Palm Beach County Industrial Market Report Year-End 2018

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1 County Industrial Market Report Rents Continue to Rise in a Supply-Constrained Market as Major Institutional Players Enter the Market County's industrial market continued to tighten during 208 due to strengthening market fundamentals and the steady growth of e-commerce. As of November 208, County's non-seasonally adjusted unemployment rate continued to decline to 3.0%, an 80-basis point (bps) drop over the previous year and an alltime low for the county. The manufacturing sector also experienced an 8.5% year-over-year employment gain. The consistent upward trend in employment and a boost in wages has instilled stronger consumer confidence, which continues to fuel demand for logistics space. A limited construction pipeline and scarce deliveries during 208 further compressed vacancy rates as the overall vacancy rate fell to 2.84%, the lowest vacancy rate across the tri-county area. The average asking rental rate also climbed to a new high of $9.93 per sf, a 7.5% increase over the previous year. Investment activity has gained momentum in County as an increasing number of institutional investors are entering the market. At the end of 208, institutional investors comprised 24.8% of County's buyer composition, up from the 3.8% recorded in 207. Cross-border investors were most active, accounting for 39.7% of all investment sales. The most leasing activity during the fourth quarter took place in West, the largest industrial submarket in County which boasts a vacancy rate of just under 2%. With limited supply-side pressure in the market, it is likely that rents will continue to climb in 209 as the market tightens further. Slow construction has caused the average asking rental rate to rise 28% over a fiveyear period Industrial Market Snapshot During 208, only one building totaling 46,253 sf was delivered, which was building five of the Turnpike Crossing Industrial Park. Average asking rents in County have surged due to this supply-constrained market, with rents increasing as much as 28% over the last five years. Cabot Properties Inc. recently purchased three warehouses totaling 72,8 sf at the Vista Business Park for $25.8 million. The buildings were fully occupied at the time of sale and were purchased from McCraney Property Co. This transaction is a prime example of institutional investors seizing new opportunities in County. Investment sales volume remained steady throughout 208 with total transaction volume of $20.2 million, a slight 6.5% decrease from 207 volume. The largest sale during the fourth quarter was the $40.8 million sale of the Windsor Commerce Center to Harbor Group International. The building serves as the headquarters for Power Systems Manufacturing and was last traded for $6.54 million in The growth of e-commerce and increasing demand for last-mile delivery services has sparked the emergence of new logistics tech startup companies throughout South Florida. This trend is likely to continue as County's convenient location along I-95, as well as its closer proximity to northern markets, makes it an attractive location for logistics companies looking to expand. TPA Group recently broke ground on a 220,000-sf warehouse located in the Park of Commerce in Gardens. The building is a speculative development scheduled for completion in June 209. As the most significant new development under construction in an increasingly tight industrial market, it is likely the building will see significant pre-leasing activity before it is delivered. 39. MSF 42,30 SF 2.84% $9.93SF/NNN Total industrial inventory in the County market Direct Y-T-D net absorption as of 4Q-208 Overall Vacancy Average asking rental rate

2 County Industrial Market Report Year-End 207 Vacancy Rate YTD Net Absorption (SF) Average Asking Rent Rate ($/SF/NNN) 7% 6% 5% 4% 3% 2% % 0% Q-208 Direct Sublet,400,000,200,000,000, , , , , Q-208 $0.00 $9.00 $8.00 $7.00 $6.00 $ Q-208 PALM BEACH COUNTY INDUSTRIAL MARKET AT A GLANCE MILLION IN TOTAL INDUSTRIAL INVESTMENT SALES FOR T-2 MOS ENDING 4Q-208 SQUARE FEET CURRENTLY UNDER CONSTRUCTION 3.8% NOV-207 CHANGE IN BROWARD COUNTY UNEMPLOYMENT RATE 3.0% NOV-208 INCREASE IN TOTAL NON-FARM EMPLOYMENT SINCE 4Q-207 RENTAL RATE INCREASE OVER THE TRAILING 2-MOS ENDING 4Q-208 OF NEW INDUSTRIAL DEVELOPMENT UNDERWAY IN PALM BEACH GARDENS INCREASED CONSUMER CONFIDENCE IS FUELING THE NEED FOR LAST-MILE LOGISTICS SERVICES AN INCREASING NUMBER OF INSTITUTIONAL INVESTORS ARE BEGINNING TO ENTER THE INDUSTRIAL MARKET YEAR-OVER-YEAR INCREASE IN THE MANUFACTURING JOB SECTOR

3 County Industrial Market Report Year-End 207 County Bulk Distribution 4,447,603 22,658 0 $ % 4.98% 0.00% 4.98% 220, ,472 Flex 0,972, ,385 20,60 $ % 3.0% 0.9% 3.20% 45,000 (96,993) Manufacturing 5,766,665 3,928 43,200 $ %.98% 0.75% 2.72% 0 74,89 Warehouse / Distribution 7,924,30 367,85 4,444 $ % 2.05% 0.08% 2.3% 56,60 60,02 Total 39,0,75,033,822 78,254 $ % 2.64% 0.20% 2.84% 32,60 42,30 Boca Raton Bulk Distribution $ % 0.00% 0.00% 0.00% 0 0 Flex 3,206,292 36,348 20,60 $ % 4.25% 0.64% 4.90% 0 (60,053) Manufacturing 705,788 53,550 0 $ % 7.59% 0.00% 7.59% 0 (30,463) Warehouse / Distribution 2,588,86 39,326,00 $ %.52% 0.04%.56% 0 (22,239) Total 6,500, ,224 2,70 $ % 3.53% 0.33% 3.86% 0 (2,755) Delray Bulk Distribution $ % 0.00% 0.00% 0.00% 0 0 Flex 882,40,632 0 $ %.32% 0.00%.32% 0 (4,34) Manufacturing 224, $ % 0.00% 0.00% 0.00% 0 0 Warehouse / Distribution,7,220 9,74 0 $ % 0.87% 0.00% 0.87% 0 33,448 Total 2,224,20 2,373 0 $ % 0.96% 0.00% 0.96% 0 29,34 Boynton Bulk Distribution 450, $ % 0.00% 0.00% 0.00% 0 0 Flex 965,462 32,25 0 $ % 3.34% 0.00% 3.34% 0 (6,477) Manufacturing 489, $ % 0.00% 0.00% 0.00% 0 0 Warehouse / Distribution,888,485 7,886 0 $ % 6.24% 0.00% 6.24% 56,60 (26,866) Total 3,793,855 50,37 0 $ % 3.96% 0.00% 3.96% 56,60 (43,343) Lake Worth Bulk Distribution 252,000 33,632 0 $ % 53.03% 0.00% 53.03% 0 3,459 Flex 577,80 56,367 0 $ % 9.77% 0.00% 9.77% 0 (8,728) Manufacturing 562, $ % 0.00% 0.00% 0.00% 0 7,000 Warehouse / Distribution 998,697 5,200 0 $ % 0.52% 0.00% 0.52% 0 2,996 Total 2,389,95 95,99 0 $ % 8.7% 0.00% 8.7% 0 32,727 Wellington Bulk Distribution 875, $ % 0.00% 0.00% 0.00% 0 0 Flex,230,632 20,009 0 $ %.63% 0.00%.63% 0 (6,982) Manufacturing 23, $ % 0.00% 0.00% 0.00% 0 0 Warehouse / Distribution,202,62 6,500 0 $ % 0.54% 0.00% 0.54% 0 4,203 Total 3,539,943 26,509 0 $ % 0.75% 0.00% 0.75% 0 (2,779) West Bulk Distribution 2,200,405 88,026 0 $ % 4.00% 0.00% 4.00% 0 252,03 Flex 3,9,009 63,8 0 $ %.98% 0.00%.98% 45, Manufacturing 3,32,744 60,378 43,200 $ %.93%.38% 3.3% 0 98,282 Warehouse / Distribution 9,29,4 87,46 3,344 $ % 0.94% 0.4%.08% 0 60,862 Total 7,85, ,668 56,544 $ %.68% 0.32%.99% 45,000 5,6 North Bulk Distribution 670, $ % 0.00% 0.00% 0.00% 220,000 0 Flex 99,638 0,660 0 $ %.6% 0.00%.6% 0 (893) Manufacturing 49, $ % 0.00% 0.00% 0.00% 0 0 Warehouse / Distribution 837,59 02,052 0 $ % 2.9% 0.00% 2.9% 0 7,608 Total 2,846,642 2,72 0 $ % 3.96% 0.00% 3.96% 220,000 6,75 Reporting Methodology: This report includes all industrial buildings and parks 20,000 SF and greater in County that are not government owned. All rents are reported on a triple-net basis and are direct weighted averages calculated on total available space. The information in this report has been collected by the Avison Young research team via sources that are deemed reliable but is not guaranteed.

4 County Industrial Market Report County's unemployment rate continued to decline to 3.0%, an all-time low for the county. Leading Indicators (Y-O-Y 4Q-207 to 4Q-208) Vacancy Rate 2.84% Net Absorption 42,30 SF Average Asking Rate (NNN) $9.93 New Construction 32,60 SF Total Employment 75 K Significant Fourth Quarter 208 Sales Transactions - Sorted by Sale Price Property SF Sale Price Price/ SF Buyer Submarket Windsor Commerce Center 58,460 $40,800,000 $257 Harbor Group International North Vista Business Park 73,82 $25,838,800 $49 Cabot Properties West The Warehouse District 88,000 $8,500,000 $20 Asana Partners West 325 Fortune Way 79,845 $0,500,000 $32 Pine Plaza Properties LLC Wellington Fairfax Industrial Park* 25,400 $0,032,000 $80 Genet Property Group West * Part of a $2 million portfolio purchase 209 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 County Industrial Market Report Year-End 207 MARTIN COUNTY PALM BEACH COUNTY SUBMARKETS N PALM BEACH W PALM BEACH Jupiter Farms 95 Tequesta AA Jupiter 8 Jupiter Inlet Colony Juno Contact Information Tom Viscount Principal 500 W Cypress Creek Rd, Suite 350 Ft. Lauderdale, FL tom.viscount@avisonyoungcom WELLINGTON LAKE WORTH BOYNTON BEACH DELRAY BEACH BOCA RATON Gardens Riviera North Shores Wayne Schuchts Principal 44 Brickell Ave., Suite 06 Miami, FL wayne.schuchts@ Royal 704 Haverhill 809 Westgate Int l Airport West Evie Linger Research Analyst 500 W Cypress Creek Rd, Suite 350 Ft. Lauderdale evie.linger@ Wellington 882 Greenacres Springs 5 Lake Worth AA South Lantana Manalapan Boynton 95 Ocean Ridge 809 Golf Gulf Stream 806 Delray 794 Boca Raton 807 AA Highland 808 PALM BEACH COUNTY BROWARD COUNTY Parkland Deerfield 209 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.