14-271ph-1231 - Market Study of Site Next To Green Valley Hospital-2

CONSULTATION REPORT
MARKET STUDY FOR A PROPOSED MIXED-USE

DEVELOPMENT TO BE LOCATED ADJACENT TO THE GREEN
VALLEY HOSPITAL
4455 South Interstate 19 Frontage Road
Green Valley, Pima County, Arizona 85614
CBRE, Inc. File No. 14-271PH-1231
Mr. Salim Dahdah

Ms. Carol Ackerman
GV COMMERCIAL 28 LLC
9237 East Via Ventura, Suite 110
Scottsdale, Arizona 85258
© 2014 CBRE, Inc.

VALUATION & ADVISORY SERVICES
3719 North Campbell Avenue

Tucson, AZ 85719
T (520) 323-5163
F (520) 323-5156
www.cbre.com
December 15, 2014
Mr. Salim Dahdah

Ms. Carol Ackerman
GV Commercial 28 LLC
9237 East Via Ventura, Suite 110
Scottsdale, Arizona 85258
RE: Market Study for a Proposed Mixed-Use Development to be Located Adjacent to the Green
Valley Hospital
4455 South Interstate 19 Frontage Road
Green Valley, Pima County, Arizona
CBRE, Inc. File No 14-271PH-1231
Dear Mr. Dahdah and Ms. Ackerman:
At your request and authorization, CBRE, Inc. has prepared a market study for a proposed mixed-use
development to be located adjacent to the Green Valley Hospital in Green Valley, Arizona. The study
will focus on the demand potential for a proposed development at the subject site and concludes the
most probable use of the site. The proposed subject development is conceptually planned for mixed-
uses that would complement the adjacent Green Valley Hospital, which is the anchor for the subject
site. The Green Valley Hospital contains approximately 146,000-square feet of new hospital
improvements, along with approximately 40,000-square feet of new medical office related to the
hospital. Both the hospital and medical offices are currently under construction. The hospital is
planned to be open by Spring 2015.
At the request of the client, the scope of work for this study would be a Level C market analysis as
delineated by the Appraisal Institute.
A Level C market study is outlined as follows:

Step 1: Analyze Subject Property’s Productivity
Step 2: Market Delineation
Step 3: Forecast Demand
Step 4: Measure Competitive Supply
Step 5: Analyze Market Equilibrium/Disequilibrium
Step 6: Forecast Subject Capture

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December 15, 2014
Page 2
The resulting forecast subject capture is utilized in determining the size and mix of land uses most
probable for the proposed development. The major land use categories that are included within the
study are retail, office, multi-family, and hospitality. Our conclusions for the subject site are as follows:
SUMMARY OF PROJECTED USES - SUBJECT

Estimated Projection of Land Use for the
Land Use Subject (SF)
Retail 64,000
Office 14,000
Multi-family 75 units
Hospitality Not probable
Compiled by CBRE
The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and
inseparable from, this letter.
The intended use and user of our report are specifically identified in our report as agreed upon in our
contract for services and/or reliance language found in the report. No other use or user of the report
is permitted by any other party for any other purpose. Dissemination of this report by any party to non-
client, non-intended users does not extend reliance to any other party and CBRE will not be
responsible for unauthorized use of the report, its conclusions or contents used partially or in its
entirety.
It has been a pleasure to assist you in this assignment. If you have any questions concerning the
analysis, or if CBRE, Inc. can be of further service, please contact us.
Respectfully submitted,
CBRE, Inc. - VALUATION & ADVISORY SERVICES
Byron Bridges Gavin J. McPhie, MAI

Senior Appraiser Managing Director
Arizona Certified General Real Estate Appraiser Arizona Certified General Real Estate Appraiser
No. 31173 No. 31366
Phone: 520.323.5163 Phone: 602.735.5261
Fax: 520.323.5156 Fax: 602.735.5613
Email: byron.bridges@cbre.com Email: gavin.mcphie@cbre.com
© 2014 CBRE, Inc.

C ERTIFICATION
CERTIFICATION
We certify to the best of our knowledge and belief:

1. The statements of fact contained in this report are true and correct.
2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions
and are our personal, impartial and unbiased professional analyses, opinions, and conclusions.
3. We have no present or prospective interest in or bias with respect to the property that is the subject of this report and
have no personal interest in or bias with respect to the parties involved with this assignment.
4. Our engagement in this assignment was not contingent upon developing or reporting predetermined results.
5. Our compensation for completing this assignment is not contingent upon the development or reporting in a direction
that favors the cause of the client.
6. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity
with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the
Appraisal Institute.
7. As of the date of this report, Gavin J. McPhie, MAI, MRICS has completed the continuing education program of the
Appraisal Institute.
8. As of the date of this report, Byron Bridges has completed the Standards and Ethics Education Requirement of the
Appraisal Institute for Associate Members.
9. Byron Bridges has and Gavin J. McPhie, MAI, MRICS have not made a personal inspection of the area that is the
subject of this report.
10. The appraisers are knowledgeable of the theories and techniques applicable and are competent to complete this
assignment.
11. No one provided significant real property appraisal assistance to the persons signing this report.
12. Valuation & Advisory Services operates as an independent economic entity within CBRE, Inc. Although employees of
other CBRE, Inc. divisions may be contacted as a part of our routine market research investigations, absolute client
confidentiality and privacy were maintained at all times with regard to this assignment without conflict of interest.
13. Byron Bridges and Gavin J. McPhie, MAI, MRICS have provided valuation services, as an appraiser, regarding
properties within the area being studied in this report within the three-year period immediately preceding acceptance of
this assignment.
Byron Bridges Gavin J. McPhie, MAI, MRICS

Senior Appraiser Managing Director
Arizona Certified General Real Estate Appraiser No. 31173 Arizona Certified General Real Estate Appraiser No. 31366
© 2014 CBRE, Inc.

T ABLE OF C ONTENTS
TABLE OF CONTENTS
CERTIFICATION ........................................................................................................................ iii

TABLE OF CONTENTS ............................................................................................................... iv
INTRODUCTION ...................................................................................................................... 1
AREA ANALYSIS ......................................................................................................................... 3
MARKET ANALYSIS .................................................................................................................. 10
ASSUMPTIONS AND LIMITING CONDITIONS .......................................................................... 90
ADDENDA
A Qualifications
© 2014 CBRE, Inc.

I NTRODUCTION
INTRODUCTION
PROPERTY IDENTIFICATION
The study will focus on the demand potential for a proposed development at the subject site and
concludes the most probable use of the site. The proposed subject development is conceptually
planned for mixed-uses that would complement the adjacent Green Valley Hospital, which is the
anchor for the subject site. The Green Valley Hospital contains approximately 146,000-square feet of
new hospital improvements, along with approximately 40,000-square feet of new medical office
related to the hospital. Both the hospital and medical offices are currently under construction. The
hospital is planned to be open by Spring 2015.
At the request of the client, the scope of work for this study would be a Level C market analysis as
delineated by the Appraisal Institute.
A Level C market study is outlined as follows:


The resulting forecast subject capture is utilized in determining the size and mix of land uses most
probable for the proposed development.
EFFECTIVE DATE OF THE REPORT
The effective date of this report is November 13, 2014, the date of our most recent inspection of the
subject site and surrounding market area. The transmittal date of the report is December 15, 2014.
INTENDED USE OF REPORT
This appraisal is to be used for internal decision purposes, and no other use is permitted.
INTENDED USER OF REPORT
This consultation report is to be used by GV Commercial 28, LLC. Reliance on any reports produced
by CBRE under this Agreement is extended solely to the Client of this report and to any other Intended
Users identified in this Agreement who have signed an agreement to limit CBRE’s liability in the form
acceptable to CBRE. Other parties or entities who obtain a copy of the report may not rely upon any
opinions or conclusions contained in the report unless such party or entity has expressly been
identified by CBRE as an Intended User and has executed an agreement to limit CBRE’s liability in the
form acceptable to CBRE.
© 2014 CBRE, Inc.

I NTRODUCTION
SCOPE OF WORK
The scope of the assignment relates to the extent and manner in which research is conducted, data is
gathered and analysis is applied. CBRE, Inc. completed the following steps for this assignment:
Extent to Which the Property is Identified
The property is identified through the following sources:
 assessor’s records
Extent to Which the Property is Inspected
CBRE, Inc. inspected the subject site, as well as its surrounding environs on the effective date of the
report.
Type and Extent of the Data Researched
CBRE reviewed the following:
 zoning requirements
 flood zone status
 demographics
© 2014 CBRE, Inc.

A REA A NALYSIS
AREA ANALYSIS
SUBJECT
The subject property is located within Green Valley, which is heavily influenced by the Tucson MSA.
Tucson is part of Pima County, which is the second largest county by population in the state of
Arizona. Pima County is located in the south-central portion of the state. Moody’s Economy.com
provides the following Tucson area economic summary as of August 2014. The full Economy.com
report is presented in the addenda.
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A REA A NALYSIS
TUCSON, AZ - ECONOMIC INDICATORS

Indicators 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Gross Metro Product (C$B) 37.7 35.0 35.4 36.7 37.6 37.6 38.4 40.6 42.8 44.8 46.6 48.2
% Change -2.7 -7.1 1.3 3.6 2.3 0.1 2.1 5.7 5.5 4.6 4.0 3.4
Total Employment (Ths) 380.0 360.0 352.5 353.8 358.7 361.2 365.3 374.4 387.3 396.4 402.2 408.2
% Change -1.0 -5.2 -2.1 0.4 1.4 0.7 1.1 2.5 3.4 2.4 1.5 1.5
Unemployment Rate (%) 5.6 9.0 9.4 8.4 7.4 7.0 6.1 5.4 4.8 4.5 4.4 4.4
Personal Income Growth (%) 5.0 -4.8 0.6 3.5 3.2 2.3 4.6 7.1 7.9 7.3 6.2 5.5
Median Household Income ($ Ths) 46.1 43.8 42.9 43.1 43.8 44.5 46.1 47.8 49.6 51.5 53.0 54.2
Population (Ths) 967.8 975.6 982.0 987.9 992.4 996.6 999.3 1,020.8 1,049.0 1,078.9 1,109.7 1,142.3
% Change 1.2 0.8 0.7 0.6 0.5 0.4 0.3 2.1 2.8 2.8 2.9 2.9
Net Migration (000) 6.9 2.8 2.1 2.4 1.7 0.8 -0.1 18.6 25.5 27.1 28.1 29.9
Single-Family Permits 2,743.0 1,934.0 1,726.0 1,388.0 2,175.0 2,623.0 3,294.7 6,026.4 7,469.3 7,747.5 6,987.7 6,561.9
Multifamily Permits 478.0 195.0 212.0 854.0 666.0 868.0 1,208.4 1,372.6 1,563.1 1,425.8 1,320.0 1,330.7
Existing-Home Price ($ Ths) 205.5 172.8 152.9 133.8 149.9 169.3 181.5 194.2 205.2 212.8 224.7 237.4
Source: Moody's Economy.com
RECENT PERFORMANCE
Growth has picked up in recent months, but Tucson remains a slight laggard relative to the U.S.
recovery. Weakness has been concentrated in public employment and defense manufacturing,
reflecting the metro area's exposure to federal spending. Fortunately, private services, particularly
tourism and healthcare, have proved resilient. Professional services are also driving gains, albeit at a
slower pace than in nearby Phoenix. The unemployment rate has slid to 6.3%, below the Arizona
average. Encouragingly, the labor force is expanding, reversing its downward trajectory since the
recession.
STRENGTHS AND UPSIDE
 Low-cost alternative to Phoenix and Los Angeles.
 Highly educated workforce thanks to presence of several universities.
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A REA A NALYSIS
 Higher education is a bigger positive; value-added service job gains are stronger.
 Aerospace manufacturers have an easier time diversifying into commercial aircraft.
 Strong economic cluster of Bioscience, Healthcare, and Optics supported by the University of
Arizona, private industry, and government.
WEAKNESSES AND DOWNSIDE
 Dearth of headquarter operations.
 Exposure to reduced government and tighter defense budget.
PUBLIC SECTOR
Arizona's fiscal 2015 budget will add K-12 positions across the state, a boon for area schools.
Moreover, a suspended mandate linking education funding to inflation was recently renewed. As a
result, legislators must allocate an additional $1.6 billion in missed payments over the next six years.
Although this is good news for public education, the shifting of funds will threaten other departments,
suggesting the net effect on employment will be neutral.
PRIVATE SERVICES
Expansion of Tucson's healthcare segment will offset declines in public payrolls and power gains at the
upper end of the income spectrum. After several years of out-migration, demographic trends are
beginning to turn in the metro area's favor. Population growth is expected to accelerate in the coming
years and individuals are again relocating to the Southwest. A warm climate and relatively low cost of
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A REA A NALYSIS
living will draw an influx of retirees. As a result, Tucson's above-average share of senior citizens will
steadily expand throughout the forecast. Demand for medical services will propel industry payroll
gains past the broader labor market through decade's end.
Tourism-related industries will also outperform in the coming years, although the majority of jobs
created will be low-paying and temporary. The job growth is encouraging, but adding low-value-
added positions may do little for already-declining earnings, an ominous sign for household
consumption.
METALS
The possibility of a continued slowdown in China creates a downside risk for Tucson exports. The
world’s second largest economy supports its massive infrastructure spending with significant copper
imports from the U.S. A substantial decline in investment spending abroad would not derail the
Tucson recovery, but lower exports would create an unneeded obstacle for the recovery. Moreover,
legal problems continue to delay the development of the Rosemont Copper Mine, which would be a
substantial addition to mining industry payrolls.
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A REA A NALYSIS
HAMMER AND NAILS
Single-family sales growth is progressing at a tepid pace, and though starts are modestly rising,
building has yet to spark a recovery in construction. Industry employment has declined sharply as a
result. An improving labor market, spearheaded by well-paying healthcare and professional services,
should translate to more construction. However, substantial gains will be delayed until late 2015.
POPULATION
Rapid population growth will continue to be an advantage for the metro area, though census data
show that the population grew far more slowly than expected as a result of dwindling in-migration
toward the end of the decade. This setback foretells less money for government programs that are
based on head count, and may lead to less investment by population-dependent industries.
Tucson’s expanding population depends on the region’s job creation and its appeal as a retirement
destination. The plunging home values and job losses of the national recession stifled Tucson’s robust
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A REA A NALYSIS
population growth. Net-migration in 2010 registered a weak 2,000 migrants, well below the
historical average of more than 9,000. This trend will reverse itself as the national recovery
strengthens. The University of Arizona and above-average employment growth will attract the younger
migrants, while affordable housing and an expanding healthcare industry will continue to boost
Tucson as a retirement destination.
According to 2010 Census data, the Tucson Metropolitan Area was ranked 53rd largest in the U.S,
compared to 58th largest in 2000. The Phoenix Metropolitan Area was 14th largest in 2012 and New
York was 1st. In numerical change, only 10 metropolitan areas in the U.S. grew more rapidly than
Tucson in percentage terms between 2000 and 2010. Claritas estimates the current population of
Tucson MSA to be 999,461, representing an increase of nearly 2% since 2010. It is estimated that
the Tucson MSA will grow by 3.4% to 1,033,012 over the next five years.
UNIVERSITY OF ARIZONA
The University of Arizona (UA) is a premier, student-centered research institution. Established in 1885
as the first university in the Arizona Territory and the state's only land grant institution; the UA now
encompasses 391 acres and includes 228 buildings. Now in its second century of service to the state,
the UA has been ranked one of the nation's top 20 public research institutions. It is also one of only
63 members in the Association of American Universities, a prestigious organization that recognizes
universities with exceptionally strong research and academic programs. In some areas such as optics,
mining and pharmacology, water research, and astronomy, UA considers itself among the best in the
world. With world class faculty in fields as diverse as astronomy, plant science, biomedical science,
business, law, music and dance, the UA has much to offer students and the local economy. The
National Science Foundation ranks the UA No. 3 in physical sciences research. According to 2011
statistics, the University generates over $631 million in research, and gives the state economy an
annual $3.6 billion boost with over 34,000 jobs. The UA Health Network alone generates an
additional $2.0 billion impact with nearly 15,000 jobs, while the UA Tech Park adds $2.7 billion to
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A REA A NALYSIS
the economy and over 16,500 jobs. The high level of education trickles into the regional economy of
Tucson, helping to fuel growth and attract investment. For the Fall 2013-2014 school year, there were
40,621 students with a student-faculty ratio of roughly 26 to 1. The chart below, from the 2013–
2014 fact book, illustrates student enrollment information from the 2004 through 2013 academic
years.
CONCLUSION
Growth in Tucson will accelerate through year's end as hiring in healthcare and professional services
will negate public sector weakness. A full recovery of the housing market is likely several quarters
away, but an inflow of new residents has the potential to expedite the process. Long term, low
business costs and a fast-growing population will slot Tucson's performance just ahead of the nation's.
© 2014 CBRE, Inc.

M ARKET A NALYSIS
MARKET ANALYSIS
The Appraisal Institute defines a market analysis as a process for examining the demand and supply of
a property type and the geographic market area for that property type. Market analyses can be either
inferred or fundamental. An inferred analysis allows the appraiser to analyze historic data and trends
and use his judgment to infer, or forecast, future occurrences. A fundamental analysis uses specific
demographic and economic data to accurately forecast supply and demand for the subject property.
CBRE has completed a fundamental analysis for this report.
For the purposes of this report we have utilized a six step process to complete a fundamental market
analysis. The six-step process is defined below:
STEP 1: ANALYZE SUBJECT PROPERTY’S PRODUCTIVITY
The first step of the six step market analysis is to define the subject property with consideration to
physical attributes, legal and regulatory characteristics, and market appeal attributes.
Step 1.1 Legal Attributes
The subject is zoned CB-2, (Pima County), which allows for various commercial and multi-family
residential development such as retail, office, motel or hotel, assisted living centers, hospital or clinics,
self–storage, as well as some more intense uses such as auto repair facilities, and contractors yards.
The development standards are as follows:
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M ARKET A NALYSIS
ZONING SUMMARY
Current Zoning CB-2, Commercial - Pima County
Uses Permitted Commercial or multi-family uses serving
neighborhoods and community needs
Zoning Change Not likely
Category Zoning Requirement
Minimum Lot Size 0 Sq. Ft.
Minimum Lot Width 0 Feet
Maximum Height 39 Feet
Minimum Setbacks
Front Yard 15 Feet
Street Side Yard 0 Feet
Interior Side Yard 0 Feet
Rear Yard 10 Feet
Parking Requirements 1 spaces / 200 SF of Bldg. - most uses
Source: Planning & Zoning Dept.
The allowable uses within the CB-2 zone, which is a semi-intensive commercial use zone, include the
uses that would be appropriate for the subject site. Therefore, zoning restrictions do not seem to
restrict any potential viable uses at the subject site.
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M ARKET A NALYSIS
PLAT MAP
SUBJECT
HOSPITAL
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M ARKET A NALYSIS
Step 1.2 Physical Attributes
The subject site contains 28.09-acres (1,223,452 square feet) located along the Interstate 19
Frontage road approximately 1.5 miles north of the Canoa Ranch Road onramp/offramp.
SITE SUMMARY AND ANALYSIS
Physical Description
Assessor Parcel Number 304-69-047B
Net Site Area 28.09 Acres 1,223,452 Sq. Ft.
Primary Road Frontage Interstate 19 Frontage Road 1,075 Feet
Average Depth 1,138 Feet
Shape Generally rectangular
Topography Generally level
Zoning District CB-2, Commercial - Pima County
Flood Map Panel No. & Date 04019C3945L 16-Jun-11
Flood Zone Zone X
Adjacent Land Uses Hospital, vacant land, single-family residential
Comparative Analysis Rating

Visibility Good
Functional Utility Assumed adequate
Traffic Volume High
Adequacy of Utilities Assumed adequate
Landscaping Assumed adequate
Drainage Assumed adequate
Utilities Provider Adequacy

Water Community Water Co. Yes
Sewer Pima County Yes
Natural Gas Southwest Gas Yes
Electricity Tucson Electric Power Yes
Telephone Cox Communications Yes
Other Yes No Unknown

Detrimental Easements X
Encroachments X
Deed Restrictions X
Reciprocal Parking Rights X
Source: Various sources compiled by CBRE
© 2014 CBRE, Inc.

M ARKET A NALYSIS
INGRESS/EGRESS
Ingress and egress is available to the site via an access easement (not yet constructed) from the
Interstate 19 Frontage Road. Interstate 19 Frontage Road, at the subject, is a north/south minor
arterial road that has a dedicated width of 40 feet and is improved with one lane of traffic in each
direction. Street improvements include asphalt paving. Street parking is not permitted.
The subject property has excellent visibility from the frontage road and good visibility from north
bound Interstate 19 freeway. The site is slightly below grade of the freeway. Visibility from south
bound Interstate 19 freeway is somewhat limited due to a small hill in the median of the freeway that
blocks some visibility. According to the subject ownership, the proposed development will have good
monument signage.
FLOOD ZONE
SUBJECT
According to flood hazard maps published by the Federal Emergency Management Agency (FEMA),
the site is within Zone X, as indicated on Community Map Panel No. 04019C3945L. FEMA defines
the flood zones as follows:
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M ARKET A NALYSIS
Zones C and X (unshaded) are flood insurance rate zones used for areas outside the 0.2-percent-
annual-chance floodplain. No Base Flood Elevations (BFEs) or depths are shown in this zone, and
insurance purchase is not required.
ENVIRONMENTAL ISSUES
CBRE, Inc. is not qualified to detect the existence of potentially hazardous material or underground
storage tanks which may be present on or near the site. The existence of hazardous materials or
underground storage tanks may affect the value of the property. For this appraisal, CBRE, Inc. has
specifically assumed that the property is not affected by any hazardous materials that may be present
on or near the property.
ADJACENT PROPERTIES
The adjacent land uses are summarized as follows:
North: Vacant land, residential uses

South: Green Valley Hospital (under construction), residential uses
East: Canoa Wash, vacant land
West: Interstate 19 freeway, residential uses
The adjacent properties are generally a positive influence to the property. The surrounding land uses
are residential uses. Retail development is prominent generally along the major interchanges along
Interstate 19 in the neighborhood.
CONCLUSION
The site is well located along the frontage road of Interstate 19 freeway and is afforded good
accessibility and visibility from the freeway and frontage road. The size of the site is typical for the
area and use, and there are no known detrimental uses in the immediate vicinity. Overall, there are
no known factors which are considered to prevent the site from development to its highest and best
use.
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M ARKET A NALYSIS
Step 1.3 Analyze the Locational Attributes of the Subject Property
The subject property is located within Green Valley, about 30 miles south of downtown Tucson and is
considered to be within a suburban location. The neighborhood is southern portion of Pima County
and the Tucson MSA. The subject is located at the southern edge of the developed area of the town
of Green Valley and about 5 miles south of the large master-planned community of Rancho
Sahuarita. Additionally, the subject is located about 30 miles north of the International border and
the city of Nogales.
Green Valley has been primarily a retirement community since it began developing in the 1970s. Its
appeal was a lower cost and more relaxed retirement, yet with easy access to the services and
amenities of Tucson. Consequently, this same appeal has spurred additional development in the area
including Sahuarita, Tubac, and Rio Rico. Therefore, the trade area for the subject is not limited to
Green Valley, but draws from these three towns as well as the wider area of southeastern Pima County
and all of Santa Cruz County. In addition, the area draws patrons from the Mexican state of Sonora.
For ease of reference, the subject’s physical neighborhood will be identified throughout this report as
the Green Valley MSA. The Green Valley MSA is outlined identified in the following map:
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M ARKET A NALYSIS
SUBJECT
N
The Green Valley MSA is afforded good quality development standards imposed by Pima County. The
area has excellent mountain views and recreation opportunities, a few resorts and golf properties, and
close proximity to Tucson and Mexico that contribute to the attractiveness of the neighborhood. There
are limited entertainment venues and few retail and office developments that limit its appeal. The
prices and quality of housing in the neighborhood are commensurate with Pima County and the
Tucson MSA norms.
BOUNDARIES
The neighborhood boundaries are detailed as follows:
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M ARKET A NALYSIS
North: Tohono O’Odham San Xavier Indian Reservation

South: International Border
East: State land, Tohono O’Odham San Xavier Indian Reservation
West: Coronado National Forest/Madera Canyon/Pima County and State Land
LAND USE
The following discussion of the Green Valley MSA identifies important economic drivers in the
immediate area of the subject property.
General land use patterns in the subject area indicate that it was principally developed in the 1970s
to late 2000s and include a variety of low-density, above-average quality, detached single-family
housing subdivisions ranging in price from $100,000 to $300,000. 47% of homes are within this
range. The 2014 average median home value within the Green Valley MSA is $166,956, which is in-
line with the 2014 average median home value of the Tucson MSA and Pima County. The median
home age is about 18 years, with nearly 88% of homes built between 1970 to current; further
delineated by 43% of homes built between 1990 and 2004 and 16% built between 2005 to 2014.
Residential subdivisions are located along the freeway within several communities such as Rancho
Sahuarita, Canoa Ranch, and the Green Valley Country Club. Based upon the informal analysis of
aerial map below, the Green Valley MSA appears to be about 10%-20% developed with the majority
of vacant land remaining in Santa Cruz County closer to the international border. Pima County and
the State of Arizona are major land holders in the area, which reduces the potential amount of
available development land.
Neighborhood commercial centers are located at the intersections of the major interchanges along
Interstate 19. Major employment sectors are located within Tucson. The basic land use patterns in
the Green Valley MSA are considered to be stable, with limited new development occurring.
GROWTH PATTERNS
Growth in the Green Valley MSA is generally within the master-planned community of Rancho
Sahuarita to the north of the subject, as well as within the Green Valley proper and Tubac areas.
Rancho Sahuarita is currently planning Phase II of the master-planned development According to the
Census, the 2000 population of the Green Valley MSA was 62,698 persons. This figure grew to
95,815 by 2010, representing a total increase of 53% and an annual increase of 5.3%. The area’s
growth slowed a bit during the recent recession and is currently 99,733, which represents a 4.1%
annual increase since 2000. The 2019 projected population of the Green Valley MSA is 105,168, a
5.4% projected annual increase from current. The Interstate 19 corridor is the primary link between
the Tucson MSA and the subject neighborhood, where most of the growth has occurred; therefore the
neighborhood is in the general path of growth.
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M ARKET A NALYSIS
ACCESS
Primary access to the subject neighborhood is provided by Interstate 19 and the I-19 Frontage Road,
which are the primary north-south roads through the area, effectively linking the neighborhood with
Interstate 10 to the north and Mexico to the south. The subject is located along and has visibility from
Interstate 19 freeway. Major east-west arterials include Continental Road, Duval Mine Road, and
Sahuarita Roads, which are also freeway interchanges and the primary commercial corridors of the
Green Valley MSA. The subject is located 1.3 miles north of the nearest freeway interchange of
Canoa Ranch Road, and 3.1 miles south of the freeway interchange of Continental Road. Access to
and from the neighborhood is generally good.
LOCATION ANALYSIS
The subject site is compared to a typical quality development site in the Tucson MSA in order to gauge
its potential to attract tenants. The higher the ranking in comparison with sites of other competitive
developments equates to the more likelihood of success of a development at the subject’s location.
The subject site will be compared with competitive sites of similar utility within the Green Valley MSA
and the Tucson MSA, or the trade area which the subject will draw.
For the comparison, the highest rating would be given to a hard corner location along a major
intersection within Tucson. In contrast, the lowest rating would be given to a site located along a
minor road in a primarily residential area. The following rating grid reflects the position of the subject
site from the preceding analysis. The factors in the table are weighted equally.
Subject Rating Grid

Inferior Typical Superior
Factors Determining Demand High Moderate Slight Average Slight Moderate High
Proximity and ease of access to consumers/patrons X
Proximity and ease of access to major
transportation linkages X
Reputation/prestige of area (social reputation,
crime in area, etc.) X
Public planning/development support X
Access to infrastructure X
Site size X
Topography X
Visibility/Frontage X
Zoning X
Site shape X
Rating Conclusions
Number of items 0 0 1 3 4 2 0
Times category score 0 2 4 5 6 8 10
Subtotal score 0 0 4 15 24 16 0
Total subject score 59
Average score 50
Percentage above (below) average 18%
CBRE Compiled
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The subject is deemed to be slightly superior to a typical commercial site in Tucson due to its good
visibility and frontage along Interstate 19, yet offset by the smaller immediate market area of Green
Valley.
Conclusion
The subject is a desirable property with good curb appeal that is similar to its competition. The
location is considered desirable for commercial development. The area should continue to see growth
due to its proximity to the freeway and Tucson, especially due to the influence of the adjacent Green
Valley Hospital. The Green Valley MSA was originally developed, and continues to be, a well-
planned and affordable alternative to the Tucson MSA. Retail and office nodes, as well as
recreational and entertainment opportunities, including several resorts and golf courses in the area,
are located intermittently throughout the Green Valley MSA. Interstate 19 freeway provides
convenient access to the major employment centers of the greater Tucson area as well as Mexico.
The area is patronized from Mexican Nationals from the state of Sonora who travel to the area for
shopping and pleasure. Overall, the subject property’s locational attributes are desirable and
positively impact the subject.
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STEP 2: MARKET DELINEATION
The next step in the market analysis is to delineate the primary market area for the subject property
before demand and competitive supply can be analyzed. The purpose of market delineation is to
identify the competitive market area and the most likely user for the proposed subject’s improvements.
Since the use of the subject’s proposed improvements are not defined other than ‘mixed-use’, in this
step, we will identify the market area and characteristics of the most likely users of the subject
property.
Step 2.1 Determine the Boundaries of the Market Area
In order to determine the boundaries of the subject market area, we have determined trade areas and
distances for each of the four main commercial land uses: retail, office, multi-family residential, and
hospitality. Each probable use is analyzed below to determine how far away customers will travel to
the proposed subject development for each probable use.
Per the client, the focus of the proposed subject development is conceptually planned for mixed use
that would complement the adjacent Green Valley Hospital, the anchor of the subject site. The Green
Valley Hospital contains approximately 146,000-square feet of hospital improvements. In addition,
there will be a medical office annex adjacent on the hospital campus comprising approximately
40,000-square feet of medical offices related to the hospital. Per the client, a majority of the medical
office annex this space has been committed to doctors servicing the hospital. Approximately 60% of
the committed doctors will have primary offices at the annex, with the remaining 40% having
secondary offices.
Medical office has been satisfied at the annex and would not be appropriate for the subject
development. The remaining reasonably probable uses include retail, multi-family residential, general
office, and hospitality. The subject site size is too small for and is not zoned for a substantial single-
family detached residential use. Further, an assisted care center is a possible use for the subject site;
however, this is being considered for the hospital annex site and would not be a use for the subject
site.
Retail uses are broken into three categories: general retail, destination retail, and specialty retail.
General and destination retail market analysis is based upon the following consistent and predictable
behavior in contemporary society:
 People spend a certain percentage of their income on retail goods and services
 People want to spend as much of that percentage as close to home as possible – i.e.
convenience matters
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 Demand for most goods and services decreases with distance from the store location, since
the relative cost to the consumer increases with distance
 Demand is constrained to a range (measured in terms of distance or drive time) beyond which
customers will not travel to a specific store location
 The existence of competitors diminishes the range and determines the market area for a good
or service
For the proposed subject, these concepts apply and limit the market of the subject for general and
destination retail to the Green Valley MSA.
Depending upon the goods or services sold, it is not necessary for every business to maximize
distance from its competitors or minimize distance from its customers. Sometimes clustering attracts
more customers per business. For specialty retail, clustering can draw customers from a longer
distance.
Given the high general retail occupancy of the Green Valley MSA, it is likely that the subject can
absorb some general and destination retail space.
General retail includes basic services such as groceries, home goods, basic clothing, convenience
items, etc., where a patron would only want to drive a relatively short distance to access. Based upon
interviews and research, the typical drive time for general retail uses is between 5 and 10 minutes,
expanding to 10 to 20 minutes for more rural or smaller markets such as the subject. Thus, general
retail customers to the subject would most likely be limited to the Green Valley MSA area and would
not draw Tucson customers for general retail items.
Destination retail includes services such as home improvement, car services, clothing, restaurants,
etc., where a patron is willing to drive a moderate distance to satisfy the needs. Based upon
interviews and research, the typical drive time for destination retail uses is between 10 and 20
minutes, expanding to higher than 20 minutes as needed for rural or smaller markets. Thus,
destination retail customers to the subject would also most likely be limited to the Green Valley MSA
area and would not draw Tucson customers for destination retail items.
Specialty retail includes services such as high-end clothing, theme restaurants, or services where a
patron is willing to drive a relatively long distance. Based upon interviews and research, the typical
drive time for specialty retail uses is between 20 and 30 minutes, expanding to higher than 30
minutes as needed for rural or smaller markets. Thus, specialty retail customers to the subject could
potentially be accessed from Tucson, Nogales, and Mexico residents.
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For specialty retail, with the subject’s anchor and primary draw being the Green Valley Hospital, the
clustering of specialty retail with a health and wellness theme would be a focus of potential tenant
draw to the subject.
Much of the Green Valley MSA, due to the Interstate 19 freeway, can be accessed within 40 minutes
of the subject. The following map indicates the distance covered for drive times between 10 and 40
minutes:
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The subject’s neighborhood is considered to be stable and is a desirable section of Pima County and
should remain strong due to its favorable household income distribution and population stability.
Overall, the subject property’s neighborhood is desirable that it could access retail patrons from the
entire Green Valley MSA, Tucson, and Mexico.
In addition, the proposed subject development is anticipated to attract office uses as a primary use.
With the dynamics created by the Green Valley Hospital and the proposed retail at the subject, office
uses can complement the retail and hospital uses and create additional traffic. Competing centers in
the Green Valley MSA such as Continental Plaza and Sahuarita Plaza have complementary office
uses located in the retail development. There is a limited amount of good quality office space in the
Green Valley MSA. Thus, some demand is warranted for non-medical space at the subject as shown
in the later analysis.
Further, given the mixed-use plan for the subject site and it being adjacent to the Green Valley
Hospital, multi-family residential is a probable use at the subject site. There is a somewhat limited
amount of multi-family units in the Green Valley MSA. Given the lack of available quality multi-family
units in the Green Valley MSA, the increasing population trend of the area, there exists potential
demand for additional units. Further, being near the hospital, it is possible that some units can be
leased on a short term basis for families of hospital patients. Also, the subject’s orientation allows for
spectacular mountain views which can entice residential development. Last, according to a
consultant of the client, Pima County is planning a +/-2,500-acre open space park on the east side
of Interstate 19 freeway surrounding the subject. This would restrict land development on the east
side of the freeway creating a premium for remaining residential sites and act as an enticing amenity
for the subject. Thus, demand is warranted for multi-family use at the subject as shown in the later
analysis.
Last, the client is considering a hospitality use for the subject site. Given the current dynamics of the
Green Valley hospitality market, as described later in this report, a hotel at the subject is not
recommended, regardless of the quality of the hotel.
Step 2.2 Analyze the Tenant Profile for the Subject Property and Neighborhood
Demand for commercial properties is a direct function of demographic characteristics analyzed on the
following pages. The following tables show the demographics for the Green Valley MSA with
comparisons to the City of Tucson and Pima County.
Housing, Population and Household Formation
The following table illustrates the population and household changes for the subject neighborhood.
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SELECTED NEIGHBORHOOD DEMOGRAPHICS

Green Valley
Tucson Pima County
MSA
Population
2019 Population 103,455 533,788 1,033,012
2014 Population 97,828 523,691 999,461
2010 Population 93,734 520,013 980,263
2000 Population 60,187 483,259 843,744
Annual Growth 2014 - 2019 1.12% 0.38% 0.66%
Annual Growth 2010 - 2014 1.07% 0.18% 0.49%
Annual Growth 2000 - 2010 4.53% 0.74% 1.51%
Households
2019 Households 40,126 212,761 410,209
2014 Households 38,080 207,536 396,111
2010 Households 36,721 205,211 388,660
2000 Households 23,142 192,980 332,342
Annual Growth 2014 - 2019 1.05% 0.50% 0.70%
Annual Growth 2010 - 2014 0.91% 0.28% 0.48%
Annual Growth 2000 - 2010 4.73% 0.62% 1.58%
Income
2014 Median HH Inc $50,248 $34,771 $43,503
2014 Estimated Average Household Income $63,274 $47,273 $59,683
2014 Estimated Per Capita Income $24,630 $18,734 $23,654
Age 25+ College Graduates - 2010 19,552 81,444 195,594
Age 25+ Percent College Graduates - 2014 28.7% 24.2% 29.1%
Source: Nielsen/Claritas
As shown, the Green Valley has and continues to experience higher population and household growth
than Tucson or Pima County.
Income Distributions
Household income available for expenditure on consumer items is a primary factor in determining the
retail supply and demand levels in a given market area. The following table illustrates estimated
household income distribution for the subject neighborhood.
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HOUSEHOLD INCOME DISTRIBUTION

Green
Tucson Pima County
Households by Income Distribution - 2014 Valley MSA
Less than $15K 12.62% 21.55% 16.38%
$15K - $25K 12.33% 15.41% 13.04%
$25K - $35K 10.39% 13.32% 11.90%
$35K - $50K 14.43% 15.26% 14.58%
$50K - $75K 19.67% 16.31% 17.87%
$75K - $100K 12.67% 8.61% 10.70%
$100K - $150K 12.46% 6.76% 9.91%
$150K - $250K 4.38% 2.16% 3.93%
$250K - $500K 0.86% 0.52% 1.33%
$500K or more 0.18% 0.11% 0.35%
The following table illustrates the median and average household income levels for the subject
neighborhood.
HOUSEHOLD INCOME LEVELS

Green
Tucson Pima County
Income Valley MSA
2014 Median HH Inc $50,248 $34,771 $43,503
2014 Estimated Average Household Income $63,274 $47,273 $59,683
2014 Estimated Per Capita Income $24,630 $18,734 $23,654
An analysis of the income data indicates that the submarket is generally comprised of middle-income
economic cohort groups, which include the target groups to which the subject would most likely be
oriented. The data indicates that Green Valley MSA residents have higher average incomes than
Tucson or Pima County residents and would most likely have more disposable income.
Retail Sales Volumes
The following table illustrates retail sales for the subject’s market area at given radii intervals from the
subject.
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RETAIL EXPENDITURES ($000's)

SUBJECT'S SUBMARKET
Green Valley MSA Tucson Pima County
Product Sample 2014 2019 %/Yr 2014 2019 %/Yr 2014 2019 %/Yr
All Retail Stores 1,159,770 1,235,373 1.3% 5,467,408 5,718,387 0.9% 11,633,449 12,336,301 1.2%
Grocery Stores 218,658 229,613 1.0% 1,071,447 1,095,095 0.4% 2,177,865 2,254,773 0.7%
Eating Places 87,992 89,864 0.4% 452,703 454,231 0.1% 930,385 946,657 0.3%
Drinking Places 2,449 2,504 0.4% 12,397 12,455 0.1% 25,845 26,343 0.4%
Health and Personal Care Stores 99,084 106,753 1.5% 373,120 396,906 1.2% 844,263 909,582 1.5%
Building Material & Garden Equipment & Supplies 33,711 35,956 1.3% 126,019 133,566 1.2% 299,775 321,432 1.4%
Hardware Stores 4,024 4,361 1.6% 16,061 17,331 1.5% 37,081 40,428 1.7%
Lawn & Garden Equipment & Supplies Dealers 5,381 5,830 1.6% 21,269 22,749 1.4% 49,472 53,648 1.6%
Furniture Stores 18,203 19,511 1.4% 74,415 79,791 1.4% 175,443 190,410 1.7%
Other Home Furnishing Stores 15,185 16,092 1.2% 59,782 62,814 1.0% 140,174 149,389 1.3%
Household Appliance Stores 4,729 5,544 3.2% 20,157 23,615 3.2% 44,912 53,067 3.4%
Radio/TV/Other Electronics Stores 17,331 24,142 6.9% 87,327 120,603 6.7% 182,884 256,004 7.0%
Department Stores (Excluding Leased) 95,266 106,102 2.2% 445,767 490,545 1.9% 952,679 1,062,185 2.2%
Clothing and Clothing Accessory Stores 68,603 75,191 1.9% 360,330 389,413 1.6% 752,264 824,777 1.9%
Shoe Stores 9,858 10,873 2.0% 59,191 63,890 1.5% 114,442 125,103 1.8%
General Merchandise Stores 194,108 213,614 1.9% 914,537 990,186 1.6% 1,931,972 2,120,297 1.9%
Warehouse Clubs and Superstores 100,539 109,640 1.7% 476,683 509,617 1.3% 996,602 1,080,076 1.6%
Full Service Restaurants 30,204 30,853 0.4% 146,826 147,534 0.1% 312,178 318,296 0.4%
Fast Food Restaurants 25,317 25,925 0.5% 145,095 145,425 0.0% 283,139 287,537 0.3%
Jewelry Stores 17,303 18,212 1.0% 70,102 73,766 1.0% 168,212 179,682 1.3%
Book Stores 10,187 11,203 1.9% 64,274 67,165 0.9% 124,914 133,245 1.3%
Gift, Novelty, and Souvenir Shops 4,067 4,459 1.9% 18,610 20,062 1.5% 40,625 44,408 1.8%
Florists 12,424 13,303 1.4% 46,455 49,404 1.2% 112,328 121,163 1.5%
Hobby, Toy, and Game Shops 7,478 8,302 2.1% 34,959 38,707 2.1% 74,558 83,387 2.3%
Sporting Goods Stores 9,368 11,698 4.5% 44,232 54,748 4.4% 96,916 121,491 4.6%
Camera/Photographic Supply Stores 1,328 1,881 7.2% 5,363 7,756 7.7% 13,025 18,756 7.6%
Luggage and Leather Goods Stores 1,435 1,615 2.4% 5,667 6,383 2.4% 13,740 15,670 2.7%
Sew/Needlework/Piece Goods Stores 1,918 2,001 0.8% 7,533 7,830 0.8% 17,807 18,712 1.0%
Convenience Stores 10,253 10,853 1.1% 55,008 57,019 0.7% 109,685 114,768 0.9%
Home Centers 15,468 16,625 1.5% 58,890 63,017 1.4% 139,047 150,396 1.6%
Nursery and Garden Centers 4,806 5,172 1.5% 19,088 20,273 1.2% 44,258 47,644 1.5%
Computer and Software Stores 6,846 9,369 6.5% 34,123 46,112 6.2% 71,240 97,763 6.5%
Clothing Accessory Stores 1,051 1,148 1.8% 5,425 5,843 1.5% 11,631 12,741 1.8%
Auto Dealers 204,117 198,348 -0.6% 968,484 921,064 -1.0% 2,131,695 2,067,821 -0.6%
Automotive Part, Accessories & Tire Stores 10,515 10,586 0.1% 50,654 49,786 -0.3% 105,693 105,408 -0.1%
Gasoline Stations with Convenience Stores 88,523 91,641 0.7% 473,069 481,529 0.4% 953,736 979,245 0.5%
Gasoline Stations without Convenience Stores 25,721 26,289 0.4% 133,268 133,918 0.1% 272,562 276,569 0.3%
Electronic Shopping and Mail Order 51,206 59,426 3.0% 230,881 265,492 2.8% 499,349 581,551 3.1%
Total Accommodation and Food Services 135,162 137,378 0.3% 652,811 654,918 0.1% 1,388,635 1,412,112 0.3%
The annual rate of change for All Retail Stores is indicated as 1.3%, 0.9%, and 1.2% for the Green
Valley MSA, Tucson, and Pima County areas, respectively. As noted, demand for most retail products
is expected to increase over the next five years.
Outlook
Based on this analysis, the immediate area surrounding the subject is projected to experience
moderate, positive growth relative to households, population, income levels and retail expenditures
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into the near future. Given the area demographics, it appears that demand for surrounding area
properties and the subject will continue to be favorable.
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STEP 3: FORECAST DEMAND FACTORS
The third step of the market analysis forecasts demand for the subject property is through the use of
inferred and fundamental methods. This step examines the current and forecasted supply and
demand relationships for comparable properties in the submarket.
Step 3.1: Infer Potential Development
First, we need to infer the potential uses of the subject site by looking at land uses in the immediate
area and conclude the mix of reasonably probable land use of the subject site.
Step 3.1(a) Infer Potential Development – General Retail
General retail includes basic services such as groceries, home goods, basic clothing, convenience
items, etc., where a patron would only want to drive a relatively short distance to access. Based upon
interviews and research, the typical drive time for general retail uses is between 5 and 10 minutes,
expanding to 10 to 20 minutes for more rural or smaller markets. Thus, general retail customers to
the subject would most likely be limited to the Green Valley MSA area and would not draw Tucson
customers for groceries, home goods, basic clothing, and convenience items.
The Tucson MSA already has a sufficient concentration of general retail uses that adequately serves
the Tucson MSA. For general retail uses, Tucson MSA residents would not likely travel to Green Valley
for general retail. In addition, while there are many Mexicans from Sonora who come to Tucson to
shop, other than gas, convenience store, and restaurant uses along the way, Mexicans typically travel
to power centers or malls in Tucson for general retail shopping. Therefore, the trade area for general
retail users for the subject is limited to residents in the Green Valley MSA.
Prior to analyzing the potential demand for general retail for the Green Valley MSA, an overview of
the Tucson MSA retail market is shown. The Tucson MSA has a strong influence on the Green Valley
MSA.
Tucson MSA
The Tucson MSA is still looking to put the tread to the road, with stagnant vacancy rates and anemic
absorption, there is little traction propelling the market. Vacancy rates in Q3 2014 remained flat from
last quarter at 8.2%. This has been the story of the market for the last year now, with vacancy not
experiencing a drop greater than 80 basis points since Q3 2013 when the rate fell to 8.2% from
9.0% in Q2 2013.
Net absorption for the quarter was reported at positive 50,776 sq. ft., a down quarter compared to
Q2 2014 when an adjusted 113,521 sq. ft. was absorbed. Year-to-date, the retail market has
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recorded 199,017 sq. ft. of positive absorption, off pace of the last two years, which reported
434,453 sq. ft. (2012) and 354,733 sq. ft. (2013) of positive net absorption by the third quarter.
From the field, predictions are that the retail market is trending to have a strong close to the year,
given the deal velocity. While the larger retailers remained relatively quiet for most of 2014, the
smaller tenants displayed a lot of activity in Q3 2014. Inline shop tenants like quick serve restaurant
concepts are active in areas where the rents are some of the highest: regional mall hubs and on
intersection corners.
Supply chain analysts report container cargo shipments are at some of the highest numbers since
before the recession started. This cargo number reflects retailer confidence in the upcoming holiday
shopping season. 2013 holiday sales disappointed with lower-than-expected sales on the heels of the
federal government shutdown. This year, national retailers are filling the racks and holding out for a
strong finish to 2014 retail sales which will mean strong deal flow for retail real estate in 2015.
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According to CBRE Research, the base inventory of shopping center space stands at 21,957,539
square feet. Of this total, approximately 4,260,433 square feet is in the Southwest submarket, or
19.4% of the overall supply. The subject site is physically located within the Southwest submarket, as
delineated by CBRE Research. However, much of the Southwest submarket encompasses the
established and heavily developed areas of southwest Tucson MSA, while extending south to Green
Valley and Sahuarita. While the submarket does not represent the characteristics of the Green Valley
MSA, which are far less dense, nevertheless, the submarket exerts the most influence upon the subject.
At the end of the 3rd quarter of 2014, the Southwest submarket had a vacancy rate of 5.9%, the
second lowest vacancy rate of all submarkets in the Tucson MSA. The submarket also has the second
highest 3Q2014 absorption with a net absorption of 14,138 square feet. While the submarket has
the second lowest absorption year-to-date of 7,377, part of the low absorption is due to a lack of
good quality and well located available inventory in the submarket. In addition, the submarket has
not seen any new construction in 2014, yet has the second highest rental rates in the Tucson MSA.
In conclusion, with high rental rates, no new construction, and a low vacancy rate suggests that the
submarket trends are getting stronger and further retail development is warranted in the submarket.
While a Tucson resident would not travel to Green Valley for general retail, the overall limited
availability of retail space in the Green Valley MSA suggests that additional retail development in the
Green Valley MSA is warranted, especially for destination retail uses which draws from a larger trade
area.
Green Valley MSA
As noted earlier, the area defined as the Green Valley MSA covers an area just south of the Tohono
O’Odham San Xavier Indian Reservation or the northern boundary of Sahuarita, where development
densities are much lower than Tucson proper, southward down to the international border.
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The Green Valley MSA trade area has a median household income that is 44.5% greater than the City
of Tucson and 15.5% greater than Pima County. This difference is due primarily to a larger
percentage of households in the trade area with incomes of $50,000 and greater. With a median age
of 45 years, the trade area is older than the City of Tucson median age of 34 years and older than
the Pima County median age of 38. Thus, the Green Valley MSA encompasses a demographic that
typically has more disposable income than other age groups.
The households located in the Green Valley MSA trade area reflect a household size of 2.57 people,
comparable to 2.52 people per household in both Tucson and Pima County. The trade area contains
38,080 households, just fewer than 10% of Pima County’s total, but stands to add enough homes in
the next five years to surpass 10% of Tucson’s future total.
79.1% of the occupied dwellings in the Green Valley MSA trade area are owner-occupied compared
to 51.9% of the City of Tucson and 64.1% of Pima County. Inversely, 20.9% are renters compared to
48.1% of the City of Tucson and 35.9% of Pima County. Statistically, retailers will do better in areas
where the majority of households own their homes versus rent.
The median housing value in the Green Valley MSA trade area is only $1,522 greater than Pima
County’s median value, yet the Green Valley MSA median incomes are 15.5% higher than Pima
County. The nearly equal overall housing cost in the context of a typical household income
comparable to Pima County, allows for a greater disposable income available for consumer goods for
the Green Valley MSA.
The Green Valley MSA population annual growth rate for 2010-2014 has been 4.28%; substantially
more than the Tucson rate of 0.72% and moderately higher than the Pima County rate of 1.96%. The
five-year projected growth rate for 2014-2019 is forecasted at 4.48%, versus the Tucson growth rate
of 1.52% and the Pima County growth rate of 2.64%. The Green Valley MSA trade area is expected
to continue its growth as a result of the stable employment in the region in the public and defense
sectors as well as the healthcare and education sectors. Recovery in the construction and financial
services sectors will fuel additional growth, especially in the secondary trade area.
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According to CBRE Research, the Green Valley MSA retail market statistics are as follows:
Green Valley MSA - Retail Statistics

Gross Rentable Vacancy Rate Q3 2014 Net 2014 YTD Net Average Asking Lease
Area % Availability Rate % Absorption Absorption Rate
Retail 3,550,885 4.3 5.4 4,014 37,425 $13.35/Sq. Ft./NNN
Compiled by CBRE
More specifically, the Green Valley MSA is comprised of a handful of major shopping centers which
are most influential in the area in terms of draw and where the majority of residents in the Green
Valley MSA shop. These major shopping centers are shown in the following table and map.
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GREEN VALLEY MSA - MAJOR SHOPPING CENTERS

ID Center Name Address Size Available SF Available % Asking Rate
1 Tucson Spectrum - Phase I 1155 - 1225 W Irvington Rd 448,862 10,729 2.39% $26.00/NNN
2 Tucson Spectrum - Phase II 5133 - 5475 S Calle Santa Cruz 446,272 27,637 6.19% $15.00 - $28.00/NNN
3 Tucson Spectrum Total 895,134 38,366 4.29%
4 Rancho Sahuarita Marketplace 15920 - 15990 S Rancho Sahuarita Blvd 212,615 2,071 0.97% $24.00/NNN
5 Sahuarita Plaza 18705 - 18805 S Frontage Rd 94,174 8,912 9.46% Withheld
6 Madera Marketplace 18680 S Nogales Hwy 188,000 0 0.00% N/A
7 Sahuarita Palms Plaza 1295 - 1305 W Duval Mine Rd 81,893 900 1.10% $21.00/NNN
8 Valley Verde Center 70 - 140 W Duval Mine Rd 115,046 6,873 5.97% $17.00 - $19.00/NNN
9 Continental Plaza 180 - 260 W Continental Rd 122,824 2,360 1.92% $22.00/NNN
TOTAL 1,709,686 59,482
AVERAGE 244,241 8,497 3.39% $22.00 / NNN
Compiled by CBRE
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SUBJECT
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As shown, the Green Valley MSA retail market is performing at stronger levels than the subject’s
Southwest submarket and the Tucson market as a whole. With the Southwest submarket being at the
second lowest vacancy rate in Tucson and the Green Valley MSA market performing even better,
infers that demand for retail in the Green Valley MSA is strong and new retail development is
warranted in the subject area.
The next step is to determine the amount of general retail uses that are feasible in the Green Valley
MSA. The following demand model calculates the potential demand for additional general retail in
the Green Valley MSA over the next five years.
The basic premise utilizes the current population and retail demand statistics to ascertain the current
demand. Increases in population create additional demand for retail. The projected population
increases for the Green Valley MSA are utilized to conclude the additional projected demand for
general retail over the next five years.
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Demand Calculations - General Retail

Line No. Premise Current Projected in 5 years Comments
1 Total number of households in primary market area 38,080 40,126 Claritas Data
2 Average household income $63,274 $64,761 Claritas Data
3 Total household income in primary market area $2,409,473,920 $2,598,597,438 Line 1 x Line 2
4 % of income spent on retail 43% 43% Bureau of Labor Statistics
5 Total retail sales potential $1,036,073,786 $1,117,396,898 Line 3 x Line 4
6 % of retail sales by type of retail - General Retail 39% 39% Claritas Data, Primary research
7 Total subject type shopping center sales $404,068,776 $435,784,790 Line 5 x Line 6
8 Sales required per sq. ft. $311 $311 Current average sales PSF in area
9 Demand for sq. ft. of general retail from households in primary market area 1,298,930 1,400,886 Line 7 / Line 8
Compiled by CBRE
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M ARKET A NALYSIS
From the demand table above, the current demand for general retail square feet is 1,298,930
square feet. The projected amount of general retail square feet demand over the next five years is
1,400,886, an increase of 101,955 square feet. Thus, over the next five years, the demand for
general retail space in the Green Valley MSA is projected to be 101,955 square feet, or about
20,000 square feet per year.
Step 3.1(b) Infer Potential Development – Destination Retail
Destination retail includes services such as home improvement, car services, clothing, restaurants,
etc., where a patron is willing to drive a moderate distance to satisfy the needs. Based upon
interviews and research, the typical drive time for destination retail uses is between 10 and 20
minutes, expanding to 20 minutes and higher as needed for rural or smaller markets. Thus,
destination retail customers to the subject would also most likely be limited to the Green Valley MSA
area and would not draw Tucson customers for home improvement, car services, clothing,
restaurants, etc.
There is limited research and data in the market that indicates the portion of retail uses that are
considered to be destination retail. Therefore, we have conducted interviews with active Tucson retail
brokers who state that for the general Tucson market, general retail comprises about 40% of uses,
50% for destination retail, and 10% for specialty uses.
The Tucson Spectrum is a good example of a center with all three uses. While not physically within
the denoted Green Valley MSA, it was included in the earlier table as it is the most southern major
shopping center in Tucson and has an influence on the Green Valley MSA. Many residents from
Mexico patronize the Tucson Spectrum for destination retail needs. With a vacancy of just over 4% for
nearly 900,000 square feet of retail space, shows that the center draws from not only south Tucson
residents but also Green Valley MSA and Mexico residents. Tucson Spectrum acts almost as a
regional mall or power center for south Tucson and the Green Valley MSA. Residents of the Green
Valley MSA would likely patronize the Tucson Spectrum when they travel to Tucson for shopping.
Tucson Spectrum offers a wide range of services for one-stop shopping which allows the center to
draw from a wide trade area. Mr. Michael Laatsch, the leasing agent for the Tucson Spectrum shop
space, states that tenants tell him that their customers come from the Green Valley MSA, South
Tucson, Nogales, and Sonora Mexico.
There are a variety of uses are within the Tucson Spectrum such as food, sporting goods, groceries,
home improvement, specialty shops, and insurance uses. Most retail needs are found within the
Tucson Spectrum. Based upon the tenants within the Tucson Spectrum, the center has approximately
39% of general retail uses with tenants such as Food City, Target, and Dollar Tree; 48% of destination
retail uses with tenants such as Sports Authority, Best Buy, and LA Fitness; and 13% of specialty retail
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M ARKET A NALYSIS
with tenants such as Carter’s, Apple, and Wet Seal. Thus, residents of the Green Valley MSA are
currently satisfying their destination retail needs through the Tucson Spectrum.
The following demand model calculates the potential demand for additional destination retail in the
Green Valley MSA over the next five years.
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M ARKET A NALYSIS
Demand Calculations - Destination Retail

6 % of retail sales by type of retail - Destination Retail 46% 46% Claritas Data, Primary research
9 Demand for sq. ft. of destination retail from households in primary market area 1,532,072 1,652,327 Line 7 / Line 8
Compiled by CBRE
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M ARKET A NALYSIS
From the demand table above, the current demand for destination retail square feet is 1,532,072
square feet. The projected amount of destination retail square feet demand over the next five years is
1,652,327, an increase of 120,255 square feet. Thus, over the next five years, the demand for
destination retail space in the Green Valley MSA is projected to be 120,255 square feet, or about
Step 3.1(c) Infer Potential Development – Specialty Retail
Last, specialty retail includes services such as high-end clothing, theme restaurants, or services where
a patron is willing to drive a relatively long distance. Based upon interviews and research, the typical
drive time for specialty retail uses is between 20 and 30 minutes, expanding to 30 minutes and higher
as needed for rural or smaller markets. Thus, specialty retail customers to the subject could potentially
be accessed from Tucson, Nogales, and Mexico residents.
The following demand model calculates the potential demand for additional specialty retail in the
Green Valley MSA over the next five years.
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M ARKET A NALYSIS
Demand Calculations - Specialty Retail

6 % of retail sales by type of retail - Specialty Retail 15% 15% Claritas Data, Primary research
9 Demand for sq. ft. of specialty retail from households in primary market area 499,589 538,802 Line 7 / Line 8
Compiled by CBRE
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M ARKET A NALYSIS
From the demand table above, the current demand for specialty retail square feet is 499,589 square
feet. The projected amount of specialty retail square feet demand over the next five years is
538,802, an increase of 39,214 square feet. Thus, over the next five years, the demand for specialty
retail space in the Green Valley MSA is projected to be 39,214 square feet, or about 8,000 square
feet per year.
As stated earlier, the Tucson MSA attracts residents from Mexico for destination and specialty retail.
On any given weekend, the major malls throughout Tucson are heavily patronized by Mexican
Nationals.
The Tucson market has showed strong demand for specialty retail. As an example, La Encantada is a
high-end specialty retail shopping center located in the foothills of Tucson along Skyline Road. La
Encantada is an open-air lifestyle center with extensive landscaping, upscale shops, walkways, patios
and courtyards. Tenants consist of upscale specialty retailers, including home furnishings, jewelry,
apparel, accessory shops, and restaurants. Amenities include courtyards designed for entertainment,
community and school events. La Encantada has about 240,000 square feet of specialty retail shop
space, encompassing 65 tenants, and is currently 92.6% occupied having an average rental rate of
$30 per square foot, triple net, well above the Tucson average of $16.50. While the primary
demographic of the La Encantada shopper resides in the foothills area or within about a three –mile
radius of the center, La Encantada draws shoppers from all over Pima County. Prominent tenants
include Crate & Barrel, Brooks Brothers, Anthropolgie, Loius Vuitton, and other specialty retailers.
Among the major malls in Tucson, approximately 30% of tenants are specialty retailers. Both Park
Place Mall and Tucson Mall, the two prominent malls in Tucson are 98% and 98% occupied,
respectively, with average rental rates of about $42 per square foot, triple net.
Based upon the strong demand for specialty retail in these projects as indicated by the low vacancy
and high rental rates, it appears that more specialty retail demand than estimated by the earlier
calculation may be warranted.
In interviews with local Tucson retail brokers, the consensus was that prospective specialty tenants
want to be by either a regional mall or a lifestyle center. Based on the subject’s adjacency of the
Green Valley hospital, specialty retailers would most likely choose the subject over the other
competitive centers in the Green Valley MSA. Therefore, the subject should be able to capture a
significant portion of the annual demand for specialty retail.
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M ARKET A NALYSIS
Trade Gap
To further explore the potential for specialty retail at the subject, we have analyzed the retail
opportunity trade gap report by store type for the Green valley MSA and the Tucson MSA as compiled
by CBRE Research.
A trade gap report is a method used by economic development professionals and real estate agents
for converting retail trade gap data into estimates of retail real estate development capacity. The
trade gap is identified within the context of a well-defined trade area, such as the Green Valley MSA.
Using data for the trade area, the value of consumer expenditures made by local area residents is
measured. Then, the total value of retail sales in the area is measured. By subtracting total retail sales
(supply), from total retail expenditures (demand), we can derive the net balance of trade, or retail
trade gap, within the local retail sector. Using this information, we can identify which segments of the
retail economy are most in demand. The retail trade gap can be either positive or negative for
different retail sub-sectors. A negative trade gap indicates a net retail leakage. This is equal to the
amount of money spent by local residents outside of the trade area. Conversely, a positive trade gap
indicates a net injection of retail sales dollars. This is equal to the amount of money that residents
from outside the community spent within the trade area.
The U.S. Bureau of Labor Statistics (BLS) publishes data from the Consumer Expenditure Survey (CE)
that provides per capita estimates of consumer demand based on various demographic
characteristics. On the supply side, local retail sales tax data are often used by economists to develop
estimates of local retail sales. These data are typically available through the city, county, or state tax
assessor's office. When data are available, one simply multiplies total retail sales tax receipts by the
tax rate to estimate gross sales. The results are used to estimate local real estate development
potential.
The City of Tucson has a large negative retail trade gap, even though the two major malls, Tucson
Mall and Park Place Mall, and their periphery, which are heavily developed with retail, are within the
city limits. As stated, a negative trade gap is equal to the amount of money spent by local residents
outside of the trade area, or for our purposes, indicates the potential demand for City of Tucson
residents to travel outside of the city limits, or to Green Valley, to shop.
The following table shows the major retail type stores within the City of Tucson. The first group
indicates the store types that have a negative trade gap and their percentage of the total negative
trade gap. The specialty type stores are highlighted to illustrate the potential demand for specialty
stores at the subject. In other words, if many customers patronize these stores outside of the City of
Tucson limits as evidenced by the negative trade gap, then there is a higher likelihood that the subject
can attract this demand.
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M ARKET A NALYSIS
CITY OF TUCSON NEGATIVE TRADE GAP
S tor e T ype % of T otal

Motor Vehicle & Parts Dealers
- Automotive Dealers 16.0%
- Other Motor Vehicle Dealers 2.4%
- Automotive Parts, Accessories, & Tire 2.4%
Furniture & Home Furnishings Stores
- Furniture Stores 1.6%
- Home Furnishing Stores 0.3%
Electronics & Appliance Stores
- Appliance, Television, and Other Elec 1.9%
- Radio Television and Other Electro 1.9%
- Computer and Software Stores 0.2%
Building Material & Garden Equipment
- Building Material & Supply Dealers 7.7%
- Home Centers 1.3%
- Paint and Wallpaper Stores 0.0%
- Hardware Stores 1.7%
- Other Building Materials Dealers 4.6%
- Building Materials, Lumberyards 1.7%
- Nursery and Garden Centers 0.2%
- Grocery Stores 6.2%
Supermarkets and Other Grocery Stores 6.6%
Health & Personal Care Stores
- Pharmacies and Drug Stores 2.4%
- Cosmetics, Beauty Supplies 0.0%
- Optical Goods Stores 0.3%
- Other Health and Personal Care Stores 0.3%
- Gasoline Stations with Convenience 5.1%
Clothing & Clothing Accessories Stores
- Clothing Stores 2.5%
- Men's Clothing Stores 0.0%
- Children's and Infants' Clothing 0.1%
- Family Clothing Stores 2.6%
- Clothing Accessories Stores 0.0%
- Other Clothing Stores 0.1%
- Shoe Stores 0.8%
Jewelry, Luggage, & Leather Goods
- Jewelry Stores 6.2%
- Luggage, & Leather Goods Stores 1.6%
Sporting Goods, Hobby, Book, & Music
- Hobby, Toys and Games Stores 0.1%
- Musical Instrument and Supplies 0.4%
- Book, Periodical, & Music Stores 0.7%
- Book Stores and News Dealers 0.2%
- Prerecorded Tape, Compact Disc 0.5%
General Merchandise Stores
- Department Stores 5.5%
Miscellaneous Store Retailers
- Florists 0.0%
- Office Supplies, Stationery, & Gift S 0.1%
- Office Supplies and Stationery Stores 0.7%
- Used Merchandise Stores 0.7%
- Other Miscellaneous Store Retailers 1.2%
Foodservice & Drinking Places
- Full-Service Restaurants 4.1%
- Limited-service Eating Places 4.9%
- Special Foodservices 0.7%
- Drinking Places - Alcoholic Beverages 1.2%
Compiled by CBRE
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M ARKET A NALYSIS
The previous table suggests that there is demand for a number of specialty retail type stores at the
subject as evidenced by the fact that Tucson residents travel outside of the City of Tucson city limits to
shop at these specialty store types. The total negative trade gap of these specialty stores (highlighted)
is 13.4% indicating sufficient demand for specialty stores that are located outside of the main Tucson
area. While some of this draw is due to La Encantada being outside the Tucson city limits,
nevertheless, the indications are that there is demand for specialty retail that is located outside of the
Tucson city limits, suggesting that the 8,000 square foot per year of demand for specialty retail may
be conservative.
On the contrary, the following specialty type stores are sufficiently served in the Tucson market and
additional locations outside of the city limits would not likely be warranted.
CITY OF TUCSON POSITIVE TRADE GAP (SPECIALTY STORES)
Store Type
Convenience Stores
Specialty Food Stores
Gasoline Stations
Women's Clothing Stores
Camera & Photographic Equipment Store
Sporting Goods, Hobby, & Musical Inst
Sporting Goods Stores
Sew, Needlework, Piece Goods Store
News Dealers and Newsstands
Other General Merchandise Stores
Gift, Novelty, and Souvenir Stores
Compiled by CBRE
Last, since the subject site has exposure from Interstate 19 freeway where thousands of Mexican
National residents pass by each day, potential tenants oriented toward the Mexican culture may be a
portion of the specialty retail on the subject site. In addition, specialty stores targeted toward the
Green Valley resident, which is typically retired or near retirement, is also a demand driver for
specialty retail at the subject.
Step 3.1(d) Infer Potential Development – Retail Conclusion
The following table shows that over the next five years, there is approximately 52,000 square feet,
annually, of potential demand for retail space in the subject’s Green Valley MSA market area:
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Demand Calculations - Conclusion

Type General Retail Destination Retail Specialty Retail
Total additional projected demand for
sq. ft. of retail in subject market area 101,955 120,255 39,214
over the next 5 years
Per Year (rounded) 20,000 24,000 8,000
Compiled by CBRE
For general retail and destination retail, the Green Valley MSA has approximately 3.55 million square
feet with a vacancy rate of 4.3%. 2014 net absorption has been about 37,425 square feet.
Additionally, absorption has been consistent over the past couple of years. 2013 net absorption was
78,129 square feet, while 2012 absorbed 52,204 square feet. The Green Valley MSA currently has
191,748 available square feet, most of which is reported by local agents to be not functional or
inferior in quality and condition. Over the past two years, only 35,812 square feet of new retail space
has been built, with a majority of the new space being a single-tenant retailer (Goodwill); however, all
of this new space absorbed within the first quarter after construction was completed. At the current
absorption trend and low vacancy, demand for new good quality space in the Green Valley MSA is
warranted and should absorb quickly.
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M ARKET A NALYSIS
Step 3.2(a) Infer Potential Development – General Office (non-medical)
General office uses includes services such as insurance services, real estate services, financial
services, and other services that cater to area residents. Typical office users at the subject would most
likely be local businesses whose primary customer base would be residents within the Green Valley
MSA and would not attract Tucson residents due to distance.
Prior to analyzing the potential demand for general office for the Green Valley MSA, an overview of
the Tucson MSA office market is shown. The Tucson MSA has a strong influence on the Green Valley
MSA.
Tucson MSA
At the close of Q3 2014 the Tucson office market reported negative 79,284 sq. ft. of net absorption,
leading to a rise in vacancy to 19.8% for all property classes. This negative absorption comes at a
familiar time, as the last time the market reported negative absorption was in Q3 2013 when negative
63,380 sq. ft. of net absorption was reported across all property classes. This set back reduces the
year-to-date positive absorption to 20,944 sq. ft. Despite the contraction, the pace remains ahead of
last year, which had reported 227,459 sq. ft. of negative net absorption at this time of year. The
market remains hopeful for a strong end of the year, as the fourth quarter has typically been the
Tucson office market’s most productive quarter year-over-year, recording positive absorption in Q4
2012 and Q4 2013, with 58,678 sq. ft. and 56,651 sq. ft. of positive net absorption, respectively.
The Q3 2014 average asking rate on full service gross tracked office product in the Tucson market
experienced an increase despite negative absorption, increasing to $19.47 per sq. ft., up from
$19.28 in Q2 2014. The increase in rent may be the result of landlords anticipating increased activity
in the fourth quarter as trends year-over-year have shown. This rate, however, is still within the general
$19.00 to $20.00 range that has become the norm in this post-recession market.
As the Tucson market moves into Q4 2014, much of the focus will be on the state of the economy,
especially the residential real estate market and the strength of small businesses. The residential
market can dictate the health of the office market as some companies opt to move closer to where
their employees live. Due to new housing developments and residential moving trends, once thriving
submarkets – like East Central – are now struggling to keep vacancies down. This impact may be
remedied by smaller businesses entering the market, although some commercial real estate
professionals have voiced their concern in finding tenants that have the capital and credit to
confidently enter the market in premium office space.
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M ARKET A NALYSIS
Hot Topics
 With little activity from new businesses entering the market and the implementation of the
Affordable Care Act, non-profits and private healthcare providers have recently filled vacant
office spaces in the Tucson market. Social services, behavioral health clinics, and private
health care providers have been among the most active tenants in the market in Q3 2014.
This movement has helped stimulate an otherwise lackluster market.
 Q3 2014 was frustratingly slow, recording 79,284 sq. ft. of negative net absorption. The
office market struggled to find an identity as it transitions from the end of its most recent
activity cycle. Commercial real estate professionals are waiting for new startups and
technology companies to emerge from incubators and search out space to house their
growing businesses. Activity spiked towards the end of the third quarter creating optimism and
potential for a stronger fourth quarter and close to the year.
 With limited new tenants in the market and ample available space, the Tucson office market
experienced a large scale game of musical chairs among existing tenants. Many tenants have
taken the opportunity to upgrade their offices in Q3 2014. With insufficient new tenant
activities, landlords have been motivated to move space, and have offered lower rates and/or
concessions in high quality vacant space.
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M ARKET A NALYSIS
According to CBRE Research, the base inventory of office space stands at 9,241,945 square feet. Of
this total, approximately 18,000 square feet is in the Southwest submarket, or 0.002% of the overall
supply. Current vacancy in the subject’s submarket is 36.7%, and the average asking rate is $25.00
per square foot, full service gross.
The subject site is physically located south and out of the Southwest submarket, as delineated by CBRE
Research. Much of the Southwest submarket encompasses the airport area and does not represent
the characteristics of the Green Valley MSA.
Green Valley MSA
As noted earlier, the area defined as the Green Valley MSA covers an area just south of the Tohono
O’Odham San Xavier Indian Reservation or the northern boundary of Sahuarita, where development
densities are much lower than Tucson proper, southward down to the international border.
According to CBRE Research, the Green Valley MSA office market statistics are as follows:
Green Valley MSA - Office Statistics

Gross Rentable Vacancy Rate Q3 2014 Net 2014 YTD Net Average Asking Lease
Area % Availability Rate % Absorption Absorption Rate
Office 792,907 7.5 9.1 5,551 3,312 $17.50/Sq. Ft./FSG
Compiled by CBRE
More specifically, the Green Valley MSA is comprised of a handful of office developments, over
10,000 square feet in size, which are most influential in the area in terms of size and quality and
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M ARKET A NALYSIS
where the majority of residents obtain services such as insurance, real estate, and financial services.
These major office projects are shown in the following table and map.
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M ARKET A NALYSIS
GREEN VALLEY MSA - MAJOR OFFICE DEVELOPMENTS

ID Address Size Class Type Available SF Available % Asking Rate
1 52 W Calle de Las Tiendas, Green Valley 12,997 B General Office 12,997 100% $12.00 / NNN
2 75 W Calle de Las Tiendas, Green Valley 15,988 C General Office 1,760 11% $10.00 - $11.00 / NNN
3 400 W Camino Casa Verde, Green Valley 38,443 B Medical Office 0 0% ---
4 210 W Continental Road, Green Valley 33,056 C General Office 6,933 21% $16.00 / NNN
5 275 W Continental Road, Green Valley 23,650 C General Office 10,271 43% $21.00 - $24.00 / FSG
6 1055 S La Canada, Green Valley 23,905 B Medical Office 2,052 9% ---
7 1151 S La Canada, Green Valley 14,862 B Medical Office 4,171 28% $22.00 / NNN
8 1315 S La Canada, Green Valley 13,644 B Medical Office 0 0% ---
9 18855-18865 S La Canada, Green Valley 10,132 B General Office 6,000 59% $21.00 / NNN
10 780 S Park Center Ave, Green Valley 16,565 B General Office 0 0% ---
11 825 N Grand Ave, Nogales 25,792 B General Office 2,081 8% $30.50 / FSG
12 3241 N Grand Ave, Nogales 11,950 C General Office 0 0% ---
13 1600 W La Quinta, Nogales 190,000 B General Office 0 0% ---
14 142 W Mariposa, Nogales 11,557 B General Office 0 0% ---
15 1103 Circulo Mercado, Rio Rico 18,000 B Medical Office 0 0% ---
16 41-57 Paseo de Yucatan, Rio Rico 29,513 B General Office 0 0% ---
TOTAL 490,054 46,265 9.44%
AVERAGE 30,628 2,892
Compiled by CBRE
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M ARKET A NALYSIS
SUBJECT
As shown, the Green Valley MSA office market is performing at higher occupancies than the Tucson
market as a whole, yet with below average rental rates. These statistics infers that demand for office
in the Green Valley MSA is somewhat better than the Tucson MSA and some new office development
is warranted in the subject area. From interviews conducted with developers and agents of some of
these major projects, vacancy is partially affected by some outdated and dysfunctional space, which
also tends to lower rental rates. Thus, vacancy of good quality space is somewhat lower.
The next step is to determine the amount of non-medical office space that is feasible in the Green
Valley MSA. The following demand model calculates the potential demand for additional general
office in the Green Valley MSA over the next five years.
The basic premise utilizes the current employment statistics to ascertain the current demand. Increases
in employment create additional demand for office. The projected employment increases for the
Green Valley MSA are utilized to conclude the additional projected demand for office over the next
five years.
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M ARKET A NALYSIS
Demand Calculations - Office

1 Total employment in primary market area 34,645 37,692 Claritas Data (current); UA Outlook (projected)
2 Percentage of employment in office within primary market area 15% 15% Claritas Data
3 Estimated office employment 5,309 5,775 Line 1 x Line 2
4 Average Sq. Ft. per employee 150 150 Zoning Guidelines and Market Research
5 Demand for sq. ft. of office in primary market area 796,275 866,299 Line 3 x Line 4
Compiled by CBRE
© 2014 CBRE, Inc.

M ARKET A NALYSIS
From the demand table above, the current demand for general office (non-medical) square feet is
796,275 square feet. The projected amount of general office square feet demand over the next five
years is 866,299, an increase of 70,024 square feet. Thus, over the next five years, the demand for
general office space in the Green Valley MSA is projected to be 70,024 square feet, or about
Step 3.2(b) Infer Potential Development – Office Conclusion
The following table shows that over the next five years there is approximately 70,000 square feet of
potential demand for general office (non-medical) space in the subject’s Green Valley MSA market
area:

Type General Office
sq. ft. of general office in subject market 70,024
area over the next 5 years
Per Year (rounded) 14,000
Compiled by CBRE
For general office, the Green Valley MSA has approximately 800,000 square feet with a vacancy rate
of 7.5% overall and a vacancy rate of about 9.5% within the major office developments. Absorption
has been sluggish, while average rental rates are below Tucson averages. The Green Valley MSA
currently has 72,155 available square feet, some of which is reported by local agents to be either not
functional space or inferior in quality and condition. While the data suggests that 14,000 square feet
of new general office space could be absorbed, at the current absorption trend and vacancy, suggests
a lower amount initially can be absorbed with more absorption as the office market becomes stronger
over the next few years. Thus, demand for new good quality general office (non-medical) space in
the Green Valley MSA is somewhat limited.
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M ARKET A NALYSIS
Step 3.3(a) Infer Potential Development – Multi-family
Given the mixed-use plan for the subject site and it being adjacent to the Green Valley Hospital,
multi-family residential is a probable use at the subject site. There is a somewhat limited amount of
multi-family units in the Green Valley MSA. Given the lack of available quality multi-family units in
the Green Valley MSA, the increasing population trend of the area, there exists potential demand for
additional units. Further, being near the hospital, it is possible that some units can be leased on a
short term basis for families of hospital patients. Also, the subject’s orientation allows for spectacular
mountain views which can entice residential development. Last, according to a consultant of the
client, Pima County is planning a +/-2,500-acre open space park on the east side of Interstate 19
freeway surrounding the subject. This would restrict land development on the east side of the freeway
creating a premium for remaining residential sites and act as an enticing amenity for the subject.
Prior to analyzing the potential demand for multi-family for the Green Valley MSA, an overview of the
Tucson MSA multi-family market is shown. The Tucson MSA has a strong influence on the Green
Valley MSA.
MULTI HOUSING MARKET—METRO TUCSON ANALYSIS
A snapshot of the multi-family apartment market as well as conditions within the submarket is
presented as follows:
APARTMENT MARKET STATISTICS

Category Tucson Area Submarket 14
Existing Supply (Units) 67,447 2,415
Construction Completions YTD (Units) 1,066 0
Leasing YTD (Units) 618 -11
Average Occupancy 91.8% 89.7%
Average Rent Per Unit $636 $601
Average Unit Size 735 697 SF
Average Rent PSF $0.87 $0.86
Date of Survey 3Q 2014 3Q 2014
Source: Real Data 3Q2014
The subject site is situated within Submarket 14, Southwest Tucson submarket according to the
classification system employed by RealData, Inc. This area generally covers the Green Valley MSA.
Current Market Trends
Following a brisk 2nd quarter in which the Metro Tucson multifamily housing market experienced a
record absorption, for that calendar period, the market seems to be catching its’ breath. The pace of
improvement has slowed, although most factors seem to be positive.
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The most troubling element will be found in Gross Rents. This quarter had the greatest decline in 3rd
quarter rents compared to the previous quarter since 1988. That is no small factor, however, we are
also seeing the smallest 3rd quarter rental concession since 2007.
Demand Characteristics
TUCSON, AZ - ECONOMIC INDICATORS

Indicators 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Gross Metro Product (C$B) 37.7 35.0 35.4 36.7 37.6 37.6 38.4 40.6 42.8 44.8 46.6 48.2
% Change -2.7 -7.1 1.3 3.6 2.3 0.1 2.1 5.7 5.5 4.6 4.0 3.4
Total Employment (Ths) 380.0 360.0 352.5 353.8 358.7 361.2 365.3 374.4 387.3 396.4 402.2 408.2
% Change -1.0 -5.2 -2.1 0.4 1.4 0.7 1.1 2.5 3.4 2.4 1.5 1.5
Unemployment Rate (%) 5.6 9.0 9.4 8.4 7.4 7.0 6.1 5.4 4.8 4.5 4.4 4.4
Personal Income Growth (%) 5.0 -4.8 0.6 3.5 3.2 2.3 4.6 7.1 7.9 7.3 6.2 5.5
Median Household Income ($ Ths) 46.1 43.8 42.9 43.1 43.8 44.5 46.1 47.8 49.6 51.5 53.0 54.2
Population (Ths) 967.8 975.6 982.0 987.9 992.4 996.6 999.3 1,020.8 1,049.0 1,078.9 1,109.7 1,142.3
% Change 1.2 0.8 0.7 0.6 0.5 0.4 0.3 2.1 2.8 2.8 2.9 2.9
Net Migration (000) 6.9 2.8 2.1 2.4 1.7 0.8 -0.1 18.6 25.5 27.1 28.1 29.9
Single-Family Permits 2,743.0 1,934.0 1,726.0 1,388.0 2,175.0 2,623.0 3,294.7 6,026.4 7,469.3 7,747.5 6,987.7 6,561.9
Multifamily Permits 478.0 195.0 212.0 854.0 666.0 868.0 1,208.4 1,372.6 1,563.1 1,425.8 1,320.0 1,330.7
Existing-Home Price ($ Ths) 205.5 172.8 152.9 133.8 149.9 169.3 181.5 194.2 205.2 212.8 224.7 237.4
Source: Moody's Economy.com
Vacancy
The following tables summarize metro and submarket vacancy:
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Metropolitan Tucson's 8.21% average vacancy rate for stabilized projects represents a change of -
0.84% from the previous quarter and a -1.07 % change from one year ago. Vacancy rate was lowest
in District 5 (4.88 %). The highest rate of 11.28 % was posted in District 12. Metropolitan Tucson's
occupancy increased during the quarter to 53,768 units. During the quarter, 10 Districts realized
improvements in vacancy, with the largest improvement of -20.54% occurring in District 15. The
highest increase in vacancy of 1.21% was suffered in District 14.
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Absorption
The following table summarizes metro and submarket absorption.
Metropolitan Tucson's absorption (net change in occupied units) for Stabilized, Lease-up & Out of
Service units for this quarter is a positive 618 units. This makes the four quarter total for the area
positive 1,085 units. Absorption experienced the largest increase in Submarket 6 (138 units) and the
largest decline in Submarket 11 (-55 units ). The Submarket with the highest absorption over four
quarters is 1 (1,085 units) and the lowest over four quarters is 1 (0 units).
Rental Rates/ Concessions
The following table summarizes metro and submarket rents:
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Metropolitan Tucson's monthly average unfurnished rent per unit this quarter, excluding utility costs,
decreased to $636. Gross rents per unit are highest in District 2 at $850. The lowest gross rent of
$510 per unit was posted in District 13.
New Construction
There are 488 apartment units that are either under or scheduled for construction. As a comparison,
one–year ago there were almost 1,226 that were either under or scheduled for construction. An
additional 283 units are pending plan approval, while 961 have received zoning approval. While the
488 units are not an insignificant quantity for the local market, it is important to note that vacancy has
decreased and absorption has remained positive for the overall market over the last year. Since 2012
there have been 3,231 newly constructed units come online in the market, though overall vacancy has
generally remained stable since 2011.
The following table shows under construction and proposed projects in the Tucson MSA as of 3Q
2014:
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There are no units planned or under construction within the Green Valley MSA.
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Sale Prices
Data showing apartment sales of 75+units or more in the Tucson metropolitan area over the last
several years is summarized below:
TUCSON APARTMENT SALES: 75 + Units

2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014
Total # of Sales 53 28 14 10 8 10 21 11 11
Total Sales Value $771,709,540 $414,738,888 $143,280,000 $57,960,000 $198,123,418 $60,731,000 $332,103,631 $134,826,000 $86,185,000
Total Square Feet 9,607,656 4,973,305 1,563,329 1,638,339 3,178,245 1,436,163 4,077,379 1,443,784 1,434,216
Total Units 12,699 6,481 2,766 2,677 4,376 2,219 4,584 2,011 2,442
Total Acres 536 280 148 93 193 67 215 93 85
Average Sale Price $14,560,557 $14,812,103 $10,234,286 $7,245,000 $24,765,427 $6,073,100 $15,814,459 $12,256,909 $7,835,000
Average Number of SF 181,277 177,618 111,666 163,834 397,281 143,616 194,161 131,253 130,383
Average Price per SF $80.32 $83.39 $91.65 $44.51 $62.34 $42.29 $83.42 $93.38 $60.09
Median Price per SF $74.65 $69.54 $81.06 $42.28 $84.78 $31.80 $57.17 $53.26 $54.80
Average Price per Unit $60,769 $63,993 $51,800 $26,673 $45,275 $27,369 $72,448 $67,044 $35,293
Median Price per Unit $48,052 $45,329 $41,605 $21,739 $73,076 $19,723 $56,212 $25,223 $36,688
Average Number of Units 240 231 198 268 547 222 218 183 222
Average Number of Acres 10.11 9.99 10.59 9.25 24.09 6.73 10.23 8.41 7.76
Average Cap Rate 6.20% 5.50% 6.00% N/A 7.20% 7.92% 6.88% 6.45% 6.57%
Average GRM 7 7.1 8.3 N/A 7.35 N/A 5.44 6.53 N/A
Source: CoStar
According to the data, 2006 was a record year in terms of total sales volume and pricing that was
driven both by condominium conversions and rising occupancy rates throughout the year (53 sales).
Sales slowed in 2007 to 28 overall, although the average price per unit increased slightly. In
congruence with the financial crises and subsequent recession, sales activity from 2008 through 2011
dropped precipitously, with the average price per unit falling to its low point of $26,673 in 2009.
Activity rebounded in 2012 with a total of 21 transactions representing over $332 million in sales
volume and an average price of $72,448 per unit. The number of sales dropped again in 2013 to
11, but the average price per unit was a healthy $67,044. 2014 YTD sales are 11 and on track to
surpass 2013 volume, though with a much lower average price per unit. The majority of the
properties that sold in 2014 have been Class C quality.
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MULTI-HOUSING MARKET—SUBMARKET ANALYSIS
The following discussion concerns the market conditions impacting the immediate subject submarket.
The subject property is located in Submarket 14, Southwest Tucson, as designated by RealData, Inc.
The map below delineates the area incorporated in this submarket.
SUBJECT
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Supply Analysis
An analysis of the specific inventory comprising the subject’s submarket indicates the following age
characteristics in complexes with 40+ units.
SUBMARKET APARTMENT PROJECTS (40+ UNITS)

Submarket 14
Year Built Total # Units % of Total
Prior to 1975 0 0.0%
1976 to 1980 0 0.0%
1981 to 1990 1,550 64.2%
1991 to 2000 808 33.5%
2001 to Present 57 2.4%
Total # Units 2,415
As shown in the chart above, nearly all of the projects were built between 1981 and 2000.
Incoming Inventory
Currently, there are no apartment complexes planned or under construction within the subject’s
submarket.
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Absorption
The following table presents the historical absorption within the subject’s submarket:
HISTORIC ABSORPTION
40+ UNIT COMPLEXES
Period Submarket 14 Tucson
1Q2009 17 -336
2Q2009 -33 -460
3Q2009 51 525
4Q2009 -20 -168
1Q2010 -28 548
2Q2010 -30 -245
3Q2010 41 839
4Q2010 -7 129
1Q2011 59 652
2Q2011 7 -370
3Q2011 -28 941
4Q2011 2 28
1Q2012 0 311
2Q2012 7 -285
3Q2012 -28 516
4Q2012 -13 -77
1Q2013 4 334
2Q2013 11 204
3Q2013 -10 30
4Q2013 -20 186
1Q2014 -6 46
2Q2014 17 235
3Q2014 -22 618
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Vacancy
The following chart depicts recent historical vacancies within 40+ unit complexes.
STABILIZED VACANCY RATES

40+ UNIT COMPLEXES
Period Submarket 14 Tucson
1Q2009 11.80% 11.66%
2Q2009 13.62% 12.61%
3Q2009 10.80% 11.74%
4Q2009 11.91% 12.21%
1Q2010 13.45% 11.35%
2Q2010 15.10% 11.76%
3Q2010 12.84% 10.39%
4Q2010 13.23% 10.17%
1Q2011 9.98% 9.41%
2Q2011 9.21% 10.57%
3Q2011 7.11% 9.10%
4Q2011 7.00% 9.35%
1Q2012 7.00% 9.03%
2Q2012 6.62% 10.09%
3Q2012 8.16% 9.55%
4Q2012 8.88% 9.91%
1Q2013 8.65% 9.44%
2Q2013 8.05% 9.39%
3Q2013 8.60% 9.28%
4Q2013 9.70% 9.41%
1Q2014 10.03% 9.33%
2Q2014 9.10% 9.05%
3Q2014 10.31% 8.21%
The overall trend with respect to vacancy has been downward from 2009 through mid-2013, with a
slight tick upward over late 2013-2014. The subject’s submarket has generally outperformed the
overall market during most of 2011 through 2013 and on par with the overall market during 2014.
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Rental Rates
The following chart summarizes rental rates in the submarket.
AVERAGE RENT
UNFURNISHED - NO UTILITIES
40+ UNIT COMPLEXES
Type Submarket 14 Tucson
Studio * $432
1BR, 1BA $515 $551
1BR, 1BA+ * $679
2BR, 1BA $604 $644
2BR, 1BA+ $729 $776
3BR, 1BA * $806
3BR, 1BA+ $842 $921
4BR, 1BA+ * $939
Average $604 $636
* No Significant Units of This Type
The Tucson apartment market has exhibited strong occupancy levels, increasing rental rates, and
strong absorption over the last few years. Considering the recent trends in absorption and the
prospects for new construction, the market area should maintain a stabilized occupancy position. The
addition of new product to the market may create minor downward pressure on occupancy and on
owners’ ability to obtain the effective rental increases of the past several years. However, the long-
term projection for the market is for continued growth.
With respect to the subject submarket in particular, the submarket has exhibited occupancy levels
above the overall Tucson MSA for many years, but has seen limited absorption during the same
period. Overall, the subject submarket is currently exhibiting similar demand levels as the overall
Tucson MSA.
The multi-family projects within the Green Valley MSA are either primarily rent restricted Class B and
C projects or are located in the northern portion of the neighborhood in the southern portion of
Tucson. None of these projects are Class A and a multi-family project at the subject would be
generally superior to them.
With respect to the type of multi-family units that may best be suited for the subject property, over
2014, there have been approximately 1,066 new multi-family units that have been constructed within
the Tucson MSA. All of these units have been Class A projects. Approximately 400 units have been
student housing projects near the University of Arizona, while the remaining 660+ are traditional
units.
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A new concept to Tucson has been the Avilla projects developed by Alta Vista Communities. These
Class A projects are single-story detached rental units that have been very successful in the Tucson
market. The Avilla projects are located in infill sites as well as within growth areas of Tucson. A
photo and aerial of the typical project is shown below:
Nearly all of these projects are located within areas that have $60,000 to $70,000 average
household incomes. The subject site area has an average household income of about $63,000 and
is typically developed with single-family detached residences. Thus, the most likely type of multi-
family units at the subject site would be similar Class A single-story detached rental units.
The next step is to determine the amount of multi-family units that are feasible in the Green Valley
MSA. There are several different steps employed to determine demand.
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Tenant Income and Rent Affordability
Tenant income has been estimated in comparison to current average rental rate within the subject’s
submarket. According to RealData, the average market rental rate for the subject’s submarket is
$604. Based on typical qualification requirements of household income being typically 3 to 4 times
the monthly rent, tenants must make a minimum of $25,368 ($604 x 3.5 x 12 months). This is well
below the Green Valley MSA’s average household income of $63,274.
More applicable to the subject, using this household income and typical qualification requirements,
the average household within the Green Valley MSA could afford a monthly rental rate of up to
$1,506 ($63,274 / 3.5 / 12 months). This is well within the rental rate range of Class A units.
Further, the average rental rate of an Avilla Class A detached rental unit is $1,085 per unit, which
requires a minimum household income of $45,570 ($1,085 x 3.5 x 12). Thus, the average
household within Green Valley could easily afford Avilla type units and these units types would be a
likely use for multi-family at the subject site.
Income and Subject Renter Segment
The competitive area for the subject property has been concluded to be within the Green Valley MSA,
as defined earlier and is best representative of the potential renter at the subject. We have analyzed
the income pattern and the household income distribution for this area, which is included in the table
below.
HOUSEHOLD INCOME DISTRIBUTION

Green
Tucson Pima County
Households by Income Distribution - 2014 Valley MSA
Less than $15K 12.62% 21.55% 16.38%
$15K - $25K 12.33% 15.41% 13.04%
$25K - $35K 10.39% 13.32% 11.90%
$35K - $50K 14.43% 15.26% 14.58%
$50K - $75K 19.67% 16.31% 17.87%
$75K - $100K 12.67% 8.61% 10.70%
$100K - $150K 12.46% 6.76% 9.91%
$150K - $250K 4.38% 2.16% 3.93%
$250K - $500K 0.86% 0.52% 1.33%
$500K or more 0.18% 0.11% 0.35%
Based on the previous table, approximately 75% of the households in the Green Valley MSA can
afford the average rental rate of $604. As a comparison, approximately 63% of the Tucson MSA
residents can afford the Tucson MSA’s average rental rate.
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More importantly, approximately 57% of the households within the Green Valley MSA can afford the
average rental rate of an Avilla Class A detached rental unit of $1,085 per unit. Thus, Green Valley
has a comparatively good likelihood of attracting Class A multi-family residents.
In addition, there are households with higher incomes that would not choose to live at a multi-family
project at the subject site. We have estimated that households with incomes greater than $100,000
would fall into this category and typically choose to live in single-family housing. Therefore,
approximately 61% of the households within the Green Valley MSA are either unable to afford a Class
A apartment rent or would choose not to live at a Class A apartment due to economic reasons. Thus,
39% of households within the Green Valley MSA can afford an Avilla-type unit.
While the subject site is located in an area that is primarily developed with single-family detached
housing, much of the housing is built on small lots or within communities where much of the common
areas are taken care by the home owner’s association HOA. In other words, the demographics of the
area have historically demanded low-maintenance properties. A Class A detached rental unit
property would fit well within this trend.
As additional support for residential development within the Green Valley area, according to the
Metro Study, a single-family subdivision development report, over the last 12-months there have been
just over 300 new homes built within the major residential developments in the Green Valley MSA.
These range in price from $115,000 to $400,000 with a majority located in Sahuarita in the
$200,000 range. This is a good indication that housing in the Green Valley MSA is trending
forward.
The following demand model calculates the potential demand for additional Class A multi-family units
in the Green Valley MSA over the next five years.
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Demand Calculations - Multi-family

1 Population Forecast 97,828 110,683 Claritas Data, Arizona Outlook
2 Average Increase Per Year --- 2.50% Estimated
3 Persons Per Household 2.6 2.6 Claritas Data
4 Occupied Housing Unit Demand (Total Households) 37,626 42,571 Line 1 / Line 3
5 Percentage of Apartment Units 15.0% 15.0% Estimated
6 Potential Demand for Apartments 5,644 6,386 Line 4 x Line 5
Percentage able to Afford Units in Subject Economic
7 39% 39%
Segment or Choose Not To
Total Potential Demand for Occupied Units in Subject
8 2,201 2,490 Line 6 x Line 7
Economic Segment
9 Plus Frictional Vacancy @ 5.0% 110 125
Total Potential Demand for Units in Subject Economic
10 2,311 2,615 Line 8 + Line 9
Segment
Compiled by CBRE
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Step 3.3(b) Infer Potential Development –Multi-family Conclusion
From the demand table above, the projected number of Class A multi-family units demanded over
the next five years is 2,615, an increase of 304 units. Thus, over the next five years, the demand for
Class A multi-family units in the Green Valley MSA is projected to be 304 units, or about 60 units per
year.
As stated earlier, the success of the Avilla detached rental unit in Tucson has been strong, which
would be a most likely unit type for the subject area. Over the last year within the Tucson MSA, the
occupancy rate of Class A projects has generally been about 3%-4% higher than the occupancy rate
for all unit types. The Green Valley MSA demographics suggest that the hassle-free nature of these
Class A units would be a likely unit type for the subject. Further, given the lower vacancy of Class A
units in the market suggests that more than 60 units annually could potentially be absorbed.
The following table shows that over the next five years, there are approximately 75+ units, annually,
of potential demand for Class A multi-family units in the subject’s Green Valley MSA market area:

Type Class A multi-family
multi-family units in subject market area 300+ units
over the next 5 years
Per Year 60+ units
Compiled by CBRE
Step 3.4(a) Infer Potential Development – Hospitality
Given the mixed-use plan for the subject site and it being adjacent to the Green Valley Hospital, a
hospitality use is being considered by the client as a probable use at the subject site. There is a
limited amount of hotels within the Green Valley MSA. Given the transient nature of “snowbirds”, a
primary demographic in the Green Valley area, the addition of a new hotel may not be the best use
at the current time given the current market dynamics.
Prior to analyzing the potential demand for hospitality for the Green Valley MSA, an overview of the
Tucson MSA hospitality market is shown. The Tucson MSA has a strong influence on the Green Valley
MSA.
TUCSON AREA HOTEL MARKET ANALYSIS
According to the CBRE Econometric Advisors (CBRE-EA) Hotel Outlook – 2nd Quarter 2014, the
Tucson lodging market includes a total of 8,511 full-service and 7,437 limited-service available
rooms. The subject is located within the Tucson/East Tucson submarket, which has a total of 3,659
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full-service and 2,304 limited-service available rooms. As shown in the chart below, Hospitality and
Leisure is the 5th largest employment sector by percentage in the Tucson area.
Total employment in Tucson currently stands at 365,500 workers. Over the last five years, total
employment in the Tucson area has declined at an average annual rate of 0.3%, while across the
U.S., employment has grown at an average annual rate of 1.1%. In the last four quarters, Tucson's
employment has grown at an average annual rate of 1.3%. The CBRE-EA forecast predicts growth of
3.3% in the Tucson area in the next five years. Tucson's construction employment sector will post the
best job performance over the next five years.
Economic Drivers of Demand
Personal income and total employment are the primary economic drivers in the CBRE-EA hotel
forecasting models. The graph below shows the annual growth rates of these variables from 2004
through year-end 2018.
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Annual Market Summary and Forecast
Since year-end 2008, total employment in Tucson has declined at an average annual rate of 0.7%,
while real personal income has declined 0.5% annually. Total employment is expected to grow 3.2%
annually and real personal income is forecasted to grow 4.3% annually through 2019. As of 2013,
supply for Tucson's combined full and limited service segments stood at 15,823 rooms. The combined
forecasts for the full and limited service segments project 16,476 rooms by 2019, an average
increase of 109 rooms per year. The combined full and limited service forecasts for RevPAR project
an average annual increase of 5.2%, compared to an average annual decline of 3.6% over the
2008-2013 period.
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FULL SERVICE SUMMARY
Presented below is the CBRE-EA six-year forecast for the Tucson full service hotel market. Historical
measures are provided going back to 2009. Market data through the 2nd quarter of 2014 are
included in the year-end 2014 estimates.
The forecast for Tucson's full-service segment projects supply to increase by 379 rooms from the 2013
level of 8,473 rooms by 2019. Demand is forecasted to reach 5,385 rooms per night by 2019.
Occupancy rates are expected to improve to 60.8%, relative to 2013's average occupancy rate of
57.0%. ADR is expected to reach $135.21 by 2019, compared to 2013's annualized ADR figure of
$113.25. RevPAR is expected to reach $82.25 in 2019, compared to 2013's annualized figure of
$64.56.
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LIMITED SERVICE SUMMARY
Presented below is the CBRE-EA six-year forecast for the Tucson limited service hotel market.
Historical measures are provided going back to 2009. Market data through the 2nd quarter of 2014
are included in the year-end 2014 estimates.
The forecast for Tucson's limited-service segment projects supply to increase by 273 rooms from the
2013 level of 7,351 rooms by 2019. Demand is forecasted to reach 5,280 rooms per night by
2019. Occupancy rates are expected to improve to 69.3% relative to 2013's average occupancy rate
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of 58.0%. ADR is expected to reach $91.02 by 2019, compared to 2013's annualized ADR figure of
$72.14. RevPAR is expected to reach $63.04 in 2019, compared to 2013's annualized figure of
$41.86.
CBRE-EA breaks down the Tucson market into three submarkets.
Green Valley MSA - Submarket
There are four hotels within the Green Valley MSA. According to interviews with the hotel managers,
the following metrics were gathered:
GREEN VALLEY MSA - MAJOR HOTEL PROPERTIES

2014 2014 ADR
ID Name Address Rooms Occupancy (Approx.)
1 Wyndham 5775 S. Camino Del Sol, Green Valley 92 50% $100
2 Best Western 111 S. La Canada Dr, Green Valley 105 40% - 50% $80
3 Comfort Inn 90 W. Esperanza Blvd, Green Valley 55 40% - 50% $80
4 Holiday Inn 19200 S. I-19 Frontage Road, Green Valley 60 40% - 50% $80
TOTAL 312
AVERAGE 78 45% $85
Compiled by CBRE
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SUBJECT
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As a comparison, average Tucson occupancy rates range between 54.7% and 59.6% with an average
of 57.2% for limited service hotels. Tucson ADRs range from $64.67 to $85.57 for limited service
hotels. The four major hotels in the Green Valley MSA have an occupancy range between about 40%
- 50% with an average of about 45%. ADRs range from about $80 to $100. While occupancy is
lower, ADRs are on the upper end of the average. The Wyndham reports the highest occupancy and
average rates in the Green Valley MSA due primarily to a superior quality and a larger room size as
well as direct access to golf.
The following further describes the current strengths and weaknesses of the Green Valley MSA
hospitality market.
Strengths
 The primary driver of hotel guests to the four Green Valley hotels is visiting family in the area
or to play golf.
 A health and wellness concept hotel may be a good complimentary use with the Green Valley
hospital; however, the location may be a bit too far from Tucson and Mexico to attract Tucson
or Mexico residents.
Weaknesses
 The Green Valley MSA peak season for hotel guests is typically only from January through
April with October, November, and December seeing some activity due to the holidays. This
historically has limited overall occupancies.
 While there is potential for relatives of Green Valley Hospital patients to stay at nearby Green
Valley hotels, the hospital has only 50 beds and is not seen as a big driver of new hotel
guests. As further support, the Sheraton Hotel in Tucson, which is the nearest hotel to the
607-bed Tucson Medical Center (TMC), generates some, but not a substantial part of its
occupancy. Thus, the larger TMC hospital still is not a major driver of guest stays at the
nearby Sheraton hotel. Local hotel real estate brokers note that due to the increase in out-
patient centers, that demand from hospital patients and their families have decreased in recent
years.
 According to hotel managers, occupancies and ADRs in the Green Valley MSA have not
increased over the past several years.
In addition, we interviewed local and regional hotel real estate brokers who represent local hotel
owners and developers. They noted that construction costs are a major factor in determining the
viability of a new hotel. They opined that a new hotel would most likely need to reach 60% to 65%
occupancy by Year 2 of operation at an $85 or higher ADR to be feasible with today’s construction
cost. This is above the Green Valley MSA market averages.
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Last, some residents from Mexico traveling to Tucson to shop or visit family stay at local Tucson hotels.
While there are only a couple hotels in Tucson that report significant guests from México, these hotels
are located in close proximity to the two major Tucson malls, the primary draw.
Overall, with the weaknesses in the Green Valley MSA appears that a new hospitality use is not
probable at the subject at this current stage of the market.
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STEP 4: MEASURE COMPETITIVE SUPPLY
The first part of this analysis is to identify the available and future competitive supply. The second part
of the competitive supply analysis is to complete a qualitative ranking of the comparable properties.
In this analysis, we rank the competitive properties against the subject property.
Step 4.1: Inventory of Existing Competitive Properties, Properties Under Construction,

Planned Properties and Proposed Properties
A search if building permits issued over 2014 resulted in no permits for the Green Valley MSA other
than those associated with the Green Valley Hospital and a couple small build-to-suit retail permits.
The strong occupancy and rental rates within this submarket for retail, office, and multi-family suggest
that construction will increase in the future; however, no developments are currently anticipated. As
shown in the location analysis earlier, the subject site was gauged to be moderately superior in terms
of potential and desirability for development and would most likely be one of the first sites to be
development in the area in the near future.
Step 4.2: Analyze Competitive Supply and Rate the Subject Against the Competition
The following tables show the ratings for the comparable properties to the subject in the market for
each use. We have rated each of the comparables based on location, age and amenities. We have
rated the properties based on a scale of 1 to 4 with 4 being the highest rating.
RETAIL
COMPETITVE PROPERTIES SAMPLE SURVEYED & RATED - RETAIL

Comp Size Ratings
No. Name (GBA) Occ. Location Age Quality Score
1 Rancho Sahuarita Marketplace 212,615 99% 4 4 4 12
2 Sahuarita Plaza 94,174 90% 3 2 3 8
3 Madera Marketplace 188,000 100% 3 4 4 11
4 Sahuarita Palms Plaza 81,893 99% 3 3 3 9
5 Valley Verde Center 115,046 94% 3 2 2 7
6 Continental Plaza 122,824 98% 3 2 2 7
Subject Adjacent to Green Valley Hospital +/- 64,000 N/A 3 4 4 11
Compiled by CBRE
Overall, the subject property ranked near the upper end of the range compared to the most
competitive retail properties in the Green Valley MSA.
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OFFICE
COMPETITVE PROPERTIES SAMPLE SURVEYED & RATED - OFFICE

Comp Size Ratings
No. Name (GBA) Occ. Location Age Quality Score
1 52 W Calle de Las Tiendas, Green Valley 12,997 0% 3 2 2 7
2 75 W Calle de Las Tiendas, Green Valley 15,988 89% 3 2 2 7
3 400 W Camino Casa Verde, Green Valley 38,443 100% 3 3 3 9
4 210 W Continental Road, Green Valley 33,056 79% 3 2 2 7
5 275 W Continental Road, Green Valley 23,650 57% 3 2 2 7
6 1055 N La Canada, Green Valley 23,905 91% 3 3 3 9
9 18855-18865 S La Canada, Green Valley 10,132 41% 3 4 3 10
10 780 S Park Center Ave, Green Valley 16,565 100% 3 3 3 9
11 825 N Grand Ave, Nogales 25,792 92% 2 4 4 10
12 3241 N Grand Ave, Nogales 11,950 100% 2 2 2 6
13 1600 W La Quinta, Nogales 190,000 100% 2 3 4 9
14 142 W Mariposa, Nogales 11,557 100% 2 2 2 6
15 1103 Circulo Mercado, Rio Rico 18,000 100% 2 3 3 8
16 41-57 Paseo de Yucatan, Rio Rico 29,513 100% 2 3 4 9
Subject Adjacent to Green Valley Hospital +/- 64,000 N/A 3 4 4 11
Compiled by CBRE
Overall, the subject property ranked near the upper end of the range compared to the most
competitive retail properties in the Green Valley MSA.
MULTI-FAMILY
The multi-family projects within the Green valley MSA are either primarily rent restricted Class B and C
projects or are located in the northern portion of the neighborhood in the southern portion of Tucson.
None of these projects are Class A and a multi-family project at the subject would be generally
superior to them.
HOSPITALITY
The previous analysis of hospitality shows that while the subject site is a strong location within Green
Valley, the market dynamics of Green Valley indicates that a new hotel is not the most probable use at
this time.
© 2014 CBRE, Inc.

M ARKET A NALYSIS
STEP 5: ANALYZE MARKET EQUILIBRIUM/DISEQUILIBRIUM
Step 5.1, 5.2, and 5.3: Compare Demand and Competitive Supply
As the preceding steps indicate, due to the lack of new supply within the Green Valley MSA, the
market is generally in equilibrium with retail showing good demand, followed by multi-family, and
then limited demand for office. The high occupancy of retail centers within the Green Valley MSA
suggests that new construction is warranted. In addition, limited non-medical office construction is
projected at the subject as retail is built. Given the success of the Class A detached rental units in
Tucson and the absence of quality multi-family units in the Green Valley MSA, the demographic trends
point toward demand for Class A units at the subject.
STEP 6: FORECAST SUBJECT CAPTURE
Step 6.1 Inferred Method Conclusions
The final step of the fundamental market analysis is to estimate the subject’s capture rate. We have
used both inferred and fundamental methods to analyze the subject market. Our inferred method
conclusions are summarized below.
 General area growth trends - With particular emphasis on population growth trends within the
Green Valley MSA, it is reasonable to conclude that the subject property can warrant new
construction in three of the four major land uses, retail, office, and multi-family.
 New construction – retail and office space is warranted given the lacking supply of good
quality and functional space in the Green Valley MSA. New Class A multi-family units are
also warranted.
 Historical absorption - Based on the recently improving trends in absorption in the market
area and the improving occupancy rates in the subject’s market, the demand for retail and
multifamily units is moderately strong, while office is showing recovery from the recession.
Based on this inferred data, the subject should be able to achieve good absorption for the
projected amount of space/units.
Step 6.2 Estimate Subject Capture / Infer Potential Development – Overall

Conclusion
The following summarizes the concluded capture rates for the subject property and is based on the
demand forecasts that were presented previously.
The subject site encompasses 28 acres or about 1,200,000 square feet of developable land.
According to the client, the subject site includes approximately 7 acres that are within the flood plain
© 2014 CBRE, Inc.

M ARKET A NALYSIS
due to the wash running through the site, leaving approximately 21 useable acres or about 915,000
useable square feet.
As shown earlier, there are six (excluding Tucson Spectrum) major retail centers within the Green
Valley MSA comprising 815,000 square feet, with an average size of 135,000 square feet. The
typical site coverage ratios of the six competitive properties range between 9% and 23% with an
average of 16%.
For office uses, there are 16 significant office developments within the Green Valley MSA comprising
about 490,000 square feet, with an average size of about 30,000 square feet. The typical site
coverage ratios of these competitive properties range between 8.5% and 26% with an average of
about 16%.
Therefore, the average ratio of the competitive properties is about 16%, indicating that the subject
could potentially develop about 145,000 square feet (16% times 915,000 equals +/-145,000).
From the demand conclusions, retail is the highest in demand, followed by multi-family and then
office. For each use, the subject is projected to capture a percentage of the projected overall demand
in the Green Valley MSA.
RETAIL ABSORPTION CONCLUSION
For retail, the total projected annual demand equals about 52,000 square feet as shown in an earlier
table. Of the six competitive properties, only Rancho Sahuarita Marketplace has additional land
available for development. The six undeveloped acres of the Rancho Sahuarita Marketplace center
can most likely contain about 40,000 square feet of new retail space. While the time frame of any
new retail development is not known, Phase II of the Rancho Sahuarita master-planned community is
in the planning stages; therefore, it is highly likely that additional retail development will be built as
more homes are built. Given the strong dynamics of Rancho Sahuarita, the Marketplace will most
likely absorb the largest share of retail space and will most likely capture the Year 1 projected space.
Since the subject will be anchored by the high profile Green Valley Hospital, this draw should induce
demand second to Rancho Sahuarita Marketplace. Rancho Sahuarita Marketplace is near the top of
the Green Valley MSA physically and the subject would have more potential to capture patrons from
Green Valley and the southern half of the Green Valley MSA.
As the location analysis earlier showed, the subject was deemed to be moderately superior in terms of
potential appeal for development. It is our projection that the subject could absorb the Year 2
projected 52,000 square feet of retail space. This would be segmented by 20,000 square feet of
general retail space, 24,000 square feet of destination retail space, and 8,000 square feet of
specialty retail space.
© 2014 CBRE, Inc.

M ARKET A NALYSIS
Given the subject’s potential niche for specialty retail due to its proximity to the Green Valley Hospital,
specialty retail at the subject would likely absorb in Year 2 and 3. This is primarily due to the trend
that specialty retailers typically tenant a center after it has first established itself with general and
destination retail. This creates a greater dynamic for specialty retail at a new development. Thus, the
subject could take the lion’s share of specialty demand over the next several years.
The demand for retail space in later years of the projection would most likely be absorbed by new
smaller developments throughout the Green Valley MSA springing from developers seeing the new
demand potential of Rancho Sahuarita Marketplace and the subject.
The following table shows our projection for absorption of retail space at the subject:
CONCLUSION OF RETAIL SPACE PROJECTED FOR THE SUBJECT

Destination Retail Space Specialty Retail Space
Year General Retail Space (SF) (SF) (SF)
1 0 0 0
2 20,000 24,000 8,000
3 0 0 16,000
4 0 0 0
5 0 0 0
TOTAL 20,000 24,000 24,000
COMBINED TOTAL 68,000
Compiled by CBRE
OFFICE ABSORPTION CONCLUSION
For general office, the Green Valley MSA has approximately 800,000 square feet with a vacancy rate
of 7.5% overall and a vacancy rate of about 9.5% within the major office developments. Absorption
has been sluggish, while average rental rates are below Tucson averages. The Green Valley MSA
currently has 72,155 available square feet, some of which is reported by local agents to be either not
functional space or inferior in quality and condition. While the data suggests that 14,000 square feet
of new general office space could be absorbed, at the current absorption trend and vacancy, suggests
a lower amount initially can be absorbed with more absorption as the office market becomes stronger
over the next few years.
It is our projection that the subject could absorb approximately half of the annual 14,000 square feet
of demand in Years 2 and 3, primarily based upon the trend that the office market is slowly improving
and that most of the office space developed in the Green Valley MSA would most likely be built near
Sahuarita, where the majority of the population resides in the Green Valley MSA. However, the strong
amount of medical office use adjacent to the subject site at the Green Valley Hospital annex buildings
suggests that general office uses can be in demand due to the dynamics created by the hospital. The
hospital annex is building 40,000 square feet of medical office space, with a majority of it pre-leased
© 2014 CBRE, Inc.

M ARKET A NALYSIS
to physicians and related medical users of the hospital. Further, given the good demand for retail at
the subject, suggests that office/quasi-retail uses can be a complimentary use at the subject. Patrons
to the center could conduct their financial, insurance, etc. needs at the same time as conducting their
shopping. We project that the subject could absorb in the same time frame as specialty retail, or once
the subject becomes established.
CONCLUSION OF OFFICE SPACE

PROJECTED FOR THE SUBJECT
Year Office Space (SF)

1 0
2 7,000
3 7,000
4 0
5 0
TOTAL 14,000
COMBINED TOTAL
Compiled by CBRE
MULTI-FAMILY ABSORPTION CONCLUSION
For multi-family, the total projected annual demand equals about 60+ Class A units per year as
shown in an earlier table. There are currently no Class A units within the Green Valley MSA.
However, Tucson has shown that the Avilla type Class A unit, a new product for Tucson in the last two
years, has been successful. A similar unit type is considered to be the most likely unit type for the
Green Valley demographics.
Given the subject site’s proximity to the hospital and nearby Canoa Ranch, along with the site’s
mountain views, we project that the subject could capture a portion of the first 2-years of projected
demand, or a 120-unit project. However, a majority of the Avilla projects are less than 100-units.
Further, given the constraints of the subject site in terms of size, a smaller size project may be
warranted, projected as follows:
CONCLUSION OF MULTI-FAMILY
PROJECTED FOR THE SUBJECT
Year Multi-family Units

1 60
2 30
3 0
4 0
5 0
TOTAL 90
COMBINED TOTAL
Compiled by CBRE
© 2014 CBRE, Inc.

M ARKET A NALYSIS
OVERALL ABSORPTION CONCLUSION
The following table indicates the total projected uses that are potentially developable at the subject
site based upon the preceding conclusions for each use:
SUMMARY OF PROJECTED USES - SUBJECT

Estimated Projection of Land Use for the
Land Use Subject (SF)
Retail 68,000
Office 14,000
Multi-family 90 units
Hospitality Not probable
Compiled by CBRE
The following pie chart illustrates the estimated percent of land use for each type. Multi-family gross
sizes are based upon typical unit size.
© 2014 CBRE, Inc.

A SSUMPTIONS AND L IMITING C ONDITIONS
ASSUMPTIONS AND LIMITING CONDITIONS
1. Unless otherwise specifically noted in the body of the report, it is assumed that title to the property or properties
appraised is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that
would adversely affect marketability or value. CBRE, Inc. is not aware of any title defects nor has it been advised of any
unless such is specifically noted in the report. CBRE, Inc., however, has not examined title and makes no
representations relative to the condition thereof. Documents dealing with liens, encumbrances, easements, deed
restrictions, clouds and other conditions that may affect the quality of title have not been reviewed. Insurance against
financial loss resulting in claims that may arise out of defects in the subject’s title should be sought from a qualified title
company that issues or insures title to real property.
2. Unless otherwise specifically noted in the body of this report, it is assumed: that the existing improvements on the
property or properties being appraised are structurally sound, seismically safe and code conforming; that all building
systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred
maintenance or repair required; that the roof and exterior are in good condition and free from intrusion by the
elements; that the property or properties have been engineered in such a manner that the improvements, as currently
constituted, conform to all applicable local, state, and federal building codes and ordinances. CBRE, Inc. professionals
are not engineers and are not competent to judge matters of an engineering nature. CBRE, Inc. has not retained
independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes
no representations relative to the condition of improvements. Unless otherwise specifically noted in the body of the
report: no problems were brought to the attention of CBRE, Inc. by ownership or management; CBRE, Inc. inspected
less than 100% of the entire interior and exterior portions of the improvements; and CBRE, Inc. was not furnished any
engineering studies by the owners or by the party requesting this appraisal. If questions in these areas are critical to the
decision process of the reader, the advice of competent engineering consultants should be obtained and relied upon. It
is specifically assumed that any knowledgeable and prudent purchaser would, as a precondition to closing a sale,
obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building
systems. Structural problems and/or building system problems may not be visually detectable. If engineering
consultants retained should report negative factors of a material nature, or if such are later discovered, relative to the
condition of improvements, such information could have a substantial negative impact on the conclusions reported in
this appraisal. Accordingly, if negative findings are reported by engineering consultants, CBRE, Inc. reserves the right to
amend the appraisal conclusions reported herein.
3. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the
property was not observed by the appraisers. CBRE, Inc. has no knowledge of the existence of such materials on or in
the property. CBRE, Inc., however, is not qualified to detect such substances. The presence of substances such as
asbestos, urea formaldehyde foam insulation, contaminated groundwater or other potentially hazardous materials may
affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or
in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any
expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if
desired.
We have inspected, as thoroughly as possible by observation, the land; however, it was impossible to personally inspect
conditions beneath the soil. Therefore, no representation is made as to these matters unless specifically considered in
the appraisal.
4. All furnishings, equipment and business operations, except as specifically stated and typically considered as part of real
property, have been disregarded with only real property being considered in the report unless otherwise stated. Any
existing or proposed improvements, on or off-site, as well as any alterations or repairs considered, are assumed to be
completed in a workmanlike manner according to standard practices based upon the information submitted to CBRE,
Inc. This report may be subject to amendment upon re-inspection of the subject subsequent to repairs, modifications,
alterations and completed new construction. Any estimate of Market Value is as of the date indicated; based upon the
information, conditions and projected levels of operation.
5. It is assumed that all factual data furnished by the client, property owner, owner’s representative, or persons designated
by the client or owner to supply said data are accurate and correct unless otherwise specifically noted in the appraisal
report. Unless otherwise specifically noted in the appraisal report, CBRE, Inc. has no reason to believe that any of the
data furnished contain any material error. Information and data referred to in this paragraph include, without being
limited to, numerical street addresses, lot and block numbers, Assessor’s Parcel Numbers, land dimensions, square
footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit
count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any material
error in any of the above data could have a substantial impact on the conclusions reported. Thus, CBRE, Inc. reserves
the right to amend conclusions reported if made aware of any such error. Accordingly, the client-addressee should
© 2014 CBRE, Inc.

carefully review all assumptions, data, relevant calculations, and conclusions within 30 days after the date of delivery of
this report and should immediately notify CBRE, Inc. of any questions or errors.
6. The date of value to which any of the conclusions and opinions expressed in this report apply, is set forth in the Letter of
Transmittal. Further, that the dollar amount of any value opinion herein rendered is based upon the purchasing power
of the American Dollar on that date. This appraisal is based on market conditions existing as of the date of this
appraisal. Under the terms of the engagement, we will have no obligation to revise this report to reflect events or
conditions which occur subsequent to the date of the appraisal. However, CBRE, Inc. will be available to discuss the
necessity for revision resulting from changes in economic or market factors affecting the subject.
7. CBRE, Inc. assumes no private deed restrictions, limiting the use of the subject in any way.
8. Unless otherwise noted in the body of the report, it is assumed that there are no mineral deposit or subsurface rights of
value involved in this appraisal, whether they be gas, liquid, or solid. Nor are the rights associated with extraction or
exploration of such elements considered unless otherwise stated in this appraisal report. Unless otherwise stated it is
also assumed that there are no air or development rights of value that may be transferred.
9. CBRE, Inc. is not aware of any contemplated public initiatives, governmental development controls, or rent controls that
would significantly affect the value of the subject.
10. The estimate of Market Value, which may be defined within the body of this report, is subject to change with market
fluctuations over time. Market value is highly related to exposure, time promotion effort, terms, motivation, and
conclusions surrounding the offering. The value estimate(s) consider the productivity and relative attractiveness of the
property, both physically and economically, on the open market.
11. Any cash flows included in the analysis are forecasts of estimated future operating characteristics are predicated on the
information and assumptions contained within the report. Any projections of income, expenses and economic
conditions utilized in this report are not predictions of the future. Rather, they are estimates of current market
expectations of future income and expenses. The achievement of the financial projections will be affected by fluctuating
economic conditions and is dependent upon other future occurrences that cannot be assured. Actual results may vary
from the projections considered herein. CBRE, Inc. does not warrant these forecasts will occur. Projections may be
affected by circumstances beyond the current realm of knowledge or control of CBRE, Inc.
12. Unless specifically set forth in the body of the report, nothing contained herein shall be construed to represent any direct
or indirect recommendation of CBRE, Inc. to buy, sell, or hold the properties at the value stated. Such decisions involve
substantial investment strategy questions and must be specifically addressed in consultation form.
13. Also, unless otherwise noted in the body of this report, it is assumed that no changes in the present zoning ordinances or
regulations governing use, density, or shape are being considered. The property is appraised assuming that all required
licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, nor
national government or private entity or organization have been or can be obtained or renewed for any use on which
the value estimates contained in this report is based, unless otherwise stated.
14. This study may not be duplicated in whole or in part without the specific written consent of CBRE, Inc. nor may this
report or copies hereof be transmitted to third parties without said consent, which consent CBRE, Inc. reserves the right
to deny. Exempt from this restriction is duplication for the internal use of the client-addressee and/or transmission to
attorneys, accountants, or advisors of the client-addressee. Also exempt from this restriction is transmission of the report
to any court, governmental authority, or regulatory agency having jurisdiction over the party/parties for whom this
appraisal was prepared, provided that this report and/or its contents shall not be published, in whole or in part, in any
public document without the express written consent of CBRE, Inc. which consent CBRE, Inc. reserves the right to deny.
Finally, this report shall not be advertised to the public or otherwise used to induce a third party to purchase the property
or to make a “sale” or “offer for sale” of any “security”, as such terms are defined and used in the Securities Act of
1933, as amended. Any third party, not covered by the exemptions herein, who may possess this report, is advised that
they should rely on their own independently secured advice for any decision in connection with this property. CBRE, Inc.
shall have no accountability or responsibility to any such third party.
15. Any value estimate provided in the report applies to the entire property, and any pro ration or division of the title into
fractional interests will invalidate the value estimate, unless such pro ration or division of interests has been set forth in
the report.
16. The distribution of the total valuation in this report between land and improvements applies only under the existing
program of utilization. Component values for land and/or buildings are not intended to be used in conjunction with
any other property or appraisal and are invalid if so used.
17. The maps, plats, sketches, graphs, photographs and exhibits included in this report are for illustration purposes only and
are to be utilized only to assist in visualizing matters discussed within this report. Except as specifically stated, data
relative to size or area of the subject and comparable properties has been obtained from sources deemed accurate and
reliable. None of the exhibits are to be removed, reproduced, or used apart from this report.
© 2014 CBRE, Inc.

18. No opinion is intended to be expressed on matters which may require legal expertise or specialized investigation or
knowledge beyond that customarily employed by real estate appraisers. Values and opinions expressed presume that
environmental and other governmental restrictions/conditions by applicable agencies have been met, including but not
limited to seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density,
allowable uses, building codes, permits, licenses, etc. No survey, engineering study or architectural analysis has been
made known to CBRE, Inc. unless otherwise stated within the body of this report. If the Consultant has not been
supplied with a termite inspection, survey or occupancy permit, no responsibility or representation is assumed or made
for any costs associated with obtaining same or for any deficiencies discovered before or after they are obtained. No
representation or warranty is made concerning obtaining these items. CBRE, Inc. assumes no responsibility for any costs
or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal
Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance.
19. Acceptance and/or use of this report constitutes full acceptance of the Contingent and Limiting Conditions and special
assumptions set forth in this report. It is the responsibility of the Client, or client’s designees, to read in full, comprehend
and thus become aware of the aforementioned contingencies and limiting conditions. Neither the Appraiser nor CBRE,
Inc. assumes responsibility for any situation arising out of the Client’s failure to become familiar with and understand the
same. The Client is advised to retain experts in areas that fall outside the scope of the real estate appraisal/consulting
profession if so desired.
20. CBRE, Inc. assumes that the subject analyzed herein will be under prudent and competent management and ownership;
neither inefficient or super-efficient.
21. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and
laws unless noncompliance is stated, defined and considered in the appraisal report.
22. No survey of the boundaries of the property was undertaken. All areas and dimensions furnished are presumed to be
correct. It is further assumed that no encroachments to the realty exist.
23. The Americans with Disabilities Act (ADA) became effective January 26, 1992. Notwithstanding any discussion of
possible readily achievable barrier removal construction items in this report, CBRE, Inc. has not made a specific
compliance survey and analysis of this property to determine whether it is in conformance with the various detailed
requirements of the ADA. It is possible that a compliance survey of the property together with a detailed analysis of the
requirements of the ADA could reveal that the property is not in compliance with one or more of the requirements of the
ADA. If so, this fact could have a negative effect on the value estimated herein. Since CBRE, Inc. has no specific
information relating to this issue, nor is CBRE, Inc. qualified to make such an assessment, the effect of any possible non-
compliance with the requirements of the ADA was not considered in estimating the value of the subject.
Client shall not indemnify Appraiser or hold Appraiser harmless unless and only to the extent that the Client
misrepresents, distorts, or provides incomplete or inaccurate appraisal results to others, which acts of the Client
approximately result in damage to Appraiser. Notwithstanding the foregoing, Appraiser shall have no obligation under
this Section with respect to any loss that is caused solely by the active negligence or willful misconduct of a Client and is
not contributed to by any act or omission (including any failure to perform any duty imposed by law) by Appraiser.
Client shall indemnify and hold Appraiser harmless from any claims, expenses, judgments or other items or costs arising
as a result of the Client's failure or the failure of any of the Client's agents to provide a complete copy of the appraisal
report to any third party. In the event of any litigation between the parties, the prevailing party to such litigation shall be
entitled to recover, from the other, reasonable attorney fees and costs.
© 2014 CBRE, Inc.

A DDENDA
ADDENDA
© 2014 CBRE, Inc.

© 2014 CBRE, Inc.
© 2014 CBRE, Inc.
© 2014 CBRE, Inc.
© 2014 CBRE, Inc.
© 2014 CBRE, Inc.
© 2014 CBRE, Inc.
A DDENDA
ADDENDUM A
QUALIFICATIONS
© 2014 CBRE, Inc.

QUALIFICATIONS
BYRON BRIDGES
SENIOR APPRAISER
CBRE | Valuation & Advisory Services

3719 N. Campbell Avenue
Tucson, AZ 85719
(520) 323-5163 (direct)
(520) 323-5156 (fax)
byron.bridges@cbre.com
EDUCATIONAL
Bachelor of Science, University of Arizona, Regional Development/Planning major

Bachelor of Science in Business Administration, University of Arizona, Entrepreneurship major
Advanced Income Capitalization Approach, Appraisal Institute

Advanced Applications, Appraisal Institute
Advanced Cost and Sales Approaches, Appraisal Institute
Advanced Market Analysis and Highest and Best Use
LICENSE(S)/CERTIFICATION(S)
Arizona Certified General Real Estate Appraiser, No. 31173

New Mexico General Real Estate Appraiser, No. 03362-G
PROFESSIONAL
Associate Member of the Appraisal Institute (No. 534642)
EMPLOYMENT EXPERIENCE
2012 – Present Senior Appraiser, CBRE, Inc., Tucson, AZ

2001 to 2012 Montaña Verde, Senior Appraiser and Consultant, Tucson, AZ
1997 - 2001 CB Richard Ellis, Inc., Tucson, AZ
Appraisal experience has been in the fee preparation of real estate appraisals, rent analyses, demand and
absorption studies, and feasibility studies for a variety of clients, including numerous financial institutions,
government agencies, fortune 500 corporations, insurance companies, and private organizations. Experience
involves a wide variety of property types including retail shopping centers, office buildings, medical and surgical
centers, ground leases, full-service and limited-service hotels, luxury/boutique hotels, restaurants, multi-family
properties, right-of-way, conservation easements, special purpose real estate holdings, litigation cases, among
others. Assignments have been completed throughout the State of Arizona.
In addition, Mr. Bridges has conducted many appraisals, market studies and feasibility analyses of master-planned
communities, condominium projects, land, hospitality resort properties, residential properties, and commercial
properties within and around the major beach front communities in Mexico. Mr. Bridges has extensive knowledge
of the Mexico real estate marketplace and since 2001 has performed valuation and consultation assignments in
Mexico in excess of over 600 individual assignments. Mr. Bridges has performed several major valuation
assignments in Costa Rica and is familiar with other Central American countries.
The assignments prepared were done so for various clients for a many reasons such as financial transactions,
business decisions, investment speculation, estates, litigation, partnership disputes, conservation, and others.
© 2014 CBRE, Inc.

QUALIFICATIONS
Gavin J. McPhie, MAI, MRICS

Managing Director
CBRE, Inc.
Valuation and Advisory Services
2415 East Camelback Road
Phoenix, Arizona 85016
(602) 735-5261 tel
(602) 735-5613 fax
gavin.mcphie@cbre.com
EDUCATION
Bachelor of Science Degree, Psychology, Brigham Young University, Provo, Utah, 1998
LICENSE(S)/CERTIFICATION(S)
Arizona Certified General Real Estate Appraiser, No. 31366

New Mexico Certified General Real Estate Appraiser, No. 03013-G
PROFESSIONAL
Appraisal Institute, Designated Member (MAI)

Royal Institution of Chartered Surveyors, Professional Member (MRICS)
EXPERIENCE
2001 - 2005 Senior Real Estate Appraiser, PGP Valuation, Inc. (Now Colliers), Sacramento, California
2005 - 2008 Senior Appraiser, CBRE, Inc., Phoenix, Arizona
2008 - 2010 Vice President, CBRE, Inc., Phoenix, Arizona
2010 - Present Managing Director, CBRE, Inc., Phoenix, Arizona
Manages the Valuation and Advisory Services (VAS) offices in Arizona (Phoenix and Tucson) and New Mexico
(Albuquerque). Appraisal experience has been in the fee preparation of real estate appraisals, rent analyses and
market studies of commercial and multifamily residential properties. Experience encompasses property types
including land, office, office condominiums, retail, industrial, call centers, data centers, private schools, charter
schools, restaurants, hotels, resorts, condominium conversions, and multifamily properties, including student
housing and low-income housing (HUD and tax credit). Assignments have been completed in Arizona, California,
Nevada, and New Mexico, with international assignments completed in Grenada and Mexico.
The Intermountain Region of CBRE, Inc. Valuation and Advisory Services covers the states of Arizona, Colorado,
Idaho, Montana, Nebraska, Nevada, New Mexico, North and South Dakota, Utah and Wyoming. The regional
office is located in Phoenix, Arizona.
© 2014 CBRE, Inc.

14-271ph-1231 - Market Study of Site Next To Green Valley Hospital-2

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14-271ph-1231 - Market Study of Site Next To Green Valley Hospital-2

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CONSULTATION REPORT

MARKET STUDY FOR A PROPOSED MIXED-USE

Mr. Salim Dahdah

© 2014 CBRE, Inc.

3719 North Campbell Avenue

December 15, 2014

Mr. Salim Dahdah

Dear Mr. Dahdah and Ms. Ackerman:

A Level C market study is outlined as follows:

© 2014 CBRE, Inc.

SUMMARY OF PROJECTED USES - SUBJECT

CBRE, Inc. - VALUATION & ADVISORY SERVICES

Byron Bridges Gavin J. McPhie, MAI

© 2014 CBRE, Inc.

We certify to the best of our knowledge and belief:

Byron Bridges Gavin J. McPhie, MAI, MRICS

© 2014 CBRE, Inc.

CERTIFICATION ........................................................................................................................ iii

© 2014 CBRE, Inc.

A Level C market study is outlined as follows:

EFFECTIVE DATE OF THE REPORT

INTENDED USE OF REPORT

INTENDED USER OF REPORT

© 2014 CBRE, Inc.

Extent to Which the Property is Identified

The property is identified through the following sources:

Type and Extent of the Data Researched

CBRE reviewed the following:

© 2014 CBRE, Inc.

© 2014 CBRE, Inc.

TUCSON, AZ - ECONOMIC INDICATORS

STRENGTHS AND UPSIDE

 Low-cost alternative to Phoenix and Los Angeles.

 Highly educated workforce thanks to presence of several universities.

© 2014 CBRE, Inc.

 Aerospace manufacturers have an easier time diversifying into commercial aircraft.

WEAKNESSES AND DOWNSIDE

 Dearth of headquarter operations.

 Exposure to reduced government and tighter defense budget.

© 2014 CBRE, Inc.

© 2014 CBRE, Inc.

HAMMER AND NAILS

© 2014 CBRE, Inc.

© 2014 CBRE, Inc.

© 2014 CBRE, Inc.

Step 1: Analyze Subject Property’s Productivity

Step 2: Market Delineation

Step 3: Forecast Demand

Step 4: Measure Competitive Supply

Step 5: Analyze Market Equilibrium/Disequilibrium

Step 6: Forecast Subject Capture

STEP 1: ANALYZE SUBJECT PROPERTY’S PRODUCTIVITY

Step 1.1 Legal Attributes

© 2014 CBRE, Inc.

© 2014 CBRE, Inc.

© 2014 CBRE, Inc.

Step 1.2 Physical Attributes

SITE SUMMARY AND ANALYSIS

Comparative Analysis Rating

Utilities Provider Adequacy

Other Yes No Unknown

© 2014 CBRE, Inc.

© 2014 CBRE, Inc.