Research & Forecast Report Q1 2019

Las Vegas Economic Review Glossary

Industrial Definitions Incubator: Multi-tenant buildings without dock-high loading doors that have a parking ratio lower than 3.5/1,000 square feet and bay sizes lower than 3,500 square feet.

Light Distribution: Multi- or single-tenant buildings that include dock-high loading doors and have bay sizes of less than 15,000 square feet. Light Industrial: Multi- or single-tenant buildings without dock-high loading doors that have a parking ratio lower than 3.5/1,000 square feet and, in the case of multi-tenant buildings, bay sizes of at least 3,500 square feet. Multi- or single-tenant buildings without dock-high loading doors with parking ratios in excess of 3.5/1,000 Flex: square feet. Multi- or single-tenant buildings that include dock-high loading doors and have bay sizes of at least 15,000 Warehouse/Distribution: square feet.

Office Definitions Class A Office: Buildings with steel frame construction, high end exterior finish, distinctive lobbies featuring upgraded finishes, amenities including on-site security, state-of-the-art communications and data infrastructure and covered parking. Class A buildings are usually multi-story. Class B Office: Buildings with steel frame, reinforced concrete or concrete tilt-up construction. Class B buildings contain common bathrooms and hallways, and their lobbies may have granite and hardwood detailing. Class B buildings are often multi-story. Class C Office: Buildings of wood frame construction. Class C buildings are often garden-style and are built around courtyards.

Retail Definitions Community Center: Retail centers anchored by supermarkets, drug stores and discount department stores. Tenants include off- price retailers selling apparel, home improvements/furnishings, toys, electronics or sporting goods. Neighborhood Center: Retail centers anchored by supermarkets and drug stores. Neighborhood centers are intended for convenience shopping for day-to-day needs of consumers. Power Center: Retail centers dominated by several large anchors including discount department stores, off-price stores, warehouse clubs or “category killers”. Power centers generally do not include much inline space. Strip Center: Unanchored retail centers that are 20,000 square feet in size or larger.

Multifamily Definitions Class A Multifamily: Buildings constructed in the last 5 years

Class B/C Multifamily: Buildings constructed more than 5 years ago

General Definitions Vacant SF: Space in a building that is unoccupied and offered for lease by the owner of the company.

Sublease SF: Space in a building that is offered for sublease by the primary tenant. This space may or may not be occupied.

Net Absorption: Difference in occupied square footage from one period to another.

2 Las Vegas Research & Forecast Report | Q1 2019 | Economic Review | Colliers International Table of Contents

Economic Review So Far, So Good Southern Nevada’s economic renaissance, which began in 2013, rolled into 2019 largely intact. One cannot avoid discussion of possible recession in the press these days, so it pays to scrutinize, but at this point Southern 4 Nevada’s economy appears to be on the right track.

Industrial Review A Quick Start in 2019 After a strong 2018, Southern Nevada’s industrial market was fast out the gate in 2019, posting 1.1 million square 8 feet of net absorption, more than one year ago.

Office Review Office Vacancy Hits New Low Southern Nevada’s office market continued to improve in the first quarter of 2019, with net absorption of 345,715 14 square feet and vacancy decreasing to 12.9 percent.

Retail Review Expansion in the Air for Vegas Retail After a strong finish in 2018, Southern Nevada’s retail market continued that trend into 2019. Net absorption was 263,918 square feet, a significant improvement over the negative net absorption experienced in the first quarter of 20 2018.

Multifamily Demand Strong, Supply Stronger According to statistics provided by REIS, multifamily vacancy in Southern Nevada increased to 4.0 percent in the 27 fourth quarter of 2018 (the most recent quarter of available data)

Medical Office Medical Office Market Slows Demand for medical office space in Southern Nevada remained in growth mode in the first quarter of 2019, with 32 net absorption of 44,125 square feet

Hospitality Hospitality Sector Shows Improvement

When the dust settled on 2018, Southern Nevada’s hospitality market appeared to have peaked in 2017 37

Land Land Sales Increase

After a very strong year of land sales in 2018, Southern Nevada got off to a good start in the first quarter of 2019. 42

This report and other research materials may be found on our website at www.colliers.com/LasVegas. This quarterly report is a research document of Colliers International | Las Vegas. Questions related to information herein should be directed to the Research Department at +1 702 836 3781. Information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. ©2018 Colliers International

3 Las Vegas Research & Forecast Report | Q1 2019 | Economic Review | Colliers International Research & Forecast Report LAS VEGAS | ECONOMIC REVIEW Q1 2019

So Far, So Good

>> Southern Nevada’s economic growth continued into 2019 >> Commercial real estate investment decreased in the first quarter >> The big year may be ahead of us in 2020

Southern Nevada’s economic renaissance, which began in 2013, rolled into 2019 largely intact. One cannot avoid discussion of possible recession in the press these days, so it pays to scrutinize, but at this point Southern Nevada’s economy appears to be on the right track.

Unemployment in the Las Vegas-Paradise MSA was 4.7 percent in January 2019, down from 5.4 percent in January 2018. Unemployment Clark County Economic Data peaked in Southern Nevada at 14 percent in January 2011. The region’s Year Ago Current previous low unemployment rate was 3.7 percent in December 2005. The latest national unemployment figure was 4.0 percent in January Employment (1000s) (Jan 2019) 983.3 1,014.0 2019, down from 4.1 percent in January 2018. The national labor force Visitor Volume YTD (Jan 2019) 3.39 MM 3.46 MM participation rate decreased to 63.2 percent in January 2019. January 2019’s labor force participation rate was 0.5 points higher than it was Gaming Revenue YTD (Jan 2019) $892.1 MM $860.8 MM in January 2018. Taxable Sales YTD (Jan-Dec 2018) $41.5 BB $44.3 BB From January 2018 to January 2019, employment in Southern Nevada increased by 30,700 jobs to 1,014,000 jobs. There were more than the Commercial Occupancy (Q1-19) 91.9% 93.6% 26,100 jobs added from January 2018 to January 2019. After adding Source: The Center for Business & Economic Research, UNLV; Colliers International 35,275 new jobs in 2015, employment growth has slowed in Southern Nevada. Employment growth in 2018 had the potential to end that trend and add more jobs to the Valley than 2017, but did not quite make it.

Photo from On a year-over-year basis, the majority of new jobs created in Employment Change Southern Nevada were in professional and business services (+7,300 (January 2018 - January 2019) jobs), construction (+6,800 jobs), leisure and hospitality (+6,000 jobs), education and health services (+4,900 jobs), financial activities (+2,100 jobs), transportation and warehousing (+2,100 jobs), manufacturing (+1,300 jobs), wholesale (+1,200 jobs) and other services (+1,100 jobs). Other sectors experiencing job growth were government (+800 jobs) and natural resources and mining (+100 jobs). The information sector lost 100 jobs, while the retail sector lost 3,000 jobs.

While the current construction employment of 66,500 jobs lags behind the 111,300 construction jobs the Valley had in August of 2006, it has improved significantly since the low of 34,800 construction jobs in early 2012. Southern Nevada is seeing new construction projects in industrial, multifamily, retail, office, hospitality, sports and infrastructure, and the word from construction companies is that Southern Nevada Commercial Real Estate Recovery Index the region is as many as 10,000 construction workers short for the projects that are planned.

According to Home Builders Research, 611 new homes sold in January 2019, a 13.2 percent decrease from January 2018. New home sales totaled 10,416 units in 2018, which represented a 12.8 percent increase from 2017. The median price for new homes increased, year- over-year, by 6.5 percent in January 2019, to $375,996.

According to the Greater Las Vegas Association of Realtors, 1,823 existing homes sold in January 2019, a 19.4 percent decrease from January 2018. Existing home sales totaled 32,639 units in 2018, which represented a 7.0 percent decrease from 2017. The median price for existing homes increased, year-over-year, by 13.2 percent in January 2019, to $300,000.

Visitor volume in Southern Nevada, which was on the decline through much of 2018, showed some signs of recovery towards the end of the year; year-over-year visitor volume growth was as high as 5.4 percent in November 2018. In January 2019, 3.5 million people visited Southern Nevada, a 2.1 percent increase from January 2018. Gaming revenue totaled $860.8 million in January 2019, which was down 3.5

Jobs Added YEAR 2011 2012 2013 2014 2015 2016 2017 2018 2019

Jobs Added* 4,650 16,833 24,292 34,025 35,275 30,458 28,900 28,298 30,700

* Based on average number of jobs per month over the course of the year; data from NDETR

5 Las Vegas Research & Forecast Report | Q1 2019 | Economic Review | Colliers International percent from January 2018. Southern Nevada’s biggest year may According to the Southern Nevada Recovery Index, economic growth be ahead of us in 2020, when numerous entertainment venues are in Southern Nevada showed steady improvement over the past ten scheduled to open, including Las Vegas Stadium, future home of the months. The index was 115.0 in January 2019, 4.1 points higher than Las Vegas Raiders. one year ago. All measures were higher in January 2019 than in January 2018. The greatest improvement over the past twelve months Commercial real estate investment sales volume in the first quarter was in taxable sales (+10.8 points), port traffic in Los Angeles (+8.6 of 2019 was $327.5 million in 50 sales totaling 1.7 million square points), employment (+5.3 points) and gaming revenue (+1.8 points). feet. This represented a significant decrease when compared to the first quarter of 2018 when sales volume reached $669.6 million in 95 We have opened the gates to 2019, and what a wild ride this year sales totaling 4.6 million square feet. The average price per square might turn out to be. Economic fundamentals in Southern Nevada foot for commercial property was $183.81 in the first quarter of 2019, started the year in good shape, but the potential impact of trade a 26.6 percent increase from the $145.20 psf average price in the wars, quantitative tightening and the upcoming presidential election first quarter of 2018. It is likely that this increase in prices played a could negatively impact the economy as the year progresses. The role in the reduction of commercial sales. key for real estate investors is to understand what game they are playing. Are they looking to flip properties for quick returns, or hold Investment sales volume in the first quarter of 2019 increased on their properties for a longer term? The chances of a recession in a year-over-year basis for industrial properties (+299.9 percent), the next 12 months appear to be low, but if those chances increase professional office (+58.2 percent), single-tenant retail (+31.9 over the course of the year then short-term investors may begin percent) and medical office (+21.8 percent). Sales volume was down accumulating cash to take advantage of foreclosures in a recession. for shopping centers (negative 55.8 percent). Quantitative tightening For long-term investors, the danger is overpaying at the height of the by the Federal Reserve and other central banks may negatively impact market. Nobody can tell precisely what lies ahead, but doing your due the value of commercial real estate properties, and could slow down diligence always pays off in the end. investment sales in 2019.

Photo from

6 Las Vegas Research & Forecast Report | Q1 2019 | Economic Review | Colliers International Economic Statistics Las Vegas – First Quarter 2019

2018 TO 2019 QUARTERLY ANNUAL TYPE JANUARY-19 OCTOBER-18 JANUARY-18 2019 AVERAGE 2018 AVERAGE GROWTH GROWTH GROWTH (AVERAGE) EMPLOYMENT DATA

U.S. Employment 150,574,000 149,852,000 147,767,000 149,297,833 149,063,917 0.5% 1.9% 0.2%

U.S. Unemployment Rate 4.0% 3.8% 4.1% 4.0% 3.9% 5.3% -2.4% 2.8%

Las Vegas MSA 1,057,700 1,070,200 1,026,600 1,014,000 1,006,683 -1.2% 3.0% 0.7% Employment Las Vegas MSA 4.7% 4.4% 5.4% 4.7% 4.8% 6.8% -13.0% -1.7% Unemployment Rate Las Vegas MSA 66,500 65,400 59,700 66,500 63,542 1.7% 11.4% 4.7% Construction Jobs Las Vegas MSA Hospitality 290,900 296,100 284,900 290,900 292,333 -1.8% 2.1% -0.5% Jobs

HOUSING/CONSTRUCTION DATA

New Home Sales 611 796 704 611 868 -23.2% -13.2% -29.6%

New Home Median Price $375,996 $389,974 $352,984 $375,996 $377,149 -3.6% 6.5% -0.3%

Existing Home Sales 1,823 2,686 2,261 1,823 2,720 -32.1% -19.4% -33.0%

Existing Home Median Price $300,000 $295,025 $265,000 $300,000 $288,690 1.7% 13.2% 3.9%

Residential Permits* 496 656 1,023 496 1,025 -24.4% -51.5% -51.6%

Case-Shiller Housing Price 191.3 188.3 171.7 191.3 181.6 1.6% 11.4% n/a Index (LV)* Mortgage Rate (Fixed, 4.46% 4.83% 4.03% 4.42% 4.54% -7.7% 10.7% -2.8% 30-year)

Construction Employment 66,500 65,400 59,700 66,500 63,542 1.7% 11.4% 4.7%

HOSPITALITY DATA

Visitor Volume 3,464,900 3,659,600 3,393,900 3,464,900 3,509,742 -5.3% 2.1% -1.3%

Gaming Revenue $860,846,000 $839,052,000 $892,064,000 $860,846,000 $854,163,667 2.6% -3.5% 0.8%

Room Inventory 148,186 147,587 146,715 148,186 147,419 0.4% 1.0% 0.5%

Hotel/Motel Occupancy 85.5% 90.8% 83.8% 85.5% 88.2% -5.8% 2.0% -3.0%

Passengers (McCarran Int'l 3,901,625 4,425,670 3,776,299 3,901,625 4,143,211 -11.8% 3.3% -5.8% Airport)

Convention Attendance 683,400 408,000 612,900 683,400 541,817 67.5% 11.5% 26.1%

* Values from Dec 2018, Sep 2018 and Dec 2017.

The information contained in this report was provided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability. As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports.

7 Las Vegas Research & Forecast Report | Q1 2019 | Economic Review | Colliers International Research & Forecast Report LAS VEGAS | INDUSTRIAL Q1 2019

A Quick Start in 2019

>> 1.1 million square feet of industrial space was absorbed first quarter of 2019 Economic Indicators >> New completions totaled 578,008 square feet this quarter TR RT TRRTT >> Industrial vacancy decreased to 3.2 percent Employment Permits Taxable Sales

After a strong 2018, Southern Nevada’s industrial market was +11.6 fast out the gate in 2019, posting 1.1 million square feet of net absorption, more than one year ago. Vacancy decreased to a very +6.5% -17.5% low 3.2 percent. New completions totaled 578,008 square feet in the first quarter. The weighted average asking rate increased by $0.03 to $0.75 per square foot (psf) on a triple net (NNN) basis. Market Indicators Relative to prior period Q1 2019 Q2 2019* According to the Nevada Department of Employment, Training Vacancy and Rehabilitation, Southern Nevada’s industrial job market added 11,400 jobs between January 2018 and January 2019. Over this Net Absorption period, Southern Nevada added 6,800 jobs in the construction Completions sector, 2,100 jobs in the transportation and warehousing sector, Rental Rate 1,300 jobs in the manufacturing sector and 1,200 jobs in the *Projected wholesale sector. Unemployment in the Las Vegas-Paradise MSA Summary Statistics Las Vegas Market Q1-18 Q4-18 Q1-19 Historical Vacancy Rates and Asking Lease Rates Vacancy Rate 5.4% 3.6% 3.2%

Asking Rent (PSF, NNN) $0.64 $0.72 $0.75

Net Absorption (SF) 832,583 1,881,155 1,082,224

New Completions (SF) 2,393,451 713,464 578,008

Overall Asking Rents Per Square Foot Q1-18 Q4-18 Q1-19

Warehouse/Distribution $0.53 $0.53 $0.56

Light Distribution $0.69 $0.63 $0.69

Light Industrial $0.71 $0.81 $0.84

Incubator $0.87 $0.82 $0.82

“After a strong 2018, Southern Nevada’s industrial market was fast out the Flex $0.90 $1.10 $1.09 gate for 2019.”

Photo from was 4.7 percent in January 2019, down from 5.4 percent in January Historical Net Absorption vs. 2018. From January 2018 to January 2019, total employment in Completions Southern Nevada increased by 30,700 jobs, a 3 percent increase.

New completions of industrial space in the first quarter of 2019 totaled 578,008 square feet, most of it in the warehouse/distribution sector and mostly in the North Las Vegas submarket. 46 percent of this space was preleased. An additional 2.6 million square feet of industrial space is slated for completion in the second quarter of 2019, with approximately 32 percent of this space preleased. There was 2.4 million square feet slated for completion in the second half of 2019.

Net absorption was 1,082,224 square feet in the first quarter of 2019, more than the 832,583 square feet absorbed in the first quarter of 2018. The Valley’s highest net absorption this quarter was in North Las Vegas at 797,476 square feet, followed distantly by the Southwest submarket at 144,109 square feet and Henderson at 129,271 square feet. Net absorption was negative this quarter in West Occupancy vs. Central, East Las Vegas and Northwest. Industrial developments in Industrial Employment the West Henderson area should boost net absorption numbers in Henderson this year.

The Valley’s lowest vacancy rate at year’s end was 2.1 percent in the Southwest submarket. The Valley’s highest vacancy rate was 4.6 percent in Northwest submarket. The Northwest and Southwest submarkets had the largest decrease in vacancy since last quarter at 2.4 points each.

The industries most active in occupying space in the first quarter of 2019 were involved in professional and business services, transportation and warehousing, wholesale and manufacturing. Local companies took 24.2 percent of the leased square footage we tracked. Companies headquartered in the Great Plains took 22.0 percent of the space occupied, Midwestern companies 12.6 percent and Mid-Atlantic firms 12.3 percent. This quarter continued the JAN JAN 2018 2019 CHANGE trend of the broader national appeal of Southern Nevada’s industrial Construction 59,700 66,500 + 6,800 market that began in 2018. Manufacturing 23,600 24,900 + 1,300 Transportation & In the first quarter of 2019, the weighted average asking lease rate for 43,500 45,600 + 2,100 Warehousing industrial space was $0.75 psf NNN, an increase of $0.11 from one year ago. On a quarter-over-quarter basis, asking rates increased by Wholesale 22,500 23,700 + 1,200 $0.19 psf for flex properties, $0.10 psf for light industrial properties Source: Nevada Department of Employment, Training and Rehabilitation. and $0.02 psf for light distribution and warehouse/distribution properties, and decreased by $0.04 psf for incubator properties. The large increase asking rent for flex properties was due to two new large availabilities with a high percentage of office space and thus higher than average asking rental rates.

9 Las Vegas Research & Forecast Report | Q1 2019 | Industrial | Colliers International 2018 had Southern Nevada’s highest investment sales volume since the boom that preceded the Great Recession. Based on first quarter results, 2019 does not look as though it will top 2018, though it may equal 2016 and 2017. Industrial investment sales volume in the first quarter of 2019 was $101.3 million in 16 sales totaling 845,000 square feet at an average sales price of $119.99 psf. Although investment sales were strong in 2018, there was a trend of diminishing sales over the course of the year, and this trend continued into 2019. It is notable that prices for industrial buildings have increased dramatically over the past five years. The average cap rate in the first quarter of 2019 was 6.5 percent, higher than in 2018.

Southern Nevada’s warehouse/distribution market continued to dominate the industrial market in the first quarter of 2019. Warehouse/ distribution properties had 709,143 square feet of net absorption. New construction of warehouse/distribution was 455,270 square feet in the first quarter of 2019, compared to 2.2 million square feet of new inventory completed in the first quarter of 2018. Warehouse/distribution vacancy was 2.2 percent, a very low level of vacancy, and one sure to inspire additional warehouse/distribution construction.

1 Using the Consumer Price Index, All Urban Consumers, West Region, Class A Cities, 1982-1984 = 100

Industrial Development Schedule PROJECT TYPE STATUS SUBMARKET SIZE PRE-LEASING

2ND QUARTER 2019 2,613,298 SF 32% 4456 East Craig Road Light Industrial UC North Las Vegas 19,150 SF 100% 5855 La Costa Canyon Warehouse/Distribution UC Southwest 46,250 SF 0% Arroyo Industrial Center Warehouse/Distribution UC Southwest 69,732 SF 0% Beltway Business Park 10 Warehouse/Distribution PC Southwest 227,050 SF 89% Buffalo Industrial Park A/B/C Incubator UC Southwest 72,960 SF 36% Centennial Commerce Center Warehouse/Distribution PC North Las Vegas 213,818 SF 0% Cimarron Corporate Center Light Distribution UC Southwest 78,692 SF 73% LogistiCenter at Las Vegas Blvd Warehouse/Distribution UC North Las Vegas 109,200 SF 0% Matter Business Park @ Warm Springs Warehouse/Distribution UC Southwest 132,450 SF 5% Prologis I-15 Speedway Logistics Center Bldg ¾ Warehouse/Distribution UC North Las Vegas 1,008,588 SF 37% Prologis Warm Springs Freeway 1 Warehouse/Distribution UC Airport 76,603 SF 34% Southwest Sunset Corporate Center A/B/C/D/E/F Incubator UC Southwest 146,200 SF 11% Sunset Business Center Flex UC Southwest 68,785 SF 21% West Craig Distribution Center 1/2/3 Warehouse/Distribution UC North Las Vegas 343,820 SF 27% 3RD QUARTER 2019 1,694,343 SF 2% 7060 Arby Avenue Warehouse/Distribution PC Southwest 36,200 SF 100% Nevada State Industrial Park A/B/C Warehouse/Distribution UC Southwest 195,834 SF 0% Raceway Industrial Park Warehouse/Distribution UC North Las Vegas 670,752 SF 0% Santico Warehouse/Distribution UC Southwest 38,972 SF 0% Sunpoint Crossing 1/2/3 Warehouse/Distribution UC North Las Vegas 752,526 SF 0% 4TH QUARTER 2019 727,274 SF 0% Matter Park @ West Henderson 1/2/3/4 Warehouse/Distribution PC Henderson 299,699 SF 0% Odyssey Industrial Park Warehouse/Distribution PC North Las Vegas 86,920 SF 0% Tropical Distribution Center Warehouse/Distribution PC North Las Vegas 340,655 SF 0% 1ST QUARTER 2020 4,296,702 SF 0% Blue Diamond Interchange Center 1/2/3 Warehouse/Distribution PC Southwest 471,233 SF 0% Decatur Sunset Center Light Industrial PC Southwest 59,212 SF 0% Escondido Airport Park Light Industrial PC Airport 30,897 SF 0% Matter Logistics Center @ West Cheyenne A/B/C/D/E Warehouse/Distribution PC North Las Vegas 734,460 SF 0% North 15 Logistics 1/2 Warehouse/Distribution PC North Las Vegas 550,770 SF 0% Prologis I-15 Speedway Logistics Center Bldg 5/6/7 Warehouse/Distribution PC North Las Vegas 1,328,570 SF 0% South15 Airport Center Bldg C/D Warehouse/Distribution PC Henderson 266,560 SF 0% Tropical Distribution Center 2 (Amazon) Warehouse/Distribution UC North Las Vegas 855,000 SF BTS Tropical Industrial Logistics Center Warehouse/Distribution PC Southwest 340,855 SF 0% 2020 4,019,516 SF 37% 5785 N Hollywood Blvd Warehouse/Distribution PC North Las Vegas 36,000 SF BTS Air Parc Heights A/B/C/D/E Warehouse/Distribution PC Henderson 332,800 SF 0% Blue Diamond Business Center Bldg 10 Warehouse/Distribution PC Southwest 457,184 SF 0% Golden Triangle Industrial Park 1/2 Warehouse/Distribution PC North Las Vegas 1,003,530 SF 0% Google Data Center Light Industrial UC Henderson 750,000 SF BTS Harsch Speedway Commerce Center IV Warehouse/Distribution PC North Las Vegas 167,444 SF 0% North Las Vegas Business Park 1/2 Warehouse/Distribution PC North Las Vegas 216,243 SF 0% Tropical Distribution Center 4 (Sephora) Warehouse/Distribution UC North Las Vegas 715,460 SF 100% Tropical Industrial Logistics Center Warehouse/Distribution PC Southwest 340,855 SF 0%

10 Las Vegas Research & Forecast Report | Q1 2019 | Industrial | Colliers International The light distribution sector was not significantly different in the first light. This means asking rates for light industrial space will probably quarter of 2019 than it was in the first quarter of 2018, except in continue to rise over the course of 2019. terms of vacancy. Net absorption was 179,551 square feet in 2019, Incubator space posted negative 22,394 square feet in the first compared to 187,249 square feet one year ago. New completions quarter of 2019. This was not particularly good, but was better of light distribution space were lower in 2019 than one year ago, than one year ago. Incubator vacancy was a healthy 5.6 percent. which helped bring the light distribution vacancy rate down to 3.3 Flex space did better than incubator, with 69,367 square feet of net percent. The average asking rental rate was $0.69 psf NNN in the absorption bringing vacancy down to 6.3 percent. This was a very first quarter of 2019, and was also $0.69 psf NNN one year ago. healthy level of vacancy for flex product. Development of light distribution product is beginning to ramp up, with forward supply of light distribution now more than twice what It is difficult to predict whether 2019 will meet, beat or fall behind was seen in the first quarter of 2018. Southern Nevada’s industrial performance in 2018. Numerous projects are now planned or under construction, so steady demand The light industrial sector posted 146,557 square feet of net will be met by new supply. The difficulty is predicting how much absorption in the first quarter of 2019, considerably more than one demand the Valley can expect over the next 12 months. Recession year ago when net absorption was negative 49,483 square feet. talk is in the air, and though a recession in 2019 does not appear Light industrial vacancy was 3.7 percent this quarter, compared to to be likely, just the talk of recession can have a negative impact. 4.1 percent one year ago. Light industrial’s weighted average asking We think 2019 will follow a similar trajectory to 2018, with generally rate increased by $0.13 year-over-year to $0.84 psf NNN. Other than strong demand for industrial space and a continued strong level of the new 750,000 square foot Google data center under construction new warehouse/distribution construction. in the Henderson submarket, light industrial development remained

“We think 2019 will follow a similar trajectory to 2018, with generally strong demand for industrial space and a continued strong level of new warehouse/distribution construction.”

Investment Sales

2015 2016 2017 2018 2019 YTD

No. Sales 52 70 66 89 16 Square Feet Sold 2,759,000 3,299,000 3,241,000 6,417,000 845,000 Sales Volume $248.8 MM $308.4 MM $316.2 MM $661.7 MM $101.3 MM Average Price/SF $90.20 $93.48 $97.56 $103.11 $119.99 Average Cap Rate 7.1% 7.4% 6.9% 6.0% 6.5% Average Sale Size (SF) 53,000 47,000 49,000 72,000 53,000

11 Las Vegas Research & Forecast Report | Q1 2019 | Industrial | Colliers International Significant Industrial 215 Sale Activity NORTH 15 LAS VEGAS Northgate Distribution Center 215,804 SF - $24,500,000 NORTHWEST $113.53/SF January 2019 Warehouse/Distribution 95

Mountain Point Business Park 50,956 SF - $12,000,000 $235.50/SF February 2019 EAST Flex WEST LAS VEGAS CENTRAL 95 Foremost Business Park 43,870 SF - $4,650,000 $105.99/SF February 2019 Light Industrial

AIRORT

Cal-Neva Produce Facility 215 49,026 SF - $6,795,000 $138.60/SF HENDERSON January 2019 SOUTHWEST Light Industrial

Cameron Hacienda Business Park 34,354 SF - $4,200,000 $122.26/SF February 2019 Incubator

Lease Activity

PROPERTY NAME LEASE DATE LEASE TERM SIZE EFFECTIVE RATE TYPE

Northgate Distribution Center Jan 2019 60 months 313,628 SF $0.46 NNN Warehouse/Distribution

Sunset Parkway Business Center Jan 2019 62 months 100,000 SF $0.63 NNN Warehouse/Distribution

Stadium Industrial Park Feb 2019 61 months 20,464 SF $0.74 NNN Light Industrial

Airport Industrial Center Feb 2019 36 months 12,414 SF $0.60 NNN Light Distribution

Patrick Airport Center Feb 2019 63 months 2,800 SF $0.87 NNN Incubator

12 Las Vegas Research & Forecast Report | Q1 2019 | Industrial | Colliers International Market Comparisons - Las Vegas Industrial Market

VACANCY NET NET WEIGHTED TOTAL DIRECT SUBLEASE TOTAL VACANCY RATE COMPLETIONS UNDER PLANNED DIRECT RATE ABSORPTION ABSORPTION COMPLETIONS AVG ASKING TYPE INVENTORY VACANCY VACANCY VACANT PRIOR CURRENT CONSTRUCTION CONSTRUCTION VACANT SF CURRENT CURRENT YTD YTD SF RENTAL SF RATE SF SF QUARTER QTR SF SF SF QUARTER QTR SF SF RATE

AIRPORT SUBMARKET

WH 5,928,879 9,000 0.2% - 9,000 0.2% 0.0% 48,942 48,942 57,942 57,942 76,603 - $0.53 LD 3,419,636 179,528 5.2% 5,500 185,028 5.4% 3.6% (3,882) (3,882) 78,033 78,033 - - $0.77 LI 3,009,340 161,600 5.4% - 161,600 5.4% 5.7% (2,512) (2,512) - - - 30,897 $0.83 INC 1,484,890 123,109 8.3% - 123,109 8.3% 7.2% (16,496) (16,496) - - - - $1.03 FLX 1,533,648 105,659 6.9% 11,680 117,339 7.7% 10.0% 35,788 35,788 - - - - $1.33 Total 15,376,393 578,896 3.8% 17,180 596,076 3.9% 3.6% 61,840 61,840 135,975 135,975 76,603 30,897 $0.94 EAST LAS VEGAS SUBMARKET

WH 1,115,454 - 0.0% - - 0.0% 0.0% ------$- LD 532,163 15,428 2.9% - 15,428 2.9% 4.3% 7,701 7,701 - - - - $0.65 LI 1,836,433 64,124 3.5% - 64,124 3.5% 3.5% 757 757 - - - - $0.60 INC 280,959 16,418 5.8% - 16,418 5.8% 1.6% (11,892) (11,892) - - - - $0.74 FLX 233,692 6,731 2.9% - 6,731 2.9% 2.6% (670) (670) - - - - $0.73 Total 3,998,701 102,701 2.6% - 102,701 2.6% 2.5% (4,104) (4,104) - - - - $0.64 HENDERSON SUBMARKET

WH 9,072,193 171,020 1.9% - 171,020 1.9% 2.8% 47,009 47,009 - - - 899,059 $0.75 LD 1,929,846 95,672 5.0% 11,568 107,240 5.6% 6.2% 15,835 15,835 - - - 63,489 $0.72 LI 3,681,591 79,339 2.2% - 79,339 2.2% 3.8% 66,540 66,540 12,000 12,000 750,000 - $0.73 INC 496,625 40,966 8.2% - 40,966 8.2% 5.6% (12,908) (12,908) - - - - $0.73 FLX 1,360,598 73,230 5.4% - 73,230 5.4% 6.3% 12,795 12,795 - - - - $1.31 Total 16,540,853 460,227 2.8% 11,568 471,795 2.9% 3.8% 129,271 129,271 12,000 12,000 750,000 962,548 $0.83 NORTH LAS VEGAS SUBMARKET

WH 30,317,477 1,004,604 3.3% 0 1,004,604 3.3% 4.2% 599,233 599,233 397,328 397,328 4,669,164 4,716,392 $0.47 LD 5,138,008 241,993 4.7% 11,250 253,243 4.9% 7.7% 137,489 137,489 - - - 117,350 $0.57 LI 9,168,262 357,710 3.9% 7,710 365,420 4.0% 4.5% 79,308 79,308 32,705 32,705 19,150 - $0.87 INC 724,573 80,621 11.1% 0 80,621 11.1% 9.4% (12,746) (12,746) - - - - $0.59 FLX 803,833 110,124 13.7% 0 110,124 13.7% 13.0% (5,808) (5,808) - - - - $0.91 Total 46,152,153 1,795,052 3.9% 18,960 1,814,012 3.9% 4.9% 797,476 797,476 430,033 430,033 4,688,314 4,833,742 $0.60 NORTHWEST SUBMARKET

WH 224,906 - 0.0% - - 0.0% 0.0% ------$- LD 50,000 - 0.0% - - 0.0% 0.0% ------$- LI 341,430 7,070 2.1% - 7,070 2.1% 2.7% 2,250 2,250 - - - - $0.93 INC 99,427 10,415 10.5% - 10,415 10.5% 8.5% (2,013) (2,013) - - - - $1.10 FLX 740,230 49,875 6.7% - 49,875 6.7% 6.4% (2,411) (2,411) - - - - $0.89 Total 1,455,993 67,360 4.6% - 67,360 4.6% 4.5% (2,174) (2,174) - - - - $0.93 SOUTHWEST SUBMARKET

WH 15,436,773 195,352 1.3% - 195,352 1.3% 1.8% 53,381 53,381 - - 710,347 1,305,472 $0.80 LD 7,296,676 81,393 1.1% 3,999 85,392 1.2% 1.7% 37,774 37,774 - - 78,692 - $0.82 LI 10,549,078 398,359 3.8% - 398,359 3.8% 3.7% (4,682) (4,682) - - - 59,212 $0.76 INC 2,369,251 44,942 1.9% - 44,942 1.9% 3.4% 31,933 31,933 - - 219,160 - $0.87 FLX 1,689,248 59,902 3.5% 3,712 63,614 3.8% 5.6% 25,703 25,703 - - 68,785 - $0.96 Total 37,341,026 779,948 2.1% 7,711 787,659 2.1% 2.6% 144,109 144,109 - - 1,076,984 1,364,684 $0.80 WEST CENTRAL SUBMARKET

WH 2,253,842 39,422 1.7% - 39,422 1.7% 0.0% (39,422) (39,422) - - - - $1.00 LD 999,141 25,266 2.5% - 25,266 2.5% 1.0% (15,366) (15,366) - - - - $0.76 LI 7,749,763 285,617 3.7% - 285,617 3.7% 3.7% 4,896 4,896 - - - - $1.01 INC 2,511,825 129,269 5.1% 4,000 133,269 5.3% 5.4% 1,728 1,728 - - - - $0.77 FLX 161,603 3,770 2.3% - 3,770 2.3% 4.8% 3,970 3,970 - - - - $1.00 Total 13,676,174 483,344 3.5% 4,000 487,344 3.6% 3.2% (44,194) (44,194) - - - - $0.93 MARKET TOTAL

WH 64,349,524 1,419,398 2.2% - 1,419,398 2.2% 2.8% 709,143 709,143 455,270 455,270 5,456,114 6,920,923 $0.56 LD 19,365,470 639,280 3.3% 32,317 671,597 3.5% 4.1% 179,551 179,551 78,033 78,033 78,692 180,839 $0.69 LI 36,335,897 1,353,819 3.7% 7,710 1,361,529 3.7% 4.1% 146,557 146,557 44,705 44,705 769,150 90,109 $0.84 INC 7,967,550 445,740 5.6% 4,000 449,740 5.6% 5.4% (22,394) (22,394) - - 219,160 - $0.82 FLX 6,522,852 409,291 6.3% 15,392 424,683 6.5% 7.7% 69,367 69,367 - - 68,785 - $1.09 Total 134,541,293 4,267,528 3.2% 59,419 4,326,947 3.2% 3.7% 1,082,224 1,082,224 578,008 578,008 6,591,901 7,191,871 $0.75

QUARTERLY COMPARISON AND TOTALS

Q1-19 134,541,293 4,267,528 3.2% 59,419 4,326,947 3.2% 3.7% 1,082,224 1,082,224 578,008 578,008 6,591,901 7,191,871 $0.75 Q4-18 133,963,285 4,771,744 3.6% 212,672 4,984,416 3.7% 4.6% 1,881,155 5,156,190 713,464 4,367,548 4,540,655 6,633,368 $0.72 Q3-18 133,249,821 5,939,435 4.5% 149,026 6,088,461 4.6% 5.1% 1,420,990 3,275,035 805,768 3,654,084 2,428,533 8,127,863 $0.66 Q2-18 132,444,053 6,554,657 4.9% 256,869 6,811,526 5.1% 5.6% 1,021,462 1,854,045 454,885 2,848,316 3,435,479 6,828,786 $0.66 Q1-18 131,989,168 7,121,234 5.4% 286,147 7,407,381 5.6% 4.4% 832,583 832,583 2,393,431 2,393,431 1,409,523 7,952,601 $0.64

WH = Warehouse LD = Light Distribution LI = Light Industrial INC = Incubator FLX = Flex

The information contained in this report was provided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability. As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports.

13 Las Vegas Research & Forecast Report | Q1 2019 | Industrial | Colliers International Research & Forecast Report LAS VEGAS | OFFICE Q1 2019

Office Vacancy Hits New Low

>> Southern Nevada’s office market continued to improve in the first quarter of 2019 Economic Indicators >> Net absorption was 345,715 square feet in the first quarter Office Office Sublease >> Vacancy decreased to 12.9 percent Employment SF/Job Vacancy

Southern Nevada’s office market continued to improve in the -5.2% +2.1 first quarter of 2019, with net absorption of 345,715 square feet and vacancy decreasing to 12.9 percent. New completions were +9.4% Q1 only 15,867 square feet in the first quarter, and expansion of 2019 the office inventory should remain light in 2019. The weighted average asking rate for office space in the first quarter was $2.16 per square foot (psf) on a full service gross (FSG) basis, a Market Indicators $0.11 increase from one year ago. Relative to prior period Q1 2019 Q2 2019* VACANCY According to the Nevada Department of Employment, Training NET ABSORPTION and Rehabilitation, Southern Nevada’s office job market added 14,400 jobs between January 2018 and January 2019. Over this COMPLETIONS period, Southern Nevada added 6,200 jobs in the administration RENTAL RATE and support sector, 5,100 jobs in the health care and social *Projected

Historical Vacancy Rates and Asking Lease Rates Summary Statistics Las Vegas Market Q1-18 Q4-18 Q1-19

Vacancy Rate 15.1% 13.6% 12.9%

Asking Rent (PSF, FSG) $2.05 $2.13 $2.16

Net Absorption (SF) 182,070 394,300 345,715

New Completions (SF) 68,364 24,900 15,867

Overall Asking Rents Per Square Foot Q1-18 Q4-18 Q1-19

Class A $2.66 $2.72 $2.73

Class B $2.09 $2.17 $2.17

“Southern Nevada’s office market continued to improve in the first quarter Class C $1.73 $1.80 $1.81 of 2019…” assistance sector, 2,100 jobs in the financial activities sector and Historical Net Absorption vs. 1,300 jobs in the management of companies sector. Southern Completions Nevada lost 200 jobs in the professional, scientific and technical sector and 100 jobs in the information sector. Unemployment in the Las Vegas-Paradise MSA was 4.7 percent in January 2019, down from 5.4 percent in January 2018. From January 2018 to January 2019, total employment in Southern Nevada increased by 30,700 jobs, a 3 percent increase.

The Downtown submarket saw the completion of one building this quarter, 601 Bridger Avenue, which totaled 15,867 square feet. The second quarter of 2019 should see the completion of 132,590 square feet of office space that is 37 percent pre-leased. An additional 47,553 square feet of office space is planned for completion in 2019. Occupancy vs. Southern Nevada’s office market had 345,715 square feet of net Office Employment absorption in the first quarter of 2019, roughly on par with net absorption recorded in the second half of 2018. Net absorption this quarter was highest in the Southwest submarket at 97,625 square feet. This was followed by 74,689 square feet of net absorption in the East Las Vegas submarket and 71,525 square feet of net absorption in the Henderson submarket. Net absorption was negative in the Airport submarket and was minimal in Downtown.

Class C office space led all office classes in the first quarter in net absorption, recording 238,879 square feet. Class B office space posted 153,768 square feet of net absorption, while Class A office posted negative 46,932 square feet of net absorption. JAN JAN Demand for office space over the past four quarters came 2018 2019 CHANGE Administration primarily from health services, professional & business services 77,000 83,200 + 6,200 and Support and financial activities companies. In the lease comps we tracked Financial 51,700 53,800 + 2,100 this quarter, local tenants took 78.3 percent of the leased space, Activities Health followed by tenants from the Southwest U.S. at 6.8 percent, 88,400 93,500 + 5,100 Care Southeast U.S. at 5.3 percent and Northeast U.S. at 5.1 percent. Information 11,100 11,000 - 100 Southern Nevada’s office vacancy rate decreased to 12.9 percent Management 21,800 23,100 + 1,300 in the first quarter of 2019, a 0.7-point decrease from last quarter, of Companies and a 2.2-point decrease from one year ago. Vacancy remained Professional, Scientific 41,600 41,400 - 200 higher than the pre-2006 average of 9.0 percent, but has shown and Technical significant improvement over the past two years. Source: Nevada Department of Employment, Training and Rehabilitation.

15 Las Vegas Research & Forecast Report | Q1 2019 | Office | Colliers International Investment Sales Activity

2015 2016 2017 2018 2019 YTD No. Sales 59 45 99 94 14 Square Footage 1,712,000 1,449,000 3,560,210 3,731,240 321,013 Sales Volume $284.3 MM $200.9 MM $652.6 MM $658.2 MM $54.2 MM Average Price/SF $166.06 $138.70 $183.31 $176.42 $168.80 Average Cap Rate 7.5% 7.8% 7.5% 8.3% 8.2% Average Sale Size (SF) 29,000 32,200 36,000 39,700 22,900 * Note – Data in this table no longer includes medical office

Office vacancy decreased in all of the Valley’s eight submarkets this quarter. The largest decrease was in North Las Vegas, the smallest office submarket in the Valley, at 9.3 points. Among larger submarkets, the largest decrease was 4.5 points in West Central, followed by 2.8 points in the Northwest and Southwest submarkets.

When examined by the size range of vacant units (including vacant units for sublease), the first quarter of 2019 continued the trend of high demand for small units. Tiny units saw the strongest demand, with vacant square footage falling by 359,024 square feet year- over-year. The next most active size range was small units, in which vacant square footage fell by 225,453 square feet. Available space in medium units fell by 161,602 square feet, and in huge units by 128,797 square feet. Large units decreased available space by 85,797 square feet.

“With a general lack of new office development in the Valley, even somewhat lower levels of net absorption could see vacancy reach 11.5 percent by year’s end.”

Office Development Schedule

PROJECT CLASS SUBMARKET SIZE PRE-LEASING

Q2-2019 132,590 SF 37% University Gateway B East Las Vegas 21,885 SF 100% UNLV Harry Reid Tech Park A Southwest 110,705 SF 25% Q3-2019 0 SF ------Q4-2019 47,553 SF 1% Gardner Plaza C Henderson 23,832 SF 3% Sierra Gold Business Park B Southwest 23,721 SF 0% 2020 389,728 SF 24% 777 East Sunset Road A Airport 150,000 SF 19% Boyd Gaming HQ A Southwest Canyon Ridge Business Park C Southwest 65,000 SF 35% Centennial Hills Center C Northwest 37,100 SF 0% Jerry Tarkanian Way Building B Southwest 12,232 SF 50% Magnum Towers A Southwest 100,000 SF 34% Rainbow Commons B Southwest 25,396 SF 0% West Village A Southwest

16 Las Vegas Research & Forecast Report | Q1 2019 | Office | Colliers International Office space available for sublease in Southern Nevada increased this quarter to 440,143 square feet from 430,975 square feet one year ago. Most of the available sublease space was in Class B properties, and was located in the Northwest submarket.

The weighted average asking rental rate for office space in Southern Nevada was $2.16 psf FSG this quarter. This was $0.11 higher than one year ago. The Downtown submarket was the Valley’s most expensive, with an asking rate of $2.46 psf FSG. This was higher than the $2.40 psf FSG asking rate in the Southwest submarket and the $2.29 psf FSG asking rate in the Northwest submarket. The Valley’s lowest average asking rate was in the West Central submarket at $1.83 psf FSG.

Office investment sales volume was $54.2 million in 14 sales totaling 321,013 square feet with an average sales price of $168.80 psf this quarter. The average cap rate decreased slightly to 8.2 percent from last year’s 8.3 percent. Office investment sales are now on pace to be the weakest in nine years, and office sales prices now appear to have peaked in 2017.

Southern Nevada’s office market continued in 2019 to post the strong demand experienced in 2018, presaging a lucrative 2019 if the economy remains strong. With a general lack of new office development in the Valley, even somewhat lower levels of net absorption could see vacancy reach 11.5 percent by year’s end. Asking rates for office space are increasing, and will either stimulate additional office development or decrease demand, depending on just how strong the economy is in 2019.

Vacancy by Size Range Q1, 2018 Q4, 2018 Q1, 2019 ANNUAL CHANGE

SIZE RANGE Units Total SF Units Total SF Units Total SF Units Total SF

TINY (0 TO 2,500 SF) 989 1,830,245 879 1,453,507 851 1,358,745 (151) (359,024)

SMALL (2,501 TO 5,000 SF) 442 1,784,385 403 1,621,455 391 1,562,854 (41) (225,453)

MEDIUM (5,001 TO 10,000 SF) 190 1,354,821 172 1,247,772 169 1,225,520 (13) (161,602)

LARGE (10,001 TO 20,000 SF) 66 973,972 68 987,396 64 896,174 (3) (85,797)

HUGE (20,001 SF +) 34 1,168,347 36 1,060,683 36 999,395 (2) (128,797)

17 Las Vegas Research & Forecast Report | Q1 2019 | Office | Colliers International 215 Significant Office NORTH Sale Activity LAS VEGAS

8360 South Durango Drive 74,149 SF - $12,900,000 $173.97/SF 95 February 2019 NORTHWEST Class B 15

3012 South Durango Drive 15,136 SF - $3,592,000 EAST $237.32/SF LAS VEGAS February 2019 DOWN Class C WEST TOWN CENTRAL 1405 East Sunset Road 95 23,000 SF - $5,580,000 $242.61/SF January 2019 Class C

AIRORT Scottsdale Plaza 215 85,134 SF - $11,500,000 $135.08/SF HENDERSON February 2019 SOUTHWEST Class C

St Rose Professional Park 11,880 SF - $5,200,000 $437.71/SF January 2019 Class B

Lease Activity

Property Name Lease Date Lease Term Size Lease Rate Type

Mountain View Professional Plaza Jan 2019 102 months 7,604 SF $1.93 NNN Class B

Green Valley Corporate Center Jan 2019 60 months 6,079 SF $2.17 NNN Class A

St Rose Professional Park Feb 2019 89 months 4,194 SF $1.53 NNN Class B

Pace Plaza Feb 2019 72 months 4,118 SF $1.73 NNN Class B

Celebrate Plaza Jan 2019 36 months 2,134 SF $1.39 MG Class C

18 Las Vegas Research & Forecast Report | Q1 2019 | Office | Colliers International Market Comparisons - Las Vegas Office Market

NET TOTAL DIRECT DIRECT SUBLEASE TOTAL VACANCY RATE VACANCY NET COMPLETIONS UNDER PLANNED WEIGHTED ABSORPTION COMPLETIONS CLASS INVENTORY VACANT VACANCY VACANT VACANT CURRENT RATE PRIOR ABSORPTION CURRENT CONSTRUCTION CONSTRUCTION AVG ASKING CURRENT YTD SF SF SF RATE SF SF QUARTER QUARTER YTD SF QTR SF SF SF RENTAL RATE QTR SF

AIRPORT SUBMARKET

A 729,174 173,801 23.8% 44,653 218,454 30.0% 14.7% (76,295) (76,295) - - - 150,000 $2.87 B 2,403,646 245,563 10.2% - 245,563 10.2% 10.7% 9,045 9,045 - - - - $2.09 C 3,214,573 390,566 12.1% 12,607 403,173 12.5% 14.9% 53,759 53,759 - - - - $1.86 Total 6,347,393 809,930 12.8% 57,260 867,190 13.7% 13.3% (13,491) (13,491) - - - 150,000 $2.15

DOWNTOWN SUBMARKET

A 1,232,341 254,178 20.6% 2,325 256,503 20.8% 20.8% ------$2.74 B 2,369,431 266,380 11.2% 2,353 268,733 11.3% 9.4% (32,632) (32,632) 15,867 15,867 - - $2.51 C 1,419,399 123,352 8.7% - 123,352 8.7% 11.3% 36,569 36,569 - - - - $1.78 Total 5,021,171 643,910 12.8% 4,678 648,588 12.9% 12.7% 3,937 3,937 15,867 15,867 - - $2.46

EAST LAS VEGAS SUBMARKET

A 1,353,083 377,618 27.9% 17,872 395,490 29.2% 31.1% 31,140 31,140 - - - - $2.88 B 1,542,404 378,805 24.6% 1,066 379,871 24.6% 25.1% 7,288 7,288 - - 21,885 - $1.36 C 2,614,440 462,195 17.7% - 462,195 17.7% 19.1% 36,261 36,261 - - - - $1.48 Total 5,509,927 1,218,618 22.1% 18,938 1,237,556 22.5% 23.7% 74,689 74,689 - - 21,885 - $1.88 HENDERSON SUBMARKET A 583,905 147,442 25.3% 9,653 157,095 26.9% 25.8% (2,680) (2,680) - - - - $2.59 B 2,737,835 369,054 13.5% 18,934 387,988 14.2% 15.7% 37,209 37,209 - - - 323,832 $2.35 C 2,178,092 192,144 8.8% - 192,144 8.8% 10.5% 36,996 36,996 - - - - $1.84 Total 5,499,832 708,640 12.9% 28,587 737,227 13.4% 14.7% 71,525 71,525 - - - 323,832 $2.26 NORTH LAS VEGAS SUBMARKET A - - n/a - - n/a n/a ------$- B 245,696 31,106 12.7% - 31,106 12.7% 19.1% 9,067 9,067 - - - - $1.99 C 542,659 41,853 7.7% 3,600 45,453 8.4% 8.3% (396) (396) - - - - $1.86 Total 788,355 72,959 9.3% 3,600 76,559 9.7% 11.7% 8,671 8,671 - - - - $1.92 NORTHWEST SUBMARKET A 2,112,587 344,688 16.3% 17,698 362,386 17.2% 18.3% 6,329 6,329 - - - - $2.55 B 3,715,330 379,881 10.2% 51,565 431,446 11.6% 12.7% 51,363 51,363 - - - - $2.38 C 3,408,756 305,132 9.0% 2,943 308,075 9.0% 9.4% 10,962 10,962 - - - 37,100 $1.90 Total 9,236,673 1,029,701 11.1% 72,206 1,101,907 11.9% 12.8% 68,654 68,654 - - - 37,100 $2.29 SOUTHWEST SUBMARKET A 590,935 9,619 1.6% 21,433 31,052 5.3% 3.2% (5,426) (5,426) - - 110,705 100,000 $3.59 B 3,412,135 364,016 10.7% 36,088 400,104 11.7% 13.9% 72,333 72,333 - - - 61,349 $2.60 C 3,563,997 351,193 9.9% 3,000 354,193 9.9% 10.8% 30,718 30,718 - - - 65,000 $2.16 Total 7,567,067 724,828 9.6% 60,521 785,349 10.4% 11.6% 97,625 97,625 - - 110,705 226,349 $2.40 WEST CENTRAL SUBMARKET A 157,624 26,465 16.8% - 26,465 16.8% 16.8% ------$2.33 B 1,934,384 191,077 9.9% 5,277 196,354 10.2% 9.9% 95 95 - - - - $1.89 C 3,023,262 367,622 12.2% 3,740 371,362 12.3% 13.3% 34,010 34,010 - - - - $1.76 Total 5,115,270 585,164 11.4% 9,017 594,181 11.6% 12.1% 34,105 34,105 - - - - $1.83 MARKET TOTAL A 6,759,649 1,333,811 19.7% 113,634 1,447,445 21.4% 20.2% (46,932) (46,932) - - 110,705 250,000 $2.73 B 18,360,861 2,225,882 12.1% 115,283 2,341,165 12.8% 13.5% 153,768 153,768 15,867 15,867 21,885 385,181 $2.17 C 19,965,178 2,234,057 11.2% 25,890 2,259,947 11.3% 12.6% 238,879 238,879 - - - 102,100 $1.81 Total 45,085,688 5,793,750 12.9% 254,807 6,048,557 13.4% 14.1% 345,715 345,715 15,867 15,867 132,590 737,281 $2.16 QUARTERLY COMPARISON AND TOTALS

Q1-19 45,085,688 5,793,750 12.9% 254,807 6,048,557 13.4% 14.1% 345,715 345,715 15,867 15,867 132,590 737,281 $2.16 Q4-18 45,069,821 6,123,598 13.6% 239,537 6,363,135 14.1% 14.9% 394,300 1,255,654 24,900 516,210 148,457 631,328 $2.13 Q3-18 45,044,921 6,492,998 14.4% 232,224 6,725,222 14.9% 15.5% 421,352 861,354 152,300 491,310 56,367 463,918 $2.10 Q2-18 44,892,621 6,762,050 15.1% 217,232 6,979,282 15.5% 15.7% 257,932 440,002 270,646 339,010 192,800 388,521 $2.11 Q1-18 44,621,975 6,749,336 15.1% 254,025 7,003,361 15.7% 16.0% 182,070 182,070 68,364 68,364 463,446 881,389 $2.05

The information contained in this report was provided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability.

As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports.

19 Las Vegas Research & Forecast Report | Q1 2019 | Office | Colliers International Research & Forecast Report LAS VEGAS | RETAIL Q1 2019

Expansion in the Air for Vegas Retail

>> Demand for retail remained strong in the first quarter of 2019 >> Net absorption reached 263,918 square feet Economic Indicators

>> 373,266 square feet of new completions increased vacancy slightly RT RT RT to 7.7 percent Employment Taxable Sales SF/Job +10.0 +1.0% After a strong finish in 2018, Southern Nevada’s retail market continued that trend into 2019. Net absorption was 263,918 square +1.1% Q1 feet, a significant improvement over the negative net absorption 2019 experienced in the first quarter of 2018. New completions totaled 373,266 square feet, the largest increase in retail inventory in a decade. Vacancy was 7.7 percent, 0.6 points lower than one year ago, Market Indicators but 0.1-point higher than in the fourth quarter of 2018. The average Relative to prior period Q1 2019 Q2 2019* asking rental rate increased to $1.45 per square foot (psf) on a triple- VACANCY net (NNN) basis. NET ABSORPTION

According to the Nevada Department of Employment, Training CONSTRUCTION and Rehabilitation, Southern Nevada’s retail job market lost RENTAL RATE 3,000 jobs between January 2018 and January 2019. Over *Projected

Summary Statistics Historical Vacancy Rates and Asking Lease Rates Las Vegas Market Q1-18 Q4-18 Q1-19

Vacancy Rate 8.3% 7.6% 7.7%

Asking Rent (PSF, NNN) $1.37 $1.38 $1.45

Net Absorption (SF) -25,803 283,177 263,918

New Completions (SF) 18,237 0 373,266

Overall Asking Rents Per Square Foot Q1-18 Q4-18 Q1-19 Power Center $1.58 $1.43 $1.53

Community Center $1.37 $1.50 $1.59

Neighborhood Center $1.35 $1.33 $1.41

“We think, should the national economy remain strong in 2019 that Southern Strip Center $1.29 $1.30 $1.33 Nevada’s retail market will experience another year of healthy demand.”

Photo from this period Southern Nevada added 800 jobs in the food & Historical Net Absorption vs. beverage sector and lost 200 jobs in the health & personal care Completions sector. The food services & drinking places sector, which is not technically included in the retail category, added 2,700 jobs over the last twelve months. Unemployment in the Las Vegas-Paradise MSA was 4.7 percent in January 2019, down from 5.4 percent in January 2018. From January 2018 to January 2019, total employment in Southern Nevada increased by 30,700 jobs, a 3 percent increase.

The Nevada Department of Taxation reported that Clark County’s taxable retail sales for the twelve months ending in December 2018 (the most recent month of data available) totaled $30.6 billion, up from $29.9 billion in the previous twelve months. In the past twelve months taxable sales were $5.0 billion in the automotive sector, $10.5 billion in food services and $14.8 billion Occupancy vs. in other retail (excluding gas stations). Retail Employment

The highest year-over-year taxable sales growth in December 2018 was in miscellaneous retail (22.7 percent), food and beverage stores (5.2 percent growth) and food services and drinking places (5.0 percent growth). Year-over-year taxable sales also increased in motor vehicles and parts dealers, gasoline stations, home and garden stores and clothing stores. Taxable sales decreased in furniture stores, sporting goods and hobby stores, electronics and appliances stores and health & personal care stores. Non-store retailers posted 25.9 percent year-over- year growth in December 2018.

A total of 411,980 square feet of retail space was completed in the first quarter of 2019, and one center, Campus Village on Maryland Parkway, was demolished. This brought the net inventory growth in the first quarter to 373,266 square feet. The retail completed this quarter was 88 percent pre-leased. The second quarter of 2019 should see the completion of 523,999 square feet of retail product, 46 percent of it pre-leased. The second half of 2019 should see 333,790 square feet of retail space completed.

21 Las Vegas Research & Forecast Report | Q1 2019 | Retail | Colliers International Net absorption was 263,918 square feet in the first quarter of was annouced that Payless Shoe Source was closing all of its 2019, significantly higher than the negative 25,803 square feet stores this year, and Family Dollar is closing almost 400 stores absorbed one year ago. Net absorption was highest this year in nationally. Although it has not been announced which Family community centers at 124,022 square feet and neighborhood Dollar stores will be closed, Payless Shoe Source currently centers at 105,853 square feet. Net absorption was 89,535 occupies 43,000 square feet in Southern Nevada. square feet in strip retail centers and negative 55,492 square Retail vacancy in Southern Nevada was 7.7 percent in the first feet in power centers. quarter of 2019, lower than the 8.3 percent retail vacancy rate Net absorption was positive in six of the Valley’s eight submarkets, one year ago. Retail vacancy bounced between 8.1 and 8.4 including North Las Vegas at 131,911 square feet, West Central at percent over the past five quarters, with a general trend of 98,764 square feet and Southwest at 58,351 square feet. Net decreasing vacancy. Vacancy finally dropped beneath 8 percent absorption was negative in Downtown and University East. in the fourth quarter of 2018.

E-commerce continued to have an impact on Southern Nevada’s Among submarkets, the Valley’s highest vacancy was 13.9 retail market. In 2018, nine big box retailers vacated space percent in Downtown, while the lowest vacancy rate was 5.6 totaling 1.1 million square feet in Southern Nevada. So far in percent in Southwest, a sign of the migration of the middle class 2019, four big box locations have become vacant, including a Big from the east side of the Valley where they settled during the 5 Sporting Goods, Vons and Colleen’s Classic Consignments. It 1970’s and 1980’s, to the west side of the Valley and Henderson.

Retail Development Schedule

Project Type Submarket Size (SF) Pre-Leasing

Q2-2019 523,999 SF 46%

Shoppes on the Parkway Strip Retail Henderson 58,090 SF 50%

St Rose Square Neighborhood Center Henderson 465,909 SF 45%

Q3-2019 32,450 SF 0%

Golden Spring Plaza Strip Retail West Central 32,450 SF 0%

Q4-2019 301,340 SF 49%

Arroyo Market Junction Neighborhood Center Southwest 141,226 SF 0%

Deer Springs Village Neighborhood Center Northwest 120,000 SF 90%

Flamingo Center Strip Retail West Central 40,114 SF 100%

2020 1,347,334 SF 39%

215 Curve Community Center Southwest 207,000 SF 91%

Blue Diamond Decatur Plaza Strip Retail Southwest 67,355 SF 32%

Centennial Hills Center Strip Retail Northwest 31,000 SF 0%

Inspirada Town Center Strip Retail Henderson 36,767 SF 33%

Magnum Towers Retail Strip Retail Southwest 30,000 SF 0%

Quail Bonita Strip Retail Henderson 41,745 SF 63%

Rainbow & Arby Neighborhood Center Southwest 61,282 SF 38%

Sahara Crossing Strip Retail Downtown 67,597 SF 0%

Silverado Promenade Neighborhood Center University East 129,588 SF 0%

Skye Canyon Marketplace Community Center Northwest 250,000 SF 49%

The Bend Community Center Southwest 200,000 SF 62%

Union Village Strip Retail Henderson 225,000 SF 0%

22 Las Vegas Research & Forecast Report | Q1 2019 | Retail | Colliers International Retail Investment Sales Single-Tenant Retail 2015 2016 2017 2018 2019 YTD No. Sales 66 67 61 55 13 Square Footage Sold 981,000 569,000 461,000 359,000 188,000 Sales Volume $306.2 MM $174.4 MM $178.1 MM $130.7 MM $57.8 MM Average Price/SF $312.00 $306.57 $385.98 $363.87 $307.77 Average Sale Size (SF) 14,900 8,500 7,600 6,500 14,500 Cap Rate 7.2% 7.0% 6.5% 6.1% 4.7%

Shopping Center Retail 2015 2016 2017 2018 2019 YTD No. Sales 58 41 48 49 7 Square Footage Sold 3,195,000 2,528,000 4,607,000 3,027,000 428,000 Sales Volume $588.1 MM $419.7 MM $696.5 MM $594.1 MM $114.2 MM Average Price/SF $184.08 $166.00 $151.17 $196.29 $266.62 Average Sale Size (SF) 55,000 62,000 96,000 62,000 61,000 Cap Rate 7.7% 6.7% 7.8% 7.5% 6.6%

Vacancy decreased this year in Northeast, Henderson, West household income on the east side is $57,000, compared to an Central and Northwest, and increased in North Las Vegas, average household income of $92,000 on the west side. Just Southwest, University East and Downtown. last year, the average household income on the west side of town was $88,000 compared to average household income of The demographic shift in Southern Nevada is not just one of $56,000 on the east side. This is a sign that the middle and population, but also of wealth. The older northeast quadrant of the upper classes are moving from east to west, and while they are Valley had 382,000 households compared to 371,000 households being replaced by new residents on the east side, those new in the remainder of the Valley. Moreover, the northeast quadrant residents are less wealthy, which impacts retail sales and thus has continued to grow, with household growth of 8.9 percent retail real estate. from 2010 to 2018. The west side’s population, however, grew 16.4 percent over the same period. This disparity in population The average asking rental rate for retail space in Southern growth is projected to continue, with the west projected to have Nevada was $1.45 psf NNN this quarter, $0.08 psf higher than 8.1 percent household growth over the next five years compared one year ago. Seven submarkets saw an increase in their asking to 6.0 percent for the east. In terms of wealth, the average rate this quarter; Northwest by $0.14 psf, North Las Vegas by

“… 2019 could see the largest increase in retail inventory seen in Southern Nevada since 2009”

23 Las Vegas Research & Forecast Report | Q1 2019 | Retail | Colliers International Significant Retail Sale Activity 215 Shadow Mountain Marketplace 204,403 SF - $67,250,000 $329.01/SF NORTH LAS VEGAS January 2019 95 Multi-Tenant/Costco NORTHWEST 15

6391 West Lake Mead 10,929 SF - $5,227,233 $478.29/SF NORTHEAST January 2019 LAS VEGAS Single Tenant/CVS DOWN TOWN WEST CENTRAL Flamingo Center 4,173 SF - $6,900,000 $1,653.49/SF 95 January 2019 Single Tenant/Chick Fil A

UNIVERSITY AIRORT Flamingo Center 215 4,000 SF - $3,875,000 $968.75/SF HENDERSON January 2019 SOUTHWEST Single Tenant/Del Taco

RESORT Pecos Windmill Shopping Center CORRIDOR 34,514 SF - $12,003,000 $347.77/SF January 2019 Multi-Tenant/Vons (NAP)

Lease Activity

Property Name Tenant Lease Date Lease Term Size Lease Rate Type

Village at Centennial Springs Wild Thyme Jan 2019 96 months 3,779 SF $3.58 NNN Strip Center Sahara Pavilion North Vivo Vision Dec 2018 60 months 1,404 SF $1.67 NNN Power Center Lynden Square Allstate Feb 2019 36 months 1,301 SF $1.65 NNN Strip Center Summerlin Gateway Plaza Garden Grill Dec 2018 60 months 1,300 SF $2.35 NNN Neighborhood Center Lynden Square Express Auto Insurance Feb 2019 36 months 1,050 SF $1.55 NNN Strip Center

24 Las Vegas Research & Forecast Report | Q1 2019 | Retail | Colliers International $0.09 psf, Downtown by $0.08 psf, University East by $0.06 psf, Southwest by $0.05 psf, West Central by $0.04 psf and Henderson by $0.01 psf. Rates increased this quarter in power centers by $0.10 psf, community centers by $0.09 psf, neighborhood centers by $0.08 psf, and strip retail centers by $0.03 psf.

Single-tenant retail investment sales volume year-to-date was $57.8 million in 13 sales totaling 188,000 square feet at an average price per square foot of $307.77. This puts 2019 on pace to match 2015’s high level of single-tenant retail investment sales. The average cap rate this quarter was 4.7 percent, a decrease from 2018’s average cap rate of 6.1 percent.

Shopping center investment sales volume in the first quarter of 2019 was $114.2 million in seven sales totaling 428,000 square feet at an average price per square foot of $266.62. The average size of a shopping center sale this quarter was 61,000 square feet. The average cap rate this quarter was 6.6 percent, a compression from 2018’s average of 7.5 percent.

Beset by demographic and digital troubles, Southern Nevada’s retail market had significant improvement in 2018, and this improvement continued into the first quarter of 2019. This is important, because 2019 could see the largest increase in retail inventory seen in Southern Nevada since 2009. Much of this new construction is following new residential developments in Henderson, the Southwest and Northwest parts of the Valley, and thus is a matter of supply responding to demand. We think, should the national economy remain strong in 2019 that Southern Nevada’s retail market will experience another year of healthy demand.

Households Avg. HH Income Occupied Retail Space Occupied Retail Space (2019) (2019) (2018 Avg.) (2019 Avg.)

Downtown 38,800 $44,600 1,916,000 1,888,000

Henderson 114,800 $95,400 9,526,000 9,582,000

North Las Vegas 77,400 $71,200 5,854,000 6,062,000

Northeast 63,000 $58,200 3,214,000 3,228,000

Northwest 194,000 $93,400 13,010,000 13,072,000

Southwest 107,000 $88,800 8,018,000 8,176,000

University East 110,000 $66,800 8,070,000 8,133,000

West Central 57,600 $57,200 6,274,000 6,439,000

Source of Demographic Data: Claritas

25 Las Vegas Research & Forecast Report | Q1 2019 | Retail | Colliers International Market Comparisons - Las Vegas Retail Market

VACANCY NET NET WEIGHTED TOTAL DIRECT TOTAL VACANCY RATE COMPLETIONS UNDER PLANNED DIRECT SUBLEASE RATE ABSORPTION ABSORPTION COMPLETIONS AVG ASKING TYPE INVENTORY VACANCY VACANT PRIOR CURRENT CONSTRUCTION CONSTRUCTION VACANT SF VACANT SF CURRENT CURRENT YTD YTD SF RENTAL SF RATE SF QUARTER QTR SF SF SF QUARTER QTR SF SF RATE

DOWNTOWN PC - - n/a - - n/a n/a ------$- CC 731,186 67,109 9.2% - 67,109 9.2% 9.3% 1,200 1,200 - - - - $1.36 NC 470,630 119,078 25.3% - 119,078 25.3% 25.3% ------$1.00 SC 989,530 117,646 11.9% - 117,646 11.9% 11.1% (8,243) (8,243) - - - 40,500 $1.41 Total 2,191,346 303,833 13.9% - 303,833 13.9% 13.5% (7,043) (7,043) - - - 40,500 $1.25 HENDERSON PC 2,896,215 158,496 5.5% - 158,496 5.5% 4.4% (31,181) (31,181) - - - - $1.26 CC 2,724,168 243,776 8.9% - 243,776 8.9% 8.9% (2,524) (2,524) - - - - $1.54 NC 2,930,045 244,281 8.3% 116,457 360,738 12.3% 12.4% 57,079 57,079 - - 465,909 - $1.39 SC 1,967,660 289,138 14.7% - 289,138 14.7% 15.0% 3,601 3,601 - - 58,090 325,372 $1.41 Total 10,518,088 935,691 8.9% 116,457 1,052,148 10.0% 9.8% 26,975 26,975 - - 523,999 325,372 $1.41 NORTH LAS VEGAS PC 774,065 29,293 3.8% - 29,293 3.8% 3.7% (799) (799) - - - - $2.25 CC 2,367,463 196,111 8.3% 56,525 252,636 10.7% 5.0% 82,093 82,093 168,300 168,300 - - $1.88 NC 2,065,313 104,183 5.0% 7,133 111,316 5.4% 5.6% 49,157 49,157 40,000 40,000 - - $1.72 SC 1,308,948 124,633 9.5% 2,200 126,833 9.7% 9.6% 1,460 1,460 - - - 20,350 $1.36 Total 6,515,789 454,220 7.0% 63,658 517,878 7.9% 6.0% 131,911 131,911 208,300 208,300 - 20,350 $1.72 NORTHEAST PC - - n/a - - n/a n/a ------$- CC 1,295,615 68,880 5.3% - 68,880 5.3% 6.5% 15,800 15,800 - - - - $1.38 NC 1,404,861 80,345 5.7% 43,687 124,032 8.8% 5.7% (571) (571) - - - - $0.98 SC 769,047 92,598 12.0% - 92,598 12.0% 12.3% 2,373 2,373 - - - - $0.93 Total 3,469,523 241,823 7.0% 43,687 285,510 8.2% 7.5% 17,602 17,602 - - - - $1.07 NORTHWEST PC 3,171,110 228,455 n/a - 228,455 7.2% 7.0% (7,953) (7,953) - - - - $1.70 CC 4,814,446 168,372 3.5% 73,059 241,431 5.0% 5.1% 2,899 2,899 - - 250,000 - $2.28 NC 3,492,056 310,841 8.9% 12,679 323,520 9.3% 9.6% 12,606 12,606 - - 120,000 - $1.22 SC 2,476,551 174,495 7.0% 1,536 176,031 7.1% 7.6% 11,608 11,608 - - - 31,000 $1.41 Total 13,954,163 882,163 6.3% 85,738 967,901 6.9% 7.1% 19,160 19,160 - - 370,000 31,000 $1.58 SOUTHWEST PC 944,314 47,774 5.1% - 47,774 5.1% 5.1% ------$1.59 CC 2,688,783 155,376 5.8% - 155,376 5.8% 6.5% 18,356 18,356 - - - 407,250 $1.86 NC 2,566,980 156,770 6.1% - 156,770 6.1% 3.5% 24,681 24,681 94,880 94,880 - 262,276 $2.04 SC 2,458,738 122,992 5.0% 14,954 137,946 5.6% 5.1% 15,314 15,314 28,800 28,800 19,124 122,155 $2.04 Total 8,658,815 482,912 5.6% - 482,912 5.6% 5.1% 58,351 58,351 123,680 123,680 19,124 791,681 $1.94 UNIVERSITY EAST PC 1,210,223 95,317 7.9% - 95,317 7.9% 8.0% 1,940 1,940 - - - - $1.41 CC 2,946,813 327,317 11.1% - 327,317 11.1% 10.3% (22,469) (22,469) - - - - $1.20 NC 2,069,675 195,851 9.5% 119,650 315,501 15.2% 13.2% (38,652) (38,652) - - - - $1.60 SC 2,954,416 429,567 14.5% - 429,567 14.5% 14.9% (22,621) (22,621) (38,714) (38,714) 19,124 129,588 $1.10 Total 9,181,127 1,048,052 11.4% 119,650 1,167,702 12.7% 12.2% (81,802) (81,802) (38,714) (38,714) 19,124 129,588 $1.25 WEST CENTRAL PC 1,138,224 84,556 7.4% - 84,556 7.4% 5.9% (17,499) (17,499) - - - - $1.40 CC 1,673,939 132,506 7.9% - 132,506 7.9% 9.6% 28,667 28,667 - - - - $1.25 NC 1,777,642 79,659 4.5% 47,716 127,375 7.2% 7.4% 1,553 1,553 - - - - $1.22 SC 2,249,405 103,787 4.6% - 103,787 4.6% 5.1% 86,043 86,043 80,000 80,000 40,114 32,450 $1.31 Total 6,839,210 400,508 5.9% 47,716 448,224 6.6% 6.9% 98,764 98,764 80,000 80,000 40,114 32,450 $1.29 MARKET TOTAL PC 10,134,151 643,891 6.4% - 643,891 6.4% 5.8% (55,492) (55,492) - - - - $1.53 CC 19,242,413 1,359,447 7.1% 129,584 1,489,031 7.7% 7.3% 124,022 124,022 168,300 168,300 250,000 407,250 $1.59 NC 16,777,202 1,291,008 7.7% 347,322 1,638,330 9.8% 9.0% 105,853 105,853 134,880 134,880 585,909 262,276 $1.41 SC 15,174,295 1,454,856 9.6% 18,690 1,473,546 9.7% 9.9% 89,535 89,535 70,086 70,086 136,452 701,415 $1.33 Total 61,328,061 4,749,202 7.7% 495,596 5,244,798 8.6% 8.2% 263,918 263,918 373,266 373,266 972,361 1,370,941 $1.45

QUARTERLY COMPARISON AND TOTALS

Q1-19 61,328,061 4,749,202 7.7% 495,596 5,244,798 8.6% 8.2% 263,918 263,918 373,266 373,266 972,361 1,370,941 $1.45 Q4-18 60,954,795 4,639,854 7.6% 376,165 5,016,019 8.2% 8.8% 283,177 569,929 0 227,637 1,325,103 1,296,012 $1.38 Q3-18 60,954,795 4,923,031 8.1% 427,835 5,350,866 8.8% 8.9% 137,573 286,752 184,000 227,637 866,713 1,507,913 $1.36 Q2-18 60,770,795 4,876,604 8.0% 502,322 5,378,926 8.9% 9.1% 174,982 149,179 25,400 43,637 445,680 2,073,604 $1.38 Q1-18 60,745,395 5,026,186 8.3% 502,607 5,528,793 9.1% 9.1% (25,803) (25,803) 18,237 18,237 270,800 1,947,327 $1.37

PC = Power Center CC = Community Center NC = Neighborhood Center SC = Strip Center

The information contained in this report was provided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability.

As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports.

26 Las Vegas Research & Forecast Report | Q1 2019 | Retail | Colliers International Research & Forecast Report LAS VEGAS | MULTIFAMILY Q1 2019

Demand Strong, Supply Stronger

>> Multifamily inventory expanded by 3,429 units in 2018 Economic Indicators >> New completions drove vacancy rates higher by year’s end

>> Rental rates continued to increase TG TRT R Median Price Median Price Mortgage Rate

According to statistics provided by REIS, multifamily vacancy in Southern Nevada increased to 4.0 percent in the fourth quarter +0.4 Vacancy of 2018 (the most recent quarter of available data). +6.5% was 0.9 points higher than one year ago. Quarter-over-quarter, +13.2% Points vacancy in Class A properties increased by 0.4 points to 5.0 percent and vacancy in Class B/C properties remained steady at 2.9 percent. Market Indicators Unemployment in the Las Vegas-Paradise MSA stood at 4.7 Relative to prior period Q4 2018 Q1 2019* percent in January 2019, down from 5.4 percent in January 2018. VACANCY From January 2018 to January 2019, total employment in Southern NET ABSORPTION Nevada increased by 30,700 jobs, a 3.0 percent increase. The majority of the Valley’s new jobs were in professional and business COMPLETIONS services (7,300 jobs), construction (6,800 jobs) and leisure and RENTAL RATE hospitality (6,000 jobs). *Projected

Historical Vacancy Rates and Rental Rates Summary Statistics Las Vegas Market Q4-17 Q3-18 Q4-18

Vacancy Rate 3.0% 3.4% 4.0%

Rent (Per Unit) $1,001 $1,055 $1,097

Net Absorption (Units) 751 664 492

New Completions (Units) 497 1,034 844

Overall Asking Rents Per Unit Per Month Q4-17 Q3-18 Q4-18

Class A $1,155 $1,220 $1,274

Class B/C $845 $878 $908 “We think demand will continue to be strong for multifamily in 2019, but rental rates may have to be moderated to keep vacancy rates from rising higher.”

Photo from Southern Nevada posted 2,158 units of net absorption in 2018 Historical Net Absorption vs. according to REIS. This was up from 1,416 units of net absorption Completions in 2017. All of 2018’s positive net absorption, 2,308 units, was in Class A properties, while Class B/C properties had negative 150 units of net absorption for the year. Demographic trends suggest that rental households will expand by 4,782 units per year for the next five years, with most of that expansion occurring in the Northwest/ Southwest and Henderson/Green Valley submarkets.

Seven of the Valley’s eight submarkets had positive net absorption in 2018, with the highest net absorption, 891 units, occurring in the Northwest/Southwest submarket. Net absorption was negative 26 units in the Northeast submarket in 2018.

According to REIS, 3,429 units of multifamily were completed in 2018, with 1,676 units completed in the Northwest/Southwest submarket, 914 units completed in the Henderson/Green Valley submarket, 295 Sales (Units) vs. units completed in the West Central submarket, 283 units completed Price Per Unit in the Downtown submarket and 261 units completed in the North Las Vegas submarket. Among the larger projects completed in 2018

SCHEDULED COMPLETION SUBMARKET UNITS

1ST QUARTER 2019 1,248 Echo 1055 University 220 Elysian @ Flamingo Northwest/Southwest 360 Empire Apartments Henderson/GV 536 Revel Las Vegas Northwest/Southwest 132 2ND QUARTER 2019 621 Kaktus Life Henderson/GV 210 The Residence at Seven Hills Henderson/GV 286 University Gateway University 125 3RD QUARTER 2019 120 Casabella Apartments East Las Vegas 120 4TH QUARTER 2019 822 ASI Veterans Supportive Housing East Las Vegas 50 Flamingo Pines Northwest/Southwest 66 Gilespie & Bruner Henderson/GV 344 Trend! Apartments Henderson/GV 362 2020 1,333 Elysian @ Hughes Center University 375 Fort Apache Apartments Northwest/Southwest 160 Summerlin Apartments Northwest/Southwest 267 Union Village Apartments I Henderson/GV 275 Union Village Apartments II Henderson/GV 256

28 Las Vegas Research & Forecast Report | Q1 2019 | Multifamily | Colliers International Demographics Median Average Submarket Estimated Renter Household Household Proj. Annual Growth Rental Households (2019) Occupied (2019) Income 2019) Size (2018) Households (2019-2024)

Downtown 65,700 61% $33,900 2.8 406

East Las Vegas 68,600 43% $45,800 2.7 366

Henderson/Green Valley 186,400 37% $68,500 2.6 1,071

North Las Vegas 139,400 35% $60,600 3.1 765

Northeast 51,600 49% $42,800 3.4 343

Northwest/Southwest 178,900 33% $75,200 2.7 986

University 36,700 77% $35,800 2.3 273

West Central 87,800 54% $50,800 2.4 572

TOTAL 815,100 43% $58,300 2.7 4,782

Source: Claritas

were Castile Apartments & Senior Living, Dune Luxury Apartments, unit. The average cap rate in 2018 was 5.4 percent. While multifamily The Gallery and The Abode-Red Rock. At year’s end, an additional sales (in terms of units) have decreased each year since 2016, the 4,028 units were under construction and 5,094 units were planned average price per unit has been increasing and the average cap rate to begin construction within the next twelve months. Units currently has remained very stable. Total sales volume in 2018 was higher under construction represent a 2.7 percent increase to inventory. than in 2016 or 2017, so we are selling fewer units, but it would be foolish to suggest that the multifamily investment marker in The average asking rent for a multifamily unit was $1,097 per unit Southern Nevada is in trouble. at the end of 2018. Asking rents increased by 9.2 percent in 2018, keeping pace with home prices. Class A properties had 9.2 percent Multifamily is part of the residential spectrum, along with new annual rent growth to $1,274 per unit. Class B/C properties had home sales, existing home sales and single-family home rentals. 6.7 percent annual rent growth to $861 per unit. On a submarket All sectors of the residential market experienced sharp increases basis, the highest annual rent growth in 2018 was 14.5 percent in sales prices and rents in 2018. The rate of increases in prices in the West Central submarket, followed by 9.2 percent growth in and rents is troubling for people trying to find an affordable place the Northwest/Southwest submarket. No submarket showed a to live, and the increase in vacancy rates for both class A and class decrease in the average asking rent. B/C would seem to bear this out. We think demand will continue to be strong for multifamily in 2019, but rental rates may have to be A total of 18,466 units of multifamily sold in 2018, with total sales moderated to keep vacancy rates from rising higher. volume of $2.43 billion. The average sales price was $131,522 per

Sales Data 2014 2015 2016 2017 2018

Units Sold 14,019 15,408 22,074 19,633 18,466

Sales Volume $771 BB $2,176 BB $1,943 BB $2,429 BB

Average Price/Unit $73,627 $71,836 $96,720 $105,318 $131,522

Cap Rate 6.0% 7.3% 5.5% 5.6% 5.4%

29 Las Vegas Research & Forecast Report | Q1 2019 | Multifamily | Colliers International 215 Significant Multifamily Sales Activity

La Ventana Apartments 256 Units - $34,500,000 $134,800/Unit NORTH LAS VEGAS November 2018 Year Built - 1989 NORTHEAST 95 15

Cornerstone Crossing 544 Units - $49,750,000 $91,500/Unit October 2018 DOWNTOWN Year Built - 1984

95 Evergreen Apartment Homes EAST 313 Units - $29,800,000 $95,200/Unit WEST CENTRAL November 2018 NORTHWEST UNIVERSITY Year Built - 1979 SOUTHWEST

215 Lotus Apartments 295 Units - $77,000,000 HENDERSON $261,000/Unit GREEN VALLEY November 2018 Year Built - 2018

Black Mountain Villas 296 Units - $64,100,000 $216,600/Unit September 2018 Year Built - 2006

Sales Activity Continued

Property Name Sale Date Units Price Price/Unit Year Built

Sequoia Meadows Apartments Oct 2018 136 $22,250,000 $163,600 1988 Evergreen Apartments Nov 2018 228 $20,425,000 $89,600 1986 Retreat Apartments Sep 2018 120 $17,450,000 $145,400 1996 Capistrano Pines Oct 2018 184 $17,020,000 $92,500 1999 Swenson Apartments Oct 2018 74 $4,350,000 $58,800 1972

Source: Real Capital Analytics

30 Las Vegas Research & Forecast Report | Q1 2019 | Multifamily | Colliers International Market Comparisons - Las Vegas

Multifamily Market

TOTAL CURRENT PRIOR QTR UNDER PLANNED PRICE NET NET ABSORPTION CURRENT QTR YTD UNIT TOTAL SALES AVERAGE CLASS INVENTORY VACANCY VACANCY CONSTRUCTION CONSTRUCTION PER ABSORPTION YTD UNITS COMPLETIONS COMPLETIONS UNITS RENTAL RATE UNITS RATE RATE UNITS UNITS UNIT

DOWNTOWN

A 3,056 4.9% 5.6% 20 187 - 283 - 195 - n/a $1,188

B/C 13,394 2.2% 2.2% (3) (48) - - - - 860 $114,535 $815

Total 16,450 2.7% 2.9% 17 139 - 283 - 195 860 $114,535 $886

EAST LAS VEGAS

A 6,381 1.8% 1.4% (28) 15 - - 120 - - n/a $1,023

B/C 9,347 2.6% 2.9% 29 16 - - - - - n/a $830

Total 15,728 2.3% 2.3% 1 31 - - 120 - - n/a $909

HENDERSON/GREEN VALLEY

A 22,640 5.0% 4.3% 132 663 288 914 2,544 1,217 - n/a $1,372

B/C 8,068 3.2% 3.1% (9) 24 - - - - 480 $169,000 $1,156

Total 30,708 4.5% 4.0% 123 687 288 914 2,544 1,217 480 $169,000 $1,313

NORTH LAS VEGAS

A 13,253 3.3% 2.4% 143 205 261 261 - 1,156 - n/a $1,123

B/C 9,632 1.7% 1.9% 20 47 - - - 116 484 $113,481 $902

Total 22,885 2.6% 2.2% 163 252 261 261 - 1,272 484 $113,481 $1,029

NORTHEAST

A 2,172 4.5% 4.5% ------n/a $843

B/C 6,643 3.3% 3.6% 18 (26) - - - - - n/a $821

Total 8,815 3.6% 3.8% 18 (26) - - - - - n/a $827

NORTHWEST/SOUTHWEST

A 21,210 7.2% 7.5% 66 1,012 - 1,676 919 1,768 220 $281,818 $1,450

B/C 5,452 3.9% 2.8% (64) (121) - - - - - n/a $1,280

Total 26,662 6.5% 6.5% 2 891 - 1,676 919 1,768 220 n/a $1,413

UNIVERSITY

A 2,180 0.8% 1.3% 12 20 - - 720 - - n/a $977

B/C 12,321 4.1% 4.3% 29 24 - - - - 120 $145,417 $803

Total 14,501 3.6% 3.9% 41 44 - - 720 - 120 $145,417 $828

WEST CENTRAL

A 6,441 5.8% 3.8% 158 206 295 295 - 758 295 $261,017 $1,199

B/C 6,860 2.3% 1.9% (31) (66) - - - - 775 $132,968 $895

Total 13,301 4.0% 2.8% 127 140 295 295 - 758 1,070 $168,271 $1,041

MARKET TOTAL

A 77,333 5.0% 4.6% 503 2,308 844 3,429 4,303 5,094 515 $269,903 $1,274

B/C 71,717 2.9% 2.9% (11) (150) - - - 116 2,719 $130,579 $908

Total 149,050 4.0% 3.7% 492 2,158 844 3,429 4,303 5,210 3,234 $152,766 $1,097

QUARTERLY COMPARISON AND TOTALS

Q4-18 149,050 4.0% 3.3% 492 2,158 844 3,431 4,303 5,210 3,234 $152,766 $1,097

Q3-18 148,206 3.7% 3.4% 499 1,666 1,034 2,587 3,423 6,329 6,877 $114,791 $1,081

Q2-18 148,206 3.4% 3.2% 751 1,168 1,074 1,553 4,975 5,717 4,004 $136,252 $1,033

Q1-18 147,976 3.2% 3.1% 417 417 479 479 5,069 4,279 5,373 $124,345 $1,017

Q4-17 147,497 3.1% 3.3% 11 1,416 497 2,338 6,797 5,279 6,485 $87,726 $1,001

The information contained in this report was provided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability. As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports.

31 Las Vegas Research & Forecast Report | Q1 2019 | Multifamily | Colliers International Research & Forecast Report LAS VEGAS | MEDICAL OFFICE Q1 2019

Medical Office Market Slows

>> Vacancy decreased to 11.9 percent in the first quarter of 2019 >> Net absorption was positive, but not as strong as last quarter Economic Indicators >> The average asking rental rate increased to $2.30 psf FSG TCR TCR C Employment Spending SF/Job

Demand for medical office space in Southern Nevada remained -2.9 in growth mode in the first quarter of 2019, with net absorption 0.0% of 44,125 square feet. Medical office vacancy decreased to 11.9 +5.4% Q1 percent, the lowest level of vacancy since the fourth quarter of 2010, 2019 nearly one decade ago. The average asking rental rate was $2.30 per square foot (psf) on a full service gross (FSG) basis, $0.10 psf higher than one year ago. Market Indicators Relative to prior period Q1 2018 Q2 2019*

According to the Nevada Department of Employment, Training and VACANCY Rehabilitation, Southern Nevada’s medical office job market added NET ABSORPTION 5,100 jobs between January 2018 and January 2019. Over this period COMPLETIONS

RENTAL RATE

Historical Vacancy Rates and Rental Rates *Projected

Summary Statistics Las Vegas Market Q1-18 Q4-18 Q1-19

Vacancy Rate 13.4% 12.1% 11.9%

Asking Rent (PSF, FSG) $2.20 $2.24 $2.30

Net Absorption (SF) 108,228 109,004 44,125

New Completions (SF) 60,500 118,302 28,900

Overall Asking Rents Per Square Foot Q1-18 Q4-18 Q1-19

Class A $2.75 $2.72 $2.71

Class B $2.18 $2.22 $2.25

“We think the medical office market will continue to grow in 2019, but at a Class C $1.85 $1.76 $1.96 slower pace than last year.” Southern Nevada added 2,600 jobs in the ambulatory healthcare Historical Net Absorption vs. sector and 800 jobs in the hospital sector. Unemployment in the Las Completions Vegas-Paradise MSA was 4.7 percent in January 2019, down from 5.4 percent in January 2018. From January 2018 to January 2019, total employment in Southern Nevada increased by 30,700 jobs, a 3 percent increase.

The Nevada Department of Taxation reported that taxable spending on ambulatory health care services in Clark County over the past twelve months (January 2018 to December 2018, the most recent month of data available) totaled $87.7 million dollars, a 3.5 percent decrease in spending over the previous twelve months. Taxable sales in hospitals increased by 21.6 percent year-over-year to $36.4 million. Taxable sales in nursing and residential care facilities increased by 26.7 percent year-over-year to $2.2 million.

The second phase of the Atlas Professional Park was completed this quarter in the Henderson submarket. This project consisted of Healthcare Jobs vs. 28,900 square feet of Class C medical office space. There was only Occupancy Rate 43,777 square feet of medical office slated for completion during the remainder of 2019.

Vacancy in medical office space decreased to 11.9 percent in the first quarter of 2019, a decrease of 1.5 percentage points from one year ago. The highest vacancy rate this quarter was 17.4 percent in the Southwest submarket, followed by 14.2 percent in East Las Vegas. The lowest vacancy rate was 0 percent in the Airport submarket, which consists of only 38,000 square feet of medical office space. In larger submarkets, the lowest vacancy rate was 8.4 percent in West Central and 9.3 percent in Downtown. Vacancy this quarter decreased in the Airport submarket by 15.8 points (consisting of a single 6,000 square foot unit), Southwest by 2.4 points and East Las Vegas by 0.6 points. Vacancy increased in North Las Vegas by 1.5 points, Northwest by 0.4 points and Henderson by 0.3 points.

Southern Nevada’s medical office market had 44,125 square feet of net absorption in the first quarter of 2019. This was less than half the net absorption in the first quarter of 2018. Net absorption was strongest in the Southwest submarket at 22,709 square feet, followed by Henderson at 20,864 square feet and East Las Vegas at 8,745 square feet. Net absorption was negative in Northwest (negative 9,948 square feet) and North Las Vegas (negative 4,300 square feet).

33 Las Vegas Research & Forecast Report | Q1 2019 | Medical Office | Colliers International The weighted average asking rental rate for medical office space this quarter was $2.30 psf FSG. The lowest average asking rate for medical office space was in the Downtown and West Central submarket at $1.95 psf, followed by East Las Vegas at $2.03 psf. The Southwest and Northwest submarkets were Valley’s most expensive for medical office, with an average asking rate of $2.57 psf. Over the past quarter, asking rents increased in West Central by $0.21 psf, East Las Vegas by $0.14 psf and Henderson by $0.04 psf. Asking rents decreased in North Las Vegas by $0.02 psf.

In the first quarter of 2019, medical office investment sales volume was $48.6 million in three sales totaling 87,144 square feet at an average sales price of $558.14 psf.

After two years of significant improvement, Southern Nevada’s medical office market slowed down a bit in the first quarter of 2019. Demand was still positive and vacancy still decreased, but as much as in 2017 and 2018. This probably means that the pent-up demand for medical office space that drove performance in 2017 and 2018 has now largely been met, and the market is returning to a more normal level of demand. We think the medical office market will continue to grow in 2019, but at a slower pace than last year.

Medical Office Development Schedule PROJECT CLASS SUBMARKET SIZE PRE-LEASING Q2-2019 0 SF ------Q3-2019 43,777 SF 0% Cimarron Courtyard 4 B Southwest 43,777 SF 0% 2020 0 SF ------

“After two years of significant improvement, Southern Nevada’s medical office market slowed down a bit in the first quarter of 2019.”

Medical Office Investment Sales

2015 2016 2017 2018 2019 YTD

No. Sales 8 9 14 14 3

Square Footage 196,824 305,790 412,174 525,663 87,144

Sales Volume $41.3 MM $36.6 MM $89.8 MM $149.4 MM $48.6 MM

Average Price/SF $209.92 $126.14 $217.94 $284.15 $558.14

Average Cap Rate 7.7% 6.8% 7.0% 6.4% -

Average Sale Size (SF) 24,600 34,000 29,400 37,500 29,000

*Using the Consumer Price Index, All Urban Consumers, West Region, Class A Cities, 1982-1984 = 100

34 Las Vegas Research & Forecast Report | Q1 2019 | Medical Office | Colliers International 215 Significant Medical NORTH Office Sales Activity LAS VEGAS Dignity Health North Campus 54,090 SF - $27,117,213 $501.34/SF NORTHWEST 95 15 November 2018 Class B

Dignity Health West Flamingo Campus 4,994 SF - $23,029,500 EAST $627.99/SF LAS VEGAS December 2018 DOWN Class B SUMMERLIN TOWN WEST CENTRAL Dignity Health West Sahara Campus 4,974 SF - $23,029,295 95 $627.98/SF December 2018 Class B

AIRORT Dignity Health Blue Diamond Campus 215 4,957 SF - $19,163,453 $702.58/SF HENDERSON November 2018 SOUTHWEST Class B

7500 Smoke Ranch Road 4,994 SF - $2,580,000 $186.97/SF January 2019 Class C

Significant Lease Activity

Property Name Lease Date Lease Term Size Lease Rate Tenant Type

Nevada Cancer Institute Campus Nov 2018 144 months 21,824 SF $2.39 FSG Gaming Partell Medical Tower Oct 2018 120 months 11,603 SF $1.13 MG Healthcare MacFarlane Medical Center Oct 2018 60 months 4,365 SF $1.77 NNN Healthcare Cornerstone Office Campus Feb 2019 120 months 2,272 SF $2.15 NNN Administrative Stonecreek Spring Valley Medical Jan 2019 24 months 3,460 SF $1.47 NNN Physician

35 Las Vegas Research & Forecast Report | Q1 2019 | Medical Office | Colliers International Market Comparisons - Las Vegas Medical Office Market

VACANCY VACANCY NET NET WEIGHTED TOTAL DIRECT TOTAL COMPLETIONS UNDER PLANNED DIRECT SUBLEASE RATE RATE ABSORPTION ABSORPTION COMPLETIONS AVG ASKING CLASS INVENTORY VACANCY VACANT CURRENT CONSTRUCTION CONSTRUCTION VACANT SF VACANT SF CURRENT PRIOR CURRENT YTD YTD SF RENTAL SF RATE SF QTR SF SF SF QUARTER QUARTER QTR SF SF RATE

AIRPORT SUBMARKET A - - n/a - - n/a n/a ------$- B - - n/a - - n/a n/a ------$- C 38,000 - 0.0% - - 0.0% 15.8% 6,000 6,000 - - - - $- Total 38,000 - 0.0% - - 0.0% 15.8% 6,000 6,000 - - - - $- DOWNTOWN SUBMARKET A 65,000 - 0.0% - - 0.0% 0.0% ------$- B 228,761 34,883 15.2% - 34,883 15.2% 15.2% ------$1.95 C 80,797 - 0.0% - - 0.0% 0.0% ------$- Total 374,558 34,883 9.3% - 34,883 9.3% 9.3% ------$1.95 EAST LAS VEGAS SUBMARKET A - - n/a - - n/a n/a ------$- B 708,064 166,100 23.5% - 166,100 23.5% 26.5% (12,199) (12,199) - - - - $2.08 C 640,307 25,384 4.0% 9,055 34,439 5.4% 8.6% 20,944 20,944 - - - - $1.74 Total 1,348,371 191,484 14.2% 9,055 200,539 14.9% 18.0% 8,745 8,745 - - - - $2.03 HENDERSON SUBMARKET A 501,834 52,375 10.4% - 52,375 10.4% 10.4% 0 - - - - - $3.09 B 361,179 91,777 25.4% - 91,777 25.4% 25.4% 41 41 - - - - $1.94 C 734,578 59,325 8.1% - 59,325 8.1% 7.3% 20,823 20,823 28,900 28,900 - - $2.18 Total 1,597,591 203,477 12.7% - 203,477 12.7% 12.5% 20,864 20,864 28,900 28,900 - - $2.31 NORTH LAS VEGAS SUBMARKET A - - n/a - - n/a n/a ------$- B 98,011 24,265 24.8% - 24,265 24.8% 24.8% ------$1.93 C 180,242 12,563 7.0% 4,408 16,971 9.4% 7.0% (4,300) (4,300) - - - - $2.44 Total 278,253 36,828 13.2% 4,408 41,236 14.8% 13.3% (4,300) (4,300) - - - - $2.10 NORTHWEST SUBMARKET A 889,160 160,545 18.1% 1,811 162,356 18.3% 18.2% 994 994 - - - - $2.59 B 1,128,889 54,806 4.9% - 54,806 4.9% 3.9% (10,942) (10,942) - - - - $2.52 C 202,434 1,977 1.0% - 1,977 1.0% 1.0% ------$1.95 Total 2,220,483 217,328 9.8% 1,811 219,139 9.9% 9.3% (9,948) (9,948) - - - - $2.57 SOUTHWEST SUBMARKET A 115,300 19,614 17.0% - 19,614 17.0% 18.7% 1,957 1,957 - - - - $2.65 B 553,222 134,234 24.3% - 134,234 24.3% 27.4% 17,292 17,292 - - 43,777 - $2.61 C 281,220 11,728 4.2% - 11,728 4.2% 5.4% 3,460 3,460 - - - - $2.00 Total 949,742 165,576 17.4% - 165,576 17.4% 19.8% 22,709 22,709 - - 43,777 - $2.57 WEST CENTRAL SUBMARKET A - - n/a - - n/a n/a ------$- B 327,699 14,236 4.3% - 14,236 4.3% 3.2% (3,845) (3,845) - - - - $2.90 C 871,355 86,239 9.9% - 86,239 9.9% 10.3% 3,900 3,900 - - - - $1.79 Total 1,199,054 100,475 8.4% - 100,475 8.4% 8.4% 55 55 - - - - $1.95 MARKET TOTAL A 1,571,294 232,534 14.8% 1,811 234,345 14.9% 15.0% 2,951 2,951 - - - - $2.71 B 3,405,825 520,301 15.3% - 520,301 15.3% 16.0% (9,653) (9,653) - - 43,777 - $2.25 C 3,028,933 197,216 6.5% 13,463 210,679 7.0% 7.8% 50,827 50,827 28,900 28,900 - - $1.96 Total 8,006,052 950,051 11.9% 15,274 965,325 12.1% 12.7% 44,125 44,125 28,900 28,900 43,777 - $2.30 QUARTERLY COMPARISON AND TOTALS

Q1-19 8,006,052 950,051 11.9% 15,274 965,325 12.1% 12.7% 44,125 44,125 28,900 28,900 43,777 - $2.30 Q4-18 7,977,152 965,276 12.1% 46,936 1,012,212 12.7% 12.3% 109,004 350,040 118,302 222,579 28,900 208,096 $2.24

Q3-18 7,858,850 955,978 12.2% 13,463 969,441 12.3% 13.3% 102,368 241,036 43,777 104,277 - 252,427 $2.25

Q2-18 7,815,073 1,014,569 13.0% 20,931 1,035,500 13.3% 13.6% 30,440 138,668 - 60,500 67,777 167,527 $2.25

Q1-18 7,815,073 1,045,009 13.4% 18,685 1,063,694 13.6% 14.3% 108,228 108,228 60,500 60,500 43,777 212,527 $2.20

The information contained in this report was provided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability. As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports.

36 Las Vegas Research & Forecast Report | Q1 2019 | Medical Office | Colliers International Research & Forecast Report LAS VEGAS | HOTEL Q1 2019

Hospitality Sector Shows Improvement

>> Some of the downward trends of 2018 reversed in the first quarter of 2019 Economic Indicators >> Visitor volume, ADR and RevPAR improved year-over-year R CT ReR >> Gaming revenue decreased year-over-year Passengers Attendance +11.5 When the dust settled on 2018, Southern Nevada’s hospitality +9.1% market appeared to have peaked in 2017. Most measures of the hospitality market were down in 2018 compared to 2017, even though Jan +3.3% 2019 they were still an improvement over the ten years prior. We only have January data so far in 2019, but it looks as though the hospitality market could be getting back on track, with many metrics showing improvement over January 2018. Market Indicators Relative to prior period Q1 2019 Q2 2019* Visitor volume in January 2019 was 3.46 million people. This represented 2.1 percent year-over-year growth. Year-to-date growth Room Inventory in Southern Nevada was 1.7 percent growth in citywide occupancy, Room Occupancy

6.9 percent growth in the Average Daily Room Rate (ADR) and 9.1 Average Daily Rate percent growth in Revenue per Available Room (RevPAR). Gaming Revenue Per Available Room revenue was down 3.5 percent year-over-year in Clark County, down 4.1 percent year-over-year on the Las Vegas “Strip”, down 7.8 *Data Not Available percent in Downtown and down 9.7 percent on the Boulder Strip. Summary Statistics Revenue Per Available Room (RevPAR) Las Vegas Market Q1, 2018 Q4, 2018 Q1, 2019 Room Inventory 142,182 142,781 142,916

Room Occupancy 87.3% 86.5% 85.5%

Average Daily Rate $134.79 $130.17 $160.89

Revenue Per Available Room $117.54 $112.97 $137.56 In 2018, the leisure and hospitality sector had $11.8 billion taxable sales. Sales Volume This represented 4.9 percent year-over-year growth. These taxable sales included $849 million of taxable revenue in accommodations, $249 million in amusement, gambling and recreation, $91.6 million in performing arts and spectator sports and $10.5 billion in eating and drinking places. Employment in the leisure and hospitality sector increased by 6,000 jobs between January 2018 and January 2019.

Total room inventory in January 2019 increased to 148,186 units, more than the 146,715 units of inventory in January 2018. The 135 room Home2 Suites in the West Vegas submarket was completed this quarter. In properties with 100 or more rooms, inventory in the first quarter of 2019 was 142,916 units, compared to 142,182 units in the first quarter of 2018. Construction continued on the 3,400-unit Resorts World Las Vegas and 3,889-unit The Drew Las Vegas on the Las Vegas “Strip”. In total, there were 10,039 units of hospitality space Sales vs. Price Per Unit under construction or planned to begin construction within the next 12 months.

In addition to new property development, Southern Nevada was slated for $912 million in property remodels and renovations over the next two years, including renovations at the Palms Resort, SLS, the Stratosphere (renamed the Strat), South Point, Fremont Street Experience and the Venetian pool. New venues totaling $3.59 billion are slated for completion in the next two years, including the expansion of the Las Vegas Convention Center, the new Caesars Forum convention center, the expansion of the MGM Grand conference center, Las Vegas Ballpark in Summerlin, Las Vegas Stadium, which will host the NFL Las Vegas Raiders, Kind Heaven at the Linq, Madison Square Garden’s Sphere Arena and an expansion of the Showcase Mall on the Las Vegas “Strip”.

Market Health Data Point 2015 2016 2017 2018 2019

Visitor Volume (millions; Jan) 3.39 3.47 3.51 3.39 3.46

Room Occupancy (Jan) 81.7% 84.7% 85.7% 83.8% 85.5%

ADR (Jan) $136.02 $144.88 $150.21 $150.45 $160.89

RevPAR (Jan) $111.13 $122.71 $128.73 $126.08 $137.56

Convention Attendance 682.3 767.7 736.0 612.9 683.4 (thousands; Jan) Passengers McCarran Int’l 3.30 3.55 3.68 3.78 3.90 (millions; Jan) Gaming Revenue (Clark County; $838.2 $810.5 $926.2 $892.1 $860.8 millions; Jan)

Gaming Revenue (“Strip”; millions; Jan) $576.8 $532.3 $608.9 $554.8 $532.2

Data from Las Vegas Convention & Visitors Authority

38 Las Vegas Research & Forecast Report | Q1 2019 | Hospitality | Colliers International Southern Nevada saw no major hospitality sales in the first quarter of 2019. There were no hospitality sales in the first quarter of 2018 either, but sales picked up over the course of the year and should do so again this year. Two small properties did sell this quarter, a 59-unit Best Western Plus in the Summerlin submarket for $9.9 million and the 20-unit Knotty Pine Motel in the Downtown submarket for $800,000.

After a year that showed solid performance in the tourism sector, but failed to equal the two years previous, scrutiny of 2019’s tourism numbers is going to be intense. January numbers painted a hopeful picture, with improvement in several metrics compared to 2018. In all, Southern Nevada’s tourist numbers in January 2019 looked more like 2017’s highs than the dip experienced in 2018 and might signal a return to form. As new projects are completed over the next two years, we think the biggest tourism numbers are ahead of us.

Hospitality Sales*

Year Sales Volume Units Sold Price/Unit

2019 YTD $0 MM 0 n/a

2018 $1,355.6 MM 5,351 $253,000

2017 $917.4 MM 6,626 $138,000

2016 $1,221.8 MM 4,776 $254,000

2015 $466.2 MM 5,445 $86,000

2014 $2,001.3 MM 7,614 $263,000

2013 $57.8 MM 1,335 $43,000

2012 $159.8 MM 3,120 $51,000

* Only includes properties with 100 or more units, arm’s-length sales

Photo from

39 Las Vegas Research & Forecast Report | Q1 2019 | Hospitality | Colliers International Significant Hotel Sale Activity

215 SLS $190,000,000 NORTH 1,325 Units - $143,000/Unit NORTHWEST LAS VEGAS April 2018 Casino Hotel - Strip 95

15 Stratosphere Las Vegas $421,000,000 2,427 Units - $174,000/Unit October 2017 Casino Hotel - Strip DOWNTOWN SUMMERLIN WEST EAST CENTRAL LAS VEGAS RESORT Mandarin Oriental CORRIDOR $214,000,000 392 Units - $546,000/Unit 95 April 2018 THE Full Service - Strip “STRIP”

AIRPORT Westin-Lake Las Vegas 215 $195,500,000 $397,000/Unit HENDERSON September 2018 SOUTHWEST Full Service - Henderson SOUTH LAS VEGAS Hard Rock Hotel & Casino $500,000,000 1,506 Units - $332,000/Unit March 2018 Casino Hotel - Resort Corridor

Sale Activity Continued

Property Name Sale Date Units Price Price/Unit Submarket Property Type

Renaissance Las Vegas Apr 2018 548 $177,921,000 $325,000 Resort Corridor Full Service Arizona Charlie’s Casino Oct 2017 303 $53,000,000 $174,000 East Vegas Casino Hotel Siena Suites Nov 2018 600 $46,000,000 $77,000 East Vegas Limited Service Marriott TownePlace – Henderson May 2018 108 $36,000,000 $333,000 Henderson Limited Service Emerald Suites Aug 2018 359 $18,689,000 $52,000 Resort Corridor Limited Service

40 Las Vegas Research & Forecast Report | Q1 2019 | Hospitality | Colliers International Market Comparisons - Las Vegas Hospitality Market

TOTAL INVENTORY AVERAGE SALES PRICE COMPLETIONS CURRENT COMPLETIONS YTD FUTURE DEVELOPMENT TYPE TOTAL SALES (UNITS) TOTAL SALES VOLUME (UNITS) PER UNIT QUARTER (UNITS) (UNITS) (UNITS)

DOWNTOWN CAS 7,428 - $0 n/a - - 1,272 FS - - $0 n/a - - 406 LS 204 - $0 n/a - - - Total 7,632 - $0 n/a - - 1,678 LAS VEGAS “STRIP” CAS 80,185 - $0 n/a - - 7,180 FS 5,450 - $0 n/a - - - LS 2,567 - $0 n/a - - - Total 88,202 - $0 n/a - - 7,180

RESORT CORRIDOR CAS 10,407 - $0 n/a - - - FS 4,830 - $0 n/a - - 250 LS 5,682 - $0 n/a - - 250 Total 20,919 - $0 n/a - - 500 AIRPORT CAS - - $0 n/a - - - FS - - $0 n/a - - 211 LS 1,175 - $0 n/a - - 220 Total 1,175 - $0 n/a - - 431 EAST LAS VEGAS SUBMARKET CAS 1,704 - $0 n/a - - - FS - - $0 n/a - - - LS 3,058 - $0 n/a - - - Total 4,762 - $0 n/a - - - HENDERSON SUBMARKET CAS 2,035 - $0 n/a - - - FS 732 - $0 n/a - - - LS 1,465 - $0 n/a - - 100 Total 4,232 - $0 n/a - - 100 NORTH LAS VEGAS SUBMARKET CAS 988 - $0 n/a - - - FS - - $0 n/a - - - LS 1,405 - $0 n/a - - - Total 2,393 - $0 n/a - - - SOUTH LAS VEGAS SUBMARKET CAS 2,463 - $0 n/a - - - FS - - $0 n/a - - 150 LS 1,404 - $0 n/a - - - Total 3,867 - $0 n/a - - 150 SUMMERLIN SUBMARKET CAS 1,770 - $0 n/a - - - FS 123 - $0 n/a - - - LS 515 - $0 n/a - - - Total 2,408 - $0 n/a - - - WEST CENTRAL SUBMARKET CAS 3,425 - $0 n/a - - - FS 118 - $0 n/a - - - LS 3,783 - $0 n/a 135 135 - Total 7,326 - $0 n/a 135 135 - MARKET TOTAL CAS 110,405 - $0 n/a - - 8,452 FS 11,253 - $0 n/a - - 1,017 LS 21,258 - $0 n/a 135 135 570 Total 142,916 - $0 n/a 135 135 10,039

QUARTERLY COMPARISON AND TOTALS

Q1-19 142,916 - $0 n/a 135 135 10,039 Q4-18 142,781 1,093 $241,500,000 $220,952 33 362 12,984 Q3-18 142,748 751 $232,688,525 $309,838 0 329 13,166 Q2-18 142,748 3,507 $881,421,032 $251,332 0 329 13,166 Q1-18 142,748 - $0 n/a 329 329 12,770

The information contained in this report was provided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability. As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports.

41 Las Vegas Research & Forecast Report | Q1 2019 | Hospitality | Colliers International Research & Forecast Report LAS VEGAS | LAND Q1 2019

Land Sales Increase

>> The first quarter of 2019 hit a high in sales volume and a low in acres sold Economic Indicators >> High sales volume was driven by higher than average land prices CRC RT TR Forward Supply Permits Forward Supply >> Land sales were driven by commercial and residential land -15.2 -17.5 After a very strong year of land sales in 2018, Southern Nevada +21.3 got off to a good start in the first quarter of 2019. A total of 530 Percent Percent acres were sold with a sales volume of $353.7 million and an average Percent price of $15.33 per square foot. This was both the highest first quarter sales volume recorded in the past seven years, and the lowest first quarter number of acres sold in seven years. This means that Market Indicators sales volume was driven more by price than by a significant uptick Relative to prior period Q1 2019 Q2 2019* in demand for vacant land. Commercial land was the big seller in the NO. SALES first quarter, followed by residential land and finally industrial land. ACREAGE SOLD Occupancy in industrial buildings increased to 96.7 percent in the SALES VOLUME first quarter of 2019, driven (as it has been for two years) by demand PRICE PER SQUARE FOOT for warehouse/distribution space. A total of 1.3 million square feet of industrial space was completed on 66.4 acres this quarter. An additional 11.4 million square feet of industrial space was either under Land Sales Activity construction or planned to begin construction on 1,349 acres of land. In the first quarter of 2019, 48.2 acres of industrial land was sold with total sales volume of $13.3 million. The average sales price of industrial land was $6.34 psf, an increase of $0.95 psf from the first quarter of 2018.

Occupancy in commercial buildings increased to 90 percent this quarter, 1.3 points higher than one year ago. A total of 418,033 square feet of new commercial space was completed on 94.2 acres this quarter. An additional 3.24 million square feet of office and retail product is currently under construction or planned on 640 acres. Average hotel occupancy in the first month of 2019 was 85.5 percent, higher than in January of 2018. Over 10,000 new rooms were slated Commercial Land Sales Activity for development in Southern Nevada on 122 acres. In the first quarter of 2019, 272.7 acres of commercial land was sold with total sales volume of $258 million. The average sales price of commercial land was $21.72 psf, a $19.89 psf increase from the first quarter of 2018. The sales price of commercial land this quarter was bolstered by a major sale in the Resort Corridor.

Approximately 845 units of multifamily were completed in the first quarter of 2019 on 33.3 acres. There were 9,513 units of multifamily under construction or planned in Southern Nevada on 336 acres. Residential land sales in the first quarter of 2019 were 209 acres with sales volume of $82.4 million. The average sales price of residential land was $9.05 psf, an increase of $4.15 psf from the first quarter of 2018. Residential Land Sales Activity Depending on how you look at it, the land market started 2019 on either an up or down note. Sales volume was up, so investors were willing to pay well for the land they bought. This points to confidence in the future value of land in Southern Nevada. On the other hand, fewer acres were sold in the first quarter of 2019 than in the first quarter of any of the past seven years. Does this point to a lack of desirable land in the Valley? Given the sharp increase in the price per square foot of land seen in both the fourth quarter of 2018 and first quarter of 2019, a “desirable land” shortage may be forming. If so, it is happening at the same time that developers’ appetite for land is increasing, which could point not only to even higher prices moving forward, but ultimately to difficulty for developers in making their projects pencil over the next few years. Land Sales

Year Sales Volume Acres Sold Price/SF Market Health 2019 YTD $353.7 MM 530 $15.33 Data Point 2017 2018 2019 2018 $1,082.2 MM 4,197 $5.92 2017 $595.6 MM 2,135 $6.40 Commercial Building Occupancy (Q1) 88.5% 89.6% 90.0% 2016 $652.9 MM 4,029 $3.72 Industrial Building Occupancy (Q1) 95.7% 96.4% 96.7% 2015 $625.9 MM 2,302 $6.24 Hotel Occupancy (Jan) 85.7% 83.8% 85.5% 2014 $763.2 MM 2,761 $6.35 2013 $613.3 MM 2,636 $5.34 New Home Sales (Jan) 527 704 611 2012 $264.1 MM 1,374 $4.41 Commercial Forward Supply1 (SF) 4.10 MM 3.64 MM 3.24 MM

Industrial Forward Supply1 (SF) 8.50 MM 11.16 MM 11.35 MM

Hotel Forward Supply1 (Rooms) 10,439 13,097 10,039

Taxable Sales (Jan-Dec) $41.5 BB $44.3 BB N/A

Employment (Jan) 959,400 983,300 1,014,000

1 Includes projects that are under construction or planned

43 Las Vegas Research & Forecast Report | Q1 2019 | Land | Colliers International 215 Significant Land Sale Activity

Deer Springs & Riley NORTHWEST 59.1 Acres - $30,452,000 $11.83/SF NORTH 15 LAS VEGAS February 2019 95 Northwest - Commercial

SUMMERLIN

Koval & Rochelle 10.5 Acres - $25,000,000 DOWNTOWN $54.66/SF NORTHEAST February 2019 Resort Corridor - Commercial

WEST LAS VEGAS Harmon & Koval 60.0 Acres - $130,000,000 EAST $49.74/SF 95 LAS VEGAS February 2019 Resort Corridor - Commercial AIRORT

215 Buffalo & Sunset 10.8 Acres - $11,400,000 $24.28/SF SOUTHWEST January 2019 Southwest - Commercial

Sunset & Cimarron HENDERSON 5.0 Acres - $18,000,000 $83.14/SF December 2018 Southwest - Commercial

Land Sale Activity Continued

Property Name Sale Date Acres Price Price/SF Submarket Land Type

Chaparral & Dale Dec 2018 25.0 $9,500,000 $8.72 Henderson Residential 725 South Racetrack Road Jan 2019 7.8 $8,071,817 $23.76 Henderson Commercial 4950 North Rancho Drive Jan 2019 10.5 $5,250,000 $11.46 Northwest Commercial Hualapai & Gowan Dec 2018 7.5 $5,250,000 $16.01 Summerlin Residential Goldfield & Rome Dec 2018 14.8 $5,200,000 $8.08 North Las Vegas Residential

44 Las Vegas Research & Forecast Report | Q1 2019 | Land | Colliers International Market Comparisons - Las Vegas Land Market

AVERAGE SALES PRICE SUBMARKET SALES ACREAGE SOLD SALES VOLUME (PER SQUARE FOOT)

AIRPORT 6 23.03 $13,311,700 $13.27 Commercial 2 6.77 $4,650,000 $15.77 Industrial 1 3.53 $3,075,000 $20.00 Residential 3 12.73 $5,586,700 $10.07 APEX - 0.00 $0 N/A Commercial - 0.00 $0 n/a Industrial - 0.00 $0 n/a Residential - 0.00 $0 n/a DOWNTOWN - 0.00 $0 N/A Commercial - 0.00 $0 n/a Industrial - 0.00 $0 n/a Residential - 0.00 $0 n/a EAST LAS VEGAS 1 1.59 $525,000 $7.58 Commercial - 0.00 $0 n/a Industrial - 0.00 $0 n/a Residential 1 1.59 $525,000 $7.58 HENDERSON 11 57.18 $23,826,714 $9.57 Commercial 3 14.66 $11,170,214 $17.49 Industrial - 0.00 $0 n/a Residential 8 42.52 $12,656,500 $6.83 NORTH LAS VEGAS 11 82.18 $20,455,500 $5.71 Commercial 6 32.59 $9,651,500 $6.80 Industrial 2 23.79 $2,510,000 $2.42 Residential 3 25.80 $8,294,000 $7.38 NORTHEAST 3 18.07 $3,050,000 $3.87 Commercial - 0.00 $0 n/a Industrial 2 13.37 $2,450,000 $4.21 Residential 1 4.70 $600,000 $2.93 NORTHWEST 7 88.42 $41,812,000 $10.86 Commercial 4 80.64 $40,552,000 $11.54 Industrial - 0.00 $0 n/a Residential 3 7.78 $1,260,000 $3.72 RESORT CORRIDOR 2 70.50 $155,000,000 $50.47 Commercial 2 70.50 $155,000,000 $50.47 Industrial - 0.00 $0 n/a Residential - 0.00 $0 n/a SOUTHWEST 35 148.86 $82,648,909 $12.75 Commercial 13 57.87 $34,100,409 $13.53 Industrial 2 7.49 $5,270,000 $16.15 Residential 20 83.50 $43,278,500 $11.90 SUMMERLIN 4 30.33 $10,179,000 $7.70 Commercial - 0.00 $0 n/a Industrial - 0.00 $0 n/a Residential 4 30.33 $10,179,000 $7.70 WEST LAS VEGAS 1 9.63 $2,900,000 $6.91 Commercial 1 9.63 $2,900,000 $6.91 Industrial - 0.00 $0 n/a Residential - 0.00 $0 n/a SUBTYPE TOTALS Commercial Total 31 272.66 $258,024,123 $21.72 Industrial Total 7 48.18 $13,305,000 $6.34 Residential Total 43 208.95 $82,379,700 $9.05 MARKET TOTAL 81 529.79 $353,708,823 $15.33

QUARTERLY COMPARISON AND TOTALS

Q1-19 81 529.79 $353,708,823 $15.33 Q4-18 79 438.22 $258,859,042 $13.56 Q3-18 84 1,327.30 $274,877,124 $4.75 Q2-18 135 875.87 $311,116,250 $8.15 Q1-18 89 1,552.60 $211,449,733 $3.13 The information contained in this report was provided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability. As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports.

45 Las Vegas Research & Forecast Report | Q1 2019 | Land | Colliers International COLLIERS INTERNATIONAL | LAS VEGAS 3960 Howard Hughes Parkway countries Suite 150 68 Las Vegas, Nevada 89169 | USA +1 702 735 5700 $3.3 www.colliers.com/lasvegas billion in annual revenue* MARKET CONTACT: Mike Mixer Executive Managing Director | Las Vegas 2.0 +1 702 735 5700 billion square feet [email protected] under management John Stater Research & GIS Manager | Las Vegas 17,000 +1 702 836 3781 [email protected] professionals and staff $127 billion in total transaction value

*All statistics are for 2018, are in U.S. dollars and include affiliates.

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Copyright © 2019 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.