Reno Northern Nevada Year End c o l l i e r s i n t e r n at i o n a l R e n o, N V. r e ta i l A n n u a l R e p o rt

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1 c o l l i e r s i n t e r n at i o n a l R e n o, N V Trends Report r e ta i l A n n u a l R e p o rt Retail Industry Fundamentals Remain Strong In 2008 Market Indicators Direct Vacancy Sublease Vacancy Total Vacancy Net Absorption Construction 4Q Q 2008 * Overview For the first half of 2007, cash registers kept ringing up sales in spite of the wobbly housing market, soaring gasoline prices and high levels of debt. Although consumer confidence began to diminish later in the year, some retailers continued to seek expansion opportunities while others pulled back. Signs of weakness began appearing toward year end as lease-up times grew longer, mom and pop and start-up activity diminished and rents in many properties slid backwards for the first time in years. The good news is that locally, retail industry fundamentals remained strong as most new developments planned or under construction were infill sites or catching up to the housing boom of the last several years. Vacancy While activity slowed from the pace of the past five years, Washoe County had positive absorption of approximately 600,000 in a total inventory of million tracked by Colliers. The vacancy increased from 7.9% year-end 2006 to 8.17%. Overall average monthly asking rents rose slightly to $1.84 with shop space rent in prime, street-front and end-cap locations reaching up to $3.50 per foot. Annual ground rents for full service restaurant pads soared up to $175,000 in the new regional open-air centers while purchasing pad sites became almost impossible. Development costs such as water rights, sewer hook up fees and Regional Transportation fees increased significantly, raising already high development costs, especially for restaurants. Rental Rate *Projected VACANCY VS RENTAL RATE 10.0% $ % $ % $1.76 $1.77 $1.84 $ % $ % $ % 7.80% 8.05% 8.17% 2Q 07 3Q 07 4Q 07 $0.00 OverallVacancy Average Asking Rent 17

2 Pyramid Highway Submarket Map Key ID SUBMARKET 1 South Meadows 2 Meadowood 3 Southwest Reno 4 Downtown 5 Airport 6 West Reno 7 Sparks 8 Northwest Reno Construction 740,000 of retail space was completed in Cabela s opened their 125,000 foot super fishing and hunting store, considered the Disneyland for outdoor enthusiasts. All eyes are on them as they are the first development in the state to take advantage of STAR bonds where they can keep up to 75 percent of the sales tax gened by their store over 20 years to re-pay the bonds. It is estimated that they will attract up to 3 million additional visitors annually. Stores were also added throughout the year at Sparks Galleria, Sparks Crossing, Spanish Springs Shopping Center; Phase II of Ridgeview Plaza, Summit Sierra and Damonte Ranch Town Center. Active Tenants Due to the aging of baby boomers, drug stores are one of the strongest sectors in retail and remained active throughout the year. Long s acquired the area s Rite-Aids, CVS Caremark (the nation s largest drug store chain) aggressively sought new locations and Walgreen s continued to expand. Trader Joe s opened their second location in Douglas County and PetsMart, Ross, Famous Footwear, Office Depot, Charlotte Russe, Starbucks, Red Robin, California Automobile Association and Lowe s in Fernley added new stores and restaurants to the trade area. The Vitamin Shoppe, Massage Envy and Galaxy Theaters in Carson City opened their first stores in our market. Store closings were minimal throughout the year and included TinStar and Charley s Steakery in Summit Sierra, New Balance and Rick s Furniture, although reopening under another name in a smaller location. Under Construction As of first 2008, approximately 856,000 of retail space is under construction including Legends at Sparks Marina, which is easily the largest retail development in the history of Sparks and will total over 1.1 million upon completion. It is estimated that the development could increase the city s sales tax revenue by 50%. Deals are reportedly done with Target, Best Buy, T-Rex, Imax 13-Screen Theater, Saddle Ranch Chop House, ard House, Brooks Brothers, Off Broadway Shoes, Olympia Gaming with 40 to 50 other retailers and restaurants in various stages of negotiations. Scheels All Sports, 248,000 and advertised as the largest sporting goods store in the world, will open fall 2008 with the balance of the center opening in Wal-Mart recently pulled out of out of the development as they cut back store expansions nationally. Other significant retail developments under construction are comprised of Eagle Landing, Los Altos Crossing, Pioneer Meadows, Sparks Galleria Phase II, Summit Sierra Phase II and Virginia Plaza. Another 2.84 million is proposed over the next few years. New/Expanding Tenants The downturn in residential growth hasn t stopped the aggressive roll out of British retailing giant Tesco s new U.S. venture, Fresh & Easy Neighborhood Market. Tesco is the third largest retailer in the world with 3200 stores in 12 countries. The openings of 14 new stores in Southern California and Las Vegas in December marked a major milestone for the company. Analysts believe Tesco could have up to 1,000 stores within the next five MARKET ACTIVITY SIGNIFICANT Year End Transactions Significant LEASES Property Address DAte square Feet tenant type 5150 Mae Anne Ave. 10/ ,000 kohl s Community Center Kietzke Lane ,096 kietzke Furniture Community Center 5150 Mae Anne Ave ,537 ross Community Center Significant SALES Property Address DAte square Feet buyer/seller type S Virginia Street ,054 kimco Realty Corp./Wall Street Properties Retail Vista Blvd ,782 kimco Realty Corp./Wall Street Properties Retail 1610 SE Robb Drive ,800 Kimco Realty Corp./Wall Street Properties Retail 18

3 6.29% 9.43% 22.17% 15.72% 8.51% 10.06% 4.47% 4.47% 28.00% 54.08% 7.13% 7.12% 8.28% 8.54% 16.24% 16.29% 54.13% 60.56% 3.25% 3.97% 0.43% 7.83% 75.21% 8.71% 8.66% 3.97% 3.80% 4.90% 6.17% RETAIL AT A GLANCE GLA (SF): 14,046,877 OVERALL VACANCY RATE: 8.17% ABSORPTION: 600,000± COMPLETED 2007: 503,254 UNDER CONSTRUCTION: 856,291 PROPOSED/PLANNED: 2,838,491 AVERAGE MONTHLY RENTS: $1.84 MONTHLY RENTS (NEW): $ $3.50 LAND VALUES (FINISHED): $11 - $22 PSF MONTHLY NNN S: $ $0.77 years as 500 deals are already signed with 32 in Las Vegas alone. The exciting news is that Northern Nevada is on their radar. Whole Foods, that acquired Wild Oats in 2007, is under construction with their first location in Reno as they complete their 50,000 foot prototype in a portion of the old Shopko building on South Virginia. They are scheduled to open early summer while the existing Wild Oats store is expected to close. Other active and possible expanding tenants include: Best Buy Bonefish Grill Burlington Coat Factory CVS Home Depot Kohl s Office Depot Quick serve and fast food restaurants Raley s Ross Sephora Sports Authority Sportsman s Warehouse Staples Target Walgreen s 2008 Forecast The year started laden with more store closing announcements and news of retailers slowing expansion plans. There appears to be a wave of conservatism that is hitting the consumer; however, there are a significant number of retailers that will continue to stay healthy through this cycle as they have been through it before. Many successful retailers will pull back somewhat and focus on existing unit profitability. Store closings do create opportunities for some tenants that have learned how to be successful in their niche and will now be able to get locations not available to them in the past. Landlords with marginally functioning shopping centers will also have the opportunity to redevelop and reinvent their properties. Are we over-retailed yet? We are asked that question more than any other. Retailers were just meeting the demands of the consumer, who were addicted to credit and therefore boosted retail sales the last several years. Now that credit has almost disappeared, consumers are spending less. An interesting question is whether people will continue to live on less once the economy turns around. If that is the case, then we will all be able to determine if we are over-retailed. Caution and uncertainty will most likely characterize Although it has never been so difficult to make projections, I believe the local retail market should stay in remarkably good shape. Hopefully, vacancy s will remain stable with a possibility of inching up. Rents, particularly in new developments with excess shop space and older B &C properties, could decrease slightly and Landlords may need to consider incentives as retail brokers report that some tenants are now pushing back on rents, re-trading deals and even trying to renegotiate existing leases. And while the tenant pool may drop off to some extent with lease-up times and negotiations taking longer, deals will get done. The housing market will eventually recover and retail will once again have rooftops to follow. Total Vacancy Rates By Submarket 4Q2007 vs 3Q2007 TOTAL VACANCY RATE % % % % % 25.00% % % Airport Kietzke Meadowood North Valleys NE Reno NE Sparks NW Reno Park Lane Reno Redev. South Reno South Virginia SW Reno Sparks Industrial Spanish Springs Sparks Redev. West Sparks Q07 4Q07 19

4 Retail MARKET STATISTICS fourth QUARTER 2007 EXISTING PROPERTIES direct vacancy Sublease vacancy total vacancy Net Absorption Construction class bldgs total inventory 4Q2007 Rate prior current occupied Q2007 year to date completed this under const. rent average asking COMMUNITY CENTER Airport $0.00 Kietzke 1 275,400 71, % - 71, % 46.77% 203,431 56, $1.25 Meadowood 5 768,585 48, % - 48, % 7.97% 719,916 12, ,000 $1.95 North Valleys $0.00 NE Reno 1 35,000 35, , % - (2,824) - 19,617 - $2.65 NE Sparks 2 439,526 38, % 2, % 40, % 9.57% 398,853 1, $1.85 NW Reno 1 273,960 5, % - 5, % 1.96% 268, $2.50 Park Lane 1 233, , % - 114, % 46.33% 118,196 (6,928) $1.25 Reno Redev $0.00 South Reno $0.00 S. Virginia 1 92, % 92, $0.00 SW Reno $0.00 Spanish Springs $0.00 Sparks Redev $0.00 West Sparks 4 918, , % - 118, % 13.42% 799,666 4, ,000 $2.00 Total 15 2,760, , % 2, % 362, % 12.84% 2,600,758 66,326-19,617 72,000 $1.74 FREESTANDING Airport $0.00 Kietzke 3 52, , $0.00 Meadowood 2 243, , $0.00 North Valleys $0.00 NE Reno $0.00 NE Sparks 1 17, , $0.00 NW Reno 1 125, , , ,000 - $0.00 Park Lane 4 81,157 11, % - 11, % 27.13% 69,542 10, $1.35 Reno Redev. 3 60,067 36, % - 36, % 59.93% 24, $0.00 South Reno $0.00 S. Virginia $0.00 SW Reno $0.00 Spanish Springs $0.00 Sparks Redev $0.00 West Sparks 1 106, , $0.00 Total ,264 47, % - 47, % 10.34% 638, , ,000 - $1.35 REGIONAL CENTER Airport $0.00 Kietzke $0.00 Meadowood $0.00 North Valleys $0.00 NE Reno $0.00 NE Sparks $0.00 NW Reno $0.00 Park Lane $0.00 Reno Redev $0.00 South Reno 1 613,800 11, % - 11, % 1.84% 602, ,001 $3.33 S. Virginia $0.00 SW Reno $0.00 Spanish Springs $0.00 Sparks Redev $0.00 West Sparks $0.00 Total 1 613,800 11, % - 11, % 1.84% 602, ,001 $

5 Retail MARKET STATISTICS fourth QUARTER 2007 EXISTING PROPERTIES direct vacancy Sublease vacancy total vacancy Net Absorption Construction rent class bldgs total inventory 4Q2007 Rate prior current occupied Q2007 year to date completed this under const. average asking POWER CENTER Airport $0.00 Kietzke 2 433,277 59, % 7, % 67, % 16.38% 366,142 3, $1.65 Meadowood 6 1,518,736 16, % 28, % 45, % 2.98% 1,473,360 (54) $2.13 North Valleys $0.00 NE Reno $0.00 NE Sparks ,000 $0.00 NW Reno 2 463, , $0.00 Park Lane $0.00 Reno Redev $0.00 South Reno 2 747,629 3, % - 3, % 743,972 (3,657) ,530 $0.00 S. Virginia $0.00 SW Reno $0.00 Spanish Springs 3 1,048,528 42, % - 42, % 3.98% 1,005,938 (6,959) - 12,000 92,014 $2.83 Sparks Redev $0.00 West Sparks 2 172,991 15, % - 15, % 8.67% 157, $1.00 Total 17 4,384, , % 36, % 173, % 3.95% 4,210,681 (6,820) - 12, ,544 $1.97 SPECIALITY RETAIL Airport $0.00 Kietzke 1 24, ,753 1, $0.00 Meadowood $0.00 North Valleys $0.00 NE Reno $0.00 NE Sparks 1 12, , $0.00 NW Reno $0.00 Park Lane ,000 $0.00 Reno Redev. 2 31,212 30, % - 30, % 95.74% ,000 - $2.50 South Reno 1 94, , $0.00 S. Virginia $0.00 SW Reno $0.00 Spanish Springs $0.00 Sparks Redev. 1 12,764 9, % - 9, % 7.83% 3,164 (8.600) $1.65 West Sparks Total 6 176,029 39, % - 39, % 11.92% 136,035 (7,279) - 12,000 52,000 $2.30 STRIP RETAIL Airport 2 85,384 16, % - 16, % 13.83% 68,580 (5,508) $2.30 Kietzke 2 66,539 11, % - 11, % 17.48% 54, $1.00 Meadowood ,081 41, % - 41, % 5.43% 469,416 (13,899) $1.75 North Valleys 4 76,671 31, % - 31, % 34.22% 45,320 (5,115) $1.50 NE Reno 2 52,672 12, % - 12, % 13.77% 40,257 (5,160) $1.75 NE Sparks 7 190,364 16, % - 16, % 8.49% 174, $2.25 NW Reno 9 286, , % 6, % 118, % 37.58% 167,558 (10,805) $1.85 Park Lane ,457 22, % 2, % 24, % 3.93% 500,935 (3,897) $1.55 Reno Redev. 2 31,639 8, % - 8, % 17.86% 23,589 (2,400) ,473 $2.75 South Reno 7 155,398 38, % - 38, % 21.42% 116,782 (5,337) ,650 $2.10 S. Virginia 1 13, ,228 13, $0.00 SW Reno 3 45, , $0.00 Spanish Springs 2 86,162 7, % - 7, % 13.48% 78,752 14, ,228 $0.00 sparks indust. 1 5, ,099 5,099-5,099 49,518 $0.00 sparks redev $0.00 West Sparks 2 198,803 6, % - 6, % 2.24% 192,765 (1,578) $0.85 Total 69 2,330, , % 8, % 333, % 12.27% 1,997,310 (20,783) - 5, ,869 $

6 Retail MARKET STATISTICS fourth QUARTER 2007 EXISTING PROPERTIES direct vacancy Sublease vacancy total vacancy Net Absorption Construction rent class bldgs total inventory 4Q2007 Rate prior current occupied Q2007 year to date completed this under const. average asking NEIGHBORHOOD CENTER Airport 1 102, % % 101,957 (950) $2.15 Kietzke 1 106, % 106, $2.15 Meadowood 1 67, , % 3, % 6.87% 64,090 1, $2.80 North Valleys 4 338,847 10, % - 10, % 2.70% 328,399 (1,308) $2.10 NE Reno $0.00 NE Sparks 3 457,617 22, % - 22, % 4.68% 434,895 (1,312) $1.45 NW Reno 4 474,874 13, % 1, % 14, % 2.38% 460,304 (3,245) $2.30 Park Lane 1 102,938 2, % - 2, % 2.43% 100, $1.65 Reno Redev $0.00 South Reno 4 458,110 28, % - 28, % 4.95% 429,600 (5,854) $1.95 S. Virginia $0.00 SW Reno 2 182,480 14, % - 14, % 6.13% 168,398 (2,891) $1.50 Spanish Springs 2 218,866 1, % - 1, % 0.69% 217, ,877 $1.60 Sparks Redev $0.00 West Sparks 3 309,360 8, % - 8, % 1.94% 301,020 (2,340) $1.87 Total 26 2,819, , % 4, % 106, % 3.24% 2,713,089 (15,529) ,877 $1.86 PROPERTY TYPE TOTALS Airport 3 188,291 17, % - 17, % 6.29% 170,537 (6,458) $2.30 Kietzke , , % 7, % 150, % 22.17% 808,353 62, $1.25 Meadowood 27 3,109, , % 31, % 138, % 4.47% 2,970, ,000 $1.75 North Valleys 8 415,518 41, % - 41, % 8.51% 373,719 (6,423) $1.85 NE Reno 3 87,672 47, % - 47, % 28.00% 40,257 (7,984) - 19,617 - $2.65 NE Sparks 14 1,117,587 77, % 2, % 79, % 7.13% 1,038, ,000 $1.35 NW Reno 17 1,623, , % 7, % 138, % 8.28% 1,484, , ,000 - $2.00 Park Lane , , % 2, % 153, % 16.24% 789,111 (426) ,000 $1.28 Reno Redev ,918 74, % - 74, % 54.13% 48,474 (2,400) - 12,000 18,473 $2.75 South Reno 15 2,069,437 82, % - 82, % 3.25% 1,987,361 (14,848) ,181 $2.22 S. Virginia 2 105, % 105,326 13, $1.00 SW Reno 5 228,398 14, % - 14, % 4.90% 214,316 (2,891) $1.45 Spanish Springs 1 5, , ,518 $0.00 sparks indust. 7 1,353,556 51, % - 51, % 3.97% 1,302,056 7,630-12, ,119 $2.83 sparks redev. 1 12,764 9, % - 9, % 7.83% 3,164 (8,600) $1.65 West Sparks 12 1,706, , % % 147, % 8.71% 1,558, ,000 $1.87 MARKET TOTAL ,046,877 1,096, % 51, % 1,147, % 8.05% 12,899, , , ,291 $1.84 Quarterly Comparison and Totals Q ,046,877 1,096, % 51, % 1,147, % 8.05% 12,899, , , ,291 $1.84 Q ,863,911 1,071, % 44, % 1,116, % 7.80% 12,747,715 37,795-50, ,390 $1.77 Q ,785,274 1,037, % 37, % 1,075, % 7.20% 12,709, , ,701 1,144,894 $1.76 Q ,484, , % 19, % 988, % 12,496, $

7 Market Overview RETAIL CENTERS: UNDER CONSTRUCTION/PLANNED/PROPOSED Significant CENTERS UNDER CONSTRUCTION Project Square Feet Spanish Springs Shopping Center 7,200 Paradise Plaza 7, S McCarran Blvd. (old SPCA) 10,800 Wild Creek Commerce Center 14,600 Montage 18,473 Los Altos Crossing 27,028 Galena Crossing 28,650 Summit Sierra 34,001 Stanford Crossing 43,737 Towne Center at Virginia Lake 52,000 Pioneer Meadows 57,000 Eagle Landing 67,564 Sparks Galleria 87,042 Legends at Sparks Marina 248,000 Significant CENTERS Planned/Proposed (over 10,000 SF) Project Square Feet Double R Galleria 12,000 Paradise Plaza 14,500 Sharlands Centre Point 17,000 Somersett Town Square 19,617 Kiley Ranch Marketplace 24,000 Airport Gateway 24,400 Calle De La Plata 28,520 North McCarran Crossing 29, S Virginia Street 30,928 Stead Crossing 32,500 Somersett 35,000 Summit Sierra 52,500 Damonte Ranch Town Center 55,000 Northtowne Commons 59,432 Canyon Center 59,806 Longley Town Center 60,500 Shoppers Square 62,300 Pioneer Meadows 81,950 Village at Whites Creek 90,000 Sparks Galleria 112,272 Damonte Ranch Town Center 174,982 Super Wal-Mart 225,000 Reno Design District 255,848 Kiley Ranch Marketplace 516,000 Legends at Sparks Marina 876, offices in 57 countries on 6 continents USA 95 Canada 17 Latin America 17 Asia Pacific 53 EMEA 85 $63.5 billion in annual transaction volume million under management 10,171 Professionals Contact information Double R Boulevard Suite 100 Reno, NV United States Tel: Fax: Roxanne Stevenson Senior Vice President Retail Properties rstevenson@colliersreno.com Tel: Krystal Christiaens Research Analyst kchristiaens@colliersreno.com Tel: This report and other research materials may be found on our website at This ly report is a research document of Reno, NV. Questions related to information herein should be directed to the Research Department at Information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Colliers Nevada, LLC dba is an independently owned and oped business and a member firm of Property Consultants, an affiliation of independent companies with 267 offices throughout 57 countries worldwide. 23