U.S. MARKET | INDUSTRIAL

COMMERCIAL REAL ESTATE

U.S. MARKET | INDUSTRIAL

Second Quarter 2021

U.S. MARKET | INDUSTRIAL | Q2 2021

OVERVIEW

U.S. TRENDLINES

U.S. HIGHLIGHTS

5-Year Trend Current Quarter

ECONOMY

UNEMPLOYMENT RATE

5.9%

Job gains in nearly

every sector

? Following disappointing April and May figures, job growth exceeded expectations in June, though the unemployment rate was higher than anticipated.

? Industrial-using employment was virtually unchanged as supply chain challenges adversely affected manufacturing and construction.

RETAIL SALES GROWTH

YTD -0.3%

? E-commerce's share of overall retail sales cooled as brick-and-mortar stores reopened.

Consumers returned INDUSTRIAL MARKET

to brick & mortar retail ? Q2 marked the third consecutive quarter with over

100 MSF of positive net absorption, which hasn't

NET ABSORPTION 102.2 MSF

occurred since the first three quarters of 2018. ? Occupancy levels increased in all but one market in

Demand continued to

the past 12 months and 40 of 44 markets during Q2.

YTD

accelerate

? The overall vacancy rate improved in consecutive

quarters for the first time in three years.

VACANCY

5.2%

Lowest level since pandemic began

UNDER CONSTRUCTION

573.7 MSF

Developers ramp up to record levels

ASKING RENT

$6.96 PSF

38th consecutive quarterly increase

? New inventory delivered to the market was at its lowest level in more than two years.

? The volume of product under construction is 30% higher YoY and double that of year-end 2015.

? After slowing during much of 2020, rent growth acceleration has returned to pre-pandemic levels.

LOOKING AHEAD

? Most brick & mortar retailers are investing more in ecommerce than on the in-store experience.

? Food/beverage will grow its share of e-commerce.

? As America's ports continued to report record cargo volumes, the supply chain is still congested, and is anticipated to remain so well into 2022.

? Increased warehouse pricing, coupled with supply chain issues, could create opportunities for other transportation hubs in secondary logistics markets.

U.S. HISTORICAL

VACANCY VS ASKING RENT

$8

12.0%

$6

9.0%

$4

6.0%

$2

3.0%

$0

0.0%

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Average Asking NNN Rent (PSF)

Vacancy

NET ABSORPTION (MILLION SF)

200

3 Yr Qtrly Avg 81.3 MSF 5 Yr Qtrly Avg 93.3 MSF

150

100

50

0

-50 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

UNDER CONSTRUCTION (MILLION SF)

700

3 Yr Qrtly Avg 456.3 MSF 5 Yr Qrtly Avg 413.8 MSF

600 500 400 300 200 100

0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

U.S. MARKET | INDUSTRIAL | Q2 2021

TOP-RANKED MARKETS BY INDICATORS

NET ABSORPTION

Q2 2021 Net Absorption

Dallas-Fort Worth Inland Empire Chicago Atlanta Los Angeles Phoenix New Jersey Lehigh Valley Philadelphia Indianapolis

0

2

4

6

8 10 12

Millions SF

VACANCY/CONSTRUCTION

Q2 2021 Vacancy Rate

6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%

Trailing 4-Qtr Net Absorption

Atlanta Dallas-Fort Worth

Chicago Inland Empire

Phoenix Houston New Jersey Los Angeles Philadelphia Lehigh Valley

0

Millions SF

40 35 30 25 20 15 10

5 0

5 10 15 20 25 30 35

Millions SF

Q2 2021 Under Construction

ASKING RENTS

Q2 2021 Asking Rate NNN

San Diego Orange County

Los Angeles San Jose-Silicon Valley

Long Island District of Columbia

East Bay-Oakland Seattle

Northern Virginia Miami

U.S. Average

$0

$5

$10

$15

$20

PSF

Year-Over-Year Rent Growth

Philadelphia Suburban Maryland

Long Island Nashville

Lehigh Valley Baltimore Tampa

New Jersey Northern Virginia

Cleveland U.S. Average

0.0%

5.0%

10.0%

15.0%

20.0%

? Here we consider 3-year net absorption as a percent of stock. A higher percentage indicates that a market is more expansionary.

? Markets experiencing the most growth include Savannah, Lehigh Valley, Las Vegas, Inland Empire, Charleston, and Phoenix.

MARKET EXPANSION: 3 YEAR NET ABSORPTION % STOCK

30% 25% 20% 15% 10%

5% 0% -5%

Savannah Lehigh Valley

Las Vegas Inland Empire

Charleston Phoenix

San Antonio Northern Virginia Dallas / Fort Worth

Atlanta Austin Indianapolis Raleigh-Durham Houston Nashville Orlando Miami Tampa Columbus Baltimore Chicago Kansas City Jacksonville Charlotte New Jersey St. Louis Denver Philadelphia Greensboro San Diego Cincinnati Seattle Milwaukee Boston Suburban Maryland San Jose/Silicon Valley Los Angeles Detroit Cleveland Minneapolis East Bay/Oakland Orange County District of Columbia Long Island

T-36 Net Absorption Percent Stock

Positive annual and quarterly net absorption was reported in most markets as industrial space needs continued to grow.

Further, net absorption accelerated in Q2 for over 60% of tracked markets. This subset experienced higher net absorption in the past quarter than their quarterly average over the past 12 months.

U.S. MARKET | INDUSTRIAL | Q2 2021

KEY PERFORMANCE INDICATORS

NET ABSORPTION

35 30 25 20 15 10

5 0 -5

Atlanta Dallas / Fort Worth

Chicago Inland Empire

Phoenix Houston New Jersey Los Angeles Philadelphia Lehigh Valley Columbus Las Vegas Indianapolis

Miami St. Louis Nashville Orlando Raleigh-Durham

Austin Northern Virginia

Baltimore Kansas City

Cincinnati San Antonio

Charlotte Savannah San Diego

Tampa Greensboro

Seattle Milwaukee Orange County Charleston Jacksonville

Boston East Bay/Oakland

Cleveland Detroit

Minneapolis Denver

Suburban Maryland San Jose/Silicon Valley

District of Columbia Long Island

Square Feet (millions)

?

Quarterly Avg T12 Month Net Absorption

?

T3 Month Net Absorption

T12 Month Net Absorption

? More than half of the tracked markets saw rental growth for the year surpass 5%, with all but three experiencing increases over the past 12 months.

? While a few of the markets with low or negative rental-rate changes may be reacting to recent strong supply (e.g., Raleigh-Durham, Savannah), others may be adjusting to low or negative net absorption (e.g., Washington, D.C., Minneapolis).

RENTAL RATE CHANGE

20% 15% 10%

5% 0% -5% -10%

Philadelphia Suburban Maryland

Long Island Nashville

Lehigh Valley Baltimore Tampa

New Jersey Northern Virginia

Cleveland Miami

Los Angeles Orlando Seattle Chicago

Orange County East Bay/Oakland

Boston Las Vegas Inland Empire

Atlanta Columbus Dallas / Fort Worth Greensboro

Denver Phoenix Charleston Cincinnati San Jose/Silicon Valley Indianapolis St. Louis San Diego Jacksonville Detroit Houston Charlotte San Antonio

Austin Raleigh-Durham

Milwaukee Kansas City Minneapolis

Savannah District of Columbia

Year Over Year Change (%)

Deliveries T12 as a Percent of Stock

Rental Rate T12 Percent Change

? Markets with the highest rental rates were located on the West coast and near Washington, D.C., and New York.

? Some Midwest markets with low rental rates saw relatively high rent growth over the past year, including Cleveland, Chicago, and Columbus.

U.S. MARKET | INDUSTRIAL | Q2 2021

KEY PERFORMANCE INDICATORS

RENTAL RATES (NNN)

18 16 14 12 10

8 6 4 2 0

San Diego Orange County

Los Angeles San Jose/Silicon Valley

Long Island District of Columbia

East Bay/Oakland Seattle

Northern Virginia Miami Austin

Suburban Maryland Boston

New Jersey Inland Empire

Las Vegas Denver

Raleigh-Durham Phoenix

Philadelphia Houston Orlando

Baltimore Nashville

Tampa Lehigh Valley

Chicago Detroit San Antonio Charleston Jacksonville Dallas / Fort Worth Minneapolis Atlanta Charlotte Savannah St. Louis Kansas City Milwaukee Cincinnati Columbus Cleveland Indianapolis Greensboro

Average Rent Per Square Foot ($)

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