Sandusky Land - Interchange Location

OFFERING MEMORANDUM

CONFIDENTIALITY AND DISCLAIMER 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. NON-ENDORSEMENT NOTICE 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.

TABLE OF CONTENTS Section 1 PRICING AND FINANCIAL ANALYSIS Section 2 PROPERTY DESCRIPTION Section 3 DEMOGRAPHIC ANALYSIS Section 4 MARKET OVERVIEW

PRICING AND FINANCIAL ANALYSIS Sandusky Land - Interchange Location

PRICING AND FINANCIAL ANALYSIS FINANCIAL OVERVIEW Summary Property Property Address Sandusky Land - Interchange 5500 Milan Road Sandusky, OH 44870 Price Request For Offer Lot Size (SF) 683,456 Lot Size (Acres) 15.6900 Buildable SF 560,000 Number Of Lots 2 Financing FIRST TRUST DEED Loan Type All Cash Lot Dimensions Type of Ownership 15.69 +/- acres Fee Simple Site Description Assessor's Parcel Number 32-03494.024 32-03494.026 Zoning C-1, C-2* Taxes $32,454 Tax Year 2015 Frontage Traffic Counts Adjacent Development Highway, Exit Ramp Visibility 27,380 (SR-2) and 23,050 (US-250) WalMart Supercenter Anchored Retail There are two separate parcels. Parcel 1 (outlined in green): Erie County, OH 32-03494-024, 8.55+/- acres, with vacant movie theater building and parking lot. Parcel 2 (directly below Parcel 1): Erie County, OH 32-03494-026, 7.14+/- acres with visibility from State Route 2 and exit ramp. *Contact agent for Perkins Township Zoning Resolution. 1

PROPERTY DESCRIPTION Sandusky Land - Interchange Location

PROPERTY DESCRIPTION INVESTMENT OVERVIEW Investment Highlights Nine Million Tourist Visits per Year Make the Area One of the Most Popular Tourist Destinations in the Midwest The Subject Property is Situated Just Off the SR-2/US-250 Interchange with Excellent Highway Visibility Predominant Retail and Hospitality Area Serving a 25-Mile Radius in Addition to a Thriving Tourism Industry $1.5 Billion Spent in Erie County by Visitors in 2013, and Growing Home to Cedar Point Amusement Park Drawing Over 3.5 Million Visitors per Year Other Draws to the Area Include Beaches, World Class Fishing, Boating, Sail Boat Races, Historic Sites and Nature Areas Ohio is Ranked as One of the Top Five States for Offering a Pro- Business Climate Marcus & Millichap is pleased to exclusively present for sale a 15.69+/ acre land site consisting of 2 parcels which include a vacant movie theater building and parking lot. The site is zoned C 1 / C 2, which is general commercial. The subject property is situated directly off the State Route 2 (SR 2) interchange at Milan Road (US 250) in Sandusky (Perkins Township), Ohio. The subject property has excellent visibility from State Route 2 at the exit ramp. Sandusky is located in northern Ohio on the shores of Lake Erie. Sandusky is midway between Toledo and Cleveland in Erie County. The Sandusky area is one of the most popular tourist areas of the Midwest. The immediate area surrounding the subject property is the predominant retail trade area serving a 25 mile radius and a five county local population. The subject property is adjacent to a Wal Mart Supercenter, Dunham Sports and Lowe s anchored shopping center. Nationally recognized retail tenants in the immediate area include Home Depot, Kohl s, Meijer, Target, Toys R Us, Sam s Club, Bed Bath & Beyond, Macy s, Sears, JCP, Petco, Jo Ann, and others far too numerous to list. The immediate area is also the predominant hotel/hospitality area serving the local population and also serving a thriving tourism industry. Restaurants in the immediate area include Panera Bread, Chipotle, Taco Bell, Sonic, Longhorn Steakhouse, Olive Garden, Applebee s, Chili s, Ryan s Steakhouse, Outback Steakhouse, Cracker Barrel, Buffalo Wild Wings and several others. Hotels at the SR 2/US 250 interchange include Sleep Inn, Maui Sands Resort & Indoor Waterpark, Americas Best Value Inn, Comfort Inn, Travelodge, Best Budget Inn, Best Western Plus Hotel & Suites, Hampton Inn, Fairfield Inn & Suites and Kalahari Waterpark/Resort/Convention Center and Great Wolf Lodge. Sandusky is home to Cedar Fair Entertainment Company Headquarters, owner of 14 amusement parks nationwide, and owner of Cedar Point Amusement Park located in Sandusky. Cedar Point, globally known as The Roller Coaster Capital of the World, draws over 3.5 million visitors each year. Cedar Point is situated on a 364 acre peninsula on Lake Erie s south shore and dates back to 1870. Many of the hotels serving Cedar Point visitors are located at or near the SR 2/US 250 interchange. 3

PROPERTY DESCRIPTION INVESTMENT OVERVIEW [Investment Description: Other draws to the area include world class fishing, boating, the Lake Erie Islands, Lighthouses, Historic Sites, beaches and Nature Areas. Participants from all over North America arrive annually to compete in national sailing events. More than 9 million trips are made to the Lake Erie Shores & Islands each year making it one of the most popular tourist destinations in the Midwest. According to The Economic Impact of Tourism study conducted for TourismOhio, visitors spent more than $1.8 billion in Lake Erie Shores & Islands in 2013, and of that amount over $1.5 billion was spent in Erie County. Sandusky is home to Firelands Regional Medical Center which provides the finest health care services available to a five county area. The hospital has 311 physicians, a hospital staff with over 2,312 employees and 227 beds. In 2015, Firelands Regional Medical Center had 267,183 outpatient visits, 75,032 Emergency Room visits, and 107,462 Patient Office Visits. Sandusky is home to NASA s Plum Brook Station. Plum Brook Station is a remote test facility for the NASA Glenn Research Center. Plum Brook is home to three world class test facilities which perform complex and innovative ground tests for the international space community. Sandusky is a Great Lakes port community with a shoreline that stretches for 22 miles within the city limits. With its unique location on the Southern Shore of Lake Erie midway between Cleveland and Toledo, Sandusky offers easy access to both major urban areas via land or water. Sandusky has one of the finest and best protected harbors of the Great Lakes. Its location enhances the industrial potential of the area by providing an abundant fresh water supply and access to Great Lakes shipping. Sandusky has one of the largest Great Lakes coal ports. Lake oriented industries, fishing and shipping, add to a well diversified industrial base of foundries, automotive parts, metal fabricating, construction products, plastics and vinyl products, colorants, paints and food processing equipment manufacturing. Between 2009 and 2014 Erie County added 1,200 manufacturing jobs from companies such as Johns Manville, International Automotive Components and Sandusky International. Manufacturing employment went up 15.5 percent in Erie County from 2010 to 2012 compared to a national growth rate of 3.7 percent at that time. The Sandusky MSA is included in the Cleveland Akron Canton, OH CSA. 60% of the county is water (Lake Erie and Sandusky Bay) and Sandusky is the second smallest county by land in Ohio. The county borders Canada to the north across Lake Erie. Sandusky is noted for being the location of the fictional Callahan Auto Parts in the movie Tommy Boy. Ohio is the 7 th most populous state and the 10 th most densely populated. Ohio has one of the Top 5 business climates in the nation and is 2nd in the nation in the total number of new corporate facility projects. The state has a balanced budget with a $1.4B budget surplus, a high credit rating, and a pro business tax climate. Increasing exports continue to support Ohio s economic growth. Ohio has a Gross State Product (GSP) of $576 billion, ranked 7 th in the U.S. ] 4

PROPERTY DESCRIPTION INVESTMENT OVERVIEW Sandusky City revenues are increasing. Total revenues at December 31, 2015 General Fund were $19,932,739 compared with $16,327,717 at December 31, 2014, which is a total increase of 22%. A few items of note: Income taxes 2015 were $9,433,948 and the 2014 amount was $6,977,782. Admissions taxes 2015 were $3,665,452 and the 2014 amount was $2,723,977. Hotel/motel taxes 2015 were $1,207,305 and the 2014 amount was $1,076,421. Source: www.ci.sandusky.oh.us/finance Fueled by Cedar Point, many resort businesses and waterparks have opened in the area making the area a year round tourist destination: Outdoor Indoor Soak City Monsoon Lagoon Castaway Bay, owned by Cedar Fair Great Wolf Lodge Kalahari Maui Sands Waterpark & Hotel Rain Indoor Waterpark Located in Quality Inn & Suites 5

PROPERTY DESCRIPTION PRESS RELEASE - CEDAR POINT Point Plummet, Starboard Surge and Portside Plunge are all part of a six-story slide structure that will be the highlight of the new Cedar Point Shores Water Park. Ohio s Cedar Point to Undergo Renovation of Hotels and Water Park IO - Cedar Point, an amusement park in Sandusky on the shores of Lake Erie, is set to renovate its water park and hotels. Currently known as Soak City, the water park will be expanded to cover 18 acres and will be renamed Cedar Point Shores Water Park. New additions to the park include Point Plummet, a 400-foot, six-story body slide; Starboard Surge and Portside Plunge, two five-story tube slides; and Lakeslide Landing, a family splash ground with 12 kid-sized water slides and a zero-depth entry pool. The majority of the existing attractions will also be renovated and renamed. Upgrades and renovations to the water park are scheduled for completion in 2017. The water park will also feature a new main entrance, poolside bar, family changing and showering areas, additional lounge furniture, shaded areas and a new restaurant, the Crystal Rock Café. Cabanas near the existing 500,000-gallon wave pool will also be upgraded to include free Wi-Fi, charging stations, ceiling fans, TVs and a food and beverage service. In addition to the water park renovations, the Breakers Express hotel will be renamed Cedar Point s Express Hotel and will feature the addition of 69 new rooms. All guest rooms feature two queen beds and include new bathrooms, bedding, mini fridges and microwaves. The hotel renovations, to be complete next year, will also boast a new splash pad and outdoor courtyard in the center of the building. The signature Hotel Breakers underwent a renovation in 2015 and will see the addition of a six-story tower by summer 2018. The addition will include 158 rooms, bringing the hotel s total to 669 rooms. 6

PROPERTY DESCRIPTION PROPERTY PHOTOS Entrance to parcel with vacant movie theater. Photo taken from back of parking lot with view of Murphy Gas and WalMart. 7

PROPERTY DESCRIPTION PROPERTY PHOTOS Photo of road exiting site. View from parking lot looking toward Murphy Gas and WalMart. 8

PROPERTY DESCRIPTION AREA RETAIL 9

PROPERTY DESCRIPTION AREA RETAIL 10

PROPERTY DESCRIPTION AREA MAP Erie County Map Regional Map 11

PROPERTY DESCRIPTION AERIAL/PHOTO 12

DEMOGRAPHIC ANALYSIS Sandusky Land - Interchange Location

DEMOGRAPHIC ANALYSIS DEMOGRAPHIC REPORT 1 Mile 5 Miles 10 Miles 2000 Population 2,182 44,650 67,774 2010 Population 2,250 42,450 65,619 2014 Population 2,240 41,895 64,996 2019 Population 2,271 41,845 65,291 2000 Households 909 17,937 27,196 2010 Households 944 17,561 27,230 2014 Households 938 17,306 26,962 2019 Households 956 17,380 27,275 2014 Average Household Size 2.27 2.34 2.36 2014 Daytime Population 4,749 24,509 33,951 2000 Owner Occupied Housing Units 71.70% 59.27% 61.04% 2000 Renter Occupied Housing Units 24.27% 31.71% 25.77% 2000 Vacant 4.03% 9.02% 13.19% 2014 Owner Occupied Housing Units 78.43% 63.76% 68.89% 2014 Renter Occupied Housing Units 21.57% 36.24% 31.11% 2014 Vacant 9.22% 14.88% 17.24% 2019 Owner Occupied Housing Units 78.21% 63.82% 68.95% 2019 Renter Occupied Housing Units 21.79% 36.18% 31.05% 2019 Vacant 9.87% 15.67% 17.80% $ 0 - $14,999 6.3% 17.6% 15.1% $ 15,000 - $24,999 9.3% 13.4% 12.5% $ 25,000 - $34,999 11.1% 12.0% 11.7% $ 35,000 - $49,999 16.8% 16.0% 15.5% $ 50,000 - $74,999 21.8% 17.5% 18.2% $ 75,000 - $99,999 13.0% 10.7% 12.2% $100,000 - $124,999 8.4% 6.6% 6.9% $125,000 - $149,999 4.5% 3.0% 3.8% $150,000 - $199,999 4.5% 1.6% 2.1% $200,000 - $249,999 1.6% 0.7% 0.8% $250,000 + 2.8% 1.0% 1.2% 2014 Median Household Income $55,226 $41,024 $43,875 2014 Per Capita Income $33,556 $23,468 $25,302 2014 Average Household Income $79,108 $55,900 $60,251 Demographic data 2012 by Experian. 14

DEMOGRAPHIC ANALYSIS SUMMARY REPORT Geography: 10 miles Population In 2014, the population in your selected geography is 64,996. The population has changed by -4.09% since 2000. It is estimated that the population in your area will be 65,290 five years from now, which represents a change of 0.45% from the current year. The current population is 48.70% male and 51.29% female. The median age of the population in your area is 43.3, compare this to the Entire US average which is 37.3. The population density in your area is 206.51 people per square mile. Households There are currently 26,962 households in your selected geography. The number of households has changed by 0.85% since 2000. It is estimated that the number of households in your area will be 27,274 five years from now, which represents a change of 1.15% from the current year. The average household size in your area is 2.35 persons. Income In 2014, the median household income for your selected geography is $43,874, compare this to the Entire US average which is currently $51,972. The median household income for your area has changed by 6.40% since 2000. It is estimated that the median household income in your area will be $51,821 five years from now, which represents a change of 18.11% from the current year. The current year per capita income in your area is $25,302, compare this to the Entire US average, which is $28,599. The current year average household income in your area is $60,251, compare this to the Entire US average which is $74,533. Race & Ethnicity The current year racial makeup of your selected area is as follows: 84.74% White, 10.10% Black, 0.01% Native American and 0.67% Asian/Pacific Islander. Compare these to Entire US averages which are: 71.60% White, 12.70% Black, 0.18% Native American and 5.02% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 3.95% of the current year population in your selected area. Compare this to the Entire US average of 17.13%. Housing In 2000, there were 19,121 owner occupied housing units in your area and there were 8,074 renter occupied housing units in your area. The median rent at the time was $404. Employment In 2014, there are 33,950 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 51.64% of employees are employed in white-collar occupations in this geography, and 48.29% are employed in blue-collar occupations. In 2014, unemployment in this area is 7.39%. In 2000, the average time traveled to work was 19.3 minutes. Demographic data 2012 by Experian. 15

DEMOGRAPHIC ANALYSIS POPULATION DENSITY Demographic data 2012 by Experian. Number of people living in a given area per square mile. 16

DEMOGRAPHIC ANALYSIS EMPLOYMENT DENSITY Demographic data 2012 by Experian. The number of people employed in a given area per square mile. 17

DEMOGRAPHIC ANALYSIS AVERAGE HOUSEHOLD INCOME Demographic data 2012 by Experian. Average income of all the people 15 years and older occupying a single housing unit. 18

MARKET OVERVIEW Sandusky Land - Interchange Location

MARKET OVERVIEW CLEVELAND Market Highlights Excellent infrastructure Cleveland s transportation facilities strengthen its position as a leading center of business. Diversifying economy Education and health services is the largest employment sector. Manufacturing jobs comprise just 12 percent of the total employment base, compared with 22 percent in 1990. Revitalizing downtown Cleveland s downtown is experiencing metropolitan rebirth, as revitalized buildings attract new businesses, residents and visitors. Geography The Cleveland Metro spans five counties in the northeastern corner of Ohio, west of the Pennsylvania state border, and extends 100 miles along the Lake Erie shore and more than 40 miles inland. The eastern part of the region lies on the Appalachian Plateau at an elevation of 1,100 feet, while the western portion sits upon the Lake Plain at approximately 600 feet. Higher elevation in the east portion results in significantly greater snowfalls. Cleveland-Elyria Metro 21

MARKET OVERVIEW CLEVELAND Metro The Cleveland metro comprises Cuyahoga, Geauga, Lake, Lorain and Medina counties and contains almost 2.1 million residents, approximately 20 percent of the Ohio population. The population of the metro shrunk during the past decade but is expected to record slow growth over the next five years. This trend reversal is primarily a result of job gains. Infrastructure Cleveland is the transportation hub of the region. Interstates 77 and 71 run north and south and are connected by Interstate 80 and Interstate 90 traveling east and west. Interstates 271, 480 and 680 interconnect the freeways. Cleveland Hopkins International Airport and Burke Lakefront Airport provide air passenger service while the Greater Cleveland Regional Transit Authority (RTA) offers bus service to area municipalities. The authority also operates the RTA Rapid Transit, a network of lightand heavy-rail systems and the downtown trolleys. Declared a foreign trade zone in 1990, the Port of Cleveland, located at the confluence of Cuyahoga River and Lake Erie, provides nine berths with rail access via the Norfolk Southern and CSX railways. Largest Cities in Metro by Population Cleveland 389,700 Parma 80,400 Lorain 64,200 Elyria 54,700 Lakewood 51,500 Euclid 48,200 Airports Cleveland Hopkins International Airport Burke Lakefront Airport Major Roadways I-71, I-77, I-80, I-90, I-271, I-480 and I-490 Rail Freight - CSX, Norfolk Southern Passenger - RTA heavy rail Commuter - RTA light rail Port Port of Cleveland The Cleveland Metro is: 140 miles from Columbus 170 miles from Detroit 240 miles from Cincinnati 490 miles from New York City * Forecast Sources: Marcus & Millichap Research Services, U.S. Census Bureau, Experian 22

MARKET OVERVIEW CLEVELAND Economy Historically a durable-goods manufacturing area, the metro has recently taken great strides toward boosting its medical and biotech sectors. Today, Cleveland is a premier corporate center featuring national and international businesses. There are four Fortune 500 companies with headquarters in the region, including Parker Hannifin and Progressive. The Cleveland gross metropolitan product (GMP) is rising once again as the local economy gains momentum. Retail sales are also increasing yet will lag the U.S. rate of growth this year. Cleveland Clinic, the area s largest employer, has gained worldwide prominence and is expanding rapidly. Growth within the Cleveland Clinic, along with other healthcare providers such as the University Hospitals of Cleveland, has fueled a dynamic biomedical industry. Cleveland is also a distribution center and a market for raw materials. Large quantities of iron ore, limestone, sand and gravel, iron and steel products, petroleum products and cement pass through the Port of Cleveland annually. As one of the country s major railroad centers, Cleveland has taken advantage of its position as a crossroad for major trunks of telecommunications by laying fiber-optic lines along railroad tracks. As a result, a number of telecommunications hotels in the area have provided a strong communications backbone, attracting high-tech companies. Port of Cleveland Quick Facts 13 million tons pass through port annually Primary inbound cargo: steel, machinery, iron ore and limestone Outbound: machinery and steel Supports nearly 18,000 direct and indirect jobs 12 docks $1.08 billion in personal income $1.8 billion in annual economic activity * Forecast Sources: Marcus & Millichap Research Services, Bureau of Economic Analysis, Moody s Analytics, U.S. Census Bureau, Fortune, Cleveland Port Authority 23

MARKET OVERVIEW CLEVELAND Labor After years of contraction due in part to the decline in manufacturing and the recession, the Cleveland employment base has been expanding since 2011 at an average annual pace of 1.2 percent and now includes more than 1 million jobs. Over the next five years, job growth is forecast at a yearly rate of 1.1 percent. Local and state agencies continue to develop programs aimed at improving employment and helping workers transition from manufacturing jobs by updating skills. Workforce training is provided by several sources, including local community colleges, which have programs in place to train support staff in a wide range of clinical and medical laboratory techniques. This shift of skill sets among the metro s employment base will remain important in coming years, in light of Cleveland s burgeoning biotechnology sector. Today, Cleveland s labor force is dominated by the education and health services, which accounts for 19 percent or nearly 200,000 jobs. Many of these positions are at the Cleveland Clinic and other local hospitals and clinics. The sector is expected to add roughly 15,800 workers through 2020, an annual growth rate of 1.5 percent. Being a large transportation hub, the trade, transportation and utilities sector comprises 17 percent of total employment. This sector is expected to contract slightly during the coming five years. During this time, the largest growth will be in the professional and business services sector. Approximately 30,700 positions are due in this segment, which should bolster demand for office space. * Forecast Sources: Marcus & Millichap Research Services, BLS, Moody s Analytics 24

MARKET OVERVIEW CLEVELAND Employers There are four Fortune 500 firms located in Cleveland: Parker Hannifin, Sherwin-Williams, Progressive and TravelCenters of America. Insurance is one of the leading industries in the region, partly because of the presence of Progressive. Cleveland has long been recognized as a world leader in healthcare and medical services, and several of the area s top employers are in these industries. The region is considered an important source for the development of new healthcare devices, diagnostics and therapies because of its growing concentration of companies in the life science industry. With the help of the Cleveland Clinic, University Hospitals and Case Western Reserve University, the University Circle area is becoming a national center for biomedical and microelectromechanical technologies. Major Employers Progressive Corp. The Cleveland Clinic University Hospital Cleveland Sherwin-Williams Co. MetroHealth System KeyCorp Case Western Reserve University Parker Hannifin Corp. Swagelock Co. Lincoln Electric Holdings, Inc. Cleveland is home to many large manufacturers, led by auto and steel producers. The metro also houses hundreds of smaller manufacturing plants, including the makers of machinery and machine tools, transportation equipment, electrical equipment, fabricated metal products, and plastics and polymers. Redevelopment projects in Downtown Cleveland are attracting businesses and residents back into the city. * Forecast Sources: Marcus & Millichap Research Services, Moody s Analytics, BLS 25

MARKET OVERVIEW CLEVELAND Demographics Cleveland s improving employment opportunities are attracting residents to the metro. After years of decline, the population is increasing. During the next five years, the area is expected to gain 15,500 residents. The median age in the metro is 41.1, compared with 37.5 for the country. This trend should change slightly as jobs bring younger workers to the area. Growth in the medical and technology industries is drawing and retaining an educated workforce. Of residents 25 or older, more than 28 percent hold at least a bachelor s degree, up from 24 percent in 2000. Continued growth in these sectors will raise the median household income more than 18 percent to an expected $61,200 annually in 2019. New residents are increasing demand for housing. The median price of a home in the metro, at nearly $125,200, is well below the U.S. median. This, combined with a median household income of $51,600 per year, makes Cleveland a relatively affordable place to live. Nearly 67 percent of area residents are homeowners, compared with less than 64 percent nationally. Over the next five years, income growth will outpace the rise in home prices, making homeownership more attainable for some. * Forecast Sources: Marcus & Millichap Research Services, AGS, Experian, Moody s Analytics, U.S. Census Bureau 26

MARKET OVERVIEW CLEVELAND Quality of Life Often cited as the model for urban rebirth, Cleveland is living up to its image as a New American City. Major attractions in the metro include the Rock & Roll Hall of Fame, professional sports, unique ethnic neighborhoods, great shopping and dining and a national park for outdoor recreation. Cleveland s downtown district continues to witness economic revitalization as new building construction, such as the medical mart and convention center, and major renovations reshape the city s historic centers. Cultural opportunities include the Theater District in downtown Cleveland where Playhouse Square is located. The facility has four theaters that house Opera Cleveland and stage Broadway musicals. The city has two orchestras, as well as the Cleveland Museum of Art and the Museum of Contemporary Art. Cedar Point Amusement Park is a short drive away. Only one park in the world has more roller coasters than Cedar Point. Cleveland is home to several highly ranked institutions of higher learning, producing graduates in fields ranging from biomedical research to computer science and engineering. These include Case Western Reserve University, Cleveland State University and John Carroll University in University Heights. * Forecast Sources: Marcus & Millichap Research Services, National Association of Realtors, Moody s Analytics, U.S. Census Bureau The information contained in the market overview comes from sources deemed to be reliable, however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. The most timely data available at time of production, including estimates and forecasts, were used and may be subject to revision. 27

MARKET OVERVIEW CLEVELAND Active Investment Capital Points to Confidence in Expanding Cleveland The strength of the local economy is palpable, with steady job growth and heavy metro investment supporting Cleveland s retail market. The unemployment rate has fallen to the lowest level since mid-2001, led by hiring from construction, education and health services employers. Development is broad-based as major construction activity happens in many different areas throughout the metro. In Westlake, west of Cleveland, the mixed-use development Crocker Park is undergoing a $400 million expansion that will include the new American Greetings tower, drawing further need for high-end retailers and restaurants. Downtown Cleveland is experiencing a revitalization of multifamily development in addition to a new hotel that will lure new residents and travelers to retailers in the area. In University Circle to the east, metro builders have new high-rise apartments in the works, spurring increased retail development. Although the pace of construction will accelerate in 2016, expanding retailers will absorb the new space, helping push the metrowide vacancy rate to the lowest level of the current cycle. These tighter market conditions will incite another year of modest rent growth as lease rates approach prerecession levels. High yields are the primary driver of investor interest for Cleveland real estate; however, positive market sentiment has also been a contributing factor. As cap rates continue to compress in their home markets, buyers from New York City to Florida enter the metro seeking higher returns. These investors are able to leverage their deep pockets to bid heavily on properties, supporting robust price increases, especially in the single-tenant segment. Sellers have taken advantage of strong valuations as single-tenant properties approach peak pricing. These assets trade with cap rates in the high-6 percent area. As the single-tenant market nears maturity, some buyers may expand their portfolio to include multi-tenant assets trading at cap rates that have room for further compression. * Forecast 28

MARKET OVERVIEW CLEVELAND 2016 Market Forecast NRI Rank 43, up 2 places Employment up 1.8% Construction 667,000 sq. ft. Vacancy down 40 bps Rent up 1.1% Investment Demand will outpace supply this year, bumping Cleveland up two places in the NRI. Cleveland employers will hire 19,000 workers in 2016, an increase of 1.8 percent. Metro organizations added 23,100 jobs last year, led by gains in the leisure and hospitality sector. Developers will bring 667,000 square feet of retail space to market this year, growing total inventory by 0.4 percent. In 2015, 512,000 square feet was delivered. The metrowide vacancy rate will fall 40 basis points to 7.1 percent in 2016. Cleveland registered an 80-basis-point drop last year. Rent growth will hit 1.1 percent this year with the average asking rate reaching $10.99 per square foot. An increase of 1.1 percent was also realized in 2015. Areas on the edge of the metro like Avon, Concord and Medina are gaining momentum with robust population growth indicating potential for future NOI improvements. * Forecast Sources: CoStar Group, Inc.; Real Capital Analytics 29