Southwest submarket leads absorption for 2015; demand strong for flex space and lagging for distribution

Research & Forecast Report

MINNEAPOLIS-ST. PAUL | INDUSTRIALQuarter 4 2015

Vacancy and absorption trends The vacancy rate in the Minneapolis-St. Paul industrial market is 8.1 percent as of Quarter Four of 2015. Absorption was 269,735 square feet. In spite of positive absorption, vacancy actually increased from 8.0 percent in Quarter Three. There was 772,998 square feet of new, speculative space added to the market, and 95 percent of that space is vacant, increasing the vacancy rate in spite of positive absorption for the third quarter.

Since year-end 2014, vacancy has decreased from 8.6 percent, and the market has absorbed a total of 2,958,812 square feet. This absorption total is the highest posted in the last 10 years. There was 3,909,538 square feet of industrial space added to the market in 2015, and the split between speculative and build-to-suit space construction was 45 percent build-to-suit and 55 percent speculative.

There is a total of 2,291,906 square feet of additional industrial space under construction. This includes Amazon’s 820,000-square-foot distribution facility in Shakopee. Amazon is hiring workers and planning on a completion date this summer.

Market IndicatorsRelative to prior period Q4 2015 VACANCY NET ABSORPTION RENTAL RATE

Vacancy

20%

15%

10%

5%

0

8.6%

13.1% 12.5% 11.5%

Perc

ent V

acan

t

10.5% 9.4% 8.6%

2007 2009 2010 2011 2012 2013 2014 2015

8.1%10.4%

2005

9.0%

2006

10.4%

2008

Net Absorption4,000,0003,000,0002,000,0001,000,000

0(1,000,000)(2,000,000) (3,000,000)(4,000,000)

(928,872)

(2,430,461)

1,369,692914,877

SF A

bsor

bed 1,261,325

1,677,7072,011,292

2,958,812

2008 2009 2010 2011 2012 2013 2014 2015

2,782,090

2005

1,355,744

2006

1,410,063

2007

Quarter Four Speculative Construction

PROPERTY NAME CITY TOTAL SF % VACANT

Plymouth Point Business Center Plymouth 96,470 100%

169 North Business Center Brooklyn Park 145,800 100%

Bridgepoint Business Center III St. Paul 107,498 100%

Red Fox Business Center Buildings 1 & 2 Arden Hills 93,300 100%

Clark Road Complex Inver Grove Heights 26,400 82%

2 Minneapolis-St. Paul Research & Forecast Report | Quarter 4 | Industrial | Colliers International

20

15

10

5

0

7.6% 7.3% 9.3%6.8%

8.6%

Airport/Southof the River

MinneapolisNorth

Southwest St. PaulEast

West/Northwest

Q4 Vacancy

Perc

ent V

acan

t

400,000

200,000

0

(200,000)

(400,000)

42,860

(72,537)

67,140

Airport/Southof the River

MinneapolisNorth

Southwest St. PaulEast

West/Northwest

15,396

216,876

Q4 AbsorptionSF

Abs

orbe

d

Vacancy and absorption trends (Cont.’d) Many large tenants have chosen to build their own facilities in order to forgo the process of customizing an existing building for their use.

For 2015, there was a total of 2,141,034 square feet of speculative space added to the market. The lack of large bulk warehouse users of more than 100,000 square feet, along with the significant number of existing options available, may result in longer-than-expected leasing times at new bulk multi-tenant buildings.

Overall average lease terms for new deals include a 10 percent discount from the asking rate, two months free rent for five-year terms, and 3-5 months on a 7-10 year term. Tenant improvement allowances are averaging $3-5 on warehouse space and $20+ for office space per square foot.

There is demand among tenants seeking flex industrial space but little interest from developers in planning new flex construction. Bulk warehouse space is the preferred product type for both developers and investors. Flex properties are considered a higher risk to investors, as they are more difficult to re-tenant due to the significant amount of customization required compared to bulk warehouse space.

Future Trends The Minneapolis-St. Paul industrial market has seen significant demand reflected in strong absorption and construction numbers. We expect continued strong demand due to a strong, growing economy. The market will continue to favor landlords, with some exceptions, including in the West/Northwest submarket which saw over 1.2 million square feet of speculative bulk warehouse development in 2015. This is combined with additional existing vacancies to create a glut of available space in that submarket. Increasing construction costs will continue to be a challenge for developers and builders.

2015 Build-to-Suit Construction

COMPANY PROPERTY CITY TOTAL SF

Room & Board Gateway North Business Center V Otsego 485,000

3M 3M Research Facility Maplewood 400,000

Fedex Fedex Distribution Center Rogers 350,000

Blu Dot Gateway North Business Center III Otsego 150,064

Wurth AdamsNorth Cross Business Park Building I

Brooklyn Park 143,440

Bayer CropScience

Dean Lakes Business Park Shakopee 135,000

Design Ready Controls

Capstone Business Center Brooklyn Park 105,000

3Minneapolis-St. Paul Research & Forecast Report | Quarter 4 | Industrial | Colliers International

MINNEAPOLIS NORTH> 99,056 SF> 1 project

10

94 94

35E

35E

61

5

100

62

41

55

55

55

77

13 3

13

94

169

169

169

494

35W

12

5212

212

610

694

65

55

1094 97

35E

694 36

61

52

35WRogers

SpringPark

St. Paul

Cottage Grove

InverGrove

HeightsEagan

St. PaulPark

SouthSt. Paul

AppleValley

WestSt. Paul

MendotaHeights Woodbury

Afton

LakeElmo

Oakdale

Maplewood

NorthSt. Paul

LittleCanada

Lauderdale

EdenPrairie

Minnetonka

Hopkins

Wayzata

Deephaven

Greenwood

Bloomington

Rosemount

EdinaRichfield

GoldenValley

St. LouisPark

SaintAnthony

Minneapolis

Medina

Orono

Chaska

ExcelsiorShorewood

Victoria

Chanhassen

Shakopee

MaplePlain

TonkaBay

Mound

Minnetrista

Roseville

White BearLake

VadnaisHeights

GemLake

Centerville

Lexington

Circle Pines

Hugo

Shoreview

ArdenHills

LinoLakes

NorthOaks

Grant

Stillwater

Dellwood

Pine Springs

Willernie

Osseo

Champlin

MapleGrove

Plymouth

NewHope

BrooklynCenter Columbia

Heights

SpringLakePark

NewBrighton

MoundsView

Fridley

Crystal

Blaine

Robbinsdale

Coon Rapids

Brooklyn Park

Dayton

Corcoran

Greenfield

Hanover

Independence

Loretto

Otsego

Albertville

Ramsey

St. Michael

Elk River

Andover

Anoka

HamLake

Columbus

ForestLake

Scandia

West/Northwest

MinneapolisNorth

St. PaulEast

Airport/South ofthe River

Southwest

WEST/NORTHWEST> 663,000 > 4 projects

OVERALL MARKET> 2,414,306 SF under construction> 831,456 SF speculative> 1,582,850 SF build-to-suit

SOUTHWEST> 1,252,850 SF> 4 projects

ST. PAUL EAST> 189,000 SF> 1 project

AIRPORT/SOUTH OF THE RIVER> 210,400 > 2 projects

Industrial Under Construction

PROPERTY NAME ADDRESS CITY SUBMARKET SF DEVELOPER

Gateway Business Park of Eagan 3430 Highway 55 Eagan Airport/South of the River 122,400 Buhl Investors

Uponor Expansion 150th St W & Johnny Cake Ridge Rd Apple Valley Airport/South of

the River 88,000 Uponor

Blaine Preserve Business Park Building 2 95th Ave NE & I-35W Blaine Minneapolis North 99,056 United Properties

Amazon 1 Shenandoah Drive Shakopee Southwest 820,000 BTS-Amazon

Valley Park Business Center Innovation Blvd & Innovation Dr Shakopee Southwest 216,000 Opus Group

Rahr Malting Expansion 800 W 1st Ave Shakopee Southwest 112,000 Rahr Malting

Ziegler Industries 1201 W. 96th St Bloomington Southwest 104,850 Ziegler Industries

Midway Office Warehouse Development 1785 Energy Park Drive St. Paul St. Paul East 189,000 United Properties/St. Paul

Port Authority

Kinghorn Logistics Hub 19401 Rogers Drive Rogers West/Northwest 221,000 Scannell Properties

North Park Business Center 109th Ave & Highway 169 Brooklyn Park West/Northwest 200,000 Scannell Properties

North Cross Business Park Highway 610 & Highway 169 Brooklyn Park West/Northwest 182,000 United Properties

Minneapolis Business Center II 4821 Xerxes Ave N Brooklyn Center West/Northwest 60,000 Hyde Development

Industrial Under Construction

4 Minneapolis-St. Paul Research & Forecast Report | Quarter 4 | Industrial | Colliers International

Lease Activity

TENANT BUILDING NAME ADDRESS CITY SIZE SUBMARKET TYPE

Bluestem Brands Inc Golden Triangle Innovation Center 7075 Flying Cloud Dr Eden Prairie 345,299 Southwest New

Milestone AV Technology Gateway South SW of Highway 101 & Shenandoah Dr Shakopee 242,004 Southwest New

Conklin Shakopee Industrial Center II 4551 12th Ave E Shakopee 79,989 Southwest New

Graybar Electric Co Crosstown North Business Center XII

7601-7681 Setzler Pkwy Brooklyn Park 72,000 Northwest Expansion

HID Flying Cloud Business Centre 6533 Flying Cloud Dr Eden Prairie 52,159 Southwest Renewal

Taylor Corp Atlas Business Center II 2767 Highway 55 Eagan 35,584 Southeast New

Tioga Inc 4810 Lilac Dr N 4810 Lilac Dr N Brooklyn Center 35,000 Northwest New

TA Instruments - Waters Golden Triangle Business Center 9625 W 76th St Eden Prairie 32,919 Southwest New

Tapco Circuit Supply Inc Plymouth Industrial Park Bldg D 13200 N 10th Ave Plymouth 29,911 Northwest Renewal

That Furniture Outlet Prairieview II 9901 W 74th St Eden Prairie 28,750 Southwest New

Auer Steel Berkshire Distribution Center 800-1000 Berkshire Ln Plymouth 24,444 Northwest New

ABM Golden Valley Business Center 905-965 Decatur Ave N Golden Valley 23,277 Northwest New

Full Motion Fitness 11300 K-Tel Dr 11300 K-Tel Dr Minnetonka 21,909 Southwest New

Current EDM Penn James Commerce Center 9201 Penn Ave S Bloomington 20,814 Southwest New

Significant Lease and Sales Activity

Golden Triangle Innovation Center Bluestem Brands, Inc. signed a 340,000-square-foot lease at Golden Triangle Innovation Center, which is the former Supervalu Headquarters in Eden Prairie.

5Minneapolis-St. Paul Research & Forecast Report | Quarter 4 | Industrial | Colliers International

Sales Activity

PROPERTY NAME ADDRESS CITY BUYER SELLLER SUBMARKET SF PRICE PRICE PSF

2222 SE Elm St 2222 SE Elm St Minneapolis University of Minnesota

Murphy Warehouse Co St. Paul East 642,114 $17,950,000 $28

8840-8800 Evergreen Boulevard

8840 Evergreen Blvd Coon Rapids

Shopoff Properties Trust JV Guggenheim RE Coon Rapids LLC

Fairbridge Properties

West/Northwest 261,805 $14,000,000 $53

fmr Genmab 9450 Winnetka Ave N

Brooklyn Park

Takeda Pharmaceutical

Baxter Healthcare Corp

West/Northwest 215,000 $12,798,800 $60

Silgan Containers Distr 1080 Park Pl Shakopee United Properties Breckner River Dev Southwest 299,600 $12,750,000 $43

Eden Woods Business Center

10200 Valley View Rd Eden Prairie Alidade Cap Onward Investors Southwest 166,736 $11,712,125 $70

5651 Innovation Blvd 5651 Innovation Blvd Shakopee Liberty Property

Trust The Opus Group Southwest 197,956 $11,013,680 $56

4900 W 78th St 4900 W 78th St Bloomington Phillip Jaffe Interstate Partners Southwest 111,046 $9,425,000 $85

Cedar Business Center 1701-1801 American Blvd E Bloomington Alidade Cap Onward Investors Southwest 119,295 $8,496,310 $71

9200 10th Ave N 9200 10th Ave N Golden Valley Lubrication Technologies

Bellcourt Technologies

West/Northwest 132,400 $6,450,000 $49

3400 Technology Dr NE 3400 Technology Dr NE Minneapolis Bell Manufacturing Bureau of

Engraving IncMinneapolis

North 130,000 $5,800,000 $45

6591 MN-13 6591 MN-13 Savage Mike Harris Karl David Bohn Southwest 103,810 $4,560,000 $44

Midwest Business Center 5205 Hwy 169 Plymouth Tryperion Partners First Industrial

Realty TrustWest/

Northwest 98,847 $4,509,643 $46

5320 West 23rd Street 5320 W 23rd St St. Louis Park Zerorez Hillcrest

DevelopmentWest/

Northwest 311,946 $4,462,691 $14

Olympia Business Center

1325-1425 American Blvd E Bloomington Alidade Cap Onward Investors Southwest 54,335 $3,791,340 $70

6775 Shady Oak Rd 6775 Shady Oak Rd Eden Prairie Ralph Nordick Prologis Southwest 55,893 $3,780,000 $68

7500-7546 Washington Sq

7500-7546 Washington Sq Eden Prairie Tryperion Partners First Industrial

Realty Trust Southwest 73,000 $3,775,293 $52

Kasota Industrial Center II

500 Kasota Ave SE Minneapolis Tryperion Partners First Industrial

Realty TrustMinneapolis

North 86,055 $3,751,012 $44

Northeast Business Center 3300 5th St NE Minneapolis

Pan Asian Community Development Inc

Wirth Companies Minneapolis North 149,147 $3,735,000 $25

2112 Broadway St NE 2112 Broadway St NE Minneapolis Schafer

Richardson IncLinvill Properties

IncMinneapolis

North 69,305 $3,705,000 $53

Kasota Industrial Center

2530-2570 Kasota Ave Saint Paul Tryperion Partners First Industrial

Realty TrustMinneapolis

North 78,502 $3,643,308 $46

5605 Green Circle Dr 5605 Green Circle Dr Hopkins Wellington

ManagementGoodman

Networks IncWest/

Northwest 58,000 $3,400,000 $59

21901 Industrial Boulevard

21901 Industrial Blvd Rogers NexGen Property

LLCNexGen Homes

IncWest/

Northwest 42,750 $3,200,000 $75

fmr ABC Electronics 315 N 7th Ave Minneapolis Opus JV Greco RE Development Howard Kuretsky Minneapolis

North 31,290 $3,097,000 $99

Wedgwood Commerce Center XI

6845 Wedgwood Ct N Maple Grove Nevers Industries

IncGoldblatt

Investments LLCWest/

Northwest 50,156 $3,059,516 $61

19188 Industrial Blvd 19188 Industrial Blvd Elk River Patriot Converting

IncCommercial Connection

West/Northwest 135,000 $3,050,000 $23

2980 Granada Ln N 2980 Granada Ln N St. Paul Mulcahy Nickolaus Premier Bank St. Paul East 48,500 $2,900,000 $60

8400 Coral Sea St NE 8400 Coral Sea St NE

Mounds View Midwest Medical Northeast Bank Minneapolis

North 66,700 $2,550,000 $38

7251-7329 Washington Ave S

7251-7267 Washington Ave Eden Prairie Tryperion Partners First Industrial

Realty Trust Southwest 52,217 $2,520,740 $48

Plymouth Point

169 North Business Center

6 Minneapolis-St. Paul Research & Forecast Report | Quarter 4 | Industrial | Colliers International

West/Northwest

> The vacancy rate in the West/Northwest submarket is 8.6 percent, up from the third quarter when the vacancy rate was 8.0 percent and year-end 2014 when vacancy was at 7.9 percent. Absorption was 67,140 square feet during the fourth quarter and 713,123 for the year.

> Over 2.6 million square feet of industrial space was constructed in 2015 in the West/Northwest submarket. Of that space, 1,449,836 is speculative space, or constructed without a lead tenant, and much of it remains vacant. This explains the increasing vacancy rate in spite of a significant amount of absorption.

> There are numerous bulk space options available in both new construction and existing buildings.

> Many large users such as Blu Dot, Fedex, Room & Board, and Design Ready Controls chose build-to-suit options leaving few remaining users of 100,000 square feet or more searching for space compared to a year ago.

> Concessions overall are down from 3-4 years ago, but have been steady over the past year except for bulk warehouse properties where concessions are increasing.

> We are seeing an average 2-3 months of free net rent on a five-year lease.

> While asking rates are closer to actual rates on renewal transactions, landlords are willing to negotiate on tenant improvements.

> Office showroom demand is strong, particularly in Plymouth along I-494 and I-394.

Plymouth Point & 169 North Business Center Opus completed two speculative projects in the West/Northwest submarket, Plymouth Point Business Center, a 96,000-square-foot flex property, and the 145,000-square-foot 169 North Business Center in Brooklyn Park.

7Minneapolis-St. Paul Research & Forecast Report | Quarter 4 | Industrial | Colliers International

Southwest

> The vacancy rate in the Southwest submarket is 9.3 percent, down from 10.6 percent during Quarter Three.

> Robust demand for both bulk warehouse and flex space contributed to a record year for absorption. There was 216,876 square feet of absorption for the quarter and over 1.3 million square feet for the year, almost half of the total absorption for the Minneapolis-St. Paul market in 2015.

> Polaris accounts for a significant portion of absorption at Canterbury Distribution Center, where they absorbed 870,000 square feet during the third quarter.

> Rental terms continue to favor landlords; we are seeing 3 percent rental rate escalations compared to 2.5 percent in 2014. Concessions on new leases are at an all-time low for this market cycle. On a 7-year lease the average is only 2 months of net free rent, while one year ago the average was 3-4 months of net free rent.

> Tenant improvement allowances are averaging $2 per square foot for warehouse space and $20 per square foot for office space on new leases. Renewals are averaging $10 per square foot for new carpet and paint but tenants can consider foregoing tenant improvements and negotiating a lower rental rate.

> Tenant confidence is strong, as many companies outgrow existing facilities; sometimes taking spaces that have been vacant for 2-3 years.

> There is a lack of options at well-located office/showroom and flex buildings. It is very difficult to find blocks of spaces larger than 25,000 square feet for all space types. Companies requiring clear heights of over 18’ will find that their only option is in the City of Shakopee.

> Owner-user buildings continue to be in high demand, and the lack of options is pushing prices to pre-recession heights. This, combined with a favorable interest rate environment, makes it necessary to make quick decisions as functional office warehouse buildings become available for sale.

> Milestone AV chose to combine its locations into a build-to-suit property at a 242,004-square-foot facility in Shakopee, leaving two buildings over 100,000 square feet between Shakopee and Savage.

> The Southwest submarket’s dense concentration of industrial users and potential employees will continue to make it a sought-after option for industrial tenants.

CONCEPT ARCHITECTURAL RENDERING

MILESTONE AV TECHNOLOGIES

SHAKOPEE, MNGATEWAY SOUTH

OCTOBER 7, 2015

BUILDING ONEGateway South Milestone AV will consolidate its operations into Gateway South, a 242,004-square-foot build-to-suit in Shakopee.

8 Minneapolis-St. Paul Research & Forecast Report | Quarter 4 | Industrial | Colliers International

Airport/South of the River

> The vacancy rate in the Airport/South of the River submarket is 7.6 percent, down slightly from Quarter Three’s rate of 7.7 percent. For the year, the smallest of the submarkets we track absorbed an impressive 324,033 square feet, and vacancy has declined from 9.5 percent at year-end 2014.

> The strongest demand is for buildings with clear heights of 24’-28’.

> Tenants seeking space from 15,000 square feet to 40,000 square feet are most active.

> Activity for 32’ clear bulk warehouse spaces over 100,000 square feet remains slow.

> We have seen an uptick in deal velocity for office/showroom space, which should translate into positive absorption in 2016.

> Quoted net rates for new construction office/warehouse space is above $10.50-$11.00 per square foot for office space and $5.00-$5.50 per square foot for warehouse space. Existing functional office/warehouse space is quoted between $9.50-$9.75 per square foot for office and $4.50-$4.75 per square foot for warehouse. Office/showroom rates remain flat, however should increase as velocity increases.

> Free rent is on the decline; 5-year leases are seeing an average of 2-3 months.

> The Vikings purchased the former Delta headquarters in Eagan and are planning a mixed-use project that would include retail and office components as well as a state-of-the-art practice facility. This, in addition to a growing population, will contribute to the overall vibrancy of this submarket.

Minneapolis North

> The vacancy rate in the Minneapolis North submarket is 7.3 percent, up slightly from 7.1 percent during the third quarter. There was 15,396 square feet of absorption for the quarter and 224,809 square feet for all of 2015.

> Red Fox Business Center Buildings 1 and 2, two speculative facilities in Arden Hills totaling 93,000 square feet, were completed.

> The 99,000-square-foot Blaine Preserve Business Park Building 2 is under construction with completion expected sometime this spring. This property is also being constructed on a speculative basis.

> Demand is strongest for office warehouse spaces of 4,000 to 12,000 square feet, while demand for bulk warehouse and office showroom space is limited.

> Final rental rates for a typical 5 year new lease are very close to asking rates with limited free rent.

> For tenants with expiring leases, there are limited viable space options, leading to high renewal rates.

St. Paul East

> The vacancy rate in the St. Paul East submarket is 6.8 percent, up from 6.1 percent in the third quarter.

> Overall, there was a negative 72,537 square feet of absorption for the quarter. Fedex Home Delivery moved out of 85,000 square feet at Energy Park Distribution Center.

> 3M’s $150 million research and development facility opened in Maplewood. The 400,000-square-foot facility will house up to 700 researchers and scientists.

> Interstate Partners’ Bridgepoint Business Park III was completed, bringing 107,000 square feet of speculative space to the market.

Red Fox Business Center Roberts Management Group completed construction on two speculative flex buildings in Arden Hills, Red Fox Business Center Buildings 1 and 2. The two projects total 93,000 square feet.

9Minneapolis-St. Paul Research & Forecast Report | Quarter 4 | Industrial | Colliers International

SubmarketTotal SF

Direct Vacant SF

% Vacant Direct

Sublease Vacant SF

% Vacant W/Sublease

Low-High Asking Rate

Q4 2015 Absorption

YTD Absorption

Airport/South of the RiverBulk Warehouse 5,365,858 180,792 3.4% 0 3.4% $4.33-$9.79 44,287 38,943

Office Showroom 3,450,779 493,514 14.3% 47,678 15.7% $4.69-$9.02 (4,073) 78,323 Office Warehouse 9,255,713 702,836 7.6% 66,602 8.3% $4.74-$9.18 2,646 206,767

Totals: 18,072,350 1,377,142 7.6% 114,280 8.3% $4.68-$9.18 42,860 324,033

Minneapolis NorthBulk Warehouse 5,260,008 521,938 9.9% 10,000 10.1% $4.60-$8.53 41,470 (13,040)Office Showroom 4,341,421 369,098 8.5% 7,947 8.7% $5.20-$9.71 (4,348) 23,095 Office Warehouse 17,257,437 1,072,043 6.2% 85,117 6.7% $4.70-$9.23 (21,726) 214,754

Totals: 26,858,866 1,963,079 7.3% 103,064 7.7% $4.84-$9.35 15,396 224,809

SouthwestBulk Warehouse 7,439,941 948,568 12.7% 0 12.7% $4.23-$7.93 155,950 1,187,478 Office Showroom 7,158,237 779,588 10.9% 151,792 13.0% $5.41-$9.89 (56,712) (28,547)Office Warehouse 14,668,458 1,002,278 6.8% 49,320 7.2% $4.82-$9.32 117,638 198,555

Totals: 29,266,636 2,730,434 9.3% 201,112 10.0% $5.01-$9.44 216,876 1,357,486

St. Paul EastBulk Warehouse 9,041,404 697,315 7.7% 0 7.7% $4.92-$8.88 (58,605) (108,352)Office Showroom 2,480,045 171,132 6.9% 6,420 7.2% $4.67-$10.13 15,288 158,757 Office Warehouse 12,591,160 775,454 6.2% 160,987 7.4% $4.65-$9.68 (29,220) 288,956 Totals: 24,112,609 1,643,901 6.8% 167,407 7.5% $4.71-$9.66 (72,537) 339,361

West/NorthwestBulk Warehouse 12,655,215 1,465,135 11.6% 53,072 12.0% $4.66-$9.84 48,058 314,802

Office Showroom 5,751,061 661,923 11.5% 108,208 13.4% $5.01-$9.50 (10,369) (34,402)

Office Warehouse 21,457,571 1,303,242 6.1% 47,797 6.3% $4.71-$8.88 29,451 432,723

Totals: 39,863,847 3,430,300 8.6% 209,077 9.1% $4.78-$9.10 67,140 713,123

Total All MarketsBulk Warehouse 39,762,426 3,813,748 9.6% 63,072 9.7% $4.58-$9.18 231,160 1,419,831

Office Showroom 23,181,543 2,475,255 10.7% 322,045 12.1% $5.08-$9.63 (60,214) 197,226

Office Warehouse 75,230,339 4,855,853 6.5% 409,823 7.0% $4.73-$9.20 98,789 1,341,755

Totals: 138,174,308 11,144,856 8.1% 794,940 8.6% $4.82-$9.34 269,735 2,958,812

Market Statistics

The above table is summarized data on multi-tenant industrial buildings greater than 20,000 square feet. Not included are single-tenant or owner-occupied buildings.

10 Minneapolis-St. Paul Research & Forecast Report | Quarter 4 | Industrial | Colliers International

Market Statistics (Expanded Market)

The above table is summarized data on multi- and single-tenant industrial buildings greater than 10,000 square feet. Owner-occupied properties are also included.

SubmarketTotal SF

Direct Vacant SF

% Vacant Direct

Sublease Vacant SF

% Vacant W/Sublease

Low-High Asking Rate

Q4 2015 Absorption

YTD Absorption

Airport/South of the RiverBulk Warehouse 17,074,080 518,061 3.0% 46,048 3.3% $5.62-$8.61 34,886 154,693

Office Showroom 4,679,267 507,735 10.9% 47,678 11.9% $4.89-$9.00 (1,073) 89,881 Office Warehouse 10,896,422 713,192 6.5% 66,602 7.2% $5.03-$9.28 3,646 145,542

Totals: 32,649,769 1,738,988 5.3% 160,328 5.8% $5.15-$9.05 37,459 390,116

Minneapolis NorthBulk Warehouse 20,389,616 762,262 3.7% 21,222 3.8% $5.34-$8.85 (21,033) 19,837 Office Showroom 6,115,467 467,586 7.6% 7,947 7.8% $5.18-$9.66 (19,004) (10,044)Office Warehouse 19,543,349 1,201,163 6.1% 85,117 6.6% $4.69-$9.21 (86,305) (18,699)

Totals: 46,048,432 2,431,011 5.3% 114,286 5.5% $4.97-$9.28 (126,342) (8,906)

SouthwestBulk Warehouse 23,627,700 1,254,814 5.3% 325,026 6.7% $4.46-$7.16 298,725 1,604,842 Office Showroom 8,547,220 779,588 9.1% 151,792 10.9% $5.40-$9.89 (8,012) (16,308)Office Warehouse 17,576,010 1,532,802 8.7% 49,320 9.0% $4.93-$9.24 22,339 (368,183)

Totals: 49,750,930 3,567,204 7.2% 526,138 8.2% $5.01-$9.13 313,052 1,220,351

St. Paul EastBulk Warehouse 19,253,536 802,235 4.2% 0 4.2% $4.75-$8.29 (56,115) (110,465)Office Showroom 4,426,510 207,309 4.7% 6,420 4.8% $6.66-$11.19 405,735 489,919 Office Warehouse 20,868,137 778,454 3.7% 160,987 4.5% $4.60-$9.48 (14,795) 234,433 Totals: 44,548,183 1,787,998 4.0% 167,407 4.4% $5.17-$9.65 334,825 613,887

West/NorthwestBulk Warehouse 37,380,343 2,599,669 7.0% 398,094 8.0% $4.81-$8.37 80,529 1,305,341

Office Showroom 8,099,351 722,632 8.9% 158,917 10.9% $5.50-$9.91 (36,313) (38,503)

Office Warehouse 25,821,070 1,450,300 5.6% 47,797 5.8% $4.95-$8.99 28,179 461,698

Totals: 71,300,764 4,772,601 6.7% 604,808 7.5% $5.02-$9.02 72,395 1,728,536

Total All MarketsBulk Warehouse 117,725,275 5,937,041 5.0% 790,390 5.7% $4.94-$8.23 336,992 2,974,248

Office Showroom 31,867,815 2,684,850 8.4% 372,754 9.6% $5.43-$9.83 341,333 514,945

Office Warehouse 94,704,988 5,675,911 6.0% 409,823 6.4% $4.87-$9.20 (46,936) 454,791

Totals: 244,298,078 14,297,802 5.9% 1,572,967 6.5% $5.05-$9.16 631,389 3,943,984

11Minneapolis-St. Paul Research & Forecast Report | Quarter 4 | Industrial | Colliers International

BROKERAGE SERVICES CONTACT:William M. Wardwell SIOR

Executive Vice President | Brokerage Minneapolis-St. Paul+1 952 897 7828bill.wardwell@colliers.com

FOR MORE INFORMATION:Maura Carland Director of ResearchMinneapolis-St. Paul+1 952 828 7219maura.carland@colliers.com

Copyright © 2016 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

502 offices in 67 countries on 6 continentsUnited States: 140 Canada: 31 Latin America: 24 Asia Pacific: 199 EMEA: 108

$2.3billion in annual revenue

1.7billion square feet under management

16,300professionals and staff

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