Retail Slows but Does Not Stop

Research & Forecast Report LAS VEGAS RETAIL Q1 2017 Retail Slows but Does Not Stop > > Strong net absorption in the second half of 2016 did not extend into 2017 > > Vacancy remained under 9.0 percent, but increased in the first quarter > > Asking rental rates remained at $1.36 per square foot on a triplenet basis The retail market hit another bump in the road in the first quarter, with negative net absorption brought about by the closure of some large anchor locations. Net absorption in the first quarter totaled negative 17,825 square feet, bringing the vacancy rate up slightly to 8.4 percent. Vacancy was still down on a year-over-year basis. The asking rental rate for retail space in the first quarter of 2017 was $1.36 per square foot (psf) on a triple-net (NNN) basis, $0.06 higher than one year ago. According to the Nevada Department of Employment, Training and Rehabilitation, Southern Nevada s retail job market suffered in January 2017 (the latest month of data available) compared with January 2016, losing approximately 2,100 jobs in the past twelve months. Historical Vacancy Rates and Asking Lease Rates 7.0% 6.0% $0.68 $0.66 Economic Indicators RETAIL Employment Market Indicators Relative to prior period Q1 2017 Q2 2017* VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE *Projected +3.2% Summary Statistics RETAIL Taxable Sales +2.6 RETAIL /Job +1.6% Q1 2017 Las Vegas Market Q1-16 Q4-16 Q1-17 Vacancy Rate 9.1% 8.3% 8.4% 5.0% $0.64 Asking Rent (P, NNN) $1.30 $1.35 $1.36 4.0% 3.0% $0.62 $0.60 Net Absorption () 283,597 234,591-17,825 2.0% $0.58 New Completions () 80,000 65,851 53,589 1.0% $0.56 0.0% 2 Q 2015 3 Q 2015 4 Q 2015 1 Q 2016 2 Q 2016 3 Q 2016 4 Q 2016 1 Q 2017 $0.54 Overall Asking Rents Per Square Foot Vacancy Asking Rental Rate Power Center $1.55 $1.58 $1.54 Community Center $1.21 $1.26 $1.29 As new centers are completed over the next two quarters, we think net absorption will rebound, and that 2017 will prove to be a productive year for Southern Nevada s retail market. Neighborhood Center $1.46 $1.50 $1.49 Strip Retail $1.16 $1.22 $1.24

Unemployment in the Las Vegas-Paradise MSA stood at 5.1 percent as of January 2017, down from 6.5 percent in January 2016. From January 2016 to January 2017, total employment in Southern Nevada has increased by 37,500 jobs. The Nevada Department of Taxation reports that Clark County s taxable retail sales for the past twelve months (December 2015 to November 2016, the most recent month of data available) totaled $28.8 billion, up from $27.9 billion in the previous twelve months. In the past twelve months taxable sales were $4.6 billion in the automotive sector, $10.3 billion in food service and $13.6 billion in other retail (excluding gas stations). The highest year-over-year growth in taxable retail sales in November 2016 were in health and personal care stores (11.9 percent growth), home and garden stores (11.3 percent growth) and furniture stores (11.2 percent growth). Year-over-year taxable sales decreased in electronics and appliance stores (negative 6.1 percent growth), clothing stores (negative 5.4 percent) and hobby stores (negative 0.9 percent). Nonstore retailers, by comparison, posted 25.5 percent year-over-year growth. The only retail completions in the first quarter of 2017 were 1st & Main, a 19,800 square foot strip center in the Downtown submarket, and the fourth phase of Green Valley Crossing in Henderson. The market currently has 446,550 square feet of retail product under construction, and another 1.18 million square feet planned to begin construction within the next twelve months. While vacancy took a wrong turn in the first quarter, there is still a strong possibility of increased development through 2017 and 2018, especially as multifamily and single-family residential construction continues and the population continues to grow. Net absorption totaled negative 17,825 square feet in the first quarter of 2017, a significant step down from the fourth quarter of 2016 when net absorption totaled 234,591. Among product types, neighborhood centers suffered the worst, posting negative 61,327 square feet of net absorption. Vacated anchor and junior anchor spaces were the primarily culprits, with businesses including Sav-a-Lot grocery, the V.A., Sports Chalet and Toys R Us all leaving space this quarter. These anchors represented an addition of 145,066 vacant square feet to the market. Competition from internet retailers may be playing a part in these closures, as 53 anchor locations have been vacated since the current recovery started in 2013. Seventeen of these spaces have been filled, many of them by non-traditional retailers in that time. Although not tracked in this reports numbers, the JC Penneys at the Boulevard Mall is among the 130 stores that will be closing in 2017, joining the Macy s which shuttered there in 2016. Historical Net Absorption vs. Completions 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0-50,000-100,000 2 Q 2015 3 Q 2015 4 Q 2015 1 Q 2016 2 Q 2016 3 Q 2016 4 Q 2016 1 Q 2017 Net Absorption Occupancy vs. Retail Employment 84,000 83,000 82,000 81,000 80,000 79,000 78,000 Completions 2 Q 2015 3 Q 2015 4 Q 2015 1 Q 2016 2 Q 2016 3 Q 2016 4 Q 2016 1 Q 2017 Retail Jobs Occupancy Rate 93.0% 92.0% 91.0% 90.0% 89.0% 88.0% 87.0% Net absorption was positive in five of the Valley s eight submarkets, with the Downtown, Henderson and University East submarkets posting negative net absorption in the first quarter. Net absorption was highest this quarter in the West Central submarket (61,613 square feet), followed by the Northwest and North Las Vegas submarkets, which absorbed 20,775 square feet and 20,324 square feet respectively. Net absorption was lowest in Downtown (negative 57,474 square feet) and University East (negative 47,965 square feet). 2 Las Vegas Research & Forecast Report Q1 2017 Retail Colliers International

Strong multifamily development along the I-215 Beltway, stretching from Henderson to the Northwest, should stimulate demand for retail space over the next 12-24 months in the Henderson, Southwest and Northwest submarkets. Gross absorption of retail product totaled 467,471 square feet in the first quarter of 2017, lower than one quarter ago, but a great improvement over the first quarter of 2016. Retail vacancy in Southern Nevada was 8.4 percent in the first quarter of 2017, an increase of 0.1 points from last quarter, and and 0.7 points lower than one year ago. Southern Nevada s retail market has been expanding since 2012, though growth was slower in 2014 and dipped for one quarter in 2016 into negative territory. This gives us two periods of strong growth, from 2012-2013, and 2015-2016. Negative net absorption this quarter does not mean that the growth period is necessarily over, but it does suggest that it may be ending this year unless we see a rebound by mid-year. Among submarkets, the Valley s highest vacancy this quarter was 12.4 percent in Downtown and University East, while the lowest vacancy rate, 6.3 percent, was in the burgeoning Southwest submarket. All submarkets but Downtown, Henderson and University East saw vacancy decrease in the first quarter of 2017. The average asking rental rate for retail space in Southern Nevada was $1.36 psf NNN in the first quarter of 2017. This was the same asking rate as in the fourth quarter of 2016, and it represents a $0.06 psf increase from one year ago. In the first quarter of 2017, five submarkets saw asking rates increase on a quarter-over-quarter basis University East ($0.04 psf), Henderson ($0.02 psf), West Central ($0.02 psf), North Las Vegas ($0.01 psf), and Southwest ($0.01 psf). Asking rates decreased in Downtown ($0.07 psf), Northwest ($0.02 psf) and Northeast ($0.01 psf). Since the fourth quarter of 2016, asking rents decreased in power centers ($0.04 psf) and neighborhood centers ($0.01 psf), and increased by $0.02 psf in community centers and strip centers. Single-Tenant Retail 2013 2014 2015 2016 YTD 2017 No. Sales 47 61 66 67 12 Square Footage Sold 719,000 643,000 981,000 569,000 64,000 Sales Volume $139.8 MM $187.5 MM $306.2 MM $174.4 MM $23.7 MM Average Price/ $194.55 $291.50 $312.00 $306.57 $369.80 Average Sale Size () 15,300 10,500 14,900 8,500 5,300 Cap Rate N/A 7.2% 7.2% 7.0% 6.0% Shopping Center Retail 2013 2014 2015 2016 YTD 2017 No. Sales 48 60 58 41 13 Square Footage Sold 3,192,000 4,025,000 3,195,000 2,528,000 1,628,000 Sales Volume $359.2 MM $504.5 MM $588.1 MM $419.7 MM $346.1 MM Average Price/ $112.52 $125.33 $184.08 $166.00 $212.63 Average Sale Size () 66,000 67,000 55,000 62,000 125,000 Cap Rate N/A 8.9% 7.7% 6.7% 6.6% Retail Development Schedule Project Type Submarket Size () Pre-Leasing Q2-2017 21,000 67% Spencer Crossing Strip Retail Henderson 21,000 67% Q3-2017 187,000 99% 7560 Oso Blanca Rd Strip Retail Northwest 26,000 47% St Rose Coronado Center Strip Retail Henderson 18,000 8% Walgreens (Blue Diamond) Neighborhood Center Southwest 169,000 BTS Q4-2017 205,000 42% Mountains Edge Marketplace Community Center Southwest 205,000 42% Q1-2018 73,000 66% DCs Plaza Neighborhood Center Northwest 73,000 66% 3 Las Vegas Research & Forecast Report Q1 2017 Retail Colliers International

Single-tenant retail investment sales volume in the first quarter of 2017 was $23.7 million in twelve sales totaling 64,000 square feet. This rendered an average price per square foot of $369.80, an improvement over 2016. The average cap rate was 6.0 percent, a reduction from 2016 s 7.0 percent cap rate. Shopping center investment sales volume in the first quarter was $346.1 million in thirteen sales totaling 1.6 million square feet. This rendered an average price per square foot of $212.63, higher than in 2016. Shopping center sales were hot in the first quarter, and put 2017 on pace to beat 2014 s 4.0 million square feet of shopping center sales. Investment sales had been heading down since 2014, and perhaps are turning around in 2017. The average cap rate was 6.6 percent, a slight compression from last year. Chick-Fil-A has finally entered the Southern Nevada market, and plans more stores in the future. Other retailers entering or expanding in Southern Nevada include Paul Mitchell, Discount Tire, Lolo s Chicken & Waffles, Chicken Shack, Café Rio, Five Guys Burger & Fries, Black Bear Diner, Wingnutz, Pei Wei, and Cheeseburger Cheeseburger. Target is introducing a new Target Express concept to compete with Dollar General or Walgreens, though no locations have yet been announced in Southern Nevada. Walmart is planning locations at Rainbow & Blue Diamond and Boulder & Russell, and Smith s Marketplace, a 125,000 square foot concept, looking into putting stores in the Cadence MPC and Skye Canyon. Southern Nevada s retail market has been expanding (mostly) steadily since the first quarter of 2015, putting us two years into the current expansion. At this point, is is difficult to say whether a negative first quarter will set the tone for the entire year. Retail employment figures from the BLS are not great, but those figures miss growth in new business and are often heavily revised. Taxable sales are only available up to last November, which means we do not yet know if consumer spending in Southern Nevada has reversed course. Given that much of the negative net absorption can be attributed to a few large anchor locations going vacant, it would be foolish to assume that this is the beginning of a trend. As new centers are completed over the next two quarters, we think net absorption will rebound, and that 2017 will prove to be a productive year for Southern Nevada s retail market. The retail market hit another bump in the road in the first quarter, with negative net absorption brought about by the closure of some large anchor locations. - John Stater, Research & GIS Manager Las Vegas Households (2017) Ave. HH Income (2017) Occupied Retail Space (2017 Avg.) Occupied Retail Space (2017 Avg.) Downtown 38,000 $41,000 2,010,000 1,958,000 Henderson 112,800 $86,000 9,537,000 9,526,000 North Las Vegas 75,200 $67,000 5,625,000 5,687,000 Northeast 82,300 $55,000 3,122,000 3,119,000 Northwest 181,600 $85,000 12,741,000 12,840,000 Southwest 99,000 $81,000 7,587,000 7,683,000 University East 108,100 $61,000 7,889,000 7,948,000 West Central 56,300 $53,000 6,303,000 6,406,000 Source of Demographic Data: Claritas 4 Las Vegas Research & Forecast Report Q1 2017 Retail Colliers International

Significant Retail Sale Activity 215 NORTH LAS VEGAS Craig Marketplace 119,000 - $33,000,000 $277.00/ NORTHWEST 95 December 2016 15 Sunrise Marketplace 191,000 - $29,300,000 WEST CENTRAL DOWN TOWN NORTHEAST LAS VEGAS $153.00/ December 2016 Rainbow Plaza North 105,000 - $23,100,000 95 $219.00/ January 2017 UNIVERSITY AIRPORT Town Square 215 860,000 - $161,600,000 $188.00/ SOUTHWEST HENDERSON January 2017 RESORT CORRIDOR Anthem Highlands 119,000 - $29,500,000 $248.00/ December 2016 Lease Activity Property Name Tenant Lease Date Lease Term Size Lease Rate Type Sahara Pavilion South InStyle Furniture Inc Mar 2017 60 months 11,600 $0.94 NNN Community Shadow Mountain Marketplace Big Drive Fitness Dec 2016 64 months 2,800 $2.20 NNN Community Scottsdale Plaza Tables Board Game Spot Feb 2017 63 months 2,400 $1.21 NNN Strip Retail Decatur Meadows El Varaderito Feb 2017 60 months 1,500 $1.58 NNN Community Aliante MarketPlace Skye Communication Dec 2016 60 months 1,500 $2.25 NNN Neighborhood 5 Las Vegas Research & Forecast Report Q1 2017 Retail Colliers International

Market Comparisons - Las Vegas Retail Market TYPE TOTAL INVENTORY DIRECT VACANT DIRECT VACANCY RATE SUBLEASE VACANT TOTAL VACANT VACANCY RATE CURRENT QUARTER VACANCY RATE PRIOR QUARTER NET ABSORPTION CURRENT QTR NET ABSORPTION YTD COMPLETIONS CURRENT QTR COMPLETIONS YTD UNDER CONSTRUCTION PLANNED CONSTRUCTION WEIGHTED AVG ASKING RENTAL RATE DOWNTOWN PC - - n/a - - n/a n/a - - - - - - $- CC 607,055 84,158 13.9% - 84,158 13.9% 12.9% (6,135) (6,135) - - - - $1.28 NC 588,070 100,933 17.2% - 100,933 17.2% 11.2% (35,161) (35,161) - - - - $0.91 SC 1,040,640 92,248 8.9% - 92,248 8.9% 5.5% (16,178) (16,178) 19,800 19,800-40,500 $1.41 Total 2,235,765 277,339 12.4% - 277,339 12.4% 9.0% (57,474) (57,474) 19,800 19,800-40,500 $1.12 HENDERSON PC 2,896,215 105,191 3.6% - 105,191 3.6% 3.4% (5,950) (5,950) - - - - $1.94 CC 2,714,168 169,431 6.2% - 169,431 6.2% 5.7% 18,267 18,267 33,789 33,789 - - $1.52 NC 2,930,045 358,463 12.2% 116,457 474,920 16.2% 15.9% (10,179) (10,179) - - - 618,422 $1.44 SC 1,908,708 290,310 15.2% 3,086 293,396 15.4% 14.2% (25,726) (25,726) - - - 201,860 $1.12 Total 10,449,136 923,395 8.8% 116,457 1,039,852 10.0% 9.5% (23,588) (23,588) 33,789 33,789-820,282 $1.41 NORTH LAS VEGAS PC 774,065 31,986 4.1% - 31,986 4.1% 4.1% - - - - - - $2.25 CC 2,311,384 138,561 6.0% 1,505 140,066 6.1% 6.9% 19,851 19,851 - - - - $1.56 NC 1,806,524 179,478 9.9% 2,687 182,165 10.1% 8.5% (28,983) (28,983) - - - - $1.37 SC 1,290,836 144,826 11.2% - 144,826 11.2% 13.6% 29,456 29,456 - - - - $1.26 Total 6,182,809 494,851 8.0% 4,192 499,043 8.1% 8.4% 20,324 20,324 - - - - $1.45 NORTHEAST PC - - n/a - - n/a n/a - - - - - - $- CC 1,295,615 57,361 4.4% 18,614 75,975 5.9% 6.7% 10,671 10,671 - - - - $1.57 NC 1,307,891 90,590 6.9% 62,301 152,891 11.7% 11.1% (8,205) (8,205) - - - - $1.47 SC 771,785 108,625 14.1% - 108,625 14.1% 14.0% (496) (496) - - - - $0.88 Total 3,375,291 256,576 7.6% 80,915 337,491 10.0% 10.1% 1,970 1,970 - - - - $1.24 NORTHWEST PC 3,171,110 247,448 n/a 1,400 248,848 7.8% 7.5% (11,420) (11,420) - - - - $1.55 CC 4,716,146 121,948 2.6% 73,059 195,007 4.1% 4.3% 8,151 8,151 - - - - $1.04 NC 3,419,506 276,260 8.1% 36,831 313,091 9.2% 9.5% 12,802 12,802 - - 72,550 - $1.67 SC 2,414,496 235,474 9.8% - 235,474 9.8% 10.2% 11,242 11,242 - - - 31,000 $1.34 Total 13,721,258 881,130 6.4% 111,290 992,420 7.2% 7.4% 20,775 20,775 - - 72,550 31,000 $1.46 SOUTHWEST PC 944,314 49,796 5.3% - 49,796 5.3% 4.9% (3,700) (3,700) - - - - $1.46 CC 2,616,421 107,696 4.1% - 107,696 4.1% 4.1% (1,510) (1,510) - - 205,000 - $1.75 NC 2,303,100 151,892 6.6% 3,526 155,418 6.7% 6.6% 1,115 1,115 - - 169,000 65,000 $2.02 SC 2,332,845 204,766 8.8% - 204,766 8.8% 9.2% 10,615 10,615 - - - 58,800 $1.55 Total 8,196,680 514,150 6.3% 3,526 517,676 6.3% 6.4% 6,520 6,520 - - 374,000 123,800 $1.72 UNIVERSITY EAST PC 1,210,223 123,864 10.2% - 123,864 10.2% 10.1% (1,348) (1,348) - - - - $1.19 CC 2,946,724 340,913 11.6% 28,955 369,868 12.6% 11.0% (45,802) (45,802) - - - - $1.02 NC 1,953,965 152,731 7.8% 182,349 335,080 17.1% 7.6% (4,265) (4,265) - - - 129,588 $1.40 SC 2,966,847 512,136 17.3% 1,800 513,936 17.3% 17.6% 3,450 3,450 - - - 38,636 $1.22 Total 9,077,759 1,129,644 12.4% 211,304 1,340,948 14.8% 12.3% (47,965) (47,965) - - - 168,224 $1.18 WEST CENTRAL PC 1,138,224 91,787 8.1% - 91,787 8.1% 10.0% 22,411 22,411 - - - - $1.31 CC 1,910,276 232,275 12.2% - 232,275 12.2% 13.0% 15,896 15,896 - - - - $1.20 NC 1,756,947 102,900 5.9% 47,716 150,616 8.6% 6.5% 11,549 11,549 - - - - $1.30 SC 2,170,564 143,371 6.6% - 143,371 6.6% 7.1% 11,757 11,757 - - - - $1.17 Total 6,976,011 570,333 8.2% 47,716 618,049 8.9% 9.1% 61,613 61,613 - - - - $1.23 MARKET TOTAL PC 10,134,151 650,072 6.4% 1,400 651,472 6.4% 6.4% (7) (7) - - - - $1.54 CC 19,117,789 1,252,343 6.6% 122,133 1,374,476 7.2% 7.1% 19,389 19,389 33,789 33,789 205,000 - $1.29 NC 16,066,048 1,413,247 8.8% 451,867 1,865,114 11.6% 9.8% (61,327) (61,327) - - 241,550 813,010 $1.49 SC 14,896,721 1,731,756 11.6% 4,886 1,736,642 11.7% 11.8% 24,120 24,120 19,800 19,800-370,796 $1.24 Total 60,214,709 5,047,418 8.4% 580,286 5,627,704 9.3% 8.9% (17,825) (17,825) 53,589 53,589 446,550 1,183,806 $1.36 QUARTERLY COMPARISON AND TOTALS Q1-17 60,214,709 5,047,418 8.4% 580,286 5,627,704 9.3% 8.9% (17,825) (17,825) 53,589 53,589 446,550 1,183,806 $1.36 Q4-16 60,161,120 4,976,004 8.3% 354,423 5,330,427 8.9% 9.6% 234,591 889,587 65,851 216,920 523,506 1,385,706 $1.35 Q3-16 60,095,269 5,144,744 8.6% 639,448 5,784,192 9.6% 10.2% 408,766 654,996 71,069 151,069-1,564,516 $1.32 Q2-16 60,024,200 5,482,441 9.1% 618,699 6,101,140 10.2% 10.2% (37,367) 246,230 0 80,000 71,069 1,492,349 $1.31 Q1-16 60,024,200 5,445,074 9.1% 653,842 6,098,916 10.2% 10.5% 283,597 283,597 80,000 80,000 242,402 466,083 $1.30 Q4-15 59,944,200 5,648,671 9.4% 629,228 6,277,899 10.5% 10.5% 87,160 573,512 29,800 152,429 270,402 710,023 $1.30 Q3-15 59,914,400 5,706,031 9.5% 579,499 6,285,530 10.5% 10.8% 138,267 486,352 55,000 122,629 209,588 452,095 $1.26 PC = Power Center CC = Community Center NC = Neighborhood Center SC = Strip Center 6 Las Vegas Research & Forecast Report Q1 2017 Retail Colliers International

396 offices in 68 countries on 6 continents United States: 153 Canada: 29 Latin America: 24 Asia Pacific: 79 EMEA: 111 $2.6 billion in annual revenue* COLLIERS INTERNATIONAL LAS VEGAS 3960 Howard Hughes Parkway Suite 150 Las Vegas, Nevada 89169 USA +1 702 735 5700 www.colliers.com/lasvegas MARKET CONTACT: Mike Mixer Executive Managing Director Las Vegas +1 702 735 5700 mike.mixer@colliers.com John Stater Research & GIS Manager Las Vegas +1 702 836 3781 john.stater@colliers.com 2.0 billion square feet under management 15,000 professionals and staff *All statistics are for 2016 and include affiliates. About Colliers International Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIGI) is an industry-leading global real estate services company with more than 15,000 skilled professionals operating in 68 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting. Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals Global Outsourcing for 12 consecutive years, more than any other real estate services firm. For the latest news from Colliers, visit Colliers.com or follow us on Twitter (@Colliers) and LinkedIn. Copyright 2017 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.