Vacancy Rates Over Completions and Absorptions6.07.08.09.010.011.012.013.014.015.016.03Q084Q081Q092Q093Q094Q091Q102Q103Q104Q101Q11Q211Q311Q411Q112Q212Q312Q412Q113(2,000,000)(1,500,000)(1,000,000)(500,000)0500,0001,000,0001,500,0002,000,0002,500,000Completions Absorptions Total Market Vacancy RateIndustrial Trends ReportGreater Columbus Regionwww.colliers.com/columbusMarket Flourishing, Despite Slow StartIndustrial Market OverviewThe Columbus industrial market recorded its eighth consecutive quarter of positive absorption, as 213,265square feet were absorbed this quarter. The vacancy rate now stands at 7.7 percent. Construction continuesto be strong as 1.3 million square feet of warehouse distribution space is underway. Southgate Corp.finished construction on its speculative 50,000 square foot spec manufacturing building at 94 IntegrityDrive. Significant leases were signed by HD Supply at 6200 Commerce Center Drive for 437,256 squarefeet, and S B Capital at 4851 Groveport Rd. for 132,100 square feet. Sears, Roebuck and Co. renewed358,760 square feet of warehouse distribution space at 5765 Green Pointe Drive. Agellan Commercial REITpurchased 3671-3699 Interchange Road (91,200 square feet) and 3949 Business Park Drive (74,558 squarefeet) from Premier Courier Inc. for $7.7 million ($46 per square foot).Forecasts and Reflection• KTR Capital Partners, a private equity firm that has completed nearly $2 billion of acquisitions anddevelopment since 2004, recently sold two warehouses in its portfolio to Welsh Property Trust. CreeksideXII, a 737,471 square foot warehouse distribution building, located at 3051 Creekside Parkway, sold for$24.5 million ($33 per square foot). Air East I, a 754,000 square foot warehouse property located at 6766Pontius Road sold for $22.5 million ($30 per square foot).• Navarre announced it will expand its operations in Ohio by 500,000 square feet. Navarre selecteda site at 175 Heritage Drive, located in the Prologis Park 70 Etna complex in Licking County.Hemmer Construction will begin construction on this 766,633 square foot warehouse build-to-suitin the second quarter, and should be completed by the end of the year. As a result of theimproved economy and increased demand for bulk warehouse/distribution space, future build-to-suit and speculative construction will be a big storyline for the Columbus industrial market in 2013.Rental ratesAsking rental rates haveremained stable during thebeginning of 2013. A slightuptick in warehouse/distributionrates, and modest increases ingeneral industrial rates can beattributed to falling vacancyrates. There are now just 21spaces of 20,000 square feet orgreater available in R&D/Flexthroughout Greater Columbus,causing R&D/Flex rental ratesto significantly increase over thepast year as leasing remainsstrong. Overall, concessionscontinue to decrease as largerdistribution centers are in shortsupply.market indicatorsWeighted Average REntal RatesRates for the Major Product TypesQ12013*Q22013**VacancyNet absorptionconstructionRental Rates —*Actual change from previous quarter**Projected change from previous quarterQ1 2013 | Industrial$0.00$1.00$2.00$3.00$4.00$5.00$6.00$7.00Q308Q408Q109Q209Q309Q409Q110Q210Q310Q410Q111Q211Q311Q411Q112Q212Q312Q412Q113General Industrial R&D/Flex Warehouse/Dist.
Regional industrial economicsThe Federal Reserve Bank of Cleveland reports at leastonce a quarter in the Federal Reserve’s Beige Bookabout the economic activity of the fourth district, whichincludes the Columbus Metropolitan Statistical Area(MSA). At the beginning of March, the Beige Bookreported that economic activity had grown at a modestpace. Manufacturers reported that production outputand new orders were steady or up slightly during thepast quarter. Inventories are aligned with demand.Capacity utilization rose slightly for steel producers;other factories reported that rates were slightly belowtheir normal range.Many reports on freight volume indicated that thevolume exceeded projections made late last year. Theindustries driving transport demand are automotive,construction, and shale gas. Shale gas activityexpanded at a robust pace. Little change was seen inconventional oil and natural gas production, but drillingis expected to pick up this spring and summer.Nonresidential builders described current businessconditions as slowing compared to the fourth quarterof last year. The stress of the fiscal cliff on governmentbudgets has choked the supply of projects. Contractorsare reporting substantially higher prices for buildingmaterials. Projects receiving the strongest inquiriesare in the industrial manufacturing and distribution,education, healthcare, and multi-family development.Demand for commercial loans and refinancings haveslowed, but many investors continue to take advantageof low interest rates that appear to be disappearingsooner than later.EmploymentOhio was ranked third in the country after gaining50,000 manufacturing jobs from 2009 throughDecember 2012 according to the U.S. Bureau of LaborStatistics. However, the Central Ohio region reportedmanufacturing employment of 65,200 employees inFebruary which was a decrease of nearly 500employees from the past quarter. Over the last 12months, the hottest manufacturing sectors for jobswere transportation equipment, food manufacturing,and plastics and polymers. Trade, transportation andutilities employment declined by 3,500 employees inFebruary since December 2012. Over the past yearthe industry has effectively seen a decrease of 1,500employees, with a 70 basis point employmentdownturn. Mining, logging and construction decreasedby 2,600 employees in February since December2012, an overall 300 employee decrease over the pastyear.The Columbus industrial market consistsof 10 suburban submarkets and theCentral Business District. The totalinventory for the region is 212 millionsquare feet of space.Market Activitysales activityProperty Address sales date sale price size SF Grantor Grantee Price / Sf type submarket6766 Pontius Road 1/25/2013 $22,450,000 754,000 KTR Capital Partners Welsh Property Trust $29.77 Warehouse Southeast3051 Creekside Parkway 1/25/2013 $24,500,000 737,354 KTR Capital Partners Welsh Property Trust $33.22 Warehouse Southeast6999-7029 Huntley Road 2/5/2013 $5,000,000 184,187 North Development Group CW Capital Asset Management $27.13 Flex/R&D North3671 Interchange Road 1/25/2013 $4,200,000 91,200 Premier Courier Inc Agellan Capital $46.00 Flex/R&D West3949 Business Park Drive 1/25/2013 $3,500,000 74,558 Premier Courier Inc Agellan Capital $46.00 Flex/R&D West1341 Norton Avenue 3/7/2013 $1,300,000 56,860 1341 Norton Ltd LLC Grandview 1341 LLC $22.86 Light Industrial West16710 Square Drive 1/29/2013 $1,000,000 53,464 CRJ Investments LLC RY-1 LLC $18.70 Flex/R&D Union2222 South Third Street 3/6/2013 $1,000,000 53,006 Schuler Inc QPI Property Holdings LLC $18.86 Light Industrial Souteast985-999 Goodale Boulevard 3/18/2013 $1,475,000 40,834 999 Goodale LLC Ogstutz Daimler LLC $36.12 Flex/R&D West5075 Krieger Court 1/11/2013 $1,840,000 24,664 Vitran Express Inc Vitran Ohio LLC $74.60 Light Industrial SouthwestUnionCountyDelawareCountyLickingCountyNorthEastCBDWestSouthwest SoutheastFairfieldCountyPickaway CountyMadisonCountyLease activityProperty Address Lease Date Lease sf Lessee Asking price (NNN) type Submarket6200 Commerce Center Drive 3/20/2013 437,256 HD Supply $3.25 Warehouse-Distribution Southeast4851 Groveport Road 3/13/2013 132,100 S B Capital $1.75 Warehouse-Distribution Southeast3000 Charter Street 1/1/2013 124,115 Ball Corporation $1.35 Bulk Warehouse West3515-3595 Urbancrest Industrial Drive 2/28/2013 63,041 AY Manufacturing $3.75 Warehouse-Distribution Southwest2221-2302 John Glenn Avenue 2/1/2013 58,056 Faro Logistics $2.50 Warehouse-Distribution Southeast3024 Charter Street 1/1/2013 45,000 Newark Group $2.55 Bulk Warehouse West5650 Green Pointe Drive 3/4/2013 45,000 Crown Cork & Seal $3.25 Bulk Warehouse Southeast1736 Westbelt Drive 1/4/2013 30,024 General Wholesalers $2.80 Warehouse-Distribution West2200 International Street 3/1/2013 20,800 Laird Plastics $3.25 Light Industrial Westp. 2 | Colliers Internationalresearch & forecast report | Q1 2013 | industrial | Greater Columbus Region
ConstructionTeam Gemini LLC, a developer based inOrlando, announced it will build areceiving center at a new landfill entry offLondon Groveport Road to sort reusableand recyclable material from incomingloads of garbage. They will become theanchor tenant in what will become a 340-acre industrial park across the road, to benamed Gemini Synergy Center. The $300million project would create over 300jobs.update Market ComparisonsIndustrial marketNet Absorption Construction Asking Rental RatesSubmarket Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions WH/Dist R&D/FlexCBD 5,335,716 405,386 7.6% 4,884 4,884 - $6.63East 20,442,133 2,009,044 9.8% (244,531) (244,531) - $2.56 $5.27Fairfield 6,114,387 66,755 1.1% (2,255) (2,255) - $4.00 $6.50Licking 19,162,312 1,396,046 7.3% (50,000) (50,000) 50,000 $2.76Madison 9,026,748 - 0.0% - - 450,000North 16,814,944 1,291,345 7.7% (15,114) (15,114) - $4.36 $4.72North Delaware 8,796,109 553,466 6.3% 9,100 9,100 - $3.33 $7.00Pickaway 3,602,146 93,756 2.6% (9,506) (9,506) -Southeast 64,163,813 7,237,271 11.3% 115,105 115,105 783,303 40,800 $2.79 $3.46SOUTHWEST 17,512,083 976,080 5.6% 19,628 19,628 - $2.90 $3.38Union 6,299,770 333,916 5.3% 73,664 73,664 - $6.46West 34,873,110 2,094,230 6.0% 312,290 312,290 - $2.40 $4.27TOTALS 212,366,316 16,457,295 7.7% 213,265 213,265 1,233,303 90,800 $2.76 $4.83Net Absorption Construction Asking Rental RatesProperty Type Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions By Product Typer&D/Flex 20,209,273 2,552,433 12.6% 34,103 34,103 20,800 $4.83General industrial 70,071,075 3,491,356 5.0% (166,074) (166,074) 70,000 $3.22Warehouse/distribution122,085,968 10,413,506 8.5% 345,236 345,236 1,233,303 $2.76Totals 212,366,316 16,457,295 7.7% 213,265 213,265 1,233,303 90,800 $2.92quarterly comparison and totalsNet Absorption Construction Asking Rental RatesQuarter, year Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions ($)Q4, 2012 211,821,516 16,517,649 7.8% 1,455,132 4,938,885 924,103 448,655 $2.99Q3, 2012 211,027,622 19,227,318 9.1 757,254 3,461,253 1,259,655 - $2.87Q2, 2012 213,192,579 21,359,885 10 1,430,866 2,703,999 425,000 900,000 $2.95Q1, 2012 212,418,016 22,790,751 10.7 1,273,133 1,273,133 898,000 - $3.04research & forecast report | Q1 2013 | Industrial | Greater Columbus RegionColliers International | p. 3
Central Business DistrictThe Central Business District (CBD) experiencedrelatively insignificant positive absorption of 4,884square feet in the first quarter. An owner/user sale of a15,000 square foot flex building at 106 East Moler St.kept the downtown submarket from experiencingnegative absorption after a new 14,000 square footvacancy at 1001 Kinnear Road. Absorption as a wholehas been strong for eight consecutive quarters in theCBD, with just four spaces of 10,000 square feet vacant,two of which have more than 100,000 square feetavailable.EastThe submarkets comprising eastern Columbus are Eastand Licking County. The Licking submarket recorded50,000 square feet of negative absorption afterSouthgate Corp. finished construction on its 50,000square foot building at 94 Integrity Drive. The specmanufacturing building has the ability to expand to150,000 square feet, but further development on the sitehas not been announced. The East submarket stumbledin the first quarter as vacancy rates have increased 80basis points to 9.8 percent. The submarket is stillsignificantly better off than previous years when vacancyrates were lingering in the 20 percent range. BallCorporation vacated 250,000 square feet ofmanufacturing space at 350 McCormick Boulevard, andrelocated into 124,115 square feet of warehouse space at3000 Charter St. in the West submarket.NorthThe submarkets comprising northern Columbus areNorth and North Delaware. The North submarketrecorded 15,114 square feet of negative absorption asAvnet vacated 52,870 square feet of flex space at 7465Worthington Galena Rd., while Air Waves downsized by45,842 square feet in their flex space at 7787 GraphicsWay. Atlas Butler purchased a 48,412 square footbuilding at 4849 Evanswood Drive. The North Delawaresubmarket recorded 9,100 square feet of positiveabsorption that can be attributed to Maco Power leasing9,100 square feet at 7708 Green Meadows Drive.SoutheastThe Southeast drove the market for most of 2012, andthe first quarter of 2013 is no different. After posting115,105 square feet of positive absoprtion, the vacancyremains at 11.3 percent. Construction continues on the305,250 square foot FedEx SmartPost distributionfacility, and the 478,053 square foot speculativedistribution center on Centerpoint Parkway. Sears,Roebuck and Company’s 358,760 square foot renewal at5765 Green Pointe Drive is the highlight of the quarter.Kraft vacated 516,174 square feet of space at 2235Spiegel Drive, but it was not enough to negatively impactthe absorption for the quarter as major leases weresigned by HD Supply (437,256 square feet), S B Capital(132,1000 square feet), Faro Logistics (58,056 squarefeet), and Crown Cork and Seal (45,000 square feet).(See Lease Activity on Page 2).SouthwestThe Southwest submarket experienced relativelyinsignificant positive absorption of 19,628 square feet,but still boasts an impressive 5.6 percent vacancy rate.AY Manufacturing signed 63,041 square feet ofwarehouse distribution space at 3515-3595 UrbancrestIndustrial Drive.WestThe submarkets on the west side of Central Ohio areWest, Madison and Union. The West submarket continuesits impressive run after recording 312,290 square feet ofpositive absorption; which created an astonishing 100basis point drop in vacancy to 6 percent. A 71,327 squarefoot renewal by Yazaki at 5353 Fisher Road, and a45,000 square foot lease by the Newark Group at 3024Charter St. offset 110,000 square feet of move outs byMonk Casket, All-State Belting Co., and Heidelberg.Madison County showed no leasing activity, andconstruction continues on the 450,000 square footTarget distribution center.Market intelMarket Activity Volume is the sum of the absolute valueof each absorption change in the market. It tells us alittle more about what exactly happened to the marketbehind the absorption number. The Market ActivityVolume was 3,032,817 square feet. This is slightlybelow the average (3,934,164 square feet) for firstquarters in the past four years. There are only 47buildings with vacant contiguous space equal to orgreater than 100,000 square feet left in the Columbusmarket. Nine were built since 2000 and eight of thoseare warehouse/distribution.Tenants in the MarketThe types of tenant seen most frequently are 40,000-70,000 square foot light warehouse and Flex/R&Dusers. Demand from bulk warehouse and distributionusers seeking more than 200,000 square feet isbeginning to subside, but will continue to drive themarket. Auto suppliers, technology companies(e-commerce distributors, internet based retailers andthird party logistic firms) are also active in the region.The biggest hurdle facing tenants is their inability tocommit to long lease terms. With a tightening market anddecreased vacancy, landlords are pushing for higherrental rates. Tenants are hard-pressed to examineincreases in operating expenses, and consider theiroptions to relocate into newer tax abated buildings, astax abatements expire on their existing buildings.Leslie HobbsDirector of Marketing | OhioTwo Miranova PlaceSuite # 900Columbus, Ohio 43215tel +1 614 410 5640Jonathan SchuenResearch AnalystTwo Miranova PlaceSuite # 900Columbus, Ohio 43215tel +1 614 437 4495522 offices in62 countries on6 continentsUnited States: 147Canada: 31Latin America: 19Asia Pacific: 201EMEA: 118• $1.8 billion in annual revenue• 1.25 billion square feet undermanagement• Over 12,500 professionalsThis document/email has been prepared by ColliersInternational for advertising purposes. ColliersInternational statistics and data are audited annually andmay result in revisions to previously reported quarterlyand final year-end figures. Sources include ColumbusDispatch, Business First, Xceligent, CoStar, Chain StoreAge, Wall Street Journal, Bureau of Labor Statistics,Bureau of Economic Analysis, Gallup and the ClevelandFederal Reserve.www.colliers.com/columbusAccelerating success.united states:Greater Columbus RegionRichard B. Schuen SIOR CCIMCEO | Principal | ColumbusTwo Miranova PlaceSuite # 900Columbus, Ohio 43215tel +1 614 410 5612research & forecast report | Q1 2013 | industrial | Greater Columbus Region