MARKET WATCH HOUSTON RETAILQ3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 $16.75 $17.00 $17.25 $17.50 $17.75 $18.00 $18.25 5.0% 6.0% ... Galleria/Uptown Inner Loop / River

HOUSTON RETAILFEBRUARY 2016

RECENT RETAIL LEASES

Fairfield :: Fitness Connection 44,189 SF new lease at Jones Plaza

Spring Branch :: SOAP Hand Car Wash31,000 SF new lease at Shoppes at Memorial Villages

Atascocita :: Lone Star Athletics11,740 SF new lease at Lake Country Plaza

RECENT RETAIL SALES

Fairfield :: Cypress Town Center 55,090 SF Buyer: Spigel Properties, IncSeller: Inland Real Estate Corporation

RETAIL IN THE NEWS

High-end bowling alley moves forward on first Houston location link to storyHouston Business Journal, February 23, 2016

Iconic Tex-Mex joint snaps up shuttered steakhouse for a move across the street link to storyCultureMap Houston, February 22, 2016

New upscale H-E-B opens in growing Houston ‘burb link to storyHouston Business Journal, February 17, 2016

RETAIL LEASE STATISTICS

Source: CoStar - Houston retail buildings 5,000 SF and greater

Retail Market IndicatorsSUBMARKET TOTAL RBA (SF)

DIRECT VACANT (SF)

DIRECT VACANCY RATE

OVERALL VACANCY RATE

SF UNDER CONSTRUCTION

2015 NET ABSORPTION

East (Chambers County/Baytown, Channelview & Pasadena/Galena Park) 13,213,520 950,302 7.9% 7.9% 20,342 (38,187)

Inner Loop (CBD, Galleria, Uptown, University, River Oaks, Heights & East End) 31,511,311 1,067,241 3.9% 3.9% 27,865 627,822

North (Near North, FM 1960/I-45, Greenspoint/North Belt, Spring Creek, Far North & Montgomery County)

57,386,772 3,067,292 5.8% 5.9% 190,539 348,405

Northeast (Near Northeast, Lake Houston, Kingwood & Liberty County) 12,797,899 541,904 7.2% 7.4% 307,000 192,139

Northwest (Addicks, Bridgelands, Cypresswood, Fairfield, Far Katy North, Far Northwest, Far Tomball, Jersey Village, Near Northwest Oaks, Near NW Spring Valley, Willowbrook)

57,110,793 2,785,724 5.9% 5.9% 1,098,176 825,624

South (Far South & Near South) 13,734,228 739,349 6.1% 6.1% 164,730 112,723

Southeast (NASA/Clear Lake, Near Southeast, Southeast Outlier ) 51,364,503 3,010,201 5.8% 5.9% 731,736 761,060

Southwest (Near SW Central, Stafford, Sugar Land, Far New Territory, Far West, Far Southwest )

42,514,647 2,502,000 6.5% 6.6% 261,575 263,580

West (Near West, Westchase, Far West, Far Katy South) 39,259,163 1,952,320 4.9% 5.1% 127,898 1,219,962

Total - Houston 318,892,836 16,616,333 6.0% 6.0% 2,929,861 4,313,128 Source: Costar - Houston retail buildings 5,000 SF and greater

Retail Sales StatisticsHOUSTON MSA UNITED STATES

QUARTER TO DATE

LAST QUARTER (Q4 2015)

TRAILING 12 MONTHS

LAST QUARTER (Q4 2015)

TRAILING 12 MONTHS

Volume ($ Mil)

$53.7 $464.1 $1,848.1 $22,739.7 $88,019.5

No. of Properties

9 48 182 1,835 7,195

Total SF 285,105 2,926,371 11,842,857 114,802,709 427,643,487

Average Price/SF

N/A $233 $186 $210 $218

Average Cap Rate (Yield)

N/A 6.3% 6.9% 6.4% 6.5%

Source: Real Capital Analytics

MARKET WATCH

Overall Vacancy Rates Asking Rental Rates (NNN)

Q412

Q113

Q213

Q313

Q413

Q114

Q214

Q314

Q414

Q115

Q215

Q315

Q415

$16.75

$17.00

$17.25

$17.50

$17.75

$18.00

$18.25

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

MARKET WATCH HOUSTON RETAIL MARKET FEBRUARY 2016

HOUSTON RETAIL MARKET WATCHFEBRUARY 2016

45

45

45

10

10

610

10

290

59

90

288

99

249

8

35

6

See Inner Loop

Map

Inner Loop

3

3

3

3

33

3

3

4

4

4

4

4

4

2

2

2

2

2

2

2

2

2

1

1

1

1

1

1

1

1

1

5

5

5

6

6

6

7

8

9

10

Gulf Freeway/Pasadena

Baybrook / Clear Lake

Old Pearland / Alvin

1

2

3SOU

THE

AST

Pasadena / Galena Park

Channelview / Beaumont

Baytown / Chambers

1

2

3

EA

ST

Pearland / Manvel

Near South

1

2SOU

TH

Near North

FM 1960 & I-45

Greens Point - North Belt

Spring Creek

Far North

The Woodlands - Montgomery

1

2

3

4

5

6

NO

RTH

Near Northeast

Atascocita

Kingwood

Liberty County

1

2

3

4

NO

RTH

EA

ST

1

2

3

4

SOU

THW

EST

1

2

3

4

5

6

INN

ER

LO

OP

1

2

3

4

5

6

7

8

9

10

NO

RTH

WE

ST

1

2

3

4

WE

ST

CBD

Bellaire / West University

Galleria/Uptown

Inner Loop / River Oaks

Heights

East End

Northwest Oaks

Spring Branch

Willowbrook

Jersey Village

Copperfield

Fairfield

Cypress/Bridgelands

Far Katy North

Far Northwest

Tomball/Spring Cypress

Memorial

Westchase

Energy Corridor

Katy - Cinco Ranch

Sharpstown - Southwest Central

West Oaks

Sugar Land - Stafford

Richmond Rosenberg

Houston | RETAIL SUBMARKETS

INNER LOOP

1. CBD2. Bellaire/West University3. Galleria/Uptown4. Inner Loop/River Oaks5. Heights6. East End

WEST

1. Memorial2. Westchase3. Energy Corridor4. Katy/Cinco Ranch

NORTH

1. Near North2. FM 1960 & I-453. Greens Point/North Belt4. Spring Creek5. Far North6. The Woodlands/Montgomery

SOUTHWEST

1. Sharpstown/Southwest Central2. West Oaks3. Sugar Land/Stafford4. Richmond/Rosenberg

NORTHWEST

1. Northwest Oaks2. Spring Branch3. Willowbrook4. Jersey Village5. Copperfield6. Fairfield7. Cypress/Bridgelands8. Far Katy North9. Far Northwest10. Tomball/Spring Cypress

NORTHEAST

1. Near Northeast2. Atascocita3. Kingwood4. Liberty County

SOUTH

1. Pearland / Manvel2. Near South

EAST

1. Pasadena/Galena Park2. Channelview/Beaumont3. Baytown/Chambers

SOUTHEAST

1. Gulf Freeway/Pasadena2. Baybrook/Clear Lake3. Old Pearland/Alvin

Copyright © 2016 Transwestern. All rights reserved. No part of this work may be reproduced or distributed to third parties without written permission of the copyright owner. The information contained in this report was gathered by Transwestern from CoStar and other primary and secondary sources believed to be reliable. Transwestern, however, makes no representation concerning the accuracy or completeness of such information and expressly disclaims any responsibility for any inaccuracy contained herein.

HOUSTON RETAIL MARKET WATCHFEBRUARY 2016

SEATTLE

WALNUT CREEK

LOS ANGELES

SALT LAKECITY

DENVER

MINNEAPOLIS

MILWAUKEE

ST. LOUIS

CHICAGO

DETROIT GREENWICHNEW YORK

NEW JERSEY

BALTIMORENORTHERNVIRGINIA

BETHESDAWASHINGTON DC

DALLASFORTWORTH

HOUSTONAUSTIN

SAN ANTONIO

OKLAHOMACITY

NEW ORLEANS

ATLANTA

FORT LAUDERDALEORLANDO

MIAMI-DADE

SANFRANCISCO

PHOENIXORANGE COUNTY

SAN DIEGO

BOSTON

SILICONVALLEY

TRANSWESTERNLOCATIONS

HOUSTON RETAIL TEAM

Nick HernandezManaging [email protected]

Micha van Marcke, CCIMSenior Vice [email protected]

Grant WalkerVice [email protected]

Crystal AllenVice [email protected]

Cindy PhamSenior [email protected]

Chace [email protected]

METHODOLOGY

The information in this report is the result of a compilation of publicly available data from a variety of commercial and government sources.

CONTACT

Rachel AlexanderDirector of Market [email protected]

T 713.270.7700 F 713.270.6285www.transwestern.net/houston

1900 West Loop South, Suite 1300Houston, Texas 77027

Chris [email protected]

Danielle SchidlowskiAssociate713.231.1584danielle.schidlowski@transwestern.com

Alex [email protected]

ABOUT TR ANSWESTERN

Transwestern is a privately held real estate firm specializing in agency leasing, property and facilities management, tenant advisory, capital markets, research and sustainability. The fully integrated global enterprise leverages competencies in office, industrial, retail, multifamily and healthcare properties to add value for investors, owners and occupiers of real estate. As a member of the Transwestern family of companies, the firm capitalizes on market insights and operational expertise of independent affiliates specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 37 countries as part of a strategic alliance with Paris-based BNP Paribas Real Estate.

Transwestern was founded in Houston, Texas in 1978, and Houston remains the corporate headquarters today. As one of the preeminent commercial real estate firms in Houston, we offer a comprehensive menu of real estate services designed to provide owners, tenants and investors with the optimum solutions for their unique requirements. Transwestern has seasoned veterans in every area of expertise with the integrity, experience and creativity to be the best partner for its clients. Transwestern’s Houston office currently employs over 400 team members and has been an innovator in the Houston market for 38 years.

Lauren [email protected]

Ryan [email protected]

Kevin RobertsPresident, [email protected]