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cushmanwakefield.com Philadelphia Industrial Q4 2016 MARKETBEAT Economic Indicators Market Indicators (Overall, All Property Types) Overall Net Absorption/Overall Asking Rent 4-QTR TRAILING AVERAGE Overall Vacancy Q4 15 Q4 16 12-Month Forecast Philadelphia Employment 2,845M 2,888M Philadelphia Unemployment 4.8% 5.4% U.S. Unemployment 5.0% 4.8% Q4 15 Q4 16 12-Month Forecast Vacancy 5.6% 4.2% Net Absorption (sf) 5.5M 8.5M Under Construction (sf) 4.7M 3.5M Average Asking Rent* $4.70 $4.63 *Rental rates reflect net asking $psf/year Economy The Philadelphia Metropolitan Area’s (MSA) unemployment rate increased to 5.4% in the fourth quarter of 2016, an increase by 60 basis points (BPS) year-over-year. Despite the increase, total nonfarm employment increased by 1.5% over the past year. Philadelphia’s manufacturing index also reached its highest point of 2016 in December, with a reading of 19.7, the highest reading since December of 2014. Market Overview The Philadelphia industrial market’s overall vacancy rate declined to 4.2% in the fourth quarter of 2016, down 140 BPS from the fourth quarter of 2015. Overall absorption increased to 8.5 million square feet (MSF), the highest annual total since 2005. The reason for the increase in positive absorption was the 4.1 MSF of new construction that delivered in 2016, in which 99.7% of that inventory is currently occupied. Leasing activity was also robust with 12.5 MSF of new activity, the highest since 2005. Overall asking rental rates for warehouse and distribution space declined by 0.2% over the past 12 months to $4.21 per square foot (PSF). Investment sales activity was strong in 2016 with 75 buildings that were sold totaling 7.3 MSF transacted. Combined with 2015 numbers, 172 buildings were sold over the past two years totaling 18.8 MSF, 42.2% more than the market’s activity from 2010-2014. Nine of the 10 largest leases signed in 2016 were in either Burlington or Gloucester counties in Southern New Jersey. In Burlington County, Seldat Distribution subleased 1.0 MSF at 1900 River Road in Burlington, the Camuto Group took 682,708 square feet (SF) at 32 Springside Road in Westhampton, and a confidential tenant leased the 613,920-SF spec building that delivered in 2016 at 309 Cedar Lane in Florence. In Gloucester County, notable leases included, a confidential tenant preleasing the 1.0-MSF proposed building at 2651 Oldsman Creek Road in Logan Township, XPO Logistics leasing 393,120 SF at 2810 Oldmans Creek Road also in Logan Township, and CSI taking 180,000 SF at 100 Friars Lane in Thorofare. In the Philadelphia suburbs, the largest lease signed this year was Continental Tire leasing 740,880 SF at 3000 AM Drive in Quakertown. Outlook Expect new construction activity to increase in 2017, supported by the market’s decline in vacancy and the demand for new product as new buildings constructed in 2016 delivered to the market were nearly 100% occupied. The bulk of the market’s new construction activity will continue to occur in Southern New Jersey, with multiple projects expected to break ground in early 2017. PHILADELPHIA INDUSTRIAL $4.30 $4.40 $4.50 $4.60 $4.70 $4.80 $4.90 $5.00 $5.10 $5.20 0 1,000 2,000 3,000 4,000 5,000 6,000 2011 2012 2013 2014 2015 2016 Net Absorption, (thousands) Asking Rent, $ PSF 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 2011 2012 2013 2014 2015 2016 Historical Average = 5.9%

Philadelphia Americas Market Beat Industrial q42016

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Page 1: Philadelphia Americas Market Beat Industrial q42016

cushmanwakefield.com

PhiladelphiaIndustrial Q4 2016

MARKETBEAT

Economic Indicators

Market Indicators (Overall, All Property Types)

Overall Net Absorption/Overall Asking Rent

4-QTR TRAILING AVERAGE

Overall Vacancy

Q4 15 Q4 1612-Month

Forecast

Philadelphia Employment 2,845M 2,888M

Philadelphia Unemployment 4.8% 5.4%

U.S. Unemployment 5.0% 4.8%

Q4 15 Q4 1612-Month

Forecast

Vacancy 5.6% 4.2%

Net Absorption (sf) 5.5M 8.5M

Under Construction (sf) 4.7M 3.5M

Average Asking Rent* $4.70 $4.63

*Rental rates reflect net asking $psf/year

EconomyThe Philadelphia Metropolitan Area’s (MSA) unemployment rate

increased to 5.4% in the fourth quarter of 2016, an increase by 60

basis points (BPS) year-over-year. Despite the increase, total

nonfarm employment increased by 1.5% over the past year.

Philadelphia’s manufacturing index also reached its highest point

of 2016 in December, with a reading of 19.7, the highest reading

since December of 2014.

Market OverviewThe Philadelphia industrial market’s overall vacancy rate declined

to 4.2% in the fourth quarter of 2016, down 140 BPS from the

fourth quarter of 2015. Overall absorption increased to 8.5 million

square feet (MSF), the highest annual total since 2005. The

reason for the increase in positive absorption was the 4.1 MSF of

new construction that delivered in 2016, in which 99.7% of that

inventory is currently occupied. Leasing activity was also robust

with 12.5 MSF of new activity, the highest since 2005. Overall

asking rental rates for warehouse and distribution space declined

by 0.2% over the past 12 months to $4.21 per square foot (PSF).

Investment sales activity was strong in 2016 with 75 buildings that

were sold totaling 7.3 MSF transacted. Combined with 2015

numbers, 172 buildings were sold over the past two years totaling

18.8 MSF, 42.2% more than the market’s activity from 2010-2014.

Nine of the 10 largest leases signed in 2016 were in either

Burlington or Gloucester counties in Southern New Jersey. In

Burlington County, Seldat Distribution subleased 1.0 MSF at 1900

River Road in Burlington, the Camuto Group took 682,708 square

feet (SF) at 32 Springside Road in Westhampton, and a

confidential tenant leased the 613,920-SF spec building that

delivered in 2016 at 309 Cedar Lane in Florence. In Gloucester

County, notable leases included, a confidential tenant preleasing

the 1.0-MSF proposed building at 2651 Oldsman Creek Road in

Logan Township, XPO Logistics leasing 393,120 SF at 2810

Oldmans Creek Road also in Logan Township, and CSI taking

180,000 SF at 100 Friars Lane in Thorofare. In the Philadelphia

suburbs, the largest lease signed this year was Continental Tire

leasing 740,880 SF at 3000 AM Drive in Quakertown.

OutlookExpect new construction activity to increase in 2017, supported by

the market’s decline in vacancy and the demand for new product

as new buildings constructed in 2016 delivered to the market were

nearly 100% occupied. The bulk of the market’s new construction

activity will continue to occur in Southern New Jersey, with

multiple projects expected to break ground in early 2017.

PHILADELPHIA INDUSTRIAL

$4.30

$4.40

$4.50

$4.60

$4.70

$4.80

$4.90

$5.00

$5.10

$5.20

0

1,000

2,000

3,000

4,000

5,000

6,000

2011 2012 2013 2014 2015 2016

Net Absorption, (thousands) Asking Rent, $ PSF

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2011 2012 2013 2014 2015 2016

Historical Average = 5.9%

Page 2: Philadelphia Americas Market Beat Industrial q42016

MARKETBEAT

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live.

Our 43,000 employees in more than 60 countries help investors and occupiers optimize the value of their real estate by combining

our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is

among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset

services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ

Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit

www.cushmanwakefield.com or follow @CushWake on Twitter.

Copyright © 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple

sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or

representations as to its accuracy.

PhiladelphiaIndustrial Q4 2016

SUBMARKETTOTAL

BLDGS

INVENTORY

(SF)

YTD

LEASING

ACTIVITY

(SF)

YTD USER

SALES

ACTIVITY

(SF)

OVERALL

VACANCY

RATE

YTD

OVERALL NET

ABSORPTION

(SF)

UNDER

CNSTR

(SF)

YTD

CONSTR

COMPLETIONS

(SF)

OVERALL

WEIGHTED

AVG.

NET RENT(MF)

OVERALL

WEIGHTED

AVG.

NET RENT(OS)

OVERALL

WEIGHTED

AVG.

NET RENT(W/D)

Philadelphia County** 714 58,037,085 777,973 206,000 7.3% 476,579 0 145,000 $2.85 $8.01 $3.52

Lower Bucks County 588 38,415,272 1,198,965 325,907 4.6% 294,598 0 0 $4.60 $9.70 $4.08

Upper Bucks County 393 19,642,240 996,198 306,755 2.0% 773,735 0 43,000 N/A $8.80 $5.23

Montgomery County 756 46,462,047 1,644,036 143,889 3.2% 788,399 0 531,333 $5.86 $10.42 $6.41

Chester County 479 26,659,464 429,912 411,535 1.9% 97,129 53,040 0 $5.50 $8.92 $6.83

Delaware County 258 15,266,812 280,319 53,100 4.7% 253,485 0 247,452 $4.50 $6.17 $4.95

SUBURBAN PHILADELPHIA 2,474 146,445,835 4,549,430 1,241,186 3.4% 2,207,346 53,040 821,785 $5.54 $8.80 $4.70

Burlington County 393 36,084,769 4,329,174 136,333 5.5% 4,662,516 1,850,348 3,131,917 N/A $7.25 $4.29

Camden County 456 27,106,816 345,381 366,265 2.3% 151,473 600,000 0 $4.07 $9.46 $4.83

Gloucester County 224 22,175,807 2,492,949 145,275 2.1% 959,857 963,050 0 N/A $5.97 $3.87

SOUTHERN NEW JERSEY 1,073 85,367,392 7,167,504 647,873 3.6% 5,773,846 3,413,398 3,131,917 $4.07 $7.04 $4.27

Northern Delaware*** 355 26,067,916 961,211 232,000 8.2% 339,723 0 26,600 $6.01 $6.39 $5.00

PHILADELPHIA MSA TOTALS 4,261 289,850,312 12,494,907 2,095,059 4.2% 8,457,771 3,466,438 4,098,702 $3.64 $8.04 $4.22

*Rental rates reflect asking $psf/year **Philadelphia County not included in Suburban Philadelphia Totals MF = Manufacturing OS = Office Service/Flex W/D = Warehouse/Distribution

*** Northern Delaware market not included in Philadelphia MSA Totals

Key Lease Transactions 2016

PROPERTY SF TENANT PROPERTY TYPE SUBMARKET

1900 River Road 1,048,631 Seldat Distribution, Inc. Warehouse/Distribution Burlington County

2651 Oldmans Creek Road 1,016,116 Confidential Warehouse/Distribution Gloucester County

3000 AM Drive 740,880 Continental Tire Warehouse/Distribution Upper Bucks County

Key Sales Transactions 2016

PROPERTY SF SELLER/BUYER PROPERTY TYPE PRICE / $PSF SUBMARKET

400 Lukens Drive 485,987Zenith Home Corp. / STAG

Industrial, Inc.Warehouse/Distribution $27,500,000 / $57 New Castle County

Keystone Industrial Portfolio Sale 475,910 GLP / Carson Companies Warehouse/Distribution $26,085,000 / $55 Lower Bucks County

Key Construction Completions 2016

PROPERTY SF SUBMARKET MAJOR TENANT PROPERTY TYPE COMPLETION DATE

400 Bordentown Hedding Road 1,300,000 Burlington County W.W. Grainger Warehouse/Distribution Q3 2016

1600 River Road 740,537 Burlington County H&M Warehouse/Distribution Q2 2016

Key Projects Under Construction

PROPERTY SF SUBMARKET MAJOR TENANT PROPERTY TYPE COMPLETION DATE

32 Springside Road 682,708 Burlington County Camuto Group Warehouse/Distribution Q1 2017

Holtec Technology Campus 600,000 Camden County Holtec International Manufacturing Q4 2017

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Philadelphia, PA 19103

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Tel: +1 215 963 4077

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