MarketView New Jersey Industrial

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1 MarketView New Jersey Industrial CBRE Global Research and Consulting PORT LOADED CONTAINERS 367,926 TEUs (Sept. 12) NJ UNEMPLOYMENT 9.6% (Nov. 12) Y-O-Y U.S. GDP CHANGE 2.6% (Q3 12) U.S. CONSUMER CONF. INDEX 65.1 (Dec. 12) Quick Stats Availability 10.2% Lease Rates $5.32 Hot Topics Change from last Current Yr. Qtr MSF Sale Prices $62.38 Completed 0.06 MSF Note: The arrows are trend indicators over the specified time period and do not represent a positive or negative value. (e.g., absorption could be negative, but still represent a positive trend over a specified period.) The New Jersey industrial market has now seen nine consecutive quarters of positive net absorption The State s average asking lease rate increased to $5.32 per sq. ft. Leasing velocity in amounted to 3.62 million sq. ft., bringing the year-end total to 21.9 million sq. ft saw the highest volume of sales activity in the past four years, driven mostly by investors Sq. ft. under construction is up 59.2% from last quarter, with one build-to-suit and one speculative project breaking ground during New Jersey s industrial real estate market demonstrated stability in its recovery over the past two years; however, fourth quarter leasing activity reflected the continued uncertain political and economic climate. Demand tapered off in the final quarter of the year, interrupting the steadfast leasing momentum that has become commonplace for the State s industrial real estate market. Despite this, availability improved by 30 basis points in 2012 and will likely drop below the 10.0% threshold during the first half of Of the largest transactions completed during the quarter, there were 11 new leases of 100,000 sq. ft. and greater. This is a 47.6% decrease from the same period last year. This drop-off in large tenant commitments significantly impacted s leasing velocity, which fell below the four million sq. ft. mark for the first time since late Overall, 2012 ended with annual leasing of 21.9 million sq. ft. Amidst the fiscal cliff debate, immediate tax rate increases, and overall economic uncertainty, New Jersey tenants were also hit with an increase in the average Historical Availability Rates vs. Asking Lease Rates $9.00 $7.50 $6.00 $4.50 $3.00 asking lease rate, which now stands at $5.32 per sq. ft. While the market is beginning to realize rental growth, tenants continue to be very price-sensitive. The market reacted to these combined forces with a slight pullback in demand. Active tenants in the market continue to face limited space options, especially those seeking large, class A warehouses. Currently, there are only nine class A properties with more than 200,000 sq. ft. available, and developers are actively responding to this market scenario with new construction projects. Two of the top new leases during the fourth quarter were buildto-suit transactions, and there are now four significant speculative developments underway. resulted in the ninth consecutive quarter of positive net absorption for New Jersey s industrial market. Investors continue to demonstrate their interest in the State s industrial product, and the increase in investment purchases in 2012 is a strong sign for the coming years will be characterized by increased demand for new construction, limited supply of large class A availabilities, and a steady increase in lease rates Availability Rate 10.2% Asking Lease Rate $ % 10% 8% 6% 4% $1.50 2% $0.00 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q %

2 LEASE RATES Average Asking Lease Rates $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 $4.00 NJ $5.32 NNJ CNJ Now at $5.32 per sq. ft., the average asking lease rate for New Jersey industrial space increased $0.13 in the fourth quarter. Northern New Jersey s asking rate increased to $6.02 per sq. ft., while Central s asking rate increased to $4.61 per sq. ft. Competition over existing available inventory and new construction is driving up lease rates; although tenants are still hesitant to concede to increased rates as evidenced by a drop in leasing activity this quarter. SALE RATES Average Asking Sale Rates $100 NJ $62.38 NNJ CNJ $90 $80 $70 $60 $50 The State s asking sale rate now stands at $62.38 per sq. ft. Northern New Jersey s rate dropped slightly to $71.52 per sq. ft., and Central New Jersey s rate dropped to $53.50 per sq. ft. Investors accounted for 74.9% of sales activity in. Financing remains difficult for occupiers to attain for acquisitions, while investors continue to aggressively demonstrate their interest and confidence in the New Jersey industrial real estate market. NET ABSORPTION MSF New Jersey s industrial market netted a positive 842,913 sq. ft. of absorption during the ninth consecutive quarter of positive momentum. Central New Jersey carried the market in the fourth quarter with 1.32 million sq. ft. of absorption, but Northern New Jersey saw negative 475,593 sq. ft. of absorption due to space hitting the market in Bergen and Hudson Counties. When looking at the State overall, the volume of new available space coming to market continues to be historically low. 2

3 CONSTRUCTION ACTIVITY Completed MSF During, a 61,700-sq.-ft. condo development completed construction in Parlin. Two new construction projects broke ground: an 878,564-sq.-ft. build-to-suit for Peapod and Imperial Bag & Paper Co. in Jersey City being built by Prologis, as well as a 750,000-sq.-ft. speculative project by IDI in South Brunswick. Currently, four significant projects totaling 1.90 million sq. ft. are being constructed fully on-spec. Compared to this time last year, overall construction activity is up 361.3%. PORT OF NY AND NJ ACTIVITY Activity at the New York and New Jersey port terminals continues to increase, which typically prompts growth for the surrounding New Jersey industrial real estate market. As of November 2012, monthly loaded container traffic in TEUs is up 5.3% from the previous month. The Port Authority is continuing to partake in the US port industry s East Coast race to upgrade port infrastructure in preparation for larger cargo vessels that will pass through the Panama Canal starting in As the largest port on the East Coast and the third largest in the US, the Port of New York and New Jersey is a passageway to one of the largest and most important consumer markets in the world. *PONYNJ Terminal Operator Data Top Lease Transactions 4Q 2012 Size (Sq. Ft.) Tenant Address City Type 495,000 Imperial Bag & Paper Company 219 Route 1 & 9 Jersey City New Lease 344,832 Peapod 219 Route 1 & 9 Jersey City New Lease 254,750 Vira Manufacturing 1 Buckingham Ave Perth Amboy Renewal 212,335 The Home Depot 130 Docks Corner Rd South Brunswick Renewal 172,849 Falken Tire Corporation 200 Docks Corner Rd South Brunswick Renewal Top Sale Transactions 4Q 2012 Size (Sq. Ft.) Buyer Address City Type 271,800 Digital Realty Trust 701 Union Blvd Totowa Sold to Investor 267,000 Sitex Realty Group 51 Commerce Dr South Brunswick Sold to Investor 259,369 Colony Realty Partners 1 Matrix Dr Monroe Township Sold to Investor 3 209,512 TIAA-CREF 200 Central Ave Teterboro Sold to Investor 170,022 Meadowlands Ventures 500 Schuyler Ave North Arlington Sold to Investor

4 Market Statistics 4Q 2012 Market Rentable Area (SF) Availability Rate (%) Avg. Asking Sale Price ($) Net Absorption (SF) Under (SF) Average Asking Lease Rate ($ SF/Yr) Brunswick/Exit 9 2,810, % $ ,623 0 $2.97 Carteret/Avenel 1,672, % $97.71 (11,139) 232,000 $4.51 Central Union 3,022, % $ ,482 0 $5.23 Exit 8A 7,056, % $ , ,000 $4.42 Hunterdon 1,828, % $23.39 (79,000) 0 $3.43 Linden/Elizabeth 3,863, % $ , ,000 $5.20 Monmouth 1,926, % $ ,000 0 $6.28 Princeton 934, % $45.30 (10,000) 0 $5.59 Rt 287/Exit 10 9,472, % $ , ,000 $5.26 Rt 78 East 1,112, % $31.20 (22,339) 0 $3.38 Somerset 3,369, % $69.48 (32,160) 0 $5.60 Trenton/295 4,079, % $ ,763 0 $3.56 Central New Jersey 41,147, % $ ,318,506 2,302,000 $4.61 Central Bergen 2,152, % $91.22 (175,755) 0 $6.10 Fairfield Market 1,905, % $ ,024 0 $7.24 Hudson Waterfront 5,423, % $89.78 (259,249) 1,505,564 $5.76 Meadowlands 10,887, % $ ,206 0 $6.04 Morris Region 7,031, % $66.14 (134,135) 0 $5.87 Newark 3,172, % $49.49 (91,127) 350,000 $5.89 North East Bergen 716, % $84.78 (10,393) 0 $6.50 North West Bergen 2,845, % $85.34 (136,591) 0 $7.24 Rt 23 North 153, % $ $6.62 Rt 46/23/3 Interchange 5,318, % $ ,803 0 $5.28 Suburban Essex 940, % $58.56 (10,376) 0 $4.54 Rt 280 Corridor 212, % $ $5.60 Northern New Jersey 40,760, % $71.52 (475,593) 1,855,564 $ Overall 81,907, % $ ,913 4,157,564 $5.32

SUBMARKET MAP DEFINITIONS Average Asking Lease Rate Rate determined by multiplying the asking net lease rate for each building by its available space, summing the products, then dividing by the sum

5 SUBMARKET MAP DEFINITIONS Average Asking Lease Rate Rate determined by multiplying the asking net lease rate for each building by its available space, summing the products, then dividing by the sum of the available space with net leases for all buildings in the summary. Net Leases Includes all lease types whereby the tenant pays an agreed rent plus most, or all, of the operating expenses and taxes for the property, including utilities, insurance and/or maintenance expenses. Market Coverage Includes all competitive industrial buildings 10,000 square feet and greater in size in Northern and Central New Jersey. The change in occupied square feet from one period to the next. Net Rentable Area The gross building square footage minus the elevator core, flues, pipe shafts, vertical ducts, balconies, and stairwell areas. Occupied Area (Square Feet) Building area not considered vacant. Under Buildings which have begun construction as evidenced by site excavation or foundation work. Available Area (Square Feet) Available Building Area which is either physically vacant or occupied. Availability Rate Available Square Feet divided by the Net Rentable Area. Vacant Area (Square Feet) Existing Building Area which is physically vacant or immediately available. Vacancy Rate Vacant Building Feet divided by the Net Rentable Area. 1. Route 23 North 2. North West Bergen 3. North East Bergen 4. Morris Region 5. Route 46/23/3 Corridor 6. Central Bergen 7. Fairfield Market 8. Route 280 Corridor 9. Suburban Essex 10. Meadowlands 11. Hunterdon 12. Somerset 13. Route 78 East 14. Central Union 15. Linden/Elizabeth 16. Newark 17. Hudson Waterfront 18. Princeton 19. Brunswicks/Exit Route 287/Exit Carteret/Avenel 22. Trenton/ Exit 8A 24. Monmouth 2013 CBRE, Inc. CBRE statistics contained herein may represent a different data set than that used to generate National Vacancy and Availability Index statistics published by CBRE s Corporate Communications Department or CBRE s research and econometric forecasting unit, CBRE Econometric Advisors. Information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market. This information is designed exclusively for use by CBRE clients, and cannot be reproduced without prior written permission of CBRE. Normalization Due to a reclassification of the market, the base, number and square footage of buildings of previous quarters have been adjusted to match the current base. Availability and Vacancy figures for those buildings have been adjusted in previous quarters. For more information, please contact: Jeff Hipschman Senior Managing Director CBRE, 250 Pehle Ave, 6th Floor Saddle Brook, NJ T F jeff.hipschman@cbre.com William Forcello Analyst CBRE, 250 Pehle Ave, 6th Floor Saddle Brook, NJ T F william.forcello@cbre.com

A Wave of Significant Transactions Energizes New Jersey s Office Market

MARKETVIEW New Jersey Office, Q3 16 A Wave of Significant Transactions Energizes New Jersey s Office Market.4% Lease Rate $25.40 PSF Net Absorption 268,107 SF Leasing Velocity 2,782,513 SF Arrows indicate