Q4 2012 | INDUSTRIALNORTH AMERICAHIGHLIGHTS                                                             Industrial Measure...
HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA•	 Post-Panamax readiness progresses on the East Coast: Baltimore   joine...
HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICAINDUSTRIAL OUTLOOK 2013                                                  ...
HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICADifferentiating trends are:•	 Port markets will distinguish themselves if...
HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA                                                                         ...
HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICAAbsorptionThe final tally on 2012 net industrial absorption was not in th...
HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICAThe 5 states with the most warehouse construction under way, along withth...
HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICATransaction Activity                                                     ...
HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICAUNITED STATES | INDUSTRIAL SURVEY                                     INV...
HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA UNITED STATES | INDUSTRIAL SURVEY (continued)                           ...
HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA UNITED STATES | INDUSTRIAL SURVEY | SALES PRICE AND CAP RATE AS OF DECEM...
HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA UNITED STATES | INDUSTRIAL SURVEY | SALES PRICE AND CAP RATE AS OF DECEM...
HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA UNITED STATES | INDUSTRIAL SURVEY | RENTS AS OF DECEMBER 2012           ...
HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA UNITED STATES | INDUSTRIAL SURVEY | RENTS AS OF DECEMBER 2012   (continu...
HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA CANADA | INDUSTRIAL SURVEY                                  EXISTING    ...
HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA CANADA | INDUSTRIAL SURVEY | SALES PRICE AND CAP RATE AS OF DECEMBER 201...
North American Industrial Highlights 4Q-12
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Colliers International North American Industrial Real Estate Report

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North American Industrial Highlights 4Q-12

  1. 1. Q4 2012 | INDUSTRIALNORTH AMERICAHIGHLIGHTS Industrial Measures are in a Near-Perfect V Formation. K.C. CONWAY EMD | Market Analytics Key TakeawaysMARKET INDICATORSRelative to prior period • Q4 was the best quarter for industrial warehouse property transactions since Q3 2007. Industrial warehouse property transactions were up 4% in 2012 to $36.9 billion. Approximately 37% of these transactions ($13.5 billion) occurred in Q4 2012 US US Canada Canada Q4 Q1 Q4 Q1 • 2012 net absorption in Colliers’ 75 primary North American industrial markets surpassed 160 2012 2013* 2012 2013* million square feet. 70.9 MSF were absorbed in Q4, or 40% of the 2012 total. ApproximatelyVACANCY 90% of Q4 leasing activity occurred in the U.S. • 30% of Q4 North American net absorption occurred in just five MSAs: Toronto (4.95 MSF),NET ABSORPTION     Detroit (4.7 MSF), Los Angeles – Inland Empire (4.4 MSF), Dallas/Ft. Worth (3.2 MSF), andCONSTRUCTION Memphis (2.9 MSF). All five markets are home to the nation’s busiest intermodal rail operations, with the exception of Chicago.RENTAL RATE** • The North American industrial vacancy rate dropped 30 basis points in Q4 to end 2012 *Projected, relative to prior period below 9.0%. The North American vacancy rate ended 2012 at 8.42%, and the U.S. vacancy **Warehouse rents rate at 8.92%. • Ten major North American markets have vacancy rates at or below 6.5 percent. Montreal (4.3%) and Calgary (5.0%) in Canada; Orange County, CA (4.9%), Omaha (5.1%), Houston (5.2%),N.A. INDUSTRIAL MARKET Indianapolis (5.3%), Long Island, NY (5.6%), Seattle (5.8%), Los Angeles – Inland Empire (6.5%)SUMMARY STATISTICS, Q4 2012 and Milwaukee (6.5%) in the U.S. NORTH AMERICAN INDUSTRIAL VACANCY, INVENTORY AND ABSORPTION | Q4 2012 US CAN NAVACANCY RATE 8.92 4.25 8.42 Change from Q3 2012 (%) -0.31 -0.24 -0.30ABSORPTION (MSF) 64.0 6.9 70.9NEW CONSTRUCTION (MSF) 24.0 3.7 27.7UNDER CONSTRUCTION (MSF) 56.0 14.1 70.1 Absorption Per Market (SF) q3 12 - q4 12 3,000,000ASKING RENTS 1,500,000 US CAN 300,000PER SF (USD/CAD) -300,000 -1,500,000Average Warehouse/ -3,000,000 4.82 7.55Distribution Center Sq. Ft. By RegionChange from Q3 2012 (%) 1.07 0.66 4 billion 4.00000000 2 billion 2.00000000 400 mil 4.00000000 Occupied SF Sq. Ft. Occupied Vacant SF Sq. Ft. VacantWWW.COLLIERS.COM
  2. 2. HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA• Post-Panamax readiness progresses on the East Coast: Baltimore joined Norfolk, VA, as the only other post-Panamax port on the East Coast in 2012. New York is progressing with project to raise the Bayonne Bridge 60 feet. Miami has ordered new post-Panamax cranes. Charleston is on track as well. Geese migrating in their iconic “V formation” use significantly less energy than flying soloPort of Baltimore has deployed new PPMX cranes WHAT DO NATURE AND PHYSICS TELL US ABOUTPhoto: dol.gov THE “V FORMATION,” AND HOW DOES IT APPLY TO INDUSTRIAL REAL ESTATE? Geese are iconic North American birds, most often seen migrating in a signature V formation. This is no accident: the formation is more aerodynamically efficient, reducing the energy the geese expend in flight by as much as 50 percent. This is analogous to what’s happening in North American industrial real estate with the growth in e-commerce and the expansion of the Panama Canal lock system. Just as Mother Nature aided geese in configuring their flight, so too is “Mother Intermodal” guiding distributors, producers, retailers and suppliers to re-engineer their supply chains. The driving force behind demand for industrial real estate as we approach the first post-Panamax decade (2015–2025) is efficiency: reduced cost, handling, and time. Several factors are forcing rapid evolution, eliminating the traditional choke points and “drag” in the system. Container ships two or three times the size of those in service today will soon make regular calls on North American ports, and not just on the West Coast. New hours-worked rules for over-the-road truck freight carriers will shift freight to intermodal and rail. Increasing demand for same-day delivery of goods purchased online will force more collaboration between air cargoExisting Bayonne Bridge to be raised 60 feet by 2015 and ocean container distribution in both port and air cargo markets, suchPhoto: Ines Hegedus-Garcia as Memphis (FedEx) and Louisville (UPS).• Four of the top 5 U.S. cities for in investment were port cities, The effects of this natural streamlining process are already visible. according to AFIRE (the Association for Foreign Investment in Real This report examines key Q4 2012 metrics pertaining to absorption, Estate): New York, San Francisco, Houston and Boston. Houston was vacancy, rail carload volume and intermodal traffic, which define the new also in the top five globally for the first time. V formation driving the future demand for North American industrial real• Recovery in housing is an overlooked industrial demand driver that will estate, and provide the real definition of INTERMODAL: Industrial Now gain additional traction in 2013. Turns Especially to Rail to Move Ocean Distribution Across Land.P. 2 | COLLIERS INTERNATIONAL
  3. 3. HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICAINDUSTRIAL OUTLOOK 2013 Right now, manufacturers and retailers are intensely focused on developing2H 2012 North American outlook reports focused on mixed economic the most efficient path for goods and materials moving around thesignals and post-Panamax readiness of U.S. ports to understand why globe, traversing both ocean and land. This requires the integration ofindustrial real estate has continued to perform well. With the benefit sophisticated logistics to reduce transportation, warehousing and handlingof hindsight, it’s increasingly clear that the fiscal headwinds and costs, as well as reducing time to deliver finished goods to consumers. Theunemployment riptides are not powerful enough to capsize continued logistics technology driving these efficiencies, along with rising energy costsindustrial performance in 2013. and expanding trade routes made possible by the Panama Canal expansion, are changing where industrial real estate is most in demand.The driving force behind industrial development, leasing and transactionactivity remains enhanced efficiencies: more movement of raw materials For these reasons, traditional industrial economic indicators such asand processed goods, more global trade with emerging markets in Latin GDP, the Institute for Supply Management’s Purchasing Managers IndexAmerica, more e-commerce, and more domestic manufacturing. And (PMI), and Federal Reserve District Bank manufacturing surveys, all failmore must be achieved with less: less time to move goods, less energy to explain the boom in industrial real estate. This quarter’s analysis ofconsumption and less labor-intensive handling of goods and materials at industrial leasing, transaction and development activity highlights fiveports. These changes have resulted in ongoing port labor strife, which will emerging trends related to this observation, which will become morecontinue as the implementation of these efficiencies results in job losses pronounced as we approach the first post-Panamax decade (2015–2025).at ports and along the supply chain. Unlike the industrial boom periods in These five trends will explain why the V formation for industrial real estatethe 20th century that resulted in the construction of factories employing development and investment in 2013 is pointed toward port markets,thousands of laborers, the modern manufacturing returning to the U.S. inland distribution markets with dominant intermodal facilities (e.g.,today is highly technical and automated, requiring a leaner and more Atlanta, Memphis, Dallas, Denver, Los Angeles and Philadelphia), and aeducated workforce with skills in engineering, IT and robotics. handful of dominant air cargo markets, such as Memphis and Louisville. OF THE LEASES SIGNED THIS QUARTER*, DID MOST TENANTS...? 3-MONTH FORECAST FOR VACANCY LEVELS (relative to current quarter) Contract Hold Steady Expand Up Same Down 100% 3.2% 100% 5.0% 8.3% 4.8% 5.3% 11.8% 8.3% 9.1% 9.0% 90% 16.7% 90% 22.2% 80% 80% 33.3% 17.6% 30.0% 23.6% 26.9% 42.9% 38.1% 11.1% 70% 46.0% 45.3% 70% 41.7% 66.7% 60% 41.7% 60% 50.0% 50% 50% 40% 40% 66.7% 66.7% 70.6% 65.0% 67.3% 64.2% 30% 30% 52.4% 50.0% 20% 38.1% 41.7% 38.1% 38.7% 20% 33.3% 10% 16.7% 10% 0% 0% Midwest Northeast South West Canada U.S. N.A. Midwest Northeast South West Canada U.S. N.A. *Excluding renewals CHARACTERIZE CURRENT INDUSTRIAL RENTS IN YOUR MARKET 3-MONTH FORECAST FOR RENTS (relative to current quarter) Up Same Down Declining Bottoming No Clear Direction Increasing Peaking 100% 90% 16.7% 80% 33.3% 33.3% N.A. 3 45.5% 40.3% 1.5% 19.7% 27.3% 48.5% 3.0% 47.1% 70% 55.0% 60% Canada 9.1% 36.4% 27.3% 18.2% 50% 75.0% 40% 30% 66.7% 66.7% 58.2% 52.9% 54.5% U.S. 21.8% 25.5% 52.7% 20% 45.0% 10% 8.3% 0% 20% 40% 60% 80% 100% 0% 1.5% Midwest Northeast South West Canada U.S. N.A. COLLIERS INTERNATIONAL | P. 3
  4. 4. HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICADifferentiating trends are:• Port markets will distinguish themselves if they... MEMPHIS NOW #1 IN AIR GLOBAL CARGO • …are post-Panamax ready; According to Airports Council International, • …occupy a commodity or product niche, such as coal Memphis in February overtook Hong Kong and (Norfolk, VA), grain (Seattle), autos (Baltimore and Shanghai to top the list of Asian, European and Jacksonville), poultry or pharmacy (Savannah); or North American air cargo markets, as measured by metric tons of air cargo handled annually. With its BNSF intermodal facility, • …are aligned with the national intermodal rail system; that Colliers recognizes Memphis as the top North American market is, physically connected to one of the seven Class-1 North for e-commerce. American railroads. Tampa, Jacksonville, Charleston, Savannah, Philadelphia, Mobile, and New Orleans are examples along the East and Gulf coasts.• Intermodal and logistics differentiate top-tier inland distribution MSAs (e.g., Atlanta, Memphis, Louisville, Columbus, Indianapolis, BEHIND THE STATISTICS & BEYOND THE BASICS Dallas, Kansas City and Denver) from those that will be ancillary to the Colliers monitors industrial property conditions in 75 North American national supply chain (e.g., Orlando, Birmingham, Charlotte, Las Vegas markets from Miami to Montreal, totaling 16.1 billion square feet of and California’s Central Valley). inventory. Approximately 90 percent (14.4 billion square feet) of this• Inland waterways are diminishing in importance as a means of inventory is located in the United States. moving bulk cargo, due to the inefficiency and unreliability of this mode of transportation owing to unpredictable drought or flood. The West and Midwest regions constitute approximately half of the North• Changes to environmental and labor regulations are driving cargo American industrial warehouse space (8.0 billion square feet), and also away from trucking and toward rail. accounted for approximately half of the annual net leasing activity in• Air cargo facilities are vital to e-commerce. In 3–5 years, there will North America. The South is the next largest region, with 4.2 billion be at most a half-dozen dominant U.S. air cargo markets. Candidates square feet of industrial warehouse space, or 26 percent of the North include Memphis, Louisville, Columbus, Miami, New York, Los American inventory. The expansion of the Panama Canal, and the addition Angeles, Seattle and Denver. Because of the costs involved, air cargo of at least five more Panamax-ready ports to the East and Gulf coasts, in the U.S. will follow the same hub-and-spoke model adopted by will only enhance the market share of key inland and port distribution passenger air carriers to maximize traffic. markets in the Southeast and Southwest by 2015. NORTH AMERICAN INDUSTRIAL OVERVIEW | Q4 2012 MEASURE NORTH AMERICA CANADA UNITED STATES WEST/MIDWEST SOUTH NORTHEAST # of Markets 75 12 63 33 21 9 Inventory (MSF) 16,121.4 1,720.4 14,401.0 8,018.6 4,159.8 2,222.6 % of N.A. Inventory 100.0 10.7 89.3 49.7 25.8 13.8 New Supply (MSF) 27.7 3.7 24.0 11.6 10.5 2.0 % of N.A. New Supply 100.0 13.2 86.8 41.7 37.8 7.3 Vacancy (%) 8.42 4.25 8.92 8.37 9.57 9.67 Absorption (MSF) 70.9 6.9 64.0 36.1 21.9 6.0 % of N.A. Absorption 100.0 9.7 90.3 50.9 30.9 8.5 Leadership Markets Toronto—tops in Detroit, Los Angeles, Los Angeles, San Diego, Atlanta, Charlotte, Philadelphia, New absorption; and then Dallas, Memphis, Bakersfield, Denver, Dallas, Houston, Jersey – Central and Montreal and Calgary Philadelphia, Phoenix, Seattle, Greenville SC, Louis- Washington, DC with (lowest vacancy rates) Louisville and Atlanta Chicago, Columbus, ville, Memphis, Nashville >1.0 MSF net in absorption; and then Detroit and Indianapolis and absorption in Q4 Southern California and with >1.0 MSF of net Richmond with Los Angeles, Houston, absorption Q42012 1.0 MSF net absorption Indianapolis and in Q42012 Seattle with respect to lowest vacancy Laggard Markets Halifax and NE (Hartford, Boston, Central Valley of Birmingham, Savannah, Hartford, Boston Waterloo with and Long Island). California and Omaha Orlando, and Little Rock and Long Island with vacancy rates >6.5% Central Valley of with <250k SF net with <250k SF in net negative absorption in California (Fresno, absorption in Q4 2012 absorption in Q4 2012 Q4 0212 Stockton and secondary SE markets inland from ports and lacking intermodal facilities (Birmingham and Orlando)P. 4 | COLLIERS INTERNATIONAL
  5. 5. HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA TOP 20 NORTH AMERICAN INDUSTRIAL MARKETS | VACANCY2012 finished with progress on all fronts. • North American and U.S. industrial vacancy rates below 9.0 percent (8.42% and 8.92%, respectively) Q4 VACANCY MARKET MSA VACANCY • Q4 was the best quarter since Q3 2007 and the financial crisis, RANKING PROFILE RATE (%) with $36.9 billion in transactions, making investor demand for industrial real estate second only to multifamily 3rd largest • Lease activity surged at year-end, with 45% of 2012’s 1 Vancouver 3.67 Canadian CANADA 163.5 MSF of net absorption coming in Q4 industrial market • Addition of another post-Panamax port (Baltimore) and another Largest Canadian 2 Toronto 4.13 industrial market major intermodal facility (Philadelphia)Following four consecutive quarters of improving demand metrics with 2nd largest 3 Montreal 4.34 Canadianlimited new supply, the overall picture is of a property type in balance. industrial marketAs a result, new construction is both warranted and feasible. 4th largest 4 Calgary 5.05 Canadian industrial market U.S. INDUSTRIAL MARKET | Q4 2010–Q4 2012 Top-20 North 5 Honolulu 3.75 UNITED STATES American port Busiest North 70.0 14.0 6 Los Angeles 4.21 American TEU 60.0 10.80 10.56 12.0 container port 10.29 10.01 9.77 9.68 9.43 50.0 8.92 10.0 8.42 7 Orange County 4.90 - Vacancy % 40.0 8.0 30.0 6.0 Busiest 8 Houston 5.15 Gulf Coast port 20.0 4.0 Developing 10.0 2.0 9 Indianapolis 5.26 Canadian - - Intermodal link Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Port of New York Absorption MSF Completions MSF Vacancy % 10 Long Island 5.59 influence Top-20 North 11 Seattle 5.82 American portVacancy Top-5 NorthFrom a regional perspective, Canada has the lowest average vacancy rate 12 LA – Inland Empire 6.45 American intermodal facilityin North America at 4.25 percent; the Northeast U.S. has the highest, at9.67 percent. The West and Midwest are the only two U.S. regions with Key Great Lakes 13 Milwaukee 6.51 region portvacancy rates below 9.0 percent—7.88 percent and 8.79 percent,respectively. Top-20 North 14 Miami 6.57 American port to Latin America Top-10 North US CAN NA 15 Kansas City 6.72 American intermodal facility Vacancy Rate 8.92% 4.25% 8.42% Top-20 North 16 Portland 7.18 American port; Change from Q3 2012 -0.31% -0.24% -0.30% autos & agriculture Proximity to Great 17 Grand Rapids 7.29 Lakes ports & railDrilling deeper into the five North American office regions, vacancy Cruise ship portimproved the most in the primary port and inland distribution markets 18 West Palm Beach 7.29 influencewith large intermodal facilities. In Canada, among the three large industrialmarkets (at least 100 MSF of inventory), the vacancy rates are lowest in Top-10 intermodal 19 Denver 7.45 & air cargoVancouver (3.67%), Toronto (4.13%) and Montreal (4.34%). There are 15U.S. markets with a vacancy rate below 7.5 percent, approximately 100 North American 7.50basis points below the North American average. It is important to note that Average13 of the 15 U.S. markets with the lowest industrial vacancy rates Intermodal and railare top-20 North American port or top-10 inland distribution markets with 20 Minneapolis 8.12 linkage to Canadamajor intermodal rail. COLLIERS INTERNATIONAL | P. 5
  6. 6. HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICAAbsorptionThe final tally on 2012 net industrial absorption was not in the cards Looking forward to 2013, the only brake on industrial leasing activity in keyat mid-2012, when it appeared that retailers and manufacturers were port and intermodal markets will be the delayed delivery of new spacepulling back from warehouse leasing activity and capital expenditures under construction: Los Angeles, Houston, Seattle and Memphis can’tfor supply-chain makeover. However, despite the market’s anxiety over complete new space fast enough to keep pace with demand. Market forcesthe November 2012 election and the Fiscal Cliff, net industrial absorption will see disproportionately higher 2H 2013 net leasing activity thanhad its best performance in 2012 since the 2008–2009 financial 1H 2013, as was the case in 2012.crisis, and Q4 net absorption accounted for 45 percent of aggregate 2012net leasing activity. Construction Activity There is no change from the prior North American Outlook report.Which markets outperformed and why? As was revealed by the year-end Bottom line: there remains a dearth of new speculative warehousevacancy statistics, there is another strong correlation to port and development. Construction activity is still subdued, and predominantlyintermodal markets with two wrinkles: Detroit (influenced by the auto driven by owner-users expanding e-commerce capabilities by redevelopingrecovery), and Phoenix (influenced by the housing recovery). The fiscal their supply chain. National retailers such as Amazon, Family Dollar,headwinds and unemployment riptides are not powerful enough to FedEx, Home Depot, Lowes, Publix, Target, Tractor Supply and Wholecapsize continued industrial performance because development and Foods are constructing in excess of 9.0 MSF of modern distribution andleasing activity is fueled by distributors, manufacturers, retailers and logistics centers from coast to coast. These new centers account forshippers who need to re-engineer their supply chain to gain efficiencies approximately 30 percent of the 32 MSF of new warehouse constructionrequired in the post-Panamax era, just two years away. Eight of the top under way at year-end 2012. Another 30 percent of this total is forten U.S. markets for both Q4 and CY 2012 absorption were top-ten modern parts and distribution centers for manufacturers, such as Boeing,North American port or intermodal industrial markets. Volkswagen and Whirlpool. TOP 10 U.S. INDUSTRIAL MARKETS | ABSORPTION ABSORPTION (SF) | SELECT U.S. MARKETS | Q4 2012 Millions MSA Q4 2012 (MSF) MSA CY 2012 (MSF) 0.0 2.0 4.0 6.0 8.0 Chicago, IL Chicago 13.438 1 7.006 Chicago Detroit, MI (Intermodal) (Intermodal) Los Angeles - Inland Empire, CA Detroit Dallas-Ft. Worth, TX Dallas/ 9.728 2 (Auto + 4.685 Los Angeles, CA Ft. Worth (Intermodal) Housing) Atlanta, GA Los Angeles– Indianapolis, IN 9.169 3 Inland Empire 4.405 Detroit (Auto-recovery) New Jersey - Central (Intermodal) New Jersey - Northern Dallas/ Los Angeles– 8.470 Savannah, GA 4 Ft. Worth 3.223 Inland Empire (Intermodal) (Intermodal) Memphis Los Angeles– 8.375 5 2.905 (Intermodal) Coastal (Port) ABSORPTION (SF) | CANADIAN MARKETS | Q4 2012 Philadelphia 7,400 6 (Port + 2.900 Atlanta Millions (Intermodal) Intermodal) -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 Phoenix 6.245 Toronto, ON 7 2.519 Houston Vancouver, BC (Housing) (Port) Edmonton, AB Regina, SK Los Angeles 5.137 Saskatoon, SK 8 2.235 Phoenix Ottawa, ON (Port) (Housing Recovery) Waterloo Region, ON Victoria, BC Louisville 4.916 Montréal, QC 9 2.227 Columbus (Air Cargo) (Air Cargo) Calgary, AB Halifax, NS Winnipeg, MB Richmond 3.916 10 2.223 Seattle (Port) (Port)P. 6 | COLLIERS INTERNATIONAL
  7. 7. HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICAThe 5 states with the most warehouse construction under way, along withtheir largest distribution or logistics project: BURGEONING OPPORTUNITY IN DISTRIBUTION FOR HEALTHCARE United Parcel Service (UPS) has jumped out as TOTAL NEW a leader in developing a healthcare distribution LARGEST DISTRIBUTION/ STATE CONSTRUCTION network. Approximately 6.0 MSF of distribution space is LOGISTICS PROJECT U/C UNDERWAY (MSF) dedicated to healthcare distribution in the U.S., Canada and Europe, and UPS is adding 800,000 SF more in 2013—the 1 Georgia 3.4 1.4 MSF by Lowes largest portion in Atlanta. In the U.S., UPS is focused on growing this distribution niche in Atlanta, Louisville, Mira Loma, 2 Tennessee 1.8 1.0 MSF by Amazon CA and Reno. In light of the aging U.S. population and a rapidly growing healthcare industry, healthcare distribution is certainly 800k SF by Rubbermaid ; a niche to monitor. However, its higher regulatory scrutiny and 3 Ohio 1.7 unique design requirements (such as temperature-controlled 400k by Target facilities) are steep barriers to entry for those lacking capital 4/5 California 1.5 300,000 SF by Chino and knowledge of the healthcare industry. 4/5 Arizona 1.5 600,000 SF by Estrela Logistics However, rising construction costs are a concern that spans all commercialCapital for new construction is scarce, as banks remain on the sidelines property types. It may surprise many to learn that construction costsunless the warehouse project is a build-to-suit for owner occupancy or is never actually declined during the 2008–2009 financial crisis and thepre-leased to ensure break-even debt service. The risk of overbuilding is ensuing recession. As documented by ENR Construction, costs have risenlow, given the scarcity of debt capital for speculative construction and the 17% since the end of 2007, and are up over 5.0 percent since Februarylimited degree of speculative warehouse construction under way at 2011. Investors and developers considering new construction investmentsyear-end 2012 (less than 10 MSF), so prospects for further improvement should budget construction cost increases at double the CPI for 2013 andin both vacancy and rental rates remain favorable for 2013. 2014, due to pressures on labor and materials. ENGINEERING NEWS-RECORD’S CONSTRUCTION COST INDEX YEAR JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC AVG 2013 9437 9453 NOTE: CONSTRUCTION COSTS NEVER DROPPED POST-2007 & ARE RISING AT A FASTER PACE. 2012 9176 9198 9268 9273 9290 9291 9324 9351 9341 9376 9398 9412 9308 2011 8938 8998 9011 9027 9035 9053 9080 9088 9116 9147 9173 9172 9070 2010 8660 8672 8671 8677 8761 8055 8844 8837 8836 8921 8951 8952 8799 2009 8549 8533 8534 8528 8574 8578 8566 8564 8586 8596 8592 8641 8570 2008 8090 8094 8109 8112 8141 8185 8293 8362 8557 8623 8602 8551 8310 2007 7880 7880 7856 7865 7942 7939 7959 8007 8050 8045 8092 8089 7966 2006 7660 7689 7692 7695 7691 7700 7721 7722 7763 7883 7911 7888 7751 2005 7297 7298 7309 7355 7398 7415 7422 7479 7540 7563 7630 7647 7446 2004 6825 6862 6957 7017 7065 7109 7126 7188 7298 7314 7312 7308 7115 2003 6581 6640 6627 6635 6642 6694 6695 6733 6741 6771 6794 6782 6694 2002 6462 6462 6502 6480 6512 6532 6605 6592 6589 6579 6578 6563 6538 2001 6281 6272 6279 6286 6288 6318 6404 6389 6391 6397 6410 6390 6343 2000 6130 6160 6202 6201 6233 6238 6225 6233 6224 6259 6266 6283 6221INDEX METHODOLOGY: 200 hours of common labor at the 20-city average of common labor rates, plus 25 cwt of standard structural steel shapes at the mill price prior to 1996 and the fabricated20-city price from 1996, plus 1.128 tons of portland cement at the 20-city price, plus 1,088 board-ft of 2x4 lumber at the 20-city price. COLLIERS INTERNATIONAL | P. 7
  8. 8. HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICATransaction Activity CONCLUSIONIndustrial warehouse property transactions were up 4 percent in 2012 Let’s return to the question posed at the beginning of this report:to $36.9 billion, despite a dearth of portfolios and investment-gradewarehouses for sale. Approximately 37 percent of these transactions Q. What do nature and physics tell us about the V formation, and(13.5 billion) occurred in Q4 2012, making it the most active quarter for how is it applicable to industrial real estate?industrial warehouse transactions since Q3 2007. Cap rates continue to A. It tells us that it is the most efficient pattern of movement thatcompress, and prices were up 6 percent over 2011, according to Real expends 50 percent less energy.Capital Analytics Industrial Year in Review.Capital Markets The North American industrial markets are re-engineering their supplyWhat is better than improving office property type fundamentals? For chains and distribution channels with a V formation in mind—and a goalthose that purchased any of the 4,000 industrial warehouse properties of achieving enhanced efficiencies in both costs and time. The growththat traded in 2012, the answer is availability of capital. Domestic and in e-commerce and expansion of the Panama Canal lock system areforeign sources are flush with capital ready to invest in tangible assets converging to force manufacturers, retailers, and suppliers to makelike real estate, that can offer 2.5 to 3.0 times the yield offered by the large CapEx investments in new facilities, particularly in markets alignedU.S. government’s 10-year Treasury bond. And, the CMBS debt markets with post-Panamax ports, with intermodal facilities along one or moreare opening up again after four consecutive years of annual new issuance Class-1 railroads, and in proximity to the most efficient overnight airbelow $50 billion. Underwriting terms and pricing spreads have also cargo airports.compressed in favor of borrowers. Improving market conditions have $@enabled even properties with elevated vacancy rates to becomefinanceable again due to the low DSCR hurdle provided by sub-5.0percent interest rates and 90 percent LTVs. Declining CMBS delinquencyrates have further aided new issuance interest, and have CMBS investorsenthusiastic about 2013 new issuance increasing 50 percent over2012’s $50 billion level to 75 billion. If you have tenants, and can meet a1.4 DSCR using a 4.5% loan coupon, the capital markets are once againopen to refinance your industrial building. PERCENTAGE 30+ DAYS DELINQUENT BY PROPERTY TYPE JAN ‘13 DEC ‘12 NOV ‘12 3 MON 6 MON 1 YEAR INDUSTRIAL 11.32 11.24 11.48 11.53 11.72 12.14 LODGING 11.77 11.73 12.24 11.24 13.06 12.09 Industrial markets V formation MULTIFAMILY 13.43 13.98 14.21 14.26 15.69 15.39 OFFICE 10.48 10.66 10.37 10.20 10.69 8.90 The driving force behind demand for industrial real estate as we approach RETAIL 7.79 7.62 7.75 8.03 8.03 7.88 the first post-Panamax decade is increased efficiency, in order to offset global competition and pressure of a global economic climate miredSource: Trepp – January 2013 CMBS Delinquency Report in debt, and likely to see ongoing tepid GDP growth.P. 8 | COLLIERS INTERNATIONAL
  9. 9. HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICAUNITED STATES | INDUSTRIAL SURVEY INVENTORY NEW CURRENTLY UNDER ABSORPTION VACANCY RATE VACANCY RATEMARKET DEC. 31, 2012 CONSTRUCTION CONSTRUCTION Q4 2012 (SF) SEPT. 30, 2012 (%) DEC. 31, 2012 (%) (SF) Q4 2012 (SF) (SF)NORTHEASTBaltimore, MD 225,922,841 67,120 392,620 777,065 10.53 10.21Boston, MA 154,079,047 128,874 1,109,585 (263,862) 17.14 17.38Hartford, CT 97,321,923 224,061 - (273,114) 8.93 9.19Long Island, NY 161,321,096 - - (385,086) 5.36 5.59New Jersey – Central 353,576,306 287,800 1,027,000 1,032,423 9.39 9.17New Jersey – Northern 374,424,353 - - 824,363 8.55 8.35Philadelphia, PA 409,316,988 1,265,000 2,204,530 2,900,169 10.18 9.75Pittsburgh, PA 168,333,439 - 146,313 191,368 8.32 8.21Washington, DC 278,296,443 49,600 1,933,098 1,223,202 11.14 10.71Northeast Total 2,222,592,436 2,022,455 6,813,146 6,026,528 9.87 9.67SOUTHAtlanta, GA 608,573,705 1,370,640 4,521,578 1,791,217 12.71 12.41Birmingham, AL 110,692,974 - 150,000 136,337 9.57 9.39Charleston, SC 32,042,029 200,000 768,000 338,899 10.86 10.36Charlotte, NC 295,314,817 160,988 509,765 1,615,340 12.28 11.78Columbia, SC 37,853,794 - - 58,608 8.90 8.78Dallas-Ft. Worth, TX 717,071,304 1,693,118 1,279,743 3,223,281 9.72 9.48Ft. Lauderdale-Broward, FL 123,353,931 - 381,969 (14,666) 8.34 8.35Greenville/Spartanburg, SC 183,028,727 1,015,740 - 1,730,134 9.61 9.16Houston, TX 482,535,159 949,497 2,554,598 1,440,472 5.26 5.15Jacksonville, FL 121,961,127 41,808 - 512,271 10.47 10.08Little Rock, AR 45,018,927 18,376 497,443 59,518 11.29 11.17Louisville, KY 180,269,470 16,000 - 2,227,336 10.19 8.96Memphis, TN 217,057,417 1,372,305 1,219,892 2,905,072 13.25 12.46Miami, FL 220,661,704 53,000 1,008,421 858,752 6.94 6.57Nashville, TN 88,921,700 1,300,000 - 1,369,010 9.03 8.82Orlando, FL 145,229,723 87,814 - 136,471 10.25 10.21Raleigh, NC 120,097,770 36,554 135,696 254,180 10.42 10.23Richmond, VA 112,863,513 2,146,494 482,489 2,223,096 10.24 9.98Savannah, GA 44,421,300 - 881,000 144,657 12.16 11.84Tampa Bay, FL 212,832,724 - 35,519 734,755 9.70 9.36West Palm Beach, FL 60,002,683 - 20,900 186,192 7.60 7.29South Total 4,159,804,498 10,462,334 14,447,013 21,930,932 9.90 9.57 COLLIERS INTERNATIONAL | P. 9
  10. 10. HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA UNITED STATES | INDUSTRIAL SURVEY (continued) INVENTORY NEW CURRENTLY UNDER ABSORPTION VACANCY RATE VACANCY RATE MARKET DEC. 31, 2012 CONSTRUCTION CONSTRUCTION Q4 2012 (SF) SEPT. 30, 2012 (%) DEC. 31, 2012 (%) (SF) Q4 2012 (SF) (SF) MIDWEST Chicago, IL 1,310,785,800 900,153 4,768,149 7,006,883 10.04 9.53 Cincinnati, OH 274,600,585 - 553,338 856,364 9.53 9.22 Cleveland, OH 477,772,867 153,492 22,538 738,868 9.18 9.05 Columbus, OH 211,821,516 448,665 924,103 1,455,132 9.11 8.76 Detroit, MI 556,741,643 1,640,405 - 4,685,051 12.03 11.45 Grand Rapids, MI 108,946,869 - 285,000 370,606 7.56 7.29 Indianapolis, IN 282,953,005 1,306,295 2,303,616 1,091,779 5.21 5.26 Kansas City, MO-KS 234,052,197 212,441 2,466,743 761,402 6.96 6.72 Milwaukee, WI 223,336,664 322,050 - 358,540 6.57 6.51 Minneapolis/St. Paul, MN 252,239,046 647,000 1,585,000 764,750 8.35 8.12 Omaha, NE 67,749,057 - 35,636 153,296 5.41 5.09 St. Louis, MO 260,993,881 - 209,050 487,411 8.61 8.42 Midwest Total 4,261,993,130 5,630,501 13,153,173 18,730,082 9.13 8.79 WEST Bakersfield, CA 33,401,923 495,000 291,085 1,026,063 4.45 2.80 Boise, ID 35,010,541 169,680 210,000 643,826 10.92 9.51 Denver, CO 215,855,262 340,928 855,271 1,298,425 7.86 7.45 Fairfield, CA 46,831,953 - 48,133 514,997 12.40 11.30 Fresno, CA 48,600,000 - - 214,000 9.70 9.26 Honolulu, HI 39,179,616 - - 205,646 4.27 3.75 Las Vegas, NV 109,030,779 - 658,320 284,707 16.05 15.53 Los Angeles – Inland Empire, CA 386,235,800 1,759,500 8,741,800 4,405,800 6.89 6.45 Los Angeles, CA 882,677,700 848,500 1,608,600 2,235,500 4.35 4.21 Oakland, CA 141,540,855 - 517,575 99,250 8.46 8.23 Orange County, CA 200,123,900 - 183,200 (576,500) 4.60 4.90 Phoenix, AZ 272,634,685 2,008,075 4,683,704 2,519,378 13.09 12.81 Pleasanton/Walnut Creek, CA 33,187,680 - - 918,170 12.99 10.22 Portland, OR 200,393,745 - 2,170,447 186,166 7.27 7.18 Reno, NV 87,415,483 - - 399,516 11.43 10.97 Sacramento, CA 188,076,142 - 235,553 720,631 13.30 12.92 San Diego, CA 186,979,756 129,845 172,656 1,031,268 10.36 9.87 San Francisco Peninsula, CA 41,071,873 - - (242,772) 9.26 9.85 San Jose/Silicon Valley 251,868,566 99,800 111,100 (77,141) 10.69 10.73 Seattle/Puget Sound, WA 262,474,244 - 693,758 1,150,355 6.50 5.82 Stockton/San Joaquin County, CA 94,049,012 29,095 - 377,094 13.77 13.45 West Total 3,756,639,515 5,880,423 21,181,202 17,334,379 8.20 7.88 U.S. TOTAL 14,401,029,579 23,995,713 55,594,534 64,021,921 9.22 8.92P. 10 | COLLIERS INTERNATIONAL
  11. 11. HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA UNITED STATES | INDUSTRIAL SURVEY | SALES PRICE AND CAP RATE AS OF DECEMBER 2012 SALES PRICE CAP RATE VACANCY FORECAST ABSORPTION FORECAST RENT FORECAST MARKET (USD PSF) (%) (3 MONTHS) (3 MONTHS) (3 MONTHS) NORTHEAST Baltimore, MD 60.74 6.36  Boston, MA 65.00  Hartford, CT 38.00 8.50  Long Island, NY 67.44 7.67 Close to zero New Jersey – Central 59.00 6.30  New Jersey – Northern 67.00  Philadelphia, PA 58.95 7.84  Pittsburgh, PA 50.00 7.75  Washington, DC 151.43 6.52  Northeast Total* 68.62 7.28 SOUTH Atlanta, GA 38.06 7.90  Birmingham, AL Charleston, SC 46.00 7.50  Charlotte, NC Columbia, SC  Dallas-Ft. Worth, TX 60.00 7.30  Ft. Lauderdale-Broward, FL 51.00 4.16  Greenville/Spartanburg, SC  Houston, TX 63.00 7.90  Jacksonville, FL 32.00 9.00  Little Rock, AR 65.45 9.00 Close to zero Louisville, KY Memphis, TN 32.50 7.75  Miami, FL 85.00 7.00  Nashville, TN 35.00 10.32  Orlando, FL 52.00 7.50  Raleigh, NC Richmond, VA Close to zero Savannah, GA 36.00 8.50 Close to zero Tampa Bay, FL 30.09 8.75  West Palm Beach, FL 85.00 6.94  South Total* 50.79 7.82* Straight averages used. COLLIERS INTERNATIONAL | P. 11
  12. 12. HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA UNITED STATES | INDUSTRIAL SURVEY | SALES PRICE AND CAP RATE AS OF DECEMBER 2012 (continued) SALES PRICE CAP RATE VACANCY FORECAST ABSORPTION FORECAST RENT FORECAST MARKET (USD PSF) (%) (3 MONTHS) (3 MONTHS) (3 MONTHS) MIDWEST Chicago, IL 52.00 6.30 Close to zero Cincinnati, OH Cleveland, OH Columbus, OH 25.61 8.75  Detroit, MI 21.60 9.90  Grand Rapids, MI 35.59 9.88  Indianapolis, IN 40.00 6.75  Kansas City, MO-KS 30.00  Milwaukee, WI 50.00 9.00  Minneapolis/St. Paul, MN 37.53  Omaha, NE  St. Louis, MO Midwest Total* 36.54 8.43 WEST Bakersfield, CA 38.00 10.00  Boise, ID 102.00 9.60  Denver, CO 60.00 8.20  Fairfield, CA 82.31 7.40  Fresno, CA 42.00 9.00 Close to zero Honolulu, HI 219.00 8.00  Las Vegas, NV Close to zero Los Angeles – Inland Empire, CA 69.00 7.00  Los Angeles, CA 91.00 7.00 Close to zero Oakland, CA 90.00 6.50  Orange County, CA 125.00 6.25  Phoenix, AZ 48.00 8.00  Pleasanton/Walnut Creek, CA  Portland, OR 60.88  Reno, NV Sacramento, CA 45.39  San Diego, CA 112.13 8.50  San Francisco Peninsula, CA 250.00 7.00 Close to zero San Jose/Silicon Valley 105.00 6.00 Close to zero Seattle/Puget Sound, WA  Stockton/San Joaquin County, CA  West Total* 96.23 7.75 U.S. TOTAL* 67.25 7.79* Straight averages used.P. 12 | COLLIERS INTERNATIONAL
  13. 13. HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA UNITED STATES | INDUSTRIAL SURVEY | RENTS AS OF DECEMBER 2012 WAREHOUSE/DISTRIBUTION BULK FLEX/SERVICE TECH/R&D MARKET SPACE SPACE SPACE SPACE (USD PSF) (USD PSF) (USD PSF) (USD PSF) NORTHEAST Baltimore, MD 4.72 4.73 11.03 Boston, MA 5.83 5.58 6.39 11.29 Hartford, CT 3.98 3.50 6.50 6.50 Long Island, NY 9.07 9.13 16.08 New Jersey – Central 4.37 3.49 11.85 11.33 New Jersey – Northern 6.28 5.98 10.11 12.26 Philadelphia, PA 4.25 4.14 7.00 11.00 Pittsburgh, PA 4.47 4.10 11.42 11.42 Washington, DC 6.73 5.59 11.27 14.44 Northeast Total* 5.52 5.14 10.18 11.18 SOUTH Atlanta, GA 3.17 2.83 7.41 10.41 Birmingham, AL 7.38 4.07 9.38 Charleston, SC 3.85 4.30 6.25 16.25 Charlotte, NC 3.34 3.54 8.70 Columbia, SC 4.00 4.00 Dallas-Ft. Worth, TX 3.15 2.70 6.90 8.40 Ft. Lauderdale-Broward, FL 6.14 5.84 9.37 7.95 Greenville/Spartanburg, SC 2.75 2.95 6.33 Houston, TX 5.36 4.36 7.08 8.07 Jacksonville, FL 3.72 3.10 8.93 Little Rock, AR 2.68 2.74 7.35 Louisville, KY 3.40 3.42 7.24 6.00 Memphis, TN 2.47 2.50 4.75 9.00 Miami, FL 7.73 7.16 9.73 12.00 Nashville, TN 2.95 8.38 8.52 7.50 Orlando, FL 4.40 4.22 8.45 8.60 Raleigh, NC 3.63 4.28 9.74 Richmond, VA 3.36 8.17 Savannah, GA 3.95 3.75 7.00 10.00 Tampa Bay, FL 4.52 3.86 7.44 5.35 West Palm Beach, FL 6.81 6.13 10.92 7.00 South Total* 4.23 4.21 7.98 8.96* Straight averages used. COLLIERS INTERNATIONAL | P. 13
  14. 14. HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA UNITED STATES | INDUSTRIAL SURVEY | RENTS AS OF DECEMBER 2012 (continued) WAREHOUSE/DISTRIBUTION BULK FLEX/SERVICE TECH/R&D MARKET SPACE SPACE SPACE SPACE (USD PSF) (USD PSF) (USD PSF) (USD PSF) MIDWEST Chicago, IL 3.71 2.67 7.45 Cincinnati, OH 3.53 2.88 6.13 6.13 Cleveland, OH 3.30 2.86 7.84 Columbus, OH 2.62 2.51 4.66 4.82 Detroit, MI 3.70 3.59 7.24 7.20 Grand Rapids, MI 3.15 3.09 4.37 4.37 Indianapolis, IN 3.67 3.24 8.02 Kansas City, MO-KS 4.20 3.48 8.90 7.32 Milwaukee, WI 4.68 3.89 5.71 Minneapolis/St. Paul, MN 6.47 6.19 7.26 Omaha, NE 4.62 3.46 5.84 4.16 St. Louis, MO 3.81 3.80 7.34 Midwest Total* 3.95 3.47 6.73 5.67 WEST Bakersfield, CA 4.00 3.42 8.00 Boise, ID 5.04 4.80 6.96 6.00 Denver, CO 4.62 3.95 8.20 9.50 Fairfield, CA 5.50 5.52 7.78 8.84 Fresno, CA 3.36 3.12 4.80 5.50 Honolulu, HI 11.52 Las Vegas, NV 4.68 4.16 5.76 8.76 Los Angeles – Inland Empire, CA 4.20 3.96 6.99 8.05 Los Angeles, CA 6.21 5.94 9.80 12.75 Oakland, CA 4.56 4.44 6.00 9.00 Orange County, CA 6.96 6.12 12.60 13.50 Phoenix, AZ 5.16 4.21 10.29 10.74 Pleasanton/Walnut Creek, CA 4.99 4.26 10.23 11.12 Portland, OR 5.48 5.06 9.17 9.40 Reno, NV 3.66 3.12 8.60 Sacramento, CA 4.32 3.84 8.52 8.40 San Diego, CA 8.16 7.56 11.04 13.92 San Francisco Peninsula, CA 9.48 9.48 23.96 21.96 San Jose/Silicon Valley 6.24 5.90 9.36 15.60 Seattle/Puget Sound, WA 6.11 5.88 13.60 Stockton/San Joaquin County, CA 3.96 8.40 West Total* 5.63 4.99 9.56 10.67 U.S. TOTAL* 4.83 4.45 8.56 9.54* Straight averages used.P. 14 | COLLIERS INTERNATIONAL
  15. 15. HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA CANADA | INDUSTRIAL SURVEY EXISTING NEW CURRENTLY UNDER MARKET INVENTORY CONSTRUCTION CONSTRUCTION (SF) DEC. 31, 2012 (SF) Q4 2012 (SF) Calgary, AB 125,068,494 338,126 2,706,068 Edmonton, AB 79,221,653 192,632 1,449,743 Halifax, NS 7,604,256 7,625 135,000 Montréal, QC 347,995,640 225,053 312,060 Ottawa, ON 28,070,055 - 111,500 Regina, SK 16,897,836 144,000 150,000 Saskatoon, SK 20,840,000 120,000 550,000 Toronto, ON 762,813,784 1,300,000 5,621,750 Vancouver, BC 182,663,027 1,147,498 213,791 Victoria, BC 8,883,924 161,402 561,030 Waterloo Region, ON 60,658,893 - 98,454 Winnipeg, MB 79,692,082 35,000 245,435 CANADA TOTAL 1,720,409,644 3,671,336 12,154,831 CANADA | INDUSTRIAL SURVEY ABSORPTION VACANCY RATE VACANCY RATE MARKET Q4 2012 (SF) SEPT. 30, 2012 (%) DEC. 31, 2012 (%) Calgary, AB (106,694) 4.71 5.05 Edmonton, AB 507,583 3.75 3.35 Halifax, NS (115,054) 8.05 9.65 Montréal, QC (1,484) 4.28 4.34 Ottawa, ON 67,703 6.00 5.76 Regina, SK 190,000 2.91 3.51 Saskatoon, SK 90,000 4.83 4.94 Toronto, ON 4,958,865 4.71 4.13 Vancouver, BC 1,399,479 3.80 3.67 Victoria, BC - 4.15 4.15 Waterloo Region, ON 36,198 6.92 6.80 Winnipeg, MB (130,105) 2.77 2.97 CANADA TOTAL* 6,896,491 4.49% 4.25%* Straight averages used. COLLIERS INTERNATIONAL | P. 15
  16. 16. HIGHLIGHTS | Q4 2012 | INDUSTRIAL | NORTH AMERICA CANADA | INDUSTRIAL SURVEY | SALES PRICE AND CAP RATE AS OF DECEMBER 2012 SALES PRICE CAP RATE VACANCY FORECAST ABSORPTION FORECAST RENT FORECAST MARKET (CAD PSF) (%) (3 MONTHS) (3 MONTHS) (3 MONTHS) Calgary, AB 155.00 7.00  Edmonton, AB 133.35 6.66  Halifax, NS 120.00 7.25  Montréal, QC 68.00 7.25  Ottawa, ON 110.00 7.50  Regina, SK 130.00 7.40  Saskatoon, SK 150.00 7.15  Toronto, ON 82.00 6.50  Vancouver, BC 180.00 5.70 Victoria, BC 170.00 7.00 Close to zero Waterloo Region, ON 61.00 7.90  Winnipeg, MB 71.25 8.25 Close to zero CANADA TOTAL* 119.22 7.13* Straight averages used CANADA | INDUSTRIAL SURVEY | RENTS AS OF DECEMBER 2012 WAREHOUSE/DISTRIBUTION BULK SPACE FLEX/SERVICE SPACE TECH/R&D SPACE MARKET SPACE (CAD PSF) (CAD PSF) (CAD PSF) (CAD PSF) Calgary, AB 8.50 7.25 12.00 12.00 Edmonton, AB 8.00 7.50 10.00 12.00 Halifax, NS 7.75 6.75 10.50 15.00 Montréal, QC 4.75 4.25 6.00 8.00 Ottawa, ON 8.25 7.50 8.50 11.00 Regina, SK 9.00 9.00 11.00 13.00 Saskatoon, SK 10.00 9.00 12.00 14.00 Toronto, ON 4.83 Vancouver, BC 7.60 6.80 9.65 14.00 Victoria, BC 12.00 10.00 13.50 13.50 Waterloo Region, ON 3.97 3.12 8.29 8.29 Winnipeg, MB 6.00 5.25 9.95 12.75 CANADA TOTAL* 7.55 6.95 10.13 12.14* Straight averages usedP. 16 | COLLIERS INTERNATIONAL

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