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Regional Data —continued <br />SALIESVOLUMEAND CAPITALIZATION F <br />Twin Cities Office,Industrial, Retail Properties <br />M MARKETHOLUME s CAP RATE <br />5 11 <br />45 103 <br />S4- 10 <br />33 43 <br />3 7 9 <br />V5 2.5 8.4 <br />8.2 8S <br />Z <br />2 7 7.8 B <br />J 755 <br />J <br />IS 1 <br />7.3 7.3 75 <br />7.0 <br />W $1 6.7 -46 7 z <br />OS 6.5 d <br />0 6 rL <br />JUNE'04 JUNE'05 JUNEW JUNE'07 JUNE'08 JUNE'09 "U"E'ID JUNE'!I JUNE'17 JUNE'13 JUNE'14 <br />rad xsl ArW t,s Im <br />In general and for most properties types, capitalization rates have been steadily declining <br />since 2010. Recent data is showing stabilizing rates. <br />The Twin Cities commercial real estate market enjoyed continued success in first half 2014 <br />as the vacancy rate remained stable at 11.8%, which is equal to pre-recession levels. <br />Further, the market recorded 384,000 SF of positive absorption, pushing activity into the next- <br />tier cities for land, residential and industrial sectors. <br />Commercial real estate investors are increasingly coming to the Twin Cities in search of <br />yields higher than those available in larger, more expensive top tier markets. Investor <br />demand in the Twin Cities continues to chase multiple offerings in the market. The most in <br />demand product types include class A core office buildings in downtown Minneapolis and <br />select suburban locations. Capital is also chasing apartment properties, grocery-anchored <br />retail centers and modern industrial distribution buildings with minimal office finish. <br />Outlook: The U.S. economy added 288,000 jobs in June, making it the fifth consecutive <br />month that employment growth has exceeded 200,000. This marks the first time since 1999- <br />2000 that the U.S. economy has generated such sustained strong job growth. This is great <br />news for the commercial real estate sector. More than 2.9 msf of space is expected to be <br />added to the overall market in second-half 2014 thanks to multiple industrial, medical office <br />and retail projects currently under construction coming on line. If the majority of the <br />completion dates are met, the Twin Cities will enjoy its highest historical construction level <br />since 2007. <br />Source: The Compass, Northmarq, July 2014 <br />12 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com