The presentation forecasts a strong industrial real estate market in Southeast Wisconsin, highlighting factors such as job growth, a skilled labor shortage, and an active investment environment. It notes a drop in the vacancy rate to 4.6% in Q4 2015 and anticipates continued construction despite land and labor shortages. The outlook for 2016 includes stable cap rates and significant new construction projects.

1. FORECAST BREAKFAST
SE WI INDUSTRIAL REAL ESTATE MARKET
Presentation by:
Brian S. Parrish, MBA
President & CEO
PARADIGM Real Estate LLC
Thursday, January 14, 2016
www.PARADIGMre.com

2. Agenda
• Factors Affecting Manufacturers
• Vacancy & Absorption
• Deal Velocity
• Investment
• Portfolio Sale Bonanza
• New Construction
• Self Storage Building Boom
• Interesting Leases
• Interesting Sales
• SE WI Industrial Real Estate Forecast
PARADIGM Real Estate LLC
www.paradigmre.com

3. FACTORS AFFECTING MANUFACTURERS
U.S. added 292,000 jobs in
December
National unemployment rate
holds steady at 5 percent
2015 was an auto sales record:
17.47mm vehicles
Highly active industrial real estate
market – local and national
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www.paradigmre.com
ISM Milwaukee PMI
ISM National PMI
Ended at 48.53%
Ended at 48.20%

4. PARADIGM Real Estate LLC
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THE FACTOR 2015 2016
Skilled labor shortage
Unemployment
Severe issue
5%(national)/4.4%(metro)
Shortages to continue
Ranked 32nd in job creation
Housing Market Strong
3rd healthiest in nation
To remain strong
Construction prices Increased, shortages Still high
Commodities
(excluding
construction)
Plummeted
Oil at 6 year low
To remain low
Stronger dollar expected
Interest rates No change
Fed funds from .25-.5%
2 - 4 more increases
Min. effect on consumer rates
Elections Non-factor Non-factor
Market Liquidity Abundant
SBA, conventional,
creative
Still abundant - more players

5. Total Vacancy & Net Absorption
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Source: Xceligent
1,782,074
3,652,378
1,053,297
653,503 651,398
5.0%
4.7%
4.4%
4.5% 4.6%
4.0%
4.2%
4.4%
4.6%
4.8%
5.0%
5.2%
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4

6. 2015 in a Nutshell
 Vacancy rate dropped from 5.00% (Q4 2014) to
4.6% (Q4 2015)
 Vacancy rate hit 9.75% in 2008
 Walworth County had lowest vacancy at 1.4% (Q4 2015), followed by
Sheboygan at 3.1%
 Racine County had highest vacancy at 6.5%, followed by Ozaukee
County at 6.1%
 Almost 6 years of positive absorption
 2015 Absorption 5,406,382 SF
 Milwaukee & Kenosha Counties 87.6%
PARADIGM Real Estate LLC
www.paradigmre.com
Source: Xceligent

7. DEAL VELOCITY
Year Avg Age # of Sales Avg $/SF
2009 28 77 $41.98
2010 35 97 $35.39
2011 33 163 $30.59
2012 39 269 $32.24
2013 40 215 $29.75
2014 40 300 $33.01
2015 42 264 $35.66
• Prices of existing buildings nearly half new construction.
• 8% increase in $/SF
• 12% decrease in # sales (likely to be breakeven)
Source: Xceligent Data, PARADIGM analysis
PARADIGM Real Estate LLC
www.paradigmre.com

8. INVESTMENT
VOLUME
• Higher demand, lower supply
• 2015 saw $420.3B investment sales
• 2016 expecting $500B investment
sales
• 8-10% investment buyers over last 4
years were international
Source: NAR
PARADIGM Real Estate LLC
www.paradigmre.com

9. INVESTMENT
• National average –
• SE WI Cap Rates have ranges from
• 6.5% - 7.5% for Class A
• 8 .0 – 9.0% for Class B
• Industrial cap rates are almost fully compressed
• Cap Correlation to interest rates vs. supply/demand
PARADIGM Real Estate LLC
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Warehouse Flex/R&D
Average 5.48% 7.15%
Range 3.00 – 7.00% 5.75% - 9.00%
Source: PwC Q4 2015
CAP RATES

10. PORTFOLIO SALE BONANZA
Zilber purchased six industrial
buildings from CenterPoint,
with a total of 206,000 SF on
Howell Ave.
for $2.55 million, or $12.38/Sq.
Ft. Leased, added value, and
FOR SALE!
Expect at least 2 more large
portfolio sales in 2016 totaling
800,000 SF+
LOOK FOR SPIN-OFFS
PARADIGM Real Estate LLC
www.paradigmre.com
CenterPoint sold CrossLake Airport
Business Park (formerly ACE) to
Building ABC Investor LLC for
$27mm, or $24.95/SF
Westmount Realty Capital LLC
purchased CenterPoint Properties
Portfolio • Feb. 2015 • 1.74 Million
SF (10 Buildings) 80% occupied •
$61,483,556 • $35.33/FT
CenterPoint has completed exit of
multi-tenant flex portfolios.

11. PARADIGM Real Estate LLC
www.paradigmre.com
2015 Market
Deliveries Property Name Size (SF)
Enterprise Business Park Bldg III 375,000
Washington Ave and Frontage Rd 155,844
Gateway Business Park 82,500
Manhard Dr & Lilly Rd 146,423
West Allis Industrial Showroom 130,000
Old Orchard Road (Hwy 145) 158,525
Oberlin Filter Company 90,000
Delaney V 80,000
ENR Group 110,000
Custom Logistics 50,000
RidgeView Business Center VII 113,000
Freistadt Rd & Maple Rd 32,000
Weimer Building 68,000
Grand Total 1,591,292
2016 Market Deliveries
Market Size (SF)
Milwaukee 388,274
Kenosha 1,836,052
Racine 132,000
Washington 285,063
Waukesha 100,000
Grand Total 2,741,389
NEW CONSTRUCTION: 2015 vs. 2016
Source: Xceligent

12. NEW CONSTRUCTION
• Shortage of land, materials,
labor
• Prices are increasing
• 1.6mm Sq. Ft. under
construction for 2016
• Ideal lending environment
for manufacturers
PARADIGM Real Estate LLC
www.paradigmre.com

13. SELF STORAGE BUILDING
BOOM
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14. SELF STORAGE BUILDING BOOM
PARADIGM Real Estate LLC
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Developer
Acquisition
Year
Delivery
Year City
Acquisiton
$/SF Size (SF)
Units
(est.)
Self Storage of Brookfield 2014 2015 Brookfield 93,000 500
Self Storage of Brookfield 2014 2015 Brookfield 45,000 350
Metro Storage 2014 2015 Brown Deer $ 17.20 85,291 525
EZ 2015 2016 Cudahy 49,200 400
Storage Master 2014 2015 Franklin 12,000 600
EZ 2015 2016 Greenfield 37,000 400
Birchwood 2015 2015 Menomonee Falls $ 41.66 48,000 300
Vault 2015 2016 Menomonee Falls 50,100 350
Humboldt Storage 2014 2016 Milwaukee $ 2.78 64,440 367
Highland Development 2015 2016 Milwaukee $ 20.40 125,000 800
Highland Development 2015 2016 Milwaukee $ 32.37 40,160 450
Milwaukee Storage Partners 2015 2016 Milwaukee $ 24.67 124,245 750
Storage Master 2015 2016 Milwaukee $ 9.63 57,121 600
Storage Master 2014 2015 Muskego $ 20.96 57,234 350
Vault 2014 2015 Waukesha $ 25.53 80,647 450
U-haul 2015 2016 Wauwatosa $ 13.29 394,840 2,000
WI SS WA LLC 2014 2015 West Allis $ 16.13 123,986 750
$ 20.42 1,487,264 9,942

15. INTERESTING LEASES
• QuadGraphics leased 188,210
SF at the American facility on
Duplainville, Pewaukee
• Briggs and Stratton leased
235,600 SF at 4355 N. Richards
St, Milwaukee
• Beck Aluminum leased
193,605 SF at 7505 Durand Ave,
Mount Pleasant
PARADIGM Real Estate LLC
www.paradigmre.com
Additional Quad warehouse

16. INTERESTING LEASES
• Gardner Pet Group leased 160,000 SF at
2845 Wingate St., West Bend
• OTR Wheel & Engineering Inc. leased
71,778 SF at Brown Deer Business Park
Bldg 5, Brown Deer
• Seko World Wide leased 50,564 SF at
Liberty Property Trust building in Oak
Creek
PARADIGM Real Estate LLC
www.paradigmre.com
Gardner facility, West Bend

17. INTERESTING SALES
PARADIGM Real Estate LLC
www.paradigmre.com
• Wangard Partners purchased
beverage facility in
Wauwatosa • Aug. 2015 •
196,921 SF • $4,800,000 •
$24.37/SF
• R2 Companies and Polsky
Holdings purchased US Postal
Service building from Enco
Realty • Nov. 2015 •
1,105,000 SF • $13,100,000 •
$11.85/SF
INTERESTING SALES
113th St., Wauwatosa

18. INTERESTING SALES
PARADIGM Real Estate LLC
www.paradigmre.com
• Redwall Screen Printing • 7655 S.
6th St., Oak Creek • Feb. 2015 •
88,820 SF • $1,975,000 • $22.23/SF
• Hilmot • 11925 W. Carmen Ave,
Milwaukee • May 2015 • 100,000
SF • $2,800,000 • $28.00/SF
• Indiana Investment LLC
(Kreilkamp) • 13300 Whitney Dr.
Germantown • Oct. 2015 •
102,400 SF • $3,380,000 •
$33.00/SF
7655 S 6th, Oak Creek

19. IREM INDUSTRIAL
REAL ESTATE FORECAST

20. • 2016 will be another strong year
• Lower vacancy
• Slower rate of positive absorption
• Lackluster but healthy leasing market
• Cap rates to remain stable at current
lows
• More sale leaseback investment deals
PARADIGM Real Estate LLC
www.paradigmre.com
2016 Industrial
Real Estate Forecast

21. • New construction will become even more
prevalent
• Uncertainty due to elections, interest rates,
and global matters
• Swinging past equilibrium in the SE WI
industrial RE market
PARADIGM Real Estate LLC
www.paradigmre.com
2016 Industrial
Real Estate Forecast

22. THANK YOU
Brian S. Parrish, MBA
President & CEO
PARADIGM Real Estate LLC
www.PARADIGMre.com
(262) 717-5151