HOUSTON 3Q17 INDUSTRIAL MARKET. Current Conditions. Vacancy held at 5.5 percent quarter versus quarter but up 30 basis points Y-o-Y

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5 HOUSTON 3Q17 INDUSTRIAL MARKET Current Conditions Vacancy held at 5.5 percent quarter versus quarter but up 30 basis points Y-o-Y The third quarter metrics for the Houston industrial market showed a slowing but strong sector of the overall Houston commercial real estate sector. Overall vacancy rates held at 5.5 percent, as nearly 3 million square feet of absorption occurred and 2.3 million square feet of new deliveries took place during the past 90 days. Asking rents were down 2 percent to $6.73 per square foot during the quarter and leasing activity while strong at 2.6 million square feet of transactions, represented a nearly 50 buildings and 4.2 million square feet of new construction remains in pipeline North and Northwest submarkets saw nearly 95 percent of total market absorption during the quarter. Market Analysis Asking Rent and Vacancy $8.00 8% 4.3 million square feet of new development remains in the pipeline. This represents an nearly 70 percent decline from the peak of nearly 14.5 million square feet of projects underway in late However, this decline in new construction can been seen as a positive for the market, as it will allow the nearly 18 million square feet of tenants currently in the market to absorb both the new space as well as existing space and help keep vacancy levels at or near the five year average of 5.1 percent across the entire market. Unsurprisingly, the Northwest and Southeast submarkets lead the way in terms of both number of projects underway and total square footage with more than 50 percent of both metrics multitude of transportation arteries and rooftops continue to make them a high demand area for 3PL and petrochemical companies looking at both warehouse and distribution space. Additionally, the North and Northwest submarkets continue to see strong demand metrics, as both saw greater than 1.0 million square foot of positive absorption take place during the third quarter. Additionally, the two submarkets rank first and second in terms of asking rents in Houston. Finally, the top five leases signed during the quarter, led by Emser new lease at Pinto Business Park for 600,000 square feet, all occurred in either the North or Northwest submarkets. We anticipate the submarkets will continue to draw on their locational superiority in terms of proximity to rail, overland and air cargo routes, to see strong tenant demand through Additionally, demand near the Port of Houston will remain as both the petrochemicals and consumer goods that flow through the Port to the tune of more than 20 million tons of cargo through July will continue Second-Half Outlook industrial market throughout the city and as such, the remainder of $7.00 $6.00 $5.00 $4.00 $3.00 3% 3Q12 3Q13 3Q14 3Q15 3Q16 3Q Net Absorption Square Feet, Millions Q12 3Q13 3Q14 3Q15 3Q16 3Q17 Market Summary NNN Avg Asking Rent (Price/SF) Vacancy (%) Current Quarter Prior Quarter Year Ago Period Total Inventory (SF) M M M Vacancy Rate 5.5% 5.5% 5.2% Qtrly Net Absorption (SF) 3.0 M -76, M NNN Avg Asking Rent $6.73 $6.84 $6.85 Under Construction (SF) 4.2 M 4.5 M 9.5 M Deliveries (SF) 2.3 M 1.6 M 6.3 M 7% 6% 5% 4% 12 Month Forecast

6 HOUSTON 3Q17 INDUSTRIAL MARKET and 2018 will continue to see a market with strong tenant demand as large scale users take advantage of the expected uptick in demand for construction goods and supplies as well as consume goods as Houstonians look to rebuild and re-emerge stronger than before Submarket Statistics Total Under Total Qtr YTD Direct NNN Sublet NNN Total NNN Inventory Construction Vacancy Absorption Absorption Asking Rent Asking Rent Asking Rent (SF) (SF) Rate (SF) (SF) (Price/SF) (Price/SF) (Price/SF) CBD 54,934,431 14, % 100, ,205 $5.29 $4.98 $5.28 North 94,669, , % 1,159,109 1,229,978 $7.29 $6.78 $7.25 Northeast 34,707, , % 21, ,891 $ $6.32 Northwest 155,961,707 1,118, % 1,112,093 1,298,965 $6.91 $6.57 $6.85 Southeast 90,287,663 2,014, % 487,457 2,863,074 $7.09 $5.22 $6.82 South 46,557,279 97, % -26, ,127 $5.38 $6.15 $5.41 Southwest 69,631, , % -215,143 78,736 $7.38 $6.59 $7.27 Houston Market 546,749,257 4,151, % 2,639,731 5,625,566 $6.78 $6.33 $6.73 Lease/User Transactions Tenant Building/Address Submarket Type Square Feet Emser Tile Pinto Business Park North Direct/Relocation 600,000 Home Depot 7301 Security Way Northwest Direct/New 300,000 Basin Tek LLC 713 NorthPark Central Dr North Direct/Renewal 148,242 DHL Central Green Blvd North Direct/New 128,924 Mahindra USA Satsuma Distribution Center Northwest Direct/New 99,840 Select Sales Transactions Building Submarket Price Price/SF Square Feet 5750 Brittmoore Rd Northwest $40,000,000 $98 140, Bissonnet St Southwest $33,000,000 $80 94, Brittmoore Park Dr North $3,050,000 $58 52, Taub Rd Northwest $2,600,000 $66 39, N Sam Houston Pky E North $2,550,000 $88 28,875 2

7 HOUSTON 3Q17 INDUSTRIAL MARKET Select Texas Markets Largest Submarkets Employment By Industry Top 10 Submarkets by Square Feet Rank Submarket Square Feet 1 Northwest Houston M 2 DFW South Stemmons M 3 Northeast Dallas M 4 Northwest Dallas M 5 DFW Great SW-Arlington M 6 North Houston 94.7 M 7 Southeast Houston 90.4 M 8 South Dallas 90.1 M 9 North Ft. Worth 88.5 M 10 South Ft. Worth 82.0 M Source: Newmark Knight Frank Houston, September % 7.0% 12.8% 7.7% 3.6% 10.8% 19.9% 13.1% 5.2% 16.0% 1.1% Source: U.S. Bureau of Labor Statistics Mining, Logging, and Construction Construction Manufacturing Trade, Transportation, and Utilities Information Financial Activities Professional and Business Services Education and Health Services Leisure and Hospitality Other Services Government Unemployment Rate Payroll Employment Not Seasonally Adjusted 10% 8% 6% 4% 2% 0% Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Total Nonfarm, Not Seasonally Adjusted, 12-Month % Change 6.0% 4.5% 3.0% 1.5% 0.0% -1.5% Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 United States Houston United States Houston Source: U.S. Bureau of Labor Statistics Source: U.S. Bureau of Labor Statistics Consumer Price Index (CPI) Employment Growth by Industry All Items, 12-Month % Change, Not Seasonally Adjusted, =100 6% 4% 2% 0% -2% -4% Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 United States Houston Source: U.S. Bureau of Labor Statistics Houston, August 2017, 12-Month % Change, Not Seasonally Adjusted Manufacturing Education and Health Services Professional and Business Services Leisure and Hospitality Total Nonfarm Government Financial Activities Other Services Mining, Logging, and Construction Trade, Transportation, and Utilities Construction Information Source: U.S. Bureau of Labor Statistics -4% -2% 0% 2% 4% 6% 3

8 Houston 1700 Post Oak Blvd. 2 BLVD Place, Suite 250 Houston, TX Newmark Knight Frank United States Office Locations Graham Hildebrand Director of Research & Marketing - Texas graham.hildebrand@ngkf.com Morgan Sturgeon Research Manager msturgeon@ngkf.com Newmark Knight Frank has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our data, there may be adjustments in historical statistics including availability, asking rents, absorption and effective rents. Newmark Knight Frank Research Reports are also available at All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark Knight Frank (NKF) has not verified any such information, and the same constitutes the statements and representations only of the source thereof, and not of NKF. Any recipient of this publication should independently verify such information and all other information that may be material to any decision that recipient may make in of that decision, including its legal, financial, and tax aspects and implications. Any recipient of this publication may not, without the prior written approval of NKF, distribute, disseminate, publish, transmit, copy, broadcast, upload, download, or in any other way reproduce this publication or any of the information it contains.

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13 HOUSTON 1Q17 INDUSTRIAL MARKET Current Conditions The years due to the economic slowdown combined with elevated construction volumes has impacted every property type. The industrial market has been no exception; fortunately, the subsequent impact to the overall health of the market has been relatively benign, although there What Vacancy overall has been at or below the current rate of 5.6% for 22 consecutive quarters. 43 projects representing 4.5 million SF of construction underway. 2.2 million SF in 26 buildings came online first quarter % vacancy recorded at the end of the first quarter of 2017, representing an increase of 120 basis points since bottoming out at 4.4% in the second quarter of Despite some weakening in market fundamentals, overall vacancy remains low by historical standards, while asking rents continue to trend higher. All told, cyclical and structural tailwinds support a fairly optimistic outlook for Market Analysis Asking Rent and Vacancy $8.00 $7.00 8% 7% On the cyclical front, 57.8 million square feet of new supply came online from 2010 to 2016, but the good news from the supply perspective is twofold. First, newer product is better-suited to meet the requirements of end users, offering features such as expanded truck courts, increased clear heights and staging lanes. Second, the construction boom is winding down. Currently, there are 43 properties representing 4.5 million square feet underway, which is down significantly from 14.4 million square feet at the peak. Furthermore, the construction pipeline, which had been highly concentrated in the North submarket, has begun to shift toward the Southeast and the Northwest submarkets. The pace of demand has also been normalizing. For perspective, net absorption, which totaled 11.7 million, 11.4 million and 8.7 million square feet in 2014, 2015 and 2016 respectively, is expected to slow even -square-foot build-to-suit lease of 2016 drops off the annual tally. However, structural drivers such as population growth, the rapid emergence of ecommerce, petrochemical manufacturing and Port Houston should support healthy levels of demand moving forward. More recently, net absorption totaled more than 1.3 million square feet in first-quarter 2017, marking the 57th consecutive quarter of positive absorption. Expect net absorption to reach 5.4 to 5.8 million square feet in This guidance is driven by $6.00 6% $5.00 5% $4.00 4% $3.00 3% 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 NNN Avg Asking Rent (Price/SF) Vacancy (%) Net Absorption Square Feet, Millions Q12 1Q13 1Q14 1Q15 1Q16 1Q17 Market Summary -square-foot fulfillment - -square-foot Current Quarter Prior Quarter Year Ago Period 12 Month Forecast squaredistribution center in Northwest Houston. Total Inventory (SF) M M M Vacancy Rate 5.6% 5.6% 5.0% 2017 Outlook The Houston industrial market is operating in a state of equilibrium. Expect vacancy to end the year flat, as absorption and deliveries produce nearly identical results. In the longer term, LNG exports, manufacturing on-shoring and port diversification strategies could produce the next wave of growth. Qtrly Net Absorption (SF) 1,334,727 1,391, ,664 NNN Avg Asking Rent $6.99 $6.91 $6.93 Under Construction (SF) 4,495,393 5,541,209 14,366,551 Deliveries (SF) 2,206,883 2,165,077 2,160,379

14 HOUSTON 1Q17 INDUSTRIAL MARKET Submarket Statistics Total Under Total Qtr YTD Direct NNN Sublet NNN Total NNN Inventory Construction Vacancy Absorption Absorption Asking Rent Asking Rent Asking Rent (SF) (SF) Rate (SF) (SF) (Price/SF) (Price/SF) (Price/SF) CBD 54,650, % -677, ,279 $5.46 $4.41 $5.38 North 92,204,325 1,184, % 52,765 52,765 $7.67 $7.11 $7.59 Northeast 34,512, % 186, ,300 $6.86 $0.36 $6.04 Northwest 152,225,387 1,271, % -117, ,343 $7.30 $6.55 $7.17 Southeast 89,555,614 1,477, % 1,759,082 1,759,082 $7.14 $5.39 $6.93 South 46,169, , % 29,769 29,769 $5.59 $6.12 $5.60 Southwest 68,835, , % 101, ,433 $8.05 $6.61 $7.94 Houston Market 538,152,531 4,495, % 1,334,727 1,334,727 $7.10 $6.21 $6.99 Lease/User Transactions Tenant Building/Address Submarket Type Square Feet Gulf Winds International 1755 Federal Rd Southeast Direct/Renewal 303,281 Ford Motor Company 7909 Northcourt Rd Northwest Direct/Renewal 250,000 Exel Logistics 8609 Citypark Loop Northeast Direct/Renewal 167,731 Flexitallic 8203 Market Street Southeast Sublease/New 125,000 Hawthorne Customs & Dispatch 1401 S 16 th Street Southeast Direct/New 96,793 Select Sales Transactions Building Submarket Price Price/SF Square Feet Ikea Distribution Center (pending) Southeast $63,500,000 $64 996, Market Street Southeast $13,811,841* $39 355,404 Mason Creek Business Center Northwest $29,000,000 $85 339, Gillingham Southwest N/A N/A 330, Sommermeyer St Northwest $18,962,695* $66 285,432 * Allocated 2

15 HOUSTON 1Q17 INDUSTRIAL MARKET Select Texas Markets Largest Submarkets Employment By Industry Top 10 Submarkets by Square Feet Houston, February 2017 Rank Submarket Square Feet 1 Northwest Houston M 2 DFW South Stemmons M 3 Northeast Dallas M 4 Northwest Dallas M 5 DFW Great SW-Arlington M 6 North Houston 92.2 M 7 Southeast Houston 89.6 M 8 South Dallas 88.9 M 9 North Ft. Worth 84.9 M 10 South Ft. Worth 81.5 M 15.6% 20.0% 13.8% 1.1% 2.9% 3.5% 5.1% 12.8% 7.2% 7.5% 10.5% Information Mining/Logging Other Services Financial Activities Construction Manufacturing Leisure/Hospitality Education/Health Services Government Professional/Business Services Trade/Transportation/Utilities Source: Newmark Grubb Knight Frank Source: U. S. Bureau of Labor Statistics Unemployment Rate Not Seasonally Adjusted 10% 8% 6% 4% 2% 0% Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Payroll Employment Total Nonfarm, Not Seasonally Adjusted, 12-Month % Change 6.0% 4.5% 3.0% 1.5% 0.0% -1.5% Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 United States Houston MSA United States Houston MSA Source: U.S. Bureau of Labor Statistics, Source: U.S. Bureau of Labor Statistics, Consumer Price Index (CPI) Employment Growth by Industry All Items, 12-Month % Change, Not Seasonally Adjusted, =100 6% 4% 2% 0% -2% -4% Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 United States Houston MSA Source: U.S. Bureau of Labor Statistics Houston, February 2017, 12-Month % Change, Not Seasonally Adjusted Leisure/Hospitality Government Education/Health Services Information Total Nonfarm Professional/Business Services Financial Activities Other Services Trade/Transportation/Utilities Construction Manufacturing Mining/Logging Source: U.S. Bureau of Labor Statistics -9% -6% -3% 0% 3% 6% 3

16 Houston 1700 Post Oak Blvd. 2 BLVD Place, Suite 250 Houston, TX Newmark Grubb Knight Frank United States Office Locations David Wegman, CFA Director of Research - Texas dwegman@ngkf.com Newmark Grubb Knight Frank has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our data, there may be adjustments in historical statistics including availability, asking rents, absorption and effective rents. Newmark Grubb Knight Frank Research Reports are also available at All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark Grubb Knight Frank (NGKF) has not verified any such information, and the same constitutes the statements and representations only of the source thereof, and not of NGKF. Any recipient of this publication should independently verify such information and all other information that may be material to any decision that recipient to all aspects of that decision, including its legal, financial, and tax aspects and implications. Any recipient of this publication may not, without the prior written approval of NGKF, distribute, disseminate, publish, transmit, copy, broadcast, upload, download, or in any other way reproduce this publication or any of the information it contains.

17 HOUSTON 4Q16 INDUSTRIAL MARKET Current Conditions The Houston industrial real estate market remained active through the fourth quarter of 2016, which marked over five straight years of overall vacancy at or below the current rate of 5.6%, as almost 1.4 million square feet was absorbed during the quarter. The unemployment rate in Houston, not adjusted for seasonal variations, was 4.9% in November, up from 4.8% a year ago. The Houston metro area added 5,700 jobs in November, bringing total nonfarm employment to 3,031,500, not seasonally adjusted, according to the Texas Workforce Commission. The reported job growth is well below the 25-year average of 11,600 net new jobs for November, a sign the job market remains vulnerable following the downturn in the oil and gas industry. In Texas, job growth has risen after a two-year slump, as the energy industry has begun to recover. The Texas Workforce Commission reported that mining and logging, the sector that includes energy from oil and gas extraction services, added 3,200 jobs across the state last month. However, the sector has lost more than 29,000 jobs year-overyear. In Houston, oil and gas employment showed signs of continued improvement. The mining and logging sector posted a year-over-year loss of 7,900 jobs last month, compared with losses of 8,400 jobs in October and 10,200 in September. Vacancy Houston's industrial vacancy rate increased by 10 basis points quarterover-quarter, from 5.5% to 5.6%. By the end of the fourth quarter, Houston had 29.9 million square feet of vacant industrial space. Among the major property types, manufacturing closed the quarter at 3.6% vacancy, and warehouse and distribution ended at 6.0%. The North submarket continued to have the highest overall vacancy at 9.1%. The higher vacancy is due in part to an ongoing large supply of institutional warehouse and distribution space at 9.7%. Manufacturing space was at 4.8%, up slightly from 4.7% last quarter. Move-outs affecting net absorption in the North submarket included Gator Fabrications vacating 72,000 square feet at 101 East Avenue M in Conroe and Display Works moving out of 63,762 square feet at Beltway Crossing Center, Building 6. The Northeast submarket had the tightest overall vacancy at 2.6%, with warehouse and distribution at 2.6% and manufacturing at 2.7%. The oil downturn has reduced demand for crane-served manufacturing buildings. The total amount of manufacturing space being marketed for lease, regardless of whether space is vacant, occupied, subleased or available at a future date, is at 8.1 million square feet with an availability rate of 9.1%. About 1.3 million square feet of that space is sublet. Vacancy overall has been at or below the current rate of 5.6% for 21 consecutive quarters. 55 projects representing 5.5 million SF of construction underway. 2.1 million SF in 23 buildings came online fourth quarter Market Analysis Asking Rent and Vacancy $8.0 $7.2 $6.4 $5.6 $4.8 $ Q11 4Q12 4Q13 4Q14 4Q15 4Q16 Net Absorption Square Feet, Millions 0.0 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 Market Summary NNN Avg Asking Rent (Price/SF) Vacancy (%) Current Quarter Prior Quarter Year Ago Period Total Inventory (SF) M M M Vacancy Rate 5.6% 5.5% 4.8% Qtrly Net Absorption (SF) 1,391,083 6,463,291 1,815,328 NNN Avg Asking Rent $7.16 $6.97 $7.02 Under Construction (SF) 5,541,209 7,451,886 12,807,845 Deliveries (SF) 2,165,077 6,506,241 3,298, Month Forecast

18 HOUSTON 4Q16 INDUSTRIAL MARKET Construction and Deliveries In response to higher vacancy, construction activity has shifted from the North submarket to the Southeast side of Houston, which includes the spec project at Bayport North Industrial Park in Pasadena. Four buildings are currently under construction, and there are five planned buildings totaling 397,775 square feet. The project involves two single-tenant and two multi-tenant buildings, ranging from 24,250 to 231,983 square feet. The developer intends to add a 275,000-square-foot cross-dock facility and other buildings of different sizes in the park. The locations are New Decade Drive, New Decade Drive, 4033 Malone Drive and 4111 Malone Drive. There is currently 5.5 million square feet under construction in the Houston industrial market, with approximately 2.0 million square feet available, or 36.3%. Only 15,300 square feet is manufacturing space in Breen Road Business Park, Building 8 near Tomball Parkway. Construction finished during the fourth quarter at the Crystal Geyser Alpine Spring Water facility. The 130,000 square feet of manufacturing space is located in Pasadena. The multimillion-dollar bottling plant is geared up to produce $41.9 million in annual economic influence for Pasadena, according to a study overseen by Houston-based CenterPoint Energy. Absorption Houston's industrial market has posted 8.7 million square feet of net absorption as of year-end The Northwest submarket contributed the largest share with 5.2 million square feet, including the 3.9 millionsquare-foot build-to-suit Daikin Texas Technology Park, followed by the Southeast submarket with 2.8 million square feet of net absorption during Two submarkets posted negative absorption year-to-date: the Central Business District (CBD), with negative 890,666 square feet; and the South submarket, with negative 136,497 square feet. Sublease availability currently totals over 5.6 million square feet and is expected to grow in 2017, as the energy industry continues to downsize. In the CBD, tenants are vacating old warehouse and distribution space and moving into less space in more recently built buildings. The Southeast submarket remains in high demand, especially for rail-served distribution space near the Port of Houston. Leasing Activity With a less-than-positive perception of the current Houston economy, tenants have the upper hand in lease negotiations, including free rent and tenant improvement dollars. Leasing activity was at 2.6 million square feet during fourth-quarter 2016, down from 5.3 million square feet quarter-over-quarter and 9.0 million square feet year-over-year. The average square feet leased per quarter over the last 10 years is approximately 244,000 square feet. Several major tenant move-ins contributed to net absorption gains in the fourth quarter, including Wald Relocation Services, with 96,000 square feet in Jersey Village Corporate Center; and TSC Apparel, with 89,060 square feet in Apex Distribution Center II. Both of these tenants are located in the Northwest submarket. Industrial Real Estate Investment Trusts The average occupancy rates for commercial mortgage-backed security loans financed by industrial properties have increased annually over the past five years, according to Trepp Analytics. These rates range from 91.9% in 2011 to 95.7% for This trend continued in November, as the industrial sector held the highest average occupancy rate among major property types at 95.8%. The industrial sector owes its success to ecommerce, which may be restraining brick-and-mortar properties but is creating demand for spaces such as warehouses and distribution centers. Changing trends in consumption methods are driving demand, and competition is pushing companies to deliver goods in hours rather than days. This type of demand has industrial development opportunities at all-time highs. Net Absorption, Deliveries, Vacancy Square Feet, Millions Vacancy by Property Type Percent (%) Q11 4Q12 4Q13 4Q14 4Q15 4Q Q06 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 Net Absorption (SF) Deliveries (SF) Vacancy (%) Warehouse/Distribution Manufacturing Overall 2

19 HOUSTON 4Q16 INDUSTRIAL MARKET The Next Generation of Technology One of the world's leading plastics, chemical and refining companies, LyndellBasell has designated its La Porte, Texas, manufacturing complex as the location for a new high-density polyethylene (HDPE) plant. Plans were announced to build the new, $700.0 million plant as part of a $4.0 billion expansion in Texas. It will be the first commercial plant to use LyondellBasell's new Hyperzone PE technology. The projected annual capacity is 1.1 billion pounds, or 500,000 metric tons. The plant is expected to create up to 1,000 jobs at the peak of construction and as many as 75 full-time positions. Construction is slated to begin in early 2017, with startup planned for Port of Houston Authority Rebrands as Port Houston The Port of Houston Authority has rebranded itself as Port Houston and adopted a new logo in an effort to further expand its business base and to improve awareness of port activities. Port Houston ranks first in the nation for foreign waterborne tonnage and second for overall tonnage. It backs the creation of nearly 1.2 million jobs in Texas and 2.7 million jobs product, in addition to more than $617 billion in economic impact across the U.S. Oil and Gas OPEC and some non-opec members agreed to cut oil production by 1.2 million and 558,000 barrels a day, respectively. These production cuts, which are set to take place by January, could accelerate the time it takes for the oil market to regain equilibrium. Currently, the global supply and demand imbalance stands at 1.2 million barrels a day. However, the consensus forecast suggests the global oil market will reach equilibrium in the second half of Downside risks to this thesis include the actual results and duration of the production cuts, how quickly shale producers can come back online, a stronger U.S. dollar and to a lesser extent whether there is a pullback in global demand due to an economic recession. Despite these and other concerns, the price of oil shot up, and West Texas Intermediate stood at $52 a barrel at the time of this writing. Houston Purchasing Managers Index The Houston Purchasing Managers Index has moved upward in the past two months, reaching 51.1 in October. The results of a survey of supply chain managers indicates that Houston's economy is on track to continue to improve with an above-neutral reading of 50, after 21 months of contraction. October is the first reading above 50 since the oil bust began. If the current oil prices stay above $50 per barrel, Houston should be in a relatively good position for growth going into Lease/User Transactions Tenant Building/Address Submarket Type Square Feet Adams Warehouse & Delivery McCarty Business Park Northeast Direct/Renewal 75,540 MIQ Logistic 8575 Volta Dr. North Direct/New 56,404 Gateway Supply 620 N Houston Ave. Northeast Direct/New 52,145 Debusk 1005 W 8 th St. Southeast Direct/New 49,178 Diesel Core Mason Creek Business Park Northwest Direct/New 42,550 Select Sales Transactions Building Submarket Price Price/SF Square Feet Corporate Park Northwest Northwest $8,327,243 $45 185,418 Westchase Corporate Park Southwest N/A N/A 176,977 Corporate Park West Northwest $7,685,436 $44 175,665 I-10 Warehouse Park Northwest $6,680,661 $44 152,699 Century Plaza Distribution Center North N/A N/A 149,760 3

20 HOUSTON 4Q16 INDUSTRIAL MARKET Submarket Statistics Total Total Total Qtr YTD Under Qtr Total NNN Inventory Vacant Vacancy Absorption Absorption Construction Deliveries Asking Rent (SF) (SF) Rate (SF) (SF) (SF) (SF) (Price/SF) Houston Market Total 534,675,311 29,937, % 1,391,083 8,758,181 5,541,209 2,165,077 $7.16 Warehouse & Distribution 445,222,607 26,698, % 1,172,564 5,289,753 5,525,909 2,035,077 $7.25 Manufacturing 89,452,704 3,239, % 217,269 3,467,178 15, ,000 $6.76 CBD Total 54,987,698 2,970, % -255, , $5.50 Warehouse & Distribution 44,816,419 2,669, % -257, , $5.48 Manufacturing 10,171, , % 2, , $5.59 North Total 91,880,954 8,324, % -103, , ,450 99,250 $7.60 Warehouse & Distribution 79,167,055 7,713, % -89, , ,450 99,250 $7.77 Manufacturing 12,713, , % -14, , $6.66 Northeast Total 34,092, , % -83, ,265 20,222 0 $5.48 Warehouse & Distribution 27,412, , % -42, ,529 20,222 0 $5.56 Manufacturing 6,679, , % -41,445-38, $5.05 Northwest Total 151,830,805 7,921, % 825,285 5,236,363 1,386,100 72,840 $7.68 Warehouse & Distribution 127,203,341 7,066, % 760,731 1,654,316 1,370,800 72,840 $8.02 Manufacturing 24,627, , % 64,554 3,582,047 15,300 0 $6.24 Southeast Total 88,012,538 4,566, % 1,042,792 2,855,726 2,511,770 1,595,687 $7.26 Warehouse & Distribution 70,744,177 3,936, % 852,304 2,828,236 2,511,770 1,465,687 $7.00 Manufacturing 17,268, , % 190,488 27, ,000 $8.85 South Total 45,674,084 1,627, % -128, , , ,000 $5.41 Warehouse & Distribution 36,321,149 1,465, % -128,004-49, , ,000 $5.96 Manufacturing 9,352, , % 0-87, $4.29 Southwest Total 68,197,114 3,623, % 93,214 1,020, , ,300 $8.21 Warehouse & Distribution 59,557,801 3,129, % 69, , , ,300 $7.76 Manufacturing 8,639, , % 15,533 24, $9.67 4

21 HOUSTON 4Q16 INDUSTRIAL MARKET Texas Vacancy By Submarket Top 10 Submarkets by Lowest Vacancy Rate Employment By Industry Houston, November 2016 Rank Submarket Total Vacancy Rate 1 South Austin 2.1% 2 Northeast Houston 2.6% 3 Northwest/Cedar Park Austin 2.7% 4 Southwest Austin 3.2% 5 South Houston 3.6% 6 South Fort Worth 3.7% 7 Central Austin 4.2% 8 Northwest Houston 5.2% 9 Southeast Houston 5.2% 10 Southwest Houston 5.3% 8% 7% 11% 3% 1% 3% 5% 13% 13% 21% 15% Trade/Transportation/Utilities Professional/Business Services Government Education/Health Services Leisure/Hospitality Manufacturing Construction Financial Activities Other Services Mining/Logging Information Source: NGKF Research 3Q16 Source: U. S. Bureau of Labor Statistics Unemployment Rate Not Seasonally Adjusted 10% 8% 6% 4% 2% 0% Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Payroll Employment Total Nonfarm, Not Seasonally Adjusted, 12-Month % Change 5% 4% 3% 2% 1% 0% Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 United States Houston MSA United States Houston MSA Source: U.S. Bureau of Labor Statistics, Source: U.S. Bureau of Labor Statistics, Consumer Price Index (CPI) Employment Growth by Industry All Items, 12-Month % Change, Not Seasonally Adjusted, =100 8% 6% 4% 2% 0% -2% Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 United States Houston MSA Source: U.S. Bureau of Labor Statistics Houston, November 2016, 12-Month % Change, Not Seasonally Adjusted Leisure/Hospitality Education/Health Services Government Trade/Transportation/Utilities Total Nonfarm Financial Activities Professional/Business Services Information Other Services Manufacturing Construction Mining/Logging Source: U.S. Bureau of Labor Statistics -10% -5% 0% 5% 10% 5

22 Houston 1700 Post Oak Blvd. 2 BLVD Place, Suite 250 Houston, TX Newmark Grubb Knight Frank United States Office Locations David Wegman, CFA Director of Research - Texas dwegman@ngkf.com Leta Wauson Research Manager - Texas lwauson@ngkf.com Newmark Grubb Knight Frank has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our data, there may be adjustments in historical statistics including availability, asking rents, absorption and effective rents. Newmark Grubb Knight Frank Research Reports are also available at All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark Grubb Knight Frank (NGKF) has not verified any such information, and the same constitutes the statements and representations only of the source thereof, and not of NGKF. Any recipient of this publication should independently verify such information and all other information that may be material to any decision that recipient to all aspects of that decision, including its legal, financial, and tax aspects and implications. Any recipient of this publication may not, without the prior written approval of NGKF, distribute, disseminate, publish, transmit, copy, broadcast, upload, download, or in any other way reproduce this publication or any of the information it contains.