Land Offering Benn's Grant Benn's Church Boulevard Smithfield

LAND OFFERING BENN’S GRANT BENN’S CHURCH BOULEVARD SMITHFIELD, VIRGINIA 23430

BREWER’S NECK BLVD.

BENN’S CHURCH BLVD. NEW

BENN’S GRANT BLVD. CONNECTOR ROAD

Ryan Homes For Sale Residential

Contacts:

Trip Ferguson, Senior Vice President [email protected]

Jay Joseph, Senior Vice President [email protected]

Harvey Lindsay Commercial Real Estate 701 Town Center Drive, Suite 100 Newport News, VA 23606 757 873 2020

www.harveylindsay.com PROPERTY FACT SHEET

LOCATION: Smithfield, Virginia

ADDRESS: Benn’s Church Boulevard Smithfield, Virginia

IMPROVEMENTS: Intersection improvements to create entrance to site are currently under construction. 320-home Ryan Homes development on site, with 2,000 additional approved lots in the same Newport Development Service District. Public water and sewer adjacent to site.

SITE SIZE: 97.6 acres

PARKING: Per Code

ZONING: Conditional Planned Development - Mixed Use (C-PD-MX), ready for immediate commercial development, including a big box SUP. Approved for 650,225 square feet of commercial space and 240 apartment units.

BROKER’S COMMENTS: Multi-use site with 3,500+ feet of highway frontage along Benn’s Church Boulevard (Route 10) just south of the Brewer’s Neck Boulevard intersection in Smithfield (Isle of Wight), Virginia.

SALES PRICE: Per agreement

3 MAP

4 BREWER’S NECK BLVD. NECK BREWER’S

NEW CONNECTOR ROAD BLVD.

BENN’S CHURCH

BENN’S GRANT BLVD. GRANT BENN’S

For Sale Residential Sale For Ryan Homes Ryan AERIAL

5 LAYOUT SITE PLAN

6 7 8 9 10 11 Demographic and Income Profile

14564 Benns Church Blvd, Smithfield, Virginia, 23430 Prepared by Esri Ring: 1 mile radius Latitude: 36.93713 Longitude: -76.58611

Summary Census 2010 2015 2020 Population 866 892 929 Households 344 357 373 Families 264 273 284 Average Household Size 2.51 2.49 2.49 Owner Occupied Housing Units 300 307 319 Renter Occupied Housing Units 44 50 54 Median Age 42.7 44.5 45.3 Trends: 2015 - 2020 Annual Rate Area State National Population 0.82% 0.99% 0.75% Households 0.88% 1.00% 0.77% Families 0.79% 0.92% 0.69% Owner HHs 0.77% 0.95% 0.70% Median Household Income 3.11% 2.91% 2.66% 2015 2020 Households by Income Number Percent Number Percent <$15,000 38 10.6% 38 10.2% $15,000 - $24,999 43 12.0% 36 9.7% $25,000 - $34,999 28 7.8% 21 5.6% $35,000 - $49,999 30 8.4% 28 7.5% $50,000 - $74,999 58 16.2% 60 16.1% $75,000 - $99,999 49 13.7% 69 18.5% $100,000 - $149,999 73 20.4% 64 17.2% $150,000 - $199,999 13 3.6% 27 7.2% $200,000+ 26 7.3% 31 8.3%

Median Household Income $65,223 $76,026 Average Household Income $85,705 $97,397 Per Capita Income $32,470 $37,017 Census 2010 2015 2020 Population by Age Number Percent Number Percent Number Percent 0 - 4 51 5.9% 47 5.3% 45 4.8% 5 - 9 56 6.5% 56 6.3% 52 5.6% 10 - 14 60 6.9% 58 6.5% 64 6.9% 15 - 19 65 7.5% 52 5.8% 56 6.0% 20 - 24 37 4.3% 53 5.9% 40 4.3% 25 - 34 83 9.6% 92 10.3% 97 10.4% 35 - 44 114 13.1% 94 10.5% 107 11.5% 45 - 54 156 18.0% 156 17.4% 125 13.5% 55 - 64 125 14.4% 139 15.5% 157 16.9% 65 - 74 83 9.6% 100 11.2% 116 12.5% 75 - 84 29 3.3% 39 4.4% 59 6.4% 85+ 8 0.9% 9 1.0% 11 1.2% Census 2010 2015 2020 Race and Ethnicity Number Percent Number Percent Number Percent White Alone 527 60.8% 546 61.2% 569 61.2% Black Alone 304 35.1% 297 33.3% 295 31.7% American Indian Alone 4 0.5% 6 0.7% 7 0.8% Asian Alone 8 0.9% 11 1.2% 15 1.6% Pacific Islander Alone 0 0.0% 0 0.0% 0 0.0% Some Other Race Alone 8 0.9% 11 1.2% 15 1.6% Two or More Races 16 1.8% 21 2.4% 29 3.1%

Hispanic Origin (Any Race) 20 2.3% 32 3.6% 46 5.0% Data Note: Income is expressed in current dollars.

Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2015 and 2020.

February 26, 2016

14564 Benns Church Blvd, Smithfield, Virginia, 23430 Prepared by Esri Ring: 1 mile radius Latitude: 36.93713 Longitude: -76.58611

Trends 2015-2020 3 ) t n

e 2.5 c r e p

2 n i (

e 1.5 t a R

l 1 a

u Area n 0.5 State A n USA 0 Population Households Families Owner HHs Median HH Income

Population by Age

16 14 12 t

n 10 e c r 8 e P 6

4 2015 2020 2 0 0-4 5-9 10-14 15-19 20-24 25-34 35-44 45-54 55-64 65-74 75-84 85+

2015 Household Income 2015 Population by Race

$25K - $34K 60 7.8% $15K - $24K 55 $35K - $49K 12.0% 8.4% 50 45 <$15K 40 $50K - $74K 10.6% 16.2% t n 35 e c

r 30 e

P 25 $200K+ 20 7.3% 15 $150K - $199K $75K - $99K 3.6% 10 13.7% 5 $100K - $149K 0 20.4% White Black Am. Ind. Asian Pacific Other Two+

2015 Percent Hispanic Origin: 3.6%

Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2015 and 2020.

February 26, 2016

14564 Benns Church Blvd, Smithfield, Virginia, 23430 Prepared by Esri Ring: 3 mile radius Latitude: 36.93713 Longitude: -76.58611

Summary Census 2010 2015 2020 Population 6,751 6,978 7,336 Households 2,616 2,738 2,889 Families 2,016 2,098 2,204 Average Household Size 2.57 2.54 2.53 Owner Occupied Housing Units 2,125 2,180 2,295 Renter Occupied Housing Units 491 558 594 Median Age 42.5 43.7 44.5 Trends: 2015 - 2020 Annual Rate Area State National Population 1.01% 0.99% 0.75% Households 1.08% 1.00% 0.77% Families 0.99% 0.92% 0.69% Owner HHs 1.03% 0.95% 0.70% Median Household Income 2.94% 2.91% 2.66% 2015 2020 Households by Income Number Percent Number Percent <$15,000 278 10.2% 256 8.9% $15,000 - $24,999 180 6.6% 142 4.9% $25,000 - $34,999 162 5.9% 118 4.1% $35,000 - $49,999 266 9.7% 246 8.5% $50,000 - $74,999 477 17.4% 489 16.9% $75,000 - $99,999 300 11.0% 352 12.2% $100,000 - $149,999 500 18.3% 519 18.0% $150,000 - $199,999 401 14.6% 549 19.0% $200,000+ 173 6.3% 218 7.5%

Median Household Income $75,352 $87,092 Average Household Income $95,265 $109,885 Per Capita Income $37,004 $42,846 Census 2010 2015 2020 Population by Age Number Percent Number Percent Number Percent 0 - 4 382 5.7% 354 5.1% 355 4.8% 5 - 9 437 6.5% 444 6.4% 417 5.7% 10 - 14 475 7.0% 474 6.8% 505 6.9% 15 - 19 472 7.0% 432 6.2% 454 6.2% 20 - 24 295 4.4% 346 5.0% 296 4.0% 25 - 34 655 9.7% 730 10.5% 761 10.4% 35 - 44 918 13.6% 826 11.8% 922 12.6% 45 - 54 1,269 18.8% 1,195 17.1% 1,038 14.1% 55 - 64 937 13.9% 1,073 15.4% 1,211 16.5% 65 - 74 575 8.5% 698 10.0% 846 11.5% 75 - 84 255 3.8% 317 4.5% 417 5.7% 85+ 80 1.2% 91 1.3% 114 1.6% Census 2010 2015 2020 Race and Ethnicity Number Percent Number Percent Number Percent White Alone 4,944 73.2% 5,089 72.9% 5,306 72.3% Black Alone 1,490 22.1% 1,459 20.9% 1,453 19.8% American Indian Alone 25 0.4% 34 0.5% 44 0.6% Asian Alone 86 1.3% 118 1.7% 158 2.2% Pacific Islander Alone 5 0.1% 7 0.1% 11 0.1% Some Other Race Alone 45 0.7% 63 0.9% 86 1.2% Two or More Races 156 2.3% 208 3.0% 279 3.8%

Hispanic Origin (Any Race) 168 2.5% 270 3.9% 393 5.4% Data Note: Income is expressed in current dollars.

Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2015 and 2020.

February 26, 2016

14564 Benns Church Blvd, Smithfield, Virginia, 23430 Prepared by Esri Ring: 3 mile radius Latitude: 36.93713 Longitude: -76.58611

Trends 2015-2020 ) t 2.5 n e c r

e 2 p

n i (

1.5 e t a R

1 l a

u Area n 0.5 State

A n USA 0 Population Households Families Owner HHs Median HH Income

Population by Age

14 12 t

n 10 e c

r 8 e P 6

4 2015 2020 2

0 0-4 5-9 10-14 15-19 20-24 25-34 35-44 45-54 55-64 65-74 75-84 85+

2015 Household Income 2015 Population by Race

$35K - $49K $25K - $34K 70 9.7% 5.9% $15K - $24K 6.6% 60 $50K - $74K 17.4% <$15K 50 10.2% t n

e 40 c r e

P 30 $200K+ $75K - $99K 6.3% 11.0% 20

$150K - $199K 10 14.7% $100K - $149K 18.3% 0 White Black Am. Ind. Asian Pacific Other Two+

2015 Percent Hispanic Origin: 3.9%

Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2015 and 2020.

February 26, 2016

14564 Benns Church Blvd, Smithfield, Virginia, 23430 Prepared by Esri Ring: 5 mile radius Latitude: 36.93713 Longitude: -76.58611

Summary Census 2010 2015 2020 Population 20,926 21,946 23,048 Households 8,118 8,586 9,047 Families 6,153 6,469 6,790 Average Household Size 2.56 2.54 2.53 Owner Occupied Housing Units 6,475 6,716 7,067 Renter Occupied Housing Units 1,643 1,870 1,979 Median Age 43.4 44.7 45.6 Trends: 2015 - 2020 Annual Rate Area State National Population 0.98% 0.99% 0.75% Households 1.05% 1.00% 0.77% Families 0.97% 0.92% 0.69% Owner HHs 1.02% 0.95% 0.70% Median Household Income 3.13% 2.91% 2.66% 2015 2020 Households by Income Number Percent Number Percent <$15,000 970 11.3% 906 10.0% $15,000 - $24,999 629 7.3% 497 5.5% $25,000 - $34,999 524 6.1% 380 4.2% $35,000 - $49,999 877 10.2% 813 9.0% $50,000 - $74,999 1,466 17.1% 1,510 16.7% $75,000 - $99,999 916 10.7% 1,114 12.3% $100,000 - $149,999 1,615 18.8% 1,738 19.2% $150,000 - $199,999 1,150 13.4% 1,535 17.0% $200,000+ 440 5.1% 555 6.1%

Median Household Income $71,013 $82,849 Average Household Income $90,196 $103,285 Per Capita Income $35,372 $40,637 Census 2010 2015 2020 Population by Age Number Percent Number Percent Number Percent 0 - 4 1,113 5.3% 1,053 4.8% 1,065 4.6% 5 - 9 1,325 6.3% 1,313 6.0% 1,238 5.4% 10 - 14 1,472 7.0% 1,458 6.6% 1,497 6.5% 15 - 19 1,389 6.6% 1,377 6.3% 1,426 6.2% 20 - 24 953 4.6% 1,050 4.8% 957 4.2% 25 - 34 1,942 9.3% 2,285 10.4% 2,409 10.5% 35 - 44 2,757 13.2% 2,512 11.4% 2,746 11.9% 45 - 54 3,911 18.7% 3,677 16.8% 3,254 14.1% 55 - 64 3,036 14.5% 3,485 15.9% 3,844 16.7% 65 - 74 1,811 8.7% 2,329 10.6% 2,814 12.2% 75 - 84 892 4.3% 1,031 4.7% 1,353 5.9% 85+ 326 1.6% 374 1.7% 444 1.9% Census 2010 2015 2020 Race and Ethnicity Number Percent Number Percent Number Percent White Alone 15,191 72.6% 15,911 72.5% 16,604 72.0% Black Alone 4,878 23.3% 4,849 22.1% 4,845 21.0% American Indian Alone 77 0.4% 107 0.5% 142 0.6% Asian Alone 221 1.1% 307 1.4% 413 1.8% Pacific Islander Alone 12 0.1% 19 0.1% 28 0.1% Some Other Race Alone 116 0.6% 169 0.8% 233 1.0% Two or More Races 431 2.1% 583 2.7% 782 3.4%

Hispanic Origin (Any Race) 455 2.2% 746 3.4% 1,087 4.7% Data Note: Income is expressed in current dollars.

Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2015 and 2020.

February 26, 2016

14564 Benns Church Blvd, Smithfield, Virginia, 23430 Prepared by Esri Ring: 5 mile radius Latitude: 36.93713 Longitude: -76.58611

Trends 2015-2020 3 ) t n

e 2.5 c r e p

2 n i (

e 1.5 t a R

l 1 a

u Area n 0.5 State A n USA 0 Population Households Families Owner HHs Median HH Income

Population by Age 16

t 10 n e c

r 8 e P 6

4 2015 2 2020

0 0-4 5-9 10-14 15-19 20-24 25-34 35-44 45-54 55-64 65-74 75-84 85+

2015 Household Income 2015 Population by Race $25K - $34K $35K - $49K 6.1% 70 10.2% $15K - $24K 65 7.3% 60 55 $50K - $74K <$15K 50 17.1% 11.3% 45 t

n 40 e c

r 35 e

P 30 $200K+ 5.1% 25 $75K - $99K 20 10.7% 15 $150K - $199K 10 13.4% 5 $100K - $149K 0 18.8% White Black Am. Ind. Asian Pacific Other Two+

2015 Percent Hispanic Origin: 3.4%

Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2015 and 2020.

February 26, 2016

NEWPORT DSD

RETAIL DEVELOPMENT

ANALYSIS Prepared for ISLE OF WIGHT COUNTY, VA Isle of Wight County Department of Economic

Development

May, 2015

1202 Westover Avenue / Norfolk, VA 23507 757.626.0757 [email protected]

FOREWORD

This report has been prepared for Isle of Wight County's Department of Economic Development to evaluate prevailing retail conditions and to establish a framework for broadening the retail base in the Newport Development Service District. A key element in the assignment is to provide objective guidance to establish realistic expectations about the type of retailers that are within reach given current and projected levels of consumer support.

Citizens are typically unfamiliar with the minimum levels of sales that must be anticipated by retailers and restaurateurs before they open new locations. These sales thresholds are directly related to profitability and acceptable return on capital investment. Merchants usually have multiple options for new sites and the demands of today's financial climate leave limited tolerance for marginal opportunities. The capital they deploy to open a store with uncertain performance prospects could (and should) be used to open a store with better performance prospects.

Chain retailers tend to use models of varying levels of complexity to assist in evaluating site opportunities. These models have been developed using sales from stores with profitable levels of sales and the demographics of documented trade areas surrounding existing stores. It is difficult to convince retailers or restaurant operators to open new locations that do not promise to achieve at least "average" sales performance for their chains. The days of opening new locations solely in the name of growth are long gone.

Awareness of the full breadth of the retail offering in a large metropolitan area can cause residents on the fringe of the region to be frustrated with limited retail options in their community. Many Isle of Wight County residents no doubt want more shops and restaurants closer to home. But, retailing follows rooftops, and a community's retail mix evolves as the community itself grows and evolves.

This evaluation and its recommendations are intended to explain where Isle of Wight County stands in its retail evolution and what to anticipate in terms of retail and restaurant development as the county gains population over the next few years.

Blount Hunter H. Blount Hunter Retail & Real Estate Research Co. May, 2015

EXECUTIVE SUMMARY

Isle of Wight County is a growing county on the western edge of South Hampton Roads. The county wishes to balance residential / commercial growth with its long-term agricultural base. Several service districts have been created to focus growth in specific geographic areas where public utilities will be available.

Isle of Wight's retail base is a prime example of "county seat" retailing. Residents from throughout the county look inboard toward Smithfield and the Newport DSD for their routine shopping needs. Smithfield's historic Main Street has transitioned into a boutique shopping and dining district while several shopping centers plus numerous freestanding stores and restaurants are located on busy corridors including Route 10 and near the intersection with Route 258 and on Route 17/258 between Route 32 and the James River Bridge.

The population in Isle of Wight County is relatively modest although a drive time comparison shows the Isle of Wight retail market to be superior in population and household income to the retail market surrounding Franklin. This comparison is meaningful since Franklin's retail and restaurant base appears to have evolved more than Isle of Wight's base. A traditional retailer site requirement is 50,000 residents within a 3-mile radius of a proposed store location. Aggregating a trade area of 50,000 residents in Isle of Wight County requires rings or drive times that exceed the parameters used by most retailers.

Much of the merchandise currently offered within Isle of Wight County consists of "convenience goods" sought on a frequent basis. Residents have few options for "comparison goods" such as apparel/shoes and household furnishings. This situation is typical of small retail markets and does not reflect deficiencies in the Isle of Wight County consumer base.

Walmart is a high-probability candidate for Isle of Wight County's next phase of retail evolution. Walmart's closest existing stores are located in Newport News (approximately 11 miles away). Walmart also operates stores in Suffolk and Franklin at distances of 16 and 34 miles respectively from the Newport DSD. Spending potential across multiple merchandise categories will support Walmart without the presumption of damaging sales transfer from existing retailers. In today's retail world, Walmart is the sole viable candidate since this market opportunity does not deliver Target's required customer base of 100,000 residents nor does the Isle of Wight retail market seem capable of sustaining Kroger's expectation of weekly sales of $1 million (annual sales volume $52 million) in its Marketplace stores.

Walmart is a formidable competitor in merchandise categories ranging from groceries to automobile tires and batteries; however, many retailers have learned how to co-exist with Walmart and others succeed as shopping center co-tenants with Walmart. Several compatible co-tenants have site selection criteria that mesh with the population of Isle of Wight's retail trade area.

Most of the proposed shopping centers in the county are small in total square footage. By size, these centers are destined to be unanchored neighborhood convenience centers that will not be compelling to most "comparison goods" retailers interested in Isle of Wight County. At 234,000 square feet, The Crossings could accommodate a moderately-sized Walmart store with adjacent retail tenants. On the other hand, the proposed Benn's Grant shopping center appears to be over- sized if the full center as proposed at 533,000 square feet is contemplated in a single phase. Securing Walmart as an anchor at either of these locations represents the best opportunity for drawing new retailers and restaurants to Isle of Wight County.

Isle of Wight County Demographic and Economic Profile

Isle of Wight County is a predominantly rural county on the western edge of the urbanized portion of South Hampton Roads. The county has a total land area of 316 square miles and is bounded to the northeast by the James River, the City of Suffolk to the southeast, the City of Franklin and Southampton County across the Blackwater River to the west, and Surry County to the northwest. Smithfield and Windsor are the two incorporated towns within the county.

Residential growth has been fueled by high quality of life in a relaxed setting that offers easy access to all major employment centers on the Southside of the Hampton Roads harbor and a direct link to the Peninsula via the James River Bridge. New residents tend to have relatively high household income levels; many commute to white collar jobs on the Peninsula via the James River Bridge or to other communities on the Southside. The most recent data collected by the Virginia Employment Commission shows approximately 6,500 in-commuters and 11,100 out-commuters.

NON-AGRICULTURAL EMPLOYMENT COMMUTING NET INFLOW Live and work in Isle of Wight County 2,883 In-Commuters 6,513 Out-Commuters 11,137 Net In-Commuters - 4,624

“Smart growth” planning principles have lead to the creation of Development Service Districts (DSDs) where residential and commercial development are anticipated and where the community can provide utilities in an economical and efficient manner. Most of the county will remain rural with low density population at citizens' request.

The Newport DSD includes 1,900 approved residential units out of approximately 4,800 additional allowed units. A proposed growth plan that would allow for the long-term build-out of 13,600 additional residential units in an expanded Newport DSD was presented to the Board of Supervisors in October, 2014 and will be presented to the Planning Commission and Board of Supervisors for consideration. This potential growth is not reflected in the state's official population projections for Isle of Wight County.

The creation of the Newport DSD serves to concentrate residential growth in a manner that is beneficial to retail development. Retail development potential is enhanced by the concentration of residential development. Retail development potential is also enhanced by higher residential density that allows for larger population than envisioned several years ago.

Isle of Wight County’s population growth has been well ahead of the state’s rate of growth. The county is expected to add an average of approximately 355 residents annually between 2010 and 2020 although this rate of growth is subject to change if increased density is permitted in the Newport DSD or if the DSD boundaries are expanded.

POPULATION GROWTH AND PROJECTIONS ISLE OF WIGHT COUNTY VS. VIRGINIA ISLE OF WIGHT COUNTY VIRGINIA POPULATION 10-YR. CHANGE 10-YR. CHANGE 1990 25,178 ------2000 29,889 18.7 percent 14.3 percent 2010 35,270 24.0 percent 13.0 percent 2014 36,172 ------2020 38,828 10.1 percent 10.1 percent 2030 41,946 8.0 percent 9.5 percent 2040 44,922 15.7 percent 9.2 percent SOURCES: U.S. Census Bureau; Weldon Cooper Center

Agriculture and farming are leading industries in Isle of Wight County. The County has a total of 205,143 acres of which 175,100 acres are covered by zoning that preserves rural character/agricultural use. The County’s “right-to-farm” policy protects farmers’ practices as unique and necessary aspects of agribusiness.

Isle of Wight County’s second most important employment sector is manufacturing with more than 5,000 employees (44 percent of the non-agricultural labor force). Meat packing is the dominant form of the manufacturing sector. The list of Top 10 Employers shows the importance of meat processing, warehousing/logistics, retailing, and local government.

TOP 10 EMPLOYERS IN ISLE OF WIGHT COUNTY 1. Smithfield Packing Company 6. C. R. England, Inc. 2. Isle of Wight School Board 7. Food Lion Supermarkets 3. Green Mountain Coffee Roasters 8. Riverside Regional Medical Center 4. Isle of Wight County 9. Cost Plus, Inc. 5. International Paper Co. 10. Smithfield Foods SOURCE: Virginia Employment Commission

Isle of Wight County has historically enjoyed a lower level of unemployment than Virginia and the nation. Since 2010, the county's unemployment rate has slightly exceeded the state's unemployment rate.

ANNUAL UNEMPLOYMENT RATE COMPARISON ISLE OF WIGHT CO. VIRGINIA U.S. 2003 3.6 percent 4.1 percent 6.0 percent 2004 3.4 percent 3.7 percent 5.5 percent 2005 3.6 percent 3.5 percent 5.1 percent 2006 3.1 percent 3.0 percent 4.6 percent 2007 2.9 percent 3.1 percent 4.6 percent 2008 3.7 percent 4.0 percent 5.8 percent 2009 6.4 percent 7.0 percent 9.3 percent 2010 7.4 percent 7.1 percent 9.6 percent 2011 6.8 percent 6.4 percent 8.9 percent 2012 6.0 percent 5.9 percent 8.1 percent 2013 5.6 percent 5.5 percent 7.4 percent 2014 estimate 5.3 percent 5.1 percent 6.2 percent SOURCE: Virginia Employment Commission

Isle of Wight’s growth has been accompanied by a steady increase in per capita personal income. While the County’s average lags the state’s average personal per capita income, it exceeds the per capita personal income averages in Suffolk and Chesapeake.

PERSONAL PER CAPITA INCOME GROWTH 2009 TO 2013 ISLE OF VIRGINIA WIGHT CO. SUFFOLK CHESAPEAKE BEACH VIRGINIA 2009 $39,308 $36,428 $39,952 $45,749 $44,056 2010 $40,634 $37,341 $40,867 $46,429 $44,836 2011 $42,883 $39,279 $42,504 $48,706 $47,076 2012 $45,247 $41,344 $44,681 $50,651 $48,715 2013 $45,759 $41,749 $44,562 $50,662 $48,838 SOURCE: Bureau of Labor Statistics

Retail Market Overview

Total taxable sales within Isle of Wight County have increased at an average annual compound rate of 2.4 percent since 2000. Retail sales growth is the result of a combination of factors including an increase in the number of retail establishments within the county, population growth, and increases in household income.

TOTAL TAXABLE SALES ISLE OF WIGHT COUNTY ANNUAL MILLIONS INCREASE 1984 $ 71.3 --- 1986 $ 78.6 + 5.0 percent 1988 $ 99.3 +12.4 percent 1990 $104.9 + 2.8 percent 1992 $104.0 - 0.4 percent 1994 $128.0 +10.9 percent 1996 $136.4 + 3.2 percent 1998 $140.6 + 1.5 percent 2000 $151.7 + 3.9 percent 2002 $150.5 - 0.4 percent 2004 $177.5 + 8.6 percent 2006 $197.1 + 5.4 percent 2008 $207.5 + 2.6 percent 2010 $193.1 - 3.5 percent 2012 $201.2 + 2.1 percent 2014 $212.8 + 2.8 percent SOURCE: Virginia Department of Taxation

Retail merchandise generally falls into one of two basic classifications:

1. "Convenience Goods" 2. "Comparison Goods"

"Convenience goods" include groceries, health and beauty products, greeting cards, and other goods purchased on a daily or weekly basis by most consumers. "Convenience goods" retailers generally have broad appeal in order to serve as many consumers as possible, and annual spending on "convenience goods" is highly predictable since most "convenience goods" are necessities rather than discretionary purchases.

"Comparison goods" include clothing and shoes, electronics/appliances, home furnishings, jewelry, sporting goods, books, and other items purchased on an occasional basis usually after comparing

24 options as part of the final purchase decision. Consumer spending capacity (i.e. income) and preferences (i.e. tastes) heavily influence the purchase of "comparison goods."

"Convenience goods" represent the most basic level in the hierarchy of retailing and are typically matched to neighborhood and community level trade areas.

"Convenience goods" retailers have different consumer support requirements than "comparison goods" retailers. Every consumer (or household) routinely purchases "convenience goods" but "comparison goods" are purchased on a discretionary basis. "Comparison goods" purchasing is influenced by "wants" rather than "needs" and is subject to subjective factors such as style/design (fashion) as well as price point. As a result, "comparison goods" retailers require locations that are readily accessible to larger consumer bases to allow for adequate consumer support. In contemporary U.S. retailing, "comparison goods" retailers often co-locate in critical mass clusters in order to harness the collective drawing power of multiple compatible retailers. This is the principle behind the development of shopping centers.

In recent decades, Walmart has become the super-sized variety store that offers a mix of "convenience goods" and "comparison goods." In some instances, Walmart has been criticized for being too powerful as it absorbs a disproportionate share of spending potential in a community. In other communities, Walmart has been praised as the anchor that solidifies the retail base.

Isle of Wight County is an emerging market that currently lacks the full offering of retail goods associated with larger population bases. The most prevalent layer of retail is "convenience goods" such as groceries and everyday needs although Peebles, Roses, and Olympia Sports are examples of retailers in Isle of Wight offering "comparison goods."

2014 SALES BY STORE CATEGORY ISLE OF WIGHT COUNTY "Convenience Goods" Food & Beverage Stores $70,333,859 Health and Personal Care Stores $ 1,595,535 "Comparison Goods" Clothing Stores $ 3,155,626 General Merchandise Stores $15,058,574 Furniture/Furnishings Stores $ 1,970,161 Building Materials Stores $ 5,742,507 Sporting Goods/Hobby/Book/Music Stores $ 1,741,778 Restaurants $28,003,995 SOURCE: Virginia Department of Taxation

As shown in the table on the following page, Isle of Wight County's 2014 per capita sales in food & beverage stores (i.e. grocery stores) are similar to the statewide per capita. This category of stores is well-represented in Isle of Wight County therefore per capita sales are on par with the state per capita.

Isle of Wight County's per capita sales in health and personal care stores is slightly below the state per capita suggesting that the county's drug stores are not capturing full spending despite reasonable representation of stores in this category. It is possible that some county residents are using drug stores near medical offices and/or places of employment outside of the county.

Per capita spending in categories of "comparison goods" stores in Isle of Wight County is well below state per capita spending levels. This demonstrates the under-representation of these types of stores in the county. Demand exists but stores are not present to capture spending. County residents are spending their dollars in "comparison goods" stores and restaurants outside of the county where greater selection can be found.

2014 PER CAPITA SALES ISLE OF WIGHT COUNTY VS. VIRGINIA ISLE OF WIGHT CO. VIRGINIA Food & Beverage Stores $1,944 $1,905 Health and Personal Care Stores $103 $192 Clothing Stores $87 $585 General Merchandise Stores $416 $2,074 Furniture/Furnishings Stores $54 $256 Building Materials Stores $212 $690 Sporting Goods/Hobby/Book/Music Stores $33 $209 Restaurants $774 $1,518 SOURCE: Virginia Department of Taxation; H. Blount Hunter Retail & Real Estate Research Co.

Compared to the state’s “balanced” retail market, Isle of Wight shows deficiencies in "comparison goods" categories including general merchandise, furniture, building materials/garden supplies, clothing/accessories, and sporting goods/hobbies/books/music. These "imbalances" reflect the absence of stores--not the absence of demand. In the absence of a full assortment of retail stores, the County’s sales are disproportionately weighted toward food and beverage stores.

2014 SHARES OF SALES BY STORE CATEGORY ISLE OF WIGHT VS. VIRGINIA ISLE OF WIGHT COUNTY VIRGINIA SALES PERCENT PERCENT Food & Beverage Stores $70,333,859 53.7 percent 25.0 percent Health and Personal Care Stores $ 1,595,535 2.8 percent 2.5 percent Clothing Stores $ 3,155,626 2.4 percent 7.7 percent General Merchandise Stores $15,058,574 11.5 percent 27.2 percent Furniture/Furnishings Stores $ 1,970,161 1.5 percent 3.4 percent Electronics/Appliances N/D --- 2.5 percent Building Materials Stores $ 5,742,507 5.8 percent 9.1 percent Sporting Goods/Hobby/Book/Music Stores $ 1,741,778 0.9 percent 2.7 percent Restaurants $28,003,995 21.4 percent 19.9 percent SOURCE: Virginia Department of Taxation

There are numerous sales gaps in Isle of Wight County based on Virginia per capita sales by store category in 2014. The largest gaps ("voids") are associated with general merchandise stores, restaurants, clothing/shoe stores, and building materials stores. It is likely that county residents are spending aggregate amounts comparable to the gap volumes in stores outside of Isle of Wight County.

GAP / SURPLUS ANALYSIS ISLE OF WIGHT COUNTY SALES VS. DEMAND GAP OR SALES DEMAND (SURPLUS) Food & Beverage Stores $70,333,859 $68,915,294 ($ 1,418,565) Health and Personal Care Stores $ 3,726,670 $ 6,931,506 $ 3,204,836 Clothing Stores $ 3,155,626 $21,164,771 $18,009,145 General Merchandise Stores $15,058,574 $75,034,107 $59,975,533 Furniture/Furnishings Stores $ 1,970,161 $ 9,258,454 $ 7,288,293 Building Materials Stores $ 5,742,507 $24,947,244 $17,276,298 Sporting Goods/Hobby/Book/Music Stores $ 1,741,778 $ 7,566,830 $ 6,389,571 Restaurants $28,003,995 $54,906,052 $26,902,057 SOURCE: Virginia Department of Taxation; H. Blount Hunter Retail & Real Estate Research Co.

Franklin's retail base serves as an illustration of a rural retail base that has gained a large national general merchandise store and a large building supply chain store. By virtue of having Walmart and Lowes, the Franklin/Southampton County retail market is one step ahead of Isle of Wight County in its retail evolution.

The table below demonstrates the impact on per capita sales of having Walmart and Lowes in Franklin. Per capita general merchandise store sales are five times higher in Franklin than in Isle of Wight County while building material store sales are between three and four times higher in Franklin than in Isle of Wight County.

2014 PER CAPITA SALES ISLE OF WIGHT COUNTY VS. FRANKLIN/SOUTHAMPTON COUNTY FRANKLIN/ ISLE OF WIGHT CO. SOUTHAMPTON CO. Food & Beverage Stores $1,944 $1,187 Health and Personal Care Stores $103 $80 Clothing Stores $87 $66 General Merchandise Stores $416 $2,281 Furniture/Furnishings Stores $54 $96 Building Materials Stores $212 $784 Sporting Goods/Hobby/Book/Music Stores $33 $17 Restaurants $774 $784 SOURCE: Virginia Department of Taxation; H. Blount Hunter Retail & Real Estate Research Co.

A comparison with Franklin is appropriate given the amount of retail development at the intersection of Armory Drive (Route 617) and Route 58. In addition to a full offering of "convenience goods," Franklin has "comparison goods" retailers including Walmart plus Belk, Rose's, Sears, and Lowe's. In addition to a full assortment of fast food outlets, the Franklin node has attracted Applebee's.

Franklin's strategic location on U.S. Route 58 mid-way between Suffolk and Emporia establishes a regional trade area with easy access from east and west. Route 258 provides direct access to Franklin from Hertford and Northampton counties in North Carolina.

Franklin's retail trade area is geographically extensive but the demographics within 10- and 20- minute drives of Smithfield are superior to the demographics within 10- and 20-minute drives of Franklin. The most significant difference is in household income.

The demographic analysis indicates it is reasonable to believe that the market surrounding the Newport DSD can support Walmart, Applebee's, and several other merchants present in Franklin.

DRIVE TIME DEMOGRAPHIC COMPARISON SMITHFIELD/NEWPORT DSD VS. FRANKLIN 10-MINUTE 20-MINUTE DRIVE TIME DRIVE TIME 2015 POPULATION Smithfield/Newport DSD 11,001 29,293 Franklin 11,589 22,750 2015 HOUSEHOLD COUNT Smithfield/Newport DSD 4,232 11,430 Franklin 4,743 9,112 AVG. HOUSEHOLD INCOME Smithfield/Newport DSD $100,520 $99,285 Franklin $54,163 $60,391 HOUSEHOLDS $50,000+ Smithfield/Newport DSD 3,060 6,191 Franklin 1,492 4,527 SOURCE: Neilsen Claritas

In addition to having superior demographics, Isle of Wight County's traffic counts are superior to traffic counts in Franklin. The average daily traffic count on Benns Church Boulevard at South Church Street in the midst of the retail corridor is 28,000 vehicles; the average daily vehicle count on Route 17 in the Eagle Harbor area is also 28,000. In the Franklin area, the average daily vehicle count on Route 58 is 20,000 while the average daily vehicle count through the retail corridor on Armory Drive is 14,000.

Maps on the following page depict 20-minute drive radii surrounding the Newport DSD and Franklin. Note that much but not all of Isle of Wight County falls within a 20-minute drive of the Benns Church/Brewers Neck intersection. It is likely that Isle of Wight County residents living between Windsor and Franklin will continue to be drawn to Franklin for shopping even if Walmart and other retailers open stores in the general vicinity of Smithfield and the Newport DSD.

(Larger images of the maps can be found in the Appendix on pages 20 and 21.)

11 29

The levels of "sales inflow" to retailers in the vicinity of Smithfield/Newport DSD and Franklin generated by residents from beyond each locality's 20-mile drive radius are unknown. Some sales inflow from Surry County would be expected in Isle of Wight County while some sales inflow from North Carolina and Southampton County would be expected in Franklin. Substantial sales inflow to Franklin could explain the presence of Walmart, Lowe's, and other retailers/restaurants that are not located in the Newport DSD.

Some of the analysis in this report is based on county geography, although this is an artificial basis for site selection because retailers think in terms of radii and drive times. The Isle of Wight County Economic Development Department should present site opportunities using multiple means of expressing the population dynamics of the probable retail trade area surrounding the existing retail node near Benns Grant.

Demographics within 3-5-7 mile radii of the Smithfield/Newport DSD retail node are clearly superior to the demographics within 3-5-7 mile radii of the Franklin retail node. In particular, average household income around the Smithfield/Newport DSD node is nearly twice the level of the average surrounding Franklin node. Unless the Franklin retail node is benefitting from substantial "sales inflow," it represents a smaller retail market than the Smithfield/Newport DSD retail market.

3-5-7 MILE RADIUS DEMOGRAPHIC COMPARISON SMITHFIELD/NEWPORT DSD NODE VS. FRANKLIN NODE 3-MILE 5-MILE 7-MILE RADIUS RADIUS RADIUS 2015 POPULATION Smithfield/Newport DSD 12,320 17,921 24,440 Franklin 9,859 12,999 16,403 2020 POPULATION Smithfield/Newport DSD 12,917 18,821 25,749 Franklin 10,095 13,242 16,639 2015 HOUSEHOLD COUNT Smithfield/Newport DSD 4,742 7,029 9,530 Franklin 4,053 5,309 6,653 2020 HOUSEHOLD COUNT Smithfield/Newport DSD 4,962 7,407 10,066 Franklin 4,153 5,421 6,774 2015 AVG. HOUSEHOLD INCOME Smithfield/Newport DSD $98,933 $98,061 $98,978 Franklin $52,060 $55,276 $57,454 2015 HOUSEHOLDS $50,000+ Smithfield/Newport DSD 3,390 5,053 6,874 Franklin 1,575 2,227 2,927 SOURCE: Neilsen Claritas

(Larger images of these maps can be found in the Appendix on pages 22 and 23.)

13 31

A comparison with Suffolk illustrates the change in per capita spending by store category as a retail market evolves with a greater component of "comparison goods" retailers. Suffolk’s retail base has expanded in recent years with the opening of two Walmart stores, a movie theater, restaurants, and “comparison goods” retailers such as Kohl's, T.J. Maxx, Dick's Sporting Goods, and Bed Bath & Beyond. Retail development in Suffolk has occurred because the city is approaching a population threshold of 100,000 residents and because the Harbor View area in Suffolk is easily accessible from nearby densely-populated areas of Chesapeake and Portsmouth.

Note that Suffolk's per capita spending levels in several "comparison goods" store categories have reached or are approaching Virginia's per capita spending levels in those categories. These are categories that have become well-represented by businesses in Suffolk in recent years.

2014 PER CAPITA SALES ISLE OF WIGHT COUNTY VS. SUFFOLK ISLE OF WIGHT CO. SUFFOLK VIRGINIA Food & Beverage Stores $1,944 $1,294 $1,905 Health and Personal Care Stores $103 $122 $192 Clothing Stores $87 $197 $585 General Merchandise Stores $416 $2,108 $2,074 Furniture/Furnishings Stores $54 $140 $256 Building Materials Stores $212 $544 $690 Sporting Goods/Hobby/Book/Music Stores $33 $125 $209 Restaurants $774 $1,143 $1,518

The next step in the evolution of the Isle of Wight retail market is attracting a comprehensive mass merchandise retailer to serve the broad general merchandise needs of the community. In today's world, this means Walmart. Walmart would compete with existing businesses but its greater impact would be retaining consumer spending by county residents in Isle of Wight County. Curtailing sales outflow would result in positive sales tax gains for Isle of Wight County. The void in general merchandise store sales has been measured at $59 million--more than enough to support Walmart without assuming severe cannibalization of existing merchants' sales. Walmart's ability to establish a strong critical mass retail node that will draw other retailers is one of the benefits of securing this retailer in the vicinity of the Newport DSD. As Walmart demonstrates the viability of the Isle of Wight retail market, more retailers and restaurants will move toward the node.

A strong Walmart store can attract casual family-style restaurants. Many expanding restaurant chains (Applebee's, Ruby Tuesday, Chili's) will take note of the burgeoning retail node around Walmart. Existing daily traffic counts on Routes 10 and 258 in the Brewer's Neck area already meet the stated criteria of several of these restaurant chains although population density remains lower than these restaurant operators would prefer.

With continued population growth, Isle of Wight will be able to attract additional retailers offering a broader variety of “comparison goods.” Isle of Wight County may be perceived by retailers to be a “stand alone” retail trade area—independent of Suffolk’s trade area—when its population reaches the threshold level of 50,000. In the meantime, it may be possible to secure retailers with more modest population density requirements.

Chain Retailer/Restaurant Site Selection Criteria

Chain retailers generally have site selection criteria based on population density expressed as minimum population within a specified distance from a potential site. Many of the retailers cited in the following table require 50,000 residents within a 3-mile radius.

Performance models enable retailers to project sales potential associated with the residential base of market areas. Retailers will open stores when their traditional share of "sales capture" of sales potential appears to support a new location at the required level. Retailers also try to measure and anticipate "sales transfer" from nearby operating stores. In recent years, almost all retailers have become more vigilant about the possibility of self-inflicted sales transfer that renders an existing store unprofitable. Because of the cost of capital, retailers would prefer to have one highly profitable store than two marginally profitable stores.

As an example, apparel retailers at Harbour View East in Suffolk understand their typical "capture" of clothing sales potential within a 5 mile radius is 10 percent and also requires a sales volume of $3 million to be assured of profit and return on capital at the required level. In evaluating a site in Isle of Wight County, the retailer will apply its 10 percent corporate "capture" rate to the county's $21.1 million sales potential to yield store sales potential of $2.1 million--a figure that falls below the required threshold for opening a profitable store. In this example, the retailer will continue to rely on its Harbour View East store to tap into clothing spending by Isle of Wight County residents.

Prevailing Market Conditions

Data collected for the E. V. Williams Center for Real Estate and Economic Development at Old Dominion University provides an overview of shopping center space in Southeastern Virginia with details about the Isle of Wight County sub-market. Data released on March 12, 2015 defines the Isle of Wight retail market as follows:

 The Smithfield/Isle of Wight sub-market has seven shopping with a total of 279,756 square feet of space.

 The prevailing vacancy rate in the seven retail centers is 4.5 percent.

 Average rent is $16.60 per square foot.

Market conditions are very tight at the present time as evidenced by the low vacancy rate.

Local Market Supply

The Smithfield/Newport DSD sub-market has seven shopping centers; all would be classified as "neighborhood strip centers."

o Smithfield Shopping Plaza and adjacent retail space comprise the largest and most diverse community shopping center in Isle of Wight. Smithfield Plaza is anchored by a 45,544-square foot Farm Fresh supermarket. "Comparison goods" retailers include Peebles department store (21,600 square feet), Rose's, and Olympia Sports. The only other major retailer is Dollar Tree. The center's total GLA is 134,600 square feet.

o Cypress Run is a small retail center consisting of several buildings with distinctive architecture. Cypress Run is directly adjacent to Smithfield Plaza and offers a mix of personal services and restaurants with no "comparison goods" retailers. The largest tenant is Wells Fargo.

o Smithfield Commons is a 22,000 square foot center on South Church Street in Smithfield. It occupies an in-fill location. The project has enhanced architectural features. The center has considerable vacancy. Its current tenant mix includes Verizon, Liberty Tax, The UPS Store, Cho's Clothing Care, Smithfield Eye Center, and Papa John's. There are no "comparison goods" retailers.

o Smithfield Square is an older strip shopping center with Food Lion as the major anchor. The center is showing some signs of market erosion. Among the larger tenants are a thrift store and Smithfield Foods offices. A rental center, Virginia ABC store, and Dominos Pizza round out the tenant base. There are no "comparison goods" retailers.

o Eagle Harbor shopping plaza is a 77,000 square foot neighborhood center located on Route 17 in Carrollton. This center provides a Food Lion grocery store for the Eagle Harbor planned residential community. In addition, tenants include several financial institutions and fast food establishments. A locally-owned pharmacy, a small pet store, Virginia ABC store, and a clothing consignment shop are the only retailers in the shopping center.

o The Shoppes at Eagle Harbor is a 23,300 square foot neighborhood strip center located across Carrollton Boulevard from Eagle Harbor Shopping Center. Its tenants include Tropical Smoothie, AJ Gator's Sports Bar, a fitness center and several fast food restaurants and professional offices.

o Carrollton Cove Shoppes is a 27,100 square foot strip center largely occupied by food tenants.

Freestanding retailers in the vicinity of the Smithfield/Newport DSD node include Dollar General, Smithfield True Value, Tractor Supply Company, Hearn Furniture, Carrollton Furniture, and Sherwin Williams.

SMITHFIELD / NEWPORT DSD SHOPPING CENTERS SQ. FT. MAJOR TENANTS Smithfield Shopping Plaza 134,600 Farm Fresh, Peebles, Dollar Tree, Roses Cypress Run 25,000 --- Smithfield Commons 22,000 --- Smithfield Square 65,244 Food Lion Eagle Harbor 77,000 Food Lion The Shoppes at Eagle Harbor 23,300 --- Carrollton Cove Shoppers 27,100 --- SOURCE: H. Blount Hunter Retail & Real Estate Research Co.

New Retail Centers

Six shopping centers within mixed-use developments have been announced over the past decade and have been through various phases of the planning process but none are currently under active development:

 Eagle Harbor Tract 8 is planned for development at the intersection of Carrollton Boulevard and Smith's Neck Road as part of a mixed-use development with 208 apartments. The retail center would have up to 90,000 square feet.

 The Crossings would be located at the intersection of Route 17 and Brewer’s Neck Boulevard. The retail center build-out is 234,000 square feet. A site plan indicates several junior anchor spaces.

 Brewer's Station is proposed to have 85,000 square feet of retail space.

 St. Luke’s Village would offer 79,650 square feet of “town center” space as part of a 470- unit residential project near the intersection of Brewer’s Neck Boulevard and Benn’s Church Boulevard.

 Bridge Point Commons, proposed for construction at the intersection of Carrollton Boulevard and Deep Bottom Drive, would have 46,000 square feet of retail space and a convenience store in addition to 230 residential condominium units.

 Benn's Grant has a commercial component that has been dormant since 2007 when Walmart abandoned plans to open a store in a proposed 533,000 square foot shopping center.

Merchandising Opportunities

It is frustrating for residents living on the outer edge of a metropolitan area to be aware of the plethora of shopping and dining options located nearby. The necessity of driving for shopping is time-consuming. But an objective assessment of the situation leads to the realization that nearby retail nodes have superior population bases from which to draw customers. Community aspirations for "comparison goods" retailers need to be tempered by the inability of this limited consumer market to support adequate sales.

Few retail chains disclose their site selection criteria to the general public, but site selection guidelines exist. Selected examples illustrate the magnitude of consumer support required for several well-known retail chains. o Target typically searches for trade areas with a minimum of 100,000 residents to support a store volume of $20+ million. o Starbucks targets sites where they believe they can sell a minimum of 400 cups of coffee on weekday mornings between 6:00 and 9:00. o The Gap needs to be located in trade areas capable of supporting store sales of at least $2.5 million. This would require apparel sales of $50 million to $125 million for The Gap to succeed with 2-5 percent “capture” of apparel sales.

CONCLUSION AND RECOMMENDATIONS

A simple real estate adage is "retail follows rooftops." This means that retail development is a by- product of residential development. Most national and regional retail and restaurant chains base their site decisions on well-defined demographic criteria related to consumer spending capacity as related to population count and household income and issues such as access, co-tenancy, and competition. In varying degrees, multi-unit operators have models that predict sales performance and potential sales transfer from existing units. These models incorporate proprietary market share insights and focus on required levels of sales for achieving profitable operation. The Appendix contains the published site criteria for a variety of retailers and restaurant chains.

Despite its high ranking within Hampton Roads for personal income, Isle of Wight County’s consumer base (i.e. population) is small in comparison to the demographic requirements of the type of upscale specialty retailers found at Harbour View East or in the Chesapeake Square retail node (either inside the mall or in adjacent strip centers).

Isle of Wight's current and projected population provide an opportunity to attract a large-format general merchandiser. In today's retail environment, Walmart is the foremost candidate in this category . This retailer could reinforce the Newport DSD as Isle of Wight County's central place "critical mass" for future retail development. Walmart would bridge the gap between "convenience goods" and "comparison goods" in its merchandise offering. Walmart can be an anchor tenant that draws frequent shopping trips by a broad consumer constituency.

Walmart's drawing power may attract specialized merchants especially if an appropriately designed shopping complex can combine Walmart with other retail and restaurant tenants. A review of retailers actively seeking to expand in Virginia yielded eight priority prospects for solicitation.1

Fortunately, many of the following retailers would be reasonable prospects for Isle of Wight County and are compatible co-tenants with Walmart. The following retailers and restaurants appear to be viable candidates based on their stated site criteria including minimum population threshold and/or average daily vehicle count:

o Hibbett Sports (category currently represented by Olympic Sports) o Rue 21 o Cato Fashions o Simply Fashions o Shoe Show o Schewel Furniture o Ruby Tuesday o Golden Corral

Securing Walmart and a base of tenants similar to these priority targets could initiate interest by other "comparison goods" retailers such as T.J. Maxx / Marshall's or Ross Dress for Less; however, these stores do not disclose specific site selection criteria.

1 SOURCE: Retail Lease Trac

37 21

SITE REQUIREMENTS--SELECTED NON-APPAREL/SHOE RETAILERS AVG. HSLD. VEHICLES RADIUS POPULATION INCOME PER DAY OTHER PREFERENCES TYPICAL SIZE (SF) FACTORY CARD AND PARTY OUTLET ------VARIETY OF SHOPPING CENTER TYPES 9,000 - 10,000

PARTY CITY 5 MILES 150,000 $50,000 --- 25 PERCENT OF POPULATION UNDER AGE 14 12,000 - 15,000

DISCOUNT PARTY STORE 2 MILES 20,000 ------1,000 - 2,000

CARDSMART 3 MILES 50,000 $60,000

KIRKLAND'S 5 MILES 100,000 ------EASY ACCESS AND HIGH VISIBILITY 6,500 - 10,000

FIVE BELOW 5 MILES 100,000 $50,000 25,000 10%+ UNDER AGE 9

GAMESTOP 3 M ILES 25,000 --- 15,000 MEDIAN AGE BELOW 39 WITH 30 PERCENT OF 1,500 - 2,500 POPULATION UNDER AGE 24; DESIRED CO-TENANTS INCLUDE WALMART SUPERCENTER, TARGET

HANCOCK FABRICS ------10,000 - 13,000

JOANN'S FABRICS 5 MILES 125,000 $75,000 ---

BATH & BODY WORKS ------HIGH TRAFFIC LOCATIONS WITH FASHION RETAILER 2,500 - 3,000 CO-TENANCY

CLAIRE'S ACCESSORIES ------TARGETS TEENS AND TWEENS AGE 7 AND 13 1,000 - 1,200

SALLY BEAUTY SUPPLY 3 MILES 35,000 $34,000 20,000 100,000+ SQUARE FOOT SHOPPING CENTERS WITH 1,200 - 1,800 AT LEAST ONE MAJOR ANCHOR INCLUDING

GNC --- 30,000 ------SENSITIVE TO PROTECTED TERRITORY OF EXISTING 1,100 - 1,400 FRANCHISEE; DESIRED CO-TENANTS INCLUDE MASS MERCHANDISERINCLUDING TARGET, WALMART

ANNA'S LINENS 5 MILES 150,000 $35,000 - $70,000 --- PREFERS AREA WITH 30 PERCENT AFRICAN 7,000 - 10,000 AMERICANS OR HISPANICS; DESIRED CO-TENANTS INCLUDE NATIONAL BIG BOXES AND GROCERS

HIBBETT SPORTS 5 MILES 20,000 ------REQUIRES BIG BOX SORE OR DEPARTMENT STORE 5,000 CO-TENANCY; $200+ MILLION RETAIL SALES BASE

SITE REQUIREMENTS--SELECTED APPAREL/SHOE RETAILERS AVG. HSLD. VEHICLES RADIUS POPULATION INCOME PER DAY ROSS DRESS FOR LESS 5 MILES 100,000 --- 30,000 WHITE COLLAR CUSTOMERS AGES 25-54 --- MIDDLE INCOME HOUSEHOLDS

RUE 21 10 MILES 35,000 $35,000 - $80,000 --- TEENS AGE 11-16 WHO DESIRE TO BE 21 AND ADULTS 4,500 - 5,000 WHO ASPIRE TO BE 21 AGAIN

DRESSBARN/DRESSBARN WOMAN 5 MILES 120,000 $60,000 --- 150,000+ SQUARE FOOT CENTERS; PREFERRED --- CO-TENANTS INCLUDE DISCOUNTERS AND OTHER SOFT GOODS; TARGET IS FEMALES SIZES 2-24 AND PETITES

CATO FASHIONS --- 30,000 ------SERVES BROAD INCOME RANGE; DESIRED CO-TENANTS 4,000 - 5,000 INCLUDE DISCOUNTERS AND STRONG GROCERY STORES PREFERES RURAL AND MIDDLE MARKETS

CHRISTOPHER & BANKS 10 MILES 75,000 $50,000 --- TARGET IS FEMALES AGE 40+ WITH HOUSEHOLD INCOME 3,000 - 3,500 OF $50,000 - $75,000

DEB SHOPS ------TARGET IS FEMALES AGE 13 - 25; DESIRED CO-TENANTS 6,000 - 8,000 ARE VALUE-BASED MERCHANTS

FASHION BUG 5 MILES 100,000 $45,000 --- TARGETS WOMEN AGE 20 - 49; ALSO SERVES TEENS AND 6,500 - 9,000 GIRLS AGE 7+. DESIRED CO-TENANTS INCLUDE GROCERY AND DISCOUNTERS WITH OTHER WOMEN'S APPAREL

SIMPLY FASHIONS 3 MILES 25,000 ------MANDATORY REQUIREMENT OF AT LEAST 5,000 2,500 - 3,500 AFRICAN AMERICANS WITHIN 1 MILE RADIUS AND 25,000 AFRICAN AMERICANS WITHIN 3 MILE RADIUS

THE AVENUE 5 MILES 150,000 ------TARGET IS WOMEN SIZES 14+, AGES 25 - 55; MEDIAN 5,000 - 6,000 HOUSEHOLD INCOME $35,000 - $85,000

LANE BRYANT 5 MILES 150,000 $50,000 25,000 FASHION-ORIENTED FEMALES AGES 25 - 45; SIZES 14 - 28; 5,000 - 7,000 SOFT GOODS/OTHER WOMEN'S APPAREL AS CO-TENANTS

$10 CLOTHING 2 MILES 20,000 ------

CITITRENDS 3 MILES 30,000 ------REQUIRES HIGH CONCENTRATION OF AFRICAN AMERICANS

FAMOUS FOOTWEAR 5 MILES 100,000 $65,000 --- DESIRED CO-TENANTS INCLUDE TARGET, MARSHALL'S 5,000 - 6,500

THE ATHLETE'S FOOT 3 MILES 25,000 ------LIKE A VARIETY OF SHOPPING CENTER TYPES 1,000 - 2,400

SHOE CARNIVAL --- 80,000+ ------PREFER CENTERS WITH STRONG APPAREL/FASHION 8,000 - 10,000 CO-TENANCY; DESIRED CO-TENANTS INCLUDE TARGET, WALMART, MARSHALL'S, DRESS BARN, RUE 21

PAYLESS SHOES --- 50,000 --- 15,000

RACK ROOM SHOES --- 100,000 $50,000 ---

SHOE SHOW --- 20,000 ------PREFERS RURAL MARKETS; DESIRED CO-TENANTS ARE 2,800 - 20,000 TARGET, WALMART, TJ MAXX/MARSHALL'S, RUE 21, CATO, MAURICE'S

SHOE SENSATION --- 60,000 ------PREFER COUNTY SEAT 45 MINUTES+ FROM LARGE CITY 4,800 - 6,000

SITE REQUIREMENTS--SELECTED ANCHORS AND MINI-ANCHORS

KOHL'S --- 100,000 $40,000 --- TRADE AREAS MUST HAVE HIGH PERCENTAGE OF 64,000 - 88,000 FAMILIES WITH CHILDREN; NATIONAL RETAILER CO-TENANCY PREFERRED

PEEBLES DEPARTMENT STORES 10 MILES 20,000 - 50,000 --- 20,000 TARGET CUSTOMERS ARE WOMEN AGE 25- 54 WITH 18,500 MEDIAN HOUSEHOLD INCOME $45,000+; PREFER SITES 20+ MILES FROM DEPARTMENT STORE

STEIN MART 5 MILES 150,000 $80,000 --- REQUIRES FASHION-CONSCIOUS, HIGH TASTE FEMALES AGES 35-60; OTHER CARRIAGE TRADE RETAILERS NEARBY

HOME DEPOT 10 MILES 55,000 MSA MEDIAN 11,000 NO CONFLICTING CO-TENANTS 55,000 - 225,000

PETCO 1 MILE 15,000 $45,000+ 40,000 MIDDLE TO UPPER MIDDLE INCOME PET OWNERS; 10,000 - 15,000 3 MILES 100,000 200,000+ SQUARE FOOT SHOPPING CENTERS

PETSMART 3 MILES 75,000 $90,000 75,000 MINIMUM 200,000 POPULATION WITHIN 5 MILES 18,000 - 28,000

PET SUPPLIES PLUS 5 MILES 75,000 $45,000 20,000

SPORTS AUTHORITY 5 MILES 200,000 $55,000 30,000 PREFERS TO BE IN OR NEAR BIG BOS POWER CENTERS 35,000 - 50,000

STAPLES ------DESIRABLE CO-TENANTS INCLUDE 14,000 - 18,000 WALMART AND HOME DEPOT

OFFICEMAX --- 70,000 ABOVE MSA --- MAJOR THOROUGHFARE WITH HIGH VISIBILITY 13,000 - 18,000

OFFICE DEPOT --- 40,000 $40,000 --- GROWTH AREA WITH A MINIMUM OF 40,000 20,000 - 22,000 POPULATION

MICHAEL'S ARTS & CRAFTS 5 MILES 100,000 $35,000 25,000 PREFER TO BE IN OR NEAR BIG BOX POWER CENTERS 21,000 - 22,000

BOOKS-A-MILLION 5 MILES 150,000 ------WELL-EDUCATED CONSUMERS IN HOUSEHOLDS WITH 15,000 -25,000 MODERATE TO ABOVE-AVERAGE INCOMES; DESIRED CO-TENANTS INCLUDE BIG BOX STORES INCLUDING T.J. MAXX OR UPSCALE GROCERY STORE

BED BATH & BEYOND 5 MILES 100,000 $50,000 --- 20,000 - 85,000

SCHEWEL FURNITURE 5 MILES 20,000 ------LOWER/MIDDLE INCOME CUSTOMER FOCUS 12,000 - 55,000

SITE REQUIREMENTS--SELECTED RESTAURANTS AND FOOD/BEVERAGE

STARBUCKS 1 MILE 50,000 $45,000 ---

APPLEBEE'S 5 MILES 50,000 --- 20,000

BUFFALO WILD WINGS 5 MILES 40,000 $30,000 25,000 MINIMUM DAYTIME/LUNCH POPULATION=100,000 80% OR MORE POPULATION AGES 20-50

IHOP 3 MILES 25,000 - 50,000 ------

RUBY TUESDAY 3 MILES 25,000 $30,000 - $50,000 25,000

WILD WING CAFÉ 7 MINUTES 30,000 $60,000 --- DAYTIME POPULATION 20,000

WING STOP 2 MILES 20,000 $30,000 --- BLUE COLLAR WORKER PREFERENCE

CHICK FIL-A 3 MILES 50,000 $50,000 --- 15,000+ DAYTIME WORKERS

PANERA BREAD 1 MILE 10,000 --- 20,000 6,000+ DAYTIME WORKERS 2 MILES 30,000 ---

GOLDEN CORRAL 1 MILE 15,000 --- 25,000 3 MILES 25,000 --- 5 MILES 25,000 - 50,000 ---

SITE REQUIREMENTS--SELECTED SPECIALTY RETAILERS

COST PLUS WORLD MARKET 7 MILES 300,000 $60,000 --- FOCUS ON 22-55 YEAR OLDS

THE FRESH MARKET 5 MILES 125,000 --- 25,000 25,000

TRADER JOE'S 3 MILES 90,000 $50,000 --- 10,000 - 15,000

45 REGIONAL PROFILE

Hampton Roads - officially referred to as the Virginia Beach-Norfolk-Newport News Metropolitan Statistical Area (MSA). The region attracts and retains many of the world's most recognizable companies and thrives on its highly educated workforce including a renewable source of labor from our exiting military personnel. Centrally located on the mid-Atlantic coast, Hampton Roads has a modern infrastructure, including the state of the art Port of Virginia, that connects us to the global marketplace.