3 RD QUARTER 2016 RICHMOND RETAIL MARKET REPORT FORECAST 5.3% VACANCY 349,524 SF UNDER CONSTRUCTION (137,905) SF NET ABSORPTION

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1 3 RD QUARTER 2016 RICHMOND RETAIL MARKET REPORT FORECAST All signs indicate a stabilized market that continues to support well-located new development. The majority of absorption in the 3rd quarter was directly tied to new tenants moving into new construction. Unfortunately there were several large tenants vacating space resulting in a decline of absorption experienced thus far this year. Moving forward in the short term we expect overall rents to remain flat with rents for well-located new developments topping the market. A promising trend we see is the tightening of available sublease space which gives us a fairly optimistic view of the retail market moving into While inline leasing within shopping centers will remain sluggish overall we have observed a stabilized retail market in Richmond. 5.3% VACANCY 349,524 SF UNDER CONSTRUCTION (137,905) SF NET ABSORPTION $13.41 PSF AVERAGE RENTAL RATES MAIN OFFICE ADDRESS: 4198 Cox Road, Suite 200 Glen Allen, VA MAILING ADDRESS: P.O. Box Richmond, VA OFFICE LOCATIONS: Richmond Hampton Roads Nashville Jacksonville Greensboro Tampa

2 The Richmond, VA retail market experienced a slight decline in market conditions in the third quarter The vacancy rate went from 5.1% in the previous quarter to 5.3% in the current quarter. Net absorption was negative (137,905) square feet, and vacant sublease space decreased by (2,359) square feet. Quoted rental rates decreased from second quarter 2016 levels, ending at $13.41 per square foot per year. A total of 5 retail buildings with 16,416 square feet of retail space were delivered to the market in the quarter, with 349,524 square feet still under construction at the end of the quarter. ABSORPTION Retail net absorption was moderately negative in Richmond, VA third quarter 2016, with negative (137,905) square feet absorbed in the quarter. In second quarter 2016, net absorption was positive 484,368 square feet, while in first quarter 2016, absorption came in at positive 137,871 square feet. In fourth quarter 2015, positive 307,027 square feet was absorbed in the market. Tenants moving out of large blocks of space in 2016 include: Dillard s Men & Children moving out of 80,104 square feet at Virginia Center Commons; and Martin s Super Market moving out of 54,598 square feet at 7324 Bell Creek Road. Tenants moving into large blocks of space in 2016 include: Wegmans moving into 130,000 square feet at West Broad Marketplace; Wegmans moving into 130,000 square feet at Stonehenge Village; and Burlington Coat Factory moving into 50,705 square feet at Southgate Square. VACANCY Richmond, VA s retail vacancy rate increased in the third quarter 2016, ending the quarter at 5.3%. Over the past four quarters, the market has seen an overall no change in the vacancy rate, with the rate going from 5.3% in the fourth quarter 2015, to 5.5% at the end of the first quarter 2016, 5.1% at the end of the second quarter 2016, to 5.3% in the current quarter. The amount of vacant sublease space in the Richmond, VA market has trended down over the past four quarters. At the end of the fourth quarter 2015, there were 168,442 square feet of vacant sublease space. Currently, there are 107,280 square feet vacant in the market. INVENTORY & CONSTRUCTION During the third quarter 2016, five buildings totaling 16,416 square feet were completed in the Richmond, VA retail market. Over the past four quarters, a total of 694,988 square feet of retail space has been built in Richmond, VA. In addition to the current quarter, six buildings with 246,011 square feet were completed in second quarter 2016, nine buildings totaling 263,444 square feet completed in first quarter 2016, and 169,117 square feet in four buildings completed in fourth quarter There were 349,524 square feet of retail space under construction at the end of the third quarter Some of the notable 2016 deliveries include: Wegmans, a 130,000-square-foot facility that delivered in first quarter 2016 and is now 100% occupied, and Wegmans, a 130,000-square foot building that delivered in second quarter 2016 and is now 100% occupied. Total retail inventory in the Richmond, VA market area amounted to 80,286,655 square feet in 7,091 buildings and 579 centers as of the end of the third quarter 2016.

3 SHOPPING CENTER The Shopping Center market in Richmond, VA currently consists of 557 projects with 30,778,309 square feet of retail space in 1,247 buildings. In this report the Shopping Center market is comprised of all Community Center, Neighborhood Center, and Strip Centers. After absorbing (113,520) square feet and delivering no new space in the current quarter, the Shopping Center sector saw the vacancy rate go from 8.9% at the end of the second quarter 2016 to 9.2% this quarter. Over the past four quarters, the Shopping Center vacancy rate has gone from 9.1% at the end of the fourth quarter 2015, to 9.2% at the end of the first quarter 2016, to 8.9% at the end of the second quarter 2016, and finally to 9.2% at the end of the current quarter. POWER CENTERS The Power Center average vacancy rate was 2.8% in the third quarter With positive 17,218 square feet of net absorption and no new deliveries, the vacancy rate went from 3.2% at the end of last quarter to 2.8% at the end of the third quarter. In the second quarter 2016, Power Centers absorbed positive 123,911 square feet, delivered 130,000 square feet, and the vacancy rate went from 3.1% to 3.2% over the course of the quarter. Rental started the quarter at $16.25 per square foot and ended the quarter at $16.25 per square foot. A year ago, in third quarter 2015, the vacancy rate was 3.3%. Over the past four quarters, Power Centers have absorbed a cumulative 228,657 square feet of space and delivered cumulative 212,265 square feet of space. Vacant sublease space has gone from 1,722 square feet to 0 square feet over that time period, and rental rates have gone from $16.30 to $ At the end of the third quarter 2016, there were 41,358 square feet under construction in the Richmond, VA market. The total stock of Power Center space in Richmond, VA currently sits at 5,338,816 square feet in 13 centers comprised of 121 buildings. A total of 41,358 square feet of space was under construction at the end of the third quarter 2016.

4 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 2.8% at the end of third quarter There was a total of 1,037,795 square feet vacant at that time. The General Retail sector in Richmond, VA currently has average rental rates of $13.16 per square foot per year. There are 271,766 square feet of space under construction in this sector, with 16,416 square feet having been completed in the third quarter. In all, there are a total of 5,671 buildings with 37,212,890 square feet of General Retail space in Richmond, VA. SALES Tallying retail building sales of 15,000 square feet or larger, Richmond, VA retail sales figures rose during the second quarter 2016 in terms of dollar volume compared to the first quarter of In the second quarter, five retail transactions closed with a total volume of $53,302,000. The five buildings totaled 410,096 square feet and the average price per square foot equated to $ per square foot. That compares to 11 transactions totaling $45,494,319 in the first quarter The total square footage in the first quarter was 428,162 square feet for an average price per square foot of $ Total retail center sales activity in 2016 was down compared to In the first six months of 2016, the market saw 16 retail sales transactions with a total volume of $98,796,319. The price per square foot averaged $ In the same first six months of 2015, the market posted 12 transactions with a total volume of $99,397,000. The price per square foot averaged $ Cap rates have been higher in 2016, averaging 8.06% compared to the same period in 2015 when they averaged 7.62%. One of the largest transactions that has occurred within the last four quarters in the Richmond, VA market is the sale of Southgate Square in Colonial Heights. This 220,131 square foot retail center sold for $38,585,000, or $ per square foot. The property sold on 4/29/2016, at a 7.25% cap rate.

5 2016 TOP LEASES Building Name Tenant Name Submarket Lease SF Nuckols Place Publix Far West End North Ret 49,000 South Crater Square Rose s Petersburg Retail 37, W. Broad Street 2nd & Charles Staples Mill/Parham Retail 36, Midlothian Turnpike Auto Connection Midlothian E/Hull Street Retail 32, W. Broad Street U-fab Upholstery Shop Broad Street Corridor Retail 28,117 Meadowbrook Gold s Gym Jeff Davis Corridor Retail 27,979 Lady Byrd Hat Building CarMax Downtown Retail 26, Midlothian Turnpike Big Lots Midlothian E/Hull Street Retail 18, Myers Street ALDI Near West End Retail 16,000 Pinehill Plaza Allianz Global Assistance Petersburg Retail 15, Deep Rock Road Beechwell Adult Day Program Broad Street Corridor Retail 14,558 Laburnum Park Shopping Center Biomat USA, Inc. East End Retail 14, Midlothian Turnpike 4 Wheel Parts Midlothian E/Hull St Ret 13,400 Hanover Village Shopping Center Harbor Freight Tools Mechanicsville Retail 12,882 Merchants Walk UFC Gym Staples Mill/Parham Retail 11,455 Parham One Shopping Center McKay Books Staples Mill/Parham Ret 11,270 The Shops at Stratford Hills Tuesday Morning Midlothian E/Hull St Ret 10, W. Broad Street* Woodcraft Staples Mill/Parham Ret 10,042 *Renewal TOP SELECTED SALES Property Name Buyer Seller Sales Price SF PSF Southgate Square Armada Hoffler Properties, Blackwood Development Co. $38,585, ,131 $ Inc. Walmart Neighborhood Center Hollywood Atlantic Real Confluent Development $12,091,444 41,117 $ Estate Group Southpark Square MCB Real Estate Kimco Realty Corporation $9,500,000 71,509 $ South Shore Shops Armada Hoffler Properties, Blackwood Development Co. $9,160,000 37,815 $ Inc Woodlake Commons Morgan Stanley & Co., LLC Kepley Broscious & Biggs, PLC $8,000,000 47,400 $ Loop 3641 Cox Road Kotarides Cohen Equities $7,600,000 37,257 $ Wilton Square at Reynolds The Wilton Companies Reynolds Development $7,325,000 19,000 $ Crossing 5023 Nine Mile Road Bromont Investments Chiocca-Talley Malls, Inc. $6,318, ,785 $24.70 Branders Creek Corner Yong Kim The Emerson Construction Group, Inc. $6,210,000 26,354 $235.64

6 The information and details contained herein have been obtained from third-party sources believed to be reliable; however, Commonwealth Commercial has not independently verified its accuracy. Commonwealth Commercial makes no representations, guarantees, or express or implied warranties of any kind regarding the accuracy or completeness of the information and details provided herein, including but not limited to the implied warranty of suitability and fitness for a particular purpose. Interested parties should perform their own due diligence regarding the accuracy of the information. The information provided herein, including any sale or lease terms, is being provided subject to errors, omissions, changes of price or conditions, prior sale or lease, and withdrawal without notice. Third-party data sources: CoStar Group, Inc., Moody s Economy. com, Nielsen/Claritas, Real Capital Analytics, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, U.S. Census Bureau, Greater Richmond Partnership, U.S. Department of Commerce. The Commonwealth Commercial Retail Market Report compiles relevant market data by using a third-party database for the proprietary analysis of specific retail properties above 10,000 SF in the Richmond Metropolitan Area. Retail Team Carl Blackwell T E cblackwell@ James McVey T E jmcvey@ Morgan Trible T E mtrible@ Michael Morris T E mmorris@