retail 2015 real estate market review

Author David Machupa Cushman & Wakefield | THALHIMER

Survey Collection Luisa Lucero E.V. Williams Center for Real Estate and Economic Development Old Dominion University

Data Analysis/ David Chapman, Ph.D. Layout Old Dominion University

Financial The E. V. Williams Center for Real Estate and Economic Support Development (CREED) functions and reports are funded by donations from the CREED membership, organizations, and individuals.

Disclosure The data used for this report are deemed reliable; however, neither Old Dominion University, the E. V. Williams Center for Real Estate and Economic Development, nor sponsoring companies and/or individuals make any representation or warranty as to its accuracy. 2015 retail

13 2015 retail d e f i n i t i o ns o f t e rms

Asking Rates: The market rate per square foot of a retail property (excluding freestanding buildings and malls), exclusive of additional rents that may be paid under a triple net lease. Interpretation of average retail rates in General Overview different product types and submarkets should be viewed cautiously given the tremendous variability in rates for like products and for properties located within the same submarket. Factors such as visibility, co-tenancy, and accessibility, are some of the many sources of variation in market rates which should be considered. his report analyzes the 2014 retail real estate conditions Big Boxes: Contiguous retail space that is at least 23,000 square feet and located in any one of the identified within the Virginia Beach-Norfolk- product types. Retailers occupying big boxes include, but are not limited to, the following: category killers, specialty Newport News, Virginia Metropol- stores, discounters, furniture stores, grocery stores and theaters. Bowling alleys, automotive uses, roller rinks and itan Statistical Area (MSA) which is ice-skating rinks were not included. commonly referred to as HamptonT Roads. The report examines supply, CAM: Common Area Maintenance. vacancy, construction, absorption, and rent data to provide a comparison of data for the Product Types: Properties were classified according to one of the following nine retail product types. The specific submarkets and product types located within the Southside and Peninsula regions of the Hampton International Council of Shopping Centers defined the first six categories. Three additional categories were included Roads MSA. Southside properties surveyed for the purpose of this report included those located in the cities of to accurately categorize the remaining properties. Chesapeake, Norfolk, Portsmouth, Smithfield, Suffolk and Virginia Beach. Peninsula properties surveyed are located in the cities of Gloucester, Hampton, Newport News, Poquoson, Williamsburg, and York County. Neighborhood Center 30,000 to 150,000 square feet; supermarket anchored This survey is recognized as the most comprehensive analysis of retail real estate trends in the Hampton Community Center 100,000 to 350,000 square feet; discount department store, Roads MSA. The report includes information on all retail property types including regional malls, supermarket or drug store anchored freestanding buildings and strip centers of various classifications. The scope of the report also includes Fashion/Specialty Center 80,000 to 250,000 square feet; fashion anchored a summary of new retail construction activity, an analysis of absorption, and a review of selected retail Power Center 250,000 to 600,000 square feet; category killer, home improvement investment sales that have occurred in the region in 2014. and discount department store anchored Theme Festival Center 80,000 to 250,000 square feet; restaurants, entertainment anchored METHODOLOGY Outlet Center 50,000 to 400,000 square feet; manufacturer’s outlet store anchored This survey gathered information about strip shopping centers and regional malls located in the Hampton Roads Freestanding Individual building not considered a shopping center MSA that were generally 30,000 square feet in size or larger. Additionally, information on retail-oriented freestanding Mall Shopping center with area designed for pedestrian use only buildings at least 23,000 square feet and freestanding buildings that contained furniture stores, discounters, Other Any center that does not fit into a typical category grocery stores or category killer retailers that met the established size criteria were included in the survey.

Automotive uses and buildings containing “downtown storefronts” were not included. Although available retail Regional Mall Node: Submarket anchored by regional mall. space in many submarkets (e.g. Ghent) is best described as a collection of small specialty shops, storefronts or Small Shop: In-line retail space usually less than 10,000 square feet located in a multi-tenanted shopping center. freestanding buildings, practical limitations dictated that the focus of the survey be on larger product types. Submarkets: Hampton Roads is divided into 35 retail submarkets (25 Southside submarkets and 10 Peninsula The survey data were collected between November 2014 and January 2015. Questionnaires were mailed to owners, submarkets) which reflected general concentrations, pockets or corridors of retail product type. Geographical

leasing agents and property managers responsible for retail properties meeting the selection criteria. Direct contact boundaries of the retail submarkets were influenced by density of existing retail product, physical or geographical 2015 retail was utilized as a follow-up to the mailing to encourage participation. Information on square footage for freestanding obstacles, existing transportation networks, municipal boundaries, population concentrations and retailers’ per- buildings was obtained from building owners, tax records, store managers and retail real estate representatives. ceptions of the MSA. Final determination of specific boundaries of each submarket was made by a subcommittee Sales information was obtained from property owners, real estate agents, appraisers and real estate assessors. of retail real estate professionals who are actively involved in the MSA. Also highlighted were specific submarkets that are anchored by regional malls. A map which identifies the general location of each submarket is included in the centerfold of this report.

Triple Net Lease: Type of lease under which a tenant pays its pro-rata share of real estate taxes, insurance and common area maintenance.

14 2015 Hampton Roads Real Estate Market Review 15 2015 retail

YEAR IN REVIEW 2014 HAMPTON ROADS MARKET SURVEY

Overall 2014 was an active year in the retail market for Hampton Roads. We saw activity from existing grocery The Hampton Roads retail market contained stores, entry into the market by new tenants, expansion and relocations of existing tenants as well as multiple new approximately 53,190,105 square feet of gross developments. On a national level, the retail market rebounded as it did here in Hampton Roads. The financing market leasable area (“GLA”) in 425 properties with an is active and stable with lenders seeking opportunities. We are seeing capitalization rates decreasing therefore average asking rental rate of $16.34 with triple net increasing overall sales price but we are not seeing a great deal of Investment Sales or opportunities in Hampton charges (Common Area Maintenance, Real Estate Roads. There are many investors interested in the Hampton Roads area. Taxes and Insurance) running $2.85 per square foot. The US Census Bureau indicates the popula- Grocery Stores led the way in 2013 did so again in 2014. Kroger and Wal-Mart Neighborhood Market were tion of Hampton Roads is approximately 1.7 Million very active. Wal-Mart opened in the Pembroke area of Virginia Beach with a Super Center as well as multiple resulting in a 31.29 square feet of retail supply per Wal-Mart Neighborhood Market concepts throughout Hampton Roads. Harris Teeter opened in the Red Mill area of person. Certain methodological differences (e.g., Virginia Beach and Wards Corner area of Norfolk. Kroger opened its 124,000 square foot Marketplace concept in the inclusion of freestanding buildings and malls in Portsmouth and Northern Suffolk. Whole Foods is under construction at the Tech Center of Oyster Point in this survey) make it difficult to compare per capita Newport News and The Fresh Market opened in the Ghent section of Norfolk. CVS and 7-Eleven both continued supply in the MSA to a national average statistic. aggressive expansion within the market. Simon Properties has Lake Wright under contract and is working to bring an outlet mall to the Norfolk site. MarketSquare, formerly Lynnhaven Shopping Center, a mostly vacant property along Hampton Roads consists of two markets, the Southside and Peninsula. The Southside market has approximately Virginia Beach Blvd has been redeveloped and opened with the first Hobby Lobby in the market as well as a 35,585,486 square feet, roughly 66% of the total square footage in the market, in 289 properties. The average Wal-Mart Neighborhood Market and One Life Fitness. Virginia Beach Town Center, long a successful restaurant asking rent for small shop space increased $.36 over 2013 numbers to $16.92 triple net. The increase in rental location, really hit its stride in 2014 with the addition of Lululemon, Anthropology, and Free People. Additional rates can be attributed to consistent demand as vacancy rates decreased further to 6.30% in 2014. While 202,940 national retailers including West Elm will open this spring. square feet of new construction came on line in 2014, we have significant amounts of new construction in the pipeline for 2015. There is concern for certain retailers as they continue to struggle on a national level. Kmart and Sears are closing stores on both a local and national level. Kmart closed the and Tidewater Drive locations in The Peninsula also experienced some mixed change this past year. The 136 properties on the Peninsula that 2013; Chesapeake Square remains vacant but the Tidewater Drive location was demolished and the site was were surveyed combined for 17,604,619 square feet of product. The average asking price of small shop space leased to Sam’s Club, which will open in 2015. JCPenney closed the Military Highway location, which was increased from 2013’s $14.61 to $15.00 per square foot with $2.97 in triple net charges for 2014. The vacancy purchased by the City of Norfolk, as well as a Williamsburg location that is just now hitting the market. Sears rate for the greater Peninsula was 11.85%; however, activity and interest in the Peninsula Market is strong. closed the Chesapeake Square location just after the start of 2015 and a variety of smaller shop national retailers filed Chapter 11 after poor holiday sales, including Radio Shack, Wet Seal, Cache, and Deb Shops. The retail In 2014, the Hampton Roads Market did see a slight decrease in the vacancy rate as 2013’s overall 8.37% landscape is constantly changing and those tenants that do not change with it will be closing their doors. vacancy rate gave way to 2014’s 8.14%. This decrease is due to greater overall activity in the market. Landlords and tenants continue to get creative in the deal making process and retailers are repositioning themselves within Despite the above, the Hampton Roads market is active with new tenants looking for locations and developers the market creating new developments, as well as second generation opportunities, local tenants are not as keeping busy with a variety of projects coming on line. We do expect the vacancy rate to increase because of the abundant as in years past. We have seen more regional franchise tenants replacing the units once sought by amount of big box space that will come to the market, but we also expect rental rates to increase as quality retail the local “mom and pop”. Additionally we are seeing a trend of medical users occupying retail space rather than product is limited at this time. traditional medical office buildings. Landlords are approaching these second generation spaces with both traditional and non-traditional retailers to back fill the space. While the market was not saturated with retail product 2015 retail due to mass store closings we will keep a close eye on Sears / Kmart as they represent large blocks of space that may enter the market providing an opportunity for redevelopment or re-use.

We move forward acknowledging that 2015 is off to a strong start. We will see the size of the overall market continue to increase due to grocery store expansion as multiple new centers are currently under construction and will be opening this year. It should be noted some of the larger vacant spaces’ highest and best use may no longer be retail. These spaces will continue to negatively impact the overall Hampton Roads numbers until such time as they are redeveloped.

16 2015 Hampton Roads Real Estate Market Review 17 2015 retail

Market Overview Table New SOUTHSIDE SUBMARKETS Number of Construction in Occupied Absorption Properties GLA in SF Vacant SF % Vacant SF in SF in SF

2015 Southside 289 35,585,486 2,241,348 6.30% 202,940 33,344,138 626,599 There were 26 retail submarkets on the Southside this year, with an average submarket size of 1,433,411 square Peninsula 136 17,604,619 2,086,112 11.85% 27,158 15,518,507 (1,025,114) feet. The Hilltop submarket had a strong 2014 with vacancy decreasing from 2.76% in 2013 to 1.88%, and Total 425 53,190,105 4,327,460 8.14% 230,098 48,862,645 (398,515) average small shop rents increasing from $21.83 to $23.10 per square foot, which is the highest asking rent of all 2014 Southside 288 35,835,277 2,416,346 6.74% 89,200 33,418,931 701,392 Peninsula 134 18,387,321 2,123,718 11.55% 21,411 16,263,603 (280,018) Southside suburban submarkets. Total 422 54,222,598 4,540,064 8.37% 110,611 49,682,534 421,374 2013 Southside 286 34,924,153 2,206,614 6.32% 57,442 32,717,539 1,896,773 The range of vacancy rates in the Southside submarkets can be seen in the table below. Peninsula 138 18,532,649 1,989,028 10.73% 6,576 16,543,621 775,368 Total 424 53,456,802 4,195,642 7.85% 64,018 49,261,160 2,672,141 2012 Southside 279 34,150,108 2,534,765 7.42% 103,380 31,615,343 794,577 SOUTHSIDE BY SUBMarket Average Peninsula 138 18,494,461 1,944,109 10.51% 999,389 16,550,352 782,099 Number of Small Shop Total 417 52,644,569 4,478,874 8.51% 1,102,769 48,165,695 1,576,676 Properties GLA in SF Vacant SF % Vacant Rate PSF 2011 Southside 274 34,019,555 2,523,754 7.42% 18,880 31,495,801 675,035 BAY FRONT 6 298,098 24,422 8.19% $17.50 Peninsula 138 18,548,407 2,175,793 11.73% - 16,372,614 604,361 Total 412 52,567,962 4,699,547 8.94% 18,880 47,868,415 1,279,396 BIRDNECK/OCEANFRONT 6 225,350 - 0.00% $16.63 2010 Southside 273 33,535,280 2,714,514 8.09% 302,352 30,820,766 (288,440) CAMPOSTELLA 6 332,921 85,015 25.54% $12.39 Peninsula 136 18,160,963 2,392,710 13.18% 981,463 15,768,253 362,777 CHESAPEAKE SQUARE 12 2,294,809 83,206 3.63% $17.33 Total 409 51,696,243 5,107,224 9.88% 1,283,815 46,589,019 74,337 CHURCHLAND PORTSMOUTH/HARBORVIEW 16 1,747,401 97,178 5.56% $17.67 2009 Southside 265 33,265,028 2,155,822 6.48% 275,252 31,109,206 238,525 Peninsula 133 17,112,012 1,706,536 9.97% - 15,405,476 (109,898) DAM NECK 9 1,650,256 36,485 2.21% $20.00 Total 398 50,377,040 3,862,358 7.67% 275,252 46,514,682 128,627 DOWNTOWN NORFOLK 7 2,488,083 55,972 2.25% $17.70 2008 Southside 263 33,086,160 2,215,479 6.70% 1,038,291 30,870,681 339,596 GHENT 9 395,638 22,847 5.77% $17.70 Peninsula 133 17,133,079 1,617,705 9.44% 1,009,000 15,515,374 100,485 GREAT BRIDGE 17 1,361,881 75,968 5.58% $15.88 Total 396 50,219,239 3,833,184 7.63% 2,047,291 46,386,055 440,081 2007 Southside 259 32,407,761 1,876,676 5.79% 1,552,392 30,531,085 1,741,962 GREENBRIER/BATTLEFIELD BOULEVARD 26 4,106,164 234,376 5.71% $20.00 Peninsula 131 16,895,155 1,480,266 8.76% 1,042,451 15,414,889 576,788 HILLTOP/GREAT NECK 12 1,542,910 28,948 1.88% $23.10 Total 390 49,302,916 3,356,942 6.81% 2,594,843 45,945,974 2,318,750 HOLLAND/GREEN RUN 10 875,874 83,587 9.54% $15.06 2006 Southside 246 30,852,210 2,063,087 6.69% 593,520 28,789,123 1,280,869 INDIAN RIVER/COLLEGE PARK 3 433,643 87,275 20.13% $12.00 Peninsula 129 16,337,458 1,499,357 9.18% 618,179 14,838,101 687,097 Total 375 47,189,668 3,562,444 7.55% 1,211,699 43,627,224 1,967,966 KEMPSVILLE 12 1,288,913 125,796 9.76% $15.71 2005 Southside 243 30,184,395 2,676,141 8.87% 271,610 27,508,254 341,736 LITTLE CREEK ROAD/WARDS CORNER/OCEAN VIEW 17 1,743,804 199,157 11.42% $15.85 Peninsula 125 15,799,778 1,648,774 10.44% 185,000 14,151,004 496,338 LITTLE NECK 13 1,507,069 15,995 1.06% $16.95 Total 368 45,984,173 4,324,915 9.41% 456,610 41,659,258 838,074 LYNNHAVEN 8 1,822,511 204,739 11.23% $18.20 2004 Southside 243 30,336,266 3,169,748 10.45% 419,458 27,166,518 419,138 Peninsula 127 16,094,161 2,027,477 12.60% 330,000 14,066,684 412,018 MIDDLE PORTSMOUTH 16 1,911,116 192,258 10.06% $12.82 Total 370 46,430,427 5,197,225 11.19% 749,458 41,233,202 831,156 MILITARY HIGHWAY/JANAF 18 3,432,456 146,889 4.28% $14.00 2003 Southside 245 30,180,691 3,433,311 11.38% 574,400 26,747,380 535,167 NEWTOWN 10 522,596 71,814 13.74% $13.44 Peninsula 126 15,546,085 1,891,419 12.17% 676,000 13,654,666 932,008

ODU 1 49,872 2,317 4.65% $21.00 2015 retail Total 371 45,726,776 5,324,730 11.64% 1,250,400 40,402,046 1,467,175 2002 Southside 239 29,760,443 3,548,230 11.92% 828,800 26,212,213 1,185,818 PEMBROKE 22 2,695,414 194,625 7.22% $18.63 Peninsula 123 14,906,530 2,183,872 14.65% 202,750 12,722,658 242,563 PORTSMOUTH 1 45,800 2,700 5.90% $12.00 Total 362 44,666,973 5,732,102 12.83% 1,031,550 38,934,871 1,428,381 PRINCESS ANNE ROAD 13 1,379,193 66,857 4.85% $17.88 2001 Southside 230 29,436,515 3,760,087 12.77% 918,100 25,676,428 (158,181) SMITHFIELD 5 279,756 12,656 4.52% $16.60 Peninsula 121 14,477,970 1,997,875 13.80% 212,229 12,480,095 147,115 Total 351 43,914,485 5,757,962 13.11% 1,130,329 38,156,523 (11,066) SUFFOLK 14 1,153,958 90,266 7.82% $17.83 2000 Southside 220 28,816,383 2,933,294 10.18% 2,064,727 25,883,089 1,344,209 Total 289 35,585,486 2,241,348 6.30% $16.92 Peninsula 118 15,249,617 2,012,637 13.20% 758,370 13,236,980 292,785 Total 338 44,066,000 4,945,931 11.22% 2,823,097 39,120,069 1,636,994

18 2015 Hampton Roads Real Estate Market Review 19 2015 retail Total Retail Product By Type New Average Number of Construction Small Shop Average Properties GLA in SF in SF Vacant SF % Vacant Rate PSF CAM PSF PENINSULA SUBMARKETS Neighborhood Center 173 12,305,888 6,750 1,481,710 12.04% $15.16 $2.85 Community Center 53 9,077,956 189,537 858,252 9.45% $16.18 $2.53 There were 10 retail submarkets on Peninsula ranging in size from 108,521square feet to the largest, 4,863,911 Fashion/Specialty Center 14 2,001,530 5,735 223,718 11.18% $22.81 $3.86 square feet with an average size of 1,671,574 square feet. The two largest Peninsula submarkets are now Patrick Power Center 31 10,925,745 - 857,170 7.85% $19.77 $3.44 Henry and Williamsburg. The Patrick Henry submarket is anchored by a regional mall, and has the lowest vacancy Theme Festival Center 3 316,217 - 14,492 4.58% $19.00 $4.03 rate on the Peninsula. Outlet Center 2 409,819 - 2,300 0.56% $15.00 $2.00 Other 58 2,038,405 6,665 185,166 9.08% $16.92 $3.03 The Patrick Henry submarket continues to be one of the most highly desired submarkets in Hampton Roads having Freestanding 81 8,470,293 21,411 358,700 4.23% $14.86 $3.39 4,251,252 square feet and a vacancy rate of just 3.43%. Mall 10 7,644,252 - 345,952 4.53% $20.50 No data Total 425 53,190,105 230,098 4,327,460 8.14% $16.34 $2.85

PENINSULA BY SUBMARKET Average Southside By Type Number of Small Shop properties GLA in SF Vacant SF % Vacant Rate PSF New Average Number of Construction Small Shop Average COLISEUM CENTRAL 15 2,876,066 377,810 13.14% $17.27 Properties GLA in SF in SF Vacant SF % Vacant Rate PSF CAM PSF DENBIGH 14 1,702,852 416,148 24.44% $10.84 Neighborhood Center 123 8,851,851 6,750 978,402 11.05% $15.73 $2.86 FOXHILL/BUCKROE/EAST MERCURY 7 631,256 110,419 17.49% $12.40 Community Center 35 5,812,428 183,790 381,416 6.56% $17.31 $2.58 GLOUCESTER 8 894,676 68,664 7.67% $14.38 Fashion/Specialty Center 9 1,014,613 5,735 34,675 3.42% $24.78 $3.86 HAMPTON MISCELLANEOUS 1 64,327 10,910 16.96% $10.00 Power Center 20 6,353,515 - 347,715 5.47% $19.24 $3.44 NEWMARKET/MAIN (TO INCLUDE HAMPTON) 13 1,343,862 271,217 20.18% $9.50 Theme Festival Center 3 316,217 - 14,492 4.58% $19.00 $4.03 NEWPORT NEWS 1 21,240 - 0.00% $18.00 Outlet Center 1 59,892 - 2,300 3.84% $15.00 $2.00 PATRICK HENRY/OYSTER POINT/KILN CREEK 31 4,251,252 145,870 3.43% $16.13 Other 42 1,445,216 6,665 113,677 7.87% $17.14 $3.05 POQUOSON 2 108,521 6,450 5.94% $15.00 Freestanding 48 4,982,109 - 35,607 0.71% $17.29 $3.39 WILLIAMSBURG 31 4,863,991 602,586 12.39% $19.16 Mall 8 6,749,645 - 333,064 4.93% $20.50 No data Total 289 35,585,486 202,940 2,241,348 6.30% $16.96 $2.97 YORK COUNTY 13 846,576 76,038 8.98% $14.71 Grand Total 136 17,604,619 2,086,112 11.85% $15.07 Peninsula By Type New Average Number of Construction Small Shop Average RETAIL PRODUCT TYPE Properties GLA in SF in SF Vacant SF % Vacant Rate PSF CAM PSF While the Neighborhood Center remains the predominant product type with 173 properties with more than 12 Neighborhood Center 50 3,454,037 - 503,308 14.57% $13.75 $2.39 million square feet of GLA. The Community Centers comprised the most growth due to the expansion of the Community Center 18 3,265,528 5,747 476,836 14.60% $14.58 $2.45 crockery chains. We do anticipate new Neighborhood Centers in 2015 and expect they will contain less small Fashion/Specialty Center 5 986,917 - 189,043 19.15% $18.38 $4.23 2015 retail shop space than traditionally developed as smaller grocery stores begin their expansion within the Hampton Roads Power Center 11 4,572,230 - 509,455 11.14% $20.68 $3.05 Market. Theme Festival Center - - - - No data No data No data Outlet Center 1 349,927 - - No data No data No data Other 16 593,189 - 71,489 12.05% $16.38 $2.70 Freestanding 33 3,488,184 21,411 323,093 9.26% $10.00 $2.50 Mall 2 894,607 - 12,888 1.44% No data No data Total 136 17,604,619 27,158 2,086,112 11.85% $15.00 $2.60

20 2015 Hampton Roads Real Estate Market Review 21 2015 retail

BIG BOX VACANCY

Big box vacancy decreased in 2014 by 212,604 square feet, but is expected to increase in 2015. Tenants rightsizing their units will bring mid box spaces to the market, as they modify their footprints to stay current to what the consumers dictate as well as mergers between like users. The boxes that we believe will bring the most product to market are Kmart, Sears, and JCPenney. Already this year, JCPenney’s closed at the Marque in Williamsburg as did Sears at Chesapeake Square. The 1,782,337 square feet of vacant space represents 41% of the total retail vacancy in the market. It is important to note some of the vacant boxes are now functionally or practically obsolete for today’s retailer. They will remain on the report as retail product until they are demolished, converted to a non-retail use or redeveloped.

Big Box Vacancy

4,000,000 Southside 3,500,000 Peninsula TOTAL 3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

Vacant Square Feet Square Vacant 500,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Retail Submarkets Southside Peninsula Big Box Vacancy 1 Bayfront 11 Hilltop/Great Neck 21 ODU 26 Coliseum Central Southside 2 Birdneck/Oceanfront 12 Holland/Green Run 22 Pembroke 27 Denbigh 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 Campostella 13 Indian River/College Park 23 Princess Anne 28 Foxhill/Buckroe 2,207,416 2,220,935 1,906,391 1,513,523 1,142,319 957,887 948,288 907,688 1,102,093 880,568 855,979 821,993 929,713 862,848 2015 retail 4 Chesapeake Square 14 Kempsville 24 Smithfield 29 Gloucester

Peninsula 5 Churchland/Harbourview 15 Little Creek Road/ 25 Suffolk 30 Hampton Miscellaneous 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 6 Dam Neck Wards Corner 31 Patrick Henry 1,435,489 1,407,021 1,556,029 1,141,207 982,263 819,163 827,360 880,805 989,305 837,025 794,484 767,637 895,489 919,489 7 Downtown Norfolk 16 Little Neck 32 Poquoson 8 Ghent 17 Lynnhaven 33 Newmarket/Main TOTAL 9 Great Bridge 18 Middle Portsmouth 34 Williamsburg 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 10 Greenbrier/Battlefield 19 Military Highway/Janaf 35 York County 3,642,905 3,627,956 3,462,420 2,654,730 2,124,582 1,777,050 1,775,648 1,788,493 2,091,398 1,717,593 1,650,463 1,589,630 1,825,202 1,782,337 Boulevard 20 Newtown

22 2015 Hampton Roads Real Estate Market Review 23 The following is a list of the Planet Fitness Plaza A 52,966 Edinburgh East A 210,000 KEMPSVILLE Alexander’s Corner Shopping Center A 50,826 Loehmann’s Plaza E 139,380 properties included in this year’s survey Poplar Hill Plaza B 102,326 Gainsborough Square A 88,862 Arrowhead Plaza A 97,006 Elmhurst Square A 66,250 Northern Super Center G 36,588 listed by submarket with a code Sterling Creek A 75,660 I 899,665 Fairfield SC B 239,763 Gilmerton Square A 28,080 Pembroke East B 24,806 representing the type of property Town Point Square A 58,989 Greenbrier Market Center D 487,580 Kemps Corner Shoppes G 25,929 Manor Commerce Center G 67,060 I 570,000 The GLA of the property is also listed H 500,000 Greenbrier Shops A 37,500 Kemps River Center A 62,507 Manor Shops G 14,573 Pembroke Meadows SC A 81,592 Greenbrier South SC A 97,500 Kemps River Crossing B 249,358 Old Towne Marketplace A 42,000 Pembroke Place B 165,000 A Neighborhood Center F Outlet Center DAM NECK Home Depot H 130,060 Kempsville Crossing A 94,477 Rodman SC A 45,000 Pembroke Plaza A 34,900 B Community Center G Other C Fashion/Specialty Center H Freestanding 2236 General Booth Blvd. A 11,500 Kmart/OfficeMax H 165,000 Kempsville Plaza A 60,778 Super Wal-Mart H 200,000 Roomstore H 50,000 D Power Center I Mall Dam Neck Crossing B 138,571 Knell’s Ridge Square G 40,000 Parkway Marketplace A 64,677 Triangle SC A 84,437 The Town Center E Theme Festival Dam Neck Square A 67,917 Lowes H 114,000 Providence Square SC A 144,904 Victory Crossing D 500,000 of Virginia Beach C 341,323 General Booth Plaza A 71,639 Orchard Square A 88,728 University Shoppes A 47,200 Victory West Shopping Center A 167,102 Town Center Station G 40,440 southside Home Depot H 130,000 Parkview @ Greenbrier A 83,711 Witchduck Exchange A 50,000 Williams Court B 214,739 Red Mill Commons D 750,000 Plantation Woods A 16,800 Woods Corner A 152,314 PORTSMOUTH BAY FRONT Red Mill Walk B 240,000 Regal Cinemas H 60,763 MILITARY HIGHWAY/JANAF Academy Crossing A 45,800 Cape Henry Plaza A 58,424 Sandbridge SC A 66,800 The Shoppes at Greenbrier G 40,000 LITTLE CREEK ROAD/ 3455 Azalea Garden Road A 1,024 Chic’s Beach Shopping Center A 79,397 Strawbridge Marketplace A 173,829 Thn G 80,160 WARDS CORNER/OCEAN VIEW Best Square B 140,030 PRINCESS ANNE ROAD Kroger H 47,000 Towne Place at Greenbrier E 76,837 Ames/Kroger B 140,568 Broad Creek Crossing Phase 1 and Phase 2 D 100,000 Brenneman Farm SC A 135,823 Kroger Shops A 13,540 DOWNTOWN NORFOLK Village Square G 15,000 Dollar Tree Shopping Center A 51,415 Broad Creek SC D 205,417 Buckner Retail Shops G 12,814 Lake Shores Plaza Shopping Center A 58,230 Berkley Center A 47,945 Volvo Parkway SC G 41,874 East Beach Marketplace B 180,223 Bromley SC A 67,790 Courthouse Marketplace A 103,263 Marina Shores G 41,507 Church Street Crossing A 51,000 Wal-Mart/Sam’s Club/Kohl’s D 433,821 East Beach Shoppes A 63,000 CostCo H 110,000 Kempsville Marketplace A 71,460 MacArthur Center Mall I 2,200,000 Farm Fresh - Little Creek H 66,120 Dump/Mega Office G 115,854 Landstown Commons D 409,747 BIRDNECK/OCEANFRONT University Shops G 8,800 HILLTOP/GREAT NECK Glenwood Shoppes A 53,255 Farm Fresh H 60,000 Lynnhaven Square S C A 22,933 Birdneck SC A 65,460 Waterside Festival Marketplace I 130,338 Great Neck Square A 94,587 Little Creek and Tidewater Shops B 119,820 Food Lion #170 H 41,000 Parkway SC A 64,820 Birdneck Shoppes B 24,000 Wells Fargo Retail G 50,000 Great Neck Village A 73,736 Little Creek Square A 82,300 Grand Outlet H 35,000 Princess Anne Marketplace B 222,423 Farm Fresh H 29,296 Hilltop East C 144,100 Meadowbrook S C G 27,260 Janaf D 873,225 Princess One SC G 84,725 Harris Teeter H 48,000 GHENT Hilltop North C 202,346 Mid-Town A 75,768 Lowes H 115,000 Salem Crossing D 92,316 Linkhorn Shops G 48,899 201 Twenty One A 14,800 Hilltop Plaza B 152,025 Mid-Way SC G 31,000 Military Crossing D 192,000 Salem Lakes Marketplace A 42,087 Pacific Plaza H 9,695 21st Street Pavilion G 21,000 Hilltop Square B 270,093 Ocean View SC A 73,658 Military Triangle G 10,061 Target A 88,107 Center Shops A 139,081 Hilltop West C 45,834 Roosevelt Gardens SC A 109,175 Northampton Business Center G 85,000 Woodtide SC A 28,675 CAMPOSTELLA Colley Village A 44,585 La Promenade C 63,280 Southern Shopping Center B 245,868 Super Kmart & Shoppes B 200,000 Atlantic Commons A 63,393 Ghent Place G 13,000 Marketplace at Hilltop B 114,360 Super Wal-Mart H 225,000 Super Wal-Mart H 224,513 SMITHFIELD Bainbridge Marketplace A 46,444 Harris Teeter H 27,000 Mill Dam Crossing C 24,000 Wards Corner Strip A 61,540 The Gallery @ Military Circle I 856,542 Cypress Run SC G 25,000 Campostella Corner A 43,375 Palace Shops I, II C 78,669 Regency Hilltop B 236,549 Wedgewood SC A 137,834 Eagle Harbor A 77,049 George Washington Commons A 44,942 Palace Station C 37,503 Target H 122,000 NEWTOWN Shoppes at Eagle Harbor A 23,343 Holly Point SC A 65,338 The Corner Shops G 20,000 LITTLE NECK Cypress Point A 117,958 Smithfield Plaza B 89,120 Southgate Plaza A 69,429 HOLLAND/GREEN RUN Birchwood SC A 358,635 Diamond Springs North (Shopping Center) A 23,880 Smithfield Square A 65,244 GREAT BRIDGE Auburn Place A 42,709 Colony Building A 23,625 Diamond Springs Shoppes H 18,840 CHESAPEAKE SQUARE Cahoon Commons D 278,023 Buckner Plaza A 62,655 Home Depot H 130,060 Mattress Discounters Plaza F 59,892 SUFFOLK BJ’s H 115,660 Cedar Lakes Center A 35,659 Chimney Hill B 207,175 Kroger H 45,000 Newpointe SC A 92,978 Bennetts Creek Crossing A 119,812 Castle Shops H 37,464 Centerville Crossing A 46,000 Green Run Square A 75,000 London Bridge Plaza B 114,584 Newtown Baker Crossing A 91,687 Bennetts Creek Food Lion A 64,544 Chesapeake Center B 270,602 Crossings at Deep Creek A 68,970 Holland Plaza SC A 155,000 Lowes H 160,000 Newtown Center H 19,800 Centerbrooke Village A 12,600 Chesapeake Square Mall I 800,000 Dominion Marketplace A 73,103 Holland Windsor Crossing A 54,150 Lynnhaven 2600 H 13,300 Newtown Convenience Center G 19,800 Creekside Village G 18,835 Chesapeake Square Shops H 13,559 Dominion Plaza SC A 63,733 Lowes H 125,323 Lynnhaven Convenience G 36,900 Thomas Corner SC G 23,557 Holland Plaza A 69,345 Crossroads Center at Chesapeake Sq. D 332,464 Glenwood Square A 73,859 Lynnhaven Green A 50,838 Lynnhaven Shopping Center B 191,136 Wesleyan Commons Shopping Center A 54,204 Kensington Square A 66,421 Food Lion @ Chesp. Sq. H 45,000 Great Bridge SC A 156,937 Rosemont Center A 12,700 Princess Anne Plaza West C 77,558 Lowes H 150,000 Home Depot H 130,060 Hanbury Village A 100,560 Timberlake SC A 90,324 Regatta Bay Shops G 60,000 ODU Oak Ridge Plaza A 38,700 Lowes H 115,000 Harbor Watch Shoppes G 21,505 Renaissance Place G 47,667 First Floor Retail Shops at Suffolk Plaza B 176,733 Shops at Chesapeake Square H 25,000 Las Gaviotas A 90,500 INDIAN RIVER/COLLEGE PARK Sam’s Club Plaza D 248,604 University Village Apartments G 49,872 Suffolk Plaza West A 60,000 Taylor Road Plaza A 60,000 Millwood Plaza G 16,969 College Park I & II B 183,874 Suffolk Shopping Center B 155,733 Wal-Mart Supercenter/Sam’s Club H 350,000 Mt. Pleasant Shopping Center A 100,000 Indian River Plaza B 126,017 LYNNHAVEN PEMBROKE Suffolk Specialty Shops G 15,200 Mt. Pleasant Village A 34,180 Indian River SC B 123,752 Lynnhaven Crossing A 55,550 Aragona SC A 69,688 Suffolk Village SC G 11,875 CHURCHLAND PORTSMOUTH/HARBORVIEW Wilson Village A 52,500 Lynnhaven East B 97,303 Best Buy H 45,000 Wal-Mart Super Center H 194,160 Churchland Place Shoppes G 21,000 Woodford Shoppes G 9,760 I 1,293,100 Collins Square A 123,870 Churchland SC A 149,741 Woodford Square B 139,623 Lynnhaven North B 176,254 Columbus Village East A 63,000 Churchland Square A 72,189 Lynnshores Shopping Center G 12,692 Columbus Village Entertainment Center E 100,000 College Pkwy Crossing at Harbour View A 86,130 GREENBRIER/BATTLEFIELD BOULEVARD Lynnway Place G 30,213 Dean Plaza (Former HQ) D 140,000 Grand H 30,000 Battlefield Marketplace G 30,000 Parkway Plaza A 44,287 Former Bloom Brothers H 165,000 Harbor View Shoppes A 17,000 Chesapeake Crossing D 280,000 Wal-Mart H 113,112 Goodwill H 34,000 Harbour View East D 172,000 Country Club Shoppes H 17,700 Haverty’s H 55,000 Harbour View Marketplace H 96,624 Country Club Square A 12,600 MIDDLE PORTSMOUTH Haygood SC B 165,000 Harbourview Station East D 217,308 Crossways Center I Afton SC A 106,500 Haynes H 228,000 Harbourview Station West D 83,007 & Eden Way Shops D 373,771 Airline Marketplace A 50,000 Hunter’s Mill Shoppes G 22,827 Marketplace Square A 12,461 Edinburgh Commons D 184,232 Airline Plaza A 99,549

24 25 PENINSULA Forest Park Square B 150,000 Olde Towne SC G 30,000 Fransisco Village A 55,865 Prime Outlets F 349,927 COLISEUM CENTRAL Hampton Plaza B 173,199 Quarterpath Crossing A 85,600 Coliseum Corner A 49,267 Hilton SC A 74,000 Settlers Market at New Town D 234,489 Coliseum Crossing B 221,004 Midway Shopping Center C 60,000 Staples H 37,400 Coliseum Marketplace A 105,998 Newmarket South D 368,085 The Marquis (Phase I) D 1,000,000 Coliseum Specialty Shops G 15,026 Plaza @ Newmarket B 117,377 The Shops at Cedar Valley G 26,003 Coliseum Square G 43,307 Warwick Center A 103,886 The Shops at High Street B 114,449 Hampton Towne Centre D 376,100 Warwick Village A 75,400 Village Shops at Kingsmill C 82,234 Hampton Woods A 89,092 Wal-Mart SuperCenter H 210,000 Home Depot H 130,060 NEWPORT NEWS Williamsburg Crossing A 150,000 Peninsula Towncenter C 361,683 Jefferson Shoppes G 21,240 Williamsburg Farm Fresh A 79,188 Riverdale Plaza D 260,316 Williamsburg Marketcenter B 176,000 Sports Authority H 40,000 PATRICK HENRY/OYSTER POINT/KILN CREEK I 180,000 Target H 122,000 Bayberry Village A 72,883 Williamsburg Pavillion Shops G 50,000 The Power Plant D 621,150 Best Buy Building H 135,000 Williamsburg SC I & II B 251,000 Todd Center & Todd Lane Shops B 247,747 City Center C 230,000 Williamsburg Towne and Cnty A 49,802 Wal-Mart Super Center H 193,316 Commonweatlh Center G 30,279 WindsorMeade Marketplace D 209,737 Fairway Plaza A 34,700 Yankee Candle H 42,000 DENBIGH Glendale SC G 30,000 Beaconsdale SC A 28,000 Grand Furniture H 35,000 YORK COUNTY Denbigh Speciality Shops G 24,504 Harris Teeter H 52,334 Grafton SC A 32,000 Denbigh Village Centre B 327,322 Haverty’s H 45,000 Heritage Square A 73,865 Denbigh Village Shopping Center H 327,322 Haynes H 85,000 Kiln Creek Center A 45,700 Ferguson Center G 118,000 Jefferson Commons D 400,000 Lakeside 17 H 8,400 Former Hills Denbigh H 86,589 Jefferson Greene G 57,430 Marketplace @ Yorktown A 73,050 Jefferson Crossing Kroger H 55,000 Patriots Square A 47,231 (formerly Denbigh Crossing) A 145,000 Lowes H 120,000 Pavilion at Kiln Creek A 26,820 Kmart H 115,854 Market Place @ Oyster Point A 69,660 Shady Banks SC A 56,634 Lee Hall Plaza A 36,000 Newport Marketplace D 450,000 Shoppes at Wythe Creek G 13,200 Newport Crossing B 200,000 Newport Square B 184,126 Wal-Mart SuperCenter H 220,000 Stoneybrook Shopping Center A 74,340 Office Depot H 30,122 Washington Square Turnberry Crossing A 53,775 Oyster Point Plaza A 73,197 Shopping Center B 177,056 Village Square A 40,000 Oyster Point Square A 83,089 York Square A 48,720 Warwick Denbigh SC B 126,146 I 714,607 Yorkshire Downs G 23,900 Patrick Henry Place A 17,000 FOXHILL/BUCKROE/EAST MERCURY Richneck Shopping Center A 63,425 Buckroe SC A 76,000 Sam’s Club H 133,880 Farm Fresh Phoebus H 60,411 Sherwood Shopping Center A 100,000 Kmart H 94,500 The Shoppes at Oyster Point G 30,000 Langley Square A 120,646 Victory Center @ Kiln Creek A 69,000 Marketplace @ Nickerson A 75,850 Village Square @ Kiln Creek B 267,021 Nickerson Plaza A 83,849 Villages of Kiln Creek G 45,300 Willow Oaks Village Square S.C. A 120,000 Wal-Mart Super Center H 201,146 Yoder Plaza SC D 337,053 GLOUCESTER Food Lion H 40,000 POQUOSON Hayes Plaza SC A 52,651 Poquoson SC A 57,458 Hayes SC A 100,000 Wythe Creek Plaza SC A 51,063 Home Depot H 100,000 Lowe’s H 125,000 WILLIAMSBURG Shoppes at Gloucester B 82,025 Colony Square A 66,806 Wal-Mart Super Center H 220,000 Governor’s Green SC A 100,000 York River Crossing B 175,000 Home Depot H 130,000 James York Plaza B 137,708 HAMPTON MISCELLANEOUS Kingsgate Green B 138,348 Kecoughtan SC A 64,327 Lowes H 163,000 Marketplace Shoppes A 32,000 NEWMARKET/MAIN (TO INCLUDE HAMPTON) Marketplace Shopping Center A 36,000 4113 W Mercury Blvd. H 49,770 Monticello Marketplace D 315,300 4205 W. Mercury Blvd. H 28,080 Monticello SC A 82,000 Brentwood SC A 53,200 New Town Shops on Main C 253,000 Dresden SC G 35,000 Norge Crossing H 52,000

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