Retail Real Estate PDF Report (3.9.16)

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In 2014, according to the SITEC-sponsored report, Scaling New heights, online retail sales increased exponentially, while some traditional
shopping malls and retail centers suffered from decreased sales, increased vacancy, and postponed capital projects. However, the balance may be
shifting back in favor of the traditional store for several reasons [Emphasis mine] (Scaling New Heights, 45).
!!
Changes to the size and layout of vacant retail space: The closing of major mall anchor tenants has provided rare
opportunities for mall owners to update and reposition the space to appeal to a high-end anchor replacement or multiple mid-size
tenants. Further, The National Association of Realtors (NAR)1 has stated, Space utilization is undergoing a transformation, as
retail outlets are scaling back floor space in favor of e-commerce distribution channels, (NAR 2015, 4).
!!
Internet sales tax: Fewer online-only retailers are able to avoid charging sales tax on internet purchases, as many are now
collecting sales tax on any order shipped to a State where the company has a presence i.e., distribution centers. Amazon, for
example, collected sales tax on purchases it shipped to twenty-three (23) states in 2014, and this number will certainly increase as
Amazon continues its rapid build-out of distribution, fulfillment, and sortation centers nationwide.
!!
Increased shipping costs: The costs associated with moving a purchased product from its origin to the end user has increased.
These costs have partially been passed on to the consumer through subtle increases in the price of goods, an increase in
shipping charges; use of minimum purchase requirement to qualify for free shipping, or a combination of the above.
!!
Successful Big Box OmniChannel Strategies: There has been a strong trend towards traditional retailers putting in place
robust omni-channel strategies such as Shop Online and Pickup in-store usually that same day with national retailers
Nordstroms, Macys, Bed Bath & Beyond, Walgreens, and others adopting their own versions of this strategy over the last
two years. A CBRE April 2013 research note predicted an increase in these multi-channel strategies and more recently stated their
belief that Omni-Channel is the future of retail.
As a result of the above factors, as well as the benefits inherent

to the traditional brick and mortar retailer, it is expected
The New Storefront continued
that the retail industry will see an influx
of once online-only retailers (etailers) establishing brick and mortar
Explosive Growth Expected to Continue
stores in a variety of formats. More
Key Point
In 2011, U.S. retail e-commerce sales rose 16.1 percent to just under
$200 billion, according to the U.S. Department of Commerce and
s "ETWEENAND53
online-only retailers are realizing the
shown in Chart 1. Projections are plentiful regarding the strong future
retail e-commerce sales grew
growth potential of this channel as more retailers beef up capital
by seven-fold and at its curbenefits of a successful multi-channel retail
spending on their Internet-sales channel. Already, between 2000 and
rent growth rate will double its
2011, U.S. retail e-commerce sales grew by seven-fold and at its cur2011 sales by 2016.
strategy. In fact, while some have
rent growth rate will double its 2011 sales by 2016.
announced plans to open their first physical
Moreover, leading retailers are gearing up mobile platforms as they
evolve their retail-selling strategy. The m-commerce sector alone is
stores in 2015, they wouldnt be the first:
estimated to have grown by 105 percent between 2010 and 2011.
In that m-commerce space, Amazon.com has an estimated 37 percent
two previously online-only retailers,
market share. Already, the Web analytics provider Coremetrics estimated that 18.3 percent of all online sessions conducted on retailers
Birchbox and Nasty Gal, opened their
websites in 2011 were initiated from a mobile device. Additionally,
Forrester Research forecasts mobile commerce sales will grow from $3
first brick and mortar stores in 2014.
billion in 2010 to $31 billion in 2016.
According to a 2014 Report by the International Council of Shopping Centers (ICSC),
These rapid changes in non-traditional storefront commerce and trans7
actions call for changes across the retail industry and the supporting
cast of logistics service providers and developers. Retailers that successOnline retailers from Amazon to Warby Parker to RentTheRunway realize multiple distribution
channels
successful
fully fulfill this challenge
will help tosupport
ensure their survival;
those missing
the challenge will likely face severe problems. There is no middle ground
2
brand development, (ISCS 2014, 1).
in the new commerce transaction, distribution and retail industry.
!
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!NAR 2015. COMMERCIAL REAL ESTATE OUTLOOK. 4.!

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Chart 1
Retail E-Commerce Sales: A Seven-Fold Increase Since 2000
200
BILLIONS OF U.S. DOLLARS
Hundreds of retailers have announced plans to open additional retail

stores and enter new geographic markets during 2015. Chicagos
retail sector should be able to attract many of these retailers as the
city has unique advantages over other major urban retail markets.
Many of these retailers some with a Midwest presence (e.g., Dicks
Sporting Goods) and some without (e.g., Robert Graham), have
announced plans to expand their retail footprints during 2015, but
have yet to settle at least publicly on new site locations and in
some cases, which new markets they plan to enter. Retailers without
an existing presence in the Midwest, Robert Graham for one, will
150
100
50
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source: U.S. Commerce Department
7 Mobile Commerce Top 300 Guide, posted on September 22, 2011 by internetretailer.com.
8
8 Leena Rao, Christmas Day Online Spending Up 16.4 Percent; Mobile Sales Up 173 Percent, TechCrunch, December 27, 2011,
http://techcrunch.com/2011/12/27/christmas-day-online-spending-up-16-4-percent-mobile-sales-up-173-percent/, retrieved April 6, 2012.
likely seek guidance from those commercial real estate firms with the local knowledge and expertise of markets they plan to enter,
rather than rely solely on their in-house real estate teams.
In addition, retailers will increasingly look to commercial real estate firms with expertise in both the retail and industrial real estate
markets as they seek to both expand and align their e-commerce offerings while concurrently adding to their warehousing and
distribution centers to ensure their inventory is delivered to the end-user in the most efficient and cost-effective manner. As was
foreshadowed in an April 2012 white paper for the NAIOP, the authors noted, In order to support the emerging e-commerce and m-commerce
demands, retailers today must deploy a new approach to supply chains that support moving goods from distribution centers directly to consumer sites. While
some retailers will choose to completely outsource their e/m/s-commerce fulfillment to third-party specialists, such as Amazon.com, others will reconfigure
parts of their current distribution system networks in order to support a multi-channel or blended fulfillment strategy, (IMF Worldwide, P. 15).
However, it should be noted that industrial warehouses are not the only means brick and mortar retailers have for storing and
distributing purchased goods to the end-user. Unlike e-tailers, many department stores have the ability assuming strong inventory
management systems are in place to use a combination of dedicated distribution centers along with their existing retail locations to
deliver goods to the end user-based on the proximity of the end-user to the closest distribution center or retail location where the
inventory is in stock.
Same-day home delivery strategies will likely require that future distribution centers be proximate to consumers, which should create
increased opportunities for urban in-fill development. Furthermore, markets near UPS or FedEx hubs will be the most likely to
attract major distribution centers to service e-commerce sales. It also worth noting a finding in CBREs April 2013 commercial real
estate sector update, which discusses how seasoned e-commerce companies are opting for build-to-suit (BTS) developments [as
distribution centers] that can provide increased infrastructure, heavy power, higher clear heights, an abundance of land and locations
in 24/7 zones. These trends will, over time, profoundly reshape and, in many cases, blur the lines between retail and industrial real
estate.
NATIONAL COMMERCIAL RETAIL REAL ESTATE MARKET OUTLOOK AND TRENDS
According to data published by REIS, Inc., the combined national vacancy rate for retail community centers and neighborhood
centers decreased to 10.3% by the end of 2014. There has been a concurrent increase in occupancy rates for all retail subtypes.
During the 3rd Quarter of 2014, asking rental rates for community centers and neighborhood
Select Retail Store
#
centers experienced an increase to $19.59 PSF.
At the end of Q3, 2014, retail property Closings for 2015
transactions for both mall and strip center sales had an average price per square foot year-to-date Radio Shack
-1,784
of $209 (compared to $167 for 2013). Meanwhile, the average capitalization rate remained steady Wet Seal
-338
at 6.8% (Scaling New Heights, 62).
Body Central
-265
Industry Insider Projections:
National Association of Realtors (NAR): Projects a 2.5% increase in rents during 2015.
Green Street Advisors (Jan 2014): NOI growth should be healthy in the coming years, yet
high-quality malls (A-Malls) will likely fare better than low-productivity centers where NOI
growth is expected to be materially lower (Green Street, 4).3
REIS: Demand for retail properties will likely continue to outpace supply over the next 4 years, with
positive absorption through 2018 [Emphasis mine], (Scaling New Heights, 46).
Despite this generally positive outlook, there will still be hundreds of store closings this year that
will alter the shopping mall landscape for years to come. Many of these store closures, according
to Telsey Advisory Group, are from the old guard stores established in the early 1990s (see
table at right-side of page).
RETAIL STORE OPENINGS COMPLETE LIST Announced (2015):
Deb Shops
Office Depot/
Office Max
Delias
Coach
-70
Abercrombie & Fitch
-60
Staples
-55
J.C. Penney
Kate Spade Saturday /
Jack Spade
Chicos
MACYS
-40
Real Deals Home Dcor
Boulders on Southern
Grab-a-Green
Restoration Hardware
Forever 21
Cabelas
Ikea (U.S.)
Snooze, an AM Eatery
27
Fresh Thyme
Caseys General Stores
Kroger
Toms
4
1
4
400
16
1
Gander Mountain
Grabbagreen
Gymboree
H&M (global)
Hobby Lobby
IKEA (U.S.)
Cato
Michael Kors
Tory Burch
Chipotle
Microsoft (Canada)
Wegmans
Corner Bakery
Nori Sushi
White Barn
Fairway Stores
Fiesta Mart
Opa Life Greek Caf

Pink
Williams-Sonoma
Zumiez
Brookstone
Fairway Stores
11
ALDI (U.S. 2015)
Cabelas
Fiesta Mart
Amazon
Caseys General
Apple
Cato
20
4
27
3
2
1
Bed Bath & Beyond

Biggby Coffee
Blaze Pizza
Bobs Disc. Furniture
Bosa Donuts
Boulders on Southern
1
1
1
7
730
3
Chick-fil-A
Chipotle
Corner Bakery
Costco (U.S.)
Dollar General
EZPawn
-92
-75
Forever 21
38
-135
Aeropostale
Amazon
520 ALDI (to 2019)
-287
-28
-120
14
According to a survey conducted by Deloitte, 70% of retailers plan to open brick-and-mortar stores in 2015. The category expected
to see the greatest increase is Mens Apparel with nearly 400 announced new store openings a 3% year-over-year increase.
Lingerie shops, likewise, are expected to see a similar 3% increase.
Green Street Advisors: U.S. Mall Outlook (Jan 29, 2014)
CHICAGO COMMERCIAL RETAIL REAL ESTATE MARKET OUTLOOK AND TRENDS

OVERVIEW: Chicagos Commercial Real Estate market will see its greatest growth from 2015 to 2016, with vacancy rates increasing
in 2017 (though remaining below the U.S. Average vacancy rate) and Effective Rent Growth and Potential Rental Revenue both
increasing at rates exceeding the national average in 2015 and 2016 before dropping below the U.S. Average in 2017.
Source: Scaling New Heights (Page 51
The March 2015 edition of Site Selection magazine announced that, 385 companies either
expanded or located in Chicago in 2014, resulting in the city being named Site Selections Top Metro
in the US for the second straight yearChicagos appeal is hardly surprising. The citys boasts
outstanding transportation and logistical assets, including two international airports, a rail hub and
seaport, and stands at the
crossroads of major Interstates.
Chicago and the region are
home to a wealth of talent
educated at some of the
nations premier colleges and
universities, (Site Selection 84).4
Growing job counts in the region indicate that Chicago-area businesses
are hiring and that the region's economy is growing. There are currently
an estimated 4.7 million jobs in the region. This total is less than the
region's pre-recession jobs peak of 4.8 million (2007). However, initial
CMAP data suggest that 2014 will be the fourth straight year for which
the region's total job count has grown.5
Within the Chicago region, an estimated 86.9 percent of residents held
a high school degree or higher (including those with some college but
no degree), and 43.4 percent held an associate degree or higher in 2013.
The proportion of the region's residents holding a high school degree
or higher closely mirrors the national average, while the proportion of
residents with an associate degree or higher exceeds the national
average.
Chicagos appeal is hardly surprising. The citys boasts outstanding
transportation and logistical assets, including two international
airports, a rail hub and seaport, and stands at the crossroads of major
Interstates.
SITE SELECTION MAGAZINE
In 2013, roughly 80 percent of the region's working-age residents were either employed or actively looking for employment.
National workforce trends show that, between 2006-13, workforce participation for persons aged 20 to 64 declined from 77.3
percent to 76.9 percent. While workforce participation decreased on a national level, in the Chicago region it increased by an
estimated 1.2 percent during the same period. The region's workforce participation rate exceeds the national average and exceeds

4
5
Site Selection. Jan 2015 edition. Page 84-91.

HTTP://WWW.CMAP.ILLINOIS.GOV/ECONOMY/REGIONAL-ECONOMIC-INDICATORS/TRENDS#REAL-GROSS-REGIONAL-PRODUCT
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OVERVIEW: Chicagos Commercial Real Estate market will see its greatest growth from 2015 to 2016, with vacancy rates increasing
in 2017 (though remaining below the U.S. Average vacancy rate) and Effective Rent Growth and Potential Rental Revenue both
increasing at rates exceeding the national average in 2015 and 2016 before dropping below the U.S. Average in 2017.
Source: Scaling New Heights (Page 51
The March 2015 edition of Site Selection magazine announced that, 385 companies either
expanded or located in Chicago in 2014, resulting in the city being named Site Selections Top Metro
in the US for the second straight yearChicagos appeal is hardly surprising. The citys boasts
outstanding transportation and logistical assets, including two international airports, a rail hub and
seaport, and stands at the
crossroads of major Interstates.
Chicago and the region are
home to a wealth of talent
educated at some of the
nations premier colleges and
universities, (Site Selection 84).4
Growing job counts in the region indicate that Chicago-area businesses
are hiring and that the region's economy is growing. There are currently
an estimated 4.7 million jobs in the region. This total is less than the
region's pre-recession jobs peak of 4.8 million (2007). However, initial
CMAP data suggest that 2014 will be the fourth straight year for which
the region's total job count has grown.5
Within the Chicago region, an estimated 86.9 percent of residents held
a high school degree or higher (including those with some college but
no degree), and 43.4 percent held an associate degree or higher in 2013.
The proportion of the region's residents holding a high school degree
or higher closely mirrors the national average, while the proportion of
residents with an associate degree or higher exceeds the national
average.
Chicagos appeal is hardly surprising. The citys boasts outstanding
transportation and logistical assets, including two international
airports, a rail hub and seaport, and stands at the crossroads of major
Interstates.
-!
SITE SELECTION MAGAZINE
In 2013, roughly 80 percent of the region's working-age residents were either employed or actively looking for employment.
National workforce trends show that, between 2006-13, workforce participation for persons aged 20 to 64 declined from 77.3
percent to 76.9 percent. While workforce participation decreased on a national level, in the Chicago region it increased by an
estimated 1.2 percent during the same period. The region's workforce participation rate exceeds the national average and exceeds
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participation rates in peer regions like New York and Los Angeles.
Metropolitan Chicago's dual concentration in freight and manufacturing are the region's strongest built-in advantages that help it
compete in an increasingly global economy. Chicago has more interstates than any other region, six of the seven Class I railroads,
connections to the Mississippi River and St. Lawrence Seaway, and the nation's second largest cargo airport (in terms of total cargo
value). The region's freight industry whos location quotient declined in the early 2000s but has grown since 2008 to 1.15 by the
end of 20136 -- is able to move more goods than any other region in the nation. The constant movement of goods into and out of
the region supports metropolitan Chicago's economy by creating demand for freight and logistics jobs and providing manufacturers
with timely, cost-effective, and reliable options for moving products to market. Recent advances in logistics have made the region's
multiple transportation options even more appealing as businesses are increasingly taking advantage of multimodal transportation as
a way to move goods more efficiently at a lower cost.7 An April 2012 report from IMF Worldwide also emphasizes how,
Proximity to sea-hubs or large inland ports/may improve supply chain reliability for imported goods, which allows an
importer/retailer quicker and more efficient transfer of goods from ships to trains or trucks to reach distribution centers.
- (IMF Worldwide, 16).

6
7
HTTP://WWW.CMAP.ILLINOIS.GOV/ECONOMY/INDUSTRY-CLUSTERS/FREIGHT
HTTP://WWW.CMAP.ILLINOIS.GOV/ECONOMY/REGIONAL-ECONOMIC-INDICATORS/CLUSTERS
ROBERT GRAHAM
Currently operates fourteen (14) retail locations in AZ, CA, FL, NJ, NV, NY, and TX and
seven outlet locations in CA, FL, MN, NY, PA, and TX.
They have announced their intention to expand their retail footprint nationwide over the
next 18 months and have retained Townsend & Associates, Inc to help them do so.8
Their stores offering men and womens luxury apparel items occupy spaces ranging
from 1,200 to 1,800 SF along heavily trafficked street fronts in affluent locations.
Current Retail Store Locations:
Arizona
(1)
California
(1)
Connecticut
(1)
Florida
(3)
Nevada
(2)
New Jersey
(1)
New York
(3)
Texas
(2)
Select Robert Graham Stores:
SCOTTSDALE FASHION SQUARE - 7014 E Camelback Rd. Scottsdale, AZ

Store Dimension: 30 (Storefront) x 50 (Depth)
Total Area: 1,245.92 ft2

DESERT HILL PREMIUM OUTLETS - 48650 Seminole Dr. #1104 Cabazon CA
Store Dimensions: 21.82 (front) x 69.34 (depth) x 23.11 (rear)
THE MALL AT SHORT HILLS:

Store Dimensions: 172.5 (Front and Rear); 325.0 (Depth)
The Dealmakers Weekly Newsletter. Vol 74. April 3, 2015.
380 BLEECKER ST. NEW YORK, NY

Store Dimensions: 21.74 (front = rear) x 44.93 (Depth/Length)
Total Area: 985.33 ft2

ROBERT GRAHAM OUTLET STORE LOCATIONS:
CALIFORNIA (1)
MASSACHUSETTS (1)
FLORIDA (2)
MINNESOTA (1)
NEW YORK (1)

PENNSYLVANIA (1)
TEXAS (1)
TWIN CITIES PREMIUM OUTLETS (A Simon Center) - 3965 Eagan Outlet Parkway, Eagan, MN
Store Dimensions: 42.27 (Corner Entrance); 44.93 (Depth/Length)
Total Area: 2,801 ft2
DICKS SPORTING GOODS - 5601 Touhy Ave, Niles, IL

TOTAL AREA:
STORE DIMENSIONS: 271 (FRONT) X 225 (EAST)
56,441.12 FT2
BED BATH AND BEYOND GURNEE MILLS MALL

DIMENSIONS: ENTRANCE (40.5) + WALL I (225) + WALL II (207.5) WALL III (255) X WALL IV (241)
TOTAL AREA: 60,097 FT2
ZUMIEZ - EAST TOWNE MALL, MADISON, WISCONSIN

DIMENSIONS: STORE ENTRANCE: 30.93 X LENGTH/DEPTH: 65.45
TOTAL AREA: 2,025.91 FT
SHOE SENSATION
STORE COUNT (Q1 2015):
82
PROJECTED 12-MONTH STORE OPENINGS:
EXPANSION REQUIREMENTS:
SQUARE FOOTAGE (MIN/MAX): 4,800 TO 6,000 SF
10
EXPANSION MARKETS:
MIDWEST & SOUTH
LOCATION: WITHIN A 24-MINUTE DRIVE OF 40,000 POPULATION;

PREFERS COUNTY SEATS 45 MINUTES OR MORE FROM NEAREST
METROPOLITAN CITY
SITE TYPES: NEIGHBORHOOD STRIP, REGIONAL MALL, REGIONAL

STRIP, SPECIAL STRIP, JUNIOR DEPARTMENT STORES, MAJOR GROCER,
FARM SUPPLY STORE AND/OR HOBBY SUPPLY STORE

CONTRACT TERMS: 3-5 YEAR INITIAL TERM WITH RENEWAL OPTIONS
TIMES SQUARE MALL - 3917 BROADWAY ST. MOUNT VERNON, IL
WEST WALL (STOREFRONT) = 107.5 FT | NORTH WALL (STOREFRONT) = 75.63 FT

EAST WALL
=
107.5 FT | SOUTH WALL
=
75.63 FT
TOTAL AREA: 8,754 SF
BOOT BARN
SHEPLERS INC. ON JUNE 11TH, 2015: Founded in 1978, Boot Barn is the largest and fastest-growing lifestyle retail chain
devoted to western and work-related footwear, apparel and accessories in the U.S. With 166
New Stores Goals:
stores in 26 states as of January 12, 2015, we have over twice as many stores as our nearest
Approx. 10,000 square feet
direct competitor that sells primarily western and work wear, and believe we have the
Year 1 Net Sales: $1.7M
potential to grow our store base to at least 400 domestic locations. We target a broad and
Payback Period: 2.7 years
growing demographic, ranging from passionate western and country enthusiasts to workers

ACQUIRED
Acquisition of
Sheplers 25
stores
seeking dependable, high-quality footwear and clothing. Our store environment, product offering and marketing materials represent the
aesthetics of the true American West, country music and rugged, outdoor work. These threads are woven together in our motto, "Be
True", which communicates the genuine and enduring spirit of the Boot Barn brand.
GURNEE MILLS MALL - 6170 West Grand Ave Suite 625, Gurnee, IL (Currently Only Store in Illinois)
DIMENSIONS: 30 X 127.5X 49 (REAR)
RESTORATION HARDWARE (HEREAFTER, RH)
NEW FULL-LINE DESIGN GALLERY FORMAT:
RHs FY2014 10-K filing states that as of January 31st, 2014, the Company operated a total of 70 retail stores throughout the United
States and Canada, consisting of 62 Galleries, 5 Full Line Design Galleries, and 3 Baby & Child Galleries.
The CEO of RH, stated in the Companys FY2014 14K Proxy Statement, The transformation of our retail stores, including the opening of larger
format Design Galleries in Greenwich and Los Angeles as well as our first next generation Design Gallery in Atlanta in fiscal 2014. Our future real
estate pipeline is strong with, as previously disclosed, 9 leases signed for 2016 and beyond, and an additional 25 locations that
have been identified or are in advanced negotiations [Emphasis mine], (FY2014 14K, p. 25). The Companys goal in opening
these larger gallery stores is to, optimize our selling space to display a greater number of products, which should result in higher sales productivity
and profitability. On average, our retail stores display less than 20% of our current product assortment. Our newer, larger store model, the Full Line Design
Gallery, significantly enhances our merchandise presentation and customer experience to capitalize on this opportunity for sales growth, (RH 10-K 2014, 3-4).
Furthermore, Full Line Design Galleries are shopping destinations in iconic or high-profile locations with high customer visibility
that enhances the RH brandBased on recent trends
January 31st 2015
January 31st 2014
and our plans for product assortment expansion and new
Store Formats
Store
Square Feet
Store
Square Feet
businesses, we are generally targeting a range of
Count
(average)
Count
(Average)
25,000 to 60,000 square feet for new Legacy Galleries
7,800
62
7,800 SF
purchase the Notes, to pay special interest, if any, due on the Notes, or to pay the 57
amount of cash
due SF
upon
locationsThis increased
sizewewill
support
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in default
under the indenture, which in turn may result in the acceleration of other
Larger Format Galleries
7 be accelerated,
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may then
have. If and
the repayment of the other indebtedness were to
we SF
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as cafes
have sufficient funds to repay that indebtedness and to purchase the Notes or to pay the amount of cash due upon
Baby
&
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Galleries
wine bars, (RH 10-K 2014,
4).
3
3,800 SF
3
3,800 SF
conversion.
As of January 31, 20159, RH operated a total of sixty- Outlet Stores
17
N/A
17
N/A
The fundamental change provisions of the Notes and the terms of the Bond Hedge and Warrants may delay or
seven (67) retail stores
17 Outlet
hinder and
an otherwise
beneficial stores
takeover attempt
of
us.
Totals (excl. outlets)
67
-70
-throughout the United States
Canada.
While
therights allow holders of Notes to require us to purchase all or a portion of
The and
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occurrence
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number of Baby & Childtheir
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theregoverning
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requiring an increase to the conversion rate for conversions in connection with a make-whole fundamental
compared to FY2014 Form
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store
counts.
However,
this
was
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result
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closing
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five
Legacy
Galleries and the opening of
change, including certain corporate transactions such as a change in control, may result in a change in the value
of the Notes.
Additionally,
certainresulted
change ofin
control
transactions,
the offsetting
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Hedge square
and Warrants
two additional Larger Format
Galleries,
whichupon
actually
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that we entered into at the time we issued the Notes may be exercised and/or terminated early. As a result of
these provisions, we may be required to make payments to, or renegotiate terms with, holders
of the Notes and/or
According to the Companys
latest Form 10-K filing for the fiscal year ending January 31st, 2015,
the board of directors and executive
the hedge counterparties.
officers see transforming their real estate platform as the Companys number one growth strategy. Page 2 of the FY2015 10K filing
These features of the Notes and the Bond Hedge and Warrants, including the financial implications of any
reads, We believe we have an opportunity
to significantly increase our sales by transforming our real estate platform from our existing legacy
renegotiation of the above-mentioned provisions, could have the effect of delaying or preventing a change of
retail footprint to a portfolio
of larger
next
generation
Galleries
thatandare
tothethe
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or notformat,
it is desired
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. On
average,
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than
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of the consideration available in such a transaction to holders of the Notes or Warrants or the counterparties to
Galleries allow us to optimize
our selling space by displaying a greater percentage of our merchandise assortment, as well as
the Bond Hedge.
future product expansions and new businesses, in a highly differentiated retail setting. Based on our historical performance, when a
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Notesthat product across all of our
product is presented on
sellinghasfloor,
we experience
sales for
Financing and might not apply the proceeds of the Convertible Notes Financing in ways that yield significant
channels, (RH Form 10-K
2015, 2).
returns.
Our management has broad discretion to use the net proceeds from the Convertible Notes Financing.
New Format Gallery Site

Selection:
Management
used a portion of the net proceeds from the Convertible Notes Financing for the cost of the Bond
Hedge, after such cost was offset by the proceeds of Warrants, and to repay a portion of the outstanding amount
Full Line Design Galleries

shopping Hardware,
destinations
in iconic
high-profile
locations
with high
customer
visibility that enhances the
underare
the Restoration
Inc. revolving
lineor
of credit
and term loan.
The remaining
proceeds
are available
to management to use for general corporate purposes, including to fund our real estate business initiative related
RH brandBased on recent
trends and our plans for product assortment expansion and new businesses, we are generally targeting a
to the development of our next generation Galleries. However, management has not allocated the remaining net
range of 25,000 to 60,000
leased
square
feetOur
formanagement
new locationsBased
onyield
oura significant
analysis,return,
we believe
proceeds
for selling
any specific
purposes.
might not be able to
if any, onwe have the opportunity to
any investment
net proceeds.
operate next generation Galleries
in of
60thetoremaining
70 locations
in the United States and Canada [emphasis mine], (RH Form 10-K 2015, 2).
Iteminclude
1B. Unresolved
Comments
Other site selection criteria
severalStaff
store
specific criteria: geographic location; demographics; and proximity to other high-end
specialty retail stores.10
None.
Site Acquisition Terms Item 2.
Properties
We leased approximately 1,103,000 gross square feet for 57 Legacy Galleries, 7 larger format Galleries,
3 Baby & Child Galleries and 17 outlet stores that were open as of January 31, 2015. We also lease
approximately 45,000 square feet for offsite storage. The initial lease term of our retail stores is generally 10 to
15 years. Certain leases contain renewal options for up to 25 years.
Most leases for our retail stores provide for a minimum rent, typically including escalating rent increases. In
addition, certain leases have a percentage rent based upon sales after minimum thresholds are achieved. Leases
generally require us to pay insurance, utilities, real estate taxes and repair and maintenance expenses.
9 Restoration Hardware. Form 10-K for Fiscal Year ending January 31st, 2015. Page 1.
10 Restoration Hardware. Form 10-K (FY 2014). Page 3.
36
NOTE: RH defines leased selling square footage as retail space at our stores used to sell our products...It excludes backrooms
used for storage, office space or similar purpose, as well as exterior sales space located outside a store, such as courtyards, gardens and
rooftops, (RH Form 10-K 2015, 4).
Restoration Hardware, Inc. Annual Report (Form 10-K) for Fiscal year Ending Jan 31st 2015.
Year Ended
Statement of Operations Retail
Stores
Growth in net revenues:
Retail
Stores open at beginning of
Stores [b]
period
Direct
Total
Stores
opened
Jan 31,
2015
Direct as a percentage of net revenues [a]
Comparable brand revenue growth [c]

Retail: [d]
Stores closed
Retail stores open at beginning of period

Stores opened
Retail
Stores open at end of period
Stores closed
Three Months Ended

January
February
31,
1,
Feb2015
1,
Feb2014
2,
2014
70
71
67
Retail stores open at end of period

Retail sales per leased selling square foot [e] [e]
Retail
sales
perfootage
leased
selling
SF(in thousands)
Total leased
square
at end
of period
$1,426
Total leased selling square footage at end of period (in thousands)
52%
2013
49%
14%
74
33%
24%
24%
68
1
2
70
67
$398
$1,395 861
Twelve Months Ended

January
February
31,
1,
Jan 2015
28,
Jan2014
29,
50%
2011 47%
16%
22%
18%
14%
28%
20%
27%
33%
30%
24%
20%
31%
70
71
70
$392
$1,143 798
70
3
6
74
67
$1,426
$846 861
71
2
3
91
70
$1,395
$635 798
5
8
2012
[f]
Total
leased SF at end of period
861
798 607 768 554 808 607
970 554
Average
leased square footage (in thousands) [g]
841
797
813
793
(in
thousands)
[g]
Average leased selling square footage (in thousands)
[f]
591
537
567
522
Total
leased
selling
square
footage
[a] Direct revenues include sales through our catalogs and websites.
554
501
516
613
atStores
end data
of period
[b]
represents retail stores plus outlet stores. 607
[c]
Comparable
brand revenue growth includes retail comparable store sales, including Baby & Child Galleries, and direct
(in
thousands)
net revenues. Comparable brand revenue growth excludes retail non-comparable store sales, closed store sales and
Average
SF Comparable store sales have been calculated based upon retail stores, excluding outlet stores,
outlet
store leased
net revenues.
813
793
784
913
1,014
that
open at least fourteen full months as of the end of the reporting period and did not change square footage by
(inwere
thousands)
more than 20% between periods. If a store is closed for seven days during a month, that month will be excluded from
Average
leased
selling
SF
comparable store sales.
567
522
504
580
641
(in
thousands)
[d]
Retail
data has been calculated based upon retail stores, which includes our Baby & Child Galleries and excludes
outlet stores.
[e] Retail sales per leased selling square foot is calculated by dividing total net revenues for all retail stores, comparable
and non-comparable, by the average leased selling square footage for the period.
[f] Leased selling square footage is retail space at our stores used to sell our products. Leased selling square footage
excludes backrooms at retail stores used for storage, office space or similar matters, as well as exterior sales space
located outside a store, such as courtyards, gardens and rooftops. Leased selling square footage includes approximately
4,500 square feet related to one owned store location.
[g] Average square footage (leased or leased selling, as applicable) is calculated for each quarter by taking the total
applicable square footage at the beginning of the quarter plus the total applicable square footage at the end of the quarter
and dividing by two. Average square footage for periods of three and twelve months is calculated by averaging the
average square footage for the quarters within such periods.
RESTORATION HARDWARE HOLDINGS, INC.
RECONCILIATION OF ADJUSTED INCOME STATEMENT ITEMS
(In thousands, except share and per share amounts)
(Unaudited)
Net revenues
Cost of goods
sold
Gross profit
Selling,
general and
administrative
Three Months Ended

Reported
Adjusted
Reported
Adjusted
January 31,
January 31, % of Net February 1,
February 1, % of Net
2015
Adjustments
2015
Revenues
2014
Adjustments
2014
Revenues
$
582,727 $
$
582,727
100.0% $
471,694 $
$
471,694
100.0%
364,584
218,143
364,584
218,143
62.6%
37.4%
296,717
174,977
296,717
174,977
62.9%
37.1%
RH West Palm Beach at City Place (Proposed)

560 Okeechobee Blvd, West Palm Beach, FL
The proposed 50,917 SF Gallery is described as a four-story store featuring outdoor courtyards, garden terraces, Juliet balconies,
reflecting pools, a fountain, and a rooftop park. The parking would be valet-only with tandem spaces.
RH ATLANTA The Gallery at the Estate in Buckhead

FIRST NEXT GENERATION GALLERY FORMAT
RH NEW YORK THE GALLERY IN THE HISTORIC FLAT IRON DISTRICT

OPENED JUNE 26TH, 2014
3030 PEACHTREE RD NW, ATLANTA, GA
935 BROADWAY, NEW YORK CITY

30,000 GSF
RH WEST HOLLYWOOD THE GALLERY ON MELROSE AVENUE

OPENED OCTOBER 24, 2014
8654 MELROSE AVE. LOS ANGELES, CA
234 Berkeley
47,000 Square Feet
234 Berkeley
Street
| Boston,
Massachusetts
RH
BOSTON
234
BERKELEY
ST02108
. BOSTON, MA
Former Museum of Natural History
ORIGINALLY CONSTRUCTED 1863 | 47,000 SF

Map of 234 Berkeley Street, Boston, MA 02116 (Suffolk County)

RH GREENWICH THE GALLERY AT THE HISTORIC POST OFFICE
310 GREENWICH AVE, GREENWICH
, CT
Iconic Building in Bostons Back Bay
APPROX. 24,000 SF
234 Berkeley is a one-of-a-kind retail opportunity situated directly on

three of Bostons most prominent streets: Berkeley, Boylston, and
Newbury. Built in 1863, the 47,000 square foot building originally housed
the Museum of Natural History before becoming the home to renowned
retailers Bonwit Teller and Louis Boston. The space is currently home to
Restoration Hardware.
234 Berkeley gracefully combines period details such as intricate molding
and arched windows with a modern, open floor plan and well-lit spaces,
allowing the retailer unlimited merchandising opportunities.
The Back Bay is walking distance from downtown Boston, the Theatre
District, South End, Cambridge, and Fenway Park. Alongside 234 Berkeley,
rows of fine Victorian brownstone homes from the 19th century sit
adjacent to modern towers such as The Prudential Center, John Hancock
Tower, and 111 Huntington.

Property Fact Sheet No. 31

WS Development | 617.232.8900 | WSDevelopment.com
| OPENED MAY 16, 2014
Cr
MID-AMERICA PROPERTY LISTINGS

I.
717 NORTH MICHIGAN AVE:
+/- 35,000 3-LEVEL SQUARE FOOT ANCHOR
INCREDIBLE
EXPOSURE
II.
100-112 SOUTH STATE STREET:
Have your brand take advantage of dramatic, multi-level corner visibility.

Opportunity for a nearly 50,000 SF single tenant flagship or multiple tenant configurations.

III.
430 NORTH LASALLE STREET
48,390 SF (SOUTHWEST CORNER STATE AND MONROE)

30,000 SF (DIVISIBLE)

*9:9;#

*9:)9<#

IV.
OAK BROOK COURT (NEC ROUTE 83 & 16TH ST):

!"#!"
$ !"#%
&' ( )* * &*

%+ "#
$ !"#%
*,-)* * &*

!"#!"
$ !"#%
&' ( )* * &*

%+ "#
$ !"#%
*,-)* * &*
(* .(( (( / (0( /' ,( && ' (*// ,* 0( /( / ' ,( (
28,519 SF
(,
"! 1 (20(
%
++
,,,* * &*
POTENTIAL SITES LISTED BY OTHER BROKERS:

I.
10 SOUTH STATE ST. (STATE & MADISON)

SF) | LOWER LEVEL (19,000 SF)
25,000 SF 2-LEVEL | 37 FEET FRONTAGE | GROUND LEVEL (4000

CUSHMAN & WAKEFIELD
II. 231 SOUTH LASALLE ST (RKF)

(LOWER LEVEL) + SPACE B (2,284 SF) OR C (2,130 SF)
ORIGINALLY CONSTRUCTED 1923 | | MAX CONTIGUOUS: 40,000 SF

TRIPLE NET LEASE
III. 540 N LASALLE (LASALLE & OHIO)

ROOFTOP WITH 360 DEGREE SKYLINE VIEW
MAX CONTIGUOUS 65,000 SF | 7-STORIES (8,000 GSF PER FLOOR) |

LISTING BROKER, DEBRA TUCKER OF LEGAL ACUMEN, LLC
RH Distribution and Warehousing Facilities:

Managed through 13 facilities, each serving all of RHs sales channels.12
-
West Jefferson, OH Distribution Center for small parcel direct-to-customer orders and retail store replenishment (1,224,000 SF)
North East, MA Primary furniture Distribution Center for the Eastern regions of US and Canada (1,195,000 SF)
Mira Loma, CA Furniture Distribution Center for
Western Regions of US and Canada and Furniture Home
Delivery Hub for the Greater Los Angeles Metropolitan
area (886,000 SF)
Grand Prairie, TX Supports Furniture distribution for
the Central and Southern regions within the US and
Furniture Delivery Hub for the Greater Dallas
metropolitan area and central Texas region (859,000 SF)
Chino, CA Short-term facility to support the Mira Loma
furniture distribution center. Intend to exit facility in
August 2015.
Baltimore, MD Secondary Furniture Distribution
Center for the Eastern regions of the US and Canada and a
Furniture Home Delivery Hub for the greater Baltimore
and Washington D.C. metropolitan areas (508,000 SF)
Tracy, CA Furniture Home Delivery Hub for the San
Francisco Bay Area region and as a supplemental storage
facility for our furniture distribution network (284,000 SF)
Dedham, MA Furniture Delivery Hub for greater
Boston metropolitan area (119,000 SF)
Avenel, NJ Furniture Delivery Hub for the greater New
York/New Jersey metropolitan area (114,000 SF)
Atlanta, GA Furniture Delivery Hub for the greater
Atlanta metropolitan area (101,000 SF)
Pompano Beach, FL Furniture Delivery Hub for greater Miami metropolitan area and southern Florida region (101,000 SF)
Houston, TX Furniture Delivery Hub for the greater Houston metropolitan area and eastern Texas region (71,000 SF)
Carmel, NY Furniture Delivery Hub for the greater New York metropolitan area and Connecticut (40,000 SF)

12
Restoration Hardware. Form 10-K for Fiscal Year ending January 31st, 2015. Page 6-7.
WESTGATE
O R BLVD. AUSTIN, TX
TREEHOUSE, INC. - 4477 S. LFAMAR
SHOPPING
LEASE
CENTER
WESTGATE SHOPPING CENTER
TreeHouse is a first-of-its-kind sustainable 4477

home S.
improvement
store, founded
in 2011, TX
with a single 25,000 SF retail location in Austin,
LAMAR BOULEVARD
:: AUSTIN,
TX. It specializes in curated products and services that promote healthy and sustainable spaces, with an emphasis on high performance and design. Rather than trying to be imitate the stereotypical big box retailer, TreeHouse has become a 25,000-squarefoot hub for everything LEASE
tied toRATE:
thoughtful building. Customers come to find supplies
and services that range from
paints and flooring to home solar systems.
1,080nontoxic
SF
$30.00 PSF/YR
April 15, 2015: Future TreeHouse stores will be similar in size to the TreeHouse in the
Westgate Shopping Center,
CEO Ballard has stated, spanning roughly 25,000 to 30,000
6,745 SF
square feet. Possible expansion
markets include elsewhere in Texas, as well as cities in
CALL FOR RATES
California, Colorado and the Pacific Northwest. These areas being targeted were
selected for two reasons: Theyre either geographically adjacent to Austin or in areas
that are known for being eco-friendly.13
On May 15, 2015, Tesla Motors CEO Elon Musk announced a new product line,
Residential and Industry Stationary Battery Packs for energy storage (dubbed the
Powerwall and Powerpack, respectively) and named TreeHouse Inc. as the first and exclusive retailer of their new product line.
TreeHouse CEO Jason Ballard was interviewed by Industry
Week magazine following the announcement and the
following excerpts are taken from that interview:
Industry Week: Being the only American outlet to sell this,
at least at the launch, should help TreeHouses bottom line
and possible expansion, right?
CEO Jason Ballard: The timing for this is actually pretty
unbelievable. Tesla didnt do it for us, but Im actually in the
middle of raising another round of capital for growth, and I
got a number of emails from potential investors the morning
after
2012 TXDOT TRAFFIC CO
U Nthe
T S announcement. We are planning both a regional
and a national expansion. Before the launch, we proved the
H I G H W AY 2 9 0 W E S T O F L Aconcept,
MAR BO
U Lproved
E V A R Dthe store can make money,
145,000
vpd
we
we proved
we can get access to really exciting products and materials
H I G H W AY 2 9 0 E A S T O F L Aand
M A Rtechnology.
B O U L E V AFor
R D Tesla to announce the partnership
128,000 vpd
right
in the middle of all this, Im walking into board meetings
with a big smile on my face.14
2 0 1 3 E S T I M AT E D D E M O G R A P H I C S
1 Mile
3 Mile
5 Mile
P O P U L AT I O N :
AVG. HOUSEHOLD INCOME :

HOUSEHOLDS:
10,411
108,688
297,311
$58,537
$63,812
$68,639
5,358
50,733
129,076
CBRE | 100 Congress Ave. | Suite 500 | Austin, TX 78701 | www.cbre.com/austin

2013 CBRE, Inc. This information has been obtained from sources believed reliable. We have not
verified it and make no guarantee, warranty or representation about it. Any projections, opinions,
assumptions or estimates used are for example only and do not represent the current or future
performance of the property. You and your advisors should conduct a careful, independent investigation
of the property to determine to your satisfaction the suitability of the property for your needs.

13
14
Austins TreeHouse plans to expand, add more stores. April 15, 2015. My Statesman.
http://www.industryweek.com/energy/meet-man-who-will-sell-you-tesla-powerwall. 5.15.2015.
past ten years, the industry has grown and has remained resilient during economic downturns. In 2010, the industry showed a
MICHAEL KORS
significant recovery with 13% growth and surpassed the pre-financial crisis peak of $222.7 billion set in 2007. In addition, according
to these same
studies, demand
for the worldwide
luxuryyear
goods industry
to grow
approximately
$277.7
in
According to WWD, the company plans to open 45 stores
in North
America
in fiscal
2015, isaspredicted
well as
10 from
in Japan.
John
D.billion
Idol,
2012 to between $295.6 billion and $301.3 billion in 2014. We believe that we are well positioned to capitalize on the continued
of the accessories
product
category,retail
as it is one
of our primary
product category
focuses. The company is also
Chairman and CEO of Michael Kors, said the brand growth
also plans
to open
more
stores
in various
airports.
15
* Comprised of: the Worldwide
Luxury Markets
Spring
2014 update,
Worldwide Luxury Markets Monitor, Spring 2013
preparing to disclose its plans to open a number of freestanding
men's stores
on aMonitor,
global
basis.
update, Luxury Goods Worldwide Market Study, 2012, the Luxury Goods Worldwide Market Monitor, Spring 2012 Update,
Luxury Goods Worldwide Market Study, 2011, Luxury Goods Worldwide Market Study Spring 2011 Update, the Luxury Goods
Worldwide Market Study, and the Altagamma 2006 Worldwide Markets Monitor (together, the Altagamma Studies). These
studies were prepared by the Altagamma Foundation in cooperation with Bain & Company and can be obtained free of charge or at
a nominal cost by contacting Bain & Companys media contacts at cheryl.krauss@bain.com or frank.pinto@bain.com. While we
believe that each of these studies and publications is reliable, we have not independently verified market and industry data from
third-party sources. The Altagamma Studies analyze the global luxury goods market, including the market and financial
performance of more than 230 of the worlds leading luxury goods companies and brands. All figures derived from the Altagamma
Studies are based on an exchange rate of $1.31 to 1.00.
Business Overview: Michael Kors is a rapidly growing global luxury lifestyle brand led by a world-class management team and a
renowned, award- winning designer. Since launching his namesake brand over 30 years ago, Michael Kors has featured distinctive
designs, materials and craftsmanship with a jet-set aesthetic that combines stylish elegance and a sporty attitude. Mr. Kors vision has
taken the Company from its beginnings as an American luxury sportswear house to a global accessories, footwear, and apparel company
with a presence in over 85 countries (FY2014 Annual Geographic
Report, 4).
Information
We generate revenue globally through our segments. Through our retail and wholesale segments we sell our
products in three principal geographic markets: North America, Europe and Japan. Through our licensing segment, we enter into
The business is divided into three segmentsretail, wholesale
and tolicensingalong
with
controlled
distribution
agreements that license
third parties use of our brand
name a
andstrategically
trademarks, certain
production, andglobal
sales and/or
distribution rights.
Revenues generated through these agreements are primarily earned in North America, though we have begun to grow our licensing
network focused on company-operated retail stores, leading
department
stores,
specialty
stores
and
select
licensing
partners.
business in Europe during Fiscal 2014.
The following table details our net sales and revenue by segment and geographic location for the fiscal years then
thousands):
Retail Segment:16 FY2014 - retail segment accountedended
for(inapproximately
48.1 percent of total revenue.
As of March 29, 2014, the retail segment included:

288 North American retail stores
117 international retail stores in Europe and Japan.
As of March 29, 2014, Kors occupied 405 leased
retail stores worldwide (including concessions)
Retail net sales - North America

Retail net sales - Europe
Retail net sales - Japan
Wholesale net sales - North America
Wholesale net sales - Europe
Licensing Revenue - North America
Licensing Revenue - Europe
March 29,
2014
Fiscal Years Ended

March 30,
2013
March 31,
2012
$1,318,887
235,571
38,547
1,335,545
241,972
117,386
22,935
$3,310,843
$ 938,515
101,754
22,373
913,145
118,970
86,975
$2,181,732
$ 573,394
43,316
10,230
544,686
65,474
65,154
$1,302,254
Competitive Strengths
Wholesale Segment: FY2014, - wholesale segment accounted forWe

approximately
47.6%
of total
revenue.
believe that the following
strengths
differentiate
us from our competitors:
As of March 29, 2014, the wholesale segment included: (1) Wholesale
through
approximately
2,496 department
store
andthatspecialty
Rapidly sales
Growing
Luxury Lifestyle
Brand with Best-in-Class
Growth Metrics.
We believe
the Michael
Kors name has become synonymous with luxurious fashion that is timeless and elegant, expressed through sophisticated accessory
store doors in North America; and (2) wholesale
sales
through
approximately
1,232
department
store
and
specialty
store
doors and
and ready-to-wear collections. Each of our collections exemplifies the jet-set lifestyle and features high quality designs, materials
craftsmanship. Some of the most widely recognized global trendsettersincluding celebrities such as Halle Berry, Angelina Jolie,
internationally. A small number of the Companys wholesale
for Michelle
a significant
portion
of their
net sales.
Net sales
their
Blake Lively,customers
Penelope Cruz,account
Jennifer Lopez,
Obama, Gwyneth
Paltrow,
the Duchess
of Cambridge,
and Cateto
Blanchett
walk the red carpet in our collections. We have built a solid foundation for continued long-term global growth and currently enjoy
five largest wholesale customers represented 28.9 percent
of
their
total
revenue
for
Fiscal
2014
and
29.3
percent
of
their
total
revenue
for
best-in-class growth metrics.
Fiscal 2013. Their largest wholesale customer, a large, nationally recognized
U.S.
department store,
accounted
forMichael
14.4 percent
of their total
Design Vision Led
by World-Renowned,
Award-Winning
Designer.
Kors, a world-renowned
designer,
personally leads our experienced design team. Mr. Kors and his team are responsible for conceptualizing and directing the design of
revenue for Fiscal 2014 and 14.0 percent for Fiscal 2013.
all of our products, and their design leadership is a unique advantage that we possess. Mr. Kors has received a number of awards
which recognize the contribution Mr. Kors and his team have made to the fashion industry and our Company.
5
Licensing Segment: FY2014, the licensing segment accounted for approximately 4.2 percent of total revenue and consisted primarily of
royalties earned on licensed products and geographic licenses.
For FY2014, Kors retail segment reported net sales of $1,593.0 million (a 26.2% increase in year-over-year comparable store sales).
Three primary retail store formats: (FY2014 Annual Report, 14).
Retail
1.
2.
3.
We sell ourmost
products,
as well as licensed
products bearing
our name,
directly
to the end consumer
throughin
our retail
Collection stores (Generally 3,300 SF): located in some
of the worlds
prestigious
shopping
areas,
such
as Madison
Avenue
stores and concessions throughout North America, Europe, and Japan. We have three primary retail store formats: collection stores,
lifestyle stores and outlet stores. Our collection stores are located in highly prestigious shopping areas, while our lifestyle stores are
New York and Rodeo Drive in California
located in well-populated commercial shopping locations and leading regional shopping centers. Our outlet stores, which are
generally
shopping
malls, extend
our reach
to additional metropolitan
consumer groups. In addition
to these locations
three retail storeand
formats,
we operate
Lifestyle stores (Generally 2,300 SF): located in some
of inthe
worlds
most
frequented
shopping
top
concessions in a select number of department stores in North America, Europe and Japan. The following table presents the growth in
our network of retail stores during Fiscal 2014, Fiscal 2013 and Fiscal 2012:
regional shopping centers
Fiscal Years Ended
Outlet stores (Generally 3,000 SF)
March 31,
March 30,
March 29,
2014
Full price retail stores including concessions:

Number of stores
Increase during period
Percentage increase vs. prior year
Total gross square footage
Average square footage per store
2013
2012
158
Business Strategy: Continue to expand our retail store base
45
39.8%
in North America and in Europe. We believe that there is
316,649
2,004
significant opportunity to continue expanding our retail stores Outlet stores:
of stores
126
103
79
in both North America and in Europe, and to increase our Number
23
24
26
22.3%
30.4%
49.1%
stores in these regions to approximately 600 locations in the
Total gross square footage
381,567
291,407
219,407
Average square footage per store
3,028
2,829
2,777
long term. We will look to open new stores predominately in
Wholesale
high traffic areas of street and mall locations in high-income demographic
areas and will adhere to our already successful retail store
We sell our products directly to department stores across North America and Europe to accommodate consumers
prefer to shop at major department stores. In addition, we sell to specialty stores for those consumers who enjoy the boutique
formats, which we believe reinforce our brand image and who
generate
strong
sales
square
foot,
(FY2014
Annual
7). by enhancing
experience afforded by such stores.per
We continue
to focus
our sales
efforts and drive
sales inReport,
existing locations
279
78
38.8%
562,773
2,017
201
43
27.2%
410,681
2,043
presentation, primarily through the creation of more shop-in-shops with our proprietary fixtures that effectively communicate our
brand and create a more personalized shopping experience for consumers. We tailor our assortments through wholesale product
planning and allocation processes to better match the demands of our department store customers in each local market.
Fiscal 2012:
The following table presents the growth in our network of wholesale doors during Fiscal 2014, Fiscal 2013 and

http://www.fashiontimes.com/articles/7776/20140529/michael-kors-plans-major-retail-expansion.htm
Michael Kors FY2014 Annual Report page 4.
Licensing
15
Number of full-price wholesale doors

March 29,
2014
3,728
479
14.7%
Fiscal Years Ended

March 30,
2013
3,249
572
21.4%
March 31,
2012
2,677
645
31.7%
16
We generate revenue through product and geographic licensing arrangements. Our product license agreements allow
third parties to use our brand name and trademarks in connection with the manufacturing and sale of a variety of products, including
watches, fragrances, eyewear and jewelry. In our product licensing arrangements, we take an active role in the design process,
marketing and distribution of products under our brands. Our geographic licensing arrangements allow third parties to use our
ImpacT of e-commerce on
usTrIal and reTaIl real esTaTe
Convergence of Industrial and Retail Real Estate Sectors: Attracting Retailers to the Chicago Retail Market
store, particularly around FedEx/UPS hubs, to convert and
rezone.18
Research Foundation and the International Council of
Vitou
David Egan
i prepared forthe NAIOP
In Analyst
an April 2012 white
paper
r Research
Director,
Research
& Analysis
d-
n-
el
r-
ce
e-
Shopping Centers, Curtis Spencer and Steve Schellenberg of

IMS Worldwide argue, It is vital for retailers to integrate their
systems to address production planning, purchasing, materials
management, distribution, packaging configuration, customer
services,
forecasting
and logistics
initially sales
as an
online book
retailer, management.
but the company quickly
grew into the worlds online superstore offering products in
According
to the National Association of Realtors (NAR)
16 distinct categories ranging from clothes to electronics.
February 2015 Commercial Real Estate Outlook Report,
Books, which once accounted for nearly 100% of Amazons
Industrial markets have been benefitting from rising trade and the
sales, now represent just over 30% of revenue. Amazon has
continued shift toward electronic commerceBoth of which have
grown
fromdemand
$16 million
in revenue
in 1996
to over
led
to strong
for distribution
warehouse
space,
(NAR$60
Feb
billion
today,
a
figure
which
represents
over
one-third
of
all
Outlook 4).
online sales in the U.S. Amazon is the engine that has driven
While
the e-commerce
sectorin still
only accounts
for 6-7%
the growth
of e-commerce
the United
States, where
totalof
annual retail sales, the rate at which it has grown and is expected
online sales have grown seven-fold since 2000, to $226 bilto continue to grow would have been difficult to fathom back in
lion inFrom
2012.
By to
2016,
U.S. U.S.
will see
a 61%
in
2000.
2000
2012,the
annual
online
sales increase
grew sevenfold
to $226over
billion
andlevels,
it is expected
that by sales
2016,reaching
the U.S.
e-retailing
2011
with projected
will
seebillion.
a 61% increase in e-retailing over 2011 levels, with
$327
projected sales reaching $327 billion, (CBRE April 2013, 1).17
Billions
by
s,
$200
se
$150
At
$100
he
$50
n.
$0
ly
Forecast
$300
$250
U.S. E-commerce Sales
$350
e-
Figure 1: U.S. E-commerce Sales
or
In addition to urban infill near FedEx and UPS hubs, there are
numerous opportunities for industrial to mobilize and develop
around railroads like CN, NS and CSX, since big clients will
undoubtedly diversify to prevent major stoppages in the future.
Current product around CN terminals is mainly Class B and
Class C. This argument should be persuasive to retailers like
Restoration Hardware, which currently have no distribution
centers in the Chicagoland area. The retailer has also been
susceptible to the work stoppages and overcrowding that has
plagued the West Coast ports during the last two years. CEO
Gary Friedman admitted during their latest annual shareholder
meeting that their FY2014 revenue was less than it otherwise
would have been had the company not been so reliant on the
West Coast ports. In its latest 10K filing, the Company
provided the following guidance for the first quarter of fiscal
2015:
$252
$202
2011
$304
Net revenues in the range of $415 million to $420 million,

including the negative impact of approximately $10 million to $12
million due to the West Coast port congestion;
Adjusted net income in the range of $7.5 million to $8.4 million,
including the negative impact of the West Coast port congestion;
Adjusted diluted EPS in the range of $0.18 to $0.20, including the
negative impact of approximately $0.05 to $0.06 due to the West
Coast port congestion.
$327
$278
RETAILERS SEEKING CHICAGO INDUSTRIAL SPACE19
$226
Digikey (Electronic component distributor)

- Seeking build-to-suit site requiring 1.3 to 1.5 million SF
- Search Parameters: Midwest
2012
2013
2014
2015
2016
Note: Online consumers will increase their spending 62% by 2016, according to
Forrester Inc.
A March 2015 NAIOP Panel discussed key market trends that

Source:
Forrester Inc.,global
Q4 2012.industry in Chicago.
are
impacting
The most often
discussed market trend was the competition amongst retailers to
implement a reliable and cost-effective same-day delivery
strategy. As both online and traditional brick & mortar
2013, retailers
CBRE, Inc.
rush to implement this last mile delivery, Chicago is in a
unique position to benefit from its extensive existing industrial
property base, its dominant position as a top transportation and
logistics infrastructure hub, and its proximity to major
population centers. In fact, Chicago has already experienced
extensive speculative industrial development. According to
Scaling New Heights 2015 Outlook, Chicago was the most
active [industrial market] with $1.4 billion in [industrial
property] transactions during the first half of 2014, (Scaling
New Heights, 61).
Project Cosmopolitan (Undisclosed retailer)

- Seeking 1.0 million square feet of distribution space off I-80
- Most likely will result in build-to-suit
Undisclosed owner operator
- Looking to purchase a 600,000 square-foot facility, expandable
to 1.0 million square feet
- Search Parameters: Greater Chicago region
- Build-to-suit not being considered
Batory Foods
- Search Parameter: seeking land along I-80, I-55, or I-88
- Space Requirement: 750,000 square-feet
Whirlpool
- Pursuing first Chicago facility
- Seeking 600,000 to 700,000 SF with abundant trailer parking
Life Fitness
- Seeking rail served building between 300,000 to 500,000
square feet for its manufacturing and assembly operations
- Search Criteria: Retain proximity to its existing labor force by
focusing on West Cook and OHare
In a March 24, 2015 blog post, JLL concurs, arguing that the
race to implement last mile strategies, will inevitably spur
smaller, urban infill industrial deals, as retailers look for dark

Vitou, John; Egan, David. CBRE U.S. ViewPoint (April 2013). Global Research and
Consulting. The Impact of E-Commerce on Industrial and Retail Real Estate
17

Marissa Oberlander. NAIOP Panel Reveals E-Commerce, Industrial Trends Impacting
Chicago. March 24, 2015.
18
19
SOURCE: JLL INDUSTRIAL HIGHLIGHTS: CHICAGO. Q1 2015. 1-2.
CHICAGO INDUSTRIAL REAL ESTATE MARKET OVERVIEW:

WAREHOUSE SPACES GREATER THAN 500,000 SQUARE FEET RENTABLE BUILDING AREA, GREATER CHICAGO REAL ESTATE MARKET,
INDUSTRIAL SUBMARKETS (BY WAREHOUSE SQUARE FOOTAGE) AND SELECTED YEAR RANGES20
RANK
1
2
3
4
5
6
SUBMARKET
SOUTH I-55 CORRIDOR
JOLIET AREA IND
I-88 WEST IND
SOUTH CHICAGO IND
FAR SOUTH COOK IND
WEST COOK NORTH IND
SOURCE: CMAP ANALYSIS
OF
COSTAR
SUB#
28
12
10
27
4
30
DATA.
PRE-1990
0
513,000
827,487
3,868,000
0
3,170,382
COSTAR GROUP,
1990S
2,577,724
637,614
2,473,276
0
670,000
0
2000-2006
6,529,345
6,217,789
1,199,915
524,800
696,540
0
2000-2011
8,597,878
7,450,413
1,199,915
524,800
2,621,564
0
SINCE 2007
2,068,533
1,232,624
0
0
1,925,024
0
BY
TOP 6
TOTAL
11,175,602
8,601,027
4,500,678
4,392,800
3,291,564
3,170,382
WWW.COSTAR.COM
COSTAR CHICAGO INDUSTRIAL SUBMARKET OVERVIEW (2014)
CASE STUDY: AMAZONS GROWING COMMERCIAL PROPERTY PORTFOLIO: DISTRIBUTION, SORTATION, FULFILLMENT AND THE LAST MILE
According to a Cushman & Wakefield research note, the growth of E-Commerce has brought with it, A
Trend toward larger (1.0 million square feet and greater) distribution facilities in close proximity to UPS and FedEx
Centersas customers demand 24/7 delivery, especially for e-tailers such as Amazon.com, (C&W, 6). This same
customer demand will likely drive retailers such as Walmart and Home Depot to open additional mega
distribution centers in the Chicago region.
TIMELINE OF AMAZON DISTRIBUTION CENTER GROWTH:
-
2011 to 2012: + 19 fulfillment centers in U.S. and Canada (total of 17 million ft2)
2013:
+ 8 fulfillment centers in U.S. (total of 7.7 million ft2)
March 2015:
67 total distribution centers (includes fulfillment centers, specialty facilities,
redistribution centers, returns centers, and 3PL outsourced facilities) in North America (total of 51.8
million SF)
In addition to these massive distribution centers, Amazon currently operates a network of 15 smaller
Sortation Centers totaling a combined 4.3 million square feet. Amazon will almost certainly expand
their portfolio of these sortation centers as they are key to Amazons strategy for gaining control of
the last mile delivery process. Sortation Centers differ from traditional distribution centers in the
following ways:
Sortation Centers are only 200-300,000 SF. In general, sortation centers are smaller operations that can be located
beside, adjacent to, or nearby larger fulfillment centers, (MWPVL Report).
Sortation Centers aggregate shipments from one or more fulfillment/distribution centers for delivery to a
defined regional grouping of zip codes (typically a nearby set of populated urban areas).

ORIGINAL TABLE PREPAPRED FEBRUARY 2012 BY CHICAGO METROPOLITAN AGENCY FOR PLANNING, CONGESTION, MANAGEMENT PROGRAM
DATA INCLUDES WAREHOUSING WITHIN INDUSTRIAL AND FLEX MARKETS. TOTALS ARE CROSS-TABS OF RENTABLE BUILDING AREA BY YEAR BUILT, SUMMED BY DECADE. SUBMARKETS NOT SHOWN
HAVE NO COSTAR RECORDS OF WAREHOUSE SPACES GREATER THAN 500,000 SQUARE FEET. WAREHOUSES > 500,000 SQUARE FEET COMPRISE ONLY 9.3% OF TOTAL WAREHOUSE SPACE IN THE
CHICAGO REAL ESTATE MARKET.
20
These pallets of shipments are then delivered from the Sortation Center to the U.S. Postal Service or local courier depots for delivery to
the end user.
MWVPL Supply Chain Consultants21 offer a compelling explanation for Amazons Sortation Center Strategy, arguing that Amazon
has thus far not had the same level of control over their outbound transportation functions as do traditional retailers who oftentimes
have dedicated carriers or private fleets and do not rely solely on UPS and/or FedEx to ship their goods to market. Amazon has
historically relied primarily on national parcel couriers (UPS or FedEx) to move product to market, but these carriers are obviously not
working exclusively for Amazon. To them, Amazon is simply another shipper that has to suffer the consequences of transportation infrastructure
constraints, (MWVPL Report). It is for this reason that Amazon is complementing its distribution center strategy with sortation centers,
which currently utilize USPS. MVPWL expects Amazon to roll out this strategy such that, all major fulfillment center clusters will be
supported by a sortation center to better service regional high population markets, (MVPWL Report).
The authors of Cushman & Wakefields22 Fall 2014 Industrial Investor Outlook project industrial property sales to increase through
2015, with even greater sales activity and speculative development anticipated as inventory dwindles (C&W, 1). Their Investor Survey
also revealed the top U.S. Markets for potential acquisition that are expected to command premium prices for Class A Assets, with
Chicago being among the top twelve of these markets.
As discussed previously, a major reason Chicago is seen as prime opportunity for Class A Asset construction 23 is its proximity to
transportation nodes such as freight, rail, and intermodal services and the vast populations these allow retailers to reach. Global growth of
e-commerce and online retailing willcontinue to impact the supply chain and provide the growth engine for new industrial development, (Wakefield 3).
The Report also identifies changing demand trends as they relate to the end-users/occupiers. For example, the Inland Ports of Chicago,
Dallas/Fort Worth and Southern California are forecasted to increase their existing supply of industrial space by a combined 107 million
square feet over the next four years.
Inland port cities are key to the completion of the supply-chain cycle, as shippers are looking to locate their distribution centers in
closer proximity to their end markets and reduce long-haul trucking costs by using intermodal rail (C&W, 5).
A second key demand trend alluded to above - is the increasing need for access to Rail Networks by the end-users/occupiers:
Inland transportation nodes continue to be focused on rail versus traditional trucking because of volatile trucking costs. In fact, according to the Association of
American Railroads (AAR), there are a total of seven Class I Railroads serving the United States, (Wakefield 5). The Chicago Region is the only
region in the nation served by six of the seven Class I railroads. This places Chicago in a unique and enviable position, as retailers
will be selecting sites with direct access to major rail and intermodal facilities for their new distribution centers.
DISTRIBUTION CENTERS: THE NEW VS. THE OLD
CBREs April 2013 Report24 discusses the impact e-Commerce is expected to have on the industrial and retail real estate sectors. They
begin by highlighting key ways that newly constructed distribution facilities (those built from 1997 to the present) differ from the typical
distribution centers (those constructed primarily during the second half of the 20th century). These new facilities have:
-
Increased infrastructure (e.g., Heavy conveyors and sorting systems);

Heavy power;
Locations in 24/7 zones;
Higher clear heights (36 40) to accommodate for higher racking and mezzanine areas; and
An abundance of land for parking and transport truck turning radius.

http://www.mwpvl.com/html/amazon_building_new_sortation_network.html
Cushman & Wakefield. Industrial Investor Outlook and Trends: United States Fall 2014.
NOTE: Class A Assets are defined using CoStars Criteria: Class A Industrial are extremely desirable investment-grade properties and command
the highest rents or sale prices compared to other buildings in the same market. Such buildings are well-located with efficient tenant
layouts and high-quality one-of-a-kind floor plans. They contain modern mechanical systems and have above-average maintenance and management,
and the best quality materials and workmanship (Wakefield 4).
21
22
23
24
CBRE: U.S. Viewpoints. April 2013. Page 2 of 6.
The Chicago Industrial Real Estate Market: The alignment of retail and industrial needs and
Chicago as the Freight and Manufacturing Hub of America
According to the National Association of Realtors (NAR) February 2015 Commercial Real Estate Outlook Report, Industrial markets
have been benefitting from rising trade and the continued shift toward electronic commerceBoth of which have led to strong demand for
distribution warehouse space, (NAR Feb 2015 Outlook, 4).
As retailers (both online and brick & mortar) are rushing to capture the last mile delivery, Chicago is in a unique position to benefit
from its extensive existing industrial property base and its proximity to major cross-country train corridors and interstate highways.
According to the Scaling New Heights 2015 Outlook, Chicago was the most active location with $1.4 billion in [industrial property]
transactions during the first half of 2014, (Scaling New Heights 61).
The growth of E-Commerce has already - and will continue to - change how industrial-zoned land and warehouse space are utilized.
There has been a steady trend toward larger (1.0 million square feet and greater) distribution facilities in close proximity to UPS
and FedEx Centersas customers demand 24/7 delivery, especially for e-tailers such as Amazon.com, (Wakefield 6). This same
customer demand will likely drive retailers such as WalMart and Home Depot to open additional distribution centers in areas with the
unique attributes of the Chicago region.
Chicago is expected to be among the top twelve U.S. Markets for potential acquisition while still commanding premium prices for Class
A Assets. One reason Chicago is viewed as prime opportunity for Class A Asset construction is the vast transportation networks and
nodes (e.g., freight, interstate, ports, and intermodal services) have become increasingly important concurrent with the growth of
eCommerce.25 (see Footnote for Definition of Class A Assets)
According to the U.S. Department of Transportations Bureau of Transportation Statistics, Illinois ranks 2nd among 51 states, behind
only Texas, in the number of railroad miles
the state dedicates to freight transport. 26
The bar graph to the right illustrates the
extent to which Illinois and Texas lead the
rest of the states in this metric.
Along with the growth of e-commerce, there
has been an increasing need by retailers to
setup their distribution facilities where there
is convenient access to rail networks. In
addition to urban infill near FedEx and UPS
hubs, there are numerous opportunities for
industrial to mobilize and develop around
major freight terminals like CN (currently
composed of mainly Class B and C), NS and
CSX, since big clients will undoubtedly see
the benefit of a diversified supply chain to
protect against major stoppages.
The Report also identifies some changing demand trends as they relate to the end-users/occupiers. For one, The Inland Ports of Chicago,
Dallas/Fort Worth and Southern California are forecasted to increase the existing supply of industrial space by a combined 107 million
Inland port cities are key to the completion of the supply-chain cycle, as shippers are looking to locate their distribution
centers in closer proximity to their end markets and reduce long-haul trucking costs by using intermodal rail, (Wakefield 5).
-
Illinois already ranks 8th out of all states in miles of inland waterway with 1,100 miles
Illinois ranks 2nd in the nation for the amount (in tons) of rail shipments terminating in the State
Illinois Ranks 3rd in Freight Shipments by Value (behind California and Texas), with over $639 billion in freight shipments in
2007 the latest year the DOT recorded such figure
NOTE: Class A Assets are defined using CoStars Criteria: Class A Industrial are extremely desirable investment-grade properties
and command the highest rents or sale prices compared to other buildings in the same market. Such buildings are well-located with
efficient tenant layouts and high-quality one-of-a-kind floor plans. They contain modern mechanical systems and have above-average
maintenance and management, and the best quality materials and workmanship (Wakefield 4).
26 U.S. Department of Transportation. Research and Innovation Technology Administration, Bureau of Transportation Statistics, State Transportation Statistics, 2012.
25
2015 CHICAGO INDUSTRIAL MARKET OUTLOOK
Retailers will increasingly be in need of Commercial Real Estate Firms with expertise in both the retail and industrial real estate markets
of the major metropolitan areas as they seek to capitalize on their growing e-commerce business through the purchase and/or leasing of
industrial property to warehouse and distribute their inventory in the most efficient and cost-effective manner.
Cushman & Wakefields Q4 2014 MarketBeat Industrial Snapshot27 for the Chicago Market, offers the following insights, New leasing
activity for the Chicago Industrial Market measured 35.5 million square feet (msf) in 2014, a 14.9% increase from this time last year. The
strongest leasing activity occurred in the Interstate 55 Corridor submarket with 5.6 msf. Despite the interstate 55 Corridor capturing the
most activity, the largest lease transaction of the year took place in the Interstate 80 Corridor. Michelin North America, inked a deal to
lease a 1.7-msf build-to-suit (BTS) in Wilmington. The transaction makes Michelin the first major tenant at RidgePort Logistics Center, a
1,500-acre, rail-served intermodal park with room for 14.0 msf of industrial product.
In addition, construction completions totaled 9.0 MSF in 2014 with nearly 4.4 MSF delivered on a speculative basis. The majority of
developments in 2014 took place in the I-55 and I-80 Corridor submarkets, accounting for 2.6 MSF and 1.9 MSF, respectively. An
additional 11.1 MSF was under construction at year-end.24
As industrial fundamentals remain strong and rental rates experience upward pressure, there will be an increase in speculative
development. Currently, 51.7% of these developments are being built on a speculative basis.
CLUSTER EMPLOYMENT AND LOCATION QUOTIENTS*

METROPOLITAN CHICAGO'S DUAL CONCENTRATION IN FREIGHT AND MANUFACTURING IS ONE OF THE REGION'S MANY ADVANTAGES THAT HELPS IT
COMPETE IN AN INCREASINGLY GLOBAL ECONOMY. WITHIN THE SEVEN-COUNTY CMAP REGION, THE FREIGHT AND MANUFACTURING CLUSTERS
CONTAIN ROUGHLY 637,000 JOBS.
THE HEALTH OF CLUSTER ECONOMIES WITHIN METROPOLITAN AREAS CAN BE MEASURED BY TRACKING BOTH EMPLOYMENT LEVELS AND LOCATION
QUOTIENTS FOR EACH CLUSTER. TOTAL EMPLOYMENT MEASURES PROVIDE AN EASY-TO-UNDERSTAND METRIC FOR MEASURING THE SIZE OF A
CLUSTER, WHILE LOCATION QUOTIENTS MEASURE EMPLOYMENT LEVELS IN THE REGION COMPARED TO THE NATIONAL AVERAGE.
METROPOLITAN CHICAGO POSSESES:
MORE INTERSTATES THAN ANY OTHER REGION;
SIX OF THE SEVEN CLASS I RAILROADS;
!
!
CONNECTIONS TO THE MISSISSIPPI RIVER AND ST. LAWRENCE SEAWAY;

THE NATION'S SECOND LARGEST CARGO AIRPORT (TOTAL CARGO VALUE
The
outlook
for NChicagos
industrial
market: in 2015 is positive, especially in the first half of the yearDevelopers will be looking for
CHICAGO
THE
ATIONS FREIGHT
CLUSTER
more land sites to build speculative warehouse/distribution space to meet the ever-increasing demand. Rental rates will continue to rise
marginally
nearly THAT
all submarkets.
half OF
of the
ESTIMATES in
SUGGEST
BETWEEN A Through
QUARTER the
ANDfirst
A THIRD
ALLyear, absorption will be positive, but as new construction is completed,
FREIGHTrates
TONNAGE
THE to
U.S.
ORIGINATES
, TERMINATES
PASSES 1).
vacancy
couldINbegin
rise,
(Wakefield
ChicagoORIndustrial
THROUGH THE CHICAGO REGION. IT IS THE ONLY REGION SERVED BY SIX
OF THE SEVEN CLASS I RAILROADS. AN ESTIMATED 500 FREIGHT TRAINS
MOVE 37,500 RAIL CARS THROUGH THE REGION EACH DAY, ACCOUNTING
FOR APPROXIMATELY
IN THE NATION.
50
PERCENT OF TOTAL RAIL FREIGHT MOVEMENT
620
Cook County #2
THE
REGION'S FREIGHT CLUSTER EMPLOYS ROUGHLY 176,000

Chicago MSA #3
INDIVIDUALS AND INCLUDES BOTH DIRECT FREIGHT JOBS (E.G.,
TRUCKING, RAIL ENGINEERING, ETC.) AND JOBS SUPPORTED INDIRECTLY
BY FREIGHT ACTIVITY
(E.G.,
BRIDGE CONSTRUCTION OR PACKAGE
). THE C
HICAGO PRROJECT
EGION,
S F
CLUSTER
IS ABLE AND
TO MOVE
MORE GOODS
ANYBOTHER
REGION
IN THE NATION. THIS IS
SMANUFACTURING
OURCE: U.S. CLUSTER
MAPPING
IREIGHT
NSTITUTE
FOR STRATEGY
COMPETITIVENESS
, THAN
HARVARD
USINESS
SCHOOL
DESPITE EMPLOYMENT IN CHICAGO'S FREIGHT CLUSTER BEING INCREDIBLY VOLATILE, EXPERIENCING LARGE SWINGS DURING THE RECENT
CMAP CHICAGO REGION PRODUCTIVITY TRENDS: THE STRENGTH OF CHICAGOS LABOR FORCE, FREIGHT, AND MANUFACTURING
RECESSION AND RECOVERY. THE REGION'S FREIGHT LOCATION QUOTIENT DECLINED IN THE EARLY 2000S BUT HAS GROWN SINCE 2008, NOW
STANDING
1.15.
JOB
COUNTAT
: Growing
job counts in the region indicate that Chicago-area businesses are hiring and that the region's economy is growing.
There are currently an estimated 4.7 million jobs in the region. This total is less than the region's pre-recession jobs peak of 4.8 million in 2007;
however,
initial dataCsuggest
2014 will
be the fourth straight
year for which the region's total job count has grown.28
MANUFACTURING
LUSTERthat
: CHICAGO
'S MANUFACTURING
CLUSTER
EMPLOYS APPROXIMATELY 551,000 JOBS AND INCLUDES CORE
MANUFACTURING INDUSTRIES ALONG WITH SEVERAL SUPPORTING

INDUSTRIES SUCH AS INDUSTRIAL DESIGN AND ENGINEERING, FREIGHT
27 Cushman
28
& Wakefield. Marketbeat Industrial Snapshot: Chicago, Il (Q42014)
TRANSPORTATION, RESEARCH AND DEVELOPMENT, AND ENERGY

http://www.cmap.illinois.gov/economy/regional-economic-indicators/trends#real-gross-regional-product
GENERATION.
CHICAGOS MANUFACTURING CLUSTER IS THE SECOND

LARGEST IN THE NATION. EVEN SO, MANUFACTURING EMPLOYMENT IN
EDUCATIONAL ATTAINMENT: Within the Chicago region, an estimated 86.9 percent of

residents held a high school degree or higher (including those with some college but no
degree), and 43.4 percent held an associate degree or higher in 2013. The proportion of the
region's residents holding a high school degree or higher closely mirrors the national average,
while the proportion of residents with an associate degree or higher exceeds the national
average.
WORKFORCE PARTICIPATION RATE (2013):

Chicago's workforce participation rate exceeds that of Los
Angeles and New York, with higher levels of workforce
participation generally seen as a positive indicator of regional
economic opportunity.
The region's workforce participation rate exceeds the

national average and exceeds participation rates in peer
regions like New York and Los Angeles.
IV. Skills Gap

This indicator tracks three mid-skill career fields:
1.
Mechanic and Repair Technologies
2. Precision Production
3. Transportation and Material Moving
In order to illustrate gaps between job openings and educational program completions, which can vary substantially from year to
year. The following chart lists job openings and educational program completions from 2008-13.
For the CMAP seven-county region, the
Mechanic and Repair Technologies Career
Field has been most closely aligned between
openings and degree completions.
The Precision Production career field, which

includes positions such as Machinist; Tool and Die
Technician; Metal Fabricator; and Cabinetmaker,
has had a significantly higher number of job
openings than educational program completions for
the past six years.
An increase in the global movement of goods has

helped increase openings in Transportation and
Material Moving, and estimates from 2010-13
show job openings outpacing educational program
completions.
Cluster Employment and Location Quotients*

Metropolitan Chicago's dual concentration in freight and manufacturing
is one of the region's many advantages that helps it compete in an
increasingly global economy. Within the seven-county CMAP region,
the freight and manufacturing clusters contain roughly 637,000 jobs.
The health of cluster economies within metropolitan areas can be
measured by tracking both employment levels and location quotients for
each cluster. Total employment measures provide an easy-tounderstand metric for measuring the size of a cluster, while location
quotients measure employment levels in the region compared to the
national average.
Chicago Metropolitan Statistical Area (MSA):
- More interstates than any other region;
- Six of the seven Class I railroads;
Connections to Mississippi and St. Lawrence Seaway;

Nation's second largest cargo airport (total cargo
value)
Chicago The Nations Freight Cluster:

Estimates indicate that somewhere between 1/4th and 1/3rd of all freight tonnage in the U.S. originates, terminates or passes through the
Chicago region. it is the only region served by six of the seven Class I railroads. An estimated 500 freight trains move 37,500 rail cars
through the region each day, accounting for approximately 50
percent of total rail freight movement in the nation. 29 The
region's freight cluster employs roughly 176,000 individuals and
includes both direct freight jobs (e.g., trucking, rail engineering,
etc.) and jobs supported indirectly by freight activity (e.g.,
bridge construction or package manufacturing). The Chicago
Regions Freight Cluster is able to move more goods than any
other region in the nation. This is in spite of the volatile nature
of Chicagos freight cluster employment. The region's freight
LQ declined in the early 2000s but has grown since 2008, now
standing at 1.15.
Manufacturing Cluster:
Chicago's manufacturing cluster employs approximately
551,000 workers and includes core manufacturing industries
along with several supporting industries such as industrial
design and engineering, freight transportation, research and
development, and energy generation. Chicagos manufacturing
cluster is the second largest in the nation. However, due to
manufacturing employment in the region declining steadily
during the 2000s and only recently experiencing a slight rebound
(since 2010), the regions manufacturing location quotient is
only 1.04 (less than it was in the early 2000s).

29
OECD, 2012, p. 55. Data for the Chicago MSA.
Summary: The Chicago region's dominance as a transportation hub attracts not only traditional transportation jobs such as trucking
and warehousing, but also a variety of supporting industry jobs (traffic engineering, logistics management, packing material
manufacturing). And, as the region's transportation capabilities increase, Chicago's manufacturing cluster also benefits. Faster and
more efficient movement of goods from Chicago gives local manufacturers a competitive advantage over manufacturers not located near
efficient, cost-effective transportation infrastructure.
*Location Quotients explained: The Location Quotients measure the concentration of employment in particular industries or clusters
within the Chicago region compared to national concentrations in the same year. A location quotient greater than 1.0 indicates
increasingly greater concentrations (also referred to as "specialization") in a cluster compared to the national average.
Intermodal Lifts
The Chicago metropolitan area is one of the busiest
freight hubs in the U.S. The number of TEUs (20Foot-equivalent freight cargo container) moved
through the region's rail-truck intermodal facilities has
increased by roughly 26 percent since 2009.
Approximately 14.9 million TEUs of cargo were
moved through the region's intermodal terminals in
2013 (see map below).
The constant movement of goods into and out of the
region supports metropolitan Chicago's economy by
creating demand for freight and logistics jobs and
providing manufacturers with timely, cost-effective,
and reliable options for moving products to market.
Recent advances in logistics have made the region's
multiple transportation options even more appealing as
businesses are increasingly taking advantage of
multimodal transportation as a way to move goods
more efficiently at a lower cost.30
INTERMODAL LIFT TRENDS:
- Intermodal freight volume in the Chicago region based on intermodal lifts was approximately 14.92 million TEUs in 2013.
- Intermodal freight volumes declined during the last recession but have since experienced a significant rebound, increasing by 26 percent
from 2009-13.
30 http://www.cmap.illinois.gov/economy/regional-economic-indicators/clusters (SOURCE:
CHICAGO METROPOLITAN AGENCY FOR PLANNING OF REGIONAL INTERMODAL ACTIVITY: WORLD SHIPPING COUNCIL.)
ROBERT GRAHAM!!
Currently operates fourteen (14) retail locations in AZ, CA, FL, NJ, NV, NY, and TX and
seven outlet locations in CA, FL, MN, NY, PA, and TX.
They have announced their intention to expand their retail footprint nationwide over the
next 18 months and have retained Townsend & Associates, Inc to help them do so.8
Their stores offering men and womens luxury apparel items occupy spaces ranging
from 1,200 to 1,800 SF along heavily trafficked street fronts in affluent locations.
Current Retail Store Locations:

!
Arizona
(1)
!
California
(1)
!
Connecticut
(1)
!
Florida
(3)
!
Nevada
(2)
!
New Jersey
(1)
!
New York
(3)
Texas
(2)
!
$
1898:;$-<=8>;$0>?@?A$1;<>8B.$
SCOTTSDALE FASHION SQUARE - 7014 E Camelback Rd. Scottsdale, AZ

Store Dimension: 30 (Storefront) x 50 (Depth)
!!!!!!!!!!
DESERT HILL PREMIUM OUTLETS - 48650 Seminole Dr. #1104 Cabazon CA

Store Dimensions: 21.82 (front) x 69.34 (depth) x 23.11 (rear)
THE MALL AT SHORT HILLS:

Store Dimensions: 172.5 (Front and Rear); 325.0 (Depth)
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
M
!Q(.!R.6<46;.01!S..;<T!U.V1<.//.0'!W)<!PA'!3*0+<!BJ!#@"L'!
380 BLEECKER ST. NEW YORK, NY

Store Dimensions: 21.74 (front = rear) x 44.93 (Depth/Length)
ROBERT GRAHAM OUTLET STORE LOCATIONS:

!! CALIFORNIA (1)
!! MASSACHUSETTS (1)
!! FLORIDA (2)
!! MINNESOTA (1)
Total Area: 985.33 ft2
!!
!!
!!!!!!!
NEW YORK (1)

PENNSYLVANIA (1)
!!
TEXAS (1)
TWIN CITIES PREMIUM OUTLETS (A Simon Center) - 3965 Eagan Outlet Parkway, Eagan, MN
Store Dimensions: 42.27 (Corner Entrance); 44.93 (Depth/Length)
Total Area: 2,801 ft2
DICKS SPORTING GOODS - 5601 Touhy Ave, Niles, IL

TOTAL AREA:
STORE DIMENSIONS: 271 (FRONT) X 225 (EAST)
56,441.12 FT2
BED BATH AND BEYOND GURNEE MILLS MALL

DIMENSIONS: ENTRANCE (40.5) + WALL I (225) + WALL II (207.5) WALL III (255) X WALL IV (241)!
TOTAL AREA: 60,097 FT2 !
ZUMIEZ - EAST TOWNE MALL, MADISON, WISCONSIN

DIMENSIONS: STORE ENTRANCE: 30.93 X LENGTH/DEPTH: 65.45
TOTAL AREA: 2,025.91 FT
SHOE SENSATION
STORE COUNT (Q1 2015):
82
PROJECTED 12-MONTH STORE OPENINGS:
EXPANSION REQUIREMENTS:
!! SQUARE FOOTAGE (MIN/MAX): 4,800 TO 6,000 SF
!!
10
EXPANSION MARKETS:
MIDWEST & SOUTH
LOCATION: WITHIN A 24-MINUTE DRIVE OF 40,000 POPULATION;

PREFERS COUNTY SEATS 45 MINUTES OR MORE FROM NEAREST
METROPOLITAN CITY
!!
SITE TYPES: NEIGHBORHOOD STRIP, REGIONAL MALL, REGIONAL

STRIP, SPECIAL STRIP, JUNIOR DEPARTMENT STORES, MAJOR GROCER,
!!
FARM SUPPLY STORE AND/OR HOBBY SUPPLY STORE

CONTRACT TERMS: 3-5 YEAR INITIAL TERM WITH RENEWAL OPTIONS
TIMES SQUARE MALL - 3917 BROADWAY ST. MOUNT VERNON, IL
WEST WALL (STOREFRONT) = 107.5 FT | NORTH WALL (STOREFRONT) = 75.63 FT

=
107.5 FT | SOUTH WALL
=
75.63 FT
EAST WALL
BOOT BARN
SHEPLERS INC. ON JUNE 11TH, 2015: Founded in 1978, Boot Barn is the largest and fastest-growing lifestyle retail chain
devoted to western and work-related footwear, apparel and accessories in the U.S. With 166
New Stores Goals:
stores in 26 states as of January 12, 2015, we have over twice as many stores as our nearest
" Approx. 10,000 square feet
direct competitor that sells primarily western and work wear, and believe we have the
" Year 1 Net Sales: $1.7M
potential to grow our store base to at least 400 domestic locations. We target a broad and
" Payback Period: 2.7 years
growing demographic, ranging from passionate western and country enthusiasts to workers
!
ACQUIRED
Acquisition of
Sheplers 25
stores
seeking dependable, high-quality footwear and clothing. Our store environment, product offering and marketing materials represent the
aesthetics of the true American West, country music and rugged, outdoor work. These threads are woven together in our motto, "Be
True", which communicates the genuine and enduring spirit of the Boot Barn brand.!
GURNEE MILLS MALL - 6170 West Grand Ave Suite 625, Gurnee, IL (Currently Only Store in Illinois)
DIMENSIONS: 30 X 127.5X 49 (REAR)
RH West Palm Beach at City Place (Proposed)

560 Okeechobee Blvd, West Palm Beach, FL
The proposed 50,917 SF Gallery is described as a four-story store featuring outdoor courtyards, garden terraces, Juliet balconies,
reflecting pools, a fountain, and a rooftop park. The parking would be valet-only with tandem spaces.
RH ATLANTA The Gallery at the Estate in Buckhead

FIRST NEXT GENERATION GALLERY FORMAT
RH NEW YORK THE GALLERY IN THE HISTORIC FLAT IRON DISTRICT

OPENED JUNE 26TH, 2014
3030 PEACHTREE RD NW, ATLANTA, GA
935 BROADWAY, NEW YORK CITY

30,000 GSF
RH WEST HOLLYWOOD THE GALLERY ON MELROSE AVENUE

OPENED OCTOBER 24, 2014
8654 MELROSE AVE. LOS ANGELES, CA
234 Berkeley
47,000 Square Feet
234 Berkeley
Street
| Boston,
Massachusetts
RH
BOSTON
234
BERKELEY
ST02108
. BOSTON, MA
Former Museum of Natural History
ORIGINALLY CONSTRUCTED 1863 | 47,000 SF

Map of 234 Berkeley Street, Boston, MA 02116 (Suffolk County)
RH GREENWICH THE GALLERY AT THE HISTORIC POST OFFICE

310 GREENWICH AVE, GREENWICH
, CT
Iconic Building in Bostons Back Bay
APPROX. 24,000 SF
234 Berkeley is a one of a kind retail opportunity situated directly on

three of Boston s most prominent streets: Berkeley, Boylston, and
Newbury. Built in 1863, the 47,000 square foot building originally housed
the Museum of Natural History before becoming the home to renowned
retailers Bonwit Teller and Louis Boston. The space is currently home to
Restoration Hardware.
234 Berkeley gracefully combines period details such as intricate molding
and arched windows with a modern, open floor plan and well lit spaces,
allowing the retailer unlimited merchandising opportunities.
The Back Bay is walking distance from downtown Boston, the Theatre
District, South End, Cambridge, and Fenway Park. Alongside 234 Berkeley,
rows of fine Victorian brownstone homes from the 19th century sit
adjacent to modern towers such as The Prudential Center, John Hancock
Tower, and 111 Huntington.
Property Fact Sheet No. 31
WS Development | 617.232.8900 | WSDevelopment.com
| OPENED MAY 16, 2014
Cr
MID-AMERICA PROPERTY LISTINGS

I.!
717 NORTH MICHIGAN AVE:
+/- 35,000 3-LEVEL SQUARE FOOT ANCHOR
!"#$%&!'(%
EXPOSURE
II.!
100-112 SOUTH STATE STREET:
Have your brand take advantage of dramatic, multi level corner visibility.
Opportunity for a nearly 50,000 SF single tenant fl agship or multiple tenant confi gurations.

III.!
430 NORTH LASALLE STREET
48,390 SF (SOUTHWEST CORNER STATE AND MONROE)

30,000 SF (DIVISIBLE)

*9:9;#

*9:)9<#

IV.!
OAK BROOK COURT (NEC ROUTE 83 & 16TH ST):

!"#!"
$ !"#%
&' ( )* * &*

%+ "#
$ !"#%
*,-)* * &*

!"#!"
$ !"#%
&' ( )* * &*

%+ "#
$ !"#%
*,-)* * &*
(* .(( (( / (0( /' ,( && ' (*// ,* 0( /( / ' ,( (
28,519 SF
(,
"! 1 (20(
%
++
,,,* * &*
POTENTIAL SITES LISTED BY OTHER BROKERS:

I.! 10 SOUTH STATE ST. (STATE & MADISON)
SF) | LOWER LEVEL (19,000 SF)
25,000 SF 2-LEVEL | 37 FEET FRONTAGE | GROUND LEVEL (4000

CUSHMAN & WAKEFIELD
II.! 231 SOUTH LASALLE ST (RKF)

(LOWER LEVEL) + SPACE B (2,284 SF) OR C (2,130 SF)
ORIGINALLY CONSTRUCTED 1923 | | MAX CONTIGUOUS: 40,000 SF

TRIPLE NET LEASE
III.! 540 N LASALLE (LASALLE & OHIO)

ROOFTOP WITH 360 DEGREE SKYLINE VIEW
MAX CONTIGUOUS 65,000 SF | 7-STORIES (8,000 GSF PER FLOOR) |

LISTING BROKER, DEBRA TUCKER OF LEGAL ACUMEN, LLC
RH Distribution and Warehousing Facilities:

Managed through 13 facilities, each serving all of RHs sales channels.12
!!
!!
!!
!!
!!
!!
!!
!!
!!
!!
!!
!!
!!
West Jefferson, OH Distribution Center for small parcel direct-to-customer orders and retail store replenishment (1,224,000 SF)
North East, MA Primary furniture Distribution Center for the Eastern regions of US and Canada (1,195,000 SF)
Mira Loma, CA Furniture Distribution Center for
Western Regions of US and Canada and Furniture Home
Delivery Hub for the Greater Los Angeles Metropolitan
area (886,000 SF)
Grand Prairie, TX Supports Furniture distribution for
the Central and Southern regions within the US and
Furniture Delivery Hub for the Greater Dallas
metropolitan area and central Texas region (859,000 SF)
Chino, CA Short-term facility to support the Mira Loma
furniture distribution center. Intend to exit facility in
August 2015.
Baltimore, MD Secondary Furniture Distribution
Center for the Eastern regions of the US and Canada and a
Furniture Home Delivery Hub for the greater Baltimore
and Washington D.C. metropolitan areas (508,000 SF)
Tracy, CA Furniture Home Delivery Hub for the San
Francisco Bay Area region and as a supplemental storage
facility for our furniture distribution network (284,000 SF)
Dedham, MA Furniture Delivery Hub for greater
Boston metropolitan area (119,000 SF)
Avenel, NJ Furniture Delivery Hub for the greater New
York/New Jersey metropolitan area (114,000 SF)
Atlanta, GA Furniture Delivery Hub for the greater
Atlanta metropolitan area (101,000 SF)
Pompano Beach, FL Furniture Delivery Hub for greater Miami metropolitan area and southern Florida region (101,000 SF)
Houston, TX Furniture Delivery Hub for the greater Houston metropolitan area and eastern Texas region (71,000 SF)
Carmel, NY Furniture Delivery Hub for the greater New York metropolitan area and Connecticut (40,000 SF)
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
"#
!X.1/)06/+),!Y609V60.'!8)04!"@NZ![)0!8+156<!\.60!.,9+,-!H6,>60T!B"1/J!#@"L'!!=6-.!ONP'
!"#$%&$"
" #$ BLVD. AUSTIN, TX

TREEHOUSE, INC. - 4477 S. L!AMAR
#'())*+%,-"+$".
%&'(&
WESTGATE SHOPPING CENTER
TreeHouse is a first-of-its-kind sustainable !!""#$%#&'(')#*+,&-.')/#00#',$1234#15

home improvement store, founded in 2011, with a single 25,000 SF retail location in Austin,
TX. It specializes in curated products and services that promote healthy and sustainable spaces, with an emphasis on high performance and design. Rather than trying to be imitate the stereotypical big box retailer, TreeHouse has become a 25,000-squarefoot hub for everything L*FM*")F0*N"
tied to thoughtful
building. Customers come to find supplies
"
and services that range from
nontoxic paints and flooring to home solar systems.
%+$O$"MP
Q&$/$$"RMPSI)
April 15, 2015: Future TreeHouse stores will be similar in size to the TreeHouse in the
Westgate Shopping Center,
CEO Ballard has stated, spanning roughly 25,000 to 30,000
T+UVK"MP
square feet. Possible expansion
markets include elsewhere in Texas, as well as cities in
'FLL"PW)")F0*M
California, Colorado and the Pacific Northwest. These areas being targeted were
selected for two reasons: Theyre either geographically adjacent to Austin or in areas
that are known for being eco-friendly.13
On May 15, 2015, Tesla Motors CEO Elon Musk announced a new product line,
Residential and Industry Stationary Battery Packs for energy storage (dubbed the
Powerwall and Powerpack, respectively) and named TreeHouse Inc. as the first and exclusive retailer of their new product line.
TreeHouse CEO Jason Ballard was interviewed by Industry
Week magazine following the announcement and the
following excerpts are taken from that interview:
Industry Week: Being the only American outlet to sell this,
at least at the launch, should help TreeHouses bottom line
and possible expansion, right?
CEO Jason Ballard: The timing for this is actually pretty
unbelievable. Tesla didnt do it for us, but Im actually in the
middle of raising another round of capital for growth, and I
got a number of emails from potential investors the morning
after
)*+)$ ,-.",$ ,#'!!/0$ 0"
1 2the
, ( announcement. We are planning both a regional
and a national expansion. Before the launch, we proved the
%% store can make money,
'B67(((%0CD
3 / 4 3 5 '6 $ ) 7 * $ 5 & ( , $ " ! $ % 'concept,
8'#$9"
1 %proved
& : ' # .the
we
we proved
we can get access to really exciting products and materials
3 / 4 3 5 '6 $ ) 7 * $ & ' ( , $ " ! $ % 'and
8 ' #technology.
$ 9 " 1 % & : 'For
# . %%
'E;7(((%0CD
Tesla to announce the partnership
right
in the middle of all this, Im walking into board meetings
with a big smile on my face.14
) * + ; $ & ( , / 8 ', & . $ . & 8 " 4 # ' < 3 / 0 (
%%"J2>;
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!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
"B
"A
!Austins TreeHouse plans to expand, add more stores. April 15, 2015. My Statesman.!
!(//*2]]VVV'+,9>1/0TV..;'5)4].,.0-T]4../N46,NV()NV+<<N1.<<NT)>N/.1<6N*)V.0V6<<'!L'"L'#@"L'!
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store, particularly around FedEx/UPS hubs, to convert and
rezone.18
7080$'9.! :3;#1$/(3#! $#1! /.0! "#/0'#$/(3#$)! <3;#9()! 32!
1$2.3&
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(,2!#*!%#+*-.!2,1'-2!)*+!2$%#+$74#$*-!;'+,/*4%,!%3'5,6>!G4%7!:0A!
billion today, a figure which represents over one-third of all
5;/)33M!NHO!!!
2-1<-5"64156"<-";85"P/?/"UA4M2-"<6";85"5-=<-5";84;"846"97<G5-"
While
the e-commerce sector still only accounts for 6-7% of
;85"=72I;8"2C"5@.2AA57.5"<-";85"P-<;59"?;4;56'"I8575";2;41"
annual retail sales, the rate at which it has grown and is expected
2-1<-5"64156"84G5"=72I-"65G5-@C219"6<-.5"#$$$'";2"]##["3<1@
to continue to grow would have been difficult to fathom back in
1<2-"<-"#$%#/")H"#$%['";85"P/?/"I<11"655"4"[%Z"<-.75465"<-"
2000.
From 2000 to 2012, annual U.S. online sales grew sevenfold
to $2262G57"
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and15G516'"
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5@75;4<1<-="
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will
see
a
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over
2011
levels,
with
]&#L"3<11<2-/
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56336.74
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In addition to urban infill near FedEx and UPS hubs, there are
numerous opportunities for industrial to mobilize and develop
around railroads like CN, NS and CSX, since big clients will
undoubtedly diversify to prevent major stoppages in the future.
Current product around CN terminals is mainly Class B and
Class C. This argument should be persuasive to retailers like
Restoration Hardware, which currently have no distribution
centers in the Chicagoland area. The retailer has also been
susceptible to the work stoppages and overcrowding that has
plagued the West Coast ports during the last two years. CEO
Gary Friedman admitted during their latest annual shareholder
meeting that their FY2014 revenue was less than it otherwise
would have been had the company not been so reliant on the
West Coast ports. In its latest 10K filing, the Company
provided the following guidance for the first quarter of fiscal
2015:
!&$&
!&"&
&"%%
!#"9
Net revenues in the range of $415 million to $420 million,

including the negative impact of approximately $10 million to $12
million due to the West Coast port congestion;
Adjusted net income in the range of $7.5 million to $8.4 million,
including the negative impact of the West Coast port congestion;
Adjusted diluted EPS in the range of $0.18 to $0.20, including the
negative impact of approximately $0.05 to $0.06 due to the West
Coast port congestion.
!#&:
!&:;
RETAILERS SEEKING CHICAGO INDUSTRIAL SPACE19
!&&8
Digikey (Electronic component distributor)

-! Seeking build-to-suit site requiring 1.3 to 1.5 million SF
-! Search Parameters: Midwest
&"%&
&"%#
&"%9
&"%$
&"%8
^2;5_"`-1<-5".2-6:A576"I<11"<-.75465";85<7"6B5-9<-="[#Z"3H"#$%['"4..279<-=";2""
R27756;57",-./
A March 2015 NAIOP Panel discussed key market trends that

?2:7.5_"R27756;57",-./'"aJ"#$%#/
are
impacting global industry in Chicago. The most often
discussed market trend was the competition amongst retailers to
implement a reliable and cost-effective same-day delivery
strategy. As both online and traditional brick & mortar
retailers
!"#$%&'"()*+'",-./
rush to implement this last mile delivery, Chicago is in a
unique position to benefit from its extensive existing industrial
property base, its dominant position as a top transportation and
logistics infrastructure hub, and its proximity to major
population centers. In fact, Chicago has already experienced
extensive speculative industrial development. According to
Scaling New Heights 2015 Outlook, Chicago was the most
active [industrial market] with $1.4 billion in [industrial
property] transactions during the first half of 2014, (Scaling
New Heights, 61).
Project Cosmopolitan (Undisclosed retailer)

-! Seeking 1.0 million square feet of distribution space off I-80
-! Most likely will result in build-to-suit
Undisclosed owner operator
-! Looking to purchase a 600,000 square-foot facility, expandable
to 1.0 million square feet
-! Search Parameters: Greater Chicago region
-! Build-to-suit not being considered
Batory Foods
-! Search Parameter: seeking land along I-80, I-55, or I-88
-! Space Requirement: 750,000 square-feet
Whirlpool
-! Pursuing first Chicago facility
-! Seeking 600,000 to 700,000 SF with abundant trailer parking
Life Fitness
-! Seeking rail served building between 300,000 to 500,000
square feet for its manufacturing and assembly operations
-! Search Criteria: Retain proximity to its existing labor force by
focusing on West Cook and OHare
In a March 24, 2015 blog post, JLL concurs, arguing that the
race to implement last mile strategies, will inevitably spur
smaller, urban infill industrial deals, as retailers look for dark
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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"P
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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"M
"I
!=5P7<LQ!RSS!"4TP=U7"%S!V"WVS"WVU=Q!<V"<%W5O!!X,!*+,JO!!,Y*O!
CHICAGO INDUSTRIAL REAL ESTATE MARKET OVERVIEW:

WAREHOUSE SPACES GREATER THAN 500,000 SQUARE FEET RENTABLE BUILDING AREA, GREATER CHICAGO REAL ESTATE MARKET,
INDUSTRIAL SUBMARKETS (BY WAREHOUSE SQUARE FOOTAGE) AND SELECTED YEAR RANGES20
RANK
1
2
3
4
5
6
SUBMARKET
SOUTH I-55 CORRIDOR
JOLIET AREA IND
I-88 WEST IND
SOUTH CHICAGO IND
FAR SOUTH COOK IND
WEST COOK NORTH IND
SOURCE: CMAP ANALYSIS
OF
COSTAR
SUB#
28
12
10
27
4
30
DATA.
PRE-1990
0
513,000
827,487
3,868,000
0
3,170,382
COSTAR GROUP,
1990S
2,577,724
637,614
2,473,276
0
670,000
0
2000-2006
6,529,345
6,217,789
1,199,915
524,800
696,540
0
2000-2011
8,597,878
7,450,413
1,199,915
524,800
2,621,564
0
SINCE 2007
2,068,533
1,232,624
0
0
1,925,024
0
BY
TOP 6
TOTAL
11,175,602
8,601,027
4,500,678
4,392,800
3,291,564
3,170,382
WWW.COSTAR.COM
COSTAR CHICAGO INDUSTRIAL SUBMARKET OVERVIEW (2014)
!"#$%#&'()*%"+",-./#%01-23.0%!-++$1!3"4%51-5$1&)%5-1&6-43-*%(3#&137'&3-.8%#-1&"&3-.8%6'46344+$.&%".(%&9$%4"#&%+34$%
According to a Cushman & Wakefield research note, the growth of E-Commerce has brought with it, A
Trend toward larger (1.0 million square feet and greater) distribution facilities in close proximity to UPS and FedEx
Centersas customers demand 24/7 delivery, especially for e-tailers such as Amazon.com, (C&W, 6). This same
customer demand will likely drive retailers such as Walmart and Home Depot to open additional mega
distribution centers in the Chicago region.
TIMELINE OF AMAZON DISTRIBUTION CENTER GROWTH:
!!
!!
!!
2011 to 2012: + 19 fulfillment centers in U.S. and Canada (total of 17 million ft2)
2013:
+ 8 fulfillment centers in U.S. (total of 7.7 million ft2)
March 2015:
67 total distribution centers (includes fulfillment centers, specialty facilities,
redistribution centers, returns centers, and 3PL outsourced facilities) in North America (total of 51.8
million SF)
In addition to these massive distribution centers, Amazon currently operates a network of 15 smaller
Sortation Centers totaling a combined 4.3 million square feet. Amazon will almost certainly expand
their portfolio of these sortation centers as they are key to Amazons strategy for gaining control of
the last mile delivery process. Sortation Centers differ from traditional distribution centers in the
following ways:
^!
^!
Sortation Centers are only 200-300,000 SF. In general, sortation centers are smaller operations that can be located
beside, adjacent to, or nearby larger fulfillment centers, (MWPVL Report).
Sortation Centers aggregate shipments from one or more fulfillment/distribution centers for delivery to a
defined regional grouping of zip codes (typically a nearby set of populated urban areas).
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
#@!ORIGINAL TABLE PREPAPRED FEBRUARY 2012 BY CHICAGO METROPOLITAN AGENCY FOR PLANNING , CONGESTION , MANAGEMENT PROGRAM
DATA INCLUDES WAREHOUSING WITHIN INDUSTRIAL AND FLEX MARKETS. TOTALS ARE CROSS-TABS OF RENTABLE BUILDING AREA BY YEAR BUILT, SUMMED BY DECADE. SUBMARKETS NOT SHOWN
HAVE NO COSTAR RECORDS OF WAREHOUSE SPACES GREATER THAN 500,000 SQUARE FEET. WAREHOUSES > 500,000 SQUARE FEET COMPRISE ONLY 9.3% OF TOTAL WAREHOUSE SPACE IN THE
CHICAGO REAL ESTATE MARKET.
The Chicago Industrial Real Estate Market: The alignment of retail and industrial needs and
Chicago as the Freight and Manufacturing Hub of America
According to the National Association of Realtors (NAR) February 2015 Commercial Real Estate Outlook Report, Industrial markets
have been benefitting from rising trade and the continued shift toward electronic commerceBoth of which have led to strong demand for
distribution warehouse space, (NAR Feb 2015 Outlook, 4).
As retailers (both online and brick & mortar) are rushing to capture the last mile delivery, Chicago is in a unique position to benefit
from its extensive existing industrial property base and its proximity to major cross-country train corridors and interstate highways.
According to the Scaling New Heights 2015 Outlook, Chicago was the most active location with $1.4 billion in [industrial property]
transactions during the first half of 2014, (Scaling New Heights 61).
The growth of E-Commerce has already - and will continue to - change how industrial-zoned land and warehouse space are utilized.
There has been a steady trend toward larger (1.0 million square feet and greater) distribution facilities in close proximity to UPS
and FedEx Centersas customers demand 24/7 delivery, especially for e-tailers such as Amazon.com, (Wakefield 6). This same
customer demand will likely drive retailers such as WalMart and Home Depot to open additional distribution centers in areas with the
unique attributes of the Chicago region.
Chicago is expected to be among the top twelve U.S. Markets for potential acquisition while still commanding premium prices for Class
A Assets. One reason Chicago is viewed as prime opportunity for Class A Asset construction is the vast transportation networks and
nodes (e.g., freight, interstate, ports, and intermodal services) have become increasingly important concurrent with the growth of
eCommerce.25 (see Footnote for Definition of Class A Assets)
According to the U.S. Department of Transportations Bureau of Transportation Statistics, Illinois ranks 2nd among 51 states, behind
only Texas, in the number of railroad miles
the state dedicates to freight transport. 26
The bar graph to the right illustrates the
extent to which Illinois and Texas lead the
rest of the states in this metric.
Along with the growth of e-commerce, there
has been an increasing need by retailers to
setup their distribution facilities where there
is convenient access to rail networks. In
addition to urban infill near FedEx and UPS
hubs, there are numerous opportunities for
industrial to mobilize and develop around
major freight terminals like CN (currently
composed of mainly Class B and C), NS and
CSX, since big clients will undoubtedly see
the benefit of a diversified supply chain to
protect against major stoppages.
The Report also identifies some changing demand trends as they relate to the end-users/occupiers. For one, The Inland Ports of Chicago,
Dallas/Fort Worth and Southern California are forecasted to increase the existing supply of industrial space by a combined 107 million
Inland port cities are key to the completion of the supply-chain cycle, as shippers are looking to locate their distribution
centers in closer proximity to their end markets and reduce long-haul trucking costs by using intermodal rail, (Wakefield 5).
!!
!!
!!
Illinois already ranks 8th out of all states in miles of inland waterway with 1,100 miles
Illinois ranks 2nd in the nation for the amount (in tons) of rail shipments terminating in the State
Illinois Ranks 3rd in Freight Shipments by Value (behind California and Texas), with over $639 billion in freight shipments in
2007 the latest year the DOT recorded such figure
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
%NOTE: Class A Assets are defined using CoStars Criteria: Class A Industrial are extremely desirable investment-grade properties
and command the highest rents or sale prices compared to other buildings in the same market. Such buildings are well-located with
efficient tenant layouts and high-quality one-of-a-kind floor plans. They contain modern mechanical systems and have above-average
maintenance and management, and the best quality materials and workmanship (Wakefield 4).
#O!E'%'!R.*60/4.,/!)[!Q06,1*)0/6/+),'!X.1.605(!6,9!$,,)D6/+),!Q.5(,)<)-T!394+,+1/06/+),J!a>0.6>!)[!Q06,1*)0/6/+),!%/6/+1/+51J!%/6/.!Q06,1*)0/6/+),!%/6/+1/+51J!#@"#'!!
:;
2015 CHICAGO INDUSTRIAL MARKET OUTLOOK
Retailers will increasingly be in need of Commercial Real Estate Firms with expertise in both the retail and industrial real estate markets
of the major metropolitan areas as they seek to capitalize on their growing e-commerce business through the purchase and/or leasing of
industrial property to warehouse and distribute their inventory in the most efficient and cost-effective manner.
Cushman & Wakefields Q4 2014 MarketBeat Industrial Snapshot27 for the Chicago Market, offers the following insights, New leasing
activity for the Chicago Industrial Market measured 35.5 million square feet (msf) in 2014, a 14.9% increase from this time last year. The
strongest leasing activity occurred in the Interstate 55 Corridor submarket with 5.6 msf. Despite the interstate 55 Corridor capturing the
most activity, the largest lease transaction of the year took place in the Interstate 80 Corridor. Michelin North America, inked a deal to
lease a 1.7-msf build-to-suit (BTS) in Wilmington. The transaction makes Michelin the first major tenant at RidgePort Logistics Center, a
1,500-acre, rail-served intermodal park with room for 14.0 msf of industrial product.
In addition, construction completions totaled 9.0 MSF in 2014 with nearly 4.4 MSF delivered on a speculative basis. The majority of
developments in 2014 took place in the I-55 and I-80 Corridor submarkets, accounting for 2.6 MSF and 1.9 MSF, respectively. An
additional 11.1 MSF was under construction at year-end.24
As industrial fundamentals remain strong and rental rates experience upward pressure, there will be an increase in speculative
development. Currently, 51.7% of these developments are being built on a speculative basis.
CLUSTER EMPLOYMENT AND LOCATION QUOTIENTS*

METROPOLITAN CHICAGO'S DUAL CONCENTRATION IN FREIGHT AND MANUFACTURING IS ONE OF THE REGION'S MANY ADVANTAGES THAT HELPS IT
COMPETE IN AN INCREASINGLY GLOBAL ECONOMY. WITHIN THE SEVEN-COUNTY CMAP REGION, THE FREIGHT AND MANUFACTURING CLUSTERS
CONTAIN ROUGHLY 637,000 JOBS.
THE HEALTH OF CLUSTER ECONOMIES WITHIN METROPOLITAN AREAS CAN BE MEASURED BY TRACKING BOTH EMPLOYMENT LEVELS AND LOCATION
TOTAL EMPLOYMENT MEASURES PROVIDE AN EASY-TO-UNDERSTAND METRIC FOR MEASURING THE SIZE OF A
CLUSTER, WHILE LOCATION QUOTIENTS MEASURE EMPLOYMENT LEVELS IN THE REGION COMPARED TO THE NATIONAL AVERAGE.
QUOTIENTS FOR EACH CLUSTER.
METROPOLITAN CHICAGO POSSESES:
MORE INTERSTATES THAN ANY OTHER REGION;
SIX OF THE SEVEN CLASS I RAILROADS;
!
!
CONNECTIONS TO THE MISSISSIPPI RIVER AND ST. LAWRENCE SEAWAY;

THE NATION'S SECOND LARGEST CARGO AIRPORT (TOTAL CARGO VALUE
The
outlook
for NChicagos
industrial
market: in 2015 is positive, especially in the first half of the yearDevelopers will be looking for
CHICAGO
THE
ATIONS FREIGHT
CLUSTER
more land sites to build speculative warehouse/distribution space to meet the ever-increasing demand. Rental rates will continue to rise
marginally
nearly THAT
all submarkets.
half OF
of the
ESTIMATES in
SUGGEST
BETWEEN A Through
QUARTER the
ANDfirst
A THIRD
ALLyear, absorption will be positive, but as new construction is completed,
U.S.
ORIGINATES
, TERMINATES
PASSES 1).
FREIGHTrates
TONNAGE
THE to
vacancy
couldINbegin
rise,
(Wakefield
ChicagoORIndustrial
THROUGH THE CHICAGO REGION. IT IS THE ONLY REGION SERVED BY SIX
OF THE SEVEN CLASS I RAILROADS. AN ESTIMATED 500 FREIGHT TRAINS
MOVE 37,500 RAIL CARS THROUGH THE REGION EACH DAY, ACCOUNTING
FOR APPROXIMATELY
IN THE NATION.
50
PERCENT OF TOTAL RAIL FREIGHT MOVEMENT
620
<33M!<3;#/I!Z*!
THE
REGION'S FREIGHT CLUSTER EMPLOYS ROUGHLY 176,000

<.(9$>3!B=%!Z[!
INDIVIDUALS AND INCLUDES BOTH DIRECT FREIGHT JOBS (E.G.,
TRUCKING, RAIL ENGINEERING, ETC.) AND JOBS SUPPORTED INDIRECTLY
BY FREIGHT ACTIVITY
(E.G.,
BRIDGE CONSTRUCTION OR PACKAGE
). THE C
HICAGO PRROJECT
EGION,
S F
CLUSTER
IS ABLE AND
TO MOVE
MORE GOODS
ANYBOTHER
REGION
IN THE NATION. THIS IS
SMANUFACTURING
OURCE: U.S. CLUSTER
MAPPING
IREIGHT
NSTITUTE
FOR STRATEGY
COMPETITIVENESS
, THAN
HARVARD
USINESS
SCHOOL
DESPITE EMPLOYMENT IN CHICAGO'S FREIGHT CLUSTER BEING INCREDIBLY VOLATILE, EXPERIENCING LARGE SWINGS DURING THE RECENT
CMAP CHICAGO REGION PRODUCTIVITY TRENDS: THE STRENGTH OF CHICAGOS LABOR FORCE, FREIGHT, AND MANUFACTURING
RECESSION AND RECOVERY. THE REGION'S FREIGHT LOCATION QUOTIENT DECLINED IN THE EARLY 2000S BUT HAS GROWN SINCE 2008, NOW
STANDING
1.15.
JOB
COUNTAT
: Growing
job counts in the region indicate that Chicago-area businesses are hiring and that the region's economy is growing.
There are currently an estimated 4.7 million jobs in the region. This total is less than the region's pre-recession jobs peak of 4.8 million in 2007;
however,
initial dataCsuggest
2014 will
be the fourth straight
year for which the region's total job count has grown.28
MANUFACTURING
LUSTERthat
: CHICAGO
'S MANUFACTURING
CLUSTER
EMPLOYS APPROXIMATELY 551,000 JOBS AND INCLUDES CORE
MANUFACTURING INDUSTRIES ALONG WITH SEVERAL SUPPORTING
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
INDUSTRIES SUCH AS INDUSTRIAL DESIGN AND ENGINEERING, FREIGHT
#P!Cushman
#M
& Wakefield. Marketbeat Industrial Snapshot: Chicago, Il (Q42014)!
TRANSPORTATION, RESEARCH AND DEVELOPMENT, AND ENERGY

!(//*2]]VVV'546*'+<<+,)+1'-)D].5),)4T]0.-+),6<N.5),)4+5N+,9+56/)01]/0.,91d0.6<N-0)11N0.-+),6<N*0)9>5/
GENERATION.
CHICAGOS MANUFACTURING CLUSTER IS THE SECOND

LARGEST IN THE NATION. EVEN SO, MANUFACTURING EMPLOYMENT IN
EDUCATIONAL ATTAINMENT: Within the Chicago region, an estimated 86.9 percent of

residents held a high school degree or higher (including those with some college but no
degree), and 43.4 percent held an associate degree or higher in 2013. The proportion of the
region's residents holding a high school degree or higher closely mirrors the national average,
while the proportion of residents with an associate degree or higher exceeds
the national
e
average
average.
WORKFORCE PARTICIPATION RATE (2013):

Chicago's workforce participation rate exceeds that of Los
Angeles and New York, with higher levels of workforce
participation generally seen as a positive indicator of regional
economic opportunity.
The region's workforce participation rate exceeds the

national average and exceeds participation rates in peer
regions like New York and Los Angeles.
IV. Skills Gap

This indicator tracks three mid-skill career fields:
1.! Mechanic and Repair Technologies
2. Precision Production
3. Transportation and Material Moving
In order to illustrate gaps between job openings and educational program completions, which can vary substantially from year to
year. The following chart lists job openings and educational program completions from 2008-13.
For the CMAP seven-county region, the
Mechanic and Repair Technologies Career
Field has been most closely aligned between
openings and degree completions.
The Precision Production career field, which

includes positions such as Machinist; Tool and Die
Technician; Metal Fabricator; and Cabinetmaker,
has had a significantly higher number of job
openings than educational program completions for
the past six years.
An increase in the global movement of goods has

helped increase openings in Transportation and
Material Moving, and estimates from 2010-13
show job openings outpacing educational program
completions.
Cluster Employment and Location Quotients*

Metropolitan Chicago's dual concentration in freight and manufacturing
is one of the region's many advantages that helps it compete in an
increasingly global economy. Within the seven-county CMAP region,
the freight and manufacturing clusters contain roughly 637,000 jobs.
The health of cluster economies within metropolitan areas can be
measured by tracking both employment levels and location quotients for
each cluster. Total employment measures provide an easy-tounderstand metric for measuring the size of a cluster, while location
quotients measure employment levels in the region compared to the
national average.
Chicago Metropolitan Statistical Area (MSA):
-! More interstates than any other region;
-! Six of the seven Class I railroads;
-!
-!
Connections to Mississippi and St. Lawrence Seaway;

Nation's second largest cargo airport (total cargo
value)
Chicago The Nations Freight Cluster:

Estimates indicate that somewhere between 1/4th and 1/3rd of all freight tonnage in the U.S. originates, terminates or passes through the
Chicago region. it is the only region served by six of the seven Class I railroads. An estimated 500 freight trains move 37,500 rail cars
through the region each day, accounting for approximately 50
percent of total rail freight movement in the nation. 29 The
region's freight cluster employs roughly 176,000 individuals and
includes both direct freight jobs (e.g., trucking, rail engineering,
etc.) and jobs supported indirectly by freight activity (e.g.,
bridge construction or package manufacturing). The Chicago
Regions Freight Cluster is able to move more goods than any
other region in the nation. This is in spite of the volatile nature
of Chicagos freight cluster employment. The region's freight
LQ declined in the early 2000s but has grown since 2008, now
standing at 1.15.
Manufacturing Cluster:
Chicago's manufacturing cluster employs approximately
551,000 workers and includes core manufacturing industries
along with several supporting industries such as industrial
design and engineering, freight transportation, research and
development, and energy generation. Chicagos manufacturing
cluster is the second largest in the nation. However, due to
manufacturing employment in the region declining steadily
during the 2000s and only recently experiencing a slight rebound
(since 2010), the regions manufacturing location quotient is
only 1.04 (less than it was in the early 2000s).
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
#I
!OECD, 2012, p. 55. Data for the Chicago MSA.
Summary: The Chicago region's dominance as a transportation hub attracts not only traditional transportation jobs such as trucking
and warehousing, but also a variety of supporting industry jobs (traffic engineering, logistics management, packing material
manufacturing). And, as the region's transportation capabilities increase, Chicago's manufacturing cluster also benefits. Faster and
more efficient movement of goods from Chicago gives local manufacturers a competitive advantage over manufacturers not located near
efficient, cost-effective transportation infrastructure.
*Location Quotients explained: The Location Quotients measure the concentration of employment in particular industries or clusters
within the Chicago region compared to national concentrations in the same year. A location quotient greater than 1.0 indicates
increasingly greater concentrations (also referred to as "specialization") in a cluster compared to the national average.
Intermodal Lifts
The Chicago metropolitan area is one of the busiest
freight hubs in the U.S. The number of TEUs (20Foot-equivalent freight cargo container) moved
through the region's rail-truck intermodal facilities has
increased by roughly 26 percent since 2009.
Approximately 14.9 million TEUs of cargo were
moved through the region's intermodal terminals in
2013 (see map below).
The constant movement of goods into and out of the
region supports metropolitan Chicago's economy by
creating demand for freight and logistics jobs and
providing manufacturers with timely, cost-effective,
and reliable options for moving products to market.
Recent advances in logistics have made the region's
multiple transportation options even more appealing as
businesses are increasingly taking advantage of
multimodal transportation as a way to move goods
more efficiently at a lower cost.30
INTERMODAL LIFT TRENDS:
-! Intermodal freight volume in the Chicago region based on intermodal lifts was approximately 14.92 million TEUs in 2013.
-! Intermodal freight volumes declined during the last recession but have since experienced a significant rebound, increasing by 26 percent
from 2009-13.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
B@!(//*2]]VVV'546*'+<<+,)+1'-)D].5),)4T]0.-+),6<N.5),)4+5N+,9+56/)01]5<>1/.01!GSOURCE:
CHICAGO METROPOLITAN AGENCY FOR PLANNING OF REGIONAL INTERMODAL ACTIVITY: WORLD SHIPPING COUNCIL.)

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!"#$%&'()!$*+$#,)*&&#-)#.$!"#$*/0*%/0$!-(/1+*-&(!%*/$*+$!"#$!-(2%!%*/(3$4-%)5$6$&*-!(-$-#!

As a result of the above factors, as well as the benefits inherent

!NAR 2015. COMMERCIAL REAL ESTATE OUTLOOK. 4.!

BILLIONS OF U.S. DOLLARS

Hundreds of retailers have announced plans to open additional retail

Source: U.S. Commerce Department

NATIONAL COMMERCIAL RETAIL REAL ESTATE MARKET OUTLOOK AND TRENDS

Abercrombie & Fitch

Real Deals Home Dcor

Caseys General Stores

Opa Life Greek Caf

ALDI (U.S. 2015)

Bed Bath & Beyond

520 ALDI (to 2019)

Green Street Advisors: U.S. Mall Outlook (Jan 29, 2014)

CHICAGO COMMERCIAL RETAIL REAL ESTATE MARKET OUTLOOK AND TRENDS

Source: Scaling New Heights (Page 51

Site Selection. Jan 2015 edition. Page 84-91.

Source: Scaling New Heights (Page 51

Current Retail Store Locations:

Select Robert Graham Stores:

SCOTTSDALE FASHION SQUARE - 7014 E Camelback Rd. Scottsdale, AZ

Total Area: 1,245.92 ft2

THE MALL AT SHORT HILLS:

The Dealmakers Weekly Newsletter. Vol 74. April 3, 2015.

Total Area: 1,540.2 ft2

Total Area: 56,244.3 ft2

380 BLEECKER ST. NEW YORK, NY

Total Area: 985.33 ft2

NEW YORK (1)

Total Area: 2,801 ft2

DICKS SPORTING GOODS - 5601 Touhy Ave, Niles, IL

STORE DIMENSIONS: 271 (FRONT) X 225 (EAST)

BED BATH AND BEYOND GURNEE MILLS MALL

TOTAL AREA: 60,097 FT2

ZUMIEZ - EAST TOWNE MALL, MADISON, WISCONSIN

TOTAL AREA: 2,025.91 FT

PROJECTED 12-MONTH STORE OPENINGS:

SQUARE FOOTAGE (MIN/MAX): 4,800 TO 6,000 SF

MIDWEST & SOUTH

LOCATION: WITHIN A 24-MINUTE DRIVE OF 40,000 POPULATION;

SITE TYPES: NEIGHBORHOOD STRIP, REGIONAL MALL, REGIONAL

FARM SUPPLY STORE AND/OR HOBBY SUPPLY STORE

TIMES SQUARE MALL - 3917 BROADWAY ST. MOUNT VERNON, IL

WEST WALL (STOREFRONT) = 107.5 FT | NORTH WALL (STOREFRONT) = 75.63 FT

TOTAL AREA: 8,754 SF

DIMENSIONS: 30 X 127.5X 49 (REAR)

RESTORATION HARDWARE (HEREAFTER, RH)

NEW FULL-LINE DESIGN GALLERY FORMAT:

New Format Gallery Site

Full Line Design Galleries

Site Acquisition Terms Item 2.

Direct as a percentage of net revenues [a]

Comparable brand revenue growth [c]

Retail stores open at beginning of period

Three Months Ended

Retail stores open at end of period

Twelve Months Ended

Three Months Ended

!"#$%&'()!$+$#,)&&#-)#.$!"#$/0%/0$!-(/1+-&(!%/$+$!"#$!-(2%!%/(3$4-%)5$6$&*-!(-$-#!