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07/21/1997 JOINT - 4790JOINT CITY COUNCIL/HRA MEETING MONDAY, JULY 21, 1997 7:00 P.M. WILLIAM BURNS EXECUTIVE DIRECTOR OF HRA � L CffY OF FRIDLEY JOINT CITY COUNCIL AND HOUSING & REDEVELOPMENT AUTHORITY CONFERENCE MEETING July 21, 1997 - 7:00 P.M. Meeting Room 1 (Lower Level) 1. Fridley Executive Center: A. Discuss Master Plan, B. Discuss Contract for Exclusive Negotiations. 2. Other Business. Adjourn. } MEMORANDUM DEVELOPMENT DIRECTOR DATE: July 18, 1997 1 TO: William Bums, City Manager/Executive Director of HRA ,�� FROM: Barbara Dacy, Community Development Director SUBJECT: Fridley Executive Center TWO ISSUES -�There are two issues for discussion: 1. Should the City continue to market the site as proposed in the current Master Plan? 2. Should the City continue a contractual relationship with MEPC American Properties? MATRIX In order to guide discussion, a"Matrix of Issues" has been developed to summarize key information about four development options. A glossary of terms is aisa ax#,ached which d�fnes the terms in each of the options. ' Four Scenarios Scenario A, the "Corporate Office Park", represents the existing Master Plan of 582,000 square feet in four office buildings. The 90,000 square feet of retail and service uses is included in all of the four scenarios. Scenario B, "Operation Center/Office Building", is a 185,000 square foot multi-story office building with 261,800 square feet in two operation center buildings (these are two, two-story buildings). � Fridley Executive Center July 18, 1997 Page 2 Scenario C, "Mixed Use Park", proposes 250,000 square feet in finro multi-story office buildings and 100,000 square feet in two, one-story "tech flex" buildings. Tech flex means a one-s#ory research and development facility with a higher grade appearance than a typica! one-story office/showroom facility. Scenario D, "Tech Flex", is 240,000 square feet in two or more tech flex one-story buildings. Issues The first column in the matrix summarizes the financial impacts of each of the scenarios in terms of the amount of annual taxes and the present value of tax increment. A significant amount of time was spent making assumptions about the timing of the development, the valuation per square foot, land sale prices (in some of the scenarios), and the amount of development that can be accomplished on the site. These figures come from a more detailed summary sheet entitled "Comparison of Scenarios". • The second column is "net cost" which means the balance of ex enses � costs) subtracted from revenues (tax increment and land sales).pThe exp nses do not include the Authority's previous costs from the site (acquisition, improvements, or holding costs). Scenarios A and B assume that all of the land is written down to zero. Scenarios A, B, and C assume that all of the parking ramp expenses are assumed by the HRA (and paid for via the tax increment). Scenario D assumes land sales and no parking ramp expenses because the proposed development is entirely one story with surtace pa�king. Scenario C also assumes revenue from a land sale for the one-story building. �Also included on the matr'rx is the net revenue if the HRA were responsible for only 50% of the parking ramp costs. The third column in the matrix identifies pertinent issues to each scenario from a market perspective. Tech flex is hot in the market today. Corporate office space will take longer to attract a user. The fourth column in the matrix is entitled "Development/Empioyment Impacts". Each scenario will produce different levels of density, jobs, and wage levels. The fifth column pertains to the impact of each scenario on Fridley's "image". How does each of the scenarios enhance or detract from Fridley's image? Fridley Executive Center July 18, 1997 Page 3 The last column is "Neighborhood impact". Changing the land use may have different land use impacts on the surrounding area. Extra space has been provided within the matrix for the City Council and HRA members to make additional notes during Monday nighYs discussion. A full sized site plan for each of the options will be available on Monday evening A video of examples of each of the different types of buildings will also be��hown on Monday evening, incfuding an example of tech flex and an operation cente � building. MEPC has submitted a letter (attached) summarizing their activity in the last 18 months plus a summary of the proposals made. Based on their experience with the Lawson proposal, their letter suggests pursuing Scenario C starting with 100,000 square feet of tech flex but preserving the remainder of the properiy for a corporate office user(s). The questions which will be used to guide discussion on Monday evening are simply: 1. Should t#�e �ity continue to market the site undec the current Master Plan? 2. If not, which of the remaining three scenarios is the preferred altemative? MEPC AMERICAN PROPERTIES Selecting MEPC as the site's representative has served the City welt, despite the fact that no development is underway. Some of MEPC's strengths are: � National and intemational user contacts; some of the proposals have been made °': because of r�lationships through prior leasing arrangements, either in the United States or in London. • Ability to self-finance was a key ingredient in the Lawson proposal. • MEPC is well-respected in the metro area among commercial and industrial brokers. • MEPC's mission to own and manage a corporate park is similar to the City's goal for the prope►ty. No matter the development scenario, MEPC is fully capable of carrying out a quality project. Staff recommends the City continue to work with MEPC on any of the scenarios. Fridley Executive Center July 18, 1997 Page 4 - - � � In marketing terms, the previous 18 month relationship with MEPC is a very short timeframe. !f the City were to initiate a process to select another developer, #he City would lose valuable time in the marketplace to attract a user. NEXT STEPS Depending on the outcome of Monday's meeting, staff will schedule the appropriate action items. For example, a new contract of exclusive negotiations will have to be negotiated and approved by the HRA. BD/dw M-97-319 - -� � ,,, ,�., _ . : : _ .� �... i e �$�f ,•±�, "i'Y i1�:T1 -.� _ .� �._ i. � �� '_ � ''r. _� I= y�T i=Y �.� ... . � �.. _..,. � �•0. . . _ �-L. . .,. . �. . �..�. 'rs�F - ,,.... . __�. ..-.-r . s.�f r r - ' - �•_ � : � _._i. 1rF - � :!� _ ' �� 6T� t� �.:_. � . � � . � S : i - ��6 � ��. , r Ci s• '�� ;$� >�'t. ,'t ... L -'�`{ h '- � -.' � . - . � - ' � _ � �}'y+... �� _�r� J - - r . r ��*t - - : � . . - � 2 - _� . — : . -:-�'-" - - - w � "� _ �'' , �. % � � - ,� : _ i �-S'� G n `r `� _ 't �.i+. �c` � .' � � e � ,, r �'� Y..� _f; y .F res.l'�' ' �` 4 , ` ' � ,..v � �� - � � : �'2 F } a�, � � � � .� �' ' x�- r�� (, l�° � ..F, p�at �� _ �� t3,.�� Y. { ` � � �Sf .�R ir = � � 3 .._'.� . �{ � �'+ � � K�� mm� � '.{ ! � �°,. � � '� c '� ,:? s_ `:i ;:...v.�f E ._S `..i `y ��y�' �� + : _ _ ; - 7 � -- - . _ � ' _ �.: -.-� ' ' _ � " t- ' " _ . - Se temb r Z _ � e 0 1996 p � - � - S onsored b � p 3' _ ,. / : ��_ Market Charactensrics MINNEAPOLIS/ST. PAUL OFFICE MARKET OVERVIEW & FORECAST BY STEVE CHIRHART, SIOR VICE PRESIDENT GRIFFIN COMPANIES The Twin Cities Office Market contains approximately 55 million square feet of multi-tenant office properries. The Market consists of 40% Class A space, 37% Class B, with the remaining 23% consisring of Class C& renovated properties. Vacancy Rates ' ' . Total office market vacancy rates have reached a twelve year low of 8.93% and aze expected to drop to 7.9% by June of 1997. The Southeast Quadrant and St. Paul CBD remain the softest market segments, expenencing vacancy rates of approximately 16%. The St. Paul CBD, however, has expenenced both eYtremely posirive absorprion, leading the Twin Cities market with 272,326 square feet and the strongest improvement in rates, with increases averaging 25%. Rental Rates Rental rate increase�have averaged 13.8% with increases of as rriuch as 20 - 25% within the Minneapolis and St. Paui CBDs. The average quoted net rerifal r$i�vvithin the Twin Cities Metropolitan Area as of June, 1996 was $10.23 per square foot. Sross rate differentials of as much as $10 00- $14 00 per square foot are now occurring between Class A and other altemahves. Future increases in netrental rates are. expected to approach 13% before leveling off in late 1997, which will produce an average net rental rate for the Twin Ciries Metrapolitan Area of $11.55 per square foot. Absorprion 0 Market-wide absorption for the last twelve months slowed to 912,OOQ sq�are feet as compared to l,Qa8,649 square feet the previous year. bso rion is ex ected to fall sh next year tc� 755,000 square feet. This decrease will occur as a result of ra idly risina'ren a ack of lar e block vacancies and � tight labor market conditions. It is also likelv that the relocarion of State Farm Insurance from os vitle to Woodbury an _ e possible "n�ht-sizin " of several CBD tenants could further dampen the market's absorpnon of space. Economic Trends The Twin Ciries economy is doing extremely well and continues to show an amazing level of diversity. Due to unemployment rates of less than 3% in the Metro area, the Twin Cities area has continued to attract work force participants from areas beyond state lines. This fact coupled with a stron ca ital mark� t connnues to bode well for start up companies and existing company expansions resulting in contuiued long-term demand for office space. �— 61�-338-2825 Far bl?-3�S-�?S8 � :�7he Su�te 30Q 510 Marquette A��enue, Minneapofis, M[V 5�-30? --��r�� — _ �oric. 0 � Development Trends The short term beneficiar�es of a ti.�ht of�ice isrinQ landlords of all classes of Owners ot Z`�B and C space may Fecei"ve_an added berr��! demand'for low cost altemanves increases. The lo__�-terrr� beneficiaries of the`curt°eirt market will�e office developer of the future �vho � � can reco�nize changing demands and produce an economically viable solution. This solurion will result in a radically different officE� property over the next development cycle. Smaller suburban projects are anricipated with more emphasis on function than form. They will have smaller lobbies and comnnon areas and will emphasize value. They will also occur in phases of 50,000 - � 200,000 square feet rather than in 300,000 - 400,000 square feet increments. CBD development on the other hand may move towards larger scale projects which help offset higher costs associated with site assimilarion. All properties will have a much stroneer emphasis on electrical and mechanical systems to meet the increasing technological needs and higher densities of office space users. � until at red thousand-scLare feet of new construcrion is expected to_enter the suburban market in 1997 300,000 to 400,000 in 1998. Development in either Central Business Distnct is not expected -� mid 1999. Market Volarilitv The Southwest Quadrant is by far the most stable market at present based on current demand and supply The Minneapolis CBD on the other hand possesses the ability to fluctuate significantly in its direcrion if a new tower is developed or a major consolidarion occurs_ This impact is expected to hit the market by 1998 or 1999 and will likely incre�.se vacancy rates back to a low double-digit level. St. Paul is doing a vef=y good job of capitalizing on its strengths and changing its perceptio but the truth is, it lacks a �reat deal of depth in the Class A segment, which has historically been higher in demand. Sales Activitv Institurional grade investo�s will conrinue to focus on well located trophy properties and will push prices on existin� propenies to tt�eir highest levels in years, although srill below replacement cost. Class B, C. and renovated properties �vill also benefit from the improved market condirions and reduced short-term nsk associated with real estate investmenu. �'� , Conclusions A caunous approach with a ctose eye on absorption nends will be critical in the coming year. While landlords attempt to maxirnize values by raising rents, there are limits to the achievement of this objective. Lower cost altematives will be sou�ht by pnce sensirive tenants who will look to Class B C or renovated space as well as office/ showro� properties to satisfy demand. r _--� T'here should be no surpnses on the suppl�• side in the short term, but a new develQnment c�.-cle has now begun_ :�s we have leameci historically there are manv market vanables�achich cou�ld c_han�e the characterisrics of today's stable environment in a relatively short period of time. .� / -r� _�- �.... �� . s ,.�.�--.� i i / � iti'II\\�ESOTA - SOUTH DAKOTA CCIM Q1'tice i��Iarket Fo�ecast Steve Chirhart, SIOR Total Inventorv of space (Buildin�s As of As of greater than 20.000 sf) June 30, 1997 June 30, 1996 55,482,469 55,282,969 �. _ - Vacancy and Absorption As of � � � June 30, 1996 Vacancy 4,384,112 7_9% 4,939,112 (8.93%) sf +75�,000 sf 6/96 6/97 +916,653 sf (June 1995- Absorption � � June 1996) Twin Cities Metro Area Area Analysis ( A,B, C and renovated � Aver�be NNN Absorption _ space combined) � _ Rental :Rate/SF +/- Sq. Ft: " . Inventory Vacancy �Quoted) N� Rate June1996 June 1997 Mpls CBD 22,732,149 8.6% 10.22 12.26 250,000 Northwest Market 6,482,204 6.9% 10.24 11.05 50,000 Northeast Market 3,251,039 9.5% 9.07 9.52 30,000 Southeast Market 1,102,069 13.7% 9.50 9J8 25,000 S� Paul CBD 5,761,169 13.1% 8.53 9.80 150,000 Southwest Market 15,954,339 4.6% 10.71 12.31 250,000 Total ��,282,969 7:9% 10.23 11.55 75�,000 Property Sales* Suburbs CBD Average capitalization rate for sales of A and B space 10.25 10.25 Average sales $/ sq. ft. for sales of � and B space $104.00 $108.00 Market Activitv* Suburbs CBD How many major corp. relocations (greater than 50,000 st) will come to the Twin Cities area in the next 12 months? 1 0 Ho�v many major move-outs/close do�vns (greater than 50,000 s�`? � � 1 2 "` NOTE: Property Sates Forecast and tilarket Ac�ivity will not be used as grading criteria. ` / � � � . _ ._ . ._ . _ _ . _ "__'_' __ ...." _' _ .' _ . . . . _ . S�rTHO��; �_a„ � Minnesota / ��outh Dakota CCIM Chapter : Office Steve Chirhart, SIOR Griffin Cornpanies O .�.r.�.__..:� CCIM Office Market Existin,y Universe O Steve Chirhart, SIOR ._ - �.:, � Submarket � NRA Total Vara � i � �cy Absorption � Avg Renta � I Vacancy Rate �+/- gQ Fp Rate/SF � � � � June 199 June 199 i June 19961 June �996� IMP�s CBO ;22.732,7491 2,211.5T2 9.73%� 190.657! $10.22� !I NW ; 6.482.204 � 495.687 7.65% 52,3381 S 10.24 I ...- . .. � � - . . . :. _ - �-,L SE SC Paul I CBD .$W ' 1 TotaF � 5 i 787, I 4,939. 10.711 10.23 � Office Market � Steve Chirhart, SIOR ,�.,.,��,T Percentage of Total Available Space by Property Class�fication CUSS i, .gp% .�,la5y A SSOt. 1J1' _ s ��"4' • � . � n. 1""`" h .'"�,.'.�.;L � +.z3o �ce :a : y`��a ,'�'� Rerq.-dtea ,sok C�ss B �oo. �17.�5s va t a'vd ri95 sQ � Office Market Highlights O Steve _,�hirhart, SIOR <t,. .,_,,,.,�„_ . '• VaCancy rates have reached a 72-year low of 8.9°/a and will dip to 7.9°/a b'y June of 19g7. • Net rental rates have escalated to 13.8% and will rise an additional 12.8% before reaching their peak. - Higher rents, a lack of large block vacancies, and a tight labor market will slow absorption to 755,000 sq. ft. marketwide. CCIM Office Market O Steve Chirhart, SIOR ..�..:...��,T . Twin Cities Office Market by Property Classification � . . Ciass A wax � u.ws.a� w. e. � am c n.s„ � � � s.na,s. sa a Rcror�tea sx � � � �.easm sa. e. Gass e �evc � :CaiZ.ss; sa n Office Market Projected UniverseO Steve Chirhart, S10R .�.r...�..:.� Projected Universe ' 4MSns I00.000 s! W�r�+ mnal.ucnon � / / I� __. "._ _. __ . . _ "_ �� Avg Tenant Considerations O Steve Chirhart, SIOR „_,,,,,�� • Corporate pressure to "right-size" is expected to increase. • As market conditions tighien, expansion, contraction, and renewal option language will become increasingly impo�tant_ • Five-year leases will dominate the market for small to medium firms. Larger tenants will seek security in 10-year leases with a focus on flexibility. �iiiii Office Property Sales O Steve Chirhart, SIOR �—��,;� A g 9.5 11 128.00 80.( �4Q?o� 7� r Combination (CBD properties) � I - - � 108.00 • Trophy properiy demand will again exceed supply. • The local i�vestor has returned to the market as a buyer of investment real estate. Office Market Trends O Steve Chirhart, SIOR .,.._.a.___,:._ - Rising tenant improvement costs coupled with disappearing incentives will lead to a higher percentage of lease renewals. - With gross rate differentials ranging from $10 - �14 per sq. ft., demand for Class B. C, and renovated space will increase as tenants seek a lower cost alternative. CCIM Office Market Projected Activity O Steve Chirhart, SIOR ,�,_�,_ • .• tVew co�pprate relocations to the Twin Cities area , greater than 50,000 sq. ft. in the next 12 months: -1 • Corporate relocations or "righi-sizing" in excess of 50,000 sq. ft.: -3 CCiM O�ce Development O Steve Chirhart, �lOR �� • 20Q,000 sf of new construction is currently under development. Preleasing efforts are in progress on ten additional sites. • Suburban office development is less likely to result in an immediate over supply condition as development is phased, geographically diverse and smaller in scale. • Development within either CBD may have a� more volatile impact on market conditions. � Office Market Trends O Steve Chirhart, SIOR ,�,��,T • Demand for office showroom space with reasonable parking will also increase as a desirable lower cost space attemative. • The Class A o�ce product of the future will have more of a focus o� function, such as, electrical capacity and improved HVAC systems than on form. • Commercial real estate taxes wiil escaiate sharply under their present system and must undergo reform. � � � K��L 1Hf At -1t E �1 11' iEF\�(F. (<l�u��\�1 MINNEAPOLIS/ST PAUL `. OFF�CE MARKET OBSERVATIONS � BY JIM JETLAND VICE PRESIDENT • Tot31 universe of office space will remain stable but will increase the latter part of 1997 with multiple new developments in the suburban market. • Vacancy will drop slightly and absorption will decline due to a lack of available space in the current universe. • Effective rental rates are at a historical high due to significantly increased net rents combined with lower transaction costs and the elimination of free rent. � • investor interest in the Twin Cities office market is high and should remain i w strong for the near future. Real estate values have not reached a historical i high however. • Demand is slightly in excess of suppiy in both the Tenant/Landlord areas, as well as Investor/Seller area of the real estate market, hence we will see a continued increase in rents and sales. • Replacement costs will create a barrier that will limit the rapid rise of investment sales we have seen the last year. • Real estate taxes payable in 1997 will increase as much as 20-35%. The %� combination of increased net rents and real estate taxes will force selected companies to downgrade from Class A to Class B or office/tech buildings. � 17 new developments are being pursued in various stages throughout the Twin Cities market. A significant increase in the total universe in a short perioci of time will have a flattening or negative ef%ct on net rents. ,, ,_ , ,,.,, __.. . ., ... . .,�. . . . ■ /./ / � r _ <.. .j I � � • Mosi new office developments will be smaller in size (80,000 - 150;000 square feet) with fewer amenities than the office product that was developed in the � late 1980's. • Many corporate users are planning a significantly higher density of people, per square foot than in the past, which will effect building issues such as �i� mechanical systems, parking, floor loading and restrooms. • Many large users are being forced to consider long-term lease commitments with new development; however, flexibility will remain a key issue for the corporate user. • - , • There will be less subiease space options in the market over the next 12 ; months; however, look for 1-2 large subleases to become available through further corporate downsizing. ' =:�w«w��... , � �: �` •- -,_ - I - �.. . i / . i ��I�ti�cs�� - soL��rH ��:oT� ccl�l � OtTice ��tarkei Forecast .Iim .ietland Total Inventorv of space (Buildinbs greater than 20,000 sf� Vacancy Absorption Vacancy and Absorption Twin Cities Metro Area Area Analysis ( A,B, C and renovated space combined) � � Inventory Vacancy N� Rate Mpls CBD Northwest Market Northeast Market Southeast Market St. Paul CBD Southwesf Market Total 22,732,149 9.11% 6,482,204 6.45% 3,251,039 7.94% 1,102,Ob9 12.92% 5,761,169 13.33°l0 16,154,339 3_27% 55,482,969 7.55% As of Juty 1, 1996 5�,282,969 As of July 1, 1996 4,939,112 (8.93%) sf +916>653 sf (June 1995- June 1996) Average NNN Absorption Rental Rate/SF +/- Sq. Ft. (Qaoted} June1996 June 1997 10.22 10.24 9.07 9.50 8.53 10.71 10.23 12.78 11.74 9.11 9.77 8.77 12.20 11.69 � � �� : 111 1 111 111 . 111 � �� .� Property Sales�` Suburbs CBD Average capitalization rate for sales of A and B space �' 9% B 9.75% A g% � B 9.5� Average sales $/ sq: ft. for sales of A and B space A B A$14 $135 �90 B �95 Market Activitv* How many major corp. relocations (greater than �0,000 sf� will com� to the Twin Cities area in the next 12 months? Ho�v many major move-outs/close downs (greater than �0,000 sf)? Suburbs � fl "�'OTE: ProPert�� Sale� Forecast and Marke[ Activitv will not be used as y�radin� criteria. CBD � 1 , . � - - . _ _ _ _ — -- ---- SZtI'HOi�L1S �u �►a,�n��i,. ;� Minnesota / South Dakota CCIM Chapter �« � � Office . `'-_.� Jim Jetland %�0�� I .a�,-O «_ Y�j ��C@... O Jim Jetland ,�.:.�,_,._ Submarket i NRA : Total � Vacancy � Absorption ; Vacancy j Rate 199 +/_ Sq FE � 1996 I � I j dpts CBD �22.732.t49j 2.071.572; 9.11%� 740000� >t Paul CHq 5.761,169� 844,a42i 14.66% 85.000; �W � 6,482.204 � 445,687 i 6.889'0 50,000 � JE 3.251.039 � 303.140 � 9.32% � 35.000 j �E 1.102.0691 111.480 ; 10.12 % � 65.0001 iW 16.754.3391 717J91 ! 4 44% � 270 000 j otal I 55.482.9691 4,494,112 : 8.10q i 645.000 [ � OffIC@... Jim Jetland .� O�, J�im Jetland � ��. Average NNN Rental Rate/SF (Quoted) ' Total Inventory of Space Millions pf $p ft � Submarket i June 1996 I June 1997 i% Change eo � Mpis C8D 10.22 12.78 25% � t ; St Paul CBD 8.53 8_77 2.8% � sa I I ' ! NW 70.24 11.74 14.6% I � I I NE __..,. i 9.07 , 9.17 .04% � � � SE 9.50 9.77 2.896 ; • � - � � S W 10.71 12.20 13.9% i 5* i i Total 10.23 11.65 13.996 i 52 F � I � 1993 794a 7995 1996 1997 55.482.969 Office... Jim Jetland .�..�0,:� J��im Jetland � ��.�� .iva�laDle i� millions of sa n ercencage � �0. 20 - � ' ' /�50(P(IOfI � ' , 2. 500.000 s: i �. t 5 ; ; i �� . '� 2.CA0.000 Y � � i 6f I I ' �� . 1.$Op.Qpp i I _ a i ' � ' S � i 1.000.000 � � _ , . z f ` . � I ", . . . 500.000 � I a — o� — I �553 :99a t995 t996 t9S) 139] �54a �995 t99u �SS> j t997 Base 55.4H2.969 million sp. ft. � .—. t993 1994 1995 1996 t997 �9e� area�ciion a.s miuion sq. ft. e_�,� - 645.000 sq ft _____ _ -- - - -- --- -------- -- - _ _ _ __- -- ----- � ; - -- ----- _ �X� „ a � � ' � , '$' a. � . <.,, � . - , , . _ �•, � . . - Office___ O Jim Jetland ,,.._..,�,T Area Analysis NRA '96 I Avg relrt Avg ,eM Ab50rpUOn Vatarx.y . '96 57 Mds C80 22.7J2.u9 9.11 . 57012 i i71-78 110.000 St PaW 5.761.769 1a.66y. 58.53 $9.I7 f�Stuxl • cao Mw 6.o82.Z0a 6.B8Y. NE 3.25t.039 9.32% SE 1,102.069 t0.12% SW I t6./51.339 a.saq Totel � �5.482.969 8.t0% s`-'.>> 50.000 i9.)7 35.000 S t 2_20 270.000 5!-05 e.f5mn Office... O Jim Jetland ,,,,,_�� Property Sales - i996 Average CBD A g Avg Cap Rate 8% 9.75% Avg $/sf $140 $95 Office... O Jim Jetland ,,,_�,�,T • Market Activity - How many new office developments over 100.000 square feet are currentty under discussion - 17 - How many office developments in excess of 100,000 square feet �vill break ground in 1997 -2 � , Office--- O Jim Jetland „��.�,_ Property Sales - 1996 Average Suburbs A g Avg Cap Rate Avg $/sf 9 � 9.75 $135 I $90 Office.._ O Jim Jetland ,,,,_,��,__ • MarketActivity - New major relocations to the Twin Cities greater than 50,000 square feet in the next 12 months - 2 - Suburbs -O-CBD - Major move outs greater than 50.000 square feet - 1 - Suburbs ' - 1- CBD CCIM Office... O Jim Jetland ._ �,�,T - Effective rental rates at a historical high due to increased net rents combined with lower transaction costs and the elimination of free rent - Demand is slightly in excess of supply in Tenant / Landlord market and Investor / Seller market hence we will see continued increase in rents and sates. • Replacement costs will create a barrier that will limit the continued rapid use of investment sales `�� / . / Office._. O Jim Jetland � .,--.�..�:___. - Real Estate Taxes payable in 1997 wili increase •,_•- 24%0_-35%..This�combined with increase net r�r�ts:will force selected companies to -y �jczan!ngcade frQm Class A"to Class B or ''� �� offr.ce/tech buildin s. - 9_, • Ove� 1? new developments are being pursued in various stages throughout the Twin Cities market. A significant increase in the total universe in a short period of time wiil have a flattening or negative effect on net rents_ � Office.._ 0 .�.u.___y, - Ask the experts � Office... O Jim Jetland . � . .-�......._.� - Many co�porate users are planning a significantiy higher density of people, per square fooi than in the past, which will effect building issues such as mechanical systems, parking, floor loading and �estrooms. I � CCIM � CITY OF FRIDLEY, MINNESOTA ----------- -- —.—_-__ ________ COMPARISON OF SCENARIOS -- ---- ' � ----- ---- Scenario A Scenario 6°� Scenario C Scenario D CURRENT � 185000 sq. ft. in 250000 sq. ft. in 240000 sq. ft. in MASTER PLAN 1 office building; 2 office buildings; 2 or more flex 582000 sq. ft. in 261800 sq. ft. in 100000 sq. ft. in space buildings 4 office buildings 2 operations ctrs 2 flex space bldgs Construction Square Footage Flex Space - Office 0 0 100,000 240,000 Operations Centers 0 261,800 Office Building � � 0 ` _ 582,000 185,000 250,000 p ' ------- ---------- 350,000 240,000 Total Square Footage 582,000 � � � 446, 800 Estimated Market Value _ Flex Space - Office _ 0_ ' 0 6,000,000 94,400,000 Operations Centers � �`'" " 0�"- `'� 19,635,000 p Office Building 52,380,000 16,650,000 22,500,000 � - -- - ------ ------------------- --�--�---------�-- ------ Total Market Value 52,380,000 36,285,000 28,500,000 14,400,000 Estimated Annual Taxes � 2,687,513 1,974,588 1,462,278 738,835 Estimated Tax Increment 18,986,739 15,310,264 11,081,642 6,802,555 Administrative Expenses 1,898,674 1,531,026 1,108,164 680,256 Available Tax Increment,. • " 17,088,065 13,779,238 9,973,478 6,122,300 Available Tax Increment P. V. 8,529,938 7,124,357 5,071,479 3,485,934 Land Sales 0 _____ �_ p 800,000 1,920,000 ---------------- - ---- ------------------ I Total Revenues 8,529,938 7,124,357 5,871,479 5,405,934 I IParking Costs (expenses) 100% 15,000,000 °10,850�000 6;375,000 ' J -------- -------- -------------- 0 Revenues Less Ex enses ( ) 1(503,521) 5,405,934 p (6,470,062) 3,725,643 Add Retail/Service Net Revenues 2,993,973 2,993,973 2,993,973 2,993,973 � � ---------------- ' ---------------- -------------------- TOTAL REVENUES LESS EXPENSES -----`---'--'–' (3,476,089) (731 670) 2 490 452 8,399,907 , Use Onl SO% o Parki� Costs Total Revenues Parking Costs (expenses) 50% Revenues Less Expenses Add Retail/Service Net Revenues TOTAL REVENUES LESS EXPENSES 8, 529, 938 7,500,000 ------------------- 1,029,938 2, 993, 973 ------------------- _ 4,023,911 7,124, 357 5,425,000 1, 699, 357 2,993,973 5,871,479 5,405,934 3,187, 500 p 2,683,979 5,405,934 2,993,973 2,993,973 5,677,952 8,399,907 )0 sq. ft. restaur, 110 room hotel; 20,000 sq. ft Bank office bldg 5,375,000 275,781 2,411,868 241,187 2,170,681 i 1,193,973 ` 1,800,000 � 2, 993, 973 ' 0 2, 993, 973 �vlepcsum7.wk4 PREPARED BY KRASS MONROE, P.A. 07/17/97 . • �. �. �4ff.:�,ce�,Buildina :;:-n , , , . - :,� . TERMS Multi-story; smaller floor plate; brick finish Market Value/s.f.: $90 Taxes/s.f.: $4.62 Operations Center: 2 story; larger floor plate; precast finish Market Value/s.f.: $75 Taxes/s.f.: $3.85 Flex Space: 1 story (16'-18' ceiling clearance); brick & glass exterior; large floor plate; delivery doors in rear - _ - : � .� ., n Mar et Value s.f.: $60 - � � Taxes/s.f.: $3.08 Parking Structure Office Buildina: Multi-story ramp: $7,500/stall Operations Center: Bilevel structure $4,500/stall F\FRIDLEY\14\DOC\TERMS.1 cost cost approximately approximately , M E P C July 17, 1997 Mr. Bill Burns City Manager Fridley Municipal Center 6431 University Avenue N.E. Fridley, MN 55432 Dear Bill: MEPC American Properties 1550 Utica Avenue South Suite 120 Minneapolis Minnesota 55416 Telephone (612) 546-8000 Facsimile (612) 542-9297 The following activities and material development has been enacted by MEPC over the past year and a half in an effort to position and market Fridley Executive Center for commercial development. • Master Site Development Plan Based on the research and secondary market information, we worked with city planners, architects and engineers to establish an updated Master Site Development Plan. � Focus Grou� Research An exploration of attitudes and perceptions of Fridley and the Fridley business community by the commercial real estate community. • New Imag�Fridley Executive Center� Created to help achieve the City of Fridley's goal of upgrading and expanding the image and perception of the community. Developer of Minneapolis West Business Center and Norman Center Mr. Bill Burns July 17,1997 Page 2 • ew L o A logo developed to provide a contemporary business image to prospective company tenants. • l�ew Signage Initial method of impacting potential prospects with the image and site advantages of Fridley Executive Center. • Site Event for Brokers A personal introduction to Fridley Executive Center by key marketing members of the Twin Cities commercial real estate community. An opportunity to share, first-hand, the advanta.ges of this unique site and to define appropriate users according to the master site development plan. � Undated Marketing Materials Developed a rendering of Phase I along with a total package of information for use in all marketing activities directed to brokers and prospects. � Mailin�s -�- Announcing the Fridley/MEPC development agreement to commercial space users and more than 500 key real estate brokers in the Twin Cities area. • Marketing Meetings Conducted marketing meetings with the leading local commercial real estate companies to show the opportunities available at Fridley Executive Center. Mr. Bill Burns July 17,1997 Page 3 ♦ Commercial Sites The following service businesses were contacted to expand their understanding of the opportunities available at Fridley Executive Center. Hampton Inns - Tom Torgerson Marriott Courtyards - Dan Mahoney American Hospitality Management - Kirby Payne Five Star Realty & Development - James Stuebner Graves Development Corporation - Jim Graves Homewood Suites - Cambridge Real Estate Company Restaurant Macaroni Grill/Chilli's - Brinker Corporation Old Chicago/The Chop House - Brewery, U.S.A. Olive Garden/General Mills Champs/Shelley's - A.B. Pettit Company Nikalow Deli - Jim Nikalow Outback Steak House - D.J. Sikka • Banks Northeast State Bank - Ben Rasmussen Alliance Bank - Susan Hinrich ♦ Office Tenants The following proposals were presented as a second stage marketing approach to interested prospects which had been developed through marketing efforts: American Express Financial Services (IDS) Dain Bosworth Mr. Bill Burns July 17, 1997 Page 4 Piper Jaffrey Target U.S. West Direct Augsburg Fortress Publishing Home Builders Association of the Twin Cities Pentair, Inc. Lawson Software Summary: Based on our experience with this development site and many conversations with prospects and real estate professionals, it is apparent that demand for high density executive office space in the northern Twin Cities market area is extremely limited. However, given the explosive growth of technology firms and the recent success of technology buildings throughout the Twin-City area we believe the Fridley Executive Center site is ideally suited for this new wave of business space growth. In meeting the needs of the corporate users of today and in order to get development going on this site, MEPC would propose the development of approximately 100,000 square feet of Hi-Tech space on the westerly portion of the site. The project would be similar in quality and appearance to Golden Hills Business Park in Golden Valley and Golden Triangle Technology Center in Eden Prairie. Both of the projects have been successfully constructed and leased by MEPC over the last yeax and a half. These projects are attracting fast growth, quality companies such as: CyberOptics 71,000 sf Information Advantage 37,000 sf Sedgewick James 22,000 sf Workstations International 13,000 sf Sales Force Companies 22,000 sf Mr. Bill Burns July 17,1997 Page 5 Many of these companies vacated office buildings to relocate to Hi-Tech facilities. These Hi-Tech facilities offer a class "A" office environment with ease of access, flexibility for growth and the functionality of a one-floor operation. With this revision to the Master Plan, the City of Fridley would still have the flexibility of developing appro�mately 250,000 sf of multi-story office space on the balance of the site. MEPC believes that by beginning construction on the Hi-Tech facilities now, we will generate new found attention to Fridley Executive Center. In our e�ctended discussions with Lawson Software, we found an interest to have both a corporate headquarters site and also a one (1) story Research & Development (R&D) facility at this location. We therefore believe this type of mixed-use park would fit many corporate users and attract excellent, high-quality, skilled professionals to the City of Fridley, but not limit the future development of office space on the balance of the site. MEPC has greatly enjoyed the opportunity to work with a City that is so interested in attracting and accommodating corporate users to this site. It has been a pleasure to work with you and your staff and hopefully we can continue this relationship through the completion of this excellent business park. Sincerely, MEPC AMERICAN PROPERTIES INC. (1 � . � }��{�;� , / David M'. Jellison Regional Vice President Marketing Division DMJ/clp J.� - ,�`' �` � . ..��'` �.��/' "�' � ,: � Leslie Jowett, RPA Leasing Manager ■ � � � � � � � ' ' � ' � _ � Q w � Q H J � O O � Q ~ w Z � � w H U Z � H Z � Q mm U � � � � m � ¢ � m Z � � m Z � Q N � � w � v~i Z W Q � m _ � H � � m O� �N � O � w Q � N � � � F- a. � Q NAIOP 1996 ANNUAL OFFICE SPACE UPDATE 1996 MARKF,T DATA REPORT WEST & NORT'HWEST SIGNIFICANT EVENTS AND TRENDS • Overall vacancy declined from 6.8 % to 5.2 %. � Vacancy in Class A buildings decreased slightly from 3.6% to 3.1 %. • Vacancy in the West Submarket is 3.0 %, and 13.2 % in the Northwest Submarket. • Net absorption for 1996 is 117,347 square feet. • 505 Waterford Park sold for $119 per square foot. • 55 West Financial Center sold as a package deal along with City West Financial Center. • The 1,000,000 square foot Interchange Office Park is under contract and is scheduled to close in 1996. • Carlson Real Estate developed a 65,000 square foot build-to-suit building for Grand Casinos. • There are only four large blocks of space greater than 15,000 square feet, and three of these blocks are sublease opportunities. • Unlike the Southwest Submarket, the West Submarket did not break ground for new development in 1996, however, there are three to four sites that are poised for 1997. � _7 � a r � � J ' _. ._ . _ ._ 23 NAIOP 1996 ANNUAL OFFICE SPACE UPDATE 1996 MARKF.T DATA REPORT V'VEST & NORT�IWEST Existing Universe of Space Sublease Space and Shadow Space SUBTOTAL Projects Under Construction PERCENT PERCENT TOTAL VACANT VACANT OCCUPIED 7,222,930 372,457 5.2 % 94.8 % 59,400 7,222,930 431,857 6.0% 94.0% 0 0 — — TOTAL PROJECTED '1,222,930 431,857 6.0% 94.0% 1994 Estimated Annual Net Absorption 117,347 Supply of Space in Years 3.7 5 Year Average Annual Net Absorption 212,012 Supply of Space in Years 2.0 Tax & Operating Estimated Estimated Expense RENTAL RATES Quoting Net High Low Base Class A All Other Buildings $12.50 $15.50 $9.00 $8.60 $10.25 $12.50 $5.50 $7.40 Note: Rental rates are based on quoted net rates without consideration of transaction costs. Actual effective rates will vary. 25 ' -- .. _ __ _. _ _ - ---- ":;,'°e` e �w�� v NAIOP 1996 ANNi7AL OFFICE SPACE Ul?DATE - .�- � 199611�RI�ET DATA REPORT "� � WEST & NORT'HWEST G G G G NET A►BSORPTION TRENDS G Sq. Ft. 300,000 200, o00 100,000 0 1992 c �. c c c � ` � � . r - r � f- � � � 1993 1994 1995 1996 =' r r r VAC'ANCY TRENDS �� Percent Vacant � 20% c 15% 10% 5% 0% r � � r � r r � ._ � r c r c C 1'/J 1996 r r C C 24 C . _. . � _ � _ _ _ �._. r.... . _ .....�rt - -.�.��rr �r ' __ - ��%tS� NAIOP 1996 ANNUAL OFFICE SPACE UPDATE 1996 r►�ARI�T DATA REPORT VV'EST & NORT'HWEST Percent Vacant 30% 20% 10% I' . . . . ' 1 � � � �_ _� � � 1992 199;3 1994 1995 1996 �Class A Buildings ■ Other Buildings 26 �� construction-ready rates, as evidenced by the 25% increase in the average quoted net rent to $14.21 psf in Class A. Another 5.4% jump in rates by fourth quarter brings the average net rent up to $14.97 psf. Including the 22% jump in rental rates reported for the year ending second quarter 1995, this is an increase of 52% in two years! Asking rents range from $10 to 22 psf. Six new Class A office towers are proposed for downtown. Opus Corporation has development opportunities for three sites. At 444 Marquette (Powers site), a 15-story, 600,000 sq. ft. building is possible, featuring large floor plates and underground parking. At 707 Second Avenue (Minnegasco site), a 35-story, 900,000 sq. ft. tower has been designed with more typical floor plate sizes and underground parking. Although there are no immediate plans, Opus controls development rights at the Ritz block between Nicollet and Marquette and 3rd and 4th streets. Target Stores, Inc. plans to build a 400,000 sq. ft. office tower for its new headquarters on a portion of the block bounded by Nicollet Mall and LaSalle Avenue and l Oth and 11 th Streets. And, near the Govemment Center, plans for Phase II of the Metropolitan Centre are in the early stages. Ryan Companies plans to demolish The Conservatory at 8th and Nicollet and build a 40-story skyscraper with 750,000 sq. ft. of office space. Also planned by Ryan is the 900 Tower, a 500,000 sq. ft. office building to be located above the planned Target store. The cfiallenge for these developers is to convince would-be anchor tenants with strong credit to sign a long-term lease (15-20 years) at gross rents that could be $35 psf or more. And fmally, after four consecutive years of increasing vacancy, the Class C segment reported 26,431 sq. ft. of absorption for fourth quarter, lowering its vacancy rate to 21.6%. After suffering negative absoiption of 22,100 sq. ft. and a vacancy rate of 25.3% for the year ending second quarter 1996, leasing activity in four of the nine buildings in this small segment improved the vacancy rate by 3.7 percentage points. Though asking rents are comparatively low, an 18.3% increase brought the average quoted net rent to $fi.14 psf. By fourth quarter, another 1:�.6% increase brought the rates up to $i;.25 psf. MINNEAPOLIS OUT-Of-CBD This sector of 15 buildings, totaling 1,332,463 sq. ft. of office space, had one of' the most improved vacancy rates in the metro area. The Out-of-CBD sector reported annual net absorption of 55,533 sq�. ft., reducing its vacancy rate by 4.0 pe:rcentage points to 16.3%. Strong leasing activity inUnivetsity Ps�rk Plaza accounted for the majority of'this absorption. The average quoted net rent rose by 3°%, to $9.61 psf. Following the 14% increase in the average property tax for the previous year, real estate taxes decreased b}� 9.6% to $3.12 psf. Average total ex:penses decreased by 3% to $8.18 psf. With a shortage of large blocks of space, a new trend is emerging that is worth noting: industrial warehouse space is being converted to office space. An example of this is the leasing of 180,000 sq. ft. at Stinson Business Center by US West. NORTHWEST Several years of slow but steady absorption have inched this sector's vacancy rate down to 14.0%. Ten out of 12 buildings in this small sector experienced equal or improved occupancy. The biggest gain was in Earl Brown Tower where 28,000 sq. ft. was leased to one tenant. Annual net absorption was 8,562 sq. ft. Added to the survey is the 63,000 sq. ft. Brookdale Towers, previously a single tenant property, which sold and is nearly half leased as multi-tenant. STATED NET RENTAL RATES AND EXPENSES MINNEAPOLIS/SI PAUL METROPOLITAN AREA - SECOND QUARTER 1996 (PSF) NET RENT AVERAGE AVERAGE MARKET AVERAGE RANGE PROPERTY TOTAL SECTOR NET RENT LOW-HIGH TAX EXPENSES Anoka Counry Dakota County Minneapolis CBD Class A Class B Class C Renovated Mpls. Out-of-CBD Northeast Northwest St. Paul CBD Class A Class B Class C Renovated St. Paul Out-of-CBD Southwest Class A Class B Washington West $8.54 59.23 $14.97 59.81 56.97 $8.25 59.61 59.86 $7.87 $3.00-$11.50 52.47 56.26 $7.00-$12.00 $2.85 $6.79 $11.00-$22.00 55.51 $11.25 56.00-516.00 53.08 58.38 $5.00-$9.00 51.39 $5.45 53.00-$16.00 $1.82 56.24 57.00-$16.00 53.12 $8.18 $6.40-$13.00 52.91 57.02 SSSO-%10.00 $2S3 $659 $10.75 $8.00-$15.00 52.78 $6.73 $3.00-$1350 51.79 $4.96 52.25-$9.00 $1.16 $7.48 $6.00-$10.00 S1S6 S1S4 54.00-510.00 $2.05 $14.70 512.50-$18.00 54.29 $10.42 55.50-514.00 52.53 59.16 S7.25-512.00 $1.80 57.85 $7.70 $5S9 $5.62 $5.90 $9.87 $7.13 $6.26 Class A 515.00 $14.00-520.00 $4.67 S10.05 Class B 54.97 $6.00-$14.00 5253 $151 fourlh Ouaner 1996 Doro m Towle Real Estate Company TOWLE REALESTATE 8 -a " For the year ending second quarter 1996, the average quoted net rent rose 11.9% to $7.87 psf. And, after five consecutive years of declining real estate taxes, the average property tax increased this year by 7.5% to $2.53 psf. Average total expenses for the sector remained at $6.59 psf. WEST For this very tight sub-market, another year of strong positive absorption totaling 126,568 sq. ft. resulted in a record-low vacancy rate of 6.2%. The large Class B segment was the leader with 36 of the 47 buildings reporting equal or improved occupancy as of second quarter 1996. The highest absorption occurred in Interchange Tower, Ridge Plaza, Willow Creek Plaza and Westwood Lake Office Park. The Class B segment experienced substantial improvement in the past two years, from a vacancy rate of 16.9% in 1994 to a present vacancy rate of 6.2%. The Class A universe added 26,670 sq. ft. to the occupied base. The highest absorption was reported in The Colonnade. The current vacancy rate of 6.0% is a considerable recovery from the 18.4% reported three years ago. With low vacancy rates, development action has heated up in this sub-market. The Galbreath Company began construction on its 70,000 sq. ft. 12600 Whitewater Drive Class A- quality building in Minnetonka. More development plans abound in the West sector. In Golden Valley, Sherman Associates, Inc. is proposing Valley Creek Office Pazk, a three phase, 105,000 sq. ft. project. Phase I is 44,000 sq. ft. Opus Corporation plans to develop a 25-acre of�ce campus with up to 500,000 sq. ft. of office space at the northeast quadrant of I-394 and Hopkins Crossroads. Carlson Real Estate is planning to build Two Cazlson Pazkway, which will consist of two Class A-quality buildings of 80,000 sq. ft. each, across from One Carlson Parkway in Plymouth. And, MEPC continues to pre-lease a proposed 12-story, 230,000 sq. ft. office tower adjacent to the Travelers Express Tower near Highway 100 and 394. Class A net rental rates rose again this year to an average quoted net rent of $15.00 psf, up 12.5% for the year ending second quarter 1996. Total operating � ♦ The Go/bieo//i Componr hos began cnns/radJon o� 11600 Whilewahi D�rir in Minnerom(a expenses rose by 4.5% to $10.05 psf, and the average property taxes increased by 8.1 % to $4.67 psf. Class B net rental rates jumped up 9.8% to $9.97 psf. Total operating expenses and property taxes increased 3% to $7.52 psf and $2.53 psf respectively. SOUTHWEST Despite extremely tight conditions, the Southwest sector experienced substantial absorption for fourth quarter 1996. Six-month absorption of 193,385 sq. ft. improved the vacancy rate to 4.3%. This is the lowest of all sectors. The Southwest sector is the metro area leader in several other ways. For the year ending second quarter 1996, it was the net absorption leader, reporting 295,700 sq. ft. And, with 129 buildings, it has more properties than any other sector. Hazeltine Gates, in Chaska, was recently added to our survey of multi- tenant buildings. The majority of absorption for fourth quarter, 249,031 sq. ft., was in Class B buildings. This lowered the vacancy rate to 4.7%. The biggest winners were NFC Center, Pentagon Office Park, and Riverview Office (formerly Appletree Square I). Class A buildings took a slight step backwards for fourth quarter. Negative six-month absorption of 55,646 sq. ft. raised the vacancy rate from 2.3% at the end of second quarter to 3.6% by fourth quarter 1996. The very tight Class A segment has few space options with no reported contiguous space of 25,000 sq. ft. or more available. Rents have risen enough to support new construction. The current range of asking rents is $12 to $18. A 9.8% increase brought the average quoted Class A net rental rate up to $14.03 psf for the ' _w�-� . . �"'� . ' _ . . year ending second quarter 1996. By fourth quarter, it ticked up another 4.8% to $14.70 psf. New developments need $14.00- $17.00 psf net to work in the Southwest sector. Class B rents are also on the rise. As of second quarter, a 6.1% increase brought the average quoted net rental rate to $9.74 psf. An additional7% increase brought average rents to $10.42 psf by fourth quarter 1996. - The race to begin construction of a new office building ended with the recent ground breakings of two properties. Opus Corp's 122,000 sq. ft. Pondview Plaza will be ready for occupancy in October 1997 in the Opus 2 Business Park in Minnetonka. And, United Properties began construction on the 130,000 sq. ft. �rst phase of the Centennial Lakes project. Much more development is proposed. TOLD Development plans to construct Meridian Crossing in Richfeld. It will feature a six-story, 140,000 sq. ft. first phase and eight- story,180,000 sq. ft. second phase. Ryan Companies is in the preliminary planning stage of the 175,000 sq. ft. phase II of Wilson Ridge in Eden Prairie. BTO Development announced plans for Smetana Lake Office Plaza, a 130,000 sq. ft. project in Eden Prairie. Pinehurst Properties plans to build a 4-story, 90,000 sq. ft. office project in Edina. United Properties has proposed an expansion of the Normandale Lake Office Pazk on Highway 100 and 494. ST. PAUL CBD In a dramatic comeback performance after years of hardship, the St. Paul CBD emerged as an absorption leader (topped only by the Southwest sector) for the year ending second quarter 1996. Positive annual net absorption of 276,680 sq. ft. TOWLE REA�ESTAiE NAIOP 1997 INDUSTRIAL SPACE UPDATE OFF'ICE SHOWROOM - N�]�TNEAPOLIS & NORT'H SUBURBAN I. CURRENT U1�IIVERSE Annual Net Total Occupied Vacant Percent Absorption (Sq. Ft.) (Sq. F�) (Sq. Ft.) Vacant (Sq. Ft.) Existing Projects 1,992,165 1,899,872 92,293 4.6 55,403 New Projects 146,000 123,500 22,500 15.4 123,500 Current Universe 2,138,165 2,023,372 114793 5.4 178,903 II. III. FUTURE PROJECTS Total Number Of (Sq. Ft.) Projects Under Construction 35,000 1 Planned Projects 110.000 1 Future Projects 145,000 2 NET ABSORPTION (Years Ended April 30) Annual Net Percent Of Absorption Occupied Year Square Feet Square Feet 1993 107,473 6.5 1994 (59>671) (3.5) 1995 179,305 9.6 1996 48,454 2.2 1997 178,903 8.8 5 Year Average 90,893 III. LARGEST CONTIGUOUS SPACE BREAKDOWN Vacancy Size Number Of Square Square Feet Projects Feet � 19 0 1 - 9,999 8 24,978 10,000 - 24,999 1 17,000 25,000 - 49,999 1 40,033 50,000 - 99,999 0 0 100,000 + 0 0 Total* 29 82,011 IV. RENT SUMMARY FUTURE PROJECTS Under Construction - Twin Lakes Business Center III 35,000 sq. ft. Planned Projects - Center Pointe Campus I 10,000 sq. ft. Average Low - High Office Rent $8.79 $6.00 - $11.00 Warehouse Rent $4.40 $3.00 - $5.00 Blended Net Rent (Assuming 50% Office) $5.28 Taxes & Operating Expenses $2.89 $1.00 - $3.79 Taxes Only $1.96 $0.65 - $2.50 ` One block of space per project, may not reflecc [otal vacancy 15 n � — v 3 ^� cn _ � O � _ _ � _, D n � � �, � �. � � � _' � � � ,.��.,. �' � _' -' '� ° � = N (� m a 3� a�° � �o c�,,: � _.�, c z � 6 p � y �� 3� O n p �� p� p y � �� O N � ,. C� � D X'* � � G �D � N � O O O ''� � O O�' O °�o c � c �-'�� n �.n c�i� n �cn � � � � —• • o � � �• � � c m c � m c ai cn m� � a� o � a� v Qv 3 �... 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