Houston Retail August 2016

MARKET WATCH HOUSTON RETAIL AUGUST 2016

RECENT RETAIL LEASES RETAIL LEASE STATISTICS Baytown/Chambers :: Marshalls 23,000 SF new lease at Baytown Marketplace Overall Vacancy Rates Asking Rental Rates (NNN) Pasadena/Galena Park :: Boot Barn 110 12 13,249 SF new lease at Federal East Plaza 100 100 Pearland/Manvel :: Village Family Practice 8,763 SF new lease at Silverlake Plaza Shopping Center 0 1

RECENT RETAIL SALES 0 10 Copperfield :: West Junction Center 64,340 SF 0 12 Buyer: Transnational Investments Seller: KBP Group III 60 100

0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 16 RETAIL IN THE NEWS 13 13 13 14 14 14 14 15 15 15 15 16 16 Paris gelato shop arrives in River Oaks District Source: CoStar - Houston retail buildings 5,000 SF and greater with French flair and rose-shaped cones link to story CultureMap Houston, August 23, 2016 Retail Sales Statistics HOUSTON MSA UNITED STATES SoulCycle’s second Houston studio sets opening QUARTER TO LAST QUARTER TRAILING 12 LAST QUARTER TRAILING 12 date DATE (Q2 2016) MONTHS (Q2 2016) MONTHS link to story Volume ($ $78.1 $357.1 $1,401.3 $17,774.7 $80,587.8 Houston Business Journal, August 19, 2016 Mil) No. of 14 30 149 1,404 6,856 Fast-growing pizza chain continues Houston Properties expansion Total SF 469,938 1,586,161 8,750,872 79,754,256 410,607,933 link to story Average N/A $185 $201 $232 $210 Houston Business Journal, August 16, 2016 Price/SF Average Cap N/A 7.8% 6.7% 6.4% 6.5% Rate (Yield) Source: Real Capital Analytics

Retail Market Indicators DIRECT DIRECT VACANCY OVERALL VACANCY SF UNDER Q2 2016 NET SUBMARKET TOTAL RBA (SF) VACANT (SF) RATE RATE CONSTRUCTION ABSORPTION East (Chambers County/Baytown, Channelview & Pasadena/Galena Park) 13,356,618 958,872 7.2% 7.2% 142,807 35,980

Inner Loop (CBD, Galleria, Uptown, University, River Oaks, Heights & East End) 31,773,787 976,482 3.1% 3.1% 83,098 71,325

North (Near North, FM 1960/I-45, Greenspoint/North Belt, Spring Creek, Far North & 58,589,294 3,129,435 5.3% 5.4% 720,523 416,012 Montgomery County)

Northeast (Near Northeast, Lake Houston, Kingwood & Liberty County) 13,150,889 465,262 3.5% 3.5% 545,995 246,771

Northwest (Addicks, Bridgelands, Cypresswood, Fairfield, Far Katy North, Far Northwest, 57,908,713 2,893,899 5.0% 5.0% 957,880 461,833 Far Tomball, Jersey Village, Near Northwest Oaks, Near NW Spring Valley, Willowbrook)

South (Far South & Near South) 14,075,127 683,042 4.9% 5.0% 18,346 172,631

Southeast (NASA/Clear Lake, Near Southeast, Southeast Outlier ) 51,983,112 3,351,499 6.4% 6.5% 602,462 226,482

Southwest (Near SW Central, Stafford, Sugar Land, Far New Territory, Far West, Far 43,136,389 2,505,257 5.8% 5.9% 482,115 142,107 Southwest )

West (Near West, Westchase, Far West, Far Katy South) 39,802,643 1,902,389 4.8% 5.0% 114,437 132,490 Total - Houston 323,776,572 16,866,137 5.6% 5.6% 3,667,663 1,905,631 Source: Costar - Houston retail buildings 5,000 SF and greater HOUSTON RETAIL MARKET WATCH AUGUST 2016 Houston | RETAIL SUBMARKETS

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INNER LOOP NORTH NORTHWEST NORTHEAST SOUTHEAST 1. CBD 1. Near North 1. Northwest Oaks 1. Near Northeast 1. Gulf Freeway/Pasadena 2. Bellaire/West University 2. FM 1960 & I-45 2. Spring Branch 2. Atascocita 2. Baybrook/Clear Lake 3. Galleria/Uptown 3. Greens Point/North Belt 3. Willowbrook 3. Kingwood 3. Old Pearland/Alvin 4. Inner Loop/River Oaks 4. Spring Creek 4. Jersey Village 4. Liberty County 5. Heights 5. Far North 5. Copperfield SOUTH 6. East End 6. The Woodlands/Montgomery 1 CBD 1 Near North 6. Fairfield 1 Northwest Oaks 1. Pearland / Manvel1 Near Northeast 1 Pasadena / Galena Park WEST SOUTHWEST 7. Cypress/Bridgelands 2. Near South 2 Bellaire / West University 2 FM 1960 & I-45 2 Spring Branch 2 Atascocita 2 Channelview / Beaumont 1. Memorial 1. Sharpstown/Southwest Central 8. Far Katy North EAST EAST 3 Galleria/Uptown 3 Greens Point - North Belt 3 Willowbrook 3 Kingwood 3 Baytown / Chambers 2. Westchase 2. West Oaks 9. Far Northwest 1. Pasadena/Galena Park NORTHEAST 3.INNER LOOP EnerInnergy CorridorLoop / River Oaks 3. Sugar Land/SSpringtafford Creek 10. Tomball/Spring Jersey Cypress Village 2. Channelview/Be Libertyaumont County 1 Gulf Freeway/Pasadena NORTH 4. Katy/Cinco Ranch 4. Richmond/Rosenberg 3. Baytown/Chambers 5 Heights 5 Far North 5 Copperﬁeld 1 Pearland / Manvel 2 Baybrook / Clear Lake 6 6 6 Fairﬁeld SOUTH 2 3 East End The Woodlands - Montgomery Near South SOUTHEAST Old Pearland / Alvin 1 Memorial 1 Sharpstown - Southwest Central 7 Cypress/Bridgelands NORTHWEST NORTHWEST 2 Westchase 2 West Oaks 8 Far Katy North

MARKETWEST 3 Energy WATCH Corridor HOUSTON RETAIL MARKET3 Sugar AUGUST Land - Stafford 2016 9 Far Northwest SOUTHWEST Katy - Cinco Ranch Richmond Rosenberg 10 Tomball/Spring Cypress HOUSTON RETAIL MARKET WATCH AUGUST 2016

ABOUT TRANSWESTERN

Transwestern is a privately held real estate firm specializing in agency leasing, property and facilities management, tenant advisory, capital markets, research and sustainability. The fully integrated global enterprise leverages competencies in office, industrial, retail, multifamily and healthcare properties to add value for investors, owners and occupiers of real estate. As a member of the Transwestern family of companies, the firm capitalizes on market insights and operational expertise of independent affiliates specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 37 countries as part of a strategic alliance with Paris-based BNP Paribas Real Estate.

Transwestern was founded in Houston, Texas in 1978, and Houston remains the corporate headquarters today. As one of the preeminent commercial real estate firms in Houston, we offer a comprehensive menu of real estate services designed to provide owners, tenants and investors with the optimum solutions for their unique requirements. Transwestern has seasoned veterans in every area of expertise with the integrity, experience and creativity to be the best partner for its clients. Transwestern’s Houston office currently employs over 400 team members and has been an innovator in the Houston market for 38 years.

SEATTLE

MINNEAPOLIS BOSTON DETROIT MILWAUKEE GREENWICH NEW YORK CHICAGO NEW JERSEY SAN FRANCISCO WALNUT CREEK SALT LAKE SILICON CITY BETHESDA BALTIMORE DENVER VALLEY WASHINGTON DC NORTHERN ST. LOUIS VIRGINIA

LOS ANGELES OKLAHOMA ORANGE COUNTY CITY SAN DIEGO PHOENIX TRANSWESTERN ATLANTA FORT DALLAS WORTH LOCATIONS

HOUSTON AUSTIN SAN ANTONIO NEW ORLEANS ORLANDO FORT LAUDERDALE MIAMI-DADE

HOUSTON RETAIL TEAM Nick Hernandez Crystal Allen Cindy Pham Ryan Holliday Managing Director Senior Vice President Senior Broker Associate 713.270.3354 713.270.3360 713.231.1562 713.231.1623 [email protected] [email protected] [email protected] [email protected] Micha van Marcke, CCIM Chace Henke Danielle Schidlowski Tyler Trevino Senior Vice President Vice President Associate Associate 713.272.1231 713.272.1274 713.231.1584 713.720.3388 [email protected] [email protected] [email protected] [email protected] Grant Walker Chris Reyes Alex Kelly Senior Vice President Vice President Associate 713.270.3389 713.272.1280 713.231.1568 [email protected] [email protected] [email protected]

CONTACT METHODOLOGY Rachel Andrae Kevin Roberts The information in this report is the result of a compilation of publicly available Research Analyst President, Southwest data from a variety of commercial and government sources. 713.272.1216 713.270.3347 [email protected] [email protected]

1900 West Loop South, Suite 1300 T 713.270.7700 F 713.270.6285 Houston, Texas 77027 www.transwestern.net/houston

Copyright © 2016 Transwestern. All rights reserved. No part of this work may be reproduced or distributed to third parties without written permission of the copyright owner. The information contained in this report was gathered by Transwestern from CoStar and other primary and secondary sources believed to be reliable. Transwestern, however, makes no representation concerning the accuracy or completeness of such information and expressly disclaims any responsibility for any inaccuracy contained herein. MARKET WATCH HOUSTON RETAIL MAY 2016

RECENT RETAIL LEASES RETAIL LEASE STATISTICS Sugar Land/Stafford :: 24 Hour Fitness 38,000 SF new lease at Brazos Town Center Overall Vacancy Rates Asking Rental Rates (NNN) Greenspoint/North Belt :: Epic Thrift Stores 110 12 29,500 SF new lease at Deerbrook Commons 100 100 Atascocita :: Old Navy 12,500 SF new lease at Westlake Marketplace 0 1 Bellaire/West University :: Dollar Tree 0 10 12,000 SF new lease at Loop Center 0 12 RECENT RETAIL SALES Pasadena/Galena Park :: Federal Road Shopping 60 100 Center 18,330 SF 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 16 Buyer: B&G Real Estate Partnership 13 13 13 13 14 14 14 14 15 15 15 15 16 Seller: Federal 883, LLC Source: CoStar - Houston retail buildings 5,000 SF and greater

RETAIL IN THE NEWS Retail Sales Statistics H-E-B is keeping to its growth plans HOUSTON MSA UNITED STATES link to story QUARTER TO LAST QUARTER TRAILING 12 LAST QUARTER TRAILING 12 Houston Chronicle, May 9, 2016 DATE (Q1 2016) MONTHS (Q1 2016) MONTHS Volume ($ Japanese retailer inks first Houston lease, more in $12.1 $188.1 $1,290.8 $18,139.4 $81,286.1 Mil) the works No. of 4 26 155 1,672 7,206 link to story Properties Houston Business Journal, May 9, 2016 Total SF 47,059 954,807 8,569,674 104,728,340 427,002,596 Average Austin-based burger chain sets May 30 as Houston N/A $218 $199 $191 $206 Price/SF opening date Average Cap N/A 7.3% 6.8% 6.6% 6.6% link to story Rate (Yield) CultureMap Houston, May 9, 2016 Source: Real Capital Analytics

Retail Market Indicators DIRECT DIRECT VACANCY OVERALL VACANCY SF UNDER Q1 2016 NET SUBMARKET TOTAL RBA (SF) VACANT (SF) RATE RATE CONSTRUCTION ABSORPTION East (Chambers County/Baytown, Channelview & Pasadena/Galena Park) 13,294,367 917,311 6.9% 6.9% 99,707 39,525

Inner Loop (CBD, Galleria, Uptown, University, River Oaks, Heights & East End) 31,569,594 1,010,227 3.2% 3.3% 51,818 (15,996)

North (Near North, FM 1960/I-45, Greenspoint/North Belt, Spring Creek, Far North & 57,926,824 3,070,122 5.3% 5.3% 619,399 491,778 Montgomery County)

Northeast (Near Northeast, Lake Houston, Kingwood & Liberty County) 12,966,748 868,772 6.7% 6.8% 731,895 15,807

Northwest (Addicks, Bridgelands, Cypresswood, Fairfield, Far Katy North, Far Northwest, 57,247,720 2,976,881 5.2% 5.2% 674,960 (105,255) Far Tomball, Jersey Village, Near Northwest Oaks, Near NW Spring Valley, Willowbrook)

South (Far South & Near South) 13,911,039 806,840 5.8% 5.9% 173,896 54,481

Southeast (NASA/Clear Lake, Near Southeast, Southeast Outlier ) 51,594,849 3,147,286 6.1% 6.1% 797,548 (205,616)

Southwest (Near SW Central, Stafford, Sugar Land, Far New Territory, Far West, Far 42,924,131 2,704,220 6.3% 6.3% 78,168 47,922 Southwest )

West (Near West, Westchase, Far West, Far Katy South) 39,604,466 1,861,410 4.7% 4.8% 87,794 147,175 Total - Houston 321,039,738 17,363,070 5.5% 5.5% 3,315,185 469,821 Source: Costar - Houston retail buildings 5,000 SF and greater HOUSTON RETAIL MARKET WATCH MAY 2016 Houston | RETAIL SUBMARKETS

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INNER LOOP NORTH NORTHWEST NORTHEAST SOUTHEAST 1. CBD 1. Near North 1. Northwest Oaks 1. Near Northeast 1. Gulf Freeway/Pasadena 2. Bellaire/West University 2. FM 1960 & I-45 2. Spring Branch 2. Atascocita 2. Baybrook/Clear Lake 3. Galleria/Uptown 3. Greens Point/North Belt 3. Willowbrook 3. Kingwood 3. Old Pearland/Alvin 4. Inner Loop/River Oaks 4. Spring Creek 4. Jersey Village 4. Liberty County 5. Heights 5. Far North 5. Copperfield SOUTH 6. East End 6. The Woodlands/Montgomery 1 CBD 1 Near North 6. Fairfield 1 Northwest Oaks 1. Pearland / Manvel1 Near Northeast 1 Pasadena / Galena Park WEST SOUTHWEST 7. Cypress/Bridgelands 2. Near South 2 Bellaire / West University 2 FM 1960 & I-45 2 Spring Branch 2 Atascocita 2 Channelview / Beaumont 1. Memorial 1. Sharpstown/Southwest Central 8. Far Katy North EAST EAST 3 Galleria/Uptown 3 Greens Point - North Belt 3 Willowbrook 3 Kingwood 3 Baytown / Chambers 2. Westchase 2. West Oaks 9. Far Northwest 1. Pasadena/Galena Park NORTHEAST 3.INNER LOOP 4EnerInnergy CorridorLoop / River Oaks 3. Sugar4 Land/SSpringtafford Creek 10. Tomball/Spring4 Jersey Cypress Village 2. Channelview/Be4 Libertyaumont County 1 Gulf Freeway/Pasadena NORTH 4. Katy/Cinco Ranch 4. Richmond/Rosenberg 3. Baytown/Chambers 5 Heights 5 Far North 5 Copperﬁeld 1 Pearland / Manvel 2 Baybrook / Clear Lake 6 6 6 Fairﬁeld SOUTH 2 3 East End The Woodlands - Montgomery Near South SOUTHEAST Old Pearland / Alvin 1 Memorial 1 Sharpstown - Southwest Central 7 Cypress/Bridgelands NORTHWEST NORTHWEST 2 Westchase 2 West Oaks 8 Far Katy North

MARKETWEST 3 Energy WATCH Corridor HOUSTON RETAIL MARKET3 Sugar MAY Land 2016 - Stafford 9 Far Northwest SOUTHWEST 4 Katy - Cinco Ranch 4 Richmond Rosenberg 10 Tomball/Spring Cypress HOUSTON RETAIL MARKET WATCH MAY 2016

ABOUT TRANSWESTERN

SEATTLE

MINNEAPOLIS BOSTON DETROIT MILWAUKEE GREENWICH NEW YORK CHICAGO NEW JERSEY SAN FRANCISCO WALNUT CREEK SALT LAKE SILICON CITY BETHESDA BALTIMORE DENVER VALLEY WASHINGTON DC NORTHERN ST. LOUIS VIRGINIA

LOS ANGELES OKLAHOMA ORANGE COUNTY CITY SAN DIEGO PHOENIX TRANSWESTERN ATLANTA FORT DALLAS WORTH LOCATIONS

HOUSTON AUSTIN SAN ANTONIO NEW ORLEANS ORLANDO FORT LAUDERDALE MIAMI-DADE

HOUSTON RETAIL TEAM Nick Hernandez Crystal Allen Cindy Pham Lauren Heimann Managing Director Senior Vice President Senior Broker Associate 713.270.3354 713.270.3360 713.231.1562 713.231.1621 [email protected] [email protected] [email protected] [email protected] Micha van Marcke, CCIM Chace Henke Danielle Schidlowski Ryan Holliday Senior Vice President Vice President Associate Associate 713.272.1231 713.272.1274 713.231.1584 713.231.1623 [email protected] [email protected] [email protected] [email protected] Grant Walker Chris Reyes Alex Kelly Tyler Trevino Senior Vice President Vice President Associate Associate 713.270.3389 713.272.1280 713.231.1568 713.720.3388 [email protected] [email protected] [email protected] [email protected]

CONTACT METHODOLOGY Rachel Alexander Kevin Roberts The information in this report is the result of a compilation of publicly available Director of Market Research President, Southwest data from a variety of commercial and government sources. 713.270.3344 713.270.3347 [email protected] [email protected]

1900 West Loop South, Suite 1300 T 713.270.7700 F 713.270.6285 Houston, Texas 77027 www.transwestern.net/houston

Recent RETAIL Leases Sugar Land/Stafford :: Fishing Tackle Unlimited RETAIL LEASE STATISTICS

27,930 SF new lease at Sugar Creek Village Overall Vacancy Rates Asking Rental Rates (NNN) Willowbrook :: Giant Dollar 12.0% $18.00 11,000 SF new lease at Commons at Lincoln Green Far North :: Red Barn Special Events 11.0% $17.80 5,600 SF new lease at 5814 FM 1488 10.0% $17.60 Recent RETAIL sales Baybrook/Clear Lake :: Bayway Village II 9.0% $17.40 142,935 SF Buyer: DuWest Realty 8.0% $17.20 Seller: David Z. Mafridge Interests

Retil a IN THE NEWS 7.0% Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 $17.00 Midtown’s newest restaurant features burgers and Source: CoStar - Houston retail buildings 5,000 SF and greater park views, but don’t call it Shake Shack link to story Retail Sales Statistics CultureMap Houston, September 18, 2015 Houston MSA United States

NewQuest to develop Kroger-anchored center in Quarter to Last Quarter Trailing 12 Last Quarter Trailing 12 Katy area Date (Q2 2015) Months (Q2 2015) Months link to story Volume ($ $238.3 $287.1 $1,697.0 $19,118.5 $90,424.6 Houston Chronicle, September 17, 2015 Mil) No. of 23 39 168 1,727 7,347 Krispy Kreme to open two Houston locations next Properties months, plans for more growth in 2016 Total SF 2,322,666 1,627,909 9,956,761 94,933,346 439,366,581 link to story Average N/A $176 $189 $213 $214 Houston Business Journal, September 17, 2015 Price/SF Average Cap N/A 7.3% 7.1% 6.6% 6.6% Rate (Yield) Source: Real Capital Analytics

Retail Market Indicators DIRECT DIRECT VACANCY OVERALL VACANCY SF UNDER Q2 2015 SUBMARKET TOTAL RBA (SF) VACANT (SF) RATE RATE CONSTRUCTION NET ABSORPTION East (Pasadena/Galena Park, Channelview/Beaumont & Baytown/Chambers) 13,170,754 913,943 8.9% 8.9% 9,960 35,529

Inner Loop (CBD, Bellaire/West U, Galleria/Uptown, River Oaks, Heights & East End) 26,839,751 1,129,294 4.2% 4.2% 284,865 (32,093)

North (Near North, FM 1960/I-45, Greenspoint/North Belt, Spring Creek, Far North & The 56,636,692 2,904,431 7.1% 7.2% 96,063 199,747 Woodlands/Montgomery)

Northeast (Near Northeast, Atascosita, Kingwood & Liberty County) 12,501,866 568,654 7.5% 7.5% - 133,866

Northwest (NW Oaks, Spring Branch, Willowbrook, Jersey Village, Copperfield, Fairfield, 56,440,553 2,975,567 6.3% 6.3% 956,331 98,378 Cypress/Bridgelands, Far Katy North, Far NW & Tomball/Spring Cypress)

South (Pearland/Manvel & Near South) 13,473,374 664,771 6.9% 6.9% 164,640 168,115

Southeast (Gulf Frwy/Pasadena, Baybrook/Clear Lake & Old Pearland/Alvin) 50,203,689 2,944,715 5.9% 5.9% 260,752 128,720

Southwest (Sharpstown/Southwest Central, West Oaks, Sugar Land/Stafford & Richmond/ 42,935,002 2,657,211 7.3% 7.4% 66,275 132,197 Rosenberg)

West (Memorial, Westchase, Energy Corridor & Katy/Cinco Ranch) 38,410,219 2,096,968 5.5% 5.7% 193,750 85,059 Total - Houston 310,611,900 16,855,554 7.1% 7.2% 2,032,636 949,518 Source: Costar - Houston retail buildings 5,000 SF and greater HOUSTON RETAIL MARKET WATCH Sebept m er 2015 Houston | RETAIL SUBMARKETS

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I NneR LOOP NORTH NORTHWEST northeast SUO THEAST 1. CBD 1. Near North 1. Northwest Oaks 1. Near Northeast 1. Gulf Freeway/Pasadena 2. Bellaire/West University 2. FM 1960 & I-45 2. Spring Branch 2. Atascocita 2. Baybrook/Clear Lake 3. Galleria/Uptown 3. Greens Point/North Belt 3. Willowbrook 3. Kingwood 3. Old Pearland/Alvin 4. Inner Loop/River Oaks 4. Spring Creek 4. Jersey Village 4. Liberty County 5. Heights 5. Far North 5. Copperfield SUO TH 6. East End 6. The Woodlands/Montgomery 1 CBD 1 Near North 6. Fairfield 1 Northwest Oaks 1. Pearland / Manvel1 Near Northeast 1 Pasadena / Galena Park WEST SUO THWEST 7. Cypress/Bridgelands 2. Near South 2 Bellaire / West University 2 FM 1960 & I-45 2 Spring Branch 2 Atascocita 2 Channelview / Beaumont 1. Memorial 1. Sharpstown/Southwest Central 8. Far Katy North EAST EAST 3 Galleria/Uptown 3 Greens Point - North Belt 3 Willowbrook 3 Kingwood 3 Baytown / Chambers 2. Westchase 2. West Oaks 9. Far Northwest 1. Pasadena/Galena Park NORTHEAST 3.INNER LOOP 4EnerInnergy CorridorLoop / River Oaks 3. Sugar4 Land/SSpringtafford Creek 10. Tomball/Spring4 Jersey Cypress Village 2. Channelview/Be4 Libertyaumont County 1 Gulf Freeway/Pasadena NORTH 4. Katy/Cinco Ranch 4. Richmond/Rosenberg 3. Baytown/Chambers 5 Heights 5 Far North 5 Copperﬁeld 1 Pearland / Manvel 2 Baybrook / Clear Lake 6 6 6 Fairﬁeld SOUTH 2 3 East End The Woodlands - Montgomery Near South SOUTHEAST Old Pearland / Alvin 1 Memorial 1 Sharpstown - Southwest Central 7 Cypress/Bridgelands NORTHWEST NORTHWEST 2 Westchase 2 West Oaks 8 Far Katy North

MARKETWEST 3 Energy WATCH Corridor HOUSTON RETAIL MARKET3 Sugar Se pLandteme - Staffordber 2015 9 Far Northwest SOUTHWEST 4 Katy - Cinco Ranch 4 Richmond Rosenberg 10 Tomball/Spring Cypress HOUSTON RETAIL MARKET WATCH Sebept m er 2015

ABOUT TRANSWESTERN

Transwestern is a privately held real estate firm specializing in agency leasing, property and facilities management, tenant advisory, capital markets, research and sustainability. The fully integrated global enterprise leverages competencies in office, industrial, retail, multifamily and healthcare properties to add value for investors, owners and occupiers of real estate. As a member of the Transwestern family of companies, the firm capitalizes on market insights and operational expertise of independent affiliates specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 38 countries as part of a strategic alliance with Paris-based BNP Paribas Real Estate.

SEATTLE

MINNEAPOLIS BOSTON DETROIT MILWAUKEE GREENWICH NEW YORK CHICAGO NEW JERSEY SAN FRANCISCO WALNUT CREEK SALT LAKE SILICON CITY BETHESDA BALTIMORE DENVER VALLEY WASHINGTON DC NORTHERN ST. LOUIS VIRGINIA

LOS ANGELES OKLAHOMA ORANGE COUNTY CITY SAN DIEGO PHOENIX TRANSWESTERN ATLANTA FORT DALLAS WORTH LOCATIONS

HOUSTON AUSTIN SAN ANTONIO NEW ORLEANS ORLANDO FORT LAUDERDALE MIAMI-DADE

HOUT S ON RETAIL TEAM Nick Hernandez Grant Walker Chace Henke Alex Kelly Managing Director Vice President Associate Associate 713.270.3354 713.270.3389 713.272.1274 713.231.1568 [email protected] [email protected] [email protected] [email protected] Micha van Marcke, CCIM Crystal Allen Chris Reyes Lauren Heimann Senior Vice President Vice President Associate Associate 713.272.1231 713.270.3360 713.272.1280 713.231.1621 [email protected] [email protected] [email protected] [email protected] Tony Armstrong Cindy Nguyen Danielle Schidlowski Ryan Holliday Vice President Senior Broker Associate Associate 713.270.3323 713.231.1562 713.231.1584 713.231.1623 [email protected] [email protected] [email protected] [email protected]

Contact Methodology Rachel Alexander Kevin Roberts The information in this report is the result of a compilation of publicly available Director of Market Research President, Southwest data from a variety of commercial and government sources. 713.270.3344 713.270.3347 [email protected] [email protected]

1900 West Loop South, Suite 1300 T 713.270.7700 F 713.270.6285 Houston, Texas 77027 www.transwestern.net/houston

Copyright © 2015 Transwestern. All rights reserved. No part of this work may be reproduced or distributed to third parties without written permission of the copyright owner. The information contained in this report was gathered by Transwestern from CoStar and other primary and secondary sources believed to be reliable. Transwestern, however, makes no representation concerning the accuracy or completeness of such information and expressly disclaims any responsibility for any inaccuracy contained herein. MARKET WATCH HOUSTON RETAIL AUGUST 2015

RECENT RETAIL LEASES Near North :: dd’s DISCOUNTS RETAIL LEASE STATISTICS

21,000 SF new lease at Eastex Shopping Center Overall Vacancy Rates Asking Rental Rates (NNN) Bridgelands :: CVS 12.0% $18.00 15,300 SF new lease at Lakeland Village Center Far North :: Dollar Tree 11.0% $17.80 9,450 SF new lease at Cypress Station Square Center 10.0% $17.60 RECENT RETAIL SALES Channelview :: San Jacinto Mall 9.0% $17.40 1.2 million SF Sale Price: undisclosed 8.0% $17.20 Buyer: Fidelis Realty Partners Seller: TriYar Companies 7.0% Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 $17.00 RETAIL IN THE NEWS Source: CoStar - Houston retail buildings 5,000 SF and greater Retail centers are white hot investments as occupancy hits 10-year high Retail Sales Statistics link to story HOUSTON MSA UNITED STATES Realty News Report, August 17, 2015 QUARTER TO LAST QUARTER TRAILING 12 LAST QUARTER TRAILING 12 Coffeehouse developers to launch new doughnut DATE (Q2 2015) MONTHS (Q2 2015) MONTHS Volume ($ shop in the Heights $169.9 $267.5 $1,682.1 $19,060.0 $90,511.0 link to story Mil) No. of Houston Business Journal, August 11, 2015 12 36 166 1,669 7,277 Properties Renovations underway at Willowbrook Mall Total SF 1,841,594 1,527,059 9,869,868 92,564,426 436,822,702 Average link to story N/A $187 $193 $220 $216 Houston Chronicle, August 10, 2015 Price/SF Average Cap N/A 7.2% 7.1% 6.5% 6.6% Rate (Yield) Source: Real Capital Analytics

Inner Loop (CBD, Bellaire/West U, Galleria/Uptown, River Oaks, Heights & East End) 26,839,751 1,129,294 4.2% 4.2% 284,865 (32,093)

North (Near North, FM 1960/I-45, Greenspoint/North Belt, Spring Creek, Far North & The 56,636,692 2,904,431 7.1% 7.2% 96,063 199,747 Woodlands/Montgomery)

Northeast (Near Northeast, Atascosita, Kingwood & Liberty County) 12,501,866 568,654 7.5% 7.5% - 133,866

South (Pearland/Manvel & Near South) 13,473,374 664,771 6.9% 6.9% 164,640 168,115

Southeast (Gulf Frwy/Pasadena, Baybrook/Clear Lake & Old Pearland/Alvin) 50,203,689 2,944,715 5.9% 5.9% 260,752 128,720

Southwest (Sharpstown/Southwest Central, West Oaks, Sugar Land/Stafford & Richmond/ 42,935,002 2,657,211 7.3% 7.4% 66,275 132,197 Rosenberg)

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INNER LOOP NORTH NORTHWEST NORTHEAST SOUTHEAST 1. CBD 1. Near North 1. Northwest Oaks 1. Near Northeast 1. Gulf Freeway/Pasadena 2. Bellaire/West University 2. FM 1960 & I-45 2. Spring Branch 2. Atascocita 2. Baybrook/Clear Lake 3. Galleria/Uptown 3. Greens Point/North Belt 3. Willowbrook 3. Kingwood 3. Old Pearland/Alvin 4. Inner Loop/River Oaks 4. Spring Creek 4. Jersey Village 4. Liberty County 5. Heights 5. Far North 5. Copperfield SOUTH 6. East End 6. The Woodlands/Montgomery 1 CBD 1 Near North 6. Fairfield 1 Northwest Oaks 1. Pearland / Manvel1 Near Northeast 1 Pasadena / Galena Park WEST SOUTHWEST 7. Cypress/Bridgelands 2. Near South 2 Bellaire / West University 2 FM 1960 & I-45 2 Spring Branch 2 Atascocita 2 Channelview / Beaumont 1. Memorial 1. Sharpstown/Southwest Central 8. Far Katy North EAST EAST 3 Galleria/Uptown 3 Greens Point - North Belt 3 Willowbrook 3 Kingwood 3 Baytown / Chambers 2. Westchase 2. West Oaks 9. Far Northwest 1. Pasadena/Galena Park NORTHEAST 3.INNER LOOP 4EnerInnergy CorridorLoop / River Oaks 3. Sugar4 Land/SSpringtafford Creek 10. Tomball/Spring4 Jersey Cypress Village 2. Channelview/Be4 Libertyaumont County 1 Gulf Freeway/Pasadena NORTH 4. Katy/Cinco Ranch 4. Richmond/Rosenberg 3. Baytown/Chambers 5 Heights 5 Far North 5 Copperﬁeld 1 Pearland / Manvel 2 Baybrook / Clear Lake 6 6 6 Fairﬁeld SOUTH 2 3 East End The Woodlands - Montgomery Near South SOUTHEAST Old Pearland / Alvin 1 Memorial 1 Sharpstown - Southwest Central 7 Cypress/Bridgelands NORTHWEST NORTHWEST 2 Westchase 2 West Oaks 8 Far Katy North

MARKETWEST 3 Energy WATCH Corridor HOUSTON RETAIL MARKET3 Sugar AUGUST Land - Stafford 2015 9 Far Northwest SOUTHWEST 4 Katy - Cinco Ranch 4 Richmond Rosenberg 10 Tomball/Spring Cypress HOUSTON RETAIL MARKET WATCH AUGUST 2015

ABOUT TRANSWESTERN

Transwestern is a privately held real estate firm specializing in agency leasing, property and facilities management, tenant advisory, capital markets, research and sustainability. The fully integrated global enterprise leverages competencies in office, industrial, retail, multifamily and healthcare properties to add value for investors, owners and occupiers of real estate. As a member of the Transwestern family of companies, the firm capitalizes on market insights and operational expertise of independent affiliates specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 38 countries as part of a strategic alliance with Paris-based BNP Paribas Real Estate.

SEATTLE

MINNEAPOLIS BOSTON DETROIT MILWAUKEE GREENWICH NEW YORK CHICAGO NEW JERSEY SAN FRANCISCO WALNUT CREEK SALT LAKE SILICON CITY BETHESDA BALTIMORE DENVER VALLEY WASHINGTON DC NORTHERN ST. LOUIS VIRGINIA

LOS ANGELES OKLAHOMA ORANGE COUNTY CITY SAN DIEGO PHOENIX TRANSWESTERN ATLANTA FORT DALLAS WORTH LOCATIONS

HOUSTON AUSTIN SAN ANTONIO NEW ORLEANS ORLANDO FORT LAUDERDALE MIAMI-DADE

HOUSTON RETAIL TEAM Nick Hernandez Grant Walker Chace Henke Alex Kelly Ryan Holliday Managing Director Vice President Associate Associate Associate 713.270.3354 713.270.3389 713.272.1274 713.231.1568 713.231.1623 [email protected] [email protected] [email protected] [email protected] [email protected] Micha van Marcke, CCIM Crystal Allen Chris Reyes Sage Klement Senior Vice President Vice President Associate Associate 713.272.1231 713.270.3360 713.272.1280 713.231.1643 [email protected] [email protected] [email protected] [email protected] Tony Armstrong Cindy Nguyen Danielle Schidlowski Lauren Heimann Vice President Senior Broker Associate Associate 713.270.3323 713.231.1562 713.231.1584 713.231.1621 [email protected] [email protected] [email protected] [email protected]

1900 West Loop South, Suite 1300 T 713.270.7700 F 713.270.6285 Houston, Texas 77027 www.transwestern.net/houston

Recent RETAIL Leases Kingwood :: Ashley Furniture RETAIL LEASE STATISTICS

52,360 SF renewal at Deerbrook Corner Overall Vacancy Rates Asking Rental Rates (NNN) Spring Branch :: Harbor Freight Tools 12.0% $18.00 18,124 SF lease at Northway Center Far Katy North :: Bike World 11.0% $17.80 10,000 SF new lease at Katy Ranch Crossing II 10.0% $17.60 Recent RETAIL sales Pasadena/Galena Park :: Federal East Plaza 9.0% $17.40 105,763 SF Sale Price: undisclosed 8.0% $17.20 Buyer: Embrey Development Seller: Metro National Corp. 7.0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 $17.00 Retil a IN THE NEWS Source: CoStar - Houston retail buildings 5,000 SF and greater More Sugar Land dining choices: Galleria-area Thai restaurant adds second location in the ‘burbs Retail Sales Statistics link to story Houston MSA United States CultureMap Houston, June 16, 2015 Quarter to Last Quarter Trailing 12 Last Quarter Trailing 12 Popular food truck nabs Greenway Plaza space Date (1Q15) Months (1Q15) Months link to story Volume ($ $199.1 $712.7 $1,699.9 $24,977.8 $85,596.8 Houston Business Journal, June 15, 2015 Mil) No. of 22 52 161 1,729 7,055 Louboutin to open first Houston location amid Properties strong luxury retail competition Total SF 1,183,610 4,077,203 10,008,458 108,962,906 426,239,510 link to story Average $184 $183 $188 $228 $208 Houston Business Journal, June 9, 2015 Price/SF Average Cap 7.6% 6.6% 7.1% 6.5% 6.7% Rate (Yield) Source: Real Capital Analytics

Retail Market Indicators DIRECT DIRECT VACANCY OVERALL VACANCY SF UNDER 1Q2015 NET SUBMARKET TOTAL RBA (SF) VACANT (SF) RATE RATE CONSTRUCTION ABSORPTION East (Pasadena/Galena Park, Channelview/Beaumont & Baytown/Chambers) 12,793,320 922,645 9.2% 9.2% 9,960 (81,236)

Inner Loop (CBD, Bellaire/West U, Galleria/Uptown, River Oaks, Heights & East End) 24,989,546 1,208,167 4.8% 4.9% 298,650 306,950

North (Near North, FM 1960/I-45, Greenspoint/North Belt, Spring Creek, Far North & The 56,123,522 2,839,990 7.1% 7.2% 136,200 32,544 Woodlands/Montgomery)

Northeast (Near Northeast, Atascosita, Kingwood & Liberty County) 12,115,551 664,156 7.5% 7.5% - 23,306

Northwest (NW Oaks, Spring Branch, Willowbrook, Jersey Village, Copperfield, Fairfield, 56,296,593 2,987,532 6.3% 6.3% 407,842 211,342 Cypress/Bridgelands, Far Katy North, Far NW & Tomball/Spring Cypress)

South (Pearland/Manvel & Near South) 13,046,543 644,712 6.9% 6.9% 22,290 21,955

Southeast (Gulf Frwy/Pasadena, Baybrook/Clear Lake & Old Pearland/Alvin) 49,573,246 3,022,734 6.1% 6.2% 151,375 (10,143)

Southwest (Sharpstown/Southwest Central, West Oaks, Sugar Land/Stafford & Richmond/ 41,767,217 2,655,944 7.4% 7.5% 54,400 22,448 Rosenberg)

West (Memorial, Westchase, Energy Corridor & Katy/Cinco Ranch) 37,914,046 1,978,170 5.2% 5.4% 138,302 253,018 Total - Houston 304,619,584 16,924,050 7.3% 7.3% 1,219,019 780,184 Source: Costar - Houston retail buildings 5,000 SF and greater HOUSTON RETAIL MARKET WATCH jne u 2015 Houston | RETAIL SUBMARKETS

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MARKETWEST 3 Energy WATCH Corridor HOUSTON RETAIL MARKET3 Sugar june Land 2015 - Stafford 9 Far Northwest SOUTHWEST 4 Katy - Cinco Ranch 4 Richmond Rosenberg 10 Tomball/Spring Cypress HOUSTON RETAIL MARKET WATCH jne u 2015

ABOUT TRANSWESTERN

Transwestern is a privately held real estate firm specializing in agency leasing, property and facilities management, tenant advisory, capital markets, research and sustainability. The fully integrated global enterprise leverages competencies in office, industrial, retail, multifamily and healthcare properties to add value for investors, owners and occupiers of real estate. As a member of the Transwestern family of companies, the firm capitalizes on market insights and operational expertise of independent affiliates specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 38 countries as part of a strategic alliance with Paris-based BNP Paribas Real Estate.

SEATTLE

MINNEAPOLIS BOSTON DETROIT MILWAUKEE GREENWICH NEW YORK CHICAGO NEW JERSEY SAN FRANCISCO WALNUT CREEK SALT LAKE SILICON CITY BETHESDA BALTIMORE DENVER VALLEY WASHINGTON DC NORTHERN ST. LOUIS VIRGINIA

LOS ANGELES OKLAHOMA ORANGE COUNTY CITY SAN DIEGO PHOENIX TRANSWESTERN ATLANTA FORT DALLAS WORTH LOCATIONS

HOUSTON AUSTIN SAN ANTONIO NEW ORLEANS ORLANDO FORT LAUDERDALE MIAMI-DADE

HOUT S ON RETAIL TEAM Nick Hernandez Grant Walker Chace Henke Alex Kelly Ryan Holliday Managing Director Vice President Associate Associate Associate 713.270.3354 713.270.3389 713.272.1274 713.231.1568 713.231.1623 [email protected] [email protected] [email protected] [email protected] [email protected] Micha van Marcke, CCIM Crystal Allen Chris Reyes Sage Klement Senior Vice President Vice President Associate Associate 713.272.1231 713.270.3360 713.272.1280 713.231.1643 [email protected] [email protected] [email protected] [email protected] Tony Armstrong Cindy Nguyen Danielle Schidlowski Lauren Heimann Vice President Senior Broker Associate Associate 713.270.3323 713.231.1562 713.231.1584 713.231.1621 [email protected] [email protected] [email protected] [email protected]

Contact Rachel Alexander Director of Market Research Methodology 713.270.3344 The information in this report is the result of a compilation of publicly available data from a variety of [email protected] commercial and government sources.

1900 West Loop South, Suite 1300 T 713.270.7700 F 713.270.6285 Houston, Texas 77027 www.transwestern.net/houston

Recent RETAIL Leases Sharpstown/Southwest Central :: Sellers Bros RETAIL LEASE STATISTICS 33,000 SF renewal at 5900 Renwick Dr. Overall Vacancy Rates Asking Rental Rates (NNN) $18.00 Near North :: Conn Appliances 12.0% 31,000 SF renewal at Northline Commons $17.90 $17.80

Katy/Cinco Ranch :: Party City 11.0% $17.70

22,000 SF at Green Tree Shopping Center $17.60 10.0% $17.50 Recent RETAIL sales $17.40 Cypress/Bridgelands :: Copperfield Village 9.0% $17.30 165,293 SF $17.20 Sale Price: $39.8 approximate 8.0% $17.10 Buyer: Kimco $17.00 Seller: Greenstreet Partners $16.90 7.0% 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14

Retil a IN THE NEWS Source: CoStar - Houston retail buildings 5,000 SF and greater All the right pieces put in place, but downtown retail not quite there yet Retail Sales Statistics link to story Houston MSA United States Houston Business Journal, March 20, 2015 Quarter to Last Quarter Trailing 12 Last Quarter Trailing 12 New plan for Montrose retail center aims to fit in Date (4Q14) Months (4Q14) Months with the neighborhood Volume ($ Mil) $569.7 $276.6 $1,293.4 $24,636.6 $82,948.8 link to story No. of 37 33 149 1,911 7,901 Houston Business Journal, March 19, 2015 Properties Whole Foods takes grocery wars to The Woodlands Total SF 3,345,269 1,627,091 8,933,687 130,144,628 436,616,134 Average with wine bar, concierge and taco station Price/SF N/A $238 $184 $200 $203 link to story Average Cap 6.0% 6.7% 7.4% 6.7% 6.8% Culture Map, March 19, 2015 Rate (Yield) Source: Real Capital Analytics

Retail Market Indicators DIRECT DIRECT VACANCY OVERALL VACANCY SF UNDER 2014 NET SUBMARKET TOTAL RBA (SF) VACANT (SF) RATE RATE CONSTRUCTION ABSORPTION East (Pasadena/Galena Park, Channelview/Beaumont & Baytown/Chambers) 12,836,155 909,219 9.2% 9.2% 8,691 272,264

Inner Loop (CBD, Bellaire/West U, Galleria/Uptown, River Oaks, Heights & East End) 26,562,415 1,237,440 5.7% 5.7% 332,489 303,785

North (Near North, FM 1960/I-45, Greenspoint/North Belt, Spring Creek, Far North & The 55,510,523 2,988,051 7.2% 7.4% 129,019 817,616 Woodlands/Montgomery)

Northeast (Near Northeast, Atascosita, Kingwood & Liberty County) 12,104,453 728,491 8.0% 8.0% - 234,444

Northwest (NW Oaks, Spring Branch, Willowbrook, Jersey Village, Copperfield, Fairfield, 55,981,679 3,072,405 6.5% 6.5% 657,000 180,596 Cypress/Bridgelands, Far Katy North, Far NW & Tomball/Spring Cypress)

South (Pearland/Manvel & Near South) 13,008,589 630,861 7.8% 7.8% 9,685 110,945

Southeast (Gulf Frwy/Pasadena, Baybrook/Clear Lake & Old Pearland/Alvin) 49,205,751 2,957,620 8.0% 8.1% 152,975 511,773

Southwest (Sharpstown/Southwest Central, West Oaks, Sugar Land/Stafford & Richmond/ 42,022,604 2,715,989 7.5% 7.6% 86,075 463,291 Rosenberg)

West (Memorial, Westchase, Energy Corridor & Katy/Cinco Ranch) 38,093,194 2,088,226 6.5% 6.7% 416,969 423,971 Total - Houston 305,325,363 17,328,302 7.7% 7.7% 1,792,903 3,318,685 Source: Costar - Houston retail buildings 5,000 SF and greater HOUSTON RETAIL MARKET WATCH Mr a ch 2015 Houston | RETAIL SUBMARKETS

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MARKETWEST 3 Energy WATCH Corridor HOUSTON RETAIL MARKET3 Sugar mar Landch - Stafford2015 9 Far Northwest SOUTHWEST 4 Katy - Cinco Ranch 4 Richmond Rosenberg 10 Tomball/Spring Cypress HOUSTON RETAIL MARKET WATCH Mr a ch 2015

ABOUT TRANSWESTERN

Transwestern is a privately held real estate firm specializing in agency leasing, property and facilities management, tenant advisory, capital markets, research and sustainability. The fully integrated global enterprise leverages competencies in office, industrial, retail, multifamily and healthcare properties to add value for investors, owners and occupiers of real estate. As a member of the Transwestern family of companies, the firm capitalizes on market insights and operational expertise of independent affiliates specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 38 countries as part of a strategic alliance with Paris-based BNP Paribas Real Estate.

SEATTLE

MINNEAPOLIS BOSTON DETROIT MILWAUKEE GREENWICH NEW YORK CHICAGO NEW JERSEY SAN FRANCISCO WALNUT CREEK SALT LAKE SILICON CITY BETHESDA BALTIMORE DENVER VALLEY WASHINGTON DC NORTHERN ST. LOUIS VIRGINIA

LOS ANGELES OKLAHOMA ORANGE COUNTY CITY SAN DIEGO PHOENIX TRANSWESTERN ATLANTA FORT DALLAS WORTH LOCATIONS

HOUSTON AUSTIN SAN ANTONIO NEW ORLEANS ORLANDO FORT LAUDERDALE MIAMI-DADE

HOUT S ON RETAIL TEAM Nick Hernandez Grant Walker Chris Reyes Cindy Nguyen Managing Director Vice President Associate Associate 713.270.3354 713.270.3389 713.272.1280 713.231.1562 [email protected] [email protected] [email protected] [email protected] Micha van Marcke, CCIM Crystal Allen Danielle Schidlowski Sage Klement Senior Vice President Vice President Associate Associate 713.272.1231 713.270.3360 713.231.1584 713.231.1643 [email protected] [email protected] [email protected] [email protected] Tony Armstrong Chace Henke Alex Kelly Lauren Heimann Vice President Associate Associate Associate 713.270.3323 713.272.1274 713.231.1568 713.231.1621 [email protected] [email protected] [email protected] [email protected]

1900 West Loop South, Suite 1300 T 713.270.7700 F 713.270.6285 Houston, Texas 77027 www.transwestern.net/houston

Recent RETAIL Leases Fairfield :: DaVita Dialysis RETAIL LEASE STATISTICS 10,855 SF at Fairfield Plaza Overall Vacancy Rates Asking Rental Rates (NNN) $18.00 Copperfield :: Mucho Mexico 12.0% 8,950 SF at 5402 Hwy 6 North $17.90 $17.80

Galleria/Uptown :: Parvizian Rugs 11.0% $17.70

7,606 SF at Courtyard at Post Oak $17.60 10.0% $17.50 Recent RETAIL sales $17.40 Far Katy North :: Copperwood Village 9.0% $17.30 350,444 SF $17.20 Sale Price: $46.2 million allocated (39 property portfolio) 8.0% $17.10 Buyer: Kimco $17.00

Seller: Blackstone $16.90 7.0% 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 rtile a IN THE NEWS Gourmet sandwich shop expands into hot grocery Source: CoStar - Houston retail buildings 5,000 SF and greater center link to story Retail Sales Statistics CultureMap, February 17, 2015 Houston MSA United States Lucchese celebrates Houston grand opening to Quarter to Last Quarter Trailing 12 Last Quarter Trailing 12 much fanfare Date (4Q14) Months (4Q14) Months link to story Volume ($ Mil) $75.6 $260.3 $1,277.1 $24,324.6 $82,582.3 Houston Business Journal, February 13, 2015 No. of 8 31 147 1,859 7,801 Properties

Home Depot hiring 1,600 in Houston; Lowe’s Total SF 663,874 1,516,253 8,822,849 131,824,496 437,222,095 adding 525 Average link to story Price/SF N/A $233 $183 $193 $200 Houston Chronicle, February 11, 2015 Average Cap Rate (Yield) N/A 7.0% 7.4% 6.7% 6.8% Source: Real Capital Analytics

Inner Loop (CBD, Bellaire/West U, Galleria/Uptown, River Oaks, Heights & East End) 26,562,415 1,237,440 5.7% 5.7% 332,489 303,785

North (Near North, FM 1960/I-45, Greenspoint/North Belt, Spring Creek, Far North & The 55,510,523 2,988,051 7.2% 7.4% 129,019 817,616 Woodlands/Montgomery)

Northeast (Near Northeast, Atascosita, Kingwood & Liberty County) 12,104,453 728,491 8.0% 8.0% - 234,444

South (Pearland/Manvel & Near South) 13,008,589 630,861 7.8% 7.8% 9,685 110,945

Southeast (Gulf Frwy/Pasadena, Baybrook/Clear Lake & Old Pearland/Alvin) 49,205,751 2,957,620 8.0% 8.1% 152,975 511,773

Southwest (Sharpstown/Southwest Central, West Oaks, Sugar Land/Stafford & Richmond/ 42,022,604 2,715,989 7.5% 7.6% 86,075 463,291 Rosenberg)

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MARKETWEST 3 Energy WATCH Corridor HOUSTON RETAIL MARKET3 Sugar FEBRUARY Land - Stafford 2015 9 Far Northwest SOUTHWEST 4 Katy - Cinco Ranch 4 Richmond Rosenberg 10 Tomball/Spring Cypress HOUSTON RETAIL MARKET WATCH Fuarebr y 2015

ABOUT TRANSWESTERN

Transwestern is a privately held real estate firm specializing in agency leasing, property and facilities management, tenant advisory, capital markets, research and sustainability. The fully integrated global enterprise leverages competencies in office, industrial, retail, multifamily and healthcare properties to add value for investors, owners and occupiers of real estate. As a member of the Transwestern family of companies, the firm capitalizes on market insights and operational expertise of independent affiliates specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 38 countries as part of a strategic alliance with Paris-based BNP Paribas Real Estate.

SEATTLE

MINNEAPOLIS BOSTON DETROIT MILWAUKEE GREENWICH NEW YORK CHICAGO NEW JERSEY SAN FRANCISCO WALNUT CREEK SALT LAKE SILICON CITY BETHESDA BALTIMORE DENVER VALLEY WASHINGTON DC NORTHERN ST. LOUIS VIRGINIA

LOS ANGELES OKLAHOMA ORANGE COUNTY CITY SAN DIEGO PHOENIX TRANSWESTERN ATLANTA FORT DALLAS WORTH LOCATIONS

HOUSTON AUSTIN SAN ANTONIO NEW ORLEANS ORLANDO FORT LAUDERDALE MIAMI-DADE

1900 West Loop South, Suite 1300 T 713.270.7700 F 713.270.6285 Houston, Texas 77027 www.transwestern.net/houston

Recent RETAIL Leases Pasadena/Galena Park :: Bravo Ranch Market RETAIL LEASE STATISTICS 31,000 SF at Woodforest Shopping Center Overall Vacancy Rates Asking Rental Rates (NNN)

Tomball/Spring Cypress :: Sun & Ski Sports 13.0% $17.40 12,000 SF at Cypresswood Crossing Shopping Center Near Northeast :: The Egg & I 12.0% $17.30 3,600 SF at Izzy Plaza/Fall Creek Retail Center 11.0% $17.20 Recent RETAIL sales Fairfield :: Willowbrook Court 10.0% $17.10 137,650 SF Sale Price: undisclosed 9.0% $17.00 Buyer: Mikeone Houston Holdings Seller: Pacific Star Capital 8.0% 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 $16.90 rtile a IN THE NEWS Source: CoStar - Houston retail buildings 5,000 SF and greater Year in Review: Explosion of retail activity in Galleria during 2014 Retail Sales Statistics link to story Houston MSA United States Houston Business Journal, December 17, 2014 Quarter to Last Quarter Trailing 12 Last Quarter Trailing 12 Grocery-anchored shopping centers dominate new Date (3Q14) Months (3Q14) Months retail construction Volume ($ Mil) $105.0 $368.4 $1,452.1 $19,849.2 $76,677.0 link to story No. of 12 40 159 1,794 7,611 Houston Business Journal, December 16, 2014 Properties Inside the new Lucchese store: Boots, bourbon Total SF 794,833 2,411,649 10,581,749 100,486,217 417,063,633 Average $125 $200 $183 $212 $199 and a fashionable lifestyle experience Price/SF link to story Average Cap 7.7% 7.6% 7.5% 6.8% 6.9% CultureMap, December 14, 2014 Rate (Yield) Source: Real Capital Analytics

Retail Market Indicators DIRECT DIRECT VACANCY OVERALL VACANCY SF UNDER 3Q2014 NET SUBMARKET TOTAL RBA (SF) VACANT (SF) RATE RATE CONSTRUCTION ABSORPTION East (Pasadena/Galena Park, Channelview/Beaumont & Baytown/Chambers) 12,676,091 912,344 11.2% 11.2% 26,473 180,792

Inner Loop (CBD, Bellaire/West U, Galleria/Uptown, River Oaks, Heights & East End) 26,392,973 1,264,973 7.8% 7.8% 318,650 12,392

North (Near North, FM 1960/I-45, Greenspoint/North Belt, Spring Creek, Far North & The 54,935,632 2,869,311 10.2% 10.4% 94,522 199,884 Woodlands/Montgomery)

Northeast (Near Northeast, Atascosita, Kingwood & Liberty County) 11,860,243 786,126 9.6% 9.6% 121,895

Northwest (NW Oaks, Spring Branch, Willowbrook, Jersey Village, Copperfield, Fairfield, 56,064,896 3,133,354 8.6% 8.6% 657,000 104,158 Cypress/Bridgelands, Far Katy North, Far NW & Tomball/Spring Cypress)

South (Pearland/Manvel & Near South) 12,974,595 632,696 9.9% 9.9% 16,191 38,984

Southeast (Gulf Frwy/Pasadena, Baybrook/Clear Lake & Old Pearland/Alvin) 48,773,460 2,814,153 9.8% 9.8% 533,372 37,235

Southwest (Sharpstown/Southwest Central, West Oaks, Sugar Land/Stafford & Richmond/ 42,220,652 2,806,600 9.6% 9.8% 182,900 165,741 Rosenberg)

West (Memorial, Westchase, Energy Corridor & Katy/Cinco Ranch) 37,796,367 2,152,870 8.7% 8.8% 447,582 37,830 Total - Houston 303,694,909 17,372,427 9.7% 9.7% 2,276,690 898,911 Source: Costar - Houston retail buildings 5,000 SF and greater HOUSTON RETAIL MARKET WATCH dr ecembe 2014 Houston | RETAIL SUBMARKETS

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MARKETWEST 3 Energy WATCH Corridor HOUSTON RETAIL MARKET3 Sugar de Landcem - bStafforder 2014 9 Far Northwest SOUTHWEST 4 Katy - Cinco Ranch 4 Richmond Rosenberg 10 Tomball/Spring Cypress HOUSTON RETAIL MARKET WATCH dr ecembe 2014

ABOUT TRANSWESTERN

Transwestern is a privately held real estate firm specializing in agency leasing, property and facilities management, tenant advisory, capital markets, research and sustainability. The fully integrated global enterprise leverages competencies in office, industrial, retail, multifamily and healthcare properties to add value for investors, owners and occupiers of real estate. As a member of the Transwestern family of companies, the firm capitalizes on market insights and operational expertise of independent affiliates specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 38 countries as part of a strategic alliance with Paris-based BNP Paribas Real Estate.

Transwestern was founded in Houston, Texas in 1978, and Houston remains the corporate headquarters today. As one of the preeminent commercial real estate firms in Houston, we offer a comprehensive menu of real estate services designed to provide owners, tenants and investors with the optimum solutions for their unique requirements. Transwestern has seasoned veterans in every area of expertise with the integrity, experience and creativity to be the best partner for its clients. Transwestern’s Houston office currently employs over 385 team members and has been an innovator in the Houston market for 36 years.

SEATTLE

MINNEAPOLIS BOSTON DETROIT MILWAUKEE GREENWICH NEW YORK CHICAGO NEW JERSEY SAN FRANCISCO WALNUT CREEK SALT LAKE SILICON CITY BETHESDA BALTIMORE DENVER VALLEY WASHINGTON DC NORTHERN ST. LOUIS VIRGINIA

LOS ANGELES OKLAHOMA ORANGE COUNTY CITY SAN DIEGO PHOENIX TRANSWESTERN ATLANTA FORT DALLAS WORTH LOCATIONS

HOUSTON AUSTIN SAN ANTONIO NEW ORLEANS ORLANDO FORT LAUDERDALE MIAMI-DADE

HOUT S ON RETAIL TEAM Nick Hernandez Tony Armstrong Crystal Allen Chris Reyes Alex Kelly Managing Director Vice President Vice President Associate Associate 713.270.3354 713.270.3323 713.270.3360 713.272.1280 713.231.1568 [email protected] [email protected] [email protected] [email protected] [email protected] Micha van Marcke, CCIM Grant Walker Chace Henke Danielle Schidlowski Cindy Nguyen Senior Vice President Vice President Associate Associate Associate 713.272.1231 713.270.3389 713.272.1274 713.231.1584 713.231.1562 [email protected] [email protected] [email protected] [email protected] [email protected]

Contact Methodology Rachel Alexander The information in this report is the result of a compilation of publicly available data from a variety of Director of Market Research commercial and government sources. 713.270.3344 [email protected]

1900 West Loop South, Suite 1300 T 713.270.7700 F 713.270.6285 Houston, Texas 77027 www.transwestern.net/houston

Copyright © 2014 Transwestern. All rights reserved. No part of this work may be reproduced or distributed to third parties without written permission of the copyright owner. The information contained in this report was gathered by Transwestern from CoStar and other primary and secondary sources believed to be reliable. Transwestern, however, makes no representation concerning the accuracy or completeness of such information and expressly disclaims any responsibility for any inaccuracy contained herein. Mt arke Watch HOUSTON RETAIL seeb pt m er 2014

Recent RETAIL Leases The Woodlands/Montgomery :: Pier 1 Imports RETAIL LEASE STATISTICS 11,000 SF at Hughes Landing Overall Vacancy Rates Asking Rental Rates (NNN)

Inner Loop/River Oaks :: The Dunlavy 8.0% $15.00 3,915 SF at Buffalo Bayou Park 7.5% $14.75 Old Pearland/Alvin :: MOD Pizza 2,744 SF at Center at Pearland 7.0% $14.50

Recent RETAIL sales Tomball/Spring Cypress :: Spring Cypress Village 6.5% $14.25 101,371 SF Sale Price: $21.4 million 6.0% $14.00 Buyer: Phillips Edison ARC REIT II

Seller: Sun Life Assurance Company 5.5% 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 $13.75 Source: CoStar - Houston retail buildings 5,000 SF and greater rtile a IN THE NEWS New steakhouse and butcher shop set for revitalized Washington Ave Retail Sales Statistics link to story Houston MSA United States Culture Map, September 15, 2014 Quarter to Last Quarter Trailing 12 Last Quarter Trailing 12 Date (2Q14) Months (2Q14) Months Southern comfort restaurant to open in the Heights Volume ($ Mil) $144.4 $285.7 $1,670.6 $14,901.1 $76,109.2 No. of 16 31 158 1,416 7,383 link to story Properties Houston Business Journal, September 12, 2014 Total SF 911,994 1,666,618 11,443,371 77,187,637 420,772,850

Average New restaurant planned in Upper Kirby $157 $176 $176 $214 $192 link to story Price/SF Average Cap N/A 7.3% 7.4% 6.9% 6.9% Houston Business Journal, September 10, 2014 Rate (Yield) Source: Real Capital Analytics

Retail Market Indicators DIRECT DIRECT VACANCY OVERALL VACANCY SF UNDER 2Q2014 NET SUBMARKET TOTAL RBA (SF) VACANT (SF) RATE RATE CONSTRUCTION ABSORPTION East (Pasadena/Galena Park, Channelview/Beaumont & Baytown/Chambers) 12,319,899 916,302 7.4% 7.4% 192,989 34,216

Inner Loop (CBD, Bellaire/West U, Galleria/Uptown, River Oaks, Heights & East End) 26,368,793 1,240,510 4.7% 4.8% 344,855 114,867

North (Near North, FM 1960/I-45, Greenspoint/North Belt, Spring Creek, Far North & The 55,117,270 3,042,663 5.5% 5.8% 108,605 221,814 Woodlands/Montgomery)

Northeast (Near Northeast, Atascosita, Kingwood & Liberty County) 11,785,968 914,111 7.8% 7.8% 10,500 14,695

Northwest (NW Oaks, Spring Branch, Willowbrook, Jersey Village, Copperfield, Fairfield, 55,949,429 3,077,400 5.5% 5.5% 663,660 116,759 Cypress/Bridgelands, Far Katy North, Far NW & Tomball/Spring Cypress)

South (Pearland/Manvel & Near South) 12,885,855 669,577 5.2% 5.2% 16,191 23,246

Southeast (Gulf Frwy/Pasadena, Baybrook/Clear Lake & Old Pearland/Alvin) 48,814,817 2,868,627 5.9% 5.9% 106,377 450,188

Southwest (Sharpstown/Southwest Central, West Oaks, Sugar Land/Stafford & Richmond/ 42,299,189 2,946,823 7.0% 7.2% 215,012 146,406 Rosenberg)

West (Memorial, Westchase, Energy Corridor & Katy/Cinco Ranch) 37,795,768 2,206,700 5.8% 6.0% 388,440 18,475 Total - Houston 303,336,988 17,882,713 5.9% 6.0% 2,046,629 1,140,666 Source: Costar - Houston retail buildings 5,000 SF and greater HOUSTON RETAIL MARKET WATCH seeb pt m er 2014 Houston | RETAIL SUBMARKETS

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6 249 Inner Loop 3 2 2 290 3 4 7 90 4

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MARKETWEST 3 Energy WATCH Corridor HOUSTON RETAIL MARKET3 Sugar se pLandtem - Staffordber 2014 9 Far Northwest SOUTHWEST 4 Katy - Cinco Ranch 4 Richmond Rosenberg 10 Tomball/Spring Cypress HOUSTON RETAIL MARKET WATCH seeb pt m er 2014

ABOUT TRANSWESTERN

Transwestern is a privately held real estate firm specializing in agency leasing, property and facilities management, tenant advisory, capital markets, research and sustainability. The fully integrated global enterprise leverages competencies in office, industrial, retail, multifamily and healthcare properties to add value for investors, owners and occupiers of real estate. As a member of the Transwestern family of companies, the firm capitalizes on market insights and operational expertise of independent affiliates specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 181 offices in 40 countries as part of a strategic alliance with Paris-based BNP Paribas Real Estate.

Transwestern was founded in Houston, Texas in 1978, and Houston remains the corporate headquarters today. As one of the preeminent commercial real estate firms in Houston, we offer a comprehensive menu of real estate services designed to provide owners, tenants and investors with the optimum solutions for their unique requirements. Transwestern has seasoned veterans in every area of expertise with the integrity, experience and creativity to be the best partner for its clients. Transwestern’s Houston office currently employs over 385 team members and has been an innovator in the Houston market for 36 years.

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MINNEAPOLIS BOSTON DETROIT MILWAUKEE GREENWICH NEW YORK CHICAGO NEW JERSEY SAN FRANCISCO WALNUT CREEK SALT LAKE SILICON CITY BETHESDA BALTIMORE DENVER VALLEY WASHINGTON DC NORTHERN ST. LOUIS VIRGINIA

LOS ANGELES OKLAHOMA ORANGE COUNTY CITY SAN DIEGO PHOENIX TRANSWESTERN ATLANTA FORT DALLAS WORTH LOCATIONS

HOUSTON AUSTIN SAN ANTONIO NEW ORLEANS ORLANDO FORT LAUDERDALE MIAMI-DADE

1900 West Loop South, Suite 1300 T 713.270.7700 F 713.270.6285 Houston, Texas 77027 www.transwestern.net/houston

Recent RETAIL Leases RETAIL LEASE STATISTICS Far Katy North :: Fiesta Mart 60,000 SF at FM 529 and N Fry Road Overall Vacancy Rates Asking Rental Rates (NNN) Sharpstown/Southwest Central :: Fitness 8.0% $15.00 Connection 55,553 SF in Fondren Road Plaza 7.5% $14.50 Pearland/Manvel :: Salata

2,450 SF in Shadow Creek Ranch Town Center 7.0% $14.00

Recent RETAIL Sales 6.5% $13.50 Energy Corridor :: Kirkwood Marketplace 80,483 SF

Sale Price: undisclosed 6.0% $13.00 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Buyer: Phillips Edison ARC REIT Source: CoStar - Houston retail buildings 5,000 SF and greater Seller: Koelbel and Company Retail Sales Statistics rtile a IN THE NEWS Houston MSA United States Pizza wars fire up as new chain enters Houston Quarter to Last Quarter Trailing 12 Last Quarter Trailing 12 market Date (1Q14) Months (1Q14) Months link to story Houston Business Journal, June 25, 2014 Volume ($ Mil) $216.5 $337.3 $1,644.7 $22,443.8 $75,567.8 No. of 19 42 151 2,488 7,244 What’s in store for retail portion of Springwoods Properties Village mixed-use development Total SF 51,183,821 3,139,267 12,008,504 116,175,533 423,320,530 Average link to story N/A $168 $170 $206 $183 Price/SF Houston Business Journal, June 24, 2014 Average Cap N/A 7.7% 7.5% 6.8% 7.0% Rate (Yield) Source: Real Capital Analytics

Retail Market Indicators DIRECT DIRECT VACANCY OVERALL VACANCY SF UNDER 4Q2013 NET SUBMARKET TOTAL RBA (SF) VACANT (SF) RATE RATE CONSTRUCTION ABSORPTION East (Pasadena/Galena Park, Channelview/Beaumont & Baytown/Chambers) 11,940,267 1,270,746 10.6% 10.8% 226,521 1,123

Inner Loop (CBD, Bellaire/West U, Galleria/Uptown, River Oaks, Heights & East End) 26,129,565 1,466,487 5.6% 5.7% 410,799 279,416

North (Near North, FM 1960/I-45, Greenspoint/North Belt, Spring Creek, Far North & The 54,829,375 3,271,521 6.0% 6.4% 98,616 219,090 Woodlands/Montgomery)

Northeast (Near Northeast, Atascosita, Kingwood & Liberty County) 11,758,518 1,018,210 8.7% 8.7% 15,147 9,634

Northwest (NW Oaks, Spring Branch, Willowbrook, Jersey Village, Copperfield, Fairfield, 55,989,221 3,158,997 5.6% 5.7% 168,729 159,342 Cypress/Bridgelands, Far Katy North, Far NW & Tomball/Spring Cypress)

South (Pearland/Manvel & Near South) 12,821,414 681,308 5.3% 5.3% 16,191 37,474

Southeast (Gulf Frwy/Pasadena, Baybrook/Clear Lake & Old Pearland/Alvin) 48,441,478 3,181,186 6.6% 6.6% 225,644 135,516

Southwest (Sharpstown/Southwest Central, West Oaks, Sugar Land/Stafford & Richmond/ 50,897,609 3,673,243 7.2% 7.3% 295,037 (49,885) Rosenberg)

West (Memorial, Westchase, Energy Corridor & Katy/Cinco Ranch) 37,625,271 2,315,975 6.2% 6.3% 191,774 73,787 Total - Houston 310,432,718 20,037,673 6.3% 6.4% 1,648,458 865,497 Source: Costar - Houston retail buildings 5,000 SF and greater