Strong Development Expanding the Market

Research & Forecast Report GREENVILLE, SC RETAIL Q2 2016 Strong Development Expanding the Market Bryana Mistretta Research Coordinator South Carolina Key Takeaways > > The primary retail corridors Woodruff Road, Haywood Road, West Spartanburg and Clemson Boulevard are strengthening as the vacancy rates fall and average asking rental rates continue to escalate. > > Grocery chains continue to expand within the Greenville/ Spartanburg area. Harris Teeter, Lowes Food, Aldi, The Fresh Market, Walmart Neighborhood Market, and Lidl have all recently opened or are preparing to open stores in the Greenville retail market. > > Restaurants continue to expand in the market with six openings this quarter and many new announcements. Robust Activity Leading to High Occupancy The second quarter of 2016 was an active quarter for retailers in the Greenville/Spartanburg market. Developers are taking notice of the strong interest in the area with several mixed-use developments underway in corridors surrounding downtown Greenville, some close to completion. Once completed, these developments will expand the reach of downtown Greenville, encouraging locals and the growing number of tourists to walk off Main Street. The vacancy rate at the end of the quarter was 9.7%, a drop from 11.0% at the end of the first quarter, and 12.8% a year ago. The average asking rental rate for shop space in the market is $12.00 NNN per square foot per year (PSF/YR), slightly down from $12.51 NNN PSF/YR at the end of the first quarter of 2016. The average asking rental rate for the market is lower, although is not reflective of the overall health of the market. High occupancy and fewer options for desirable space in some corridors are creating lower average asking rental rates despite the rise in asking rental rates at anchored shopping centers in the corridors of Woodruff, Haywood, West Spartanburg and Clemson Boulevard in Anderson. Market Indicators Relative to prior period Q2 2016 Q3 2016* VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE Note: Construction is the change in Under Construction. *Projected Average Asking Rental Rates (NNN) Greenville/Spartanburg, SC Retail Market $6.41 $6.39 $9.34 $11.16 $12.51 $12.00 Anchor Jr Anchor Shop Space Q1 16 Q2 16 High occupancy in the Greenville retail corridors of Woodruff, Haywood, West Spartanburg and Clemson Boulevard has led to

higher average asking rental rates. These four corridors have vacancy rates of 2.8%, 11.0%, 6.9% and 1.7%, respectively. In actuality, vacancy is much lower in these areas due to the few available spaces in unanchored retail centers not being tracked. The average asking rental rate for shop space in these corridors is $16.64 NNN PSF/YR, well above the average $11.99 NNN PSF/YR for shop space in other suburban Greenville retail corridors. Total Vacancy Rate Greenville/Spartanburg Retail Market 13.0% 11.1% 9.8% 12.8% 11.0% 9.7% Downtown Activity Downtown Greenville is seeing a lot of momentum from new restaurants adding to the downtown areas already eclectic restaurant scene. Additionally, new mixed residential, retail and office developments in the areas are creating a walkable community that is top ranked in the nation by Liveability and Thrillist. > > Southern Tide is opening a new 2,800 square-foot store at the former Charleston Cooks location at 200 N Main Street. The store expects to open in August of this year. > > Chick-fil-A opened in downtown Greenville at 2 N Main Street this quarter. The fast-food chain occupies the former Coffee & Crema space and is only open for lunch Monday through Saturday. > > Oak Blue Kitchen opened this quarter at 109 N Main Street. The 2,500 square-foot restaurant is serving a mix of Korean and Southern inspired dishes. > > Caviar and Bananas is set to open in early August of this year at the ONE City Plaza. The 4,700 square-foot restaurant will serve small plates and pastries similar to its Charleston location although the extra space at this location will allow the restaurant to expand their menu and include a wine bar. > > Basil Thai is opening a new restaurant in a 3,254 square-foot space at ONE City Plaza in downtown Greenville. This will be the fourth Basil Thai in South Carolina. > > Ink N Ivy opened their doors at 21 E Coffee Street. The building was formerly a bar called Corner Pocket and now houses Ink N Ivy across four floors including a restaurant and bar, lounge area, event space, and rooftop lounge. > > Diner 24 is still planned to open this fall at the former Charlie s Steakhouse on Coffee Street. Diner 24 will be a 24-hour diner with a 50s theme owned by the Bottle Cap Group which also opened Brazwells Pub and Ink n Ivy this year. > > Biscuit Head, one of the anchor spaces at the new South Ridge development at the corner of Church street and University Ridge, opened this quarter. Toss Pizza, another anchor restaurant at the development is set to open in the third quarter of 2016. > > Methodical Coffee opened its doors in June at 3 McBeth Street. The 4,000 square-foot space serves seasonal coffees and offers barista training, as well as coffee tasting events. > > A new restaurant is opening in West Greenville at 586 Perry Avenue called The Anchorage. The restaurant hopes to use local produce, meats, and beer and continuously rotate the items on the menu. 1.7% 1.7% 3.0% Downtown Suburban Market Q2 2015 Q1 2016 Q2 2016 Shop Space Average Asking Rental Rates (NNN) Select Retail Submarkets Woodruff Road West Spartanburg Haywood Road Downtown Greenville Clemson Boulevard $13.00 $9.70 The Anchorage Rendering $13.58 $14.59 $32.38 2 South Carolina Research & Forecast Report Q2 2016 Greenville Retail Colliers International

Suburban Happenings Suburban retail corridors throughout Greenville are experiencing growth, in particular Woodruff Road, Haywood Road, West Spartanburg and Clemson Boulevard. The growing residential population in the suburbs of these areas has created a demand amongst retailers to locate in these highly populated areas. > > IronTribe Fitness is planning a 3,600 square-foot location next to the Fresh Market, their second location on Woodruff Road. The fitness company plans to eventually expand to other areas of Greenville. > > Cheesecake Factory opened this quarter at the Haywood Mall in Greenville, the first in South Carolina. > > Owners of the existing Fuddruckers at 1509 John B. White Sr. Boulevard have announced their plans to open a second location at 1515 E Main Street off Highway 290. The 4,900 square-foot building, a former Denny s, will undergo a renovation that once completed will seat 150 patrons. > > Willy Taco is opening a Greenville location at the former Feed and Seed property at the corner of Laurens Road and Washington Street. The building will require an extensive renovation but once complete, will seat 200 guests. Willy Taco expects to be open by the end of the third quarter. > > The Hub City CO-OP opened this quarter at 176 N Liberty Street in Spartanburg. The 5,000 square- foot grocery store sells a range of products and is the first of its kind in South Carolina. > > Sidewall Pizza Co. opened their 1,800 square-foot storefront at 99 Cleveland Street in April. The menu serves a mix of pizza, sandwiches, and salads with fresh and local ingredients when possible. The restaurant has roll up doors that allow diners to sit inside or outside on their large patio. New Developments Several mixed- use developments are at different stages of the planning and construction process throughout Greenville. These spaces, many of which are on the outskirts of downtown Greenville, are expected to expand the downtown area. Most of the developments include entertainment venues, bars, restaurants, and open spaces connecting the community and encouraging people to spend time in these areas. > > Plans are in place for the redevelopment of the Montgomery building in downtown Spartanburg. The redevelopment will transform the historic office building into a mix of uses including 72 apartments, 10,000 square feet of office space and 9,000 square feet of retail space. > > The Commons redevelopment near the Swamp Rabbit Trail on Welborn Street will create a 40,000 square-foot marketplace. Bacon Bros. Public House is set to open a butcher shop, bakery and diner at the location. Other tenants will be Due South Coffee, The Community Tap, and the Feed and Seed food hub. Shops at Greenridge Hub City CO-OP Source: Hub City CO-OP Montgomery Building Redevelopment Rendering 3 South Carolina Research & Forecast Report Q2 2016 Greenville Retail Colliers International

> > The Ellison on Broad multifamily project remains under construction at the corner of Church and Broad Streets. Construction is expected to be completed in 2017 with the first units available by the end of 2016. > > Keys Village, a mixed use entertainment development, is planned for the building at 307 E. McBee street. Renderings show plans for a brewery, restaurants, food truck parking, and an outdoor stage and movie screen. CycleBar has signed a lease at the development and is expected to open in the third quarter of 2016 with other tenants opening later this year. > > Drayton Mill in Spartanburg is undergoing an extensive renovation to turn the former mill into a mixed-use development including residential, office and retail spaces. > > Hampton Station, a redevelopment of a former 100,000 square foot cotton warehouse on Hampton Avenue, is planned to have a mix of retail, entertainment and office space. Avison Young, LiveWell Greenville, Noble Dog Pet Hotel, Birds Fly South and Dapper Ink join tenants, Lions Roar CrossFit and Invert Skate Shop, at the development. Birds Fly South Ale Project will be the anchor tenant occupying 9,000 square feet including a tasting room and an outdoor stage for live music. The brewery is set to open in the third quarter. > > Construction on the Main and Stone project is expected to finish by the end of the third quarter. The development will include a mix of residential and retail space. The Beach Company has announced that tenants will include Megan Diez Salon, Ji-Roz, and Two Chefs and there are still availabilities. > > Renovations at the South Church Commons are expected to finish in the third quarter of 2016. The space was formerly Bell Tower Laundromat. The renovation will return the building to a shell state and offer units from 1,000 to 2,300 square feet. > > A new Lowes Foods anchored shopping center is planned for delivery in Q4 2017. The shopping center will be located at the intersection of Pelham Road and Boiling Springs Road, and will contain approximately 17,000 square feet of additional shop space. This will be the third Lowes Foods to open in the Upstate. Ideal Investment Conditions Current conditions in the market are ideal for investment. Occupancy is high, asking rental rates are rising, there are moderate capitalization rates, and interest rates remain low. > > Bottle Cap Group purchased Sip, a rooftop wine bar, and The Green Room. Bottle Cap Group has already opened Brazwell s Premium Pub and Ink n Ivy restaurants in downtown Greenville this year with plans of opening Diner 24 by the end of the third quarter. > > New Market Properties, a Preferred Apartment Communities, Inc. company, acquired 14 grocery anchored shopping centers in the south east this quarter. Five properties are located in South Carolina and of those, three are in the Greenville retail market. The 14 properties were part of two portfolios totalling $278.7 million expanding the New Market Properties Portfolio. Keys Village Hampton Station Proposed Lowes Food Anchored Center Source: ARS Ventures LLC 4 South Carolina Research & Forecast Report Q2 2016 Greenville Retail Colliers International

Q2 2016 Retail Market Summary Statistics Greenville, SC ANCHOR SPACE (GREATER THAN 25,000 SF) JR. ANCHOR SPACE (10,000-25,000 SF) SHOP SPACE (LESS THAN 10,000 SF) MARKET BUILDINGS INVENTORY VACANCY RATE (%) VACANT ASKING RENT (NNN) VACANT ASKING RENT (NNN) VACANT ASKING RENT (NNN) Belton/Honea Path 5 260,281 10.3% 0-0 - 26,700 $4.76 Boiling Springs 8 605,386 21.7% 64,000 $4.00 0-67,472 $8.34 Cherrydale/TR 5 453,054 15.6% 0-30,100-40,410 $11.43 Clemson Boulevard 12 977,172 1.7% 0-0 - 16,783 $9.70 Clemson Pendleton 7 380,437 11.3% 34,928-0 - 8,000 $4.50 Downtown 3 169,726 3.0% 0-0 - 5,096 $13.00 Duncan/Lyman 4 219,302 28.0% 44,000-0 - 17,460 $12.55 Easley 4 541,859 26.3% 120,479 $7.00 0-22,120 $11.00 East Side 12 990,248 11.0% 45,116-0 - 63,545 $12.76 East Spartanburg 13 1,061,468 16.5% 34,928 $7.00 37,655 $4.00 102,739 $9.24 Greer 9 729,617 11.3% 22,705 $13.00 0-59,644 $17.17 Haywood/Pleasantburg 16 1,420,009 11.0% 38,003-70,686 $11.42 47,731 $14.59 Highway 81 3 175,362 7.5% 0-0 - 13,075 $10.75 Inman/Lyman 4 222,836 11.9% 0-17,500 $6.00 9,120 $7.00 Mauldin 6 410,608 3.0% 0-0 - 12,294 $13.35 Oconee 8 741,796 4.5% 0-22,400 $5.00 10,750 $9.48 Pelham Road 7 312,856 14.0% 38,083-0 - 5,700 $15.68 Pickens/Liberty 4 204,720 5.0% 0-0 - 10,180 $6.10 Powdersville 1 141,000 0.0% 0-0 - 0 - Simpsonville 10 697,345 2.5% 0-0 - 17,750 $14.11 South Side 4 159,418 2.8% 0-0 - 4,500 $8.00 West Anderson 17 854,072 18.6% 57,648 $8.00 38,081 $5.00 63,047 $8.35 West Spartanburg 16 1,521,963 6.9% 29,781 $4.50 10,733 $0.00 63,957 $13.58 White Horse Road/Berea 10 777,987 10.2% 48,510 $4.75 0-31,057 $9.72 Woodruff Moore 3 145,400 0.0% 0-0 - 0 - Woodruff Road 32 2,112,629 2.8% 0-28,000 $30.00 31,973 $32.38 Market Total 223 16,286,551 9.7% 578,181 $6.39 255,155 $11.16 751,103 $12.00 Regional Demographics The Greenville/Spartanburg region, which makes up nearly 25% of South Carolina s population, offers favorable demographics for various types of retailers. Upstate Gross Retail Sales February 2016 - April 2016 Totals AGE (2015 ESRI Estimate) 20-34: 233,606 (19.8%) 35-64: 463,374 (39.2%) 65+: 182,712 (15.5%) HOUSEHOLD INCOME 2020 Average: $68,247 (ESRI forecast) 2015 Average: $60,284 (ESRI estimate) 2020 Median: $51,317 (ESRI forecast) 2015 Median: $44,063 (ESRI estimate) HOUSEHOLDS 2020: 480,434 (ESRI forecast) 2015: 460,525 (ESRI estimate) 2010: 442,333 (Census) POPULATION 2020: 1,233,227 (ESRI forecast) 2015: 1,182,589 (ESRI estimate) 2010: 1,137,380 (Census) 2016 $9.8 billion total sales Feb - Apr +13.1% since 2012 +4.9% since 2015 Greenville County $4.1 billion Spartanburg County $2.3 billion Anderson County $1.3 billion Source: ESRI Demographics, Colliers International Research Source: South Carolina Department of Revenue, Colliers International 5 South Carolina Research & Forecast Report Q2 2016 Greenville Retail Colliers International

Local Economy Supports Retail Growth Greenville s retail market is strengthening according to data from the Bureau of Labor Statistics and the South Carolina Department of Revenue (SCDR). The growth of jobs year over year in Greenville and increased tourism have created higher retail sales volume. Despite global economic uncertainty due to the effect of the United Kingdom s recent decision to depart from the European Union, employment continues to strengthen in the Greenville-Anderson- Mauldin MSA. Non-farm employment in the Greenville-Anderson- Mauldin Metropolitan Statistical Area (MSA) was recorded at 409,100 employees for May 2016, up 2.4% from May 2015 and 5.6% from two years ago. Employment has continuously grown since the start of 2016 and is at a historic high. Strong employment and a stable local economy is reflected in the gross retail sales. SCDR recorded gross retail sales at $9.8 billion for the Upstate area for February 2016 through April 2016, up 4.9% from February 2015 through April 2015. Greenville county saw the majority of the sales, contributing $4.1 billion to the total sales in the Upstate between February and April of this year, an increase of 8.9% from the same time a year ago. Market Outlook The Greenville retail market is expected to see continued growth throughout the year with several developments near completion and even more retailers preparing for their openings in the third quarter. An increase in residential population for the area is expected due to the fast growth of Greenville s downtown and surrounding retail corridors as well as the addition of residential units. An expanding population and robust interest from retailers wanting a Greenville location will continue through 2016, further lowering vacancies for space in ideal corridors in the market. Rising construction costs and increased demand will continue to escalate rental rates to new highs. Around the State The retail market continues to grow throughout the state with emphasis on downtown developments and several new openings. Asking Rents are increasing due to low vacancies and high construction costs. Charleston, South Carolina > > King Street is expanding with several retailers locating to Upper King Street. Columbia, South Carolina > > Spirit Communications Park, home of the Columbia Fireflies, delivered this quarter. The Baseball field is part of the larger BullStreet development which will have 400,000 square feet of retail space when completed in 2018. Cobb Theatre group announced their intentions of opening a 10-screen cinema with a bar and full-service restaurant at the development that is set to open in 2018. Annual Change in Non-Farm Employment by Month Greenville-Anderson-Mauldin MSA Number of Jobs Added (Thousands) 16.5 15.5 14.5 13.5 12.5 11.5 10.5 9.5 8.5 7.5 6.5 5.5 4.5 3.5 2.5 1.5 0.5 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Commercial Real Estate Growth Cycle: Where the market stands and where it is going. NEW CONSTRUCTION RENTAL RATE EMPLOYMENT OCCUPANCY PHASE 4: RECESSION PHASE 1: RECOVERY COMMERCIAL REAL ESTATE GROWTH CYCLE PHASE 2: EXPANSION PHASE 3: HYPERSUPPLY 420.0 410.0 400.0 390.0 380.0 370.0 360.0 350.0 340.0 330.0 Total Non-Farm Employment (Thousands) Source: St. Louis Federal Reserve, Bureau of Labor Statistics, Colliers International THE GREENVILLE/SPARTANBURG, SC RETAIL MARKET is moving along the expansion phase. Rental rates, occupancy and employment are all strong and increasing. New construction is at its highest level at years and momentum continues to grow as grocery stores and national retailers show significant interest in the market. For more statewide commercial real estate news check out our market reports at: www.colliers.com/southcarolina/insights 6 South Carolina Research & Forecast Report Q1 2016 Greenville Retail Colliers International

502 offices in 67 countries on 6 continents United States: 140 Canada: 31 Latin America: 24 Asia Pacific: 199 EMEA: 108 $2.5 billion in annual revenue 2 billion square feet under management 16,000 professionals and staff FOR MORE INFORMATION: Liz H. McCary Director of Marketing South Carolina +1 803 401 4269 Liz.McCary@colliers.com Bryana Mistretta Research Coordinator South Carolina +1 803 401 4252 Bryana.mistretta@colliers.com GREENVILLE RETAIL PROFESSIONALS: Frank Hammond, CCIM, CPM Senior Principal +1 864 527 5451 Frank.Hammond@colliers.com Lyn Tyner Principal & Brokerage Associate +1 864 527 5431 Lyn.Tyner@colliers.com Nick Reinhardt Brokerage Associate +1 864 527 5432 Nick.Reinhardt@colliers.com Scott Burgess Brokerage Associate +1 864 527 5434 Scott.Burgess@colliers.com Colliers International Greenville 55 E. Camperdown Way, Suite 200 Greenville, South Carolina USA +1 864 297 4950 About Colliers International Colliers International is a global leader in commercial real estate services, with more than 16,300 professionals operating out of 502 offices in 67 countries. A subsidiary of FirstService Corporation, Colliers International delivers a full range of services to real estate occupiers, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. Colliers International has been recognized and ranked by the International Association of Outsourcing Professionals Global Outsourcing 100 for 10 consecutive years, more than any other real estate services firm. colliers.com Copyright 2015 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.