WCAI Year In Review Symposium

December 2, 2013

Retail Market Overview

Milwaukee, WI2013

Ross L. Koepsel, CCIMPartner

Commercial Property Associates, Inc.1000 N. Water St.

Suite 160Milwaukee, WI 53202

(414) 271-3298(414) 271-3789 fax

rkoepsel@cpa-wi.com

• Retail-focused brokerage• Founded in 1989• 10 brokers plus support staff• Landlord/buyer/developer representation, Tenant/seller

representation, site selection, investment sales, excess property disposition, distressed assets, sale/leasebacks, subleases, ground leases, etc.

• Retailers represented include: Men’s Wearhouse, AutoZone, Dollar Tree, rue 21, Firehouse Subs, Verizon, Heartland Dental, Caribou Coffee, Fresh Thyme Farmer’s Market, and many more

Major Factors Currently Affecting Retail

• Employment• Interest Rates• Consumer confidence/decreased consumer demand• Housing• Inflation

CCIM Quarterly Market Trends Report

• Projected net absorption of approximately 12 million square feet nationwide.

• Third quarter national vacancy rate fell 10 basis points to 10.6%

Retail Research Market Report

• Local economy to add 10,000 jobs in 2013, adding 1.2% to payrolls year over, while net jobs created remains relatively even compared to 2012

• Approximately 650,000 sf of new retail space will be delivered at year end 2013. This is a decrease of 850,000 sf of new product compared to 2012

• Local vacancy rates will fall 70 basis points to 7.8% as strong national net absorption rates are also witnessed closer to home

• Area retail asking rents will swing slightly in favor of Landlords, adjusting up 0.4% from 2012

Recent Retailer Activity in Southeastern Wisconsin

• Nordstrom, Nordstrom Rack• Sak’s Off Fifth• Wal-Mart Neighborhood Market• Meijer• Hobby Lobby• Ashley Furniture• Ulta• DSW Shoes• Gordman’s• Bed Bath & Beyond• Dick’s Sporting Goods• Big Lots• Planet Fitness• Dollar Tree• TJX Cos• Woodman’s

Retail Development in Southeastern Wisconsin

Under Construction• Mayfair Collection• Drexel Town Square• Wal-Mart SWC Moorland Rd. and Greenfield Ave. New

Berlin – breaking ground soon 152,000 sf Proposed• Ruby Farms/Plaza 173/The Corners in Brookfield• Grafton – north of Costco• Oconomowoc Wal-Mart/Sam’s Club• Phase 3 Shops at Fox River in Waukesha

Largest Lease Deals in 2013

• Hobby Lobby Crossroads SC Menomonee Falls 62,000 sf

• Ashley Furniture 4771 S. 27th St. Greenfield 56,785 sf

• Big Lots 5415 Washington Ave. Racine 39,060 sf • Value Village Badger Plaza Racine 26,041 sf• Jo-Ann Fabrics North Northpointe SC Menomonee

Falls 18,157 sf

Largest Deliveries of Space in 2013

• Woodman’s 1600 E. Main St. Waukesha 230,000 sf

• Wal-Mart 4140 W. Greenfield Ave. West Milwaukee 100,000 sf

• Wal-Mart 5301 S. 76th St. Greendale 92,000 sf• Wal-Mart 222 N. Chicago Ave. South Milwaukee

48,978 sf• TJ Maxx 1160 W. Sunset Dr. Waukesha 24,000 sf

Cap Rates, etc.• Retail cap rates in the area compressed to

8.04% in 2013 from 8.94% in 2012• In first 6 months of 2013, 32 sale transactions

over 15,000 sf occurred vs. 25 during the first 6 months of 2012

• Price on a psf basis rose from $81.50/sf to $93.17/sf

Retail Property Sales

• 3 Wal-Mart anchored properties purchased by Inland Real Estate JV (Wauwatosa, Menomonee Falls, and Milwaukee)

• Sale of combined 174,500 sf for $24,200,000• 9/12/2013

• Nagawaukee Center in Delafield purchased by Ramco-Gershenson Properties Trust from Told Development Co. for $22,650,000 on 4/18/2013

• The 105,921 sf acquisition achieved $213.84/sf• 8% cap

• Washington Square SC Sheboygan sold for $19,000,000

• $128.18/sf, GLA of center 147,086 sf• Sold on 12/26/2012 to Piggly Wiggly by Tom

Schafer

• Pick N Save center 1751 N. Mayfair Rd. Wauwatosa acquired for $16,185,484

• 7.55% cap rate equates to $234.67/sf (68,970 sf)

• Sold 12/21/2012 to Cole Real Estate Investments by West Development Partners

• East Pointe Marketplace downtown Milwaukee $15,235,000 or $264.04/sf

• 57,700 sf sold 11/2/2012• Sold by Mandel Group Inc. to Westwood

Financial Corp• Originally developed 1994

• Cole Credit Property Trust IV, Inc. purchased the Pick N Save 2625 S. Business Dr. in Sheboygan (southside) $14,122,000.

• Sold 9/6/2012 for $201.74/sf (70,000 sf)• Cap rate of 7.73%• Built 2012 – developed by Continental Properties

• Shoppes at Wyndham Village 7780 S. Lover’s Lane in Franklin sold 11/26/13 for $12,800,000

• Sale encompassed the Pick N Save and 3 buildings totaling 96,269 sf

• Purchaser was Cloverleaf Group from Northfield, IL• Sold by Starwood Capital Group

• Ascendant Holdings LLC purchased West Bend Corporate Center from Ripp Properties on 9/25/2012 for $11,475,000

• Property size 127,992 which equates to $89.65/sf• 9.66% cap• Developed in 1998 by Continental Properties

• Meadowbrook Marketplace sold for $10,300,000 on 11/19/2012• GLA of center 104,526 sf, built in 1999• $98.54/sf• 9% cap• 104,526 sf, 92% leased at time of sale• Sold by Styza Properties to a property investment group from

Singapore (Meadowbrook Marketplace LLC)

• Pick N Save at 2931 S. Chicago Ave. in South Milwaukee was sold 11/11/13 for $7,558,000

• Cole Real Estate Investments Inc. purchased from Alexander & Bishop of Oshkosh, WI

• 58,730 sf big box anchors Grant Park Plaza

2014 Forecast

• Retail leasing and sales activity will continue to increase• Net absorption should continue to increase slowly even

with new construction deliveries• Rents for grade A properties will continue to strengthen• Demand and cap rates for single tenant net leased

assets will remain steady due to low inventory• Cap rates for multi-tenant retail should compress an

additional 25 to 50 basis points due to increased demand

Have a Happy and Prosperous 2014

Thank you!!