedly reverse.

Industrial Economic Indicators U.S. GDP in the third quarter increased at an annual rate of 1.5 percent. This lower-than-expected growth was due to inventory drawdowns and the relative strength of the U.S. dollar adversely impacting exports. Gains were made in personal consumption and building construction. The manufacturing sector posted anemic growth with the Purchasing Managers Index recording only 50.1 in October; figures above 50% indicate expansion, so the current level suggests manufacturing risks contracting. Growth was seen in new orders and production, while inventories and employment fell.

Nationally, the unemployment rate stands at 5.0% at the end of October, the lowest its been since April of 2008. Over the last 12 months, the economy has added 1.8 million jobs with construction adding 228,000 jobs, manufacturing adding 65,000 jobs and transportation and warehousing adding 107,000 jobs in the last 12 months. These industries are the heaviest users of industrial space.

So far for 2015 the American Association of Railroads has reported a

Industrial Vacancy, Inventory & AbsorptionQ3 2015 | United States

How would you characterize current industrial rents in your market?

% of reporting marketsSource: Colliers International

Absorption MSF Completions MSF Vacancy %

16.7% 2.4%

61.5% 60.0% 41.7%

21.7%

83.3%

41.4% 47.6%

30.8% 40.0% 45.8%

73.9% 51.4%

43.9%

7.7% 12.5% 4.3% 7.1%

16.7% 2.4%

61.5% 60.0% 41.7%

21.7%

83.3%

41.4% 47.6%

30.8% 40.0% 45.8%

73.9% 51.4%

43.9%

7.7% 12.5% 4.3% 7.1% 6.1% 6.1%

0%

20%

40%

60%

80%

100%

Excluding renewals, of the leases signed this quarter, did most tenants Expand, Hold Steady or Contract?

Midwest

Northea

stSout

hWest

Canada U.S.

N.A.

U.S.

Canada

N.A.


N/A

DecliningBottoming

No Clear Direction

Increasing

Peaking

7.1% 7.1%

0.0% 0.0%

6.1% 6.1%

25.0% 25.0%

4.9% 4.9%

1.4% 1.4%

1.2% 1.2%

14.3% 14.3%

33.3% 33.3%

17.1% 17.1%

65.7% 65.7%

25.0% 25.0%

59.8% 59.8%

10.0% 10.0%

16.7% 16.7%

11.0% 11.0%

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

0%

20%

40%

60%

80%

100%

Northea

stSout

h

Midwest West U.S.

Canada N.A.

Provide a three month forecast for vacancy levels (relative to current quarter):

UpSameDown N/A

100.0% 100.0%

70.8% 70.8%

46.2% 46.2% 47.8% 47.8% 62.9% 62.9%

25.0% 25.0%

57.3% 57.3%

25.0% 25.0%

38.5% 38.5% 47.8% 47.8%

31.4% 31.4%

16.7% 16.7%

29.3% 29.3%

4.2% 4.2% 15.4% 15.4%

4.3% 4.3% 5.7% 5.7%

58.3% 58.3%

13.4% 13.4%

Contract Holding Steady Expand N/A

0%

20%

40%

60%

80%

100%

Up Same Down N/A

Northea

stSout

h

Midwest West U.S.

Canada N.A.

33.3% 33.3%

4.9% 4.9%

70.0% 70.0% 62.5% 62.5%

30.8% 30.8%

78.3% 78.3% 62.9% 62.9%

16.7% 16.7% 56.1% 56.1%

30.0% 30.0% 25.0% 25.0%

61.5% 61.5%

17.4% 17.4%

30.0% 30.0% 50.0% 50.0%

32.9% 32.9%

12.5% 12.5% 7.7% 7.7% 4.3% 4.3% 7.1% 7.1% 6.1% 6.1%

Provide a three month forecast for rents (relative to current quarter):

8.3 8.3 8.1 8.1 7.9 7.9 7.7 7.7 7.5 7.5 7.2 7.2 7.0 7.0 6.7 6.7 6.6 6.6

Q3 2013 Q4 Q2Q1 2

014 Q3 Q4 Q2Q1 2

015 Q30.0

10.020.030.040.050.060.070.080.0

Vaca

ncy

%

U.S. INDUSTRIAL MARKET Q3 2013 - Q3 2015

-2.0 0.0 2.0 4.0 6.0 8.0 10.0Millions

Currently U/C Q3-15 Absorption

Calgary, AB

Winnipeg, MB

Regina, SK

Halifax, NS

Victoria, BC

Montréal, QC

Saskatoon, SK

Edmonton, AB

Waterloo Region, ON

Ottawa, ON

Toronto, ON

ABSORPTION, UNDER CONSTRUCTION (SF) | SELECT MARKETS | Q3 2015


Indianapolis, IN Dallas-Ft. Worth, TX

New Jersey - Northern

Chicago, IL Savannah, GA

Los Angeles, CA

Houston, TX

New Jersey - Central Atlanta, GA

Los Angeles - Inland Empire, CA

0.0 5.0 10.0 15.0 20.0 25.0

Millions

0.0

2.0

4.0

6.0

8.0

10.0 Vaca

ncy

%


61.5% 60.0% 41.7%

21.7% 41.4%

30.8% 40.0% 45.8%

73.9% 51.4%

7.7% 12.5% 4.3% 7.1%

61.5% 60.0% 41.7%

21.7% 41.4%

30.8% 40.0% 45.8%

73.9% 51.4%

7.7% 12.5% 4.3% 7.1%

0%

20%

40%

60%

80%

100%


Midwest

Northea

stSout

hWest U.S.


0%

20%

40%

60%

80%

100%

Northea

stSout

h

Midwest West U.S.


UpSameDown N/A

100.0% 100.0%

70.8% 70.8%

46.2% 46.2% 47.8% 47.8% 62.9% 62.9%

25.0% 25.0%

38.5% 38.5% 47.8% 47.8%

31.4% 31.4%

4.2% 4.2% 15.4% 15.4%

4.3% 4.3% 5.7% 5.7%


0%

20%

40%

60%

80%

100%

Up Same Down N/A

Northea

stSout

h

Midwest West U.S.

70.0% 70.0% 62.5% 62.5%

30.8% 30.8%

78.3% 78.3% 62.9% 62.9%

30.0% 30.0% 25.0% 25.0%

61.5% 61.5%

17.4% 17.4%

30.0% 30.0%

12.5% 12.5% 7.7% 7.7% 4.3% 4.3% 7.1% 7.1%


8.3 8.3 8.1 8.1 7.9 7.9 7.7 7.7 7.5 7.5 7.2 7.2 7.0 7.0 6.7 6.7 6.6 6.6

Q3 2013 Q4 Q2Q1 2

014 Q3 Q4 Q2Q1 2

015 Q30.0

10.020.030.040.050.060.070.080.0

Vaca

ncy

%


-2.0 0.0 2.0 4.0 6.0 8.0 10.0Millions


Calgary, AB

Winnipeg, MB

Regina, SK

Halifax, NS

Victoria, BC

Montréal, QC

Saskatoon, SK

Edmonton, AB

Waterloo Region, ON

Ottawa, ON

Toronto, ON






Los Angeles, CA

Houston, TX



0.0 5.0 10.0 15.0 20.0 25.0

Millions

0.0

2.0

4.0

6.0

8.0

10.0 Vaca

ncy

%

Increasing, 65.7% Increasing, 65.7%

Peaking, 10%

N/A, 7.1%

Declining, 1.4% Bottoming, 1.4%

No Clear Direction, 14.3%


countries however in the short run certain industries are likely to be negatively impacted. Significantly, China is not a party to the TPP, so clearly not all Asian trade is represented, limiting TPP’s total impact. Nonetheless, the trade agreement should continue the trend toward easier and more trade among nations, which has no doubt benefited logistics firms and the warehousing sector.

Vacancy

Driven by robust absorption in the top U.S. markets, the vacancy rate fell by 20 bps to 6.6% in Q3. The decline was broad-based, with 87% of U.S. markets seeing a decline in vacancy.

Vacancy rates declined in every U.S. region, led by the West, which dropped 30 bps to 4.7%. Still, there is a wide disparity in rates among the regions. The West remained the lowest at 4.7%, trailed by the Midwest (6.4%), South (7.4%) and Northeast (8.4%). Western markets ranked among the lowest vacancy rates include: Los Angeles (1.6%), Honolulu (2.2%), and Orange County (2.6%).

Savannah continued to be the best performer in the third quarter with the vacancy rate dropping by 150 bps to 2.3%. On the other end of the spectrum, vacancy rates increased in Dallas – Ft. Worth (+30 bps) and Atlanta (+20 bps) due to vacant construction completions rather than downsizing companies.

U.S. Industrial Market Q3 2013 to Q3 2015

Source: Colliers International

Industrial Transaction Volume Q3 2015 - United States

Billi

ons

-100%

-50%

0%

50%

100%

150%

200%

$-

$10

$20

$30

$40

$50

$60

$70

07Q1 07

Q2 07

Q3 07

Q4 08

Q1 08

Q2 08

Q3 08

Q4 09

Q1 09

Q2 09

Q3 09

Q4 10

Q1 10

Q2 10

Q3 10

Q4 11Q

1 11Q

2 11Q

3 11Q

4 12Q

1 12Q

2 12Q

3 12Q

4 13Q

1 13Q

2 13Q

3 13Q

4 14Q

1 14Q

2 14Q

3 14Q

4 15Q

1 15Q

2 15Q

3

Rolling 4-Qtr Deal Volume Series2

Manufacturing at a Glance - October 2015

INDEXSERIES INDEX

(JULY 2015)

SERIES INDEX

(JUNE 2015)

PERCENTAGE-POINT

CHANGEDIRECTION RATE OF

CHANGETREND*

(MONTHS)

PMI® 50.1 53.5 -0.8 Growing Slower 34

New Orders 52.9 56 0.5 Growing Faster 35

Production 52.9 51.8 2.0 Growing Faster 38

Employment 47.6 50.5 -2.8 Contracting From Growing 1

Supplier Deliveries 50.4 50.2 0.1 Sowing Faster 3

Inventories 46.5 48.5 -3.5 Contracting Faster 4

Customer Inventories 51 54.5 -4.5 Too High Slower 3

Prices 39 38 -5.5 Decreasing Slower 12

Backlog of Orders 42.5 41.5 -4.5 Contracting Slower 5

Exports 46.5 46.5 -1.5 Contracting Slower 5

Imports 47 50.5 -1.5 Contracting From Growing 1

OVERALL ECONOMY Growing Slower 77

Manufacturing Sector Growing Slower 34*Number of months moving in current directionSource: ISM

Absorption, Under Construction (SF)Select U.S. Markets | Q3 2015


Absorption

Net absorption was strong in Q3 at 59.1 million square feet, with 22 markets reporting over one million square feet of positive net absorption this quarter. Due to robust industrial demand for warehousing and distribution space, we expect strong absorption in markets dominated by larger distribution space.

Absorption this quarter was more spread out than in previous quarters, although the same markets continue to dominate, with Los Angeles – Inland Empire reporting 4.2 million square feet and Atlanta showing 2.9 million square feet. This quarter also saw Seattle / Puget Sound report 2.9 million square feet due to the completion of a 2 million square feet build to suit for Amazon and Memphis recording 2.6 million square feet due to several large leases and user purchases this quarter.

Construction Activity

Rising industrial demand is pushing new supply to pre-recession levels. Some 59 million square feet of space came online in Q3, and over the previous 12 months there has been a total of 184 million square feet added to the industrial base, approaching the yearly all-time high of 196 million square feet seen in 2008.

We are now tracking 181 million square feet of industrial space under construction that is expected to come online in the next 18 months. Construction is heavily concentrated in a handful of markets such as Los Angeles – Inland Empire (19 million square feet), Atlanta (16 million square feet), Dallas-Ft. Worth (14.4 million square feet) and Chicago (12.5 million square feet). In each of those markets, virtually all of the new supply will be modern distribution centers with high ceilings, large truck courts, ESFR sprinklers and other improvements demanded by logistics and e-retailer tenants.

One concern is that more than half of the space under construction (57% or 102 million square feet) is speculative. So far, gains in industrial demand have remained greater than gains in the industrial supply. Net absorption has averaged 64 million square feet per quarter over the last four quarters while new supply has averaged 46 million square feet a quarter over the last four quarters. Thus, at current rates, there would be little trouble filling the entire inventory


16.7% 2.4%

61.5% 60.0% 41.7%

21.7%

83.3%

41.4% 47.6%

30.8% 40.0% 45.8%

73.9% 51.4%

43.9%

7.7% 12.5% 4.3% 7.1%

16.7% 2.4%

61.5% 60.0% 41.7%

21.7%

83.3%

41.4% 47.6%

30.8% 40.0% 45.8%

73.9% 51.4%

43.9%

7.7% 12.5% 4.3% 7.1% 6.1% 6.1%

0%

20%

40%

60%

80%

100%


Midwest

Northea

stSout

hWest

Canada U.S.

N.A.

U.S.

Canada

N.A.


N/A

DecliningBottoming

No Clear Direction

Increasing

Peaking

7.1% 7.1%

0.0% 0.0%

6.1% 6.1%

25.0% 25.0%

4.9% 4.9%

1.4% 1.4%

1.2% 1.2%

14.3% 14.3%

33.3% 33.3%

17.1% 17.1%

65.7% 65.7%

25.0% 25.0%

59.8% 59.8%

10.0% 10.0%

16.7% 16.7%

11.0% 11.0%

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

0%

20%

40%

60%

80%

100%

Northea

stSout

h

Midwest West U.S.

Canada N.A.


UpSameDown N/A

100.0% 100.0%

70.8% 70.8%

46.2% 46.2% 47.8% 47.8% 62.9% 62.9%

25.0% 25.0%

57.3% 57.3%

25.0% 25.0%

38.5% 38.5% 47.8% 47.8%

31.4% 31.4%

16.7% 16.7%

29.3% 29.3%

4.2% 4.2% 15.4% 15.4%

4.3% 4.3% 5.7% 5.7%

58.3% 58.3%

13.4% 13.4%


0%

20%

40%

60%

80%

100%

Up Same Down N/A

Northea

stSout

h

Midwest West U.S.

Canada N.A.

33.3% 33.3%

4.9% 4.9%

70.0% 70.0% 62.5% 62.5%

30.8% 30.8%

78.3% 78.3% 62.9% 62.9%

16.7% 16.7% 56.1% 56.1%

30.0% 30.0% 25.0% 25.0%

61.5% 61.5%

17.4% 17.4%

30.0% 30.0% 50.0% 50.0%

32.9% 32.9%

12.5% 12.5% 7.7% 7.7% 4.3% 4.3% 7.1% 7.1% 6.1% 6.1%


8.3 8.3 8.1 8.1 7.9 7.9 7.7 7.7 7.5 7.5 7.2 7.2 7.0 7.0 6.7 6.7 6.6 6.6

Q3 2013 Q4 Q2Q1 2

014 Q3 Q4 Q2Q1 2

015 Q30.0

10.020.030.040.050.060.070.080.0

Vaca

ncy

%


-2.0 0.0 2.0 4.0 6.0 8.0 10.0Millions


Calgary, AB

Winnipeg, MB

Regina, SK

Halifax, NS

Victoria, BC

Montréal, QC

Saskatoon, SK

Edmonton, AB

Waterloo Region, ON

Ottawa, ON

Toronto, ON






Los Angeles, CA

Houston, TX



0.0 5.0 10.0 15.0 20.0 25.0

Millions

0.0

2.0

4.0

6.0

8.0

10.0 Vaca

ncy

%


61.5% 60.0% 41.7%

21.7% 41.4%

30.8% 40.0% 45.8%

73.9% 51.4%

7.7% 12.5% 4.3% 7.1%

61.5% 60.0% 41.7%

21.7% 41.4%

30.8% 40.0% 45.8%

73.9% 51.4%

7.7% 12.5% 4.3% 7.1%

0%

20%

40%

60%

80%

100%


Midwest

Northea

stSout

hWest U.S.


0%

20%

40%

60%

80%

100%

Northea

stSout

h

Midwest West U.S.


UpSameDown N/A

100.0% 100.0%

70.8% 70.8%

46.2% 46.2% 47.8% 47.8% 62.9% 62.9%

25.0% 25.0%

38.5% 38.5% 47.8% 47.8%

31.4% 31.4%

4.2% 4.2% 15.4% 15.4%

4.3% 4.3% 5.7% 5.7%


0%

20%

40%

60%

80%

100%

Up Same Down N/A

Northea

stSout

h

Midwest West U.S.

70.0% 70.0% 62.5% 62.5%

30.8% 30.8%

78.3% 78.3% 62.9% 62.9%

30.0% 30.0% 25.0% 25.0%

61.5% 61.5%

17.4% 17.4%

30.0% 30.0%

12.5% 12.5% 7.7% 7.7% 4.3% 4.3% 7.1% 7.1%


8.3 8.3 8.1 8.1 7.9 7.9 7.7 7.7 7.5 7.5 7.2 7.2 7.0 7.0 6.7 6.7 6.6 6.6

Q3 2013 Q4 Q2Q1 2

014 Q3 Q4 Q2Q1 2

015 Q30.0

10.020.030.040.050.060.070.080.0

Vaca

ncy

%


-2.0 0.0 2.0 4.0 6.0 8.0 10.0Millions


Calgary, AB

Winnipeg, MB

Regina, SK

Halifax, NS

Victoria, BC

Montréal, QC

Saskatoon, SK

Edmonton, AB

Waterloo Region, ON

Ottawa, ON

Toronto, ON






Los Angeles, CA

Houston, TX



0.0 5.0 10.0 15.0 20.0 25.0

Millions

0.0

2.0

4.0

6.0

8.0

10.0 Vaca

ncy

%


Peaking, 10%

N/A, 7.1%




61.5% 60.0% 41.7%

21.7% 41.4%

30.8% 40.0% 45.8%

73.9% 51.4%

7.7% 12.5% 4.3% 7.1%

61.5% 60.0% 41.7%

21.7% 41.4%

30.8% 40.0% 45.8%

73.9% 51.4%

7.7% 12.5% 4.3% 7.1%

0%

20%

40%

60%

80%

100%


Midwest

Northea

stSout

hWest U.S.


0%

20%

40%

60%

80%

100%

Northea

stSout

h

Midwest West U.S.


UpSameDown N/A

100.0% 100.0%

70.8% 70.8%

46.2% 46.2% 47.8% 47.8% 62.9% 62.9%

25.0% 25.0%

38.5% 38.5% 47.8% 47.8%

31.4% 31.4%

4.2% 4.2% 15.4% 15.4%

4.3% 4.3% 5.7% 5.7%


0%

20%

40%

60%

80%

100%

Up Same Down N/A

Northea

stSout

h

Midwest West U.S.

70.0% 70.0% 62.5% 62.5%

30.8% 30.8%

78.3% 78.3% 62.9% 62.9%

30.0% 30.0% 25.0% 25.0%

61.5% 61.5%

17.4% 17.4%

30.0% 30.0%

12.5% 12.5% 7.7% 7.7% 4.3% 4.3% 7.1% 7.1%


8.3 8.3 8.1 8.1 7.9 7.9 7.7 7.7 7.5 7.5 7.2 7.2 7.0 7.0 6.7 6.7 6.6 6.6

Q3 2013 Q4 Q2Q1 2

014 Q3 Q4 Q2Q1 2

015 Q30.0

10.020.030.040.050.060.070.080.0

Vaca

ncy

%


-2.0 0.0 2.0 4.0 6.0 8.0 10.0Millions


Calgary, AB

Winnipeg, MB

Regina, SK

Halifax, NS

Victoria, BC

Montréal, QC

Saskatoon, SK

Edmonton, AB

Waterloo Region, ON

Ottawa, ON

Toronto, ON






Los Angeles, CA

Houston, TX



0.0 5.0 10.0 15.0 20.0 25.0

Millions

0.0

2.0

4.0

6.0

8.0

10.0 Vaca

ncy

%


Peaking, 10%

N/A, 7.1%




61.5% 60.0% 41.7%

21.7% 41.4%

30.8% 40.0% 45.8%

73.9% 51.4%

7.7% 12.5% 4.3% 7.1%

61.5% 60.0% 41.7%

21.7% 41.4%

30.8% 40.0% 45.8%

73.9% 51.4%

7.7% 12.5% 4.3% 7.1%

0%

20%

40%

60%

80%

100%


Midwest

Northea

stSout

hWest U.S.


0%

20%

40%

60%

80%

100%

Northea

stSout

h

Midwest West U.S.


UpSameDown N/A

100.0% 100.0%

70.8% 70.8%

46.2% 46.2% 47.8% 47.8% 62.9% 62.9%

25.0% 25.0%

38.5% 38.5% 47.8% 47.8%

31.4% 31.4%

4.2% 4.2% 15.4% 15.4%

4.3% 4.3% 5.7% 5.7%


0%

20%

40%

60%

80%

100%

Up Same Down N/A

Northea

stSout

h

Midwest West U.S.

70.0% 70.0% 62.5% 62.5%

30.8% 30.8%

78.3% 78.3% 62.9% 62.9%

30.0% 30.0% 25.0% 25.0%

61.5% 61.5%

17.4% 17.4%

30.0% 30.0%

12.5% 12.5% 7.7% 7.7% 4.3% 4.3% 7.1% 7.1%


8.3 8.3 8.1 8.1 7.9 7.9 7.7 7.7 7.5 7.5 7.2 7.2 7.0 7.0 6.7 6.7 6.6 6.6

Q3 2013 Q4 Q2Q1 2

014 Q3 Q4 Q2Q1 2

015 Q30.0

10.020.030.040.050.060.070.080.0

Vaca

ncy

%


-2.0 0.0 2.0 4.0 6.0 8.0 10.0Millions


Calgary, AB

Winnipeg, MB

Regina, SK

Halifax, NS

Victoria, BC

Montréal, QC

Saskatoon, SK

Edmonton, AB

Waterloo Region, ON

Ottawa, ON

Toronto, ON






Los Angeles, CA

Houston, TX



0.0 5.0 10.0 15.0 20.0 25.0

Millions

0.0

2.0

4.0

6.0

8.0

10.0 Vaca

ncy

%


Peaking, 10%

N/A, 7.1%




61.5% 60.0% 41.7%

21.7% 41.4%

30.8% 40.0% 45.8%

73.9% 51.4%

7.7% 12.5% 4.3% 7.1%

61.5% 60.0% 41.7%

21.7% 41.4%

30.8% 40.0% 45.8%

73.9% 51.4%

7.7% 12.5% 4.3% 7.1%

0%

20%

40%

60%

80%

100%


Midwest

Northea

stSout

hWest U.S.


0%

20%

40%

60%

80%

100%

Northea

stSout

h

Midwest West U.S.


UpSameDown N/A

100.0% 100.0%

70.8% 70.8%

46.2% 46.2% 47.8% 47.8% 62.9% 62.9%

25.0% 25.0%

38.5% 38.5% 47.8% 47.8%

31.4% 31.4%

4.2% 4.2% 15.4% 15.4%

4.3% 4.3% 5.7% 5.7%


0%

20%

40%

60%

80%

100%

Up Same Down N/A

Northea

stSout

h

Midwest West U.S.

70.0% 70.0% 62.5% 62.5%

30.8% 30.8%

78.3% 78.3% 62.9% 62.9%

30.0% 30.0% 25.0% 25.0%

61.5% 61.5%

17.4% 17.4%

30.0% 30.0%

12.5% 12.5% 7.7% 7.7% 4.3% 4.3% 7.1% 7.1%


8.3 8.3 8.1 8.1 7.9 7.9 7.7 7.7 7.5 7.5 7.2 7.2 7.0 7.0 6.7 6.7 6.6 6.6

Q3 2013 Q4 Q2Q1 2

014 Q3 Q4 Q2Q1 2

015 Q30.0

10.020.030.040.050.060.070.080.0

Vaca

ncy

%


-2.0 0.0 2.0 4.0 6.0 8.0 10.0Millions


Calgary, AB

Winnipeg, MB

Regina, SK

Halifax, NS

Victoria, BC

Montréal, QC

Saskatoon, SK

Edmonton, AB

Waterloo Region, ON

Ottawa, ON

Toronto, ON






Los Angeles, CA

Houston, TX



0.0 5.0 10.0 15.0 20.0 25.0

Millions

0.0

2.0

4.0

6.0

8.0

10.0 Vaca

ncy

%


Peaking, 10%

N/A, 7.1%




61.5% 60.0% 41.7%

21.7% 41.4%

30.8% 40.0% 45.8%

73.9% 51.4%

7.7% 12.5% 4.3% 7.1%

61.5% 60.0% 41.7%

21.7% 41.4%

30.8% 40.0% 45.8%

73.9% 51.4%

7.7% 12.5% 4.3% 7.1%

0%

20%

40%

60%

80%

100%


Midwest

Northea

stSout

hWest U.S.


0%

20%

40%

60%

80%

100%

Northea

stSout

h

Midwest West U.S.


UpSameDown N/A

100.0% 100.0%

70.8% 70.8%

46.2% 46.2% 47.8% 47.8% 62.9% 62.9%

25.0% 25.0%

38.5% 38.5% 47.8% 47.8%

31.4% 31.4%

4.2% 4.2% 15.4% 15.4%

4.3% 4.3% 5.7% 5.7%


0%

20%

40%

60%

80%

100%

Up Same Down N/A

Northea

stSout

h

Midwest West U.S.

70.0% 70.0% 62.5% 62.5%

30.8% 30.8%

78.3% 78.3% 62.9% 62.9%

30.0% 30.0% 25.0% 25.0%

61.5% 61.5%

17.4% 17.4%

30.0% 30.0%

12.5% 12.5% 7.7% 7.7% 4.3% 4.3% 7.1% 7.1%


8.3 8.3 8.1 8.1 7.9 7.9 7.7 7.7 7.5 7.5 7.2 7.2 7.0 7.0 6.7 6.7 6.6 6.6

Q3 2013 Q4 Q2

Q1 2014 Q3 Q4 Q2

Q1 2015 Q3

0.010.020.030.040.050.060.070.080.0

Vaca

ncy

%


-2.0 0.0 2.0 4.0 6.0 8.0 10.0Millions


Calgary, AB

Winnipeg, MB

Regina, SK

Halifax, NS

Victoria, BC

Montréal, QC

Saskatoon, SK

Edmonton, AB

Waterloo Region, ON

Ottawa, ON

Toronto, ON






Los Angeles, CA

Houston, TX



0.0 5.0 10.0 15.0 20.0 25.0

Millions

0.0

2.0

4.0

6.0

8.0

10.0 Vaca

ncy

%


Peaking, 10%

N/A, 7.1%




61.5% 60.0% 41.7%

21.7% 41.4%

30.8% 40.0% 45.8%

73.9% 51.4%

7.7% 12.5% 4.3% 7.1%

61.5% 60.0% 41.7%

21.7% 41.4%

30.8% 40.0% 45.8%

73.9% 51.4%

7.7% 12.5% 4.3% 7.1%

0%

20%

40%

60%

80%

100%


Midwest

Northea

stSout

hWest U.S.


0%

20%

40%

60%

80%

100%

Northea

stSout

h

Midwest West U.S.


UpSameDown N/A

100.0% 100.0%

70.8% 70.8%

46.2% 46.2% 47.8% 47.8% 62.9% 62.9%

25.0% 25.0%

38.5% 38.5% 47.8% 47.8%

31.4% 31.4%

4.2% 4.2% 15.4% 15.4%

4.3% 4.3% 5.7% 5.7%


0%

20%

40%

60%

80%

100%

Up Same Down N/A

Northea

stSout

h

Midwest West U.S.

70.0% 70.0% 62.5% 62.5%

30.8% 30.8%

78.3% 78.3% 62.9% 62.9%

30.0% 30.0% 25.0% 25.0%

61.5% 61.5%

17.4% 17.4%

30.0% 30.0%

12.5% 12.5% 7.7% 7.7% 4.3% 4.3% 7.1% 7.1%


8.3 8.3 8.1 8.1 7.9 7.9 7.7 7.7 7.5 7.5 7.2 7.2 7.0 7.0 6.7 6.7 6.6 6.6

Q3 2013 Q4 Q2

Q1 2014 Q3 Q4 Q2

Q1 2015 Q3

0.010.020.030.040.050.060.070.080.0

Vaca

ncy

%


-2.0 0.0 2.0 4.0 6.0 8.0 10.0Millions


Calgary, AB

Winnipeg, MB

Regina, SK

Halifax, NS

Victoria, BC

Montréal, QC

Saskatoon, SK

Edmonton, AB

Waterloo Region, ON

Ottawa, ON

Toronto, ON






Los Angeles, CA

Houston, TX



0.0 5.0 10.0 15.0 20.0 25.0

Millions

0.0

2.0

4.0

6.0

8.0

10.0 Vaca

ncy

%


Peaking, 10%

N/A, 7.1%



Excluding renewals, of the leases signed this quarter, did most tenants expand, hold steady or contract?




% of reporting marketsSource: Colliers International


of 181 million square feet of new supply projected to hit the market. Still, the high share of speculative space could be problematic should an unforeseen adverse event occur reducing industrial tenant demand.

Transaction Activity

Investor demand for U.S. industrial real estate remains high; however growth may slow relative to previous quarters due to the lack of portfolio deals. Year to date, investment volume is up 8% over the previous year on investment volumes of $50.7 billion.

Of this, roughly $23.8 billion (47%) has been from foreign direct investment inflows, primarily focused on New Jersey ($1.6 billion), Inland Empire ($1.6 billion) and Chicago ($1.5 billion). Much of this total involves Global Logistics Properties purchasing assets from Industrial Income Trust. Foreign investors seek the stability of U.S. denominated assets and are drawn to the industrial sector’s relatively low volatility compared to office or retail investments.

In today’s low yield environment, the industrial sector continues to post the highest average cap rates for any commercial property type, averaging 6.8% nationwide. Although the gap is narrowing with the other sectors, industrial returns remain compelling for many investors on a risk-adjusted basis. Foreign investors are weighing the strength of the dollar in their calculations; and the dollar may strengthen further with the anticipated Fed hikes. But with the continuing stagnation in the European and Asian markets, the U.S. will continue to be a safe haven for investors to park their money.

Conclusion

The industrial sector is posting record absorption and rental rate increases despite mixed macro-economic signals. Notwithstanding continued volatility in both GDP and job growth, the U.S. economy is generally outperforming most advanced economies, albeit growing slower than many would like. Beyond that some of the key drivers for warehousing, including manufacturing and trade, are areas of relative weakness, in large part due to the slowing global economy and the relative strength of the dollar, making exports less competitive. In addition, the prolonged weakness for oil, gas and other minerals continues to strain the economies of commodity-dependents metros such as Houston. In sum, drivers for the industrial sector are favorable overall, though some clouds on the horizon bear watching for signs of possible slowing for the sector.

United States Industrial Overview | Q3 2015UNITED STATES WEST MIDWEST SOUTH NORTHEAST

Number of Markets 70 23 13 24 10

Inventory (Millions SF) 15,079.6 3,903.4 4,282.5 4,621.5 2,272.1

% of N.A. Inventory 89.3% 23.1% 25.4% 27.4% 13.5%

New Supply (Millions SF) 41.3 15.1 7.9 14.8 3.5

% of N.A. New Supply 90.1% 33.0% 17.2% 32.2% 7.7%

Vacancy (%) 6.6% 4.7% 6.4% 7.4% 8.4%

Absorption (Millions SF) 59.1 21.4 11.5 18.7 7.4

% of N.A. Absorption 94.3% 34.1% 18.4% 29.9% 11.9%

Sources: Real Capital Analytics, Colliers International

Top 5 MSAs in Transaction Volume Q2 2015

1. Los Angeles $4.0 bil

2. Chicago $2.4 bil

3. No NJ $2.4 bil

4. Dallas $2.2 bil

5. Inland Empire $2.2 bil


Industrial Real Estate Indicators U.S.

GDP: +1.5% in Q3

Inventory 15.1 bsf

Vacancy 6.6% Nationwide (down 10 bps)

Net Absorption 59.1 msf in Q3

New Supply 41.3 msf in Q3, down 18% over Q2

New Supply to Inventory 1.1% annualizedNote: Up to 2% is considered healthy

Net Absorption to New Supply Ratio 1.4:1 Q3 2015 vs. 1.4:1 Q2 2015

- Top 10 Markets account for 39.7% of 62.6 msf net absorption in Q3.


Top 5 MSAs Q3 Net Absorption

1. LA - Inland Empire, CA 4.2 MSF

2. Atlanta, GA 2.9 MSF

3. Seattle / Puget Sound, WA 2.9 MSF

4. Memphis, TN 2.6 MSF

5. Detroit, MI 2.3 MSF


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

MARKETEXISTING

INVENTORY (SF) SEPT 30, 2015

SPECULATIVE NEW SUPPLY Q3 2015 (SF)

TOTAL NEW SUPPLY Q3 2015 (SF)

YTDNEW SUPPLY

SPECULATIVE CURRENTLY UNDER CONSTRUCTION

(SF)

TOTAL CURRENTLY UNDER CONSTRUCTION

(SF)

NORTHEAST

Baltimore, MD 230,520,106 0 144,000 1,955,985 0 225,445

Boston, MA 171,369,699 0 40,000 426,000 0 1,349,972

Hartford, CT 95,613,351 0 0 0 0 292,000

Long Island, NY 156,475,662 0 0 0 350,860 350,860

New Hampshire 61,542,042 0 0 0 0 0

New Jersey - Central 316,917,464 1,505,248 1,570,823 2,179,099 2,695,535 2,695,535

New Jersey - Northern 366,435,000 0 160,000 304,000 1,291,729 1,916,729

Philadelphia, PA 422,208,863 598,333 598,333 5,325,084 6,105,155 10,639,160

Pittsburgh, PA 176,906,708 78,200 78,200 724,452 128,800 1,402,573

Washington, DC 274,149,537 469,034 920,249 2,626,745 1,838,711 3,850,426

Northeast Total 2,272,138,432 2,650,815 3,511,605 13,541,365 12,410,790 22,722,700

SOUTH

Atlanta, GA 632,252,583 2,697,538 4,375,538 9,184,400 8,605,194 16,058,309

Austin, TX 66,240,154 420,525 420,525 917,729 295,500 353,100

Birmingham, AL 107,102,000 0 0 70,000 0 120,000

Charleston, SC 33,750,660 279,000 279,000 552,000 492,856 1,309,856

Charlotte, NC 338,951,778 0 592,988 1,411,110 0 1,104,159

Columbia, SC 77,132,980 141,300 141,300 143,000 120,000 195,000

Dallas-Ft. Worth, TX 758,975,005 2,696,626 3,262,336 13,204,112 12,264,103 14,433,289

Ft. Lauderdale-Broward, FL 111,076,486 359,600 359,600 1,025,487 992,311 992,311

Greenville/Spartanburg, SC 185,581,727 200,000 200,000 1,410,200 1,145,000 4,945,000

Houston, TX 511,386,927 2,150,096 2,925,791 9,279,790 4,221,347 9,583,467

Huntsville, AL 54,828,183 0 0 0 62,366 62,366

Jacksonville, FL 123,556,210 0 424,527 727,106 237,319 962,230

Little Rock, AR* 45,275,910 0 0 0 0 0

Louisville, KY 184,698,243 0 50,541 2,058,577 0 1,682,966

Memphis, TN 230,429,323 0 76,667 2,708,932 1,977,356 2,385,553

Miami, FL 212,110,755 282,365 282,365 1,369,456 599,946 599,946

Nashville, TN 188,646,228 0 0 0 595,000 2,361,453

Norfolk, VA 101,373,459 10,000 208,839 798,651 0 128,209

Orlando, FL 135,221,439 430,030 430,030 1,048,664 585,475 585,475

Raleigh, NC 112,128,967 0 63,800 161,880 0 1,027,073

Richmond, VA 113,307,657 0 0 402,550 0 279,800

Savannah, GA 46,245,075 305,375 665,375 932,775 1,340,125 3,070,125

Tampa Bay, FL 200,866,361 0 0 340,000 788,620 788,620

West Palm Beach, FL 50,311,978 0 0 754,634 0 0

South Total 4,621,450,088 9,972,455 14,759,222 48,501,053 34,322,518 63,028,307

* Q1-15 data displayed

7 United States Research Report | Q3 2015 | Industrial Market Outlook | Colliers International7

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

MARKETEXISTING

INVENTORY (SF) SEPT 30, 2015

SPECULATIVE NEW SUPPLY Q3 2015 (SF)

TOTAL NEW SUPPLY Q3 2015 (SF)

YTDNEW SUPPLY

SPECULATIVE CURRENTLY UNDER CONSTRUCTION

(SF)

TOTAL CURRENTLY UNDER CONSTRUCTION

(SF)

MIDWEST

Chicago, IL 1,331,849,262 220,799 3,073,280 11,037,561 7,568,232 12,562,722

Cincinnati, OH 248,679,356 787,361 787,361 2,124,811 3,618,091 5,330,500

Cleveland, OH 393,563,724 207,360 511,248 511,248 241,188 1,637,066

Columbus, OH 224,403,729 226,800 1,801,800 4,482,488 2,280,740 3,013,940

Dayton, OH 104,774,507 0 54,000 3,568,000 0 575,000

Detroit, MI 528,419,254 0 86,000 1,656,247 0 2,298,183

Grand Rapids, MI 114,234,075 0 194,120 534,841 75,000 346,000

Indianapolis, IN 289,046,518 248,400 274,650 10,356,612 1,245,019 3,686,857

Kansas City, MO-KS 239,933,279 759,879 759,879 3,735,825 5,448,638 6,028,008

Milwaukee, WI 224,780,624 0 84,000 1,026,263 891,331 1,917,131

Minneapolis/St. Paul, MN 243,110,100 168,000 168,000 2,609,630 567,598 1,862,598

Omaha, NE 68,349,607 0 83,668 83,668 295,341 404,031

St. Louis, MO 271,388,907 0 12,802 1,151,939 0 3,986,376

Midwest Total 4,282,532,942 2,618,599 7,890,808 42,879,133 22,231,178 43,648,412

WEST

Albuquerque, NM 37,386,940 0 183,026 183,026 0 0

Bakersfield, CA 37,292,784 90,300 0 3,185,900 137,000 519,580

Boise, ID 46,373,012 0 0 183,305 0 12,000

Denver, CO 220,774,289 347,840 546,630 1,357,727 1,157,058 1,467,786

Fairfield, CA 48,786,186 226,044 823,860 1,438,820 838,350 838,350

Fresno, CA 67,774,220 0 0 0 553,000 553,000

Honolulu, HI 39,714,250 0 0 0 0 0

Las Vegas, NV 120,132,720 0 952,290 1,740,993 1,397,817 1,689,817

Los Angeles - Inland Empire, CA 457,616,600 2,827,400 4,706,400 17,783,300 15,750,100 19,079,100

Los Angeles, CA 893,336,900 1,073,700 1,073,700 3,441,300 2,851,400 2,851,400

Oakland, CA 143,409,822 175,913 175,913 846,002 1,243,750 1,243,750

Orange County, CA 180,793,000 94,600 94,600 407,640 1,060,200 1,060,200

Phoenix, AZ 287,618,249 872,151 972,151 4,354,388 1,187,354 2,480,155

Pleasanton/Tri-Valley, CA 17,391,991 0 0 0 1,298,207 1,298,207

Portland, OR 195,339,614 0 1,207,887 2,926,867 0 3,172,720

Reno, NV 87,447,080 0 1,396,960 3,244,620 0 6,024,000

Sacramento, CA 163,148,384 0 220,000 491,147 943,738 943,738

San Diego, CA 187,520,936 46,035 46,035 157,093 672,371 1,366,008

San Francisco Peninsula, CA 39,466,561 0 0 0 0 0

San Jose - Silicon Valley, CA 252,324,418 0 173,296 864,514 623,920 1,574,237

Seattle/Puget Sound, WA 264,322,809 509,602 2,509,602 3,618,701 2,100,000 2,100,000

Stockton/San Joaquin County, CA 97,772,885 0 0 257,000 1,747,018 3,599,011

Walnut Creek, CA 17,704,548 55,260 55,260 55,260 0 0

West Total 3,903,448,198 6,318,845 15,137,610 46,537,603 33,561,283 51,873,059

U.S. TOTALS 15,079,569,660 21,560,714 41,299,245 151,459,154 102,525,769 181,272,478

(continued)


United States | Industrial Survey | Absorption, Vacancy

MARKET ABSORPTION Q3 2015 (SF)

YTDABSORPTION

VACANCY RATE JUNE 30, 2015

VACANCY RATE SEPT 30, 2015

QUARTERLY CHANGE IN VACANCY

NORTHEAST

Baltimore, MD 339,561 1,198,919 9.5% 9.4% -0.1%

Boston, MA 1,044,333 -183,506 18.6% 18.0% -0.6%

Hartford, CT 154,262 745,456 7.7% 7.6% -0.2%

Long Island, NY 761,430 928,099 4.7% 4.2% -0.5%

New Hampshire -818,978 -458,126 8.0% 8.5% 0.5%

New Jersey - Central 1,813,343 5,072,181 6.9% 6.7% -0.1%

New Jersey - Northern 841,735 3,863,419 7.2% 7.1% -0.1%

Philadelphia, PA 2,099,256 6,157,397 8.7% 8.3% -0.4%

Pittsburgh, PA -12,002 629,408 6.9% 7.0% 0.0%

Washington, DC 1,207,570 3,673,146 9.1% 8.9% -0.2%

Northeast Total 7,430,510 21,626,393 8.6% 8.4% -0.2%

SOUTH

Atlanta, GA 2,971,649 10,443,721 8.4% 8.6% 0.2%

Austin, TX 711,265 1,778,733 7.4% 6.9% -0.5%

Birmingham, AL 62,093 485,665 9.8% 9.8% -0.1%

Charleston, SC 184,626 1,024,282 7.2% 7.5% 0.2%

Charlotte, NC 925,159 3,350,753 9.1% 9.0% -0.1%

Columbia, SC 955,893 1,827,162 9.4% 8.3% -1.1%

Dallas-Ft. Worth, TX 713,643 13,025,108 7.2% 7.5% 0.3%

Ft. Lauderdale-Broward, FL 325,264 784,481 7.3% 7.1% -0.2%

Greenville/Spartanburg, SC 1,028,415 1,256,945 8.0% 7.6% -0.5%

Houston, TX 1,583,471 8,662,818 4.6% 4.8% 0.2%

Huntsville, AL 461,407 368,589 8.2% 7.3% -0.8%

Jacksonville, FL 491,109 822,934 7.8% 7.7% -0.1%

Little Rock, AR* 393,161 393,161 11.8% 10.8% -0.9%

Louisville, KY 465,885 2,054,326 5.9% 5.7% -0.2%

Memphis, TN 2,559,157 5,810,135 11.8% 10.7% -1.1%

Miami, FL 522,657 2,653,774 5.0% 4.8% -0.1%

Nashville, TN 624,113 2,357,354 6.5% 6.2% -0.3%

Norfolk, VA 641,778 1,863,261 7.2% 6.8% -0.5%

Orlando, FL 595,369 1,956,119 7.6% 7.6% 0.0%

Raleigh, NC 201,707 1,265,183 7.6% 7.5% -0.1%

Richmond, VA 110,772 740,510 8.1% 8.0% -0.1%

Savannah, GA 1,322,679 2,363,638 3.7% 2.3% -1.5%

Tampa Bay, FL 564,050 1,977,687 8.0% 7.8% -0.3%

West Palm Beach, FL 325,161 877,460 5.7% 5.2% -0.5%

South Total 18,740,483 68,143,799 7.5% 7.4% -0.1%



United States | Industrial Survey | Absorption, Vacancy

MARKET ABSORPTION Q3 2015 (SF)

YTDABSORPTION

VACANCY RATE JUNE 30, 2015

VACANCY RATE SEPT 30, 2015

QUARTERLY CHANGE IN VACANCY

MIDWEST

Chicago, IL 1,232,046 10,551,626 7.2% 7.3% 0.0%

Cincinnati, OH 1,086,384 3,411,264 4.9% 4.8% -0.1%

Cleveland, OH 977,880 1,136,127 5.7% 5.6% -0.1%

Columbus, OH 831,301 2,552,013 5.7% 6.1% 0.4%

Dayton, OH 608,445 3,612,624 9.1% 8.6% -0.5%

Detroit, MI 2,298,183 6,305,556 6.4% 6.0% -0.4%

Grand Rapids, MI 110,038 434,827 6.0% 6.0% 0.0%

Indianapolis, IN 591,835 3,727,031 7.0% 6.9% -0.1%

Kansas City, MO-KS 1,160,537 2,565,702 6.7% 6.6% -0.2%

Milwaukee, WI 378,674 2,590,499 5.0% 5.1% 0.1%

Minneapolis/St. Paul, MN 1,893,887 3,963,366 7.0% 6.4% -0.7%

Omaha, NE 38,928 506,259 2.6% 2.7% 0.0%

St. Louis, MO 326,050 1,749,034 6.9% 6.8% -0.1%

Midwest Total 11,534,188 43,105,928 6.5% 6.4% -0.1%

WEST

Albuquerque, NM 313,407 234,952 7.1% 6.7% -0.4%

Bakersfield, CA 154,597 2,079,604 4.8% 4.7% -0.1%

Boise, ID 551,053 768,837 4.4% 3.2% -1.2%

Denver, CO 413,536 2,292,860 3.8% 3.7% 0.0%

Fairfield, CA 1,148,161 1,587,206 5.8% 5.0% -0.8%

Fresno, CA 135,548 430,523 5.2% 5.0% -0.2%

Honolulu, HI -54,949 -24,668 2.0% 2.2% 0.1%

Las Vegas, NV 1,710,955 4,343,696 6.9% 6.2% -0.7%

Los Angeles - Inland Empire, CA 4,191,800 16,377,200 4.3% 4.2% -0.1%

Los Angeles, CA 1,378,300 7,971,800 1.8% 1.6% -0.1%

Oakland, CA 952,602 2,069,335 3.6% 3.0% -0.5%

Orange County, CA 546,600 1,281,600 2.9% 2.6% -0.3%

Phoenix, AZ 1,379,583 3,545,964 12.2% 11.9% -0.2%

Pleasanton/Tri-Valley, CA 125,209 65,314 6.1% 5.4% -0.7%

Portland, OR 1,137,124 3,161,103 5.4% 5.4% 0.0%

Reno, NV 1,503,439 2,070,776 9.2% 8.9% -0.3%

Sacramento, CA 615,850 1,861,273 10.6% 10.4% -0.3%

San Diego, CA 444,786 3,105,991 5.4% 5.2% -0.2%

San Francisco Peninsula, CA 62,744 94,782 2.6% 3.1% 0.4%

San Jose - Silicon Valley, CA 701,127 4,141,238 5.8% 5.4% -0.4%

Seattle/Puget Sound, WA 2,889,336 5,810,015 3.9% 3.7% -0.2%

Stockton/San Joaquin County, CA 985,699 1,067,317 8.4% 7.4% -1.0%

Walnut Creek, CA 92,077 -55,523 8.9% 8.0% -0.9%

West Total 21,378,584 64,281,195 5.0% 4.7% -0.2%

U.S. TOTALS 59,083,765 197,157,315 6.7% 6.6% -0.2%

(continued)


United States | Industrial Survey | 3-Month Forecasts, Sales Price, Cap Rates

MARKET VACANCY FORECAST (3 MONTHS)**

RENT FORECAST (3 MONTHS)**

ABSORPTION FORECAST (3 MONTHS)**

SALES PRICE (USD/SF)

CAP RATE

NORTHEAST

Baltimore, MD Down Up Positive $63.00 6.0%

Boston, MA Down Same Positive $82.14 6.8%

Hartford, CT Down Up Positive $38.00 9.0%

Long Island, NY Down Up Positive $90.00 8.3%

New Hampshire Down Same Positive N/A N/A

New Jersey - Central Down Up Positive N/A N/A

New Jersey - Northern Down Up Positive N/A N/A

Philadelphia, PA Down Up Positive $74.17 6.8%

Pittsburgh, PA Down Up Positive $55.00 7.8%

Washington, DC Down Same Positive $130.00 6.4%

Northeast Average*** $76.04 7.3%

SOUTH

Atlanta, GA Same Up Positive $50.65 7.7%

Austin, TX Down Up Positive $82.00 N/A

Birmingham, AL Same Same Close to zero $51.00 7.5%

Charleston, SC Down Up Positive $70.00 N/A

Charlotte, NC Down N/A Positive N/A N/A

Columbia, SC Up Up Negative N/A N/A

Dallas-Ft. Worth, TX Same Same Positive $48.00 7.3%

Ft. Lauderdale-Broward, FL Down Up Positive $98.25 6.0%

Greenville/Spartanburg, SC Down Up Positive N/A N/A

Houston, TX Same Same Positive $81.00 8.2%

Huntsville, AL Down Same Positive N/A N/A

Jacksonville, FL Down Same Positive $47.00 8.5%

Little Rock, AR* Same Same Close to zero $65.45 9.0%

Louisville, KY Down N/A Positive N/A N/A

Memphis, TN Down Up Positive N/A N/A

Miami, FL Down Up Positive $82.56 5.8%

Nashville, TN Down Up Positive $57.00 6.0%

Norfolk, VA Down Up Positive N/A N/A

Orlando, FL Down Up Positive $68.00 6.5%

Raleigh, NC Down N/A Positive N/A N/A

Richmond, VA Same Up Positive N/A N/A

Savannah, GA Down Up Positive $38.00 8.0%

Tampa Bay, FL Down Up Positive $50.00 7.0%

West Palm Beach, FL Down Up Positive $88.97 N/A

South Average*** $65.19 7.3%

* Q1-15 data displayed** Forecasts for Warehouse space*** Straight averages used


** Forecasts for Warehouse space*** Straight averages used

United States | Industrial Survey | 3-Month Forecasts, Sales Price, Cap Rates

MARKET VACANCY FORECAST (3 MONTHS)**

RENT FORECAST (3 MONTHS)**

ABSORPTION FORECAST (3 MONTHS)**

SALES PRICE (USD/SF)

CAP RATE

MIDWEST

Chicago, IL Down Same Positive $64.00 5.5%

Cincinnati, OH Up Up Positive $44.00 8.5%

Cleveland, OH Down Up Positive $48.00 N/A

Columbus, OH Down Up Positive N/A N/A

Dayton, OH Same Same Close to zero $30.00 N/A

Detroit, MI Down Same Positive $26.00 8.3%

Grand Rapids, MI Same Same Close to zero N/A N/A

Indianapolis, IN Down Same Positive $50.00 6.9%

Kansas City, MO-KS Same Same Positive N/A N/A

Milwaukee, WI Same Same Positive $55.00 8.0%

Minneapolis/St. Paul, MN Same Same Positive $57.00 7.5%

Omaha, NE Down Up Positive N/A N/A

St. Louis, MO Up N/A Close to zero N/A N/A

Midwest Average*** $46.75 7.5%

WEST

Albuquerque, NM Same Same Close to zero $83.50 7.7%

Bakersfield, CA Same Same Close to zero $42.00 10.0%

Boise, ID Down Up Positive N/A N/A

Denver, CO Same Up Positive $77.00 7.3%

Fairfield, CA Down Up Positive $68.26 6.5%

Fresno, CA Down Up Positive $40.00 9.5%

Honolulu, HI Down Up Positive N/A N/A

Las Vegas, NV Down Up Positive $79.29 5.2%

Los Angeles - Inland Empire, CA Same Up Positive $83.00 6.0%

Los Angeles, CA Same Up Close to zero $101.00 6.0%

Oakland, CA Down Up Positive $145.00 5.0%

Orange County, CA Same Same Close to zero $119.00 6.0%

Phoenix, AZ Down Up Positive $65.00 7.8%

Pleasanton/Tri-Valley, CA Up Up Positive $125.00 5.5%

Portland, OR Same Up Positive $97.45 6.5%

Reno, NV Down N/A Positive N/A N/A

Sacramento, CA Down Up Positive $80.70 7.1%

San Diego, CA Down Up Positive $112.88 5.8%

San Francisco Peninsula, CA Same Same Positive $294.00 5.0%

San Jose - Silicon Valley, CA Same Up Positive $205.00 6.7%

Seattle/Puget Sound, WA Down Up Positive $126.00 6.6%

Stockton/San Joaquin County, CA Same Up Positive N/A N/A

Walnut Creek, CA Same Up Positive N/A N/A

West Average*** $108.00 6.7%

U.S. AVERAGES*** $79.76 7.1%

(continued)


United States | Industrial Survey | Average Asking NNN Rents as of September 2015

MARKETWAREHOUSE /

DISTRIBUTION SPACE (USD/SF/YR)

BULK SPACE (USD/SF/YR)

FLEX / SERVICE SPACE (USD/SF/YR)

TECH / R&D SPACE (USD/SF/YR)

NORTHEAST

Baltimore, MD $4.58 $4.58 $9.75 N/A

Boston, MA $6.73 $6.28 $7.56 $16.84

Hartford, CT $3.93 $5.88 $7.96 $6.50

Long Island, NY $10.02 $10.02 $16.84 N/A

New Hampshire $5.63 $6.54 $8.03

New Jersey - Central $5.09 $4.53 $11.73 N/A

New Jersey - Northern $6.20 $5.84 $9.85 N/A

Philadelphia, PA $4.50 $4.35 $7.50 $11.25

Pittsburgh, PA $4.74 $4.74 $12.19 $12.19

Washington, DC $7.22 $6.30 $12.35 $14.70

Northeast Average** $5.86 $5.84 $10.23 $11.59

SOUTH

Atlanta, GA $3.53 $3.26 $8.24 $11.34

Austin, TX $6.81 $5.16 $11.43 $10.02

Birmingham, AL $4.10 $3.50 $7.45 N/A

Charleston, SC $4.33 $4.88 $8.92 N/A

Charlotte, NC $3.80 $3.81 $8.15 N/A

Columbia, SC $3.15 $3.35 $8.01 N/A

Dallas-Ft. Worth, TX $3.50 $2.95 $7.55 $9.00

Ft. Lauderdale-Broward, FL $7.12 $6.68 $11.46 $9.57

Greenville/Spartanburg, SC $3.27 $3.60 $7.84 N/A

Houston, TX $6.37 $4.56 $12.61 $12.76

Huntsville, AL $5.30 $5.15 $6.55 N/A

Jacksonville, FL $3.82 $3.83 $9.00 N/A

Little Rock, AR* $3.71 $3.12 $6.41 N/A

Louisville, KY $3.70 $3.69 $6.70 N/A

Memphis, TN $2.64 $2.74 $5.29 $9.75

Miami, FL $7.85 $7.33 $13.51 N/A

Nashville, TN $3.80 $3.30 $7.89 $8.42

Norfolk, VA $4.68 $4.24 $8.00 $10.35

Orlando, FL $5.12 $4.76 $9.45 $9.59

Raleigh, NC $4.35 $4.79 $11.16 N/A

Richmond, VA $3.94 $4.10 $8.30 $4.83

Savannah, GA $3.95 $3.75 $7.00 $10.00

Tampa Bay, FL $4.63 $4.26 $8.74 $6.24

West Palm Beach, FL $7.55 $6.93 $12.46 N/A

South Average** $4.63 $4.32 $8.84 $9.32

* Q1-15 data displayed** Straight averages used


United States | Industrial Survey | Average Asking NNN Rents as of September 2015

MARKETWAREHOUSE /

DISTRIBUTION SPACE (USD/SF/YR)

BULK SPACE (USD/SF/YR)

FLEX / SERVICE SPACE (USD/SF/YR)

TECH / R&D SPACE (USD/SF/YR)

MIDWEST

Chicago, IL $4.66 $4.30 $9.50 N/A

Cincinnati, OH $3.24 $3.31 $6.55 $6.55

Cleveland, OH $3.51 $3.51 $6.73 $6.73

Columbus, OH $2.83 $2.83 $5.91 $5.91

Dayton, OH $2.50 $2.63 $4.42 $4.42

Detroit, MI $4.44 $3.78 $7.81 $7.99

Grand Rapids, MI $2.85 $2.85 $4.67 $4.67

Indianapolis, IN $3.05 $3.30 $4.10 $9.00

Kansas City, MO-KS $4.43 $3.97 $8.20 $7.51

Milwaukee, WI $3.92 $3.54 $5.29 N/A

Minneapolis/St. Paul, MN $5.16 $5.16 $7.56 $7.70

Omaha, NE $4.13 $3.90 $6.92 $5.36

St. Louis, MO $4.02 $3.93 $8.62 N/A

Midwest Average** $3.75 $3.62 $6.64 $6.58

WEST

Albuquerque, NM $5.27 $4.29 $9.49 $9.49

Bakersfield, CA $4.00 $3.40 $8.40 N/A

Boise, ID $5.40 $5.40 $6.60 $5.40

Denver, CO $6.47 $4.69 $10.22 $10.68

Fairfield, CA $5.16 $6.05 $6.96 $8.38

Fresno, CA $4.42 $3.60 $8.37 $8.37

Honolulu, HI $13.92 N/A N/A N/A

Las Vegas, NV $6.12 $6.05 $7.32 $9.60

Los Angeles - Inland Empire, CA $5.50 $4.95 $7.20 $7.85

Los Angeles, CA $7.28 $5.90 $9.45 $12.55

Oakland, CA $6.72 $6.60 $6.95 $12.48

Orange County, CA $8.40 $7.79 $14.79 $11.55

Phoenix, AZ $5.94 $4.58 $12.03 $11.82

Pleasanton/Tri-Valley, CA $5.76 $5.52 N/A N/A

Portland, OR $5.51 $4.66 $11.20 $9.70

Reno, NV $4.07 $3.71 $7.65 N/A

Sacramento, CA $4.92 $3.60 $8.28 $4.56

San Diego, CA $8.64 $7.56 $12.36 $18.60

San Francisco Peninsula, CA $11.16 $12.70 $34.32 $34.32

San Jose - Silicon Valley, CA $8.28 $6.45 $10.92 $20.76

Seattle/Puget Sound, WA $6.12 $6.12 $12.48 $15.18

Stockton/San Joaquin County, CA $4.44 $4.56 $7.44 $7.44

Walnut Creek, CA $5.11 N/A $9.51 $13.03

West Average** $6.46 $5.63 $10.57 $12.20

U.S. AVERAGES** $5.24 $4.80 $9.16 $10.19

(continued)

** Straight averages used


MARKET VACANCY RATE SEPT 30, 2015

Los Angeles, CA 1.6%

Honolulu, HI 2.2%

Savannah, GA 2.3%

Orange County, CA 2.6%

Omaha, NE 2.7%

Oakland, CA 3.0%

San Francisco Peninsula, CA 3.1%

Boise, ID 3.2%

Seattle/Puget Sound, WA 3.7%

Denver, CO 3.7%

Los Angeles - Inland Empire, CA 4.2%

Long Island, NY 4.2%

Bakersfield, CA 4.7%

Cincinnati, OH 4.8%

Houston, TX 4.8%

Miami, FL 4.8%

Fresno, CA 5.0%

Fairfield, CA 5.0%

Milwaukee, WI 5.1%

San Diego, CA 5.2%

West Palm Beach, FL 5.2%

Pleasanton/Tri-Valley, CA 5.4%

San Jose - Silicon Valley, CA 5.4%

Portland, OR 5.4%


Cleveland, OH 5.6%

Louisville, KY 5.7%

Grand Rapids, MI 6.0%

Detroit, MI 6.0%

Columbus, OH 6.1%

Nashville, TN 6.2%

Las Vegas, NV 6.2%

Minneapolis/St. Paul, MN 6.4%

Kansas City, MO-KS 6.6%

U.S. AVERAGE 6.6%

Albuquerque, NM 6.7%

New Jersey - Central 6.7%

Norfolk, VA 6.8%

St. Louis, MO 6.8%

Indianapolis, IN 6.9%

Austin, TX 6.9%

Pittsburgh, PA 7.0%

New Jersey - Northern 7.1%

Ft. Lauderdale-Broward, FL 7.1%

Chicago, IL 7.3%

Huntsville, AL 7.3%

Stockton/San Joaquin County, CA 7.4%

Charleston, SC 7.5%

Raleigh, NC 7.5%


Dallas-Ft. Worth, TX 7.5%

Greenville/Spartanburg, SC 7.6%

Hartford, CT 7.6%

Orlando, FL 7.6%

Jacksonville, FL 7.7%

Tampa Bay, FL 7.8%

Walnut Creek, CA 8.0%

Richmond, VA 8.0%

Philadelphia, PA 8.3%

Columbia, SC 8.3%

New Hampshire 8.5%

Dayton, OH 8.6%

Atlanta, GA 8.6%

Reno, NV 8.9%

Washington DC 8.9%

Charlotte, NC 9.0%

Baltimore, MD 9.4%

Birmingham, AL 9.8%

Sacramento, CA 10.4%

Memphis, TN 10.7%

Little Rock, AR* 10.8%

Phoenix, AZ 11.9%

Boston, MA 18.0%

U.S. | Vacancy Rankings


Copyright © 2015 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.

Colliers International666 Fifth Avenue New York, NY 10103+1 212 716 3500colliers.com

INDUSTRIAL SERVICES | contactDwight Hotchkiss

President, Brokerage Services | USANational Director, Industrial | USA

+1 213 532 [email protected]

FOR MORE INFORMATIONPete Culliney

Director of Research | Global +1 212 716 3689

[email protected]

CONTRIBUTORSJeff Simonson

U.S. Senior Research Analyst | USA

AJ Paniagua U.S. Research Analyst | USA

Andrew Nelson Chief Economist | USA

GlossaryBulk 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 build-ings 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.

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.

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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good times continue to roll - but supply threat looms · u.s. industrial market q3 2013 - q3...

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