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United Properties Outlook: Retail -Neighborhood Centers <br />rr/ ' <br />I DU',GK <br />,torcal Vacancy <br />!i ,taNcal Absorption <br /><`> N-'oricel Construction <br />s ii; >rcal Rental Rates <br />ii; Building Data <br />~: Adi icnal Data Graoh~: <br />~',,~` , <br />;~: . <br />~>~e~ <br />Page 1 of 1 <br />Communty_Cente. rs j Minneapolis CBD j Negh.b...o..rhood Centers j Re..gional Ce[ ~ I ~ inters j 5i Vaul_CB..D ~ <br />r~ ~I <br />~r ~ ~~'i: <br />~~ ~ - <br />.~;r:.. I <br />3. <br />NE1GFiBtl~NOaD ~~N~~R~ <br />Vacancy Increased 1.2% as a result of slow small shop leasing activity <br />Absorption Negative as retailers slow expansion plans <br />Rental Rates Decreased slightly to $16.26 <br />Highlights <br />The second-half vacancy rate for neighborhood centers was 8.6%, up from 7.2% at mid-year, with negative absorption <br />of 132,138 sq. ft., compared with 174,630 sq. ft. of positive absorption in the first half of 2007. The average rental rate <br />decreased slightly, to $16.26 per square foot. <br />Activity in the small-shop category slowed as a direct result of the slowdown in the single-family housing market. This <br />downturn in leasing has forced some landlords to begin offering incentives for the first time in nearly a decade. <br />Some fast-food and fast-casual restaurants have continued to struggle, particularly in outer-ring suburban centers where <br />weekday traffic is lacking. Caribou and Starbucks have scaled back, potentially presenting opportunities for franchise <br />operators such as Dunn Brothers. <br />Drugstore chains CVS and Walgreen's have also slowed their expansion in the market, although CVS is still looking for <br />highly desirable locations to build out its presence. CVS' new location at 12th Street and Hennepin Avenue in downtown <br />Minneapolis will open in second-quarter 2008. <br />The Outlook <br />Incentives such as free rent are likely to continue as landlords work to fill vacant space, particularly in outer-ring suburbs. <br />Any new development that has not yet begun will likely remain in the planning stages until it's clear the market can <br />support the additional space. <br />Redevelopment opportunities will continue to be sought in the inner-ring suburbs. <br />Vacancy is expected to increase as small shops struggle. Absorption will likely remain low as vacancy increases and new <br />construction slows down. <br />Copyright 2002-2008. United Properties. All Rights Reserved. <br />3500 American Boulevard West, Minneapolis, MN 55431 <br />Pnvacy Policy j Con„fit: UP j C)gtir~nloaci..hlard Cc~.py j ftequ~>t Mard CU~~r <br />Back To Ton <br />http://outlook.uproperties.com/Screens/Retail/NeighborhoodCenters.aspx 2/4/2008 <br />