MID YEAR 2016 RICHMOND RETAIL MARKET REPORT FORECAST 5.1% VACANCY 77,858 SF UNDER CONSTRUCTION 478,084 SF NET ABSORPTION

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1 MID YEAR 2016 RICHMOND RETAIL MARKET REPORT FORECAST The competitive landscape of Richmond grocers has pivoted once again with the recent announcement that Publix will purchase 10 of the 19 local Martin s stores pending FTC approval. The purchase is said to be in line with Publix s aggressive expansion in Virginia and help put the merger between the parent companies of Martin s and Food Lion back on track. Meanwhile, Walmart s smaller, grocery focused Neighborhood Market concept has helped catapult them to the #1 ranking in market share among grocers in the Richmond market, accounting for 15.83% of sales.* In contrast, look for Wegmans 130,000 foot megastores in Midlothian and Short Pump to start diluting that number. The introduction of big name retailers such as Wegman s, Publix, Cabela s, and others are peaking the interest of more than just Richmond shoppers. Investors, both local and out of town, remained active in the 2nd quarter. Virginia Beach based Armada Hoffler Properties purchased Southgate Square to top the sales list with a purchase price of $38.6 Million. With the vacancy threatening to move under 5%, we expect this type of investment activity to continue through the second half of % VACANCY 77,858 SF UNDER CONSTRUCTION 478,084 SF NET ABSORPTION $13.57 PSF AVERAGE RENTAL RATES *Source: Food World, June 2016 MAIN OFFICE ADDRESS: 4198 Cox Road, Suite 200 Glen Allen, VA MAILING ADDRESS: P.O. Box Richmond, VA OFFICE LOCATIONS: Richmond Hampton Roads Nashville Jacksonville Greensboro Tampa

2 The Richmond, VA retail market experienced a slight improvement in market conditions in the second quarter The vacancy rate went from 5.4% in the previous quarter to 5.1% in the current quarter. Net absorption was positive 478,084 square feet, and vacant sublease space decreased by 7,578 square feet. Quoted rental rates decreased from first quarter 2016 levels, ending at $13.57 per square foot per year. A total of 5 retail buildings with 239,785 square feet of retail space were delivered to the market in the quarter, with 77,858 square feet still under construction at the end of the quarter. ABSORPTION Retail net absorption was strong in Richmond, VA second quarter 2016, with positive 478,084 square feet absorbed in the quarter. In first quarter 2016, net absorption was positive 238,184 square feet, while in fourth quarter 2015, absorption came in at positive 300,427 square feet. In third quarter 2015, positive 268,312 square feet was absorbed in the market. Tenants moving out of large blocks of space in 2016 include: Martin s Super Market moving out of 54,598 square feet at 7324 Bell Creek Rd; Martin s Food moving out of 37,449 square feet at 3000 Stoney Point Road; and Pier 1 Imports moving out of 10,682 square feet at Ross Square. Tenants moving into large blocks of space in 2016 include: Wegmans moving into 130,000 square feet at both West Broad Marketplace and Stonehenge Village; and Burlington Coat Factory moving into 50,705 square feet at Southgate Square. VACANCY Richmond, VA s retail vacancy rate decreased in the second quarter 2016, ending the quarter at 5.1%. Over the past four quarters, the market has seen an overall decrease in the vacancy rate, with the rate going from 5.6% in the third quarter 2015, to 5.4% at the end of the fourth quarter 2015, 5.4% at the end of the first quarter 2016, to 5.1% in the current quarter. The amount of vacant sublease space in the Richmond, VA market has trended down over the past four quarters. At the end of the third quarter 2015, there were 176,919 square feet of vacant sublease space. Currently, there are 114,916 square feet vacant in the market. LARGEST LEASE SIGNINGS The largest lease signings occurring in 2016 included: the 49,000-square-foot-lease signed by Publix at Nuckols Place; the 36,125-square-foot-deal signed by 2nd & Charles at 9004 W Broad Street; and the 32,484-square-foot-lease signed by Auto Connection at 5300 Midlothian Turnpike. INVENTORY & CONSTRUCTION During the second quarter 2016, five buildings totaling 239,785 square feet were completed in the Richmond, VA retail market. Over the past four quarters, a total of 854,553 square feet of retail space has been built in Richmond, VA. In addition to the current quarter, eight buildings with 253,444 square feet were completed in first quarter 2016, four buildings totaling 169,117 square feet completed in fourth quarter 2015, and 192,207 square feet in eight buildings completed in third quarter There were 77,858 square feet of retail space under construction at the end of the second quarter Notable 2016 deliveries include two Wegmans Food Markets totalling130,000 square feet each in Stonehenge Village in Midlothian and West Broad Marketplace in Short Pump. Total retail inventory in the Richmond, VA market area amounted to 80,129,802 square feet in 7,086 buildings and 579 centers as of the end of the second quarter 2016.

3 SHOPPING CENTER The Shopping Center market in Richmond VA currently consists of 557 projects with 30,772,004 square feet of retail space in 1,245 buildings. In this report the Shopping Center market is comprised of all Community Center, Neighborhood Center, and Strip Centers. After absorbing 177,276 square feet and delivering 76,500 square feet in the current quarter, the Shopping Center sector saw the vacancy rate go from 9.3% at the end of the first quarter 2016 to 9.0% this quarter. Over the past four quarters, the Shopping Center vacancy rate has gone from 9.4% at the end of the third quarter 2015, to 9.2% at the end of the fourth quarter 2015, to 9.3% at the end of the first quarter 2016, and finally to 9.0% at the end of the current quarter. Rental rates ended the second quarter 2016 at $13.33 per square foot, down from the $13.75 they were at the end of first quarter Rental rates have trended down over the past year, going from $14.28 per square foot a year ago to their current levels. Net absorption in the Shopping Center sector has totaled 388,516 square feet over the past four quarters. In addition to the positive 177,276 square feet absorbed this quarter, positive 101,588 square feet was absorbed in the first quarter 2016, positive 57,473 square feet was absorbed in the fourth quarter 2015, and positive 52,179 square feet was absorbed in the third quarter POWER CENTERS The Power Center average vacancy rate was 3.3% in the second quarter With positive 123,911 square feet of net absorption and 130,000 square feet in new deliveries, the vacancy rate went from 3.3% at the end of last quarter to 3.3% at the end of the second quarter. In the first quarter 2016, Power Centers absorbed positive 79,955 square feet, delivered 82,265 square feet, and the vacancy rate went from 3.3% to 3.3% over the course of the quarter. Rental started the quarter at $17.19 per square foot.

4 A year ago, in second quarter 2015, the vacancy rate was 3.3%. Over the past four quarters, Power Centers have absorbed a cumulative 206,039 square feet of space and delivered cumulative 212,265 square feet of space. Vacant sublease space has gone from 1,722 square feet to 0 square feet over that time period, and rental rates have gone from $17.46 to $ At the end of the second quarter 2016, there were 41,358 square feet under construction in the Richmond, VA market. The total stock of Power Center space in Richmond, VA currently sits at 5,339,709 square feet in 13 centers comprised of 121 buildings. A total of 41,358 square feet of space was under construction at the end of the second quarter GENERAL RETAIL PROPERTIES The General Retail sector of the market, which includes all freestanding retail buildings, except those contained within a center, reported a vacancy rate of 2.7% at the end of second quarter There was a total of 986,066 square feet vacant at that time. The General Retail sector in Richmond VA currently has average rental rates of $12.83 per square foot per year. There are 24,500 square feet of space under construction in this sector, with 33,285 square feet having been completed in the second quarter. In all, there are a total of 5,668 buildings with 37,075,639 square feet of General Retail space in Richmond, VA. SALES Tallying retail building sales of 15,000 square feet or larger, Richmond, VA retail sales figures rose during the first quarter 2016 in terms of dollar volume compared to the fourth quarter of In the first quarter, 11 retail transactions closed with a total volume of $45,494,319. The 11 buildings totaled 428,162 square feet and the average price per square foot equated to $ per square foot. That compares to four transactions totaling $21,085,000 in the fourth quarter The total square footage in the fourth quarter was 185,518 square feet for an average price per square foot of $ Total retail center sales activity in 2016 was up compared to In the first three months of 2016, the market saw 11 retail sales transactions with a total volume of $45,494,319. The price per square foot averaged $ In the same first three months of 2015, the market posted seven transactions with a total volume of $43,400,000. The price per square foot averaged $ Cap rates have been higher in 2016, averaging 8.88% compared to the same period in 2015 when they averaged 8.21%. One of the largest transactions that has occurred within the last four quarters in the Richmond, VA market is the sale of Southgate Square in Colonial Heights. This 220,131 square foot retail center sold for $38,585,000, or $ per square foot. The property sold on 4/29/2016, at a 7.25% cap rate.

5 2016 TOP LEASES Building Name Tenant Name Submarket Lease SF Nuckols Place Publix Far West End North Ret 49, W. Broad Street 2nd & Charles Staples Mill/Parham Retail 36, Midlothian Turnpike Auto Connection Midlothian E/Hull Street Retail 32, Midlothian Turnpike Big Lots Midlothian E/Hull Street Retail 18, Deep Rock Road Beechwell Adult Day Program Broad Street Corridor Retail 14, Midlothian Turnpike 4 Wheel Parts Midlothian E/Hull St Ret 13,400 Hanover Village Shopping Center Harbor Freight Tools Mechanicsville Retail 12,882 Parham One Shopping Center McKay Books Staples Mill/Parham Ret 11,270 South Creek Retail N/A Powhatan Retail 11,200 The Shops at Stratford Hills Tuesday Morning Midlothian E/Hull St Ret 10, W. Broad Street* Woodcraft Staples Mill/Parham Ret 10,042 Merchant s Walk UFC Gym Staples Mill/Parham Retail 10, Deep Rock Road N/A Broad Street Corridor Retail 9, West Broad Street West End Thrift Broad Street Corridor Retail 9,378 Westchester Commons-Building 1300* Dollar Tree Midlothian Village Retail 9,325 Glen Lea Centre* Kool Smiles Laburnum/Rte 360 Ret 9,090 Harbor Pointe Village HCA Swift Creek Retail 8,500 Circle Plaza Orange Beauty Midlothian E/Hull Street Retail 8,300 *Renewal TOP SELECTED SALES Property Name Buyer Seller Sales Price SF PSF Southgate Square Armada Hoffler Properties, Blackwood Development Co. $38,585, ,131 $ Inc. WestPark Shopping Center InvenTrust Properties Corp. Westdale Real Estate Investment $33,390, ,973 $ and Management Walmart Neighborhood Center EB Property Investment, LLC Confluent Development $11,564,000 41,117 $ Woodlake Commons Morgan Stanley & Co., LLC Kepley Broscious & Biggs, PLC $8,000,000 47,400 $ Loop 3641 Cox Road Kotarides Cohen Equities $7,600,000 37,257 $ Wilton Square at Reynolds The Wilton Companies Reynolds Development $7,325,000 19,000 $ Crossing 5023 Nine Mile Road Bromont Investments Chiocca-Talley Malls, Inc. $6,318, ,785 $24.70 Branders Creek Corner Yong Kim The Emerson Construction $6,210,000 26,354 $ Group, Inc. Midlothian Station The Butz Family Midlothian Center, LLC $5,900,000 67,246 $87.74

6 The information and details contained herein have been obtained from third-party sources believed to be reliable; however, Commonwealth Commercial has not independently verified its accuracy. Commonwealth Commercial makes no representations, guarantees, or express or implied warranties of any kind regarding the accuracy or completeness of the information and details provided herein, including but not limited to the implied warranty of suitability and fitness for a particular purpose. Interested parties should perform their own due diligence regarding the accuracy of the information. The information provided herein, including any sale or lease terms, is being provided subject to errors, omissions, changes of price or conditions, prior sale or lease, and withdrawal without notice. Third-party data sources: CoStar Group, Inc., Moody s Economy. com, Nielsen/Claritas, Real Capital Analytics, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, U.S. Census Bureau, Greater Richmond Partnership, U.S. Department of Commerce. The Commonwealth Commercial Retail Market Report compiles relevant market data by using a third-party database for the proprietary analysis of specific retail properties above 10,000 SF in the Richmond Metropolitan Area. Retail Team Carl Blackwell T E cblackwell@ James McVey T E jmcvey@ Morgan Trible T E mtrible@ Michael Morris T E mmorris@