Market Overview Lansing Market Overview Developments JDS REAL ESTATE OFFERING MEMORANDUM SERVICES, INC. Lansing Market Overview Lansing at a Glance METRO POPULATION AVERAGE HH INCOME MEDIAN HOME PRICE 472,400 $98,440 $98,484 IN GROSS METRO PRODUCT COST OF LIVING PROJECTED JOB GROWTH $24.4 B 11.3% 1.5% (below national average) Lansing is the capital of the US state of Michigan. The Lansing Metropolitan Area, colloquially As the capital city of Michigan and next-door It is mostly in Ingham County, although portions referred to as “Mid-Michigan”, is an important neighbor to one of the state’s major universities, of the city extend west into Eaton County and center for educational, cultural, governmental, Lansing attracts people from all across the region north into Clinton County. The 2010 Census commercial, and industrial functions. The area and benefits from a culturally diverse landscape. placed the city’s population at 114,297, making it is home to two medical schools, one veterinary Downtown is a charming, historic district along the fifth largest city in Michigan. The population school, two nursing schools, two law schools— the Grand River. The Michigan State Capitol of its Metropolitan Statistical Area (MSA) was including Western Michigan University and overlooks a walkable collective of storefront 464,036, while the even larger Combined Michigan State University—a Big Ten Conference shops, cafes, and bars, mainly situated along Statistical Area (CSA) population, which includes university (Michigan State), the Michigan State South Washington Square. Lush riverside parks Shiawassee County, was 534,684. It was named Capitol, the state Supreme Court, the Court of like Hawk Island and Scott Woods give the locals the new state capital of Michigan in 1847, ten Appeals, a federal court, the Library of Michigan scenic areas to picnic, exercise, or just hang out years after Michigan became a state. and Historical Center, and headquarters of four and enjoy the scenery. national insurance companies JDS Real Estate Services, Inc. in association with Kidder Mathews | L3 OFFERING MEMORANDUM 2 Investment Highlights FLOURISHING METROPOLITAN AREA Rated as the 3rd best economy in the mid-west, Lansing is experiencing To that end a $15-million Hilton Homewood Suites is among four hotels in strong economic growth and development throughout its neighborhoods, various stages of construction across Greater Lansing. Another three are leading to a metropolitan area with high sustained demand for multifamily approved and slated to open within the next few years. Four more hotels properties. Major employers such as Jackson National Life Insurance are still in the early planning stages. Co. recently investing upward of one hundred million dollars and General Motors have recently invested $580 Million in local expansion efforts, In addition to the strong employment drivers, the market enjoys a robust helping fuel Lansing’s strong annual job growth and low unemployment average household income of over $98,000 in Q1 of 2017. The annual figures. Developers continue to invest in multi-million dollar mixed-use average household income has enjoyed a positive growth rate in every year projects in downtown Lansing, with private investment in development since 2005. The high average household income is derived from several experiencing a strong surge in the post-recession years. Overall, Lansing high paying employment opportunities in Lansing. Other Primary drivers remains poised for steady and stable growth over the long term. of high income employment include, education, with the Michigan State University and medical jobs with Sparrow Health System, which is the Each year, 4.8 million people visit the region, helping to generate an largest health system in the area. economic impact of $1.1 billion, according to the visitors bureau. Vacancy Vacancy Asking Asking Population Household Avg HH AHHI Employment Year Population Households Employment Rate Change Rent Rent Chg Change Change Income Change Change 2012 3.0 -130 (BPS) $732 2.5% 467,300 0.2% 187,540 0.7% $88,825 2.8% 217,100 0.5% 2013 2.9 -10 (BPS) $748 2.2% 469,110 0.4% 189,260 0.9% $88,043 -0.9% 221,900 2.2% 2014 2.8 -10 (BPS) $762 1.9% 471,270 0.5% 190,910 0.9% $90,785 3.1% 222,670 0.3% 2015 2.0 -80 (BPS) $784 2.9% 472,540 0.3% 192,070 0.6% $94,836 4.5% 226,500 1.7% 2016 2.2 20 (BPS) $812 3.6% 473,670 0.2% 192,940 0.5% $97,645 3.0% 233,170 2.9% 2017 2.1 -10 (BPS) $818 0.7% 474,320 0.1% 194,250 0.7% $101,765 4.2% 236,530 1.4% 2018 2.0 -10 (BPS) $829 1.4% 474,790 0.1% 195,470 0.6% $105,617 3.8% 239,230 1.1% 2019 2.0 0 (BPS) $848 2.2% 475,140 0.1% 196,730 0.6% $109,591 3.8% 241,250 0.8% 2020 2.1 10 (BPS) $871 2.8% 475,380 0.1% 197,920 0.6% $113,261 3.3% 242,120 0.4% 2021 2.2 10 (BPS) $894 2.6% 475,760 0.1% 199,120 0.6% $116,392 2.8% 242,500 0.2% JDS Real Estate Services, Inc. in association with Kidder Mathews | L3 OFFERING MEMORANDUM 3 $2,000 $1,500 $1,000 $500 $0 Studio 1 Bed 2 Bed 3 Bed Lansing Midwest US $2,000 $1,500 $1,000 ABOVE-AVERAGE MSA MULTIFAMILY PERFORMANCE UNIT MIX RENT DETAILS$500 $2.50 Throughout the Lansing-East Lansing metropolitan statistical area, rental apartment activity has been strong in recent quarters. Effective rents grew$2.00 $0 by 1.9% between the first and second quarters of 2017, corresponding to 1Q 2017 StudioAvg SF 1YTD Bed1 Year 2 Bed 3 Bed Studio/Efficiency $611 524 -4.8% 5.8% a 3.7% annual growth rate; this far exceeds the national average growth $1.50 $2,000 rate of 2.3%. Occupancy throughout the market is equally strong. Market 1 Bedroom $679 680 Lansing-1.6% Midwest3.9% US forecast in the next 3 years puts Lansing in the top 3 economies in the 2 Bedroom $862 976 0.6% 2.9% $1.00 $1,500 midwest and the top 20 nationally. With an occupancy rate of 98 % in 3 Bedroom $1,138 1,240 0.9% 6.1% the second quarter of 2017; since 2011, the overall rate of occupancy $0.50 Avg over period ending 3/31/17 12/31/16 throughout the market has averaged a robust 97%. $1,000 VACANCY RATE DISTRIBUTION $0.00 ASKING RENT COMPARISONS Studio$500 1 Bed 2 Bed 3 Bed LOW 25% MEAN MEDIAN 75% HIGH $2,000 Lansing Midwest US 0.0% Metro:1.0% Lansing 2.0% 1.6% 2.7% 10.4% $0 $1,500 Studio$2.50 1 Bed 2 Bed 3 Bed 120 $2.00 $1,000 Lansing Midwest US 100 $1.50 80 $500 $1.00 60 $0 $0.50 40 Studio 1 Bed 2 Bed 3 Bed $0.00 20 Lansing StudioMidwest US 1 Bed 2 Bed 3 Bed Annualized ASKING RENT/SF 5 Year 5 Yr Forecast 2.9% 2.2% 0 $2.50 4.2% 4.5% Under 4.3% 8.6% 12.9% 17.2% 21.5% 25.8% 30.1% Lansing Midwest US 4.5% 5.0% 4.2% 8.5% 12.8% 17.1% 21.4% 25.7% 30.0% Over 12/31/16 12/31/21 $2.00 Number of Properties 5 Year 5 Yr Forecast 4 4 $1.50 $1.00 $0.50$2.50 $0.00$2.00 Studio 1 Bed 2 Bed 3 Bed $1.50 Lansing Midwest US $1.00 JDS Real Estate Services, Inc. in association with Kidder Mathews | L3 OFFERING MEMORANDUM 4 $0.50 $0.00 Studio 1 Bed 2 Bed 3 Bed Lansing Midwest US Developments PROPERTY ADDRESS DESCRIPTION 1 Sparrow Health Systems Sparrow Health System is developing a $64 Million five story Herbert-Herman cancer center. The glass-fronted 132,000 square foot building will house all 1215 E Michigan Ave of the health system’s cancer treatments under one roof for the first time. Complimenting the hospital will be a new dining area, called the Gathering Place 1 Lansing, MI featuring a full service Starbucks. 2 Sparrow Health System Health Center & Also in development is the $20 Million, three-story health center which is set to partially open in November for primary care services. Sparrow Health System Laboratory is nearing completion of a $10 million Sparrow Reference laboratory. The 35,000 sf facility will house labs located within the St. Lawrence campus. 2 1210 W Saginaw St Lansing, MI 3 LOC Performance Products LOC Performance Products announced a $96.5 million expansion to the 1600 N. Larch St property. The expansion will provide 700 new jobs and is 3 1600 N. Larch St expected to create a huge economic boost in the area. Lansing, MI 4 School For The Blind Project Indianapolis-Based TWG Development will redevelop the former Michigan School for the Blind to low-income senior housing. At $24.4 million the plan 4 656 W Maple St includes creating 72 multi-family units and 60 senior units between 3 buildings. Lansing, MI 5 REO Town Investment - The Venue at East Town REO town has seen a $500,000 investment that will allow for development of a brewery and pottery studio. 2010 – 2020 East Lansings East Side is the site of “The Venue at East Town”, a $5 million 4 story development that will have 39 apartments atop retail space on the first floor.