± % Market Report NEW JERSEY INDUSTRIAL 4Q Leasing Activity MSF. Net Absorption

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1 Market Report NEW JERSEY INDUSTRIAL 4Q 215 Accelerating success. ± % $ MSF Absorption SF 4Q 215 Quarter-to- Quarter Change Year-to- Year Change YTD ,25, % 54.9% 43,84,773 6,81,4 48,81 5,326,129 19,29,86 Availability Rate 9.8% -.8pp -2.3pp N/A Average Asking ($/SF/YR) $6.13.2%.33% N/A Note: pp (percentage points) In line with the industrial market s consistent recovery, the fourth quarter represented another strong period of growth. At 12 million SF, leasing activity is up 26% from last quarter, and at 43.8 million SF, year-to-date leasing activity is up over 46% from 214. Demand was driven by retailers, 3PLs and distribution and logistics users, which totaled 56% of the overall leasing activity. This increased demand improved the State s overall availability rate by 8 basis points from the prior quarter to 9.8%. Tenants continued to focus on Class A properties in the fourth quarter, with Class A product accounting for 3% of the leasing activity in the quarter. Such demand for modern Class A warehouses continued to spur new construction with five new projects totaling 1.5 million SF breaking ground this quarter. Spec construction demand was evidenced this quarter by Fedway s 539,17 SF lease at 1 North Avenue in Elizabeth and All-Ways Pacific 285,362 SF lease at 2 Industrial Road in Dayton. OCCUPANY GAINS FOR INDUSTRIAL PRODUCT REMAIN AT HISTORICAL LEVELS New Jersey s industrial market has made historic strides in occupancy levels again this year. Annual net absorption reached a record high of 19.2 million SF, with 6.1 million SF of space absorbed in the fourth quarter. Occupancy levels have continually improved in each of the last 12 quarters, since Q1 213, with net absorption totaling 37.7 million SF during this period. The greatest occupancy gains were seen in New Jersey s core submarkets along the New Jersey Turnpike. In Northern New Jersey, the Port Market led the way with 4.2 million SF of net absorption in 215, and the Exit 8A submarket in Central New Jersey experienced 3.6 million SF of positive absorption this year. As the State recorded historic highs for net absorption in 215 overall, the availability rate decreased by 23 basis points, which marks the highest year-over-year improvement. PORT AUTHORITY TERMINAL ACTIVITY ACHIEVES YEAR-OVER-YEAR GROWTH FOR 14 TH CONSECUTIVE MONTH Container traffic volumes at the Port of New York and New Jersey achieved year-over-year growth for the 14th consecutive month in November.TotalcontainertrafficforNovembertotaled5,68TEUs, up 3.3% from the prior year. Year-to-date traffic in TEUs is up 11.1% over the same period last year. Auto volumes also continued to rise in as of October volume is up over 21.9% compared to the prior year. The increase can be attributed to the Auto Incentive Program, which was launched in 214 to provide financial incentives to auto manufacturers who bring new or increased vehicle business to the Port. New Jersey Overall Availability Rate vs. Average Asking New Jersey Overall vs. Net Absorption 14% 12% 1% 8% 6% 4% 2% % % Available Overall Asking (NNN) $6.5 $6.25 $6. $5.75 $ ,, 8,, 6,, Net Absorption 1 New Jersey Industrial Market Report 4Q 215 Colliers International 3 Interpace Parkway, Bldg. C, 3 rd Floor Parsippany, NJ

2 New Jersey Industrial Market Report 4Q 215 NORTHERN NEW JERSEY Northern New Jersey s industrial market continues to show signs of strong market fundamentals, evidenced by the lowest levels of availability since 28 and highest annual absorption since 27. Healthy demand for large blocks of modern Class A space helped drive absorption this quarter. At 2.8 million SF, net absorption remained positive for the tenth consecutive quarter, which raised year-to-date net absorption to 7.2 million SF. Robust absorption coupled with increased leasing activity further reduced the availability rate to 9.9%, which marked the first time the availability rate dropped below 1% since 28. Leasing activity in Northern New Jersey totaled 6 million SF, up 57% from the prior quarter. Occupier demand for Class A product remained a driving force for demand in the fourth quarter. Class A activity accounted for 22% of Northern New Jersey s leasing activity a property group that accounts for 3% of Northern New Jersey s total inventory. In addition, the Port Market drove activity this quarter, accounting for 55% of Northern New Jersey s leasing activity. As delivery costs continue to rise, distributors remain increasingly focused on the last mile. As a result, the Port Market has seen continued growth due to its close proximity to major urban centers and New Jersey s Ports. Also driving activity this quarter was an increase in the amount of large transactions, - six leases over 25, SF were completed in the fourth quarter compared to only one in the prior quarter. In the largest transaction, Fedway leased 539,17 SF at 1 North Avenue in Elizabeth. The property, which will commence construction next quarter, is being developed by Prologis. This robust leasing activity resulted in 2.8 million SF of positive net absorption, which reduced the availability rate to 9.9% - a 6 basis point improvement from last quarter. This decline in availability represents the largest quarterly improvement since Q4 21. Strong industrial demand and tightening market conditions continue to put upward pressure on average asking rents. The asking rent for warehouse space has increased by 3.6% from the prior year, and now stands at $6.25/SF. The average asking rent has been steadily increasing over the past 11 quarters since bottoming out at $5.51/SF in Q With the availability rate dropping below 1%, and heightened demand, the market is poised to support continued rental growth. Northern New Jersey Availability Rate vs. Average Asking 14% 12% 1% 8% 6% 4% 2% % % Available Overall Asking (NNN) $7. $6.75 $6.5 $6.25 $6. $5.75 $5.5 Northern New Jersey vs. Net Absorption Net Absorption 7,, 6,, 5,, 3,, 1,, -1,, 2 New Jersey Industrial Market Report 4Q 215 Colliers International 3 Interpace Parkway, Bldg. C, 3 rd Floor Parsippany, NJ

3 New Jersey Industrial Market Report 4Q 215 CENTRAL NEW JERSEY The Central New Jersey industrial market continued to demonstrate positive momentum, as evidenced by the increase in tenant demand compared to last quarter and the prior year. Leasing activity totaled 6.1 million SF during the fourth quarter, a 6% increase from last quarter's 5.7 million SF, and a 46% increase from 4.1 million SF the prior year. As a result, for the second consecutive quarter Central New Jersey absorbed over 3 million square feet of space, reducing the availability rate to historic lows. This dynamic has spurred speculative construction in Central New Jersey as five new projects totaling 1.5 million SF broke ground this quarter. Robust leasing activity kept net absorption positive for the 12 th consecutive quarter at 3.2 million square feet, bringing year-to-date absorption to 12 million SF. Sustained positive momentum in Central New Jersey throughout 215 reduced the availability rate to 9.6% - a remarkable 32 basis point improvement from the prior year. The most notable year-over-year decline occurred in the Exit 8A submarket, where the availability rate improved by 5 basis points to 9.%. Tenant demand continued to center around modern product which provides good access to the New Jersey Turnpike. For example, List Logistics signed a new lease for 571, SF at 75 Mill Road in Edison. The property was built on spec by J.G. Petrucci in 213. Additional new lease commitments underscoring this trend include; All-Ways Pacific s 285,362 SF new lease at 2 Industrial Road in Dayton and Medline s 28,384 SF lease at 1119 West Middlesex Avenue in Edison. The consistent demand for high-quality, Class A industrial product is evidenced by commencement of speculative construction, including Bridge Development s eport Logistics Center. The complex, which is located on High Street in Perth Amboy, will include three separate buildings of 718,2 SF, 354,25 SF and 22,2 SF. The positive absorption and tightening market conditions across the core Central New Jersey submarkets pushed industrial rents to their, highest level since the fourth quarter of 28. The average asking rent for warehouse space rose to $5.9/SF this quarter, up 2% from last year. With only two of Central New Jersey s 11 submarkets reaching or exceeding their 27 peak asking rents, there remains significant potential for continued rental rate growth. Central New Jersey Availability Rate vs. Average Asking % Available Overall Asking (NNN) 14% 12% 1% 8% 6% 4% 2% % $7. $6.5 $6. $5.5 $5. $4.5 $4. Central New Jersey vs. Net Absorption 7,, 6,, 5,, 3,, 1,, Net Absorption 3 New Jersey Industrial Market Report 4Q 215 Colliers International 3 Interpace Parkway, Bldg. C, 3 rd Floor Parsippany, NJ

4 New Jersey Industrial Market Report 4Q 215 CAPITAL MARKETS Investor demand for industrial product remained competitive throughout the year, evidenced by the record annual sales volume of $3.2 billion an increase of 91% from 214. The industrial sales market continued to experience significant activity with properties throughout the State selling at record-breaking prices, averaging $78.33/SF, up 1.8% from 214 and up 19.8% from the low point in 29. However, future interest rate increases coupled with a lack of available product for sale may cause activity to slow down in the coming quarters. Fourth quarter sales volume closed at $666 million, up 64% from the prior year. In the largest sale of the quarter based on sales price, Sitex Group purchased 215 Blair Road in Avenel From Marvin & Edward Israelow for $2,, or $117.17/SF. The 2-acre site includes a 175, SF vacant warehouse and additional land to develop a new distribution Center. Sitex will rehabilitate the existing property resulting in a new roof, façade, HVAC system and loading docks. The excess land will provide for the development of a new 2, SF facility, with Sitex s plans calling for 36 foot ceiling heights, 53 loading docks and several acres of trailer parking. New Jersey Annual Investment Volume $4. Sales Volume # Transactions 25 Billions $3. $2. $ # Transactions $ CONSTRUCTION ACTIVITY Developers are actively responding to the tightening market conditions seen in New Jersey s industrial market. In 215, 15 new projects totaling 3.1 million SF were completed, signifying developer s confidence in the market. Currently, 18 projects totaling 5.5 million SF are under construction and due for completion by the end of 216. Developers have been focusing their construction efforts in the Exit 8A submarket, which accounts for 46% of the 5.5 million SF currently under construction, all of which are being built on spec. With a shortage of Class A space in the Exit 8A submarket, developers have been eager to break ground on new projects. New Jersey Overall Quarterly Construction Starts Square Feet 3,, 1,, ECONOMIC INDICATORS GDP Gross Domestic Product CCI Consumer Confidence Index TEUs Port Loaded Containers $18,6 (3Q 215) [in billions] Increase from 2Q (Dec. 215) Increase from Nov ,68 (Nov. 215) Decrease from Oct. 215 Source: U.S. Department of Commerce, The Conference Board, Port Authority of NY/NJ 4 New Jersey Industrial Market Report 4Q 215 Colliers International 3 Interpace Parkway, Bldg. C, 3 rd Floor Parsippany, NJ

5 New Jersey Market Overview Recent Transactions & Major Sales Top 4Q 215 Transactions Submarket Property Address City Leased SF Tenant Lease Type Exit 8A 66 Station Rd Cranbury 812,739 Home Depot Renewal Exit 1 75 Mill Rd Edison 571, List Logistics New Lease Port Market 1 North Ave - Bldg A Elizabeth 539,17 Fedway New Lease Port Market 31 Broadway Jersey City 439,15 National Retail Systems New Lease Port Market 6 Lister Ave Newark 352, Hello Fresh New Lease Port Market 22 Port Jersey Blvd Jersey City 312,412 East Coast Warehouse & Distribution Corp New Lease Exit 8A 2 Industrial Rd Dayton 285,362 All-Ways Pacific New Lease Exit W Middlesex Ave Port Reading 28,384 Medline New Lease Port Market Pennsylvania Ave - Bldg A Kearny 28, Sarcona Management New Lease Top 4Q 215 Sales Property Address, City Building RBA Buyer 215 Blair Road, Avenel 175, Sitex Group 7 Union Boulevard, Totowa 1532 South Washington Avenue, Piscataway 1441 Chestnut Avenue, Hillside 33, 18 Manor Road 84,72 75 Demarest Drive, Wayne The Hampshire Companies Seller Marvin & Edward Israelow Sale Price Price PSF Cap Rate $2,, $ Vacant Purdue Pharma $17,31,9 $52.46 Vacant 256, Dream on Me EvaTees $16,38, $ ,815 Bay Crane Group 7, Terreno Realty Corporation Industrial Property Trust Paul V. Profeta & Associates $15,, $75.83 Sold to user Sold to user Apple Corrugated $9,3, $ % The Davis Companies $8,941,17 $ % 5 New Jersey Industrial Market Report 4Q 215 Colliers International 3 Interpace Parkway, Bldg. C, 3 rd Floor Parsippany, NJ

6 New Jersey Market Overview Existing Properties Submarket Inventory Availability Rate (%) W/D Average Manufacturing Average Flex/ R&D Average Leasing Activity (QTR.) Net Absorption (QTR.) RBA Under Construction Northern NJ Sussex County 2,75, % $6.96 $4.4 $. 27,65 Northern Bergen 22,457,9 12.5% $8.47 $6.83 $ ,639 (143,265) Central Bergen 12,794,88 1.4% $7.93 $8.6 $ ,647 (164,433) Meadowlands 75,746,52 9.7% $6.83 $5.69 $13.9 1,314,873 (96,429) 535,883 Route 8/46 74,498,951 9.% $6.16 $6.2 $ ,881 (181,43) Port Market 111,699, % $5.94 $7.11 $8.82 3,256,9 2,717,79 753,611 West Essex 19,397, % $5.46 $6. $12. 18,5 23,2 Morris Region 39,732, % $5.84 $6.66 $ ,965 46,95 Route 23 North 695, % $1. $. $. (7) Warren County 6,334, % $4.75 $4.43 $7.5 45,85 12,22 Total NNJ 365,432,22 9.9% $6.25 $6.21 $9.99 5,966,255 2,834,869 1,289,494 Central NJ Route 78/Union 28,311, % $5.5 $6.12 $ ,777 (29,147) 263,415 Somerset County 31,469,65 9.5% $4.84 $4.94 $ ,286 75,24 Hunterdon County 6,777, % $4.41 $3.57 $ ,225 42,439 Exit 12 23,862, % $6.51 $6.2 $8.5 49, ,782 Exit 1 79,81,73 7.5% $5.59 $4.75 $8.29 1,523, ,441 1,292,65 Exit 9 22,659,13 7.9% $4.54 $7.8 $ , ,891 Exit 8A 61,288,949 9.% $4.78 $4.75 $ ,362,13 479,14 2,539,872 Princeton/Trenton 18,232, % $3.55 $2.96 $ ,3 132,81 Exit 7A 14,312, % $3.8 $2.5 $ ,923 (73,693) Monmouth County 2,17, % $6.86 $6.81 $ ,594 26,457 Ocean County 1,68, % $6.24 $5.42 $7.96 7,299 5,811 7, Total CNJ 316,955, % $5.9 $4.22 $11.8 6,59,286 3,246,171 4,165,937 Market Total 682,387, % $5.72 $5.28 $ ,25,541 6,81,4 5,455,431 Class A Warehouse/Distribution Market Inventory Availability Rate (%) Vacancy Rate (%) Average Asking Leasing Activity (QTR.) Northern New Jersey 11,25,68 6.5% 1.6% $8.36 1,33,481 Central New Jersey 59,266,58 1.1% 6.4% $6.4 2,237,636 New Jersey Overall 7,517, % 5.7% $6.29 3,541,117 6 New Jersey Industrial Market Report 4Q 215 Colliers International 3 Interpace Parkway, Bldg. C, 3 rd Floor Parsippany, NJ

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