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CBRE <br />MARKETVIEW MINNEAPOLIS/ST. PAUL OFFICE <br />UNEMPLOYMENT DOWN FOR Q2 2015 <br />Not seasonally -adjusted unemployment <br />numbers for Q2 2015 are reported at 3.4% for <br />the Twin Cities metro. The State of Minnesota <br />saw a decrease from 4.6% in Q1 2015 to 3.6% in <br />Q2 2015. According to the Minnesota <br />Department of Employment and Economic <br />Development (DEED), the rate of participation 3.0% <br />in the labor force is up for the fifth consecutive <br />month to 70.8%. Nationally, Minnesota is still <br />well below the average unemployment rate of <br />5.3% (not seasonally adjusted figure). <br />Figure 5: Unemployment <br />12.0% <br />9.0% <br />6.0% <br />WEST END ASKING RATES LEADING THE <br />MARKET <br />0.0% <br />Asking rates in the Class A office buildings <br />surrounding the West End development near <br />Highway 100 and Interstate 394 are leading the <br />Minneapolis -St. Paul office market in 2Q 2015. In <br />the graph above, vacancy rates have been steadily <br />Figure 6: West End Class A Buildings Historical Vacancy Vs. Asking Rates <br />30% <br />24% <br />18% <br />12% <br />6% <br />0% <br />Vacancy (L) <br />United States t■ 5.3% <br />Minnesota • 3.6% <br />Twin Cities • 3.4% <br />2009 2010 2011 2012 2013 2014 May -15 <br />Source: BLS and MN DEED, May2015 <br />Non -seasonally adjusted figures <br />decreasing as the asking rates continue to increase. <br />They're up 37.5% since Q1 2010. Buildings in this <br />survey include the 1550 and 1600 Towers, Golden <br />Hills, The Colonnade and the West End Offices. The <br />average asking rate for these buildings is $23.04 net <br />and vacancy is currently 0.9%. <br />While an increase in asking rates in this specific <br />location is most clearly seen, overall asking rates for <br />all the Class A buildings in the I-394 submarket are <br />the highest in the market. The average metro asking <br />rate is currently $13.43 compared to $18.48 for I- <br />394. Landlords of Class A buildings are not the only <br />ones enjoying this increase in rates. Class B <br />buildings are also up year -over -year from $12.79 in <br />to $13.53. <br />Asking Rate (R) <br />Q2 2010 Q4 2010 02 2011 Q4 2011 Q2 2012 Q4 2012 Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q2 2015 <br />S24 <br />S22 <br />520 <br />518 <br />516 <br />Source: CBRE Research, 02 2015. <br />Q2 2015 CBRE Research © 2015 CBRE, Inc. 4 <br />