Cushman & Wakefield, Inc. 500 East Pratt Street, Suite 500 Baltimore, MD 21202 www.cushmanwakefield.com/knowledge

For more information, contact: Paula Munger, Managing Director +1 (703) 847 2785 paula.munger@cushwake.com

The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2014 Cushman & Wakefield, Inc. All rights reserved.

1

ECONOMIC OVERVIEW As of March 2014, Maryland employment strengthened with the addition of 5,150 jobs from the year before, while the preliminary unemployment rate continued its descent to 5.6%, the lowest it’s been in five years.

Baltimore’s February unemployment rate, at 6.0%, declined 1.0 percentage points (pp) from the year before. Tax credit initiatives geared towards the development of disadvantaged areas, partnerships with Maryland Port Administration and the Maryland Transit Authority, helped lure big-box retailers like Amazon to the State, which is expected to add over 1,000 jobs in 2014. The trade, transportation, warehousing & utilities sector led in monthly job gains totaling 2,200 jobs.

LEASING ACTIVITY DOWN BUT DEMAND IS NOT OUT At 1.9 million square feet (msf), leasing activity in the Baltimore industrial market was down 14.1% from the year before. This came as no surprise since 2013 exhibited exceedingly strong market fundamentals and unprecedented demand. With that being said, first quarter activity was still higher than 2011 and 2012 first quarter activity by 35.8% and 25.0%, respectively. Growth in consumer spending was apparent as the wholesale and retail trade sectors accounted for the top three deals executed. Coca Cola Refreshments executed the largest deal at 7210 Preston Gateway Drive totaling 276,260 square feet (sf), while clothier Jos. A Bank executed two deals, a 149,410-sf renewal at 1332 Londontown Boulevard and an 186,687-sf lease at 626 Hanover Pike.

ABSORPTION AND VACANCY Overall net absorption was positive at 672,903 sf as spaces leased in 2013 and the first quarter 2014 began to see tenant move-ins, resulting in a modest overall vacancy rate decline of 0.3 pp from the fourth quarter of 2013 to 7.9% in the first quarter of 2014. Jos. A Bank’s 186,687-sf expansion in Carroll County at 626 Hanover Pike contributed to the largest quarter-over-quarter overall vacancy rate decline of 1.5 pp, in the Beltway Submarket. Other notable tenant occupancies were Last Mile Logistics’ occupancy of 124,000 sf at 1710 Midway Road in Anne Arundel County and Mobern Lighting’s occupancy of 66,467 sf at 8200 Stayton Drive in Howard County, resulting in a 0.8 pp decline in Baltimore-Washington Corridor’s overall vacancy rate from the previous quarter.

OUTLOOK The Baltimore industrial market will continue to show signs of overall improvement throughout the year with leasing activity and direct asking rents holding steady. Once the 3.8 msf of product in the pipeline delivers, the overall vacancy rate will tick up slightly, as 28.5% is projected to deliver vacant. However, the new vacancies should serve as viable options for the tenants circling the supply-constrained market which hasn’t posted an overall vacancy rate as low as 7.9% since prior to the recession.

STATS ON THE GO Q1 2013 Q1 2014

Y-O-Y

CHANGE 12 MONTH FORECAST

Overall Vacancy 9.0% 7.9% -1.1pp

Direct Asking Rents (psf/yr) $5.08 $5.30 4.3%

YTD Leasing Activity (sf) 2,212,731 1,900,151 -14.1%

OVERALL RENTAL VS. VACANCY RATES

OVERALL OCCUPIER ACTIVITY

7.0%

7.5%

8.0%

8.5%

9.0%

9.5%

$4.90

$5.00

$5.10

$5.20

$5.30

$5.40

Q1 13 Q2 13 Q3 13 Q4 13 Q1 14

psf/y

r

OVERALL NET RENTAL RATE OVERALL VACANCY RATE

6.6

5.9

5.5

10.8

1.9

0.2

1.6

1.2

0.9

0.5

0.0 2.0 4.0 6.0 8.0

10.0 12.0

2010 2011 2012 2013 Q1 14

msf

LEASING ACTIVITY USER SALES ACTIVITY

Q1 2014 BALTIMORE, MD

INDUSTRIAL SNAPSHOT

MARKETBEAT

A Cushman & Wakefield Research Publication

Cushman & Wakefield, Inc. 500 East Pratt Street, Suite 500 Baltimore, MD 21202 www.cushmanwakefield.com/knowledge

For more information, contact: Paula Munger, Managing Director +1 (703) 847 2785 paula.munger@cushwake.com

The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2014 Cushman & Wakefield, Inc. All rights reserved.

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MARKET HIGHLIGHTS SIGNIFICANT Q1 2014 LEASE TRANSACTIONS SUBMARKET TENANT PROPERTY TYPE SQUARE FEET

7210 Preston Gateway Drive, Hanover Anne Arundel County Coca Cola Refreshments USA, Inc. Warehouse/Distribution 276,260

626 Hanover Pike, Hampstead Carroll County Jos. A Bank Clothier, Inc. Warehouse/Distribution 186,687

1332 Londontown Boulevard, Eldersburg* Carroll County Jos. A. Bank Clothier, Inc. Warehouse/Distribution 149,410

SIGNIFICANT Q1 2014 SALE TRANSACTIONS SUBMARKET BUYER PURCHASE PRICE / $PSF SQUARE FEET

1801 Clark Road, Havre De Grace Harford County Plastipak Holdings, Inc. $10,800,000/$25 437,564

350 Old Bay Lane, Baltimore Harford County Smucker Natural Foods, Inc. $3,000,000/$17 175,200 7190 Parkway Drive, Hanover Anne Arundel County Terreno Realty Corporation $18,000,000/$115 158,769 SIGNIFICANT Q1 2014 CONSTRUCTION COMPLETIONS SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET

(% LEASED) N/A N/A N/A N/A N/A SIGNIFICANT PROJECTS UNDER CONSTRUCTION SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET

(% LEASED) 2010 Broening Highway, Baltimore Baltimore City Amazon.com, Inc. Q3 2014 1,150,000 (100%)

1467 Perryman Road, Aberdeen Harford County Clorox Manufacturing, Co. Q2 2014 945,720 (100%)

* RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS

BALTIMORE, MD

SSUBMARKET

PROPERTY TYPE

INVENTORY OVERALL VACANCY

RATE

YTD LEASING ACTIVITY

YTD USER SALES

ACTIVITY

UNDER CONSTRUCTION

YTD CONSTRUCTION COMPLETIONS

YTD DIRECT NET

ABSORPTION

YTD OVERALL NET

ABSORPTION

DIRECT WEIGHTED AVERAGE NET RENTAL RATE

Howard County Flex 6,761,557 5.6% 153,137 0 0 0 45,797 49,397 $9.95 W/D 29,298,286 11.9% 317,189 170,690 397,597 0 (26,452) (26,452) $5.17 Anne Arundel County Flex 9,399,446 9.5% 118,643 54,965 0 0 42,528 32,428 $10.86 W/D 20,886,249 7.0% 456,564 0 243,000 0 187,370 187,370 $5.63 Baltimore City/County - Southwest

Flex 3,050,135 14.3% 42,018 0 0 0 80,199 76,599 $7.18

W/D 20,444,680 10.2% 186,363 116,757 0 0 (64,901) (64,901) $4.29 BALTIMORE-WASHINGTON CORRIDOR

Flex 19,211,138 8.9% 313,798 54,965 0 0 168,524 158,424 $9.72

W/D 70,629,215 10.0% 960,116 287,447 640,597 0 96,017 96,017 $5.03 Total 89,840,353 9.5% 1,273,914 342,412 640,597 0 264,541 254,441 $5.65 Harford County Flex 2,204,780 10.7% 11,080 0 0 0 86,665 86,665 $9.86 W/D 18,286,902 3.1% 12,000 175,200 1,600,720 0 (11,900) (11,900) $4.32 Cecil County Flex N/A N/A N/A N/A N/A N/A N/A N/A N/A W/D 9,759,156 3.5% 0 0 0 0 0 0 $2.74 Baltimore County East Flex 4,804,571 9.5% 69,935 0 0 0 59,756 56,898 $8.00 W/D 41,516,862 7.4% 93,013 0 1,599,299 0 (37,298) (37,298) $3.83 I-95 NORTH CORRIDOR

Flex 7,009,351 9.9% 81,015 0 0 0 146,421 143,563 $8.80

W/D 69,562,920 5.7% 105,013 175,200 3,200,019 0 (49,198) (49,198) $3.84 Total 76,572,271 6.0% 186,028 175,200 3,200,019 0 97,223 94,365 $4.22 Baltimore County – North/West

Flex 9,701,807 9.9% 187,560 0 30,120 0 12,137 6,637 $9.10

W/D 8,038,925 5.7% 32,262 0 0 0 74,254 74,254 $7.23 Baltimore City Flex 1,483,889 8.0% 0 0 0 0 (2,551) (2,551) $11.16 W/D 5,873,867 5.7% 31,700 0 0 0 36,854 36,854 $5.74 Carroll County Flex** N/A N/A N/A N/A N/A N/A N/A N/A N/A W/D 7,236,817 4.7% 188,687 0 0 0 208,903 208,903 $4.79 BELTWAY SUBMARKETS

Flex 11,185,696 9.6% 187,560 0 30,120 0 9,586 4,086 $9.47

W/D 21,149,609 5.4% 252,649 0 0 0 320,011 320,011 $6.17 Total 32,335,305 6.8% 440,209 0 30,120 0 329,597 324,097 $7.53 TOTAL FLEX FLEX 37,406,185 9.3% 582,373 54,965 30,120 0 324,531 306,073 $9.44 TOTAL W/D W/D 161,341,744 7.5% 1,317,778 462,647 3,840,616 0 366,830 366,830 $4.62

BALTIMORE TOTAL TOTAL 198,747,929 7.9% 1,900,151 517,612 3,870,736 0 691,361 672,903 $5.30 * RENTAL RATES REFLECT ASKING $PSF/YEAR **FLEX INVENTORY DOES NOT EXIST IN THIS MARKET