An in-depth look at the Cleveland industrial market. Analysis includes leasing, sales, construction and employment.

1. JLL Research
Cleveland | Q4 2017
Industrial
Outlook
An in-depth look at the
Cleveland industrial
market. Analysis includes
leasing, sales, construction
and employment.

2. © 2018 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Q4 2017
Insight
Cleveland Industrial Outlook
2017 was another positive year for the Cleveland industrial market.
Companies remained in growth mode with a number of expansions,
relocations, and new entrants to the market. Close to 1.0 million square feet
was delivered in 2017, nearly all of which was absorbed upon completion,
helping to keep vacancy in check at 8.2 percent. Meanwhile, rents posted a
year-over-year gain of 1.6 percent, propelling valuations and investment
sales to their highest level of the cycle on a per square foot basis.
We are seeing a shift in tenant requirements as structural changes take place
in the manufacturing and distribution sectors. Manufacturing employment
continues to decline in the region, yet at the same time, companies are
producing more thanks to new technologies and processes. Manufacturers
across the region are retooling existing facilities and building new plants to
take advantage of these advancements. Meanwhile, we are seeing increased
demand for warehouse space in response to the exponential growth of e-
commerce sales. Much of the activity in the warehouse segment has been
concentrated within the modern bulk asset class (defined as ≥100,000 s.f.,
built after 2000, 24’ clear, ESFR), where companies can store more product
within a similar footprint and increase operational efficiencies.
Outlook
The outlook for the Cleveland industrial market is positive. Companies in
northeast Ohio will benefit from an uptick in the U.S. economy along with
sustained high levels of consumer confidence. Lower tax rates, thanks to the
recently passed tax bill, will free up capital for manufacturers to purchase
new equipment and expand their operations. We will likely see additional
deregulation in 2018, which will be a positive for local companies. Specific to
real estate, construction levels will remain heightened as companies expand
and upgrade facilities. New tenant demand will likely net out around 1.5
million square feet and rents should post gains around 2.0 percent. Increases
in valuations and investment sales will continue, but may begin to plateau.
What do structural changes in manufacturing and
distribution mean for the industrial market in 2018?
• Manufacturers are retooling existing facilities and building new plants to
increase output and take advantage of new technologies and processes.
• Build it and they will come! Exponential growth in e-commerce sales
sparks a warehouse development boom and unlocks new demand.
• The Cleveland industrial market is set up for another strong year in 2018,
bolstered by tax reform, deregulation, and the rising economic tide.
Fundamentals Forecast
YTD net absorption 1.0 m.s.f. ▲
Under construction 2.5 m.s.f. ▶
Deliveries 0.9 m.s.f. ▶
Total vacancy 8.2% ▼
Average asking rent (NNN) $3.85 p.s.f. ▲
Tenant improvements Falling ▼
-1,000,000
1,000,000
3,000,000
5,000,000
2013 2014 2015 2016 2017
Supply and demand (s.f.) Net absorption
Deliveries
9.6%
8.9%
8.5%
8.2% 8.2%
2013 2014 2015 2016 2017
Total vacancy
$2.50
$3.00
$3.50
$4.00
2013 2014 2015 2016 2017
Average asking rents ($/s.f.)
W&D Manufacturing

3. © 2018 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Q4 2017
Statistics
Cleveland Industrial Outlook
Inventory
(s.f.)
YTD
total net
absorption
(s.f.)
YTD
total net
absorption
(% of stock)
Total
availability
(s.f.)
Total
availability
(%)
Average
asking rent
($ p.s.f.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
Cleveland Totals
Warehouse & Distribution 181,208,808 61,893 0.0% 15,507,100 8.6% $4.01 526,000 2,203,000
Manufacturing 154,014,835 909,497 0.6% 11,906,704 7.7% $3.60 417,000 288,000
Totals 335,223,643 971,390 0.3% 27,413,804 8.2% $3.85 943,000 2,491,000
Flex 22,596,154 240,607 1.1% 2,598,490 11.5% $9.58 20,000 179,000
Downtown
Warehouse & Distribution 16,826,326 -62,559 -0.4% 2,221,747 13.2% $2.45 46,000 0
Manufacturing 17,874,809 216,012 1.2% 2,731,774 15.3% $3.43 0 0
Totals 34,701,135 153,453 0.4% 4,953,521 14.3% $2.99 46,000 0
Flex 1,481,399 132,369 8.9% 62,984 4.3% $14.00 0 0
East
Warehouse & Distribution 1,983,883 -9,663 -0.5% 128,691 6.5% $6.22 0 0
Manufacturing 1,963,140 -14,175 -0.7% 65,703 3.3% $5.17 0 0
Totals 3,947,023 -23,838 -0.6% 194,394 4.9% $5.87 0 0
Flex 1,863,004 48,702 2.6% 208,749 11.2% $9.05 0 145,000
Medina County
Warehouse & Distribution 10,853,070 352,623 3.2% 629,196 5.8% $4.58 0 107,000
Manufacturing 6,168,688 176,169 2.9% 313,088 5.1% $4.21 0 0
Totals 17,021,758 528,792 3.1% 942,284 5.5% $4.46 0 107,000
Flex 1,247,708 -4,369 -0.4% 181,904 14.6% $8.00 0 0
Northeast
Warehouse & Distribution 21,604,820 -107,041 -0.5% 1,969,631 9.1% $3.19 0 1,106,000
Manufacturing 31,712,248 147,586 0.5% 1,974,253 6.2% $3.52 70,000 110,000
Totals 53,317,068 40,545 0.1% 3,943,884 7.4% $3.36 70,000 1,216,000
Flex 1,946,517 -16,212 -0.8% 271,141 13.9% $12.23 0 0
South
Warehouse & Distribution 11,879,276 -97,148 -0.8% 1,255,670 10.6% $5.01 0 50,000
Manufacturing 10,325,524 160,019 1.5% 434,055 4.2% $3.72 0 0
Totals 22,204,800 62,871 0.3% 1,689,725 7.6% $4.68 0 50,000
Flex 3,667,689 50,155 1.4% 466,893 12.7% $9.65 0 0
Southeast
Warehouse & Distribution 43,063,744 -429,910 -1.0% 3,655,392 8.5% $4.51 146,000 679,000
Manufacturing 20,706,012 55,547 0.3% 991,054 4.8% $4.19 0 130,000
Totals 63,769,756 -374,363 -0.6% 4,646,446 7.3% $4.44 146,000 809,000
Flex 6,088,075 47,314 0.8% 808,653 13.3% $8.80 0 0
Southwest
Warehouse & Distribution 20,015,324 -636,888 -3.2% 2,119,571 10.6% $3.80 0 125,000
Manufacturing 17,502,734 186,458 1.1% 1,017,821 5.8% $3.63 0 0
Totals 37,518,058 -450,430 -1.2% 3,137,392 8.4% $3.74 0 125,000
Flex 2,920,952 2,204 0.1% 189,761 6.5% $7.50 0 0
Summit County
Warehouse & Distribution 36,055,214 628,368 1.7% 2,146,950 6.0% $4.14 334,000 136,000
Manufacturing 24,368,500 1,062 0.0% 3,188,260 13.1% $3.56 0 48,000
Totals 60,423,714 629,430 1.0% 5,335,210 8.8% $3.79 334,000 184,000
Flex 2,545,047 16,246 0.6% 288,886 11.4% $9.75 20,000 34,000
West
Warehouse & Distribution 19,195,134 428,723 2.2% 1,434,311 7.5% $4.01 0 0
Manufacturing 24,022,411 -24,061 -0.1% 1,163,476 4.8% $2.90 347,000 0
Totals 43,217,545 404,662 0.9% 2,597,787 6.0% $3.51 347,000 0
Flex 1,082,394 -35,292 -3.3% 132,494 12.2% $8.77 0 0

4. © 2018 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Q4 2017
Construction
Cleveland Industrial Outlook
4
2
1
6
5
3
5
Address: 1200 S Chillicothe
Building size: 409,000
Percent leased: 100%
Tenant(s): McMaster-Carr
Owner: Scannell
Construction type: BTS
Est. completion: Q4 2018
2
Address: 1260 Babbitt Rd.
Building size: 1,700,000
Percent leased: 100%
Tenant(s): Amazon
Owner: Seefried
Construction type: BTS
Est. completion: Q2 2019
4
Address: 20900 Emery Rd.
Building size: 850,000
Percent leased: 100%
Tenant(s): Amazon
Owner: Seefried
Construction type: BTS
Est. completion: Q4 2018
1
Address: 17450 Engle Lake
Building size: 125,000
Percent leased: 60%
Tenant(s): Fat Heads
Owner: Harsax
Construction type: BTS
Est. completion: Q1 2018
6
Address: 4863 Scarlet Ln.
Building size: 136,000
Percent leased: 0%
Tenant(s): N/A
Owner: Fogg/Brennan
Construction type: Spec
Est. completion: Q1 2018
3
Address: 26250 Bluestone
Building size: 75,000
Percent leased: 0%
Tenant(s): N/A
Owner: Fogg
Construction type: Spec
Est. completion: Q3 2018
This map highlights a partial list of construction projects either planned, under construction, or recently completed.

5. © 2018 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Q4 2017
Sales
Cleveland Industrial Outlook
This report analyzes all industrial sales completed in the last 12 months ≥$1,000,000 and ≥30,000 s.f.
Top 10 sales transactions during the last 12 months
Size (s.f.) $ p.s.f. Sale date
333,215 $182 Jan-17
Vereit AIC Ventures 554,037 $40,000,000 $72 Aug-17
347,205 $88 Mar-17
1,212,782 $25 May-17
219,765 $89 Sep-17
138,148 $72 Sep-17
173,052 $44 Mar-17
190,188 $37 Jun-17
115,000 $58 Oct-17
100,040 $66 Jul-17
$7,000,000
$6,722,204
$6,600,000
Three building portfolio CDH Investments Gatehouse Bank
Wiseco Piston CompanySTORE Capital Corporation7201 Industrial Park Boulevard
30600 Carter Street Kanan Enterprises First Industrial Reality Trust
26801 Fargo Avenue STAG Industrial ORG Portfolio Management $7,636,651
30 Foundation Place AIC Ventures Daniel L Pohl Family LP $10,000,000
Five building portfolio Raith Capital Partners SB Equities $30,510,186
4651 Prosper Road Monmouth Real Estate Investment Geis Companies $19,500,000
1425 Rockwell Avenue H5 Data Centers ByteGrid $60,675,000
38889 Center Ridge Road LCN Capital Partners Scannell Properties $30,650,000
12850-13000 Darice Parkway
Number of sale-leasebacks 1
Building address Buyer company Seller company Sales price
Average price per square footSales volume by submarket (s.f.)
Number of owner-user sales 33
Transactions details
12 months at a glance Sales volume by building type
Total volume ($) $326,879,927
Total volume (s.f.) 7,802,299
Number of transactions 54
Number of investment sales 20
0 1,000,000 2,000,000
West
Summit
Southwest
Southeast
South
Northeast
Medina
East
Downtown
0
1,500,000
3,000,000
4,500,000
6,000,000
7,500,000
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
Warehouse / Distribution Manufacturing Flex
Total volume ($) Total volume (s.f.)
$0
$50
$100
$150
Warehouse / Distribution Manufacturing Flex

6. © 2018 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Q4 2017
Employment
Cleveland Industrial Outlook
4.1%U.S. unemployment
1.4%U.S. 12-month job growth
5.2%Cleveland unemployment
1.4%Cleveland 12-month job growth
5.1%Ohio unemployment
1.1%Ohio 12-month job growth
0.0%
0.7%
1.4%
2.1%
2.8%
2013 2014 2015 2016 2017
Cleveland U.S.
-2,900
-400
100
200
600
1,000
1,700
2,500
3,400
8,300
-10,000-8,000-6,000-4,000-2,000 0 2,000 4,000 6,000 8,00010,000
Professional & Business Services
Information
Other Services
Trade, Transportation & Utilities
Government
Financial Activities
Manufacturing
Leisure & Hospitality
Mining, Logging & Construction
Educational & Health Services
-5.0
0.0
5.0
10.0
2013 2014 2015 2016 2017
Trade,Transportation & Utilities Manufacturing
Other Services Mining, Logging & Construction
0%
4%
8%
12%
900,000
1,000,000
1,100,000
2013 2014 2015 2016 2017
Employment Unemployment
Employment vs. unemployment rate
Employment by industry
Job growth (12-month change)
20%
17%
14%13%
11%
10%
6%
Educational & Health Services
Trade, Transportation & Utilities
Professional & Business Services
Government
Manufacturing
Leisure & Hospitality
Financial Activities
Mining, Logging & Construction
Other Services
Information
Industrial employment trends (12-month change, 000s)
Job growth by sector (12-month change)

7. © 2018 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Andrew Batson
Vice President, Director of Research
+1 216 937 4374
andrew.batson@am.jll.com
Johnathan Miller
Research Analyst
+1 216 937 4381
johnathan.miller@am.jll.com
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In 2016, JLL had revenue of $6.8 billion and fee revenue of
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square feet, or 409 million square meters, and completed
sales acquisitions and finance transactions of
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nearly 300 corporate offices, operations in over 80
countries and a global workforce of more than 77,000. As
of December 31, 2016, LaSalle Investment Management
has $60.1 billion of real estate under asset management.
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