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Real Estate - Market Studies
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Market Data | ||
Inventory (sf) |
Central City |
Suburban |
Total |
4,886,058 |
24,008,415 |
Vacant |
699,327 |
1,645,693 |
Vacancy Rates |
14.31% |
6.85% |
Under Construction |
25,000 |
25,000 |
Net Absorption |
-230,352 |
-252,310 |
Site Prices ($/sf) |
|
|
Improved Sites |
Central City |
Suburban |
Less than 2 acres |
$1.05 |
$1.05 |
2 to 5 acres |
$1.00 |
$1.00 |
5 to 10 acres |
$0.80 |
$0.90 |
More than 10 acres |
$0.70 |
$0.80 |
Unimproved sites |
|
|
Less than 10 acres |
$0.60 |
$0.60 |
10 to 100 acres |
$0.40 |
$0.40 |
More than 100 acres |
$0.30 |
$0.30 |
Prime source of Financing: Commercial Banks |
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Mortgage Money Supply: Ample |
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Current Trends |
Outlook |
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Composition of Absorption |
Sales Prices |
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Warehouse/Distr. |
|
25% |
Warehouse/Distr. |
Same |
|
Manufacturing |
|
75% |
Manufacturing |
Same |
|
High Tech/R&D |
|
~ |
High Tech/R&D |
Same |
|
Composition of Inventory |
Lease Rates |
||||
Warehouse/Distr. |
|
58% |
Warehouse/Distr. |
Same |
|
Manufacturing |
|
40% |
Manufacturing |
Same |
|
High Tech/R&D |
|
2% |
High Tech/R&D |
Same |
|
Rate of Construction |
Site Prices |
||||
Warehouse/Distr. |
Up |
100% |
Absorption |
|
|
Manufacturing |
Up |
100% |
Warehouse/Distr. |
Up |
6-10% |
High Tech/R&D |
Same |
|
Manufacturing |
Up |
6-10% |
Dollar Volume - Sales |
High Tech/R&D |
Same |
|
||
Warehouse/Distr. |
Down |
6-10% |
Construction |
||
Manufacturing |
Down |
6-10% |
Warehouse/Distr. |
Same |
|
High Tech/R&D |
Down |
6-10% |
Manufacturing |
Same |
|
Dollar Volume - Leases |
High Tech/R&D |
Same |
|
||
Warehouse/Distr. |
Down |
6-10% |
|||
Manufacturing |
Down |
6-10% |
Dollar Volume - Sales |
Up |
6-10% |
High Tech/R&D |
Down |
6-10% |
Dollar Volume - Lease |
Up |
6-10% |
|
|
Sales Prices ($/sf) |
Net Lease Rates ($/sf) |
Construction |
Vacancy |
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|
|
Central City |
Suburban |
Central City |
Suburban |
($/sf) |
|
Less than 5,000 sf |
$26.00 |
$28.00 |
$4.25 |
$5.00 |
$38.00 |
Balanced Market |
5,000 - |
$24.00 |
$24.00 |
$3.00 |
$3.00 |
$32.00 |
Moderate Oversupply |
20,000 - 39,999 sf |
$23.00 |
$23.00 |
$3.00 |
$3.00 |
$32.00 |
Moderate Oversupply |
40,000 - 59,999 sf |
$21.00 |
$22.00 |
$3.00 |
$3.00 |
$30.00 |
Moderate Oversupply |
60,000 - 99,999 sf |
$20.00 |
$21.00 |
$2.75 |
$2.75 |
$28.00 |
Moderate Oversupply |
100,000 - 250,000 sf |
$19.00 |
$20.00 |
$2.50 |
$2.50 |
$25.00 |
Moderate Oversupply |
More than 250,000 sf |
$19.00 |
$20.00 |
$2.50 |
$2.50 |
$23.00 |
Moderate Oversupply |
High Tech / R&D |
$37.00 |
$37.00 |
$5.50 |
$5.50 |
$55.00 |
Balanced Market |
Warehouse and Factories |
Research and Development |
|
||||
Central City |
Suburban |
Central City |
Suburban |
|
||
Real Estate Taxes |
$0.90 |
$0.95 |
$1.40 |
$1.40 |
|
|
Insurance |
$0.13 |
$0.15 |
$0.16 |
$0.16 |
|
|
Structural and Roof Maintenance |
$0.14 |
$0.14 |
$0.16 |
$0.16 |
|
|
Common Area Maintenance |
$0.30 |
$0.30 |
$0.35 |
$0.35 |
|
|
2004 Forecast |
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We expect to see a slight improvement in national economic conditions to continue into 2004, with a presidential election on the horizon. Barring any unforeseen external problems, and with continued favorable interest rates and continued government support of business, we expect to see our unusually high vacancy rates to diminish and lease/sale prices to improve. Until we have a normal supply/demand scenario, we will not see the market expand with new construction in St. Joseph County. |
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| Class A | Class B | |||
| Inventory (sf) | CBD | Outside CBD | CBD | Outside CBD |
| Total | 960,153 | 842,677 | 913,741 | 303,420 |
| Vacant | 154,542 | 82,883 | 179,493 | 56,069 |
| Vacant Sublease | 10,173 | 0 | 4,787 | 1,150 |
| Under Construction | 0 | 0 | 0 | 0 |
| Substantial Rehab | 0 | 0 | 0 | 0 |
| Net Absorption | 13,645 | 112,814 | -36,063 | -17,977 |
| Vacancy Rate | 16.10% | 9.84% | 19.64% | 18.48% |
| Rental Rates ($/sf) | ||||
| Lowest | $14.75 | $17.25 | $10.00 | $15.75 |
| Highest | $20.50 | $22.50 | $13.50 | $17.25 |
| Weighted Average | $17.63 | $19.86 | $11.75 | $16.50 |
| Sales Prices ($/sf) | ||||
| Lowest | ~ | $101.52 | $29.46 | $74.25 |
| Highest | ~ | $111.21 | $29.46 | $74.25 |
| Weighted Average | ~ | $106.37 | $29.46 | $74.25 |
| Operating Expenses ($/sf) | ||||
| Lowest | $4.90 | $5.00 | $4.50 | $5.00 |
| Highest | $5.50 | $6.25 | $5.00 | $5.50 |
| Weighted Average | $5.25 | $5.63 | $4.75 | $5.25 |
| Tax Expenses ($/sf) | ||||
| Lowest | $1.65 | $1.70 | $0.95 | $1.50 |
| Highest | $2.50 | $2.40 | $1.50 | $1.85 |
| Weighted Average | $2.08 | $2.05 | $1.23 | $1.68 |
| Utility Rates: | Parking
Ratio: |
|||
| CBD
$1.40-$1.75 per sf Outside CBD $1.40-$1.75 per sf Not Separately Metered |
CBD 1 per 333 sf Outside CBD 1 per 250 sf |
|||
| Standard Work Letter: S- per sf typically based on dollars per square foot | Operating
Cost Escalation: determined by Base Year |
|||
| Rate of Return:
Cap Rate: -% IRR: 12-14% |
Mortgage Money Supply: Ample | |||
| Cumulative Discount Rate: 7-10% | Prime Source of Financing: Insurance Companies, Commercial Banks, Pension Funds | |||
| Landlord Concessions: Parking, Rental Abatement, Addl. Interior Improvements | Outlook | |||
| Absorption | Up |
1-5% |
||
| Leasing Activity Profile Major Activity - Minior Activity - Fortune 500 firms, Leagal/Accounting, Insurance, Business Services, Sales, Finance/BankingGovernment |
Construction | Up | 1-5% | |
| Vacancies | Same | |||
| Rental Rates | Same | |||
| Landlord Concession | Same | |||
| Sales | Class A CBD | Same | ||
| Prices | Outside CBD | Up | 1-5% | |
| Class B CBD | Same | |||
| Outside CBD | Up | 1-5% | ||
| 2004 Forecast | ||||
On a positive note, an 80,000 sq.ft. corporate facility is expected to be eliminated from available inventory, avoiding a potentially costly glut of space in the Class A suburban market. However, the introduction of 80,000 sq.ft. in a separate corporate facility previously owner-occupied will soften rents and increase potential concessions for competitive buildings being simultaneously marketed. Class A & B CBD will strive to hold steady occupancy levels in a stagnant market and vacancy rates are not expected to change significantly. New construction will stay limited to owner-occupied, free-standing buildings located primarily in the suburbs. |
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Project Future - 401 East Colfax Avenue, South Bend, Indiana 46617 . Phone: (574) 234-6590 or (800) 228-8086 . Fax: (574) 236-1060
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