Research & Forecast Report

CHARLOTTE Accelerating success. Q3 2016 | Multifamily

Source: AXIOMetrics. RCA, CoStar

Market Survey Results and Forecasts Sequential Month Annual 4Q15 1Q16 2Q16 3Q16 Sep-16 2014 2015 2016F 2017F 2018F 2019F 2020F Effective Rent Per Unit $993 $1,000 $1,027 $1,041 $1,045 $929 $979 $1,026 $1,056 $1,091 $1,136 $1,171 Per Sq. Ft $1.03 $1.04 $1.06 $1.08 $1.08 $0.96 $1.01 $1.06 $1.09 $1.13 $1.18 $1.21 Effective Rent Growth - Annually 5.5% 6.0% 4.8% 4.0% 3.5% 3.4% 5.4% 4.8% 3.0% 3.2% 4.1% 3.1%

Effective Rent Growth - Quarterly -0.8% 0.7% 2.7% 1.4% Occupancy Rate 95.6% 95.2% 95.9% 95.8% 95.7% 94.8% 95.4% 95.6% 94.8% 95.2% 95.6% 95.0% Occupancy Change - Annually 0.7% 0.5% 0.5% 0.0% -0.1% 0.1% 0.6% 0.2% -0.8% 0.3% 0.4% -0.6% Occupancy Change - Quarterly -0.2% -0.3% 0.7% -0.1% Economic Concessions Concession Value $-4.56 $-5.71 $-3.98 $-3.92 $-4.50 $-5.15 $-4.32 As a % of Asking Rent -0.5% -0.6% -0.4% -0.4% -0.4% -0.6% -0.4% SUPPLY AND DEMAND According to the Bureau of Labor Statistics, job growth in Charlotte-Concord-Gastonia, NC-SC Metro Area was 2.6% in August 2016, reflecting 28,600 jobs added during a 12-month period. The metro job growth figure was above the national number of 1.7%.

Axiometrics forecasts Charlotte-Concord-Gastonia, NC-SC Metro Area’s job growth to be 2.2% in 2017, with 25,291 jobs added. Job growth is expected to average 2.0% from 2018 to 2020, with an average of 23,458 jobs added each year.

On the supply side, permits for 7,023 multifamily units were issued in the 12 months ending in August 2016, up 162 units from the prior year’s sum. In terms of total residential housing, 19,712 units were permitted in the 12 months ending August 2016, an increase of 922 units from the prior year’s total.

Market Employment and Permitting Annual August-16 Annual Forecast 2013 2014 2015 Market National 2016F 2017F 2018F 2019F 2020F Employment (000s) 1,028.6 1,065.6 1,104.6 1,133.1 144,424.0 1,131.5 1,156.8 1,177.7 1,201.2 1,227.1 Job Gain (000s) 25.3 37.1 38.9 28.6 2,451.0 26.9 25.3 21.0 23.5 25.9 Job Growth (%) 2.5% 3.6% 3.7% 2.6% 1.7% 2.4% 2.2% 1.8% 2.0% 2.2% Total Residential Permitting 16,139 17,812 18,790 17,404 1,056,185 18,373 20,564 22,045 24,750 21,085 Relative Change 23.1% 10.4% 5.5% 1.9% 2.3% -2.2% 11.9% 7.2% 12.3% -14.8% Single Family Units Permitted 10,378 11,157 11,742 11,352 658,713 Relative Change 37.3% 7.5% 5.2% 8.3% 9.1% Multifamily Units Permitted 5,590 6,510 6,861 6,022 368,231 Relative Change 4.2% 16.5% 5.4% -5.4% -8.2% Multifamily as a % of Total 34.6% 36.5% 36.5% 34.6% 34.9% Demand/Supply Ratio Job Gain / Total Residential Units Permitted 1.9 2.3 2.2 1.7 2.4 1.4 1.4 1.0 1.1 1.0 Job Gain / Single Family Units Permitted 3.3 3.6 3.5 2.7 4.1 Job Gain / Multifamily Units Permitted 4.7 6.6 6.0 4.5 6.1

Multifamily Absorption and Supply Annual 3Q16 Annual Forecast 2013 2014 2015 Market National 2016F 2017F 2018F 2019F 2020F Total Units Absorbed 4,502 6,169 6,950 8,787 274,353 9,159 5,367 5,759 4,024 3,409 New Supply 4,825 5,772 6,249 9,542 367,859 9,904 7,138 4,718 3,826 5,196 Inventory Growth 2.3% 3.4% 4.1% 4.8% 1.4% 5.4% 4.8% 3.1% 2.3% 2.4%

COLLIERS INTERNATIONAL www.ColliersMultifamilyEast.com MULTIFAMILY ADVISORY GROUP P. 2 IDENTIFIED SUPPLY As of October 9, 2016, Axiometrics has identified 8,903 apartment units scheduled for delivery in 2016, of which, 7,083 have been delivered. As a comparison, there were 5,465 apartment units delivered in 2015. Properties delivered to the market in the last 12 months have achieved an average asking rent of $1,416 per unit, or $1.53 per square foot. Effective rent has averaged $1,346, or $1.46 per square foot, resulting in an average concession value of $-69.82. As a comparison, existing properties in the market had an average asking rent of $1,045 per unit ($1.08 per square foot) and an average effective rent of $1,041 per unit, or $1.08 per square foot, in 3Q16. Concessions for existing properties averaged $-3.92.

Submarket Delivery Schedule Pipeline Delivery Schedule Pipeline Lease Up Trend Units Absorbed Asking Rent Effective Rent Top Submarkets 2014 2015 2016 Total Totals PPM Per Unit PSF Per Unit PSF Fairview North 327 507 1,080 1,914 414 7 $1,661 $1.94 $1,541 $1.80 Harris Blvd/Mallard Creek Church Rd 497 414 968 1,879 681 17 $1,162 $1.16 $1,143 $1.14 Northwest Charlotte 743 499 986 2,228 421 23 $1,196 $1.21 $1,117 $1.13 Rock Hill 166 792 1,197 2,155 499 12 $1,173 $1.05 $1,158 $1.04 West - Charlotte Airport 828 1,084 899 2,811 646 16 $1,490 $1.75 $1,406 $1.65 Other 3,137 2,169 3,773 9,079 2,741 12 $1,460 $1.59 $1,383 $1.51 Charlotte-Concord-Gastonia, NC-SC 5,698 5,465 8,903 20,066 5,402 12 $1,420 $1.54 $1,348 $1.46 *Based on 2016 deliveries *Trend based on a trailing 12 month period

“We were extremely pleased with the East Region team and its ability to attract an incredible amount of interest in our 3 assets. The number of offers received and the end results exceeded our expectations. They have a talented group who was a pleasure to work with. Their performance stands out against any of the groups we work with nationally.” Nels Billsten, Vice President | CORE Realty Holding Management

COLLIERS INTERNATIONAL www.ColliersMultifamilyEast.com MULTIFAMILY ADVISORY GROUP P. 3 PIPELINE MAP GREATER CHARLOTTE 47

50 17 8 39

93 1

65 64 85 25 4 67 90 34 69 27

Downtown Charlotte

88 9 35 52 75 42 15 18 55 80 23 11 59 66 60 13 96 72 16 41

38 30

97 82 Key 51 56 95 28 92 Lease-Up 29 63 87 6 5 31 53 Under Construction

Proposed DOWNTOWN CHARLOTTE

32 24

74

84 26 79 36 7 10 43 68 21 40 44 61 89

57 73 20 33 54 22 77 49 37 94 76 91

46 14 12 3 58 83 70 45 19 71 62 2 48 86 81

78

COLLIERS INTERNATIONAL www.ColliersMultifamilyEast.com MULTIFAMILY ADVISORY GROUP P. 4 PIPELINE DETAIL

# Name Status Owner Address Market Units Lease Up 1 Ardmore King's Grant Lease Up Ardmore Residential 9015 Kings Grant Dr Mallard Creek-Withrow 294 Dow 2 Berkshire Dilworth Lease Up Berkshire Group 1351 E Morehead St Dilworth 296 3 Camden Gallery Lease Up Camden Property Trust 1750 Camden Rd Wilmore 323 4 University House BLVD Lease Up Canada Pension Plan Investment 9825 University City Blvd Harris-Houston 300 Board 5 Apartments at Brayden Lease Up Charter Properties, Inc. 1027 Aubrey Ln Outlying York County 270 6 Solis Waverly Lease Up Childress Klein Properties 6101 Ardrey Kell Rd Providence Estates East 267 7 Cedar Flats Lease Up Delray Ventures, LLC 225 N Cedar St Fourth Ward 82 8 Legacy Concord - Phase I Lease Up Goldberg Companies, Inc. 5020 Avent Dr NW Cabarrus Country Club 187 9 M Station Lease Up Goode Properties 6215 Forest Way Dr East Forest 260 10 SkyHouse Uptown Lease Up Grubb Properties 640 N Church St Fourth Ward 336 11 Allure Lease Up JLB Partners, LP 5720 Carnegie Blvd Barclay Downs 350 12 Midtown 205 Lease Up Lennar Multifamily Investors LLC 205 S Kings Dr Cherry 261 13 The Lofts at Charleston Row - Lease Up New Forum, Inc. 2025 Ayrsley Town Blvd Outer South Charlotte 132 Phase II 14 The Village at Commonwealth Lease Up Northwood Investors LLC 2426 McClintock Rd Commonwealth 196 Phase II 15 5115 Park Place Lease Up Pollack Shores Real Estate Group 5115 Park Rd Madison Park 273 16 Fountains Matthews Lease Up Proffitt Dixon Partners 10624 Parrish St Outer East Charlotte 258 17 Silver Collection at The Park Lease Up Silver Companies 13816 Boren St Outer Huntersville/Cornel 120 18 Encore Southpark Lease Up Simpson Property Group 6205 Morrison Blvd Barclay Downs 280 19 Solis Dilworth Lease Up Terwilliger Pappas 1010 Kenilworth Ave Dilworth 183 20 Loft 135 Lease Up The NRP Group, LLC - Property 135 W Morehead St Third Ward 298 Management 21 Circa Uptown Lease Up The Prudential Insurance 360 S Graham St Third Ward 243 Company of America 22 One 305 Central Lease Up TriBridge Residential 1305 Central Ave Plaza Midwood 247 23 Crescent SouthPark Lease Up UBS Realty Investors LLC 5725 Carnegie Blvd Barclay Downs 321 24 The Mercury NoDa Lease Up Woodfield Investments 3310 N Davidson St North Charlotte 241 25 Woodfield Northlake Lease Up Woodfield Investments 8524 Mason Andrew Way Northlake 310 Units 6,328

Under Construction 26 The Lofts at NC Music Factory Under Construction ARK Group 630 Music Factory Blvd Lockwood 205 27 The Residence at Tailrace Under Construction Arnold Companies 1001 Marina Village Dr Outlying Gaston County 192 Marina 28 Beckett Farms Under Construction Beckett Farms Apartments LLC 645 Gold Hill Rd Outlying York County 280 29 Millcrest Park - Phase II Under Construction Blue Ridge Companies 208 Sedgewick Dr Outlying York County 100 30 Copus 1 Indian Trail Under Construction Bonterra Builders, LLC 1021 Glenn Valley Ln Union County 204 31 Solis Waverly Phase II Under Construction Childress Klein Properties 6101 Ardrey Kell Rd Providence Estates East 108 32 Crescent NoDa Under Construction Crescent Communities, LLC 424 E 36th St North Charlotte 344 33 Crescent Under Construction Crescent Communities, LLC 400 E Stonewall St Second Ward 459 34 Sovereign at Belgate Under Construction Davis Development 8075 Ikea Blvd Mineral Springs 266 35 Solis Berewick Under Construction Dixie River Land Company, LLC 4913 Dixie River Rd Dixie-Berryhill 275 36 1010 West Trade Under Construction Dominion Realty Partners, LLC W Trade & N Sycamore St Fourth Ward 297 37 Midwood Station Under Construction DPJ Residential 2007 Central Ave Plaza Midwood 97 38 District South Under Construction Flournoy Companies 12600 District South Dr Ballantyne 397 39 Legacy Concord - Phase II Under Construction Goldberg Companies, Inc. 5020 Avent Dr NW Cabarrus Country Club 161 40 Ascent Uptown Under Construction Greystar Real Estate Partners 225 N Poplar St Fourth Ward 300 41 Revere at Lake Wylie - Phase II Under Construction Gross Builders 1001 Wylie Springs Cir Outlying York County 228 42 Aspire SouthPark Under Construction Grubb Properties 345 Sharon Township Ln Myers Park 367 43 SkyHouse Uptown - Tower II Under Construction Grubb Properties 601 N Tryon St Fourth Ward 336 44 Tenth Street Apartments and Under Construction Levine Properties, Inc. 707 N Brevard St First Ward 200 Deck

COLLIERS INTERNATIONAL www.ColliersMultifamilyEast.com MULTIFAMILY ADVISORY GROUP P. 5 PIPELINE DETAIL

# Name Status Owner Address Market Units 45 The Dillon Under Construction Lincoln Property Company 905 Kenilworth Ave Dilworth 379 46 The Lexington Dilworth Under Construction Marsh Euclid Apartments, LLC 1106 Euclid Ave Dilworth 234 47 Holly Crest - Phase II Under Construction Northwood Ravin 16408 Holly Crest Ln Outer Huntersville/Cornel 112 48 Solis Southline Under Construction Pappas Properties, LLC 2500-2522 South Blvd Dilworth 313 49 The Gibson Under Construction Pollack Shores Real Estate Group 1000 Central Ave Elizabeth 250 50 Silver Collection at The Park - Under Construction Silver Companies 13816 Boren St Outer Huntersville/Cornel 212 Phase II 51 Palisades at Belmont - Phase II Under Construction Southwood Realty Company 1011 Palisades Dr Outlying Gaston County 149 52 The Abbey Under Construction Spectrum Properties 1415 Abbey Pl Madison Park 260 53 Solis Ballantyne Under Construction Terwilliger Pappas 9550 Community Ballantyne 194 Commons Ln 54 CampusWorks - Plaza Midwood Under Construction The Carlyle Group 1205 Central Ave Plaza Midwood 349 55 Horizons at Steele Creek Under Construction The Carroll Companies 10526 Steele Creek Rd Steele Creek 288 56 The Villas at Regal Manor Under Construction Villas At Regent Park LLC 8332 Regent Pky Outlying York County 144 57 Museum Tower Apartments Under Construction Wells Fargo & Company 525 S Church St Third Ward 394 58 1919 E Seventh Under Construction White Edward A 1930 E 7th St Elizabeth 91 59 2600 W Arrowood Rd Under Construction Whitehall Development LLLP 2600 W Arrowood Rd Olde Whitehall 96 Units 8,281

Proposed 60 6010 Piedmont Row Dr S Proposed American Asset Corporation 6010 Piedmont Row Dr S Beverly Woods 400 61 West Morehead Lofts Proposed ArchCo Residential 1331 W Morehead St Wesley Heights 287 62 Morehead St & Kenilworth Proposed Armada Hoffler Properties, Inc. Morehead St & Kenilworth Dilworth 380 63 Crescent Providence Farm Proposed Bahakel Communications 11355 Providence Rd Providence Estates East M 394 64 1931 Salome Church Rd Proposed Blue Ridge Companies 1931 Salome Church Rd Mallard Creek-Withrow 228 Dow 65 West Mallard Creek Church Proposed Browder Group Real Estate, LLC W Mallard Creek Church Mallard Creek-Withrow 395 Road Apartments Rd Dow 66 Hazel SouthPark Proposed Cec-bda-ii Partners, LLC 4401 Barclay Downs Dr Barclay Downs 266 67 Rodden Square Apartments Proposed Connelly Builders 6520 Mallard Creek Rd Mineral Springs 98 68 500 W Trade St Proposed Crosland 500 W Trade St Fourth Ward 400 69 University City Apartments Proposed Development Advisors, Inc. 6801 N Tryon St Hidden Valley 376 70 1924 E 7th St Proposed Faison & Associates, LLC 1924 E 7th St Elizabeth 125 71 2205 Dunavant St Proposed Faison & Associates, LLC 2205 Dunavant St Brookhill 368 72 The Yards at Proposed Gvest Capital 7600 South Blvd Outer South Charlotte 245 73 The Lofts at Hawthorne Mill Proposed Hml Ii LLC 1101 Hawthorne Ln Belmont 150 74 2715 N Davidson St Proposed Martin Newton D 2715 N Davidson St North Charlotte 147 75 The Walden Proposed My Niche - The Walden 1700 Abbey Pl Madison Park 130 76 Northwood Ravin Proposed Northwood Ravin 500 E Stonewall St Dilworth 400 77 Stonewall Mixed Use Proposed Northwood Ravin 510 E Stonewall St Dilworth 421 78 Proposed Pappas Properties, LLC 3610 South Blvd York Road 440 79 Parkwood Avenue Apartments Proposed Land LLC 1708 N Brevard St Optimist Park 335 80 Capital Crossing at Whitehall Proposed Peggy S Harkey 14200 Brown Grier Rd Griers Fork 271 81 Proposed Pepsi Bottling Ventures, LLC 2820 South Blvd Sedgefield 423 82 Towne Centre Apartment Proposed R. Dean Harrell 100 Plyler Rd Union County 378 Homes 83 Design Center Charlotte Proposed Ram Realty Services 100 W Worthington Ave Wilmore 296 84 NoDa at 27th Proposed Ram Realty Services 2300 N Davidson St Villa Heights 250 85 Riverbend Multi-Family Proposed Schulman & Beard Commercial RE 3822 Mt Holly-Huntersville Mountain Island 500 Rd 86 Bainbridge South End Proposed The Bainbridge Companies 175 Poindexter Dr Sedgefield 200 87 Rea Farms Apartments Proposed The Rea Family 11500 Providence Rd Providence Crossing 500 88 1351 E Woodlawn Rd Proposed Thomas P III & Betty Q Moore 1351 E Woodlawn Rd Ashbrook-Clawson Village 265 89 801 McNinch Proposed Tribute Companies 801 McNinch St Third Ward 212 90 Pinnacle Point Proposed WaterWalk 8515 University Executive Mineral Springs 138 Park Dr

COLLIERS INTERNATIONAL www.ColliersMultifamilyEast.com MULTIFAMILY ADVISORY GROUP P. 6 PIPELINE DETAIL

# Name Status Owner Address Market Units 91 Montage Proposed Wedgewood Properties LLC 650 E Stonewall St Dilworth 302 92 North Community House Proposed William Trotter Development 6915 Endhaven Ln Whiteoak 200 Residences 93 Prosperity Church Apartments Proposed Wood Partners 2934 Ridge Rd Davis Lake-Eastfield 292 94 Carver Cove Apartments Proposed Diannon Development Group, LLC 2619 Carver Cove Ln West Blvd 109 95 Fountains at Ballantyne Proposed Proffitt Dixon Partners 12135 N Community House Whiteoak 245 Rd 96 Granite Pointe Apartments Proposed Pedcor Investments 9101 Nations Ford Rd Outer South Charlotte 198 97 The Haven at Regent Park Proposed TBC Property Management, LLC 5055 Regent Pky Outlying York County 288 Units 11,052

Total Units 25,661

RECENT SALES Date Property Name Address City Units Year Built Price in $ $/Units Sep-16 Lodge at Mallard Creek 7808 Mallard Creek Rd Charlotte 264 1998 34,279,000 129,845 Sep-16 Thornberry 9920 Brickleberry Ln Charlotte 288 1999 42,000,000 145,833 Sep-16 Colonial Village at Greystone 9610 Stoney Glen Dr Charlotte 408 1998 / 2000 30,250,000 74,142 Sep-16 CV at Stone Point Apartments 10900 Point South Dr Charlotte 192 1986 / 1991 19,500,000 101,563 Sep-16 Vanguard Northlake 11011 Northlake Landing Dr Huntersville 204 2015 31,644,998 155,123 Sep-16 Somerstone At Winding Trails 7139 Winding Cedar Trl Charlotte 360 1983 / 1989 24,099,920 66,944 Aug-16 University Crossings Charlotte 9010 University City Blvd Charlotte 187 2013 40,000,000 213,904 Aug-16 Alpha Mill (Phase I) 220 Alpha Mill Ln Charlotte 167 2007 51,925,000 310,928 Aug-16 Whitehall Parc 8024 Whitehall Executive Center Charlotte 298 2013 51,199,992 171,812 Jul-16 Parkhaven 5831 Reddman Rd Charlotte 112 1979 5,250,000 46,875 Jul-16 Montclaire Estates 8512 Lodge South Cir Charlotte 301 1974 / 2005 20,500,000 68,106 Jul-16 Parkwood East 7108 Wallace Rd Charlotte 128 1984 7,150,000 55,859 Jul-16 Fern Forest Apartments 1024 Ashwood Ct Gastonia 184 1963 / 2012 8,220,000 44,674 Jul-16 Magnolia Terrace 8300 Paces Oaks Charlotte 264 1989 24,000,000 90,909 Jul-16 Vista Villa 6309 Montego Dr Charlotte 238 1971 12,375,024 51,996

COLLIERS INTERNATIONAL www.ColliersMultifamilyEast.com MULTIFAMILY ADVISORY GROUP P. 7 OUR PROVEN TRACK RECORD Recent Closings

Land Sale Oakview Terrace Wolf Creek Apartments Charlotte, NC High Point, NC Raleigh, NC Acres: 17.245 Units: 150 Units: 385 WHO WE ARE

One of the largest and most experienced teams of multifamily specialists in the industry

Park Place Geneva Park Apartments Arlington West Apartments Raleigh, NC Cary, NC Jacksonville, NC MORE THAN Units: 20 Units: 248 Units: 324 50 Dedicated Multifamily Professionals & Advisors

COVERING OVER STATES Taylor Place Apartments Teal Point Arbor Townhomes Chocowinity, NC Charlotte, NC Greensboro, NC 20 Units: 40 Units: 216 Units: 150 Expansive geographic footprint

MORE THAN

30,000 Eagle Point Crest at Elon Falcon Pointe Apartments Units sold since 2011 Durham, NC Elon, NC Winston Salem, NC Units: 323 Units: 42 Units: 120

$2.0B Group gross transaction value in since 2011 Land Sale Sommerset Place Oaktree Apartments Charlotte, NC Raleigh, NC Durham, NC Acres: 25.8 Units: 144 Units: 24

COLLIERS INTERNATIONAL www.ColliersMultifamilyEast.com MULTIFAMILY ADVISORY GROUP P. 8 WE CAN HELP As an investor in multifamily properties, you need a firm that provides experience, broad reach and the ability to market an asset no matter how challenging the economic environment. You need a team that specializes in your market you need The East Region Multifamily Advisory Group.

Colliers International has one of the largest and most experienced teams in the industry, strategically located in key markets throughout North America. Our combination of market dominance, expertise, and singular focus, make us uniquely successful in helping our clients achieve their disposition objectives.

How are we able to bring together the skills and tools necessary to complete challenging assignments? Our East Region Multifamily Advisory Group is connected by purpose and focus. Our team is dedicated to sharing information on market opportunities, capital sources and buyers/sellers to achieve the best results for our clients.

COLLIERS INTERNATIONAL www.ColliersMultifamilyEast.com MULTIFAMILY ADVISORY GROUP P. 9 Will Mathews Brooks Colquitt PRINCIPAL | EAST REGION ASSOCIATE | EAST REGION INSTITUTIONAL CLIENT GROUP [email protected] [email protected] DIR +1 404 978 2337 DIR +1 404 877 9285

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