1A.1, TCAAP Market Analysis and Comprehensive Plan Discussion

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D Rx A F EXECUTIVE SUMMARY Sustained job growth in the Market Area will be needed to generate the demand necessary to absorb the existing vacancy in the market. We expect that market conditions will sup- port a new office development on the Site during the second half of the decade. • The most likely target markets for office space on the Site would be businesses in the industry sectors that are projected to grow and have an existing presence in the Market Ar- ea. The PMA has a large employment base in the Professional and Business Services sector as well as the Education and Health Services industry, both of which are expected to experi- ence substantial growth by 2020. In addition to traditional multi-tenant office space, the Site would also likely be an attractive location for a corporate campus as well as less- traditional office users such as governmental agencies and medical services. Hotel Market Analysis • According to published data, the Minneapolis-St. Paul Metro Area has experienced flat occupancies over the past year (58.2%), but experienced growth in average daily rates (ADR) and in revenue per available room. Generally, a 65%occupancy rate is considered the equilibrium for a hotel to be profitable. • Due to the Site's close proximity to several major employers and employment centers, as well as the National Sports Center in Blaine, the subject property would likely be a suitable location for a hotel. The development of additional retail and entertainment uses on the Site would increase the attractiveness of the Site to a hotel operator. There appears to be a market from leisure travelers, but the ability to support a hotel on the site is going to be dependent on the ability to attract weekday business which will come from developing of- fice and industrial uses that will have business travelers requiring overnight hotel space. Also, there are several large employers in the surrounding area, such as Medtronic, Land O'Lakes, and Deluxe,which will likely generate demand for overnight hotel stays from busi- ness travelers. Industrial Market Analysis I • Due to the Site's access to Highway 10 and 1-35W and the central location of the property within the Northeast industrial submarket, we project that the TCAAP Site could capture approximately 400,000 to 445,000 square feet of industrial space on the property. I • Bulk Warehouse properties with 32-foot clear height ceilings appear to be in highest de- mand currently and forecasted job growth in the Transportation and Warehousing subsec- for will continue to support demand for this product type. Functionally well-designed Office Warehouse facilities that have 24-foot or higher clear height ceilings, are energy efficient, have ample parking and good lighting are also in demand. MAXFIELD RESEARCH INC. 5