MARKETBE EAT

INDUSTR RIAL SN NAPSHO OT

RIC CHMOND D, VA
A Cu ushman & Wak kefield Alliance e Research Pub blication

Q3 2013

National industr rial production ro ose 0.4% in August the big ggest increase in six months propelled by gai ins in factory pro oduction of cars, appliances and home h furnishings. . Virginias manufacturing activity a also strengthened, accord ding to the Federal Reserve Bank of Richmond, wit th more manufa acturers expectin ng greater strengt th in the six mon nths ahead. But an nother measure could be cause for r uncertainty: The states jobless cked up to 5.8% from 5.7% in Aug gust, the fourth consecutive c rate tic month hly increase. It sto ood at 5.9% in Au ugust 2012. The commonwealth c could be threatened by y an overreliance on federal gover rnment spending ight grow more slowly s than the re est of nation in th he next two and mi years, a research repor rt at George Mason University ind dicates.

ECONOMIC OVERVIEW

say tot tal leasing and abs sorption in the th hird quarter dont really reflect the market ts vigor.

OUTL LOOK

Supply has tightened, es specially for class s A space. Distrib bution buildings with 32 2-foot-high ceiling gs are limited to just a few spaces s. Still, demand is limited d and agents say it t will be difficult t to maintain the m momentum into the fou urth quarter. User-d driven deals (such h as the Lumber L Liquidators move e) abound, with more e expected to be an nnounced.

STAT TS ON THE G O
Q3 2012 2 Overa all Vacancy Direct t Asking Rents (ps f/yr) YTD L Leasing Activity (sf f) 10.2% % $4.28 8 1,723,244 4 Q3 2013 9.9% $4.13 2,297,468 Y-O-Y CHANGE -0.3pp -3.5% 33.3% 12 MONTH H FORECAST T

DEAL LS AND EXPA ANSIONS

It was a very active thir rd quarter for sales and leasing. Dominion D Packag ging bought the 317,400-square-fo oot (sf) former Mazda Distribution n Center at 5700 Audubo on Drive for $9 million, m or $28.39 9 per square foot t (psf). rnment Propertie es Income Trust bought b the 228,10 08-sf Enterchange e Gover at Mea adowville for $12 2.5 million, or $54 4.81 psf. In the sa ame I-95S/I-295S corrido or, a Cole Real Estate E Investment ts affiliate paid $8 81.3 million for th he Amazo on fulfillment cent ter at Meadowvil lle Technology Pa ark, adding about t 1 millio on sf to its portfo olio. A flex property at 601 Moorefield Park Drive with 2.4 ac cres and 23,184 sf s sold to o L&N LLC for $825,000, or $35.59 psf. Land s sales also saw increased activity. Lumber Liquidator rs plans to build and op perate a 1 million-square-foot (ms sf) distribution ce enter in the Whit te Oak T Technology Park in eastern Henric co County on abo out 110 acres of land it purchased for ab bout $5 million. Republic R National Distributing Company bought 22.7 acres in Hanover r County from Vi irginia Truck or $1.9 million. Center of Richmond fo ble leases included d an expansion of f Central Shared Services, which Notab leased an additional 87, ,425 sf at the Ent terchanges at Wa althall on Ruffin Mill Ro oad to bring its to otal to 184,000 sf f. CEVA Freight took t 36,651 sf in Highw woods Distribution I at 6601 S. Lab burnum Ave., while Insulation Distrib butors leased 18,000 sf at 4325 Ca arolina Ave. Bapt tist Theological Semina ary of Richmond leased 16,868 sf in Villa Park I at 8040 Villa Park Drive, adding to the fle ex deal activity around Parham Road and I-95. Vacanc cy dipped to 9.9% % in the quarter, down from 10.2% % in the third quarte er of 2012 and fro om 10.5% in the second s quarter of o 2013. Agents
Thalhim mer 11100 W W. Broad St. Glen Allen, VA 23060 ushmanwakefield.c com/knowledge www.cu

OVER RALL RENTAL L VS. VACANC CY RATES

$4.50 $4.40 psf/yr $4.30 $4.20 $4.10 $4.00 2009 2010 201 11 2012 Q Q3 2013 14.0% 12.0% 10.0% 8.0% 6.0% 4.0%

OVERALL NET T RENTAL RATE

OVERALL V VACANCY RATE

LEAS SING ACTIVIT TY VS. OVERA LL NET ABSO ORPTION

6 6,000 sf (thousands)
2 530 2,530

2,711

0 -2 2,000 -4 4,000
-3,481

2009

2010

-1,006

2011

2,565

573

2 2,000

4,470

4,013

2012 2

2013 YTD

LEASING AC CTIVITY

O OVERALL NET ABSO ORPTION

For more m information, contact: Brad McGetrick, Direc ctor, Brokerage Se ervices 804 697 6 3558 brad.mcgetrick@thalhi imer.com

The market terms and definition ns in this report are based on n NAIOP standards. No warranty or repr resentation, express or implie ed, is made to the accuracy o or completeness of the information cont tained herein, and same is submitted subject to errors, omissions, change of price, rental or othe er conditions, withdrawal wit thout notice, and to any spec cial listing conditions imposed d by our princ cipals. 20 013 Cushman & Wakefield, Inc. All rights reserved.

1,737

4 4,000

2,297

RICHMOND, VA
SUBMARKET CLUSTER INVENTORY OVERALL VACANCY RATE 1.8% 9.4% 9.0% 11.4% 10.1% YTD LEASING ACTIVITY UNDER CONSTRUCTION YTD CONSTRUCTION COMPLETIONS 0 500,000 311,730 0 0 YTD DIRECT YTD OVERALL NET NET ABSORPTION ABSORPTION D Downtown Northeast Northwest Southeast Southwest 620,780 13,628,692 24,634,197 17,544,586 48,391,629 6,457 289,436 539,423 314,014 1,148,138 0 0 0 0 0 500 (197,283) 674,563 (43,870) 1,270,727 500 (164,755) 678,163 (43,870) 1,266,907 $0.00 $3.67 $2.93 $3.87 $2.95 MF $0.00 $2.39 $2.77 $3.95 $4.02 DIRECT WEIGHTED AVERAGE NET RENTAL RATE* F $4.95 $9.08 $7.50 $6.80 $6.58 GI $0.00 $4.91 $5.04 $3.76 $3.82

TOTALS

104,819,884

9.9%

2,297,468

811,730

1,704,637

1,736,945

$3.36

$3.51

$7.13

$4.38

PROPERTY TYPE

INVENTORY

OVERAL VACANCY RATE 11.3% 10.6% 12.8% 7.8%

YTD LEASING ACTIVITY

UNDER CONSTRUCTION

YTD CONSTRUCTION COMPLETIONS 811,730 0 0 0

YTD DIRECT YTD OVERALL NET NET ABSORPTION ABSORPTION Q3 2013 2012 $3.55 $3.64 $7.81 $4.18 1,265,129 (253,012) 51,487 641,033 1,265,129 (253,012) 51,487 673,341 $3.36 $3.51 $7.13 $4.38

DIRECT WEIGHTED AVERAGE NET RENTAL RATE* 2011 2010 $3.82 $3.51 $7.89 $4.21 $3.81 $3.51 $7.77 $5.80

Distribution Manufacturing Flex General Industrial

21,356,900 28,714,195 11,661,491 43,087,298

598,864 83,618 235,727 1,379,259

0 0 0 0

TOTALS

104,819,884

9.9%

2,297,468

811,730

1,704,637

1,736,945

$4.13

$4.16

$4.15

$4.26

* RENTAL RATES REFLECT ASKING $PSF/YEAR

D= DISTRIBUTION MF = MANUFACTURING F = FLEX

GI = GENERAL INDUSTRIAL

MARKET HIGHLIGHTS
SIGNIFICANT Q3 2013 LEASE TRANSACTIONS 1821 Battery Dantzler Road Enterchange at Walthall Airport Distribution Center A 10471 Washington Highway Villa Park I SIGNIFICANT Q3 2013 SALE TRANSACTIONS 1801 N. Meadowville Technology Pky. 5700 Audubon Drive 2101 Bermuda Hundred Road 2819 Bells Road 3000 Transport Street SIGNIFICANT Q3 2013 CONSTRUCTION COMPLETIONS NA SIGNIFICANT PROJECTS UNDER CONSTRUCTION NA SUBMARKET I-95 S/I-295 S/Rt 10 I-95 S/I-295 S/Rt 10 Airport I-95 North/Ashland Staples Mill/Parham SUBMARKET I-95 S/I-295 S/Rt 10 Airport I-95 S/I-29 5S/Rt 10 Jeff Davis Corridor Jeff Davis Corridor SUBMARKET TENANT Hillphoenix Central Shared Services CEVA Freight, LLC Triton Stone Group of New Orleans BUILDING CLASS B A A B SQUARE FEET 90,000 87,425 36,651 24,000 16,868 SQUARE FEET 1,016,281 317,400 228,108 127,000 76,124 BUILDING SQUARE FEET

The Baptist Theological Seminary of B Richmond BUYER Cole Corporate Income Trust, Inc. Dominion Packaging Government Properties Income Trust HMU, LLC dba Open Plan Systems Keany Produce MAJOR TENANT PURCHASE PRICE / $PSF $81,300,000 / $80.00 $9,000,000 / $28.39 $12,503,000 / $54.81 $2,095,000 / $16.49 $2,000,000 / $26.27 COMPLETION DATE

SUBMARKET

MAJOR TENANT

COMPLETION DATE

BUILDING SQUARE FEET

Thalhimer 11100 W. Broad St. Glen Allen, VA 23060 www.cushmanwakefield.com/knowledge

For more information, contact: Brad McGetrick, Director, Brokerage Services 804 697 3558 brad.mcgetrick@thalhimer.com

The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. 2013 Cushman & Wakefield, Inc. All rights reserved.