11.0% 10.5% 10.0% 9.5% 9.0% 8.5% 8.0% $4.00 $3.75 $3.50 $3.25 $3.00 $2.75 $2.50 $2.25 $2.00

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1 TRENDS: Q UPSTATE, SOUTH CAROLINA INDUSTRIAL MARKET REPORT LOCAL UPSTATE ECONOMY Population: 1,375,759 Population Change: 27% increase since 1990 Labor Force: 632,670 Unemployed: 50,696 Unemployment : 8.0% (8.2% National) Source: SC Dept. of Employment & Workforce & ESRI Business Analyst INDUSTRIAL MARKET OVERVIEW BY: Grice Hunt Industrial Division GROWTH IN THE INDUSTRIAL SECTOR AND LACK OF AVAILABILITY The largest challenge facing the Greenville/Spartanburg industrial market is the lack of quality industrial buildings. So how did we get from the worst recession in recent memory to a shortage of available industrial space? With the recession and the 2012 election behind us, business has returned to a more stable condition and continues to improve. The effects of the recession were felt in the Greenville/Spartanburg market much like the rest of the country with higher than normal vacancy, lack of activity, depressed rates, and so forth. However, the past few years have portrayed a much different market than what was experienced in the recession years. INDUSTRIAL MARKET TRENDS Vacancy Construction Asking Rents Q INDUSTRIAL SECTOR Number of Buildings...4,190 Market Size...183,810,520 Overall Vacancy Space...15,411, % Direct Vacancy...14,784,535 Sublease Vacancy...626, ,806,391 Asking Rental ($/SF/YR)...$ % 10.5% 10.0% 9.5% 9.0% 8.5% 8.0% Year End Vacancy 8.4% Companies planning for expansion and growth in the recession years that ultimately survived the tough years have recovered to the point of near normal business. In the past few years the companies planning expansion and growth were able to implement their plans although they were delayed several years. This delay in growth was a market wide occurrence experienced by a number of various industries resulting in pent up demand. The companies that were waiting to expand took advantage of the symptoms of a recovering market, depressed rates and high vacancy levels to expand or enter the market at historically low rates. article continued on next page $4.00 $3.75 $3.50 $3.25 $3.00 $2.75 $2.50 $2.25 $2.00 Asking Rental Year End $2.87 Upstate Market 1-2 / Submarkets 3-4 / Activity 5 / News 6-7 / Industrial Division 8 / About Us 9 / Resources 10

2 UPSTATE INDUSTRIAL MARKET OVERVIEW One of the most common conversations I have with prospective clients is clarification of the current status of the industrial market. Companies either think that they are going to find distressed owners with a quality building willing to cut a below market deal or think there are plenty of buildings to choose from. This may have been true a few years ago but the market has changed drastically. For example, a vacant 100,000 SF A Warehouse simply does not exist in the Upstate SC market. To that point there are not any available A facilities of any size in the market. What does this mean? 1) The Greenville/Spartanburg market will lose opportunities to attract companies that need to be in existing building and 2) some form of industrial development is imminent. So why are there no buildings coming out of the ground? The answer is difficulty in the justification of lease rates for new construction. Justifying lease rates for speculative construction is difficult especially since the market has seen very few lease ups of spec buildings. Build to suit may be the answer to bridging the gap between lease rates for existing buildings, which have been increasing with limited availability, and justifying rates for new construction. The market is likely to go one of two directions, either growth will completely stop which is very unlikely if not impossible, or tenants will adapt to paying lease rates for new construction. Many investors who are looking to take advantage of current market conditions are evaluating or holding land positions for build to suit projects while more aggressive investors are assessing sites for possible spec buildings. The upstate of SC is positioned well for dynamic growth in the coming years. Local and International companies with manufacturing operations in the upstate have continued to announce expansions and growth in our area which is a testament to the community and the business climate of the Greenville/ Spartanburg market as well as other major factors essential for attracting business from the state level down to the local economic development allies. In past few years companies with offshore manufacturing operations have been re-evaluating these locations due to logistics cost, stable labor and government, product quality etc. The result is consideration of more onshore or near shore operations either locating operations closer to suppliers or the end customer. Recent announcements by both the SC Ports Authority and the Greenville Spartanburg International Airport should help bolster the opportunity for continued growth of the market. The benefit of the SC Ports Authority s inland port in Greer is twofold. It will help retain existing companies that utilize the port s services and secondly it will be an added benefit to any company anticipating use of the port services. The recent decision of the Greenville Spartanburg International Airport to begin development of some of its land holdings through ground leases opens up enormous opportunity for further development of major companies currently in the upstate or the ability to attract another significant manufacturing operation. The market has come a long way in the past several years and has reached a critical point with lack of current building availability. As existing companies expand and new companies locate in the upstate of SC their local suppliers will most likely require expansions to support the growth of manufacturing. As 2013 progresses there will most likely be a combination of solutions to the lack of inventory either by public private partnerships, speculative construction or build to suit projects. The Greenville/Spartanburg market has a lot of momentum in the industrial sector and we expect that growth to continue to become stronger. Grice Hunt grice@naief.com

3 UPSTATE INDUSTRIAL SUBMARKET DATA For data on additional counties and submarkets please send a request to: marketing@naiearlefurman.com ANDERSON COUNTY GREENVILLE COUNTY All es ,174, ,300 $2.84 A 7 423, (26,830) $3.74 B 110 6,724, ,530 $2.83 C ,180, (22,706) $2.52 All es 1,885 72,596, (322,163) 2.97 A 21 1,766, B ,415, , C 1,273 37,456, , SPARTANBURG COUNTY 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% $4.00 $3.75 $3.50 $3.25 $3.00 $2.75 $2.50 $2.25 $ % 11.5% 11.0% 10.5% 10.0% 9.5% 9.0% $4.00 $3.75 $3.50 $3.25 $3.00 $2.75 $2.50 $2.25 $2.00 Asking Rental Asking Rental All es 1,398 72,100, ,321, A 25 6,219, ,055, B ,863, , C ,254, , % 8.5% 8.0% 7.5% 7.0% 6.5% 6.0% $4.00 $3.75 $3.50 $3.25 $3.00 $2.75 $2.50 $2.25 $2.00 Asking Rental 3

4 UPSTATE FLEX SUBMARKET DATA For data on additional counties and submarkets please send a request to: marketing@naiearlefurman.com ANDERSON COUNTY FLEX GREENVILLE COUNTY FLEX All es , ,050 $6.38 B , ,500 $6.59 C , (450) $6.00 All es 451 7,174, (17,571) 7.03 A 4 881, , B 145 2,958, (8,792) 7.24 C 302 3,334, (12,779) % 8.5% 8.0% 7.5% 7.0% 6.5% 6.0% $7.00 $6.75 $6.50 $6.25 $6.00 $5.75 $5.50 $5.25 $ % 26.5% 26.0% 25.5% 25.0% 24.5% 24.0% $8.00 $7.75 $7.50 $7.25 $7.00 $6.75 $6.50 $6.25 $6.00 Asking Rental Asking Rental SPARTANBURG COUNTY FLEX All es , , B , , C , (2,500) % 20.5% 20.0% 19.5% 19.0% 18.5% 18.0% $7.00 $6.75 $6.50 $6.25 $6.00 $5.75 $5.50 $5.25 $5.00 Asking Rental 4

5 UPSTATE INDUSTRIAL ACTIVITY RECENT DELIVERIES Amazon Distribution Facility Address: 400 John Dodd Road, Spartanburg SF: 1,015,740 : A % Occupied: 100% Completed: Q4 Dollars per SF $70 $60 $50 $40 $30 $20 $10 $0 U.S. PRICE/SF COMPARISON BASED ON INDUSTRIAL BUILDING SALES OF 15,000 SF & LARGER U.S. CAP RATE COMPARISON BASED ON INDUSTRIAL BUILDING SALES OF 15,000 SF & LARGER Greenville/Spartanburg United States Greenville/Spartanburg United States 16.0% Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q Cap Percentage 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 12.0% 10.0% U.S. VACANCY COMPARISON Greenville/Spartanburg United States EXISTING INVENTORY COMPARISON BASED ON TOTAL RBA BY BUILDING TYPE BY TENANCY TYPE Vacancy 8.0% 6.0% 4.0% 5% Flex 33% Multi Tenancy 2.0% 0.0% Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 95% Warehouse 67% Single Tenancy Graph Source: CoStar Property SAMPLING OF TOP LEASE TRANSACTIONS Tenant: Size : Submarket: Address/Building Sunbelt Warehouse Corp. Contec Inc. Southern Cotton Higher Source Aviation Rockwell Medical Technologies Speedway Packaging 195, , , ,847 57,000 54,980 Spartanburg Spartanburg Greenville Greenville Greenville Greenville SAMPLING OF TOP SALE TRANSACTIONS Gilliam Road *NAI Earle Furman transaction 5670 North Blackstock Road *NAI Earle Furman transaction 2425 Rutherford Road (renewal) *NAI Earle Furman transaction 46 Beechtree Blvd. 604 High Tech Court (renewal) Greenville Distribution Center (renewal) *NAI Earle Furman transaction Buyer: Size : Submarket: Address/Building Price Cole Corporate Income Trust 1,015,740 Spartanburg 400 John Dodd Road $60,748,659 *NAI Earle Furman Transaction 25

6 UPSTATE IN THE NEWS AMAZON CENTER IN SPARTANBURG SOLD FOR $63 MILLION By Dick Hughes Updated January 7, 2013 Spartanburg Journal Ownership of the 1-million-square-foot distribution center that Amazon leases in Spartanburg has changed hands. Cole Corporate Income Trust, a real estate investment trust based in Phoenix, Ariz., acquired the building Dec. 17 for $63 million from Tango SC LLC, which is registered in South Carolina as a Texas company. According to a filing with the Securities and Exchange Commission by Cole, it has an agreement to lease the distribution center to Amazon through Sept. 30, 2027, with renewal options of four and five years. The current base rent is $3.4 million annually. In January 2012, Amazon announced plans to invest $50 million in the distribution center on John Rodd Road near I-26. The county granted the online retailer a property tax break in the form of a 6 percent in-lieu payment. Construction started immediately, and the first shipments left the center in September. It was anticipated that Amazon would have a workforce of around 400 but many more in peak buying seasons. The Spartanburg facility is one of the largest distribution centers in the county after Adidas expanded 2.4-millionsquare-foot center. In 2011, Amazon opened a larger order fulfillment center in Lexington County, where it employs approximately 2,000. Cole Corporate said it acquired the Spartanburg facility under a Delawareregistered subsidiary, Cole ID Spartanburg SC LLC. Cole held 12 wholly owned corporate and industrial properties in eight states as of Dec. 21. The total includes the Spartanburg property and three others acquired last month. The company said in a prospectus that it has no plan for any renovations, improvements or development of the recently acquired properties. 6

7 UPSTATE IN THE NEWS MICHELIN PLANS EXPANSION OF ANDERSON COUNTY PLANT Staff Writer Published July 24, 2013 GoUpstate.com Greenville-based tiremaker Michelin North America announced Thursday it will invest $200 million to expand its Anderson County rubber production operation and create 100 new jobs. The company said it will grow its facility in Starr in order to keep up with increasing demand for tires of every kind and size. Last April, Michelin announced expansion plans and committed to invest $750 million and create 500 new jobs in Anderson and Lexington counties. In the last 21 months, the company has committed to invest a total of $1.15 billion and create at least 870 new jobs in the state. Construction has begun on the Starr plant expansion, which will be adjacent to the current facility. The expansion is expected to be complete in The company s Earthmover tire plant is being built nearby and is scheduled to begin producing tires later this year. Michelin said the Starr factory is one of two rubber production plants in Anderson. The company s largest rubberproducing plant in the world is only a few miles away in Sandy Springs. Built in 1975, that facility was one of Michelin s first manufacturing operations in the U.S. We are delighted that Michelin again has decided to invest in our great state and our wonderful county, said Anderson County Council Chairman Francis Crowder, in a statement. The relationship between Anderson County and Michelin has been long and fruitful. Today Michelin will again add quality jobs and investment to our area. We are truly blessed and we pledge to continue nurturing this very special relationship now and in the future. Michelin is South Carolina s largest manufacturing employer, according to the commerce department. Nearly 9,000 of Michelin s 22,000 employees in North America will be located in South Carolina when all the construction is complete. Half of its 18 U.S. production facilities are in this state. For more information, visit: www. michelinman.com. I am proud to say this new expansion at this facility is one of the lynchpins that will allow us to maintain Michelin s industry leadership in providing customers with the best tires in all categories, said Pete Selleck, chairman and president of Michelin North America, in a statement. Michelin s continued investment in Anderson County and the state of South Carolina is a testament to our proven, high-quality workforce here. The company said has begun hiring maintenance technicians already, and will begin hiring production workers in the coming months. Jobseekers are encouraged to visit: michelin-us.com. According to the state Department of Commerce, the Coordinating Council for Economic Development has approved a $1.5 million grant for site preparation and approved job development credits. 7

8 THE INDUSTRIAL DIVISION For more information on the Upstate Industrial market please contact one of our specialists: Ken Anderson John Baldwin, CCIM Glenn Batson Ford Borders, SIOR Principal & Tom Daniel Dan Dunn J. Earle Furman, Jr., SIOR Chairman & -in-charge Hunter Garrett, CCIM, SIOR Principal & Jon Good, SIOR CEO & Principal Michael Greer, CCIM, SIOR Grice Hunt Alexi Papapieris John Powell, CCIM Tim Roller Towers Rice John Staunton 6

9 ABOUT NAI EARLE FURMAN Uptown 15.3 million SF vacant 4.13% vacancy rate $54.14 NAI Earle SF/YR Furman avg. principals rental A SOLID FOUNDATION AND PROVEN RESULTS Midtown Founded by J. Earle Furman in 1986, NAI Earle Furman, LLC is the leading full service commercial real estate brokerage firm in the Upstate of South Carolina specializing in the office, industrial, investment, 4.88 healthcare, million land, SF vacant multifamily and retail sectors. NAI Earle Furman, LLC offers a wide range of services including sales, leasing, development, site selection, consulting and property management. A partnership with NAI Global allows NAI Earle Furman, 4.7% LLC to vacancy access a rate network of worldwide real estate connections and offer international commercial real estate services to Upstate $37.53 clients, SF/YR while avg. retaining rentallocal personality and knowledge. Downtown NAI Earle Furman offers a full service property management program that encompasses a unique hands-on approach to real estate management. Formal monthly property inspections with face-to-face contact with each tenant provide the foundation of the 11.3 million SF vacant management program. Each property is evaluated on an individual basis with the end result being a management program that will suit the needs of each property. Monthly operational reports are tailored 4.o% to accommodate vacancy rate each property and include an executive summary page unlike any in the industry. $42.03 SF/YR avg. rental STRONG LEADERSHIP AND A TEAM APPROACH The firm has over 60 team members and in 2012 completed over 600 transactions. The Property Management team has also grown exponentially in recent years and manages over 5 million square feet of commercial space in North and South Carolina. NAI GLOBAL As the world s only managed network of commercial real estate firms, New America International (NAI) works together to help clients strategically optimize their assets throughout the world. As a member of this network, NAI Earle Furman, LLC, is able to provide commercial real estate services to our local Upstate clients, as well as national and international clients. We have immediate access to over 5,000 professionals working out of 350 offices in 55 countries throughout the world. The NAI Global work has annual sales and leasing transactions of $45 billion and manages 300 million square feet of property. In addition to NAI Global, our brokers are also members of ICSC, Urban Land Institute, CCIM and SIOR, giving them access to a wealth of knowledge and networking. NAI Earle Furman has more SIOR and CCIM designees than any other firm in South Carolina. 101 East Washington Street, Suite 400 Greenville SC

10 ADDITIONAL RESOURCES Complete listings of NAI Earle Furman s available properties The Greenville Area Development Corporation (GADC) is dedicated to the growth and prosperity of Greenville County, SC. Since its founding in 2001, GADC efforts have resulted in the creation of nearly 10,000 new jobs and more than $2 billion in capital investment in Greenville County. The organization s continued successes are demonstrated by the innovative, dynamic, and inviting nature of our community. Formed in 2000, the Upstate South Carolina Alliance is a public/private regional economic development organization designed to market the dynamic 10-county Upstate region to the world. The 10 counties of the Alliance represent the commerce-rich northwestern corner of South Carolina - The Greater Greenville Chamber at its core is dedicated to promoting quality development of Upstate South Carolina through managed growth, service to members and the public, and a community-wide approach to issues shaping the region's future. - Provides information on trade, grants, rural development, and recycling. Includes databases of community profiles, labor market information, etc South Carolina's Information Highway is the largest directory of South Carolina information on the Internet. - The South Carolina Power Team promotes industrial sites & industrial buildings in South Carolina and the state's unique advantages for industry. - Official website of the City of Greenville Official website of Spartanburg County government Official website of Greenville County government - Official website of Anderson county government - Official website of Cherokee county government 4Q12 INDUSTRIAL ADVISORY BOARD John Baldwin, CCIM jbaldwin@naief.com Grice Hunt grice@naief.com Alexi Papapieris alexi@naief.com Some of the data in this report has been gathered from third party sources including CoStar Group, Inc. and has not been independently verified by NAI Earle Furman, LLC. NAI Earle Furman, LLC makes no warranties or representations as to the completeness or accuracy thereof. The Upstate Market is defined by: Greenville, Anderson, Spartanburg, Cherokee and Pickens counties. 7