INDUSTRIAL MARKET REPORT. San Antonio. 4th Quarter Q4 Market Trends 2017 by Xceligent, Inc. All Rights Reserved

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1 INDUSTRIAL MARKET REPORT San Antonio 4th Quarter 2016

2 Table of Contents/ Methodology of Tracked Set Xceligent is a leading provider of verified commercial real estate information which assists real estate professionals, appraisers, owners, investors and developers that make strategic decisions to lease, sell, buy and develop commercial properties. Table of Contents/Methodology of Tracked Set 2 Industrial Market Map 3 San Antonio Industrial Overview 4-5 Statistics by Market 6 Vacancy Rates & Asking Rents 7-8 Leasing & Absorption 9 New Construction 10 Industrial Advisory Board Members 11 Xceligent San Antonio Team 12 The San Antonio tracked set consists of an inventory of buildings considered to be competitive within the brokerage community. All buildings within the competitive tracked set have been reviewed and verified by members of the Advisory Boards for each market area. Inventory Warehouse/Distribution Flex/R&D Direct Vacant (sf) Net Absorption Sublease (sf) Total Available (sf) Total Vacant (sf) The total square feet of all existing single and multi tenant office buildings greater than 20,000 SF, excluding medical, government and owner occupied buildings. Bldg size ranges between 50, ,000 sf; can be subdivided; 18 + clear height; sprinklered; dock high loading; less than 5% office 30+% is finished office; less than 24' clear height; at least one dock/drive-in door. The total of the vacant square footage in a building that is being marketed by an agent representing the landlord. The net change in physically occupied space from quarter to quarter, expressed in square feet. Space that is offered for lease by a current tenant, or his agent, within a property. Whether the tenant is paying rent or not, the space is considered vacant only if it is unoccupied. All of the available leasable space within a building, whether it is occupied or vacant, for direct lease or sublease space. The total of all of the vacant square footage within a building, including both direct and sublease space. Weighted Average Rents The weighted average of all direct asking lease rates expressed as a full service/gross rental rate and weighted on total direct available square feet. Non-full service rates (such as NNN) have been grossed up to reflect a full service/gross rate. 2

3 Industrial Market Map 3

4 San Antonio Industrial Overview Overview According to the Texas Workforce Commission, Texas has added an estimated 210,800 seasonally adjusted jobs over the past year with the addition of 20,900 nonfarm jobs in November. The state has added jobs in 19 of the past 20 months. Texas seasonally adjusted unemployment rate decreased to 4.6 percent in November, down slightly from 4.7 percent in October. The unemployment rate in the San Antonio New Braunfels MSA has dropped 0.2 percentage points over the last 12 months from 3.7% in November 2015 to 3.5% in November The San Antonio industrial metro absorbed approximately 323,000 square feet (sf) during 4Q 2016 and almost 1.8 million sf year-to-date. Major occupiers of space included Steves and Sons, Alamo Brewery, Alamo Brokerage, Darryl Flood and OP Tech. Due to continued positive absorption, the overall vacancy rate decreased 0.6 percentage points to 8.3% in 4Q 2016 from 8.9% at the close of 4Q The South West market recorded the most absorption for 4Q 2016 with 134,444 sf absorbed. The North East market reflected the second largest absorption total with 134,009 sf of total absorption during 4Q The San Antonio industrial market delivered roughly 2.8 million square feet (msf) in 2016 and currently has approximately 1.3 msf under construction. # of Bldgs Inventory (sf) Total Available (sf) Total Vacant (sf) Total Vacancy Rate (%) Total Quarterly Net Absorption (sf) YTD Total Net Absorption (sf) Flex/R&D 212 7,823,905 1,047, , % 55, ,888 Warehouse - Distribution ,219,014 4,916,031 2,547, % 267,986 1,504,502 Overall ,042,919 5,963,949 3,140, % 323,602 1,692,390 # of Bldgs Inventory (sf) Sum of Direct Available (sf) Direct Vacant (sf) Direct Vacancy Rate (%) Direct Quarterly Net Absorption (sf) YTD Direct Net Absorption (sf) Flex/R&D 212 7,823, , , % 55, ,995 Warehouse - Distribution ,219,014 4,550,438 2,453, % 267,986 1,616,481 Overall ,042,919 5,537,667 3,043, % 323,602 1,809,476 # of Bldgs Inventory (sf) Available Sublease (sf) Sublease Vacant (sf) Sublease Vacancy Rate (%) Sublease Quarterly Absorption (sf) YTD Sublease Net Absoprtion (sf) Flex/R&D 212 7,823,905 60,689 2, % 0-5,107 Warehouse - Distribution ,219, ,593 94, % 0-111,979 Overall ,042, ,282 96, % 0-117,086 4

5 San Antonio Industrial Overview Historical Vacancy Rate & Net Absorption Absorption Vacancy 1,200,000 1,000, , , , , ,000 4Q Q Q Q Q % 8.0% 6.0% 4.0% 2.0% 0.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% Historical Vacancy Rates by Use Flex/R&D Warehouse - Distribution 4Q Q Q Q Q ,480,000 Historical Net Absorption by Use Flex/R&D Warehouse - Distribution 980, ,000-20,000 4Q Q Q Q Q

6 Statistics by Market # of Bldgs Inventory (sf) Total Vacant (sf) Sublease Vacant (sf) Vacancy Rate (%) Total Quarterly Absorption (sf) YTD Total Net Absorption (sf) Far North Central 2 26,586 2, % - -1,299 Flex/R&D 2 26,586 2, % - -1,299 Far North East 39 5,145, ,664 52, % 42, ,325 Flex/R&D , , % - 16,492 Warehouse - Distribution 27 4,645, ,904 52, % 42, ,833 Far West 3 345,382 31, % - - Flex/R&D 1 120, Warehouse - Distribution 2 225,182 31, % - - North Central 131 4,972, , % -20,783 23,259 Flex/R&D 84 2,480, , % 12,367 54,913 Warehouse - Distribution 47 2,492, , % -33,150-31,654 North East ,143,130 1,263,729 41, % 134,009 1,324,905 Flex/R&D 36 1,755, , % 20,768 28,156 Warehouse - Distribution ,387,427 1,149,610 41, % 113,241 1,296,749 North West 89 4,205, ,766 2, % -20, ,460 Flex/R&D 70 2,659, ,738 2, % 22,481 84,826 Warehouse - Distribution 19 1,546, , % -43,449 74,634 South East 5 566,033 99, % 54,400 54,400 Flex/R&D 1 25, Warehouse - Distribution 4 540,249 99, % 54,400 54,400 South West 35 6,404, , % 134,444-48,660 Flex/R&D 6 255,253 32, % - 4,800 Warehouse - Distribution 29 6,149, , % 134,444-53,460 Central Business District 3 233, Warehouse - Distribution 3 233, Overall ,042,919 3,140,624 96, % 323,602 1,692,390 6

7 Vacancy Rates & Asking Rents Vacancy Rate % Weighted Average Asking Rent (NNN) 4Q Q Q Q Q Q Q Q Q Q 2016 Far North Central 6.3% 6.3% % 11.2% $15.00 $15.00 $15.00 $15.00 $15.00 Flex/R&D 6.3% 6.3% % 11.2% $15.00 $15.00 $15.00 $15.00 $15.00 Warehouse - Distribution Far North East 9.4% 10.6% 6.9% 10.6% 13.8% $5.04 $4.89 $5.20 $5.01 $5.28 Flex/R&D 12.7% 12.7% 12.7% 8.8% 24.0% $6.76 $5.86 $6.76 $7.71 $7.12 Warehouse - Distribution 9.1% 10.4% 6.3% 10.8% 12.7% $4.80 $4.80 $4.80 $4.77 $4.90 Far West 9.1% 9.1% 9.1% 9.1% 9.1% $3.84 $3.84 $3.84 $3.84 $3.84 Flex/R&D Warehouse - Distribution 13.9% 13.9% 13.9% 13.9% 13.9% $3.84 $3.84 $3.84 $3.84 $3.84 North Central 6.1% 5.5% 5.6% 5.2% 5.8% $9.30 $10.26 $10.35 $9.37 $9.46 Flex/R&D 8.4% 8.2% 8.1% 6.5% 6.4% $9.75 $10.24 $10.30 $10.09 $10.53 Warehouse - Distribution 3.9% 3.0% 3.2% 3.8% 5.2% $8.25 $10.42 $10.60 $8.34 $8.08 North East 10.5% 10.4% 6.9% 7.1% 7.8% $5.07 $5.08 $4.92 $5.22 $5.30 Flex/R&D 8.4% 10.4% 9.2% 7.7% 6.5% $5.95 $6.07 $5.89 $8.38 $8.61 Warehouse - Distribution 10.8% 10.4% 6.7% 7.1% 8.0% $4.84 $4.88 $4.61 $4.52 $4.40 North West 11.9% 8.8% 7.7% 6.9% 7.1% $8.16 $8.46 $9.27 $8.31 $7.56 Flex/R&D 9.9% 8.8% 8.8% 7.5% 6.2% $10.90 $10.42 $11.26 $10.90 $9.80 Warehouse - Distribution 15.4% 8.8% 5.9% 5.9% 8.7% $5.03 $5.13 $5.47 $5.43 $5.58 South East 9.9% 9.9% 9.9% 9.9% 17.6% $5.00 $5.00 $5.00 $5.00 $5.00 Flex/R&D Warehouse - Distribution 10.5% 10.5% 10.5% 10.5% 18.4% $5.00 $5.00 $5.00 $5.00 $5.00 South West 4.8% 4.1% 7.3% 9.1% 7.0% $4.27 $4.66 $4.24 $4.18 $4.34 Flex/R&D 33.5% 33.7% 14.7% 12.8% 12.8% $10.00 $10.00 $12.00 $12.00 $12.00 Warehouse - Distribution 3.5% 2.8% 7.0% 8.9% 6.7% $3.67 $4.02 $3.74 $3.74 $3.88 Overall 8.9% 8.5% 6.9% 7.7% 8.3% $5.90 $5.91 $5.92 $5.88 $5.86 7

8 Vacancy Rates & Asking Rents Vacancy Rate by Market 17.6% 11.2% 13.8% 5.8% 7.1% 7.8% 7.0% North Central North West Far North Central North East Far North East South West South East Weighted Average Asking Rent by Market (NNN) $15.00 $9.46 $7.56 $5.30 $5.28 $4.34 $5.00 $3.84 North Central North West Far North Central North East Far North East South West South East Far West $20.00 $15.00 $10.00 $5.00 Asking Rent Range by Type (NNN) $15.79 $9.50 $4.75 $13.00 $4.85 $3.50 $- Flex/R&D Warehouse - Distribution 8

9 Leasing & Absorption Property Name Occupied or Vacated (sf) Largest Absorption Changes Tenant Name Submarket Specific Use 711 Davy Crockett Rd 96,044 Steves and Sons South West Warehouse - Distribution Cornerstone Industrial 54,400 Alamo Brewery North East Warehouse - Distribution Cornerstone Industrial Park Bldg 3 46,688 Alamo Brokerage North East Warehouse - Distribution Tri-County Business Park 5 42,500 Undisclosed Far North East Warehouse - Distribution Cornerstone Industrial 40,800 Darryl Flood North East Warehouse - Distribution 913 Billy Mitchell Blvd 38,400 OP Tech South West Warehouse - Distribution Rittiman West Bldg 6-10,800 CFI Express North East Warehouse - Distribution 5823 Rittiman Plz -14,422 Scott's Lawn Service North East Flex/R&D Pan Am Distribution Center Bldg 3-16,800 Alamo Brokerage North East Warehouse - Distribution Bulverde Business Park Bldg II -35,700 Ferguson Plumbing North Central Warehouse - Distribution Alamo Downs Distribution Center I -50,372 Chalk Mountain North West Warehouse - Distribution Top Transactions Property Name Sale Price Sold (sf) Buyer Seller Submarket Specific Use 5300 SE Loop 410 $2,500,000 17,229 LBL 5300 LLC CLN/WWMK LP South East Warehouse - Distribution Iota Dr $1,047,500 8, Iota Drive LLC Graham Byrne Ltd North East Light Industrial Western Oak Dr $975,000 12,200 Kuykendall Investments LP GL Wade Property Ltd Far North West Flex/R&D Roadrunner Charters Inc $798,340 4,900 Ronald A Wills Fay Moody Spousal Trust South East Light Industrial 304 E Basse Rd $750,000 7,803 Quarry Heights Villas Ltd Alamo Garden Inc North Central Light Industrial 5227 Sinclair Rd $607,210 2,510 Guillermo T Reynoso Kenneth Wade Whiteley South East Light Industrial 9

10 New Construction 700,000 Current Construction by Market 647, , , , , , , , , ,000 - Far North East New Braunfels North East North West 10

11 Industrial Advisory Board Members San Antonio Research Cavender & Hill Properties, Inc. Joe Carroll CBRE Pedro Nino CBRE Rob Burlingame Endura Advisory Group Deborah Hester Endura Advisory Group Charlie Hargis Oldham Goodwin Group Raelin Fontenot REOC San Antonio Kim Gately REOC San Antonio Margaret Genzer Peloton Commercial Real Estate Omar Nasser Transwestern Yesenia Dominguez Prologis Eddie Gonzalez Providence Commercial Real Estate Services Dan Gostylo Steam Realty Partners Jason Schnittger Kevin Cosgrove Turcotte Real Estate Services John Greg Turcotte HPI Jordan Walker 11

12 Xceligent San Antonio Team This information has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy. For more information, please contact : Elisabeth Niles Director of Analytics (830) eniles@xceligent.com Doug Swanson Sales Executive (210) dswanson@xceligent.com Brad Hauser Regional VP Analytics West Region (281) bhauser@xceligent.com Chris Summers Regional VP Sales Texas (214) csummers@xceligent.com 12