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National Retail ReviewWINTER 2014

Cassidy Turley

Garrick Brown, Editor201 California Street, Ste 800

San Francisco, CA 94111

[email protected]

916.329.1558


2/27Cassidy Turle

Retail Review Winter 2014

Holiday Sales ForecastHeading into this years holiday shopping season analysts were

exceedingly cautious. Last year most of us predicted sales

growth in the 3.5% to 4.5% range. The average increase inretail sales over the holidays has averaged 3.2% over the past

decade. Those numbers include a brutal 2008 when, at the

front end of the recession, sales recorded a rare decline of

-2.8%, and they fell by another 1.2% during the dismal 2009

shopping season. Since that time, they have consistently been

posting increases of 3.0% or more.

2013 was supposed to be the breakout year. Having weathered

the policy-induced distractions of the fiscal cliff, sequester and

government shutdown, the economy appeared to be picking

up. From January through August of last year, the U.S. aver-

aged 197,000 new jobs per month. By September, the monthwhen most analysts release their predictions, the unemployment

rate had fallen to 7.2% (its lowest level since December 2008

when jobs were hemorrhaging at a pace of 700,000 per month).

Meanwhile, the Conference Boards Consumer Confidence Index

hit 82 in August of last year. This was the highest reading for this

metric since January 2008a full nine months before the near

financial collapse that set off the Great Recession.

And so analysts were optimistic last year. GDP was up. Job

growth was at its highest levels in eight years. Home prices were

rebounding solidly. Confidence and consumer spending were

posting solid and consistent gains. So it only seemed natural that

these positive indicators for the overall economy would translate

into the strongest sales gains seen so far in the post-Recession

era. But what happened? Sales growth for the 2013 holiday

shopping season came in at a humdrum 3.3%. Better than the

ten-year average of 3.2%, but disappointing for an industry that

had expected something more. Ultimately a short shopping sea-

son (blame the calendar for that one), terrible weather in most of

the country and a still-cash-strapped consumer were blamed.

Burned last year, many analysts waited until October before re-

leasing their 2014 forecasts. We didnt. In September we predict-ed sales growth of 3.5%, an improvement over 2013 totals but a

relatively modest one. Our rationale was that while there is a case

for bullishness, this would be tempered by a shorter sales season

and a few other factors. From Thanksgiving through Christmas

Eve, there are 28 shopping days this year. Last years 26 days was

the shortest possible period. The longest possible period is 32

days. According to the International Council of Shopping Centers,

since 1993 when the holiday sales season has measured 28 days

the market has averaged sales growth of 2.8%.

Supporting the case for optimism is that the economy is far

stronger this year than it was last year. GDP for Q3 2014 came inat 3.9%, well above the advance estimate of 3.5%. This follows

an extremely strong Q2 in which GDP grew by a robust 4.6%. And

the momentum hasnt let up. Heading into the final quarter of

2014, we were tracking growth in the 3% to 4% range.

Current levels of job creation are at the strongest that we have

seen in 15 years. The U.S. economy added an average of

229,000 jobs per month from January through October 2014.

Employment growth has been positive for 49 consecutive months,

Shopping Center Statistical Review

Highest Vacancy Markets

Reno Memphis ClevelandSan Francisco Hawaii

Lowest Vacancy Markets

San Jose

Source: Conference B

0

20

40

60

80

100

120

Nov2006

Nov2007

Nov2008

Nov2009

Nov2010

Nov2011

Nov2012

Nov2013

Nov2014

5-Year Average = 67

10-Year Average = 75

20-Year Average = 93

November 2014: 89

Consumer Confidence


3/27Cassidy Turle


with the economy having added over 2.6 million jobs over the past

12 months alone. If Bureau of Labor Statistics forecasts hold true

for the final months of this year, 2014 will close as the strongest

year for job creation since 1999. Meanwhile, job openings (which

are often a leading indicator) are at their highest levels since

2001, indicating continued momentum.

Business and consumer confidence are at their highest levels

in eight years as well. The Conference Boards Consumer Con-

fidence Index stood at 89 as of November. Though this is down

slightly from Octobers reading of 94, this metric is expected to

climb significantly in December thanks to the impact of falling gas

prices. Octobers reading was the highest level that the market

has recorded since 2007.

So why werent we more aggressive with our forecast back in Sep-

tember? After all, household, corporate and bank balance sheetsare all in fantastic shape by nearly every metric. The reason is that

though wage pressures have picked up in many U.S. markets,

overall wage growth numbers have remained relatively weak so

far. Though American consumers are generally in a better spot

than where they were one year ago, this last issue is critical. After

all, the signs were also all positive in 2013. Ultimately, consumers

remained fairly conservative when it came to holiday shopping.

We anticipated something similar for 2014.

But this was back in September before what appeared to be a

short-term trend of falling gasoline prices evolved into a full-blown

price war between Saudi and domestic shale oil producers. Basedon the impact of this trend, we see our initial estimate of 3.5% as

being too conservative. Thanks to the economic boost that fall-

ing gas prices will give American consumers, we now anticipate

final sales numbers for the 2014 holiday sales season to come in

somewhere between 4.0% and 4.5%.

Over the past few weeks a number of other major holiday sales

forecasts have been released. Nielsen predicted 1.9% sales

growth. Wells Fargos economist forecast an increase of 3.9%,

while Fitch hedged their bets with a prediction of 3.0% to 4.0%.

Kiplinger forecasts 4.0%, Deloitte puts it somewhere between

4.0% and 4.5% and the National Retail Federation has predictedsales growth of 4.1%

Crude Oil Christmas

As of December 1, the average price of gasoline in the United

States was $2.75 per gallon. This is down $0.94 per gallon from

the peak pricing of $3.69 per gallon recorded on June 26th of this

year. Gas prices began to slowly fall following this peak, but the

pace accelerated significantly in October.

The initial reason for falling prices was a glut in supply. This was

fueled almost entirely by U.S. shale oil producers who, through

fracking and other new, innovative methods, have boosted U.S

energy production to record levels. U.S. oil production has

increased by 80% since 2008. Domestic output amounted to abou

5 million barrels per day in 2008. The U.S. now produces more

than 9 million barrels per day. This increase alone is greater than

the output of almost every OPEC country combined. The bigger

point is that it is creating energy independence for the United

Statesearlier this year the U.S. stopped importing from Eas

Africa (once our fourth largest supplier).

Little Rock

7.8% 6.8%

Louisville

9.0% 7.9%

Tampa

9.3%8.4%

Largest Decrease in Vacancy (Q3 2013 vs. Q3 2014)

Boston

5.0% 6.1%

Mobile

8.9% 10.7%

Charleston

7.0% 8.1%

Largest Increase in Vacancy (Q3 2013 vs. Q3 2014)

At current rate of declines, gasoline will cost $2 per gallon by March

Source: Cassidy Turley Research/Gasbuddy.com

$0

$20

$40

$60

$80

$100

$120

$1.25

$1.75

$2.25

$2.75

$3.25

$3.75

06/20/14

07/15/14

08/09/14

09/03/14

09/29/14

10/24/14

11/18/14

12/15/14

01/12/15

02/09/15

03/17/15

04/14/15

Billions

US Avg PriceGasoline (pergallon)

CumulativeSavings toConsumers(currentpricing vs.peak)

$2 Gas by March 2015?


4/27


5/27Cassidy Turle


in a landscape where their core consumer (the middle class) has

downshifted to discount mode. The challenges have been greatest

for hard goods retailers thanks to the rise of e-commerce. Some

categories, like music and book stores or office supplies, have

been victims of technological shifts in how their core products are

consumed or purchased. Others, like consumer electronics, have

struggled with showrooming and heightened competition eroding

pricing and margins. And this is where the impact of e-commerce

on retailers has been most profound. Amazon alone would be a

formidable enough competitor on its own merits just on the basis of

its selection and service. Throw in deep discounts and a consumer

that is more tech-savvy than ever and that is using the internet

to find the best deals (whether online or via bricks and mortar

retailers) and you suddenly have a marketplace where many mid-

price-point retailers are struggling to justify their existence.

At the very least, the strongest of the mid-price point hard goods

retailers have shifted their growth focus away from bricks and mortar

stores and towards building e-commerce infrastructure to compete

with Amazon and all the other online players, including Alibaba.

In the largest initial public offering ever recorded, Chinese internet

giant Alibaba raised $25 billion in September to fuel global growth.

Alibaba is the worlds largest online retailer. In China alone, it has

an 80% market share. Its services range from online shopping

(like Amazon), to processing internet payments (like Paypal) and

virtually every other online service that can be named. Its total salesvolume in 2013 was $248 billion. By comparison, Amazons was

$100 billion. And that $25 billion Alibaba raised? Thats to fuel

growth in North America, particularly the United States.

Against this onslaught, retailers like Kohls and Macys are shifting

the majority of their capital expenditure budgets to building

e-commerce infrastructure. This is the case across the board. And

if growth is happening for these chains, it is mostly in the form

of off-price concepts. Nordstrom has netted one new department

store over the last four years. During that same time the chain has

opened more than 100 new off-price Nordstrom Rack stores.

Mid-price hard goods retailers are where we are seeing the greates

number of closures as this shift occurs. Many chains, particularly

traditional mall or lifestyle center tenants, are looking at major U.S

markets with the mindset that if they had seven stores there before

that increased internet sales (which most of them are trying to build

will mean that three or four locations will suffice in the future. And

naturally, which locations are they looking to close? Their weakest

ones, typically the units located at Class B or C shopping centers.

Things arent that much different in the grocery world, where the

margins were already razor thin. A horde of new, smaller concep

grocers continue to proliferate throughout the marketplace. Bu

here the growth also mirrors the barbell trend of expansion from the

luxury (Whole Foods) and off-price (Walmart Neighborhood) ends

while consolidation is occurring with the traditional (and mostly

unionized) players in the middle.

The restaurant world has seen an explosion of growth, but the same trends

are in place. Fast casual has been the fastest growing sector, followed by

fast food and higher end concepts. But the going has been spotty for casua

dining chains in the middle. Cheaper fast casual concepts like Chipotle

have gobbled into their market share. There are always exceptions to the

rule, and in no other area of the retail world is the saying flavor of the

month more appropriate than in the dining sector. New brewpub chains

and other fresh concepts continue to perform best, but some long-time

Dallas Los AngelesNorthernNew Jersey

Strongest Levels of New Development (Q3 2013 to Q3 2014)

Mid-price-point retailers across the spectrum (from

apparel to grocery and restaurants) have struggled to

maintain market share in a landscape where their core

consumer (the middle class) has downshifted to discount

mode. The challenges have been greatest for hard goods

retailers thanks to the rise of e-commerce.

The restaurant world has seen an explosion of growth,

but the same trends are in place. Fast casual has been the

fastest growing sector, followed by fast food and higher end

concepts. But the going has been spotty for casual dining

chains in the middle. The restaurant world in 2015 will be a

game of musical chairs with as many new players rushing in

as concepts flailing out, though if there is one place where the

gas price dividend could make a huge difference this is it.


6/27Cassidy Turle


leaders in the casual dining chain continue to face challenges and the

weakest players are shrinking, not growing, unit counts.

Ultimately, against this backdrop, one of the big questions to grip

the retail world has been, when, if ever, will we see the return

of the middle class consumer? Cheap gas certainly will help

boost middle class spending. But asking whether the middle class

consumer will return is probably the wrong question.

The real question the retail world needs to ask is have seen a

structural shift in consumer behavior? Shoppers became frugal in

the recession out of necessity. But now, thanks to improving and

better technological tools (that are only going to remain with us and

improve), will they ever go back to their old ways? We think that for

the most part (even with the cheap gas dividend) that the answer is

no at least not for a very, very long time.

Growth Drivers to Slow in 2015

So here is the good news for retail landlords and developers:

despite the challenges outlined in this report, overall shopping

center vacancy in the United States has continued to fall. This

holds true this past quarter (though not for all product types)

and has been the case for going on five years now. Why? The

consolidation that we have seen from various retail sectors has

been significantly outpaced by the growth recorded by mostly

off-price concepts across the spectrum.

Dollar stores and discounters have been on fire. The five top dollar

store chains in the U.S. have averaged growth in excess of 2,000

new units annually for the past four years. That is a new dollar store

opening at the rate of one every 4.5 hours.

But, as we detailed in last quarters report, the party may be

coming to an end soon. Many of the pillars of growth that have

expanded throughout the post-Recession era period are now

starting to reach saturation point.

In the case of dollar stores, all indications are that consolidationis in the works. In April, Family Dollar decided to slow growth

next year (from over 600 units to about 400) and to close 370

underperformers. Then, it went on the market. It is currently the

target of a hostile takeover bid from Dollar General. Dollar General

may or may not win this bid, but if they do, they have stated

they will close up to 1,500 stores just to make it past regulatory

approval. But you can rest assured that future eliminations of

redundancies could bring total store closures above the 2,500

unit mark in a new chain that would initially have close to 20,000

stores. Our 2,500 unit number over the next five years or so might

be low, but with an average footprint of 10,000 square feet, we

are talking about 2.5 million square feet of space that might come

back to market (shopping centers and freestanding) alone.

Meanwhile, off-price apparel players have all been growing

aggressively for years. Marshalls, T.J. Maxx and Ross have all been

averaging more than 40 new stores per year the last few years

Nordstrom has closed a number of full-line department stores

while opening more than 100 Nordstrom Rack stores in the last

few years. Are they also reaching saturation?

Lastly, automotive service retailers like Advance Auto Parts, Pep

Boys, OReilly and others have all been averaging 100+ stores

annually, and it all made sense. In 2000, the average length of

time that Americans kept their cars was a little over eight years

By 2012, it was over eleven years. But, as of August 2014, new

Market

Vacancy

Rate Q3

2014

Vacancy

Rate Q2

2014

Vacancy

Rate Q3

2013

Change in

Vacancy Over

the Past Year

1 San Francisco 2.6% 2.7% 3.2% -0.6%

2 Hawaii 3.8% 3.5% 3.9% -0.1%

3 San Jose 4.3% 4.3% 4.9% -0.6%

4 Pittsburgh 4.5% 4.6% 5.1% -0.6%

5 San Diego 4.8% 4.9% 5.5% -0.6%

6 Santa Barbara 4.9% 5.1% 5.5% -0.6%

7 New York City Metro 5.0% 4.6% 4.6% 0.3%

8 Oakland/East Bay 5.3% 5.1% 5.6% -0.3%

9 Washington, DC 5.4% 5.4% 5.6% -0.2%

10 Orange County 5.5% 5.3% 5.9% -0.3%

11 Los Angeles 5.7% 5.6% 5.7% 0.0%

12 (tie) Baltimore 6.1% 5.8% 6.3% -0.2%

12 (tie) Boston 6.1% 5.0% 5.0% 1.1%

12 (tie) Des Moines 6.1% 6.3% 6.4% -0.3%

12 (tie) Salt Lake City 6.1% 6.0% 5.7% 0.4%

13 (tie) Austin 6.3% 6.3% 6.4% -0.1%

13 (tie) N. New Jersey 6.3% 6.4% 6.5% -0.2%

14 Miami 6.6% 6.5% 6.9% -0.3%

15 (tie) Raleigh/Durham 6.8% 7.0% 7.3% -0.5%

15 (tie) Little Rock 6.8% 6.6% 7.8% -0.9%

16 Seattle 7.0% 7.2% 7.4% -0.4%

17 San Antonio 7.1% 7.1% 7.9% -0.8%

18 (tie) Minneapolis 7.2% 6.5% 6.6% 0.6%

18 (tie) Denver 7.2% 7.3% 7.5% -0.2%

19 (tie) Hampton Roads 7.5% 7.4% 7.7% -0.3%

19 (tie) Houston 7.5% 7.6% 8.4% -0.9%

19 (tie) Portland 7.5% 7.3% 7.5% 0.0%

20 Philadelphia 7.7% 7.6% 7.8% 0.0%

Source: Cassidy Turley Research / CoStar


7/27Cassidy Turle


car sales totals were on track to reach 14 million in the U.S. this

yearthe highest total since 2006. With an improving economy

and Americans increasingly buying new cars, will they need the

repair shops as much?

The point is that many of the pillars of our retail growth over the last few

years are about to go away, slow or further evolve. And this will occur at a

time while consolidation continues to occur for mid-price point retailers.

Certainly a strong holiday sales season will help, but so long as

sales numbers are driven by stark discounts and razor thin margins,

the benefit to troubled chains may be no more than a band aid

over a gaping wound. We anticipate store closures to increase

substantially throughout the first half of 2015, with most of the

casualties coming from the mid-price hard goods sector, primarily

mall and lifestyle center space users. Strong sales this Christmas

may mitigate the closure plans of many chains, but unless some

sort of holiday miracle takes place, the general trend will remain

one of slow but steady consolidation for this sector of the market.

But at least landlords can still count on the restaurant sector fo

growth, right?

Dining Go Round

Restaurant growth has accounted for more than 40% of all tota

unit growth over the past four years. Here, are we also reaching thepoint where aggressive growth has created too much competition

According to the U.S. Department of Agriculture, U.S. food

expenditures on eating out were up 3.5% (year-over-year) in

October. This is down from a 4.6% annual increase in 2013

and a 10.8% bump posted in 2012. In fact, the current rate

of growth is the weakest posted since 2009 when the marke

was in the red to the tune of -2.2%. Still, a 3.5% increase when

inflation has consistently measured in the 2.0% range means

growth is occurring. But it is not occurring at the rate needed

to support the massive influx of restaurant concepts that has

occurred in recent years.

All of this leads us to the conclusion that restaurants are facing

greater levels of competition than ever before, but since the

consumer dining-out pie has only grown minimally, we may be due

for a shakeout. Dont get us wrong, we think restaurant growth wil

actually increase next year thanks to increased IPO activity bu

so will closures. The restaurant world in 2015 will be a game of

musical chairs with as many new players rushing in as concepts

flailing out, though if there is one place where the gas price dividend

could make a huge difference this is it.

But there are other challenges for the dining sector. Rents for Class

A space continue to skyrocket, and this could wreak havoc with

the expense ratios of the national credit chains chasing this space

Typically, restaurants try to keep their rent around 10% of gross

income. Yet we are seeing Class A asking rents skyrocket by 20%

or more in most major markets.

Minimum wage hikes may also challenge many players

especially small family businesses. In the long-run, workers

earning more benefits all retail, but for businesses where theSource: Cassidy Turley Research / CoStar

Market

Vacancy

Rate Q3

2014

Vacancy

Rate Q2

2014

Vacancy

Rate Q3

2013

Change in Vacancy

Over the Past Year

21 Richmond 7.8% 7.7% 7.7% 0.0%

22 (tie) Tucson 7.9% 7.8% 8.7% -0.9%

22 (tie) Louisville 7.9% 8.4% 9.0% -1.1%

23 New Orleans 8.0% 7.6% 7.5% 0.5%

24 Charleston 8.1% 7.3% 7.0% 1.0%

25 Tampa 8.4% 8.3% 9.3% -0.9%

26 Tulsa 8.6% 8.0% 8.7% -0.1%

27 (tie) Omaha 8.7% 8.0% 8.7% 0.0%

27 (tie) Albuquerque 8.7% 8.7% 9.4% -0.7%

28 (tie) Dallas 9.4% 9.4% 10.1% -0.7%

28 (tie) Nashville 9.4% 9.6% 10.2% -0.7%

28 (tie) Orlando 9.4% 9.1% 9.6% -0.2%

29 Charlotte 9.6% 9.3% 9.2% 0.4%

30 Indianapolis 9.8% 9.8% 10.0% -0.2%

31 Inland Empire 9.9% 9.8% 10.3% -0.4%

32 (tie) Oklahoma City 10.1% 10.2% 10.5% -0.4%

32 (tie) Milwaukee 10.1% 9.6% 9.8% 0.3%

33 (tie) Kansas City 10.4% 9.9% 9.6% 0.8%

33 (tie) Jacksonville 10.4% 10.1% 10.6% -0.1%

34 (tie) Chicago 10.7% 10.8% 9.6% 1.0%

34 (tie) Mobile 10.7% 9.4% 8.9% 1.8%

34 (tie) Sacramento 10.7% 10.6% 10.8% -0.1%

35 St. Louis 10.8% 10.6% 10.6% 0.2%

36 (tie) Las Vegas 11.3% 11.1% 11.2% 0.0%

36 (tie) Birmingham 11.3% 11.2% 12.0% -0.7%

36 (tie) Cincinnati 11.3% 11.0% 11.7% -0.4%

37 Atlanta 11.4% 11.4% 12.1% -0.7%

38 Detroit 11.7% 11.3% 11.6% 0.0%

39 Phoenix 11.8% 11.7% 12.1% -0.3%

40 Cleveland 11.9% 11.5% 11.8% 0.1%

41 Memphis 12.9% 13.2% 13.4% -0.6%

42 Reno 14.5% 13.7% 14.0% 0.6%


8/27Cassidy Turle


business plan is built on paying minimum wage, thin profit

margins are likely about to get thinner.

For example, most restaurants need payroll to account for no more

than 20% of gross sales. Assuming you are a small, family ownedsandwich shop with annual sales of about $1 million, that means a

total payroll of $200,000. If your $8 per hour wage has to climb to

$10, now your payroll outlay is $320,000 per year. A typical small

business like this accounts the aforementioned 10% of income

towards rent, 32% for food costs (these are even higher for luxury

restaurants) and the remainder to other expenses (some controlled,

most not). At the end of the day, the profit margin usually comes out

to 8%. For a shop grossing $1 million, thats just $80,000 annually.

The increase in wages we just outlined would drive that down to

$55,000 per year. And, if your rent doubles you can see where

the accumulation of all of these additional expenses could lead toan increase in small business failures.

With all of these trends converging at a time in which new

development levels are now matching peak metrics recorded at the

height of the last cycle, we think its inevitable that overall shopping

center vacancy levels will start to tick up next year.

National Shopping Center

Statistical Overview

Cassidy Turley tracks shopping center vacancy, absorption and

rental rate trends in 60 major U.S. markets. As of the close of Q3

2014, shopping center vacancy in the markets that we tracked

stood at 8.3%. This is down from a reading of 8.4% recorded last

quarter and the 8.7% rate that was in place exactly one year ago.

Since peaking at 12.3% in Q1 2010, shopping center vacancy

in the United States has declined for 16 consecutive quarters.

However, the pace at which vacancy has been falling has slowed

over the past year. Vacancy has declined just ten basis points

per quarter over the last 12 months. Over the past 12 months,

the marketplace has absorbed just over 40.4 million square feet

of shopping center space. Over 6.3 million square feet of this

occupancy growth took place in Q3 2014.

We are now tracking more than 25.5 million square feet of

shopping center space under construction throughout the

markets we track. Current levels of new development now match

what we saw at the peak of the last cyclein 2005 just over 25.5

million square feet of new shopping center space was delivered to

the marketplace. The difference is that speculative development

led the charge then, accounting for about 60% of the space that

was built. Of the 25.5 million square feet of product currently in

the pipeline, roughly 75% of it already has lease commitments in

place. Though developers are increasingly willing to build a greate

proportion of their projects without deals in place, development

of brand new shopping centers without anchors in place remains

almost unheard of in this climate. Additionally, nearly half of the

projects we are tracking are either expansions (additional phases

of existing shopping centers) or redevelopment projects in urban

or dense suburban markets.

This current wave of new development has been driven by a

shortage of Class A space. Though overall vacancy may still stand

in the low 8.0% range, we estimate that overall vacancy for trophy

or premium space for every shopping center type currently stands

below the 5.0% mark. Class A neighborhood/community centers

have the highest Class A vacancy rate at 4.9%, but this is not faroff from historic averages.

With a dearth of Class A availability, many retailers have turned to

Class B space in the tightest retail markets over the past couple of

years. As new premium product increasingly becomes available

in the coming months, Class B centers will suffer the most though

sharp rental rate increases will mean that these projects wil

increasingly land bargain hunting tenants.

Neighborhood Centers Continue to Rebound

Of the nearly 5.3 billion square feet of shopping center space tha

we track throughout the United States, Community/Neighborhood

Strip Centers account for the lions share of the inventory (67.1%

, with nearly 3.6 billion square feet of product. The vacancy rate

for this segment of the shopping center market stood at 9.6% as

of the close of Q3 2014. This compares to a vacancy rate of 9.8%

last quarter and 10.1% exactly one year ago. Over the past twelve

months, this product type has posted over 30.3 million square

feet of occupancy growth, with nearly 5.3 million square feet of

that growth coming in Q2.

:

Spec Slowly Returning Roughly 75%of the 25.5MSF of Shopping CenterSpace Under Constructon has Commitments in Place

12.1 11.710.6

8.5

10.4

12.8 12.5 12.0

13.5

6.9

2.7

4.6

2.2

16.3

2.8

19.212.1

7.8

7.1

5.7

10.4

12.8

8.3

6.45.8

1.7

0.5

0.5

0.1

0.9

0.3

6.4

0

5

10

15

20

25

30

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014YTD

UC

Millions,

SF

US Shopping Center Development


9/27Cassidy Turle


Just under 11.7 million square feet of new Community/

Neighborhood/Strip Center space has been delivered over the

past year. We are tracking more than 10.7 million square feet

of product under development currently. This metric jumped

by over 2.7 million square feet over the past three months withmost of that increase being for new, ground-up projects. Why?

In addition to seeking to sate retailer demand for new Class A

space, homebuilders are beginning to ramp up development plans

for next year. After more than seven years of virtually non-existent

homebuilding, it appears as if retailers will finally have some new

rooftops to follow in 2015. Nearly all of this space is in the form of

community or neighborhood centers. Speculative development of

unanchored strip centers remains a relative rarity and completely

dependent upon high profile locations.

Though this shopping center type currently has the highestlevel of overall vacancy, it is also where we expect to see the

strongest growth ahead. Strip centers, however, will continue

to be a challenge in many markets, though the increase of new

small concept users (particularly among grocery or superstore

players like Target and Walmart) may offer many landlords the

possibility of transitioning some strip projects overnight should

they be lucky enough to land these mini-anchors capable

of boosting traffic and simultaneously making these centers

more desirable to other inline tenants. Ultimately, however,

the increasing strength of this sector comes down to its core

tenancy drug store or grocery anchors and inline tenants that

are usually food or service based.

Power Centers Plug Away

The trend of shrimpboxing continues. Big box users are

downsizing space needs across virtually every retail category.

Pet supply stores like PetSmart and PetCo, for example, remain

in healthy growth mode, but most are now experimenting with

concepts in the 5,000 to 10,000 square foot range instead of

the 25,000 square foot or more footprints they used to favor.

Grocery growth is on the upswing for smaller concepts (generally

between 15,000 and 50,000 square feet), but the industry isin consolidation mode when it comes to traditional space users

(typically 50,000 square feet and up).

Meanwhile, some big box categories are in full retreat. Bookstores,

office supplies and toy stores are all seeing major players both

shrink the footprint of existing stores and close underperformers

as they face greater online competition.

Barnes and Noble plans on closing at least one third of their

stores over the next few years. Right now, the official tally is 300

stores over the next seven years, but we suspect totals will be

much higher than that and likely on a much more accelerated

timeline. All told, we estimate that B&N could return as much

as 9 million square feet of space in the next few years.

Office Depot will be closing at least 400 stores over the nex

couple of years, with roughly 150 of those closures occurring this

year. These closures are directly related to its merger last yea

with OfficeMax and will see the chain removing redundancies

from its system. But they are also downsizing from an average

store size of 25,000 to 35,000 square feet to a new ideal template

ranging between 10,000 and 15,000 square feet. Segmen

leader Staples is doing the same. Though they remain profitable

(largely due to a strong e-commerce presence), Staples has

plans to close at least 225 stores through 2015, and its also

shrinking the size of existing locations.

With a tenant base that has traditionally been built upon the back

of big box, you would expect Power Centers to be one of the most

challenged shopping center types out there. But thanks to a rapidly

adapting marketplace, they are emerging as one of the stronge

asset classes in the marketplace.

We currently track just over 928 million square feet of Power Cente

space. This product type accounts for 17.5% of the shopping cente

space in our survey. As of the close of Q3 2014, the vacancy rate

for Power Centers was just 5.7%. This is down from the 5.8% rate

we recorded just three months earlier and the 6.3% rate posted

one year ago. Over the past 12 months, Power Centers absorbed

just under 5.3 million square feet of space, with Q3 2014 activity

accounting for nearly 2.3 million square feet of that total.

New development has added over 3.3 million square feet of new

product over the last year, most of which was occupied on delivery

We are now tracking just under 3.4 million square feet of Power

Center space under development.

The reason that Power Centers have essentially held their own

is that landlords have been willing to adapt. Most of the box

categories that are shrinking are leaving behind junior box space

in the 30,000 to 40,000 square foot range. This is where we

still see a fairly deep tenant pool in terms of demand, with smal

Current levels of new development now match what

we saw at the peak of the last cyclein 2005 just over

25.5 million square feet of new shopping center space was

delivered to the marketplace.


10/27Cassidy Turley


grocery users accounting for most of the action. Players ranging

from Walmart to Whole Foods are looking to aggressively grow

their smaller format grocery stores, and now Target is entering the

fray with their new small format Target Express concept. So, look

for the trend of Power Centers shifting core tenancy towards food

users to continue and accelerate.

Most of what has been delivered over the past year has featured

Supercenter concepts (I.e. Walmart, Target, Meijer, etc.) that

feature full grocery components. Interestingly, though there are

a few grocery and superstore players that are going larger (like

Meijer and Kroger, on a limited number of new stores), both

Walmart and Target seem to be slowing superstore growth. In the

case of Target, it only has two new superstore deals in the pipeline

for next year and is increasingly looking to grow its new, smaller

(and often standalone) CityTarget and Target Express formats. Weknow of some instances where, in order to tap into lucrative CBD

markets, Target may experiment with taking this concept to as

small as 15,000 to 25,000 square feet (though most will likely fall

in the 40,000 to 60,000 square foot range). Meanwhile, though

Walmart is still likely to add 100+ full service superstore locations

in the next year, they are increasingly focused on expanding their

smaller format Walmart Express (15,000 to 30,000 square feet)

and Walmart Neighborhood (30,000 to 45,000 square feet) stores.

What does this mean? It means that Power Center development

numbers are likely to continue to fall, though we certainly dont rule

out that these smaller format stores may pop up as anchors for newPower Center projects in the future.

Mall Bifurcation to Accelerate

We currently track over 612 million square feet of mall space in

the 60 markets that we track nationally. This accounts for 11.5%

of the roughly 5.3 billion square feet of shopping center space

in our survey. As of the close of Q3 2014, the vacancy rate for

malls stood at 4.7%, reflecting a slight uptick from the 4.6%

rate that was in place as of three months ago. This is the second

consecutive quarter of increased vacancy. Occupancy has been

declining (albeit at a rate of just ten basis points per quarter) eversince vacancy peaked at a low of 4.5% in Q1 2014. One year ago,

mall vacancy stood at 4.8%.

Over the past year, the mall sector has accounted for just over 1.2

million square feet of occupancy growth, but nearly all of that was

in Q3 2013 and Q1 of this year. Occupancy has been falling by

about 850,000 square feet per quarter since. Just over 1 million

square feet of new mall space has been added in the United States

over the past twelve months, and we are tracking over 6 million

square feet of product currently in the construction pipeline.

This quarters uptick in vacancy is likely the start of a new trend

that we anticipate will accelerate next year. Though development

levels are up, they are not the issue here. The 6 million square

feet of space currently under construction that we are tracking has

delivery dates through 2016 and still accounts for less than 0.9%

of the existing inventory that we track. These numbers have not

increased substantially since the downturn and remain near 40

year lows. More importantly, these totals are unlikely to increase

anytime soon.

New development is not what will be driving mall vacancy upwardin the months ahead. Increased closures from mid-priced hard

goods retailers are what caused this quarters uptick and are wha

we think will be responsible for further declines in occupancy

heading into 2015. But while the overall mall metrics may show

slight increases in vacancy, they will continue to mask the rea

story, which is the increasing gulf between Class A and Class B/C

properties. Increased closures will only accelerate this trend o

bifurcation as the market separates mall product into two basic

categories: trophies and trash.

We estimate current Class A Mall vacancy at just 2.5%. Class B

and C vacancy is the problem. We dont see this as a big portion o

the marketplace, but we do estimate vacancy for Class C product

at the 11% level. Class B is trickier and here is where we see

incredible pressure on landlords to upgrade and compete with

Class A or risk falling into the dreaded C category. We estimate

Class B vacancy to be closer to 6.0%.

While we continue to see consolidation from a number of major

mall retailers, we also continue to see strong growth from new

concepts and entertainment and restaurant players. The recen

IPO of Dave and Busters, for example, could raise $100 million o

more that likely would be used for aggressive expansion with malls

as a primary target for growth. Class A or trophy shopping centers

will avoid most of the closures we expect next year as retailers are

generally looking to pull the plug on less profitable Class B and C

locations while keeping these. Meanwhile, the vacancies that we do

see opening up in Class A centers are usually backfilled as quickly

as they become available. Class A properties are holding their own

quite well. The challenge is for older Class B and C properties.

This is the second consecutive quarter of increased mall

vacancy. Occupancy has been declining... since Q1 2014.


11/27Cassidy Turley


Current Qtr Last 12 Months UnderConstruction

Average QuotedRateShopping Centers Total GLA Total SF Vac Vac % Net Absorption Deliveries

Community/Neighborhood/Strip 3,557,208,433 342,064,976 9.6% 30,349,035 11,680,110 10,723,151 $15.50

Power Centers 928,463,496 52,792,545 5.7% 5,279,745 3,300,712 3,392,674 $18.44

Malls 612,071,024 28,858,862 4.7% 1,206,985 1,034,920 6,058,629 $19.59

Specialty Centers 197,385,949 13,530,390 6.9% 3,656,298 2,869,438 5,374,166 $20.21

All Shopping Centers 5,295,128,902 437,246,773 8.3% 40,492,063 18,885,180 25,548,620

National Summary

PACIFIC Current Qtr Last 12 Months UnderConstruction


Community/Neighborhood/Strip 645,442,242 49,238,355 7.6% 6,529,090 2,504,017 1,737,181 $20.77

Power Centers 151,046,930 8,135,627 5.4% 962,828 700,296 66,400 $24.45

Malls 110,114,969 2,986,112 2.7% 162,268 68,370 44,000 $21.67

Specialty Centers 36,755,991 2,288,329 6.2% 1,065,057 725,172 2,106,276 $20.73

All Shopping Centers 943,360,132 62,648,423 6.6% 8,719,243 3,997,855 3,953,857

Regional Summaries

MOUNTAIN Current Qtr Last 12 Months UnderConstruction


Community/Neighborhood/Strip 328,765,821 37,123,343 11.3% 2,723,788 852,543 933,082 $13.84

Power Centers 95,514,019 5,390,494 5.6% 979,148 78,542 69,772 $20.11

Malls 45,040,746 2,539,520 5.6% (45,971) 16,500 1,800,000 $15.67

Specialty Centers 15,306,779 1,487,196 9.7% 274,991 427,152 424,554 $21.87


MIDWEST GREAT PLAINS Current Qtr Last 12 Months UnderConstruction


Community/Neighborhood/Strip 190,170,782 18,671,487 9.8% 587,816 548,169 265,063 $12.00

Power Centers 53,699,254 3,633,011 6.8% 104,849 215,905 245,000 $14.86

Malls 36,935,052 2,907,178 7.9% (145,298) - 130,000 $13.47


All Shopping Centers 294,584,781 27,119,618 9.2% 847,673 1,193,574 678,973


12/27

MIDWEST GREAT LAKES Current Qtr Last 12 Months UnderConstruction



Power Centers 135,435,796 10,267,873 7.6% (210,877) 356,604 121,000 $13.28

Malls 90,778,981 7,772,764 8.6% 211,852 - 266,172 $11.94

Specialty Centers 24,794,631 1,173,797 4.7% (31,191) 138,895 852,158 $19.40


Cassidy Turley

National/Regional Summaries

TEXAS SOUTH CENTRAL Current Qtr Last 12 Months UnderConstruction



Power Centers 108,754,049 4,720,144 4.3% 1,262,411 495,488 45,989 $18.30

Malls 67,290,898 3,321,531 4.9% 81,949 78,550 33,457 $17.42



SOUTHERN US Current Qtr Last 12 Months UnderConstruction



Power Centers 33,056,571 2,726,649 8.2% 279,612 54,209 136,602 $15.92

Malls 18,505,923 2,137,563 11.6% 102,109 - - $10.10

Specialty Centers 6,645,654 992,608 14.9% 181,298 - - $13.81

All Shopping Centers 194,066,410 20,237,048 10.4% 1,980,014 118,009 230,802

SOUTHEAST Current Qtr Last 12 Months UnderConstruction



Power Centers 136,237,006 8,108,996 6.0% 271,844 91,836 1,175,422 $15.68

Malls 93,403,202 3,195,440 3.4% 163,952 124,000 880,000 $25.63

Specialty Centers 36,545,377 2,223,266 6.1% 1,066,720 712,302 902,467 $19.68


NORTHEAST Current Qtr Last 12 Months UnderConstruction



Power/Regional Centers 214,719,871 9,809,751 4.6% 1,629,930 1,307,832 1,532,489 $19.81

Malls 150,001,253 3,998,754 2.7% 676,124 747,500 2,905,000 $23.78


All Shopping Centers 1,044,622,639 62,659,090 6.0% 6,752,769 4,174,722 8,404,136

Regional Summaries


13/27Cassidy Turley


HAWAII Current Qtr Historical Vacancy Qrtly NetAbsorption

Last 12 Months UnderConstruction

AverageQuoted RateShopping Centers Total GLA Total SF Vac Vac % Vac % Prior Yr Net Absorption Deliveries

Community/Neighborhood 15,669,911 606,905 3.9% 3.8% 4.3% (7,508) 139,820 34,074 12,897 $39.55

Power/Regional Centers 5,959,834 223,007 3.7% 3.7% 3.7% (1,116) (5,295) 0 0 $42.95

Specialty Centers 771,484 63,894 8.3% 8.6% 14.5% 2,640 51,726 4,500 0 $60.00

Strip 1,560,831 124,701 8.0% 7.6% 7.4% (5,344) (8,879) 0 0 $26.15

Malls 3,782,140 24,953 0.7% 0.3% 0.0% (14,501) (24,953) 0 0 $48.00

All Shopping Centers 27,744,200 1,043,460 3.8% 3.5% 3.9% (25,829) 152,419 38,574 12,897

Pacific Region

INLAND EMPIRE, CA* Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 75,940,223 8,060,962 10.6% 10.9% 11.3% 218,378 911,015 397,969 209,389 $16.01

Power/Regional Centers 21,019,888 1,722,082 8.2% 8.3% 8.4% 30,569 183,565 7,000 0 $17.18

Specialty Centers 5,676,852 688,211 12.1% 12.6% 12.5% 25,391 25,474 5,200 0 $21.12

Strip 14,372,136 1,519,336 10.6% 10.6% 11.9% 20,846 245,423 54,184 9,000 $16.04

Malls 11,582,840 755,486 6.5% 6.7% 6.5% 19,413 1,166 0 0 -

All Shopping Centers 128,591,939 12,746,077 9.9% 9.8% 10.3% 314,597 1,366,643 464,353 218,389

LOS ANGELES, CA Current Qtr Historical Vacancy Qrtly NetAbsorption




Power/Regional Centers 36,961,225 2,257,189 6.1% 6.0% 4.7% 6,076 (106,344) 404,386 0 $22.53

Specialty Centers 7,839,021 277,195 3.5% 3.8% 5.4% 170,156 289,582 155,614 827,476 $19.27

Strip 38,686,715 2,677,141 6.9% 7.1% 7.5% 55,311 307,463 94,528 73,795 $23.14

Malls 28,326,885 620,913 2.2% 2.2% 2.2% (5,646) 8,161 0 0 $24.41

All Shopping Centers 230,359,480 13,203,610 5.7% 5.6% 5.7% 447,917 1,459,366 1,088,063 1,196,845

OAKLAND/EAST BAY, CA Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 36,372,355 2,090,172 5.7% 5.9% 6.3% 64,932 285,311 102,979 0 $21.99

Power/Regional Centers 10,661,123 461,597 4.3% 4.3% 6.1% (1,218) 245,762 59,610 0 $19.48

Specialty Centers 2,003,289 59,570 3.0% 2.9% 2.5% (2,173) (2,844) 7,540 158,131 $21.64

Strip 6,174,982 433,243 7.0% 7.6% 8.3% 38,377 85,659 10,088 15,040 $20.66

Malls 8,049,212 311,640 3.9% 3.9% 3.9% (19) (867) 0 0 $24.41

All Shopping Centers 63,260,961 3,356,222 5.3% 5.1% 5.6% 99,899 613,021 180,217 173,171

ORANGE COUNTY, CA Current Qtr Historical Vacancy Qrtly NetAbsorption




Power/Regional Centers 12,832,802 424,141 3.3% 3.2% 4.3% (14,945) 127,666 0 0 $32.09

Specialty Centers 4,142,992 329,785 8.0% 8.5% 11.3% 24,404 140,044 0 960,415 $30.86

Strip 11,895,286 702,219 5.9% 5.9% 6.3% (2,071) 59,831 15,000 0 $23.32

Malls 14,425,784 681,212 4.7% 3.4% 3.8% (192,637) (107,507) 26,600 44,000 $35.00

All Shopping Centers 99,656,039 5,500,418 5.5% 5.3% 5.9% 226,353 878,744 154,857 1,004,415

*Riverside & San Bernardino Counties, CA


14/27Cassidy Turley


PORTLAND, OR Current Qtr Historical Vacancy Qrtly NetAbsorption




Power/Regional Centers 13,535,620 807,969 6.0% 6.2% 7.0% 37,761 135,741 0 0 $18.51


Strip 8,918,710 1,051,740 11.8% 12.1% 12.1% 35,391 60,663 44,300 74,455 $16.24

Malls 6,768,604 267,017 3.9% 3.9% 4.8% (4,940) 59,954 0 0 $12.27


Pacific Region

SACRAMENTO, CA Current Qtr Historical Vacancy Qrtly NetAbsorption




Power/Regional Centers 15,211,368 1,147,382 7.5% 7.1% 7.2% 12,873 191,171 223,700 66,400 $18.62


Strip 10,611,337 1,578,100 14.9% 15.0% 16.2% 12,060 137,590 0 4,373 $15.04

Malls 3,330,053 130,019 3.9% 4.0% 3.0% 2,500 (9,718) 21,000 0 -


SAN DIEGO, CA Current Qtr Historical Vacancy Qrtly NetAbsorption





Specialty Centers 2,580,484 1 55,420 6.0% 6.4% 6.9% 10,688 128,904 115,000 140,000 $19.81

Strip 10,956,025 651,631 5.9% 6.4% 7.4% 46,360 185,758 27,545 8,800 $19.78

Malls 12,804,210 10,685 0.1% 0.1% 0.2% 0 17,000 0 0 -


SAN FRANCISCO, CA* Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 7,469,248 315,626 4.2% 4.4% 4.1% 13,591 (7,315) 0 74,477 $32.93


Specialty Centers 1,484,246 29,510 2.0% 2.8% 2.4% 12,383 5,455 0 0 -

Strip 1,834,485 47,775 2.6% 3.3% 3.3% 12,913 12,689 0 0 $29.09

Malls 3,871,460 27,977 0.7% 1.2% 3.9% 19,707 123,001 0 0 $48.09

All Shopping Centers 18,330,235 469,294 2.6% 2.7% 3.2% 49,127 138,723 0 74,477

SAN JOSE, CA Current Qtr Historical Vacancy Qrtly NetAbsorption





Specialty Centers 1,688,948 9,190 0.5% 0.6% 0.9% 1,762 5,745 0 0 -

Strip 5,695,311 270,459 4.7% 5.5% 6.3% 41,266 121,777 36,334 46,251 $28.05

Malls 7,587,949 70,663 0.9% 0.9% 1.5% 891 40,802 0 0 $33.00


*Includes San Francisco and San Mateo Counties


15/27Cassidy Turley


SANTA BARBARA, CA Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 6,090,554 411,926 6.8% 6.9% 7.5% 5,280 50,659 4,320 0 $18.84


Specialty Centers 0 0 0.0% 0.0% 0.0% 0 0 0 0 $0.00

Strip 957,477 44,363 4.6% 4.8% 4.8% 1,964 1,589 0 0 $22.19

Malls 0 0 0.0% 0.0% 0.0% 0 0 0 0 $0.00

All Shopping Centers 9,581,521 470,942 4.9% 5.1% 5.5% 20,696 68,158 4,320 0

Pacific Region

SEATTLE, WA Current Qtr Historical Vacancy Qrtly NetAbsorption






Strip 12,244,560 1,055,957 8.6% 9.0% 9.4% 45,682 89,872 0 18,102 $18.18

Malls 9,585,832 85,547 0.9% 1.0% 1.3% 6,000 55,229 20,770 0 $30.46


ALBUQUERQUE, NM Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 15,280,192 1,347,138 8.8% 8.9% 9.9% 7,534 165,528 0 42,129 $12.49


Specialty Centers 212,283 6,000 2.8% 2.8% 4.2% 0 3,000 0 0 -

Strip 3,535,311 382,414 10.8% 11.2% 10.1% 12,068 (24,001) 0 0 $14.21

Malls 3,275,018 267,592 8.2% 8.2% 10.5% 0 77,584 0 0 $9.78

All Shopping Centers 24,025,515 2,093,261 8.7% 8.7% 9.4% 16,416 216,950 0 42,129

Mountain Summary

DENVER, CO Current Qtr Historical Vacancy Qrtly NetAbsorption





Specialty Centers 3,662,768 466,654 12.7% 13.0% 14.2% 8,514 53,081 0 0 $21.63

Strip 10,171,660 786,198 7.7% 8.2% 9.0% 46,608 159,605 38,315 23,000 $16.33

Malls 12,148,195 514,670 4.2% 4.1% 3.8% (9,048) (38,059) 16,500 0 $21.85



16/27Cassidy Turley


LAS VEGAS, NV Current Qtr Historical Vacancy Qrtly NetAbsorption





Specialty Centers 3,758,589 224,131 6.0% 6.0% 5.7% 117 253,597 278,923 364,554 $26.11

Strip 9,646,795 1,385,403 14.4% 14.3% 15.4% (10,037) 122,709 16,000 0 $14.40

Malls 5,606,870 320,038 5.7% 6.4% 6.6% 37,006 52,760 0 1,600,000 $23.65

All Shopping Centers 77,519,297 8,723,175 11.3% 11.1% 11.2% 404,755 799,992 309,343 2,386,590

Mountain Region

PHOENIX, AZ Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 91,215,345 12,697,981 13.9% 14.3% 15.1% 392,772 1,171,816 137,886 211,005 $13.39

Power/Regional Centers 31,714,963 1,823,840 5.8% 5.6% 6.3% (34,738) 168,579 0 57,272 $24.54

Specialty Centers 3,587,630 276,519 7.7% 7.3% 6.2% (14,619) (53,211) 0 60,000 $16.94

Strip 13,803,386 2,295,819 16.6% 17.1% 17.4% 69,192 145,269 48,979 65,043 $13.22

Malls 14,310,365 1,109,211 7.8% 8.4% 6.8% 97,783 (137,963) 0 0 -


RENO, NV Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 11,329,375 1,549,139 13.7% 13.5% 13.6% (15,980) (7,500) 6,337 0 $13.38


Specialty Centers 667,082 72,986 10.9% 12.3% 11.3% 8,842 2,628 0 0 30

Strip 2,863,817 497,529 17.4% 17.8% 16.9% 11,810 (13,745) 0 7,740 $15.23

Malls 1,926,419 134,958 7.0% 7.0% 7.9% 0 16,693 0 0 $24.78


SALT LAKE CITY, UT Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 34,504,219 2,104,470 6.1% 6.2% 5.7% 37,924 (5,456) 124,018 100,000 $12.10


Specialty Centers 2,498,526 385,114 15.4% 11.9% 10.4% (87,075) 7,030 148,229 0 $22.31

Strip 7,030,993 486,185 6.9% 7.4% 6.6% 31,454 (13,710) 6,323 0 $13.80

Malls 5,389,391 151,051 2.8% 2.5% 2.7% (14,523) (6,598) 0 200,000 $23.68


TUCSON, AZ Current Qtr Historical Vacancy Qrtly NetAbsorption




Power/Regional Centers 5,060,025 208,545 4.1% 4.6% 4.8% 24,486 48,558 14,000 7,500 $20.47

Specialty Centers 919,901 55,792 6.1% 6.2% 7.0% 800 8,866 0 0 $23.06

Strip 3,901,628 491,190 12.6% 11.9% 13.2% (25,070) 25,507 0 14,517 $12.96

Malls 2,384,488 42,000 1.8% 1.7% 1.3% (1,925) (10,388) 0 0 $42.00



17/27Cassidy Turley


DES MOINES, IA Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 8,529,521 527,105 6.2% 6.3% 5.8% 6,091 (11,387) 20,000 31,000 $11.09

Power/Regional Centers 1,073,165 109,630 10.2% 10.4% 9.9% 1,691 (3,273) 0 0 $13.53

Specialty Centers 520,759 6,288 1.2% 1.2% 2.6% 0 24,100 17,500 0 $22.84

Strip 2,364,128 223,618 9.5% 10.5% 12.4% 24,545 69,834 0 0 $11.51

Malls 4,428,969 169,268 3.8% 3.8% 4.0% 0 10,000 0 130,000 $16.53


Midwest/Great Plains Region

KANSAS CITY, MO Current Qtr Historical Vacancy Qrtly NetAbsorption




Power/Regional Centers 16,974,707 1,811,682 10.7% 10.2% 9.4% (73,848) (78,263) 144,269 245,000 $17.31


Strip 6,981,026 924,354 13.2% 13.4% 13.5% 16,289 58,956 48,227 6,000 $11.99

Malls 6,335,986 160,501 2.5% 2.5% 2.6% 0 1,406 0 0 $18.18

All Shopping Centers 79,653,602 8,297,919 10.4% 9.9% 9.6% (695) 316,860 538,988 347,590

MINNEAPOLIS/ST. PAUL, MN Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 41,779,712 3,603,461 8.6% 7.6% 7.4% (421,811) (504,070) 23,690 34,203 $13.12

Power/Regional Centers 15,372,175 863,983 5.6% 5.0% 5.3% (83,431) (1,631) 51,047 0 $15.48


Strip 11,716,202 1,235,937 10.5% 10.7% 10.9% 29,376 53,830 15,000 0 $13.44

Malls 11,753,648 221,383 1.9% 2.0% 2.2% 8,091 41,114 0 0 $14.00


OMAHA, NE Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 13,248,030 1,280,651 9.7% 9.9% 11.2% 28,954 204,310 0 0 $11.99

Power/Regional Centers 6,004,661 385,055 6.4% 6.5% 6.9% 3,964 43,360 14,589 0 $14.39

Specialty Centers 256,566 0 0.0% 0.0% 0.0% 0 0 0 0 -

Strip 3,918,932 388,541 9.9% 10.3% 11.8% 16,802 73,695 0 0 $11.38

Malls 3,759,773 313,854 8.3% 8.4% 8.4% 1,673 1,673 0 0 $14.00

All Shopping Centers 27,187,962 2,368,101 8.7% 8.0% 8.7% 51,393 323,038 14,589 0

ST. LOUIS, MO Current Qtr Historical Vacancy Qrtly NetAbsorption





Specialty Centers 4,937,776 1,252,904 25.4% 20.6% 21.7% (234,291) (179,923) 0 0 $9.80

Strip 9,349,817 1,104,945 11.8% 12.0% 12.9% 35,706 120,850 21,600 23,000 $12.94

Malls 10,656,676 2,042,172 19.2% 18.5% 16.7% (7,259) (199,491) 0 0 $8.62



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CHICAGO, IL Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 133,647,691 17,240,113 12.9% 13.5% 11.7% 764,399 (1,191,094) 698,528 426,373 $14.33

Power/Regional Centers 44,439,625 3,299,095 7.4% 7.9% 6.1% 207,154 (570,395) 13,394 0 $13.86

Specialty Centers 9,278,107 391,622 4.2% 3.9% 3.9% (28,939) (26,481) 135,895 552,000 $23.01

Strip 35,121,531 4,495,921 12.8% 13.0% 13.5% 75,427 306,811 84,621 7,200 $15.47

Malls 28,876,719 1,361,783 4.7% 4.7% 4.9% 2,616 41,123 0 76,172 $16.94

All Shopping Centers 251,363,673 26,788,534 10.7% 10.8% 9.6% 1,020,657 (1,440,036) 932,438 1,061,745

Midwest/Great Lakes Region

CINCINNATI/DAYTON, OH Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 49,050,538 6,649,475 13.6% 13.6% 14.6% 12,308 530,604 0 6,248 $9.47


Specialty Centers 4,262,924 206,501 4.8% 4.9% 4.8% 2,520 (770) 0 0 $10.12

Strip 9,645,249 1,242,732 12.9% 13.0% 13.6% 30,652 128,755 68,776 0 $13.55

Malls 10,955,830 978,438 8.9% 9.0% 8.9% 5,343 150 0 0 $5.25


CLEVELAND, OH Current Qtr Historical Vacancy Qrtly NetAbsorption





Specialty Centers 2,113,937 269,506 12.7% 12.7% 13.3% 0 11,780 0 0 $19.17

Strip 10,947,687 1,157,321 10.6% 10.8% 11.1% 25,622 54,972 0 0 $11.39

Malls 15,142,651 2,413,716 15.9% 15.9% 16.4% 198 75,041 0 0 $8.46


DETROIT, MI Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 73,254,434 10,418,263 14.2% 14.2% 14.5% (1,612) 251,670 6,500 43,758 $11.54

Power/Regional Centers 26,351,809 1,889,833 7.2% 7.2% 7.3% (4,544) 46,205 2,500 0 $12.88

Specialty Centers 5,049,113 209,625 4.2% 4.0% 3.9% (8,800) (13,943) 0 0 $17.96

Strip 19,970,199 2,779,383 13.9% 14.5% 15.2% 121,903 298,430 39,897 53,393 $13.15

Malls 19,672,935 1,567,749 8.0% 7.9% 8.4% (7,746) 78,129 0 50,000 $6.71


INDIANAPOLIS, IN Current Qtr Historical Vacancy Qrtly NetAbsorption





Specialty Centers 1,804,155 33,001 1.8% 1.8% 1.6% 1,800 (1,299) 3,000 0 25

Strip 7,213,658 769,032 10.7% 10.5% 11.9% (9,791) 87,471 0 0 $13.70

Malls 8,432,783 463,526 5.5% 5.5% 5.6% 0 12,329 0 0 $24.61



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MILWAUKEE/MADISON, WI Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 38,133,378 4,062,023 10.7% 10.7% 10.9% (351) 76,926 0 14,000 $10.45


Specialty Centers 2,286,395 63,542 2.8% 2.7% 2.8% (2,500) (478) 0 300,158 $21.01

Strip 7,954,332 850,860 10.7% 10.4% 10.8% (22,980) 4,283 0 39,129 $13.65

Malls 7,698,063 987,552 12.8% 12.9% 12.9% 5,080 5,080 0 140,000 $9.00


Midwest Great Lakes Region

AUSTIN, TX Current Qtr Historical Vacancy Qrtly NetAbsorption





Specialty Centers 2,916,369 60,147 2.1% 2.1% 0.8% 0 (36,529) 0 0 $13.53

Strip 6,966,437 665,499 9.6% 9.9% 11.3% 21,502 169,429 50,597 0 $17.83

Malls 5,240,796 4,988 0.1% 0.1% 0.2% 0 5,766 0 0 -


DALLAS, TX Current Qtr Historical Vacancy Qrtly NetAbsorption






Strip 31,620,941 3,463,421 11.0% 10.7% 12.0% 150,943 631,847 358,190 144,649 $14.74

Malls 25,270,621 1,250,422 4.9% 4.9% 5.0% (764) 6,538 0 0 $28.38

All Shopping Centers 219,042,134 20,623,945 9.4% 9.4% 10.1% 555,510 2,963,132 1,207,219 1,359,006

HOUSTON, TX Current Qtr Historical Vacancy Qrtly NetAbsorption






Strip 34,798,484 3,080,868 8.9% 9.2% 10.6% 162,241 765,836 165,153 81,177 $16.41

Malls 20,817,384 1,175,387 5.6% 5.7% 5.2% 9,106 (85,996) 0 0 $13.04


Texas/Panhandle/Lower Mississippi Delta Region


20/27Cassidy Turley


LITTLE ROCK, AR Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 11,310,563 954,926 8.4% 8.2% 10.1% 19,669 231,808 50,000 0 $10.03

Power/Regional Centers 4,898,862 149,767 3.1% 3.0% 3.3% (700) 10,683 0 0 $16.06

Specialty Centers 688,169 51,510 7.5% 6.7% 7.6% (5,500) 720 0 0 $20.43

Strip 3,720,009 253,465 6.8% 7.2% 7.0% 18,731 8,565 3,000 0 $14.19

Malls 0 0 0.0% 0.0% 0.0% 0 0 0 0 $0.00


Texas/Panhandle/Lower Mississippi Delta Region

NEW ORLEANS, LA Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 17,452,705 1,727,266 9.9% 9.8% 9.9% (19,219) (2,015) 0 0 $12.98

Power/Regional Centers 3,849,094 118,896 3.1% 3.1% 3.0% 0 (4,754) 0 0 $32.22

Specialty Centers 1,627,907 95,739 5.9% 5.9% 2.6% 0 (52,882) 0 0 $22.27

Strip 3,449,025 382,288 11.1% 10.8% 11.5% 218 23,903 11,850 0 $15.07

Malls 3,846,551 97,153 2.5% 3.1% 3.2% 23,300 24,159 0 0 $21.00

All Shopping Centers 30,225,282 2,421,342 8.0% 7.6% 7.5% 4,299 (11,589) 11,850 0

OKLAHOMA CITY, OK Current Qtr Historical Vacancy Qrtly NetAbsorption





Specialty Centers 692,817 42,085 6.1% 5.9% 7.8% 16,539 29,314 19,092 0 $16.35

Strip 7,177,740 475,077 6.6% 7.1% 7.1% 32,548 66,815 33,774 0 $11.23

Malls 3,002,340 694,639 23.1% 23.1% 24.4% 0 37,595 0 0 $6.00


SAN ANTONIO, TX Current Qtr Historical Vacancy Qrtly NetAbsorption






Strip 9,486,283 783,507 8.3% 8.8% 9.8% 48,368 265,457 129,505 20,185 $15.38

Malls 6,105,710 54,232 0.9% 0.8% 0.9% 67,117 78,287 78,550 14,450 -

All Shopping Centers 64,162,152 4,568,752 7.1% 7.1% 7.9% 276,201 1,484,726 1,008,478 102,180

TULSA, OK Current Qtr Historical Vacancy Qrtly NetAbsorption





Specialty Centers 872,362 124,872 14.3% 13.3% 14.5% (8,951) 1,984 0 0 $10.89

Strip 5,909,820 403,497 6.8% 7.4% 7.7% 36,711 70,457 23,078 0 $11.28

Malls 3,007,496 44,710 1.5% 1.4% 2.0% (2,400) 15,600 0 19,007 $28.22



21/27Cassidy Turley


BIRMINGHAM, AL Current Qtr Historical Vacancy Qrtly NetAbsorption






Strip 5,354,052 404,595 7.6% 7.8% 9.3% 13,515 101,024 9,200 0 $11.03

Malls 2,818,064 86,909 3.1% 3.1% 3.2% 0 2,904 0 0 -


Southern US Region

LOUISVILLE, KY Current Qtr Historical Vacancy Qrtly NetAbsorption





Specialty Centers 364,956 65,484 17.9% 17.8% 18.4% (530) 1,530 0 0 $17.75

Strip 3,618,560 477,564 13.2% 14.1% 15.7% 33,543 91,259 0 0 $13.63

Malls 3,894,634 371,585 9.5% 9.7% 9.9% 4,562 12,228 0 0 $8.55

All Shopping Centers 37,440,797 2,965,206 7.9% 8.4% 9.0% 252,075 498,547 0 0

MEMPHIS, TN Current Qtr Historical Vacancy Qrtly NetAbsorption






Strip 7,434,625 804,378 10.8% 11.7% 12.1% 64,272 95,362 2,400 0 $12.49

Malls 3,269,744 849,040 26.0% 26.0% 27.6% 0 52,900 0 0 $1.19


MOBILE, AL Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 9,235,717 1,074,347 11.6% 11.3% 11.1% (27,336) (53,584) 0 5,000 $10.88



Strip 2,555,168 195,306 7.6% 8.6% 9.0% 23,168 33,726 0 0 $10.61

Malls 2,283,955 96,971 4.2% 4.2% 4.3% 0 1,733 0 0 -

All Shopping Centers 17,509,151 1,867,857 10.7% 9.9% 9.9% 20,558 10,996 0 5,000

NASHVILLE, TN Current Qtr Historical Vacancy Qrtly NetAbsorption






Strip 5,823,681 511,306 8.8% 9.5% 9.9% 44,608 67,236 0 14,200 $15.04

Malls 6,239,526 733,058 11.7% 11.7% 12.3% 0 32,344 0 0 $24.00



22/27Cassidy Turley


ATLANTA, GA Current Qtr Historical Vacancy Qrtly NetAbsorption






Strip 34,545,330 4,603,891 13.3% 13.7% 14.4% 119,475 354,487 0 0 $13.18

Malls 18,223,286 985,602 5.4% 5.5% 5.6% 8,085 35,838 0 0 $18.62


Southeast Region

CHARLESTON, SC Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 13,235,632 1,256,552 9.5% 9.1% 9.1% (50,580) 87,725 151,846 0 $14.29


Specialty Centers 1,012,980 18,247 1.8% 1.4% 1.4% (3,919) (4,457) 0 0 $28.16

Strip 3,040,166 325,943 10.7% 11.3% 10.6% 16,345 (3,337) 0 0 $14.08

Malls 2,101,239 20,146 1.0% 0.5% 0.6% (9,499) (8,230) 0 0 -

All Shopping Centers 21,709,738 1,752,760 8.1% 7.3% 7.0% (54,420) 26,542 151,846 0

CHARLOTTE, NC Current Qtr Historical Vacancy Qrtly NetAbsorption






Strip 9,129,231 952,552 10.4% 10.8% 12.1% 30,336 157,680 6,751 0 $13.42

Malls 6,995,613 126,215 1.8% 1.8% 1.6% 0 (13,169) 0 0 $40.50


HAMPTON ROADS, VA Current Qtr Historical Vacancy Qrtly NetAbsorption





Specialty Centers 1,724,427 127,640 7.4% 7.4% 8.4% 0 17,990 0 93,326 $22.11

Strip 6,976,712 638,503 9.2% 9.5% 10.1% 37,265 119,918 60,222 0 $14.32

Malls 4,223,135 357,457 8.5% 8.6% 8.9% 7,278 19,484 0 0 $21.39


JACKSONVILLE, FL Current Qtr Historical Vacancy Qrtly NetAbsorption



Community/Neighborhood 31,806,650 3,645,171 11.5% 11.5% 11.9% (2,089) 166,245 13,476 99,607 $12.16


Specialty Centers 1,375,635 107,726 7.8% 6.5% 6.9% (18,364) (12,418) 0 0 23.70

Strip 7,506,251 913,223 12.2% 11.5% 13.3% (46,914) 111,272 27,135 0 $14.08

Malls 4,880,719 188,794 3.9% 4.0% 3.8% 124,000 114,000 124,000 0 $17.89



23/27Cassidy Turley


Southeast Region

MIAMI, FL Current Qtr Historical Vacancy Qrtly NetAbsorption





Specialty Centers 6,449,681 407,115 6.3% 5.9% 7.9% (28,805) 513,985 444,000 150,000 $29.99

Strip 25,469,928 1,627,508 6.4% 6.5% 6.9% 49,181 176,318 42,914 14,117 $20.76

Malls 22,959,130 496,738 2.2% 2.3% 1.9% 39,965 (69,602) 0 0 $50.15

All Shopping Centers 177,806,539 11,736,138 6.6% 6.5% 6.9% 17,992 1,246,478 660,805 1,486,243

ORLANDO, FL Current Qtr Historical Vacancy Qrtly NetAbsorption




Power/Regional Centers 13,973,768 822,354 5.9% 5.3% 5.6% (78,708) (24,520) 10,320 427,000 $15.27

Specialty Centers 6,256,763 261,682 4.2% 4.4% 4.3% 14,801 9,077 0 27,968 $21.18

Strip 11,440,014 1,421,093 12.4% 12.6% 12.9% 17,186 96,206 42,300 0 $15.13

Malls 11,071,536 629,152 5.7% 4.1% 4.4% (174,000) (141,229) 0 0 $11.29


RALEIGH/DURHAM, NC Current Qtr Historical Vacancy Qrtly NetAbsorption




Power/Regional Centers 11,799,698 584,103 5.0% 5.2% 5.3% 35,012 4 3,767 0 0 $16.31


Strip 3,657,031 462,598 12.6% 12.7% 13.9% 3,578 50,716 4,706 0 $15.54

Malls 7,568,597 113,857 1.5% 1.6% 1.7% 4,608 16,992 0 0 -


RICHMOND, VA Current Qtr Historical Vacancy Qrtly NetAbsorption





Specialty Centers 1,061,157 9,894 0.9% 0.9% 1.6% 0 6,846 0 0 -

Strip 4,192,974 456,557 10.9% 10.9% 9.5% (693) (57,389) 0 0 $14.59

Malls 3,311,659 42,822 1.3% 1.3% 1.7% 0 14,278 0 0 -


Documents

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