INDUSTRIAL MARKET REPORTCHARLOTTE, NORTH CAROLINA

Q2 2014 | INDUSTRIAL

www.colliers.com/charlotte

MARKET INDICATORS

RELATIVE TO PRIOR QUARTER FORECAST

VACANCY

ABSORPTION

RENTAL RATE

CONSTRUCTION

Low Vacancy, High Development Leads to “Landlords Market”

CHARLOTTE INDUSTRIAL MARKET

> The demand to shorten delivery time of e-commerce products will continue to attract third party logistics to the southeast

> Single tenant free standing buildings under 100k SF are in high demand for purchase

> In 2014 landlords have had the ability to push warehouse and flex rents

> Q2 2014 STATISTICS

132,467,250 SFTOTAL MARKET INVENTORY

6.07%OVERALL VACANCY RATE

4.87%WAREHOUSE VACANCY RATE

• The Charlotte industrial market experienced modest net absorption in the 2nd quarter of 2014; the vacancy rate continues to hover at 6.07%.

• This quarter’s move-in activity was mostly dominated by tenants ranging between 40,000 – 60,000 SF with the largest lease being signed by 3D Systems for 200,978 SF at 700 Marine Drive.

• Since breaking ground in June 2013, Mississippi based developer East Group Properties has delivered one 70,000 SF build-to suit facility for German logistics company Kuehne & Nagel. Fast forward to the 2nd quarter of 2014 the developer has delivered two additional buildings bringing Steele Creek Commerce Park to 248,800 SF, the park is 59% leased.

Greater Charlotte Region

• Currently there is over 2 million SF of industrial development planned and under construction, the largest amount since the beginning of Charlotte’s industrial market recovery.

• The Cabarrus County, I-85 corridor, northeast of Mecklenburg County, has attracted industrial speculative building by offering incentive packages to local developers. The latest parks to break ground are Trinity Capital Advisors at International Business Park and Childress Klein at Afton Ridge.

Absorption Deliveries Vacancy %

Squa

re F

eet

0%

5%

10%

15%

20%

25%

(2,000,000)

(1,000,000)

0

1,000,000

2,000,000

3,000,000

4,000,000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

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 280 8,838,701 498,374 5.64% 0 0.00% 498,374 5.64% 5.53% (10,000) (8,554) - - - $4.20FLEX 22 917,909 76,946 8.38% 0 0.00% 76,946 8.38% 8.38% 0 (2,450) - - - $16.81Total 302 9,756,610 575,320 5.90% 0 0.00% 575,320 5.90% 5.79% (10,000) (11,004) - $7.39

AIRPORT/WESTWAREHOUSE 243 12,469,810 588,019 4.72% 0 0.00% 588,019 4.72% 5.90% 147,452 172,747 - - - $3.99FLEX 47 1,841,602 155,246 8.43% 0 0.00% 155,246 8.43% 8.28% (2,812) 626 - - - $8.65Total 290 14,311,412 743,265 5.19% 0 0.00% 743,265 5.19% 6.20% 144,640 173,373 - - - $4.69

NORTHWAREHOUSE 194 16,100,116 522,580 3.25% 46,000 0.29% 568,580 3.53% 4.39% 212,324 447,013 78,319 107,200 415,541 $4.76FLEX 94 3,782,275 439,288 11.61% 8,100 0.21% 447,388 11.83% 11.97% 5,417 (37,450) - - - $8.66Total 288 19,882,391 961,868 4.84% 54,100 0.27% 1,015,968 5.11% 5.83% 217,741 409,563 78,319 107,200 415,541 $5.54

NORTHWESTWAREHOUSE 222 13,505,475 776,702 5.75% 0 0.00% 776,702 5.75% 6.22% 62,945 89,151 - - - $4.00FLEX 13 528,593 15,125 2.86% 0 0.00% 15,125 2.86% 3.43% 3,000 0 - - - $5.96Total 235 14,034,068 791,827 5.64% 0 0.00% 791,827 5.64% 6.11% 65,945 89,151 - - - $4.01

EASTWAREHOUSE 503 19,933,562 788,256 3.95% 0 0.00% 788,256 3.95% 3.66% (58,653) (8,042) - - - $4.32FLEX 98 3,782,132 506,082 13.38% 0 0.00% 506,082 13.38% 13.71% 12,516 91,243 - - - $8.04Total 601 23,715,694 1,294,338 5.46% 0 0.00% 1,294,338 5.46% 5.26% (46,137) 83,201 - - - $4.89

SOUTHWAREHOUSE 683 43,929,738 2,349,622 5.35% 20,160 0.05% 2,369,782 5.39% 5.63% 105,483 183,021 - 140,542 108,800 $4.12FLEX 190 6,837,337 1,239,811 18.13% 9,852 0.14% 1,249,663 18.28% 18.57% 20,044 56,861 - - - $7.55Total 873 50,767,075 3,589,433 7.07% 30,012 0.06% 3,619,445 7.13% 7.38% 125,527 239,882 - 140,542 108,800 $4.87

CHARLOTTE TOTALWAREHOUSE 2,125 114,777,402 5,523,553 4.81% 66,160 0.06% 5,589,713 4.87% 5.21% 459,551 875,336 78,319 247,742 524,341 $4.23FLEX 464 17,689,848 2,432,498 13.75% 17,952 0.10% 2,450,450 13.85% 14.07% 38,165 108,830 - - - $8.36Total 2,589 132,467,250 7,956,051 6.01% 84,112 0.06% 8,040,163 6.07% 6.39% 497,716 984,166 78,319 247,742 524,341 $4.94

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 | Q2 2014 | CHARLOTTE, NC

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

INDUSTRIAL SALES

11001 Park Charlotte Southwest YG-1 59,542 $50

7295 West Winds Blvd. North Carolina Blue Skies Prop. 36,000 $81

1101 Carrier Dr. Central Discount Trophy & Co 37,600 $37

225 Mooresville Blvd. North Marrano Marc-Equity Corp. 51,200 $23

9900 Twin Lakes Pkwy. North PSI Control Solutions 33,690 $70

2014 INDUSTRIAL LEASE & SALES TRANSACTIONS

PROPERTY SUBMARKET TENANT SIZE (SF)

WAREHOUSE LEASES700 Marine Drive York 3D Systems 200,978

500 Linkwood Road York Casual Cushion Corporation 181,000

1000 Bond Street Airport Exel 102,657

Shopton Ridge 30-C Southwest Gift Services 40,000

5109 W WT Harris Blvd. Southwest RTS Leasing, LLC 33,418

The

3636 Taylorsville Highway- Colliers International represented the seller (Nandina Properties II, LLC) in the sale of a 168,631 SF facility to FlexSol Packaging. The building will be used for warehouse and distribution purposes.

225 Mooresville Blvd. - Colliers International represented both the purchaser (Reger Holdings LLC) and seller (Toyo Seal America Corporation) in the sale of a 51,200 SF facility in Mooresville, NC. Reger Holdings LLC purchased the building as an investment and has retained Colliers International for the leasing and management of the asset.

11001 Park Charlotte Road.- Colliers International represented the seller in the sale of Hart Park, located in the southwest submarket. The 59,542 SF building was bought by YG1 who manufacturers cutting tools.

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

UNDER CONSTRUCTION

• Demand for Class A space has outstripped supply.

• Five buildings are currently under construction.

• Over 2 million SF of industrial speculative space planned.

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

Bold text indicates Colliers International transaction

1872 & 2021 Old Mountain Road- Colliers International represented both the seller (Zimmer) and purchaser (Nandina Properties III & IV, LLC) with this transaction. The buildings were previously used for the manufacturing, warehouse and distribution of medical products.

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 Flex Afton Ridge 360,000 Under Construction

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

EastGroup Bulk Distribution Steele Creek Comm. Park 178,800 Under Construction

P. 3 | COLLIERS INTERNATIONAL

INDUSTRIAL MARKET REPORT | Q2 2014 | CHARLOTTE, NC

(100,000)

(50,000)

0

50,000

100,000

150,000

200,000

250,000

www.colliers.com/marketname

UNITED STATES:

Charlotte Industrial Team

Greg Copps | SIOR Managing Partner

Lawrence Shaw | SIOR Managing Partner

Grant Miller Vice President

Rob Speir Vice President

Don Moss | SIOR | CCIM Vice President

Justin Smith Industrial Specialist

Adam RussInvestment Services Group

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

Twin Lakes Distribution Center

Charlotte $25,500,000 346,500 $73.59 6.0% Single LaSalle

Tremont Industrial Park

Charlotte $10,000,000 43,780 $69.55 n/a MultiCarolina Capital In-vestment Partners

Hart Park Charlotte $2,975,000 56,320 $52.82 n/aMulti (Flex)

YG-1 Co Ltd; YG-1 America Inc

Sykes Industrial Building I & II

Charlotte $17,525,000 252,206 $69.49 n/a Multi Prologis

Ridge Creek III Charlotte $14,516,333 270,000 $53.76 7.0% SingleEastGroup Properties

Catawba Distribution Center

Fort Mill $18,000,000 478,000 $37.66 n/a MultiExeter Property

Group

Charlotte Business Park

Charlotte $10,525,000 387,745 $27.14 8.0% MultiEquity Industrial

Partners

Northcross Business Campus

Huntersville $7,950,000 80,000 $99.38 n/aMulti (Flex)

Stockbridge

Northwoods Business Center

Charlotte $12,600,000 206,321 $61.07 n/a SingleExeter Property

Group

Investment Highlights

The second quarter saw several notable transactions of both core Class A and Class B/C product. The Ridge Creek III transaction represents a modern Class A, 30’ clear, ESFR building trade in the premier submarket. At the other end of the spectrum, Charlotte Business Park in Chemway is indicative of investor sentiment towards older vintage product. The most significant trade of the quarter is the Sykes Industrial transaction, this marks the reentry of ProLogis to the Charlotte market, adding another national operator to the growing population of institutional owner’s of industrial properties.

CLASS A871,852 SF

CLASS B3,404,989 SF

EAST

NORT

HW

EST

NORT

H

CENT

RAL

AIRP

ORT

/WES

T

Squa

re F

eet

SOU

TH

CLASS C3,763,322 SF

2ND QUARTER 2014 | Vacant Space By Class 2ND QUARTER 2014 | Net Absorption by Submarket

Class A Class B Class C

Bold text indicates Colliers International transaction

INDUSTRIAL MARKET REPORT | Q2 2014 | CHARLOTTE, NC