2Q 17. Charlotte Retail Market Report

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1 2Q 17 Charlotte Retail Market Report

2 Charlotte, North Carolina Greater Charlotte Area (28 ± Mile Radius from Uptown Charlotte) Q Total Number of Buildings 10,088 Total Square Feet 124,346,6 Average Asking Rates $.67 Overall Vacancy 3.8% Net Absorption 373,739 SF Deliveries 260,064 SF Under Construction 1,639,876 SF 1,000, , , , , , , , , ,000 0 Absorption (RSF) / Asking Rates $17.00 $.50 $.00 $15.50 $15.00 $14.50 $14.00 $13.50 $13.00 Charlotte s 4.0% Unemployment Rate is below 20 levels and below the national average as well. Charlotte s Local Economy Charlotte s economy remained strong during the second quarter, as the combination of low unemployment, a rising population and spending growth created a bullish environment for local businesses. The unemployment rate in Mecklenburg County fell to 4% in the second quarter its lowest point in more than a decade and down from 4.4% in the first quarter, and down from 5.3% unemployment the previous year. Charlotte s unemployment rate compares favorably to the U.S. as a whole. Meanwhile, the county s average home price climbed 8% from a year earlier to $306,154, according to the Charlotte Chamber. Mecklenburg County s Consumer Price Index also continued to push higher during. 9% 8% 7% 6% 5% 4% 3% 14.0% 13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% Avg. Asking Rate Vacancy Rates Absorption SF 5.5% Average Vacancy Rate Charlotte Unemployment Rate Charlotte Market Overview 2Q vs. 2Q17 NET ABSORPTION VACANCY RATE DELIVERIES ASKING RATES Industry metrics remained strong for Charlotte s retail market during the second quarter. The vacancy rate was 3.9%, largely unchanged from the prior quarter and down from 4.5% the previous year. The rate hit its lowest point in at least a decade. One of the top deals was the $43.2 million purchase of Ballantyne Village, a 171,559-square-foot mixed-use center in South Charlotte. The buyers were American Realty Advisors and Stonemar Properties. The property is located beside Ballantyne Corporate Park, which sold earlier this year for more than $1 billion. Ballantyne Village includes dozens of shops and restaurants. The retail market s net absorption for was positive 373,739 square feet. That compares to positive 251,963 square feet the previous quarter and positive 540,278 square feet the previous year. Meanwhile, deliveries bounced back after a sluggish Q1. Seventeen retail buildings were delivered during the second quarter, totaling 260,064 square feet. That was up from six buildings totaling 57,159 square feet during the first quarter. The Q1 figure marked the first time in at least a decade that the number of deliveries fell below double digits and the square footage dropped below 100,000. Average retail rents during the second quarter rose to $.67 per square foot from $.51 a quarter earlier.

3 Midtown-Dilworth / Park Road Dilly Place, a trio of retail buildings and adjacent parking lot in Dilworth, sold for nearly $3.8 million to Somerville, Mass.-RCG. The properties are located at the intersection of East Boulevard and Worthington Avenue and are fully leased to 12 tenants, including Sunflour Baking Co., Hydrate Medical, California Closets and Follicle Salon and Spa. New York-based burger chain Shake Shack confirmed plans to open its first Charlotte location later this year at Park Road Shopping Center. According to reports, the restaurant will be located on an outparcel near the shopping center s East Woodlawn Road entrance. South Charlotte A number of new leases were signed at Waverly, a mixed-use, 90-acre development at the corner of Providence and Ardrey Kell roads near Ballantyne. Tenants that signed deals include Babalu Tapas & Tacos, DeSano Pizza Bakery, Fab rik, and Scout and Molly s Boutique. More than 40 retail shops and restaurants have signed on at Waverly, including Whole Foods Market, a retail anchor for the development. Midtown - South End White Point Partners, under the name WPCP Bowers Inc., purchased the Bowers Fiber Inc. buildings at 4001 and 4025 Yancey Road in the South End area for $7.9 million. Plans for the site include 73,000 square feet of leasable commercial space across three existing buildings. One 28,000-square-foot building will likely contain retail, according to media reports. The other, 45,000-square-foot unit will have office and retail tenants. Northeast Harris Square in Harrisburg, a 67,200-square-foot shopping center due to open early next year, added four new tenants during the second quarter: Smoothie King, Sports Clips, Avalon Spa & Nails and Zammitti & Gidaly Orthodontics. Smoothie King is taking 1,200 square feet; Zammitti & Gidaly Orthodontics is leasing 3,000 square feet; Sports Clips is taking 1,200 square feet; and Avalon Spa & Nails is leasing 2,400 square feet. A 180-acre mixed use project in Northeast Charlotte and Harrisburg has been approved that will include up to 191,000 square feet of office and retail space, a movie theater, a 120-room hotel, and hundreds of for-rent and for-sale residential units. MPV Properties is developing the project, called Farmington. Lake Norman MPV Properties and Bowman Development Group announced plans to develop a mixed-use project called Vermillion Village on a large site between North Church Street and Huntersville-Concord Road. It will include a 78,000-square-foot supermarket anchor and 18,000 square feet of retail space, along with 400 residential units. It should be completed in three to five years. $27 $26 $24 $23 $21 $20 $18 $17 $15 $14 $12 $11 $ Q Q Q1 20 Q Q1 Downtown Inner Southeast Outer Southeast Southwest Northeast North East Northwest Union County York County Cabarrus County Gaston County Iredell County Lincoln County Lancaster County Charlotte, North Carolina Asking Rates by Building Class Class A Class B Class C Rates by Submarket $7 $9 $11 $13 $15 $17 $19 $21 $23 $25 $27 Outlook Local demographic trends remain upbeat for local developers. According to new Census Bureau estimates, Charlotte s population grew 9% last year. The city added 15,656 new residents between July 2015 and 20 the 11th-most in the country. The City of Charlotte s population is now estimated at 842,051. Employment trends also bode well. According to a report from Headlight Data, year-over-year employment in the area rose nearly 4% in 20, putting Charlotte No. 4 among the top 10 metros with the fastest-growing economies. Meanwhile, a new ranking from FitSmallBusiness rated North Carolina as the best state to start a business, based on a combination of tax rates, quality of life, cost of living, labor market outlook, startup activity, access to capital and the costs of starting a business.

4 Class A, B & C Submarket Statistics and Submarket Specific Statistics Charlotte, North Carolina *Class A-C covers the entire 28± Mile Radius Market Total SF Total # of Buildings Total Available SF Vacancy Rate % Net Absorption Deliveries Under Construction End of 2Q Average Rental Rate Class A / (4 & 5 Star) 22,765, ,235, % 8,605 20, ,875 $26.02 Class B / (3 Star) 69,420,722 4,917 4,401, % 236, , ,001 $.33 Class C / (1 & 2 Star) 32,151,568 4,796 1,951, % 125, ,000 $14.92 Dowtown 1,3, , % 5, ,000 $26.19 Inner Southeast 11,198, , % 87,690 75,500 54,653 $24.31 Outer Southeast 12,152, , % 155, , ,602 $23.18 Southwest 3,818, , % (466) 12,531 19,465 $21.56 Northeast 10,979, , % 30,765 4, ,498 $18.12 North 5,376, , % (641) 3,724 14,148 $.60 East 13,347, , % 63, ,331 $.30 Northwest 7,213, , % 27, ,000 $14.43 Union County 9,589, , % (39,937) 3,802 24,000 $14.19 York County 12,570,587 1, , % 27,284 24,969 80,139 $13. Cabarrus County 13,622,8 1, , % 31,760 17, ,261 $12.99 Gaston County 13,605,703 1,411 1,146, % (2,076) 0 252,900 $12.60 Iredell County 10,496, , % 21,0 0 0 $12.46 Lincoln County 4,0, , % ,158 $11.99 Lancaster County 3,725, , % (5,565) 0 194,721 $9.60 Notable Lease Transactions Building Submarket SF Qtr Tenant Name 1 Matthews Corners East 63,000 2nd Academy Sports 2 Cambridge Village Lincoln County 50,000 2nd Publix 3 Riverbend Village Northwest 40,000 2nd Harris Teeter 4 Chester Crossing Chester County 26,171 1st Roses 5 Carolina Pavilion Outer Southeast 26,043 2nd Frontgate Outlet Store 6 City View Shopping Center Northwest 23,383 1st American Freight N Tryon St Northeast,000 2nd - 8 Center Street Plaza Iredell County 14,700 1st South Blvd Inner Southeast 13,880 1st - 10 Mooresville Consumer Square Iredell County 13,500 1st Tuesday Morning 11 Parkway Crossing Phase I Outer Southeast 12,275 2nd Habitat Restore David Cox Rd Northeast 11,3 1st Stats East Blvd Inner Southeast 10,980 2nd The People s Market S NC 27 Hwy Gaston County 10,908 1st Dollar Tree Wallace Blvd* East 10,812 1st Manpower Auto Detailing Svc Charlotte Cotton Mills Downtown 10,651 2nd - 17 Shops at Freedom - Bldg 2 Northwest 9,869 2nd Salon Central 18 Pendleton Village York County 9,1 2nd Government Ave SW Catawba County 9,100 1st Z Rock Fitness S Main St Rowan County 9,088 1st W Franklin Blvd Gaston County 9,000 2nd Gavel Time Auction 22 The Plaza Mall Marketplace Northeast 8,753 1st New Hope Church

5 Charlotte, North Carolina Notable Lease Transactions Building Submarket SF Qtr Tenant Name N Broad St Iredell County 8,700 1st WFV Design N New Hope Rd Gaston County 8,000 2nd Auto Accessories 25 Countryside Shopping Center Outer Southeast 7,000 2nd - 26 Dollar Tree Plaza Bldg 4 East 6,800 1st - 27 Poplin Place Union County 6,4 1st Grumpy Monk Hoey Church Rd Cleveland County 6,698 1st th Street Pl Catawba County 6,530 1st N Center St Catawba County 6,500 2nd - 31 Promenade at Carolina Pavilion Outer Southeast 6,214 1st 5.11 Tactical E Independence Blvd East 6,181 1st - 33 South Square Marketplace Inner Southeast 6,035 1st PAE Immigration Office Lenoir Rhyne Blvd SE Catawba County 6,000 1st Matthews Township Pky East 5,962 2nd Berewick Town Center Dr Southwest 5,956 2nd Pet Supermarket Wesley Chapel Stouts Rd Union County 5,2 1st Valvoline 38 McCullough Commons Northeast 5,750 1st - 39 Brawley Commons Shopping Center Iredell County 5,750 2nd Pet Supermarket Pineville-Matthews Rd* Outer Southeast 5,547 1st Kabuto Steakhouse * Renewal Major Sales Transactions Building(s) Price SF Seller Buyer Ballantyne Village - Buildings A & B $43,150,000 6,000 Vision Ventures American Realty Advisors McCullough Commons $40,100, ,175 Smart Stop Asset Management Ferris Development, LLC Northcross Commons $31,000,000 62,4 Hawthorne Retail Partners, Inc InvenTrust Properties Metropolitan Midtown $30,000, ,695 Property Markets Group, Inc Bluejay Management The Arbors at Mallard Creek $25,100,000 55,323 Principal Real Estate Investors, LLC Westwood Financial Corp Coddle Creek Market / Regency Village $22,200, ,098 Casto ECHO Real Estate Services Co Mooresville Town Square $,700,000 89,824 Manchester Financial NC, LLC Slate Retail REIT Johnston Road Plaza $15,250,000,508 Westwood Financial Corp Unison Realty Partners Terraces at SouthPark $13,700,000,2 DDR Corp Crow Holdings

6 Retail Submarkets den 1 Downtown 2 Inner Southeast 3 Outer Southeast 4 East 5 Northeast 6 North 7 Northwest 8 Southwest Lake Norman of Catawba Denver 28 ± Mile Radius Westport Iredell County Mooresville Davidson Charlotte, North Carolina Landis Enochville Rowan County Salisbury China Grove Gran Fai Cornelius Shoals Iron Station Lincoln County Lowesville Huntersville 6 Kannapolis Mou 21 Concord Stanley Dallas Mount Holly 5 Harrisburg 601 Gaston County Ranlo Lowell McAdenville Cramerton Belmont Mecklenburg County Cabarrus County Midland Charlotte 2 4 Mint Hill Fairview Lake Wylie Tega Cay 21 Pineville 3 Matthews Union County Hemby Bridge Stallings Indian Trail Unionville 601 India Hook Fort Mill Riverview Marvin Weddington Wesley Chapel Monroe Newport Rock Hill York County 521 Lancaster County WaxhawMineral Springs Wing Lesslie Catawba JAARS

7 Charlotte, North Carolina 1Q Billy Cooper Ragan Rose Camille Christie NAI Southern Real Estate 4201 Congress Street Charlotte, NC NAI Southern Real Estate-Charlotte, NC. We obtained the information above from sources we believe to be reliable. However, we have not verified its accuracy and make no guarantee, warranty, or representation about it. No part of this document is to be reproduced without our written permission. This document has been prepared and issued by NAI Southern Real Estate on the basis of publicly available information, internally developed data and other sources believed to be reliable. The information contained herein is not guaranteed, does not purport to be comprehensive and is strictly for information purposes only. NAI Southern Real Estate or its affiliates does not assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions provided herein. Any expressions of opinions are subject to change without notice. This document does not constitute an offer or an invitation to invest, lease, rent, purchase or conduct any real estate activity, business activity, or personal activity based upon its data or purpose. No party should treat any of the contents herein as advice.