North American Industrial Highlights 4Q 2010

HIGHLIGHTSNORTH AMERICA

www.COllIERs.COM

Q4 2010 | INDUSTRIAL

ROss J. MOORE Chief Economist | USA

The U.S. industrial market finished 2010 with a notable surge capping off three consecutive quarters of positive absorption. Solid demand for warehouse space in most regions coupled with minimal construction created the conditions for a sudden reversal in vacancy, and almost certainly heralds the beginning of the next cycle. The vacancy rate dropped nationally by nearly a quarter of a percentage point during the quarter—significantly more in select markets. Despite newfound optimism and a noticeable pick-up in leasing activity, warehouse rents fell over the quarter, dropping by 2.1 percent to $4.60 per square foot.

With the economy registering healthy growth in the fourth quarter, and similar expansion anticipated in coming quarters, demand for warehouse space is expected to increase as the year progresses. A giant positive for industrial markets is the continued rise in import and export activity which continues to benefit not only key port markets, but also any distribution nodes that are part of the supply chain. Another positive for warehouse markets is manufacturing, which continues to show surprising growth as measured by the Institute for Supply Management (ISM) manufacturing index. For January the ISM manufacturing index registered 60.8—the highest level in nearly seven years and well above the critical 50 level that indicates expansion. As 2011 unfolds the industrial market is expected to improve on the back of a thriving manufacturing sector and further increases in global trade.

Although signs of a true rebound in the warehouse market are still a few quarters away, almost all economic indicators suggest demand for warehouse space will only increase during 2011. With almost no new warehouse construction coming onto the market, even a modest bounce-back in demand will quickly

Over the last three quarters, occupied space has increased by 42.7 million square feet, however, during the period Q2 2008 and Q1 2010 occupied space shrank by 209.9 million square feet.

MARkET INdICATORsRelative to prior period

u.s. INdusTRIAl MARkETsuMMARy sTATIsTICs, Q4 2010

U.S. Industrial Market Finishes 2010 on a High Note Further Gains Anticipated in 2011

Q4 2010

Q1 2011*

VACANCy

NET ABsORPTION

CONsTRuCTION

RENTAl RATE

*Projected

u.s. INdusTRIAl MARkET Q4 2009 – Q4 2010

Mill

ion

Squa

reFe

et

Vaca

ncy

(%)

-20

-10

0

10

20

30

Q4 2010Q3 2010Q2 2010Q1 2010Q4 2009

Absorption Completions Vacancy

7

8

9

10

11

12

Q4 2010Q3 2010Q2 2010Q1 2010Q4 2009

Vacancy Rate: 10.74%Change from Q3 2010: –0.22

Absorption: 28.6 Million Square Feet

New Construction: 9.4 Million Square Feet

under Construction: 22.7 Million Square Feet

Asking Rents Per square Foot: Average Warehouse/ Distribution Center: $4.60 Change from Q3 2010: –2.11%

continued on page 7

P. 2 | COllIERs INTERNATIONAl

hIghLIghTS | Q4 2010 | industrial | north america

uNITEd sTATEs | INdusTRIAl suRVEy

MARkETEXIsTING INVENTORy (sF)

dEC. 31, 2010NEw CONsTRuCTION

Q4 2010 (sF)NEw CONsTRuCTION

yTd 2010 (sF)CuRRENTly uNdER CONsTRuCTION (sF)

Atlanta, GA 588,384,000 0 2,900,000 1,632,000 Bakersfield, CA 31,466,000 0 530,000 487,000 Baltimore, MD 224,045,000 1,515,000 386,000 61,000 Boise, ID 31,909,000 0 131,000 0 Boston, MA 155,986,000 0 0 170,000 Charleston, SC 32,024,000 10,000 1,440,000 240,000 Charlotte, NC 282,509,000 51,000 201,000 39,000 Chicago, IL 1,312,700,000 549,000 2,667,000 3,728,000 Cincinnati, OH 254,878,000 156,000 156,000 175,000 Cleveland, OH 418,008,000 14,000 571,000 35,000 Columbia, SC 35,509,000 0 206,000 1,000,000 Columbus, OH 205,421,000 0 47,000 1,470,000 Dallas/Ft. Worth, TX 750,421,000 0 0 559,000 Denver, CO 277,478,000 13,000 890,000 153,000 Detroit, MI 480,580,000 240,000 301,000 0 Fairfield, CA 38,904,000 0 363,000 0 Fresno, CA 48,600,000 0 0 0 Ft. Lauderdale/Broward County, FL 126,385,000 0 69,000 63,000 Greenville/Spartanburg, SC 170,450,000 127,000 0 0 Hartford, CT 96,975,000 0 0 0 Honolulu, HI 38,530,000 0 0 0 Houston, TX 474,722,000 207,000 2,225,000 207,000 Indianapolis, IN 274,027,000 1,329,000 1,580,000 250,000 Jacksonville, FL 120,450,000 240,000 240,000 483,000 Kansas City, MO-KS 174,061,000 50,000 50,000 1,087,000 Las Vegas, NV 107,554,000 0 341,000 72,000 Little Rock, AR 45,056,000 0 253,000 570,000 Los Angeles – Inland Empire, CA 379,098,000 667,000 667,000 2,300,000 Los Angeles, CA 879,573,000 200,000 510,000 750,000 Louisville, KY 167,562,000 0 0 0 Memphis, TN 196,788,000 32,000 470,000 725,000 Miami, FL 226,047,000 62,000 407,000 0 Nashville, TN 158,293,000 2,045,000 924,000 2,045,000 New Jersey – Central 357,793,000 176,000 844,000 440,000 New Jersey – Northern 373,657,000 0 0 83,000 Oakland, CA 131,233,000 0 0 26,000 Orange County, CA 200,950,000 375,000 495,000 0 Orlando, FL 144,357,000 0 0 0 Philadelphia, PA 421,082,000 46,000 926,000 1,124,000 Phoenix, AZ 245,457,000 391,000 1,763,000 147,000 Pleasanton/Walnut Creek, CA 32,225,000 0 74,000 0 Portland, OR 174,413,000 60,000 60,000 60,000 Raleigh, NC 101,500,000 30,000 97,000 76,000 Reno, NV 73,732,000 0 0 0 Sacramento, CA 182,249,000 0 53,000 36,000 San Diego, CA 188,521,000 54,000 311,000 212,000 San Francisco Peninsula, CA 40,808,000 0 0 0 San Jose/Silicon Valley, CA 253,311,000 0 0 609,000 Savannah, GA 43,511,000 538,000 538,000 172,000 Seattle/Puget Sound, WA 291,496,000 0 0 0 St. Louis, MO 261,205,000 0 148,000 11,000 Stockton/San Joaquin County, CA 92,563,000 0 16,000 0 Tampa Bay, FL 214,839,000 0 0 0 Washington, DC 206,729,000 147,000 475,000 1,391,000 West Palm Beach, FL 58,796,000 30,000 30,000 34,000 u.s. TOTAl 12,894,820,000 9,354,000 24,355,000 22,722,000


COllIERs INTERNATIONAl | P. 3

uNITEd sTATEs | INdusTRIAl suRVEy

MARkETABsORPTION Q4 2010 (sF)

ABsORPTION yTd 2010 (sF)

VACANCy RATE sEP. 30, 2010 (%)

VACANCy RATE dEC. 31, 2010 (%)

Atlanta, GA 931,000 934,000 14.2 14.0Bakersfield, CA (76,000) 3,000 9.6 9.7Baltimore, MD 935,000 2,328,000 10.6 10.6Boise, ID 113,000 477,000 11.1 10.9Boston, MA 142,000 167,000 21.5 21.4Charleston, SC 1,516,000 2,621,000 12.8 11.2Charlotte, NC 177,000 (3,076,000) 14.1 14.0Chicago, IL 2,132,000 (2,380,000) 12.0 11.7Cincinnati, OH 1,414,000 2,226,000 8.7 8.1Cleveland, OH 939,000 (1,737,000) 9.7 9.5Columbia, SC 203,000 663,000 6.4 7.0Columbus, OH 744,000 (767,000) 13.2 12.7Dallas/Ft. Worth, TX 1,740,000 902,000 11.8 11.6Denver, CO 373,000 3,142,000 7.8 7.7Detroit, MI (3,685,000) (3,895,000) 14.4 15.4Fairfield, CA (367,000) (662,000) 14.8 15.8Fresno, CA 100,000 215,000 8.1 7.9Ft. Lauderdale/Broward County, FL 232,000 1,035,000 9.5 9.4Greenville/Spartanburg, SC 137,000 (119,000) 10.9 10.6Hartford, CT 6,000 6,000 9.3 9.3Honolulu, HI (152,000) 6,000 4.4 4.7Houston, TX 354,000 4,761,000 6.8 6.2Indianapolis, IN (459,000) (1,822,000) 8.9 9.0Jacksonville, FL 403,000 (32,000) 11.3 11.1Kansas City, MO-KS 859,000 48,000 7.5 7.0Las Vegas, NV (377,000) (1,177,000) 15.5 15.8Little Rock, AR 1,254,000 1,344,000 16.8 14.0Los Angeles – Inland Empire, CA 6,756,000 12,981,000 12.3 11.1Los Angeles, CA 1,501,000 (4,885,000) 5.3 5.2Louisville, KY 76,000 (2,005,000) 12.2 12.2Memphis, TN (367,000) 875,000 13.1 13.3Miami, FL 395,000 2,706,000 9.3 9.1Nashville, TN (479,000) (1,451,000) 14.0 13.9New Jersey – Central 1,927,000 1,787,000 11.3 10.8New Jersey – Northern 847,000 2,005,000 7.8 7.6Oakland, CA (118,000) (1,486,000) 9.5 9.5Orange County, CA 662,000 (68,000) 6.2 5.8Orlando, FL 534,000 1,115,000 12.8 12.4Philadelphia, PA 1,808,000 3,301,000 9.9 9.4Phoenix, AZ 1,393,000 4,687,000 17.7 17.2Pleasanton/Walnut Creek, CA 401,000 866,000 12.5 11.2Portland, OR 346,000 728,000 8.0 8.1Raleigh, NC (74,000) (220,000) 12.5 12.4Reno, NV 274,000 282,000 15.2 14.9Sacramento, CA (339,000) (1,632,000) 13.1 13.3San Diego, CA 820,000 1,278,000 11.6 11.3San Francisco Peninsula, CA 374,000 27,000 10.6 9.7San Jose/Silicon Valley, CA 699,000 (3,869,000) 13.8 13.0Savannah, GA 1,118,000 (237,000) 21.4 19.3Seattle/Puget Sound, WA 703,000 (241,000) 8.0 7.8St. Louis, MO 353,000 2,560,000 8.0 7.9Stockton/San Joaquin County, CA (552,000) (1,324,000) 17.3 17.9Tampa Bay, FL (225,000) (611,000) 11.1 11.2Washington, DC (34,000) 512,000 12.7 12.8West Palm Beach, FL 177,000 771,000 10.5 10.3u.s. TOTAl/AVERAGE 28,564,000 23,663,000 10.95 10.74



uNITEd sTATEs | INdusTRIAl suRVEy | sAlEs PRICE, CAP RATE ANd lANd PRICE As OF dECEMBER 2010

MARkETsAlEs PRICE

(usd PsF)CAP

RATE (%)lANd PRICE (usd PsF)

lANd PRICEsuBMARkET

VACANCy FORECAsT(3 MONTHs)

ABsORPTION FORECAsT (3 MONTHs)

RENT FORECAsT (3 MONTHs)

Atlanta, GA 35.37 9.00 1.00 Northeast Atlanta Down Up SameBakersfield, CA 48.00 9.50 2.50 Bakersfield-North Same Same SameBoise, ID 45.00 1.75 Caldwell Same Same SameBoston, MA 40.00 3.75 Route 495 Down Up SameCharleston, SC 45.50 7.75 2.65 Ladson Down Up UpChicago, IL 43.00 7.15 5.25 I-55 Corridor Same Down SameCincinnati, OH 43.40 8.00 1.72 Airport Down Up UpColumbia, SC – – 1.10 Lexington Down Up UpColumbus, OH 25.00 7.90 0.38 Southeast Same Same SameDallas/Ft. Worth, TX 50.00 8.30 1.60 South Dallas Down Up UpDenver, CO 42.00 8.50 5.00 Northwest Down Up SameDetroit, MI 30.00 8.00 – – Up Up DownFairfield, CA 75.00 7.50 7.00 Napa, CA Up Same DownFresno, CA 38.00 9.00 2.00 Southwest Down Up SameFt. Lauderdale/Broward Co., FL – – – – Same Up SameGreenville/Spartanburg, SC 30.00 10.00 0.86 – Down Up UpHartford, CT 40.00 8.50 1.49 North of Hartford Same Same SameHonolulu, HI – – – – Same Same SameHouston, TX 66.12 9.95 2.50 Northwest Down Same UpIndianapolis, IN 40.27 – 1.96 Park 100 Down Up SameJacksonville, FL 45.00 8.20 – – Down Up SameKansas City, MO-KS – – – – Same Same SameLas Vegas, NV – – 5.29 North Las Vegas Up Same DownLittle Rock, AR 65.45 9.00 0.95 Port Industrial District Down Up SameLos Angeles – Inland Empire, CA 57.00 8.50 9.23 Riverside Down Up UpLos Angeles, CA 87.00 7.75 16.81 Industry Same Same SameMemphis, TN 25.00 9.50 1.25 DeSoto County Down Up SameMiami, FL 43.88 7.50 14.07 Various Same Up SameNashville, TN 32.00 9.00 – – Up Same DownNew Jersey – Central 47.87 – 11.25 Exit 8A Up Same DownNew Jersey – Northern 48.09 6.00 13.45 Hudson Waterfront Same Same DownOakland, CA 62.94 7.00 12.95 Oakland, CA Same Same SameOrange County, CA 112.00 7.00 18.00 Central Down Up SameOrlando, FL 36.77 – – – Same Up DownPhiladelphia, PA 57.00 8.50 3.10 Lehigh Valley Down Up SamePhoenix, AZ 71.00 9.50 2.30 West I-10 Down Up DownPleasanton/Walnut Creek, CA – – 6.80 Livermore Same Same SamePortland, OR 67.27 8.45 14.98 – Down Up UpReno, NV 24.92 – 2.38 TRIC Down Same SameSacramento, CA 50.00 8.25 2.22 Roseville/Rocklin Same Same SameSan Diego, CA 133.82 – 15.25 Poway Down Same SameSan Francisco Peninsula, CA 175.00 7.00 – – Same Same SameSan Jose/Silicon Valley, CA – – – – Same Same SameSavannah, GA 40.00 8.50 2.00 Westside Down Same SameSeattle/Puget Sound, WA 193.74 7.43 4.70 Seattle/Puget Sound Down Up SameStockton/San Joaquin County, CA 53.00 8.00 3.50 Stockton Up Down DownTampa Bay, FL 49.01 7.70 – – Same Up SameWashington, DC – – – – Same Same UpWest Palm Beach, FL – 6.43 13.78 Various Same Same Sameu.s. AVERAGE 57.86 8.18



uNITEd sTATEs | INdusTRIAl suRVEy | RENTs As OF dECEMBER 2010

MARkETwAREHOusE/dIsTRIBuTION

sPACE (usd PsF)Bulk sPACE(usd PsF)

FlEX/sERVICE sPACE (usd PsF)

TECH/R&d sPACE (usd PsF)

Atlanta, GA 3.08 2.84 7.29 7.33 Bakersfield, CA 4.00 3.92 7.00 –Baltimore, MD 4.66 – 9.91 –Boise, ID 4.50 4.50 6.30 6.30 Boston, MA 4.50 4.95 7.50 9.50 Charleston, SC 3.65 4.00 6.00 16.25 Charlotte, NC 3.34 8.64 Chicago, IL 3.84 2.69 8.30 –Cincinnati, OH 2.93 2.93 6.12 6.12 Cleveland, OH 3.46 – 8.09 –Columbia, SC 3.75 3.75 – 9.50 Columbus, OH 2.49 2.46 4.68 4.68 Dallas/Ft. Worth, TX 3.00 2.70 6.80 8.40 Denver, CO 3.50 3.25 8.50 9.50 Detroit, MI 3.97 3.52 8.17 –Fairfield, CA 5.28 – 10.92 –Fresno, CA 2.40 2.28 4.00 5.50 Ft. Lauderdale/Broward County, FL 6.67 6.43 9.40 9.75 Greenville/Spartanburg, SC 2.75 2.95 7.00 17.00 Hartford, CT 4.28 4.28 6.75 6.75 Honolulu, HI 11.88 – – –Houston, TX 4.96 4.32 6.79 8.40 Indianapolis, IN 3.71 2.96 8.77 –Jacksonville, FL 3.50 3.00 9.00 –Kansas City, MO-KS 3.97 4.19 7.04 7.04 Las Vegas, NV 4.80 4.71 6.48 10.56 Little Rock, AR 2.67 2.74 7.35 –Los Angeles – Inland Empire, CA 3.60 3.48 6.66 10.00 Los Angeles, CA 5.64 5.28 11.20 13.15 Louisville, KY 3.34 – 7.33 7.33 Memphis, TN 2.54 2.49 7.35 10.00 Miami, FL 6.80 7.04 11.20 11.92 Nashville, TN 3.99 3.13 7.38 –New Jersey – Central 4.66 3.77 11.90 12.89 New Jersey – Northern 5.93 5.63 10.89 5.94 Oakland, CA 4.32 2.88 4.80 8.04 Orange County, CA 6.96 5.76 12.95 13.75 Orlando, FL 4.57 4.11 8.68 8.94 Philadelphia, PA 4.00 3.75 7.00 11.00 Phoenix, AZ 5.42 4.18 10.98 10.73 Pleasanton/Walnut Creek, CA 4.80 4.20 12.60 –Portland, OR 4.97 4.64 8.88 5.95 Raleigh, NC 3.95 – 9.13 –Reno, NV 3.48 3.20 6.24 9.84 Sacramento, CA 4.41 3.77 8.40 9.84 San Diego, CA 7.92 7.08 11.40 14.28 San Francisco Peninsula, CA 9.24 9.24 21.24 21.24 San Jose/Silicon Valley, CA 4.44 5.04 6.84 10.92 Savannah, GA 3.95 3.75 7.00 10.00 Seattle/Puget Sound, WA 5.62 – 10.12 –St. Louis, MO 3.93 – 9.66 –Stockton/San Joaquin County, CA 3.96 3.48 5.52 7.44 Tampa Bay, FL 4.20 3.96 8.24 9.36 Washington, DC 7.74 – 12.03 –West Palm Beach, FL 7.14 6.40 10.36 14.71 u.s. AVERAGE 4.60 4.13 8.54 10.00 Quarterly Change -2.10% -2.02% 0.51% -2.10%



CANAdA | INdusTRIAl suRVEy

MARkETEXIsTING INVENTORy (sF)

dEC. 31, 2010NEw CONsTRuCTION

Q4 2010 (sF)NEw CONsTRuCTION

yTd 2010 (sF)CuRRENTly uNdER CONsTRuCTION (sF)

Calgary, AB 122,107,000 0 740,000 957,000 Edmonton, AB 77,072,000 230,000 730,000 113,000 Halifax, NS 7,075,000 5,000 102,000 0 Montreal, QC 347,771,000 0 180,000 24,000 Ottawa, ON 28,027,000 75,000 176,000 75,000 Regina, SK 16,175,000 0 600,000 532,000 Saskatoon, SK 19,700,000 60,000 190,000 170,000 Toronto, ON 760,332,000 120,000 1,551,000 958,000 Vancouver, BC 178,640,000 0 0 1,702,000 Waterloo Region, ON 61,180,000 0 223,000 135,000 Winnipeg, MB 79,308,000 – 118,000 136,000 CANAdA TOTAl 1,697,387,000 490,000 4,610,000 4,802,000

CANAdA | INdusTRIAl suRVEy

MARkETABsORPTION Q4 2010 (sF)

ABsORPTION yTd 2010 (sF)

VACANCy RATE sEP. 30, 2010 (%)

VACANCy RATE dEC. 31, 2010 (%)

Calgary, AB (778,000) 3,743,000 4.7 5.4Edmonton, AB 401,000 1,691,000 4.3 4.1Halifax, NS 34,000 227,000 5.4 5.0Montreal, QC 878,000 1,905,000 6.4 6.2Ottawa, ON 140,000 148,000 6.3 5.8Regina, SK 58,000 1,255,000 1.7 1.3Saskatoon, SK (32,000) 420,000 2.5 2.7Toronto, ON (1,484,000) 4,092,000 5.8 6.0Vancouver, BC 449,000 3,331,000 4.0 4.1Waterloo Region, ON 498,000 (336,000) 9.4 8.4Winnipeg, MB – 303,000 – 3.0CANAdA TOTAl/AVERAGE 164,000 16,779,000 5.52 5.56

CANAdA | INdusTRIAl suRVEy | sAlEs PRICE, CAP RATE ANd lANd PRICE As OF dECEMBER 2010

MARkETsAlEs PRICE

(CAd PsF)CAP

RATE (%)lANd PRICE (CAd PsF)

lANd PRICEsuBMARkET

VACANCy FORECAsT(3 MONTHs)

ABsORPTION FORECAsT (3 MONTHs)

RENT FORECAsT (3 MONTHs)

Calgary, AB 105.00 7.00 12.05 Great Plains (SE) Up Up UpEdmonton, AB – – 14.60 Southeast Down Up SameHalifax, NS 86.00 8.13 4.25 Burnside Industrial Park Down Up UpMontreal, QC 85.00 8.25 11.00 St-Laurent Down Up UpOttawa, ON 85.00 8.13 6.75 Central Ottawa Same Same UpRegina, SK 73.00 7.80 5.75 Ross Industrial Park Same Same UpSaskatoon, SK 110.00 7.50 9.11 Marquis Up Up SameToronto, ON 64.52 6.98 9.88 Caledon Down Same UpVancouver, BC 125.00 6.50 22.50 Metro Vancouver Same Up SameWaterloo Region, ON 65.00 7.50 7.46 Cambridge Down Up UpWinnipeg, MB 75.00 7.75 11.40 Southwest Down Up SameCANAdA AVERAGE 87.35 7.55 10.43

CANAdA | INdusTRIAl suRVEy | RENTs As OF dECEMBER 2010

MARkETwAREHOusE/dIsTRIBuTION

sPACE (CAd PsF)Bulk sPACE(CAd PsF)

FlEX/sERVICE sPACE (CAd PsF)

TECH/R&d sPACE (CAd PsF)

Calgary, AB 7.75 6.50 9.50 10.50 Edmonton, AB 6.80 6.15 8.15 8.40 Halifax, NS 7.00 5.50 8.95 13.95 Montreal, QC 4.00 4.00 6.50 8.50 Ottawa, ON 7.25 6.25 8.25 11.00 Regina, SK 8.50 6.50 12.00 14.00 Saskatoon, SK 9.00 8.00 11.00 13.00 Toronto, ON 4.98 4.56 7.15 7.75 Vancouver, BC 6.50 5.75 8.50 9.25 Victoria, BC 12.00 10.00 13.00 13.00 Waterloo Region, ON 4.07 3.54 8.33 8.33 Winnipeg, MB 4.50 4.00 7.00 8.00 CANAdA AVERAGE 6.86 6.07 9.21 10.70 Quarterly Change 0.77% -0.85% 0.90% 0.93%



Spec

Build-to-Suit

Chicago, ILLos Angeles – Inland Empire, CA

Nashville, TNAtlanta, GA

Columbus, OHWashington, DCPhiladelphia, PA

Kansas City, MO-KSColumbia, SC

Los Angeles, CAMemphis, TN

San Jose/Silicon Valley, CALittle Rock, AR

Dallas/Ft. Worth, TXBakers�eld, CAJacksonville, FL

New Jersey – CentralIndianapolis, INCharleston, SCSan Diego, CA

Houston, TXCincinnati, OHSavannah, GA

Boston, MADenver, CO

Phoenix, AZNew Jersey – Northern

Raleigh, NCLas Vegas, NV

Ft. Lauderdale/Broward Co., FLBaltimore, MD

Portland, ORCharlotte, NC

Sacramento, CACleveland, OH

West Palm Beach, FLOakland, CA

St. Louis, MO

0 1,000,000 2,000,000 3,000,000 4,000,000Square Feet

translate into stronger fundamentals. Rents, however, are unlikely to firm up until vacancies drop below 10.0 percent, which should occur by year-end. For most landlords and investors, the best that can be hoped for is rising occupancy and fewer incentives. For tenants, 2011 is an opportune time to sign a new lease, as 2012 will almost certainly be the inflection period when warehouse rents begin their upward march.

Occupancies rise for third consecutive quarter. For the third consecutive three-month period, industrial markets registered an increase in occupied space. For the fourth quarter, net absorption totaled 28.6 million square feet (MSF)—a large increase from the third quarter, when occupied space increased by just 3.6 MSF, and in sharp contrast to the 17.6 MSF of industrial space returned to the market in the Q4 2009. For the year, absorption totaled 23.7 MSF compared with –160.7 MSF in 2009. Of the 55 markets tracked in the U.S., 33 reported positive absorption during the fourth quarter; however, sizeable gains in four (Inland Empire, New Jersey, Chicago and Dallas) of the Big Five markets drove up the national number. Canadian markets ended the year on a somewhat muted note, however, full-year absorption totaled 16.7 MSF, a stark turnaround from 2009 when occupied space shrank by 700,000 square feet.

warehouse construction still at low levels but up from previous quarter. Fourth quarter completions totaled 9.4 MSF, a substantial increase from the third quarter when 4.4 MSF were delivered to the market, and a modest increase from 7.0 MSF completed in Q4 2009. Of the 9.4 MSF delivered, 71 percent was build-to-suit and 29 percent was speculative construction. In the coming quarters construction is anticipated to be largely build-to-suit, with only 15 percent under construction at year-end classified as speculative. Quarter-end construction activity totaled 22.7 MSF, a modest increase from 18.6 MSF underway at the end of the third quarter but well below the 107.0 MSF recorded two years ago. Canadian construction remained subdued with merely 500,000 square feet completed in Q4 bringing annual construction to 4.6 MSF. In 2009 Canadian warehouse construction totaled 15.7 MSF.

u.s. industrial vacancy rate registers sharp drop during the quarter. The U.S. industrial warehouse vacancy rate dropped 22 basis points during the fourth quarter to register 10.74 percent. After a very slight increase in the third quarter, this brings the national vacancy rate back to where it began the year. Vacancies in many markets appear to have peaked and are expected to drift lower over the coming quarters. About three of every four tracked U.S. markets (41 out of 55) saw vacancy decrease in Q4 while the balance registered no change or a modest increase. Canadian warehouse vacancies were little changed, increasing by just 4 basis points during the quarter to average 5.56 percent.

Rents continue to go lower despite a pick-up in demand. In spite of improvements in demand for industrial warehouse space, industrial rents moved lower during the fourth quarter. Warehouse rents fell 2.1 percent to register $4.60 per square foot while bulk rents dropped 2.0 percent to average $4.13 per square foot, flex rents marginally increased $0.04 to $8.54 per square foot and R&D rents slipped $0.21 to $10.00 per square foot. Canadian industrial rents largely held steady during the quarter with warehouse, bulk, R&D and flex all registering increases/decreases of less than 1.0 percent.

U.S. Industrial Market Finishes 2010 on a High Note

u.s. INdusTRIAl sPACE uNdER CONsTRuCTION By TyPE – Q4 2010

Vancouver, BC

Toronto, ON

Calgary, AB

Regina, SK

Saskatoon, SK

Winnipeg, MB

Waterloo Region, ON

Edmonton, AB

Ottawa, ON

Montreal, QC

0 1,000,000 2,000,000 3,000,000 4,000,000Square Feet

Spec

Build-to-Suit

CANAdA INdusTRIAl sPACE uNdER CONsTRuCTION By TyPE – Q4 2010

Continued from page 1


www.COllIERs.COM

Absorption—Net change in leased space over a given period of time.

Bulk space—100,000 square feet or more with up to 10 percent office space, the balance being general warehouse space with 20- to 36-foot ceiling heights. All loading is dock-height.

Flex space—Single-story buildings having 10- to 18-foot ceilings with both floor-height and dock-height loading. Includes wide variation in office space utilization, ranging from retail and personal service through distribution, light industrial and occasional heavy industrial use.

Inventory—Includes all existing multi- or single-tenant leased and owner-occupied industrial warehouse, light manufacturing, flex and R&D properties greater than or equal to 10,000 square feet.

New Construction—Includes completed speculative and build-to-suit construction. New construction quoted on a net basis after any demolitions or conversions.

service space—Single-story (or mezzanine) with 10- to 16-foot ceilings with frontage treatment on

one side and dock-height loading or grade level roll-up doors on the other. Less than 15 percent office.

Tech/R&d—One- and two-story, 10- to 15-foot ceiling heights with up to 50 percent office/dry lab space (remainder in wet lab, workshop, storage and other support), with dock-height and floor-height loading.

Triple Net Rent—Includes rent payable to the landlord and does not include additional expenses such as taxes, insurance, maintenance, janitorial and utilities. All industrial and high-tech/R&D rents in this report are quoted on an annual, triple net per square foot basis in U.S. dollars.

Vacancy Rate—Percentage of total inventory available (both vacant and occupied) at the survey date including direct vacant and sublease space.

warehouse—50,000 square feet or more with up to 15 percent office space, the balance being general warehouse space with 18- to 30- foot ceiling heights. All loading is dock height.

Glossary

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480 offices in 61 countries on 6 continentsUnited States: 135Canada: 39Latin America: 17Asia Pacific: 194EMEA: 95

• $1.9 billion in annual revenue

• 2.4 billion square feet under management

• over 15,000 professionals

Accelerating success.

FOR MORE INFORMATION

Ross J. MooreChief Economist | USATEl +1 617 722 0221EMAIl [email protected]

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North American Industrial Highlights 4Q 2010

Real Estate

Transcript of North American Industrial Highlights 4Q 2010