HOLT BLVD RETAIL INDUSTRIAL - LoopNet€¦ · HOLT BLVD RETAIL INDUSTRIAL 5118-5156 Holt Blvd • Montclair, CA 91763 Offering Memorandum . NON- ENDORSEMENT AND DISCLAIMER NOTICE

HOLT BLVD RETAIL INDUSTRIAL5118-5156 Holt Blvd • Montclair, CA 91763

Offering Memorandum

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

Confidentiality and DisclaimerThe information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended tobe reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any otherperson or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared toprovide summary, unverified information to prospective purchasers, and to establish only a preliminary level ofinterest in the subject property. The information contained herein is not a substitute for a thorough due diligenceinvestigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, withrespect to the income or expenses for the subject property, the future projected financial performance of theproperty, the size and square footage of the property and improvements, the presence or absence of contaminatingsubstances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of theimprovements thereon, or the financial condition or business prospects of any tenant, or any tenant's plans orintentions to continue its occupancy of the subject property. The information contained in this Marketing Brochurehas been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will notverify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regardingthese matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of theinformation provided. All potential buyers must take appropriate measures to verify all of the information set forthherein. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. Â© 2017Marcus & Millichap. All rights reserved.

Non-Endorsement NoticeMarcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified inthis marketing package. The presence of any corporation's logo or name is not intended to indicate or implyaffiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates orsubsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included forthe 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.

HOLT BLVD RETAIL INDUSTRIALMontclair, CAACT ID Y0100393

TABLE OF CONTENTS

SECTION

INVESTMENT OVERVIEW 01Executive Summary

Investment Overview

Property Summary

Property Photos

Local Aerial Map

Regional Map

FINANCIAL ANALYSIS 02Tenant Summary

Pricing Detail

Tenant Summary

Operating Statement

Acquisition Financing

MARKET COMPARABLES 03Sale Comparables

Rent Comparables

MARKET OVERVIEW 04Market Analysis

Demographic Analysis

HOLT BLVD RETAIL INDUSTRIAL


4

INVESTMENT

OVERVIEW


#

EXECUTIVE SUMMARY

OFFERING SUMMARY

MAJOR EMPLOYERS

EMPLOYER # OF EMPLOYEES

Concept Green Enrgy Sltons Inc 4,000

PVHMC 2,121

San Antonio Community Hospital 1,929

National Railroad Pass Corp 1,913

Ontario-Montclair School Dst 1,568

Walmart 1,349

Royal Cabinets 730

Claremont Outpatient Clinic 728

Claremont Unified School Dst 728

Montclair Physical Therapy 728

McDonalds 695

County of Los Angeles 609

DEMOGRAPHICS

1-Miles 3-Miles 5-Miles

2016 Estimate Pop 23,577 209,751 499,040

2016 Census Pop 22,420 199,987 476,850

2016 Estimate HH 5,875 58,689 142,501

2016 Census HH 5,594 55,687 135,514

Median HH Income $47,964 $50,551 $55,623

Per Capita Income $15,550 $18,779 $21,407

Average HH Income $61,444 $65,706 $73,741

5

VITAL DATA

YEAR 1 PRO-FORMA

Price $2,800,000 CAP Rate 5.73% 8.99%

Loan Type All Cash Net Operating Income $160,367 $251,613

Gross Leasable Area (GLA) 28,200 SF Net Cash Flow After Debt Service 5.73% / $160,367 8.99% / $251,613

Price/SF $99.29 Total Return 5.73% / $160,367 8.99% / $251,613

Current Occupancy 94.33%

Year Built / Renovated 1952 / 2012

Lot Size 1.79 acre(s)

6#6

OFFERING SUMMARY



#

OFFERING SUMMARY

Attractively Priced under $100 per Square Foot

Leases Average Only $0.61 per Square Foot Modified Gross

100% Leased Center

New Roof and Just Paved and Striped Parking Lot

Busy Holt Blvd Retail Location with 24,072 Vehicles per Day

Additional 3,000 Square Feet of Income Buildings in Rear

Densely Populated Area of 500,000 People within 5 Miles

INVESTMENT HIGHLIGHTS

The Subject Property is 100% occupied, and consists of two retail/industrial buildings along busy Holt Blvd, as well as three buildings in the rear,on 1.79 acres of land. The larger five tenant spaces, with commercial frontage on Holt, each measuring 40 feet by 128 feet deep and have 16 footceilings. Additionally, there are three buildings in the rear. A dog groomer, who has been there for 40 years, rents the 600 square foot building and800 square foot fenced yard; whereas two of the front tenants are using the 2,400 square feet of rear buildings for additional warehouse storage.

All of the units are separately metered for electricity and water, except the dog groomer whose water is combined with building 5118. Everyonecontracts for their own trash. All the large buildings have rear roll up doors, except the 5118 building that has double doors. A new roof wasreplaced on the front buildings in 2012, and the parking lot was just paved and striped.

Located just west of Central Avenue, on busy Holt Boulevard, the traffic counts are approximately 24,072VPD on Holt and 25,860VPD on Central.Current rents average a low $0.61 per square foot modified gross; whereas rents for similar spaces in the area average nearly $1.00 per squarefoot. Considering that industrial properties are selling for under 5% CAP with rents above $0.80 per square foot; whereas retail propertiesexperience even higher rents at the same sale CAP rates, the subject property represents an excellent opportunity to buy a good retail location withupside at less than industrial prices.

Montclair is the gateway between Los Angeles and the thriving Inland Empire. It sits between the I-10 and the SR-60 freeways. It has 504,000people within a 5-mile radius, while still showing a 3.28% five-year growth. Montclair is located in very close proximity to private universities andcolleges, including the prestigious Claremont colleges, state universities and several community colleges. Montclair is a full-service city with itsown police and fire departments and has a young, diverse population.

INVESTMENT OVERVIEW

7


PROPERTY SUMMARY

OFFERING SUMMARY

PROPOSED FINANCING

First Trust Deed

Loan Type All Cash

THE OFFERING

Property HOLT BLVD RETAIL INDUSTRIAL

Price $2,800,000

Property Address 5118 Holt Blvd,Montclair,CA

Assessors Parcel Number 1010-611-16, -17, 18, -19

Zoning Holt Specific Plan - Commerical

SITE DESCRIPTION

Number of Stories 1

Year Built/Renovated 1952 / 2012

Gross Leasable Area 28,200 SF

Ownership Fee Simple

Lot Size 1.79 AC

Parking 39

Topography Flat

Access Points Holt Blvd

UTILITIES

Gas Southern California Gas Company

Electric Southern California Edison Company

Water City of Montclair

Sewer City of Montclair

Trash Burrtec Waste Industries

CONSTRUCTION

Foundation Concrete Slab

Framing Block

Exterior Block and Stucco

Parking Surface Asphalt (Brand New)

Roof 2012 New Flat Roof

MECHANICAL

HVAC Yes

8

Marcus & Millichap closes

more transactions than any

other brokerage firm.

12


9

PROPERTY PHOTO

A&H Accessory House

GR Motorsports

Weico Toys

12


10

PROPERTY PHOTO

Dog Groomer with 800sf Fenced Yard

Rear Warehouse Buildings

SITE PLAN


11

Rear Storage

Holt Blvd 24,072 VPD

LOCAL AERIAL MAP

12

CA


REGIONAL MAP

REGIONAL MAP


13

CA

14


LAND USESHolt Blvd Specific Plan

Manufacturing and Assembly• Automotive and Light Truck RepairWholesale, Storage, Distribution• Business StorageCommercial Types• Administrative and Professional Offices• Alcohol Sales• Animal Care• Car Washes• Automotive Rental Agencies• Automotive Sales• Automotive Service Station• Building Supplies and Sales• Communication Services

Permitted Land Uses Conditionally Permitted Uses

Commercial Types• Business Supply Retail and Services• Business Support Services• Durable Goods• Eating EstablishmentsEntertainment/Recreation• Financial Institutions• Medical and Health Care• Personal Services and Sales• Repair ServicesCivil Use Types• Public Schools• Cultural Facilities• Parks

• Convenience Sales and Services• Health Clubs and Spas• Hotels and Motels• Industrial Medical and Health CareEntertainment/Recreation• Amusement Center• Indoor Entertainment• Indoor Sports and Recreation• Outdoor Entertainment • Outdoor Sports and RecreationCivil Use Types• Civic Administration• Community Education for Adults• Religious Assembly• Utility Facilities


15

FINANCIAL

ANALYSIS

FINANCIAL ANALYSIS


PRICING DETAIL

16

FINANCIAL ANALYSIS


17

TENANT SUMMARY

OPERATING STATEMENT

MARCUS & MILLICHAP CAPITAL CORPORATION CAPABILITIESMMCC—our fully integrated, dedicated financing arm—is committed to providing superior capital market expertise, precisely managed execution, and unparalleled access to capital sources providing the most competitive rates and terms.

We leverage our prominent capital market relationships with commercial banks, life insurance companies, CMBS, private and public debt/equity funds, Fannie Mae, Freddie Mac and HUD to provide our clients with the greatest range of financing options.

Our dedicated, knowledgeable experts understand the challenges of financingand work tirelessly to resolve all potential issues to the benefit of our clients.

National platform operating

within the firm’s brokerage

offices

$5.1 billiontotal national

volume in 2016

Access to more capital sources than any other firm in the industry

Optimum financing solutions to enhance value

Our ability to enhance buyer pool by expanding finance options

Our ability to enhance seller control

• Through buyer qualification support

• Our ability to manage buyers finance expectations

• Ability to monitor and manage buyer/lender progress, insuring timely, predictable closings

• By relying on a world class set of debt/equity sources and presenting a tightly underwritten credit file

WHY MMCC?

Closed 1,651debt and equity

financings in 2016

ACQUISITION FINANCING


18


19

MARKET

COMPARABLES


SALES COMPARABLES MAP

20

HOLT BLVD RETAIL INDUSTRIAL(SUBJECT)

5280 Holt Blvd

5158-5180 Holt Blvd

4701-4737 Holt Blvd

4749-4759 Holt Blvd

938 E Belmont St

2455 E Francis St

86768 Hellman Ave

1441 E 9th St

2221 E Philadelphia St

1251 E Belmont St

SALES COMPARABLES

1

2

3

4

5

7

8

6

9

10

21

Avg. $137.49

$0.00

$30.00

$60.00

$90.00

$120.00

$150.00

$180.00

$210.00

$240.00

$270.00

$300.00

5118 HoltBlvd

5280 HoltBlvd

5158-5180Holt Blvd

4701-4737Holt Blvd

4749-4759Holt Blvd

938 EBelmont St

2455 EFrancis St

86768Hellman Ave

1441E 9th St

2221 EPhiladelphia

St

1251 EBelmont St

PROPERTY NAMEHOLT BLVD RETAIL INDUSTRIAL

SALES COMPARABLES

Average Price Per Square Foot

SALES COMPARABLES SALES COMPS AVG

PROPERTY NAME

MARKETING TEAM


SALES COMPARABLES

rentpropertyname1

rentpropertyaddress1

rentpropertyname1


rentpropertyname1


22

SALES COMPARABLES

Annual Per SF

Income $217,746 $7.72

Expenses $53,647 $1.90

NOI $164,099 $5.82

Occupancy 100.0%

Asking Price: $2,800,000

Price/SF: $99.29

CAP Rate: 5.68%

Year Built: 1952

Building SF: 28,200

Lot SF: 1.79 AC

5118 HOLT BLVD5118 Holt Blvd, Montclair, CA, 91763

1

NOTESThe vacant corner lot on the subject side property's side of Holt and Central just closed last month at $253/SF. Judging from recent trips to the subject, the building still sits vacant. The sale was off-market as the leasing broker found an owner/user to purchase.

Close Of Escrow: 9/12/2017

Sales Price: $1,850,000

Price/SF: $253.67

Year Built: 1986

Building SF: 7,293

Lot SF: 0.54 AC


2

NOTESWest Coast Auto Sales Purchased the land they were leasing for their financing building along with a service building. West Coast owns the land their dealership is on. They also purchased the neighboring parcels with two income generating buildings in worse condition than subject property.



Price/SF: $126.15

Year Built: 1950

Building SF: 17,439

Lot SF: 2.88 AC

5158-5180 HOLT BLVD5158 Holt Blvd, Montclair, CA, 91763

PROPERTY NAME

MARKETING TEAM


SALES COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


23

SALES COMPARABLES

3

NOTESThis sale is part of a 12 property sale at $152/SF. This lot has two income generating properties similar to the subject. They are west more on Holt which has lower traffic counts.



Price/SF: $152.61

Year Built: 1960

Building SF: 23,898

Lot SF: 2.40 AC

4701-4737 HOLT BLVD4701-4737 Holt Blvd, Montclair, CA, 91763

4

NOTESThis sale is part of a 12 property sale at $152/SF. This lot has three income generating buildings similar to the subject. They are west more on Holt which has lower traffic counts.



Price/SF: $152.61

Year Built: 1948

Building SF: 7,740

Lot SF: 2.13

4749-4759 HOLT BLVD4749 Holt Blvd, Montclair, CA, 91763

5

Close of Escrow: 6/30/2017


Rentable SF: 38,944

Price/SF: $121.69

CAP Rate: 4.99%

Year Built: 1992

Lot SF: 1.9

938 E BELMONT ST938 E Belmont St, Ontario, CA, 91761

PROPERTY NAME

MARKETING TEAM


SALES COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


24

SALES COMPARABLES

6



Rentable SF: 39,900

Price/SF: $114.04

CAP Rate: 4.25%

Year Built: 1984

Lot SF: 1.96 AC

2455 E FRANCIS ST2455 E Francis St, Ontario, CA, 91761

7



Rentable SF: 30,766

Price/SF: $130.01

Year Built: 1991

Lot SF: 1.6 AC

86768 HELLMAN AVE8768 Hellman Ave, Rancho Cucamonga, CA, 91730

8



Rentable SF: 32,504

Price/SF: $107.68

Year Built: 1964

Lot SF: 2.35 AC

1441 E 9TH ST1441 E 9th St, Pomona, CA, 91766

PROPERTY NAME

MARKETING TEAM


SALES COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


25

SALES COMPARABLES

9



Rentable SF: 30,638

Price/SF: $110.45

Year Built: 1987

Lot SF: 1.49 AC

2221 E PHILADELPHIA ST2221 E Philadelphia St, Ontario, CA, 91761

10



Rentable SF: 24,786

Price/SF: $105.99

Year Built: 2001

Lot SF: 4.59 AC

1251 E BELMONT ST1251 E Belmont St, Ontario, CA, 91761

8


RENT COMPARABLES

HOLT BLVD RETAIL INDUSTRIAL(SUBJECT)

Mega Fixtures, Inc.

Walco Machine

All Spec Welding Solutions, Inc.

Sandbox Brewing Company

B&K Electric Wholesale

Keller Williams Building

Trioptics, Inc.

4

7

8

9

11

20

12

14

15

16

17

13

18

10

4

7

1

2

3

5

6

26

PROPERTY NAMEHOLT BLVD RETAIL INDUSTRIAL

27

AVERAGE RENT PER SQUARE FOOT

Avg. $0.98

$0

$0

$0

$1

$1

$1

$1

$1

$2

$2

$2

5118 HoltBlvd

MegaFixtures,

Inc.

WalcoMachine

All SpecWelding

Solutions,Inc.

SandboxBrewing

Company

B&KElectric

Wholesale

KellerWilliamsBuilding

Trioptics,Inc.

Note: Subject pricing is below market, especially considering that all the SOLD Comps are Industrial, and the Subject Property is zoned Commercial with frontage on a 16,000 VPD commercial street.

RENT COMPARABLES

PROPERTY NAME

MARKETING TEAM


rentpropertyname1


rentpropertyname1


rentpropertyname1


28

Total GLA Available SF Asking Rent/SF

28,200 SF 0 SF $1

YEAR BUILT: 1952


1

Rentable SF 2,431

Available SF 2,431

Asking Rent/SF $1.00

Year Built 1988

NOTES

Tenant contributes $.05 towards CAM and has 3.5% annual increase

MEGA FIXTURES, INC.9007 Arrow Route, Rancho Cucamonga, CA, 91730

2

Rentable SF 12,631

Available SF 12,631


Year Built 1988

NOTES

Tenant contributes $.05 towards CAM and has 3% annual increases

WALCO MACHINE9395 Feron Blvd, Rancho Cucamonga, CA, 91730

RENT COMPARABLES

PROPERTY NAME

MARKETING TEAM


rentpropertyname1


rentpropertyname1


rentpropertyname1


29

Rentable SF 12,262

Available SF 12,262


Year Built 2006

NOTESProperty is leased to All Spec Welding for additional storage. The building they operate does not front the street. Their lease has 3% annual increases.

3

ALL SPEC WELDING SOLUTIONS, INC.8333 Rochester Ave, Rancho Cucamonga, CA, 91730

4

Rentable SF 1,426

Available SF 1,426


Year Built 1980

Lot Size 6.02

NOTESTenant contributes $.05/sf for CAM charges and has 3.5% annual increases with a 5 year term.

SANDBOX BREWING COMPANY4650 Arrow Hwy, Montclair, CA, 91763

5

Rentable SF 4,108

Available SF 4,108


Year Built 1980

Lot Size 8.72

NOTES

Tenant contributes $.05/sf for CAM and has 3.5% annual increases.

B&K ELECTRIC WHOLESALE9047 Arrow Rte, Rancho Cucamonga, CA, 91730

RENT COMPARABLES

PROPERTY NAME

MARKETING TEAM


rentpropertyname1


rentpropertyname1


rentpropertyname1


30

Rentable SF 15,931

Available SF 15,931


Year Built 2005

Lot Size 16.94

NOTESThe Keller Williams building is situated in a industrial park that doesn't front a major street. The building is newer and built in 2005, while our building was recently renovated. Tenant contributes $.14/sf towards CAM and 3.5% annual increases.

6

KELLER WILLIAMS BUILDING8250 White Oak Ave, Rancho Cucamonga, CA, 91730

7

Rentable SF 3,316

Available SF 3,316


Year Built 1980

Lot Size 8.72

NOTES

The tenant contributes $.05 towards CAM and has 3.5% annual increases.

TRIOPTICS, INC.9087 Arrow Rte, Rancho Cucamonga, CA, 91730

RENT COMPARABLES


31

MARKET

OVERVIEW

MARKET OVERVIEW

RIVERSIDE-SAN BERNARDINOOVERVIEW

The Riverside-San Bernardino metro, also referred to as the InlandEmpire, is a 28,000-square-mile region in Southern Californiacomposed of San Bernardino and Riverside counties. The metrocontains a population of more than 4.5 million. The largest city isRiverside with more than 320,000 residents, followed by SanBernardino with nearly 220,000 people. Valleys in the southwesternportion of the region, adjacent to Los Angeles, Orange County andSan Diego County, are the most populous in the metro. These areasabut the San Bernardino and San Jacinto mountains, behind which liesthe high desert area of Victorville/Barstow to the north and the low-desert Coachella, home of Palm Springs, to the east.

MARKET OVERVIEW

METRO HIGHLIGHTS

STRATEGIC LOCATIONNear LAX and Ontario International airports and ports in Long Beach and Los Angeles, Riverside-San Bernardino has vast air, rail and interstate transit network.

DOMINANT INDUSTRIAL MARKETThe metro is one of the nation’s leading industrial markets in terms of sales, construction and absorption.

STRONG DEMOGRAPHIC TRENDSJobs, colleges, new home construction and more affordable housing options will draw 400,000 new residents to the Inland Empire in the next five years.


32

MARKET OVERVIEW

ECONOMY Intermodal infrastructure supports the warehousing and distribution industry. Ontario

International and the Southern California Logistics Airport in Victorville are cargo airports that supplement the distribution system.

Growth in the distribution industry impacts all others. Many Fortune 500 companies have massive distribution centers in the area, such as Amazon and Deckers. Available land allows further development.

Relatively affordable housing supports local population growth. These gains heighten the need for housing, retail goods, personal and government services.

SHARE OF 2016 TOTAL EMPLOYMENT

MAJOR AREA EMPLOYERS

San Bernardino County

Riverside County

Stater Bros.

Loma Linda University Medical Center

Kaiser Permanente

Wal-Mart Stores Inc.

University of California, Riverside

Fort Irwin

Ontario International Airport

March Air Reserve Base* Forecast

MANUFACTURING7%

GOVERNMENT

HEALTH SERVICESEDUCATION AND

+OTHER SERVICES

3%

LEISURE AND HOSPITALITY FINANCIAL ACTIVITIES

25%AND UTILITIES

TRADE, TRANSPORTATION CONSTRUCTION

PROFESSIONAL ANDBUSINESS SERVICES

1%INFORMATION

10%

6%

18% 11% 3%

16%


33

MARKET OVERVIEW

DEMOGRAPHICS

EDUCATION

The metro is expected to add nearly 400,000 people through 2021, and during this time, more than 100,000 households will be formed, generating demand for housing.

The homeownership rate of 62 percent is below the national rate of 64 percent but well above large metros in California.

The median home price of $329,900 is also well below that of larger Southern California metros.

Relatively affordable housing is a large draw of the metro. The median home price in

Riverside-San Bernardino is lower than in Los Angeles and Orange Counties. The Inland

Empire provides a number of cultural opportunities, including the Riverside Metropolitan

Museum and the Museum of History and Art in Ontario. The Riverside County Philharmonic

provides classical music concerts throughout the area. The region features an impressive

offering of more than 20 college campuses, including nine community colleges, two

California State University campuses and the University of California, Riverside.

Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody’s Analytics; U.S. Census Bureau

33.72016

MEDIAN AGE:

U.S. Median:

37.7

$56,2002016 MEDIAN

HOUSEHOLD INCOME:

U.S. Median:

$54,500

4.5M2016

POPULATION:

Growth2016-2021*:

8.3%

1.4M2016

HOUSEHOLDS:

8.5%

Growth2016-2021*:

QUALITY OF LIFE

2016 Population by Age

0-4 YEARS

7%5-19 YEARS

23%20-24 YEARS

8%25-44 YEARS

27%45-64 YEARS

24%65+ YEARS

12%

SPORTS

ARTS & ENTERTAINMENT


34

MARKET OVERVIEW

35

Grouping of factors support retail spending and tenant demand. An influx oflogistics, retail trade and government positions will offset an anticipated decline inconstruction and professional and business services hiring this year. Payrollincreases among the metro’s largest employment sectors support a steady boost inoverall earnings. Rising incomes coupled with the region’s housing affordability willencourage household formations and attract more millennials. Positive in-migrationshould bolster demand for retailers and services near employment centers andclusters of housing.

An above-average volume of space will come online this year with completionsspread throughout the region. The lack of large-scale deliveries in most cities andsubmarkets coupled with the high volume of pre-leased new space will elevate tenantdemand for existing properties, reducing the metro’s vacancy rate to a nine-year low.A lack of leasable space, most pronounced in the single-tenant arena, will support asecond consecutive year of asking rent growth, a significant milestone for a regionthat registered annual rent declines from 2008 to 2013, followed by minimal gains thefollowing two years.

• Boasting higher yields and lower entry costs than Orange County and LosAngeles, the Inland Empire attracts a host of Southern California andinstitutional investors. Heightened buyer demand and some investors’willingness to pay a premium for assets put upward pressure on pricing,especially for recently built assets and well-located 30- to 40-year-oldproperties.

• Investor demand for smaller single-tenant buildings will keep sales velocityrobust in the sector. Restaurants, fast-food establishments and banks pricedfrom $2 million to $5 million are highly sought after.

• Buyers continually target neighborhood and strip centers throughout SanBernardino County. Shopping centers with national or regional anchortenants secured under long-term leases will trade at mid-4 percent minimumyields. Investors searching for 7 percent to 8 percent yields will eyeproperties in Riverside County and the Coachella Valley.

Retail 2017 OutlookInvestors’ Interest Piqued by Region’s Recovery,Higher-Yielding Opportunities

RIVERSIDE-SAN BERNARDINO METRO AREA

800,000 sq. ft.

will be completed

3% increase

in asking rents

40 basis point

decrease in vacancy

Construction:

The average asking rent in the metro willclimb to $17.11 per square foot in 2017,building on last year’s historically strong 4percent rise.

Net absorption will outpace deliveries,compressing the vacancy rate to 8 percent in2017, a nine-year low in the region.

* Trailing 12 months through 1QSources: CoStar Group, Inc.; Real Capital Analytics

Development activity tops last year’s670,000 square feet. Riverside and SanBernardino counties will welcome acomparable volume of new retail space.

Vacancy:

Rents:

Investment Trends


MARKET OVERVIEW

36

• Metro employers added 48,800 workers to payrolls in the 12 months ending in the first quarter after creating 53,500 positions in the prior year. Construction and retail jobs accounted for nearly half of the gain.

• The metro’s unemployment rate fell 60 basis points to 5.4 percent, the lowest level since 2006.

EMPLOYMENT

• The pace of deliveries was subdued in the last 12 months, with eastern Inland Empire cities home to most the completions. In the previous period, developers brought 934,000 square feet online.

• Construction will elevate. Developers will deliver at least 770,000 square feet during the remainder of 2017.

CONSTRUCTION

• Vacancy ended the first quarter at 8.6 percent, the fourth consecutive year of annual declines and the lowest annual level since 2008.

• A recent increase in year-over-year absorption suggests new space is being well received and existing stores are being backfilled quickly.

VACANCY

• Cycle-low vacancy revived rent growth during the past year, with the effective rate posting its largest annual increase in 10 years to $16.56 per square foot.

• Single- and multi-tenant rents rose by more than 4 percent to averages of $16.53 per square foot and $16.64 per square foot, respectively.

RENTS


increase in the average asking rent Y-O-Y

4.2%basis point decrease in vacancy Y-O-Y60square feet

completed Y-O-Y

455,000increase in total employment Y-O-Y

3.5%

* Forecast

1Q17 - 12-MONTH TREND


MARKET OVERVIEW

37

Demographic Highlights

2017 JOB GROWTH

FIVE-YEAR POPULATION GROWTH*

181,900

FIVE-YEAR HOUSEHOLD GROWTH*

99,000

1Q17 MEDIAN HOUSEHOLD INCOME

RETAIL SALES FORECAST*

Metro 13.4%U.S. 21.1%

$3,869 Per Household

$1,207 Per Person

1Q17 RETAIL SALES PER MONTH

Re-Emergence of Rent Growth Heats Investor Competition

Outlook: Sales velocity will remain robust,limited only by the availability of listings.Institutional buyers should drive pricingfor properties built after 2000.

VacancyRate

Y-O-YBasisPoint

ChangeSubmarket

AskingRent

Y-O-Y%Change

Submarket Trends

Lowest Vacancy Rates 1Q17

Sales Trends


• Multi-Tenant: Sales activity in Ontario, San Bernardino and Upland drove recent dealflow. Buyers paid an average of $250 per square for assets in the metro.

• Single-Tenant: Investor demand for assets elevated the average price 15 percent to$422 per square foot. San Bernardino and the neighboring cities of Murrieta andTemecula garnered the most buyer interest.

** Trailing 12 months through 1Q17Pricing trend sources: CoStar Group, Inc.; Real Capital Analytics

*2017-2022

Metro 2.0%U.S. Average 1.4%

Metro $58,201U.S. Average $58,218

U.S. $3,785

U.S. $1,454

Inland Empire East 8.9% -60 $16.53 4.7%

Inland Empire West 7.7% -80 $16.63 3.1%

Overall Metro 8.6% -60 $16.56 4.2%


MARKET OVERVIEW

38

• Monetary policy in transition. The yield on the 10-year U.S. Treasury bond remained in thelow- to mid-2 percent range throughout the first quarter of 2017. Despite the Fed raising itsbenchmark short-term rate twice in recent months and signaling another rise in June, long-term rates have remained stable. The Federal Reserve wants to normalize its monetary policyand, in addition to rate hikes, could start paring its balance sheet. While short- and long-termrates do not always move in tandem, both actions by the Fed have the potential to lift long-term rates.

• Sound economy a balancing act for Fed. Tight labor market conditions are finally producingupward pressure on wages and inflation. Unemployment just hit the lowest level since 2007and consumer confidence sits close to its all-time high. Consumers have the means and theconfidence to expand consumption and retail properties stand to gain significantly fromincreased spending. The Fed must now balance growth and job creation against wage growthand inflationary pressures. economic

• Lenders exercise disciplined approach. Overall, leverage on acquisition loans hascontinued to reflect disciplined underwriting, with LTVs typically ranging from 60 percent to 70percent for most retail properties. The combination of higher rates and conservative lenderunderwriting encouraged some investor caution that slowed deal flow in late 2016, a trend thatwill likely extend into 2017. A potential easing of regulations on financial institutions, though,could liberate additional lending capacity and higher interest rates may also encourageadditional lenders to participate.

* ForecastSources: CoStar Group, Inc.; Real Capital Analytics


Capital Markets


PROPERTY NAME

MARKETING TEAM


DEMOGRAPHICS

Source: © 2016 Experian

Created on August 2017

POPULATION 1 Miles 3 Miles 5 Miles 2021 Projection

Total Population 24,147 212,676 507,853

2016 Estimate


2010 Census


2000 Census


Current Daytime Population

2016 Estimate 19,371 184,890 468,631

HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2021 Projection

Total Households 6,008 59,727 145,481

2016 Estimate


Average (Mean) Household Size 3.89 3.43 3.39

2010 Census


2000 Census


Occupied Units

2021 Projection 6,008 59,727 145,481

2016 Estimate 5,943 59,974 145,411

HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2016 Estimate

$150,000 or More 3.95% 4.76% 6.47%

$100,000 - $149,000 9.28% 11.15% 13.53%

$75,000 - $99,999 11.32% 12.41% 13.20%

$50,000 - $74,999 21.88% 21.08% 20.10%

$35,000 - $49,999 16.24% 16.03% 14.58%

Under $35,000 35.82% 33.48% 30.64%

Average Household Income $61,444 $65,706 $73,741

Median Household Income $47,964 $50,551 $55,623

Per Capita Income $15,550 $18,779 $21,407

HOUSEHOLDS BY EXPENDITURE 1 Miles 3 Miles 5 MilesTotal Average Household Retail Expenditure $64,119 $64,829 $67,739

Consumer Expenditure Top 10 Categories

Housing $19,640 $20,006 $20,697

Shelter $13,213 $13,391 $13,762

Transportation $10,452 $10,427 $11,027

Food $7,024 $7,048 $7,325

Personal Insurance and Pensions $5,353 $5,590 $6,124

Health Care $3,558 $3,727 $3,989

Utilities $3,328 $3,328 $3,440

Entertainment $2,375 $2,449 $2,586

Apparel $1,730 $1,724 $1,764

Cash Contributions $1,303 $1,453 $1,575

POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age

2016 Estimate Total Population 23,577 209,751 499,040

Under 20 32.37% 30.61% 29.78%

20 to 34 Years 24.53% 25.42% 24.17%

35 to 39 Years 7.01% 6.87% 6.66%

40 to 49 Years 13.14% 12.96% 13.04%

50 to 64 Years 14.52% 15.18% 16.40%

Age 65+ 8.40% 8.95% 9.96%

Median Age 30.43 30.99 32.24

Population 25+ by Education Level

2016 Estimate Population Age 25+ 13,926 125,824 306,680

Elementary (0-8) 13.18% 12.57% 11.45%

Some High School (9-11) 14.65% 13.85% 12.48%

High School Graduate (12) 29.80% 26.69% 24.64%

Some College (13-15) 19.00% 22.19% 22.12%

Associate Degree Only 6.28% 6.44% 6.77%

Bachelors Degree Only 8.93% 9.86% 12.33%

Graduate Degree 3.52% 4.75% 6.64%

39

IncomeIn 2016, the median household income for your selected geography is$55,623, compare this to the US average which is currently $54,505.The median household income for your area has changed by 27.67%since 2000. It is estimated that the median household income in yourarea will be $65,476 five years from now, which represents a changeof 17.71% from the current year.

The current year per capita income in your area is $21,407, comparethis to the US average, which is $29,962. The current year averagehousehold income in your area is $73,741, compare this to the USaverage which is $78,425.

PopulationIn 2016, the population in your selected geography is 499,040. Thepopulation has changed by 8.60% since 2000. It is estimated that thepopulation in your area will be 507,853.00 five years from now, whichrepresents a change of 1.77% from the current year. The currentpopulation is 49.46% male and 50.54% female. The median age ofthe population in your area is 32.24, compare this to the US averagewhich is 37.68. The population density in your area is 6,353.01 peopleper square mile.

HouseholdsThere are currently 142,501 households in your selected geography.The number of households has changed by 8.25% since 2000. It isestimated that the number of households in your area will be 145,481five years from now, which represents a change of 2.09% from thecurrent year. The average household size in your area is 3.39 persons.

EmploymentIn 2016, there are 169,720 employees in your selected area, this isalso known as the daytime population. The 2000 Census revealedthat 52.50% of employees are employed in white-collar occupationsin this geography, and 47.45% are employed in blue-collaroccupations. In 2016, unemployment in this area is 8.22%. In 2000,the average time traveled to work was 32.00 minutes.

Race and EthnicityThe current year racial makeup of your selected area is as follows:52.59% White, 5.72% Black, 0.23% Native American and 8.31%Asian/Pacific Islander. Compare these to US averages which are:70.77% White, 12.80% Black, 0.19% Native American and 5.36%Asian/Pacific Islander. People of Hispanic origin are countedindependently of race.

People of Hispanic origin make up 64.74% of the current yearpopulation in your selected area. Compare this to the US average of17.65%.

PROPERTY NAME

MARKETING TEAM


HousingThe median housing value in your area was $301,718 in 2016,compare this to the US average of $187,181. In 2000, there were77,000 owner occupied housing units in your area and there were54,640 renter occupied housing units in your area. The median rent atthe time was $623.

Source: © 2016 Experian

DEMOGRAPHICS

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DEMOGRAPHICS

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