The CoStar Retail Report. Y e a r - E n d Denver Retail Market

Transcription

1 The CoStar Retail Report Y e a r - E n d

2 Year-End 2014 Denver 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 Aurora Market Boulder Market Central Market Colorado Bl/Cherry Ck Market Downtown Market Longmont Market North Outlying Market Northeast Market Northern Colorado Market Northwest Market South Market Southeast Outlying Market Southeast Market Southwest Outlying Market Southwest Market West Market 2015 CoStar Group, Inc. The CoStar Retail Report A

3 Denver Year-End 2014 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 2015 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 The CoStar Retail Report 2015 CoStar Group, Inc.

4 Year-End 2014 Denver 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. : 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 2015 CoStar Group, Inc. The CoStar Retail Report C

5 Denver Year-End 2014 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). Rental Rate: The asking rate per square foot for a particular building or unit of space by a broker or property owner. 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 The CoStar Retail Report 2015 CoStar Group, Inc.

6 Overview Year-End 2014 Denver Denver s Decreases to 5.7% Net Absorption Positive 435,814 SF in the Quarter The Denver retail market did not experience much change in market conditions in the fourth quarter The vacancy rate went from 5.8% in the previous quarter to 5.7% in the current quarter. Net absorption was positive 435,814 square feet, and vacant sublease space increased by 3,997 square feet. rental rates increased from third quarter 2014 levels, ending at $15.17 per square foot per year. A total of 10 retail buildings with 259,075 square feet of retail space were delivered to the market in the quarter, with 873,653 square feet still under construction at the end of the quarter. Net Absorption Retail net absorption was moderate in Denver fourth quarter 2014, with positive 435,814 square feet absorbed in the quarter. In third quarter 2014, net absorption was positive 388,787 square feet, while in second quarter 2014, absorption came in at positive 184,404 square feet. In first quarter 2014, positive 598,360 square feet was absorbed in the market. Denver s retail vacancy rate decreased in the fourth quarter 2014, ending the quarter at 5.7%. Over the past four quarters, the market has seen an overall decrease in the vacancy rate, with the rate going from 6.0% in the first quarter 2014, to 5.9% at the end of the second quarter 2014, 5.8% at the end of the third quarter 2014, to 5.7% in the current quarter. The amount of vacant sublease space in the Denver market has trended down over the past four quarters. At the end of the first quarter 2014, there were 439,772 square feet of vacant sublease space. Currently, there are 255,484 square feet vacant in the market. Largest Lease Signings The largest lease signings occurring in 2014 included: the 104,396-square-foot-lease signed by Conn s at 3910 River Point Pky; the 78,000-square-foot-deal signed by King Soopers at 100 W Littleton Blvd; and the 56,040-square-foot-lease signed by Spirit Halloween at 1000 W 104th Ave. Rental Rates Average quoted asking rental rates in the Denver retail market are up over previous quarter levels, and up from their levels four quarters ago. rents ended the fourth quarter 2014 at $15.17 per square foot per year. That compares to $15.15 per square foot in the third quarter 2014, and $14.98 per square foot at the end of the first quarter This represents a 0.1% increase in rental rates in the current quarter, and a 1.25% increase from four quarters ago. Inventory & Construction During the fourth quarter 2014, 10 buildings totaling 259,075 square feet were completed in the Denver retail market. Over the past four quarters, a total of 863,674 square feet of retail space has been built in Denver. In addition to the current quarter, 15 buildings with 254,452 square feet were completed in third quarter 2014, 10 buildings totaling 165,470 square feet completed in second quarter 2014, and 184,677 square feet in 28 buildings completed in first quarter There were 873,653 square feet of retail space under construction at the end of the fourth quarter Some of the notable 2014 deliveries include: 4705 Weitzel St - Costco, a 150,000-square-foot facility that delivered in fourth quarter 2014 and is now 100% occupied, and 3910 River Rates by Building Type Power Center Specialty Center General Retail Shopping Center Mall Total Market 12% 10% 8% 6% 4% 2% 0% q q q q q q q q q 2015 CoStar Group, Inc. The CoStar Retail Report 1

7 Denver Year-End 2014 Overview Point Pky, a 122,396-square-foot building that delivered in third quarter 2014 and is now 87% occupied. Total retail inventory in the Denver market area amounted to 191,267,480 square feet in 14,131 buildings and 1504 centers as of the end of the fourth quarter Shopping Center The Shopping Center market in Denver currently consists of 1431 projects with 74,090,712 square feet of retail space in 3,571 buildings. In this report the Shopping Center market is comprised of all Community Center, Neighborhood Center, and Strip Centers. After absorbing 221,916 square feet and delivering 39,339 square feet in the current quarter, the Shopping Center sector saw the vacancy rate go from 8.3% at the end of the third quarter 2014 to 8.1% this quarter. Over the past four quarters, the Shopping Center vacancy rate has gone from 8.5% at the end of the first quarter 2014, to 8.5% at the end of the second quarter 2014, to 8.3% at the end of the third quarter 2014, and finally to 8.1% at the end of the current quarter. Rental rates ended the fourth quarter 2014 at $14.21 per square foot, down from the $14.43 they were at the end of third quarter Rental rates have trended down over the past year, going from $14.29 per square foot a year ago to their current levels. Net absorption in the Shopping Center sector has totaled 645,941 square feet over the past four quarters. In addition to the positive 221,916 square feet absorbed this quarter, positive 125,641 square feet was absorbed in the third quarter 2014, positive 46,814 square feet was absorbed in the second quarter 2014, and positive 251,570 square feet was absorbed in the first quarter Power Centers The Power Center average vacancy rate was 3.3% in the & Rent Past 10 Quarters Price in Dollars per Unit $15 $15 $15 $15 $15 $14 $14 $14 $14 Average Rental Rate Rate q q q q q 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Rate Percentage fourth quarter With positive 24,370 square feet of net absorption and 5,000 square feet in new deliveries, the vacancy rate went from 3.4% at the end of last quarter to 3.3% at the end of the fourth quarter. In the third quarter 2014, Power Centers absorbed positive 206,049 square feet, delivered 127,396 square feet, and the vacancy rate went from 3.8% to 3.4% over the course of the quarter. Rental started the quarter at $18.55 per square foot and ended the quarter at $19.36 per square foot. A year ago, in fourth quarter 2013, the vacancy rate was 4.3%. Over the past four quarters, Power Centers have absorbed a cumulative 430,126 square feet of space and delivered cumulative 233,847 square feet of space. Vacant sublease space has gone from 1,434 square feet to 1,600 square feet over that time period, and rental rates have gone from $18.65 to $ At the end of the fourth quarter 2014, there were 169,000 square feet under construction in the Denver market. The total stock of Power Center space in Denver currently sits at 20,741,383 square feet in 48 centers comprised of 553 buildings. A total of 169,000 square feet of space was under construction at the end of the fourth quarter 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 3.6% at the end of fourth quarter There was a total of 2,770,776 square feet vacant at that time. The General Retail sector in Denver currently has average rental rates of $16.28 per square foot per year. There are 603,375 square feet of space under construction in this sector, with 214,736 square feet having been completed in the fourth quarter. In all, there are a total of 9,700 buildings with 76,750,491 square feet of General Retail space in Denver. Specialty Centers There are currently 4 Specialty Centers in the Denver market, making up 864,942 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 Denver market have experienced no net absorption in The vacancy rate currently stands at 0.2%, and rental rates average $20.00 per square foot. Malls Malls recorded net absorption of positive 47,853 square feet in the fourth quarter This net absorption number, combined with no new space that was built in the quarter, caused the vacancy rate to go from 7.5% a quarter ago to 7.3% at the end of the fourth quarter Rental rates went from $21.78 per square foot to $23.16 per square foot during 2 The CoStar Retail Report 2015 CoStar Group, Inc.

8 Overview Year-End 2014 Denver that time. In this report the Mall market is comprised of 21 Lifestyle Center, Regional Mall and Super Regional Malls. Sales Activity Tallying retail building sales of 15,000 square feet or larger, Denver retail sales figures rose during the third quarter 2014 in terms of dollar volume compared to the second quarter of In the third quarter, 32 retail transactions closed with a total volume of $223,335,795. The 32 buildings totaled 1,652,097 square feet and the average price per square foot equated to $ per square foot. That compares to 24 transactions totaling $102,664,000 in the second quarter The total square footage in the second quarter was 1,003,384 square feet for an average price per square foot of $ Total retail center sales activity in 2014 was up compared to In the first nine months of 2014, the market saw 83 retail sales transactions with a total volume of $436,495,206. The price per square foot averaged $ In the same first nine months of 2013, the market posted 64 transactions with a total volume of $413,486,707. The price per square foot averaged $ Cap rates have been lower in 2014, averaging 7.76% compared to the same period in 2013 when they averaged 8.30%. One of the largest transactions that occurred within the last four quarters in the Denver market is the sale of Orchard Absorption & Deliveries Past 10 Quarters Millions SF Net Absorption Town Center in Westminster. This 494,600 square foot retail center sold for $123,500,000, or $ per square foot. The property sold on 12/23/2013, at a 6.50% cap rate. Reports compiled by: Alissa Spittel, CoStar Research Manager, Christiana Jones, CoStar Research Associate, Christina Armstead, CoStar Research Associate, Andrea Lawson, CoStar Research Associate, and Virgil Watson, CoStar Research Associate Deliveries q q q q q CoStar Group, Inc. The CoStar Retail Report 3

9 Denver Year-End 2014 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 Aurora Ret Boulder Ret Central Ret Colorado Bl/Cherry Ck Ret Downtown Ret Longmont Ret North Outlying Ret Northeast Ret Northern Colorado Ret Northwest Ret South Ret Southeast Outlying Ret Southeast Ret Southwest Outlying Ret Southwest Ret West Ret 4 The CoStar Retail Report 2015 CoStar Group, Inc.

10 Inventory & development Year-End 2014 Denver 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 Longmont Ret , , % 13,135 28,203 Northwest Ret 4 205, , % 16,611 51,437 South Ret 1 78,000 78, % 20,002 78,000 Northern Colorado Ret 2 52,590 32, % 12,635 26,295 Downtown Ret 1 45,896 33, % 13,275 45,896 West Ret 6 38,487 20, % 10,229 6,414 Northeast Ret 3 34,299 34, % 13,513 11,433 Central Ret 2 11,300 3, % 9,008 5,650 Boulder Ret 1 5,796 5, % 14,895 5,796 Aurora Ret 1 5,400 5, % 17,468 5,400 All Other 2 1, % 16, Totals , , % 13,535 23,612 Recent Deliveries Leased & Un-Leased SF in Deliveries Since 2010 Future Deliveries Preleased & Un-Leased SF in Properties Scheduled to Deliver 1.8 Leased Un-Leased 450 Preleased Un-Leased Millions of SF Thousands of SF T q q 2015 CoStar Group, Inc. The CoStar Retail Report 5

11 Denver Year-End 2014 Inventory & development Historical Construction Starts & Deliveries Square Footage Per Quarter Starting and Completing Construction Construction Starts 0.79 Deliveries Millions of SF q q q 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 , , % $ , ,820 50,000 SF - 99,999 SF 1 59,542 59, % $ , ,000 SF - 249,999 SF 2 272, , % $ , ,000 SF - 499,999 SF % $ >= 500,000 SF % $ Recent Development by Tenancy Based on GLA Developed for Single & Multi Tenant Use 2014 Deliveries Currently Under Construction Comparison Based on Total GLA General Retail 44% 19% Shopping Center Power Center 56% 81% Mall Specialty Center Multi Single Multi Single Millions of SF The CoStar Retail Report 2015 CoStar Group, Inc.

12 Inventory & development Year-End 2014 Denver 2015 CoStar Group, Inc. The CoStar Retail Report 7

13 Denver Year-End 2014 Inventory & development 8 The CoStar Retail Report 2015 CoStar Group, Inc.

14 Figures at a Glance Year-End 2014 Denver General Retail Market Statistics Year-End 2014 YTD Net YTD Under Market # Blds Total GLA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Aurora Ret 352 3,249,720 51,875 51, % 41, $11.90 Boulder Ret 338 3,262,478 83,758 91, % 40,266 7,120 5,796 $23.15 Central Ret 1,887 12,370, , , % (164,108) 39,144 11,300 $18.18 Colorado Bl/Cherry Ck Ret 223 1,758,088 32,112 32, % 11,775 7,810 0 $31.12 Downtown Ret 221 2,405,234 79,855 79, % (43,088) 0 45,896 $30.95 Longmont Ret 330 2,315,634 65,895 68, % 21, ,845 $13.26 North Outlying Ret ,239 49,677 49, % (4,605) 3,600 0 $10.65 Northeast Ret 757 5,431, , , % 34,685 96,697 16,779 $10.26 Northern Colorado Ret 1,551 11,899, , , % 261, ,729 52,590 $11.72 Northwest Ret 859 8,319, , , % 105,153 49,813 42,148 $14.32 South Ret 468 6,492,997 80,689 80, % 20,376 37,013 0 $16.99 Southeast Outlying Ret 213 1,261,468 32,483 32, % 12,246 4,945 0 $19.12 Southeast Ret 344 4,398, , , % 65,688 4, $19.19 Southwest Outlying Ret ,175 42,753 42, % 6, $17.69 Southwest Ret 195 2,438,318 27,746 27, % 8,143 7,700 0 $14.25 West Ret 1,665 9,459, , , % 80,329 32,591 33,174 $17.07 Totals 9,700 76,750,491 2,722,772 2,770, % 497, , ,375 $16.28 Mall Market Statistics Year-End 2014 YTD Net YTD Under Market # Ctrs Total GLA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Aurora Ret 1 1,224,926 9,100 9, % (3,900) 0 0 $6.00 Boulder Ret 1 707, % 18,494 14,000 0 $25.15 Central Ret % $0.00 Colorado Bl/Cherry Ck Ret 1 1,177, % $0.00 Downtown Ret 1 411,528 23,192 23, % (1,465) 0 0 $0.00 Longmont Ret 1 608, , , % $0.00 North Outlying Ret % $0.00 Northeast Ret 1 1,166, , , % 25, $22.50 Northern Colorado Ret 4 2,748, , , % 34, $22.65 Northwest Ret 3 2,612, , , % 11, $12.00 South Ret 3 2,560,665 91,052 92, % 19, $27.60 Southeast Outlying Ret 1 132,922 2,731 2, % 15, $20.00 Southeast Ret 1 1,508,177 61,641 61, % 9, $22.00 Southwest Outlying Ret % $0.00 Southwest Ret 1 1,470, , , % (99,587) 0 0 $0.00 West Ret 2 2,491,582 8,580 8, % 4,374 2,500 0 $0.00 Totals 21 18,819,952 1,367,938 1,369, % 33,852 16,500 0 $ CoStar Group, Inc. The CoStar Retail Report 9

15 Denver Year-End 2014 Figures at a Glance Power Center Market Statistics Year-End 2014 YTD Net YTD Under Market # Ctrs Total GLA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Aurora Ret 2 1,033,583 19,060 19, % 52, ,400 $21.32 Boulder Ret 1 622,757 48,286 48, % (23,632) 0 0 $18.50 Central Ret 3 1,461,522 28,707 28, % (15,992) 0 0 $21.22 Colorado Bl/Cherry Ck Ret 1 361, % $0.00 Downtown Ret % $0.00 Longmont Ret 1 480,859 20,110 20, % $16.11 North Outlying Ret % $0.00 Northeast Ret 7 3,371, , , % 70,350 59,542 0 $19.77 Northern Colorado Ret 9 3,322,357 28,952 28, % 23,602 5,000 0 $21.15 Northwest Ret 7 3,227, , , % 58,293 41, ,600 $16.66 South Ret 4 1,145,235 5,227 5, % 20, $29.00 Southeast Outlying Ret % $0.00 Southeast Ret 4 2,136,021 30,100 30, % 61, $23.32 Southwest Outlying Ret % $0.00 Southwest Ret 5 2,187,171 92,192 92, % 163, ,396 0 $12.07 West Ret 4 1,390,954 44,334 44, % 19, $20.61 Totals 48 20,741, , , % 430, , ,000 $19.36 Shopping Center Market Statistics Year-End 2014 YTD Net YTD Under Market # Ctrs Total GLA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Aurora Ret 98 6,649, , , % 25, $12.29 Boulder Ret 62 2,929, , , % 41, $20.70 Central Ret 165 6,307, , , % 141,429 3,500 0 $14.21 Colorado Bl/Cherry Ck Ret 44 1,737,036 79,566 85, % 32, $32.22 Downtown Ret ,142 44,282 44, % $55.00 Longmont Ret 58 2,951, , , % (29,194) 2,583 0 $15.08 North Outlying Ret ,776 2,173 2, % 5, $9.28 Northeast Ret 110 5,327, , , % 3,857 60,359 17,520 $13.79 Northern Colorado Ret 157 8,234, , , % 56,473 15,150 0 $13.74 Northwest Ret ,720,992 1,183,361 1,297, % 130,832 8,291 0 $11.49 South Ret 93 7,402, , , % 65,475 43,656 78,000 $16.27 Southeast Outlying Ret ,582 30,323 30, % 8, $16.64 Southeast Ret 96 5,810, , , % 50, $16.96 Southwest Outlying Ret 9 396, , , % 7, $11.80 Southwest Ret 59 4,079, , , % 25, $16.20 West Ret 237 8,936, , , % 79,766 19,502 5,313 $12.73 Totals 1,431 74,090,712 5,783,210 5,987, % 645, , ,278 $ The CoStar Retail Report 2015 CoStar Group, Inc.

16 Figures at a Glance Year-End 2014 Denver Specialty Center Market Statistics Year-End 2014 YTD Net YTD Under Market # Ctrs Total GLA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Aurora Ret % $0.00 Boulder Ret % $0.00 Central Ret 1 289, % $20.00 Colorado Bl/Cherry Ck Ret 1 30,960 2,110 2, % $0.00 Downtown Ret % $0.00 Longmont Ret % $0.00 North Outlying Ret % $0.00 Northeast Ret % $0.00 Northern Colorado Ret % $0.00 Northwest Ret 1 66, % $0.00 South Ret % $0.00 Southeast Outlying Ret 1 477, % $0.00 Southeast Ret % $0.00 Southwest Outlying Ret % $0.00 Southwest Ret % $0.00 West Ret % $0.00 Totals 4 864,942 2,110 2, % $20.00 Total Retail Market Statistics Year-End 2014 YTD Net YTD Under Market # Blds Total GLA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates Aurora Ret ,157, , , % 114, ,400 $12.65 Boulder Ret 505 7,522, , , % 77,007 21,120 5,796 $22.04 Central Ret 2,268 20,429,812 1,103,593 1,105, % (38,671) 42,644 11,300 $16.51 Colorado Bl/Cherry Ck Ret 322 5,065, , , % 44,751 7,810 0 $31.93 Downtown Ret 236 3,132, , , % (43,831) 0 45,896 $32.76 Longmont Ret 484 6,357, , , % (8,017) 2, ,845 $14.33 North Outlying Ret 183 1,297,015 51,850 51, % 690 3,600 0 $9.95 Northeast Ret 1,132 15,296, , , % 134, ,598 34,299 $13.65 Northern Colorado Ret 2,074 26,205,231 1,333,417 1,381, % 376, ,879 52,590 $13.18 Northwest Ret 1,562 25,946,401 2,095,027 2,210, % 306, , ,748 $12.18 South Ret ,601, , , % 125,148 80,669 78,000 $17.97 Southeast Outlying Ret 274 2,860,970 65,537 65, % 35,946 4,945 0 $17.24 Southeast Ret ,852, , , % 187,380 4,124 1,292 $17.58 Southwest Outlying Ret 160 1,088, , , % 13, $12.14 Southwest Ret ,175, , , % 97, ,096 0 $15.91 West Ret 2,178 22,278,471 1,307,772 1,322, % 184,127 54,593 38,487 $14.31 Totals 14, ,267,480 10,556,331 10,811, % 1,607, , ,653 $ CoStar Group, Inc. The CoStar Retail Report 11

17 Denver Year-End 2014 Figures at a Glance General Retail Market Statistics Year-End 2014 Net Deliveries UC Inventory Period # Blds Total GLA Direct SF Total SF Vac % Absorption # Blds Total GLA # Blds Total GLA Rates q 9,700 76,750,491 2,722,772 2,770, % 141, , ,375 $ q 9,696 76,596,697 2,706,261 2,758, % 38, , ,263 $ q 9,687 76,592,202 2,769,101 2,792, % 133, , ,538 $ q 9,692 76,811,593 3,061,280 3,145, % 183, , ,748 $ q 9,676 76,711,850 3,143,151 3,229, % 75, , ,555 $ q 9,666 76,750,510 3,311,685 3,343, % 271, , ,411 $ q 9,656 76,470,876 3,291,230 3,335, % 394, , ,852 $ q 9,643 76,192,216 3,417,510 3,451, % 354, , ,836 $ q 9,628 76,081,212 3,659,553 3,695, % 100, , ,942 $ q 9,618 76,030,587 3,684,891 3,745, % 130, , ,507 $ q 9,613 76,120,617 3,902,562 3,966, % (7,083) 5 31, ,995 $ q 9,610 76,261,780 4,054,022 4,100, % (77,369) 10 58, ,616 $ ,606 76,445,827 4,160,700 4,206, % 1,210, , ,705 $ ,589 75,965,525 4,730,705 4,936, % 740, , ,237 $ ,571 75,820,815 5,170,849 5,532, % (88,562) , ,035 $ ,521 75,201,223 4,543,848 4,824, % 905, ,584, ,458 $13.87 Mall Market Statistics Year-End 2014 Net Deliveries UC Inventory Period # Ctrs Total GLA Direct SF Total SF Vac % Absorption # Blds Total GLA # Blds Total GLA Rates q 21 18,819,952 1,367,938 1,369, % 47, $ q 21 18,819,952 1,415,791 1,417, % 18, , $ q 21 18,805,952 1,413,694 1,422, % (89,273) 1 2, ,000 $ q 21 18,803,452 1,315,797 1,330, % 56, ,500 $ q 21 18,803,452 1,378,230 1,386, % 62, ,500 $ q 21 18,803,452 1,447,868 1,449, % (39,498) ,500 $ q 21 18,803,452 1,408,370 1,410, % 33, $ q 21 18,803,452 1,435,844 1,443, % 21, , $ q 21 18,794,652 1,454,605 1,456, % 63, , ,800 $ q 21 18,759,495 1,483,252 1,484, % (40,282) ,957 $ q 21 18,759,495 1,429,644 1,444, % 96, ,157 $ q 21 18,759,495 1,501,420 1,541, % (141,658) $ ,759,495 1,340,094 1,399, % 27, , $ ,487,007 1,154,242 1,154, % 12, , ,488 $ ,484,649 1,164,633 1,164, % 642, , ,358 $ ,899,088 1,218,449 1,221, % 572, ,021, ,782 $26.22 Power Center Market Statistics Year-End 2014 Net Deliveries UC Inventory Period # Ctrs Total GLA Direct SF Total SF Vac % Absorption # Blds Total GLA # Blds Total GLA Rates q 48 20,741, , , % 24, , ,000 $ q 48 20,736, , , % 206, , ,000 $ q 48 20,608, , , % 93, , ,396 $ q 48 20,507, , , % 106, ,847 $ q 48 20,507, , , % 6, , ,847 $ q 48 20,501, , , % 35, , ,907 $ q 48 20,433, , , % 82, ,120 $ q 48 20,433, , , % 69, , ,343 $ q 48 20,426, , , % 58, ,872 $ q 48 20,426,281 1,020,466 1,048, % 24, , ,135 $ q 48 20,421,281 1,029,335 1,068, % 29, ,000 $ q 48 20,421,281 1,061,153 1,097, % 102, , $ ,369,459 1,112,020 1,148, % 214, , ,822 $ ,353,295 1,314,803 1,347, % 323, , ,664 $ ,332,458 1,587,173 1,649, % 610, , ,250 $ ,393,568 1,241,216 1,321, % 689, ,081, ,065 $ The CoStar Retail Report 2015 CoStar Group, Inc.

18 Figures at a Glance Year-End 2014 Denver Shopping Center Market Statistics Year-End 2014 Net Deliveries UC Inventory Period # Ctrs Total GLA Direct SF Total SF Vac % Absorption # Blds Total GLA # Blds Total GLA Rates q 1,431 74,090,712 5,783,210 5,987, % 221, , ,278 $ q 1,431 74,051,373 5,975,610 6,170, % 125, , ,617 $ q 1,431 74,042,792 6,089,193 6,287, % 46, , ,753 $ q 1,431 73,993,097 5,946,352 6,284, % 251, , ,506 $ q 1,430 73,937,671 6,170,268 6,480, % 124, , ,641 $ q 1,427 73,765,316 6,139,214 6,432, % 229, , ,951 $ q 1,426 73,733,261 6,342,896 6,630, % 226, , ,258 $ q 1,425 73,612,595 6,448,124 6,735, % 236, , ,741 $ q 1,423 73,571,352 6,648,773 6,930, % 368, , ,429 $ q 1,421 73,327,105 6,807,541 7,054, % 360, , ,433 $ q 1,419 73,173,535 6,996,480 7,262, % 304, , ,222 $ q 1,418 73,142,803 7,291,325 7,536, % 97, , ,567 $ ,418 73,106,567 7,287,453 7,596, % 825, , ,676 $ ,416 72,506,239 7,619,079 7,822, % 449, , ,962 $ ,412 72,158,277 7,649,448 7,924, % 76, , ,371 $ ,405 71,830,421 7,339,269 7,672, % 294, , ,436 $15.77 Specialty Center Market Statistics Year-End 2014 Net Deliveries UC Inventory Period # Ctrs Total GLA Direct SF Total SF Vac % Absorption # Blds Total GLA # Blds Total GLA Rates q 4 864,942 2,110 2, % $ q 4 864,942 2,110 2, % $ q 4 864,942 2,110 2, % $ q 4 864,942 2,110 2, % $ q 4 864,942 2,110 2, % 3, $ q 4 864,942 5,950 5, % 25, $ q 4 864,942 31,775 31, % (815) 1 11, $ q 4 853,042 19,060 19, % , ,900 $ q 3 833, % ,960 $ q 3 833, % 4, ,960 $ q 3 833,982 4,500 4, % $ q 3 833,982 4,500 4, % $ ,982 4,500 4, % 3, $ ,982 7,700 7, % 9, $ ,982 17,000 17, % (16,385) $ , % 4, $14.00 Total Retail Market Statistics Year-End 2014 Net Deliveries UC Inventory Period # Blds Total GLA Direct SF Total SF Vac % Absorption # Blds Total GLA # Blds Total GLA Rates q 14, ,267,480 10,556,331 10,811, % 435, , ,653 $ q 14, ,069,347 10,798,009 11,049, % 388, , ,880 $ q 14, ,914,875 11,050,988 11,283, % 184, , ,054,687 $ q 14, ,980,620 11,094,188 11,533, % 598, , ,079,601 $ q 14, ,825,451 11,570,505 11,977, % 272, , ,543 $ q 14, ,685,300 11,781,037 12,109, % 523, , ,063,769 $ q 14, ,305,947 11,918,577 12,253, % 735, , ,230 $ q 14, ,894,721 12,246,899 12,577, % 681, , ,012,820 $ q 14, ,707,479 12,723,601 13,072, % 591, , ,074,003 $ q 13, ,377,450 12,996,150 13,333, % 480, , ,992 $ q 13, ,308,910 13,362,521 13,745, % 424, , ,374 $ q 13, ,419,341 13,912,420 14,279, % (19,269) , ,183 $ , ,515,330 13,904,767 14,356, % 2,281, ,547, ,203 $ , ,146,048 14,826,529 15,268, % 1,535, , ,459,351 $ , ,630,181 15,589,103 16,287, % 1,224, ,516, ,014 $ , ,158,282 14,342,782 15,040, % 2,466, ,680, ,187,741 $ CoStar Group, Inc. The CoStar Retail Report 13

19 Denver Year-End 2014 Leasing Activity 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 by Available Space Type Percent of All Vacant Space in Direct vs. Sublet by Building Type Percent of All Vacant Space by Building Type 2% Shopping Center General Retail Mall Power Center 98% 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 Millions Mall 0.3 Specialty Center Millions of SF q q * Includes Under Construction Spaces 14 The CoStar Retail Report 2015 CoStar Group, Inc.

20 Leasing Activity Year-End 2014 Denver Select Top Retail Leases Based on Leased Square Footage For Deals Signed in 2014 Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company River Point Pky Southwest Ret 104,396 3rd Conn s N/A Weingarten Realty Investors W Littleton Blvd South Ret 78,000 2nd King Soopers N/A N/A W 104th Ave Northwest Ret 56,040 3rd Spirit Halloween N/A Northglenn Urban Renewal Authority E Colfax Ave Central Ret 52,862 1st Afrikmall N/A N/A E Colfax Ave Central Ret 49,324 2nd Walmart Direct Deal Centre Point Properties Bockman Dr Northern Colorado Ret 46,271 2nd Conn Appliances, Inc. CBRE Cassidy Turley E 104th Ave Northeast Ret 45,000 1st Total Beverage N/A ALII Management S University Blvd South Ret 37,221 4th Sierra Trading Post N/A CBRE 9 98 Wadsworth Blvd West Ret 27,000 3rd Sprouts Farmers Market N/A CBRE W Foothills Pky Northern Colorado Ret 26,500 3rd Shamrock Foods N/A The Zall Company S College Ave Northern Colorado Ret 25,776 1st ARC Thrift Stores Newmark Grubb Knight Frank Cassidy Turley S College Ave Northern Colorado Ret 25,000 1st Sierra Trading Post N/A Integrated Real Estate Group W Littleton Blvd South Ret 24,927 4th Savers N/A Legacy Commercial S Wadsworth Blvd West Ret 24,883 2nd Oce Depot N/A AXIO Commercial Real Estate S College Ave Northern Colorado Ret 23,337 1st Wilbur s Total Beverage N/A Newmark Grubb Knight Frank E Washington St Central Ret 20,955 1st Vitamin Cottage Natural Grocers N/A N/A S Parker Rd Southeast Ret 20,388 2nd Denver Gym and Fitness N/A DDR Corp Orchard Pky Northwest Ret 20,000 1st H&M N/A N/A E County Line Rd South Ret 18,030 1st Bridal Collection N/A Transwestern E 35th Pl Northeast Ret 18,000 3rd Goodwill Aurora Direct Deal Direct Deal Youngeld St West Ret 15,905 3rd The Shops at the Red Geranium Forte Commercial Real Estate, LLC Antono & Company Brokerage, Inc W Hampden Ave Central Ret 15,677 2nd Harbor Freight N/A Weingarten Realty Investors W Mineral Ave South Ret 15,112 2nd ACE Hardware Direct Deal Hirschfeld Commercial Real Estate A Downing St Central Ret 15,000 1st Downing Street Grill N/A Exdo Properties Ford St West Ret 15,000 2nd Vitamin Cottage Natural Grocers Craddock Commercial Real Estate Equity Ventures Inc Linden St Northern Colorado Ret 14,000 2nd Galvanize N/A N/A th St Downtown Ret 13,980 4th Walgreens N/A Newmark Grubb Knight Frank W Alameda Pky West Ret 13,540 2nd Katabatic Gear Marcum Commercial Advisors Westar Real Property Services, Inc S Broadway St Boulder Ret 13,051 3rd Auguste Escoer N/A The W.W. Reynolds Companies, Inc Laporte Ave Northern Colorado Ret 12,784 3rd Washington s Sports Bar N/A Dan Eckles S College Ave Northern Colorado Ret 12,192 1st Trader Joe s N/A Integrated Real Estate Group S Sheridan Blvd West Ret 12,185 2nd Bear Valley Wine & Liquors N/A CBRE Champa St Downtown Ret 11,994 2nd N/A N/A Unique Properties, Inc Northeld Blvd Northeast Ret 10,974 3rd Regus JLL JLL W 64th Ave Northwest Ret 10,860 3rd Dollar Tree N/A N/A Sheridan Blvd Northwest Ret 10,852 3rd N/A N/A Sperry Properties, Inc S Parker Rd Southeast Ret 10,800 4th Boot Barn N/A Legend Retail Group Harlan St Northwest Ret 10,748 2nd N/A N/A Center Land Co W 74th Ave Northwest Ret 10,659 2nd Rock Gymnastics N/A Antono & Company Brokerage, Inc Sheridan Blvd West Ret 10,600 3rd N/A N/A David Hicks & Lampert Brokerage Inc * Renewal 2015 CoStar Group, Inc. The CoStar Retail Report 15

21 Denver Year-End 2014 Sales Activity The Optimist Sales Index Average of Two Highest Price/SF's and Two Lowest Cap Rates 9.0% Cap Rate Price/SF $ % $350 Cap Rate Percentage 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% $300 $250 $200 $150 $100 Dollars/SF 1.0% $50 0.0% q q q $0 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 Oct Sept $500 Sales Volume Price/SF $250 Bldg Size # RBA $ Volume Price/SF Cap Rate $450 < 25,000 SF 345 2,709,350 $544,002,519 $ % Millions of Sales Volume Dollars $400 $350 $300 $250 $200 $150 $100 $200 $150 $100 $50 Price/SF 25K-99K SF 100K-249K SF 54 2,578,290 $285,081,550 $ % 10 1,416,530 $162,089,867 $ % $50 $0 $0 >250K SF 2 922,977 $240,000,000 $ % 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 $280 Denver US 11.0% Denver US 10.0% Dollars per SF $230 $180 $130 $80 Cap Rate Percentage 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% $30 3.0% q q q q q q q q q q q q Source: CoStar COMPS Source: CoStar COMPS 16 The CoStar Retail Report 2015 CoStar Group, Inc.

22 Year-End 2014 Denver 2015 CoStar Group, Inc. The CoStar Retail Report 17 Sales Activity