At one point during the Great Recession, Elkhart County had the highest unemploymentrate recorded in the state of Indiana at 20%. During the second quarter of 2017, it isamong the lowest, coming in at 1.9% and 2.1% for the months of April and May,respectively. Employers are struggling to fill vacant positions due to the shortage of skilledworkers in a market with a surplus of available jobs.

The commercial real estate market is not exempt from this impact. Elkhart is themanufacturing hub in the region, from plastic and metal to recreational vehicles. ThorIndustries, one of the world’s largest RV manufacturers, is headquartered in Elkhart andhas a major economic impact in the local community. Recently, VP of Administration andHuman Resources, Ken Julian, stated that they are open to expanding their businessoperations outside of the Elkhart region due to the current labor shortage.

With 40,000 square feet still under construction, more jobs will continue to be created.According to the Elkhart County Economic Development Corporation (EDC), themanufacturing sector will have close to 25,000 jobs to fill in the coming years.

Although a low unemployment rate is a good problem to have, the vacant positions stillneed to be filled. When there is a limited labor force that is rapidly depleting, the nextmove is to establish a coordinated effort to bring people to the region and have housingoptions readily available, so the economy and local businesses can continue to grow andmove forward. County and city leaders are eager to bring more skilled workers to thearea. Expanding their campaign in places with high unemployment to bring more peopleto the region, they can embed themselves and become an integral part of the community.

2Q17 2Q16 2Q15 3Q17Forecast

Total Inventory(Local Profile) 86M SF 85.5M SF 45.8M SF

Vacancy Rate 1.1% 1.8% 3.7%

Quarterly Absorption 449,816 270,140 105,844

Average Lease Rate $2.89 $2.59 $2.51

Under Construction 40,000 SF 810,500 0

CompletedConstruction 0 0 0

MARKET PERFORMANCE

AVERAGE LEASE RATE & VACANCY

At one point during the Great Recession, Elkhart County had the highest

HOW LOW CAN IT GO? ELKHART COUNTY UNEMPLOYMENT RATE AMONG THE LOWEST

www.cressyandeverett.com

ELKHART2Q17 INDUSTRIAL MARKET

86MSF

467,591SF

40KSF

TotalInventory

VacancyRate

QuarterlyAbsorption

AverageLease Rate

UnderConstruction

UnemploymentRate

MARKET AT A GLANCE

1.1%

$2.89

2.1%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

$1

$2

$3

$4

$5

2Q12 2Q13 2Q14 2Q15 2Q16 2Q17

Vacancy (%) Average Lease Rate (Price/SF)

Kem Krest Opens New Distribution Space

The $6.2 million distribution center is Kem Krest Corp.’s thirdfacility in Elkhart County. It is located adjacent to the existingElkhart headquarters and will house distribution operations for anew Original Equipment Manufacturer customer. Chief ExecutiveOfficer Amish Shah, received a seven-year tax abatement for theproject. At the time of construction, Shah had estimatedapproximately three dozen new jobs would be created, and as thecompany continues to grow, company officials say they expect tohire more additions to the team.

Lippert Components Inc. Makes Largest Acquisition

in 20 Years

Lexington LLC, manufacturer of high quality seating solutions forthe marine, recreational vehicle, office, and medical industries, has

been acquired by Lippert Components Inc. (LCI) for $40 million.The acquisition is an anchor in LCI’s portfolio of companies andproducts to expand their footprint in the marine industry.

Global Manufacturer Debuts $5 Million Center

Furrion Innovation Center & Institute of Technology (ICIT) recentlycelebrated the grand opening of its new U.S. headquarters inElkhart, located across from the RV/MH Hall of Fame and Museum.Chief Marketing Officer Matthew Fidler, states that the 35,000square foot building will focus on research and development, but itwill also house operations for sales, testing, customerservice/support, and warranty operations. Furrion is a globaltechnology manufacturer that focuses on developing state-of-the-art products and services to a diverse range of businesses,including marine, recreational vehicle, hotel, residential, andadjacent specialty industries.

$6 Million Expansion for Goshen Aluminum Manufacturer

Bearcat Corporation invested more than $6 million into its currentheadquarters in Goshen. The expansion began in January andadded 6,000 square feet to the existing facility for new metalfabrication equipment. They are the supplier to some of thelargest marine and recreational vehicle companies in the globalmarket.

Company officials estimate the expansion will add up to 40 new

jobs by 2019. The Indiana Economic Development Corporationoffered the company up to $150,000 in tax credits, conditional onthe job creation plans.

Patrick Industries Inc. Completes $73.5 Million Acquisition

Patrick Industries completed the acquisition of Leisure Product Enterprises, LLC (LPE) on May 1, 2017. LPE is a holding company with three marine manufacturing subsidiaries—Marine Concepts/Design Concepts, Florida Marine Tanks (FMT), and Marine Electrical Products (MEP). “We look to continue to build on

our marine platform, which after the LPE acquisition represents more than $125 million in combined annualized revenues, complements our value proposition to the marine market, and will help drive synergy realization,” states Todd Cleveland, Chief

Executive Officer of Patrick Industries.

Forest River Closes on Supreme Corporation Property

RV manufacturer, Forest River Inc., purchased two of Supreme’s

vacant buildings to move a recently purchased company and itsemployees into the new location on East Kercher Road.

ELKHART2Q17 INDUSTRIAL MARKET www.cressyandeverett.com

OUR MARKET IN MOTION

ELKHART2Q17 INDUSTRIAL MARKET www.cressyandeverett.com

NOTABLE SALE TRANSACTIONS

Address Submarket Size (SF) Total Consideration ($)

3933 Lexington Park Drive Elkhart North 12,750 $265,000

822 Middlebury Street Elkhart South 28,000 $425,000

72104 County Road 23 Goshen 169,230 $1,400,000

2575 East Kercher Road (Portfolio) Goshen 140,887 $4,550,000

SUBMARKET STATISTICS

SubmarketArea

TotalInventory

(SF)

UnderConstruction

(SF)

TotalVacancy

Rate (%)

QuarterAbsorption

(SF)

YTDAbsorption

(SF)

PROPERTY TYPE AverageLease Rates (Price/SF)General

Industrial Lease Rates

(Price/SF)

R&D Flex

Lease Rates

(Price/SF)

Warehouse/Distribution

Lease Rates

(Price/SF)

Elkhart North 24,228,251 0 0.8 112,500 -106,770 $2.44 $5.48 $0.00 $2.51

Elkhart South 27,816,493 20,000 1.3 68,230 31,523 $2.96 $3.83 $0.00 $3.00

Goshen 12,864,804 20,000 1.4 269,086 269,086 $3.16 $0.00 $0.00 $3.16

Middlebury 13,773,701 0 0.0 0 -4,232 $0.00 $0.00 $0.00 $0.00

Wanee(Wakarusa & Nappanee)

7,350,882 0 2.2 0 -163,611 $0.00 $0.00 $0.00 $0.00

TOTALS 86,034,131 40,000 1.1% 449,816 25,996 $2.87 $4.32 $0.00 $2.89

Newmark Grubb Cressy Commercial quarterly market reports are a compilation of data from multiple sources.The data is reviewed quarterly and adjusted due to circumstances in the market, such as new construction anddemolition. The vacancy square footage is compiled from a combination of online data from multiple majorlisting services, broker provided listing information and industry knowledge. NGCE has created this report toprovide the most accurate information possible. We do not assume responsibility, however, for errors,omissions, prior sale, lease or withdrawal from the market.

NOTABLE LEASE TRANSACTIONS

Address Submarket Size (SF) Total Consideration ($)

2707 Decio Drive Elkhart North 11,600 $115,536

2946 Jami Street Elkhart North 12,100 $99,825

2403 Clay Street Elkhart South 30,000 $304,200

2500 Supreme Court Goshen 27,676 $432,072

ELKHART2Q17 INDUSTRIAL MARKET www.cressyandeverett.com

“Inventory continued to shrink during the fourth quarter of 2016,ending the year at record-low levels. Looking forward, we shouldsee a considerable amount of new construction in 2017. This mayfree up some much needed inventory as users move out of theirexisting facility and into the new buildings. With the currentmarket conditions extending into 2017 we expect continuedupward pressure on lease rates and sale prices for the new year.”

Christopher J. Barth, Broker

LOCAL STATE UNITED STATES

TOTALINVENTORY (SF) 86M 691.5M 15B

VACANCYRATE 1.1% 6.5% 5.4%

QUARTERLYABSORPTION (SF) 449,816 7.7M 51.7M

AVERAGELEASE RATE (PSF) $2.89 $3.79 $6.12

UNDERCONSTRUCTION

(SF)40,000 4.9M 214.7M

UNEMPLOYMENTRATE 2.1% 2.8% 4.1%

HOW DO WE COMPARE?

MARKET PERSPECTIVE

1718 Mishawaka Road | Elkhart, Indiana130,000 SF available and25,000 SF available 12/2017For Lease: $3.50 PSF NNN218,590 SF owner-occupied Industrial building with approximately 155,000 SF excessspace available for lease. The building is situated on 9+/- acres and was built in 1958 andremodeled in 1989. The excess space features 26’ ceiling height, 7 docks, 6 grade-leveloverhead doors, 100% wet sprinkled, heavy power, 100% heated and cooled andmunicipal utilities. The entire property features 650+ shared parking spaces, 10restrooms, men’s and women’s locker rooms, a cafeteria that seats 200 comfortably andamazing sound proof room.

ELKHART2Q17 INDUSTRIAL MARKET www.cressyandeverett.com

OUR FEATURED LISTINGS

502 S Oakland Avenue | Nappanee, IndianaFour buildings on campus totaling164,405 SF / 19 Acres / 164,405 SF availableFor Sale: $3,275,000 & Lease: $2.80 PSF NNN4 building Industrial manufacturing/warehouse campus with a total of 164,405 SF(including 9,455 SF of office space) on approximately 19 acres of land. The mainbuilding is 106,705 SF and was designed for construction of manufactured homes.The property offers a host of amenities such as 22' - 27' clear ceiling heights, 14grade level overhead doors, 14 dock high loading doors and multiple 1 and 2 toncranes (hoists not included). The building features 800 Amps of 480V, 3 Phase powerand is heated by a combination of gas fired air rotation and radiant tube heat. Thebuilding is wet sprinkled, fenced, serviced by municipal utilities and high speedinternet access is available. Property is bordered by a rail line (CSX). The building has40' x 80' bay spacing,T-5 lighting, and is zoned M-1 Manufacturing. The floors are 6"reinforced concrete.

ELKHART2Q17 INDUSTRIAL MARKET www.cressyandeverett.com

Corporate Headquarters4100 Edison Lakes ParkwaySuite 350Mishawaka, IN 46545574.271.4060

NEW!South Bend Office100 E. Main Street, Suite 120South Bend, Indiana 46601574.485.1510

Fort Wayne Office200 E. Main StreetSuite 540Fort Wayne, IN 46802260.399.4057

Grand Rapids Office32 Market StreetSuite 302Grand Rapids, MI 49503616.456.6400

Socialize with us!

All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark Grubb Cressy Commercial has not verified any such information, and the same constitutes the statements and representations only of the source thereof, and not ofNewmark Grubb Cressy Commercial. Any recipient of this publication should independently verify such information and all other information that may be material to any decision that recipient may make in response to this publication, and should consult with professionals of the recipient’schoice with regard to all aspects of that decision, including its legal, financial, and tax aspects and implications. Any recipient of this publication may not, without the prior written approval of Newmark Grubb Cressy Commercial, distribute, disseminate, publish, transmit, copy, broadcast,upload, download, or in any other way reproduce this publication or any of the information it contains.

©2017. Newmark Grubb Cressy Commercial has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our data, there may be adjustments in historical statistics including availability, asking rents,absorption and effective rents.

www.cressyandeverett.com

Newmark Grubb Knight Frank & Newmark Grubb Affiliate Office Locations

Christopher J. BarthBroker574.271.4060 (o)574.485.1553 (d)574.261.1797 (c)chrisbarth@cressyandeverett.com

Years of Experience4

Areas of SpecializationOfficeRetailTenant RepresentationLandlord Representation

Ryan Gableman, CCIM/SIORSenior Broker574.271.4060 (o)574.485.1502 (d)574.215.0336 (c)ryangableman@cressyandeverett.com

Years of Experience15

Areas of SpecializationIndustrialInvestmentLandOfficeRetail