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7.0. EDSR 02-11-2008
ITEM # 7. of ~7~~ ver MEMORANDUM TO: Economic Development Authority FROM: Catherine Mehelich, Director of Economic Development/~~~ DATE: February il, 2008 SUBJECT: Update on Economic Development Assistant Hiring Process Staff will provide a verbal update at the EDA meeting on the status of the hiring process for the Economic Development Assistant position. United Properties Outlook: Industrial -Northwest ~~_. , rioile I OUiGk Southeast ~ Southwest ~ N.ortheast ~ Northwest ~ "~ v<; ~ancv by PrOGUCt ~torioal Vacancy urical Vacancy Buik ...,rehouse "~ri--,torlcal Vacancy O~i'ice Showroom Historical Vacancy Office 4`Jarehouse 4bsorption by Product r .e _storical Absorption ~~> Historical Absorption Buik larehouse j? I?~;~rical Absorption ~e 5hov~~room ~, ~listarical Absarotion Office Warehouse '~ Nlstorlcal Canstructlon ,cts Planned K Under Construction Historical Rental Rases Tor Office ~ Warehouse Space 4veraae Net Rental Rates Main Summary Table f3~_...9ing Data Additional Data Graphs INFO~M/~TION Page 1 of 3 L+ ~~ ~ ~~ ~ ~ ~ e . r:. .~~~ ~ Vacancy Inched up Absorption Turned negative Rental Rates Holding steady Highlights • The Northwest industrial submarket, which is composed of 295 buildings totaling just over 26 million square feet, is the tightest submarket in the Twin Cities at with vacancy at 9.9%, up slightly from 9.1% at mid-year. • Absorption, however, took a hit in the Northwest in the past six months, dropping to negative 75,227 sq. ft. from positive 322,027 sq. ft. at mid-year. Overall leasing activity during the past six months was slow. • Both bulk warehouse and office warehouse reported negative absorption of 141,913 sq. ft. and 101,535 sq. ft., respectively. Despite the lack of activity, the bulk warehouse market still boasted a respectable 9.4% vacancy (up from 7.6% at mid-year) and office warehouse reported vacancy of 9.2% (up from 8.3%). Prospect lists for both of these product types were slim. • Six months ago, there was a lot of uncertainty in the bulk warehouse market with a reported 900,000 sq. ft. of sublease space expected to come back on the market. While some bulk space did hit the market, it was not as bad as expected and some of that space is already leasing up. • Archway Marketing, for example, has 240,000 sq. ft. for sublease in Greenfield, west on Highway 55. However, it took off the market another 200,000-sq.-ft. sublease in Rogers. • Wickes Furniture filed bankruptcy, so it's directly leasing its 203,000-sq.-ft. Wickes Distribution Center, 4837 Azelia Ave., in Brooklyn Center. A lease has been signed with Wagner Spray Tech Corp. for 120,000 sq. ft. of that space. Occupanty will occur in 2008, so this lease will show up in next year's bulk warehouse absorption numbers. DBixby Energy Systems Inc. has its 100,000-sq.-ft. facility available for sublease in Brooklyn Park. • Meanwhile, office showroom was fairly active, holding its own with 168,211 sq. ft. of positive absorption and a 12.2% vacancy rate, down from 14% at mid-year. • The bright spot in the Northwest was medical technology and life science companies, which continued to thrive and take new space, primarily office showroom. These types of higher-finish users were most active during the past six months. • For example, NeoMetrics Inc., a firm specializing in manufacturing of wire-based products and components to the medical device industry, signed aseven-year lease for 21,464 sq. ft. of office showroom space at the 80,766- sq.-ft. Plymouth Corporate Center at 2605 Fernbrook Lane North in Plymouth. In other activity at that building, Johnson Controls Inc. leased 29,206 sq. ft. for 61 months. Johnson Controls is a manufacturer of automotive interior systems and automotive batteries. • In additional leasing activity in the Northwest, Minntech Corp., a Twin Cities-based medical device manufacturer, signed athree-year deal and doubled its distribution space from 22,000 sq. ft. to 44,000 sq. ft. at the 101,906- sq.-ft. Plymouth Ponds building, 17300 Medina Road in Plymouth. • Hedberg Associates inked asix-year lease for 55,000 sq. ft. with Duke Realty Corp. at the Medicine Lake Industrial Building on Nathan Lane in Plymouth. • First Industrial Realty Trust signed a 70,000-sq.-ft. lease with portable storage company PODS Enterprises in a new speculative warehouse/distribution building called Interstate North Distribution Center at 7035 Winnetka http://outlook.uproperties.com/Screens/IndustriaUNorthwest.aspx 2/4/2008 United Properties Outlook: Industrial -Northwest Page 2 of 3 Ave. in Brooklyn Park. • Automation Inc. took 37,000 sq. ft. of bulk warehouse space in Real Estate Recycling's France Avenue Business Center in Brooklyn Center. The tenant relocated from Minneapolis and took occupancy of the new space in November. • In addition to these deals, a couple more big leases were signed, but the companies won't take occupancy until frst-quarter 2008. These leases will be reflected in next quarter's data. Southern Graphic Systems (SGS), which provides graphic services for consumer products packaging, will vacate 25,000 sq. ft. at Plymouth Technology Center and lease the entire 78,000 sq. ft. of bulk warehouse space at the new 610 Business Center in Brooklyn Park. The building was developed by Ryan Companies, which has sold it to Investors Real Estate Trust (IRET). • Also not reflected in this half's numbers is the expansion of Vascular Solutions Inc., a company that develops diagnostic and interventional devices for vascular medicine. The company is currently located in 32,000 sq. ft. Northgate I in Maple Grove, at Bass Lake Road and Interstate 494. The company signed aseven-year lease to expand and take an additional 58,000 sq. ft. in the building on Aug. 1, 2008. To accommodate this expansion, another tenant will vacate its space at Northgate I and is looking for 35,000 to 40,000 sq. ft. in amulti-tenant building in the West market. It will relocate this spring. • In user-building sales, Empirehouse sold a 51,585-sq.-ft. building at 4401 Quebec Ave. N. in New Hope to 4401 Quebec LLC (Horwitz Mechanical) for $3,146,685, or $61 per square foot. • Cobalt Industrial REIT II acquired a 70,100-sq.-ft. building at 19875 South Diamond Lake Road in Rogers from AGW Properties LLC. • Cobalt Capital Partners purchased the 252,000-sq.-ft. Midway Distribution Center, a bulk warehouse property located at 2075-85 Ellis Ave. in St. Paul, from San Francisco-based Bristol Group. • Cobalt REIT purchased atwo-building portfolio of multi-tenant industrial buildings totaling 194,000 sq. ft. from a local ownership group. Both properties are located in Fridley. • Cobalt Industrial RErr II purchased an 86,000-sq.-ft. flex space industrial property located at 1905 County Road C W. in Roseville from Fat Industrial Holdings, LLC. • n new construction, three speculative buildings were delivered in the past six months totaling 427,804 sq. ft. They were predominantly 24-foot-clear bulk buildings because the Northwest's bulk market has been tight. Duke Realty Corp. completed the 153,000-sq.-ft. Gateway North in Otsego. No leases have yet been signed. Net asking rates are $5 for warehouse space and $10 for office. Duke anticipates developing as much as 1.4 million square feet of industrial space in the new 165-acre Gateway Business Park. It could take five to seven years to build out the entire park. Otsego is the next logical step out from Rogers for industrial development. • Opus Corp. completed the 104,000-sq.-ft. Park West Business Center, an office warehouse building at Brooklyn Boulevard and Boone Avenue in Brooklyn Park. No leases are yet signed. The net asking rates are $12 for office and $6 for warehouse. These rates set a new high watermark for 24-foot clear space. • First Industrial Realty Trust completed the 170,804-sq.-ft. Interstate North Business Center in Brooklyn Park, a speculative warehouse/distribution building at 7035 Winnetka Ave. This building is fully leased. First Industrial signed a 70,000-sq.-ft. lease with PODS Enterprises Inc., and Ruan Transport Corporation, one of the largest privately owned transportation service companies in the United States, is leasing the remaining space. • In construction currently underway in the Northwest, there are two buildings totaling 225,650 sq. ft. AMB Property Corp. is developing the 2200 Commerce Building at Commerce Boulevard and George Weber Drive in Rogers. It is a 150,000-sq.-ft. bulk building. Net rental rates are $9.50 and $4.75. The building is set to open in second-quarter 2008. • Also, the 75,650-sq.-ft. 610 Business Center II is under construction in Brooklyn Park. The office showroom building is being developed by Ryan Companies in the northwest quadrant of Broadway and 93rd Avenue North. It is scheduled for completion in first-quarter 2008. Net rates are $12 and $5.50. ~. In planned development, there is only one building: Shingobee Builders has plans for the 65,000-sq.-ft. Otsego ~/ Business Center in Otsego. The developer will break ground when the office warehouse building is 50% preleased. And in preliminary development, there are five projects totaling nearly 600,000 sq. ft.: three are bulk warehouse buildings and the other two are office warehouse buildings. • In other activity to report, Eden Prairie-based Department 56 Inc., which sells collectibles and giftware, terminated its lease at a 335,000-sq.-ft. distribution center in Rogers and will vacate the space by the end of December. Morgan Stanley, which owns the building, has signed a 10-year lease with Walgreen's for the entire space; the lease will start March 1. This is a new distribution requirement for the national drugstore chain. This building is not in the multi-tenant universe because it's asingle-tenant building, but it is a significant transaction in the market. • Other big users are looking for space in the Northwest. For example, Plymouth-based ev3 Inc., afast-growing medical device company, is looking for 300,000 to 500,000 sq. ft. for a new headquarters. It currently leases a 64,000-sq.-ft. manufacturing and R&D facility and a 50,000-sq.-ft. headquarters property in Plymouth. These leases, which expire in 2009 and 2010, respectively, are with Liberty Property Trust. Also, ev3 has a 16,000-sq.- ft. distribution center in Brooklyn Park. Eva likely will do a build-to-suit to own or lease because there are no existing options large enough to meet their requirement. It may take 18 to 24 months for abuild-to-suit to be completed. http://outlook.uproperties.com/Screens/Industrial/Northwest.aspx 2/4/2008 United Properties Outlook: Industrial -Northwest Page 3 of 3 • Also, several other users are looking for 80,000 to 150,000 sq. ft. or more in this submarket. The Outlook Although there was negative absorption in the past six months, there was still activity. Three big leases-Southern Graphic Systems (SGS), Vascular Solutions Inc. and Wagner Spray Tech Corp.-will show up in next year's data when these users take occupancy. Absorption for the next six months is predicted to be approximately 400,000 sq. ft.; however, it could be significantly higher if a couple of larger companies that are looking for big blocks of space sign deals. The Northwest will continue to see larger, high-finish deals completed in the next six months. Med tech and life science companies will continue to grow and look for space. Office showroom will continue to perform well. Rental rates will hold steady. The average net rental rate was $8.50 per square foot for office space and $4.77 per square foot for warehouse. Most landlords have bumped up rates and are achieving higher net effective rates. In bulk warehouse, it will be interesting to watch whether Opus Corp. is able to achieve its quoted $12 and $6 rates at its new 104,000-sq.-ft. Park West Business Center in Brooklyn Park. These rates are entering new territory for 24-foot clear product. Copyright 2002-2008. United Properties. All Rights Reserved. 3500 American Boulevard West, Minneapolis, MN 55431 Privacy Policy ~ t;rn:~c. OF ~ ~cxvnicacf_Nird CgpY ~ Request hard repy ~` Back_To_Top. http://outlook.uproperties.com/Screens/IndustriaUNorthwest.aspx 2/4/2008 ~, `~ a ~ k~ ., ., ~ ~ "'-f: ' 1~1 .~ • t~i:SL'I"~it'(1fl ,i(i1~1~1F':j I'C~l~y + ~f~a~I'1G :its-lf!Cfl. fif,„l~ffl.":;i`C f ~.~,;r ccmparl~~ crt. ~ri~ , ~pc~ • I ~l1StIUCth, ACS`S PVUI Off:.,~E_U,d.iV I,e~clcpm. ~ s u1i~9 r,ay ~n all SI IllaI~F.t INDUSTRIAL CONSTRUCTION COST INDEX Per Sq. FC. July -December, 2669 -.~ i SHELL ~ TENANT BUIL6ING ~ IMRR6VEMENiS ~ _._.i Industrial Market Faces 'Pause' as Users Wait to Become Mare Comfortable with Economy TENANTS ARE CAUTIOUS dt~n'i sti~ant to take u^ more ;pace th:m Foll~x~~ing [wo years of record--setrin~ they nerd. Some arc rc newiu~ rather absorption auct construction, decreas... thsrl rekx~atvi~. Tr1 ch~~ South~~~csr, users iv d~re 5,U(i(}- na 14,Q011 s .-i~. ~;ui~~e in vacan<1es ;u1d increasru,> rental r~ttet, `3 the Ts°in Clues industrial mn;~kei is in tuuharaeteristlrallq' cho'~c<<i liCrnh: activitti~. .{ `'1~>atue.. as m:uly~ u,crs Bake a tiv:iit- Saxtallrr cotnpsnics ofic n f.xl thr, p:un Anil-see approach ~t~t.i.°n it comes to the more dt~rin~; ,1n c•:;ononz.ic: sltunp. c°c~onortrv.>lower,job :~i-owch .utc3 the ABSORFTI~N PLUMMETS residential doc~nttlru. Absoi ption dropped to ~U,864~ sd. Ft_ a[ Compaui ~s associated ~s'ith residential reat~ ~71d tit»n I t ? lnilhon :yuarc trot at c:onsn:u~uorl traditiolialls, conrribitte mid-~~~c.u~. The [~in-theast and Sculthcu~~st ctrou~ to leasin,:~ ~c twit}' iii the inc'lnst~rial rePortrcl positlse .tbsot} Cron of x>~,51 i ~n trl.ct, .n1d they 11 ti elttt t11r, p;liri oh s~• ft. end t>1,=}119 sq_ h r spECt1~ ~h. 'l~he South isC J cpot tcd ^e~ ttt~ "? 3~ S33 sq. ft the lac,~rslnE; shu~lp. Iitiro tlcor ua~ cusrlp.r- . flies dins n ized in thc~ Sr~rit.hr•,ist. Ses~e•ral and Gt.r NorC>>iGest, nc aut:~ 75.?'? / sq. ft. rnort~a~e ce,7mpanies ]eft the Sortthwest• 1 Jcar~trs ros~• to 1' (1':%h, prinlarih~ dur io Tide ccnnp;ulies closed acunss the ruetlc). netis~ coitstructiun deliti-ered ~~ith s~acan- :111 busine,ses ser~in,~ the hotrinlr, iri~lw._ ties. 111r \c,rths~est reported the ]aGt,est a~>,r air impact"'1• vacanrs ar. 9.9;5, fol.lo~~~ed b~~ the Sottth- ~s:cst at 1194, the SoutheasC at 73.1`.'-4;, and rhtother t1 tul is to tm~ ttx rs partituiarly the Northeast at i 3.9°- ~. n 11k~r one ~, sn~;an t shorr:et I c i m le ttc s dui to rho, utzcertanutr ot~ thy: cconorny Odic, ss-art:h~ru_c t'nd1~d tale 4~ear ~~~id1 cud its in'ipact cn'a their business. ~G~nants 10.9" ; vac;lnry' ;utd =}Q~.S8R sq. fr. of • Vacancy Rate • VacancyRatew/Sublease INDUSTRIAL VACANCY -- '.. 18 1o.S 1Ze 12 td.1 1b r • 14 1 • 13 • 15.5 16.2 15.2 • 13.5 . • 12.0 12.2 • 14.0 • 13 3 • i t`9 13A 13A • ' 12 . i1.0 ~ s • 117 i2A , I 10 • • • 10.6 t0.n 101 f- S Z ~ 6 d r 4 z w t~ 2 w 0 a. '. '97 '90 '49 '00 '01 '02 '03 'Ok 'OS 'Ob '07 ......... Source Ur -ted r'rcperties -. ~~ ,. y,_----- h.. .. ~ ;(:C! 10 absorption. I.3u]k warehouse reported [' 'r~''b vacanc'v aud nx>re tha^ I uaillion x}ware toot of absorption in WOU7. One of the ]ar,;er (:calk deals watt I3Al:: S~stent to}~_inl; ;ur a<aditiona] 1 I O,t)o0 scL It. rr. Riv. a I~oac1 Industrial Center in Iridh^y: Office slao~c~rooan ret~iu-tcd 7 , 8`:'~~ vacaticc~ aud. 'h5.`J`a'> c}. ft. of absorptior ira "'i`on'. CONSTRUCTION CONTINUES Cun~ap}eted construetioa~ I rr~;ects t:{rli;.'- ere*d 1.] rui7lion square feat of space in 'il0 i (7 y,;,:17 sq. tt. irr tl~e second halt ). 17c,pite slr>ty ;thsa~rptioat in the }}ast .ix aatonths, decelopz:rs are cc>ufiderat in the. anarket-----nine lnuldiu~=s aa- uni{ea-s~av tu... tile:<,, I,O~) ~,~i30 sq. Ft. All f}~ur subtn2rke>< aac' treeing s}~aeeulatiti-e decelopntent.'~Ien lnaildings are planned totalin, `> i `i,51 i) sq. tt., and nanny ol~ fho~esltoul<I stiar"C an ?i}(ils, r3 pasitinc ampacr of dre pons}u~; slogs,... doss-n is a ~eculiriu, offaFconsrrucnor, costs because industrial deco}oilers :u-e no longer roanl~>.ting~s~it:hrestdeaatz.i' ~trt~eo],;rs for lau<'1, labor and mate rials_ STRATEGIC DEVELOPMENT OCCURRING f ~et~t:}opaa s are, di< }ng itcto saabnuu-kets and fiudin},~ niche trth littae conapeo- tion. In other wards. they arr. inking land },ositions an strafe is }ocari<>>~is tl~aat are supp.v--~constr;uueci. The}' ae delving into }~.u is or I ake~~~i]Ie, I3urnsvillc:, I31~une and AppleV'alleysvhe~e d.vre~Iimitedconi-- pc~ting product. lx`haar tl~ac~ rnaxket turns, developers G~~}tla good. su ue.~;ic site, swill be at a eornpetitice advanta:~e. C 7ne es;ranple is first Industrial Realty°'liust's Pura;}rase oil=lo acres rn L.ake~~~ille, a high-demand niche market, c4ith plans for abuild--to-s`taa for LJpouer Corp. The laud. also v.~ii1 sup- ~~ort additional build ro-suits .rnd specta]a- tive <]et~rlo}~anrne. NEW RATE LEVELS BEING QUOTED Rental rates mc:reasec! si,~nificautly Liar quzd}ty hrop~-rti%s Burin, t}ae p;r r ttii-v v~~rr~ --on atic.a ,,e 5"" - -}wusbed Irv hi Sher raet~, coaastruction rat~:s. Con:~55ion;t~roc all cubnt;:3kcts dimiarisbed.A~~cragc new construction r-arcs are <GIO anc{ ~?.'some landlords are askira~.; S+I? :aid '*6. "T'h~~r~~ i, less Sticker shock. li.crs aa~e vv'ilI- ing to pap laighrr nrss consa:rut;tior: rates iFthrc creed ncs~~er, eI[icient space in tip,]'at urarl.tts.'l~~bcre is lirde rpom to Mach rate further. bu~i.e,-er, wuil anorc ;a~~,a esssve leasrns; aetiVov occurs. MEDICAL USERS ARE ACTIVE Med-tech can,.{ }tealda, trc'-~ri~~lat~~d com- p:un~s, users svho rcq pare ]:i;,her--iinisla slaaa ~'c, arc: gtts~ arrg and taking anore;pau'. ht the Soutlaea~c, Li±e~s~orks, Stavt~~el1 arrc3 ;~lidti~:etit "';ptca.al tier; aceti sigrc d deal;. In thy; Uortl t°est.Uascu}ar Solutions and Nlinnrexh C;oa p. signc~{ leases aud cre3 1'nc. a, ronsidea mg~ _i luild-to-gait. In the South~le~st, }~ilniTct: Corp.aiad ~ttrtnoctics -- ^ Absorption ^ construction INDUSTRIAL ABSORPTION AND CONSTRUCTION 6 5 4 N 3 z o J Z w 1 w w ~ o a 0 c ~ .~__ completed deals. In thr ~iorthcast, Cola>- plast signed a large base. The Outlook As users becotrre rnorc cc,nfident in the economy and their business, ;ibsi:>rption sh<nald bourre;e back to approximately l .~ million sgn;ue feet in the Yu-st luau of 2iiCt3, led by the Northw<st and Nortb- east. Seti'eral lair ~~ ]uses ue alreadt signed 2nd ~~'ill be reported iu nest ytaartcr's data ~s~hen teucuats take occupancy. I3ag users are scouting all of the submaa lots, and if some take s}?~a ~. ~'; absorption ctinll spike. Spi^ctriztivc de~el4rprnent will continue with more than i 1rti11ion square Feet undersa~a~.; asauch of ctirl~aich Should be dcliv-. erect in ~QU8. Tbis csdll likely push v:artn- cies up trataporarily: Build-to-suit activilti ~sil] also arndnue to he stron~~- . A}though a stri?n~~ }nc{ustrial base is health~> for coanrnunit}es, it's I;etting harder to develop industri;il in many cities. T~C;ere`s olteu the auiiude of"uat in ntv back- ~'ard:' Industrial is the least desirable pmduct t~>pc, :nrd some cities are makiu~~ it ettrcanely dit£icult io get tluough the Follot~ vr~ sreadv incr•ases <{ur{ug the past tc~-o years, rates hale reached a plateau. Rai~es hotald retnairt stable. If tnorc~~ c~e;tis start i,ccurring, tltc rc run}' be moan to push rates a bit further. ^ (Gaol ttl '97 '98 'Y9 '00 '07 '02 '03 '0, 'OS '06 '07 Sou!ce: Ur,i[ed Properties NAME DEVELOPER NORTHEAST ': B ~ r Por~ds dc~~n Lc:,c- Fntllc y int^r>,at, k . , L >t. Ctr. n„ st ::' E , ', Fndk.y .nD^'s.~a[, R ~'. Lest. Ctr n ~..,t: ;;. Er NORTHWEST ', 610 Du.~iness Ce•rt2r ?y:a.a :,omparr~as 2200 Comme ce Ctwlai ~~y _.. AFaa _. '. SOUTHEAST Hvty .au Distribution Center Atla., Ra at E,tat^ Mgmt. ib.1 2615 H:~.a a.a, Eacan B:aulder Lake., Eus~•ress Park I do rstate P :ers 3000 a,r~r; Cr .,ing R.d.. Eaaan SOUTHWEST ', Ch.. '.: ~a _;-_n lht;t Bu siness Park (.'enter C. r Ly ,an ;~ Gatp a. r'.::,aska 7k.GC0 2:"?d Dtr, 2009 . NA ':. ... ', S a. in~; Lakc•. Cerporrate C_ntc-r L n te. Prc, oeri r s lirry 212 R Pc ntcr Traii, Ecun Prairie 0,000 1st 3t~, 2UQE NA !,. TOTAL INDUSTRIAL UNDER CONSTRUCTION 1,007,530 ~~~~~~~ S emc Ur;ikcd Propert ies - ----- INDUSTRIAL VA CANCY AND ABSORPTION ': SUBMARKET TOTAL # O F NRA VACANT SPACE PERCENT PERCENT VACANT 1ST HALF 200? 2ND HALF 2007 LAST 12 MONTHS BUILDING S VACANT WI SUBLEASE ABSORPTION ABSORPTION ABSORPTION r- ~ .<la'a reho. .;.: 52 1 1:.., 633 ~,09G w2°. 19 5"r. I~t 7"',-h 95 E71 .'.34 ";14 41%:635 :. : ~ K w C11ice~hn.'rroom 70 4,37(+.354 554,'160 1 .',~ 13 TO 7401!, l"111,6c7) (37,0511 ~ ieYVareho ~s~~ t i 244 17 434336 1 965999 11.3'% '2.200 404932 75,163 405,000 . , . , , Z TOTAL 366 33,127,333 4,614,084 13.9 ( 14.6 % 570,119 297,515 _ 867,634 __ ' F- r, x.Yarf7ouse 93 11,92~,r`39 1,11L,544 m ..-.~ 99°0 271?3h ;i41s'3j '13Q,023 w y 6f2.iceSho;aroom 78 5(089,624 ti2D,325 122% 13.4'0 4~0 15A,211 169,634 ',i z ~ t f i~t vv2'~~h^~ '135 9,281,654 950,136 ~.2ii~ 11.'r'.'o =9f,o2 ;.('1,5251 151,9571 i o Z .._ TOTAL 296 26,196,916 2,593,005 _.. 9.9% 11.0°l0 322,027 __ !75,2271 .. 246,800 ', r- ~, re i:arehouse 34 5:..02.990 65S ,"44 122'/. 1 _.2°'C o"4 405 (7,0301 312,376 N ~ t f it Showroom 5C1 2,975.399 5"s0,ba3 17.8°%C 18.8'0 1o56ta9 .137,5821 29,110 x :. ~ t f Pc vs ;>eh0use 11E 8,02`- 23C ?6C1432 12.0`;.. 124'o IG[,5L7) (93,2211 ;150,70%?) 0 '~ TOTAL 202 16,368,608 2,144,824 13.1 % 13.5 % 422,557 (232,$33) 189,724 r- N 3 < areho i 27 4,69'„10 29o,55'L ~~.1 % ,.8P6 180:708 4.294 1235 QO< W 3 Otlh.eShowroom 100 6,47L554 979,63:3 141'/ 1.,.4°jo 125,547 71631,1 109243 x ~ t f iu vv3?eh~ se 164 12:00),893 1,328:500 1L1'l 11.7%-' =.9741... 7' :.b, 123,215 d _ _ _ __ _ .__..__ . _ .____. _ .~- _ i 'n TOTAL 241 23,673,457 2,594,685 T1.01 12.1% 356,099 61,409 417,508 ~i 3 .1 Wnrahousc 195 33,196 771 4,149 625 12 51 (~ o ~'u `757 7~'I 1 b ,.65 1,C.47,096 Y ',. Q r t,i~eSh~~avroor,a 799 1"w14,930 2,584,°71 13.t3'/i. 19.L3.o )o5:3$C (97,';'12] 269,??'L E Q r- of le Jaa~aho!se __ _ 661 ____. 46,755,113 ____. ___ 5112,467 _ ____. 1C.n°/~ _.__ ____. 119'0 ____. __.. 4~~,647 ____. __. (41,1091 __ __.__ __ 405,538 '' .. ____. _. k°- TOTAL 1,155 99,366,814 11,446,603 12.01 12.9 % 1,670,802 50,864 1,721,666 Source: United Propcr'.ie_• INDUSTRIAL PROJECTS UNDER CONSTRUCTION LOCATION S0. FT. COMPLETION NET RATE `".15th Sk. 8 I-3 v , u':aine IOCr,OCi0 ;11(161..::7 `it & troth A9ES F 7!ey 7d,8kp ';110 tit :', r. St. & '.9th Ave F aey 128,000 1 t Qtr:, 2Q09 S?.75; 54.; 5 1st`.Jtr 9008 1L.001~1:r.45 tsi 7tr ..u08 PJA bV. E.. o:.d.:ay & ?3rd Ave. fd Br;:oktyr: Park ,'5:65-0 C mgr er.a Btvd ..'~oiy:: Heber, Rnyers 150,060 1=aCitr~. 2008 ;;12.D(ii$5.50 2nd Oht, <OfJ9 S?.50(54.;5 2:%$(1011 'st'Jt..,~:CO 510.50i~",:i.i5 115.000. 2 ,ri Otr, 2006 $13.50 11 yam. ~" ~ ' ,~, ~ ' ~ r ~72~ T i~ j J J j~ . ~li~r,~~'. ~ '' U 6 ~~..! ~,.; Y~ I~ l.1J'~ 4 ~t Y`~ f COY S~~ ~ ~:@ r'.lChif~f '+~ L~ . c 4 , ~,, ,; ,~ ~~ .. ~. _ tf .:. ea~'~,~ 4 kcs,~ J ~~ '~ .~~ ~ _ ~ '. _~. ~ , ~~ a ~~---- ,. , ~ ~7~.. ~~ ~k i ~:... s `u ,,~ . - ~ ~. _ ~ ice- - • f jJSf(I~ ~ S ~ ~(3Slfli~ .:'va.CC ~(1( ;,m;,,,d • ~ Il lu~('~ I' ~0'v911~ ~i061~1j Cr.IJ ,U iEt~ l ~nl ~~ ~ ;a ~ ~I, d r.i~~ie. riU I~~ I'g I~ d~ 3 ::rc 1. • .8Ci17-f1C1i,ly .CCE~ lS 8'? hllVi'1(~{` '`.f~CkIVE (18CCL~~ Vii. t:IG d SCOa,"'~. Industrial hand Boasts Strongest Demand of All Product Tykes Loc d t3uners were selhn r mare fu-ms tO t gus ire homrbiuldcis Bunn the past te~~t year;. AX~ith the current hous- ing shrmp, however, landowners today are looking to industrial developers to purchase Cheir properties. "The industrial land market is thrivim~ as devekrpers coruinue taking land posi~ Lions. hrdustrial space is partit;ulady tight for large usere;prompting developers to move forward with spect~Jative develop- ment. In 2007, I I uuliou square feet of rretc° iru3usttial space was dehvercd to the market; 1..082,=}10 sq. ft. is under con- struction m;u-ket-wide.Another g18;8IO sq. tt. is planned. Skyrocketing consnxuaiun and land costs were deterring developers from starting new projects. However, the bleak: }rousing market has helped brine construction costs down. as industrial developers ;rte nO lk~nger competing ~i+ith homebuilders for materials and labor. ALSO, industrial rental rates increased enough to help otlset nes~l construction costs. Develop- ers are b~urkin; ou tenants' acceptance of these hip*her rate;. Rates increased on avera>e b`'~~-1%~~:~~ durim> the past two ye.u-s. Average nes~ consvuction :rckin~ rates art. '> t0 for office space and 55 for tivarehouse space. Some h.ighet-fhrish properties are asking 3fi12 surd ~$6. °f his is significantly higher than the Often-quoted ;y~7 and .b~4.51i for csrstin.`~ space. INDUSTRIAL SALE PRICES RISING In ;once case>, industrial land prices have surpassed residential laud prices ;md con~- Cinue to increase due to d1e acceptance of Chis new rate structure, the scarcity of availably rndustr r rl zoned land, rnd ~ ] uk of opaom m some Fn-odut t Capes IOr esatrplc, page blocks of I~tfice shO~~roour space ate limited market-tivid<. DEVELOPERS DELVE INTO 'MICRO- MARKETS' Industri.il developers are esploriug subnrarkets and uncovcrin;; "micra- nrarkets" svitlz limited compei~irrg prixluct. They reco~uze chat such strategic sites will put tlrem at a competitive adv;urtage. They ue lookurg at parts oEM Lyle Grove, Chanhassen, Chaska, Lakeville, Burnsville; Blai~re and Apple' Va11ey, for e.xamplc. NO DEMAND FOR RESIDENTIAL LAND Twin Cities--area 12e.iltor associations reported that closed. and pending sales c'iro}.rped 2L?°~:, in I~oven~iber from one year ago, and home prices posted their deepest ylear-over-y-ear decline of 2007. Tlrc• supply of ness- homes on the mar- ket ~ilso is dropping. In llecember, the T3uilders 11 sociation of the Twin t:5t- ies reported a 30°% decline in total new units so Liu- in 2~J0?.'I'his excess supply of homes and lots has forced resideuti.rl ]arrd s~'alue to drop fit) 5~J°,v Yi'Om their peak of tsvo yrars a~~O. SPECULATORS JUMP IN Speculators arc still active. Some believe 2(108 will be the time to liuy tO capitalize on current market conditions Aggres- sive speculators are buying attractive Iand positions at heavily reduced pricey in alltlClpatron Ot a reCO~'ery. h.Urli poll Clbni are being taken metro-wide, including Se. Michael, h.oger, Otsego, itlaple Grove, Medina, Corcoran surd Columbus. Landowners are getting a more realistic idea of land values in today's market SI?eculators are very selective and are btryiu,:; land at prices much ]o4ver th;ul those seen in recent nears. 11s a resale. landown •rs are gtttiu~; a more. realistic: idea ofland valuec_ in today's market. Son~rc s})erulatoTS are even waiting until tluv believe the housin ~ n~rark~t reaclTes bottom I °-] S months Fi-oru now. RETAIL LAND MQVES SLOWLY 1'he hou~ul~ slo~wdosvll cL,ates Irrore c1ra11~IL~*c~ file rct:ril. A houtTUg crisis often coulplete deals, As a result, developers are phasing crud "right-sizmg'~ d~v~lopments~ Some land~>cvners are acccptin~; ]ovver prices because retail u = T i developers still paG~ s~gnihcrnty rlore than industrial or resid.:ntial. i\4c~st netis~ developnleut is for big-bow ret.ul~I s; encrything else is on bold. Fewer developers are scouting sites. Many arc tryilr? to fell halt v~acaut shops and p~td5. SOIn9; landlords are considering rent reductions and concessions. mc:uls reduced consumer sl?cudur~~, and there's lees of an a},petite for nett' <.~ ~ce(op- t..IClI t ire also broadening thclr r rail rtle•ITI. Kerail land values have dropped; and ~rcqulreruents and imposing Ye«rrr design sellers arc giving dcvelol)ers nlorc time to restrictions on new development in an r~( i_ ~ :rts~n a _~,. ~~F rvl ~.~r effort to spur retail grolvth in their COITln1LI1llt1Eti. MULTI-FAMILY IS LUKE WARM ~rhde multi-family timdament.ds continue improving, rental rates don't yet stlppart Inctro-snide uew Construction. Sc~)me developers aIx taking laud positions, but not much is being built. OFFICE LAND PRICES STABLE Not much acti~lty is oCa)ning iu office de- vcloplnent. Recent development has led. to vaclult spue; so tciver des Elopers au seek ing land positions for otsl. c, prc~je~ts. Land Alice, .Ire not necessarily goiu~ to decline, but then are not inc rcdsin~. Some sites had to ran their course as retail or residential sites-in which developers paid mores and. once then were deemed not Tensible for those uscls. chew berraTne oftiee sites. The Outlook Prices iin- retail and residential l:wd tcrther from the metro's care vv-ill continue to decline. Industri:Il land. will be in scrougest d.rrnand. Prices will likely be stable and could increase. I'he housing market will likely get worse before it gets better. The anticipated slow rccovely will be LI function ofthc econo- my, people's optilnisna and lending criteria. The recovery will begin with shall, well- locatcd devcloprnents in first- and se; ond- tier stiburbs. Speculators ~ti-i11 continue to impact the laud. market. There's opportunity for people scith cash willing Co takir specula- tive positions. Retail developers ~i~ill look for flc~ilility and plTasing options. Projects ~a~ill typic>JIy he sv~e11 located in-f>ll sitr~ or rAdevclop- ment opporrunities. ^ 14 1. Otsego 5. t;h.~aska 9. Coitage ~rc~.~e 13. C:umou~~, 2. C~ rcorar, f,..>hakope::. 10. kft^n ~. Medina 'i. f?,~:~emount 11. L..ino L.u~ as 4. Carder ~. Irrder Grove He ghts 12 Eslar~: United Properties Outlook: Retail -Community Centers JFc ~ : h'ip QUICK Page 1 of 1 Community_Centers j Mmnea.polis CBD j Neighborhood Centers j Regionf ~ i ` ; ~IL~~ ~zn~ers j ~~ rdul_la~D. ~ J k~ „,_,~ ~ ~l . j . NW ~ A ~. ~~~~~il~~i 1~~~~L1'lJ HistorCai Vacancy His'.crcal Abscrp~io-7 H~4torical Construdlon '= Fi;:'~pr'' ~I Rentai Rates `~ Building, Data ~~; Additional Data Grapl Vacancy Up nearly 2% Absorption Up significantly from first half Rental Rates Dropped slightly Highlights Community centers have enjoyed a period of expansion largely fueled by the healthy growth of big-box stores and "junior box" retailers such as Best Buy, OfficeMax, Slumberland and Dick's Sporting Goods. In addition, several million square feet of single-user freestanding retail space also came on line in the second half, but this space is not reflected in the multi-tenant universe. The strong growth of community center retail was reflected in the second-half absorption of 581,230 sq. ft., up from just 104,502 sq. ft. in the first six months of 2007. Retailers have become more selective in opening new locations. Lack of leasing activity in small shop space is reflected in the year end community center vacancy rate of 5.5% (6.9% with sublease space), up from 3.6% in the first half. The average rental rate dropped slightly, to $18.73 per square foot. Some of the increase in vacancy rates was due to store closings by CompUSA (Bloomington, Minnetonka, Roseville and Woodbury) and Wickes Furniture (Edina, Burnsville, Roseville, Brooklyn Center, Maple Grove and Coon Rapids). Staples is working on a deal for the former CompUSA Minnetonka space; PetSmart is taking the Roseville CompUSA location; the other locations are being marketed. Minneapolis-based Target has been the most active big-box retailer, adding new SuperTargets in Richfield, Monticello and Maple Grove and redeveloping its existing stores in Edina, St. Paul-Midway and Burnsville to convert them to SuperTargets. Two new Targets will open in third-quarter 2008 in Waconia and Otsego; Waconia will be a new prototype without groceries and Otsego will be a SuperTarget. Lowe's stores opened in Maple Grove, West St. Paul, Blaine and Richfield. Slumberland has continued to grow, opening in Maple Grove and preparing for a spring opening in Shakopee. Crossroads and Har Mar Mall in Roseville have both been repositioning tenants and adding new, more attractive facades and signage. In early 2008, Best Buy will be relocating to 53,206 sq. ft. of end-cap space at Crossroads of Roseville at County Road 62 and Snelling Avenue. Dick's Sporting Goods will take the space vacated by Best Buy. Several national, family entertainment center brands have been evaluating locations for possible entry into the Twin Cities market, including Dave & Buster's, Amazing Jokes and Brunswick Fun Zone. Brunswick has opened its second metro location in Blaine and is working on another location in Oakdale. The Outlook Retailers will continue to closely watch the fallout from the residential mortgage crisis and its impact on consumer spending. Developers are already being more cautious with plans for new projects, and that trend is likely to continue until consumer confidence begins emerging. Vacancy is expected to increase slightly as more small shop space becomes available. Absorption will likely remain flat as fewer developments are under construction and expected to come on line in 2008. Copyright 2002-2008. United Properties. All Rights Reserved. 3500 American Boulevard West, Minneapolis, MN 55431 Privacy Policy j Contt~ct tJE7 j gcr~~n oaci_Fiard ~9~y j Request bard Copy Back.T.o_Top http://outlook.uproperties.com/Screens/Retail/CommunityCenters.aspx 2/4/2008 United Properties Outlook: Retail -Neighborhood Centers rr/ ' I DU',GK ,torcal Vacancy !i ,taNcal Absorption <`> N-'oricel Construction s ii; >rcal Rental Rates ii; Building Data ~: Adi icnal Data Graoh~: ~',,~` , ;~: . ~>~e~ Page 1 of 1 Communty_Cente. rs j Minneapolis CBD j Negh.b...o..rhood Centers j Re..gional Ce[ ~ I ~ inters j 5i Vaul_CB..D ~ r~ ~I ~r ~ ~~'i: ~~ ~ - .~;r:.. I 3. NE1GFiBtl~NOaD ~~N~~R~ Vacancy Increased 1.2% as a result of slow small shop leasing activity Absorption Negative as retailers slow expansion plans Rental Rates Decreased slightly to $16.26 Highlights The second-half vacancy rate for neighborhood centers was 8.6%, up from 7.2% at mid-year, with negative absorption of 132,138 sq. ft., compared with 174,630 sq. ft. of positive absorption in the first half of 2007. The average rental rate decreased slightly, to $16.26 per square foot. Activity in the small-shop category slowed as a direct result of the slowdown in the single-family housing market. This downturn in leasing has forced some landlords to begin offering incentives for the first time in nearly a decade. Some fast-food and fast-casual restaurants have continued to struggle, particularly in outer-ring suburban centers where weekday traffic is lacking. Caribou and Starbucks have scaled back, potentially presenting opportunities for franchise operators such as Dunn Brothers. Drugstore chains CVS and Walgreen's have also slowed their expansion in the market, although CVS is still looking for highly desirable locations to build out its presence. CVS' new location at 12th Street and Hennepin Avenue in downtown Minneapolis will open in second-quarter 2008. The Outlook Incentives such as free rent are likely to continue as landlords work to fill vacant space, particularly in outer-ring suburbs. Any new development that has not yet begun will likely remain in the planning stages until it's clear the market can support the additional space. Redevelopment opportunities will continue to be sought in the inner-ring suburbs. Vacancy is expected to increase as small shops struggle. Absorption will likely remain low as vacancy increases and new construction slows down. Copyright 2002-2008. United Properties. All Rights Reserved. 3500 American Boulevard West, Minneapolis, MN 55431 Pnvacy Policy j Con„fit: UP j C)gtir~nloaci..hlard Cc~.py j ftequ~>t Mard CU~~r Back To Ton http://outlook.uproperties.com/Screens/Retail/NeighborhoodCenters.aspx 2/4/2008 f ~~ w 4~ 1 i~ v ~. n ~KV .~'.~ 1, ~~~,~, a.. ~« ~, r T3 ~ ;J - ~~ ~ ` ~ ~ ~ ~~ ~~~ _~ a~~ iMWCf ~'JR~"V45~,~~1 x d ..~,.. ~ m t , r, f ~ ~' ~ _ ~rr' a f ` { • )ac ri _~ ,uns~nlt;l ~ ,; xii~~ rl] j tilt; CS~t:C'lt I. ~1Clttf~af~t~ ~, °'~ ~t~' ~IIVIiiG ',~C' S~Oi4`IC~'dfl In fE-~ I ~( S'':'7 1^( CP'!c~';.II .,~i.lA 3` ,'~ rfP Bf~FvtBG ilurP I~ tu(I ay a~~ ~ =-~ ~x I~,dihrs. • r~"SCI~)tipfl 11.; .,_O,aPI _~a,i ~ s~!;. ~AG ~r. :ue s~~~l~~ I~~~lf b.l ~, ll N~_,~.ed ~s~eet ~e l.' mi 1~~~ ~~q~are Tact t~. %iIP yt;f. • Z Ge'Ve~(,~JIl P(" C`'~ P~ ~~ C'!I fu ]li C211tefP s ~79C01"VIII l Il'..u'iP ~)'l'o~l '~' I I ~tltJ- RETAIL CONSTRUCTION COST INDEX Per Sq. Ft. July -December, 2007 ~~ ~l i. f ~~~ ~ I i SNELL ~ TENANT ~ BUILOIN6 IMPROVEMENTS ' Small Shop Space Struggles as Retail Market Continues to Cool t~~eraJl.thc utailitiarketr 5ontinuin~ to coi,] in th~.~Tsti~rn (;itic°s. 1~5a:ailers in i11 }~EUduu types aie seeing; a slo`~docvn as the im}-act ot'souro~~~prrcc~s for of .u7d other co~rma.>~htics ripples th~mugh he econowy,.rloiz}? x~s'ii~h th~r nfl.7-prune resid~:rttial ruortgage meltdcns~a7. t'.onsistcnt sa~itlr a ;k>~s~ang U.S. ccof7tnnv, conscune~ spending decelerated in the second halt as his mt, x>ttcnul uul I}orxir: prices con)nuie~d to dcclin~. i'hr~ fui nrtur:: Fwd appli:u~cc~ categories ctsnCinued to evade a:~ a result of tht; hot~~ang re~;es~ion. FIa~~G~ever, the Internation,rl C.'ouncil of chap}>ang t;eatc^r~ rcporte i t .G`,=~ ~-.;ar- u~:r-year me°rease in ch,uif sr~,re ealei during the holidat~ shopput ;season. t)px:alc retalers ar:d kns.er-end discount- ~rs ap}>ear to haav fared better durin,z tlrc l~ohdav snoppang season than retailers who racer to the middle class, a ~~h~tiorn- ena economists call the "hournl.~cc .ttecr" l.ustrsv retail ty~p~cilly feels lee pressure 1'i-ow a,nstfiner spending sloscdoes.ns, anti de•c1~, dascounte:rs 5~hen l>esrc.it as con- sutners "trade down"' to stt?ivs lvirh IrSUrer prises to save inont:v. (~at~1 absorption lid beFn axp~:cted to bounce hack to full ,nomevtwn h~ scar's evd. Ho t, that did not h ~ppc°n retail ab,orptii~n rn the second h.elt of 2tx) ' teas 7~4E~.ts?1 ul.fi.,coiirparetltisitlr~=11,33<1 sq. Ft. zn the fast hali'~. 1'ot:rl tail alrsoa p- tii~ntor?l)i); ~sas I,?iiS.Jf.)~sd.ft--still t ; i"uificant anltn~uit. but anditative of a sl~~.~~~d<~~~,r_ Market-tie tde; av<;r~, e eacarrc} snit>izt? retail propcrtic~s ro•c~ to b.`~.''~~, uprixsn ~S'i: at raid-ve;u~. 'T'he avci i;~e rental rate; dropped slighth m the second hall to '~?:~.3`> frour ~2:~.~8 per sduarc foirt. Leasin activity has i~een light in smaller shop :apace :aid ,pectrlatrce projects. i „'..~y. \X.''ith rn,;le-t'amih- housing corrtruc- t~i~ti re achin}; its lowest point since i`i91, big-how chairs such as'har~et, Lo«re's and %.r]-~h~lart hat felt the ettzcts. I3tit there is stil sortie etipansion happening in the marktt.Thei~ hnc• become rnor• selec- ~j t?ve, axuiuuiu; to sc:~urc sate>, but at a °OO reduced pace. Redecc~lopmetrr to revitalize rYiseiirg retail ccr~ters ha:s bccon~e a rnor~ preva-. lent at~ud. iu tt~ell-estal gibed; titer- :md- sccond-bier n-aa~ are;ts. A good lort- tion often our~scrgh: ehe ch.rlleuges of re~develo},went, such as the longer tank fi<fine ~~equired Ct:~ complete those deals; more stringent ~;icy~ requiirmencs; and .less ,mailability of T~uhiic financing. C tt~~ ~~ov- eruweuts have beciirne more de~uranding about dedgn,aw}?1~nirirrir7~~ scrzct arcly- tc-ctural guidelines that swill pre-empt the prototypical; unif~~rnr l t~ bo?: look. l u ~er «pc~~sed ur re•nx> }plc d 'eu n stotes, Lustie s opened siti, and ~tahreeu s, C V'S ~utd ~ldi also cantimte to op~ u stahcce. COMMUNITY CENTERS (`omuuu7ity ('enters have c^njo}'rd a period of etiparrsion Lis •]~ 'uele<l by the: he tithe- ~r~ntiih of hi -bc,~ stones and "?unior hc~~" retailers sup h as 13esr 13uv. Offic ei\L[a~ti_ Shfmberlarti3 and 1~ick'a Sporting t:~ood;. -I"hi> }~c~sitavc. trend sw:u reelected in the ~ccorul half :ibsorptiozr of 5~ l ,'30 sq, ia'.. up from east 1f)-1,03 sq. ti. in the first sip 15 A1.J ~'r RETAIL VACANCY AND ABSORPTION SUBMARKET T07AL # OF NRA VACANT SPACE PERCENT PERCENT VACANT 1ST HALF 2007 2ND HALF 2007 LAST 12 MONTHS ''. BUILDINGS VACANT W; SUBLEASE ABSORPTION .. ABSORPTION . ABSORPTION ', ;xnrn :':rv ~.14.... 7E.icG.84!s ':.~91,51ti ..:;1, G.9`'~, 10~ L~~G2 G~fi17'v 6'5732 N`ui.enao;isCBU ~7 1.)7r.0' 3Q4:oDu 1°.4 ;„ i0..`;, .'.:669 ~~'a 7,405 i td,:ighburhood 24G 18,82'•38, 1,524,bh2 65'i6 103"io 17G,630 112,1:13) 42,442 O,.t e• M11ait 3 788.4-40 "4,GDu ~.~i~, 4'i', 0 7 ~U01 (;:000; '.. Re~ionat 9 11,8:;S,Oo4 663,"1 '~.8`:~, ~°, 4 ~?.8:51 ... 1 i ~,Q00 ... ~%2:641 :Jtc'Cia t`( 14 1 ) ~.76i 1Q.i.~J:1; t' 1 6.~%.. [14:!141 ,.~347I IL2.+11~ St.Pa~tc3o v s41.a1o r~~>16 31.°-, _2~i o,7s6 (11:6001 4,1x6 TOTAL MARKET 4b2 b3,822,112 4,434,858 6.9% _. $.1% 741,334 _ _ 546,871 .. 1,288,205 '..._._ ou=re: Urdued .•rcp~rt iea trtouths c)f 2(1U?- l..ack i)f lrui)t~; ~icticit}' in rnallsho~ ~pa~-e i~ r<flc~t~tccl m file ~r`a:-~rrtd COtTLrIl 171lltV CC'll Let- ~aCallCV 7;'<re OE ) ~%"ir iE,'~:~ tis~tth s,tl:,lea~ s~~ar,ei, up freln ~.(~`.h: to .he itst h;1~_'.l: l? _.~'eragr xe~n.tai talc: deopped sli„htly, u> `^1 `t.l ~ pc°; scluatc fcrtit. Some. of ti7e increase in aacaucj- rates v<%as clue to sux-i. closin;> t~M1~ ('ompUSF, and C'`'icke; ~Ftu-uitttre (ars;et}tas bee:a the tur~st~ acuce~ big-lx>~ re•taili t. ad<hng iout- uew Supc~ I'ar7et~ and t~de~~e-lo]~ing three ~31~its e~<un,' t;torc~s to cc~m; crt tlletn to Supi;rT~'argets. `±ss,,ta n 1 .ona, lalttih- r:nerrtaintne:nt~ ce:nccr brands la;tti~ been evaluaanglricai- tians for pi)ssible entry into the Tcuin t ;hies rr?arket, including 7.).i~ : to E3u,ier's, ~m;izing Jake's an.l 13r ~,:~ ,' uu lone. l3ntus>v'ick has opt nrd i,:; -...n.~i metro location in 131ar!ur and is'<{=irking t)n anirther =oca7on in O~tkdalc. NEIGHBdRNdddCENTERS "f'lte second-h,i:t ~'aian~v rate ;t)r ltei<~h-- 1?orltix?d ~ enters tvas 8.6':'4., t:p trom `.a'i:, at rni<1..._i; ar, c4~ith negative absorp on of 1J~,1:?~~CI. tC.,{~{NT?.pared iF'1T,lY ~~•:j. aii(1 {l, !t, of pox tlbr a:>sr~tpnon in thr i,ra h, ~t 't?0. "1 hc^ avcrl~e rectal rat ~ _ -Dined ~h hti:, to ~1fi?t~ },; .qualc f ~ t. Act;vitsr in the small--shop caret>orv Jowe~i c a direct )-exult of rl1e~ s1o41~doti-V1'1 In ehc sins,le-faruily housin market. T11ic down- tttrr, in lca5iui{ has turced some landlords ti) begin offering inccnrivc•s fur tlu° first time in nearh~ a dec;ule. sc,urcc: ~!rJmd I'rupsrties 9 7.8 g 7 6 5 4 3 z Q 2 `~ 1 Z o ~ (aesl W 111 a '99 '00 '01 '02 ~~ n,. 05 '06 '07 REGIONAL MALLS F'Legiaual malls have condnucd to t6ri'v=e, accot,tl[in~r for ~?2,i~~ 1 yrl. ft. of adsorp- tion, nearhr ha1r' of the tt,)ttil ?U0, rerul absorption of~ 1.?~ mllhon sZuare, fr°ct. 1-3o5c::~-~r, th.ar- v%as a u.~ep <arol? in absi>rp- rion in the second hal€~, li~ont =1~7,~4 i scl. fl'. at tx?id-yi:ar to 17 ~,f7l,~tU x{, ti.. Sn the seu)na Half. "Z-l)e s%,tc nc:vr rats, wras ~.b c. at yr^,u- c~ttd. The as~~rtgr° rrnial rare >,~as st~ablc at X60 ? ~ prr sl~t;ue• toot. ~1 pto~:osed 5.6-rtrillion-c,jtla?c• tiros ;.tiJ- ditiort to tl)c• `Mall. of lutarica is on bold; Cloy.. P"lvcacnrv vetoed a stage tun~iirr pack- ;.~e lasr-sprvz~ suluchin~h,i7ed~~I3= tur.dtna fi)r rhr: ~9all. `vacaneti- in the ;ila.ll's i=ourth level remain, high. ~1c Soutltdalit it1 E',{'iina. Sin~iou ('tc?pcrty GrouF.) is ~ti•orl,:il7~~; oft its rcno~aric)r? and )r~~osiuoiaing for thrsl~c171 Cities' i)]dcst )Hall. hr 12i~~c^~,-tlli:, l: o:cti~tle Lealter has br: rtn r~.~ rtalircd !s}- a rualot t -:design ot~ chc~ fonncr ~Vlcrv'vn~s space. SPECIALTY CENTERS The 1~1 cl?c:cialtr centers in the rnarkrr rr°porrr ~l ,-~ 6?`i, r~acaucv rate it) the second half of~~t10%. S~::cond-la;t(f absot-ptioti was ne~~ari~-e ,tt 3,3`? sq. ft.. for it 2i?ii7 toga! r)1 n~ga aye 2?,ti I 1 sq.ti. of iibsorption. I3oF~,~cr, ttpscaii ~.dina cc:nt~ersThe C.:al- leria r.1nd ~i)°` & France, bare burst thrivilag, partly dn, tc> tha zca.ent hoorn in zte~tt'by condo fr°vetopmetlr and cl)e conrintung strc~n?„;th. of t1u• upscale i"imsunlel t~,;;nrenr. RETAIL ABSORPTION, CONSTRUCTION AND VACANCY - ^ Absorption ^ Construction • Vacancy 4.5 4 %~ 3.5 3 N 25 Z 0 2 J ~ 1.5 4W 1 w W 5 a a ° 1.51 '97 '48 ~e t e I C 1 b Increasing population of downtown condo residents provides stimulus for retail development C RETAIL PROJECTS UNDER CONSTRUCTION ': NAME DEVELOPER LOCATION 50. FT. COMPLETION TENANTS ', COMMUNITY C..hcle.. ~u _~ P ,, ~~ II P~ m .a~~par i~~ <<pplE oalley J_,OJG 1~l .J.r. 200~J Par k F ` or r;ade Fha.;e I I :. to. m. Real E.,t3le Gaup B uoktyn Park 45,OOC i t .J~c, 2002 ~ Ei.ness I' 3 ei0ne Pteza Aurord Invmstmenls .,haska x10.0 )G 3rd C,1tc, 200 hohl,'s v luni^r bnties & small shops ~~ F'vm turnitur Li--.le::.=,naaa CKN! 'i~,perty InvesUnents I tL. a;~~ada 1Ffi l10"~ Std 3tr., Z00H ...... .. ': T Grove Fhase iIl f?yan Jampar:•~; P'apte fu;ve 1,:Q000 rd ~;ti ,'LfJfJ2 Sl~mherland, OfticeMax '~. N~-rth Brans - }'e.oil i...nter Solo^n^ ~'<cal. kstata Grnuo Nor t r Branch 1 EO OOr 5 d Cato, ZOOS Grocer ', Caan ~dr:es Ryan 5a-~p3nias S'~a,:rJpez 60,UOG 2nd ;Jtr., 2002 Slurnhertand I TOTAL COMMUNITY UNDER CONSTRUCTION 041,000 '.. NEION80RHOOD P~nr aLowry ~hcihn0lu:^M.nagernent, h~linieapoti_ ~+1,~1N 1.,tOtr,!08 At.1i,FamilyDohar ': TOTAL NEIGHBORHOOD UNDER CONSTRUCTION ~~~ 41,300 SPECIALTY ', 4hin~bor Ptaza Ito. ~r ~.~ R .a E tats Grnup _.. Fdeu Pralnc '>0,0.7tr 3rd UI-, ^,00: _._ '~, Cenienn(al Shops S[eubach Edina t;p,DOU° __ 4th (]tr, 200is _ West Elm, ContainerStora TOTAL SPECIALTY UNDER CONSTRUCTION 140,000 TOTAL RETAIL UNDER CONSTRUCTION 1,022,300 Sour. e: l~niled Properties: MINNEAPOLIS CBD t;tt:anciei in the illtnr,,;alxs!is C;ertral t~tt;i.rrss 1)istrira ((~I3L) r..mdtxxl reJ.... utit ~ li~;h. at l ~~.,{`.;~, .iltlu. u rh adsorption increased Fro1>> ?,ti?i9 sq. ft to ~.~'%C; eq. 1t. in the second half of'2OC17. The inctcasing population of don°.~tao~s-u condo rc~sidc~nts 1s provide 1~ ~ocr,e, (1e~altliy stiintthts fir retail development I'<'~r es.unp[e. C`V5 i utuliin: l.;tr first r~rcw dru More doGVnrrcrevn in store thatr "'0 scans. tc'itlz a srcond-yr:au- ter. 201)8 opt°ninr.; shaec! for tilt 12' S',-eet. and H~ ne.~;pur ~s, true site. The Outlook With cor3suuter speladirrg tbrc~att^1it°d by seti~cral eairnoniic factors, retailers tiwill coutiutle to be r;r :~tive and find it:ntrvarive tti r~S tc~ arts ct iuuonrers. I a rdlords skill ~k~> lracc~ to rind ur:~ti>~c apl.ur~n:h~-~ to at'ir;.ua arld rct:un t,,rrants For:anall-shop space that bas remained ~-acant~. hr ~}nres ot~the slo~~s~in~; c~c<>noun~. sr:~cer:aJ n41w restaurant arld Family c~~u«t~Cainnieut concepts ca~il3 prul?abh~ enter the manc~t. helping to re~ritalize same touters that are i.nt need of~ncw tenant nli~cs. After Ilse first t1.~>...~,car deGaitae in con,trtiction since dze late; 99~3i?s, t~eGv construction 1s expected to lag in early ?OU8.'7'his ie a reflection ref the nation- ~~•ide lict>~ir~~ slolvdol~rn. altl7c5ugh sotrte opporauristrc developers Gave boas able u~ find local nie:hes r} btuld hem~s.'The slowdol~~u in the housing market has dis<cniagcd thre euu~ana- oi~ncw~ retail and re,tauranc concepts into chc*~l`wiu C;itres marki~t, but those that ;u-e already ir1 the tsar ket ,Ire continuing to look for suit rl?ls ;pair. 9tter some dehry, high-profile G:crtterc C: al}roun Square and St>uthdale will pu:,babf~ bc~in loin-neede<~l n~tal.~ocers in the second half c~h?UUS. l7ttke Realty .ur'.)~rfkie~ R.Anderson Rral f~state are plantriug tl~~e ~9-acre ~vc~;t F,nd davcloptneue in the south~uvcst quadrane of I-3r)4 and H~~'v. l i)(1, ~~~hic1~ ti~~ill likely include .~4t),000 sq. tt. of "litetyl ~~' retail spare ("incauding a. nrovi~; t(leaii:r), 1.1 n1.il- hon square feet of of~lct space, and a hotel. `;ire w<.>rk began it> t1~u fill, svi:*1a. ~ pecitii development plan revie~~s scheduled for this ~.>inter. Redevriopnreut ofqualitc 4ites s~eidrin the l-~9=a %E,9~ loop will ]fkaly aca>ut~t For a si:;nificrrnt portion irf the auis~ity seen in the nesa 12--18 months. [Zetai;ers and hultllords rJeed trJ work through the ~isting~ ins~entor~ r~fva~ant spact in ncti~°ct d.ccl- opnrents ita outf r-ri1r,~ suburbs s~ here the horning doc~°nttu-u has been most evident. ^ 17 ;Jrt~r l ~~, _ t _-t ~l • U~ ~~l:y IG:es drrllltr 1, rente php,:F • ~ :UIt,J `iC`J !i51" lil ':C~(S • ~r~eF~lta r~t~ c co~Je t~M-rer;t~l ~n~•~ rs~u=i ~G~ I`iS MARKET BREAKDOWN l is it higl ti' ~~i;;li 1 ~ e ~ ;;tit d :-tt `~50 ~?~0 ~~:d (epo(ted ~.8°r, J~cane~;, do~~r,•~ `IL(il .'i.,i'n. L .Ij tiL ~-,iced h III I ~"~~(' ~ - ' ~ Cr ~l` d; ,., Y, the South Central,, aaased the _:gest .Ili iU. ~<i$ wi;'~.` Ild 4cC8' y' (~ Il ~ .`"o. Northeast a~ ~ r1t d t~ec ~o d ~ ~, ar~d ~~e ,ge erns u-iped ~"0 t~ w~Fa~. Southwest J c.nt,~ r , rayed tc ;.4"%~~. (c°t Southeast'dacar~cy fill to 4.d°,/o, ~I~d rents ~JJ e fa~rh; tlat ~t $~a62. Northwesty ..a.~v- a; a' ~'~._ C1t5!IlC1r,St _ ~~. Downtown Minneapolis <<aca; ~i per to 1 , ~;; ;nd r r~ ~ pen~:ed at ~ 1,100. Downtown St. Paul c r~ ~ ~ (`re ~ I ~1~.:, ui ((0111 `~',~!' . ~,llt ti~~Ce Ct 1118eL'i a (t.~`;!o ~~n is M;l~acmt, Ii ~~:!: ~~.. Apartment Market Is Healthy, but SlowJob Growth, Flat Economy Will Have Impact t7ecreasin~; c;tcxney rates, increasing rents, disappcaritrg coucess~orrs, Eittlu~ netiv constr~uccion Fwd a weak for-sale housing In:nke~t area honing vvea] for dri' 'T~4sin C7t- ies apartment m:u ket. Vacancy cropped to , U9o in third quarter trout -C"e one year aC;v ~~nd a lai~la of ~.4 in~',OU=}. intprt>ving fiuad;unrnta; meant landlords raised rents. Average rent ~v:as ~;~~}tl, it}, ~ ~ ?6 from one t'c a a~;o. <.oncc^ssior.~s are 6aiating oft; so pure rent r,~ross=th ss~iJ1 oct ur mocin~ forward. CONSTROCTION IS SLOW t).~spire improving conditions, devc~~iop- meut retrra~ined spotty, partic~l:v~ly in thc• stbuahs. ~lpproaiutatel}- 5;0 emits opened ~n ?Ot~7---tm~st in 1A-7inu~apo... lv.. Most dcveluptrtent is occ~urriar:; in hi,*6er-irtcorne. higher-_deniand arias s~-hcrr developers bclicve there is lughi•r runt potent~i:a.l. 1\pprosirn,uclc 557 mots arr~ projected for ?OU8 an l '1 570 ii~r ~(ti)9. 1)~veli,pnrc~tii is shrggis}t because constrlaciron costs arcprolaibitic, and rent levels ,renerallv are not high ettou~.;h to lusdti urw antstrut;tit?n. Alsf~> 1,.-c~pin~, a lid on consi~ructiotr arc a I~tci;: of good ;etc,, cities that are ".nett-apartment" and the uucert:dntti ofhosti-;nan~ condo-to- rental ci,nvcrsions i~-ill occur. NOOSING DOWNTORN IMPACTS RENTALS F~ew•er renters art: leaautg apartments Ii~r h~;me.<nvnersttip. L<xut terms are t.{rlri<:ult, :ux~ there is uncertainty in the hous- ing market. Average borne values in the I'svin Cities plummetexl; the aver~rgc~ vane i doc~ n :uurth~t ~`_~ (tone 20iili to ~*"41G.5i)Ci. But the bad ne~~s is tl'te drop in job ~msirth. which affe~;ts al.,artment demand. 1vlirutesota's ttuc~~trtpli?yutent rate ~~.~:.ceeded the LT. ti. rate Sn Sel?teanber For the tlrst tune in year>. ` RENOVATION IS TREND lC'ith constraint; on nc~~c constructiou, landk,rds ~u-e renovating esistin~r proper- tie and pusl:~ing rents. Coarsiderahie inaestor intirrest today is in nalu~:-add. c,raportunities. ;risen the scarcity of newer 1?ropcn)~ sales and tlsr^ tnarkct recovery that is uuderti`;ry. The Outlook it should be a good rr:n fc,r laudloz~cls. ln~irnarily because the. lid is still ou ncte development. The market condi- tion> tr~dasr suggest the begirutin~ oi' ~t deg.°elopn.ent cycle. 1)ue to the Tlat economy, spotty consrruetiou wilE c,o- crt3~ iu higher-irtcomc ;{recs. Noy-v~1~~r, there will not l,e a dramatic' increase in supply as high co~7etructi<:rn costs and runt lc•s els do nor. justit:~- a for of new developrrreut. ~Ihe market is healthy, but giti>en the state of die econouty and uttcerrair~ty .te~soc:rated kith tlxe~ sub-};rime taIlcaat, rent growth wit] be niodeit. Fume vts.~estur.~-tat opportun~- ties ~; ill 1?e as,ociated with rehabs. ^ MULTi-FAMILY VACANCY H z d U Q w d 7 b 5 4 3 2 t 18 0 'Qi '02 '03 '04 'OS 'Ob '07 . :I I tndc U f q Mt'~ry.iutt.: Ftla'S11fs I J I :.i' t I:' 8 7:dk r yon Cymbet Corporation -Company -Press Releases ~~~ ~~r~~l~~r~y~ Press Releases New Environmentally Friendly Thin-Film Batteries Provide "Green" Performance January 29, 2008 Elk River, Minn. -January 29, 2008 -Cymbet Corporation said today that its new EnerChip'"' family of thin-film battery devices offers something truly unique in battery technology: environmentally friendly, "green" performance. EnerChips, launched in September 2007 and now commercially available worldwide, are designed for semiconductor, medical, sensor, RFID, communications and portable electronic devices. Environmental friendliness is a key EnerChip attribute, since the product is designed to eliminate battery replacement and last the life of the device it powers. As a solid-state device, the EnerChip is lead-free and contains no hazardous materials, flammable solvents or liquids that can harm the user or the environment, therefore eliminating or reducing some end-of-life product costs. Said Cymbet CEO Bill Priesmeyer, "When coupled with energy- harvesting or energy-scavenging techniques, an EnerChip can supply the energy storage to build self-contained, long-lived powered systems and avoid the use of traditional battery power approaches. Using an EnerChip battery to power sensors, RFID tags or other remote devices- in combination with energy already available in the environment-is both cost and environmentally beneficial." The EnerChip's small form factor and highly rechargeable, solid-state, thin-film advancements can be economically and reliably integrated as an embedded device or as asurface-mounted component. Cymbet's EnerChip family is well suited for applications where back-up power is needed to maintain the settings of microcontroller memories, real-time- clocks and SRAM during power loss or power failures. All EnerChip products can be lead-free reflow soldered (260 Degrees C) using automated high-speed assembly processes, significantly reducing assembly cost. The devices offer a fast recharge time (under 30 minutes Page 1 of 2 INFORM/~TIOt~ r 'j"ili~l~i~~L~ E_n...er.Ch p..'.`"..._P ro....d..ucts. C....B...C..0..12__Datas_h.e....e..t (PDF) C.BC.O....5....0...._Dat~she..e..t (PDF) E...V..A...L-O_l-_Pro..d_u..ct.._Bref (PDF) http://www.cymbet.com/content/company-press-012908.asp 2/7/2008 Cymbet Corporation -Company -Press Releases Page 2 of 2 to 80 percent), are capable of greater than 5,000 charge/discharge cycles and do not suffer from the self-discharge limitations associated with super capacitors or shelf-life limitations common to chemical batteries. Currently, product is available in capacities of 12, 50 and 85uAh. About Cymbet Founded in 2000, Cymbet Corporation-a clean technology company-is a leader in thin-film, solid-state battery technology. The company is the first to market a true solid-state energy system enabling new embedded systems designer capabilities. The company's thin-film battery system will enable new concepts in battery application for ICs and new products for medical, sensor, RFID, communications and portable electronic devices. Visit Cymbet online at wyJw.cyn~l~et.com. Hume ~ Applications ~ Products (Company (Buy (Investors ;Support (C©ntact us Privacy Policy ~ Terms of Use of UVebsite ~~. ~, .i Cupyri0ht ;c> 2007 Cymbet"" Corporation '`~ http://www.cymbet.com/content/company-press-012908.asp 2/7/2008