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MNCARAnnual Market Report
F o r C a l e n d a r Ye a r 2 0 0 6
“We are proud to release the first ever MNCAR Annual Market Report. This report contains current information on the Twin Cities industrial and office markets. Data was provided by the MNCAR Exchange and reviewed for accuracy by industry experts. We invite you to use it as an update on the state of the market and share it with your clients and colleagues.”
- Dara Rudick, Executive Director
2006 MNCARAnnual Market Report
MNCAR EXCHANGE 2007 LEADERSHIP
PRESIDENT Roger Christensen Mohr PartnersPRESIDENT ELECT Whitney Peyton CB Richard EllisTREASURER Jeff LaFavre ColliersMNCAR PRESIDENT Kevin O’Neill NAI Welsh
DIRECTORS Joe Antonucci Landmark Partners Marty Fisher Premier Commercial Properties Dan Gleason United Properties Tim Igo Suntide Commercial Realty Dirk Koentopf United Properties Jim Mayland Colliers John McCarthy United Properties Jason Sell United Properties Bill Wardwell NAI Welsh
MINNESOTA COMMERCIAL ASSOCIATION OF REALTORS 2007 LEADERSHIP
PRESIDENT Kevin O’Neill NAI WelshPRESIDENT-ELECT Bruce Carland CSM CorporationSECRETARY Tony DelDotto United PropertiesTREASURER Mike Gelfman NAI Welsh IMMEDIATE PASTPRESIDENT Dan Gleason United Properties
DIRECTORS Nathan Arnold CB Richard Ellis Larry Chevalier Colliers John Chirhart Capital Growth Real Estate Brian Helmken CB Richard Ellis Steve Nilsson NAI Welsh Tricia Pitchford United Properties Bob Revoir United Properties Chris Simmons NAI Welsh Joel Torborg Equity Commercial Services
MNCAR STAFF
Dara RudickExecutive Director(952) 908-1787dara@mncar.org
Adam FisherData and Technology Manager(952) 908-1786adam@mncar.org
Tasha Dahl Office Manager/Staff Accountant(952) 908-1783 tasha@mncar.org
Emily TheisenEvent & Marketing Manager(952) 908-1784emily@mncar.org
Jean VetterData Analyst(952) 908-1785jean@mncar.org
Jay AndersonMarket Analyst(952) 908-1788jay@mncar.org
Mary NygaardMembership Coordinator(952) 908-1781mary@mncar.org
ANNUAL OFFICE MARKET REPORT
Vacancy Rates and Absorption by Submarket
Available Building Inventory Sale and Lease
Number of Listings by Submarket
Sale Listings BUILDING SIZE: 0-10,000 SF 10-25,000 SF 25-50,000 SF 50-100,000 SF 100,000+ SF Minneapolis CBD 6 3 9 0 2 Southeast 22 41 6 1 0 Southwest 16 10 20 5 2 St. Paul CBD 1 1 16 0 0 St. Paul Suburban 65 39 30 0 1 West & Northwest 43 22 12 6 2 TOTALS 153 116 93 12 7
Lease Listings
CONTIGUOUS SF: 0-10,000 SF 10-25,000 SF 25-50,000 SF 50-100,000 SF 100,000+ SF Minneapolis CBD 157 70 36 17 5 Southeast 180 36 20 7 5 Southwest 222 59 30 21 9 St. Paul CBD 58 31 16 7 3 St. Paul Suburban 254 72 28 13 5 West & Northwest 249 49 21 10 3 TOTALS 1,120 317 151 75 30 Market Highlights
• Absorption was 1,984,375.
• The vacancy rate was the highest in the St. Paul CBD at 19.4%.
• All of the office submarkets recorded positive absorption for 2006.
ANNUAL OFFICE MARKET REPORT
Vacancy Rates by Submarket
Quoted Net Rental Rates by Class
ANNUAL OFFICE MARKET REPORT
2006 Market Overview Total Net Avg Quoted MARKET Universe SF Vacant SF % Vacant Absorption SF Rate ($) Minneapolis CBD Class A 13,842,822 1,863,705 13.5 195,997 13.79 Class B* 8,968,221 1,781,113 19.9 368,585 10.80 Class C 4,967,815 1,074,802 21.6 342,367 9.20 Totals Mpls CBD 27,778,858 4,719,620 17.0 906,949 11.11 Southeast Class A 1,567,335 136,673 8.7 (37,501) 14.02 Class B 2,707,343 313,104 11.6 118,311 11.93 Class C 1,230,173 164,388 13.4 105,115 10.70 Totals Southeast 5,504,851 614,165 11.2 185,925 12.02 Southwest Class A 6,010,511 567,854 9.4 12,510 15.46 Class B 6,405,473 834,975 13.0 265,431 11.51 Class C 780,023 153,884 19.7 100,124 10.50 Totals Southwest 13,196,007 1,556,713 11.8 378,065 12.48 St. Paul CBD Class A 2,682,670 350,826 13.1 47,222 12.88 Class B 4,499,007 1,054,770 23.4 80,758 8.89 Class C 594,214 104,232 17.5 (64,541) 6.95 Totals St. Paul CBD 7,775,891 1,509,828 19.4 63,439 9.46 St. Paul Suburban Class A 1,378,708 152,308 11.0 (25,655) 13.85 Class B 3,160,816 222,773 7.0 64,114 11.00 Class C 1,987,531 530,397 26.7 33,443 10.41 Totals SP Suburban 6,527,055 905,478 13.9 71,902 11.84 West & Northwest Class A 3,782,493 393,524 10.4 220,262 16.65 Class B 5,524,446 805,666 14.6 157,827 11.96 Class C 1,539,790 134,834 8.8 6 9.47 Totals W & NW 10,846,729 1,334,024 12.3 378,095 12.58 TOTAL MARKET Class A 29,264,539 3,464,890 11.8 412,835 14.88 Class B 31,265,306 5,012,401 16.0 1,055,026 11.28 Class C 11,099,546 2,162,537 19.5 516,514 9.68 TOTALS 71,629,391 10,639,828 14.9 1,984,375 11.89
* The Midtown Exchange building was included in the Minneapolis CBD Class B universe.
ANNUAL OFFICE MARKET REPORT
Ground Rules and Definitions
Ground Rules
• This report covers only pure, multi-tenant office buildings in excess of 20,000 square feet. It therefore does not include medical office buildings, or buildings containing solely government offices.
• Properties that were designed to be multi-tenant are included in this report even if they have been
leased entirely to one tenant. 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. Actual effective rates will vary.
• Sale listing counts include individual condo units as single listings. For instance, a 50,000 square
foot building divided into five 10,000 square foot condos, each with a separate For Sale listing, would contribute 5 listings to our listing count totals.
Definitions
• Existing Projects: Building construction completed prior to December 31st, 2006.
• Vacant space: Space that is unoccupied and not under lease.
• Absorption: The positive or negative difference in the amount of space occupied between
December 31st, 2005 and December 31st, 2006.
• Space that is physically occupied by a tenant prior to December 31st, 2006, but marketed for lease is considered occupied space.
• Sublease space, either physically occupied or vacant, is considered occupied space in the universe
until the lease runs out.
• Space occupied by a tenant on a month-to-month lease that is also marketed for lease to a new, long-term tenant is considered occupied space.
• The report does not track “shadow” space, or buildings that are leased by tenants who are not
using the space but not trying to sublease it.
• Contiguous space: Having a common boundary; space that is directly adjacent to another space or spaces.
• Average quoted rates were based on single, double, and triple net rates.
• 2006 year-end data for the first MNCAR Annual Market Report was thoroughly review by
market experts. Future reports will also include thoroughly reviewed historical data.
ANNUAL OFFICE MARKET REPORT
Submarket Map
ANNUAL INDUSTRIAL MARKET REPORT Special thanks to the following MNCAR members for volunteering to review market data: Tony Deldotto – United Properties Josh Huempfner – Colliers Nathan Arnold – CB Richard Ellis Steve Nilsson – NAI Welsh Duane Poppe – Colliers
Vacancy Rates and Absorption by Submarket
Available Building Inventory Sale and Lease
Number of Listings by Submarket
Sale Listings BUILDING SIZE: 0-25,000 SF 25,000-50,000 SF 50,000-100,000 SF 100-200,000 SF 200,000+ SF East 32 8 4 2 0 Northeast 42 15 8 8 0 Northwest 34 17 9 4 2 Southeast 8 7 0 1 1 Southwest 16 9 18 5 5 TOTALS 132 56 39 20 8
Lease Listings
CONTIGUOUS SF: 0-25,000 SF 25,000-50,000 SF 50,000-100,000 SF 100-200,000 SF 200,000+ SF East 74 18 13 7 1 Northeast 227 50 17 10 2 Northwest 224 49 31 13 6 Southeast 154 28 9 5 2 Southwest 219 64 37 14 8 TOTALS 898 209 107 49 19
Market Highlights
• The Southwest posted the highest absorption at 1,084,799 square feet. • Only the East recorded negative absorption at (110,670) square feet. • Vacancy is highest in Southeast Bulk Warehouse properties, where the vacancy rate is
20.3%. This included four large buildings originally designed for single users.
ANNUAL INDUSTRIAL MARKET REPORT
Vacancy Rates by Submarket
Quoted Net Rental Rates by Product Type
ANNUAL INDUSTRIAL MARKET REPORT
2006 Market Overview
Total Net Quoted Rate ($) MARKET Universe SF Vacant SF % Vacant Absorption SF Office Warehouse East Bulk Warehouse 3,251,793 308,294 9.5 (14,831) 8.62 4.40 Office Showroom 1,674,468 299,046 17.9 (23,586) 10.42 4.74 Office Warehouse 3,298,940 529,950 16.1 (72,253) 8.71 4.22 Totals East 8,225,201 1,137,290 13.8 (110,670) 9.22 4.44 Northeast Bulk Warehouse 8,273,815 591,397 7.1 216,034 8.45 3.99 Office Showroom 4,162,189 595,737 14.3 (88,307) 9.65 4.63 Office Warehouse 21,010,534 2,288,523 10.9 392,628 8.74 4.33 Totals Northeast 33,446,538 3,475,657 10.4 520,355 8.97 4.35 Northwest Bulk Warehouse 10,309,570 867,383 8.4 263,612 8.74 4.30 Office Showroom 5,101,565 534,986 10.5 77,790 9.57 4.69 Office Warehouse 12,897,373 1,116,156 8.7 221,834 9.05 4.45 Totals Northwest 28,308,508 2,518,525 8.9 563,236 9.16 4.49 Southeast Bulk Warehouse 6,744,425 1,372,374 20.3 178,874 8.83 4.04 Office Showroom 3,972,394 512,939 12.9 (19,759) 9.06 4.57 Office Warehouse 6,767,524 450,732 6.7 (11,843) 8.73 4.44 Totals Southeast 17,484,343 2,336,045 13.4 147,272 8.93 4.37 Southwest Bulk Warehouse 4,521,554 545,941 12.1 1,029,681 8.95 4.12 Office Showroom 5,675,771 488,794 8.6 56,419 9.60 4.61 Office Warehouse 13,360,177 1,482,977 11.1 (1,301) 8.94 4.48 Totals Southwest 23,557,502 2,517,712 10.7 1,084,799 9.17 4.49 TOTAL MARKET Bulk Warehouse 33,101,157 3,685,389 11.1 1,673,370 8.70 4.15 Office Showroom 20,586,387 2,431,502 11.8 2,557 9.48 4.63 Office Warehouse 57,334,548 5,868,338 10.2 529,065 8.88 4.41 TOTALS 111,022,092 11,985,229 10.8 2,204,992 9.07 4.43
ANNUAL INDUSTRIAL MARKET REPORT
Ground Rules and 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.
• Sale listing counts include individual condo units as single listings. For instance, a 50,000 square foot building divided into five 10,000 square foot condos, each with a separate For Sale listing, would contribute 5 listings to our listing count totals.
Definitions
• Existing Projects: Building construction completed prior to December 31st, 2006.
• Vacant space: Space that is unoccupied and not under lease.
• Absorption: The positive or negative difference in the amount of space occupied between December 31st, 2005 and December 31st, 2006.
• Space that is physically occupied by a tenant prior to December 31st, 2006, but marketed for lease
is considered occupied space.
• Sublease space, either physically occupied or vacant, is considered occupied space in the universe until the lease runs out.
• Space occupied by a tenant on a month-to-month lease that is also marketed for lease to a new,
long-term tenant is considered occupied space.
• The report does not track “shadow” space, or buildings that are leased by tenants who are not using the space but not trying to sublease it.
• Contiguous space: Having a common boundary; space that is directly adjacent to another space
or spaces.
• Average quoted rates were based on single, double, and triple net rates. Profile of Project Types Typical Clear Ceiling Office or Project Type Tenant Size Height Bay Depth Showroom Office Warehouse 7,000 Sq. Ft. + 16-24 Ft. 120-160 Ft. 10%-40% Office Showroom 3,000 Sq. Ft. + 12-16 Ft. 80-120 Ft. 25%-75% Bulk Warehouse 20,000 Sq. Ft. + 20+ Ft. 160-200 Ft. 0%-10%
ANNUAL INDUSTRIAL MARKET REPORT
Submarket Map
EAST
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