www.colliers.com/RDU

market outlookRaleigh

2013 Q1 | industrial

maRket inDicatoRs

Rental Rates PeRcent Vacancy

Q4 2012

Projected Q1 2013

Vacancy

net absoRPtion

constRUction

Rental Rate

$0.00$2.00$4.00$6.00$8.00

$10.00$12.00$14.00$16.00$18.00

Flex

Warehouse

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

Flex

Warehouse

Economic Overview

the triangle has become a center for economic growth. raleigh-Cary metro ranked #3 in Bloomberg’s list of Boomtowns based on the region’s GDP growth and population growth of 1.49% and 11.06% respectively. In January, Forbes named the raleigh-Cary metro the 4th Fastest Growing City in america. Forbes took population growth into account as well as job growth, unemployment levels, gross metro product and median salary. the triangle added 13,819 jobs in the 12-month period ending in march 2013 bringing unemployment to 6.9%; this is above the seven-year average of 10,749 jobs.

Market Overview

at the end of the first quarter, of the 30.48 million square feet of industrial space in the triangle, 1.8 million square feet were vacant (14.2%). 38% of the industrial market is comprised of flex space and 62% is warehouse space. With negative net absorption of 55,243 square feet at the end of the first quarter, the warehouse market continues to lag due to its surplus of inventory, whereas demand appears to outpace supply in the flex market. Flex vacancy has dwindled to 14.7%, the lowest vacancy reported in this market since the 3rd quarter of 2009. Positive net absorption totaling 85,660 square feet was reported in the triangle region’s flex market.

the I-40/rtP submarket is responsible for 57,664 square feet of the triangle Flex market’s positive net absorption; most of the first quarter’s flex tenant activity occurred in this submarket as well. Some of the more notable moves include tecan, a biopharmaceutical oem who relocated their sales center out of 43,537 square feet at 4022 Stirrup Creek Drive in Durham and into 59,000 square feet at Globe Center Industrial Park in morrisville. Bayer CropScience moved into 81,956 square feet at keystone tech Park and Champagne logistics expanded into 64,000 square feet at keystone Industrial Park.

In the warehouse sector, South Wake had the highest negative net demand at 39,996 square feet. the biggest contractions occurred in this submarket at 800 management Way when PepsiCola moved. the largest block of available warehouse space is Park lincoln located at 2728 Capital Blvd. (397,265 SF), which was recently vacated by the Body Shop (40,000 SF). the largest lease renewal occurred in the I-40/rtP submarket with medline Industries, a medical supply company. the scope of their renewal was 324,456 SF – they renewed their current lease of 172,536 square feet and expanded by an additional 152,000 square feet.

the triangle Offers a Competitive Edge as a science and technology Hub

toP 10 changes in occUPancy

bUilDing sUbmaRket tenant sF

new occupancieskeystone tech Park I-40/rtP (Flex) Bayer CropScience 81,956

Parker lincoln Northeast Wake (Warehouse) Web Don 58,816

lincoln Park North (7) Northeast Wake (Warehouse) aBP Digital Bulk tV 51,240

keystone Park tech IV I-40/rtP (Flex) Intersil Design 25,038

lincoln Park North (9) Northeast Wake (Warehouse) excel moving & Storage 24,400

lincoln Park east (2) South Wake (Warehouse) New england retail express 23,000

Vacated spaceskeystone Park Warehouse D

I-40/rtP (Warehouse) Heavy metal Supply 24,000

Parker lincoln Northeast Wake (Warehouse) the Body Shop 40,000

800 management Way South Wake (Warehouse) Pepsi Cola 40,000

triangle Business Center (Bldg. 3)

I-40/rtP (Flex) tecan 40,000

Warehouse - 1Q 2013

Submarket Number of Building

Inventory Vacancy % Net absorbtion

Completions under Const. Proposed avg. rents

Cary 4 131,677 11.39% 0 0 0 0 $8.24

Durham 13 1,565,022 2.64% 0 0 0 255,000 $3.78

I-40/rtP 61 9,129,619 9.75% -3,775 0 0 141,144 $4.81

Northeast Wake 60 4,341,760 26.77% -11,472 0 0 0 $5.33

Northwest Wake 9 648,450 0.00% 0 0 0 0 $4.72

orange County 1 260,000 7.89% 0 0 0 0 $6.50

South Wake 41 2,798,019 17.99% -39,996 0 0 128,000 $4.58

West Wake 1 71,389 0.00% 0 0 0 0 $4.50

Flex - 1Q 2013

Submarket No. of Bldgs. Inventory Vacancy % Net abs. Completions under Const. Proposed avg. rents

Cary 25 903,150 11.77% 14,279 0 0 0 $11.14

Durham 6 437,631 35.73% 0 0 0 0 $15.82

I-40/rtP 76 5,740,980 15.96% 57,664 0 0 205,426 $10.61

Northeast Wake 69 2,762,255 12.53% 11,110 0 0 18,000 $9.71

Northwest Wake 6 218,140 4.57% 0 0 0 0 $6.30

orange County 2 43,000 70.93% 0 0 0 31,000 $9.50

South Wake 20 948,823 10.16% 4,000 0 0 0 $8.52

West Wake 23 483,925 5.79% -1,393 0 0 0 $9.77

Construction

Construction of new warehouse and flex space has been scarce since no new industrial space has been delivered in the triangle region since 2009. at the end of the first quarter, there were no completions and no new construction was reported. the triangle certainly experienced a shortage of flex space, but demand for new warehouse space has exceeded supply in the market as well.

most of the proposed development projects are located in Durham (250,000 SF proposed) and I-40/rtP (346,570 SF proposed). the Butterball headquarters on one Butterball lane in Garner sold during the first quarter. the buyers plan to develop a park setting in the 13 acres of land with the existing 26,000 SF building and build an additional 2 facilities (20,000 SF each) on the remaining land.

With 49% of the triangle’s inventory, i-40/rtP Continues to drive the Market

the research triangle Park is one of the oldest and largest science parks in North america and contains a large distribution of the triangle’s industrial inventory. Because of this, the vitality of the biotechnology industry remains a key element in the triangle’s industrial real estate market. there are 1,500 Biotech companies in the triangle; 113 have production or manufacturing facilities located in the region and this number is expected to grow. key Drivers in the industry are r&D funding, investor confidence, and access to a highly skilled recruitment pool. uS r&D expenditure increased by 3.1% since 2008 and is estimated to grow at a rate of 2.2% to a forecasted value of $308.2 billion in 2018. (Data is sourced by the National Science Foundation and published by IBISWorld.) Public and private r&D investment in the triangle continues to flourish. recently, the NC Biotechnology Center distributed $2.9 million in loans and grants to recipients such as uNC-Chapel Hill, Duke university medical Center, G1 therapeutics and Qualiber in Chapel Hill, aerial Biopharma in morrisville, and Galaxy Diagnostics in rtP. Investor confidence continues to grow because of the triangle’s relatively low cost of living and rich talent pool. Dennis Dougherty, founding partner of Intersouth Partners, one of the largest venture capital firms in the Southeast, recently commented on the area’s “entrepreneurial spirit and growth”. Intersouth Partners manages $780 million in seven venture capital limited partnerships focused on technology and life science, and the firm is based in the Historic Fire Station of Durham, NC.

P. 2 | collieRs inteRnational

market report | Q1 2013 | iNDUSTRiAl | RAleigh

www.colliers.com/marketnamewww.colliers.com/RDU

who is collieRs inteRnational?

Colliers International is the leader in global real estate services, defined by our spirit of enterprise. through a culture of service excellence and a shared sense of initiative, we have integrated the resources of real estate specialists worldwide to accelerate the success of our clients.

the foundation of our service is the strength and depth of our specialists. our clients depend on our years of direct experience in the local market. Whether you are a local firm or a global organization, our industrial specialists are ideal business partners to provide creative, strategic solutions for all your real estate needs.

why engage oUR seRVices?

our industrial professionals give you the expertise to navigate complex sales or leasing transactions and make strategically sound, long-term decisions. Colliers is uniquely positioned to help you find innovative and practical ways of achieving a business advantage from your commercial real estate transactions. Your real estate decisions today will affect your company’s bottom line long into the future. each mile that separates your facility from a supplier or customer creates a ripple effect in time and cost. that’s why location is critical.

Combining the knowledge of locally-based analysts with the shared expertise and resources of a global platform, your Colliers professional can help you understand and take advantage of current market trends.

caPabilities

> tenant representation

> Sale vs. lease analysis

> lease Negotiation & renewals

> lease administration

> Site Selection

> Build-to-Suit

> reposition/retrofit

> Construction management

> Property Due Diligence

> Highest & Best use Studies

> appraisal/Valuation

> relocation

> Consolidation

> logistics Consulting

> trend analysis

> Sale/leaseback

P. 16 Industrial Leasing Guide Colliers International

Colliers International | Raleigh-Durham 702 Oberlin Road, Suite 400Raleigh, NC 27605TEL 919 832 1110www.colliers.com/rdu

DennIs eatonVice Presidentdennis.eaton@colliers.com, 919 582 3111

482 offices in 62 countries • $2 billion in revenue • $71 billion total transaction Value• 1.12 billion square feet managed• 13,500 Professionals

accelerating success.

this market report is a research document of Colliers International. Information herein has been deemed reliable and no representation is made as to the accuracy thereof. Colliers International Inc., and certain of its subsidiaries, is an independently owned and operated business and a member firm of Colliers International Property Consultants, an affiliation of independents companies with over 482 offices throughout more than 62 countries worldwide. Sources include: State of North Carolina Department of Commerce, CoStar, loopNet, the karNeS report, the triangle Business Journal, real Capital analytics and the research triangle Park Foundation of North Carolina.

BaxteR M. WalkeR, III,Senior Vice Presidentbaxter.walker@colliers.com, 919 582 3112

lee HolDeRSenior Vice Presidentlee.holder@colliers.com, 919 582 3129

market report | Q1 2013 | industrial | raleigh