Sales Leases Investment RENO RETAIL REPORT SPARKS Q Holcomb Ave., Ste Reno, Nevada DicksonCG.

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1 RENO RETAIL REPORT SPARKS Sales Leases Investment Q Holcomb Ave., Ste Reno, Nevada DicksonCG.com

2 LEASING RECAP NEW DEVELOPMENT Northern Nevada s retail market was strong for the second quarter of 2018, with 90,046 sf positive absorption compared to the previous quarter, which had a positive absorption of 42,574 sf. Low vacancy rates have also had a positive impact with the quarter ending at 6.9% while the first quarter of 2018 was at 7.1%. Over the past four quarters, the overall vacancy rate has decreased; however, larger power center space is still in the double-digit vacancy range is bringing new development activity to the market. Developers and retailers are seeing the demand in the housing market and following suit with new retail product. The largest lease signings occurring in Q2 included the 30,112 sf deal signed by Big Lots at Disc Dr; the 10,000 sf deal inked by 5.11 Tactical at The Commons Shopping Center at 6625 S. Virginia St; the 38,326 sf deal by Tractor Supply and the 16,016 sf lease by Harbor Freight both at the Iron Horse Shopping Center at 533 E. Prater Way in Sparks; and finally, the 4,417 sf lease renewal signed by Kelly-Moore at 5318 Sparks Blvd. In the Meadowood submarket, Tolles Development Company is developing the Village at Rancharrah with 65,000 sf of retail and up to 10 restaurants. Over the last four quarters, the average quoted rental rates have gone up in the Reno/Sparks retail market. The quoted rate at the end of the second quarter was $14.12 per SF. In the first quarter the quoted rate was $13.74 per SF, a 2.8% increase over Q1. During the second quarter, there were also two retail buildings completed with a total of 25,063 sf on Avenue Of The Oaks in Silverwing s development at Victorian Square in Sparks. Overall the retail market is strong with national retailers looking to open up stores in the market. NW Reno, SW Reno, Sparks, and N. Valleys are areas getting the most interest. Interest in retail should continue to strong. In South Meadows, Gary Tremaine with Dickson Commercial Group will be pre-leasing a new 45,000 sf retail center at the intersection of Double R and Damonte Ranch Pkwy. Lastly, on Plumb Lane, Reno Land is developing the former Parklane Mall site with 44,000 sf of retail. And directly across the street, industry veteran Doug Wiele is redeveloping and rebranding Shoppers Square into a lifestyle center. Net Absorption 90,046 SF Overall Vacancy Rate 6.9% Shopping Center Vacancy: 7.7% Power Center Vacancy: 13.0% General Retail Vacancy: 4.3% Free Standing

3 INVESTMENT ACTIVITY Despite the negative headlines about the retail market, investor demand in Reno/Sparks continues to be strong. The second quarter of 2018 featured several notable shopping center sales including Smithridge Plaza and The Commons Shopping Center. Smithridge was the largest deal at $30,800,000. and reported cap of 6.5% on a NOI of $2,000,000. The seller reported spending $1,200,000 on capital improvements prior to the sale, including upgrades to the facades, columns, mechanical systems, new asphalt and striping. Notable tenants include Trader Joes, Big Lots and Stein Mart. Just behind that was the 151,877-square foot Commons Shopping Center on S. Virginia which sold after a long marketing period for $28,900,000 ($190 p/sf) or an 8.7% cap rate based on the reported NOI of $2.5m. The center was 91% occupied at the time of sale, and featured several large box space that bordered the freeway that include PetSmart, Total Wine, DSW Shoes, and Guitar Center. It also had a component of inline and shop space that include Starbucks, Massage Envy, AAA, and Sleep Train. The buyer was Cannon Commercial Inc. from Southern California. Smaller neighborhood centers continue to prove popular as we continue to see regional investors with 1031 funds coming from California. Several sales are detailed below and on page 4. NOTABLE SALES Address Price Details Smithridge Plaza/Trader Joe s Center S. McCarran 137,691 SF $30,800,000 ($224 p/sf) Cap rate of 6.5% on a NOI of $2,000,000 Seller spent $1,200,000 on capital improvements prior to sale Commons Shopping Center S. Virginia 151,877 SF $28,900,000 ($190 p/sf) 8.7% cap rate, $2.5M NOI Tenants - Total Wine, DSW Shoes, Guitar Center, Starbucks, Massage Envy, AAA Portion of Marina Marketplace 1495 E. Prater 15,740 SF $4,450,000 ($283 p/sf) 6.75% cap rate Tenants - Peg s, Subway, L & L Barbecue, Taco Del Mar, Maverick Finance, and Great Clips. Franktown Corners Kietzke & Grove 44,425 SF $4,150,000 ($93 p/sf) Part of a 3-property portfolio sale

4 5 LEASES SALES NOTABLE LEASES 8 1. Big Lots Disc Dr 30,112 SF 2. Iron Horse Shopping Center Tractor Supply Co 533 E Prater Way 38,326 SF 3. Iron Horse Shopping Center Harbor Freight 6625 S. Virginia St 16,016 SF 4. The Commons Shopping Center 5.11 Tactical 6625 S. Virginia St 10,000 SF 5. Kelly-Moore 5318 Sparks Blvd 4,417 SF 9 NOTABLE SALES 6 N Smithridge Plaza 7. Commons 5057 S McCarran Blvd 137,691 SF $30,800,000 ($224 p/sf) Shopping Center 6625 S Virginia St 151,877 SF $28,900,000 ($190 p/sf) 8. Portion of Marina 9. Franktown Corners Marketplace 1495 E. Prater 15,740 SF $4,450,000 ($283 p/sf) Kietzke & Grove 44,425 SF $4,150,000 ($93 p/sf)

5 Net Absorption Square Feet Vacancy Rates 6.9%