Denver Industrial Market Real Estate Stats

The CoStar
Industrial Report
F I R S T Q U A R T E R 2 0 1 1

Denver Industrial Market

FIRST QUARTER 2011 – DENVER


Table of Contents
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A
Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B
Terms & Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C
Market Highlights & Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
CoStar Markets & Submarkets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Employment & Tenant Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Employment & Unemployment Analysis
Tenant Profiles
Inventory & Development Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Construction Activity Map
Inventory & Development Analysis
Select Top Under Construction Properties
Select Top Deliveries
Figures at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Figures at a Glance by Building Type & Market
Figures at a Glance by Building Type & Submarket
Historical Figures at a Glance
Leasing Activity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Leasing Activity Map
Leasing Activity Analysis
Select Top Lease Transactions
Sales Activity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Sales Activity Analysis
Select Top Sales Transactions
Select Same Building Sales
Select Land Sales
Analysis of Individual CoStar Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Aurora Market
Boulder Market
Broomfield Market
Central Market
Clear Creek County Market
East I-70/Montbello Market
Elbert County Market
Fort Collins/Loveland Market
Glendale Market
Longmont Market
North Central Market
North Denver Market
Northeast Denver Market
Northwest Denver Market
Park County Market
Parker/Castle Rock Market
South Central Market
Southeast Denver Market
Southwest Denver Market
Weld County Market
West Denver Market

©2011 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT A

DENVER – FIRST QUARTER 2011


Methodology
The CoStar Industrial Report 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 national database includes approximately
71.7 billion square feet of coverage in 3 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
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© Copyright 2010 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.
1331 L ST NW • Washington, DC USA 20005 • (800) 204-5960 • www.costar.com • NASDAQ: CSGP

B THE COSTAR INDUSTRIAL REPORT ©2011 COSTAR GROUP, INC.



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

©2011 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT C



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

D THE COSTAR INDUSTRIAL REPORT ©2011 COSTAR GROUP, INC.


OVERVIEW

Denver’s Vacancy Decreases to 7.7%
Net Absorption Positive 128,256 SF in the Quarter

T
he Denver Industrial market ended the first quarter 2011 122,696 in the third quarter 2010, and positive 58,406 in the
with a vacancy rate of 7.7%. The vacancy rate was down second quarter 2010.
over the previous quarter, with net absorption totaling The Warehouse building market recorded net absorption of
positive 128,256 square feet in the first quarter. Vacant sublease positive 136,828 square feet in the first quarter 2011 compared to
space decreased in the quarter, ending the quarter at 809,476 positive 238,291 square feet in the fourth quarter 2010, positive
square feet. Rental rates ended the first quarter at $5.91, a 194,583 in the third quarter 2010, and positive 1,738,621 in the
decrease over the previous quarter. A total of two buildings second quarter 2010.
delivered to the market in the quarter totaling 55,113 square feet,
Vacancy
with 103,269 square feet still under construction at the end of
The Industrial vacancy rate in the Denver market area
the quarter.
decreased to 7.7% at the end of the first quarter 2011. The
Absorption vacancy rate was 7.8% at the end of the fourth quarter 2010,
Net absorption for the overall Denver Industrial market 7.9% at the end of the third quarter 2010, and 8.0% at the end
was positive 128,256 square feet in the first quarter 2011. That of the second quarter 2010.
compares to positive 302,913 square feet in the fourth quarter Flex projects reported a vacancy rate of 14.5% at the end
2010, positive 317,279 square feet in the third quarter 2010, and of the first quarter 2011, 14.4% at the end of the fourth quarter
positive 1,797,027 square feet in the second quarter 2010. 2010, 14.6% at the end of the third quarter 2010, and 14.8% at
Tenants moving out of large blocks of space in 2011 include: the end of the second quarter 2010.
PROMOTECH moving out of (130,182) square feet at 1775 Warehouse projects reported a vacancy rate of 6.4% at the
Cherry St, Metalwest Specialty Products moving out of (96,000) end of the first quarter 2011, 6.5% at the end of fourth quarter
square feet at 9101 E 89th Ave, and Gambro Health Care moving 2010, 6.6% at the end of the third quarter 2010, and 6.7% at the
out of (50,000) square feet at 16200 Table Mountain Pky. end of the second quarter 2010.
Tenants moving into large blocks of space in 2011 include:
Largest Lease Signings
Prime Source Building Products moving into 129,362 square
The largest lease signings occurring in 2011 included:
feet at 12950 E 38th Ave, Fresh Pack Produce moving into
the 67,220-square-foot lease signed by Solar Solutions and
97,000 square feet at Colorado Trade Center Dry, and Mohawk
Distribution, LLC at Warehouse Central in the Central market;
Carpet Distribution moving into 52,882 square feet at Majestic
the 38,863-square-foot deal signed by Denco LLC & Bakked
Commercenter - Bldg 3.
LLC at 5155 E 46th Ave in the East I-70/Montbello market; and
The Flex building market recorded net absorption of nega-
the 31,035-square-foot lease signed by Stag at Leyden II in the
tive (8,572) square feet in the first quarter 2011, compared to
East I-70/Montbello market.
positive 64,622 square feet in the fourth quarter 2010, positive

Vacancy Rates by Building Type 1999-2011
Flex Warehouse Total Market
20%

18%

16%

14%
Vacancy Rate

12%

10%

8%

6%

4%

2%

0%
1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010
4q 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q

Source: CoStar Property®

©2011 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 1

Absorption & Deliveries U.S. Vacancy Comparison


OVERVIEW

Sublease Vacancy ing 6,719 square feet completed in the third quarter 2010, and
The amount of vacant sublease space in the Denver market 764,176 square feet in two buildings completed in the second
decreased to 809,476 square feet by the end of the first quarter quarter 2010.
2011, from 839,374 square feet at the end of the fourth quarter There were 103,269 square feet of Industrial space under
2010. There was 943,000 square feet vacant at the end of the construction at the end of the first quarter 2011.
third quarter 2010 and 1,041,706 square feet at the end of the Some of the notable 2011 deliveries include: 3761 Eureka
second quarter 2010. Way, a 32,332-square-foot facility that delivered in first quarter
Denver’s Flex projects reported vacant sublease space of 2011 and is now 100% occupied, and 835 SE Frontage Rd, a
167,746 square feet at the end of first quarter 2011, up from the 22,781-square-foot building that delivered in first quarter 2011
93,133 square feet reported at the end of the fourth quarter 2010. and is now 100% occupied.
There were 139,085 square feet of sublease space vacant at the The largest projects underway at the end of first quarter
end of the third quarter 2010, and 151,912 square feet at the end 2011 were Cummins Rocky Mountain Master Rebuild Center,
of the second quarter 2010. a 78,000-square-foot building with 100% of its space pre-leased,
Warehouse projects reported decreased vacant sublease and 4894 101st Ct, a 32,127-square-foot facility that is 100%
space from the fourth quarter 2010 to the first quarter 2011. pre-leased.
Sublease vacancy went from 746,241 square feet to 641,730
Inventory
square feet during that time. There was 803,915 square feet at
Total Industrial inventory in the Denver market area
999-2011 the end of the third quarter 2010, and 889,794 square feet at the amounted to 278,456,257 square feet in 9,361 buildings as of
end of the second quarter 2010.
Warehouse Total Market the end of the first quarter 2011. The Flex sector consisted of
Rental Rates 45,377,383 square feet in 1,649 projects. The Warehouse sector
The average quoted asking rental rate for available Industrial consisted of 233,078,874 square feet in 7,712 buildings. Within
space was $5.91 per square foot per year at the end of the first the Industrial market there were 1,248 owner-occupied buildings
quarter 2011 in the Denver market area. This represented a 0.5% accounting for 60,859,192 square feet of Industrial space.
decrease in quoted rental rates from the end of the fourth quarter
Sales Activity
2010, when rents were reported at $5.94 per square foot.
Tallying industrial building sales of 15,000 square feet or
The average quoted rate within the Flex sector was $8.97
larger, Denver industrial sales figures fell during the fourth quarter
per square foot at the end of the first quarter 2011, while
2010 in terms of dollar volume compared to the third quarter of
Warehouse rates stood at $4.89. At the end of the fourth quarter
2010.
2010, Flex rates were $9.21 per square foot, and Warehouse rates
In the fourth quarter, 30 industrial transactions closed with a
were $4.84.
total volume of $87,098,949. The 30 buildings totaled 1,881,378
Deliveries and Construction square feet and the average price per square foot equated to
004 2005 2005 During the first quarter2008 2009 two buildings totaling
2006 2006 2007 2007 2008 2011, 2009 2010 2010 $46.30 per square foot. That compares to 33 transactions total-
4q 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q 2q 4q
55,113 square feet were completed in the Denver market area. ing $87,265,400 in the third quarter. The total square footage was
This compares to one building totaling 13,300 square feet that 1,537,081 for an average price per square foot of $56.77.
were completed in the fourth quarter 2010, one building total- Total year-to-date industrial building sales activity in 2010
U.S. Vacancy Comparison is down compared to the previous year. In the twelve months
Past 7 Quarters
of 2010, the market saw 100 industrial sales transactions with a
total volume of $257,509,388. The price per square foot has aver-
Denver United States
12.0%
aged $50.43 this year. In the twelve months of 2009, the market
posted 73 transactions with a total volume of $308,658,500. The
10.0% price per square foot averaged $55.40.
Cap rates have been higher in 2010, averaging 9.52%,
8.0%
compared to the twelve months of last year when they averaged
Vacancy Rate

9.20%.
6.0%
One of the largest transactions that has occurred within the
4.0% last four quarters in the Denver market is the sale of TIAA CREF
in Broomfield. This 92,800-square-foot industrial building sold
2.0% for $12,855,000, or $138.52 per square foot. The property sold
on 8/26/2010, at a 7.34% cap rate.
0.0%
2009 3q 2009 4q 2010 1q 2010 2q 2010 3q 2010 4q 2011 1q

Source: CoStar Property• Reports compiled by: Ethan Reed, CoStar Sr. Research Manager.

2 THE COSTAR INDUSTRIAL REPORT ©2011 COSTAR GROUP, INC.


MARKETS

CoStar Markets & Submarkets
In analyzing metropolitan areas in the U.S., CoStar has developed geographic designations to help group properties together, called
Regions, Markets and Submarkets. Regions 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. Regions are then divided into
Markets, 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.

Markets Submarkets
Aurora Ind Aurora Ind
Boulder Ind Boulder County Ind Boulder Ind
Broomfield Ind Broomfield County Ind
Central Ind Lower Central Ind Mid Central Ind Upper Central Ind
Clear Creek County Ind Clear Creek County Ind
East I-70/Montbello Ind Cent E I-70/Montbello Ind East I-70/270 Ind Quebec St Ind SW DIA/Pena Blvd Ind
Elbert County Ind Elbert County Ind
Fort Collins/Loveland Ind Fort Collins/Loveland Ind
Glendale Ind Glendale Ind
Longmont Ind Longmont Ind
North Central Ind Lower North Central Ind Upper North Central Ind
North Denver Ind North Denver Ind
Northeast Denver Ind Commerce City Ind DIA Ind
Northwest Denver Ind Northwest Denver Ind
Park County Ind Park County Ind
Parker/Castle Rock Ind Parker/Castle Rock Ind
South Central Ind Lower South Central Ind Mid South Central Ind Upper South Central Ind
Southeast Denver Ind Arapahoe Rd Ind Centennial Ind Denver Tech Center Ind East Hampden Ind
Greenwood Village Ind Highlands Ranch Ind Inverness Ind Meridian Ind
Southeast C-470 Ind
Southwest Denver Ind Lakewood Ind Southwest C-470 Ind
Weld County Ind Weld County Ind
West Denver Ind West Denver Ind



EMPLOYMENT AND TENANT

Total Employment by Industry Total Employment Growth
Percent of Total Employment by Industry Total Number of Jobs Added Per Year
Natural Resources & Denver U.S. Average
5% Mining 4.0%
0% 21%
Construction
3.0%
Manufacturing
16% 2.0%
Trade, Transportation &
4% Utilities
Information 1.0%

Percent Growth
Financial Activities 0.0%
8%
4% Professional & Business -1.0%
Services
Education & Health -2.0%
Services
Leisure & Hospitality -3.0%
11%
Other Services
-4.0%
18%
Government
-5.0%
13%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Department of Labor, Bureau of Labor Statistics Source: Department of Labor, Bureau of Labor Statistics

Total Employment Growth Industrial* Employment Growth
Cumulative Growth in Jobs Over the Past 5 Years Number of Industrial* Jobs Added Per Year
Employment Inventory
Denver U.S. Average
Market Growth Growth Difference 3.0%
Atlanta -8.40% 4.00% -12.40% 2.0%

Chicago -4.60% 4.10% -8.70% 1.0%
0.0%
Dallas/Ft Worth 1.10% 7.10% -6.00%
Percent Growth

-1.0%
Denver -4.70% 3.30% -8.00%
-2.0%
Detroit -11.00% 0.80% -11.80%
-3.0%
Houston 2.90% 6.80% -3.90% -4.0%
Inland Empire (California) -10.60% 14.20% -24.80% -5.0%

Los Angeles -7.70% 1.30% -9.00% -6.0%
-7.0%
Northern New Jersey -5.60% 2.30% -7.90%
-8.0%
Pittsburgh -2.80% 1.90% -4.70%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Department of Labor, Bureau of Labor Statistics
Source: Department of Labor, Bureau of Labor Statistics. * Industrial employment is defined as jobs in the
Manufacturing, and Trade, Transportation & Utilities industries

Historical Unemployment Rates
Denver U.S. Average
12.0%

10.0%
Percent Unemployment

8.0%

6.0%

4.0%

2.0%

0.0%
2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010
1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q

Source: Department of Labor, Bureau of Labor Statistics



EMPLOYMENT AND TENANT

Flex Tenants by Size Range Warehouse Tenants by Size Range
Based on Total Number of Tenants Based on Total Number of Tenants

75,000 SF & Up 1.9% 75,000 SF & Up 5.9%

50,000-74,999 SF 1.9% 50,000-74,999 SF 5.2%

25,000-49,999 SF 5.1% 25,000-49,999 SF 11.4%

10,000-24,999 SF 15.7% 10,000-24,999 SF 24.8%

5,000-9,999 SF 18.0% 5,000-9,999 SF 14.3%

2,500-4,999 SF 23.5% 2,500-4,999 SF 14.5%

Up to 2,499 SF 33.9% Up to 2,499 SF 24.0%

0% 5% 10% 15% 20% 25% 30% 35% 40% 0% 5% 10% 15% 20% 25% 30%
Percentage of Tenants Percentage of Tenants

Source: CoStar Tenant® Source: CoStar Tenant®

Flex Tenants by Lease Expiration Warehouse Lease Expiration
Based on Total Square Footage of Tenants Based on Total Square Footage of Tenants

2017 4.6% 2017 2.4%

2016 6.6% 2016 7.0%

2015 14.3% 2015 11.4%

2014 9.2% 2014 11.6%

2013 20.6% 2013 14.8%

2012 17.7% 2012 19.2%

0% 5% 10% 15% 20% 25% 0% 5% 10% 15% 20% 25%
Percentage of Tenants Percentage of Tenants



INVENTORY & DEVELOPMENT

Construction Highlights in Select CoStar Markets
Color Coded by Under Construction Square Footage as a Percentage of Existing Inventory

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Historical Deliveries 1982 - 2011
Deliveries Average Delivered SF
10.0
8.9
8.7
9.0
8.1
7.8 7.7
8.0 7.5 7.3 7.3
7.0
6.2
Millions of SF

6.0 5.4 5.4
5.0 5.1
5.0 4.5
4.2
3.9 3.8
4.0 3.5 3.5 3.5
2.9 2.9
3.0 2.4
2.0
1.7 1.7
2.0
0.9 0.7 0.8
1.0
0.1
0.0
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: CoStar Property® * 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
Northeast Denver Ind 1 78,000 78,000 100.0% 26,252 78,000
South Central Ind 1 10,875 0 0.0% 17,101 10,875
Fort Collins/Loveland Ind 1 8,130 8,130 100.0% 23,918 8,130
West Denver Ind 1 6,264 6,264 100.0% 37,829 6,264
Weld County Ind 0 0 0 0.0% 28,400 0
Northwest Denver Ind 0 0 0 0.0% 28,640 0
Aurora Ind 0 0 0 0.0% 23,821 0
Glendale Ind 0 0 0 0.0% 18,897 0
North Central Ind 0 0 0 0.0% 25,203 0
Southeast Denver Ind 0 0 0 0.0% 32,606 0
All Other 0 0 0 0.0% 35,451 0
Totals 4 103,269 92,394 89.5% 29,746 25,817


Recent Deliveries Future Deliveries
Leased & Un-Leased SF in Deliveries Since 2007 Preleased & Un-Leased SF in Properties Scheduled to Deliver
Leased Un-Leased Preleased Un-Leased
4.5 100

4.0 90

3.5 80

70
3.0 T
Thousands of SF
Millions of SF

60
2.5
50
2.0
40
1.5
30
1.0
20
0.5 10

0.0 0
2007 2008 2009 2010 2011 2011 2q 2012 1q

Source: CoStar Property® Source: CoStar Property®




Historical Construction Starts & Deliveries
Square Footage Per Quarter Starting and Completing Construction
Construction Starts Deliveries
1.6 1.5 1.5

1.4
1.3

1.2

1.0
Millions of SF

0.8
0.7 0.8
0.8
0.6

0.6

0.3
0.4
0.3
0.2 0.2
0.2
0.2 0.1
0.1
0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0
0.1
0.0 0.0
0.0
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2010 1q 2010 2q 2010 3q 2010 4q 2011 1q


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 2 55,113 55,113 100.0% $0.00 55,113 0

50,000 SF - 99,999 SF 0 0 0 0.0% $0.00 0 0

100,000 SF - 249,999 SF 0 0 0 0.0% $0.00 0 0

250,000 SF - 499,999 SF 0 0 0 0.0% $0.00 0 0

>= 500,000 SF 0 0 0 0.0% $0.00 0 0


Recent Development by Tenancy Existing Inventory Comparison
Based on RBA Developed for Single & Multi-Tenant Use Based on Total RBA
2011 Deliveries Currently Under Construction By Building Type By Tenancy Type

0% 11%

16% 39%

84% 61%

100% 89%

Flex Warehouse Multi Single
Multi Single Multi Single

Source: CoStar Property® Source: CoStar Property®




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FIGURES AT A GLANCE

Flex Market Statistics First Quarter 2011
Existing Inventory Vacancy YTD Net YTD Under Quoted
Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates
Aurora Ind 52 1,685,292 220,953 220,953 13.1% 6,184 0 0 $7.44
Boulder Ind 174 6,220,028 626,149 635,296 10.2% 62,515 0 0 $10.49
Broomfield Ind 34 1,046,510 142,143 164,037 15.7% 50,127 0 0 $8.17
Central Ind 41 410,050 34,634 34,634 8.4% 3,018 0 0 $9.18
Clear Creek County Ind 1 5,920 0 0 0.0% 0 0 0 $0.00
East I-70/Montbello Ind 83 2,084,937 546,951 546,951 26.2% 5,754 0 0 $7.97
Elbert County Ind 0 0 0 0 0.0% 0 0 0 $0.00
Fort Collins/Loveland Ind 180 4,479,878 461,198 487,954 10.9% (14,017) 0 0 $7.65
Glendale Ind 51 1,044,787 127,490 127,490 12.2% 6,810 0 0 $9.13
Longmont Ind 64 2,895,916 354,882 354,882 12.3% (33,334) 0 0 $7.87
North Central Ind 50 1,039,777 68,671 68,671 6.6% (7,922) 0 0 $19.85
North Denver Ind 29 1,736,486 284,003 284,003 16.4% (3,934) 0 0 $10.18
Northeast Denver Ind 34 519,290 136,274 136,274 26.2% 9,075 0 0 $7.53
Northwest Denver Ind 161 4,119,159 628,447 707,964 17.2% (91,728) 0 0 $9.56
Park County Ind 0 0 0 0 0.0% 0 0 0 $0.00
Parker/Castle Rock Ind 15 213,281 22,854 22,854 10.7% 2,046 0 0 $8.65
South Central Ind 65 750,286 70,572 70,572 9.4% (911) 0 0 $8.23
Southeast Denver Ind 264 7,809,682 1,212,799 1,233,031 15.8% 59,970 0 0 $9.02
Southwest Denver Ind 142 4,024,753 454,345 454,345 11.3% (100,492) 0 0 $9.24
Weld County Ind 86 2,058,569 531,330 531,330 25.8% 25,636 32,332 0 $6.64
West Denver Ind 123 3,232,782 489,418 499,618 15.5% 12,631 0 0 $8.36
Totals 1,649 45,377,383 6,413,113 6,580,859 14.5% (8,572) 32,332 0 $8.97

Warehouse Market Statistics First Quarter 2011
Existing Inventory Vacancy YTD Net YTD Under Quoted
Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates
Aurora Ind 51 768,262 17,055 17,055 2.2% (3,065) 0 0 $7.60
Boulder Ind 286 7,556,438 335,694 341,635 4.5% (543) 0 0 $6.82
Broomfield Ind 115 3,331,967 353,064 353,064 10.6% 2,580 0 0 $4.87
Central Ind 614 13,362,738 378,231 378,231 2.8% (10,016) 0 0 $4.95
Clear Creek County Ind 4 70,041 0 0 0.0% 0 0 0 $0.00
East I-70/Montbello Ind 1,289 69,418,507 5,421,993 5,950,521 8.6% 111,384 0 0 $3.80
Elbert County Ind 6 48,459 4,337 4,337 8.9% (2,169) 0 0 $6.89
Fort Collins/Loveland Ind 476 11,210,550 1,310,300 1,310,300 11.7% 7,774 22,781 8,130 $6.11
Glendale Ind 102 1,846,451 253,049 253,049 13.7% 1,674 0 0 $5.60
Longmont Ind 151 3,415,524 363,087 363,087 10.6% 78,453 0 0 $5.05
North Central Ind 857 21,819,420 1,019,320 1,019,320 4.7% 26,489 0 0 $4.40
North Denver Ind 209 7,339,719 446,546 461,398 6.3% 11,468 0 0 $5.66
Northeast Denver Ind 615 16,518,125 993,295 1,047,693 6.3% 891 0 78,000 $4.98
Northwest Denver Ind 493 14,611,619 921,368 929,912 6.4% (65,122) 0 0 $5.77
Park County Ind 7 20,132 0 0 0.0% 0 0 0 $6.33
Parker/Castle Rock Ind 87 981,925 31,013 31,013 3.2% 18,550 0 0 $8.91
South Central Ind 900 15,752,091 653,413 653,413 4.1% (22,813) 0 10,875 $5.33
Southeast Denver Ind 212 7,710,970 522,240 530,888 6.9% (3,897) 0 0 $6.88
Southwest Denver Ind 342 6,735,546 231,491 231,491 3.4% (2,045) 0 0 $5.72
Weld County Ind 545 15,861,993 661,289 661,289 4.2% 48,882 0 0 $5.77
West Denver Ind 351 14,698,397 413,412 434,231 3.0% (61,647) 0 6,264 $6.20
Totals 7,712 233,078,874 14,330,197 14,971,927 6.4% 136,828 22,781 103,269 $4.89


Denver Industrial Market Real Estate Stats

Denver Industrial Market Real Estate Stats

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