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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 | 1,184,910 | 779,588 | 2,146,489 |
| Vacant | 27,520 | 84,186 | 107,726 | 260,319 |
| Vacant Sublease | 0 | 0 | 0 | 0 |
| Under Construction | 0 | 0 | 0 | 89,372 |
| Substantial Rehab | 0 | 0 | 0 | 0 |
| Net Absorption | 2,643 | 21,341 | 91,626 | -15,877 |
| Vacancy Rate | 6.99% | 7.10% | 13.82% | 12.13% |
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| Rental Rates ($/sf) |
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| Lowest | $12.00 | $13.50 | $9.00 | $12.00 |
| Highest | $16.00 | $21.00 | $11.50 | $14.50 |
| Weighted Average | $13.50 | $14.50 | $10.50 | $12.50 |
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| Sales Prices ($/sf) |
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| Lowest | $75.00 | $105.00 | $35.00 | $65.00 |
| Highest | $85.00 | $145.00 | $55.00 | $95.00 |
| Weighted Average | $80.00 | $120.00 | $45.00 | $85.00 |
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| Operating Expenses ($/sf) |
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| Lowest | $4.50 | $4.35 | $4.15 | $4.20 |
| Highest | $5.75 | $4.60 | $4.85 | $4.45 |
| Weighted Average | $5.00 | $4.85 | $4.75 | $4.30 |
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| Tax Expenses ($/sf) |
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| Lowest | $1.10 | $1.75 | $0.74 | $1.24 |
| Highest | $1.75 | $2.54 | $1.43 | $1.98 |
| Weighted Average | $1.70 | $2.00 | $1.18 | $1.82 |
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Utility Rates:
- CBD $2.00 per sf
- Outisde CBD $1.50 per sf
- Separately Metered
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Parking Ratio:
- CBD 1 per 1000 sf
- Outside CBD 1 per 300 sf
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Standard Work Letter:$37.00 per sf
Typically based on dollars per square foot | Operating Cost Escalation:determined by Base Year
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| Rate of Return:
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Mortgage Money Supply: Ample
Prime Source of Financing: Insurance Companies, Commercial Banks |
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Cumulative Discount Rate:5%
Landlord Concessions:
Parking
Rental Abatement, Addl. Interior Improvements |
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Leasing Activity Profile
Major Activity- Technology
Minor Activity- Fortune 500 Firms, Legal/Accounting, Insurance, Finance/Banking, Engineering/Architecture, Busines Services, Sales
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| Outlook |
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| Absorption | | Up 1-5% |
| Construction | | Down 6-10% |
| Vacancies | | Up 6-10% |
| Rental Rates | | Down 1-5% |
| Landlord Concessions | | Up 6-10% |
| Sales | Class A CBD | Down 1-5% |
| Prices | Outside CBD | Down 1-5% |
| Class B CBD | Down 1-5% |
| Outside CBD | Down 1-5% |
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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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| 2003 Review |
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The Renaissance Zone within the CBD increased the conversion of existing warehouse buildings in the downtown area into office space. Notable examples are the new Vogel Law Office, 300 NP Avenue, and the conversion of the former Northern School Supply building in to a remote architecture and arts campus for North Dakota State University. These Renaissance Zone conversions will continue adding to the success and vitality of the CBD. Some of the success of the Renaissance Zone kept firms from moving outside of the CBD and thus may have negatively influenced the absorption of space in the suburban market. New office development is occurring at a rapid rate, resulting in a temporary oversupply. |
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| 2004 Forecast |
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We look forward to more conversions in the CBD; however, we expect that the rate of office conversions within the Renaissance Zone will slow and the remaining conversions will lean toward residential use. We expect a number of new construction projects in the CBD geared toward a mixed use of office, retail, and residential. The absorption of Class B space in both the CBD and outside the CBD (more so in the suburban market) will continue at a slow pace. Vacancies for Class B space average 13 percent. The office market sees some building continuing because lower financing rates have prompted companies to build new space rather than continue to lease.
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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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