Upstate SC on Track for Retail Growth

Research & Forecast Report GREENVILLE, SC RETAIL Q1 2015 Upstate SC on Track for Retail Growth Jessica Rahal Research Coordinator South Carolina Key Takeaways > > Vacancy and asking rental rates remained steady throughout the first quarter of 2015. > > Residential development will drive future retail growth. > > Major redevelopment planned for Greenville News Site. > > Grocers continue to expand footprints. Lowes Foods plans to enter Greenville market. > > Redevelopments and new construction projects are on the rise throughout the market. Market Conditions The Greenville/Spartanburg, South Carolina market continues to attract national and regional retailers, with many retailers choosing the Upstate as their first South Carolina location. Last year, the market welcomed Nordstrom Rack, Dave and Buster s, Yard House, Cheddar s, Firebirds and Bad Daddy s Burger Bar, all of which are new to South Carolina. Significant residential development is creating a greater demand for grocers, outdoor and sports apparel stores and restaurants throughout the market. Activity remains strong throughout the market despite a stable vacancy rate as a majority of the activity is in new and redeveloped centers. Redevelopments are planned for downtown Greenville and throughout suburban submarkets. The vacancy rate held steady and ended the first quarter of 2015 at 12.3%, slightly lower than the year-end 2014 vacancy rate of 12.4%. Asking rental rates are increasing over recent quarters and expected to increase further as new retail space delivers to the market. Asking rental rates for shop space in the market averaged $10.53 NNN at the end of the first quarter of 2015. Asking rates for junior anchor and anchor space averaged $7.96 NNN and $5.11 NNN, respectively, for the market. Market Indicators Relative to prior period Q1 2015 Q2 2015* VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE Note: Construction is the change in Under Construction. *Projected Average Asking Rental Rates (NNN) Upstate SC Retail Space $4.37 $5.11 $7.75 $7.96 $10.55 $10.53 Anchor Jr Anchor Shop Space Q4-14 Q1-15

New Retail Development Declining vacancy rates, increasing rental rates and a growing population are motivating the redevelopment of existing sites and development of new centers in high-traffic areas. > > A significant redevelopment is planned for the Greenville News site. Greenville s vibrant, growing downtown has earned the attention of Dallas-based Trammell Crow Corporation, who is teaming up with local Centennial American Properties on the redevelopment to be called Camperdown. Plans include an upscale hotel, office buildings, approximately 44,000 square feet of retail and restaurant space, a dine-in theatre and a parking garage. Construction is expected to begin in 2015 and complete in 2017. > > A shopping center along Augusta Street is undergoing renovations. Upon completion, the renovated center at the northeast corner of Augusta Street and East Faris Road will be home to Radio Shack and AT&T and have room for another tenant. Radio Shack is relocating from its former location in the Faris @ Augusta strip center across the street, which has recently been demolished and is being redeveloped into CVS. The pharmacy will be located on the site of a former strip center. The new 15,000 square foot CVS is expected to complete by mid-year 2015. > > The former movie theatre site adjacent Earth Fare Plaza, located at Pelham Road and I-85, is being redeveloped to offer shop space in several buildings. A 4-story Home 2 Suites hotel is under construction at the site and is expected to open by midyear 2015. Taziki s, Chicken Salad Chick and Mariana s have leased space at the redevelopment. Camperdown Rendering CVS Rendering Augusta Street Downtown Residential Development Downtown Greenville is welcoming several new residential developments, which are expected to add more than 1,500 apartment units by late 2017. In just two years, the market will see more than three times the activity experienced from 2010 to date. The growing downtown residential population reflects Gen-Y s preference for a live, work and play environment and is expected to drive retail growth downtown. A growing population will generate a greater demand for restaurants, grocers and boutiques. > > Grubb Properties recently broke ground on Link Apartments West End, a six-story, 215-unit multifamily complex at Rhett and River streets in Downtown s West End. > > Faison recently proposed plans for the former Memorial Auditorium Site, which, if approved will include 176 apartments and an underground parking garage. > > Additionally, the second phase at The Lofts of Greenville recently received approval. The complex will be a four-story development with 215 units, common areas and resident amenities. Construction is expected to begin in late spring of 2015 and be complete by year-end 2016. Earth Fare Plaza Source: Collett AVAILABLE 1st QTR 2 2 South Carolina Research & Forecast Report Q1 2015 Greenville Retail Colliers International

Several other developments are planned or under construction in the CBD. The Lofts at Greenville Rendering Highlighted Residential Developments Project Name Developer Units Status Southridge Beach Company 375 Under Construction Main + Stone Beach Company 292 Under Construction District West Flournoy 365 Permit Issued Link West End Grubb Properties 215 Permit Issued Fountains at Greenville PDP Acquisitions 201 Proposed Stone and Rowley Beach Company 51 Proposed Source: City of Greenville Many of the downtown multifamily developments offer groundlevel retail space, which are successfully attracting restaurants and retailers. > > Biscuit Head, an Asheville-based restaurant, plans to open its first Greenville location at the South Ridge development at Church Street and University Ridge. The restaurant expects to open early in 2016. River s Edge Rendering > > The Playwright, an Irish pub with a true Ireland leased retail space at the new River s Edge development, located at Broad and River Streets. Grocer Announcements A growing population means a growing demand for grocery stores, which are responding with expanding footprints and new stores. > > Walmart Neighborhood Market is set to open its first Anderson store in May 2015. The 41,000 square-foot store will be located at the intersection of Highway 81 and Reed Road. > > Aldi is expanding its footprint in the Upstate and plans to open a new store at 1000 W. Wade Hampton Boulevard in Greer. The 17,000 square-foot store is expected to open by year-end 2015. > > Lowes Foods plans to enter the Upstate with its first Greenville store open in the spring of 2016. > > Harris Teeter is reentering the Greenville market with a new store at Lewis Plaza, an approximately 100,000 square-foot center, which is being redeveloped. The 60,000 square-foot store will offer high-end amenities such as a sit-down wine bar with outdoor terrace seating. Source: Hughes Investments Main + Stone Rendering > > The Fresh Market is opening a new store at the intersection of Woodruff Road and Feaster Road in Mauldin. The 21,000 square foot store will anchor a new development, which will offer an additional 6,300 square feet of retail space. Construction is expected to be complete in Summer 2015. Source: The Beach Company 3 South Carolina Research & Forecast Report Q1 2015 Greenville Retail Colliers International

Q1 2015 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 24.5% 35,000 $3.95 0-28,700 $4.31 Boiling Springs 8 605,386 32.9% 129,000 $4.00 15,600 $8.00 54,552 $9.05 Cherrydale/TR 5 453,054 8.8% 0-30,100-9,800 $12.00 Clemson Boulevard 13 980,340 14.8% 118,749-0 - 26,272 $8.86 Clemson Pendleton 7 292,637 28.2% 56,181 $7.00 0-26,370 $9.72 Downtown 3 169,726 1.7% 0-0 - 2,841 - Duncan/Lyman 4 219,302 26.9% 44,000-0 - 15,023 $10.00 Easley 4 355,859 1.6% 0-0 - 5,600 $11.00 East Side 14 950,264 23.0% 128,076-26,142-64,340 $12.21 East Spartanburg 13 1,007,450 13.9% 0-41,162-98,534 $8.10 Greer 9 729,617 8.3% 0-10,500-50,204 $12.54 Haywood/Pleasantburg 16 1,392,071 13.4% 69,068-49,809 $9.08 67,551 $15.24 Highway 81 3 175,362 11.8% 0-0 - 20,740 $7.44 Inman/Lyman 4 222,836 26.5% 34,928-17,500 $6.25 6,720 $8.95 Mauldin 6 410,608 2.4% 0-0 - 9,834 $13.50 Oconee 8 741,796 5.1% 22,400-0 - 15,650 $10.83 Pelham Road 9 326,825 19.1% 38,003-0 - 24,390 $15.68 Pickens/Liberty 5 205,758 4.2% 0-0 - 8,680 $12.00 Powdersville 2 142,584 0.0% 0-0 - 0 - Simpsonville 10 697,345 3.9% 0-0 - 27,399 $14.26 South Side 4 159,418 2.8% 0-0 - 4,500 $7.00 West Anderson 19 733,192 18.7% 82,477 $6.98 0-54,933 $7.87 West Spartanburg 16 1,030,187 17.3% 97,857 $4.50 22,588-57,465 $12.82 White Horse Road/Berea 10 777,987 10.2% 48,510 $4.75 0-30,960 $8.60 Woodruff Moore 3 145,400 0.0% 0-0 - 0 - Woodruff Road 34 2,175,357 2.7% 0-11,000-47,666 - Market Total 234 15,360,642 12.3% 904,249 $5.11 224,401 $7.96 758,724 $10.53 Market Outlook Harris Teeter Rendering New retailers are likely to make an appearance in the market, driving down vacancy rates and pushing up rental rates. As redevelopment opportunities run low, new construction will gain momentum. A growing population will generate a greater demand for grocery stores, restaurants and entertainment. The Upstate s economy will continue to grow resulting in significant development throughout the market. Sales will increase as interest rates remain low and investors reap the benefits of a highly occupied market. 4 South Carolina Research & Forecast Report Q1 2015 Greenville Retail Colliers International

Around the State Retail development is on the rise throughout South Carolina with grocery stores and sporting goods retailers anchoring larger developments. As employment and population growth continue, the state will attract national tenants to the market. Mixed-use developments are gaining popularity in both the suburbs and downtown submarkets. Horizon Square Rendering Charleston, South Carolina Charleston s retail market continues to be influenced by a growing tourism and residential population. > > Charleston ranked third on TripAdvisor s 2015 Travelers Choice awards for top destinations in the United States. > > Earth Fare is currently under construction in Summerville and will anchor Horizon Square, a 63,000 square-foot shopping center, which will also house Petco. > > Summerville Towne Center, a planned 230,000 square-foot center in Summerville, will be anchored by Hobby Lobby and Aldi. > > Kitchen & Co. will be joining Nordstrom Rack and Dick s Sporting Goods in the former K-Mart redevelopment in Mount Pleasant. The location will be Kitchen & Co. s first South Carolina Location. Killian s Crossing Site Plan Columbia, South Carolina Columbia has experienced significant development activity in recent quarters, both anchored and non-anchored projects. Downtown Columbia continues to attract restraurants, fitness centers, health spas and clothing boutiques. > > Killian s Crossing in the Northeast submarket is gaining attention and will be anchored by Kroger, which plans to begin construction in the spring. The development will offer multifamily and single family residential units, and hotel space, along with retail space and outparcels. > > Guitar Center is open at a the former Staples and Hudson Smokehouse redevelopment along Park Terrace Drive in the Harbison Boulevard submarket. The 12,000 square-foot store joins anchor tenant Academy Sports, which opened last year at the center. > > Rosewood Crossing, the former K-Mart redevelopment, is under construction in the downtown submarket. The center is being redeveloped into 98,000 square feet of retail space to house national tenants Marshalls, Michaels and PetSmart. > > Downtown s Congaree Vista recently welcomed Kaminsky s and Old Chicago Pizza and Taproom. Panera Bread, Tin Lizzy s Cantina and Grill Marks will soon join the growing list of Vista restaurants. 281 Park Terrace Drive Rendering For more statewide commercial real estate news check out our market reports at: www.colliers.com/southcarolina/insights Source: The Seitz Group 5 South Carolina Research & Forecast Report Q1 2015 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 $2.3 billion in annual revenue 1.7 billion square feet under management 16,300 professionals and staff FOR MORE INFORMATION: Liz H. McCary Director of Marketing South Carolina +1 803 401 4269 Liz.McCary@colliers.com Jessica D. Rahal, CPRC Research Coordinator South Carolina +1 803 401 4264 Jessica.Rahal@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 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.