2016 FORT WAYNE, INDIANA OFFICE MARKET SURVEY

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1 2016 FORT WAYNE, INDIANA OFFICE MARKET SURVEY 2016 REVIEW 2017 FORECAST PREPARED WITH THE ASSISTANCE OF New construction, renovation and relocation in downtown was the big story for the Fort Wayne office market in 2016, highlighted by Ash Skyline Plaza being 100% occupied. The office vacancy for the total Fort Wayne market decreased from 14.4% to 13.9% in the period from November 2015 to October Overall, the Fort Wayne office vacancy rate has decreased in 5 out of the past 7 years, reflecting a recovery in the market since the economic downturn of 2008/2009. There was limited new construction during the year other than Ash Skyline Plaza downtown and medical-related projects. Downtown has the lowest vacancy rate in the market and decreased from 9.8% to 9.2%. The northeast quadrant continues to have the highest vacancy rate at 25.0%, down from 25.9%. The southwest quadrant vacancy increased to 14.8% from 12.3%. The Class A vacancy rate remains low at 9%. Meanwhile, the Class B vacancy rate increased slightly to 13.3%, while Class C vacancy stood at 49.3%. The market dynamics are improving for landlords and rental rates are increasing. The overall decrease in market vacancy is reflective of steadily improving market conditions, especially downtown. The high vacancy in the northeast quadrant continues to negatively impact the overall market and especially the landlords in that submarket. Downtown will continue to be the focus of office activity in 2017, with announcements possible for more developments, adaptive reuses and companies relocating downtown. By contrast, more vacant space will hit the market in the suburbs in 2017, based on corporate downsizing and relocation and the closing of three for-profit colleges. We expect some of the space to be absorbed by local companies expanding within the market. Office users will move from B & C space to A & B space. Companies are moving to better space that has a greater emphasis on office space efficiency, collaboration, more natural light and open design with fewer hard walls. Space utilization per employee will decrease. We expect Class A rents to increase with fewer incentives required from landlords. We expect Class B & C rents to decrease and landlord concessions to continue, especially in the suburban submarkets. Steven K. Zacher, SIOR, CCIM Alfred J. Zacher, SIOR Joy Neuenschwander, CPM John M. Adams, CCIM Brian Bean Fletcher Moppert Dan Reese Brent L. Overholt, MAI Dave Kaverman Evan Rubin FOR MORE INFORMATION PLEASE CONTACT: THE ZACHER COMPANY 444 EAST MAIN STREET, SUITE 203, FORT WAYNE, IN PHONE: (260) INFO@ZACHERCO.COM PUBLISHED: OCTOBER 28, 2016

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3 The Zacher Company

4 Average Full Service Lease Rates 2016 Notable Fort Wayne Office Transactions The Zacher Company

5 Methodology: The Zacher Company office market survey report is a compilation of data from many sources. The total amount of square footage in the marketplace area was originally gleaned from reports prepared by LoopNet, ICREX and CoStar. It is reviewed annually and adjusted due to circumstances in the market, such as new construction, re-positioning of existing buildings to another type of use and demolition. It includes office buildings only and does not include offices attached to industrial properties or flex space. The vacancy square footage is compiled from a combination of online data from multiple major listing services, brokers listing information from their websites and their mailings and industry knowledge. New construction is added to the inventory upon delivery of the space, during the reporting period. Available space also includes office spaces available for sub-lease. The brokers in our office are involved in the creation of this report to provide the most accurate information possible. We cannot be responsible, however, for errors, omissions, prior sale or lease or withdrawal from the market. The Zacher Company