>> Asking Rents And Vacancy Flat

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1 Research & Forecast Report CENTRAL LOS ANGELES INDUSTRIAL Accelerating success. >> Asking Rents And Vacancy Flat Key Takeaways > The overall vacancy rate recorded 1.3%, unchanged over the previous quarter. > Asking rental rates held steady at $0.65 P NNN. Asking rents are at their highest point as landlords remain bullish on rents. > Sales and leasing activity totaled 3,065,100, broken out into 27 sales (808,900 ) and 65 leases (2,256,200 ). Market Indicators Relative to prior period Forecast Construction Rental Rate Vacancy Net Absorption Summary Statistics Central Los Angeles, > Net absorption totaled 140,100 for the quarter, pushing absorption to 632,200 year to date. Vacancy Rate > Only 578,200 of space remains under construction, a very low amount for a million market. Net Absorption 140,100 Construction Completions 113,600 Under Construction 578,200 Central Los Angeles Industrial Market 1.3% Asking Rents Central Los Angeles, Central Los Angeles Industrial Market Average Asking Rent The Central Los Angeles market remains at a post recession peak with low vacancy rates despite the condition of much of the functionally obsolete and older buildings. Many of these lower clear buildings located in the Central Los Angeles submarket and near the downtown Los Angeles core have been converted to residential, retail or office product. Industrial demand is heavily concentrated in the Vernon and Commerce submarkets with food production and apparel manufacturing remaining to be the top industries. 00 BPS Change from Q2 16 (Basis Points) $0.65 P NNN Change from Q3 15 +$0.04 ($) Y.O.Y. Change (%) +6.6% Labor Force Central Los Angeles, Construction Manufacturing Transportation, Trade & Utilities 12-mo Employment Growth (%) -0.3% -1.8% 1.0% 12-mo Actual Employment Change ,400 +8,100

2 Vacancy > The vacancy rate has held steady at 1.3% while the availability rate remains low at 3.7%. > Vacancy remains tightest in the Commerce submarket at 0.7% and higher in the Vernon submarket at 1.9%. >Forecast: Vacancy will remain tight as there is little construction on the horizon and industrial demand remains positive. Absorption and Leasing Activity > Industrial demand remained positive at 140,100 of positive net absorption, the 22nd consecutive quarter of growing industrial demand. > Sales and leasing activity totaled 3,065,100 this quarter. This was broken out into 27 sales (808,900 ) and 65 leases (2,256,200 ). > Forecast: Absorption is likely to remain near zero in future quarters as the lack of available space limits the expansion options of firms in the area. Rental Rates > Average asking rents held steady at $0.65 P NNN. Asking average rents are at their highest point ever recorded. > Sales prices and asking rents continue to be driven up by non-traditional industrial users moving into industrial space in desirable areas. This is especially noticeable in the Central Los Angeles submarket, with asking rates 20% higher for comparable industrial space in the Commerce and Vernon submarkets. > Forecast: Rents will continue to rise in future quarters and tenants can expect to pay a premium for all types of industrial space. Tenants who signed leases 5 years ago can expect to their rent to increase roughly 30-40% upon renewal. Historical Vacancy v. Rents Central Los Angeles Q $ PER PER MONTH (NNN) Net Absorption by Submarket Central Los Angeles $0.70 $0.65 $0.60 $0.55 $0.50 $0.45 $ , ,000 0 (200,000) (106,400) CENTRAL LOS ANGELES RENTS VACANCY 26,800 VERNON 219,700 7% 6% 5% 4% 3% 2% 1% COMMERCE Historical Gross Absorption Central Los Angeles Q ,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 % VACANT (TOTAL) 2

3 Construction > There was a single 113,600 fully leased project that finished construction this quarter. There remains 578,200 of space still under construction which will be finishing in the next 18 months. > There are only a few small number of planned projects currently on the market and land prices have continued to increase to over 2 million per acre. Development is exceedingly difficult in the Central Los Angeles industrial market due to the encroachment of residential, retail and especially creative office development. > Forecast: Construction will remain subdued for the foreseeable future, limited to build to suit projects or creative rehabilitation of under performing space. Historical Net Absorption & Construction Completions Central Los Angeles Q ,400,000 1,200,000 1,000, , , , ,000 0 NET ABSORPTION CONSTRUCTION COMPLETIONS Investment Trends > Cap rates have continued to remain tight in Los Angeles County, averaging 5.8% in, significantly lower then the US average of 6.8%. > Forecast: There has been increased investor focus on fully leased industrial assets in prime infill locations. As such, we expect more investment sales to occur in future quarters driving up sales prices and further compressing cap rates. Outlook Investment Trends Chart Los Angeles County Q % 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% Average Price Per sf Average Cap Rate $180 $160 $140 $120 $100 $80 $60 $40 > Tight market conditions are expected to persist in the Central Los Angeles industrial marketplace. This is especially true given the amount of space being taken off the market near downtown Los Angeles. Many older and obsolete industrial buildings have been torn down or re-purposed to residential, retail or creative office uses. Many of these displaced tenants end up in the neighboring areas of Vernon or Commerce. 1.0% $20 0.0% $0 Unemployment Rate Los Angeles County August % 5.5% 5.4% 5.2% 5.0% 4.8% 4.9% 4.9% 4.6% 4.4% United States California Los Angeles County 3

4 Market Description Central Los Angeles is the largest industrial market in Los Angeles County. Comprised of million square feet of space, it represents 21 percent of the total industrial space in the Los Angeles Basin for buildings 10,000 square feet and greater. It is the oldest market, with 74 percent of its space built before It has a mix of property types, with 43 percent in big box space (100,000+ ) and the balance in small and medium sized buildings. Firms in this market include a large number of manufacturing companies and machine shops as well as will-call centers and operations that need a central location. Submarket Map RECENT TRANSACTIONS & MAJOR DEVELOPMENTS Central Los Angeles Industrial Market SALES ACTIVITY PROPERTY ADDRESS SIZE SALE PRICE PRICE P BUYER SELLER 2750 Casitas, Los Angeles 100,200 $22 Million $220 P 2800 Casitas, LLC Casitas Investment 5205 Downey, Vernon 47,600 $7.6 Million $159 P Rainfield Logistics, LLC JCJ Family, LP th, Vernon 48,000 $7.3 Million $152 P Construction Materials Iports JDW Association, LLC 6500 Stanford, Los Angeles 48,900 $6.9 Million $140 P United Pacific Waste Tri-Gents Investments LEASING ACTIVITY PROPERTY ADDRESS LEASED LEASE TYPE BLDG TYPE LESSEE LESSOR 2652 Long Beach, Los Angeles 149,700 Direct-New Freezer / Cold Storage World Produce CREF LA FOOD, LLC th, Vernon 137,400 Direct-New Light A & A Global Imports, Inc. Leonis Property, LLC 5636 E 61st, Commerce 90,300 Direct-New Distribution Bunzl Utah, LLC ProLogis 1345 Herbert, Commerce 70,900 Direct-New Freezer / Cold Storage H & T Seafood Los Angeles L & S Realty MAJOR DEVELOPMENTS PROJECT DEVELOPER SIZE SUBMARKET STATUS ESTIMATED COMPLETION 901 Union, Montebello Lincoln Property Group 113,600 Commerce Completed 5001 Soto, Vernon Bel Air Soto 118,700 Vernon Under Construction Q

5 INDUSTRIAL OVERVIEW Central Los Angeles EXISTING PROPERTIES CONSTRUCTION VACANCY AVAILABILITY ACTIVITY ABSORPTION RENTS Submarket/ Building Size Bldgs Total Inventory Completions Current Qtr Under Construction Vacancy Vacancy Prior Qtr Availability Sales Number of Activity Sales Lease Activity Number of Leases Total Gross Activity Current Qtr Total Gross Activity YTD Net Absorption Current Qtr Net Absorption YTD Weighted Avg Asking Lease Rates CENTRAL LOS ANGELES 10,000-19, ,257, % 1.0% 3.0% 53, , , ,800-14,300 7,300 $ ,000-39, ,172, % 1.7% 4.5% 147, , , ,800-72, ,800 $ ,000-69, ,573, % 0.5% 2.2% 56, , , ,400-19, ,100 $ ,000-99, ,603, % 2.3% 7.4% , ,500 28, ,100 $ , , ,187, % 1.5% 1.5% , ,100 70, ,400 $ , , ,144, % 0.0% 0.0% N/A 500, ,898, % 0.0% 0.0% N/A Subtotal ,838, % 1.1% 2.9% 258, , ,500 1,231, ,100 $0.79 COMMERCE 10,000-19, ,654, % 0.8% 2.7% 33, , , ,300 16,300 39,700 $ ,000-39, ,598, % 0.7% 2.4% 77, , , ,800-39,900-53,900 $ ,000-69, ,888, % 1.0% 1.4% 40, , , ,500 30,900 99,700 $ ,000-99, ,709, % 1.5% 3.2% , , ,600 43,500-34,200 $ , , ,289, , % 0.9% 3.0% , ,800 1,132, , ,400 $ , , ,375, % 0.3% 0.0% , , ,000 40,300 40,300 N/A 500, ,840, % 0.0% 13.9% ,900-51,200 41,300 $0.43 Subtotal ,356, , % 0.8% 2.8% 151, , ,400 3,363, ,300 $0.59 VERNON 10,000-19, ,457, % 1.1% 6.2% 90, , , ,700 21,200 67,300 $ ,000-39, ,443, % 2.4% 5.5% 52, , , , , ,700 $ ,000-69, ,077, % 1.5% 3.3% 187, , , ,200 18, ,900 $ ,000-99, ,513, % 0.5% 4.3% 70, , , ,900-47, $ , , ,631, , % 2.0% 6.1% , ,200 1,434,600-99, ,900 $ , , ,470, % 4.8% 4.8% , , ,600 1, ,200 $ , ,066, % 0.0% 6.9% $0.53 Subtotal ,660, , % 1.9% 5.2% 399, ,167, ,567,200 4,289,200 26, ,000 $0.62 MARKET TOTAL 10,000-19, ,369, % 1.0% 3.8% 177, , , ,800 23, ,300 $ ,000-39, ,214, % 1.7% 4.3% 277, , ,400 1,555,800 21,600-52,000 $ ,000-69, ,540, % 1.0% 2.4% 283, , ,600 1,860,100 29, ,500 $ ,000-99, ,826, % 1.3% 4.8% 70, , , ,000-4,200-55,900 $ , , ,109, , , % 1.4% 3.9% , ,100 2,637,800 80, ,900 $ , , ,990, % 1.9% 1.8% , , ,600 41, ,900 $ , ,805, % 0.0% 6.9% ,900-51,200 41,300 $0.45 Total ,854, , , % 1.3% 3.7% 808, ,256, ,065,100 8,884, , ,200 $0.65 5

6 Definitions of key terms in this report Total Rentable Square Feet: Industrial space in buildings with 10,000 or more of industrial space. Includes speculative as well as owner-occupied buildings. Excludes Research & Development (R&D) buildings (industrial buildings with at least 30% office build-out, 3/1000 parking ratio and a high level of finish). Excludes space that is under-construction or renovation. Vacancy: Space in existing buildings that is vacant and immediately available during the quarter for direct lease, for sublease or for sale, plus space that is vacant but not available for direct lease or sublease. Availability: All space that is being currently marketed for occupancy, includes space which may be currently occupied or which may be under construction or renovation. Net Absorption: Net change in occupied square feet from one period to the next (includes the impact of change in vacant space available for sublease). Gross Activity: Square feet sold and leased for all known transactions completed during the quarter. Excludes lease renewals. Excludes investment sale transactions. Weighted Average Asking Rental Rates: Weighted by square feet available for direct lease. Data is based on triple net rents, and excludes expenses such as taxes, insurance, maintenance, janitorial service and utilities. Reported on a monthly, per basis. Construction Completions: Total square feet added during the quarter via construction completions, including renovated space returned to market, less total square feet taken off-market due to demolitions or conversions. Technical Note Colliers International is continuously refining its database. The data shown in the historical tables and graphics in this report have been adjusted to take into account these changes in the database. This report has been prepared by Colliers International for general information only. Information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Colliers International does not guarantee, warrant or represent that the information contained in this document is correct. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This report and other research materials may be found on our website at www. colliers.com/greaterlosangeles. 554 offices in 66 countries on 6 continents United States: 153 Canada: 34 Latin America: 24 Asia Pacific: 231 EMEA: 112 UNITED STATES: Commerce Office License No S. Eastern, Suite 100 Commerce, CA > $2.5 billion in annual revenue > 2.0 billion square feet under management > Over 16,100 professionals TEL: FAX: Under Construction: Includes buildings that are in some phase of construction, beginning with foundation work and ending with the issuance of a Certificate of Occupancy. JOHN HOLLINGSWORTH Executive Managing Director THOMAS GALVIN Research Analyst Research Services 6