Metro: Norfolk/Hampton Roads Submarket: Nwprt. News/Hampton · Q2 2010 of negative 11,400 square...

Metro: Norfolk/Hampton RoadsSubmarket: Nwprt. News/Hampton

Copyright 2020 Reis, Inc.


ContentsSubmarket Executive Briefing 3

Submarket Trend Futures 6

Current Submarket Rent Details7

Nonanchor Rent Growth Comparisons7

Current Submarket Rent Details7


Current Submarket Vacancy Details8

Vacancy Rate Comparisons9

Current Submarket Vacancy Details9


Nonanchor Rent Growth Comparisons and Forecast10

Vacancy Rate Comparisons and Forecast11

Submarket Inventory Details12

Inventory Growth Comparisons12

Construction/Absorption Change13

Economic and Demographic Trends14

Submarket Area Map15

Submarket Data17

Submarket Data18

Submarket Data19

Metro Executive Briefing 20

Reis Observer 22

Metro Trend Futures 33

Current Metro Rent Details34


Current Metro Rent Details34


Current Metro Vacancy Details35


Current Metro Vacancy Details36


Nonanchor Rent Growth Comparisons and Forecast37

Vacancy Rate Comparisons and Forecast38

Metro Inventory Details39

Inventory Growth Comparisons39



Metro Area Map42


Contents (Continued)Metro Data

44Metro Data

45Metro Data

46Submarket Overview 47

New Construction Listing 49

Construction Deliveries50

Metro Construction Breakdown50

Submarket New Construction Project Tally50

Metro Inventory Details50

Inventory Growth Rankings Forecast51


Occupancy at Completion51

Stabilization Data52

Metro Area Map52

New Construction Listing54

Sales Trend 56

Activity57

Map57

Most Recent Transactions57

Comparable Group Details58

Power Center Report 61

Current Rent Snapshot62

Current Vacancy Snapshot62

New Construction62

Metro Power Center and Regional Mall Projects63

Cap Rate Trending63

Recent Metro Area Regional Mall Sales63

Metro Area Power Center and Regional Malls64

Metro Area Power Center and Regional Malls66

Economic and Demographic Data66


Submarket Executive Briefing

Submarket Executive BriefingRetail - 1st Quarter 2020Prepared By Reis, Inc.

Metro: Norfolk/Hampton RoadsSubmarket: Newport News/HamptonCustomerID:1075682

Copyright 2020 Reis, Inc. 1075682

Section 1 - Executive Briefing on Submarket Conditions

Average Asking Rent $13.65

● Up 0.4% from year-end 2019.

● Expected to finish 2020 at $12.63.

Average Vacancy Rate 15.1%

● Drifted downward by 20 basis points.

● Expected to finish 2020 at 17.6%.

Submarket Overview

With 5.3 million square feet,amounting to 19.8% of the total metroinventory, the NewportNews/Hampton submarket is thesecond largest of the six distinctgeographic concentrations that formthe Norfolk/Hampton Roads retailmarket, smaller only thanNorfolk/Chesapeake. In the ten-yearperiod beginning with Q2 2010, newadditions to the submarket totaled266,000 square feet, amounting to anannualized inventory growth rate of0.5%; over the same period, themetro growth rate has been 0.3%.

Asking and Effective Rent

Asking rents rose by 0.4% during thefirst quarter of 2020 to an average of$13.65, the lowest observed acrossthe metro's six submarkets. Since thesame reporting period last year,asking rents have advanced by 0.7%,up from $13.56. The NewportNews/Hampton submarket's currentasking rent levels are lower than themetro's average of $16.28, whileasking rent growth in the first quartercompares favorably to the metroaverage of 0.2%. Effective rents,which exclude the value ofconcessions offered to prospectivetenants, climbed by 0.5% during thefirst quarter to an average of $11.29.

Competitive Inventory, Absorption

Since the beginning of Q2 2010, themetro recorded an average annualabsorption rate of negative 11,400square feet. During the first quarter,metropolitan absorption totalednegative 62,000 square feet. In theNewport News/Hampton submarket,however, new renters took a net totalof 10,000 square feet off of themarket. The first quarter's positiveabsorption in the submarket followstwo consecutive quarters of negativeabsorption, amounting to 19,000square feet. The submarket sawabsorption totaling negative 23,000square feet over the past fourquarters; in historical perspective, thisrecent rate of tenant outmigration iseven greater than the annual averagesince the beginning of Q2 2010 ofnegative 600 square feet. Thesubmarket's average vacancy ratedrifted downward by 20 basis pointsduring the first quarter to 15.1%,which is 4.5 percentage points higherthan the long-term average, and 2.2percentage points higher than thecurrent metro average.

Outlook

Reis's new construction observationteam reports that no competitive retailstock will be introduced to thesubmarket through the end of 2022.Between now and year-end, net totalabsorption will be negative 135,000square feet. As a result, the vacancyrate will drift upward by 2.5percentage points to 17.6%. During2021 and 2022, no additionalcompetitive stock is expected to beintroduced to the submarketinventory. Total employment growthduring 2021 and 2022 is projected toaverage 1.5% annually, whilehousehold formations are expected toaverage an increase of 0.7% per year.Over the same period the metroabsorption rate is expected toaverage negative 109,000 square feetper year. The NewportNews/Hampton submarket, however,will experience absorption averaging13,000 square feet per year. Thesubmarket vacancy rate will finish2021 at 18.4% and will fall 1.2percentage points to 17.2% by yearend 2022. Between now and year-end2020 asking rents are expected to fall-7.5% to a level of $12.63, whileeffective rents will decline by -11.5%to $9.99. Thereafter, Reis projectsthat asking rent growth will decelerateto an annualized average of -0.8%during 2021 and 2022 to reach a levelof $12.44 per square foot.


Submarket Trend Futures

Submarket Trend FuturesRetail - 1st Quarter 2020Prepared By Reis, Inc.



Neighborhood Shopping Centers

Section 2 - Current Submarket Rent Details

Nonanchor Asking Rentby Age

Nonanchor Asking Rent Distribution Nonanchor Asking Rent Growth Rate Distribution

Year Built Rent

Before 1970 $14.55

1970-1979 $17.24

1980-1989 $16.62

1990-1999 $16.15

2000-2009 $18.48

After 2009 $27.89

All $13.91

As of 03/31/20

Low 25% Mean Median 75% High

$ 9.17 $12.49 $13.91 $16.29 $18.55 $27.89

7 7

5

9

0

3

0

3

Under$11.83

$11.84$14.30

$14.31$16.77

$16.78$19.24

$19.25$21.71

$21.72$24.18

$24.19$26.65

$26.66Over

Num

ber

of P

rope

rtie

s


0.0% 0.5% 0.4% 0.5% 0.8% 0.9%

13

0

9

2

19

0 0

Under- 0.1%

0.0%0.1%

0.2%0.3%

0.4%0.5%

0.6%0.7%

0.8%0.9%

1.0%1.1%

1.2%Over

Num

ber

of P

rope

rtie

s

1 Negative Growth 33Positive Growth

As of 03/31/20 Qtr Ending 03/31/20

Anchor Asking Rent DistributionLow 25% Mean Median 75% High

$ 5.79 $ 8.87 $11.56 $11.10 $14.35 $17.43

As of 03/31/20

Section 3 - Nonanchor Rent Growth Comparisons

Asking Rent Growth

Quarterly Annualized

1Q20 4Q19 YTD Avg 1 Year 3 Year 5 Year

Nwprt. News/Hampton 0.4% - 0.5% 0.4% 2.0% 0.5% 0.9%

Norfolk/Hampton Roads 0.1% - 0.2% 0.1% 0.6% 1.2% 1.3%

South Atlantic 0.2% 0.3% 0.2% 1.3% 1.8% 2.0%

United States 0.1% 0.1% 0.1% 1.3% 1.7% 1.8%

Period Ending: 03/31/20 12/31/19 03/31/20 12/31/19 12/31/19 12/31/19

Submarket Rank Total Submarket RanksCompared to: Subs

1Q20 4Q19 YTD 1 Year 3 Year 5 Year

Norfolk/Hampton Roads 6 3 6 3 1 5 5South Atlantic 110 27 97 27 38 96 97United States 386 107 326 107 113 311 314

1Q19 2Q19 3Q19 4Q19 1Q20

-0.40-0.200.000.200.400.600.801.001.201.401.60

Quarterly Rent Growth Rate Trends

Nwprt. News/Hampton

Norfolk/Hampton Roads

US

South Atlantic

%

Period ending 03/31/20

2015 2016 2017 2018 2019

-1.0

0.0

1.0

2.0

Nwprt. News/Hampton


South Atlantic

US

Asking Rent Growth Rate Trends%





Community Shopping Centers

Section 4 - Current Submarket Rent Details



Year Built Rent

Before 1970 $14.12

1970-1979 $12.25

1980-1989 $13.58

1990-1999 $25.88

2000-2009 $16.12

After 2009 $29.15

All $13.43

As of 03/31/20


$12.00 $12.40 $13.43 $15.38 $28.30 $29.15

0

8

3

01

0 0

2

Under$11.83

$11.84$14.30

$14.31$16.77

$16.78$19.24

$19.25$21.71

$21.72$24.18

$24.19$26.65

$26.66Over

Num

ber

of P

rope

rtie

s


0.0% 0.5% 0.4% 0.5% 0.5% 4.3%

01

0

8

1

3

01

Under- 0.1%

0.0%0.1%

0.2%0.3%

0.4%0.5%

0.6%0.7%

0.8%0.9%

1.0%1.1%

1.2%Over

Num

ber

of P

rope

rtie

s


As of 03/31/20 Qtr Ending 03/31/20


$ 5.48 $ 7.58 $10.98 $ 8.85 $11.96 $26.79

As of 03/31/20


Asking Rent Growth



Nwprt. News/Hampton 0.4% - 0.4% 0.4% 1.3% - 0.4% 0.4%


South Atlantic 0.1% 0.3% 0.1% 1.2% 1.7% 1.9%

United States 0.1% 0.1% 0.1% 1.2% 1.5% 1.7%

Period Ending: 03/31/20 12/31/19 03/31/20 12/31/19 12/31/19 12/31/19




1Q19 2Q19 3Q19 4Q19 1Q20

-0.40-0.30-0.20-0.100.000.100.200.300.400.500.600.700.800.901.00


Nwprt. News/Hampton


US

South Atlantic

%


2015 2016 2017 2018 2019

-2.0

-1.0

0.0

1.0

2.0

Nwprt. News/Hampton


South Atlantic

US







Section 6 - Current Submarket Vacancy Details

Vacancy Rate By Age Vacancy Rate Distribution

Year Built Vac. Rate

Before 1970 12.0%

1970-1979 19.0%

1980-1989 14.8%

1990-1999 26.3%

2000-2009 3.6%

After 2009 14.0%

All 14.8%

As of 03/31/20


0.0% 3.2% 14.8% 9.7% 17.6% 62.4%

11

7

3

7

1 10

4

Under5.0%

5.1%10.0%

10.1%15.0%

15.1%20.0%

20.1%25.0%

25.1%30.0%

30.1%35.0%

35.1%Over

Num

ber

of P

rope

rtie

s

As of 03/31/20

Section 7 - Vacancy Rate Comparisons

Vacancy Rates



Nwprt. News/Hampton 14.8% 15.3% 14.8% 14.9% 13.1% 12.1%

Norfolk/Hampton Roads 13.3% 13.3% 13.3% 13.2% 12.2% 11.5%

South Atlantic 9.7% 9.7% 9.7% 9.8% 9.8% 10.0%

United States 10.5% 10.4% 10.5% 10.5% 10.4% 10.6%

Period Ending: 03/31/20 12/31/19 03/31/20 12/31/19 12/31/19 12/31/19




1Q19 2Q19 3Q19 4Q19 1Q20

10.010.511.011.512.012.513.013.514.014.515.0

Quarterly Vacancy Rates

Nwprt. News/Hampton


US

South Atlantic

%


2015 2016 2017 2018 2019

10.0

11.0

12.0

13.0

14.0

15.0

Nwprt. News/Hampton


South Atlantic

US

Vacancy Rate Trends%






Section 8 - Current Submarket Vacancy Details



Before 1970 20.8%

1970-1979 4.0%

1980-1989 16.3%

1990-1999 31.1%

2000-2009 24.6%

After 2009 4.5%

All 15.3%

As of 03/31/20


2.5% 4.9% 15.3% 6.0% 18.0% 47.2%

3

5

0

2

1 1

0

2

Under5.0%

5.1%10.0%

10.1%15.0%

15.1%20.0%

20.1%25.0%

25.1%30.0%

30.1%35.0%

35.1%Over

Num

ber

of P

rope

rtie

s

As of 03/31/20


Vacancy Rates



Nwprt. News/Hampton 15.3% 15.2% 15.3% 15.0% 12.8% 12.0%


South Atlantic 9.3% 9.4% 9.3% 9.5% 9.3% 9.3%

United States 9.9% 9.9% 9.9% 10.0% 9.7% 9.6%

Period Ending: 03/31/20 12/31/19 03/31/20 12/31/19 12/31/19 12/31/19




1Q19 2Q19 3Q19 4Q19 1Q20

9.510.010.511.011.512.012.513.013.514.014.515.0


Nwprt. News/Hampton


US

South Atlantic

%


2015 2016 2017 2018 20199.0

10.0

11.0

12.0

13.0

14.0

15.0

Nwprt. News/Hampton


South Atlantic

US






Neighborhood and Community Shopping Centers

Section 10 - Nonanchor Rent Growth Comparisons and Forecast

Asking Rent Growth


1Q20 4Q19 YTD Avg 1 Year 3 Year 5 Year 5 Yr Forecast

Nwprt. News/Hampton 0.4% - 0.4% 0.4% 1.6% 0.0% 0.6% - 1.7%

Norfolk/Hampton Roads 0.2% - 0.2% 0.2% 0.3% 0.9% 1.2% - 1.6%

South Atlantic 0.1% 0.3% 0.1% 1.3% 1.8% 1.9% - 1.2%

United States 0.1% 0.1% 0.1% 1.2% 1.6% 1.7% - 1.3%

Period Ending: 03/31/20 12/31/19 03/31/20 12/31/19 12/31/19 12/31/19 12/31/24


1Q20 4Q19 YTD 1 Year 3 Year 5 Year 5 Yr Forecast

Norfolk/Hampton Roads 6 2 6 2 1 5 6 5South Atlantic 110 16 95 16 47 107 105 74United States 386 73 316 73 144 366 348 241

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024-8.0

-6.0

-4.0

-2.0

0.0

2.0

Nwprt. News/Hampton


South Atlantic

US

Asking Rent Growth Rate Trends and Forecast%






Section 11 - Vacancy Rate Comparisons and Forecast

Vacancy Rates



Nwprt. News/Hampton 15.1% 15.3% 15.1% 15.0% 13.0% 12.1% 17.2%

Norfolk/Hampton Roads 12.9% 12.7% 12.9% 12.4% 11.8% 11.1% 15.2%

South Atlantic 9.5% 9.6% 9.5% 9.6% 9.5% 9.7% 12.2%

United States 10.1% 10.2% 10.1% 10.2% 10.1% 10.1% 12.7%

Period Ending: 03/31/20 12/31/19 03/31/20 12/31/19 12/31/19 12/31/19 12/31/24




2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

10.0

12.0

14.0

16.0

18.0

Nwprt. News/Hampton


South Atlantic

US

Vacancy Rate Trends and Forecast%


Section 12 - Submarket Inventory Details

Inventory By Center Age Shopping Center Stock Traits

Year Built Percent

Before 1970 21.0%

1970-1979 19.0%

1980-1989 26.0%

1990-1999 19.0%

2000-2009 8.0%

After 2009 6.0%

All 100.0%

As of 03/31/20

SubmarketLow Mean Median High

Year Built 1954 1985 1986 2015Size (sq. ft.) 16,900 92,905 73,197 263,680

Distance to Highway (miles) 0 0.3 0.2 1.2Distance to CBD (miles) 9 15.9 15 22.7

Distance to Landmark (miles) 0.4 1.8 1.8 3.4As of 03/31/20 Landmark =Coast

Average Submarket Lease Terms

Anchor/Nonanchor CRD % Free Rent

(mos)Expenses $

(Commercial)Lease Term

(yrs)Leasing

Commission %Tenant

Improvements $A - 7.7% 7.8 $ 2.10 11.4 9.7% $15.13N - 8.7% 7.3 $ 2.10 4.2 12.1% $17.92

As of 03/31/20




Section 13 - Inventory Growth Comparisons

Inventory Growth Rates



Nwprt. News/Hampton 0.0% 0.0% 0.0% 0.0% 0.0% 0.9% 0.0%

Norfolk/Hampton Roads 0.0% 0.0% 0.0% 0.0% - 0.2% 0.2% 0.1%

South Atlantic 0.0% 0.1% 0.0% 0.3% 0.4% 0.5% 0.3%

United States 0.0% 0.1% 0.0% 0.3% 0.4% 0.4% 0.3%

Period Ending: 03/31/20 12/31/19 03/31/20 12/31/19 12/31/19 12/31/19 12/31/24




2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

0.0

1.0

2.0

3.0

4.0

Nwprt. News/Hampton


South Atlantic

US

Inventory Growth Comparisons and Forecast%





Section 14 - Construction/Absorption Change

Construction and Absorption

Quarterly

1Q20 4Q19 YTD Avg

Sq Ft Built Sq FtAbsorbed

Con/AbsRatio Sq Ft Built Sq Ft

AbsorbedCon/Abs

Ratio Sq Ft Built Sq FtAbsorbed

Con/AbsRatio

Nwprt. News/Hampton 0 10,000 0.0 0 -8,000 0.0 0 10,000 0.0

Norfolk/Hampton Roads 0 -62,000 0.0 0 -139,000 0.0 0 -62,000 0.0Average over period ending: 03/31/20 03/31/20 03/31/20 12/31/19 12/31/19 12/31/19 03/31/20 03/31/20 03/31/20

Annualized

1 Year History 3 Year History 5 Year History



AbsorbedCon/Abs


Con/AbsRatio

Nwprt. News/Hampton 0 -31,000 0.0 0 -94,000 0.0 46,000 -16,000 -2.9

Norfolk/Hampton Roads 34,000 -164,000 -0.2 11,000 -253,000 0.0 90,000 -136,000 -0.7Average over period ending: 12/31/19 12/31/19 12/31/19 12/31/19 12/31/19 12/31/19 12/31/19 12/31/19 12/31/19

Annualized

5 Year Forecast


Con/AbsRatio

Nwprt. News/Hampton 0 -8,400 0.0

Norfolk/Hampton Roads 24,400 -56,000 -0.4Average over period ending: 12/31/24 12/31/24 12/31/24

-100,000

0

100,000

200,000

Squ

are

Fee

t

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

0

5

10

15

Vac

ancy

Rat

e (%

)Construction/Absorption and Vacancy

Vacancy Rate Construction Absorption





Section 15 - Economic and Demographic Trends

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

Norfolk/Hampton Roads South Atlantic US

Household Income Growth Trends and Forecast Metro vs. Region & U.S.

Per

cent

age

Cha

nge

Provided by Moody's Economy.com, Period ending 12/31/24

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%


Total Employment Growth Trends and Forecast Metro vs. Region & U.S.

Per

cent

age

Cha

nge


2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

0.20%

0.40%

0.60%

0.80%

1.00%

Population Households

Norfolk/Hampton Roads Population/Household Growth Trends and Forecast

Per

cent

age

Cha

nge





Section 16 - Submarket Area Map: Newport News/Hampton

Metro:Norfolk/Hampton Roads Submarket:Newport News/Hampton

Newport News Township Line Hampton River James River

Hampton Township Line





Section 17 - Submarket Data

Year Qtr InventorySF/Units Completions Inventory

Growth% Vacant Stock VacancyRate

VacancyChange(BPS)

OccupiedStock

NetAbsorption Asking Rent Ask Rent %

Chg

2015 Y 2,384,000 0 0.0% 253,000 10.6% 100 2,131,000 -24,000 $13.54 2.0%

2016 Y 2,384,000 0 0.0% 236,000 9.9% -70 2,148,000 17,000 $13.66 0.9%

2017 Y 2,384,000 0 0.0% 305,000 12.8% 290 2,079,000 -69,000 $13.84 1.3%

2018 Q2 2,384,000 0 0.0% 341,000 14.3% 150 2,043,000 -36,000 $13.51 - 1.4%

2018 Q3 2,384,000 0 0.0% 341,000 14.3% 0 2,043,000 0 $13.51 0.0%

2018 Q4 2,384,000 0 0.0% 346,000 14.5% 20 2,038,000 -5,000 $13.59 0.6%

2018 Y 2,384,000 0 0.0% 346,000 14.5% 170 2,038,000 -41,000 $13.59 - 1.8%

2019 Q1 2,384,000 0 0.0% 350,000 14.7% 20 2,034,000 -4,000 $13.82 1.7%

2019 Q2 2,384,000 0 0.0% 355,000 14.9% 20 2,029,000 -5,000 $13.91 0.7%

2019 Q3 2,384,000 0 0.0% 360,000 15.1% 20 2,024,000 -5,000 $13.93 0.1%

2019 Q4 2,384,000 0 0.0% 365,000 15.3% 20 2,019,000 -5,000 $13.86 - 0.5%

2019 Y 2,384,000 0 0.0% 365,000 15.3% 80 2,019,000 -19,000 $13.86 2.0%

2020 Q1 2,384,000 0 0.0% 353,000 14.8% -50 2,031,000 12,000 $13.91 0.4%

Year Qtr EffectiveRent

Eff Rent %Chg Cons/Abs Abs/Occ

Stock%

2015 Y $11.23 2.1% 0.0 - 1.1%

2016 Y $11.34 1.0% 0.0 0.8%

2017 Y $11.48 1.2% 0.0 - 3.3%

2018 Q2 $11.20 - 1.5% 0.0 - 1.8%

2018 Q3 $11.20 0.0% n/a 0.0%

2018 Q4 $11.25 0.5% 0.0 - 0.2%

2018 Y $11.25 - 2.0% 0.0 - 2.0%

2019 Q1 $11.45 1.8% 0.0 - 0.2%

2019 Q2 $11.52 0.6% 0.0 - 0.2%

2019 Q3 $11.53 0.1% 0.0 - 0.2%

2019 Q4 $11.47 - 0.5% 0.0 - 0.2%

2019 Y $11.47 2.0% 0.0 - 0.9%

2020 Q1 $11.52 0.4% 0.0 0.6%








VacancyChange(BPS)

OccupiedStock


Chg

2015 Y 2,892,000 230,000 8.6% 315,000 10.9% 100 2,577,000 179,000 $13.37 1.9%

2016 Y 2,892,000 0 0.0% 286,000 9.9% -100 2,606,000 29,000 $13.55 1.3%

2017 Y 2,892,000 0 0.0% 327,000 11.3% 140 2,565,000 -41,000 $13.49 - 0.4%

2018 Q2 2,892,000 0 0.0% 367,000 12.7% 190 2,525,000 -55,000 $13.15 - 1.0%

2018 Q3 2,892,000 0 0.0% 385,000 13.3% 60 2,507,000 -18,000 $13.13 - 0.2%

2018 Q4 2,892,000 0 0.0% 428,000 14.8% 150 2,464,000 -43,000 $13.21 0.6%

2018 Y 2,892,000 0 0.0% 428,000 14.8% 350 2,464,000 -101,000 $13.21 - 2.1%

2019 Q1 2,892,000 0 0.0% 422,000 14.6% -20 2,470,000 6,000 $13.34 1.0%

2019 Q2 2,892,000 0 0.0% 431,000 14.9% 30 2,461,000 -9,000 $13.44 0.7%

2019 Q3 2,892,000 0 0.0% 437,000 15.1% 20 2,455,000 -6,000 $13.43 - 0.1%

2019 Q4 2,892,000 0 0.0% 440,000 15.2% 10 2,452,000 -3,000 $13.38 - 0.4%

2019 Y 2,892,000 0 0.0% 440,000 15.2% 40 2,452,000 -12,000 $13.38 1.3%

2020 Q1 2,892,000 0 0.0% 442,000 15.3% 10 2,450,000 -2,000 $13.43 0.4%



Stock%

2015 Y $11.01 2.0% 1.3 6.9%

2016 Y $11.17 1.4% 0.0 1.1%

2017 Y $11.13 - 0.4% 0.0 - 1.6%

2018 Q2 $10.84 - 1.0% 0.0 - 2.2%

2018 Q3 $10.82 - 0.2% 0.0 - 0.7%

2018 Q4 $10.88 0.6% 0.0 - 1.7%

2018 Y $10.88 - 2.2% 0.0 - 4.1%

2019 Q1 $10.99 1.0% 0.0 0.2%

2019 Q2 $11.08 0.8% 0.0 - 0.4%

2019 Q3 $11.08 0.0% 0.0 - 0.2%

2019 Q4 $11.04 - 0.4% 0.0 - 0.1%

2019 Y $11.04 1.5% 0.0 - 0.5%

2020 Q1 $11.09 0.5% 0.0 - 0.1%








VacancyChange(BPS)

OccupiedStock


Chg

2015 Y 5,276,000 230,000 4.6% 568,000 10.8% 100 4,708,000 155,000 $13.45 1.9%

2016 Y 5,276,000 0 0.0% 522,000 9.9% -90 4,754,000 46,000 $13.60 1.1%

2017 Y 5,276,000 0 0.0% 632,000 12.0% 210 4,644,000 -110,000 $13.65 0.4%

2018 Q2 5,276,000 0 0.0% 708,000 13.4% 170 4,568,000 -91,000 $13.31 - 1.2%

2018 Q3 5,276,000 0 0.0% 726,000 13.8% 40 4,550,000 -18,000 $13.30 - 0.1%

2018 Q4 5,276,000 0 0.0% 774,000 14.7% 90 4,502,000 -48,000 $13.38 0.6%

2018 Y 5,276,000 0 0.0% 774,000 14.7% 270 4,502,000 -142,000 $13.38 - 2.0%

2019 Q1 5,276,000 0 0.0% 772,000 14.6% -10 4,504,000 2,000 $13.56 1.3%

2019 Q2 5,276,000 0 0.0% 786,000 14.9% 30 4,490,000 -14,000 $13.65 0.7%

2019 Q3 5,276,000 0 0.0% 797,000 15.1% 20 4,479,000 -11,000 $13.66 0.1%

2019 Q4 5,276,000 0 0.0% 805,000 15.3% 20 4,471,000 -8,000 $13.60 - 0.4%

2019 Y 5,276,000 0 0.0% 805,000 15.3% 60 4,471,000 -31,000 $13.60 1.6%

2020 Q1 5,276,000 0 0.0% 795,000 15.1% -20 4,481,000 10,000 $13.65 0.4%

2020 Y 5,276,000 0 0.0% 930,000 17.6% 230 4,346,000 -125,000 $12.63 - 7.1%

2021 Y 5,276,000 0 0.0% 971,000 18.4% 80 4,305,000 -41,000 $12.48 - 1.2%

2022 Y 5,276,000 0 0.0% 905,000 17.2% -120 4,371,000 66,000 $12.44 - 0.3%

2023 Y 5,276,000 0 0.0% 878,000 16.6% -60 4,398,000 27,000 $12.44 0.0%

2024 Y 5,276,000 0 0.0% 847,000 16.1% -50 4,429,000 31,000 $12.47 0.2%



Stock%

2015 Y $11.11 2.0% 1.5 3.3%

2016 Y $11.25 1.3% 0.0 1.0%

2017 Y $11.29 0.4% 0.0 - 2.4%

2018 Q2 $11.00 - 1.3% 0.0 - 2.0%

2018 Q3 $10.99 - 0.1% 0.0 - 0.4%

2018 Q4 $11.05 0.5% 0.0 - 1.1%

2018 Y $11.05 - 2.1% 0.0 - 3.2%

2019 Q1 $11.20 1.4% 0.0 0.0%

2019 Q2 $11.28 0.7% 0.0 - 0.3%

2019 Q3 $11.28 0.0% 0.0 - 0.2%

2019 Q4 $11.23 - 0.4% 0.0 - 0.2%

2019 Y $11.23 1.6% 0.0 - 0.7%

2020 Q1 $11.29 0.5% 0.0 0.2%

2020 Y $ 9.99 -11.0% 0.0 - 2.9%

2021 Y $ 9.87 - 1.2% 0.0 - 1.0%

2022 Y $ 9.98 1.1% 0.0 1.5%

2023 Y $10.11 1.3% 0.0 0.6%

2024 Y $10.16 0.5% 0.0 0.7%


Metro Executive Briefing

Metro Executive BriefingRetail - 1st Quarter 2020Prepared By Reis, Inc.

Metro: Norfolk/Hampton RoadsCustomerID:1075682


Section 20 - Executive Briefing on Metro Conditions

Average Asking Rent $16.28

● Up 0.2% from year-end 2019.

● Expected to finish 2020 at $14.94.

Average Vacancy Rate 12.9%

● Drifted upward by 20 basis points.

● Among the 20 highest vacancies nationally.

● Expected to finish 2020 at 15.0%.

Market Overview

The Norfolk/Hampton Roads retailmarket is comprised of 26.7 millionsquare feet in six geographicconcentrations ranging in size fromthe 6.6 million square footNorfolk/Chesapeake submarket to theWilliamsburg/Gloucester/Yorksubmarket, which accounts for 2.7million square feet. In the ten-yearperiod beginning with Q2 2010, thePortsmouth/Suffolk submarket hasexperienced the greatest introductionof new inventory, 411,000 squarefeet, amounting to 41.5% of all newcompetitive stock added to themarket.

Asking and Effective Rent

Asking rents climbed by 0.2% duringthe first quarter of 2020 to an averageof $16.28. Since the same reportingperiod last year, asking rents haveticked upward by 0.1%, up from$16.26. Since the beginning of Q22010, the metro as a whole hasrecorded an annual average increaseof 0.9%. Effective rents, whichexclude the value of concessionsoffered to prospective tenants, also

rose by 0.2% during the first quarter.The identical rates of change suggestthat landlords have managed tomaintain a stable relationshipbetween asking and effective rentvalues. The asking rent growth rate ofthe metro's six underlying submarketsover the past four quarters has beenmixed, with cumulative change ratesranging from 1.4%(Lynnhaven/Oceana) to -1.2%(Norfolk/Chesapeake).

Competitive Inventory, Absorption

Although shifts in demand for retailspace typically trail employment andhousehold figures, it is worth notingthat the cumulative impact ofeconomic and demographic trends inthe Norfolk/Hampton Roadsmetropolitan area contributed toabsorption of negative 62,000 squarefeet during the first quarter, and a totalof negative 223,000 square feet overthe past four quarters; in historicalperspective, this recent rate of tenantoutmigration is even greater than theannual average since the beginning ofQ2 2010 of negative 11,400 squarefeet. In a long-term context, the firstquarter vacancy rate is 2.3

percentage points higher than the10.6% average recorded since thebeginning of Q2 2010.

Outlook

Between now and year's end, no newcompetitive retail stock will beintroduced to the metro, and Reisestimates that net total absorption willbe negative 558,000 square feet. Inresponse, the vacancy rate willcontinue to drift upward to finish theyear at 15.0%. During 2021 and 2022,developers are expected to deliver atotal of 30,000 square feet. Totalemployment growth during 2021 and2022 is expected to average 1.5%annually, while household formationsare projected to average an increaseof 0.7% per year. Over the sameperiod the metro absorption rate isexpected to average negative109,000 square feet per year. Themarket vacancy rate will finish 2021 at15.7% and will increase 0.2percentage points to 15.9% by yearend 2022. Between now and year-end2020 asking rents are expected todecline -8.2% to a level of $14.94,while effective rents will fall by -12.4%to $11.89.


Reis Observer

Reis Observer NORFOLK

1

Published January 13, 2020

THE ECONOMY

An uncertain future. “Healthy defense spending means 2019 should extend a period of economic growth for Hampton Roads,” noted The Virginia-Pilot earlier this year citing a forecast by Old Dominion University [ODU]. “But, [the forecast] said diversifying the local economy would be even better.” These have been the issues for a long while. With the local economy heavily dependent on the military (Hampton Roads—the name itself is a nautical term—hosts five major naval bases including Norfolk Naval Base, the world’s largest), the defense budget increases implemented under the Trump administration have been music to the ears of the Hampton Roads economy. Persistent anxiety over the earlier policy of base closings and contractions (remember BRAC?) has been much alleviated. Still, the lopsided local economy remains vulnerable to trends in the defense sector and the defense budget, which are changeable. Thus, the recent boost given to Hampton Roads does not address an underlying liability—the lack of substantial diversification. Thus, while local employment “has increased, household incomes continue to rise, and local GDP continues to surge thanks to wins in defense spending, tourism, and health services,” notes Cushman & Wakefield/Thalhimer, “Washington storm clouds will continue to be on the horizon in a market so impacted by the federal political landscape.” Further, the local economy lacks the business infrastructure—a broad-based core of corporate tenants, a substantial high-tech sector, a well-educated work force, for example—that would support ample diversification. Skilled young people continue to depart the area. Thus, noted ODU in an October report, “Hampton Roads’ economic recovery features an uncertain future.” Accordingly, the recent boost given by the defense sector is not transformative and leaves the local economy as dependent as ever on budgeting for defense. Indeed, private non-defense-related job growth has remained sluggish. According to U.S. Bureau of Labor Statistics (BLS) data, it took until late 2017 for average annual non-farm employment in the Hampton Roads Metropolitan Statistical Area (MSA) to return to pre-recession levels. Preliminary total non-farm employment in the local MSA as of November 2019, reflecting a mix of gains and losses among individual sectors, was up just 0.9% year-over-year, a gain of 7,200 jobs net. The October-to-October increase was 4,500 jobs (0.6%).

Employment: • The BLS reports a seasonally

unadjusted unemployment rate of 2.7% in October 2019 for the Virginia Beach-Norfolk-Newport News MSA, down from 3.0% one year earlier.

• Moody’s Economy.com reports a

third quarter 2019 average household income of $133,349 for Norfolk. Average household incomes of $161,142 and $143,029 are reported for the top metros in the nation and South Atlantic region, respectively.

Employment By Sector:

Employment Growth:

Reis ObserverJanuary 13, 2020Prepared By Reis, Inc.




2


Much of the recent weakness has been located in the Trade, Transportation, and Utilities and Professional and Business Services sectors. Employment in the former as of November was down fully 2,200 jobs from 12 months prior, a decline of 1.7%, while the latter saw a net loss of 1,700 jobs for a 1.5% decline. Notably, however, employment in the latter’s Professional, Scientific, and Technical Services subsector, perhaps a reflection of defense sector activity, grew by 2,700 jobs November-to-November for a hefty 5.2% increase. Interestingly as well, the Government sector as a whole shrunk by 1,600 jobs—a 1.0% loss—even as the Federal Subsector added 1,500 net for a 2.6% gain. The period’s strongest job creator was the Mining, Logging, and Construction sector (mainly Construction), which grew by 4,700 jobs for a gain of fully 12.5%; it was the highest rate of job growth as well. Leisure and Hospitality, accounting for fully 14.4% of total private non-farm employment, followed with 3,700 added net—growth at 4.2%—while the Manufacturing and Education and Health Services segments each grew by 1,600 jobs for respective increases of 2.8% and 1.4%. Population growth proceeds at a crawl. According to data provided by Moody’s Economy.com, the population of the local MSA, now counted at about 1.74 million, increased by only 0.3% (about 5,000 persons) in 2018, a rate of growth low enough or nearly so to indicate net emigration. Growth at 0.4% (about 7,000 persons) currently is expected for 2019.

OUTLOOK

While increases in defense spending bring some relief, reduce anxiety, and produce some new jobs, they neither alter the basic composition of the Hampton Roads economy nor eliminate its embedded liabilities. ODU “urges” Hampton Roads leadership to “look for opportunities to diversify the local economy.” On a large scale, though, that’s easier said than done. Slow growth and the related lack of diversification are likely to remain long-term trends here. “The 2020 presidential election, a potential withdrawal from Afghanistan, the continued rise of China, the challenge of North Korea and uncertainty in the Middle East will challenge defense budgets,” stated Robert M. McNab, director of ODU’s Dragas Center for Economic Analysis and Policy.





3


THE REAL ESTATE MARKET

OFFICE

With little corporate expansion or relocation and only a small white-collar employment sector, Hampton Roads hosts a small general purpose, multi-tenant office market counted by Reis at just 17.6 million square feet. A total of 10.1 million qualify as Class A. Inventory is widely distributed among several submarkets. The two in Virginia Beach combined and the Norfolk submarket, both on the south side, claim respective totals of 6.4 million and 4.2 million square feet. On the Peninsula, the Newport News/Hampton submarket hosts 4.3 million. In a market that tends to see little action, there is now a new phenomenon—expansion in the coworking sector, a new trend seen across the nation, “The buzz of coworking and shared office... has finally arrived in Hampton Roads,” stated Cushman & Wakefield/Thalhimer in a recent report in the local market. Coworking firms Gather, Novel Coworking, and Percolator have opened or soon will open locations in downtown Norfolk. “The saturation in the Downtown Norfolk market is spurring on companies like Gather, Venture X, Industrious, and rumors of WeWork to explore other submarkets across the region.” Recent construction, meanwhile, has been meager amid anemic demand. The 301,000 square feet of general-purpose space that completed construction in 2017 was the largest single-year total since 2010. Net absorption trailed at 159,000. The year 2018 followed with the delivery of only 80,000. Net absorption for the year ran at 49,000. The first three quarters of 2019 followed with the delivery of a single small project, the 56,400-square-foot Beacon One, which completed during the first quarter

Special Real Estate Factors:

• Office: “There are several large blocks of contiguous square footage including Norfolk Southern, Dominion Enterprises, and several former retail boxes that are inflating overall vacancy numbers above true market fundamentals.” So states Cushman & Wakefield/Thalhimer, assessing according to its own data and criteria, in its third quarter report on the local market, “Almost every submarket is a landlord favorable market, especially on existing tenant renewals as landlords look past sluggish absorption and continue to push rents.”

• More. “The significant negative absorption numbers in Norfolk were a result of the Norfolk Southern headquarters being listed [Reis does not yet include the 300,000 square feet thus entailed; while available, the space remains occupied], the Nordstrom retail box marketed as office space, and the former Farm Fresh opportunity at 260 Boush Street that is currently under contract.”





4


in Newport News. Year-to-date net absorption through three quarters was 104,000 square feet, 52,000 of which is attributed to the third. Current non-medical-office space construction includes the $83 million, 260,000-square-foot Ferguson Town Center Campus in Newport News, for and by Ferguson Enterprises. In January 2019, meanwhile, Summit Pointe Realty LLC announced that it had commenced development of the first three blocks of the second phase of its $300 million Summit Pointe mixed-use development at the Greenbrier community in Chesapeake, PRNewswire reported at the time. A 150,000-square-foot office building with ground floor retail is included. A 325,000-square-foot owner-occupied headquarters for Dollar Tree completed at the same development in August last year. The biggest news in the recent history of this market, however, was not favorable. Fortune 500 railroad giant Norfolk Southern announced last December that it would relocate its headquarters from 3 Commercial Plaza (a.k.a. Norfolk Southern Tower) in the Norfolk Central Business District (CBD) to a new facility in Atlanta, evacuating 331,000 square feet by summer 2021. The emptied space could represent an opportunity, say optimistic observers (see Special Real Estate Factors for related commentary). Work on the firm’s new Atlanta site began in March 2019. Quarter-end vacancy was 16.8%, down 30 basis points for the period and down 40 year-to-date after a loss of 40 through 2018. The Class A vacancy rate for the quarter, at 13.1%, was down 50 basis points year-to-date following a 60-basis-points decline through 2018. Rent growth slipped to a certain extent in 2018 but has picked up somewhat in 2019. Growth, though, is not strong and rents are not high. At $20.32 psf and $16.78 psf, average asking and effective rates in the third quarter were up 0.9% and 1.0% year-to-date following increases of 1.0% and 1.3% all told in 2018. The third quarter Class A mean asking price, at $22.31 psf, was up 0.9% year-to-date after 2018’s increase at 0.7%. • While there are a few bright spots, the basic low-key profile of the local market

likely will remain in place. The 56,000 square feet of new space for 2019, already online, are expected to face net absorption below 100,000. The vacancy rate would close at about 17.0%. Rent growth at about 1.5% is expected. Another low-key performance is expected for 2020.





5


APARTMENT The large annual market-rate apartment construction completion totals seen in Hampton Roads since 2013 will be followed by a more modest sum in 2019 (currently projected at 549 units). Demand, though, has been strong relative to new supply. The 7,459 units that delivered over the four-year span ending with 2018 met with 8,090 units of net absorption. Totals for 2018 alone were 1,764 and 1,636. Much of local apartment development is undertaken by local firms. The first three quarters of 2019 followed with only 453 units of new supply, all of which arrived during the third quarter in three projects led by the Clairmont at Harbour View Station complex in Suffolk. Local firm Kotarides Development is the developer. Also coming online during the quarter was the 132-unit second phase of the Nexus Flats complex in Virginia Beach. The 136-unit first phase completed in late 2018. Net absorption year-to-date through the third quarter, at 1,313 units, ran well ahead of same-term new supply. The third quarter net alone was 362 units. Also completing in 2018, meanwhile, was the $90 million, 24-story, 270-unit Icon at City Walk Tower in downtown Norfolk, the development of the iconic 1 Commercial Place office building. A second, companion office tower has been renovated. Local firm Marathon Development is the developer. See Special Real Estate Factors for more on Marathon and the large role it plays in the local apartment market. Current market-rate construction consists of a combined total of 1,383 units. The newest and largest, breaking ground in December 2019, is the 15-story, 266-unit 27th Street and Atlantic Avenue tower at that Virginia

• Apartment: “Thought downtown Norfolk couldn’t possibly need more apartments?” queries The Virginian-Pilot in a late-October article. “The developer largely responsible for turning the area into a place where several thousand people live and work, including converting the former Bank of America office tower into residences, says there’s still plenty of demand.” The developer at issue, in the person of Frank “Buddy” Gadams, is Norfolk-based Marathon Development Group, now “planning to build two more apartment complexes, this time from the ground up” (Marathon is responsible for the 2018 redevelopment of the 1 and 2 Commercial Place towers into apartment—Icon at CityWalk—and office uses).

• More. One of the new projects would be near the Neon District on land acquired in late-2016. The other “would sit next to his high-rise Icon apartment tower near Waterside Drive. ‘Together, they would bring more than 500 more apartments to the downtown Norfolk area.’ And another developer plans to build 170 units in what is now The Virginian-Pilot headquarters on West Brambleton Avenue.” Gadams “expects to submit plans to the city within 60 days. Each project will cost more than $50 million to build.” “Interest rates are at record lows and

Special Real Estate Factors: Continued





6


Beach address. Virginia Beach-based Armada Hoffler Properties, developer of Virginia Beach Town Center, is the developer. Due online in January, also in Virginia Beach, is the 282-unit Mezzo Apartment Homes complex. Regional firm Atlantic Dominion Distributors is the owner. Breaking ground in June, also in Virginia Beach, is locally-based Franklin Johnston Group’s 244-unit Coastal 61 at Oxford Village complex. With only small fluctuations, apartment vacancy has run at or below 5.0% since the third quarter of 2016. It dipped below 4.0% in the second quarter of 2019. The rate in the third quarter was 3.7%, up 10 basis points for the period but down 110 year-to-date after a flat performance overall through 2018. The rate could slip additionally during the final quarter. While nearly all recent market-rate construction qualifies as Class A, quarter-end vacancy in that sector was only 3.6%, down 110 basis points year-to-date following a 10-basis-points increase through 2018. Rent growth has been mainly favorable. At $1,087 and $1,045 per month, asking and effective averages for third quarter were up 1.7% and 1.3% year-to-date following increases of 3.4% and 3.1% all told in 2018. Third quarter growth rates were 0.6% for both averages. The Class A asking average was $1,238 per month, up 1.3% year-to-date after a 2.8% increase through 2018. • The 549-unit market-rate completion total projected for 2019, smallest in a year

since 2001, is expected to meet with some 1,700 units of net absorption. The vacancy rate would slip to about 3.5%. Gains at approximately 2.0% are expected for average rents for the year. A flat performance currently is expected for 2020.

demand is very robust for housing,” noted Gadams in an email. “The opportunity is large at this point and time.” The Federal Reserve has cut the interest rate twice this year and is expected to do so again, adds the article.






7


TRANSACTION ANALYTICS Office Thirteen office property sales were completed during 2018 for a combined total of $233.8 million at a low average price of $106 psf. The first three quarters of 2019 followed with the sale of eight properties for a combined total of $68.2 million at a mean price of $132 psf. The third quarter total for three transactions was $30.6 million at $151 psf. The 12-month rolling cap rate per quarter-end was 6.7%, down from 6.8% four quarters prior. In the third quarter’s largest sale, Hampton Roads Connector Partners paid FHC Property Holdings LLC $12.97 million ($150 psf, NRA) in August for the 86,700-square-foot Riverside Corporate Center multi-tenant office building in Norfolk. Apartment Twenty-five apartment property sales closed during 2018 for a combined total of $506.7 million at an average selling price of $98,000 per unit. The total for the first three quarters of 2019 for 13 transactions was $372.4 million at $132,000 per unit. The third quarter sum was $101.3 million at $120,000 per unit for four deals with an average cap rate of 5.6%. The 12-month rolling cap rate per quarter-end was 5.3%, down from 6.6% four quarters prior. In the third quarter’s largest deal, Capital Square 1031 paid Runnymede Corporation $48.6 million ($215,044 per unit) for the 226-unit Saltmeadow Bay market-rate rental complex in Virginia Beach. The sale closed in August at a 5.1% cap rate.





8


Retail A sum of $364.7 million were exchanged in 56 retail property transactions during 2018, up from the totals reported for 2017. The first three quarters of 2019 saw $406.5 million change hands in 35 deals. The total for the third quarter alone for 16 transactions was $220.1 million. Average selling prices for the quarter and first three of the year were $188 psf and $211 psf. Averages for 2018 and 2017 were $91 psf and $141 psf. Mean cap rates measured quarterly recently have been erratic. The rate in the third quarter was 8.3%, up from 6.7% the quarter before and from 4.3% a year earlier. The 12-month rolling cap rate per the end of the third quarter was 6.5%, down from 8.1% 12 months prior. In the third quarter’s largest deal, largest in a year as well, Acadia Realty Trust paid locally-based Divaris Real Estate Inc. $87.0 million ($208 psf) for 419,089 square feet of the 505,699-square-foot Landstown Commons Shopping Center power center in Virginia Beach. The sale closed in September at an 8.4% cap rate. The center’s 86,610-square-foot Kohl’s store was not included in the sale.

* Reis Transaction Analytics includes single sale transactions of $2,000,000 and greater, and excludes portfolio sales

where pricing of individual buildings cannot be confirmed.





9


RETAIL

Prior to the recession, Hampton Roads went through a period of unusually active retail real estate construction focused heavily on large power centers. Local development, reflecting the changes in retailing seen across the country, including numerous store closings, has been slow since (see Special Real Estate Factors for related commentary). There have been a few significant items in the recent period, however. IKEA opened a 331,000-square-foot store in April 2019 in Norfolk. In the same area, a hot zone for retail, Simon Property Group’s 332,000-square-foot Norfolk Premium Outlets outlet center completed in 2017. In addition, Cushman & Wakefield/Thalhimer has noted interest in the area on the part of “national brands.” The market, all the same, maintains a low profile. No retail space of any description completed construction metrowide in 2018. While 2019 followed with 447,600 square feet, most of that volume belongs to the IKEA store cited above and to a 113,000-square-foot freestanding Wegmans store, which opened in Virginia Beach in March. No retail projects were under construction per the date of this report. Another large one, however, is in the pipeline. Thus, a March 2021 completion date is given for the 500,000 square feet of retail planned for the Summit Pointe mixed-use development in Chesapeake. Dollar Tree Properties is the developer. Until the 21,000-square-foot Shoppes at Lake Wright neighborhood center from developer Apple Retail delivered in Norfolk in May, no community or neighborhood center projects had completed construction since 111,000 square feet arrived in 2016. Following in August were 13,000 square feet of neighborhood center space at the Little Neck development in Virginia Beach. Net absorption in this sector, meanwhile,


• Retail: “Notable announcements” during the third quarter included Dick’s Sporting Goods decision not to renew its lease and to close its store in Virginia Beach Town Center, states Cushman & Wakefield/ Thalhimer’s third quarter report on the local market: However, the landlord is reporting that a replacement for Dick’s has been lined up. “K-Mart will close its last two Virginia stores located in Chesapeake and Yorktown. Two Farm Fresh stores that were acquired by private operators have elected to terminate their leases and close their doors, one in Virginia Beach, and the other in Norge.”

• More. “GNC and Forever 21 recently announced store closings that may impact the Hampton Roads market. GNC will close 900 stores (1.5 million square feet) around the country. Although a list of specific stores has not been released at this time, GNC currently has 30 stores throughout Hampton Roads. Forever 21 will close 178 stores (6 million square feet), with one of them being located within MacArthur Mall.” In January 2020, Pier 1 Imports announced that it would close 450 of the 936 stores it operates nationwide. The future of the retailer’s five stores in Hampton Roads was uncertain per the date of this report.





10


has been poor. A total of negative 594,000 square feet over the two-year span 2017-2018 (a portion of that loss in occupancy, however, was a statistical effect of the 2018 removal of some product from the inventory count). The first three quarters of 2019 followed with negative 25,000. The third quarter community-neighborhood shopping center market vacancy rate was 12.2%, up 20 basis points for the period and up 10 year-to-date. At $16.29 psf and $13.58 psf, third quarter average asking and effective rents were up 0.6% and 0.5% year-to-date following 2018’s gains of 1.4% and 1.5%. Growth rates in the third quarter were negative at 0.2% and 0.3%. Hampton Roads power center vacancy, also somewhat elevated, ended the third quarter at 7.7%, up 10 basis points for the period and up 90 year-over-year. The national third quarter power center vacancy rate was 6.3%, down 30 basis points year-over-year. The mean asking lease rate for local non-anchor power center space for the quarter was $21.84 psf, up 3.1% for the period, up 4.2% year-over-year. • Community-neighborhood center net absorption at about minus 35,000 square feet is

expected for 2019 alongside the year’s 34,000 square feet of new supply (already online, as described). Vacancy would hold steady. Rent growth below 1.0% on average is anticipated.

For additional information on up to 275 markets for the four principal property types plus specialty sectors, visit www.reis.com.

Unless otherwise indicated, economic and demographic data provided by Moody’s Economy.com

Publication Date: January 2020 © 2020 Reis, Inc.

Sector 3Q19 3Q18 Chg

Office 16.8% 17.8% -100 bps

Apartment 3.7% 4.3% -60 bps

Retail 12.2% 12.3% -10 bps

Vacancy

Sector Chg

Office $20.32 psf $19.99 psf 1.7%

Apartment $1,087 month $1,060 month 2.5%

Retail $16.29 psf $16.07 psf 1.4%

Rents3Q19 3Q18





Metro Trend Futures

Metro Trend FuturesRetail - 1st Quarter 2020Prepared By Reis, Inc.




Section 22 - Current Metro Rent Details



Year Built Rent

Before 1970 $16.41

1970-1979 $16.52

1980-1989 $17.42

1990-1999 $18.63

2000-2009 $22.14

After 2009 $27.17

All $16.09

As of 03/31/20


$10.00 $14.27 $16.09 $16.54 $20.00 $29.44

27

40

53

32

1215

12

19

Under$12.58

$12.59$14.96

$14.97$17.34

$17.35$19.72

$19.73$22.10

$22.11$24.48

$24.49$26.86

$26.87Over

Num

ber

of P

rope

rtie

s


- 1.1% 0.0% 0.1% 0.5% 2.2% 3.3%

15

32

0

33

64

0 3

63

Under- 1.1%

- 1.0%- 0.6%

- 0.5%- 0.1%

0.0%0.4%

0.5%0.9%

1.0%1.4%

1.5%1.9%

2.0%Over

Num

ber

of P

rope

rtie

s


As of 03/31/20 Qtr Ending 03/31/20


$ 5.17 $ 9.00 $11.83 $11.49 $14.24 $21.15

As of 03/31/20


Asking Rent Growth




South Atlantic 0.2% 0.3% 0.2% 1.3% 1.8% 2.0%

United States 0.1% 0.1% 0.1% 1.3% 1.7% 1.8%

Period Ending: 03/31/20 12/31/19 03/31/20 12/31/19 12/31/19 12/31/19

Metro Rank Total Metro RanksCompared to: Metros


South Atlantic 25 18 20 18 20 19 19United States 80 52 60 52 60 47 48

1Q19 2Q19 3Q19 4Q19 1Q20

-0.20-0.15-0.10-0.050.000.050.100.150.200.250.300.350.400.450.500.55



US

South Atlantic

%


2015 2016 2017 2018 20190.0

0.5

1.0

1.5

2.0Norfolk/Hampton Roads

South Atlantic

US







Section 24 - Current Metro Rent Details



Year Built Rent

Before 1970 $19.00

1970-1979 $18.78

1980-1989 $15.55

1990-1999 $21.67

2000-2009 $20.15

After 2009 $24.69

All $16.46

As of 03/31/20


$10.46 $15.59 $16.46 $19.00 $20.90 $29.15

10

8

1011

9

32

9

Under$12.58

$12.59$14.96

$14.97$17.34

$17.35$19.72

$19.73$22.10

$22.11$24.48

$24.49$26.86

$26.87Over

Num

ber

of P

rope

rtie

s


- 1.1% 0.0% 0.1% 0.5% 0.7% 4.3%

47

0

8

28

02

13

Under- 1.1%

- 1.0%- 0.6%

- 0.5%- 0.1%

0.0%0.4%

0.5%0.9%

1.0%1.4%

1.5%1.9%

2.0%Over

Num

ber

of P

rope

rtie

s


As of 03/31/20 Qtr Ending 03/31/20


$ 5.48 $ 8.85 $12.68 $11.17 $15.27 $24.18

As of 03/31/20


Asking Rent Growth




South Atlantic 0.1% 0.3% 0.1% 1.2% 1.7% 1.9%

United States 0.1% 0.1% 0.1% 1.2% 1.5% 1.7%

Period Ending: 03/31/20 12/31/19 03/31/20 12/31/19 12/31/19 12/31/19




1Q19 2Q19 3Q19 4Q19 1Q20

-0.25-0.20-0.15-0.10-0.050.000.050.100.150.200.250.300.350.400.450.50



US

South Atlantic

%


2015 2016 2017 2018 20190.0

0.5

1.0

1.5


South Atlantic

US







Section 26 - Current Metro Vacancy Details



Before 1970 17.8%

1970-1979 12.6%

1980-1989 11.6%

1990-1999 21.9%

2000-2009 10.3%

After 2009 6.5%

All 13.3%

As of 03/31/20


0.0% 2.1% 13.3% 8.3% 15.5% 66.5%

84

32 3324

8 4 5

20

Under5.0%

5.1%10.0%

10.1%15.0%

15.1%20.0%

20.1%25.0%

25.1%30.0%

30.1%35.0%

35.1%Over

Num

ber

of P

rope

rtie

s

As of 03/31/20


Vacancy Rates




South Atlantic 9.7% 9.7% 9.7% 9.8% 9.8% 10.0%

United States 10.5% 10.4% 10.5% 10.5% 10.4% 10.6%

Period Ending: 03/31/20 12/31/19 03/31/20 12/31/19 12/31/19 12/31/19




1Q19 2Q19 3Q19 4Q19 1Q20

10.0

10.5

11.0

11.5

12.0

12.5

13.0



US

South Atlantic

%


2015 2016 2017 2018 2019

10.0

10.5

11.0

11.5

12.0

12.5

13.0


South Atlantic

US







Section 28 - Current Metro Vacancy Details



Before 1970 14.8%

1970-1979 8.7%

1980-1989 13.9%

1990-1999 12.2%

2000-2009 11.3%

After 2009 15.4%

All 12.5%

As of 03/31/20


0.0% 2.5% 12.5% 5.5% 18.0% 43.8%

26

13

63

6

1 1

6

Under5.0%

5.1%10.0%

10.1%15.0%

15.1%20.0%

20.1%25.0%

25.1%30.0%

30.1%35.0%

35.1%Over

Num

ber

of P

rope

rtie

s

As of 03/31/20


Vacancy Rates




South Atlantic 9.3% 9.4% 9.3% 9.5% 9.3% 9.3%

United States 9.9% 9.9% 9.9% 10.0% 9.7% 9.6%

Period Ending: 03/31/20 12/31/19 03/31/20 12/31/19 12/31/19 12/31/19




1Q19 2Q19 3Q19 4Q19 1Q20

9.49.69.8

10.010.210.410.610.811.011.211.411.611.812.012.212.4



US

South Atlantic

%


2015 2016 2017 2018 20199.0

9.5

10.0

10.5

11.0

11.5

12.0


South Atlantic

US







Section 30 - Nonanchor Rent Growth Comparisons and Forecast

Asking Rent Growth



Norfolk/Hampton Roads 0.2% - 0.2% 0.2% 0.3% 0.9% 1.2% - 1.6%

South Atlantic 0.1% 0.3% 0.1% 1.3% 1.8% 1.9% - 1.2%

United States 0.1% 0.1% 0.1% 1.2% 1.6% 1.7% - 1.3%

Period Ending: 03/31/20 12/31/19 03/31/20 12/31/19 12/31/19 12/31/19 12/31/24



South Atlantic 25 12 21 12 21 20 22 21United States 80 38 62 38 66 60 59 58

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024-8.0

-6.0

-4.0

-2.0

0.0

2.0


South Atlantic

US

Asking Rent Growth Rate Trends and Forecast%






Section 31 - Vacancy Rate Comparisons and Forecast

Vacancy Rates



Norfolk/Hampton Roads 12.9% 12.7% 12.9% 12.4% 11.8% 11.1% 15.2%

South Atlantic 9.5% 9.6% 9.5% 9.6% 9.5% 9.7% 12.2%

United States 10.1% 10.2% 10.1% 10.2% 10.1% 10.1% 12.7%

Period Ending: 03/31/20 12/31/19 03/31/20 12/31/19 12/31/19 12/31/19 12/31/24




2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

10.0

11.0

12.0

13.0

14.0


South Atlantic

US

Vacancy Rate Trends and Forecast%



Section 32 - Metro Inventory Details

Inventory By Center Age Shopping Center Stock Traits

Year Built Percent

Before 1970 13.0%

1970-1979 20.0%

1980-1989 34.0%

1990-1999 19.0%

2000-2009 10.0%

After 2009 5.0%

All 100.0%

As of 03/31/20

MetroLow Mean Median High

Year Built 1958 1986 1986 2019Size (sq. ft.) 5,167 87,539 65,992 382,526

Distance to Highway (miles) 0 0.7 0.3 4.2Distance to CBD (miles) 2.7 12.4 10.7 36.8

Distance to Landmark (miles) 0.4 3.2 2.9 7.9As of 03/31/20 Landmark =Coast

Average Metro Lease Terms

Anchor/Nonanchor CRD % Free Rent

(mos)Expenses $

(Commercial)Lease Term

(yrs)Leasing

Commission %Tenant

Improvements $A - 6.2% 5.9 $ 2.80 9.3 10.5% $20.30N - 7.3% 5.3 $ 2.70 3.3 12.9% $20.60

As of 03/31/20




Section 33 - Inventory Growth Comparisons

Inventory Growth Rates



Norfolk/Hampton Roads 0.0% 0.0% 0.0% 0.0% - 0.2% 0.2% 0.1%

South Atlantic 0.0% 0.1% 0.0% 0.3% 0.4% 0.5% 0.3%

United States 0.0% 0.1% 0.0% 0.3% 0.4% 0.4% 0.3%

Period Ending: 03/31/20 12/31/19 03/31/20 12/31/19 12/31/19 12/31/19 12/31/24




2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

-0.5

0.0

0.5

1.0


South Atlantic

US

Inventory Growth Comparisons and Forecast%







Quarterly

1Q20 4Q19 YTD Avg



AbsorbedCon/Abs


Con/AbsRatio

Norfolk/Hampton Roads 0 -62,000 0.0 0 -139,000 0.0 0 -62,000 0.0

South Atlantic 12,000 78,000 0.2 434,000 11,000 39.5 12,000 78,000 0.2Average over period ending: 03/31/20 03/31/20 03/31/20 12/31/19 12/31/19 12/31/19 03/31/20 03/31/20 03/31/20

Annualized




AbsorbedCon/Abs


Con/AbsRatio

Norfolk/Hampton Roads 34,000 -164,000 -0.2 11,000 -253,000 0.0 90,000 -136,000 -0.7

South Atlantic 2,108,000 2,420,000 0.9 3,289,000 1,841,000 1.8 3,542,000 3,312,000 1.1Average over period ending: 12/31/19 12/31/19 12/31/19 12/31/19 12/31/19 12/31/19 12/31/19 12/31/19 12/31/19

Annualized

5 Year Forecast


Con/AbsRatio

Norfolk/Hampton Roads 24,400 -56,000 -0.4

South Atlantic 1,702,600 -728,800 -2.3Average over period ending: 12/31/24 12/31/24 12/31/24

-600,000

-400,000

-200,000

0

200,000

Squ

are

Fee

t

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

0

5

10

15

Vac

ancy

Rat

e (%

)Construction/Absorption and Vacancy

Vacancy Rate Construction Absorption






2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%


Household Income Growth Trends and Forecast Metro vs. Region & U.S.

Per

cent

age

Cha

nge


2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%


Total Employment Growth Trends and Forecast Metro vs. Region & U.S.

Per

cent

age

Cha

nge


2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

0.20%

0.40%

0.60%

0.80%

1.00%

Population Households

Norfolk/Hampton Roads Population/Household Growth Trends and Forecast

Per

cent

age

Cha

nge





Section 36 - Metro Area Map: Norfolk/Hampton Roads





Section 37 - Metro Data



VacancyChange(BPS)

OccupiedStock


Chg

2015 Y 13,363,000 76,000 0.5% 1,388,000 10.4% 30 11,975,000 19,000 $15.37 2.3%

2016 Y 13,376,000 13,000 0.1% 1,355,000 10.1% -30 12,021,000 46,000 $15.51 0.9%

2017 Y 13,376,000 0 0.0% 1,614,000 12.1% 200 11,762,000 -259,000 $15.68 1.1%

2018 Q2 13,376,000 0 0.0% 1,861,000 13.9% 190 11,515,000 -252,000 $15.73 - 0.1%

2018 Q3 13,376,000 0 0.0% 1,800,000 13.5% -40 11,576,000 61,000 $15.83 0.6%

2018 Q4 13,350,000 0 - 0.2% 1,756,000 13.2% -30 11,594,000 18,000 $15.97 0.9%

2018 Y 13,350,000 0 - 0.2% 1,756,000 13.2% 110 11,594,000 -168,000 $15.97 1.8%

2019 Q1 13,309,000 0 - 0.3% 1,708,000 12.8% -40 11,601,000 7,000 $16.02 0.3%

2019 Q2 13,330,000 21,000 0.2% 1,720,000 12.9% 10 11,610,000 9,000 $16.12 0.6%

2019 Q3 13,343,000 13,000 0.1% 1,742,000 13.1% 20 11,601,000 -9,000 $16.11 - 0.1%

2019 Q4 13,343,000 0 0.0% 1,780,000 13.3% 20 11,563,000 -38,000 $16.07 - 0.2%

2019 Y 13,343,000 34,000 - 0.1% 1,780,000 13.3% 10 11,563,000 -31,000 $16.07 0.6%

2020 Q1 13,343,000 0 0.0% 1,773,000 13.3% 0 11,570,000 7,000 $16.09 0.1%



Stock% Population Pop%Chg Employment Emp%

Chg Households HH%Chg

Avg HHIncome

AHHI%Chg

2015 Y $12.75 2.3% 4.0 0.2% 1,721,050 0.2% 772,400 1.8% 659,080 0.7% $123,556 3.3%

2016 Y $12.89 1.1% 0.3 0.4% 1,723,540 0.1% 776,430 0.5% 662,660 0.5% $124,338 0.6%

2017 Y $13.03 1.1% 0.0 - 2.2% 1,724,930 0.1% 786,670 1.3% 665,150 0.4% $127,767 2.8%

2018 Q2 $13.06 - 0.2% 0.0 - 2.2% 1,725,470 0.0% 792,530 0.1% 666,290 0.1% $131,803 1.0%

2018 Q3 $13.16 0.8% 0.0 0.5% 1,725,980 0.0% 789,830 - 0.3% 666,880 0.1% $132,983 0.9%

2018 Q4 $13.27 0.8% 0.0 0.2% 1,726,640 0.0% 787,900 - 0.2% 667,830 0.1% $133,872 0.7%

2018 Y $13.27 1.8% 0.0 - 1.4% 1,726,640 0.1% 787,900 0.2% 667,830 0.4% $133,872 4.8%

2019 Q1 $13.33 0.5% 0.0 0.1% 1,727,510 0.1% 792,530 0.6% 669,310 0.2% $135,568 1.3%

2019 Q2 $13.41 0.6% 2.3 0.1% 1,728,640 0.1% 797,100 0.6% 671,000 0.3% $137,122 1.1%

2019 Q3 $13.39 - 0.1% -1.4 - 0.1% 1,730,040 0.1% 793,600 - 0.4% 672,800 0.3% $137,619 0.4%

2019 Q4 $13.36 - 0.2% 0.0 - 0.3% 1,731,790 0.1% 794,600 0.1% 674,510 0.3% $138,168 0.4%

2019 Y $13.36 0.7% -1.1 - 0.3% 1,731,790 0.3% 794,600 0.9% 674,510 1.0% $138,168 3.2%

2020 Q1 $13.39 0.2% 0.0 0.1% 1,733,760 0.1% 795,060 0.1% 675,950 0.2% $138,542 0.3%








VacancyChange(BPS)

OccupiedStock


Chg

2015 Y 13,405,000 230,000 1.7% 1,332,000 9.9% 130 12,073,000 33,000 $15.82 1.0%

2016 Y 13,503,000 98,000 0.7% 1,451,000 10.7% 80 12,052,000 -21,000 $16.16 2.1%

2017 Y 13,503,000 0 0.0% 1,638,000 12.1% 140 11,865,000 -187,000 $16.27 0.7%

2018 Q2 13,357,000 0 0.0% 1,614,000 12.1% 110 11,743,000 -143,000 $16.26 - 0.2%

2018 Q3 13,357,000 0 0.0% 1,491,000 11.2% -90 11,866,000 123,000 $16.32 0.4%

2018 Q4 13,357,000 0 0.0% 1,472,000 11.0% -20 11,885,000 19,000 $16.44 0.7%

2018 Y 13,357,000 0 - 1.1% 1,472,000 11.0% -110 11,885,000 20,000 $16.44 1.0%

2019 Q1 13,357,000 0 0.0% 1,482,000 11.1% 10 11,875,000 -10,000 $16.50 0.4%

2019 Q2 13,357,000 0 0.0% 1,492,000 11.2% 10 11,865,000 -10,000 $16.53 0.2%

2019 Q3 13,357,000 0 0.0% 1,504,000 11.3% 10 11,853,000 -12,000 $16.48 - 0.3%

2019 Q4 13,357,000 0 0.0% 1,605,000 12.0% 70 11,752,000 -101,000 $16.44 - 0.2%

2019 Y 13,357,000 0 0.0% 1,605,000 12.0% 100 11,752,000 -133,000 $16.44 0.0%

2020 Q1 13,357,000 0 0.0% 1,674,000 12.5% 50 11,683,000 -69,000 $16.46 0.1%





Avg HHIncome

AHHI%Chg

2015 Y $13.20 1.1% 7.0 0.3% 1,721,050 0.2% 772,400 1.8% 659,080 0.7% $123,556 3.3%

2016 Y $13.50 2.3% -4.7 - 0.2% 1,723,540 0.1% 776,430 0.5% 662,660 0.5% $124,338 0.6%

2017 Y $13.58 0.6% 0.0 - 1.6% 1,724,930 0.1% 786,670 1.3% 665,150 0.4% $127,767 2.8%

2018 Q2 $13.58 - 0.3% 0.0 - 1.2% 1,725,470 0.0% 792,530 0.1% 666,290 0.1% $131,803 1.0%

2018 Q3 $13.64 0.4% 0.0 1.0% 1,725,980 0.0% 789,830 - 0.3% 666,880 0.1% $132,983 0.9%

2018 Q4 $13.74 0.7% 0.0 0.2% 1,726,640 0.0% 787,900 - 0.2% 667,830 0.1% $133,872 0.7%

2018 Y $13.74 1.2% 0.0 0.2% 1,726,640 0.1% 787,900 0.2% 667,830 0.4% $133,872 4.8%

2019 Q1 $13.80 0.4% 0.0 - 0.1% 1,727,510 0.1% 792,530 0.6% 669,310 0.2% $135,568 1.3%

2019 Q2 $13.83 0.2% 0.0 - 0.1% 1,728,640 0.1% 797,100 0.6% 671,000 0.3% $137,122 1.1%

2019 Q3 $13.79 - 0.3% 0.0 - 0.1% 1,730,040 0.1% 793,600 - 0.4% 672,800 0.3% $137,619 0.4%

2019 Q4 $13.75 - 0.3% 0.0 - 0.9% 1,731,790 0.1% 794,600 0.1% 674,510 0.3% $138,168 0.4%

2019 Y $13.75 0.1% 0.0 - 1.1% 1,731,790 0.3% 794,600 0.9% 674,510 1.0% $138,168 3.2%

2020 Q1 $13.77 0.1% 0.0 - 0.6% 1,733,760 0.1% 795,060 0.1% 675,950 0.2% $138,542 0.3%








VacancyChange(BPS)

OccupiedStock


Chg

2015 Y 26,768,000 306,000 1.1% 2,720,000 10.2% 80 24,048,000 52,000 $15.59 1.6%

2016 Y 26,879,000 111,000 0.4% 2,806,000 10.4% 20 24,073,000 25,000 $15.84 1.6%

2017 Y 26,879,000 0 0.0% 3,252,000 12.1% 170 23,627,000 -446,000 $15.98 0.9%

2018 Q2 26,733,000 0 0.0% 3,475,000 13.0% 150 23,258,000 -395,000 $15.99 - 0.2%

2018 Q3 26,733,000 0 0.0% 3,291,000 12.3% -70 23,442,000 184,000 $16.07 0.5%

2018 Q4 26,707,000 0 - 0.1% 3,228,000 12.1% -20 23,479,000 37,000 $16.20 0.8%

2018 Y 26,707,000 0 - 0.6% 3,228,000 12.1% 0 23,479,000 -148,000 $16.20 1.4%

2019 Q1 26,666,000 0 - 0.2% 3,190,000 12.0% -10 23,476,000 -3,000 $16.26 0.4%

2019 Q2 26,687,000 21,000 0.1% 3,212,000 12.0% 0 23,475,000 -1,000 $16.32 0.4%

2019 Q3 26,700,000 13,000 0.0% 3,246,000 12.2% 20 23,454,000 -21,000 $16.29 - 0.2%

2019 Q4 26,700,000 0 0.0% 3,385,000 12.7% 50 23,315,000 -139,000 $16.25 - 0.2%

2019 Y 26,700,000 34,000 0.0% 3,385,000 12.7% 60 23,315,000 -164,000 $16.25 0.3%

2020 Q1 26,700,000 0 0.0% 3,447,000 12.9% 20 23,253,000 -62,000 $16.28 0.2%

2020 Y 26,700,000 0 0.0% 4,005,000 15.0% 230 22,695,000 -620,000 $14.94 - 8.1%

2021 Y 26,700,000 0 0.0% 4,192,000 15.7% 70 22,508,000 -187,000 $14.72 - 1.5%

2022 Y 26,730,000 30,000 0.1% 4,254,000 15.9% 20 22,476,000 -32,000 $14.74 0.1%

2023 Y 26,776,000 46,000 0.2% 4,032,000 15.1% -80 22,744,000 268,000 $14.82 0.5%

2024 Y 26,822,000 46,000 0.2% 3,787,000 14.1% -100 23,035,000 291,000 $15.00 1.2%





Avg HHIncome

AHHI%Chg

2015 Y $12.97 1.6% 5.9 0.2% 1,721,050 0.2% 772,400 1.8% 659,080 0.7% $123,556 3.3%

2016 Y $13.19 1.7% 4.4 0.1% 1,723,540 0.1% 776,430 0.5% 662,660 0.5% $124,338 0.6%

2017 Y $13.31 0.9% 0.0 - 1.9% 1,724,930 0.1% 786,670 1.3% 665,150 0.4% $127,767 2.8%

2018 Q2 $13.32 - 0.2% 0.0 - 1.7% 1,725,470 0.0% 792,530 0.1% 666,290 0.1% $131,803 1.0%

2018 Q3 $13.40 0.6% 0.0 0.8% 1,725,980 0.0% 789,830 - 0.3% 666,880 0.1% $132,983 0.9%

2018 Q4 $13.51 0.8% 0.0 0.2% 1,726,640 0.0% 787,900 - 0.2% 667,830 0.1% $133,872 0.7%

2018 Y $13.51 1.5% 0.0 - 0.6% 1,726,640 0.1% 787,900 0.2% 667,830 0.4% $133,872 4.8%

2019 Q1 $13.57 0.4% 0.0 0.0% 1,727,510 0.1% 792,530 0.6% 669,310 0.2% $135,568 1.3%

2019 Q2 $13.62 0.4% -21.0 0.0% 1,728,640 0.1% 797,100 0.6% 671,000 0.3% $137,122 1.1%

2019 Q3 $13.59 - 0.2% -0.6 - 0.1% 1,730,040 0.1% 793,600 - 0.4% 672,800 0.3% $137,619 0.4%

2019 Q4 $13.55 - 0.3% 0.0 - 0.6% 1,731,790 0.1% 794,600 0.1% 674,510 0.3% $138,168 0.4%

2019 Y $13.55 0.3% -0.2 - 0.7% 1,731,790 0.3% 794,600 0.9% 674,510 1.0% $138,168 3.2%

2020 Q1 $13.58 0.2% 0.0 - 0.3% 1,733,760 0.1% 795,060 0.1% 675,950 0.2% $138,542 0.3%

2020 Y $11.89 -12.3% 0.0 - 2.7% 1,740,460 0.5% 774,640 - 2.5% 677,860 0.5% $137,524 - 0.5%

2021 Y $11.71 - 1.5% 0.0 - 0.8% 1,749,600 0.5% 781,880 0.9% 681,710 0.6% $140,976 2.5%

2022 Y $11.89 1.5% -0.9 - 0.1% 1,758,370 0.5% 797,510 2.0% 687,630 0.9% $147,490 4.6%

2023 Y $12.10 1.8% 0.2 1.2% 1,766,800 0.5% 805,130 1.0% 693,900 0.9% $152,529 3.4%

2024 Y $12.28 1.5% 0.2 1.3% 1,775,590 0.5% 807,490 0.3% 699,890 0.9% $157,215 3.1%


Submarket Overview

Submarket OverviewRetail - 1st Quarter 2020Prepared By Reis, Inc.



Section 40 - Submarket Overview

Submarket Anchor/Nonanchor

Inventory(Buildings)

Inventory(Sq Ft)

AskingRent $ CRD % Vac

%

FreeRent(mos)

Expenses $(Commercial)

LeaseTerm(yrs)

LeasingCommission

%

TenantImprovements

$

Portsmouth/Suffolk A 26 2,332,000 $ 7.74 - 4.5% 15.2% 6.5 $ 4.05 9.0 10.8% $17.98

Portsmouth/Suffolk N 31 1,354,000 $13.97 - 5.0% 15.8% 4.7 $ 4.03 3.7 11.8% $16.05

Norfolk/Chesapeake A 49 3,677,000 $10.32 - 7.3% 13.4% 5.0 $ 2.22 10.2 10.9% $22.62

Norfolk/Chesapeake N 67 2,947,000 $16.96 - 7.9% 19.6% 4.9 $ 2.14 2.7 14.0% $23.23

Kempsville/Bayside A 47 2,591,000 $11.30 - 6.9% 12.1% 5.0 $ 2.04 10.8 11.5% $22.67

Kempsville/Bayside N 62 2,397,000 $17.19 - 7.7% 9.2% 4.7 $ 2.04 2.9 13.5% $20.68

Lynnhaven/Oceana A 18 1,627,000 $ 9.94 - 4.8% 4.4% 3.3 $ 3.03 5.3 10.8% $24.90

Lynnhaven/Oceana N 29 1,787,000 $20.41 - 5.0% 5.9% 3.3 $ 3.03 3.8 14.3% $25.62

Nwprt. News/Hampton A 37 2,889,000 $ 8.87 - 7.7% 16.3% 7.8 $ 2.10 11.4 9.7% $15.13

Nwprt. News/Hampton N 49 2,387,000 $13.65 - 8.7% 13.6% 7.3 $ 2.10 4.2 12.1% $17.92

Wmsbg./Glcster./York A 20 1,613,000 $ 9.48 - 3.7% 9.1% 7.9 $ 4.85 5.3 8.5% $18.75

Wmsbg./Glcster./York N 29 1,099,000 $16.00 - 7.9% 14.3% 7.1 $ 4.54 2.2 9.5% $16.13


New Construction Listing

New Construction ListingRetail - 1st Quarter 2020Prepared By Reis, Inc.

Metro: Norfolk/Hampton RoadsAs of 31-Mar-2020CustomerID:1075682


Section 41 - Construction Deliveries

Completed SF SF Under Construction Totals Planned Proposed Totals

2019 YTD 2020 2020 2021 and Later 2019 and LaterNeighborhood 33,600 0 0 0 33,600 124,637 43,860 168,497

Community 0 0 0 0 0 0 120,000 120,000Power Center 0 0 0 0 0 0 225,000 225,000

Regional 0 0 0 0 0 0 0 0Mixed Use 0 0 0 0 0 750,000 25,600 775,600

Other 444,000 0 0 0 444,000 0 0 0Totals 477,600 0 0 0 477,600 874,637 414,460 1,289,097

Section 42 - Metro Construction Breakdown

6.9 %

43.9 %

11.4 %

25.1 %

12.7 %

Metro Construction by Project Type 2019 and Later

CommunityMixed UseNeighborhoodOtherPower CenterRegional

78.3 %

7.9 %

7.1 %

6.8 %

Metro Construction by Top Five Submarket Share 2019 and Later

Norfolk/ChesapeakeKempsville/BaysideNwprt. News/HamptonWmsbg./Glcster./York

Includes all recently completed, under construction, planned, and proposed properties from the table above. Note that some verified listings for planned and proposed properties do not yet have afirm completion date.

Section 43 - Submarket New Construction Project Tally

1. Completed 2. Under Construction 3. Planned/Proposed

Submarket Neigh/Comm

Power/Reg. Other Neigh/

CommPower/Reg. Other Neigh/

CommPower/Reg. Other Grand

Total

Norfolk/Chesapeake 21,000 0 331,000 0 0 0 30,000 225,000 775,600 1,382,600

Kempsville/Bayside 12,600 0 113,000 0 0 0 13,860 0 0 139,460

Nwprt. News/Hampton 0 0 0 0 0 0 124,637 0 0 124,637

Wmsbg./Glcster./York 0 0 0 0 0 0 120,000 0 0 120,000





Section 44 - Metro Inventory Details

Inventory By Center Age

Year Built Percent

Before 1970 13.0%

1970-1979 20.0%

1980-1989 34.0%

1990-1999 19.0%

2000-2009 10.0%

After 2009 5.0%

All 100.0%

As of 03/31/202015 2016 2017 2018 2019 2020 2021 2022 2023 2024

-0.5

0.0

0.5

1.0


Retail Inventory Growth Trend and Forecast%

Section 45 - Inventory Growth Rankings Forecast

South Atlantic Region Cumulative Inventory Growth Forecast Ranking 2020 and Later National Cumulative Inventory Growth Forecast Ranking 2020 and Later

Metro Cumulative Growth Forecast Rank Metro Cumulative Growth Forecast RankMiami 2.9% 1

Columbia 0.7% 21

Suburban Maryland 0.6% 22

Norfolk/Hampton Roads 0.5% 23

Lexington 0.0% 24

Knoxville 0.0% 25

Knoxville 0.0% 25

Austin 3.8% 1

Fairfield County 0.5% 62

New Haven 0.5% 63

Norfolk/Hampton Roads 0.5% 64

Tulsa 0.4% 65

Oklahoma City 0.4% 66

Little Rock 0.0% 80



Quarterly

1Q20 4Q19 YTD Avg



AbsorbedCon/Abs


Con/AbsRatio

Norfolk/Hampton Roads 0 -62,000 0.0 0 -139,000 0.0 0 -62,000 0.0

South Atlantic 97,000 161,000 0.6 445,000 18,000 24.7 97,000 161,000 0.6Average over period ending: 03/31/20 03/31/20 03/31/20 12/31/19 12/31/19 12/31/19 03/31/20 03/31/20 03/31/20

Annualized




AbsorbedCon/Abs


Con/AbsRatio

Norfolk/Hampton Roads 34,000 -164,000 -0.2 11,000 -253,000 0.0 90,000 -136,000 -0.7

South Atlantic 2,108,000 2,420,000 0.9 3,289,000 1,841,000 1.8 3,542,000 3,312,000 1.1Average over period ending: 12/31/19 12/31/19 12/31/19 12/31/19 12/31/19 12/31/19 12/31/19 12/31/19 12/31/19




Section 47 - Occupancy at Completion

0

20

40

60

80

100

Occ

upan

cy (

%)

2014 2015 2016 2017 2018 2019 2020

Occupancy at Completion Comparisons

Norfolk/Hampton RoadsOverall Occupancy

Norfolk/Hampton RoadsOccupancy at Completion

South Atlantic Occupancy at Completion US Occupancy at Completion

Occupancy at Completion ComparisonsProperties Built in: 2014 2015 2016 2017 2018 2019 2020

Norfolk/Hampton Roads 53.4% 94.9% 58.2% n/a n/a 91.5% n/aSouth Atlantic 76.2% 86.4% 88.6% 83.5% 68.6% 75.3% n/aUnited States 61.9% 80.5% 74.7% 64.6% 72.9% 76.3% 61.9%*Occupation at completion is calculated for all properties completed during each individual calendar year

Section 48 - Stabilization Data

0 1 2 3 4 5 6 7 80.0

10.0

20.0

30.0

40.0

2014 2015 2016 2017 2018 2019 2020 Long Term Metro Vacancy Average

New Construction Quarters to Stabilization

Quarters After Completion

Vac

ancy

(%

)

%

Stabilization Data

Construction Year: 2014 2015 2016 2017 2018 2019 2020 YTD

No.of Properties Tracked 3 2 2 2

Properties Stabilized 0-4 Quarters After Completion 3 2 2 2Properties Stabilized 5-8 Quarters After Completion 0 0 0 0Properties Stabilized 9-12 Quarters After Completion 0 0 0 0Properties Stabilized 13+ Quarters After Completion 0 0 0 0Properties That Have Not Yet Stabilized 0 0 0 0

Stabilization is reached when the average vacancy of the properties built in any given year equals or is less than the metro's average overall vacancy for the last five years. "0" in theQuarters After Completion chart above represents the vacancy at completion.




Section 49 - Metro Area Map: Norfolk/Hampton Roads

Completed Projects Under Construction Planned/Proposed




Section 50 - New Construction Listing

No. Property Name and Address Date AsOf Secondary Type County Size (Sq Ft) No. Bldgs Floors Est.

GroundbreakEst.

Completion Status

Submarket: Kempsville/Bayside

1Diamond Springs Center Ph 11808 DIAMOND SPRINGS RD VIRGINIABEACH, VA 23455

10-07-2019 Neighborhood Virginia Beach 13,860 Proposed

2

Little Neck Retail Development3229 Virginia Beach Blvd Virginia Beach, VA23452

Leasing Agent Name: Troy ParkerLeasing Agent Phone: (757) 222 - 0111Leasing Agent Company: Parker Burnell RealEstate

08-20-2019 Neighborhood Virginia Beach 12,600 1 1 8/2019 Complete

3

WegmansUS-58 E & Independence Blvd Virginia Beach,VA 23462

Developer Phone: (757) 486-1122Developer Company: SIFEN INC

04-04-2019 Freestanding Virginia Beach 113,000 1 5/2018 3/2019 Complete

Submarket: Norfolk/Chesapeake

4

Burton CrossingNorthampton Blvd & I-64 Norfolk, VA 23502

Developer Phone: (757) 627 - 8611Developer Company: S.L NUSBAUM

08-14-2018 Mixed Use Norfolk 250,000 Planned

5

Northampton Boulevard5900 Northampton Blvd Norfolk, VA 23502

Developer Name: Sandy CohenDeveloper Phone: (757) 335 - 1144Developer Company: Benna Victor

07-31-2019 Mixed Use Norfolk 25,600 4 Proposed

6

The Shops at Lake Wright6290 Northampton Boulevard Norfolk, VA 23502

Developer Name: Gary GilbertDeveloper Phone: (717) 578 - 0211Developer Company: Apple Retail

05-29-2019 Neighborhood Norfolk 21,000 2 1 6/2018 5/2019 Complete

7

IkeaInterstate 64 HOV LN & Northampton BlvdNorfolk, VA 23502

Owner Name: JOSEPH ROTHOwner Phone: (610) 834 - 0180Owner Company: IKEA

04-30-2019 Freestanding Norfolk 331,000 1 1 1/2018 4/2019 Complete




No. Property Name and Address Date AsOf Secondary Type County Size (Sq Ft) No. Bldgs Floors Est.

GroundbreakEst.

Completion Status

8

Palace Station Ph 2300 W 21ST ST NORFOLK, VA 23517

Developer Name: MICHELLEDeveloper Phone: (757) 625 - 2595

02-11-2019 Neighborhood Norfolk 30,000 1 1 Proposed

9

Edinburgh Shopping Center West Ph 2BATTLEFIELD BLVD @ HILLCREST PKWYCHESAPEAKE, VA 23322

Developer Name: BRUCE BRULLINDeveloper Phone: (757) 651 - 1467Developer Company: PRECON DEVELOPMENT

01-27-2020 Power Center Chesapeake 225,000 Proposed

10

Summit Pointe Future RetailVOLVO PKWY @ CROSSWAYS BLVDCHESAPEAKE, VA 23320

Developer Name: BOB SASSERDeveloper Phone: (757) 321 - 5000Developer Company: DOLLAR TREEPROPERTIES

01-17-2020 Mixed Use Chesapeake 500,000 Planned

Submarket: Nwprt. News/Hampton

11 Kroger1120 W Mercury Blvd Hampton, VA 23666

01-27-2020 Neighborhood Hampton 124,637 1 Planned

Submarket: Wmsbg./Glcster./York

12

The Shops at High Street Ph 21430 HIGH ST WILLIAMSBURG, VA 23185

Developer Name: ROB WRIGHTDeveloper Phone: (757) 873 - 2900

12-04-2018 Community Williamsburg 120,000 6 2 Proposed


Sales Trend

Sales TrendRetail - 1Q 2020Prepared By Reis, Inc.



1Q 2020 Metro Statistics Metro Statistics - 12 Month RollingMean Median 25th Percentile Mean Median 75th Percentile

Cap Rate 4.1% 3.8% 4.3% 7.4% 6.3% 8.0%Total Size (SF) 60,672 62,000 21,558 105,749 50,725 114,309Sale Price $12,237,709 $13,130,539 $3,413,750 $17,621,875 $11,093,231 $18,150,000Price/SF (Area Purchased) $202 $179 $137 $179 $179 $244Number of Floors 1 1 1 1 1 1Year Built 2002 2003 1998 1999 2004 2008

Submarkets1. Portsmouth/Suffolk

2. Norfolk/Chesapeake

4. Kempsville/Bayside

5. Lynnhaven/Oceana

6. Newport News/Hampton

7. Williamsburg/Gloucester/York

Most Recent Transactions

City, State SubmarketYearBuilt Type

Price Per SqFt Range Sale Date

Reis SalesComparables

Number

1. Norfolk, VA Norfolk/Chesapeake 1964 Neighborhood Ctr. $150 - $199 Q2 2020 60118742. Virginia Beach, VA Lynnhaven/Oceana 2004 Restaurant n/a Q2 2020 59981183. Hampton, VA Nwprt. News/Hampton 2001 Gas Station/Repair Garage $700 - $799 Q2 2020 60065984. Chesapeake, VA Norfolk/Chesapeake 1999 Neighborhood Ctr. n/a Q1 2020 59467585. Virginia Beach, VA Kempsville/Bayside 2005 Neighborhood Ctr. n/a Q1 2020 59823376. Virginia Beach, VA Kempsville/Bayside 2005 Neighborhood Ctr. n/a Q1 2020 59467597. Chesapeake, VA Norfolk/Chesapeake 1999 Neighborhood Ctr. n/a Q1 2020 59823318. Norfolk, VA Norfolk/Chesapeake 1987 n/a Q1 2020 59498199. Newport News, VA Nwprt. News/Hampton 2015 Gas Station/Repair Garage $600 - $699 Q1 2020 596014810. Virginia Beach, VA Norfolk/Chesapeake 2000 Freestanding Retail Bldg. n/a Q1 2020 595119711. Hampton, VA Nwprt. News/Hampton 1962 $125 - $149 Q1 2020 596696112. Hampton, VA Nwprt. News/Hampton 1966 $75 - $99 Q1 2020 596686913. Norfolk, VA Norfolk/Chesapeake 2007 Neighborhood Ctr. n/a Q1 2020 599134514. Virginia Beach, VA Lynnhaven/Oceana 1985 Mixed-Use/Downtown/Other n/a Q1 2020 592196815. Chesapeake, VA Norfolk/Chesapeake 2018 Gas Station/Repair Garage $1,600 - $1,799 Q1 2020 592786316. Virginia Beach, VA Lynnhaven/Oceana 1981 Restaurant n/a Q1 2020 592235417. Newport News, VA Nwprt. News/Hampton 1996 Anchor Attached to Existing Ctr. n/a Q1 2020 595833218. Norfolk, VA Norfolk/Chesapeake n/a Restaurant $450 - $524 Q1 2020 592789419. Suffolk, VA Outside Delineated Submarkets 1996 Restaurant $525 - $599 Q1 2020 593709720. Hampton, VA Nwprt. News/Hampton 2010 Neighborhood Ctr. n/a Q4 2019 5918767

For details on the transactions listed above, click on the Sales Comparables number link. For historical transactions ortransactions in another Reis market, please go to the Sales Comparables section of the Reis website. www.Reis.com

https://se.reis.com/comps/index.cfm?event=comps.getSCByRecordID&scid=6011874























Property Location and Physical Characteristics

Property Name Gainsborough Square Property Type Neighborhood Ctr.

Address 109 GAINSBOROUGH SQ Bldg. Area/Area Purchased (SF) 88,838GLA / 88,838GLA

City Chesapeake Anchor/Nonanchor Space (SF) 44,874 / 43,964

State/ZIP/County VA / 23320 / Chesapeake No. of Bldgs./Floors 3 / 1

Metro (Submarket) Norfolk/Hampton Roads (Norfolk/Chesapeake) Year Built/Renovated 1999 / --

Comments

Sale Details and Analysis

Sale Date Mar 2020 Reis Cap Rate Analysis ProformaSale Price $15,167,846 APD All per square foot figures are on an annual basis

Sale Price PSF $171 Total Rentable Area Assumption --

Vacancy at Sale Potential Rent Revenue --Vacancy Loss/Rate --

Seller 1. Armada/Hoffler Charleston Association / 1 Columbus Ctr, Ste700, Virginia Beach, VA 23462

Effective Rent Revenue --

Expense Reimbursements --

Free Rent Concessions --Credit Loss --

Buyer 1. Slate Retail REIT / (416) 644-4264 / 121 King St W, Ste 200,Toronto, ON M5H 3T9

Additional Income --

Effective Gross Revenue --Operating Expenses --

Capital Reserve --Net Operating Income --

Comments Est Going-in Cap Rate/EGIM -- / --

12-Month Rolling Metro Cap Rate 5.5% [Q1 2020]Reported Cap Rate, This Sale None

Additional Details When Available

Seller's Broker Parking Spaces

Buyer's Broker Key Tenants Ben Cooper JewelersPirate's Cove RestauThe UPS StoreSupercutsJuice Bar & CafeAnytime FitnessOsaka Ramen & SushiFood LionRite Aid

Other Broker

Interest Purchased

Lot Size 441,872 SF / 10.144 Acres

Parcels Number 0370000003710

Deed Reference

Time on Market

Financing Details

Other:





Property Name Gainsborough Square Property Type Neighborhood Ctr.

Address 109 Gainsborough Sq Bldg. Area/Area Purchased (SF) 88,838GLA / 88,838GLA

City Chesapeake Anchor/Nonanchor Space (SF) 44,874 / 43,964

State/ZIP/County VA / 23320 / Chesapeake City No. of Bldgs./Floors 3 / 1


Comments


Sale Date 11 Mar 2020Rec Reis Cap Rate Analysis ProformaSale Price $15,171,943 APD All per square foot figures are on an annual basis

Sale Price PSF $171 Total Rentable Area Assumption --

Vacancy at Sale Potential Rent Revenue --Vacancy Loss/Rate --

Seller 1. Armada Hoffler / (757) 366-4000 / 222 Central Park Ave, Ste2100, Virginia Beach, VA 234622. ARMADA/HOFFLER CHARLESTON ASSOCIATES

Effective Rent Revenue --

Expense Reimbursements --

Free Rent Concessions --Credit Loss --

Buyer 1. Slate Retail REIT / (416) 644-4264 / 121 King St W, Ste 200,Toronto, ON M5H 3T9

Additional Income --

Effective Gross Revenue --Operating Expenses --

Capital Reserve --Net Operating Income --

Comments Part of a $106,500,000 million portfolio sale, totaling 623,770 SF.Sale includes 6 other retail properties across 3 states.

Est Going-in Cap Rate/EGIM -- / --




Buyer's Broker Key Tenants Food Lion 44874 SFRite Aid 11200 SFBen Cooper JewelersPirate's Cove Restau 4800 SFThe UPS Store 1600 SFJuice Bar & CafeSupercuts 1600 SF

Other Broker

Interest Purchased



Deed Reference

Time on Market

Financing Details

Other:





Property Name Little Creek Marketplace Property Type Neighborhood Ctr.

Address 7870 Tidewater Dr Bldg. Area/Area Purchased (SF) 49,161GLA / 49,161GLA

City Norfolk Anchor/Nonanchor Space (SF) 0 / 49,161

State/ZIP/County VA / 23505 / Norfolk City No. of Bldgs./Floors 5 / 1


Comments


Sale Date 21 Jan 2020 Reis Cap Rate Analysis ProformaSale Price $17,100,000 (Verified: Pub Rcrd) All per square foot figures are on an annual basis

Sale Price PSF $348 Total Rentable Area Assumption 49,161 SF

Vacancy at Sale 3.0% (excludes sublease) Potential Rent Revenue $878,075Vacancy Loss/Rate ($64,705) [ 7.4%]

($17.89 Shop Rent x 3,616 SF+ $11.11 Anch Rent x 0 SF)

Seller 1. Little Tidewater Associates LLC / 440 Monticello Ave, Ste 1700,Wells Fargo Center, Norfolk, VA 23456

Effective Rent Revenue $813,370$17.86 In Place Rent x 45,545 SF

Expense Reimbursements $93,016 [$1.89 PSF]($2.92 PSF Exp. x 0.70 Reimb. Ratio

x 45,545 SF)

Free Rent Concessions ($18,784) [$0.38 PSF]Credit Loss ($8,781) [ 1.0%]

Buyer 1. SWNC I LLC / 1616 2nd Ave S, Ste 100, Birmingham, AL 352332. SWNC-Little CRK LLC

Additional Income $0 [$0.00 PSF]

Effective Gross Revenue $878,822Operating Expenses ($143,432) [$2.92 PSF]

Capital Reserve ($4,916) [$0.10 PSF]Net Operating Income $730,474

Comments Est Going-in Cap Rate/EGIM 4.3% / --Based on Sale Price of $17,100,000




Buyer's Broker Key Tenants Applebee'sJersey Mike's SubsVirginia ABCFuddruckersWingstopGreat WallCricket Wireless AutLj Nail SpaTropical Smoothie CaVerizon Authorized R

Other Broker

Interest Purchased



Deed Reference 1392

Time on Market

Financing Details

Other:


Power Center Report

Power Center ReportRetail - 1st Quarter 2020Prepared By Reis, Inc.



Section 55 - Current Rent Snapshot

2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

Power Center Community Neighborhood

Norfolk/Hampton Roads Non-Anchor Asking Rent Growth

2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

Norfolk/Hampton Road South Atlantic United States

Power Center Non-Anchor Asking Rent Growth

Norfolk/Hampton Roads Non-Anchor Asking Rent Comparisons Power Center Non-Anchor Asking Rent Comparisons

1Q 2020 1Q 2019 Annual Rent Growth

Power Centers $21.30 $21.30 0.0%

Neighborhood Centers $16.09 $16.02 0.4%

Community Centers $16.46 $16.50 - 0.2%

1Q 2020 1Q 2019 Annual Rent Growth

Norfolk/Hampton Roads $21.30 $21.30 0.0%

South Atlantic Region $27.69 $27.22 1.7%

United States $28.59 $28.20 1.4%

Section 56 - Current Vacancy Snapshot

2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1

7.0

8.0

9.0

10.0

11.0

12.0

13.0

Power Center Community Neighborhood

Norfolk/Hampton Roads Vacancy Rate by Center Type

2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1

5.5

6.0

6.5

7.0

7.5


Power Center Vacancy Rate by Region

Norfolk/Hampton Roads Vacancy Rate by Center Type Power Center Vacancy Rate Comparisons

1Q 2020 1Q 2019 Annual Vac. Change

Power Centers 7.7% 7.3% 0.4%

Community 12.5% 11.1% 1.4%

Neighborhood 13.3% 12.8% 0.5%

1Q 2020 1Q 2019 Annual Vac. Change

Norfolk/Hampton Roads 7.7% 7.3% 0.4%

South Atlantic Region 5.7% 5.8% - 0.1%

United States 6.5% 6.4% 0.1%




Section 57 - New Construction

6.9 %

43.9 %

11.4 %

25.1 %

12.7 %

Norfolk/Hampton Roads New Construction - 2019 and Later

CommunityMixed UseNeighborhoodOtherPower CenterRegional

Completed SF SF Under Construction Totals Planned Proposed Totals

2019 YTD 2020 2020 2021 and Later 2019 and LaterNeighborhood 33,600 0 0 0 33,600 124,637 43,860 168,497

Community 0 0 0 0 0 0 120,000 120,000Power Center 0 0 0 0 0 0 225,000 225,000

Regional 0 0 0 0 0 0 0 0Mixed Use 0 0 0 0 0 750,000 25,600 775,600

Other 444,000 0 0 0 444,000 0 0 0Totals 477,600 0 0 0 477,600 874,637 414,460 1,289,097

As of 31-Mar-2020Includes all recently completed, under construction, planned, and proposed properties from the table above. Note that some verified listings for planned and proposed properties do not yet have afirm completion date.

Section 58 - Metro Power Center and Regional Mall Projects

Type Property Name Street Address City County Year Size Status

P Edinburgh Shopping Center West Ph BATTLEFIELD BLVD @ HILLCREST PK CHESAPEAKE Chesapeake 225,000 Proposed

Types: R=Regional/Super Regional Malls P=Power Centers

Section 59 - Cap Rate Trending

Norfolk/Hampton Roads Retail Cap RatesMetro Statistics - 12 Month Rolling (All Retail Types)

Mean MedianCap Rate N/A N/ASale Price $17,333,967 $11,093,231Price/SF (Area Purchased) $179 $179

4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

Community CtrFreestanding

Neighborhood CtrRegl/Super Regl Mall

Power Center

US Retail Average Cap Rates by Center Type

US Average Transaction Data12 Month Rolling

Power Centers Regional MallsCap Rate 8.7% 16.4%Sale Price $35,397,819 $35,164,687Price/SF (Area Purchased) $152 $77




Section 60 - Recent Metro Area Regional Mall Sales

Date Type Property Name CityArea

Purchased ofTotal (SF)

Price Price/SF Seller Buyer

Sep-19 PLandstown Commons ShoppingCenter (portion) Virginia Beach 419089 / 505699 $87,000,000 $207.59 Divaris Real Estate Inc

Acadia Realty Trust/LandstownCommons Owner LLC

Mar-18 PBed Bath & Beyond @Yoder PlazaShopping Center Newport News 41984 / 41984 $4,359,074 $103.83 Triple B Newport News Trust BBB Newport News LLC

Feb-18 R Chesapeake Square Mall (portion) Chesapeake 703633 / 803633 $12,900,000 $18.33JPMCC 2004-LN2 ChesapeakeSq M

Kotarides Holdings/KH WesternBranch LLC

Jan-18 P JANAF Shopping Center Norfolk 913974 / 913974 $85,650,000 $93.71McKinley Inc/JANAF ShopsLLC/JANAF Shopping Center

Wheeler Real Estate InvestmentTrust Inc/WHLR-JANA

Jan-18 P Crossways Shopping Center Chesapeake 371735 / 371735 $19,900,000 $53.53Schottenstein PropertyGroup/JLP-Chesapeake LLC

Ultimate Retail Realty LLC

Types: R=Regional/Super Regional Malls P=Power Centers




Section 61 - Metro Area Power Center and Regional Malls: Norfolk/Hampton Roads

Recently completed, under construction, planned or proposed Existing center




Section 62 - Metro Area Power Center and Regional Malls

Id Name City YearBuilt Size Type Id Name City Year

Built Size Type

1 Edinburgh Shopping Center West Ph 2 CHESAPEAKE 225,000 P 13 Yoder Plaza Shopping Center NEWPORT NEWS 1996 400,000 P

2 Crossways Shopping Center Chesapeake 1990 355,811 P 14 Greenbrier Market Center CHESAPEAKE 1996 480,000 P

3 Sams Club Plaza VIRGINIA BEACH 1962 340,000 P 15 Fox Mill Centre GLOUCESTER 2002 296,000 P

4 Pembroke Mall Virginia Beach 1967 658,500 R 16 Power Plant of Hampton Roads HAMPTON 2002 635,000 P

5 Greenbrier Mall CHESAPEAKE 2005 897,626 R 17 Red Mill Commons Ph 1-4 VIRGINIA BEACH 2002 422,000 P

6 Patrick Henry Mall NEWPORT NEWS 1987 661,522 R 18 Walmart Way Crossing CHESAPEAKE 2002 432,250 P

7 Lynnhaven Mall VIRGINIA BEACH 1981 1,291,445 R 19 Victory Crossing Ph 1 + 2 PORTSMOUTH 2002 326,300 P

8 Military Circle Norfolk 1970 688,842 R 20 Victory Village WILLIAMSBURG 2004 335,000 P

9 Chesapeake Square Mall CHESAPEAKE 1989 803,633 R 21 Jefferson Commons NEWPORT NEWS 2005 307,662 P

10 J.A.N.A.F. Shopping Yard NORFOLK 1957 891,281 P 22 Windsor Meade Marketplace WILLIAMSBURG 2005 225,000 P

11 Newmarket Shopping Center Hampton 1956 354,804 P 23 Edinburgh Commons CHESAPEAKE 2008 597,000 P

12 Macarthur Square NORFOLK 1999 950,000 R 24 Landstown Commons VIRGINIA BEACH 2008 505,699 P

25 The Marquis at Williamsburg WILLIAMSBURG 2008 393,911 P

Type R: Regional/Super Regional malls P: Power Centers

Numbers correspond to listings on map

Section 63 - Economic and Demographic Data

2014 2015 2016 2017 2018 2019

1.0

2.0

3.0

4.0

5.0

6.0


Household Annual Income Growth Trend Comparisons

2014 2015 2016 2017 2018 2019

0.5

1.0

1.5

2.0

2.5

3.0


Total Annual Employment Growth Comparisons

Source: Economy.com Source: Economy.com





Year Qtr TotalEmployment

OfficeEmployment

IndustrialEmployment Households Population Household Avg.

Income

2010 Y 737,530 237,851 86,059 633,220 1,682,950 $109,249

2011 Y 741,630 240,724 86,429 636,960 1,691,400 $112,826

2012 Y 752,330 243,691 89,007 641,320 1,700,820 $118,842

2013 Y 757,130 244,236 88,874 648,430 1,709,030 $114,241

2014 Y 758,530 244,762 88,572 654,680 1,717,410 $119,566

2015 Y 772,400 247,050 87,262 659,080 1,721,050 $123,556

2016 Y 776,430 247,761 85,749 662,660 1,723,540 $124,338

2017 Y 786,670 252,118 87,343 665,150 1,724,930 $127,767

2018 2 792,530 255,266 89,867 666,290 1,725,470 $131,803

2018 3 789,830 254,008 90,504 666,880 1,725,980 $132,983

2018 4 787,900 254,518 90,462 667,830 1,726,640 $133,872

2018 Y 787,900 254,518 90,462 667,830 1,726,640 $133,872

2019 1 792,530 254,893 91,568 669,310 1,727,510 $135,568

2019 2 797,100 257,328 92,167 671,000 1,728,640 $137,122

2019 3 793,600 255,210 91,620 672,800 1,730,040 $137,619

2019 4 794,600 253,479 91,931 674,510 1,731,790 $138,168

2019 Y 794,600 253,479 91,931 674,510 1,731,790 $138,168

2020 1 795,060 253,690 91,738 675,950 1,733,760 $138,542

2020 Y 774,640 247,251 88,943 677,860 1,740,460 $137,524

2021 Y 781,880 249,451 89,000 681,710 1,749,600 $140,976

2022 Y 797,510 254,726 89,820 687,630 1,758,370 $147,490

2023 Y 805,130 257,712 89,770 693,900 1,766,800 $152,529

2024 Y 807,490 259,067 89,179 699,890 1,775,590 $157,215

Source: Moody's Economy.com

Click here for a glossary of terms, or go to https://se.reis.com/ReisSEGlossary.pdf

https://se.reis.com/ReisSEGlossary.pdf


About Reis

Reis provides commercial real estate market information and analytical tools to real estate professionals through itsReis Services subsidiary. Reis Services, including its predecessors, was founded in 1980. Reis maintains a proprietarydatabase containing detailed information on commercial properties in metropolitan markets and neighborhoodsthroughout the U.S. The database contains information on apartment, office, retail, warehouse/distribution,flex/research & development, self storage, seniors housing properties and affordable housing, and is used by realestate investors, lenders and other professionals to make informed buying, selling and financing decisions. In addition,Reis data is used by debt and equity investors to assess, quantify and manage the risks of default and loss associatedwith individual mortgages, properties, portfolios and real estate backed securities. Reis currently provides itsinformation services to many of the nation's leading lending institutions, equity investors, brokers and appraisers.

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