JLL Columbus Industrial Outlook Q4 2016

Industrial Outlook

Columbus | Q4 2016

Deliveries vs net absorption (m.s.f.)

Source: JLL Research

Q4 2016 transactions in Southeast submarket


Deliveries by product type (s.f.)


Demand hits record levels in 2016

In 2016, the Columbus market hit a record low with respect to vacancy, in addition

to record high net absorption. Deliveries outpaced the previous year, providing a

bump in demand for a record-setting year. New product was responsible for 4.0

million square feet of net absorption in 2016, while leasing activity was also driven

by existing inventory and accounted for 52.4 percent of overall net absorption.

Availability is as narrow as it’s ever been, providing an enticing landscape for new

construction throughout the Columbus region. While new construction

announcements for 2017 have yet to hit the market, rapid absorption of recently

completed speculative development, as well as a lack of availability of modern

inventory, indicate more projects are likely to break ground next year.

Rickenbacker availability continues to tighten

The Southeast submarket saw 1.4 million square feet of net absorption in the final

quarter of 2016, slashing warehouse availability to 11.3 percent and pushing

average total asking rents up $0.30 year-over-year, further tilting the balance of

the market in favor of landlords. This has emerged as a common trend for the

Columbus region, and with minimal space available, the Southeast submarket is

in a prime position for speculative construction. Meanwhile, with limited land

available for development in the submarket, Northpoint continued its advance in

Columbus with an additional land purchase just south of the Rickenbacker Inland

Port in Pickaway County, which may signal the emergence of another submarket

option for new development.

Tenant demand for modern space driving development

Logistics and e-commerce operations spurred warehouse development

throughout the Columbus market with over 4.0 million square feet of deliveries in

2016. Demand for modern, customizable space is impelling investment and

shaping the size and type of new construction; of the eight warehouse

completions, seven are over 400,000 square feet. With that said, the market is

also seeing an unprecedented amount of investment from manufacturers. Only

578,000 square feet of manufacturing space was built from 2013 to 2015, and

over 800,000 square feet was built in 2016 alone, with a 1.4 million square-foot

BTS project in Pickaway County currently under construction.

Warehouse demand soars to close out record year

Industrial Insight

Columbus | Q4 2016

$3.73Average total asking rent

2,424,975Total under construction (s.f.)

1,642,869Quarterly completions (s.f.)

8,415,888YTD net absorption (s.f.)

5.3%Total vacancy

1,503,196Planned construction (s.f.)

2,914,802Quarterly net absorption (s.f.)

246,603,780Market size (s.f.)

JLL | Columbus | Industrial Outlook | Q4 2016

Tenant Building Type Size (s.f.)

DHL Creekside IX New lease 426,408

West-Ward Pharmaceuticals 2130 Rohr Rd BTS delivered 275,869

3PL for Hankook Tire Rickenbacker 8 New lease 255,070

Schoola 1655 Watkins Rd Expansion 115,920

3.0%

4.0%

5.0%

6.0%

7.0%

-

2

4

6

8

10

2014 2015 2016

Speculative BTS Net Absorption Vacancy

834,284

100,000

4,668,206

Manufacturing R&D/Flex Warehouse

Projects under construction by submarket (s.f.) Average total asking rent ($ p.s.f.)


Notable sales in 2016 Notable leases signed in the fourth quarter


Large block availabilities Net absorption & overall vacancy rate


Industrial property clock New construction deliveries (s.f.)

Source: JLL Research Source: JLL Research

$3.33

$3.42 $3.43

$3.52

$3.61

$3.73

$3.00

$3.30

$3.60

$3.90

2011 2012 2013 2014 2015 2016

1,183,000

2,096,000

5,660,000

2,818,000

5,602,490

0

2,000,000

4,000,000

6,000,000

2012 2013 2014 2015 2016

Property Submarket Tenant Leased s.f.

Creekside IX Southeast DHL 426,408

Prologis Capital Park South 11 Southwest Staples 340,704

Rickenbacker 8 Southeast 3PL for Hankook Tire 255,070

1655 Watkins Rd Southeast Schoola 115,920

5830 Green Pointe Dr Southeast Shiseido 114,239

6150 Huntley Ave North STC 73,000

0.0%

4.0%

8.0%

12.0%

0

2,500,000

5,000,000

7,500,000

10,000,000

2011 2012 2013 2014 2015 2016

Net absorption Total vacancyExisting Under Construction

Size range Class A Class B Class C Class A Class B

100-249 k.s.f. 12 6 2 0 0

250-499 k.s.f. 10 2 0 2 0

500-749 k.s.f. 2 1 0 0 0

Property Buyer Bldg s.f. $ p.s.f

Amazon at Prologis Park 70 GC Essential Asset REIT II 855,000 $103.97

SouthPark VIII Exeter Property Group 393,696 $31.35

SouthPark VII Exeter Property Group 393,232 $31.35

2652 Fisher Road Diamond Properties 391,000 $21.71

5920 Green Pointe Drive South Clarion Partners 354,000 $53.56

Alum Creek Distribution Center 1 Ares Capital Corporation 306,000 $30.23

Land

lord

leve

rage

Tenant leverage

Peaking

market

Falling

market

Bottoming

marketRising

market




Columbus Q4 ‘15

Columbus Q4 ‘14


1,400,000

322,000 264,000 200,000 178,97560,000

0

400,000

800,000

1,200,000

1,600,000

PickawayCounty

Southwest LickingCounty

West Southeast DelawareCounty

Columbus Q4 ‘16

Industrial Statistics

Columbus | Q4 2016


Inventory

(s.f.)

Quarterly

total net

absorption

(s.f.)

YTD

total net

absorption

(s.f.)

YTD

total net

absorption

(% of stock)

Total

vacancy

(%)

Total

availability

(%)

Average

total asking

rent

($ p.s.f.)

Quarterly

completions

(s.f.)

YTD

completions

(s.f.)

Under

construction

(s.f.)

Columbus Totals

Warehouse & Distribution 191,394,884 2,087,827 7,366,909 3.8% 5.6% 8.4% $3.74 842,869 4,668,206 1,024,975

Manufacturing 33,474,555 826,975 1,048,979 3.1% 3.7% 7.2% $3.64 700,000 834,284 1,400,000

Total Industrial 224,869,439 2,914,802 8,415,888 3.7% 5.3% 8.2% $3.73 1,542,869 5,502,490 2,424,975

Flex / R&D 21,734,341 -40,231 313,271 1.4% 4.1% 7.7% $6.05 100,000 100,000 72,000

CBD

Warehouse & Distribution 1,663,135 0 0 0.0% 0.0% 0.0% $4.25 0 0 0

Manufacturing 573,948 0 0 0.0% 0.0% 0.0% $4.15 0 0 0

Total Industrial 2,237,083 0 0 0.0% 0.0% 0.0% $4.15 0 0 0

Flex / R&D 134,453 0 3,355 2.5% 0.0% 0.0% $5.00 0 0 0

North

Warehouse & Distribution 12,572,097 34,765 464,215 3.7% 1.4% 3.0% $5.15 0 0 0

Manufacturing 1,075,041 0 0 0.0% 1.2% 1.2% $5.25 0 0 0

Total Industrial 13,647,138 34,765 464,215 3.4% 1.4% 2.8% $5.15 0 0 0

Flex / R&D 4,817,688 -28,451 -53,277 -1.1% 4.7% 7.5% $7.42 0 0 0

East

Warehouse & Distribution 18,963,743 63,020 170,434 0.9% 1.7% 2.7% $4.73 0 140,000 0

Manufacturing 3,566,879 582,885 599,885 16.8% 7.5% 13.4% $4.05 600,000 600,000 0

Total Industrial 22,530,622 645,905 770,319 3.4% 2.6% 4.4% $4.40 600,000 740,000 0

Flex / R&D 4,051,335 -15,612 120,814 3.0% 3.6% 7.1% $6.43 100,000 100,000 0

Southeast

Warehouse & Distribution 71,645,291 1,246,448 4,440,895 6.2% 9.1% 11.3% $3.72 842,869 3,673,206 178,975

Manufacturing 5,921,348 197,600 260,600 4.4% 2.6% 9.5% $3.00 100,000 100,000 0

Total Industrial 77,566,639 1,444,048 4,701,495 6.1% 8.6% 11.2% $3.67 942,869 3,773,206 178,975

Flex / R&D 2,699,188 -5,984 27,223 1.0% 2.0% 5.2% $5.39 0 0 0

Southwest

Warehouse & Distribution 17,942,525 389,775 482,797 2.7% 4.7% 9.5% $3.82 0 0 322000

Manufacturing 968,653 0 158,615 16.4% 0.0% 5.8% $3.15 0 67,000 0

Total Industrial 18,911,178 389,775 641,412 3.4% 4.4% 9.3% $3.80 0 67,000 322,000

Flex / R&D 1,698,335 0 58,224 3.4% 2.2% 19.2% $5.61 0 0 0

West

Warehouse & Distribution 30,139,024 272,302 519,870 1.7% 3.8% 9.0% $3.39 0 0 200,000

Manufacturing 2,154,559 45,240 -31,223 -1.4% 2.1% 3.3% $3.54 0 0 0

Total Industrial 32,293,583 317,542 488,647 1.5% 3.7% 8.6% $3.39 0 0 200,000

Flex / R&D 5,656,351 13,316 141,103 2.5% 4.1% 5.6% $5.55 0 0 72,000

Outlying

Warehouse & Distribution 38,469,069 81,517 1,288,698 3.3% 4.3% 6.9% $3.67 0 855,000 324000

Manufacturing 19,214,127 1,250 61,102 0.3% 4.1% 6.4% $3.79 0 67,284 1400000

Total Industrial 57,683,196 82,767 1,349,800 2.3% 4.2% 6.7% $3.71 0 922,284 1,724,000

Flex / R&D 2,676,991 -3,500 15,829 0.6% 7.1% 9.1% $5.22 0 0 0

Industrial Development Report

Columbus | Q4 2016


This report analyzes all industrial developments under construction & new deliveries > 30,000 s.f.

Total leased at delivery (%) 67.0%

Total speculative at delivery (s.f.) 2,216,337

Total BTS at delivery (s.f.) 2,619,153

Total Owner-User at delivery (s.f.) 767,000

Total # of properties delivered 14

Asking rental rate (low - high) $3.50 - $4.25

Top 5 projects delivered to date

Building RBA (s.f.) Delivery dateLeased at

delivery (%)

Amazon Fulfillment Center 1,000,000 Q3 2016 100%

Amazon Distribution Center 855,000 Q3 2016 100%

Rogue Fitness 600,000 Q4 2016 100%

3219 Rohr Road 567,000 Q4 2016 0%

Duke Building 482 482,220 Q1 2016 53%

Total pre-leased (%) 69.7%

Total speculative under construction (s.f.) 824,975

Total BTS under construction (s.f.) 1,600,000

Total Owner-user under construction (s.f.) -

Total # of properties UC 6

Asking rental rate (low - high) $3.95 - $4.95

Top 5 projects currently under construction

Building RBA (s.f.) Delivery date Pre-leased (%)

Sofidel Plant 1,400,000 Q1 2017 100%

Southpark Place 322,000 Q2 2017 0%

8820 Smith's Mill Rd 264,000 Q2 2017 0%

845 Kaderly Dr 200,000 Q2 2017 100%

RGLP Gateway 179 178,975 Q2 2017 50%

Speculative

Owner-user

BTS

Submarket

Under construction

2,424,975Under construction (s.f.)

Under construction in-depth

Upcoming deliveries by year (s.f., excludes YTD completions)

New deliveries

Completions in-depth

5,602,490Total delivered YTD (s.f.)

Historical deliveries (s.f.)

Construction typeOwnerSubmarket

Southeast

Southeast

East

Licking County

Southeast

Duke Realty

VanTrust

1047 Cleveland LLC

Prologis

Duke Realty

Speculative

BTS

Southeast

West

Licking County

Southwest

Pickaway County

Speculative

BTS

Owner Construction type

Speculative

Duke Realty

Jim Pattison Developments

Pizzuti

Becknell Industrial

Pewamo Ltd

Speculative

BTS

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2011 2012 2013 2014 2015 2016

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Under construction

2017

BTS Owner-user Speculative

Industrial Sales Activity

Columbus | Q4 2016


This report analyzes all industrial sales > 10,000 / 30,000 s.f.

$277,363,768

30

$49

6.6%

85.2%

5.8%

5-6.5% 0 1 $3,815,641

6.5-7.5% 31 $225,214,248

Top 10 sales transactions past two quarters

Size (s.f.) $ p.s.f. Sale date

855,000 $104 Nov-16

354,000 $54 Mar-16

226,800 $61 Nov-16

393,696 $31 Feb-16

393,232 $31 Feb-16

290,606 $41 Feb-16

241,334 $47 Jul-16

306,000 $30 Jul-16

391,000 $22 Feb-16

184,152 $43 Apr-16

Waxman Industries

VanTrust Real Estate

Invesco Advisors

Invesco Advisors

$18,961,297

$13,900,000

$12,350,000

$12,350,000

2829-2843 Charter St Dalfen Hackman Capital $7,986,672

4458 Alum Creek Dr Ares Capital Corporation Prologis $9,250,000

2652 Fisher Rd Diamond Properties Garrison Investment Group $8,488,223

Invesco Advisors $12,040,000

8170 Dove Pkwy Ares Capital Corporation Prologis $11,250,000

3655 Brookham Dr Alaska Permanent Fund (APFC)

3357 Southpark Pl Exeter Property Group

3423 Southpark Pl Exeter Property Group

5920 Green Pointe Dr S Clarion Partners

3360 Southwest Blvd WPT Industrial

11999 National Rd SW GC Essential Asset REIT II Prologis $88,900,000

Building address Buyer company Seller company Sales price $

Sales volume $ by submarket

Warehouse/Dist. sales volume as

% of total YTD

Flex/R&D sales volume as % of

total YTD

Cap rate range

Core Class A Ind.

Core Class A Flex

Average Class A price p.s.f. YTD

At a glance

Total volume YTD

Number of transactions YTD

Average Class A cap rate YTD

Sales activity by building type

Transactions details

Number of partial interest

transactions

Top sellers (s.f.)Top buyers (s.f.)

Number of domestic buyers

Foreign capital $

Average partial interest acquired

Number of foreign buyers

Domestic Capital $

6,726,565 s.f.

356,631 s.f. 304,566 s.f.

$257,278,768

$16,185,000 $3,900,000

0 s.f.

1,000,000 s.f.

2,000,000 s.f.

3,000,000 s.f.

4,000,000 s.f.

5,000,000 s.f.

6,000,000 s.f.

7,000,000 s.f.

8,000,000 s.f.

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

Warehouse / Distribution Flex/R&D Manufacturing

Sum of Price ($) Sum of RBA (SF)

23%

14%

12%11%

10%

10%

8%

7%5%

Other Cabot Properties

GC Essential Asset REIT II Exeter Property Group

Dalfen Diamond Properties

Alaska Permanent Fund (APFC) Ares Capital Corporation

Clarion Partners

19%

18%

17%

14%

10%

8%

5%

4%4%

Prologis Invesco Advisors

Other NorthPoint Development

Garrison Investment Group Hackman Capital

Waxman Industries Invesco RE

Midwest Highfield Drive Industrial

$88,900,000

$71,560,400

$50,847,071

$35,856,297

$17,200,000

$11,250,000

$1,750,000

Licking County

Southwest

West

Southeast

DelawareCounty

FairfieldCounty

East

Industrial employment trends (12-month change, 000s): Columbus

Industrial Employment Update

Employment vs. unemployment rate: Columbus

0.0%

2.0%

4.0%

2011 2012 2013 2014 2015 2016

Columbus United States


-2,100

-200

800

1,100

1,100

1,100

2,600

3,600

3,800

6,900

-4,850-2,850 -850 1,150 3,150 5,150 7,150 9,150

Trade, Transportation & Utilities

Information

Mining, Logging & Construction

Manufacturing

Financial Activities

Other Services

Educational & Health Services

Leisure & Hospitality

Government

Professional & Business Services

0%

3%

6%

9%

12%

780,000

840,000

900,000

960,000

1,020,000

1,080,000

1,140,000

2006 2008 2010 2012 2014 2016

Nonfarm employment

Unemployment

Trade, Transportation & Utilities, 196,200 ,

18%

Professional & Business Services,

185,900 , 17%

Government, 174,800 , 16%

Educational & Health Services, 155,700 , 14%

Leisure & Hospitality, 107,400 , 10%

Financial Activities, 81,500 , 8%

Manufacturing, 73,300 , 7%

Other Services, 41,800 , 4%

Mining, Logging & Construction, 38,400 , 4%

Information, 16,600 , 2%

Job growth (12-month change): United State vs. Columbus

Job growth/loss by sector (12-month change): Columbus

4.6%U.S. unemployment

1.6%U.S. 12-month job growth

3.9%Columbus unemployment

1.4%Columbus 12-month job growth

4.9%Ohio unemployment

0.9%Ohio 12-month job growth

Industry employment stratification: Columbus

-5.0

5.0

15.0

2011 2012 2013 2014 2015 2016

Trade,Transportation & Utilities Manufacturing

Other Services Mining, Logging & Construction

Columbus | Q4 2016

Industrial Submarket Map

Notable construction projects


RGLP Gateway 179

Tenant: N/A

Square feet: 178,975

Landlord: Duke Realty

Estimated completion:

Q2 2017

Southpark Place

Tenant: N/A


Landlord: Becknell Industrial


Q2 2017

Sofidel Plant

Tenant: Sofidel Group

Square feet: 1,400,000

Landlord: Pewamo Ltd


Q3 2017

8820 Smith’s Mill Rd

Tenant: N/A


Landlord: Prologis


Q3 2017

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Great Lakes Region

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