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PRESENTATION
March 30, 2017
BRADLEY MIGDALSenior Managing Director
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Manufacturing’s Role:
Industrial Market
Industrial Type Square Feet
Multi-tenant Distribution Warehouse 5,383,996,116
Manufacturing 3,142,084,067
Bulk Distribution Warehouse 2,218,998,543
Owner/User Warehouse 1,615,198,834
R&D/Flex 1,345,999,029
Other 269,199,808
Total U.S. Industrial Market 13,975,476,397
Multi-tenant Distribution Warehouse
39%
R&D/Flex10%
Owner/User Warehouse
12%
Bulk Distribution Warehouse
16%
Manufacturing22%
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2016 Industrial Performance
Strongest 3-year run of growth on record(Net absorption, msf)
226235
265
244 243
205
272 270283
0
50
100
150
200
250
300
350
Demand: 726.8 msfSupply: 630.7 msfSpec: 473.8 msf75% spec deliveries
Demand: 692.6 msfSupply: 574.7 msfSpec: 438.3 msf76% spec deliveries
Demand: 825.5 msfSupply: 550.3 msfSpec: 339.0 msf62% spec deliveries
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2016 Industrial Performance
Top markets by square feet of occupancy growth
0.0
5.0
10.0
15.0
20.0
25.0
MS
F
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2016 Industrial Performance
The Pistons of the U.S. industrial engine
Rank MarketsRecessionary
2008-2010
Expansion
2011-2016
1 Inland Empire 7,607,093 94,759,223
2 Chicago -22,309,349 83,347,357
3 Dallas/Ft. Worth 2,962,888 70,756,426
4 Atlanta 7,262,608 60,319,162
5 PA I-81/I-78 Corridor 10,153,291 54,572,822
6 Central New Jersey -5,118,967 39,463,722
7 Phoenix -244,262 39,093,911
8 Houston 176,076 36,067,254
9 Los Angeles -34,371,295 31,844,287
10 Indianapolis 13,988,987 27,269,539
11 Philadelphia -2,090,745 29,669,222
12 Cincinnati 1,110,435 24,313,248
13 Nashville -4,917,825 24,307,103
14 Memphis 1,361,364 22,702,878
15 Detroit -3,851,095 19,674,105
16 Denver 3,165,751 19,259,395
17 Kansas City -1,415,858 19,000,351
18 East Bay/Oakland -6,560,335 16,939,151
19 Louisville 5,732,067 15,892,966
20 Northern New Jersey -16,758,281 13,925,722
28 straight quarters
of occupancy gains
Coming off the
strongest 3-year
gains on record
Vacancy is at its
lowest level in 30
years
All segments of
commercial real
estate are growing
Auto-related
manufacturing and
distribution is part
of the story
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2016 Industrial Performance
Tight market: vacancy rates remain lower than last cycle
0%
2%
4%
6%
8%
10%
12%
14% 4Q 2016 Vacancy Prior Cycle Lows (2002-2007)
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Manufacturing Snapshot
Growing states
-20
-15
-10
-5
0
5
10
15
20
25
0
5
10
15
20
25
30
35
Gro
wth
in
Ma
nu
fac
turi
ng
GS
P (
20
10
-20
16
)
% o
f S
tate
GD
P
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Vacancy Rates
Atlanta, GA
10.7%2011 Q4
8.6%2016 Q3
Chicago, IL
9.8%2011 Q4
6.1%2016 Q3
Dallas, TX
12.1%2011 Q4
6.6%2016 Q3
Los Angeles,CA
4.9%2011 Q4
1.3%2016 Q3
InlandEmpire, CA
8.0%2011 Q4
4.7%2016 Q3
OrangeCounty, CA
9.6%2011 Q4
4.3%2016 Q3
New Jersey,Central
9.5%2011 Q4
5.9%2016 Q3
New Jersey,Northern
6.3%2011 Q4
2.2%2016 Q3
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Asking Rents
Atlanta, GA
$3.742011 Q4
$4.17 2016 Q3
Chicago, IL
$4.012011 Q4
$4.79 2016 Q3
Dallas, TX
$4.072011 Q4
$4.89 2016 Q3
Los Angeles, CA
$6.222011 Q4
$8.79 2016 Q3
InlandEmpire, CA
$4.332011 Q4
$6.58 2016 Q3
OrangeCounty, CA
$5.352011 Q4
$7.18 2016 Q3
New Jersey,Central
$5.982011 Q4
$7.71 2016 Q3
New Jersey,Northern
$7.632011 Q4
$10.91 2016 Q3
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Everything is Different │ Different is Great for Industrial
Eight New Challenges Driving Prices and Absorption
Industrial Is the
New Black.
When Does this “Cycle” End?
Forecasting is Flawed.
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Different Means New Building Types
Two Factors Driving the Business into New Buildings
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The “Sea of Change” in Cities...Here to Stay?
Household Migration….Enabled by Technology & Prosperity
• MW, parts of NE, “Old south” populations declining
• What happens in the next 5 years?
• What does a recession do?
2015: Total Urban Population Growth, 1.06%, Total Suburban Population Growth, 1.00%
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What does this mean for my community?
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Time is Money!
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What Can I do as an Economic Developer?
What are my tools?
What is my ROI advantage?
How do I compare to my neighbors?
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What is in the Future?
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Changing Industrial Landscape
What users are looking for
• Large auto parking areas and more trailer storage
• Increasing clear heights
» 32’ clear under 300K
» 36’ clear over 300K-400K
» 40’ more commonplace (eCommerce)
• Proximity to parcel hubs
• Higher amperage (e.g., 8000) with access to more
• AC for mezzanine due to higher headcounts
• Increase air exchanges
• Greater site security (e.g., fencing, gates, etc.)
• Better traffic circulation
» Two ingress/egress options
» More onsite queuing
» Separated car and trailer traffic (ring roads)
» Access to a controlled (traffic light intersection)
right off site
• Specific and wider column spacing: 50x60 and 56x56
MOST REQUESTED FEATURES
• Ultra-smooth floors for wire guided systems
• LED lighting (instead of T-5/T-8) and motion sensors
• ESFR
• Deeper truck courts (135’ to 200’)
• Full dock packages (lights, levelers and locks)
» 35-40K lb. locks
» 7x8 levelers – preferably hydraulic
• Sustainable designs but not necessarily LEED
• Avoid internal roof drains
• Flow-through (even if one side isn’t used) for greater
flexibility
• Large speed bays (70’-80’)
• Infill locations are looking for:
» 30’ clear heights | flow through | 100-200K
• Full concrete courts
• Thicker floors to accommodate MHE infrastructure
• Knock out panels on endcaps
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My community is not big enough for that…
What do I look for?
What is my communities value proposition?
What industry clusters do we have?
Do we have rail, a port, interstates, an airport?
Do we have a building? Do we have shovel ready sites?
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KEEPCALM
AND
GOGET ‘EM
Now I know what the future holdsWhere I stack upTime to go get ‘em!
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How Do I Execute My Plan?
• Understand my existing companies supply chain!
• Know, ask them what they need to grow
• Understand my targeted industries – update them
• Understand my labor market – Tech Schools – College & Universities – Existing Workforce – Plant Closures
• Get people and companies to see my community
o Tell my story. Be proud. Brag
o Talk about the good and the bad
o Develop relationships with decision makers.
o Make sure the right people are telling the story!
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Q& A
Thank You!
Brad Migdal
Senior Managing Director
Business Incentives Practice
312 775 2679