MARKETBEAT

FREDERICKSBURG, VA

INDUSTRIAL SNAPSHOT
A Cushman & Wakefield Research Publication

Q2 2013

ECONOMIC OVERVIEW
The economy in Fredericksburg during the second quarter has continued to show signs of strength with decreasing unemployment. The regions unemployment at 5.3% continues to be below the national and state average, and slightly improved from 5.4% one year ago. While sequestration has certainly shown signs of its affect in the government sectors, the overall economy of the region remains strong. The vacancy rate this quarter was relatively unchanged to a year prior and the activity in the market is also flat. Average direct asking rents remain flat at $5.17 psf/yr. STATS ON THE GO
Q2 2012 Overall Vacancy Direct Asking Rents (psf/yr) YTD Leasing Activity (sf) 18.0% $5.17 128,142 Q2 2013 18.4% $5.17 168,318 Y-O-Y CHANGE 0.4pp 0.0% 31.4% 12 MONTH FORECAST

OVERALL RENTAL VS. VACANCY RATES

$6.00 $5.75 psf/yr $5.50 $5.25 $5.00 $4.75 2009 2010 2011 2012 Q2 13
OVERALL NET RENTAL RATE

22.5% 21.0% 19.5% 18.0% 16.5% 15.0%

OVERALL VACANCY RATE

LEASING ACTIVITY
The most recent and significant news in this sector is the announcement that Print Mail Communications Inc. is moving to Spotsylvania County and backfilling a long vacant 100,000-square foot building at 4333 Davenport Road. The company will bring 80+ jobs with this move and it is being touted as a great economic development win through the use of incentives by the county. This will give a much needed boost to the absorption numbers. Tenants continue to renew or trade-up to spaces that were previously unobtainable. While it is still a tenants market, that may soon be changing with the forecasted decreasing vacancy rate as supply tightens and demand increases.

LEASING ACTIVITY VS. ABSORPTION

400 300 sf (thousands) 259.7 360.8 406.6 327.2 141.8 219.6 100 0 -100 -200 168.3 36.7 60.1 200

OUTLOOK

With the partial lease-up of one building that made up a large portion of the markets vacancy, and the increased activity from interested end-user purchasers, the horizon looks bright for the remainder of the year. With the continued good news from the residential markets and home builders activity, the industrial sector may see the job growth it has needed. These are great leading indicators for our industry, which forecast continued improvement for the quarters to come.

2009

-78.4

2010

2011

2012 ABSORPTION

2013 YTD

LEASING ACTIVITY

Thalhimer 725 Jackson Street, Suite 101 Fredericksburg, VA www.cushmanwakefield.com/knowledge

For more information, contact: Brad McGetrick, Director of Brokerage Services 804 697 3558 brad.mcgetrick@thalhimer.com

The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. 2013 Cushman & Wakefield, Inc. All rights reserved.

FREDERICKSBURG, VA
SUBMARKET INVENTORY OVERALL VACANCY RATE 30.6% 19.9% 24.1% 16.7% 13.3% 18.4% YTD LEASING UNDER ACTIVITY CONSTRUCTION YTD CONSTRUCTION COMPLETIONS 0 0 0 0 0 0 YTD DIRECT NET ABSORPTION (3,118) 3,200 17,705 46,597 (4,282) 60,102 YTD OVERALL NET ABSORPTION HT $0.00 $0.00 $0.00 $10.25 $6.00 $8.57 MF $0.00 $0.00 $0.00 $4.00 $6.24 $4.49 DIRECT WEIGHTED AVERAGE NET RENTAL RATE OS W/D $0.00 $2.24 $0.00 $7.25 $9.26 $10.49 $9.83 $3.28 $4.60 $5.94 $6.17 $5.17

Caroline County King George County Fredericksburg City Spotsylvania County Stafford County TOTALS

1,673,469 368,115 1,152,436 5,593,929 3,572,626 12,360,575

0 0 48,018 42,890 77,410 168,318

0 0 0 20,000 0 20,000

(3,118) 3,200 17,705 46,597 (4,282) 60,102

* RENTAL RATES REFLECT ASKING $PSF/YEAR

HT= HIGH TECH MF = MANUFACTURING OS = OFFICE SERVICE W/D = WAREHOUSE/DISTRIBUTION

MARKET HIGHLIGHTS
SIGNIFICANT Q2 2013 LEASE TRANSACTIONS 39 Synan Road 101 Juliad Court* 509 Lendall Lane SIGNIFICANT Q2 2013 SALE TRANSACTIONS N/A SIGNIFICANT Q2 2013 CONSTRUCTION COMPLETIONS N/A SIGNIFICANT PROJECTS UNDER CONSTRUCTION 11205 New Albany Drive SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET SUBMARKET Spotsylvania County Stafford County Stafford County SUBMARKET TENANT Cargo Services Group Response Dynamics Hour Development Corp BUYER PROPERTY TYPE Warehouse/Distribution Warehouse/Distribution Warehouse/Distribution PURCHASE PRICE / $PSF SQUARE FEET 35,000 14,000 5,000 SQUARE FEET

SUBMARKET Spotsylvania County

MAJOR TENANT Trane

COMPLETION DATE Q3 2013

BUILDING SQUARE FEET 20,000

* RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS

Thalhimer 725 Jackson Street, Suite 101 Fredericksburg, VA www.cushmanwakefield.com/knowledge

For more information, contact: Brad McGetrick, Director of Brokerage Services 804 697 3558 brad.mcgetrick@thalhimer.com

The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. 2013 Cushman & Wakefield, Inc. All rights reserved.