The CoStar
Industrial Report
YEAR-END 2006
National Industrial Market
YEAR-END 2006 – NATIONAL
National Industrial Market
Table of Contents
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A
Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B
Terms & Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C
Market Highlights & Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Employment Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Employment & Unemployment Analysis
Inventory & Development Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Inventory & Development Analysis
Map of Growth in Inventory Last 5 Years
Select Top Deliveries
Select Top Under Construction Properties
Figures at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Figures at a Glance by Building Type & Market
Historical Figures at a Glance
Leasing Activity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Leasing Activity Analysis
Select Top Lease Transactions
Map of Change In Vacant Square Footage Last 12 Months
Sales Activity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Sales Activity Analysis
Select Top Sales Transactions
Select Same Building Sales
©2007 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT A
NATIONAL – YEAR-END 2006
National Industrial Market
Methodology
The CoStar Industrial Report calculates Industrial statistics using CoStar Group's base of existing,
under construction and under renovation Industrial buildings in each given metropolitan area. All
Industrial building types are included, including warehouse, flex / research & development, distribution,
manufacturing, industrial showroom, and service buildings, in both single-tenant and multi-tenant
buildings, including owner-occupied buildings. CoStar Group's national database includes approximately
33.6 billion square feet of coverage in 1.2 million properties. All rental rates reported in the CoStar
Industrial Report are calculated using the quoted rental rate for each property.
For information on subscribing to CoStar’s Advisory reports, or for information
on CoStar’s other products and services, please contact us at 1-877-7COSTAR,
or visit our web site at www.costar.com
© Copyright 2007 CoStar Group, Inc. All Rights Reserved. Although CoStar makes efforts to ensure the accuracy and reliability of the
information contained herein, CoStar makes no guarantee, representation or warranty regarding the quality, accuracy, timeliness or
completeness of the information. The publication is provided ‘as is’ and CoStar expressly disclaims any guarantees, representations or
warranties of any kind, including those of MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
CoStar Group, Inc.
2 Bethesda Metro Center • Bethesda, MD USA 20814 • (800) 204-5960 • www.costar.com • NASDAQ: CSGP
B THE COSTAR INDUSTRIAL REPORT ©2007 COSTAR GROUP, INC.
YEAR-END 2006 – NATIONAL
National Industrial Market
Terms & Definitions
Availability Rate: The ratio of available space to total rentable Deliveries: Buildings that complete construction during a specified
space, calculated by dividing the total available square feet by the period of time. In order for space to be considered delivered, a
total rentable square feet. certificate of occupancy must have been issued for the property.
Available Space: The total amount of space that is currently Delivery Date: The date a building completes construction and
being marketed as available for lease in a given time period. It receives a certificate of occupancy.
includes any space that is available, regardless of whether the Developer: The company, entity or individual that transforms raw
space is vacant, occupied, available for sublease, or available at land to improved property by use of labor, capital and entrepre-
a future date. neurial efforts.
Build-to-Suit: A term describing a particular property, developed Direct Space: Space that is being offered for lease directly from
specifically for a certain tenant to occupy, with structural features, the landlord or owner of a building, as opposed to space being
systems, or improvement work designed specifically for the needs offered in a building by another tenant (or broker of a tenant)
of that tenant. A build-to-suit can be leased or owned by the ten- trying to sublet a space that has already been leased.
ant. In a leased build-to-suit, a tenant will usually have a long Existing Inventory: The square footage of buildings that have
term lease on the space. received a certificate of occupancy and are able to be occupied
Buyer: The individual, group, company, or entity that has pur- by tenants. It does not include space in buildings that are either
chased a commercial real estate asset. planned, under construction or under renovation.
Cap Rate: Short for capitalization rate. The Cap Rate is a calcula- Flex Building: A type of building designed to be versatile, which
tion that reflects the relationship between one year’s net operating may be used in combination with office (corporate headquarters),
income and the current market value of a particular property. research and development, quasi-retail sales, and including but
The Cap Rate is calculated by dividing the annual net operating not limited to industrial, warehouse, and distribution uses. A typi-
income by the sales price (or asking sales price). cal flex building will be one or two stories with at least half of the
CBD: Abbreviation for Central Business District. (See also: rentable area being used as office space, have ceiling heights of 16
Central Business District) feet or less, and have some type of drive-in door, even though the
Central Business District: The designations of Central Business door may be glassed in or sealed off.
District (CBD) and Suburban refer to a particular geographic area Full Service Rental Rate: Rental rates that include all operating
within a metropolitan statistical area (MSA) describing the level expenses such as utilities, electricity, janitorial services, taxes and
of real estate development found there. The CBD is characterized insurance.
by a high density, well organized core within the largest city of a Gross Absorption: The total change in occupied space over a
given MSA. given period of time, counting space that is occupied but not
Class A: A classification used to describe buildings that generally space that is vacated by tenants. Gross absorption differs from
qualify as extremely desirable investment-grade properties and leasing Activity, which is the sum of all space leased over a certain
command the highest rents or sale prices compared to other period of time. Unless otherwise noted Gross Absorption includes
buildings in the same market. Such buildings are well located direct and sublease space.
and provide efficient tenant layouts as well as high quality, and in Growth in Inventory: The change in size of the existing square
some buildings, one-of-a-kind floor plans. They can be an archi- footage in a given area over a given period of time, generally due
tectural or historical landmark designed by prominent architects. to the construction of new buildings.
These buildings contain a modern mechanical system, and have Industrial Building: A type of building adapted for such uses as
above-average maintenance and management as well as the best the assemblage, processing, and/or manufacturing of products
quality materials and workmanship in their trim and interior fit- from raw materials or fabricated parts. Additional uses include
tings. They are generally the most attractive and eagerly sought warehousing, distribution, and maintenance facilities. The pri-
by investors willing to pay a premium for quality. mary purpose of the space is for storing, producing, assembling,
Class B: A classification used to describe buildings that generally or distributing product.
qualify as a more speculative investment, and as such, command Landlord Rep: (Landlord Representative) In a typical lease trans-
lower rents or sale prices compared to Class A properties. Such action between an owner/landlord and tenant, the broker that
buildings offer utilitarian space without special attractions, and represents the interests of the owner/landlord is referred to as the
have ordinary design, if new or fairly new; good to excellent Landlord Rep.
design if an older non-landmark building. These buildings typical- Leased Space: All the space that has a financial lease obligation.
ly have average to good maintenance, management and tenants. It includes all leased space, regardless of whether the space is
They are less appealing to tenants than Class A properties, and currently occupied by a tenant. Leased space also includes space
may be deficient in a number of respects including floor plans, being offered for sublease.
condition and facilities. They lack prestige and must depend Leasing Activity: The volume of square footage that is commit-
chiefly on a lower price to attract tenants and investors. ted to and signed under a lease obligation for a specific building
Class C: A classification used to describe buildings that gener- or market in a given period of time. It includes direct leases,
ally qualify as no-frills, older buildings that offer basic space and subleases and renewals of existing leases. It also includes any
command lower rents or sale prices compared to other buildings pre-leasing activity in planned, under construction, or under
in the same market. Such buildings typically have below-average renovation buildings.
maintenance and management, and could have mixed or low Market: Geographic boundaries that serve to delineate core areas
tenant prestige, inferior elevators, and/or mechanical/electrical that are competitive with each other and constitute a generally
systems. These buildings lack prestige and must depend chiefly accepted primary competitive set of areas. Markets are building-
on a lower price to attract tenants and investors. type specific, and are non-overlapping contiguous geographic
Construction Starts: Buildings that began construction during a designations having a cumulative sum that matches the boundar-
specific period of time. (See also: Deliveries) ies of the entire Region (See also: Region). Markets can be further
Contiguous Blocks of Space: Space within a building that is, or is subdivided into Submarkets. (See also: Submarkets)
able to be joined together into a single contiguous space.
©2007 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT C
NATIONAL – YEAR-END 2006
National Industrial Market
Multi-Tenant: Buildings that house more than one tenant at a Seller: The individual, group, company, or entity that sells a par-
given time. Usually, multi-tenant buildings were designed and ticular commercial real estate asset.
built to accommodate many different floor plans and designs for SF: Abbreviation for Square Feet.
different tenant needs. (See also: Tenancy). Single-Tenant: Buildings that are occupied, or intended to be
Net Absorption: The net change in occupied space over a given occupied by a single tenant. (See also: Build-to-suit and Tenancy)
period of time. Unless otherwise noted Net Absorption includes Sublease Space: Space that has been leased by a tenant and is
direct and sublease space. being offered for lease back to the market by the tenant with
Net Rental Rate: A rental rate that excludes certain expenses that the lease obligation. Sublease space is sometimes referred to as
a tenant could incur in occupying office space. Such expenses sublet space.
are expected to be paid directly by the tenant and may include Submarkets: Specific geographic boundaries that serve to delin-
janitorial costs, electricity, utilities, taxes, insurance and other eate a core group of buildings that are competitive with each
related costs. other and constitute a generally accepted primary competitive
New Space: Sometimes called first generation space, refers to set, or peer group. Submarkets are building type specific (office,
space that has never been occupied and/or leased by a tenant. industrial, retail, etc.), with distinct boundaries dependent on
Occupied Space: Space that is physically occupied by a tenant. different factors relevant to each building type. Submarkets are
It does not include leased space that is not currently occupied non-overlapping, contiguous geographic designations having a
by a tenant. cumulative sum that matches the boundaries of the Market they
Office Building: A type of commercial building used exclusively are located within (See also: Market).
or primarily for office use (business), as opposed to manufactur- Suburban: The Suburban and Central Business District (CBD)
ing, warehousing, or other uses. Office buildings may sometimes designations refer to a particular geographic area within a metro-
have other associated uses within part of the building, i.e., retail politan statistical area (MSA). Suburban is defined as including all
sales, financial, or restaurant, usually on the ground floor. office inventory not located in the CBD. (See also: CBD)
Owner: The company, entity, or individual that holds title on a Tenancy: A term used to indicate whether or not a building is
given building or property. occupied by multiple tenants (See also: Multi-tenant) or a single
Planned/Proposed: The status of a building that has been tenant. (See also: Single-tenant)
announced for future development but not yet started Tenant Rep: Tenant Rep stands for Tenant Representative. In a
construction. typical lease transaction between an owner/landlord and tenant,
Preleased Space: The amount of space in a building that has been the broker that represents the interests of the tenant is referred to
leased prior to its construction completion date, or certificate of as a Tenant Rep.
occupancy date. Time On Market: A measure of how long a currently available
Price/SF: Calculated by dividing the price of a building (either space has been marketed for lease, regardless of whether it is
sales price or asking sales price) by the Rentable Building Area vacant or occupied.
(RBA). Under Construction: The status of a building that is in the process
Property Manager: The company and/or person responsible for of being developed, assembled, built or constructed. A building is
the day-to-day operations of a building, such as cleaning, trash considered to be under construction after it has begun construc-
removal, etc. The property manager also makes sure that the vari- tion and until it receives a certificate of occupancy.
ous systems within the building, such as the elevators, HVAC, and Vacancy Rate: A measurement expressed as a percentage of the
electrical systems, are functioning properly. total amount of physically vacant space divided by the total
Quoted Rental Rate: The asking rate per square foot for a par- amount of existing inventory. Under construction space generally
ticular building or unit of space by a broker or property owner. is not included in vacancy calculations.
Quoted rental rates may differ from the actual rates paid by Vacant Space: Space that is not currently occupied by a tenant,
tenants following the negotiation of all terms and conditions in regardless of any lease obligation that may be on the space.
a specific lease. Vacant space could be space that is either available or not avail-
RBA: Abbreviation for Rentable Building Area. (See also: able. For example, sublease space that is currently being paid for
Rentable Building Area) by a tenant but not occupied by that tenant, would be considered
Region: Core areas containing a large population nucleus, that vacant space. Likewise, space that has been leased but not yet
together with adjacent communities have a high degree of eco- occupied because of finish work being done, would also be con-
nomic and social integration. Regions are further divided into sidered vacant space.
market areas, called Markets. (See also: Markets) Weighted Average Rental Rate: Rental rates that are calculated by
Relet Space: Sometimes called second generation or direct space, factoring in, or weighting, the square footage associated with each
refers to existing space that has previously been occupied by particular rental rate. This has the effect of causing rental rates
another tenant. on larger spaces to affect the average more than that of smaller
Rentable Building Area: (RBA) The total square footage of a spaces. The weighted average rental rate is calculated by taking
building that can be occupied by, or assigned to a tenant for the the ratio of the square footage associated with the rental rate on
purpose of determining a tenant’s rental obligation. Generally each individual available space to the square footage associated
RBA includes a percentage of common areas including all hall- with rental rates on all available spaces, multiplying the rental rate
ways, main lobbies, bathrooms, and telephone closets. by that ratio, and then adding together all the resulting numbers.
Rental Rates: The annual costs of occupancy for a particular Unless specifically specified otherwise, rental rate averages include
space quoted on a per square foot basis. both Direct and Sublet available spaces.
Sales Price: The total dollar amount paid for a particular property Year Built: The year in which a building completed construction
at a particular point in time. and was issued a certificate of occupancy.
Sales Volume: The sum of sales prices for a given group of build- YTD: Abbreviation for Year-to-Date. Describes statistics that are
ings in a given time period. cumulative from the beginning of a calendar year through what-
ever time period is being studied.
D THE COSTAR INDUSTRIAL REPORT ©2007 COSTAR GROUP, INC.
YEAR-END 2006 – NATIONAL
National Industrial Market
OVERVIEW
U.S.’s Vacancy Remains Unchanged at 8.7%
Net Absorption Positive 33,836,088 SF in the Quarter
T he U.S. Industrial market ended the fourth quarter 2006 to 8.7% at the end of the fourth quarter 2006. The vacancy
with a vacancy rate of 8.7%. The vacancy rate was rate was 8.7% at the end of the third quarter 2006, 8.9% at the
unchanged over the previous quarter, with net absorp- end of the second quarter 2006, and 9.0% at the end of the first
tion totaling positive 33,836,088 square feet in the fourth quar- quarter 2006.
ter. Vacant sublease space decreased in the quarter, ending the
quarter at 57,251,345 square feet. Rental rates ended the fourth Flex projects reported a vacancy rate of 13.0% at the end
quarter at $5.99, an increase over the previous quarter. A total of the fourth quarter 2006, 13.0% at the end of the third quarter
of 452 buildings delivered to the market in the quarter totaling 2006, 13.4% at the end of the second quarter 2006, and 13.6%
40,875,270 square feet, with 132,688,713 square feet still under at the end of the first quarter 2006.
construction at the end of the quarter.
Warehouse projects reported a vacancy rate of 8.2% at the
Absorption end of the fourth quarter 2006, 8.1% at the end of third quarter
Net absorption for the overall U.S. Industrial market was 2006, 8.2% at the end of the second quarter 2006, and 8.3% at
the end of the first quarter 2006.
positive 33,836,088 square feet in the fourth quarter 2006. That
compares to positive 53,323,571 square feet in the third quarter Largest Lease Signings
2006, positive 50,431,082 square feet in the second quarter 2006, The largest lease signings occurring in 2006 included:
and positive 34,922,474 square feet in the first quarter 2006.
the 1,298,700-square-foot lease signed by Kimberly-Clark
The Flex building market recorded net absorption of positive Corporation at SouthPort Logistics Center in the Atlanta market;
3,759,832 square feet in the fourth quarter 2006, compared to the 852,000-square-foot deal signed by Whirlpool Corp at 1101
positive 8,583,657 square feet in the third quarter 2006, positive Everman Pky in the Dallas/Ft Worth market; and the 814,848-
7,381,093 in the second quarter 2006, and positive 4,847,151 in square-foot lease signed by Sears at Windham Southwest II the
the first quarter 2006. Chicago market.
The Warehouse building market recorded net absorption Sublease Vacancy
of positive 30,076,256 square feet in the fourth quarter 2006 The amount of vacant sublease space in the U.S. market
compared to positive 44,739,914 square feet in the third quarter
2006, positive 43,049,989 in the second quarter 2006, and posi- decreased to 57,251,345 square feet by the end of the fourth
tive 30,075,323 in the first quarter 2006. quarter 2006, from 59,110,664 square feet at the end of the third
quarter 2006. There was 58,742,598 square feet vacant at the
Vacancy end of the second quarter 2006 and 58,238,604 square feet at the
The Industrial vacancy rate in the U.S. market area changed end of the first quarter 2006.
U.S.’s Flex projects reported vacant sublease space of
Vacancy Rates by Building Type* 2000-2006
Flex Warehouse Total Market
18%
16%
14%
12%
Vacancy Rate 10%
8%
6%
4%
2%
0%
2000 2001 2001 2001 2001 2002 2002 2002 2002 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006
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
Source: CoStar Property® *Excludes Portland
Absorption©2007 COSTAR GROUP, INC. & Deliveries* THE COSTAR INDUSTRIAL REPORT 1
NATIONAL – YEAR-END 2006
National Industrial Market
OVERVIEW
15,756,296 square feet at the end of fourth quarter 2006, Sales Activity
down from the 17,182,732 square feet reported at the end of Tallying industrial building sales of 15,000 square feet or
the third quarter 2006. There were 18,200,472 square feet of
sublease space vacant at the end of the second quarter 2006, and larger, U.S. industrial sales figures fell during the third quarter
17,460,615 square feet at the end of the first quarter 2006. 2006 in terms of dollar volume compared to the second quarter
of 2006.
Warehouse projects reported decreased vacant sublease space
from the third quarter 2006 to the fourth quarter 2006. Sublease In the third quarter, 1,515 industrial transactions closed
vacancy went from 41,927,932 square feet to 41,495,049 square with a total volume of $7,518,061,959. The 1,515 buildings
feet during that time. There was 40,542,126 square feet at the totaled 115,058,385 square feet and the average price per square
end of the second quarter 2006, and 40,777,989 square feet at the foot equated to $65.34 per square foot. That compares to 1,820
end of the first quarter 2006. transactions totaling $10,411,683,920 in the second quarter. The
total square footage was 158,901,435 for an average price per
Rental Rates square foot of $65.52.
The average quoted asking rental rate for available Industrial
Total year-to-date industrial building sales activity in 2006
space was $5.99 per square foot per year at the end of the fourth is up compared to the previous year. In the first nine months
quarter 2006 in the U.S. market area. This represented a 1.2% of 2006, the market saw 5,025 industrial sales transactions with
increase in quoted rental rates from the end of the third quarter a total volume of $26,221,925,974. The price per square foot
2006, when rents were reported at $5.92 per square foot. has averaged $65.10 this year. In the first nine months of 2005,
the market posted 5,175 transactions with a total volume of
The average quoted rate within the Flex sector was $11.03 $23,466,547,000. The price per square foot averaged $58.57.
per square foot at the end of the fourth quarter 2006, while
Warehouse rates stood at $5.19. At the end of the third quarter Cap rates have been lower in 2006, averaging 7.60%, com-
2006, Flex rates were $10.75 per square foot, and Warehouse pared to the first nine months of last year when they averaged
rates were $5.12. 8.13%.
Deliveries and Construction One of the largest transactions that has occurred within
During the fourth quarter 2006, 452 buildings totaling the last 4 quarters in the U.S. market is the sale of 7777-7788
Gateway Blvd in Newark, CA located in the East/Bay Oakland
40,875,270 square feet were completed in the U.S. market area. market. This 1,443,818 square foot industrial property sold for
This compares to 618 buildings totaling 44,532,033 square feet $214-million, or $148.22 per square foot. The property sold on
that were completed in the third quarter 2006, 690 buildings 7/11/2006, at an undisclosed cap rate.
totaling 39,704,058 square feet completed in the second quarter
2006, and 43,377,720 square feet in 620 buildings completed in Atlanta
the first quarter 2006. The Atlanta industrial market saw vacancies rise and rental
There were 132,688,713 square feet of Industrial space rates decrease from the third quarter 2006 to the fourth quarter
under construction at the end of the fourth quarter 2006. 2006. The overall vacancy rate currently sits at 11.6%, from
11.5% in the previous quarter. Rental rates ended the quarter at
Some of the notable 2006 deliveries include: Middlesex $4.20 per square foot, from $4.22 in the previous quarter. There
Center Blvd, a 1,351,200-square-foot facility that delivered in was a total of 6,103,734 square feet that delivered in the quarter,
third quarter 2006 and is now 0% occupied, and Solo Cup, a with 8,703,322 square feet still under construction at the end of
1,300,716-square-foot building that delivered in third quarter the quarter.
2006 and is now 100% occupied.
Austin
The largest projects underway at the end of fourth quarter The Austin industrial market saw vacancies fall and rental
2006 were Perris Distribution Center, a 1,686,590-square-foot
building with 0% of its space pre-leased, and 200 Middlesex Dr, rates increase from the third quarter 2006 to the fourth quarter
a 1,351,200-square-foot facility that is 0% pre-leased. 2006. The overall vacancy rate currently sits at 11.2%, from
12.0% in the previous quarter. Rental rates ended the quarter at
Inventory $6.78 per square foot, from $6.67 in the previous quarter. There
Total Industrial inventory in the U.S. market area amounted was a total of 52,871 square feet that delivered in the quarter,
with 505,762 square feet still under construction at the end of
to 12,878,960,486 square feet in 305,190 buildings as of the the quarter.
end of the fourth quarter 2006. The Flex sector consisted of
1,531,648,493 square feet in 48,426 projects. The Warehouse Baltimore
sector consisted of 11,347,311,993 square feet in 256,764 build- The Baltimore industrial market saw vacancies rise and
ings. Within the Industrial market there were 64,150 owner-
occupied buildings accounting for 3,343,882,126 square feet of rental rates increase from the third quarter 2006 to the fourth
Industrial space. quarter 2006. The overall vacancy rate currently sits at 12.5%,
2 THE COSTAR INDUSTRIAL REPORT ©2007 COSTAR GROUP, INC.
2%
0%
2000 2001 2001 2001 2001 2002 2Y0E0A2R-E2N00D2 20200602– N2A0T0I3ON2A0L03 2003 200
National Industrial Market4q 1q 2q 3q 4q 1q 2q 3q 4q 1q 2q 3q 4q
Source: CoStar Property® *Excludes Portland
OVERVIEW
from 12.1% in the previous quarter. Rental rates ended the quar- Absorption & Deliveries*
ter at $5.72 per square foot, from $5.67 in the previous quarter.
There was a total of 882,163 square feet that delivered in the Past 10 Quarters
quarter, with 5,586,263 square feet still under construction at the
end of the quarter. Net Absorption Deliveries
Boston 70.0
The Boston industrial market saw vacancies rise and rental
60.0 57.8 59.8 42.6 49.2 52.1
rates increase from the third quarter 2006 to the fourth quarter 50.0 37.6 45.4 33.8 39.2 43.8
2006. The overall vacancy rate currently sits at 13.5%, from 40.0
13.3% in the previous quarter. Rental rates ended the quarter at Millions SF 30.0 39.0 40.5
$6.93 per square foot, from $6.88 in the previous quarter. There 30.3 32.7
was a total of 134,500 square feet that delivered in the quarter,
with 2,262,304 square feet still under construction at the end of 20.0
the quarter.
10.0
Broward County
The vacancy rate remained unchanged in Broward County 0.0
in the fourth quarter. With 281,000 square feet in deliveries, and 2005 2q 2005 3q 2005 4q 2006 1q 2006 2q 2006 3q 2006 4q
positive 264,593 square feet in net absorption, the vacancy rate
held at 3.9%, the same rate reported in the previous quarter. The Source: CoStar Property® *Excludes Portland
market had 2,433,580 square feet under construction at the end
of the quarter, and rental rates stood at $8.31 per square foot. ter at $4.21 per square foot, from $4.25 in the previous quarter.
There was a total of 4,512 square feet that delivered in the quar-
Charlotte ter, with 608,787 square feet still under construction at the end
The vacancy rate remained unchanged in Charlotte in the of the quarter.
fourth quarter. With 454,800 square feet in deliveries, and posi- Columbus
tive 370,944 square feet in net absorption, the vacancy rate held The Columbus industrial market saw vacancies rise and
at 11.9%, the same rate reported in the previous quarter. The
market had 1,506,048 square feet under construction at the end rental rates increase from the third quarter 2006 to the fourth
of the quarter, and rental rates stood at $4.05 per square foot. quarter 2006. The overall vacancy rate currently sits at 12.4%,
from 12.3% in the previous quarter. Rental rates ended the quar-
Chicago ter at $3.22 per square foot, from $3.20 in the previous quarter.
The Chicago industrial market saw vacancies fall and rental There was a total of 656,000 square feet that delivered in the
quarter, with 2,575,892 square feet still under construction at the
rates increase from the third quarter 2006 to the fourth quarter end of the quarter.
2006. The overall vacancy rate currently sits at 10.3%, from
10.6% in the previous quarter. Rental rates ended the quarter at Dallas/Ft Worth
$5.09 per square foot, from $5.08 in the previous quarter. There The Dallas/Ft Worth industrial market saw vacancies fall
was a total of 1,858,926 square feet that delivered in the quarter,
with 8,966,622 square feet still under construction at the end of and rental rates decrease from the third quarter 2006 to the
the quarter. fourth quarter 2006. The overall vacancy rate currently sits at
10.2%, from 10.5% in the previous quarter. Rental rates ended
Cincinnati the quarter at $4.72 per square foot, from $4.77 in the previous
With no new office space being delivered to the market, and quarter. There was a total of 3,733,043 square feet that delivered
in the quarter, with 8,934,739 square feet still under construction
negative (3,605,692) square feet of net absorption, Cincinnati’s at the end of the quarter.
vacancy rate went from 6.6% to 7.9% in the quarter. Rental
rates went from $3.90 to $3.94 during that time. At the end of Dayton
the quarter, there was 580,870 square feet underway for future With no space currently under construction, Dayton
delivery.
absorbed (446,829) square feet of space and delivered 33,600
Cleveland square feet of space, resulting in a vacancy rate that went from
The Cleveland industrial market saw vacancies fall and 10.8% to 11.4% over the course of the quarter. Rental rates went
from $3.99 to $4.07 per square foot.
rental rates decrease from the third quarter 2006 to the fourth
quarter 2006. The overall vacancy rate currently sits at 8.4%, Denver
from 8.5% in the previous quarter. Rental rates ended the quar- The vacancy rate remained unchanged in Denver in the
fourth quarter. With 486,822 square feet in deliveries, and posi-
©2007 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 3
NATIONAL – YEAR-END 2006
National Industrial Market
OVERVIEW
tive 558,253 square feet in net absorption, the vacancy rate held Jacksonville (Florida)
at 8.8%, the same rate reported in the previous quarter. The mar- The Jacksonville (Florida) industrial market saw vacancies
ket had 2,373,687 square feet under construction at the end of the
quarter, and rental rates stood at $6.01 per square foot. rise and rental rates increase from the third quarter 2006 to the
fourth quarter 2006. The overall vacancy rate currently sits at
Detroit 6.2%, from 6.0% in the previous quarter. Rental rates ended
The Detroit industrial market saw vacancies rise and rental the quarter at $4.50 per square foot, from $4.47 in the previous
quarter. There was a total of 362,000 square feet that delivered
rates increase from the third quarter 2006 to the fourth quarter in the quarter, with 1,004,261 square feet still under construction
2006. The overall vacancy rate currently sits at 12.4%, from at the end of the quarter.
11.4% in the previous quarter. Rental rates ended the quarter at
$5.34 per square foot, from $5.32 in the previous quarter. There Kansas City
was a total of 670,908 square feet that delivered in the quarter, The vacancy rate remained unchanged in Kansas City in
with 548,876 square feet still under construction at the end of the
quarter. the fourth quarter. With 468,517 square feet in deliveries, and
positive 472,023 square feet in net absorption, the vacancy rate
East Bay/Oakland held at 7.7%, the same rate reported in the previous quarter. The
The East Bay/Oakland industrial market saw vacancies market had 1,737,022 square feet under construction at the end
of the quarter, and rental rates stood at $4.21 per square foot.
rise and rental rates increase from the third quarter 2006 to the
fourth quarter 2006. The overall vacancy rate currently sits at Long Island (New York)
9.7%, from 9.6% in the previous quarter. Rental rates ended With no new office space being delivered to the market, and
the quarter at $8.47 per square foot, from $7.87 in the previous
quarter. There was a total of 121,144 square feet that delivered negative (1,569,650) square feet of net absorption, Long Island
in the quarter, with 491,519 square feet still under construction at (New York)’s vacancy rate went from 4.0% to 4.4% in the quar-
the end of the quarter. ter. Rental rates went from $9.91 to $10.30 during that time. At
the end of the quarter, there was 66,000 square feet underway for
Houston future delivery.
The Houston industrial market saw vacancies rise and rental
Los Angeles
rates decrease from the third quarter 2006 to the fourth quarter The Los Angeles industrial market saw vacancies fall and
2006. The overall vacancy rate currently sits at 6.8%, from 6.4%
in the previous quarter. Rental rates ended the quarter at $4.97 rental rates increase from the third quarter 2006 to the fourth
per square foot, from $5.14 in the previous quarter. There was quarter 2006. The overall vacancy rate currently sits at 2.6%,
a total of 660,880 square feet that delivered in the quarter, with from 2.9% in the previous quarter. Rental rates ended the quar-
4,472,453 square feet still under construction at the end of the ter at $7.94 per square foot, from $7.77 in the previous quarter.
quarter. There was a total of 1,004,794 square feet that delivered in the
quarter, with 3,721,252 square feet still under construction at the
Indianapolis end of the quarter.
The Indianapolis industrial market saw vacancies fall and
Memphis
rental rates change from the third quarter 2006 to the fourth The Memphis industrial market saw vacancies fall and rent-
quarter 2006. The overall vacancy rate currently sits at 10.5%,
from 10.6% in the previous quarter. Rental rates ended the quar- al rates increase from the third quarter 2006 to the fourth quarter
ter at $3.95 per square foot, from $3.95 in the previous quarter. 2006. The overall vacancy rate currently sits at 15.5%, from
There was a total of 1,688,321 square feet that delivered in the 15.9% in the previous quarter. Rental rates ended the quarter at
quarter, with 1,534,490 square feet still under construction at the $2.69 per square foot, from $2.66 in the previous quarter. There
end of the quarter. was a total of 17,055 square feet that delivered in the quarter,
with 2,066,672 square feet still under construction at the end of
Inland Empire (California) the quarter.
The Inland Empire (California) industrial market saw vacan-
Miami-Dade County
cies rise and rental rates increase from the third quarter 2006 to The Miami-Dade County industrial market saw vacancies
the fourth quarter 2006. The overall vacancy rate currently sits
at 8.5%, from 7.2% in the previous quarter. Rental rates ended rise and rental rates increase from the third quarter 2006 to the
the quarter at $5.99 per square foot, from $5.83 in the previous fourth quarter 2006. The overall vacancy rate currently sits at
quarter. There was a total of 8,485,506 square feet that delivered 4.5%, from 3.9% in the previous quarter. Rental rates ended
in the quarter, with 19,459,552 square feet still under construc- the quarter at $7.66 per square foot, from $7.65 in the previous
tion at the end of the quarter. quarter. There was a total of 132,757 square feet that delivered
in the quarter, with 3,564,612 square feet still under construction
at the end of the quarter.
4 THE COSTAR INDUSTRIAL REPORT ©2007 COSTAR GROUP, INC.
YEAR-END 2006 – NATIONAL
National Industrial Market
OVERVIEW
Nashville There was a total of 2,887,037 square feet that delivered in the
The Nashville industrial market saw vacancies fall and rent- quarter, with 8,125,166 square feet still under construction at the
end of the quarter.
al rates increase from the third quarter 2006 to the fourth quarter
2006. The overall vacancy rate currently sits at 8.7%, from 9.8% Phoenix
in the previous quarter. Rental rates ended the quarter at $4.10 The Phoenix industrial market saw vacancies rise and rental
per square foot, from $4.04 in the previous quarter. There was
a total of 653,460 square feet that delivered in the quarter, with rates increase from the third quarter 2006 to the fourth quarter
1,156,151 square feet still under construction at the end of the 2006. The overall vacancy rate currently sits at 8.4%, from 7.5%
quarter. in the previous quarter. Rental rates ended the quarter at $8.12
per square foot, from $8.00 in the previous quarter. There was a
Northern New Jersey total of 2,233,244 square feet that delivered in the quarter, with
The Northern New Jersey industrial market saw vacancies 7,173,582 square feet still under construction at the end of the
quarter.
fall and rental rates increase from the third quarter 2006 to the
fourth quarter 2006. The overall vacancy rate currently sits at Pittsburgh
8.1%, from 8.7% in the previous quarter. Rental rates ended The Pittsburgh industrial market saw vacancies rise and
the quarter at $6.16 per square foot, from $6.14 in the previous
quarter. There was a total of 938,896 square feet that delivered rental rates increase from the third quarter 2006 to the fourth
in the quarter, with 6,452,720 square feet still under construction quarter 2006. The overall vacancy rate currently sits at 15.4%,
at the end of the quarter. from 15.3% in the previous quarter. Rental rates ended the quar-
ter at $4.44 per square foot, from $4.40 in the previous quarter.
Orange (California) There was a total of 53,000 square feet that delivered in the quar-
The Orange (California) industrial market saw vacancies ter, with 538,000 square feet still under construction at the end
of the quarter.
fall and rental rates increase from the third quarter 2006 to the
fourth quarter 2006. The overall vacancy rate currently sits at Portland
4.0%, from 4.1% in the previous quarter. Rental rates ended The Portland industrial market saw vacancies fall and rental
the quarter at $9.89 per square foot, from $9.64 in the previous
quarter. There was a total of 492,926 square feet that delivered rates decrease from the third quarter 2006 to the fourth quarter
in the quarter, with 1,378,015 square feet still under construction 2006. The overall vacancy rate currently sits at 8.8%, from 9.4%
at the end of the quarter. in the previous quarter. Rental rates ended the quarter at $6.52
per square foot, from $6.56 in the previous quarter. There was
Orlando a total of 334,046 square feet that delivered in the quarter, with
The vacancy rate remained unchanged in Orlando in the 1,300,907 square feet still under construction at the end of the
quarter.
fourth quarter. With 565,462 square feet in deliveries, and posi-
tive 477,580 square feet in net absorption, the vacancy rate held Raleigh/Durham
at 6.1%, the same rate reported in the previous quarter. The mar- The Raleigh/Durham industrial market saw vacancies fall
ket had 1,600,469 square feet under construction at the end of the
quarter, and rental rates stood at $6.66 per square foot. and rental rates increase from the third quarter 2006 to the
fourth quarter 2006. The overall vacancy rate currently sits at
Palm Beach County 12.1%, from 12.2% in the previous quarter. Rental rates ended
The Palm Beach County industrial market saw vacancies the quarter at $6.21 per square foot, from $5.84 in the previous
quarter. There was a total of 70,821 square feet that delivered in
rise and rental rates increase from the third quarter 2006 to the the quarter, with 312,995 square feet still under construction at
fourth quarter 2006. The overall vacancy rate currently sits at the end of the quarter.
4.2%, from 2.9% in the previous quarter. Rental rates ended
the quarter at $10.12 per square foot, from $9.76 in the previous Sacramento
quarter. There was a total of 68,000 square feet that delivered in The Sacramento industrial market saw vacancies fall and
the quarter, with 608,289 square feet still under construction at
the end of the quarter. rental rates decrease from the third quarter 2006 to the fourth
quarter 2006. The overall vacancy rate currently sits at 12.2%,
Philadelphia from 12.7% in the previous quarter. Rental rates ended the quar-
The Philadelphia industrial market saw vacancies fall and ter at $5.98 per square foot, from $6.06 in the previous quarter.
There was a total of 593,892 square feet that delivered in the
rental rates increase from the third quarter 2006 to the fourth quarter, with 1,451,064 square feet still under construction at the
quarter 2006. The overall vacancy rate currently sits at 10.4%, end of the quarter.
from 10.6% in the previous quarter. Rental rates ended the quar-
ter at $5.06 per square foot, from $5.02 in the previous quarter.
©2007 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 5
NATIONAL – YEAR-END 2006
National Industrial Market
OVERVIEW
San Diego St. Louis
The San Diego industrial market saw vacancies fall and The St. Louis industrial market saw vacancies rise and rental
rental rates increase from the third quarter 2006 to the fourth rates increase from the third quarter 2006 to the fourth quarter
quarter 2006. The overall vacancy rate currently sits at 6.8%, 2006. The overall vacancy rate currently sits at 7.3%, from 6.9%
from 7.2% in the previous quarter. Rental rates ended the quarter in the previous quarter. Rental rates ended the quarter at $4.75
at $11.77 per square foot, from $11.63 in the previous quarter. per square foot, from $4.73 in the previous quarter. There was a
There was a total of 700,891 square feet that delivered in the total of 1,017,884 square feet that delivered in the quarter, with
quarter, with 2,086,099 square feet still under construction at the 3,066,602 square feet still under construction at the end of the
end of the quarter. quarter.
San Francisco Tampa/St Petersburg
The San Francisco industrial market saw vacancies fall and The Tampa/St Petersburg industrial market saw vacancies
rental rates increase from the third quarter 2006 to the fourth fall and rental rates increase from the third quarter 2006 to the
quarter 2006. The overall vacancy rate currently sits at 6.5%, fourth quarter 2006. The overall vacancy rate currently sits at
from 6.6% in the previous quarter. Rental rates ended the quarter 5.3%, from 5.5% in the previous quarter. Rental rates ended
at $12.25 per square foot, from $11.60 in the previous quarter. the quarter at $6.62 per square foot, from $6.32 in the previous
There was a total of 450,000 square feet that delivered in the quarter. There was a total of 621,772 square feet that delivered
quarter, with 85,000 square feet still under construction at the in the quarter, with 2,378,121 square feet still under construction
end of the quarter. at the end of the quarter.
Seattle/Puget Sound Washington
The Seattle/Puget Sound industrial market saw vacancies The Washington industrial market saw vacancies fall and
fall and rental rates decrease from the third quarter 2006 to the rental rates increase from the third quarter 2006 to the fourth
fourth quarter 2006. The overall vacancy rate currently sits at quarter 2006. The overall vacancy rate currently sits at 9.4%,
5.7%, from 6.1% in the previous quarter. Rental rates ended from 9.5% in the previous quarter. Rental rates ended the quarter
the quarter at $7.32 per square foot, from $7.36 in the previous at $10.29 per square foot, from $10.16 in the previous quarter.
quarter. There was a total of 599,321 square feet that delivered There was a total of 300,765 square feet that delivered in the
in the quarter, with 6,761,092 square feet still under construction quarter, with 3,744,157 square feet still under construction at the
at the end of the quarter. end of the quarter.
South Bay/San Jose Westchester/So Connecticut
With no new office space being delivered to the market, and With no new office space being delivered to the market, and
positive 165,049 square feet of net absorption, South Bay/San positive 690,051 square feet of net absorption, Westchester/So
Jose’s vacancy rate went from 12.3% to 12.2% in the quarter. Connecticut’s vacancy rate went from 11.2% to 10.7% in the
Rental rates went from $10.53 to $11.19 during that time. At quarter. Rental rates went from $7.47 to $7.34 during that time.
the end of the quarter, there was 99,334 square feet underway for At the end of the quarter, there was 666,365 square feet underway
future delivery. for future delivery.
6 THE COSTAR INDUSTRIAL REPORT ©2007 COSTAR GROUP, INC.
YEAR-END 2006 – NATIONAL
National Industrial Market
EMPLOYMENT ANALYSIS
Total Employment by Industry Total Employment Growth
Percent of Total Employment by Industry Total Number of Jobs Added Per Year
5% 10% Natural Resources & 2.0%
0% Mining
Construction
17% 20% Manufacturing
Trade, Transportation & Percent Growth 1.0%
Utilities
Information
Financial Activities
4% 2% Professional & Business 0.0%
10% 6% Services
Education & Health
Services
Leisure & Hospitality
Other Services
13% Government -1.0%
13% 2002 2003 2004 2005 2006
Source: Department of Labor, Bureau of Labor Statistics Source: Department of Labor, Bureau of Labor Statistics
Total Employment Growth Industrial* Employment Growth
Cumulative Growth in Jobs Over the Past 5 Years Number of Industrial* Jobs Added Per Year
Employment Inventory
Market Growth Growth Difference 1.0%
-0.30%
Atlanta 8.00% 8.30% 0.00%
3.00%
Chicago 5.80% 5.80% 5.10% 0.0%
-6.30%
Dallas/Ft Worth 8.60% 5.60% 4.80% Percent Growth
Denver 8.90% 3.80% -10.50% -1.0%
-0.10%
Detroit -3.90% 2.40% 1.10%
-1.90%
Houston 9.70% 4.90% -2.0%
Inland Empire (California) 14.20% 24.70%
Los Angeles 3.00% 3.10% -3.0%
Northern New Jersey 3.90% 2.80%
Pittsburgh 0.30% 2.20% -4.0%
Source: Department of Labor, Bureau of Labor Statistics 2002 2003 2004 2005 2006
Source: Department of Labor, Bureau of Labor Statistics. * Industrial employment is defined as jobs in the
Manufacturing, and Trade, Transportation & Utilities industries
Historical Unemployment Rates
Percent Unemployment7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2002 1q 2002 2q 2002 3q 2002 4q 2003 1q 2003 2q 2003 3q 2003 4q 2004 1q 2004 2q 2004 3q 2004 4q 2005 1q 2005 2q 2005 3q 2005 4q 2006 1q 2006 2q 2006 3q
Source: Department of Labor, Bureau of Labor Statistics
©2007 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 7
NATIONAL – YEAR-END 2006
National Industrial Market
INVENTORY & DEVELOPMENT
Historical Deliveries 1983 - 2007
Deliveries Average Delivered SF
275.1
300.0 261.8 256.9
250.0 259.2 244.1 248.2 238.1
239.3 244.0
197.8 194.3 206.9
200.0 170.2 169.5
137.1
Millions SF 149.3 155.7 153.9
150.0 141.0
132.3
116.2
112.9
100.0 73.6 68.3 82.6
50.0
0.0
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: CoStar Property® * Future deliveries based on current under construction buildings.
Construction Activity Markets Ranked by Under Construction Square Footage
Under Construction Inventory Average Bldg Size
Market # Bldgs Total RBA Preleased SF Preleased % All Existing U/C
Inland Empire (California)
Chicago 329 19,459,552 3,588,674 18.4% 43,693 59,148
Dallas/Ft Worth 63 8,966,622 2,031,181 22.7% 59,751 142,327
Atlanta 52 8,934,739 2,717,035 30.4% 44,755 171,822
Philadelphia 59 8,703,322 2,336,188 26.8% 54,604 147,514
Phoenix 48 8,125,166 10.5% 61,249 169,274
Seattle/Puget Sound 7,173,582 855,283 21.1% 30,030
Northern New Jersey 149 6,761,092 1,514,773 19.0% 42,202 48,145
Baltimore 42 6,452,720 1,281,944 61,042 160,978
Houston 34 5,586,263 4.7% 59,986 189,786
Washington 29 4,472,453 301,584 10.1% 38,275 192,630
Los Angeles 44 3,744,157 563,004 36.3% 41,931 101,647
Miami-Dade County 58 3,721,252 1,624,743 50.6% 33,516
St. Louis 68 3,564,612 1,895,240 36.4% 32,307 64,554
Columbus 53 3,066,602 1,353,436 55.6% 48,493 54,724
Broward County 12 2,575,892 1,980,326 13.7% 70,468 67,257
Tampa/St Petersburg 9 2,433,580 419,550 15.6% 27,902 255,550
Denver 38 2,378,121 402,888 62.9% 30,683 286,210
Boston 55 2,373,687 1,531,489 56.7% 33,568 64,042
San Diego 33 2,262,304 1,349,379 23.7% 51,938 43,239
Memphis 32 2,086,099 561,909 53.8% 24,804 71,930
Kansas City 62 2,066,672 1,216,570 12.6% 102,064 70,697
Orlando 6 1,737,022 262,346 45,992 33,647
Indianapolis 30 1,600,469 0.0% 31,092 344,445
Charlotte 34 1,534,490 0 71.7% 53,413 57,901
Sacramento 10 1,506,048 1,244,858 55.3% 44,641 47,073
Orange (California) 34 1,451,064 21.9% 35,203 153,449
Portland 91 1,378,015 885,037 27,187 44,296
Nashville 83 1,300,907 335,645 5.8% 39,661 15,946
Jacksonville (Florida) 26 1,156,151 21.8% 59,896 16,603
Westchester/So Connecticut 6 1,004,261 87,373 55.7% 40,428 50,035
Cleveland 17 666,365 316,686 34.7% 37,356 192,692
Palm Beach County 15 608,787 767,825 47,918 59,074
Cincinnati 10 608,289 451,920 6.7% 23,508 44,424
Detroit 18 580,870 55.7% 51,056 60,879
Pittsburgh 4 548,876 77,880 40.1% 35,115 33,794
Austin 14 538,000 559,377 76.4% 38,947 145,217
East Bay/Oakland 7 505,762 267,185 39.3% 36,214 39,205
Raleigh/Durham 17 491,519 464,843 14.3% 37,891 76,857
South Bay/San Jose 8 312,995 238,971 43,838 29,751
San Francisco 8 99,334 3.8% 39,073 61,440
Long Island (New York) 7 85,000 83,305 8.3% 23,055 39,124
Dayton 3 66,000 20,700 7.3% 30,799 14,191
2 0 44,400 2.2% 42,655 28,333
Totals 0 37,100 34.9% 42,200 33,000
132,688,713 10,960 47.9%
Source: CoStar Property® 1,719 109,091 0.0% 0
47,550 39.4% 77,189
0.0%
0 25.5%
26,000
0
33,864,248
8 THE COSTAR INDUSTRIAL REPORT ©2007 COSTAR GROUP, INC.
YEAR-END 2006 – NATIONAL
National Industrial Market
INVENTORY & DEVELOPMENT
Historical Construction Starts & Deliveries*
Square Footage Per Quarter Starting and Completing Construction
Construction Starts Deliveries
60.0
50.0 40.4 39.9 42.3 52.3 42.9 45.4 43.642.6 42.9 42.143.8 40.5
40.0 35.5 33.6 37.4 37.6 30.3 41.7 39.2 30.3
37.4 38.2
34.7
Millions SF 30.0 25.9
20.0
10.0
0.0 2004 2q 2004 3q 2004 4q 2005 1q 2005 2q 2005 3q 2005 4q 2006 1q 2006 2q 2006 3q 2006 4q
2004 1q
Source: CoStar Property® * Excludes Portland
Recent Deliveries by Project Size Breakdown of Year-to-Date Development Based on RBA of Project
Building Size # Bldgs RBA SF Leased % Leased Avg Rate Single Tenant Multi-Tenant
< 50,000 SF 1,791 30,804,230 16,522,983 53.6% $9.54 8,255,689 22,548,541
50,000 SF - 99,999 SF 242 16,753,787 9,053,029 54.0% $7.68 2,737,815 14,015,972
100,000 SF - 249,999 SF 188 28,852,485 15,902,633 55.1% $5.32 7,670,149 21,182,336
250,000 SF - 499,999 SF 88 31,148,488 14,455,155 46.4% $4.56 9,846,856 21,301,632
86 61,962,717 28,206,181 45.5% $3.54 18,828,035 43,134,682
>= 500,000 SF
Source: CoStar Property®
Recent Deliveries Future Deliveries
Leased & Un-Leased SF in Deliveries Last 5 Years Preleased & Un-Leased SF in Properties Scheduled to Deliver
Leased Un-Leased 80.0 Preleased Un-Leased
180.0 70.0
160.0
140.0 60.0
120.0
Millions SF 100.0 50.0
Millions SF
80.0 40.0
60.0
40.0 30.0
20.0
20.0
0.0
10.0
2002 2003 2004 2005 2006 0.0 2007 2q 2007 3q 2007 4q
2007 1q
©2007 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 9
NATIONAL – YEAR-END 2006
National Industrial Market
INVENTORY & DEVELOPMENT
Growth in Inventory Last 5 Years - Select Regions
Based on Percentage Growth in Inventory From Year-End 2001 Through Year-End 2006 Including
Current Under Construction Square Footage
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Rank Region 4th Qtr 2006 4th Qtr 2001 Increase in Inventory
Existing RBA U/C RBA
1 Inland Empire (California) # Bldgs Total RBA # Bldgs Total RBA # Bldgs Total RBA %
2 Memphis 8,955 391,272,648 19,459,552 410,732,200 29%
3 Phoenix 1,507 153,809,849 2,066,672 155,876,521 7,701 317,880,343 1,254 92,851,857 13%
4 Indianapolis 8,259 248,017,891 7,173,582 255,191,473 10%
5 Atlanta 4,712 251,684,250 1,534,490 253,218,740 1,451 138,068,106 56 17,808,415
6 Baltimore 567,774,231 8,703,322 576,477,553 8%
7 Orlando 10,398 201,194,544 5,586,263 206,780,807 7,766 231,498,149 493 23,693,324 8%
8 Seattle/Puget Sound 3,354 153,006,136 1,600,469 154,606,605 8%
9 Washington 4,921 287,857,730 6,761,092 294,618,822 4,614 233,661,739 98 19,557,001 7%
10 Nashville 6,821 182,232,572 3,744,157 185,976,729 7%
11 Chicago 4,346 131,232,461 1,156,151 132,388,612 10,137 532,234,374 261 44,243,179 7%
12 Portland 2,191 989,770,655 8,966,622 998,737,277 6%
13 Broward County 136,117,749 1,300,907 137,418,656 3,273 191,933,942 81 14,846,865 6%
14 Dallas/Ft Worth 16,565 116,212,854 2,433,580 118,646,434 6%
15 San Diego 3,432 675,391,508 8,934,739 684,326,247 4,680 143,862,349 241 10,744,256 6%
4,165 181,739,334 2,086,099 183,825,433 6%
6,699 275,197,312 122 19,421,510 6%
15,091
7,327 4,204 174,056,906 142 11,919,823
2,128 124,346,747 63 8,041,865
16,263 938,584,154 302 60,153,123
3,359 129,585,372 73 7,833,284
4,097 111,894,625 68 6,751,809
14,906 645,545,459 185 38,780,788
7,020 173,589,606 307 10,235,827
10 THE COSTAR INDUSTRIAL REPORT ©2007 COSTAR GROUP, INC.
YEAR-END 2006 – NATIONAL
National Industrial Market
INVENTORY & DEVELOPMENT
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������������������������ THE COSTAR INDUSTRIAL REPORT 11
©2007 COSTAR GROUP, INC.
NATIONAL – YEAR-END 2006
National Industrial Market
INVENTORY & DEVELOPMENT
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������������������������ THE COSTAR INDUSTRIAL REPORT ©2007 COSTAR GROUP, INC.
12
YEAR-END 2006 – NATIONAL
National Industrial Market
FIGURES AT A GLANCE
Flex Market Statistics Year-End 2006
Existing Inventory Vacancy YTD Net YTD Under Quoted
Total SF Absorption Deliveries Const SF Rates
Market # Bldgs Total RBA Direct SF 6,792,760 Vac %
Atlanta 6,423,290 12.4% 589,992 488,948
2,543 54,957,833 19.0% 1,458,513 241,079 232,934 $8.76
11.0% 470,720
Austin 380 18,664,445 3,488,268 3,550,522 16.6% 442,009 152,062 $8.23
1,451,772 77,980
Baltimore 1,034 38,870,581 4,027,921 4,263,613 5.6% 321,710 724,160 $11.19
15.6% 828,484 268,322
Boston 2,225 116,858,735 17,504,129 19,405,749 12.1% 1,365,021 233,677 421,000 $9.81
14.9% 1,233,019
Broward County 743 20,021,189 1,057,497 1,122,660 17.9% 8,600 249,241 $10.52
14.3% (45,837) 46,240
Charlotte 890 26,599,308 3,631,907 4,149,037 12.6% (26,030) 27,037 742,413 $7.95
21.5% 100,293 270,066
Chicago 1,706 65,822,137 7,615,376 7,949,335 15.2% 455,269 98,736 $10.29
19.8% (30,190) 0
Cincinnati 264 7,502,742 1,088,283 1,117,117 17.2% 315,938 552,944 41,000 $7.28
16.0% (736,872)
Cleveland 531 17,806,972 3,140,899 3,189,152 14.4% (661,896) 19,150 153,953 $8.24
225,386 324,884
Columbus 261 8,678,002 1,228,393 1,245,179 7.2% 537,492 562,898 0 $7.03
10.4% 675,793 366,802
Dallas/Ft Worth 5,989 138,092,223 16,172,649 17,358,159 13.7% 393,214 372,463 530,091 $7.48
350,881
Dayton 90 2,885,786 583,868 619,761 9.6% (82,323) 42,920 0 $8.49
4.4% 587,818 141,287
Denver 1,477 43,355,353 6,339,661 6,601,132 30.4% (641,650) 150,257 $8.86
6.3% 161,854 15,000
Detroit 1,065 35,010,519 6,774,029 6,945,775 14.6% 474,818 61,661 49,500 $9.90
11.5% 337,422 122,121
East Bay/Oakland 1,436 54,766,412 8,435,040 9,404,784 4.8% 1,381,415 204,284 0 $12.64
6.8% 1,014,909 123,150
Houston 1,163 35,902,620 4,964,116 5,726,846 4.9% 143,172 472,768 237,634 $7.49
13.3% 2,197,408 490,704
Indianapolis 726 20,857,078 2,880,325 2,993,962 15.8% 719,228 767,938 55,700 $7.56
14.0% (211,808) 187,380
Inland Empire (California) 581 12,585,974 871,832 904,979 14.6% 576,808 587,233 285,047 $13.58
13.0% 648,838 1,244,628
Jacksonville (Florida) 204 6,138,652 640,573 640,573 14.9% 335,991 79,900 54,200 $9.79
10.8% 891,010 181,074
Kansas City 403 11,552,788 1,558,360 1,584,549 13.3% 235,609 165,214 278,165 $8.18
10.2% 1,701,867 627,677
Long Island (New York) 546 21,025,894 1,970,007 2,025,428 17.6% 2,711,105 1,041,218 0 $15.16
14.9% 228,779 479,844
Los Angeles 2,717 71,775,980 2,871,955 3,146,570 11.3% 686,891 298,912 254,992 $14.76
12.7% 1,072,250 215,925
Memphis 282 8,640,810 2,605,745 2,623,408 11.5% 478,071 139,464 44,000 $8.35
13.0% 24,571,733 639,305
Miami-Dade County 533 19,363,692 1,154,159 1,226,280 1,456,466 386,149 $14.92
145,000
Nashville 267 9,896,647 1,287,200 1,443,303 14,584,593 74,645 $8.85
Northern New Jersey 963 44,198,031 4,531,469 5,094,441 550,489 $12.41
Orange (California) 2,950 69,310,125 3,025,787 3,339,307 202,196 $14.03
Orlando 1,169 28,658,504 1,777,579 1,935,941 88,010 $11.82
Palm Beach County 433 11,427,299 564,177 564,177 28,000 $12.63
Philadelphia 2,153 72,362,368 9,029,950 9,609,140 496,375 $9.87
Phoenix 1,007 29,020,639 4,078,411 4,592,791 631,732 $12.68
Pittsburgh 591 17,215,975 2,270,540 2,411,881 92,000 $9.74
Portland 671 19,937,370 2,700,399 2,912,979 241,469 $10.55
Raleigh/Durham 636 19,457,704 2,412,601 2,531,072 146,995 $10.39
Sacramento 832 20,278,597 2,967,223 3,028,763 135,297 $11.68
San Diego 1,383 38,960,987 3,418,612 4,210,333 355,444 $16.81
San Francisco 824 22,836,770 2,575,084 3,029,567 60,000 $17.13
Seattle/Puget Sound 797 29,880,769 2,801,183 3,046,625 15,052 $12.89
South Bay/San Jose 2,643 117,940,125 17,640,923 20,794,311 37,470 $12.65
St. Louis 393 12,625,658 1,875,345 1,886,605 0 $7.65
Tampa/St Petersburg 924 24,899,884 2,760,711 2,819,648 361,349 $10.02
Washington 1,368 61,180,596 7,249,545 7,794,694 1,429,483 $13.57
Westchester/So Connecticut 633 23,824,720 2,617,191 2,735,600 239,625 $12.13
Totals 48,426 1,531,648,493
182,612,212 198,368,508 10,326,865 $11.03
Source: CoStar Property®
©2007 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 13
NATIONAL – YEAR-END 2006
National Industrial Market
FIGURES AT A GLANCE
Warehouse Market Statistics Year-End 2006
Existing Inventory Vacancy YTD Net YTD Under Quoted
Total SF Absorption Deliveries Const SF Rates
Market # Bldgs Total RBA Direct SF 59,255,787 Vac % 12,615,313 20,027,659
Atlanta 56,946,373 11.6%
7,855 512,816,398 393,292 8,470,388 $3.77
1,996,918
Austin 1,534 50,648,704 4,038,440 4,182,582 8.3% 913,690 353,700 $5.97
884,070
Baltimore 2,320 162,323,963 20,258,618 20,976,607 12.9% 1,293,764 1,054,238 4,862,103 $4.88
Boston 5,603 289,714,247 32,902,630 35,462,920 12.2% 141,449 943,316 1,841,304 $5.82
11,607,598
Broward County 3,422 96,191,665 3,253,441 3,406,993 3.5% 705,214 2,184,339 $7.78
2,021,795
Charlotte 3,636 175,443,871 19,741,562 19,928,240 11.4% 3,312,353 233,349 763,635 $3.50
Chicago 14,859 923,948,518 89,575,507 93,725,881 10.1% 9,884,865 2,551,856 8,867,886 $4.81
10,820,570
Cincinnati 5,312 277,187,188 20,408,128 21,237,740 7.7% (1,517,737) 539,870 $3.77
39,600
Cleveland 7,104 348,049,690 27,122,017 27,630,116 7.9% 2,631,673 1,767,833 454,834 $3.86
2,445,714
Columbus 2,949 217,523,204 25,033,242 26,725,014 12.3% 881,099 2,575,892 $3.11
473,466
Dallas/Ft Worth 9,102 537,299,285 48,660,643 51,442,679 9.6% 12,093,280 2,635,802 8,404,648 $3.95
7,195,555
Dayton 1,556 67,324,047 7,227,935 7,408,075 11.0% (510,824) 27,576,079 0 $3.80
Denver 6,287 217,264,455 15,135,898 16,260,324 7.5% 2,854,182 799,552 2,223,430 $5.11
1,014,423
Detroit 13,103 462,496,817 54,278,835 54,654,073 11.8% (3,244,462) 499,376 $4.85
141,650
East Bay/Oakland 5,583 211,190,391 14,352,332 16,341,870 7.7% (704,864) 6,380,721 491,519 $6.72
4,086,516
Houston 10,004 391,509,912 22,947,800 23,306,282 6.0% 3,426,362 4,234,819 $4.60
877,321
Indianapolis 3,986 230,827,172 23,072,162 23,526,782 10.2% 4,135,573 1,818,595 1,478,790 $3.62
6,080,187
Inland Empire (California) 8,374 378,686,674 29,634,193 32,244,876 8.5% 16,641,370 1,079,370 19,174,505 $5.80
2,034,343
Jacksonville (Florida) 2,157 89,312,668 4,872,897 5,304,979 5.9% 1,019,819 950,061 $3.99
249,835
Kansas City 4,721 224,110,644 16,147,789 16,471,283 7.3% 1,139,555 9,633,101 1,458,857 $3.83
5,539,107
Long Island (New York) 9,454 286,959,521 11,178,342 11,674,178 4.1% (142,113) 66,000 $9.61
213,000
Los Angeles 28,736 982,415,544 22,384,803 24,535,328 2.5% 12,482,331 2,172,756 3,466,260 $7.39
Memphis 1,225 145,169,039 20,244,412 21,140,399 14.6% 5,662,757 112,573 2,022,672 $2.53
2,860,789
Miami-Dade County 5,937 189,663,053 7,756,267 8,098,415 4.3% 184,196 2,218,435 3,178,463 $7.24
Nashville 1,924 121,335,814 9,742,125 9,938,640 8.2% 5,683,079 8,633 1,081,506 $3.63
4,313,484
Northern New Jersey 11,908 741,468,970 55,026,087 58,654,835 7.9% 3,216,406 5,902,231 $5.75
152,958
Orange (California) 8,154 232,574,458 7,881,061 8,790,967 3.8% 373,893 2,988,952 1,175,819 $8.46
2,634,812
Orlando 3,752 124,347,632 6,920,331 7,445,888 6.0% 2,155,856 1,804,117 1,512,459 $5.60
Palm Beach County 1,727 39,349,809 1,543,874 1,545,579 3.9% (259,526) 20,548 580,289 $9.61
153,904,488
Philadelphia 10,449 699,498,195 68,583,434 70,401,188 10.1% 14,344,120 7,628,791 $4.65
Phoenix 7,252 218,997,252 15,366,797 16,228,117 7.4% 3,859,835 6,541,850 $7.21
Pittsburgh 2,143 89,266,371 13,751,586 13,959,756 15.6% 925,580 446,000 $3.92
Portland 2,761 116,180,379 8,700,196 9,061,209 7.8% 4,133,905 1,059,438 $5.16
Raleigh/Durham 672 37,882,751 4,336,569 4,430,209 11.7% 3,288,588 166,000 $4.47
Sacramento 4,792 177,702,274 20,768,903 21,220,566 11.9% 5,367,399 1,315,767 $5.25
San Diego 5,944 142,778,347 7,512,267 8,188,061 5.7% 2,690,603 1,730,655 $9.57
San Francisco 3,704 81,554,040 3,463,492 3,788,524 4.6% 242,133 25,000 $9.74
Seattle/Puget Sound 6,024 257,976,961 12,336,874 13,406,451 5.2% 4,771,736 6,746,040 $6.36
South Bay/San Jose 3,141 108,060,325 5,812,578 6,773,430 6.3% 795,389 61,864 $7.50
St. Louis 4,796 239,006,872 15,750,390 16,450,130 6.9% 1,900,052 3,066,602 $4.56
Tampa/St Petersburg 6,002 187,608,410 8,271,603 8,501,982 4.5% 4,708,095 2,016,772 $5.76
Washington 2,978 121,051,976 8,814,224 9,263,903 7.7% 1,022,652 2,314,674 $8.38
Westchester/So Connecticut 3,822 142,594,487 14,892,508 15,153,356 10.6% 2,822,842 426,740 $6.41
886,649,165 928,144,214
Totals 256,764 11,347,311,993 8.2% 147,941,482 122,361,848 $5.19
Source: CoStar Property®
14 THE COSTAR INDUSTRIAL REPORT ©2007 COSTAR GROUP, INC.
YEAR-END 2006 – NATIONAL
National Industrial Market
FIGURES AT A GLANCE
Total Industrial Market Statistics Year-End 2006
Existing Inventory Vacancy YTD Net YTD Under Quoted
Total SF Absorption Deliveries Const SF Rates
Market # Bldgs Total RBA Direct SF 66,048,547 Vac % 20,516,607
Atlanta 63,369,663
10,398 567,774,231 11.6% 13,205,305 634,371 8,703,322 $4.20
2,467,638
Austin 1,914 69,313,149 7,526,708 7,733,104 11.2% 2,372,203 505,762 $6.78
962,050
Baltimore 3,354 201,194,544 24,286,539 25,240,220 12.5% 1,735,773 1,375,948 5,586,263 $5.72
1,211,638
Boston 7,828 406,572,982 50,406,759 54,868,669 13.5% 1,593,221 11,841,275 2,262,304 $6.93
2,030,395
Broward County 4,165 116,212,854 4,310,938 4,529,653 3.9% 1,533,698 2,433,580 $8.31
279,589
Charlotte 4,526 202,043,179 23,373,469 24,077,277 11.9% 4,677,374 2,578,893 1,506,048 $4.05
11,090,636
Chicago 16,565 989,770,655 97,190,883 101,675,216 10.3% 11,117,884 8,966,622 $5.09
39,600
Cincinnati 5,576 284,689,930 21,496,411 22,354,857 7.9% (1,563,574) 2,320,777 580,870 $3.94
2,464,864
Cleveland 7,635 365,856,662 30,262,916 30,819,268 8.4% 2,605,643 608,787 $4.21
798,350
Columbus 3,210 226,201,206 26,261,635 27,970,193 12.4% 981,392 3,198,700 2,575,892 $3.22
7,562,357
Dallas/Ft Worth 15,091 675,391,508 64,833,292 68,800,838 10.2% 12,548,549 27,948,542 8,934,739 $4.72
Dayton 1,646 70,209,833 7,811,803 8,027,836 11.4% (541,014) 842,472 0 $4.07
1,155,710
Denver 7,764 260,619,808 21,475,559 22,861,456 8.8% 3,170,120 2,373,687 $6.01
156,650
Detroit 14,168 497,507,336 61,052,864 61,599,848 12.4% (3,981,334) 6,442,382 548,876 $5.34
4,208,637
East Bay/Oakland 7,019 265,956,803 22,787,372 25,746,654 9.7% (1,366,760) 1,081,605 491,519 $8.47
1,941,745
Houston 11,167 427,412,532 27,911,916 29,033,128 6.8% 3,651,748 6,552,955 4,472,453 $4.97
1,570,074
Indianapolis 4,712 251,684,250 25,952,487 26,520,744 10.5% 4,673,065 2,802,281 1,534,490 $3.95
Inland Empire (California) 8,955 391,272,648 30,506,025 33,149,855 8.5% 17,317,163 437,215 19,459,552 $5.99
10,220,334
Jacksonville (Florida) 2,361 95,451,320 5,513,470 5,945,552 6.2% 1,413,033 1,004,261 $4.50
6,783,735
Kansas City 5,124 235,663,432 17,706,149 18,055,832 7.7% 1,490,436 292,900 1,737,022 $4.21
Long Island (New York) 10,000 307,985,415 13,148,349 13,699,606 4.4% (224,436) 2,353,830 66,000 $10.30
277,787
Los Angeles 31,453 1,054,191,524 25,256,758 27,681,898 2.6% 13,070,149 3,721,252 $7.94
3,488,466
Memphis 1,507 153,809,849 22,850,157 23,763,807 15.5% 5,021,107 3,259,653 2,066,672 $2.69
Miami-Dade County 6,470 209,026,745 8,910,426 9,324,695 4.5% 346,050 488,477 3,564,612 $7.66
4,612,396
Nashville 2,191 131,232,461 11,029,325 11,381,943 8.7% 6,157,897 1,156,151 $4.10
368,883
Northern New Jersey 12,871 785,667,001 59,557,556 63,749,276 8.1% 3,553,828 3,128,416 6,452,720 $6.16
3,274,117
Orange (California) 11,104 301,884,583 10,906,848 12,130,274 4.0% 1,755,308 3,260,583 1,378,015 $9.89
Orlando 4,921 153,006,136 8,697,910 9,381,829 6.1% 3,170,765 165,548 1,600,469 $6.66
168,489,081
Palm Beach County 2,160 50,777,108 2,108,051 2,109,756 4.2% (116,354) 608,289 $10.12
Philadelphia 12,602 771,860,563 77,613,384 80,010,328 10.4% 16,541,528 8,125,166 $5.06
Phoenix 8,259 248,017,891 19,445,208 20,820,908 8.4% 4,579,063 7,173,582 $8.12
Pittsburgh 2,734 106,482,346 16,022,126 16,371,637 15.4% 713,772 538,000 $4.44
Portland 3,432 136,117,749 11,400,595 11,974,188 8.8% 4,710,713 1,300,907 $6.52
Raleigh/Durham 1,308 57,340,455 6,749,170 6,961,281 12.1% 3,937,426 312,995 $6.21
Sacramento 5,624 197,980,871 23,736,126 24,249,329 12.2% 5,703,390 1,451,064 $5.98
San Diego 7,327 181,739,334 10,930,879 12,398,394 6.8% 3,581,613 2,086,099 $11.77
San Francisco 4,528 104,390,810 6,038,576 6,818,091 6.5% 477,742 85,000 $12.25
Seattle/Puget Sound 6,821 287,857,730 15,138,057 16,453,076 5.7% 6,473,603 6,761,092 $7.32
South Bay/San Jose 5,784 226,000,450 23,453,501 27,567,741 12.2% 3,506,494 99,334 $11.19
St. Louis 5,189 251,632,530 17,625,735 18,336,735 7.3% 2,128,831 3,066,602 $4.75
Tampa/St Petersburg 6,926 212,508,294 11,032,314 11,321,630 5.3% 5,394,986 2,378,121 $6.62
Washington 4,346 182,232,572 16,063,769 17,058,597 9.4% 2,094,902 3,744,157 $10.29
Westchester/So Connecticut 4,455 166,419,207 17,509,699 17,888,956 10.7% 3,300,913 666,365 $7.34
Totals 305,190 12,878,960,486 1,069,261,377 1,126,512,722 8.7% 172,513,215 132,688,713 $5.99
Source: CoStar Property®
©2007 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 15
NATIONAL – YEAR-END 2006
National Industrial Market
FIGURES AT A GLANCE
Flex Market Statistics Year-End 2006
Existing Inventory Vacancy Net Deliveries UC Inventory Quoted
Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates
2006 4q 47,755 1,511,711,123 179,911,813 195,455,529 12.9% 3,741,577 72 2,994,750 297 10,085,396 $11.03
2006 3q 47,686 1,508,846,380 179,329,139 196,332,363 13.0% 8,388,236 150 4,205,229 288 10,577,252 $10.76
2006 2q 47,538 1,504,714,467 182,548,452 200,588,686 13.3% 7,434,916 158 3,837,642 347 11,918,016 $10.62
2006 1q 47,383 1,501,159,555 187,071,370 204,468,690 13.6% 4,430,196 116 3,365,898 411 12,564,961 $10.36
2005 4q 47,278 1,497,907,591 187,746,945 205,646,922 13.7% 9,393,004 134 5,161,958 390 11,804,565 $10.00
2005 3q 47,149 1,492,838,149 190,529,185 209,970,484 14.1% 8,193,803 114 3,525,775 421 13,472,003
2005 2q 47,038 1,489,644,051 194,988,582 214,970,189 14.4% 11,551,557 103 3,277,799 392 13,216,085 $9.94
2005 1q 46,939 1,486,776,552 202,657,819 223,654,247 15.0% 4,990,585 184 4,531,131 323 11,321,716 $9.84
2004 4q 46,763 1,482,543,565 201,372,149 224,411,845 15.1% 7,570,312 140 4,296,026 388 11,996,194 $9.61
2004 3q 46,628 1,478,599,432 203,819,902 228,038,024 15.4% 5,608,107 123 3,005,083 425 12,954,298 $9.64
2004 2q 46,512 1,475,792,552 205,136,518 230,839,251 15.6% 3,237,970 102 3,641,115 384 11,415,724 $9.69
2004 1q 46,411 1,472,166,437 203,318,796 230,451,106 15.7% 2,346,494 111 4,995,065 358 11,576,905 $9.83
2003 4q 46,316 1,467,845,126 199,483,696 228,476,289 15.6% 1,496,834 108 4,262,623 331 12,490,918 $9.85
2003 3q 46,213 1,463,757,521 194,592,758 225,885,518 15.4% 3,488,342 2,839,815 286 13,582,136 $10.03
2003 2q 46,131 1,461,307,706 194,985,362 226,924,045 15.5% (3,196,225) 87 2,535,074 247 12,453,961 $10.13
2003 1q 46,056 1,459,073,518 189,596,480 221,493,632 15.2% (4,008,035) 86 3,569,784 228 11,352,287 $10.14
133 $10.58
Source: CoStar Property® *Excludes Portland
Warehouse Market Statistics Year-End 2006
Existing Inventory Vacancy Net Deliveries UC Inventory Quoted
Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates
2006 4q 254,003 11,231,131,614 877,948,969 919,083,005 8.2% 28,918,201 373 37,546,474 1,396 121,302,410 $5.19
2006 3q 253,655 11,194,879,173 870,229,183 911,748,765 8.1% 43,747,388 458 39,643,513 1,437 131,060,178 $5.12
2006 2q 253,214 11,156,649,158 877,332,388 917,252,263 8.2% 41,792,514 520 35,338,658 1,514 131,448,125 $5.05
2006 1q 252,709 11,124,328,840 886,761,188 926,724,459 8.3% 29,349,474 491 39,203,087 1,580 127,075,999 $5.01
2005 4q 252,268 11,088,833,101 881,753,870 920,578,194 8.3% 50,421,059 463 40,214,246 1,484 126,773,887 $4.97
2005 3q 251,851 11,051,298,077 894,136,840 933,464,229 8.4% 30,819,073 481 26,772,060 1,521 128,741,670 $4.91
2005 2q 251,390 11,026,418,771 895,832,343 939,403,996 8.5% 46,207,997 489 34,294,719 1,462 116,392,991 $4.86
2005 1q 250,929 10,995,756,077 907,565,105 954,949,299 8.7% 31,031,402 510 33,622,728 1,386 103,536,918 $4.83
2004 4q 250,467 10,965,387,020 907,184,383 955,611,644 8.7% 46,649,515 487 33,146,973 1,425 106,267,646 $4.77
2004 3q 250,047 10,937,249,634 924,553,329 974,123,773 8.9% 36,453,972 385 22,910,837 1,437 100,405,853 $4.74
2004 2q 249,724 10,921,520,401 941,763,740 994,848,512 9.1% 26,751,858 470 30,002,745 1,241 $4.78
2004 1q 249,299 10,893,842,936 939,847,267 993,922,905 9.1% 553 35,433,153 1,239 90,494,649 $4.73
2003 4q 248,848 10,866,876,148 917,979,768 973,842,451 9.0% 6,886,334 439 30,221,593 1,260 84,083,496 $4.73
2003 3q 248,453 10,838,317,467 902,505,045 963,592,792 8.9% 18,309,022 354 17,369,250 1,268 88,137,992 $4.77
2003 2q 248,141 10,823,566,016 900,367,702 963,964,428 8.9% 15,123,087 321 20,844,020 1,153 90,301,348 $4.74
2003 1q 247,870 10,806,592,092 887,104,845 958,890,681 8.9% 11,900,177 530 29,183,987 82,186,453 $4.89
15,914,198 955 71,544,074
Source: CoStar Property® *Excludes Portland
Total Industrial Market Statistics Year-End 2006
Existing Inventory Vacancy Net Deliveries UC Inventory Quoted
Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates
2006 4q 301,758 12,742,842,737 1,057,860,782 1,114,538,534 8.7% 32,659,778 445 40,541,224 1,693 131,387,806 $5.99
2006 3q 301,341 12,703,725,553 1,049,558,322 1,108,081,128 8.7% 52,135,624 608 43,848,742 1,725 141,637,430 $5.91
2006 2q 300,752 12,661,363,625 1,059,880,840 1,117,840,949 8.8% 49,227,430 678 39,176,300 1,861 143,366,141 $5.84
2006 1q 300,092 12,625,488,395 1,073,832,558 1,131,193,149 9.0% 33,779,670 607 42,568,985 1,991 139,640,960 $5.79
2005 4q 299,546 12,586,740,692 1,069,500,815 1,126,225,116 8.9% 59,814,063 597 45,376,204 1,874 138,578,452 $5.77
2005 3q 299,000 12,544,136,226 1,084,666,025 1,143,434,713 9.1% 39,012,876 595 30,297,835 1,942 142,213,673 $5.72
2005 2q 298,428 12,516,062,822 1,090,820,925 1,154,374,185 9.2% 57,759,554 592 37,572,518 1,854 129,609,076 $5.71
2005 1q 297,868 12,482,532,629 1,110,222,924 1,178,603,546 9.4% 36,021,987 694 38,153,859 1,709 114,858,634 $5.69
2004 4q 297,230 12,447,930,585 1,108,556,532 1,180,023,489 9.5% 54,219,827 627 37,442,999 1,813 118,263,840 $5.65
2004 3q 296,675 12,415,849,066 1,128,373,231 1,202,161,797 9.7% 42,062,079 508 25,915,920 1,862 113,360,151 $5.63
2004 2q 296,236 12,397,312,953 1,146,900,258 1,225,687,763 9.9% 29,989,828 572 33,643,860 1,625 101,910,373 $5.69
2004 1q 295,710 12,366,009,373 1,143,166,063 1,224,374,011 9.9% 664 40,428,218 1,597 $5.67
2003 4q 295,164 12,334,721,274 1,117,463,464 1,202,318,740 9.7% 9,232,828 547 34,484,216 1,591 95,660,401 $5.72
2003 3q 294,666 12,302,074,988 1,097,097,803 1,189,478,310 9.7% 19,805,856 441 20,209,065 1,554 100,628,910 $5.77
2003 2q 294,272 12,284,873,722 1,095,353,064 1,190,888,473 9.7% 18,611,429 407 23,379,094 1,400 103,883,484 $5.76
2003 1q 293,926 12,265,665,610 1,076,701,325 1,180,384,313 9.6% 663 32,753,771 1,183 $5.21
8,703,952 94,640,414
11,906,163 82,896,361
Source: CoStar Property® *Excludes Portland
16 THE COSTAR INDUSTRIAL REPORT ©2007 COSTAR GROUP, INC.
YEAR-END 2006 – NATIONAL
National Industrial Market
LEASING ACTIVITY
Historical Rental Rates*
Flex Warehouse Total Market
$14.00
$12.00
$10.00
Dollars/SF/Year $8.00
$6.00
$4.00
$2.00
$0.00
2000 2001 2001 2001 2001 2002 2002 2002 2002 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006
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
Source: CoStar Property® *Excludes Portland
Vacancy by Available Space Type Vacancy by Building Type
Percent of All Vacant Space in Direct vs. Sublet Percent of All Vacant Space by Building Type
Direct 5% Flex
Sublet Warehouse
18%
95% 82%
Source: CoStar Property® Source: CoStar Property® 0.29
2008 1q
Future Space Available
Space Scheduled to be Available for Occupancy in the Future*
90.0 79.21 36.49 13.37 2.14 0.02
80.0 2007 1q 2007 2q 2007 3q 2007 4q 2008 2q
70.0
60.0 17
50.0
40.0
30.0
20.0
10.0
0.0
* includes Under Construction Spaces Source: CoStar Property®
©2007 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT
NATIONAL – YEAR-END 2006
National Industrial Market
LEASING ACTIVITY
Select Top Industrial Leases Based on Leased Square Footage For Deals Signed in 2006
Building Market SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company
1 SouthPort Logistics Center Atlanta 1,298,700 3rd Kimberly-Clark Corporation Colliers Spectrum Cauble, Inc. CB Richard Ellis
2 1101 Everman Pky Dallas/Ft Worth 852,000 1st Whirlpool Corp Jones Lang LaSalle Americas, Inc. Lee & Associates
3 Windham Southwest II Chicago 814,848 4th Sears Colliers Bennett & Kahnweiler CB Richard Ellis
4 281 Airtech Pky Indianapolis 812,000 3rd Ozburn-Hessey Logistics Summit Realty Group Browning Investments, Inc.
5 Park 55 - Bldg 3 Chicago 805,912 2nd Kimberly-Clark Corp. Colliers Bennett & Kahnweiler Colliers Bennett & Kahnweiler
6 California Palms Business Center - Bldg 2 Inland Empire (California) 784,280 3rd Lamps Plus Grubb & Ellis CB Richard Ellis
7 ProLogis Park I-210 - Bldg 2 Inland Empire (California) 703,176 4th Broyhill Furniture Industries Binswanger/Realty Advisory Grp Inc. Lee & Associates
8 ProLogis Park Redlands - Bldg 4 Inland Empire (California) 683,269 1st Ashley Furniture Industries CAM Realty Colliers International
9 Park Mira Loma South - Bldg A Inland Empire (California) 683,200 1st Quiksilver Boardriders Club Voit Commercial Brokerage Lee & Associates
10 Hofer Ranch Bldg 2 Inland Empire (California) 675,000 1st Ventura Foods Collins Commercial Corporation Majestic Realty Co.
11 2750 Morris Rd Philadelphia 659,092 2nd Visteon Corporation CB Richard Ellis BPG Properties, Ltd.
12 Wineville Centre Pointe S - Bldg E Inland Empire (California) 645,052 1st UPS Direct Deal IDI
13 Duke Intermodal I Dallas/Ft Worth 626,100 4th Proctor & Gamble The Aldrich Group, Inc. Duke Realty
14 LogistiCenter At Allentown - Phase 2 Philadelphia 621,500 1st C & S Wholesale Grocers Atlantic Real Estate Services DP Partners
15 5195 Fermi Rd Sacramento 607,208 4th Owens-Brockway Glass Container Inc Colliers International Colliers International
16 LakeView X Chicago 600,000 3rd Uline Direct Deal Lee & Associates
17 Rockdale Distribution Center II Nashville 575,000 1st Wilson Sporting Goods ProVenture Commercial Real Estate ProVenture Commercial Real Estate
18 Rickenbacker 572 Columbus 573,696 1st Exel Ruscilli Real Estate Services, Inc. Duke Realty Corporation
19 10701 Central Port Dr Orlando 555,000 1st Staples Fischer & Company CB Richard Ellis
20 Grand Crossing - Bldg 25 Los Angeles 550,000 3rd Poundex Associates Corp. Colliers International Majestic Realty Co.
21 Warehouse Bldg 2200 Baltimore 532,515 1st Henry Bath, Inc. Trammell Crow Company Trammell Crow Company
22 16850 Heacock St Inland Empire (California) 507,995 1st Lowes Collins Commercial Corporation CB Richard Ellis
23 ProLogis Park I-210 - Bldg 2 Inland Empire (California) 493,875 2nd Kuehne & Nagel Logistics, Inc. CB Richard Ellis Lee & Associates
24 Gateway Industrial Center* Detroit 488,000 4th TECHNICOLOR Signature Associates Signature Associates
25 200 Docks Corner Rd Northern New Jersey 460,000 1st Home Depot N/A Lee & Klatskin Associates
26 Honeywell Philadelphia 450,000 1st GMAC Mortgage CB Richard Ellis Liberty Property Trust
27 Imperial Center/Essex Center* Raleigh/Durham 449,716 1st Sanmina-SCI Corporation NAI Carolantic Realty, Inc. Tri Properties
28 ProLogis Park Redlands - Bldg H Inland Empire (California) 446,050 2nd Exel Inc. Colliers International Collins Commercial Corporation
29 Romulus Business Center Phase III* Detroit 435,050 1st Bay Logistics Signature Associates Signature Associates
30 Raritan Industrial Center Northern New Jersey 433,069 4th Regency Warehousing & Distribution, Inc. SitarCompany/ONCORInternational Colliers Houston & Co.
31 Ontario Distribution Ctr - Bldg 3 Inland Empire (California) 432,308 4th N/A N/A Prologis
32 3433 Marshall Ln Philadelphia 428,863 2nd TC Millwork Heller Industrial Park Heller Industrial Park
33 601 Expressway Dr* Memphis 427,289 4th Patterson Warehouses Direct Deal Colliers Wilkinson Snowden
34 Windgate Distribution Center Chicago 426,203 1st Levy Home Entertainment, L.L.C. Lee & Associates NAI Hiffman
35 Crossroads Lakes Bus Park - Bldg I Chicago 425,368 2nd Broder GVA Williams Colliers Bennett & Kahnweiler
36 ExelLogistics-FormerHersheyDistribution Philadelphia 424,520 4th Arnold Logistics, Inc. CB Richard Ellis CB Richard Ellis
37 Turnpike Crossing OPUS - Bldg 3 Northern New Jersey 418,300 2nd Williams Sonoma N/A Cushman & Wakefield Inc.
38 Southaven Distribution Building II Memphis 416,000 3rd Iron Mountain Commercial Advisors, LLC Panattoni Development Company, LLC
39 LakeviewCommerceCenterI-Expansion St. Louis 415,000 3rd Spectrum Brands N/A Lee & Associates
40 Chickasaw Distribution Center - Bldg D* Memphis 414,960 1st Blyth Homescents International Newmark Knight Frank IDI
Source: CoStar Property®
* Renewal
18 THE COSTAR INDUSTRIAL REPORT ©2007 COSTAR GROUP, INC.
YEAR-END 2006 – NATIONAL
National Industrial Market
LEASING ACTIVITY
Change In Vacant Square Footage Last 12 Months
Year-End 2005 to Year-End 2006
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Rank Region 2005 4q 2006 4q Diff Rank Region 2005 4q 2006 4q Diff
1 Inland Empire (California) 22,518,476 33,149,855 47.2% 22 Pittsburgh 16,792,509 16,371,637 -2.5%
2 Palm Beach County 35.6% 23 San Diego 12,720,354 12,398,394 -2.5%
3 Cincinnati 1,556,187 2,109,756 19.1% 24 Memphis 24,598,477 23,763,807 -3.4%
4 Indianapolis 18,776,561 22,354,857 12.2% 25 Houston 30,100,318 29,033,128 -3.5%
5 Detroit 23,631,452 26,520,744 11.5% 26 Broward County -3.6%
6 Atlanta 55,237,060 61,599,848 11.4% 27 Orlando 4,696,380 4,529,653 -3.8%
7 Phoenix 59,273,290 66,048,547 10.2% 28 Denver 9,750,313 9,381,829 -4.2%
8 East Bay/Oakland 18,890,876 20,820,908 29 Orange (California) 23,864,282 22,861,456 -5.6%
9 Miami-Dade County 23,581,544 25,746,654 9.2% 30 Philadelphia 12,846,089 12,130,274 -8.3%
10 Dayton 8.1% 31 Sacramento 87,255,101 80,010,328 -8.4%
11 Columbus 8,629,644 9,324,695 7.8% 32 Cleveland 26,472,906 24,249,329 -8.7%
12 Washington 7,447,222 8,027,836 6.1% 33 Jacksonville (Florida) 33,767,622 30,819,268 -8.8%
13 St. Louis 26,372,692 27,970,193 5.7% 34 South Bay/San Jose 6,516,113 5,945,552 -10.2%
14 Baltimore 16,142,289 17,058,597 2.6% 35 Charlotte 30,705,352 27,567,741 -12.6%
15 Northern New Jersey 17,880,750 18,336,735 2.3% 36 Seattle/Puget Sound 27,543,013 24,077,277 -12.8%
16 Long Island (New York) 24,662,485 25,240,220 2.1% 37 Westchester/So Connecticut 18,871,806 16,453,076 -15.3%
17 San Francisco 62,433,752 63,749,276 2.1% 38 Tampa/St Petersburg 21,119,321 17,888,956 -16.2%
18 Chicago 13,417,820 13,699,606 0.2% 39 Portland 13,513,549 11,321,630 -16.5%
19 Kansas City 6,807,356 6,818,091 -0.1% 40 Austin 14,339,071 11,974,188 -18.3%
20 Dallas/Ft Worth 101,726,357 101,675,216 -1.8% 41 Los Angeles 9,470,936 7,733,104 -21.2%
21 Boston 18,390,558 18,055,832 -2.3% 42 Nashville 35,122,274 27,681,898 -27.1%
70,414,715 68,800,838 -2.5% 43 Raleigh/Durham 15,608,275 11,381,943 -35.8%
56,251,465 54,868,669 10,847,575 6,961,281
Source: CoStar Property® THE COSTAR INDUSTRIAL REPORT 19
©2007 COSTAR GROUP, INC.
NATIONAL – YEAR-END 2006
National Industrial Market
SALES ACTIVITY
The Optimist Sales Index Average of Two Highest Price/SF's and Two Lowest Cap Rates From Each Region
Cap Rate Price/SF
8.5% $220
Cap Rate Percentage 8.0% Dollars/SF$200
7.5% Price/SF $180
7.0% $160
6.5% $140
$120
6.0% $100
2003 4q 2004 1q 2004 2q 2004 3q 2004 4q 2005 1q 2005 2q 2005 3q 2005 4q 2006 1q 2006 2q 2006 3q
Source: CoStar COMPS®
Sales Volume & Price Sales Analysis by Building Size
Based on Industrial Building Sales of 15,000 SF and Larger Based on Industrial Bldg Sales From Oct. 2005 - Sept. 2006
Sales Volume Price/SF Bldg Size # RBA $ Volume Price/SF Cap Rate
$12,000 $70
Millions of Sales Volume Dollars $10,000 $65 < 25,000 SF 5,417 69,837,178 $ 7,054,823,871 $ 101.02 6.93%
$8,000 $60
$55
$6,000 $50 25K-99K SF 3,492 177,919,935 $ 11,766,397,168 $ 66.13 7.22%
$4,000 $45 100K-249K SF 994 147,810,015 $ 8,841,671,152 $ 59.82 7.59%
$2,000 $40
$35
$0 $30
2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 >250K SF 371 185,987,630 $ 11,624,892,845 $ 62.50 8.11%
4q 2q 4q 2q 4q 2q 4q 2q 4q 2q
Source: CoStar COMPS® Source: CoStar COMPS®
Historical Price/SF Average Historical Cap Rate Average
Based on Industrial Building Sales of 15,000 SF and Larger Based on Industrial Building Sales of 15,000 SF and Larger
$70 10.0%
$65 9.5%
$60
Cap Rate Percentage
Dollars per SF $55 9.0%
$50 8.5%
$45 8.0%
$40
$35 7.5%
$30 2002 2002 2003 2003 2004 2004 2005 2005 2006 7.0% 2002 2002 2003 2003 2004 2004 2005 2005 2006
2q 4q 2q 4q 2q 4q 2q 4q 2q 2q 4q 2q 4q 2q 4q 2q 4q 2q
2001 2001
4q 4q
Source: CoStar COMPS® Source: CoStar COMPS®
20 THE COSTAR INDUSTRIAL REPORT ©2007 COSTAR GROUP, INC.
YEAR-END 2006 – NATIONAL
National Industrial Market
SALES ACTIVITY
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��������������������� THE COSTAR INDUSTRIAL REPORT 21
©2007 COSTAR GROUP, INC.
NATIONAL – YEAR-END 2006
National Industrial Market
SALES ACTIVITY
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22
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