Triangle Industrial Market Absorbs Close to 400,000 SF Warehouse Space

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1 Research Report RALEIGH-DURHAM INDUSTRIAL Q3 217 Triangle Industrial Market Absorbs Close to 4, SF Warehouse Space Emily Bostic Research Analyst Raleigh- Hannah Hathaway Research Assistant Raleigh- Key Takeaways > > The Triangle s industrial market experienced a lot of activity throughout the third quarter of 217, leading to the largest amount of positive absorption since second quarter of 216. While national job growth seems to have peaked as the country nears full employment, the economic environment in the Triangle remains very strong. Raleigh has the second highest GDP growth across all metro hubs in the nation. Job growth has gained momentum in many sectors. > > Raleigh has a projected population growth of over 73% through year 244, outpacing cities such as Boston, Atlanta, Nashville and San Francisco. As online shopping and instant delivery services have continued to grow, the need for more industrial space will follow. The increase in our region s poplulation, combined with our central location along the east cost, positions the Triangle as a prime location. > > The Triangle flex market reported another increase in positive net absorption, up over 46, square feet from the second quarter. The Research Triangle Park submarket continues to hold the highest vacancy in the market, at 26.8%. In September, the Research Triangle Foundation announced Scott Levitan as its new CEO to lead the redevelopment of RTP. > > The overall warehouse market ended the third quarter with a total net absorption of 391,124 square feet. The Research Triangle Park accounted for the majority with 328,772 square feet in net absorption. > > The most notable investment sales transaction of the third quarter was the sale of the FedEx Ground Distribution Center in the RTP I-4 submarket. The 237, square foot warehouse facility sold for $44.9M or $19 per square foot in July of 217. Market Indicators Relative to prior period NET RENTAL Summary Statistics Q3 217 Industrial Market Raleigh Flex Market Raleigh Warehouse Market Total Square Feet 27,543,745 41,987,69 Vacancy Rate 11.2% 3.% Change From Q3 216 (basis points) Q3 17 Net Absorption Under Construction Deliveries Asking Rents Per Square Foot Per Year Raleigh- Q3 216 Raleigh- Q % (.8%) 62, , , 1,22,4 6, 276, Average Quoted $13.52 FSG $5.5 NNN Change from Q3 216 $.25 $.47

2 Absorption & Leasing Activity > > Total net absorption reached 457,761 square feet in the warehouse market and 62,567 square feet in the flex market at the close of third quarter. After almost a year in the red, this is the second consecutive quarter of positive absorption for the flex market. > > Research Triangle Park submarket led the entire warehouse market with positive net absorption of 328,772 square feet. Key leases accounting for the majority of absorstion include Hatch Beatuy Labs leasing 125,864 square feet at Research TriCenter North and Park Communications, LLC leasing 84, SF at Liberty Ridge. Much of the positive absorption in the Flex market was due to tenants expanding at existing locations. Vacancy & Availability > > The overall flex market vacancy dipped slightly in the third quarter to 11.2% from 11.6% in the previous quarter. Total available space in the market is 2,961,444 square feet. > > Over 1 million square feet of warehouse space was reported vacant at the close of the third quarter 217, placing the vacancy rate at 3%, a slight drop from the prior quarter. Quarterly Absorption and Vacancy Triangle Flex 5, 4, 3, 2, 1, -1, -2, -3, -4, Net Absorption SF Total Vacant Percent % Total Quarterly Absorption and Vacancy Triangle Warehouse 7, Rental Rates 6, 5, 1 > > The average asking rental rate for the Triangle flex market was $13.52 per square foot at the end of the third quarter, remaining consistent from the previous quarter. > > The average asking rate in the Triangle s warehouse sector was $5.5 per square foot, up from $5.21 at the end of the second quarter, continuing a steady increase. 4, 3, 2, 1, Bulk: 6.6% Warehouse: 4.4% Flex: 11.2% > > In the flex market, the Research Triangle Park and West Raleigh submarkets reported the highest asking rents of the second quarter, at $16.96 per square foot and $15.62 per square foot respectively. -1, -2, 2 Construction & Investment Activity Net Absorption SF Total Vacant Percent % Total > > Overall industrial deliveries totaled approximately 336, square feet. There is over 1M square feet of Warehouse and Flex product under construction, with approximately 23% pre-leased. > > Investment activity in the industrial sector remains strong as there were 13 sales of over $1M that completed in the third quarter. Q3 217 NOTABLE DEVELOPMENT PROJECTS SUBMARKET SIZE PRELEASE % STATUS DELIVERY / START DATE TYPE TBC Lot 2 Research Triangle Park 28, % Under Construction Q1 218 Warehouse Oakwood Business Center Orange County 16, % Proposed Unkown Warehouse Greenfield North Southern Wake County 149, % Proposed Unkown Warehouse Liberty Ridge III RTP I-4 136,5 % Under Construction Q4 217 Warehouse Innovation II Research Triangle Park 62,464 % Proposed Q4 217 Flex Source: Colliers Research, CoStar Group 2 Raleigh- Research Report Q3 217 Industrial Market Colliers International

3 Q3 217 FLEX SUBMARKET COMPARISONS (%) Q3 17 NET AVG RENTAL (FULL SERVICE) SUBMARKET NAME Cary 64 1,392,159 48,89 3.5% (14,554) $11.67 Downtown ,862 18, % (3,91) $15. East Raleigh 14 32,97 13, % (1,8) $8.99 Glenwood Creedmoor 66 1,11,331 56, % (25,74) $8.99 Johnston County ,527.% $9.81 North 24 81,49 94, % 2,417 $6.25 Northeast Wake County 52 2,433, ,81 7.6% (7,443) $8.95 Orange County ,89 3, 3.7% 2,6 12, $7.75 Research Triangle Park 94 6,87,61 1,821, % (12,886) 4, $17.15 RTP I ,119, , % 4,549 $12.43 Six Forks Falls of Neuse 3 666,9 17, % (2,81) $9.76 South ,938 2, % (9,6) $9.51 Southern Wake County 14 3,48,873 67,8 2.% 97,982 6, 75, $11.53 US 1 Capital Blvd ,143,67 328, % (9,3) 18, $12.28 West Raleigh 6 1,719,545 32, % (412) $12.23 FLEX MARKET S ,518,532 3,172, % 44,967 6, 145, $13.52 Q3 217 WAREHOUSE SUBMARKET COMPARISONS % Q3 17 NET AVG RENTAL (NNN) SUBMARKET NAME Cary 19 1,226,911.% $4.75 Downtown 36 1,124,.% 1,5 $4.5 East Raleigh 43 1,31,528 9,5.7% $7.45 Glenwood Creedmoor 69 1,614,867 4,68.3% (1,8) $8.17 Johnston County 97 4,226, ,25 4.5% (1,25) $2.98 North 41 1,532,222 99,17 6.5% $9.75 Northeast Wake County 17 4,591, ,941 5.% 69,8 15, 12, $6.18 Orange County ,87.% $6. Research Triangle Park 57 6,528,68 11, % 328, , 92,4 $5.77 RTP I ,329,396 22,378.7% $6.34 Six Forks Falls of Neuse 58 2,454,54 12,2.5% 4,88 $8.37 South 62 3,19,978 3,85 1.% 15,199 $2. Southern Wake County 182 6,516, ,26 3.6% 28,12 $5.55 US 1 Capital Blvd. 74 2,848,39 66,8 2.3% 1,7 $6.2 West Raleigh 42 1,111,682 1,125.9% $8. WAREHOUSE MARKET S ,987,69 1,264,596 3.% 391, , 1,22,4 $5.5 3 Raleigh- Research Report Q3 217 Industrial Market Colliers International

4 Q3 217 NOTABLE LEASE TRANSACTIONS TENANT SUBMARKET SIZE TYPE DEAL TYPE Hatch Beauty Labs TriCenter Research Triangle Park 125,864 Warehouse New Park Communications, LLC Liberty Ridge Research Triangle Park 84, Warehouse New SRS Distribution Regent Place RTP I-4 54,258 Warehouse New Elite Flooring Liberty Ridge Research Triangle Park 42, Warehouse New Dupont Triangle Business Center Research Triangle Park 32, Flex New Insulation Distributors Liberty Ridge Research Triangle Park 29,1 Warehouse New RALEIGH DURHAM INDUSTRIAL CLASS A MARKET COMPARISONS CLASS A MARKET BREAKDOWN (%) Q2 17 NET AVG RENTAL Class A Flex 25 1,758, , ,843 $17.76 Class A Warehouse 48 6,22, , ,44 412,5 $5.61 Overall Industrial Class A 73 7,961, , , ,5 $8.61 NNN NOTABLE INVESTMENT SALES Q3 217 SUBMARKET TYPE SIZE SALES PRICE (IN MILLIONS) PRICE/SF BUYER FedEx Ground Distribution Ctr RTP I-4 Warehouse 237, $44.9 $19 Centrum Partners Spring Forest US 1 Capital Blvd Flex 154,581 $17.8 $115 Stoltz RE Partners 418 Stirrup Creek Drive RTP I-4 Warehouse 97, $7.8 $8 Lifestar Pharma 411 Capital Blvd US 1 Capital Blvd Warehouse 66,4 $6.9 $14.48 SGP Raleigh, LLC 2315 Atlantic Ave US 1 Capital Blvd Warehouse 127,534 $5.5 $43.13 Grubb Ventures 531 Alston Ave RTP I-4 Flex 22,649 $4.4 $ John S. Carbone URLINGTON Graham Orange County North TRIANGLE SUBMARKET MAP CHAPEL HILL Carrboro ORANGE CO. DURHAM CO South CHATHAM CO. Downtown DURHAM RTP / I-4 RESEARCH TRIANGLE PARK Apex 85 Morrisville RDU International Airport CARY DURHAM CO. Glenwood/ Creedmoor Six Forks 4 GRANVILLE CO Downtown Raleigh Falls of the Neuse Rd RALEIGH FRANKLIN CO. Wake Forest US 1 / Capital Blvd Northeast Wake County 264 Garner 4 1 Holly Springs Southern Wake County 7 Clayton Fuquay-Varina. JOHNSON CO. 4 Raleigh- Research Report Q3 217 Industrial Market Colliers International

5 396 offices in 68 countries United States: 153 Canada: 29 Latin America: 24 Asia: 36 EMEA: 111 ANZ: 43 $15 billion in annual revenue 2. billion square feet under management 15, professionals and staff INDUSTRIAL SERVICES CONTACT: Lee Holder Senior Vice President Raleigh Dennis Eaton Senior Vice President Raleigh Dennis.Eaton@colliers.com David Stroud Vice President Raleigh david.stroud@colliers.com David Batten Vice President Raleigh david.batten@colliers.com REGIONAL AUTHOR: Emily W. Bostic Research Analyst, CPRC Emily.Bostic@colliers.com Hannah Hathaway Research Assistant, CPMC, CPRC Hannah Hathaway@colliers.com About Colliers International Colliers International is a global leader in commercial real estate services, with more than 16,3 professionals operating out of 52 offices in 67 countries. A subsidiary of FirstService Corporation, Colliers International delivers a full range of services to real estate occupiers, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. Colliers International has been recognized and ranked by the International Association of Outsourcing Professionals Global Outsourcing 1 for 1 consecutive years, more than any other real estate services firm. colliers.com/rdu Copyright 217 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.