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MARKET REPORT I Q2 2013 I OFFICE I MINNEAPOLIS-ST. PAUL 4., 1 MINNEAPOLIS CBD ® T 'lip e ` > The vacancy rate in the Minneapolis CBD is > There are Class A landlords pushing rental 14.2 percent, with Class A properties posting a rates. Time will tell if tenants will pay the rates WEST/NORTHWEST m rate of 11 percent.There was minimal absorption for quality and location or modify their v ST.iiilL 12 INNEAPOUsceo SUBUR AN ® of 49,756 square feet.The total absorption year- requirements to avoid paying premium rents. "t► • tag ss� st HMUL ceo to date is 25,719. ,, S` >Companies are changing the way they use their s ez -;.-_ > Activity is robust in terms of tenants looking office space,and see the expiration of their lease SOUTHWEST 'J for space; with no new development, prospects as an opportunity to create efficiencies and AIRPORT/ souinoP are quickly pursuing the options available. upgrade to modern space designs including to "HER"H CO) 59 more natural light, open space plans,and fewer > Without committing to building a new office private offices. Moss & Barnett is moving from tower, developers are purchasing space and an upper floor at Wells Fargo to 150 Fifth Street renovating and/or repurposing the space to Towers in August. The company chose lower- MINNEAPOLIS CBD VACANCY BY CLASS office use. Examples include space at 510 floor,more economical Class A space.They also Marquette,currently being renovated by Swervo took advantage of the opportunity to move after Development. United Properties recently the build out of their space was complete,rather Class C 193% purchased the vacated Neiman Marcus space, than staying and working amidst construction. classe tb j and David Werner Real estate is offering to purchase Gaviidae Common I. Both of these > The Minneapolis CBD is seeing a shift to a Class A 10.8% retail properties would be strong candidates for landlord's market with little development and low office use. actual vacancy for prime properties along 0 5% 10% 15% 20% Nicollet Mall. Landlords are pushing rental rates Percent Vacant >There are discussions between the Minnesota upward. Timberwolves and the owners of Block E about the potential for a conversion of Block E to a > Ryan Companies was awarded the contract to practice facility and office space. build parking connected to the new Viking stadium in downtown Minneapolis,an early step > There is significant residential development in their proposal to build a mixed use project planned and under construction in the near the stadium. Minneapolis CBD, increasing the attractiveness of downtown office space. Companies are >Wells Fargo vacated 58,000 square feet at 100 increasingly concerned with employee Washington Square. recruitment, and the presence of available housing in a robust CBD is appealing. SIGNIFICANT MINNEAPOLIS CBD ACTIVITY LEASE TENANT BUILDING ADDRESS CITY SIZE(SF) Grey Plant Mooty Renewal IDS Center 80 8th St S Minneapolis 50,000 Moss&Barnett Fifth Street Towers 150 5th St Minneapolis 40,000 Grant Thornton(New Space,Same Property) U.S.Bank Plaza 200 S.Sixth St Minneapolis 31,484 Yamamoto The Northwestern Building 219 Second St N Minneapolis 11,300 Morsekode 333 S Seventh St 333 S Seventh St Minneapolis 8,500 Way Better Snacks Tractorworks Building 800 Washington Ave N Minneapolis SALES BUILDING ADDRESS CITY BUYER SELLER PRICE PRICE PSF SIZE(SF) IDS Center 701 Nicollet Mall Minneapolis Beacon Investment p Inland $253,000,000 $181 1,400,000 Properties LLC Marquette Partners 510 Marquette Building 510 Marquette Minneapolis LLC(affiliate of Opportunity Advisors $6,690,000 $34 198,552 Swervo Development) 317 Second Ave S 317 Second Ave S Minneapolis The Historic 317 Co. Hennepin County $4,400,000 $62 71,000 COLLIERS INTERNATIONAL I MINNEAPOLIS-ST.PAUL