HomeMy WebLinkAbout6. Report on Vacancy Rate for Commercial/Industrial Properties
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City of Shakopee
Memorandum
TO: Economic Development Authority
Mark McNeill, City Administrator
FROM: Kris Wilson, Assistant to the City Administrator
SUBJECT: Vacant Commercial/Industrial Space
DATE: August 30, 2005
Introduction
As part of our ongoing economic development efforts, staff completes an occasional
report on the amount of vacant or available space for commercial/industrial uses in the
city.
Findings
A review of commercial real estate in the City of Shakopee suggests that we currently
have approximately 2 million square feet of vacant commercial/industrial space. Of this,
500,000 square feet, or 25 percent is the empty ADC building, which is being marketed
by CB Richard Ellis as the "Valley Corporate Campus." There are another seven
properties in excess of 100,000 square feet (see attached list). These numbers do not
include vacant retail or small office space.
United Properties and Welsch Companies are the listing agents for the vast majority of
available industrial space in Shakopee, although a handful of other companies have one
or two listings. Bill Ritter, the primary broker in the area for Welsch Companies, says
Shakopee's vacancies are mostly in large distribution facilities. While Shakopee is
located on a major highway, 169 is not an interstate, and most people looking for
distribution space want to be on an interstate. According to Mr. Ritter, the smaller
spaces, manufacturing and production spaces are doing better because they are attracted
by the workforce we have.
Jon Yanta, of United Properties, tells me that activity in the area was good in the first half
of the year, but has started to slow down in recent months. He sees Shakopee as being in
the midst of a long, slow recovery from ADC's withdrawal several years ago.
Shakopee's location south ofthe river is a huge barrier for many ofthe companies he
works with. However, he predicts that improvements to Hwy 169 and rising prices inside
the 494/694 beltway should help to make Shakopee more attractive in the next year or
two.
In addition to compiling the attached inventory of vacant space and speaking to Mr.
Ritter and Mr. Yanta, I have also reviewed two recent industry reports, ,which both show
declining vacancy rates in the area, although to different degrees.
United Properties reports that demand for industrial space is up across the Twin Cities
region and that vacancy rates for industrial space declined 2.5% in the first six months of
the year, from 15.5% at the end of2004, to 13% mid-year - marking the lowest industrial
vacancy rates since 2000. In the southwest metro, United Properties reports a be10w-
average vacancy rate of 11.9 percent for industrial properties. They attribute the
declining vacancies to job growth, minimal new construction, and fewer buildings for
sale, which forces companies to lease space in multi-tenant buildings.
Colliers Turley reports that vacancy rates for industrial properties in Scott County are
down 12.4 percent from the first to the second quarter of2005, by far the largest
improvement of any sub-market. However, they still post the vacancy rate at 23.7
percent. It is worth noting that, unlike United Properties, Colliers reports separately for
Scott County and Southwest Hennepin County, which may account for at least some of
the difference.
Action Requested
This is an informational item. No action is requested at this time
Vacant Commercial/Industrial Properties for Lease in Shakopee (August, 2005)
Listina Co. Address Approx. Sa. Ft.
United 5775 12th Ave. E. 133,000
United 4241 12th Ave. E. 130,000
United o Hwy 169 100,000
United 1 Shenandoah Dr. 100,000
United 5240-5300 Valley Industrial Blvd. 90,000
United 5775 12th Ave. E. 75,000
United 1157 Valley Park Dr.S. 60,000
Welsch 4701-4801 Valley Industrial Blvd. S. 202,000
Welsch 5655 11th Ave. 162,000
Welsch 804 Valley Park Dr. 106,000,
Welsch 7700 Co. Rd. 101 E. 54,000
Welsch 5400 12th Ave. E. 44,000
Welsch 5301-5391 12th Ave.E. 42,000
Welsch 240 Shumway S1. S. 30,000
Welsch 4218 Valley Industrial Blvd. S. 24,000
Welsch 6220 Co. Rd. 101 E. 12,000
Welsch 1513 Hansen Ave. 10,000
Gonyea 4101-4107 Valley Industrial Blvd. 46,000
Gonyea 4107 Valley Industrial Blvd. 40,000
CB Richard Ellis 6021 Broadband Blvd. (ADC bldg) 500,000
CB Richard Ellis 4571 Valley Industrial Blvd. S. 39,000
5th St. Ventures 4571 Valley Industrial Blvd. 39,000
Northstar Partners 4301 12th Ave: 32,000
TOTAL 2,070,000