Market Update 2016Presented by:

INDUSTRIAL MARKET

Jim YoungThe Barry Company

Total Industrial Market

• Total Universe: 135,797,343 sq ft

• Occupied Space: 128,249,300 sq ft

• Vacant Space: 7,548,043 sq ft

• Vacancy Rate: 5.6%

• Absorption: 2,903,434 sq ft

Central North West South Kenosha

Total Universe 21,467,633 41,290,498 32,896,515 17,822,433 22,320,264

Vacant Space 3,569,865 1,233,204 1,247,367 660,880 1,752,526

Vacancy Rate 12.4% 3.0% 3.8% 3.7% 7.9%

Absorption 340,463 545,275 895,894 671,247 450,555

2016 Industrial Market Statistics

• Artificially high vacancy rate in Central Market• Occupied space is being marketed as vacant

Property Vacant Space

445 W. Oklahoma Ave. 361,000 SF

944 N. 45th Street 146,000 SF

714 E. Keefe Ave. 132,000 SF

2748 N. 32nd Street 379,800 SF

1982 S. Hilbert Street 194,300 SF

3201-3257 S. 20th Street 145,700 SF

TOTAL 1,358,800 SF

2016 Industrial Market Statistics

2016 Industrial Market Statistics

Historical Industrial Vacancy Rates

0

2

4

6

8

10

12

14

16

18

2011 2012 2013 2014 2015 2016

Central North West South Kenosha

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2012 2013 2014 2015 2016 YTD

Absorption is outpacing construction and new inventory!

Deliveries (SF) Annual Absorption (SF)

Why the Low Vacancy Rate?

Short Supply of developable sites

• Lack of land in right location to build product prospects want

• Cost of developing the land/reluctance of some communities to use TIF Financing on new parks

• Fear of bringing a site to market and gets limited interest• This is slowly fading as recent speculative deals have been met

favorably

Large TransactionsAcceleration of large transactions compressing already low rates

Ariens – First Park 94 (Kenosha)8448 38th Street, Kenosha601,439 SF Lease

KemKrest (Kenosha)9801 80th Avenue, Pleasant Prairie277,454 SF Lease

Lindner Logistics (West)W229N1492 Westwood Drive, Pewaukee190,000 SF Sale

Large TransactionsAcceleration of large transactions compressing already low rates

Pieper Electric (West)5475 S. Westridge Court, New Berlin100,000 SF Lease

Large Transactions

Jason Industries (North)9009 N. 51st Street, Brown Deer154,800 SF Sale

Phoenix Inv. to Briggs & Stratton (North)4143 N. 27th Street, Milwaukee170,000 SF Lease

Oilgear (Central)2300 S. 51st Street, Milwaukee250,000 SF Sale

0

50

100

150

200

250

300

2012 2013 2014 2015 2016 YTD

10-50K Building Sales

10-50K Building Sales

Smaller Transaction VolumeHas been fantastic over the last 5 years, averaging 200 sales.

• Glenroy sale to

MacLean-Fogg (North)

N92W14555 Anthony Avenue

71,044 SF, 4/2016

$3,425,000 - $48.21/SF

Creative/Off-Market Transactions

• STAG Industrial Sale to

Crown Lift Truck (West)

5150 Towne Drive

81,500 SF, 5/2016

$5,925,000 - $72.69 /SF

A more even Playing Fieldbetween buyers and sellers

• Higher Sales Prices and “firming” of price points across all categories and market segments

• Reduced time on market

$50.96/SF - Central

Strong Sale Prices Across All Markets

$60.32/SF - West

$61.15/SF - West

$79.57/SF - Kenosha

$62.48/SF - South

$56.05/SF - North $58.40/SF - North

$70.52/SF - West

$75.83/SF - West

Increase in Infill Development/New Construction for End Users

Oberlin Filter (West)827 Silvernail Road, Pewaukee92,340 SF Sale

Mortara Instrument (North)8585 N. Bradley Road, Milwaukee62,000 SF new construction

Result of Low Vacancy

• CenterPoint and Wispark planning large

spec building in Pleasant PrairieBizTimes 03/14/16

• Construction begins on another spec

industrial building in Kenosha CountyBizTimes, 09/01/16

• Border deal clears path for more

development along I-94 in Kenosha CountyThe Business Journal, 10/26/16

• Dairyland property in Kenosha lined up for

sale, manufacturing developmentThe Business Journal, 11/1/16

• Franklin approves large industrial buildingMilwaukee Journal Sentinel, 11/18/16

• Large truck terminal planned for Oak CreekMilwaukee Journal Sentinel, 11/21/16

• Zilber plans speculative industrial building

in Pleasant PrairieBizTimes 11/29/16

• Industrial park planned for BrookfieldBizTimes 11/30/16

• OakView Business Park in Oak Creek lands

second spec building with 2017 openingThe Business Journal, 12/7/16

Increased Speculative Developmentas is playing out in Kenosha

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2012 2013 2014 2015 2016

Kenosha County Deliveries and Vacancy

Deliveries (SF) Vacancy Rate

• Newly announced Marriot development (South)

Oak Creek - 120,000 SF Proposed

• Dickman Co. (South)

OakView Business Park

Oak Creek

133,056 SF Under Construction

• 2000 Development (West)

Watertown Road & Commerce Cir.

Pewaukee

127,700 SF, October 2016

Increased Speculative Development

Increased Speculative Development

• Burnham Business Center (Central)

4915 W. Burnham Street

West Milwaukee

82,500 SF Under Construction

• Interstate Partners (West)

22755 Green Road

Pewaukee

140,000 SF Proposed

• Rizzo (West)

21290 Gumina Road

Brookfield

333,000 SF Proposed

• Century City (Central)

3945 N. 31st Street

Milwaukee

53,160 SF, Late 2015

Increased Speculative Development

Where do we go from here?

• Vacancy rates should rise as much of the pending/proposed construction gets delivered

• Uptick in Build-to-Suit Projects• A function of developers controlling key sites

• Potential slow down in 2017 of speculative development in the South market on the heels of recent announcements, but potential uptick in speculative activity in the North market