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1 Retail Real Estate Trends & Analysis Southern New Hampshire New This Year: -Year Historical Data The KeyPoint Report KEYPOINT PARTNERS, LLC, BURLINGTON, MA KeyPoint Partners, LLC One Burlington Woods Drive, Burlington, MA Tel Fax KeyPointPartners.com Blog.KeyPointPartners.com unlocking value

2 About this Report: Highlights: This KeyPoint Report examines changes in supply, vacancy and absorption, retailer activity, and market composition by store size and retail categories during the year ending June. The Southern New Hampshire market includes 9 cities and towns representing more than 5 square miles and approximately 55,9 people (4.% of the state population). Supply: 9.7M SF :.9M Absorption:.M SF : 47, SF Vacancy Rate: 9.6% :.6% KeyPoint Partners GRIID database maintains detailed information on virtually all retail properties in three key regions: Eastern Massachusetts, Southern New Hampshire and Greater Hartford, Connecticut. These markets encompass approximately 44% of all retail space in New England. GRIID has information on more than 56 million square feet of retail space and approximately 59,6 retail establishments. City/Town Ranks: # Space SF: Nashua # High Occupancy: Bedford # High Vacancy: Manchester Category Expansion by Square Feet: # Food/Grocery (+59,) Category Expansion by Number of Stores: # Women s Apparel (+) The KeyPoint Reports contain a detailed summary and analysis of market trends and activity for each studied area. Copyright KeyPoint Partners, LLC, Retailer Expansion by Square Feet: # Market Basket (+95,7) # Subway # Sleepy s (+) Study Area: Cities & Towns in the Study Area: Amherst, Atkinson, Auburn, Bedford, Brentwood, Brookline, Chester, Danville, Derry, East Kingston, Exeter, Fremont, Greenville, Hampstead, Hampton, Hampton Falls, Hollis, Hudson, Kensington, Kingston, Litchfi eld, Londonderry, Lyndeborough, Manchester, Mason, Merrimack, Milford, Mont Vernon, Nashua, Newton, North Hampton, Pelham, Plaistow, Salem, Sandown, Seabrook, South Hampton, Wilton, Windham

KeyPoint Partners, LLC Custom Retail Market Research The KeyPoint Report Southern New Hamsphire Figure : Summary Retail inventory grew to 9.7 million square feet in, a signifi cant gain of.

Category Total Market Size (Square Feet) Total Number of Retail Properties Total Number of Retail Establishments Total Market Vacancy Square Feet Vacant Stores Vacancy Rate Total Retail Space Per

% decline, and vacant storefronts were reduced by.%. With a signifi cant gain in inventory and reduction in vacancy, net absorption exceeded. million square feet..6% 5.6 5,5 % change.7%.5%.5% -7.% -.% -9.

% Observations: Special Feature: This year s Report, in addition to our usual detailed summary of market activity for the last year, includes a special feature: an historical perspective which

Supply, Occupancy, & Absorption (Figure, Page 4): Southern New Hampshire received a double shot of retail love in : inventory was up and vacancy was down.

Square footage gains were largely attributable to the addition of the 4, square foot Merrimack Premium Outlets in Merrimack, now Southern New Hampshire s fi fth largest shopping center.

3 KeyPoint Partners, LLC Custom Retail Market Research The KeyPoint Report Southern New Hamsphire Figure : Summary Retail inventory grew to 9.7 million square feet in, a signifi cant gain of.7% versus last year when the level stood at.9 million square feet, largely the result of the opening of the 4, square foot Merrimack Premium Outlets. Category Total Market Size (Square Feet) Total Number of Retail Properties Total Number of Retail Establishments Total Market Vacancy Square Feet Vacant Stores Vacancy Rate Total Retail Space Per Capita Retail Store Average Size 9,74,, 5,,4, 7 9.6% 5.6 5,6,9,, 5,,6,9 Vacancy & Absorption: The vacancy rate in Southern New Hampshire ended the year at 9.6%. Unoccupied space was reduced by approximately, square feet, equating to a 7.% decline, and vacant storefronts were reduced by.%. With a signifi cant gain in inventory and reduction in vacancy, net absorption exceeded. million square feet..6% 5.6 5,5 % change.7%.5%.5% -7.% -.% -9.% -.9%.% Observations: Special Feature: This year s Report, in addition to our usual detailed summary of market activity for the last year, includes a special feature: an historical perspective which presents a profi le of the market from the relatively good times beginning in, through the Great Recession, to the present. Supply, Occupancy, & Absorption (Figure, Page 4): Southern New Hampshire received a double shot of retail love in : inventory was up and vacancy was down. For starters, the region gained 79, square feet of retail space between and. This.7% increase in retail space from a year ago was the largest since the good ol days - well, 6, to be precise. Square footage gains were largely attributable to the addition of the 4, square foot Merrimack Premium Outlets in Merrimack, now Southern New Hampshire s fi fth largest shopping center. Regarding Southern New Hampshire vacancy, results are even more compelling. Unoccupied space in the region has been reduced by approximately, square feet, a 7.% drop from the vacancy level last year. The number of vacant storefronts is down.% and the vacancy rate has declined from.6% in to a current level of 9.6%. As a result, there has been more than. million square feet of net absorption in the region. Individual Town Rankings (Figure, Page 6): Retailing in Southern New Hampshire is dominated once again by the Big Three : Nashua, Manchester, and Salem, respectively ranking in that order. In the aggregate the retail space in these three communities represents 5.% of the total inventory within the region. While the remaining towns in the top ten repeat last year s list, Merrimack moves from 9th to 6th by virtue of the Merrimack Premium Outlets opening. Amongst towns with the highest vacancy rate, Manchester continues at No. with 5.6%, down from a rate of 6.7% last year when it was tied with Merrimack, which dropped to fi fth this year at.6%. The only newcomer to the top fi ve is Derry where most of the former Walmart store remains vacant. Seabrook eked out of the top fi ve this year. Nashua retains number rank in retail supply Towns with the best occupancy levels this year include Bedford, which again resides at the top of the list. Amherst, Salem, North Hampton and Milford complete the top fi ve. Vacancy in these towns range from a low of 4.% to a high of 6.6%, respectively. Almost every city and town in Southern New Hampshire with more than 5, square feet of retail space showed improved vacancy, the exceptions including Londonderry and Seabrook. Although vacancy is up incrementally in Londonderry by only 4, square feet, its rate still increased from.% to.9%. In Seabrook, the increase in the vacancy rate was nominal, up only basis points, but is expected to decline next year when DDR is scheduled to open its Seabrook Town Center, a new power center anchored by a Walmart Supercenter. Vacancy by Tenant Size (Figure 4, Page 6): In assessing vacancy rates by store size, it s encouraging to see that the smaller store sizes showed considerable improvement since last year, although rates are still quite high. It has been these smaller store categories that have been the most troubling in recent years, with vacancy rates soaring into the mid to upper teens. The most improvement occurred in the,5-4,999 square foot bracket, where the vacancy rate declined by basis points to a level of.4%. Among stores less than,5 square feet, a rate drop of basis points resulted in a current vacancy rate of 5.%. However, much of this vacancy is confi ned to the urban cores of the larger cities, particularly Manchester. Somewhat surprising was the jump in vacancy in the 5,-99,999 square foot classifi cation. Virtually the entire increase can be explained by two locations: a 7, square foot Walmart store in Derry was only partially replaced by a 46,5 square foot Ocean State Job Lot, creating a 7, square foot vacancy; In Nashua, Market Basket vacated a 5,4 square foot store. The Walmart and Market Basket vacancies were both the result of relocating to larger units. 4 No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein, and same is submitted subject to errors, omissions, change in price, rental or other conditions, or withdrawal without notice. Copyright KeyPoint Partners, LLC Continued on page 7 5

KeyPoint Partners, LLC Custom Retail Market Research The KeyPoint Report Southern New Hamsphire Figure : City & Town Rankings Nashua, Manchester, and Salem continue to dominate the retail scene in

The top ten communities represent % of the retail inventory in Southern New Hampshire. Among jurisdictions with 5, square feet, Bedford is the only town with a vacancy rate less than 5%.

4 KeyPoint Partners, LLC Custom Retail Market Research The KeyPoint Report Southern New Hamsphire Figure : City & Town Rankings Nashua, Manchester, and Salem continue to dominate the retail scene in Southern New Hampshire. These three cities encompass 5% of the retail space in a region comprised of 9 cities and towns. The top ten communities represent % of the retail inventory in Southern New Hampshire. Among jurisdictions with 5, square feet, Bedford is the only town with a vacancy rate less than 5%. Manchester has the highest vacancy rate at 5.6%. Most Space SF Highest Vacancy* Prior Rank Lowest Vacancy* Prior Rank Nashua Manchester Salem Bedford Seabrook Merrimack Plaistow Derry Londonderry Hudson 6,4,6 5,4,,7,5,65,,5,,45,,,,7,,, 96,6 Manchester Londonderry Derry Plaistow Merrimack *For cities and towns with 5, square feet or more of retail space. Municipalities not meeting this threshold in prior year are denoted by N. Figure 4: Market Composition & Vacancy by Tenant Size Although still quite high, vacancy rates in the smaller store classifi cation showed signifi cant improvement this year. Somewhat surprising was the vacancy rate increase in the 5,- 99,999 square foot size bracket. This was attributable mainly to two big box closings in the region, Walmart and Market Basket. Tenant Size Market SF Less Than,5 SF,5 to 4,999 SF 5, to 9,999 SF, to 4,999 SF 5, to 49,999 SF 5, to 99,999 SF, to 99,999 SF, SF and above 4,4, 4,65,7,575,4 4,9,4,4,4,95, 5,74,7 4,6 5.6%.9%.%.6%.6% 4 N 4.% 5.% 5.6% 5.% 6.6% Vacancy SF Vacancy Rate Share of Total 664,6 49, 55, 5,4 4,6 449,9 9,6 Bedford Amherst Salem North Hampton Milford 5.%.4% 5.6% 7.7% 7.5%.4%.%.% 6 4.9% 4.7%.%.9%.6%.% 9.%.% Observations Continued Market Basket led expansion in the region Retailer Activity (Figure 5, Page ): For the second straight year, Market Basket leads the way among retailers in incremental square footage - and not by adding to its store count, but by continuing its super-sized store expansion strategy. The opening of two larger prototypes in Bedford (7,5 sf) and Nashua (4, sf), and the completing of an expansion of its Southgate Plaza location in Seabrook were more than enough to offset the closings of two smaller Nashua stores. Ocean State Job Lot took second place thanks to its acquisition of the former Walmart store in Derry - Ocean State occupies 46,5 square feet of the total 7, square foot unit. The relocation of Walmart to its new Superstore across the street in Derry netted this retailer enough new space to rank it fourth on the list. Tractor Supply, however, fi nished just above Walmart in third place with the opening of new stores in Plaistow and Brentwood. Two elite department store names made it into the top ten ranking this year, albeit of the outlet store variety. Saks Fifth Avenue OFF FIFTH and Bloomingdale s Outlet both made their Southern New Hampshire debuts at Merrimack Premium Outlets in Merrimack. Retailers with the most store openings in Southern New Hampshire are Subway and Sleepy s, each adding three stores. Sleepy s new locations came via the acquisition of Mattress Giant stores. Several retailers added two stores with some of the more prominent names including Advance Auto, Jos. A. Bank, Tractor Supply, and Sport Clips, a new entry into the region. New parent company Ascena Retail Group closed all 6 Fashion Bug stores, and as a result this retailer heads the list of square foot contraction this year. Fashion Bug vacated three stores totaling,7 square feet in Nashua, Der- 6 No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein, and same is submitted subject to errors, omissions, change in price, rental or other conditions, or withdrawal without notice. Copyright KeyPoint Partners, LLC Continued on page 9 7

KeyPoint Partners, LLC Custom Retail Market Research The KeyPoint Report Southern New Hamsphire Figure 5: Retailer Activity The region encompasses more than 5, retail establishments, representing

Expansion by SF Retailer New Total Market Basket Ocean State Job Lot Tractor Supply Wal-Mart Saks Fifth Avenue OFF FIFTH T J Maxx Bloomingdale s Outlet Savers The Fresh Market Trader Joe s Expansion

5 KeyPoint Partners, LLC Custom Retail Market Research The KeyPoint Report Southern New Hamsphire Figure 5: Retailer Activity The region encompasses more than 5, retail establishments, representing approximately, unique retailers. The following summarizes these by the degree of expansion or contraction. Expansion by SF Retailer New Total Market Basket Ocean State Job Lot Tractor Supply Wal-Mart Saks Fifth Avenue OFF FIFTH T J Maxx Bloomingdale s Outlet Savers The Fresh Market Trader Joe s Expansion by # Stores Subway Sandwiches & Salads Sleepy s Mattresses Fanzz Sport Clips Vans Jos A Bank Clothiers Boost Mobile Swirl N Serve Frozen Yogurt Harrison s Comics Aeropostale Tractor Supply 95,7 46,5, 7,, 5,7 4,,,4 7,9 Retailer New Total NOTE: All fig gures shown above are NET 9, 46,5 6,,5,4, 9,5 4, 59,,4 7, Contraction by SF Retailer Contracted Total Fashion Bug H & M Mattress Giant Movie Scene Used Book Super Store Color Tyme Discount Pet Supply Drift Away Restaurant KFC Ritz Camera Contraction by # Stores,7, 7,,,6 7,9 7,5 7, 6, 5, 4,4 6,5 Retailer Contracted Total Ritz Camera Fashion Bug Mattress Giant Movie Scene Postal Center USA Haircuts Plus KFC Curves For Women Casual Male Big & Tall Stride Rite Annie s Book Stop 4 Figure 6: Retail Category Activity Tenants in GRIID represent nearly 6 unique business classifi cations; we have aggregated similar business types into larger retail categories, and summarized these by the degree of expansion or contraction. Expansion by SF Category New Total Food Stores - Grocery Department Stores Apparel - Women s Used & Antique Merchandise Shoe Stores Eating Places Beauty Salons & Services Misc. General Merchandise Health & Fitness Services Apparel & Accessory - Misc. Expansion by # Stores Category New Total Apparel - Women s Apparel - Family Eating Places Beauty Salons & Services Shoe Stores Food Stores - Miscellaneous Apparel & Accessory Food Stores - Dairy Products Food Stores - Grocery Health & Fitness Services 59, 47,, 66, 54,9 5,6 4,5 4, 5,7,9 Contraction by SF Contraction by # Stores Observations Continued ry, and Hudson. H&M closed its only store in Southern New Hampshire, a, square foot unit in Salem. Mattress Giant followed, closing three stores and 7, square feet. Both Fashion Bug and Mattress Giant are near the top of the list of store closures in Southern New Hampshire - but topping the list was Ritz Camera, which vacated four stores. We should note that since the close of this study, Stop & Shop announced that it will be closing six of its New Hampshire stores, all of which are located within the region. Retail Categories (Figure 6, Page 9): The Food Stores and Grocery and Department Store categories fi nished the year ranked one and two for the second straight year. Two new Market Basket stores, The Fresh Market in Bedford, and Trader Joe s in Nashua all contributed to the growth of the grocery category, while Bloomingdale s and Saks outlet stores in Merrimack, as well as a Walmart relocation from a traditional store to a Supercenter in Derry and the subsequent replacement of the former unit by Ocean State Job Lot, all added to department store square footage. Women s Apparel ended the year in third, mainly due to the opening of Merrimack Premium Outlets. The top two categories in store count growth were Women s Apparel and Family Apparel. Eating Places was ranked third. Again, the Merrimack outlet center yielded many of these store openings. On another positive note, retail contraction in the region was fairly negligible. Video Rental and Building Materials were the only merchandise categories to contract by more than, square feet. Retail space in some other categories declined only marginally. Home Furnishings ended the year with the largest reduction in store count, declining by six locations, although retail space in this category actually grew modestly. For the most part, smaller independents were the victims. Video Rental and Camera and Photographic Supply each contracted by four stores with Movie Scene and Ritz Camera closings having the most impacts. Conclusions: As noted, retail inventory was up and vacancy was down. The opening of the Merrimack Premium Outlets has brought a spark to the region s retail outlook, and we can be cautiously optimistic for recovery to continue through the coming year. Bob Sheehan Vice President of Research No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein, and same is submitted subject to errors, omissions, change in price, rental or other conditions, or withdrawal without notice. Copyright KeyPoint Partners, LLC BSheehan@KeyPointPartners.com 9,4, 4,, ,6 44, 9,,5, 6,6 49,5 99,7 5, Category Contracted Total Video Rental Building Materials Packaging & Mailing Services Camera/Photographic Supply Hobby, Toy & Game Shops Book Stores Jewelry Optical Goods Stores Fabric & Sewing Goods Stores Copying/Duplicating Services Homefurnishings Video Rental Camera/Photographic Supply Variety Stores Auto Services Packaging/Mailing Services Transportation & Public Utilities Book Stores Jewelry Copying/Duplicating Services -6,6 -, -6,7-5, -5, -4,7 -,9 -,7 -,6 -, ,6,5, 5,, 4, 5,, 74,4 55,9 4, Category Contracted Total

Special Section: A Ten-Year Market History Total Market Size SF Vacancy Rate

% 4.%.%.% In our KeyPoint Reports, we seek to create an annual snapshot of where

Given the turbulent times we ve been through since the beginning of the decade,

We examined activity in several key areas by reviewing KeyPoint Reports for

relatively robust, through the diffi cult times that started in 6 and culminated

4 5 6 7 9 4 5 The tables in this section were compiled from GRIID data in

million square feet of retail space have been added to Southern New Hampshire

Development has been generally consistent throughout the decade with 5% occurring

In only three years has incremental space been less than, square feet with last

Growth in was surpassed only once in 7, just prior to the Great Recession.

6 5 7 6 7 9 9 Vacant space in the region experienced a spike in 9 and has

Hopefully was the start of a trend in Southern New Hampshire when retail

,,,,, 6, 4,, -, -4, 4 5 6 7 9 The region experienced a 6.

decline. These data can be explained by big box growth in the region.

increased from 7% to 4% and the average store size in the region increased from

The trend in net absorption in Southern New Hampshire since has been erratic amid

6 Special Section: A Ten-Year Market History Total Market Size SF Vacancy Rate Decade of Change: Recovery, Recession, Recovery,, 9,,,, 7,, 6,, 5,, 4,,,,.%.%.% 6.% 4.%.%.% In our KeyPoint Reports, we seek to create an annual snapshot of where we are right now as a region and as an industry. Given the turbulent times we ve been through since the beginning of the decade, we thought it would be instructive this year to look at where we ve been. We examined activity in several key areas by reviewing KeyPoint Reports for Southern New Hampshire from, when retail activity and the general economy were relatively robust, through the diffi cult times that started in 6 and culminated in the 7 recession, to the glimmerings of recovery we noted in this year s study The tables in this section were compiled from GRIID data in KeyPoint Reports from through. Approximately 4. million square feet of retail space have been added to Southern New Hampshire since. Development has been generally consistent throughout the decade with 5% occurring in the front half of the decade and 47% during the latter half. In only three years has incremental space been less than, square feet with last year representing the weakest (5,6 SF). Growth in was surpassed only once in 7, just prior to the Great Recession. Total Retail Establishments Total Retail Properties Net Absorption 6, 5, 4,,,, Vacant space in the region experienced a spike in 9 and has struggled to get back to pre-recession levels. Hopefully was the start of a trend in Southern New Hampshire when retail inventory saw a net decline of 7.% in the level of unoccupied space.,,,,, 6, 4,, -, -4, The region experienced a 6.4% increase in retail inventory during the past years yet the number of retail establishments gained only modestly. Moreover, the number of retail properties during the decade showed a slight decline. These data can be explained by big box growth in the region. During the past decade, the market share of stores larger than 5, square feet increased from 7% to 4% and the average store size in the region increased from 4,7 square feet to 5,6 square feet. The trend in net absorption in Southern New Hampshire since has been erratic amid vast fl uctuations in occupancy and development activity. The past year was a record year, however, with the region absorbing more than. million square feet. Average Store Size : 4,675 SF : 5,574 SF Retail SF Per Capita : 46.7 SF : 5.6 SF Copyright KeyPoint Partners, LLC No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein, and same is submitted subject to errors, omissions, change in price, rental or other conditions, or withdrawal without notice.

The KeyPoint Report KEYPOINT PARTNERS, LLC, BURLINGTON, MA On the Cover: Merrimack Premium Outlets, Merrimack, NH Methodology: The data for this study

The information in our database has been compiled from a variety of sources.

The area for each space is obtained from sources deemed reliable, such as the owner or leasing agent, is paced off by our researchers or otherwise

Each entry is fi eld verifi ed or determined by our research staff.

the public. There are no size restrictions for stores or shopping centers.

services, such as stock brokers, real estate agents, insurance agents, etc.

In some cases wholesale or quasi-retail establishments have been included in the database if information from InfoUSA or our fi eld research indicates

Some establishments available to the public but typically serving primarily the needs of other users of a facility, such as a cafeteria in an offi ce

Custom Retail Market Research KeyPoint Partners provides retail research consulting services ranging from preliminary desktop assessments to comprehensive

7 The KeyPoint Report KEYPOINT PARTNERS, LLC, BURLINGTON, MA On the Cover: Merrimack Premium Outlets, Merrimack, NH Methodology: The data for this study includes all public retail space in the study area except for a few exclusions discussed below. The information in our database has been compiled from a variety of sources. A member of KeyPoint Partners research staff has visited each store/shopping center in order to verify and/ or acquire the necessary information. The area for each space is obtained from sources deemed reliable, such as the owner or leasing agent, is paced off by our researchers or otherwise measured. Retail categories and SIC Codes are obtained from a leading business database, InfoUSA, when available. Each entry is fi eld verifi ed or determined by our research staff. In general, public retail space is characterized as all space currently, or most recently, utilized in selling or renting retail goods and/or services to the public. There are no size restrictions for stores or shopping centers. Certain retail classifi cations are excluded, including automobile dealerships, gasoline service stations, automobile repair shops and quasi-retail services, such as stock brokers, real estate agents, insurance agents, etc., unless such establishments are located in shopping centers containing typical retail tenants. In some cases wholesale or quasi-retail establishments have been included in the database if information from InfoUSA or our fi eld research indicates that goods and/or services are being offered to the public from the location. Some establishments available to the public but typically serving primarily the needs of other users of a facility, such as a cafeteria in an offi ce building or a beauty salon located inside a hotel, may also be excluded. Demographic information used in this study was provided by Scan/US. Custom Retail Market Research KeyPoint Partners provides retail research consulting services ranging from preliminary desktop assessments to comprehensive evaluations which integrate fi eld investigation and quantitative analysis for a variety of retail location and store types. The heart of our research superiority is our powerful, proprietary GRIID. Is there a custom retail market research project we can do for you? Call Bob Sheehan, Vice President of Research at , or him at BSheehan@KeyPointPartners.com. Read our daily news blog, the KeyPoint Retail RoundUp; our monthly KeyPoints retail newsletter; and our annual KeyPoint Reports at KeyPointPartners.com Property Management Retail Leasing & Tenant Representation Investment Sales Construction Research & Consulting KeyPoint Partners, LLC One Burlington Woods Drive, Burlington, MA Tel Fax KeyPointPartners.com Blog.KeyPointPartners.com

Southern New Hampshire

Retail Real Estate Trends & Analysis 16 Southern New Hampshire New This Year: 1-Year Retail Category Report The KeyPoint Report 16 KEYPOINT PARTNERS, LLC, BURLINGTON, MA KeyPoint Partners, LLC One Burlington