Wichita Core Report 2016 Q1 RETAIL. Delano Downtown Old Town Douglas Design District

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1 Wichita Core Report 2016 Q1 RETAIL Delano Downtown Old Town Douglas Design District

2 Heart of WICHITA Core neighborhoods are where ideas collide and turn into innovations. Where communities come together to meet, share, and create a unique identity. Cities are dynamic organisms and core neighborhoods are their hearts. The revitalization of inner cities occurring across the country is a movement for which Wichita is well-prepared. Our core neighborhoods Downtown, Old Town, Delano, and the Douglas Design District were planned for permanence, with versatile and resilient buildings offering a variety of uses and allowing for conversions as market forces shift. And most of all, they provide a sense of place the buildings have architectural integrity and the landmarks define our city. Young talent the future of Wichita increasingly demands authentic, vibrant, walkable urban areas. We are seeing it in the creative companies relocating within and moving back to the core. We are seeing it in Downtown, with over 800 apartment units under construction or in planning. And we are seeing it in entertainment, as many of the city s most popular bars and restaurants cluster in Old Town, coffee shops spring up all along East Douglas in the Design District and boutiques thrive in Delano. As the knowledge leaders in Wichita commercial real estate, we at NAI Martens have made a commitment to be on the leading edge of information development and dissemination. We are pleased to introduce our first Wichita Core Report, providing investors, developers, and users of commercial real estate with the information they need to do what they do best build a better Wichita.

3 Delano is emerging as one of the most popular restaurant and neighborhood retail districts in Wichita. The heart of the district is the Clock Tower Neighborhood, extending along Douglas from Seneca to the Arkansas River; generous streetscaping and slower, two-lane traffic creates a picturesque and highly-walkable area attractive to eclectic local shops, restaurants, and salons. This Main Street atmosphere draws visitors from across Wichita, making Delano a growing retail and entertainment destination while the proximity to the Central Business District draws strong lunchtime crowds. DELANO FORECAST The Delano District will likely see little change in 2016, as the supply of multi-story office and warehouse buildings that helped spur loft conversions and catalyzed growth in the CBD is limited. Well-maintained properties will continue to see mostly frictional vacancy, with locations along Douglas and in proximity to the river at a premium. Look for the completion of River Vista, which will bring 204 Class-A apartments and river-oriented programming in late 2016, and the start of the $33 million Central Library to more significantly impact the district. Average Asking Rate/SF $8.87 Average Asking Occup. Cost/SF $11.43 Base Rent Est. Base Rent + Expenses + Utilities Number of # of Vacant Rentable Vacant Vacancy Rate (%) Class A ,138 7, % Class B ,311 26, % Class C ,529 35, % Overall Market ,798 69, %

4 If only one word were available to describe retail in Downtown Wichita, it is potential. With over $180 million of new development initiated along Douglas alone in 2015, the city center will look and feel vastly different twenty-four months from now. Many of the most prominent current redevelopment projects such as the Exchange Place and Market Centre apartment conversions, CorTen Building, and the Pop-Up Urban Park are clustered in the Center Core neighborhood. Combining with the first phase of the Douglas Avenue streetscape project and the planned railway underpass renovation, these projects help to further connect Old Town and Union Station with INTRUST Bank Arena and extend activity toward the river. DOWNTOWN FORECAST 2016 looks to be a transitional yet exciting year for downtown retail, as new apartments come online late in the year and office users increasingly migrate to the core. Driving this growth are Millennials, who see the city as an extension of their living space, generating vibrancy beyond the new apartments and offices themselves retail opportunities will continue to arise as a result. Average Asking Rate/SF $9.66 Base Rent Average Asking Occup. Cost/SF $12.57 Est. Base Rent + Expenses + Utilities Number of # of Vacant Rentable Vacant Vacancy Rate (%) Class A ,544 10, % Class B ,612 37, % Class C ,574 19, % Overall Market ,730 67, %

5 Old Town continues to be the jewel of Wichita s core area and it will only improve in Developers have transformed over 55,000 square feet of industrial buildings along Mosley just east of Old Town Square into retail space, with streetscaping improvements set to extend the Old Town aesthetic northward. Meanwhile, Union Station s redevelopment continues the first retail tenant (Smoothie King) has opened for business, with Mumbai Rail and Old Town s second Scooter s Coffee soon to follow; the plaza along Douglas, with outdoor food kiosks backing up to the elevated railway, is on track for completion in time for warm weather revelry. OLDTOWN FORECAST As the inventory of available properties continues to diminish, future activity will spread outside of the traditional boundaries of Old Town. New restaurants and commercial development are seen on the east side of Washington and Union Station s further development extends Old Town south of Douglas. Look for this activity to combine with the additional visitors and patrons generated by the Airbus-WSU Old Town swap to further boost Old Town s draw as a live-work-play destination. Average Asking Rate/SF $13.69 Base Rent Average Asking Occup. Cost/SF $18.46 Est. Base Rent + Expenses + Utilities Number of # of Vacant Rentable Vacant Vacancy Rate (%) Class A , % Class B ,502 6, % Class C 2 0 5, % Overall Market ,519 6, %

6 The Douglas Design District is fast becoming one of the trendiest districts in the city. Lincoln Heights Village, Clifton Square, and the marquee businesses east of Douglas and Hillside continue to be among Wichita s most popular commercial centers while maintaining the feel of a hidden gem. New food and drink establishments, such as Reverie Coffee Roasters and Hopping Gnome Brewery, bring a hip vibe and serve as community gathering places, while continued renovations the GLMV Architecture building, Abode Venue, Sunburst Plaza, Reuben Saunders Gallery, and many others are testimony to the growing popularity of the district. DOUGLAS DESIGN DISTRICT FORECAST Look for an improved East High neighborhood, as a development application is pending to nominate the 2200 block of East Douglas, anchored by the former Kimzey-Eilert Medical Supply building currently undergoing redevelopment, as a historic district. Expect new ownership of the Parkstone development to breathe new life into a long delayed project in the College Hill neighborhood. Vacant storefronts will continue to be filled and we can expect new restaurant and entertainment venues to emerge. Average Asking Rate/SF $9.26 Base Rent Average Asking Occup. Cost/SF $12.41 Est. Base Rent + Expenses + Utilities Number of # of Vacant Rentable Vacant Vacancy Rate (%) Class A ,680 12, % Class B ,933 43, % Class C ,828 29, % Overall Market ,441 86, %

7 AVAILABLE Douglas Design District Douglas Design District 4800 E. Douglas 2,187 SF 2903 E. Douglas 2,780 SF Oldtown Downtown 139 N. Mead 2,400-3,750 SF 618 E. Douglas 2,300 SF Douglas Design District Downtown 3234 E. Douglas 3,500-7,000 SF 430 S. Commerce 2,064 SF The Wichita Core Report is the product of the most comprehensive database of commercial real estate information in the Wichita retail submarket. Alex Pemberton Led by Alex Pemberton, Urban Retail Advisor, and NAI Martens Research/GIS Specialist Drew Gannon, the Wichita Core Report database tracks commercial property in Downtown, Old Town, Delano, and the Douglas Design District. For information on survey methodology and property classification descriptions, visit our website at and view the electronic version under News & Research.

8 Survey Methodology The Wichita Core Report is the most comprehensive, detailed survey of a commercial real estate submarket, backed by a database that includes every commercial property in: - Delano: From the Arkansas River south to Kellogg and west to Meridian - Downtown: From the Arkansas River east to the elevated BNSF railway, from Murdock south to Kellogg - Old Town: From the elevated BNSF railway east to Washington, from Central south to Kellogg - Douglas Design District: Both sides of Douglas Avenue from Washington to Glendale, just east of Oliver The Wichita Core Report provides a level of detail unseen in other publications.

9 Survey Methodology Property records in the Wichita Core Report database are broken down to the suite-level, providing for a more accurate accounting of market information by distinguishing between property types in mixed-use buildings. Meanwhile, the quality of each property is determined by a set criteria, detailed below: Class A: Recently constructed or redeveloped with no deferred maintenance, high-quality materials and finishes, attractive aesthetics, and located in a strong trade area. Class B: Average quality of materials and finishes, some deferred maintenance, fair aesthetics, and located in a strong to fair trade area. Class C: Below-average quality of materials and finishes, significant deferred maintenance, poor aesthetics, and located in a fair to poor trade area.

10 Survey Methodology Weighted averages are used to control for outliers in asking rents; weighted average occupancy cost controls for different lease types by adding estimated additional charges, such as utilities or triple-net reimbursements, to arrive at a standardized, Full Service rate for each available space. Average rents are listed based on both the base rental rate and the total occupancy cost. Every property is physically surveyed for vacancies bi-weekly and leasing information, such as square feet available and asking rent, is confirmed with the property owner or leasing agent.