1 CBRE | 2015
Market Overview – Looking Back at 2014 & Now
NATIONAL INDUSTRIAL MARKETSource: CBRE Research / Econometric Advisors / Federal Reserve
BUSINESS INVENTORIES
ALL TIME HIGH OF$1.75 TRILLION
ALL TIME RECORD
AVAILABILITY RATES
Fall From Recessionary
Peak14.5% to 10.6%
IMPORTS
2.8%
INDUSTRIAL PRODUCTION INDEX
105.1HIGHEST
LEVEL EVER
2 CBRE | 2015
Market Overview – Looking Back at 2014 & Now
NATIONAL INDUSTRIAL MARKETSource: CBRE Research / Econometric Advisors / Federal Reserve
BUSINESS INVENTORIES
ALL TIME HIGH OF$1.75 TRILLION
ALL TIME RECORD
ALL TIME HIGH OF$1.82 TRILLION
ALL TIME RECORD
AVAILABILITY RATES
Fall From Recessionary
Peak14.5% to 10.6%
IMPORTS
2.8% 3.4%
INDUSTRIAL PRODUCTION INDEX
105.1 107.2HIGHEST
LEVEL EVERHIGHEST
LEVEL EVER21ST CONSECUTIVE QUARTER WITH AN
AVAILABILITY DECLINELOWEST SINCE Q3/2001
Fall From Recessionary
Peak14.5% to 9.6%
3 CBRE | 2015
Market Overview – Looking Back at 2014 & Now
NATIONAL INDUSTRIAL MARKETSource: CBRE Research / Econometric Advisors / Federal Reserve / US Census Bureau
FULL-YEAR RENT GROWTH
POSITIVE NET ABSORPTION
NET ABSORPTION
4.3%2015
Rent Growth
166.0Msquare feet
(vs. historical national average of 34M SF)
18TH
ConsecutiveQuarter
2014 FULLY RECOVERED
4 CBRE | 2015
Market Overview – Looking Back at 2014 & Now
NATIONAL INDUSTRIAL MARKETSource: CBRE Research / Econometric Advisors / Federal Reserve / US Census Bureau
FULL-YEAR RENT GROWTH
POSITIVE NET ABSORPTION
NET ABSORPTION
4.3%2015
Rent Growth
5.6%Forecasted for
2016
166.0Msquare feet
(vs. historical national average of 34M SF)
174.3Msquare feet
MOST SPACE ABSORBED DURING THE FIRST 3 QUARTERS OF A YEAR SINCE 2005
18TH
ConsecutiveQuarter
22ND
ConsecutiveQuarter
3rd Strongest Quarter of Absorption in the Current Cycle
2014 FULLY RECOVERED
2015 PASSING PREVIOUS PEAK
5 CBRE | 2015
Market Overview – 2015 Update
NATIONAL INDUSTRIAL MARKETSource: CBRE Econometric Advisors, Q3 2015
U.S. Industrial Supply and Demand
6 CBRE | 2015
Market Overview – Looking Back at 2014 & Now
DENVER INDUSTRIAL MARKETSource: CBRE Econometric Advisors
INVENTORY BY PRODUCT TYPE
MANUFACTURING
905 | 45.8M SF
WAREHOUSE | DISTRIBUTION
2,710 | 141.9M SF
FLEX | R&D718 | 34.0M SF
4,525 TOTAL229.0 M SF
7 CBRE | 2015
Market Overview – Looking Back at 2014 & Now
DENVER INDUSTRIAL MARKETSource: CBRE Econometric Advisors
2.5M SFUNDER CONSTRUCTION
2014 Q3: 2.08M SF
4.8%RECORD LOW
VACANCY RATE
18QUARTERS
POSITIVE ABSORPTION
FUNDAMENTALS
1,548,612PRE-LEASED
LEASE RATES UP
10.1%Q3/2014
$6.72/SF NNN
NET ABSORPTION
8 CBRE | 2015
Market Overview – Looking Back at 2014 & Now
DENVER INDUSTRIAL MARKETSource: CBRE Econometric Advisors
2.5M SFUNDER CONSTRUCTION
2014 Q3: 2.08M SF
NET ABSORPTION SIMILAR TO LAST YEAR
4.8%RECORD LOW
VACANCY RATE
18QUARTERS
POSITIVE ABSORPTION
FUNDAMENTALS
4.6%DECLINE IN VACANCY 1,548,612
PRE-LEASED
2.3M SFUNDER CONSTRUCTION
834,900PRE-LEASED
2015 YTD: 1.91M SF 22
QUARTERS
LEASE RATES UP
5.0%YEAR OVER YEAR
$7.05/SF NNN
10.1%Q3/2014
$6.72/SF NNN
NET ABSORPTION
STRAIGHT POSITIVEABSORPTION
9 CBRE | 2015
Market Overview – 2015 Update
DENVER INDUSTRIAL MARKETSource: CBRE Research
Vacancy Rate vs. Lease Rate(Chart from Q3 Denver)
10 CBRE | 2015
Market Overview - Looking Back at 2014 & Now
DENVER INDUSTRIAL MARKETSource: CBRE Research / Real Capital Analytics / US Census Bureau
Jobs added in Denver(YTD as of August 2015)
40,500
Single-family home starts: up 15.8% YTD
(August 2015)
5,851
DENVERor BUST
People moved to Denver in 201334,848
Denver Industrial Sales Volume (Rolling12 mo. total through Q1 2015)
$668.5 million
Denver Industrial Sales Volume (Rolling12 mo. total through Q3 2015)
$537.0 million
Jobs added in Denver(YTD as of October 2015)
44,100
Single-family home starts: up 14.0% YOY
(Q3 2015)
8,627
DENVERor BUST
People moved to Denver in 201430,630
11 CBRE | 2015
Market Overview - Looking Back at 2014 & Now
DENVER INDUSTRIAL MARKETSource: CBRE Research / Real Capital Analytics / US Census Bureau
ULI TOP MARKETS TO WATCH
DRIVER’S OF INDUSTRIAL ACTIVITY
0% 5% 10% 15% 20% 25% 30%
Materials MFG-Plastics
Building Materials & Construction MFG
Warehousing/Storage
E-Commerce and Wholesale…
Transportation/Distribution/Logistics
High Technology and Energy Related…
Industrial Drivers as a % of Leasing Activity
12 CBRE | 2015
MARKET FUNDAMENTALS REACH PRE-RECESSION LEVELSSource: CBRE Research
13 CBRE | 2015
THE ELEPHANT IN THE ROOMSource: CBRE ResearchDenver Marijuana Real Estate Characteristics
14 CBRE | 2015
CONSTRUCTION TIMELINESource: CBRE ResearchThe Progress of Commercial Construction in Denver
15 CBRE | 2015
CONTROLLED CONSTRUCTION KEY TO MARKET HEALTHSource: CBRE ResearchThe Progress of Commercial Construction in Denver
0% 1.0% 2.0% 3.0%
Industrial Construction as a % of Market
Seattle
Denver
Salt LakeCityMinneapolis
Chicago
Phoenix
Las Vegas
Dallas
16 CBRE | 2015
E-COMMERCE & TECHNOLOGYSource: CBRE ResearchFuture Driver
E-commerce has driven the mostdisruptive movement of our time,changing the supply chainlandscape forever - led by newconsumer behaviors.
-Adam Mullen, Head of Supply Chain Services
“
“
17 CBRE | 2015
E-COMMERCE & TECHNOLOGYSource: CBRE ResearchFuture Drivers
18 CBRE | 2015
OIL & GASSource: CBRE ResearchFuture Drivers
Denver’s industrial sector will not be negatively affected by low, volatile oil prices, as the industry represents a negligible share of leasing activity and occupied sf. Ft. The boost to consumption will
translate into increased demand for warehousing and logistics space. In fact, the Q2 2015 vacancy rate of 4.5% is down from 4.9% a year earlier. On the other hand, Northern Colorado’s industrial market will soften as oil production in the Denver-
Julesburg basin stalls.
19 CBRE | 2015
CAPITAL CANNOT LOCATE ENOUGH INDUSTRIAL PRODUCTSource: CBRE Investor Intentions SurveyCapital Markets
Imbalance in Investor Intentions vs. Actual Activity
20 CBRE | 2015
INDUSTRIAL CLASS A CAP RATESSource: CBRE ResearchCapital Markets
21 CBRE | 2015
WHERE ARE WE IN THE
CYCLE?
