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NORTHWIST SECTOR The Northwest Sector continued its SOUTHWEST SECTOR VACANCY RATES slow but steady rate of positive absorp- tion. This year's annual absorption of FOURTH QUARTER 1988- 1995 10,572 sq.ft.resulted in a vacancy rate of 30% ©Towle Real EsmteCampo" • 16.0%, the lowest this sub-market has 29.6 seen since its peak at just under 38% in 25% 1988. zz•� 22.5 k17.0 Of the 11 buildings in this relatively 20% 18. small sector, seven buildings had equal 21.1 or better occupancy than a year ago. 15% 17.3 For the fifth consecutive year, real 14.3 12.6 estate taxes decreased, falling 8.1% this 10% 13.1 year to$2.57 psf.The average quoted net 8•a rent also dropped, by 3% to $7.03 psf. 5% 8.0 5.7 Total expenses decreased as well, falling 4.4 4.0 4.2% to$6.12 psf. 0 1988 1989 1990 1991 1992 1993 1994 1995 WEST SECTOR CLASS A BUILDINGS CLASS B BUILDINGS Another year of positive absorption totaling 69,885 sq. ft. resulted in an impressive 8.5% vacancy rate for this Class B market, with no buildings After suffering negative absorption sub-market. The large Class B segment reporting contiguous space available of for the first time in four years for the was the leader with approximately three 50,000 sq. ft. or larger. The average year ending second quarter 1995,Class B fourths of the 47 buildings reporting quoted net rent rose 12% to$9.09 psf. experienced a dramatic increase in equal or improved occupancy as of Real estate taxes in Class A build- leasing activity by the end of fourth i second quarter 1995. ngs remained the same for second quarter 1995, reporting six-month Two buildings became single tenant quarter 1995 at $4.34 psf, with total absorption of 306,236 sq.ft.This lowered and were removed from the study: the expenses increasing 2.3% to$9.61. Class the vacancy rate by 2.3 percentage points Class A, 349,430 sq. ft. Prudential build B Property taxes reported a slight to 5.7% in just six months. The largest ing at 3033 Campus Drive, and in Class decrease of 2% to $2.45 psf, and total gainers were the 8100 Building, BLN • B, the 338,649 sq. ft. former Prudential expenses increased 3.5% to$7.29 psf. Office Park II, France Place, the building at 3701 Wayzata Boulevard. Normandale Building, and Pentagon This reduced the amount of space in the SOUTHWEST SECTOR Office Park. multi-tenant market by 688,079 sq. ft. Another year of strong absorption With this extremely tight market, Class A buildings added 24,902 sq. decreased the Southwest Sector's the Southwest Sector is primed for a new ft. to the occupied base,with the highest vacancy rate to a record low of 5.1% as office building. Zeller Realty absorption reported in 601 Carlson of fourth quarter 1995. During a six- Corporation, TOLD Development Center. The vacancy rate in Class A month period this sector pulled ahead of Company, United Properties and Opus changed very little from last year's the Minneapolis CBD to become the Corporation all have announced plans. dramatic move from 18.4% in second metro area absorption leader. Active TOLD Development Company hopes to quarter 1993 to 7.7% by the second leasing resulted in 398,339 sq. ft. of break ground within the next year for its quarter of 1994.For second quarter 1995 absorption from second quarter 1995 to proposed six-story 140,000 sq. ft. first it increased just 0.1 percentage point to fourth quarter 1995. This sector has phase and eight-story, 180,000 sq. ft. 7.8%. experienced quite a turnaround since second phase at the northeast corner of With no contiguous space available 1991 when it reported a vacancy rate of I-494 and 35W. of 50,000 sq. ft. or more in this sector's 22%. Three buildings became single Class A buildings, average quoted rental Class A buildings experienced six- tenant and were removed from the study, rates rose significantly with a reported month absorption of 92,103 sq.ft.,lower- raising this sector's occupancy rate. range between $10.50 to $16 psf. The ing its fourth quarter 1995 vacancy rate Cargill now owns and will occupy 12800 average quoted net rent increased nearly to 4%.The majority of the leasing activ- and 12900 Whitewater Drive. $3 psf to$13.33 psf. ity was in the 8400 Tower, Opus Center, Paramount Plaza IV also became single The Class B buildings experienced a Southpoint II,and Southpoint Tower. In tenant. significant vacancy drop of 8.1 percent- this very tight submarket, space is Using fourth quarter data, the Class age points from second quarter 1994 to limited, with One Southwest Crossing A average rental rate increased a total of second quarter 1995 to a vacancy rate of and International Plaza reporting the 20.1% over the past 18-month period to 8.8%. As in Class A,space is tight in the largest blocks available. $13.74 psf. Class B asking rents rose •