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CONFIDENTIAL OFFERING MEMORANDUM

1004 N Shadeland Ave,

Indianapolis, IN 46219 PLAZAGEORGE THOMAS

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27,099 SF | +/- 1.96 Acres BOR: Josh Caruana

Charleston East Apartments13 Buildings | 188-Units

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C O N F I D E N T I A L I T Y & D I S C L A M E R

The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by

the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent

of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers,

and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a

thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with

respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square

footage of the property and improvements, the presence or absence of contaminating substances, PCB's or asbestos, the compliance

with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of

any tenant, or any tenant's plans or intentions to continue its occupancy of the subject property. The information contained in this

Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not

verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and

makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers

must take appropriate measures to verify all of the information set forth herein. Marcus & Millichap is a service mark of Marcus & Millichap

Real Estate Investment Services, Inc. © 2018 Marcus & Millichap. All rights reserved

Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing

package. The presence of any corporation's logo or name is not intended to indicate or imply affiliation with, or sponsorship or

endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing

of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective

customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY.

PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

N O N - E N D O R S E M E N T N O T I C E

TABLE OF CONTENTS

01INVESTMENT OVERVIEW

02

03

PRICING & FINANCIAL ANALYSIS

DEMOGRAPHICS & MARKET OVERVIEW

01INVESTMENT

OVERVIEW

5

INVESTMENT HIGHLIGHTS

27,099 Square Foot Shopping Center | Indianapolis, IN

Internet-Resistant Tenant Mix | Minimal Short-Term Rollover Risk

Hard Corner with Signalized Intersection that Sees Over 45,000 Combined VPD

Situated Near I-70 with 127,000 VPD and I-465 with 112,000 VPD

Dense Trade Area | 230,000 Residents and 205,000 Employees within Five-Miles

Six-Miles Northeast of Downtown Indianapolis | 16th Most Populous City in the U.S.

PLAZAGEORGE THOMAS

8

`



Indy Police Department | Lifeline Data Center

9

Entire Roof Replaced in 2017

SITE PLAN

27,099

2,524

Indy Phys. Therapy

2,524 SF

1,021 SF

Ind

y P

hys

.Th

erap

y

1,021

(Not Included)

1058 - 2,524 SF

Scecina MemorialHigh School

Community Hospital East

Raytheon Intelligence, Information and Services

Indianapolis Speedrome

FedEx Ground

Indiana Farmers Coliseum & State

Fairgrounds

Tindley Preparatory & Renaissance Academy

Douglass Park Golf Course

Metro Sports Complex

229,104 Residents | 205,768 Employees$48,216 Average Household Income

Indiana University-Purdue, IndianapolisEli Lilly & CoAllison TransmissionRolls-Royce CorpAnthemCummins

Indiana University-Purdue, IndianapolisEnrollment: 21,748University of IndianapolisEnrollment: 4,139Butler UniversityEnrollment: 4,001

Industrial Park

Kroger Distribution Center

Indianapolis Motor Speedway

Indiana University - Purdue University Indianapolis

Downtown/University Hospital District

University of Indianapolis

Population: 853,17314th Largest city in US | Largest City in IN

Indianapolis Industrial District

AMTRAK

Downtown Indianapolis

Arsenal Tech.High School

Emmerich Manual High School

10

SUBJECT PROPERTY

7 Miles fromDowntown Indianapolis

11

65 Miles

185 Miles

225 Miles145 Miles

120 Miles

170 Miles

115 Miles

110 Miles

190 Miles

120 Miles

180 Miles

215 Miles

130 Miles

02PRICING & FINANCIAL

ANALYSIS

THE OFFERING

DEMOGRAPHICS

1-Mile 3-Miles 5-Miles

2017 Estimate Population 8,104 77,585 229,104

2010 Census Population 7,749 74,463 219,801

2017 Estimate Households 3,639 31,981 88,947

2010 Census Households 3,495 30,908 85,990

Daytime Populations 9,954 83,588 205,768

Average Household Income $52,980 $48,852 $48,216

SITE DESCRIPTION

EXECUTIVE SUMMARY

Built 1992

Gross Leasable Area (GLA) 27,099 SF

Current Occupancy 96.23%

Lot Size +/- 1.96 Acres

Ownership Fee Simple

MAJOR TENANTSTENANT GLA

LEASE EXPIRATION

LEASE TYPE

Kozzy’s 5,298 09/30/2021 NNN

Check Smart 4,836 12/31/2023 NNN

Select Physical Therapy 3,194 09/30/2022 NNN

MAJOR EMPLOYERSEMPLOYER

Anthem

Eli & Lilly Co.

Rolls-Royce Corporation

13Marcus & Millichap makes no representations as to the accuracy of the information contained herein. Buyer must verify all information and bears all risk for any inaccuracies.

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PLAZAGEORGE THOMAS

George Thomas Plaza1004 N Shadeland Ave., Indianapolis, IN 46219







14

RENT ROLL AND TENANT LEASE SUMMARY

Marcus & Millichap makes no representations as to the accuracy of the information contained herein. Buyer must verify all information and bears all risk for any inaccuracies.

Tenant NameSquare

Feet

% of

GLA

Lease Dates Rent

Per SF

Monthly

Rent

Annual

Rent

Changes

On

Changes

To

Lease

Type

Renewal

OptionsComm. Exp.

Wings Mania 2,524 9.31% 11/01/2015 07/31/2023 $17.00 $3,576 $42,908 08/01/2023 $48,057 NNN One, Five-Year

Penn Station Subs 1,800 6.64% 02/01/1998 04/30/2025 $16.00 $2,400 $28,800 05/01/2021 $30,600 NNNOne, Seven-Year

& One, Six-Year

Magic Nails 1,900 7.01% 02/01/2002 05/31/2024 $14.00 $2,217 $26,600 06/01/2020 $28,500 NNN One, Five-Year

Fantastic Sams 1,200 4.43% 11/01/2002 12/31/2020 $15.93 $1,593 $19,116 01/01/2020 $19,500 NNN One, Five-Year

Boost Mobile 1,200 4.43% 12/01/2011 08/31/2020 $13.00 $1,300 $15,600 None None NNN None

Solar Dimensions Tanning 1,600 5.90% 01/01/2002 04/30/2022 $17.60 $2,347 $28,160 05/01/2022 $30,976 NNN One, Five-Year

Kozzy's 5,298 19.55% 07/01/2016 09/30/2021 $6.33 $2,795 $33,536 10/01/2019 $38,516 NNN Two, Three-Year

RJ Tacos & Burritos 2,526 9.32% 05/01/2016 05/31/2021 $12.00 $2,526 $30,312 None None Gross None

Select Physical Therapy 3,194 11.79% 12/01/1990 09/30/2022 $14.57 $3,878 $46,537 10/01/2019 $47,463 NNN Two, Three-Year

Check Smart 4,836 17.85% 10/01/2013 12/31/2023 $18.54 $7,472 $89,659 01/01/2020 $92,349 NNN One, Five-Year

Clear Channel Outdoor Inc. (Billboard) 0 0.00% 02/15/2003 02/14/2023 N/A $700 $8,400 02/15/2021 $9,000 Gross None

Vacant 1,021 3.77%

Total Occupied 26,078 96.23% $30,802 $369,629

Total Vacant 1,021 3.77% $0 $0

Total 27,099 100.00% $30,802 $369,629

PLAZAGEORGE THOMAS

15

PRICING DETAIL & OPERATING DATA

George Thomas Plaza1004 N Shadeland Ave., Indianapolis, IN 46219

List Price $4,195,000

CAP Rate 8.25%

Price/SF $155

Net Operating Income $346,169

Gross Leasable Area (GLA) 27,099 SF

Occupancy 96.23%

Scheduled Base Rental Income $369,629

Expense Reimbursement Income

CAM $40,175

Insurance $21,802

Real Estate Taxes $47,731

Management Fees $20,830

Total Reimbursement Income $130,538

Additional Income from Pylon Sign $1,500

Effective Gross Revenue $501,667

Less: Operating Expenses ($155,498)

Net Operating Income $346,169

Less: Assumable Debt Service ($192,211)

Net Cash Flow After Debt Service 10.37% $153,958

Principal Reduction $70,534

Total Return 15.12% $224,492

CURRENT OPERATING DATA

Loan Type Assumption

Master Servicer Key Bank RECM

Start Date November 1, 2016

Maturity Date October 1, 2026

Original Loan Amount $2,870,000

Interest Rate | Term | Amortization 4.54% | 10-Years | 25-Years

Estimated Down Payment 35% | $1,485,000

Estimated Loan Amount 65% | $2,710,000

Debt Coverage Ratio 1.80

LOAN INFORMATION


Operating Expenses Current Per/SF

Co

mm

on A

rea

Main

tenance

Electric $15,615 $0.58

Water/Sewer $3,263 $0.12

Trash Removal $6,945 $0.26

Snow Removal $3,205 $0.12

Landscaping $6,013 $0.22

Lot Sweeping $7,344 $0.27

Lighting Repairs $327 $0.01

General R&M $3,283 $0.12

Service Contracts $230 $0.01

Total CAM Expenses $46,225 $1.71

Insurance Premium $25,086 $0.93

2018 Real Estate Taxes* $54,920 $2.03

Management Fee (5% of EGI) $23,967 $0.88

Estimated Reserves $5,300 $0.20

Total Expenses $155,498 $5.74

PLAZAGEORGE THOMAS

*Taxes based on 2018 value of $1,890,700




03DEMOGRAPHICS & MARKET

OVERVIEW

17

Indianapolis+/- 7 Miles

Population

8,104

Population

77,585

Population

229,104

Employees

9,954

Employees

83,588

Employees

205,768

18

DEMOGRAPHIC OVERVIEW


Source: © 2017 Experian

Created on August 2018

PLAZAGEORGE THOMAS

POPULATION 1 Miles 3 Miles 5 Miles

▪ 2022 Projection

Total Population 8,199 76,380 229,763

▪ 2017 Estimate


▪ 2010 Census


▪ 2000 Census


▪ Current Daytime Population

2017 Estimate 9,954 83,588 205,768

HOUSEHOLDS 1 Miles 3 Miles 5 Miles

▪ 2022 Projection

Total Households 3,717 31,896 90,577

▪ 2017 Estimate


Average (Mean) Household Size 2.14 2.39 2.53

▪ 2010 Census


▪ 2000 Census


▪ Occupied Units

2022 Projection 3,717 31,896 90,577

2017 Estimate 4,112 36,260 103,380

HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles

▪ 2017 Estimate

$150,000 or More 2.58% 2.42% 2.53%

$100,000 - $149,000 8.50% 6.48% 6.30%

$75,000 - $99,999 8.31% 8.45% 8.49%

$50,000 - $74,999 17.73% 18.47% 17.90%

$35,000 - $49,999 18.51% 17.66% 16.30%

Under $35,000 44.36% 46.53% 48.47%

Average Household Income $52,980 $48,852 $48,216

Median Household Income $39,463 $37,827 $36,260

Per Capita Income $24,253 $20,265 $18,833

HOUSEHOLDS BY EXPENDITURE 1 Miles 3 Miles 5 MilesTotal Average Household Retail Expenditure

$52,625 $50,993 $50,525

▪ Consumer Expenditure Top 10 Categories

Housing $14,043 $13,653 $13,466

Transportation $9,329 $9,231 $9,133

Shelter $8,012 $7,843 $7,745

Food $5,705 $5,653 $5,560

Health Care $4,341 $3,760 $3,601

Personal Insurance and Pensions $4,150 $4,220 $4,116

Utilities $3,157 $3,071 $3,034

Entertainment $2,305 $2,260 $2,185

Household Furnishings and Equipment

$1,429 $1,368 $1,342

Cash Contributions $1,366 $1,081 $1,031

POPULATION PROFILE 1 Miles 3 Miles 5 Miles

▪ Population By Age

2017 Estimate Total Population 8,104 77,585 229,104

Under 20 20.92% 26.31% 29.31%

20 to 34 Years 16.27% 20.17% 20.93%

35 to 39 Years 4.91% 6.59% 6.56%

40 to 49 Years 12.74% 13.02% 12.53%

50 to 64 Years 22.96% 20.83% 18.86%

Age 65+ 22.23% 13.09% 11.81%

Median Age 46.64 37.65 34.82

▪ Population 25+ by Education Level

2017 Estimate Population Age 25+ 5,986 52,471 147,110

Elementary (0-8) 3.73% 3.62% 4.31%

Some High School (9-11) 13.31% 13.82% 14.95%

High School Graduate (12) 37.94% 36.27% 35.69%

Some College (13-15) 21.22% 19.67% 20.71%

Associate Degree Only 4.64% 7.39% 7.19%

Bachelors Degree Only 10.54% 12.62% 11.25%

Graduate Degree 8.15% 5.56% 4.63%

19

DEMOGRAPHIC OVERVIEW

Source: © 2017 ExperianMarcus & Millichap makes no representations as to the accuracy of the information contained herein. Buyer must verify all information and bears all risk for any inaccuracies.

MARKETING TEAM

PLAZAGEORGE THOMAS

Income

In 2017, the median household income for your selected geography is

$36,260, compare this to the US average which is currently $56,286.

The median household income for your area has changed by 5.30%

since 2000. It is estimated that the median household income in your

area will be $41,441 five years from now, which represents a change

of 14.29% from the current year.

The current year per capita income in your area is $18,833, compare

this to the US average, which is $30,982. The current year average

household income in your area is $48,216, compare this to the US

average which is $81,217.

Population

In 2017, the population in your selected geography is 229,104. The

population has changed by 0.93% since 2000. The current population

is 47.68% male and 52.32% female. The median age of the

population in your area is 34.82, compare this to the US average

which is 37.83. The population density in your area is 2,912.86 people

per square mile.

Households

There are currently 88,947 households in your selected geography. It

is estimated that the number of households in your area will be

90,577 five years from now, which represents a change of 1.83%

from the current year. The average household size in your area is 2.53

persons.

Employment

In 2017, there are 205,768 employees in your selected area, this is

also known as the daytime population. The 2000 Census revealed

that 51.95% of employees are employed in white-collar occupations

in this geography, and 47.96% are employed in blue-collar

occupations. In 2017, unemployment in this area is 6.64%. In 2000,

the average time traveled to work was 25.00 minutes.

Race and Ethnicity

The current year racial makeup of your selected area is as follows:

47.34% White, 41.58% Black, 0.04% Native American and 0.96%

Asian/Pacific Islander. Compare these to US averages which are:

70.42% White, 12.85% Black, 0.19% Native American and 5.53%

Asian/Pacific Islander. People of Hispanic origin are counted

independently of race.

People of Hispanic origin make up 10.19% of the current year

population in your selected area. Compare this to the US average of

17.88%.

Housing

The median housing value in your area was $91,703 in 2017, compare

this to the US average of $193,953. In 2000, there were 53,712 owner

occupied housing units in your area and there were 35,869 renter

occupied housing units in your area. The median rent at the time was

$434.

Source: © 2017 Experian

20Source: © 2017 ExperianMarcus & Millichap makes no representations as to the accuracy of the information contained herein. Buyer must verify all information and bears all risk for any inaccuracies.

MARKET OVERVIEW

INDIANAPOLISOVERVIEW

The Indianapolis metro houses the state capitol and is a growing tech

hub. Situated in central Indiana, the market consists of 11 counties:

Marion, Johnson, Hamilton, Boone, Hendricks, Morgan, Hancock,

Shelby, Brown, Putnam and Madison. The metro lacks formidable

development barriers, except for the several rivers and creeks that

traverse the region. Marion County is home to Indianapolis, which

contains a population of approximately 859,200 people. Carmel in

Hamilton County is the second most populous with more than 91,000

residents. A large portion of the surrounding counties are rural,

offering builders ample land for residential and commercial

development. Population growth is primarily concentrated to the

northern suburbs and west of the city.

METRO HIGHLIGHTS

PREMIER DISTRIBUTION HUB

Around 50 percent of the U.S. population lies within

a one-day drive of Indianapolis, making it a center

for the transportation of goods.

MAJOR HEALTH SCIENCES CENTER

Eli Lilly & Co., Roche Diagnostics Corp. and

Covance Inc. maintain operations in the region,

among other major health-related employers.

LOW COST OF DOING BUSINESS

Indianapolis’ costs are far below national averages,

attracting businesses and residents to the area.

PLAZAGEORGE THOMAS

21

MARKET OVERVIEW


ECONOMY▪ Indianapolis’ economy has diversified from manufacturing into a variety of other industries,

including a growing tech sector underpinned by Salesforce.com.

▪ The metro is one of the key health-sciences centers in the nation, anchored by several

pharmaceutical and life-sciences companies including Ely Lilly and Roche Diagnostics.

▪ The metro is accessible to a large portion of the nation in one day by ground or air, making

the region a burgeoning logistics and distribution hub.

▪ Annual GMP growth rate tops the national level, a trend that is set to persist next year.

SHARE OF 2017 TOTAL EMPLOYMENT

MAJOR AREA EMPLOYERS

Eli Lilly & Co.

Indiana University Health

Rolls-Royce Corp.

Community Health

Cummins

Kroger

IUPUI

FedEx

Roche Diagnostics

Finish Line* Forecast

MANUFACTURING

9%GOVERNMENT

HEALTH SERVICES

EDUCATION AND

+OTHER SERVICES

4%

LEISURE AND HOSPITALITY FINANCIAL ACTIVITIES

21%

AND UTILITIES

TRADE, TRANSPORTATION CONSTRUCTION

PROFESSIONAL AND

BUSINESS SERVICES

1%INFORMATION

15%

5%

12% 10% 7%

15%

PLAZAGEORGE THOMAS

22

MARKET OVERVIEW


DEMOGRAPHICS

SPORTS

EDUCATION

ARTS & ENTERTAINMENT

▪ The metro is expected to add nearly 118,100 people through 2022, which will result

in the formation of nearly 52,000 households, generating demand for housing.

▪ A median home price below the national level has produced a homeownership rate

of 65 percent, which is slightly above the national rate of 64 percent.

▪ Roughly 31 percent of people age 25 and older hold bachelor’s degrees; among

those residents, 11 percent also have earned a graduate or professional degree.

Indianapolis offers residents many big-city amenities in an affordable, small-town

atmosphere. The city is home to several high-profile auto races, including the Indianapolis

500 and Brickyard 400. Races are hosted at the Indianapolis Motor Speedway and the

Lucas Oil Raceway at Indianapolis. The metro has two major league sports teams: the

Indianapolis Colts (NFL) and the Indiana Pacers (NBA). The area also has a vibrant cultural

and arts scene, with more than 200 art galleries and dealers, the Indianapolis Symphony

Orchestra and a variety museums, including the Eiteljorg Museum of American Indians and

Western Art. Additionally, the Children’s Museum of Indianapolis is one of the largest

children’s museums in the world.

QUALITY OF LIFE

2017 Population by Age

0-4 YEARS

7%5-19 YEARS

21%20-24 YEARS

6%25-44 YEARS

28%45-64 YEARS

26%65+ YEARS

13%

* Forecast

Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody’s

Analytics; U.S. Census Bureau

36.4

2017MEDIAN AGE:

U.S. Median:

37.8

$55,600

2017 MEDIAN HOUSEHOLD INCOME:

U.S. Median:

$56,300

2M

2017POPULATION:

Growth2017-2022*:

5.8%

779K

2017HOUSEHOLDS:

6.7%

Growth2017-2022*:

PLAZAGEORGE THOMAS

23

MARKET OVERVIEW


Robust employment growth, household formation trigger development in the

market’s northern sections. With job creation accelerating over the past four

quarters, the metro’s unemployment rate contracted under 3 percent. Employment

growth in education and health services and in professional and business services

was most pronounced as each sector added over 6,000 positions. This surge in job

creation supported another 12-month span of strong development, as 1.1 million

square feet of retail space was delivered. The northern submarkets remain an area of

focus for developers as household formation in these parts is intense. Many new

retail structures consisted of quick-service restaurants, including Blaze Pizza and

Portillo’s. IKEA also established a presence in the past year.

Increased vacancy in outer-ring suburbs leads to sliding rents. As construction

remained heightened, vacancy posted a slight uptick in the past 12 months. Supply

additions in the Far West Counties and Northwest County submarkets surpassed

demand, supporting the market’s overall rise. As vacancy increased, Indianapolis

experienced declining rents, particularly in the Northeast County submarket, where

retail development was elevated and landlords dropped rents to attract new tenants.

• Due to uncertainty surrounding the eventual passage of tax reform last year,

transaction velocity eased in the past four quarters. Despite buyers and

sellers being wary of potentially revised tax provisions, cap rates continued

to tighten, as the measure dropped 10 basis points to 7.4 percent.

• California investors remain highly interested in Indianapolis due to initial

returns up to 400 basis points higher than their local metros. Recently, they

placed emphasis on neighborhood centers in Carmel and Fishers, where

household growth is prominent. Here, cap rates sit in the 7 percent range.

• Local buyers continue to drive the market’s deal flow, with many of these

investors focusing on properties under the $2 million mark. Strip malls in the

Meridian Street corridor extending south from Pleasant Run to County Line

Road remain attractive as assets in this area offer high-traffic locations. Cap

rates in the high-8 percent realm can be attained for these retail centers.

Retail 2018 Outlook

INDIANAPOLIS METRO AREA

850,000 sq. ft.

will be completed

4.3% increase in

asking rents

30 basis point

decrease in vacancy

Construction:

Healthy tenant demand drives rents to

$15.11 per square foot. Indianapolis’ average

asking rent still sits $4 below the national

measure.

Strong pre-leasing activity and a reduced

construction pipeline support vacancy

compressing to 4.9 percent, following the

50-basis-point rise last year.

* Cap rates trailing 12 months through 2Q17; 10-year Treasury rate through Aug.

Sources: CoStar Group, Inc.; Real Capital Analytics

Although development slows after 1.2 million

square feet delivered last year, 2018 marks

the fourth straight year of at least 800,000

square feet completed.

Vacancy:

Rents:

Investment Trends

PLAZAGEORGE THOMAS

24

MARKET OVERVIEW


• Indianapolis employers added 19,000 workers to payrolls in the past 12 months, with the education and health services and business and professional services sectors leading the way. Trade, transportation and utilities also recorded strong gains as 3,000 jobs were added.

• Metro unemployment slid roughly 80 basis points to 2.9 percent, well below the national measure of 4.1 percent.

EMPLOYMENT

• The pace of development remained steady in the past 12 months, with builders focusing on northern submarkets as well as the Far South Counties. Strong household formation in these areas attracts retailers.

• The Shoppes at Anson headlines deliveries during the next four quarters. The 300,000-square-foot retail center in Whitestown should be finished by fall 2018.

CONSTRUCTION

• With heightened completions over the past yearlong period, vacancy registered an uptick, pushing the rate to 5.3 percent. This rise follows a 40-basis-point drop in the prior 12-month time frame.

• A lack of retail deliveries in the West County submarket supported a 220-basis-point decrease, contributing to the 480-basis-point drop logged in the past five years.

VACANCY

• As tenants moved into the new, high-quality space, a number of older properties were brought to market, decreasing the average asking rent to $13.58 per square foot. The decline was supported by a 15 percent drop in the Northeast County submarket.

• Despite the metro average falling, West County and South County posted growth rates above 14 percent.

RENTS

decrease in the average asking rent Y-O-Y

3.9%basis point increase in vacancy Y-O-Y20square feet

completedY-O-Y

1.1 millionincrease in total employment Y-O-Y

1.8%

* Forecast

1Q18 - 12-Month Trend


PLAZAGEORGE THOMAS

25

MARKET OVERVIEW


Multi-Tenant Assets Garner Elevated InterestDespite Overall Decline in Transaction Velocity

Outlook: Healthy retail metrics andreduced uncertainty regarding tax reformshould accelerate sales tempo in thecoming months, specifically in the outer-ring submarkets.

Vacancy

Rate

Y-O-Y

BasisPoint

Change

SubmarketAsking

Rent

Y-O-Y%

Change

Austin County 1.6% -960 $12.00 35.3%

Northeast 4.4% 30 $17.49 6.4%

Inner Loop 4.6% 100 $26.18 10.1%

West 5.0% 30 $20.93 1.8%

East 5.5% 70 $13.96 6.3%

Northwest 5.7% 30 $18.66 9.5%

Southeast 5.7% -20 $14.34 1.8%

Southwest 6.2% 20 $15.04 -2.5%

CBD 6.3% 240 $24.27 25.3%

South 6.3% 60 $15.98 -2.3%

North 6.7% 140 $13.64 -14.8%

Overall Metro 5.7% 40 $17.20 1.6%

Submarket Trends

Lowest Vacancy Rates 1Q18

Sales Trends

• Multi-Tenant: As investor demand for multi-tenant assets stayed strong, the average

price per square foot climbed 6 percent to $207. This rise led to the average cap rate

dropping 30 basis points to 8.1 percent.

• Single-Tenant: Limited listings slowed sales tempo by approximately 30 percent in the

past 12 months. During the same period, the average cap rate compressed by 10

basis points to 6.8 percent.

* Trailing 12 months through 1Q18 over previous time period

Pricing trend sources: CoStar Group, Inc.; Real Capital Analytics

* Forecast **2017-2022


PLAZAGEORGE THOMAS

26

MARKET OVERVIEW


• Fed raises benchmark interest rate, plans additional increases. The FederalReserve increased the federal funds rate by 25 basis points in late March, raising theovernight lending rate to 1.5 percent. While the Fed noted the inflation outlookmoderated recently, an upgraded economic forecast including tax cuts and aregulation rollback strengthened growth projections through 2020. As a result, theFed has guided toward at least two more rate hikes this year, while setting the stagefor up to four increases in 2019.

• Lending costs rise alongside Fed rate increase. As the Federal Reserve liftsinterest rates, lenders will face a rising cost of capital, which may lead to higherlending rates for investors. However, greater competition for loan demand hasprompted some lenders to absorb some cost increases. While higher borrowingcosts may prompt buyers to seek higher cap rates, the positive economic outlookshould boost rent growth above inflation over the coming year.

• The capital markets environment remains highly competitive. While the FederalReserve has committed to tightening policy, other major central banks havemaintained easing policies. The downward pressure on rates from foreign centralbanks is counteracting greater economic growth and wider government deficits,keeping demand for fixed-income investments stable. Loan pricing resides in themid-4 percent range with maximum leverage of 70 percent. Portfolio lenders willrequire loan-to-value ratios closer to 65 percent with interest rates, depending onterm, in the high-3 to mid-4 percent range. The passage of tax reform and risingfiscal stimulus will keep the U.S. economy growing strongly this year, while limitednew construction and steady absorption will contain office vacancy near 14 percent.

* Through May 1st

Sources: CoStar Group, Inc.; Real Capital Analytics

Capital Markets


PLAZAGEORGE THOMAS

JOEL DUMESSenior Vice President Investments

Senior Director - National Retail Group

Cincinnati Office

Tel: (513) 878-7720

[email protected]

Licenses: OH SAL.2003013045, KY 63818

STANTON FALKFirst Vice President Investments

Senior Director - National Retail Group

Cincinnati Office

Tel: (513) 878-7721

Fax: (513) 878-7710

[email protected]

Licenses: OH SAL.2012001364

EXCLUSIVELY LISTED BY :

PLAZAGEORGE THOMAS

JOSEPH DISALVOFirst Vice President Investments

Director – National Office & Industrial Properties Group

National Healthcare Group Member

Indianapolis Office

Tel: (317) 218-5334

Fax: (317) 410-8788

[email protected]

Licenses: IN RB14051407

Broker of Record: Josh Caruana

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