Cushman & Wakefield, Inc. 1290 Avenue of the Americas New York, NY 10019-6178 www.cushmanwakefield.com/knowledge

For more information, contact: Ronnie Davis, Managing Director, Research 404 853 5249 ronnie.davis@cushwake.com

The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2012 Cushman & Wakefield, Inc. All rights reserved.

1

ECONOMIC OVERVIEW As the recovery hit the 4-year mark, the U.S. economy continued to improve throughout the third quarter despite the recent rise in interest rates and lingering uncertainty surrounding regulation and upcoming U.S.

policy decisions. Gross Domestic Product (GDP) rose at an annualized rate of 2.0% in the third quarter, 50 basis points off the previous quarter’s pace, while slow but steady employment growth pushed the unemployment rate down to 7.3%, a drop of more than 70 basis points year-over-year. Employment growth, coupled with improving business and consumer confidence, had a positive impact on retail sales.

RETAIL MARKET OVERVIEW U.S. retail market fundamentals continued to improve through the third quarter. According to the U.S. Census Bureau, retail & food service sales totaled more than $1.27 trillion in third quarter 2013, an increase of 5.1% over third quarter 2012 sales. Discount and high-end luxury retailers continued to outperform their mid-range counterparts, due in part to the gap in wage gains throughout the country. Demand continued to increase, although inconsistently among segments, driving many retailers to move forward with expansion plans. Department store retailers such as Von Maur and Dillards have signed some of the largest retail leases year-to-date while value retailers such as Costco, Family Dollar, and Sam’s Club continued to open new stores. Aldi, the discount grocery retailer, moved forward with its plans to expand in the U.S. by 80 stores per year.

RETAIL SALES AND CONSUMER CONFIDENCE TRENDS

Source: Moody’s Analytics

ECONOMIC INDICATORS NATIONAL 2012 2013F 2014F

GDP Growth 2.8% 1.6% 3.1%

CPI Growth 2.1% 1.5% 1.8%

Consumer Spending Growth

2.2% 1.9% 3.3%

Retail Sales Growth 5.3% 4.4% 5.8%

Median Household Income $51,371 $52,427 $54,360

Population Growth 0.8% 0.8% 0.8%

Unemployment 8.1% 7.5% 7.0%

Source: Moody’s Analytics

UNITED STATES STATISTICS BY TYPE* VACANCY RENTAL RATES

PSF/YR

YTD NET ABSORPTION (SF)

General Retail 4.7% $15.89 25,032,717

Mall 5.8% $17.95 4,454,583

Power Center 5.4% $16.99 4,060,765

Shopping Center 10.2% $14.51 17,851,236

Specialty Center 7.6% $14.02 1,662,956

TOTAL MARKET 6.8% $15.17 53,062,257

Source: CoStar Group * Select U.S. markets

OVERALL RENTAL VS. VACANCY RATES*

Source: CoStar Group * Select U.S. markets

0

20

40

60

80

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

2009 2010 2011 2012 2013F

Bil U

S$

RETAIL SALES CONSUMER CONFIDENCE

6.4%6.6%6.8%7.0%7.2%7.4%7.6%7.8%

$14.00

$14.50

$15.00

$15.50

$16.00

$16.50

2009 2010 2011 2012 Q3 2013

psf/y

r

OVERALL NET RENTAL RATE OVERALL VACANCY RATE

Q3 2013UNITED STATES

RETAIL SNAPSHOT MARKETBEAT

A Cushman & Wakefield Research Publication

Cushman & Wakefield, Inc. 1290 Avenue of the Americas New York, NY 10019-6178 www.cushmanwakefield.com/knowledge

For more information, contact: Ronnie Davis, Managing Director, Research 404 853 5249 ronnie.davis@cushwake.com

The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2012 Cushman & Wakefield, Inc. All rights reserved.

2

With U.S. consumer confidence at its highest level since 2007 and U.S. retailers cautiously optimistic, retail real estate fundamentals steadily improved through third quarter. Overall retail vacancy dropped 10 basis points from the previous quarter to 6.8%, returning to 2008 levels. Overall rents have improved as well, increasing 1.2% year-to-date to an average of $15.17 per square foot (psf). Notably, average rents are on track to record their first full-year increase since 2008. Well-established urban high street corridors continued to lead in rental rate gains, yet their pace of rent growth has slowed since 2012. Nationally, new retail construction deliveries remained at historical lows. Some of the largest year-to-date deliveries included the 538,000-sf Fashion Outlets of Chicago and the 350,000-sf St. Louis Premium Outlets. As of third quarter, nearly 37.0 million square feet (msf) of retail space remained under construction, with the 1.5 msf Shops at Summerlin Centre in Las Vegas and the 880,000-sf Mall at University Town Center in Tampa/St. Petersburg among the largest and most notable projects.

RETAIL INVESTMENT ACTIVITY Despite recent increases in interest rates, sales of retail properties surged in the third quarter to more than $19.2 billion, rivaling levels recorded in 2007. Much of the activity was attributable to portfolio transactions with many exceeding $100 million in value. Strip centers, malls, and single-tenant properties were the favorites among investors as price gains across the retail sector topped all other property types.

Notable retail transactions during the third quarter included Hines’ purchases of the 750,800-sf Avenue Murfreesboro in Murfreesboro, TN for $163.0 million and the 317,000-sf Markets at Town Center in Jacksonville, FL for $135.0 million.

OUTLOOK Both supply and demand fundamentals within the U.S. retail market are expected to continue to improve, albeit slowly. As economic conditions improve and uncertainty remains in check, business and consumer confidence will continue to strengthen and lead to increased momentum in retail spending. Supply-side characteristics should continue to improve, thanks in part to the restrained construction pipeline over the past 5-year period.

High-end and discount-oriented retailers will continue to lead in retail gains, while mid-market retailers will continue to face the greatest challenges as the middle class remains cautious in its spending decisions. In the short term, U.S. retailers will continue to focus their expansion plans on major U.S markets with strong consumer demand. Established retail corridors in New York, Boston, Chicago, San Francisco and other top-tier urban markets will continue to perform well, while second-tier markets will finally begin to catch up. Overall, market conditions for the retail sector will reflect the moderate improvement expected throughout the U.S. economy.

MARKET HIGHLIGHTS SIGNIFICANT Q3 2013 LEASE TRANSACTIONS MARKET TENANT TRANSACTION DATE SQUARE FEET

Harrison Square Raleigh/Durham Bass Pro Shops Q3 2013 105,062

Anaheim Hills Festival Center Orange County Hobby Lobby Q3 2013 77,822

Herald Center New York City H&M Q3 2013 62,923

SIGNIFICANT Q3 2013 SALE TRANSACTIONS MARKET BUYER PURCHASE PRICE / $PSF SQUARE FEET

Avenue Murfreesboro Murfreesboro, TN Hines $163,000,000 / $217 750,772

Rio West Mall Gallup, NM Humboldt N/A / N/A 513,506

Pearl Highlands Center Pearl City, HI Alexander & Baldwin $141,500,000 / $343 411,945

The Markets at Town Center Jacksonville, FL Hines $135,000,000 / $426 317,000

SIGNIFICANT Q3 2013 PORTFOLIO TRANSACTIONS MARKET BUYER PURCHASE PRICE / $PSF SQUARE FEET

Blackstone Multiple DDR $1,460,000,000 / $183 8,404,740

QIC – Forest City Malls Multiple QIC $917,400,000 / $261 7,844,460

SIGNIFICANT Q3 2013 CONSTRUCTION COMPLETIONS

MARKET DEVELOPER COMPLETION DATE SQUARE FEET

Fashion Outlets of Chicago Chicago, IL AWE Talisman Q3 2013 538,000

St. Louis Premium Outlets St. Louis, MO Simon Property Group/Woodmont Outlets

Q3 2013 350,000

SIGNIFICANT Q3 2013 PROJECTS UNDER CONSTRUCTION

MARKET DEVELOPER COMPLETION DATE SQUARE FEET

The Shops at Summerlin Centre Las Vegas, NV General Growth Properties Q3 2014 1,500,000

The Mall at University Town Center Tampa, FL Benderson Development Company Q4 2014 880,000

Ponce City Market Atlanta, GA Jamestown Properties Q1 2014 300,000

Source: CoStar Group, Real Capital Analytics, Cushman & Wakefield Research Denotes Cushman & Wakefield involvement

Cushman & Wakefield, Inc. 1290 Avenue of the Americas New York, NY 10019-6178 www.cushmanwakefield.com/knowledge

For more information, contact: Ronnie Davis, Managing Director, Research 404 853 5249 ronnie.davis@cushwake.com

The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2012 Cushman & Wakefield, Inc. All rights reserved.

3

UNITED STATES MARKET STATISTICS* MARKET INVENTORY (SF) VACANCY (SF) VACANCY RATE YTD NET ABSORPTION YTD DELIVERIES (SF) UNDER CONSTRUCTION (SF) AVERAGE ASKING RENT (US$/PSF/YR)

Atlanta, GA 349,589,099 33,587,183 9.6% 1,998,284 730,790 729,853 $12.88 Baltimore, MD 134,298,494 7,162,022 5.3% 562,199 186,965 356,802 $19.15 Boston, MA 310,378,032 13,554,567 4.4% 1,458,389 965,147 2,197,822 $17.56 Charlotte, NC 149,709,690 11,941,231 8.0% 805,586 779,751 485,137 $12.44 Chicago, IL 500,917,062 41,149,399 8.2% 3,348,118 1,951,876 1,211,223 $15.84 Cincinnati, OH 121,417,253 9,815,449 8.1% 894,662 167,026 211,520 $9.92 Cleveland, OH 196,209,899 16,858,795 8.6% 487,316 365,449 399,060 $10.42 Dallas/Ft Worth, TX 374,543,184 28,485,380 7.6% 3,411,436 1,877,493 3,315,202 $13.49 Denver, CO 189,059,570 11,803,964 6.2% 2,082,227 1,004,194 455,996 $14.89 Detroit, MI 239,479,976 23,027,353 9.6% 1,623,813 898,686 411,048 $11.97 East Bay/Oakland, CA 126,655,862 6,017,863 4.8% 812,248 213,486 295,962 $20.67 Hartford, CT 144,280,020 8,084,812 5.6% 685,553 234,934 290,836 $12.03 Honolulu, HI 55,114,342 1,435,899 2.6% 266,610 90,151 163,638 $30.20 Houston, TX 340,074,985 22,002,710 6.5% 2,263,543 1,636,250 943,966 $14.35 Indianapolis, IN 117,916,657 8,754,941 7.4% 182,873 114,707 175,258 $12.13 Inland Empire, CA 184,195,683 16,090,141 8.7% 987,780 522,823 669,547 $15.72 Jacksonville, FL 89,116,195 7,036,864 7.9% 398,274 249,848 41,327 $12.68 Kansas City, MO 104,896,728 9,255,134 8.8% 899,968 506,126 549,043 $12.39 Las Vegas, NV 106,066,122 10,650,809 10.0% 737,929 119,543 1,748,938 $15.25 Los Angeles, CA 450,495,866 23,864,716 5.3% 1,554,244 667,020 631,469 $24.29 Memphis, TN 81,629,553 7,917,522 9.7% 364,115 135,830 69,752 $9.70 Miami, FL 121,801,419 5,041,958 4.1% 213,728 288,661 913,775 $27.43 Milwaukee, WI 136,235,222 9,176,482 6.7% 850,694 672,673 570,050 $10.66 Minneapolis, MN 198,419,690 10,097,726 5.1% 531,267 374,656 843,659 $13.00 Nashville, TN 97,241,785 7,185,133 7.4% 800,549 232,940 251,325 $13.83 New Orleans, LA 73,663,848 4,890,159 6.6% 779,871 259,280 0 $14.50 Manhattan, NY 56,828,480 1,467,662 2.6% (73,737) 176,718 670,558 $89.91 Northern New Jersey 351,667,825 22,382,830 6.4% 1,974,027 327,523 4,241,241 $19.37 Oklahoma City, OK 83,618,744 5,846,301 7.0% 409,262 227,110 286,551 $10.58 Orange County, CA 137,009,438 7,409,525 5.4% 632,807 106,977 745,507 $22.36 Orlando, FL 157,498,396 12,166,750 7.7% 714,089 531,419 108,435 $14.44 Palm Beach, FL 76,374,418 5,675,992 7.4% 401,196 298,076 565,425 $17.66 Philadelphia, PA 487,038,544 31,120,407 6.4% 619,150 704,971 452,361 $13.76 Phoenix, AZ 214,815,085 22,602,033 10.5% 2,873,337 1,233,390 208,397 $14.05 Pittsburgh, PA 132,857,268 5,763,378 4.3% 1,093,786 608,823 290,975 $12.20 Portland, OR 104,421,151 5,825,689 5.6% 252,948 182,225 108,024 $16.06 Raleigh/Durham, NC 91,347,268 5,422,639 5.9% 746,291 719,078 255,898 $14.60 Richmond, VA 78,589,899 5,311,593 6.8% 340,308 123,354 416,834 $13.61 Sacramento, CA 117,045,457 10,718,329 9.2% 1,063,332 253,388 736,989 $15.70 Salt Lake City, UT 124,585,748 5,492,442 4.4% 251,572 182,421 211,249 $12.81 San Antonio, TX 121,726,970 6,996,241 5.7% 1,003,016 707,920 604,714 $13.91 San Diego, CA 134,321,096 6,144,701 4.6% 611,676 403,048 196,495 $21.69 San Francisco, CA 80,231,251 2,090,138 2.6% 262,508 80,412 375,240 $30.38 Seattle, WA 173,633,228 9,115,304 5.2% 630,394 339,347 660,502 $17.32 Tampa, FL 214,010,425 15,708,783 7.3% 34,595 455,047 930,123 $13.68 Washington, D.C. 220,068,118 10,053,153 4.6% 1,205,363 974,544 2,107,937 $23.78 TOTAL MARKET* 9,966,488,398 675,551,653 6.8% 53,062,257 29,037,475 36,997,862 $15.17

RENTAL RATES REFLECT ASKING $PSF/YEAR *Select U.S. markets

Source: CoStar Group