Vacancy Rates Over Completions and Absorptions6.07.08.09.010.011.012.013.014.015.016.03Q084Q081Q092Q093Q094Q091Q102Q103Q104Q101Q11Q211Q311Q411Q112Q212Q312Q412(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/columbusOptimism Outweighs UncertaintyIndustrial Market OverviewThe Columbus industrial market recorded its seventh consecutive quarter of strong positive absorption, asmore than 1,445,132 square feet were absorbed this quarter, and 4,938,885 were absorbed for the year.This is a positive sign as 2011 recorded 3,497,841 square feet of positive absorption, nearly 2 million shyof this year’s mark. Two notable construction projects were completed during the past quarter, and anadditional 924,103 square feet of construction broke ground. Restoration Hardware at 100 EnterpriseParkway completed its 418,655 square foot warehouse expansion, and a 30,000 square foot building at952-960 North Freeway Drive was completed where Mattress Firm will occupy 25,000 square feet of flexspace. Significant leases were signed by Great Lakes at 2160 McGraw Road for 185,000 square feet, andRogue Fitness at 3950 Venture Court for 168,850 square feet. Cabot Properties purchased a 508,760square foot warehouse distribution center at 2727 London-Groveport Road from Trident Capital Group for$13.6 million.Forecasts and Reflection• While 2012 will be remembered as the most promising in more than five years since the financial crisis,much of the market’s success can be attributed to portfolio sale offerings and the trading of assets due toattractive pricing, prime financing and lending opportunities.• Investment and owner/user sales continue to be a big storyline going into 2013, as fourth quarter showedno signs of a slowdown. Mobis Parts America purchased a 377,283 square foot warehouse distributioncenter at 5900 Opus Drive for $12.2 million.• Exeter Property Group expanded its portfolio at Rickenbacker as DCT Industrial Trust trimmed itsinvestment holdings. Exeter now owns more than 5 million square feet of industrial product in CentralOhio after purchasing a 388,264 square foot warehouse distribution center at 4000 Creekside Parkwayfor $12.3 million, and a 432,455 square foot distribution center at 6500 Port Road for $12.5 million.Rental ratesAsking rental rates haveremained stable over the courseof 2012. A slight uptick inwarehouse/distribution rates,and modest decreases ingeneral industrial rates can beattributed to falling vacancyrates. There are now just 25spaces of 20,000 square feetor greater available in R&D/Flex throughout GreaterColumbus, causing R&D/Flexrental rates to significantlyincrease over the past year asleasing remains strong. Overall,concessions continue todecrease as larger distributioncenters are in short supply.market indicatorsWeighted Average REntal RatesRates for the Major Product TypesQ42012*Q12013**VacancyNet absorptionconstructionRental Rates —*Actual change from previous quarter**Projected change from previous quarterQ4 2012 | Industrial$0.00$1.00$2.00$3.00$4.00$5.00$6.00$7.00Q308Q408Q109Q209Q309Q409Q110Q210Q310Q410Q111Q211Q311Q411Q112Q212Q312Q412General 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 November, the Beige Bookreported that economic activity had grown at a modestpace. Manufacturers reported that production outputrose slightly during the past six weeks, while neworders weakened. Inventories remained manageableas competition (volume and pricing) from offshoreproducers has intensified. Capacity utilization isslightly below normal levels.Many reports on freight volume indicated that thevolume is returning to normal trends after a slowsecond and third quarter. The industries drivingtransport demand are automotive, construction, andshale gas. Lower than expected harvests havenegatively impacted revenues, although manycompanies believe they met their growth objectives for2012 despite high diesel prices, and maintainencecosts. The Beige Book from November 2012 reportedthat economic activity continued to expand since theSeptember 2012 report, but not as rapidly asanticipated. The outlook by manufacturers was mixed,as shale gas activity continued at a robust pace, andcoal production fell between 10 and 50 percent belowprior-year levels. To date, 375 permits have beenissued in Ohio for drilling horizontal shale gas wells. Nonresidential builders described current businessconditions as improving and better when compared toa year ago, and are satisifed with their backlogs goinginto 2013. Projects receiving the strongest inquiriesare in the industrial manufacturing and energy,education, and healthcare industries. Demand forcommercial loans and refinancings continue asinvestors and businesses take advantage of lowinterest rates that appear to be disappearing soonerthan later.EmploymentThe Bureau of Labor Statistics reported manufacturingemployment of 61,700 employees in December, whichwas a decrease of nearly 400 employees from the pastquarter. This was an overall decrease of 1,200employees for the year. Year over year manufacturingis down by 7 percent. Trade, transportation and utilitiesemployment grew by 7,000 employees in Decembersince September 2012, a year-to-date increase of12,000 employees, with a 5 percent employmentupturn. Mining, logging and construction decreased by900 employees in December since September 2012,an overall 2,500 employee increase since January2012, and is up 3.6 percent year over year.The Columbus industrial market consistsof 10 suburban submarkets and theCentral Business District. The totalinventory for the region is 211 millionsquare feet of space.Market Activitysales activityProperty Address sales date sale price size SF Grantor Grantee Price / Sf type submarket2727 London-Groveport Road 12/1/2012 $13,600,000 508,760 Trident Capital Group Cabot Properties $27.00 Warehouse Southeast5900 Opus Drive 12/3/2012 $12,261,000 377,283 KBS Real Estate Mobis Parts America $32.50 Warehouse Southeast1600 Eastgate Parkway 11/2/2012 $7,150,000 308,000 Investors Warranty Eastgate Parkway $23.21 Warehouse East3300 Lockbourne Road 11/30/2012 $2,410,000 301,103 Garrison 3300 Lockbourne LLC B&B Lockbourne LLC $7.86 Warehouse Southeast5255 Sinclair Road 11/26/2012 $2,825,000 83,055 CM MEDIA INC 5255 Sinclair Road LLC $34.01 Flex/R&D North5795 Green Pointe Drive 10/29/2012 $1,800,000 60,800 Dennis Enterprises Mason Management Group $29.60 Flex/R&D Southeast2499 McGraw Road 11/2/2012 $1,100,000 27,810 Executive Land Holdings LLC Celadon Realty LLC $39.55 Warehouse Southeast3830 Lacon Road 10/26/2012 $700,000 25,546 Mason Management Group Dennis Enterprises $27.40 Warehouse West3882 Agler Road 11/19/2012 $1,150,000 25,140 I Buck LLC Gep Properties Too LLC $45.74 Light Industrial East4080 Business Park Drive 11/1/2012 $1,400,000 16,000 4080 Investment Co. Ltd. Star Leasing Company $75.48 Light Industrial WestUnionCountyDelawareCountyLickingCountyNorthEastCBDWestSouthwest SoutheastFairfieldCountyPickaway CountyMadisonCountyLease activityProperty Address Lease Date Lease sf Lessee Asking price (NNN) type Submarket2160 McGraw Road 12/10/2012 185,000 Great Lakes $1.50 Warehouse-Distribution Southeast3950 Venture Court 10/17/2012 168,850 Rogue Fitness $2.50 Warehouse-Distribution West915 Taylor Road 11/9/2012 84,000 Spinnaker Mgmt/Comfy Couch Co $2.75 Warehouse Distribution East1635 Watkins Road 12/10/2012 76,710 INS Electronics $1.95 Warehouse-Distribution Southeast320 Outerbelt Street 11/2/2012 70,000 Rightway Solutions/DNS Distribution $2.50 Warehouse Distribution East2120 Creekside Parkway 11/1/2012 64,992 Exel $3.25 Warehouse-Distribution Southeast2250 International Street 11/26/2012 51,840 Arlington Contact Lens Service $3.00 Warehouse-Distribution Westp. 2 | Colliers Internationalresearch & forecast report | Q4 2012 | industrial | Greater Columbus Region
ConstructionExxcel Project Management partnershipstarted construction on a 478,053 squarefoot distribution center at the CenterPointBusiness Park north of RickenbackerInternational Airport in Obetz. This is thefirst major speculative industrial space inCentral Ohio in years, due largely to thechanging demand for bulk warehouse/distribution space, which recorded 1.1million square feet of net absorption lastquarter.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 5,335,716 410,270 7.7% 68,482 (10,167) - $6.63East 20,442,133 1,764,513 8.6% 1,467,111 1,738,292 - $2.60 $5.29Fairfield 6,114,387 64,500 1.1% (35,500) 234,920 - $4.00Licking 19,112,312 1,346,046 7.0% - 109,000 50,000 - $2.76Madison 8,576,748 - 0.0% - - 450,000 418,655North 16,814,944 1,272,891 7.6% 85,376 (149,936) 30,000 $4.13 $4.98North Delaware 8,796,109 562,566 6.4% (26,621) 45,028 - $3.21 $7.00Pickaway 3,602,146 84,250 2.3% - (22,750) -Southeast 64,139,813 7,228,149 11.3% (66,751) 2,577,012 824,103 - $2.57 $3.53SOUTHWEST 17,512,083 1,015,708 5.8% (12,743) 333,007 - $2.98 $3.40Union 6,299,770 342,116 5.4% (153,536) (65,351) - $3.11 $6.44West 34,873,110 2,426,640 7.0% 129,314 127,330 - $2.34 $3.96TOTALS 211,821,516 16,517,649 7.8% 1,455,132 4,938,885 924,103 448,655 $2.62 $4.82Net Absorption Construction Asking Rental RatesProperty Type Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions By Product Typer&D/Flex 20,188,473 2,533,132 12.5% 233,210 498,845 45,800 30,000 $4.82General industrial 70,015,457 3,374,942 4.8% 909,725 1,364,277 70,000 - $2.82Warehouse/distribution 121,617,58610,609,575 8.7% 312,197 3,075,763 755,250 418,655 $2.62Totals 211,821,516 16,517,649 7.8% 1,455,132 4,938,885 924,103 448,655 $2.99quarterly comparison and totalsNet Absorption Construction Asking Rental RatesQuarter, year Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions ($)Q3, 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 | Q4 2012 | Industrial | Greater Columbus RegionColliers International | p. 3
Central Business DistrictThe Central Business District (CBD) recorded 68,482square feet of positive absorption in the fourth quarter,largely attributed to a 54,531 square foot owner/usersale at 433 State Street, and a 13,951 square foot flexspace sale at 892-896 Scott Street. Absorption in theCBD overall for 2012 has improved, as the area is seeingits lowest vacancy rate (7.7 percent) in years. Absorptionas a whole has been strong for seven consecutivequarters in the CBD, with just six spaces of 10,000square feet vacant, two of which have more than 100,000square feet available.EastThe submarkets comprising eastern Columbus are Eastand Licking County. The Licking submarket absorptionhas remained flat, and vacancy is relatively unchangedfrom the previous quarter. Southgate Corp. continuesconstruction on its 50,000 square foot bulk warehouseat 94 Integrity in Licking County, with the abililty toexpand to 150,000 square feet. In the East, vacancyrates have lowered dramatically to around 9 percent,after lingering in the 20 percent range for over twoyears. Two major sales are responsible for the shift ofmomentum in the East. Trident Capital Group purchaseda 1,240,991 square foot warehouse distribution center at6200 E. Broad Street for $2.3 million. The building isscheduled to be demolished for eventual redevelopment.Niagara Bottling purchased the former 308,000 squarefoot Amerigraph printing plant in Gahanna for $7.2million. Spinnaker Management and Comfy Couch leased84,000 square feet of space at 915 Taylor Road. RightwaySolutions and DNS Distribution leased a total of 70,000square feet at 320 Outerbelt Street.NorthThe submarkets comprising northern Columbus areNorth and North Delaware. The North submarketrecorded 85,376 square feet of positive absorption asHoshizaki leased 14,550 square feet of flex space at7461 Worthington Galena Road. The North Delawaresubmarket recorded 26,621 square feet of negativeabsorption after 113,265 square feet was vacated at1020 Pittsburgh Drive. Construction has completed onthe 30,000 square foot Mattress Firm building at 952-960 N. Freeway Drive.SoutheastThe Southeast submarket stumbled in the fourth quarterafter driving the market for most of 2012. Pepsi vacated705,000 square feet at 3800 Groveport Road causingthe vacancy rate to to slip to 11.3 percent. Great Lakes,185,000 square foot lease at 2160 McGraw Road is thehighlight of the quarter. While 66,751 square feet ofnegative absorption occured in the fourth quarter, theprior three quarters were strong enough to keep year todate absorption positive at 2,577,012 square feet and beremembered as the best performing submarket of 2012.Construction is improving as Exxcel began constructionon a 478,053 square foot speculative distribution center.Construction continues on the 305,250 square footFedEx SmartPost distribution facility.SouthwestThe Southwest submarket experienced relativelyinsignificant negative absorption of 12,743 sqaure feet.Minor leases of 10,000 and 40,000 square feet occurredat 3940 Gantz Road, and 27 Jenkins Road respectively.Standard Register downsized by 63,041 square feet ofspace at 3515 Urbancrest Industrial Drive.WestThe submarkets on the west side of Franklin County areWest, Madison and Union. The West submarket recordedpositive absorption of 129,314 square feet, an additional100,000 square feet from the previous quarter, with aastonishing 150 basis point drop in vacancy to 7 percent.A 168,500 square foot lease signed by Rogue Fitness at3950 Venture Court, along with 155,688 square feet ofother significant signings were offset by Jacobson’sWarehouse’s 173,903 square foot move out at 2642Fisher Road. Madison showed no leasing activity butconstruction continues on expanding the Target Corp.distribution center by 425,000 square feet. The 418,655square foot Restoration Hardware expansion at 1000Enterprise Parkway has been completed.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 4,725,008 square feet. This is well abovethe average (3,463,631 square feet) for fourth quartersin the past three years. There are 56 buildings withvacant contiguous space equal to or greater than100,000 square feet left in the Columbus market. 10were built since 2000 and 9 of those are 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. Bulk warehouse and distribution users seekingmore than 200,000 square feet are beginning to subside,but will continue to drive the market. Auto suppliers,technology companies (e-commerce distributors,internet based retailers and third party logistic firms) arealso active in the region. The largest leases of 2012were Jacobson Warehouse leasing 455,667 square feetat 2450 Spiegel Drive; Innotrac leasing 434,120 squarefeet at 6440 Port Road; and Restoration Hardwareleasing 418,655 square feet at 100 Enterprise Parkway.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 | Q4 2012 | industrial | Greater Columbus Region