WCAIIndustrial Real Estate Update

Brian S. Parrish, MBA

Vice PresidentNovember 11, 2010

Presentation Overview

• Noteworthy Transactions

• Updates

• New Construction

• Proposed Construction

• Analyzing Flex & Warehouse Today

• 2011 Forecast & Beyond

Noteworthy TransactionsOakwood Crossings Business Center

100 W. Oakwood Drive, Oak Creek

• Building Size: 139,726 Sq. Ft.• Sale Price: $8,664,000 ($61.96/SF) on

6/29/10• CAP Rate: Mid 8%’s• Seller: Opus North Corp.• Buyer: CenterPoint Properties Trust

Inc.• Tenant: Yaskawa Electric

Noteworthy Transactions529 N. River Road, West Bend

• Building Size: 105,000 Sq. Ft.• Sale Price: $1,750,000 ($16.67/SF) on 9/2010• Seller: Milliken Millwork• Buyer: Heartland Woodcraft• Largest transaction in Washington County to date• Vacancy rate dropped from 7.9% (Q2) to 7.3%

(Q3)• Another large deal is pending

• Building Size: 323,610 Sq. Ft.• Seller: HSA Commercial Real Estate• Buyer (user): Seda International Packaging Group

SpA of Naples, Italy• Sale Date: November 2010 (Price N/A)• 189 new jobs • Packaging for ice cream, beverages and fast food

containers.

Noteworthy TransactionsSeda Purchase in Mount Pleasant

• 85 Acres• Demolition almost complete

UpdatesDelphi, Oak Creek

• 2,200,000 SF on 86 acres• $3.5 mm acquisition & $34.6 mm redevelopment• To be demolished – 60 acre business park and

retail/multi-family

• Talgo leasing 133,600 Sq. Ft., $2.59/SF, 2 years with extensions

Updates“Century City”

Tower Automotive, City of Milwaukee

OTHER UPDATES

• Post Office in Oak Creek

• Oak Creek Water Park

• Chrysler Engine Plant, Kenosha– 109 Acres, 1,900,000 SF, 10-100 years old– Vacant & available – City could take over in 2011– Not part of industrial property base

Updates

• 1,100,000 Sq. Ft. on 20 Acres• Occupancy Q2 2010• Corporate relocation from Illinois

New ConstructionUline Corporate Campus

Pleasant Prairie, WI

• Building Size: 83,000 Sq. Ft.• CAP Rate: 9 cap-ish• Landlord: CenterPoint Properties Trust

Inc.• Tenant: Crothall Laundry Services Inc.• Delivery Date: Late February 2011• Occupancy: Late May 2011• Notes: Relocation from South Milwaukee

New ConstructionBuild-To-Suit, Oak Creek

• Occupancy Q3 2010• 81,000 Sq. Ft. Office Building• 175,480 Sq. Ft. Warehouse + 135,000 Sq. Ft. Expansion.• Irgens Development developed and leased office building.• Former space is vacant in Glendale.

New ConstructionActuant Campus

Westbrook Corporate Center, 124th Street & Westbrook Crossing, Menomonee Falls

• Construction finishing Q4 2010

• 114,000 Sq. Ft. on 8 Acres

• $17.5 million factory

• Developer: MSI General

• Makes generators for wind turbines

• Only 12 acres remain in the Industrial Center

New ConstructionIngeteam

Menomonee Valley, Milwaukee, WI

• 100,000 Sq. Ft. production area• Expansion underway• Original 135,000 Sq. Ft. built in 2006

New ConstructionPalermo Villa Inc.

Menomonee Valley, Milwaukee, WI

$5.20

$4.73

$4.22

$4.00

$4.20

$4.40

$4.60

$4.80

$5.00

$5.20

$5.40

2008Average

2009Average

2010Average

Dickman

Analyzing Flex & WarehouseDickman Lease Comps Vs. CoStar Asking Lease Rates

Assumptions: 3 years, Excluding Outliers, NNN’s $1.50 when leases were gross.

Trend: More transactions, more concessions, lower rental rates.Renewals will be a key factor.

$5.20

$4.73

$4.22

$4.35

$4.25 $4.23$4.00

$4.20

$4.40

$4.60

$4.80

$5.00

$5.20

$5.40

2008Average

2009Average

2010Average

Dickman

Costar

Analyzing Flex & Warehouse

• Landlord/Buyer should be examined:

– Ability to consummate lease transactions

– Concessions – free rent, TI’s

– Structure of deal – Cash flow

• So, what is the CAP rate?

Korpacz SE Wisconsin

Institutional 8.38 % 8.0 – 10.0 %

Non-Institutional 10.63 % 10.0 – 12.0+ %

Market Considerations

• TIFs & Development– Liberty Corporate Preserve (Oak Creek) received

construction extension from 2011 to 2014.

– West Bend – facilitating a purchase

• Receiverships

• Refinancing difficulties

• Short-sales

• Financing– Creative Sales: Seller notes, land contracts, trades– Continued difficulty in 2011

2011 Forecast & Beyond• Uncertainty from elections & high-speed rail will

settle Example: “The announcement won't mean immediate layoffs,

but casts a pall over the future of the [Talgo] plant on the former Tower Automotive property.” –Talgo Rep.

• Speculative development will remain flat– Upcoming large deals will cause supply shortfall in some areas

of Racine & Kenosha Counties

• Positive Absorption will occur

• Vacancy Rate: Will remain stable during 2011 – 9% benchmark.

2011 Forecast & Beyond

• Sales: Increasing volume of sales, prices will slowly rise from depressed levels in 2011.– Users– Bargain-hunters

• Leases: Rates will slowly rise from depressed levels in 2011– Landlord concessions to remain

Contact Information

Brian S. Parrish, MBAVice President

The Dickman Company/CORFAC Internationalhttp://www.dickmanrealestate.com

http://www.linkedin.com/in/briansparrish 626 E. Wisconsin Avenue, Suite 1020

Milwaukee, WI 53202(414) 278-6887