VACANCY RATES CONSTRUCTION NET ABSORPTION LEASE RATES Q GREATER CINCINNATI INDUSTRIAL MARKET REPORT Q INDUSTRIAL MARKET AT-A-GLANCE

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1 Q GREATER CINCINNATI INDUSTRIAL MARKET REPORT The greater Cincinnati industrial market reported robust leasing activity for the first quarter of 2017, with net absorption totaling over 3.3 million square feet. Over 2,000,000 square feet of speculative space was delivered to the market in the second half of 2016, increasing industrial market vacancy; however, this recent flurry of leasing activity has brought vacancy rates to record lows approximately 3% at quarter end. Key transactions include Hayneedle s occupancy of nearly 995,000 square feet at Park Monroe, Kroger s acquisition of over 670,000 square feet in Independence, KY, UPS leasing over 440,000 square feet near CVG, and Amazon s expansion of over 645,000 square feet. The Florence/Richwood Submarket in Kentucky posted the highest positive net absorption, closing the quarter with just over 1.37 million square feet. Monroe/Middletown recorded over 1 million square feet, and the Airport Submarket (also in Kentucky) rebounded from negative absorption in fourth quarter 2016, posting over 600,000 square feet in the first quarter of The Tri-County Submarket reported little activity for the quarter, but maintains low vacancy (under 4%). In addition, new deliveries are scheduled for nearly all of these submarkets in Weighted average asking rents have increased year-over-year, from around $3.75 per square foot to upwards of $4.20 per squarefoot.thisjumpinaskingratescanbeattributedtoincreased demand, a dwindling supply of mid-size, freestanding buildings, and rapid absorption of new deliveries. Q INDUSTRIAL MARKET AT-A-GLANCE VACANCY RATES NET ABSORPTION CONSTRUCTION LEASE RATES SVN RICORE INVESTMENT M ANAGEMENT, INC NORTHLAKE D R. CINCINNATI, OH WWW. SVN- RICORE. COM

2 U.S. ECONOMY CINCINNATI GAINS MAJOR ECONOMIC ADVANTAGE Nationwide, the economy is still moving at a slow but growing pace at the end of the first quarter of Interest rates were stable for most of the quarter, but appear ready to continue a long-term trend of increases as inflation pressures are too much to ignore. The Trump rally is holding but not advancing, at the time of this writing, as major policy initiatives such as healthcare and tax reform feel uncertain. Yet, the national labor market is showing signs of tightness due to lack of qualified workers; the 4.5% unemployment rate with sub-one hundred thousand monthly hiring in March exemplifies this point. Still, consumer and CEO confidence are setting recent highs with each reading, and most signs are optimistic. Nonetheless, the national picture is less clear than it was three months ago. Nationwide, industrial real estate is still forecast to experience positive net absorption with gains in rental rates and occupancies as growth from e-commerce distribution continues and new supply remains relatively low. Locally, Cincinnati may have won the best prize an industrial market could hope for in January of This prize was the selection of Greater Cincinnati/Northern Kentucky International Airport (CVG) for the North American hub of Amazon Prime Air, the cargo service of Amazon.com being built to serve Amazon s growing network of local distribution hubs. Amazon alone is reported to be investing over $1 billion dollars in the project and will hire an estimated 2,700+ new employees. Given that Amazon is becoming the nation s leader in site-to-home delivery of physical goods; the Cincinnati MSA stands to gain many multiplier effects from Amazon suppliers needing to locate within close proximity to the air hub. Similar trends have occurred surrounding other air hubs including Louisville, KY (home to UPS) and Memphis, TN (home to FedEX); this effect is part of becoming an Aerotropolis or city that has a major economic engine due to its airport operations (Dallas and Dulles are other prime examples). Further, given the relatively short proximity to the UPS and FedEX hubs, it s conceivable for an over-land distribution route/chain to develop with the Cincinnati MSA as its northern boundary. This would make Cincinnati a strategically logical choice for firms hoping to make and distribute goods via Amazon or direct to consumer via UPS and FedEx. OHIO UNEMPLOYMENT RATES (CINCINNATI, COLUMBUS, DAYTON) The local industrial market is already experiencing strong positive net absorption in the first quarter of 17 with falling occupancies and rising rental rates. Further, employment in Trade, Transportation, and Utilities has averaged a robust 2.7% year-over-year growth rate during the first quarter; beating the metro s non-farm rate of 2.0% which has brought citywide unemployment to 4.7%, roughly in line with the nation. Given that the national economy, especially the consumer sector, is still very healthy as of today, and balanced state of supply and demand of industrial space in the metro; the local industrial market is poised to outperform the nation in terms of value and operating performance. Given that the Amazon announcement was only recently made, now is the time to acquire well-positioned buildings and land suitable for development within the metro. Amazon states a desire to further revolutionize the distribution system with this air hub; if successful, Cincinnati could be permanently transformed for the better. Source: Joshua A. Harris, Ph. D., CRE, CAIA Managing Partner Lakemont Group The Cincinnati industrial market is poised to outperform the nation in terms of value and operating performance. Now is the time to acquire well-positioned buildings and land suitable for development within the metro area. Joshua A. Harris, Ph.D., CRE, CAIA Managing Partner at Lakemont Group

3 Q CINCINNATI MSA TOTAL EMPLOYMENT Millions '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Source: Bureau of Labor Statistics CINCINNATI TRADE, TRANSPORT & UTILITIES EMPLOYMENT YEAR-OVER-YEAR GROWTH 4% 2% 0% -2% -4% -6% -8% '08 '09 '10 '11 '12 '13 '14 '15 Source: Bureau of Labor Statistics S V N RICOR E I NVESTM E N T M ANA G E M E N T, I NC N ORTHLAKE D R. C INC INN A T I, OH WWW. SVN - R IC O R E. COM '16

4 Q GREATER CINCINNATI INDUSTRIAL SUBMARKET OVERVIEW Submarket # of Buildings Total SF Vacant SF Vacancy Rate Qtrly Net Absorption (SF) YTD Net Absorption (SF) East ,051, , % -81,280-81,280 Covington 76 4,216,581 60, % 23,000 23,000 Airport ,953,087 1,892, % 605, ,219 Central/Midtown ,827,681 1,230, % 108, ,094 West 164 6,268, , % 3,224 3,224 Woodlawn/Evendale ,519, , % 55,669 55,669 Blue Ash ,941, , % -33,285-33,285 I-71 Corridor ,822, , % 115, ,197 Tri County ,364,538 2,143, % 134, ,845 Campbell County 79 3,291,315 76, % -13,070-13,070 Florence/Richwood ,962, , % 1,377,679 1,377,679 Hamilton 123 6,940,560 1,651, % - - Monroe/Middletown ,824, , % 1,020,133 1,020,133 OVERALL 3, ,985,240 11,159, % 3,315,425 3,315,425 Q NEW & UPCOMING DELIVERIES Submarket Property Name Address Building Size (SF) Direct Available (SF) Monroe/Middletown Park North at Monroe Bldg , ,664 Blue Ash Kenwood Rd. 534, ,560 Airport 3501 Point Pleasant Rd. 264, ,000 Airport Hebron Logistics Center Bldg. A 589, ,244 Airport Hebron Logistics Center Bldg. B 209, ,468 Hamilton Union Centre Logistics Park Bldg. I 477, ,360 Hamilton Union Centre Logistics Park Bldg. II 128, ,304 Source: Xceligent Autonomous vehicles are on the cusp of proliferation. Distribution facilities nationally will be designed and reconfigured to utilize tremendously efficient driverless vehicles in the warehouses and on our roadways. Rapid delivery will be common and truck drivers and warehouse labor will be increasingly obsolete. Consumers will be able to summon a desired product to their location using their portable device in the same fashion as an Uber is currently called. The difference is that the vehicle will not have a human driver. - John Rickert, CCIM Executive Managing Director at SVN RICORE

5 Q VACANCY RATES BY SUBMARKET 14.0% 7.0% 1.9% 2.2% 2.3% 2.4% 1.4% 1.6% 2.8% 2.6% 2.9% 1.2% 0.9% Q ASKING RENT RANGE BY PRODUCT USE/TYPE $14.00 $12.00 $10.00 $11.00 $11.50 $8.00 $6.00 $4.00 $2.00 $4.59 $2.50 $5.25 $3.21 $2.25 $6.14 $3.00 $5.95 $3.64 $2.25 $- LIGHT INDUSTRIAL $ $11.00/SF MANUFACTURING $ $5.25/SF FLEX $ $11.50/SF WAREHOUSE/DISTRIBUTION $ $5.95/SF Source: Xceligent, Weighted Averages SVN RICORE INVESTMENT M ANAGEMENT, INC NORTHLAKE D R. CINCINNATI, OH WWW. SVN- RICORE. COM

6 Q CONSTRUCTION ACTIVITY BY SUBMARKET (SF) 1,200,000 1,000,000 1,062, , , , , , , , ,664 45,000 78,668 23,000 Airport Blue Ash Central/Midtown Florence/Richwood Monroe/Middletown Tri County Hamilton West CHANGES IN ABSORPTION SELECT TRANSACTIONS SUBMARKET PROPERTY NAME ADDRESS SF OCCUPIED/VACATED TENANT TYPE USE TenantMonroe/Middletown Address Park North at Monroe Bldg. 8 Size 994,013 Submarket Hayneedle.com Bulk Warehouse I-71 Corridor 4219 State Route ,952 Undisclosed Manufacturing Blue Ash Alliance Rd 84,837 Caruso Logistics Light Industrial Tri County Port Union Centre Bldg. E 47,750 Kosei Warehouse - Distribution Tri County Capital Center I Distribution Bldg. III 36,000 Undisclosed Warehouse - Distribution Central/Midtown 3238 Fredonia Ave. (37,665) Group Sales Manufacturing Tri County West Chester Commerce Center V (50,000) P & G Flex/R&D Airport 1155 Victory Place (56,000) Victory Tube Manufacturing East 1236 Clough Pike (65,200) Etrendco Bulk Warehouse SUBMARKET PROPERTY NAME ADDRESS SALE PRICE SF SOLD BUYER SELLER Tri County Port Union Distribution Center H $20,230, ,600 GPT LE Saint Drive Owner LLC US Industrial REIT III Gateway Tri County Port Union Distribution Center A $14,570, ,512 GPT Trade Port Drive Owner LLC US Industrial REIT III Gateway Tri County 9911 Crescent Park Dr. $14,570,000 49,000 STOCK BROTHERS PROPERTIES LLC - Tri County Capital Center I Industrial Bldg. I $12,933, ,605 G & I IX Interstate III LLC Cabot II OH2W03 W12 LLC Tri County Capital Center I Distribution Bldg. III $12,228, ,041 G & I IX Interstate I LLC Cabot II OH2M01 M04 LLC Tri County 9696 International Blvd. $11,150, ,525 Stag Industrial Holdings LLC Dry Ridge Capital (KY Ltd.) Tri County 4255 Thunderbird Lane $9,800, ,644 Gpt Thunderbird Lane Owner LLC Allen Realty Limited Source: Xceligent SVN RICORE INVESTMENT M ANAGEMENT, INC NORTHLAKE D R. CINCINNATI, OH WWW. SVN- RICORE. COM