CoStar Industrial Statistics. F i r s t Q u a r t e r Reno/Sparks Industrial Market

Transcription

1 CoStar Industrial Statistics F i r s t Q u a r t e r

2 First Quarter 2018 Reno/Sparks Table of Contents Table of Contents A Methodology B Terms & Definitions C Market Highlights & Overview CoStar Markets Inventory & Development Analysis Inventory & Development Analysis Select Top Under Construction Properties Select Top Deliveries Figures at a Glance Figures at a Glance by Building Type & Market Historical Figures at a Glance Leasing Activity Analysis Select Top Lease Transactions Analysis of Individual CoStar Submarket Clusters Airport Market Carson City County Market Central Reno Market Churchill County Market Douglas County Market Fernley Market Incline Village Market N Outlying Washoe Cty Market North Valleys Market S Lyon County Market S Outlying Washoe Cty Market South Reno Market Sparks Market Storey County Market West Reno Market 2018 CoStar Group, Inc. CoStar Industrial Statistics A

3 Reno/Sparks First Quarter 2018 Methodology The CoStar Industrial Statistics calculates Industrial statistics using CoStar Group's base of existing, under construction and under renovation Industrial buildings in each given metropolitan area. All Industrial building types are included, including warehouse, flex / research & development, distribution, manufacturing, industrial showroom, and service buildings, in both single-tenant and multi-tenant buildings, including owner-occupied buildings. CoStar Group's global database includes approximately 119 billion square feet of coverage in 5.4 million properties. All rental rates reported in the CoStar Industrial Report are calculated using the quoted rental rate for each property. For information on subscribing to CoStar s other products and services, please contact us at COSTAR, or visit our web site at Copyright 2018 CoStar Group, Inc. All Rights Reserved. Although CoStar makes efforts to ensure the accuracy and reliability of the information contained herein, CoStar makes no guarantee, representation or warranty regarding the quality, accuracy, timeliness or completeness of the information. The publication is provided as is and CoStar expressly disclaims any guarantees, representations or warranties of any kind, including those of MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CoStar Group, Inc L ST NW Washington, DC (800) NASDAQ: CSGP B CoStar Industrial Statistics 2018 CoStar Group, Inc.

4 First Quarter 2018 Reno/Sparks Terms & Definitions Availability Rate: The ratio of available space to total rentable space, calculated by dividing the total available square feet by the total rentable square feet. Available Space: The total amount of space that is currently being marketed as available for lease in a given time period. It includes any space that is available, regardless of whether the space is vacant, occupied, available for sublease, or available at a future date. Build-to-Suit: A term describing a particular property, developed specifically for a certain tenant to occupy, with structural features, systems, or improvement work designed specifically for the needs of that tenant. A build-to-suit can be leased or owned by the tenant. In a leased build-to-suit, a tenant will usually have a long term lease on the space. Buyer: The individual, group, company, or entity that has purchased a commercial real estate asset. Cap Rate: Short for capitalization rate. The Cap Rate is a calculation that reflects the relationship between one year s net operating income and the current market value of a particular property. The Cap Rate is calculated by dividing the annual net operating income by the sales price (or asking sales price). CBD: Abbreviation for Central Business District. (See also: Central Business District) Central Business District: The designations of Central Business District (CBD) and Suburban refer to a particular geographic area within a metropolitan statistical area (MSA) describing the level of real estate development found there. The CBD is characterized by a high density, well organized core within the largest city of a given MSA. Class A: A classification used to describe buildings that generally qualify as extremely desirable investment-grade properties and command the highest rents or sale prices compared to other buildings in the same market. Such buildings are well located and provide efficient tenant layouts as well as high quality, and in some buildings, one-ofa-kind floor plans. They can be an architectural or historical landmark designed by prominent architects. These buildings contain a modern mechanical system, and have above-average maintenance and management as well as the best quality materials and workmanship in their trim and interior fittings. They are generally the most attractive and eagerly sought by investors willing to pay a premium for quality. Class B: A classification used to describe buildings that generally qualify as a more speculative investment, and as such, command lower rents or sale prices compared to Class A properties. Such buildings offer utilitarian space without special attractions, and have ordinary design, if new or fairly new; good to excellent design if an older non-landmark building. These buildings typically have average to good maintenance, management and tenants. They are less appealing to tenants than Class A properties, and may be deficient in a number of respects including floor plans, condition and facilities. They lack prestige and must depend chiefly on a lower price to attract tenants and investors. Class C: A classification used to describe buildings that generally qualify as no-frills, older buildings that offer basic space and command lower rents or sale prices compared to other buildings in the same market. Such buildings typically have below-average maintenance and management, and could have mixed or low tenant prestige, inferior elevators, and/or mechanical/electrical systems. These buildings lack prestige and must depend chiefly on a lower price to attract tenants and investors. Construction Starts: Buildings that began construction during a specific period of time. (See also: Deliveries) Contiguous Blocks of Space: Space within a building that is, or is able to be joined together into a single contiguous space. Deliveries: Buildings that complete construction during a specified period of time. In order for space to be considered delivered, a certificate of occupancy must have been issued for the property. Delivery Date: The date a building completes construction and receives a certificate of occupancy. Developer: The company, entity or individual that transforms raw land to improved property by use of labor, capital and entrepreneurial efforts. Direct Space: Space that is being offered for lease directly from the landlord or owner of a building, as opposed to space being offered in a building by another tenant (or broker of a tenant) trying to sublet a space that has already been leased. : The square footage of buildings that have received a certificate of occupancy and are able to be occupied by tenants. It does not include space in buildings that are either planned, under construction or under renovation. Flex Building: A type of building designed to be versatile, which may be used in combination with office (corporate headquarters), research and development, quasi-retail sales, and including but not limited to industrial, warehouse, and distribution uses. A typical flex building will be one or two stories with at least half of the rentable area being used as office space, have ceiling heights of 16 feet or less, and have some type of drive-in door, even though the door may be glassed in or sealed off. Full Service Rental Rate: Rental rates that include all operating expenses such as utilities, electricity, janitorial services, taxes and insurance. Gross Absorption: The total change in occupied space over a given period of time, counting space that is occupied but not space that is vacated by tenants. Gross absorption differs from leasing Activity, which is the sum of all space leased over a certain period of time. Unless otherwise noted Gross Absorption includes direct and sublease space. Growth in Inventory: The change in size of the existing square footage in a given area over a given period of time, generally due to the construction of new buildings. Industrial Building: A type of building adapted for such uses as the assemblage, processing, and/or manufacturing of products from raw materials or fabricated parts. Additional uses include warehousing, distribution, and maintenance facilities. The primary purpose of the space is for storing, producing, assembling, or distributing product. Landlord Rep: (Landlord Representative) In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the owner/landlord is referred to as the Landlord Rep. Leased Space: All the space that has a financial lease obligation. It includes all leased space, regardless of whether the space is currently occupied by a tenant. Leased space also includes space being offered for sublease. Leasing Activity: The volume of square footage that is committed to and signed under a lease obligation for a specific building or market in a given period of time. It includes direct leases, subleases and renewals of existing leases. It also includes any pre-leasing activity in planned, under construction, or under renovation buildings. Market: Geographic boundaries that serve to delineate core areas that are competitive with each other and constitute a generally accepted primary competitive set of areas. Markets are building-type specific, and are non-overlapping contiguous geographic designations having a cumulative sum that matches the boundaries of the entire Region (See also: Region). Markets can be further subdivided into Submarkets. (See also: Submarkets) Multi-Tenant: Buildings that house more than one tenant at a given time. Usually, multi-tenant buildings were designed and built to accommodate many different floor plans and designs for different 2018 CoStar Group, Inc. CoStar Industrial Statistics C

5 Reno/Sparks First Quarter 2018 tenant needs. (See also: Tenancy). Net Absorption: The net change in occupied space over a given period of time. Unless otherwise noted Net Absorption includes direct and sublease space. Net Rental Rate: A rental rate that excludes certain expenses that a tenant could incur in occupying office space. Such expenses are expected to be paid directly by the tenant and may include janitorial costs, electricity, utilities, taxes, insurance and other related costs. New Space: Sometimes called first generation space, refers to space that has never been occupied and/or leased by a tenant. Occupied Space: Space that is physically occupied by a tenant. It does not include leased space that is not currently occupied by a tenant. Office Building: A type of commercial building used exclusively or primarily for office use (business), as opposed to manufacturing, warehousing, or other uses. Office buildings may sometimes have other associated uses within part of the building, i.e., retail sales, financial, or restaurant, usually on the ground floor. Owner: The company, entity, or individual that holds title on a given building or property. Planned/Proposed: The status of a building that has been announced for future development but not yet started construction. Preleased Space: The amount of space in a building that has been leased prior to its construction completion date, or certificate of occupancy date. Price/SF: Calculated by dividing the price of a building (either sales price or asking sales price) by the Rentable Building Area (RBA). Property Manager: The company and/or person responsible for the day-to-day operations of a building, such as cleaning, trash removal, etc. The property manager also makes sure that the various systems within the building, such as the elevators, HVAC, and electrical systems, are functioning properly. Quoted Rental Rate: The asking rate per square foot for a particular building or unit of space by a broker or property owner. Quoted rental rates may differ from the actual rates paid by tenants following the negotiation of all terms and conditions in a specific lease. RBA: Abbreviation for Rentable Building Area. (See also: Rentable Building Area) Region: Core areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Regions are further divided into market areas, called Markets. (See also: Markets) Relet Space: Sometimes called second generation or direct space, refers to existing space that has previously been occupied by another tenant. Rentable Building Area: (RBA) The total square footage of a building that can be occupied by, or assigned to a tenant for the purpose of determining a tenant s rental obligation. Generally RBA includes a percentage of common areas including all hallways, main lobbies, bathrooms, and telephone closets. Rental Rates: The annual costs of occupancy for a particular space quoted on a per square foot basis. Sales Price: The total dollar amount paid for a particular property at a particular point in time. Sales Volume: The sum of sales prices for a given group of buildings in a given time period. Seller: The individual, group, company, or entity that sells a particular commercial real estate asset. SF: Abbreviation for Square Feet. Single-Tenant: Buildings that are occupied, or intended to be occupied by a single tenant. (See also: Build-to-suit and Tenancy) Sublease Space: Space that has been leased by a tenant and is being offered for lease back to the market by the tenant with the lease obligation. Sublease space is sometimes referred to as sublet space. Submarkets: Specific geographic boundaries that serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted primary competitive set, or peer group. Submarkets are building type specific (office, industrial, retail, etc.), with distinct boundaries dependent on different factors relevant to each building type. Submarkets are non-overlapping, contiguous geographic designations having a cumulative sum that matches the boundaries of the Market they are located within (See also: Market). Suburban: The Suburban and Central Business District (CBD) designations refer to a particular geographic area within a metropolitan statistical area (MSA). Suburban is defined as including all office inventory not located in the CBD. (See also: CBD) Tenancy: A term used to indicate whether or not a building is occupied by multiple tenants (See also: Multi-tenant) or a single tenant. (See also: Single-tenant) Tenant Rep: Tenant Rep stands for Tenant Representative. In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the tenant is referred to as a Tenant Rep. Time On Market: A measure of how long a currently available space has been marketed for lease, regardless of whether it is vacant or occupied. Under Construction: Buildings in a state of construction, up until they receive their certificate of occupancy. In order for CoStar to consider a building under construction, the site must have a concrete foundation in place. Abbreviated UC. Rate: A measurement expressed as a percentage of the total amount of physically vacant space divided by the total amount of existing inventory. Under construction space generally is not included in vacancy calculations. Vacant Space: Space that is not currently occupied by a tenant, regardless of any lease obligation that may be on the space. Vacant space could be space that is either available or not available. For example, sublease space that is currently being paid for by a tenant but not occupied by that tenant, would be considered vacant space. Likewise, space that has been leased but not yet occupied because of finish work being done, would also be considered vacant space. Weighted Average Rental Rate: Rental rates that are calculated by factoring in, or weighting, the square footage associated with each particular rental rate. This has the effect of causing rental rates on larger spaces to affect the average more than that of smaller spaces. The weighted average rental rate is calculated by taking the ratio of the square footage associated with the rental rate on each individual available space to the square footage associated with rental rates on all available spaces, multiplying the rental rate by that ratio, and then adding together all the resulting numbers. Unless specifically specified otherwise, rental rate averages include both Direct and Sublet available spaces. Year Built: The year in which a building completed construction and was issued a certificate of occupancy. YTD: Abbreviation for Year-to-Date. Describes statistics that are cumulative from the beginning of a calendar year through whatever time period is being studied. D CoStar Industrial Statistics 2018 CoStar Group, Inc.

6 Overview First Quarter 2018 Reno/Sparks Reno/Sparks s Decreases to 6.5% Net Absorption Positive 496,119 SF in the Quarter The Reno/Sparks Industrial market ended the first quarter 2018 with a vacancy rate of 6.5%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 496,119 square feet in the first quarter. Vacant sublease space decreased in the quarter, ending the quarter at 1,125,259 square feet. Rental rates ended the first quarter at $4.64, an increase over the previous quarter. A total of two buildings delivered to the market in the quarter totaling 146,871 square feet, with 5,448,264 square feet still under construction at the end of the quarter. Absorption Net absorption for the overall Reno/Sparks Industrial market was positive 496,119 square feet in the first quarter That compares to positive 1,182,772 square feet in the fourth quarter 2017, positive 853,192 square feet in the third quarter 2017, and positive 1,495,272 square feet in the second quarter The Flex building market recorded net absorption of negative (26,897) square feet in the first quarter 2018, compared to positive 45,727 square feet in the fourth quarter 2017, positive 48,885 in the third quarter 2017, and negative (32,459) in the second quarter The Warehouse building market recorded net absorption of positive 523,016 square feet in the first quarter 2018 compared to positive 1,137,045 square feet in the fourth quarter 2017, positive 804,307 in the third quarter 2017, and positive 1,527,731 in the second quarter The Industrial vacancy rate in the Reno/Sparks market area decreased to 6.5% at the end of the first quarter The vacancy rate was 6.9% at the end of the fourth quarter 2017, 8.0% at the end of the third quarter 2017, and 8.7% at the end of the second quarter Flex projects reported a vacancy rate of 4.5% at the end of the first quarter 2018, 4.2% at the end of the fourth quarter 2017, 4.8% at the end of the third quarter 2017, and 5.3% at the end of the second quarter Warehouse projects reported a vacancy rate of 6.7% at the end of the first quarter 2018, 7.1% at the end of fourth quarter 2017, 8.4% at the end of the third quarter 2017, and 9.0% at the end of the second quarter Largest Lease Signings The largest lease signings occurring in 2018 included: the 190,871-square-foot lease signed by The Boys Nevada LLC at 9460 N Virginia St in the North Valleys market; the 38,576- square-foot deal signed by Dal-Tile Distributions Inc. at 855 Sandhill Rd in the South Reno market; and the 33,250-squarefoot lease signed by Crystal Creek Logistics at 9250 Red Rock Rd in the North Valleys market. Sublease The amount of vacant sublease space in the Reno/Sparks market decreased to 1,125,259 square feet by the end of the first quarter 2018, from 2,567,087 square feet at the end of the fourth quarter There was 2,335,267 square feet vacant at the end of the third quarter 2017 and 2,145,546 square feet at the end of the second quarter Rates by Building Type % Flex Warehouse Total Market 14% 12% Rate 10% 8% 6% 4% 2% 0% q q q q q q q q q 2018 CoStar Group, Inc. CoStar Industrial Statistics 1

7 Reno/Sparks First Quarter 2018 Overview Reno/Sparks s Flex projects reported vacant sublease space of 40,367 square feet at the end of first quarter 2018, up from the 7,319 square feet reported at the end of the fourth quarter There were 3,572 square feet of sublease space vacant at the end of the third quarter 2017, and 14,249 square feet at the end of the second quarter Warehouse projects reported decreased vacant sublease space from the fourth quarter 2017 to the first quarter Sublease vacancy went from 2,559,768 square feet to 1,084,892 square feet during that time. There was 2,331,695 square feet at the end of the third quarter 2017, and 2,131,297 square feet at the end of the second quarter Rental Rates The average quoted asking rental rate for available Industrial space was $4.64 per square foot per year at the end of the first quarter 2018 in the Reno/Sparks market area. This represented a 3.8% increase in quoted rental rates from the end of the fourth quarter 2017, when rents were reported at $4.47 per square foot. The average quoted rate within the Flex sector was $9.73 per square foot at the end of the first quarter 2018, while Warehouse rates stood at $4.41. At the end of the fourth quarter 2017, Flex rates were $9.02 per square foot, and Warehouse rates were $4.28. Deliveries and Construction During the first quarter 2018, two buildings totaling 146,871 square feet were completed in the Reno/Sparks market area. This compares to one building totaling 9,920 square feet that were completed in the fourth quarter 2017, nothing completed in the third quarter 2017, and 1,425,783 square feet in four buildings completed in the second quarter There were 5,448,264 square feet of Industrial space under construction at the end of the first quarter Some of the notable 2018 deliveries include: 925 North Hills Blvd, an 84,996-square-foot facility that delivered in first quarter 2018 and is now 0% occupied, and 945 N Hills Blvd, a 61,875-square-foot building that delivered in first quarter 2018 and is now 100% occupied. The largest projects underway at the end of first quarter 2018 were the second phase of the Tesla Gigafactory at 2641 Portofino Dr, a 3,800,000-square-foot building with 100% of its space pre-leased, and 9550 N Virginia St, an 802,113-squarefoot facility that is 0% pre-leased. Inventory Total Industrial inventory in the Reno/Sparks market area amounted to 101,760,906 square feet in 2,074 buildings as of the end of the first quarter The Flex sector consisted of 9,009,968 square feet in 379 projects. The Warehouse sector consisted of 92,750,938 square feet in 1,695 buildings. Within the Industrial market there were 143 owner-occupied buildings accounting for 14,647,865 square feet of Industrial space. Reports compiled by: Scott Stephenson, Research Manager U.S. Comparison Past 7 Quarters 12.0% Reno/Sparks United States 1 Rate 8.0% 6.0% 4.0% 2.0% q 2 CoStar Industrial Statistics 2018 CoStar Group, Inc.

8 Markets First Quarter 2018 Reno/Sparks CoStar Submarkets In analyzing metropolitan areas, CoStar has developed geographic designations to help group properties together, called Markets, Submarket Clusters and Submarkets. Markets are the equivalent of metropolitan areas, or areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Markets are then divided into Submarket Clusters, which are core areas within a metropolitan area that are known to be competitive with each other in terms of attracting and keeping tenants. Markets are then further subdivided into smaller units called Submarkets, which serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted competitive set, or peer group. Submarket Clusters Airport Ind Carson City County Ind Central Reno Ind Churchill County Ind Douglas County Ind Fernley Ind Incline Village Ind N Outlying Washoe Cty Ind North Valleys Ind S Lyon County Ind S Outlying Washoe Cty Ind South Reno Ind Sparks Ind Storey County Ind West Reno Ind 2018 CoStar Group, Inc. CoStar Industrial Statistics 3

9 Reno/Sparks First Quarter 2018 Inventory & development Historical Deliveries Deliveries Average Delivered SF Millions of SF * Future deliveries based on current under construction buildings. Construction Activity Markets Ranked by Under Construction RBA Under Construction Inventory Average Bldg Size Market # Bldgs Total RBA Preleased SF Preleased % All Existing U/C Storey County Ind 1 3,800,000 3,800, ,820 3,800,000 North Valleys Ind 2 1,155, , % 93, ,535 South Reno Ind 2 322,975 92, % 60, ,487 Sparks Ind 2 143, , % 42,170 71,609 Central Reno Ind 1 27,000 27, ,158 27,000 West Reno Ind ,285 0 Carson City County Ind ,933 0 Airport Ind ,765 0 S Lyon County Ind ,992 0 Incline Village Ind ,702 0 All Other ,842 0 Totals 8 5,448,264 4,408, % 49, ,033 Recent Deliveries Leased & Un-Leased SF in Deliveries Since 2014 Future Deliveries Preleased & Un-Leased SF in Properties Scheduled to Deliver 7.0 Leased Un-Leased 4,000 Preleased Un-Leased 6.0 3,500 Millions of SF Thousands of SF 3,000 2,500 2,000 1, , q q 4 CoStar Industrial Statistics 2018 CoStar Group, Inc.

10 Inventory & development First Quarter 2018 Reno/Sparks Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction Construction Starts 3.5 Deliveries Millions of SF (0.5) (0.1) q q q q Recent Deliveries by Project Size Breakdown of Year-to-Date Development Based on RBA of Project Building Size # Bldgs RBA SF Leased % Leased Avg Rate Single-Tenant Multi-Tenant < 50,000 SF $ ,000 SF - 99,999 SF 2 146,871 61, % $ , ,000 SF - 249,999 SF $ ,000 SF - 499,999 SF $ 0 0 >= 500,000 SF $ 0 0 Recent Development by Tenancy Comparison Based on RBA Developed for Single & Multi-Tenant Use Based on Total RBA 2018 Deliveries Currently Under Construction By Building Type By Tenancy Type 100% 0% 72% 28% 91% 9% 43% 57% Multi Single Multi Single Flex Warehouse Multi Single 2018 CoStar Group, Inc. CoStar Industrial Statistics 5

11 Reno/Sparks First Quarter 2018 Inventory & development 6 CoStar Industrial Statistics 2018 CoStar Group, Inc.

12 Figures at a Glance First Quarter 2018 Reno/Sparks Flex Market Statistics First Quarter 2018 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Ind 88 2,614, , , % 20, $10.62 Carson City County Ind ,519 4,191 4, % $5.62 Central Reno Ind ,503 98,532 98, % (9,092) 0 0 $14.05 Churchill County Ind 1 11,312 11,312 11, (6,712) 0 0 $ Douglas County Ind ,641 21,000 21, % (4,170) 0 0 $6.45 Fernley Ind 1 20, $ Incline Village Ind 3 35, $ N Outlying Washoe Cty Ind 1 20, $ North Valleys Ind , , $6.78 S Lyon County Ind 2 12, , $ S Outlying Washoe Cty Ind $ South Reno Ind 54 2,284,414 26,334 46, % (26,805) 0 0 $11.20 Sparks Ind 137 2,667,744 89, , % (21,765) 0 0 $8.68 Storey County Ind 1 13, $ West Reno Ind 11 81, $8.40 Totals 379 9,009, , , % (26,897) 0 0 $9.73 Warehouse Market Statistics First Quarter 2018 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Ind 135 6,475, , , % (61,644) 0 0 $5.03 Carson City County Ind 150 3,387, , , % (42,142) 0 0 $5.61 Central Reno Ind 186 2,440,256 72,822 72, % 3, ,000 $9.66 Churchill County Ind 2 9, $6.72 Douglas County Ind 66 1,866,166 16,687 16, % 49, $7.62 Fernley Ind 44 4,335, , , % (14,540) 0 0 $3.74 Incline Village Ind 3 40, $ N Outlying Washoe Cty Ind 15 1,335, $7.32 North Valleys Ind ,910, ,417 1,040, % 338, ,871 1,155,070 $3.98 S Lyon County Ind 119 2,285, , , % (169,819) 0 0 $4.96 S Outlying Washoe Cty Ind 10 1,497, $4.80 South Reno Ind 106 7,349, , , % (110,836) 0 322,975 $5.81 Sparks Ind ,525,990 2,645,229 2,739, , ,219 $4.22 Storey County Ind 67 14,389, , , % 79, ,800,000 $4.33 West Reno Ind , , % (2,000) 0 0 $8.27 Totals 1,695 92,750,938 5,146,622 6,231, % 523, ,871 5,448,264 $4.41 Total Industrial Market Statistics First Quarter 2018 YTD Net YTD Under Quoted Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Airport Ind 223 9,090, , , % (41,057) 0 0 $6.05 Carson City County Ind 176 3,860, , , % (42,142) 0 0 $5.61 Central Reno Ind 213 2,802, , , % (5,364) 0 27,000 $10.10 Churchill County Ind 3 20,514 11,312 11, % (6,712) 0 0 $6.72 Douglas County Ind 78 2,168,807 37,687 37, % 45, $7.01 Fernley Ind 45 4,356, , , % (14,540) 0 0 $3.74 Incline Village Ind 6 76, $ N Outlying Washoe Cty Ind 16 1,356, $7.32 North Valleys Ind ,019, ,417 1,040, % 347, ,871 1,155,070 $3.99 S Lyon County Ind 121 2,298, , , % (157,399) 0 0 $4.96 S Outlying Washoe Cty Ind 10 1,497, $4.80 South Reno Ind 160 9,634, , , % (137,641) 0 322,975 $6.68 Sparks Ind ,193,734 2,734,535 2,847, % 431, ,219 $4.39 Storey County Ind 68 14,403, , , % 79, ,800,000 $4.33 West Reno Ind , , % (2,000) 0 0 $8.28 Totals 2, ,760,906 5,515,985 6,641, % 496, ,871 5,448,264 $ CoStar Group, Inc. CoStar Industrial Statistics 7

13 Reno/Sparks First Quarter 2018 Figures at a Glance 8 CoStar Industrial Statistics 2018 CoStar Group, Inc.

14 Leasing Activity First Quarter 2018 Reno/Sparks Historical Rental Rates Based on Quoted Rental Rates $12.00 Flex Warehouse Total Market $1 $8.00 $6.00 $4.00 $2.00 $ q q q q q by Available Space Type by Building Type Percent of All Vacant Space in Direct vs. Sublet Percent of All Vacant Space by Building Type Reno/Sparks United States Reno/Sparks United States 17% 4% 6% 14% 83% 96% 94% 86% Direct Sublet Direct Sublet Flex Warehouse Flex Warehouse U.S. Rental Rate Comparison Based on Average Quoted Rental Rates Future Space Available Space Scheduled to be Available for Occupancy* $7.00 Reno/Sparks United States $ $5.00 $4.00 $3.00 $2.00 Millions $ $ q q q q * Includes Under Construction Space 2018 CoStar Group, Inc. CoStar Industrial Statistics 9

15 Reno/Sparks First Quarter 2018 Leasing Activity Select Top Industrial Leases Based on Leased Square Footage For Deals Signed in 2018 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company N Virginia St North Valleys Ind 190,871 1st The Boys Nevada LLC N/A Kidder Mathews Sandhill Rd South Reno Ind 38,576 1st Dal-Tile Distributions, Inc. N/A Kidder Mathews Red Rock Rd North Valleys Ind 33,250 1st Crystal Creek Logistics Dickson Commercial Group Kidder Mathews Purina Way Sparks Ind 28,000 1st Ernest Packaging N/A Kidder Mathews E Greg St Sparks Ind 27,807 1st Whole Hog Hospitality Logistics LLC N/A Kidder Mathews Corsair St* Airport Ind 23,026 1st N/A N/A Kidder Mathews Spice Islands Dr Sparks Ind 20,400 1st N/A N/A Kidder Mathews Capital Blvd Airport Ind 17,333 1st N/A N/A Kidder Mathews Spice Islands Dr* Sparks Ind 11,200 1st Sierra Air Freight Express Dickson Commercial Group N/A Us-50 Carson City County Ind 9,750 1st N/A N/A NAI Alliance Carson City Capital Ct Airport Ind 9,600 1st Peterson-Dean, Inc. N/A Kidder Mathews Packer Way Sparks Ind 9,450 1st N/A N/A Kidder Mathews E 4th St Central Reno Ind 9,448 1st Acro Enso N/A Dickson Commercial Group Echo Ave North Valleys Ind 8,800 1st GD International Miller Industrial Properties Miller Industrial Properties Kleppe Ln Sparks Ind 8,000 1st NU-Clean LLC N/A Kidder Mathews Icehouse Sparks Ind 7,920 1st N/A N/A McKenzie Properties Capital Ct Airport Ind 6,720 1st Larry Methvin Installations, Inc. N/A Kidder Mathews Glen Carran Cir Sparks Ind 6,600 1st N/A N/A Avison Young Terabyte Ct South Reno Ind 6,200 1st N/A N/A McIntyre Real Estate Services Terabyte Ct South Reno Ind 6,200 1st N/A N/A McIntyre Real Estate Services Terabyte Ct South Reno Ind 6,200 1st N/A N/A McIntyre Real Estate Services Matley Ln* Airport Ind 5,912 1st Hanger Clinic: Prosthetics & Orthotics N/A Colliers International Spice Islands Dr Sparks Ind 5,750 1st N/A N/A Kidder Mathews Double Diamond Pky South Reno Ind 5,500 1st N/A N/A Gaston & Wilkerson Terabyte Dr South Reno Ind 5,160 1st N/A N/A McIntyre Real Estate Services Terabyte Dr South Reno Ind 5,040 1st N/A N/A The Baker Company Terabyte Dr South Reno Ind 5,040 1st Stanley Steamer Carpet Cleaner N/A McIntyre Real Estate Services Terabyte Dr South Reno Ind 4,920 1st N/A N/A McIntyre Real Estate Services Challenger Way Carson City County Ind 4,500 1st N/A N/A John Uhart Commercial RE E Glendale Ave Sparks Ind 4,200 1st N/A N/A Commercial Project Management Equity Ave Airport Ind 4,200 1st N/A N/A SVN/Gold Dust Commercial Spice Islands Dr Sparks Ind 4,054 1st N/A N/A Kidder Mathews Vine St Central Reno Ind 3,728 1st N/A N/A ArchCrest Commercial Partners Longley Ln South Reno Ind 3,543 1st N/A N/A SVN/Gold Dust Commercial Steneri Way Sparks Ind 3,510 1st The Justin Hope Foundation Chase International,Inc. Metzker Johnson Group Longley Ln South Reno Ind 3,424 1st N/A N/A SVN/Gold Dust Commercial Mill St Airport Ind 3,256 1st N/A N/A Colliers International Spice Islands Dr Sparks Ind 3,230 1st N/A N/A Fleming Properties, Inc US Highway 50 E Carson City County Ind 3,000 1st N/A N/A NAI Alliance Carson City Glendale Ave Sparks Ind 2,958 1st N/A N/A SVN/Gold Dust Commercial * Renewal 10 CoStar Industrial Statistics 2018 CoStar Group, Inc.

16 Deliveries, Absorption & A i r p o r t M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse First Quarter 2018 Reno/Sparks Delivered SF Absorption SF 12.0% (0.050) (0.100) 8.0% 6.0% 4.0% 2.0% Percent Vacant (0.150) q q q q q q q q q q q q q Vacant Space Quoted Rental Rates 0.80 Direct SF Sublet SF $ $ $6.40 $6.20 $6.00 $5.80 $5.60 $5.40 Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 223 9,090, , % (41,057) $ q 223 9,090, , % 234, $ q 223 9,090, , % 43, $ q 223 9,090, , % (21,357) $ q 223 9,090, , % (120,486) $ q 223 9,090, , % (37,381) $ q 223 9,090, , % 88, $ q 223 9,090, , % (42,597) $ q 222 9,081, , % (3,101) ,000 $ q 222 9,081, , % 238, ,000 $ q 222 9,081, , % 170, $ q 222 9,081, , % 9, $ q 222 9,081, , % 156, $ q 222 9,081,487 1,152, % (50,173) $ q 222 9,081,487 1,102, % (27,529) $ q 222 9,081,487 1,074, % 136, $ CoStar Group, Inc. CoStar Industrial Statistics 11

17 Reno/Sparks First Quarter 2018 Deliveries, Absorption & C a r s o n C i t y C o u n t y M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse Delivered SF Absorption SF 18.0% 16.0% 14.0% (0.050) 12.0% 1 8.0% 6.0% 4.0% 2.0% Percent Vacant (0.100) q q q q q q q q q q q q q Vacant Space Quoted Rental Rates 0.40 Direct SF Sublet SF $ $ $5.75 $5.70 $5.65 $5.60 $5.55 $5.50 Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 176 3,860, , % (42,142) $ q 176 3,860, , % 102, , $ q 175 3,850, , % 22, ,920 $ q 175 3,850, , % (19,206) ,920 $ q 175 3,850, , % (10,172) $ q 175 3,850, , % 30, $ q 175 3,850, , % 55, $ q 175 3,850, , % 31, $ q 175 3,850, , % 23, $ q 175 3,850, , % 80, $ q 175 3,850, , % 76, $ q 175 3,850, , % (82,329) $ q 175 3,850, , % 1, $ q 175 3,850, , % 7, $ q 175 3,850, , % 23, $ q 175 3,850, , % (40,290) $ CoStar Industrial Statistics 2018 CoStar Group, Inc.

18 Deliveries, Absorption & C e n t r a l R e n o M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse First Quarter 2018 Reno/Sparks (0.020) (0.040) (0.060) (0.080) (0.100) (0.120) Delivered SF Absorption SF q q q q q q q q q q q q q 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Percent Vacant Vacant Space Quoted Rental Rates 0.18 Direct SF Sublet SF $ $1 $8.00 $6.00 $ $2.00 $ Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 213 2,802, , % (5,364) ,000 $ q 213 2,802, , % (30,894) $ q 213 2,802, , % (755) $ q 213 2,802, , % (22,533) $ q 213 2,802, , % (89,261) $ q 213 2,802,759 22, % 44, $ q 213 2,802,759 67, % 7, $ q 213 2,802,759 74, % (1,863) $ q 213 2,802,759 72, % (15,639) $ q 213 2,802,759 57, % 2, $ q 213 2,802,759 59, % 32, $ q 214 2,935, , % (103,094) $ q 214 2,935, , % (22,059) $ q 215 2,946, , % (18,308) $ q 215 2,946,831 93, % (4,454) $ q 215 2,946,831 88, % 58, $ CoStar Group, Inc. CoStar Industrial Statistics 13

19 Reno/Sparks First Quarter 2018 Deliveries, Absorption & C h u r c h i l l C o u n t y M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse (2) (4) (6) (8) Delivered SF Absorption SF q q q q q q q q q q q q q Percent Vacant Vacant Space Quoted Rental Rates 0.01 Direct SF Sublet SF $8.00 $ $ $5.00 $4.00 $3.00 $2.00 $1.00 $ Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 3 20,514 11, % (6,712) $ q 3 20,514 4, % $ q 3 20,514 4, % $ q 3 20,514 4, % (4,600) $ q 3 20, $ q 3 20, , $ q 3 20,514 9, % $ q 3 20,514 9, % $ q 3 20,514 9, % $ q 3 20,514 9, % $ q 3 20,514 9, % $ q 3 20,514 9, % $ q 3 20,514 9, % (500) $ q 3 20,514 9, % $ q 3 20,514 9, % $ q 3 20,514 9, % (9,200) $ 14 CoStar Industrial Statistics 2018 CoStar Group, Inc.

20 Deliveries, Absorption & D o u g l a s C o u n t y M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse First Quarter 2018 Reno/Sparks (0.020) (0.040) Delivered SF Absorption SF q q q q q q q q q q q q q 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Percent Vacant Vacant Space Quoted Rental Rates 0.18 Direct SF Sublet SF $ $ $ $5.00 $4.00 $3.00 $2.00 $1.00 $ Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 78 2,168,807 37, % 45, $ q 78 2,168,807 83, % 27, $ q 78 2,168, , % 30, $ q 78 2,168, , % 22, , $ q 76 2,164, , % (30,769) ,836 $ q 76 2,164, , % 39, , $ q 75 2,144, , % 2, ,538 $ q 75 2,144, , % ,538 $ q 75 2,144, , % 15, ,538 $ q 75 2,144, , % 65, ,538 $ q 74 2,067, , % (10,005) ,538 $ q 74 2,067, , % (21,285) ,538 $ q 74 2,067, , % 53, ,000 $ q 74 2,067, , % 13, $ q 74 2,067, , % 81, $ q 74 2,067, , % 11, $ CoStar Group, Inc. CoStar Industrial Statistics 15

21 Reno/Sparks First Quarter 2018 Deliveries, Absorption & F e r n l e y M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse Delivered SF Absorption SF % 0 (0.200) (0.400) % 1 Percent Vacant (0.600) 5.0% (0.800) q q q q q q q q q q q q q Vacant Space Quoted Rental Rates 1.40 Direct SF Sublet SF $3.76 $ $ $3.70 $3.68 $3.66 $3.64 $ $ $3.58 $3.56 $3.54 Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 45 4,356, , % (14,540) $ q 45 4,356, , % 244, $ q 45 4,356, , % 330, $ q 45 4,356,210 1,154, % (256,300) $ q 45 4,356, , % 59, $ q 45 4,356, , % 65, , $ q 44 4,226, , % 3, ,000 $ q 44 4,226, , % $ q 44 4,226, , % (115,200) $ q 44 4,226, , % $ q 44 4,226, , % $ q 44 4,226, , % (589,520) $ q 44 4,226, , % $ q 44 4,226, , % (186,675) $ q 44 4,226,210 4, % 183, $ q 44 4,226, , % 22, $ CoStar Industrial Statistics 2018 CoStar Group, Inc.

22 Deliveries, Absorption & I n c l i n e V i l l a g e M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse First Quarter 2018 Reno/Sparks Delivered SF Absorption SF q q q q q q q q q q q q q 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% Percent Vacant Vacant Space Quoted Rental Rates Direct SF Sublet SF $12.00 $1 $8.00 $6.00 $4.00 $2.00 $ Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 6 76, $ q 6 76, $ q 6 76, $ q 6 76, $ q 6 76, $ q 6 76, $ q 6 76, $ q 6 76, % $ q 6 76,210 1, % $ q 6 76,210 1, % $ q 6 76,210 1, % $ q 6 76,210 2, % $ q 6 76,210 2, % $ q 6 76,210 2, % $ q 6 76,210 2, % $ q 6 76,210 2, % $ CoStar Group, Inc. CoStar Industrial Statistics 17

23 Reno/Sparks First Quarter 2018 Deliveries, Absorption & N O u t l y i n g W a s h o e C t y M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse Delivered SF Absorption SF 1.6% 1.4% 1.2% % 0.8% 0.6% 0.4% 0.2% Percent Vacant q q q q q q q q q q q q q Vacant Space Quoted Rental Rates 0.02 Direct SF Sublet SF $ $ $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $ Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 16 1,356, $ q 16 1,356, $ q 16 1,356, , $ q 16 1,356,435 13, % $ q 16 1,356,435 13, % $ q 16 1,356,435 13, % $ q 16 1,356,435 13, % 360, , $ q ,435 13, % ,000 $ q ,435 13, % ,000 $ q ,435 13, % ,000 $ q ,435 13, % $ q ,435 13, % $ q ,435 13, % 360, , $ q ,435 13, % (13,920) ,000 $ q , , ,000 $ q ,435 13, % (13,920) $ CoStar Industrial Statistics 2018 CoStar Group, Inc.

24 Deliveries, Absorption & N o r t h V a l l e y s M a r k e t MARKET HIGHLIGHTS - Flex & Warehouse First Quarter 2018 Reno/Sparks (0.200) Delivered SF Absorption SF q q q q q q q q q q q q q 16.0% 14.0% 12.0% 1 8.0% 6.0% 4.0% 2.0% Percent Vacant Vacant Space Quoted Rental Rates 2.50 Direct SF Sublet SF $4.50 $ $ $4.20 $4.10 $ $3.90 $3.80 $3.70 Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q ,019,307 1,040, % 347, , ,155,070 $ q ,872,436 1,240, % 414, ,828 $ q ,872,436 1,655, % 675, ,957 $ q ,631,936 2,090, % 236, ,457 $ q ,631,936 2,326, % 267, ,500 $ q ,631,936 2,594, % 118, , ,500 $ q ,208,935 2,290, % 417, , ,001 $ q ,486,423 1,985, % 397, ,145,513 $ q ,486,423 2,382, % 27, , ,512 $ q ,578,763 1,502, % (74,978) ,630,172 $ q ,578,763 1,427, % 866, ,396, ,000 $ q ,181, , % 62, ,596,960 $ q ,181, , % 474, , ,596,960 $ q ,557, , % (27,561) ,250,960 $ q ,557, , % 181, ,000 $ q ,557, , % (65,340) ,000 $ CoStar Group, Inc. CoStar Industrial Statistics 19