This document discusses trends in e-commerce growth and its impact on the industrial real estate market. Some key points: - E-commerce's share of total US retail sales has steadily increased since 2011 and reached 10.8% in 2015. - The top e-commerce markets from 2010-2016 were the Inland Empire and Dallas/Fort Worth, reflecting increased demand for fulfillment centers. - E-commerce is generating demand for new types of industrial buildings like mega fulfillment centers, parcel hubs, and last-mile delivery centers. - Major retailers are expanding their industrial footprints to accommodate growing e-commerce operations and inventory needs.

1. e-commerce Growth
March 2017
Lee Allen
Managing Director
lee.allen@am.jll.com
+1 843 566 2064

2. Industry share of U.S. lease activity 2010 - 2016
16.7%
16.7%
16.1%
10.5%
10.5%
7.9%
7.5%
3.5%
3.0%
7.7%
2010 - 2014
22.5%
15.2%
12.1%10.4%
9.1%
7.8%
5.8%
3.8%
3.1%
10.2%
2015 - 2016
Retailer (e-commerce)
3PL
Consumer Non-Durables
Retailers (traditional)
Food & Beverage
Consumer Durables
Auto, Auto Parts & Tires
Logistics & Distribution
Construction Materials & Building Fixtures
Paper Packing
All Others
e-commerce & Labor Availability

3. Industry share of U.S. lease activity 2010 - 2016
16.1%
22.5%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
2010 - 2014 2015 - 2016
Total deals completed E-commerce deals completed % E-commerce
Squarefeet
e-commerce & Labor Availability

4. E-commerce share of total U.S. retail sales
6.3%
7.3%
8.5%
9.8%
10.8%
2011 2012 2013 2014 2015
The share of e-commerce retail
sales in the U.S. has steadily
increased since 2011, reaching a
10.8% growth rate in 2015.
11.5%
The amount online spending
increased from Q1 2015 to Q1 2016
for the U.S. customer

5. E-commerce sales for top retailers in 2016, in billions
of dollars and percent of total sales
$12.5
$4.7
$4.1 $4.0 $3.8
$2.7 $2.5 $2.5 $2.5
3%
5%
15%
10%
3%
19%
16%
13%
3%
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
0.2
0
2
4
6
8
10
12
14
Of the top retailers in the
U.S., Walmart had the
highest sales in 2016,
reaching $12.5 billion.
However, Nordstrom saw
the highest percentage of
sales represented by e-
commerce, totaling
almost 20%.

6. Research
online and in
store, buy
online
16%
Search and buy
online
42%
Search and
buy in store…
Research
online and in
store, buy in
store
22%
Research online and in store, buy online
Search and buy online
How purchases were made in 2016
A total of 58% of shoppers
made purchases online in
2016, a shift away from in
store purchases.
Survey of 5,000 shoppers in a Wall Street Journal study

7. U.S. shoppers buying groceries online, by age group
Every age group saw an
18% two-year increase in
online grocery shopping,
illustrating a significant
increase in all consumers’
level of comfort with
stepping out of the
traditional grocery store.
7%
11%
5%
7% 6% 7%
25%
37%
34%
28%
32%
25%
Ages 18-24 25-34 35-44 45-54 55-64 65 and
older
2014
2016

8. 12.7%
7.6%
7.6%
6.8%
6.4%
6.4%
5.6%
5.3%
5.3%
4.8%
4.5%
4.4%
4.3%
4.3%
4.1%
2.7%
2.2%
1.5%
1.2%
1.2%
1.1%
Inland Empire
Philadelphia
Atlanta
Central Valley
Dallas / Fort Worth
Baltimore
New Jersey
Indianapolis
Phoenix
Cincinnati
Nashville
Seattle / Bellevue
Richmond
Columbus
Reno / Sparks
San Antonio
Charlotte
Salt Lake City
East Bay / Oakland
Jacksonville
Memphis
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00%
Most active e-commerce markets 2010 - 2014
e-commerce & Labor Availability

9. 21.3%
12.9%
10.1%
9.9%
8.3%
6.6%
5.2%
4.8%
4.1%
3.8%
3.3%
2.5%
2.4%
2.1%
1.4%
1.3%
Inland Empire
Dallas / Fort Worth
Chicago
Atlanta
Indianapolis
Columbus
Philadelphia / Central PA
New Jersey
Cincinnati
St. Louis
Reno / Sparks
Boston
Central New Jersey
Kansas City
Jacksonville
Las Vegas
0.00% 5.00% 10.00% 15.00% 20.00% 25.00%
Most active e-commerce markets 2015 - 2016
e-commerce & Labor Availability

10. Most active e-commerce markets 2010 - 2016
16.6%
9.4%
8.7%
6.7%
6.5%
5.3%
5.2%
4.6%
4.5%
3.7%
3.7%
3.5%
2.9%
2.5%
2.4%
2.4%
1.7%
1.5%
1.3%
1.2%
1.2%
1.1%
1.0%
0.8%
0.7%
0.6%
0.6%
Inland Empire
Dallas / Fort Worth
Atlanta
Indianapolis
Philadelphia / Central PA
Columbus
New Jersey
Chicago
Cincinnati
Reno / Sparks
Central Valley
Baltimore
Phoenix
Nashville
Seattle / Bellevue
Richmond
St. Louis
San Antonio
Jacksonville
Charlotte
Boston
Central New Jersey
Kansas City
Salt Lake City
East Bay / Oakland
Las Vegas
Memphis
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00%
e-commerce & Labor Availability

11. So much innovation
in the last 2-3 years

12. In the fourth industrial revolution, technology
giants have risen to the top
Sources: Yahoo Finance; Forbes; JLL Research
$0 $100 $200 $300 $400 $500 $600
Royal Dutch Shell
BP
Citigroup
Microsoft
General Electric
ExxonMobil
Facebook
ExxonMobil
Amazon
Microsoft
Alphabet
Apple
Market Capitalization, Billions
2006
2016

13. Those that do not adapt quickly will be disrupted
2004 2005 2006 2007 2008 2009 2010
6.0
Physical rental
0.5
2.5
Digital rental
Netflix vs. Blockbuster (2004-2010)
Revenues, USD billions
SOURCE: McKinsey

14. Moving beyond a pure nodal supply chain strategy

15. Different e-commerce strategies
Regional distribution
Dedicated e-commerce
‘Ship-from-store’
Outsourced ‘last mile’
‘Click & collect’
Drop shipping
Dedicated in-store pick-up
Innovative adaptive re-use

16. More than real estate…
Transportation, inventory and labor account for 80% of operating costs
A proven, proprietary* process for comparing real
estate alternatives based on transportation and
operating cost considerations.
Utilizes in-house supply chain modeling tools and
experts to support our clients’ decision making.
SM
Supply Chain Select SM is a proprietary service marked
offering from JLL.

17. Most active e-commerce markets 2015 - 2016

18. Omni-channel retail is generating demand for new
types of buildings
Mega e-fulfilment Centers Parcel Hub / Sortation Center Parcel delivery center and urban
logistics depot
Return Processing Centers Online Food Fulfilment
>1 MSF
High bay (50 F) to
accommodate mezzanine
floors for pick-pack
operations.
Single load with dedicated
doors per parcel carrier’s
zone. 3 non-dock sides
maximize employee
parking.
150K to 350K SF
with long length to width
ratio
Low site density.
Cross-dock configuration
with extensive loading
for lorries.
<50K SF
Expect all types of real
estate, shapes and sizes.
Any configuration of doors
or elevators for loading
vans.
Maybe bespoke up to 50K
SF, depending on value-
added operation.
Often part of an eFC or RDC
for re-distribution decision
making.
30K to 150K SF
based on operation
specifications
e.g. degree of automation.
Bespoke loading provision
for vans.
Extensive yard area for
trailer and van parking
with ample parking for
high number of staff.

19. Major retailers are expanding their industrial
footprints
More product in
close proximity
means more space.

20. April, 2017
JLL Research
Q1 2017 U.S. Industrial
Market Overview

21. U.S. economic
performance
indicators

22. March 2017 U.S. labor market highlights
After two strong months, March disappoints
• January and February both exceeded the 200,000-job threshold, while March fell well below expectations with
only 98,000 net new jobs. A contraction in retail trade and slowdowns in all major sectors with the exception of
professional and business services (PBS) were the primary drivers of this, compounded by volatility due to
tightening and employment growth continuing to exceed the rate of labor-force expansion. Although March’s
monthly growth did not meet consensus figures, the broader trend remains positive and future months will dictate
whether this is an anomalous month or a broader shift in growth rates.
1
Unemployment drops, but slack is beginning to run out
• Counter to job growth, unemployment metrics improved once again, with the unemployment rate dropping by
another 20 basis points to a cyclical low of 4.5 percent. Total unemployment fell below the 9.0-percent threshold
for the first time since 2007 and now stands at 8.9 percent. With unemployment already low, the slowing rate of
labor-force expansion (0.5 percent annually compared to total non-farm job growth of 1.5 percent) will present a
challenge for employers seeking to increase headcounts, particularly as unemployment for bachelor’s-degree
holders remains steady at 2.5 percent.
2
Confidence is up even as inflation ramps up
• The consumer confidence index spiked in March to 125.6 points, its highest figure since 2000. Business
confidence metrics have also showed optimism, indicating further economic growth ahead. The acceleration in
inflation to 2.7 percent – now at the same rate as wage growth – may begin to affect consumer spending,
however, but tightening labor-market conditions will likely push wages up further.
3
Source: JLL Research, Bureau of Labor Statistics
U.S. economy

23. March 2017 U.S. labor market at a glance
+98,000
(78 consecutive months
of growth)
1-month net change
+2,185,000
(+1.5% y-o-y)
12-month change
+795,000
10-year average annual
growth
4.5%
Unemployment rate
5,626,000
(-1.5% y-o-y)
Job openings
-50bp
12-month change in
unemployment
63.0%
Labor force participation
rate
5,440,000
(+6.3% y-o-y)
Hires
3,220,000
(+11.3% y-o-y)
Quits
Source: JLL Research, Bureau of Labor Statistics
U.S. economy

24. After two strong months, March disappoints
After a strong start to 2017, March saw only 98,000 net new jobs, while downward
revisions hit Jan. and Feb.
360,000
226,000
243,000
96,000
110,000
88,000
106,000
122,000
221,000
183,000
164,000
196,000
360,000
226,000
243,000
96,000
110,000
88,000
160,000
150,000
161,000
225,000
203,000
214,000
197,000
280,000
141,000
203,000
199,000
201,000
149,000
202,000
164,000
237,000
274,000
84,000
166,000
188,000
225,000
330,000
236,000
286,000
249,000
213,000
250,000
221,000
423,000
329,000
221,000
265,000
84,000
251,000
273,000
228,000
277,000
150,000
149,000
295,000
280,000
262,000
168,000
233,000
186,000
277,000
24,000
271,000
252,000
176,000
208,000
135,000
164,000
155,000
216,000
219,000
98,000
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2011 2012 2013 2014 2015 2016 2017
1-monthnetchange
Source: JLL Research, Bureau of Labor Statistics
U.S. economy

25. Unemployment drops, but slack is beginning to
run out
Unemployment fell to its lowest rate this cycle (4.5 percent) on the back of further labor-
market tightening
Source: JLL Research, Bureau of Labor Statistics
0%
2%
4%
6%
8%
10%
12%
-1,000
-800
-600
-400
-200
0
200
400
600
Unemploymentrate(%)
1-monthnetchange(thousands)
1-month net change Unemployment rate
U.S. economy

26. Confidence is up even as inflation ramps up
Consumer confidence is soaring even as inflation rises and now strongly exceed their
previous peak
Source: JLL Research, Conference Board
0
20
40
60
80
100
120
140
Consumerconfidenceindex
U.S. economy

27. U.S. industrial
leasing

28. Industrial observations
2017 set to be another solid year for construction
• The construction pipeline continues to grow, led by a significant increase (29 percent from the fourth quarter) of
construction activity of build-to-suit properties.
• While the speculative pipeline remains robust, owner-user and BTS projects combined contributed 28 percent to
the “new-groundbreakings. Preleasing rates for speculatively-built buildings increased by 320 bps to nearly 27
percent, a sign of continued healthy demand from tenants.
1
Logistics & distribution and 3PL sectors dominate leasing
• Responding to healthy consumer spending and growing e-commerce sales, the combined logistics & distribution
and 3PL sectors committed to 24 percent of the total leasing activity. Inland Empire, Atlanta, Los Angeles and
Chicago are the top hubs of 3PL leasing activity.
• 68 percent of ‘big-box’ leasing signed at new construction buildings (built in last 3 years)
2
Total net absorption continues to outpace new deliveries.
• Philadelphia alone absorbed nearly 8.2 million square feet, followed by Dallas and Atlanta. Those three markets
contributed to 34 percent of U.S. absorption gains.
• Vacancy rates fell in nearly three quarters of U.S. markets, causing overall U.S. vacancy to decline another 30
basis points. This is despite a steady flow of new construction in most markets.
3
U.S. leasing

29. 2017 set to be another solid year for construction
New deliveries on track to cross the 200 m.s.f. mark
Source: JLL Research U.S. leasing
0
50
100
150
200
250
2013 2014 2015 2016 Q1 2017
Expected 2017 completions
millionssquarefeet

30. 22.0%
6.6%
71.5%
What is the pace of construction?
While the speculative pipeline remains robust, owner-user and BTS projects combined
contributed 28 percent to the “new-groundbreakings”
Source: JLL Research U.S. leasing
BTS Owner-user Spec
17.5%
25.4%
36.3%
43.2%
24.4%
26.9%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17
Breakdown of new-groundbreakings Spec pre-leasing rates of new deliveries

31. Logistics & distribution and 3PL sectors
dominate leasing
Responding to healthy consumer spending and growing e-commerce sales, the combined
logistics & distribution and 3PL sectors committed to 24 percent of the total leasing
activity
Source: JLL Research U.S. leasing
Total leasing activity
3PL and Logistics Distribution Other sectors
24%
Hard to find,
existing ‘big-box’
space
• 68 percent of ‘big-
box’ leasing signed
at new construction
buildings (built in
last 3 years)

32. Total net absorption continues to outpace
new deliveries
Philadelphia, Dallas and Atlanta alone contributed to 34 percent of U.S. absorption
gains
Source: JLL Research U.S. leasing
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
-150
-100
-50
0
50
100
150
200
250
300
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD 2017
Nationalvacancyrate(in%)
Netabsorption(inmillionsofs.f.)
Q1 Q2 Q3 Q4 Total vacancy
5.3%

33. Thank you
© 2017 Jones Lang LaSalle IP, Inc. All rights reserved. The information contained in this document is proprietary to JLL and shall be used solely for the purposes of evaluating this proposal. All such
documentation and information remains the property of JLL and shall be kept confidential. Reproduction of any part of this document is authorized only to the extent necessary for its evaluation. It is not
to be shown to any third party without the prior written authorization of JLL. All information contained herein is from sources deemed reliable; however, no representation or warranty is made as to the
accuracy thereof.
Lee Allen
Managing Director
lee.allen@am.jll.com
+1 843 566 2064