2015.09.02 EDC Packet - Laserfiche WebLink

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MARKET REPORT 1 02 2015 1 OFFICE I MINNEAPOLIS -ST. PAUL ST. PAUL SUBURBAN The vacancy rate in the St. Paul Suburban submarket is 15.2 percent, up from Quarter One's rate of 14.5 percent. Sport Ngin moved into 30,000 square feet at Highlight Center, a former Minneapolis Public Schools property in Northeast Minneapolis that was recently purchased and renovated by Hillcrest development. The addition of this 166,000 square foot property, which is coming online with 136,000 square feet of vacancy, is why there was positive absorption but an increase in vacancy. Highlight Center is seeing significant interest from tenants who are willing to pay strong rental rates for the area. One of the main draws of this building is the extensive parking surface, a major differentiator from other buildings in Northeast. Arden Hills is seeing increased vacancy rates, as Smiths Medical moved out of its headquarters and into 6000 Nathan Lane in Plymouth. ST. PAUL CBD The vacancy rate in the St. Paul CBD is 18.4 percent, down from 18.6 percent at Quarter One as 19,472 square feet was absorbed overall. Green Tree Servicing signed a lease for 140,000 square feet at 180 East Fifth, a property located in the Lowertown section of the CBD, close to the new St. Paul Saints' stadium. The company will be significantly investing in the property to upgrade the space and use it as efficiently as possible. Ecolab recently bought the Travelers North Tower at 385 Washington where it will consolidate all of its 1,500 employees. COLLIERS INTERNATIONAL I MINNEAPOLIS -ST. PAUL This corporate activity does not bode well for the Rice Park neighborhood in the CBD. Green Tree will be relocating from Landmark Towers and Lawson Commons in the Rice Park area near the Ecolab Headquarters and Ecolab University, both of which Ecolab will be vacating. Other than Lawson Commons, all of these properties have smaller floor plates compared to what tenants are currently seeking and it may take a long time to fill the space as most large users prefer large floor plates. Obsolete office space in the St. Paul CBD continues to be converted to residential including Sibley Square and the pending redevelopment of the St. Paul Post office into apartments and a hotel.