Issuu

REAL ESTATE

TRI-CITIES REAL ESTATE REVIEW

John L. Scott Tri-Cities Pasco 5109 N Road 68, Suite E | Pasco, WA 99301

EQUAL HOUSING

OPPORTUNITY

Office Leader: Dennis Gisi, dgisi@johnlscott.com This office is independently owned and operated

REALTOR

Â®

REAL ESTATE

FOMC TACKLING THE HOUSING AFFORDABILITY CRISIS INTRODUCTION KENNEWICK PASCO RICHLAND W. RICHLAND BENTON CITY SUMMARY NEW CONSTRUCTION SUMMARY MARKET TRENDS DENNIS GISI

John L. Scott Tri-Cities Pasco 5109 N Rd 68, Ste E. | Pasco, WA 99301 This office is independently owned and operated

INDEX 2

3 4 5 6 7 8 9 10 11 12 29 50

REAL ESTATE

FOMC

Fantastic News This means the Fed will actually look at the economic indicators and determine adjusts as opposed to blindly following a previous plan. We still have a flight to quality as investor purchase CMO’s at a premium over the market. CMO’s are Collateralized Mortgage Obligations like first deed 10, 15, and 30 year fixed or variable rate loans. Many economist see this premium going away toward the 2nd half of the year. What does this mean? Currently 30 year fixed rate loans are priced at approx. 5.3% but the premium investors are willing to pay for those loans in their investment pool pushes the rate down to 4 7/8% which is what your borrower pays. Many economists believe the year end rate will be 5.3% for a 30 year fixed loans which means the investor willingness to pay more for quality of the debt will fade. See below for the Fed (Federal Open Market Committee) announcement. Let me know if you have questions. As expected, the Fed maintained the target range for the federal funds rate at 2-1/4 to 2-1/2 percent – NO CHANGE; also dropped language that more rate hikes would be warranted – MORE CAUTIOUS APPROACH; and said they would consider adjusting the reduction of the portfolio if conditions warrant – ON HOLD FOR NOW.

Rates and Market Fed Funds Target: 2-1/4 to 2-1/2 % Market Reaction: stock market jumped and bond yields declined about 5bp

The FOMC Announced the Following 10-0 vote Economic activity has been rising at a solid rate Inflation remains near 2%

The Statement Information received since the Federal Open Market Committee met in December indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Job gains have been strong, on average, in recent months, and the unemployment rate has remained low. Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier last year. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Although market-based measures of inflation compensation have moved lower in recent months, survey-based measures of longer-term inflation expectations are little changed. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective as the most likely outcomes. In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes. In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. Voting for the FOMC monetary policy action were : Jerome H. Powell, Chairman; John C. Williams, Vice Chairman; Michelle W. Bowman; Lael Brainard; James Bullard; Richard H. Clarida; Charles L. Evans; Esther L. George; Randal K. Quarles; and Eric S. Rosengren. Best regards, | President & CEO | PCBB

REAL ESTATE

TACKLING THE HOUSING AFFORDABILITY CRISIS 4

Olympia Somehow I found myself in Olympia for the Washington Association of Realtor’s Legislative Session on Hill Day. It turns out that I was nominated to the Legislative Steering Committee. I am proud to have been asked and hope I can contribute to this in a way the benefits those in the real estate and building industry. Below is an excerpt of our 2019 Legislative mission “ Tackling the Housing Affordability Crisis.”

Legislative Priorities Reform Condominium Liability Laws Increase Urban & Suburban Housing Supply in Urban Growth Areas Aligning the Short Subdivision Process with Ecology’s SEPA Regulations Support the Housing Trust Fund for Homeownership State Funding Support for Housing, Homelessness, & Infrastructure REET & Lodging Tax - Local Funding Tools for Housing & Homelessness Expanding the Multi-Family Tax Exemption Program

Tackling the housing affordability crisis The lack of housing opportunities have reached crisis level in Washington State. This issue affects us all, creating a burden on home owners, renters, employers and on. Washington REALTORS® is pleased to announce a coalition comprised of non-profits and for profits called "Unlock the Door for Affordable Homeownership". Together, we're working with our elected officials on legislation surrounding condo liability, buildable lands, zoning requirements and more. For more information, visit www.unlockthedoorwa.com. View our TV and Radio Ads here: https://www.warealtor.org/government/unlock-the-door

We met with Legislators: The 8th Legislative District: Senator Sharon Brown Rep. Brad Klippert Rep. Matt Boenhke The 9th Legislative District: Senator Mark Schoessler Rep. Mary Dye Rep. Joe Scmick (unavailable) The 16th Legislative District: Senator Maureen Walsh Rep. Skylar Rude Rep. Bill Jenkin (unavailable) Our methodology is we were not asking for money to support this agenda but only for their support to address and issue with the help our the Washington Association of Realtors. I am pleased to announce we have a fantastic group of Legislators representing our districts and look forward to success during this long legislative session. Let me know if you have questions.

REAL ESTATE

Intro

Introduction I have fielded many questions regarding the future of the housing market as many people (usually those “off the street”) feel the market is going to slow or possibly crash because of high home prices and higher interest rates. The primary reason is jobs. We are in a extremely viable job market. Jobs are available across the board, from unskilled labor to very skilled scientists and doctors. Currently, there are 738 full time positions listed on Indeed.com as well as another 361 part-time. Of those positions there are 462, 259 and 234 jobs in Kennewick, Richland and Pasco respectively. At John L. Scott Real Estate Pasco 23% of our business comes from relocation for quality high paying positions. Some of those this last year went to work for Amazon, Burlington Northern, Lamb Weston, Kadlec Hospital, various school districts, JLG Equipment and many more. Not included in this are those who are relocating in retirement for the sunshine, golf, wine and roads less traveled. My last report discussed interest rates and the loss of purchasing power as interest rates go up. This is a key element to the housing market but what most people missed including myself is the “Nervous Factor”. The definition of the Nervous Factor is “How do the individual investors feel about the economy and world affairs. Interest Rates today should be around 4.98% based on the 30-year US Treasury. However, the average rate with no point spread was 4.25-4.75% for the 30-year fixed rate mortgage loan. Why? There is so much money in the economy that investors were willing to pay a premium in order to get a collateralized mortgage. This is typically called the “flight to quality” so the investors can sleep at night. The beneficiaries are … The home borrowers purchasing new or existing homes. This along with jobs is bolstering our housing market locally and nationally. Let’s look at each of our cities in the Kennewick-Pasco-Richland Metropolitan Statistical Area (MSA).

ÂŽ

REAL ESTATE

KENNEWICK

Kennewick This year was somewhat unusual as sales followed a tradition of seasonal demand i.e. starting slower last winter, growing demand thru spring and summer then trailing off toward the end of the year. This has not been the case in recent years as the demand prior had been quite steady even in the colder months. Sales were up approximately 7.24% for the year. However, a longer view is sales were down 3.35% over December 31, 2016. . The strongest segments of the market were between $550-600,000 then $450-500,000 and finally $300-350,000. In this order, odd the strongest segment would be in the more expensive price range. In my opinion, the biggest reason for the decline is the lack of available land at affordable prices to motivate developers into taking a risk that builders and eventually homeowners will purchase the final product. Regarding relocation, I think it note worthy that our John L. Scott offices got the relocation contract in our area. Ninety percent (90%) are working in the data centers in Hermiston, Boardman and Irrigon Oregon. My sense is that 40% are living in our Hermiston Market the balance are purchasing homes in South Kennewick and commuting. The average days on market in Kennewick is 54 days. The longest marketing time in the MSA

ÂŽ

REAL ESTATE

PASCO

Pasco This year was somewhat unusual as sales followed a tradition of seasonal demand i.e. starting slower last winter, growing demand thru spring and summer then trailing off toward the end of the year. This has not been the case in recent years as the demand prior had been quite steady even in the colder months. Sales were up approximately 0.26% for the year. However, a longer view is sales were up, unlike Kennewick, 8.5% over December 31, 2016. The strongest segments of the market were between $450-550,000, specifically between $450-500,000. Again, the biggest reason for the slower growth in 2018 was the lack of available land at affordable prices to motivate developers into taking a risk that builders and eventually homeowners will purchase the final product. Having said this, we know that moving thru the City of Pasco planning department there are a total number of these lots is 383 lots of which 130 are known to be sold. Additionally, there are 97 Zero-lot line homes also believe to be Sold out. Regarding relocation in this market is the majority move to Pasco because of the School System, slightly more affordable housing and a central location particularly in West Pasco. The Pasco Schools were selected as one of twenty-two schools in Washington to receive an award of excellence. West Pasco near road 100 is the center most point of the Tri Cities makes commute times very reasonable. The average days on market in Pasco is 46 days. The shortest marketing time in the MSA.

ÂŽ

REAL ESTATE

RICHLAND 8

Richland This year was somewhat unusual as sales followed a tradition of seasonal demand i.e. starting slower last winter, growing demand thru spring and summer then trailing off toward the end of the year. Richland bucked this trend by maintaining a solid average of homes sold during the year. Sales were up approximately 12.17% for the year, this is the strongest sales growth in the MSA. However, a longer view is sales were up, unlike Kennewick, 7.2% and slightly below Pasco over December 31, 2016. The strongest segments of the market were between $400-550,000, specifically between $400-450,000. The strongest area of growth is in South Richland and Keene Rd west to the old race track. The average days on market in Richland was 52 days. Just behind Kennewick in marketing times in the MSA.

ÂŽ

REAL ESTATE

W. RICHLAND 9

W. Richland Sales in West Richland were a roller coaster this year with the strongest sales occurring in March, April and May after a slow start. The dipped in July, August and September before rebounding again in the third Quarter. Interesting that the strongest sales segment was between $550-$600,000 up 600% followed by $0-150,000 up 100% and then but to the up end at $500-550,000 up 83.3%. Overall sales were down 1.3% after a negative growth of 2.9% in 2017. The average days on market for 2018 was 47

REAL ESTATE

BENTON CITY 10

Benton City Approximately six months ago, we began tracking Benton City and have included it in this issue. The reason is we wanted to see what impact the Tri Cities was having in our outlying areas. Looking at the statistics for December 31, 2018, Benton City has 16 homes at or under $300,000 or 55% of their inventory compared to Richland, Kennewick and Pasco at 15%, 38% and 33% respectively. This provides more opportunity for 1�� time home or family buyers. We will continue to build this portion of the report in order to see how the Tri Cities growth impacts the broader footprint.

ÂŽ

REAL ESTATE

SUMMARY

Summary As we have done in the past, I am bringing you the Commercial, Industrial and Multi-Family Statistics as compiled by Nikki Griffith of Appraisal Group SEWA. I would like to personally thank Nikki for sharing the information her hard work has produced for our benefit and the benefit of you our readers. I have taken the liberty to highlight some of these important bullet points on her report. In general, the Tri-Cities is an amazing place in all segments of the real estate market. 2019 should be another great year for the Tri-Cities as a whole. Single Family Residential â€“ Inventory is down 56% from last year and demand is exceeding supply by record levels. ulti-Family Housing is enjoying a 99% occupancy rate Commercial Real Estate Class A is enjoying a 95% occupancy rate. Investors for the most part are getting 1-2% higher returns than in the larger markets of Portland or Seattle. Industrial Real Estate is also enjoying strong growth as our available land and strong transportation corridors are providing movement for freight with efficiency and ease. I hope you found this 2018 year end report to be full of useful information and worthwhile

Â®

NEW CONSTRUCTION SUMMARY 12

REAL ESTATE

Tri-Cities, WA New Construction Summary For the Period 2014 through January 31, 2019 City

Kennewick Kennewick Kennewick Kennewick Kennewick Kennewick Kennewick

Neighborhood

East Central CC Blvd Southridge Vista Field West Gage Blvd. / Keene Blvd. Kennewick

Total SF Complete

Total SF U/C or Combined Total Prop SF

Apts

Education

Healthcare

Industrial

Office

Other

Restaurant & Winery

Retail

72,548 145,894 40,157 530,556 395,662 240,228

12,000 233,536 115,119 172,085 217,302 269,692

84,548 379,430 155,276 702,641 612,964 509,920

121,738 219,060

56,000 86,000 75,000

206,202 139,874 13,026

12,000 15,802 167,200 110,484

65,449 244,133 97,588 46,018

4,148 42,087 49,776 177,487 98,191 18,029

15,900 5,494 20,255 26,383 6,000

8,500 52,016 99,806 38,762 83,728 22,303

144,786

22,350

167,136

82,000

65,003

4,826

15,307

1,569,831

1,042,084

2,611,915

422,798 16.19%

217,000 8.31%

359,102 13.75%

305,486 11.70%

518,191 19.84%

389,718 14.92%

78,858 3.02%

320,422 12.27%

976,750 -

76,440 34,026 -

10,000 122,456 14,000

12,568 27,123 -

49,441 77,181 4,001

13,350

155,728

1,609

Richland Richland Richland

North Queensgate South

832,441 244,286 576,745

995,579 24,500 -

1,828,020 268,786 576,745

373,734 423,744

247,850 135,000

81,237 8,000 -

Richland

Columbia Point

255,687

85,000

Richland

Spaulding

129,794

34,000

163,794

57,000

65,794

41,000

WRich / Bcity / Prosser

266,977

298,488

565,465

69,810

2,000

3,000

94,471

80,001

50,783

2,305,930

1,352,567

3,658,497

952,288 26.03%

382,850 10.46%

89,237 2.44%

1,035,750 28.31%

192,610 5.26%

437,655 11.96%

119,692 3.27%

183,015 5.00%

North Central King City Road 68 Road 90 / 100 Pasco

603,734 1,256,667 628,321 105,856 2,594,578

109,600 157,190 89,555 149,783 506,128

713,334 1,413,857 717,876 255,639 3,100,706

2,000 2,000 0.06%

281,800 281,800 9.09%

34,892 34,892 1.13%

248,022 1,189,170 221,588 12,000 1,670,780 53.88%

34,098 25,536 59,634 1.92%

152,700 206,804 39,520 399,024 12.87%

6,000 6,000 0.19%

30,812 4,044 220,494 255,350 8.24%

Total Tri-Cities

6,470,339

2,900,779

9,371,118

1,377,086 14.70%

881,650 9.41%

483,231 5.16%

3,012,016 32.14%

770,435 8.22%

1,226,397 13.09%

204,550 2.18%

758,787 8.10%

Richland / Bcity / Prosser

Pasco Pasco Pasco Pasco

1 of 17

Prepared by Nikki Griffith, MAI, CCIM

1/24/2019

Â®

NEW CONSTRUCTION SUMMARY 13

REAL ESTATE

Tri-Cities WA New Construction Summary Kennewick Year Complete

Owner

Project Name

Street Address or Location

County

City

Neighborhood

2019 (Prop)

Former Leo's Catering

Proposed Apts/Retail

20 N Auburn

Benton

Kennewick

East

2018

Port of Kennewick

Wine Village Phase I

421 Columbia Drive

Benton

Kennewick

East

2018

OJ Fiander

Columbia Fitness Expansion

433 E Columbia Dr

Benton

Kennewick

2016

TTB Investments LLC

Bush Car Wash #4

520 W Columbia Dr

Benton

2015

Kennewick School District

Eastgate Elementary

910 E 10th Ave

Benton

Type

Total SF Complete

Mixed-Use 3,900

East

Retail

8,500

Kennewick

East

Other

4,148

Kennewick

East

Education

56,000

Kennewick

East

$14MM

Apts

Education

Healthcare

Industrial

Office

Other

12,000

Restaurant & Winery

$3.4M

Total SF U/C or Prop

72,548

8,500 4,148

56,000

12,000

56,000

4,148

C-Store

4306 (prev 4312) W Clearwater

Benton

Kennewick

Central

1.1M

C-Store w/fuel

43,000

2019 (Prop)

Unk

Strip Retail Mixed Use

4112 W 24th Ave

Benton

Kennewick

Central

$8M

commercial

36,960

2019 (U/C)

Boys & Girls Club of Benton/Franklin Co

Clubhouse

910 W 7th Pl

Benton

Kennewick

Central

$4.3M

Clubhouse

22,146

2019 (U/C)

IBEW Local #112

114 N Edison St

Benton

Kennewick

Central

3.4M

Union Hall

17,532

2018 (Prop)

Carmina's Place

Adult Disabled Living

526 N Edison

Benton

Kennewick

Central

450K

Adult Homes

2,409

2018 (Prop)

KSD

Amistad Elementary School

930 W 4th Ave

Benton

Kennewick

Central

15.7M

School

86,000

2019 (U/C)

St Josephs

Rectory & Office

520 S Garfield

Benton

Kennewick

Central

2.5M

Church Office

13,489

Light Indust

12,000

8,500

36,960

86,000 13,489

Proposed Whse

Edison, SEC @ Metaline

Benton

Kennewick

Central

2018

Nueva Vista II

386 N Union St. at Volland

Benton

Kennewick

Central

$2.5MM

Apts

28,085

28,015

2018

BMB Development

7th Ave Apts

3887 W Seventh Ave

Benton

Kennewick

Central

$1.3M

MultiFamily

19,008

2017

Blue Bridge Plaza

402 N Ely

Benton

Kennewick

Central

Retail

4,000

2016

Kennewick Irrigation District

Admin Building

2015 S Ely

Benton

Kennewick

Central

Office

15,000

2015

Great Western Partners LLC

Hidden Meadows Apartments

5809 W Clearwater

Benton

Kennewick

Central

Apts

12,296

2015

Kennewick Housing Authority

Nueva Vista

386 N Union St. at Volland

Benton

Kennewick

Central

Apts

28,085

28,015

2015

Evergreen Park Apartments

2021 W 19th Ave

Benton

Kennewick

Central

Apts

19,810

15,900

43,000

Kennewick Housing Authority

$2.5MM

Retail

3,900

Maverik Inc

$4.5M

Restaurant & Winery

12,000

2019 (U/C)

2019 (U/C) Eerkes, Craig, Marilee

2 of 17

Constr. $ (000)

12,000

4,000 15,000

1/24/2019

Â®

NEW CONSTRUCTION SUMMARY 14

REAL ESTATE

Tri-Cities WA New Construction Summary Kennewick Year Complete

Owner

Project Name

Street Address or Location

County

City

Neighborhood

Constr. $ (000)

Type

2015

Kevin and LoAnn Ayers

Kennewick Vision Care

3700 W Clearwater

Benton

Kennewick

Central

$1MM

Retail

5,016

2014

Sahota Janmeet

Gramercy Apartments

2112 S Rainier St

Benton

Kennewick

Central

Apts

14,594

Kennewick

Central

2019 (Prop) 2019 (Prop)

3 of 17

Goodwill Industries

Dick's Sporting Goods Dick's Sporting Goods

Total SF Complete

145,894

Total SF U/C or Prop

Apts

Education

Healthcare

Industrial

Office

Other

Restaurant & Winery

Retail

5,016 14,594

233,536

121,738

86,000

12,000

65,449

42,087

52,016

311 & 345 Columbia Ctr Blvd

Benton

Kennewick

CC Blvd

3.1M

Retail / Whse

20,205

Col Ctr Mall

Benton

Kennewick

CC Blvd

7.5M

Retail

45,138

49,776

2019 (Prop)

WoodSpring Suites

Wood Spring Suites

1370 Tapteal

Benton

Richland

CC Blvd

6.7M

Hotel

2016

Columbia Mall Partnership

HomeGoods

1321 N Columbia Center Blvd.

Benton

Kennewick

CC Blvd

$2.7M

Retail

22,200

2014

LFIC LLC (CCB Development)

Pizza Wood Fired

1022 N Columbia Center Blvd

Benton

Kennewick

CC Blvd

$1.5MM

Restaurant

5,494

2014

LFIC LLC (CCB Development)

Massage Envy / Restaurant

901 N Colorado (Columbia Ctr Blvd)

Benton

Kennewick

CC Blvd

$2.3MM

Retail

12,463

Kennewick

CC Blvd

40,157

49,776 22,000 5,494 12,463

115,119

49,776

2019 (Prop)

Windsong at Southridge

Windsong at Southridge Memory Care

4000 W 24th

Benton

Kennewick

Southridge

6.1M

Memory Care

36,202

2019 (U/C)

Fairchild Cenema

Kennewick

2909 S Quillan

Benton

Kennewick

Southridge

$7.2M

Other

43,947

2019 (U/C)

South Ridge Inv

Comfort Suites

3703 Plaza Way

Benton

Kennewick

Southridge

$6.5M

Hotel

62,314

2019 (Prop)

Firehouse Subs/Sun Market

4,000

Restaurant

10799 Ridgeline Dr

Benton

Kennewick

Southridge

1.3M

Sandwich/C Store

4,000

Brinkley Investment

Warehouse

6562 W Brinkley Road

Benton

Kennewick

Southridge

700K

Commercial

6,842

2019 (Prop)

King of Kings Lutheran Church

3315 S Sherman St

Benton

Kennewick

Southridge

3.5M

Church

11,880

2019 (Prop)

Craig Eerkes

Strip Center

3631 Plaza Way

Benton

Kennewick

Southridge

Retail

6,900

2018

STCU

STCU Home Loan Office

4842 W Hildebrand

Benton

Kennewick

Southridge

commercial

4,590

2018

Tri-CU

Tri-CU Hdqtrs

3213 W 19th

Benton

Kennewick

Southridge

$3M

Office

8,381

2018

ML3 Inv

Superior Glass

6476 W Brinkley Rd

Benton

Kennewick

Southridge

1.5M

99,806

36,202

2019 (Prop)

8,960

5,494

6,842 11,880 6,900

8,960

1/24/2019

Â®

NEW CONSTRUCTION SUMMARY 15

REAL ESTATE

Tri-Cities WA New Construction Summary Kennewick

4 of 17

Year Complete

Owner

Project Name

Street Address or Location

County

City

Neighborhood

2017 (Prop)

Bauder Young Properties LLC

Master Planned Community

7641 W Hildebrand Blvd

Benton

Kennewick

Southridge

2017

RKSC LLC

Mid Columbia Dental

2620 S Williams Place

Benton

Kennewick

Southridge

2017

BTE Holding Co

The Original Pancake House

3717 Plaza Way

Benton

Kennewick

2017

Willowbrook Assoc. (Pratt)

Strip Center

2459 S Union Pl

Benton

2016

Trios Southridge Hospital

3810 Plaza Way

2016

Trios Health Care

Trios Care Center at Southridge

2016

City of Kennewick

Gesa Carousel of Dreams

2015

Hampton Inn

2015

Constr. $ (000)

Type

Total SF Complete

Total SF U/C or Prop

Apts

Education

Healthcare

Industrial

Office

Master Planned Community

50,000

$1.4M

Med/Dent

5,500

Southridge

$1.2MM

Restaurant

4,500

Kennewick

Southridge

$1M

Retail

5,000

Benton

Kennewick

Southridge

3730 Plaza Way

Benton

Kennewick

Southridge

2901-F Southridge Blvd

Benton

Kennewick

Southridge

Hampton Inn Kennewick

3715 Plaza Way

Benton

Kennewick

Southridge

Nancy Thurston

Verizon / Zpizza

4101 W 27th Place

Benton

Kennewick

Southridge

2015

TAGGSTRICK1 LLC

Southridge Towers

4898 W Hildebrand Blvd

Benton

Kennewick

Southridge

2015

TAGGSTRICK1 LLC

Roasters Coffee

3609 W Hildebrand Blvd

Benton

Kennewick

2015

Boulder Heights LLC (Lundgren)

Boulder Heights Plaza, Bldg. B

3801 S Zintel Way

Benton

2015

Gretl Crawford Homes Union Park Retail Mall

4504 W 26th Ave

Healthcare

170,000

Office

168,000

Other

9,650

Other

49,696

Retail

3,440

$2.3MM

Retail

7,957

Southridge

$2.3MM

Retail

1,279

Kennewick

Southridge

$1.6MM

Retail

3,674

Benton

Kennewick

Southridge

$1.5MM

Retail

10,278

10,278 3,674

$40M

$8MM

170,000 168,000

3,440

Boulder Heights Plaza, Bldg. A

3801 S Zintel Way

Benton

Kennewick

Southridge

$1.3MM

Retail

3,674

2014

H & H Northwest Companies

Rock Wood Fired Kitchen

4862 W Hildebrand Blvd.

Benton

Kennewick

Southridge

$2.5MM

Restaurant

8,315

2014

South Side Up LLC (Collete & Hamilton)

Dentistry for Kids

2611 Quillan Pl

Benton

Kennewick

Southridge

$2.2MM

Retail

5,162

2014

South Side Up LLC (Collete & Hamilton)

Tri-City Orthodontics

2611 Quillan Pl

Benton

Kennewick

Southridge

Retail

2,500

Kennewick

Southridge

Benton

Kennewick

Vista Field

355k

Restaurant (2)

8,925

8101 W Grandridge Blvd Benton

Kennewick

Vista Field

5.4M

Office

19,611

Kennewick

Vista Field

$1.5M

Office

4,467

Dual Restaurant

2019 (Prop)

ClifftonLarsonAllen and Ticor Title

Ticor Title

2019 (Prop)

Elite Investment Group

Office Bldg

5373 Canal Drive

9001 W Tucannon

Retail

5,000

Doug & Carrie Lundgren

Steele-Chavallo

Restaurant & Winery

4,500

2015

2019 (Prop)

Other

Benton

530,556

8,315

172,085

206,202

15,802

244,133

177,487

20,255

38,762

8,925

1/24/2019

Â®

NEW CONSTRUCTION SUMMARY 16

REAL ESTATE

Tri-Cities WA New Construction Summary Kennewick

5 of 17

Total SF Complete

Total SF U/C or Prop

Year Complete

Owner

Project Name

Street Address or Location

County

City

Neighborhood

Constr. $ (000)

Type

2019 (Prop)

LK Holding Group

Office Bldg

9025 W Tucannon

Benton

Kennewick

Vista Field

1.2M

Office

9,150

2019 (Prop)

Justice Family Chiro

Justice Family Chrio

7106 W Hood P l

Benton

Kennewick

Vista Field

Medical/Off ice

4,778

2019 (Prop)

Chicago Title

8009 W Tucannon

Benton

Kennewick

Vista Field

2.8M

Office

9,671

2019 (U/C)

Vista Field Industrial Park III LLC

Warehouse

6416 W Hood Pl

Benton

Kennewick

Vista Field

$2.8M

Whse

36,700

2019 (Prop)

Tri-City Title & Escrow

8109 W Grandridge

Benton

Kennewick

Vista Field

1.3

Office

5,500

2018 (U/C)

Vista Field Industrial Park III LLC

Warehouse

6416 W Hood Pl

Benton

Kennewick

Vista Field

$2.8M

Whse

38,500

2018 (U/C)

O'Brien Warehouse

Vista III Warehouse

North of Quay St

Benton

Kennewick

Vista Field

$2M

Whse

40,000

2018 (U/C)

O'Biren Warehouse

Vista III Warehouse

North of Quay St

Benton

Kennewick

Vista Field

$2M

Whse

40,000

2018

Chuck E Cheese

6340 W Rio Grande

Benton

Kennewick

Vista Field

$2.2M

Restaurant

14,458

2017

Allen Breck

BTS 2-tenant office building

3360 W Deschutes Ave

Benton

Kennewick

Vista Field

Office

6,400

2017

Craig Eerkes

BTS Light Ind'l Bldg

TDB N Edison

Benton

Kennewick

Vista Field

Ind'l

12,000

2017

BlueCougar Properties

Adv Family Chiropractic

8350 W Grandridge

Benton

Kennewick

Vista Field

$2.5M

Office

12,000

2017

Keller Supply Co/Stuart Sulman

Keller Supply Plumbing

6509 W Deschutes

Benton

Kennewick

Vista Field

$2M

Retail

22,000

2017

Fresunius Kidney Care Fresunius Kidney Care Columbia Basen Columbia Basen

6600 Rio Grande Ave

Benton

Kennewick

Vista Field

Healthcare

11,132

Other

4,000

Retail

900

Retail

3,000

Office

8,500

8,500 9,614

$100K

Apts

Education

Healthcare

Industrial

Office

Other

Restaurant & Winery

Retail

36,700 5,500

14,458 6,400 12,000 12,000 22,000 11,132

2017

Tim Bush Trust

Car Wash

5207 W Okanogan

Benton

Kennewick

Vista Field

2016

Wes Heyden

Roaster's Coffee

5125 W Okanogan Pl

Benton

Kennewick

Vista Field

2016

Michael Scott

Bruchi's

5209 W Okanogan Pl

Benton

Kennewick

Vista Field

2016

Almond Orthodontics

8305 W Quinault Ave

Benton

Kennewick

Vista Field

2016

Elysium Properties LLC

Center Vision Clinic

8127 Grandridge

Benton

Kennewick

Vista Field

$1.95MM

Office

9,614

2016

3 BLANKS LLC (Blankenship)

Strip Center

6205 W Okanogan @ Kellogg

Benton

Kennewick

Vista Field

$1.5M

Retail

15,401

2016

Windsor Plywood Northwest, Inc

Windsor Plywood Northwest Inc.

311 N Van Buren St.

Benton

Kennewick

Vista Field

$1.4M

Retail

15,194

2015

Fieldstone Assisted Living of Kennewick

Fieldstone Memory Care

7215 Grandridge Blvd.

Benton

Kennewick

Vista Field

$10MM

Healthcare

74,350

2015

Cascadia Development

Fieldstone Memory Care

575 N Young St

Benton

Kennewick

Vista Field

Healthcare

39,758

$1M

4,000 900 3,000

1/24/2019

Â®

NEW CONSTRUCTION SUMMARY 17

REAL ESTATE

Tri-Cities WA New Construction Summary Kennewick

6 of 17

Total SF Complete

Total SF U/C or Prop

Year Complete

Owner

Project Name

Street Address or Location

County

City

Neighborhood

Constr. $ (000)

Type

2015

DPA Enterprises LLC

Budget Print Center

7010 W Okanogan Pl

Benton

Kennewick

Vista Field

$0.5MM

Office

3,953

2015

Harvey Insurance

Harvey Insurance Agency Building

2555 S Quillan Pl

Benton

Kennewick

Vista Field

$850K

Office

3,944

2015

A-1 Kennewick LLC

Springhill Suites

Convention Center

Benton

Kennewick

Vista Field

$7MM

Other

94,191

2015

CCM Investments LLC

Great Floors

7220 W Okanogan Place

Benton

Kennewick

Vista Field

Retail

24,233

2014

H2M Properties LLC

Tri-City Orthopaedics Ambulatory Surgery

6703 W Rio Grande

Benton

Kennewick

Vista Field

Healthcare

14,634

2014

Pratt, Don & Lois

Chinook Heating & Air

309 N Belfair Court

Benton

Kennewick

Vista Field

Retail

6,000

Kennewick

Vista Field

2019 (Prop)

VC Enterprises

2019 (Prop)

CIBB Properties

2019 (Prop)

Craig Eerkes

2019 (Prop) 2019 (Prop)

Bar & Grille & Coffee Drive-Thru

$1.4MM

395,662

Apts

Education

Healthcare

Industrial

6,000

217,302

139,874

167,200

6,000

364

7,743

5,696

$750k

5401 Ridgeline Dr.

Benton

Kennewick

West

10251 Ridgeline Dr

Benton

Kennewick

West

25M

MultiFamily

219,060

Matson Builders

253 Reata Road

Benton

Kennewick

West

$1.6M

Warehouse

22,269

8,560

2018

83,728

Retail

West

Badger Canyon Apartments

TSR Management Group

26,383

970k

Kennewick

80k

2018

98,191

6,364

Benton

West

Amon Hills Properties

97,588

Coffee Kiosk

12125 W Clearwater

Kennewick

2018

Retail

14,634

Benton

Richard & Amy Nall

Restaurant & Winery

24,233

10799 Ridgeline Dr

2019 (Prop)

Other

94,191

C-Store w/fuel

Sun Pacific Energy

Office

219,060

143 Reata Road

Benton

Kennewick

West

$537k

MiniStorage

Kennewick Dental / Desert Winds

9501 W Clearwater

Benton

Kennewick

West

$1.5M

Office

11,155

Ind'l Bldg

135 Reata Rd

Benton

Richland

West

523K

Com'l

UNKNOWN

MH Construction

106010 Wiser Parkway

Benton

Kennewick

West

$1M

Com'l

3,700

2018

Mustang Signs

10379 W Clearwater

Benton

Kennewick

West

1.4M

Office

17,000

2018

Amos Properties

Office/whse

106006 E Wiser Pkwy

Benton

Kennewick

West

$280k

Ind'l

4,125

2017

CCS Storage

Cottonwood Self Storage

105106 Wiser Pkwy

Benton

Kennewick

West

$2.8MM

Self Storage

71,830

2017

KSD

Fuerza Elementary School

6011 W 10th Pl

Benton

Kennewick

West

17M

Education

75,000

2017

Copiers NW

7035 W Clearwater

Benton

Kennewick

West

$1.3M

Office

12,000

11,155

3,700 17,000

75,000 12,000

1/24/2019

Â®

NEW CONSTRUCTION SUMMARY 18

REAL ESTATE

Tri-Cities WA New Construction Summary Kennewick

Year Complete

Owner

Project Name

Street Address or Location

County

City

Neighborhood

Constr. $ (000)

Type

2016

Kadlec Regional Medical

Kadlec Primary Care Clinic

9040 W Clearwater Ave

Benton

Kennewick

West

$6.1MM

Healthcare

13,026

2016

Thrivent Financial

11257 W Clearwater Ave Benton

Kennewick

West

$1.5MM

Office

5,863

2016

City of Kennewick

Kennewick Fire Department #5

$3.5MM

Other

12,553

Other

5,476

Retail

8,500

2015 2016

2019 (Prop)

Toyota Pre-Owned Car Toyota of the Tri-Cities Sales Eric Moore

Kenmore Team

Excaliber Auto Group

Kenmore Team

Total SF U/C or Prop

Apts

Education

Healthcare

Industrial

Office

Kennewick

West

6211 W Canal Dr

Benton

Kennewick

West

8201 W Clearwater

Benton

Kennewick

West

Kennewick

West

Kennewick

Gage Blvd. / Keene Blvd.

$1.2M

Office

9,150

Kennewick

Gage Blvd. / Keene Blvd.

1.2M

Com'l

13,200

9001 W Tucannon

Benton

240,228

Retail

5,863

Benton

$1.7M

Restaurant & Winery

Other

13,026

6004 W 10th Ave

8,500

269,692

219,060

75,000

13,026

110,484

46,018

2019 (U/C)

Smile-A Mile

Smile-A-Mile Dental

8804 W Victoria

Benton

2016

Washingt Securities & Invest.

Two Cannon Professional Offices

8901 W Tucannon Ave

Benton

Kennewick_Ri Gage Blvd. / chland Keene Blvd.

$4.2M

Office

22,227

2015

89 Gage Blvd LLC Montegeagudo

Century 21

89 Gage Blvd

Benton

Kennewick_Ri Gage Blvd. / chland Keene Blvd.

$1.5MM

Office

8,216

Apartments

82,000

18,029

6,000

22,303

2015

Bender Equities

Bellavista Apts II

2101 Steptoe Ave

Benton

Kennewick_Ri Gage Blvd. / chland Keene Blvd.

2014

R.A. Johnson Properties LLC

Johnson Office Building

8486 W Gage Blvd. / Keene Blvd.

Benton

Kennewick_Ri Gage Blvd. / chland Keene Blvd.

$1.2 MM

Office

5,482

2014

PHAB Property LLC

Columbia Physical Therapy

35 S Louisana St

Benton

Kennewick_Ri Gage Blvd. / chland Keene Blvd.

$1.4 MM

Office

6,728

2014

Don Deno

Perfecton Pittsburgh Paint

8818 W Victoria Ave

Benton

Kennewick_Ri Gage Blvd. / chland Keene Blvd.

$900K

Retail

5,160

2014

Cazier Enterprises

Costa Vida / Subway

95 Gage Blvd. / Keene Blvd.

Benton

Kennewick_Ri Gage Blvd. / chland Keene Blvd.

$1.5MM

Retail

4,826

2014

Three Hinge LLC (Blankenship et al)

Keene Retail Center

480 Keene Rd

Benton

Kennewick_Ri Gage Blvd. / chland Keene Blvd.

$1.8MM

Retail

7,014

2014

Gage West Properties LLC

Verizon Store

106 Keene Road

Benton

Kennewick_Ri Gage Blvd. / chland Keene Blvd.

$1MM

Retail

3,133

Kennewick

7 of 17

Total SF Complete

Gage Blvd. / Keene Blvd.

144,786

82,000

5,160 4,826

22,350

82,000

65,003

4,826

15,307

1/24/2019

Â®

NEW CONSTRUCTION SUMMARY 19

REAL ESTATE

Tri-Cities, WA New Construction Summary Richland Year Completed

2019 (Prop) 2019 (Prop) 2019 (Prop) 2019 (Prop) 2019 (Prop) 2019 (U/C) 2019 (Prop) 2019 (Prop) 2019 (Prop) 2019 (U/C) 2018 (Prop) 2019 (U/C) 2019 (Prop) 2019 (Prop) 2019 (U/C)

Owner

Project Name

AREVA

COR land to be 1100-1200 Jadwin sold Gale-Rew Office Constuction Packaging Corp of Industrial America Zenitram Prop III Audi Tri-Cities LLC

Street Address or Location

County

2101 Horn Rapids Rd Benton

City

Neighborhood Constr. $ (000)

Richland

North

$2.2M

Type

Total SF Complete

Total SF U/C or Prop

Industrial

11,000

Apts / Retail

150,000 4,100

1100-1200 Jadwin

Benton

Richland

North

1616 Terminal Drive

Benton

Richland

North

970k

Office

3003 Kingsgate Way

Benton

Richland

North

1.9M

Industrial

450,000

1177 Aaron Drive

Benton

Richland

North

$3.5M

Auto Dealer

10,000

COR

Richland City Hall

625 Swift

Benton

Richland

North

18.5M

Central WA Corn Processors

3334 Logston Blvd

Benton

Richland

North

7.9M

Xenophile Books

2240 Robertson

Benton

Richland

North

500k

215 & 217 University Benton Dr

Richland

North

12M

Office Grain Handling Facility commercia l Apartment s

40,840

Apts

Education

Industrial

Other

Restaurant & Winery

4,100 450,000 10,000 40,840

95,480

6,000

Vineyards Apts

Shadow Mt Indl Prop

Warehouse

3000 Kingsgate Way

Benton

Richland

North

$2,647,700

Whse

40,000

Port of Benton

Warehouse

1850 Terminal Dr

Benton

Richland

North

$605,000

Whse

6,000

Warehouse

2990 Kingsgate Way

Benton

Richland

North

$2,288,600

Whse

46,750

Addition

2531 Stevens Dr

Benton

Richland

North

$1.2M

Whse

23,500

Self-Storage

2701 Kingsgate Way

Benton

Richland

North

$3,230,800

Whse

37,620

2391 SR 240 / 2009 Logston

Benton

Richland

1.9M

Retail

74,289

17,000

WSU Tri-Cities

Student Union Building

xxxx Crimson Way

Benton

Richland

South

$5,040MM

Education

6,250

2018

Roasters Coffee

Roaster's Coffee Kiosk

3205 Kennedy Rd

Benton

Richland

North

$500K

600

2018

RSD

School

Elementary School

Benton

Richland

North

24M

School

65,000

2017

CBC

CBC Wortman Med Science Ctr

940 Northgate Dr

Benton

Richland

North

17.7M

School

72,600

2017

Grigsby Properties

Retail Strip

585 Stevens Dr

Benton

Richland

North

1.1M

Retail

12,656

2017

Innovation Center Lofts LLC

Commons at Innovation Center

2894 Salk Ave

Benton

Richland

North

18M

Apts

UNKNOWN

2018 ?

ConAgra French Fry Plant

Lamb Weston

2013 Saint St

Benton

Richland

North

$200M

Mfg

200,000

Retail

150,000

Vineyards Apts

Shadow Mt Indl Prop Total Energy Management Horn Rapids Storage Treasure Valley Coffee

Office

11,000

2017

8 of 17

Healthcare

6,250

600

12,656

200,000

1/24/2019

Â®

NEW CONSTRUCTION SUMMARY 20

REAL ESTATE

Tri-Cities, WA New Construction Summary Richland Year Completed

Owner

Project Name

Street Address or Location

County

City

2017

ConAgra

Lamb Weston Innovation Center

2460 Saint St.

Benton

Richland

2017

Black Dog Industrial

Light Industrial

2000 Saint St., Bldg A

Benton

Richland

2017

Apogee Logistics

Savage Logistics Trucking

1440 Battelle Blvd

Benton

2016

Richland School District

Lewis & Clark Elementary

415 Jadwin Ave.

2016

Kadlec

Kadlec NICU

2016

Wash Securities & Markel Properties

2016

Neighborhood Constr. $ (000)

North

Type

Total SF Complete

Total SF U/C or Prop

Apts

Education

Healthcare

Office

Other

Restaurant & Winery

$8.3M

Mfg

North

$283,400

Commercia l

Richland

North

$2M

Industrial

37,500

Benton

Richland

North

$15.5MM

Education

65,000

888 Swift Blvd

Benton

Richland

North

$8MM

Healthcare

15,000

Markel Development Office Building

1010 Jadwin

Benton

Richland

North

Office

5,000

PNNL

PNNL - Chemistry Bldg.

PNNL Campus

Benton

Richland

North

$7.5MM

Office

16,500

2016

Ralph Martinez

Town & Country Auto Ctr (VW)

Aaron Dr.

Benton

Richland

North

$2.5M

Car Dealership

10,000

2016

Sterlings

Sterling's

890 George Washington Wy

Benton

Richland

North

$1.2M

Restaurant & Winery

7,549

2015

McDonald's Real Estate Company

McDonald's

1275 George Washington Way

Benton

Richland

North

Restaurant & Winery

4,419

2015

Wash Securities & Markel Properties

Dupus Boomer's, Taco Time, Go Green Salads

502 Swift Blvd

Benton

Richland

North

Retail

3,785

2014

Innovation Center Lofts LLC

Lofts @ Innovation Center

2895 Pauling Ave

Benton

Richland

North

2014

WSU / POB / City of Richland

WSU Wine Science Center

359 University Dr

Benton

Richland

North

2014

Kadlec

Kadlec Healthplex

1268 Lee Blvd

Benton

Richland

2014

ABC Mini-Storage

ABC Mini-Storage, Phase II

701 Aaron Dr.

Benton

$500K

26,900

Industrial

26,900

UNKNOWN

Apartments

149,445

Education

39,000

North

Healthcare

66,237

Richland

North

Industrial

12,000

Richland

North

$17MM

832,441

27,500

10,000

65,000 15,000

10,000

3,785 149,445 39,000 66,237 12,000

995,579

373,734

247,850

81,237

976,750

76,440

10,000

12,568

2019 (Prop)

Original Pancake House-2

Original Pancake House 2

424 Keene Road

Benton

Kennewick

Queensgate

1.8M

Restaurant

4,500

2019 (Prop)

Queensgate Dental

3200 Duportail St

Benton

Richland

Queensgate

5.3M

Med Ofc

20,000

2018

Panera Bread

2762 Duportail St

Benton

Richland

Queensgate

Restaurant

5,000

2017

DQ Queensgate

3250 Duportail

Benton

Richland

Queensgate

2,600

2017

Nathan Croskrey

BTS Office Building

1020 Queensgate Dr.

Benton

Richland

Queensgate

Office

14,026

9 of 17

Retail

49,441

4,500 20,000

14,026

1/24/2019

Â®

NEW CONSTRUCTION SUMMARY 21

REAL ESTATE

Tri-Cities, WA New Construction Summary Richland Total SF U/C or Prop

Restaurant & Winery

Year Completed

Owner

Project Name

Street Address or Location

County

City

2017

Mindi Irvine / Oasis Physical

BTS 3 strip tenant building

1020 Queensgate Dr.

Benton

Richland

Queensgate

1.3MM

Healthcare

8,000

2017

Mod Pizza

2803 Queensgate

Benton

Richland

Queensgate

$710K

Retail

2,800

2017

Ulta Beauty

2911 Queensgate Dr

Benton

Richland

Queensgate

$710K

Retail

4,200

2016

Suzanne & Craig Garrison

Spanky's Car Wash & Detail

2544 Queensgate

Benton

Richland

Queensgate

Other

4,240

2016

Fairchild Cinemas

Fairchild Cinemas Richland

2871 Duportail St.

Benton

Richland

Queensgate

$10.5MM

Other

44,136

2016

Western States Lodging, Development &

Home2 Suites

2861 Lincoln Landing

Benton

Richland

Queensgate

$9.0M

66,380

2016

First Richland L.P.

Panera Bread Strip Center

2762 Duportail

Benton

Richland

2015

First Richland L.P.

Hop Jacks & Qdoba Mexican Grill

2675 Queensgate

Benton

2015

Kreme Properties LLC

Krispy Kreme Donuts

2805 Duportail

2015

First Richland L.P.

Carter's & Osh Kosh B'gosh

2015

TJ Maxx

2015

Neighborhood Constr. $ (000)

Type

Total SF Complete

Apts

Education

Healthcare

Industrial

Office

Other

Retail

8,000

Other

66,380

Queensgate

Restaurant & Winery

9,400

Richland

Queensgate

Restaurant & Winery

8,023

Benton

Richland

Queensgate

Retail

3,073

2947 Queensgate Drive

Benton

Richland

Queensgate

Retail

6,000

Marshalls

2921 Queensgate Dr

Benton

Richland

Queensgate

$2.1MM

Retail

25,050

First Richland L.P.

Ross Dress for Less

2921 Queensgate

Benton

Richland

Queensgate

$2.36M

Retail

25,050

2014

City or Richland

Richland Fire Station #74

2761 Duportail St

Benton

Richland

Queensgate

$3.5MM

Other

7,700

2014

Numerica Credit Union

3045 Duportail

Benton

Richland

Queensgate

$2.2MM

Retail

3,152

GESA Credit Union

GESA Credit Union Branch

2951 Duportail

Benton

Richland

Queensgate

$2.2MM

Retail

5,456

Richland

Queensgate

2014

2016

Richland School District

Orchard Elementary

1600 Gala Way (south of Keene near Westcluff)

Benton

Richland

South

2015

Badger Canyon

10251 Ridgeline Dr

Benton

Richland

South

2015

Richland School District

Sacajawea Elementary

535 Fuller St

Benton

Richland

South

2015

Bush Living Trust

Terra Ricca

1207-15 Aaron Dr

Benton

Richland

South

2014

Townfair Investors LLC

Bellerive Apartments

2100 Bellerive Dr

Benton

Richland

South

10 of 17

$1.5MM

244,286

$16MM

Education

70,000

Apartments

135,210

$15.3MM

Education

65,000

$300K

Retail

4,001

Apartments

76,239

9,400 8,023

7,700

24,500

8,000

34,026

122,456

27,123

77,181

70,000 135,210 65,000 4,001

76,239

1/24/2019

ÂŽ

NEW CONSTRUCTION SUMMARY 22

REAL ESTATE

Tri-Cities, WA New Construction Summary Richland Year Completed

Owner

Project Name

Street Address or Location

County

City

2014

Badger Mountain Apartments I LLC

Badger Mountain Ranch

451 Westcliffe Blvd

Benton

Richland

South

2014

City of Richland

Hanford Reach Interpretive Center

1943 Columbia Park Trail

Benton

Richland

South

Richland

South

Neighborhood Constr. $ (000)

$3.8MM

Type

Total SF Complete

Apartments

212,295

Other

14,000

576,745

Total SF U/C or Prop

Apts

Education

Healthcare

Industrial

Office

Other

14,000

423,744

135,000

DP Management Enter

Strip Office

299 Bradley

Benton

Richland

Columbia Point

Office

7,150

2018

DP Management Enter

Strip Office

291 Bradley

Benton

Richland

Columbia Point

Office

6,200

2017

575 Apartments

Apartments (575 units) 575 Columbia Point Dr

Benton

Richland

Columbia Point

Apts

85,000

2017

The Lodge at Columbia Point

530 Columbia Point Dr.

Benton

Richland

Columbia Point

Motel

62,773

2015

Liapeds Properties LLC

Oil Can Henry's

25 Columbia Point Drive

Benton

Richland

Columbia Point

$1.3MM

Retail

1,609

2014

Vandervert Hospitality

Homewood Suites

1060 George Washington Way

Benton

Richland

Columbia Point

$10.8MM

Other

92,955

Richland

Columbia Point

2019 (Prop)

Ford Group

Office Building

1953 Fowler St

Benton

Richland

Spaulding

2018

ADSG LLC

BTS 2-story office building

1363 Columbia Pk Trail

Benton

Richland

Spaulding

2017 (U/C)

Randy Rupp

Cost Less Carpet

1925 Fowler

Benton

Richland

Spaulding

2017

Support Advocacy & Resource Ctr

SARC

1458 Fowler

Benton

Richland

2016

Spaulding Surgeons LLC

NW Orthopeadic/Sports Medicine

1351 Fowler St.

Benton

2016

Gauntt Northwest LLC

Senior Life Resources / Meals on Wheels

1824 Fowler Street

Benton

11 of 17

2.4M

Office

4,001

62,773 1,609 92,955

85,000

13,350

155,728

1,609

34,000

Office

17,000

$5.5M

Industrial

62,000

Spaulding

$1.2M

Office

7,500

Richland

Spaulding

$12M

Office

36,294

Richland

Spaulding

$1MM

Other

7,000

Richland

Spaulding

14,000

85,000

34,000

129,794

Retail

212,295

2018

255,687

Restaurant & Winery

17,000 57,000

5,000

7,000

34,000

57,000

65,794

41,000

1/24/2019

Â®

NEW CONSTRUCTION SUMMARY 23

REAL ESTATE

Tri-Cities WA New Construction Summary Pasco Year Complet e 2019 (Prop) 2019 2018

Owner

Tim Rowell DBA A-1 Hospitality Properties (Vijay Patel) Musser Bros

Project Name

Street Address or Location

County

City

Neighbor hood

Constr. $ (000)

Type

Ral-Boy Inc

4005 E "B" St

Franklin

Pasco

North Central

150K

Ind'l

Pasco

$10MM

Pasco

$947K

Pasco

Courtyard by Marriott (99 Rooms) Truck and Auto Auctions

Tri-Cities Airport Business Park (20th Franklin & Argent) 3135 Rickenbacker Franklin Dr

2018

Musser Bros

Hangar

2018

Tri-City Union Gospel Mission

UGM Men's Facility

221 S Fourth Ave

Franklin

Pasco

2018

Port of Pasco

Fed Ex

1705 W Argent Rd

Franklin

Pasco

Leon Watts

Hanger

4218 Stearman Ave

Franklin

Pasco

Franklin

Pasco

Franklin

Pasco

2018 2018 2017 2017 2017 2017 2017 2016 2016

Trucks & Auto Auction Trucks & Auto Auction Advance Auto Parts

Auto Auction Auto Auction

xx Rickenbacker

3135 Rickenbacker Rd Adjacent to above address

Franklin

Advance Auto Parts

1325 W Court

Franklin

Pasco

Okran Moon

2221 E Lewis

Franklin

Pasco

Sigma Financial GroupI LP Rowand & Assoc

CBC Student Housing

20th Ave

Franklin

Pasco

Industrial Bldg

1925 E James St

Franklin

Pasco

2600 N 29th

Franklin

Pasco

802 S Oregon

Franklin

Pasco

H & N Electric

4224 E B St

Franklin

Pasco

CBC UPI Property LLC (Mark Corcum) H & N Electric

Social Sciences Bldg U-Pull-It Auto Parts

2015

Pasco School District

Marie Curie STEM Elementary

715 N California Ave

Franklin

Pasco

2015

Butch & Julie Lindstrom

All Star Motors

816 N 28th Ave

Franklin

Pasco

Tapteal II LLC

Thunder Alley Motorsports

9405 St Thomas Dr

Franklin

Pasco

Delta High School

5801 Broadmoor Blvd.

Franklin

Pasco

2015 2015 2014

Pasco School District Pasco School District

Rosalind Franklin STEM Elementary

6010 Road 52

2014

Thrifty Supply

2014

THM Management

NAPA Auto Parts Store

2724 W Sylvester St 1724 W Lewis Street

2014

Royal Roofing

1620 E Superior

Franklin

Pasco

Franklin

Pasco

Franklin

Pasco

Franklin

Pasco Pasco

12 of 17

North Central North Central North Central North Central North Central North Central North Central North Central North Central North Central North Central North Central North Central North Central North Central North Central North Central North Central North Central North Central North Central

Total SF Complete

Total SF U/C Or Prop

Apts

Education

Healthcare

Industrial

9,600

Office

Other

Restaurant & Winery

Retail

9,600

100,000

Auto Auction

7,742

Hangar

9,000

9.2M

Shelter

40,000

1.6M

Indl

36,192

1.2M

Hanger

19,200

947,900K

Retail

8,000

Hanger

9,000

$800K

Retail

6,912

$450,000

Retail

10,000

$7.0MM

Education

26,800

$3.64M

Ind'l

33,680

$14.5M

Education

65,000

Indl

9,900

Indl

45,000

$18MM

Education

73,000

$1.5MM

Other

12,700

$1.375MM

Retail

13,900

$12.2MM

Education

45,000

$46.8M (part)

Education

72,000

$1.65

Indl

29,232

$1.4MM

Indl

19,476

Indl

12,000

603,734

40,000

26,800 33,680 65,000

73,000

12,700 13,900

109,600

281,800

248,022

152,700

30,812

1/24/2019

ÂŽ

NEW CONSTRUCTION SUMMARY 24

REAL ESTATE

Tri-Cities WA New Construction Summary Pasco Year Complet e

2019 (Prop) 2019 (Prop) 2019 (Prop) 2019 (Prop) 2019 (Prop) 2019 (Prop) 2019 (Prop)

Total SF Complete

Total SF U/C Or Prop

Owner

Project Name

Street Address or Location

County

City

Neighbor hood

Constr. $ (000)

Type

KSU Investment

Warehouse

3207 Travel Plaza Way

Franklin

Pasco

King City

558k

Ind'l

6,000

Ice Harbor Properties

Warehouse

4520 Venture Pl PR Franklin

Pasco

King City

425k

Ind'l

47,000

Port of Pasco

Warehouse

3210 Swallow Ave

Franklin

Pasco

King City

866k

Ind'l

12,000

Port of Psco

Warehouse

3306 Swallow Ave

Franklin

Pasco

King City

$678K

Ind'l

9,000

Franklin

Pasco

King City

961k

Ind'l

5,000

Franklin

Pasco

King City

1.4M

Ind'l

16,800

Franklin

Pasco

King City

3.1M

Ind'l

61,390

Franklin

Pasco

King City

Ind'l

4,800

Ind'l

11,000

Ind'l

34,200

7,453

WA Industrial Properties Medelez Trucking Allied Potato NW

2018

Ramirez

2018

3JM Enterprises

355 N Commercial Warehouse Ave 3275 Travel Plaza Warehouse Way 3082 Glade North Allied Potato NW Rd 2002 N Commercial Warehouse Ave

Warehouse

1510 N Commercial

Franklin

Pasco

King City

Franklin

Pasco

King City

Apts

Education

Healthcare

Industrial

2018

Jay Brantingham

Multi-tenant

3120 Travel Plaza Way

2017

Bryan R Schutz

Bryan's Meats

525 N Commercial

Franklin

Pasco

2017

3030 Travel Plaza Jay Brantingham Travel Plaza Way Way

Franklin

Pasco

King City

1.056M

Ind'l

55,742

Franklin

Pasco

King City

780K

Ind'l

12,000

Franklin

Pasco

King City

$4MM

Ind'l

61,824

Franklin

Pasco

King City $4,593,700

Ind'l

49,730

Franklin

Pasco

King City

Ind'l

98,189

Franklin

Pasco

King City $

Ind'l

16,562

3733 N Capitol Ave Franklin

Pasco

King City

Ind'l

450,776

3121B Travel Plaza Way

Franklin

Pasco

King City

Ind'l

10,800

1724 E Superior St

Franklin

Pasco

King City

Ind'l

6,000

5701 Industrial Way

Franklin

Pasco

King City $10.8MM

Ind'l

409,467

3121B Travel Plaza Way

Franklin

Pasco

King City

Ind'l

9,040

Franklin

Pasco

King City

Ind'l

9,040

2017 2017 2017 2017 2017

Wilbur-Ellis Douglas Fruit

Douglas Fruit

Twin City Foods Twin City Foods Addition Volm Volm Companies Companies Inc Teton Gold

2016

AutoZone

2015

Jay & Amy Brantingham

2015

Franklin County

2015

Kenyon Zero Storage,Inc

2014

Jay & Amy Brantingham

2014

Jay and Amy Brantingham

13 of 17

Warehouse

Warehouse Distribution Center Brantingham Business Park Phase 2 Franklin Conservation Kenyon Zero Storage Brantingham Business Park Bldg. B

6221 Industrial Pl 110 Taylor Flats Road 5405 Industrial Way 5702 Industrial Way 5806 Industrial Way

North Tech 3121 Travel Plaza Equipment Repair Way

$1M

$8.5M 1.35 $50M

Office

Other

Restaurant & Winery

Retail

1/24/2019

Â®

NEW CONSTRUCTION SUMMARY 25

REAL ESTATE

Tri-Cities WA New Construction Summary Pasco Year Complet e

Owner

Project Name

Street Address or Location

County

City

Neighbor hood

2014

Brent W Preston

Vineyard View Market Place

52 E Vineyard Dr

Franklin

Pasco

King City

2014

Shell Oil & Convenience

Kahlotus Corners 120 Kahlotus Hwy

Franklin

Pasco

King City

Pasco

King City

Pasco

Road 68

560K

Com

4,000

Pasco

Road 68

$1.2M

Adult Homes

18,780

Pasco

Road 68

Retail

7,250

Pasco

Road 68

8.5M

Motel

59,525

2019 (Prop) 2019 (Prop) 2019 (Prop) 2019 (Prop)

8921 Sandifur Parkway

Sparrow Investments

Franklin

5921 Road 60, #A * Franklin #B 4824 Broadmoor Franklin Blvd 2101 W Argent Franklin Road

Constr. $ (000)

$2MM

Type

Total SF Complete

Restaurant & Winery

6,000

Retail

4,044 1,256,667

Total SF U/C Or Prop

Apts

Education

Healthcare

Industrial

Office

Restaurant & Winery

Other

Retail

6,000 4,044 157,190

1,189,170

6,000

4,044

4,000

BV AL Pasco 1

Adult Homes

Real Property Acquisitions Courtyard by Martiott

GESA Credit Union Branch

2018

Garam LLC

Strip Mall

6627 Burden Blvd

Franklin

Pasco

##########

Retail

9,600

2018

O'Reilly Auto Ent LLC

O'Reilly's Auto Parts

5425 Road 68

Franklin

Pasco

$1MM

Auto Parts

8,748

2018

Argent Storage

3302 N Rd 44

Franklin

Pasco

Road 68

$3M

Self-Storge

100,000

Eye Clinic

4802 Clemente Ln

Franklin

Pasco

$735K

Eye Clinic

5,812

2018 2018 2018 2018 2018

Genius Clinic LLC Hogback Sandifur Wine Country Family Dental Self Storage at Chapel Hill Hogback Sandifur

Shopping Center

commercia l commercia l

671K

6225 Burden Blvd

Franklin

Pasco

Road 68

900K

6615 Chapel Hill Blvd

Franklin

Pasco

Road 68

$7.2M

Retail

84,000

Shopping Center

5710 Road 68

Franklin

Pasco

Road 68

855k

Retail

48,000

6705 Chapel Hill Blvd

Franklin

Pasco

Road 68

Retail

30,585

84,000

2017

Chapel Hill Storage

6615 Chapel Hill

Franklin

Pasco

Road 68

Self storage

5,994

NW Farm Credit NW Farm Credit 9915 St Thomas Dr Services Services

Franklin

Pasco

Road 68

$3MM

Office

24,486

2014

Pasco My Place LLC

$3.6MM

Other

28,594

Retail

6,317

Other

72,685

Industrial

37,588

My Place Hotel

6830 Rodeo Dr

Franklin

Pasco

Road 68

GESA Credit Union Branch

7421 Sandifur Parkway

Franklin

Pasco

Road 68

Hotel

6826 Burden Blvd.

Benton

Pasco

Road 68

Broadmoor Storage Solutions

9335 Sandifur Parkway

Franklin

Pasco

Road 68

$9.9M

5,994

3,800

2017

14 of 17

5,812

Road 68

Dave & Sue Peachy

2016

100,000

Pasco

Bleyhl, Great Harvest, TruValue

2016

59,525

Franklin

Bleyhl Co-op

2014

7,250

5802 Road 68

Wine County Family Dental Self Storage at Chapel Hill

2018

GESA Credit Union Ron/Tracey Asmus Sound Investment

18,780

3,800

2,000

84,000 24,486 28,594 6,317 72,685 37,588

1/24/2019

Â®

NEW CONSTRUCTION SUMMARY 26

REAL ESTATE

Tri-Cities WA New Construction Summary Pasco

Year Complet e

Owner

Project Name

Street Address or Location

County

City

Neighbor hood

Constr. $ (000)

Type

2016

Baxalta US Inc

BioLife Plasma Center

7430 Wrigley Dr

Franklin

Pasco

Road 68

$2.7M

Office

16,112

2017

Petco

7202 Burden Blvd

Franklin

Pasco

Road 68

$1.3M

Retail

11,000

2016

DB Wrigley Drive

2016

Retail/Co m/Restaura nt 1 Retail

7525 Wrigley Dr.

Franklin

Pasco

Road 68

6005 Burden

Franklin

Pasco

Road 68

Pasco

Road 68

Road 90 / 100

13M

School

PSD

New School

3901 Road 84

Franklin

Pasco

2018

Vitruvius Dev Group LLC

PH I Road 90 Business Park

5804 Road 90

Franklin

Pasco

$5.7MM

Flex Space

27.3M

School

$560K

PSD

New School

Road 84

Franklin

Pasco

Road 90 / 100

2019

Chicken Shack

8921 Sandifur Pkwy

Franklin

Pasco

2018

Vitruvius Dev Group LLC

PH II Road 90 Business Park

5804 Road 90

Franklin

Pasco

Road 90 / 100

2017

Road 90 Business Park Development

5804 Road 90

Franklin

Pasco

Road 90 / 100

2016

McCurley

9620 Sandifur Parkway

Franklin

Pasco

Road 90 / 100

Pasco

Road 90 / 100

15 of 17

McCurley Integrity Subaru

$5.7M

Total SF U/C Or Prop

Apts

Education

Healthcare

Industrial

Office

Other

Restaurant & Winery

11,000 46,000

5,000

5,000 89,555

2,000

73,783

34,892

221,588

34,098

206,804

72,000

4,000

Office

25,536

Other

39,520 105,856

220,494

28,800 72,000

12,000

73,783

28,800

Flex Space

Retail

16,112

46,000

628,321

2019 (Prop)

Total SF Complete

4,000

12,000

25,536 39,520 149,783

12,000

25,536

39,520

1/24/2019

ÂŽ

NEW CONSTRUCTION SUMMARY 27

REAL ESTATE

Tri-Cities, WA New Construction Summary West Richland, Benton City, Prosser Restaurant & Winery

Owner

Project Name

Street Address or Location

County

City

Neighborhoo d

Constr. $ (000)

Type

2019

West Richland School District

Elementary School #11

Sunshine Ave @ Keene and Belmont Blvde

Benton

West Richland

$17.5MM

Elem School

65,000

2019 (Prop)

Aquilini Winery

Red Mountain

Benton

Benton City

Winery

170,000

2018 (Prop)

Goose Ridge Winery

63725 E Jacobs Rd

Benton

West Richland

Wine bottling

28,000

2019 (U/C)

Silver Dog Investments LLC

Strip Mall

4330 W Van Giesen

Benton

West Richland

8060 Keene

Benton

West Richland

$5.25M

Commercial

$1.9M

Total SF Complete

Total SF U/C Or Prop

Year Completed

Strip Mall Retail

Apts

Education Healthcare Industrial

Office

Other

65,000

2,400

2018 (Prop)

Mountain States Co Double Canyon Winery

2015

Janece & Lyn Wood

Country Mercantile

5015 Ava Way

Benton

West Richland

$2.5MM

Retail

24,607

2017

City of West Richland

W Richland Municipal Facility

3100 Belmont Blvd

Benton

West Richland

$6.3M

City

26,950

2015

West Richland Apartments

3913 Fallon Dr.

Benton

West Richland

Apts

19,810

2018

Port of Benton

Vintner's Village

236 Port Ave

Benton

Prosser

B City / Prosser

2.38M

Mixed use

9,000

2014

Hamilton Cellars

55410 N Sunset Road

Benton

Benton City

B City / Prosser

$1.5MM

Restaurant & Winery

4,657

2018

Love's Travel Stops

Holiday Inn Express

680 Wine Country Road

Benton

Prosser

B City / Prosser

$7M

Other

30,000

2018

Love's Travel Stops

Love's Travel Stop

680 Wine Country Road

Benton

Prosser

B City / Prosser

$11M

Other

10,000

2017

Coventry Vale Vineyards

51705 N Wilgus Rd

Benton

Prosser

B City / Prosser

$2.8M

Winery

25,000

2017

Port of Benton/Incubator

Vintner Village

Benton

Prosser

B City / Prosser

$2M

Incubator Bldg

3,500

2017

Port of Benton

Vintner Village

Benton

Prosser

B City / Prosser

Adjacent Bldg

1,500

2016

Catholic Charities Housing Svc

Prosser Sr. Housing Project

Wine Country Road

Benton

Prosser

B City / Prosser

$11.7M

Apts

50,000

2015

The Patton Group Ltd Ptnsp

Shopko Hometown

471 Wine Country Road

Benton

Prosser

B City / Prosser

$3.2MM

Retail

26,176

2014

Bethel Church of Richland

Bethel Church

270 N Gap Road

Benton

Prosser

B City / Prosser

$3.5MM

Other

18,521

2014

Port of Benton

Walter Clore Wine & Culinary Ctr

2140 A Wine Country Road

Benton

Prosser

B City / Prosser

$4MM

Restaurant & Winery

14,856

WRich / Bcity / Prosser

16 of 17

35,488

266,977

Retail

35,488 24,607 26,950 19,810 9,000 4,657

25,000 2,000

1,500 1,500

50,000 26,176 18,521 14,856

298,488

69,810

2,000

3,000

94,471

80,001

50,783

1/24/2019

Â®

NEW CONSTRUCTION SUMMARY 28

REAL ESTATE

Tri-Cities WA New Construction Summary New Additions to Add

Source of Info

Date of Source

Year Completed

Owner

Project Name

Street Address or Location

County

City

Neighborho od

Constr. $ (000)

Type

Total SF Complete

Total SF U/C Or Prop

Apts

Education Healthcare Industrial

Office

Restaurant & Winery

Other

Retail

A-1 Properties

17 of 17

1/24/2019

REAL ESTATE

MARKET TRENDS

Market Trends Analysis – General – Benton & Franklin Counties Updated Quarterly, Most Recent Update Q1 (January) 2019

A study of general market trends was conducted for the Tri-City market. For purpose of this analysis, the first demographic researched was that of demand generators and existing supply of commercial and residential development in response to demand for the majority of the Tri-Cities market of Pasco, Kennewick and Richland. Demand Generator - Changes in the Population Base A brief synopsis of current market trends for different market segments of the Tri-Cities is found in the pages to follow, including commercial (office and retail), industrial, multi-family, and residential. Demand for real estate in general is created by increases in the population and the labor force in the study area. New jobs generated in the Tri-Cities in general are greatly affected by primarily three factors. First is by the demand generated through the U.S. Department of Energy (DOE) and related contractors including Pacific Northwest National Laboratory (PNNL) and others in connection with research and clean-up associated with the Manhattan Project at the Hanford Site. The Hanford Site is the location of the first plutonium production in the United States for the production of the atomic bomb. Any other Hanford site contractor can create demand for additional office buildings and services catering to the employees. Forecasting this demand is difficult, if not impossible, at best because of the volatility of the DOE’s annual budgeting and funding through Congress. It appears as if this budget is stable for the time being. Nonetheless, changes in the population and labor force over the last several years were examined. Second, increasing demand is evident as a result of the expanding agricultural activities in the region. The Tri-Cities enjoys one of the longest growing seasons anywhere in the United States. This is coupled with a high desert climate (10” or less of annual rainfall) which is ideal for growing many agricultural crops. But the pièce de résistance is the fact that the Columbia Basin Project (CBP) in Central Washington is the irrigation and hydroelectric network that the Grand Coulee Dam (completed in 1942) makes possible. It is the largest water reclamation project in the United States, supplying irrigation water to over 670,000 acres of the 1,100,000-acre project area. Water pumped from the Columbia River is carried over 331 miles of main canals, stored in a number of reservoirs, then fed into the 1,339 miles of lateral irrigation canals. Currently it is estimated that about 3.0 million acre-feet or 2.3% of the average river flow, is diverted into the CBP. Its hydroelectric capacity provided the electric demanded by the Hanford nuclear reservation during World War II. Third, increasing demand is evident as the number of retirees attracted to the area relocate. The baby boomer generation has begun this process and is looking for an affordable place to retire with a good climate and good quality regional medical care. The Tri-Cities offers these options. The total metropolitan area population grew from 191,822 to 253,340 between 2000 and 2010, an increase of 30%, or 3% per year based on the 2010 census. Recent population growth statistics can be summarized as follows:

Page 1

REAL ESTATE

MARKET TRENDS

Summary: Based on a review of this data, it is clear that the Tri-Cities region is growing, although growth appears to have moderated slightly in the more recent past, with average growth rates of closer to 2% per year occurring on a stabilized basis today. While the percentage may be declining, the absolute numbers are not that different as the numbers grow larger. As of the date of this update, the most recent annual data published by OFM is April, 2018, published in May, 2018. Demand Generator – Changes in Employment As previously indicated, the labor force of the Tri-Cities area is comprised of agricultural, service and Hanford related industries. The Washington State Office of Employment Security publishes labor force statistics for the Benton County and Franklin County areas. The labor force statistics for 2000 through the present are presented below. Unemployment Rate for the Tri-Cities SMSA - Seasonally Adjusted Year 2018 2017 2016 2015 2014 2013 2012 2011

JAN 7.2 6.20 5.60 8.10 8.30 9.30 9.20 7.70

FEB MAR APR MAY JUN JUL AUG SEP OCT NOV 7.2 6.5 5.7 5.2 4.8 4.6 4.6 4.1 4.4 5.2 6.10 5.90 5.70 5.70 5.60 5.60 5.60 5.60 5.60 5.60 5.60 5.60 5.60 5.60 5.60 6.60 6.40 5.90 6.00 6.60 7.80 7.10 6.50 6.70 6.00 6.50 6.00 5.40 5.70 6.90 8.20 8.00 7.90 7.80 7.70 7.70 7.80 7.90 8.00 8.10 9.30 9.30 9.30 9.30 9.30 9.20 9.10 8.90 8.80 8.70 9.30 9.40 9.50 9.50 9.50 9.50 9.50 9.40 9.30 9.30 7.70 7.80 7.90 8.10 8.20 8.30 8.50 8.70 8.90 9.10 Source: Washington State Employment Security Dept and Labor Force US (LAUS) (November, 2018)

DEC

AVG

5.60 7.70 8.00 8.20 8.50 9.30 9.20

5.73 6.90 7.00 8.00 9.10 9.40 8.30

The table reflects the fluctuation of the annual average resident civilian labor force and employment levels in the Benton and Franklin Counties for years 2011 through the most recent data available. The average annual unemployment rates, which averaged about 8.4% during the early 1990’s, ranged from 5.3% to 7.9% between 2000 and 2011. The labor force grew substantially from 2007 through 2010, as federal stimulus money flooded the region. As mentioned in the Regional Data section, this funding was reduced in 2011, and is reflected in the area’s average annual unemployment rate, which during 2009 through 2013 was higher than previous years. But currently, the rate is at 5.2% (November, 2018 at press time), a rate which will decline during the summer months somewhat as harvest time occurs, before rising slightly again. Summary: Given the historical growth in the number of employed persons in the Tri-Cities area coupled with the reduction in the unemployment rate, it is reasonable to assume that employment growth will continue, yet at a somewhat slower rate than in the past.

Page 2

ÂŽ

REAL ESTATE

MARKET TRENDS 31

Demand Generators - Tri-Cities Market for Retail Trends Annual retail sales are shown in the following table for both Benton and Franklin counties as well as the respective major cities. Annual Taxable Retail Sales Source: Quarterly Business Review, Dept. of Revenue $(000) Benton County Kennewick Richland Franklin County Pasco 2005 $2,226,436 $1,277,295 $686,414 $862,138 $781,597 2006 $2,303,245 $1,303,810 $748,888 $929,718 $811,293 2007 $2,574,398 $1,432,031 $811,768 $1,057,004 $856,422 2008 $2,601,911 $1,442,198 $802,685 $1,052,102 $877,529 2009 $1,918,416 $1,445,410 $812,779 $1,038,744 $884,080 2010 $2,731,890 $1,478,874 $873,190 $964,585 $825,267 2011 $2,959,959 $1,558,341 $954,851 $1,007,226 $839,174 2012 $2,937,656 $1,634,408 $903,715 $1,037,096 $861,063 2013 $3,189,855 $1,723,129 $989,622 $1,110,257 $933,301 2014 $3,284,582 $1,768,985 $1,041,224 $1,196,017 $1,016,795 2015 $3,612,773 $1,930,747 $1,129,471 $1,315,962 $1,125,061 2016 $3,789,869 $2,002,185 $1,207,961 $1,428,477 $1,250,472 2017 $3,905,643 $2,024,430 $1,259,515 $1,534,638 $1,333,597 5-Yr 22.43% or 17.48% or 27.27% or 38.22% or 42.89% or Growth 4.48%/Yr 3.5%/Yr 5.45%/Yr 7.64%/Yr 8.57%/Yr Updated June 2018 from the Quarterly Business Review for Calendar 2018, Calendar Year; data for 2018 will be available in mid-2019

Over the past five years, the average growth in retail sales in Kennewick was 3.5%, which is a slight growth from the earlier period. Richland has continued to grow in sales from a lower total in 2012, to a rise of 3.5%/yr for the last five years. Pasco's retail sales incurred a marked decrease in 2010, but sales increased 38.22% over the last five years, an astonishing 7.64%, although the majority of that growth occurred in the City of Pasco. Real Estate Activity - Commercial (Office and Retail) â€“ General Comments The Tri-Cities real estate market is less sophisticated than larger first tier markets. For example, there are no published statistics regarding the current standing inventory of the individual office, retail or industrial markets, and no hand count has ever been done of which the appraiser is aware. Thus, it is left to the analyst to make its best estimates. This is further complicated because the line between office and retail development is blurred in the Tri-Cities, primarily because the small size of the market in general (<300,000 population) as well as the limited size of the office market specifically (oriented more specifically to owner users), encourages many office users in this market to go into what would be typically categorized as retail space in larger markets. Even so, until the national recession which occurred a decade ago in 2008, the Tri-City market

Page 3

REAL ESTATE

MARKET TRENDS

was a “hot spot” for commercial real estate. This was because both the Seattle and Portland markets ranged from depressed to flat, causing those market investors to move eastwardly and bid up the price of local strip malls and office buildings. Discussions at that time with investors outside the market stated that even in the Seattle area, capitalization rates were in the 6% to 8% range whereas the Tri-City market cap rates were in the 8% to 9% range for office and 7% to 8% for retail strip malls during the same period, a more favorable rate of return. Out of the area investors tended to push sale prices upward, comparable to what is experienced in larger metropolitan areas. This put inflationary pressure on real estate prices, in hopes that if the investor did pay in excess of the market value, within the next year or two the market would catch up to the purchase price. During the recession, there was a steep decline in investor-oriented sales, attributable to lack of credit availability and the weakened economy. Rental rates declined, and vacancy rates increased. Sales activity has increased within the past 48 to 60 months (Q1 2014 to Q4 2018), evidenced by the sales reviewed for many assignments as well as the number of new construction projects in the works, although the vast majority of new projects have included development of individual buildto-suit standalone projects for owner/users, and educational uses rather than for investors on a speculative basis. We have noted a slight slowdown in sales activity beginning with the third quarter, 2016 to the present time, but this is actually attributed more to a lack of inventory available on the market than lack of demand. In fact, most good product is snapped up quickly if priced competitively. Our office began keeping track of new construction activity in 2014 by neighborhood. A summary of that construction activity is included in the chart included in this section and a brief description of activity in each segment is included following the chart. Commercial Real Estate Development – New Construction A review of major construction projects (new) developed during the 5-year period between 20142018 year to date period as reported in a variety of local publications and City Zoning departments was compiled and confirmed. A copy is retained in our records. This data can be summarized as follows: ·

Kennewick - Kennewick has completed projects in seven designated neighborhoods. The most activity has been centered in the emerging areas of Southridge, and the established Vista Field and West neighborhoods, each with over 500,000 SF of space added or proposed. Even the central Kennewick market, which is mostly built out at this time is seeing quite a flurry of activity. The largest segment has been office space with over 500,000 SF of space added or proposed. Richland - Richland’s most popular neighborhood for new development activity at this time is North Richland between the residential areas to the south and the Hanford site to the north on land owned or acquired from the City of Richland or the Port of Benton. Over 832,000 SF has been added, and nearly 1,000,000 SF is under construction or proposed, the majority of which is in the industrial category. This is skewed somewhat with the announcement of a 450,000

Page 4

MARKET TRENDS 33

REAL ESTATE

SF new facility for Packaging Corporation of America; a 200,000 SF French fry plant for ConAgra / Lamb Weston; and a 95,480 SF facility for Central Washington Corn Processors. Pasco - Pasco has seen the largest increase overall, with the majority including nearly 1.4 Million SF in the North Pasco/King City neighborhoods. Of this amount, 410,000 SF is contained in the Kenyon Zero Storage facility, and 450,000 in the new facility for Auto Zone. The Western Market – The Cities of West Richland, Benton City and Prosser extend the TriCities market about 30 miles to the west of Benton County. New development in these markets has been mostly quiet, however, three new winery projects are proposed that will add 233,500 SF of new space. Tri-Cities, WA New Construction Summary For the Period 2014 through January 31, 2019 City

Neighborhood

Kennewick Kennewick Kennewick Kennewick Kennewick Kennewick

Total SF Complete

Total SF U/C or Prop

Combined Total SF

East 72,548 12,000 84,548 Central 145,894 233,536 379,430 CC Blvd 40,157 115,119 155,276 Southridge 530,556 172,085 702,641 Vista Field 395,662 217,302 612,964 West 240,228 269,692 509,920 Gage Blvd. / 144,786 22,350 167,136 Keene Blvd. Kennewick 1,569,831 1,042,084 2,611,915

Kennewick

Education

121,738 219,060 82,000

56,000 86,000 75,000 -

Healthcare

206,202 139,874 13,026 -

Industrial

O ffice

12,000 15,802 167,200 110,484 -

65,449 244,133 97,588 46,018 65,003

15,900 5,494 20,255 26,383 6,000 4,826

15,307

305,486 11.70%

518,191 19.84%

389,718 14.92%

78,858 3.02%

320,422 12.27%

1,828,020 268,786 576,745

373,734 423,744

247,850 135,000

81,237 8,000 -

976,750 -

76,440 34,026 -

10,000 122,456 14,000

12,568 27,123 -

49,441 77,181 4,001

85,000

13,350

155,728

65,794

41,000

Richland

Columbia Point

255,687

Richland

Spaulding

129,794

34,000

163,794

WRich / Bcity / Prosser

266,977

298,488

565,465

69,810

Richland / Bcity / Prosser 2,305,930 1,352,567 3,658,497

952,288 26.03%

382,850 10.46%

109,600 713,334 157,190 1,413,857 89,555 717,876 149,783 255,639 506,128 3,100,706

2,000 2,000 0.06%

281,800 281,800 9.09%

248,022 1,189,170 34,892 221,588 12,000 34,892 1,670,780 1.13% 53.88%

34,098 25,536 59,634 1.92%

Total Tri-Cities 6,470,339 2,900,779 9,371,118

1,377,086 14.70%

881,650 9.41%

483,231 3,012,016 5.16% 32.14%

57,000

2,000

3,000

89,237 1,035,750 2.44% 28.31%

192,610 5.26%

8,500 52,016 99,806 38,762 83,728 22,303

359,102 13.75%

832,441 244,286 576,745

4,148 42,087 49,776 177,487 98,191 18,029

Retail

217,000 8.31%

North Queensgate South

North Central 603,734 King City 1,256,667 Road 68 628,321 Road 90 / 100 105,856 Pasco 2,594,578

Restaurant & Winery

O the r

422,798 16.19%

Richland Richland Richland

Pasco Pasco Pasco Pasco

995,579 24,500 -

Apts

94,471

1,609 -

80,001

50,783

437,655 119,692 11.96% 3.27%

183,015 5.00%

152,700 206,804 39,520 399,024 12.87%

6,000 6,000 0.19%

30,812 4,044 220,494 255,350 8.24%

770,435 1,226,397 204,550 8.22% 13.09% 2.18%

758,787 8.10%

Prepared by Nikki Griffith, MAI, CCIM

Note that the square footage reflected in the column headed “Under Construction or Proposed” IS included for calculation purposes in the categories to the right.

As indicated in the table above, about 6.47 Million SF of new space was completed through 2018 with another 2.9 Million SF currently under construction or proposed in 2019 in major projects over the 60-month period. Interestingly, nearly 1,365,000 SF were in the combined categories of education and healthcare, representing about 15% of the new construction activity. The “other” category comprising nearly 13% includes primarily the airport expansion, lodging, and automotive/RV dealerships. And of the total, only 4,541,238 Sq. Ft. or just about 50% was in the traditional categories of office, retail, and industrial development, with industrial development

Page 5

REAL ESTATE

MARKET TRENDS 34

taking the lion’s share of the traditional category. And even more interesting is the fact that probably less than 25% of the new additions to the market in the traditional categories was in the investment category. The remainder was in owner/occupant type projects. Office Market – Professional and Medical – General Comments Between 2014 and 2018, about 738,907 SF of office and medical office space has been added. The three major locations for growth in office and medical office space, both fee simple and condominium ownership, include (1) the area south of the Columbia Center within the Columbia Boulevard Corridor (defined as between Kellogg Street on the East and Center Parkway on the West), including the Vista Field areas of Kennewick; (2) the area north of the mall bordering the Columbia River in the South Richland area in the Spaulding Business Park; and (3) the Columbia Point area in South Richland. There has been over 500,000 SF of space constructed in Kennewick, followed by 172,610 SF in Richland and 66,134 SF in Pasco. Speculative building began in 1999 and continued through about 2008. Given the supply of new product, and the concern over the national economy, new construction stagnated beginning in 2008 but picked up again in the 2014-2016 timeframe, continuing at a steady pace into 2018. Professional office development interior to Vista Field and Spaulding Business Park has consisted mainly of medical and dental office buildings, constructed in proximity to the Tri-City Cancer Center and medical mall. Today, additional new office building construction is occurring on the Clearwater Extension between Columbia Center Blvd. and the Badger Canyon area which begins at the Clearwater / I-82 interchange. The majority of new construction since 2014 has been for owner occupancy, although some projects include an additional suite or two which may serve for the owner’s future expansion needs. Occupancies in new construction are high, with some impact on the older Class B and Class C projects which have been vacated as new projects are completed. However, vacancies even in this class are dwindling as new business start-ups and relocations from outside of the market occur. From 2000 to 2009, well located, newly constructed offices experienced a 90% to 95% occupancy level. New inventory and the slowing economy impacted occupancy levels. This resulted from a considerable amount of new product coming onto the market between 2006-2008. There has been no recent speculative office space constructed as financial institutions today generally have a preleasing requirement in their commitment that must be met prior to groundbreaking. Over the past three years the rapid absorption period has changed to a slower, steadier pace, as new product has entered the market. Absorption periods for renting vacant space have slowed somewhat, and rental rates have softened slightly. Astute developers not willing to take the risk on market cycles and expensive carrying costs are generally pre-leasing to 50% or greater before construction due to lender’s requirements. Vacancies have increased in older Class B and Class C product, with some projects in the 75% to 80% range.

Page 6

MARKET TRENDS 35

REAL ESTATE

Industrial Market Trends – General Comments · ·

Kennewick had the smallest increase in industrial space, adding only 305,486 SF. Richland’s increase was nearly 5 times that of Kennewick, adding 1,035,750 SF, with the majority centered in North Richland, much of which is due to the two large projects previously discussed. Pasco has added a stunning 1,679,554 SF of industrial space, but again, much of this is due to three large projects previously mentioned.

Vacancies in the industrial sector are almost non-existent, as there is virtually nothing available for lease or for sale. This has been the case for the last 2-3 years. As a result, rents and sale prices are rising at a steady pace. Specific Comments – by Market City of Kennewick Vista Field provides the majority of developable and available light industrially zoned land in the City of Kennewick. Vista Field is expected to grow at a much faster rate and also command much higher prices than other areas in the Tri-Cities, due to its central location and proximity to the commercial activity of nearby Columbia Center. Vista Field consumes an entire section of land comprised of 640 acres originally used as open buffer land for the private Kennewick Airport. Over the past several years the two major landowners of Vista Field, the City of Kennewick and the Kennewick Irrigation District have been slowly dividing their large ownerships into small commercial and light industrial tracts. In August, 2013, it was announced that the airport at Vista Field would be closing and the airport property re-developed. Work was finalized in 2017 for the re-development and this will add about 113 acres to potential developable land totals. Before work can commence, some mitigation work will need to be completed for those areas potentially affected by airport fuel; however, it has been announced the first new road improvements will commence in 2019. Parcels within Vista Field have a variety of zoning classifications. The properties situated along Columbia Center Boulevard are generally CG-Commercial General, CO-Commercial Office, or CCCommercial Community. Interior parcels in Vista Field are IP, Industrial Park or LI, Light Industrial. Vista Field is also the location of the juvenile justice center and the municipal court system as well as several governmental agencies. ·

The Toyota Center opened November 19, 1988 and is also located in the western portion of Vista Field, offering a 7,200-seat venue used by a local hockey league team franchise and an indoor arena football team, and public events. The 72,000 square foot Three Rivers convention center opened June 19, 2004. The northwestern portion of the neighborhood has developed as regional retail district, with numerous national chains. Construction of several new motel properties in close proximity

Page 7

REAL ESTATE

MARKET TRENDS

have helped boost attendance at scheduled events. The most recent addition included a Marriott SpringHill Suites (all suite property) which is attached to the Convention Center and was completed in mid-2015. Development in the southwest corner of Vista Field has been intermixed with medical, dental, and professional office buildings. The southeast portion consists of light manufacturing, distribution, sales and service, all newer properties built within the past 10-15 years. The majority of new development space is for owner/users and the most recent data was included in an earlier table for Vista Field. The attraction of Vista Field and Columbia Center shopping district will continue to be a Tri-Cities growth catalyst. Located in the central portion of the City of Kennewick, it is considered advantageous to certain development as compared to other industrial properties located in periphery locations, even as it occurs at the expense of locations in other cities. City of Pasco Pasco dominates in the industrial and agricultural sectors and has numerous industrial sites currently available as it continues to expand. Industrial development in the central Pasco area is located near the north banks of the Columbia River, along West “A” Street, Ainsworth Avenue, and the south side of W. Lewis Street. These are smaller industrial properties, typically owner occupied that offer automotive servicing, warehouse space, and light manufacturing uses. East “A” Street provides access to Big Pasco, situated in the eastern portion of Pasco. Big Pasco also provides a vast amount of industrial land and buildings, owned and operated by the Port of Pasco. It was built by the Army during World War II and purchased by the Port in 1959. The facility has 600 acres of land with several miles of railroad tracks and streets and over 1.7 million square feet of buildings. Big Pasco tenants include Zen-Noh hay cubing and exporting, Wheco crane remanufacturing, and Lampson Cranes. The site also includes a barge container terminal, which averages over 2,700 containers each year, with most of the containers used in exporting local products. Pasco’s industrial sections extend further north out along the Oregon Avenue corridor in Central Pasco. The older southerly portion of Oregon Avenue has been a mix of light and heavy industrial users for many years. Many of the earlier users have either left the area or relocated. Most recent activity is summarized here. The city of Pasco also has partially developed industrial areas lying outside of the central city core area. The largest newer development is located north of Pasco near Highway 395 and Hillsboro interchange in an area commonly referred to as King City. Neighborhoods referred to as the Kartchner Tract, the FCID Tract, and the Columbia East Tract have all been partially built out by the initial developers, owner/users, who have purchased one-acre to two-acre tracts for their own business development. To the north of King City, in the Foster Wells Road area, substantial agricultural processing

Page 8

REAL ESTATE

MARKET TRENDS

development has occurred in the recent past. The J.R. Simplot Company built a $32 million frozen vegetable processing plant. Next to Simplot, Americold Company constructed an 80,000 square foot warehouse, which has refrigeration and freezer capabilities, used to store and distribute Simplot frozen vegetables. To aid in this distribution, a rail spur was extended to both of these plants. These developments were the incentive for water and sewer lines to be extended into this area. To the north of Foster Wells Road, Stemilt Growers built a $1.4 million fruit storage warehouse. Also located in this immediate area are an incubator building and a warehouse for Columbia Blends. Property use in this area has been primarily agricultural services and truck stop services. The most recent development was the construction of a 200,000 Sq. Ft. cold storage warehouse on a 16.7-acre site (complete as of February 1, 2016). Several smaller owner/occupied projects have also been completed. A more recent addition to the Pasco market has been the 300-acre Columbia East Business Park under development on the east side of Commercial Avenue. Additional industrial land in Pasco is located at the confluence of the Columbia and Snake Rivers near the Sacajawea State Park. This is at the east end of East Ainsworth Avenue. Along Sacajawea Park Road, leading to State Route 12, is an industrial area with fuel storage tanks and a shipping area owned by Chevron. City of Richland Richland is probably best known for its proximity to the Hanford Site, which was the location of the Manhattan Project in the mid 1940’s and 1950’s, where the first plutonium was developed. Many light industrial projects were developed on the periphery of the area. But in addition, Richland has many light industrially zoned parks. · The Horn Rapid Business Center, located north of the subject on Highway 240, is a masterplanned industrial, office and commercial center, designed to eventually accommodate 7.5 million square feet of light manufacturing, warehouse and related office uses and more than 1,000,000 square feet of general office, restaurant and lodging uses. § In the early 1980’s the City developed the Center with parcels ranging in size from 1 to 2 acres with a few larger tracts up to 5 acres in size. § Originally three structures anchored the park, the first being the Technology and Enterprise Center, a 17,730 square foot, single level business and technology incubator. This building is situated at the northeast corner of SR 240 and Logston Boulevard. A second building, the Interstate Nuclear Services building is constructed at the present termination of Robertson Drive. This facility caters laundry service for Hanford Area employers working in potential radioactive environments. A third building, originally constructed for a machining facility, is a 4,000 square foot steel building located on approximately one acre, across from the intersection of Snyder and Robertson Drive. § Up until 2010, the developed park was slow to absorb. It is now about 60% built out. Current asking prices for improved lots range from $1.15 to $1.25 per square foot depending on whether or not they have exposure on Highway 240. If developed today, infrastructure costs would exceed the price at which the City sells sites. Purchasers tend to be light industrial, contractors, engineering, survey, self-storage and other building industry service firms. A good portion of the properties are investor owned and leased to Hanford related businesses or other destination oriented service entities.

Page 9

REAL ESTATE

MARKET TRENDS 38

Two new 12,000 square foot multi-tenanted properties are nearing completion (October 2016). A total of 18,000 square feet is listed for rent at $7.56 per square foot. · To the west of the Horn Rapids Business Park is irrigated agricultural lands leased by the city to a local farmer. · West of this is the Horn Rapids Industrial Park, comprised of approximately 2,000 acres and primarily controlled by the City of Richland. Current asking prices within the industrial park are $20,000 to $35,000 per acre. Accessed via Kingsgate Boulevard, and located to the north of First Street, the area is zoned for heavy industrial use. Some sites are served by rail. Surrounding businesses on Kingsgate Way and Horn Rapids Road include Framatome, with approximately 650 employees, and the HAMMER Facility. Neighboring businesses along Kingsgate Way include Oregon Metallurgical Corporation known as “Ormet”, ATG situated at the southwest corner of Horn Rapids Road and Kingsgate Way, Plastic Injection Molding, Ferguson Plumbing Distribution, Wheco, and others. · Bordering the north side of Horn Rapids Road and the west side of Stevens Drive is the 760acre Manufacturing Mall, formerly part of the DOE’s Hanford Site. Zoned light and heavy industrial, land within this park is controlled by the Port of Benton. Sites are served by rail. Water, sewer and electrical are provided by the City of Richland and fiber optic and natural gas lines are available. Occupants of the manufacturing mall include American Rock Products, Bechtel National, Kaiser Aluminum, Lockheed Martin, and others. · The Port of Benton has also developed the Richland Airport, bordering the south and west side of Highway 240 as it curves to the west. It is a tract of approximately 65 acres, designed to stimulate small light industrial business. Many projects in this park were developed on land leased from the Port of Benton. · The Port of Benton, with exception of a few privately owned parcels, controls the southern and northern corners of the intersection of Stevens Drive and State Highway 240. Land prices, whether leased or sold in fee simple, are based at approximately $1.50 to $2.00 per square foot inclusive of infrastructure. If developed today, infrastructure would exceed the price the Port sells or leases sites. Within the last few years approximately two dozen new buildings have been constructed over long-term land leases with the Port of Benton, accounting for most of the last of 80 acres available for business development at the airport. Properties in this area are both owner occupant and investor owned, tenanted by private sector light industrial businesses, as well as Hanford related tenants. · A new RV Park recently opened (2014) to the north of the airport. Demand for space appears to be mostly stable in this market. Here is a brief recap of new development in North Richland. There has also been intermittent development along Richland’s Wellsian Way, mostly by owner users involved in light industrial and service related businesses. However, with exception of one large 10-acre tract, the only remaining Wellsian Way sites are about 1-acre in size.

Page 10

MARKET TRENDS

REAL ESTATE

Current Listing All Space An analysis of competitive commercial and industrial space currently available for lease (Q4/18) was conducted through review of the Tri-Cities Association of Realtors’ Multiple Listing Service. The current survey was compared with similar data as of December 31, 2016, June 30, 2017 and December 31, 2017 and June 30, 2018. The summary provided herein used search parameters of all active listings of space for lease for office, retail and industrial space, in Benton and Franklin Counties. The data can be summarized as follows: · ·

The inventory of total industrial space has remained very low seeing significant absorption as new space has come on line The inventory of office space has gone up and down, from a low of 362,000 to 472,000 and back down to its present position of 413,437. Some of this could be attributable to office space users moving into more retail-oriented locations as leases expire. Most of the existing inventory would be classified as Class C space. The inventory of retail space has ranged from 342,207 SF to its present high of 462,583 SF. Summary of Available Space for Lease Bnton & Franklin Counties, WA As of 12/31/2016 Location Benton Co Franklin Co Total

Industrial Office Retail SF Avail $ PSF SF Avail $ PSF SF Avail $ PSF 70,580 $ 8.53 165,074 $ 16.00 259,114 $ 13.78 79,820 $5.11 48,937 $7.92 109,739 $ 25.72 150,400 214,011 368,853

Source: Tri-Cities Association of Realtors Report Prepared by Appraisal Group SEWA

Summary of Available Space for Lease Benton & Franklin Counties, WA As of 06/30/2017 Location Benton Co Franklin Total

Industrial SF Avail $ PSF 50,600 $ 9.51 99,880 $ 5.74 150,480

Office Retail SF Avail $ PSF SF Avail $ PSF 285,772 $ 17.47 278,817 $ 12.36 76,644 $ 13.84 127,772 $ 11.41 362,416 406,589

Source: Tri-Cities Association of Realtors Report Prepared by Appraisal Group SEWA

Summary of Available Space For Lease Benton & Franklin Counties, WA As of 12/31/2017 Industrial Office Retail SF Avail $ PSF SF Avail $ PSF SF Avail $ PSF Benton Co 85,989 $ 8.97 403,774 $ 15.75 187,454 $ 15.84 Franklin Co 78,180 $6.79 68,999 $ 15.76 88,683 $ 11.09 164,169 472,773 276,137 Source: Tri-Cities Association of Realtors Report Prepared by Appraisal Group SEWA

Page 11

ÂŽ

MARKET TRENDS

REAL ESTATE

Summary of Available Space For Lease Benton & Franklin Counties, WA As of 06/15/2018 Industrial Office Retail SF Avail $ PSF SF Avail $ PSF SF Avail $ PSF Benton Co 31,172 $10.12 302,670 $19.40 244,121 $14.17 Franklin Co 76,730 $7.52 72,927 $13.10 98,086 $12.09 107,902 375,597 342,207 Source: Tri-Cities Association of Realtors Report Prepared by Appraisal Group SEWA

Summary of Available Space for Lease Benton & Franklin Counties, WA As of 12/31/2018 Location Benton Co Franklin Co

Industrial SF Avail $ PSF 46,175 $ 7.47 48,670 $ 6.48 94,845

Office SF Avail 362,784 $ 50,653 $ 413,437

$ PSF 19.50 14.14

Retail SF Avail $ PSF 374,711 $ 12.68 87,872 $14.02 462,583

Source: Tri-Cities Association of Realtors Report Prepared by Appraisal Group SEWA

As indicated above, the current levels of available space when viewed in connection with what is coming on line are indicative that additional new construction is probably not feasible, or only warranted in specific neighborhoods; the average levels of vacancy in all four major sectors exceed the vacancy levels typically needed to justify new construction, although again it must be stated that the majority of vacancy is occurring in the Class C and Class B space. In looking at the retail product available for lease, the following big box spaces are currently being marketed. Brokers in this segment report that this segment is experiencing higher vacancy than in the past due to increasing closures in the retail industry: BIG BOX Space Available For Lease Tri-Cities, WA As of 12/31/2018

Rental Year Rate Built Furniture 1103 W Court St. Pasco $5 1955 Grigg 1425 G W Way Richland $12 1974 Office Max 908 N Colorado Ste B Kennewick $9 1996 Ashleys Furniture 1340 Tapteal Dr Kennewick $10 2007 Bethel Church 5200 Outlet Dr. Pasco $10 1995 Sports Authority Columbia Center Blvd Kennewick $10 1996 Oâ€™Reilly Auto Parts 1307 Jadwin Ave Richland $12 1961 $10 - $14 NNN **NOTE: Sears announced the closing of its Tri-City store by the end of March, 2019, which is not included in the above stats. Another recent announcement may save the Sears Store. Former Tenant

Address

City

Space Available 11,295 10,400 7,184 13,200 17,000 68,158 30,625 157,862

Page 12

REAL ESTATE

MARKET TRENDS 41

Medical Office Building Trends Within all commercial retail markets there exists various “sub-markets’’ or “micro markets.” Medical buildings are considered a special purpose property (i.e., different from professional office buildings in that they have a higher degree of plumbing, electrical and partitioning) and a “micro market”, which historically has done very well. The market for medical space has not been affected in the same manner, timing, or degree as rental space for new retail or commercial sites. Demand for commercial and retail buildings is heavily influenced by interest rates, the economy, disposable income, personal demographics, etc. Demand for medical buildings or medical space is influenced more by the quality and extent of community health care, overhead for private practice, and insurance reimbursements. In the past, primary care physicians occupied many of the more remote neighborhood clinics independently either as tenants or owners. Primary Care Providers (PCPs), General and Family Practitioners, Obstetrics, Pediatrics, and Internal Medicine appear to have been severely impacted by decreased reimbursements in managed care, dwindling Medicare reimbursements, and especially in the case of obstetrics, high malpractice insurance. While procedural based practices, specialties and subspecialties have also been negatively affected, many primary care practitioners found it more cost effective to join with hospital physician groups, eliminating expensive billing departments, and personnel with the expertise in proper coding and less expensive malpractice insurance premiums. The most active market for new and existing medical buildings has shifted from primary care to subspecialist and specialists. The delivery of medicine once somewhat decentralized is now largely centralizing toward hospital-operated facilities. While this is unfortunate for the private practitioner and small medical buildings scattered throughout the community, once intended to deliver convenient neighborhood health care, it adds value to any medical property in close proximity to a hospital. Of the three community hospitals, Kadlec has emerged as the leader of new services and has expanded their physical plant accordingly. Based on activity in 2018, both Lourdes Hospital and Trios have been acquired by RCCH HealthCare Partners, leaving only two providers in the TriCities. As a result of these recent conditions, medical office space leasing appears to be somewhat in limbo at the current time. In fact, many active real estate brokers contacted indicated that “the medical office market is dead” at the present time, with some exceptions. Facility Expansion Kadlec Regional Medical Center's present and long-term mission is to be a regional medical center for southeast Washington and northeast Oregon. Building expansion continued with the River Pavilion Tower. The building has been constructed in phases, with the final four floors completed in late 2016, expanding the building to 10 stories. It contains surgical suites, with a clinical observation unit. Previously, construction was completed in October 2009 on the 25,000 Sq Ft pediatric center on the fifth floor of the tower, and a new 29-bed acute care facility on the sixth floor was completed in 2010. On October 1, 2014, the new Neonatal Intensive Care Unit opened on the second floor. The $8

Page 13

REAL ESTATE

MARKET TRENDS 42

million project included the renovation of the existing 7,300 Sq Ft NICU and the addition of 6,700 Sq Ft. It offers 28 patient rooms, as well as new staff and patient areas. In 2015, construction commenced on the final four stories. Two of the floors have been designated for acute care and two for intensive care. Construction was also completed in August 2016 on a 5-story garage on the corner of Swift Boulevard and Goethals Drive that provides parking for 595 vehicles. Completed in August 2013 is the Kadlec Neuroscience Center on Goethals Drive. Physician specialties include neurosurgery, neurology, orthopedic spine surgery, urology, psychiatry, pain management, cardiology and others. The 60,000 Sq Ft structure is designed to combine more services under one roof. This building significantly increased the amount of medical office space in the area. In addition, the 50,000 Sq Ft Healthplex opened on Lee Boulevard in April 2014. The building houses 20 outpatient services including occupational therapy, wound management, respiratory therapy, genetic testing and counseling and nutrition. Kadlec has moved tenants from the Corrado Medical office building and the Richland Medical Building located at the corner of Goethals and Swift into the new facilities. Both the Richland Medical Center and the Corrado Building were purchased by Kadlec Medical Center within the past five years. Also, a new entry into the Campus was constructed off of Jadwin Avenue extending to Gilmore and to the parking area of the 1100 Goethals Building. Kadlec also acquire 0.64 acres of the Goethals Drive right-of-way. The roadway was recently closed as part of its campus expansion plan. In July 2014, Trios Health, (formerly Kennewick General Hospital) opened its new hospital in Kennewick’s Southridge area. The new hospital is three stories high and contains approximately 168,000 Sq Ft. There are 74 private patient rooms plus 27 emergency and trauma service rooms and six operating rooms. Also, completed in 2016, is the 160,000 Sq Ft Trios Care Center adjacent to the hospital that houses outpatient, administrative, support services and physician offices. The former general hospital has been converted to a 37 bed Women and Children's Hospital and the former emergency room, an urgent care center. As mentioned earlier, Trios and Lourdes have been acquired by RCCH and future activities are still an unknown. In addition to pulling physicians toward the hospital, the hospitals have also moved into neighborhoods where private practitioners once provided community health care. All three TriCity hospitals are involved with competing for market share. Until about five years ago, each community’s hospital pretty much stayed within their defined geographical areas. Kadlec Regional Medical Center has evolved into a regional hospital, drawing patients from outlying areas as well as establishing a presence in each of the Tri-City communities. Additionally, KRMC serves Eastern Oregon, Walla Walla and the Lower Yakima Valley. Kadlec has been the most aggressive with this market capture by also traveling into what was once Trios (formerly Kennewick General Hospital’s territory) and into Pasco. Kadlec occupies a 2story medical building containing 17,817 Sq Ft on Sandifur Parkway in Pasco. Kadlec also completed a 20,000 Sq Ft medical building in West Richland in March 2009. An urgent care facility was completed in June of 2013 at 3290 W. 19th Avenue in Kennewick. The facility comprises 20,813 Sq Ft. In 2013, a second urgent care clinic was constructed on Clearwater Avenue. In early 2017 Kadlec Clinic West opened a 13,400 Sq Ft urgent care facility that is

Page 14

MARKET TRENDS 43

REAL ESTATE

located at the corner of Steptoe and Clearwater Avenue in Kennewick. Trios Health responded to territorial expansion by opening a clinic in south Richland, and also purchasing the former Kania Clinic on Kennewick Avenue. Our Lady of Lourdes Hospital, the smallest of the hospitals, continues to focus on Pasco and Franklin County. Lourdes Medical has served Franklin County since the original hospital was constructed on 4th Street in Pasco. The Road 68 neighborhood along with the northern portion of rural Franklin County has the population necessary to extend Lourdes physical facilities to the area, rather than expanding the proposed services to their downtown location. Our Lady of Lourdes Rehabilitation and Occupational medicine facility was the first medical office constructed about 10 years ago. A local developer constructed a 20,390 Sq Ft medical building in 2004 at 6825 Burden Boulevard. Lourdes also purchased the Kania Clinic on the corner of Road 68 and Wrigley and leased the first floor of the 2-story 32,000 Sq Ft medical building to the west of the clinic on Wrigley Avenue. Summary – Commercial and Industrial Market Trends Based on a review of current and historical data, my estimates for today’s general patterns for commercial space based on visual observation and a review of listing data can be summarized in the following table:

Type of Space / Neighborhood

Tri-Cities, WA Commercial and Industrial Space Summary AVERAGES as of Q4/2018 Typ. Lease Kennewick Pasco Type “A” “B” “C” “A” “B”

“C” “A” INDUSTRIAL Occupancy Levels NNN 95% 95% 95% 95% 95% 95% 95% Average Rental Rates NNN $9 $8 $7 $9 $8 $7 $9 PROFESSIONAL OFFICE Occupancy Levels Gross 95% 85% 75% 95% 85% 75% 95% Average Rental Rates Gross $18 $15 $12 $18 $15 $12 $18 MEDICAL OFFICE Occupancy Levels Gross 85% 80 75 85% 80 75 85% Average Rental Rates Gross $21 $18 $15 $21 $18 $15 $21 RETAIL Occupancy Levels NNN 95% 85% 80% 95% 85% 80% 95% Average Rental Rates NNN $20 $17 $15 $20 $17 $15 $20 Gross Lease = Tenant pays utilities and Janitorial in addition to contract rental NNN Lease = Tenant pays all operating expenses in addition to contract rental

Richland “B”

“C”

95% $8

95% $7

85% $15

75% $12

80 $18

75 $15

85% $17

80% $15

Page 15

MARKET TRENDS

REAL ESTATE

Market Trends – Multi-family Development Supply/Demand-Apartment Complexes The vast majority of the apartment units in the Tri-Cities were built in the 1970’s or in the early to mid-2000s. There was also a surge of multi-family construction between 2010-2018. In all, including projects containing more than 20 units, the current supply is estimated at about 14,000 to 15,000 rental units according to the Washington Center for Real Estate Research (WCRER) at Washington State University (WSU), now the Runstad Center for Real Estate Studies at the University of Washington (UW). The following table identifies the current supply of major apartment complexes in the Tri-Cities, containing 30+ units.

City Kennewick Richland Pasco Totals

# of Units 3,904 1,953 1,690 7,547

Gross SF 2,825,494 3,104,375 1,403,629 7,333,498

% of Units 51.73% 25.88% 22.39% 100.00%

% of SF 38.53% 42.33% 19.14% 100.00%

Within the city of Kennewick, there are 3,904 reported apartment units, comprising 52% of the total inventory. Richland has 26% of the supply of multi-family units; however, the average size of the units exceeds the remaining cities. Pasco contains about 22% of the overall supply and only 19% of the total square feet. Recent multi-family projects since 2013 are summarized in a table accompanying this section. Since 2013, there have been over 2,300 new units in 20 new complexes added to the Tri-City housing market, with another 488 units currently under construction and 565 units announced/proposed. If all were completed, that would bring the total number of new units since 2013 to over 3,300. Additionally, another 100 units of affordable housing have been added during that timeframe. WCRER provides apartment market statistics for communities throughout the state of Washington which were formerly done by Crown Property Management. The WCRER has become the largest apartment market researcher focusing on markets outside the 5‑county Seattle area in Washington. It publishes data semi-annually. Unlike the Crown Property Management’s data related to earlier years, the statistics do not address the three cities, but lumps the data into the two county market areas. It was not until 2014 that data regarding the number of units surveyed and the number of units responding were reported; thus there was a gap in time between the two studies. Beginning with the most recent survey, data was separated into Benton and Franklin Counties. The vacancy survey for Benton and Franklin Counties is presented in the following chart. The Fall, 2018 survey results were not published at press time.

Page 16

ÂŽ

MARKET TRENDS 45

REAL ESTATE

Vacancy Rates â€“ Benton-Franklin County Apartments Average # Units Response Vacancy Rental Rate Surveyed Rate (%) Fall, 2018 Spring, 2018 Fall, 2017 Spring, 2017 September, 2016 March 2016 September 2015

1.1% 3.7%(B) 1.3% (F) 2.2% 2.2% 2.1% (B) 0.8% (F) 2.6% (B) 1.9% (F)

Not Yet Published 1,263 9,935(B) 1,536 (F) 7,084 $861

$834 $844(B) $820 (F)

$861 $775 (B) $744 (F) $824 (B) $680 (F)

March 2015

1.00%

$785

September 2014

2.80%

$740.00

71.0%(B) 50.6%

7,311

52.3%

13,987

43.6%

13,987

43.5%

13987

44.2%

13,987

41.3%

13,987 33.0% March 2014 4.00% $778.00 Source: WCRER = NOTE: Beginning with the September, 2015 survey, Benton and Franklin Counties were sometimes broken out separately rather than combined as in the past

It was not until 2010 that the apartment market experienced the necessary rental increases and subsequent net operating income to warrant constructing new units. The average rent per unit was insufficient to cover construction costs new. With operating income stable at best, property owners trimmed operating costs where they could, primarily in maintenance and more expensive capital improvements of replacing roofs, kitchens, parking lots, pool maintenance, etc. The vacancy rate spiked and the average rental rate declined in 2011 as new units entered the market. Vacancy has gradually improved from that point forward, with average rental rates showing an increase in the most recent survey.

Page 17

Â®

MARKET TRENDS 46

REAL ESTATE

Summary of New Multi-Family Construction Tri-Cities (Benton & Franklin County), WA For the Period 2013 through October 2018 Unit Activity Thru 10/01/18

Project Name

Location

City

Year Completed

Market Rate Projects Copper Ridge Navigator Villas Island View Canyon Crest Regency Park River Trails Quail Springs

Southridge Blvd. 6212 Road 68 Columbia Park Trail 785 Canyon St Truman & Queensgate 2514 Duportail 4720 Dallas Road

Kennewick Pasco Richland Richland Richland Richland W Richland

2013 2013 2013 2013 2013 2013 2013

232 176 144 30 114 180 118 994

232 408 552 582 696 876 994

The Gramercy Kamiakin Bella Vista The Lofts @ Innovation Badger Mtn Ranch

2112 S Rainier St 4711 W Metaline Steptoe St Smart Park 451 Westcliffe Blvd.

Kennewick Kennewick Richland Richland Richland

2014 2014 2014 2014 2014

12 8 106 160 176 462

1,006 1,014 1,120 1,280 1,456

Badger Canyon Ph I Hidden Meadows I West Richland Apts

Ridgeline & Clodfelter 5809 W Clearwater 3913 Fallon Dr

Kennewick Kennewick W Richland

2015 2015 2015

88 12 14 114

1,544 1,556 1,570

Hidden Meadows II Badger Canyon Ph II Evergreen Park I

5809 W Clearwater Ridgeline & Clodfelter 2021 W 19th Ave

Kennewick Kennewick Kennewick

2016 2016 2016

15 312 16 343

1,585 1,897 1,913

575 Columbia Pointe Apts Lofts at Innovation Ctr Ph II Evergreen Park II

575 Columbia Pointe Dr Smart Park 2021 W 19th Ave

Richland Richland Kennewick

2017 2017 2017

94 147 15 256

2,007 2,154 2,169

Richland

2018

2,308

U/C 2018 U/C 2018 U/C 2018 U/C 2018 U/C 2018 Submitted Proposed Conversion from Ofc to MF Richland Announced Kennewick Announced

58 150 24 16 240 106 276

2,227 2,458 2,482 2,498 2,738 2,844 3,120

150

3,270

3,303

Pasco Kennewick Kennewick

38 32 28

38 70 98

Merlot @ Brelsford Vineyards

WSU @ TC Campus (215/227 University) Battelle / Richardson Rd 2894 Salk Ave 3887 W 7th Ave

Willow Point Apts Commons @ Innovation Ctr 7th Ave Apartments Irving Square Badger Canyon Ph III Park Place Copper Mountain

5701-5735 & 5700-5736 W Albany

Former Fluor Buildings

1100 & 1200 Jadwin

20 N Auburn St Apts/Retail

20 N Auburn St

Housing Authority Projects Pasco Housing Authority Nueva Vista I Nueva Vista II

4th & Pearl Clearwater & Volland Clearwater & Volland

Ridgeline & Clodfelter 650 GW Way 2555 Bella Coola Ln

Richland Richland Kennewick Kennewick Kennewick Richland Richland

Cum Total

Page 18

REAL ESTATE

MARKET TRENDS 47

New Construction Four new projects completed in 2017-18 are in the lease-up phase. Ground was broken in November, 2017 ago for Nueva Vista II, adding 28 units of subsidized housing and all are preleased. Three new projects are under construction for completion in 2018 adding about 488 units. We are also aware that another 28-unit project is planned which could get started later this year or early 2019; plans are being finalized. Additionally, a 16-unit duplex project has been submitted for approval, with the first four buildings under construction as of August 2018. Several new projects are making their way through the preliminary approval process. · Two large vacant office buildings (Tri-City Professional Center I and II) in the City of Richland are slated to be converted to apartments, possibly as many as 150 units. · A 276-unit project known as Copper Mountain has been announced, and some units will be set aside for low to moderate income residents. · Park Place has submitted a plan for 106 units for approval at 650 George Washington Way. · A mixed use mid-rise project to contain 33 luxury rental units has been announced in downtown Kennewick, · The next phase of WSU’s student housing apartments is in process. · A developer is reportedly under contract for some land in the downtown Kennewick area, and plans to build about 150 units. Absorption of New Units Absorption data from the last two years is sparse, as most projects were developed earlier than that. I did research seven newer projects and noted the following trends: · · ·

575 Columbia Pointe Apartments in Richland completed 94 units in 2017 and all units were rented by the end of 2017 reflecting an average absorption of 8-10 units per month. Phase I of the Lofts at Innovation Center were well received, leasing quickly. It was just reported that Phase II has reached stabilized occupancy and permanent financing secured. Hidden Meadows Apartments at 5809 W. Clearwater Avenue in Kennewick contained 12 units in Phase I. All units were leased between November 2015 and April 2016, traditionally a slow time in the market for rental units. This reflects an absorption rate of 3-4 units per month. Fallon Drive Apartments at 3913 Fallon Drive in West Richland contained 14 units. All units were occupied by the end of November 2015, or within 30 days of completion, reflecting an absorption rate of 14 units per month. Denali Townhomes at 3426 W. 7th Avenue had 12 completed units just coming on the market however, leasing was paused until Charter can install cable, phone and internet lines. Nonetheless, three units were leased up without those amenities. Sixty days later, the project began leasing in earnest and reports it is nearly full. Vancouver Street Apartments at 2021 19th Avenue in Kennewick began leasing units the 2nd week of June and the leasing agent reports strong demand; it is expected to be full before the start of the 3rd quarter.

Page 19

REAL ESTATE

MARKET TRENDS 48

From the foregoing discussion, it is clear that demand for rental units in the market is strong, that occupancy levels are high, rents are rising, and absorption rates are strong. This trend is expected to continue for the foreseeable future. During 2016-18, our firm appraised approximately one dozen apartment projects, located in a variety of locations throughout the Tri-Cities. Occupancy levels at all projects appraised were strong, oftentimes turning vacant units in less than one week. As a result of the strength of the housing market, many owners of single-family homes are renting those homes out rather than selling them. It is unknown how long this trend will continue The Tri-Cities Herald reported in its October 14, 2018 issue on the apartment market that “while the Tri-Cities added 6,500 new residents in 2017, it only added about 2,000 new homes and apartments. With demand outpacing supply, prices for both homes and apartments are rising.”. Market Trends – Single Family Development The Tri-Cities is experiencing the highest demand and the lowest inventory of housing in the last decade; inventory is about 56% lower than the inventory at the same time in 2013, which is putting steady upward pressure on prices. In this market, new listings that are well priced and in good condition are selling in less than one week, sometimes in one day, oftentimes with multiple offers. The median sold price in May 2013 of $189.5 had increased to nearly $230.0 between May and June of 2016, an increase of 18.7% in 3 years, or an average of 6% per year for the last three years. For the first time, several homes have sold above the $700,000 threshold. The most recent report (December 2018 data published January 11, 2018) reflects an inventory of 586 units and an average sale price of $294.9 with the median at $278.9, up 5.8% and 5.8% respectively over the last rolling 12 months. Developers are having difficulty finding parcels to purchase at affordable prices which can then be appropriately re-zoned, and many are resorting to smaller infill parcels. This trend is expected to continue for the foreseeable future.

Page 20

Â®

REAL ESTATE

MARKET TRENDS

Page 21

DENNIS GISI 50

REAL ESTATE

Real Estate Experience

Land Management

Dennis Gisi has been Owner- Broker, Chairman and CEO since 2010 of D. Gisi & Assoc. LLC, dba John L Scott Tri Cities Pasco, a real estate brokerage firm specializing in the sale and leasing of residential and commercial property. He is also a Co-Owner Broker of the John L. Scott Real Estate offices in Walla Walla, WA and Milton-Freewater and Hermiston Oregon.

Responsible for managing 48,000 acres of land in Washington, Oregon, Idaho USA and Alberta, Canada Land Consisted of: Dryland Farming Irrigated Framing Orchards Timber Grazing Wetlands Oil Leases Owner of Single and Multi-Family Residences Pullman, College Place, and Walla Walla, WA

Specific (private) Real Estate Investments, projects; Residential Development Pasco WA Desert Plateau = 56 lots Wilson Meadows =118 lots Desert Sunset = 100 lots West Vineyard Estates = 25 lots Fox Hollow = 29 lots Eagle Crest Neighborhood = 65 lots West Richland WA Kingview V – 32 lots. For a total of 425 lots

Private- Commercial Development Construction and Leaseback West Pasco Library, Pasco WA Wayne Dalton Building Distribution Center - Vista Field Kennewick WA Office Warehouse - Vista Field, Kennewick WA Women's Clinic, Walla Walla General Hospital Walla Walla, WA Bank Building for Bank Reale, Pasco WA Environmental Cleanup and Historical Design 51 E Main, Walla Walla WA

Banking Experience Founder, Director – Bank Reale, Pasco WA Retired Chairman, CEO -Bank Reale, Pasco WA Past Director of Strategic Planning – Baker Boyer Bank, Walla Walla WA Past VP – Trust and Investment Officer, Baker Boyer Bank, Walla Walla, WA Past Certified Financial Planner and Client Investment Manager- American Express, Walla Walla WA

Community Service Appointee to the Washington State Assoc. of Realtors – Legislative and Finance Committees Finance Council of St. Patrick’s Catholic Church in Walla Walla, WA, Former -Treasurer of the Washington State Foundation for Early Learning (FEL), Board Member to Thrive by 5 Governor's Appointee to Financial Education Public Private Partnership, (FEPPP). Past President-Board Member – Pasco Chamber of Commerce.

Residential Construction R & D Homes, Inc. Tri Cities, WA Gisi Construction (Residential Bldr.) Walla Walla, WA

509-520-0505 Dgisi@johnlscott.com