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Mr. Jim Waters <br />Quest Development, Inc. July 24 2013 <br />North Central Suburban Market Conditions <br />The North Central Suburban submarket has a total inventory of about 13,000 market rate <br />apartment units. The graph below summarizes rental rate growth and vacancy for the submarket <br />over the past five years. Through 2013 Q1, the submarket demonstrated 2.5% market rent <br />growth over a trailing 12 -month period, from $850 to $871. We note that the overall average <br />rent is held down significantly due to the age of the housing stock in this submarket, which has <br />seen relatively few new apartment developments in recent years. Our forthcoming analysis <br />includes a more detailed review of newer Class A apartments, both within and near the <br />submarket. North Central Suburban vacancy declined dramatically coming out of the recession <br />in 2009/2010 and has remained very low since that time with a modest number of new units <br />added during this time, with those units coming online being quickly absorbed. Our 2013 Q1 <br />survey showed a submarket vacancy rate of just 2.3 %. <br />$1,000 <br />North Central Suburban Submarket <br />1 st Qtr 2008 -2013 <br />$832 5838 $824 $829 5850 $811 <br />10.0% <br />$800 <br />8.0% <br />$600 <br />� � <br />6.0% <br />00 <br />$2 0o- <br />� <br />2.0 % <br />so <br />0.0% <br />2008 2009 2010 2011 2012 2013 <br />Avg Rent Avg. Vacancy <br />REVIEW OF CLASS "A" APARTMENT COMPARABLES <br />We have reviewed a number of Class "A" apartments within and proximate to the subject St. <br />Anthony market area. We note that the market area has very few modern, Class A apartment <br />communities. Therefore, we have reviewed a group of north metro apartment properties both <br />within and near the submarket, including the following properties: <br />• The Landings at Silver Lake Village (209 mkt rate apts + 54 LIHTC units) — St. Anthony <br />• The View at Long Lake (122 apartments) — New Brighton <br />• Autumn Woods (201 units) — St. Anthony <br />• The Lexington Apartments (150 units) -- Roseville <br />• Parkshore Apartments (37 units) — Arden Hills <br />The table on the following page summarizes current vacancy and market rents by unit type for <br />this sub -group of Class "A" apartment comparables. A map is also provided which shows the <br />location of the comparables in relationship to the proposed development site in St. Anthony. <br />marquene Aovlsors Page 17 <br />