Third Quarter 2017 / Industrial Market Report. Tampa Bay

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1 Third Quarter 2017 / Industrial Market Report Tampa Bay Market Facts Industrial Fundamentals Strengthen Further, Fueled Largely by Record E-Commerce Demand MSF Total inventory in Tampa Bay's industrial market 1,880,502 SF Direct net absorption for YTD % Overall Vacancy $5.88 PSF Average rental rate for industrial space in Tampa Bay on a triple-net basis Economic Drivers Nationwide, the industrial sector remains in a state of expansion, fueled in large part by the rapidly expanding logistics and e-commerce industries. Vacancy within newer product is at a record low, and with demand outstripping supply for seven consecutive years, there is great competition between tenants for prime industrial space. Economic fundamentals are strong and consumer confidence remains solid. The unemployment rate has steadily declined, dropping 80 bps over the rate recorded in August 2016 to a current.0%, and the strong pace of job growth continues with over 55,000 new jobs added in the trailing 12-month period. Industrial Market Snapshot Healthy leasing activity is occurring, vacancy and cap rates remain low, and record e-commerce activity continues to shape industrial fundamentals, accounting for approximately 20% of all new industrial leasing nationwide. At the end of the third quarter of 2017, industrial fundamentals remained strong. The overall vacancy rate in Tampa Bay has compressed over the trailing 12 month period by 71 bps to a very tight.36%, healthy net absorption of over 1.8 million square feet (sf) has been recorded for the year to date, and rental rates continue to strengthen, with the direct weighted average rental rate for industrial space rising $0.7 per sf over the last year to a current $5.88 per sf on a triple-net basis. Net absorption has been robust within the East Side and Mid-Pinellas/Gateway submarkets, which together comprised 82% of all absorption for the year to date. The Lakeland submarket, which has been a strong performer in 2017, is expected to record strong absorption during the fourth quarter following the delivery of two large bulk distribution buildings

2 Tampa Bay Industrial Market Report Third Quarter 2017 Strong leasing activity has been fueled in large part by a red-hot logistics industry and continued e-commerce demand as online retailers, most notably Amazon, are driving up both demand for space and asking rents for warehouse space across the nation. Average Asking Rent Rate ($/SF/NNN) $11.00 $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $.00 $3.00 $2.00 $8.22 $5.06 $5.23 $6.03 Direct Vacancy Rate 7.00% 6.00% 5.00%.00% 3.00% 2.00% 1.00% 0.00% $6.62 $ % 5.80% 5.95% $9.73 $ % $5.0 $5.88 $.53.15% YTD-2017 Historical Net Absorption (SF) Square Feet,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 (500,000) (1,000,000) YTD-2017 Bulk Distribution Flex Manufacturing Warehouse/Distribution currently under construction that are 100% pre-leased. Siemens Joint Venturing and Expanding on the East Side At the close of the third quarter Siemens and Chromalloy Gas Turbine Corporation announced that a new joint venture to be known as Advanced Airfoil Components had been formed, and that it would be leasing 210,723 sf on the East Side. The new company's space will be located in the newly delivered first building in Tampa Regional Industrial Park, and 350 new jobs are expected when it opens late in The facility will manufacture products designed to increase gas turbine performance and the total capital investment of the project is estimated to be $139 million. Several Large Development Projects Nearing Delivery Several speculative and buildto-suit development projects are nearing completion along the pivotal I- and I- corridors. In Lakeland, both a 5,2-sf bulk distribution building in CenterState Logistics Park that is entirely preleased to PepsiCo and an 830,000-sf building for Medline should be completed during the fourth quarter. In the Plant City area, County Line Logistics Center is expected to be completed in October with roads completed in December, and in the East Side there are five buildings delivering in the Oak Creek and Crossroads Commerce Center developments that will add 520,50 sf of new industrial space, although nearly 350,000 sf was previously sold to New South Windows and Colonial Grocers. Looking Ahead During 2017, Tampa s industrial market has been characterized by compressing vacancies and a quickly dwindling supply of large blocks of quality space. As mentioned, strong leasing activity has been fueled in large part by a red-hot logistics industry and continued e-commerce demand as online retailers, most notably Amazon, are driving up both demand for space and asking rents for warehouse space across the nation. Additionally, the U.S. is well entrenched in what is very likely the secondlongest economic expansion since World War II, and the length of the current expansion has caused some investors to hit the pause button, resulting in a slight drop-off in deal volume nationwide over the past quarter. With that said, Tampa Bay should continue to benefit from healthy investment activity as the high price/low cap rate environment is creating more interest in the bigger returns available within value-add acquisitions available in secondary markets. Heading into the final quarter of the year, Avison Young expects leasing activity to remain steady, rental rates to exhibit continued improvement (albeit at a slower pace), and that investment sales interest will improve. New developments coming online in the East Side, Plant City and Lakeland areas should also help to mitigate some of the continued pent-up demand for industrial space. Providing there are no unexpected economic fluctuations caused by policy reforms out of Washington, D.C., Tampa s industrial market should remain on its upward trajectory.

3 Tampa Bay Industrial Market Report Third Quarter 2017 Bulk Distribution 2,510,295 $ , % 3.71% 0.00% 3.71% 1,672, ,225 Flex 15,989,352 $9.36 1,397, % 8.7% 0.7% 9.22% 0 17,566 Manufacturing 28,869, $ , % 1.82% 0.15% 1.97% 0 396,70 Warehouse / Distribution 82,501,01 $5.02 3,62, %.20% 0.2%.% 1,269,502,007 Market Total 151,870,802 $5.88 6,297, %.15% 0.21%.36% 2,9,71 1,880,502 Airport/Westshore Flex 3,865,980 $ ,296.96% 7.0% 0.08% 7.12% 0 (69,179) Manufacturing 1,,832 $6. 7, % 0.63% 0.00% 0.63% 0 90,103 Warehouse / Distribution 8,297, $6.73 8, % 2.0% 0.03% 2.2% 0,2 Airport/Westshore Total 13,358,6 $ , % 3.58% 0.0% 3.62% 0 25,168 Downtown Tampa Bulk Distribution 550,09 $ % 0.00% 0.00% 0.00% 0 0 Flex 1,6 $ % 0.00% 0.00% 0.00% 0 0 Manufacturing 886,171 $ , % 13.32% 0.00% 13.32% 0 0 Warehouse / Distribution 3,71,535 $ , % 3.2% 0.00% 3.2% 0 (12,98) Downtown Tampa Total 5,295,726 $ , %.63% 0.00%.63% 0 (12,98) East Side Bulk Distribution 7,92,9 $. 620,970.18% 7.82% 0.00% 7.82% 236,800 82,02 Flex 3,63,221 $9.11 2, % 6.70% 0.00% 6.70% 0 59,633 Manufacturing 5,58,9 $5.8, % 1.68% 0.00% 1.68% 0 (23,773) Warehouse / Distribution 29,168,528 $.93 1,69, % 5.66% 0.68% 6.33% 610,50 25, East Side Total 6,303,139 $5.23 2,7, % 5.63% 0.3% 6.06% 87, ,722 North Hillsborough Flex 1,136,683 $ , % 15.05% 0.00% 15.05% 0 (63,627) Manufacturing 718,886 $ , % 2.30% 0.00% 2.30% 0 17,953 Warehouse / Distribution 1,188,151 $ , % 2.67% 0.00% 2.67% 0 7,0 North Hillsborough Total 3,03,720 $8.1 2,3.79% 7.21% 0.00% 7.21% 0 (38,07) Plant City/East Hillsborough Bulk Distribution 2,722,36 $ % 0.00% 0.00% 0.00% 0 0 Flex 133,363 $7.86 2, % 1.89% 0.00% 1.89% 0 3,220 Manufacturing 2,338,697 $ , % 1.11% 0.00% 1.11% 0 0 Warehouse / Distribution 5,817,5 $ , % 5.89% 0.00% 5.89% 39,052 (125,69) Plant City/E Hillsborough Total 11,011,839 $ , % 3.37% 0.00% 3.37% 39,052 (122,29) South Tampa Bulk Distribution 679,129 $ % 0.00% 0.00% 0.00% 0 0 Flex,681 $ % 0.00% 0.00% 0.00% 0 0 Manufacturing 52,291 $.50 67, % 12.% 0.00% 12.% 0 0 Warehouse / Distribution 1,307,377 $.56 73, % 5.61% 0.00% 5.61% 0 12,01 South Tampa Total 2,589,78 $.53 10, % 5.3% 0.00% 5.3% 0 12,01 PINELLAS COUNTY TAMPA BAY MSA TOTAL Mid-Pinellas/Gateway Bulk Distribution 112,722 $ % 0.00% 0.00% 0.00% 0 0 Flex,396,633 $9.10 3,5 91.6% 8.5% 1.66% 10.20% 0 102,52 Manufacturing 11,703,223 $ , % 1.3% 0.36% 1.80% 0 1,1 Warehouse / Distribution 13,9,181 $ , % 3.50% 0.00% 3.50% 220,000 8,023 Mid-Pinellas/Gateway Total 29,631,9 $6.62 1,012, % 3.2% 0.39% 3.81% 220, ,70 North Pinellas Flex 1,91,63 $12. 90, % 6.10% 0.00% 6.10% 0 16,0 Manufacturing 1,8,5 $ % 0.00% 0.00% 0.00% 0 0 Warehouse / Distribution 3,868,503 $6.03, % 1.57% 0.00% 1.57% 0 (16,90) North Pinellas Total 6,778,507 $ , % 2.2% 0.00% 2.2% 0 (300) South Pinellas Bulk Distribution 350,000 $ % 0.00% 0.00% 0.00% 0 0 Flex 273,106 $ , % 9.% 0.00% 9.% 0 (17,00) Manufacturing 1,73,161 $ % 0.00% 0.00% 0.00% 0 72,76 Warehouse / Distribution 5,5,832 $ , % 1.9% 0.00% 1.9% 0 62,5 South Pinellas Total 7,959,099 $5.0 13, % 1.69% 0.00% 1.69% 0 118,298 LAKELAND Lakeland Bulk Distribution 12,153,05 $ , % 2.38% 0.00% 2.38% 1,35,2 03,823 Flex 83,296 $ , % 25.58% 0.00% 25.58% 0 (1,173) Manufacturing 2,7,503 $.07 30, % 1.11% 0.00% 1.11% 0 8,500 Warehouse / Distribution 10,127,2 $ , % 3.95% 0.01% 3.96% 0 (89,803) Lakeland Total 25,899,1 $ , % 3.61% 0.00% 3.62% 1,35,2 38,37 Reporting Methodology: This report includes all industrial buildings and parks 20,000 SF and greater in the Tampa-Bay MSA that are not government owned. All rents are reported on a triple-net basis. The information in this report has been collected by the Avison Young research team via sources that are deemed reliable but not guaranteed.

4 Tampa Bay Industrial Market Report Third Quarter 2017 Tampa Bay should continue to benefit from healthy investment activity as the high price/low cap rate environment is creating more interest in the bigger returns available within value-add acquisitions available in secondary markets. Leading Indicators (Y-O-Y 3Q-2016 to 3Q-2017) Vacancy Rate.36% Net Absorption 1,880,502 SF Average Asking Rate (NNN) $5.88 Under Construction 2,9,71 SF Total Employment 1.6 MM Significant Third Quarter 2017 Lease Transactions - Sorted by SF Tenant Property Type SF Submarket PepsiCo CenterState Logistics Park New Lease 5,2 Lakeland Fanatics, Inc.* Harney Distribution Center Renewal 220,000 East Side Siemens/Chromalloy Tampa Regional Industrial Park New Lease 210,723 East Side Lockheed Martin Aeronautics th St N Renewal 7,0 South Pinellas IGT Ruthven Parkway Center Renewal 70,000 Lakeland Florida Fresh Vending* Center Point Business Park D New Lease 69,08 East Side Berger Moving Eagle Creek Industrial Park New Lease 55,00 Airport/Westshore Wayfair Oak Creek Commerce Park New Lease 5,00 East Side Aramsco, Inc Maine Ave New Lease 5,000 Lakeland Red Bull* Chad Lane Renewal,713 East Side Bailey Industries* 2 Gelman Place New Lease, East Side Lasership, Inc.* Sabal Park Distribution Ctr 1 New Lease,296 East Side SoFlo Mattress* Silo Bend Distribution Center New Lease 35,500 East Side Intercontinental Pharma Bryan Dairy East 3 New Lease 25,500 Mid-Pinellas/Gateway Apollo Retail Specialists* Adamo Distribution Center 6 New Lease 2,003 East Side Sunrun* Tampa West Distribution Center 3 New Lease,130 Airport/Westshore Crown Health Care Laundry Services Ruthven Air Park New Lease 17,500 Lakeland Copy Control* Benjamin Distribution Center I New Lease 17,125 Airport/Westshore Creative Builder Services* Harney Distribution Center New Lease 16,710 East Side Kuehne + Nagel Tampa Airport Distribution Center Expansion 16,25 Airport/Westshore * Avison Young handled this transaction Significant Third Quarter 2017 Sales Transactions - Sorted by Sale Price Property SF Sale Price Price/SF Cap Rate Buyer Submarket Gateway Business Park (2003/2005/2007 Gandy Blvd) 69,0 $9,370,000 $105 NA Ivanhoe Cambridge, Inc. Mid-Pinellas/Gateway Metropointe Commerce Center 355,526 $28,930,000 $81 NA Ivanhoe Cambridge, Inc. Mid-Pinellas/Gateway Breckenridge Pky 33,279 $22,500,000 $67 NA MLG Capital East Side th St N* 7,0 $22,100,000 $112 NA Ivanhoe Cambridge, Inc. Mid-Pinellas/Gateway Gateway Business Centre 122,309 $11,900,000 $97 NA Ivanhoe Cambridge, Inc. Mid-Pinellas/Gateway Bay Tec Center 12,327 $9,0,000 $77 NA Avistone Mid-Pinellas/Gateway Commerce Ave N ( properties) 8,016 $6,555,000 $ % Epic Development South Pinellas Airport Corporate Center 107,50 $6,500,000 $ NA Avistone Airport/Westshore * Part of a 157-property national portfolio sold Jul-2017 for $979,0,000 to a Canadian buyer that previously had no significant industrial component in its portfolio 2017 Avison Young - Florida, LLC. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young.

5 Tampa Bay Industrial Submarkets Ho l i d ay NORTH PINELLAS Ta r p o n Springs MID PINELLAS-GATEWAY PASCO COUNTY PINELLAS COUNTY SOUTH PINELLAS Tr i n i t y Ch eva l Keys to n e No r t h d a l e Ci t ru s Pa rk 2 We s tc h a s e BUS Ca r ro l l wo o d U n i ve r s i t y USF 597 Oldsmar 1 Tow n ' N ' Co u nt r y S a fe t y H a rb o r Ta m p a Int l Airport Cl e a r wate r 699 Belleair 611 Belleair 686 Indian Rocks 688 Indian Sh o re s R e d i n g to n Sh o re s L a rg o Seminole 0 Downtown Tampa BUS Th o n o to s a s s a 57 S e ff n e r 57 Mango P l a nt Ci t y D ove r 301 Port of Tampa B ra n d o n 618 Va l r i co Pa l m R i ve r Cl a i r M e l Pro g re s s Vi l l a g e Pi n e l l a s Pa rk 582 Te m p l e Te r ra ce Ta m p a Channelside 2 Fe at h e r Sound B a rd m o o r 2 582A 583 E a s t O r i e nt Pa rk S t Pe te - C l e a r wate r Int l Airport Eg y p t - Le to Magdalene 589 POLK COUNTY Lu t z East Dunedin Cr ys t a l Springs Odessa 611 Pa l m H a rb o r Ze p hy rh i l l s We s l ey Ch a p e l Land O' s 98 Bloomingdale POLK CITY 39 POLK COUNTY 33 R i ve r v i ew Macdill AFB Fi s h H aw k G i b s o nto n Le a l m a n B ay 699 Pi n e s M a d e i ra R e d i n g to n 2 3 Tre a s u re Is l a n d South Pa s a d e n a S a i nt Pe te r s b u rg Ap o l l o 1 Gulfport St. Pe te L akeland PINELLAS SUBMARKETS Third Quarter 2017 Ruskin S u n Ci t y Ce nte r Wi m a u m a MANATEE COUNTY 2 Balm 67 Ti e r ra Ve rd e LAKELAND HILLSBOROUGH SUBMARKETS NW TAMPA E HILLSBOROUGH - PLANT CITY WESTSHORE EAST SIDE SOUTH TAMPA DOWNTOWN TAMPA Contact Information Ken Lane, Principal and Managing Director ken.lane@ Clay Witherspoon, Principal and Managing Director clay.witherspoon@ Tim Callahan, Principal tim.callahan@ Trey Carswell, Principal trey.carswell@ Lisa Ross, Senior Vice President lisa.ross@ Lisa McNatt, Director of Research 135 W Central Blvd, Suite 700 Orlando, FL lisa.mcnatt@ 2017 Avison Young - Florida, LLC. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young.