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PRESENTATION

March 30, 2017

BRADLEY MIGDALSenior Managing Director

Manufacturing’s Role:

Industrial Market

Industrial Type Square Feet

Multi-tenant Distribution Warehouse 5,383,996,116

Manufacturing 3,142,084,067

Bulk Distribution Warehouse 2,218,998,543

Owner/User Warehouse 1,615,198,834

R&D/Flex 1,345,999,029

Other 269,199,808

Total U.S. Industrial Market 13,975,476,397

Multi-tenant Distribution Warehouse

39%

R&D/Flex10%

Owner/User Warehouse

12%

Bulk Distribution Warehouse

16%

Manufacturing22%

2016 Industrial Performance

Strongest 3-year run of growth on record(Net absorption, msf)

226235

265

244 243

205

272 270283

0

50

100

150

200

250

300

350

Demand: 726.8 msfSupply: 630.7 msfSpec: 473.8 msf75% spec deliveries




Top markets by square feet of occupancy growth

0.0

5.0

10.0

15.0

20.0

25.0

MS

F


The Pistons of the U.S. industrial engine

Rank MarketsRecessionary

2008-2010

Expansion

2011-2016

1 Inland Empire 7,607,093 94,759,223

2 Chicago -22,309,349 83,347,357

3 Dallas/Ft. Worth 2,962,888 70,756,426

4 Atlanta 7,262,608 60,319,162

5 PA I-81/I-78 Corridor 10,153,291 54,572,822

6 Central New Jersey -5,118,967 39,463,722

7 Phoenix -244,262 39,093,911

8 Houston 176,076 36,067,254

9 Los Angeles -34,371,295 31,844,287

10 Indianapolis 13,988,987 27,269,539

11 Philadelphia -2,090,745 29,669,222

12 Cincinnati 1,110,435 24,313,248

13 Nashville -4,917,825 24,307,103

14 Memphis 1,361,364 22,702,878

15 Detroit -3,851,095 19,674,105

16 Denver 3,165,751 19,259,395

17 Kansas City -1,415,858 19,000,351

18 East Bay/Oakland -6,560,335 16,939,151

19 Louisville 5,732,067 15,892,966

20 Northern New Jersey -16,758,281 13,925,722

28 straight quarters

of occupancy gains

Coming off the

strongest 3-year

gains on record

Vacancy is at its

lowest level in 30

years

All segments of

commercial real

estate are growing

Auto-related

manufacturing and

distribution is part

of the story


Tight market: vacancy rates remain lower than last cycle

0%

2%

4%

6%

8%

10%

12%

14% 4Q 2016 Vacancy Prior Cycle Lows (2002-2007)

Manufacturing Snapshot

Growing states

-20

-15

-10

-5

0

5

10

15

20

25

0

5

10

15

20

25

30

35

Gro

wth

in

Ma

nu

fac

turi

ng

GS

P (

20

10

-20

16

)

% o

f S

tate

GD

P

Vacancy Rates

Atlanta, GA

10.7%2011 Q4

8.6%2016 Q3

Chicago, IL

9.8%2011 Q4

6.1%2016 Q3

Dallas, TX

12.1%2011 Q4

6.6%2016 Q3

Los Angeles,CA

4.9%2011 Q4

1.3%2016 Q3

InlandEmpire, CA

8.0%2011 Q4

4.7%2016 Q3

OrangeCounty, CA

9.6%2011 Q4

4.3%2016 Q3

New Jersey,Central

9.5%2011 Q4

5.9%2016 Q3

New Jersey,Northern

6.3%2011 Q4

2.2%2016 Q3

Asking Rents

Atlanta, GA

$3.742011 Q4

$4.17 2016 Q3

Chicago, IL

$4.012011 Q4

$4.79 2016 Q3

Dallas, TX

$4.072011 Q4

$4.89 2016 Q3

Los Angeles, CA

$6.222011 Q4

$8.79 2016 Q3

InlandEmpire, CA

$4.332011 Q4

$6.58 2016 Q3

OrangeCounty, CA

$5.352011 Q4

$7.18 2016 Q3

New Jersey,Central

$5.982011 Q4

$7.71 2016 Q3

New Jersey,Northern

$7.632011 Q4

$10.91 2016 Q3

Everything is Different │ Different is Great for Industrial

Eight New Challenges Driving Prices and Absorption

Industrial Is the

New Black.

When Does this “Cycle” End?

Forecasting is Flawed.

Different Means New Building Types

Two Factors Driving the Business into New Buildings

The “Sea of Change” in Cities...Here to Stay?

Household Migration….Enabled by Technology & Prosperity

• MW, parts of NE, “Old south” populations declining

• What happens in the next 5 years?

• What does a recession do?

2015: Total Urban Population Growth, 1.06%, Total Suburban Population Growth, 1.00%

What does this mean for my community?

Time is Money!

What Can I do as an Economic Developer?

What are my tools?

What is my ROI advantage?

How do I compare to my neighbors?

What is in the Future?

Changing Industrial Landscape

What users are looking for

• Large auto parking areas and more trailer storage

• Increasing clear heights

» 32’ clear under 300K

» 36’ clear over 300K-400K

» 40’ more commonplace (eCommerce)

• Proximity to parcel hubs

• Higher amperage (e.g., 8000) with access to more

• AC for mezzanine due to higher headcounts

• Increase air exchanges

• Greater site security (e.g., fencing, gates, etc.)

• Better traffic circulation

» Two ingress/egress options

» More onsite queuing

» Separated car and trailer traffic (ring roads)

» Access to a controlled (traffic light intersection)

right off site

• Specific and wider column spacing: 50x60 and 56x56

MOST REQUESTED FEATURES

• Ultra-smooth floors for wire guided systems

• LED lighting (instead of T-5/T-8) and motion sensors

• ESFR

• Deeper truck courts (135’ to 200’)

• Full dock packages (lights, levelers and locks)

» 35-40K lb. locks

» 7x8 levelers – preferably hydraulic

• Sustainable designs but not necessarily LEED

• Avoid internal roof drains

• Flow-through (even if one side isn’t used) for greater

flexibility

• Large speed bays (70’-80’)

• Infill locations are looking for:

» 30’ clear heights | flow through | 100-200K

• Full concrete courts

• Thicker floors to accommodate MHE infrastructure

• Knock out panels on endcaps

My community is not big enough for that…

What do I look for?

What is my communities value proposition?

What industry clusters do we have?

Do we have rail, a port, interstates, an airport?

Do we have a building? Do we have shovel ready sites?

KEEPCALM

AND

GOGET ‘EM

Now I know what the future holdsWhere I stack upTime to go get ‘em!

How Do I Execute My Plan?

• Understand my existing companies supply chain!

• Know, ask them what they need to grow

• Understand my targeted industries – update them

• Understand my labor market – Tech Schools – College & Universities – Existing Workforce – Plant Closures

• Get people and companies to see my community

o Tell my story. Be proud. Brag

o Talk about the good and the bad

o Develop relationships with decision makers.

o Make sure the right people are telling the story!

Q& A

Thank You!

Brad Migdal

Senior Managing Director

Business Incentives Practice

312 775 2679

[email protected]

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