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| Market Data | Class A | Class B |
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| Inventory(sf) | CBD | Outside CBD | CBD | Outside CBD |
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| Total | 393,739 | 887,218 | 700,000 | 1,804,479 |
| Vacant | 25,277 | 9,590 | 80,177 | 183,968 |
| Vacant Sublease | 0 | 0 | 30,000 | 0 |
| Under Construction | 0 | 93,035 | 0 | 6,376 |
| Substantial Rehab | 0 | 0 | 0 | 0 |
| Net Absorption | 17,676 | 29,509 | 21,393 | 145,169 |
| Vacancy Rate | 6.42% | 1.08% | 11.45% | 10.20% |
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| Rental Rates ($/sf) |
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| Lowest | $12.00 | $13.50 | $9.00 | $11.50 |
| Highest | $15.50 | $25.00 | $12.00 | $14.00 |
| Weighted Average | $13.00 | $14.50 | $10.50 | $12.50 |
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| Sales Prices ($/sf) |
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| Lowest | n/a | n/a | $35.00 | $55.00 |
| Highest | n/a | $140.00 | $55.00 | $94.00 |
| Weighted Average | n/a | n/a | $45.00 | $72.00 |
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| Operating Expenses ($/sf) |
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| Lowest | $4.45 | $4.30 | $4.10 | $4.85 |
| Highest | $5.05 | $4.55 | $4.80 | $4.75 |
| Weighted Average | $4.85 | $4.75 | $4.20 | $4.35 |
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| Tax Expenses ($/sf) |
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| Lowest | $1.65 | $1.25 | $1.00 | $1.10 |
| Highest | $2.10 | $1.45 | $1.30 | $1.40 |
| Weighted Average | $1.90 | $1.30 | $1.20 | $1.30 |
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Utility Rates:
- CBD $1.50 per sf
- Outside CBD $1.25 per sf
- Not Separately Metered
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Parking Ratio:
- CBD - per 1 sf
- Outside CBD - 300 per 1 sf
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| Standard Work Letter:$25.00 per sf | Operating Cost Escalation:determined by Base Year
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| Rate of Return:
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Mortgage Money Supply: Moderate
Prime Source of Financing: Commercial Banks |
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Cumulative Discount Rate:10%
Landlord Concessions:
Parking
Rental Abatement
Additional Interior Improvements |
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Leasing Activity Profile
Major Activity-
Minor Activity- Fortune 500 Firms, Business Services,
Sales, Engineering/Architecture, Government
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| Outlook |
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| Absorption | | Down 6-10% |
| Construction | | Down 1-5% |
| Vacancies | | Up 6-10% |
| Rental Rates | | Down 6-10% |
| Landlord Concessions | | Up 6-10% |
| Sales | Class A CBD | Down 6-10% |
| Prices | Outside CBD | Up 1-5% |
| Class B CBD | Down 6-10% |
| Outside CBD | Same |
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| Reporter(s) |
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Olson Konrad, Konrad Olson Real Estate 701.280.1606 email me
Ericksmoen Neal, Appraisal Services 701.235.1189 neal@asind.com |
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| 2000 Review |
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2000 saw a decline in office construction in the suburban market, with the exception of Great Plains Software and the Lexus Tower, which had just broken ground after this survey was submitted and thus are not included in the "under construction" statistics.
The cost advantages that marked 1999 were still available in 2000, with low operating expenses, low rents, and low taxes. Vacancy rates declined in all markets, except Class "B" Outside CBD space.
Demand for existing and second-generation space has slipped, with new construction capturing most of the office market. Fargo's experiencing a moderate amount of speculative development.
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| 2001 Forecast |
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Due to a low unemployment rate of 1.9 percent, it appears that relocations from outside the market will be minimal. New firms and existing firms are experiencing difficulty recruiting and retaining human capital.
The overall economy is still vibrant and even though the numbers show a decline in new construction and absorption from prior years, the market should remain vital. Technology leads the office market, especially for new construction. Great Plains Software will complete
a second building on their campus over the next year, adding 93,000 sq. ft. of office space. The Renaissance Zone in the CBD has stimulated rehabilitation of several buildings.
The program provides a number of tax abatements to qualified projects.
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| Definitions |
| Please read carefully. The following definitions are given to insure uniformity of response. Use, not building design, determines reporting category. |
Central City/Suburban Areas -Since the definition of urban and suburban areas varies widely, it is the responsibility of the individual survey panelist to reflect his or her area's particular characteristics.
High Technology/R&D - Refers to highly improved space with 50 percent or more office potential and higher-than-normal parking.
Must have some industrial function to qualify; cannot be pure office.
Total Inventory -Total square footage of rentable industrial space (including R&D space), vacant and occupied, including owner occupied space, ready for tenant finish, in your market area.
Vacant Inventory -Total square footage of vacant rentable industrial space, including sublease.
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Net Absorption - Net absorption is the net change in occupied space.
Construction - Ground must be broken. Do not include projects that are still in the planning stage.
Prime Industrial Building - Buildings in the top 25 percent of overall desirability of the existing inventory; such buildings are considered to be for general purpose uses such as industrial, research, warehouse and/or manufacturing.
Net Lease - A lease in which the tenant bears the responsibility for real estate taxes, insurance and operating expenses.
Gross Lease - A lease in which the tenant's rent includes real estate taxes and fire and extended coverage insurance, as well as maintenance of the roof structure and outside walls.
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Improved Sites - Sites in the top 25 percent of overall desirability of the existing inventory. Such sites are in a "ready-to-build" condition and are essentially level and graded and serviced with all necessary utilities.
Unimproved Sites - Sites in the top 25 percent of overall desirability of the existing inventory and are zoned for industrial use. Streets and utilities may not yet be installed but are reasonably close and available.
Construction Costs - Should reflect only hard construction costs such as general contractor, overhead, and profit but exclude architectural and engineering fees, and financing.
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Copyright 2002 - Society of Industrial and Office Realtors (SIOR)
Konrad Olson is a licensed broker in the State of North Dakota and Minnesota.
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