Miami: How Does It Compare?

Miami: How Does It Compare? An in-depth look at Miami s industrial market and how it compares with other similar markets around the nation. Statistical comparisons are made for population, business climate, and industrial drivers. JLL 2017 1

Table of contents Introduction 3 Seattle Economic overview 4 Economic & trade overview 5 Property clock Industrial overview Miami 6 7 8 Oakland Northern New Jersey Northern New Jersey 14 Seattle 20 Oakland 26 Miami JLL 2017 2

Introduction Despite relatively slow economic growth, industrial markets around the country have demonstrated improving fundamentals, which has resulted in robust interest from institutional investors and developers. Population growth coupled with the increasing popularity of e-commerce have been the main drivers of this outperformance and the most prominent force shaping future demand. As a result, Miami has been a hot bed for increased demand evidenced by the record absorption figures we have seen over the past 24 months over 7.0 million square feet. In 2016 there was just over 2.0 million square feet of net absorption. Not long ago anywhere from 500,000 square feet to just over 1.0 million square feet would be considered a very good year for Miami. Such improvement, which exceeded our own initial expectations, suggests the need for a closer look at the drivers of growth. However, to better understand the underplaying details, we focused our analysis on comparing Miami to three similar markets: Seattle, Northern New Jersey and Oakland. These markets have diverse demand drivers local consumption and are port driven. More importantly, modern institutionalgrade real estate product is still relatively young in these regions, and consequently represents a smaller share of their total industrial stock. At the same time, sustained high occupancy and strong market rent growth in these markets has invited more construction activity than ever before, especially from local developers backed by institutional capital. JLL 2017 3

GDP Growth GDP (in millions) Economic Overview Metro Area GDP trends Miami s metro GDP growth has been steady compared with the other markets, growing roughly 3.0 percent per year much of which has been driven by the trade and transportation sector. Miami Oakland* Northern NJ** Seattle $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 2011 2012 2013 2014 2015 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% Miami Oakland* Northern NJ** Seattle 2011 2012 2013 2014 2015 *San Francisco-Oakland-Hayward MSA used for all economic and demographic comparisons **New York MSA used for all economic and demographic comparisons JLL 2017 4

Twenty-foot Equivalent Unit Economic & Trade Overview by the numbers Residential population in 2016 by MSA* Miami Northern New Jersey Seattle** Oakland 6,066,387 20,249,968 3,798,902 4,679,166 7.0 M 6.0 M PortMiami Port of Seattle-Tacoma Port of NY-NJ Port of Oakland Population density 966.0 1,781.0 635.0 1,891.0 Population growth since 2010 8.6% 2.8% 10.2% 7.7% Total employment by MSA 2,651,000 9,697,000 1,994,000 1,136,100 Share of industrial employment 31.0% 26.0% 34.0% 31.0% 5.0 M 4.0 M 3.0 M 2.0 M 1.0 M Total industrial inventory per person (s.f.) 30.2 16.9 57.9 23.5 0.0 M GDP growth (2014-2015) 3.3% 1.7% 2.9% 4.1% Total TEUs (2016) 1,030,758 6,251,953 3,615,752 2,369,631 Total inventory (s.f.) 183,044,966 344,086,599 220,989,085 112,598,112 TEU/inventory ratio (s.f.) 177.6 55.0 61.1 46.5 Ports PortMiami Port of N.Y and N.J Port of Seattle-Tacoma Port of Oakland Top exports/imports Motor vehicles/insulated wire, cable Motor vehicles/medicine Soybeans/plastic shoes Almonds, walnuts, pistachios/motor vehicles *Miami-Dade County s most current population estimate is 2.7 million. However, for comparative purposes the Miami metro area population (Miami-Fort Lauderdale-West Palm Beach) of 6.0 million is used throughout the report **Seattle market includes Seattle, Kent Valley, and Pierce County JLL 2017 5

Property Clock Oakland Seattle Northern New Jersey Miami-Dade Peaking phase Falling phase Rising phase Bottoming phase JLL 2017 6

Industrial Overview by the numbers Inventory (s.f.)/no. Bldgs Average building size (s.f.) Average asking NNN rents (p.s.f) Rent growth since 2010 Asking NNN rents on new construction (p.s.f.)* Current construction (s.f.)/preleased (%) Proposed construction (s.f.) Overall vacancy rate Total net absorption (s.f.) 2016 sales volume/avg. PSF Cap rate (core Class A) Miami 183.0M/4,329 42,034 $6.83 35.2% $7.50 4.1M/43.0% 14.2M 3.9% 2,500,000 $68.0M/$113 5.2% Northern New Jersey 344.2M/4,993 68,914 $9.00 16.6% $10.00 1.8M/76.0% 15.7M 4.5% 3,400,700 $6.0B/$77 4.7% Seattle** 221.0M/4,997 44,054 $6.40 2.3% $7.50 2.8M/52.0% 8.8M 2.5% 5,000,600 $1.1B /$110 4.8% Oakland 112.5M/1,197 94,067 $6.77 0.6% $8.60 3.0M/30.0% 3.8M 1.6% 3,800,700 $900M/$98 4.8% * Includes deliveries within the last three years **Seattle market includes Seattle, Kent Valley, and Pierce County JLL 2017 7

Miami JLL 2017 8

Miami by the numbers 2.6M Total employment 3.3% Percent GDP growth (2014-2015) 14.2M s.f of planned industrial projects 2.7M Residential population* 1.0M Total TEUs $682M Total sales volume (in 2016) 8.6% Population growth since 2010 35.2% Rent growth since 2010 3.9% Vacancy rate * Miami-Dade County s most current population estimate. However, for comparative purposes the Miami metro area population (Miami-Fort Lauderdale-West Palm Beach) of 6.0 million is used throughout the report JLL 2017 9

Miami People & Industries Historical population The overall population of the Miami metro has been in a constant state of increase since the 1970s, reaching an estimate of more than 6.0 million people in 2016. As a result, Miami has become the second most populous metro in the Southeast and the seventh most populous in the United States. This, coupled with rapid and sustained growth of tourism to the area, has resulted in the strong job growth, specially in retail and wholesale trade. By 2020, Miami s metro population is expected to surpass 6.2 million, representing a growth rate of more than 12.0 percent since the previous Census. Employment by industry 5% 15% 31% 9% 6.5 M 344.7K 17.1K 361.2K Miami Metro Population* Percentage Change 50.0% 12% 12% 6.0 M 322.9K 45.0% 16% 5.5 M 5.0 M 4.5 M 14.4K 14.9K 989K 995K 40.0% 35.0% 30.0% Employment by industry Construction, manufacturing and transportation 4.0 M 3.5 M 3.0 M 2.5 M 2.0 M 1970 1980 1990 2000 2010 2020 25.0% 20.0% 15.0% 10.0% 5.0% Hospitality, leisure and retail Professional and business services Government Information and financial activities Education and Health Services Other JLL 2017 Source: ESRI; U.S Census, Federal Reserve Economic Data I FRED 10 *Miami metro: Miami-Fort Lauderdale-West Palm Beach (MSA)

Miami Industrial Market New construction E-commerce in Miami is proving to be a frontrunner in pushing up demand for new construction as retail sales continue to surge in the region (retail sales are up 4.0 percent year-over-year). Miami s industrial stock has increased by more than 8.8 million square feet in the last six years, increasing at an average of more than 1.2 million square feet annually. Despite rising land and development costs, the pace of industrial construction hasn t been held up. In fact, the pipeline for new development is flowing strong. There is more than 4.1 million square feet under construction, and an additional 14.2 million square feet planned for future development. The majority of new construction is Class A distribution and logistics space featuring higher ceilings, more doors and far fewer columns Total Inventory (s.f.) New deliveries (% of inventory) Inventory by age 11% 17% 33% 184.0 M 182.0 M 1.1% 1.1% 1.0% 1.2% 1.0% 39% 180.0 M 178.0 M 176.0 M 174.0 M 172.0 M 170.0 M 0.7% 0.6% 0.2% 0.2% 0.8% 0.6% 0.4% 0.2% 0.0% Year built breakdown 2000 + 1980-1999 1960-1979 Square feet 31,200,000 65,600,700 63,400,600 # of buildings 491 1424 1664 1959 23,000,800 750 JLL 2017 11

Net Absorption Net absorption closed out the year at 2.6 million square feet, the fourth consecutive year of absorption above 2.0 million square feet. Strikingly, the market does not feel toppy, or mature and there remains no evidence that the positive cycle for industrial in Miami is nearing its end. In fact, the shift of consumption toward online sales continues to push demand higher. Evidenced by Amazon s major expansion plans in Miami; a 850,000 square foot mega-warehouse is expected to break ground in 2017. Vacancy Rate The industrial market in Miami was tight heading into 2016 and tightened even further throughout the year as historic leasing demand outpaced new supply. The vacancy rate in Miami is now lower than the national average, compressing over 500 basis points in the last six years to 3.9 percent. The market continues to be driven by new-to-market tenants which are drawn to South Florida because of its attractive location as a distribution hub and Miami s strong business climate. Absorption (s.f.) Absorption (% of inventory) 5.0 M 2.5% 4.0 M 2.0% 3.0 M 1.5% 2.0 M 1.0% 1.0 M 0.5% 0.0 M 0.0% Vacancy rate 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% TEU vs Occupancy The occupancy rate is the highest its ever been, reaching 96.0 percent in 2016. The rise in e- commerce is driving a lot of this as it remains a strong catalyst for the industrial sector as a whole. Interestingly, space in Miami seems to be filling up differently than in previous cycles. For example, in previous cycles, Miami experienced smaller leases being signed up first while larger leases followed. This time around, the opposite is happening. JLL 2017 12 TEUs 1.1 M 1.0 M 0.9 M 0.8 M 0.7 M 0.6 M 0.5 M Market occupancy rate 97.0% 96.0% 95.0% 94.0% 93.0% 92.0% 91.0% 90.0%

Triple NNN rental rates Growing at an annualized rate of 5.0 percent since 2010, rents continued increasing in 2016, currently at $6.83 per-square-feet. Between 2010 and 2016 rents have increased by more than 35.0 percent, fueled by high consumer confidence and low vacancy rates market-wide. In fact, the asking rents in prime submarkets such as Airport West and Medley are seeing higher rental growth. Rents for newer product on the market stand at about $7.25 to $7.50 per square feet. Investment activity Rents $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 Total sales volume With investors aggressively seeking strong secondary markets, new players are continuing to enter Miami s market and acknowledge its high performance. With both megadeals and single asset activity in recent years, institutional entities have been the biggest net buyers in the region. Occupier and investor demand is expected to remain strong, but the lack of availability may limit future take-up or investment volume. Miami recorded over $680 million in total sales volume in 2016. Cap rates In the past six years, there has been a continual compression of capitalization rates in the industrial real estate sector. Capitalization rates now sit between 4.7 percent and 5.2 percent in Miami. Those rates are being spurred by historically low vacancy rates, demand outpacing supply and resilient pricing. In the short term, cap rates for industrial properties are expected to decline slightly, pushing values higher in the region. $1,000.0 M JLL 2017 13 $900.0 M $800.0 M $700.0 M $600.0 M $500.0 M $400.0 M $300.0 M $200.0 M 7.5% 6.5% 5.5% 4.5% 3.5% 2.5% 1.5% Cap rates 10-year treasury yield

Northern New Jersey JLL 2017 14

Northern New Jersey by the numbers 9.6M Total employment 1.7% Percent GDP growth (2014-2015) 15.7M s.f of planned industrial projects 20.2M Residential population 6.2M Total TEUs $6.0B Total sales volume (in 2016) 2.8% Population growth since 2010 16.6% Rent growth since 2010 4.5% Vacancy rate JLL 2017 15

Population Change Northern New Jersey People & Industries Historical population The New Jersey metro area is the most populous in the United States with over 20.2 million residents as per the most recent Census estimate. Yet, with a growth rate of less than 25.0 percent between 1970 and 2010 it ranks well behind the other comparable metros and lower than most states. For comparison, the Miami metro grew by more than 180.0 percent during the same period, increasing its population from 2.2 million to 5.5 million. However, the difference in density between the two metros is significant. The overall density for the New Jersey metro is 1,781 per square mile versus 966 per square mile for Miami. Employment by industry 4% 20% 26% 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 14.4K 17.1K 344.7K 322.9K 14.9K New Jersey Metro 361.2K Miami Metro 995K 989K 1970 1980 1990 2000 2010 2020 11% 9% 14% 16% Employment by industry Construction, manufacturing and transportation Hospitality, leisure and retail Professional and business services Government Information and financial activities Education and Health Services Other JLL 2017 Source: ESRI; U.S Census, Federal Reserve Economic Data I FRED 16

Northern New Jersey Industrial Market New Construction With increasing constraints on Northern New Jersey s supply, new construction totaled 2.1 million square feet in 2016, the highest it has been since 2014. More than half of new deliveries occurred in the Port submarket, which includes the cities of Elizabeth and Linden. Population growth has become a key contributor to the increased construction activity in the Northern New Jersey market. In terms of construction as a percentage of total inventory, Miami s construction pipeline has outpaced Northern New Jersey s since 2010. While significant appreciation on construction costs continues, proposed developments for Miami and Northern New Jersey remain high, with 14.2 million square feet and 15.7 million square feet, respectively. 400.0 M 350.0 M Miami Inventory New deliveries (% of inventory) Northern New Jersey Inventory New deliveries (% of inventory) 1.2% 1.0% Inventory by age 13% 23% 31% 33% 300.0 M 250.0 M 0.8% 0.6% Year built breakdown Square feet # of buildings 200.0 M 0.4% 2000 + 22,203,621 220 150.0 M 0.2% 1980-1999 52,716,176 791 100.0 M 0.0% 1960-1979 140,324,186 2,197 1959 128,972,606 1,785 JLL 2017 17

Net Absorption In 2016, Northern New Jersey recorded another strong year for net absorption, increasing by 37.0 percent from the previous year to 3.4 million square feet. In retrospect, unlike Miami which begun its recovery in 2009, the Northern New Jersey market began its recovery in early 2012. In the last six years, Miami has averaged a higher amount of total absorption (2.9 million square feet) than Northern New Jersey (1.6 million square feet) despite having almost less than half of its total industrial inventory. Vacancy Rate The combination of intense demand and a larger than usual development pipeline kept overall vacancy flat at 4.5 percent for the Northern New Jersey market in 2016. Notably, the market has compressed significantly since 2010, dropping by 320 basis points, due to the emergence of e-commerce in the region. During the same period, however, Miami compressed by 530 basis points, led by the same trend of e- commerce. TEU vs Occupancy Occupancy in Northern New Jersey has climbed 330 basis points since bottoming in the last cycle. Since then, the Northern New Jersey market has made historical strides in occupancy as big name companies such as Amazon and FedEx continue to expand in the market. The same trend is helping propel occupancy higher in Miami. For example, more than 1.7 million square feet is expected to be occupied by companies such as Amazon, Telemundo, and KLX by 2017 and 2018. JLL 2017 18 Miami N.NJ 5.0 M 4.0 M 3.0 M 2.0 M 1.0 M 0.0 M -1.0 M -2.0 M 11.0% 9.0% 7.0% 5.0% 3.0% Miami vacancy Miami TEUs NJ-NY TEUs 7.0 M 6.0 M 5.0 M 4.0 M 3.0 M 2.0 M 1.0 M 0.0 M Miami absorption (% of inventory) N.NJ absorption (% of inventory) N.NJ vacancy Miami occupancy rate N.NJ occupancy rate 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% 97.0% 96.0% 95.0% 94.0% 93.0% 92.0% 91.0% 90.0%

Triple NNN Rents Rates in the Northern New Jersey market continued to rise propelled by limited supply and new construction in 2016. Since the recovery, asking rents in Northern New Jersey have been increasing at an annualized rate of 4.1 percent versus 5.0 percent in Miami. Asking rents for some new projects in Northern New Jersey are at $13.00 per-square-feet versus $7.50 per-square-feet in Miami. Miami rents $7.50 $7.00 $6.50 $6.00 $5.50 N.NJ rents Investment Activity Large portfolio transactions have helped boost activity for the Northern New Jersey industrial market. In fact, investment volume in the market has increased at an annual rate of 26.0 percent since 2010. In comparison, Miami has only increased by 18.0 percent during the same time frame. Investor demand for industrial properties remains focused in core submarkets, specially for Miami. Cap rates The cap rate in Northern New Jersey has compressed by 260 basis points since its high in 2011 which was at 7.30 percent. In contrast, Miami compressed by 80 basis points during the same time, decelerating at a much slower pace. In general, in order for cap rates to increase and keep pace with rising interest rates nationwide, rents in both markets will have to increase and/or valuations will have to decrease at some point in the cycle. JLL 2017 19 $5.00 $9,000.0 M $8,000.0 M $7,000.0 M $6,000.0 M $5,000.0 M $4,000.0 M $3,000.0 M $2,000.0 M $1,000.0 M $0.0 M 8.5% 7.5% 6.5% 5.5% 4.5% 3.5% 2.5% 1.5% Miami total sales Miami cap rates N.NJ cap rates N.NJ total sales 10-year treasury yield

Seattle JLL 2017 20

Seattle by the numbers 1.9M Total employment 2.9% Percent GDP growth (2014-2015) 8.8M s.f of planned industrial projects 3.8M Residential population 3.6M Total TEUs $1.1B Total sales volume (in 2016) 10.2% Population growth since 2010 2.3% Rent growth since 2010 2.5% Vacancy rate JLL 2017 21

Population Change Seattle People & Industries Historical population Growing its population by more than 1,100 persons per week since 2010, Seattle has become one of the fastest growing metros in the United States, despite having a relatively higher cost of living than the other comparable metros. In total, Seattle s population has increased by nearly 10.0 percent since 2010. Comparably, Miami has increased 8.1 percent during the same period. Seattle s population growth over the years can largely be attributed to the region s tech boom. In fact, the number of people moving to the region has also eclipsed the number of housing units being built every year. Seattle is expected to grow by more than 16.0 percent by 2020, while Miami is expected to grow by 12.5 percent. Employment by industry 4% 14% 34% 10% 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 14.4K 17.1K 344.7K 322.9K 14.9K Miami metro 361.2K Seattle metro 995K 989K 1970 1980 1990 2000 2010 2020 14% 10% 14% Employment by industry Construction, manufacturing and transportation Hospitality, leisure and retail Professional and business services Government Information and financial activities Education and Health Services Other JLL 2017 Source: ESRI; U.S Census, Federal Reserve Economic Data I FRED 22

Seattle Industrial Market New Construction Prior to 2015 Miami and Seattle saw their inventories grow at similar rates. Now, construction activity in Seattle has been highly elevated, developers have added close to 13.0 million square feet to the market in the last six years, 32.2 percent of which delivered in the last two years alone. Similarly to Miami, the majority of developments have been projects over 100,000 square feet as tenant requirements continue to get larger in size for both markets. Pre-leasing has also been strong for the Seattle market. In 2016, 52.0 percent of new construction was pre-leased in Seattle. Comparatively, Miami pre-leasing rate came at 42.0 percent for the same year. Inventory by age 23% 13% Miami Inventory Seattle Inventory 31% 240.0 M Miami New deliveries (% of inventory) Seattle New deliveries (% of inventory) 1.8% 220.0 M 200.0 M 180.0 M 160.0 M 140.0 M 120.0 M 100.0 M 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Year built breakdown 2000 + 1980-1999 1690-19790 33% Square feet 47,009,399 69,492,155 61,323,042 # of buildings 477 1,123 1,199 1959 43,164,489 868 JLL 2017 23

Net Absorption Recording over 5.0 million square feet for the second consecutive year, the industrial market in Seattle is poised to maintain its growth into 2017. While this figure seems to dwarf Miami s absorption level, both markets have experienced an average of 2.9 million square feet of positive net absorption since 2010. Additionally, the dynamics for both markets remains fairly similar, their need-it-now economy will continue to drive more demand for warehouse space. Vacancy Rate The vacancy rate in the Seattle market is below peak levels at 2.5 percent. This has forced industrial owners such as Prologis to compete with a more dense format by building multi-level warehouses in the market. Yet in many ways, Miami s industrial market has also compressed, albeit rather slowly, currently at 3.9 percent. Supply-constrained Seattle and Miami should remain landlord favorable for the foreseeable future. Miami Seattle 6.0 M 5.0 M 4.0 M 3.0 M 2.0 M 1.0 M 0.0 M -1.0 M -2.0 M 10.0% 8.0% 6.0% 4.0% 2.0% Miami vacancy Miami absorption (% of inventory) Seattle (% of inventory) Seattle vacancy 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% TEU vs Occupancy Container traffic in Seattle has been growing at an annual rate of only 0.2 percent per year versus 3.3 percent in Miami. Yet, vacancy in the immediate vicinity of the Seattle s port is currently below 4.0 percent as robust leasing activity in the region has helped propel strong occupancy gains during 2016. Seattle and Miami occupancy currently stands at 97.5 percent and 95.9 percent, respectively. Both markets should continue to see strong occupancy gains due to strong leasing fundamentals. Miami TEUs SeattleTEUs JLL 2017 24 4.0 M 3.0 M 2.0 M 1.0 M 0.0 M Miami occupancy rate Seattle occupancy rate 98.0% 96.0% 94.0% 92.0% 90.0%

Triple NNN Rents Space in Seattle remains highly competitive, specially for tenants looking to expand in the market due to the extremely scarce availabilities which continues to propel rents. While asking rents grew by 2.0 percent over the last year in Seattle, they grew by 4.4 percent in Miami to $7.41 per-square-feet and $6.83 persquare-feet, respectively. Currently, asking rates for both markets are now at either historic highs or quickly approaching it. Investment Activity Investment sales volume in Seattle picked up over the previous two years, as more than 23.0 million square feet has traded hands. Comparatively, Miami only traded 19.0 million square feet during the same period. Despite a smaller total transaction volume than Seattle, the average sales price for Miami in 2016 was slightly higher than Seattle, currently sitting at $113.0 per-square-feet versus $110.0 per-squarefeet. Cap Rates The consistent cap rate compression is occurring faster in Seattle than in Miami, compressing 220 basis points versus 160 basis in the last six years, respectively. The continued cap rate compression has led investors to look for different ways to obtain a higher yield. For Seattle, investors are considering more value-add plays. For Miami, investors interest remains in prime or core product. JLL 2017 25 $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 Miami rents $1,400.0 M $1,200.0 M $1,000.0 M $800.0 M $600.0 M $400.0 M $200.0 M 7.5% 6.5% 5.5% 4.5% 3.5% 2.5% 1.5% $0.0 M Seattle rents Miami total sales Seattle total sales Miami cap rates Seattle cap rates 10-year treasury yield

Oakland JLL 2017 26

Oakland by the numbers 1.1M Total employment 2.5% Percent GDP growth (2014-2015) 3.8M s.f of planned industrial projects 2.7M Residential population 2.3M Total TEUs $371M Total sales volume (in 2016) 8.4% Population growth since 2010 0.6% Rent growth since 2010 1.6% Vacancy rate JLL 2017 27

Population Change Oakland People & Industries Historical population The Oakland metro has a population of more than 4.6 million people, gaining 343,775 people (mostly within Alameda and Contra Costa Counties) from the latest Census in 2010. Population growth coupled with a healthy amount of new housing development has helped boost the economy in the metro as Oakland experienced a GDP growth rate of 4.1 percent, 100 basis points higher than the rate seen in Miami in 2015. By 2020, the Oakland metro is expected to grow its population by 11.0 percent to 4.8 million residents while the Miami metro is expected to grow by 12.5 percent to 6.2 million during the same time. Employment by industry 3% 17% 31% 8% 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 14.4K 17.1K 344.7K 322.9K 14.9K Miami metro 361.2K Oakland metro 995K 989K 1970 1980 1990 2000 2010 2020 15% 10% 16% Employment by industry Construction, manufacturing and transportation Hospitality, leisure and retail Professional and business services Government Information and financial activities Education and Health Services Other JLL 2017 Source: ESRI; U.S Census, Federal Reserve Economic Data I FRED 28

Oakland Industrial Market New Construction In the Oakland market, industrial development has returned after years of stagnation. From 2010 through 2013, only 411,618 square feet were added to the market. Today, there are more than 3.0 million square feet under construction (with the majority been speculative) and an additional 3.8 million square feet proposed in the pipeline. Also, as projects get underway construction time remains a major factor for both markets, as builders have not been able to quickly respond to supply and demand imbalances. Demand for quality, modern space and the needs of e-commerce companies should continue to fuel construction activity for both markets in near to medium term. Inventory by age 18% 9% Miami Inventory Oakland Inventory 37% 190.0 M 180.0 M 170.0 M Miami New deliveries (% of inventory) Oakland New deliveries (% of inventory) 2.5% 2.0% 36% 160.0 M 150.0 M 140.0 M 130.0 M 120.0 M 110.0 M 100.0 M 1.5% 1.0% 0.5% 0.0% Year built breakdown 2000 + 1980-1999 1960-1979 Square feet 11,035,270 43,052,351 37,039,215 # of buildings 105 478 428 1959 21,471,276 216 JLL 2017 29

Net Absorption Oakland recorded over 13.0 million square feet of net absorption in the last six years. In comparison, Miami recorded over 20.0 million square feet of absorption in the same period. While 2015 was a banner year for Oakland and Miami in terms of absorption figures, both markets saw a decrease of 11.4 percent and 37.8 percent, respectively, the following year. Vacancy Rate Even though new supply is becoming more abundant, warehouse vacancy in Oakland continues to decrease. The vacancy rate in Oakland, has dropped 800 basis points since 2010. Also, of the comparable markets, Oakland maintained the lowest overall vacancy, at 1.6 percent. For the Oakland market, it will be important to watch how quickly the large amount of space currently under construction are leased up. Miami Oakland 5.0 M 4.0 M 3.0 M 2.0 M 1.0 M 0.0 M -1.0 M -2.0 M 13.0% 11.0% 9.0% 7.0% 5.0% 3.0% 1.0% Miami absorption (% of inventory) Oakland (% of inventory) Miami vacancy Oakland vacancy 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% TEU vs Occupancy Last year, TEU volume in Oakland increased by 4.0 percent. The surge in TEU volume correlated with a 190 basis point increase in occupancy year-overyear, which currently sits at 98.4 percent. Similarly, PortMiami registered gains of 2.3 percent in TEU volume, with 50 basis points in occupancy gains, at 95.9 percent. If this correlation holds true, both markets should have a similar year. Miami TEUs Oakland TEUs JLL 2017 30 3.0 M 2.5 M 2.0 M 1.5 M 1.0 M 0.5 M 0.0 M Miami occupancy rate Oakland occupancy rate 100.0% 98.0% 96.0% 94.0% 92.0% 90.0%

Triple NNN Rents Thanks to extremely limited space options for users, rents continued to increase in 2016. Asking rents have in the Oakland market have increased by 33.0 percent since bottoming in 2011. Comparably, Miami has increased by 32.2 percent during the same period. Strong demand and construction activity should continue to push rates upward for both markets. Miami rents $7.00 $6.50 $6.00 $5.50 Oakland rents Investment Activity Topping a billion sales, the Oakland market has heavily increased its investment activity in the previous two years. In fact, sales have nearly tripled since 2014, an achievement is yet to be seen in Miami. Owners in both markets continue to benefit from the historically low vacancy rates, which is hiking operating incomes and raising values. Cap Rates While the market keeps getting stronger, cap rates continue to face downward pressure in Miami and in Oakland, which decreased by 10 basis points in the last year in both markets. Inventor interest, however, remains bullish despite cap rates being nominally low, evidenced by the increased amount in investment activity in the last two years. Additionally, risk premiums for industrial properties in both markets remain at healthy levels when compared to historical trends. JLL 2017 31 $5.00 $1,400.0 M $1,200.0 M $1,000.0 M $800.0 M $600.0 M $400.0 M $200.0 M 7.5% 6.5% 5.5% 4.5% 3.5% 2.5% 1.5% $0.0 M Miami total sales Oakland total sales Miami cap rates Oakland cap rates 10-year treasury yield

For more information, please contact: South Florida Erik Rodriguez Analyst, Research +1 954 548 5534 erik.rodriguez@am.jll.com South Florida Marc L. Miller Manager, Research +1 954 233 3427 marcl.miller@am.jll.com Miami Brian Smith Managing Director, South FL Industrial Lead +1 305 960 8403 smith.brian@am.jll.com New Jersey Ignatius Armenia Research Manager +1 201 528 4419 Ignatius.armenia@am.jll.com Seattle YeonSoo Lee Analyst, Research +1 206 953 0236 yeonsoo.lee@am.jll.com Oakland Crystal Tseng Analyst, Research +1 925 948 1312 crystal.tseng@am.jll.com National Industrial leads Aaron L. Ahlburn Managing Director, Industrial Research +1 424 2943437 aaron.ahlburn@am.jll.com Gillam Campbell Research Manager, Industrial +1 404 995 6327 gillam.campbell@am.jll.com Mehtab Randhawa Vice President, Director of U.S. Industrial Research +1 206 953 0236 mehtab.randhawa@am.jll.com www.jll.com/research 2017 Jones Lang LaSalle IP, Inc. All rights reserved. JLL 2017 32