Industrial Outlook. An in-depth look at the Louisville industrial market. Analysis includes leasing, sales, construction and employment.

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1 Industrial Outlook Louisville An in-depth look at the Louisville industrial market. Analysis includes leasing, sales, construction and employment. JLL Research

2 Insight Industrial market quick out of the gate to start to 2017 The modern bulk market built upon momentum from a successful 2016 with 605,767 square feet of positive absorption in Q1. Developer confidence remains high as they continue to acquire land for speculative development in every submarket. Clarion Partners purchased the 645,840-square-foot Air Commerce II from Molto Properties for $42.3 million to end the quarter. After finishing 2016 with ten straight years of positive absorption, the Louisville market delivered once again in the first quarter with 605,767 square feet of absorption. Driven by Arvato s lease of Molto s 645,000- square-foot Airport Commerce Center II and multiple deals signed in the Riverport submarket, leasing activity started 2017 on a high note. While there are quality large blocks of space available in the market, only three exceed 500,000 square feet of space with one currently under construction. With multiple large tenants in the market, developers will look to begin construction on larger projects as current blocks of available space are absorbed. The first quarter saw multiple announcements within the Airport and East submarkets as developers move forward on infill sites to attract tenants in the market. As land costs and competition have increased in the Bullitt County and Southern Indiana submarkets, one-off infill sites will continue to attract developers looking to enter or expand in the market. Landlords continue to push leasing rates with average rates remaining at 5-year highs. Outlook As product in the development pipeline delivers in the first half of 2017, vacancy rates are projected to remain inflated and rental rates will level off, at least in the short-term. Investment activity is forecasted to ramp up into 2018 as projects in the pipeline are leased up, and investors look for footholds in the market to add to their portfolios. Located within a day s drive to two-thirds of the U.S. population and several important distribution hubs, Louisville s location was made even more desirable with Amazon s pledge to invest $1.5 billion in a 3.0-million-square-foot air services hub at CVG Airport in Northern Kentucky. This announcement in addition to the UPS Worldport facility and ground hub expansion in Louisville will continue to drive demand from e-commerce and 3PL users. Fundamentals Forecast YTD net absorption 605,767 s.f. QTD net absorption 605,767 s.f. Under construction 3,104,553 s.f. Total vacancy 10.2% Average asking rent (NNN) $3.70 p.s.f. Tenant improvements Falling Supply and demand (s.f.) 10,000,000 5,000,000 0 Total vacancy 7.2% 6.6% Net absorption Deliveries YTD % 8.7% 10.2% YTD 2017 Average asking rents ($/s.f.) $3.80 $3.70 $3.60 $3.50 $3.40 $ YTD 2017

3 Statistics Inventory (s.f.) YTD total net absorption (s.f.) YTD total net absorption (% of stock) Total Vacancy (%) Average total asking rent ($ p.s.f.) YTD completions (s.f.) Under construction (s.f.) Airport 20,169, , % 3.3% $ ,840 1,752,745 Bullitt County 12,261, % 10.1% $ ,010 East 5,028, % 0.0% $ Riverport 11,957,666-40, % 9.6% $ ,798 Southern Indiana 9,460, % 30.9% $3.86 1,257,600 0 Louisville Totals 58,877, , % 10.2% $3.70 1,903,440 3,104,553 Analyzes all industrial buidings greater than 100,000 s.f. with a minimum clear height of 24' Total vacancy rate (%) 17.0% 14.0% 15.1% 15.6% 11.0% 12.2% 8.0% 5.0% 9.2% 8.3% 7.2% 6.6% 5.7% 8.7% 10.2% 2.0% Total net absorption (s.f.) 5,000,000 4,000,000 3,843,783 3,000,000 2,000,000 2,117,585 1,750,850 2,234,648 1,934,181 2,059,001 2,742,889 3,029,702 1,000,000 1,014, ,

4 Sales This report analyzes industrial sales in the last 12 months > 100,000 s.f. At a glance Sales activity by building type Total volume YTD $212,852,385 $250,000,000 Sum of Price ($) 3,149,124 s.f. Sum of RBA (SF) 3,500,000 s.f. Number of transactions YTD Average Class A price p.s.f. YTD* (skewed by Fedex and Faurecia sales) Average Class A cap rate YTD Warehouse/Dist. sales volume as % of total YTD Flex/R&D sales volume as % of total YTD Cap rate range Core Class A Ind. Core Class A Flex 10 3,000,000 s.f. $200,000,000 2,500,000 s.f. *$68 $150,000,000 $100,000,000 2,000,000 s.f. 1,500,000 s.f % 1,000,000 s.f. $50,000, % 500,000 s.f. $212,852,385 $0 0 s.f. 0.0% Warehouse / Distribution Transactions details 6-6.5% Number of partial interest transactions 0 Number of foreign buyers - Foreign capital $ - 7.5% Average partial interest Number of domestic 0.0% acquired buyers 10 Domestic Capital $ $212,852,385 Sales volume $ by submarket Top buyers (s.f.) Top sellers (s.f.) Riverport East Airport $67,455,280 $59,593,105 $53,604,000 20% 5% 20% 5% 57% 57% 7% 5% 19% 7% 5% 31% 21% 19% 21% 31% Radial Inc. (Formerly ebay) Molto Properties Bullitt County $32,200,000 Industrial Property Trust Industrial Property Trust Columbia Property Investors Columbia Property Investors Monmouth Real Estate Monmouth Real Estate Clarion Partners Clarion Partners Simpsonville LLC Simpsonville LLC Another Room Self Storage Another Room Self Storage ARES Setzer Properties Brennan Radial Investment Inc. (Formerly Group ebay) The LandMark Molto Group Properties ARES Setzer Properties Gray Construction DCT Industrial Brennan Investment Group The LandMark Group Gray Construction DCT Industrial Top 10 sales transactions the past 12 months Building address Buyer company Seller company Size (s.f.) Sales price $ $ p.s.f. Sale date 2500 Export Drive Clarion Partners Molto Properties 645,840 $42,300,000 $65 Mar Plantside Dr Columbia Property Investors 649 Omega Parkway Industrial Property Trust 7601 Trade Port Dr Industrial Property Trust 65 Kingbrook Pkwy Simpsonville LLC Setzer Properties ARES Radial Inc. (Formerly ebay) The LandMark Group 303,369 $41,893,105 $138 Apr ,000 $32,200,000 $53 Jun ,000 $25,605,600 $55 Jun ,750 $17,700,000 $117 Feb Cane Run Rd Industrial Property Trust Radial Inc. (Formerly ebay) 270,000 $14,709,600 $55 Jun Trade Port Dr Industrial Property Trust Radial Inc. (Formerly ebay) 221,000 $12,040,080 $55 Jun South Park Rd Monmouth Real Estate Gray Construction 137,500 $11,304,000 $82 Jun Cane Run Rd Industrial Property Trust Brennan Investment Group 212,500 $9,700,000 $46 Apr-16

5 Construction This report analyzes all industrial developments under construction & new deliveries > 100,000 s.f. New deliveries 6,275,041 7,000,000 6,000,000 Total delivered past 12 months (s.f.) Completions in-depth Total leased at delivery (%) 54.0% Total speculative at delivery (s.f.) 3,835,572 Total BTS at delivery (s.f.) 2,076,969 Total Owner-User at delivery (s.f.) 362,500 Total # of properties delivered 18 Asking rental rate (low - high) $ $4.25 5,000,000 4,000,000 3,000,000 2,000,000 1,000, YTD 2017 Historical deliveries (s.f.) Top 5 projects delivered past 12 months Building Submarket Owner RBA (s.f.) Construction type Delivery date Crossdock River Ridge Southern Indiana Crossdock Dev. 664,800 Speculative 0% Leased at delivery (%) Aiport Commerce Center II Airport Molto 645,840 Speculative 100% Van Trust River Ridge Southern Indiana Van Trust 592,800 Speculative 0% LogistiCenter at 480 Bullitt County Dermody Properties 546,000 Speculative Q % Pinchal River Ridge Southern Indiana Pinchal & Co. 458,640 Speculative Q % Under construction 3,104,553 Under construction (s.f.) Under construction in-depth Total pre-leased (%) 0.0% Total speculative under construction (s.f.) 1,804,553 Total BTS under construction (s.f.) - Total Owner-user under construction (s.f.) 1,300,000 Total # of properties UC 5 Asking rental rate (low - high) $ $4.25 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , ,000 0 Owner-user Speculative Upcoming deliveries by year (s.f., excludes YTD completions) Top 5 projects currently under construction Building Submarket Owner RBA (s.f.) Construction type Delivery date Pre-leased (%) W.W. Grainger Airport W.W. Grainger 1,300,000 Owner-user Q % Velocity 65 Bldg 1 Bullitt County Browning 721,050 Speculative Q % New Cut Center Bldg 1 Airport Main Street Realty 452,745 Speculative Q % Riverport Distribution Center Riverport IAC 370,798 Speculative Q % Park 65 Business Center Bullitt County Johnson Development 259,960 Speculative Q %

6 Construction Completed: Completed: Gateway 600 Signed tenant(s): none Square Feet: 592,800 Landlord: VanTrust Crossdock River Ridge Signed tenant(s): none Square Feet: 664,800 Landlord: Crossdock Development Completed: Q Lewis and Clark Bridge Completed: Est. completion: Q Air Commerce Center II Signed tenant(s): Arvato Square Feet: 645,840 Landlord: Molto Properties New Cut Center Bldg 1 Signed tenant(s): none Square Feet: 452,745 Landlord: Main Street Realty Est. completion: Q Velocity 65 Bldg 1 Signed tenant(s): none Square Feet: 721,000 Landlord: Browning Investments

7 Employment 4.7% 2.8% Louisville unemployment Louisville 12-month job growth 5.0% 1.6% Kentucky unemployment Kentucky 12-month job growth 4.7% U.S. unemployment 1.5% U.S. 12-month job growth Job growth (12-month change) Louisville U.S. 3.5% 2.8% 2.1% % 0.0% Employment vs. unemployment rate 800,000 Employment Unemployment 12% 700,000 8% 600, , ,000 0% Job growth by sector (12-month change) Professional & Business Services Manufacturing Trade, Transportation & Utilities Mining, Logging & Construction Educational & Health Services Financial Activities Other Services Leisure & Hospitality Information Government ,600 1, ,300 4,700 4,400-2,000-1, ,000 2,000 3,000 4,000 5,000 6,000 Employment by industry Office employment trends (12-month change, 000s) 7% 12% 13% 13% 23% 13% Trade, Transportation & Utilities Educational & Health Services Professional & Business Services Manufacturing Government Leisure & Hospitality Financial Activities Mining, Logging & Construction Other Services Information Professional & Business Services Information 18.0 Government Financial Activities

8 Ross Bratcher Research Analyst Andrew Batson Vice President, Director of Research About JLL JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At year-end 2016, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 77,000. As of December 31, 2016, LaSalle Investment Management has $60.1 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit About JLL Research JLL s research team delivers intelligence, analysis and insight through market-leading reports and services that illuminate today s commercial real estate dynamics and identify tomorrow s challenges and opportunities. Our more than 400 global research professionals track and analyze economic and property trends and forecast future conditions in over 60 countries, producing unrivalled local and global perspectives. Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.