North America Report. Industrial Logistics & Transportation Solutions Outlook. Big-Box. Market Report

Transcription

1 North America Report Industrial Logistics & Transportation Solutions 2016 Outlook Big-Box Market Report

2 Notes from Leadership Colliers International s Logistics & Transportation Solutions Group is pleased to present our inaugural research report on 2015 s industrial big-box transactions in North America s eight largest distribution markets was one of the strongest years ever for North America s industrial real estate market, and the big-box market led the way. This report will give you a summary of North American industrial activity for Class A industrial bigbox buildings over 300,000 square feet within the following markets: > Atlanta, GA > Chicago, IL > Dallas, TX > Houston, TX > Greater Los Angeles, CA > Pennsylvania (Eastern) & New Jersey (Southern) > New Jersey (Northern & Central) > Toronto, ON Colliers International s Logistics & Transportation Solutions Group includes 65 members in North America. Our members are hand-picked for their knowledge, experience, and commitment to broaden their expertise regarding the supply chain issues that drive industrial distribution decisions of our occupier clients. Our goal is to provide thought leadership that helps our investor clients grow their portfolios and our occupier clients understand the market dynamics that affect their location choices and market rents. We hope this report will assist you in formulating your strategy for Please let us know if you have any questions or feedback. Best regards, Dwight Hotchkiss National Director, Industrial USA Colliers International Jack Rosenberg National Leader Logistics & Transportation Solutions Group Colliers International 2 A Colliers International publication

3 Contents >What constitutes a Big-Box Building? 300,000 SF or Larger Industrial Buildings Primarily used for Distribution Ceiling Heights of 28 Clear or Greater Pre-Cast or Tilt-Up Concrete Construction Service in Motion 5 Current Snapshot: Big-Box Rental Rates 6 North America Market Reports 8 1. Atlanta, GA 8 2. Chicago, IL 9 3. Dallas, TX Houston, TX Greater Los Angeles, CA Pennsylvania (Eastern) & New Jersey (Southern) New Jersey (Northern & Central) Toronto, ON 15 How else can we help you? Strategic advice Learn about Colliers Speak to one of our property experts today. dwight.hotchkiss@colliers.com Ensuring your decisions are fully informed. research@colliers.com Visit our website to explore the ways we can accelerate your success Colliers International Big-Box Market Report 3

4 >The Logistics & Transportation Solutions Group understands that doing business in an interconnected world requires creative, long-term, dynamic real estate decisions. Our industry experts operate with teams to integrate transportation insight, real estate expertise, and effective market research into a single platform. 4 A Colliers International publication

5 Service In Motion Colliers Logistics & Transportation Solutions Group delivers advisory, brokerage, and management services to domestic and international clients, targeting the expanding relationship between goods movement and real estate. Our industry specialists understand the issues that shape and drive the transportation industry: skyrocketing energy, transportation, and labor costs; heightened security needs; stringent environmental requirements; and profound changes in global supply chains. Utilizing our experience, talent and insight, we resolve this myriad of issues through flexible and efficient industrial real estate solutions. The Logistics & Transportation Solutions Group connects Colliers brokers worldwide to the global transportation community. Whether researching new advances or issues, participating in industry organizations, or taking the lead in trade conferences, our specialists immerse themselves in the business of the transportation industry. Built upon the principles of specialization and innovation, coupled with a global reach and local knowledge, Colliers Logistics & Transportation Solutions Group delivers high-impact results through a unique combination of logistics and commercial real estate knowledge and expertise. Colliers Industrial More SIOR 510 members professionals than any other firm in the U.S. in the U.S. Ranked in the top 3 in the U.S. for industrial volume -RCA 2016 Colliers International Big-Box Market Report Updated March

6 Current Snapshot: Big-Box Rental Rates 2015 was a great year to own big-box industrial real estate. For the purpose of this report, Colliers defines a bigbox building as a 300,000-squarefoot or larger industrial building that is primarily used for distribution with ceiling heights of 28 clear or greater and being pre-cast or tilt-up concrete construction. Almost 95 million square feet of big-box space leased during the year. Net absorption totaled almost 56 million square feet. The occupancy rate of big-box space ended the year at 92.68%. Only 151 of the 1,961 big-box buildings were vacant in all of North America. The top ten occupier leases in Q totaled 10,620,000 square feet. The top ten sales showed $470 million dollars invested. Keep in mind that these statistics reflect only the activity in North America s primary distribution markets. As such, these numbers are phenomenal! The comparison of 2015 s numbers to 2011 s numbers demonstrate the big box market recovery: > In 2011, 9 million square feet of big-box space was built. In 2015, 61 million square feet was delivered. > In 2011, speculative development totaled 623,000 square feet and in 2015, totaled 34.8 million square feet. > Cap rates dropped from 7.16% in 2011 to 5.99% in Cap rates will continue to drop into 1Q > The average effective net rent was $3.55 per square foot in 2011 versus $4.54 net per square foot in 2015, a 28% gain. Investors have reacted to these robust big-box numbers by making big investments. Two trends revealed by the statistics are interesting. > Despite massive construction completions in 2015 totaling 60 million square feet, there remains 74 million square feet of construction underway for 2016 delivery. > The vacancy rate hit its lowest number in Q at 7.02%. Vacancy ended 2015 at 7.32%. Why the increase? Quarterly construction underway increased every quarter in 2015, as speculative big-box projects were completed during the year. This resulted in a slight rise in vacancy toward the end of the year. What will happen in 2016? The simple answer is that no one knows. However, early activity reported by Colliers indicates that 2016 will be another strong year for occupier demand. We will monitor trends to see if occupier demand keeps up with the coming tsunami of completed spec buildings.>what constitutes a Big-Box Building? 300,000 SF or Larger Industrial Buildings Primarily used for Distribution Ceiling Heights of 28 Clear or Greater Pre-Cast or Tilt-Up Concrete Construction 6 A Colliers International publication

7 Q4 Chicago, IL Avg. Rental Rate: $3.80 Big-Box Vacancies: 19 Big-Box Vacancy Rate: 8.4% Net Absorption: 1,574,488 SF Q4 Toronto, ON Avg. Rental Rate: $6.20 Big-Box Vacancies: 11 Big-Box Vacancy Rate: 3.3% Net Absorption: 1,217,966 SF Q4 Northern/Central New Jersey Avg. Rental Rate: $6.22 Big-Box Vacancies: 17 Big-Box Vacancy Rate: 12.8% Net Absorption: 664,914 SF Q4 Penn./New Jersey Avg. Rental Rate: $4.24 Big-Box Vacancies: 17 Big-Box Vacancy Rate: 8.6% Net Absorption: 430,931 SF Q4 Q4 Q4 Greater Los Angeles, CA Avg. Rental Rate: $4.94 Big-Box Vacancies: 30 Big-Box Vacancy Rate: 4.4% Net Absorption: 5,096,250 SF Houston, TX Avg. Rental Rate: $4.56 Big-Box Vacancies: 10 Big-Box Vacancy Rate: 14.5% Net Absorption: 80,320 SF Atlanta, GA Avg. Rental Rate: $2.95 Big-Box Vacancies: 26 Big-Box Vacancy Rate: 8.7% Net Absorption: 637,832 SF Colliers Locations Featured Distribution Markets Q4 Dallas, TX Avg. Rental Rate: $3.42 Big-Box Vacancies: 50 Big-Box Vacancy Rate: 14.0% Net Absorption: 2,814,081 SF

8 Market Report Atlanta, GA Q Net Effective Rent: $2.95 Current Big-Box Vacancies: 300, ,999 SF , ,999 SF 9 750,000+ SF 5 Atlanta Overview Leasing activity totaled 2.5 million square feet during the fourth quarter of 2015, a 525% increase over last quarter s tally of 400,000 square feet. The fourth quarter activity brought the total big-box leasing volume for 2015 to 6.99 million square feet. The largest big-box lease signed during the fourth quarter involved Medline leasing the 1,287,000 square foot facility at 1500 Medline Place in McDonough. The largest big-box sale completed during the fourth quarter involved Glen Una Investments purchasing the 1,054,500 square foot building located at 3312 North Berkeley Lake Road in Duluth for $31.7 million. Capitalization rates for big-box buildings continue to compress, averaging 6.2% in 2015, a 50-basis-point decrease from 2014 s average cap rate of 6.7%. The average net effective taking rent for big-box spaces was $2.95 per square foot net during the fourth quarter of 2015, representing an 2.7% increase when compared to the $2.87 per square foot net rate recorded a year ago. This rate has been on the increase for the five years after bottoming at $2.50 per square foot net in 2011, representing an 18% increase. Big-box construction activity continues to expand. Currently, 10.7 million square feet of new big-box construction is underway in the Atlanta market. 4.5 million square feet of new big-box development was completed during %, or about 3.2 million square feet of the new construction completions were built on a speculative basis, while an additional 1.3 million square feet were build-to-suit projects. Big-Box Market Indicators: # of Buildings Total Inventory (SF) 75,930,452 80,101,656 80,419,176 Under Construction 6,224,754 8,430,815 10,654,043 Construction Deliveries 0 1,822, ,520 Big-Box Lease Transactions - Q Vacancy Rate (%) 11.1% 9.1% 8.7% Leasing Activity (%) 4,699, ,517 2,481,666 Net Absorption (SF) 2,311, , ,832 Net Effective Rent $2.87 $2.91 $2.95 Tenant Size (SF) Address City Lease Type Medline 1,287, Medline Place McDonough New Lease Exel 987, Shannon Way Union City New Lease Best Buy 461,700 2 Broadmoor Boulevard Buford New Lease big-box Historical Statistics: >300,000 SF 4,000,000 3,000,000 2,000,000 1,000, Spec Construction Deliveries (SF) BTS Construction Deliveries (SF) Cap Rate Net Effective Rent % $ % $ % $ % $ A Colliers International publication

9 Net Effective Rent: $3.80 Current Big-Box Vacancies: 300, ,999 SF , ,999 SF 4 750,000+ SF 1 Market Report Chicago, IL Q Overview Leasing activity totaled 3.9 million square feet during the fourth quarter of 2015, a 62.5% increase over last quarter s tally of 2.4 million square feet. The fourth quarter activity brought the total big-box leasing volume for 2015 to million square feet. The largest bigbox lease signed during the fourth quarter involved Mars Candy signing a 1,388,000 square foot built-to-suit lease to be constructed at 4005 Cedar Creek Drive in Elwood. The largest big-box sale completed during the fourth quarter involved American Realty Advisors purchasing the 604,565 square foot building located at 1200 Orchard Gateway in Aurora for $42.2 million. Capitalization rates for big-box buildings continue to compress, averaging 5.0% in 2015, a 60-basis-point decrease from 2014 s average cap rate of 5.6%. The average net effective taking rent for big-box spaces was $3.80 per square foot net during the fourth quarter of 2015, representing an 8.2% increase when compared to the $3.51 per square foot net rate recorded a year ago. Net lease rates across the Chicago metro market have been on the increase for the last 2 years after bottoming at $3.27 per square foot net in 2013, representing a 16.2% increase. Big-box construction activity continues to expand. Currently, 9.2 million square feet of new big-box construction is underway in the Chicago market. 9.4 million square feet of new big-box development was completed during %, or about 3.4 million square feet of the new construction completions were built on a speculative basis, while an additional 6.0 million square feet were build-to-suit projects. Chicago Big-Box Market Indicators: # of Buildings Total Inventory (SF) 143,867, ,909, ,300,532 Under Construction 8,291,650 7,039,723 9,720,084 Construction Deliveries 2,941,487 2,466,448 1,391,127 Vacancy Rate (%) 10.3% 8.7% 8.4% Leasing Activity (%) 1,626,186 2,393,159 3,485,075 Net Absorption (SF) 1,839,274 3,207,458 1,574,488 Net Effective Rent $3.51 $4.33 $3.80 Big-Box Lease Transactions - Q Tenant Size (SF) Address City Lease Type Mars Candy 1,388, Cedar Creek Drive Elwood New Lease 3M 978,120 Park 88 DeKalb New Lease Ozburn-Hessey Logistics 672, Taylor Road Romeoville New Lease big-box Historical Statistics: >300,000 SF 8,000,000 6,000,000 4,000,000 2,000, Cap Rate Net Effective Rent % $ % $ % $ % $3.80 Spec Construction Deliveries (SF) BTS Construction Deliveries (SF) 2016 Colliers International Big-Box Market Report 9

10 Market Report Dallas, TX Q Net Effective Rent: $3.42 Current Big-Box Vacancies: 300, ,999 SF , ,999 SF ,000+ SF 5 Dallas Overview Leasing activity totaled 4.0 million square feet during the fourth quarter of 2015, a 9% decrease compared to last quarter s tally of 4.4 million square feet. The fourth quarter activity brought the total big-box leasing volume for 2015 to 17.8 million square feet. The largest big-box lease signed during the fourth quarter involved Mission Foods leasing the 768,587 square foot facility at 2401 West Pioneer Parkway in Arlington. The largest big-box sale completed during the fourth quarter involved Stone Lake Capital Partners purchasing the 529,103 SF building located at Pipestone Road in Dallas for $21.7 million. Capitalization rates for big-box buildings continue to compress, averaging 6.1% in 2015, a 20-basis-point decrease from 2014 s average cap rate of 6.3%. The average net effective taking rent for big-box spaces was $3.42 per square foot net during the fourth quarter of 2015, representing an 0% change when compared to the $3.42 per square foot net rate recorded a year ago. This rate has been on the increase for the five years after bottoming at $3.21 per square foot net in 2011, representing a 6.5% increase. Big-box construction activity continues to expand. Currently, 9.8 million square feet of new big-box construction is underway in the Dallas market. 9.3 million square feet of new big-box development was completed during %, or about 6.2 million square feet of the new construction completions were built on a speculative basis, while an additional 3.1 million square feet were build-to-suit projects. Big-Box Market Indicators: # of Buildings Total Inventory (SF) 116,052, ,790, ,308,926 Under Construction 9,256,549 4,584,602 9,977,581 Construction Deliveries 7,153,722 1,856,140 1,518,536 Vacancy Rate (%) 14.2% 15.2% 14.0% Leasing Activity (%) 2,970,665 4,406,326 4,017,509 Net Absorption (SF) 181, ,333 2,814,081 Net Effective Rent $3.42 $3.45 $3.42 Big-Box Lease Transactions - Q Tenant Size (SF) Address City Lease Type Mission Foods 768, W Pioneer Parkway Arlington New Lease Niagra Water 630,000 Grady Niblo Road Dallas New Lease Proctor and Gamble 504, Oak Grove Road Fort Worth Renewal big-box Historical Statistics: >300,000 SF 15,000,000 10,000,000 5,000, Spec Construction Deliveries (SF) BTS Construction Deliveries (SF) Cap Rate Net Effective Rent % $ % $ % $ % $ A Colliers International publication

11 Net Effective Rent: $4.56 Current Big-Box Vacancies: 300, ,999 SF 8 500, ,999 SF 2 750,000+ SF 0 Market Report Houston, TX Q Overview Leasing activity totaled 1.3 million square feet during the fourth quarter of 2015, a 165% increase compared to last quarter s tally of 488,752 square feet. The fourth quarter activity brought the total big-box leasing volume for 2015 to 4.38 million square feet. The largest big-box lease signed during the fourth quarter involved Exel renewing the 905,000 square feet facility at City Park East in Houston. The largest big-box sale completed during the fourth quarter involved Liberty Property Trust purchasing the 921,196 square foot building located on South 16th Street in La Porte for $93 million (including 130 acres). Capitalization rates for big-box buildings continue to compress, averaging 7.8% in 2015, a 30-basis-point increase from 2014 s average cap rate of 7.5%. The average net effective taking rent for big-box spaces was $4.56 per square foot net during the fourth quarter of 2015, representing an 2.7% increase when compared to the $4.44 per square foot net rate recorded a year ago. This rate has been on the increase for the 3 years after bottoming at $4.20 per square foot net in 2012, representing an 8.5% increase. Big-box construction activity continues to expand. Currently, 6.2 million square feet of new big-box construction is underway in the Houston market. 1.8 million square feet of new big-box development was completed during %, or about 1.7 million square feet of the new construction completions were built on a speculative basis, while an additional 357,000 square feet were build-to-suit projects. Houston Big-Box Market Indicators: # of Buildings Total Inventory (SF) 26,325,641 29,206,083 29,912,313 Under Construction 4,444,930 6,104,119 6,230,289 Construction Deliveries 351, , ,230 Vacancy Rate (%) 10.8% 12.7% 14.5% Leasing Activity (%) 695, ,752 1,294,242 Net Absorption (SF) 121, ,608 80,320 Net Effective Rent $4.31 $4.59 $4.59 Big-Box Lease Transactions - Q Tenant Size (SF) Address City Lease Type Exel 905,000 City Park East Houston Renewal Michelin North America, Inc. 663, Citypark Loop Houston Renewal Dunavant 565,760 Bay Area Business Park La Porte New Lease big-box Historical Statistics: >300,000 SF 4,000,000 3,000,000 2,000,000 1,000, Cap Rate Net Effective Rent % $ % $ % $ % $4.56 Spec Construction Deliveries (SF) BTS Construction Deliveries (SF) 2016 Colliers International Big-Box Market Report 11

12 Market Report Greater Los Angeles, CA Q Net Effective Rent: $4.94 Current Big-Box Vacancies: 300, ,999 SF , ,999 SF 7 750,000+ SF 6 Greater Los Angeles Overview Leasing activity totaled 8.6 million square feet during the fourth quarter of 2015, a 4.8% increase over last quarter s tally of 8.2 million square feet. The fourth quarter activity brought the total big-box leasing volume for 2015 to 33.0 million square feet. The largest big-box lease signed during the fourth quarter involved General Mills leasing a 1.1 million square foot facility at 4120 Indian Street in Perris. General Mills signed the lease and the developer is completing the extra 400,000 square feet of the building. The largest big-box sale completed during the fourth quarter involved Costco Wholesale purchasing the 525,700 square foot building located at Riverside Drive in Jurupa Valley for $62.6 million. Although the building is currently occupied by manufacturer Quik Set, Costco plans to eventually use the building as a regional distribution center. Capitalization rates for big-box buildings continue to compress, averaging 4.5% in 2015, a 100-basis-point decrease from 2014 s average cap rate of 5.5%. The average net effective taking rent for big-box spaces was $4.94 per square foot net during the fourth quarter of 2015, representing an 8.8% increase when compared to the $4.54 per square foot net rate recorded a year ago. This rate has been on the increase for the four years after bottoming at $3.73 per square foot net in 2011, representing a 32.4% increase. Big-box construction activity continues to expand. Currently, 16.2 million square feet of new big-box construction is underway in the Greater Los Angeles market million square feet of new big-box development was completed during %, or about 9.1 million square feet of the new construction completions were built on a speculative basis, while an additional 10.7 million square feet were build-to-suit projects. Big-Box Market Indicators: # of Buildings Total Inventory (SF) 365,404, ,441, ,187,562 Under Construction 15,032,000 20,957,000 16,227,432 Construction Deliveries 3,200,000 4,858,000 5,746,200 Vacancy Rate (%) 4.5% 4.3% 4.4% Leasing Activity (%) 11,560,000 8,192,000 8,623,000 Net Absorption (SF) 4,212,800 4,011,000 5,096,250 Net Effective Rent $4.54 $5.10 $4.94 Big-Box Lease Transactions - Q Tenant Size (SF) Address City Lease Type General Mills 1,547,342 SF 4120 Indian Perris New Lease Black & Decker 970,747 SF Jurupa Fontana New Lease Wayfair, LLC 783,400 AD 3500 Indian Perris New Lease big-box Historical Statistics: >300,000 SF 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000, Spec Construction Deliveries (SF) BTS Construction Deliveries (SF) Cap Rate Net Effective Rent % $ % $ % $ % $ A Colliers International publication

13 Net Effective Rent: $4.24 Current Big-Box Vacancies: 300, ,999 SF 9 500, ,999 SF 5 750,000+ SF 3 Market Report Pennsylvania & New Jersey Q Overview Leasing activity totaled 1.1 million square feet during the fourth quarter of 2015, a 38.9% decrease over last quarter s tally of 1.8 million square feet. The fourth quarter activity brought the total big-box leasing volume for 2015 to 7.13 million square feet. The largest bigbox lease signed during the fourth quarter involved e-commerce retailer StitchFix leasing newly completed 483,990 square feet facility at 4770 Hanoverville Road in Bethlehem, PA. The largest big-box sale completed during the fourth quarter involved American Realty Advisors purchasing the 700,000 square foot building located at 2 Ames Drive in Carlisle, PA for $62.5 million. Capitalization rates for big-box buildings continue to compress, averaging 5.6% in 2015, a 30-basis-point decrease from 2014 s average cap rate of 5.9%. The average net effective taking rent for big-box spaces was $4.24 per square foot net during the fourth quarter of 2015, representing an 2.1% increase when compared to the $4.15 per square foot net rate recorded a year ago. This rate has been on the increase for the five years after bottoming at $4.01 per square foot net in 2011, representing a 5.7% increase. Big-box construction activity continues to expand. Currently, 13.3 million square feet of new big-box construction is underway in the Eastern PA/Southern NJ market million square feet of new big-box development was completed during %, or about 7.35 million square feet of the new construction completions were built on a speculative basis, while an additional 4.75 million square feet were build-to-suit projects. PA & NJ Big-Box Market Indicators: # of Buildings Total Inventory (SF) 81,018,384 89,738,396 93,129,886 Under Construction 7,092,265 11,302,195 13,306,229 Construction Deliveries 400,060 2,425,434 3,391,490 Vacancy Rate (%) 3.4% 5.7% 8.6% Leasing Activity (%) 6,026,314 1,803,258 1,131,507 Net Absorption (SF) 1,515,745 1,529, ,931 Big-Box Lease Transactions - Q Tenant Size (SF) Address City Lease Type StitchFix 483, Hanoverville Road Bethlehem, PA New Lease FedEx 305, River Road King of Prussia, PA New Lease XPO Logistics 283, Van Buren Road Easton, PA New Lease big-box Historical Statistics: >300,000 SF 8,000,000 6,000,000 4,000,000 2,000, Spec Construction Deliveries (SF) BTS Construction Deliveries (SF) Cap Rate Net Effective Rent % $ % $ % $ % $ Colliers International Big-Box Market Report 13

14 Market Report Northern/Central New Jersey Q Net Effective Rent: $6.22 Current Big-Box Vacancies: 300, ,999 SF , ,999 SF 5 750,000+ SF 1 NY & NJ Overview Leasing activity totaled 1.5 million square feet during the fourth quarter of 2015, a 36.3% increase over last quarter s tally of 1.1 million square feet. The fourth quarter activity brought the total big-box leasing volume for 2015 to 6.21 million square feet. The largest big-box lease signed during the fourth quarter involved Home Depot s renewal of 812,739 square feet at 66 Station Road in Cranbury. Capitalization rates for big-box buildings continue to compress, averaging 6.2% in 2015, a 100-basis-point decrease from 2014 s average cap rate of 7.2%. The average net effective taking rent for big-box spaces was $6.22 per square foot net during the fourth quarter of 2015, representing an 0.5% increase when compared to the $6.19 per square foot net rate recorded a year ago. This rate has been on the increase for the two years after bottoming at $4.78 per square foot net in 2013 representing a 30.1% increase. Big-box construction activity continues to expand. Currently, 3.8 million square feet of new big-box construction is underway in the New Jersey market. 1.4 million square feet of new big-box development was completed during % of the new construction completions were built on a speculative basis. Big-Box Market Indicators: # of Buildings Total Inventory (SF) 70,349,509 71,812,857 71,812,857 Under Construction 2,002,348 2,769,150 3,841,770 Construction Deliveries 1,672,446 1,463,348 0 Vacancy Rate (%) 13.3% 13.7% 12.8% Leasing Activity (%) 1,292,422 1,144,503 1,529,488 Net Absorption (SF) 1,399,983 39, ,914 Net Effective Rent $4.46 $4.44 $4.36 Big-Box Lease Transactions - Q Tenant Size (SF) Address City Lease Type Home Depot 812, Station Road Cranbury Renewal List Logistics 571, Mill Road Edison New Lease Fedway 539, North Avenue Elizabeth New Lease big-box Historical Statistics: >300,000 SF 4,000,000 3,000,000 2,000,000 1,000, Spec Construction Deliveries (SF) BTS Construction Deliveries (SF) Cap Rate Net Effective Rent % $ % $ % $ % $ A Colliers International publication

15 Net Effective Rent: $6.20 Current Big-Box Vacancies: 300, ,999 SF 7 500, ,999 SF 2 750,000+ SF 2 Market Report Toronto, ON 4Q 2015 Overview Leasing activity totaled 1.5 million square feet during the fourth quarter of 2015, a 296% increase over last quarter s tally of 378,427 square feet. The fourth quarter activity brought the total big-box leasing volume for 2015 to 5.74 million square feet. The largest big-box lease signed during the fourth quarter involved Amazon leasing the 868,122 square foot facility at 8050 Heritage Road in Brampton. The largest big-box sale completed during the fourth quarter involved Royal Laser Manufacturing Inc. purchasing the 351,368 square foot building located at 75 Doney Crescent in Vaughan for $22.5 million. Capitalization rates for big-box buildings continue to compress, averaging 5.5% in 2015, a 100-basis-point decrease from 2014 s average cap rate of 6.5%. The average net effective taking rent for big-box spaces was $6.20 per square foot net during the fourth quarter of 2015, representing an 2.8% increase when compared to the $6.03 per square foot net rate recorded a year ago. This rate has been on the increase for the five years after bottoming at $4.59 per square foot net in 2011, representing a 35.0% increase. Big-box construction activity continues to expand. Currently, 4.5 million square feet of new big-box construction is underway in the Toronto market. 1.9 million square feet of new big-box development was completed during %, or about 1.6 million square feet of the new construction completions were built on a speculative basis, while an additional 311,000 square feet were buildto-suit projects. Toronto Big-Box Market Indicators: # of Buildings Total Inventory (SF) 152,148, ,397, ,038,541 Under Construction 4,305,232 4,883,480 4,553,616 Construction Deliveries 406, ,864 Vacancy Rate (%) 2.1% 3.7% 3.3% Leasing Activity (%) 0 378,427 1,512,122 Net Absorption (SF) 1,384,068-1,380,579 1,217,966 Net Effective Rent $5.60 $6.50 $6.13 Big-Box Lease Transactions - Q Tenant Size (SF) Address City Lease Type Amazon 868, Heritage Road Brampton New Lease Sherway Logistics 330, Northwest Drive Mississauga New Lease Continental Tires 314, Airport Road Caledon New Lease big-box Historical Statistics: >300,000 SF 2,500,000 2,000,000 1,500,000 1,000, ,000 Cap Rate Net Effective Rent % $ % $ % $ % $ Spec Construction Deliveries (SF) BTS Construction Deliveries (SF) 2016 Colliers International Big-Box Market Report 15

16 502 offices in 67 countries on 6 continents United States: 140 Canada: 31 Latin America: 24 Asia Pacific: 199 EMEA: 108 $2.3 billion in annual revenue 1.7 billion square feet under management 16,300 professionals and staff colliers.com/us/logistics Copyright 2016 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. 16 A Colliers International publication