3 RD QUARTER 2015 RICHMOND RETAIL MARKET REPORT FORECAST 5.7% VACANCY 509,220 SF UNDER CONSTRUCTION 370,165 SF NET ABSORPTION

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1 3 RD QUARTER 2015 RICHMOND RETAIL MARKET REPORT FORECAST As 2015 winds down, the vacancy rates are approaching an all time low. Retail inventory is down causing an increase in construction with national and regional users leading the push to achieve greater coverage. 5.7% VACANCY 509,220 SF UNDER CONSTRUCTION Cap rates for investors are at a historical low spurning on the triple net lease investment market. Commonwealth Commercial forecasts the positive situation to continue well into 2016, as lenders continue to follow suit with very low interest rates. Overall, the retail market is strong and is predicted to remain so through next year. 370,165 SF NET ABSORPTION $14.21 PSF AVERAGE RENTAL RATES MAIN OFFICE ADDRESS: 4198 Cox Road, Suite 200 Glen Allen, VA MAILING ADDRESS: P.O. Box Richmond, VA OFFICE LOCATIONS: Richmond Hampton Roads Nashville Jacksonville Greensboro Tampa

2 The Richmond, VA retail market experienced a slight improvement in market conditions in the third quarter Vacancy rate dropped from 6.1% in the previous quarter to 5.7% in the current quarter. Net absorption was positive 370,165 square feet, and vacant sublease space decreased by (3,357) square feet. Quoted rental rates decreased from second quarter 2015 levels, ending at $14.21 per square foot per year. A total of 8 retail buildings with 282,707 square feet of retail space were delivered to the market in the quarter, with 509,220 square feet still under construction at the end of the quarter. ABSORPTION Retail net absorption of positive 370,165 square feet in the third quarter is up significantly from negative (173,319) square feet in the previous quarter. Tenants moving out of large blocks of space in 2015 include: Peebles moving out of 59,524 square feet at Fairfield Commons; Food Lion moving out of 38,000 square feet at Woodpecker Rd; and Martin s Food moving out of 34,000 square feet at Dumbarton Square. VACANCY Richmond, VA s retail vacancy rate decreased in the third quarter 2015, ending the quarter at 5.7%. Over the past four quarters, the market has seen an overall decrease in the vacancy rate from 6.1% in the fourth quarter 2014, to 5.7% in the current quarter. The amount of vacant sublease space in the Richmond, VA market has trended down over the past four quarters. At the end of the fourth quarter 2014, there were 221,830 square feet of vacant sublease space. Currently, there are 176,919 square feet vacant in the market. LARGEST LEASE SIGNINGS The largest lease signings occurring in 2015 included: the 130,000-square-foot-lease signed by Wegmans at West Broad Marketplace; the 85,018-square-foot-deal signed by UPS Ground Freight Inc at Chippenham Square; and the 60,000-square-foot-lease signed by Chevrolet at Tennessee Plaza. INVENTORY & CONSTRUCTION During the third quarter 2015, eight buildings totaling 282,707 square feet were completed in the Richmond, VA retail market. Over the past four quarters, a total of 543,656 square feet of retail space has been built in Richmond, VA. In addition to the current quarter, five buildings with 61,893 square feet were completed in second quarter 2015, six buildings totaling 115,238 square feet completed in first quarter 2015, and 83,818 square feet in six buildings completed in fourth quarter There were 509,220 square feet of retail space under construction at the end of the third quarter Total retail inventory in the Richmond VA market area amounted to 79,143,001 square feet in 7,014 buildings and 576 Centers as of the end of the third quarter 2015.

3 Construction Activity Markets Ranked by Under Construction Square Footage Market # Bldgs Total GLA Preleased SF Preleased % All Existing U/C Northwest Ret 6 256, , % 12,943 42,827 Southwest Ret 4 234, , % 13,074 58,589 Prince George Ret 1 9,100 9, % 14,807 9,100 Powhatan Ret 1 8,800 8, % 10,516 8,800 Sussex County Ret % 5,732 0 Charles City County Ret % 3,141 0 Northeast Ret % 8,469 0 TriCities Ret % 10,605 0 Cumberland County Ret % 5,427 0 Dinwiddie County Ret % 6,517 0 All Other % 8,021 0 Totals , , % 11,284 42,435 Source: CoStar Property Under Construction Inventory Average Bldg Size Recent Deliveries Future Deliveries SHOPPING CENTER The Shopping Center market in Richmond, VA currently consists of 555 projects with 30,452,680 square feet of retail space in 1,234 buildings. The Shopping Center market is comprised of all Community Center, Neighborhood Center, and Strip Centers. After absorbing 57,273 square feet and delivering 16,653 square feet in the current quarter, the Shopping Center sector saw vacancy rates drop slightly from 9.5% at the end of the second quarter 2015 to 9.4% this quarter. Over the past four quarters, the Shopping Center vacancy rate has gone from 10.0% at the end of the fourth quarter 2014, to its current level of 9.4%. Rental rates ended the third quarter 2015 at $14.22 per square foot, down from $14.27 at the end of second quarter Rental rates have trended up over the past year, going from $13.69 per square foot a year ago to their current levels. Net absorption in the Shopping Center sector has totaled 279,082 square feet over the past four quarters. Over the same time period, 69,672 square feet of shopping center space has been delivered to the market. POWER CENTERS The Power Center average vacancy rate was 3.6% in the third quarter With negative (5,400) square feet of net absorption and no new deliveries, the vacancy rate went from 3.5% at the end of last quarter to 3.6% at the end of the third quarter. In the second quarter 2015, Power Centers absorbed positive 3,266 square feet, delivered no new space, and the vacancy rate went from 3.6% to 3.5% over the course of the quarter. Rental rates started at $17.99 per square foot and ended the quarter at $17.46 per square foot.

4 At the end of the third quarter 2015, there were 6,000 square feet under construction in the Richmond, VA market. The total stock of Power Center space in Richmond, VA currently sits at 5,109,557 square feet in 12 centers comprised of 117 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 3.5% at the end of third quarter There was a total of 1,289,497 square feet vacant at that time. The General Retail sector in Richmond, VA currently has average rental rates of $12.98 per square foot per year. There are 88,607 square feet of space under construction in this sector, with 266,054 square feet having been completed in the third quarter. In all, there are a total of 5,612 buildings with 36,652,807 square feet of General Retail space in Richmond, VA. SALES Tallying retail building sales of 15,000 square feet or larger, Richmond, VA retail sales figures rose during the second quarter 2015 in terms of dollar volume compared to the first quarter of In the second quarter, five retail transactions closed with a total volume of $55,997,000. The five buildings totaled 291,218 square feet and the average price per square foot equated to $ per square foot. That compares to seven transactions totaling $43,400,000 in the first quarter The total square footage in the first quarter was 692,740 square feet for an average price per square foot of $ Total retail center sales activity in 2015 was up compared to In the first six months of 2015, the market saw 12 retail sales transactions with a total volume of $99,397,000. The price per square foot averaged $ In the same first six months of 2014, the market posted 13 transactions with a total volume of $43,106,013. The price per square foot averaged $ Cap rates have been higher in 2015, averaging 7.62% compared to the same period in 2014 when they averaged 7.23%. Absorption & Deliveries Past 9 Quarters One of the largest transactions that has occurred within the last (0.3) four quarters in the Richmond, VA market is the sale of WestPark Shopping Center in Glen Allen. This 176,973 square foot retail center sold for $33,390,000, or $ per square foot. The property sold on 5/20/2015, at a 6.40% cap rate. Millions SF (0.1) (0.2) (0.05) Net Absorption Deliveries (0.17) q q q q 20 0.

5 2015 TOP LEASES Building Name Tenant Name Submarket Lease SF Wegman s Wegman s Short Pump Ret 130,000 Chippenham Square UPS Ground Freight Inc. Midlothian E/Hull St Ret 85,018 Chevrolet Chevrolet Swift Creek Ret 60,000 Victorian Square Gabe s Midlothian E/Hull St Ret 44,000 Walmart Neighborhood Market Walmart Laburnum/Rte 360 Ret 41,117 Brook Run Shopping Center Crunch Fitness Staples Mill/Parham Ret 32,000 Gleneagles Shopping Center Crunch Fitness Far West End South Ret 23,383 Oak Hill Plaza You Fit Health Club Laburnum/Rte 360 Ret 23,000 West Broad Marketplace TJMaxx Short Pump Ret 23,000 Victorian Square Planet Fitness Midlothian E/Hull St Ret 22,000 Eastgate Town Center Planet Fitness East End Ret 20,000 Skateland N/A South Chesterfield Ret 20, Iron Bridge Rd ALDI South Chesterfied Ret 17, Forest Hill Avenue ALDI Midlothian E/Hull St Ret 17,018 Fairfield Commons Peebles East End Ret 16,000 Stonehenge Village La-Z-Boy Midlothian West Ret 15,700 Short Pump Town Center LL Bean Short Pump Ret 15,500 TOP SELECTED SALES Property Name Buyer Seller Sales Price SF PSF WestPark Shopping Center InvenTrust Properties Corp. Westdale Real Estate Investment $33,390, ,973 $ and Management Auto Dealership and Repair Hendrick Automotive Group Dominion Auto Group $17,600, ,456 $ Center Regency Square The Rebkee Company LNR Partners, LLC $13,100, ,891 $28.61 Walmart Neighborhood Center EB Property Investment, LLC Confluent Development $11,564,000 41,117 $ Hanover Village-Walgreen s Pinak A. Mehta Morgan Property Group $10,500,000 14,550 $ Southpark Blvd Armada Hoffler Blackwood Development Co. $10,000, ,369 $79.13 Stony Point Shopping Center Next Realty JP Morgan Chase $9,300,000 72,719 $ Nine Mile Road Bromont Investments Chiocca-Talley Malls Inc. $6,318, ,785 $24.70 Powhatan Plaza Asha Jones Whitney Mason & Co., LLC $5,900,000 46,600 $126.61

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