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lta <br />MARKET INDICATORS <br /> <br />Q2 08 Q3 08 <br />Actual Estimated <br />VACANCY RATE T ~ <br />NET ABSORPTION ~ JI <br />CONSTRUCTION ~ ~ <br />RENTAL RATE ~ -~ <br />SIGNIFICANT TRANSACTION <br />41 I Farwell Avenue <br />South St. Paul, MN <br />Landlord: Blue Dog Properties Trust <br />Lessee: Sportsman's Guide <br />Size: 422,727 SF <br />TURLEY <br />MARTIN <br />TUCKER <br />Commercial Real Estate Services <br />INDUSTRIAL ~ SECOND QUARTER ~ 2008 <br />Economy Stymies Industrial Market <br />The Twin Cities Indttstri;al market experienced <br />a slow second quarter with negative absorp- <br />tian of 300,405 square. feet (SF}. The overall va- <br />t ani:y fc}r rite market rose sli;~lltly front 11..0`io <br />to 11.4°/v. <br />Most Markets registered negative absorption, <br />with the Northwest leading the way with a neg- <br />ative 1'0,915 SF, raisin;; vacancy from 10.5°h <br />to 1.1.1°.%. 1.T)kota C;oxuxty led the way wit11 <br />positive absorption of 185,2.59 SI~, lolveting <br />the vacancy in the subntarket to 13.1°io. <br />1 he etnplaylrletlC and Ut1en11)layment 11ttn1berS <br />recently released for May reflect continued. <br />i:hallenges for the metro area. The unemploy- <br />tnetlt figures for the state followed the national <br />trend. In the state, unemployment jumps from <br />4.8"% in April ro 5.4cio in May, while nationally <br />the rate climbed from 5.0%v to 5.5%. "This is <br />the highe.~t the state unetrtployment has been <br />sini:e November of 1991 and r11e largest one <br />month jump since July of ;198'. Manxttaeturing <br />jobs continue to suffer as ~+~ell, as Twin Citii:, <br />tna.nt.tfacrurin.g lost 400 jobs dipping below <br />'00,000 for the second time in six months. <br />The slow ei:onotny appr.;ars to late t11e key driver <br />in manv of the observations for t:he industrial <br />r ,_ <br />~, <br />~ .. <br />w 6:'.~ <br />4 <br />'y56.60 <br />ry <br />v <br />s gait.00 '. I. <br />a <br />'' $3G.6C . <br />'- $20.06 <br />~It7.QG <br />~n.oa <br />Q2 2006 Q4 2006 Q2 2007 Q4 2007 <br />market. l)ne of the rnosr notable is the sllift <br />from a typical itve year term an leases dropping <br />dawn to three years. Tenants are. requesting a <br />tllrre year option ~vltetx renewing anc{ evaluating <br />lease proposals. Landlords want the Longer deal, <br />but sametimes they have acquiesced to kec p ac- <br />cupancy hig11. <br />Scott County 13.8% <br />Southwest Sector i 0.5% <br />St. Paul -Northeast 7.2% <br />Twin Cities Metro ~ 6.7% <br />Washington County 6.1% <br />Dakota County 4.T~ <br />Minneapolis 4.3% <br />Northwest Sector 3.5% <br /> <,~rirce i.?;fliers <br />t_'nless there has been a dramatic shift in their <br />business, many tenants are rlectin;~ to renew in <br />t lelT Cltrretlt lacatlan. It IS caster tOY [e11a I1t:S t0 <br />remain than to ext_xcrience tllc unknolvn in re- <br />locating i)r {nc'rrasinf; space until the economic <br />out:lactk becomes more stable. <br />Ani)ther inclicaror that reflects the srntgglin; <br />economy is the reduction in asking sale price <br />per square foot for industrial buildings an the <br />market. During rite booming times of 2006 and <br />early 2007, ~ ~ ,king prices rose steadily. But in the <br />Q2 2008 <br />tx ~ ~~ <br />