Northern California Industrial Demand Continues to Fuel Industrial Development in San Joaquin County

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1 Research & Forecast Report STOCKTON SAN JOAQUIN COUNTY INDUSTRIAL Q Northern California Industrial Demand Continues to Fuel Industrial Development in San Joaquin County > Thirteen industrial developments have been completed year-to-date in San Joaquin County totaling,941,00 square feet. > Net absorption through September totaled 4.3 million square feet. > The vacancy rate for San Joaquin County was 6.0 percent at the close of the third quarter The San Joaquin County Industrial market has continued to experience a high volume of transactional activity and development as we head into the final quarter of A total of six industrial developments completed during the third quarter of 2018, totaling just shy of 2.7 million square feet, brought the year-to-date total for thirteen completed industrial developments to,941,00 square feet. Twelve projects remain under construction as we head into the fourth quarter of 2018 totaling just over.0 million square feet. The overall vacancy rate for the county was driven upwards to 6.0 percent as a result of an additional 870,72 square feet of sublet space becoming available. Positive net absorption for the county totaled 1.6 million square feet during the third quarter, driving the year-to-date total for net absorption to 4.3 million square feet. The average sales price for an industrial property in San Joaquin County during the third quarter Historical Vacancy and Average Asking Rates San Joaquin County Overall 10.0% $0.60 Market Indicators U.S. 10-Year Nominal Consumer Unemployment Rate Interest Rate Confidence 3.9% Market Trends Relative to prior period Q Q4 2018* Vacancy Net Absorption Construction Lease Rates Cap Rates Land Prices *Projected 8.0% 6.0% 4.0% 2.0% 0.0% 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Vacancy Rate Asking Lease Rate (NNN) $0. $0.0 $0.4 $0.40 $0.3 Overall average asking lease rates for the county increased to $0.49 NNN with vacancy at 6.0 percent for the quarter. Summary Statistics San Joaquin County Industrial Market Previous Quarter Current Quarter Vacancy Rate.1% 6.0% Overall Asking Rate* $0.48 $0.49 Light Industrial Asking Rate* $0.4 $0. Warehouse Asking Rate* $0.44 $0.49 R&D/Flex Asking Rate* $0.46 $0.44 Manufacturing Asking Rate* $0.46 $0.3 Special Purpose Asking Rate* $0.66 $0.81 Net Absorption 2,400,029 1,98,238 *Asking rates are reported on a NNN monthly basis.

2 equaled $116 per square foot, with an average cap rate of.4 percent. The overall average asking lease rate county wide totaled $0.49 per square foot, triple net (NNN). Tracy The vacancy rate for the Tracy submarket increased to.4 percent with the delivery of 461,810 square feet on Pescadero Avenue that remained vacant at the close of the quarter. One other distribution facility delivered during the third quarter, was a 708,080 square foot build-to-suit for Lindt/Ghirardelli located in Prologis International Park of Commerce. As we push into the final quarter of 2018, seven buildings remain under construction in Tracy totaling close to 2.2 million square feet of new Class A product, with only three of those projects considered speculative development. Net absorption for the submarket year-to-date increased to over 1.8 million square feet after nearly 70,000 square feet of absorption was reported throughout the third quarter. Submarket Available Square Feet and Vacancy Rates Tracy 1,383,891.4% 2,736,232 Total Building Available Lathrop/Manteca The vacancy rate for Lathrop increased to 7.3 percent, which can be attributed to 343,732 square feet of sublet space becoming available. As a result of limited activity during the third quarter of 2018 in the Lathrop submarket, negative net absorption totaling 347,772 square feet was recorded. Buzz Oates has broken ground on a build-to-suit for Tesla, located at Murphy Parkway, totaling 870,294 square feet. Tesla will occupy 613,22 square feet once the building has completed in the second quarter of 2019, leaving 27,042 square feet available for lease. The vacancy rate for Manteca increased to 4.9 percent by the close of the third quarter with the delivery of Manteca Commerce Center on Dupont Court. Estes Trucking will occupy 130,000 square feet of the new speculative building that was completed during the quarter, leaving the remaining 148,000 square feet available. Another speculative warehouse that was completed during the quarter was the 1,47 square foot development located at CenterPoint Lathrop Manteca 927,221 Total Building 313, % 12,617,832 Available 4.9% 6,419,667 Total Building Available Lathrop Industrial Complex Lathrop, CA The ±417,720 square foot warehouse/manufacturing facility is available for lease and benefits from I- frontage. The facility has just undergone a multi-million dollar renovation. 2 San Joaquin County Research & Forecast Report Q Industrial Colliers International

3 Intermodal Center. This building has been 100 percent leased. One facility, a build-to-suit for Medline, remains under construction in the submarket. Year-to-date net absorption for the Manteca submarket exceeded 1.1 million square feet after 686,682 square feet of product was absorbed during the third quarter. The overall average asking lease rate for Manteca equaled $0.3 per square foot NNN. Submarket Available Square Feet and Vacancy Rates Stockton 4,040,124 Stockton The vacancy rate for the Stockton submarket increased slightly by 10 basis points over the previous quarter to 7.6 percent. Amazon continued to expand their footprint in San Joaquin County inking a 1,122,341 square foot lease at CT Realty s new development at the NorCal Logistics Center, a warehouse that was completed earlier this year. Two new industrial development projects were completed during the third quarter of 2018 totaling 670,844 square feet. Buzz Oates completed a 00,000 square foot facility on Arch Road that is a portion of a three building project. The building remains available. Phelan Development completed a 164,000 square foot warehouse located on Performance Drive, within close proximity to the Stockton Metropolitan Airport, and it is fully leased to Pactiv. Just over 1.0 million square feet remains under construction in the submarket divided between two speculative buildings and one build-to-suit for Amazon. Net absorption for the submarket year-to-date pushed past the million square feet mark after an active third quarter that recorded 43,220 square feet of positive absorption. While activity remains strong, we should expect to see the vacancy rate for the Stockton submarket decrease due to the limited supply of speculative development delivering during the fourth quarter. The overall average asking lease rate for the Stockton submarket was $0.44 per square foot NNN. Lodi The vacancy rate for the Lodi submarket remains at a historic low of 0.2 percent with only 24,634 square feet of product available across four buildings. Year-to-date net absorption for the North San Joaquin County submarket totaled 87,000 square feet with average asking lease rates at $0.60 per square foot NNN. Ripon Historically, the Ripon submarket has been a small stable industrial market with a low vacancy. The current vacancy rate for industrial product remains at 0.0 percent. Lodi Ripon 24, % 2,88,712 Total Building Available 0.2% 13,309,173 Total Building Available 0 0% 883,1 Total Building Available 3 San Joaquin County Research & Forecast Report Q Industrial Colliers International

4 Significant Lease & Sale Activity 12 LODI 88 Pactiv 102 Performance Drive, Stockton 164,000 Warehouse/Distribution Lease STOCKTON 4 Amazon 432 Newcastle Road, Stockton September ,122,341 Warehouse/Distribution Lease Clorox Harlan Road, Lathrop 336,800 Warehouse/Distribution Lease (renewal) LATHROP MANTECA Estes Trucking 1340 Dupont Court, Manteca September ,000 Warehouse/Distribution Lease RIPON Dermody Properties 1340 Dupont Court, Manteca 286,072 Warehouse/Distribution Sale NFI 1820 N. MacArthur Drive, Tracy September ,2 Warehouse/Distribution Lease (renewal) = LEASE = SALE Colony Properties W. Schulte Road, Tracy 1,888,627 Warehouse/Distribution Sale 4 San Joaquin County Research & Forecast Report Q Industrial Colliers International

5 LODI Under Construction STOCKTON 4 Northeast Industrial Area Developer: Prologis 67,870 in Tracy Stockton Logistics Center Developer: IDI Gazeley 3,040 in Stockton LATHROP MANTECA Lathrop Logistics Center Developer: Buzz Oates 870,294 in Lathrop RIPON Pacific Logistics Center Developer: Exeter 6,000 in Manteca Under Construction - Under 00,000 Tracy Distribution Center Developer: Black Creek Group Speculative 610,914 in Tracy PROJECT SUBMARKET SIZE STATUS DEVELOPER Owens Brockway/LBA Schulte Tracy 490,000 Speculative LBA Realty International Park of Commerce Tracy 288,689 Speculative Prologis NorCal Logistics Center Stockton 28,480 Speculative Seefried/USAA International Park of Commerce Tracy 22,000 Prologis Northeast Industrial Area Tracy 221,22 FEMA Airport Gateway Center Stockton 18,193 Speculative Buzz Oates Eastgate Business Park Tracy 1,942 Speculative Scannell Properties Completed Construction PROJECT SUBMARKET SIZE STATUS DEVELOPER International Park of Commerce Tracy 708,080 Prologis CenterPoint Intermodal Center Manteca 1,47 Speculative CenterPoint Oates Arch Logistics Center Stockton 06,844 Speculative Buzz Oates Tracy Distribution Center III Tracy 461,810 Speculative Black Creek Group Manteca Commerce Center Manteca 286,072 Speculative Scannell Properties Airport Gateway Center Stockton 164,000 Speculative Phelan Development San Joaquin County Research & Forecast Report Q Industrial Colliers International

6 Market Comparisons San Joaquin County INDUSTRIAL MARKET CLASS BLDGS TOTAL INVENTORY DIRECT VACANT DIRECT SUBLEASE VACANT SUBLEASE TOTAL VACANT CURRENT QUARTER PRIOR QUARTER NET ABSORPTION CURRENT QTR NET ABSORPTION YTD COMPLETIONS CURRENT QTR COMPLETIONS YTD UNDER CONSTRUCTION WEIGHTED AVG ASKING NNN Lt Ind ,60 21, % - 0.0% 21, % 3.0% 2,160 (8,790) $0.98 Whse 20,224,741 1,27, % 92,000 0.% 1,349, % 4.7% 708,212 1,767,79 1,169,890 2,142,890 2,9,667 - R&D/Fl 4 869,314 1, % - 0.0% 1, % 0.0% (1,680) (1,680) $0.87 Mfg 13 2,318,961 11,760 0.% - 0.0% 11,760 0.% 1.2% 16,800 24, Sp Purp 19 1,0,66-0.0% - 0.0% - 0.0% 0.0% - 9, Total 180 2,736,232 1,291,891.0% 92, % 1,383,891.4% 3.8% 72,492 1,841,621 1,169,890 2,142,890 2,9,667 $0.97 LATHROP Lt Ind , % - 0.0% - 0.0% 0.0% Whse 23 9,69,284 16, % 488,961.1% 0,001.2% 1.6% (347,772) (493,001) ,294 $0.93 R&D/Fl 7 21,100 4,00 2.1% - 0.0% 4,00 2.1% 2.1% - 7, Mfg 4 1,61,06 417, % - 0.0% 417, % 26.8% - (120) Sp Purp , % - 0.0% - 0.0% 0.0% Total 66 12,617, ,260 3.% 488, % 927, % 4.6% (347,772) (48,66) ,294 $0.93 MANTECA Lt Ind 8 941,39 20, % - 0.0% 20, % 1.7% (4,398) 17, Whse 12 3,383,20 162,61 4.8% - 0.0% 162,61 4.8% 0.3% 681,47 1,08, ,47 1,242,204 6,000 $0.69 R&D/Fl ,68 10, % - 0.0% 10, % 28.0% 1,60 2, $0.31 Mfg 8 733,93, % - 0.0%, % 0.7% $0.70 Sp Purp ,988 20, % - 0.0% 20, % 2.9% 8,000 (3,640) $0.37 Total 14 6,419, , % - 0.0% 313, % 2.9% 686,682 1,101, ,47 1,242,204 6,000 $0.3 STOCKTON Lt Ind 31 6,738,20 300,766 4.% 4,88 0.1% 30,34 4.%.9% 94,021 81, $0.2 Whse ,842,946 3,026, % 41,1 1.% 3,67,28 9.7% 9.2% 424,8 790, ,844 2,,96 1,023,713 $0.42 R&D/Fl 6 1,161,847 4, % - 0.0% 4, % 6.9% 2,80 30, $0.64 Mfg 78,701,008 67,00 1.2% - 0.0% 67,00 1.2% 1.2% 2,00 108, $0.32 Sp Purp 114 2,414,391 4,01 1.9% - 0.0% 4,01 1.9% 1.7% (4,006) 4, $1.01 Total 919 2,88,712 3,494, % 4, % 4,040, % 7.% 43,220 1,01, ,844 2,,96 1,023,713 $0.44 LODI Lt Ind 124 1,840,79 8,00 0.% - 0.0% 8,00 0.% 0.8% 6,70 6, $0.61 Whse 28 6,183,32-0.0% - 0.0% - 0.0% 0.0% R&D/Fl ,497 16, % - 0.0% 16, % 0.0% (16,134) (14,384) $0.60 Mfg 32 3,002, % - 0.0% - 0.0% 0.0% - 86, Sp Purp 27 1,08,69-0.0% - 0.0% - 0.0% 0.0% Total ,309,173 24, % - 0.0% 24, % 0.1% (9,384) 87, $0.60 RIPON Lt Ind 6 107, % - 0.0% - 0.0% 0.0% Whse 7 18, % - 0.0% - 0.0% 0.0% R&D/Fl 2 49,12-0.0% - 0.0% - 0.0% 0.0% Mfg 3 497,7-0.0% - 0.0% - 0.0% 0.0% Sp Purp 2 43,70-0.0% - 0.0% - 0.0% 0.0% Total ,1-0.0% - 0.0% - 0.0% 0.0% MARKET TOTAL Lt Ind ,866, 30, % 4,88 0.0% 34,89 3.3% 4.2% 98,33 97, $0. Whse ,479,687 4,462,474.8% 1,122,116 1.%,84,90 7.3%.9% 1,466,770 3,10,303 2,678,281,941,00,018,674 $0.49 R&D/Fl 218 3,449,68 182,01.3% - 0.0% 182,01.3%.6% 9,641 23, $0.44 Mfg ,81,441 02, % - 0.0% 02, % 3.8% 19,300 7, $0.3 Sp Purp 218 7,213,20 6, % - 0.0% 6, % 1.0% 3,4 61, $0.81 Total ,824,771,62,28.0% 1,126, % 6,688, %.1% 1,98,238 4,329,820 2,678,281,941,00,018,674 $0.49 QUARTERLY COMPARISON AND TOTALS Q ,824,771,62,28.0% 1,126, % 6,688, %.1% 1,98,238 4,329,820 2,678,281,941,00,018,674 $0.49 Q ,146,490,32, % 2, %,608,919.1% 4.% 2,400,029 2,731,82 3,262,769 3,262,769 4,984,74 $0.48 Q ,883,721 4,71,269 4.% 30, % 4,746,179 4.% 4.8% 331,3 331, ,63,6 $0.3 Q ,883,721,0, % 21, %,077, % 4.% 1,028,172 4,864,386 1,418,691 3,86,972 7,63,6 $0.2 Q ,46,030 4,66,397 4.% 21, % 4,687,213 4.% 4.8% 1,370,60 3,836,214 1,09,143 2,447,281 6,2,397 $0.3 6 San Joaquin County Research & Forecast Report Q Industrial Colliers International

7 69 countries $2.7 billion in annual revenue* 2.0 billion square feet under management 1,400 professionals and staff COLLIERS INTERNATIONAL STOCKTON 3439 Brookside Road, Suite 108 Stockton, CA 9219 USA MANAGING DIRECTOR Michael Goldstein, SIOR Executive Managing Director CA License No RESEARCHER Kyle Mecker Research Analyst $116 billion in total transaction volume *All statistics are for 2017, are in U.S. dollars and include affiliates. About Colliers International Group Inc. Colliers International Group Inc. (NASDAQ: CIGI) (TSX: CIGI) is a top tier global real estate services and investment management company operating in 69 countries with a workforce of more than 13,000 professionals. Colliers is the fastest-growing publicly listed global real estate services and investment management company, with 2017 corporate revenues of $2.3 billion ($2.7 billion including affiliates). With an enterprising culture and significant employee ownership and control, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide, and through its investment management services platform, has more than $2 billion of assets under management from the world s most respected institutional real estate investors. Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice to accelerate the success of its clients. Colliers has been ranked among the top 100 global outsourcing firms by the International Association of Outsourcing Professionals for 13 consecutive years, more than any other real estate services firm. Colliers is ranked the number one property manager in the world by Commercial Property Executive for two years in a row. Colliers is led by an experienced leadership team with significant equity ownership and a proven record of delivering more than 20% annualized returns for shareholders, over more than 20 years. For the latest news from Colliers, visit Colliers.com or follow us on and LinkedIn. Copyright 2018 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.