U.S. National Retail Report 2012 Forecast

Transcription

1 ChainLinks Advisors U.S. National Report 1 Forecast 1 Forecast Welcome to ChainLinks 1 Forecast Report. This report not only contains our forecast for the national retail real estate market in 1, but also includes a statistical summary of the activity that we witnessed during the third quarter of 11 and detailed expansion plans of just a few of the retailers that we are tracking throughout our + offices across nearly every major market in the United States. 11 Holiday Sales Season Forecast Before we focus on this year s coming holiday sales season, let s recap what happened last year. Heading into the 1 holiday sales season, analysts were generally skeptical about retail sales. Luxury retailers had only seen a return to positive monthly same-store comparables in September. Prior to that, many had endured as many as 1 consecutive months of double digit monthly declines. Consumer confidence was in the s well below the historical average of 9 and the most recent ranking (October 11) of 1.. Last year, groups as diverse as the International Council of (ICSC) and the National Federation (NRF) were predicting that holiday sales would only increase by about.%. Then, the unexpected happened. Consumers showed up. By early December, most think-tanks were upwardly revising their forecasts. By mid-december it was clear that nearly everyone had underestimated just how much the American consumer would spend. Depending upon the data source, we closed the 1 holiday sales season with sales increases in the % to % range. As important as this was in terms of the general economy, what occurred next was even more critical to retail real estate; retailers significantly upped their growth plans. ers had already been increasing expansion plans over the virtually non-existent levels of 9, but this had primarily been driven by discounters and other concepts that had benefited from the newfound frugality of the American consumer. Following Christmas 1, we saw middle-of-the-road and luxury concepts getting back in the game. We also saw discounters adding extra units to their growth plans. Prior to the 1 holiday sales season, retail requirements had been up about % over 9 levels. By February 11, requirements were up over % above the past year s levels. The surprising success of the 1 holiday sales season was one of the driving forces behind keeping occupancy growth in the black this year. er sentiment remained high through the annual ICSC ReCon event in Las Vegas this past May, when many retailers further bolstered growth plans in the face of an economic outlook that looked to be improving. This, unfortunately, only lasted until the debt ceiling/credit downgrade debacle of August. As the economic outlook darkened with uncertainty and fears of a double-dip recession, retailers began to pull back on planned expansion. At the very least, those who did not trim their number of planned new units, were suddenly taking much longer to get deals done. While we are now past the worst of this late summer swoon, the economic outlook remains extremely cloudy at best. Most economists have downgraded job growth and GDP forecasts for the coming year; the Eurozone sovereign debt crisis will likely morph into a European recession and retailers continue to trim growth plans. That being said, the impact of last year s holiday shopping season cannot be understated. It was a catalyst behind a Brought to you by: Garrick H. Brown ChainLinks Research Director gbrown@terranomics.com Matt Kircher ChainLinks President.91. mkircher@terranomics.com

2 Chainlinks Advisors U.S. National Report significant amount of retail growth throughout the United States over the past year. Now, it may be true that most of this growth was mitigated by just a few major retailer bankruptcies (as we will discuss later in this report), however, we are firm in our conviction that the impact of last year s holiday season is what sent us on a positive trajectory for 11. Despite the fact that economic uncertainty dominated the landscape throughout the majority of the third quarter of this year, it was only in the third quarter that we finally saw vacancy levels moving downward. Growth over the first half of the year was largely cancelled out by just the Borders and Blockbuster vacancies. Other, smaller retail failures thrown into the mix certainly didn t help. But overall, what we saw was minor increases in demand from most of the marketplace, swallowed up by a few big failures. So where does this leave us heading into the 11 holiday shopping season? The Death of Black Friday First, retail real estate statistics aside, the impact of Black Friday is slowly slipping away. As this report went to press, Black Friday 11 numbers were not yet available. However, we were seeing trends that seem to suggest that Black Friday s days may be numbered as more and more retailers are pushing up their opening times. This year, Target, Best Buy, Kohl s and Macy s all opened their stores at midnight to accommodate early holiday shoppers. Abercrombie & Fitch, Justice, Hollister, Ann Taylor, The Gap, Old Navy, Banana Republic, GameStop and dozens of other chains also followed suit with many of their locations. But a number of retailers have taken things even farther. Both Toys R Us and Walmart opened stores as early as 9 PM on Thanksgiving night. While this has created some backlash (a Target employee started an online petition to urge the Minneapolis-based retailer to return to opening stores no earlier than AM on Black Friday so that employees could still enjoy their Thanksgiving holiday it garnered over 19, signatures in less than a week), the reality is that consumers have continued to show up in record numbers at ungodly hours to get an early jump on their holiday shopping. It may take a year or two, but we expect the majority of retailers and shopping centers to eventually be open on Thanksgiving Day. It already is one of the busiest days of the year for movie theaters and many restaurant chains (an estimated 1 million Americans ate out this Thanksgiving). With retailers facing ever more intense competition from both online retailers and one another and consumers continuing to demonstrate that they are willing to show up earlier to cash in on deals, we see it as only a matter of time before Thanksgiving Day becomes the new Black Friday. But even as the importance of Black Friday seems to be fading into the past, the question remains how will the market perform this year? The predictions from ICSC and the NRF have, so far, been in the.% to.% increase range. Of course, the problem in this negative media cycle has been that many media outlets have run with stories that headline reduced growth ahead. The problem with this is that even these projections are looking towards sales growth. They just don t see sales growth matching the level of increase we saw last year. Yet, to the uneducated reader, many of these articles would seem to paint a picture of declining sales revenues not increasing sales revenues that are simply not living up to last year s surprising results. Yet, we think these numbers are low to begin with. First off, the projections of the major think-tanks are right back to where they were last year. That being said, this year we have concerns over the Eurozone, political dysfunction and a whole new palette of issues plaguing the economy. But, one year ago there was a similar set of issues hanging over the economy in fact, they were issues that were actually more prescient than our current crisis of confidence driven issues. And, despite all of these challenges, we are actually heading into this holiday shopping season with higher levels of consumer confidence than where we were last year. We expect sales gains this year to be in the.% to.% range. The year-over-year increase will not be as high as last year s jump, but these numbers will still translate into a relatively strong holiday shopping season. We are more bullish in our forecast than the NRF or ICSC, although we are not as optimistic (though we hope they are right) as Customer Growth Partners, a research group that recently published a report forecasting.% annual sales growth. But regardless of whether our more positive forecast turns out to be true, this does not necessarily mean that this will translate into a surge of retailer demand this year. In fact, our informal polling of retailers is telling us that they are in a much more conservative state of mind this year. The reality is that most economists and most retailers are expecting 1 to be a year of slow, grinding growth thanks to the implications of both the likely European recession and the continued ineffectiveness of our government (which will be exacerbated by a gridlocked election year) to create any sort of economic policy relief. Of course, the political issues go deeper than this, to the fear

3 Chainlinks Advisors U.S. National Report that political dysfunction may actually derail the economy. It certainly threatened to do so this summer, so many see it as a looming potential issue at least through November 1. So while we see a strong holiday sales season ahead, we do not see the same surge in retailer demand occurring that happened last year. So where does this leave us? er Demand Survey We recently completed our quarterly retailer demand survey, which asks over top retail brokers in over markets nationally to rank current retailer demand on a scale of one (reflecting the lowest levels of demand possible) to ten (reflecting the highest levels of demand possible). While the national average of retailer demand remained stable at a ranking of seven indicating levels of retailer demand that are slightly above average, we did see a number of cracks in the façade that our brokers at the local level reported to us. First off, one almost unanimous response was that deals were taking longer to get done. ers have responded to big picture economic uncertainty with caution. Secondly, urban levels of demand were immensely higher than those that we are seeing in suburban marketplaces. Markets that saw no movement in retailer demand included; Albuquerque, Atlanta, Baltimore, Birmingham, Dallas, Denver, Detroit, Indianapolis, Inland Empire, Las Vegas, Miami, New Orleans, New York, North New Jersey, Oakland/East Bay, Omaha, Orange County (CA), Orlando, Philadelphia, Pittsburgh, Portland (OR), Salt Lake City, San Diego, San Francisco, San Jose/South Bay, St. Louis and Tampa/St. Petersburg. Markets that saw improvement in retailer demand include; Austin, Boston, Charlotte, Chicago, Des Moines, Jacksonville, Kansas City, Los Angeles, Milwaukee, Minneapolis, Nashville, Oklahoma City, Phoenix, Raleigh/Durham, Sacramento, San Antonio, Seattle, Tucson and Washington DC. Markets that saw retailer demand drop included; Charleston (SC), Cincinnati, Cleveland, Houston, Little Rock, Louisville, Memphis, Mobile, Newport News/Norfolk, Hampton Roads, San Jose/South Bay and Tulsa. 1 Forecast We expect retail vacancies to continue to fall over the coming year at an extremely slow pace. Though we do expect a strong holiday shopping season, we expect retailers to be in cautious growth mode throughout the majority of 1. er expansion will be dominated once again by discounters and grocery store chains, as well as new fast casual restaurant concepts. But discounter expansion (with the exception of dollar stores) may begin to slow by year-end, if for no other reason than players like TJX or Ross have already been in aggressive growth mode for a couple of years now and prime second-generation sites are becoming harder to find. Meanwhile, grocery growth will come mostly in the form of smaller format stores in the, to, square foot range. Even while discount, luxury/organic and ethnic themed grocery chains will be expanding with these smaller footprints, we will see increasing consolidation from unionized, mid-priced regional chains that will be returning stores (typically in the, to, square foot range) to the marketplace. While fast food and fast casual chains will continue to expand, we also expect casual dining chains (with a few exceptions) to continue to contract. Meanwhile, retailers in the middle will continue to be squeezed. While The Gap and Christopher & Banks have announced plans to close hundreds of stores between them in the coming year, we suspect there will be more. Meanwhile, mom-and-pop retail will largely continue to out of the picture until home prices stabilize (home equity loans remain the primary initial source of funding for small retail startups). Meanwhile, even as growth continues to be tempered by economic headwinds, we will also continue to see retailers shrinking their footprints. The bad news is that we don t expect retailer demand and leasing activity to increase above this year s levels in the year ahead. The good news is that we also don t expect retailer bankruptcies and failures to take as severe a toll in 1 as they did in 11. shopping center vacancy throughout the United States stood at 9.% as of the close of the third quarter. levels over the first half of 11 had remained firm at 9.% despite strong leasing activity. The failures of Borders and Blockbuster alone translated into nearly 1 million square feet of space being returned to the marketplace mitigating nearly all of the growth the market recorded over the first half of the year. These, of course, weren t the only bankruptcies impacting the market, but retail closures continued to keep pace with growth over the first six months of 11. It was only in the third quarter that the market finally began to see some movement in overall vacancy rates. While we expect retailer bankruptcies to diminish in 1, they will remain an issue. Throughout 11, retail failures largely mitigated what would have been respectable growth levels. As of the close of the third quarter, year-to-date shopping center absorption stood above 1 million square feet. Take just the failure of Borders and Blockbuster out of the mix and this number would have doubled. Looking forward, we continue to have strong concerns over mid-priced retail chains. Consumer shopping patterns have diverged to the extremes; luxury retail is back for the higherend consumer and discount retail is flourishing. Across every segment of the retail industry, it is the mid-priced retailer who is suffering most. Middle-class consumers have downsized and there are no signs that the new frugality will end any time soon. Chains caught in the middle will be where the most contraction occurs and though we don t expect retail closures to approach last year s levels, they will continue to mitigate growth across the board. will shrink in 1, but it will be at a slow pace, measured more by basis points than by percentage points.

4 Chainlinks Advisors U.S. National Report er Demand Survey Albuquerque NM Atlanta GA Austin TX Baltimore MD Birmingham AL Boston MA Charlotte NC Charleston SC Chicago IL Cincinnati OH Cleveland OH Dallas TX Denver CO Des Moines IA Detroit MI Houston TX Indianapolis IN Inland Empire CA Jacksonville FL Kansas City MO Las Vegas NV Little Rock AR Los Angeles CA Louisville KY Memphis TN Miami/Dade County FL Milwaukee WI Minneapolis MN Mobile, AL Nashville TN New Orleans LA New York City NY Newport News/Norfolk/Hampton Roads VA North New Jersey Oakland/East Bay CA Oklahoma City OK Omaha NE Orange County CA Orlando FL Philadelphia PA Phoenix AZ Pittsburgh PA Portland, OR Raleigh/Durham NC Sacramento CA Salt Lake City UT San Antonio TX San Diego CA San Francisco CA San Jose/South Bay CA Santa Barbara CA Seattle CA St. Louis MO Tampa/St. Petersburg FL Tucson AZ Tulsa OK Washington, DC NATIONAL AVERAGE 1 1 Q 1 1Q * 1 = Lowest retail demand, 1 = Highest retail demand

5 Chainlinks Advisors U.S. National Report Date Inventory 11 Const SF 11 q,9,1,9,,,, 9.%,1,1,9,1 11,9,91 $ q,,,,1,1,,1 9.%,,9,1, 1,, $ q,,9,,,,1, 9.%,99,,,9 1,1,99 $1.1 1 q,,9,,99,,111, 9.% 1,1,91,, 1,1,19 $1. 1 q,,,,1,,1,91 9.%,,,1,11 1,1,9 $1. 1 q,9,11,9,,,, 9.%,,,1,11 1,, $1. 1 1q,,9,1,9,,19, 9.% 19,1,,1 19,, $1.9 9 q,,9,1,,,, 9.%,1, 11,,1 19,, $1.1 9 q,,1,1,9,9,,9 9.% 1,, 1,,,99, $1.9 9 q,11,1,9,9, 1,,11 9.% (,,1) 1,,,1, $1. 9 1q,999,9,1 1,19, 1,,.% (1,,) 1,,,1, $19. q,9,9,9,9,9,,9.1%,1,,9,9,, $19. q,9,,,, 9,,9.% 19,,1,,91,, $19.9 q,91,,11,1,1,,9.% 9,11,,1, 9,1,1 $19. 1q,9,9, 1,,1,,1.%,,1,1,1 9,1,91 $19.,1,9,19,,,91,1.% 11,,1 1,1, 11,9,1 $.,9,1,9,,9 1,,.% 9,1,1 1,9, 1,, $.1 Third Quarter 11 Statistical Recap As of the close of the third quarter of 11, national retail shopping center vacancy stood at 9.%, down slightly from the 9.% mark where it had held steady since the fourth quarter of 1. The market absorbed over. million square feet of space during the third quarter its best performance year-to-date, but well below pre-recession quarterly averages which typically ranged in the 1 to million square foot mark. For example, at the peak of the last real estate cycle in, the market absorbed an average of million square feet of space per quarter. So far this year the market has recorded total occupancy growth in excess of 1. million square feet, or an average of nearly. million square feet. By comparison, last year the market netted total positive absorption in excess of. million square feet, or an average of nearly.9 million square feet per quarter. But while occupancy growth numbers are down, retailer demand and leasing activity are actually up. In fact, demand has been up substantially over last year. So why are the numbers down? er bankruptcies continue to mitigate growth in the marketplace. The Borders bankruptcy and liquidation alone translated into nearly 1 million square feet of space being returned to the marketplace. Blockbuster, meanwhile, has closed over 1, locations this year. Between just these two retailers over 1 million square feet of occupancy loss was recorded this year. Take these out of the mix and the market would be approaching million square feet of growth on the year already. But the loss of just these two retailers was enough to counter improving growth trends over the first half of the year and keep vacancy levels flat. It wasn t until this quarter that market vacancy levels finally began to show signs of traction. The good news is that the positive vacancy trends that we saw during the third quarter should continue over the final three months of the year. In fact, barring any unforeseen large-scale retailer bankruptcies following the holiday shopping season, this trend should continue at least into the first quarter of 1. The problem is that we cannot discount the possibility of some more large-scale retailer bankruptcies. The fact is that retailer closures continue. While we don t expect anything at the level of Borders or Blockbuster in the months ahead, there will be additional bankruptcies and there will be more chains in contraction mode returning space to the market. In fact, Christopher & Banks recently announced plans to close 1 stores (nearly half a million square feet) during the first quarter of 1. The Gap, meanwhile, has plans to close 19 U.S. stores roughly 1% of its domestic store count over the next couple of years. While positive occupancy growth from expanding retailers has largely been cancelled out by space being returned from a few large bankruptcies, there is one other factor that has significantly helped to keep vacancy levels from increasing. New development remains at record lows. So far this year only 11. million square feet of new shopping center product has been delivered to the marketplace. We are currently on place to close 11 with roughly 1 million square feet of new deliveries nationally. Keep in mind that at the peak of the last real estate cycle ( to ) deliveries averaged over ten times this total, or 1 million square feet per year. We are tracking just under 1 million square feet of shopping center space currently under construction throughout the United States, the lowest amount that we have ever tracked. That being said, we are likely at the low-water mark for retail development. The number of proposed retail projects in the development pipeline has increased considerably over the course of the past year and many of these will begin to move dirt in 1. However, new construction levels will remain modest and projects will be dominated by the expansion/renovation of existing centers as well as urban redevelopment and mixeduse projects. New suburban shopping center construction will be scarce. Specialty Center Update Specialty retail center vacancy now stands at.%. This category of shopping centers includes lifestyle centers, as well as theme

6 Chainlinks Advisors U.S. National Report Date Inventory q,,1,1,,9,.% 1,9 11 q,,1,,9,1,.% 11 1q,,,1,1,1,.% 1 q,1,,99,99,19,9 1 q,9,,,9 1 q,9, 1 1q Const SF, $1.9,9, 1,9 $1. 1, 1,,9 $1.9.% 1,9,99 1, $1.,,9.%, 9,9 91, $1.1,,,1,.% 191,,,1 $1.1,91,9,1,91,91,9.% (,) 1,, $1. 9 q,,9,,,11,.% (1,1),, $1.1 9 q,,,11,91,1,9.% 1,, 1,19 $1. 9 q,,,,,,1.% (1,) 1, 9, $ q,,1,1,,9,9.9% (9,) 1,11 9, $1. q,1,19,,,,1.% 1,, 1,9, 9, $1. q,9,,1,,,9.% 9,99 1,1 1,,9 $1. q,,9,1,91,11,.% 1, 91,9 1,9,11 $1. 1q,,9,9,,,9.% (,11),1,, $1.9,9,,,1,11,9.1%,,19,9,,, $.,,19,,,9,1.%,1,1,,9,, $19. and entertainment centers, and outlet centers. Thanks in large part to the performance of outlet centers; it is one of the stronger segments of the retail market. That being said, lifestyle centers are also performing well and are making a bit of a comeback after having been overdeveloped at the peak of the last real estate cycle. This quarter marks the second consecutive quarter in which vacancy levels have declined. Last quarter vacancy stood at.%. had peaked during the first quarter of this year at.%. Specialty centers absorbed nearly 1, square feet of space during the third quarter. Year-to-date absorption now stands at, square feet. These are modest totals compared to pre-recession averages. The market recorded nearly. million square feet of occupancy growth in at the peak of the last cycle. Like every other shopping center type, performance has been bifurcated by class. Class A centers in every market, even those with the highest overall vacancy levels, have performed strongly this year and are typically averaging vacancy levels of % or less. Class B centers have performed well in all but the weakest markets and are typically averaging vacancy levels in core markets of 1% or less. Class C centers continue to struggle everywhere. Specialty centers overall have performed well because the national inventory of specialty centers overwhelmingly consists of Class A and B product. Community, Neighborhood & Strip Update levels for community, neighborhood and strip centers fell from 11.% to 1.9% during the third quarter. This is the largest segment of the shopping center market that we track, accounting for over. billion square feet of the over five billion square feet of space that we track. This is also where we see the greatest variances in terms of individual shopping center performance. Bifurcation by class is the overriding trend in the marketplace. Strip centers almost universally fall into the Class C category and continue to struggle because their bread-and- butter tenant base, mom-and-pop retailers, remain missing in action. Mom-and-pop retailers will not be back in any significant numbers until the nation s housing market begins to recover home equity loans are usually the initial line of funding for startups and family-owned businesses. That being said, Class A neighborhood and community centers are doing well in nearly every major U.S. market. Though the bankruptcy of Blockbuster largely impacted drug and grocery-store anchored shopping centers, much of this space was situated in Class A and B centers and has been generating significant touring and leasing activity. Neighborhood and community centers, meanwhile, were largely spared the impact of Borders liquidation. Borders typically utilized space at power/regional centers. Community, neighborhood and strip centers accounted for over.1 million square feet of occupancy growth during the third quarter. Year-to-date net absorption now stands above.9 million square feet. These numbers should improve over the final quarter of 11. Leasing activity continues to be driven by strong activity from fast casual dining concepts; meanwhile, most of the pending closures that we are aware of will inordinately impact malls and power/regional centers. That being said, the improvement will continue to be limited to the strongest centers. Update for power/regional centers crept up slightly during the third quarter from.9% to.%. Though deliveries accounted for only 1. million square feet of space this quarter, this number outpaced occupancy growth. Roughly 9, square feet of space was absorbed this quarter. This product type took the biggest hit with Border s liquidation. We estimate that over nine million square feet of the 1 million that Borders returned to the marketplace was at power/ regional centers. Despite this, this product type has continued to record modest occupancy growth this year. Year-todate net absorption now stands at just under two million square feet.

7 Chainlinks Advisors U.S. National Report (includes Community, Neighborhood & Strip) Date Inventory 11 Const SF 11 q,,,,,9,,1 1.9%,1,1 1,,1,1, $1. 11 q,1,,,91,9 9,9,11 11.% 1,9,1 1,,,, $ q,9,9,,,91,919, 11.% 1,1,,1,9,, $1. 1 q,,9,1,,,1, 1.9%,,1,,,,1 $1.1 1 q,,1,,,9 9,9,1 11.%,11, 1,9, 9,,9 $1.9 1 q,1,,,1,1 1,9, 11.1%,,1,,1 9,9, $1. 1 1q,,99,9,,9,1,9 11.1% (1,11,),11,,,11 $1. 9 q,,,9,,,,91 11.% 91,,1,,, $1.9 9 q,,1,9 9,,,,1 1.9% (,99,),,1 11,19, $1. 9 q,,19,,,,9,91 1.% (,1,9),9, 1,, $1. 9 1q,,9,19 1,,1,,91 1.% (,,) 11,99,,,9 $1. q,1,9,,19,91 1,1,1 9.%,91,1 1,99,9,9, $1.9 q,9,9,9 9,,,, 9.%,19,9 1,,,,1 $1.9 q,,19,19,1, 9,9,11 9.1%,19, 1,1,1,1,1 $1. 1q,,,1,1,1,,.% 1,,99,1,9,,1 $1.,,9,9,1,9,1,.%,9,,,99,1, $1.,1,91,9,,1,,.%,1,9 9,1,9,, $1. Power/regional centers are continuing to show strong leasing activity for junior box space, however, also are seeing challenges from continued closures. We expect continued slow growth ahead. Though we expect vacancy to continue to trend downward, these decreases will be measured in basis not percentage points. Mall Update Mall vacancy currently stands at.%, up slightly from the.% mark recorded at the mid-year mark. had stayed firm at.% since the fourth quarter of last year. Despite the fact that vacancy crept upward during the third quarter, occupancy growth remained modestly positive. The market netted nearly 1, square feet of occupancy growth over the past three months. The problem is that during this same time, the market also experienced roughly 91, square feet of deliveries. Supply (new construction) outpaced demand (occupancy growth) and so vacancy levels crept up slightly. This is despite the fact that both new construction and occupancy growth totals were miniscule compared to historical averages. Though malls have been one of the strongest performing segments of the market in terms of retailer demand and leasing activity, they are also the segment of the market that we expect to be most impacted by the next round of retail closures. For example, both the planned closure of 1 Christopher & Banks and 19 Gap stores will almost exclusively impact malls. While luxury and discount retailers are doing well, mid-price retailers are facing the greatest challenges. The middle-class consumer they used to cater to has largely downscaled. Meanwhile, a number of the retailers on our watch list are primarily mall users. While we expect a strong holiday sales season, there will be more retail failures in 1. And many of these will include concepts that are mall-based. Looking forward, we expect vacancy levels to stay at or near current levels, but any movement will be up. The good news for mall landlords is that they remain at the top of the list for most expanding concepts. Geographic Updates Of the five markets that we track in the Northeast United States, only one Boston recorded declining vacancy levels. for Philadelphia remained flat, while New York, Northern New Jersey and Pittsburgh saw slight increases. Despite this, retail demand in all of these markets remains high. Urban retail demand remains particularly high in Boston, New York, Philadelphia and Pittsburgh. Within the South Atlantic region, eight of the 1 markets that we track Charlotte, Hampton Roads, Jacksonville, Miami, Orlando, Richmond, Tampa and Washington DC recorded declining vacancy levels. Demand and leasing activity remain strong in the greater Washington DC/Virginia/Maryland markets despite the fact that Baltimore was one of the markets where we saw vacancy tick up during the third quarter. Activity also appears to be on the rise for most of Florida s retail markets. Atlanta, Baltimore, Charleston and Raleigh all recorded increased vacancy in the third quarter, but in most cases these increases were nominal. We track five markets in the East South Central region. Three of these markets Birmingham, Mobile and Nashville registered vacancy declines. Only Louisville saw an increase in vacancy, while occupancy remained flat in Memphis. We track eight markets in the West South Central region. Five markets Austin, Houston, Little Rock, New Orleans and Tulsa recorded vacancy declines this quarter. Houston led the way with over, square feet of occupancy growth. Occupancy levels remained flat in the Oklahoma City metro. Both the Dallas and San Antonio metros recorded modest increases in vacancy. We track six markets in the East North Central region. All but two recorded decreased vacancy in the third quarter. Chicago, Cleveland, Indianapolis and Milwaukee all saw vacancy levels creep downward. Chicago leads all other markets in terms of occupancy growth with over 1. million square feet. Cincinnati and Detroit both saw vacancy levels creep up slightly.

8 Chainlinks Advisors U.S. National Report Power Center Date Inventory q,,,19,,,.% 11 q,, 9,,1 1,1,.9% 11 1q,9,9 9,,9,1,19.% 1 q,,99 9,,,,.% 1 q,,,99,,,1 1 q,91,,, 1 1q,99, 9 q 9 q,99 Const SF 1,, 1,9, $1., 99,9,9, $1. 1,1,1 1,,9,1,1 $1.1 1,9,,1,, $1..%,1,,,,9 $1.,1,.%,,1 9,19,,1 $1.,,,,19.% 1,,1 99,,1, $1.1,,,9,,,.9% 1,,99,,,91,9 $1.1 99,1,,1,,19,1.9%,1,1,,,99,99 $19. 9 q 9,9,,1,,,.% (,9),1,,, $ q 9,1,,,,1,.% (1,1,9),1,9,,9 $19. q,,991,,1,,.%,9,9,9,99 1,, $. q,1,19,, 1,,1.%,9,1,, 1,1,9 $. q,9, 9,,,911,9.%,,,,,,9 $. 1q,1,9,, 9,,.% 9,9,9 11,,,,9 $.,,9,,,,.%,11,91,,,9,91 $.1,,99,1,,,1.1% 1,,,,9,,1 $19. Date Inventory 11 Const SF 11 q 1,1,,,11,,19,1.% 1, 9,9,9, $ q 1,9,,,1,1,,.% 9,1 1,19,1,, $ q 1,,1,1,1,,9,.% 1,9 19,,,9 $ q 1,,,,1,11,9,11.%,,1 9,,9, $19. 1 q 1,,,1,,91 9,,.9% 1,1,,9,1, $19. 1 q 1,,,1,99,19,,1.% 1,,,1,1,1,191 $.1 1 1q 1,,,9,1,1 9,9,1.%, 1,,,, $.9 9 q 1,,,,9, 9,1,9.9%,1,9,,,9,9 $. 9 q 999,9,,,9,1,.%,,1,, 1,, $. 9 q 99,91,,,1,,1.% (,9) 1,9,9 1,9, $1. 9 1q 99,9,9,9,,,.% (,9,),, 1,9,1 $. q 99,, 1,,9,1,9.% 1,1,9,, 1,,9 $.1 q 9,,,,1,1,.9%,,,,11,99,9 $.9 q 9,,191,1,1,1,9.% 1,,,,9,91,9 $. 1q 91,1,1,9,,1,.%,,,,1,,1 $. 99,,,9, 9,,9.%,9,,9,9,, $. 91,,,,9,,1.% 11,,,1,,1,1 $.1 In the West North Central region we track five markets. St. Louis and Kansas City both saw vacancy retreat during the third quarter. Omaha s occupancy levels remained flat this quarter. Both the Des Moines and Minneapolis markets saw vacancy levels creep up by a basis point. We track seven markets in the Mountain region. Performance here was evenly mixed; three markets improved, three markets declined and one remained flat. decreased in the Denver, Reno and Salt Lake City markets. Denver led the way for occupancy growth and has recorded over 1. million square feet of absorption so far this year. Las Vegas remained flat at 1.% vacancy. The Albuquerque, Phoenix and Tucson markets all saw increased vacancy levels. We track 1 markets in the Pacific region. Seven of these markets recorded increased vacancy levels this quarter. improved in the Inland Empire, Oakland/East Bay, San Diego, San Jose/ South Bay and Seattle markets. increased in Hawaii, Los Angeles, Orange County, Portland, Sacramento, San Francisco and Santa Barbara

9 Northeast Chainlinks Advisors U.S. National Report Northeast U.S. - New England Boston MA $1. $1. 1,19,91 1,9 1,9 1.%.%.%,9 1,19,,,,,,9.1%.%.%,,1,9 1,1,, 9,1.%.9%.%,9,, $11.,9,1 9,99 91,.%.%.9% (1,) $.9 1,9 1,,9,,1,1,9.9%.%.% 1,,19,1 9,9 N/A Northeast U.S. - Middle Atlantic New York City NY ,.%.%.% 99,,,.%.9%.% (1,) N/A, 1,1 1,1 1.9% 1.9%.%,19 N/A 1 9,,,.%.9%.% (,) N/A 1,,,,.%.% 1.9% (19,9) Northern New Jersey ,,1 1,1 1,1.%.%.% (1,99) $. 1,9 9,,,1,9,, 9.% 9.%.% (9,),9, $.,99,9 1,, 1,1,1.%.%.%,1 9,9 $.,, 9,1 9,.%.%.1%, $. 1,9 1,,1 11,,91 11,1,.%.1%.% (9,),, Philadelphia PA ,9, 1, 1,.% 1.9%.% (9,) $1., 1,, 1,,11 1,, 9.% 9.% 1.1% 1, 1,9, $1.,,,,,,.%.%.%,,9,9 $1. 1,,99 1,,9,1,.%.%.1% 1, 1, 1,,1 $.,,, 1,,9 1,9,.9%.9%.% 9, 1,9, 1,11,9 Pittsburgh PA N/A 1 19,.%.%.% 1 1,9,,,11,11,9.%.%.% 9,, 1, $ ,9, 9,1 9,1.9%.%.9% (1,91) $1. 1 1,1, 1,,1 1,,1.%.%.% (,) 1,9, $1.,,9,99,9,1,1.%.%.9%, 11,9 1,

10 Chainlinks Advisors U.S. National Report South U.S. - South Atlantic Atlanta GA $11.9 1,,,1,1 1.% 9.%.% 1,9,11 19,,1,, 1,, 1.1% 1.% 1.% (,) 11,, $1.1,,9,,,,9 9.%.%.% (,9) $1. $. Baltimore MD 1,,,9,,,.%.%.% (1,9),,1,,,1,19,9 1.% 1.% 1.% (,9) 11,, ,,, 1.%.%.% N/A 9,,,9,9,,.%.%.% (1,),9 1,1 $1. 9,1,1, 1,1.%.%.% 1,11, $19. 1,, 1,, 1,,19.%.%.%,91 19,19 9, $.,,,1,9,9,1.1%.%.1% (,11) 11,,1 Charleston SC ,.%.%.% $. 1,,11 1,, 1,9, 1.% 9.9% 1.% 1,,, $1.9 1,, 1,9 1,9 1.9%.%.% (,) $1. $. Charlotte NC,99,, 9, 1.% 1.%.% 1,9 9 1,, 1,,91 1,,199.9%.1%.1% 1,,, $ ,,1,1,1.%.1%.9%,1 1,1,,1,,1,, 11.% 11.% 1.1%,, 9,1 $1.9,,11 9, 1,.%.%.%, $.9 $1.9 19,,1 1,,1 1,9,9 9.% 9.% 11.% 1, 1,1,1,,9,9,1,9 1.% 1.% 11.%,, 9,1 $. $ Hampton Roads VA 1,11,,,.%.% 1.% ,,9,,1,, 1.% 1.% 1.%,9 1,99 119, 1,9,9 19,9 19,9.%.%.% (1,) 1,19 $ ,1,,1 1,.%.%.1%, $ ,1,,1,,,9.%.%.% 1,9 19,11 119,

11 Chainlinks Advisors U.S. National Report South U.S. - South Atlantic cont. Jacksonville FL ,9,,.9%.9%.% 1, $1.,,1,,1,,19 1.% 1.% 1.%,1 1,, $1.,,9,, 19.% 19.% 1.% (,) $11. $1. Miami FL 1,,9,,9.%.%.% (,9) 9,1,1,,,,9 11.% 11.% 11.% 19, 1,, ,,1,1 9.% 9.% 1.%, $.9 1,,,99,,1,,1.9%.%.%,9,1, $. Orlando FL,11,11,, 1.%.%.%, $ ,1,,,.%.%.% (,) $. 1,,1,99,,1,,.1%.%.%,,1, ,, 9, 9,.%.%.%,1 $1. 1,9,,,1,,, 11.% 1.% 11.% 1,9 99,, $1. 9,,91 1,,1.%.%.% 1,1, $1.1 1,1,,,.9%.%.%,1, $.1 1, 9,,1 9,1, 9,191, 9.% 9.9% 9.9% 1,1 1,, Raleigh NC ,11,1,,.9%.9%.% $1.,,,,1,1, 9.%.% 9.%,9 1,, $1. 1,, 1,1,.%.%.% 9,9 1,, $1. 1 1,,,,.%.1%.% 1, $.,,9,,1,1,1.%.%.% 9,,9,1 Richmond VA ,.%.% 9.% $. 9 9,,,1,9,9,11 11.% 1.9% 11.% 1, 9,, $1. 9,1,1, 9,.% 1.%.%, 1, $1. 1 9,1,,1,9.%.%.1% 9, 9, 1, $. 1,,11,,,,19.%.% 9.% 9,9 1,1 1,

12 Chainlinks Advisors U.S. National Report South U.S. - South Atlantic cont. Tampa FL ,9 1,1 1,1 1.%.9%.% (,) $1.,1,, 9,9,9 9,,99 11.% 11.1% 11.%,11 19,11,9 $1. 9,9,1,9,9.%.%.% 19,1 $1. 1 1,91,1,9,9.9%.1%.%, $., 11,1,9 1,,1 1,9,9 9.% 9.% 9.%,1 19,11,9 Washington DC ,,,9,919.% 1.%.% (1,) N/A 1,,1,9,9,,1,1.%.%.%, 9,, $. 1,11,1,1 9,.%.%.% (,1), $. 1,,9 1,11,99 1,1,1.%.%.%,9, $. 1, 11,9,,1,1,,.%.%.% 1, 1,9,1 19, $1.11 South U.S. - East South Central Birmingham AL ,,1 9,9 9,9.%.% 1.9%,,9,1,,,11, 1.% 1.% 1.% 1,11, $9.1 1,99, 1, 9,9.9%.%.% 19,, $1. $1. Louisville KY 1,9,1 1,, 1,9, 1.%.% 1.%,91 1,,,,,9,1 1.% 1.% 1.% 1,9,, % (1,11) $. 1,,1 99, 99,.%.%,9,,191,,, 11.% 11.% 11.% 1,9,9 1, $1.9,,1 1, 1,.%.% 1.%,9 $19.,9, 9, 1,.%.%.1% 1, $.1 1,,,9,1,, 1.% 1.% 1.% 9,,9 1, $1. Memphis TN %.%.% 1,19,9 1, 1, 9,,,1,9,9,9 1.% 1.% 1.%,9 1, $1. 1,1,99,91 9,9 1.% 1.% 1.% 19, 1,1 $.9,,,9 1, 1.1% 1.%.% (,) $.9,9,9,,,,19 1.% 1.% 1.% 11,9 1,, (,)

13 Chainlinks Advisors U.S. National Report South U.S. - East South Central cont. Mobile AL , 1, 1,.%.%.% $. 9 9,, 9, 1,,11 11.% 11.9% 1.1% 11, 1, $1. 1,,,9,9.% 9.% 1.9%,1 $1.,, 1,9 9,9 9.% 9.% 1.%, $. 9 1,, 1,1,9 1,, 9.% 1.% 11.1%,1 1, Nashville TN ,99,, 1.% 1.% 9.9% 1,9 $.1,1,,,9,, 1.% 1.% 1.9% 1,, $1. 1,1, 9, 9,9.%.%.% (,19) $1. 1 1,,1 91,9 91,9.%.% 11.%,9 19, $.,,9,,,, 9.% 9.% 9.% 1, 1, South U.S. - West South Central Austin TX ,,9 1, 1,.%.9%.% 1,,9,9,19,,,, 1.9% 11.% 1.% (1,),, $1. 1 1,1,9,,.%.%.% (,11), $1. 11,, 1,9 1,9.1% 1.9%.%, $. 99,,,,,,1.%.%.9%,9,1 1,99,19 Dallas TX ,1,9 19,9 19,9.% 1.1%.%, 19,19,,,9 1,, 1.% 1.9% 1.% 1,, 9,91 $1.1 9,1,,,,9,.%.%.%,9 1,1 1, $1.1 $1.9 Houston TX 9, $.,1,1,,1,9,911.1%.9%.1% 11, 1,1,, 1,,9,,,,11 1.1% 11.% 11.%, 9,19, $ ,1, 11, 11,.% 1.9% 11.1% (1,) $.9,9 19,,1 1,,9 1,,9 9.% 1.1% 1.9% 9,1,91 19, $1.1 1,,1 1,,1 1,1,.1%.%.%,1 9, 1,91 $1.9,99,,,,1,19.%.%.% 9, $.,1,9, 1,,9 1,,1 9.% 9.1% 9.%,1,1 11,1

14 Chainlinks Advisors U.S. National Report South U.S. - West South Central cont. Little Rock AR N/A.%.% 1,9, 1,,1 1,,1.%.%.%, $9.,, 19, 19,.%.% 1.% 1,9 1, $1. $. New Orleans LA.%,1,9,11,11.%.%.% (,),, 1,,19 1,,19.%.%.%,1 1, ,1,, 1.% 1.% 1.% (,11) $. 1,911,9 1,,9 1,9,9 1.% 11.% 11.% 1, 1,19 9,1 $1. 1,9,1,9,9.%.%.% 9,9 $. 11,,,9 9,.%.%.9% 9, 1, $.,1,1,,91,9,.% 9.% 9.% 1,,1 9,1 Oklahoma City OK ,1 9,9 9,9.9%.%.% (1,9) $1.9,,19,1,,9,1 1.9% 11.% 9.% 11,, 1, $9. 1,,9 11,1 191,1.%.%.% (,) $1. 1,9,1 99,1 1,19,1.1% 1.% 1.% (1,), $1.,,,,,,9 11.% 11.% 11.% 1,,, San Antonio TX ,,, 1.%.%.% (1,) $11. 1,,9,,,,, 1.% 1.% 1.%,1,, $1.1 1,1,1 1, 9, 1.% 1.%.% (11,9), $. $1.9 Tulsa OK 1 1,,,9,.1%.%.% (,) 1,,9,11,19,,, 9.% 9.%.9% 1,,, $.,,, 1.% 1.% 1.% (9,1) 1,,1,,,, 1.9% 1.% 1.%,, $9.,,9 1, 1,.1%.%.% 9, $.9 1,,,9,9.%.%.% (,9) $ ,1,1,,,9, 9.% 9.% 9.% 1,,

15 Midwest Chainlinks Advisors U.S. National Report Midwest U.S. - East North Central Chicago IL ,,,1,1.% 1.%, 1,,9 19,,9 19,1,9 1.1%,1,,,9,1,.1% Cincinnati OH 1 $1. 1.%,19 19, 1.% 1.% 9,9,, $1..% 1.% 1, $1.1 $. 1,1, 1,, 1,,.%.%.% 1,,91,9,,1,,9,1 9.% 1.% 1.% 1,9,11, 19, ,,, 9.% 9.% 9.9% (11,) N/A,,,1,1,1, 1.% 1.% 1.%, 1, $1. 1,,,19 9, % 11.1% 1.% 1,1 1, $ ,, 1,1,1 1,,1 1.9% 11.%.%,9 $11.,1,9,,,1, 1.% 1.% 1.%,1, Cleveland OH ,,,1,1.% 1.%.%, $. 91,,1,,,, 1.% 1.% 1.% (1,),9 $ ,,9 1,1,1 1,1,1.%.%.% (,) 1, $1. 1 1,,,9,1,9,9 1.% 1.9% 1.% (1,), $9. 1,,9, 9,, 1,1, 1.% 1.% 1.%, 9,1, Detroit MI ,9,,11,11.9%.%.% (1,) 1,,9,9 1,,9 11,1,11 1.% 1.% 1.% 11,,, $1. 1,,1 1,1, 1,9,9.%.1%.% (9,9) $1.,,,,1,,9.%.%.9% (,1) $11. 1,1 11,1, 1,, 1,, 1.% 1.% 1.% (,9),, $1.

16 Midwest Chainlinks Advisors U.S. National Report Midwest U.S. - East North Central cont. Indianapolis IN %.%.% N/A 1 9,,,9,,, 1.1% 1.% 1.% (,1) 9, $11. 1,9,,9,.%.%.% (1,) $1. $1. Milwaukee WI 1 1,9, 9, 99,1.%.1%.% (191,1),19,1,,99,9,1 1.1% 1.% 1.% (,1) 9, ,9 19, 19,.%.%.% 1,9 $1.1 9,9,9,,,,9 11.9% 1.% 11.% 11,19 9,1,19 $11. 11,9, 1,9 9,99 9.% 9.%.% (,1) $1. 1,,99 1,199, 1,199, 1.% 1.% 1.% (9,) $.,1,19,1,1,,1 1.% 1.% 1.%,9 9,1,19 Midwest U.S. - West North Central Des Moines IA ,1,, 1.1% 1.1%.% $1. 1,, 9,1 9,.9% 9.% 9.% 1,1 $11. 9,,,.9%.1%.% (,) $11.,,9,,.%.%.% (,9) $1.1 1,, 1,1, 1,,9.%.%.% 1,1 Kansas City MO ,,9 1, 1,.9%.% 1.%, $. 1 9,,99,1,99,, 1.% 1.% 1.% 1,1, $ ,19,91 9, 9,.%.%.%,19,11, $1. 1 1,,11 9,,1.%.%.9% 9,99 1, $. 1,,,9,,9, 11.% 11.% 11.9%,1,11,

17 Midwest Chainlinks Advisors U.S. National Report Midwest U.S. - West North Central cont. Minneapolis MN ,19,,,9.%.1%.% 1, $1. 1,9,9,,1,9,, 9.9% 9.% 9.% (119,19) 19,19 1,9 $1.9 1,,,99,9.%.%.% (11,) $1. 1,,1,9,.%.%.% 1,9, $1.9 1,,1,1,,,1,11.%.%.% 9,1 19,19,9 Omaha NE ,,, 1.% 1.% 1.% N/A 1,,9,119,,1,1 1.% 1.% 1.% (,1),1 $1. 9,,1 1, 1,.9%.%.%,1,, $1.9,,9 1,1 1,1.%.%.% (1,1) 9,1 $.,,1,,,, 1.% 1.% 1.% (,1), 1,1 St. Louis MO ,,,.1%.1%.% $11. 1,1,,9,1,1,,1 1.% 1.% 11.1%,9,, $1.1 9,91,, 9,991.9%.1%.% (,) 11, $ ,, 1,,11 1,,11.% 1.% 9.% (,) $1.9 1,11,1,,,1,9,1 1.% 1.% 1.% (,1),,

18 West Chainlinks Advisors U.S. National Report West U.S. - Mountain Albuquerque NM N/A.%.%.% 9 1,,1,9,,1, 1.1% 11.% 11.% (,), 9, $1.,9,,,9 11.% 1.9% 11.% 1,9, $1. $. Denver CO,9,,1,1.9%.%.%,9 9,99,1,1,,, 11.% 1.% 1.% (1,9) 9, 9, ,9, 1, 1, 1.%.%.% 1, $. 1, 9,9,,,,,1 9.% 1.1% 1.% 1,1,9, 1,11 $1. 1,,9 1,,99 1,19,.1%.%.%, 1,1 $1.9 1,1, 1,1, 1,,.%.9%.%,, $1. 1, 111,19,1 9,9,9 9,,1.% 9.% 9.% 1,,91, 11,11 Las Vegas NV ,19,11 1, 1,.%.%.% (11) $1.1 99,9,9,,91,9, 1.% 1.% 1.% (9,1),, $1. 1,, 1,1, 1,, 11.% 11.%.% (1,1) $1. $9. Phoenix AZ 19 1,1, 91,9 91,9.%.%.%,1 199,, 1,,9,9 9,, 1,, 1.% 1.% 1.% (,9),, ,1,9 1,,.% 9.1% 1.% (1,) $1.1 1,11 1,9,11 1,9,9 1,,1 1.% 1.1% 1.% (,) 11,9,1 $1.9,,9 1,, 1,1,99.%.1% 9.9% (1,) 1,9 $19.,,,,,, 1.% 1.% 1.%, 1, $1. 1,9 1,,11 1,,,,9 1.% 1.9% 1.% (9,9),,1 Reno NV ,,,.%.%.% $1. 1 9,9, 1,1, 1,, 1.% 1.% 1.% 1,1 $1.,,9,, 1.9% 19.1% 19.% (,) $1.,9,,9 9,9.9%.%.% (,1) $1. 1 1,,91 1,9, 1,9,91 1.% 1.% 1.% 11,

19 West Chainlinks Advisors U.S. National Report West U.S. - Mountain cont. Salt Lake City UT 11,1 1, $.19 1,1, 1,9 1,9 1,,91,,,9,11.1%.%.%,1 19,1 1, $1.1 1,9,9 1,1 1,1.9%.%.% (1,) $1. $1. Tucson AZ.1%.% 1 1.% ,, 1,11,111 1,11,111.%.9%.% (,), 1, 9 1,,,,9,,1.9%.%.% 9, 11,1 1, , 11,9 11,9.%.% 1.1%, $.11 1,,,1,,9,1 1.% 11.9% 1.9% (1,1) 1,1 1, $1. 9,,,1,1.% 9.% 1.%,9 $. $.11,1,19,1,1.%.%.9% (9,),,99,,,9,, 11.1% 1.9% 1.% (,) 1,1 19, West U.S. - Pacific Hawaii ,,1 1, 1.% 1.% 1.9% 1, 1,1 N/A 1,19,,9 9,.%.9%.% (,) $1.9 1,,,99,99.%.1%.% (,9) $.1 1,, 19,19,1.%.% 1.9% (11,) $.,,91 99, 1,,19.%.%.% (19,) 1,1 Inland Empire CA ,,,1,1 1.1% 1.1%.% (,) 1, $1. 1,,1,9 9,, 9,,9 11.% 1.1% 11.% 1,, 9,9 $1. 1,,9 1,1, 1,, 9.% 9.%.1% 11, 9,1 $.9 $.1 Los Angeles CA 19,9, 1,1, 1,,1.%.%.% (1,) 1, 1,, 1,, 1,9,9 1.% 1.% 1.% (1,1),9 19, ,19, 1,9 1,9.%.%.% 19, 1, $19.,19 1,9,99 9,, 9,9,.%.%.%,9 1,1,9 $.,, 1,9, 1,19,.%.%.% (1,1) $.1 $.19,,91 1,,99 1,,.%.1%.% 1, 1,,, 1,, 1,, 1,9,.9%.%.9%,,9 11,9

20 West Chainlinks Advisors U.S. National Report West U.S. - Pacific cont. Oakland/East Bay CA ,9,, 1.% 11.%.% (,), $1.9,11,,1,991,,.%.%.%,1,,1 $1.11 1,,1 191,1 1,9.%.9%.% 11,9 1, $. $ ,1,9,99,99.9%.%.% (1,9) 1,1 9,,9,1,,,.%.%.%,, 1, Orange County CA ,,9 19, 19,.%.% 1.%,11, $.19 1,,,9,99,9,1,1.%.%.%,9, $. 9,9,,1,.%.%.% (1,11) $1.1 1,1,1 1, 1,.%.%.% (1,) $. 1,11 9,,1,9,9,,.%.1%.% (11,9),, Portland OR ,91.%.% 1.%, $. 19,1,,,,1,.%.%.%,1,, $1. 1,,11,,.%.%.%, $19. $.9 Sacramento CA 11,9, 9,19,.%.%.%,9,,9,1,19,,.1%.%.% 1,,, ,9,9,, 1.% 1.% 9.% 11,9 $1. 1,1,,99,,19,1, 1.% 1.9% 1.% 1,,, $ ,, 9, 9,9.%.% 9.%,,, $ ,, 1,1 1,1.%.%.% 19,1, 1, $.1 1,1,,99,99,9,9,9 1.% 1.1% 1.%, 9,1, San Diego CA ,,,,.%.%.% (,9) $.1 1,,1,,9,,19,11.%.9%.%,, 11, $1. 1,1,1 19,9,9.%.%.% 19, $.1 1 1,1,,1 9,.%.%.% 119, $.9 1, 1,,,,,1,.%.%.% 9,919, 11,

21 West Chainlinks Advisors U.S. National Report West U.S. - Pacific cont. San Francisco CA ,9, 9,9,1.%.9%.% 1,11, $. 1 9,,9, 9,.1%.%.1% (1,9) $. 1,9,,9,9.%.%.%,9 $1.9,19, 1,1 1,1.%.9%.% (9,9) $. 99 1,,,191,91.1%.%.1% (9,11), San Jose/ South Bay CA ,,9,9 1.%.1% 1.% (,9) $. 9,9,9 1,99,,1,1.%.%.9% 1,9 11, 1, $. 9,9,1,, 1.% 1.% 1.% (,11) $ ,19,1,1,1 1.% 1.%.%, $.1,19,,19,,,.%.%.%,9 11, 1, Santa Barbara CA %.%.% N/A 1,, 11,,.%.%.% 1, $ ,1,,.%.%.1% (1,) $. 1,,,1,1.%.%.% (,) $ ,9, 1,,1.9%.%.1% (,1) Seattle WA ,1, 9,9 9,9.%.%.% (,) 1,9,1,1,1,1,, 1.% 1.% 9.9% 9,,, $1.9 1,9,1,9,9.%.%.%, $1. 1,,,,9.%.9%.% 99, $. 1,1 1,1,9,,,,.%.%.%,9,, $1.

22 Chainlinks Advisors U.S. National Report Exspansion Notes The following are just a few of the expansion plans of the retailers and restaurant chains that we are tracking in the marketplace. This data has been culled from a wide variety of sources, ranging from published reports to SEC filings to market gossip or confirmed plans shared with us directly by retailers. While we believe that this information is reliable, we make no guarantee as to the accuracy of this data. Apparel Accessorize opened only two stores this year, but the London-based chain has announced a goal of reaching 1 units by 1. We expect 1 openings to surpass the -unit mark. Anthropologie will close 11 with at least 1 new stores. Our sources tell us to expect a similar growth rate for the coming year. Even while parent company The Gap is planning on closing 1 stores or more in the coming months, they are continuing to grow their active women s sportswear concept, Athleta. Athleta should close 11 with about ten new stores. We expect growth levels to surpass this in 1 we anticipate at least 1 units. Bebe s has plans to add a total of 11 new stores in its current fiscal year, which ends in June 1. Body Central is looking to open as many as new stores in 1. Casual Male will open about 1 more new stores before the end of the year, most of which will be their new Destination XL concept. The chain wants to be opening between and 1 new locations annually by 1, which leaves the question as to how many units to expect next year. We expect as many as new units as Casual Male ramps up growth of its new concept. Cato Corporation s new accessories concept, Versone Accessories, is looking to open as many as new stores over the next 1 months. Charlotte Russe will beef up growth in 1 with as many as new stores. Charming Charlie s, an accessories concept that typically uses about, square feet, will close 11 with at least ten new stores. We expect 1 openings to approach 1 units or more. Charming Shoppes will close out 11 with only five to seven new stores. We expect similar growth rates for 1. Chico s will net 1 new units over the next six months. Citi Trends is yet another apparel chain that shrunk growth plans this year; having reduced expansion goals from to locations. We expect Citi Trends to continue to grow at a conservative pace next year we expect a minimum of units. David s Bridal is looking to open 1 new stores in 1. delia*s may open as many as 1 new stores in the next twelve months. Dots will close this year with about new stores; next year they have budgeted for as many as new stores. Express will close the year with about new units. Look for the same in 1 Five Below continues aggressive growth in the Midwest. In Chicago alone, the chain is planning on as many as stores over the next five years. Five Below should close out 11 with about new units. We expect this number to increase to as many as units in 1. Fossil will close this year with about new stores, mostly at outlet centers. The chain reportedly is looking to boost this number in 1 we expect as many as new stores over the next twelve months. Foundry Big & Tall Supply Company is JC Penney s new men s concept. There are ten new stores already in the pipeline, with openings scheduled heading into early 1. These stores use roughly, square feet of space. The Foundry has plans to open new stores over the next five years. 1 openings will likely top ; with plans for 1 new stores by 1. Francesca s Collections plans to open as many as new stores annually over the next couple of years. H&M is looking to close the year with as many as new stores internationally. It opened 1 new stores in the U.S. this year. That number will likely exceed 1 next year. It s Fashion Metro should close the year with 1 new units. We expect this number to approach the -unit mark in 1. Jos. A Banks should close this year with somewhere between and new stores, including its outlet concepts. We expect a similar growth rate in 1. The Limited will close this year with 19 new stores. We expect the same growth rate in 1. Men s Wearhouse should close 11 with to new stores for the year. That being said, next year will see more remodels than new stores. New unit tallies for 1 may not reach this year s levels. Men s Wearhouse has announced a goal of 19 new units through 1. Rue1 should close out the year having reached their goal of 1 new units. We expect next year s growth levels to be slightly below this year s, though this may change should the economy pick up momentum. Still, we are expecting somewhere in the neighborhood of new units.

23 Chainlinks Advisors U.S. National Report Steele s plans as many as new stores next year; focusing growth primarily in the south central United States. Tilly s will close 11 with roughly 1 new stores and reportedly is planning to add around units in 1. Urban Outfitters will close this year with about new stores, including a few locations for their new bridal concept, Bhldn. We expect at least new units in 1. Wet Seal may open between and new stores in the coming year. Department Stores JC Penney has shifted most of its growth to its new men s concept, The Foundry Big & Tall Supply Company. They opened two new department stores earlier this year, but we expect remodels to take centerstage in 1 as the Plano, Texas-based retailer continues to look to upgrade its image and land in-store deals with more upscale retailers like Sephora. Kohl s never slowed growth during the recession, capitalizing on market conditions to grow its discount department store concept, though usually in off-mall sites. The Wisconsin-based chain has plans to close 11 with at least new stores. Kohl s is yet another chain shrinking its format moving from 9, to, square feet. Numbers have yet to be released yet for 1, but we expect Kohl s to likely match this year s growth level. Macy s has plans to open two department stores in New York, including one new location in the Bronx and one that will replace an existing store in Bay Shore. The chain also has plans for new department stores in Victorville (CA), Grendale (WI), Gurnee Mills (IL) and Salt Lake City. All of these locations will open in 1. Macy s will close the year with three new Bloomingdale s Outlet stores and we expect a similar pace of growth for this concept in 1. Nieman Marcus will open at least three of its discount concept, Last Call, in 1 and plans to open at least one full service department store in Walnut Creek (CA). Though it closed its Downtown Indianapolis store this summer, Nordstrom has opened two new full service department stores (St. Louis and Nashville) over the past few months, even while it continues to aggressively expand its off-price concept, Nordstrom Rack. They should close the year with three new department stores and somewhere near 1 new Nordstrom Rack stores. Nordstrom is reportedly planning about 1 new Rack stores next year and as many as three more department stores. Sak s OFF th concept continues to grow it will likely add five new stores annually for the next couple of years. Sears remains in contraction mode, though the chain has announced plans for a new, smaller concept and a focus on internet sales as part of its turnaround plan. Still, we expect more closures ahead as Sears continues to post severe losses and remains one of the most challenged major retail chains in the marketplace. Target should close 11 with a total of roughly 1 new stores. The chain is signing new deals for their smaller urban concept, CityTarget, which will take anywhere from, to, square feet as opposed to their typical footprint of 1, square feet or more. Deals have been inked for multiple stores in both Los Angeles and San Francisco, as well as for stores in Chicago, Seattle and a number of other markets. We expect at least to new stores over the next 1 months. Automotive Advance Auto Parts will open as many as 1 new stores before the close of 11. The company will likely keep a similar pace next year; primarily focusing on the Eastern United States. AutoZone opened nearly stores in the first half of the year. They will likely close the year with about new units, well behind the 1 stores opened in 1. The chain is shifting its expansion strategy to more ground leases and land purchases which will slow development, so we expect somewhere in the neighborhood of new locations in 1, though 1 numbers will likely increase substantially. O Reilly Auto Parts hopes to close this year with as many as 1 new units. We expect them to open roughly the same number of stores in 1. Pep Boys will close 11 with as many as new stores. Next year, the company has plans for as many as service and tire centers (which average about, square feet in size) and as many as ten supercenters (which are usually 1, square feet in size). Beauty Salons/Supply Fantastic Sam s will likely close out 11 with just new locations. We expect this number to increase in 1 based on reports that the chain s franchising efforts are up. We expect at least units in the coming year. Great Clips should reach 1 new salons this year and has a goal of at least 1 new units next. Sport Clips is aiming for at least 1 new salons in 1. Ulta will close this year with 1 new stores; we expect a similar pace of expansion in 1. Children s Apparel/Children s Specialty The Disney Store is back under the Walt Disney Company s control and is also back in the marketplace with a smaller footprint (now about, square feet) and new growth plans. They will close this store with roughly new stores globally, most situated in top malls.