U.S.

Research Report
INDUSTRIAL MARKET OUTLOOK
Q3 2017

Demand Continues to Outpace

Supply Leading to Record
Low Vacancies
James Breeze, National Director of Industrial Research | USA

Featured Highlights Market Indicators

>> The U.S. industrial sector continues to far outperform all other Relative to Prior Quarter
Q3 2017 Q4 2017*
segments in the industry, with record levels of absorption, rent
growth, construction and occupancy, all fueled by positive economic VACANCY
drivers and structural shifts favoring warehouse space. NET ABSORPTION
>> U.S. e-commerce sales grew 16% in Q2 2017 compared with the
CONSTRUCTION
same time last year and now represent 10% of total non-auto retail
sales. E-commerce will be a driving force in industrial real estate for RENTAL RATE**
the foreseeable future.
* Projected
>> The national industrial vacancy rate dropped 0.2 percentage points ** Warehouse rents
(pps) compared with the previous quarter to 5.2%the lowest rate
on record despite more than 170 million square feet of new supply Summary Statistics | Q3 2017
completing in the first three quarters of 2017. U.S. Industrial Market
>> Product under construction remained high at 222 million square
Vacancy Rate 5.2%
feet, the second-greatest quarterly level on record. Accordingly,
vacancies could rise modestly in coming quarters if absorption does Change From Q3 2016 -0.5%
not keep pace. Markets With Lower 83.6%
Vacancies Compared With Q3 2016
>> Tightening markets and new, higher-quality Class A industrial space
hitting the market drove up asking rents to $6.32 per square foot/ Q3 2017 Absorption (MSF) 68.7
per year (psf/yr) for all product types in Q3 2017, 10% higher than Markets With Positive 82.6%
the same time last year and the highest asking rent on record. Absorption

>> Essential indicators for industrial real estate, including loaded Q3 2017 New Supply (MSF) 63.4
inbound container volumes and intermodal rail volume, continue New Supply to Inventory 0.4%
to move in a positive direction. U.S. seaports are booming, with all Under Construction (MSF) 222.8
major locations posting year-over-year increases in loaded inbound
container volumes. Rail traffic also remains robust as year-to-date ASKING RENTS
volumes are up more than 3% compared with the previous year. PER SQUARE FOOT PER YEAR

Average Warehouse/Distribution $5.37

>> Growth in investor demand for industrial properties continues to Center
surpass all other property types. More than $51 billion in industrial
Average Manufacturing Space $5.68
assets were purchased in the first three quarters of 2017, 23%
higher than the same period a year ago. While single-asset sales Average Flex Space $11.90
dominated the first half of the year, large portfolio sales surged in
third quarter, with more than $9 billion closing in the third
quarter alone.
The U.S. industrial market rebounded from a relatively slow first U.S. Industrial Market
half of 2017 with just under 69 million square feet absorbed, Q1 2016 to Q3 2017
the third highest quarter on record, and the thirtieth consecutive
100 6.2%
quarter of positive net absorption. Year-to-date, continued demand

MSF
90 6.0%
from e-commerce and third-party logistics (3PL) users led to
80
more than 183 million square feet of occupancy gains, lowering the 5.8%
70
overall vacancy rate to 5.2%, the lowest vacancy rate on record. 5.6%
60

Essential indicators for industrial real estateincluding loaded 50 5.4%

inbound container volumes and intermodal rail volumecontinue to 40 5.2%

move in a positive direction. Year-to-date loaded inbound container 30
5.0%
volumes increased in all major seaports at the end of September 20
10 4.8%
(according to the most recent data available). While volumes
continue to grow at a brisk pace in most markets, the largest year- 0 4.6%
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
over-year gains were seen at the ports of Long Beach, Savannah
New Supply Absorption Vacancy Rate (%)
and Houston, all increasing more than 10% compared with the
same time a year ago, driving strong industrial demands. Rail Source: Colliers International
traffic, too, is experiencing solid growth, with total annual volumes
up 3% at the end of October. Strong traffic continues to increase
demand in 2017 for industrial product in the major rail hub markets U.S. Industrial Indicators | Q3 2017
of Chicago, Kansas City, St. Louis and Atlanta.
SERIES PERCENTAGE
SERIES INDEX RATE OF TREND*
INDEX INDEX POINT DIRECTION
(SEP. 2017) CHANGE (MONTHS)
The manufacturing sector also continues to post robust (OCT. 2017) CHANGE

fundamentals. The Institute for Supply Managements Purchasing PMI 58.7 60.8 -2.1 Growing Slower 14
Managers Index remained strong at 58.7 in October. The index
has been in expansionary territory for 14 consecutive months. New New Orders 63.4 64.6 -1.2 Growing Slower 14
orders, a key figure in the forecasting of manufacturing demand, Production 61.0 62.2 -1.2 Growing Slower 14
finished October at a solid 63.4. With manufacturing output
projected to remain strong into 2018 and the trend of reshoring Employment 59.8 60.3 -0.5 Growing Slower 13
continuing, look for industrial demand from manufacturers to Supplier
61.4 64.4 -3.0 Slowing Slower 18
increase in the coming quarters and push up demand in markets Deliveries
From
with robust manufacturing capabilities including Grand Rapids, Inventories 48.0 52.5 -4.5 Contracting 1
Growing
Detroit and Cincinnati. Customers'
43.5 42.0 1.5 Too Low Slower 4
Inventories
A possible headwind arising in the industrial market is labor Prices 68.5 71.5 -3.0 Increasing Slower 20
availability. With the U.S. economy near full employment and the Backlog of
55.0 58.0 -3.0 Growing Slower 9
industrial market needing more workers due to consumer shifts Orders
to e-commerce, intensifying warehouse demand, many occupiers Exports 56.5 57.0 -0.5 Growing Slower 20
are having difficulty finding adequate labor. This trend could have a
Imports 54.0 54.0 0.0 Growing Same 9
negative effect on occupier expansion plans in the coming quarters.
Despite this, import levels are strong, manufacturing is on the rise Overall Economy Growing Slower 101
and the U.S. economy remains solid, all of which points to strong
Manufacturing Sector Growing Slower 14
industrial fundamentals for the foreseeable future.
*Number of months moving in current direction
Source: ISM

2 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

Moderate Economic Expansion Continues
Economic growth remains moderate, with a mix of stronger
and weaker indicators, but no policy changes out of Washington U.S. Economic Indicators
or other economic drivers have materialized to fundamentally GDP
alter the course of recent trends. The only change has been the Q3 2017 +3.0%
weather, as Hurricanes Harvey (Texas) and Irma (Florida) caused Q2 2017 +3.1%
meaningful but temporary hits to employment, industrial output and
ISM
consumption. All exhibited sharp declines in the affected zones in
October 2017 PMI 58.7, up 6.8 pctg. pts from October 2016
the immediate aftermath of the storms, followed by strong bounce
RAIL TIME INDICATORS
backs in the following month. But the net impact on the economy in
the long term will be slight. Impacts from Hurricane Maria (Puerto Total Railcar Traffic +3.3% since October 2016
Rico) will be longer lasting though minor in scale given the regions Intermodal Traffic +3.6% since October 2016
relatively small economic output. Sources: BEA, ISM, AAR

Overall, growth during the rest of the year should be a bit faster
than in the first half of 2017, but down from the surge we saw
in the second quarter. GDP jumped to a revised 3.1% in Q2, up
from just 1.2% in Q1, for an average of 2.2%. The governments
first estimate for third-quarter GDP came in at 3%, somewhat
above consensus, as consumer spending and inventories were
modestly higher than expected, but offset by declines in residential
investment and business investment in structures. The expectation
for all of 2017 is 2.2%, rising slightly to 2.3% next year.

Significantly, this forecast is virtually identical to the survey results

from a year ago, before the last election, largely due to many
economists strongly questioning Washingtons ability to execute
on its policy promises, notwithstanding the election of more a
business-friendly Congress and administration.

One positive change, however, is that global GDP continues to

strengthen. The International Monetary Fund (IMF) again raised
its outlook, this time to 3.6% in 2017, up from 3.2% last year and
the fastest since the recession as the world finally experiences
synchronized growth in both developing and advanced nations.
Global growth is forecast to rise to 3.7% in 2018. These trends
bode well for the U.S. economy and for the industrial market,
which gains from improving international trade, investment
and manufacturing.

U.S. job growth seems to have peaked and continues to slow as

we near full employment. No doubt the job losses sustained in the
September employment report were a one-off consequence of
the hurricanes. Employment fell last month for the first time since
September 2010, after 84 consecutive monthly job gains. Still, the
longer-term trend has been falling. Since job growth peaked in
early 2014, job gains have dropped in nine of the past 13 quarters.

3 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

 Top 30 Markets: Absorption in Q3 2017

Minneapolis-St. Paul, MN
2.33M Northern New Jersey
Tacoma, WA 3.09M
2.06M Grand Rapids, MI
St. Louis, MO 2.24M
3.46M
Boston, MA
Chicago, IL Lehigh Valley
Sacramento, CA 2.49M
Denver, CO 13.46M 2.31M
3.51M Kansas City, MO-KS Hartford, CT
2.76M 6.60M 3.10M
Las Vegas, NV
5.63M Cincinnati, OH Philadelphia, PA
Memphis, TN Indianapolis, IN 8.64M
Stockton, CA Inland Empire, CA 4.46M
2.47M 4.24M
3.82M 14.83M Central New Jersey
Dallas-Fort Worth, TX 5.17M
Los Angeles, CA 13.62M
3.17M Atlanta, GA
Phoenix, AZ Charlotte, NC Baltimore, MD
17.12M
6.34M 3.07M 4.85M

Houston, TX
6.53M Greenville-Spartanburg-Anderson, SC
Savannah, GA 2.54M
YTD 2017 Absorption (SF) 4.10M
2.06M 17.12M South Florida
2.33M
Tampa Bay, FL
2.06M 5.00M 1.95M

10.00M 17.12M

Vacancy Drops to Record Low Despite Significant demand, record low vacancy rates and additional class A
space on the market from new construction increased asking rental
Robust Development rates in the U.S. to $6.32 psf/yr in the third quarter, 10% higher
than this time last year and the highest asking rate on record. In
U.S. e-commerce sales rose an impressive 16% in Q2 2017
previous cycles, higher asking rates ultimately reduced demand.
compared with the same time last year and now represent 10% of
However, in this cycle the importance of securing well-placed,
total non-auto retail sales. The continued surge in online sales and
modern distribution centers because of e-commerce, coupled with
the need to get products to consumers quickly while minimizing
higher transportation costs, have rendered rising asking rates less
supply chain costs are forcing retailers and wholesalers into
pertinent. Eventually, asking rents will increase to a level where
modern facilities and rapidly changing supply chain strategy. These
demand will be impacted, but the market has yet to reach this point.
changes will be a major contributor to industrial real estate demand
for the foreseeable future. Development remains strong in core industrial markets, with
Dallas-Fort Worth leading the way at nearly 20 million square feet
The overall industrial vacancy rate declined 0.2 pps from the
completed in 2017. The Inland Empire, which continues to post
previous quarter to 5.2%, the lowest vacancy rate on record.
robust fundamentals, has the most product under construction at
Vacancies fell in 67% of the markets we track compared with
a record 26 million square feet. Nearly 172 million square feet of
the previous quarter. Net absorption was positive for the thirtieth
new construction has been completed in 2017, 8% lower than this
consecutive quarter at nearly 69 million square feet, the third
time last year. However, development appears set to pick up pace
highest quarterly net absorption on record. The increase in
in the coming quarters with 222 million square feet currently under
absorption can be attributed to multiple factors including a
constructionthe second-highest amount on record. With a large
resurgence in big box demand, strong interest in smaller product
amount of new development slated to hit the market in the next
and a plethora of pre-leased buildings completing construction.
year, any drop off in leasing could cause modest increases in the
overall vacancy rate.

4 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

Industrial Real Estate Stands Out in Sales
Growth
Industrial sales volume was robust for the third consecutive
quarter leading to an impressive 23% increase in year-to-date Top 5 MSAs* in Mid-2017: Transaction Volume
sales compared with this time last year. Industrial was the only Los Angeles $4,397 million
commercial product type to post year-over-year sales volume
gains, according to Real Capital Analytics. Deal activity totaled Chicago $2,950 million
nearly $52 billion for the first three quarters of 2017. The growth
Dallas $2,280 million
in sales volume remained strong for single-building sales which
were up 10% compared with this time last year. However, portfolio Washington DC/Virginia Suburbs $2,279 million
sales experienced a robust quarter thanks to two large purchases
Inland Empire $2,092 million
by Blackstone, creating an 118% increase in third-quarter portfolio
sales compared with last year and a 52% annual increase. *Metropolitan Statistical Area
Source: Colliers International
Sales growth remains strong in secondary and tertiary locations,
up 24% and 36% respectively compared with this time last year.
Investors continue to pour into these markets because of the Top 5 MSAs* in YTD 2017: Net Absorption
availability of product to purchase and a significant increase in
occupier demand, which has improved fundamentals profoundly. Atlanta 17.1 MSF
Core market sales, which were down 9% for the first half of the Inland Empire 14.8 MSF
year because of lack of product available to purchase, rebounded in
third quarter thanks primarily to the increase in portfolio sales, and Dallas-Fort Worth 13.6 MSF
are now up 17% for the year. Capitalization rates have remained Chicago 13.5 MSF
relatively stable since 2015 but did decline 0.2 percentage points
compared with the previous quarter to a record low of 6.7%. Philadelphia 8.6 MSF

*Metropolitan Statistical Area

Whats Ahead for Industrial Real Estate? Source: Colliers International

The industrial sector should continue to benefit from supply

chain modernization brought on by e-commerce demand for the
foreseeable future. With trade war fears declining in the short term,
cargo volumes at U.S. ports are expected to remain strong and
heighten demand for warehousing near these locations. NAFTA
negotiations continue and the potential long-term effects on U.S.
trade policy will be important to monitoralthough any impact from
the renegotiation will not take effect until 2018 or later.

The continued shift to more localized distributionthe deployment

of more warehouses in more locations to get products to
consumers quicklyhas driven activity in many secondary markets
with seaports, inland ports or growing population centers such
as Phoenix, Indianapolis, Memphis, Savannah and Greenville, and
will continue for the foreseeable future as occupiers increase
their footprints in these strategic markets to better service their
customers.

A headwind to keep an eye out for is labor availability. Occupier

demand for labor in modern fulfillment centers combined with
an economy at or near full employment could delay or lower size
requirements in the coming quarters. While the availability of labor
will gain in importance in industrial site selection, look for the
use of automation and other technologies to increase as a way of
combating labor shortages throughout the country.

All in all, U.S. industrial real estate continued its positive

momentum in the third quarter and fundamentals are expected to
stay strong with record low vacancies, record high asking rents and
robust activity in the coming quarters.

5 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

Supplemental Data: Largest 20 Markets
Vacancy vs. Absorption Q2 2017 Warehouse Rent History & Outlook
By Port Location and Region Rent Outlook Over Next 12 Months

Port Location Region

10% Eastern U.S. Midwest
Great Lakes Northeast Los Angeles, CA
$8
Phoenix, AZ Gulf Coast South
2.0M Inland West
9% New Jersey-Northern
West Coast
No port
$7
8% Inland Empire, CA
Houston, TX
Atlanta, GA Phoenix, AZ

Q3 2017 Average Warehouse/Distribution Rent (S/SF/Year)

4.1M New Jersey-Central
$6
7% Memphis, TN Chicago, IL
1.7M 3.5M
Kansas City, MO-KS Detroit, MI
3.0M Houston, TX Dallas-Ft. Worth, TX
4.4M Chicago, IL Milwaukee, WI
6% Silicon Valley, CA 3.0M $5
Indianapolis, IN
Q3 2017 Vacancy Rate

0.1M Philadelphia, PA Philadelphia, PA Median

1.3M Kansas City, MO-KS
Minneapolis-St. Paul, MN 3.2M
1.0M Columbus, OH Median Dallas-Ft. Worth, TX
5%
1.9M $4 Cincinnati, OH Cleveland, OH
Cleveland, OH Atlanta, GA
-0.1M New Jersey-Northern
1.8M
4% Milwaukee, WI Indianapolis, IN
Cincinnati, OH 0.9M New Jersey-Central Columbus, OH
$3
0.1M 2.0M
Memphis, TN
3% Inland Empire, CA
Detroit, MI 6.6M
1.0M $2
Port Location Rent Outlook
2% Eastern U.S. Up
Great Lakes Same
$1 Gulf Coast Down
Los Angeles, CA
1% 1.2M Inland
West Coast
No port
0% $0
Median Median
0M 1M 2M 3M 4M 5M 6M 7M -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18%
Q3 2017 Absorption (SF) YOY Change in Warehouse/Distribution Rent (since Q3 2016)

Source: Colliers Q3 2017 Industrial Survey Source: Colliers Q3 2017 Industrial survey

Vacancy vs. YOY Change in Vacancy Absorption vs. New Supply by Port Location
By Port Location and Region Absorption Outlook Over Next 12 Months

10% Median
8M Port Location
Eastern U.S.
9% Phoenix, AZ Great Lakes
7M Gulf Coast
Inland
8% West Coast Inland Empire, CA
Atlanta, GA
6M No port

7% Chicago, IL
Absorption Outlook
Memphis, TN (Over Next 12 Months)

Dallas-Ft. Worth, TX Positive

Kansas City, MO-KS Houston, TX 5M
6% Close to zero
Philadelphia, PA Dallas-Ft. Worth, TX
Negative
Q3 2017 Absorption (SF)

Indianapolis, IN

5% Median 4M
Columbus, OH Minneapolis-St. Paul, MN Atlanta, GA
Q3 2017 Vacancy Rate

Philadelphia, PA
New Jersey-Northern Cleveland, OH Houston, TX Chicago, IL
4% 3M
Cincinnati, OH
New Jersey-Central
Kansas City, MO-KS
Inland Empire, CA Milwaukee, WI
3% Detroit, MI New Jersey-Northern Phoenix, AZ
2M Columbus, OH New Jersey-Central
Memphis, TN Median
Port Location
2% Detroit, MI Indianapolis, IN
Eastern U.S.
1M Los Angeles, CA
Great Lakes Milwaukee, WI
Minneapolis-St. Paul, MN
1% Gulf Coast Los Angeles, CA
Inland
Silicon Valley, CA
West Coast 0M
Cincinnati, OH
0% No port Cleveland, OH

Vacancy Outlook
(Over Next 12 Months) -1M
-1%
Up
Same
Down -2M
-2%
Median
-2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% -6M -4M -2M 0M 2M 4M 6M 8M 10M 12M 14M 16M 18M 20M
YOY Change in Vacancy (since Q3 2016) YTD 2017 New Supply (SF)

Source: Colliers Q3 2017 Industrial Survey Source: Colliers Q3 2017 Industrial Survey

6 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

 United States | Industrial Survey | Inventory, New Supply, Under Construction
INVENTORY TOTAL NEW SUPPLY
MARKET TOTAL UNDER CONSTRUCTION (SF)
SEP. 30, 2017 (SF) YTD 2017 (SF)

NORTHEAST
Baltimore, MD 215,617,882 1,188,010 5,886,489
Boston, MA 148,069,748 0 772,500
Hartford, CT 107,217,170 0 10,000
New Hampshire 61,908,706 0 240,000
New York City Metro 809,919,248 2,409,192 15,143,982
> Central New Jersey 318,376,573 1,807,980 9,220,985
> Long Island 132,272,149 53,052 123,774
> Northern New Jersey 359,270,526 548,160 5,799,223
Philadelphia-Lehigh Valley, PA 445,493,492 3,867,544 6,878,410
Pittsburgh, PA 160,299,468 17,800 105,920
Washington, D.C. 196,053,956 698,510 2,101,355
Northeast Total 2,144,579,670 8,181,056 31,138,656
SOUTH
Atlanta, GA 675,926,215 5,517,400 10,916,915
Augusta-Aiken, GA 9,620,480 0 0
Austin, TX 54,089,965 120,773 303,839
Birmingham, AL 115,023,251 0 0
Charleston, SC 47,706,605 307,353 2,389,875
Charlotte, NC 207,891,974 933,399 3,979,733
Columbia, SC 66,633,442 45,600 1,018,056
Dallas-Fort Worth, TX 791,567,171 5,847,870 21,479,141
Florence-Myrtle Beach, SC 35,667,735 22,270 0
Greenville-Spartanburg-Anderson, SC 191,336,153 499,000 6,143,926
Houston, TX 547,370,838 2,672,549 5,416,045
Huntsville, AL 46,679,825 0 0
Jacksonville, MI 127,311,328 416,435 1,849,491
Little Rock, AR 46,497,775 0 333,760
Memphis, TN 240,776,737 37,990 4,418,984
Nashville, TN 193,013,926 2,353,253 3,443,050
Norfolk, VA 68,452,374 180,405 0
Orlando, FL 141,202,180 325,871 1,842,906
Raleigh-Durham, NC 71,142,395 336,000 531,300
Richmond, VA 97,307,201 153,480 0
Savannah, GA 63,045,383 2,439,269 3,920,475
Shenandoah Valley-I-81 Corridor 90,575,618 0 2,749,273
South Florida 359,398,544 732,252 2,936,631
> Fort Lauderdale 106,051,691 166,370 1,397,791
> Miami 202,486,865 562,595 1,321,174
> Palm Beach 50,859,988 3,287 217,666
Tampa Bay, FL 209,796,956 155,000 2,878,166
South Total 4,498,034,071 23,096,169 76,551,566
Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals.

7 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

 United States | Industrial Survey | Inventory, New Supply, Under Construction (continued)

INVENTORY TOTAL NEW SUPPLY

MARKET TOTAL UNDER CONSTRUCTION (SF)
SEP. 30, 2017 (SF) YTD 2017 (SF)

MIDWEST
Chicago, IL 1,372,239,345 6,272,371 12,042,863
Cincinnati, OH 256,722,206 937,658 3,757,514
Cleveland, OH 396,279,109 142,117 1,993,914
Columbus, OH 233,287,970 514,031 5,186,710
Dayton, OH 104,940,619 0 496,000
Detroit, MI 753,892,654 590,000 7,633,683
Grand Rapids, MI 116,867,615 237,069 1,111,890
Indianapolis, IN 241,955,400 1,500,015 7,000,348
Kansas City, MO 242,909,954 2,676,222 5,987,934
Milwaukee, WI 250,958,625 251,000 1,068,240
Minneapolis-St. Paul, MN 250,660,306 1,143,540 2,170,500
Omaha, NE 68,888,299 499,680 970,862
St. Louis, MO 234,378,054 892,660 3,627,018
Midwest Total 4,523,980,156 15,656,363 53,047,476
WEST
Albuquerque, NM 39,333,554 0 0
Bakersfield, CA 32,278,056 0 0
Boise, ID 44,711,971 143,000 0
Denver, CO 230,567,825 1,591,158 4,001,246
Fresno, CA 47,840,327 37,402 0
Greater Los Angeles, CA 1,590,802,600 9,098,766 32,153,600
> Inland Empire 494,061,800 6,209,000 26,138,500
> Los Angeles 903,993,400 2,838,766 5,964,100
> Orange County 192,747,400 51,000 51,000
Honolulu, HI 40,040,303 0 0
Las Vegas, NV 128,993,445 1,413,231 3,462,663
Phoenix, AZ 294,852,325 1,516,616 3,895,681
Sacramento, CA 146,549,563 35,800 1,433,855
San Diego, CA 188,955,277 138,213 2,176,268
San Francisco Bay Area, CA 529,477,907 449,979 2,988,304
> East Bay 182,297,577 348,605 2,041,304
> Fairfield, CA 50,410,721 0 460,270
> San Francisco Peninsula 39,291,087 0 0
> Silicon Valley 257,478,522 101,374 486,730
Seattle-Puget Sound, WA 272,246,681 993,120 4,922,983
Stockton, CA 104,465,030 1,095,143 6,992,397
West Total 3,691,114,864 16,512,428 62,026,997
U.S. TOTAL 14,857,708,761 63,446,016 222,764,695

Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals.

8 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

 United States | Industrial Survey | Absorption, Vacancy
ABSORPTION YTD VACANCY RATE VACANCY RATE
MARKET
Q3 2017 (SF) ABSORPTION JUN. 30, 2017 SEP. 30, 2017

NORTHEAST
Baltimore, MD 2,086,900 4,850,153 7.2% 6.7%
Boston, MA 731,341 2,487,917 10.3% 9.7%
Hartford, CT 1,376,320 3,104,807 5.8% 5.2%
New Hampshire 478,305 1,533,918 5.7% 6.4%
New York City Metro 3,602,299 8,047,362 4.3% 4.1%
> Central New Jersey 2,021,356 5,167,315 4.0% 3.8%
> Long Island -246,554 -210,289 3.5% 3.8%
> Northern New Jersey 1,827,497 3,090,336 4.9% 4.4%
Philadelphia-Lehigh Valley, PA 4,327,436 10,949,853 5.7% 5.6%
Pittsburgh, PA -988,464 345,482 5.7% 5.7%
Washington, D.C. 1,080,201 1,380,151 8.6% 8.4%
Northeast Total 12,694,338 32,699,643 5.9% 5.7%
SOUTH
Atlanta, GA 4,079,431 17,118,449 7.2% 7.4%
Augusta-Aiken, GA -193,056 -134,756 13.3% 15.3%
Austin, TX -77,897 -412,689 6.9% 6.0%
Birmingham, AL 109,155 482,836 8.0% 6.5%
Charleston, SC -354,927 148,886 5.8% 7.1%
Charlotte, NC 736,525 3,074,066 5.3% 5.3%
Columbia, SC 395,388 1,074,789 10.1% 9.5%
Dallas-Fort Worth, TX 4,387,014 13,617,918 6.2% 6.3%
Florence-Myrtle Beach, SC -766,274 -1,917,875 11.7% 13.9%
Greenville-Spartanburg-Anderson, SC 639,170 2,544,337 6.8% 6.7%
Houston, TX 2,992,207 6,529,862 6.1% 5.9%
Huntsville, AL 197,462 300,998 7.8% 5.5%
Jacksonville, MI 148,617 915,609 4.4% 4.6%
Little Rock, AR -12,470 520,248 10.2% 10.3%
Memphis, TN 1,714,166 2,465,493 7.5% 6.8%
Nashville, TN 1,270,579 633,320 5.2% 4.2%
Norfolk, VA 492,718 1,730,514 4.8% 4.6%
Orlando, FL 623,011 1,542,458 5.3% 5.3%
Raleigh-Durham, NC 423,048 679,109 6.3% 6.1%
Richmond, VA 899,223 1,366,437 5.1% 4.6%
Savannah, GA 2,891,765 4,101,655 2.9% 2.0%
Shenandoah Valley-I-81 Corridor 35,126 1,264,027 6.5% 6.5%
South Florida 640,029 2,333,806 4.2% 4.1%
> Fort Lauderdale 134,297 837,580 4.1% 4.0%
> Miami 155,826 733,792 4.3% 4.4%
> Palm Beach 349,906 762,434 3.9% 3.1%
Tampa Bay, FL 550,734 1,949,115 6.2% 5.7%
South Total 21,820,744 61,928,612 6.3% 6.1%
Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals.

9 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

 United States | Industrial Survey | Absorption, Vacancy (continued)

ABSORPTION YTD VACANCY RATE VACANCY RATE

MARKET
Q3 2017 (SF) ABSORPTION JUN. 30, 2017 SEP. 30, 2017

MIDWEST
Chicago, IL 3,497,179 13,463,405 6.7% 6.9%
Cincinnati, OH 129,510 4,463,759 3.9% 4.0%
Cleveland, OH -72,781 1,761,477 4.4% 4.5%
Columbus, OH 1,869,600 1,437,052 5.8% 5.1%
Dayton, OH 499,018 1,598,721 6.2% 5.7%
Detroit, MI 1,045,987 -302,521 3.6% 3.2%
Grand Rapids, MI 378,850 2,243,350 5.1% 5.1%
Indianapolis, IN 1,259,004 4,241,168 5.4% 5.6%
Kansas City, MO 2,953,520 6,595,289 6.1% 5.9%
Milwaukee, WI 922,705 1,260,861 4.4% 3.8%
Minneapolis-St. Paul, MN 1,041,481 2,330,477 5.1% 5.0%
Omaha, NE 349,921 678,757 3.3% 3.6%
St. Louis, MO 2,154,202 3,460,082 6.9% 6.4%
Midwest Total 16,028,196 43,231,877 5.4% 5.2%
WEST
Albuquerque, NM 134,893 130,048 5.3% 5.0%
Bakersfield, CA -86,670 -72,146 3.9% 3.2%
Boise, ID 70,619 219,333 2.3% 2.5%
Denver, CO 1,576,813 2,759,174 4.7% 4.7%
Fresno, CA -124,610 492,542 4.2% 4.5%
Greater Los Angeles, CA 7,398,900 17,378,700 2.2% 2.1%
> Inland Empire 6,624,800 14,826,200 3.8% 3.4%
> Los Angeles 1,248,800 3,171,900 1.2% 1.3%
> Orange County -474,700 -619,400 2.5% 2.7%
Honolulu, HI -57,776 -109,480 1.7% 1.9%
Las Vegas, NV 1,829,265 5,627,774 5.4% 5.1%
Phoenix, AZ 2,033,590 6,344,634 9.4% 9.3%
Sacramento, CA 1,638,292 3,506,220 7.4% 6.3%
San Diego, CA 522,609 1,464,321 4.8% 4.5%
San Francisco Bay Area, CA 735,897 2,365,654 4.1% 4.2%
> East Bay 537 425,147 2.5% 2.7%
> Fairfield, CA 680,784 1,737,657 5.9% 5.3%
> San Francisco Peninsula -24,450 9,734 1.6% 1.6%
> Silicon Valley 79,026 193,116 5.3% 5.4%
Seattle-Puget Sound, WA 1,170,843 1,537,451 3.1% 2.8%
Stockton, CA 1,357,531 3,821,463 4.8% 4.5%
West Total 18,200,196 45,465,688 3.9% 3.7%
U.S. TOTAL 68,743,474 183,325,820 5.4% 5.2%

Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals.

10 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

 United States | Industrial Survey | Average Asking NNN Rents as of Q3 2017
WAREHOUSE /
MANUFACTURING SPACE FLEX / SERVICE SPACE
MARKET DISTRIBUTION SPACE
(USD/SF/YR) (USD/SF/YR)
(USD/SF/YR)

NORTHEAST
Baltimore, MD $4.07 $10.14 $5.17
Boston, MA $7.09 $9.65 $6.44
Hartford, CT $4.41 $7.01 $5.01
New Hampshire $6.01 $9.41 $5.31
New York City Metro $7.22 $11.76 $7.43
> Central New Jersey $6.48 $12.20 $6.34
> Long Island $10.68 $14.80 $10.00
> Northern New Jersey $6.51 $9.76 $7.47
Philadelphia-Lehigh Valley, PA $3.98 $9.03 $4.92
Pittsburgh, PA $4.05 $9.69 $5.46
Washington, D.C. $7.20 $12.32 $7.88
Northeast Total $5.46 $10.76 $6.27
SOUTH
Atlanta, GA $3.56 $9.13 $3.89
Augusta-Aiken, GA $1.51 $3.30
Austin, TX $13.36 $8.85
Birmingham, AL $7.14 $4.39
Charleston, SC $4.71 $8.14 $5.23
Charlotte, NC $2.79 $8.95 $4.72
Columbia, SC $2.85 $9.82 $3.25
Dallas-Fort Worth, TX $5.15 $9.28 $4.31
Florence-Myrtle Beach, SC $2.13 $7.31 $2.70
Greenville-Spartanburg-Anderson, SC $4.32 $7.84 $3.64
Houston, TX $10.43 $6.57
Huntsville, AL $8.41 $4.56
Jacksonville, MI $9.71 $4.11
Little Rock, AR $3.99 $3.34
Memphis, TN $6.44 $2.87
Nashville, TN $4.31 $9.84 $5.93
Norfolk, VA $5.97 $12.37 $4.62
Orlando, FL $9.81 $5.80
Raleigh-Durham, NC $13.82 $5.51
Richmond, VA $4.94 $9.85 $4.54
Savannah, GA $3.70 $7.00 $4.19
Shenandoah Valley-I-81 Corridor $4.39 $5.77 $3.62
South Florida $10.23 $15.35 $10.71
> Fort Lauderdale $8.76 $12.94 $8.58
> Miami $14.33 $19.86 $11.73
> Palm Beach $8.09 $13.54 $8.83
Tampa Bay, FL $9.46 $4.84
South Total $4.12 $9.78 $4.88
Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals. * Straight averages used

11 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

 United States | Industrial Survey | Average Asking NNN Rents as of Q3 2017 (continued)

WAREHOUSE /
MANUFACTURING SPACE FLEX / SERVICE SPACE
MARKET DISTRIBUTION SPACE
(USD/SF/YR) (USD/SF/YR)
(USD/SF/YR)

MIDWEST
Chicago, IL $5.06
Cincinnati, OH $3.78 $6.64 $4.03
Cleveland, OH $3.29 $7.11 $4.27
Columbus, OH $6.42 $3.25
Dayton, OH $2.52 $4.69 $3.43
Detroit, MI $8.17 $5.11
Grand Rapids, MI $3.66 $3.77 $3.67
Indianapolis, IN $5.50 $6.48 $3.54
Kansas City, MO $4.35 $8.89 $4.58
Milwaukee, WI $4.75 $5.86 $4.90
Minneapolis-St. Paul, MN $4.86 $5.05 $4.70
Omaha, NE $5.92 $4.93
St. Louis, MO $4.46 $7.54 $4.33
Midwest Total $4.25 $6.84 $4.65
WEST
Albuquerque, NM $8.68 $7.82 $6.72
Bakersfield, CA $9.49 $6.49
Boise, ID $6.55
Denver, CO $9.20 $11.03 $7.59
Fresno, CA $3.07 $11.44 $5.18
Greater Los Angeles, CA $7.87
> Inland Empire $6.76
> Los Angeles $8.40
> Orange County $10.32
Honolulu, HI $14.97
Las Vegas, NV $9.32 $11.11 $7.09
Phoenix, AZ $7.44 $12.76 $6.35
Sacramento, CA $5.95 $9.13 $5.01
San Diego, CA $11.09 $22.93 $10.88
San Francisco Bay Area, CA $11.19 $24.50 $8.41
> East Bay $10.11 $20.04 $7.51
> Fairfield, CA $8.10 $7.26 $5.52
> San Francisco Peninsula $18.15
> Silicon Valley $14.13 $24.78 $10.52
Seattle-Puget Sound, WA $8.88 $18.10 $7.71
Stockton, CA $7.83 $5.47 $5.76
West Total $9.19 $19.28 $7.32
U.S. TOTAL $5.68 $11.90 $5.37

Note: The detail for markets with older data has been removed, but the numbers they contribute remain in the totals. * Straight averages used

12 U.S. Research Report | Q3 2017 | Industrial Market Outlook | Colliers International

 INDUSTRIAL SERVICES CONTACT
Pete Quinn, SIOR
National Director, Industrial | USA
+1 317 713 2107
pete.quinn@colliers.com

RESEARCH CONTACTS
James Breeze
National Director of Industrial Research | USA
+1 602 222 5184
james.breeze@colliers.com
Pete Culliney
Director of Research | Global
+1 212 716 3689
pete.culliney@colliers.com

CONTRIBUTORS
Andrew Nelson
Chief Economist | USA
Jeff Simonson
U.S. Senior Research Analyst | USA
AJ Paniagua
U.S. Research Analyst | USA

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