The CoStar Industrial Report. Y e a r - E n d St. Louis Industrial Market

Transcription

1 The CoStar Industrial Report Y e a r - E n d

2 Year-End 2016 St. Louis Table of Contents Table of Contents A Methodology B Terms & Definitions C Market Highlights & Overview CoStar Markets & Submarkets Inventory & Development Analysis Inventory & Development Analysis Select Top Deliveries Select Top Under Construction Properties Figures at a Glance Figures at a Glance by Building Type & Market Figures at a Glance by Building Type & Submarket Historical Figures at a Glance Leasing Activity Analysis Select Top Lease Transactions Analysis of Individual CoStar Submarket Clusters Central County Market Illinois Market North St Louis County Market South St Louis County Market St Charles County Market St Louis City Market West St Louis County Market 2016 CoStar Group, Inc. The CoStar Industrial Report A

3 St. Louis Year-End 2016 Methodology The CoStar Industrial Statistics calculates Industrial statistics using CoStar Group's base of existing, under construction and under renovation Industrial buildings in each given metropolitan area. All Industrial building types are included, including warehouse, flex / research & development, distribution, manufacturing, industrial showroom, and service buildings, in both single-tenant and multi-tenant buildings, including owner-occupied buildings. CoStar Group's global database includes approximately 95.6 billion square feet of coverage in 4.4 million properties. All rental rates reported in the CoStar Industrial Report are calculated using the quoted rental rate for each property. For information on subscribing to CoStar s other products and services, please contact us at COSTAR, or visit our web site at Copyright 2017 CoStar Group, Inc. All Rights Reserved. Although CoStar makes efforts to ensure the accuracy and reliability of the information contained herein, CoStar makes no guarantee, representation or warranty regarding the quality, accuracy, timeliness or completeness of the information. The publication is provided as is and CoStar expressly disclaims any guarantees, representations or warranties of any kind, including those of MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CoStar Group, Inc L ST NW Washington, DC (800) NASDAQ: CSGP B The CoStar Industrial Report 2016 CoStar Group, Inc.

4 Year-End 2016 St. Louis Terms & Definitions Availability Rate: The ratio of available space to total rentable space, calculated by dividing the total available square feet by the total rentable square feet. Available Space: The total amount of space that is currently being marketed as available for lease in a given time period. It includes any space that is available, regardless of whether the space is vacant, occupied, available for sublease, or available at a future date. Build-to-Suit: A term describing a particular property, developed specifically for a certain tenant to occupy, with structural features, systems, or improvement work designed specifically for the needs of that tenant. A build-to-suit can be leased or owned by the tenant. In a leased build-to-suit, a tenant will usually have a long term lease on the space. Buyer: The individual, group, company, or entity that has purchased a commercial real estate asset. Cap Rate: Short for capitalization rate. The Cap Rate is a calculation that reflects the relationship between one year s net operating income and the current market value of a particular property. The Cap Rate is calculated by dividing the annual net operating income by the sales price (or asking sales price). CBD: Abbreviation for Central Business District. (See also: Central Business District) Central Business District: The designations of Central Business District (CBD) and Suburban refer to a particular geographic area within a metropolitan statistical area (MSA) describing the level of real estate development found there. The CBD is characterized by a high density, well organized core within the largest city of a given MSA. Class A: A classification used to describe buildings that generally qualify as extremely desirable investment-grade properties and command the highest rents or sale prices compared to other buildings in the same market. Such buildings are well located and provide efficient tenant layouts as well as high quality, and in some buildings, one-ofa-kind floor plans. They can be an architectural or historical landmark designed by prominent architects. These buildings contain a modern mechanical system, and have above-average maintenance and management as well as the best quality materials and workmanship in their trim and interior fittings. They are generally the most attractive and eagerly sought by investors willing to pay a premium for quality. Class B: A classification used to describe buildings that generally qualify as a more speculative investment, and as such, command lower rents or sale prices compared to Class A properties. Such buildings offer utilitarian space without special attractions, and have ordinary design, if new or fairly new; good to excellent design if an older non-landmark building. These buildings typically have average to good maintenance, management and tenants. They are less appealing to tenants than Class A properties, and may be deficient in a number of respects including floor plans, condition and facilities. They lack prestige and must depend chiefly on a lower price to attract tenants and investors. Class C: A classification used to describe buildings that generally qualify as no-frills, older buildings that offer basic space and command lower rents or sale prices compared to other buildings in the same market. Such buildings typically have below-average maintenance and management, and could have mixed or low tenant prestige, inferior elevators, and/or mechanical/electrical systems. These buildings lack prestige and must depend chiefly on a lower price to attract tenants and investors. Construction Starts: Buildings that began construction during a specific period of time. (See also: Deliveries) Contiguous Blocks of Space: Space within a building that is, or is able to be joined together into a single contiguous space. Deliveries: Buildings that complete construction during a specified period of time. In order for space to be considered delivered, a certificate of occupancy must have been issued for the property. Delivery Date: The date a building completes construction and receives a certificate of occupancy. Developer: The company, entity or individual that transforms raw land to improved property by use of labor, capital and entrepreneurial efforts. Direct Space: Space that is being offered for lease directly from the landlord or owner of a building, as opposed to space being offered in a building by another tenant (or broker of a tenant) trying to sublet a space that has already been leased. : The square footage of buildings that have received a certificate of occupancy and are able to be occupied by tenants. It does not include space in buildings that are either planned, under construction or under renovation. Flex Building: A type of building designed to be versatile, which may be used in combination with office (corporate headquarters), research and development, quasi-retail sales, and including but not limited to industrial, warehouse, and distribution uses. A typical flex building will be one or two stories with at least half of the rentable area being used as office space, have ceiling heights of 16 feet or less, and have some type of drive-in door, even though the door may be glassed in or sealed off. Full Service Rental Rate: Rental rates that include all operating expenses such as utilities, electricity, janitorial services, taxes and insurance. Gross Absorption: The total change in occupied space over a given period of time, counting space that is occupied but not space that is vacated by tenants. Gross absorption differs from leasing Activity, which is the sum of all space leased over a certain period of time. Unless otherwise noted Gross Absorption includes direct and sublease space. Growth in Inventory: The change in size of the existing square footage in a given area over a given period of time, generally due to the construction of new buildings. Industrial Building: A type of building adapted for such uses as the assemblage, processing, and/or manufacturing of products from raw materials or fabricated parts. Additional uses include warehousing, distribution, and maintenance facilities. The primary purpose of the space is for storing, producing, assembling, or distributing product. Landlord Rep: (Landlord Representative) In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the owner/landlord is referred to as the Landlord Rep. Leased Space: All the space that has a financial lease obligation. It includes all leased space, regardless of whether the space is currently occupied by a tenant. Leased space also includes space being offered for sublease. Leasing Activity: The volume of square footage that is committed to and signed under a lease obligation for a specific building or market in a given period of time. It includes direct leases, subleases and renewals of existing leases. It also includes any pre-leasing activity in planned, under construction, or under renovation buildings. Market: Geographic boundaries that serve to delineate core areas that are competitive with each other and constitute a generally accepted primary competitive set of areas. Markets are building-type specific, and are non-overlapping contiguous geographic designations having a cumulative sum that matches the boundaries of the entire Region (See also: Region). Markets can be further subdivided into Submarkets. (See also: Submarkets) Multi-Tenant: Buildings that house more than one tenant at a given time. Usually, multi-tenant buildings were designed and built to accommodate many different floor plans and designs for different 2016 CoStar Group, Inc. The CoStar Industrial Report C

5 St. Louis Year-End 2016 tenant needs. (See also: Tenancy). Net Absorption: The net change in occupied space over a given period of time. Unless otherwise noted Net Absorption includes direct and sublease space. Net Rental Rate: A rental rate that excludes certain expenses that a tenant could incur in occupying office space. Such expenses are expected to be paid directly by the tenant and may include janitorial costs, electricity, utilities, taxes, insurance and other related costs. New Space: Sometimes called first generation space, refers to space that has never been occupied and/or leased by a tenant. Occupied Space: Space that is physically occupied by a tenant. It does not include leased space that is not currently occupied by a tenant. Office Building: A type of commercial building used exclusively or primarily for office use (business), as opposed to manufacturing, warehousing, or other uses. Office buildings may sometimes have other associated uses within part of the building, i.e., retail sales, financial, or restaurant, usually on the ground floor. Owner: The company, entity, or individual that holds title on a given building or property. Planned/Proposed: The status of a building that has been announced for future development but not yet started construction. Preleased Space: The amount of space in a building that has been leased prior to its construction completion date, or certificate of occupancy date. Price/SF: Calculated by dividing the price of a building (either sales price or asking sales price) by the Rentable Building Area (RBA). Property Manager: The company and/or person responsible for the day-to-day operations of a building, such as cleaning, trash removal, etc. The property manager also makes sure that the various systems within the building, such as the elevators, HVAC, and electrical systems, are functioning properly. Quoted Rental Rate: The asking rate per square foot for a particular building or unit of space by a broker or property owner. Quoted rental rates may differ from the actual rates paid by tenants following the negotiation of all terms and conditions in a specific lease. RBA: Abbreviation for Rentable Building Area. (See also: Rentable Building Area) Region: Core areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Regions are further divided into market areas, called Markets. (See also: Markets) Relet Space: Sometimes called second generation or direct space, refers to existing space that has previously been occupied by another tenant. Rentable Building Area: (RBA) The total square footage of a building that can be occupied by, or assigned to a tenant for the purpose of determining a tenant s rental obligation. Generally RBA includes a percentage of common areas including all hallways, main lobbies, bathrooms, and telephone closets. Rental Rates: The annual costs of occupancy for a particular space quoted on a per square foot basis. Sales Price: The total dollar amount paid for a particular property at a particular point in time. Sales Volume: The sum of sales prices for a given group of buildings in a given time period. Seller: The individual, group, company, or entity that sells a particular commercial real estate asset. SF: Abbreviation for Square Feet. Single-Tenant: Buildings that are occupied, or intended to be occupied by a single tenant. (See also: Build-to-suit and Tenancy) Sublease Space: Space that has been leased by a tenant and is being offered for lease back to the market by the tenant with the lease obligation. Sublease space is sometimes referred to as sublet space. Submarkets: Specific geographic boundaries that serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted primary competitive set, or peer group. Submarkets are building type specific (office, industrial, retail, etc.), with distinct boundaries dependent on different factors relevant to each building type. Submarkets are non-overlapping, contiguous geographic designations having a cumulative sum that matches the boundaries of the Market they are located within (See also: Market). Suburban: The Suburban and Central Business District (CBD) designations refer to a particular geographic area within a metropolitan statistical area (MSA). Suburban is defined as including all office inventory not located in the CBD. (See also: CBD) Tenancy: A term used to indicate whether or not a building is occupied by multiple tenants (See also: Multi-tenant) or a single tenant. (See also: Single-tenant) Tenant Rep: Tenant Rep stands for Tenant Representative. In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the tenant is referred to as a Tenant Rep. Time On Market: A measure of how long a currently available space has been marketed for lease, regardless of whether it is vacant or occupied. Under Construction: Buildings in a state of construction, up until they receive their certificate of occupancy. In order for CoStar to consider a building under construction, the site must have a concrete foundation in place. Abbreviated UC. Rate: A measurement expressed as a percentage of the total amount of physically vacant space divided by the total amount of existing inventory. Under construction space generally is not included in vacancy calculations. Vacant Space: Space that is not currently occupied by a tenant, regardless of any lease obligation that may be on the space. Vacant space could be space that is either available or not available. For example, sublease space that is currently being paid for by a tenant but not occupied by that tenant, would be considered vacant space. Likewise, space that has been leased but not yet occupied because of finish work being done, would also be considered vacant space. Weighted Average Rental Rate: Rental rates that are calculated by factoring in, or weighting, the square footage associated with each particular rental rate. This has the effect of causing rental rates on larger spaces to affect the average more than that of smaller spaces. The weighted average rental rate is calculated by taking the ratio of the square footage associated with the rental rate on each individual available space to the square footage associated with rental rates on all available spaces, multiplying the rental rate by that ratio, and then adding together all the resulting numbers. Unless specifically specified otherwise, rental rate averages include both Direct and Sublet available spaces. Year Built: The year in which a building completed construction and was issued a certificate of occupancy. YTD: Abbreviation for Year-to-Date. Describes statistics that are cumulative from the beginning of a calendar year through whatever time period is being studied. D The CoStar Industrial Report 2016 CoStar Group, Inc.

6 Overview Year-End 2016 St. Louis St. Louis s Stays at 6.0% Net Absorption Positive 1,011,295 SF in the Quarter The St. Louis Industrial market ended the fourth quarter 2016 with a vacancy rate of 6.0%. The vacancy rate was unchanged over the previous quarter, with net absorption totaling positive 1,011,295 square feet in the fourth quarter. Vacant sublease space increased in the quarter, ending the quarter at 511,451 square feet. Rental rates ended the fourth quarter at $4.34, an increase over the previous quarter. A total of three buildings delivered to the market in the quarter totaling 860,800 square feet, with 5,794,863 square feet still under construction at the end of the quarter. Absorption Net absorption for the overall St. Louis Industrial market was positive 1,011,295 square feet in the fourth quarter That compares to positive 1,321,654 square feet in the third quarter 2016, positive 2,340,171 square feet in the second quarter 2016, and positive 254,002 square feet in the first quarter Tenants moving out of large blocks of space in 2016 include: CWC Inventories Inc. moving out of (205,000) square feet at 8000 Hall S and Hilex Poly Co. LLC moving out of (94,500) square feet at 1780 Belt Way Dr. Tenants moving into large blocks of space in 2016 include: Schnuck s moving into 915,000 square feet on North Hanley Rd., Amazon moving into 769,500 square feet at Lakeview Commerce Center IV, and Amazon moving into 717,250 square feet at Gateway East 717. The Flex building market recorded net absorption of negative (115,810) square feet in the fourth quarter 2016, compared to positive 94,462 square feet in the third quarter 2016, negative (58,240) in the second quarter 2016, and positive 2,825 in the first quarter The Warehouse building market recorded net absorption of positive 1,127,105 square feet in the fourth quarter 2016 compared to positive 1,227,192 square feet in the third quarter 2016, positive 2,398,411 in the second quarter 2016, and positive 251,177 in the first quarter The Industrial vacancy rate in the St. Louis market area remained at 6.0% at the end of the fourth quarter The vacancy rate was 6.0% at the end of the third quarter 2016, 6.5% at the end of the second quarter 2016, and 6.4% at the end of the first quarter Flex projects reported a vacancy rate of 9.5% at the end of the fourth quarter 2016, 8.7% at the end of the third quarter 2016, 9.2% at the end of the second quarter 2016, and 8.2% at the end of the first quarter Warehouse projects reported a vacancy rate of 5.7% at the end of the fourth quarter 2016, 5.9% at the end of third quarter 2016, 6.3% at the end of the second quarter 2016, and 6.3% at the end of the first quarter Largest Lease Signings The largest lease signings occurring in 2016 included: the 769,500-square-foot lease signed by Amazon at Lakeview Commerce Center IV in the Illinois market; the 717,250-squarefoot deal signed by Amazon at Gateway East 717 in the Illinois market; 240,161-square-foot lease signed by Ozburn-Hessey Logistics, LLC at 305 Rock Industrial Park Dr. Rates by Building Type % Flex Warehouse Total Market 12% 10% Rate 8% 6% 4% 2% 0% q q q q q q q q q q q q q q q q CoStar Group, Inc. The CoStar Industrial Report 1

7 St. Louis Year-End 2016 Overview Sublease The amount of vacant sublease space in the St. Louis market increased to 511,451 square feet by the end of the fourth quarter 2016, from 374,644 square feet at the end of the third quarter There was 416,380 square feet vacant at the end of the second quarter 2016 and 337,698 square feet at the end of the first quarter St. Louis s Flex projects reported vacant sublease space of 229,000 square feet at the end of fourth quarter 2016, up from the 98,000 square feet reported at the end of the third quarter There were 103,000 square feet of sublease space vacant at the end of the second quarter 2016, and 11,488 square feet at the end of the first quarter Warehouse projects reported increased vacant sublease space from the third quarter 2016 to the fourth quarter Sublease vacancy went from 276,644 square feet to 282,451 square feet during that time. There was 313,380 square feet at the end of the second quarter 2016, and 326,210 square feet at the end of the first quarter Rental Rates The average quoted asking rental rate for available Industrial space was $4.34 per square foot per year at the end of the fourth quarter 2016 in the St. Louis market area. This represented a 1.6% increase in quoted rental rates from the end of the third quarter 2016, when rents were reported at $4.27 per square foot. The average quoted rate within the Flex sector was $9.07 per square foot at the end of the fourth quarter 2016, while Warehouse rates stood at $4.06. At the end of the third quarter 2016, Flex rates were $9.10 per square foot, and Warehouse rates were $3.97. Deliveries and Construction During the fourth quarter 2016, three buildings totaling 860,800 square feet were completed in the St. Louis market area. This compares to one building totaling 138,000 square feet that were completed in the third quarter 2016, six buildings totaling 2,779,338 square feet completed in the second quarter 2016, and nothing completed in the first quarter There were 5,794,863 square feet of Industrial space under construction at the end of the fourth quarter Some of the notable 2016 deliveries include: Schnuck s Distribution, a 915,000-square-foot facility that delivered in second quarter 2016 and is now 100% occupied, and Lakeview Commerce Center IV, a 769,500-square-foot building that delivered in second quarter 2016 and is now 100% occupied. The largest projects underway at the end of fourth quarter 2016 were Wentzville Logistics Center, a 1,200,000-squarefoot building with 100% of its space pre-leased, and Premier 370 Bus Park 2001 Reckitt Benckiser, a 714,780-square-foot facility that is 100% pre-leased. Inventory Total Industrial inventory in the St. Louis market area amounted to 266,602,995 square feet in 6,164 buildings as of the end of the fourth quarter The Flex sector consisted of 16,099,294 square feet in 568 projects. The Warehouse sector consisted of 250,503,701 square feet in 5,596 buildings. Within the Industrial market there were 1,499 owner-occupied buildings accounting for 80,673,004 square feet of Industrial space. Reports compiled by: Alison Panza, CoStar Research Manager U.S. Comparison Past 10 Quarters 8.0% St. Louis United States 7.0% 6.0% Rate 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% q 2 The CoStar Industrial Report 2016 CoStar Group, Inc.

8 Markets Year-End 2016 St. Louis CoStar Submarket Clusters & Submarkets In analyzing metropolitan areas, CoStar has developed geographic designations to help group properties together, called Markets, Submarket Clusters and Submarkets. Markets are the equivalent of metropolitan areas, or areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Markets are then divided into Submarket Clusters, which are core areas within a metropolitan area that are known to be competitive with each other in terms of attracting and keeping tenants. Markets are then further subdivided into smaller units called Submarkets, which serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted competitive set, or peer group. Submarket Clusters Central County Ind Illinois Ind North St Louis County Ind South St Louis County Ind St Charles County Ind St Louis City Ind West St Louis County Ind Submarkets Hanley Ind Innerbelt E of 170 Ind Innerbelt W of 170 Ind Illinois Ind Airport Ind Earth City Ind North County Ind Fenton Ind South County Ind St Charles County Ind St Louis City North Ind St Louis City South Ind Chesterfield/Hwy-40 Ind West County Ind Westport Ind 2016 CoStar Group, Inc. The CoStar Industrial Report 3

9 St. Louis Year-End 2016 Inventory & development Historical Deliveries Deliveries 5.4 Average Delivered SF Millions of SF * Future deliveries based on current under construction buildings. Construction Activity Markets Ranked by Under Construction RBA Under Construction Inventory Average Bldg Size Market # Bldgs Total RBA Preleased SF Preleased % All Existing U/C St Charles County Ind 4 2,289,530 1,914, % 34, ,382 North St Louis County Ind 4 1,677, % 69, ,401 Illinois Ind 3 1,192, , % 57, ,577 West St Louis County Ind 3 635, , % 36, ,667 St Louis City Ind % 41,787 0 Central County Ind % 31,093 0 South St Louis County Ind % 36,014 0 Totals 14 5,794,863 2,763, % 43, ,919 Recent Deliveries Leased & Un-Leased SF in Deliveries Since 2012 Future Deliveries Preleased & Un-Leased SF in Properties Scheduled to Deliver 4.0 Leased Un-Leased 4,000 Preleased Un-Leased 3.5 3, ,000 Millions of SF Thousands of SF 2,500 2,000 1, , q q 4 The CoStar Industrial Report 2016 CoStar Group, Inc.

10 Inventory & development Year-End 2016 St. Louis Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction 4.0 Construction Starts 3.7 Deliveries Millions of SF q q q q Recent Deliveries by Project Size Breakdown of Year-to-Date Development Based on RBA of Project Building Size # Bldgs RBA SF Leased % Leased Avg Rate Single-Tenant Multi-Tenant < 50,000 SF 1 15,000 15, % $ ,000 50,000 SF - 99,999 SF 1 53,300 47, % $ , ,000 SF - 249,999 SF 3 462, , % $ , ,000 SF - 499,999 SF 2 845, , % $ , ,800 >= 500,000 SF 3 2,401,750 2,401, % $0.00 1,632, ,500 Recent Development by Tenancy Comparison Based on RBA Developed for Single & Multi-Tenant Use Based on Total RBA 2016 Deliveries Currently Under Construction By Building Type By Tenancy Type 54% 46% 21% 79% 94% 6% 54% 46% Multi Single Multi Single Flex Warehouse Multi Single 2016 CoStar Group, Inc. The CoStar Industrial Report 5

11 St. Louis Year-End 2016 Inventory & development 6 The CoStar Industrial Report 2016 CoStar Group, Inc.

12 Inventory & development Year-End 2016 St. Louis 2016 CoStar Group, Inc. The CoStar Industrial Report 7

13 St. Louis Year-End 2016 Figures at a Glance Flex Market Statistics Year-End 2016 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Central County Ind 83 2,019, , , % (146,190) 0 0 $8.09 Illinois Ind , , , % $11.49 North St Louis County Ind 71 2,808, , , % (109,687) 0 0 $10.93 South St Louis County Ind 48 1,061,978 67,877 67, % 5, $11.43 St Charles County Ind 82 2,265, , , % 49, $7.12 St Louis City Ind 91 2,036, , , % 47, ,000 0 $7.64 West St Louis County Ind 141 5,005, , , % 76, ,000 $8.74 Totals ,099,294 1,294,986 1,523, % (76,763) 140, ,000 $9.07 Warehouse Market Statistics Year-End 2016 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Central County Ind ,684, , , % 305, $4.42 Illinois Ind ,301, , , % 1,749,039 1,540,050 1,192,730 $3.66 North St Louis County Ind ,838,421 3,857,740 3,867, % 2,196,348 1,960,088 1,677,603 $4.23 South St Louis County Ind ,017, , , % 153, $6.35 St Charles County Ind ,728, , , % 110, ,000 2,289,530 $5.03 St Louis City Ind 1,696 72,637,706 7,058,974 7,058, % 132, $2.92 West St Louis County Ind ,295, , , % 357, ,000 $5.99 Totals 5, ,503,701 14,064,354 14,346, % 5,003,885 3,638,138 5,204,863 $4.06 Total Industrial Market Statistics Year-End 2016 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Central County Ind ,704, , , % 159, $4.70 Illinois Ind ,203, ,319 1,089, % 1,749,253 1,540,050 1,192,730 $3.85 North St Louis County Ind ,646,809 4,208,510 4,337, % 2,086,661 1,960,088 1,677,603 $4.50 South St Louis County Ind ,079, , , % 158, $6.63 St Charles County Ind ,994, , , % 160, ,000 2,289,530 $5.31 St Louis City Ind 1,787 74,674,090 7,269,814 7,269, % 179, ,000 0 $3.05 West St Louis County Ind ,301, , , % 433, ,000 $6.58 Totals 6, ,602,995 15,359,340 15,870, % 4,927,122 3,778,138 5,794,863 $ The CoStar Industrial Report 2016 CoStar Group, Inc.

14 Figures at a Glance Year-End 2016 St. Louis Flex Submarket Statistics Year-End 2016 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Ind ,695 96,074 96, % (4,670) 0 0 $8.40 Chesterfield/Hwy-40 Ind 38 2,197,843 19,588 19, % (3,956) 0 590,000 $9.65 Earth City Ind 43 1,675, , , % (105,017) 0 0 $12.16 Fenton Ind ,329 62,377 62, % 7, $11.44 Hanley Ind ,239 12,286 12, % $9.99 Illinois Ind , , , % $11.49 Innerbelt E of 170 Ind ,161 70, , % (147,220) 0 0 $8.86 Innerbelt W of 170 Ind ,840 65,883 65, % $6.96 North County Ind 7 353, % $0.00 South County Ind ,649 5,500 5, % (2,100) 0 0 $11.21 St Charles County Ind 82 2,265, , , % 49, $7.12 St Louis City North Ind ,276 16,628 16, % 23, $4.00 St Louis City South Ind 60 1,424, , , % 24, ,000 0 $7.76 West County Ind ,727 13,355 13, % $9.29 Westport Ind 76 2,185, , , % 79, $8.46 Totals ,099,294 1,294,986 1,523, % (76,763) 140, ,000 $9.07 Warehouse Submarket Statistics Year-End 2016 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Ind ,903,466 1,780,693 1,780, % 629,779 1,045,088 1,139,850 $4.10 Chesterfield/Hwy-40 Ind 119 3,702,794 84,660 84, % 15, $8.36 Earth City Ind ,054,695 1,720,702 1,730, % 557, $4.37 Fenton Ind 200 8,148, , , % (13,618) 0 0 $6.59 Hanley Ind 251 5,803,126 86,806 86, % 80, $5.39 Illinois Ind ,301, , , % 1,749,039 1,540,050 1,192,730 $3.66 Innerbelt E of 170 Ind 213 9,505, , , % 32, $3.86 Innerbelt W of 170 Ind ,375, , , % 192, $4.22 North County Ind 149 6,880, , , % 1,009, , ,753 $4.20 South County Ind 254 8,869, , , % 166, $6.02 St Charles County Ind ,728, , , % 110, ,000 2,289,530 $5.03 St Louis City North Ind ,009,484 4,259,378 4,259, % 43, $2.94 St Louis City South Ind ,628,222 2,799,596 2,799, % 88, $2.88 West County Ind 118 4,091,292 31,513 31, % 11, ,000 $7.02 Westport Ind ,501, , , % 329, ,000 $5.30 Totals 5, ,503,701 14,064,354 14,346, % 5,003,885 3,638,138 5,204,863 $4.06 Total Industrial Submarket Statistics Year-End 2016 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Ind ,683,161 1,876,767 1,876, % 625,109 1,045,088 1,139,850 $4.24 Chesterfield/Hwy-40 Ind 157 5,900, , , % 11, ,000 $8.73 Earth City Ind ,730,277 1,975,398 2,104, % 452, $4.88 Fenton Ind 224 8,943, , , % (6,442) 0 0 $7.01 Hanley Ind 283 6,378,365 99,092 99, % 80, $5.74 Illinois Ind ,203, ,319 1,089, % 1,749,253 1,540,050 1,192,730 $3.85 Innerbelt E of 170 Ind ,037, , , % (115,183) 0 0 $4.07 Innerbelt W of 170 Ind ,288, , , % 193, $4.50 North County Ind 156 7,233, , , % 1,009, , ,753 $4.20 South County Ind 278 9,135, , , % 164, $6.07 St Charles County Ind ,994, , , % 160, ,000 2,289,530 $5.31 St Louis City North Ind ,621,760 4,276,006 4,276, % 67, $2.94 St Louis City South Ind ,052,330 2,993,808 2,993, % 112, ,000 0 $3.24 West County Ind 145 4,714,019 44,868 44, % 12, ,000 $7.16 Westport Ind ,686, , , % 409, ,000 $6.01 Totals 6, ,602,995 15,359,340 15,870, % 4,927,122 3,778,138 5,794,863 $ CoStar Group, Inc. The CoStar Industrial Report 9

15 St. Louis Year-End 2016 Figures at a Glance 10 The CoStar Industrial Report 2016 CoStar Group, Inc.

16 Leasing Activity Year-End 2016 St. Louis Historical Rental Rates Based on Quoted Rental Rates $12.00 Flex Warehouse Total Market $10.00 Dollars/SF/Year $8.00 $6.00 $4.00 $2.00 $ q q q q q q q q 20164q by Available Space Type by Building Type Percent of All Vacant Space in Direct vs. Sublet Percent of All Vacant Space by Building Type St. Louis United States St. Louis United States 3% 3% 10% 14% 90% 86% 97% 97% Direct Sublet Direct Sublet Flex Warehouse Flex Warehouse U.S. Rental Rate Comparison Based on Average Quoted Rental Rates Future Space Available Space Scheduled to be Available for Occupancy* $7.00 St. Louis United States 2.5 $ Dollars/SF/Year $5.00 $4.00 $3.00 $2.00 Millions $ $ q q q q * Includes Under Construction Space 2016 CoStar Group, Inc. The CoStar Industrial Report 11

17 St. Louis Year-End 2016 Leasing Activity Select Top Industrial Leases Based on Leased Square Footage For Deals Signed in 2016 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company 1 Lakeview Commerce Center IV Illinois Ind 769,500 2nd Amazon N/A JLL 2 Gateway East 717 Illinois Ind 717,250 2nd Amazon N/A Cushman & Wakeeld 3 Premier 370 Bus Park 2001 St Charles County Ind 714,780 1st Reckitt Benckiser N/A Duke Realty Corporation 4 65 Corporate Woods Dr* Earth City Ind 556,287 1st Whirlpool JLL Block Hawley Commercial Real Estate 5 Premier Best Buy St Charles County Ind 252,000 4th Best Buy N/A Duke Realty Corporation Rock Industrial Park Dr Earth City Ind 240,161 2nd Ozburn-Hessey Logistics, LLC N/A CBRE, Inc. 7 Gateway East 520 Illinois Ind 214,890 2nd N/A N/A Cushman & Wakeeld Hazelwood Logistics Ctr Dr* Airport Ind 198,858 1st TAGG Logistics N/A Block Hawley Commercial Real Estate 9 Lindbergh Distribution Center* Airport Ind 182,358 4th Fiserv N/A CBRE, Inc. 10 Hazelwood Logistics Center 2 Airport Ind 150,820 3rd N/A N/A JLL N Price Rd Innerbelt W of 170 Ind 148,416 1st N/A Direct Deal Hawk Distribution Services, LLC Industrial Dr Illinois Ind 140,172 3rd N/A N/A CBRE, Inc. 13 Corporate 44 Business Park - Bldg V Fenton Ind 129,757 1st N/A N/A Altus Properties 14 Corporate Trail Distribution* Earth City Ind 124,042 1st S P Richards Co N/A CBRE, Inc Riverport Dr Earth City Ind 119,000 3rd N/A N/A CBRE, Inc Bussen Underground Rd South County Ind 113,350 1st N/A Direct Deal Hawk Distribution Services, LLC Shoreline Dr Earth City Ind 105,600 3rd Legacy Pharmaceutical N/A JLL 18 Buske I* Illinois Ind 105,000 2nd Owens & Minor Dist. Inc. N/A JLL 19 Riverview Industrial Center St Louis City North Ind 84,420 3rd N/A N/A Cushman & Wakeeld 20 Lambert Corporate I Airport Ind 68,000 3rd N/A N/A Colliers International 21 Aviator Business Park - Lot 7 Airport Ind 66,750 3rd Fair-Play Scoreboards N/A CBRE, Inc. 22 Westport Distribution Center A Westport Ind 63,345 2nd Sundisc Abrasives USA CBRE, Inc. Block Hawley Commercial Real Estate Hazelwood Logistics Ctr Dr Airport Ind 63,000 3rd TAGG Logistics N/A Block Hawley Commercial Real Estate Mall Pky St Charles County Ind 62,100 1st Elite Printing & Packaging N/A Cushman & Wakeeld 25 Hazelwood Logistics Center 1 Airport Ind 55,109 3rd N/A N/A JLL 26 Imperial Illinois Ind 54,000 2nd Distribution Now N/A BarberMurphy Group Rider Trail S Earth City Ind 53,626 3rd Johnson Controls, Inc. CBRE, Inc. Colony Capital, Inc.; CBRE, Inc Lakefront Dr Earth City Ind 51,600 3rd Motors & Armatures Inc N/A Block Hawley Commercial Real Estate Phantom Dr Airport Ind 50,000 1st WellFit Parts International Co. N/A Intelica Commercial Real Estate 30 Hazelwood Logistics Center 1 Airport Ind 48,249 2nd N/A N/A JLL 31 Hazelwood Logistics Center 1 Airport Ind 48,249 2nd N/A N/A JLL 32 DukePort II* Earth City Ind 44,855 3rd Pack Rat N/A CBRE, Inc. 33 Brown Campus #2 Airport Ind 43,210 1st N/A N/A JLL 34 DukePort Earth City Ind 43,200 3rd CSI Distribution CBRE, Inc. Duke Realty Corporation; CBRE, Inc. 35 Cassens Business Center Fenton Ind 42,449 4th N/A N/A JLL N Hanley Rd North County Ind 41,539 2nd OSA N/A First Industrial Realty Trust, Inc. 37 Western Building North County Ind 38,958 2nd N/A N/A G W Van Keppel Co Lakefront Dr Earth City Ind 38,000 2nd MMS A Medical Supply Co N/A Block Hawley Commercial Real Estate 39 Earth City Industrial Center 5 Earth City Ind 37,963 2nd N/A N/A Cushman & Wakeeld 40 Westport Center II Westport Ind 37,613 1st N/A N/A Exeter Property Group LLC * Renewal 12 The CoStar Industrial Report 2016 CoStar Group, Inc.

18 Deliveries, Absorption & C e n t r a l C o u n t y M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse Year-End 2016 St. Louis (0.100) Delivered SF Absorption SF 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Percent Vacant (0.200) q q q q q q q q q q q q q q q q 0.0% Vacant Space Quoted Rental Rates 1.60 Direct SF Sublet SF $ $ Dollars/SF/Year $4.60 $4.50 $4.40 $ $ $ $4.00 Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q ,704, , % 76, $ q ,704, , % 15, $ q ,704, , % 64, $ q ,704,169 1,038, % 3, $ q ,704,169 1,042, % 376, , $ q ,625,169 1,339, % 52, ,000 $ q ,625,169 1,391, % (152,708) ,000 $ q ,625,169 1,239, % 19, ,000 $ q ,625,169 1,258, % 89, ,000 $ q ,625,169 1,348, % 120, ,000 $ q ,625,169 1,468, % 173, ,000 $ q ,625,169 1,642, % 339, $ q ,628,019 1,985, % 137, $ q ,639,719 2,134, % (140,725) $ q ,639,719 1,993, % 37, $ q ,639,719 2,031, % (20,230) $ CoStar Group, Inc. The CoStar Industrial Report 13

19 St. Louis Year-End 2016 Deliveries, Absorption & I l l i n o i s M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse Delivered SF Absorption SF 7.0% % (0.500) 5.0% 4.0% 3.0% 2.0% 1.0% Percent Vacant (1.000) q q q q q q q q q q q q q q q q 0.0% Vacant Space Quoted Rental Rates Direct SF Sublet SF $3.90 $ $ Dollars/SF/Year $3.75 $3.70 $3.65 $3.60 $3.55 $ $3.45 Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q ,203,215 1,089, % 18, ,192,730 $ q ,203,215 1,107, % 783, ,192,730 $ q ,203,215 1,891, % 932, ,540, ,580 $ q ,663,165 1,283, % 14, ,540,050 $ q ,663,165 1,298, % (168,953) ,540,050 $ q ,663,165 1,129, % 15, ,486,750 $ q ,663,165 1,144, % 1,089, ,083, $ q ,580,028 1,151, % 85, ,083,137 $ q ,580,028 1,237, % 501, , ,083,137 $ q ,399,028 1,558, % 248, ,137 $ q ,399,028 1,806, % 532, ,000 $ q ,399,028 2,338, % 247, , ,000 $ q ,200,255 2,387, % (197,369) ,773 $ q ,200,255 2,190, % (541,412) ,773 $ q ,200,255 1,649, % 654, , ,773 $ q ,717,957 1,821, % 107, ,298 $ The CoStar Industrial Report 2016 CoStar Group, Inc.

20 Deliveries, Absorption & N o r t h S t L o u i s C o u n t y M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse Year-End 2016 St. Louis (0.200) (0.400) (0.600) (0.800) Delivered SF Absorption SF 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% q q q q q q q q q q q q q q q q Percent Vacant Vacant Space Quoted Rental Rates 5.00 Direct SF Sublet SF $ $ Dollars/SF/Year $4.45 $4.40 $4.35 $ $ $4.20 Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q ,646,809 4,337, % 736, , ,677,603 $ q ,801,009 4,228, % 229, ,383,553 $ q ,801,009 4,458, % 995, ,114, ,383,553 $ q ,686,721 4,339, % 124, ,538,288 $ q ,686,721 4,464, % 472, , ,538,288 $ q ,768,460 4,018, % (102,603) 1 150, ,257,261 $ q ,618,419 3,765, % (79,193) ,802 $ q ,618,419 3,686, % (186,687) ,027 $ q ,618,419 3,499, % (664,954) ,986 $ q ,618,419 2,834, % 845, $ q ,618,419 3,680, % (98,494) $ q ,618,419 3,582, % 451, , $ q ,395,919 3,811, % 732, ,500 $ q ,395,919 4,544, % 283, ,500 $ q ,400,919 4,832, % 327, ,500 $ q ,400,919 5,159, % 286, $ CoStar Group, Inc. The CoStar Industrial Report 15

21 St. Louis Year-End 2016 Deliveries, Absorption & S o u t h S t L o u i s C o u n t y M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse Delivered SF Absorption SF 12.0% 10.0% (0.100) (0.200) 8.0% 6.0% 4.0% 2.0% 0.0% q q q q q q q q q q q q q q q q Percent Vacant Vacant Space Quoted Rental Rates 1.20 Direct SF Sublet SF $ $ Dollars/SF/Year $6.40 $6.20 $ $ $5.60 Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q ,079, , % 45, $ q ,079, , % (32,110) $ q ,079, , % 47, $ q ,079, , % 97, $ q ,079, , % 18, $ q ,079,254 1,001, % (104,203) $ q ,079, , % (26,639) $ q ,079, , % (77,518) $ q ,079, , % 210, $ q ,079,254 1,004, % (57,541) $ q ,079, , % 596, $ q ,079,254 1,543, % 27, $ q ,079,254 1,570, % 227, $ q ,079,254 1,798, % 222, $ q ,079,254 2,021, % (73,201) $ q ,079,254 1,948, % 131, $ The CoStar Industrial Report 2016 CoStar Group, Inc.

22 Deliveries, Absorption & S t C h a r l e s C o u n t y M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse Year-End 2016 St. Louis Delivered SF Absorption SF 6.0% % 4.0% 3.0% 2.0% 1.0% Percent Vacant (0.100) q q q q q q q q q q q q q q q q 0.0% Vacant Space Quoted Rental Rates Direct SF Sublet SF $5.40 $5.35 $ Dollars/SF/Year $5.25 $5.20 $5.15 $5.10 $5.05 $ $ $4.90 Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q ,994, , % (27,697) ,289,530 $ q ,994, , % 47, , ,914,780 $ q ,856, , % 18, ,338,000 $ q ,856, , % 121, ,000 $ q ,856, , % (36,819) ,000 $ q ,856, , % 41, $ q ,856, , % 30, $ q ,856, , % (18,077) $ q ,856, , % 93, , $ q ,774, , % 602, , ,844 $ q ,274, , % 88, ,844 $ q ,274, , % 54, ,844 $ q ,274, , % 71, ,000 $ q ,274, , % 88, ,000 $ q ,274,333 1,086, % 223, ,000 $ q ,276,805 1,312, % 76, ,000 $ CoStar Group, Inc. The CoStar Industrial Report 17

23 St. Louis Year-End 2016 Deliveries, Absorption & S t L o u i s C i t y M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse (0.100) (0.200) (0.300) Delivered SF Absorption SF 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% Percent Vacant (0.400) q q q q q q q q q q q q q q q q 0.0% Vacant Space Quoted Rental Rates Direct SF Sublet SF $ $ Dollars/SF/Year $3.00 $2.95 $ $ $2.80 Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 1,787 74,674,090 7,269, % 53, , $ q 1,786 74,659,090 7,308, % 47, ,000 $ q 1,786 74,659,090 7,355, % 162, , ,000 $ q 1,786 74,727,019 7,585, % (83,324) ,000 $ q 1,786 74,727,019 7,502, % 16, ,000 $ q 1,786 74,727,019 7,519, % 537, ,000 $ q 1,791 75,289,632 8,619, % 427, , $ q 1,797 75,611,480 9,368, % (265,753) ,000 $ q 1,799 75,700,049 9,191, % 68, ,000 $ q 1,799 75,700,049 9,259, % 211, ,000 $ q 1,801 75,762,525 9,533, % (84,545) ,000 $ q 1,805 75,908,737 9,595, % (165,307) $ q 1,808 75,955,249 9,476, % (132,921) $ q 1,809 75,957,249 9,345, % (51,389) $ q 1,809 75,957,249 9,294, % (129,696) 1 44, $ q 1,810 76,072,370 9,279, % (341,329) ,796 $ The CoStar Industrial Report 2016 CoStar Group, Inc.