The document provides an economic outlook and trends analysis for 2013 from an executive managing director at Colliers International. Some of the key points summarized are: - Texas cities and MSAs ranked highly in job and economic growth indicators in 2012 such as the NAHB Improving Markets Index and On Numbers Economic Index. - Housing market recovery is broad-based according to the NAHB Index, with Texas having the most MSAs on the list. This recovery will drive renewed demand for retail, office and industrial space. - Texas ranked #1 in areas like job growth, foreign trade and the NAHB housing market index in 2012. Houston specifically ranked highly in port container cargo volumes and economic indexes.

1. What’s imPORTant in 2013?
Reading of the Crystal Ball
TRENDS 2013
K.C. Conway, MAI, CRE January 29, 2013
Exec. Managing Dir. R.E. Analytics
Colliers International
KC.Conway@Colliers.com

2. Let’s Start with a Review of 2012
Report Card on KC’s 2012 Predictions ... 4 out of 5 or 80%.
 U.S. GDP would Grow by 1.5% - 2%
 Home Prices to bottom-out in 2012
 Warehouse to be a Star Performer
r
 Overall CMBS DQT to surpass 10%
X Cap Rate Compression would end.
2

3. For 2013, read the letters in KC’s Eco. Alphabet Soup.
Look for direction outside Governmental data in places like NAHB, ONEI…
MSA-level Job Gr.
TX MSAs = 20% of Top 20 (Houston #2)
NAHB Improved Mkt Index
Housing Recovery is real.
TX has most MSAs on NAHB IMI
with 18 (FL is #2)
ONEI – On Numbers Eco Index
by Am Biz Journals.
Quantify “Recovering MSAs”
TX key 4 MSAs ranked in top 20 &
Houston is #3
Rail Time Indicators Company 10(q)s
by Association of Am. Rail Roads
Earnings reports are a
Journal of Commerce Dodge Pipeline treasure trove of info.
New Construction Why FED doesn’t use in Beige
An easy/cheap way to keep up
Book is a mystery to me.
with Ind’l, Ports, etc. (Familiarize yourself with
new supply to jobs ratios)
MF is 8-9 jobs : 1 new MF
TX ratio in 2012 = 9.2:1
3

4. TX and Houston by the Numbers / Rankings
#1 is such a lonely number, so Houston is 1,2,3,8… Still room for improvement
#1 State on NAHB IMI, and Foreign Tr.
Zone Imports & Exports. #2 in 2012 MSA-level job growth
#3 ranking in latest On Numbers
Economic Index & #5 by AFIRE.
#8 in TEU container cargo in N.Am., but
“Most Irreplaceable” port by Colliers.
4

5. Those kind of numbers explain why Houston is AFIRE!
Note: 4 of the 5 U.S. cities are all key port markets; & Ind’l R.E. #2 prfd property
5

6. MSA-level Job Growth
TX MSAs hold 4 of the Top-20 Rankings
6

7. NAHB’s Improved Housing Markets
The Recovery is Broad-Based – note the Gulf & East coast port MSAs
A post 2007 peak of 201 MSAs
make the Dec ‘12 list
7

8. Housing Recovery will stimulate sub-office, retail & warehouse demand
NAHB/First American Improving Markets Index (IMI) Yr-End NAHB IMI
Permits Growth Prices Growth Employment Growth
Trough From Trough From Trough From • TX has most MSAs
MSA Date Trough Date Trough Date Trough
with 18. Houston has
Baton Rouge, LA* 01/31/09 1.4% 01/31/12 2.4% 02/28/10 1.5% most growth from
Houma, LA 03/31/10 4.2% 06/30/11 3.1% 06/30/11 6.5%
Lafayette, LA 02/28/09 2.3% 10/31/11 2.3% 01/31/10 15.4% trough of large TX
Lake Charles, LA 04/30/11 2.2% 11/30/11 1.7% 11/30/10 3.3%
Monroe, LA 03/31/09 2.4% 06/30/10 4.6% 09/30/09 3.2%
MSAs.
New Orleans, LA 11/30/05 0.5% 12/31/11 4.4% 02/28/10 1.9%
Shreveport, LA 01/31/09 1.3% 12/31/11 5.1% 08/31/10 4.3% • FL ranks #2 among all
Beaumont, TX 12/31/05 0.7% 12/31/11 2.4% 12/31/09 2.0%
Brownsville, TX* 03/31/09 1.1% 05/31/11 3.3% 03/31/09 3.4% states with 15
College Station, TX* 10/31/10 2.5% 09/30/10 6.1% 01/31/08 3.0%
Corpus Christi, TX 01/31/11 3.3% 12/31/11 9.2% 11/30/09 6.3% • CA ranks #3 (14)
Dallas, TX 03/31/09 2.1% 02/28/11 5.7% 12/31/09 5.9%
Houston, TX 04/30/09 1.8% 08/31/11 9.7% 12/31/09 8.5%
Killeen, TX* 01/31/09 1.9% 01/31/12 4.3% 12/31/07 4.7% • Recovery in housing
Lubbock, TX
McAllen, TX
09/30/11
01/31/09
7.4%
0.2%
09/30/11
11/30/10
2.8%
6.5%
09/30/10
12/31/07
3.9%
5.7%
will drive renewed
Midland, TX 04/30/09 2.4% 01/31/10 21.1% 08/31/09 20.6% demand for all
Odessa, TX 02/28/09 29.3% 10/31/10 13.7% 08/31/09 23.2%
San Angelo, TX 12/31/10 1.1% 04/30/11 9.5% 06/30/09 8.7% commercial R.E. types
San Antonio, TX 04/30/11 2.6% 12/31/10 7.0% 09/30/09 5.1% in the suburbs (n’hood
Texarkana, TX* 08/31/11 5.3% 01/31/10 2.4% 10/31/09 6.7%
Victoria, TX 09/30/10 6.2% 02/28/11 9.9% 11/30/09 4.8% retail, professional
Waco, TX 04/30/09 1.5% 11/30/10 2.9% 01/31/12 2.8%
services & small-bay,
multi-tenant indistrial
by contractors,
suppliers). 8

9. Recovering Markets – ONEI November Rankings
Houston ranks #3 – TX has 4 of Top-20, and 6 in Top 65 (State with most in Top-10,25,50
ON NUMBERS ECONOMIC INDEX - January 2013 (Top 102 U.S. MSAs ranked by Am. Business Journal)
Rank Overall Prior Rank Overall Prior Rank Overall Prior
(Jan '13) MSA Scorre Rank (Jan '13) MSA Scorre Rank (Jan '13) MSA Scorre Rank
1 Oklahoma City 90.473 2 35 New Orleans 55.497 53 69 New York City 41.413 61
2 Austin 89.755 1 36 Charleston, S.C. 55.225 28 70 Orlando 41.14 72
3 Houston 82.627 3 37 San Francisco-Oakland 55.126 35 71 Allentown-Bethlehem, Pa.41.042 52
4 Columbus 78.765 4 38 Madison, Wis. 54.432 45 72 Dayton, Ohio 40.867 74
5 Tulsa 77.922 6 39 Raleigh 54.285 39 73 Memphis 40.57 81
6 Provo, Utah 76.908 10 40 Albany, N.Y. 54.086 38 74 Philadelphia 40.422 76
7 Honolulu 74.037 17 41 San Diego 54.086 42 75 Sacramento 40.397 67
8 Omaha 72.577 5 42 El Paso, Texas 53.963 50 76 Bridgeport-Stamford, Conn.
38.244 80
9 Pittsburgh 72.304 9 43 Cleveland 53.714 41 77 Atlanta 37.898 82
10 Des Moines, Iowa 71.561 8 44 Wichita, Kans. 53.021 47 78 Los Angeles 37.65 83
11 Denver 70.052 11 45 Grand Rapids, Mich. 52.997 26 79 Stockton, Calif. 37.551 73
12 Dallas-Fort Worth 69.805 14 46 Greenville, S.C. 52.65 29 80 Worcester, Mass. 37.501 69
13 Boston 69.606 12 47 Harrisburg, Pa. 51.932 48 81 Bakersfield, Calif. 37.18 66
14 Nashville 69.507 18 48 Birmingham 51.312 59 82 Springfield, Mass. 37.08 78
15 Salt Lake City 69.409 22 49 Boise, Idaho 50.893 44 83 Oxnard-Thousand Oaks, Calif.
34.357 97
16 Baton Rouge, La. 69.061 32 50 Buffalo 50.175 31 84 Miami-Fort Lauderdale 33.54 85
17 Little Rock, Ark. 68.541 7 51 Poughkeepsie, N.Y. 49.309 63 85 Augusta, Ga. 32.748 77
18 Ogden, Utah 68.195 16 52 Indianapolis 49.11 46 86 Detroit 32.724 88
19 San Antonio 67.775 21 53 Charlotte 49.086 55 87 Albuquerque 32.574 86
20 Louisville 67.156 13 54 Milwaukee 49.085 57 88 Virginia Beach-Norfolk 32.55 95
21 San Jose 66.785 15 55 Portland, Ore. 47.799 51 89 Bradenton-Sarasota, Fla. 31.956 89
22 Lancaster, Pa. 63.096 27 56 Rochester, N.Y. 47.725 54 90 Cape Coral-Fort Myers, Fla.
31.213 84
23 Cincinnati 62.75 23 57 Jackson, Miss. 46.807 58 91 Greensboro, N.C. 30.843 90
24 Washington 62.428 19 58 Syracuse, N.Y. 45.892 64 92 Lakeland, Fla. 30.842 87
25 Durham, N.C. 60.992 24 59 Richmond 45.546 65 93 Palm Bay-Melbourne, Fla. 30.322 92
26 Phoenix 59.308 36 60 Columbia, S.C. 45.496 43 94 Tampa-St. Petersburg 30.076 94
27 Scranton-Wilkes-Barre, Pa. 59.185 20 61 Toledo, Ohio 44.976 56 95 Hartford 29.061 93
28 Portland, Maine 58.516 25 62 McAllen-Edinburg, Texas 44.334 70 96 Chicago 28.887 98
29 Chattanooga, Tenn. 58.046 49 63 Youngstown, Ohio 43.294 79 97 Las Vegas 27.253 100
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30 St. Louis 57.452 34 64 Tucson 42.797 75 98 Jacksonville 26.907 91
31 Akron, Ohio 57.452 30 65 Baltimore 42.477 62 99 New Haven, Conn. 25.15 99
32 Seattle 57.131 33 66 Fresno, Calif. 42.204 71 100 Riverside-San Bernardino, Calif.
22.105 102
33 Minneapolis-St. Paul 56.735 40 67 Kansas City 41.833 60 101 Colorado Springs 21.213 101
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34 Knoxville, Tenn. 56.042 37 68 Modesto, Calif. 41.634 68 102 Providence 20.694 96

10. Rail Time Indicators – Manufacturing & Trade
Forget ISM, Empire State Mfg Index & FED Mfg Surveys – go to the source!
Q. Why did rail cars in storage rise at YE?
10
A. Impending ILA E-Coast port strike.

11. Dodge Pipeline – New Supply is Distr-Ctrs & Logistics
Target Dates
Ind’l U/C 2013
Construction Sq. Ft.
Project Title City State Phase
Cost ($ m) (000's) Completion
Estrella Logistics Warehouse Distribution Center Phoenix AZ Underway 18.0 593 July-13
Coldwater Depot Logistics Office/ Warehouse Phase I
Total Sq Ft Under Construction at Yr-End 2012:
Avondale AZ Underway
1,493
20.0 509 March-13
• 32.1 msf
FedEx Warehouse Distribution Facility
Chino Logistics Center
Pacoima
Chino
CA
CA
Underway
Underway
20.0
12.0
236
300
June-13
February-13
(not a lot)
Whole Foods Market Distribution Center Richmond CA Underway 12.7 136 February-13
Total Sq Ft Under Construction at Yr-End 2012: 1,547
United Natural Foods Refrigerated Warehouse (Design/Build)
Aurora CO Underway 25.0 542 July-13 • 8 states=45%
FedEx Ground Distribution Center South Windsor CT Underway 25.0 222 October-13
Dollar Tree Distribution Center Windsor CT Underway 57.0 1,001 May-13 of all constr.
Publix Warehouse & Distribution Center @ LeeVista Orlando
Center FL Underway 100.0 970 October-14
Total Sq Ft Under Construction at Yr-End 2012: 1,337
GA #1
Tractor Supply Distribution Center (Design/Build)Macon
Lowe's Flatbed Distribution Center Rome
GA
GA
Underway
Underway
30.0
80.0
686
1,451
May-13
April-13
TN #2
PPG Pittsburgh Paints Warehouse Bldg at Southpark
Home Depot Online Distribution Center
Fairburn
Mcdonough
GA
GA
Underway
Underway
30.0
91.1
300
1,000
April-13
April-13
IN #3
Total Sq Ft Under Construction at Yr-End 2012: 3,437
Toro Distribution Center (Design/Build) Ankeny IA Underway 43.0 450 December-13
FedEx Distribution Center Grimes IA Underway 19.0 186 March-13 • 75% Build-to-
FedEx Distribution Center Romeoville IL Underway 15.0 239 September-13
Total Sq Ft Under Construction at Yr-End 2012: 1,270 suit or large
Manufacturing/Distribution Building (PGP International)
Evansville IN Underway 6.0 70 March-13
IDI World Connect Building 1 At Ameriplex Indianapolis IN Underway 25.0 795 December-12 new D-Ctr &
Total Sq Ft Under Construction at Yr-End 2012:
Coca Cola Distribution Facility (Pre-Engineered)(Design/Bld) MO
Joplin
1,841
Underway 5.5 56 March-13
Logistics Ctr
Rubbermaid Warehouse & Distribution Center Brimfield Township OH Underway 22.9 811 April-13
Volkswagen Passat Parts Warehouse Kingston TN Underway 40.0 400 March-13
Amazon Distribution Center Lebanon TN Underway 33.0 1,016 February-13 • No “Spec”
Whirlpool Manufacturing and Distribution Facility Cleveland TN Underway 84.0 400 January-13
Total Sq Ft Under Construction at Yr-End 2012: 1847 risk in Ind’l
Refrigerated Distribution Warehouse (Design/Build) Denton TX Underway 20.0 450 March-13
Total Sq Ft Under Construction at Yr-End 2012: 749
Family Dollar Distribution Center Saint George UT Underway 80.0 820 June-13
US total 2,132 32,112
($ millions) SqFt 000s
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12. What is the Crystal Ball indicating for 2013?
Beware of Q1, but be prepared for a robust 2H2013.
Industrial: GDP:
Ports will remain an imPORTant story! Pulls back to 1% or less in 1H2013,
Port Labor Strife not done – Feb 6, 2013. but Rebounds >2% in 2H2013
Leasing activity remains robust (No “Cash for Clunkers” or housing tax
Dearth of new constr & assets for sale. credit artificial stimulants).
Office:
ICEE office MSAs still hot.
Employment:
Recovery in housing will add to
Focus on Labor Participation
suburban absorption.
rate (63.6%), U-6 (14.4%), &
½ the 71.5msf of new office
expect another year of 153k/mo.
construction is Med Office
job growth
MF: U-3 could drop to 7% just on
Overbuilding Risk is exaggerated workers losing Unempl. benefits.
Too much in just a few MSAs (DC)
TX is OK: 1 unit : 9.2 jobs in 2012
Housing: Interest Rates:
The recovery is real! Get ‘eer done in 2013!
NAHB IMI > 200 markets. 2nd U.S. Debt downgrade >50%
US Census Housing Occupancy FED balance sheet @ 20% US GDP
(50 MSAs 90% to 96%) Monitor commodity prices.
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13. Colliers’ 2013 Industrial Warehouse Perspective
13

14. Colliers’ Yr-End 2012 Industrial Warehouse Perspective
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15. r
www.colliers.com/US/Colliers_Port_Analysis_NA_Aug-2012
www.colliers.com/us/insights
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CRE.org/Publications/rei_absdetail.cfm?lid=1897&lparent_id=1892

16. How well do you know the U.S. Ports?
Colliers recognizes 10 ports 2X a year for distinction beyond size
r
www.colliers.com/US/Colliers_Port_Analysis_NA_Aug-2012
www.colliers.com/us/insights 16

17. 17

18. Intermodal, Intermodal, Intermodal … it means
Industrial Now Turns Especially to Rail to Move Ocean Distribution Across Land
18

19. Office Space Trends Note:
The old ratio (growth in office
employment means X square
feet of office absorption) is out
the window.
The open space architecture is
moving the space per employee
ratio from 1:300 to 1:250 to
1:200.
That means a 20% growth in
office employment = no net new
absorption.
Source: Colliers Atlanta
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20. Colliers’ Yr-End 2012 Office Perspective
20

21. Office Space Trends: FIRE Vs ICEE markets
Jan 23, 2013 Chicago fire: Building turns to ICE after fire.
21

22. The Multi-Family Perspective
Construction Activity & Costs Vs Vacancy & Cap Rates.
• Is new construction overheating?
New Supply under construction or in lease-up approximates 2007 activity.
• Are higher costs being rationalized by Cap Rate compression and
unrealistic rent growth? The cost per unit of new construction has increased 40%.
22

23. The Multi-Family Perspective
A recent record MF sale in Denver is a warning sign for hot MF MSAs.
23

24. Opportunities: Risks:
• Housing – Monitor NAHB IMI. A • Congress/political dysfunction
surprise stimulant to “small-space” leads to 2nd Debt Downgrade
warehouse users, like building • ILA Port Strike Impacts East
contractors & suppliers. & Gulf coasts ports February
• Job Gr in secondary MSAs fueled 6, 2013; NW Grain ports in
by ICEE sectors. Spring & West coast ports at
Yr-End
• Industrial – especially port & inland
distribution MSAs where retailers • End of Bernanke Fed in 2013
are remaking their supply-chains. - Impact on interest rates & QE
Thank You
K.C. Conway, MAI, CRE
Exec. Managing Director, R.E. Analytics
Colliers International
KC.Conway@Colliers.com