NORTHEAST FLORIDA Year-End 2017 Multifamily

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Research & Forecast Report NORTHEAST FLORIDA Year-End 2017 Multifamily Strong Demand Drives Multifamily Fundamentals Performance in Jacksonville.

1 Research & Forecast Report NORTHEAST FLORIDA Year-End 2017 Multifamily Strong Demand Drives Multifamily Fundamentals Performance in Jacksonville... Strong absorption levels of new unit deliveries, decreasing vacancy rates, ongoing rental rate growth, robust demand for multifamily product, and continuing economic gains were characteristics of the Jacksonville multifamily sector in Strong demand for multifamily units has facilitated a current vacancy rate of 4.3%, which is representative of a twenty-year low mark. The diminishing vacancy rate for the overall MSA has facilitated continued rental rate growth in 2017 at an annual rate of 4.4%. The two year ( ) rental rate growth for the region stands at 7.7%. The average per square foot rental rate has increased to $1.03 up from $1.01 in July Multifamily Snapshot Year-End 2017 YTD 2017 Existing Units 76,388 Annual Absorption 2,623 Change in Supply 1,930 Occupancy Rate 95.7% Monthly Rate $1,003 Average Rent/SF $1.03 Annual Rent Growth 4.40% Chg from prior Qtr The average monthly unit rental rate crossed the $1,000 benchmark and presently stands at $1,003 and the average rent as a percent of monthly wages has risen to 24%. From a per square foot rental rate perspective, the top four performing submarkets (11 total submarkets) within the MSA remain unchanged from 2016; Central at $1.39 p/sf, Beaches at $1.23 p/sf, Southeast at $1.13 p/sf, and Baymeadows at $1.11. The bottom four performing submarkets are as follows: West at $0.86 p/sf, Arlington at $0.92 p/sf, North at $0.94 p/sf, and Orange Park at $0.95. Asset Comparison by Class Year-End 2017 CLASS UNITS VAC. RATE AVG. SF AVG. RENT AVG. RENT/SF Lease-Up 2, % 1,027 $1,356 $1.32 Class A (1-5 Yrs. in Age) Class B (6-15 Yrs. in Age) Class C (16-30 Yrs. in Age) Class C- (30+ Yrs. in Age) 6, % 1,037 $1,351 $ , % 1,070 $1,118 $ , % 1,013 $1,056 $ , % 909 $843 $0.93 Totals/Averages 76, % 979 $1,003 $1.025

2 Economic Overview Strong rental rate growth within the MSA is forecasted to endure over the next 18 months at rates that continue to be well above the Southeast average. The vacancy rate within the MSA is expected to remain in the 5% range through mid-year 2019 despite the development pipeline, which has added 1,500 new construction unit starts since June The development pipeline includes 18 projects totaling 4,066 units that are currently under construction within the MSA with an additional 3,317 units that are proposed through the future delivery of an additional 16 multifamily projects. More than half of the projects that are presently under construction are located in the Baymeadows and Southeast submarkets. The remaining projects under construction are located within the Central, Mandarin, Beaches and North submarkets. Annual job growth gains continue to drive the economic prosperity of the region as the MSA added approximately 23,000 new jobs in the past 12 months and has seen its unemployment rate drop to a low 3.6%. Primary statistical information for the Jacksonville MSA is as follows: Total population is million, median age is 38, median household income is $54,000, and the per capita income is $29,700. Real Data Employment Housing Costs vs. Wages Employment 740, , , , , , , , , , , , ,000 Employment Unemployment Rate 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Unemployment Rate Rent Index Mortgage Index Wage Index Wages vs. Rents Jacksonville Supply vs. Demand Rent as % of Wages 28% 27% 26% 25% 24% 23% 22% 21% 20% 19% 18% 20% 24% Dec '11 Supply Growth Demand Jun '12 1,800 1,600 1,400 1,200 1, Forecast Months 12 Months 18 Months Apartment Units (Moving Average) nnualized Source Apt Index Northeast Florida Research & Forecast Report Year-End 2017 Multifamily Investment Colliers International

Average Rental Rate Per SF by Submarket Year-End 2017 Multifamily Submarkets Northeast Florida $0.00 $0.

11 Mandarin $1.03 St. Augustine $1.03 South $1.00 Orange Park $0.95 North $0.94 Arlington $0.90 West $0.

1% Average Rent Per SF by Class Year-End 2017 6.9% 10.0% 8.0% 5.7% 5.1% 4.3% 6.0% 4.0% 2.0% 0.

3 Average Rental Rate Per SF by Submarket Year-End 2017 Multifamily Submarkets Northeast Florida $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 Central $1.39 Beaches $1.23 Southeast $1.13 Baymeadows $1.11 Mandarin $1.03 St. Augustine $1.03 South $1.00 Orange Park $0.95 North $0.94 Arlington $0.90 West $0.86 Vacany Rates by Year 12.0% 11.2% Year-End % 9.7% 9.1% Average Rent Per SF by Class Year-End % 10.0% 8.0% 5.7% 5.1% 4.3% 6.0% 4.0% 2.0% 0.0% Vacancy Rate Source Apt Index Northeast Florida Research & Forecast Report Year-End 2017 Multifamily Investment Colliers International

Jax MSA Transactional Data Year-End 2017 Sale Cap Rates by Asset Class (2017) Number

00-5.50 Number of Units $17,993 $ per Unit $91,739 B 5.50-6.00 C 6.00-7.00 C- 7.

93 $1.00 $0.80 $0.60 $ p/sf $0.40 $0.20 $0.

by Asset Class Age Distribution by Asset Class 2,451 LU A 6,058 14,744 33 27 C- B C

4 Jax MSA Transactional Data Year-End 2017 Sale Cap Rates by Asset Class (2017) Number of Transactions 63 ASSET CLASS CAP RATES (%) Transactional Revenue $1,650,618,000 A Number of Units $17,993 $ per Unit $91,739 B C C Average Rent Per SF by Class Year-End 2017 $1.40 $1.20 $1.32 $1.30 $1.05 $1.04 $0.93 $1.00 $0.80 $0.60 $ p/sf $0.40 $0.20 $0.00 Lease-Up Class "A" Class "B" Class "C" Class "C-" (1-5 Yrs. in Age) (6-15 Yrs. in Age) (16-30 Yrs. of Age) (30+ Yrs. in Age) Class C # of Transactions by Class Class A 3 Class B 35,123 Age Distribution by Asset Class Age Distribution by Asset Class 2,451 LU A 6,058 14, C- B C 18,012 Lease-Up 1-5 Years in Age 6-15 Years in Age Years in Age 30+ Years in Age 4 Northeast Florida Research & Forecast Report Year-End 2017 Multifamily Investment Colliers International

Sales Volume by Year Historicals $1,800,000,000 $1,600,000,000

$400,000,000 $200,000,000 $0 2013 2014 2015 2016 2017 Sales Volume

Volume by Class Year-End 2017 $1,200,000,000.

00 $504,318,000 Sales Volume $400,000,000.00 $200,000,000.

5 Sales Volume by Year Historicals $1,800,000,000 $1,600,000,000 $1,400,000,000 $1,200,000,000 $1,000,000,000 $800,000,000 $600,000,000 $400,000,000 $200,000,000 $ Sales Volume $850,000,000 $800,000,000 $830,000,000 $1,100,000,000 $1,650,000,000 Sales Volume by Class Year-End 2017 $1,200,000, $1,006,500,000 $1,000,000, $800,000, $600,000, $504,318,000 Sales Volume $400,000, $200,000, $139,800,000 $0.00 Class "A" Class "B" Class "C" 5 Northeast Florida Research & Forecast Report Year-End 2017 Multifamily Investment Colliers International

6 Jacksonville (JAX) Fast Facts > > JAX Named #2 Most Up-and-Coming City in America (Time 10/17) > > JAX Named Best City for Intermodal Access (Global Trade Mag. 10/17) > > JAX Named one of World s Top 10 Best Value Destinations (Lonely Planet 10/17) 15,000 BROKERS PROFESSIONALS AND STAFF > > JAX 4th Fastest Growing Import Port in the U.S. (JAXPORT 9/17) > > JAX is the 9th Hottest City for Tech Jobs Now (ZipRecruiter 6/17) > > JAX is the #2 Best City for Young Professionals (Forbes 5/17) > > JAX #7 Best City for Job Seekers (Money 5/17) 68 COUNTRIES > > JAX #2 Hotspot Where Americans are Moving (Realtor.com 4/17) > > JAX #5 Fastest Growing City in America (Forbes 2/17) > > JAX in Top 50 Best Places to Live in the USA (U.S. News & World Report 2/17) 2B SF UNDER MANAGEMENT > > JAX has 1 of Only 3 Mayo Clinics in the Nation > > JAX is Leading Destination for Business; 80+ Headquarters Including 3 Fortune 500 Companies (more than any other city in FL) National Practice Groups $2.6B IN REVENUE COLLIERS INTERNATIONAL Multifamily Advisory Group COLLIERS INTERNATIONAL Land Advisory Group 554 OFFICES For More Information: Bradley Coe, MBA, MRE Director Northeast Florida bradley.coe@colliers.com DIR Douglas Blair, MSW Managing Director Northeast Florida douglas.blair@colliers.com DIR Morgan Williams, MAI Associate Director l Northeast Florida morgan.williams@colliers.com DIR $105B TRANSACTION VALUE Copyright 2018 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. Colliers International Northeast Florida 50 N Laura Street, Suite 1725 Jacksonville, FL colliers.com/jacksonville 6 North American Research & Forecast Report Q Office Market Outlook Colliers International

Performance Monitor Futures

Performance Monitor Futures Section 1 - Current Metro Rent Details Asking Rent by Age Asking Rent Distribution Asking Rent Growth Rate Distribution Year Built Rent Before 1970 $914 1970-1979 $885 1980-1989 $959 1990-1999 $967 2000-2009