Market hot spots continue to drive majority of activity

Transcription

1 Research & Forecast Report MINNEAPOLIS-ST. PAUL OFFICE Quarter 2, 2017 Market hot spots continue to drive majority of activity Vacancy and absorption trends Quarter Two of 2017 saw a slight drop in vacancies from 15.3% to 15.2% throughout the entire Minneapolis- office market. The strongest performer by far was Class A, where 350,000 square feet of positive absorption occurred. The majority of this absorption was seen in the Minneapolis CBD. The largest absorptions in the Minneapolis CBD were Amazon, Zipnosis, Ryan Companies and the U.S. Immigration Service. Metrowide, Class B saw another negative absorption quarter and is now showing a vacancy rate of 17.1%, up from last quarter s 16.5% in the multi-tenant universe. However, the negative Class B numbers have been expected for a while. Wells Fargo is finishing phased move-outs from numerous Minneapolis CBD leased spaces into their newly-owned building in East Town. This is counting as negative absorption. The same story is happening in the CBD. Ecolab vacated space from the Ecolab University Center to relocate into an owned building, which is in the CBD. Another negative absorption in the CBD is Cray, Inc., who finally vacated space from Cray Plaza. The company signed a new lease over a year ago to move into the newly-constructed Class A building MOA which is located in the Airport/South of the River submarket. Percent Vacant SF Absorbed Quarterly Market Indicators Q Relative to prior period Historical Vacancy (Direct) 20% 17.5% 15% 12.5% 10% 15.2% % 17.2% 16.8% 16.7% 16.1% 15.6% 14.2% 13.7% 13.2% Net Absorption (YTD) 2,000,000 1,000,000 0 (1,000,000) VACANCY NET RENTAL RATE 929, 253,779 (312,099) 585, , ,841 1,025, , % 2017 Q2 (357,652) (208,153) (2,000,000) 2007 (1,661,963) Q2 SUBSCRIBE TO OUR BLOG

2 Market Trends Q2 Vacancy Percent Vacant % Airport/South of the River 17.7% Minneapolis CBD 14.7% 14.8% 14.3% 11.7% Southwest CBD Suburban West 18.9% Northwest Shorter term deals Navigating unforeseen changes in business structure, both large corporate tenants and small or new start-up companies are asking for shorter term leases in an effort to balance both stability and growth. In some submarkets, the number of smaller tenants and start-ups has created a large demand for more flexible lease terms. Smaller companies are betting heavily on future growth and are willing to pay higher rent for a shorter term in anticipation of growth, forcing them to look for more or different space. Q2 Absorption SF Absorbed 200, , ,000 0 (61,602) (100,000) 56,114 11,315 (16,767) (8,388) On the other side of the tenant market, we are seeing large corporate users also demanding shorter terms. Corporate users have additional leverage to get shorter terms and have shown that they desire flexibility, at any cost. The driver for shorter terms is often different for large users than for start-ups, however, where corporate structure changes and constant M&A threats place a higher value on flexibility than rent savings. (200,000) (153,820) Airport/South of the River Minneapolis CBD Southwest CBD Suburban West Northwest Commute times rising I-494 increased activity Projections are showing an increase in activity along the I-494 corridor, beyond the traditionally desirable I-494 / France Avenue intersection. For the last several years, the I-494 corridor in the Southwest metro has been a relatively stagnant market. The corridor, which includes over 150 buildings from Eden Prairie to the MSP International Airport, has slightly increased in vacancy in the past three years. Rents are also rising at a lower rate than market average. In addition, asking rents in the Southwest submarket have only risen 4% compared to the metro average increase of 13%. The renewed interest is impacting both Class A and Class B spaces and can be traced to shifts by both tenants and landlords. There has been little movement in a renewal-heavy market resulting in significant pent-up demand for both new and additional space from existing tenants in the submarket. Also due to a relatively quiet leasing market in the past several years, landlords have become more aggressive in attracting and closing deals. During the first half of 2017, we have seen only minor positive absorption figures, but there are more deals expected to be realized during the remainder of the year. The Twin Cities has been suffering through a spell of high-impact road construction projects over the past several years. A combination of interstate work and downtown street construction has made roadwork near impossible to avoid for most residents. An increased number of decision makers have been asking about commute times for both executives and employees. With a number of high-profile construction projects on the horizon, there is expectation that location and accessibility will take a more prominent role in future leasing conversations. Tenant Improvement more important than free rent Recently, there has been a trend for tenants to be much more focused on Tenant Improvement (TI) allowances during lease negotiations. The root of the demand is tenant desire for space that is attractive to current and future employees, as well as an awareness of increased base construction costs for build-outs. One way of luring and keeping employee talent is through smart office design. This is of particular interest to companies who are planning for future growth. Technology s impact on how we work, coupled with generational specification on working dynamics, are moving many companies away from older-style office design. Demand for new and interesting office build-outs with open and collaborative spaces are running into the reality of higher construction costs. In some instances, construction costs could be double what they were the last time a tenant signed a lease. To offset an out-of-pocket hit, tenants are looking for landlords to calculate additional TI allowances into lease structures. 2 Minneapolis- Research & Forecast Report Quarter 2 Office Colliers International

3 Submarket Quick Hits Airport / South of the River > The Airport / South of the River submarket saw a negative absorption figure of -60,000 square feet in Q2 and is slightly negative on the year. > Several vacancy changes accounted for nearly all of the negative absorption. These include the U.S. Citizen Immigration office and Career Education Corp., who both vacated space. > The U.S. Immigration Office moved from Metro Office Park to Marquette Plaza in the Minneapolis CBD and actually expanded in total leased space. > The newly constructed Class A building connected to the Mall of America, MOA still has 80,000 square feet of available space. This is the second largest vacancy in the submarket. Mall of America Entering first to the Mall of America s office building, Cray Inc. moved into 85,000 square feet of the buildings top four floors. Minneapolis CBD > The Minneapolis CBD had the most absorption of any submarket in the Minneapolis- metro in Q2 with 330,000 square feet absorbed. Vacancy rate was lowered to 17.6%. Year-to-date, the Minneapolis CBD is also the strongest performing submarket. > New construction and repositions have dramatically changed the submarket in Two new Class A buildings were completed, Millwright and T3, and were both built in a modern brick-andtimber style. In addition, two large renovations have been completed in the core, Baker Center which was finished in Q2 and the soon-to-be-completed 801 Marquette, formerly known as the TCF Building. > The Minneapolis CBD has seen the highest rental rate growth of any submarket, with an asking rate increase of 11% over the last two years. This is just over twice the metro average of 5% increase over the last two years. Baker Center Baker Center in Downtown Minneapolis revealed its new $25 million renovations after the anchor tenant, Wells Fargo, vacated last year. > WeWork will enter the Minneapolis market with a 54,000 square foot location in Capella Tower. This will open soon and will count in next quarter s statistics. Southwest > Q2 showed positive absorption from all three building classes in the Southwest. Year-to-date, the submarket is slightly down. > Landlords are differentiating Class B buildings with broker and tenant incentives not previously seen in this market such as large TI packages and signage deals. > We are anticipating more positive absorption in the second half of the year as activity in both class A and B seems to be higher than previous quarters. This activity should be realized in the second half of the year. Capella Tower Capella Tower will welcome WeWork, a New York City workspace innovator, to its first location in the Twin Cities. Minneapolis- Research & Forecast Report Quarter 2 Office Colliers International 3

4 Submarket Quick Hits CBD > The CBD had the largest negative absorption in the metro in Q2, but it is still below the market average and the second lowest vacancy rate of all six submarkets at 13.8%. > The largest vacancy, Ecolab, vacated a leased building to consolidate into an owned building. They left the Ecolab University Center for their newer headquarters building. While the multi-tenant leasing market shows this as a negative, it is not a reduction in total workforce in the CBD. > The CBD has a disproportionately high percentage of Class B office make-up compared to other submarkets. The majority of the deals in the market fall into Class B. Ecolab University New owners plan to reposition the former Ecolab University building, beginning with a tower rename to Osborn370. Suburban > The Suburban submarket has been holding an even vacancy rate of 14.0% for several quarters. > The Suburban submarket has the highest rate of corporate-owned office space in the metro, with only 50.5% of the total office inventory counting as multi-tenant. > There was not as much activity during Q2 in the Suburban submarket, with the largest vacancy change being Education for Excellence at 2446 University Ave for a 12,500 square foot move-in. Prime Therapeutics Prime Therapeutics broke ground on new headquarters in Eagan. West/Northwest > The West/Northwest submarket continues to maintain the lowest vacancy rate in the metro at 13.0%. > Average asking rates are the second highest behind only the Minneapolis CBD, with asking rates of Class A buildings almost exactly the same between the two markets. > Class A space along the I-394 corridor continues to be in high demand, driving several new proposed office projects. The two most notable include 801 Carlson and 10 West End. None appear to be breaking ground in West End The Excelsior Group and Ryan Cos. will develop a new office building in St. Louis Park called 10 West End. 4 Minneapolis- Research & Forecast Report Quarter 2 Office Colliers International

5 Submarket Quick Hits Spotlight Trend: Downtown Class B is forcing the landlord s hand The Minneapolis CBD has been the most active office market in the Minneapolis- metro area since the end of the Great Recession. Through the financial recovery, we have seen new workplace trends emerge that have changed how employees physically work and how tenants view their space. In a time of low unemployment and quickly changing demographics, tenants understand how high the stakes are for attracting and retaining top talent. Locally, we count suburban to urban corporate migrations and watch the arms race of tenants coming up with the most employee-friendly and innovative build-out. The competition for tenants, along with tenant s interest in attracting top talent, is forcing Class B landlords to breathe new life back into their spaces to stay relevant, or risk high vacancy. These market realities are leading to the repositioning of Class B space with renovations that cater to the interest in more urban creative product. The Minneapolis CBD has been a top performing market in the Twin Cities metro over the last 5 years. Landlords in the submarket were reaping the benefits of the urban migration. The demand for downtown office space created a decade low in vacancy. Then starting in 2014, Wells Fargo, one of the largest tenants in the Minneapolis CBD, decided to construct 1.2 million square feet in the up-and-coming Downtown East neighborhood of Minneapolis. This consolidated much of their downtown footprint into the newlyowned buildings which were ready for occupancy in The result of Wells Fargo s departure from the multi-tenant market in 2016 and 2017 resulted in a large amount of Class B vacancy throughout the Minneapolis CBD. Building owners were faced with the question of how to handle the new vacancies in their buildings. Many landlords opted for the reposition approach and refreshed their buildings to make their vacancies more desirable. Most commonly, the renovations bring back the design and feel of historic brick-and-timber buildings. Now with the amenities of traditional Class A buildings, a new type of product offers the best of all worlds and fosters creative work environments. The demand for this new creative space is a result of shifting requests from tenants. As the workforce becomes younger, there is less value in occupying the high-rise Class A assets that our grandfathers or fathers worked in. Rather, technology has changed how people work and has put a higher value on collaboration. In a typical transition from an older Class B space to a new urban creative feel, the building entrance, building amenities and other common areas are usually the first investments made by landlords. These first impression points are important in welcoming guests to the building. Additionally, the physical floorplates are typically opened up, removing office walls while exposing ceilings. This creates a new, open and flexible workspace that is not often seen within traditional buildings. As a tenant, there can be significant cost benefits to moving into a renovated urban creative space. Where there may be some rent savings in choosing a Class B building over more expensive, established buildings, the savings could be allocated to additional space build-out or an investment in the workplace culture. There is high demand for the creative feel of historic buildings seen in the North Loop. But tenants now have a new option, thanks to the surge of repositioned Class B space that offers the same ambiance and culture enhancements with the added benefit of the skyway system and infrastructure of the Minneapolis CBD. Teresa Lingg Associate Office Leasing DIRECT teresa.lingg@colliers.com Minneapolis- Research & Forecast Report Quarter 2 Office Colliers International 5

6 Significant Lease, Sales and Construction Activity Lease Activity TENANT PROPERTY ADDRESS CITY LEASED SF SUBMARKET TYPE WeWork Capella Tower 225 S 6th St Minneapolis 53,271 Minneapolis CBD New AT&T Wells Fargo Plaza 7900 Xerxes Ave Bloomington 85,044 Southwest Renewal Industrious T3 323 Washington Ave Minneapolis 34,361 Minneapolis CBD New Nestle One Southwest Crossing Viking Dr Eden Prairie 30,232 Southwest New Select Comfort rd Ave S rd Ave Minneapolis 27,596 Minneapolis CBD Expansion Cozen O' Connor 33 S 6th 33 6th St Minneapolis 24,886 Minneapolis CBD Expansion Comcast of MN Arden Hills Corporate Center I 42 Lexington Ave Arden Hills 20,054 Northeast New Dealer TeamWork, LLC Flying Cloud Dr 7500 Flying Cloud Dr Eden Prairie 20,000 Southwest New Cobb, Strecker, Dunphy & Zimmerman Capella Tower 225 S 6thth St Minneapolis 18,253 Minneapolis CBD New MNSCU 7700 France 7700 France Ave Edina 17,971 Southwest Accenture 7700 France 7700 France Ave Edina 17,680 Southwest New Relocation (Local) MEDA Thor 1256 Penn Ave Minneapolis 15,409 Northwest New Thor Thor 1256 Penn Ave Minneapolis 15,000 Northwest New Sales Activity PROPERTY ADDRESS CITY BUYER SELLER PRICE PRICE PSF SF Kickernick Building 430 N 1st Ave Minneapolis United Properties The Sherman Group $19,150,000 $ , Red Fox Rd 1275 Red Fox Rd Arden Hills China Life ElmTree Funds $18,056,385 $239 75, nd Ave S nd Ave S Minneapolis Marquette Lots LLC; North Country Property LLC The 614 Company $15,002,836 $66 227,197 UBS Plaza 444 Cedar St Saint Paul CIG-UBS LLC RAIT Financial $14,150,000 $62 227,717 Ridgeview Office Center Wayzata Blvd Minnetonka Curtis Squire Inc 6950 France Avenue South 6950 France Ave S Edina Sentinel Management Co The Jewish Community Building Corporation Michael Christ Demoss $5,500,000 $93 59,107 $5,175,000 $560 9,240 Parkwood Place 7650 Currell Blvd Woodbury LTE 9000 LLC Ryan Companies $4,424,242 $119 37, Hutchins Drive Hutchins Dr Minnetonka Edgewood REIT Dale Dobrin MD $4,100,000 $454 9,038 BioLife Plasma Services 2325 County Rd 10 Mounds View China Life ElmTree Funds $3,986,683 $239 16,692 Loring Park Condominiums 1730 Clifton Pl Minneapolis Twenty-First Century Tribal Services LLC Trustees of Diocese/ Minnesota Inc $3,075,000 $183 16,848 6 Minneapolis- Research & Forecast Report Quarter 2 Office Colliers International

7 Ramsey 94 Andover Ham 97 Lake 10 Albertville St. Michael Hanover Greenfield Maple Plain Minnetrista Mound 12 Hopkins Minneapolis Shorewood Excelsior 62 Victoria Richfield Southwest Edina 5 Chanhassen Chaska W 41 Eden Prairie Bloomington 212 Otsego Independence Spring Park Rogers Corcoran Loretto Medina Orono Elk River West/Northwest Maple Grove Plymouth Wayzata Minnetonka Deephaven Dayton 494 Champlin 610 Osseo 694 Shakopee Office Under Construction Anoka New Hope Golden Valley Brooklyn Park Crystal St. Louis Park 100 Brooklyn Center Coon Rapids Robbinsdale 94 Spring Lake Park Fridley 35E 65 Blaine Mounds View New Brighton Columbia Saint Anthony 77 Circle Pines Lexington Shoreview Arden Hills Minneapolis CBD Airport/ South of the River 35E 94 Eagan 13 Apple 3 Valley Roseville Lauderdale Columbus Lino Lakes Vadnais West Mendota 35W Centerville North Oaks Little Canada Rosemount 35E Maplewood CBD South Inver Grove North Gem Lake Grant White Bear Lake Willernie Stillwater 694 Pine Springs 36 Woodbury Park Forest Lake Hugo Dellwood 10 Lake Elmo Oakdale 94 Afton Cottage Grove Scandia 5 Suburban 61 OVERALL MARKET > 1,522,015 SF under construction > 588,015 SF speculative > 934,000 SF BTS WEST/NORTHWEST > 117,015 SF > 2 projects SOUTHWEST > 220,000 SF > 2 projects AIRPORT/SOUTH OF THE RIVER > NA > NA ST. PAUL SUBURBAN > 974,000 SF > 4 projects MINNEAPOLIS CBD > 151,000 SF > 2 projects ST. PAUL CBD > 60,000 SF > 1 project Under Construction PROPERTY ADDRESS CITY SUBMARKET SF DEVELOPER Land O Lakes Corporate HQ Expansion 4001 Lexington Ave N Arden Hills Suburban 1000 McGough Vikings HQ 2800 Lone Oak Pkwy Eagan Suburban Kraus Anderson Prime Therapeutics 2900 Ames Crossing Rd. Eagan Suburban United Properties Sycamore Commons 6885 Sycamore Ln Maple Grove West/Northwest Arrow Cos. Kraus Anderson HQ 525 S 8th St Minneapolis Minneapolis CBD Kraus Anderson Thor Construction HQ 1256 Penn Ave N Minneapolis West/Northwest Thor Construction 700 N 5th St 700 N 5th St Minneapolis Minneapolis CBD Schafer Richardson MoZaic East 1320 Lagoon Ave Minneapolis Southwest Ackerberg Group MMPA Shakopee Energy Park 3030 Vierling Dr Shakopee Southwest NA Case Building 767 N Eustis St Suburban NA Treasure Island Center 411 Cedar St CBD Hempel Minneapolis- Research & Forecast Report Quarter 2 Office Colliers International 7

8 NEW TO OUR REPORT Micro Market Analysis Minneapolis CBD The Minneapolis CBD has distinct neighborhoods, from the trendy North Loop to the skyscrapers in the core to the neighborly feel of the Northeast. Each of these neighborhoods warrants a closer look. Beginning Q4 2016, we began tracking these distinct markets to better understand the dynamics of the CBD. SUBMARKET # OF BUILDINGS BUILDING SF DIRECT % DIRECT VACANT % VACANT ASKING RATE AVERAGE OPERATING YTD CORE A 18 13,041,205 1,663, % 1,665, % $18.42 $ ,048-87,990 B 29 7,593,305 2,139, % 2,154, % $14.44 $ ,135-15,322 C 9 733, ,514 49% 359,514 49% $13.25 $ ,979 Totals: 56 21,368,136 4,163, % 4,178, % $15.82 $ , ,291 EAST A 1 172, , % 108, % - $ ,600 63,600 B 9 631,341 9, % 9, % $16.50 $ ,581 C 4 510, , % 138, % $ ,708-7,708 Totals: 14 1,314, , % 256, % $16.00 $ ,309 58,473 NORTHEAST A 1 180, , % 127, % $14.50 $ ,249 B 18 1,811, , % 167, % $13.83 $ ,9 26,687 C 2 85, Totals: 21 2,077, , % 294, % $8.22 $ ,9 41,936 NORTH LOOP A 4 958,594 93, % 93, % $20.94 $ , ,797 B 20 1,414, , % 144, % $17.43 $ ,691-27,674 C 4 262, $15.25 $ Totals: 28 2,635, , % 238, % $17.99 $ , ,123 WAREHOUSE A 1 220,897 78, % 78, % - $ ,390 15,390 B 12 1,430, , % 182, % $14.73 $9.27-7,132-35,2 C 8 5,773 27, % 27, % $14.69 $ ,027 36,064 Totals: 21 2,207,9 284, % 287, % $14.71 $9.07-6,769 16,199 8 Minneapolis- Research & Forecast Report Quarter 2 Office Colliers International

9 Micro Market Analysis NEW TO OUR REPORT 394/494 Corcoran Corridors Maple Grove Medina 94 New Hope Brooklyn Park 100 Brooklyn Center 2 Mississippi River 47 Spring Lake Park 65 Columbia 35W New Brighton 10 Shoreview Arden Hills 694 North Oaks Vadnais 96 White Dellwood Bear Lake 61 Gem Lake 244 Mahtom Orono Shorewood 41 Greenwood 101 Wayzata Woodland Deephaven Chanhassen Plymouth 5 Eden Prairie 394 CORRIDOR Minnetonka Golden Valley 394 St Louis Park Hopkins 100 West Bloomington 50th & France Edina 494 CORRIDOR 494 Uptown Bloomington Minneapolis CBD St Anthony Minneapolis -Saint Paul International Airport Minnesota Valley National Wildlife Refuge 77 9 Roseville Falcon Mendota 36 Summit- University The I-394 and I-494 corridors are also micro markets that are worthy of additional tracking. Payne-Phalen They are hubs of office space that have unique St Paul dynamics and market trends. Mississippi National River and Recreation Area South St Paul Inver Grove North St Paul 120 Maplewood Newport Oakdale Woodbur Cottag Chaska 41 Shakopee 35W 13 35E Lebanon Hills Regional Park 52 SUBMARKET # OF BUILDINGS BUILDING SF Savage DIRECT % DIRECT VACANT Burnsville % VACANT ASKING RATE AVERAGE OPERATING YTD Spring Lake 394 CORRIDOR A 24 4,176, , % 0, % $16.03 $ ,238-29,082 B 30 2,511,1 378, % 386, % $12.39 $ , ,262 C 6 238,123 26, % 26, % $10.25 $ ,2 Totals: 60 6,925, , % 963, % $13.86 $ , , CORRIDOR A 49 8,593,472 1,168, % 1,240, % $14.80 $ ,013 26,237 B 69 5,375, , % 943, % $11.45 $9.80-8,227-31,920 C ,080 98, % 98, % $10.70 $ , ,110 Totals: ,478,4 2,096, % 2,282, % $13.07 $ ,483 98,427 Minneapolis- Research & Forecast Report Quarter 2 Office Colliers International 9

10 Market Statistics SUBMARKET # OF BUILDINGS BUILDING SF DIRECT % DIRECT VACANT % VACANT ASKING RATE AVERAGE OPERATING YTD AIRPORT/SOUTH OF THE RIVER A 21 1,883, , % 199, % $15.17 $ ,749 88,244 B 62 4,271, , % 815, % $12.06 $ ,800-98,119 C 29 1,273, , % 157, % $9.46 $9.23-6,1-16,130 Totals: 112 7,428,850 1,093, % 1,172, % $12.27 $ ,602-26,005 MINNEAPOLIS CBD A 25 14,573,435 2,071, % 2,073, % $18.62 $ , ,414 B 90 12,988,172 2,644, % 2,662, % $15.08 $ ,066-53,025 C 29 2,216, , % 527, % $13.29 $ ,371 25,377 Totals: ,777,836 5,244, % 5,264, % $15.71 $ , ,766 SOUTHWEST A 61 9,211,074 1,392, % 1,423, % $16.16 $ ,240-90,564 B 90 6,176, , % 875, % $12. $ ,314 43,015 C ,251 86, % 86, % $8.83 $7.84 5,560 2,750 Totals: ,257,375 2,350, % 2,385, % $14.23 $ ,114-44,799 ST. PAUL CBD A 6 2,128, , % 233, % $14.26 $ ,778 B 26 4,515, , % 796, % $10.89 $ , ,251 C ,936 51, % 51, % $9.00 $ ,773-12,990 Totals: 44 7,283,603 1,003, % 1,081, % $12.03 $ ,820-1,019 ST. PAUL SUBURBAN A 35 2,172, , % 377, % $14.16 $ ,707 37,110 B 99 6,139, , % 896, % $11.88 $ ,409-51,590 C 34 1,912, ,6 9.44% 187, % $10.65 $ ,017-21,585 Totals: ,224,789 1,430, % 1,462, % $12.66 $ ,315-36,065 WEST/NORTHWEST A 42 5,099, , % 615, % $18.52 $ ,126 B 95 6,196,0 999, % 1,103, % $13.44 $ , ,619 C 41 2,057, , % 158, % $9.49 $ ,513 30,657 Totals: ,353,237 1,730, % 1,878, % $14.67 $ ,1-153,088 TOTAL ALL MARKETS A ,068,894 4,831, 13.78% 4,923, % $16.48 $ , ,300 B ,287,093 6,866, % 7,150, % $13.14 $ ,090-4,589 C 167 8,969,703 1,156, % 1,, % $10.43 $8.24-6,605 8,079 Totals: ,325,690 12,853, % 13,243, % $14.01 $ , ,210 The above table is summarized data on multi-tenant office buildings greater than 20,000 square feet. Not included are single-tenant, owner-occupied, medical or government buildings. 10 Minneapolis- Research & Forecast Report Quarter 2 Office Colliers International

11 Market Statistics (Expanded Market) SUBMARKET # OF BUILDINGS BUILDING SF DIRECT % DIRECT VACANT % VACANT ASKING RATE AVERAGE OPERATING YTD AIRPORT/SOUTH OF THE RIVER A 51 2,538, , % 265, % $14.88 $ ,131 97,092 B 154 7,367, , % 857, % $12.05 $8.47 -,542-82, C 74 2,620, , % 175, % $9.46 $9.23-7,111-17,544 Totals: ,526,5 1,220, % 1,298, % $12.43 $ ,522-2,621 MINNEAPOLIS CBD A 31 16,689,095 2,071, % 2,073, % $18.62 $ , ,414 B ,535,789 2,667, % 2,685, % $15.06 $ ,385-53,706 C 57 3,902, , % 616, % $14.06 $ ,691 19,057 Totals: ,127,524 5,3, % 5,374, % $15.73 $ , ,765 SOUTHWEST A 91 13,167,045 1,689, % 1,720, % $16.41 $ ,737-97,531 B 194 9,615,445 1,011, % 1,235, % $27.70 $ ,9 89,522 C 80 3,121, , % 168, % $10.83 $7.63-6,575 7,863 Totals: ,904,362 2,861, % 3,125, % $21.26 $ , ST. PAUL CBD A 8 2,773, , % 233, % $14.26 $ ,778 B 50 5,433, , % 796, % $10.89 $ , ,251 C 32 2,810,535 73, % 73, % $9.00 $ ,773-12,990 Totals: 90 11,018,439 1,026,3 9.32% 1,103, % $12.03 $ ,820-1,019 ST. PAUL SUBURBAN A 72 3,024, , % 407, % $17.68 $ ,166 41,376 B ,581,979 1,098, % 1,106, % $12.24 $8.45-9,850-75,775 C 117 6,546, , % 208, % $9.01 $ ,250-10,898 Totals: ,152,993 1,690, % 1,722,657 8.% $13.88 $ ,566-45,297 WEST/NORTHWEST A 94 9,301, , % 943, % $17.61 $ ,438-18,517 B ,043,0 1,7, % 1,661, % $13.32 $ , ,592 C 138 5,339, , % 519, % $10.41 $ , ,854 Totals: ,684,362 2,722, % 3,124, % $14.31 $ , ,963 TOTAL ALL MARKETS A ,494,607 5,296, % 5,643, % $16.86 $ , ,056 B 1,026 58,578,444 7,840, % 8,344, % $16.39 $ , ,971 C ,341,184 1,739, % 1,762, % $15.83 $ , ,281 Totals: 1, ,414,235 14,876, % 15,749, % $15.83 $ , ,281 The above table is summarized data on multi- and single-tenant office buildings greater than 10,000 square feet. Owner-occupied properties are also included. Not included are government or medical buildings. Minneapolis- Research & Forecast Report Quarter 2 Office Colliers International 11

12 403 offices in 68 countries on 6 continents United States: 153 Canada: 29 Latin America: 24 Asia Pacific: 86 EMEA: 111 BROKERAGE SERVICES CONTACT: William M. Wardwell SIOR Executive Vice President Brokerage Minneapolis bill.wardwell@colliers.com Colliers International Minneapolis Baker Road, Suite 400 Minnetonka, MN 343 colliers.com/msp $2.6 billion in annual revenue SUBSCRIBE TO OUR BLOG 2 billion square feet under management 16,000 professionals and staff Copyright 2017 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.