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CUSHMAN & WAKEFIELD CENTRAL MIDWEST MULTIFAMILY RESEARCH MARKET INSIGHT CENTRAL MIDWEST MULTIFAMILY REPORT | THIRD QUARTER 2017

The Cushman & Wakefield Central Midwest Multifamily Research Team provides in-depth coverage of primary, secondary, and tertiary cities across the Midwest. In addition to analyzing multifamily rent and sales trends, these reports examine employment data, job growth trends, key economic announcements, and development pipeline news.

RESEARCH TEAM IN THIS EDITION

CINCINNATI/DAYTON COLUMBUS INDIANAPOLIS KANSAS CITY BRENDAN DUNBAR ST. LOUIS [email protected]

JARRETT HICKS CINCINNATI/DAYTON, COLUMBUS, TOLEDO [email protected]

MATTHEW NEVINGER Don Murphy Don Murphy Scott Pollom Phillip Brimble KANSAS CITY [email protected] Senior Director Senior Director Director Managing Director +1 513 763 3008 +1 513 763 3008 +1 317 639 0403 +1 816 412 0205 [email protected] [email protected] [email protected] [email protected] MATT NIEHOFF INDIANAPOLIS [email protected]

MINNEAPOLIS OMAHA ST. LOUIS TOLEDO SARA PETERSON MINNEAPOLIS [email protected]

SHARON THAMM OMAHA [email protected]

Lance Steiger Scott Koethe Mike Hanrahan Don Murphy Senior Director Director Executive Director Senior Director INTERACTIVE CONTENT +1 952 893 8863 +1 402 548 4046 +1 314 746 0371 +1 513 763 3008 [email protected] [email protected] [email protected] [email protected]

Effective as of third quarter 2017, multifamily trends included in this and future reports reflect a shift in data sources. Therefore, trends in prior reports will not match going forward.

CINCINNATI/DAYTON COLUMBUS INDIANAPOLIS KANSAS CITY MINNEAPOLIS OMAHA ST. LOUIS TOLEDO

Previous Page Home Next Page CINCINNATI/DAYTON MARKET INSIGHT Third Quarter 2017 CINCINNATI / DAYTON 1

CINCINNATI/DAYTON, OH ECONOMIC EXPANSION The following are select announcements from the third quarter of 2017:

EMPLOYMENT & UNEMPLOYMENT TRENDS Paycor is planning to double the size of its Norwood a corporate headquarters, as it adds 1,064 new jobs. The combined Cincinnati/Dayton region added more than 25,000 net jobs year-over-year per the Bureau of Labor Statistics’ (BLS) In Monroe, a 1.3 million-square-foot fulfillment center is total employment average for the third quarter of 2017. The 25,000 a being built for Amazon, which will result in the creation new jobs represent a job growth rate of 2.0%, which is slightly higher of more than 1,000 full-time jobs. than the growth rates from the prior three quarters. Industries that led will at a new job growth in the third quarter were Leisure & Hospitality (+9,800 net UPS Supply Chain Solutions add 130 jobs a West Chester facility by the end of 2020. jobs), Professional & Business Services (+6,300 net jobs), and Trade/ Transportation & Utilities (+5,500 net jobs). Automotive manufacturer Hematite is constructing a a 106,000-square-foot U.S. headquarters / manufacturing CINCINNATI/DAYTON JOB GROWTH TRENDS facility in Englewood, which will create 100 jobs. EMPLOYMENTCINCINN INAT MILLIONSI/DAYTO &N JOB JO GROWTHB GROW (%)TH TRENDS EMPLOYMENT IN MILLIONS As part of its expansion, East Price Hill-based 1.51 2.5% a Q Laboratories is planning to add 90 new jobs.

1.50 Dayton-based manufacturer Composite Advantage LLC 2.0% 1.49 a is looking to double its area workforce, by adding 90 new jobs. 1.48 1.5% 1.47 Q3 2015 Q3 2016 Q3 2017 FORECAST

1.46 1.0% U.S. UNEMPLOYMENT RATE 5.1% 4.9% 4.4% 1.45

1.44 0.5% EMPLOYMENT (% Change) 2.1% 1.5% 2.0% 1.43

1.42 0.0% Q4 Q1 Q2 Q3 LOCAL UNEMPLOYMENT RATE 4.4% 4.4% 4.7%

2015-2016 2016-2017 YOY % Job Growth Forecast is 12-month outlook Source: Moody’s Analytics

JOB GROWTH & UNEMPLOYMENT RATE OUTLOOK • According to the U.S. Bureau of Economic Analysis (BEA), Greater Cincinnati is now the largest metropolitan economy in Ohio, with a +2.0 +37 GMP of $132 billion. Nationally, Greater Cincinnati is the 28th largest local economy, followed by Columbus (29th) and Cleveland (30th). % YOY BPS YOY • At 4.7%, unemployment in the combined Cincinnati/Dayton market Average Q3 employment Average Q3 unemployment is now slightly higher than the national average. • Multifamily vacancy should remain between 5.5% and 6.0% with increased by 25,000 jobs. increased to 4.7%. effective rent rates continuing to grow steadily.

CINCINNATI/DAYTON COLUMBUS INDIANAPOLIS KANSAS CITY MINNEAPOLIS OMAHA ST. LOUIS TOLEDO

Previous Page Home Next Page MARKET INSIGHT Third Quarter 2017 CINCINNATI / DAYTON 2

MULTIFAMILY TRENDS DEVELOPMENT / INVENTORY

In the combined Cincinnati/Dayton market, effective rent per unit has Through three quarters of 2017, nearly 1,400 units have been completed been growing steadily and now exceeds $800 per unit. Vacancy in the and over 4,300 units are under construction in the combined Cincinnati/ Cincinnati/Dayton market has hovered around 6.0% over the past two Dayton market. years. The Downtown Cincinnati / Over The Rhine submarket and the Cincinnati – East / I-275 Corridor submarket account for more than 30% of current construction. Other active construction submarkets include Boone County (Kentucky), Warren County (Ohio), and the Cincinnati – +3.6 -50 East / I-71 Corridor (Ohio). The east Dayton submarket of Beavercreek/ % YOY BPS YOY Bellbrook also has multiple projects underway. Average effective rent Vacancy decreased to an DEMOGRAPHIC FUNDAMENTALS increased to $809. average of 5.9%. The combined Cincinnati/Dayton MSA is projected to increase by nearly 38,000 households from 2016 to 2021, of which 13,000 are estimated to be renter households. Net migration is projected to be moderate during HISTORICAL & FORECASTED METRO RENT GROWTH RATES the next five years. Cincinnati/Dayton’s one-year historical rent growth (per third quarter 2000: 2,800,671 2017 year-over-year data) trailed the national average by 100 basis POPULATION 2010: 2,913,819 points. However, the market’s projected five-year annual rent growth 2016: 2,966,731 rate is 2.8% from 2017 to 2021. 2021: 3,049,187 CINCINNATI/DAYTON RENT GROWTH RATES HISTORICAL ANDCINCINNATI/DAYTON FORECAST RENT GROWTH RATES RENTER 2000: 33.1% 6.0% OCCUPIED 2010: 33.3% H I S T O R I C A L 2016: 33.9% Quarterly vs. Annual F O R E C A S T PERCENTAGE 5.0% 2021: 33.6% 2000: $44,006 4.0% MEDIAN 2010: $51,487 2.8% FAMILY 3.0% INCOME 2016: $54,389 2.3% 2.1% 2021: $65,536 2.0% 1.2% 1.2% MULTIFAMILY FORECAST 1.0% 0.6% The following are Cushman & Wakefield’s projections over the near term. 0.0% Q4' 16 Q1 '17 Q2 '17 Q3 '17 1 Year 3 Year 5 Year 5 Year (Avg Annual Change) Forecast -1.0% 0.0% (Avg Annual Change) -0.5% -2.0% PIPELINE % RENTS VACANCY Cincinnati/Dayton United States GROWTH Source: AXIOMetrics Forecast is 12-month outlook

CINCINNATI/DAYTON COLUMBUS INDIANAPOLIS KANSAS CITY MINNEAPOLIS OMAHA ST. LOUIS TOLEDO

Previous Page Home Next Page MARKET INSIGHT Third Quarter 2017 CINCINNATI / DAYTON 3

INVESTMENT ACTIVITY MOST ACTIVE MARKET PLAYERS

Three quarters into 2017, the cumulative sales volume of $294 million TOP FIVE CINCINNATI/DAYTON BUYERS - YTD 2017 for the Cincinnati/Dayton market has almost reached the historical RANK BUYER TOTAL VOLUME NO. TRANSACTIONS annual market average. While 2017 is nowhere near the record sales 1 Sundance Property Mgmt. $38,450,000 2 volume of $558 million set in 2016, a 2017 full-year projection of nearly $400 million would still be one of the strongest investment sales years 2 Brack Capital $26,100,000 1 in recent history. CINCINNATI/DAYTON ANNUAL SALES VOLUME 3 ILM Capital $24,990,000 1 ANNUAL SALES VOLUME ($ MILLIONS) HISTORICAL SALES VOLUME 4 RISE Real Estate $24,800,000 1 $600 5 Asset Plus $9,900,000 1 $500 TOP FIVE CINCINNATI/DAYTON SELLERS - YTD 2017

$400 RANK SELLER TOTAL VOLUME NO. TRANSACTIONS ) 1 Schottenstein Prop. Group $51,300,000 1 $300 millions 2 Apollo Property Mgmt. $47,300,000 2 (in

$200 3 Friedkin Realty Group $26,440,000 1

4 Atlantic Housing Prtnrs. $26,100,000 1 $100 5 American Campus Comm. $24,990,000 1

$0 Source: Real Capital Analytics 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD 2017 Transaction Volume Historic Average PRICING & CAP RATES Source: Real Capital Analytics The market’s mid-quartile spread is 6.2% to 7.9%, which is in line with trailing 12-month trends from the last quarter. When compared to prior NOTABLE SALES years, theCI NYTDCINN 2017ATI/D gapAYT OinN average PRICING priceTREN DperS unit has narrowed between PRICE / UNIT & CAP RATE Class B – Woods of Turpin Apartments (1973, 164 units). Andmark Class A product and older Class B / Class C product.

Management Co. purchased this asset from The Infinity Group in $250,000 September for $52,000 per unit. The property is located in a Southeast

suburb of Cincinnati near I-275 and was more than 95% occupied at the $200,000 time of sale.

$150,000 Class C – Oxford West (1965, 303 units). RISE Real Estate purchased this asset from MCS Capital Partners LLC in July for $80,000 per unit. $100,000 The property is located near the Miami University campus in Oxford and Unit Per Price Average was approximately 90% occupied at the time of sale. $50,000

$0 Class C – Northwoods Apartments (1993, 108 units). Metro Communities 2013 2014 2015 2016 YTD '17 sold this asset to Northwoods Apartments Cincinnati LLC in August for $58,000 per unit. The property is located in a west side suburb of Class A Class B Class C Cincinnati and was fully occupied at the time of sale. Source: Real Capital Analytics, Cushman & Wakefield Research

CINCINNATI/DAYTON COLUMBUS INDIANAPOLIS KANSAS CITY MINNEAPOLIS OMAHA ST. LOUIS TOLEDO

Previous Page Home Next Page MARKET INSIGHT Third Quarter 2017 CINCINNATI / DAYTON 4

CINCINNATI/DAYTON SUBMARKET TRENDS SUBMARKETRENTS & VACAN COVERVIEWY SELECT SUBMARKET NEWS RENTS & VACANCY BY SUBMARKET Clifton/Corryville Beavercreek/Bellbrook $974 Beavercreek/Bellbrook 6.7% Boone County $824 Boone County 6.3% • Developer Trinitas Ventures, along with Harrison Street Butler County $832 Butler County 6.0% Real Estate Capital, has purchased multiple properties Campbell County $888 Campbell County 4.7% near the University of Cincinnati campus, including the Centerville/Kettering $761 Centerville/Kettering 6.1% Cincinnati - East / I-275 Corr. $835 Cincinnati - East / I-275 Corr. 3.9% former Deaconess Hospital. A mixed-used development Cincinnati - East / I-71 Corr. $946 Cincinnati - East / I-71 Corr. 5.1% is being planned for the area, including a 357-unit Cincinnati - North $810 Cincinnati - North 4.4% apartment complex called the Collegiate. This complex Cincinnati - West $664 Cincinnati - West 5.8% will feature fully-furnished units and is scheduled to be Clark County $623 Clark County 3.9% Clifton/Corryville complete in the fall of 2019. $996 Clifton/Corryville 4.7% Dayton - Central/West $628 Dayton - Central/West 9.3% Dayton - East $576 Dayton - East 4.7% Oakley Dayton - North/West $619RENTS & VACANCYDayton BY - North/WestSUBMARKET 5.1% Downtown Cincinnati/O-T-R $1,355 Downtown Cincinnati/O-T-R 7.1% • To meet growing multifamily demand, Nashville-based Downtown Dayton/Oregon Dist. $1,007 Downtown Dayton/Oregon… 10.0% Hickory Capital Group is building an 82,000-square Fairborn/WPAFB $694 Fairborn/WPAFB 4.6% Kenton County $736 foot indoor self-storage facility on the site of a former Kenton County 4.1% Miami County $733 Miami County 5.5% restaurant on Madison Road. CubeSmart will be three Miamisburg/Moraine $781 Miamisburg/Moraine 7.4% stories tall and climate-controlled. The project is Warren County $969 Warren County 5.0% expected to be complete in April of 2018.

CINCINNATI/DAYTON SUBMARKET TRENDS UNDERUnder CCONSTRUCTIONonstruction BY SUBMARKET Covington

900 • Following the demolition of a former bank building, 800 804 construction will begin on a 187-unit luxury apartment 700 700 complex called River Haus. The $40 million project is 600 being built on Fifth Street in Covington’s MainStrasse 500 528 Village and is being developed by Flaherty & Collins 400 428 406 Properties. 300 356 355

200 226 218 Downtown Dayton 100 114 110 76 58 0 • In the mixed-use Water Street District, Crawford Hoying and Woodard Development are in the early stages of developing a 100-unit apartment complex. The project would be located on the site of a soon-to-be demolished industrial building on East First Street. The complex is Source: CoStar, Cushman & Wakefield Research expected to be complete in 2019. Note: Submarkets are defined by Cushman & Wakefield Research

CINCINNATI/DAYTON COLUMBUS INDIANAPOLIS KANSAS CITY MINNEAPOLIS OMAHA ST. LOUIS TOLEDO

Previous Page Home Next Page COLUMBUS MARKET INSIGHT Third Quarter 2017 COLUMBUS 1

COLUMBUS, OH ECONOMIC EXPANSION The following are select announcements from the third quarter of 2017:

Honda is adding 300 new jobs between its manufacturing EMPLOYMENT & UNEMPLOYMENT TRENDS a plants in Marysville and Anna. The Columbus market added more than 13,000 net jobs year-over-year per the Bureau of Labor Statistics’ (BLS) total employment average for Meijer is hiring 300 new employees across 13 of its a Central Ohio area stores. the third quarter of 2017. The 13,000 new jobs represent a job growth rate of 2.0%, which is similar to the growth rates from each the prior Housing developer Woda Group is relocating its Central three quarters. Industries that led job growth in the third quarter a Ohio office to the Brewery District and plans to add 100 were Mining/Logging/Construction (+5,800 net jobs), Manufacturing new jobs. (+5,600 net jobs), and Government (+3,600 net jobs). Facebook will be building a new 900,000-square-foot a data center in New Albany that will create 100 jobs. COLUMBUS JOB GROWTH TRENDS EMPLOYMENTCOLUMB INU SMILLIONS JOB GR &O JOBWT GROWTHH TREN (%)DS EMPLOYMENT IN MILLIONS Ascena Retail Group, the parent company of Catherines stores, will add 100 jobs in Central Ohio, as it relocates 1.10 3.5% a operations from Philadelphia.

1.09 3.0% a Fluvitex USA, an Ikea bedding supplier, is planning to 1.08 add 80 full-time equivalent jobs to its Groveport facility. 2.5%

1.07 2.0% Q3 2015 Q3 2016 Q3 2017 FORECAST 1.06 1.5% U.S. UNEMPLOYMENT RATE 5.1% 4.9% 4.4% 1.05

1.0% 1.04 EMPLOYMENT (% Change) 2.2% 2.3% 2.0% 1.03 0.5%

1.02 0.0% Q4 Q1 Q2 Q3 LOCAL UNEMPLOYMENT RATE 4.0% 4.1% 4.4%

2015-2016 2016-2017 YOY % Job Growth Forecast is 12-month outlook Source: Moody’s Analytics

JOB GROWTH & UNEMPLOYMENT RATE OUTLOOK • Greater Columbus was one of North America’s “most competitive cities” in both automotive and logistics by a recent Site Selection +2.0 +27 magazine report • At 4.4%, unemployment in the Columbus area remains on-par with % YOY BPS YOY the national average. Average Q3 employment Average Q3 unemployment • Columbus is the largest multifamily market in Ohio with more than increased by 13,000 jobs. increased to 4.4%. 7,600 apartment units under construction and increasing effective rental rates.

CINCINNATI/DAYTON COLUMBUS INDIANAPOLIS KANSAS CITY MINNEAPOLIS OMAHA ST. LOUIS TOLEDO

Previous Page Home Next Page MARKET INSIGHT Third Quarter 2017 COLUMBUS 2

MULTIFAMILY TRENDS DEVELOPMENT / INVENTORY

Effective rent per unit has been growing significantly in the Columbus Through three quarters of 2017, nearly 2,600 units have been completed market over the past few years. For the first time ever, effective rent and more than 7,600 units are under construction in the eight-county now exceeds $860 per unit. Vacancy in the Columbus market has Columbus Metro Area. ranged between 5.0% and 6.0% over the past two years. Downtown Columbus is currently the most active development submarket. Activity is also strong in the northern Dublin/Hilliard submarket and the New Albany submarket, along with the far northern +5.1 - 20 counties of Delaware, Morrow and Union. % YOY BPS YOY DEMOGRAPHIC FUNDAMENTALS Average effective rent Vacancy decreased to an increased to $864. average of 5.3%. The Columbus MSA is projected to increase by more than 43,000 households from 2016 to 2021, of which 16,000 are estimated to be renter households. Net migration is projected to accelerate during the HISTORICAL & FORECASTED METRO RENT GROWTH RATES next five years. Columbus’ one-year historical rent growth (per third quarter 2017 year- 2000: 1,674,653 over-year data) was ahead of the national average by 50 basis points. 2010: 1,901,979 POPULATION Furthermore, the market’s projected five-year annual rent growth rate 2016: 2,022,105 is 3.0% from 2017 to 2021. COLUMBUS RENT GROWTH RATES 2021: 2,122,571 HISTORICAL AND FORECASTCOLUMBUS RENT GROWTH RATES RENTER 2000: 36.1% 6.0% 2010: 37.1% H I S T O R I C A L OCCUPIED Quarterly vs. Annual F O R E C A S T PERCENTAGE 2016: 37.7% 5.0% 2021: 37.2%

4.0% 2000: $44,445 3.5% 3.4% MEDIAN 3.2% 3.0% 2010: $51,188 FAMILY 3.0% 2016: $56,665 2.5% INCOME 2021: $67,923 2.0% 1.4%

1.0% 0.3% MULTIFAMILY FORECAST The following are Cushman & Wakefield’s projections over the near term. 0.0% Q4' 16 Q1 '17 Q2 '17 Q3 '17 1 Year 3 Year 5 Year 5 Year (Avg Annual Change) Forecast -1.0% (Avg Annual Change) -0.6% -2.0%

PIPELINE % RENTS VACANCY Columbus United States GROWTH Source: AXIOMetrics Forecast is 12-month outlook

CINCINNATI/DAYTON COLUMBUS INDIANAPOLIS KANSAS CITY MINNEAPOLIS OMAHA ST. LOUIS TOLEDO

Previous Page Home Next Page MARKET INSIGHT Third Quarter 2017 COLUMBUS 3

INVESTMENT ACTIVITY MOST ACTIVE MARKET PLAYERS

Three quarters into 2017, the cumulative sales volume of $280 million TOP FIVE COLUMBUS BUYERS - YTD 2017 for the Columbus market is on-pace to reach nearly $375 million for RANK BUYER TOTAL VOLUME NO. TRANSACTIONS the year. The 2017 projection would fall short of the record-breaking 1 Albion Residential $55,450,000 1 multifamily investment sales years of 2014, 2015, and 2016, which were $861 million, $702 million and $448 milion respectively. 2 Independence Realty Trust $50,900,000 2 COLUMBUS ANNUAL SALES VOLUME ANNUAL SALES VOLUME ($ MILLIONS) 3 Cortland Partners $49,000,000 1 HISTORICAL SALES VOLUME $1,000 4 Connor Group $32,500,000 1

$900 5 CDEC $30,000,000 1 $800 TOP FIVE COLUMBUS SELLERS - YTD 2017 $700

) RANK SELLER TOTAL VOLUME NO. TRANSACTIONS $600 1 Connor Group $55,450,000 1 $500 millions

(in 2 Hamilton Point Investments $50,900,000 2 $400

$300 3 Crawford Hoying $49,000,000 1

$200 4 CORE Realty Holdings $32,500,000 1

$100 5 UBS $30,000,000 1 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD Source: Real Capital Analytics 2017 Transaction Volume Historic Average PRICING & CAP RATES Source: Real Capital Analytics The market’s mid-quartile spread is 5.9% to 7.3%, which is similar to the COLUMBUS PRICING TRENDS NOTABLE SALES trailingP R12-monthICE / UNIT & CAP RtrendATE from the last quarter.

Class B – Sterling Place (1990, 300 units). Connor Group purchased this $150,000 asset from CORE Realty Holdings in September for $108,000 per unit. The property is located in Northwest Columbus and was almost fully $125,000

occupied at the time of sale. $100,000

Class B – Alkire Glen (2000, 252 units). Crawford Hoying sold this $75,000 asset to RealSource Management LLC in July for $79,000 per unit. The $50,000 property is located near I-270 in Southeast Columbus and was over 95% Unit Per Price Average occupied at the time of sale. $25,000

Class C – Creekside at Taylor Square (2001, 532 units). Crawford Hoying $0 sold this asset to Monarch Investments in August for $97,000 per unit. 2013 2014 2015 2016 YTD '17

The property is located in the eastern suburb of Reynoldsburg and was Class A Class B Class C 100% occupied at the time of sale. Source: Real Capital Analytics, Cushman & Wakefield Research

CINCINNATI/DAYTON COLUMBUS INDIANAPOLIS KANSAS CITY MINNEAPOLIS OMAHA ST. LOUIS TOLEDO

Previous Page Home Next Page MARKET INSIGHT Third Quarter 2017 COLUMBUS 4

COLUMBUS SUBMARKET TRENDS SUBMARKETRENTS & VACAN COVERVIEWY SELECT SUBMARKET NEWS RENTS & VACANCY BY SUBMARKET Italian Village

Bexley/Whitehall $732 Bexley/Whitehall 5.2% • Dublin-based Borror Properties is close to breaking Delaware Co. / Morrow Co. / $945 Delaware Co. / Morrow Union Co. Co. / Union Co. 6.1% ground on an unnamed multi-story apartment complex

Downtown/Short Downtown/Short on East Fifth Street. The 89-unit complex will be built on $1,270 3.7% North/Brewery North/Brewery the site of the former Acme Taxi building and is expected

Dublin/Hilliard $965 Dublin/Hilliard 5.2% to be complete by the Spring of 2019.

Fairfield Co. / Fairfield Co. / Pickaway Co. $813 Pickaway Co. 3.4% Grandview Heights

Licking Co. $747 Licking Co. 5.0% • Plans are underway to redevelop the current White

New Albany $994 New Albany 4.8% Castle corporate headquarters into a $65 million mixed- RENTS & VACANCY BY SUBMARKET use complex, located west of downtown. In addition to Northeast Columbus $728 Northeast Columbus 4.9% new offices, the project will include 270 new housing units and a community center. Southeast Columbus $756 Southeast Columbus 8.0%

Southwest Columbus / Southwest Columbus / 5.3% Downtown Madison Co. $753 Madison Co.

Upper Arlington/OSU $988 Upper Arlington/OSU 4.8% • Denver-based Charles Street Investment Partners LLC is proposing a six story mixed-used development on COLUMBUS SUBMARKET TRENDS East Long Street, with a unique block-O structure. The UNDERUnder CONSTRUCTIONConstruction BY SUBMARKET project would include 225 apartment units.

2,500 Short North 2,242 2,000 2,001 • A 100-unit apartment complex is being planned by 1,500 Columbus-based Pizzuti Companies on a West First 1,314 Avenue site. The six-story complex will be located 1,000 1,011 adjacent to another new Pizzuti office and retail

500 665 development project. 199 136 53 0 Westerville

• The Fenimore will be a 180-unit apartment complex which soon begin construction on Hamilton Road. The project will be built on an 11-acre site adjacent to a number of other multifamily complexes by developers Source: CoStar, Cushman & Wakefield Research Robert Weiler Co. and Donald W. Kelley & Associates. Note: Submarkets are defined by Cushman & Wakefield Research

CINCINNATI/DAYTON COLUMBUS INDIANAPOLIS KANSAS CITY MINNEAPOLIS OMAHA ST. LOUIS TOLEDO

Previous Page Home Next Page INDIANAPOLIS 37

28 Elwood

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37 19 9 31 213

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MARKET38 INSIGHT 65 | THIRD QUARTER 2017 INDIANAPOLIS MULTIFAMILY REPORT 47 47 32 38 39 32

52 19 75 421 Anderson The Cushman & Wakefield Multifamily Research Team provides in-depth coverage of the Indianapolis Metropolitan 9 31 38 32 IN THIS EDITION Statistical Area. In addition to analyzing multifamily rent and sale trends, these reports examine employment 69 32 9 Lebanon 38 data, key economic announcements, and development32 pipeline news. 32 Noblesville  Downtown 109 38 9  Center Pendleton 36 75 65  North 69 38  Northeast 74 31 36 39 ZIIONSVIILLE 13 Carmel FIISHERS  East 52 CARMEL 67 Zionsville CARMEL Fishers 421 69 9  Southeast 865 52 421 109 465 234 267 465 37  South

136 31 234 234 465 65 Meridian NORTHEAST  Southwest Hills 74 37  West NORTHWEST 67 Brownsburg Lawrence NORTH 31  Northwest 236 36  Zionsville 39 52 136 70 74 65 236 Indianapolis 70 36  Carmel 267 9 75 CENTER Greenﬁeld IMS  Fishers40 Speedway 70 465 465 40 40  Greenwood DOWNTOWN EAST Danville 36 74 65 36 WEST Avon 70 52 421

267 40 40 Beech Grove 40 74 RESEARCH TEAM 39 52 SOUTHWEST 9 SOUTHWEST 67 Indianapolis 31 SCOTT POLLOM, CCIM International Airport 74 465 52 36 DIRECTOR, CAPITAL MARKETS Plainﬁeld 267 70 [email protected] 67 SOUTH SOUTHEAST

75 Southport MATT NIEHOFF52 65 37 31 RESEARCH ANALYST 40 135 [email protected] 39

Greenwood 9 MITCH OSTROWSKI Mooresville 74 GREENWOOD RESEARCH ANALYST [email protected]

42 Fairland

144 42

44 31 144 Whiteland 42 39 67 Shelbyville 65 142 CINCINNATI/DAYTON COLUMBUS37 INDIANAPOLIS KANSAS CITY MINNEAPOLIS OMAHA ST. LOUIS TOLEDO

42 Franklin 44

44 135 74 Previous Page Home Next Page 44 9 Bud 44 Martinsville

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135 Edinburgh 37 MARKET INSIGHT Third Quarter 2017 INDIANAPOLIS 2

INDIANAPOLIS ECONOMIC EXPANSION The following are select announcements from third quarter 2017:

EMPLOYMENT & UNEMPLOYMENT TRENDS Amazon expects to hire more than 120,000 holiday jobs in The Indianapolis market added 19,200 net jobs year-over-year for a 33 states, 7,000 jobs will be added locally. third quarter 2017. The 19,200 new jobs represent a job growth rate of 1.5%, which is 70 basis points less than the growth rate from the KAR Auction Services announced plans to build an $80-mil- prior quarter. The top sectors leading the way were Financial Activities a lion corporate campus which will add 400 jobs. (+4,300 net jobs), Education and Health Services (+4,000 net jobs), Construction (+3,700 net jobs), Government (+3,300 net jobs). FedEx Corporation will build a $259-million distribution a center in Greenwood and expects to hire 450 employees.

INDIANAPOLIS JOB GROWTH TRENDS Clean Slate Technology Group expects to invest $1 million EMPLOYMENTINDIAN INA MILLIONSPOLIS J O& BJOB GR GROWTHOWTH T(%)RENDS a to expand which will add 50 jobs by 2020. EMPLOYMENT IN MILLIONS

1.07 3.0% Fuzic will add 250 jobs when it completes the build-out of a just under 12,000-square-foot space in the newly constructed 1.06 Braden Building. 2.5% TechPoint received a $5.7-million grant to expand its tech- 1.05 a focused talent acquisition programs locally. 2.0%

1.04 Q3 2015 Q3 2016 Q3 2017 FORECAST 1.5% 1.03 NATIONAL UNEMPLOYMENT 5.1% 4.9% 4.4% 1.0% 1.02 EMPLOYMENT (% Change) 2.9% 2.3% 1.5% 0.5% 1.01

1.00 0.0% UNEMPLOYMENT RATE (%) 4.4% 4.4% 3.2% Q4 Q1 Q2 Q3 2015-2016 2016-2017 YOY % Job Growth Forecast is 12-month outlook

Source: Moody’s Analytics

JOB GROWTH & UNEMPLOYMENT RATE OUTLOOK • The industrial market inventory continues to expand. By year-end, construction deliveries are expected to set a new market high. +1.5 -80 • Construction (+7.3% YOY), Financial Activities (+6.5% YOY) and Trade % YOY BPS YOY (+2.0% YOY) jobs all grew at above-average rates. • Job growth in Indianapolis will slow in the short-term as its current Average Q3 employment Average Q3 unemployment expansion cycle matures, with Manufacturing employment staying increased by 19,200. decreased to 3.2%. steady and Technology jobs continuing to grow.

CINCINNATI/DAYTON COLUMBUS INDIANAPOLIS KANSAS CITY MINNEAPOLIS OMAHA ST. LOUIS TOLEDO

Previous Page Home Next Page MARKET INSIGHT Third Quarter 2017 INDIANAPOLIS 3

MULTIFAMILY TRENDS DEVELOPMENT / INVENTORY Effective rents are being pushed up due to new product added to the At the end of third quarter 2017, multifamily units delivered totaled 1,110, market. Over 1,000 new units were delivered during the third quarter with while 2,820 units are under construction in the Indianapolis metro area. almost 3,000 units under construction nearing delivery. Expect the steady Downtown remains the most active submarket in terms of development, pipeline of new product to continue. with over 1,500 units under construction, and more proposed projects could be starting construction early next year. Center Township, Fishers, and Carmel all have over 300 units under construction, putting them right +3.2 +30 behind Downtown in development. % YOY BPS YOY DEMOGRAPHIC FUNDAMENTALS Average effective rent Vacancy The MSA is projected to increase by 94,300 households from 2016 to increased to $862. increased to 5.6%. 2021 with an expectation of a 3.9%-increase in renter occupancy. Total population and households are expected to keep pace as well, with growth Source: Yardi Matrix of 5.3% and 5.6%, respectively.

HISTORICAL & FORECASTED METRO RENT GROWTH RATES 2000 1,658,455 Indianapolis’s one-year historical rent growth (per third quarter 2017 YOY 2010 1,887,873 POPULATION data) continued to out-pace the national averages. Year-over-year rent 2016 2,002,893 growth by year’s end 2017 is projected to be 3.3%. Yardi Matrix forecasts that Indianapolis’s multifamily market will continually grow from a rental 2021 2,109,514 perspective over the next five years. The three-year forecast specifies that 2000 28.60% average rents will be estimated to be 10.6% costlier than average rents PERCENT 2010 33.20% currently. RENTER INDIANAPOLIS RENT GROWTH RATES 2016 34.30% HISTORICAL AND FORECASTINDIANAPOLIS RENT GROWTH RATES HOUSEHOLDS 2021 33.70% 25.0% F O R E C A S T 22.4% H I S T O R I C A L 2000 $45,402 MEDIAN 20.0% 2010 $51,847 FAMILY 2016 $53,681 15.8% INCOME 15.0% 2021 $62,989

10.6% 10.0% MULTIFAMILY FORECAST The following are Cushman & Wakefield’s projections over the near term: 5.0% 3.2% 1.3% 0.9% 0.9% 0.0% 0.0% Q4' 16 Q1 '17 Q2 '17 Q3 '17 1 Year 3 Year 5 Year 5 Year (YOY) (Total (Total Forecast Change) Change) (Total Change) RENTS VACANCY PIPELINE % Indianapolis United States GROWTH Source: Yardi Matrix Forecast is 12-month outlook

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INVESTMENT ACTIVITY MOST ACTIVE MARKET PLAYERS Through the third quarter, YTD investment activity is tracking over $200 TOP FIVE INDIANAPOLIS BUYERS - YTD 2017 million above the historical average. Nearly $150 million was invested during the third quarter. RANK BUYER TOTAL VOLUME NO. TRANSACTIONS

Investment activity already outpaces the total market investment in 2015 1 Sterling Group/Virtus RE Capital $98,119,702 1 and is nearing levels seen in 2016. With announcements of additional technology and warehouse jobs coming to the market, investor dollars 2 Pedcor Management $88,050,000 2 should continue to steadily pour into the market due to demand of space 3 Birge & Held $60,693,750 2 by theIN DmillennialIANAPO workforce.LIS ANNUAL SALES VOLUME ANNUAL SALES VOLUME ($ MILLIONS) 4 Covenant Capital Group $52,900,000 2

$1,000 HISTORICAL SALES VOLUME 5 Lighthouse Group $52,500,000 3 $900 TOP FIVE INDIANAPOLIS SELLERS - YTD 2017 $800 RANK SELLER TOTAL VOLUME NO. TRANSACTIONS $700

) 1 Harbor Group Int'l. $117,250,000 2 $600 Bluestone Holdings / QVT Mount $500 millions 2 $98,119,702 1

(in Auburn Cap $400 3 Meridian Realty $74,300,000 2 $300

$200 4 Sinclair Broadcast Group $72,250,000 1

$100 5 Sheehan Development $56,900,000 2

$0 Source: Real Capital Analytics 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD 2017 Transaction Volume Historic Average PRICING & CAP RATES In 2017, the average cap rate for Class A product is up from 5.6% in 2016 Source: Real Capital Analytics to 6.2% in 2017. Conversely, average Class B cap rate declined to 5.9% INDIANAPOLIS PRICING TRENDS proving favorablePRICE / UforNIT & C Alandlords.P RATE The following graph reflects price per NOTABLE SALES unit trends by asset class. $200,000 • Milhaus Development sold Mozzo Apartments (2013, 65 units, $215,385 per unit) and The Maxwell (2008, 105 units, $190,476 per $150,000 unit) to Birge & Held for a total of $34 million. Both are Class A assets. • Samuel Geltman & Co. sold Columns of Castleton (1969, 398 units) for $100,000 $76,000 per unit to Covenant Capital Group. The asset is located in

the Northeast submarket. $50,000 • Domo Development Company sold Eaglepoint Apartments (2015, 240 units) in July to AR Building Co. for $28 million at nearly $117,000 $0 2013 2014 2015 2016 YTD '17 per unit. Class A Class B Class C Source: Real Capital Analytics, Cushman & Wakefield Research

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SUBMARKETINDIANA POVERVIEWOLIS SUBMARKET TRENDS SELECT SUBMARKET NEWS RENTSRE &N TVACANCYS & VACANCY BY SUBMARKET Downtown

Carmel $1,128 Carmel 6.7% • Flaherty & Collins’ 28-story, 292-unit, luxury mixed-use Center $932 Center 7.5% development, 360 Market Square Apartments, is under Downtown $1,423 Downtown 4.8% construction and is expected to be finished in the early part

East $640 East 6.2% of 2018.

Fishers $1,138 Fishers 8.5%

Greenwood $815 Greenwood 5.1% North

North $853 North 5.2% • Requests For Qualifications (RFQs) for the potentialWhite Northeast $721 Northeast 7.6% River Development Plan are now being considered for the Northwest $736 Northwest 6.0% Broad Ripple area. South $734 South 5.8% • TWG Development received approvals to build a Southeast $907 Southeast 7.2% $27.1-million, 186-unit complex despite opposition from the Southwest $813 Southwest 5.4% Nora community. The “Notch at Nora” includes 18 studio, West $692 98 one-bedroom, and 70 two-bedroom units. West 7.5% Zionsville $1,058 Zionsville 3.5% Carmel

INDIANAPOLIS SUBMARKET TRENDS • Midtown Carmel announced plans to widen the Monon Trail UNDER CONSTRUCTIONUnder Construction BY SUBMARKET to accommodate the $210-million mixed-use investment 1,600 being made in the area. The Midtown development will include office, retail and multifamily developments 1,515 1,400 clustered within a 17-acre area.

1,200 Fishers

1,000 • IKEA and Topgolf have officially opened in Fishers. IKEA is expected to average $90-million in annual revenue while 800 Topgolf is projected to average $24.5 million.

600 Zionsville

400 • Anson in Whitestown—a $1-billion commercial, retail and 343 354 305 housing development—just announced the Shoppes at 200 194 Whitestown. The $50-million project is expected to feature 110 275,000 square feet of retail, services, and restaurants. 0 Carmel Center Downtown Fishers North Southeast Source: Yardi Matrix, Cushman & Wakefield Research Note: Submarkets are defined by Cushman & Wakefield Research

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Previous Page Home Next Page KANSAS CITY MARKET INSIGHT Third Quarter 2017 KANSAS CITY 1

KANSAS CITY ECONOMIC EXPANSION The following are select announcements from third quarter 2017:

EMPLOYMENT & UNEMPLOYMENT TRENDS Creative Planning is hoping to double employment to a 400 in their new headquarters. The Kansas City job market remains in robust health, with an umemployment rate of just 4.1%. More importantly, job growth remains Horizons Global will create 150 jobs at their new strong with a 3.6% increase in the seasonally adjusted number of non- a distribution facility at Logistics Park Kansas City. farm payroll over the past 24 months. The biggest constraint on job growth in Kansas City has been the low unemployment rate, although Cerner continues to add hundreds of jobs as it moves an increase in total population is helping in that area. According to a forward with its contract for the Department of Defense. estimates by the United States Census, the total population for Kansas City increased 2.4% from 2015 to 2016, the latest timeframe for which a Amazon continues to hire for at least 1,000 full-time jobs numbers are available. at their new fulfillment center near I-70 and the Turner Diagonal, in addition to seasonal workers.

KANSAS CITY JOB GROWTH TRENDS a Sioux Chief is aiming to create 100 additional jobs at EMPLOYMENT IN MILLIONS & JOB GROWTH (%) their new headquarters in the Centerpoint Intermodal. 1,090 3.0% a Spring Venture Group will be initiating the hiring of 1,080 2.5% 1,000 employees as the move into their new offices.

1,070 2.0% Q3 2015 Q3 2016 Q3 2017 FORECAST 1,060 1.5% NATIONAL UNEMPLOYMENT 5.1% 4.9% 4.4% 1,050

1.0% 1,040 EMPLOYMENT (% Change) 2.1% 2.3% 1.3%

0.5% 1,030 UNEMPLOYMENT RATE (%) 4.7% 4.4% 4.1%

1,020 0.0% Q4 Q1 Q2 Q3 Forecast is 12-month outlook 2015-2016 2016-2017 YOY % Job Growth Source: Bureau of Labor Statistics OUTLOOK JOB GROWTH & UNEMPLOYMENT RATE • Demand for residential space continued to outpace supply as the combined inventory of homes for sale in the Kansas City metro area has fallen 16.7% over the past twelve months. +1.3 -30 • Johnson County, KS has the highest percentage of residents ages % YOY BPS YOY 25 and over with at least a Bachelor’s degree of any county in the United States with a population of at least 250,000. Kansas City has averaged 1,800 Kansas City’s unemployment rate • There are 3,704 units under construction in Downtown Kansas City new jobs per month since Q3 2014. reamains below the US level. as development in the area remains at a record high.

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MULTIFAMILY TRENDS DEVELOPMENT / INVENTORY

Effective rents moved slightly higher, driven in large part by the continued For the 12-month period ending September 30, 2017, 8,660 units development of new, higher-priced units Downtown. Developments in were completed and approximately 6,300 were under construction the Central Business District, Crossroads, and the River Market should at the time. These rates are at all-time highs, but the overall rate of drive rates higher over the next 12 months. development has remained steady for at least 24 months.

The downtown urban revival remains the focus of new development, with over 3,700 units currently under construction in and around the +1.4 -118 area. % YOY BPS YOY Average effective rent Vacancy decreased to an DEMOGRAPHIC FUNDAMENTALS increased to $961. average of 4.2%. Kansas City’s population is projected to increase by almost 100,000 people over the next five years, while the percentage of renters is expected to remain steady at just over one-third of the total population. HISTORICAL & FORECASTED METRO RENT GROWTH RATES The rate of growth for rent rates in Kansas City has been slowing. Over 2000: 1,811,208 the past 12 months the growth rate in Kansas City was only 60.5% of the 2010: 2,009,340 national average, while over the last five years Kansas City’s growth rate POPULATION 2016: 2,093,438 has been 74.4% of the national average. Forecasts show that over the 2021: 2,188,903 next five years Kansas City growth rates should accelerate and come more in line with national trends. RENTER 2010: 32.8% OCCUPIED 2016: 34.0% KANSAS CITY RENT GROWTH RATES PERCENTAGE 2021: 33.8% 20.0% 2000: $45,931 H I S T O R I C A L F O R E C A S T MEDIAN 2010: $54,875 15.0% 13.9% FAMILY 13.1% 2016: $58,521 INCOME 2021: $68,965

10.0%

7.0% MULTIFAMILY FORECAST The following are Cushman & Wakefield’s projections over the near term. 5.0%

1.4% 1.4% -0.1% 0.5% 0.0% -0.4%

Q4'16 Q1'17 Q2'17 Q3'17 1 Year 3 Year 5 Year 5 Year -5.0% (YOY) Forecast PIPELINE % RENTS VACANCY Kansas City U.S. GROWTH Source: AXIOMetrics Forecast is 12-month outlook

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INVESTMENT ACTIVITY MOST ACTIVE MARKET PLAYERS

The volume of investment activity in the Kansas City market was strong TOP FIVE KANSAS CITY BUYERS - YTD 2017 through the first six months of the year, but the pace slowed in the third RANK BUYER TOTAL VOLUME NO. TRANSACTIONS quarter. Year-to-date there has been $426.6 million in total transactions, which puts the market behind pace to match the five-year average of 1 CRES Management $70,083,000 1 $639.3 million. However there were some encouraging signs during the 2 PRG Managment $58,250,000 1 third quarter. 3 BH Managment Services, LLC $55,550,000 2 The per-unit-price jumped up significantly in the third quarter, and three- 4 Fogelman Management Group $48,100,000 1 quarters of the way through 2017, Class A and Class B transactions have accounted for 84.3% of the total number of units transacted. Increased 5 Starwood Capital $42,800,000 1 investment in higher-end properties could quickly bring volume back in line with historical averages. TOP FIVE KANSAS CITY SELLERS - YTD 2017

$900 RANK SELLER TOTAL VOLUME NO. TRANSACTIONS

$800 1 MAA REIT $70,083,000 1

$700 2 Somerset Partners $58,250,000 1

$600 3 Preferred Apartment Comm. $48,100,000 1

) $500 4 Milestone Apartments REIT $42,800,000 1

millions $400 5 Banner Apartments $28,000,000 1 (in

$300 Source: Real Capital Analytics

$200 PRICING & CAP RATES $100 The spread of cap rates for the middle fifty percent of transactions was $0 5.8% to 6.6% for the twelve months ending September 30, 2017. The 2011 2012 2013 2014 2015 2016 YTD 2017 Source: Real Capital Analytics median cap rate during that period of time was 6.0%. Transaction Volume Historic Average $250,000

NOTABLE SALES 9 $200,000 4 , 1

Class A – The most significant Class transaction of the third quarter 2

2 7

$ 7 4 2 was the Province of Briarcliff, which was purchased by Forum Real 4 ,

$150,000 2

, 8 1 0 4

7 1 7 1 2 2

Estate Group for $18.8 million, or $156,000 per unit. A few years ago 1 2 $ , 6 7 4 , $ 0 3 6 6 , 5 8 4 9 Northland Apartments trading at those values would have been a major 1 ,

$ 7 1

$100,000 $ 8 7 $ 0 1 6

$ 1 , surprise, but the last few years have seen a drastic increase in the value ,

8 7 5

5 4 7 8 5 7 4 2 9 7 4 , 2 5 8 1 $ 7 , , , $ 9 1 of apartments north of the river, especially those around Briarcliff. 9 , , 5 3 2 2 $50,000 1 9 8 2 2 $ 2 1 $ $ $ $ $ Class B – A local partnership led by Jones Development Co. purchased $0 a total of 588 units spread across five different complexes in Prairie 2013 2014 2015 2016 YTD '17

Village, KS. The group now owns 73% of all apartments in the Kansas Class A Class B Class C City suburb. Source: Real Capital Analytics, Cushman & Wakefield Research

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SUBMARKET OVERVIEW SELECT SUBMARKET NEWS RENTS & VACANCY BY SUBMARKET Brookside & Waldo $695 Brookside & Waldo 7.9% Downtown Area College Boulevard $877 College Boulevard 4.6% • Work is now getting started on new apartments near Downtown $1,237 Downtown 6.6% the Berkley Riverfront. Additionally, plans are moving East & SE Jackson County $1,107 East & SE Jackson County 2.5% forward on an extension for the KC Streetcar to serve the Eastern 435 $709 Eastern 435 6.5% area, which could accelerate even more development. I-29 Northland $963 I-29 Northland 8.0% I-35 Northland $830 I-35 Northland 6.0% Plaza & Midtown Independence $803 Independence 5.4% • Renovations have been completed at Plaza Club City Midtown $956 Midtown 4.0% Apartments near the Country Club Plaza. The total North Johnson County investment in upgrading the complex was over $7 million $865 North Johnson County 3.8% and included substantial upgrades to the common space North Kansas City $909 North Kansas City 5.3% amenities along with improvements to the units. Olathe $959 Olathe 3.6% Plaza $1,490 Plaza 8.5% North Johnson County South Johnson County $1,125 South Johnson County 5.2% South Kansas City • Jones Development Co. led a group of investors that $832 South Kansas City 5.8% purchased a total of 588 units at Kenilworth Apartments, Western 435 $977 Western 435 4.6% Corinth Place, Corinth Paddock, Corinth Gardens, Wyandotte County $804 Wyandotte County 7.8% and Corith Mission Valley. The price has not yet been disclosed and upgrades and rebranding are planned for UNDER CONSTRUCTION BY SUBMARKET the near future, but the group now owns 73% of all the

4,000 apartments in Prairie Village.

3,704 3,500 South Johnson County

3,000 • After suffering a construction fire earlier this year, work is continuing on the mixed-use development 2,500 at CityPlace. The fire has not caused any significant 2,000 setbacks and residents are continuing to move into the 205-unit Royale View. 1,500

1,000 1,168 East & Southeast Jackson County 1,026

500 646 • The Manor Homes of Arborwalk were part of a national 547 portfolio purchase by Starwood Capital. The 280-unit 315 292 337 0 Lee’s Summit property was valued at $42.8 million. Overland Park Downtown East & SE I-29 NorthlandI-35 Northland Plaza & South Western 435 Plaza North Jackson KC County Source: AXIOMetrics, Cushman & Wakefield Research Note: Submarkets are defined by Cushman & Wakefield Research

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Previous Page Home Next Page MINNEAPOLIS CUSHMAN & WAKEFIELD MINNEALIS MULTIFAMILY RESEARCH MARKET INSIGHT MINNEAPOLIS MULTIAMILY EPOT | THIRD QUARTER 2017

The Cushman & Wakefield Multifamily Research Team provides in-depth coverage of the Minneapolis Metropolitan IN THIS EDITION Statistical Area. In addition to analyzing multifamily rent and sale trends, these reports examine employment data, key economic announcements, and development pipeline news. ► Minneapolis ► Minneapolis - DT ?�A@ !"b$ )s ► St. Paul )y )m ?�A@ %&d( ► St. Paul - DT ?�A@ ► North Central NorthNorth %&c( Northwest Northeast ► South Central Northwest !"b$ CentralCentral Northeast S� %&h( ► Northwest Metro )n %&f( %&d( ?�A@ )y ► Southwest Metro ?�A@ !"b$ ?�A@ ?�A@ %&c( %&h( Northeast Metro Minneapolis ?�A@ ► %&e( CBD Saint Paul !"b$ !"b$ Saint Paul ► Southeast Metro Minneapolis Saint Paul !"b$ ?�A@ %&d( %&c( CBD )s %&f( %&f( ?�A@ ?'A@ MAKET TEAM SouthwestSouthwest %&f( SoutheastSoutheast )p LANCE STEIE ?ØA@ ?�A@ SENIOR DIRECTOR, CAPITAL MARKETS )y [email protected] %&d( %&c( ?�A@ )s )z OBET DULIN South SENIOR ASSOCIATE, CAPITAL MARKETS )y South )p [email protected] CentralCentral!"�$

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MINNEAPOLIS, MN ECONOMIC EPANSION The following are select announcements from third quarter 2017:

EMPLOYMENT UNEMPLOYMENT TENDS  S. P C C approved the master plan and zoning layout for the 135-acre former Ford Assembly T M MSA year-over- Plant. The redevelopment is expected to year per BLS’ third quarter 2017 average. . The Education & Health . Services sector led job growth with a 4.4% increase from September 2016 to September 2017. The unemployment rate in Minneapolis  M U C a North America Soccer League continues to trend well below the U.S. rate due to the market’s highly team, broke ground on the 20,000 seat Allianz field at educated workforce and the presence of corporate headquarters such I-94 and Snelling Avenue in St. Paul. The stadium is the as UnitedHealth Group, Target, Best Buy, and 3M. beginning of a 34.5 acre urban village redevelopment that includes retail, residential and open space.

E A S recently completed a MINNEAPOLIS OB OTH TENDS  $10 million renovation in Shakopee, . EMPLOYMENT IN MILLIONS & JOB GROWTH (%) They also announced a $14 million conversion project in Chanhassen, . 2.02 3.0%  C broke ground on a new 40,000 square foot 2.00 2.5% headquarters in Roseville and expect to .

1.98 2.0% OECAST

1.96 1.5% NATIONAL UNEMPLOYMENT 5.1% 4.9% 4.4%

1.94 1.0% EMPLOYMENT C 1.6% 2.0% 2.0%

1.92 0.5%

UNEMPLOYMENT ATE 3.5% 3.6% 3.5% 1.90 0.0% Q4 Q1 Q2 Q3

2015-2016 2016-2017 YOY % Job Growth Forecast is 12-month outlook Source: Moody’s Analytics OUTLOOK OB OTH UNEMPLOYMENT ATE • Minneapolis is in an economic expansion phase with job growth rates projected at 1.1% to 1.6% annually through 2019. 2.0 10 • Fortune 500 companies are expected to continue to fuel in- migration, attracting candidates from other markets such as YOY BPS YOY Chicago, St. Cloud, and Duluth due to the metro’s tight labor market. Average Q3 Average Q3 • In addition to healthcare and technology, the logistics sector is increased by 39,450 jobs. decreased to 3.5%. projected to drive future growth with Amazon’s growing presence.

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MULTIAMILY TENDS DEELOPMENT / INENTOY

Driven by strong demand due to low unemployment and favorable Developers are stretching out their building streak with new deliveries demographics, effective rents in Minneapolis continue to rise. With that continue to meet lease-up and projected rent expectations. That steady new supply anticipated and vacancy rates holding, rents are construction pipeline will hold steady for the next two years. Nearly expected to grow at nearly 3.5% for the year. 3,300 units were completed in 2016; and, more than 4,800 units are currently under construction in the seven-county Minneapolis metro area. Approximately 4,000 units are estimated for delivery in 2018. New 3.6 10 supply is being well-received with still-strong renter demand. YOY BPS YOY Minneapolis remains the most active development submarket. A decreased to an DEMOAPHIC UNDAMENTALS increased to $1,300. average of 2.4%. The MSA is projected to increase by more than 69,000 households from 2016 to 2021, of which 19,000 are estimated to be renter households. HISTOICAL OECASTED METO ENT OTH ATES 2010: 3,348,852 Minneapolis’ year-over-year historical rent growth (per third quarter POPULATION 2016: 3,538,519 2017 year-over-year data) outperformed that of the nation by a 2021: 3,704,631 significant margin. Rent growth in 2017 is projected to be 3.5% followed by 2.5% in 2018, 3.3% in 2019, 4.0% in 2020, and 2.3% in 2021. PECENT 2010: 28.4% MINNEAPOLIS RENT GROWTH RATES ENTE 2016: 29.9% 20.0% HOUSEHOLDS 2021: 29.8%

H I S T O R I C A L F O R E C A S T

15.5% MEDIAN 2010: $64,573 15.0% 2016: $69,826 13.5% AMILY INCOME 2021: $82,303

10.0% 9.0% MULTIAMILY OECAST The following are Cushman & Wakeﬁ eld’s projections over the near term: 5.0% 4.0% 3.8% 3.7% 3.7% 3.6%

0.0% Q4' 16 Q1 '17 Q2 '17 Q3 '17 1 Year 3 Year 5 Year 5 Year (YOY) Forecast PIPELINE Minneapolis United States ENTS ACANCY OTH Source: AXIOMetrics Forecast is 12-month outlook

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INESTMENT ACTIITY MOST ACTIE MAKET PLAYES

Multifamily sales reached nearly $1.3 billion through third quarter 2017. TOP THEE MINNEAPOLIS BUYES THID UATE Although volume is likely to be lower than the record-high $1.6 billion ANK BUYE TOTAL OLUME NO. TANSACTIONS reported in 2016, it remains well above historical levels. S

Class B value-add properties are still a favorite amoung buyers with TH E heavy bidding for assets. More buyers are looking at Class C suburban properties in “A” locations. A AM

TOP THEE MINNEAPOLIS SELLES THID UATE

HISTORICAL SALES VOLUME ANK SELLE TOTAL OLUME NO. TANSACTIONS $1,800 I $1,600 D C $1,400 C P $1,200 )

$1,000 millions $800 (in Source: Real Capital Analytics $600

$400 PICIN CAP ATES $200 The market’s average cap rate has declined from 6.5% in 2014 and

$0 hovered between 5.2% and 5.6% for the last year. The following graph 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD reflects price per unit trends by asset class. 2017 Transaction Volume Historic Average Source: Real Capital Analytics $300,000

0 2 1

, 2 7 5 $250,000 9

NOTABLE SALES 5 2 , $ 2 7

2 5

8 1 2

$200,000 8 7

, 3

– (1999, 394 units) sold for 8

C A E 1 6 0 1 , 4

4 8 5 , , 2 0 4 1 5 4 3 , 1 2 , 8 2 4 $246,000 per unit. Goldman Sachs purchased the property from 3 2

1 2 $ 4 0 0 9 2 , 3 , $ $ 2 2

$150,000 1 1 8 2 6 $ $ $ 0 0 0 Invesco. The asset is located in the St. Paul submarket.

1 1 1 1 2

5 $ 1 $ 7 9 1 6 0 8 $ 9 , 6 , , $100,000 1 5 4 3 7 , 6 6 3 $ $ $ C B – CPM Development sold T (1962, 26 units) to 5 $ Fulton Terrace, LLC for $155,000 per unit. The asset is located in the $50,000 Minneapolis submarket. $0 2013 2014 2015 2016 YTD '17

C C – In an all cash deal, Oak Grove Realty Services purchased Class A Class B Class C L (1912, 64 units) from CPM Development for $141,000 per unit. The property is located in the Minneapolis submarket. Source: Real Capital Analytics, Cushman & Wakefield Research

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SUBMAKET OEIE SELECT SUBMAKET NES RENTS & VACANCY BY SUBMARKET M U

Downtown Minneapolis $1,602 Downtown Minneapolis 2.7% • C and A H submitted a proposal to redevelop an entire block at inneapolis - Out of Downtown $1,178 Minneapolis - Out of Downtown 1.7% Lake Street and Humboldt Avenue. The partnership plans to demolish the existing S N building and Downtown St. Paul $1,512 Downtown St. Paul 3.6% construct a 105-foot tower and five additional buildings consisting of 326 apartments and a new office for the St. Paul - Out of Downtown $993 St. Paul - Out of Downtown 1.9% Sons of Norway.

Northeast Suburban $957 Northeast Suburban 1.9% S M

Northwest Suburban $1,060 Northwest Suburban 3.3% • A local developer, T P announced plans to break ground on E a $60 million mixed- North Central Suburban $RENTS947 & VACANCY BY SUBMARKETNorth Central Suburban 2.1% use project in the Green Line light rail corridor of

Southeast Suburban Eden Prairie. The project, on the site of a former Ruby $1,053 Southeast Suburban 2.0% Tuesday/Anchor Bank, includes 222 apartments and

Southwest Suburban 13,000 square feet of street-level retail. $1,217 Southwest Suburban 3.0%

South Central Suburban $1,027 South Central Suburban 2.2% M D

• United Properties broke ground on T N. Situated UNDER CONSTRUCTION BY SUBMARKET in the North Loop, the 10-story tower consists of 185,000 square feet of office, 15,000 square feet of street-level 1,111 1,118 1,086 1,000 retail and 44 apartments.

800 821 M U

600 • The luxury A opened with 42% of the units pre-leased. The 125-unit building sits on the former 514 400 Cheapo site and will include a Target store on the ground floor in October.

200 70 149 M N 0 0 0 0 • Minneapolis-based CPM D purchased five parcels of land for $2.2 million and announced plans to break ground on M in the 1300 block of Marshall Street Northeast. The 110-unit building has been proposed since 2016 but delayed due to neighborhood Source: AXIOMetrics, Cushman & Wakefield Research opposition. Note: Submarkets are defined by Marquette Advisors

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Previous Page Home Next Page OMAHA METRO MARKET INSIGHT Third Quarter 2017 OMAHA METRO 1

OMAHA - COUNCIL BLUFFS ECONOMIC EXPANSION

The following are metro area expansion announcements as of third quarter 2017: EMPLOYMENT & UNEMPLOYMENT TRENDS Work began on the initial stages of a $1.2 billion Boys Town The Omaha–Council Bluffs Metro added approximately 8,800 new jobs development that will eventually feature 2.3 million square feet from third quarter 2016 to third quarter 2017. The major job producers as of commercial space, 2,000 residences, and a food, dining and of September 2017 are Professional & Business Services and Education retail area. The property includes land formerly occupied by a Boys Town farm near 144th Street and West Dodge. As planned, & Health Services. Omaha’s unemployment rate is very low at 2.9% - a the nearly 500 acres of undeveloped land west of historic Boys 150 basis points below that of the nation - indicating that the metro is Town would showcase a food and dining plaza, a retail center experiencing a tight labor market. and an entertainment hub for live bands and festivals. OMAHA/COUNCIL BLUFFS JOB GROWTH OMAHATRENDS JOB GROWTH TRENDS The $370 million Buffett Cancer Center opened in June 2017 as EMPLOYMENT IN THOUSANDS 2.0% part of the Nebraska Medicine campus is adding 4,657 new jobs. 540 The 615,000-square-foot facility is a joint venture between 1.8% a the University of Nebraska Medical Center and clinical partner Nebraska Medicine that will pull all cancer-related functions — 520 1.6% research, outpatient and inpatient — together under one roof. 1.4% 500 The $205 million Capital District is Omaha’s newest downtown 1.2% entertainment district. The District surrounds a technology- 480 smart, modern town square and will feature a 218-unit high rise 1.0% apartment tower, a full-service 333-room Marriott hotel, Class a A office space, plenty of adjacent parking and over 20 diverse 460 0.8% restaurants and bars – all within walking distance of Omaha’s 0.6% best civic, cultural and entertainment venues and the Riverfront. 440 0.4% 420 0.2% MULTIFAMILY TRENDS 400 0.0% Q4 Q1 Q2 Q3 Average effective rent growth year-over-year as of the third quarter 2015-2016 2016-2017 YOY % Job Growth slowed a bit to the 1.6% range. Vacancy increased by a nominal amount year-over-year and remained below 5.0% as of the third quarter. Rents Source: U.S. Bureau of Labor Statistics (BLS) are projected to increase by 13.3% from 2017 to 2022 per AXIOMetrics, with an average annual rate of 2.7%. This trend is in line with current JOB GROWTH & UNEMPLOYMENT RATE rent growth trends in the market. +1.8 -50 +1.6 +.68 % YOY BPS YOY % YOY BPS YOY Average Q3 employment Average Q3 unemployment Average effective rent Vacancy decreased to an increased by 8,800 jobs. decreased to 2.9%. increased to $884. average of 4.0%.

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Previous Page Home Next Page MARKET INSIGHT Third Quarter 2017 OMAHA METRO 2

INVESTMENT ACTIVITY & CAP RATES DEMOGRAPHIC FUNDAMENTALS The Omaha Market has continued to heat up through the third quarter. Median household income rose by 24.0% from 2000 to 2010. It is Transaction volume on a unit basis is up substantially over 2016, with projected to increase by another 19.5% from 2016 to 2021, thereby a 2017 year-to-date total of 2,120 units compared to just over 1,200 fueling future rent growth in the market. units in 2016. A total of 882 units traded in the third quarter alone. 2000: 767,052 The pipelinePrice Per Unit (avg.) of productCap Rate (avg.) under contract, on the market, and coming to the 2010market $47,312has the 6.46%Omaha MSA trackingThe toward Region is experiencinga 3,000-unit a cultural year. shift , where people are moving to revitalized downtown areas that offer live/work/play2010: environments865,354 not typically seen in smaller Midwest metros. 2011 $53,135 8.96% Market Velocity is up and transaction volume in units sold for 2017 YTDPOPULATION (2,120) has surpassed 2016 (1,200), with an additional 1,271+ units under contract and set to close in Q4 2017 Cap rates2012 have$53,814 remained7.18% low despite theAbsorption increased remains supply, steady, but hovering concessions are up in the downtown areas due the amount of new product delivered2017: and under 917,517 construction, suburban rents remain steady and strong between2013 6.0%$49,643 and 7.0%7.63% depending upon the class, condition, and age 2022: 960,358 of the asset.2014 Notably,$57,596 Willow7.40% Creek (1998, 156 units) had the low trailing cap of 2015the third$65,068 quarter7.99% at 6.38%, and Fox Ridge (1988, 120 units) had RENTER 2010: 33.2% the high2016 trailing$80,377 cap of7.03% the third quarter at 7.42%. 2017 YTD $72,376 6.63% OCCUPIED 2016: 33.9% PERCENTAGE 2021: 33.4% REGIONAL SALES VOLUME / CAP RATES Regional Sale Price Per Unit / Cap Rate 2000: $44,674 MEDIAN $90,000 10.00% 2010: $55,407 HOUSEHOLD 9.00% 2016: $56,959 $80,000 INCOME 8.00% 2021: $68,079 $70,000 7.00% Source: Site To Do Business $60,000 6.00% $50,000 MULTIFAMILY FORECAST 5.00% The following are Cushman & Wakefield’s projections for the near term. $40,000 4.00% $30,000 3.00% The Region is experiencing a cultural shift , where people are moving to revitalized downtown areas that offer live/work/play environments not typically seen in smaller Midwest metros. $20,000 Market Velocity is up and transaction volume in units sold2.00% for 2017 YTD (2,120) has surpassed 2016 (1,200), with an additional 1,271+ units under contract and set to close in Q4 2017 Absorption remains steady, but concessions are up in the downtown areas due the amount of new product delivered and under construction, suburban rents remain steady and strong $10,000 1.00%

$0 0.00% 2010 2011 2012 2013 2014 2015 2016 2017 YTD PIPELINE % Price Per Unit (avg.) Cap Rate (avg.) RENTS VACANCY GROWTH Source: CoStar Forecast is 12-month outlook

DEVELOPMENT / INVENTORY NOTABLE SALES YEAR # OF PURCHASE PRICE PER There are six notable properties under construction or in lease up PROPERTY BUYER SELLER competing for tenants in the downtown market, totaling more than BUILT UNITS PRICE UNIT Maple View 1991 Briar Capital Maxx 108 $6,270,000 $58,056 1,000 total new units: Capital District (218 units), The Breakers (214 units), Zag Apartments (193 units), The Conrad (153 units), The Triangle Fox Valley 1997 Briar Capital Maxx 228 $14,980,000 $65,702 (134 units), The Yard (101 units). Suburban Omaha has fewer but larger Willow Creek 1998 Briar Capital Maxx 156 $8,420,000 $53,974 projects, with 752 units under construction in two projects. Andover Edgewater Court 1975 Briar Capital Maxx 108 $6,270,000 $58,056 Pointe is finishing up Phase II, adding 390 units to the southwest Omaha Fox Ridge 1988 Briar Capital Maxx 120 $6,175,000 $51,458 market near 132nd and Chandler. The Lumberyard in Millard is finishing Howard Street 1986 Briar Capital Maxx 90 $4,659,000 $51,767 up its 346 units, completing the mixed-use redevelopment project. Briar Hills 1999 JB Group NewStreet 72 $6,550,000 $90,972

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Previous Page Home Next Page ST. LOUIS CUSHMAN & WAKEFIELD ST. LOUIS MULTIFAMILY RESEARCH MARKET INSIGHT ST. LOUIS MULTIFAMILY REPORT | THIRD QUARTER 2017

The Cushman & Wakefield Multifamily Research Team provides in-depth coverage of the St. Louis Metropolitan 61 IN THIS EDITION Statistical Area. In addition to analyzing multifamily rent and sale trends, these reports examine employment data, key economic announcements, and development pipeline news.  Downton Clayton

61  Downtown CBD  St. Louis City

61 370  Mid County

70 70 70  West County 64 370 67 70 94 270  St. Charles County ST. CHARLES COUNTY 270 NORTH COUNTY 270 270 364 170  North County 70 141  South County 94 64 67 255 364 55 70 70  Metro East UNIVERSITY CITY

NORTH 270 ST. LOUIS CITY 64 OLIVETTE 170 94 MARYLAND HEIGHTS / 141 CREVE COEUR 55 CENTRAL 255 70 70 64 CLAYTON WEST END DOWNTOWN MARKET TEAM CBD CHESTERFIELD 64 CBD RICHMOND HEIGHTS 64 MICHAEL HANRAHAN 44 EXECUTIVE DIRECTOR, CAPITAL MARKETS 94 METRO 64 [email protected] SOUTH 94 255 94 ST. LOUIS CITY 47 67 55 EAST BALLWIN 64 44 PAUL HILTON KIRKWOOD EXECUTIVE DIRECTOR, CAPITAL MARKETS SOUTH [email protected] 55 255 44 141 100 67 270 47 BOBBY MILLS 44 ASSOCIATE, CAPITAL MARKETS

255 [email protected] 100 44 JEFFERSON COUNTY141 55 BRENDAN DUNBAR ST. LOUIS RESEARCH MANAGER 141 21 [email protected] 50 47

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ST. LOUIS ECONOMIC EXPANSION The following are select announcements from the last six months:

EMPLOYMENT & UNEMPLOYMENT TRENDS Reckitt Benckiser is bringing over 450 employees to its a new warehouse and custom manufacturing operations in The unemployment rate in St. Louis MSA is 4.1% as of August, according St. Charles County. to the Bureau of Labor Statistics, which is 40 basis points lower than the national rate of 4.5%. From August 2016 to August 2017, 6,900 new Amazon will add 34 full-time employees and 350 part- jobs in the Education & Health Services industry were created, while a time employees as it expands into two buildings in the just under 2,000 jobs were added in the Financial Activities industry. Hazelwood Logistics Center. The third quarter also marked the 20th consecutive quarter of positive job growth in St. Louis, according to Moody’s. Nestlé USA is moving its IT operations from California, a expanding its workforce in St. Louis by 300 jobs.

Bunzl Distribution and Quiet Logistics will bring 282 ST. LOUIS JOB GROWTH TRENDS a new jobs to Hazelwood as they move into the Hazelwood ST. LOUIS JOB GROWTH TRENDS EMPLOYMENT IN MILLIONS & JOB GROWTH (%) Logistics Center. EMPLOYMENT IN MILLIONS 1.38 1.6% Microsoft plans to locate a regional tech hub within the Cortex district at 4200 Duncan Avenue, creating 1.38 1.4% a 150 new jobs. 1.37 1.2%

1.37 1.0% Q3 2015 Q3 2016 Q3 2017 FORECAST

1.36 0.8% NATIONAL UNEMPLOYMENT 5.1% 4.9% 4.4%

1.36 0.6%

2.1% 1.2% 0.8% 1.35 0.4% EMPLOYMENT (% Change)

1.35 0.2% UNEMPLOYMENT RATE (%) 4.5% 4.7% 4.1% 1.34 0.0% Q4 Q1 Q2 Q3 Forecast is 12-month outlook 2015-2016 2016-2017 YOY % Job Growth Source: Moody’s OUTLOOK JOB GROWTH & UNEMPLOYMENT RATE • A favorable business environment, low living costs, and an educated workforce provides strong incentives for large corporations to increase footprints in St. Louis. • The approval of $7 billion in sales of Boeing fighter jets to Kuwait and Qatar +2.8 -80 will increase momentum in St. Louis manufacturing as aerospace accounts % YOY BPS YOY for 15% of all local manufacturing jobs. Education and health services Decrease in the unemployment • St. Louis continues to be one of the fastest growing cities for startups thanks to the nationally recognized Cortex district, which is currently home to over employment increase rate in St. Louis MSA 250 companies. since August 2016. as of August.

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MULTIFAMILY TRENDS DEVELOPMENT / INVENTORY

Effective rents in the third quarter reached $959, a 7.0% increase over More than 3,700 units are under construction in the St. the last two years. The third quarter marks the 30th consecutive quarter Louis Area, led by the Central West End with over 1,300 of positive effective rent growth according to AXIOMetrics. units under construction. Other strong submarkets include Downtown Clayton and Chesterfield, with 349 and 345 units under construction, respectively. Close to 2,000 deliveries are expected by the end of the year, according to CoStar. While new construction, such as the development at 32 N. Euclid Ave, dominates the Central West +3.7 -50 End, the redevelopment of aging office buildings in Downtown St. Louis % YOY BPS has increased considerably in the past few years. This redevelopment activity is heavily reliant on favorable tax incentives offered by the city. Effective rate growth from 3Q Vacancy decreased since the 2015 to 3Q 2017. beginning of 2016. DEMOGRAPHIC FUNDAMENTALS The St. Louis Area continues to be an attractive market for residents as it ranks as the 37th most afforable single family market out of 211 HISTORICAL & FORECASTED METRO RENT GROWTH RATES markets. The St. Louis market experienced strong rent growth over the last three 2000: 2,675,296 years with an average annual increase in rates of 2.6%. Over the next 2010: 2,787,704 five years, rates are expected to grow around 2.7% annually on average. POPULATION 2016: 2,819,249 This is slightly higher than average annual growth over the previous five 2021: 2,893,983 yearsST. LofO 2.6%.UIS RENT GROWTH RATES HISTORICAL AND FORECAST RENTER ST. LOUIS RENT GROWTH RATES 2010: 29.4% 7.0% OCCUPIED 2016: 30.1% H I S T O R I C A L PERCENTAGE Quarterly vs. Annual F O R E C A S T 2021: 29.9% 6.0% 2000: $44,256 MEDIAN 5.0% 2010: $52,487 FAMILY 2016: $56,676 INCOME 4.0% 2021: $67,192

3.0% 2.7% MULTIFAMILY FORECAST 2.6% 2.6% The following are Cushman & Wakefield’s projections over the near term. 1.9% 2.0% 1.9% 1.5% 1.1% 1.1% 1.0%

0.0% Q4 '16 Q1 '17 Q2 '17 Q3 '17 1 Year 3 Year 5 Year 5 Year PIPELINE % (Avg Annual Change) Forecast RENTS VACANCY (Avg Annual Change) GROWTH St. Louis United States Source: AXIOMetrics Forecast is 12-month outlook

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INVESTMENT ACTIVITY MOST ACTIVE MARKET PLAYERS

2017 cumulative sales volume in the St. Louis area through the third TOP FIVE ST. LOUIS AREA BUYERS - YTD 2017 quarter was $490.9 million, according to Real Capital Analytics. Private RANK BUYER TOTAL VOLUME NO. TRANSACTIONS investors made up 74% of investment purchases thus far in 2017, 1 Strategic Properties of NA/BRT $74,600,000 3 while Public Listed/REITs and Institutional investors made up 22% of investment activity. Public Listed/REITs were not active in the market in Apartments 2016 and only made up 7% of activity in 2015. International buyers make 2 Mapletree U.S. Management $67,000,000 1 up 4%A NofN thisUA Lyear’s SAL EactivityS VOL soUM far,E up from 3% in 2016. International buyersANNUAL were SALES not active VOLUME in ($ St. MILLIONS) Louis from 2009 through 2015. 3 FPA Multifamily $62,800,000 3

$900 4 Trilogy Real Estate Group $59,500,000 1

$800 HISTORICAL SALES VOLUME 5 Monarch $31,650,000 1

$700 TOP FIVE ST. LOUIS AREA SELLERS - YTD 2017 RANK SELLER TOTAL VOLUME NO. TRANSACTIONS $600 ) 1 Kayne Anderson Real Estate Advisors $67,000,000 1 $500 2 Cullinan Properties $59,500,000 1 millions

(in $400 3 The Lipton Group $47,700,000 1 $300 4 Covington Realty Partners $39,600,000 1 $200 5 Urban Street/NA Properties $35,000,000 2 $100 Source: Real Capital Analytics $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD 2017 PRICING & CAP RATES Transaction Volume Historic Average Thus far in 2017, the average cap rate for Class A is 5.8%, which is down fromS theT. L averageOUIS PR capICI NrateG in 2016 of 6.0%. Class B and Class C average Source: Real Capital Analytics TRENDS cap ratesPRICE / UYTDNIT & C A2017P RATE are 6.6% and 7.5% respectively.

NOTABLE SALES $250,000

Class A – Whitney Capital Company purchased Pointe 400 (118 units), $200,000 built in 1971 and renovated in 2006, for $258,000 per unit. Timberland

Partners purchased Green Mount Lakes (240 units), built in 2004, for $150,000 $128,000 per unit.

$100,000 Class C – David Stern Management Corp. purchased Cypress Village (330 units), built in 1967, and Reserve at Winding Creek (272 units), $50,000 built in 1970, for $45,000 per unit. $0 2013 2014 2015 2016 YTD '17

Class A Class B Class C Source: Cushman & Wakefield Research

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SUBMARKET TRENDS RENSUBMARKETTS & VACANCY OVERVIEW SELECT SUBMARKET NEWS RENTS & VACANCY BY SUBMARKET Central West End Ballwin $994 Ballwin 4.4%

Central West End $1,166 Central West End 8.5% • The Koman Group is expected to complete its $31 million mixed-used project at 32 N. Euclid Ave. by the end of Chesterfield $1,029 Chesterfield 5.4% the year. The six-story building will include apartments, Downtown CBD $974 Downtown CBD 7.3% office space, and retail, anchored by the St. Louis area’s first Shake Shack. Downtown Clayton $2,170 Downtown Clayton 14.6% 21.2% • Mac Properties proposed $130 million, 36-story Jefferson County $759 Jefferson County 5.5% residential tower, One Hundred, is expected to begin Kirkwood South $814 Kirkwood South 5.3% construction this fall with completion in spring 2020. Maryland Heights / Maryland Heights / • Construction is underway on the new Boyle Street $968 6.8% Creve Coeur Creve Coeur Metro Station. The new station serving the Cortex Metro East $776 Metro East 5.5% district is expected to be completed in 2018, and is the North County $677 North County 9.0% first expansion for Metrolink in over a decade.

North St. Louis City $732 North St. Louis City 12.1% Clayton Olivette $1,221 Olivette 9.8%

Richmond Heights $1,046 Richmond Heights 6.0% • Indianapolis-based developer, Flaherty & Collins South St. Louis City Properties, is planning a $797 South St. Louis City 5.5% $70 milion luxury apartment high-rise at the corner of Forsyth and Brentwood St. Charles County $914 St. Charles County 4.7% Boulevard. The 24-story tower will include 264 units, a University City $656 University City 6.2% 373-space parking garage, as well as 7,800 square feet SUBMARKET TRENDS Under Construction of retail. Construction is expected to begin late 2017 or UNDER CONSTRUCTION BY SUBMARKET early 2018. 1,600

1,400 Downtown 1,365 1,200 • Cordish and the St. Louis Cardinals plan to break 1,000 ground by the end of the year on phase two of Ballpark 800 Village. The $220 million project will include a 29-story residential tower and 100,000 square feet of Class A 600 office space. 400 349 345 312 312 200 296 232 244 Midtown 181 77 60 0 • SSM Health will break ground this fall on the new SSM Health Saint Louis University Hospital. The $550 million project, expected to be completed by the fall of 2020, will include a nine-story patient tower and a three-story ambulatory care center.

Source: CoStar, Cushman & Wakefield Research Note: Submarkets are defined by Cushman & Wakefield Research

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Previous Page Home Next Page TOLEDO MARKET INSIGHT Third Quarter 2017 TOLEDO 1

TOLEDO, OH ECONOMIC EXPANSION The following are select announcements from the third quarter of 2017:

EMPLOYMENT & UNEMPLOYMENT TRENDS Construction has begun on a 700,000-square-foot The Toledo region experienced a net decline of 2,200 jobs year-over- a distribution center in Findlay for Campbell’s Soup / DHL year per the Bureau of Labor Statistics’ (BLS) total employment average Supply Chain, which will employ 220 people. for the third quarter of 2017. This is the second consecutive quarter of

declining net jobs, which was preceded by two consecutive quarters of net job increases. Even with an overall net job decline, Leisure & As part of an expansion of its food production plant in Hospitality (+3,300 net jobs) and Education/Health Services (+1,400 a Bowling Green, Apio is planning to create 150 full-time net jobs) industries saw net job growth increases in the third quarter. jobs.

TOLEDO JOB GROWTH TRENDS Steel industry supplier IronUnits LLC will build a new TOLEDOEMPLOYMENT JOB IN MILLIONS GROWTH TRENDS 0.32 3.0% a plant in a vacant former industrial site in East Toledo and create 130 full-time jobs. 0.32 2.5% 0.31 2.0% a At its growing manufacturing facility in Leipsic, Pro-Tec 0.31 1.5% Coating is planning to add 80 new full time jobs.

0.31 1.0% Alpont LLC will create 40 full-time jobs at its chemical 0.31 0.5% a manufacturing plant in Oregon.

0.31 0.0%

0.30 -0.5% MULTIFAMILY TRENDS 0.30 -1.0% Q4 Q1 Q2 Q3 Like many Midwest markets, effective rent per unit has been steadily 2015-2016 2016-2017 YOY % Job Growth growing in the Toledo market for years. Effective rent is now $665 per Source: Moody’s Analytics unit, which is a historical peak. Vacancy in the Toledo market has been increasing in recent quarters, but has ranged between 5.0% and 6.0% over the past three years. JOB GROWTH & UNEMPLOYMENT RATE -0.2 +122 +4.2 +90 % YOY BPS YOY % YOY BPS YOY Average Q3 employment Average Q3 unemployment Average effective rent Vacancy increased to an decreased by 2,200 jobs. increased to 6.2%. increased to $665. average of 6.1%.

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HISTORICAL & FORECASTED METRO RENT GROWTH RATES DEMOGRAPHIC FUNDAMENTALS

Toledo’s one-year historical rent growth (per third quarter 2017 year- The Toledo MSA is projected to increase by nearly 4,000 households over-year data) trailed the national average by more than 500 basis from 2016 to 2021, of which 1,300 are estimated to be renter households. points. However, the third quarter year-over-year decline was an oddity in the Toledo market, as other quarters saw rent growth. 2000: 618,206 2010: 610,005 POPULATION TOLEDO RENTTOLEDO GROW TRENTH RA GROWTHTES RATES 2016: 610,431 HISTORICAL AND FORECAST 2021: 616,555

6.0% H I S T O R I C A L RENTER 2000: 34.0% Quarterly vs. Annual F O R E C A S T OCCUPIED 2010: 35.0% 4.0% PERCENTAGE 2016: 35.8% 2021: 35.7% 2.3% 2.1% 1.7% 1.9% 1.9% 2.0% 2000: $39,908 1.2% MEDIAN N/A FAMILY 2010: $44,349 0.0% INCOME 2016: $45,594 Q4 '16 Q1 '17 Q2 '17 Q3 '17 1 Year 3 Year 5 Year 5 Year 2021: $55,130 (Avg Annual Change) Forecast -2.0% (Avg Annual Change)

MULTIFAMILY FORECAST -4.0% The following are Cushman & Wakefield’s projections for the near term. -4.7% -6.0%

Toledo United States

Source: AXIOMetrics PIPELINE % RENTS VACANCY GROWTH

DEVELOPMENT / INVENTORY Forecast is 12-month outlook

There are three notable properties that are currently under construction in the Greater Toledo area. Each of these properties is located in the NOTABLE SALES major suburban submarket of Perrysburg. Tracy Creek Apartments - Class C – Hidden Village Square (1977, 72 units). Hidden Village LLC Phase I (456 units) plus Tracy Creek Apartments - Phase II (120 units), purchased this asset from Jakz Properties LLC in July for $31,000 per along with Mosaic at Levis Commons (294 units). unit. The property is located north of Toledo, near the Ohio-Michigan border, and was 100% occupied at the time of sale.

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