3 Things About 4 Texas Markets

THREE BIG DRIVERS

3 THINGS 01

ABOUT 4 POPULATION GROWTH

TEXAS MARKETS AUSTIN: Growth added 55,269 new residents in 2017, bringing the metro area to nearly POPULATION 2.2 million people. D-FW: Ranks No. 1 in the nation for growth, GROWTH, JOB based on a population increase of 146,000 during 2017, bringing the total GROWTH, STRONG population to 7.2 million. HOUSTON: ECONOMIES A national leader for growth, based on a population increase of 94,417 new residents in 2017, bringing the population to 6.9 million. 150K Δ 146,000 SAN ANTONIO: Population now totals 2.5 million, due 100K Δ 94,417 to a population increase of 47,763 new residents in 2017. Δ 55,269 Δ 47,763 GROWTH

50K 02

JOB GROWTH SAN 12 MONTHS ENDING MARCH 2018 AUSTIN D-FW HOUSTON ANTONIO POP 2.2 M 7.2 M 6.9 M 2.5 M AUSTIN: Ranks in the nation’s top 10 job markets with 36,800 jobs added. Our 4 major-metro retail markets currently report D-FW: their highest retail occupancy rates in years. This Ranks number 2 in the nation for job is due in part to stellar population and job growth, growth based on an increase of 101,200 healthy economies and, importantly, near-record-low net new jobs added. HOUSTON: development even in the midst of a healthy retail Ranks 4th nationally with new job environment. growth of 62,500. Here are 3 key things to know about our 4 metro SAN ANTONIO: 27,273 jobs added; unemployment rate markets. of 3.5%. For the full report, visit weitzmangroup.com.

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RETAIL GROWTH 90% ALL FOUR RETAIL MARKETS ENJOY STRONG PERFORMANCE, INCLUDING SOME RECORD-HIGH OCCUPANCY 80% RATES.

THE MARKETS ALL REPORTED NEAR- 70% RECORD-LOW CONSTRUCTION IN 2017, WHICH BOOSTS OCCUPANCY BY DRIVING EXPANDING CONCEPTS 96.0% 92.5% 95.0% 94.0% TO EXISTING SPACE IN ESTABLISHED 60% AUSTIN DFW HOUSTON SAN SUBMARKETS. NEW SPACE FOR ANTONIO 2018 SHOULD BE SIMILARLY INVENTORY 48.8 M 197.9 M 158.1.0 M 45.8 M CONSERVATIVE. RETAIL OCCUPANCY FOR 4 TEXAS CITIES AUSTIN HOUSTON 48.8-million-SF retail inventory 158.1-million-SF retail inventory The Austin area currently reports Houston is at 95.0% retail occupancy, 96.0% occupancy, making it the thanks to a diverse economy that has strongest market in Texas in terms of performed well through a hurricane’s occupancy. aftermath and an energy slump. NEW SPACE Austin added only 640,000 square feet Construction in 2017 added 2.8 million LEADERS 2017-2018 in 2017, largely in grocery-anchored square feet, a decrease over 2016, with AUSTIN: Nordstrom Rack, and power-anchored retail. For 2018, we new space dominated by grocery- and Randalls, H-E-B, 365 by Whole expect to see an uptick in new space. power-anchored projects along a major Foods, Field & Stream, Dick’s new freeway expansion Sporting Goods, Costco D-FW: Neiman Marcus, AMC, DALLAS / FORT WORTH SAN ANTONIO IKEA, Walmart, WinCo Foods, REI, Barnes & Noble, Tom 197.9-million-SF retail inventory 45.8-million-SF retail inventory Thumb, Costco, Dick’s Sporting Goods, Kroger, Sprouts D-FW is at a three-decade high in San Antonio reports a healthy 94.0% terms of occupancy and is now at occupancy, a rate that should continue HOUSTON: H-E-B, Kroger, 92.5%, exceeding the previous high for the rest of 2018 and beyond. Target, Burlington, Hobby point of 92% in 1984. New construction added only 360,000 Lobby, Walmart, Dick’s Sporting D-FW only added 4.2 million square Goods, Lowe’s, Academy, Barnes square feet, largely for limited grocery- & Noble, Ross, 365 by Whole feet in 2017, with new space dominated anchored construction. The biggest Foods by grocery- and entertainment- construction news is set for 2019, anchored retail, as well as key mixed- when IKEA opens as the anchor for the SAN ANTONIO: H-E-B, Sprouts, use projects with significant retail 900,000-square-foot Live Oak Town La-Z-Boy, The Rustic, IKEA components. More of the same is on Center. IKEA broke ground in the first track for 2018. quarter of 2018.

WEITZMAN: 2018 1ST QUARTER 2 3 THINGS TO KNOW ABOUT 4 TEXAS MARKETS THREE BIG DRIVERS

3 THINGS 01 ABOUT 4 POPULATION GROWTH MARKETS (2010-2016) AUSTIN: Since 2000, the MSA’s population has POPULATION increased 64.9%, to 2.1 million. D-FW: Ranks No. 2 in the nation for resident GROWTH, JOB growth, based on a population increase of 39.4% to 7.2 million

GROWTH, STRONG HOUSTON: Ranks No. 1 in the nation for growth, based on a population increase of 45.5% to 6.8 ECONOMIES million.

SAN ANTONIO: Now totals 2.4 million, based on a AUSTIN, population increase of 42.4% D F W, HOUSTON & 02 SAN ANTONIO SHINE IN THE JOB GROWTH LONE STAR STATE AUSTIN: 34,000 jobs added in 2016 | Job growth of 3.5% Our 4 major-metro retail markets currently report D-FW: their highest retail occupancy rates in years. This 135,400 jobs added in 2016 | is due to in part to population and job growth, Job growth of 4.0% HOUSTON: healthy economies and, importantly, near-record- 9,500 jobs added in 2016 | low development even in the midst of a healthy Job growth of 0.3% retail environment. SAN ANTONIO: Here are 3 key things to know about our 4 metro 25,600 jobs added in 2016 | markets. Job growth of 2.6% For the full report, visit weitzmangroup.com.

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RETAIL GROWTH 90% ALL FOUR RETAIL MARKETS ENJOY STRONG PERFORMANCE, INCLUDING SOME RECORD-HIGH 80% OCCUPANCY RATES. THE MARKETS ALL REPORTED NEAR- RECORD-LOW CONSTRUCTION IN 70% 2016, WHICH BOOSTS OCCUPANCY BY DRIVING EXPANDING CONCEPTS TO EXISTING SPACE IN ESTABLISHED 60% 96.0% 92.6% 95.6% 94.0% SUBMARKETS. NEW SPACE FOR 2017 AUSTIN DFW HOUSTON SAN WILL BE ON PAR WITH OR SLIGHTLY ANTONIO INVENTORY 48.3 M 193.0 M 153.3.0 M 45.1 M BELOW THE 2016 LEVEL, WITH GROCERY STORES STILL THE MOST DOMINANT ANCHOR TYPE. RETAIL OCCUPANCY FOR 4 TEXAS CITIES

AUSTIN HOUSTON

Houston is at 95.6 % occupied, even in the The Austin area currently reports 96.2 % face of an energy-industry slump, thanks occupancy, making it the strongest market in part to a diverse economy that has in Texas in terms of occupancy. remained a job and housing generator. NEW SPACE Austin added only 1.1 million square feet Construction in 2016 added 3.4 million LEADERS 2016-2017 in 2016, mostly for grocer-anchored and square feet to a market with more than power-anchored retail. A Nordstrom- 115 million square feet. Houston saw AUSTIN: Nordstrom, Randalls, anchored mixed-use project accounted for numerous grocery, power-anchored and H-E-B, 365 by Whole Foods, around 60 % of all new space mixed-use projects, as well as two major Field & Stream, Dick’s Sporting mall expansions. Construction is steady but Goods, Walmart Neighborhood slowing for 2017. Market DALLAS / FORT WORTH D-FW: Kroger, Belk, Walmart, D-FW has happily broken its 34-year-old SAN ANTONIO WinCo, Whole Foods, REI, record for high occupancy and is now at Barnes & Noble, Neiman Marcus, 92.6 %, exceeding the previous high point San Antonio reports a healthy 94 % Tom Thumb, Costco of 92 % in 1984. occupancy, a rate that should continue for D-FW only added 2 million square feet in the rest of 2017 and beyond. HOUSTON: Kroger, Target, 2016, a rounding error for a market with New construction added only 1.2 million Walmart, Dick’s Sporting Goods, 193 million square feet. Much of the new square feet, largely for Walmart stores, Field & Stream, H-E-B, Costco, space was for grocery-anchored retail, led H-E-B and a handful of power anchors. Academy, Barnes & Noble, Field by concepts like Kroger, and some mixed- The biggest construction news is set for & Stream use projects; more of the same is on track 2019, when IKEA opens as the anchor for for 2017, which should see a slight uptick in the 900,000-square-foot Live Oak Town SAN ANTONIO: Walmart, new space completions. Center regional-draw project. H-E-B, Natural Grocers, Macy’s Backstage, Academy

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Texas’ major-metro retail markets – Austin, Dallas-Fort Worth, Houston and San Antonio – all share one thing in common: strong job and population growth that is driving some of the best-performing4 retail markets in the nation. THREE BIG DRIVERS 1 RESIDENTIAL GROWTH 3 RETAIL GROWTH

Our Texas markets are national leaders in All key Texas retail markets report strong combined single- and multi-family residential performance. Austin and Houston are the tightest growth. Nationally, D-FW is No. 2, with 57,146 markets in Texas, with Austin at 96.0% occupied residential permits in 2015; Houston is No. 3, and Houston at 95.0%. Austin’s rate is based with 56,901; Austin is No. 10, with 22,370; and on an inventory of 47.2 million square feet. San Antonio completes the list with 13,970 new Houston’s inventory, of course, is much larger, residential units. with 152.0 million square feet. San Antonio and Dallas-Fort Worth are nearly as strong with, 2 POPULATION GROWTH respectively, 93.5% and 91.6%. D-FW’s retail market inventory totals 193.0 million square feet, Four markets, 400,000 people. That is the total and San Antonio’s is approximately 41.7 million population growth our four major Texas metros square feet. reported last year. In fact, according to the The combination of population growth and residential Census Bureau, if these four metros formed a growth, combined with metro area job markets that state, they would rank second only to Texas rank among the strongest in the nation, continues to among U.S. states! attract retailers to our markets. Retail concepts like what they see. Austin now ranks as the fastest-growing large city in the country, with annual population growth of 2.9% and a population that has surpassed 2 million for the first time. Houston reports 2.5% population growth, and Dallas/ Fort Worth is not far behind, with 2.1% population growth. San Antonio’s metropolitan area reported an equally strong 2.2% population growth, according to a U.S. Census Bureau report on 2015 gains. 2.9% 2.1% 2.5% 2.2% RETAIL CONSTRUCTION REMAINS AUSTIN D/FW HOUSTON SAN ANTONIO IN LINE WITH DEMAND Population Growth of 4 Texas Cities 400,000 New Residents

Our major metros are seeing construction remain also expanding marketwide. Other active concepts constrained by historical standards. New space include Sprouts, Whole Foods, Walmart, Costco comes online largely occupied, and speculative space and Target, among others. Houston also is seeing a is extremely limited. As a result, expanding retailers number of mixed-use projects, largely specialty retail like H&M and WinCo Foods have been leasing at built in conjunction with apartments. Despite the oil existing centers, removing some of the last remaining downturn, the retail market remains healthy due to well-located blocks of vacancy from our markets. Houston’s diverse economy, which is maintaining job AUSTIN and population growth. Austin is seeing the most limited retail space, with SAN ANTONIO only 900,000 square feet in 2015 and a little over 1 San Antonio continues to see limited construc- million square feet coming online in 2016, largely for tion, which helps the market maintain strong grocery-anchored retail, as well as an open-air mall occupancy numbers. Only 883,000 square feet of expansion with a Nordstrom. new space came online in 2015, led by Walmart and a 260,000-square-foot expansion of the massive DALLAS-FORT WORTH center The Rim, with junior anchors and restaurants. In Dallas-Fort Worth, new space for 2015 topped 2.7 Walmart and H-E-B will dominate construction in million square feet, a blip on a 193-million-square-foot 2016, although a handful of junior anchors like inventory, with much of the new space for grocers Rooms to Go also will add new space. including Kroger. For 2016, new space will approach or equal the 2015 total, largely in grocery-anchored retail, as well as some mixed-use and power retail. NEW CONCEPTS Much more square footage is in the works in com- munity and mixed-use projects such as Legacy West in Plano and The Colony’s Grandscape, but it will be Texas will see its first 365 by Whole Foods stores, phased in as demand dictates. in the Austin and Houston metros. Massive 300,000-square-foot sporting goods store Scheel’s HOUSTON will open its first Texas location in D-FW next year, Houston is the most active grocery market, with and Colorado-based Natural Grocers is under way Kroger widely expanding its 123,000-square-foot with its first San Antonio store. Marketplace concept, followed by H-E-B, which is