STANLEY SERVICE CENTER...SF wereunder constructionand expected to deliverthis summer. NorthPoint is...

STANLEY SERVICE CENTER63,850-Sq.Ft. Industrial Warehouse on Approximately 3.36 AC

2416-2524 Stanley Avenue, Dayton, OH 45404

About the Investment

Investment Highlights

Marcus and Millichap is pleased to present for sale the Stanley ServiceCenter located at 2416-2524 Stanley Avenue, Dayton, OH. This offeringconsists of multi-tenant, Industrial Warehouse/Office building totaling63,850 square feet and sit on approximately 2.5 aces of land.

Multi-Tenant industrial office/warehouse building in the fast-growingNorth Dayton submarket.

Located within an Opportunity Zone. Subject Property has 12.83% Vacancy Upside. Dayton’s average market

rent for similar properties is $4.35/SF, subject property average rent is20% below market at $3.48 Per Square Foot.

Subject Property benefits from 18’ ceiling heights and comes equippedwith sixteen, 12’x14’ drive in dock doors.

Benefits from easy access to several major highway systems — I-75 northand south; I-70 east and west; US Route 35 southeast & northwest; StateRoute 4 north and west. Located on Stanley Avenue with exposure to over13,000 Vehicles per day.

Located within Montgomery County, in the heart of the Midwest. Situatedat the intersection of highways I-70 and I-75, Montgomery Countyprovides access to one of the most highly traveled intersections in theUnited States.

1.3 Miles from Dayton Children’s Hospital which sees over 280,000patients each year. The hospital is staffed with more than 1,400 full-timeemployees, 300 part-time employees, and nearly 250 physicians. This iscurrently the only pediatric hospital in the Dayton region.

Affluent demographics with over 210,000 residents within a 5-mile radiusand average household incomes in excess of $52,000 within a 5-mileradius.

STANLEY SERVICE CENTER

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PROPERTY DESCRIPTIONProperties Industrial WarehouseProperties Address 2416-2524 Stanley Avenue, City, State, ZIP Dayton, OH 45404Years Built 1972Buildings GLA 63,850-SqftLot Size 2.5± AcresOccupancy 100%Type of Construction MasonryBuilding Height 18’Columns 40’w x 35’dDrive Ins 16 tot. / 12’w x 14’hDocks 2Enterprise Zone YesOpportunity Zone YesPower 200-600a 3p 4w

P R O P E R T Y D E S C R I P T I O N S I T E P L A N M A R K E T A N A L Y T I C S P H O T O S P R I C I N G S U M M A R Y L O C A T I O N O V E R V I E W M A R K E T O V E R V I E W D E M O G R A P H I C S

2416-2524 Stanley Avenue, Dayton, OH 45404

SITE PLAN2416-2524 STANLEY AVENUE, DAYTON, OH 45404

Building (APN):R72-16707-0005 BUILDING TOTAL GLA: 63,850-SF | LOT AREA: ±3.36-AC

STANLEY AVENUE13,000+ VPD

Signage

LOCAL AERIAL SNAPSHOT

STANLEYSERVICECENTER

1-Mile SE of Subject Property

MAIN CAMPUS

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Drive-in Ramp

Bay #1Blue Jay

Communications

Bay #2FantasticFinishes

Bay #3Fantastic Finishes

Bay #4Something Old

Rentals, LLC

Bay #5Something Old

Rentals, LLC

Bay #6Gwin’s SteamCleaning, Inc.

Bay #7Magic Salt

of Dayton LLC

Bay #8High Quality

Nutrition Co. LLC

Bay #9High Quality

Nutrition Co. LLC

Bay #10Frederick

Electric, LLC

Bay #12Rooter Drain

Tech.

Bay #12Westwind Limousine

Service

Bay #14First Call

Quality

Bay #15First Call

Quality

85-Parking Spaces

STANLEY AVENUE


Bay #11(HCR Restoration)

https://goo.gl/maps/tZikX7nb5agYy7wY9

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Market Buildings Inventory SF Avg Est. Rent / SF Vacancy $P/SF CapSubject Property 1 63,850 $3.48 12.84% $23.49 8.50%

North Dayton Submarket 1,163 44M $4.05 6.5% $33 8.00%North Dayton 2-4 Submarket 743 37.8M $4.04 7.4% $32 8.10%

Dayton 2-4 Star Market 1,895 95.2M $4.35 7.3% $33 8.00%Dayton Market Overall 3,084 107M $4.35 6.6% $33 8.80%

TRAILING 12 MONTHS SALES ACTIVITY [140 INDUSTRIAL PROPERTIES SOLD]

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The rise of e-commerce has fueled strong growth in recent years, with demand for warehouse and distribution facilities driving substantial vacancy compression and leading to a surge in supply growth.Demand is concentrated in the North Dayton Submarket, home to the Dayton International Airport and the I-70/75 Interchange. With the rapid development of logistics facilities around the airport andinterchange, Dayton has succeeded in attracting a number of major retailers, including Spectrum Brands, Crocs, and Chewy. In spite of these healthy demand trends, rents remain well belowneighboring Cincinnati and Columbus, and growth has been modest. The transaction market has experienced a similar slow pace of improvement, although 2019 is likely to be a record-breaker, with$118 million in assets trading in the first five months of the year.

SUMMARY: DAYTON - OH

Dayton's industrial market has continued to see healthy levels of absorption, due largely to its prime location along Interstates 70 and 75 and strong growth in e-commerce-fueled logistics demand.Vacancy has compressed over 800 basis points since 2010, driven by over 12 million SF of positive net absorption cycle to date. Vacancy was 5.5% as of 19Q1, up slightly from the prior quarter due tonew supply in the logistics sector. Over the past year, however, vacancy is down 80 basis points, with net absorption totaling 1.6 million SF. Vacancy is highest in flex at 10.3% (up 80 basis points year-over-year) and lowest for manufacturing at 4.2%. Vacancy for logistics sits at 5.7%. Strong supply growth is expected to continue through year-end, causing vacancy to move higher still before a briefrecovery in 2020. In line with the overall U.S., vacancy will trend higher through the forecast as the economy cools and absorption slows. The North Dayton Submarket, the metro’s largest and the hometo both Dayton International Airport and the I-70/I-75 Interchange, captured the lion’s share of demand over the past year. Both the largest move-in and the largest lease signed last year (each about350,000 SF) took place in this submarket, in newly delivered properties by the airport. Vacancies in North Dayton and in the other major submarkets South Central and South Dayton hover between 5%and 6%. Vacancies are highest in Southeast Dayton (over 13%) and lowest in Northeast Central and West Dayton (both under 2%).

VACANCY/AVAILABILITY

Rents have grown modestly through the cycle, up about 11% since 2010, and remain comfortably below neighboring Columbus and Cincinnati, at $4.23/SF. While rents are highest for flex, at $8.61/SF,this sector has seen very little rent growth cycle to date. Both logistics and manufacturing have seen rents grow about 12% since 2010, with average rents of $4.16/SF and $3.76/SF as of 19Q1. Consistentwith national trends, rent growth is expected to moderate but remain positive through the forecast. The highest rents are found in South Dayton, averaging around $5.50/SF, and the lowest are in WestDayton, at around $3/SF. While experiencing the strongest demand, rents are also fairly low in North Dayton, averaging just below $4/SF. The nature of submarket inventory is likely a key factor, withhigher-priced flex space representing an above-market share of total inventory in South Dayton but well below average shares in West and North Dayton.

RENT

There is more than 103 million SF of industrial space in Dayton, with logistics representing 68%, manufacturing 28%, and flex 4% of total inventory. North Dayton is the largest submarket, with 42million SF of space, and home to most of the metro’s new supply. Other major submarkets include South Central, with 21 million SF, and South Dayton, with 11.5 million SF. Since 2010, 6.7 million SF ofnew space has entered the market, with logistics space representing over 80%. Logistics represents an even greater share of more recent deliveries, around 1 million SF of the 1.2 million SF that hasdelivered since the beginning of 2018. Consistent with broader trends cycle to date, the majority of recent deliveries are located in North Dayton. One property has delivered this year: the 4 Star,434,000-SF Park 70/75 Building 3 in North Dayton. Built by Northpoint Development, the property is located adjacent to Dayton International Airport. As of early 19Q2, 54% of space was leased,although the entire property was listed as available. Crocs is occupying space here temporarily, in advance of their build-to-suit delivering next door. As of early 19Q2, two properties totaling 1.3 millionSF were under construction and expected to deliver this summer. NorthPoint is developing both properties, which are located in the North Dayton Submarket in close proximity to the airport. Chewy, theFlorida-based retailer of pet food and supplies, will occupy a 700,000-SF fulfillment center at 3280 Lightner Road. Footwear company Crocs is relocating their U.S. distribution center from Ontario,California, to Dayton this summer, occupying a 560,000-SF warehouse on Dog Leg Road. The property will also feature a retail shop.

CONSTRUCTION

About $715 million in industrial assets has traded cycle to date, with annual sales averaging around $77 million. The North and South Dayton submarkets tend to have the most transactions, which comesas no surprise, as they house the bulk of the metro’s inventory. In 2018, sales volume totaled just over $68 million, at an average transaction price of $28.55/SF and relatively low cap rate of 7.5%. Thelargest sale last year was the $13.1 million sale-leaseback of the Avenue Stores distribution facility in North Dayton. This 3 Star, 363,000-SF property sold in December for $36.18/SFat an 8.42% cap rateto New Jersey-based Rosdey Group. 2019 is setting up to be a record-breaking year on the sales front. In the first quarter, sales totaled just over $22 million, but early in the second quarter, the Procterand Gamble distribution center in North Dayton traded for $93.3 million ($52.09/SF). This 5 Star, 1.8-million-SF property was sold by Cole Office & Industrial REIT in a portfolio sale to IndustrialLogistics Properties Trust. At a total sale price of $624.7 million and a 5.9% cap rate, the portfolio consisted of 20 single-tenant, net lease properties.

SALES


Tenant Name GLA (SF) % Share Lease From Lease To Monthly Rent Annual Rent R/SF Options Lease Type* Rent Increases

Blue Jay Communications 7,485 11.72% 5/23/2018 2/28/2020 $2,425 $29,100 $3.89 None Modified Gross N/A

Chris and Stuarts Fantastic Finishes 5,640 8.83% 3/27/2017 4/30/2020 $1,800 $21,600 $3.83 None Modified Gross N/A

Something Old Rentals LLC 8,400 13.16% 3/1/2018 3/31/2021 $2,550 $30,600 $3.64 1, 3-Year Option Modified Gross (2%) 4/1/2020

Gwin's Steam Cleaning, Inc. 4,200 6.58% 12/1/2016 11/30/2021 $1,400 $16,800 $4.00 None Modified Gross N/A

Magic Salt of Dayton LLC 4,200 6.58% 4/1/2014 3/31/2020 $1,339 $16,068 $3.83 None Modified Gross N/A

Frederick Electric, LLC 4,200 6.58% 9/28/2016 9/30/2020 $1,350 $16,200 $3.86 7, 1-Year Options Modified Gross $600 During Ext.Option #5-8 – CPI

Rooter Drain Tech 4,200 6.58% 10/1/2018 9/30/2020 $1,435 $17,220 $4.10 1, 1-Year Option Modified Gross N/A

Westwind Limousine Service 4,200 6.58% 11/15/2017 10/31/2020 $1,450 $17,400 $4.14 None Modified Gross N/A

First Call Quality 8,925 13.98% 4/18/2017 5/31/2020 $3,347 $40,163 $4.50 None Modified Gross N/A

HCR Restoration 4,200 6.58% 8/1/2014 7/30/2020 $1,435 $17,220 $4.10 None Modified Gross N/A

Vacant 8,200 12.84% - - - - - - - -

Total GLA: 63,850 100% $18,531 $222,371 $3.48

Occupied: 87.16% = 55,650-SF | Vacant: 12.84% = 8,200-SF

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*Tenants reimburse for their own utilities, all else is gross.*Utilities are all separately metered. *Something Old Rentals LLC is subleasing their space to Oberer’s Flowers, Inc. for $2,975/Month ($4.25/SF).

RENT ROLL


Landlord Responsibilities: Lessor shall make and pay for all repairs to the exterior of the leased premises, to the walls, foundation, structural portions of the building.

Landlord is also responsible for parking lot, Insurance, Taxes, and Management fees, HVAC Replacements.

Lessee Responsibilities: Lessee is responsible for interior of the premises, including repairs to the doors, plumbing, electrical, HVAC.

Lessee pay own utilities (gas, electric, heat, power, water, trash removal)

STANLEY SERVICE CENTER

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PROPERTY DESCRIPTIONProperties Industrial WarehouseProperties Address 2416-2524 Stanley Avenue, City, State, ZIP Dayton, OH 45404Years Built 1972Buildings GLA 63,850-SqftLot Size 2.5± AcresOccupancy 87.16%Type of Construction MasonryBuilding Height 18’Columns 40’w x 35’dDrive Ins 16 tot. / 12’w x 14’hDocks 2Enterprise Zone YesOpportunity Zone YesPower 200-600a 3p 4w


DEBT QUOTELTV 70% ($1,120,000)Option 1 (CoC: 14.51%)Option 2 (CoC: 13.92%)Option 3 (CoC: 13.52%)

5/1 ARM – 4.125%7/1 ARM – 4.500%

10/1 ARM – 4.750%Amortization 25-Years

THE OFFERINGPrice: $1,500,000Cap Rate: 8.50%CoC: (Option 1) 13.35%NOI: $127,446Price/SF: $23.49

Loan info is subject to change please contact Jim Hester, VP of LCNB National Bank for additional details.

Notes:1- Tenants reimburse towards tenant’s utility expense. All else, gross. All utilities are separately metered. 2- Taxes are assessed at 35% of FMV| Current Assessed Value: $253,260 | Millage rate is 116.5.

INCOME STATEMENTCurrent $P/SF

Scheduled Base Rental Income $222,371 $3.481Total Reimbursements (Utilities) $4,707 $0.07Potential Gross Income $227,078 $3.56General Vacancy 12.84% Actual -Effective Gross Income $227,078 $3.56Less: Operating Expenses

CAM ($35,066) ($0.55)Insurance ($12,770) ($0.20)2Real Estate Taxes ($29,365) ($0.46)Management (4% EGI) ($9,083) ($0.14)Administrative ($3,770) ($0.06)Capital Reserve ($9,578) ($0.15)

Net Operating Income 8.50% $127,446 $2.00Debt Service ($67,380) $1.06Cash Flow After Debt Service 13 35% $60,075 $0.94Principal Reduction $24,528 $0.38Total Return 18.80% $84,603 $1.33

OPERATING EXPENSESOperating Expenses Current $P/SFUtilities (CAM) $3,971 $0.06 Dumpster $103 $0.00 General R&M $5,299 $0.08 Fire Protection $2,378 $0.04 Pest Control $232 $0.00 R&M $16,322 $0.26 Snow Removal $1,361 $0.02 Utilities - (Tenant’s) $5,401 $0.08 Total CAM Expenses $35,066 $0.55

Insurance ($12,770) ($0.20)Current RE Taxes ($29,365) ($0.46)Management (4.00%) ($9,083) ($0.14)Administrative ($3,770) ($0.06)Capital Reserve ($9,578) ($0.15)

Total Operating Expenses $99,632 $1.56

Current underwriting is based on averages of 2015-2018 profit and loss statements with consideration for 2019 Sept. YTD

CITY OF DAYTONCOMMUNITY PROFILE

DAYTON TOP EMPLOYERS

Wright-Patterson AFB: 27,500+ employees

Premier Health Partners: 13,800+ employees

Kettering Health Network: 8,400+ employees

Montgomery County: 4,300+ employees

Miami University: 3,750+ employees

Honda of America-Anna.: 3,300+ employees

T-7 Crown Equipment Corporation: 3,000+ employees

Sinclair Community College: 3,000+ employees

LexisNexis: 3,000+ employees

ADTC: 13,000+

Source: in 2019 from MPSI, a leading provider of comprehensive published traffic count data for the U.S.

Source: 2018 Dayton Daily News

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ADTC: 36,000+

ADTC: 9,000+

Situated in southwestern Ohio, Dayton is the county seat and the largest city inMontgomery County. Dayton is a part of several other communities called theGreater Dayton Area, which include the cities of Vandalia, Trotwood, Kettering,Centerville, Beavercreek, Fairborn, West Carrollton, Huber Heights, Troy, andMiamisburg.

At the heart of Dayton’s economy is an unwavering spirit of innovation and thewill to transform for success. The City has worked strategically to reposition itseconomy to compete globally in the future with a diversified knowledge-basedeconomy. The City continues to see growth across several sectors of Dayton’sregional economy in the past year with the largest increases found in thesectors of Leisure/Hospitality, and Education/Health Services. Since the depthsof the financial crisis in December 2009, the Dayton regional economy hasadded jobs at a steady pace, growing by 34,800 jobs or 9.7%.

New construction and business expansions continue the optimism andreinforce broader-based business and consumer confidence. Underscoring thestrength of the labor market is a flurry of economic development activity in theCity. Developers of the Water Street District recently completed the Delco Lofts,an adaptive reuse project that transformed a former 6-story factory buildinginto 129 market rate units overlooking the Dragons Baseball Stadium. A 115-room Fairfield Inn and Suites which opened in the district in late 2018.Children’s Medical Center’s $140 million campus expansion has beencompleted, and CareSource, Ohio’s largest Medicaid managed care provider, isin the process of expanding its footprint downtown with construction of a new7-story office building, scheduled for completion in 2019. In addition to activityin Northeast downtown, construction is underway on the Levitt Pavilion at DaveHall Plaza; the first concerts took place there in the late summer of 2018.

Further, the Dayton International Airport has weathered the departure ofSouthwest Airlines by continuing to develop its surrounding real estate. Inaddition to the 77,000 square foot maintenance hangar built by PSA airlines in2016, Spectrum Brands finished construction on its 570,000 square foot $11million distribution center, adding about 325 jobs.

ADTC: 100,000+

8-Minutes North of Dayton


DAYTON METROOVERVIEW

The Dayton metro area is often referred to as the birthplace of aviation as itwas the home of the Wright brothers and where they researched andexperimented with flight. Composed of Greene, Montgomery and Miamicounties, it is the fourth largest metropolitan area in Ohio. Defense andaerospace industries comprise a large section of the region’s economy.Additionally, healthcare accounts for a sizable portion of the area’semployment; several key institutes and centers are located here.

ECONOMY

METRO HIGHLIGHTS

Hospitals in the Greater Dayton area have an estimated combined employment of nearly32,000 and a yearly economic impact of $6.8 billion.

Wright-Patterson U.S. Air Force Base is just east of Dayton. The base employs 27,500military, civilian and contract employees and has a $4.3 billion annual economic impact.

Dayton’s logistics sector is growing and is expected to add 2,200 jobs by 2023.

Tech Town, a 40-acre district developed in downtown Dayton, was created as a tool tosupport the attraction and growth of high-technology business and promote technologycommercialization.

TECHNOLOGY HUBDayton is known for its high concentration of aerospace and aviationtechnology. In 2009, it was designated as Ohio's aerospace innovation hub.

HIGHER EDUCATIONThe University of Dayton and Wright State University are two major higher-education institutions impacting the local economy.

HEALTHCARE SERVICESMetro hospitals consistently earn top national rankings and recognition aswell as many of HealthGrades’ top ratings.

807K2018

POPULATION:

329K2018

HOUSEHOLDS:

39.52018

MEDIAN AGE:

U.S. Median:38.02.6%

Growth2018-2023*:1.7%

Growth2018-2023*:

DEMOGRAPHICS

* Forecast Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody’s Analytics; U.S. Census Bureau

$53,5002018 MEDIAN

HOUSEHOLD INCOME:

U.S. Median:$58,800

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2019 PRICING AND VALUATION TRENDSYield Range Offers Compelling Options For Investors;Most Metros Demonstrate Strong Elevated Yields

* 2008-2018 Average annualized appreciation in prices per square foot** Price per square foot for industrial properties $1 million and greaterSources: Marcus & Millichap Research Services; CoStar Group, Inc.; Real Capital Analytics


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2019 PRICING AND VALUATION TRENDS

Pricing and Valuation Trends Summary

Ten-year appreciation favors high-growth markets. Benchmarkedfrom the end of 2008 as the U.S. economy began its rapid tumble intorecession, many markets’ industrial prices declined several years morebefore recovering. Dallas/Fort Worth and Houston are two markets thatexperienced a much softer downturn, allowing strong price appreciationduring the growth cycle while maintaining first-year yields higher thanthe national rate. Denver leads all markets in appreciation while thenation’s two largest cities, New York City and Los Angeles, have alsoposted robust value gains, reflecting substantive economic growth.Midwestern metros registered marginal appreciation in industrial pricesas their recovery began later in the growth cycle than coastal or gatewaymarkets.

Smaller metros boast elevated returns. Competitive bidding insecondary and tertiary markets has pushed up prices above their pre-recession levels, yet many still have the opportunity to rise at a similarpace as large port markets and major interior distribution hub metros.As prices climb, these markets’ industrial assets trade with cap rateshigher than the U.S. rate. Comparatively, many primary coastal metrosand gateway cities offer lower first-year returns that have witnessedstrong appreciation over the past 10 years, including Seattle-Tacoma andOakland.

Average Price per Square Foot(Alphabetical order within each segment)


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Los Angeles retains top spot, reshuffling ensues. Southern California markets dominate the top 10 in this year’s Index.Twin Ports Los Angeles is one of the busiest ports in the world and the metro also has an expansive manufacturing base,underpinning a robust industrial sector. Solid absorption of space has kept vacancy in Los Angeles the lowest in the nationfor five consecutive years. The movement of goods from the ports to markets throughout the world as well as expanding e-commerce demand have produced a vibrant distribution and logistics sector in neighboring Orange County (#4) andRiverside-San Bernardino (#8). Tightening vacancy and the greatest rent growth among metros in the Index propelledNorthern New Jersey (#2) onto the second rung. Detroit (#3) benefits from new autonomous vehicle technology that isspurring additional space needs for automobile manufacturers and their suppliers. Newcomer to the index, Minneapolis-St.Paul (#5) debuts in the fifth position, as the metro’s diverse economy and position as a distribution hub for the UpperMidwest produce steady absorption and rent growth. Rounding out the top 10 slots are Seattle-Tacoma (#6), Cleveland (#7),Oakland (#9) and Tampa-St. Petersburg (#10).

Biggest Index movers. Milwaukee (#13) registered the greatest improvement in the 2019 NIPI, leaping six rungs. Strongmanufacturing hiring and minimal new inventory will fill existing space, dropping vacancy and boosting rents. Cleveland(#7) and Atlanta (#14) followed, each climbing four spots. A slow delivery pipeline in Cleveland will keep vacancy well belowthe national level, moving rents higher, while the growth in e-commerce demand and steady absorption in Atlanta willproduce outsized rent advances. Elevated vacancy that is stifling rent growth is a trend in markets with the largest declinesand those sitting near the bottom of the NIPI. Dallas/Fort Worth (#23) and New York City (#24) each fell seven rungs toremain in the bottom half of the Index, while Baltimore lost two notches to land at the bottom of this year’s rankings.

2019 NATIONAL INDUSTRIAL PROPERTY INDEXRegional Distribution Centers and Ports Head Index; Elevated Vacancy Keeps Metros From Moving Up

Index MethodologyThe NIPI ranks 32 major industrial markets based upon a series of 12-month, forward-looking economic and supply-and-demandvariables. Markets are ranked based on their cumulative weighted-average scores for various indicators, including projectedemployment growth, vacancy level and change, construction, and rents. Weighing both the forecasts and incremental changeover the next year, the Index is designed to indicate relative supply-and-demand conditions at the market level.

Users of the Index are cautioned to be aware of several important considerations. First, the NIPI is not designed to predict theperformance of individual investments. A carefully chosen property in a bottom-ranked market could easily outperform a poorchoice in a top-ranked market. Second, the NIPI is a snapshot of a one-year time horizon. A market facing difficulties in the nearterm may provide excellent long-term prospects, and vice versa. Third, a market’s ranking may fall from one year to the next evenif its fundamentals are improving. Also, the NIPI is an ordinal index, and differences in rankings should be carefully interpreted. Atop-ranked market is not necessarily twice as good as the second-ranked market, nor is it 10 times better than the 10th-rankedmarket.


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NATIONAL ECONOMYRising Wages Sustain Consumption in 2019;Growth Solid Despite Moderating Momentum

Wages continue to climb as firms compete for talent. With help from a tight labor market,economic growth will extend into 2019. Organizations will add 2 million workers to payrollsthis year, keeping the nation’s unemployment rate near 4 percent. Though many companiesare eager to expand employment bases, a lack of qualified workers may inhibit them fromfilling open positions. In an effort to attract quality talent, firms will bolster compensationpackages, supporting an uptick in wage growth after annual increases in the mid-2 percentband were witnessed regularly during the past few years. Rising wages should become moreprevalent as the year progresses, translating to relatively active spending habits andencouraging retailers to keep inventories elevated. Additionally, many companies are aimingto beat potential tariffs by bringing spring merchandise into the country early, putting pressureon warehouses and other storage facilities to maintain heightened levels of imports.

Economy to stay on solid footing as momentum begins to ebb. The U.S. economy willremain fundamentally stable in 2019 despite consumer confidence dipping from last year’shistorically high levels. All-time highs of U.S. household wealth and disposable income willkeep consumers optimistic, particularly as several factors could threaten domestic growthmoving forward. The longer-term effects of a government shutdown remain unclear in additionto any implications from still-unresolved trade tensions. Also, weakening internationaleconomies will weigh on U.S. economic expansion. Accounting for these factors, momentumwill ease this year, moderating GDP growth into the low- to mid-2 percent range annually.Steady growth will help maintain positive levels of consumption, boosting propertyperformance as retailers increase inventories to keep pace with spending.

* Forecast


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NATIONAL ECONOMY2019 National Economic Outlook

Organizations sustain accelerated pace of hiring. After reaching 3 percent at the end of2018 for the first time in more than 10 years, wage growth is expected to remain abovehistorical averages this year. An exceptionally tight job market will be the primary driver ofwage gains as job creation reaches 2 million for the for the ninth year in a row. Positions inthe professional and business services sector as well as education and health services willbe abundant in 2019.

Coastal warehouses impacted by trade war. Many of the nation’s major seaports areexperiencing the effects of ongoing trade tensions. Imports are coming in larger quantitiesas retailers order products in advance, attempting to beat a potential hike in tariffs on goodsfrom China in March, ultimately crowding nearby storage facilities. U.S. tariffs of 10 percenton $200 billion worth of Chinese goods that took effect in September 2018 are scheduled toincrease to 25 percent this spring barring successful negotiations prior to that.

Steady retail spending expected in 2019. Last year, core retail sales averaged 4.7 percentgrowth, reaching peak levels last summer when expansion hit 6.0 percent. While Decemberposted a yearly increase of just 2.2 percent, spending is expected to stabilize this year amida solid economic climate. Online sales should continue to rapidly rise, further benefiting theindustrial sector.


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NATIONAL INDUSTRIAL OVERVIEWChanging Consumer Expectations Motivating NewStrategies in the Industrial Property Sector

Last-mile delivery costs push demand toward urban industrial. The transformation of theindustrial sector has accelerated to an unheard of pace as online shopping has blurred thelines between retail and industrial properties. Shifting consumer habits are rewiring the sectorin the digital age as e-commerce sales grew by 13.5 percent last year to now account forroughly 10 percent of overall retail sales. Most retailers are implementing omnichannelstrategies to meet customer needs, bolstering demand for warehouse and distribution spaceacross the nation. Rising shipping and transportation costs, driven by trucking shortages, areencouraging more companies to find space within population centers to limit distributionexpenses. With consumers expecting shorter delivery windows, companies are turning tovacated retail space in dense residential areas while some developers are making a movetoward multistory warehouses to combat logistical challenges in the urban core.

Leasing demand driven by retailers building their online presence. Demand for industrialspace climbed past supply growth for the ninth straight year in 2018 as e-commerce and last-mile delivery motivated companies to locate closer to the end consumer. This year, e-commerce and the related functions of the business will once again fuel space demand, withcompanies like Home Depot, Kroger and Walmart substantially growing their footprint. HomeDepot is investing $1.2 billion into its supply-chain network, intermingling online and physicalretail with a greater emphasis on same-day pickup, a strategy followed by Walmart as well.Kroger recently partnered with online supermarket Ocado as consumers increasingly purchasetheir groceries online, fueling the need for grocers to expand their customer fulfillmentcapabilities. With Amazon accounting for nearly half of all e-commerce sales last year, otherretailers are moving quickly to streamline their supply chain to catch up, pushing the nationalindustrial vacancy rate to its lowest point on record.

* ForecastSources: CoStar Group, Inc.; Real Capital Analytics


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NATIONAL INDUSTRIAL OVERVIEW2019 National Industrial Outlook

Developers tackle logistical hurdles with taller warehouses. Supply constraints amidexceptional space demand in the urban center have influenced developers to bringmultistory warehouses to the U.S. for the first time, with the first of its kind rising in Seattlelast year. Common in dense urban areas of Europe and Asia, these types of warehousesallow trucks to be loaded on multiple levels, which can be accessed by ramp. Similarprojects are underway in New York City and the Bay Area as strong rental rate growth andlow vacancy in the core justify the higher construction costs. As more retailers make effortsto close the gap between the last mile of the supply chain and the end consumer, demandfor taller warehouses in the tightest markets will grow.

Vacancy tightens further as construction eases. Developers are starting to respond tohigher costs, helping to slow deliveries this year to 210 million square feet following thecompletion of more than 246 million square feet in 2018. Tenant demand pushes pastsupply growth for the 10th consecutive year, compressing the national industrial vacancyrate to 4.5 percent, the lowest on record. Supply constraints support another year of healthyrent growth, climbing 4 percent this year to $7.27 per square foot after recording a 5.4percent increase last year.

Growing production pushes gauges higher. Expansion of the manufacturing sector raiseda leading index of activity to signal steady growth. The subsidiary gauge of new orders, aleading indicator of future manufacturing activity, maintained a strong level, indicating apositive outlook. With a healthy outlook on all fronts, the manufacturing sector is positionedto make contributions to the industrial property sector this year.

* Forecast** Through January 2019Sources: CoStar Group, Inc.; Real Capital Analytics


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U.S. CAPITAL MARKETSFed Eyes Slowing International Economies;Shifting Consumer Preferences Support Acquisitions

Fed adopts cautious stance. Ongoing trade disputes between the U.S. and China together withslowing growth throughout Europe have begun to weigh on the global economy. Financialmarket volatility and elevated caution have sponsored a flight to the safety of Treasurys,pushing the 10-year yield to the mid-2 percent range. While domestic economic output hasmoderated in recent months, the government shutdown and waning impact of the tax cutstimulus are likely to trim forward estimates. As a result, Chairman Jerome Powell stated thatthe Fed is considering an adjustment to ongoing balance sheet runoffs through quantitativetightening and put further interest rate hikes on hold as the central bank takes a wait-and-seeapproach to monetary policy. The bond market has begun to price in a much more dovish Fed,with flattening interest rates reflecting this more cautious stance. Fed officials will likely focuson the intersection of a global growth slowdown and continued labor market strength as theydefine their plans. Barring a significant economic or political event, investors can expectinterest rates to be a bit more stable this year.

E-commerce strength powering broad industrial demand. As consumer preferences shifttoward more spending online, lenders including local, regional and national banks andinsurance companies have been active. Sentiment remains upbeat, with tightening lendingstandards apparent only in the riskiest proposals. High-profile distribution facilities andwarehouses in urban areas remain a portfolio staple, with loan-to-value (LTV) ratios in the 55 to75 percent range, depending on borrower, asset and location factors. Non-core locations anduse cases typically require more nuanced financing such as mezzanine and bridge loans toundertake capital improvements. Elevated construction in some markets has also caused aslight pullback in willingness to lend toward additional developments, particularly in tertiarylocations without a signed tenant in place.


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U.S. CAPITAL MARKETS2019 Capital Markets Outlook

Inflationary pressures benign despite upbeat wage growth. Following theimplementation of tariffs on several key trading partners, core inflation has remained justabove 2 percent, showing little impetus for an uncontrolled surge. Muted inflationarypressure has given the Fed more maneuvering room, particularly as international pressuresweigh on sentiment. Meanwhile, low unemployment has sponsored steady wage growthgains, expanding by 3.0 percent over the last year.

Monetary policy allows flexibility into potential downturn. While other central bankshave maintained ultra-low interest rates, the Federal Reserve has undertaken a much moreprudent policy stance, embarking on a series of rate increases since the fourth quarter of2015. The current fed funds rate of 2.5 percent offers the Federal Reserve sufficientammunition to combat potential headwinds to domestic growth, helping to boost sentiment.

Treasurys offer arbitrage opportunities for global investors. Offering a premium of up to200 basis points compared with other countries, the 10-Year Treasury provides asignificantly higher yield to international investors, particularly on a risk-adjusted basis.This arbitrage has sponsored tremendous capital inflows into U.S.-based assets, with anemphasis on Treasurys, which has suppressed interest rates.


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U.S. INDUSTRIAL INVESTMENT OUTLOOKStrong Growth Prospects and Elevated Returns ExpandPool of Industrial Investors

Crowded market lifts competition for industrial properties. An abundance of equity capitalexpanded into the industrial property market last year, intensifying investor competition andplacing upward pressure on asset values. Pricing across the country remains near or above all-time highs, while gateway markets like Los Angeles are recording the tightest first-year yieldsand the highest prices. Robust competition among buyers and the opportunity for higher yieldsare motivating institutional and private groups to enter secondary and tertiary markets, thoughsuperior liquidity characteristics will keep most institutional buyers focused on primarymarkets. Strong NOI growth will be a major focus among investors this year, lifted by sizablerent gains across most markets. Prospects of a rising interest rate climate could also be asignificant factor affecting investor decisions, though pressures appear to be alleviated fornow.

Deep pool of investors presented with an abundance of opportunities. Urban infillproperties will remain a top target among investors as e-commerce and last-mile demand pushtenants closer to the end consumer. Challenges faced in retail are providing investors withopportunities to convert vacated big-box stores into smaller distribution centers that can servethe local market, particularly with minimal supply growth for infill space. Port markets on theWest Coast, Southeast and the New Jersey port markets will also drive deal volume as a strongU.S. consumer and trade tensions fuel space demand. Investment activity for data centers willremain aggressive as Microsoft, Google, Amazon and other firms rapidly grow their serverfarms, boosting liquidity in key markets such as Northern Virginia, Dallas, Chicago, New Yorkand Northern California. Many corporations have also been motivated to sell these assets,utilizing a sale-leaseback strategy that has become increasingly popular under recent taxreform.

* Through 3Q


19

U.S. INDUSTRIAL INVESTMENT OUTLOOK2019 Investment Outlook

Aggressive investment activity compresses cap rates further. Higher returns in theindustrial sector spur investors to place a premium on Class A and Class B properties overreplacement costs, though a robust construction pipeline could lead sellers to be morecompetitive with pricing this year. The average cap rate compressed to the upper-6 percentterritory, a record low, as demand continues to outpace new supply. Class A properties insome of the nation’s primary markets have achieved a cap rate closer to 4 percent,motivating buyers to seek higher yields in secondary and tertiary markets.

Cross-border acquisitions climb past $15.5 billion. An attractive yield alternative whencompared with a broad range of investment options has foreign investors acquiring moreindustrial portfolios, diversifying away from office and multifamily assets. A combination oflow-risk and growth characteristics pushed capital inflows by foreign entities to a recordhigh last year, expanding into major gateway markets such as Dallas, Los Angeles, Chicagoand Atlanta.

New opportunity arises from migration to online shopping. Adaptive reuse of outdatedproperties is expected to grow this year as e-commerce lifts demand for logistics space.Freestanding big-box stores and some Class B office buildings are prime candidates forconversion due to centralized locations, clear heights and presence of a loading dock.Investors have been active in secondary markets when looking at conversions, realizinghigher returns than are typical in primary markets.


Source: © 2018 Experian

20

Created on September 2019

POPULATION 1 Miles 3 Miles 5 Miles 2018 Estimate

Total Population 6,282 79,544 210,376 2010 Census

Total Population 6,333 79,998 210,223 2000 Census

Total Population 6,899 93,783 237,298 Daytime Population

2018 Estimate 12,868 118,269 248,716HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2023 Projection

Total Households 2,517 32,785 85,466 2018 Estimate

Total Households 2,518 33,513 86,521Average (Mean) Household Size 2.46 2.30 2.32

2010 CensusTotal Households 2,561 34,004 87,258

2000 CensusTotal Households 2,767 39,504 97,151

HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2018 Estimate

$200,000 or More 0.61% 0.97% 1.64%$150,000 - $199,000 0.25% 1.35% 2.24%$100,000 - $149,000 2.28% 4.46% 7.30%$75,000 - $99,999 6.93% 6.89% 9.33%$50,000 - $74,999 11.15% 16.07% 17.65%$35,000 - $49,999 15.88% 13.78% 14.39%$25,000 - $34,999 13.43% 13.24% 11.99%$15,000 - $24,999 19.36% 16.47% 14.22%Under $15,000 30.13% 26.75% 21.23%

Average Household Income $35,342 $42,848 $52,708Median Household Income $25,328 $30,243 $37,470Per Capita Income $14,167 $18,461 $22,238POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age

2018 Estimate Total Population 6,282 79,544 210,376Under 20 28.81% 26.05% 26.04%20 to 34 Years 21.72% 23.66% 23.32%35 to 39 Years 5.65% 6.47% 6.04%40 to 49 Years 10.76% 11.87% 11.38%50 to 64 Years 19.77% 19.81% 19.32%Age 65+ 13.30% 12.12% 13.88%Median Age 34.57 35.21 35.49

Population 25+ by Education Level2018 Estimate Population Age 25+ 4,049 52,641 137,069Elementary (0-8) 6.20% 4.70% 3.27%Some High School (9-11) 19.82% 14.67% 11.03%High School Graduate (12) 37.30% 33.39% 30.74%Some College (13-15) 22.43% 24.31% 25.46%Associate Degree Only 6.44% 8.11% 9.31%Bachelors Degree Only 4.96% 8.28% 11.41%Graduate Degree 1.07% 5.11% 7.73%

Time Travel to WorkAverage Travel Time in Minutes 29 23 22


Source: © 2018 Experian

Created on September 2019

21

INCOMEIn 2018, the median household income for your selected geography is$37,470, compare this to the US average which is currently $58,754.The median household income for your area has changed by 17.27%since 2000. It is estimated that the median household income in yourarea will be $43,137 five years from now, which represents a change of15.12% from the current year.

The current year per capita income in your area is $22,238, comparethis to the US average, which is $32,356. The current year averagehousehold income in your area is $52,708, compare this to the USaverage which is $84,609.

POPULATIONIn 2018, the population in your selected geography is 210,376. Thepopulation has changed by -11.35% since 2000. It is estimated that thepopulation in your area will be 206,003.00 five years from now, whichrepresents a change of -2.08% from the current year. The currentpopulation is 48.52% male and 51.48% female. The median age of thepopulation in your area is 35.49, compare this to the US average whichis 37.95. The population density in your area is 2,674.74 people persquare mile.

HOUSEHOLDSThere are currently 86,521 households in your selected geography. Thenumber of households has changed by -10.94% since 2000. It isestimated that the number of households in your area will be 85,466five years from now, which represents a change of -1.22% from thecurrent year. The average household size in your area is 2.32 persons.

EMPLOYMENTIn 2018, there are 135,917 employees in your selected area, this is alsoknown as the daytime population. The 2000 Census revealed that53.40% of employees are employed in white-collar occupations in thisgeography, and 46.51% are employed in blue-collar occupations. In2018, unemployment in this area is 7.47%. In 2000, the average timetraveled to work was 22.00 minutes.

RACE AND ETHNICITYThe current year racial makeup of your selected area is as follows:62.12% White, 31.18% Black, 0.05% Native American and 1.45%Asian/Pacific Islander. Compare these to US averages which are:70.20% White, 12.89% Black, 0.19% Native American and 5.59%Asian/Pacific Islander. People of Hispanic origin are countedindependently of race.

People of Hispanic origin make up 3.63% of the current year populationin your selected area. Compare this to the US average of 18.01%.

HOUSINGThe median housing value in your area was $84,926 in 2018, comparethis to the US average of $201,842. In 2000, there were 55,229 owneroccupied housing units in your area and there were 41,921 renteroccupied housing units in your area. The median rent at the time was$389.


P R E S E N T E D B Y

Darpan PatelFirst Vice President, Investments

Net Leased Properties GroupCincinnati Office

Tel: (513) 878-7723Fax: (513) 878-7710

[email protected]: OH SAL 2012000748

Michael GlassBroker of Record

THE PATEL GROUP

Sal RamundoAssociate

National Office & Industrial GroupCincinnati Office

Tel: (513) 878-7736Fax: (513) 878-7710

[email protected]: KY 239856

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