INDIANAPOLIS INDUSTRIAL Economic Indicators Q1 17 Q1 18 12-Month Forecast MSA Employment 10.5k 10.8k MSA Unemployment 3.7% 3.1% U.S. Unemployment 4.7% 4.1% Numbers above are quarterly averages; Feb 2018 data used to represent Q1 2018 for Market Indicators *Rental rates reflect net asking $psf/year **Not representative of National Industrial Overall Net Absorption/Overall Asking Rent 4-QTR TRAILING AVERAGE Overall Vacancy Q1 17 Q1 18 12-Month Forecast Overall Vacancy 5.1% 5.5% Overall Net Absorption 468,287 647,116 Under Construction 6.5M 5.6M** Average Asking Rent* $3. $3.88 2,500,000 2,000,000 1,500,000 1,000,000 500,000 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 0 $0.00 2011 2012 2013 2014 2015 2016 2017 2018 8% 7% 6% 5% 4% 3% 2% 1% Net Absorption Historical Average = 6.1% Asking Rent, $ PSF 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Economy The economy continues to support industrial commercial real estate growth entering 2018. Nationally, employment remains a hot topic as most economists believe the country has reached full employment. U.S. unemployment is still tracking historically low at 4.1% with labor force participation rates trending upward because of the addition of workers from underutilized demographics such as stay-at-home parents, students, disabled individuals and frustrated workers. Indiana is no different. Locally, unemployment is also historically low at 3.1%, while the labor force participation rate is 63.%. Industrial jobs have seen modest growth in most areas except for Construction jobs which grew 5.6% year-overyear (YOY). Manufacturing and Trade, Transportation, and Utilities jobs grew 0.2% and 0.1% YOY. The expectation is for the labor markets to stay tight as consumer confidence and the Industrial Production Index (INDPRO) remains at record levels. The INDPRO reached the second highest level in history during March boasting a 106.51 evaluation, nearly passing the 106.66 mark posted in November 2014. Consumer confidence hit an all-time high (130.0) in February according to The Conference Board, but ended the quarter down at 127.7. Most forecasts show that the dip in confidence was due to a less optimistic valuation of business conditions and lower short term expectations of the stock market. Factors playing into a poor short-term outlook include rapid wage growth causing investors to fear a pace hike of interest rates by the Federal Reserve, as well as trade negotiations with regards to NAFTA and China. Both instances triggered an immediate investor reaction, thus causing the stock market to a dip. As for the effect on commercial real estate, we cannot determine with certainty. Until interest rates rise and trade talks move to more than just talks, commercial real estate fundamentals will continue to remain strong. Market Overview The industrial market began the year with sound growth of positive 7,253 square feet (sf) absorbed in the first quarter of 2018. Among the industrial submarkets, the East posted the largest net absorption tally with positive 425,56 sf for the quarter. cushmanwakefield.com I 1
Other top-performing submarkets include the Southwest and the North. Among the major industrial product types, Modern Bulk facilities experienced the lion s share at positive 0,621 sf absorption to kick off the year followed by Traditional Bulk facilities with positive 223,3 sf and Office Showroom with positive 111,763 sf. 2018 began with five newly constructed buildings delivered totaling 66,044 sf. The Northwest submarket experienced the most deliveries during first quarter 2018 with three buildings totaling 607,4 sf. This total included Exeter s new 4,4 sf speculative development at 32 Perry Blvd. The expectation is to see elevated construction numbers throughout 2018. Currently, 18 projects totaling nearly 5.6 million square feet (msf) are under construction with just under 50% preleased. THERE ARE CURRENTLY 18 PROJECTS TOTALING NEARLY 5.6 MSF UNDER CONSTRUCTION WITH JUST UNDER 50% PRELEASED Rental rates continue to be on a high growth pattern e.g., levels are up 2.% YOY. The anticipation is for supply to edge out demand in the coming months which will cause market vacancy to rise and rental rate growth to slow its historical pace, but remain growing moderately. Vacant Space by Product Type PERCENTAGE OF TOTAL VACANT SPACE Q4 2017 4 2 0 88 86 84 82 80 78 3% 4% 6% 7% 17% 18% Manufacturing Employment INDIANAPOLIS-CARMEL-ANDERSON MSA MSA Manufacturing Employment (Ths., SA) Office Showroom Medium Distributio Traditional Bulk Modern Bulk Manufacturing Flex Source: Cushman & Wakefield Research 76 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Bureau of Labor Statistics Outlook The industrial market began the year with sound growth of 7,253 direct sf absorbed. We anticipate supply to edge out demand in the coming months which will cause market vacancy to rise. Five buildings were constructed during the first quarter 2018 totaling 66,044 sf leaving 18 projects totaling nearly 5.6 msf remaining under construction and just under 50% preleased. Rental rates continue to be on a high growth pattern e.g., levels are up 2.% YOY. Expect rental rate growth to slow its tremendous pace, but remain growing moderately. Historical Net Absorption INDIANAPOLIS CONTINUES THE STREAK OF STRONG ABSORPTION Net Absorption (MSF) 8 7 6 5 4 3 2 1 0 2008 200 2010 2011 2012 2013 2014 2015 2016 2017 Q1 18 Source: The Conference Board cushmanwakefield.com I 2
SUBMARKET TOTAL BUILDINGS *Industrial asking rents converted to NNN INVENTORY SUBLET VACANT DIRECT VACANT DIRECT VACANCY RATE **Not representative of National Industrial Marketbeat Report CURRENT DIRECT NET ABSORPTION YTD DIRECT NET ABSORPTION TOTAL OCCUPIED UNDER CONSTRUCTION Downtown 17 10,0,483 57,306 124,264 1.1% -35,510-35,510 10,866,21 0 $4. East 504 41,847,63 1,51 1,507,663 3.6% 425,56 425,56,3,030 8,000 $3.58 Northeast 254 13,3,48 22,613 643,434 4.7% 15,82 15,82 13,010,514 103,883 $7.24 North 158 6,17,248 124,622 273,635 4.0% 3,813 3,813 6,643,613 105,720 $4.27 Northwest 47 54,875,484 278,5 3,551,150 6.5%,1,1 51,4,334 1,460,464 $4.03 Southeast 261 18,802,687 5,000 1,66 2.8% -46,710-46,710 18,280,721 0 $4.23 South 1 15,413,114 0 24,150 6.0% -15,28-15,28 14,488,64 1,178,477 $3.6 Southwest 514 7,41,51 3,000 5,24,818 6.6% 14,0 14,0,242,133 2,4,042 $3.4 West 156 15,0,176 0 5,0 2.1% 8,200 8,200 15,14,866 0 $3.6 INDIANAPOLIS MARKET TOTALS Office Showroom 483 14,014,330,622 82,273 6.4% 111,763 111,763 13,122,057 30,000 $6.8 Medium Distribution 60 55,224,221 307,344 2,247,882 4.1% 63,443 63,443,76,33 3,158 $4.27 Traditional Bulk 145,000,64 43,518 2,,28 6.6% 223,3 223,3 33,611, 0 $3. Modern Bulk 163 83,8,6 164,875 6,2,848 7.6% 0,621 0,621 77,275,558 4,63,825 $3.42 Manufacturing 56 56,77,214 0 853,144 1.5% -7,216-7,216 56,124,0 14,603 $3.35 Flex 2 8,0,500 61,7 345,45 4.2% -12,60-12,60 7,64,555 0 $7.17 Transport 7 3,7,41 0 10,000 0.3% 0 0 3,7,41 0 $5.60 TOTAL 2,6 257,512,784 83,01 13,121,30 5.1% 7,253 7,253 244,31,34 5,760,586** $3.88 Key Transactions Q1 2018 Industrial Deliveries 2018 OVERALL ASKING RENT * PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET 2301 Reeves Road, Plainfield 448,305 Ingram Micro New Lease Southwest 5302 Performance Way Lot 6 Bldg 1, Whitestown 202,6 Undisclosed New Lease Northwest 200 N Shadeland Avenue, 173,0 Mastin & Cain Properties New Lease East 6 Anson Blvd/Allpoints Anson Bldg 1, Whitestown 130,841 Undisclosed New Lease Northwest 2516-2548 Airwest Blvd/Airwest V, Plainfield 120,430 Niagara Bottling Renewal Southwest Chaney Ave, Greenwood 107,443 Amcor Rigid Plastics USA New Lease South 7600 Rockville Rd, 7,200 Carolina Logistic Services Expansion West 0 Whitaker Rd, Plainfield 5,7 Niagara Bottling Renewal Southwest 7826 Allision Ave, 0,100 Zenith Freight Lines Renewal Northwest PROPERTY SF TENANT DELIVERY SUBMARKET 32 Perry Blvd., Whitestown 4,4 Speculative Q1 18 Northwest 5302 Performance Way, Buidling 2, Whitestown 143,000 Build to Suit - Undisclosed Q1 18 Northwest 16460 Southpark Dr/New Pro Container BTS, Westfield 50,000 Build to Suit - New Pro Container Q1 18 North 1 Perry Blvd/Perry Industrial Lot 1, Whitestown 24,000 Speculative Q1 18 Northwest 4 Rawles Court, 11,730 Speculative Q1 18 East Upcoming Industrial Deliveries (±0,000 SF) PROPERTY SF TENANT DELIVERY SUBMARKET 1301-1 Smith Road/Allpoints Midwest Bldg 8, Plainfield 8,230 Build to Suit - HP/Ryder Logsitics Q2 18 Southwest 24 Plainfield Road/GreenPark III, Plainfield 2,000 Speculative Q2 18 Southwest 8 North Graham Road/Greenpointe Logistics Center, 45,77 Speculative Q2 18 South Albert S. White Dr/Fishback Creek II, Whitestown 410,424 Speculative Q2 18 Northwest 4121 Allpoints Dr/Allpoints Anson 7B, Whitestown 0,1 Build to Suit - Brooks Running Shoes Q2 18 Northwest cushmanwakefield.com I 3
213 INDUSTRIAL SUBMARKETS 3 INDIANAPOLIS 2 3 Danville 3 3 Lebanon 1 NORTHWEST WEST Brownsburg 42 47 2 2 Avon Plainfield 2 International Airport SOUTHWEST Mooresville 8 144 Zionsville IMS Speedway NORTH Meridian Hills Carmel DOWNTOWN Beech Grove Southport 135 Greenwood SOUTH Noblesville Fishers 1 6 Lawrence SOUTHEAST NORTHEAST EAST Fairland 13 234 6 Anderson Pendleton Greenfield 142 3 Cushman & Wakefield Matt Niehoff One American Square, Suite 1800 Research Analyst, IN 46282 USA Direct +1 7 63 0460 44 cushmanwakefield.com Martinsville matt.niehoff@cushwake.com Mitch Ostrowski Research Analyst Direct +1 7 63 0487 mitch.ostrowski@cushwake.com 144 135 Whiteland Franklin Shelbyville About Cushman & Wakefield Cushman & Wakefield 44 is a leading global real estate services firm with 45,000 employees in more than countries helping occupiers and investors optimize the value of their real estate. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter. Copyright 2018 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy. 44 cushmanwakefield.com I 4
Methodology Cushman & Wakefield s quarterly estimates are derived from a variety of data sources, including its own proprietary database and historical data from third party data sources. The market statistics are calculated from a base building inventory made up of industrial properties deemed to be competitive in the Central Indiana marketplace. Older buildings unfit for occupancy or ones that require substantial renovation before tenancy are not included in the competitive inventory. The inventory is subject to revisions due to resampling. Vacant space is defined as space that is available immediately or imminently after the end of the quarter. Sublet space still occupied by the tenant is not counted as available space. The figures provided for the current quarter are preliminary and all information contained in the report is subject to revisions based on additional data received. New Statistical Series To ensure the highest level of data integrity, Cushman & Wakefield periodically undertakes a comprehensive, quantitative and qualitative, review of all industrial inventory in the Central Indiana marketplace. During Q1 2017, Cushman & Wakefield Research conducted an extensive review of the industrial market and transitioned to a new data series. Explanation of Building Characteristics Office Showroom: Buildings designed to meet the needs of distributors or sales agents who do not require high ceilings or rail service. Tenants are typically under 25,000 sf, but sizes can vary. Common features include ceiling heights of 12' 16'; few docks and/or drive-in doors; and office space of 20% to 25%. Medium Distribution: Buildings designed to meet the needs of intermediate-sized distributors. Tenants typically range from 12,000 sf to 75,000 sf. Common features include 14' 20' ceilings; docks and/or drive-in doors; office space of 10% to 20%; and, occasionally, rail service. Traditional Bulk: Buildings constructed prior to 15 designed for large-scale distributors. Tenants typically are over 100,000 sf, with sizes varying. Common features include 20' 28' ceilings; multiple dock height doors with levelers and seals; office space of 1% to 5%; and, often, rail service. Modern Bulk: Buildings constructed since 15 designed for large-scale distributors. Tenants typically are over 100,000 sf, with sizes varying. Common features include 28' clear ceiling heights or higher; multiple dock height doors with levelers and seals; office space of 1% to 5%; and, often, rail service. Flex: Buildings generally distinguished by office space ranging from 25% to 100%. Tenants typically are under 30,000 sf, but sizes can vary considerably. Common features include 12' 16' ceilings; high parking ratios; common dock areas; individual service doors; full window lines; and, landscaping. Manufacturing: Buildings designed for production, research, and development of goods. Tenant size varies from 5,000 SF to over 1 msf. Common features include 16' 24' ceilings; heavy power capacity; processed gas; floor drains; cranes; 1% to 10% office space; and, rail service. Transport: Buildings designed for vehicle upkeep, repair and storage. Tenants typically are 5,000 to 20,000 sf. Common features include 16' 24' ceilings. About Cushman & Wakefield Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop and live. Our 45,000 employees in more than countries help occupiers and investors optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. 2017 marks the 100-year anniversary of the Cushman & Wakefield brand. 100 years of taking our clients ideas and putting them into action. To learn more, visit www.cushwakecentennial.com, www.cushmanwakefield.com or follow @CushWake on Twitter. cushmanwakefield.com I 5