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CHICAGO RETAIL MARKET TRENDS

CHICAGO RETAIL MARKET TRENDS. CHICAGO MSA. Chicago is a Dynamic Retail Market and Truly a Global Marketplace If Chicago Region were a country it would be the 20th largest economy in the world Gross regional Product of $500 billion Ranks 3rd of all US Metro Areas

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CHICAGO RETAIL MARKET TRENDS

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  1. CHICAGO RETAIL MARKET TRENDS

  2. CHICAGO MSA • Chicago is a Dynamic Retail Market and Truly a Global Marketplace • If Chicago Region were a country it would be the 20th largest economy in the world Gross regional Product of $500 billion • Ranks 3rd of all US Metro Areas • 26 regional malls and 47 sub regional retail markets • Population of 8.6 million in 3.4 million households • Population growth forecast to over 11 million by 2040 • Employment of over 4.1 million rising to 5.3 million by 2040 • Tourism represented nearly 40 million visitors and over $11 billion in sales • Major Transportation Hub - O’Hare International Airport • 25 % of all domestic rail freight originates, terminates or passes through Chicago

  3. CHICAGO MSA SALES 2013 2012 • Metro Area Retail Sales $110.8 $105.7 Billion • General Merchandise $12.0 $12.1 Billion • Food store $13.4 $13.2 Billion • Drinking & Eating Places $14.8 $14.1 Billion • Apparel $5.1 $4.9 Billion • Furniture & Appliance $5.7 $5.5 Billion • Lumber, Building, & Hardware $5.0 $4.6 Billion • Automotive & Filling Stations $24.2 $22.8 Billion • Drugs & Misc. $17.8 $16.5 Billion

  4. CHICAGO MSA SALES CHANGES

  5. CHICAGO MSA SALES CHANGES 2013 • General Merchandise - $117.6 Million • Food + $245.1 Million • Drinking & Eating + $672.1 Million • Apparel + $157.4 Million • Furniture & Electronics + $216.1 Million • Home Improvement + $211.0 Million • Auto & Filling Stations + $1.4 Billion • Drugs & Miscellaneous Retail + $1.2 Billion

  6. CHICAGO MSA SALES CHANGES 2013 • General Merchandise - 1.0 % • Food + 1.9 % • Drinking & Eating + 4.7 % • Apparel + 3.2 % • Furniture & Electronics + 3.9 % • Home Improvement + 9.1 % • Auto & Filling Stations + 6.2 % • Drugs & Miscellaneous Retail + 7.4 %

  7. MSA RETAIL SALES FIRST HALF 2014 • General Merchandise + $324.1 Million • Food + $189.1 Million • Drinking & Eating + $270.6 Million • Apparel - $8.3 Million • Furniture & Electronics - $84.2 Million • Home Improvement + $28.7 Million • Auto & Filling Stations +$557.9 Million • Drugs & Miscellaneous Retail +$223.4 Million • Total Retail Sales + $2.1 Billion

  8. CHICAGO MSA SALES CHANGES First Half of 2014 • General Merchandise + 5.3 % • Food + 2.8 % • Drinking & Eating + 3.6 % • Apparel - 0.3 % • Furniture & Electronics - 3.2 % • Home Improvement + 1.1 % • Auto & Filling Stations + 4.5 % • Drugs & Miscellaneous Retail + 0.5 %

  9. RETAIL DEVELOPMENT • Grocers will be the focus • Single Tenant development will dominate (grocers, Mariano’s, Wal-Mart, Meijer) • Second Generation stores – Vacant Dominick’s & Kmart • Mixed-Use Development • Wheeling Town Center - Wheeling • Orland Park Triangle – Orland Park • McCaffery – Children’s Memorial Site - Chicago • Arlington Downs – Arlington Heights • Shoppes at Lincoln Pointe - Lincolnwood • New City Project • Transit-Oriented Mixed-Use Development

  10. RETAIL DEVELOPMENT • No Major Mall Development • Limited Conventional Department Store Activity • Limited Lifestyle Center activity • Approximately 1,200 Malls around the Country • 26 Regional Malls in Chicago MSA • 47 Sub Regional Markets • Only 2 malls built in the US in 2003 • Only 5 malls built in 2004 • 9 Malls in 2005 • 5 Years of No New Ground Up Malls • 1 mall opened in 2011 in the whole country • No Malls in 2012 • 2 New Malls in 2013 • 2 New Malls in 2014

  11. MALL OPENINGS 1987-2005

  12. MALLS & LIFESTYLE CENTERS • University Town Center – 880,000 sf Sarasota, Fl -October 2014 – Dillard’s, Saks & Macy’s • Mall at Bay Plaza – 780,000 sf -Bronx, NY – August 2014 – Macy’s & JC Penney • No New Malls in Chicago MSA in 2014 • Rosemont Outlet Center opened in 2013 • Redevelopment of Randhurst Village • Promenade Bolingbrook – Macy’s • 23 lifestyle centers built in both 2004 and 2005 • 10 lifestyle centers built in 2006 • Only 4 lifestyle centers built in 2010 • Focus on redevelopment

  13. NEW SHOPPING CENTERS • Pulaski Promenade – Chicago- 133,000 SF - Marshalls, Ross, Michaels, Petsmart& Shoe Carnival – IBT Group • Main Street Promenade East – Naperville -51,000 SF – Sephora, Naf Naf Grill, J. Crew, Anthropologie, J. Jill • Wheeling Town Center – 100,000 Sf – Flix Brewhouse • Shoppes at Lincoln Pointe – Lincolnwood – Mixed Use • Downtown Barrington - Hough and Main • McCaffery Children´s Memorial Site – 105,000 SF • Arlington Downs in Arlington Heights – 65,000 SF • Chicago Premium Outlets - 290,000 SF expansión • Dimucci Mall - 650,000 SF approved

  14. RETAIL DEVELOPMENT CHICAGO MSA • 2013 2.0 million square feet • 2012 1.14 million square feet • 2011 1.02 million square feet • 2010 1.0 million square feet • 2009 3.0 million square feet • 2008 3.7 million square feet • 2007 8.7 million square feet • 2006 6.0 million square feet • 2005 5.0 million square feet

  15. Brookstone American TV & Appliance Loehmann’s Fox & Obel Applebee’s Flat Top Grill & Stir Crazy Mark Shale Michael’s Fresh Market Moo & Oink Borders Circuit City Linens ‘N Things Boscov’s Sharper Image Bombay Co. Lillian Vernon KDA Comp USA Charming Shoppes Furtonoff Everything but Water Ritz Camera S&K Famous Brand Bruno's Supermarkets Gottschalks Mervyn’s Uno Restaurant Holdings-Pizzeria Uno The Walking Company Robbins Diamonds The Walking Company Bully’s Sports Bar & Grill Penn Traffic Simmons Bedding Damon’s Grill Ham’s Restaurants Super 88 Supermarkets Igourmet Hudson’s Furniture Showroom A&M Carpet RETAIL BANKRUPTCIES

  16. Wickes Furniture KB Toys Bennigan’s/Steak & Ale Baker’s Square Tweeter Good Guys Whitehall Jewellers Bonanza/Ponderosa Value City Urban Brands Blockbuster Claim Jumper Jennifer Convertibles McGrath Public Fish House Movie Gallery Boston Blackie’s Restaurant Max & Erma’s Restaurants Thomas Kinkades Gallery Steve & Barry’s Bashas Crabtree & Evelyn Oililiy Best & Co Smith Hawken Door Store Eddie Bauer Filene's Basement Bi-Lo Z Gallerie Ultra Jewelry Big 10 Tires Zounds Hearing Aid Center Al Baskin Co Drug Fair Dippin Dots Friendly’s Ice Cream RETAIL BANKRUPTCIES

  17. RETAIL BANKRUPTCIES • Coldwater Creek • Dots • Brookstone • Quiznos • Sbarro Pizza • Anchor Blue • Orchard Brands • Rugged Bear • Ultimate Electronics • Harry & David Holdings • Southern Golf Partners • Swoozie's • KV Inc., d/b/a Tellos • Strasburg-Jarvis • Joe's Sports & Outdoor Stores • Perkins & Marie Callender’s Restaurants • Giordano’s Pizza • A & P Grocery • Brown’s Chicken • Fuddruckers

  18. VACANCY RATES & RENTAL RATES • Vacancy Rates Declining • 8.9 Percent Vacancy Q3 2014 • 10.1 percent Vacancy Q2 2014 • 8.6 Percent in 2008 • 12.1 Percent during the peak in 2010 • Rental rates at A locations have reached pre-recession levels • Dominick’s Store Closings – increased vacancy rates • Dominick’s - 38 stores unspoken for at 70,000 sf average • Whole Foods 7 Dominick’s - Waiting a year to redevelop locations • Rental rates still weak at B & C locations • Rental rates were down 20 percent from 2007 • Prime second generation spaces taken by hhgregg, Ross, Binny’s, Art Van Furniture, Mariano’s, Whole Foods, and others.

  19. EXPANDING RETAILERS • Mariano’s Fresh Market – Arlington Heights, Chicago (9), Frankfort, Lake Zurich, Glenview (2), Wheaton, Elmhurst, Harwood Heights, Hoffman Estates, Park Ridge, Northbrook, Northfield, Palatine, and Vernon Hills. New – Aurora, Buffalo Grove, Gurnee, Western Springs, Westchester, Oak Lawn, Bannockburn and Shorewood • Heinen’s – Barrington, Glenview and Bannockburn • Fresh Thyme – Mount Prospect, Downers Grove, Deerfield, Naperville and Joliet • Wal-Mart – (Chicago I-94 & 111th) and 47th and Cottage Grove, Skokie (Touhy & St. Louis), Mundelein, Carpentersville, Homewood and Richton Park • Meijer- Evergreen Park, Mokena, Flossmoor & 9 in Wisconsin • Art Van Furniture – Batavia, Bedford Park, Elston Avenue, Orland Park, Woodridge/Bolingbrook, and Orland Park • Menards – Vernon Hills • Costco – Winfield

  20. EXPANDING RETAILERS • Mariano’s – 11 Dominick’s locations • Whole Foods – Kildeer, Park Ridge, Orland Park, Hyde Park, 63rd & Halsted – Wellness Centers • Whole Foods - 7 Dominick’s - West Loop, Streeterville, Lincoln Park, Edgewater, Willowbrook, Evanston and Elmhurst • Ultra Foods – Crestwood and Prospect Heights • Floor & Decor – Lombard & Arlington Heights • Jewel-Osco – Rogers Park, Old Town, Merrionette Park, Fox River Grove, and Lake Zurich • Caputo’s – 4 Dominick’s - Arlington Heights, Northbrook, Des Plaines, and Elk Grove Village plus Carol Stream • Fresh Farms – Niles (former Jewel) • Piggly Wiggly – Carol Stream and Buffalo Grove • Garden Fresh Market – Buffalo Grove (former Dominick’s)

  21. EXPANDING RETAILERS • Art Van Furniture Advance Auto Parts Apple 16 ,00 customers per week • Aldi Food Stores Auto Zone Binny’s Beverage Depot • Big Lots Burlington Coat Bye Bye Baby • Costco Cost Plus World Market Charming Charlie • CVS Caputo´s Cricket Comm • DSW Shoes Discovery Clothing Dollar Tree • Dress Barn Fresh Market Food 4 Less (Kroger) • Five Below Foreman Mills Fresh Market • Fresh Thyme Gander Mountain Golfsmith • Hobby Lobby hhgregg Heinen´s Fine Foods • Jewel Kohl’s King’s Bowl America • Mariano’s Fresh Market Lucky Strike Meijer • Menards Michael’s Microsoft • Nordstrom Rack Off Fifth Petco • PetSmart Pet Supplies Plus Pete´s Produce • Plum Market Pinstripes Ross Dress for Less • Rue 21 Sam’s Club Savers • Sav-A-Lot Sleepy’s Tiger Direct • TJ Maxx T Mobile Perch • Fresh Thyme Topshop Trader Joe’s • US Cellular Ultra Foods Valli Produce • Whole Foods Walgreens Wal-Mart

  22. EXPANDING RESTAURANTS Argo Tea Andy’s Frozen Custard Bar Louie • Blaze Fast Fire’d Pizza Buffalo Wild Wings Blue Fish Sushi • Chick Fil-A Culvers Dunkin Donuts • Checker’s Drive In Chipotle Chutney Joe’s • Coney Island Hot Dogs Cooper’s Hawk Corner Bakery • Dave & Busters Einstein’s Bagels Firehouse Subs Five Guys Burgers Flix Brewhouse Granite City • Golden Corral Halsted Street Deli Jake’s Wayback Burger • Jason’s Deli Jimmy John’s Jets Pizza • Johnny Rockets Kim’s & Scotts Pretzels Labriola Café • Lettuce Entertain You Enterprises Magnolia Bakery Menchie’s • Moe’s Southwest Grill Meatheads Nathan’s Hot Dogs • Noodles & Co. Panera Bread Pancheros • Potbelly Pei Wei Asian Pret A Manager • Peet’s Coffee Red Mango Red Robin • Roti Mediterranean Grill Shake Shack Tim Horton´s • Stella’s Starbuck’s (Beer & Wine) Star Cinema Grill • Tom & Eddie’s Texas Roadhouse BZ’S Twisted American Cuisine • TCBY Which Wich Wingstop • Yogenfruz Yogurtland Zoup • Twin Peaks

  23. OUTLET CENTERS • 312 outlet centers US • Rosemont – Fashion Outlets - $625 sales psf • New Lenox and Country Club Hills proposed • Products are made specifically for outlet stores • Mills Hybrid Outlet Centers very successful • Gurnee Mills Mall – Macy’s and Neiman Marcus Last Call • Chicago Premium Outlets in Aurora – 290,000 SF Expansion • Lighthouse Place Michigan City • Pleasant Prairie Premium Outlets • Huntley Factory Outlets • Outlet Centers – Strong Fundamentals

  24. DEPARTMENT STORE PLANS • Limited Conventional Department Store Expansion • Macy’s –Gurnee – Closed 5 stores Ut, Mo, Az, Ka, and NY • Nordstrom – Mayfair Mall in Wauwatosa, Wi.- Ridgedale Mall – Minnetonka, Mn, The Woodlands- Houston, Tx and The Domain-Austin, Tx, Manhattan, NY, St. John’s Town Center, Jacksonville, Fl, The Mall at San Juan, Puerto Rico and six stores in Canada • Nordstrom Rack – Orland Park, Lincoln Park and Skokie – 28 stores around the country • Bon-Ton–Carson’s – No New Stores Planned–Closed River Oaks) North Riverside fire • Bon-Ton–Carson’s to stay open at Lincoln Mall in Matteson • JC Penney – No New Stores • Sears – No New Stores Planned – Closed State Street • Von Maur –Joliet, Plainfield, Lindenhurst and New Lenox – dead • Bloomingdale’s–No New Stores Planned • Bloomingdale’s Outlet – Opened in Rosemont • Neiman Marcus – 15,000 SF Last Call Studio – Northbridge Mall • Neiman Marcus Last Call Outlet Opened at Gurnee Mills

  25. RETAILERS RIGHTSIZING • Focus on execution and consumer preferences • Best Buy – Closed 50 stores 7 in Chicago Area – Addison, Chicago, Deerfield, Matteson, Mundelein, West Dundee and Skokie, • Radio Shack closing 1,100 stores • Target – Target Closing 11 locations including McHenry and Calumet City • Target closed West Dundee & 7 other stores in NV, TN, GA, Fl, and OH • JC Penney –Closed 33 stores- 5 Wisconsin • Carson’s – Closed River Oaks Mall • Walgreens – Closing 75 stores • Office Depot/Office Max Merger–Smaller stores 4,500 sku’s instead of 9,000 • Sears – Closed State Street - Monetizing Sears Real Estate – Aventura Mall • Changing Store Size to penetrate urban sites. • Target Opening Express stores in Streeterville & Lakeview • Provide store within a store concepts • Real Estate costs driving smaller stores

  26. INTERNET SALES • Internet Sales Over $300 billion 7 % of US Retail Sales $4.7 Trillion • Estimates of 10% to 15% include hotels, airlines, rental cars etc. • Online sales increased by more than double the rate of brick-and-mortar sales last holiday season • Retailers got only about half the holiday traffic in 2013 as they did just three years earlier • Declines of 28.2% in 2011, 16.3% in 2012 and 14.6% in 2013. • Internet Sales were strong but many consumers got burned on delivery last year • The Holiday presents did not arrive

  27. MALL PERFORMANCE • Water Tower Place - $600 psf * Food Court Expansion • 900 N. Michigan Avenue - $450 psf * • Northbridge - $800 psf * • Chicago Place - $375 psf * • Old Orchard Center - $599 psf – Food Court Expansion • Northbrook Court - $500 psf * • Louis Joliet Mall - $408 psf • Southlake Mall - $406 psf • Woodfield Mall - $400 psf * • Orland Square Mall - $400 psf – Remodeled - Cheesecake Factory – Dave & Busters Pad • Chicago Ridge - $398 psf • Fox Valley - $358 psf • Randhurst Village - $300 psf - For Sale

  28. MALL PERFORMANCE • Hawthorn Center - $332 psf – Redevelopment Planned • Gurnee Mills Mall - $308 psf - New Macy’s, Neiman Marcus Last Call • Lincolnwood Town Center $300 psf * • Harlem Irving Plaza - $300 psf * • Stratford Square Mall - $280 psf * - Renovations Planned – Round One – Family Entertainment • River Oaks Mall - $280 psf • Ford City Mall – $250 psf * • Golf Mill - $250 psf * • Spring Hill Mall - $200 psf * - Declining Occupancy and Performance • Lincoln Mall - Judge Ordered to Close • Charlestowne Mall – N/A – Redevelopment planned • Bolingbrook Promenade - $500 psf $1.23 billion biggest increase in 2011 – 13.8 % • Deer Park Town Center - $300 psf * • Arboretum of South Barrington - $200 psf* - Foreclosure • Glen Town Center - $200 psf * - Foreclosure • Block 37 – Foreclosure • DiMucci Mall – 800, 000 SF Mall Planned • Macerich says mall sales up 4% from $549 tp $571 PSF

  29. CONCLUSIONS Approximately 2.0 million square feet of new shopping center construction in 2013 Retailers Focused on Vacant Second Generation Space New Construction Driven by Wal-Mart, Supermarkets, Pharmacies and Fast Casual Restaurants New Construction Concentrated in Mature Markets Employers shed 8.8 million jobs during recession Employers added 8.9 million jobs since the recession ended Economists forecast 200,000 jobs per month for rest of 2014 Value-focused mass retailers will hold up well, including supercenters and warehouse clubs. High End Retailers will experience strong sales – rising stock market

  30. CONCLUSIONS Retail Sales growth accelerated in 2013 by 4.8% over $5 billion Household wealth, credit availability, and job growth are key lead components of retail sales - all are improving General Merchandise sales impacted by Target – Credit Card Fraud Food store sales will rise only moderately due to vacant Dominick’s More consumers are drawn to supercenters and warehouse clubs Restaurant sales growth will accelerate with more discretionary spending Expenditures on home furnishings and home improvement will continue to improve Retailers will begin to increase new store openings Store sizes will get smaller-Wal-Mart, Home Depot, & Best Buy

  31. CONCLUSIONS Auto sales have increased strongly – Pent up demand The Drugs & Miscellaneous category will continue to rise with the aging of the population – Prescriptions Improving Housing Market - enhanced household wealth Decreasing vacancy as retail sales rise and retailers and more particularly restaurants increase growth plans Holiday Retail Sales in 2013 increased by 3.2 % Holiday Retail Sales in 2014 forecast to rise by 4.0 % E-Commerce Holiday Sales forecast to be strongest in years

  32. 2014 Retail Sales Forecast to Reach $116 billion $6.0 billion increase in 2014 or over 5 percent Lower gasoline prices - additional discretionary spending Decreasing unemployment rate - 6.1 % Housing market improvement Rising Consumer Confidence – Highest in 7 Years Seasonal Hiring Highest since 2000 2015 GDP – 2.5 % Growth New Congress and New Governor in Illinois Retail Development of over 2 million square feet FORECAST

  33. FORECAST Fewer Malls by 2040 Tenants Shuttering Stores RetailersWill Require Less SellingArea ImprovedTechnologyWithSeamlessCheckouts BodyScannnersforApparelPurchases More Online Shopping ImprovedShippingCapabilities E Commerce to RepresentNearly 10 % of Retail Sales Aging of thePopulationChanges in SpendingPatterns Shopping Centers Will Continue to Evolve with Restaurants, Entertainment and Services

  34. WHEELING TOWN CENTER

  35. Transit-oriented, master planned, mixed-use development Located at the Metra Station, Municipal Campus and Heritage Park Developer - Urban R2 and Lynmark Group 300 residential apartment units 100,000 sf of restaurant and entertainment uses Flix Brewhouse - First Run Dinner Theater Reva Development – 288 luxury apartment units Nearly 600 Units Planned in the Town Center TIF District Leasing Agent – Wayne Caplan – Sperry Van Ness Village will create a Downtown at the Wheeling Metra Station WHEELING TOWN CENTER

  36. SITE PLAN Movie Theater Restaurants Entertainment Retail Services Village Greenway Village Events Festivals 85 acre Heritage Park

  37. John C. Melaniphy, III Director of Economic Development Village of Wheeling 2 Community Boulevard Wheeling, IL 60090 Phone: (847) 499-9094 Fax: (847) 215-5175 Web Site: www.wheelingil.gov Email: jmelaniphy@wheelingil.gov

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