CoStar Retail Statistics. F i r s t Q u a r t e r Colorado Springs Retail Market

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1 CoStar Retail Statistics F i r s t Q u a r t e r

2 First Quarter 2017 Colorado Springs 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 Select Top Under Construction Properties Figures at a Glance Figures at a Glance by Building Type & Market Historical Figures at a Glance Leasing Activity Analysis Select Top Lease Transactions Sales Activity Analysis Sales Activity Analysis Select Top Sales Transactions Analysis of Individual CoStar Submarket Clusters Downtown Market East Market North Market Northeast Market Northwest Market Southeast Market Southwest Market Teller County Market 2017 CoStar Group, Inc. CoStar Retail Statistics A

3 Colorado Springs First Quarter 2017 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 CoStar Retail Statistics 2017 CoStar Group, Inc.

4 First Quarter 2017 Colorado Springs 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. Existing Inventory: 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 2017 CoStar Group, Inc. CoStar Retail Statistics C

5 Colorado Springs First Quarter 2017 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). Quoted Rental Rate: The asking rate per square foot for a particular building or unit of space by a broker or property owner. Quoted 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. Vacant Space: 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 CoStar Retail Statistics 2017 CoStar Group, Inc.

6 Overview First Quarter 2017 Colorado Springs Colorado Springs s Rises to 6.1% Net Absorption Negative (100,982) SF in the Quarter The Colorado Springs retail market experienced a slight decline in market conditions in the first quarter The vacancy rate went from 5.6% in the previous quarter to 6.1% in the current quarter. Net absorption was negative (100,982) square feet, and vacant sublease space increased by 27,122 square feet. Quoted rental rates increased from fourth quarter 2016 levels, ending at $12.68 per square foot per year. A total of 5 retail buildings with 100,302 square feet of retail space were delivered to the market in the quarter, with 388,766 square feet still under construction at the end of the quarter. Net Absorption Retail net absorption was moderately negative in Colorado Springs first quarter 2017, with negative (100,982) square feet absorbed in the quarter. In fourth quarter 2016, net absorption was positive 34,347 square feet, while in third quarter 2016, absorption came in at positive 51,305 square feet. In second quarter 2016, positive 33,628 square feet was absorbed in the market. Tenants moving out of large blocks of space in 2017 include: Zio s Italian Kitchen moving out of 10,000 square feet at 6650 Corporate Dr and Radio Shack moving out of 2,400 square feet at 4319 Centennial Blvd. Tenants moving into large blocks of space in 2017 include: Skill Amusements moving into 15,210 square feet at 2322 S Academy Blvd; Kum & Go moving into 10,800 square feet at 9665 Prominent Pt; and Burn Bootcamp moving into 7,820 square feet at 2450 Montebello Square Dr. Colorado Springs s retail vacancy rate increased in the first quarter 2017, ending the quarter at 6.1%. Over the past four quarters, the market has seen an overall increase in the vacancy rate, with the rate going from 5.5% in the second quarter 2016, to 5.6% at the end of the third quarter 2016, 5.6% at the end of the fourth quarter 2016, to 6.1% in the current quarter. The amount of vacant sublease space in the Colorado Springs market has trended up over the past four quarters. At the end of the second quarter 2016, there were 47,588 square feet of vacant sublease space. Currently, there are 76,050 square feet vacant in the market. Largest Lease Signings The largest lease signings occurring in 2017 included: the 4,986-square-foot-lease signed by Muse Comics at 1330 N Academy Blvd; the 4,200-square-foot-deal signed by Bob s Mattress at 1791 S 8th St; and the 3,817-square-foot-lease signed by Artisan Vaper at 1348 N Academy Blvd. Rental Rates Average quoted asking rental rates in the Colorado Springs retail market are up over previous quarter levels, and up from their levels four quarters ago. Quoted rents ended the first quarter 2017 at $12.68 per square foot per year. That compares to $12.47 per square foot in the fourth quarter 2016, and $11.75 per square foot at the end of the second quarter This represents a 1.7% increase in rental rates in the current quarter, and a 7.33% increase from four quarters ago. Rates by Building Type % 19% 17% 15% 13% 11% 9% 7% 5% 3% 1% Power Center Specialty Center General Retail Shopping Center Mall Total Market q q q q q q q q q q 20171q 2017 CoStar Group, Inc. CoStar Retail Statistics 1

7 Colorado Springs First Quarter 2017 Overview Inventory & Construction During the first quarter 2017, five buildings totaling 100,302 square feet were completed in the Colorado Springs retail market. Over the past four quarters, a total of 285,022 square feet of retail space has been built in Colorado Springs. In addition to the current quarter, seven buildings with 43,613 square feet were completed in fourth quarter 2016, 10 buildings totaling 88,547 square feet completed in third quarter 2016, and 52,560 square feet in five buildings completed in second quarter There were 388,766 square feet of retail space under construction at the end of the first quarter Some of the notable 2017 deliveries include: 4665 Continental Heights, a 68,402-square-foot facility that delivered in first quarter 2017 and is now 0% occupied, and 9665 Prominent Pt, a 10,800-square-foot building that delivered in first quarter 2017 and is now 100% occupied. Total retail inventory in the Colorado Springs market area amounted to 40,574,678 square feet in 3,567 buildings and 340 centers as of the end of the first quarter Shopping Center The Shopping Center market in Colorado Springs currently consists of 324 projects with 15,276,262 square feet of retail space in 846 buildings. In this report the Shopping Center market is comprised of all Community Center, Neighborhood Center, and Strip Centers. After absorbing (28,594) square feet and delivering 89,202 square feet in the current quarter, the Shopping Center sector saw the vacancy rate go from 8.4% at the end of the fourth quarter 2016 to 9.1% this quarter. Over the past four quarters, the Shopping Center vacancy rate has gone from 8.7% at the end of the second quarter 2016, to 8.6% at the end of the third quarter 2016, to 8.4% at the end of the fourth quarter 2016, and finally to 9.1% at the & Rent Past 7 Quarters Price in Dollars per Unit $13 $13 $12 $12 $11 $11 Average Rental Rate Rate q q q q 6.2% 6.0% 5.8% 5.6% 5.4% 5.2% 5.0% Rate Percentage end of the current quarter. Rental rates ended the first quarter 2017 at $13.30 per square foot, down from the $13.36 they were at the end of fourth quarter Rental rates have trended up over the past year, going from $12.18 per square foot a year ago to their current levels. Net absorption in the Shopping Center sector has totaled 135,167 square feet over the past four quarters. In addition to the negative (28,594) square feet absorbed this quarter, positive 59,488 square feet was absorbed in the fourth quarter 2016, positive 59,426 square feet was absorbed in the third quarter 2016, and positive 44,847 square feet was absorbed in the second quarter Power Centers The Power Center average vacancy rate was 7.7% in the first quarter With negative (38,913) square feet of net absorption and no new deliveries, the vacancy rate went from 6.9% at the end of last quarter to 7.7% at the end of the first quarter. In the fourth quarter 2016, Power Centers absorbed negative (43,541) square feet, delivered no new space, and the vacancy rate went from 6.1% to 6.9% over the course of the quarter. Rental started the quarter at $10.73 per square foot and ended the quarter at $14.23 per square foot. A year ago, in first quarter 2016, the vacancy rate was 4.9%. Over the past four quarters, Power Centers have absorbed a cumulative (132,755) square feet of space and delivered cumulative 10,100 square feet of space. Vacant sublease space has gone from 0 square feet to 34,047 square feet over that time period, and rental rates have gone from $11.20 to $ At the end of the first quarter 2017, there was no space under construction in the Colorado Springs market. The total stock of Power Center space in Colorado Springs currently sits at 4,989,873 square feet in 11 centers comprised of 146 buildings. 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 2.6% at the end of first quarter There was a total of 442,193 square feet vacant at that time. The General Retail sector in Colorado Springs currently has average rental rates of $12.34 per square foot per year. There are 48,471 square feet of space under construction in this sector, with 11,100 square feet having been completed in the first quarter. In all, there are a total of 2,518 buildings with 17,325,923 square feet of General Retail space in Colorado Springs. 2 CoStar Retail Statistics 2017 CoStar Group, Inc.

8 Overview First Quarter 2017 Colorado Springs Specialty Centers There are currently 2 Specialty Centers in the Colorado Springs market, making up 454,230 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 Colorado Springs market have experienced no net absorption in The vacancy rate currently stands at 3.3%, and rental rates average $23.33 per square foot. Malls Malls recorded no net absorption in the first quarter This net absorption number, combined with no new space that was built in the quarter, caused the vacancy rate to remain at 9.2% at the end of the first quarter Rental rates remained at $5.00 per square during that time. In this report the Mall market is comprised of 3 Lifestyle Center, Regional Mall and Super Regional Malls. Sales Activity Tallying retail building sales of 15,000 square feet or larger, Colorado Springs retail sales figures fell during the fourth quarter 2016 in terms of dollar volume compared to the third quarter of In the fourth quarter, four retail transactions closed with a total volume of $11,336,500. The four buildings totaled 149,639 square feet and the average price per square foot equated to $75.76 per square foot. That compares to six transactions totaling $26,187,100 in the third quarter The total square footage in the third quarter was 170,909 square feet for an average price per square foot of $ Total retail center sales activity in 2016 was down compared to In the twelve months of 2016, the market saw 23 retail sales transactions with a total volume of $90,000,062. The price per square foot averaged $ In the same twelve months of 2015, the market posted 13 transactions with a total Absorption & Deliveries Past 7 Quarters Millions SF (0.1) (0.2) Net Absorption volume of $90,073,500. The price per square foot averaged $ Cap rates have been higher in 2016, averaging 7.62% compared to the same period in 2015 when they averaged 6.85%. One of the largest transactions that occurred within the last four quarters in the Colorado Springs market is the sale of the Sprouts located at Voyager Pky in Colorado Springs. This recently delivered, 28,000 square foot retail building sold for $9,734,231, or $ per square foot. The property sold on 4/13/2016 at a 5.35% cap rate. Reports compiled by: Jeff Miles, Research Manager. Deliveries (0.10) q q q q 2017 CoStar Group, Inc. CoStar Retail Statistics 3

9 Colorado Springs First Quarter 2017 Markets 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 Downtown Ret East Ret North Ret Northeast Ret Northwest Ret Southeast Ret Southwest Ret Teller County Ret 4 CoStar Retail Statistics 2017 CoStar Group, Inc.

10 Inventory & development First Quarter 2017 Colorado Springs Historical Deliveries Deliveries Average Delivered SF 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 Northeast Ret , , % 17,693 20,897 East Ret 2 138, , % 12,737 69,000 Teller County Ret % 5,801 0 North Ret % 12,787 0 Downtown Ret % 6,482 0 Southeast Ret % 9,762 0 Northwest Ret % 6,891 0 Southwest Ret % 10,368 0 Totals , , % 11,375 27,769 Recent Deliveries Leased & Un-Leased SF in Deliveries Since 2013 Future Deliveries Preleased & Un-Leased SF in Properties Scheduled to Deliver 0.7 Leased Un-Leased 250 Preleased Un-Leased Millions of SF Thousands of SF T q q 2017 CoStar Group, Inc. CoStar Retail Statistics 5

11 Colorado Springs First Quarter 2017 Inventory & development Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction Construction Starts 0.40 Deliveries Millions of SF q q q q q q q q q q q q q 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 4 31,900 22, % $ ,500 30,400 50,000 SF - 99,999 SF 1 68, % $ , ,000 SF - 249,999 SF % $ ,000 SF - 499,999 SF % $ >= 500,000 SF % $ Recent Development by Tenancy Based on GLA Developed for Single & Multi Tenant Use 2017 Deliveries Currently Under Construction Existing Inventory Comparison Based on Total GLA General Retail 1% 33% Shopping Center Power Center 99% 67% Mall Specialty Center Multi Single Multi Single Millions of SF CoStar Retail Statistics 2017 CoStar Group, Inc.

12 Inventory & development First Quarter 2017 Colorado Springs 2017 CoStar Group, Inc. CoStar Retail Statistics 7

13 Colorado Springs First Quarter 2017 Inventory & development 8 CoStar Retail Statistics 2017 CoStar Group, Inc.

14 Figures at a Glance First Quarter 2017 Colorado Springs General Retail Market Statistics First Quarter 2017 Existing Inventory YTD Net YTD Under Quoted Market # Blds Total GLA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Downtown Ret 340 2,112,577 65,255 65, % 5, $14.47 East Ret 602 4,591, , , % 3,236 11,100 0 $8.05 North Ret 185 1,119,827 14,439 14, % 2, $14.93 Northeast Ret 305 3,156,799 57,735 57, % 3, ,471 $19.78 Northwest Ret 394 1,896,180 61,131 61, % (31,695) 0 0 $13.26 Southeast Ret ,309 8,935 8, % 3, $17.72 Southwest Ret 374 2,725,077 17,083 17, % 2, $13.94 Teller County Ret ,889 22,922 22, % (21,622) 0 0 $20.14 Totals 2,518 17,325, , , % (33,475) 11,100 48,471 $12.34 Mall Market Statistics First Quarter 2017 Existing Inventory YTD Net YTD Under Quoted Market # Ctrs Total GLA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Downtown Ret % $0.00 East Ret 1 882, , , % $5.00 North Ret % $0.00 Northeast Ret 2 1,645,662 38,850 38, % $0.00 Northwest Ret % $0.00 Southeast Ret % $0.00 Southwest Ret % $0.00 Teller County Ret % $0.00 Totals 3 2,528, , , % $5.00 Power Center Market Statistics First Quarter 2017 Existing Inventory YTD Net YTD Under Quoted Market # Ctrs Total GLA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Downtown Ret % $0.00 East Ret 2 800, , , % (6,861) 0 0 $8.70 North Ret 2 912,215 93, , % (34,027) 0 0 $29.27 Northeast Ret 5 2,390,306 30,853 30, % 1, $20.29 Northwest Ret % $0.00 Southeast Ret % $0.00 Southwest Ret 2 887,129 15,000 15, % $20.00 Teller County Ret % $0.00 Totals 11 4,989, , , % (38,913) 0 0 $15.25 Shopping Center Market Statistics First Quarter 2017 Existing Inventory YTD Net YTD Under Quoted Market # Ctrs Total GLA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Downtown Ret , % $12.00 East Ret 85 4,310, , , % (41,910) 0 138,000 $8.99 North Ret 40 1,970, , , % (8,833) 0 0 $14.17 Northeast Ret 79 4,702, , , % 41,577 89, ,295 $16.98 Northwest Ret 39 1,500,978 60,514 60, % $14.75 Southeast Ret ,016 43,109 43, % (4,879) 0 0 $9.15 Southwest Ret 34 1,333, , , % (9,078) 0 0 $14.41 Teller County Ret ,334 44,452 44, % (5,831) 0 0 $13.06 Totals ,276,262 1,359,609 1,388, % (28,594) 89, ,295 $ CoStar Group, Inc. CoStar Retail Statistics 9

15 Colorado Springs First Quarter 2017 Figures at a Glance Specialty Center Market Statistics First Quarter 2017 Existing Inventory YTD Net YTD Under Quoted Market # Ctrs Total GLA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Downtown Ret % $0.00 East Ret % $0.00 North Ret % $0.00 Northeast Ret 2 454,230 14,949 14, % $23.33 Northwest Ret % $0.00 Southeast Ret % $0.00 Southwest Ret % $0.00 Teller County Ret % $0.00 Totals 2 454,230 14,949 14, % $23.33 Total Retail Market Statistics First Quarter 2017 Existing Inventory YTD Net YTD Under Quoted Market # Blds Total GLA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Downtown Ret 373 2,417,655 65,255 65, % 5, $14.39 East Ret ,584,776 1,175,626 1,188, % (45,535) 11, ,000 $8.00 North Ret 313 4,002, , , % (40,616) 0 0 $16.18 Northeast Ret ,349, , , % 46,574 89, ,766 $17.73 Northwest Ret 493 3,397, , , % (31,335) 0 0 $14.18 Southeast Ret 167 1,630,325 52,044 52, % (1,583) 0 0 $9.74 Southwest Ret 477 4,945, , , % (7,026) 0 0 $14.76 Teller County Ret 215 1,247,223 67,374 67, % (27,453) 0 0 $13.64 Totals 3,567 40,574,678 2,386,815 2,462, % (100,982) 100, ,766 $ CoStar Retail Statistics 2017 CoStar Group, Inc.

16 Figures at a Glance First Quarter 2017 Colorado Springs 2017 CoStar Group, Inc. CoStar Retail Statistics 11

17 Colorado Springs First Quarter 2017 Figures at a Glance 12 CoStar Retail Statistics 2017 CoStar Group, Inc.

18 Leasing Activity First Quarter 2017 Colorado Springs Historical Rental Rates Based on NNN Rental Rates Power Center Specialty Center General Retail Shopping Center Mall Total Market $25.00 Dollars/SF/Year $20.00 $15.00 $10.00 $5.00 $ q q q q q q q q q q q by Available Space Type Percent of All Vacant Space in Direct vs. Sublet by Building Type Percent of All Vacant Space 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* General Retail Shopping Center Power Center Mall Specialty Center Millions of SF Millions q q * Includes Under Construction Spaces 2017 CoStar Group, Inc. CoStar Retail Statistics 13

19 Colorado Springs First Quarter 2017 Leasing Activity Select Top Retail Leases Based on Leased Square Footage For Deals Signed in 2017 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company N Academy Blvd East Ret 7,618 1st N/A N/A Dunton Commercial Real Estate United Heights Northeast Ret 6,400 1st N/A N/A Colorado Springs Commercial - Cushm Centennial Blvd Northwest Ret 5,264 1st N/A N/A CORE Commercial Brokerage Astrozon Blvd East Ret 5,200 1st N/A N/A Moon Kim N Academy Blvd East Ret 4,986 1st Muse Comics N/A NAI Highland Commercial Group S 8th St Southwest Ret 4,200 1st Bob s Mattress N/A NAI Highland Commercial Group N Academy Blvd East Ret 3,817 1st Artisan Vaper N/A NAI Highland Commercial Group S Tejon St Downtown Ret 3,800 1st N/A N/A Richard M. & Pamela C. Guy S Nevada Ave Southwest Ret 3,324 1st Once Upon A Child N/A NAI Highland Commercial Group W Colorado Ave Northwest Ret 3,150 1st Trailz Taproom N/A NAI Highland Commercial Group N Academy Blvd North Ret 2,600 1st Fit Body Boot Camp N/A Quantum Commercial Group E Bijou St Downtown Ret 2,540 1st N/A N/A Olive Real Estate Group Powers Center Pt Northeast Ret 2,500 1st N/A N/A Front Range Commercial, LLC North Gate Blvd Northeast Ret 2,466 1st N/A N/A NAI Highland Commercial Group Peterson Rd East Ret 2,419 1st N/A N/A C.T. Martin LLC E Woodmen Rd North Ret 2,339 1st Joule N/A Olive Real Estate Group S 21st St Southwest Ret 2,338 1st N/A N/A Kratt Commercial Properties S Sierra Madre St Downtown Ret 2,255 1st N/A N/A Ho & Leigh, Inc Cipriani Loop* Northeast Ret 2,000 1st Rangewood Orthodontics N/A CORE Commercial Brokerage N Murray Blvd Northeast Ret 2,000 1st N/A N/A Ho & Leigh, Inc. 21 Constitution Ave East Ret 2,000 1st Subway N/A SullivanHayes Brokerage S Sierra Madre St Downtown Ret 1,920 1st N/A N/A Ho & Leigh, Inc S Nevada Ave Southwest Ret 1,784 1st Berges Jewelry Design N/A NAI Highland Commercial Group S Academy Blvd East Ret 1,770 1st Jimmy John s N/A Kratt Commercial Properties Barnes Rd Northeast Ret 1,700 1st N/A N/A Ho & Leigh, Inc Mesa Ridge Pky Southeast Ret 1,700 1st N/A N/A NAI Highland Commercial Group E Pikes Peak Ave East Ret 1,600 1st Benzer Pharmacy N/A Patricia A Mason W Colorado Ave Northwest Ret 1,549 1st N/A N/A Quantum Commercial Group N Academy Blvd North Ret 1,513 1st Ivilo Services N/A DDR Corp Washington St Northwest Ret 1,501 1st N/A N/A NAI Highland Commercial Group E Platte Ave East Ret 1,500 1st N/A N/A J&B Building Company N Academy Blvd North Ret 1,463 1st N/A N/A SullivanHayes Brokerage N Academy Blvd East Ret 1,400 1st Egg & I N/A CBRE Bloomington St Northeast Ret 1,400 1st Styles Salon N/A NAI Highland Commercial Group United Heights Northeast Ret 1,400 1st Interquest Liquors N/A Colorado Springs Commercial - Cushm Black Forest Rd Northeast Ret 1,360 1st Brewing Grounds N/A CBRE Montebello Ln Northeast Ret 1,338 1st N/A N/A J&B Building Company Powers Center Pt Northeast Ret 1,270 1st N/A N/A CORE Commercial Brokerage N Circle Dr East Ret 1,203 1st Compu-Mark N/A NAI Highland Commercial Group Fountain Mesa Rd Southeast Ret 1,200 1st Sassy Sun Tan N/A CORE Commercial Brokerage * Renewal 14 CoStar Retail Statistics 2017 CoStar Group, Inc.

20 Sales Activity First Quarter 2017 Colorado Springs The Optimist Sales Index Average of Two Highest Price/SF's and Two Lowest Cap Rates 11.0% Cap Rate Price/SF $ % $330 Cap Rate Percentage 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% $280 $230 $180 $130 Dollars/SF 3.0% $80 2.0% q q q $30 Source: CoStar COMPS Sales Volume & Price Sales Analysis by Building Size Based on Retail Building Sales of 15,000 SF and Larger Based on Retail Building Sales From Jan Dec $140 Sales Volume Price/SF $450 Bldg Size # RBA $ Volume Price/SF Cap Rate $120 $400 < 25,000 SF ,148 $155,219,361 $ % Millions of Sales Volume Dollars $100 $80 $60 $40 $350 $300 $250 $200 $150 $100 Price/SF 25K-99K SF 100K-249K SF ,482 $54,703,662 $ % - 0 $0 $ - - $20 $50 $0 $0 >250K SF - 0 $0 $ q q q q Source: CoStar COMPS Source: CoStar COMPS U.S. Price/SF Comparison Based on Retail Building Sales of 15,000 SF and Larger U.S. Cap Rate Comparison Based on Retail Building Sales of 15,000 SF and Larger $460 Colorado Springs US 11.0% Colorado Springs US $ % Dollars per SF $360 $310 $260 $210 $160 $110 Cap Rate Percentage 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% $60 3.0% $10 2.0% q q q q q2013 3q q2014 3q q2015 3q q2016 3q Source: CoStar COMPS Source: CoStar COMPS 2017 CoStar Group, Inc. CoStar Retail Statistics 15

21 16 CoStar Retail Statistics 2017 CoStar Group, Inc. Colorado Springs First Quarter 2017 Sales Activity

22 Deliveries, Absorption & D o w n t o w n M a r k e t Market Highlights Class A, B & C Delivered SF Absorption SF First Quarter 2017 Colorado Springs (0.005) (0.010) (0.015) (0.020) q q q q q q q q q q q q q 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Vacant Space Quoted Rental Rates Direct SF Sublet SF $ $ $ Dollars/SF/Year $14.20 $14.00 $13.80 $13.60 $ $ $ q q q q q $ q q q Existing Inventory Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 373 2,417,655 65, % 5, $ q 373 2,417,655 71, % 2, $ q 373 2,417,655 73, % (5,847) $ q 373 2,417,655 67, % 13, $ q 373 2,417,655 81, % 11, $ q 373 2,417,655 93, % (5,846) $ q 373 2,417,655 87, % $ q 373 2,417,655 87, % 2, $ q 373 2,417,655 90, % 5, , $ q 372 2,409,119 87, % ,536 $ q 372 2,409,119 87, % (7,270) ,536 $ q 373 2,426,219 97, % (14,924) ,536 $ q 373 2,426,219 82, % 27, $ q 373 2,426, , % (14,313) $ q 373 2,426,219 95, % , $ q 373 2,424,769 94, % 2, ,750 $ CoStar Group, Inc. CoStar Retail Statistics 17

23 Colorado Springs First Quarter 2017 Deliveries, Absorption & E a s t M a r k e t Market Highlights Class A, B & C Delivered SF Absorption SF (0.020) (0.040) (0.060) (0.080) q q q q q q q q q q q q q 12.0% 11.5% 11.0% 10.5% 10.0% 9.5% 9.0% Vacant Space Quoted Rental Rates Direct SF Sublet SF $ q q q q q Dollars/SF/Year $8.10 $8.05 $8.00 $7.95 $7.90 $7.85 $7.80 $7.75 $ q q q Existing Inventory Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q ,584,776 1,188, % (45,535) 2 11, ,000 $ q ,573,676 1,132, % (53,648) ,100 $ q ,573,676 1,078, % 10, ,100 $ q ,573,676 1,089, % (3,133) 1 3, ,000 $ q ,570,176 1,082, % 18, ,500 $ q ,570,176 1,101, % (4,022) ,500 $ q ,570,176 1,097, % (6,795) 1 8, ,500 $ q ,561,376 1,081, % ,800 $ q ,561,376 1,081, % (27,116) ,800 $ q ,561,376 1,054, % 71, $ q ,553,056 1,117, % 106, ,320 $ q ,548,040 1,219, % 6, ,336 $ q ,548,040 1,225, % 14, ,016 $ q ,548,040 1,240, % 36, $ q ,548,040 1,276, % 209, , $ q ,507,439 1,445, % (137,831) ,601 $ CoStar Retail Statistics 2017 CoStar Group, Inc.

24 Deliveries, Absorption & N o r t h M a r k e t Market Highlights Class A, B & C Delivered SF Absorption SF First Quarter 2017 Colorado Springs (0.020) (0.040) (0.060) (0.080) q q q q q q q q q q q q q 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Vacant Space Quoted Rental Rates Direct SF Sublet SF $ $ $ Dollars/SF/Year $12.00 $10.00 $8.00 $ $ $ q q q q q $ q q q Existing Inventory Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 313 4,002, , % (40,616) $ q 313 4,002, , % 9, $ q 313 4,002, , % (66,453) $ q 313 4,002, , % (35,924) 1 10, $ q 312 3,992, , % 25, , ,100 $ q 310 3,983, , % (7,456) ,950 $ q 310 3,983, , % 47, , ,100 $ q 307 3,914, , % (10,383) 1 2, ,859 $ q 306 3,912, , % 9, ,959 $ q 306 3,912, , % 2, ,700 $ q 306 3,912, , % 33, $ q 306 3,912, , % 22, $ q 306 3,912, , % (18,477) 2 12, $ q 304 3,899, , % 27, ,776 $ q 304 3,899, , % 52, , ,776 $ q 302 3,864, , % 7, , ,947 $ CoStar Group, Inc. CoStar Retail Statistics 19

25 Colorado Springs First Quarter 2017 Deliveries, Absorption & N o r t h e a s t M a r k e t Market Highlights Class A, B & C Delivered SF Absorption SF (0.020) (0.040) (0.060) q q q q q q q q q q q q q 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Vacant Space Quoted Rental Rates Direct SF Sublet SF $ $ Dollars/SF/Year $17.00 $16.50 $16.00 $15.50 $15.00 $14.50 $ q q q q q $ q q q Existing Inventory Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q ,349, , % 46, , ,766 $ q ,260, , % 71, , ,968 $ q ,215, , % 70, , ,590 $ q ,123, , % 53, , ,892 $ q ,081, , % 110, , ,523 $ q ,015, , % 123, , ,518 $ q ,951, , % 70, , ,208 $ q ,918, , % (11,063) 2 16, ,075 $ q ,901, , % 76, , ,604 $ q ,820, , % (23,822) 3 18, ,314 $ q ,798, , % 92, , ,011 $ q ,785, , % 45, , ,274 $ q ,755, , % (33,206) 1 4, ,790 $ q ,750, , % 307, , ,431 $ q ,562, , % 5, , ,828 $ q ,555, , % 67, , ,265 $ CoStar Retail Statistics 2017 CoStar Group, Inc.

26 Deliveries, Absorption & N o r t h w e s t M a r k e t Market Highlights Class A, B & C Delivered SF Absorption SF First Quarter 2017 Colorado Springs % (0.010) (0.020) (0.030) 5.0% 4.0% 3.0% 2.0% 1.0% (0.040) q q q q q q q q q q q q q 0.0% Vacant Space Quoted Rental Rates Direct SF Sublet SF $ $ $ Dollars/SF/Year $14.00 $13.80 $ $ q q q q q $ q q q Existing Inventory Net Delivered Inventory UC Inventory Quoted Period # Bldgs Total RBA Vacant SF % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates q 493 3,397, , % (31,335) $ q 493 3,397,158 90, % (1,424) $ q 493 3,397,158 88, % 5, $ q 493 3,397,158 94, % 17, $ q 493 3,397, , % (9,964) $ q 493 3,397, , % 20, $ q 493 3,397, , % 20, , $ q 492 3,394, , % 11, ,850 $ q 492 3,394, , % (808) ,850 $ q 492 3,394, , % 17, ,850 $ q 492 3,394, , % (7,338) ,850 $ q 492 3,394, , % (3,696) $ q 492 3,394, , % (3,422) $ q 492 3,394, , % (12,281) $ q 492 3,394, , % (3,735) $ q 492 3,394, , % 10, $ CoStar Group, Inc. CoStar Retail Statistics 21