End of Year 4Q 17. Charlotte Retail Market Report

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1 End of Year 4Q 17 Charlotte

2 Charlotte, North Carolina Greater Charlotte Area (28 ± Mile Radius from Uptown Charlotte) Q Total Number of Buildings 10,145 Total Square Feet 125,205,739 Average Asking Rates $.75 Overall Vacancy 3.6% Net Absorption 638,381 SF Deliveries 348,547 SF Under Construction 1,866,753 SF 1,000, , , , , , , , , , % 8% 7% 6% 5% 4% 3% Absorption (RSF) / Asking Rates Avg. Asking Rate Vacancy Rates Absorption SF 5.1% Average Vacancy Rate $17.00 $.50 $.00 $15.50 $15.00 $14.50 $14.00 $13.50 $13.00 Charlotte s Retail Market Remains Steady with minor increases in rental rates, increased absorption, and low vacancy rates. Local Economy Charlotte s economy continued to barrel forward during the 2017 fourth quarter, helped by an improving jobs picture and rising home values. Mecklenburg County s unemployment rate was 4.3% during, according to data from the U.S. Bureau of Labor Statistics. That was up from 4.0% during the third quarter but down from 4.5% at the end of 20. The local rate was slightly higher than the U.S. as a whole. Mecklenburg County s unemployment rate continues to fall from a high of 11.5% established early in the decade. The county s median home value stands at $214,000, according to Zillow. That s up about 11% from a year earlier. Zillow predicts values will rise 4.6% over the next year. The median price of homes currently listed in Mecklenburg County is just shy of $300,000. 4Q vs. 4Q17 NET ABSORPTION VACANCY RATE DELIVERIES ASKING RATES Charlotte Market Overview Charlotte s retail market presented another mixed picture during the fourth quarter, with vacancy rates and average rents maintaining positive momentum but the number of lease deals slightly lower than normal, while at the same time absborption is up. 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% Charlotte Unemployment Rate A total of 6 leasing deals were signed in Charlotte during the fourth quarter, down from 204 the previous quarter and 215 the prior year. It was the fewest number of deals in nearly four years. Fourth quarter net absorption was positive 638,381 square feet. That compares to a positive 441,236 square feet the previous quarter and a positive 442,336 square feet the previous year. The vacancy rate fell to 3.6%, its lowest point this decade. The rate was down from 3.9% the previous quarter and 4.2% the previous year. After a sluggish third quarter that saw only one retail investment sales transaction above $10 million in Mecklenburg County, the fourth quarter was a little busier. The biggest deal was Invesco s sale of the Matthews Township Shopping Center to Echo Real Estate Services Co. for $27.5 million. 14 retail buildings totaling 348,547 square feet were delivered during vs.18 buildings totaling 217,871 square feet the previous quarter. None of the deliveries ranked among the biggest in the Charlotte metro area. Most of the

3 action took place in surrounding counties, particularly Cabarrus County, which had the only area delivery above 100,000 square feet. Average retail rents climbed to $.75 per square foot from $.36 the prior quarter and $15.75 a year earlier. Average rents are at their highest level this decade and have trended upward five straight years. Midtown - South End NAI Southern Real Estate moved forward on a mixed-use project in Elizabeth that will include up to 512,500 square feet of office space, 30,000 square feet of ground-floor retail and a 240-room hotel next door. The 3.4-acre site is bounded by Baldwin Avenue and Third and Fourth streets and is located adjacent to the Lynx Gold Line streetcar system. A 1.2-acre tract of land that once was slotted for a Dilworth boutique hotel was sold for $3.9 million to OMS Dilworth LLC, affiliated with Charlotte-based OmShera Hotel Group. An affiliate of Charlotte s Catellus Group sold the property. Plans for the site have not been finalized. Florida-based Ram Realty Services filed a rezoning petition to allow mixed-use development on part of a 1.4-acre parcel at Doggett and Hawkins streets in South End. Plans call for a residential building up to 5 feet high as well as ground-floor retail. Asana Partners owns the parcel. Beacon Partners broke ground on The RailYard, a mixed-use project that will feature 300,000 square feet of creative office space and 30,000 square feet of retail space at the former HD Supply site in South End. The eight-story, two-building project sits on more than three acres and is expected to deliver in January Plans also call for the development of 100 micro-unit apartments at the rear of the site. No tenants had been signed as construction began. New York-based Magnus Capital Partners spent $4.25 million to acquire a 42,000-square-foot building at 314 West Bland Street in South End. Plans call for a mix of office and retail tenants. Southpark Hazel Southpark Apartments LP, affiliated with Florida s ZOM Living, purchased a 2.7-acre parcel at 4401 Barclay Downs Drive for $13.2 million, with plans to develop a mixed-use project. The Southpark-area project reportedly will include 203 luxury apartments and 14,000 square feet of ground-floor retail space. Construction should wrap up in South Charlotte The second phase of Blakeney Commons, a retail development in south Charlotte, broke ground during the fourth quarter. The development is located at Ardrey Kell and Carson Whitley roads and will feature 30,000 square feet of retail space across three buildings. The second phase will total 20,000 square feet and is expected to include health tenants. It is expected to deliver during the 2018 first quarter. East Charlotte An investment group affiliated with Charlotte-based Waters Inc. spent $6.3 million to buy Monroe Business Park, a five-building, 54,200-square-foot mixed-use development at 4420 Monroe Road in East Charlotte. The property includes a Common Market as well as PPG Paints and IronTribe Fitness. An affiliate of Charlotte-based Sonic Automotive spent $6 million to purchase about 10 acres at 3700 East Independence Boulevard to develop EchoPark, a used-car concept. The site, long known as Coliseum $27 $26 $24 $23 $21 $20 $18 $17 $15 $14 $12 $11 $9 Charlotte, North Carolina Asking Rates by Building Class Q Q1 20 Q Q1 Downtown Inner Southeast Outer Southeast Southwest Northeast Northwest East North Cabarrus County York County Union County Iredell County Gaston County Lincoln County Lancaster County Class A Class B Class C Rates by Submarket $8 $10 $12 $14 $ $18 $20 $22 $24 $26 $28 $30 $32 $34 Center, will be rebranded as Coliseum Crossing as part of a $35 million makeover. University A 118,000-square-foot office building in the University submarket area was sold to Family Video affiliate Longvalley I LLC for $17.4 million. The seller was an affiliate of Hartord, Conn.-based UBS Realty Investors, which had owned the property since The one-story office building was 100% leased at the time of the transaction and is located on a 12.6-acre parcel near the intersection of University East Drive and East W.T. Harris Boulevard. Outlook The slowdown in leasing deals hasn t stopped developers from putting new product on the market, which is a sign of ongoing confidence in the market. Sixty-five buildings totaling 1.86 million square feet were under construction at the end of the fourth quarter, which represents a substantial increase over recent years. Mecklenburg County s retail sales volume has been on a years-long uptrend a reflection of both population growth and a bustling economy. The Charlotte metro area ranked No. 13 on the Milken Institute s index of best-performing cities of 2017, which tracks how well cities are creating and sustaining jobs and economic growth. Statewide trends are positive as well. North Carolina s inflation adjusted gross state product (GSP) is expected to increase by 1.9% in 2018, according to an economic forecast from Barings and UNC-Charlotte. The report also expects the state s unemployment rate to dip to 3.8% by the end of the year.

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 4Q Average Rental Rate Class A / (4 & 5 Star) 23,328, ,527, % 134, ,360 1,042,681 $25.33 Class B / (3 Star) 69,557,172 4,963 3,3, % 367, , ,504 $.07 Class C / (1 & 2 Star) 32,247,311 4,812 1,624, % 127,241,900 9,100 $14.84 Dowtown 1,242, , % (2,142) 0 62,000 $34.23 Inner Southeast 11,221, , % 37,405 10,000 81,000 $24.01 Outer Southeast 11,822, , % 69,7 23,470 31,200 $22.56 Southwest 3,808, , % 23, ,465 $20.98 Northeast 11,220, , % 33,924 8,890 1,550 $20.15 Northwest 7,186, , % 24, ,700 $18.54 East 13,3, , % 20, ,357 $.95 North 5,394, , % 32,669 8,267 25,000 $13.97 Cabarrus County 13,922,061 1,0 482, % 211,5 108, ,889 $13.79 York County 12,751,826 1, , % (9,721), ,326 $13.41 Union County 9,721, , % 30,273 67,000 82,247 $13.39 Iredell County 10,4, , %, ,100 $12.02 Gaston County 13,4,362 1,417 1,0, % 94,1 95,900 14,100 $11.34 Lincoln County 4,1, , % 19,964 9,100 81,258 $10.53 Lancaster County 3,7, , % (3,224) 0 232,787 $8.75 Notable Lease Transactions Building Submarket SF Qtr Tenant Name Concord Pky S Cabarrus County 73,690 4th Ridenow Powersports Concord 2 Northgate Plaza Catawba County 63,000 4th Bargain Hunt S NC Hwy Lincoln County 50,000 2nd Publix 4 Harris Teeter Northwest 40,000 2nd Harris Teeter 5 Matthews Corners East 36,643 2nd Academy Sports N Sardis Rd East 35,200 2nd Big Air Trampoline 7 The Commons at Chancellor Park Northeast 30,090 3rd Fallas 8 The Shops at Franklin Square Gaston County 30,000 4th Altitude Trampoline Park 9 Bowers - Building A Inner Southeast 27,234 3rd Artisanal Brewing Ventures 10 Chester Crossing Chester County 26,171 1st Roses 11 Carolina Pavilion Outer Southeast 26,043 2nd Frontgate Outlet Store Pineville Matthews Rd Outer Southeast 25,637 3rd Planet Fitness 13 Franklin Square I & II Gaston County 25,000 2nd Burkes Outlet 14 The Commons at Chancellor Park Northeast 24,500 3rd Patel Brothers 15 Eastgate Shopping Center Stanly County 24,150 3rd Ollie s Bargain Outlet City View Shopping Center Northwest 23,383 1st American Freight 17 Chesterville Commons Chester County 21,710 4th Discount Marketplace N Tryon St Northeast,000 2nd N/A W Roosevelt Blvd Union County 15,231 2nd N/A 20 The Ketner Center Rowan County 15,000 3rd N/A 21 Center Street Plaza Iredell County 14,700 1st N/A South Blvd Inner Southeast 13,880 1st N/A

5 Charlotte, North Carolina Notable Lease Transactions Building Submarket SF Qtr Tenant Name 23 Mooresville Consumer Square Iredell County 13,500 1st Tuesday Morning S Polk St Outer Southeast 12,953 3rd Spices and More, LLC 25 Salisbury Marketplace Rowan County 12,500 3rd City Trends S Main St Rowan County 12,468 4th Sidekick Karate 27 Parkway Crossing Phase I Outer Southeast 12,275 2nd Habitat Restore David Cox Rd Northeast 11,3 1st Stats 1315 East Condominium Inner Southeast 10,980 2nd The People s Market S NC 27 Hwy Gaston County 10,908 1st Dollar Tree 31 Oak Street Mill North 10,8 2nd N/A Wallace Blvd* East 10,812 1st Manpower Auto Detailing W Main St Stanly County 10,812 4th N/A 34 Charlotte Cotton Mills Downtown 10,651 2nd N/A S NC-27 Hwy Gaston County 10,125 2nd CVS Lyles Ln NW Cabarrus County 10,000 4th N/A 37 Shops at Freedom - Bldg 2* Northwest 9,869 2nd Salon Central 38 Franklin Square I & II Gaston County 9,575 1st Partners in Primary Care 39 RedStone - Outparcel A-1 Lancaster County 9,464 3rd Tide Dry Cleaners S Main St Rowan County 9,088 1st Roc s Furniture * Renewal Notable Sales Transactions: 20 through Building(s) Price SF Seller Buyer Mooresville Consumer Square $48,230, ,182 DDR Corp. Slate Retail REIT Hickory Ridge Shopping Center $44,020, ,487 Retail Properties of America, Inc Acadia Realty Trust Ballantyne Village Way $43,150, ,000 Vision Ventures American Realty Advisors McCullough Commons $40,100, ,175 Smart Stop Asset Management Ferris Development, LLC 9145 Sam Furr Rd $31,000,000 62,4 Hawthorne Retail Partners, Inc InvenTrust Properties 900 Metropolitan Ave $30,000, ,695 Property Markets Group, Inc Bluejay Management Matthews Township Shopping Center $27,500, ,651 Investco ECHO Real Estate Services 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 Castco ECHO Real Estate Services

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 Cornelius Mooresville Davidson Charlotte, North Carolina Landis Enochville Rowan County Salisbury China Grove Gran Fai Shoals Iron Station Lincoln County Lowesville Huntersville 6 Kannapolis Mou 21 Concord Stanley Dallas Mount Holly 4 5 Harrisburg 601 Gaston County Ranlo Lowell McAdenville Cramerton Belmont Mecklenburg County Cabarrus County Midland Charlotte Mint Hill Fairview Lake Wylie Tega Cay 4 21 Pineville 3 4 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 RETAIL Billy Cooper Ragan Rose Camille Christie Louis Rose III 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.