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CBRE <br />MARKETVI EW <br />Minneapolis/St. Paul Retail, Q1 2017 <br />Outlook positive for 2017 <br />despite higher vacancy <br />Vacancy Rate <br />8.1% <br />Net Asking Rate <br />$16.75 <br />Figure 1: Direct Vacancy Rate and Lease Rate <br />Vacancy Rate (%) <br />10 <br />9 <br />8 <br />7 <br />6 <br />5 <br />4 <br />3 <br />2 <br />0 <br />111111-'i_ <br />IIIII/IIIIr.. G111111►1 <br />1111E11111111 111111111 <br />:iiillllllllllllllllllll <br />111111111111111111111111 <br />111111111111111111111111 <br />Oak Net Absorption <br />IRO (380,765) SF <br />0 Under Construction <br />679,893 SF <br />*Arrows indicate change from previous quarter. <br />Net Asking Rent (S/sq. ft.) <br />19 <br />IIII1111111IIIIIIIIII III <br />III 1 1 11_ 1 _1 1.1.1.1_1 1 _1 1 1 1 1 <br />e.\\ ee- ee ee‘ .re .*c) „," ee <br />Source: CBRE Research, 01 2017. <br />Vacancy (L) — Asking Rate (R) <br />• Macy's sold its flagship building in downtown <br />Minneapolis and vacated 361,655 sq. ft. <br />Grocers continued their push in the Minneapolis/St. <br />Paul retail market, with another Hy-Vee completed <br />in Savage and another set to break ground in Q2 <br />2017. <br />• Scheels, a sporting goods company, signed the <br />largest lease of Q1 2017, an expansion at Eden <br />Prairie Center totally 204,566 sq. ft. <br />• Two of the top five sales of Q1 2017 had <br />Walgreens as a tenant, demonstrating the <br />attractiveness of long term leases to investors. <br />MARKET OVERVIEW <br />18 <br />17 <br />16 <br />15 <br />While net asking rates and absorption are down <br />quarter -over -quarter and vacancy rates are up, <br />positive indicators in sales and leasing activity in the <br />Minneapolis/St. Paul retail market signal a robust <br />2017. <br />Two large retailers, Macy's and Sears, accounted for <br />the majority of the negative absorption in Q1 2017. <br />Macy's left its flagship store at 700 Nicollet Mall in <br />downtown Minneapolis and Sears vacated Riverdale <br />Village at Round Lake Blvd and Highway 10 in Coon <br />Rapids. However, Hobby Lobby's future occupancy <br />in Riverdale Village will offset some of the negative <br />absorption seen Q1 2017. <br />Q1 2017 CBRE Research © 2017 CBRE, Inc. I 1 <br />