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CBRE <br />MARKETVI EW <br />EL <br />Minneapolis/St. Paul Office, Q2 2015 <br />Halfway through 2015, absorption <br />over half a million square feet <br />OVacancy Rate <br />15.3% <br />Net Asking Rate <br />$13.43 <br />Net Absorption <br />369,148 Sq. Ft. <br />Figure 1: Owner -Favorable vs. Occupier -Favorable Submarkets <br />Owner Favorable <br />Market conditions where one or more of the <br />following exist: positive net absorption, stable or <br />declining vacancy rate, strong leasing activity, <br />increasing rents, a lack of rent concessions or limited <br />new supply. <br />O <br />-Minneapolis CBD <br />-North Loop <br />MIMPF Moderate <br />Z <br />-394 Corridor <br />Slight <br />Under Construction <br />180,000 Sq. Ft. <br />*Arrows indicate change from previous quarter. <br />Occupier Favorable <br />Market conditions where one or more of the following <br />exist: negative net absorption, flat or increasing <br />vacancy rate, sluggish leasing activity, flat or declining <br />rents, rent concessions or an imbalance created by a <br />large increase in new supply. <br />-494 Corridor <br />-Midway <br />Slight <br />-St. Paul CBD <br />-Northwest -B/E/A <br />-Suburban St. Paul <br />Source: [BRE Research, Q2 2015. <br />• Leasing trends continued upward trajectory <br />into Q2 2015 with overall positive <br />absorption almost double that of Q1 2015 <br />• Tenants relocating within Central Business <br />Districts (CBDs) of Minneapolis and St. Paul <br />• Single tenant construction dominates the <br />market <br />• CBRE Institutional Properties team <br />completes largest suburban building sale <br />to date in 2015 and sales of portfolios <br />rounded out the top four transactions <br />• Class A buildings near the West End area <br />of the 1-394 submarket leading the market <br />in low vacancy, high asking rates <br />MARKET OVERVIEW <br />Q2 2015 continued the steady start from Q1 2015 with <br />decreasing vacancy, steady asking rates and higher <br />absorption quarter -over -quarter. Overall metro vacancy <br />rates dropped to 15.3% which is 70 basis points less <br />than Q1 2015. Net asking rates came in steady at <br />$13.43, but Class A average asking rates are up 2%. Net <br />absorption for the metro was 369,148 sq. ft. which <br />brings the current Minneapolis -St. Paul office market <br />to over half a million sq. ft. of positive absorption for <br />2015. <br />The Downtown Minneapolis submarkets saw steady <br />absorption, consistent asking rates and decreasing <br />vacancy. The North Loop vacancy rate of 8.1% is still <br />the lowest of any submarket in the metro. The lowest <br />vacancy rate in the suburban submarkets is found in <br />the I-394 area at 11.8%. <br />Q2 2015 CBRE Research © 2015 CBRE, Inc. 1 <br />