Top 10 things you need to know about the industrial market Adam Matson, Vice President - Industrial

Interesting Market Conditions #10 BrandXceligentCO-Star Universe313,000,000288,800,000 Vacant35,000,00021,600,000 < 10,000sf vacant7,600,000 (21%) 8,800,000 (40%) < 20,000sf vacant11,000,000 (31%) 12,400,000 (57%) > 100,000sf vacant - Racine County630,000 (2%) 400,000 (2%) > 100,000sf vacant - Kenosha County1,200,000 (3.4%) 800,000 (3.7%)

# 9 Speculative Development o Interstate Partners - approved for 5 buildings in Pewaukee o Majestic - planning 600,000sf; 1,200,000sf in Kenosha County o Zilber - 90,000sf in New Berlin o Wanguard - $13,000,000 project in West Allis on 9 acres

Why do we have a shortage of spec development? Costs200,000sf building 40,000sf building Construction Cost$7,000,000 ($35.00/SF) $2,400,000 ($60.00/SF) Land Size (acres)104 Land Cost$1,000,000$400,000 Project Cost$8,000,000$2,400,000 Yearly Income ($4.25/SF)$850,000$170, % Cap Rate Value$8,950,000$1,800,000

# 8 Short Term Leases o Stabilize cash flow for Owner o Cover immediate needs for Tenants o Reduced expenses for Tenants

# 7 Tenant Incentives are on the Decrease o It is no longer a Tenant’s world Landlords have decreased incentives for tenants this past year such as rent abatement

# 6 Elimination of Our Industrial Market o Mejier o HSA – The Mayfair Collection o Woodman’s – Waukesha o Wisconsin Athletic Club/Froedtert Health

# 5 Movers & Shakers… o Amazon o Kohl’s o United Natural Foods o Rust-o-leum o Kenall Manufacturing Company 1,000,000sf 1,100 employees $7,000,000 in tax credits

# 5 Movers & Shakers… o Amazon o Kohl’s o United Natural Foods o Rust-o-leum o Kenall Manufacturing Company 300,000sf Information Technology Center Buying former Pro-Health Care Center for a health and wellness facility Giving back 104 acres and $2,000,000 in incentives!

# 5 Movers & Shakers… o Amazon o Kohl’s o United Natural Foods o Rust-o-leum o Kenall Manufacturing Company 425,000sf $32,000,000

# 5 Movers & Shakers… o Amazon o Kohl’s o United Natural Foods o Rust-o-leum o Kenall Manufacturing Company 250,000sf addition $7,000, new jobs!

# 5 Movers & Shakers… o Amazon o Kohl’s o United Natural Foods o Rust-o-leum o Kenall Manufacturing Company 350,000sf Relocating from Gurnee, IL 400 jobs immediately!

# 4 Big Comeback… o Airport area submarket has significantly rebounded after years of stagnant absorption.

# 3 Hot Markets… o Germantown o Kenosha

# 2 What did we get right/wrong about 2013? o Sale values o Lease value o Lease term o Velocity

# Expectations… o 2013 is ending on a high note!

Thank you! Any questions?