SHOPPING CENTER 2017

SURVEY & FORECAST

WEITZMAN 1 FORECAST REPORT 2017 TEXAS’ MOST IN-DEPTH AND RESPECTED RETAIL MARKET INSIGHT.

AUSTIN / / FORT WORTH / HOUSTON /

WEITZMAN 2 FORECAST REPORT 2017 TABLE OF CONTENTS

04 AUSTIN REVIEW

08 DALLAS - FORT WORTH REVIEW

16 HOUSTON REVIEW

20 SAN ANTONIO REVIEW

23 APPENDICES

23 APPENDIX A: AUSTIN CONSTRUCTION

25 APPENDIX B: DALLAS-FORT WORTH CONSTRUCTION

29 APPENDIX C: HOUSTON CONSTRUCTION

32 APPENDIX D: SAN ANTONIO CONSTRUCTION

34 DEFINITIONS

35 COMPANY OVERVIEW

35 ACKNOWLEDGMENTS

WEITZMAN 3 FORECAST REPORT 2017 AUSTINA REVIEW

AUSTIN

The information contained herein was obtained from sources deemed reliable; however, Weitzman makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The presentation of this real estate information is subject to errors or omissions. WEITZMAN 04 FORECAST REPORT 2017 HOPDODDY BURGER BAR IS ONE OF THE MANY LOCAL DINING CONCEPTS EXPANDING IN AUSTIN. A NEW LOCATION IN MIXED-USE PROJECT THE TRIANGLE OPENED IN 2016, JOINING OTHER LOCAL CONCEPTS LIKE AUSTIN: AS AVAILABLE SPACE SHRINKS, MAUDIE’S TEX-MEX. SO DOES NEW DEVELOPMENT

For calendar-year 2016, the Austin Class A-plus rent levels that can hit $40 retail market again recorded a year per square foot per year or more for BACKFILLED OR REDEVELOPED at essentially full occupancy. Despite small-shop space. RETAIL SPACE INCLUDES: the lack of available space, developers remain conservative in terms of new Occupancy remains highest in Central • Target, which took a 22,000-square- development, although the market is Austin, where density and active mid- and foot space in Dobie Twenty21, the seeing a number of large new centers high-rise residential construction helps redeveloped Dobie Mall at West come online. boost population and retail sales. The 21st and Guadalupe adjacent to the area also is essentially built out in terms University of Texas. The store, to open As of year-end, the market reported of retail space, creating barriers to entry in mid-2017, will be the first in Texas for occupancy at 96.2 percent, one of its except through redevelopments. Target’s “small-box” concept, which it highest levels ever. We foresee this high has been rolling out in select markets; occupancy continuing through 2017 due Thanks to some large new leases and to new development that opens well- the backfilling of long-vacant boxes, • H&M, the popular fast-fashion apparel leased, as well as steady leasing that is many suburban markets are enjoying retailer, which opened in 20,000 square absorbing the market’s shrinking supply their strongest retail occupancy rates feet of existing space in Bee Cave’s of available space. in recent memory. In Georgetown, on S. mixed-use Hill Country Galleria. The Austin Avenue near IH-35, a number of location is its second in Austin; No other Texas market has maintained leases helped absorb the vacant space in occupancy above 90 percent as a former Albertsons that had been empty • Saks Fifth Avenue Off 5th, consistently as Austin. During the for a decade. which opened an approximately recession that started in 2007, when 50,000-square-foot store in a former retailers like Linens ‘n Things failed and The market also benefits from limited furniture store in Gateway Shopping closed stores, Austin managed to keep its store closings. During 2016, few Center, located on Research Boulevard occupancy above 90 percent. junior-anchor boxes closed. After in North Austin; Sports Authority went out of business Even with the tight market, new nationwide, it closed its store in • 99 Ranch Market, a specialty grocer construction has remained constrained, Southpark Meadows at IH-35 and that will open in the Crescent, the largely due to high land and construction Slaughter Lane. The site is currently newly branded name for Highland costs that require record-high rents. being actively marketed. Village. 99 Ranch Market will open These rents are one reason why new in the renovated center in 2017; the space is being delivered in what are Due to low construction, many expanding location is its first in Austin; largely sure-shot locations that have the tenants open in existing-center vacancies density and affluence to deliver retail or redevelopments. • The Spot, an entertainment venue with sales high enough to support current a bar, bowling alley, movie theater and more, which opened at 1180 Thorpe Lane in San Marcos in a space that

WEITZMAN 05 FORECAST REPORT 2017 formerly housed Target. The Spot backfilled the former Jasper’s location the high-profile street-level space in joined a Gold’s Gym that opened in the in The Domain; downtown’s Frost Tower; Bufalina Due, first half of 2016 in the power center; a specialty pizzeria, with a second • P. Terry’s, with new locations that location on Burnet Road; Picnik, • Society of St. Vincent de Paul, which include a 2016 restaurant on Research Citizen, Tino’s, DeSano Pizza Bakery renovated a vacant 25,000-square-foot Boulevard, a location north of Capital and, soon, Flyrite, with new locations grocery store into offices, thrift retail, Plaza on IH-35, and one along North on Burnet Road; Flyrite, a fast-casual storage and a small restaurant at 901 Lamar; chicken concept also opened on E. W. Braker Lane in North Austin; Seventh St.; and ELM Group’s new • Torchy’s Tacos, which opened a concept, Irene’s, with a location on • STK, a high-end steakhouse from New flagship location in the former Fran’s West Ave., and Easy Tiger, with its York-based The One Group, which location on South Congress; second location. ELM Group is known leased nearly 11,000 square feet in for 24 Diner and others; a building formerly occupied by The • Pollo Tropical, which opened a new Melting Pot at 305 East 3rd Street in freestanding location on IH-35 in Kyle; • Houston-based Cyclone Anaya’s, MAD downtown Austin. Opening has been Greens, The Dogwood, Salvation • Chi’lantro, which opened its third pushed to 2017. Pizza, Tarka Indian Kitchen, East Side area location on Burnet Road near The King Thai Kun, Second Bar + Kitchen, Domain. Chi’lantro gained fame this Additionally, Austin continues to see a Sway past year after winning an investment (which also has a new location high level of activity from local, regional Velvet Taco on the ABC reality show, Shark Tank; in Westlake), and others and national restaurant concepts and located in Rock Rose in The Domain; other non-anchor tenants. The velocity of • Via 313 at 31st and Guadalupe; the leasing makes Austin one of the most • Small-format health and fitness active leasing markets in the country. • Other expanding small-tenant concepts concepts, including Massage Heights, with two new locations, Cyclebar, Soul HIGHLIGHTS INCLUDE: include Juiceland, which opened in Parmer McNeil and Frost Tower, Cycle and Orangetheory Fitness. and which will open in Georgetown’s • Boiler Nine Bar + Grill, a multi-level During calendar-year 2016, the Austin Republic Square in 2017; local favorite locale that opened in 11,000 square market added approximately 1,106,000 Jack Allen’s Kitchen, which will open feet in the Seaholm mixed-use project square feet of space in new and expanded on Anderson Lane in 2017; Mama Fu’s; downtown along Lady Bird Lake; retail projects. This marks the first time AT&T and other wireless retailers; since 2014 that the market has topped • Hopdoddy Burger Bar, which opened Denver-based Snooze, a Denver-based 1 million square feet, which is still an at 2800 North IH-35 in Round Rock and brunch-and-breakfast specialist, which extremely conservative total for a growth in The Triangle, a mixed-use project in opened in Lamar Central, a mixed-use market with a strong economy and Central Austin; project; Moe’s Southwest Grill, with the highest retail occupancy in Texas. several new locations; Blenders & (During calendar-year 2015, the market • Grand Lux Café, the sister restaurant Bowls, with two new locations; Modern added approximately 900,000 square feet to The Cheesecake Factory, which Market, whose new locations include of space.)

SMALL SHOP LEASING REMAINED ACTIVE IN 2016. AT SOUTHPARK MEADOWS, FOR EXAMPLE, NEW TENANCY INCLUDED MASSAGE HEIGHTS, AMERICA’S BEST CONTACTS & EYEGLASSES, DOLLAR TREE & OTHERS.

WEITZMANN 06 FORECASTF O RECAS T REPORTREPO RT 2017 A handful of new retail projects, including one that accounted for 60 percent of the construction total, came online in 2016. A number of projects also are underway or $40 psf planned to open in 2017 or later. These are detailed in the Construction Report in Appendix A, on page 23. RENTS REMAIN HIGH

In terms of rents, Austin-area rental rates $30 psf are at or near all-time highs, but they are not showing notable increases. • For small-shop space in anchored Class A projects, rates range from the mid- $30s per square foot per year to $40

per square foot or higher; $20 psf • Averages for Class B small-tenant rates are posting from the mid-$20s to around $33 per square foot per year; • Averages for Class C rates for small- tenant in-line spaces typically range

from around $20 to $24 per square Class C Class B Class A foot, though some Class C rates are in the teens. RENTS For all classes of space, rates can go notably lower or higher than the rates listed above due to factors including anchors, traffic, demographics and location within a center. The outlook for 2017 remains strongly positive, thanks to current leasing and development trends and a booming economy that is resulting in an unemployment rate that ranks as the LOW CONSTRUCTION, lowest for any of Texas’ major metros. STEADY LEASING AND A STRONG METRO ECONOMY HELP CREATE ONE OF THE STRONGEST RETAIL MARKETS IN THE COUNTRY.

1.5 MIL 97%

96% 1 MIL

95%

0.5 MIL 94%

2015 2016 2015 2016

CONSTRUCTION OCCUPANCY

WEITZMAN 07 FORECAST REPORT 2017 DALLAS - FORT WORTH REVIEW

DALLAS - FORT WORTH

The information contained herein was obtained from sources deemed reliable; however, Weitzman makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The presentation of this real estate information is subject to errors or omissions. WEITZMAN 08 FORECAST REPORT 2017 MALL OCCUPANCY CLIMBED IN 2016, THANKS TO CONCEPTS THAT LEASED OR EXPANDED SPACE. AT DENTON’S , BOTH VICTORIA’S SECRET AND D-FW RETAIL MARKET ACHIEVES BATH & BODY WORKS INCREASED THEIR STORE RECORD-HIGH OCCUPANCY AS LEASING SIZE. CLIMBS, NEW SPACE DROPS

The occupancy rate is based on  This category, typically anchored Dallas-Fort Worth’s retail market ended Weitzman’s review of a total D-FW retail by a grocer, is the market’s largest 2016 with 92.6 percent occupancy, an market inventory of 193,001,080 square in terms of inventory. Community increase of a full percentage point over feet of space in projects with 25,000 centers feature some of the strongest year-end 2015’s 91.6 percent occupancy. square feet or more – the largest retail projects in D-FW. In addition to The occupancy rate exceeds the inventory for any metro area in Texas. grocery and discounter anchors, the previous 32-year record for the market, Weitzman surveys 1,406 centers in 42 category features a mix of tenants a 92-percent occupancy rate achieved in submarkets, of which 30 submarkets designed to serve community needs. the boom year of 1984. are in the Dallas-area market, and 12 submarkets are in the Fort Worth-area • Neighborhood Centers – 89.3 percent The new occupancy rate is a result of market. (86.7 percent at year-end 2015) based overall market vacancy dropping to 7.4 on an inventory of 40.6 million square percent. As recently as 2009, around 13 For year-end 2016, the occupancy rate feet. percent of the market’s space was vacant, in the Dallas area was 92.6 percent, an and since then, total vacant space has improvement over year-end 2015’s 91.3  This category represents smaller, declined from 23.1 million square feet in percent. The rate is based on a review of typically unanchored centers of the depths of the recession to 14.2 million 979 projects with a total market inventory 25,000 square feet to as much as square feet of vacant space today, a of 133.9 million square feet in the Dallas 100,000 square feet. The occupancy reduction of nearly 10 million square feet area. rate for year-end 2016 represents over the past seven years. an improvement of 8.3 percent since The occupancy rate in the Fort Worth the category’s low point in 2010, THE OCCUPANCY GAIN WAS area was even better: 92.7 percent, which occupancy declined to only LARGELY DUE TO: compared to 92.4 percent at year-end 81 percent. Since that time, vacant 2015. The rate is based on 427 retail space in neighborhood centers has • Demand from expanding concepts, projects with a total inventory of 59.1 declined from 6.9 million square feet including anchors, that created high million square feet. at year-end 2010 to 4.3 million square leasing activity levels for the market’s feet today. existing centers; FOR D-FW’S MAJOR SHOPPING  The strongest neighborhood • New space development that was CENTER CATEGORIES, THE centers in the category continue to primarily anchor driven with extremely SURVEY REPORTED THE report healthy occupancies, and 23 limited small-shop space that was built FOLLOWING OCCUPANCY submarkets report neighborhood- in line with demand; RATES: center occupancy ranging from 90 • Community Centers – 92.3 percent • New market entrants that expanded to 100 percent, compared to just 13 (compared to 91.5 percent at year-end primarily via existing space. submarkets in 2015. 2015) based on an inventory of 74.4 million square feet.

WEITZMAN 09 FORECAST REPORT 2017 • Power Centers – 95.3 percent (95.2 mixed-use projects underway feet absorbed in the entire D-FW market percent at year-end 2015) based on an including in Plano. in 2014. In the smaller Fort Worth retail inventory of 40.5 million square feet. market, a healthy 1,192,858 square feet of • Malls –93.8 percent (93.1 percent at space was absorbed.  The occupancy in this category year-end 2015) for an inventory of 23.5 remains healthy as the category million square feet. The overall market did see some new transforms from one with only key vacant spaces, most notably the power “category killer” retailers  These numbers remain healthy, even nine closed Sports Authority stores, to an expanded focus with uses taking into consideration Macy’s which created more than 411,000 square ranging from gyms to discounters, closing a mall anchor store in Fort feet of new vacancy, plus four Fresh grocers to medical uses, as well as Worth. For 2017, we’ll see another Market stores (altogether totaling less entertainment and restaurants. The department store go dark after than 90,000 square feet) and four area Power category, which reported fast- Neiman’s relocates its Ridgmar store Goldsmith stores, which were closed rising vacancy during the recession to Shops at Clearfork. after the chain’s acquisition by Dick’s when power tenants like Circuit City Sporting Goods. Fortunately, D-FW has and Linens ‘n Things failed, is today  Mall owners do not take these a stellar track record of backfilling retail one of the healthiest categories in vacancies lightly. Plans are already vacancies, and 2016 was no exception, Dallas-Fort Worth, even with the in the works to redevelop the Macy’s with Tom Thumb already open in three of closing of several stores by Sports and the Neiman’s spaces, possibly for the former Fresh Markets. Authority. multi-tenant or entertainment space. To make locations and existing centers • Mixed-use – 95.5 percent (95.4 ABSORPTION STEADY IN 2016 as attractive as possible for expanding percent at year-end 2015) based on Steady leasing in existing retail projects retailers, many sites are undergoing an inventory of 5.8 million square feet and new projects opening full or renovations. In Uptown Dallas, even high- of retail space in projects with other essentially full proved to be big drivers profile mixed-use project The Crescent commercial and residential space. for strong absorption in D-FW. Absorption completed a $33 million renovation measures net leasing demand by using a that helped its retail space sign new  This category, with retail at its core, concepts like New York-based Shake typically also features residential and formula to determine the net change in occupied space. Shack and Canada-based Moxie’s. As office space, as well as other uses expanding grocers, like WinCo with such as hotel or entertainment. For 2016, the market reported 3,802,546 new 85,000-square-foot stores, open square feet of absorption. While the total in existing centers, many projects are  This category saw strong activity represents a decline over the 4,531,480 reporting their highest occupancy in from restaurant, service and shop decades thanks to the shopper traffic tenants. square feet absorbed in 2015, it still represents the second-highest activity and the service and shop co-tenancy new anchors attract.  During 2016 and moving into 2017, in 16 years. A total of 2,609,687 square mixed-use is the most active non- feet were absorbed in the Dallas area, community category, with major almost as much as the 2.6 million square

MIXED-USE RETAIL RECORDED OVERALL OCCUPANCY GAINS IN 2016. PROJECTS LIKE WEST PLANO VILLAGE, SHOWN HERE, SAW STEADY OPENINGS FROM SPECIALTY RESTAURANTS, SERVICES AND SHOPS.

WEITZMAN 10 FORECASTF O RECAS T REPORTREPO RT 2017 For 2016, leasing in existing centers is space at Skillman Abrams Shopping For calendar-year 2016, despite what boosting occupancy and taking spaces Center in East Dallas for a nine-screen could be considered its healthiest both large and small from the market. location to open in 2017; balance of supply and demand in history, D-FW added only 2,027,122 square feet in KEY BACKFILLED LOCATIONS IN • Burlington Coat Factory, which leased new and expanded projects with 25,000 EXISTING CENTERS DURING THE approximately 48,000 square feet in square feet or more. The Dallas area YEAR INCLUDED: formerly multi-tenant space in Cedar reported 984,649 square feet of new Hill Shopping Center, located on FM space, and the Fort Worth area reported • At Home, the home accessories 1382 in Cedar Hill; 1,042,473 square feet. superstore, which at mid-year 2016 opened in a 140,167-square-foot former • Guitar Center, which took 13,349 square The construction total represents a Walmart box at 13307 Midway Road feet of a former Best Buy vacancy at decline from 2015, when the market in Farmers Branch. At Home also Cedar Hill Pointe in Cedar Hill; reported new construction of 2.7 million leased a former Kohl’s at North Central square feet of new retail space. While Expressway and Parker Road to • F21 Red, an apparel retailer, which millions of square feet remain in the relocate its East Plano store; opened in 17,484 square feet of existing pipeline, limited shop space is being space in Cedar Hill’s Hillside Village developed in conjunction with anchors • H&M, the popular fast-fashion retailer, open-air mall; like Kroger Marketplace, and phased which opened during the first half of developments taking longer than first 2016 in a 31,000-square-foot vacancy • Tom Thumb, which opened in backfilled announced are among the key reasons for created when Barnes & Noble closed space in three former Fresh Market the drop in new space compared to 2016. in downtown Fort Worth. H&M also stores in East Dallas, in the Oak Lawn opened in 22,000 square feet of area of Dallas and in the University New space in major retail projects for backfilled space at in Fort District of Fort Worth. Fresh Market 2016 and 2017 is highlighted in the Worth; exited the D-FW market in the second Construction Report in Appendix B on quarter of 2016; page 25. • WinCo Foods, with new stores totaling approximately 85,000 square feet that • Gold’s Gym, which opened a new Although it’s not set to open until 2020, opened in or are redeveloping large location in 38,500 square feet in a it’s notable that Fargo, N.D.-based Scheels vacancies in D-FW, including: long-vacant Bally’s Fitness at North is on track to enter the D-FW market Central Expressway and Campbell in with a 300,000-square-foot megastore  A store that opened in September Richardson. The existing space was in the Nebraska Furniture Mart-anchored 2016 at the site a former Sports expanded by 9,500 square feet for the Grandscape development in The Colony. Authority in Arlington’s Bardin Place Gold’s; Shopping Center, located at 4620 S. The D-FW retail market activity, Cooper Street; • The complete redevelopment of the especially retail leasing demand and vacant, 125,000-square-foot Saks store growth, is boosted by the metro  The site of a closed Target store store at , an area’s economy, which ranks as one of in Trinity Valley Shopping Center, upscale mall in Plano. The razed Saks the strongest in the country. In terms of located at SH-190 and Josey Lane. store site is being redeveloped for an population, the D-FW metro area ranks as The new 85,000-square-foot WinCo open-air entertainment, restaurant and one of the fastest-growing in the country. is now under construction and will retail district. The mall’s owner is also Currently, the D-FW market’s population open in 2017. in the works with plans for an office totals 7.1 million people, an increase of tower and a hotel at the site, located 36.2 percent since 2000. • Saks Fifth Avenue OFF 5th, J. Crew and at the Dallas North Tollway and Park Nordstrom Rack, which leased a total Boulevard; With powerful growth expected to of 68,000 square feet of existing space continue in the key areas of jobs, in Preston Ridge, a shopping center at • Dirt Cheap, which leased a population and residential growth, the Gaylord Parkway and Preston Road in 34,265-square-foot former Conn’s on outlook for the D-FW retail market in 2017 Frisco; South Cherry Lane in White Settlement, is for a year with steady gains building on near Fort Worth. the strength seen in 2016. • Alamo Drafthouse, which backfilled a 46,000-square-foot former grocery

PROPERTIES 2016 GLA 2016 VACANCY 2016 % VACANCY Neighborhood 698 40,571,544 4,321,603 10.65% Mixed-Use 34 5,763,214 256,963 4.46% Malls 18 23,490,097 1,459,958 6.22% Power 135 40,475,079 1,888,515 4.67% Community 473 74,405,844 5,697,561 7.66%

WEITZMAN 11 FORECAST REPORT 2017 DFW RENTAL RATES

SECTOR NAME CLASS A CLASS B CLASS C 1 Dallas CBD $40 $24 $12 2 Northeast Dallas $32 $20 $10 3A Far North Dallas $25 $19 $14 3B North Dallas $40 $25 $17 93% 3C Park Cities/Oak Lawn $55 $31 $23 3D West Dallas $28 $15 $10 92% 4 Southeast Dallas $15 $10 $7 5 Southwest Dallas $18 $14 $7 91% 6 Addison $31 $20 $11 7 Carrollton $22 $15 $10 90% 8 DeSoto/Lancaster $16 $10 $6 9 Duncanville $15 $10 $7 Farmers Branch $18 $14 $8 2015 2016 10 11 Grand Prairie $28 $15 $10 OCCUPANCY 12 Irving $28 $16 $10 13A Coppell $27 $19 $12 13B Mesquite/Balch Springs $24 $15 $8 Richardson $30 $22 $12 3 MIL 14 15 Plano $36 $25 $12 16 Denton $34 $25 $12 2 MIL 17 Lewisville/Flower Mound $30 $22 $12 18 McKinney $28 $21 $15

1 MIL 19 Frisco $38 $25 $17 20 Allen $28 $18 $12

2015 2016 21 Rowlett $25 $15 $9 22 Rockwall $27 $18 $11 CONSTRUCTION 23 Cedar Hill $22 $16 $11 24 Murphy/Wylie/Sachse $26 $18 $10 25 Garland $27 $16 $10 26 Northern Ellis County $21 $16 $10

DALLAS AVERAGE $26 $18 $11

27 Arlington $26 $18 $10 28 Bedford/Euless $27 $14 $10 29 Hurst $26 $15 $10 TABLE REFLECTS 30 Northeast Fort Worth $27 $15 $8 ASKING RATES BEFORE CONCESSIONS FOR 31 Northwest Fort Worth $25 $14 $8 TYPICAL SMALL-SHOP 32 Southeast Fort Worth $18 $14 $7 SPACE. TOTALS ARE NOT 33 Southwest Fort Worth $32 $20 $12 WEIGHTED. 34 Fort Worth CBD $30 $20 $13 35 North Richland Hills $24 $14 $8 36 Northeast Tarrant County $36 $22 $15 37 Weatherford $25 $16 $8 38 Burleson $25 $18 $12

FORT WORTH AVERAGE $27 $17 $10

DFW AVERAGE $28 $18 $11

WEITZMAN 12 FORECAST REPORT 2017 DALLAS-FORT WORTH SUBMARKET SUMMARY

YE 2015 YE 2015 % YE 2016 YE 2016 % NAME YE 2015 GLA VACANCY VACANCY YE 2016 GLA VACANCY VACANCY 1 Dallas CBD 536,492 118,957 22.17% 536,492 116,784 21.77% 2 Northeast Dallas 9,429,535 1,002,933 10.64% 9,429,535 388,897 4.12% 3A Far North Dallas 8,791,116 620,951 7.06% 8,791,116 584,245 6.65% 3B North Dallas 5,747,739 165,376 2.88% 5,747,739 124,008 2.16% 3C Park Cities/Oak Lawn 3,169,973 80,438 2.54% 3,207,692 70,036 2.18% 3D West Dallas 567,492 122,350 21.56% 567,492 59,115 10.42% 4 Southeast Dallas 1,924,034 213,800 11.11% 1,924,034 34,840 1.81% 5 Southwest Dallas 7,506,301 1,116,556 14.87% 7,500,189 597,518 7.97% 6 Addison 1,482,111 201,385 13.59% 1,482,111 232,198 15.67% 7 Carrollton 3,352,321 439,444 13.11% 3,352,321 367,507 10.96% 8 DeSoto/Lancaster 2,076,711 221,435 10.66% 2,076,711 247,233 11.91% 9 Duncanville 1,444,174 255,397 17.68% 1,444,174 229,424 15.89% 10 Farmers Branch 1,086,528 101,545 9.35% 1,086,528 86,777 7.99% 11 Garland 7,071,524 763,103 10.79% 7,071,524 432,324 6.11% 12 Grand Prairie 3,486,058 153,958 4.42% 3,486,058 114,949 3.30% 13A Irving 8,163,653 874,683 10.71% 8,231,653 983,409 11.95% 13B Coppell 853,480 129,120 15.13% 853,480 86,381 10.12% 14 Mesquite/Balch Springs 5,237,819 517,756 9.88% 5,237,819 437,357 8.35% 15 Richardson 4,000,976 477,057 11.92% 4,100,976 351,358 8.57% 16 Plano 15,178,222 1,539,192 10.14% 15,178,222 1,639,165 10.80% 17 Denton 6,300,142 358,534 5.69% 6,540,142 369,880 5.66% 18 Lewisville/Flower Mound 10,138,781 867,361 8.55% 10,138,781 926,263 9.14% 19 McKinney 3,661,840 194,494 5.31% 3,902,840 90,815 2.33% 20 Frisco 6,875,488 224,099 3.26% 7,017,722 203,210 2.90% 21 Allen 4,961,761 327,793 6.61% 4,961,761 391,133 7.88% 22 Rowlett 1,327,542 76,524 5.76% 1,327,542 101,215 7.62% 23 Rockwall 2,078,141 114,978 5.53% 2,078,141 164,109 7.90% 24 Cedar Hill 2,656,273 167,808 6.32% 2,665,273 190,849 7.16% 25 Murphy/Wylie/Sachse 1,962,451 44,515 2.27% 1,962,451 111,061 5.66% 26 Northern Ellis County 1,880,589 65,475 3.48% 1,994,762 181,284 9.09% DALLAS 132,949,262 11,557,017 9.14% 133,915,281 9,913,344 7.40%

27 Arlington 13,877,553 942,250 6.79% 13,877,553 918,312 6.62% 28 Bedford/Euless 2,728,478 250,259 9.17% 2,948,406 234,188 7.94% 29 Hurst 3,678,524 350,834 9.54% 3,678,524 232,780 6.33% 30 Northeast Fort Worth 3,742,411 357,466 9.55% 3,865,456 332,187 8.59% 31 Northwest Fort Worth 6,284,119 353,539 5.63% 6,783,619 335,327 4.94% 32 Southeast Fort Worth 1,736,560 176,510 10.16% 1,736,560 189,899 10.94% 33 Southwest Fort Worth 9,351,542 883,840 9.45% 9,551,542 969,299 10.15% 34 Fort Worth CBD 393,300 54,824 13.94% 391,800 37,900 9.67% 35 North Richland Hills 3,249,011 615,245 18.94% 3,249,011 457,425 14.08% 36 Northeast Tarrant Co 9,248,542 367,175 3.97% 9,248,542 482,132 5.21% 37 Burleson 2,078,016 44,874 2.16% 2,078,016 33,233 1.60% 38 Weatherford 1,676,770 68,480 4.08% 1,676,770 90,728 5.41% FORT WORTH 58,044,826 4,465,296 7.69% 59,085,799 4,313,410 7.30%

GRAND TOTAL 190,994,093 16,022,313 8.39% 193,081,080 14,226,754 7.37%

WEITZMAN 13 FORECAST REPORT 2017 DALLAS/FORT WORTH SUBMARKET MAP

380 1717 1919 2020 380

35W 121 2121 35E 75 1616 1818 DNT 2525 287 190 121 77 3A3A 13B13B 66 1515 377 66 35W 3636 635 1111 114 1010 1111 2222 2323 121 35E 75 3030 3B3B 3131 161 DNT 3535 2828 13A13A 30 2828 183 820 22 2929 3C3C 30 121 3D3D 820 11 30 1414 80 3434 44 1414 30 3434 44 635 175 360 1212 20 55 20 20 377 2727 20 3232 99 3333 45 35W 67 287 88 2424 2424 35E 3737 2626

Shopping Center Sectors 1 - Dallas CBD 18 - Lewisville / Flower Mound 2 - Northeast Dallas 19 - McKinney 3A - Far North Dallas 20 - Frisco 3B - North Dallas 21 - Allen 3C - Park Cities / Oak Lawn 22 - Rowlett 3D - West Dallas 23 - Rockwall 4 - Southeast Dallas 24 - Cedar Hill 5 - Southwest Dallas 25 - Murphy / Wylie / Sachse 6 - Addison 26 - Northern Ellis County 7 - Carrollton 27 - Arlington 8 - DeSoto / Lancaster 28 - Bedford / Euless 9 - Duncanville 29 - Hurst 10 - Farmers Branch 30 - Northeast Fort Worth 11 - Garland 31 - Northwest Fort Worth 12 - Grand Prairie 32 - Southeast Fort Worth 13A - Irving 33 - Southwest Fort Worth 13B - Coppell 34 - Fort Worth CBD 14 - Mesquite / Balch Springs 35 - North Richland Hills 15 - Richardson 36 - Northeast Tarrant County 16 - Plano 37 - Burleson 17 - Denton 38 - Weatherford* *not shown on map

WEITZMAN 14 FORECAST REPORT 2017 DALLAS-FORT WORTH - ABSORPTION & CONSTRUCTI0N NAME 2016 ABSORPTION 2016 CONSTRUCTION* 1 Dallas CBD 2,173 2 Northeast Dallas 614,036 3A Far North Dallas 36,706 3B North Dallas 41,368 3C Park Cities/Oak Lawn 48,121 50,000 3D West Dallas 63,235 4 Southeast Dallas 178,960 5 Southwest Dallas 512,926 6 Addison -30,813 7 Carrollton 71,937 8 DeSoto/Lancaster -25,798 9 Duncanville 25,973 10 Farmers Branch 14,768 11 Garland 330,779 12 Grand Prairie 39,009 13A Irving -40,726 68,000 13B Coppell 42,739 14 Mesquite/Balch Springs 80,399 15 Richardson 225,699 100,000 16 Plano -99,973 17 Denton 228,654 240,000 18 Lewisville/Flower Mound -58,902 19 McKinney 344,679 241,000 20 Frisco 163,123 162,426 21 Allen -63,340 22 Rowlett -24,691 23 Rockwall -49,131 24 Cedar Hill -14,041 25 Murphy/Wylie/Sachse -66,546 26 Northern Ellis County -1,636 114,173 DALLAS 2,609,687 984,649

27 Arlington 23,938 28 Bedford/Euless 235,999 219,928 29 Hurst 118,054 30 Northeast Fort Worth 148,324 123,045 31 Northwest Fort Worth 517,712 499,500 32 Southeast Fort Worth -13,389 33 Southwest Fort Worth 114,541 200,000 34 Fort Worth CBD 15,424 35 North Richland Hills 157,820 36 Northeast Tarrant Co -114,957 37 Burleson 11,641 38 Weatherford -22,248 FORT WORTH 1,192,859 1,042,473

GRAND TOTAL 3,802,546 2,027,122

* New construction of 25,000 square feet or more; some construction represents expansion space

WEITZMAN 15 FORECAST REPORT 2017 HOUSTON REVIEW

HOUSTON

The information contained herein was obtained from sources deemed reliable; however, Weitzman makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The presentation of this real estate information is subject to errors or omissions. WEITZMAN 16 FORECAST REPORT 2017 THE JUNCTION AT DEER PARK, ANCHORED BY H-E-B, OPENS A NEW PHASE IN 2017. HOUSTON RETAIL MARKET CONTINUES TO PERFORM IN FACE OF ENERGY INDUSTRY WEAKNESS

Houston’s retail market as of year-end closings further added more than 272,000 seen vacancy increase due to its heavy 2016 reports a healthy occupancy rate square feet of vacancy to the market. concentration of “upstream” energy firms, of 95.5 %, which ranks as one of the particularly in the Downtown and Energy strongest rates recorded for the market; Weitzman reviews a Houston-area retail Corridor submarkets. The segments occupancy showed a slight decrease over market inventory of approximately 155.3 like refineries and petrochemical plants year-end 2015. million square feet in multi-tenant retail that make up Houston’s “downstream” centers with 25,000 square feet or more. market, however, continue to perform The retail market to date has shown strongly due to the fact that they benefit little to no ill effect from the oil market’s While high profile, the closings from lower oil prices. This is boosting the weakness. The market remains healthy represented only a rounding error for a residential and retail markets in Houston due to weaker but positive employment market with more than 150,000 million areas like Baytown, Pasadena and Deer growth, as well as healthy population and square feet of retail inventory; as they Park. The strong economies in these residential growth. The market is seeing are marketed, the vacant boxes are likely areas are leading to higher residential more new retail construction than any to find new tenancy within a reasonable and retail construction, and the jobs other major metro in Texas, but the new amount of time due to the fact that the space is reacting to increased density metro area has a strong track record of inside the Loop and strong suburban backfilling vacant existing space. residential growth, which is creating KEY CONCEPTS BACKFILL new demand that is being met by a large The retail market is benefitting from VACANCIES IN 2016 number of new grocery stores. the continued strength of the Houston economy, which despite the loss of During the first half of 2016, the market numerous energy-sector jobs, still reports saw the closure of 11 Sports Authority an unemployment rate of only 4.9 percent DICK’S SPORTING FIESTA MART stores, four Fresh Market grocery stores as of November 2016, according to the GOODS and two Walmart stores, a Supercenter Texas Workforce Commission. The rate actually represents an improvement over on FM 1960 West and a Neighborhood H•E•B NORDSTROM RACK Market on Gessner. Sports Authority’s 11 the 5.8 percent rate posted as of July area stores ranged in size from 35,000 2016. WHOLE FOODS ACADEMY SPORTS square feet to more than 65,000 square & OUTDOORS feet, creating well over a half a million Thanks to positive job growth combined with strong population growth, the square feet of vacancy in the process. PGA SUPERSTORE Fresh Market’s failure did not have as ongoing oil price downturn that began in large an impact, but its closure of four mid-2014 has had few negative effects area stores added close to 90,000 square on the retail market; however, segments feet of vacant space, and the Walmart of the office and industrial markets have

WEITZMAN 17 FORECAST REPORT 2017 created by the downstream boom are Mall and Willowbrook Mall. The located along IH-10 in East Houston. seen as one key factor that is keeping stores, in the 50,000-square-foot to The retail property is being renovated; the Houston market out of negative job- 80,000-square-foot range, are among growth territory. the national chain’s first six stores • Fitness Connection, which leased in the Houston market, all of which 44,200 square feet in Jones Plaza in For calendar-year 2016, the Houston- opened in 2016; Northwest Houston; area retail market added approximately 3,415,000 square feet of retail space in • PGA Superstore, which opened in a • El Mercado, a Hispanic-themed grocery new and expanded projects, an increase 45,500-square-foot former Sports store, with a 42,130-square-foot space over the 2.7 million square feet that came Authority location at 19075 IH-45 North in Fairmont Junction Shopping Center online in 2015. The current construction in The Woodlands Shopping Center; on Fairmont Parkway in Pasadena. total marks the highest new construction since 2008, when 4.9 million square • Nordstrom Rack, which is backfilling RESTAURANTS REMAIN ONE OF feet came online. Construction dropped a 27,000-square-foot former Sports THE HOUSTON AREA’S MOST sharply during the recent recession, with Authority space in Portofino Shopping ACTIVE CATEGORIES FOR the lowest point being 600,000 square Center, located in The Woodlands area NEW LOCATIONS. NEW AND feet of new space in 2011. in Shenandoah. The store will open in EXPANDING CONCEPTS INCLUDE: 2018; Based on projects underway and • Mellow Mushroom, a specialty pizza concept planned, the market in 2017 should see • Whole Foods Market, which opened that opened its second Houston location construction remain active but with lower a 40,000-square-foot store at 11041 at 1919 N. Shepherd in the Heights area. total space. Westheimer Road in a former Randalls; Also in the Heights, Dallas-based specialty pizza concept Cane Rosso opened its first For 2016, the majority of new retail • H-E-B, which opened a 62,000-square- Houston location during the first half of the centers are dominated by grocery- foot store at the site of a vacant Kmart year at 1835 N. Shepherd; anchored retail with some very high- at Highway 146 near Palmer Highway in profile exceptions. New retail space in Texas City; • Fast-casual Malawi’s Pizza, which entered new and expanded projects is detailed in the market with a location at 8731 Highway 6 the Construction Report in Appendix C on • Fiesta Mart, which backfilled three in Sienna Plantation. A second location soon page 29. vacant grocery store boxes located opens in Central Square Midtown, a mixed- at 2877 S. Richey and at 11035 East use project located at 2100 Travis Street in THE MARKET IS ALSO SEEING Freeway in Houston and at 5101 Avenue the Midtown district; STRONG DEMAND FOR SPACE H in Rosenberg; IN EXISTING CENTERS. LEASING • Tacodeli and Hopdoddy Burger Bar, favorites HIGHLIGHTS INCLUDED: • Academy, which opened a out of Austin, which are opening new 63,000-square-foot store at 1461 Spring Houston locations; • Dick’s Sporting Goods stores, which Cypress and IH-45, which represents opened new-construction locations as the redevelopment of a former Kroger • Snooze, a Denver-based breakfast-and- mentioned previously, as well as new location; brunch concepts, which is opening several stores in backfilled space at Deerbook locations throughout the market; Mall, First Colony Mall, The Woodlands • Boot Barn, which leased 13,250 square feet in Federal East Shopping Center, • Maggiano’s, an upscale Italian chain, which opened its third area location in Memorial City Mall;

• Roka Akor, a high-end Japanese steak, sushi WOODSHORE and seafood restaurant that will open in MARKETPLACE, A 2017 in the 2929 Weslayan luxury residential KROGER MARKETPLACE- tower in the River Oaks area of Houston; ANCHORED CENTER IN CLUTE, OPENED IN 2016. • Fast-casual and quick-serve chicken concepts, which are expanding marketwide and include Pollo Loco, Chick-fil-A, Chicken Express and Slim Chickens;

• Specialty dessert concepts, including Sub Zero Ice Cream and Steel City Pops. Sub Zero has a total of seven area locations to date, many of which are in new retail centers. Steel City Pops opened in Heights Plaza at 420 E. 20th Street in summer 2016.

WEITZMAN 18 FORECASTF O RECAS T REPORTREPO RT 2017 URBAN RETAIL INCLUDED THE PLANNED STREET- LEVEL SPACE IN THE IVY LOFTS IN HOUSTON’S EAST DOWNTOWN (EADO) DISTRICT.

HOUSTON’S RETAIL MARKET These rates are average small-shop asking IS SEEING AVERAGE QUOTED rates, and rates at specific centers can be RENTS REMAIN STEADY, INSTEAD notably higher or lower depending on location, OF INCREASING, AS THEY anchors, type of tenant, specific-space sizes and MAINTAIN THE LEVELS THEY demographics. REACHED A YEAR OR SO AGO. Going into 2017, the retail market appears poised Demand for the Class A space, especially inside to repeat the strong performance of 2016, based the Loop, can result in small-shop rates in the on steady leasing activity and new construction best-located and newly constructed projects that remains primarily demand-based going as high $50 to $60 per square foot per year in select areas like Galleria, River Oaks and Midtown. For small-shop in-line space in well-located, anchored projects:

• Class A rates ranged from $30 to the high $30s on a per-square-foot-per- year basis, with rates for quality space inside the Loop typically rising above $40 per square foot or more. 4 MIL 96% • Class B small-shop space average rates ranged from the low to the high 3 MIL 95% $20-per-square-foot-per-year range.

• Class C small-shop rates typically were 2 MIL 94% in the $15- to $20-per-square-foot-per- year range. 1 MIL 93%

2015 2016 2015 2016

CONSTRUCTION OCCUPANCY

WEITZMAN 19 FORECAST REPORT 2017 SAN ANTONIO REVIEW

SAN ANTONIO

The information contained herein was obtained from sources deemed reliable; however, Weitzman makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The presentation of this real estate information is subject to errors or omissions.

WEITZMAN 20 FORECAST REPORT 2017 IKEA ANNOUNCED ITS FIRST SOUTH TEXAS STORE IN 2016. THE STORE WILL ANCHOR LIVE OAK TOWN CENTER AND OPEN BY 2019. SAN ANTONIO RETAIL MARKET REMAINS HEALTHY IN 2016

San Antonio’s retail market maintained IKEA. In November, the Swedish retailer Other active concepts include H-E-B, its healthy occupancy rate of 94 percent announced its plans to develop a the market’s leading grocer in terms of as of year-end 2016, thanks to steady 290,000-square-foot furniture store at market share, as well as other anchors demand for existing retail space that the southwest quadrant of IH-35 and like Academy Sports + Outdoors. continues to absorb vacancies on the Loop 1604 in Live Oak for its first location market. In addition, the market benefits in South Texas. In addition to the anchor Detailed information on new projects can from limited construction of new space, of the center, to be named Live Oak Town be found in the New Construction report which tends to open significantly or fully Center, an additional 480,000 square feet in Appendix D on page 32. leased. of anchor and shop space is planned by Weitzman. THE MARKET’S HEALTHY The occupancy rate is based on a OCCUPANCY IS MAINTAINED review of San Antonio area multi-tenant CONSTRUCTION INCREASES BY RETAIL CONCEPTS shopping centers with 25,000 square IN 2016 TAKING LARGE VACANCIES IN feet or more conducted by Weitzman. EXISTING SPACE. EXAMPLES OF The review is based on a San Antonio During 2016, the San Antonio market BACKFILLED SPACE INCLUDE: inventory of 45.1 million square feet of added approximately 1.2 square feet of • Floor & Décor, which backfilled a retail space. space in new and expanded projects. The past year’s construction total remains 65,000-square-foot former Sports The market for Class A space remains conservative, but it still marks the biggest Authority in La Plaza Del Norte at Loop tighter than the overall market, addition to retail inventory since 2014, 410 and San Pedro Avenue; and centers at the best-performing when 1.4 million square feet came online. • At Home, a Texas-based home décor intersections and retail districts During 2015, the market added less than superstore, which absorbed one of San throughout San Antonio are often 900,000 square feet. Antonio’s largest remaining vacancies by completely full. A number of major retail projects are on leasing 118,000 square feet of a former The market’s limited retail construction is the drawing board that could add millions Target store at 8421 U.S. 281 North, near dominated by anchor stores, most notably of square feet to the market. Of these, . Tuesday Morning opened Walmart and H-E-B, as well as space for we expect to see several underway and in the balance of the Target space this power anchors like Academy and a junior- opening in 2017 and 2018. past year; anchor box for Macy’s Backstage. These • F21 Red, a family apparel concept, anchors come online with limited or even For 2016, more than any other retailer, which leased 22,000 square feet of no small-shop space, further tightening Walmart dominated new development. existing retail space in Ingram Festival, the market for available space. As it grows its market share in the Alamo City market, Walmart opened both peripheral to ; In terms of construction, the biggest large-format Supercenters and smaller J. Crew Mercantile, a new concept from news during 2016 involved a store Neighborhood Markets. • J. Crew, which opened in existing space in that won’t open for at least two years: the high-profile ;

WEITZMAN 21 FORECAST REPORT 2017 • The multi-tenant redevelopment of ASKING RETAIL RENTS REMAIN the historic Joske’s building, circa 1887, STABLE, WITH RENTS FOR THE in ’s Rivercenter. MARKET’S STRONGEST CLASS A The space, branded , RETAIL CENTERS SEEING features a 33,000-square-foot Dave & INCREASES OVER THE PAST 18 Buster’s and a two-story H&M. In addition, MONTHS. new concepts at the mall include Texas’ first Jimmy Buffet’s Margaritaville, as well While Class A rents are steady, the tight as Yard House and Johnny Rockets; market for space is resulting in increases in rates for Class B and C retail space. • West Elm, the upscale home furnishings chain, which opened an 11,000-square- For centers by grade: foot store at 201 E. Grayson Street, near 1.5 MIL downtown, in existing space that most • Average Class A asking rents for recently served as a haunted house; small-shop in-line spaces in the market’s strongest centers, including • YMCA of , which new construction, ranged from $28 to 1 MIL opened in a 53,570-square-foot former the mid-$30s per square-foot per year. grocery store located at Potranco Road These rates are for small-shop space in and Highway 151; the newest and/or strongest anchored 0.5 MIL projects. For leading Class A retail • Small-format concepts expanding in centers, rates can reach the $40-per- existing centers, which include specialty square-foot or higher level. fitness uses like CycleBar, Orangetheory, 2015 2016 Title IX Boxing and Nine Rounds, as • Class B asking rates typically were in CONSTRUCTION well as restaurants such as Hopdoddy the $19-to-$23-per-square-foot range. Burger Bar, Mashed, Raising Cane’s, Wing Daddy’s, Moe’s Southwest Grill, • Class C asking rates were in the $12-to- Lion & Rose Pub and Gloria’s, which is $18-per-square-foot range. new construction at The Rim. Breakfast- 94% and-brunch eateries Eggspectations and The reported rates are average asking Snooze are also expanding. rates and do not take into consideration concessions. Rates can be higher or lower 93% For 2017, a number of projects are slated depending on location, co-tenancy, center condition and other factors. to open or to break ground, including 92% high-profile mixed-use projects. Detailed information on these planned projects San Antonio’s retail market continues to can be found in the New Construction benefit from the continued soundness of 91% report in Appendix D on page 32. the metro area’s economy, which ranks as one of the better-performing major markets in Texas and the country. 2015 2016

OCCUPANCY THE VILLAGES @ HERFF, TO BREAK GROUND IN 2017, WILL BE THE FIRST MAJOR MIXED-USE PROJECT IN BOERNE, A SAN ANTONIO-AREA TOWN.

WEITZMAN 22 FORECASTF O RECAS T REPORTREPO RT 2017 APPENDIX A: AUSTIN CONSTRUCTION

KEY NEW RETAIL FOR 2016

Domain Northside & Rock Rose Domain Northside and Rock Rose are the newest retail components of the MoPac near W Braker Ln massive Domain mixed-use project, which has opened in phases over several Austin years. A total of 620,000 square feet came online in 2016 in Domain Northside, anchored by a 127,500-square-foot full-line Nordstrom and a four-story RH Austin from Restoration Hardware, and locally focused Rock Rose, where restaurants and retailers include Tarka Indian Kitchen, Birds Barbershop, Salvation Pizza and more.

Star Ranch Star Ranch, anchored by H-E-B Plus, is the largest grocery-anchored project to Gattis School Rd at SH-130 open in 2016. In addition to the 121,000-square-foot H-E-B Plus that opened in Hutto November, the center includes Five Star ER and Gold’s Gym. Star Ranch retail is located in Hutto near its border with Pfugerville.

Crystal Falls Town Center This 93,642-square-foot community retail center in Leander is anchored by a SWC Lakeline Blvd & Crystal Falls Pkwy 63,182-SF Randalls grocery store. Leander

High 5 This 46,000-square-foot entertainment venue with bowling, an arcade, a 1502 RR 620 S restaurant and bar, and more, opened in January 2016 in the Oaks at Lakeway. Lakeway

LA Fitness A new 45,000-square-foot facility opened in March 2016. 1824 W Slaughter Ln Austin

H-E-B H-E-B expanded its Georgetown store by 12,500 square feet added to the existing 4500 Williams Dr 84,000 square feet to create a 96,500-square-foot store. Georgetown

KEY NEW SPACE ANNOUNCED FOR 2017 OR LATER

The Parke This 370,000-square-foot center will feature Austin’s first 365 by Whole Foods SWC of Toll Road 183A & New Hope Rd grocery and its first Field & Stream, as well as Nordstrom Rack, Dick’s Sporting Cedar Park Goods, DSW, Michaels, Marshalls and several others.

Belterra Village This mixed-use project, adjacent to a proposed H-E-B set to open in 2018, will US-220 at Nutty Brown Rd open its 200,000-square-foot first phase in fall 2017, bringing online retail and a Dripping Springs mix of uses including a hotel, medical offices and a senior-living community. In terms of retail space, the first phase will bring online 85,000 square feet and will include a 14-screen Sky Cinemas, Total Wine, Pet Supplies Plus, Great Clips and Breed & Company hardware store.

Aldrich Street The new retail phase of this multi-phased retail addition to the Mueller master- IH-35 between 51st St & Airport Blvd planned community will be anchored by Alamo Drafthouse, nearing completion Austin and on track for an early 2017 opening. Aldrich Street’s retail is designed with a focus on local concepts and will feature as much as 1.2 million square feet of mixed-use space (which includes an existing museum, apartments and offices). The project includes a specialty retail component called the Diamond Building, which will house concepts like Lick Ice Creams and several others.

WEITZMAN 23 FORECAST REPORT 2017 APPENDIX A: AUSTIN CONSTRUCTION

Oak Meadows MarketPlace This community center will be anchored by a 57,000-square-foot Randalls grocery Jim Hogg Rd & Williams Dr store, which is set to break ground in early 2017. The center is slated to open in Georgetown fall 2017.

Harker Heights Plaza This planned retail center will join anchor Walmart Neighborhood Market. SWC FM 2410 & Stillhouse Lake Dr Concepts in the small-shop space include Express ER and Great Clips Harker Heights

Cross Creek Market This 37,500-square-foot neighborhood center is scheduled to open in 2017. Toll 183A & E Whitestone Blvd Austin

The Grove at Shoal Creek This planned major mixed-use development, which could break ground in 2017, 45th St & Bull Creek Rd is designed to have approximately 140,000 square feet of retail space, as well as Austin approximately 1,500 residential units and 185,000 square feet of office space.

H-E-B This new store is expected to open within the next two years on South Congress 2017 S Congress Ave near Slaughter and IH-35, across from Southpark Meadows, Austin’s largest power Austin center. Plans are in the works for adjacent retail space.

WEITZMAN 24 FORECAST REPORT 2017 APPENDIX B: DALLAS-FORT WORTH CONSTRUCTION

KEY NEW RETAIL FOR 2016

The Shops at Prosper Trail This 251,000-square-foot center saw its first phase, anchored by a 1250 Preston Rd 123,000-square-foot Kroger Marketplace, open in 2016. Prosper

Highland Station This Kroger Signature-anchored center opened in late 2016. The Kroger totals Blue Mound Rd near IH-35W approximately 102,500 square feet, and the project also includes 17,000 square Fort Worth feet of shop space and a freestanding CVS store.

Glade Parks This mixed-use project added a 95,000-square-foot Belk department store, a 24 SH-121 & Glade Rd Hour Fitness and small-shop space in its newest phase. Euless

Presidio Towne Crossing This center in the Presidio Junction mixed-use development added a newly IH-35W & N Tarrant Pkwy constructed WinCo Foods with approximately 85,000 square feet and a 49,000-square-foot Main Event during the year.

Rayzor Ranch The Towne Center phase of this project opened with WinCo Foods. The site, U.S. Highway 380 across Highway 380 from the power retail component of the center, also features Denton Chili’s and other tenants.

Teasley Town Square A 75,000-square-foot Walmart Neighborhood Market-anchored community center. Teasley Ln & Ryan Denton

Sprouts Village The grocery store Sprouts opened along with limited shop space. 4930 Teasley Ln Denton

Waterside This mixed-use project with retail opened with Whole Foods Market, REI, retail Bryant Irvin & Arbor Lawn space and a number of restaurants. Fort Worth

Walmart Supercenter Walmart’s large-format Superstore concept. US-380 near Creekview Dr Princeton

Kroger Marketplace An approximately 123,000-square-foot Kroger store in North Fort Worth. North Tarrant Pkwy & Ray White Rd Fort Worth

Kroger Marketplace An approximately 123,000-square-foot Kroger store. N. Old Decatur Rd & W. Bailey Boswell Rd Fort Worth

Kroger Marketplace An approximately 123,000-square-foot Kroger store. 1653 Basswood Blvd Fort Worth

CityLine Market This mixed-use project opened with an approximately 100,000-square-foot NEC Renner Rd & Plano Rd community retail component anchored by Whole Foods Market. A small shop Richardson expansion is also underway.

WEITZMAN 25 FORECAST REPORT 2017 APPENDIX B: DALLAS-FORT WORTH CONSTRUCTION

Waxahachie Marketplace Approximately 115,000 square feet, largely for junior anchors, joined an Academy 1700 N HWY 77 Sports that opened in 2015. Waxahachie

KEY NEW SPACE ANNOUNCED FOR 2017 OR LATER

Legacy West Urban Village The retail space in the $3 billion mixed-use project is set for a March 2017 grand SWC of SH-121 & Dallas North Tollway opening. The mixed-use project’s retail space, at approximately 300,000 square Plano feet, ranks as one of the largest retail projects opening in 2017. The line-up includes a 9,000-square-foot Barnes & Noble that will be one of only a handful in the nation that will include a restaurant and bar. Other concepts in Legacy West include Tommy Bahama’s, Del Frisco’s Double Eagle Steak House, Fogo de Chao, Shake Shack and others. The Euro-style 55,000-square-foot Legacy Food Hall at the project is also set to open at Legacy West in 2017.

The Shops at Clearfork This luxury retail project from Simon located in southwest Fort Worth is slated to Chisholm Trail Pkwy near S. Hulen St open its first retailers in the first quarter of 2017. The retail space will be anchored Fort Worth by Fort Worth’s only Neiman Marcus, which will open in 90,000 square feet after relocation from . In addition to the department store, the project will feature 380,000 square feet of luxury and specialty retail, as well as office space and multi-family units.

The Star This mixed-use development is anchored by the Dallas Cowboys. The Star is Warren Rd & Dallas North Tollway designed to feature 200,000 square feet of retail space that will include Dee Frisco Lincoln Prime, Liberty Burger, Mi Cocina and others. Opening is set for 2017.

Cinepolis The leading world-class cinema exhibitor will open in summer 2017 at Glade Park, SH-121 & Glade Rd a power and lifestyle retail project. Euless

The Gates of Prosper This retail center will open an approximately 300,000-square-foot first phase. It is US-380 & Preston Rd anchored by Walmart Supercenter, which is now under construction. Prosper

Windsong Ranch Marketplace This Kroger Marketplace-anchored center is expected to open in 2017. US-380 & FM 423 Prosper

Tom Thumb This new urban grocery store will open in street-level space in the Union high-rise Akard & Cedar Springs project at the edge of downtown Dallas in 2017. Dallas

Tom Thumb This urban grocery is planned for a 2018 opening just east of downtown Dallas in Live Oak St & Texas St the City Lights apartment tower. Dallas

Tom Thumb This 55,000-square-foot store is planned, but no opening date has been Denton Dr & Maple Ave confirmed. Dallas

Kroger Kroger plans an urban location just east of downtown Dallas to anchor a new Hall St near Ross Ave mixed-use development. Dallas

WEITZMAN 26 FORECAST REPORT 2017 APPENDIX B: DALLAS-FORT WORTH CONSTRUCTION

Midlothian Towne Center This 2017 project in Ellis County will be anchored by Kroger Marketplace. Future SEC FM 663 & US-287 phases are designed to add an additional 122,000 square feet of space at the site. Midlothian

Lake Highlands Town Center A 22,000-square-foot Sprouts will anchor this center, now under construction in 7100 Wildcat Way the Lake Highlands area of East Dallas. Dallas

TopGolf The golf, dining and entertainment concept will open in approximately 65,000 2201 E 4th St square feet of new space in the spring of 2017. Fort Worth

High Point Center This center, located at the site of the former Steakley Chevrolet, is designed to Northwest Hwy & Abrams total approximately 160,000 square feet. No opening date has been announced. Dallas

Tager Outlet Mall The 350,000-square-foot outlet mall is expected to open in late 2017. SWC IH-35W & SH-114 Fort Worth

Kroger Marketplace This 123,000-square-foot Kroger Marketplace should open during the first half of Custer Rd & US-380 2017. Additional anchor retail is planned for a future phase of the site. McKinney

Kroger Signature This 90,000-square-foot Signature store has an opening set for late 2017. Lake Forest & US-380 McKinney

West Town Center This Sprouts-anchored center is opening in early 2017. In addition to Sprouts, the NWC Eldorado Pkwy & Teel Pkwy center will have 38,000 square feet of space and pad sites. Frisco

Allen Premium Outlets This premium outlet mall plans to expand by 122,000 square feet. Stacy Rd & US-75 Allen

Victory Park The new retail component will bring online a new Cinepolis luxury cinema and Stemmons & Woodall Rogers Fwys small shop space for late 2017 in this major mixed-use project just off two major Dallas freeways in downtown Dallas.

Irving Music Factory This mixed-use music-oriented project near the Irving Convention Center is set to Near the Irving Convention Center open in late 2017 or 2018. The project is designed to incorporate nearly 207,000 Irving square feet of retail and restaurant space.

Village 121 This mixed-use project is designed for as much as 500,000 square feet of retail SH-121 & Preston Rd space near Mall. Some retail space opened in 2016. Plano

Costco The warehouse club plans to open its first store within the Dallas city limits in Coit Rd near N Central Expy (US-75) May 2017. The 146,000-square-foot store is to be built at the site of a former Dallas transit center.

WEITZMAN 27 FORECAST REPORT 2017 APPENDIX B: DALLAS-FORT WORTH CONSTRUCTION

Costco The warehouse club is planned as the anchor for a future project in McKinney. NEC US-380 & Hardin McKinney

Champions Park Approximately 80,000 square feet of multi-tenant retail will come online in 2017. IH-30 & Collins St The project is located within Arlington’s entertainment district. Arlington

Main Marketplace This new center is anchored by Flix Brewhouse, a meal-and-a-movie NWC FM 423 & King Rd entertainment concept based in the Austin area. Completion is set for mid-2017. Little Elm

Wade Park The delayed retail component of Wade Park, a $1.6 billion mixed-use project, is Dallas North Tollway & Lebanon Rd slated to open in 2017 or later. Frisco

Scheels Although it’s not set to open until 2020, it’s notable that Fargo, N.D.-based Grandscape Scheels is on track to enter the D-FW market with a 300,000-square-foot The Colony megastore in the Nebraska Furniture Mart-anchored Grandscape development.

WEITZMAN 28 FORECAST REPORT 2017 APPENDIX C: HOUSTON CONSTRUCTION

KEY NEW RETAIL FOR 2016

Baybrook Mall The 555,000-square-foot expansion of the mall in late 2016 wrapped up an open-air power-retail expansion that added anchors such as a 105,000-square- IH-45 & Bay Area Blvd foot Dick’s Sporting Goods that houses Field & Stream and Golf Galaxy under Friendswood the same roof, as well as REI, Total Wine, Barnes & Noble and others. The new expansion, which resulted in Baybrook becoming one of the largest malls in Texas, is essentially fully leased.

The Galleria The expansion and renovation of this leading mall saw its relocated, 198,000-square-foot Saks store open in the first half in 2016. The redeveloped Post Oak Blvd former Saks department store building, which will open in 2017, created multi- Houston tenant space for luxury concepts including Ted Baker, Tadashi Shoki and others. The expansion is adding approximately 110,000 square feet for new retailers and restaurants.

Woodshore Marketplace This community retail center opened with a 123,000-square-foot Kroger SWC Oyster Creek Dr & Dixie Dr Marketplace anchor and an additional 16,450 square feet of small-shop retail Clute space.

Clear Lake Marketplace This new center, anchored by an approximately 100,000-square-foot H-E-B, Clear Lake City Blvd & El Dorado Blvd opened in the first half of 2016. Houston

Fairfield Town Center This power-anchored project, designed to have as much as 600,000 square feet upon completion, opened its Phase I in late 2016 with Academy, Marshalls, Ross, 28644 Northwest Frwy Ulta and others. More retail in the first phase will open in early 2017. A phase Cypress planned for completion in 2018 will add Cinemark, Burlington and others and total approximately 200,000 square feet.

Fairfield Marketplace This community center with Kroger Marketplace and approximately 30,000 square feet of shop space opened in the first half of 2016 in the master-planned Fairfield NEC Hwy 290 & Mason Rd community. Cypress

Grand Morton Town Center The regional-draw center opened its first phase anchored by a 125,531-square- foot Kroger Marketplace in 2016. In 2017, Walmart will open a 186,902-square- Grand Pkwy & Morton Ranch Rd foot store in the center, planned to total more than 600,000 square feet upon Katy completion.

Westlake Marketplace This retail center that is designed to total 450,000 square feet upon completion in 2017. The first phase, opened in 2016, is anchored by a 123,800-square-foot Beltway 8 E & West Lake Houston Pkwy Kroger Marketplace. Other retailers for the project include Old Navy, Marshalls, Humble Ross, Michaels, Petsmart and Ulta.

Main Street Kingwood This center, anchored by a 107,000-square-foot H-E-B grocery, also features a West Lake Houston Pkwy & Kingwood Dr number of restaurants. Kingwood

Cypress Creek Plaza Anchor H-E-B opened a 100,000-square-foot store at this retail center in fall 2015. NEC Fry Rd & Tuckerton An additional 51,000 square feet in multi-tenant buildings opened in 2016. Cypress

The Shops at Katy Reserve This center opened its fully leased first phase of nearly 160,000 square feet, FM 1463 & Spring Green Blvd including anchor Kroger Marketplace, in 2015. A small-shop Phase II delivery with Katy 16,000 square feet and a 37,000-square-foot 24 Hour Fitness opened in 2016.

WEITZMAN 29 FORECAST REPORT 2017 APPENDIX C: HOUSTON CONSTRUCTION

Summerwood Marketplace This new center is anchored by a 124,000-square-foot Kroger Marketplace. Future 14221 E. Sam Houston Parkway phases will add as much as 180,000 square feet. Atascocita

Walmart Supercenter This Walmart Supercenter totals 187,000 square feet. 2901 Riley Fuzzel Rd Spring

Walmart Neighborhood Market This Walmart Neighborhood Market, a smaller grocery concept from the retail giant, anchors The Shoppes at Landing in League City. FM 518 W & Landing Blvd League City

Trader Joe’s The 9,500-square-foot store joined a center on Westheimer Road. The location is the specialty grocer’s fifth in Houston. 11683 Westheimer Road Houston

H-E-B The 102,000-square-foot store opened in the Aliana master-planned community in Richmond. SH-99 & Harlem Rd Richmond

H-E-B This H-E-B grocery store opened at FM 1488 and Tamina Road in Magnolia. FM 1488 & Tamina Rd Magnolia

Marketplace at Ninety-Six This community center, anchored by Kroger Marketplace, opened with an League City Pkwy & Hobbs Rd additional 25,900 square feet of space in addition to the 123,000-square-foot League City Kroger.

Kroger Marketplace The Kroger Marketplace-anchored community center, with approximately 170,000 square feet, opened in Baytown. Garth Rd & Hunter Rd Baytown

The Market at Crenshaw The first phase of this regional project opened in 2015 with Burlington, Party City Beltway 8 between Fairmont Pkwy & and Tuesday Morning. A second, approximately 60,000-square-foot phase opened Crenshaw Rd in late 2016. Pasadena

The Center at Pearland Parkway II A new phase for the existing power retail center. The expansion space brought online approximately 108,000 square feet of new retail space anchored by a NWC FM 518 & Pearland Pkwy 62,000-square-foot Academy Sports + Outdoors. Pearland

The Boardwalk at Towne Lake This lakeside mixed-use project with approximately 150,000 square feet features a Barker Cypress Rd & Tuckerton Rd number of restaurants, as well as concepts like Sub Zero Ice Cream, Orangetheory, Cypress Massage Heights and others.

Cabela’s The 72,000-square-foot store opened in 2016. The location is the first in the IH-45 & Big League Dreams Pkwy Houston area for outdoors superstore Cabela’s. League City

Costco The 148,000-square-foot Costco, the eighth in the Houston market, opened during the first half of 2016 in Townsen Landing Village in Humble. Townsen Blvd & IH-69 | Hwy 59 Humble

WEITZMAN 30 FORECAST REPORT 2017 APPENDIX C: HOUSTON CONSTRUCTION

The Shoppes at Parkwest This 255,000-square-foot power center opened near Katy Mills Mall. The first phase includes one of the Houston area’s first Dick’s Sporting Goods. The NEC IH-10 & Katy Ford Bend Rd 105,000-square-foot Dick’s is one of only two out of six in Houston that also Houston houses Golf Galaxy and Field & Stream stores under one roof. Other retailers in the project include Bed Bath & Beyond, DSW and PetSmart.

KEY NEW SPACE ANNOUNCED FOR 2017 OR LATER

The Junction at Deer Park This center opened its first phase – an 83,000-square-foot H-E-B grocery – in NEQ Spencer Hwy & East Blvd 2015. A second phase, with 14,600 square feet, opens in 2017, and future phases Deer Park will bring the center to more than 400,000 square feet.

Valley Ranch Town Center This major regional-draw project designed for retail and entertainment space is on track for completion in 2017; some tenants, like a 62,000-square-foot Academy, US-59 N & Grand Pkwy opened in 2016. The project is located in Porter (Montgomery County) and Porter includes Kroger Marketplace, Sam’s Club and a 40,000-square-foot Cinemark, among others.

Grand Parkway Marketplace This planned 450,000-square-foot center, which will be anchored by Target, is Grand Pkwy & Kuykendahl set to open in the first half of 2017 and will include Burlington, DSW, TJMaxx, Spring Michaels and several others. The center, which is located within The Woodlands trade area, is set to be completed by year-end 2017.

Grand Parkway Marketplace II This center is set to open adjacent to the already mentioned Grand Parkway Marketplace. The Phase II center will be anchored by Hobby Lobby and Academy. Grand Pkwy & Kuykendahl Spring

The Market at Springwoods Village This community center is slated for a 2017 opening. The first phase of the center is set to total approximately 170,000 square feet and will be anchored by a Grand Parkway & Holzwarth Rd 100,000-square-foot Kroger, along with additional space for concepts including Spring Zoe’s Kitchen, Torchy’s Tacos, Mod Pizza, Supercuts and others.

Grand Parkway Town Center This 63-acre project at the parkway’s intersection with Highway 249 will be Grand Pkwy & Hwy 289 anchored by Sam’s Club. Spring

Star Cinema Grill The 42,000-square-foot multi-screen cinema will open in 2017. Westpark Tollway & Grand Pkwy Katy

Kroger & Sam’s Club The retail project anchored by Kroger & Sam’s Club is set to open in 2017. Grand Pkwy & Boudreaux Tomball

Spring Pines Shopping Center The new community center is located along Grand Parkway in Spring and planned for a grocery anchor and approximately 50,000 square feet of shop space. Spring Cypress & Holzworth Completion is set for 2017. Spring

CityPlace A north Houston mixed-use project is under construction near the new IH-45 & Grand Pkwy ExxonMobil corporate campus. CityPlace is designed to have 400,000 square feet Spring of retail upon completion.

WEITZMAN 31 FORECAST REPORT 2017 APPENDIX D: SAN ANTONIO CONSTRUCTION

NEW GROCERY CONSTRUCTION 2016

Walmart Supercenter This Supercenter with 187,000 square feet opened in July. 510 Kitty Hawk Rd Universal City

Walmart Supercenter This approximately 182,000-square-foot store opened during the first quarter of Cibolo Valley Dr & Borgfeld Rd 2016. Cibolo

Walmart Supercenter This aproximately 155,000-square-foot store anchors Boerne Stage Crossing, Boerne Stage Rd & IH-10 which plans future phases. Boerne

Walmart Neighborhood Markets Walmart opened several smaller Neighborhood Market stores during 2016. The • 3418 E Southcross, San Antonio concept averages around 42,000 square feet. • 3847 Pleasanton Rd, San Antonio • 6938 Walzem, San Antonio • 9005 FM 1560 North, San Antonio • 10781 Toepperwein Rd, Converse

H-E-B This 120,000-square foot H-E-B Plus! store opened in June. 2965 IH-35 & FM 306 New Braunfels

H-E-B This 100,000-square-foot store represents the relocation and expansion of an 1368 East Court St adjacent smaller location that was demolished for parking. Seguin

Natural Grocers by Vitamin Cottage This Colorado-based specialty grocer entered the market in 2016 with two new • 13310 NW Military Hwy, San Antonio stores, with one to open in 2017. • 6514 N New Braunfels Ave, San Antonio (2017) KEY NON-GROCER RETAIL CONSTRUCTION 2016

Macy’s Backstage This new outlet concept from Macy’s department store opened one of its first 5811 Worth Pkwy freestanding Backstage stores in the country in The Rim. The store incorporates San Antonio 26,000 square feet. The Rim also expanded space for several other concepts.

Academy Sports & Outdoors The newly built store is 62,942 square feet. 7503 S Zarzamora & IH-35 San Antonio

Rooms To Go This newly constructed store opened in early 2016. 15339 IH-35 N San Antonio

Santikos Theaters This new 16-screen location called Casa Blanca includes approximately 110,000 11210 Alamo Ranch Pkwy square feet and includes a bowling alley, a café, a gelato station and bar service. San Antonio

WEITZMAN 32 FORECAST REPORT 2017 APPENDIX D: SAN ANTONIO CONSTRUCTION

The Plaza at Vance Jackson A 28,000-square-foot retail strip center. SEC of Vance Jackson & UTSA Blvd San Antonio

KEY NEW SPACE ANNOUNCED FOR 2017 OR LATER

Bulverde Marketplace This center, under construction in phases and planned for as much as 500,000 SWC of Loop 1604 & Bulverde Rd square feet of retail space, will be anchored by H-E-B. San Antonio

H-E-B Construction on this new store is planned to begin in early 2017 and expected to Alamo Pkwy & Alamo Ranch Pkwy open by year-end. San Antonio

H-E-B This location is one of several stores H-E-B has in the works for 2017 or later. Potranco Rd near Talley Rd San Antonio

Shaenfield Road Shopping Center This new center is designed to have as much as 100,000 square feet upon Schaenfield & Loop 1604 completion. The first phase should come online in early 2017. San Antonio

Culebra Commons This 53,160-square-foot neighborhood center opens in mid-2017. W. Loop 1604 N & Culebra San Antonio

Lone Star Brewery District This mixed-use project is planned at the site of the former Lone Star Brewery Proband St & Lone Star Blvd along the . The Southtown site has landed Cinemark and first San Antonio area location for the Punch Bowl Social entertainment venue, with groundbreaking in 2017 and completion by late 2018.

The Shops at Dove Creek This project planned for 2018 is expected to include as much as 500,000 square Potranco Rd & Loop 1604 feet of retail space. San Antonio

WEITZMAN 33 FORECAST REPORT 2017 DEFINITIONS

NEIGHBORHOOD SHOPPING CENTER POWER SHOPPING CENTER

Concept Convenience Concept Category-dominated anchors, SF 25,000-100,000 few small tenants Acreage 3-15 SF Including Anchors 250,000-800,000 Typical Retailers Convenience store, Acreage 25-80 services, QSR # of Typical Anchors 3 or more Typical Retailers Category killer, home improvement, discount department store, warehouse club, off-price

COMMUNITY SHOPPING CENTER

Concept General merchandise MIXED-USE RETAIL SF Including Anchors 100,000-300,000 Acreage 10-40 Concept Retail in a multi-use projects # of Typical Anchors 1 or more along with multi-family, office, Typical Retailers Discount department store, hotel or other uses supermarket, drugstore, SF Typically 25,000-300,000 home improvement, large Typical Retailers Destination restaurant, specialty | discount apparel entertainment, service uses, health, wellness and beauty

REGIONAL SHOPPING MALL

Concept General merchandise. fashion (mall, typically OUTLET SHOPPING CENTER enclosed) Concept Manufacturers’ outlet stores SF Including Anchors 400,000-800,000 Acreage 40-100 SF Including Anchors 50,000-400,000 # of Typical Anchors 2 or more Typical Retailers Manufacturers’ outlet stores Typical Retailers Full-line department store, junior department store, mass merchant, fashion apparel, restaurants

SUPER-REGIONAL SHOPPING MALL

Concept Similar to regional center but has more variety SF Including Anchors 800,000+ Acreage 60-120 # of Typical Anchors 3 or more Typical Retailers Full-line department store, junior department store, mass merchant, fashion apparel, restaurants

WEITZMAN 34 FORECAST REPORT 2017 COMPANY OVERVIEW

Weitzman, one of the largest retail-focused commercial real estate services firms based in Texas, offers a full range of services, including general brokerage, tenant representation, project representation, investment sales, property management, asset management and development services. Weitzman operates offices in Dallas-Fort Worth, Austin, Houston and San Antonio.

ACKNOWLEDGMENTS

WE WOULD LIKE TO THANK THE FOLLOWING PEOPLE FOR THEIR VALUABLE CONTRIBUTIONS.

SURVEY DATA & PRODUCTION Leisa Barger Karin Jones-Moore Chief Marketing Officer Senior Designer

Ian Pierce Jennifer Britton Vice President of Communications Listing Coordinator-Broker Assistant Writer-Editor-Researcher Cheryl Sodders Research Associate

We extend special recognition to our Weitzman Research Division. Our 2017 Shopping Center Survey and Forecast would not be possible without valuable input from our retail real estate associates who provided in-depth knowledge of the retail markets in Dallas, Fort Worth, Austin, Houston and San Antonio, along with technical support from our IT team.

METHODOLOGY OVERVIEW

Each market is reviewed for conditions relating to occupancy, leasing, new and expansion construction, tenant and user activity, rental rates and historical comparisons.

Note: Results prior to 2016 may reflect adjustments to the database compared to previous reports

WEITZMANGROUP.COM

Copyright 2017. The data in this report is gathered from sources deemed reliable; however, Weitzman makes no guarantees, warranties or representations as to the completeness or accuracy thereof.

WEITZMAN 35 FORECAST REPORT 2017 AUSTIN DFW HOUSTON SAN ANTONIO 4200 North Lamar 3102 Maple Ave, Ste 350 1800 Bering Dr, Ste 550 70 NE Loop 410, Ste 450 Austin, Texas 78756 Dallas, Texas 75201 Houston, Texas 77057 San Antonio, Texas 78216 512.482.0094 214.954.0600 713.781.7111 210.366.3500

WEITZMANGROUP.COM

WEITZMAN 36 FORECAST REPORT 2017 THE TEXAS SNAPSHOT

AUSTIN DALLAS FORT WORTH HOUSTON SAN ANTONIO

Mid-year retail real estate review

SUMMER 2016 TEXAS RETAIL: AT A GLANCE

A U INVENTORY 47.9 million SF S OCCUPANCY 96.0% T RATE CONSTRUCTION I 700,000 SF* N 2016 CONSTRUCTION 2015 900,000 SF

* Projected

D INVENTORY 194 million SF F OCCUPANCY W RATE 91.6% CONSTRUCTION 2016 2.0 million SF* CONSTRUCTION 2015 2.7 million SF

* Projected TEXAS RETAIL: AT A GLANCE

H O INVENTORY 152 million SF U OCCUPANCY S RATE 95.5% T CONSTRUCTION 2.9 million SF* O 2016 N CONSTRUCTION 2015 2.7 million SF

* Projected

S INVENTORY 44.9 million SF A N OCCUPANCY 94.0%

RATE A CONSTRUCTION N 2016 1.3 million SF* T CONSTRUCTION 900,000 SF O 2015

N * Projected I

O Copyright 2016. The information contained herein was obtained from sources deemed reliable; however, The Weitzman Group makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The Weitzman Group, which provides real estate brokerage services, and Cencor Realty Services, which provides property management and development services, are divisions of Weitzman Management Corporation, a regional realty corporation.

As Retail Occupancy Remains Near Record Levels, A Construction May Finally Be Responding

U ustin’s retail market as of mid-year 2016 again reports a low vacancy rate, thanks to strong demand for space, limited construction and the backfi lling of retail boxes S Athat had been vacant for years. At mid-year, the market is reporting overall retail space at the 96-percent occupancy T rate. This is a notably strong rate, even for a market that has traditionally maintained healthy occupancy rates in the low-to-mid-90-percent range. I No other Texas market has maintained occupancy above 90 percent as consistently as Austin. During the recession that started in 2007, when retailers like Linens ‘n Things failed and closed stores, Austin managed to keep its occupancy above 90 percent. Now, N thanks to a metro-area economy that ranks as one of the strongest in the country, the market’s retail space is at near-full occupancy. Even with the tight market, new construction has remained constrained, largely due to high land and construction costs that require record-high rents. These rents are one reason why new space is being delivered in what are largely sure-shot locations that have the density and affl uence to deliver retail sales high enough to support current Class A-plus rent levels that can hit at $40 per square foot per year or more for small- shop space.

hese fi ndings are based on a review of re- House of Gainz, which took more than 29,000 tail market conditions for the greater Austin square feet; Golf Ranch, which took more than Tarea as of mid-year by The Weitzman 8,000 square feet; and La Playa Mexican Cafe. Group and Cencor Realty Services. The mar- For 2016, the only notable new retail vacancy ket’s occupancy rate is based on an inventory of was created by the failure of Sports Authority. approximately 47.9 million square feet of multi- The retailer closed a 42,000-square-foot space tenant retail space in centers with 25,000 square at the massive Southpark Meadows project at feet or more. IH-35 and Slaughter Lane. The center should Occupancy remains highest in Central Austin, benefi t from the trend of retailers backfi lling the where density and active mid- and high-rise res- few remaining well-located large-format vacan- idential construction helps boost retail sales. The cies on the market. Examples include: area also is essentially built out in terms of retail space, creating barriers to entry except through  H&M, the famed fast-fashion apparel retailer, which leased 20,000 square feet of redevelopments. existing space in Bee Cave’s mixed-use Hill But thanks to some large new leases and the Country Galleria. The location is the second in backfi lling of long-vacant boxes, many suburban the Austin area for H&M. markets are enjoying their strongest retail occu-  Saks Fifth Avenue Off 5th, which opened pancy rates in recent memory. In Georgetown, an approximately 50,000-square-foot store for example, a former Albertsons store on Austin during the fi rst quarter of the year in a former Avenue that had been vacant since summer 2006 furniture store in Gateway Shopping Center, lo- saw a spate of leasing that has basically brought cated on Research Boulevard in North Austin. the box to full occupancy. New tenants include 1 SUMMER 2016  99 Ranch Market, a spe- cialty grocer that will open in the Crescent, the newly branded name for the former Highland Village. 99 Ranch Market will open in the reno- vated center in 2017; the loca- tion is its fi rst in Austin.  The Spot, an entertain- ment venue with a bar, bowling alley, movie theater and more, which is redeveloping part of the space in Springtown Center that formerly housed Target. The location is set to open this fall, joining a Gold’s Gym that opened in the fi rst half of 2016 in the power cen- ter, located at 1180 Thorpe Lane in San Marcos. will open in the second half of the year in The Triangle, a mixed-use project in Central Austin.  The Society of St. Vincent de Paul is ren- ovating a vacant 25,000-square-foot grocery  Grand Lux Café, the sister restaurant to store into offi ces, thrift retail, storage and a small The Cheesecake Factory, which leased the for- restaurant. The site is located at 901 W. Braker mer Jasper’s location in The Domain. Jasper’s Lane in North Austin. closed in late May 2016.  STK Rebel, a high-end steakhouse, which  P. Terry’s, with new locations that include leased nearly 11,000 square feet in a building a 2016 restaurant on Research Boulevard, a lo- formerly occupied by The Melting Pot at 305 cation north of Capital Plaza on IH-35 and one East 3rd Street in downtown Austin. along North Lamar.

 Torchy’s Tacos, which opened a fl agship location in the former Fran’s location on South Congress in January 2016. dditionally, the retail market continues to see a high level of activity from lo-  Pollo Tropical, which in May opened a new Acal, regional and national restaurant freestanding location on IH-35 in Kyle. concepts and other non-anchor tenants. The  Chi’lantro, which opened its third area loca- velocity of the new deals makes Austin one of tion in the fi rst half of the year on Burnet Road the most active leasing markets in the country, near The Domain. and highlights include:  Via 313 at 31st and Guadalupe.  Boiler Nine Bar + Grill, a multi-level locale that opened recently in 11,000 square feet in  Other expanding concepts include Denver- the Seaholm mixed-use project downtown based Snooze, a brunch specialist that opened along Lady Bird Lake. in Lamar Central, a mixed-use project that opened in 2015; Blenders & Bowls, with two  Hopdoddy Burger Bar, which opened at new locations; Modern Market, whose new loca- 2800 North I-35 in Round Rock, and which tions include the high-profi le street-level space in downtown’s Frost Tower; Moe’s Southwest Grill, which leases three new locations; Bufalina TEXAS SNAPSHOT 2 Due, a specialty pizzeria, with a second loca- As Class A space fi lls up, the resulting demand tion on Burnet Rd; Flyrite, a fast-casual chicken for Class B and some C spaces has resulted concept that opened February on E. Seventh St.; in rental rate increases for select properties in and ELM Group’s new concept, Irene’s, with a those categories. However, there still remains a location on West Ave., and Easy Tiger, with its signifi cant gap between Class A and other class- second location. ELM Group is known for 24 es of rents. Diner and others.  For small-shop space in anchored Class  Houston-based Cyclone Anaya’s, MAD A projects, rates range from the mid-$30s per Greens, The Dogwood, Salvation Pizza, Tarka square foot per year to $40 per square foot or Indian Kitchen, East Side King Thai Kun, Second higher; Bar + Kitchen, Sway (which also has a new lo- cation in Westlake), Velvet Taco and others that  Averages for Class B small-tenant rates are are opening or will open at Rock Rose in The posting from the mid-$20s to around $33 per Domain. square foot per year;  Health and fi tness concepts include  Averages for Class C rates for small-tenant Massage Heights, with two new locations, and in-line spaces typically range from around $18 to Cyclebar, which is expanding. $24 per square foot per year, though some Class C rates are in the mid-teens. For all classes of space, rates can go notably lower or higher than the rates listed above due to factors including anchors, traffi c, demographics ased on space open or scheduled to and location within a center. open during calendar-year 2016, the BAustin market is on track to add ap- proximately 700,000 square feet of space in new and expanded retail projects. For cal- EXPANDING RETAIL CONCEPTS endar-year 2015, the market added approxi- mately 900,000 square feet of space in new and expanded retail projects. The market has not seen construction top 1 million square feet since 2014, which is ex- tremely conservative for a growth market with one of the lowest major-market unemployment rates -- 3.3 percent – in the country.

For descriptions of new retail opening in 2016 and 2017, see Appendix 1.

he tight market for well-located Class A retail space is resulting in average rates above $30 Tper square foot for shop space in newly con- structed projects. For the best-located new-con- struction projects and existing retail centers, rates have reached the $40-per-square-foot-or-higher level in many key centers.

3 SUMMER 2016 TEXAS SNAPSHOT 4 D-FW Retail Market Enters Third Year of Record D Stability as Population, Job Growth Soar and F Construction Market Peaks allas-Fort Worth’s retail market as of mid-year 2016 continues to report overall W occupancy right at 91.6 percent, thanks to new pre-leased construction, the Dbackfi lling of large retail vacancies and only a few retail closings, most notably Sports Authority and Fresh Market. For D-FW’s retail market, occupancy exceeding 90 percent is becoming almost com- monplace, despite the fact that occupancy remained below that mark in recent years, even dropping to as low as 86 percent in 2009. In fact, the current occupancy rate is second only to year-end 1984, when the market posted 92 percent. The market is on track to match or exceed that record rate, based on current leasing and demand supported by the hottest residential market in years, population growth that leads the nation and job growth that has resulted in near-full employment, with an unemployment rate of only 4 percent at mid-year.

The occupancy gain during the past year was centers, long the market’s weakest category, boosted by the strong economy along with the report occupancy nearing 87 percent, the cate- following: gory’s strongest performance in years.  construction dominated by space for an- chors, meaning that construction helps boost occupancy; THE WINCO EFFECT  limited store closings, with well-located va- he market did see some new key vacant cancies re-leased within months, not years; spaces come onto the market, most  new retailer and restaurant entrants that Tnotably the nine closed Sports Authority expanded primarily via existing space due to the stores, which created more than 411,000 limited amount of new speculative space. square feet of new vacancy, plus four Fresh Market stores, although altogether these add up to less than 90,000 square feet. Fortunately, he D-FW occupancy rate is based on a D-FW has a stellar track record of backfi lling total market inventory of approximately retail vacancies, and 2016 is no exception. T194 million square feet of retail space in To make locations and existing centers as shopping centers with 25,000 square feet or attractive as possible for expanding retailers, more – the largest retail inventory for any metro many sites are undergoing renovations. In area in Texas. Uptown Dallas, even high-profi le mixed-use Every category of retail center except one reports project The Crescent is in the game, this year occupancy rates above 90 percent. Community wrapping up a $33 million renovation that is centers, the largest category with more than 75 helping its retail space sign new concepts like million square feet of inventory, are at 91 per- the popular New York-based Shake Shack. cent. Power centers are at just above 95 percent. As expanding grocers, like WinCo with new Mixed-use is just under 96 percent, and malls 85,000-square-foot stores, open in existing are just under 94 percent. Even neighborhood centers, many projects are reporting their 5 SUMMER 2016 highest occupancy in decades thanks to the  Burlington Coat Factory, which leased approximately 48,000 square of former multi- grocer’s shopper traffi c and the co-tenancy it tenant space, in Cedar Hill Shopping Center on attracts. FM 1382 in Cedar Hill. For 2016, leasing in existing centers is boost- ing occupancy and eliminating spaces both large and small from the market. Examples of DESPITE STRONG MARKET, NET the larger backfi lled locations include: RETAIL CONSTRUCTION DECLINES  H&M, the famed fast-fashion retailer, which opened during the fi rst half of the year s of mid-year 2016, based on retail open in a 31,000-square-foot vacancy created when or scheduled to open this year, D-FW is Barnes & Noble closed in downtown Fort Aon track to add approximately 2 million Worth; H&M also leased 22,000 square feet in square feet in new and expanded projects. The Fort Worth’s Hulen Mall for a store to open this construction total represents a notable drop from fall. 2015, when the market reported new construc-  WinCo Foods, with approximately tion of 2.7 million square feet of retail in new and 85,000-square-foot stores, including: expanded projects.  a store in Carrollton’s Trinity Valley, located at Josey Lane and SH-190, which opens in early 2017 at the site of a Target store that closed in 2015;  a store opening this year in Bardin Place, on South Cooper Street in Arlington, in a site formerly occupied by Sports Authority See Appendix 2 for new space open or in Arlington; scheduled to open in major retail centers in 2016 and 2017. TEXAS SNAPSHOT 6 ne of the most notable planned projects, the D-FW residential market is setting records in in terms of its anchor, is a grocery-an- terms of price increases for existing homes and Ochored center in the Tarrant County (Fort multi-family construction. As has always been Worth area) town of Mansfi eld that received the case, a strong residential market is a huge zoning approval in June 2016. While a grocery driver for a strong retail market. store as an anchor is fairly common in D-FW, this With powerful growth expected to continue in anchor – H-E-B – is not. H-E-B is a market leader the key areas of population, jobs and residential in Austin, Houston and San Antonio, but its pres- growth, the outlook for the D-FW retail market ence in D-FW is limited to a handful of stores for the remainder of 2016 is for a year of steady on the outskirts of the Metroplex. The Mansfi eld gains that will carry forward to 2017. store would represent H-E-B’s strongest pres- ence in D-FW to date outside of its specialty Central Market stores. As previously reported, H-E-B has secured sites throughout the North EXPANDING RETAIL CONCEPTS Texas market, but has not confi rmed plans or dates for the land parcels.

In terms of rental rates, the current retail mar- ket is seeing asking rents remain stable fol- lowing several years of increases. The rates below are averages, and asking rates can go higher or lower depending on location, center, co-tenancy, traffi c patterns and other related variables. Additionally, concessions like free rent can lower effective rates, but concessions in the current market are fairly conservative. As of mid-year 2016, by class of center:  Class A Rates ranged from mid-$20s to high $30s per square foot per year, with rates in the best-located projects going for $45 per square foot or higher.  Class B rates ranged from the low teens to mid-$20s.  Class C rates ranged from $8 to $16.

he D-FW retail market activity, especially retail leasing demand and store growth, Tis boosted by the area’s economy, which ranks as one of the strongest metro economies in the country. In terms of job growth, D-FW has annual job growth of about 117,000, and during the most recent 12-month survey by the U.S. Census Bureau, D-FW added more than 144,000 people. As a result of jobs and population growth, 7 SUMMER 2016

Houston Retail Market Sees Likely Construction Peak in H 2016 as Occupancy, Leasing Demand Plateau ouston’s retail market as of mid-year 2016 reports a healthy occupancy rate of O 95.5%, which ranks as one of the strongest rates recorded for the market. However, Hoccupancy dropped nearly one-half percent compared to a year ago due to slightly U slower retail shop-space leasing and store closings that added close to 1 million square feet of vacant space to the market. S The retail market to date has continued to perform beautifully throughout the oil market downtown, thanks to the metro area’s diversifi ed economy, strong population growth, the T most active residential market in years and job growth that remains positive. During the fi rst half of 2016, the market saw the closure of 11 Sports Authority stores, four O Fresh Market grocery stores and two Walmart stores, a Supercenter on FM 1960 West and a Neighborhood Market on Gessner. Sports Authority’s 11 area stores ranged in size from 35,000 to more than 65,000 square feet, creating well over a half a million square feet N of vacancy in the process. Fresh Market’s failure did not have as large an impact, but its closure of four area stores added close to 90,000 square feet of vacant space, and the Walmart closings further added more than 272,000 square feet of vacancy to the market. The Weitzman Group and Cencor Realty Services review a Houston-area retail market inventory of approximately 152 million square feet in multi-tenant retail centers with 25,000 square feet or more.

VACANCY REMAINS LIMITED Thanks to positive job growth combined with hile high profi le, the closings represent- strong population growth, the ongoing oil ed only a rounding error for a market price downturn that began in mid-2014 has Wwith more than 150 million square feet had few negative effects on the retail market; of retail inventory; as they are marketed, the va- however, segments of the offi ce and industrial cant boxes are likely to fi nd new tenancy within markets have seen vacancy increase due to a reasonable amount of time due to the fact that its heavy concentration of “upstream” ener- the metro area has a strong track record of back- gy fi rms, particularly in the Downtown and fi lling vacant existing space. Energy Corridor submarkets. The segments like refi neries and petrochemical plants that The retail market is benefi tting from the contin- make up Houston’s “downstream” market, ued strength of the Houston economy, which de- however, continue to perform strongly due to spite the loss of numerous energy-sector jobs, the fact that they benefi t from lower oil prices. still reports an unemployment rate of only 5.5 This is boosting the residential and retail mar- percent as of mid-year 2016, according to the kets in Houston’s eastern areas like Baytown, Texas Workforce Commission. The rate actually Pasadena and Deer Park. The strong econo- is in line with the 5.0 percent rate posted as of mies in these areas are leading to higher res- mid-year 2015. idential and retail construction, and the jobs created by the downstream boom are seen as one key factor that is keeping the Houston market out of negative job-growth territory.

9 SUMMER 2016 GROCERS BACKFILL VACANCIES CONSTRUCTION MAY PEAK IN 2016 he market is also seeing strong demand or calendar year 2016, the Houston-area for space in existing centers. Leasing high- retail market is on track to add more than lights included: F2.9 million square feet of retail space in T new and expanded projects, an increase over  Whole Foods Market, which opened a the 2.7 million square feet that came online 40,000-square-foot store at 11041 Westheimer in 2015 and well above the 1.7 million square Road during the fi rst half of the year in a former feet of new space that came online in 2014. Randalls; Based on projects underway and planned, the  H-E-B, which opened a 62,000-square-foot store at the site of a vacant Kmart during the fi rst market should see construction reach its high quarter at Highway 146 near Palmer Highway in point this decade during 2016, returning in Texas City; 2017 to the levels of 2014.  Academy, which opened a 63,000-square- The majority of new retail centers opening foot store at 1461 Spring Cypress and I-45, or under way for completion by year-end are which represents the redevelopment of a former dominated by grocery-anchored retail. Kroger location;  El Mercado, a Hispanic-themed grocery store, with a 42,130-square-foot space in For details on grocery and non-grocery new Fairmont Junction Shopping Center on Fairmont projects opening in 2016 and 2017, see Parkway in Pasadena. Appendix 3.

TEXAS SNAPSHOT 10 For small-shop in-line space in well-located, an- RESTAURANT MARKET SIZZLES chored projects: any of the new restaurants are con-  Class A rates ranged from $30 to the high cepts that are entering the Houston $30s on a per-square-foot-per-year basis, with Mmarket. These include: rates for quality space inside the Loop typically  Roka Akor, a high-end Japanese steak, rising above $40 per square foot or more. sushi and seafood restaurant that will open in  Class B small-shop space average rates are 2017 in the 2929 Weslayan luxury residential posted from the low to the high $20-per-square- tower in the River Oaks area of Houston; foot-per-year range.  Mellow Mushroom, a specialty pizza con-  Class C small-shop rates typically were in cept that will open its second Houston location the $15- to $20-per-square-foot-per-year range. at 1919 N. Shepherd in the Heights area. Also in the Heights, Dallas-based specialty pizza These rates are average small-shop asking concept Cane Rosso opened its fi rst Houston rates, and rates at specifi c centers can be no- location during the fi rst half of the year at 1835 tably higher or lower depending on location, an- N. Shepherd. chors, type of tenant, specifi c-space sizes and demographics.  Fast-casual Malawi’s Pizza, which is enter- ing the market with locations at 8731 Highway For the remainder of 2016 and going into 2017, 6 in Sienna Plantation and at Central Square the retail market will proceed with caution as it Midtown, a mixed-use project located at 2100 watches the energy sector performance, but we Travis Street in the Midtown district; expect to see the coming year end on a strong  Tacodeli, a favorite out of Austin, which note thanks to a lack of speculative shop space will open its fi rst Houston location at 1902 and construction dominated by some of the Washington in fall 2016; strongest retailers in the country.  Fast-casual and quick-serve chicken con- cepts, which are expanding marketwide and include Pollo Loco, Pollo Tropical, Chick-fi l-A, EXPANDING RETAIL CONCEPTS Chicken Express and Slim Chickens;  Specialty dessert concepts, including Sub Zero Ice Cream and Steel City Pops. Steel City Pops opened in Heights Plaza at 420 E. 20th Street in early July, and Sub Zero has a total of fi ve area locations to date, with the most recent being in Main Street Kingwood.

RETAIL RENTS REMAIN STEADY n terms of rent, the Houston retail market is seeing average quoted rents remain steady Iand maintaining the levels they reached in 2015. Demand for the Class A space, however, can result in small-shop rates in the best-located and newly constructed projects going as high $50 to $60 per square foot per year in select ar- eas like Galleria, River Oaks and Midtown. 11 SUMMER 2016 TEXAS SNAPSHOT 12 Alamo City Retail Market Sees Gains, Construction S Reaches Two-year High as Market Tightens an Antonio’s retail market posted a healthy occupancy rate of 94 percent as of A mid-year 2016, even as key vacancies from Sports Authority came onto the mar- Sket. The Alamo City is able to maintain the balance due to the fact that vacancy N added by the sporting goods retailer was offset by fully leased construction and the backfi lling of major retail box spaces. The occupancy rate is based on a review of San Antonio area multi-tenant shopping centers with 25,000 square feet or more conducted by The Weitzman Group and Cencor A Realty Services. The review is based on a San Antonio retail market inventory of 44.9 million square feet. N The market for Class A space remains tighter than the overall market, and centers at the best-performing intersections and retail districts throughout San Antonio are often T completely full. The market’s limited retail construction is dominated by anchor stores, most notably Walmart and H-E-B. These anchors come online with limited or even no small-shop O space, ensuring a tight market for space during a time of steady demand for restaurant, N service and shop space. The market’s construction pace is on track to add approximately 1.3 million square feet for 2016, making it the most active construction market since 2014, when 1.4 million I square feet was added to the market. During 2015, the market added less than 900,000 square feet. For a major metro retail market in the midst of strong economic growth, 1.3 O million square feet is extremely conservative.

MORE PROJECTS IN THE WORKS STRONG CONCEPTS BACKFILL number of major retail projects are on the RETAIL VACANCIES drawing board, and of these, we expect he market’s healthy occupancy is main- Ato see several break ground by year-end tained by retail concepts taking large 2016 or in 2017. Tvacancies in existing space. Examples For 2016, the retail projects opening or sched- of backfi lled space include: uled to open by year-end include several Walmart  At Home, a Texas-based home décor su- stores, both large-format Supercenters and perstore, which absorbed one of San Antonio’s smaller Neighborhood Markets, which are each largest remaining vacancies by leasing a approximately 42,000 square feet. 118,000-square-foot former Target store at 8421 U.S. 281 North, near North Star Mall. The store is slated to open in 2017.  West Elm, the upscale home furnish- ings chain, which in late June opened an 11,000-square-foot store at 201 E. Grayson For details on new construction in 2016 and Street, near downtown, in existing space that 2017, see Appendix 4. most recently served as a haunted house.

13 SUMMER 2016  F21 Red, a family apparel concept from Forever 21, which leased 22,000 square feet in part of a former JCPenney Home Store at Ingram Festival, a mall- peripheral power center.  Epic Thrift, a Phoenix-based thrift store, with a lease that back- fi lled just under 24,000 square feet at 5538 Walzem Road;  YMCA of Greater San Antonio, with a 2016 opening in a 53,570-square-foot former gro- cery store located at Potranco Road and Highway 151;  J. Crew Mercantile, a new concept from J. Crew, which rates are for small-shop space in the newest opened in existing space in the high-profi le and/or strongest anchored projects. For lead- Alamo Quarry Market; ing Class A retail centers, rates can reach the  The multi-tenant redevelopment of the his- $40-per-square-foot-or-higher level. toric Joske’s building, circa 1887, in downtown  Class B asking rates typically are in the San Antonio’s Rivercenter. The space, branded $19-to-$23-per-square-foot range. Shops at Rivercenter, features a 33,000-square- foot Dave & Buster’s that opened in January and  Class C asking rates are in the $14-to-$18- a two-story H&M that opened in February. In ad- per-square-foot range. dition, new concepts locating at the mall include The reported rates are average asking rates and Jimmy Buffet’s Margaritaville, Yard House and do not take into consideration concessions. Johnny Rockets. Rates can be higher or lower depending on lo- cation, co-tenancy, center condition and other factors. TIGHT CLASS A MARKET PUSHES UP San Antonio’s retail market continues to bene- RENTS FOR B, C CENTERS fi t from the continued soundness of the metro sking retail rents remain stable in San area’s economy, which ranks as one of the bet- Antonio, with rents for the market’s stron- ter-performing major markets in Texas and the Agest Class A retail centers maintaining the country. increases they’ve experienced over the past 18 months. While Class A rents are steady, the tight EXPANDING RETAIL CONCEPTS market for space is resulting in increases in rates for Class B and C retail space. For centers by grade:  Average Class A asking rents for small-shop in-line spaces in the market’s strongest centers, including new construction, ranged from $26 to the mid-$30s per square-foot per year. These

TEXAS SNAPSHOT 14 Appendix 1: Austin Construction

New Retail for 2016 Rock Rose (specialty retail MoPac Expy near The 100,000-square-foot new phase for The phase of The Domain, a W. Braker Ln, Domain offers a focus on local restaurants, massave multi-phased Austin retailers, services and more, including mixed-use project) Viva Day Spa, Tarka Indian Kitchen, Birds Barbershop, MAD Greens, Salvation Pizza and more.

Nordstrom, at The Domain MoPac Expy near Nordstrom’s second full-line department W. Braker Ln, store in Austin. 127,500 SF Austin

Star Ranch SH-130 & Gattis The center is to open in the second half School Rd, Hutto of the year and will be anchored by a 121,000-square-foot H-E-B Plus. Other concepts are to include Gold’s Gym and Five Star ER. The center is the fi rst major retail project along SH-130, the Austin area’s new- est freeway, in approximately a decade.

H-E-B 4500 FM 2338, Expanding its Georgetown store by 12,500 Georgetown square feet added to the existing 84,000 square feet

High Five 1502 RR 620 A 46,000-square-foot entertainment venue in the Oaks with bowling, an arcade, a restaurant and bar at Lakeway, and more. Lakeway

Crystal Falls Town Center SWC Lakeline A community retail center that is underway Blvd & Crystal and will be anchored by an approximately Falls Pkwy, 60,000-square-foot Randalls grocery store. Leander The center will total around 94,000 square feet and is scheduled to open in the fourth quarter of 2016.

Alamo Drafthouse Cinema I-35 between 51st Alamo Drafthouse is currently under St & Airport Blvd, construction and should be the fi rst major Austin concept to open at Aldrich Street, the new multi-phase retail addition to the Mueller master-planned community, which will see the majority of its fi rst-phase tenants open in 2017.

LA Fitness 1824 W. Slaughter A 45,000-square-foot facility opened in Lane, Austin March 2016

A-1 SUMMER 2016 Austin Construction (cont.) New Retail for 2017 The Parke SWC of Toll Road The 370,000-square-foot center will feature 183A & New Hope Austin’s fi rst 365 by Whole Foods grocery, Rd, Cedar Park as well as Nordstrom Rack, Dick’s Sporting Goods, DSW, Michaels, Marshalls and others.

Belterra Village US-290 at Nutty The project will open its 200,000-square-foot Brown Rd, fi rst phase in fall 2017, bringing online retail Dripping Springs and a mix of uses including a hotel, medical offi ces and a senior-living community. In terms of retail space, the fi rst phase will bring online 85,000 square feet and will in- clude a 14-screen Sky Cinemas, Total Wine, Pet Supplies Plus, Great Clips and Breed & Company hardware store. In 2018, a new H-E-B is planned across the street at the same intersection.

Aldrich Street Mueller The new multi-phased retail addition to the master-planned Mueller master-planned community should community, I-35 see the majority of concepts in its fi rst phase between 51st St open in 2017, following an already-men- & Airport Blvd, tioned Alamo Drafthouse on track for a Austin late 2016 opening. Aldrich Street’s retail is designed with a focus on local concepts and will feature as much as 1.2 million square feet of mixed-use space (which includes an existing museum, apartments and offi ces). Other announced concepts include Halcyon coffee bar, J.T. Youngblood’s restaurant, Stella Public House, Lick Ice Creams, an Irish pub and several others.

Harker Heights Plaza SWC of FM 2410 This planned retail center will join anchor & Stillhouse Lake Walmart Neighborhood Market. Dr, Harker Heights

Crosscreek Market Toll Road 183A & A 37,500-square-foot neighborhood center East Whitestone Blvd, Cedar Park

TEXAS SNAPSHOT A-2 Appendix 2: Dallas-Fort Worth Construction

New Retail for 2016 The Shops at Prosper Trail 1250 Preston Rd, This center, anchored by a 123,000-square- Prosper foot Kroger Marketplace, opened in the fi rst quarter of 2016.

Highland Station Blue Mound Rd A Kroger Signature-anchored center set to near I-35W, Fort open in November 2016. The Kroger totals Worth approximately 102,500 square feet, and the project also includes 17,000 square feet of shop space and a freestanding CVS store.

Glade Parks SH-121 & Glade This mixed-use project added a Rd, Euless 95,000-square-foot Belk department store in its newest phase.

Presidio Towne Crossing NWQ of I-35W & A center in the Presidio Junction mixed-use N Tarrant Pkwy, development, where a newly constructed Fort Worth WinCo Foods with approximately 85,000 square feet opened during the fi rst half of the year.

Rayzor Ranch US-380 & I-35, Another new WinCo Foods just joined the Denton lineup at this center.

Teasley Town Square Teasley Ln & Ryan A 75,000-square-foot Walmart Neighborhood Rd, Denton Market-anchored community center

Sprouts-anchored retail Teasley Ln & Sprouts will open in late August 2016, along Hickory Square with limited shop space. Rd, Denton

Waterside Bryant Irvin & On completion, this project will have up to Arbor Lawn, Fort 200,000 square feet of retail space. The fi rst Worth phase included an REI store, now open, and a Whole Foods Market opening in fall 2016. The project’s fi rst phase upon completion will include Cyclebar, Mattress Firm and a num- ber of restaurants, including one of D-FW’s fi rst Tokyo Joe’s.

Whole Foods Market 6741 N MacArthur The specialty grocer has three openings Blvd, Irving in 2016, this one and those at Waterside, mentioned previously, and City Line Market, below.

A-3 SUMMER 2016 D-FW Construction (cont.)

Walmart Supercenter US-380 near The 192,000-square-foot superstore is Creekview Dr, scheduled for a summer 2016 opening. Princeton

Kroger Marketplace N Tarrant Pkwy An approximately 123,000-square-foot & Ray White Rd, Kroger store. North Fort Worth

Kroger Marketplace N Old Decatur Another approximately 123,000-square-foot Rd & W Bailey store. Boswell Rd, Fort Worth

CityLine Market Renner Rd A mixed-use project with an approximately & Plano Rd, 100,000-square-foot community retail com- Richardson ponent anchored by Whole Foods Market.

Waxahachie Marketplace US-77 & Bessie The second phase for 2016 contains approx- Coleman Blvd, imately 100,000 SF for junior anchors. Waxahachie

New Retail for 2017

Legacy West Urban Village SWC of SH-121 Approximately 300,000 square feet of retail & Dallas North space in the massive mixed-use project is Tollway, Plano set for a March 2017 grand opening. The project ranks as one of the largest retail projects opening in 2017. The line-up in- cludes a number of well-known retailers and restaurants, such as Tommy Bahama’s, Del Frisco’s Double Eagle Steak House, Fogo de Chao, Shake Shack and others. The Euro- style 55,000-square-foot Legacy Food Hall at the project is also set to open at Legacy West in 2017.

The Star Frisco This mixed-use development anchored by the Dallas Cowboys in Frisco is designed to feature 200,000 square feet of retail space that will include Dee Lincoln Prime, Liberty Burger, Mi Cocina and others. Opening is set for 2017.

Cinépolis SH-121 & Glade The leading world-class cinema exhibitor Rd, Euless will open in summer 2017 at Glade Parks, a power and lifestyle retail project.

TEXAS SNAPSHOT A-4 D-FW Construction (cont.)

The Gates of Prosper US-380 & Preston A retail center with an approximately Rd, Prosper 300,000-square-foot fi rst phase anchored by Walmart Supercenter, which is now under construction.

Prosper Plaza US-380 & Custer This project will be anchored by a Rd, Prosper 123,000-square-foot Kroger Marketplace.

Windsong Ranch US-380 & Gee Rd, A Kroger Marketplace-anchored center that Marketplace Prosper is expected to open during the fi rst half of 2017. Additional anchor retail is planned for a future phase of the site.

Sprouts-anchored retail Eldorado & Teel An approximately 65,000-square-foot retail Pkwys, Frisco center anchored by Sprouts Farmers Market.

Kroger Ross Ave & Hall A 78,000-square-feet store planned to open St, Dallas in 2017.

Tom Thumb urban locations Akard St & Cedar A grocery is planned for street-level space Springs Rd, Dallas in the Union high-rise project at the edge of downtown Dallas, which should open Live Oak St & Texas St, Dallas in 2017, and for the City Lights apartment tower planned for a 2018 opening at Live Oak and Texas streets, just east of down- town Dallas. Tom Thumb also plans a third urban-Dallas location, a 55,000-square-foot store planned for Denton Drive and Maple Avenue, although no opening date has been confi rmed.

Allen Premium Outlets Stacy Rd & US- The open-air center plans to expand by 75, Allen 122,000 square feet.

Midlothian Towne Center FM 663 & US-287, A Kroger Marketplace-anchored center set to Midlothian open its fi rst phase in 2017.

Victory Park Stemmons & A new Cinepolis luxury cinema and small Woodall Rogers shop space will open at this major mixed-use Fwys, Dallas project in late 2017 or in 2018.

Irving Music Factory SH-114 near A mixed-use 250,000-SF music-oriented Northwest Hwy, project near the Irving Convention Center, Irving which is set to open in late 2017 or 2018.

A-5 SUMMER 2016 D-FW Construction (cont.)

Village 21 SH-121 & Preston A mixed-use project designed for as much Rd, Plano as 500,000 square feet of retail space near Stonebriar Centre Mall. A segment of small- shop multi-tenant retail and restaurant space is now underway.

Sam’s Club US-75 & Haskell The store is planned as the anchor for East Ave, Dallas Village, a retail center underway in the CityPlace area near downtown Dallas.

Costco NEC of US-380 & The store is planned as the anchor for a fu- Hardin, McKinney ture project. McKinney approved the zoning request this past spring.

Kroger Goliad & Quail The store is on track to open in 2017. It will Run, North be the second Kroger in Rockwall. Rockwall

Main Marketplace NWC FM 423 & The center will be anchored by Flix King Rd, Little Elm Brewhouse, a meal-and-a-movie enter- tainment concept based in the Austin area. Completion is set for mid-2017.

The Shops at Clearfork Edwards Ranch The retail component of a major mixed-use Rd & Clearfork development. The 2017 project’s anchor is Main St, Fort Neiman Marcus. Worth

Wade Park Dallas North The retail component of this $1.6 billion Tollway & mixed-use project is set to include Whole Lebanon Rd, Foods Market, iPic Theaters and a number of Frisco shops and restaurants. The retail is slated to open in the fourth quarter of 2017 or later.

Scheels SH-121 & Paige Although it’s not set to open until 2020, it’s Rd, The Colony notable that Fargo, N.D.-based Scheels is on track to enter the D-FW market with a 300,000-square-foot megastore in the Nebraska Furniture Mart-anchored Grandscape development.

TEXAS SNAPSHOT A-6 A-7 SUMMER 2016 Appendix 3: Houston Construction

New Retail for 2016 Valley Ranch Town Center US-59 N at Grand This major project designed for retail and en- Parkway, Porter tertainment space is seeing its fi rst anchors, (Montgomery Kroger Marketplace and Sam’s Club, set to County) open by year-end or in early 2017.

Woodshore Marketplace SWC Oyster A community retail center with a Creek Dr & Dixie 123,000-square-foot Kroger Marketplace Dr, Clute anchor that opened during the fi rst quarter 2016. An additional 16,450 square feet of retail was also completed during the fi rst half of the year.

Clear Lake Marketplace Clear Lake City This center, anchored by an approximately Blvd & El Dorado 100,000-square-foot H-E-B, opened in the Blvd, Houston fi rst half of 2016.

Fairfi eld Marketplace NEC Hwy 290 This community center with Kroger & Mason Rd, Marketplace and approximately 30,000 Cypress square feet of shop space opened in the fi rst half of 2016 in the master-planned Fairfi eld community.

The Junction at Deer Park NEQ of Spencer The center opened its fi rst phase, an Hwy & East Blvd, 83,000-square-foot H-E-B grocery, in 2015. Deer Park A second phase, with 14,600 square feet, breaks ground later this year, and future phases will bring the center to more than 400,000 square feet.

Westlake Marketplace Beltway 8 E This retail center is designed to total 450,000 & West Lake square feet upon completion. The fi rst phase Houston Pkwy, is anchored by a 123,800-square-foot Kroger Humble Marketplace and is set to open in August 2016. Other retailers announced for the project include Old Navy, Marshalls, Ross, Michaels, Burlington, PetSmart and Ulta.

Main Street Kingwood West Lake The center will be anchored by a Houston Pkwy 107,000-square-foot H-E-B grocery that is & Kingwood Dr, currently under construction with a sched- Houston uled second half 2016 opening. The center also features a number of restaurants.

TEXAS SNAPSHOT A-8 Houston Construction (cont.)

Cypress Creek Plaza NEC Fry Rd Anchor H-E-B opened a 100,000-square-foot & Tuckerton, store in this center in fall 2015. An additional Cypress 51,000 square feet of multi-tenant build- ings broke ground in late 2015 for a 2016 opening.

Shops at Katy Reserve FM 1463 & Spring The center opened its fully leased fi rst phase Green Blvd, Katy of nearly 160,000 square feet in 2015. The center is anchored by an approximately 123,000-square-foot Kroger Marketplace. A small-shop Phase II delivery with 16,000 square feet joining a 37,000-square-foot 24 Hour Fitness, is set for mid-2016.

Walmart Supercenter 2901 Riley Fuzzel The store opened during the fi rst half of Rd, Spring 2016.

Walmart Neighborhood FM 518 West & This Walmart, a smaller grocery concept Market Landing Blvd, from the retail giant, opened in early 2016 League City and anchors The Shoppes at Landing.

Trader Joe’s 11683 Westheimer The specialty grocer’s fi fth location in Rd, Houston Houston, a 9,500-square-foot store opened in July 2016.

H-E-B SH-99 & Harlem A 102,000-square-foot store located in Rd, Richmond the Aliana master-planned community in Richmond, now under construction, is scheduled to open in the second half of 2016.

H-E-B FM 1488 & Tamina The grocery store is scheduled to open in Rd, Magnolia late 2016.

Marketplace at Ninety-Six League City Pkwy In addition to the 123,000-square-foot & Hobbs Rd, Kroger, this community center will open in League City fall 2016 with an additional 25,900 square feet of space.

Kroger Marketplace Garth Rd & Hunter Kroger Marketplace anchors the center, Baytown Rd, Baytown which totals approximately 170,000 square feet.

A-9 SUMMER 2016 Houston Construction (cont.)

The Market at Crenshaw Beltway 8, be- The fi rst phase of this regional project tween Fairmont opened in 2015 with Burlington, Party City Pkwy & Crenshaw and Tuesday Morning. A second, approxi- Rd, Pasadena mately 60,000-square-foot phase is sched- uled for a fourth quarter 2016 opening.

The Center at Pearland NEC of FM 518 The new phase for an existing power retail Parkway II & Pearland Pkwy, center is set to bring online approximately Pearland 108,000 square feet of new retail space anchored by Academy Sports + Outdoors by year-end 2016.

The Boardwalk at Towne Barker Cypress This lakeside mixed-use project with ap- Lake Rd & Tuckerton proximately 150,000 square feet features a Rd, Cypress number of restaurants, including craft beer tavern World of Beer, as well as concepts like Orangetheory, Massage Heights and others.

Cabela’s I-45 & Big League This 72,000-square-foot 2016 location is the Dreams Pkwy, fi rst in the Houston area for outdoors super- League City store Cabela’s.

Costco Townsen Blvd & This 150,000-square-foot store that opened I-69, Humble during the fi rst half of 2016 is the ware- house-club retailer’s eighth in the Houston area.

The Galleria Westheimer Rd The expansion and renovation of this leading & Post Oak Blvd, mall saw its relocated, 198,000-square-foot Houston Saks store open in the fi rst half in 2016. The Saks’ relocation created the opportunity for new restaurant and retail space.

The Shoppes at Parkwest NEC of I-10 & The fi rst phases of this planned Katy Ford Bend 400,000-square-foot power center near Katy Rd, Katy Mills Mall, which include Bed Bath & Beyond, DSW, PetSmart and Dick’s Sporting Goods, are set for opening in 2016 and will total approximately 250,000 square feet.

TEXAS SNAPSHOT A-10 Houston Construction (cont.)

Dick’s Sporting Goods Baybrook Mall, These new stores, in the 50,000-square-foot (multiple locations) Deerbrook Mall, to 80,000-square-foot range, are the chain’s First Colony Mall, fi rst in the Houston market and are sched- The Woodlands uled for 2016 or 2017 openings. Mall, Willowbrook Mall New Retail for 2017 Grand Parkway Grand Pkwy & This planned 450,000-square-foot center will Marketplace Kuykendahl Rd, be anchored by Target. The center, which is Spring located within The Woodlands trade area, is set to open in 2017.

Yale Marketplace I-610 & Yale, This new center will be anchored by one of Houston the country’s fi rst locations for Whole Foods new value-shopping concept, 365 by Whole Foods Market; the grocery store is to open at I-610 and Yale near the close-in Heights area in 2017.

Kroger Grand Pkwy & New Kroger stores set to open in 2017 in- Morton, Katy clude ones in Katy and Conroe. Lone Star Pkwy & Hwy 105, Conroe

H-E-B 5130 Cedar, A planned 70,000-square-foot store, set for a Bellaire 2017 opening inside the loop in Bellaire, will replace a much smaller H-E-B location; it will be H-E-B’s fi rst two-story store in Houston, refl ecting the tight market for new develop- ment sites inside the loop.

Miramesa Town Center Fry & West, This Walmart-anchored center will include a Northwest 45,000-square-foot Star Cinema Grill. Houston

Baybrook Mall I-45 & Baybrook The power-retail expansion of the mall, with Mall Dr, one of the already mentioned Dicks’ Sporting Friendswood Goods, as well as Field & Stream, REI, Total Wine, Barnes & Noble and others, is under construction to open in 2017.

A-11 SUMMER 2016 Houston Construction (cont.)

Stableside at Falcon NWC of Gaston The center’s fi rst phase, planned for a 2017 Landing Rd & Falcon opening, includes a 102,473-square-foot Landing Blvd, Kroger and approximately 35,000 square feet Katy of shop space.

Crossing at Katy Fulshear FM 1093 & FM The anchor, Walmart Supercenter, of this 1463, Katy large power retail project is set to open in 2017.

University Commons US-59 & This center, with 110,000 square feet of Shopping Center University Blvd, retail anchored by a new 50,000-square-foot Sugar Land Burlington store, is set to open in 2017.

The Kirby Collection Kirby Drive, This mixed-use project is now underway for Houston a late 2017 opening. The Kirby Collection will include residential, offi ce and 67,000 square feet of upscale retail space.

Star Cinema Grill Westpark Tollway A 42,000-square-foot multi-screen cinema is & Grand Pkwy, set to open in 2017. Katy

Grand Parkway Town Grand Pkwy This retail project, anchored by Kroger Center & Boudreaux, Marketplace and Sam’s Club, is set to open Tomball in 2017.

CityPlace I-45 at Grand CityPlace, a mixed-use project, is under Pkwy, North construction near the new ExxonMobil Houston corporate campus. The project is designed to have 400,000 square feet of retail upon completion.

H-E-B-anchored retail I-10 & Eagle Dr, This new center, planned to incorporate Mont Belvieu 285,000 square feet of retail space, is slated for a 2018 opening.

Imperial Market US-90 near Hwy Imperial Market is scheduled to break 6, Sugar Land ground during the second half of 2016 for a late 2017 opening. The mixed-use project is designed to incorporate 290,000 square feet of retail space.

The Shoppes at Cinco FM 1093 & Spring This retail project will be anchored by a Ranch Green Blvd, Katy 100,000-square-foot Lowe’s store set to open in spring 2017. In addition to Lowe’s, small-shop space that includes Great Clips, a nail salon and a gym is set to open in summer 2016.

TEXAS SNAPSHOT A-12 Houston Construction (cont.)

The Market at Springwoods Grand Pkwy & This community center now underway at Village Holzwarth Rd, Grand Parkway and Holzwarth Road is Spring scheduled for a 2017 opening. The center is anchored by a 100,000-square-foot Kroger and will feature additional space.

Spring Pines Shopping Spring Cypress This center will feature a 123,000-square- Center & Holzwarth Rd, foot Kroger Marketplace along with approx- Spring imately 50,000 square feet of shop space. Completion is set for 2017 in, appropriately enough, spring.

Mid-Main Main St, along Mid-Main in Midtown Houston will open in Main St’s light rail 2017 with approximately 29,000 square feet line, Houston of retail, in addition to multi-family space.

A-13 SUMMER 2016 Appendix 4: San Antonio Construction

New Retail for 2016 and 2017

Walmart Supercenter Cibolo Valley Dr This approximately 182,000-square-foot & Borgfeld Rd, Supercenter opened during the fi rst quarter Cibolo 2016.

Walmart Supercenter NWQ of Boerne An approximately 155,000-square-foot Stage Rd & I-10, Walmart Supercenter anchors Boerne Stage San Antonio Crossing, which plans future phases.

Walmart Supercenter 510 Kitty Hawk This Supercenter should open during the Rd, Universal City second half of 2016.

Walmart Neighborhood 3418 East These smaller Neighborhood Market stores Markets, San Antonio Southcross Rd opened in San Antonio during the fi rst half of 3837 Pleasanton 2016. Rd 6938 Walzem 9005 FM 1560 North

Walmart Neighborhood Toepperwein Rd Walmart is under construction with a Market & Kitty Hawk Rd Neighborhood Market in Converse. Converse

H-E-B Plus! 2965 I-35, at A 120,000-square-foot store opened in June. FM 306, New Braunfels

H-E-B 1368 East Court This 100,000-square-foot store represents St, Seguin the relocation and expansion of an adjacent smaller location, which is being demolished for parking.

H-E-B Bulverde Rd & This H-E-B store is planned for 2017. Loop 1604, San Antonio

Natural Grocers by Vitamin 13310 NW Military The Colorado-based specialty grocer Cottage Hwy entered the market in 2016 with two new stores. The fi rst store, with 15,000 square 6514 N New feet, opened on NW Military Highway, and Braunfels Ave the second store is underway at the site San Antonio of a demolished retail building on N New Braunfels Avenue.

TEXAS SNAPSHOT A-14 San Antonio Construction (cont.)

Academy Sports & 7503 S Zarzamora The sporting goods giant is relocating Outdoors at I-35, San its S.W. Military store to a newly built Antonio 62,942-square-foot store.

Rooms To Go 15339 I-35 North, This newly constructed store opened in early San Antonio 2016. Rooms To Go’s new store format aver- ages approximately 40,000 square feet.

Sun & Ski 5811 Worth Pkwy, The specialty sporting goods store is open- San Antonio ing a new-construction store totaling 10,700 square feet at The Rim.

Santikos Theaters 11210 Alamo Santikos Theaters opened a new 16-screen Ranch Pkwy, San location called Casa Blanca. The approxi- Antonio mately 110,000-square-foot mega-theater includes a host of entertainment and dining options, including a bowling alley, a café, a gelato station, cocktails and beer and wine.

The Plaza at Vance SEC of Vance This retail strip center, with 28,000 square Jackson Jackson & UTSA feet, is scheduled to open during the second Blvd, San Antonio half of the year.

A-15 SUMMER 2016 Austin Houston 4200 North Lamar Boulevard, Suite 200 1800 Bering Drive, Suite 550 Austin, Texas 78756 Houston, Texas 77057 Weitzman 512.482.0094 Weitzman 713.868.9961 Cencor 512.482.8383 Cencor 713.781.7111

Dallas - Fort Worth San Antonio 3102 Maple Avenue, Suite 350 70 NE Loop 410, Suite 450 Dallas, Texas 75201 San Antonio, Texas 78216 Weitzman 214.954.0600 Weitzman 210.366.5050 Cencor 214.954.0300 Cencor 210.366.3500

Copyright 2016. The information contained herein was obtained from sources deemed reliable; however, The Weitzman Group makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The Weitzman Group, which provides real estate brokerage services, and Cencor Realty Services, which provides property management and development services, are divisions of Weitzman Management Corporation, a regional realty corporation.