5,119,575 SFQ2 NET ABSORPTION #

Q1 3,681,773 SF

7.3 %Q2 VACANCY $

Q1 7.6%

6,004,835 SFLEASING ACTIVITY#

12,675,979 SFUNDER CONSTRUCTION $

4,173,352 SFNEW SUPPLY DELIVERED $

$4.31 SFAVERAGE ASKING RENT (PER YR.)

$54AVERAGE SALES PER SF #

$443 M183 SALES TRANSACTIONS $

Q2 2016ATLANTA INDUSTRIAL MARKET REPORT

The Metro Atlanta Industrial market contin-ued its second quarter momentum with 5.1M SF in positive net absorption and persistent demand for growth. The vacancy rate dropped 30 basis points where it now rests at 7.3%, the lowest Atlanta has seen in over 15 years. Construction and development ac-tivities seem to be taking a pause for speculative de-velopment and build-to-suit projects which now total 12,675,979 SF, down roughly 2.5M SF from last quarter. The industrial market saw 4.2M SF in new build-ings deliver in Q2, an almost 1.8M SF decrease from completed projects in Q1. With two major league sta-diums and several large infrastructure projects under-way, construction costs have increased and the la-bor component has become very shallow, resulting in construction delays. Out of the top 14 largest buildings (8,877,339M SF) under construction, 60% are speculative.

MARKET HIGHLIGHTS02Lee & Associates | Q2 2016 Atlanta Industrial Market Report

LARGEST PROJECTS UNDER CONSTRUCTION as of Q2 2016

VACANCYpercentage, 2005-2016

ABSORPTIONin SF, 2005-2016

ECONOMIC INDICATORSas of Q2 2016

Unemployment U.S. Down to 4.7% Georgia Down to 5.3% Atlanta Metro Down to 5.3%

U.S. Consumer Price Index (CPI) Up 0.2%Gross Domestic Product (GDP) Up 1.1%

Source: Bureau of Labor Statistics, Georgia State University Economic Forecasting Center, Bureau of Economic Analysis

OVERALL VACANCY RATES

Distribution

8.1%$Flex

11.0%$

Overall7.3%$

WAREHOUSE

6.8%$

BUYER TYPEQ2 2016 sales

construction. South Atlanta continues its streak as the most active submarket with 6M SF of absorption this year. Rental rates overall have maintained steady rates closing Q2 at $4.31 PSF. In the warehouse sector, rates slightly increased to $3.86 PSF, while flex rates dropped to $8.41 PSF. Leasing activity jumped from 3,956,843 SF in Q1 to 6,004,835 SF in Q2. The largest lease transaction of the quarter was signed by Wayfair: 846,496 SF of warehouse space located at 130 Distribution Drive in the South Atlanta submarket. Investment sales volume reached $443M this quarter and av-eraged $54 PSF. The largest industrial sales transaction for the quarter was an 11-building portfolio, totaling 977,895 SF purchased by Clarion Partners for $113,974,001 or $116.55 PSF. In addi-tion, Industrial Property Trust purchased a portfolio of three buildings along Barrett Lakes, totaling 923,624 SF and paying just over $55.6M or $60.21 PSF. Despite the second quarter’s strong numbers, Lee & Associates proj-ects modest absorption activity in future months as more spec space delivers. Gross lease and sale activity will likely remain strong. However, one emerging trend to watch: investors’ pursuit of more buildings with adaptive reuse potential.

The three largest spec developments are be-ing developed in the South and Northeast sub-markets: Majestic Airport Center IV (1.04M SF); Braselton Logistics Center (1M SF); and Shugart Farms Industrial (873,800 SF). Tenants continue to pursue functional space located near inter-state highways. With prime land for industrial use diminishing in the popular submarkets, 2016 may inspire developers to focus their projects in alternate areas around Atlanta for indus-trial parks or redevelopment opportunities. The warehouse sector is particu-larly active this year due partially to e-retailers such as Wayfair and Amazon, that are leas-ing up warehouse space as e-commerce drives companies to locate distribution cen-ters closer to their customers in order to bet-ter meet delivery expectations. Year to date, over 7.8M SF of warehouse space is already absorbed, while 11.5M SF remains under

Project Location Building SF Tenant Delivery

1500 Medline Pl 1,069,200 BTS Q3-17

Majestic Airport Center IV 1,042,000 Spec Q4-16

705 Braselton Ind. Blvd. 1,000,048 Spec Q1-17

5000 Bohannon Rd. 873,800 Spec Q3-16

2160 Anvil Block Rd. 848,421 Spec Q3-16

0 Hog Mountain Rd. 822,257 Spec Q1-17

Satellite Blvd. 548,556 Spec Q3-16

Project Location Building SF Tenant Delivery

1 Interstate W Pky 548,556 Spec Q3-16

2110 Lawerence Ave 538,500 Spec Q4-16

Cornelia Highway 502,000 BTS Q3-16

212 Bohannon Rd 493,870 BTS Q3-16

1 Broadmoor Blvd 492,048 BTS Q3-16

2 Broadmoor Blvd 461,700 BTS Q3-16

200 Thomas Parkway 458,640 Spec Q2-17

03Q2 2016 Atlanta Industrial Market Report | Lee & Associates

INDUSTRIAL SUBMARKET DATA

The information and details contained herein have been obtained from third-party sources believed to be reliable; however, Lee & Associates Atlanta has not independently verified its accuracy. Lee & Associates Atlanta makes no representations, guarantees, or express or implied warranties of any kind regarding the accuracy or completeness of the information and details provided herein, including but not limited to the implied warranty of suitability and fitness for a particular purpose.

Interested parties should perform their own due diligence regarding the accuracy of the information. The information provided herein, including any sale or lease terms, is being provided subject to errors, omissions, changes of price or conditions, prior sale or lease, and withdrawal without notice. Third-party data sources: CoStar Group, Inc., Real Capital Analytics, and Georgia State Economic Forecasting Center. The Lee & Associates Atlanta Industrial Market Report compiles market data by using a third-party database for the proprietary analysis of over 7,500 distribution, flex,

manufacturing and warehouse properties in the Atlanta Metropolitan Area. © Copyright 2016 Lee & Associates Atlanta. All rights reserved.Market report analysis by:

Samantha Wheeler, Research Coordinator

Market report created by:

Brittany Sturdivant, Marketing Coordinator

Submarkets Total Inventory Vacancy Vacancy NET Absorption Under Construction Building Completions Asking RentTotal SF Q2 16 YTD Total YTD Total

Northwest Warehouse 46,434,291 3,217,024 10.9% 2,416,201 220,235 3,080,200 $4.60Distribution 11,184,351 528,913 4.7% 208,574 - - -Flex 7,720,721 842,757 6.9% (12,711) - - $8.78Total 65,339,363 4,588,694 7.0% 2,612,064 220,235 3,080,200 $5.30

North CentralWarehouse 14,027,980 1,205,645 8.6% 158,020 191,981 191,981 $5.99Distribution 5,160,082 340,485 6.6% 27,720 - - -Flex 7,436,957 652,770 8.0% 184,106 - - $9.98Total 26,625,019 2,198,900 8.3% 369,846 191,981 191,981 $7.92

NortheastWarehouse 111,044,226 5,169,925 4.7% (165,321) 2,762,997 300,000 $4.30Distribution 27,671,445 1,588,552 5.7% 337,639 281,865 38,000 -Flex 15,001,847 2,171,823 14.5% 174,410 - - $8.11Total 153,717,518 8,930,300 5.8% 346,728 3,044,862 338,000 $4.88

St. Mountain/SnapfingerWarehouse 50,696,264 3,280,809 6.7% 134,458 1,000,000 175,000 $3.60Distribution 14,130,200 717,853 5.0% 99,766 75,000 - -Flex 4,825,494 794,319 16.2% 38,085 - - $7.03Total 69,651,958 4,792,981 7.1% 242,309 1,075,000 175,000 $3.98

South AtlantaWarehouse 134,215,385 11,218,436 8.4% 4,579,406 6,066,059 5,899,954 $3.43Distribution 25,424,090 4,064,132 16.0% (54,980) - - -Flex 4,241,569 505,251 11.9% (16,343) - - $7.28Total 163,881,044 15,787,819 9.6% 4,508,083 6,066,059 5,899,954 $3.53

I-20 West/Fulton IndWarehouse 75,404,740 5,015,801 6.7% 1,046,016 1,213,686 307,000 $3.25Distribution 16,029,782 1,037,163 6.5% (22,581) - - -Flex 3,187,920 199,145 6.2% (46,732) 808,355 - $6.25Total 94,622,442 6,252,109 6.6% 976,703 2,022,041 307,000 $3.34

Chattahoochee/Central AtlWarehouse 25,347,445 1,802,000 8.0% (291,286) 55,801 - $5.30Distribution 3,132,429 15,000 0.8% (300) - - -Flex 5,300,241 92,819 1.8% 7,201 - - $12.54Total 33,780,115 1,909,819 6.2% (284,385) 55,801 - $5.80

Total Submarkets Warehouse 457,170,331 30,909,640 6.8% 7,877,494 11,510,759 10,002,614 $3.86Distribution 102,732,379 8,292,098 8.1% 595,838 356,865 140,720 -Flex 47,714,749 5,258,884 11.0% 328,016 808,355 - $8.41Total 607,617,459 44,460,622 7.3% 8,801,348 12,675,979 10,143,334 $4.31

04Lee & Associates | Q2 2016 Atlanta Industrial Market Report

Q2 2016 TOP LEASES

ATLANTA INDUSTRIAL SUBMARKETS

Q2 2016 TOP SALES

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Property Name Address Submarket Tenant Name SF Lease Type

King Mill Distribution Park 130 Distribution Dr South Atlanta Wayfair 846,496 New

1793 Highway 42 S 1793 Highway 42 S South Atlanta OHL 417,400 New

Southpark 5025 Fayetteville Rd South Atlanta Georgia Pacific 279,776 New

800 Sigman Rd. 800 Sigman Rd Snapfinger Mannington Mills 175,000 New

Horizon Pointe Business Center 530 Horizon Dr Northeast Atlanta Pak-Lite 168,564 New

Property Address Buyer Seller Sales Price SF PSF

3505 Newpoint Pky.“11 Bldg Portfolio”

Clarion Partners Crow Holdings $113,974,001 977,895 $116.55

2700 Barrett Lakes “3 Bldg Portfolio”

Industrial Property Trust Ares Commercial $55,615,000 923,624 $60.21

2225 Cedars Rd.“6 Bldg Portfolio”

Graham & Company TA Realty $53,250,000 979,650 $54.36

600 Riverside Pky Clarion Partners Brookfield Property Partners $40,611,798 653,484 $62.15

2091 Faulkener Rd NE “2 Bldg Portfolio”

Westplan Investors John Hunsinger & Co. $11,250,000 120,000 $93.75