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WCAI Industrial Real Estate Update

WCAI Industrial Real Estate Update. Brian S. Parrish, MBA Vice President November 11, 2010. Presentation Overview. Noteworthy Transactions Updates New Construction Proposed Construction Analyzing Flex & Warehouse Today 2011 Forecast & Beyond.

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WCAI Industrial Real Estate Update

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  1. WCAIIndustrial Real Estate Update Brian S. Parrish, MBA Vice President November 11, 2010

  2. Presentation Overview • Noteworthy Transactions • Updates • New Construction • Proposed Construction • Analyzing Flex & Warehouse Today • 2011 Forecast & Beyond

  3. Noteworthy TransactionsOakwood Crossings Business Center100 W. Oakwood Drive, Oak Creek • Building Size: 139,726 Sq. Ft. • Sale Price: $8,664,000 ($61.96/SF) on 6/29/10 • CAP Rate: Mid 8%’s • Seller: Opus North Corp. • Buyer: CenterPoint Properties Trust Inc. • Tenant: Yaskawa Electric

  4. Noteworthy Transactions529 N. River Road, West Bend • Building Size: 105,000 Sq. Ft. • Sale Price: $1,750,000 ($16.67/SF) on 9/2010 • Seller: Milliken Millwork • Buyer: Heartland Woodcraft • Largest transaction in Washington County to date • Vacancy rate dropped from 7.9% (Q2) to 7.3% (Q3) • Another large deal is pending

  5. Noteworthy TransactionsSeda Purchase in Mount Pleasant • Building Size: 323,610 Sq. Ft. • Seller: HSA Commercial Real Estate • Buyer (user): Seda International Packaging Group SpA of Naples, Italy • Sale Date: November 2010 (Price N/A) • 189 new jobs • Packaging for ice cream, beverages and fast food containers.

  6. UpdatesDelphi, Oak Creek • 85 Acres • Demolition almost complete

  7. Updates“Century City”Tower Automotive, City of Milwaukee • 2,200,000 SF on 86 acres • $3.5 mm acquisition & $34.6 mm redevelopment • To be demolished – 60 acre business park and retail/multi-family • Talgo leasing 133,600 Sq. Ft., $2.59/SF, 2 years with extensions

  8. Updates OTHER UPDATES • Post Office in Oak Creek • Oak Creek Water Park • Chrysler Engine Plant, Kenosha • 109 Acres, 1,900,000 SF, 10-100 years old • Vacant & available – City could take over in 2011 • Not part of industrial property base

  9. New ConstructionUline Corporate CampusPleasant Prairie, WI • 1,100,000 Sq. Ft. on 20 Acres • Occupancy Q2 2010 • Corporate relocation from Illinois

  10. New ConstructionBuild-To-Suit, Oak Creek • Building Size: 83,000 Sq. Ft. • CAP Rate: 9 cap-ish • Landlord: CenterPoint Properties Trust Inc. • Tenant: Crothall Laundry Services Inc. • Delivery Date: Late February 2011 • Occupancy: Late May 2011 • Notes: Relocation from South Milwaukee

  11. New ConstructionActuant CampusWestbrook Corporate Center, 124th Street & Westbrook Crossing, Menomonee Falls • Occupancy Q3 2010 • 81,000 Sq. Ft. Office Building • 175,480 Sq. Ft. Warehouse + 135,000 Sq. Ft. Expansion. • Irgens Development developed and leased office building. • Former space is vacant in Glendale.

  12. New ConstructionIngeteamMenomonee Valley, Milwaukee, WI • Construction finishing Q4 2010 • 114,000 Sq. Ft. on 8 Acres • $17.5 million factory • Developer: MSI General • Makes generators for wind turbines • Only 12 acres remain in the Industrial Center

  13. New ConstructionPalermo Villa Inc.Menomonee Valley, Milwaukee, WI • 100,000 Sq. Ft. production area • Expansion underway • Original 135,000 Sq. Ft. built in 2006

  14. Analyzing Flex & Warehouse Dickman Lease Comps Vs. CoStar Asking Lease Rates Assumptions: 3 years, Excluding Outliers, NNN’s $1.50 when leases were gross. Trend: More transactions, more concessions, lower rental rates. Renewals will be a key factor.

  15. Analyzing Flex & Warehouse • Landlord/Buyer should be examined: • Ability to consummate lease transactions • Concessions – free rent, TI’s • Structure of deal – Cash flow • So, what is the CAP rate?

  16. Market Considerations • TIFs & Development • Liberty Corporate Preserve (Oak Creek) received construction extension from 2011 to 2014. • West Bend – facilitating a purchase • Receiverships • Refinancing difficulties • Short-sales • Financing • Creative Sales: Seller notes, land contracts, trades • Continued difficulty in 2011

  17. Uncertainty from elections & high-speed rail will settle Example: “The announcement won't mean immediate layoffs, but casts a pall over the future of the [Talgo] plant on the former Tower Automotive property.” –Talgo Rep. Speculative development will remain flat Upcoming large deals will cause supply shortfall in some areas of Racine & Kenosha Counties Positive Absorption will occur Vacancy Rate: Will remain stable during 2011 – 9% benchmark. 2011 Forecast & Beyond

  18. Sales: Increasing volume of sales, prices will slowly rise from depressed levels in 2011. Users Bargain-hunters Leases: Rates will slowly rise from depressed levels in 2011 Landlord concessions to remain 2011 Forecast & Beyond

  19. Contact Information Brian S. Parrish, MBA Vice President The Dickman Company/CORFAC International http://www.dickmanrealestate.com http://www.linkedin.com/in/briansparrish 626 E. Wisconsin Avenue, Suite 1020 Milwaukee, WI 53202 (414) 278-6887

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