2018 NORTHEAST INDIANA INDUSTRIAL MARKET SURVEY

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1 2018 NORTHEAST INDIANA INDUSTRIAL MARKET SURVEY 2017 REVIEW 2018 FORECAST PREPARED WITH THE ASSISTANCE OF 2017 was a solid year for industrial real estate in Northeast Indiana. The vacancy rate at the beginning of 2018 was 4.66%, which is the lowest in the 15 years has tracked industrial data. The vacancy rate in Northeast Indiana has decreased steadily since its peak of 12.21% in However, sale and leasing activity was constrained by a lack of quality space and the shortage of available labor. The net absorption of 567,313 sq. ft. in 2017 was lower than prior years due in part to removing the 1,200,000 sq. ft. GE Campus from the inventory. Labor-dependent businesses have expanded or moved into the market, continuing to decrease vacancy and drive down the unemployment rate. Significant transactions included the Faurecia lease of the Hagerman Construction spec building on Airport Expressway in Fort Wayne, Lippert Components lease of the 750,000 sq. ft. building on Pleasant Center Road in Fort Wayne and Sauder Manufacturing s lease of 165,000 sq. ft. in New Haven. Construction started on the 100,000 sq. ft. MKS spec building on Lafayette Center Road, Alconex is building a 106,750 sq. ft. facility on Cook Road and Continental Diamond Tool is building a 112,000 sq. ft. building on Rose Avenue. Two former big box retail buildings were converted to industrial. General Motors completed the $1.2 billion expansion of the pickup truck assembly plant in southwest Allen County. The investment increases the plant from 3.3 million sq. ft. to 4.9 million sq. ft. Sale prices and lease rates continue to increase across all categories as the available supply continues to shrink. In some cases, buildings will be purchased or leased before the space hits the market. Reasons for optimism for industrial real estate in Northeast Indiana include corporate tax reform, e-commerce growth and the continued return of manufacturing to the United States. Our outlook is tempered because this expansion has been fueled by low gasoline prices, strong auto sales and relatively low interest rates, all of which could be retrenching. Also, the tight labor market may continue to constrain expansion. We expect the positive momentum from the past several years to continue for industrial real estate in Northeast Indiana but at a somewhat reduced level. Steven Zacher, SIOR, CCIM; Alfred J. Zacher, SIOR; Joy Neuenschwander, CPM; John Adams, CCIM; Fletcher Moppert; Dan Reese; Brian Bean, Evan Rubin; Zach Meyer; Dave Kaverman FOR MORE INFORMATION PLEASE CONTACT: THE ZACHER COMPANY 444 EAST MAIN STREET, SUITE 203, FORT WAYNE, IN PHONE: (260) INFO@ZACHERCO.COM PUBLISHED 2/16/2018

2 Vacancy and Absorption

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4 *In our market, triple net means the tenant is responsible for all operating costs such as real estate taxes, building insurance, interior and exterior maintenance and repairs. The landlord is responsible for roof and structure. **The construction cost does not include land acquisition cost.

5 Methodology: market survey reports are a compilation of data from many sources. The data is reviewed annually and adjusted due to circumstances in the market, such as new construction and demolition. The vacancy square footage is compiled from a combination of online data from multiple major listing services, brokers listing information from their websites and their mailings, and industry knowledge. Several brokers in our office are involved in the creation of this report to provide the most accurate information possible. We cannot be responsible, however, for errors, omissions, prior sale, lease or withdrawal from the market. 1. The Northeast Indiana industrial real estate market is defined as the counties of Adams, Allen, DeKalb, Huntington, LaGrange, Noble, Steuben, Wabash, Wells and Whitley. Wabash County was added in The County Economic Development Organizations for each of the ten counties provided assistance preparing this report. 2. This survey includes space projected to be vacant in the first quarter of It does not include announced industrial expansions or contractions that are anticipated or projected to be occupied or vacated after the first quarter of The survey includes space that has been ground-broken and above-ground construction has commenced. 3. The total inventory is adjusted downward by 0.25% for buildings that are deemed to have become functionally obsolete or demolished. 4. The total industrial inventory in Allen County on 1/1/18 is estimated to be 46,797,488 sq. ft. The total industrial inventory in the other nine counties in Northeast Indiana on 1/1/18 is estimated to be 60,087,127 sq. ft.