$ Growing Population Fuels Retail Expansion $13.50 $13.77 COLUMBIA, SC RETAIL. Research & Forecast Report Q

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1 Research & Forecast Report COLUMBIA, SC RETAIL Q Growing Population Fuels Retail Expansion Bryana Mistretta Research Coordinator South Carolina Key Takeaways > > National grocers are leading suburban retail expansion in the Columbia market. This quarter, Lowes Foods and Lidl announced their first Midlands locations. They are joining newly announced stores from Kroger, Walmart Neighborhood Market, Costco, Sam s Club, Publix Super Market and The Fresh Market. > > Downtown retail is expanding beyond its traditional corridors (Gervais, Main and Harden Streets) to North Main, BullStreet Commons and Devine Street, as several residential developments nearing occupancy draw more interest. Growing Population Attracts New Interest From Retailers The second quarter of 2016 saw the expansion of national and local retailers within the market. The Columbia retail market is driven by the growing employment, residential population and the student population of the University of South Carolina, especially in the Downtown submarket. Newly delivered student housing projects in that submarket will add to the residential population and generate new interest in the surrounding areas as the developments reach full occupancy. Strong activity in the market has led to a market vacancy rate of 9.4%. Although slightly higher than the vacancy rate for the market from the first quarter of 2016, available spaces in the market are quickly absorbed, with fast turnaround on newly vacated spaces. The uptick in vacancy does not reflect the overall health of the market as three submarkets reported vacancy rates lower than 5.0%. The retail market shows to be improving, as the market average asking rental rate rose higher than last quarter s rate to $13.76 NNN per square foot per year (PSF/YR) for shop space. Market Indicators Relative to prior period Q Q3 2016* VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE Note: Construction is the change in Under Construction. *Projected Average Asking Rental Rates for Shop Space Columbia, SC Retail Market Q Q Q $13.50 $13.77 $13.96

2 Grocers Continue to Expand Growing population in the Northeast Columbia, Harbison/St. Andrews and Lexington Submarkets has attracted grocers to expand in Columbia. Lowes Foods and Lidl both announced their first Midlands locations this quarter, joining a list of other grocers who have already begun construction on new locations throughout suburban Columbia. Several of these grocery-anchored centers are receiving robust interest from local and national retailers, who will benefit from the customer traffic the grocers will create. > > Lowes Foods announced two new locations in Lexington this quarter. The first will be built at the corner of U.S. 1 and Charter Oaks Road and the second on Hope Ferry Road and Sunset Boulevard. The stores will be the first for this North Carolina based grocer. > > Lidl, a grocer based in Germany, has announced plans to open two stores in Columbia, one on Hardscrabble Road in Northeast Columbia and the other on Sunset Boulevard in Lexington. The location at Hardscrabble Road will be built from the ground up. The Lexington location will backfill a former car dealership near Hope Ferry Road and Sunset Boulevard. > > A 38,000 square-foot Walmart Neighborhood Market opened at the intersection of Knox Abbott Drive and Charleston Highway. > > Fresh Market will be opening a third location in Lexington on Sunset Boulevard. The grocer and Hobby Lobby will anchor the new 143,000 square-foot shopping center. > > Costco Wholesale will soon open their new 153,000 square-foot store at 507 Piney Grove Road. > > Construction of a new 136,000 square foot Sam s Club in the Village at Sandhill is complete. > > Kroger Marketplace recently opened their 124,000 square-foot store at the corner of Killian and Farrow Road. This is the first retailer to anchor the 1.3 million square-foot Killian Crossing Shopping Center. > > Publix Super Market will open a new 45,000 square-foot store in Chapin Crossing Shopping Center in September of this year. Downtown is Booming An unprecedented population boom is underway in Downtown Columbia driven by multifamily development for students and young professionals. In August of 2015, 224 market rate units and 1,992 beds of student housing were delivered in downtown. This summer, another 524 market rate units and 1,530 beds will be delivered. Together, this will add nearly 5,000 new residents to downtown and radically reshape the retail environment. The four established retail clusters (The Vista, Main Street, Five Points and Devine Street) are all seeing increased interest, lower vacancy, new infill development and rising rental rates. In response, two new retail areas are showing green shoots: the North Main Street corridor and BullStreet Commons, a 180-acre redevelopment. We expect interest to intensify in these six areas as the dynamics of 5,000 new residents becomes apparent. Columbia, SC Retail Submarkets FOREST ACRES SOUTHEAST COLUMBIA NORTH COLUMBIA NORTHEAST COLUMBIA DOWNTOWN CAYCE/WEST COLUMBIA LEXINGTON HARBISON/ST. ANDREWS Kroger Marketplace at Killian s Crossing Chapin Crossing Shopping Center 2 South Carolina Research & Forecast Report Q Columbia Retail Colliers International

3 On the horizon, 1,100 units of market-rate apartments and 2,000 additional beds of student housing have been proposed through a combination of announcements, site acquisitions or design reviews with local government. If those came to fruition, another 4,500 residents would be added to the region s core. Three factors are driving the boom: > > Full time enrollment at the University of South Carolina has increased by an average of 800 students a year since > > The great migration of millennials and young professionals from the suburbs to the urban core where they can live, work and play near their home. > > The Columbia region has 48% of its office space located downtown this is disproportionately large for metro areas around the nation, where suburban office markets are dominant. New Downtown Developments > > Cobb Theatres recently announced a new 10-screen movie theater that will anchor the Commons at BullStreet, a 414,000 square-foot retail center. > > The Casual Pint, a craft beer market from Tennessee, opened at 807 Gervais Street. > > Frankenbrew, a new brewhouse by the Cotton Town Brew Lab, is expected to begin production in August at 1223 Franklin Street. The brewery will produce up to 240 kegs a year and will incorporate local flavors in some of their productions. > > The Devine Cinnamon Roll Deli, offering sandwiches, soup and specialty cinnamon rolls, opened this quarter at 2617 Devine Street. > > East Bay Deli will open its first location in Columbia in the third quarter at 1426 Main Street. The Charleston-based restaurant will occupy 4,100 square feet on the bottom floor of the Hub at Columbia student housing building. > > Texas-based Sure Fire Tacos and Tortilla Grill opened this quarter at 916 Gervais Street, with plans to expand to locations in Charleston, Greenville and Charlotte. > > The Station at Five Points, located at the corner of Gervais and Harden Streets, was finished this quarter. The development has a total of 660 student housing beds. > > Park Place is a new 640-bed student housing development delivered this quarter at 500 Huger Street. > > The Palmetto Compress, delivering in the third quarter, will add 197 residential units. The development is located at 612 Devine Street. > > Tremont recently delivered 230 residential units at 111 Knox Abbot Drive. > > Land Bank Apartments, built in a redeveloped historic property at 1401 Hampton Street, recently delivered adding 114 market rate units. Park Place Rendering Huger and Blossom Street Source: Park7 Group The Palmetto Compress Rendering 612 Devine Street Source: PMC Property Group The Station at Five Points Geravis and Harden Street Source: Peak Campus 3 South Carolina Research & Forecast Report Q Columbia Retail Colliers International

4 Q Retail Market Summary Statistics Columbia, SC MARKET BUILDINGS INVENTORY VACANCY RATE (%) ANCHOR SPACE (GREATER THAN 25,000 SF) JR. ANCHOR SPACE (10,000-25,000 SF) SHOP SPACE (LESS THAN 10,000 SF) Cayce/West Columbia 15 1,212, % 101,249 $ ,265 $ ,043 $10.84 Downtown 6 405, % ,207 $21.93 Forest Acres 3 777, % 51,728-11,754 $ ,523 $17.26 Harbison/St. Andrews 33 3,535, % 41,435 $ ,576 $ ,884 $14.47 Lexington 14 1,633, % 33, ,227 $17.29 North Columbia 5 353, % ,008 $8.76 Northeast Columbia 28 3,741, % 132,243 $ ,020 $ ,586 $14.90 Southeast Columbia 8 1,109, % 0-18,000-17,950 $11.89 Market Total ,769, % 359,900 $ ,615 $ ,428 $13.96 Sales Conditions remain favorable for retail investment in Columbia. Average asking rental rates are rising, interest rates remain low and capitalization rates are moderate. Renovations of anchored shopping centers have proven successful in the Columbia retail market, with several of them near full occupancy. > > Wheeler Real Estate Investment Trust purchased 25 retail properties in Georgia and South Carolina in April for $71 million. The group purchased four Columbia retail centers, including 3818 Devine Street and 1123 S. Lake Drive in Lexington, both former Piggly Wiggly-anchored centers. > > 2800 Rosewood Drive, a 36,887 square-foot Publix Super Market-anchored shopping center sold to Preferred Apartment Communities this quarter. The property was part of a $68.7 million investment portfolio encompassing six other southeastern properties. Gross Retail Sales Activity Gross retail sales are driven by a strengthening economy, strong job growth and a growing residential population. According to the most recent data from the South Carolina Department of Revenue, the Columbia Metropolitan Statistical Area (MSA) had $7.8 billion in gross retail sales between January and April of 2016, an 11.8% increase from the same time in These sales are a 16.5% growth from two years ago. Strengthening Non-Farm Employment Non-farm employment is growing within the Columbia Metropolitan Statistical Area (MSA). According to the Bureau of Labor Statistics most recent data from May 2016, the Columbia MSA had 392,000 non-farm employees. Since May 2015, 8,400 new non-farm jobs were added to the market, a 2.2% growth over one year. Since May 2014, the Columbia MSA has experienced a 4.9% job growth rate. A strengthening job market correlates to the higher gross retail sales for this year comparative to the last two years Devine Street Source: Costar January - April Gross Retail Sales Columbia, SC MSA Lexington County: $4.8 Billion Richland County: $3.3 Billion 2016 Since % Source: South Carolina Department of Revenue 2016 $7.8 Billion Since % 4 South Carolina Research & Forecast Report Q Columbia Retail Colliers International

5 Looking Ahead The retail market in Columbia is growing and has potential for expansion. Residential developments are expected to deliver throughout the rest of 2016, drawing more residents into the downtown area, with several more proposed to begin construction soon. Vacancy rates will begin to drop as demand for retail space in the Columbia retail market grows stronger, further increasing the average asking rental rates in all submarkets. Around the State Retail activity is strong throughout South Carolina, as retailers continue to expand and invest in the state. Grocers, including Harris Teeter, Publix Super Market, Aldi, Lidl, Lowes Foods and Walmart Neighborhood Market, are taking advantage of South Carolina s growing population in all three cities. Developers are building new residential communities to accommodate the growing population in Charleston, Greenville, and Columbia. Large population density in the downtown cores and growing suburban populations holds potential for further expansion of retail in these markets. Charleston, South Carolina > > Charleston s population is growing and new residential projects are being delivered. Tourism is also expanding, creating a larger daytime population than ever before. > > Upper King Street is expanding with the addition of curated soft goods retailers. The success of retailers on Upper King is attributed to higher residential and tourist density than other areas of King Street. Greenville, South Carolina > > The primary retail corridors of Woodruff Road, Haywood Road, West Spartanburg and Clemson Boulevard are strengthening as the vacancy rates fall and average asking rental rates continue to escalate. > > Restaurants continue to expand in the market, with six openings this quarter and many new announcements. For more statewide commercial real estate news check out our market reports at: Columbia, SC MSA Employment Trends Number of Jobs Added (Thousands) 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 May-12 Sep-12 Commercial Real Estate Growth Cycle: Where the market stands and where it is going. NEW CONSTRUCTION RENTAL RATE EMPLOYMENT OCCUPANCY PHASE 4: RECESSION Jan-13 May-13 Sep-13 PHASE 1: RECOVERY Jan-14 May-14 Sep-14 Source: South Carolina Bureau of Labor Statistics Jan-15 COMMERCIAL REAL ESTATE GROWTH CYCLE PHASE 3: HYPERSUPPLY PHASE 2: EXPANSION THE COLUMBIA, SC RETAIL MARKET is moving along the expansion phase. Rental rates, occupancy and employment are all strong and increasing. New construction is at its highest level in years and momentum continues to grow as grocery stores and national retailers show significant interest in the market. May-15 Sep-15 Jan-16 May-16 Total Non-Farm Employment (Thousands) FOR MORE INFORMATION Rox Pollard Vice President & Director of Retail Services Team rox.pollard@colliers.com Liz H. McCary Director of Marketing South Carolina liz.mccary@colliers.com Bryana Mistretta Research Coordinator South Carolina bryana.mistretta@colliers.com Copyright 2015 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. Colliers International South Carolina 1301 Gervais Street, Suite 600 Columbia, South Carolina colliers.com/southcarolina 5 North American Research & Forecast Report Q Office Market Outlook Colliers International