CLEVELAND INDUSTRIAL MARKET

RESEARCH 3Q 2018 CLEVELAND INDUSTRIAL MARKET INDUSTRIAL PROPERTIES STILL HOTTEST ASSET IN CLEVELAND The third quarter of 2018 saw the Greater Cleveland industrial market absorb 1,197,172 square feet, bringing year-to-date net absorption to positive 1,227,579 square feet. Overall vacancy remained flat from the second quarter at 5.9%, staying below 6. for the fourth consecutive quarter. The overall market s vacancy has contracted by 270 basis points (2.7%) from 8. over the past five years and by 50 basis points (0.5) from 6. over the past year. CURRENT CONDITIONS Vacancy stayed below 6. for the fourth consecutive quarter; overall asking rental rate dipped slightly Amidst an industrial construction boom, over 1.3 million square feet was delivered in the third quarter The Northeast and Southeast submarkets both accrued a significant amount of positive absorption Despite vacancy holding steady, the overall average asking rental rate decreased to $4.20/SF during third-quarter 2018, down $0.09/SF from the prior quarter. Notably, the overall asking rental rate for the warehouse/distribution segment of the market rose $0.33/SF from last quarter to $3.92/SF, its highest rate since the second quarter of 2004 ($3.96/SF). The Southwest submarket commanded the highest asking rental rate of $5.44/SF, up $0.07/SF from the prior quarter. The Southeast followed with $5.40/SF, a gain of $0.08/SF from last quarter. The Northeast s average asking rental rate gained the most, by $0.87/SF to $5.31/SF. $5 $4 $3 $2 MARKET ANALYSIS and Vacancy 1 1 1 8% The delivery of nearly 1.4 million square feet of new space to the industrial market was the most inventory ever added in one quarter. The second and fourth quarters of 2004 each delivered over 1.0 million square feet in new product, but neither eclipsed the third quarter of 2018. Northeast Submarket Paces Quarter With News and Absorption In the Northeast submarket, Bluestone Business Center 3 s 75,576 square feet came online at 26250 Bluestone Boulevard in Euclid, and Process Technology s new, 40,000-square-foot global headquarters and R&D center opened at 38809 Mentor Avenue in Willoughby. However, the majority of the space delivered came from North Randall s 855,000-square-foot Amazon fulfillment center. Located at 20801 Miles Road, also in the Northeast submarket, this Seefried Industrial Properties-developed project is expected to eventually bring nearly 2,000 Amazon jobs to Northeast Ohio. More than 10,000 tons of structural steel and 60,000 cubic yards of concrete were utilized in the construction of the estimated $177 million multi-level facility. Three expansion-related stories emerged in the Northeast during the third quarter, including the purchase of a former 140,000-square-foot Walmart at 34440 Vine Street in Eastlake by Jakprints, an independent printing company. The company plans to move its headquarters from its current Downtown Cleveland facility at 31333 Chester Avenue. $1 $0 3Q08 3Q09 3Q10 3Q11 3Q12 3Q13 3Q14 3Q15 3Q16 3Q17 3Q18 3 2 1 0-1 Average Vacancy (%) Net Absorption (SF, Millions) -2 3Q08 3Q09 3Q10 3Q11 3Q12 3Q13 3Q14 3Q15 3Q16 3Q17 3Q18 MARKET SUMMARY Current Quarter Prior Quarter Year Ago Period 12 Month Forecast Inventory 285 MSF 284 MSF 290 MSF é Vacancy Rate 5.9% 5.9% 6. ê Quarterly Net Absorption 1,197,172 143,072 (121,976) é Average $4.20 $4.29 $4.34 é Under Construction 2.30 M 3.55 M 806,597 é Deliveries 1.39 M 327,600 0 é NEWMARK KNIGHT FRANK 2018 RESEARCH 1

Farther east, the acquisition of five acres of land by Mar-Bal, Inc. adjacent to its newly opened Painesville operations at 787 Renaissance Parkway set the groundwork for a future 20,000 to 35,000-square-foot facility expansion within the next three years. In late July, Euclid-based Terves Inc. broke ground on a new project that will expand its current 15,000-square-foot foundry facility at 24112 Rockwell Drive by approximately 12,000 square feet. Also of note in the Northeast was Orbis Corporation s consolidation of its two Mentor facilities to 294,060 square feet at 7190 Justin Way. The company moved from over 100,000 square feet at 8100 Tyler Boulevard and another 108,500 square feet at 9050 Tyler Boulevard in September. to the largest amount of industrial inventory ever delivered in one quarter, as Aurora s 409,000-square-foot McMaster Carr facility came online at 1200 South Chillicothe Road. In addition, a long-discussed construction project commenced in the Southeast, as O Reilly Auto Parts broke ground on a $30.0 million, 404,000-square-foot distribution center at 8701 Chamberlin Road within Twinsburg s CornerStone Business Park. One of the quarter s top transactions took place in August, as AIC Ventures purchased Maple Heights Rockside Distribution Center, located at 5801 Lee Road/16625 Granite Road. The 350,592-square-foot property transferred for $19.1 million, or $55/SF. The 400,000-square-foot 30339 Diamond Parkway in Glenwillow sold as the quarter ended to Plymouth Industrial REIT for $27 million, or $65.50/SF. The Northeast submarket s vacancy rate decreased by 40 basis points to 4.8% during the third quarter, after posting 1,168,471 square feet of absorption, the most by any submarket. One noteworthy lease in this submarket was signed by Tuff Shed for 34,714 square feet at 600 Beta Drive in Mayfield Heights. This property is now fully leased and being marketed for sale. Another newsworthy development in the Southeast took place in Solon, as Swagelok announced in September that it will construct a new, $30 to $50 million corporate headquarters and global innovation center at its 29500 Solon Road location. As a result of an incentive package, the 120,000 square feet of new space is expected to begin in 2019 and be completed by the end of 2020. The Northwest submarket continued to claim the market s tightest vacancy at 2., although it increased 40 basis points from last quarter because of 108,227 square feet of negative absorption. The average asking rental rate in the Northwest submarket was in the middle of the pack of all submarkets at $4.55/SF, a decrease by $0.49/SF from second-quarter 2018. The Southwest submarket posted the second-lowest vacancy of any submarket at 3., a decrease of 30 basis points from last quarter as a result of 78,793 square feet of positive absorption. Two significant developments occurred in the Southwest in the third quarter. The city of North Royalton awarded Royalton Architectural Fabrication, Inc. a 15-year property tax break for the company to remain in town rather than reinvest in another community. Under this agreement, the company will move its existing workers from its current location at 13155 York-Delta Drive to a new, 36,000-square-foot warehouse and office located right behind the company s current building. New construction began in September on the estimated $3.2 million project, which is expected to double the company s workforce within two years. The second development took place in Medina, where the Orlando-based plastic resin distributor Ravago Americas, LLC began construction on a 506,000-square-foot distribution center at 5192 Lake Road after the city annexed 32 acres of land from Lafayette Township. This Geis-constructed property could create as many as 70 new jobs at this warehouse/assembly operation, for which Ravago could be issued up to $50 million in bonds. The Southeast recorded the second most absorption of any submarket with 528,783 square feet of positive absorption for the quarter. Vacancy here dropped by 30 basis points from second-quarter 2018 to 4.5%. One significant new product delivery in the Southeast contributed The South Central submarket was near the bottom of the pack with an average asking rental rate of $3.61/SF. Additionally, its vacancy came in at 8.8%, up 30 basis points from last quarter and the highest of any submarket, due in part to 124,053 square feet in negative absorption. A bright spot in this submarket was the awarding of an eight-year, 1.527% tax credit to RhinoSystems, the manufacturer of a nasal irrigator designed to relieve sinus congestion and allergies. The company is relocating from approximately 25,000 square feet of space at 800 Resource Drive in Brooklyn Heights to approximately 65,000 square feet at the former American Greetings headquarters campus, located at 10601 Memphis Avenue in Brooklyn. The Downtown submarket once again had the lowest asking rental rate at $3.16/SF, which remained flat from last quarter. Its vacancy was the secondhighest of all submarkets at 8., an increase of 50 basis points from last quarter. Downtown also had most negative absorption, as 346,595 square feet of space was returned to the submarket. Two new developments offer reasons for optimism about the future of the Downtown submarket. The first came by way of an economic development deal between the Cleveland City Council and Weston Inc. The developer unveiled plans to construct a two-phase, multi-building industrial complex on 22 acres of land at 10615 Madison Avenue and West 110th Street that was once home to Midland Steel. The plans include a 162,000-square-foot building and two 108,300-square-foot buildings that could vary in final size, depending on prospective tenant specifications. The second announcement concerned the transfer of the 200,000-square-foot building located at 12735 Kirby Avenue in Cleveland s Glenville neighborhood to Level 5 Global International Holdings Corp, a manufacturer of hemp-based products, for an undisclosed price. The facility is being renovated to open in 2019. NEWMARK KNIGHT FRANK 2018 RESEARCH 2

SELECT LEASE TRANSACTIONS Tenant Building Submarket Type Square Feet Signum 32000 Aurora Rd. Southeast Renewal 125,324 FedEx 5313 Majestic Pkwy. Southeast Renewal 82,269 RhinoSystems 10601 Memphis Ave. South Central New ~65,000 Tuff Shed 600 Beta Dr. Northeast New 34,714 Technoform Glass Insulation 1755 Enterprise Pkwy. Southeast Sublease 26,845 SELECT SALES TRANSACTIONS Building Submarket Sale Price Price/SF Square Feet 4300 and 4500 Crane Center Dr. Southeast $6,000,000 $77.78 77,136 30339 Diamond Pkwy. Southeast $27,000,000 $65.50 400,000 5801 Lee Rd./16625 Granite Rd. Southeast $19,135,000 $54.58 350,592 2950 Westway Dr. Southwest $1,462,500 $52.42 27,900 24811 Rockwell Dr. Northeast $1,200,000 $52.40 22,900 SUBMARKET STATISTICS Inventory Under Construction Vacancy Rate Qtr Absorption YTD Absorption WH/Dist R&D/Flex Average Downtown 74,450,625 0 8. (346,595) (647,796) $2.49 $5.29 $3.16 Northeast 55,964,852 780,000 4.8% 1,168,471 1,313,840 $5.62 $8.40 $5.31 Northwest 23,047,622 103,527 2. (108,227) (83,753) $5.41 $8.17 $4.55 South Central 36,133,325 34,000 8.8% (124,053) 176,730 $3.95 $7.48 $3.61 Southeast 67,467,529 994,250 4.5% 528,783 424,949 $5.13 $7.00 $5.40 Southwest 28,620,215 391,296 3. 78,793 43,609 $4.57 $7.89 $5.42 Market 285,684,168 2,303,073 5.9% 1,197,172 1,227,579 $3.92 $7.47 $4.20 NEWMARK KNIGHT FRANK 2018 RESEARCH 3

ECONOMIC CONDITIONS The Greater Cleveland economy added more jobs at a near-historic pace throughout third-quarter 2018, as total payroll employment grew in July by 2. year-over-year and in August by 2.5% year-over-year. The August number ties the highest year-over-year increase in Greater Cleveland since June 2012. Overall payroll employment for the United States also grew in May, by 1.7% year-over-year. Most industry sectors reported employment growth from August 2017 to August 2018, including mining, logging and construction (3.); manufacturing (3.3%); trade/transportation/utilities (2.8%); professional and business services (4.); education and health services (1.9%); leisure and hospitality (5.); other services (0.03%); and government (0.1%). nonfarm employment also saw an overall increase year-over-year of 2.5%. Only two sectors reported a decline in employment growth during this time, information (negative 1.) and financial activities (negative 0.1%). EMPLOYMENT BY INDUSTRY Cleveland-Elyria-Mentor 9.9% 3.7% 19. 12.9% 3. 14. 11.5% 17.3% 1.3% 6.3% Mining, Logging, and Construction Manufacturing Trade, Transportation, and Utilities Information Financial Activities Professional and Business Services Education and Health Services Leisure and Hospitality Other Services Government UNEMPLOYMENT RATE PAYROLL EMPLOYMENT Seasonally Adjusted 1 8% Nonfarm, Not Seasonally Adjusted, 12-Month % Change 3% 1% -1% - United States United States Cleveland-Elyria-Mentor CONSUMER PRICE INDEX (CPI) All Items, 12-Month % Change, Not Seasonally Adjusted EMPLOYMENT GROWTH BY INDUSTRY Cleveland-Elyria-Mentor, August 2018*, 12-Month % Change, Seasonally Adjusted - - United States Cleveland-Elyria-Mentor Nonfarm Mining/Logging/Construction Manufacturing Trade/Transportation/Utilities Information Financial Activities Prof & Bus Services Education and Health Services Leisure and Hospitality Other Services Government -5.0-3.0-1.0 1.0 3.0 5.0 (*preliminary) NEWMARK KNIGHT FRANK 2018 RESEARCH 4

CLEVELAND INDUSTRIAL SUBMARKETS MATTHEW ORGOVAN Research and Marketing Manager 216.453.3027 morgovan@ngkf.com NATHANIEL HOOVER Research Coordinator 216.453.3052 Nathaniel.Hoover@ngkf.com Newmark Knight Frank has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our data, there may be adjustments in historical statistics including availability, asking rents, absorption and effective rents. Newmark Knight Frank Research Reports are available at www.ngkf.com/research All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark Knight Frank (NKF) has not verified any such information, and the same constitutes the statements and representations only of the source thereof, and not of NKF. Any recipient of this publication should independently verify such information and all other information that may be material to any decision that recipient may make in response to this publication, and should consult with professionals of the recipient s choice with regard to all aspects of that decision, including its legal, financial, and tax aspects and implications. Any recipient of this publication may not, without the prior written approval of NGKF, distribute, disseminate, publish, transmit, copy, broadcast, upload, download, or in any other way reproduce this publication or any of the information it contains. NEWMARK KNIGHT FRANK 2018 RESEARCH 5