News Release
United Properties Issues 2007 Year-End ‘Outlook’ Report for Twin Cities Commercial Real Estate Market
NEWS FACTS
- Second-half momentum slowed, cautious optimism for 2008
- Steady improvement continues in office, industrial, medical
- Reality in retail
RELEASE
MINNEAPOLIS (January 21, 2008) — Twin Cities commercial real estate markets were unsettled in the second half of 2007 as turmoil in capital markets slowed lending activity, according to United Properties’ mid-year 2007 Outlook market study, released today. Nagging worries about the strength of the economy and consumer spending added to the uncertainty, but the projection for 2008 remains cautiously optimistic.
Despite a slower than expected second half, key market segments showed healthy growth in demand for the year overall. There was substantial new leasing activity in major office submarkets; industrial developers remained confident as indicated by a robust construction pipeline; and medical office absorption kept pace with new space availability. Retail showed a modest rise in vacancies and a slowdown in new construction, leveling off overall from a record-breaking year in 2006.
Against the backdrop of a projected economic slow down in early 2008 and continued housing fall out, the commercial real estate forecast calls for modest improvement overall. The Office segment will continue to improve with new development activity moving west. Some softness is anticipated in the Southwest due to a surplus of new product and the retreat of mortgage lending companies. Industrial will also continue to improve, fueled by med-tech growth in the West. The Retail market is not likely to improve. Side shop space will see incentives creep back in for the first time in 10 years, though correcting land prices will help developers in outlying areas.
About Outlook
United Properties issues its Outlook report twice annually and is the only Twin Cities commercial real estate company to publish comprehensive market data at the calendar mid-year and year-end marks. Outlook includes information for all commercial property types, including office, retail, industrial, multi-family and medical office. The report also features an up-to-date overview of the Twin Cities economy and an analysis of the market's commercial real estate investment trends. The January 2008 report is available on the web at http://outlook.uproperties.com.
About United Properties
United Properties is a full-service commercial real estate company with more than 500 employees and 22.5 million square feet of office, industrial, retail and multi-family properties under management. Based in the Twin Cities, United Properties serves other markets through its affiliations with ONCOR International, an organization of commercial real estate companies serving more than 200 markets throughout the world, and ChainLinks, the largest retail-only full-service real estate organization in North America. United Properties is located on the web at www.uproperties.com.
EXPERT QUOTES
Office – Bill Rothstein “2008 looks to be a year of solid overall improvement for the Twin Cities market, with net absorption of 750,000 sq. ft. More vacancy in the Southwest will creep in as more new construction comes on line, and there may be additional fallout from housing-related turmoil.”
Industrial – Tony DelDotto “Following two years of record-setting absorption and construction, decreasing vacancies and increasing rental rates, the Twin Cities industrial market is in a “pause” as many users take a wait-and-see approach when it comes to the economy, slower job growth and the residential downturn.”
Retail – Stefanie Meyer “In spite of the slowing economy, several new restaurant and family entertainment concepts will probably enter the market, helping to revitalize some centers that are in need of new tenant mixes.”
Medical Office – Steve Brown “We will see a pause for 12-18 months as existing medical office space fills and the dust from recent acquisitions settles. Healthcare groups have made long-term space commitments in their strategic planning, some taking more space than they currently need with plans to build patient volume to support it. We need to understand the viability of the space on the market and who will staff it before more development occurs.”
Land – Jon Rausch “Speculators are still active. Some believe 2008 will be the time to buy to capitalize on current market conditions. Aggressive speculators are buying attractive land positions at heavily reduced prices in anticipation of a recovery.”
Media Contacts
Martha Nevanen
Vice President, Marketing Communications
952-893-7539
mnevanen@uproperties.com
Jessie Folkens
Sr. Communications Consultant
952-837-8516
jfolkens@uproperties.com