INDUSTRIAL MARKET REPORTCHARLOTTE, NORTH CAROLINA

Q3 2014 | INDUSTRIAL

www.colliers.com/charlotte

MARKET INDICATORS

RELATIVE TO PRIOR QUARTER FORECAST

VACANCY

ABSORPTION

RENTAL RATE

CONSTRUCTION

Over 2.2 Million SF of Speculative Space Planned in Charlotte

CHARLOTTE INDUSTRIAL MARKET

> Intermodal expansion is driving logistics demand in addition to e-commerce growth

> In the most established submarkets landlords continue to have the ability to push rental rates

> Supply of free standing facilities available for purchases continues to dwindle

> Q3 2014 STATISTICS

132,576,280 SFTOTAL MARKET INVENTORY

5.61%OVERALL VACANCY RATE

4.69%WAREHOUSE VACANCY RATE

• Sealed Air Corp announced its plans to relocate its global headquarters to Charlotte, bringing more the 1,262 jobs. This is the largest Fortune 500 company to relocate to the Queen City. As a manufacture they are known for their brand Bubble Wrap. It has been rumored that Sealed Air Corp’s facility will be more than 300,000 SF and contain both office and research/development space.

• The Lakemont Industrial Portfolio which included a variety of distribution and light manufacturing buildings plus one, eight acre site for future development was sold to Invesco Real Estate. The portfolio totaled 890,873 SF was 100% leased and sold for $65.00 PSF.

• Cabarrus County will be home to North Carolina’s first Amazon distribution center, scheduled to open in the 4th quarter. The fulfillment center will be located in Silverman Group’s 444,500 SF facility and Amazon will occupy 222,500 SF.

• Prologis Inc. has jumped into the speculative arena with the announcement of a 205,081 SF industrial building in their existing West Pointe Business Park located at the intersection of I-485 and I-85.

• Pinpoint Warehousing Inc. a third party logistics company has leased 102,400 SF, formerly occupied by Shutterfly, at Shopton Ridge Industrial Park. In addition to this new lease, Shopton Ridge attracted two additional tenants and have recently leased a total of 176,000 SF.

Absorption Deliveries Vacancy %

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CLASS A BULK BUILDINGS - Lease rates derived from a representative set of newer tilt-up, concrete buildings averaging 250,000 SF with bulk ceiling height and standard dock door configuration.

CLASS B WAREHOUSES - Lease rates derived from a representative set of facilities from 50,000 SF to 150,000 SF with 20’+ clear height and a functional dock loading configuration.

COMPARISON OF LEASE RATES

Class A & B Existing Buildings

$4.05AVERAGECURRENT

RATE

$3.25AVERAGECURRENT

RATE

CHARLOTTE, NORTH CAROLINA INDUSTRIAL MARKET

BldgsTotal

InventorySq Ft

Direct VacantSq Ft

DirectVacancy

Rate

Sublease Vacant Sq Ft

Sublease Vacancy

Rate

Total Vacant Sq Ft

VacancyRate

Current

VacancyRate

Prior Qtr

Net AbsorptionCurrent Qtr

SF

Net Absorption

YTD SF

Net New Supply Current Qtr

SF

Net New Supply YTD SF

UnderConstruction

Sq Ft

AvgRentalRate

CENTRALWAREHOUSE 279 8,816,714 459,562 5.21% 0 0.00% 459,562 5.21% 5.65% 38,812 30,258 - - - $4.31FLEX 22 917,909 63,152 6.88% 0 0.00% 63,152 6.88% 8.38% 13,794 11,344 - - - $15.29Total 301 9,734,623 522,714 5.37% 0 0.00% 522,714 5.37% 5.91% 52,606 41,602 - $7.55

AIRPORT/WESTWAREHOUSE 243 12,565,813 582,706 4.64% 0 0.00% 582,706 4.64% 4.77% 16,513 189,260 - - - $3.84FLEX 46 1,797,321 126,105 7.02% 0 0.00% 126,105 7.02% 6.35% (12,047) (11,421) - - - $7.36Total 289 14,363,134 708,811 4.93% 0 0.00% 708,811 4.93% 4.97% 4,466 177,839 - - - $4.20

NORTHWAREHOUSE 194 16,083,326 565,905 3.52% 46,000 0.29% 611,905 3.80% 3.57% (38,245) 408,768 - 107,200 415,543 $4.66FLEX 93 3,776,495 370,655 9.81% 7,010 0.19% 377,665 10.00% 11.85% 69,723 32,273 - - - $8.93Total 287 19,859,821 936,560 4.72% 53,010 0.27% 989,570 4.98% 5.14% 31,478 441,041 - 107,200 415,543 $5.44

NORTHWESTWAREHOUSE 223 13,533,722 713,936 5.28% 0 0.00% 713,936 5.28% 5.60% 43,831 132,982 - - - $3.60FLEX 13 528,593 15,875 3.00% 0 0.00% 15,875 3.00% 2.86% (750) (750) - - - $0.00Total 236 14,062,315 729,811 5.19% 0 0.00% 729,811 5.19% 5.50% 43,081 132,232 - - - $3.60

EASTWAREHOUSE 503 19,918,089 772,937 3.88% 0 0.00% 772,937 3.88% 3.95% 14,569 6,527 - - - $4.11FLEX 99 3,788,921 381,908 10.08% 0 0.00% 381,908 10.08% 9.22% (32,653) 58,590 - - - $8.06Total 602 23,707,010 1,154,845 4.87% 0 0.00% 1,154,845 4.87% 4.80% (18,084) 65,117 - - - $4.70

SOUTHWAREHOUSE 683 44,029,765 2,231,568 5.07% 20,160 0.05% 2,251,728 5.11% 5.36% 211,554 394,575 108,800 249,342 310,960 $4.18FLEX 191 6,819,612 1,058,377 15.52% 26,652 0.39% 1,085,029 15.91% 17.84% 131,634 188,495 - - - $7.92Total 874 50,849,377 3,289,945 6.47% 46,812 0.09% 3,336,757 6.56% 7.04% 343,188 583,070 108,800 249,342 310,960 $5.04

CHARLOTTE TOTALWAREHOUSE 2,125 114,947,429 5,326,614 4.63% 66,160 0.06% 5,392,774 4.69% 4.85% 287,034 1,162,370 108,800 356,542 726,503 $4.11FLEX 464 17,628,851 2,016,072 11.44% 33,662 0.19% 2,049,734 11.63% 12.59% 169,701 278,531 - - - $8.53Total 2,589 132,576,280 7,342,686 5.54% 99,822 0.08% 7,442,508 5.61% 5.88% 456,735 1,440,901 108,800 356,542 726,503 $4.85

QUARTERLY COMPARISON AND TOTALSQ1-14 2,589 132,677,635 7,898,612 5.95% 314,412 0.2% 8,213,024 6.19% 6.44% 486,450 486,450 169,423 169,423 498,079 $4.84Q4-13 2,589 132,572,116 8,234,754 6.21% 426,577 0.3% 8,661,331 6.53% 7.65% 1,503,530 3,307,646 19,554 31,554 199,342 $4.76Q3-13 2,584 132,103,407 9,828,229 7.44% 342,577 0.3% 10,170,806 7.70% 8.22% 704,842 1,804,116 12,000 12,000 109,554 $4.82Q2-13 2,588 132,193,965 10,859,123 8.21% 320,800 0.2% 11,179,923 8.46% 9.10% 844,061 1,099,274 0 0 12,000 $4.82Q1-13 2,588 132,174,406 11,647,284 8.81% 376,700 0.3% 12,023,984 9.10% 8.50% 275,352 275,352 46,000 46,000 12,000 $4.60Q4-12 2,721 139,718,727 11,368,747 8.10% 437,923 0.3% 11,806,670 8.50% 9.00% 823,715 1,907,785 46,237 369,114 270,400 $4.75Q3-12 2,716 138,447,289 12,075,139 8.7% 639,914 0.5% 12,715,053 9.2% 9.7% 709,880 1,084,070 64,456 102,421 472,637 $4.65Q2-12 2,713 139,546,710 13,320,871 9.5% 727,169 0.5% 14,048,040 10.1% 9.7% (464,342) (157,144) 102,421 266,693 $4.65Q1-12 2,712 140,432,884 13,155,044 9.40% 654,649 0.50% 13,809,693 9.80% 10.00% 265,776 265,776 102,421 102,421 220,456 $4.60Q4-11 2,710 140,330,463 13,391,864 9.5% 581,184 0.40% 13,973,048 10.0% 9.9% (8,290) 2,017,623 14,900 51,220 258,421 $4.43Q3-11 2,709 140,315,563 13,351,718 9.5% 598,140 0.4% 13,653,964 9.9% 10.3% 937,898 2,108,235 36,320 36,320 29,900 $4.28Q2-11 2,708 140,279,243 14,224,496 10.1% 248,724 0.2% 14,473,220 10.3% 11.2% 1,192,949 1,170,337 - - 66,220 $4.27Q1-11 2,708 140,279,243 15,260,984 10.9% 405,185 0.3% 15,666,169 11.2% #REF! (22,612) (22,612) - - - $4.27

The data tracked is for Mecklenburg County. The data does not reflect the activity in the greater Charlotte Region.

P. 2 | COLLIERS INTERNATIONAL

RESEARCH & FORECAST REPORT | Q3 2014 | CHARLOTTE, NC

PROPERTY SUBMARKET BUYER SIZE (SF) $ / SF OR ACRE

INDUSTRIAL SALES

4265 Trailer Dr. Northeast XPEDX, LLC 156,239 $35.56

1100 Bond St. Northwest Polygal Inc. 102,600 $25.34

10800 Nations Ford Rd. Southeast Colonial Land 90,940 $24.19

2014 INDUSTRIAL LEASE & SALES TRANSACTIONS

PROPERTY SUBMARKET TENANT SIZE (SF)

WAREHOUSE/FLEX LEASES1942 Airport Road Southeast Charlotte Pipe and Foundry 160,000

4925 Sirona Drive Southwest Spears Manufacturing 52,000

11515 Vanstory Drive North Structural Integrity 37,280

1000 Bond Street Northwest Exel, Inc. 100,000

Huntersville Business Park North Play Power 16,700

Pinebrook Business Park Southwest ASG Security, Inc 12,545

The

137 Knob Hill - Colliers International represented Wallace Office Properties #3, LLC in the lease of 137 Knob Hill Road to Windecker Aircraft, Inc. Windecker Aircraft, Inc. will be utilizing the 20,000 square foot facility for assembly / light manufacturing purposes.

1000 Bond Street - Colliers International represented Exel, Inc in the lease of 1000 Bond Street. Exel leased 100,000 SF of space at Chemway Industrial Park.

Pine Brook Business Park- Colliers International represented ASG Security in the lease of 12,545 square feet with landlord Childress Klein. The facility will be used to service the Carolinas.

GATEWAY PHASE II- Southwest110,000 SFBreaking Ground 4th Quarter 2014

UNDER CONSTRUCTION

• Demand for Class A space has outstripped supply.

• Six buildings are currently under construction.

• Over 2.2 million SF of industrial speculative space planned.

INNERLOOP NORTH (2 BUILDINGS) - North415,541 SF4th Quarter 2014 Delivery

Bold text indicates Colliers International transaction

1942 Airport Road- Colliers International represented Monmouth Real Estate Investment Corporation in the lease of 1906 Airport Road to Charlotte Pipe and Foundry Company. The 160,000 square foot facility will be used to support Charlotte Pipe’s operation in Monroe, NC.

COMPANY TYPE PARK SIZE (SF) STATUS

COMPLETED & UNDER CONSTRUCTION BUILDINGS

Beacon Partners Bulk Distribution InnerLoop - North 415,541 Under Construction

Childress Klein Bulk Distribution Ridge Creek West 310,960 Under Construction

Trinity Partners Bulk Distribution 215 International Drive 277,235 Under Construction

Exeter Property Group Bulk Distribution Gateway Distribution Park 110,000 Proposed

Childress Klein Bulk Distribution Afton Ridge 360,000 Under Construction

The Silverman Group Bulk Distribution Concord Airport Park 550,000 Under Construction

EastGroup Flex Steele Creek Comm. Park 178,800 Under Construction

P. 3 | COLLIERS INTERNATIONAL

INDUSTRIAL MARKET REPORT | Q3 2014 | CHARLOTTE, NC

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www.colliers.com/marketname

UNITED STATES:

Charlotte Industrial Team

Greg Copps | SIOR Managing Partner

Lawrence Shaw | SIOR Managing Partner

Grant Miller Vice President | Industrial

Rob Speir Vice President | Industrial

Don Moss | SIOR | CCIM Vice President | Industrial

Justin Smith Associate | Industrial

Deven GriffinAssociate | Industrial

Adam RussVice President | Investment

301 S College Street | Suite 3350Charlotte, NC 28202

485 offices in 63 countries on 6 continents• $2.1 billion in annual revenue

• Over 1.46 billion square feet under management

• Over 15,800 professionals

Accelerating success.

This market report is a research document of Colliers International.

Information herein has been deemed reliable and no representation

is made as to the accuracy thereof. Colliers International-Charlotte,

Inc., and certain of its subsidiaries, is an independently owned and

operated business and a member firm of Colliers International

Property Consultants, an affiliation of independent companies with

over 485 offices throughout more than 63 countries worldwide.

PROPERTY NAMEADDRESS SUBMARKET TRANSACTION

VALUE RSF PRICE PER RSF

CAP RATE TENANCY BUYER

INVESTMENT SALES

3D Systems Southwest $9,700,000 198,400 $48.89 call SingleAmerican Realty

Capital

Shopton Ridge Southwest $6,800,000 152,000 $44.74 call SingleLiberty Property

Trust

Lakemont Portfolio Southwest $44,200,000 680,000 $65.00 call Multi Invesco

Perimeter Woods North $28,000,000 310,000 $90.32 call Multi Stockbridge

5130 Hovis Rd. Chemway $5,000,000 163,902 $30.51 call Single STAG Industrial

Bonded Logistics Northeast $4,100,000 101,591 $40.36 call Single STAG Industrial

Investment Highlights

The third quarter saw several notable transactions of both core Class A and Class B/C product. The Lakemont Portfolio transaction is the largest deal YTD and is indicative of the increasingly bullish institutional point of view toward Charlotte core industrial. At the other end of the spectrum, the 5130 Hovis Rd. trade in the Chemway submarket is indicative of investor sentiment towards older vintage product. Please contact Adam Russ at (704) 409-2901 to obtain cap rate information for any of these deals or to discuss whether now is a good time to be buying/selling Charlotte Industrial assets.

CLASS A683,522 SF

CLASS B3,288,246 SF

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CLASS C3,643,916 SF

3RD QUARTER 2014 | Vacant Space By Class 3RD QUARTER 2014 | Net Absorption by Submarket

Class A Class B Class C

INDUSTRIAL MARKET REPORT | Q3 2014 | CHARLOTTE, NC