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equipment expansions. Over the past three years, over six million sq. ft. of industrial space was y�r r absorbed, bringing the inventory of .F _ available space in line with the expand- ing demand. The present conditions, where supply and demand for industrial space are in balance, will benefit land- lords. Owners of well located,functional industrial buildings will enjoy high occu- pancies, rising rents, increasing cash c .r_ flows, and the opportunity to sell at lam attractive prices. As presented in our previous - outlook, after years of relatively static ♦ Opus Corporation's Elm Creek Commerce Center in Champlin asking rents, the industrial markets are now experiencing rental rate increases. WEST facility,70,000 sq.ft.has been pre-leased. Since there are no rental concessions, h d i The West Sector experienced the the rate increases represent real upside. Continuing its three-year recovery, p Additionally, the higher construction the West Sector doubled the strong largest increases in average quoted net rental rates. Offices ace rose 5.2% to costs associated with the new develop- absorption it reported last year with an P ments will keep upward pressure on impressive 201,775 sq. ft., or 15.2% of $7.07 psf and warehouse rents increased b 4% to$3.59 sf. rental rates. the occupied base absorbed over the past Y P The substantial amount of proposed twelve months. This resulted in a development has led to a significant vacancy rate of 7.0%. Since 1992, when rebound in industrial land prices. Well- this submarket's vacancy rate was 23%, MARKET located industrial sites are considered nearly 425,000 sq. ft. of space has been �\� very marketable and thus very valuable. absorbed! ` OUTLOOK The increased marketability of industrial Contributing to this year's absorp- land represents another sign the market Oarne was the addition to the survey of the The industrial markets have expert- is recovering.As the amount of available 532 sq.ft. building at 1000 Berkshire enced another year of strong recovery industrial land diminishes, prices will in Plymouth, reporting a vacancy and many experts believe we have fully continue to rise. The rise in prices will of 80,000 sq. ft. rebounded from the prior difficulties. push the demand for sites to new loca- With these tight conditions and Continued market success will be depen- lions. rising demand for space, new develop- dent on the general business economy One new location is Scott County ment is occurring. MEPC's Golden Hills and the balance of supply and demand and Shakopee, primarily due to the Business Park Phase I in Golden Valley for industrial space. Both the national recent opening of the Highway 169 is under construction and scheduled for and local economy are stable, resulting bridge crossing the Minnesota River. completion in March 1995.Of the 90,000 in profitable company operations, employment rowth, and plant and Another location is Dakota County, sq. ft. office manufacturing/distribution g P given the availability of land,close prox- imity to the airport, and equidistance between downtown Minneapolis and St. Paul. A third location is Washington County and Woodbury along I-94, espe- cially given the tremendous population growth in the area.Finally,the West and Northwest Sectors will continue to see new development,a result of the existing --- - industrial base and freeway systems. After years of languishing perfor- mance,the OS/BC market appears to be frebounding. The recovery of this --' product type can be traced to the posi- tive trends impacting the general office market. With its high percent of office finish space, the OS/BC product MfPC Corporation's Golden Hills Business Park in Golden Valley