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2. PCSR 07-13-2004 Item # 2. >it\11,.* City of Elk River MEMORANDUM TO: Planning Commission FROM: Michele McPherso irector of Planning DATE: July 13, 2004. SUBJECT: Industrial Market Update Attachment • Excerpt from the National Association of Industrial and Office Properties, 2004 Annual Industrial Market Update We have received information from the Economic Development Department regarding industrial development overall in the seven-county metro area, as well as a more detailed overview for the northwest Minneapolis area. We will discuss the information included in the report and pose any questions needed to the Economic Development Authority and/or the City Council regarding industrial development within the City of Elk River. cc: Catherine Mehelich, Executive Director of Economic Development S:\PLANNING\Michele McPherson\PLREPRTS\7 13 04 Industrial update.doc GROUND RULES & DEFINITIONS GROUND RULES • Multi-tenant office warehouse, office showroom, and bulk warehouse buildings in excess of 25,000 square feet. Single tenant leased properties that were developed on a build-to-suit basis, and that would not function well as multi-tenant properties, are not included in this report. Owner occupied properties are also not included in this report. • Rental rates are based on quoted net rates exclusive of transaction costs. Actual effective rates will vary. • Expenses are quoted as an estimate for the 2004 calendar year. DEFINITIONS • Existing Projects—Building shell construction completed prior to May 1,2003. • New Projects—Building shell construction completed between May 1,2003 and May 1, 2004. • Current Universe—combined Existing Projects and New Projects as of May 1, 2004. • Under Construction—Projects under construction as of May 1, 2004. • Planned Projects—Projects with a greater than 50%probability of construction commencement prior to December 31,2004. PROFILE OF PROJECT TYPES Typical Clear Ceiling Office or Project Type Tenant Size Height Bay Depth Showroom Office Warehouse 7,000 S.. Ft. + 16—24 Ft. 120— 160 Ft. 10% -40% Office Showroom 3,000 S I. Ft.+ 12— 16 Ft. 80— 120 Ft. 25% - 75% Bulk Warehouse 20,000 S I. Ft.+ 20+Ft. 160—200 Ft. 0% - 10% 2 NAIOP 2004 ANNUAL INDUSTRIAL MARKET UPDATE t- J 7 a 6 f N 7 N ' Lz 'N.71----}1 I :. :. ' ':",;:Y':!:::'± ,,-, .-.17-',-,.,.,-....... 7fi----r • �• �� 6 ' 7 rP - . yp[fp. w ''PL, rt I El----1,• re z -414:' iifl e)'y ) W� � r H e Q am IL ICE W W\� 13 F © Q N. to E j W e, itVH., . u , , ..vi, 1 pp" a 3 I' t+ P • li- ® _ c r .\ki r .. f r_ ,, , is t c, 0 0 z '" TOTAL MARKET SIGNIFICANT EVENTS AND TRENDS • The overall vacancy rate decreased from 11.8% to 11.6% marking a second consecutive year of downward movement following 13.5% vacancy in 2002. • Net absorption decreased to 878,198 square feet from last year's report, however this statistic should be considered in conjunction with the following: o Office warehouse net absorption was over 700,000 square feet o Office showroom net absorption soared above 800,000 square feet o These positive absorption categories were not aided given a negative net absorption of 650,000 square feet reported in bulk warehouse • The "for sale" market continued to be active • 6 buildings are underway totaling approximately 400,000 square feet. 25 buildings are planned totaling approximately 2,700,000 square feet. 5 NAIOP 2004 ANNUAL INDUSTRIAL MARKET UPDATE TOTAL MARKET NET ABSORPTION TRENDS 4,999,472 5,000,000 i IL` g 4,137,046 4,000,000 I Llr,194 164 - 3,040,491 d 3,000,000 ' ,590 519 3h. ,a, , c 2,000,000 I ., `f 1,000,000 ts k £. I I ' A a 794.499 ' n 0 .:a- a#x..All ate :a a 3- al a i 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 HISTORICAL VACANCY RATES 20%J 13.S% 15%-/ `.8% a let co 10% ® '— 10.8% 11.6% I. o, 5%, Agar 6.3% 5.7 ° 0% " / 1 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 NEW PROJECTS 5,000,000-' „ r e 4,000,000 v. e '1 N Y o re v 3,000,000-' o N N . o° °- N ;:••I V r7 N r� no L C >1 ' to Oa r- r T N co e r e., n r-Et ? oo 2,000,000' t..!"':-r. '- m - LID ou - C N N . O - 'CO ,ry..,b VI 1,000,000 m,r, - , a .., e - r-. °v,o` a n"in O° p �Lip - I- a .. O �_O�� 0 - �- � - - 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 •Bulk Warehouse ❑Office Warehouse E Office Showroom 1 6 NAIOP 2004 ANNUAL INDUSTRIAL MARKET UPDATE TOTAL MARKET - COMBINED CURRENT UNIVERSE Annual Net Total Occupied Vacant Percent Absorption (Sq. Ft.) (Sq.Ft.) (Sq.Ft.) Vacant (Sq.Ft.) Existing Projects 110,499,147 97,867,703 12,631,444 11.4% 714,198 New Projects 423,250 164,000 259,250 61.3% 164,000 Current Universe 110,922,397 98,031,703 12,890,694 11.6% 878,198 FUTURE PROJECTS HISTORICAL Total Number Of NET ABSORPTION (Sq.Ft.) Projects Under Construction 341,000 5 5,000,000 Planned Projects 2,870,146 26 Future Projects 3,211,146 31 0 6,000,000 r en p^, NET ABSORPTION (Years Ended April 30)Annual Net Percent of Li 4,000,000 Infl: Absorption Occupied Year (Sq.Ft.) Square Feet 2000 4,137,046 5,8 2,000,000 2001 1,539,835 2.1 kr: 2002 394,498 0.4 ) r 2003 3,040,491 3.0 0 Jm'J S` ' 2004 878,198 0.9 2000 2001 2002 2003 2004 Five Year Average 1,998,014 LARGEST CONTIGUOUS SPACE BREAKDOWN Vacancy Size Number of Square Feet Projects Square Feet 0 926 0 1—9,999 168 908,109 10,000—24,999 135 2,146,256 25,000-49,999 73 2,519,441 50,000—99,999 38 2,711,325 100,000+ 15 2,555.484 Total* 1355 10,840,615 "One block of space per protect may not reflect total vacancy. Not all projects reporting Largest Contiguous Space figures. 7 NAIOP 2004 ANNUAL INDUSTRIAL MARKET UPDATE TOTAL MARKET - OFFICE WAREHOUSE CURRENT UNIVERSE Annual Net Total Occupied Vacant Percent Absorption (Sq. Ft.) (Sq.Ft.) (Sq. Ft.) Vacant (Sq. Ft.) Existing Projects 57,523,942 50,763,907 6,760,035 11.8% 706,840 New Projects 100,000 0 100,000 100.0% 0 Current Universe 57,623,942 50,763,907 6,860,035 11.9% 706,840 FUTURE PROJECTS Total Number Of HISTORICAL (Sq.Ft.) Projects NET ABSORPTION Under Construction 0 0 4,000,000 Planned Projects 900,000 9 Future Projects 900,000 9 3,000,000 O a a, NET ABSORPTION (Years Ended April 30) $rr,. — ,c r Annual Net Percent of E 2,000,000 - Absorption Occupied P " Year (Sq.Ft.) Square Feet n ' . rt 2000 1,607,699 4.5 030,000 2001 1,120,736 3.0 4 2002 605,572 1.1 2003 1,678,694 2.9 0 Al . c a "J :I 2004 706,840 1.4 2000 2001 2002 2003 2009 Five Year Average 1,143,908 LARGEST CONTIGUOUS SPACE BREAKDOWN Vacancy Size Number of Square Feet Projects Square Feet 0 546 0 1 —9,999 92 476,219 10,000—24,999 72 1,140,809 25,000—49,999 44 1,508,305 50,000—99,999 20 1,364,128 100,000+ 7 964,174 Total* 781 5,453,635 RENT SUMMARY Average Low - High Office Rent $8.63 $5.00 - $14.00 Warehouse Rent $4.22 $2.00 - $6.00 Blended Net Rent(Assuming 20% Office) $5.10 Taxes & Op.Exp. $2.70 $1.13 - $7.90 "One block of space per project,may not reflect total vacancy.Not all projects reporting Largest Contiguous Space figures. 8 NAIOP 2004 ANNUAL INDUSTRIAL MARKET UPDATE TOTAL MARKET - OFFICE SHOWROOM CURRENT UNIVERSE Annual Net Total Occupied Vacant Percent Absorption (Sq. Ft.) (Sq.Ft.) (Sq. Ft.) Vacant (Sq.Ft.) Existing Projects 21,122,221 19,202,610 1,919,611 9.1% 659,988 New Projects 323,250 164,000 159,250 49.3% 164,000 Current Universe 19,366,610 2,078,861 9.7% 823,988 FUTURE PROJECTS HISTORICAL Total Number Of NET ABSORPTION (Sq.Ft.) Projects o 1,600,000 0 Under Construction 341,000 5 Planned Projects 902,942 11 '" Future Projects 1,243,942 I6 1200,000 00 en NET ABSORPTION (Years Ended April 30) E 800,000 1 Annual Net Percent of e t Absorption Occupied rn ? ;' ' I a Year (Sq.Ft.) Square Feet .00,000 e 2000 1,214,002 7.3 2001 46,609 0.3 Al 2002 388,197 2.1 0 a -.41 ` Air �J 2003 115,298 0.7 2000 2001 2002 2003 2000 2004 823,988 4.3 Five Year Average 517,619 LARGEST CONTIGUOUS SPACE BREAKDOWN Vacancy Size Number of Square Feet Projects Square Feet 0 195 0 1—9,999 67 387,222 10,000—24,999 44 694,760 25,000—49,999 9 328,076 50,000—99,999 4 313,067 100,000+ 1 104,262 Total* 320 1,827,387 RENT SUMMARY Average Low - High Office Rent $9.15 $6.50 - $14.00 Warehouse Rent $4.50 $3.50 - $6.75 Blended Net Rent(Assuming 50% Office) $6.83 Taxes& Op.Exp. $3.61 $1.25 - $9.14 •One block of space per project,may not reflect total vacancy. Not all projects reporting Largest Contiguous Space figures. 9 NAIOP 2004 ANNUAL INDUSTRIAL MARKET UPDATE TOTAL MARKET - BULK WAREHOUSE CURRENT UNIVERSE Annual Net Total Occupied Vacant Percent Absorption (Sq. Ft.) (Sq. Ft.) (Sq.Ft.) Vacant (Sq.Ft.) Existing Projects 31,852,984 27,901,186 3,951,798 12.4% (652,630) New Projects 0 0 0 0.0% 0 Current Universe 31,852,984 27,901,186 3,951,798 12.4% (652,630) FUTURE PROJECTS HISTORICAL Total Number Of NET ABSORPTION (Sq. Ft.) Projects Under Construction 0 0 3,000,000 Planned Projects 1,067,204 6 v a Future Projects 1,067,204 6 m 2,000,000 NET ABSORPTION (Years Ended April 30) 4PM Annual Net Percent of 1.000,000 e v r e Absorption Occupied h I N e Year ( Sq.Ft.) Square Feet 0 , f ' l 2000 1,315,345 6.9 2001 372,490 1.9 4. 2002 (599,271) (2.3) 2003 1,246,499 4.8 .1.000,000 Sir 2003 (652,630) 2.3 2000 2001 2002 2003 2004 Five Year Average 336,487 LARGEST CONTIGUOUS SPACE BREAKDOWN Vacancy Size Number of Square Feet Projects Square Feet 0 185 0 1—9,999 9 44,668 10,000—24,999 19 310,687 25,000—49,999 20 683,060 50,000—99,999 14 1,034,130 100,000+ 8 1,619,617 Total* 255 3,692,162 RENT SUMMARY Average Low - High Office Rent $8.30 $6.50 - $10.25 Warehouse Rent $3.92 $2.25 - $5.75 Blended Net Rent(Assuming 6% Office) $4.18 Taxes & Op. Exp. $2.15 $0.78 - $6.71 •One block of space per project,may not reflect total vacancy.Not all projects reporting Largest Contiguous Space figures 10 NAIOP 2004 ANNUAL INDUSTRIAL MARKET UPDATE 2004 MARKET OVERVIEW CURRENT PERCENT TOTAL ANNUAL NET MARKET AREA UNIVERSE OF TOTAL VACANT PERCENT ABSORPTION YEAR (Sq.FL) MARKET (Sq.Ft.) VACANT (Sq.Ft.) Northwest 2004 28,130,865 25.4% 3,036,507 10.8% 1,090,527 2003 29,341,241 25.8% 4,274,892 14.6% 266,271 Minneapolis,North 2004 21,347,960 19.2% 1,798,340 8.4% 313,637 2003 20,707,961 18.2% 1,769,623 8.5% 1,009,438 St. Paul,East 2004 19,779,163 17.8% 1,995,313 10.1% 136,781 2003 21,162,694 18.6% 1,679,668 7.9% 1,207,957 Airport, South 2004 17,318,060 15.7% 2,797,055 16.2% (621,003) 2003 20,100,185 17.7% 2,810,390 14.0% 232,044 Southwest 2004 24,346,349 21.9% 3,263,479 13.4% (41,774) 2003 22,433,610 19.7% 2,832,786 12.6% 324,781 TOTAL MARKET 2004 110,922,397 100.0% 12,890,694 11.6% 878,198 2003 113,745,691 100.0% 13,367,359 11.8% 3,040,491 2004 NET ABSORPTION BY MARKET AREA 1500000 1,090,527 1000000Y q tat u w 500000' 4 313,637 'ifii, 136,781 ci /"h 35 gla4'v fii'`vir;e 1 0 i ' i : F "5P'�: 1 "M,M,' (41,744) 7�Y Y1Y -S00000--/ �. 'M J Ira:.: (621,003) -1000000 / 1 se t o o cost S°Jtb lieSt ..ea- ``,' aa, oa, Sotth et st.tie 11 NAIOP 2004 ANNUAL INDUSTRIAL MARKET UPDATE 2000 - 2004 HISTORICAL OVERVIEW** 5 Year Market Area 2000 2001 2002 2003 2004 Average Northwest Current Universe: 19,668,811 20,479,078 29,814,384 29,341,241 28,130,865 Total Vacant: 1,830,407 2,418,071 4,432,886 4,274,892 3,036,507 Percent Vacant: 9.3% 11.8% 14.5% 14.6% 10.8% Net Absorption: 1,486,356 1,184 230,415 266,271 1,090,527 614,951 Minneapolis,North Current Universe: 15,375,651 15,655,384 22,364,581 20,707,961 21,347,960 Total Vacant: 1,782,573 1,203,210 2,748,167 1,769,623 1,798,340 Percent Vacant: 11.6% 7.7% 12.0% 8.5% 8.4% Net Absorption: 165,166 939,256 270,608 1,009,438 313,637 539,621 St.Paul,East Current Universe: 13,880,786 14,768,786 20,306,597 21,162,694 19,455,913 Total Vacant: 710,469 1,131,816 2,655,184 1,679,668 1,995,313 Percent Vacant: 5.1% 7.7% 13.0% 7.9% 10.1% Net Absorption: 799,499 465,126 (412,246) 1,207,957 136,781 439,423 Airport,South Current Universe: 11,911,405 12,125,074 21,042,793 20,100,185 17,318,060 Total Vacant: 1,534,844 1,824,459 2,700,538 2,810,390 2,797,055 Percent Vacant: 12.9% 15.0% 12.8% 14.0% 162% Net Absorption: 754,077 (181,658) 665,408 232,044 (621,003) 169,774 Southwest Current Universe: 17,585,838 18,949,420 22,882,210 22,433,610 24,346,349 Total Vacant: 1,420,225 2,251,067 3,332,574 2,832,786 3,263,479 Percent Vacant: 8.1% 11.9% 14.4% 12.6% 13.4% Net Absorption: 931,948 315,927 (359,687) 324,781 (41,744) 234,245 TOTAL MARKET Current Universe: 78,034,568 81,977,742 117,956,040 113,745,691 110,922,397 Total Vacant: 7,278,518 8,828,623 15,869,349 13,367,359 12,890,694 Percent Vacant: 9.3% 10.8% 13.5% 11.8% 11.6% Net Absorption: 4,137,046 1,539,835 394,498 3,040,491 878,198 1,998,014 **During 2002,the Minnesota Chapter of the NAIOP formed an alliance with the Minnesota Commercial Association of Realtors (MNCAR)for the purpose of gathering current market data. MNCAR operates a data exchange network that is widely used in the Twin Cities marketplace. The greater participation in the MNCAR data exchange network has resulted in additional properties being added to NAIOP's overall database,or"Current Universe",for 2002. NAIOP has invested considerable care in analyzing the data underlying the report to insure that the results are indicative of the conditions of the marketplace. When comparing 2002 figures to prior years the majority of the increase in square feet for a particular market is the result of capturing more of the existing buildings in the database used for analysis. 12 NAIOP 2004 ANNUAL INDUSTRIAL MARKET UPDATE NORTHWEST SIGNIFICANT EVENTS AND TRENDS • Leasing activity significantly outpaces the previous 12 months. • Developers looking for land parcels, completing build to suits and converting existing buildings over to higher and better use. • True speculative development returning to the Northwest submarket. 37 NAIOP 2004 ANNUAL INDUSTRIAL MARKET UPDATE NORTHWEST NET ABSORPTION TRENDS 2,000,000 i 1,486,356 1,500,000 , '+ m I 1,090,527 d 2.' 1,000,000 , +:d∎ �:.�' n 737,323� " 'Pm ; ct L, 622,064 pi, , , 500,000 °44 6' • 66 271 �^� 230,41 �L' �it �air: a�,,..a., " 4.4,_ a' at a i 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 HISTORICAL VACANCY RATES 20% 14. % 146% a 15%J ea u > 10%-/ c —�� 10.5% mCJ I. m a o. 5/0 5.0% 5.7% 4.6% 0% / 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 NEW PROJECTS 1,200,000 .m- N _en b 1,000,000 O e 00 fel co d 800,000 W ry M P en Gr. b {� O b 600,000 W O O W r, ■ .7 N Cr m 00 v v' 400,000 00 � ' – ' ■ I ; i 1WW 1., 200,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 ■Bulk Warehouse DOffice Warehouse IL Office Showroom 38 NAIOP 2004 ANNUAL INDUSTRIAL MARKET UPDATE NORTHWEST - COMBINED CURRENT UNIVERSE Annual Net Total Occupied Vacant Percent Absorption (Sq.Ft.) (Sq. Ft.) (Sq.Ft.) Vacant (Sq.Ft.) Existing Projects 28,130,865 25,094,358 3,036,507 10.8% 1,090,527 New Projects 0 0 0 0.0% 0 Current Universe 25,094,358 3,036,507 10.8% 1,090,527 FUTURE PROJECTS Total Number Of (Sq. Ft.) Projects Under Construction 0 0 Planned Projects 1,063,000 6 Future Projects 1,063,000 6 NET ABSORPTION (Years Ended April 30) Annual Net Percent of Absorption Occupied Year (Sq. Ft.) Square Feet 2000 1,486,356 8.3 2001 1,184 <0.01 2002 230,415 0.8 2003 266,271 1.1 2004 1,090,527 4.3 Five Year Average 614,951 LARGEST CONTIGUOUS SPACE BREAKDOWN Vacancy Size Number of Square Feet Projects Square Feet 0 237 0 1 —9,999 37 202,065 10,000—24,999 35 572,381 25,000—49,999 18 601,977 50,000—99,999 11 817,648 100,000+ 4 537,907 Total* 342 2,731,978 •One block of space per project,may not reflect total vacancy. Not all projects reporting Largest Contiguous Space figures. 39 NAIOP 2004 ANNUAL INDUSTRIAL MARKET UPDATE NORTHWEST - OFFICE WAREHOUSE CURRENT UNIVERSE Annual Net Total Occupied Vacant Percent Absorption (Sq.Ft.) (Sq. Ft.) (Sq.Ft.) Vacant (Sq.Ft.) Existing Projects 13,257,323 11,359,304 1,898,019 14.3% (44,367) New Projects 0 0 0 0.0% 0 Current Universe 13,257,323 11,359,304 1,898,019 14.3% (44,367) FUTURE PROJECTS FUTURE PROJECTS Total Number Of (Sq.Ft.) Projects Under Construction Under Construction 0 0 • None Planned Projects 440,000 3 Future Projects 440,000 3 Planned Projects • 610 Business Center I, NET ABSORPTION (Years Ended April 30) Brooklyn Park— 100,000 Sq. Ft. • 610 Business Park, Annual Net Percent of Brooklyn Park—200,000 Sq. Ft. Absorption Occupied • Crosstown North Business Year (Sq.Ft.) Square Feet Center X, Brooklyn Park— 2000 57,643 0.8 140,000 Sq. Ft. 2001 61,743 0.8 2002 221,945 1.5 2003 (51,759) (0.3) 2004 (44,367) (0.4) Five Year Average 49,041 LARGEST CONTIGUOUS SPACE BREAKDOWN Vacancy Size Number of Square Feet Projects Square Feet 0 123 0 1—9,999 20 93,666 10,000—24,999 17 293,462 25,000—49,999 11 382,834 50,000—99,999 6 452,544 100,000+ 3 433,645 Total* 180 1,656,151 RENT SUMMARY Average Low - High Office Rent 58.45 $5.85 - $10.00 Warehouse Rent $4.17 $3.25 - $5.15 Blended Net Rent(Assuming 20%Office) $5.03 Taxes & Op.Exp. $2.43 $0.80 - $4.56 •One block of space per project,may not reflect total vacancy. Not all projects reporting Largest Contiguous Space figmres. 40 NAIOP 2004 ANNUAL INDUSTRIAL MARKET UPDATE NORTHWEST - OFFICE SHOWROOM CURRENT UNIVERSE Annual Net Total Occupied Vacant Percent Absorption (Sq.Ft.) (Sq.Ft.) (Sq.Ft.) Vacant (Sq.Ft.) Existing Projects 5,325,012 4,816,039 508,973 9.6% 261,534 New Projects 0 0 0 0.0% 0 Current Universe 5,325,012 4,816,039 508,973 9.6% 261,534 FUTURE PROJECTS FUTURE PROJECTS Total Number Of (Sq.Ft.) Projects Under Construction Under Construction 0 0 • None Planned Projects 105,000 1 Future Projects 105,000 1 Planned Projects • Schmidt Lake Business Center, Plymouth— 105,000 Sq. Ft. NET ABSORPTION (Years Ended April 30) Annual Net Percent of Absorption Occupied Year (Sq.Ft.) Square Feet 2000 751,384 18.7 2001 (115,176) (3.0) — 2002 144,740 3.0 2003 9,892 0.2 2004 261,534 5.4 Five Year Average 210,475 LARGEST CONTIGUOUS SPACE BREAKDOWN Vacancy Size Number of Square Feet Projects Square Feet 0 52 0 1 —9,999 15 95,486 10,000—24,999 10 155,937 25,000—49,999 1 40,239 50,000—99,999 1 63,412 100,000+ 1 104,262 Total* 80 459,336 RENT SUMMARY Average Low - High Office Rent $9.59 $7.00 - $12.00 Warehouse Rent $4.66 $4.25 - $6.00 Blended Net Rent(Assuming 50% Office) $7.13 Taxes & Op.Exp. $3.87 $2.22 - $5.24 "One block of space per project,may not reflect total vacancy.Not all projects reporting Largest Contiguous Space figures. 41 NAIOP 2004 ANNUAL INDUSTRIAL MARKET UPDATE NORTHWEST - BULK WAREHOUSE CURRENT UNIVERSE Annual Net Total Occupied Vacant Percent Absorption (Sq. Ft.) (Sq.Ft.) (Sq. Ft.) Vacant (Sq.Ft.) Existing Projects 9,548,530 8,919,015 629,515 6.6% 873,360 New Projects 0 0 0 0% 0 Current Universe 9,548,530 8,919,015 629,515 6.6% 873,360 FUTURE PROJECTS FUTURE PROJECTS Total Number Of (Sq.Ft.) Projects Under Construction Under Construction 0 0 • None Planned Projects 518,000 2 Future Projects 518,000 2 Planned Projects • Diamond Lake Industrial Center 2, NET ABSORPTION (Years Ended April 30) Rogers—259,000 Sq. Ft. • Diamond Lake Industrial Center 3, Annual Net Percent of Rogers—259,000 Sq. Ft. Absorption Occupied Year (Sq.Ft.) Square Feet 2000 677,359 10.4 2001 54,617 0.8 2002 (136,270) (1.9) 2003 308,138 4.2 2004 873,360 9.8 Five Year Average 355,441 LARGEST CONTIGUOUS SPACE BREAKDOWN Vacancy Size Number of Square Feet Projects Square Feet 0 62 0 1 —9,999 2 12,913 10,000—24,999 8 112,982 25,000—49,999 6 178,904 50,000—99,999 4 301,692 100,000+ 0 0 Total* 82 606,491 RENT SUMMARY Average Low - High Office Rent $8.42 $6.50 - $10.25 Warehouse Rent $4.13 $3.00 - $5.00 Blended Net Rent(Assuming 6% Office) $4.50 Taxes & Op.Exp. $2.56 $1.36 - $5.05 One Neck of space per project,may not reflect total vacancy. Not all projects reporting Largest Contiguous Space figures 42 NAIOP 2004 ANNUAL INDUSTRIAL MARKET UPDATE