7.0 EDSR 03-12-2007 - Laserfiche WebLink

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Page 1 of 2 Print this Page t~ ~Fr- ~' ..,~> ~. ~~i,,ti~~~~'' Close Window ~~~~~~ Vacancy Absorption Rental Rates Highlights Continues to improve Substantial increase over first half Flat • The Northwest industrial market, consisting of 295 buildings totaling nearly 25.6 million square feet, continues to move in the right direction and continues to chip away at its vacancy, which was a respectable 10.7% at year end, an improvement over 11.3% at mid-year. • Two-thirds of the positive absorption in 2006 occurred in the second half of the year, and it was spread out fairly evenly among bulk (213,605 sq. ft.), office warehouse (118,503 sq. ft.) and office showroom properties (100,202 sq. ft.). The submarket reported 423,310 sq. ft. of positive absorption in the second half for a total of 689,235 sq. ft. for 2006-the highest of any submarket. • A number of leases greater than 40,000 sq. ft. were signed in the past six months; several were by high-tech, med-tech companies. For example, ATS Medical renewed 57,000 sq. ft. and expanded by 6,400 sq ft. at Plymouth Business Center in Plymouth. Gyrus Medical Inc. signed a lease for 50,000 sq. ft. of office warehouse space at Wedgwood Commerce Center XI in Maple Grove and also took 23,000 sq. ft. in another building in the Wedgwood business park. • In other leases, InterNet Inc., a supplier of plastic netting and precision metal mesh, took 72,000 sq. ft. at Crosstown North XII, a bulk distribution building in Brooklyn Park. (The company sold its 207,000-sq.-ft. facility in Anoka to Graco Inc. for $6.4 million. See sales below.) • Pratt Industries, a paper and packaging company, signed for 92,000 sq. ft. at the Plymouth Distribution Center in Plymouth. The company is from the Midway area of St. Paul. • One trend in the Northwest is the continued lack of larger office showroom properties. The showroom's vacancy is 12.6%, down from 14.1% at year end. For the higher-tech, medical life-type companies that need larger showroom space, there are really only a couple of available options. • New construction was limited in 2006 in all sectors. The only new building to be delivered in the past six months was the 80,000-sq.-ft. 610 Business Center in the Highway 610 corridor in Brooklyn Park. It is an office showroom property developed by Ryan Companies US Inc. No leases have yet been announced. The building will be part of a 600,000-sq.-ft. mixed-use project. • In planned development for 2007, Ryan plans to break ground on the 96,166-sq.-ft. Crystal Bay office showroom project at 2725 Wayzata Blvd. in Long Lake. Also, Duke Realty Corporation is planning to break ground in first-quarter 2007 on a 150,000-sq.-ft. office warehouse building in a new industrial park called Gateway Business Park in Otsego, Duke intends to build up to 1.4 million square feet of industrial space in this new 120-acre industrial park. The site is north of Interstate 94, along the east side of Highway 101. It could take five to seven years to build out the entire park. Otsego is the next logical step out from Rogers for industrial development. • There are another half-dozen or more developers in the Northwest with land and approvals; however, many are waiting for preleasing. • Rates have been stable at $4.59 per square foot for warehouse and $8.20 for office. There have been a couple projects that have slightly increased rates, but that is only occurring in pockets-it is not across the whole market yet. • Tenant renewals are a major trend in the Northwest. Many companies are staying in their existing locations and expanding http://outlook.uproperties.com/PagePrinter.aspx?InstanceID=1 c68b6dc-8dbc-480a-8701-19... 3/7/2007 <~