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26 <br /> SECTION VI <br />RETAIL MARKET RESEARCH <br /> <br /> <br /> <br />Related Bristol at 3600 South Bristol Street September 2023 <br />Draft Market Study Report <br /> <br />www.FinanceDTA.com <br />According to CoStar, there is 5,965,139 SF of retail space within the 2-Mile Zone with only 131,000 vacant SF, a vacancy rate of 2.0%. DTA also <br />observed that the asking rent in the 2-Mile Zone is currently $33.46 per SF pr year. Based upon this information, we are estimating that the rent <br />for the ground-floor retail space will start at $36.00 per SF per year. <br />CoStar is estimating net operating costs in the selected sample at about 8.1% ($2.91/$36.00), as shown in Table 10. For our analysis, DTA rounded <br />this to 10.0% since many older buildings have deferred maintenance. In accordance with current operators, we have estimated that an owner will <br />allocate 3.0% to capital reserves that are used to improve space as it ages and also to provide funds to upgrade space to remain competitive in <br />the marketplace. <br />Finally, DTA reviewed current cap rates, as shown in Figure 13. This schedule <br />summarizes cap rates by a product star system in which five stars is best and one <br />star is the poorest. <br />The below items in italics are quotes from a CoStar document titled CoStar <br />Building Rating System. <br />“The CoStar Building Rating SystemSM is a national rating for <br />commercial buildings on a universally recognized 5 Star scale. <br />Historically the industry has lacked a centralized system for evaluating <br />buildings using specific standards developed for each property type. The <br />extensive, standardized property information collected by CoStar <br />Research makes such a national building rating system possible. <br />The rating system considers the building separately from its immediate <br />vicinity, with the exception of retail properties. This distinction enables <br />the rating system to address the intrinsic quality of a specific building, <br />with the understanding that a range of building quality may exist in any given location. A building considered to be Class A quality in one <br />market may not qualify as Class A in another. However, because ratings are based on specific standards developed for each property type <br />and consistently applied across different markets, a 4 Star building, for example, is expected to be comparable with all other 4 Star buildings <br />across all markets. <br />Figure 13: Market Cap Rate by Star Rating <br />Exhibit 10 <br />  <br />  <br />City Council 22 – 549 9/17/2024