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HomeMy WebLinkAbout5.c. Updates and Information 4 ROSEMOUNT EXECUTIVE SUMMARY CITY COUNCIL Port Authority Date: May 15, 2012 AGENDA ITEM: Updates and Information AGENDA SECTION: New Business PREPARED BY: Kim Lindquist, Deputy Director AGENDA NO 5.c. ATTACHMENTS: Greater MSP Information, CBRE Update, APPROVED BY: Market Updates pi_ RECOMMENDED ACTION: Information Items UPDATES AND INFORMATION As the Port Authority will recall, Rosemount is a member of the Greater MSP organization. The Mayor and Deputy Director attended the Spring Investor meeting this week. At the meeting the annual report was distributed. Within the report, which is in the packet, it is noted that the Key Industry Sectors being targeted by Greater MSP ate: Health and Life Sciences Headquarters and Business Services Food and Agribusiness Innovation and Technology Financial Services and Insurance It may be beneficial to discuss how the City can, or cannot, fold in our economic development goals with those of Greater MSP. On May 15, 2012 at 4:OOpm there will be a ribbon cutting event at Proto Labs. Given this is one of the first businesses to locate within the Business Park in some time, and due to their projected employment base, there were be several special guests in attendance. Representatives from both Greater MSP and the Department of Employment and Economic Development (DEED) as well as Council members and Dr. Ron Thomas from DCTC are also scheduled to attend. The Port Authority is of course invited. There will be formal comments from several in the public sector and representatives of Proto Lab. Included in the packet is a monthly update from Richard Palmiter regarding marketing of the Genz Ryan site. This was requested at the last meeting. Also included was information regarding the current Metropolitan market. GREATER MSP' Minneapolis Saint Paul Regional Economic Development Partnership H ..o. Where business M E X11 and people I t 'rte /.ti prosp ...e.- rr .T i e_ m i m um -x- 1 -iaa ":.1 am .1. 7. ,i ii I ia i s -"'44:4411114 ti !fit R 1 1 Annual Report 20 u p r "itilt{ 1 1 I 1 il I E ,v i FROM OUR CHAIRMAN Just over a year ago, private and public leadership in our community came together to create a new future for our region. After much thoughtful analysis and discussion by the Itasca Project, we set out to unite the region in a coordinated economic development effort. The partnership we felt among leaders from many companies and from our cities and counties emboldened us to start the Minneapolis -Saint Paul Regional Economic Development Partnership (GREATER MSP). We live in a great region, filled with smart people, great businesses, engaged leadership, and an outstanding quality of life. Yet our region's job growth was lagging behind the national average and we weren't realizing our fair share of economic expansion. In order to ensure our region's future prosperity, we needed to reverse the job loss trajectory and bring new opportunity to the region. To do this required a shift in our approach to economic development. GREATER MSP is poised to drive growth and expansion of the region's economy by retaining, expanding, and attracting business and talent to the 13- county Greater MSP region. Political boundaries don't determine business success. It is the assets of this community a strong workforce, top education and research facilities, a well planned infrastructure, and a drive for economic excellence that define what we can offer businesses, and these transcend boundaries. GREATER MSP will succeed because it is a best -in -class organization, led by an experienced staff and supported by a Board of business and public- sector leaders committed to coordinating business investment and creating jobs across the region. It plays a distinct role that will enhance the economic development efforts of other organizations and invigorate the Greater MSP business community. We've hit the ground running and we're not looking back. But there is still And so GREATER MSP much work to do and many opportunities to capture. We couldn't have come was formed, a new so far so quickly without the shared vision of all our region's leaders. We will work to make this an even more successful and vital community; one with regional partnership to both a great past and a bright future. move our region from its Sincerely, longstanding position as the best kept secret in business to being t recognized as a globally tip competitive region. Douglas Baker, Jr. Chairman of the Board O ur Cht:,. r ti„ \f�s�on °k v i s clear. Y M� won erce WE WILL BE RECOGNIZED w er as a globally leading economy. fl -ota scoti •,,,7■100. i7 p• i Ac°,111 3 y r 4 -a, f /1` 4 l y 1 Yr S i :27. 7 1 1111t o. iii V 4 a& 4 r yr g*, .x T -y y�_ r a ito t r .q fi t, Y f ,,O. A I' T .a .1+ i f eF W7 y rs,lt, 11 i i is t r.' IT Our 7 a., �;;4, mission is 10.1,.t. 7 '-'--1,,,, resolute. GREATER MSP will accelerate job ,r growth and capital investment in 7, the Greater MSP Region by: 4 LEADING regional economic strategy development, aligning with regional partners to target key industry sectors for growth. BRANDING AND MARKETING -Alt ■r our region to business decision makers, site location consultants, workers, and residents. SERVING business clients as the region's `one -stop shop" .14 ..,,-.,4 :1 ,4 t for retention, expansion, and x recruitment projects. 4 9 1 x I w .J. le l'i f ig „h tilt- FROM OUR CEO Regional partnership is the key to accelerating our job growth and realizing significant new investment in our region. With tremendous help and insight from public and private partners throughout the 13- county Metropolitan Statistical Area (MSA), we are now serving the region with a straightforward vision and mission for our work together. Our vision is clear: We see the Greater MSP region recognized as a globally leading economy. The key word in this statement is recognized. With a gross domestic product of $200 Billion, we are a significant global economic region in fact if we were a country, we'd be the 44th largest in the world. We lead the world in both traditional strengths such as food production, agribusiness, and financial services, as well as new technology sectors such as medical devices, health services, education, and water quality. It's time to make sure that the rest of the world's investors, decision makers, talented workers, and others realize this, too. GREATER MSP's organizational mission is to accelerate job growth and capital investment in the region. It is only through this ongoing economic vitality and growth that we will continue to be a place where business and people prosper on a global scale. In 2011, our work was focused in four areas: With a gross domestic First, in partnership with leaders and economic development practitioners from around the region, we developed an economic product of $200 Billion development strategy that leverages our region's business strengths we are a significant global and identifies the strongest opportunities for future growth. economic region in fact if we Second, we developed a regional brand marketing strategy that were a country, we'd be the promotes how this region drives business. 44th largest in the world. Third, we developed a protocol and pipeline to connect business expansion opportunities with regional and local resources and availabilities. And finally, we built our organization's operational infrastructure and started on the path to secure our financial future. We accomplished much, but there is still much to do. It has been an amazing year and I've loved every minute I've been here. I'm proud to call myself a Minnesotan, and I'm proud to represent GREATER MSP. We are starting to see the momentum build. We have only just begun to see how powerful our actions can be by working together and giving visibility to what makes this region great. I thank you for all your support and look forward to our continued partnership. Yours in regional excellence, W Michael Langley CEO, GREATER MSP FORMATION AND GOVERNANCE GREATER MSP VVe a r e Board of Directors CHAIR accountable. Douglas Baker, Jr., Ecolab, Inc. GREATER MSP is a private public partnership VICE CHAIR funded by business, and city and county Ken Powell, General Mills governments. We are committed to producing a meaningful SECRETARY return on their investments. In early 2011, we received Richard Davis, US Bancorp our 501(c)3 status and completed the formation of our TREASURER organizational infrastructure step one of this commitment. David MacLennan, Cargill, Inc. CEO Michael Langley, GREATER MSP GREATER MSP Mary Brainerd, HealthPartners Marilyn Carlson Nelson, Carlson Board of Directors Our first Board members, most from the Itasca Project's job growth Douglas Carnival, Of Counsel, McGrann Shea, Carnival, Straughn and Lamb task force, agreed unanimously on the need for a robust Board of Mayor Chris Coleman, City of Saint Paul seasoned leaders from both the public and private sectors and from across the 13- county Greater MSP region. Benjamin Fowke, Xcel Energy, Inc. John Griffith, Target Today, our Board of Directors reflects our region's diversity and Commissioner Joseph Harris, unique assets. Members represent businesses from a wide Dakota County range of industries and geographies, and include four county Randall Hogan, Pentair commissioners, and the mayors of Minneapolis and Saint Paul. Virginia Hubbard Morris, All are fully committed to the region's business community and Hubbard Broadcasting its economic success. Jay Lund, Andersen Corporation David Mortenson, Mortenson Construction Partnership Russ Nelson, Nelson, Tietz and Hoye Inc. Advisory Council Laura Oberst, Wells Fargo Bank Established by the organization's bylaws, this Council advises Chris O'Connell, Medtronic, Inc. and supports the GREATER MSP Board of Directors. It is Commissioner Mike Opat, Hennepin County chaired by members of the Board, and includes more than 50 economic development partners, practitioners, investors, and Christopher Policinski, Land O'Lakes, Inc. organizations involved in economic development functions Commissioner Victoria Reinhardt, from throughout the Greater MSP region. Ramsey County Mayor R.T. Rybak, City of Minneapolis Advisory Council working groups oversee and ensure the Commissioner Rhonda Sivarajah, success of our operational protocol, marketing, and regional Anoka County product improvement. GREATER MSP professional team In 2011, we hired our CEO, Michael Langley, a nationally recognized economic development leader, and staffed four organizational teams: Strategy Research, Marketing Communications, Business Investment, and Operations. Joel Akason David Griggs Amy Quaintance Director, Business Investment Vice President, Administrative Assistant Business Investmr_ nt Sara Perlman Barrow Kathy Schmidlkofer Director, Investor Relations Michael Langley Executive Vice President CEO Carolyn Bates Gita Sitaramiah Research Analyst Mary Jo Lewis Director, Executive Assistant Marketing Communications Sara Benedict to Michael Langley Human Resources, Generalist Julia Spencer Micki Mathieson Investment Associate Michael Brown Accounting Manager Vice President, Val Vannett Marketing Communications Ted Mondale Director, Strategy Research Vice President, Strategy Research Gene Goddard Director, Business Investment "As an investor in GREATER MSP, Woodbury is now part of a global marketing and outreach program." Mary Giuliani Stephens, Mayor, City of Woodbury LONG -RANGE GOALS It's time for aggressive o TO ACHIEVE OUR MISSION, we've set aggressive five -year goals and developed the strategies to reach them. Five -year goals Priority -one is to change our region's job growth trajectory, outpace the U.S. rate of employment growth, and meet or exceed job growth rates of competing, high performing peer groups. A total increase of 100,000 jobs in GREATER MSP 100,000 New Jobs By 2016, GREATER MSP will support the creation 25% Margin of 100,000 new jobs in of Excellence GREATER MSP the Greater MSP region. margin of J excellence Our direct activity will stimulate a "margin of Projected excellence" of 25,000 of regional job these jobs. growth 2012 2016 Second, we seek significant For every $1 invested, we will realize: returns on our investors' funding. 50 in new payroll $100 in increased gross regional product a t i te a` N., lit, '-44- A r r v, KEY INDUSTRY SECTORS 1 clrives r c l� „,,,ii -.7 etti.,,,,,_.:-- To create our regional economic development strategy, eleven roundtable meetings '"4 I were held with economic development partners throughout the region (one in F 4 each Minnesota county). Together, we assessed opportunities and assets for job 1 143 growth and business investment. This input, combined with analysis conducted by McKinsey Company, identified five key industry sectors that offer our top growth opportunities. By focusing on these sectors, we expect to see the greatest return on our efforts. In each, our region boasts significant strength in knowledge base, workforce quality, industry infrastructure, and research capabilities. Z HEALTH AND LIFE SCIENCES Bio -tech industries, healthcare providers and payers, 9 IT providers, and medical device companies. If HEADQUARTERS AND BUSINESS SERVICES '"'11►+ Corporate headquarters, creative and professional services, and data centers. 1 i FOOD AND AGRIBUSINESS 1 r R `70 Food processing and production, agrichemicals, and seed production. E .r+ INNOVATION AND TECHNOLOGY R &D centers, software and IT development, advanced manufacturing, and traditional and renewable energy development. 6 FINANCIAL SERVICES AND INSURANCE Financial advisory and insurance companies. We don't Just make business prosper. ,:.114'. N We make history. ,m. u.wcrmwwn�e.. rw..l.ru.rv» W k �.,wpwr.nmmrrwwr.w.w o.•ny.n►er w•p x.v1YCd MWIM.M' tat noon i1M}Itl.Id.sls NOw.Y.M.J1/pp 4 rwn..w.w14.no415.04 oax[n MP (HO p.3. r iG e Nj% GR aMSP' C tt/ Pk, All r a i k ti 1 olio al 2� :r" �-la: I fief R I r ea r I1 j y ir, s 4 j pawdn wL t,. InhY.ro4. M JE#,.wMwa.l.ywlmq.S I P*..fl M.arw -c n.n WNmv.law.Wrn pck..s• 0 w..M1 1 NMcwW.wlm.elwn M..roM.urw A4*at.. .Ow U..rrl'.:al J..cw wnlgvJ mx• bwn WJn..a... MARKETING AND OUTREACH Business and eo le p p prosper here. In 2011, we launched a new brand W 0.1 II.s S. Imams. prosper. 0% identity, Prosper i n an effort to galvanize the region on a single path toward growth. This platform is based on the i i nsight that our region as a whole owns a proud heritage e t of sustained prosperity that continues to benefit the z r y sw air companies and people who call it home. We launched our campaign in October of 2011 and have delivered more than 24 million media impressions. We doubled the average number of views to our website (5,759 per month) and our videos were viewed more than 50,000 times on YouTube. 1 1 Ntik 4 ti', il s' Business and People Prosper her- PRINT/OUTDOOR ADVERTISING We highlighted industries and companies that prosper here by G REATER »MSP w IOW ,CKAr�.t.;r4,.3 111 MI showcasing the talented workforces that drive their success. irl OP. n..t —.1.0 4y1.%IM411 .%4 I 1.1 A(41.1.0 0 I, 'I LAUNCH EVENT AT PANTAGES THEATER cz' We introduced our organization and our business and marketing i■ t, 4 a strategies to the region to help engage partners to work and invest with us, and to become ambassadors for the region. We promoted h the event with more than 1 million media impressions. GREATER MSP WEBSITE Our website, www.greatermsp.org, highlights our regional assets and creates a single destination for prospects to learn about our area. In 21 News. »H.,r Ur" just over two months, we had 14,398 unique visitors, 17,625 total WAWA re 00M.I .W .......,...........11e.......• no tw11lnw•...n,•.... 1..w.•r.......••••••••411.1.6 o r. 111.1.41111110.0.....* visits, and 41,950 page views. SOCIAL MEDIA We launched the GREATER MSP Facebook site, Twitter feed and YouTube channel, which are already raising awareness across the U.S. and building __.._..a_a regionalism at home. CC GREATER MSP" ai YOUTUBE Several videos showcasing the Greater MSP Q A region were completed and are enticing You Tube .11 viewers to learn more about our region. Find them at YouTube /greatermsp. h re. u r COLLATERAL We finished our first regional brochure, which is being distributed in 2012. It is also available at www.greatermsp.org. OUTREACH —7 '(7 t,,r In 2011, GREATER MSP team members began ambitious outreach efforts, ca k promoting our region and initiating relationships with business leaders and i site selection consultants worldwide. Visits included Charlotte, Chicago, GREATER MSP" 1. Atlanta, and Portland; as well as Tokyo and Harbin, China. Our teams also met with delegations from Japan, France, Winnipeg, Thailand, and Austria. 2011 PROJECT COMPLETIONS We're roud to play our part p GREATER MSP IS COMMITTED TO DRIVING JOB GROWTH through a mix of attracting new companies to the region, retaining companies who have options to grow elsewhere, and helping companies located in the region to expand. In every case, our success is due to the great work of our partners. We believe that 80% of job growth will come through retention /expansion efforts and 20% will come through attraction. Though only operational for a few months in 2011, GREATER MSP was successful in partnering with regional economic development organizations to realize job growth in the region. We're confident that these wins represent just the beginning of what's to come. Attraction Retention Five 9's LLC will develop and own The Connexion, Polaris made key product acquisitions in a Multi- Tenant, carrier neutral data center in 2011 with the purchase of North Carolina Eagan. The result of a concerted effort led by the based Indian Motorcycles and North Dakota City of Eagan to attract data centers, this new data based GEM. When it needed to consolidate its center will add Tier 3 Data Center space to this administrative and showroom space, GREATER underserved market to accommodate corporate MSP was able to assist Polaris in its initial data centers, colocation and cloud companies, and site search, resulting in a new lease of 30,000 disaster recovery end users. Additionally, the new square feet of secure space in Plymouth. data center will bring high capacity connectivity and enhance the region's broadband infrastructure. GREATER MSP, working with DEED, was able to help the company leverage key provisions of the recently passed Data Center Incentive legislation and help it make contacts in the region. —7 III 1;44 G:�.. gal It j 1 *ter y ,s, T ms's f .11t4t. r -000/'* SUCCESS DATA FIVE 9'S LLC IVE 9'S LL Jobs Created: 25 to 50 Square Footage: 138,000 Capital Investment: $50 million POLARIS to $75 million POLARIS INDUSTRIES INC.* Jobs Created: 80 Square Footage: 30,000 Capital Investment: $500,000 li UNISON COMFORT TECHNOLOGIES* Jobs Created: 83 wow_ 0 'V: rym Square Footage: 30,000 Capital Investment: $12,500,000 I i 4 CHART, INC. .m.�i N�rt Jobs Created: 100 e Square Footage: 141,000 Capital Investment: $4 million v. POLAR SEMICONDUCTOR, INC.* T Jobs Created: 300 w Square Footage: 98,000 Capital Investment: $90,000,000 y PRIME THERAPEUTICS* Jobs Created: 300 n Square Footage: 100,000 W Capital Investment: N/A *Data based on estimates provided. 2011 PROJECT COMPLETIONS i i 1 1 r "11 �_.,00_..,._...�.- 0_00.0. ..,.c s. 0000 r s l* CHART, INC. PR Jl`11E 'trlE ,r\ ?EJ' Chart, Inc., located in New Prague, needed to expand its operations to meet growing demand. With operations Expansions in many locations throughout the US, the company had many options. A critical factor in its decision Prime Therapeutics realized an opportunity to grow was the ability to find available workforce. When a and saw great promise in the region's workforce. location couldn't be found in New Prague, GREATER With three locations in the area, the company MSP helped find a location in Owatonna that met the needed more space, and found it in a nearby company's operational needs, and we informed the vacant building. GREATER MSP partnered with company about workforce availability. Working with DEED to create a financial assistance package to DEED, GREATER MSP was able to help the company help cover the costs of facility renovations. access Minnesota Investment Funds and JOBZ funds to aid in the expansion. Plar •ir onducto F Inc. L.. T tEGN a COMFOA 0 fr411."."1"1. k a o, b s 1 t° xz UNISON COMFOR? TECHNOL• Unison Comfort Technologies, a manufacturer of innovative commercial and industrial HVAC Polar Semiconductor, Inc. wanted to double systems, wanted to acquire its headquarters production of its high performance automotive and building. GREATER MSP worked with the City electronic IC products at its Bloomington facility. of Minneapolis and the state to make public GREATER MSP worked with the company and the city infrastructure improvements made the location to allow Polar to acquire sewer access credits. This more efficient for the company. saved the company considerable expense and time, and allowed for timely acquisition of building permits. "The programs that GREATER MSP offered helped my client bridge a significant financial hurdle in order to expand in Eagan. Its quick response was extremely helpful and greatly appreciated in bringing this transaction together." Raymond J. Reese, Senior Vice President, CBRE, Inc. INVESTMENT DEVELOPMENT CAMPAIGN There's no telling what we'll do together. 1 q r .;s In 2011, GREATER MSP partnered with Resource kW J Development Group to help lead our investment i' Ay. rwil Z.._ d evelopment process. More than two dozen business and ,A public leaders stepped forward to support the organization's formation r--.: and start -up. Our aim was to raise $2.8 million for 2011 operations. We exceeded our goal by raising nearly $3.0 million. We are grateful to these companies, cities and counties for joining us to advance the region. ,..a .1...- .,.p j 1111 l .44 fi -i4 ANNUAL BUDGET ALLOCATION GOAL DRIVE REGIONAL COLLABORATION 10% MARKETING AND BRANDING 50% NEW BUSINESS DEVELOPMENT 20% EXISTING INDUSTRY SUPPORT 20% i RP i In October 2011, we launched a three -year, $15 million I investment campaign that will fully fund GREATER MSP in its efforts to stimulate regional economic development. "Successful fundraising depends on leadership's ability to create a shared vision for the campaign. Rob Radcliff, Resource Development Group di, t y Faribault Foods t M "y 1 i': aiiiiiiii 7 .:.6., w, viva 2011 FINANCIAL RECAP (year ending December 31, 2011) INCOME 2011 ACTUALS 2011 BUDGET BUDGET STATEMENT (000) (000) (000) Revenues $2,977 $2,800 $177 Expenses $2,436 $2,570 $134 Reserve $541 $230 $311 These numbers represent an annual run rate of $4.0 million. In accordance with sound financial management practices, we are building an operating reserve. Through conservative expense management, we added $400K of marketing expenditure not originally budgeted (included in actual expenses, above). BALANCE SHEET (000) "With the collective efforts of ASSETS GREATER MSP and its supporters, Current Assets $1,349 businesses and people around the Fixed Assets $112 country and the world will want to learn more about what makes LIABILITIES AND NET ASSETS this such a great place to live Current Liabilities $230 and do business." Temporarily Restricted Net Assets $690 Laura Oberst, Executive Vice President, Wells Fargo Bank Net Assets $541 2011 GREATER MSP INVESTORS 2011 INVESTORS Andersen Corporation Land 0' Lakes, Inc. Anoka County City of New Prague Capital City Partnership Medtronic, Inc. City of Apple Valley City of Prior Lake Cargill, Inc. Mortenson Construction City of Belle Plaine City of Rosemount Carlson The Mosaic Company City of Bloomington City of Saint Paul C.H. Robinson Nelson Tietz and Hoye, Inc. City of Burnsville City of Savage Worldwide, Inc. Pentair, Inc. City of Chaska City of Shakopee Ecolab Target Corporation City of Eagan City of Woodbury General Mills US Bancorp City of Edina Dakota County Great River Energy Wells Fargo Bank City of Elko New Market Hennepin County HealthPartners Xcel Energy, Inc. City of Jordan Ramsey County Hubbard Broadcasting, Inc. City of Lake Elmo Scott County City of Minneapolis Washington County "GREATER MSP allows all of us to sit at the table together and to think regionally and globally to ensure our continued growth and success." Mike Opat, Chair, Hennepin County Board of Commissioners IN -KIND INVESTORS Capital City Partnership Minneapolis Foundation General Mills Minneapolis Regional Chamber of Commerce General Office Products Minnesota State Chamber of Commerce Economic Development Services, Inc. Minnesota Wild H. Larson Photography Nelson Tietz Hoye, Inc. Haberman Associates Padilla Speer Beardsley, Inc. Haskell's Phillips Distilling Company Hubbard Broadcasting, Inc. Sage Hunter Itasca Project St. Croix Promotions KPMG LLP Sullivan Cotter and Associates, Inc. McKinsey Company Tunheim McGrann Shea Carnival Straughn and Lamb Wells Fargo Bank Metropolitan Airports Commission Unisys PARTNER ADVISORY COUNCIL MEMBERS John Griffith, Co -Chair Janna King, Economic Development Services, Inc. Target Corporation Todd Klingel, Minneapolis Regional Chamber of Commerce Russ Nelson, Co Chair Matt Kramer, Saint Paul Area Chamber of Commerce Nelson, Tietz and Hoye Inc. M Curt Larson, City of Blaine Margaret Anderson Kelliher, Minnesota High Tech Association Kim Lindquist, City of Rosemount Megan Barnett Livgard, City of Monticello Mark Lofthus, Minnesota Department of Collin Barr, Ryan Companies Employment and Economic Development Cecile Bedor, City of Saint Paul Scott Marquardt, Southwest Initiative Foundation Denise Beigbeder, Ramsey County Tim Mulcahy, University of Minnesota Bill Blazer, David Olson, Minnesota Chamber of Commerce Minnesota Chamber of Commerce /Grow MN! Ewald Petersen, Commissioner, Sherburne County Paul Cerkvenik, MN Private Colleges Mark Phillips, Commissioner, Minnesota Department of Katie Clark, Minnesota Trade Office Employment and Economic Development Patrick Connoy, Hennepin County Cathy Polasky, City of Minneapolis Mary Rothchild, Caren Dewar, Urban Land Institute Minnesota Minnesota State Colleges and Universities Marlys Dunne, Xccent, Inc. John Schlagel, Schlagel Manufacturing Wayne Elam, Commercial Realty Solutions Janelle Schmitz, City of Woodbury Chris Eng, Chisago County Gary Shelton, Scott County Steve Fisher, Medtronic, Inc. John Sullivan, Carver County Pat Born, Metropolitan Council Anders Tolisten, Tollridge, Inc. Don Haller, Connexus Energy Dale Wahlstrom, Jeff Hamiel, Metropolitan Airports Commission Lifescience Alley /Bio Business Alliance of Minnesota Jon Hohenstein, City of Eagan Charlie Weaver, Minnesota Business Partnership Jim Hovland, Mayor, City of Edina Gene Winstead, Mayor, City of Bloomington Scott Johnson, Xcel Energy David Wright, US Bancorp Bob Kill, Enterprise Minnesota Heartfelt thanks. GREATER MSP Minneapolis Saint Paul Regional Economic Development Partnership 4j�11t. 4, "It was time for f 4' ice- 4. our region to come 4,4 together and celebrate 1 our strengths and 't'" market them to the world. N,ckt Christopher Policinski, CEO and President, Land 0' Lakes, Inc. Ving St, Crew' H pam of am W agtn9 p,erce Scott Dst�ota y r• 1 y. i Al, s 1 y 1444III44 01111011111111.161111"2214 poor poi. p.so. t t x v f ''R' 7 O. il 9 t* v '•,,,"..,-5,-g!.. s"`.as ti. 2+!'.T.'aL 1. rte 1,?.* ej. t 'i Website: www.greatermsp.org f w wittef' Email: businessdeve lopment@greatermsp.org You Tube ww w. twitter.com /greatermsp; Zoom Prospector /GIS site: www.greatermspprospector.com www.facebook.com/ reaterms The handle is @GreaterMSP 651 North Robert g p youtube.com /greatermsp 400 North Robert St., Suite 1520, Saint Paul, MN 55101 LISTING REPORT 4/30/12 Listing: Rosemount Commercial Client: City of Rosemount Client Contact: Kim Linguist Acreage: 2.45 ac 6 parcels Location: Hwy 3 Description: Vacant/Redevelopment Land Broker Contact: Brian Pankratz, Richard Palmiter Listing Price: Best Offer Listing Expiration: 10/09/2012 1 List data on Loopnet, Costar, MNCAR, CBRE's Internal HUB Completed 2 Install Onsite Signage Completed 3 Brochure Completed 4 5 E- Marketing (Campaign Logic Program) Local LSG and CBRE databases 2/16/12 6 Analyze Campaign Logic Report Completed 7 Update Brochure As Needed 8 9 10 On•oin• In•uir /Lead Follow U• On•oin• Contact User /Company Date Comments 1 Sandy Barn CBRE 11/2/11 Sent brochure 2 Tom Simon CBRE 11/8/11 Sent brochure 3 John Ryden CBRE 11/8/11 Sent brochure 4 Steve Nielson Welsh 11/17/11 Discussed site sent brochure 5 Luke Appert Northmarq 11/18/11 Discussed site sent brochure 6 Jim DePetrio CBRE 11/20/11 Discussed site sent brochure 7 Nick Ziegelmann CBRE 11/20/11 Discussed site sent brochure 8 Kari Gill 12/1/11 Discussed site sent brochure 9 Jan Just Kidding Around 12/2/11 Discussed possible daycare location sent brochure 10 Don Twombly 12/22/11 Discussed possible carwash location sent brochure 11 Kari Gill Dakota County 1/4/12 Discussed the site further sent brochure 12 J. Decesare 1/10/12 Sent brochure 13 Mike Korsh KAR Realty 1/24/12 Sent brochure 14 Ross Hedlund Frauenshuh 2/9/12 Sent brochure 15 Matt Alexander KAR Realty 2/16/12 Sent brochure 16 Jeff DeCesare 3/9/12 Seeking 1031 exchange properties sent brochure 17 Eric Curtis 3/12/12 Sent brochure 18 Mike Byron 4/13/12 Discussed possible site options- sent brochure 19 Lee Henning 4/17/12 Sent Brochure 20 Patrick Stoffregen 4/17/12 Inquired about sites discussed the properties sent brochuie 21 22 23 24 25 32 33 34 35 36 37 38 Comments Date 1 Met with Port Authority revising brochure /recommending pricing 1/17/12 2 3 4 I CBRE Minneapolis /St. Paul Industrial www.cbre.com /research First Quarter 2012 The first quarter of 2012 brought fluctuations Industrial sale activity in the 1st quarter of in terms of economic activity. Employers 2012 was limited to a handful of user driven pulled back sharply on hiring last month, a sales and some smaller investment deals. reminder that the U.S. economy may not be Institutional investor demand continues to growing fast enough to sustain robust job grow for larger core investment opportunities; growth. The unemployment rate dipped, but with some of the 1st quarter sales pushed to primarily because more Americans stopped the 2nd quarter, and an increase of product in looking for work. The Labor Department says the market, the 2nd quarter should see a Quick Pats the economy added 120,000 jobs in March, modest pickup in industrial sale activity. down from more than 200,000 in each of the Change from last previous three months. Despite the lag in The Northwest submarket was the best Current Yc Qti recent job growth, the aggregate total of performer during the first quarter, posting a 858,000 jobs added since December is the 209,548 SF of positive net absorption due to a Direct Vacancy 7.1 /o best four months of hiring in two years. Also, few larger leases signed in Brooklyn Park and Net Absorption 356,802 t the government reported consumers increased Rogers. their spending in February by the most in g Warehouse Rate $4.54 4 seven months, which is raising expectations The Minneapolis /St. Paul Metro 1st quarter Blended Rate $6.84 1 4 the economy will grow a bit faster in the indices for all industrial buildings showed a second quarter. positive net absorption of 356,802 SF. The Construction 671,909 4 4 multi- tenant net absorption showed a positive While construction finally picked up at the end 227,752 SF. Lease rates have dipped slightly, The arrows are trend indicators over the of 2011, we start the new year with only one specified time period and do not represent a while leasing activity has remained fairly positive or negative value. (e.g., absorption completed project; an 80,000 square -foot could be negative, but still represent a constant. Although we did not see the big positive trend over a specified period.) expansion to the current Black Box facility in Maple Grove. In addition, there are 4 new boost in positive activity we had hoped for in buildings totaling 337,509 SF that have the 1St quarter, an adequate supply of broken ground in the first quarter. Adding construction and steady increases in positive Hot Topics these new developments to the projects that net absorption paired with a positive broke ground in 2011, we have a total of projection in job growth; we hope to make Started 2012 with over 350,000 671,909 SF of new construction to be further progress in economic recovery completed in 2012. throughout 2012. SF of positive absorption 80,000 square -foot addition for Direct Vacancy Rate vs. Warehouse Rate Warehouse Rate (t1t� $4.54 Direct Vacancy Rate MI 7. Black Box completed in Maple Grove Over half a million SF of new 8% $s construction to be completed in y° the first half of 2012 6% The lack of large blocks of 5% IIN 54 lit functional space have driven the r 4'/° development of future sites; will a 35'° S 3 1 lead to construction in the coming 2v° quarters 1S Availability rates have decreased ay° 52 slightly, reflecting increased 1006 1007 1'49 1009 1010 1011 1012 leasing activity CBRE 2011, CBRE Submarket Statistics Rentable Direct Vacancy Total Vacancy Under Avg. Asking Direct Avail. Total Avail. 3 Market Net Absorption SF Whse Rate B Area Rate Rate Construction SF SF/YR Rate Rate c 0 Northwest 60,788,499 7.4% 7.7% 209,548 0 54.81 9.9% 10.5% o t Southwest 68,699,755 7.9% 8.2% 118,640 180,000 54.91 12.2% 13.1% gn South Central 49,963,496 8.5% 8.7% 56,281 63,000 54.62 12.2% 12.6% e c St. Paul 20,227,822 8.7% 8.7% 33,944 126,000 54.00 9.8% 9.8% B o. Minneapolis 30,453,399 5.1% 5.1% (44,794) 0 53.96 8.8% 8.9% 0 0 North Central 48,658,896 6.1% 6.5% (81,142) 274,509 54.63 8.4% 9.5% East 13,968,590 4.8% 5.1% 39,870 28,400 S5.32 5.5% 6.3% Midway 33,465,994 6.4% 6.5% 24,455 0 S4.09 10.2% 10.9% Building Type Bulk Whse 65,080,024 8.5% 8.8% 271,832 120,000 54.07 12.8% 13.3% Office Whse 137,471,965 6.7 7.0% 209,300 551,909 S4.35 10.0% 10.8% Office Showroom 35,130,271 10.6% 10.8% (131,339) 0 *56.84 13.7% 14.1% Other industrial 88,544,191 5.9% 5.9% 7,009 0 54.01 8.4% 8.5% Total 326,226,451 7.1% 7.4% 356,802 671,909 $4.54 10.2% 10.9% US III 8.3% Minnesota III 5.6% Unemployment Rate MSP ME 53% The national rate decreased again this quarter from 9.1% last quarter to 8.3%. Both the 10.0% Minnesota and Minneapolis rates followed this 9 trend as well, as they decreased from 5.9% to 5.6% and from 5.4% to 5.3% respectively. As we 80 0 move into the spring and summer seasons, a 7.0% decrease in metro unemployment is expected, as the rates are not adjusted for seasonal 6.0° %0 employment. 5.0% f 4.0% 3.0% 2.0% 0107 0108 0109 0110 0111 0112 T zA S) 0 0 3. CBRE Page N 0 2011, CBRE tJ Net Absorption Net Absorption 2012 YTD NM 356,802 1 st quarter showed a positive net absorption of 356,802 square feet. 8,000 Although the economy has leveled off, this was still our market's 7'h 3 7,000 consecutive quarter of positive absorption Major positive absorption z 6,000 this quarter was predominately concentrated in the Northwest and -°a Southwest submarket due to a large lease signed by Blanks USA in c 5,000 Brooklyn Park as well as a lease done by Hysitron in Eden Prairie. The v 4,000 North Central and Minneapolis submarkets showed negative 3,000 absorption, while the Midway and St. Paul markets were relatively la 2,000 inactive. 3 a 1,000 There is an increasing number of active users in the market, but there C 0 may be a lack of adequate space to accommodate them all. This trend o -1,000 2865 200L- 2008 -I 281.9-- 2A}}- -2A}2- will continue to increase construction numbers in the coming quarters. -2,000 en Mg 80,000 Construction Completions Spec 0 There was one project totaling 80,000 SF completed in the 1St quarter. 2,500 This build -to -suit project was an addition to the current Black Box facility in Maple Grove. 4 new projects totaling 337,509 SF broke 2,000 ground in the first quarter; In addition to the construction projects that were underway from the end of 2011, there is a total of 671,909 SF of 1,500 construction projects scheduled to finish in 2012. The drastic recent increase in construction will hopefully spark more positive activity in 1000 the new year. 500 0 1 2005 2006 2007 2008 2009 2010 2011 2012 Direct Vacancy 71% Direct Vacancy vs. Availability Direct Availability 11111 10.2% Direct availability fell to 10.2% from last quarter's mark of 10.7 This is also a decrease compared to the rate of 11.2% posted one year D 1.0;D ago. Similarly, vacancy decreased slightly to 7.1% this quarter, which 10.0 °0 is a few point drop from the 7.5% posted one year ago. A decrease in both marks reflects the fact that more space continues to be absorbed. 9.0 °0 8.0 °0 5.0 °-o 4.0°, %0 T i� 2005 2006 2007 2008 2009 2010 2011 2012 0 c a CBRE Page 3 N 2011, CBRE N MarketView Minneapolis /St. Paul Industrial Asking Lease Rate Average of Asking Lease Rates for each property Includes Direct the associated Space acei Soave. Top Minneapolis /St. Paul Transactions Includes Direct Available Space unless otherwise indicated Size (Sq. Ft.) Tenant /Buyer Location Completions Rentable Building Area completed during the 1 14,000 (Lease) Delkor 4300 Round Lake Rd, Arden Hills period Market Coverage 102,000 (Lease) Group 0 2360 Pilot Knob Rd, Mendota Heights Existing completed cornpetilive properties Net Absorption 92,000 (Lease) Blanks USA 9200 Xylon Ave N, Brooklyn Park The change in Occupied Sq. Ft. during the period for all Existing properties Base Inventory, Base or Building 82,000 (Lease) MinnPar 5251 Program Ave, Mounds View Square Feet The sum of the Rentable Building Area for all 80,000 (Renewal) RFG Distributing 7400 49'h Ave N, New Hope competitive properties Occupied Square Feet 70,000 (Lease) TREND 451 Industrial Blvd, Minneapolis Rentable Building Area less Vacant Space Under Construction Buildings that have begun construction as 0. 60,000 (Lease) DIVERSIFIED 2871 Service Rd W, Eagan evidenced by site excavation or foundation work, and is on -going Available Space Submarket Map Space being marketed to potential occupants, in Rentable Sq. Ft. (direct and sublease combined, unless otherwise indicated) fir A Availability Rate n Available space as a percentage of the Base Inventory or Building Sq. Ft r Vacant Space Available Space that is physically vacant, in p Rentable Sq. l� Vacancy Rate itaczrmo ss° a Vacant space as a percentage of the Base Inventory or Building Sq. Ft 4 W w ;2:c:1 jilt MI Ire c".. -IA SS 1r IM t7 In su I» tee' 1i For more information regarding the Copyright 201 1 CBRE Statistics contained herein may represent o different data set than that used to generate National MarketView, please contact: Vaconcy and Availability Index statistics published by CBRE Corporate Communications or CBRE's research and Tom Hayhoe, Researcher econometric forecasting unit, CBRE Econometric Advisors. Information herein has been obtained from sources believed CBRE C B R E reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. 0 is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, 4400 W 78'^ St, Minneapolis assumptions or estimates used are for example only and do not represent the current or future performance of the market T. 952.924.4604 F. 952.831.8023 This information is designed exclusively for use by CBRE clients, and cannot be reproduced without prior written permission of CBRE. Tom.Hayhoe @cbre.com CBRE Minneapolis /St. Paul Retail www.cbre.com /research First Quarter 2012 First quarter of 2012 was relatively uneventful. The first quarter of 2012 saw less movement The Dow Jones Industrial average moved than previous quarters in the restaurant above 13,000 for the first time since 2008, and industry, but there were a few notable changes. jobs reports have predominantly been positive. Minnesota -based investment group TSSN Inc. The real estate market in the Midwest seems to purchased The Melting Pot restaurant, a Quick Staffs be on the rise, and most believe the worst is downtown Minneapolis hotspot, out of behind us. bankruptcy, and Cowboy Jack's Bar and Change Restaurant announced it would be opening a 0 T here were few major retail transactions that Current YL Qtt took place in the first quarter of 2012, but one new location in downtown Minneapolis near a Vacancy 8.1% 4 notable transaction was the purchase of the the Target Field. This is Cowboy Jack's fourth location in the metro area. Lease Rates $16.91 t t 116,000 square foot Woodbury Commons Net Absorption 57,968 SF it 4 retail center. The property was part of a two- Wal -Mart again led the way for new Construction 1.59M t property sale between Inland Real Estate construction this quarter with almost 500,000 Corporation and Robert Muir Company. The square feet between its new Brookdale, 'The arrows are trend indicators over the specified time period and do not represent a two sites were purchased by Inland for a sum of Burnsville and Lakeville sites. These three sites positive or negative value. (e.g., absorption could be negative, but still represent a 10.3 million. are the first of four that Wal -Mart will deliver in positive trend over a specified period.) Best Buy made headlines in the first quarter 2012. with the announcement that it would be closing First quarter absorption was positive again at its doors on 50 stores across the country. Six of 57,968 square feet, extending the positive Hot Topics the stores to be closed are in Minnesota. They absorption trend to its seventh straight quarter, also announced that they would be downsizing another clear sign that the commercial real Best Buy to close 50 stores across the U.S. their Edina store, which was their top store in estate market is recovering. The vacancy and the country in 2009. availability rates were down slightly for the Cowboy Jack's to open new location in Uptown quarter at 8.1% and 9.2% respectively. Wal -Mart breaks ground on new Net Lease Rate in $16.91 Lakeville store Vacancy Rate vs. Net Lease Rate Vacancy Rate .111 e.1% 10% $22 Old Country Buffet announces closing of 81 locations 9% 8% Target brings Jeff Jones aboard as $20 new Chief Marketing Officer 7% Governor fights to get Vikings stadium 6% bill through legislation a 5% $18 4o /a 3% $16 2% 1% 0% $14 CBRE 1005 3005 1006 3006 1007 3007 1008 3008 1009 3009 1010 3010 1011 3011 1012 2011, CBRE Submarket Statistics Avg. Asking Absorption 3 Market Rentable Area Vacancy Rate Under Construction SF Lease Rate Availability Rate 3 SF SF/YR o A.V. Lakeville 3,499,383 4.1% 6,899 160,000 S20.04 10.3% o Brookdale 3,780,561 23% (8,668) 442,000 $12.65 24.5% N Burnsville 3,486,605 9.2% 23,826 180,000 $18.71 9.9% Calhoun 1,258,636 8.3% 0 30,000 $26.12 8.3% c Coon Rapids 4,321,506 5.4% 6,300 6,000 $16.35 6% 5 Eagan /IGH /H 1,796,232 5% 4,790 135,000 $14.13 8.6% Eden Prairie 3,713,103 3.6% 0 227,000 S15.77 3.8% Maple Grove 5,331,416 4.7% 16,228 120,000 $14.47 5.3% Maplewood 3,563,352 7% 2,128 0 $18.27 7.7% Mpls CBD 2,297,199 13.3% 0 0 $22.09 14.2% Northtown 3,114,465 11.2% (3,110) 0 $11.35 12% Ridgedale 5,652,096 5.4% (8,054) 200,000 $14.09 5.6% Rosedale 5,206,953 6.9% 1,447 21,000 S18.38 7.6% Southdale 9,553,570 6.6% 5,385 32,000 S25.79 6.8% St. Paul 1,413,147 9.5% 10,260 2,000 S13.35 9.6% West St. Paul 1,296,692 10.5% (3,200) 0 $12.05 10.8% Woodbury 4,684,062 11.9% 3,701 0 S8.86 12.8% Total 63,968,978 8.1% 57,968 1,589,000 $16.91 9.2% U.S. IN 8.3% Minnesota IN 5.6% Unemployment Rate imp N. 53% 10.0% The national rate decreased again this 9.0% quarter from 8.6% last quarter to 8.3 Both the Minnesota and Minneapolis rates 8.0% followed this trend as well, as they decreased 7.0% from 5.9% to 5.6% and from 5.4% to 5.3% respectively. As we move into the spring and 6.0% summer seasons, a decrease in metro 5.0% unemployment is expected, as the rates are not adjusted for seasonal employment. 4.0% 3.0% 2.0% T 1007 1008 1009 1010 1011 1012 9 c 9 CBRE Page 2 EI N O 0 2011, CBRE N Absorption Absorpfion 57,968SFYTD 1,800 The first quarter 2012 ended with a positive 3 57,968 square feet of space being absorbed 1,400 in the Minneapolis /St. Paul market, keeping v° absorption in the black for the seventh 1,000 straight quarter. Starting the year out with v O r positive absorption is a good sign and is 600 ii hopefully leading us into a third straight year c 200 of positive absorption. The overall 2011 xi m ill year-end absorption was a positive 290,418 o -200 1 square feet. -600 2006 2007 2008 2009 2010 2011 2012 YTD Construction Completions Completions MI 72,800SFYTD 2500 There were 72,000 square feet of space delivered in the first quarter of 2012, with 2000 more expected in the second quarter of 2012. There is currently almost 1.6 million 1500 square feet of retail space under construction in the Minneapolis /St. Paul market. e 1000 500 0 i .1. II NOM 2006 2007 2008 2009 2010 2011 2012 YTD Vacancy WM 8.1% Vacancy vs Availability Availability 9Y, 11.0% Availability and vacancy both decreased in 10.0% the first quarter of 2012. Availability was 9.0% 1________ down from 9.3% to 9.2% and vacancy was down from 8.2% to 8.1 Although these 8.0% numbers are only slightly lower than last quarter, they are notably better than they 7.0 were a year ago. This is continued evidence 6.0% that the market is improving. 5.0% 4.0% T 2006 2007 2008 2009 2010 2011 2012 YTD 0 c 0 CBRE Page 3 N 2011, CBRE N MarketView Minneapolis /St. Paul Retail Average Asking Lease Rate Rate determined by multiplying the asking net Top Minneapolis /St. Paul Transactions lease rate for each building by its available space, summing the products, then dividing by the sum of the available space with net leases Size (Sq. Ft.) Type Tenant /Buyer Location for all buildings in the summary. 116,000 Sale Inland Real Estate Group Woodbury Commons, Woodbury Net Leases Includes all lease types whereby the tenant pays an agreed rent plus most, or all, of the operating 114,000 Sale Madison Equity Hillcrest Shopping Center, St. Paul expenses and taxes for the property, including utilities, insurance and/or maintenance 38,000 Lease Whole Foods Downtown, Minneapolis expenses. Market Coverage 1 5,000 Lease Arhaus Galleria, Edina Includes all competitive retail buildings 30,000 square feet and greater in size. 14,000 Lease Schmitt Music Southdale, Edina Net Absorption The change in occupied square feet from one period to the next. 12,000 Lease Ulta Shops at Lyndale, Richfield Net Rentable Area The gross building square footage minus the 7,000 Lease Pizza Ranch Shakopee Crossroads, Shakopee elevator core, flues, pipe shafts, vertical ducts, balconies, and stairwell areas. Occupied Square Feet Submarket Map Building area not considered vacant. Under Construction Coon Rapids 0 35 Buildings which have begun construction as i ii 94 miles evidenced by site excavation or foundation work. Maple Direct Available Square Feet Grove Available Building Area which is either physically J vacant or occupied. Does not include sublease IL Northtown 35 35E space. p Maplewood 69a Total Availability Square Feet Available Building Area which is either physically Brookdale Rosedale vacant or occupied. Includes sublease space. jj( 94 J 69 Direct Vacant Square Feet Ridgedale Existing Building Area which is physically vacant Minneapolis 39 ter or immediately available. Does not include sublease or shadow space. 494 Calhoun St. Pall Total Vacant Square Feet t\ Existing Building Area which is physically vacant vie So West St. Paul sli Woodbury or immediately available. Includes sublease and �"r l t w,r� t st. ra, h,rl shadow space. 1 Normalization Eden Eden Prairie 35W Due to a.reclassification of the market, the base, 35E number and square footage of buildings of Eagan V previous quarters have been adjusted to match Mississippi River the current base. Availability and Vacancy figures for those buildings have been adjusted in previous quarters. Bumsville APPIe Valley- j o Lakeville For more information regarding the MarketView, please contact: Copyright 2012 CBRE Statistics contained herein may represent a different data set than that used to generate National Andrew Petkoff, Research Vacancy and Availability Index statistics published by CBRE Corporate Communications or CBRE's research and CBRE econometric forecasting unit, CBRE Econometric Advisors. Information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we hove not verified 5 and make no guarantee, warranty or representation 4400 West 78th St, Minneapolis CBRE about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, T. 952.924.4885 F. 952.831.8023 assumptions or estimates used are for example only and do not represent the current or future performonce of the market. This information is designed exclusively for use by CBRE clients, and cannot be reproduced without prior written permission andrew.petkoff @cbre.com of CBRE. CBRE r t Minneapolis /St. Paul Office www.cbre.com /research First Quarter 2012 Entering the new year the U.S. continued square feet on the southeast side of Shady to show economic signs of improvement. Oak Rd and Highway 62 in Eden Prairie. The S &P 500 Index generated 12.6% Lastly St. Jude Medical will begin return for the quarter, consumer construction on its 275,000 square -foot confidence reached a four year high, and expansion in Plymouth early this year. employment growth was strong January and February posting 284,000 and Office leasing activity was moderate first 227,000 net job gains. The end of the quarter 2012. Large and small tenants were Quick Stats quarter tapered off as March only added most active with a shortage of mid -size Change from last 120,000 jobs nationally; nevertheless job users shopping the market. Among the Current Yr. Qtr. gains throughout the quarter were enough smaller tenants, class B and C properties to drive down the unemployment rate to a experienced the most traction. Longer term Direct Vacancy 18.7% 4 I three year low of 8.2 leases are being explored by an increasing Total vacancy 19.4% j j number of tenants looking to lock in on Locally, the Twin Cities followed suit as discounted rates while landlords are still Lease Rates $11.77 4 office market indicators improved over the aggressively filling space. In some quarter. From December to February circumstances where space is limited, Net Absorption la 24,000 SF t t Minnesota has added 32,300 jobs, landlords are scaling back on concessions. Construction 0 SF a bringing the total Minnesota jobs Looking forward we can expect the market recovered to 81,400; over half of the to remain in the tenants advantage until the 156,300 jobs lost from the recession. employment growth kicks into overdrive. Education and the health service lead all The orrows are trend indicators over the specified time period and do not represent a sectors adding 7,000 jobs during January Class A space is tightening due to the flight positive or negative value. (e.g., absorption could be negative, but still represent a and February this year. to quality by tenants relocating from class B positive trend over a specified period.) properties in the downturn. Combined with The Metro office market continues its slow lack of new supply, larger class A blocks of Hot Topics progression in the recovery phase. space are all but expended. Metro -wide Construction continues to be at a standstill there are only four existing class A blocks of with no speculative projects underway space which can accommodate a 150,000 Target Corp is planning on moving metro -wide. On a positive note, Target square -foot user. Minimal options in the 3,900 workers from downtown Corp. has confirmed its plans to build two market have pushed larger tenants towards Minneapolis to its Brooklyn Park 325,000 square -foot office buildings on new build -to -suit construction. This trend its Brooklyn Park campus. The first should continue until vacancy in multi Campus where they plan to build building will begin construction this tenant buildings recovers to healthy levels. 650,000 SF of additional office space summer. United Health Group is currently Once multi- tenant buildings recover, new by2015 underway on a 350,000 square -foot office speculative development can start bringing Dorsey Whitney Law Firm is looking tower on their Minnetonka campus and is more supply to the market. Until then, planning on constructing an additional limited supply and rising demand should for 300,000 SF of space in the four buildings consisting of 1.5 million buoy real estate fundamentals in 2012. Minneapolis CBD Lease Rate ES $11. The Twin Cities Metro has seen an Vacancy Rate vs. Lease Rate Vacancy Rate IN 18.7% increase in office investment properties for sale 20% $16 18% Global economic growth remains weak 16% $14 Increase in build -to -suit construction 14 while no speculative construction is on 12% s12 the horizon 10% 8% $10 6% 4% $8 C B R E 1007 3007 1008 3008 1009 3009 1010 3010 1011 3011 1012 2011, CBRE Submarket Statistics Rentable Speculative or Multi- tenant Avg. Asking Lease Rate Market Area Direct Vacancy Rate Total Vacancy Rate Absorption SF Under Construction SF SF/YR Availability Rate Metro Overall 67,106,026 18.7% 19.4% 24,044 0 $11.77 19.7% Class A 33,777,414 14.7% 15.8% 123,868 0 513.60 16.3% Class B 24,062,376 23.0% 23.4% (91,536) 0 $10.74 23.4% .Z► Class C 9,266,236 22.4% 22.6% (8,288) 0 $9.18 22.6% S Suburban 36,157,272 18.9% 19.3% (42,227) 0 $12.17 19.7% m ClassA 15,808,657 17.6% 18.0% 63,224 0 $14.11 18.7% G Class B 14,620,943 19.0% 19.3% (99,774) 0 511.38 19.4% N Class C 5,727,672 22.3% 22.8% (5,677) 0 58.65 22.8% y 494 Corridor 16,990,564 17.2% 17.5% 27,425 0 $13.06 17.6% T a ClassA 8,088,128 16.1% 16.5% 64,635 0 $15.61 16.7% C 0 Class B 6,731,583 16.1% 16.2% (40,160) 0 $11.87 16.2% ClassC 2,170,853 24.7% 25.1% 2,950 0 58.62 25.1% r"a 394 Corridor 8,703,587 17.8% 18.5% (66,260) 0 512.60 193% Class 4,044,168 16.0% 16.9% 5,021 0 514.69 18.6% Class B 3,504,824 20.3% 20.9% (60,686) 0 $12.31 21.5% ClassC 1,154,595 16.6% 16.6% (10,595) 0 59.33 16.6% Northwest 1,310,796 313% 31.5% (2,718) 0 $9.26 31.5% ClassA 127,000 41.1% 41.1% (640) 0 511.10 41.1% Class B 846,937 29.6% 29.6% (2,078) 0 $9.20 29.6% Class C 336,859 32.7% 32.7% 0 0 58.69 32.7% Sub St. Paul 3,047,501 30.3% 30.3% (20,989) 0 $10.95 30.1% ClassA 1,191,572 30.7% 30.7% (20,561) 0 $11.94 32.2% Class B 905,763 29.3% 29.3% (2,396) 0 $10.87 29.3% Class C 950,166 30.8% 30.8% 1,968 0 58.58 30.8% BEA Market 2,203,739 25.9% 25.9% (2,762) 0 $11.65 26.1% ClassA 1,306,304 22.0% 22.0% 10,007 0 $13.67 22.4% Class B 594,817 35.4% 35.4% (12,769) 0 $10.80 35.4% Class C 302,618 24.0% 24.0% 0 0 58.52 24.0% Midway Market 3,901,085 11.8% 12.7% 23,077 0 510.21 12.7% ClassA 1,051,485 12.5% 12.5% 4,762 0 511.51 12.5% Class B 2,037,019 12.4% 13.4% 18,315 0 $10.25 13.4% Class C 812,581 9.4°/a 11.2% 0 0 $9.07 11.2% St. Paul CBD 7,594,192 23.4% 24.5% (1,998) 0 $9.85 24.5% ClassA 2,565,792 14.7% 16.3% (1,998) 0 510.25 16.3% Class8 4,398,907 31.0% 31.1% 0 0 59.78 31.1% Class C 629,493 11.6% 11.6% 0 0 $8.88 11.6% Minneapolis CBD 23,348,562 16.7% 18.0% 68,269 0 512.43 17.3% ClassA 15,396,965 11.73% 13.3% 62,642 0 $13.40 13.3% Class B 5,042,526 27.5% 28.4% 8,238 0 $10.45 27.5% ClassC 2,909,071 24.7% 24.7% (2,611) 0 $9.93 24.7% U.S. IN 8.3% Unemployment Rate Minn esota OM 5.3% MSP 5.3 ^/a 10.0% The national rate decreased again this quarter from 9.1% last 9.0 °/a quarter to 8.3 Both the Minnesota and Minneapolis rates 8 0 .0 followed this trend as well, as they decreased from 5.9% to 5.6% 6.0% w 1 1 1 11 1 1 T and from 5.4% to 5.3% respectively. As we move into the spring 5.0 °/a 4 1 1 1 1 1 1 and summer seasons, a decrease in metro unemployment is 4.0° /a in 7 IN 7 7 1 1 1 1 1 1 1 1 1 1 1 1 1 expected, as the rates are not adjusted for seasonal employment. 3.0% 1 1 11 1 111 111 11 111 111 2.0% T N 1007 1008 1009 1010 1011 1012 D c a C B E Page 2 N 2012, CBRE N o Metro Absorption Absorption 20 11 I. 24,000 SF 1,500,000 1,000,000 Overall metro absorption was positive first quarter 2012 posting 24,000 SF. This is the fourth consecutive quarter the Twin Cities posted positive 500,000 11 11 absorption in all commercial product types, industrial, retail, and office. 3 CD 0 0 The Minneapolis CBD was the best performing market posting 68,000 SF of a 500,000 a. e bulk of positive absorption was in the class A s ector which positive posted bsorption 63,00 SF. This is the ninth consecutive quarter the 1,000,000 Minneapolis CBD has posted positive absorption in class A. fl c 1,500,000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 FD Multi- Tenant Construction Under Construction 11111 OSF There is no new speculative office construction on the horizon. This quarter 1.0 the Mozaic, a mixed use office- retail project delivered in the Minneapolis uptown area. The project which includes 65,000 SF of speculative office 0.8 r space recently signed John Ryan Retail Marketing Agency for 12,406 SF along with Silver Mountain Partners for 2,513 SF. This leaves the office 0.6 r component 76.9% vacant. Bar Louie Restaurant has signed a lease for 7,300 SF in the retail space on the first floor. 0.4 1- The last speculative development completed was The Offices at the West End o built in 2009, developed by Duke Realty Corporation in St. Louis Park. This 0.2 F was also a mixed use project. The office component is currently 40% vacant 0.0 m. 111 with Baker Associates occupying the rest of the space. 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Vacancy vs. Availability Availability ME 19. Direct Vacancy IIII 18.7% 25.00 The MinneapoliVSt. Paul office market total availability rate (available 20.00 sublease and direct space) decreased to 19.7% in the first quarter compared to 20.8% one year ago. 15.00 In the Suburban market, availability was decreased to 19.7%, compared 10.00 to 21.2% first quarter 2011. In the Minneapolis CBD total availability decreased to 17.3% compared to 19.6% the same time last year. 5.00 0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 N_ C 0 CBRE Page 3 N 2012, CBRE e MarketView Minneapolis /St. Paul Office Top Lease /Sale Transactions Average Asking Lease Rate Rate determined by multiplying the asking net Size (Sq. Ft.) Tenant /Buyer Property Name /City lease rate for each building by its available space, summing the products, then dividing by 449,000 (Expansion) Target Corp. Retek on the Mall, Minneapolis the sum of the available space with net leases for all buildings in the summary. 95,000 (Expansion) SPS Commerce Accenture Tower, Minneapolis Net Leases Includes all lease types whereby the tenant pays an agreed rent plus most, or all, of the operating 25,000 (Lease) High Jump Software 8200 Tower, Bloomington expenses and taxes for the property, including utilities, insurance and/or maintenance 22,000 (Lease) Southwest LRT Park Place West, Saint Louis Park expenses. Market Coverage 20,000 (Lease) Activision 8200 Tower, Bloomington Includes all competitive office buildings 10,000 square feet and greater in size. Lease renewal "Sublease Net Absorption The change in total (direct and sublease) occupied square feet from one period to the next. I Net Rentable Area The gross building square footage minus the elevator core, flues, pipe shafts, vertical ducts, Submarket Map balconies, and stairwell areas. Occupied Square Feet Building area not considered vacant. a :s 5 miles Under Construction Buildings which have begun construction as Northwest evidenced by site excavation or foundation work Direct Available Square Feet a Available Building Area which is either physically vacant or occupied. Does not include sublease \-7 space. Total Available Square Feet 394 Corridor\ �bv Available Building Area which is either physically 16 I vacant or occupied. Includes sublease space. f Direct Vacant Square Feet Existing Building Area which is physically 3 Minneapolis Suburban St Paul G 7 Midway 9 9 P V V vacant or immediately available. Does not include St 94 I sublease or shadow space. 494 Total Vacant Square Feet t Existing Building Area which is physically vacant or immediately available. Includes sublease and shadow space. 4iIIII .ftN1apU114 srf Paul Inn 1 t Normalization Due to a reclassification of the market, the base, 494 Corridor number and square footage of buildings of 35 VS, previous quarters have been adjusted to match o the current base. Availability and Vacancy figures for those buildings have been adjusted in Burnsville, Eagan, s previous quarters. Apple Valley aTi.t.yla., +ppiRiver For more information regarding the MarketView, please contact: Daniel Brown, Office Research Copyright 2012 CBRE Statistics contained herein may represent a different data set than that used to generate National CBRE Vacancy and Availability Index statistics published by CBRE Corporate Communications Department or CBRE research and Econometric Forecasting unit, Econometric Advisors. Information herein hos been obtained from sources believed reliable. 4400 West 78th Street C B R E While we do not doubt its accuracy, nve not verified it and make o guarantee, warranty representation s option s It Suite 200 is your responsibility to independently confirm ac nfirm its accuracy and completeness. Any prrojeectionss, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market. This Minneapolis, MN 55435 information is designed exclusively for use by CBRE clients, and cannot be reproduced without prior written permission of T. 952-924-4627 F.952- 831 -8023 CBRE. Daniel.Brown @cbre.com i Executive Summary Twin Cities Commercial Real Estate Market Begins to Show Signs of Recovery The Twin Cities commercial real estate Business District (CBD) submarkets. uptick in construction activity. Regional market showed signs of recovery in Investment activity continued to mall space is at a premium, as evidenced 2011, with vacancy declining across rebound in the office sector in 2011, by an overall vacancy rate of 1.3% among most property types amid some signs resulting in more than $800 million the areas eight such properties. of an improving economy. Market -wide, worth of sales volume. Several signifi- vacancy declined to 15.2% for direct cant transactions closed in the second OUTLOOK space (17.6% overall across all property half, and the pipeline of potential deals is Construction projects will be more types)— reversing a three -year slide that relatively robust going into 2012. numerous in 2012. Retail alone will saw direct space vacancy go from 11.5% see about I msf of new construction in 2007 to 15.9% in 2010. The market MULTI FAMILY CONSTRUCTION in 2012, led by big -box retailers. More recorded 1.6 million square feet of BOOM UNDERWAY multi family projects are in the works as positive absorption, breaking a two -year Resurgent demand for rental housing demand for rental units is expected to skid that brought the market deep into is fueling a boom in new multi family continue to grow. The market will likely negative territory. apartment construction in the Twin also see more construction of large, Cities. Developers added approximately single -user bulk /warehouse distribu- BULK INDUSTRIAL DRAWS 900 new market -rate units in 2011 tion facilities to meet the needs of users INVESTOR INTEREST and another 1,300 units are slated for who cannot find the space they need in Large national investors showed signifi- completion in 2012. Rental rates are the current inventory. cant interest in Twin Cities industrial rising in the face of rapidly declining va- properties in 2011, particularly newer cancy rates, giving developers reason to The office and industrial leasing mar bulk /warehouse product. The number invest in new construction. Much of the kets are expected to experience solid of investment sales in bulk industrial apartment development is taking place growth in demand in 2012, mostly in the properties was the highest seen in the in urban areas such as the Minneapolis second half of the year. Investors may Twin Cities in more than a decade, CBD and the Uptown area in south broaden their search for more Twin including at least 10 high profile deals. Minneapolis. Cities opportunities in 2012, while the Institutional investors are again look- supply of lender -owned office proper ing closer at investment opportunities RETAIL PROPERTIES BENEFIT ties put back on the market for sale will in the Twin Cities, including well -posi- FROM MEDICAL SPACE USER also likely increase. Well- positioned re- tioned grocery- anchored retail centers DEMAND tail centers can anticipate improvement and multi family properties Healthcare providers have been locating in demand, including from some medical patient friendly primary care and spe- space users. DEAL MAKERS DELIGHT cialty practice clinics in high profile retail IN OFFICE MARKET sites, taking both existing second- gener- Large office space users were active in ation retail space and also building new MORE ONLINE the Southwest submarket, which posted locations on land adjacent to existing More information by submarket 456,000 sf of positive absorption for the centers. Retail center owners are more and /or product type, including: year, its highest number in more than open to accommodating medical space .Vacancy, absorption and rental decade. The overall Twin Cities market users given existing market conditions. rates experienced 484,000 sf of absorption. Class A property owners were the Vacancy among all retail property types Transaction activity main beneficiaries, and increased de- is 8.4% for direct space, down from 9.8% Investment sale activity mand for class A space was also evident at year -end 2010. Major retailers are ex- Projections for the next 6 -12 in the West and Minneapolis Central panding in the Twin Cities area, fueling an months CUSNMAN N�RTH w Submarket reports available at ww.northmargcompass.com 1 WAKEFIELD; Real Estate 5ervices