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PDF 2020 Midyear BigBoxReport

COLLIERS INTERNATIONAL | U.S. RESEARCH REPORT
NORTH AMERICA
BIG-BOX MARKET REPORT
2020 Midyear Review and Outlook

Copyright © 2020 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.
2

Big-Box Market Report
NORTH AMERICA
> Overview > Atlanta, GA > Chicago, IL > Cincinnati, OH > Columbus, OH > Dallas-Fort Worth, TX > Greater Phoenix, AZ > Houston, TX > I-4 Corridor, FL

Click a region below to go to section
> Indianapolis, IN > Inland Empire, CA > Kansas City, MO > Memphis, TN > Northern California > Northern-Central, NJ > Southern NJ-Eastern PA > Toronto, ON

Introduction
A variety of factors across North America have impacted demand for big-box industrial facilities through the first half of 2020. Core markets including the Inland Empire, Dallas-Fort Worth, Atlanta, Chicago, Northern-Central New Jersey, Southern New Jersey-Eastern Pennsylvania and Toronto continue to be the destination of choice for many occupiers, while emerging secondary markets that are near the fastest-growing population centers and in close proximity to the most utilized logistics hubs in the region continue to grow.
In this unique interactive report, we examine the North American big-box industrial market in the first six months of 2020, which includes the seven core North American big-box markets, as well as nine emerging secondary markets. We will highlight the fundamentals, take a look at demand factors including demographics and logistics capabilities and will assess what lies ahead for 2020 and beyond.
Unless otherwise specified, all report data is through midyear 2020.

Amanda Ortiz
Colliers International National Director Industrial Research | USA

Pete Quinn, SIOR
Colliers International National Director Industrial Services | USA

Jack Rosenberg, SIOR
Colliers International National Director Logistics and Transportation

2020 MIDYEAR BIG-BOX REPORT

North America
Overview

> As predicted, the U.S. economy hit a major slump at the start of the second quarter. The COVID-19 pandemic negatively impacted employment, manufacturing production, retail sales and consumer sentiment across the country, however demand for industrial space managed to increase throughout this unique time. The accelerated growth of industrial industries in the U.S. maintained momentum throughout the pandemic, as industrial product and big-box space, in particular remained in high demand. Vacancy, transaction volume and product under construction remained relatively flat across the country, while asking rents and net occupancy surged in the first half of 2020.
> Pandemic-induced growing reliance on e-commerce retailers for basic goods, fueled demand for industrial big-box product as supply chains continued to be right-sized, shifting away from "lean" inventory strategies that proved sound in the past. As evidence of the need for warehouse and distribution space, despite the global pandemic slowdown, net occupancy gains for bulk industrial space totaled nearly 79.8 million square feet (MSF) at mid-year, up 51% over the 52.8 MSF transacted at mid-year 2019.
> From grocery items, personal care, home improvement and even outdoor play items consumers have learned to lean more heavily on shopping from the comfort of their homes. E-commerce has grown the most quarter-overquarter in the last two months than it ever has. According to the U.S. Department of Commerce, as of Q2 2020, e-commerce accounted for a total of 16.1% of retail sales, up from 11.8% in the previous quarter, a record for online shopping.

> Amazon, by far the largest e-commerce occupier, transacted more than 26.9 MSF during the first half of 2020 more space than they transacted in all of 2018 or 2019. Over the next three years, Amazon is expected to occupy an additional 161 MSF which would be an explosive growth period for the e-commerce giant. In 2020 alone, Amazon is expected to occupy nearly 98 MSF.
> Third party logistics firms (3PLs) occupied the highest percentage of bulk space during the first half of the year, at 23.0%, totaling 56.1 MSF, followed by general retail and wholesale firms (21.7%), manufacturing companies (19.5%) and e-commerce (14.1%). E-commerce companies encompassed a greater percentage of occupier activity in the first half of 2020, increasing their market share by nearly 50%, followed by manufacturing firms who increased by nearly 39%.
> In terms of occupancy gains and leasing activity, the Inland Empire, Dallas-Fort Worth and Atlanta markets made up the top performing big-box markets in North America. These areas offer preferred locations, high-skilled labor, available land and an abundance of modern big-box warehouse/distribution product. The Inland Empire led North American leasing activity during the first half of 2020, with nearly 19.4 MSF of new leasing activity transacted. The Dallas-Fort Worth market maintained the highest level of occupancy gains and produced more than 14.5 MSF of net absorption.
> Occupiers are expanding warehouse locations to service online consumers and cut transportation costs. While there are some major factors

North America Overview

affecting the broader U.S. economy, the need for stronger omnichannel strategies should keep industrial real estate demand active in the coming year. Overall, 104.5 MSF of occupancy gains was recorded at midyear 2020, with 79.8 MSF in the big-box market, or 76.3% of all net absorption in 2020.
> The Dallas-Fort Worth, Southern New Jersey-Eastern Pennsylvania, Chicago and Northern-Central New Jersey markets all posted occupancy gains greater than 7 MSF, and all big-box markets posted positive net absorption during the first half of 2020. The Inland Empire, historically an extremely strong market for occupancy gains, posted just 772,400 square feet (SF) of positive absorption as the greater Los Angeles basin area posted negative absorption for the first time in 10 years. So, despite the decline in occupancy gains during the first six months of the year, it is favorable news as the Inland Empire was the only market in the greater Los Angeles area to have positive industrial demand, notwithstanding the impacts of the global pandemic.
> On the investment side, capitalization rates (cap rates) held steady at 5.6% at midyear, with only four core markets in this report posting cap rates at or above 6% - Columbus, I-4 Corridor, Cincinnati and Houston. According to Real Capital Analytics, the industrial asset class is the only property type to post positive year-over-year growth at midyear. The demand for industrial space is only likely to increase and capital continues to shift beyond the core markets and into secondary areas.
> Despite the ongoing challenges posed by COVID-19, the big-box market is poised for continued activity. New development remains high as a number of big-box facilities are scheduled to deliver in 2020, with 170.7 MSF under

construction at the end of the second quarter of 2020. This will ensure availability to meet the demand of occupiers looking to optimize their supply chains.
> With Amazon's current growth trajectory, big-box fundamentals are expected to remain favorable for the remainder of 2020. The full impact of COVID-19 on U.S. industrial demand is still difficult to determine due to the fluidity of the situation, however, shifting supply chain strategies with an emphasis on omnichannel diversification should keep momentum going for industrial space and increase demand for distribution hubs. The desire to decrease reliance on China is also a positive sign that onshoring or reshoring industrial production will spur further activity in large, big-box industrial space in North America.
Building Inventory
200,000 - 499,999 SF

3,962 257 Big-Box Buildings

Fully Vacant

500,000 - 749,999 SF

922 Big-Box Buildings

63 Fully Vacant

> 750,000 SF

801 Big-Box Buildings

45 Fully Vacant

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

12.0% 10.0%
8 .0% 6.0%

9.0% 9.2%

VaVcaacannccyyRaRtae te

9.7% 8 .4%

7.6% 7.1%

4.0%

2.0%

0.0% 200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

200,000,000 180,000,000 160,000,000 140,000,000 120,000,000 100,000,000
80,000,000 6 0,000,000 40,000,000 20,000,000
-

UndUendrerCCoonnsstrturcuticontion

53.7 6 2.2

39.5 42.3

84.0 6 6 .2

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

8 .3% 8 .4% Total
177.3 170.7 Total

MSF

PSF/YR

$5.60 $5.40 $5.20 $5.00 $4.80 $4.60 $4.40 $4.20 $4.00

$5.48 $5.18

TaAkvienraggeNNNNNNRRenetnt

$4.94 $4.59

$5.16 $4.92

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

90,000,000 80,000,000 70,000,000 60,000,000 50,000,000 4 0,000,000 30,000,000 20,000,000 10,000,000
-

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

29.6 20.9

20.2 12.1

34 .3 11.7

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

$5.29 $4.98
Total 79.8
52.8
Total

MSF

North America Overview

Historical Data

# of Bldgs.

Existing Inventory

Vacant Vacancy Leasing

Net

Taking Cap

Under

Construction

Inventory Rate

Activity Absorption NNN Rent Rate Construction Completions

2010

3,727 1,615,346,560 192,757,265 11.9%

86,815,657 41,521,924

$3.58 7.7% 8,723,202

8,610,043

2011

3,753 1,635,661,988 147,711,580

9.0%

107,934,946 62,129,684

$3.57 7.4%

13,747,187

14,896,284

2012

3,815 1,665,354,067 132,567,492 8.0% 106,975,252 36,507,365

$3.65

7.1% 35,184,002

31,375,859

2013

3,926 1,733,026,243 131,928,223 7.6% 125,709,049 55,557,377

$3.76 6.7% 68,171,313

61,385,179

2014

4,078 1,806,457,017 129,692,932 7.2% 132,567,740 81,105,514

$3.89 6.5% 92,933,985

81,331,353

2015

4,293 1,918,652,260 135,702,449 7.1%

147,511,582 96,231,222

$4.23 6.3% 110,983,762

91,044,177

2016

4,523 2,043,918,127 139,391,394 6.8% 176,713,425 124,963,919 $4.48 5.9% 130,722,178 135,020,155

2017

4,779 2,166,466,308 148,777,317 6.8% 169,308,881 124,278,814 $4.58 5.7% 140,923,903 138,227,092

2018

5,070 2,317,743,162 163,323,627 7.0% 190,769,036 134,357,785 $4.85 5.7% 155,651,469 148,864,681

2019

5,475 2,506,829,718 196,793,424 8.5% 211,352,495 131,309,138 $5.22 5.6% 172,044,307 154,751,755

1H 2020 5,654 2,602,731,923 194,586,543 8.4%

131,674,557 79,786,070

$5.29 5.6% 170,743,317

96,509,209

2020 MIDYEAR BIG-BOX REPORT

Georgia
Atlanta

E-commerce Activity Powers Atlanta

VIEW PROPERTIES

> After beginning the year with an off-quarter in the first three months of the year, Atlanta's bulk industrial market roared back during the second quarter, absorbing nearly 4.5 MSF of space, just 8.9% lower than bulk activity one year ago.
> The South Atlanta submarket has seen the majority of new leasing activity in bulk product through midyear 2020. Northeast Atlanta and I-20 West/Fulton Industrial have experienced the highest amount of occupancy gains. In fact, both Amazon and Walmart each occupied millionsquare-foot buildings at the midyear mark.
> E-commerce is the leading industry taking space in the market, with Amazon at the top of this list. The company has leased 5.9 MSF in 2020; expanding its warehouse and distribution network by 80% in Atlanta. With Amazon's transactions signed during the second quarter, Atlanta's industrial market has reached a new record number of million-square-foot lease transactions ever in one year.

> In spite of the positive gains and strong leasing activity, bulk rental rates have not moved much over the first half of the year. Historically, rental rates have increased on average 3% per year, however, asking rates for bulk space have remained flat year-over-year.
> Development of bulk industrial product remains strong in Atlanta. Developers remain bullish despite the slower than normal permitting process. Nearly 13.4 MSF of new bulk inventory is under construction in the Atlanta area, with major projects for Amazon, Goodyear, Facebook and Home Depot underway.
> The Atlanta bulk market is expected to finish the year strong. Occupancy gains in the back half of the year are expected to top the midyear totals, possibly reaching record levels for Atlanta. The market's fundamentals and location have been the key drivers to its continued growth, even during the pandemic.

A t l an t a , G A

DARREN ROSS Senior Vice President & Principal, Atlanta
"E-commerce continues to be a driving force in the Atlanta market, with approximately 6 MSF of e-commerce space being leased since the beginning of the year. With an estimated $4.13 trillion in total e-commerce sales predicted for 2020, we don't see this trend slowing down anytime soon."

Building Inventory

200,000 - 499,999 SF

295 Big-Box Buildings

39 Fully Vacant

500,000 - 749,999 SF
70 Big-Box Buildings

6 Fully Vacant

> 750,000 SF
85 Big-Box Buildings

12 Fully Vacant

Major Logistics Driver: Port of Savannah
One of Atlanta's many logistics advantages is its close proximity to the Port of Savannah, the fourth-largest seaport in North America and the second-largest on the East Coast. The Port of Savannah is home to the Garden City Terminal -- the largest single terminal in the U.S. -- which operates two Class I rail yards. Some of the largest industrial markets in the U.S. -- including Atlanta -- are within just a four-hour drive from the Port of Savannah.
The emergence of various inland ports and intermodal facilities, including the Appalachian Regional Port in Northern Georgia, provide direct rail access to major ports in the southeast. These facilities, and also future plans for truck-only highways throughout northern Georgia, will significantly improve the flow of tractor-trailer traffic in and around the Atlanta area.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

20.0% 18.0% 16.0% 14.0% 12.0% 10.0%
8 .0% 6.0% 4.0% 2.0% 0.0%

11.6% 11.2% 200,000-499,999 SF

VaVcaacannccyyRaRteate
17.7% 15.9%
11.1% 8 .2%

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

13.6% 12.4%
Total

20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000
8,000,000 6,000,000 4,000,000 2,000,000
-

UndUendrerCCoonnsstrturcuticontion

7.1 5.6

3.7 1.8

7.8 4.4

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

17.2 13.3
Total

MSF

PSF/YR

$4.5 0 $4.00 $3.5 0 $3.00 $2.5 0 $2.00 $1.5 0 $1.00 $0.5 0
$-

$4.01 $4.19

TaAkvienraggeNNNNNNRRenet nt

$3.75 $3.82

$3.43 $3.48

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

3.74 $3.83 Total

6,000,000

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

5,000,000

4,000,000

3,000,000

2.5 2.5

2,000,000

1.3

1,000,000

2.1 1.1

(1, 00 0,0 0 0)

200,000-499,999 SF

(0.1)

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

4.9 4.5
Total

MSF

A t l an t a , G A

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

Amazon

1,128,400

Amazon

1,117,529

Amazon

1,053,360

Walmart

1,021,440

Bldg. Address 7055 Campbellton Rd. 5000 Lanier Islands Pkwy.
429 Toy Wright Rd. 117 Valentine Industrial Pkwy.

City Atlanta, GA Buford, GA Pendergrass, GA Pendergrass, GA

Lease Type Direct Lease Direct Lease Direct Lease Direct Lease

Big-Box Sales | Midyear 2020

Buyer

Bldg. Size (SF)

Bldg. Address

City

Black Creek Group

797,580

3120 Anvil Block Rd.

Ellenwood, GA

James Campbell Co.

851,349

127 Liberty Industrial Pkwy. McDonough, GA

Summit Real Estate Group

538,500

2110-2135 Lawrence Ave.

Atlanta, GA

MDH Partners

425,300

5300 Kennedy Rd.

Forest Park, GA

Sale Type Investment Investment Investment Investment

Sale Price (PSF) $76
$63
$62
$59

Historical Data

# of Existing Bldgs. Inventory

Vacant Vacancy Inventory Rate

2010 281 124,979,023 22,857,635 18.2%

Leasing Activity
8,007,777

Net

Taking Cap

Under

Construction

Absorption NNN Rent Rate Construction Completions

1,714,789 $2.72 8.5% 2,396,919

2,949,294

2011 284 127,375,942 18,664,800 14.7% 10,562,843 6,539,754 $2.77 7.8% 1,336,120

2,396,919

2012 287 128,997,662 18,436,208 14.3% 16,106,165 1,850,312 $2.74 7.6% 3,042,439

1,621,720

2013 292 132,040,101 17,917,452 13.6% 19,005,643 3,561,195 $2.84 6.9% 2,254,759

3,042,439

2014 299 136,149,150 11,224,702 8.2% 22,088,795 10,801,799 $2.99 6.8% 10,066,437 4,109,049

2015 318 148,487,195 14,163,269 9.5% 13,475,380 7,377,699 $3.23 5.9% 14,077,624 10,316,266

2016 351 166,458,410 20,712,778 12.4% 21,898,806 11,413,706 $3.43 6.1% 14,810,351 17,963,215

2017 377 181,338,200 22,060,664 12.2% 24,279,013 12,903,844 $3.52 6.0% 15,467,898 14,251,730

2018 402 195,990,371 21,930,589 11.2% 22,999,044 14,782,246 $3.63 5.5% 17,202,697 14,652,171

2019 434 214,443,486 26,952,919 12.6% 22,026,200 13,430,785 $3.75 5.0% 13,839,190 18,453,115

1H 2020

450 222,297,751 30,310,603

13.6%

19,338,323 4,496,581

$3.83

5.5% 13,354,660

7,854,265

2020 MIDYEAR BIG-BOX REPORT

Illinois
Chicago

Big-Box Buildings Defy the Odds Despite Uncertainty

VIEW PROPERTIES

> Chicago's big-box market, a subset of the industrial market's most modern and desirable product, defied the odds between April and June during the height of the pandemic, when it recorded positive net absorption and a vacancy rate decrease in several submarkets, as well as the overall big-box vacancy rate.

> Amazon played an important role in demand during the quarter, signing five leases totaling 2.8 MSF in big-box buildings, accounting for 47% of total new leasing volume recorded. The e-commerce giant committed to an astounding 11 MSF during the period, only a quarter of which took place in the market's big-box buildings.

> While new leasing activity decreased compared to the record 8.5 MSF recorded during the first quarter of the year, 22 new leases and lease expansions totaling 6 MSF were signed. This figure would stand out during any time period and was particularly impressive given the economic and day-to-day turbulence.

> Big-box sales volume decreased dramatically during the second quarter of 2020, especially for large investment portfolio sales. The largest sale involved New York-based KKR purchasing a two building 1.5-MSF Amazon campus in Kenosha.

> Some of the leases signed were already in the works prior to the onset of the pandemic, but many particularly by low-exposure tenants like e-commerce and logistics users were signed by companies looking to take advantage of the current climate through swift expansion.

C h i c ag o , IL

JACK ROSENBERG, SIOR National Director, Logistics and Transportation Group Principal, Chicago
"The COVID-19 pandemic, and an economic recession, didn't do much to slow the roll of Chicago's resilient big-box industrial market through the first half of 2020. New leases totaled 14.5 MSF between January and June, a six-month record. Nearly 70% of the square footage leased has been by low-exposure tenants, including e-commerce giant Amazon.com, logistics companies, home improvement retailers and packaging users. The second half of 2020 will likely see more of the same, despite continued uncertainty surrounding the economy and the unfolding pandemic."

Building Inventory

200,000 - 499,999 SF

462 Big-Box Buildings

26 Fully Vacant

500,000 - 749,999 SF
97 Big-Box Buildings

3 Fully Vacant

> 750,000 SF
77 Big-Box Buildings

5 Fully Vacant

Major Logistics Driver: Rail, Inland Port, Central Location
Chicago is the major rail center of the U.S., claiming 70% of the nation's rail and intermodal activity. Six of the seven major rail lines have hubs in the greater Chicago area, a major reason the region is one of the largest big-box industrial markets in the country. Two of these rail lines -- the BNSF Railway and Union Pacific Railroad -- operate large intermodal centers in Chicago's I-80 Joliet Corridor submarket. Combined, these facilities are considered the largest inland port in North America.
Rail is not the only logistics advantage that the region provides. Three of the nation's busiest transcontinental expressways cross through the region. The Chicago Air Gateway comprises O'Hare International Airport and the Midway International Airport. Consistently recognized as one of the busiest airports in the world, Chicago O'Hare International Airport is not only a national aviation hub, it is also a global air cargo gateway, providing billions of dollars in trade to Chicago's economy.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

10.0% 9.0% 8 .0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%

9.1% 9.1% 200,000-499,999 SF

VaVcaacannccyyRRatae te

8 .1% 6.5%

8 .2% 6.5%

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

18,000,000 16,000,000 14,000,000 12,000,000 10,000,000
8,000,000 6,000,000 4,000,000 2,000,000
-

UndUendrerCCoonnsstrturcuticontion

4.7 3.8

2.5 2.9

9.9 6 .5

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

8 .6% 7.8 %
Total 16 .5
13.8
Total

MSF

PSF/YR

$5.00 $4.80 $4.60 $4.40 $4.20 $4.00 $3.80 $3.60

TaAkvienraggeNNNNNNRRenetnt
$4.75 $4.78 $4.42 $4 .4 4 $4.00 $4.04

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

$4.68 $4.60
Total

10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 -

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

4 .1

3.3

1.5 0.3

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

8.8 6.9
Total

MSF

C h i c ag o , IL

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

Ferrara

1,660,000

Harbor Freight Tools

1,646,392

Lowes Companies

1,380,351

Amazon

1,300,000

Amazon

1,077,602

Bldg. Address Gurler Road (2 buildings)
3401 Brandon Rd. 1600 Boudreau Rd. 1255 Gateway Blvd. I-57 & Steger Rd.

City DeKalb, IL Joliet, IL Manteno, IL Beloit, WI University Park, IL

Lease Type Build-to-suit Build-to-suit Direct Lease Build-to-suit Build-to-suit

Big-Box Sales | Midyear 2020

Buyer

Bldg. Size (SF) Bldg. Address

Prologis

6.5+ million

17 Chicago-area big-box buildings

City Various

Prologis

2.5+ million

8 Chicago-area big-box buildings

Various

The Blackstone Group

2.4+ million

5 buildings

Pleasant Prairie & Sturtevant, WI

KKR

1,531,878

3501 120th Ave. & 11211 Burlington Rd.

Kenosha, WI

Sale Type Investment Investment Investment Investment

Sale Price (PSF)
Part of an acquisition of Liberty Property Trust
Part of an acquisition of Industrial Property Trust
Part of a 27-property regional investment portfolio sale
$176,000,000 - 2-building Amazon.com campus investment sale

Historical Data

2010

# of Existing Bldgs. Inventory
406 174,896,238

Vacant Inventory
24,310,577

Vacancy Rate
13.9%

Leasing Activity
9,876,554

Net

Taking Cap

Under

Construction

Absorption NNN Rent Rate Construction Completions

4,022,613 $3.47 6.5% 1,350,000

2011 407 176,246,238 17,977,116 10.2% 11,496,182 7,683,461 $3.61 7.0% 627,100

1,350,000

2012 410 177,111,981 15,762,966 8.9% 13,372,315 3,079,893 $3.98 7.0% 4,026,851

865,743

2013 418 183,433,259 15,591,827 8.5% 15,967,560 6,492,417 $4.10 6.5% 4,307,145

6,321,278

2014 437 191,107,885 13,759,768 7.2% 12,902,662 9,506,685 $4.43 5.8% 8,801,182

7,674,626

2015 477 207,187,079 14,710,283 7.1% 16,248,184 15,128,679 $4.46 5.3% 11,037,540 16,079,194

2016 518 224,730,700 16,180,610 7.2% 14,390,831 16,073,293 $4.49 5.0% 19,208,730 17,543,621

2017 554 244,687,531 23,561,292 9.6% 11,266,980 12,576,149 $4.53 5.0% 7,054,698 19,956,831

2018 578 254,916,764 23,132,105 9.1% 16,447,765 10,867,349 $4.58 5.1% 15,650,290 10,235,066

2019 593 261,185,912 23,228,194 8.5% 20,747,392 17,426,927 $4.67 5.2% 12,379,765 17,523,016

1H 2020

636

279,968,856 21,917,243

7.8%

14,512,612 8,840,027

$4.68 5.3% 16,491,255

7,529,076

2020 MIDYEAR BIG-BOX REPORT

Ohio
Cincinnati

Leasing Activity in Bulk Space Should Keep Absorption Positive in 2020

VIEW PROPERTIES

> Year-to-date (YTD) occupancy gains for big-box space in the Cincinnati industrial market totaled more than 166,000 SF - by far the lowest total of all 16 markets tracked in this report. This time last year, however, net absorption in this market was negative at -1.1 MSF, so the limited absorption recorded was still an improvement year-over-year.

> Despite the increase in bulk warehouse vacancy, new leasing activity of 2.4 MSF have been recorded YTD and the number of occupiers seeking space greater than 100,000 SF has increased. Tenants including DHL Supply Chain, Proximo Spirits and WestRock all signed leases in excess of 300,000 SF during the first six months of the year.

> Although absorption remains positive, overall vacancy rose to 12.3%, up from 7.8% one year ago. The rise in vacancy can be attributed to large amounts of spec construction delivered in this market. To date, nearly 3.6 MSF of bulk space has delivered, while an additional 3.8 MSF remain in the pipeline. The overwhelming majority of new space added to the market is in the bulk warehouse sector, which, in mid-2018, had reached a historic low vacancy rate of 3.5%.

> New inventory will continue to keep bulk warehouse vacancy levels elevated, but forecasts for sustained demand should provide a consistent flow of leasing activity. Development projects for Amazon, Kroger and Rhinestahl Corp. remain under construction and should all be delivered early in 2021.
> The Cincinnati market continues to record rent growth, but not at the rapid pace seen in the recent past. After posting out-sized rental rate gains over the last 5 years, rent growth has moderated with bulk warehouse rents increasing by just 1.9% year-over-year.

C i n c i nna t i , OH

JOHN B. GARTNER III, SIOR Senior Vice President & Principal, Cincinnati
"After posting record low vacancies in mid-2018, the Cincinnati industrial market has been in a state of transition. During this period, development activity accelerated, delivering much needed new inventory, which along with occupiers downsizing or vacating second generation space resulted in increased vacancy. This year started off robust, but was soon slowed by the state-mandated lockdowns. Activity levels have begun to increase with more inquiries, tours and leases executed later in the second quarter. But to our dismay, Cincinnati was not immediately a beneficiary of the e-commerce growth that surged during lockdowns across the country. As we enter the third quarter, industrial occupiers are scrambling to fulfill rapidly growing online sales, redesign supply chains and boost inventory levels to eliminate the risk of future disruptions. These efforts will produce greater net absorption by year's end than we've seen in the past 18 months, providing a very positive finish to an overall COVID-19 ridden 2020."

Building Inventory

200,000 - 499,999 SF
124 Big-Box Buildings

8 Fully Vacant

500,000 - 749,999 SF
35 Big-Box Buildings

4 Fully Vacant

> 750,000 SF
17 Big-Box Buildings

4 Fully Vacant

Major Logistics Driver: Amazon Prime Air Hub
Currently under construction, the first phase of Amazon's Prime Air Hub scheduled to open in early 2021 at the Greater Cincinnati/Northern Kentucky International Airport (CVG) covers a footprint measuring 819,000 SF with multiple mezzanine levels for robotic operations. Upon full completion in 2026, the facility will encompass 3.3 MSF and employ more than 2,000 people. Amazon has been operational at CVG for over a year sharing an air cargo facility with DHL, who operates its North American super hub at the airport. Cargo-related operations have increased significantly and CVG now ranks as the seventh-largest cargo airport by volume in the U.S. The Cincinnati industrial market has been a beneficiary of this growth and development has increased in the area in anticipation of additional demand for warehouse and logistics space from 3PL's and e-commerce occupiers. Anticipating continued rapid growth at CVG, air cargo solutions provider, Atlas Air, has selected northern Kentucky for expansion and is constructing a 100,000 SF headquarters facility within a few miles of the airport.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

VaVcaacannccyyRaRteate
25.0%

20.0%

19.6%

15.0% 10.0%
5.0%

13.1% 10.0%

12.6% 6.5%

7.0%

0.0% 200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

12,000,000

UndUnedrerCCoonnsstrturcuticontion

10,000,000

8,000,000
6 .1 6,000,000

4,000,000 2,000,000
-

3.1

1.8

1.2 0.6

0.8

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

12.3% 7.8 %
Total
9.8 3.8
Total

MSF

PSF/YR

$4.50 $4.40 $4.30 $4.20 $4.10 $4.00 $3.90 $3.80 $3.70 $3.60

$4.41 $4.28

TaAkvienraggeNNNNNNRRenet nt

$4.11 $3.98

$3.95 $3.91

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

$4.14 $4.07
Total

1,000,000 5 00,000 -

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

0.7 0.4

(50 0, 00 0) (1, 00 0,0 0 0)

(0.5 )

(1, 50 0,0 0 0) (2, 00 0,0 0 0)

(1.5 )

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

0.2
(1.1) Total

MSF

C i n c i nna t i , OH

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

Proximo

589,200

DB Schenker

250,000

OIA

200,000

PAC National

194,936

Bldg. Address 2365 Litton Ln. 61 Logistics Blvd. 2350 Progress Dr. 575 Gateway Blvd.

City Hebron, KY Walton, KY Hebron, KY Monroe, OH

Lease Type Direct Lease Direct Lease Direct Lease Direct Lease

Big-Box Sales | Midyear 2020

Buyer

Bldg. Size (SF)

Lightstone Acquistions

580,166

Granite REIT

479,512

Granite REIT

374,160

Hillwood

533,720

Bldg. Address 9555 Dry Fork Rd. 8754 Trade Point Dr. 8779 Le Saint Dr. 10900 Kenwood Rd.

City Harrison, OH Hamilton, OH West Chester, OH Blue Ash, OH

Sale Type Investment Investment Investment Investment

Sale Price (PSF) $42
$70
$65
$58

Historical Data

# of Existing Bldgs. Inventory
2010 125 48,106,385

Vacant Inventory
5,641,802

Vacancy Rate
11.7%

Leasing Activity
-

Net

Taking Cap

Under

Construction

Absorption NNN Rent Rate Construction Completions

1,045,520 $2.93 9.0% 366,096

2011 126 48,909,185 6,368,636 13.0% 3,013,872 (726,834) $2.88 8.1% 930,588

802,800

2012 128 49,111,185 5,509,099 11.2% 2,279,043 1,061,537 $2.77 8.0% 1,227,046

1,072,046

2013 131 50,169,056 4,143,516 8.3% 5,358,153 2,423,454 $3.05 7.2% 1,789,500

1,150,000

2014 133 51,394,043 2,662,329 5.2% 3,007,563 3,144,497 $2.81 7.2% 2,156,220

1,808,164

2015 137 53,623,657 3,179,593 5.9% 1,956,168 1,809,123 $3.36 6.9% 2,110,587

2,931,375

2016 143 57,289,504 4,191,432

7.3% 3,444,246 2,654,038 $3.67 7.0% 2,214,973

3,665,877

2017 148 59,363,184 3,335,511 5.6% 5,470,578 2,910,501 $3.88 6.1% 3,663,328 2,073,680

2018 157 66,072,237 2,640,734 4.0% 5,759,419 5,248,250 $4.00 6.0% 7,128,374

4,728,915

2019 169 72,320,061 6,811,435

9.4% 3,219,129 2,076,433 $4.14 5.5% 5,162,853

7,925,540

1H 2020

176

74,901,244

9,227,183

12.3%

2,371,015

166,470

$4.20 6.5% 3,788,256

3,557,620

2020 MIDYEAR BIG-BOX REPORT

Ohio
Columbus

Columbus Well-positioned for Projected E-commerce Demand Post-COVID-19

VIEW PROPERTIES

> Despite uncertainty regarding the COVID-19 pandemic, the Columbus big-box market experienced a strong start to the year, posting nearly 2.8 MSF of net absorption YTD.
> Vacancy increased slightly to 10.2%, up from 8.1% one year ago, but is expected to decrease in the second half of the year as new product gets leased up. This increase is largely attributed to the speculative development that delivered vacant during the quarter.
> Overall net rents for big-box properties saw an uptick to $3.93 per square foot, an 8.9% increase over 2019 due to an influx of new bulk development. The construction pipeline also remains robust with nearly 6.5 MSF of big-box product currently underway.

> New leasing activity totaled nearly 3.2 MSF YTD, with the largest leases of the year signed by prominent e-commerce and logistics companies, which continue to drive activity throughout the market. Amazon signed a 1.2 MSF lease in Etna and ODW Logistics leased 500,000 SF in Lockbourne.
> Investment activity has slowed slightly due to the COVID-19 pandemic, with five big-box properties totaling 2.9 MSF sold at midyear 2020. Cap rates remain unchanged from 2019 at 7.0%.

C o l u m b u s , OH

MICHAEL LINDER, SIOR Senior Executive Vice President, Columbus
"Columbus will continue to see high activity in industrial space. The COVID-19 pandemic has created increased demand for e-commerce and distribution space, and Central Ohio is logistically well-positioned to keep up. Located within a 10-hour drive of half of the U.S. population, the Columbus market's strategic location assists industrial tenants in reaching their customers. The industrial sector is experiencing ongoing demand and record-breaking development, primarily in the Southeast, East and West submarkets. Additionally, Rickenbacker Inland Port is a major point of access via air and rail, making Columbus ideally situated for increased international cargo demand in the future."

Building Inventory

200,000 - 499,999 SF
124 Big-Box Buildings

7 Fully Vacant

500,000 - 749,999 SF
27 Big-Box Buildings

2 Fully Vacant

> 750,000 SF
34 Big-Box Buildings

3 Fully Vacant

Major Logistics Driver: Rickenbacker Inland Port
The Columbus industrial market is a leader in global logistics due to the area's prime location and easy access to the rest of the country. Located southeast of downtown Columbus, the Rickenbacker Inland Port is the region's major logistics driver. One of the world's only cargo-specific airports, Rickenbacker has 500,000 SF of air cargo facility space, 130 acres of cargo ramp and handles more than 255 million pounds of cargo every year. Rickenbacker is also home to a Global Logistics Park, currently offering over 70 MSF of first-class distribution space. Directly connecting Columbus to the rest of the world, Rickenbacker Inland Port helps enable industrial occupiers in the area to reach millions of global customers.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

14.0% 12.0% 10.0%
8.0% 6.0% 4.0% 2.0% 0.0%

11.5% 10.1%
200,000-499,999 SF

VaVcaacannccyyRaRtae te

8.6% 8.2%

10.8% 5.6%

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 -

UndUendrerCCoonnsstrturcuticontion

6 .4

2.3 2.4

1.9

2.2

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

10.2% 8.1%
Total
8.7 6 .5
Total

MSF

PSF/YR

$5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50
$-

$4.33 $3.85

TaAkvienraggeNNNNNNRRenetnt

$3.59 $3.76

$3.69 $3.38

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

$3.93 $3.61
Total

4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000
500,000 -
(50 0, 00 0) (1, 00 0,0 0 0)

OveOrvaelrlalNl Neett AAbbsosrpotriopntion
3.4

1.6 1.0
0.2

(0.6) 200,000-499,999 SF

(0.3) 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

2 .8 2 .5
Total

MSF

C o l u m b u s , OH

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

Confidential

1,232,149

Confidential

1,059,000

ODW Logistics

500,000

Shiseido Americas

323,571

Bldg. Address 8591 Mink St. SW 1260 London Groveport Rd. 1450 Commodity Blvd. 5275 Centerpoint Pkwy.

City Etna, OH Columbus, OH Lockbourne, OH Groveport, OH

Lease Type Direct Lease Direct Lease Direct Lease Direct Lease

Big-Box Sales | Midyear 2020

Buyer

Bldg. Size (SF)

Bldg. Address

DHL

1,199,488

2829-2869 Rohr Rd.

Granite REIT

484,216

6201 Green Pointe Dr. S

Exeter

513,760

87-103 Heritage Dr.

Forward Air

240,000

6700 Port Rd.

City Groveport, OH Groveport, OH Pataskala, OH Groveport, OH

Sale Type Investment Investment Investment Owner User

Sale Price (PSF) $52
$67
$50
$40

Historical Data

# of Existing Bldgs. Inventory
2010 131 68,334,484

Vacant Inventory
9,048,373

Vacancy Rate
12.9%

Leasing

Net

Taking Cap

Under

Construction

Activity Absorption NNN Rent Rate Construction Completions

4,720,497 2,133,886 $2.88 7.8%

2011 131 68,334,484 10,172,679 14.7% 5,480,145 (1,233,165) $2.65 7.9%

2012 131 68,334,484 8,277,577 12.0% 5,216,773 1,895,102 $2.43 7.6% 478,053

2013 133 69,406,367 6,596,766 9.3% 6,214,907 2,757,896 $2.32 7.4% 1,221,653

1,071,883

2014 138 71,826,948 5,398,180 7.4% 6,294,946 3,619,167 $2.86 7.1% 1,369,912

2,420,581

2015 142 74,053,660 8,572,251 11.1% 9,518,280 (708,685) $3.08 6.9% 4,703,145

2,226,712

2016 149 78,756,805 7,313,695 9.0% 4,413,865 5,831,622 $3.08 7.0% 831,350

4,703,145

2017 153 80,146,300 5,751,928 8.0% 6,454,459 2,946,472 $3.34 7.1% 4,995,525

1,389,495

2018 161 84,839,513 6,382,079 7.5% 9,275,480 3,676,077 $3.57 7.1% 465,478

4,759,380

2019 170 90,083,127 7,328,447

8.1%

6,012,418 2,479,249 $3.61 7.0% 8,686,042

3,003,471

1H 2020

185

96,683,902 9,869,466

10.2%

3,188,813 2,769,668

$3.93

7.0% 6,491,198

5,134,664

2020 MIDYEAR BIG-BOX REPORT

Texas
Dallas-Fort Worth

Dallas-Fort Worth Industrial Market Continues Growth Despite Pandemic

VIEW PROPERTIES

> The Dallas-Fort Worth market has experienced unimaginable success during a time when the COVID-19 pandemic has stricken the country. Companies are continuing to take advantage of Dallas' central location, inexpensive labor rates for a major metropolitan area and an abundance of newly constructed warehouse product.
> Leasing activity through the first half of 2020 is the hottest it has ever been. Tenants signed deals for more than 15.5 MSF in these first two quarters a record for this market. Occupancy gains also set a record with more space being absorbed, over 14.5 MSF, in the first and second quarters of 2020 than in any other comparative time period. The previous record was in 2019 when 8.8 MSF was absorbed.

> Record absorption and vacancy levels of 10.2% are keeping demand for new, modern space and construction levels high with 19.3 MSF of space set to deliver over the next 12 months. There were four new buildings totaling over 2 MSF that began construction in the second quarter. Much of the product that is currently under construction is being built on a speculative basis, which in turn means that of the 39 buildings under construction, over 25 buildings are without any pre-leasing activity and are being marketed as fully available.
> Rental rates continue their upward trend as rates rose to $4.31 per square foot (PSF). This is the first time in which overall asking rates were over $4.00 PSF. The largest jump in rates occurred in big-box buildings between 200,000 to 499,999 SF with rates increasing more than $0.60 over this time last year.

Dallas-Fort Worth, TX

THOMAS PEARSON, SIOR Executive Vice President, Dallas
"The Dallas-Fort Worth industrial real estate market continues to remain "white hot" despite the pandemic of the last six months. Industrial development is surging and is expected to continue to expand in 2021 and 2022 in Dallas and across the U.S. North Texas remains a location of choice for companies consolidating, expanding or relocating their operations to our business friendly, relatively low cost, centrally located metropolis. The availability of institutional capital continues to be strong, and Dallas-Fort Worth is a favored location for companies desiring to locate here and also correspondingly for developers and capital wanting to invest in what has become the #1 preferred commercial real estate investment type industrial real estate. The Dallas team gets one or two calls per week from local and out-of-state developers and institutional capital sources wanting to discuss opportunities to place capital or purchase land on which to build a new warehouse project."

Building Inventory

200,000 - 499,999 SF

409 Big-Box Buildings

46 Fully Vacant

500,000 - 749,999 SF

106 Big-Box Buildings

11 Fully Vacant

> 750,000 SF
77 Big-Box Buildings

11 Fully Vacant

Major Logistics Driver: Alliance Global Logistics Hub and International Inland Port of Dallas
Dallas-Fort Worth's central U.S. location enables the market to act as an advantageous distribution hub, with quick access to rail, air and over-the-ground truck transportation. The region is a global inland port with two locations capable of large-scale cargo operations: Alliance Global Logistics Hub and the International Inland Port of Dallas.
Home to major rail logistics operations for the two primary western U.S. railroads -- BNSF Railway Company and Union Pacific Corp. -- Dallas-Fort Worth is able to tap into major East-West arteries and provide important links to Mexican markets. By truck, distributors can efficiently move products throughout the central U.S., reaching 93% of the population within 48 hours.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

12.0% 10.0%

11.1% 11.1%

VaVcaacannccyyRaRteate

10.5% 9 .2%

10.6% 9 .6%

8.0%

6.0%

4.0%

2.0%

0.0% 200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

10.4% 10.2% Total

25,000,000

UndUendrerCCoonnsstrturcuticontion

20,000,000

15,000,000 10,000,000
5,000,000

9.6 5.3

5.5 4.7

12.8 5.1

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

23.6 19.3
Total

MSF

PSF/YR

$5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00

$4.51 $3.92
200,000-499,999 SF

TaAkvienraggeNNNNNN RRenetnt

$4.02 $3.70

$3.95 $3.65

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

$4.31 $3.88
Total

16,000,000 14,000,000 12,000,000 10,000,000
8,000,000 6,000,000 4,000,000 2,000,000
-

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

7.5 6.5
5.2

2.3 1.4
0.4

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

14 .5 8.9
Total

MSF

Dallas-Fort Worth, TX

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

Amazon

1,000,584

General Mills

856,278

Geodis

616,875

Mars Petcare

610,806

Bldg. Address 2601 S Airfield Dr. 4901 Henrietta Creek Rd. 3700 Pinnacle Point Dr. 2801 N Houston School Rd.

City Fort Worth, TX Fort Worth, TX Roanoke, TX Lewisville, TX

Lease Type Direct Lease
Renewal Renewal Direct Lease

Big-Box Sales | Midyear 2020

Buyer

Bldg. Size (SF)

Bldg. Address

Black Creek Group

281,092

1050 Luna Rd.

Suntrust Equity Funding

394,000

770 Gateway Blvd.

Longpoint Realty Partners

491,000

1201 & 1301 NE Loop 820

Cabot Properties

754,897

1200 W Wintergreen Rd.

City Dallas, TX Fort Worth, TX Fort Worth, TX Dallas, TX

Sale Type Investment Investment Investment Investment

Sale Price (PSF) $112
$95
$84
$59

Historical Data

# of Existing Bldgs. Inventory

Vacant Vacancy Leasing

Net

Taking Cap

Under

Construction

Inventory Rate

Activity Absorption NNN Rent Rate Construction Completions

2010 340 145,009,269 26,718,863 18.4% 11,220,396 2,671,806 $3.21 7.8% 1,020,000

400,123

2011 342 146,334,269 20,076,380 13.7% 18,681,128 7,967,483 $3.18 8.0% 951,480

1,325,000

2012 343 147,285,749 15,199,568 10.3% 17,110,084 5,828,292 $3.22 8.0% 3,265,722

951,480

2013 355 153,766,811 12,332,085 8.0% 24,325,827 9,348,545 $3.26 7.4% 12,361,705

6,481,062

2014 380 168,385,832 18,446,053 11.0% 22,270,784 8,010,535 $3.51 6.3% 12,875,794 14,124,503

2015 414 183,932,283 20,022,968 10.9% 27,778,017 13,515,128 $3.66 6.8% 14,886,023 15,092,043

2016 451 199,696,266 18,626,953 9.3% 26,030,839 16,665,998 $3.80 7.0% 20,545,209 15,269,983

2017 496 222,763,915 21,912,844 9.8% 25,571,250 18,886,724 $3.81 6.0% 18,515,194 22,067,065

2018 534 240,496,372 26,842,818 11.2% 29,317,820 12,576,553 $3.85 5.6% 22,770,753 17,506,527

2019 568 258,302,262 26,866,745 10.4% 29,612,062 17,781,963 $3.88 5.5% 26,602,307 17,805,890

1H 2020

592

273,833,609 27,895,247

10.2%

15,552,166 14,502,845

$4.31

5.3% 19,349,457

15,531,347

2020 MIDYEAR BIG-BOX REPORT

Arizona
Greater Phoenix

COVID-19 Elicits Increased Demand for E-Commerce and Cold Storage Space

VIEW PROPERTIES

> The Phoenix big-box market remains an attractive option for occupiers and investors because of its proximity to a growing population, a strong workforce base, an expanded and modernized highway system and more attractive rental rates compared to markets in Southern California. Although the Phoenix market is the second-smallest big-box market tracked in this report, activity here rivals many of the larger markets, despite the uncertainty surrounding the COVID-19 pandemic.
> Fueled by high demand for e-commerce fulfillment centers, 2020 has the highest inventory of big-box facilities under construction ever in the Phoenix metro. Along with a handful of speculative development, major projects for Amazon, Lucid Motors, RRB Beverage Operations and Red Bull are underway. Projects under construction are moving along as quickly as supply allows, and a slowdown in construction materials seems to be one of the main factors hindering construction.

> Overall big-box vacancy remains high however, and stood at 15.2% at midyear, 40 basis points (bps) higher than the 14.8% recorded a year ago. New supply has continued to put upward pressure on vacancy in this market, although vacancy has not exceeded 20% since Q3 2016. To-date, 3.6 MSF of new big-box development has been added to the Phoenix industrial market. However, experiencing unprecedented times and the impact of COVID-19, Nike pulled out of its facility in Goodyear. Per a development deal with the City of Goodyear, the company was expected to invest $184.5 million into the first phase.
> With demand for modern big-box space reaching all-time highs in this market, occupancy gains totaled nearly 5.3 MSF for the first half of the year. Net absorption in the first half of 2020 is the highest of any half year period over the past 10 years. As anticipated, more consumers are converting their shopping habits to online, creating an increased demand for warehouse space. The increase of online grocery shopping has created a new demand for cold storage warehouses as well, which should continue in the quarters to come.

Greater Phoenix, AZ

DON MACWILLIAM Executive Vice President, Phoenix
"The Phoenix industrial market continued its momentum, despite the COVID-19 pandemic in the big-box sector. We saw many significant regional and national logistics occupiers locating in the metro industrial market with Amazon, once again, leading the way. The opening of the Loop 202 freeway and the Loop 303 corridor became home to large corporate users taking advantage of excellent freeway access and solid market dynamics.
Our supply of labor, availability of big-box product, proximity to Southern California and attractive investor pricing will continue to highlight Phoenix as a Class A location for occupiers, developers and investors."

Building Inventory

200,000 - 499,999 SF

105 Big-Box Buildings

17 Fully Vacant

500,000 - 749,999 SF
25 Big-Box Buildings

3 Fully Vacant

> 750,000 SF
16 Big-Box Buildings

2 Fully Vacant

Major Logistics Driver: Loop 303 Construction, Phoenix Sky Harbor Airport
Phoenix expanded its local interstate system, including improvements and expansions to Loop 202 and 303. This, along with its location along I-10, gives the market a significant logistical advantage in reaching the Southwest populace. Rail access is also robust with two transcontinental railroads servicing the area. Approximately 65% of industrial big-box space that is currently under construction is located along west Loop 303. This nine-mile stretch is gaining more and more attractiveness to developers, and land sales have drastically increased in the past 12 months. This corridor has attracted large companies like REI, Dicks Sporting Goods and Sub-Zero. In June, Microsoft completed the first site, a 244,666 SF data center that sits on 279 acres in Goodyear. Historically, big-box facilities have clustered south of I-10 and east of Loop 101, which accounts for 67% of total inventory.
The Phoenix Sky Harbor Airport is a burgeoning air cargo hub utilized by both FedEx and UPS, that recently ranked 18th in the country in total cargo. The Greater Phoenix region's biggest logistics driver is its populace. The region boasts a growing population and the third-largest labor pool for distribution occupations in the Western U.S. Distribution wages are lower than California and Arizona is also a right to work state. With the increased need for labor because of e-commerce, the region will continue to prosper for the foreseeable future.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

20.0% 18.0% 16.0% 14.0% 12.0% 10.0%
8.0% 6.0% 4.0% 2.0% 0.0%

17.1% 16.9% 200,000-499,999 SF

VaVcaacannccyyRRatae te
18.8% 16.0% 14.9%
11.2%

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000
-

UndUendrerCCoonnsstrturcuticontion

2.7 1.0

1.2 1.3

2.2 0.8

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

16.9% 15.2%
Total
6 .2 3.0
Total

MSF

PSF/YR

$7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00
$-

TaAkvienraggeNNNNNNRRenetnt

$5.73 $5.35

$4.73 $4.97

$4.99 $4.77

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

$5.36 $5.02
Total

6,000,000

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

5,000,000

4,000,000

3,000,000

2 .2

2,000,000

1.8 1.3

1,000,000

0.6

(1, 00 0,0 0 0)

(0.03) 200,000-499,999 SF

(0.01)

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

5.3
0.6 Total

MSF

Greater Phoenix, AZ

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

Amazon

1,100,000

Dexcom

486,000

Lucid Motors

479,207

ABB Electrification

379,828

Bldg. Address 8181 W. Roosevelt St.
8046 E. Ray Rd. 1115 W. Alameda Dr. 8001 W. Buckeye Rd.

City Phoenix, AZ
Mesa, AZ Tempe, AZ Tolleson, AZ

Lease Type Direct Lease Direct Lease Direct Lease Direct Lease

Big-Box Sales | Midyear 2020

Buyer

Bldg. Size (SF)

Bldg. Address

Cohen Asset Management 554,000

3333 S. 59th Ave.

Cohen Asset Management

325,800

7400 W. Buckeye Rd.

Industrial Logistics Properties Trust

513,407

16920 W. Commerce Ln.

Goldman Sachs

418,651

12000 N. 132nd Ave.

City Phoenix, AZ Phoenix, AZ Goodyear, AZ Surprise, AZ

Sale Type Investment Investment Investment Investment

Sale Price (PSF) $110 $94
$85
$78

Historical Data

# of Bldgs.
2010 97

Existing Inventory
41,237,612

Vacant Vacancy Leasing

Net

Taking Cap

Under

Construction

Inventory Rate

Activity Absorption NNN Rent Rate Construction Completions

8,467,351 20.5% 5,459,503 3,423,782 $3.96 7.6%

1,434,659

2011 97 41,237,612 3,662,073 8.9% 7,043,236 4,693,378 $3.71 5.7%

2012 97 41,237,612 3,158,223 7.7% 3,018,037 5,535

$4.31 7.2% 2,250,640

2013 105 45,080,588 7,365,129 16.3% 1,850,911 (642,091) $4.23 5.2% 698,853

3,564,815

2014 106 45,779,441 7,983,721 17.4% 1,791,359 80,261

$4.36 5.2% 1,344,038

698,853

2015 111 48,282,891 8,100,084 16.8% 3,098,804 1,765,151 $4.45 5.7% 437,910

1,730,138

2016 115 49,624,149 7,803,916 15.7% 7,462,832 1,193,635 $4.34 6.9% 1,869,645

1,087,910

2017 122 52,404,981 6,547,064 12.5% 4,559,313 4,638,966 $4.56 5.0% 2,930,872

2,780,832

2018 130 56,780,827 9,416,093 16.6% 5,269,355 1,281,943 $4.88 5.3% 1,815,040

4,150,972

2019 137 59,165,659 10,023,554 16.9% 6,981,035 1,062,466 $5.21 5.6% 5,154,124

2,384,832

1H 2020

146

63,088,278 9,573,729

15.2% 4,992,386 5,276,847

$5.36

6,204,560

3,557,192

2020 MIDYEAR BIG-BOX REPORT

Texas
Houston

Houston Ready for Industrial Rebound

VIEW PROPERTIES

> The Houston big-box market continues to be active, despite the continued uncertainty surrounding COVID-19. YTD overall absorption outpaced this time in 2019 by more than 31% and totaled nearly 6.2 MSF.
> E-Commerce continues to lead industrial market absorption in Houston. Amazon has multiple active construction projects underway in addition to multiple on-going negotiations for additional space needs. Amazon's lease of nearly 450,000 SF at Park 249 in Houston led leasing activity at midyear, followed by a 313,000 SF lease by Goodman Air Conditioning and Heating in Waller.

> Active on-going construction of 10.1 MSF of big-box industrial buildings, in addition to 9.5 MSF of delivered buildings, have Houston well positioned for post-COVID-19 economic rebound.
> Three build-to-suit facilities greater than 1.0 MSF are underway in Houston for Ross Stores, Medline Industries and Dollar Tree. Amazon's 806,000 SF facility is scheduled to deliver early in 2021. Far-West Houston is emerging as a major big-box logistics destination with 5.5 MSF of construction underway, with 750,000 SF of speculative development under construction.

> In addition to the large leases signed recently, there are two active requirements near Port of Houston for buildings in excess of 500,000 SF. Increased resin output from oil refineries and growing international container traffic are major demand drivers.

Houston, TX

WALKER BARNETT Principal & Director, Houston
"Houston has a number of big-box facilities under construction now, including Ross Stores (2.3 MSF), Medline Industries (1.3 MSF) and Dollar General (1.2 MSF). These buildings, along with accelerated growth in e-commerce tenants like Amazon, show confidence in a continued growth trajectory for regional consumer spending. However, with 9.5 MSF of recently delivered buildings and 14.5 MSF of unleased buildings under construction, Houston will need increased tenant activity and sustained absorption to remain a healthy and balanced industrial market. We expect increasing tenant concessions in the short term as landlords work to lease the new inventory of large buildings. As consumers and companies emerge from the COVID-19 downturn, and as the national economy resumes normality, Houston is well-positioned to capture its fair share of U.S. warehouse absorption with its large inventory of available state-of-the-art big-box buildings."

Building Inventory

200,000 - 499,999 SF

237 Big-Box Buildings

28 Fully Vacant

500,000 - 749,999 SF
35 Big-Box Buildings

5 Fully Vacant

> 750,000 SF
16 Big-Box Buildings

1 Fully Vacant

Major Logistics Driver: Port Houston
Port Houston, the largest port on the Gulf Coast and the biggest port in Texas, is a 25-mile long complex of nearly 200 private and public industrial terminals along the 52-mile long Houston Ship Channel. The eight public terminals are owned, operated, managed or leased by the Port of Houston Authority and include the general cargo terminals at the Turning Basin, Care, Jacintoport, Woodhouse and the Barbours Cut and Bayport container terminals.
Port Houston is recognized as the No. 1 U.S. port in foreign waterborne tonnage and is the No. 3 ranked U.S. port in terms of total foreign cargo value. Having 69% of the U.S. Gulf Coast container traffic and 96% market share in containers by total TEUs, it is clear that Port Houston is a key player in global trade. The port is the largest Gulf Coast container port, handling 45% of the Texas market share by tonnage, and is now in the top 5 for U.S. container traffic.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

20.0% 18.0% 16.0% 14.0% 12.0% 10.0%
8 .0% 6.0% 4.0% 2.0% 0.0%

14.6% 8 .4%
200,000-499,999 SF

VaVcaacannccyyRaRteate
17.3%

1.8 %

1.0% 0.4%

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

12.5% 3.7%
Total

12,000,000

UndUendrerCCoonnsstrturcuticontion

10,000,000

8,000,000

6,000,000 4,000,000 2,000,000

3.7 3.3

1.9 1.8

5.0 1.8

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

10.1 7.3
Total

MSF

PSF/YR

$7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00

$6.24 $6.05 200,000-499,999 SF

TaAkvienraggeNNNNNNRRenet nt

$5.28

$4.50

$0.00

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

$6.05 $5.76
Total

7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000
(1, 00 0,0 0 0)

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

4.6 3 .1

1.4 1.6

0.1

(0.02)

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

6.2 4.7
Total

MSF

Houston, TX

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

Michelin North America

663,821

Amazon

443,520

H-E-B

401,280

Goodman Air Conditioning and Heating

312,640

China Manufacturers Alliance

183,289

Bldg. Address 8800 Citypark Loop 16225 Tomball Pky.
4501 Blalock Rd.
18140 Kickapoo Rd.
4300 Malone Dr.

City Houston, TX Tomball, TX Houston, TX
Waller, TX
Pasadena, TX

Lease Type Renewal
Direct Lease Direct Lease
Direct Lease
Direct Lease

Big-Box Sales | Midyear 2020

Buyer

Bldg. Size (SF)

WPT Industrial REIT

996,482

Bldg. Address 4762 Borusan Rd.

Prologis

656,658

1401 Rankin Rd.

Prologis

600,360

1302 Wharton Weems Blvd.

Exeter Property Group

500,000

501 Commerce Pky.

City Baytown, TX Houston, TX La Porte, TX
Katy, TX

Sale Type Investment Investment Investment Investment

Sale Price (PSF) $94 $87 $87
Undisclosed

Historical Data

# of Bldgs.
2010 111

Existing Inventory
41,961,951

Vacant Inventory
5,604,979

Vacancy Rate
13.4%

Leasing Activity
4,122,787

Net

Taking Cap

Under

Construction

Absorption NNN Rent Rate Construction Completions

3,248,277 $4.66 7.1% 1,037,251

1,706,616

2011 115 42,999,202 4,835,642 11.2% 2,850,498 1,806,588 $4.56 6.8% 1,641,994

1,037,251

2012 120 44,644,420 3,949,235 8.8% 5,143,819 2,531,625 $4.42 6.6% 1,788,163

1,645,218

2013 131 48,265,307 4,364,932 9.0% 3,736,325 3,205,190 $4.48 6.4% 2,426,230 3,620,887

2014 140 51,270,405 4,837,224 9.4% 6,207,030 2,532,806 $4.54 6.3% 5,071,689 3,005,098

2015 162 58,628,799 5,802,480 9.9% 9,054,794 5,825,101 $4.82 6.0% 9,124,848

7,115,634

2016 177 66,974,102 6,095,196

9.1% 7,265,266 7,551,238 $5.20 6.0% 5,975,173

8,345,303

2017 190 72,949,275 3,917,609 5.4% 7,187,995 8,152,760 $4.75 6.0% 7,565,644

5,975,173

2018 220 84,218,461 5,672,311 6.7% 7,934,997 7,512,550 $4.78 6.1% 7,785,658 9,267,252

2019 247 93,785,131 9,964,919 10.6% 5,620,769 5,174,062 $5.09 6.2% 14,479,951 9,566,670

1H 2020

268 104,343,830 13,078,831

12.5%

3,593,201 6,159,069

$6.05 6.2% 10,136,088

9,582,971

2020 MIDYEAR BIG-BOX REPORT

Florida
I-4 Corridor

Amazon Fuels Bulk Absorption; Infill Absorption Diversified

VIEW PROPERTIES

> The I-4 Corridor industrial market is one of the fastest growing and most dynamic industrial markets in the country. More than 21 million people live within 250 miles of the market's core, making it an ideal location for retailers, wholesalers and 3PLs to locate. Nearby Orlando is also home to a burgeoning millennial population, making the market extremely popular for distribution facilities. Nearly 32 MSF of newly developed bulk industrial space has been added to the market since Q1 2015, with another 7.1 MSF currently under construction. Build-to-suit activity remains steady in the I-4 Corridor as Ace Hardware recently signed for 710,000 SF. Brennan Investments broke ground on largest spec development in the region this cycle.
> Big-box activity continues to be extremely active as nearly 5.9 MSF of new leasing activity has been signed YTD. The overall vacancy rate for big-box product finished midyear at 12.7%, up from 10.1% in 2019 with most of this vacant space in buildings smaller than 500,000 SF. The Tampa market has witnessed an extreme shortage of cross-dock availabilities due to I-4 Logistics Center now being leased to Amazon.

> The lack of available 500,000+ SF product, combined with growing demand for this size range from e-commerce and 3PL tenants has created a significant opportunity for speculative development in the region. There are eight facilities in this market under construction greater than 500,000 SF, but only 2 MSF remains available. Nearly 3.2 MSF is already spoken for by Amazon.
> As investment activity in the country wanes in the U.S. due to uncertainty surrounding the COVID-19 pandemic, sales in the I-4 Corridor region remained healthy at midyear, evidenced by a handful of large transactions signed including Tratt Properties' purchase of a 714,000 SF distribution facility occupied by CVS Pharmacy and Prologis' acquisition of a 500,000 SF distribution facility occupied by Amcor Rigid Plastics, both in Orlando. Cap rates in the area remain stable, at 7.0%, a number on par with the national average, although the two most recent Amazon sales traded at record cap rates; both less than 4.75%.

I-4 Corridor, FL

RYAN A. VAUGHT Executive Managing Director, Tampa
"The Fortune 500 have dominated the bulk leasing market along the I-4 Corridor, indicating a "first mover" mentality in the continued reconfiguration of the southeastern supply chain. Bulk development continues to push further away from full interstate interchanges due to strong occupier demand but a decreasing supply of developable land sites."

Building Inventory

200,000 - 499,999 SF

251 Big-Box Buildings

15 Fully Vacant

500,000 - 749,999 SF
27 Big-Box Buildings

4 Fully Vacant

> 750,000 SF
23 Big-Box Buildings

0 Fully Vacant

Major Logistics Driver: Arterial Market Focused on Consumer Goods
Due to the geographic constraints on the western side of Tampa and eastern side of Orlando, the two metro areas (located a mere 82 miles apart) are continuing to grow towards each other, along the I-4 Corridor. Moreover, both metropolitan areas are two of the fastest growing MSAs in the entire country. The western side of the I-4 Corridor terminates at Port Tampa Bay, the largest seaport in the state of Florida.
The region is home to strong ground and rail freight capabilities, including the CSX Integrated Logistics Center (ILC) in Winter Haven. The ILC has also been a major boon to Central Florida's logistics and distribution industry. This centralized transportation hub features a 318-acre terminal adjacent to 930 acres of industrial and business park space slated for use by light industrial facilities and warehouse distribution centers. The region is home to two international airports (Orlando and Tampa) -- both with growing cargo handling capabilities. The I-4 Ultimate Project is a 21-mile makeover -- from west of Kirkman Road in Orange County to east of State Road 434 in Seminole County that will improve truck flow throughout the area.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

18.0% 16.0% 14.0% 12.0% 10.0%
8.0% 6.0% 4.0% 2.0% 0.0%

15.5% 11.9%
200,000-499,999 SF

VaVcaacannccyyRaRteate
16.1%

10.0%

5.6% 5.4%

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

12.7% 10.1%
Total

10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 -

UndUendrerCCoonnsstrturcuticontion

6 .0

3.0 3.0

2.0

2.1

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

9.0 7.1
Total

MSF

PSF/YR

TaAkvienraggeNNNNNNRRenetnt

$6.00 $5.00

$5.11 $5.08

$5.49

$4.75 $5.00

$4.00 $3.00

$3.32

$2.00

$1.00

$200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

$5.12 $4.47
Total

4,000,000

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

3,000,000

2,000,000 1.4

1.4

0.9 1,000,000

0.8

0.1

(1, 00 0,0 0 0) (2, 00 0,0 0 0)

200,000-499,999 SF

(1.1)

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

3.6
(0.1) Total

MSF

I-4 Corridor, FL

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

Amazon

1,086,384

Amazon

711,000

Amazon

561,750

Amazon

424,550

Bldg. Address 4401 Seaboard Rd.
8100 FL-33 9775 Air Commerce Pkwy.
1003 N. Taylor Rd.

City Orlando, FL Lakeland, FL Orlando, FL Seffner, FL

Lease Type Direct Lease Direct Lease Direct Lease Direct Lease

Big-Box Sales | Midyear 2020

Buyer

Bldg. Size (SF)

Innovative Industrial Properties

373,000

Nuveen Real Estate

440,000

Bobeck Real Estate

221,875

Tratt Properties

713,585

Bldg. Address 2324 W. Lake Dr.
8060 SR-33 N 5275 Drane Field Rd. 8201 Chancellor Dr.

City Wimauma, FL Lakeland, FL Lakeland, FL Orlando, FL

Sale Type Investment Investment Investment Investment

Sale Price (PSF) $95
$94 $68 $58

Historical Data

# of Bldgs.
2010 223

Existing Inventory
80,319,351

Vacant Vacancy Leasing

Net

Taking Cap

Under

Construction

Inventory Rate

Activity Absorption NNN Rent Rate Construction Completions

11,913,821 14.8% 2,173,885 (963,691) $3.77 8.0%

2011 223 80,319,351 10,306,921 12.8% 5,548,944 1,606,900 $3.85 7.5%

2012 223 80,319,351 8,399,395 10.5% 3,218,304 1,907,526 $3.55 8.3%

2013 223 80,319,351 8,812,113 11.0% 4,080,336 (412,718) $4.05 8.1% 2,403,245

2014 227 83,740,289 7,117,704 8.5% 5,519,321 5,115,347 $4.06 7.1% 703,920

3,420,938

2015 231 85,259,009 6,796,270 8.0% 3,705,197 1,840,154 $4.40 6.6% 2,935,004

1,518,720

2016 245 90,983,039 7,458,109 8.2% 7,155,677 5,062,191 $4.49 6.4% 4,021,654

5,724,030

2017 258 96,691,705 10,259,271 10.6% 11,264,467 2,907,504 $4.57 6.3% 5,170,880

5,708,666

2018 269 101,609,177 7,385,989 10.6% 8,559,250 7,851,210 $4.90 6.5% 8,900,279

4,917,472

2019 292 110,730,980 12,493,207 10.1% 7,859,867 4,014,585 $5.05 6.9% 6,688,456

9,121,803

1H 2020

301

114,838,873 13,816,585

12.7%

5,883,430 3,566,390

$5.09

7.0%

7,061,529

4,667,893

2020 MIDYEAR BIG-BOX REPORT

Indiana
Indianapolis

Indianapolis Industrial Market Strong Amid Pandemic

VIEW PROPERTIES

> Indianapolis' location affords access to nearly 43 million people within 250 miles. The city also has the advantage of being in a pro-business state with numerous tax and financial incentives. Indiana leads the nation in manufacturing job growth and boasts world class universities and research facilities. The state is home to the second largest automotive industry in the country, with history in the field dating back more than a century. The Indianapolis big-box market is on track to match or exceed the record high 8.4 MSF of net absorption reached in 2019 amidst the global pandemic. At midyear, 4.1 MSF of occupancy gains were recorded in this market.
> With increased demand from e-commerce occupiers, the size of bulk space continues to grow. Another 11.8 MSF of projects are under construction moving into the back half of 2020, as developers hope to capitalize on the central Indiana industrial market's momentum. Thirteen of those projects are larger than 500,000 SF. Despite the completion of 2.8 MSF of

speculative construction projects already this year, big-box vacancy dipped to 6.3% the lowest vacancy rate since 2012. With inventory surpassing 100 MSF, developers are expanding the boundaries of the Indianapolis MSA as they seek new greenfield opportunities for big-box development.
> The Indianapolis market is poised for continued growth in the coming quarters. Asking rents for big-box space remained stable at $3.88 PSF per year, and while this trend looks to continue in the coming quarters, big-box rents in the region will still remain more economical compared with nearby core markets. Asking rental rates are still increasing across all size tranches up 17.2% overall in the last 30 months.
> Investment activity has generally slowed for the U.S. industrial market, yet investors are seizing on this strong and active sector of the real estate market as capitalization rates are being compressed to record lows. Cap rates for the Indianapolis market stood at 5.6% at midyear.

Ind i anap o l i s , I N

BRIAN ZURAWSKI Executive Vice President & Co-Market Leader, Indianapolis
"The Indianapolis big-box industrial market remains very strong despite the global pandemic. Tenants continue to absorb space at record-high levels. Mid-year 2020 net absorption is almost double that of mid-year 2019 and new construction projects are also coming out of the ground at record levels. We expect big-box demand to grow due to the desire to increase domestic inventories, as well as to meet the surge in e-commerce demand. Indianapolis is well suited to accommodate this growth given its strong supply of speculative vacancies, central location, strong labor dynamics and favorable business climates."

Building Inventory

200,000 - 499,999 SF
117 Big-Box Buildings

6 Fully Vacant

500,000 - 749,999 SF
52 Big-Box Buildings

3 Fully Vacant

> 750,000 SF
35 Big-Box Buildings

1 Fully Vacant

Major Logistics Driver: Interstate System/Centrality
Indiana's reputation as the "Crossroads of America" is a moniker highlighted by the strength of the logistics and transit business through its roads and highways. The state is the national leader in pass-through highways, has the shortest distance in the nation to the median center of U.S. population, and is home to the second-largest FedEx air hub in the world. The state government has allocated more than $12 billion and continues to invest in construction and preservation of this key infrastructure. Logistics operations and developers look to Indiana's centrality, highway infrastructure, greenfield development opportunities and business-friendly environment as reasons to locate operations in the area.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

12.0% 10.0%
8 .0% 6.0% 4.0%

7.5% 5.2%

VaVcaacannccyyRaRtae te
10.1%

6.2%

6.3% 4.9%

2.0%

0.0% 200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

14,000,000

UndUendrerCCoonnsstrturcuticontion

12,000,000

10,000,000

8,000,000 6,000,000 4,000,000 2,000,000

3.5 2.1

5.8 2.9

3.9 3.1

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

7.0% 6.3%
Total
11.8 9.5
Total

MSF

PSF/YR

$4.10 $4.00 $3.90 $3.80 $3.70 $3.60 $3.50 $3.4 0 $3.30 $3.20

$3.98 $3.80

TaAkvienraggeNNNNNNRRenetnt

$3.64 $3.53

$3.75 $3.47

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

$3.88 $3.62
Total

4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000
500,000 -

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

2.1

1.3

1.2

0.9 0.7

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

4.1 2.2
Total

MSF

Ind i anap o l i s , I N

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

FedEx

955,844

Geodis Logistics

740,218

Stitch Fix

702,000

Amazon

660,312

Bldg. Address 1450 Collins Rd. 1801 Innovation Blvd. 3124 Plainfield Rd. 4412 W. 300 N

City Greenwood, IN Monrovia, IN Plainfield, IN Greenfield, IN

Lease Type Direct Lease Direct Lease Direct Lease Direct Lease

Big-Box Sales | Midyear 2020

Buyer

Bldg. Size (SF)

Granite REIT

622,440

MetLife Investment Management

338,520

Black Creek Group

690,702

Mainstreet

323,265

Bldg. Address 445 Airtech Pky. 9400 Bradford Rd. 1111 E. 56th St. 4635 W. 84th St.

City Plainfield, IN Plainfield, IN Brownsburg, IN Indianapolis, IN

Sale Type Investment Investment Investment Investment

Sale Price (PSF) $64
$62
$58 $53

Historical Data

# of Existing Bldgs. Inventory
2010 119 61,040,762

Vacant Vacancy Leasing

Net

Taking Cap

Under

Construction

Inventory Rate

Activity Absorption NNN Rent Rate Construction Completions

7,257,527 11.9% 3,289,528 923,431

$2.48 8.0% 1,049,980

486,624

2011 121 62,746,742 3,569,112 5.7% 4,277,694 5,395,797 $2.68 8.1%

1,705,980

2012 123 63,724,446 2,686,876 4.2% 4,398,979 1,859,940 $2.95 8.0% 2,787,558

977,704

2013 129 67,636,134 4,510,426 6.7% 7,679,871 2,088,138 $2.86 7.1% 2,657,271

3,911,688

2014 138 72,665,819 5,801,138 8.0% 5,041,144 3,738,973 $3.38 6.8% 4,155,250

5,029,685

2015 147 78,274,199 10,165,392 13.0% 5,478,249 1,211,196

$3.10 6.2% 1,735,569

5,608,380

2016 154 81,190,652 5,647,176 7.0% 9,149,081 6,632,522 $3.33 6.2% 5,578,939

2,916,453

2017 168 88,571,961 6,820,772 7.7% 6,777,995 6,256,160 $3.31 5.9% 4,174,405

7,384,431

2018 180 94,341,511 7,309,449 7.7% 7,267,201 5,320,503 $3.76 5.6% 7,343,610

5,810,230

2019 194 102,264,797 7,043,457 6.9% 11,644,722 8,382,389 $3.93 5.6% 10,930,987 8,231,245

1H 2020

204

106,018,837

6,682,205

6.3%

5,688,232 4,122,457

$3.88 5.6% 11,822,003

3,576,234

2020 MIDYEAR BIG-BOX REPORT

California
Inland Empire

Positive Absorption Pending Pandemic Panic

VIEW PROPERTIES

> The Inland Empire remains the largest big-box market in North America with more than 359 MSF of existing big-box space. Net absorption remained positive in the Inland Empire as the largest e-commerce companies have continued to expand despite weakening economic fundamentals.
> Combined port activity (Port of Los Angeles and Port of Long Beach) is down 12.5% overall for the first half of 2020, as compared with 2019 levels. Port activity has been slowly improving over the past few months, as supply chain disruptions are finally being addressed after the initial shock of COVID-19.
> Speculative development, which was initially put on hold by many developers at the start of the pandemic, has largely resumed as the inventory for very large buildings has become nonexistent. The Inland Empire added the second most amount of new big-box facilities in the U.S. YTD, with 10.3 MSF of new supply recorded at midyear. An additional 10.6 MSF remain under construction with projects for Uline and VF Corporation underway.

> While the market is seeing a rise in sublease space, as a whole this activity has been mostly prevalent for smaller buildings. Retailers remain the most at risk, with Pier 1's closing of a 990,000 SF distribution facility and may be the first of several larger vacancies to occur in the near future, although big-box overall vacancy is down to 3.1% in the area.
> State mandated lockdowns caused major disruptions at the start of the year, but economic prospects have improved as public health officials make strides in controlling the spread of the virus. The industrial outlook for the Inland Empire market remains optimistic, however, as e-commerce and third-party logistics companies continue to expand.

In l and E m p i r e , C A

MARK ZORN, SIOR Executive Vice President, Inland Empire
"2020 has seen significant disruptions in supply chains, underscoring the need for resiliency. Industrial users are putting increased efforts on building safety stock and not having a single source supplier. This means reducing the number of SKU's to cut costs, complexity and inventory, simplifying products to what is core to the consumer. These changes may last after the pandemic and consumer spending patterns may be forever altered. Larger, well capitalized companies are better able to adjust."

Building Inventory

200,000 - 499,999 SF

453 Big-Box Buildings

22 Fully Vacant

500,000 - 749,999 SF
138 Big-Box Buildings

8 Fully Vacant

> 750,000 SF
122 Big-Box Buildings

0 Fully Vacant

Major Logistics Driver: Twin Ports, Population, Trade
The Inland Empire is a vital link on the global supply chain, connecting the U.S. with the rest of the world via the twin ports of Los Angeles and Long Beach. These ports handle approximately 40% of all inbound cargo into the U.S. In addition, the Inland Empire is located within one of the most heavily populated regions of the U.S., serving as a vital distribution hub for growing e-commerce sales. The region also boasts access to two interstate highways (I-10 and I-15), offering direct transportation across the east and north U.S. In addition, the UPS Regional Air Hub at Ontario International Airport serves customers throughout the western U.S., Hawaii and Canada.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

7.0%
6.0% 4.9%
5.0% 4.0%
4.0%
3.0%

VaVcaacannccyyRaRteate
6.3%

2.8 %

3.8 %

2.0%

1.0%
0.0% 200,000-499,999 SF

0.0%

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

3.9% 3.1%
Total

18,000,000 16,000,000 14,000,000 12,000,000 10,000,000
8,000,000 6,000,000 4,000,000 2,000,000
-

UndUendrerCCoonnsstrturcuticontion

9.9

6 .4

4.6

3.1

2.9

0.6

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

16 .9 10.6
Total

MSF

PSF/YR

$8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00
$-

$6.48 $6.72

TaAkvienraggeNNNNNN RRenetnt

$5.88 $5.88

$6.24 $5.52

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

6.12 $6.12 Total

8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000
-

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

3.2 2.3
1.8

0.2

0.5

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

7.3
0.8 Total

MSF

In l and E m p i r e , C A

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

All Ways Forwading

1,106,124

XPO Logistics

912,338

Sam's West

753,230

Allied West Paper

611,968

Bldg. Address 1110 Merrill Ave. Patterson Logistics Center Knox Logistics Center 11101 Etiwanda Ave.

City Rialto, CA Perris, CA Perris, CA Fontana, CA

Lease Type Direct Lease Direct Lease Direct Lease Direct Lease

Big-Box Sales | Midyear 2020

Buyer

Bldg. Size (SF)

Bldg. Address

Nuveen Real Estate

200,000

9520 Santa Anita Ave.

TA Realty

1,012,995

6275 Lance Dr.

CoPart, Inc.

253,843

801 Opal Ave.

Perris Industrial

309,278

3407 Perris Blvd.

City Rancho Cucamonga, CA
Riverside, CA Mentone, CA
Perris, CA

Sale Type Investment Investment Investment Investment

Sale Price (PSF) $152
$127
$75
$70

Historical Data

# of Existing Bldgs. Inventory

Vacant Vacancy Leasing

Inventory Rate

Activity

Net

Taking Cap

Under

Construction

Absorption NNN Rent Rate Construction Completions

2010 464 210,254,000 16,736,218 8.0% 16,314,000 11,897,000 $3.36 6.8%

667,000

2011 467 213,200,000 11,512,800 5.4% 18,136,000 10,678,000 $3.60 6.2% 2,763,000 2,946,000

2012 494 227,645,000 10,319,500 4.5% 15,832,000 3,600,000 $3.72 5.7% 2,100,000 14,445,000

2013 530 249,632,000 12,205,000 4.9% 15,767,000 10,640,000 $3.96 5.2% 16,049,000 21,987,000

2014 551 263,974,000 14,888,134 5.6% 21,468,000 12,168,000 $4.32 5.4% 14,648,000 14,342,000

2015 588 267,612,000 14,986,272 5.6% 27,178,000 17,374,000 $4.56 5.2% 14,717,000 3,638,000

2016 584 284,593,000 15,083,429 5.3% 37,564,000 17,883,400 $4.80 5.0% 15,606,000 16,981,000

2017 609 298,844,000 16,021,701 5.0% 27,244,376 15,706,700 $4.92 4.8% 18,575,203 14,251,000

2018 646 320,088,000 15,628,786 4.8% 34,800,000 21,716,000 $5.23 4.5% 19,235,000 21,244,000

2019 681 339,372,700 13,499,900 4.0% 36,025,000 23,790,000 $5.69 4.3% 13,994,420 19,284,700

1H 2020

713

359,337,943 11,047,973

3.1%

19,382,000

772,400

$6.12 4.2% 10,624,000 10,344,000

2020 MIDYEAR BIG-BOX REPORT

Missouri
Kansas City

Industrial Continues to Perform Well, Despite COVID-19 Pandemic

VIEW PROPERTIES

> With nearly 47 MSF of big-box real estate, Kansas City is the smallest market showcased in this report. While the region is much smaller than the core markets, its logistics advantages provide a wealth of opportunity for both occupiers and developers. Kansas City's geography provides a level of access to consumers that is difficult to match in North America.
> The Kansas City industrial market remained active throughout the first half of 2020 despite the onset of the COVID-19 pandemic. By the end of the second quarter, the vacancy rate for big-box facilities decreased to 7.0%, down from 9.7% one year ago.
> Overall net absorption at midyear totaled 2.3 MSF, up over the 816,000 SF recorded for the first six months of 2019. Absorption totals are expected to increase in the second half of the year based on the timing of several new industrial buildings slated to be delivered in Q3 and Q4 2020.

> A total of 1.3 MSF of big-box space was delivered in this market at midyear and an additional 6 MSF remains under construction. The majority of space currently under construction is scheduled to be delivered by the end of the year. Construction activity is evident across every submarket within the Kansas City metro, with new logistics parks also planned for future development.
> Expect rates on bulk spaces to remain relatively stagnant, as landlords attempt to land new tenants to their industrial developments. Most recent construction has delivered vacant over the last year.
> The upcoming quarters are expected to experience additional demand and positive net absorption as the Kansas City market remains a benefactor because of its ideal geography, infrastructure and steady supply of speculative product, which caters to the needs and timing requirement of 3PL and e-commerce growth across the country.

K an s a s C i t y , MO

ED ELDER President, Kansas City
"The Kansas City market continues to be a thriving industrial market, as a result of its geographically- centralized location, superior infrastructure and businessfriendly foreign trade zone program. Four interstate systems converge upon Kansas City, allowing goods to be delivered to 85% of the nation's population within two days. As a result, multiple intermodal facilities and infrastructure continue to spur development activity within the market. Logistics parks throughout the Kansas City metro continue to see elevated levels of activity to cater to the growing demand for new distribution and warehouse space within our market."

Building Inventory

200,000 - 499,999 SF
78 Big-Box Buildings

3 Fully Vacant

500,000 - 749,999 SF
17 Big-Box Buildings

1 Fully Vacant

> 750,000 SF
11 Big-Box Buildings

0 Fully Vacant

Major Logistics Driver: Logistics Park Kansas City
Logistics Park Kansas City (LPKC) -- the new BNSF facility located in Edgerton -- encompasses 433 acres and has been designed to accommodate the growing demands of freight rail transportation in the Kansas City region. Approximately 1,300 acres of land is currently being developed by NorthPoint, adjacent to the BNSF facility. Since 2013, LPKC delivered more than 12 MSF of industrial product, with additional projects currently under construction. In total, the Kansas City metro area has delivered more than 43 MSF of industrial space since 2012 to cater to the need for modern distribution and warehouse supply chain space.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

14.0% 12.0% 10.0%
8 .0% 6.0% 4.0% 2.0% 0.0%

11.2% 6.2%
200,000-499,999 SF

VaVcaacannccyyRaRteate
13.2%

10.3%

9.7%

5.9%

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

10.4% 7.0%
Total

7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000
-

UndUnedrerCCoonnsstrturcuticontion

3.0 1.1

2.0 1.1

2.8 1.0

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

6 .0 5.0
Total

MSF

PSF/YR

$4.30 $4.25 $4.20 $4.15 $4.10 $4.05 $4.00 $3.95 $3.90 $3.85 $3.80 $3.75

$4.26 $4.22

TaAkvienraggeNNNNNNRRenetnt

$4.15 $4.09

$4.02 $3.95

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

$4.21 $4.11
Total

2,500,000

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

2,000,000
1.5 1,500,000

1,000,000 500,000 -

0.4

0.5

0.1

0.2

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

1.9 0.8
Total

MSF

K an s a s C i t y , MO

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

Chewy.com

796,000

FedEx Ground

548,560

Harte Hanks

298,000

Bldg. Address Southview Commerce
Northland Park Turner Logistics

City Belton, MO Kansas City, MO Kansas City, KS

Lease Type Build-to-suit Direct Lease Direct Lease

Historical Data

# of Existing Bldgs. Inventory

Vacant Vacancy Leasing

Inventory Rate

Activity

Net

Taking Cap

Under

Construction

Absorption NNN Rent Rate Construction Completions

2010 56 22,978,570 690,228 3.0%

826,146

541,754

$3.85 8.8%

2011 56 22,978,570 676,466 2.9% 1,435,309

13,762

$3.85

350,000

2012 57 23,328,570 414,695

1.8% 2,238,385

611,771

$3.71 7.7% 821,663

350,000

2013 58 24,150,233 1,034,054 4.3% 2,022,897 202,304

$4.11 6.9% 1,961,624

821,663

2014 66 27,246,879 2,045,991 7.5% 2,142,327 2,084,709 $4.05 7.0% 2,443,448 3,096,646

2015 70 29,293,448 1,445,305 4.9% 2,258,402 2,647,255 $4.14 7.6% 5,427,032 2,046,569

2016 83 35,558,261 4,723,137 13.3% 3,703,369 2,968,336 $4.24 6.3% 7,891,565

8,655,986

2017 87 39,014,106 4,643,562 11.9% 3,006,569 3,343,712 $4.25

3,535,661

4,959,713

2018 96 41,929,018 3,705,804 8.8% 5,251,423 3,672,198 $4.19 6.2% 6,202,004 3,681,233

2019 104 45,432,955 4,424,263 9.7% 1,994,639 3,968,271 $4.16

5,760,544

4,095,000

1H 2020

106

46,740,595 1,926,065

7.0%

1,994,937

1,926,065

$4.21

5,965,399

1,307,640

2020 MIDYEAR BIG-BOX REPORT

Tennessee
Memphis

Big-Box Development Momentum Remains Strong

VIEW PROPERTIES

> Over 400 acres of industrial developable land was purchased during the first half of 2020, proving that development momentum in the Memphis area remains strong. Construction of Class A inventory is under the leadership of eight developers.
> Third-party logistics firms and e-commerce leasing activity of big-box space remained strong with 3.1 MSF of new deals inked during the first half of 2020, and 3.8 MSF of renewals closed during the same time frame.
> A total of 7.8 MSF of big-box facilities were under construction at midyear, with the majority scheduled for delivery by year-end 2020. Buildto-suit construction leads the pack with 5.7 MSF under development, including e-commerce giant Amazon occupying 3.1 MSF by year-end.

> Proposed speculative development of 14 projects (10.9 MSF) will produce new product in the Desoto County and Marshall County submarkets, 7.6 MSF of which is expected to commence during Q3 2020. Associated Wholesale Grocers and Baxter also have future construction planned, totaling 1.9 MSF that is scheduled to deliver during the second half of 2021.
> Overall vacancy for big-box space measured 5.1%, compared to 4.5% one year ago. Vacancy should remain stable if speculative development leases prior to completion. Class A bulk rates remain healthy at $3.50-$3.60 per square foot NNN for year one rates.

Memphis, TN

TIM MASHBURN Principal, Memphis
"The first half of 2020 has seen the Memphis industrial market continue its run of robust speculative big-box growth. With current Class A vacancy at 3.9%, its lowest in decades, coupled with continued cap rate compression, big-box development has catapulted to just over 7.8 MSF under construction. With the continued velocity of users in the market and strong rate growth, the market will continue to drive investment and development activity into 2021."

Building Inventory

200,000 - 499,999 SF
94 Big-Box Buildings

2 Fully Vacant

500,000 - 749,999 SF
50 Big-Box Buildings

2 Fully Vacant

> 750,000 SF
58 Big-Box Buildings

1 Fully Vacant

Major Logistics Driver: Memphis International Airport
Memphis International Airport is recognized as one of the world's busiest air cargo airports. Due to its popularity among passengers (140,000 each month on average) and logistics professionals alike, the airport has an estimated annual economic impact of $23.3 billion and affects 25% of the city's jobs, according to the University of Memphis.
With its headquarters in Memphis, FedEx represents roughly 98% of the airport's total cargo and handles more than 180,000 packages every hour at its World Hub, which is located at the airport. Being near this hub is key for e-commerce distribution and will continue to draw occupiers to the region for the foreseeable future.
The International Port of Memphis is the second-largest inland port on the shallow draft portion of the Mississippi River and the fifth-largest inland port in the U.S. The Port is key to feeding product to Memphis' large rail network. In fact, Memphis is the third-largest rail center in the U.S. behind Chicago and St. Louis and home to nine fully operational rail yards, with a total current container capacity of more than two million annual lifts.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

VaVcaacannccyyRaRteate

8 .0% 6.9%
7.0% 5.9%
6.0%
5.0%

4.5%

6.0% 4.9%

4.0%

3.0%

2.0%

1.0%

0.7%

0.0% 200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000
-

UndUendrerCCoonnsstrturcuticontion

2.2 2.0

2.4 1.4

4.3 2.4

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

5.1% 4.5%
Total
7.8 7.0
Total

MSF

PSF/YR

$3.90 $3.80 $3.70 $3.60 $3.50 $3.4 0 $3.30 $3.20 $3.10

$3.80 $3.80

TaAkvienraggeNNNNNNRRenetnt

$3.65 $3.65

$3.50 $3.35

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

$3.70 $3.60
Total

3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000
500,000 -

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

1.0 0.7

1.1 0.9

1.4 0.5

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

3.1 2.4
Total

MSF

Memphis, TN

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

Bldg. Address

IG Design

892,640

Gateway Global Logistics Center, Bldg IX

Undisclosed

860,915

1615 Commerce Pky., Desoto55 Logistics Center, Bldg D

Baxter

850,000

I-269 Industrial Park

Technicolor

789,291

5215 Lamar Ave., Summit Distribution II

City Byhalia, TN Southaven, TN Hernando, TN Memphis, TN

Big-Box Sales | Midyear 2020

Buyer

Bldg. Size (SF)

CBRE Global Investors

815,050

Bldg. Address
I-22 Logistics Park, 8331 Frontage Rd.

CBRE Global Investors

1,015,740

Gateway Global Logistics Center, 291 Norfolk Southern Way

Granite REIT Holdings

1,663,296

Southaven Distribution Center, Bldg 1 & 2

Granite REIT Holdings

449,600

Southpoint Distribution Center, 4460 E. Holmes

City Olive Branch, MS
Byhalia, MS Southaven, MS Memphis, TN

Sale Type Investment Investment Investment Investment

Lease Type Direct Lease Direct Lease Build-to-suit
Renewal
Sale Price (PSF) $64 $53 $53 $50

Historical Data

2010

# of Bldgs.
141

Existing Inventory
77,046,572

Vacant Inventory
8,792,537

Vacancy Rate
11.4%

Leasing Activity
4,022,773

Net

Taking Cap

Under

Construction

Absorption NNN Rent Rate Construction Completions

444,183

$2.65 N/A

2011 142 77,902,450 7,229,816 9.3% 5,903,450 1,930,260 $2.85 8.6% 879,660

855,878

2012 144 78,782,110 7,556,842 9.6% 6,939,818 (270,974) $2.95 7.8% 2,453,040

234,600

2013 148 81,281,734 8,171,002 10.1% 3,688,176 1,452,596 $3.10 8.5% 2,322,206 1,369,892

2014 153 84,468,530 8,025,648 9.5% 4,734,192 1,448,854 $2.80 7.5% 3,807,052 2,075,842

2015 158 88,988,423 8,741,081 9.8% 7,112,905 2,560,710 $2.90 7.5% 1,506,113

2,413,241

2016 162 90,769,936 6,093,716 6.7% 8,904,440 2,036,493 $3.10 6.0% 3,734,920

1,781,513

2017 169 95,655,606 5,832,114 6.1% 5,842,702 2,741,927 $3.25 6.0% 4,893,984 2,831,630

2018 174 98,797,625 8,684,311 8.8% 4,728,783

59,945

$3.50 6.0% 3,081,340

3,142,480

2019 181 103,002,120 5,001,009 4.9% 6,956,015 2,351,123 $3.50 5.8% 6,991,584

1H 2020

191

108,426,789 5,544,922

5.1%

3,093,582

3,140,441

$3.70 5.3% 7,764,401

4,546,832

2020 MIDYEAR BIG-BOX REPORT

Northern
California

E-Commerce Continues to Fuel Demand in Northern California

VIEW PROPERTIES

> The Northern California market consists of three distinct areas: East Bay -- a mature market near the Port of Oakland, the Stockton/San Joaquin County area -- an area with fewer land constraints, and Sacramento -- an emerging big-box market.
> E-Commerce fueled demand for bulk product in the Northern California industrial market with Amazon remaining the dominant driver. Amazon has signed leases on more than 6 MSF of product in Northern California in the last nine months and have up to 15 more requirements pending. E-Commerce, last mile 3PL, food & beverage and home furnishing/improvements distribution-related companies are the major tenant classification for big-box product in this market.

> Nearly 8.9 MSF of big-box product is currently under construction throughout the Bay Area and Central Valley with leading developers including Prologis, Overton Moore Properties, Trammel Crow, Blackcreek, American Realty Advisors, Duke Realty, Bridge, Centerpoint and Dermody all have projects that have broken ground in Northern California.
> Nearly all big-box speculative developments were pre-leased prior to completion over the last four years, including projects for e-commerce furniture retailer, Wayfair, as well as Amazon, Medline, Tesla and UPS.
> The greater Northern California area big-box rents finished the first six months of the year at $5.49 PSF. Rents have remained relatively stable in most Northern California markets throughout the pandemic. Demand for larger scale space is still high and as a result rents remain higher for Class A new big-box product and remain steady in the area.

N o r t h e r n Ca l i f o r n i a

GREIG LAGOMARSINO, SIOR Executive Vice President, Oakland
"During the COVID-19 pandemic, consumers have relied heavily on the e-commerce delivery model to provide their home good needs during the shelter in place mandate. As a result, the greater Bay Area industrial market continues to benefit from strong demand from the e-commerce and food and beverage industries -- many of whom are servicing the local economy and strong businesses expanding their e-commerce platforms. Home improvement, food industries and technology are also major drivers for demand of industrial space in the region. The shift to an e-commerce delivery model continues to be the catalyst for the increasing demand of warehouse properties and the current high levels of construction.
With vacancy rates throughout the region in the low single-digit range, new speculative development is underway in virtually every submarket. Many new projects are being pre-leased prior to completion with other active requirements considering these state-of-the-art options. High costs of construction, relatively tight labor markets and rising land prices continue to put pressure on new development yields throughout the industrial market."

Building Inventory

200,000 - 499,999 SF
180 Big-Box Buildings

9 Fully Vacant

500,000 - 749,999 SF
45 Big-Box Buildings

2 Fully Vacant

> 750,000 SF
24 Big-Box Buildings

0 Fully Vacant

Major Logistics Driver: Port of Oakland
All commercial real estate sectors are expected to face continued headwinds as the unpredictable challenges of COVID-19 continue to unfold in the coming quarters. While all distribution markets will be impacted by COVID-19 to some degree, the Port of Oakland is well insulated due to its strength in the e-commerce and food and beverage industries. The greater Bay Area is home to the Port of Oakland -- a world-class international cargo transportation and distribution hub. Located on the mainland shore of San Francisco Bay, Oakland was among the first ports globally to specialize in the intermodal container operations that has revolutionized international trade and stimulated the global economy. It is situated near four major freeways and two transcontinental railroads.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

35.0% 30.0% 25.0% 20.0% 15.0% 10.0%
5.0% 0.0%

11.7% 10.2%
200,000-499,999 SF

VaVcaacannccyyRaRteate
32.4%

4.7%

1.9% 0.5%

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

15.3% 8.5%
Total

10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 -

UndUendrerCCoonnsstrturcuticontion

3.5 2.7

3.7 2.5

2.9 2.1

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

8.5 8.9 Total

MSF

PSF/YR

$7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00
$-

$5.49 $5.11

TaAkvienraggeNNNNNNRRenetnt
$6.48

$5.28

$4.08

$4.12

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

$5.35 $5.49 Total

4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000
5 00,000 -

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

2.3

1.0 1.1

1.2

0.9 0.4

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

3.8 3.1
Total

MSF

N o r t h e r n Ca l i f o r n i a

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

Confidential

851,200

Amazon

746,790

Home Depot

724,775

Amazon

707,820

Bldg. Address Promontory Pkwy., Bldg. 14
3493 N. Airport Way Hopkins Rd., Bldg. 19
2995 Atlas Rd.

City Tracy, CA Manteca, CA Tracy, CA Richmond, CA

Lease Type Build-to-suit Direct Lease Build-to-suit Direct Lease

Big-Box Sales | Midyear 2020

Buyer

Bldg. Size (SF)

Bentall Kennedy

612,300

Bcore Canal CA LLC

330,750

B9 Sapphire Icon Way Owner LLC

252,423

Blackstone

343,832

Bldg. Address 400 Longfellow Ct.
5191 Fermi Dr. 2121 Icon Way 11980 S. Harlan Rd.

City Livermore, CA Fairfield, CA Vacaville, CA
Lathrop, CA

Sale Type Investment Investment Investment Investment

Sale Price (PSF) $221 $125 $106 $103

Historical Data

# of Existing Bldgs. Inventory
2010 170 68,784,001

Vacant Vacancy Leasing

Inventory Rate

Activity

8,706,545 12.7% 3,512,862

Net

Taking Cap

Under

Construction

Absorption NNN Rent Rate Construction Completions

302,640

$4.74 5.6%

2011 171 69,989,276 7,507,925 10.7% 5,750,290 2,403,895 $4.20 5.4% 200,022

2012 173 70,531,829 7,262,915 10.3% 4,772,877 787,563

$4.49 5.2% 1,017,353

200,022

2013 174 72,039,278 7,987,237 11.1% 3,621,946 783,127

$4.29 4.5% 1,418,638

1,017,353

2014 178 73,707,916 7,219,271 9.8% 5,601,797 1,645,066 $4.57 4.1% 3,772,861

1,668,638

2015 184 76,810,658 4,783,860 6.2% 7,105,145 4,714,293 $5.02 5.9% 4,394,847

2,780,177

2016 192 81,370,780 4,306,708 5.3% 5,266,954 3,093,067 $4.44 4.4% 6,655,524 4,964,400

2017 206 88,533,773 6,527,131 7.4% 8,748,462 4,635,026 $4.73 4.0% 9,065,336 6,896,404

2018 227 98,054,852 7,376,820 7.5% 10,988,588 9,747,830 $5.26 4.1% 9,234,634

9,521,079

2019 240 101,766,270 9,879,284 9.7% 7,566,714 3,145,934 $7.84 3.7% 7,538,240 6,585,783

1H 2020

249

106,409,985

9,010,874

8.5%

5,815,386 3,789,094

$5.49

4.1% 8,877,419

2,950,910

2020 MIDYEAR BIG-BOX REPORT

Northern-Central
New Jersey

Industrial Market Unphased Amid COVID-19

VIEW PROPERTIES

> New Jersey's industrial market has been the silver lining for the local commercial real estate industry during the pandemic, as healthy demand for large blocks of space helped keep net absorption positive at 7 MSF.
> In addition, the first half of 2020 recorded 7 MSF of leasing activity, a 54% year-over-year increase. Major companies including Amazon, Geodis Logistics, Bed Bath & Beyond and Anixter International all committed to space in the first six months of the year.
> The improvement in transaction activity can be attributed to the increase of big-box transactions. Overall, there were 12 transactions greater than 200,000 SF during the first two quarters. This dynamic continued to chip away at what little space is available and at 1.8%, the vacancy rate improved 90 BPS since this time last year.

> Constrained availability has resulted in sustained average asking rent growth, which is up 10.6% year-over-year to $9.49 PSF. Big-box warehouse space between 200,000-499,999 SF had the largest increase year-over-year, up 133% to $10.06 PSF.
> Owners and developers continue to be active in response to strong market improvements, racing to break ground on new construction projects. Currently there are 17 buildings under construction totaling 9.0 MSF, while 10 buildings completed construction totaling 6.3 MSF of new product.

Northern-Central, NJ

NOAH R. BALANOFF, SIOR Executive Managing Director, Parsippany
"While headwinds were felt in the office and retail spaces, industrial market fundamentals continued to improve. In all probability, New Jersey's industrial market won't escape this economic downturn unscathed, but it will fair better than other property types during this period and the long-term outlook remains positive. Supply chain disruptions from the virus are anticipated to spur demand as retailers scramble to find additional space to store excess products. E-Commerce and logistics companies are increasing their space needs as consumers turn to online retailers during the pandemic. Stay at home orders have accelerated the use of online shopping and as such retailers with an online presence and logistics companies drove demand."

Building Inventory

200,000 - 499,999 SF
191 Big-Box Buildings

4 Fully Vacant

500,000 - 749,999 SF
45 Big-Box Buildings

1 Fully Vacant

> 750,000 SF
36 Big-Box Buildings

0 Fully Vacant

Major Logistics Driver: The Port of New York and New Jersey
Surrounded by more than 61 million people, within 250 miles of its core, the Northern/Central New Jersey market services the largest population concentration in the country. Because of its location and robust logistics advantages, occupier demand is strong within New Jersey's industrial market. The Northern/Central New Jersey market is home to the busiest seaport on the East Coast of the U.S. -- the Port of New York and New Jersey -- which remains one of the top demand drivers for industrial real estate in the region. The Port of New York & New Jersey's total cargo volume through April 2020 totaled 2.3 million TEUs, down 3.4% from the same period last year. Despite the lower volume, rail cargo continued to grow this year. YTD rail volume through April 2020 is up 6% from the same period last year to 233,260 total rail lifts. According to the American Association of Port Authorities, volumes through the U.S. ports are anticipated to fall up to 30% from last year amid the COVID-19 pandemic.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

VaVcaacannccyyRaRteate

6.0%

5.6%

5.0% 3.9%
4.0%

3.0%
2.1% 2.0%

2.6%

1.0% 0.2%
0.0% 200,000-499,999 SF

0.4%

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

2.7% 1.8 %
Total

10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 -

UndUendrerCCoonnsstrturcuticontion

3.1 3.3

1.3 1.1

4.6 2.9

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

9.0 7.2
Total

MSF

PSF/YR

$12.00 $10.00
$8.00

TaAkvienraggeNNNNNNRRenetnt

$10.06 $7.57

$9.87 $7.92

$7.58 $7.75

$6.00

$4.00

$2.00

$0.00

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

$9.49 $7.62
Total

8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000
-

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

1.7 2.0

2.2 1.3

3.8 0.7

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

7.0 4 .6
Total

MSF

Northern-Central, NJ

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

Amazon

953,595

Amazon

661,741

Geodis Logistics

611,320

U.S. Elogistic

570,777

Bldg. Address 343 Half Acre Rd. 429 Delancy St.
1 Costco Dr. 703 Bartley Chester Rd.

City Cranbury, NJ Newark, NJ Monroe, NJ Flanders, NJ

Lease Type Direct Lease Direct Lease
Renewal Direct Lease

Big-Box Sales | Midyear 2020

Buyer

Bldg. Size (SF)

Prologis

215,000

Bldg. Address 760 Port Carteret Dr.

Prologis

215,000

300 Middlesex Ave.

CalPers

926,392

50 Veronica Ave.

Prologis

235,000

1000 Port Carteret Dr.

City Carteret, NJ Carteret, NJ Somerset, NJ Carteret, NJ

Sale Type Investment Investment Investment Investment

Sale Price (PSF) $236 $177 $177 $169

Historical Data

# of Existing Bldgs. Inventory

Vacant Vacancy Leasing

Inventory Rate

Activity

2010 177 76,306,247 10,223,808 13.4% 8,997,079

Net

Taking Cap

Under

Construction

Absorption NNN Rent Rate Construction Completions

3,168,916 $4.62 8.3% 483,175

269,204

2011 179 76,789,422 6,875,435 9.0% 10,355,470 3,831,548 $4.09 6.9% 243,750

483,175

2012 181 77,259,272 4,481,869 5.8% 9,386,313 2,863,416 $4.56 5.1% 1,890,658

469,850

2013 184 78,812,822 4,157,431 5.3% 8,059,956 1,877,988 $4.94 6.5% 5,297,857 1,553,550

2014 198 85,907,606 6,826,835 7.9% 11,021,790 4,425,380 $4.65 7.5% 2,058,621 7,094,784

2015 202 87,650,838 6,655,480 7.6% 11,270,655 1,914,587 $5.02 N/A 3,006,520 1,743,232

2016 210 91,097,705 3,294,054 3.6% 12,891,551 6,808,293 $7.27 5.2% 8,617,360 2,785,637

2017 225 97,709,134 2,302,766 2.4% 11,115,522 7,602,717 $6.52 5.1% 17,484,505 6,611,429

2018 248 108,897,210 3,283,445 3.0% 13,025,351 10,207,397 $8.17 6.1% 8,530,807 11,188,076

2019 261 114,858,025 2,863,825 2.5% 18,777,298 6,380,435 $8.58 6.0% 14,497,627 6,463,770

1H 2020

272

121,228,159

2,211,498

1.8%

6,987,293 7,022,461

$9.49

N/A 9,041,135

6,268,665

2020 MIDYEAR BIG-BOX REPORT

Southern New Jersey
Eastern Pennsylvania

Accelerating Transaction Volume in Post-COVID-19 Environment

VIEW PROPERTIES

> The logistic advantages of the Southern New Jersey-Eastern Pennsylvania market continue to support demand in the area. Big-box activity accelerated in the area following a brief slowdown during the pandemic shutdown. This momentum will continue in the second half based on the volume of new requirements scheduled to close by year-end and large retailers continuing to expand in the region.
> New supply totaled nearly 5 MSF at midyear, much lower than deliveries recorded in previous quarters. Some developments were delayed by the stay in construction of non-essential projects, causing a decline in deliveries. A record-high level of projects remained under construction, totaling 21.7 MSF signaling that there is no end in sight of the amount of newly constructed product to hit the market in the coming quarters.
> Rents continued to increase with occupiers showing little sensitivity to pricing for new construction. Overall, big-box rents increased

7.4% over this time last year to $5.53 PSF a record for Southern New Jersey-Eastern Pennsylvania bulk space.
> New leasing activity was particularly strong in this region and totaled 17.4 MSF at midyear. To put it in perspective, 19.7 MSF was recorded for all of 2019, putting the Southern New JerseyEastern Pennsylvania on track to surpass last year's total by the third quarter. Amazon has been extremely active, particularly for new product along the I-95 corridor in Pennsylvania and Northern Delaware. However, activity is not limited to Amazon. Ten new leases were signed in excess of 500,000 SF including companies like Home Depot, Target and Geodis Logistics.
> Investment sales volume was very limited. The majority of sale activity during the first half of the year was multi-building portfolios in infill locations and value-add properties. Oak Street Real Estate Capital, Black Creek and NorthBridge Partners remain active in this area.

S o u t h e r n N J - Ea s t e r n P A

MARK CHUBB Senior Managing Director, Conshohocken
"COVID-19's impact on transaction volume has been relatively small in the Southern New JerseyEastern Pennsylvania region. Amazon has been extremely active, and other home improvement and mass merchandiser retailers, such as Target and Home Depot, signed deals for large format buildings.
There is a clear preference for new product, speculative or build-to-suit. Though occupier transactions are up, second or previous generation vacancies have increased. This was a preCOVID-19 trend resulting from volatility in the retail supply-chain occupiers. Deliveries and construction starts will increase in the second half of the year following a pause in construction during the shutdown of non-essential commercial construction during parts of the first and second quarters. Market-wide, construction activity is most prevalent in the 250,000 to 500,000 SF range.
An uptick in vacancy is expected as this year's speculative deliveries will be concentrated in the second half of 2020. However, the pipeline of requirements indicates a strong potential for a recordbreaking level of transactions."

Building Inventory

200,000 - 499,999 SF

313 Big-Box Buildings

24 Fully Vacant

500,000 - 749,999 SF
105 Big-Box Buildings

8 Fully Vacant

> 750,000 SF
118 Big-Box Buildings

5 Fully Vacant

Major Logistics Driver: Intermodal and Population Density
The Eastern Pennsylvania-Southern/New Jersey-Northern Delaware market is one of the most strategically located in the county.
The region is centrally located along the East Coast with access to four seaports: the Port of New York-New Jersey, the Port of Philadelphia-South Jersey, the Port of Wilmington (DE) and the Port of Baltimore. The region is served by two Class I railroads (CSX and Norfolk Southern) and five airports with major cargo handling capabilities.
A complex highway network including I-78, I-80, I-81, I-83 and I-95, in addition to the Pennsylvania Turnpike and multiple U.S. highways transverse the region. More than 58 million people are within 250 miles of the market core. Population access has made the I-95 corridor a strategic location for last-mile requirements and has increased developer interest in sites from New Jersey Turnpike (-95) Exit 7 in New Jersey to Northern Delaware.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

10.0% 9.0% 8 .0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%

9.4% 8 .0%
200,000-499,999 SF

VaVcaacannccyyRaRteate

8 .6% 5.6%

7.3% 5.5%

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

7.6% 7.5% Total

30,000,000

UndUendrerCCoonnsstrturcuticontion

25,000,000

20,000,000 15,000,000 10,000,000
5,000,000

5.6 6.1

3.4 3.7

14.9 11.9

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

23.9 21.7
Total

MSF

PSF/YR

$7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00
$-

$6.07 $5.30

TaAkvienraggeNNNNNN RRenetnt

$5.36 $4.76

$5.20 $4.32

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

$5.53 $4.79
Total

10,000,000

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

8,000,000
6.0 6,000,000

4,000,000

3.5

2,000,000

1.6

0.9

(2, 00 0,0 0 0)

(0.3)

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

9.2 3.3
Total

MSF

S o u t h e r n N J - Ea s t e r n P A

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

Target

1,105,000

Geodis

1,031,524

Home Depot

1,023,000

Amazon

1,008,867

Bldg. Address Logan North 951 Willowbrook Rd. 200 Technology Dr. 3563 Mountain Rd.

City Swedesboro, NJ Northampton, PA
Pittston, PA Hamburg, PA

Lease Type Build-to-suit Direct Lease Direct Lease Direct Lease

Big-Box Sales | Midyear 2020

Buyer

Bldg. Size (SF)

Black Creek Group

475,800

Bldg. Address 4200 Braden Blvd. East

Oak Street Real Estate Capital

1,295,000

50 Rausch Creek Rd.

City Easton, PA
Tremont, PA

Sale Type Investment
Investment

Sale Price (PSF) $131
$100

Historical Data

# of Existing Bldgs. Inventory

Vacant Vacancy Leasing

Inventory Rate

Activity

2010 359 167,732,675 16,871,028 10.1% 9,180,532

Net

Taking Cap

Under

Construction

Absorption NNN Rent Rate Construction Completions

5,725,750 $3.63

2,659,946

965,900

2011 364 171,415,821 12,680,855 7.4% 8,766,925 7,873,319 $4.01 8.1% 4,211,213

3,683,146

2012 372 177,487,547 16,468,857 9.3% 10,615,898 2,283,724 $4.04 8.4% 5,821,032

6,071,726

2013 382 183,237,013 11,618,980 6.3% 18,923,304 10,599,343 $4.08 7.6% 7,290,746 5,749,466

2014 399 191,769,917 5,732,069 3.0% 15,783,544 14,419,815 $4.15 6.7% 11,662,825 8,532,904

2015 423 204,878,145 9,322,221 4.6% 11,750,016 9,518,076 $5.04 5.9% 11,854,129 13,108,228

2016 457 226,000,578 10,596,569 4.7% 18,462,616 19,848,085 $5.06 5.9% 10,900,193 21,122,433

2017 480 242,134,858 12,951,839 5.3% 20,961,117 13,779,010 $5.11 5.7% 14,639,587 16,134,280

2018 502 258,683,045 16,859,616 6.5% 19,123,964 12,640,410 $5.22 5.5% 20,214,584 16,548,187

2019 528 279,788,729 24,793,741 8.9% 19,691,706 13,171,559 $5.42 4.9% 16,048,171 21,105,684

1H 2020

536

284,286,176 21,393,367

7.5%

17,375,522

9,197,596

$5.53 4.5% 21,728,013

4,497,447

2020 MIDYEAR BIG-BOX REPORT

Canada
Toronto

GTA Industrial Market Hold Firm Despite the Effects of COVID-19

VIEW PROPERTIES

> The Greater Toronto Area (GTA) market is the fifth-largest big-box market in North America. The region has become home to many e-commerce fulfillment/distribution centers for companies such as Amazon, Wayfair and IKEA, that are drawn to the region's vast transportation infrastructure.

> GTA's industrial big-box asking net rents have decreased for the first time since 2017. The decrease however was not dramatic, as rates went from $8.64 PSF in 2019 to $8.49 PSF at midyear. New supply outpaced demand at midyear as 5.6 MSF of big-box space was added to the market.

> Occupancy gains more than doubled in the GTA over 2019 and totaled 4 MSF in 2020. Companies like Amazon, Walmart and Goodfood continue to thrive in the current COVID-19 environment and have all made major announcements to expand their distribution channel in the GTA and across Canada.
> Amazon has almost doubled its GTA footprint in 2020 securing over 3 MSF in Southwestern Ontario. Walmart is investing $3.5 billion over the next five years, including a 550,000-SF distribution center in Vaughan. Goodfood will be adding a new 200,000-SF distribution center in Mississauga.

> E-Commerce sales have shown no signs of slowing down, even amidst the pandemic. E-Commerce sales made up 8.3% of total Canadian retail sales in May, compared to 3.1% one year ago.
> Many of Ontario's regions, including those in the GTA, have been able to move into stage 3 of the re-opening process. This will allow for the market to be better positioned for a potential bounce back in the second half of 2020.

Toronto, ON

COLIN ALVES, SIOR Executive Vice President, Sales Representative | Toronto West
"The GTA industrial market continues to post record fundamentals, led by expanding e-commerce footprints and new entrants into the market, retailers reshuffling their supply chains, 3PLs and the growing food and beverage sector. Trends indicate the average square footage of requirements are increasing, as demonstrated by a record number of transactions and requirements in excess of 400,000 SF. The remainder of 2020 will see a return to in-fill redevelopment in core GTA markets as market rents justify purchase prices."

Building Inventory

200,000 - 499,999 SF
529 Big-Box Buildings

1 Fully Vacant

500,000 - 749,999 SF
48 Big-Box Buildings

0 Fully Vacant

> 750,000 SF
52 Big-Box Buildings

0 Fully Vacant

Major Logistics Driver: CN and CP Intermodals, Toronto Pearson International Airport
GTA offers connectivity to two major railroads, the Canadian National Railway (CN) and the Canadian Pacific Railway (CP), with multiple intermodal yards located in Milton, Brampton, Caledon and Vaughan. Canada's largest and busiest airport, Toronto Pearson International Airport, is also centrally located to the GTA markets and processes more than 45% of Canada's air cargo.
Strong tenant demand for industrial space continues to support the growth of the GTA region. The GTA represents the largest population center in Canada and draws international attention as the market of choice for companies looking to expand into Canada. The e-commerce sector in general is a strong source of demand with continued transition of supply chains to support this increasingly important channel. As the largest industrial market in Canada, the GTA will continue to be a major driver for logistics within the country.

2020 MIDYEAR BIG-BOX REPORT

Key Statistics | Midyear 2019 and Midyear 2020

VaVcaacannccyyRaRteate

1.20% 1.00%

1.04%

0.80% 0.60%

0.60% 0.52%

0.40%

0.20%

0.00%

200,000-499,999 SF

0.17%

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

0.78% 0.39%
Total

14,000,000

UndUendrerCCoonnsstrturcuticontion

12,000,000

10,000,000

8,000,000 6,000,000 4,000,000

5.5 3.1

3.5

3.8 3.1

2,000,000 -

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

12.0 6 .9
Total

MSF

PSF/YR

$10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00

$8.64 $8.52

TaAkvienraggeNNNNNN RRenetnt

$8.00

$8.95

200,000-499,999 SF

500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

$8.64 $8.49 Total

4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000
5 00,000 -

OveOrvaelrlalNl Neett AAbbsosrpotriopntion

1.9 1.6 1.7

0.4 0.5 -

200,000-499,999 SF 500,000-749,999 SF

750,000+ SF

Midy ear 2019 Midy ear 2020

4.0 2.0
Total

MSF

Toronto, ON

Notable Transactions

Big-Box Leases | Midyear 2020

Tenant

Lease Size (SF)

Lindt & Sprungli Canada

457,448

Expeditors

379,427

Trillium Supply Chain

342,821

RPM Canada

272,767

Bldg. Address 7090 Kennedy Rd. 2450 Hogan Dr. 205 Speirs Giffen Ave. 200 Confederation Pky.

City Mississauga Mississauga
Caledon Vaughan

Lease Type Direct Lease Direct Lease Direct Lease Direct Lease

Big-Box Sales | Midyear 2020

Buyer

Bldg. Size (SF)

Orlando Park

369,471

Bldg. Address 5855 Terry Fox Way

Takol Steelton

231,405

2084 Steeles Ave. East

Dream REIT

240,776

1995 Markham Rd.

Dream Industrial

207,700

220 Water St.

City Mississauga Brampton
Toronto Whitby

Sale Type Investment Investment Investment Investment

Sale Price (PSF) $166 $138 $137 $85

Historical Data

# of Existing Bldgs. Inventory
2010 580 217,010,213

Vacant Vacancy Inventory Rate
13,040,032 6.0%

Leasing Activity
4,184,941

Net

Taking Cap

Under

Construction

Absorption NNN Rent Rate Construction Completions

1,547,702

2011 582 217,500,775 9,713,940 4.5% 2,332,668 3,816,654

2012 585 219,516,783 9,059,724 4.1% 2,354,973 2,670,224

6.5% 5,476,747

2,180,723

2013 590 222,203,834 8,870,051 4.0% 5,862,055 2,876,725

6.6% 3,769,675

1,386,011

2014 596 224,320,580 8,621,388 3.8% 3,826,678 2,365,409

6.8% 7,370,604

2,361,701

2015 600 226,162,325 4,360,858 1.9% 4,819,034 6,102,275

$5.78 6.6% 6,821,355

3,404,213

2016 603 227,352,258 6,433,892 2.8% 6,380,295 1,943,474 $6.01 6.0% 5,862,245 2,878,961

2017 607 230,617,779 3,767,339 1.6% 5,536,250 3,511,477 $6.36

1,934,408

5,354,212

2018 615 233,250,145 2,018,222 0.9% 10,557,390 5,280,123 $6.91

6,212,706

2,487,908

2019 622 236,425,420 2,703,211 1.1% 2,895,469 1,975,401 $8.64

6,915,991

604,295

2020 629 240,327,096 1,080,752 0.78% 1,905,659 4,037,659 $8.76

- 12,043,944 5,602,453

2020 MIDYEAR BIG-BOX REPORT

PRINCIPAL CONTACTS Amanda Ortiz National Director, Industrial Research | USA +1 847 698 8222 amanda.ortiz@colliers.com Pete Quinn, SIOR National Director, Industrial Services | USA +1 317 713 2107 pete.quinn@colliers.com Jack Rosenberg, SIOR National Director, Logistics and Transportation +1 847 698 8208 jack.rosenberg@colliers.com VIEW INTERACTIVE REPORT: www.colliers.com/BigBox1H2020
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