1Q Northern & Central New Jersey Industrial Report. NAI Hanson leased 354,250 square feet at 1000 High Street, Perth Amboy

Transcription

1 1Q 2018 Northern & Central New Jersey Industrial Report NAI Hanson leased 354,250 square feet at 1000 High Street, Perth Amboy

2 1Q2018 Edition

3 Submarket Map Sussex Hamburg Franklin West Milford Hardwick Mahwah Newton Montvale Sparta Wanaque Ridgewood Kinnelon Norwood Hopatcong Wayne Tenafly Montville Totowa Hackettstown Paramus Boonton Clifton Dover Hackensack Budd Parsippany West Englewood Lake Orange Randolph Rutherford Secaucus Long Valley Morristown Newark Jersey City Union Cokesbury Scotch Elizabeth Bayonne Bedminister Plains Linden Lebanon Warren Rahway Carteret Somerville Edison Avenel Flemington East Brunswick South Amboy Warren & Sussex Route 46/23/3 Corridor Northern Bergen County Central Bergen County Meadowlands Suburban Essex Princeton Jamesburg Cranbury Robbinsville Hamilton Freehold Trenton Morris Region Port Hunterdon Somerset Exit 10/12 Brunswick/Exit 9 Exit 8A Exit 7A

4 Northern & Central 1Q 2018 Overview County Overview Total Vacant Total Vacant Total Net Total SF RBA Under Total Average Total RBA Available SF Available % Absorption Leased Construction Asking Rate NJ Overall 663,382,455 23,349, % 2,976,064 5,016,174 13,712,230 $7.70 Middlesex 190,771,488 3,547, % 1,701,828 2,352,628 7,570,520 $7.67 Bergen 91,949,561 3,679, , , ,416 $8.90 Hudson 82,685,948 4,009, % (88,791) 665, ,130 $8.73 Essex 65,501,560 1,870, % 413, ,864 1,955,091 $8.42 Union 62,758,612 2,758, % 176, , ,051 $6.98 Passaic 53,706,552 2,415, % 51, , ,822 $7.10 Morris 38,733,522 2,591, % (111,567) 390,323 35,000 $7.08 Mercer 33,700,212 1,069, % (8,195) 5, ,000 $4.87 Somerset 27,753, , % 2,393 19, ,000 $7.39 Hunterdon 6,624, , % 68, $8.64 Warren 6,449, , % (26,000) 0 1,000,200 $5.61 Sussex 2,748, , % 54, $5.28 Orange, NY 28,282,150 1,505, % 11,742 26,100 60,000 $6.17 Rockland, NY 15,270,144 1,008, % 110,533 41,102 52,000 $9.81 Submarket Overview Total RBA Total Vacant Available SF Total Vacant Available % Total Net Absorption Total SF Leased RBA Under Construction Total Average Asking Rate Ports 138,116,138 6,054, % (231,644) 328,509 2,460,142 $7.38 Exit 10/12 104,702,903 2,357, % 806,089 1,323,774 3,851,962 $8.14 Meadowlands 94,066,632 3,352, % 1,017, , ,546 $9.27 Exit 8A 64,199, , % 896, ,966 3,718,558 $6.65 Route 46/23/3 Corridor 53,314,033 2,398, % 10, , ,822 $7.11 Exit 7A 43,558,184 1,564, % (792) 98, ,750 $5.53 Morris Region 36,832,966 2,561, % (92,667) 163,173 35,000 $7.05 Somerset 27,580, , % 2,393 19, ,000 $7.42 Central Bergen County 27,063,334 1,098, % 161, ,520 0 $8.80 Suburban Essex 23,824, , % 430, ,864 89,000 $8.22 Northern Bergen County 22,124,714 1,178, % (113,092) 389,586 30,000 $8.75 Brunswick/Exit 9 21,869, , % (314) 84,888 0 $6.03 Warren & Sussex 9,197, , % 28, ,000,200 $5.45 Hunterdon 6,545, , % 68, $8.23 Source: CoStar 10,000 + sf - All information comes from sources deemed reliable by NAI James E. Hanson.

5 Sales Activity Investor appetite for purchasing industrial assets continues to be strong. The supply of buildings for sale remains tight, creating fierce competition for the assets that do come on the market. -Scott K. Perkins, sior Senior Vice President NAI James E. Hanson Sales There was over $500,000,000 in sales volume this quarter. The average price per square foot is down $18.80 from the previous quarter ending at $81.82 per square foot. The top transaction for this quarter was The Blackstone Group purchasing a $1,800,000,000 industrial portfolio from Cabot Properties. The portfolio included 146 properties in Chicago, Dallas, Baltimore/DC, Los Angeles, South Florida and New 100 Corporate Drive, Mahwah Jersey. There was 945,000 square feet sold in New Jersey. The properties included 100 Corporate Drive, Mahwah; 200 Corporate Drive, Mahwah; 750 Corporate Drive, Mahwah; 1595 MaCarthur Boulevard, Mahwah; 320 State Route 17, Mahwah; 8 Thornton Road, Oakland; 1 Wiley Drive, Franklin; and 2303 Center Square Road, Swedesboro. Another top sale transaction this quarter included 191 Blair Road in Avenel. Barings Real Estate Advisers LLC purchased the property for $35,800,000 from Sitex Group. 191 Blair Road, built in 2018, is a 198,854 square foot class A industrial warehouse 100% leased to DHL on a long term basis. The property features 36 ceilings, 53 exterior doors and 2 drive-ins. In October 2017, Barings purchased 215 Blair Road, a 175,182 square foot class A industrial warehouse, which was renovated in 2017 and has a long term lease with TJ Maxx, who occupies the full building. The property features ceiling heights, 33 exterior doors and 1 drive-in. Several noteworthy land transactions this quarter included Bridge Development Partners purchasing a 365 acre development site along the Interstate 78/81 Corridor in Phillipsburg for $43,000,000 and I-78 Logistics Park, Phillipsburg Advance Realty and Greek Development purchasing 350 acres in Linden for $112,000,000. Bridge Development s site is approved for 3,800,000 square feet of distribution space and Advance Realty and Greek Development s site is approved for 4,000,000 square feet.

6 Leasing Activity The Northern and Central New Jersey market saw over 5,000,000 square feet leased in the first quarter of Leasing is down over 4,900,000 square feet from the previous quarter. The average asking rate is up $0.38 from the previous quarter ending at $7.70 per square foot while the vacancy rate is down 0.2% from the previous quarter ending at 3.5%. There was over 2,900,000 square feet absorbed in the first quarter. Average asking rates continue to remain high in the Bergen County submarkets. The Meadowlands submarket saw a rate of $9.27 per square foot, an increase of $0.51 from the previous quarter. Following behind are the Central Bergen County submarket and the Northern Bergen County submarket which saw rates at $8.80 per square foot and $8.75 per square foot respectively. While vacancy continues to remain tight, the Exit 8A submarket and Brunswick/Exit 9 saw the lowest levels. Exit 8A ended with the lowest vacancy of 1.3% and Brunswick/ Exit 9 followed shortly behind with a vacancy rate of 1.6%. It s important to note of the 14 submarkets that are tracked in the Northern and Central New Jersey market, there are 11 submarkets with a vacancy under 5%. Top lease transactions for the quarter included 4PX Express, XPO Logistics and Snow Joe. 4PX leased the entire 354,250 square feet at 1000 High Street in Perth Amboy. The building was recently delivered by Bridge Development. XPO Logistics st Street, North Bergen leased 294,480 square feet at 2349 US Highway in Dayton as well as 175,453 square feet at 2353 US Highway 130 in Dayton and Snow Joe leased the recently delivered 271,176 square feet at 100 Performance Drive in Mahwah. NAI Hanson completed the transactions with 4PX and Snow Joe. The top renewal for the quarter, also completed by NAI Hanson, was Dynamic Worldwide who renewed their 165,090 square feet at st Street in North Bergen. Leasing $ % 4,967,299 SF 2,754,676 SF *Compared to 4Q17 Northern & Central NJ Northern & Central NJ Leasing Activity $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 $ % 3.0% 2.0% 1.0% 0.0% 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 NNN Rent Overall Vacant Available Percent % Total

7 Significant Leases & Sales 1Q2018 Significant Leases Tenant Address Size (SF) Submarket 4PX Express* 1000 High Street, Perth Amboy 354,250 Exit 10/12 XPO Logistics 2349 US Highway 130, Dayton 294,480 Exit 8A Snow Joe* 100 Peformance Drive, Mahwah 271,176 Northern Bergen County DHL 191 Blair Road, Avenel 198,854 Exit 10/12 XPO Logistics 2353 US Highway 130, Dayton 175,453 Exit 8A Dynamic Worldwide* (Renewal) st Street, North Bergen 165,090 Meadowlands Cibo Vita 12 Vreeland Avenue, Totowa 144,340 Route 46/23/3 Corridor Cardinal Health 1265 S River Road, Cranbury 127,963 Exit 8A Stong Man Buiding Products (Renewal) 240 West Parkway, Pompton Plains 127,800 Route 46/23/3 Corridor Direct Mail 200 Circle Drive N, Piscataway 109,000 Exit 10/12 Reliable Tire Service 903 Murray Road, East Hanover 77,775 Morris Region Evergreen Cooperative Laundry 1 Eastern Road, Kearny 57,200 Meadowlands Handy Laundry* 50 Spring Street, Ramsey 40,000 Northern Bergen County Bungalow Five (Renewal) 95 Mayhill Street, Saddle Brook 32,057 Central Bergen County CET 30 Lister Avenue, Newark 30,000 Ports Amazing Vitamins* 190 Jony Drive, Carlstadt 25,190 Meadowlands Significant Sales Address Size (SF) Price Buyer Seller Chicago, Dallas, Baltimore/DC, LA, South Florida, NJ 22,000,000 $1,800,000,000 The Blackstone Group Cabot Properties 191 Blair Road, Avenel 198,854 $35,800,000 Barings Real Estate Advisers LLC Sitex Group 152 Ridge Road, Dayton 211,450 $22,000,000 Joseph Saadia Jay Franco & Sons, Inc. 133 Williams Drive, Ramsey 171,542 $20,233,536 LCN Capital Partners PMC LLC 27 Distribution Way, South Brunswick 223,977 $17,250,000 CenterPoint Properties Beel Company Fadem Road, Springfield 206,901 $15,500,000 ADP Equity, LLC Bristol Group 400 & 500 Apgar Drive, Somerset 170,459 $15,000,000 F. Greek Development High Street Equity Advisors 161 Docks Corner Road, South Brunswick 156,200 $14,590,045 Haddad Apparel Group The KRE Group 299 Webro Road, Parsippany 164,000 $14,288,600 Liquid Church Lester M. Entin Associates 7 Fitzgerald Avenue, Cranbury 152,736 $10,600,000 The KRE Group Davlyn Industries 406 Wyckoffs Mills Rd., East Windsor 84,000 $6,840,000 AJ Madison, Inc. Atlantic Mills, Inc. *NAI Hanson Deal

8 Under Construction Construction Address Size (SF) Completion Developer Type 942 Memorial Pkwy., Phillipsburg (7 building development site) Rendering of 150 Totowa Road, Wayne Rendering of 1400 Randolph Avenue, Avenel 1,000,200 1Q2019 Bridge Development Partners Spec. Devel Doremus Avenue, Newark 870,640 1Q2020 The Morris Companies Spec. Devel. 171 River Road, Piscataway 725,400 2Q2018 Rockefeller Group Pre-leased 152 Route 206, Hillsborough 700,000 2Q2018 Industrial Realty Group Spec. Devel. 429 Delancy Street, Newark 661,741 4Q2018 Duke Realty Corporation/ Bridge Development Partners Spec. Devel King Georges Post Road, Edison 635,086 3Q2018 Federal Business Centers Build-to-Suit Wyckoff Mills Rd, East Windsor 635,000 2Q2018 Exeter Property Group Spec. Devel. 700 Kapkowski Road, Elizabeth 540,000 2Q2018 Prologis Spec. Devel. 58 Station Road, Cranbury 504,428 2Q2018 Prologis Spec. Devel. 150 Totowa Road, Wayne 459,822 2Q2018 Peykar Family Properties of Wayne Spec. Devel. 2 Turner Place, Piscataway 451,800 2Q2018 F. Greek Development Pre-leased 1065 Cranbury South River Road, Monroe Township 449,880 2Q2018 IDI Gazeley Spec. Devel. 3 Brick Yard Road, Cranbury 444,466 4Q2018 Clarion Partners Spec. Devel. 300 Prospect Plains Road, Cranbury 416,300 2Q2018 The Sudler Companies Spec. Devel. 400 Docks Corner Road, Monroe Twp. 365,400 2Q2018 Matrix Development Group Spec. Devel. 286 Prospect Plains Road, Cranbury 341,982 2Q2018 The Sudler Companies Spec. Devel. 171 River Road, Piscataway 311,040 2Q2018 Rockefeller Group Spec. Devel US Highway 130, Dayton 295,350 2Q2018 Clarion Partners/F. Greek Dev. Spec. Devel Miller Street, Newark 289,451 4Q2018 Penwood Real Estate Investment Management Spec. Devel. 800 Centennial Avenue, Piscataway 277,830 4Q2018 Penford Group Spec. Devel Randolph Avenue, Avenel 242,296 2Q2018 Principal Real Estate Investors Spec. Devel. 171 River Road, Piscataway 197,200 4Q2018 Rockefeller Group Spec. Devel. 5 Ethel Boulevard, Wood-Ridge 193,805 4Q2018 Duke Realty Corporation/ Bridge Development Partners Spec. Devel. 225 Raritan Center Parkway, Edison 190,293 2Q2018 Federal Business Centers Spec. Devel Blair Road, Carteret 156,067 2Q2018 The Hampshire Companies/AEW Spec. Devel. Bergen Avenue, Kearny 130,043 4Q2018 Hartz Mountain Industries, Inc. Spec. Devel. 400 Huyler Street, South Hackensack 115,611 3Q2018 Forsgate Industrial Partners Spec. Devel. 70 Carter Drive, Edison 100,250 2Q2018 Wick Companies Spec. Devel.

9 1Q Deliveries Construction 46 Meadowlands Parkway, Secaucus 100 Performance Drive, Mahwah Address Size (SF) Leased Tenant 203 Windsor Center Dr., Hightstown 567, % Aurobindo Pharma USA, Inc. 46 Meadowlands Parkway, Secaucus 302, % UB Distributors 100 Performance Drive, Mahwah* 271, % Snow Joe 191 Blair Road, Avenel 198, % DHL 1 Eastern Road, Kearny 197, % Evergreen Cooperative Laundry 74 Carter Drive, Edison 80, % North American Logistics In The News Real Estate NAI Hanson negotiates lease for Mahwah warehouse By Elana Knopp, April 25, 2018 at 7:56 AM NAI James E. Hanson commercial real estate firm recently brokered the longterm lease of a 271,176-square-foot industrial building owned by Sitex Group in Mahwah s Stateline Business Park. Garden tool manufacturer Snow Joe DC will be moving into the warehouse, which is situated on more than 20 acres and features 36 dock doors, two drive-ins and parking for 25 trailers and 184 cars. 271,176 sq. ft., industrial building, 100 Performance Drive, Mahwah - (KSS ARCHITECTS, COURTESY NAI JAMES E. HANSON) *NAI Hanson handled the leasing.

10 Ports MARKET SIZE 138,116,138 SF VACANT AVAILABILITY (SF) 6,054,241 SF VACANT AVAILABILITY (%) 4.4% 1Q18 328,509 SF TOTAL ,509 SF AVERAGE 1Q18 TOTAL 2018 UNDER CONSTRUCTION DELIVERED The port market has seen substantial rent growth over the past quarter. Vacancies are at all-time lows and the user demand is high. Our team believe this increase is sustainable due to the lack of warehouse distribution space and yard space. The continual increase in cargo container ship carrying capacity combined with the port running at less than capacity should translate to stability in the market. Russell J. Verducci Associate Vice President NAI James E. Hanson 1Q2018 vs. 4Q2017 $7.38 PSF (231,644) SF (231,644) SF 2,460,142 SF 0 SF 0.5% Trends $0.26 Vacancy in the Ports submarket increased 0.5% from the previous quarter ending the quarter at 4.4%. The rate is down 0.5% from both the first quarter of 2017 and the first quarter of The average asking rate ended the first quarter of 2018 at $7.38 per square foot, up $0.26 per square foot from the previous quarter. The rate is up $0.20 per square foot from the first quarter of 2017 and up $0.79 per square foot from the first quarter of ,144,838 $8.50 $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 $ ,045 SF 6.5% 5.5% 4.5% 3.5% There was over 328,000 square feet leased in the first quarter and net absorption ended negatively with over -231,000 square feet absorbed. Top lease transactions for the quarter included CET leasing 30,000 square feet on acres at 30 Lister Avenue in Newark and Tumbador leasing 12,000 square feet at 815 Martin Street in Rahway. A top sale transaction included Fadem Road in Springfield. The 206,901 square foot warehouse sold for $15,500,000 or $74.92 per square foot from Bristol Group, Inc. to ADP Equity LLC. The property was 93.1% leased at the time of sale to Ring Container Technologies (109,842 square feet) and SAS Graphic Supply (82,749 square feet). NNN Rent Overall Vacant Available Percent % Total Fadem Road, Springfield

11 Exit 10/12 MARKET SIZE 104,702,903 SF VACANT AVAILABILITY (SF) 2,357,312 SF VACANT AVAILABILITY (%) 2.3% 1Q18 1,323,774 SF TOTAL ,323,774 SF AVERAGE 1Q18 TOTAL 2018 UNDER CONSTRUCTION DELIVERED Exit 10 and exit 12 are also experiencing similar market conditions as other northern New Jersey primary markets. The main drivers include being a spillover from the port market and outer-borough markets. We believe prices will remain stable, if not increasing in the future. In addition to the tight warehousing market, the implementation of electronic logs for truck drivers and that the shortage of truck drivers are increasing transportation costs substantially. Eric Demmers Industrial Specialist NAI James E. Hanson 1Q2018 vs. 4Q2017 $8.14 PSF 806,089 SF 806,089 SF 3,851,962 SF 279,104 SF 1.0% Trends $0.10 One of the lowest vacancies can be found in the Exit 10/12 submarket. Vacancy ended the first quarter at 2.3%, a decrease of 1% from the previous quarter. The rate is down 0.4% from the first quarter of 2017 and down 0.8% from the first quarter of The average asking rate rose $0.10 per square foot from the previous quarter to end the first quarter at $8.14 per square foot, which is the first time we ve seen a number over $8.00 per square foot. The rate is up $0.98 per square foot from the first quarter of 2017 and up $2.11 per square foot from the first quarter of The Exit 10/12 submarket saw the most leasing activity with over 1,320,000 square feet leased and over 806,000 square feet absorbed. Top lease transactions included 4PX Express leasing 354,250 square feet at 1000 High Street in Perth Amboy and DHL leasing 198,854 square feet at 191 Blair Road in Avenel. NAI Hanson facilitated the transaction at 1000 High Street. 191 Blair Road in Avenel, a 198,854 square foot newly constructed class A warehouse, was one of the top sale transactions for the quarter. Sitex Group sold the property along with 215 Blair Road, which closed in October, to Barings Real Estate Advisors. 191 Blair sold for $35,800,000 or $180 per square foot. 98,570 SF $8.50 $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 NNN Rent Overall 1,061,364 SF Vacant Available Percent % Total 8.0% 7.0% 3.0% 2.0% 1.0% 0.0% 191 Blair Road, Avenel

12 Meadowlands MARKET SIZE 94,066,632 SF VACANT AVAILABILITY (SF) 3,352,405 SF VACANT AVAILABILITY (%) 3.6% 1Q18 892,731 SF TOTAL ,731 SF AVERAGE 1Q18 TOTAL 2018 UNDER CONSTRUCTION DELIVERED E-Commerce and a strong economy continue to drive demand for warehouse space in the Meadowlands. Demand remains strongest for new class A space; however, there are many logistics companies providing the last mile delivery service that send their trucks in and out of NYC all day, every day and do not require large facilities with 36 ceiling heights because their product turns over so rapidly. Thomas A. Vetter, sior Senior Vice President NAI James E. Hanson 1Q2018 vs. 4Q2017 $9.27 PSF 1,017,990 SF 1,017,990 SF 732,546 SF 638,982 SF 0.2% Trends $0.51 The Meadowlands submarket saw a slight decrease of 0.2% in the vacancy rate to end the quarter at 3.6%. Vacancy is down 0.3% from the first quarter of 2017 and down 1.9% from the first quarter of The average asking rate jumped $0.51 per square foot from the previous quarter to end the first quarter at $9.27 per square foot making this the first time numbers are over $9.00 per square foot and the highest asking rate of the submarkets. The rate is up $1.15 per square foot from the first quarter of 2017 and up $2.10 per square foot from the first quarter of There was over 890,000 square feet leased in the first quarter of 2018 and over 1,000,000 square feet absorbed. Top lease transactions included NAI Hanson renewing Dynamic Worldwide s 165,090 square feet at st Street in North Bergen and Main Freight leasing 111,000 square feet at 50 Cable Drive in Kearny. 401 Central Avenue in East Rutherford sold this quarter from JBJ Partners at East Rutherford LLC to Amerco Real Estate Co. for $7,400,000 or $56.92 per square foot. The site is going to be redeveloped into a 90,000 square foot self-storage facility. 360,500 SF $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 NNN Rent Overall 529,708 SF Vacant Available Percent % Total 6.5% 5.5% 4.5% 3.5% 3.0% 50 Cable Drive, Kearny

13 Exit 8A Exit 8A had a very robust leasing market in late 2017 and the first quarter of 2018 has led to a historic low in available space. The current vacancy rate is about 1.3%, which is unheard of in that marketplace. The end result is that asking rates continue to rise rapidly. Most new buildings in the pipeline are getting leased before completion. Ken Lundberg, sior Senior Vice President NAI James E. Hanson MARKET SIZE 64,199,139 SF VACANT AVAILABILITY (SF) 837,656 SF VACANT AVAILABILITY (%) 1.3% 1Q18 943,966 SF TOTAL ,966 SF 1Q2018 vs. 4Q2017 AVERAGE 1Q18 TOTAL 2018 UNDER CONSTRUCTION DELIVERED $6.65 PSF 896,053 SF 896,053 SF 3,718,558 SF 357,500 SF 0.3% Trends $0.09 The lowest vacancy rate was seen in the Exit 8A submarket ending the quarter at 1.3%. The rate is down 0.3% from the previous quarter. The rate is down 0.5% from the first quarter of 2017 and down 2.4% from the first quarter of The average asking rate, which is up $0.09 per square foot from the previous quarter, ended the first quarter at $6.65 per square foot. Rates are up $0.16 per square foot from the first quarter of 2017 and up $1.83 per square foot from the first quarter of Leasing accounted for over 943,000 square feet for the quarter and there was over 896,000 square feet absorbed. Top lease transactions included XPO Logistics leasing 294,480 square feet at 2349 US Highway 130 in Dayton and leasing 175,453 square feet at 2353 US Highway 130 in Dayton. Another top transaction included Cardinal Health leasing 127,963 square feet at 1265 S River Road in Cranbury. 3,314,836 SF $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 $4.00 $3.50 $3.00 NNN Rent Overall 10,583 SF Vacant Available Percent % Total 3.0% 2.0% 1.0% 0.0% A top sale transaction included 27 Distribution Way in South Brunswick. The 223,977 square foot warehouse sold for $17,250,000 or $77.02 per square foot from Beel Company to CenterPoint Properties. The property is fully leased to Bunzl Distribution, Inc US Highway 130, Dayton

14 Route 46/23/3 Corridor MARKET SIZE 53,314,033 SF VACANT AVAILABILITY (SF) 2,398,880 SF VACANT AVAILABILITY (%) 4.5% 1Q18 526,813 SF TOTAL ,813 SF 1Q2018 vs. 4Q2017 AVERAGE 1Q18 TOTAL 2018 UNDER CONSTRUCTION DELIVERED $7.11 PSF 10,888 SF 10,888 SF 459,822 SF 0 SF 0.7% $ ,206 SF 253,341 SF Trends Vacancy ended the first quarter at 4.5%, which is up slightly by 0.7% compared to the previous quarter. The rate is up 0.9% compared to the first quarter of 2017 and down 0.5% compared to the first quarter of Average asking rates ended the first quarter at $7.11. The rate is down $0.80 per square foot compared to the fourth quarter of Asking rates are down $0.34 per square foot from the first quarter of 2017, but up $0.90 per square foot from the first quarter of There was over 526,000 square feet leased in the first quarter and over 10,000 square feet absorbed. Top lease transactions included Cibo Vita leasing 144,340 square feet at 12 Vreeland Avenue in Totowa and Strong Man Building Products renewing their 127,800 square feet at 240 West Parkway in Pompton Plains. 90 Newark Pompton Turnpike in Wayne sold from InterMarket Technology, Inc. to Shlomo Abrahamian. The 54,000 square foot manufacturing building sold for $3,600,000 or $66.67 per square foot. The property features 3 exterior loading docks and 4 drive-ins. The buyer purchased the property for expansion space. $8.50 $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 $ % 4.5% 3.5% 3.0% NNN Rent Overall Vacant Available Percent % Total 12 Vreeland Avenue, Totowa

15 Morris Region MARKET SIZE 36,832,966 SF VACANT AVAILABILITY (SF) 2,561,904 SF VACANT AVAILABILITY (%) 7.0 % 1Q18 163,173 SF TOTAL ,173 SF 1Q2018 vs. 4Q2017 AVERAGE 1Q18 TOTAL 2018 UNDER CONSTRUCTION DELIVERED $7.05 PSF (92,667) SF (92,667) SF 35,000 SF 0 SF 0.9% $ ,362 SF 480,678 SF Trends The Morris Region saw a 0.9% decrease in vacancy compared to the previous quarter. The first quarter ended with a 7% vacancy rate, which is the highest of all the submarkets in Northern and Central New Jersey. The rate is down 0.7% from the first quarter of 2017 and up 2.7% from the first quarter of Average asking rates are up $0.28 per square foot compared to the fourth quarter of The first quarter ended with rates at $7.05 per square foot. Rates are up $0.34 per square foot from the first quarter of 2017 and up $0.89 per square foot from the first quarter of Over 163,000 square feet was leased in the first quarter and net absorption ended negatively with over -92,000 square feet absorbed. Top lease transactions included Reliable Tire Service leasing 77,755 square feet at 903 Murray Road in East Hanover and General Dynamics leasing 20,000 square feet at 7-9 Vreeland Road in Florham Park. A top sale transaction included 299 Webro Road in Parsippany. Liquid Church purchased the 164,000 square foot building for $14,288,600 or $87.13 per square foot from Lester M. Entin Associates. They had previously leased the majority of the building on a short term basis in $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 $4.00 NNN Rent Overall Vacant Available Percent % Total 8.5% 8.0% 7.5% 7.0% 6.5% 5.5% 4.5% 903 Murray Road, East Hanover

16 Somerset MARKET SIZE 27,580,059 SF VACANT AVAILABILITY (SF) 650,705 SF VACANT AVAILABILITY (%) 2.4% 1Q18 19,350 SF TOTAL ,350 SF 1Q2018 vs. 4Q2017 AVERAGE 1Q18 TOTAL 2018 UNDER CONSTRUCTION DELIVERED $7.42 PSF 2,393 SF 2,393 SF 700,000 SF 40,000 SF 0.3% $ ,060 SF 60,314 SF Trends The Somerset submarket saw a slight increase of 0.3% in vacancy to end the quarter at 2.4%. Compared to the first quarter of 2017, vacancy is down 0.5% and compared to the first quarter of 2016 vacancy is down 1.4%. Average asking rates declined by $0.66 per square foot from the previous quarter to end the first quarter at $7.42 per square foot. Asking rates are up $0.66 per square foot from the first quarter of 2017 and up $1.95 per square foot from the first quarter of There was over 19,000 square feet leased in the first quarter and over 2,300 square feet absorbed. Top lease transactions included 7,300 square feet leased at 400 Apgar Drive in Somerset and 6,000 square feet leased at 25 E Chimney Rock Road in Bridgewater. A top sale transaction included 400 Apgar Drive and 500 Apgar Drive in Somerset. High Street Equity Advisors sold the properties to F. Greek Development for $15,000,000 or $88.00 per square foot. At the time of sale, the buildings were 91% occupied. $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $ % 2.0% 1.0% 0.0% NNN Rent Overall Vacant Available Percent % Total 400 Apgar Drive, Somerset

17 Central Bergen County MARKET SIZE 27,063,334 SF VACANT AVAILABILITY (SF) 1,098,057 SF VACANT AVAILABILITY (%) 4.1% 1Q18 180,520 SF TOTAL ,520 SF 1Q2018 vs. 4Q2017 AVERAGE 1Q18 TOTAL 2018 UNDER CONSTRUCTION DELIVERED $8.80 PSF 161,624 SF 161,624 SF 0 SF 0 SF 0.8% $ ,365 SF 141,730 SF Trends The Central Bergen County submarket ended the first quarter with a vacancy rate of 4.1%. The rate is down 0.8% from the previous quarter. Compared to the first quarter of 2017, the rate is down 1.5% and compared to the first quarter of 2016, the rate is down 1.1%. Average asking rates ended the first quarter at $8.80 per square foot, which is a decline of $0.24 per square foot from the previous quarter. Rates have been on the rise and are up $1.52 per square foot compared to the first quarter of 2017 and up $1.72 per square foot compared to the first quarter of $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 NNN Rent Overall Vacant Available Percent % Total 6.5% 5.5% 4.5% 3.5% Over 180,000 square feet was leased in the first quarter of 2018 and over 161,000 square feet was absorbed. Top lease transactions included Dermaceutical Labs leasing 46,000 square feet at 95 Mayhill Street in Saddle Brook; Bungalow Five renewing their 32,057 square feet at 95 Mayhill Street in Saddle Brook; and Jade Eastern leasing 28,684 square feet at 13 Division Street in Fairview. 187 Garibaldi Avenue in Lodi sold in the first quarter from Martant Realty Co to Dux Paint LLC. The 23,500 square foot warehouse as well as a 1,000 square foot warehouse on the property sold for $1,875,000 or $76.53 per square foot. 95 Mayhill Street, Saddle Brook

18 Northern Bergen County Leasing remains strong in this submarket. The most significant lease was for Sitex s newly constructed 271,176 square foot warehouse located at 100 Performance Drive and Sharp Plaza in Mahwah. There are a couple of limited opportunities for warehouse spaces larger than 100,000 square feet, but space below that amount is extremely tight. Ken Lundberg, sior Senior Vice President NAI James E. Hanson MARKET SIZE 22,124,714 SF VACANT AVAILABILITY (SF) 1,178,488 SF VACANT AVAILABILITY (%) 5.3% 1Q18 389,586 SF TOTAL ,586 SF 1Q2018 vs. 4Q2017 AVERAGE 1Q18 TOTAL 2018 UNDER CONSTRUCTION DELIVERED $8.75 PSF (113,092) SF (113,092) SF 30,000 SF 271,195 SF 0.6% Trends $0.02 Vacancy increased slightly this quarter by 0.6% from the previous quarter to end the first quarter at 5.3%. The rate is down 0.9% from the first quarter of 2017 and down 2.2% from the first quarter of The Northern Bergen County submarket ended the first quarter with an average asking rate of $8.75 per square foot, down $0.02 per square foot from the previous quarter. Rates are down $0.31 per square foot from the first quarter of 2017, but up $0.87 per square foot from the first quarter of There was over 389,000 square feet leased in the first quarter and net absorption posted negative numbers of over -113,000 square feet absorbed. The top transaction included NAI Hanson s leasing of 100 Performance Drive in Mahwah to Snow Joe. Snow Joe leased the entire 271,176 square feet on a long term basis. 208,811 SF $9.50 $9.00 $8.50 $8.00 $7.50 $7.00 NNN Rent Overall 51,031 SF Vacant Available Percent % Total 9.0% 8.0% 7.0% 3.0% 2.0% A top sale transaction included 133 Williams Drive in Ramsey. LCN Capital Partners purchased the 171,542 square foot property from PMC LLC. Konica Minolta North America has the property leased until The property sold for $20,233,536 or $ per square foot. 100 Performance Drive, Mahwah

19 Brunswick/Exit 9 MARKET SIZE 21,869,446 SF VACANT AVAILABILITY (SF) 352,698 SF VACANT AVAILABILITY (%) 1.6 % 1Q18 84,888 SF TOTAL ,888 SF 1Q2018 vs. 4Q2017 AVERAGE 1Q18 TOTAL 2018 UNDER CONSTRUCTION DELIVERED $6.03 PSF (314) SF (314) SF 0 SF 0 SF 0.5% $ ,886 SF 254,339 SF Trends The vacancy rate increased by 0.5% from the previous quarter and ended the first quarter at 1.6%, which is one of the lowest vacancy rates of the submarkets. Rates are down 0.6% from the first quarter of 2017 and down 3.9% from the first quarter of Average asking rates are down $0.19 per square foot from the previous quarter ending at $6.03 per square foot. Rates are up $0.66 per square foot from the first quarter of 2017 and up $1.04 per square foot from the first quarter of Leasing activity accounted for over 84,000 square feet and net absorption ended negatively with over -300 square feet absorbed. The top lease transaction was Hemispherx Biopharma, Inc. leasing 62,600 square feet at 783 Jersey Avenue in New Brunswick in a sale/ leaseback transaction. 783 Jersey Avenue in New Brunswick also sold this quarter from Hemispherx Biopharma, Inc. to Kerron Development. The 62,600 square foot manufacturing building sold for $4,000,000 or $63.90 per square foot. $6.50 $6.00 $5.50 $5.00 $4.50 $4.00 $3.50 $3.00 NNN Rent Overall Vacant Available Percent % Total 9.0% 8.0% 7.0% 3.0% 2.0% 1.0% 0.0% 783 Jersey Avenue, New Brunswick

20 1Q2018 Industrial Market Update The world s largest commercial real estate network. 30+ Countries 400 Offices 7,000± Market Leaders NAI James E. Hanson is the largest independently owned commercial real estate firm in the State with over 60 years of experience in the New Jersey industrial market and one of the largest industrial teams. NAI James E. Hanson currently holds 10 SIOR designations, the most SIORs over any other commercial real estate firm in the State. For more information, please contact: William C. Hanson, sior President x145 whanson@naihanson.com 235 Moore Street 10 Lanidex Plaza West Hackensack, NJ Parsippany, NJ naihanson.com