Market Intel

Cleveland, OH Industrial Market Report Q1 2026

Market conditions softened as negative absorption continued, driven by elevated move-outs and business closures. Vacancy increased but remains well below national benchmarks, reflecting the market’s historically constrained supply. Leasing activity declined meaningfully, with new deal volume falling and tenants showing greater caution, while renewals accounted for a larger share of activity. Limited availability, particularly among large-bay properties, continues to restrict tenant options and weigh on overall leasing velocity. Submarket performance has been uneven, with Medina County and Strongsville benefiting from proximity to I-71 and stronger regional demand drivers. Newly delivered properties are leasing more slowly, as they entered the market during a period of weaker demand. Rent growth slowed to 2.2% annually, with quarterly declines indicating further moderation ahead. Key Findings Availability increased as move-outs drove a second consecutive quarter of negative absorption, though overall conditions remain tighter than national benchmarks. Leasing activity slowed meaningfully, with fewer new deals and greater reliance on renewals, even as select submarkets along the I-71 corridor outperformed. Rent growth moderated and turned negative on a quarterly basis, reflecting softer demand and increased tenant cost sensitivity. Cleveland Industrial Supply & Demand Dynamics Source: CoStar Group, Inc. Cleveland Demographics Source: CoStar Group, Inc. Unemployment Rate: 4.5% Households: 938,269 Current Population: 2,164,455 Median Household Income: $75,227 Cleveland’s economy remains stable but slow-growing, supported by healthcare, government, and manufacturing. Industrial employment continues to anchor demand, with a large share of jobs tied to production and logistics. Population growth remains limited, though suburban counties are seeing modest gains. The region benefits from connectivity to Columbus and other Midwest hubs via I-71. However, uncertainty around trade policy and manufacturing demand is creating near-term headwinds. Business closures have also contributed to weaker space demand. Overall, Cleveland’s diversified base supports steady but modest growth. Top Cleveland Tenants Source: CoStar Group, Inc. HGR Industrial Surplus The Home Depot Winston Products B’laster Products Population, Labor Force, & Income Growth Source: CoStar Group, Inc. Cleveland Industrial Construction Development activity remains subdued, with Cleveland lagging national inventory growth trends. Deliveries have slowed in recent quarters and are leasing up more gradually as demand has softened. The active pipeline is limited, with roughly 399,000 square feet underway, representing a small share of inventory. A lack of shovel-ready sites remains a key constraint, as much of the market’s land requires remediation or redevelopment. As a result, a significant portion of recent development has consisted of repositioned or redeveloped properties rather than ground-up construction. Development has also shifted toward southern submarkets and areas near Akron, where land availability is more favorable. While new supply may place modest upward pressure on vacancy in the near term, the lack of construction should help preserve relatively tight market conditions over the longer term. SF Construction Starts Source: CoStar Group, Inc. SF Under Construction Source: CoStar Group, Inc. Cleveland Industrial Sales Investment activity has remained relatively stable, though the buyer mix has shifted in response to softer fundamentals. Transaction volume is still driven largely by smaller deals, with institutional investors pulling back amid slower rent growth and weaker absorption. In their place, private buyers, users, and REITs have taken on a larger role in acquisitions. Pricing varies by asset quality, with newer distribution properties commanding premiums near or above $100 per square foot, while older assets trade at discounts. Cap rates for newer assets generally fall in the mid-6% range, with older properties trading at higher yields. Despite near-term headwinds, Cleveland’s lower pricing and tight availability continue to attract value-oriented investors. Sales Volume Source: CoStar Group, Inc. By the Numbers Q1 2026 | Source: CoStar Group, Inc. Sales Volume: $127M Price Per SF: $54 Cap Rate: 10.4% Vacancy Rate: 4.3% Rent Growth: 2.2% Asking Rent Per SF: $6.70 SF Under Construction: 399K SF Delivered: 121K SF Absorbed: 420K

Cleveland, OH Retail Market Report Q1 2026

Cleveland’s retail market in Q1 2026 remains fundamentally stable, supported by limited new construction and historically tight availability. Vacancy holds near 5.1%, underscoring balanced conditions even as demand softened, with negative absorption reflecting some tenant consolidation. Leasing activity continues at a steady pace, though momentum has shifted toward smaller, service-oriented users, reinforcing evolving consumer preferences. Rent growth has moderated to 0.7%, reflecting ongoing demographic headwinds and an aging inventory base, though select suburban corridors continue to outperform. Construction remains constrained, helping prevent oversupply and maintain pricing stability. Overall, Cleveland’s retail sector continues to favor durability over growth, with stable fundamentals expected despite near-term economic uncertainty. Key Findings In Q1 2026, Cleveland’s retail market remained stable, with vacancy near 5%, as limited construction and no new starts helped offset negative absorption and maintain tight overall availability. Leasing activity continued to favor smaller, service-oriented tenants, contributing to modest rent growth of 0.7% and reflecting shifting consumer demand amid broader economic uncertainty. Investment activity strengthened, with sales volume reaching $140 million, as investors targeted grocery-anchored centers and net lease assets offering stable income in a low-growth environment. Cleveland Retail Supply & Demand Dynamics Source: CoStar Group, Inc. Cleveland Demographics Source: CoStar Group, Inc. Unemployment Rate: 4.5% Current Population: 2,164,455 Households: 938,269 Median Household Income: $75,227 Cleveland’s economy remained stable in Q1 2026, supported by a diversified employment base and modest labor market growth. The metro’s 4.5% unemployment rate reflects balanced conditions, with job gains continuing to outpace modest population declines. The region has a population of 2.16 million, with median household income at $75,227, supporting steady consumer spending. Healthcare, government, and manufacturing remain primary economic drivers, anchoring employment and income stability. While long-term population trends remain a constraint, suburban growth and consistent income gains continue to support retail demand across well-established neighborhoods and key suburban corridors. Population, Labor Force, & Income Growth Source: CoStar Group, Inc. Cleveland Retail Construction Retail construction activity in Cleveland has slowed significantly entering 2026, reflecting broader capital market constraints and cautious developer sentiment. No new projects broke ground in Q1, continuing a sharp decline in starts following elevated levels seen in 2024. Total space under construction has fallen to just 94.7K SF, down substantially from peak levels above 800K SF one year ago. Deliveries remain limited, with only 22.7K SF completed during the quarter, further restricting new supply. With absorption turning negative at (623K) SF, developers are remaining on the sidelines, allowing the market to rebalance. This pullback in construction is expected to help maintain tight availability despite softer demand trends. SF Construction Starts Source: CoStar Group, Inc. SF Under Construction Source: CoStar Group, Inc. Cleveland Retail Sales Retail investment activity in Cleveland remained strong in Q1 2026, with sales volume reaching $126 million, marking a notable year-over-year increase and reflecting sustained investor confidence. Over the past year, transaction activity has outpaced long-term averages, supported by stable fundamentals and limited new supply. Private buyers continue to play a leading role, though REIT and institutional participation has increased meaningfully. Investor demand remains concentrated in grocery-anchored centers and single-tenant net lease assets, which offer durable income streams. Cap rates in the mid-6% range for higher-quality assets highlight continued competition, as investors target well-leased properties in established suburban locations. Cleveland Retail Sales Volume Source: CoStar Group, Inc. By the Numbers Q1 2026 | Source: CoStar Group, Inc. Sales Volume: $140M Price Per SF: $114 Cap Rate: 8.8% Vacancy Rate: 5.1% Rent Growth: 0.7% Asking Rent Per SF: $16.10 SF Under Construction: 94.7K SF Delivered: 22.7K SF Absorbed: (623K)

Midwest Self-Storage: Steady Hands Heading Into 2026

The last two years tested self-storage more than any period since the Great Financial Crisis. Across 2024–2025, elevated borrowing costs and a persistent bid–ask gap cut transaction volume and pushed the sector into price discovery. Public REIT results show the reset clearly: by Q3 2025, national same-store revenue and NOI fell year-over-year, while operating expenses stayed high, led by property taxes and property insurance. Occupancy softened as move-ins slowed. Across 2025, REIT portfolios ran lower than the same quarters in 2024, but stabilized around 91%–92% on average each quarter. In oversupplied markets, operators leaned on discounting to maintain leasing velocity. Regional Divergence: High-Supply Markets Resetting vs. Disciplined Markets Stabilizing The downturn has not hit all regions evenly. Markets that added the most supply during the pandemic expansion are now working through the toughest reset. Yardi data show several fast-growth metros expanded inventory by low-to-high teens over the last three years, including mid-single-digit growth in the last twelve months alone. Those high-delivery markets have posted some of the steepest rent declines; by mid-2025, several large metros were still seeing street-rate drops in the 3%–4% range as new supply met slower demand growth. Disciplined, needs-based markets stabilized earlier, and the Midwest sits at the front of that group. National asking rates turned positive again in late 2025. October’s national street-rate index was about 0.7% above the prior year, and move-in rents exceeded move-out rents for the first time this cycle. With more limited new supply and steadier demand, the Midwest enters 2026 in a stronger relative position. Why the Midwest Is Holding Steady Supply Discipline Supply remains the clearest differentiator, and the Midwest continues to screen as structurally disciplined. Most major Midwest metros are running below national delivery averages. Columbus illustrates measured growth: deliveries equaled about 1.2% of inventory in 2024, yet the market still sits near 4.5 square feet per capita. Cleveland remains tight on a per-capita basis even after a delivery uptick, underscoring how small the absolute base is. Detroit has also stayed supply-constrained relative to the national high-delivery cohort; new starts remain limited compared with metros that carried mid- to high-single-digit shares of stock under construction at points this cycle. Midwest markets are adding units, but they do so from a smaller per-capita footprint and at a slower pace than the country’s highest-growth development markets, many of which expanded inventory by ~10%–20% in short bursts. That contrast best demonstrates the region’s lower development risk. Source : Yardi Matrix Needs-Based Demand Demand quality provides the second stabilizer. In the Midwest, storage usage relies less on cyclical migration patterns and more on persistent household needs: smaller living footprints, life-event churn, and steady small-business use. Cleveland and Columbus already illustrate the point (average apartments ~790 and ~881 square feet, respectively). Other Midwest metros show the same “space-light” profile: ~728 square feet in Detroit, while Chicago’s newer units rank among the smallest large-metro footprints at ~797 square feet. National comparisons sharpen the story. Many high-growth metros still deliver meaningfully larger apartments on average, often in the mid-900s sf range, versus low-900s in the Midwest, even after downsizing trends in select cities. Population trends add another layer of stability. Midwest household growth has stayed modest but steady (e.g., Cleveland ~+0.7% YoY, Columbus ~-0.7%). That profile supports a reliable, less cyclical storage customer base through rate cycles, unlike markets where demand swings with migration volatility. Net: smaller Midwest living spaces + stable household churn create a more durable demand stream than markets dependent on fast-cycle population surges. Operating Performance: Stabilization Signals Operational performance across the Midwest looks more like normalization than contraction. National street rates bottomed in 2025 and have inched higher since; Yardi Matrix’s National Self Storage Advertised Street Rate Index (the national average advertised asking rent per square foot) stood ~0.7% above October 2024. Core Midwest metros are even higher up, with Chicago rents up roughly 2.1% annually and Minneapolis around 2.9%. Occupancy has remained healthy even as leasing softened nationally. REIT net move-ins minus move-outs fell to a five-year low in 2025, but pricing improved: move-in rents exceeded move-out rents for the first time this cycle, and the rent gap between new and existing customers narrowed to ~40% from ~60% a year earlier. That shift signals returning pricing traction without requiring a meaningful occupancy trade-off. Expense growth is cooling on a year-over-year basis. Same-store operating expenses are still rising, but the pace slowed in Q3 2024 versus Q3 2023, with ExtraSpace at +1.9% YoY, Public Storage at +2.6% YoY, and NSA at +1.2% YoY, even as taxes and repairs remain elevated. As inflation moderates and insurance stabilizes, operators are pushing efficiency through centralized call centers, automated leasing, dynamic pricing, and lean staffing. Capital Markets: Liquidity Returning Selectively Capital markets are thawing, and supply-disciplined Midwest metros are benefiting early. Community banks and credit unions have re-engaged with stabilized storage assets as underwriting visibility improves. Deal structures have adapted to bridge valuation gaps: seller financing, preferred equity, and assumable low-rate loans show up more often, alongside longer diligence windows and earn-out frameworks. Liquidity is returning selectively, and capital is flowing first to markets where cash flow does not depend on aggressive rent assumptions. Investor Positioning for 2026 Investor sentiment has shifted toward resilience. Buyers now prioritize assets that can hold cash flow through uncertainty instead of chasing peak-growth submarkets. Infill Midwest locations fit that profile because supply pressure stays modest and demand remains durable. Moderate rent rebounds in Chicago and Minneapolis reinforce that these metros can outperform national averages without the volatility tied to oversupply cycles. Portfolio strategy also drives allocation. Many institutional groups built heavy exposure to high-delivery markets during the pandemic run-up, so Midwest acquisitions now hedge development risk elsewhere. Private investors, typically more flexible on deal size and comfortable underwriting in higher-rate environments, often re-enter first and set the tone for broader capital redeployment. Bottom Line After a turbulent cycle, the Midwest appears positioned to lead the early phase of self-storage recovery. Moderate pipelines, density-supported demand, and structurally tight inventory insulate these metros from the oversupply dynamics still weighing on the nation’s highest-delivery markets. With street rates positive year over year, move-in pricing improving, and expense growth decelerating, the 2026 setup favors investors who pivot toward constrained infill Midwest assets where returns depend on disciplined execution, not rent spikes.

Russell Handelman

Associate

4/8/26

Texas Retail Market Report | Recap & Future Expectations

The Texas retail market continues to serve as a top location for resilience and growth in 2026. Driven by robust inward migration and a diverse corporate sector, the state’s major metros are successfully navigating the headwinds of high interest rates and national tenant shifts. While Austin maintains its status as the occupancy leader and Houston enters a strategic recovery, Dallas-Fort Worth stands out for its development pipeline. With construction levels reaching decade-highs and a clear shift toward experiential, grocery-anchored suburban hubs, the Texas retail landscape is evolving. By the Numbers | Q4 2025 CoStar Group, Inc. Dallas-Fort Worth Sales Volume: $84.1M Price Per SF: $276 Cap Rate: 6.7% Vacancy Rate: 4.9% Rent Growth: 3.4% Asking Rent Per SF: $224.98 Under Construction: 7.8M SF Delivered: 595K SF Absorbed: 791K SF Austin Sales Volume: $62.6M Price Per SF: $340 Cap Rate: 6.3% Vacancy Rate: 3.1% Rent Growth: 2.6% Asking Rent Per SF: $31.64 Under Construction: 2.8M SF Delivered: 545K SF Absorbed: 383K SF Houston Sales Volume: $368M Price Per SF: $248 Cap Rate: 7.3% Vacancy Rate: 5.3% Rent Growth: 2.1% Asking Rent Per SF: $24.59 Under Construction: 3.4M SF Delivered: 537K SF Absorbed: 556K SF Dallas Leads Nation in Retail Growth Across Dallas-Fort Worth, retail fundamentals continue to show strong resilience and balanced performance. The metro has maintained positive tenant demand for 20 consecutive quarters, despite navigating headwinds from national tenant bankruptcies. Dallas-Fort Worth is currently a national leader in retail construction, with nearly twice the new supply as Houston. While vacancy rates are projected to reach 5% in the first half of 2026 due to new deliveries, demand remains robust across the metro. North DFW Surge in Demand Investor and developer interest has increasingly focused on the high-growth northern areas of the metro. Denton and Collin Counties account for roughly 65% of all current construction projects. Submarkets like Allen, McKinney, Frisco, and Prosper are primary targets for capital, due to rapid population growth and high household incomes. Specifically, Northern Collin County has seen the time to lease fall to historic lows of approximately five months, driven by a lack of new developments in established trade areas. The market’s expansion follows opportunities in outlying areas, where major grocery-anchored developments aid further strip mall and traditional shopping center construction. In areas like Collin County, the premium on land has pushed starting rents around $40 to $45 per square foot. Metro Reaches Record-Breaking Construction Levels DFW is experiencing an ongoing supply wave, reaching 7 million square feet underway at the end of 2025. This is one of the highest development rates recorded for the metro in 10 years. In 2025, the market completed 18% of all net retail deliveries in the country. Despite this surge, supply-side risk is limited as approximately 80% of the retail space currently under construction is already pre-leased. Mixed-use projects are also driving significant activity. In Collin County, major developments like The Farm in Allen and Fields West in Frisco are creating new retail and residential hubs that feature experiential retailers and unique luxury offerings. Austin Achieves Robust Retail Activity Across the Austin metro, retail fundamentals are strong, backed by high occupancy, disciplined new development, and constant population growth. According to Matthews™ First Vice President and Director Andrew Ivankovich, the strong transaction velocity seen at the end of 2025 will continue through 2026. “The market experienced such a frenzy from 2019 to 2022 that it made it challenging for deals to pencil in the few years that followed,” he said. “Sellers’ expectations did not change and high interest rates prevented buyers from acting. Today, both sides have improved and we expect it to be reflected in the year-end velocity report.” Shift to the Suburbs Ivankovich added that retail capital has begun to exit Austin’s CBD and is entering suburban markets. In particular, Hays County and Georgetown accounted for an increased amount of the metro’s deals. Private buyers are attracted to Hays County, with the submarket noting a total $21 million in sales for 2025. Meanwhile, Georgetown recorded a rise in deals for newly-built properties and noted a total $51.5 million for its 2025 sales volume. Both submarkets will be crucial to track moving forward given their constant population growth, as well as Round Rock and Cedar Park. In 2025, Austin’s retail under construction level saw a 38% year-over-year increase, reaching 2.1 million square feet. The metro’s suburbs accounted for more than 96% of all completions last year. Manor is one suburb that stands out from the pack as its inventory grew by 50% throughout the year. The majority of its growth is attributed to the addition of Manor Crossing, a 425,000-square-foot shopping center that was almost fully pre-leased by its completion date. This year, Cedar Park is the next Austin suburb to note an influx of deliveries. The suburb accounts for 33% of ongoing construction, with Cedar View as the largest development. The new project is a mixed-use site that will feature a hotel, a Scheels sporting goods store, and NFM as its anchor. Houston is Set to Recover from 2025 Performance Throughout 2025, Houston’s fundamental activity dropped to historic lows. Its total absorption level for 2025 was 2 million square feet, a decrease from the 2024 absorption rate of 2.5 million square feet. Despite this trend, Houston’s sales volume jumped from 2024 and totaled $1 billion by year-end 2025. Josh Longoria, Senior Associate at Matthews™, expects this activity to continue as the federal funds rate slows down. “As we head into the second month of the year, the federal funds rate has been stable and it seems like there will be no more rate cuts until the new Fed chair is elected,” Longoria said. “I think this will lead to more stability in the market and buyers having more clear expectations of where rates will be, and therefore I think transaction velocity will pick back up.” Tenants Thriving Across Houston 7 Brew and Crunch Fitness are currently two of the largest players in the metro. Crunch Fitness is absorbing sites left by big-box retailers, while 7 Brew is taking up pad sites around 500 to 700 square feet. Texas is a major market for Crunch Fitness, with a strong presence in the Houston submarkets of Kirkwood, League City, and Humble. Crunch Fitness is a preferred tenant for landlords with vacancies over 35,000 square feet. In 2025, the tenant reached 3 million gym memberships. Specifically in Houston, their locations boast fully booked exercise classes, which signals its robust consumer demand. Crunch Fitness’ growing visitations display its positive activity and add to its strong tenant potential. 7 Brew is one of the fastest-growing coffee chains across the country, doubling its national footprint by the end of 2025. In Houston, its expansion is prominent in outer submarkets, with its most recent and upcoming locations in Conroe, Tomball, Spring, Livingston, and Cleveland. With more openings planned across the metro, 7 Brew will maintain its top performance levels as its format allows for easy store placement and a shorter timeframe for opening than a traditional buildout. Top Trends to Watch Moving ahead, Longoria advises landlords to pay attention to their tenants and their sales trends. “I have heard from multiple landlords that the restaurants and beverage concepts are doing as well as they have previously,” he said. “High-end restaurants are not getting as much traffic, which is helping the lower-priced options.” Longoria added that he expects construction activity to pick back up as it has been slow throughout the past few years. “Development is going to come back into full effect as the cost breakdown to build new construction did not make sense and the spread was too thin,” Longoria stated. Specifically, Longoria said that new developments are likely to grow in the 610 Loop. One of the largest additions inside the 610 Loop is Midway’s East River project. The facility is located on the former KBR industrial site east of Downtown, and will add more than 1 million square feet to the area.

Andrew Ivankovich

First Vice President & Director

2/13/26

Cleveland, OH Industrial Market Report Q4 2025

Cleveland’s industrial sector is showing signs of softening, though fundamentals remain relatively tight. Availability has edged higher and net absorption turned negative at –939,468 square feet, marking the fourth consecutive quarter of decline, yet the vacancy rate remains low at 4.4%, well below the national average. Limited construction over the past ﬁve years has constrained supply, weighing on leasing activity as new lease volume declined sharply. Demand is concentrated among smaller manufacturers, with over 90% of new leases under 25,000 square feet, making the market more sensitive to cost pressures and tariffs. Rent growth has slowed to 2.3% year-over-year, but restrained development and scarce large-bay space should help maintain balanced conditions near term. Key Findings Cleveland recorded its fourth consecutive quarter of negative net absorption, yet vacancy remains low at 4.4%, well below the national average, supported by limited new construction. Industrial inventory has grown just 1.6% since 2020 versus 11.2% nationally, with only 0.3% of inventory currently under construction. Sales volume reached $351 million throughout 2025, although institutional participation fell to 9% of buyers as users and REITs took over. Cleveland Industrial Supply & Demand Dynamics Source: CoStar Group, Inc. Cleveland Demographics Source: CoStar Group, Inc. Unemployment Rate: 4.3% Current Population: 2,070,683 Households: 895,250 Median Household Income: $74,028 Cleveland’s economy reﬂects both resilience and transformation. While the city experienced decades of population decline, recent stabilization and modest population growth signal renewed momentum, particularly as outer suburbs attract residents with affordable housing, strong schools, and expanding business activity. The region’s economy is anchored by globally recognized healthcare and higher education institutions, led by the Cleveland Clinic, University Hospitals, and MetroHealth, alongside advanced manufacturing and ﬁnancial services employers like Progressive Insurance, KeyBank, and Sherwin-Williams. Top Tenant Leases Midwest Group Saw Inc. HGR Industrial Surplus MWD Logistics Population, Labor Force, & Income Growth Source: CoStar Group, Inc. Cleveland Industrial Construction Industrial development in Cleveland remains restrained, with inventory growing just 1.6% since 2020, far below the national pace. Recent deliveries have slowed sharply, totaling roughly 380,000 square feet over the past year, and newer projects are leasing more gradually as demand has softened. Still, availability in large logistics buildings remains well below national levels, underscoring limited supply. Much of Cleveland’s new inventory has come from redeveloped or repurposed sites, reﬂecting a shortage of land. With only 0.3% of inventory under construction, modest development and site preparation initiatives should support stable long-term industrial conditions. SF Construction Starts Source: CoStar Group, Inc. SF Under Construction Source: CoStar Group, Inc. Cleveland Industrial Sales Industrial investment activity in Cleveland remains steady, with $58.1 million in sales at the end of Q4 2025. Deal ﬂow is concentrated in smaller transactions as most sales closed below $10 million and institutional deals fell to 9% of buyers amid soft absorption and slowing rent growth. Users and REITs have helped support liquidity, together accounting for 40% of recent volume. Pricing varies by asset quality, with newer, well-leased facilities trading near $100 per square foot, while older properties continue to sell at meaningful discounts, attracting opportunistic buyers despite moderating fundamentals. Cleveland Industrial Sales Volume Source: CoStar Group, Inc. By the Numbers Q4 2025 | Source: CoStar Group, Inc. Sales Volume: $58.1M Price Per SF: $51 Cap Rate: 10.5% Vacancy Rate: 4.4% Rent Growth: 2.4% Asking Rent Per SF: $6.68 SF Under Construction: 1.1M SF Delivered: 125K SF Absorbed: -939K

Columbus, OH Retail Market Report Q4 2025

Retailer bankruptcies and softer consumer spending weighed on demand in Columbus during early 2025, pushing big-box move-outs higher and briefly driving net absorption negative. Despite this, conditions remain tight after a decade of limited deliveries, with availability hovering above 4%, below the national average. Less than 5 million square feet is available for lease, about 30% below pandemic-era peaks, allowing vacated space to be backfilled quickly and keeping leasing near pre-pandemic norms. Off-price, experiential, and service-oriented tenants have absorbed much of the recent vacancy, while former drugstore sites present selective backfill and redevelopment opportunities. Rent growth has cooled from mid-2024 highs but remains healthy at 3.8% year-over-year, outperforming the national average. Key Findings Columbus retail fundamentals remain historically tight, with vacancy at 3.0% and limited new supply, allowing 423K SF of absorption despite elevated retailer bankruptcies and big-box move-outs. Rent growth moderated but remains resilient at 3.8% YOY, supported by strong population growth, constrained availability, and average asking rents of $20.28 per SF that remain relatively affordable. Investment activity totaled $132M, with pricing near $157 per SF and an 8.3% cap rate, reflecting stable investor appetite anchored by low vacancy, limited construction, and durable long-term demand drivers. Columbus Retail Supply & Demand Dynamics Source: CoStar Group, Inc. Columbus Demographics Source: CoStar Group, Inc. Unemployment Rate: 4.6% Current Population: 2,254,427 Households: 907,594 Median Household Income: $84,122 Columbus anchors one of the Midwest’s fastest-growing metros, with roughly 2.2 million residents and population growth outpacing both national and regional averages. Strong in-migration, particularly in Delaware County, continues to expand the consumer base supporting retail demand. The metro benefits from a highly diversified, non-cyclical economy led by government, education, and healthcare, with The Ohio State University as the region’s largest employer. Columbus also functions as a major logistics and distribution hub, providing access to roughly half of U.S. households within a one-day drive. Significant advanced manufacturing investments from Intel, Honda, and Anduril are expected to support long-term job growth and household formation. Together, these fundamentals position the Columbus retail market for sustained demand and long-term stability. Population, Labor, & Income Growth Source: CoStar Group, Inc. Columbus Retail Construction Retail development in Columbus has remained limited, as high capital costs and interest rates continue to restrain new construction despite healthy tenant demand. Market rents trail national levels, tempering NOI growth and reducing the feasibility of speculative projects. Net deliveries totaled roughly 400,000 square feet over the past year, below the long-term average, with build-to-suit projects accounting for most additions. Only 350,000 square feet is currently underway, representing a small share of inventory and limiting supply-side risk. Mixed-use developments remain the primary source of new retail space, while commitments on existing projects are high. With construction starts at record lows, retail conditions are expected to remain tight over the next year. SF Construction Starts Source: CoStar Group, Inc. SF Under Construction Source: CoStar Group, Inc. Columbus Retail Sales Columbus retail investment activity finished Q4 2025 with $132.3 million in transactions, rebounding from Q3’s $108.1 million and closing the year with strong momentum. Private buyers remain the dominant force, representing 64% of deals, focusing on single-tenant net-leased properties like quick-service restaurants and drug stores at mid-6% cap rates. Key Q4 transactions included Hilliard Square ($8.7M, 7.3% cap) and Oak Creek Center ($20.4M), highlighting demand for well-leased, value-add assets. Tight retail availability, historically low construction, and above-average rent growth continue to attract both local and out-of-state capital, supporting stable fundamentals heading into 2026. Cleveland Retail Sales Volume Source: CoStar Group, Inc. By the Numbers Source: CoStar Group, Inc. Sales Volume: $132M Price Per SF: $157 Cap Rate: 8.3% Vacancy Rate: 3.0% Rent Growth: 3.8% Asking Rent Per SF: $20.28 Under Construction: 361K SF Delivered: 207K SF Absorbed: 423K SF

Cleveland, OH Retail Market Report Q4 2025

Cleveland’s retail market remains historically tight, supported by healthy leasing activity and minimal new construction. Availability increased modestly to 5.2%, or 7.2 million SF, driven primarily by large-box vacancies tied to national bankruptcies. Leasing strength is most evident in smaller formats, with availability in 2,500–5,000 SF spaces declining 12.4% as service-oriented tenants and quick-service restaurants expand. Well-located mid-size boxes vacated by Rite Aid are also being rapidly re-leased. Limited development, just 107,000 SF underway with minimal space available, continues to constrain supply. Rent growth remains flat, reflecting weak population growth and legacy inventory, though select suburban corridors are still achieving modest rent gains. Key Findings Cleveland retail availability remains low at 5.2% despite modest large-box softness, as strong small-format leasing drove 167K SF of net absorption. With just 107K SF under construction and minimal speculative risk, constrained supply supports stability. Retail sales reached $268M in 2025, led by grocery-anchored and service-oriented centers, with pricing near $115/SF and an average cap rate of 8.7% reflecting steady investor demand. Cleveland Retail Supply & Demand Dynamics Source: CoStar Group, Inc. Cleveland Demographics Source: CoStar Group, Inc. Unemployment Rate: 4.3% Current Population: 2,070,984 Households: 895,216 Median Household Income: $73,939 The Cleveland metropolitan area, home to about 2 million residents, declined 0.2% in 2025, showing signs of stabilization compared to the history of sharp declines, with recent growth concentrated in affordable, fast-growing outer suburbs. The regional economy is anchored by healthcare, higher education, advanced manufacturing, and financial services, led by major employers such as the Cleveland Clinic, Progressive Insurance, KeyBank, and Sherwin-Williams. Robust transportation infrastructure, including extensive interstate access, the Port of Cleveland’s direct European shipping routes, and multiple air cargo facilities, supports regional and national connectivity. Ongoing investment from institutional anchors, aerospace research at NASA Glenn, and expanding healthcare, fintech, and life sciences activity continue to strengthen the metro’s long-term economic outlook. Population, Labor, & Income Growth Source: CoStar Group, Inc. Cleveland Retail Construction Cleveland’s retail construction pipeline remains extremely limited, reinforcing tight market conditions. Just 107,000 SF is under construction, representing roughly 0.1% of total inventory and aligning with the national benchmark. Twelve-month net deliveries remain below the 10-year average of 150,000 SF, reflecting elevated construction and f inancing costs that continue to suppress new development. Less than 5% of space underway is still available, indicating strong preleasing and minimal speculative risk. With development activity muted and new supply constrained, construction is unlikely to materially impact availability or rent dynamics, helping support market stability despite emerging demand-side headwinds. SF Construction Starts Source: CoStar Group, Inc. SF Under Construction Source: CoStar Group, Inc. Cleveland Retail Sales Cleveland retail sales rose sharply in 2025, totaling roughly $363 million for the year, about a 29% increase from about $281 million in 2024, driven by stronger midyear transaction activity. Buyer composition has shifted notably, as REIT and public buyers accounted for 42% of acquisitions over 2025, well above the five-year average, reflecting renewed institutional confidence. High-profile transactions included Phillips Edison & Company’s $51.5 million acquisition of Westgate Mall and multiple trades at Pinecrest. Investor demand remains strongest for grocery-anchored and well-located service-oriented centers, supported by tight availability, minimal construction, and stable operating fundamentals, which should sustain steady sales activity. Cleveland Retail Sales Volume Source: CoStar Group, Inc. By the Numbers Source: CoStar Group, Inc. Sales Volume: $52.6M Price Per SF: $115 Cap Rate: 8.7% Vacancy Rate: 4.4% Rent Growth: 0% Asking Rent Per SF: $16.16 Under Construction: 107K SF Delivered: 70.1K SF Absorbed: 167K SF

Cleveland, OH Multifamily Market Report Q3 2025

Cleveland’s multifamily market softened through Q3 2025 as elevated vacancy and slowing demand contrasted with steady, modest rent growth. The vacancy rate held at 9.4%, well above the national average, as absorption of 960 units lagged behind a surge of 2,300 new deliveries. On the supply side, the construction pipeline has contracted to roughly 2,000 units, one of its lowest totals since 2020. Rents continued to rise gradually, with asking rents averaging $1,243 per unit, up 1.6% year-over-year, supported by stronger demand in suburban submarkets like South Cleveland, Lakewood, and Avon/ Westlake. Investment activity showed renewed traction, with sales volume climbing for the third straight quarter and private buyers driving most transactions. However, signs of softening appeared late in the quarter, as Downtown’s high-end segment faced rising concessions amid vacancy near 16%. Overall, Cleveland’s multifamily sector remains stable, backed by steady rent gains, slowing supply, and affordability advantages despite elevated vacancy levels. Key Findings Vacancy remains elevated at 9.4%, reflecting a market still working through a heavy wave of recent deliveries, especially in Downtown where availability is the highest in the metro. The development pipeline has thinned out, with roughly 2,000 units under construction, its lowest level in several years, which should help ease supply pressure once current projects deliver. Rent growth held positive at 1.6% year-over-year, led by stronger-performing suburban pockets, though Downtown properties are increasingly turning to concessions as new Class A units lease up. Cleveland Multifamily Supply & Demand Dynamics Source: CoStar Group, Inc. Cleveland Demographics Source: CoStar Group, Inc. Unemployment Rate: 4.3% Current Population: 2,071,565 Households: 895,178 Median Household Income: $74K Cleveland’s economy continues to evolve beyond its manufacturing heritage, supported by powerful anchors in healthcare, biomedical innovation, and expanding financial services. World-class institutions like Cleveland Clinic, University Hospitals, and MetroHealth drive regional employment, while the 1,600-acre Health-Tech Corridor has attracted more than 170 tech and health-tech companies. Manufacturing remains a key pillar, with re-shoring efforts revitalizing older industrial sites and creating new opportunities for advanced production. Major corporate investment, including Sherwin-Williams’ $600 million headquarters and research campus for 3,500 employees, further strengthens the metro. After years of population decline, the region has posted consecutive annual gains, led by growth in Lorain and Medina counties. Cleveland’s affordability remains a significant advantage, supporting ongoing stability even as the market works through longer-term demographic challenges. Healthcare services is one of Cleveland’s largest industries, and hospital networks Cleveland Clinic, University Hospitals, and Metro Health represent some of the region’s largest employers. Source: CoStar Group, Inc. Population, Labor Force, & Income Growth Source: CoStar Group, Inc. Cleveland Multifamily Construction Cleveland’s construction activity remained elevated in Q3 2025, with more than 1,100 units delivered in the quarter and 2,100 year-to-date, one of the strongest totals in a decade. While Downtown has historically dominated development, recent growth has shifted to Northeast Cleveland and Beachwood, which together accounted for nearly 40% of new deliveries. The pipeline has now thinned to roughly 2,000 units, its lowest level since 2020, though East Cleveland still leads with nearly 800 units underway, driven by the large Belle Oaks redevelopment. Downtown activity has slowed sharply, with just 420 units under construction, the smallest total in almost ten years. Looking ahead, deliveries are expected to pull back by 57% in 2026 as fewer projects break ground, setting the stage for tightening market conditions. Units Construction Starts Source: CoStar Group, Inc. Units Under Construction Source: CoStar Group, Inc. Cleveland Multifamily Sales Cleveland’s multifamily sales activity continued to firm in 2025, with volume rising for the third straight quarter and reaching $88 million in the first half of the year, up 19% year-over-year. Deal flow more than doubled, driven overwhelmingly by private buyers, who accounted for 72% of activity as institutional capital stayed largely absent. Elevated borrowing costs limited larger trades, with only one transaction above $10 million, while most recent sales fell between $1–$5 million. Notable closings included Reynolds Asset Management’s acquisitions of Park Lamont for $21.2 million and The Lumos for $9.4 million, alongside continued demand for value-add assets such as a recent $15.4 million portfolio sale in Parma and Brooklyn. Despite elevated vacancy, steady rent growth and a cooling construction pipeline continue to support buyer interest heading into 2026. Cleveland Multifamily Sales Volume Source: CoStar Group, Inc. By the Numbers Q3 2025 | Source: CoStar Group, Inc. Sales Volume: $18.1M Price Per Unit: $384K Cap Rate: 8.9% Vacancy Rate: 9.5% Rent Growth: 2.0% Asking Rent Per Unit: $1.2K Under Construction: 1.9K units Delivered: 1.1K units Absorbed: 60 units

Cleveland, OH Industrial Market Report Q3 2025

While Cleveland’s economy was once rooted in steel and automotive manufacturing, it has transformed into a diversiﬁed metro. Healthcare stands out as one of the largest industries, led by medical networks like Cleveland Clinic, University Hospitals, and MetroHealth. The metro’s ﬁnancial sector continues to grow, aided by the presence of a Federal Reserve Bank and several banking institutions. Affordable housing and a low cost-of-living further position Cleveland as an attractive destination for businesses and residents alike. Cleveland Demographics Source: CoStar Group, Inc. Unemployment Rate: 4.3% Current Population: 2,071,905 Households: 895,156 Median Household Income: $73,652 Population, Labor, and Income Growth Source: CoStar Group, Inc. Key Findings Cleveland’s industrial vacancy rate reached 4.3% in the third quarter, well below the national average. Small-bay properties lead demand, with availability at around 3.6%. About 1.3 million square feet is under construction, with major projects like Scannell Properties’ facility in Middleﬁeld and Sherwin-William’s center in Brecksville leading development. Most of Cleveland’s investments for 2025 were under $10 million. REITs and user-buyers each accounted for 20% of annual sales volume. Market Performance Industrial performance across Cleveland shows signs of cooling, with a 4.1% vacancy rate and negative absorption of 319,788 square feet in the third quarter. Move-outs pushed absorption negative for the second straight period, though limited construction has kept overall availability well below the national average. Leasing volume has softened, with new leases down 33% year-over-year, though submarkets like Medina County and Strongsville remain bright spots due to strategic access to I-71. Smaller manufacturers dominate leasing activity, over 90% of new leases are under 25,000 square feet, leaving the market sensitive to tariff and cost pressures. Despite slowing rent growth, Cleveland’s constrained supply, modest construction pipeline, and low large-bay availability continue to underpin relatively stable industrial fundamentals. Cleveland Industrial Supply & Demand Dynamics Source: CoStar Group, Inc. Cleveland Construction Industrial construction in Cleveland remains modest, with inventory expanding just 1.6% since 2020—far below the national average of 11.2%. About 380,000 square feet delivered over the past year, a 75% decline from the prior year, as new projects faced slower lease-up amid softening demand. Current construction totals roughly 1.3 million square feet, or 0.4% of inventory, well under national levels. Development is constrained by limited shovel-ready sites, prompting adaptive reuse of older properties such as Highland Business Park and the Forward Innovation Center. Efforts like the 1,000-acre Northeast Ohio Mega Site aim to attract major manufacturers and bolster future industrial growth. SF Construction Starts Source: CoStar Group, Inc. SF Under Construction Source: CoStar Group, Inc. Sales Cleveland’s industrial investment market remains stable, with third quarter sales volume reaching $96.6 million. Most trades are smaller, under $10 million, as institutional investors remain cautious amid modest absorption and slower rent growth. Institutional buyers accounted for just 9% of activity, down from a ﬁve-year average of 26%, while users and REITs each represented about 20%. The largest deal involved Plymouth’s $65 million purchase of nine Cleveland-area properties. Pricing for newer assets averages around $100 per square foot, while older facilities trade closer to $60 per square foot. Sales Volume Source: CoStar Group, Inc.

Cleveland, OH Retail Market Report Q3 2025

Cleveland’s retail market in Q3 2025 maintained stable fundamentals despite softening demand in larger spaces. Leasing activity remained healthy overall, supported by service-based tenants and fitness or discount retailers backfilling vacancies left by bankrupt national chains. Net absorption reached about 420,000 square feet over the past 12 months, while availability stayed near a record low at 5.2%. Asking rents rose modestly, up 1.3% year-over-year to an average of $16.25 per square foot, below the metro’s 10-year average but still outpacing the troughs seen earlier in the decade. Rent growth varied by submarket, with stronger gains in Chagrin Corridor and Lyndhurst/Landerhaven. Limited new supply and steady small-tenant leasing continue to underpin market stability despite headwinds from slower population growth and higher operating costs. Key Findings Cleveland’s retail market maintained stability in Q3 2025, with 421,000 SF absorbed and vacancy at 4.5%, reflecting resilient tenant demand despite limited new deliveries. Market rents climbed 1.3% year-over-year to $16.25 per SF, supported by low availability and steady leasing from service-based and fitness tenants across key submarkets. Investment activity totaled $104 million with an average price of $117 per SF, while a modest 177,000 SF under construction underscores disciplined development and balanced market fundamentals. Cleveland Retail Supply & Demand Dynamics Source: CoStar Group, Inc. Cleveland Demographics Source: CoStar Group, Inc. Unemployment Rate: 4.3% Current Population: 2,072,105 Households: 895,142 Median Household Income: $73,590 Cleveland’s economy in Q3 2025 reflects a well-balanced mix of legacy industries and emerging growth sectors. Once dominated by steel and automotive manufacturing, the metro has diversified significantly, with healthcare now serving as its economic backbone, anchored by major employers like Cleveland Clinic, University Hospitals, and Metro Health. The city’s Health-Tech Corridor has strengthened Cleveland’s biomedical and technology presence, drawing significant investment and innovation. Financial services continue to expand, supported by the presence of a Federal Reserve Bank. Despite long-term population decline, modest growth in 2024 and rising numbers in Lorain and Medina Counties signal renewed regional momentum, helped by Cleveland’s notably affordable cost of living. Population, Labor, & Income Growth Source: CoStar Group, Inc. Cleveland Retail Construction Construction activity in Cleveland’s retail market remained limited in Q3 2025, consistent with long-term trends of modest development. Only 177,000 square feet were underway, representing just 0.1% of total inventory, one of the lowest levels among major U.S. metros. Elevated financing costs and cautious investor sentiment have kept speculative projects to a minimum, while most ongoing developments are fully or largely preleased. Deliveries totaled 152,000 square feet over the past 12 months, falling below the decade average. With less than 5% of space under construction still available, new supply poses minimal risk to existing properties, helping sustain Cleveland’s historically tight retail fundamentals. SF Construction Starts Source: CoStar Group, Inc. SF Under Construction Source: CoStar Group, Inc. Cleveland Retail Sales Retail investment activity gained strong momentum through Q3 2025, reaching $104 million in quarterly sales and reflecting the market’s stability. Private buyers remained active, while REITs increased their presence, accounting for over 40% of transactions, well above historical averages. Major trades included Phillips Edison & Company’s $51.5 million purchase of Westgate Mall, one of Ohio’s top-performing shopping centers, and retail components of the Pinecrest lifestyle center totaling $78 million. Grocery-anchored and service-oriented centers, such as Parkway Shoppes and Kruse Commons, continued to attract attention. With limited new supply and consistent demand, Cleveland’s retail investment market remains well-positioned heading into 2026. Cleveland Retail Sales Volume Source: CoStar Group, Inc. By the Numbers Source: CoStar Group, Inc. Sales Volume: $104M Price Per SF: $117 Cap Rate: 8.6% Vacancy Rate: 4.5% Rent Growth: 1.3% Asking Rent Per SF: $16.25 Under Construction: 177K SF Delivered: 152K SF Absorbed: 421K SF

CRE Trends You Won’t See in the Data

The retail landscape is in constant flux, shaped by evolving consumer behaviors, rapid technological advancements, and shifting economic tides. In this dynamic environment, staying ahead requires more than just reacting to trends—it demands a deep understanding of the market’s inner workings. At Matthews™, our market leaders are at the forefront of this transformation, navigating complex challenges and capitalizing on emerging opportunities. In this article, they share their invaluable insights, offering an inside perspective on the retail segment’s current state in their markets and the latest innovations driving the future of retail. Dallas, Texas The Dallas retail market benefits from a rare combination of strong population growth, corporate relocations, and business-friendly policies—but what often gets overlooked is how underserved certain suburban trade areas still are. While the headlines focus on legacy corridors like Uptown or Preston Hollow, pockets in areas like Prosper, Forney, Celina, and Midlothian offer compelling returns with significantly less competition. As such, leasing momentum has begun to pick up in suburban submarkets—especially in areas with new rooftops and school developments. The eastern end of Henderson Avenue is set for a major revitalization. Trend Tracker: Upcoming Buildouts Acadia Realty Trust and Ignite-Rebees have broken ground on a 161,000-square-foot mixed-use development spanning a quarter-mile between Glencoe Street and McMillan Avenue. “Designed by Dallas-based GFF, the project will feature 10 architecturally distinct buildings housing 75,000 square feet of retail space, 12,000 square feet of chef-driven restaurant space, and 74,000 square feet of office space,” Gross said. Top Retail Spot Katy Trail Ice House: It’s become a go-to for brokers, clients, & locals alike. It captures the essence of Dallas: casual, energetic, & relationship-driven. – Andrew Gross, Managing Director Houston, Texas Houston has enjoyed a low cost of living, in large part thanks to the metro area not having traditional zoning, Market Leader Patrick Graham stated. “Voters have rejected zoning ordinances multiple times,” Graham said. “Instead of zoning, we have private deed restrictions and municipal development regulations. That has massive implications on commercial real estate investments in this market.” “An investor should not buy or sell a commercial property without local representation to offer a guiding hand,” Graham said, “as implications from zoning can include uncertainty, risk, and planning challenges. This may be different from what an investor from a different market is accustomed to when their prior markets had strictly controlled local zoning ordinances,” Graham stated. Yet, without zoning, the market can react more quickly to supply and demand factors, he added. “If a shopping center or multifamily complex in Houston is charging above market rents because of high demand, the market will adapt,” Graham said. The lack of zoning represents a lower barrier to entry than more restrictive markets. Trend Tracker: Coffee Shop Moves “Payton Torres and Luke Armetta in the Houston office are representing a new concept coming to market called Black Sheep Coffee,” Graham said. “They’ll be adding locations in 2025 and 2026 throughout Houston. Any shopping center will be enhanced with Black Sheep Coffee as a tenant in an end cap with a drive-thru.” With 14 specialty coffee projects permitted through Q3 2025, Houston’s caffeine infrastructure continues outpacing national growth averages. Favorite Retail Spots Sitting out on the patio at Mendocino Farms for lunch in Uptown Park on a pretty day is hard to beat. True Food Kitchen in BLVD Place and Local Foods on Post Oak are across the street from our office and making me convert to a healthier diet. I do, however, still enjoy a smash burger-double with fries and a cookies and cream shake from Burger Bodega on Washington. Cleveland, Ohio Retail in Cleveland remains historically tight and recorded a 4.5% vacancy rate as of Q2 2025. There has been ongoing positive absorption for the past two quarters, with spaces being quickly leased up. Due to consistently high absorption levels, about 40% of available space is Class C, creating limitations for the already tight retail sector. According to Market Leader Matthew Wallace, the lack of space is a function of the lack of development over the last decade. The construction decline pushed the Cleveland retail sector to focus on experiential retail opportunities. Trend Tracker: Experiential Retail Due to shifting consumer preferences, experiential retail is the name of the game. “Experiential retail has come about in response to increased online competition and a refocusing of retailers on what the customer wants,” Wallace said. “Since those retailers are successful, space has become limited. You have to draw people in with great service, convenience, or unique value play. As experiential retail drives demand in Cleveland, Wallace added Crocker Park as a notable property that continues to lean into consumer experiences. Located in the Westlake submarket, the open-air mall boasts experiences from tenants like Color Me Mine, Urban Air Adventure Park, and The Escape Game. With its vast opportunities for consumers, Crocker Park recorded nine million visits in the last 12 months, and an average dwell time of 68 minutes. Retailers to Watch Dining: Local restaurants near me are where I splurge. Thyme Table, Boss Chick & Beer, & Taki’s Greek. Can’t get enough. Shopping: “Ticknors Men’s Clothiers at Beachwood Place Mall. Gotta look sharp! Denver, Colorado Supply is historically tight in Denver with approximately 381,000 square feet under construction, down 21.8% from 2024. “This scarcity of supply has created a landlord-friendly market and led to availability rates around 4.7%, which is among the lowest in a decade,” stated Brayden Conner, Associate Market Leader. As supply remains tight, Conner added that he expects leasing velocity in high foot traffic areas to remain high. “As we see Denver continue to grow, we are seeing tenants put more emphasis on being near areas with heavy foot traffic counts like Sloan’s Lake, Lower Highlands & RINO,” Conner said. “There is also increased demand in suburban submarkets like Parker, Lone Tree, and Thornton.” Trend Tracker: Development Spotlight “While Denver is known for its abundance of outdoor activities, including skiing, biking, golf, and hiking, its retail trends are casting a similar picture,” Conner stated. Conner also highlighted the ongoing movement for new developments across the metro. “Single-tenant development continues to be an arms race, with national tenants being the most aggressive on core locations,” he said. “New concepts are having to settle on locations outside the city. Regional brands like Swig, Good Times Burgers, and Mad Green continue to expand their footprints locally and are ramping up growth throughout the region.” As people continue to move to the area and prioritize experiences, entertainment venues and interactive retail concepts are driving demand. Standout Retail Location The Sloan’s Lake/Edgewater neighborhood, located west of downtown, is a market I would continue to keep a close eye on. Tennyson Street in that area has seen an uptick of luxury brands revitalizing the area. San Diego, California With expenses increasing across the county, investors need to be cognizant as to how this trend can impact their tenants, according to Market Leader, Keegan Mulcahy. “Expenses have been climbing substantially over the past two to three years, and owners who have gross leases have felt the pain as it eats into their NOI,” Mulcahy said. “However, even for owners with NNN leases, the trend still impacts their assets as tenants who are responsible for these expenses may be struggling to remain profitable.” This activity has led to a decreased number of tenants that can afford to pay the current market rents, in conjunction with the increased expenses. “Ideally, landlords can negotiate sales reporting clauses in their leases,” Mulcahy emphasized. For landlords, understanding their tenant’s store sales and profit margins is critical. Trend Tracker: Latest Retail Movement “Investment sales velocity is starting to see an uptick,” Mulcahy said. “Particularly, the uptick has been seen with lower price point assets that purchasers can acquire all cash or are utilizing very low LTV, which helps deals to still pencil with today’s interest rates.” Additionally, there are high volumes of opportunities with tenants who are backfilling vacant drugstores and bank branches. “With the amount of vacancy in both sectors, tenants and landlords are starting to get creative in ways to repurpose these buildings,” Mulcahy said. Favorite Retail Spots One Paseo – A ±23.6 acre mixed-use site boasting Class A office space, 40+ shops, & luxury apartments. Valley Farm Market – A grocer with top-quality groceries & ready-made food. Los Angeles, California Los Angeles retail is defying national trends. According to Market Leader Erik Vogelzang, infill locations are resilient, propped up by limited new supply and near-impossible entitlements. “This creates a supply-demand imbalance that keeps quality retail assets in demand,” Vogelzang said. He added that a shift is occurring in the retail market. “The focus is moving away from traditional shopping toward experiential retail—restaurants, bars, coffee concepts, boutique fitness, and wellness,” Vogelzang stated. People want to gather, not just transact. Trend Tracker: Expansion Movement “Stormburger is one to watch. Growing fast, brand-forward, and picking smart markets with precision. They’re building real brand equity early and it’s translating into smart expansion.” Top Retail Destinations “The Point in El Segundo hits every note. Lifestyle-driven, hyper-local, & constantly buzzing. Chapman Plaza in K-Town is another standout with heritage architecture & booming foot traffic. Culver Steps is carving out its own cool factor with creative energy, a great tenant mix, & a perfect fit for that Westside tech-meets-culture vibe.” Abbot Kinney in Venice is still a must-hit for brand exposure, walkability, & consistent consumer draw. Downtown Manhattan Beach is a strong mix of daytime & nighttime traffic. We just placed Bread Head there in a fantastic deal. The South Bay as a whole is having a real moment.” Phoenix, Arizona Following the low retail vacancy rate trend across the country, Associate Market Leader Milton Braasch stated that Phoenix recorded a record-low vacancy rate of 4.6% during 2024. “In a broad national market that is facing headwinds, the investment and continued population growth of the Phoenix metro can somewhat insulate the market to see continued strong performance,” Braasch said. Braasch added that Maricopa County, which encompasses the Phoenix metro, is one of the fastest-growing counties by population growth nationally. “I am continuing to watch this trend as we move through 2025 as it will drive where our market is headed,” Braasch said. “I foresee this growth continuing in all parts of the Valley, which will continue to push our CRE market forward as a pacesetter in the United States.” More people = more demand More demand = economic growth Economic growth = CRE prosperity Trend Tracker: Transaction Movement “The biggest challenge we face in the transaction market continues to be navigating the cost of debt and managing the bid-ask spread as brokers,” Braasch said. “The more realistic we can be with clients on current market conditions, the more often we can bring out deals that are priced to sell, versus pricing six months in the past with deals that do not pencil for buyers.” Thriving Restaurant Scene “The Phoenix restaurant market is one that is always evolving. With the revitalization of Downtown Phoenix & the continued growth of Scottsdale, new restaurant concepts are always coming into the Valley & looking to expand their footprint.” “I am a food-forward person, so my favorite thing to do is find new great restaurants. Though it is hard to keep up with trying them all since so many new concepts are popping up all the time.” Nashville, Tennessee The ongoing population increase in Nashville led to a rise in retail demand, pushing the vacancy rate to 3.3% as of Q2 2025. This is a continuing trend for the metro as vacancy has been below 3.5% since 2022. “It feels like all of Nashville is increasing significantly,” stated Managing Director Hutt Cooke. “There has been consistent demand in Nashville for nearly a decade.” Cooke stated that a prominent factor for Nashville is its investment community. “The largest landlords in this market did not just get lucky by being in Nashville,” he expressed. “They saw the growth and opportunity and took advantage of it.” The metro’s strong investment environment is also aided by the variety of investors coming to Nashville. “In recent years, we have had a lot of coastal capital come into the city and pay extremely high prices,” Cooke added. “Local folks have a low cost basis, keep up with market rent, and cash flow. Different business models and they both can work.” Tenants and investors see the long-term growth of Nashville and want to be a part of it. Trend Tracker: QSR Competition According to Cooke, investors should keep an eye out for new QSRs coming to Nashville. “QSR operators are exploding the Nashville market,” he said. “We are seeing new corporations make a big splash in Nashville to keep up with their competitors.” New QSR tenants are taking over projects under 10,000 square feet, with tenants like Dutch Bros Coffee and Whataburger actively expanding in Nashville. Dutch Bros Coffee recently made a move in its growth plans by leasing a space in Murfreesboro that will be its 13th store in the metro. Newcomers and Local Favorites “I am very excited about the new Italian sandwich shop, All’Antico Vinaio. They recently opened two new locations in Nashville.” “Being located in Broadwest, I go to Halls at least once a week. It is hard to beat a Halls Chophouse Steak.” Chicago, Illinois While investors may target areas like The Loop or Magnificent Mile, other locations are important to track for their strong performance, according to Market Leader Joshua Bluestein. Bluestein added that performance levels are varied across Chicago. “The areas with the most increase in sales and leasing velocity are in single-tenant and high-traffic corridors, as well as Chicago suburbs,” he said. “In the suburbs, vacancy rates have dropped to a near 20-year low, mainly due to quite a bit of new development.” Meanwhile, core areas are noting a slowdown in performance. “Leasing and sales are slowing down in Downtown Chicago, such as The Loop and River North,” Bluestein added. “Vacancy rates in The Loop are about 30% with concerns over high rent costs, staffing, and safety issues.” The south and west sides of Chicago are showing great promise and growth, driven by strong local demand and limited e-commerce penetration. Trend Tracker: Value and Luxury Retailers “The most active retailers in the Chicago MSA right now are value-oriented retailers like GAP and Uniqlo who are making a splash with new locations in core, high traffic areas, such as Michigan Avenue,” Bluestein said. “Premium and boutique brands, like Hotel Chocolat and Marine Layer, are also adding new locations. These higher-end brands are targeting areas like Lincoln Park for their stores.” Areas to Monitor “Chicago is full of neighborhoods with great retail like Gold Coast and Lincoln Park. There is retail for everyone in Chicago!” “The Gold Coast is especially popular as the area consists of high-end retailers, such as YSL, Peter Millar, among many others. The area also boasts quite a few high-end restaurants and upscale hotels, like the Waldorf Astoria.” Northern New Jersey, New Jersey Associate Market Leader Jermaine Pugh stated that while Hudson County may be overlooked for nearby New York City, it offers a variety of retail opportunities. “Hudson County’s Gold Coast shares many of the same development fundamentals as Brooklyn, with strong rent growth, prime lots, and ideal conditions for transit-oriented, mixed-use projects,” Pugh said. “Unlike New York City, the area benefits from pro-growth local governments, streamlined approvals, and more landlord-friendly rent laws.” Pugh added that cities like Jersey City, Hoboken, and Weehawken offer a more efficient and profitable development path without the regulatory burdens faced in New York City. Yet, Pugh said that the bid-ask gap is necessary to watch as it is occurring on most active listings. “Buyers can’t raise their offers, due to current high interest rate pressures, while sellers are reluctant to lower prices since they can’t clear their debt at reduced price points,” he emphasized. “This disconnect will likely come to a head as loans mature, forcing owners to either sell or inject additional equity to meet loan-to-value requirements.” These tenants drive demand in mixed-use and grocery-anchored centers, especially in suburban and transit-oriented areas. Trend Tracker: New Tenant Arrivals According to Pugh, the most active retail tenants are food and beverage operators, boutique fitness and wellness brands, and healthcare or daily-needs service providers. Some particular tenants adding new locations in the area are CAVA and Sweetgreen as Pugh said they are targeting New Jersey suburbs with high-income demographics for their growth. CAVA is adding new locations in East Brunswick, Union, and Marlton; meanwhile, Sweetgreen is delivering properties in Morristown and Westfield, with the Westfield location recently opened. Top Retail Destinations “The best retail spots are in Northern New Jersey’s Gold Coast. Hoboken’s Mile Square is an eclectic mix of national retailers, trendy boutiques, & authentic global cuisines.” “A go-to spot is Downtown Montclair. This affluent suburb is known for its vibrant arts, culture, & dining scene. Its main retail strip—Bloomfield Avenue—thrives on high-end shops, boutique fitness, bookshops, indie cafés, & experiential concepts that align with the community’s creative energy.” New York, New York As Manhattan multifamily, mixed-use, and retail-driven property values have remained relatively stagnant since Q2 2023, a once-in-a-decade opportunity is presenting itself for investors to purchase at 10-year highs for yield and 10- to 20-year lows on a price per square foot basis, depending on property location and degree of rent regulation. The market is currently experiencing the longest sustained duration of offering properties for sale in downtown Manhattan with above 6% yields since 2010-2011, as well as multifamily buildings selling for below $500 per square foot, which has also not occurred in prime downtown markets since 2010-2011. Trend Tracker: Transaction Movement The Matthews™ New York specialists are currently marketing properties in Chelsea at pricing that is 25-30% lower than where comparable properties sold for on a price per square foot basis in 2015, showing that upside in both yield and basis is available. The current interest rate environment will create opportunities for future recapitalization, appreciation, and outsized returns in a market that has historically had the highest barrier of entry. Transaction volume will likely remain low, while first-time Manhattan buyers continue to find attractive yields. Both pricing and volume will increase when the Federal Reserve begins a consistent campaign to target lower interest rates. Why New York? We look for people who have spent time here, are enthusiastic about what the city offers, and recognize its uniqueness is not something you can find anywhere else. “The energy you feel in the city reverberates off the density of the buildings around you and what goes on within their walls. If a candidate’s eyes light up when they talk about the possibility of working on that as a product of their profession, then they’re probably for us,” Cory Rosenthal, Executive Managing Director & National Director, Multifamily

Andrew Gross

Senior Managing Director

9/19/25

Q225 | Industrial Market Report | Cleveland, OH

Q2 2025 Cleveland Industrial Market Report Key Findings Cleveland recorded an increase of 5,600 residents in 2024, which is the second consecutive year of population growth. Medina County and the Strongsville submarkets recorded an uptick in leasing activity, up 50%annually in the ﬁrst half of 2025. Construction is at its highest level in two years with 2 million square feet underway. Due to the lack of vacant land, recent deliveries are made up of repurposed shopping centers and older manufacturing facilities. By the Numbers Sales Volume: $106M Average Sale Price Per SF: $50 Cap Rate: 10.5% Vacancy Rate: 4.2% Rent Growth: 3.4% Average Market Asking Rent Per SF: $6.62 SF Under Construction: 2M SF Delivered: 10K | Q2 2025 | Source: CoStar Group, Inc. Cleveland Market Performance Cleveland’s industrial sector noted negative absorption levels for the ﬁrst half of 2025, with -984,000 square feet absorbed in the second quarter. The drop in activity can be attributed to increased move-outs, as well as low availability. Cleveland’s availability rate has been around 5% for the past two years, far below the national rate of 9.6%. Due to the low availability, renewals accounted for the most absorption activity in recent quarters. As Cleveland’s fundamentals remain tight, rents grew by 2.4% over the past 12 months. At the end of the second quarter, the market’s average asking rent was $6.62 per square foot. Newest additions across Cleveland note the highest rents around $7.50 to $8.00 per square foot. Lower rents are most often found in older properties in northern suburbs. For example, Champion Moving recently leased 41,300 square feet in the Wickliﬀe/Willowick submarket at $4.50 per square foot. Cleveland Industrial Supply and Demand Dynamics Source: CoStar Group, Inc. Construction Activity While Cleveland recorded slow construction levels in the past few years, construction ramped up in the second quarter with a total 2 million square feet on the way. The largest facility under construction will deliver in the Geauga County submarket in October 2025. It is made up of 747,000 square feet, and will be the submarket’s greatest addition over the past 25 years. Cleveland Industrial SF Under Construction Source: CoStar Group, Inc. Sales Update Sales remain greater than pre-pandemic levels, with deals 23% above the level from 2015 to 2019. Private investors account for the most deals over the past 12 months, making up 60% of these sales. Transaction levels increased in the second quarter, recording a total $106 million in deals. Cleveland Industrial Sales Volume & Price per SF Source: CoStar Group, Inc.

Q225 | Multifamily Market Report | Cleveland, OH

Q2 2025 Cleveland Multifamily Market Report Market Overview As of Q2 2025, Cleveland’s multifamily market is navigating a transitional phase with stabilizing fundamentals following years of supply-demand imbalance, which was intensified by the pandemic and accelerated deliveries. While vacancy remains elevated at 8.7%—above both the metro’s long-term average and the national benchmark—the quarter brought encouraging signs of improvement. Over the past 12 months, the market absorbed 1,500 units, a figure 30% above pre-pandemic levels, led by strong demand for Class B, mid-priced units in submarkets such as South Cleveland and Avon/Westlake, where tightening vacancy supported rent growth in the 3–3.5% range. This marks a notable turnaround from the record deliveries and negative net absorption that defined 2022–2023, suggesting the market is beginning to recalibrate heading into the second half of the year. Despite persistent vacancy challenges, Cleveland ranked among the top ten U.S. markets for rent growth, recording a 2.2% year-over-year increase— double the national average of 1.1%. Average asking rents reached $1,245/month, with the market retaining a competitive edge at 30% below the national average and roughly 10% under nearby Cincinnati. Construction activity remains significant, with 2,200 units delivered in the past year and 2,400 more underway, exerting the most pressure on Class A properties where vacancy is 13.6%, compared to 8.1% for Class B and 7.7% for Class C. Downtown and East Cleveland have been development hot spots, with projects such as The Bell and Silver Hills at the Flats contributing to supply expansion. However, construction starts have slowed to multi-year lows, indicating a likely pipeline cooldown that could help ease vacancy pressures in 2026 while supporting a more balanced and sustainable growth trajectory. Overall, Cleveland’s multifamily sector appears positioned for gradual recovery if demand continues to strengthen. Under Construction Source: CoStar Group, Inc. Cleveland multifamily shows signs of stabilization as demand rebounds in Q2 2025. Supply & Demand Dynamics Source: CoStar Group, Inc. By the Numbers Sales Volume: $62.9M Rent Growth: 2.4% Vacancy Rate: 8.5% Cap Rate: 8.8% Market Asking Rent Per Unit: $1,248 Units Under Construction: 2,652 Units Delivered: 305 Units Absorbed: 592 | Q2 2025 | Source: CoStar Group, Inc. Sales On the capital markets front, sales activity remained subdued, with $113 million in volume over the past 12 months, well below the 10-year average of $172 million. The majority of deals were below $10 million, reflecting a market increasingly driven by private buyers and value-add investors targeting smaller Class B assets. Cap rates remained elevated, and the absence of larger institutional deals signals continued investor caution amid high interest rates. While fundamentals are stabilizing, Cleveland’s multifamily outlook is not without headwinds. The metro continues to grapple with population loss, shrinking by 0.6% from 2020 to 2024, and maintains above-average exposure to struggling sectors like manufacturing. Nonetheless, submarkets with strong healthcare and education anchors—such as University Circle—may offer resilience, especially as affordability and a slowdown in new supply begin to rebalance market dynamics. Cleveland Multifamily Sales Trends Source: CoStar Group, Inc.

Q225 | Retail Market Report | Cleveland, OH

Q2 2025 Cleveland Retail Market Report Highlights Performance is strong in the sector, as rental space availability is nearing an all-time low, at just 5.2%, and service-oriented and experimental tenants are absorbing backfilled spaces. Rent growth remains healthy and location-driven, with submarkets such as the Chagrin Corridor and Lyndhurst posting rent gains of nearly 2%, and the Rockside Corridor saw a 1.5% increase. Private buyers and REITs primarily drive larger sales transactions, while smaller deals are attracting interest towards service-anchored and grocery-anchored centers. By the Numbers Sales Volume: $102M Cap Rate: 8.6% Market Sale Price Per SF: $114 Vacancy Rate: 4.7% Rent Growth: 4.0% Market Asking Rent Per SF: $16.35 SF Under Construction: 192K SF Absorbed: 432K SF Delivered: 123K | Q2 2025 | Source: CoStar Group Demographics Unemployment: 3.8% Current Population: 2,074,423 Households: 901,548 Median Household Income: $71,602 Market Performance Minimal construction, robust leasing activity, and increasing investor demand are key drivers of Cleveland’s success within the retail market. Tenant absorption is undergoing quick turnarounds, especially in busy suburban corridors. Leasing volumes have skyrocketed within the first half of the year as fitness centers, entertainment venues, and discount retailers reoccupy second-generation space, particularly in spaces under 10,000 SF. Submarkets such as Medina County, the Northeast corridor, and select areas in the Southwest are top producers in Q2 based on their affordability, accessibility, and tenant mix. With just 192,000 SF currently under construction, much of the space already pre-leased, this is driving a landlord-driven market, allowing firmer rent holds and price pushes, particularly in well-positioned retail corridors with strong daytime demand. Overall, Cleveland’s market performance is defined not by rapid expansion, but by a disciplined equilibrium—characterized by low vacancy, selective tenant growth, and stable investment that reflects confidence in the region’s long-term retail resilience. Market Asking Rent Per SF and Vacancy Rate Source: CoStar Group Under Construction A few larger retail projects are moving forward despite the region’s limited construction pipeline. The most significant is a 56,000-square-foot Acme store in Medina County, which is fully pre-leased and is expected to deliver by mid-2027. In Lorain County, a 47,582-square-foot building at 4415 Leavitt Road is currently underway, with a target completion date of late 2025. Brecksville’s Valor Acres is adding two more retail pads, 35,280 and 10,980 square feet, both integrated into a broader mixed-use setting. These projects, while limited in number, reflect targeted investment in suburban growth areas with firm pre-lease commitments. Sales The Cleveland retail investment market is showing steady growth, with Q2 2025 property sales totaling approximately $75.4 million, marking a 5.3% increase over Q2 2024. Investor appetite remains strong, particularly among private buyers, who continue to dominate the landscape, drawn by low availability rates, limited new construction, and the relative stability of the region’s retail fundamentals. Single-tenant assets and grocery-anchored shopping centers remain top targets, accounting for 70% of total sales activity. Major deals included: The $51.5 million sale of Westgate Mall in Fairview Park to Phillips Edison & Company, a Cincinnati-based public REIT, marked the most significant retail transaction of the year; the property is anchored by Target, Lowe’s, Kohl’s, and Petco and ranks among the most visited shopping centers in Ohio. Kruse Commons in Solon was acquired for $7.2 million at a 6.8% cap rate, with the property approximately 80% occupied at the time of sale. Sales Volume and Market Sale Price Per SF Source: CoStar Group 12-Month Market Leaders: Top 10 Performing Submarkets

Multifamily Markets in 2025: Navigating Oversupply, Rebounding Demand, and Institutional Revival

U.S. Multifamily Market Trends 2025 As U.S. multifamily market trends evolve, a clear narrative emerges: the sector is recalibrating after an era of hypergrowth. Across the Sunbelt, Midwest, and coastal metros, rising vacancy rates, tempered rent growth, and a sharp slowdown in construction activity have created a bifurcated landscape. While many cities face supply overhangs, others are benefiting from demographic tailwinds, resilient demand, and the re-entry of institutional capital. This article breaks down the multifamily dynamics across key U.S. markets and outlines the strategic shifts shaping investment and development activity in the year ahead. Sunbelt Metros: Supply Surges Meet Growing Pains Atlanta, Nashville, and Jacksonville Atlanta has witnessed a dramatic spike in vacancy rates—rising from 5.5% in 2021 to 12.5%—due to an onslaught of new Class A supply. Rents have fallen across luxury assets, with concessions such as two months’ free rent now commonplace. Similarly, Nashville added 13,000 units in 2024—nearly double its 10-year average—leading to elevated vacancy and softened rent growth. Jacksonville, too, is facing growing pains: a 13.4% vacancy rate underscores oversupply concerns, although a construction slowdown and rebounding rent projections into 2025 offer signs of recovery. Tampa, Fort Lauderdale, and Miami Tampa leads Florida markets in construction, delivering over 10,500 units by late 2024. Though vacancies remain elevated, investor interest in premium assets like The Pointe on Westshore continues to surge. In Fort Lauderdale, affordable submarkets outperformed luxury areas, highlighting a growing affordability divide. High absorption and strong investor interest suggest resilience despite moderating fundamentals. Austin, Dallas-Fort Worth, and Houston Austin remains the most oversupplied market nationally, with a 15.3% vacancy rate despite record absorption. New construction has slowed sharply, which may help the market recover by mid-2025. Dallas-Fort Worth (DFW) and Houston echo similar dynamics: robust demand (15,200 and 20,000 units absorbed, respectively) has been overshadowed by new supply, keeping vacancy rates above 11%. Southeast and Midwest Markets: Rebalancing in Progress Louisville and Birmingham Vacancy rates climbed in both cities due to aggressive new deliveries. Louisville’s rent growth remains healthy at 3% despite a 13% vacancy rate in Southern Indiana. Birmingham‘s adaptive reuse trend—converting offices into apartments—reflects creative responses to market saturation. Rent growth has slowed to 0.5%, and investor activity remains tepid. Chicago and Cleveland Chicago presents a rare picture of stability. With a 5.3% vacancy rate and low construction activity, it has emerged as one of the most balanced multifamily markets in the U.S. Cleveland, meanwhile, is rebounding: 2024 saw record absorption and leading rent growth at 3.2%, despite a market-wide vacancy of 8.3%. Private investors are increasingly driving transactions amid institutional caution. Minneapolis A tale of two markets: suburban areas are thriving, while downtown vacancy remains high due to safety concerns and changing work patterns. Overall, the metro’s vacancy rate dropped to 7.5% in 2024, and suburban rent growth continues to support market stability. Western Markets: Pressure Mounts Despite Strong Demand Phoenix and Denver Phoenix saw 18,000 units absorbed in 2024, but the addition of 22,000 units kept vacancies at 11%. With 27,000 more units under construction, oversupply concerns loom. Denver posted record absorption but continues to battle a pipeline of 91,000+ units, keeping the metro’s vacancy rate at nearly 11%. Both markets are seeing a shift toward smaller, more affordable investment targets. Los Angeles and the San Fernando Valley Los Angeles faced a devastating wildfire crisis that destroyed 10,000+ structures, driving expected rent hikes of up to 12% in 2025. The San Fernando Valley stands out with the lowest vacancy rate in California at 3.6% and outsized investor activity totaling $2.5 billion. San Diego and Sacramento San Diego‘s housing shortage persists despite improved absorption. Rent growth is sluggish at 0.6%, with affordability concerns prompting shared housing trends. Sacramento, on the other hand, has seen improving Class A demand and a vacancy drop to 6.5%, fueled by slowed construction and rising rents. East Bay and Orange County The East Bay continues to grapple with high-end rent declines (-2%) but shows promise through slowing construction and increased investor confidence. Orange County remains resilient with a 4.2% vacancy rate and one of the most expensive, yet stable, rent markets in the country. Northeast: Resilient Giants and Transit-Oriented Expansion Brooklyn and Manhattan Brooklyn’s vacancy rate of 2.6% remains among the lowest nationally, supported by strong absorption and modest rent growth (2%). Manhattan mirrors this trend, with 7,000 units absorbed in Q2 2024 and average rents exceeding $3,200. Investors are laser-focused on premium assets in these rent-stabilized, supply-constrained markets. Northern New Jersey New Jersey is experiencing record absorption with a skew toward luxury units. However, affordability challenges persist, prompting investment in transit-oriented developments like Vermella Broad Street and The Crossings. Payroll growth and a strong job base are supporting long-term multifamily strength. Institutional Capital Reawakens in 2025 Following a two-year pause, institutional investors are reentering the multifamily space. Blackstone’s $10 billion acquisition of AIR Communities in 2024 was a signal of confidence. With interest rates declining and alternative lenders stepping in, capital is unlocking for core and core-plus deals. Markets with stable fundamentals—like Chicago, Orange County, and parts of the Sunbelt—are attracting early waves of institutional funding. Strategic Focus Areas Geographic Shift: Sunbelt cities with paused pipelines and strong absorption (Austin, Jacksonville) are back in focus. Asset Selection: Workforce housing and mid-market suburban assets are outperforming luxury units in both demand and investment return. Development Retrenchment: Construction starts have fallen nationally, creating a more favorable leasing environment and room for rent growth. Understanding the shifting dynamics in U.S. multifamily market trends 2025 is essential for developers and investors aiming to time their reentry and capitalize on tightening supply-demand conditions. Outlook: Rebalancing Today, Growth Tomorrow While U.S. multifamily market trends across the U.S. are at varying stages of recalibration, the underlying fundamentals remain strong. Population growth, job creation, and homeownership constraints continue to fuel renter demand. The retrenchment in new development is setting the stage for a more balanced 2026, with absorption expected to reduce vacancy and reignite rent growth in many metros. With institutional capital mobilizing and interest rates easing, the second half of 2025 may mark the beginning of a new multifamily investment cycle—one defined not by the breakneck speed of past years, but by discipline, differentiation, and strategic foresight.

Hospitality Classes: 2024 Performance

Hospitality Classes: How Bifurcation Shaped 2024 Hospitality’s Slowdown During 2024 The hospitality segment was largely impacted by the high interest rate environment that occurred in 2024. Hotel performance began to decrease throughout the year as national RevPAR grew by only 1.7% year-over-year, which was driven by 1.5% rate growth. When dividing the hospitality classes, the full and select service segments noted RevPAR growth of 1.5% at the end of Q3 2024; at the same time, RevPAR for the limited service segment decreased by 2.8%. Together with these performance metrics, sales also took a hit. Transaction volume recorded $5 billion at the end of Q3 2024. This sales activity is below the peak from 2019, and it is also around 30% lower than sales velocity from 2023. Overall, the trends noted for hotels in 2024 have led to a split in performance for each of the hospitality sectors. Hotels on the lower end noted decreases in room bookings, while higher-end hotels marked increased demand from the influx in group travel. These dynamics underline the mixed performance within the hospitality sector, with clear distinctions between budget and premium offerings. The high interest rate environment has not only dampened operational performance, but also suppressed transactional activity. Full Service Despite the overall decline in hotel sales volume nationally in 2024, the full service segment stood out with strong transaction velocity and notable contributions to the sector’s performance. The return of corporate and leisure travel also boosted the segment’s standout activity. Leisure travel rebounded strongly, increasing ADR by around 20% from pre-pandemic levels, underscoring robust demand for premium hospitality experiences. Group travel also played a pivotal role, increasing by 2.1% through October 2024, positively impacting larger markets and driving ADR growth by 3.8%. Host Hotels has been an active player in boosting sales volume for this segment. In 2024, the hospitality REIT targeted Nashville for two trades as part of a portfolio. It acquired the 1 Hotel, as well as Embassy Suites by Hilton, in April 2024, and both properties are located in Nashville’s CBD. Host Hotels’ acquisition of these locations totaled $530 million, boosting full service hotel sales in Nashville to $869 million. Select Service The hospitality sector saw a slowdown in construction activity in 2024, but the select service segment emerged as a bright spot, with notable increases in inventory and strategic expansions. Room inventory for this sector grew by 3.3%, outpacing the full service segment by 0.5%. Home2 Suites by Hilton has been actively expanding within the select service space and targeted Phoenix for one of its new developments. A key project in 2024 was the transformation of a 95-year-old building located in Phoenix’s CBD into a modern hotel. The remodeled property features 148 rooms, a meeting space, and an expanded lobby designed to accommodate both leisure and business travelers. In May 2024, the newly-developed property sold for $43.3 million to Chatham Lodging Trust, underscoring investor interest in well-positioned select service properties. Limited Service Across the country, lower-end hotels have been impacted the most, with limited service construction activity decreasing more than other hospitality segments. This decline reduced inventory from 2,044,303 rooms during Q4 2023 to 2,034,351 rooms in Q4 2024. Demand in the segment also dropped as it decreased 3% from 2023 levels. The slowdown in activity for this sector can likely be attributed to the high inflation metrics that affected households across the U.S. in 2024. Together with decreased demand, limited service operators felt the impacts of increased operating costs. This includes insurance, which rose by 38% for the hospitality sector. As of August 2024, the cost for hotel property insurance increased to around $680 per available room. Hoteliers have also begun to struggle with contracted labor, as a result of hotel employees striking nationally. Many strikes erupted after Labor Day 2024 when employees walked out of the job to demand better pay and improved working conditions. In turn, strikes across the country create difficulties in hotel performance as hoteliers are unsure when the strikes will end. Owners of limited service hotels have begun to sell their assets and reinvest in higher-tier properties, due to the recent challenges. This strategic move allows them to tap into market segments demonstrating resilience, such as full service and select service hotels that have benefited from the return of corporate and group travel. By selling their limited service hotels and reinvesting in higher-level properties, owners can protect their equity, enhance their revenue streams, and set the stage for sustained growth in the evolving sector. Hoteliers on the Rise Despite the slowdown in hotel performance, some hoteliers are still recording increased performance metrics. Marriott International has been an active hotelier throughout 2024. As of Q4 2024, the firm’s pipeline grew 5% from the level noted in Q2 2024 and reached 585,000 rooms. Marriott also announced its new brands, City Express and StudioRes, which will be limited service properties. The firm is already looking to open some City Express locations in 2025. This new brand seeks to provide an affordable stay for guests, and will be made up of 100-150 rooms. On the other hand, StudioRes will be a new location for guests in search of extended stay accommodations. This property will include studios that feature queen beds and a kitchen, and Marriott plans on developing 50 StudioRes locations across the U.S. in the long term. Hoteliers have also increasingly begun to set their sights on extended stay properties, with demand for these hotels increasing by 3% through October 2024, compared to demand for conventional hotels increasing by 0.3%. Marriott has begun to match this trend as its other extended stay brands, TownePlace Suites and Residence Inn, are growing across the country. There are 21,000 rooms underway for TownePlace Suites, and Residence Inn is finalizing 19,000 rooms. Hilton is also matching the pace in demand with its extended stay brands Home2 Suites and LivSmart Studios. Home2 Suites has around 15,000 rooms underway, and Hilton stated it plans to open around 350 LivSmart properties nationally. Wyndham Hotels & Resorts also boasted strong performance throughout 2024, and it grew its operations system by 4%. Its global franchisee rate improved by 40 basis points year-over-year, and its domestic sales grew 10% more in Q3 2024 than Q3 2023. The firm also noted 3% net room growth in its domestic select and full service hotels. One property that aided this performance is the reconversion of the Wyndham Garden Louisville East. The 102-room select service property finished its four-year renovation process in September 2024. The reconversion is now ready to meet guests’ needs, especially with the property’s proximity to Churchill Downs—home to the Kentucky Derby. Hotel Markets Outperforming Across the U.S. Compared to other hospitality markets nationally, California and Florida remain successful in hotel performance as these states note consistently strong visitor numbers. Throughout 2024, these states marked increased transaction volume, with 176 trades in California and 164 sales in Florida. Florida As of Q4 2024, 50% of new hotel developments are in the Pacific, Mountain, and South Atlantic regions. In the South Atlantic, hotel developments remain stable in Florida—especially Fort Lauderdale. There are currently three hotels scheduled to deliver in the metro during 2025: the Omni Fort Lauderdale Hotel, Home2 Suites by Hilton Weston Fort, and the Whitfield Las Olas Hotel & Spa. The completion of all three properties will strengthen the metro’s full and select service segments. Additionally, Related Group & Partners announced plans for a $2 billion mixed-use hotel development in the metro. The project will take up 40 acres at the Bahia Mar marina upon its scheduled opening in 2029, and will be under hotelier Marriott and branded as a St. Regis made up of 200 rooms. California On the West Coast, markets in California recorded consistent positive performance metrics throughout 2024. Particularly, Los Angeles and San Diego outperformed other markets in the state, with 2024 occupancy at 71.6% and 73.9%, respectively. While developments declined nationally, construction is on the rise in Los Angeles and San Diego. There are about 2,000 rooms underway across 17 properties in Los Angeles, which will increase the market’s inventory by 1.9% upon completion. Standout submarkets for construction here are the Tri-Cities and East Los Angeles. San Diego will see its inventory increase by 4.4% with 12 hotels scheduled to open throughout 2026. The long-awaited Gaylord Pacific Resort Hotel and Convention Center is expected to complete in May 2025 and will be made up of 1,600 rooms. If it opens on schedule in 2025, it will bring the greatest addition of rooms in a year throughout the past 20 years. Midwest The Midwest also records positive activity. Cleveland has made a strong recovery from its pandemic levels, and marked the highest RevPAR increase in the region with a 9.3% uptick. Indianapolis is also on the rise with a notable RevPAR boost of 7.3%. Together with the jumps in RevPAR activity, hotel construction is ongoing in the region. Detroit and Indianapolis, combined, make up the most active delivery pipelines as more than 2,100 rooms are coming to market. Hospitality to Improve in 2025 and Onward As interest rates decline, the hotel industry will likely see an increase in new supply moving forward. The Fed also expects inflation to return to the 2% target by mid-2025, which will further improve hotel activity. Despite sales declining in 2024, hotel owners have stated they expect transactions to improve during the first half of 2025, due to dry powder remaining on the market. High inflation rates throughout the past few years have caused buyers to stay on the sidelines, but private and institutional investors are expected to come back with inflation cooling down. With inflation and interest rates softening, loans will be more accessible for investors to secure.

Mitchell Glasson

First Vice President

3/5/25

Market Review & 2025 Forecast

Market Review & 2025 Forecast 2025 Economic Outlook The summer of 2024 marked a turning point for the U.S. economy, as the uncertainty lingering from the pandemic began to subside. With clearer economic signals and reduced volatility, investors enter 2025 with renewed confidence. Large institutions, such as Blackstone, increased their activity, signaling a market poised for repositioning significant capital ahead of the next growth cycle. This stabilization in sentiment has fostered heightened market activity, with early indicators suggesting a potential return to more robust growth. Yet, the year ahead presents a mixed economic picture, blending optimism with enduring challenges. The Federal Reserve’s monetary policy shifts in late 2024 were a key development. Following its first rate cut in over four years in August, the Fed implemented additional reductions, culminating in a federal funds rate range of 4.25% to 4.50% by December. These moves aimed to stimulate borrowing and investment, offering relief to some sectors. However, the trickle-down effects of these cuts were slower than anticipated and were already priced into the market. Key financial indicators, such as the 10-year Treasury yield, Baa corporate bond rates, and residential mortgage rates, rose despite the easing, reflecting concerns over inflation, fiscal deficits, and global trade tensions. Commercial mortgage lending rates, for instance, stood at 6.4% in September, highlighting ongoing difficulties for borrowers. The mantra “survive until 25” encapsulated investor sentiment, as higher interest rates continued to exert pressure on property values and refinancing options. While monetary easing brought cautious optimism, broader market dynamics constricted a more pronounced recovery. Even so, improved economic forecasts for 2025 have provided a measure of hope, as reduced volatility and steady consumer confidence bolster the outlook for commercial real estate. Inflation remains a critical factor shaping the 2025 economic landscape. Stubbornly hovering 40-80 basis points above the Federal Reserve’s 2% target, it has tempered the pace of monetary easing. At around 3%, consumer price index (CPI) inflation levels align with European Central Bank standards but still exceed domestic targets, presenting a barrier to further rate cuts. Meanwhile, labor market resilience continues to underpin the economy. Although job growth has slowed from its 2021-2022 peak, gains remain positive. The Bureau of Labor Statistics reported upwardly revised figures for late 2024, with December alone adding 256,000 jobs, a sign of underlying strength. The rise in consumer and business confidence following Trump’s election win has also reshaped financial markets. Greater confidence has driven increased treasury sales, raised yields and created a dynamic where the 10-year Treasury rate is expected to remain above the federal funds rate well into 2025. While this reflects optimism about future growth, it complicates the Federal Reserve’s policy path, reinforcing a “higher-for-longer” interest rate environment. As 2025 progresses, the economy will stand at a crossroad. Reduced uncertainty and improving forecasts will hopefully create increased opportunities for growth. Defining the Market Players While private buyers remained the largest source of capital in 2024, institutional players became increasingly active on both sides of the transaction table. Cross-border investor activity softened overall but remained opportunistic. Meanwhile, REITs emerged as a significant sellers, capitalizing on specific opportunities to adjust their portfolios. Unique investor participation in acquisitions declined by 8% in the first three quarters compared to the same period in 2023. Smaller properties and portfolios valued under $10 million saw the sharpest decline in investor activity. Private investors, who traditionally dominate this segment, faced challenges such as higher borrowing costs, limited funding access, and shorter-term investment horizons. Consequently, their market share of acquisitions fell to 54% in 2024, down from 58.1% in 2023. Similarly, private sellers accounted for 51.8% of dispositions, a decline from 59.5% in 2023, indicating a more cautious approach to asset sales Institutional and REIT Investor Expand Presence 2024 ended the year with $420.4 billion, a 9% increase compared to $365 billion in 2023, and larger institutional and REIT investors increased their market share. Institutional buyers accounted for 26% of acquisitions, up from 18.6% in 2023, as they strategically focused on sectors like industrial and large-scale multifamily properties. REITs, while slightly decreasing their share of purchase to 9.9% (from 10.9% in 2023), became significant sellers, representing 17.3% of dispositions, up from 12.3% the prior year. Cross-Border Activity Softens Cross-border investors saw reduced activity, making up 5.6% of purchases in 2024 compared to 8.5% in 2023. However, their share of dispositions rose to 6.4% from 4.4%, reflecting a selective approach to both buying and selling in a high-interest rate environment. Market Composition Trends Private buyers remained the largest source of capital but retreated modestly due to rising costs and tighter funding. In contrast, well-capitalized institutional and REIT investors strengthened their positions, supported by lower capital costs and greater funding access. Institutional sellers also increased their activity, representing 21.1% of dispositions, up from 18.9% in 2023, as they rebalance portfolios in response to shifting market conditions. The Latest on Maturing Loans As the U.S. economy transitions into 2025, a critical focus point is the significant volume of maturing commercial real estate debt and its implications for lenders, borrowers, and property owners. At the close of 2023, loans maturing in 2024 surpassed $600 billion, with an additional $214 billion in unresolved maturities carried over from 2023. Together, these represent a staggering $820 billion in CRE mortgages due in 2024, underscoring the challenges of refinancing in a high-interest-rate environment. The “extend-and-pretend” strategy, wherein lenders provide short-term extensions to avoid realized losses, has largely run its course. This approach has contributed to a buildup of maturing debt slated for the first half of 2025. According to S&P Global Market Intelligence, there is an estimated $1 trillion in CRE and multifamily debt maturing in 2025. Troubling, approximately 14% of these loans are underwater, meaning the current asset values are below the outstanding loans balances, posing significant risks for refinancing efforts. Offices remain the most precarious asset class in 2025, with nearly 30% of maturing office debt tied to properties valued below their debt obligations— amounting to $30 billion. This figure is almost double the share of underwater debt across other traditional asset classes. Lenders are increasingly unwilling to renew or extend these loans, reflecting a necessary but painful market correction that aims to reallocate capital into well-performing properties. Multifamily properties, while generally more resilient, face pressures as well. Apartments account for over one-quarter of 2025 maturities tied to underwater assets, with loans originating during the low-interest-rate, high-valuation period of 2022 being particularly vulnerable. Timing plays a critical role here; properties with initial agreements from this period may struggle to renegotiate, despite the overall strength of multifamily performance. The composition of lenders managing maturing CRE debt is also evolving. While CMBS, CLO, and investor-driven lenders account for over half of the loans maturing in 2024, banks dominate maturities from 2025 through 2027, holding at least 45% of loans due in these years. However, banks remain largely healthy, having emerged from the 2023 banking crisis with limited exposure to bad CRE debt. Insurance, agency, and private capital lenders are poised to take on a larger share of lending as banks face increased regulatory scrutiny. These entities are better positioned to extend credit selectively, focusing on properties and markets with robust fundamentals. This shift could help stabilize the lending environment as banks scale back on their involvement. The CRE market in 2025 faces a critical inflection point. The pullback in extensions and refinancing signals a broader reset, redirecting capital into properties and sectors with stronger performance. While this transition may bring short-term challenges, it lays the groundwork for healthier long-term capital allocation. The combination of strong fundamentals, selective lending by non-bank institutions, and a recalibrated approach to office assets suggests a pathway forward. Taken together, the interplay of maturing debt, lender dynamics, and asset-specific risks will define the 2025 landscape. As the market recalibrates, stakeholders must adapt to a shifting landscape where prudent decision-making and strategic positioning will be key to navigating the challenges ahead. The Picture on Performance | 2024 In Review The commercial real estate market in 2024 exhibited signs of recovery but faced challenges due to lingering effects of higher borrowing costs, declining asset values, and structural changes in investor sentiment. Although the market did not return to pre-pandemic norms, improvements in deal volume, price stability, and investor activity were evident throughout the year. Deal Volume Deal volume exhibited volatility in 2024, with periods of improvement followed by declines. Early in 2024, investment activity trended negatively but began to stabilize by mid-year, turning positive by the end of Q2. Q4 2024 showed notable growth compared to 2023, signaling renewed momentum. Outlier transactions in 2024 made trend forecasting challenging. Key deals, such as Sprit Realty Capital’s sale to Realty Income Corp in January and Blackstone’s acquisition of AIR Communities in June, helped offset declines in single-asset sales. However, portfolio sales experienced substantial growth, particularly in office and industrial sectors. Entity-level transactions were another bright spot, increasing 40% at Matthews™, while Real Capital Analytics reported a 29% rise market-wide compared to 2023. Leading transaction markets included New York, Tampa, and Cleveland, with retail and multifamily emerging as the most active property types. Matthews™ also observed a 2% increase in single-tenant transactions. Overall, Matthews™ reported a 17% year-over-year increase in deal volume for 2024. YOY Volume Change: (National): 9% YOY Volume Change (Matthews™): 17% Pricing The pricing peak for most commercial property types occurred in July 2022, coinciding with the apex of consumer price index (CPI) growth. Since then, commercial property prices have generally trended downward, relating to the broader economic landscape and shifting market fundamentals. In 2024, commercial property prices saw consistent, albeit slowing, declines. Hospitality emerged as a lucrative sector in 2023 and continued growing in 2024, surging 20% YOY, the highest growth category. Multifamily experienced extreme volatility, with a steep decline in 2023, and a robust recovery in 2024, increasing 32.63%. Land saw similar changes, increasing sharply at 32.48%. Manufacturing on the other hand plummeted 55.41%, the steepest decline. Self-storage also saw price declines at 10.15%, potentially a result of less population mobility and increased availability across the county. The office sector, particularly CBD assets continue to face challenges as well. Prices for CBD office properties dropped as much as 50.9% from their peak in 2022, though signs of stabilization began to emerge later in the year. In comparison, the retail sector saw more modest declines of 9.03%. Matthews™ data indicates an -8.72% shift from 2022, while still negative, this represents an improvement from the steeper declines seen in 2023 (-10.46%). By mid-year, price declines had moderated, ending a six-quarter streak of falling prices. Positive monthly growth began in May, and by August, year-over-year changes turned positive for the first time since 2022. The data also suggests that a disconnect between buyers and sellers persists, with sale prices averaging 11.2% below list prices. Retail 2024 began on a high note with a major entitylevel transaction—the Realty Income-Spirit Capital merger—fueling triple-digit growth in deal volume. However, excluding this transaction, overall investment activity saw a 13% decline compared to January 2023. By mid-year, investor sentiment began to improve as property fundamentals strengthened, rental income reached record levels, and price declines showed signs of stabilization. By July, year-over-year price decreases had moderated to just 0.8%. August marked a significant turning point with a 0.1% price increase—the first since late 2022. Despite this progress, by year-end, retail property sales prices were still down 2% year-over-year, as reported by Matthews™. Shopping centers emerged as a bright spot within the retail sector, outperforming other retail subtypes throughout the year. In April, shopping centers posted a 19% year-over-year increase in sales volume, bolstered by robust consumer demand. By July, cap rates for shopping centers had risen to 7.5%, outpacing the 6.4% increase in single-tenant retail. Despite a 7% decline in overall retail volume by the end of 2024, shopping centers’ resilience highlighted their appeal to investors seeking stable returns in a volatile market. Private capital played a dominant role in the retail market, accounting for 60% of acquisitions in 2024. Portfolio sales saw a strong resurgence, with Q2 witnessing a 57% year-over-year increase in activity. Notable deals, such as a $495 million transaction, underscored growing confidence in the sector’s ability to weather macroeconomic challenges. However, rising interest rates and tighter financing conditions posed significant hurdles. May recorded a steep 51% year-over-year decline in deal volume, reflecting ongoing liquidity pressures despite easing commercial mortgage rates from their 2023 peaks. Looking ahead, the retail property market is positioned for cautious optimism in 2025. Incremental price gains recorded in late 2024, as indicated by the RCA CPPI, suggest continued improvement in pricing trends. Stabilized cap rates and recovering consumer spending are expected to attract additional capital, particularly from private and cross-border investors. Moderating interest rates could further bolster transaction volumes, with shopping centers likely to remain the preferred asset class due to their strong consumer demand and stable pricing dynamics. Notably, the year saw a 9% gap between list prices and sale prices, signaling potential opportunities for savvy investors. While 2024 sales prices were 2% lower than in 2023, the number of transactions increased by 4.5% compared to the previous year, nearing 2022 levels. These indicators, combined with improving fundamentals, set the stage for a gradual yet steady recovery in the retail property market in the coming year. Apartment Multifamily in 2024 experienced significant shifts with cautious yet growing optimism among investors. Investment activity in the sector continued to decline early in the year, extending a trend from 2022. January and February saw subdued transaction volumes, with no entity-level sales and significant reductions in portfolio sales. By mid-2024, the market began to stabilize as individual asset sales gained traction, with quarterly volumes improving compared to 2023. Blackstone’s $10 billion acquisition of AIR Communities in June provided a notable boost, while the second half of the year brought sustained growth in individual asset sales, particularly for mid/high-rise properties. Q4 2024 recorded year-over-year increases in transaction volumes, reversing prior declines. Multifamily property prices continued to decline in 2024, but the pace of declines moderated throughout the year and are improving relative to previous periods of sharper decline. The RCA CPPI for apartments fell at a 4.2% pace in the fourth quarter relative to the fourth quarter of 2023. Cap rates increased modestly, with garden apartments averaging 5.7% and mid/high-rise properties at 5.4% by year-end, reflecting the sector’s adaptation to new financing realities. Matthews™ data saw an average price increase of 32% compared to 2023 but was still down 12% compared to the highs of 2022. While mortgage rates for multifamily properties have slightly declined from their peak in late 2023, they remain significantly higher than the historically low levels of 2020 and 2021. This tempered investor enthusiasm but signaled a turning point in the cycle. Mid/high-rise properties outperformed garden apartments in transaction volume growth, reflecting investor preference for assets with greater urban appeal and resilience. Several key trends shaped the multifamily market in 2024. Elevated vacancy rates became a common challenge, particularly in the luxury Class A segment, as oversupply affected urban cores and transit-oriented developments. Rent growth displayed variability, with luxury and urban properties experiencing declines, while mid-tier and affordable housing remained stable or saw modest growth. Construction activity slowed in response to oversupply and rising interest rates, although regions like Denver and Phoenix maintained significant pipelines. Investment activity varied, with some markets seeing rising cap rates and declining sales volumes, while others attracted renewed interest due to supply constraints and projected rent growth. Suburban areas and mid-tier housing demonstrated stronger demand and resilience. Looking ahead to 2025, multifamily property prices are expected to stabilize further. The RCA CPPI indicates smaller year-over-year declines, suggesting a potential return to price growth. Cap rates are likely to remain stable or see slight upward adjustments, influenced by interest rate movements and inflation trends. Transaction activity is anticipated to grow, driven by improving liquidity and investor confidence, with individual asset sales leading the market. Opportunities in the sector will likely emerge in secondary and tertiary markets, where affordability challenges persist in primary markets. High-growth regions with favorable demographic trends will attract investors. Value-add strategies will remain popular, with a focus on enhancing property performance and capitalizing on moderating price declines. Industrial The industrial sector navigated a landscape of declining transaction volume while maintain robust price growth in 2024. The year 2024 marked the eight consecutive quarter of year-over-year decreases. This decline was driven by several factors, including higher interest rates and adjusted underwriting requirements. Despite these challenges, the sector’s performance often exceeded pre-pandemic benchmarks, reflecting a normalization rather than a collapse. In January, deal volume fell below pre-pandemic averages but showed a more moderate decline compared to the sharp contractions in 2023. From February to May, portfolio sales showed resilience, particularly in April and May, when portfolio transactions rose by 12% and 85% year-over-year, respectively. The second and third quarters were characterized by fluctuating deal structures, with portfolio sales gaining transaction and individual asset sales continuing to demonstrate resilience relative to pre-pandemic averages. For example, in October, sales of individual warehouse properties exceed pre-pandemic averages by 48%. By November and December, the year ended with a moderate pace of activity. Matthews™ data told a different story with transactions increasing 44% in 2024 versus 2022 and 29% compared to 2023. While deal volumes trended downward, industrial property prices defined expectations with steady growth throughout the year, consistently outperforming other commercial sectors throughout 2024. According to RCA CPPI, prices rose by 8.7% year-over-year in May and 6.7% in the third quarter decelerated slightly in the latter half of the year, up only 2.7% by year-end. According to Matthews™ data, year-end industrial property prices had seen a 4.6% price increase compared to 2023. However, this growth is still 5% below 2022 highs. Cap rates, while increasing in response to the higher interest rate environment, remained competitive. In 2024, industrial cap rates averaged 6.4%, a level that underscored the sector’s relative stability. Looking ahead, the industrial sector in 2025 is expected to see moderate growth, supported by strong income growth. Signs of stabilization emerged in latter half of 2024, suggesting that 2025 could witness a modest rebound in transaction activity if financing conditions improve or remain steady. Institutional and cross-border investors expanded their presence in 2024, a trend likely to persist in 2025. Private capital, which accounted for the largest share of acquisitions in 2023, may maintain a cautious approach given higher financing costs. The shift to e-commerce and growing demand for last-mile delivery infrastructure will continue to underpin the sector’s appeal, while supply chain resilience initiatives are also expected to sustain demand. Office The office sector remained the most troubled in 2024, with challenges stemming from high vacancy, the weakest tenant demand in over three decades and negative investment returns. Despite these challenges, the office sector is on a trajectory of growth after approaching the bottom of a prolonged period post-pandemic. While office utilization has yet to fully recover, return-to-office mandates are luring people back to cities, with notable growth in Class A highly-amenitized buildings. This flight-to-quality is driving and supporting the return-to-office movement. The resilience in transaction volume and evolving pricing dynamics is also helping prop the sector up. Central business district (CBD) office buildings have been a bright spot in the office sector’s recovery. In Q4 2024 CBD office spaces increased 104% YOY and ended the year at 49% increase YOY. This growth is not solely attributable to isolated mergers or acquisitions but reflects a broad-based return of capital to CBD assets. In contrast, suburban office markets have lagged, with sales volume through 2024 increasing only 10% from 2023 despite suburban transactions being over double the volume of CBD sales. Average cap rates for CBD offices climbed by 60 bps over the year, reaching 7.9%. Suburban office cap rates also increased, though by a smaller margin of 30 bps, settling at 7.5% by yearend. After experiencing nearly 23 million square feet of negative absorption in the first quarter—bringing cumulative occupancy losses since the pandemic to 210 million square feet—demand stabilized over the remaining three quarters of 2024. About half of the top 50 U.S. office markets, led by New York, saw positive net demand beginning in Q2. However, challenges persisted with vacancy remaining elevated due to continued supply additions. The leasing market, though active, reflected smaller space requirements. Average lease sizes were 1520% smaller than pre-pandemic norms, as occupiers continue to consolidate space. The vacancy rate ended the year at 13.9%, a 450 bps increase since 2019. On the other hand, asking rents saw a modest 1% increase. Despite these challenges, transaction volume reached $63.6 billion, a 20% increase from 2023. While transaction volumes are improving, pricing pressure continues to affect the office sector more acutely than other property types. In Q2 2024, prices fell by 51.24% YOY according to Matthews™ data and RCA recorded a 5.3% decrease YOY. Despite this, vacancy rates remain high, and financing costs, though easing, are still above pre-pandemic levels. The outlook for 2025 presents some opportunities. On the upside, increased attendance mandates by major employers, fiscal stimulus, and accelerated hiring could bolster demand. But, on the downside, stagnation in office job growth and potential job losses could hinder recovery, even in a stable economic environment. Certain office markets and categories have shown strong performance trends. Miami, Las Vegas, high-end properties under 50,000 square feet, and medical office spaces are leading the way. These segments are well-positioned to benefit from evolving market dynamics, including a growing preference for premium, amenity-rich environments and sectors with stable demand drivers. Self-Storage Despite shifting demand with slower migration trends, the self-storage sector remained resilient in 2024―major REITs reported net income growth, albeit below 2023 levels and class A RV/Boat storage emerged as a bright spot. Average street rates declined 4.9% YOY in June to $16.45, with larger units outperforming smaller ones. Rate declines slowed significantly by year-end, dropped just 2.1% signaling stabilization after 27 months of decreases. The slowdown in rate declines is evident in 28 of the top 30 metros tracked by Yardi Matrix, and nearly all top markets saw less pronounced year-over-year decreases compared to December 2023. Markets like Tampa and Orlando have outperformed due to hurricane-driven demand and improving rates, even amidst substantial new supply. Construction activity saw an increase with 3.4% of existing stock under construction as of November 2023. Public Storage leads construction metrics, with projects underway to add 3.9 million square feet at a cost of $745.2 million. Meanwhile, CubeSmart’s focus on New York and New Jersey saw two new developments in 2024, with plans for additional projects totaling $38.5 million scheduled to open in Q3 2025. Robust RV and Bost Storage Demand Class A RV and boat storage performed well, with rates holding steady at $6 per square foot annually. Despite declining RV and boast sales, demand remained high, and development activity surged. Acquisitions continued at a healthy pace. According to Matthews™ data, self-storage sales increased almost 5% from 2022 and a whopping 51% from 2023. However, sales prices were still down 10% from 2023. Hospitality The U.S. hotel industry is navigating a mixed environment. Trading volumes have fallen 33% year-over-year according to CoStar, but Matthews™ data highlights a 20% year-over-year increase in the average sale price and a 66% rise in transaction velocity. Luxury-class transactions remain strong, with notable deals such as Host Hotels’ acquisitions in Nashville, New York, and Hawaii, underscoring the appeal of prime locations. Conversely, distressed assets like Park Hotels’ San Francisco portfolio reflect valuation declines and costly property improvement plans (PIPs). Corporate strategies such as Hyatt’s $2.6 billion asset disposition program showcase efforts to monetize assets while retaining operational control, while the limited-service segment faces hurdles as ownership transitions often trigger costly PIPs, making some deals unfeasible. Operationally, the industry shows modest growth, with RevPAR increasing 1.7% in 2024, driven entirely by ADR growth, while supply and demand growth remained balanced at 0.5%. Luxury-class hotels experienced limited gains, while economy-class hotels saw RevPAR declines, reflecting uneven performance. Group demand remains a bright spot, with a 5% RevPAR increase driven by ADR growth, while leisure demand has softened in key markets due to competition from international travel and cruises. Rising costs, including a 38% increase in insurance expenses since 2019 and ongoing labor negotiations, challenge profitability despite steady demand in certain segments. Meanwhile, the construction pipeline remains steady at 150,000–160,000 rooms, with developers prioritizing limited-service hotels due to their financial viability. Looking forward, the macroeconomic landscape, including GDP growth, tariffs, and immigration policies, presents both opportunities and risks. There is potential for increased deal flow in 2025, driven by the end of the election cycle, maturing loans, and dry powder allocation. The Auction Industry in 2024 The auction industry in 2024 was characterized by significant transformations driven by digital innovation, shifting buyer demographics, and a focus on transparency and sustainability. Data from leading platforms shows a continued rise in online participation, with a 35% increase in remote bidder engagement compared to pre-pandemic levels. Matthew Auction Data | 2024 Sold By Property Type Average Bidders: 4 Gross Market Value Brought to Auction: $47M Average Above Reserve: 101% Distressed Sales on the Rise The level of property distress in the U.S. reached its highest point in over a decade during 2024. Distressed sales represented 2.7% of the market in the first three quarters of the year, a notable rise from 1.8% in 2023 and just 1.2% between 2020 and 2022. This surge was largely fueled by office assets, which have emerged as a significant driver of distressed sales. While hotels and retail properties dominated this landscape in 2020, offices accounted for nearly half of all market distress by Q3 2024. This trend highlights a fundamental shift, elevated levels of distress is expected to continue in 2025. Foreclosure Trends Reflect Financial Strain Elevated foreclosure activity further characterized 2024, reflecting ongoing financial strain in the commercial real estate sector. A September report from ATTOM, a leading curator of land and property data, revealed that foreclosure activity remained significantly above pre-pandemic levels. A sharp increase began in June 2023, peaking at 752 filings in May 2024 before declining to 695 by September. Data from Auction.com also revealed that reverse-to-value ratios at REO auctions dropped by 2 percentage points in the six months ending in October. In contrast, credit bid-to-value ratios at foreclosure actions declined by 3 percentage points in the four months leading to October. Capital Market Predictions for 2025 The capital markets are poised for significant activity in 2025. The Mortgage Bankers Association projects a resurgence in lending activity to near-record levels. Multifamily, retail, and industrial properties are set to benefit from easing rates and increased transaction volumes. Industrial assets continue to demonstrate resilience, driven by e-commerce growth. However, retail and multifamily sectors are stabilizing after declines tied to high interest rates. Medical office properties also remain a preferred investment due to their stability and long-term leases. Sector performance and lending trends highlight opportunities for investors as capital remains plentiful. They are supported by life insurance companies, agencies like Fannie Mae and Freddie Mac, and bridge lenders. Experts advise against waiting for performance market conditions, emphasizing the importance of positive leverage and actional deals. With improved construction financing prospects and sector-specific growth potential, 2025 offers optimism for a more stable lending environment.

3Q24 | Industrial Market Report | Ohio

Q3 2024 Ohio Industrial Market Report Ohio Market Overview Ohio’s industrial market is booming on both the supply and demand sides, driven by major global corporations expanding operations across the state. Located strategically between major East Coast metro areas, Midwest markets, and growing Sunbelt cities, Ohio is an appealing location for logistics and manufacturing companies. The state’s highly regarded academic institutions also provide a steady supply of skilled workers, making it even more attractive for firms to set up operations in the Buckeye State. These factors have contributed to Ohio’s rank as 4th in manufacturing product value and 3rd in manufacturing employment among U.S. states, despite being only 7th in population size. Two major announcements in the manufacturing sector are likely to further boost demand and production in Ohio. Intel’s $20 billion facility in Licking County is progressing, though its opening date has been pushed past 2025. When completed, the factory will occupy 2.5 million square feet of industrial space. Meanwhile, Abbott is building a $536 million production facility in Bowling Green to meet the growing demand for baby formula. Both projects will drive industrial space demand, both directly and indirectly, with demand for additional distribution space expected to rise sharply as goods begin to flow from these new facilities. Ohio By the Numbers Vacancy Rate: 4.4% Net Absorption in SF: 8.2M New Construction in SF: 19.1M Space Under Construction in SF: 12.5M Rent per SF: $6.56 Annual Rent Growth: +6.2% Average Cap Rate: 10.0% Average Price per SF: $54 Transaction Volume: $2.1B | Source: CoStar Group Columbus Market Overview While manufacturing and logistics employment grew significantly in 2021 and 2022, industrial-related employment growth in Ohio has begun to cool, even showing slight declines. The Columbus metro remains aligned with national trends in unemployment rates and wage growth, which helps sustain consumer demand for goods in the area. Two major corporation are set to boost Columbus’s employment outlook over the coming years. Intel’s new factories in New Albany are expected to create 3,000 direct jobs, while Honda’s $237 million investment will establish Ohio as its main production hub for North American operations. The construction of Intel and Honda facilities has driven construction employment to grow at the fastest pace of any sector in the city over the past year. Rapid population growth is further increasing demand for last-mile delivery and logistics space in Columbus. The city’s population growth has accelerated to 1.2% annually, far exceeding the national average of 0.6%. More residents in Columbus means more online spending, creating a high pace of goods movement into and out of the city, supported by one of the nation’s most active cargo airports. This thriving commerce and trade environment fuels demand for industrial facilities of various sizes and types across the region. Columbus By the Numbers Vacancy Rate: 7.7% Net Absorption in SF: 2.4M New Construction in SF: 9.6M Space Under Construction in SF: 6.0M Rent per SF: $8.17 Annual Rent Growth: +7.3% Average Cap Rate: 7.8% Average Price per SF: $77 Transaction Volume: $581M | Source: CoStar Group Market Performance Vacancy in Columbus has been rising due to a historic wave of new supply entering the market in 2023 and 2024. The overall metro figures are influenced significantly by manufacturing growth in Licking County, where developer activity has been especially high. Vacancy in Licking County currently stands at 9.2%, primarily due to a wave of support facilities anticipated to serve Intel’s future production. The outlook is promising, as the new Intel and Honda facilities are expected to attract supplementary businesses and industries that will quickly absorb surrounding space. This is especially likely given the slowdown in new industrial construction starts in the city, with only 1.6 million square feet of space breaking ground in the first three quarters of 2024— the lowest level in over a decade. In other parts of the metro, performance trends are stronger, with areas in and just north of downtown showing near 1% vacancy rates. The metro’s densest industrial area, located around and just north of Rickenbacker International Airport, saw vacancy fall by 140 basis points to 5.6% between Q1 and Q3 of 2024. The Airport’s volume is expected to increase as the city’s manufacturing sector expands, particularly with the support of a recently expanded intermodal terminal adjacent to the airport. Despite rising vacancies, rent growth has remained well above pre-pandemic levels throughout 2024, largely driven by the opening of facilities with modern technology and premium features. Although rental rates align with regional averages, Columbus continues to represent a cost-effective option for tenants seeking a central hub or expanded U.S. operations. Following a sharp increase in pricing and transaction volumes immediately after the pandemic, Columbus has felt the impact of interest rate hikes and a national market slowdown more acutely. While transaction activity remained elevated in 2023, fewer deals have closed in 2024. Deal volume in each of the first three quarters of the year ranks among the three lowest for the metro since Q4 2018, with the area on track to record its smallest annual deal volume in over a decade in 2024. To offset higher borrowing costs, the average cap rate in Columbus has risen substantially since 2022, even climbing 20 basis points above the pre-pandemic average. Much of this increase is due to strong rent growth, with per-square-foot pricing remaining 45% above 2019 levels, despite leveling off around $145 per square foot from 2022 through Q3 2024. With a pause in sales price growth and reduced buyer competition ahead of Intel and Honda’s operations becoming fully active, this may be an opportune time for investors to consider adding Columbus industrial assets to their portfolios. Cleveland Market Overview Once a major industrial hub in the United States, Cleveland has seen industrial growth shift over the last few decades to central and southern Ohio. In the 20th century, over 25% of the city’s workforce was employed in steel manufacturing, but employment in this sector declined significantly with the rise of global supply chains. Steel manufacturing remains a presence in Cleveland, along with Sherwin-Williams, which employs over 10,000 workers in the metro. $374M These operations contribute stable demand for the city’s manufacturing spaces. Cleveland’s workforce is still roughly 2% below pre-pandemic levels; however, the city has made strides in diversifying its economy. Expanding medical and financial sectors are expected to support future employment growth, providing residents with increased spending power. This trend bodes well for Cleveland’s distribution space, as e-commerce sales are likely to rise in tandem with high-income employment growth. Cleveland By the Numbers Vacancy Rate: 3.5% Net Absorption in SF: 277,000 New Construction in SF: 606,000 Space Under Construction in SF: 2.0M Rent per SF: $6.64 Annual Rent Growth: +7.3% Average Cap Rate: 10.8% Average Price per SF: $48 Transaction Volume: $374M | Source: CoStar Group Market Performance Unlike other Ohio markets, developers in Cleveland did not significantly increase activity during 2021 and 2022, keeping annual completions in line with pre-pandemic levels. This cautious approach has helped maintain stable vacancy rates amid a slowdown in leasing activity during 2023 and the first half of 2024. Despite a downturn in new lease signings, rent growth has risen over the last two quarters, driven by strong competition for spaces with modern technology and features. This trend could accelerate if leasing activity picks up; with Q3 2024 leasing reaching its highest level since Q4 2022, Cleveland’s industrial market appears positioned for tight conditions and potential undersupply in 2025 and 2026. The competition for modern, up-to-date industrial space is increasingly evident in submarket performance data, with the most active construction areas also recording the highest rents and strongest rent growth. The close-in southern suburbs, from the airport and Linndale to Brooklyn Heights, have performed exceptionally well, with vacancy rates around 2.5% and annual rent growth exceeding 5%. Meanwhile, Cleveland’s lower-cost submarkets show diverging trends: older inventory along Lake Erie in East Downtown has vacancy rates over 7%, while new developments in similarly priced Avon/Lorain are helping to keep vacancy below 4%. Entry costs for investors in Cleveland remain among the lowest in major U.S. cities, attracting a diverse range of players. Per-square-foot pricing averages around $50 in Cleveland, with prices ranging from roughly $30 per square foot in East Downtown to nearly $70 per square foot in the high-performing southern suburbs. Low vacancy rates, strong rent growth, and relatively low entry costs have pushed average cap rates for industrial properties above 10% in 2024. As with leasing velocity, deal flow in Q3 may signal a sustained uptick moving into next year. Although transaction activity has declined from its 2021 peak, it remains nearly double the 2019 level. Over $200 million transacted in Q2 and Q3 of this year, marking the strongest six-month stretch since interest rates began rising in 2022. The Lorain/Avon submarket has set new records, with over $40 million in transaction volume in the past 12 months, surpassing the previous submarket record by more than 15%. Deal flow has also been robust in Strongsville, where limited supply pressures and a sub-1.5% vacancy rate are supporting strong demand. Cincinnati Market Overview As Ohio’s largest economy, Cincinnati benefits from a strategic position at the crossroads of the Northeast, Midwest, and South. Its proximity to a large share of the U.S. population, along with a shared airport with Louisville, makes Southwestern Ohio and Northern Kentucky a prime location for distributors. This is underscored by Amazon’s significant presence at Cincinnati/Northern Kentucky International Airport, where a major hub completed in 2021 is expected to eventually employ 15,000 people and substantially increase cargo volumes. Cincinnati maintains strong manufacturing, logistics, and raw materials sectors, all of which drive high demand for industrial space. In aerospace manufacturing, GE and Honda are prominent players, while Procter & Gamble supports facilities $505M for consumer goods production, further boosting industrial demand in the region. Cincinnati By the Numbers Vacancy Rate: 5.8% Net Absorption in SF: 887,000 New Construction in SF: 6.1M Space Under Construction in SF: 1.3M Rent per SF: $7.68 Annual Rent Growth: +8.1% Average Cap Rate: 8.8% Average Price per SF: $69 Transaction Volume: $505M | Source: CoStar Group Market Performance Developers have been active in the Cincinnati metro, especially in the 500,000-square-foot segment. These large-scale properties leased quickly in 2021 and 2022, but since interest rates rose in 2023, tenants have been more cautious about committing to such sizable leases. This has created a bifurcated market, with new large-scale developments finalizing but staying more vacant than the metro average, while sub-500,000-square-foot hubs and smaller spaces are performing well in terms of both vacancy and rent growth. Fortunately for owners of big-box spaces, construction is expected to decline significantly in 2025 and 2026, with vacancy in larger facilities anticipated half by 2027. While leasing velocity slowed slightly in Q3 2024, the quarter was marked by limited moveouts, making it the strongest period for net absorption so far this year. Eastern Cincinnati has seen strong demand for space recently, and with no major projects in the construction pipeline, the submarket is on track to maintain a sub-4% vacancy rate into 2025. The airport submarket remains the most active for developers, with over 600,000 square feet in the pipeline. Despite notable moveouts causing a temporary vacancy spike, rent growth across the metro’s submarkets often exceeds 7%, outpacing both statewide and national averages. Cincinnati’s investment market has diversified significantly in recent years, with private investors, institutions, and REITs all acquiring assets at comparable levels over the past 12 months. This varied buyer pool enhances liquidity for investors but is also expected to increase competition for listings. This robust demand has helped to counteract the general slowdown in transaction activity caused by Federal Reserve rate hikes. Since Q1 2024, average sales pricing has risen by nearly 6.2% following an eight-quarter period during which the average price held around $65 per square foot. Cap rates are also showing the first signs of compression since Q1 2022. Metro-wide deal volume in Cincinnati dropped by more than 60% annually. This is largely due to higher borrowing costs and stable property performance. With strong rent and occupancy figures in properties older than a year or two, owners have little incentive to list well-performing assets at reduced prices. At the same time, elevated interest rates are impacting buyers’ ability to meet the price levels seen in 2021 and 2022, despite the potential for strong returns. Given the robust future demand drivers for industrial space in Cincinnati and Ohio, deal flow is likely to return to prior levels once borrowing costs decrease and buyers regain confidence in meeting sellers’ expectations, enabling deals to close at more favorable terms for both parties.

4Q24 | Multifamily Market Report | Cleveland, OH

Cleveland Multifamily Market Report Cleveland Key Findings With a rent growth of 2.8%, Cleveland ranks among the top 10 markets for rent growth nationwide. High demand is concentrated on upper-tier units, with 1,000 units absorbed during Q2 and Q3 2024. Downtown Cleveland leads in new construction, accounting for 35% of the market’s recent supply. By the Numbers Units Delivered: 328 ↓ from Q3 2024 Units Absorbed: 391 ↓ from Q3 2024 Sales Volume: $7.8M ↓ from Q3 2024 Cleveland Demographics Unemployment Rate: 4.2% Current Population: 2,062,058 Households: 897,443 Median Household Income: $69,221 While employment levels in Cleveland are below pre-pandemic levels, the metro is experiencing growth from its thriving healthcare segment. Cleveland Clinic and University Hospitals are two main employers for this sector. Also, Cleveland Clinic has an expansion planned for three new facilities that will create 1,300 new jobs. On the other hand, Sherwin-Williams is planning on investing $600 million in its new headquarters downtown, along with other expansions. The company’s additions will bring in 3,500 employees. Cleveland Multifamily Market Performance Cleveland is beginning to note decreased vacancy levels compared to metrics over the prior two years. During the first three quarters of 2024, the market noted 1,330 units absorbed, around 30% above levels prior to the pandemic. Absorption levels have been highest for the Class A and Class C sectors, with absorption for Class C units in Q3 2024 noting the greatest level in three years. Rent growth has continued to increase in Cleveland, with Class C units noting the most improvement. This sector marked rent growth of 3.5% during the first half of 2024, which is above its level from pre-pandemic. Also, the South submarket recorded the strongest rent growth at around 7%. The area stands out for move-ins, with the suburbs of Strongsville, North Royalton, Brunswick, and Brecksville located nearby. Cleveland Construction Activity Construction levels are still elevated here as around 3,000 units remain underway. This development environment is expected to continue until 2025. Apart from the Downtown area, East Cleveland is also a target for new construction. There have been 460 units delivered here over the past 12 months; this area is beneficial for renters due to its proximity to Cleveland Clinic and Case Western Reserve University. Sales Performance Sales activity has consistently been on the rise, with the majority of sales throughout the past year for properties ranging from $1 to $4 million. Private buyers have been the most active with these transactions, accounting for two-thirds of sales momentum.

NFL Stadiums Impact on Local CRE Markets

NFL Stadiums Impact on Local CRE Markets Drives Investment, Development, and Growth The kickoff of the 2024 NFL season attracted nearly 29 million viewers for the Baltimore Ravens vs. Kansas City Chiefs game. In comparison, the average NBA game draws 1.6 million viewers, while MLB averages 1.3 million. However, football’s significance in American culture goes beyond sports. The 2024 Super Bowl drew 50 million more viewers than recent presidential debates. The event has become the second-most-watched TV program in U.S. history, surpassed only by the Apollo 11 moon landing. Annually, the NFL contributes around $5 billion to the U.S. economy. While much of the discussion centers on the league’s impact on TV rights, sports gambling markets, and tourism, the NFL also drives economic growth for small businesses and real estate investors in its host cities. The economic impact of NFL stadiums manifests in both direct and indirect ways. Direct effects include: Ticket sales, concession sales, and merchandise revenue TV rights, sponsorships, and sports gambling income Employment opportunities from hosting games and events In addition, being home to an NFL team brings several indirect benefits: Community pride and unity-NFL teams often serve as key marketing assets for their cities and support the community through outreach, charity work, and youth programs. Increased infrastructure investment from cities to support stadium operations. Major events and concerts at NFL stadiums can dram crowds comparable to the games, boosting local businesses year-round. Increase private development around newly build or renovated NFL stadiums. Heightened consumer spending on hotels, retail, and even housing in the areas surrounding the stadiums. When new stadiums are built, the local economic impact is immediate. Data shows a 5% increase in local employment, a 20% rise in infrastructure spending, and a 10% growth in retail sales. For commercial real estate investors, perhaps the most important metric is the 15% boost in business formation near new NFL stadiums within the first five years. This is primarily driven by new stores, restaurants, and shops catering to fans before and after games and events. Levi’s Stadium San Francisco 49ers| North Santa Clara, San Jose, California Widely regarded as favorites or co-favorites to win the NFC this year, the San Francisco 49ers have been playing at Levi’s Stadium since 2014. The stadium is estimated to have generated around 12,000 jobs, contributing $550 million in wages to local workers. Its success in driving economic growth has been so significant that team officials announced they are 15 years ahead of schedule in repaying the initial development loans, saving millions in interest payments. Developers are currently active in the areas surrounding the stadium. Nearly 2,000 new apartment units are under construction less than a block away, just across Lafayette Street. These new units are expected to lease quickly, as the apartment vacancy rate in the submarket is just 3.4%—140 basis points lower than the rate in San Jose overall. Developers are likely drawn to North Santa Clara’s strong rental growth. Apartment rents are increasing at an annual rate of 4.4%, outpacing the overall metro area. Retail properties in the submarket are also outperforming metro and state averages. Retail space in North Santa Clara rents at a 40% premium compared to the rest of the city. This is primarily due to limited availability near the stadium. This strong performance has driven up property values, creating a similar premium for investors looking to enter Santa Clara’s retail real estate market. The stadium has hosted a wide range of events, including neutral-site Pac-12 football games, MLS matches, and WrestleMania 31 in 2015. It is also slated to host games for the 2026 FIFA World Cup as well as another Super Bowl in 2026. Major non-sporting events have included concerts by megastars like Taylor Swift, Elton John, and Beyoncé. From 2014 through 2023, the stadium is estimated to have contributed more than $2 billion to Santa Clara’s local economy. NRG Stadium Houston Texans | Inner Loop University, Houston, Texas Led by rising star quarterback C.J. Stroud, the Houston Texans are widely considered favorites to win the AFC South this year. Since its opening in 2002, NRG Stadium (formerly Reliant Stadium), located next to the iconic Astrodome, has been the home of the Texans and has hosted two Super Bowls. Houston is also set to be a host city for the 2026 World Cup. Early projections are estimating that the economic impact of hosting FIFA games will be equivalent to hosting six consecutive Super Bowls. Additionally, NRG Stadium hosts the Houston Livestock Show and Rodeo, which attracts over 2.5 million visitors annually. The surrounding submarket has 150,000 square feet of industrial space under construction, along with several apartment, medical, and educational projects. Elevated rental rates continue to drive investor interest in the area. Retail rents are nearly $34 per square foot, while apartment rents exceed $1,600 per unit, representing premiums of 40% and 20% above the market average, respectively. Consequently, both retail and apartment investors typically pay about a 30% premium over the market average for properties in this submarket. Hotels, benefiting from the area’s many major events, command even higher premiums, with guests paying 22% more per night and investors paying nearly 40% more per room. Despite the anticipated tourism boom in the next three years, relatively few hotel projects are underway. Inner Loop University has also seen deal flow recover more quickly than the national real estate market. While commercial real estate transactions in Southwest Houston remain below peak levels, they have already risen significantly above their lows. Investors can expect this positive momentum to continue as Federal Reserve interest rate cuts make CRE lending more viable. Retail deal activity in the third quarter of 2024 surpassed that of the entire first half of the year. This trend is expected to continue into Q4. Lincoln Financial Field Philadelphia Eagles | South Philadelphia, Philadelphia, Pennsylvania The Philadelphia Eagles have solidified their position as an NFC powerhouse, entering this season with three consecutive playoff appearances. Lincoln Financial Field, located in the South Philadelphia submarket, has played a key role in transforming the area from a primarily residential neighborhood into one of the metro’s premier weekend destinations for younger residents. The stadium hosts Eagles games, Temple Owls football games, and often the annual Army-Navy game. Due to the highly urbanized nature of the submarket, retail construction is limited and primarily confined to ground-floor spaces in mixed-use developments. These factors, along with gameday demand, have contributed to reducing retail vacancy in South Philadelphia to just 2.0%. Foot traffic data from stadium visitors highlights the CRE demand generated by the Eagles fanbase. Only 15% of attendees arriving directly from their homes, and just 20% returning home immediately after the game. Popular post-game destinations include Xfinity Live! Philadelphia, an event space currently undergoing renovations to add over 460,000 square feet of retail space, along with a new concert venue. Restaurants and shops along Passyunk Avenue, just north of the stadium, are also popular for post-game socializing and spending. The Eagles aren’t the only team drawing crowds to the area. The nearby Wells Fargo Center and Citizens Bank Park, home to the Flyers, 76ers, and Phillies, contribute to year-round foot traffic. The busy season in the submarket extends beyond Sundays in the fall. Weeknight basketball and baseball games bring consumers to the area, supporting local businesses throughout the year. Traditionally a hub for single-family housing, the submarket is seeing a surge in multifamily construction, resulting in a 13.5% increase in apartment inventory. This spike in development has temporarily elevated vacancy rates in 2024. Regardless, the area’s retail expansion and popularity among younger residents suggest that new units won’t remain vacant for long. CoStar projects 2025 will be the strongest year for apartment leasing in South Philadelphia’s history. Raymond James Stadium Tampa Bay Buccaneers | Westshore, Tamp, Florida The Tampa Bay Buccaneers have played their home games at Raymond James Stadium since 1998. The Buccaneers have famously become the first team to win a Super Bowl in their home stadium in 2021. The stadium is located in Westshore, one of the most active submarkets in the city. This location has attracted over 100,000 workers daily, with 4,000 businesses and 32 hotels. Despite Westshore’s two major malls offering over 2.5 million square feet of retail space, retail vacancy is astonishingly low. The rate stands at just 1.1%, as businesses strive to cater to workers, tourists, and Buccaneers fans. Rentable space in neighborhood and power centers is even scarcer, with average vacancy rates for these types of centers below 0.5%. Bucking the national trend, office vacancy in Westshore has decreased by 300 basis points since 2022. The state’s favorable laws and regulations supported in-person operations early in the pandemic. With this, many people and companies that relocated to Tampa have remained, even as other states loosened restrictions. In-person work has fueled lunchtime demand for restaurants and shopping. This is unlike many former U.S. office hubs, where retail demand has declined due to fewer workers coming into the office. In Westshore, this bustling in-person work environment has helped drive retail rents up by 5.7% over the past 12 months. Retail investors have been so confident in the area’s performance and growth potential that cap rates have continued to decline. Even as the Federal Reserve raised interest rates by over 500 basis points, this confidence remains prevalent. This confidence stems from the competition tenants face for space, elevated rental rates, and the consistent daily foot traffic provided by one of the strongest post-pandemic office markets in the country. Pricing has also risen despite higher capital costs. Substantial growth is forecasted as interest rate cuts are expected to materialize further in 2024 and 2025. The NFL Drives Consumer Spending In All Of Its Host Cities There are numerous recent examples of neighborhoods transformed by NFL-related development. In Las Vegas, sports-related spending doubled after the Raiders relocated to the metro. The number of tourists visiting for sporting events has also tripled. This has resulted in a boost in the performance of the city’s hospitality and retail sectors. In Cleveland, the 2021 NFL Draft generated $42 million for the local economy, while Huntington Bank Field (formerly FirstEnergy Stadium) regularly hosts U.S. Men’s soccer games, attracting international tourism to Northeast Ohio. While this analysis focused on the impact of high-performing NFL teams on local real estate markets, examples like Las Vegas and Cleveland demonstrate that winning games isn’t a prerequisite for NFL teams to drive local growth and economic development.

Multifamily Market Report | Northeast Ohio

Northeast Ohio Multifamily Market Report Cleveland, Ohio Market Overview Cleveland’s unemployment levels sit at 5.7% as of Q1 2024, largely due to its reliance on vulnerable industries like manufacturing. However, the healthcare sector remains strong, led by major employers like the Cleveland Clinic and University Hospital. These employers have continued to invest in new facilities and job creation initiatives. Furthermore, the decision of Fortune 500 company Sherwin-Williams to keep its global headquarters in Cleveland and invest substantially in the region signals confidence in the market’s economic future, with plans for new facilities and job creation. The Cleveland multifamily market reflects national trends with a slowdown in demand and increased deliveries. Multifamily rents are growing year-over-year (YOY) in the Cleveland multifamily market. Despite record-level deliveries, the construction pipeline is moderating, which may lead to a tightening vacancy rate in H2 2024 as net absorption improves amid easing inflation and moderate rent growth. Market Performance Cleveland’s rent growth remains strong, with multifamily rents increasing by 3.2% in the last 12 months. Cleveland outperforms the national average due to limited deliveries, ranking among the top five markets in the country for multifamily rent growth as of Q2 2024. Multifamily vacancy in Cleveland currently stands at 8.4%. While areas with recent deliveries of Class A and B units like Downtown Cleveland experience positive net absorption, Cleveland’s most affordable submarkets, such as Brooklyn Heights and Lakewood, face negative net absorption. Construction activity has been gradually slowing over the past year, with around 3,200 units currently underway. However, developers remain active in downtown areas, with projects like The Bell and others contributing to the evolving landscape of the housing market. In Q4 2023, Cleveland experienced a decline in sales volume, with $13 million traded and annual sales volume totaling close to $90 million. While institutional buyers were rare over the past five years, individual buyers, particularly those seeking value-add opportunities, are now driving the market. Despite the subdued sales volume outlook, above average rent growth may continue to attract investors seeking value-add opportunities for the remainder of 2024. Cleveland, OH By The Numbers | Last 12 Months | Source: CoStar Group Vacancy Rate: 8.4% Rent Growth: 3.2% Units Delivered: 2,219 Units Absorbed: 15 Sales Volume: $84.1M Akron, Ohio Market Overview Before the COVID-19 pandemic, Akron faced challenges in employment and demographics, particularly due to its heavy reliance on manufacturing. Job growth resumed in May 2020, and Akron’s total employment remains 3% below pre-pandemic levels. Efforts are being made to diversify the economy, with a focus on expanding the polymer industry and revitalizing downtown through initiatives like Elevate Akron and the Bounce Innovation Hub. Additionally, Akron’s healthcare sector remains a significant driver of economic growth, with investments in facilities like Akron Children’s Hospital and Summa’s new tower. In 2024, Akron’s multifamily market mirrors national trends, with vacancy rates continuing to rise due to record-level deliveries and weak demand. Market Performance Negative net absorption for the fifth consecutive quarter has led to an increase in vacancy, reaching 7.1% as of Q2 2024. Construction starts have slowed due to elevated interest rates and high costs, resulting in only 95 units under construction. Akron’s multifamily market maintains a 3.6% rent growth YOY average, well above the national benchmark of 0.8%, allowing landlords to sustain steady rent increases, especially in pricier suburbs like Hudson and Aurora. Transaction volume saw a decline in H2 2023, totaling less than $10 million. The top sale of the year occurred in May, with The Towers in downtown Akron trading for $15.5 million to Green Harvest Capital, signaling a focus on value-add opportunities. Akron, OH By The Numbers | Last 12 Months | Source: CoStar Group Vacancy Rate: 7.1% Rent Growth: 3.6% Units Delivered: 700 Units Absorbed: 300 Sales Volume: $37.5M Canton, Ohio Market Overview Job growth recovery in Canton has varied across industries since its GDP contraction in 2020. Manufacturing, a dominant sector in Canton, faced challenges but has shown consistent gains. Notable employers like Timken Company navigated the pandemic relatively well, while other industries such as healthcare and food production remained strong. Canton is widely recognized as the birthplace of the Pro Football Hall of Fame. Established in 1963, this institution draws approximately 200,000 visitors each year. In line with many tourist destinations, the Hall of Fame faced challenges in 2020, experiencing a 33% decline in attendance. However, visitor numbers have rebounded notably, especially during the 2021 enshrinement ceremony. An extensive expansion project, the $900 million Hall of Fame Village, is currently underway. The initial $250 million Phase I focused on revamping Tom Benson Hall of Fame Stadium and adding youth sports fields. Phase II aims to introduce a luxury hotel, an indoor waterpark, office facilities, a convention center, and a retail area. Market Performance The Canton multifamily market currently has a vacancy rate of 5.2%, up by 0.5% compared to the previous year, with 61 units experiencing negative absorption and no net deliveries in the past year. Rents have increased by 3.8% in the last 12 months, averaging around $900 per month. Approximately 53 units are under construction in the market. Among different building types, Class A and B buildings have a vacancy rate of 5.5%, with 32 units absorbed over the past year, while Class C buildings show a vacancy rate of 7.5% and 92 units of negative absorption. Year-over-year rent growth was highest in Class A & B buildings at 9.2%, followed by 5.0% in Class C buildings and 2.0% in Class D buildings. Over the past three years, there have been 84 sales totaling $77.4 million in volume and involving 2,100 units of inventory. In the last 12 months, there have been more than 20 sales totaling $11.7 million in volume. Canton, OH By The Numbers | Last 12 Months | Source: CoStar Group Vacancy Rate: 5.2% Rent Growth: 3.8% Units Delivered: 0 Units Absorbed: -61 Sales Volume: $11.7M