What role does data play on the site visit?

Cushman & Wakefield

Representative, Phased Project ApproachProject timelines are tailored to meet client priorities and constraints

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Project Goal: Identify and evaluate candidate properties, and perform subsequent due diligence and negotiations to secure optimal property occupancy and business incentives

PHASE 1 PHASE 2

Confirmedsearch area and project

specifications

Step 1: Mobilization, Criteria Development

• Review client studies• Develop location criteria• Confirm search area and

facility specifications

Steps 2-4: Identify Preferred Locations

• Identify optimal labor markets• Freight cost analysis• Solicit property submittals• Compare/select top properties

for visits• Property inspections• Comparative analysis of

retained properties• Incentives feasibility

assessment

4 to 6properties in 2

to 3 states

Part 1: Due Diligence on Finalists

• 10-year cost model for major one-time and recurring items

• 2nd property tour• Field-based labor market

analysis• Site risk assessment• Summary comparison to

pick negotiation finalists

2 to 3 finalist locations in

2 states

Parts 2,3:Incentives and Real Estate Acquisition

• Incentives and real estate RFPs

• Executive tours• Negotiations meetings• Document findings in MOU

and PSA• Final transaction

Site control; documentedincentives

* Timeline depicted does not include time periods possibly required for extended technical due diligence, property-conditions testing, etc.

Cushman & Wakefield

Business-Case Approach Identifies ValueUnlocking value and supporting decision-making

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BUSINESS CASE DEVELOPMENT

PROPERTY INVENTORY

LABOR MARKET COMPARISONS

REAL ESTATE DUE DILIGENCE& NEGOTIATIONS

COMPARATIVE FINANCIALANALYSES

SUPPLY CHAIN ANALYSIS

INCENTIVES DUE DILIGENCE& NEGOTIATIONS

OPTIMALLOCATION

Cushman & Wakefield

UNDERSTANDING PROJCT COSTS

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Site Costs♦Building purchase

♦Site work♦Construction costs

♦Equipment Tax Expense♦Sales and Use

♦ Income♦Real Property

♦Personal Property

Labor Costs♦Workforce research

♦Training♦Direct annual payroll♦ Indirect annual payroll

Transportation Costs

♦ Infrastructure♦ Inbound freight♦Outbound freight

Utilities♦Electricity♦Water

♦Waste Water♦Natural Gas

Cushman & Wakefield 4

Phase 2: Due-Diligence on Finalist Locations

Employer Interviews

Confidential interviews with area companies to explore:• Prevailing wages, pay premiums and

benefits• Labor quality and productivity• Applicant volume and pre-

employment testing standards/failure rates by skill level

• Attrition and absenteeism rates/concerns

• Labor-management relations• Quality of utility service• Satisfaction with economic

development officials and state business climate

Second Round of Property Examinations

A physical examination and review of the proposed real estate to:• Review site specifications and conditions• Discuss real estate prices, terms and

timing (with real estate partner and/or developer)

• Inquiries regarding utility and transportation infrastructure

• Update reported utility service costs and capacities

• Identify potential development restrictions and easements

• Initial cost mitigation strategies and incentive programs to offset CAPEX and OPEX

Meetings with State and Local Officials

Conduct meetings with economic development and other officials to explore:• Zoning and permitting requirements

(land, water, sewer, air, storm water, etc.)

• Recent locations by other companies (expansions, downsizings, events impact success of this project)

• Labor market trends• Proposed infrastructure improvements• Economic development incentive

programs/offers• Community leadership dynamics

• Example In-Person Activities: Labor Market Interviews, Property Examinations, Meetings with Officials/Stakeholders

Deep-dive into Preferred Properties

Cushman & Wakefield

Phase 1, Step 3: Property InspectionsExample Basic Property Profile (i.e., summary of key property attributes from past project)

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SITE

3,000 FEET

Suggested Area

General Property Attributes

SITE ACREAGE: Multiple parcels; 464 acres total SITE DEVELOPMENT STUDIES• No Phase I environmental completed• Geotechnical report completed, 10/21/14• Groundwater monitoring wells installed

throughout property• No archeological study completed• No wetlands delineation study completed

PRICE: $50,000 per acre

DIMENSIONS: Irregular; Approximately 3,000 feet wide in far N. quadrant

FORMER USE: Agricultural

ZONING: Planned industrial

HEIGHT RESTRICTIONS: No limit on building height (but township may be involved in approval process)

Strengths Concerns

• Site is adjacent to two chemical manufacturers (PPG and DuPont) including potential steam supplier (PPG).

• Site sits atop an aquifer that has the potential to support multiple on-site wells production as much as 1,500 gpm.

• Adjacent to rail (though not necessary). Providers: CSX and Norfolk Southern

• Enterprise Zone incentives designation. 15 yr/100% real property tax abatement

• Wastewater facility would need to be expanded to accommodate Hamburger’s needs.

• Phase I study has not been conducted.

• Less than 1 mi to residential (but northern portion is a mile away from closest residential area so could position site more than a mile away from residential area)

Cushman & Wakefield

What does it really cost to put it there?

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We analyze multiple sites using a battery of criteria to find the alternative with the best combination of infrastructure, access, topography and environmental compliance

Wetlands:Is the environmental impact assessment done?

Real Estate:Is the title free of liens, easements and liabilities?

Access:Is the site easily accessible by road and rail?

Zoning:Is the surrounding land use compatible?

Readiness:Does the site require preparation or is it shovel ready?

Cushman & Wakefield

Incentive opportunities continue to be a top client concern on facility location projects.• Incentives present substantial opportunities to improve locations’ competitiveness

Phase 2: Real Estate and Incentives NegotiationsParallel negotiations lower clients’ bottom-line costs in finalist locations.

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Tax Abatements and Credits

Land/Space Cost Reductions

Relocation Assistance

Site Improvements

and Grants Financing Assistance

Recruiting andTraining

AssistanceOptions

Terms &Conditions

DueDiligence

EngineeringInvestigations

FairMarket Value

Price

REAL ESTATEINCENTIVES

Multiple locations are included to sustain competition and manage risk if serious concerns arise at one location

The incentives process for small projects can be formulaic. For major projects it is dynamic and extensive

Cushman & Wakefield

Informed decision-making requires weighing cumulative impacts of investment and operating costs across multiple dimensions: supply chain, labor, utilities, real estate and incentives.

Phase 2: Financial Comparison of FinalistsExample cost model for 700,000 square feet, 330 employee warehouse

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SELECTED ONE-TIME & RECURRING 10-YEAR COSTS (EXCLUDING INCENTIVES) IN THOUSANDS

CALIFORNIA LOCATIONS NEVADA LOCATIONSCordes RanchTracy

Lumbermans Harlan RdLathrop

NorCalLogistics Stockton

Pacific Business Pk

Manteca

CenterPoint IntermodalManteca

RedRockReno

WACCMcCarran

North Hills Logistics

Reno

USA ParkwayMcCarran

ONE-TIME COSTSMachinery & Equipment $11,820 $11,820 $11,820 $11,820 $11,820 $11,820 $11,820 $11,820 $11,820 Sales Tax $1,005 $1,064 $975 $1,005 $1,005 $913 $898 $913 $898 Subtotal, One-Time Costs $12,825 $12,884 $12,795 $12,825 $12,825 $12,733 $12,718 $12,733 $12,718

RECURRING COSTSHuman Resources $140,268 $129,669 $129,669 $129,669 $129,669 $121,918 $131,052 $121,918 $131,052 Utilities (Electric Power) $5,003 $5,003 $5,003 $5,003 $5,003 $2,994 $3,128 $2,994 $3,128 Inbound & Outbound Transportation $196,272 $196,272 $196,272 $196,272 $196,272 $206,908 $206,908 $206,908 $206,908 Real Estate Lease Expense $54,830 $39,746 $39,229 $34,294 $33,676 $30,004 $27,052 $36,927 $32,760 Operating Expenses & Property Tax $8,424 $9,264 $9,211 $9,777 $9,520 $8,949 $7,217 $6,850 $6,914 Subtotal, Recurring Costs $404,797 $379,955 $379,385 $375,016 $374,141 $370,773 $375,357 $375,596 $380,762

Total 10-Year Cost $417,622 $392,839 $392,180 $387,841 $386,966 $383,506 $388,076 $388,330 $393,480 Total 10-Year NPV Cost $200,068 $188,736 $188,313 $186,321 $185,897 $184,456 $186,242 $186,612 $188,891 Amount over Lowest NPV $15,612 $4,280 $3,857 $1,865 $1,441 $0 $1,786 $2,156 $4,435 % Over Lowest NPV 8.5% 2.3% 2.1% 1.0% 0.8% 0.0% 1.0% 1.2% 2.4%

Higher Cost Higher CostLowest Cost CA & NV Properties

Cushman & Wakefield

Supplementary Labor Analysis ExhibitsGeo-Spatial Analysis of Supply and Demand

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Goal: Find optimal combinations of supply and demand

SUPPLYDEMAND

Cushman & Wakefield

Supplementary Labor Analysis ExhibitsStructured interviews to identify compensation, attraction, retention experiences

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• Field-based, primary research consisting of one-on-one interviews with relevant, local employers to validate desktop data and observations

• Provides insights on applicant flow/quality, union activity, wage positioning, bonus/premium pay, progression schedules, benefit package offerings, etc.

• Absenteeism and turnover

• Applicant quality and response

• Geographic labor shed/capture

• Labor relations

• Pay rates including bonus/incentive pay

• Pre-employment testing and failure rates

• Specific recruiting challenges

• Staffing feasibility and timing

• Unique benefit package offerings

• Workers’ compensation claims

• Workweek and shifts

Example Interviewed Employer Compensation Practices

Employer Interview Topics

Cushman & Wakefield

Preparation for Visit

Have relationships with decision makers that can make decisions. Zoning & Planning, Utilities Timelines for development

Perform a SWOT analysis of the sites Understand the Real Estate Engage Owner, Developer and Broker

Understand Existing Workforce Have technical college available Have other employers available

Have a strategy: Know who you are and what you want to be….

Who are you today and what do you want to be when you grow up… What makes you special!

Cushman & Wakefield

Before Client Leaves Ask what else is needed Show them your successes

Show projects in development Companies that have been there 10+ years

Detail your city/state’s economic development plan What type of investments are being made. New regulations or lack thereof

Make a lasting impression Make the site visit memorable

Close

What do I need to do?

www.cushmanwakefield.com

Bradley MigdalSenior Managing DirectorCushman & Wakefield9500 W. Bryn Mawr Ave. Suite 600Rosemont, IL 60018Bradley.Migdal@cushwake.com