The CoStar Retail Report. T h i r d Q u a r t e r Reno/Sparks Retail Market

Transcription

1 The CoStar Retail Report T h i r d Q u a r t e r

2 Third Quarter 2016 Reno/Sparks Table of Contents Table of Contents A Methodology B Terms & Definitions C Market Highlights & Overview CoStar Markets Inventory & Development Analysis Inventory & Development Analysis Select Top Deliveries Figures at a Glance Figures at a Glance by Building Type & Market Historical Figures at a Glance Leasing Activity Analysis Select Top Lease Transactions Analysis of Individual CoStar Submarket Clusters Airport Market Carson City County Market Douglas County Market Kietzke Market Lyon County Market Meadowood Market North Valleys Market Northeast Reno Market Northeast Sparks Market Northwest Reno Market Park Lane Market Reno Redevelopment Market South Reno Market South Virginia Market Southwest Reno Market Spanish Springs Market Sparks Industrial Market Sparks Redevelopment Market West Sparks Market 2016 CoStar Group, Inc. The CoStar Retail Report A

3 Reno/Sparks Third Quarter 2016 Methodology The CoStar Retail Report calculates Retail statistics using CoStar Group's base of existing, under construction and under renovation Retail buildings in each given metropolitan area. All Retail building types are included, including Community Center, Freestanding Retail, Neighborhood Center, Power Center, Regional Mall, Specialty Center and Unanchored Strip Center, in both single-tenant and multi-tenant buildings, including owner-occupied buildings. CoStar Group's national database includes approximately 80.7 billion square feet of coverage in 3.5 million properties. All rental rates reported in the CoStar Retail Report are calculated using Triple Net (NNN) rental rates. For information on subscribing to CoStar s other products and services, please contact us at COSTAR, or visit our web site at Copyright 2016 CoStar Group, Inc. All Rights Reserved. Although CoStar makes efforts to ensure the accuracy and reliability of the information contained herein, CoStar makes no guarantee, representation or warranty regarding the quality, accuracy, timeliness or completeness of the information. The publication is provided as is and CoStar expressly disclaims any guarantees, representations or warranties of any kind, including those of MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CoStar Group, Inc L ST NW Washington, DC (800) NASDAQ: CSGP B The CoStar Retail Report 2016 CoStar Group, Inc.

4 Third Quarter 2016 Reno/Sparks Terms & Definitions Anchor Tenant: A large national or regional retailer that serves as a primary draw for a shopping center; a store strategically located in a retail property in order to enhance, bring attention to, or increase traffic at the property. Sometimes called a destination tenant, usually these tenants lease at least 25,000 SF. Availability Rate: The ratio of available space to total rentable space, calculated by dividing the total available square feet by the total rentable square feet. Available Space: The total amount of space that is currently being marketed as available for lease in a given time period. It includes any space that is available, regardless of whether the space is vacant, occupied, available for sublease, or available at a future date. Buyer: The individual, group, company, or entity that has purchased a commercial real estate asset. Cap Rate: Short for capitalization rate. The Cap Rate is a calculation that reflects the relationship between one year s net operating income and the current market value of a particular property. The Cap Rate is calculated by dividing the annual net operating income by the sales price (or asking sales price). Community Center: A shopping center development that has a total square footage between 100, ,000 SF. Generally will have 2-3 large anchored tenants, but not department store anchors. Community Center typically offers a wider range of apparel and other soft goods than the Neighborhood Center. Among the more common anchors are supermarkets and super drugstores. Community Center tenants sometime contain retailers selling such items as apparel, home improvement/furnishings, toys, electronics or sporting goods. The center is usually configured as a strip, in a straight line, or an L or U shape. Construction Starts: Buildings that began construction during a specific period of time. (See also: Deliveries) Deliveries: Buildings that complete construction during a specified period of time. In order for space to be considered delivered, a certificate of occupancy must have been issued for the property. Delivery Date: The date a building completes construction and receives a certificate of occupancy. Developer: The company, entity or individual that transforms raw land to improved property by use of labor, capital and entrepreneurial efforts. Direct Space: Space that is being offered for lease directly from the landlord or owner of a building, as opposed to space being offered in a building by another tenant (or broker of a tenant) trying to sublet a space that has already been leased. : The square footage of buildings that have received a certificate of occupancy and are able to be occupied by tenants. It does not include space in buildings that are either planned, under construction or under renovation. Freestanding Retail: Single tenant building with a retail tenant. Examples include video stores, fast food restaurant, etc. Full Service Rental Rate: Rental rates that include all operating expenses such as utilities, electricity, janitorial services, taxes and insurance. General Retail: Typically are single tenant freestanding generalpurpose commercial buildings with parking. Many single retail buildings fall into this use code, especially when they don t meet any of the more detailed use code descriptions. Growth in Inventory: The change in size of the existing square footage in a given area over a given period of time, generally due to the construction of new buildings. Landlord Rep: (Landlord Representative) In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the owner/landlord is referred to as the Landlord Rep. Leased Space: All the space that has a financial lease obligation. It includes all leased space, regardless of whether the space is currently occupied by a tenant. Leased space also includes space being offered for sublease. Leasing Activity: The volume of square footage that is committed to and signed under a lease obligation for a specific building or market in a given period of time. It includes direct leases, subleases and renewals of existing leases. It also includes any pre-leasing activity in planned, under construction, or under renovation buildings. Lifestyle Center: An upscale, specialty retail, main street concept shopping center. An open center, usually without anchors, about 300,000 SF GLA or larger, located near affluent neighborhoods, includes upscale retail, trendy restaurants and entertainment retail. Nicely landscaped with convenient parking located close to the stores. Mall: The combined retail center types of Lifestyle Center, Regional Mall and Super Regional Mall. Market: Geographic boundaries that serve to delineate core areas that are competitive with each other and constitute a generally accepted primary competitive set of areas. Markets are building-type specific, and are non-overlapping contiguous geographic designations having a cumulative sum that matches the boundaries of the entire Region (See also: Region). Markets can be further subdivided into Submarkets. (See also: Submarkets) Multi-Tenant: Buildings that house more than one tenant at a given time. Usually, multi-tenant buildings were designed and built to accommodate many different floor plans and designs for different tenant needs. (See also: Tenancy). Neighborhood Center: Provides for the sales of convenience goods (food, drugs, etc.) and personal services (laundry, dry cleaning, etc.) for day-to-day living needs of the immediate neighborhood with a supermarket being the principal tenant. In theory, the typical GLA is 50,000 square feet. In practice, the GLA may range from 30,000 to 100,000 square feet. Net Absorption: The net change in occupied space over a given period of time. Unless otherwise noted Net Absorption includes direct and sublease space. New Space: Sometimes called first generation space, refers to space that has never been occupied and/or leased by a tenant. Occupied Space: Space that is physically occupied by a tenant. It does not include leased space that is not currently occupied by a tenant. Outlet Center: Usually located in a rural or occasionally in a tourist location, an Outlet Center consists of manufacturer s outlet stores selling their own brands at a discount. 50, ,000 SF. An Outlet Center does not have to be anchored. A strip configuration is most common, although some are enclosed malls and others can be arranged in a village cluster. Owner: The company, entity, or individual that holds title on a given building or property. Planned/Proposed: The status of a building that has been announced for future development but not yet started construction. Power Center: The center typically consists of several freestanding (unconnected) anchors and only a minimum amount of small specialty tenants. 250, ,000 SF. A Power Center is dominated by several large anchors, including discount department stores, offprice stores, warehouse clubs, or "category killers," i.e., stores that offer tremendous selection in a particular merchandise category at low prices. Preleased Space: The amount of space in a building that has been leased prior to its construction completion date, or certificate 2016 CoStar Group, Inc. The CoStar Retail Report C

5 Reno/Sparks Third Quarter 2016 of occupancy date. Price/SF: Calculated by dividing the price of a building (either sales price or asking sales price) by the Rentable Building Area (RBA). Rental Rate: The asking rate per square foot for a particular building or unit of space by a broker or property owner. rental rates may differ from the actual rates paid by tenants following the negotiation of all terms and conditions in a specific lease. RBA: Abbreviation for Rentable Building Area. (See also: Rentable Building Area) Region: Core areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Regions are further divided into market areas, called Markets. (See also: Markets) Regional Mall: Provides shopping goods, general merchandise, apparel, and furniture, and home furnishings in full depth and variety. It is built around the full-line department store with a minimum GLA of 100,000 square feet, as the major drawing power. For even greater comparative shopping, two, three, or more department stores may be included. In theory a regional center has a GLA of 400,000 square feet, and may range from 300,000 to more than 1,000,000 square feet. Regional centers in excess of 750,000 square feet GLA with three or more department stores are considered Super Regional. (See also: Super Regional Mall). Relet Space: Sometimes called second generation or direct space, refers to existing space that has previously been occupied by another tenant. Rentable Building Area: (RBA) The total square footage of a building that can be occupied by, or assigned to a tenant for the purpose of determining a tenant s rental obligation. Generally RBA includes a percentage of common areas including all hallways, main lobbies, bathrooms, and telephone closets. Rental Rates: The annual costs of occupancy for a particular space quoted on a per square foot basis. Sales Price: The total dollar amount paid for a particular property at a particular point in time. Sales Volume: The sum of sales prices for a given group of buildings in a given time period. Seller: The individual, group, company, or entity that sells a particular commercial real estate asset. SF: Abbreviation for Square Feet. Shopping Center: The combined retail center types of Community Center, Neighborhood Center and Strip Center. Single-Tenant: Buildings that are occupied, or intended to be occupied by a single tenant. (See also: Build-to-suit and Tenancy) Specialty Center: The combined retail center types of Airport Retail, Outlet Center and Theme/Festival Center. Sports & Entertainment: A facility suited for recreational activities, including: Amusement Facility, Aquatic Facility/Swimming Pool, Bowling Alley, Casino/Gaming Facility, Equestrian Center/Stable, Fitness, Court and Spa Facility, Golf Related, Racetrack, Skating Rink, Ski Resort, Sports Arena/Stadium, and Theatre/Performing Art Facility. Strip Center: A strip center is an attached row of stores or service outlets managed as a coherent retail entity, with on-site parking usually located in front of the stores. Open canopies may connect the storefronts, but a strip center does not have enclosed walkways linking the stores. A strip center may be configured in a straight line, or have an "L" or "U" shape. Sublease Space: Space that has been leased by a tenant and is being offered for lease back to the market by the tenant with the lease obligation. Sublease space is sometimes referred to as sublet space. Submarkets: Specific geographic boundaries that serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted primary competitive set, or peer group. Submarkets are building type specific (office, industrial, retail, etc.), with distinct boundaries dependent on different factors relevant to each building type. Submarkets are non-overlapping, contiguous geographic designations having a cumulative sum that matches the boundaries of the Market they are located within (See also: Market). Super Regional Mall: Similar to a regional mall, but because of its larger size, a super regional mall has more anchors, a deeper selection of merchandise, and draws from a larger population base. As with regional malls, the typical configuration is as an enclosed mall, frequently with multiple levels (See also: Regional Mall). Tenancy: A term used to indicate whether or not a building is occupied by multiple tenants (See also: Multi-tenant) or a single tenant. (See also: Single-tenant) Tenant Rep: Tenant Rep stands for Tenant Representative. In a typical lease transaction between an owner/landlord and tenant, the broker that represents the interests of the tenant is referred to as a Tenant Rep. Theme/Festival Center: These centers typically employ a unifying theme that is carried out by the individual shops in their architectural design and, to an extent, in their merchandise. Sometimes the biggest appeal of these centers is to tourists; they can be anchored by restaurants and entertainment facilities. These centers, generally located in urban areas, tend to be adapted from older, sometimes historic, buildings, and can be part of mixed-use projects. 80, ,000 SF. Under Construction: Buildings in a state of construction, up until they receive their certificate of occupancy. In order for CoStar to consider a building under construction, the site must have a concrete foundation in place. Abbreviated UC. Rate: A measurement expressed as a percentage of the total amount of physically vacant space divided by the total amount of existing inventory. Under construction space generally is not included in vacancy calculations. : Space that is not currently occupied by a tenant, regardless of any lease obligation that may be on the space. Vacant space could be space that is either available or not available. For example, sublease space that is currently being paid for by a tenant but not occupied by that tenant, would be considered vacant space. Likewise, space that has been leased but not yet occupied because of finish work being done, would also be considered vacant space. Weighted Average Rental Rate: Rental rates that are calculated by factoring in, or weighting, the square footage associated with each particular rental rate. This has the effect of causing rental rates on larger spaces to affect the average more than that of smaller spaces. The weighted average rental rate is calculated by taking the ratio of the square footage associated with the rental rate on each individual available space to the square footage associated with rental rates on all available spaces, multiplying the rental rate by that ratio, and then adding together all the resulting numbers. Unless specifically specified otherwise, rental rate averages include both Direct and Sublet available spaces. Year Built: The year in which a building completed construction and was issued a certificate of occupancy. YTD: Abbreviation for Year-to-Date. Describes statistics that are cumulative from the beginning of a calendar year through whatever time period is being studied. D The CoStar Retail Report 2016 CoStar Group, Inc.

6 Overview Third Quarter 2016 Reno/Sparks Reno/Sparks s Decreases to 9.5% Net Absorption Positive 97,036 SF in the Quarter The Reno/Sparks retail market experienced a moderate improvement in market conditions in the third quarter The vacancy rate went from 10.2% in the previous quarter to 9.5% in the current quarter. Net absorption was positive 97,036 square feet, and vacant sublease space decreased by (1,272) square feet. rental rates decreased from second quarter 2016 levels, ending at $14.05 per square foot per year.. Net Absorption Retail net absorption was strong in Reno/Sparks third quarter 2016, with positive 97,036 square feet absorbed in the quarter. In second quarter 2016, net absorption was positive 72,849 square feet, while in first quarter 2016, absorption came in at positive 70,002 square feet. In fourth quarter 2015, positive 114,488 square feet was absorbed in the market. Tenants moving into large blocks of space in 2016 include: Desert Rose Dollar Store moving into 11,216 sqft at 2700 Virginia St; Dress Barn moving into 6,554 square feet at S Virginia St; and Community Health Alliance moving into 6,400 square feet at Oddie Blvd. Reno/Sparks s retail vacancy rate decreased in the third quarter 2016, ending the quarter at 9.5%. Over the past four quarters, the market has seen an overall decrease in the vacancy rate, with the rate going from 10.6% in the fourth quarter 2015, to 10.5% at the end of the first quarter 2016, 10.2% at the end of the second quarter 2016, to 9.5% in the current quarter. The amount of vacant sublease space in the Reno/Sparks market has trended down over the past four quarters. At the end of the fourth quarter 2015, there were 121,511 square feet of vacant sublease space. Currently, there are 92,776 square feet vacant in the market. Largest Lease Signings The largest lease signings occurring in 2016 included: the 15,000-square-foot-lease signed by Furniture Discounters at 1270 E Plumb Ln; the 8,219-square-foot-deal signed by Furniture Discounters at Northtowne Ln; and the 7,000-square-foot-lease signed by Home Express Kids at Los Altos Pky. Rental Rates Average quoted asking rental rates in the Reno/Sparks retail market are down over previous quarter levels, and down from their levels four quarters ago. rents ended the third quarter 2016 at $14.05 per square foot per year. That compares to $14.14 per square foot in the second quarter 2016, and $14.09 per square foot at the end of the fourth quarter This represents a 0.6% decrease in rental rates in the current quarter, and a 0.28% decrease from four quarters ago. Inventory & Construction During the third quarter 2016, no new space was completed in the Reno/Sparks retail market. Over the past four quarters, a total of 46,216 square feet of retail space has been built in Reno/Sparks. In addition to the current quarter, one building with 5,270 square feet were completed in second quarter 2016, two buildings totaling 21,556 square feet completed in first quarter 2016, and 19,390 square feet in three buildings completed in fourth quarter Rates by Building Type % Power Center Specialty Center General Retail Shopping Center Mall Total Market 25% 20% 15% 10% 5% 0% q q q q q q q q q 2016 CoStar Group, Inc. The CoStar Retail Report 1

7 Reno/Sparks Third Quarter 2016 There was no retail space under construction at the end of the third quarter Some of the notable 2016 deliveries include: 1320 E Lincoln Way, a 19,000-square-foot facility that delivered in first quarter 2016 and is now 100% occupied, and 1300 E William St, a 5,270- square-foot building that delivered in second quarter 2016 and is now 100% occupied. Total retail inventory in the Reno/Sparks market area amounted to 32,806,257 square feet in 2,369 buildings and 249 centers as of the end of the third quarter Shopping Center The Shopping Center market in Reno/Sparks currently consists of 237 projects with 13,974,287 square feet of retail space in 706 buildings. In this report the Shopping Center market is comprised of all Community Center, Neighborhood Center, and Strip Centers. After absorbing 41,012 square feet and delivering no new space in the current quarter, the Shopping Center sector saw the vacancy rate go from 11.6% at the end of the second quarter 2016 to 11.3% this quarter. Over the past four quarters, the Shopping Center vacancy rate has gone from 12.3% at the end of the fourth quarter 2015, to 12.0% at the end of the first quarter 2016, to 11.6% at the end of the second quarter 2016, and finally to 11.3% at the end of the current quarter. Rental rates ended the third quarter 2016 at $14.61 per square foot, down from the $14.71 they were at the end of second quarter Rental rates have trended down over the past year, going from $14.63 per square foot a year ago to their current levels. Net absorption in the Shopping Center sector has totaled 233,717 square feet over the past four quarters. In addition to the positive 41,012 square feet absorbed this quarter, positive 51,674 square feet was absorbed in the second quarter 2016, positive 43,753 square feet was absorbed in the first quarter 2016, and positive 97,278 square feet was absorbed in the fourth quarter & Rent Past 9 Quarters Price in Dollars per Unit $14.20 $14.15 $14.10 $14.05 $14.00 $13.95 $13.90 $13.85 $13.80 Average Rental Rate Overview Rate q 14.0% 12.0% 1 8.0% 6.0% 4.0% 2.0% Rate Percentage Power Centers The Power Center average vacancy rate was 20.1% in the third quarter With negative (73,217) square feet of net absorption and no new deliveries, the vacancy rate went from 17.7% at the end of last quarter to 20.1% at the end of the third quarter. In the second quarter 2016, Power Centers absorbed negative (4,981) square feet, delivered no new space, and the vacancy rate went from 17.5% to 17.7% over the course of the quarter. Rental started the quarter at $10.79 per square foot and ended the quarter at $10.84 per square foot. A year ago, in third quarter 2015, the vacancy rate was 18.3%. Over the past four quarters, Power Centers have absorbed a cumulative (56,577) square feet of space. Vacant sublease space has gone from 16,442 square feet to 16,442 square feet over that time period, and rental rates have gone from $11.21 to $ At the end of the third quarter 2016, there was no space under construction in the Reno/Sparks market. The total stock of Power Center space in Reno/Sparks currently sits at 3,051,583 square feet in 8 centers comprised of 84 buildings. No space was under construction at the end of the third quarter General Retail Properties The General Retail sector of the market, which includes all freestanding retail buildings, except those contained within a center, reported a vacancy rate of 6.1% at the end of third quarter There was a total of 805,060 square feet vacant at that time. The General Retail sector in Reno/Sparks currently has average rental rates of $13.26 per square foot per year. In all, there are a total of 1,532 buildings with 13,125,520 square feet of General Retail space in Reno/Sparks. Specialty Centers There is currently 1 Specialty Center in the Reno/Sparks market, making up 91,631 square feet of retail space. In this report the Specialty Center market is comprised of Outlet Center, Airport Retail and Theme/Festival Centers. Specialty Centers in the Reno/Sparks market have experienced no net absorption in Malls Malls recorded net absorption of positive 7,895 square feet in the third quarter This net absorption number, combined with no new space that was built in the quarter, caused the vacancy rate to go from 4.4% a quarter ago to 4.1% at the end of the third quarter Rental rates went from $30.54 per square foot to $30.54 per square foot during that time. In this report the Mall market is comprised of 3 Lifestyle Center, Regional Mall and Super Regional Malls. Reports compiled by: Scott Stephenson, Research Manager, and Tomalina Pacheco, Research Associate. 2 The CoStar Retail Report 2016 CoStar Group, Inc.

8 Markets Third Quarter 2016 Reno/Sparks CoStar Submarkets In analyzing metropolitan areas, CoStar has developed geographic designations to help group properties together, called Markets, Submarket Clusters and Submarkets. Markets are the equivalent of metropolitan areas, or areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Markets are then divided into Submarket Clusters, which are core areas within a metropolitan area that are known to be competitive with each other in terms of attracting and keeping tenants. Markets are then further subdivided into smaller units called Submarkets, which serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted competitive set, or peer group. Submarket Clusters Airport Ret Carson City County Ret Douglas County Ret Kietzke Ret Lyon County Ret Meadowood Ret North Valleys Ret Northeast Reno Ret Northeast Sparks Ret Northwest Reno Ret Park Lane Ret Reno Redevelopment Ret South Reno Ret South Virginia Ret Southwest Reno Ret Spanish Springs Ret Sparks Industrial Ret Sparks Redevelopment Ret West Sparks Ret 2016 CoStar Group, Inc. The CoStar Retail Report 3

9 Reno/Sparks Third Quarter 2016 Inventory & development Historical Deliveries Deliveries 2.3 Average Delivered SF 2.0 Millions of SF * Future deliveries based on current under construction buildings. Construction Activity Markets Ranked by Under Construction Square Footage Under Construction Inventory Average Bldg Size Market # Bldgs Total GLA Preleased SF Preleased % All Existing U/C West Sparks Ret ,873 0 Carson City County Ret ,803 0 Douglas County Ret ,240 0 Lyon County Ret ,351 0 Airport Ret ,532 0 Kietzke Ret ,533 0 Meadowood Ret ,657 0 North Valleys Ret ,637 0 Northeast Reno Ret ,794 0 Northeast Sparks Ret ,846 0 All Other ,125 0 Totals ,848 0 Recent Deliveries Leased & Un-Leased SF in Deliveries Since Leased Un-Leased Millions of SF The CoStar Retail Report 2016 CoStar Group, Inc.

10 Inventory & development Third Quarter 2016 Reno/Sparks Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction Construction Starts Deliveries 0.08 Millions of SF Recent Deliveries by Project Size of Year-to-Date Development Building Size # Bldgs GLA SF Leased % Leased Avg Rate Single-Tenant Multi-Tenant < 50,000 SF 3 26,826 26, $ ,556 24,270 50,000 SF - 99,999 SF $ ,000 SF - 249,999 SF $ ,000 SF - 499,999 SF $ 0 0 >= 500,000 SF $ 0 0 Recent Development by Tenancy Based on GLA Developed for Single & Multi Tenant Use 2016 Deliveries No Properties Under Construction Comparison Based on Total GLA Shopping Center 10% General Retail Power Center 90% Mall Specialty Center Multi Single Millions of SF CoStar Group, Inc. The CoStar Retail Report 5

11 Reno/Sparks Third Quarter 2016 Inventory & development 6 The CoStar Retail Report 2016 CoStar Group, Inc.

12 Figures at a Glance Third Quarter 2016 Reno/Sparks General Retail Market Statistics Third Quarter 2016 YTD Net YTD Under Market # Blds Total GLA Total SF Vac % Absorption Deliveries Const SF Rates Airport Ret ,581 2,400 2, % (2,400) 0 0 $6.00 Carson City County Ret 185 2,109, , , % 22,289 7,826 0 $12.64 Douglas County Ret , , , % (18,120) 0 0 $12.67 Kietzke Ret 103 1,130,825 13,883 13, % 12, $7.64 Lyon County Ret 121 1,249,738 46,466 46, % 11, $9.85 Meadowood Ret ,765 22,637 22, % 16, $24.97 North Valleys Ret ,859 2,440 2, % 3, $15.00 Northeast Reno Ret ,497 15,056 15, % 8, $14.30 Northeast Sparks Ret , $17.56 Northwest Reno Ret ,486 41,513 41, % 6, $15.76 Park Lane Ret 143 1,122,506 99,331 99, % 125, $12.62 Reno Redevelopment Ret ,278 53,919 70, % 4, $16.84 South Reno Ret ,404 7,305 7, % $12.37 South Virginia Ret ,935 54,185 55, % (22,400) 0 0 $15.18 Southwest Reno Ret , , $ Spanish Springs Ret 6 42,279 2,800 2, % $26.78 Sparks Industrial Ret ,336 29,735 29, % (25,285) 0 0 $11.96 Sparks Redevelopment Ret , , , % (9,566) 0 0 $8.30 West Sparks Ret , $12.00 Totals 1,532 13,125, , , % 136,442 7,826 0 $13.26 Mall Market Statistics Third Quarter 2016 YTD Net YTD Under Market # Ctrs Total GLA Total SF Vac % Absorption Deliveries Const SF Rates Airport Ret $ Carson City County Ret $ Douglas County Ret $ Kietzke Ret $ Lyon County Ret $ Meadowood Ret 1 933, $ North Valleys Ret $ Northeast Reno Ret $ Northeast Sparks Ret 1 1,023,230 47,274 47, % 5,098 19,000 0 $29.93 Northwest Reno Ret $ Park Lane Ret $ Reno Redevelopment Ret $ South Reno Ret 1 606,748 58,019 58, % 24, $4 South Virginia Ret $ Southwest Reno Ret $ Spanish Springs Ret $ Sparks Industrial Ret $ Sparks Redevelopment Ret $ West Sparks Ret $ Totals 3 2,563, , , % 29,696 19,000 0 $ CoStar Group, Inc. The CoStar Retail Report 7

13 Reno/Sparks Third Quarter 2016 Figures at a Glance Power Center Market Statistics Third Quarter 2016 YTD Net YTD Under Market # Ctrs Total GLA Total SF Vac % Absorption Deliveries Const SF Rates Airport Ret $ Carson City County Ret 1 289, , , % (18,891) 0 0 $9.42 Douglas County Ret $ Kietzke Ret 1 309,796 71,515 71, % 5, $12.35 Lyon County Ret $ Meadowood Ret 2 987, , , % (61,500) 0 0 $13.50 North Valleys Ret $ Northeast Reno Ret $ Northeast Sparks Ret $ Northwest Reno Ret 1 285,351 4,130 4, % 2, $28.88 Park Lane Ret $ Reno Redevelopment Ret $ South Reno Ret 1 362,992 2,761 2, % $20.19 South Virginia Ret $ Southwest Reno Ret $ Spanish Springs Ret 2 816, , , % 10, $1 Sparks Industrial Ret $ Sparks Redevelopment Ret $ West Sparks Ret $ Totals 8 3,051, , , % (62,690) 0 0 $10.95 Shopping Center Market Statistics Third Quarter 2016 YTD Net YTD Under Market # Ctrs Total GLA Total SF Vac % Absorption Deliveries Const SF Rates Airport Ret 6 281,974 40,317 40, % 13, $15.63 Carson City County Ret 25 1,817, , , % 6, $9.20 Douglas County Ret 20 1,631, , , % $13.74 Kietzke Ret , , , % (4,011) 0 0 $9.98 Lyon County Ret 7 294,059 15,645 15, % (230) 0 0 $13.72 Meadowood Ret 24 1,836, , , % 26, $17.35 North Valleys Ret ,245 30,296 30, % 7, $16.79 Northeast Reno Ret 4 68,815 10,593 10, % 1, $15.60 Northeast Sparks Ret 14 1,159, , , % 21, $11.55 Northwest Reno Ret ,140 37,467 37, % 17, $19.71 Park Lane Ret , , , % 4, $17.92 Reno Redevelopment Ret 3 68,404 1,339 1, % (97) 0 0 $21.00 South Reno Ret , , , % 4, $18.62 South Virginia Ret ,743 20,247 20, % (4,489) 0 0 $13.65 Southwest Reno Ret 6 258,274 19,816 19, % 6, $15.17 Spanish Springs Ret ,622 85, , % 9, $17.26 Sparks Industrial Ret 3 53,094 5,816 5, % 3, $16.43 Sparks Redevelopment Ret 7 106, $ West Sparks Ret 19 1,127, , , % 23, $14.23 Totals ,974,287 1,521,939 1,580, % 136, $ The CoStar Retail Report 2016 CoStar Group, Inc.

14 Figures at a Glance Third Quarter 2016 Reno/Sparks Specialty Center Market Statistics Third Quarter 2016 YTD Net YTD Under Market # Ctrs Total GLA Total SF Vac % Absorption Deliveries Const SF Rates Airport Ret $ Carson City County Ret $ Douglas County Ret $ Kietzke Ret $ Lyon County Ret $ Meadowood Ret $ North Valleys Ret $ Northeast Reno Ret $ Northeast Sparks Ret $ Northwest Reno Ret $ Park Lane Ret $ Reno Redevelopment Ret $ South Reno Ret 1 91, $ South Virginia Ret $ Southwest Reno Ret $ Spanish Springs Ret $ Sparks Industrial Ret $ Sparks Redevelopment Ret $ West Sparks Ret $ Totals 1 91, $ Total Retail Market Statistics Third Quarter 2016 YTD Net YTD Under Market # Blds Total GLA Total SF Vac % Absorption Deliveries Const SF Rates Airport Ret ,555 42,717 42, % 11, $15.16 Carson City County Ret 251 4,217, , , % 9,539 7,826 0 $9.88 Douglas County Ret 177 2,520, , , % (17,886) 0 0 $13.50 Kietzke Ret 140 2,314, , , % 14, $11.06 Lyon County Ret 136 1,543,797 62,111 62, % 11, $11.43 Meadowood Ret 167 4,451, , , % (19,252) 0 0 $16.25 North Valleys Ret ,104 32,736 32, % 11, $16.69 Northeast Reno Ret ,312 25,649 25, % 9, $14.37 Northeast Sparks Ret 135 2,409, , , % 26,822 19,000 0 $22.80 Northwest Reno Ret 132 1,797,977 83,110 83, % 25, $20.07 Park Lane Ret 177 1,859, , , % 130, $14.28 Reno Redevelopment Ret ,682 55,258 71, % 4, $16.94 South Reno Ret 155 2,773, , , % 29, $18.37 South Virginia Ret 237 1,227,678 74,432 75, % (26,889) 0 0 $14.53 Southwest Reno Ret ,742 19,816 19, % 8, $15.17 Spanish Springs Ret 90 1,724, , , % 19, $12.56 Sparks Industrial Ret ,430 35,551 35, % (22,208) 0 0 $13.02 Sparks Redevelopment Ret , , , % (9,566) 0 0 $8.30 West Sparks Ret 78 1,550, , , % 23, $13.42 Totals 2,369 32,806,257 3,011,663 3,104, % 239,887 26,826 0 $ CoStar Group, Inc. The CoStar Retail Report 9

15 Reno/Sparks Third Quarter 2016 Figures at a Glance 10 The CoStar Retail Report 2016 CoStar Group, Inc.

16 Figures at a Glance Third Quarter 2016 Reno/Sparks 2016 CoStar Group, Inc. The CoStar Retail Report 11

17 Reno/Sparks Third Quarter 2016 Leasing Activity Historical Rental Rates Based on NNN Rental Rates Power Center Specialty Center General Retail Shopping Center Mall Total Market $3 $25.00 $2 $15.00 $1 $5.00 $ q q q q q q q q q by Available Space Type Percent of All in Direct vs. Sublet by Building Type Percent of All by Building Type 3% Shopping Center General Retail Power Center Mall 97% Specialty Center Direct Sublet 0% 10% 20% 30% 40% 50% 60% GLA By Building Type Ratio of Total GLA by Building Type Future Space Available Space Scheduled to be Available for Occupancy* Shopping Center General Retail Power Center Mall Millions Specialty Center Millions of SF q q * Includes Under Construction Spaces 12 The CoStar Retail Report 2016 CoStar Group, Inc.

18 Leasing Activity Third Quarter 2016 Reno/Sparks Select Top Retail Leases Based on Leased Square Footage For Deals Signed in 2016 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company E Plumb Ln Kietzke Ret 15,000 1st Furniture Discounters Sperry Van Ness RE/MAX Premier Properties S McCarran Blvd Meadowood Ret 9,909 2nd N/A N/A Ribeiro Companies Northtowne Ln West Sparks Ret 8,219 3rd Furniture Discounters N/A Hawkins Companies Los Altos Pky Spanish Springs Ret 7,000 3rd Home Express Kids N/A Colliers International S Virginia St South Reno Ret 6,992 3rd Skipoloni s N/A Colliers International Vassar St Kietzke Ret 6,603 1st N/A N/A Stark & Associates N Sierra St Reno Redevelopment Ret 6,310 2nd Mark Estee Events N/A Dickson Commercial Group E Prater Way Sparks Redevelopment Ret 6,200 3rd N/A N/A Dickson Commercial Group E Grove St Park Lane Ret 6,080 2nd Critter Control Direct Deal Direct Deal Los Altos Pky Spanish Springs Ret 5,878 2nd Campo Vino N/A Colliers International Caughlin Pky Southwest Reno Ret 5,240 3rd Renown Health N/A Kimco Realty Corporation; CBRE S Virginia St Meadowood Ret 5,000 2nd N/A N/A Ribeiro Companies Silverada Blvd West Sparks Ret 4,634 3rd N/A N/A Avison Young S McCarran Blvd Airport Ret 4,500 2nd N/A N/A CBRE N Wells Ave Northeast Reno Ret 4,463 3rd N/A N/A CBRE S Virginia St Meadowood Ret 4,200 1st Nurture Nest Sperry Van Ness Dickson Commercial Group E Grove St Park Lane Ret 4,100 2nd N/A N/A Hallmark Investments S Virginia St South Reno Ret 4,056 2nd Yoga Pod N/A Colliers International S McCarran Blvd Meadowood Ret 4,019 3rd N/A N/A Ribeiro Companies Sparks Blvd Spanish Springs Ret 3,900 2nd N/A N/A Dickson Commercial Group Caughlin Pky Southwest Reno Ret 3,842 3rd Casa Grande N/A Kimco Realty Corporation; CBRE Kietzke Ln Kietzke Ret 3,824 3rd N/A N/A Gator Investments E Pueblo St South Virginia Ret 3,600 2nd Dog Boarding Company N/A Stark & Associates Pyramid Way Spanish Springs Ret 3,600 2nd N/A N/A Kristiin Perrotta S Virginia St Meadowood Ret 3,600 2nd N/A N/A Art Hinckley S Virginia St South Reno Ret 3,502 3rd N/A N/A Colliers International N Sierra St Reno Redevelopment Ret 3,402 3rd Puzzle Room Reno N/A Colliers International 28 S Mccarran Blvd Sparks Industrial Ret 3,343 2nd N/A N/A Sperry Van Ness E 2nd St Reno Redevelopment Ret 3,312 3rd N/A N/A Dickson Commercial Group Sun Valley Blvd North Valleys Ret 3,244 1st Jump Baby Jump N/A Lothspeich Family Trust Booth St Southwest Reno Ret 3,206 3rd N/A N/A RE/MAX Premier Properties Prosperity St Kietzke Ret 3,121 3rd N/A N/A Urban Realty Advisors S McCarran Blvd Meadowood Ret 3,080 2nd N/A N/A CBRE S Virginia St South Virginia Ret 3,027 3rd N/A N/A Coldwell Banker Commercial Baring Blvd Northeast Sparks Ret 3,000 2nd N/A N/A Sperry Van Ness Wrondel Way Park Lane Ret 3,000 2nd N/A N/A Johnson Group S McCarran Blvd Airport Ret 3,000 3rd N/A N/A Sperry Van Ness Vassar St Kietzke Ret 3,000 3rd N/A N/A Avison Young S Virginia St Meadowood Ret 2,902 3rd N/A N/A Dickson Commercial Group S Virginia St Meadowood Ret 2,902 3rd N/A N/A Dickson Commercial Group * Renewal 2016 CoStar Group, Inc. The CoStar Retail Report 13

19 Reno/Sparks Third Quarter 2016 Deliveries, Absorption & A i r p o r t M a r k e t Delivered SF Absorption SF (5) (0.010) (0.015) 16.0% 14.0% 12.0% 1 8.0% 6.0% 4.0% 2.0% $ $ $ $15.00 $14.80 $ $14.40 $14.20 Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q ,555 42, % 5, $ q ,555 47, % 10, $ q ,555 57, % (3,600) $ q ,555 54, % (5,214) $ q ,555 49, % 2, $ q ,555 52, % $ q ,555 52, % 2, $ q ,555 55, % (2,868) $ q ,555 52, % (1,731) $ q ,555 50, % (9,514) $ q ,555 41, $ q ,555 42, % 1, $ q ,555 43, % (1,678) $ q ,555 41, % 2, $ q ,555 43, % (2,100) $ q ,555 41, % 2, $ The CoStar Retail Report 2016 CoStar Group, Inc.

20 Deliveries, Absorption & C a r s o n C i t y C o u n t y M a r k e t Delivered SF Absorption SF Third Quarter 2016 Reno/Sparks (0.010) (0.020) (0.030) (0.040) % 16.0% 14.0% 12.0% 1 8.0% 6.0% 4.0% 2.0% $ $ $10.50 $1 $ $9.00 Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 251 4,217, , % (9,446) $ q 251 4,217, , % 13, , $ q 250 4,212, , % 5, , ,270 $ q 249 4,209, , % 28, ,826 $ q 249 4,209, , % (26,724) ,556 $ q 249 4,209, , % (3,368) $ q 249 4,209, , % 3, $ q 249 4,209, , % 46, , $ q 248 4,200, , % 13, ,175 $ q 248 4,200, , % 45, ,175 $ q 248 4,200, , % 29, $ q 248 4,200, , % 18, , $ q 247 4,197, , % 7, ,220 $ q 247 4,197, , % (338) ,220 $ q 247 4,197, , % 35, $ q 247 4,197, , % 14, , $ CoStar Group, Inc. The CoStar Retail Report 15

21 Reno/Sparks Third Quarter 2016 Deliveries, Absorption & D o u g l a s C o u n t y M a r k e t Delivered SF Absorption SF % (0.010) (0.020) 10.5% 1 9.5% 9.0% 8.5% 8.0% (0.030) 7.5% $ $ $13.60 $13.40 $ $13.00 $12.80 Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 177 2,520, , % 5, $ q 177 2,520, , % (6,127) $ q 177 2,520, , % (16,818) $ q 177 2,520, , % 9, $ q 177 2,520, , % 5, $ q 177 2,520, , % (6,272) $ q 177 2,520, , % (26,812) $ q 177 2,520, , % 4, $ q 177 2,520, , % 22, $ q 177 2,520, , % (7,560) $ q 177 2,520, , % (2,324) 1 19, $ q 176 2,501, , % 10, ,097 $ q 176 2,501, , % 15, ,097 $ q 176 2,501, , % 15, $ q 176 2,501, , % (7,830) $ q 176 2,501, , % (16,440) $ The CoStar Retail Report 2016 CoStar Group, Inc.

22 Deliveries, Absorption & K i e t z k e M a r k e t Delivered SF Absorption SF Third Quarter 2016 Reno/Sparks (0.020) (0.040) (0.060) (0.080) (0.100) 16.0% 14.0% 12.0% 1 8.0% 6.0% 4.0% 2.0% $ $ $ $11.00 $10.50 $ $9.50 $9.00 Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 140 2,314, , % 1, $ q 140 2,314, , % (5,067) $ q 140 2,314, , % 17, $ q 140 2,314, , % 12, $ q 140 2,314, , % 9, $ q 140 2,314, , % (85,931) $ q 140 2,314, , % (1,600) $ q 140 2,314, , % 11, $ q 140 2,314, , % (5,365) $ q 140 2,314, , % (12,667) $ q 140 2,314, , % $ q 140 2,314, , % 14, $ q 140 2,314, , % (22,256) $ q 140 2,314, , % 3, $ q 140 2,314, , % (4,487) $ q 140 2,314, , % 6, $ CoStar Group, Inc. The CoStar Retail Report 17

23 Reno/Sparks Third Quarter 2016 Deliveries, Absorption & L y o n C o u n t y M a r k e t Delivered SF Absorption SF (5) (0.010) 12.0% 1 8.0% 6.0% 4.0% 2.0% (0.015) $ $ $11.00 $10.50 $1 $ $9.00 $8.50 Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 136 1,543,797 62, % 19, $ q 136 1,543,797 81, % $ q 136 1,543,797 81, % (8,489) $ q 136 1,543,797 73, % 17, $ q 136 1,543,797 90, % 9, $ q 136 1,543, , % $ q 136 1,543, , % (1,619) $ q 136 1,543,797 98, % 27, $ q 136 1,543, , % 17, $ q 136 1,543, , % (1,926) $ q 136 1,543, , % $ q 136 1,543, , % 12, $ q 136 1,543, ,612 1 (721) $ q 136 1,543, ,891 1 (4,190) $ q 136 1,543, , % (3,083) 1 9, $ q 135 1,534, , % 30, , ,002 $ The CoStar Retail Report 2016 CoStar Group, Inc.

24 Deliveries, Absorption & M e a d o w o o d M a r k e t Delivered SF Absorption SF Third Quarter 2016 Reno/Sparks (0.020) (0.040) (0.060) (0.080) 14.0% 12.0% 1 8.0% 6.0% 4.0% 2.0% $ $ $15.50 $15.00 $ $14.00 Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 167 4,451, , % (56,388) $ q 167 4,451, , % 1, $ q 167 4,451, , % 35, $ q 167 4,451, , % 12, , $ q 166 4,444, , % 50, , ,024 $ q 165 4,394, , % 30, ,000 $ q 165 4,394, , % 61, ,000 $ q 165 4,394, , % 50, ,000 $ q 165 4,394, , % (25,226) $ q 166 4,433, , % 34, $ q 166 4,433, , , $ q 166 4,433, , % 11, $ q 166 4,433, , % (9,749) $ q 166 4,433, , % 51, $ q 166 4,433, , % 29, $ q 166 4,433, , % 14, $ CoStar Group, Inc. The CoStar Retail Report 19

25 Reno/Sparks Third Quarter 2016 Deliveries, Absorption & N o r t h V a l l e y s M a r k e t Delivered SF Absorption SF (5) (0.010) 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% $ $ $ $16.50 $16.40 $16.30 $16.20 $ $16.00 $15.90 Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q ,104 32, % 3, $ q ,104 36, % 7, $ q ,104 43, % $ q ,104 44, % (819) $ q ,104 43, % 4, , $ q ,204 42, % 7, ,900 $ q ,204 49, % 16, ,900 $ q ,204 65, % 2, , $ q ,574 49, % ,630 $ q ,574 50, % (1,866) ,630 $ q ,574 48, % 9, $ q ,574 57, % 9, $ q ,574 67, % 18, , $ q ,438 65, % (4,707) ,136 $ q ,438 60, % 28, , ,136 $ q ,894 59, % (5,385) ,544 $ The CoStar Retail Report 2016 CoStar Group, Inc.