LOUISVILLEMULTIFAMILY MARKET OVERVIEW20

20 AN

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CBD

2020 MARKET OVERVIEW

• PRIME, CENTRALIZED LOCATION—within a one-day drive of two-thirds of the nation’s population

• STRONG CORPORATE BASE—numerous Fortune 500, Fortune 1000, regional, national and international corporations have headquarters or a large presence in the metro area

• GLOBAL LEADER IN AIR CARGO TRAFFIC— Louisville ranked #7 in the world by Airports Council International

• NATIONALLY RECOGNIZED BUSINESS SCHOOL—University of Louisville’s School of Business nationally recognized as one of the best business schools by U.S. News & World Report

• RICH CULTURE AND QUALITY OF LIFE—the city draws attention for being vibrant and sophisticated as well as culturally rich and hospitable. Louisville was recognized by Forbes Magazine as a cultural hub for the country in 2019

• ECONOMIC DRIVERS—Louisville’s thriving economy is driven by five major sectors: Healthcare, Business Services, Logistics & E-Commerce, Manufacturing and Tourism

• GROWTH & DEVELOPMENT—Louisville is in the midst of an economic renaissance with $14B in new capital investment since 2011

2019 Population 1,297,310

2035 Population (Projected) 1,500,000

Household Growth Projection (2010-2040) 26%

Employment (December 2019) 674,800

Unemployment Rate (November 2018) 3.3%

New & Retained Jobs (2012-2020) 76,000

Fortune 500 Headquarter Companies 3

Source: U.S. Census; Bureau of Labor Statistics,University of Louisville, Kentucky State Data Center

Louisville has emerged as a “young Nashville” and represents the northern edge of the Southeast. It has developed an expanding base of increasingly diverse capital that recognizes this mid-sized city as a growth pocket in the center

of the U.S. and a diverse, riverfront city. In recent years Louisville has been recognized as a place of “Free-wheeling Innovation and Growth” (TIME Magazine), a “Top Metro” (Site Selection Magazine), in the “Top 10 Places for New Business”

(Smart Asset) and “fifth most business-friendly large American cities of the future” (fDi Intelligence), all of which are helping to attract new jobs and unprecedented investor attention. The metro is a nationally-recognized regional distribution and warehousing hub

serving major operations including Amazon, UPS, Ford Motor Company and General Electric. The city has recently launched the Greater Louisville 2020 Transformational Initiative, an aggressive and comprehensive growth and capacity-building initiative centered around recruitment,

retention and advocating Louisville’s already favorable business environment.

LOUISVILLE: THE STAR OF THE SOUTHEAST

TOP REASONS TO INVEST IN LOUISVILLE LOUISVILLE MSA “AT A GLANCE”

NATIONAL GEOGRAPHIC

NAMED LOUISVILLE “BEST SMALL CITIES

IN THE U.S.”

3

COMPANY NAME # EMPLOYEES

UPS 21,233

JEFFERSON COUNTY PUBLIC SCHOOLS 14,476

FORD MOTOR COMPANY 12,600

NORTON HEALTHCARE 12,247

HUMANA, INC. 12,000

UNIVERSITY OF LOUISVILLE 6,933

AMAZON.COM 6,500

LOUISVILLE METRO GOVERNMENT 6,226

BAPTIST HEALTHCARE SYSTEMS 6,159

GE APPLIANCES 6,000

U of L HEALTH 6,000

KROGER 3,079

SPECTRUM 2,400

MANNA, INC. 2,300

COMPANY NAME # EMPLOYEES

Humana | Fortune 100 12,000

GE Appliances 6,000

U of L Health 6,000

Manna, Inc. 2,300

ResCare Inc. 1,948

Papa Johns 1,626

Kindred Healthcare | Fortune 500 1,571

Churchill Downs 1,515

Samtec Inc. 1,500

Texas Roadhouse 1,500

Rawlings Group 1,440

Brown-Forman Corp 1,300

Signature HealthCARE 900

Yum! Brands Inc. | Fortune 100 800

Source: Business First, December 2018

CBRE NAMED LOUISVILLE AN

‘UP-AND-COMING TECH TALENT MARKET’

A HAVEN FOR NOTABLE EMPLOYERS

LOUISVILLE’S MAJOR CORPORATE HQLOUISVILLE MSA TOP EMPLOYERS

2020 MARKET OVERVIEW

Jobs Created Since 2011 Average Home Value College-Educated, Working-Aged Adults

$211,679 45.5%

Hou

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Popu

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EMPLOYMENT GROWTH* HOUSEHOLD GROWTH

POPULATION GROWTH*MEDIAN HOUSEHOLD INCOME*

80,000

Sources: U.S. Census Bureau, American Community Surveys

Empl

oyee

s

LOUISVILLE MSA ECONOMIC STATISTICSLOUISVILLE RANKED AS ONE OF 7 BEST CITIES FOR FIRST-TIME HOMEBUYERS—

LIVABILITY

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

570,000

580,000

590,000

600,000

610,000

620,000

630,000

640,000

650,000

2011 2012 2013 2014 2015 2016 2017 2018

Employment Growth

Employed Unemployment Rate485,000

490,000

495,000

500,000

505,000

510,000

515,000

2011 2012 2013 2014 2015 2016 2017 2018

Household Growth

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

2011 2012 2013 2014 2015 2016 2017 2018

Median Household Income

1,240,000

1,250,000

1,260,000

1,270,000

1,280,000

1,290,000

1,300,000

1,310,000

2011 2012 2013 2014 2015 2016 2017 2018

Total Population

Med

ian

Hou

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com

e

5

TOTAL MARKET RENT AND OCCUPANCY

A-GRADE CAP RATES

HOUSEHOLD GROWTH

POPULATION GROWTH*

Cap

Rate

LOUISVILLE MSA MULTIFAMILY STATISTICSA

vera

ge R

ent R

ate

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

2011 2012 2013 2014 2015 2016 2017 2018 2019

A-Grade Cap Rates

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 201992.5%

93.0%

93.5%

94.0%

94.5%

95.0%

95.5%

96.0%

96.5%

TOTAL MARKET RENT AND OCCUPANCY

Average Rent Occupancy Rate

7

NAME STATUS PRICE

Old Brownsboro Crossings MOB Under Construction $20M

Paristown Point Arts District Proposed $28M

Louisville FC Stadium Under Construction $65M

Kindred Healthcare HQ Expansion Complete $39.5M

Parklands of Floyds Fork Complete $120M

UPS Worldport Centennial Hub  Complete $300M

Nucleus Building I Complete $425M

The Novak Center for Children’s Health Complete $475M

Convention Center Expansion Complete $720M

Omni Multi-Use Development Complete $754M

KFC Yum! Center Complete $1.38B

Ohio River Bridges Project Complete $2.6B

Louisville, the state’s largest metropolitan area, is a vibrant riverfront city with a growing population, diversification of employment and an attractive multifamily supply/demand balance. Louisville is home to ten Fortune 500 companies, three of which are headquartered in the city. The metro is a nationally recognized regional distribution and warehousing hub, serving major operations including Amazon, UPS, Ford Motor Company and General Electric. With a highly successful series of major distribution facilities now open, and future capital investments in distribution parks planned, Louisville continues to be the focus of institutional investment.

Leading this remarkable transformation from a city known mostly for horse racing to a logistics giant, is the development and expansion of UPS Worldport, the corporation’s main global air hub for its distribution business across the US. A series of substantial improvements has steadily boosted UPS employment in the Louisville metro. In 2019 the company announced plans to add an additional 1,000 high-paying jobs at the facility. The additional logistics jobs created over the past five years have had a multiplier effect in several areas, including retail and office support positions.

With twenty-plus employers in the healthcare sector, Louisville is at the forefront of the nation’s healthcare trends and is home to the largest cluster of aging care businesses in the country. Nationally recognized Fortune 500 companies Humana and Kindred Healthcare are headquartered in Louisville, and hire a steady stream of IT and healthcare professionals in high-paying positions. Yum! Brands (Fortune 500), one of the world’s largest restaurant holding companies, is also headquartered in Louisville. These employers’ presence in Greater Louisville bring stable demand for apartment housing, and is an immeasurable economic driver for the success of the multifamily market. Building upon the city’s healthcare, research and life sciences industries, the University of Louisville Foundation initiated a project to foster economic development and innovation for Louisville’s downtown community, called Nucleus Innovation Park, a nine-acre urban life science research park located along the eastern edge of downtown Louisville.

Louisville is in the midst of an economic renaissance with $14B in new capital investment since 2011. Louisville Forward, the city’s organization for economic development, focuses on making Louisville a premier destination through business attraction, retention and expansion.

COMPUTERSHARE—a global financial services firm with more than 600 employees in the CBD. The company has plans to hire an additional 500 in coming years.

HUMANA—approximately 12,000 employees in Louisville with the vast majority located in the CBD.

KINDRED HEALTH—a Fortune 500 company with over 1,500 employees headquarted in Louisville.

LOUISVILLE INTERNATIONAL AIRPORT -— is home to the largest fully automated package handling facility in the world, turning over an average of 130 aircrafts and processing an average of 16M packages a day.

THE UNIVERSITY OF LOUISVILLE—Nearly 23,000 students and 7,000+ employees.

BROWN FORMAN— headquartered in Louisville with 1,300 employees

INVESTMENTS DRIVE DEVELOPMENT

THE CBD IS ANCHORED BY

MAJOR DEVELOPMENTS (PARTIAL LIST)

Multifamily demand in Louisville is at an all-time high, driving new housing and mixed-use developments that are attracting highly educated, highly compensated residents and adding to the MSA’s growth and vibrancy.

Strong demand in the CBD, fueled largely by “suburban to urban“ preferences, continues to drive low vacancy rates and all-time high rental rates (see Residences at the Omni to right). Properties delivered to the market in the last 12 months have achieved an average asking rate of $1,414 per unit, $1.48 PSF, which is 60% above average rents at existing properties. Today’s levels of new multifamily supply are challenged to satisfy the growing demand to live in the Louisville MSA.

Louisville, with a growing metro population of over 1.3M, has emerged as a shining star in the northern edge of the Southeast. A dazzling array of national accolades crown this city on the move. The city has become widely recognized for its diverse business and corporate base, highly educated workforce, world-class sports, cultural attractions, shopping and premier dining and entertainment options.

2020 MARKET OVERVIEW

THE MSA BAR CONTINUES TO RISE

THE RESIDENCES AT OMNI, a 30-story, mixed-use, 226-unit, residential building, towers over the city of Louisville. A first-of-its-kind in the CBD, The Residences at Omni has raised the bar on luxury and convenience shattering Louisville metro’s prior rent ceiling. Units feature floor-to-ceiling glass with panoramic city views, LVT flooring, stainless steel appliances and granite countertops. Residents enjoy a 24-hour state-of-the-art fitness center, resort-style pool, pet spa, controlled access parking garage and direct access to an on-site market and plaza level retail.

Annual Effective Rent Growth

Average Occupancy

96% 3.21%Average

Square Feet

944Average

Rent

$901Average Rent PSF

$0.92

NEW CBD DEVELOPMENTS ARE RAISING THE BAR

RANKED BY LIVABILITY 28TH ON ‘TOP 100

BEST PLACES TO LIVE’

9

SELECT INSTITUTIONAL EQUITY SOURCES

ACRE Real Estate

Almanac/Mount Auburn

American Campus Communities

Argosy

Blackstone

Continental Realty Advisors

Eagle Realty

Goldman

Harrison Street

Independence Realty Trust

Inland

MAA REIT

PAC

Pride Rock

Public REIT

Sentinel

The John Buck Company

Varia US Properties

TOP 40 U.S. MARKETS TO WATCH FOR REAL

ESTATE PROJECTS IN 2019

NEW CBD DEVELOPMENTS ARE RAISING THE BAR

2020 MARKET OVERVIEW

WORLD-CLASS EVENTS DRIVE VISITORS & SPENDING:

• KENTUCKY DERBY• KENTUCKY OAKS• PGA CHAMPIONSHIP - 2024• LOUISVILLE FC• CHAMPIONSHIP BOXING• FORECASTLE FESTIVAL• IRONMAN TRIATHLON• MID-AMERICA TRUCKING SHOW• NCAA CHAMPIONSHIPS• NSRA STREET ROD NATIONALS• RED BULL FLUGTAG• RED BULL GLOBAL RALLYCROSS• ST. JAMES COURT ART SHOW• THUNDER OVER LOUISVILLE• VEX ROBOTICS WORLD CHAMPIONSHIP

WORLD-CLASS SPORTING AND EVENTS

Sports is a catalyst for development and positive change throughout the region. Louisville has a rich history of hosting professional and amateur sporting events, most notably the Kentucky Derby, often referred to as “the most exciting two minutes in sports”.

LOUISVILLE FC SOCCER STADIUM

Set to open in April of 2020, Lou City’s $65M, 11,700-seat world-class stadium is nearing completion in Louisville’s 35-acre Butchertown Development District.

LOUISVILLE PARKS:12,000 ACRES

120 PARKS70 MILES

OF HIKING TRAILS60 MILES

OF PAVED PATHS

TRIPADVISOR RANKED LOUISVILLE ‘TOP CITIES

TO VISIT IN 2019’

#1 City for Manufacturing

Job GrowthForbes, 2017

10th Best City for Jobs in 2017

Glassdoor

Top 10 Places for New Businesses

SmartAsset, 2019

#1 Best Food City in the World

National Geographic, 2017

Top City for New College Grads

SmartAsset, 2018

Top City for Women in TechnologySmartAsset, 2018

#1 Best Destination Experience World Food

Travel Association, 2017

Top Economic Development Group

Site Selection Magazine

2015-2019

“Where Millennials Are Moving.”SmartAsset, 2018

“Top 15 City for Affordable Living”

Forbes, 2018

11

CULTURE DRIVES TOURISM

©2020 CBRE, Inc. This information has been obtained from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market.

CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks and photos displayed on this document are the property of their respective owners.

Sources: Business Insider, CBRE, Inc., Chief Executive, Downtown Indy, Inc., Environmental Systems Research Institute (ESRI), Fast Reports, Food & Wine, Forbes, Indianapolis Business Journal (IBJ), Indy Chamber of Commerce, Kiplinger, Money Magazine, Niche.com, Nielsen, Patch.com, Software.org, Time Magazine, Travel & Leisure, U.S. Bureau of Labor Statistics, U.S. Census Bureau, U.S. News & World Report.

ALEX POSSICKAssociate+1 317 269 1141alex.possick@cbre.com

BRYAN FLAHERTYSenior Associate+1 502 412 7649bryan.flaherty@cbre.com

STEVE LAMOTTE JR.Executive Vice President+1 317 269 1018steve.lamotte@cbre.com

DANE WILSONSenior Vice President+1 317 269 1057dane.wilson@cbre.com