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TWIN LAKES, Roseville, Minnesota Market Assessment & Demand Analvsis Office Market Assessment improvement, but considerably less robust than the job growth which occurred during the late 1990s �35,�� jobs peryear). • In recent years, higher productivity (i.e. getting more done without adding employees) has been seen as one of the reasons for the slow recovery in office demand. Nonetheless, office-related employment is projected to pick up in 2005 and 2006. In particular, office growth is expected to be stronger among small and riaid- sized companies. This trend bodes well for the officelretai� buildings in Twin Lakes. • Meanwhile, higher employment is expected in the educational and healthcare industries, with some (but less substantial) growth in business and professional services, finance and government. . The United Properties report expresses optimism for office market in the year ahead. Demand has picked up regionwide, particularly in suburban markets. Quality buildings in suburban locations with good access to transportation corridors are expected to outperform that balance of the market in the immediate future. United Properties predicts 2005 regional absorption of 800,000 to 1,000,000 square feet, with a 1-2°/o decline in vacancy rates by year end and a reversal of the steady decline in rental rates seen in recent years. Office Market - Vacancv and Abso tion -- 2nd Half 2004 Northeast Northwest Mpls CBD St. Paul CBD SouthlAirport Southwest Twin Cities Total N�t Rentable Vacaalt Space Vacaalcy 4ma ur! Cn1lIPQQP Ra4P� 6,906,111 1,669,912 26,046,909 7,652,832 5,150,404 13,420,204 69,36'1,419 ' Including sublease space. 994,480 328,973 6,042,883 2.119,834 906,471 2,335,115 14,337,100 14.4°/a 19.7% 23.2% 27.7% 17.6% 17.4% 20.7% 2004 � 104,527 75,380 (178,233) 148,910 (38,085) 372.641 37.316 522,456 GVA Marquette Advisors Page 50