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<br />swr:~:
<br />Vacancy Spiked upward
<br />Absorption Significant (primarily offce warehouse)
<br />Rental Rates Creeping up
<br />Highlights
<br />• The Northwest ind~ atrial mar4at, consisting of 295 buildings totaling 26.7 million square feet, is dynamic. At 11.3%
<br />vacancy (11.8% with sublease space), it boastr the lowest vacancy of all the submarketc, However, the vacancy did creep
<br />up slightly from 10.7% at year-end 2005.
<br />• The Northwest enjoyed substantial absorption of 256,925 sq. ft. in the first half of 2006, reporting 847,001 sq. ft. for the
<br />past 12 months-the most positive absorption of any submarket. The vacancy increased, despite the positive absorption,
<br />primarily because several buildings-with substantial vacancies-were added to the universe.
<br />• ~7i,,,,cspmarket continues to be one of the healthiest in hr metro with ctrona popylatinn ,,.,,,Nrn As proof of itr health,
<br />three speculative buildings are under construction totaling 245,000 sq. ft. and another six projects are planned; many
<br />developers are getting ready to pull the trigger.
<br />• Most of the new construction occurring in the Northwest is office warehouse space with 24-foot clear ceilings and 30% or
<br />40% office finish, whereas 12 months ago it primarily saw bulk warehouse construction.
<br />• The three buildings under construction are the 78,000-sq.-ft. 610 Business Center in the Highway 610 corridor in Brooklyn
<br />Park being developed by Ryan Cos. US Inc. Quoted rates are $12 for office and $5.50 for warehouse space. A Nov. 1
<br />completion date is anticipated. No leases have yet been signed.
<br />• The 128,800-sq-ft. Minneapolis Business Center, on the border of Minneapolis and Brooklyn Center near Brookdale Mall, is
<br />being developed by Real Estate Recycling. An Oct. 1 completion date is expected. Two leases have been signed totaling
<br />50,000 sq. ft. Thyssen Krupp Elevator Corp. leased 25,000 sq. ft. and Synaquip leased 25,000 sq. ft.
<br />• As for additional leasing, most of those deals in the first half of 2006 were in the 20,000- to 50,000-sq.-ft. range and most
<br />were office warehouse. Warehouse space reported an impressive 455,043 sq. ft. of positive absorption in the first half of
<br />2006 for a total of 671,757 sq. ft. in the past 12 months. This is the first time in two years that office warehouse has
<br />experienced positive absorption.
<br />• One of the largest warehouse leases was Gaines and Hanson Printing Co. taking 160,000 sq. ft. at the New Hope
<br />Distribution Center in New Hope. (The company vacated 160,000 sq. ft. in the bulk market, however).
<br />• Another warehouse lease was n~SpJ_ay Solutions sionina for 30 000 sq ft of office warehouse space at Boone Business
<br />Center in Brooklyn Park. ~~~/1,LP/( ~,pK ~•v~ ~~~0 /~ ! ~~
<br />• Bulk warehouse space reported negative 214,213 sq. ft. of absorption in the first half of the year, following the loss of
<br />several bulk users, including Gaines and Hanson (see above).
<br />• However, there also were a number of bulk leases completed. Creative Carton signed a lease for 72,000 sq. ft. at
<br />Crosstown XII at 7601 Setrler Parkway North in Brooklyn Park.
<br />• Great Northern leased 45,000 sq. ft. of bulk space at Diamond III in Rogers. The property, at 20015 Diamond Lake Road,
<br />Is owned by Martield, Belgarde & Yaffe.
<br />http://outlook.uproperties.com/PagePrinter.aspx?InstanceID=1 c68b6dc-8dbc-480a-8701-19... 8/8/2006
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