11/03/16 - Laserfiche WebLink

Home

FINDINGS SUMMARY Market Analysis TWIN CITIES MARKET CONDITIONS—the industrial real estate market in the Twin Cities is favorable for new business parks. The vacancy rate in the Minneapolis-St. Paul Industrial market was down slightly to 8.4 percent in the second quarter of 2015.Absorption was 626,624 square feet bringing the year-to-date total to 1,238,812 square feet. During the Second Quarter,over 1.4 million square feet of new industrial space was added to the market. 635,064 square feet of this space was in single-tenant developments in the northwest metro. The vacancy rate in the Minneapolis North submarket is currently 7.1 percent which is attracting new investment and speculative development.The industrial market in the Twin Cities is the strongest it's been in a decade.At the end of second quarter in 2015,the Twin Cities industrial sector has absorbed more space than in all of 2014.The Twin Cities market has roughly 2.5 million square feet of industrial space currently under construction with construction ready to begin on about 2 million more square feet. LOCAL MARKET CONDITIONS—after studying the U.S. Highway 10 corridor it is clear that the business park market has been attractive to owner occupied real estate. Buyers in this market tend to be more workforce and price sensitive and less transportation sensitive. These types of industry for the most part create higher value added employment and investment opportunities;which specifically includes the manufacturing industry. There appears to be a need for additional business park property in the north metro market. With the exception of the City of Blaine,virtually every community along or near the Highway 10 corridor is rapidly approaching full build out of their business parks. The City of Elk River recognizes this opportunity and is in the planning stages for a major expansion of the Nature's Edge Business Park located in the southern portion of the city on U.S. Highway 10. COMPETITION—existing buildings located in the north metro market can be looked upon as competition to a new business park. While the vacancy rate for existing buildings significantly climbed during the"Great Recession" most of the existing building market in the north metro has been absorbed particularly in the Highway 10 corridor. Outside of existing buildings,vacant land available for development in other communities is considered competition. Below is a summary of available land in competing communities: City Overview ELK RIVER Approximately 12 acres remaining with 120 acres in the planning stages for future development. OTSEGO Up to 10 acres are available on a build to suit or build to lease basis. COON RAPIDS 21 acres are available for development in two existing business parks. All properties have site specific limitations due to easements,topography and access to the business parks. BLAINE Greater than 150 acres are available varying in levels of site readiness. All but 27 acres are privately owned and are scattered throughout the community. BROOKLYN PARK Greater than 250 acres of new business park development coming on line in 2016. Properties are controlled by large developers who are interested in developing the Business Parks on a "build to suit" or lease basis. ANOKA Private owners are planning to dispose of excess property in 2016.Two properties totaling 15 acres will be available and ready for development. Lastly, it should be noted, it is not uncommon for communities to provide financial incentives to assist with underwriting land acquisition costs and development related expenses. As a general rule, Ramsey competes favorably with metro cities when it comes to incentives. The exception is the City of Elk River. Elk River is located outside of the seven county metro area and is therefore not subject to fiscal disparities and corresponding tax base contribution. This difference allows Elk River to offer a higher potential level of assistance through tax increment financing than Page 4 of 12