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• op <br /> December 19, 2002 <br /> Mr. Sid Inman <br /> Vice President <br /> Ehlers and Associates, Inc. <br /> 3060 Centre Pointe Drive <br /> Roseville, MN 55113-1105 <br /> Dear Sid, <br /> Kevin Maas and I appreciate the opportunity to have met with you and Cathy Mehelich to <br /> discuss questions relating to the ongoing marketing of the Elk River Business Park. <br /> When we first envisioned, together with the city, the idea of a business park at this <br /> location we anticipated a mix of multi tenant and owner occupied industrial buildings. <br /> We have proceeded with the construction of one 50,000 square foot multi tenant office <br /> building which is currently 70% leased and it is our hope to do one or two additional <br /> similar buildings when market conditions improve. <br /> • To date, while we have undertaken extensive marketing to smaller and medium size <br /> industrial users of various types, we have yet to consummate a build to suit transaction or <br /> land sale. The market has been quieter than we anticipated and I think the reasons are <br /> twofold. The recent slowdown in the economy has created a reluctance on the part of <br /> business owners to undertake capital investments and long term commitments even <br /> though interest rates are at historically low levels. Secondly, while we planned this <br /> business park with great enthusiasm for the very positive attributes that Elk River has this <br /> is an evolving market and not a mature one. Elk River is located at the periphery of the <br /> Twin Cities, without some of the strong location attributes of cities located in close <br /> proximity to downtowns, the international airport and other major landmarks. It has other <br /> positive attributes that work well for it. It has better access to labor markets than some of <br /> the competing suburban cities and locating here avoids the growing traffic congestion <br /> experienced in closer in communities. <br /> Based upon the result of our marketing and the responses to date we have attracted some <br /> interest from smaller to medium size firms that are mostly private versus publicly owned <br /> companies engaged in industrial uses including distribution, light manufacturing, repair <br /> and maintenance, etc. We have not seen a lot of interest from large distribution uses, <br /> large publicly owned manufacturing companies or office showroom uses, although we <br /> expect showroom interest to increase. <br /> The kind of companies we have talked to seem particularity sensitive to cost issues and <br /> many of them have become well aware of the competing programs provided by <br />