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The CoStar

Industrial Report
Y E A R - E N D 2 0 0 9

Minneapolis Industrial Market


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market

Table of Contents
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A
Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B
Terms & Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C
Market Highlights & Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
CoStar Markets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Employment & Tenant Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Employment & Unemployment Analysis
Inventory & Development Analysis
Select Top Deliveries
Select Top Under Construction Properties
Figures at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Figures at a Glance by Building Type & Market
Historical Figures at a Glance
Leasing Activity Analysis
Select Top Lease Transactions
Sales Activity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Sales Activity Analysis
Select Top Sales Transactions
Select Same Building Sales
Select Land Sales
Analysis of Individual CoStar Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Chisago County Market
East Market
Isanti County Market
Midway Market
Minneapolis Market
North Central Market
Northwest Market
Pierce County Market
Sherburne County Market
South Central Market
Southwest Market
St Croix County Market
St Paul Market
Stearns County Market
Wright County Market

©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT A


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market

Methodology
The CoStar Industrial Report calculates Industrial statistics using CoStar Group's base of existing,
under construction and under renovation Industrial buildings in each given metropolitan area. All
Industrial building types are included, including warehouse, flex / research & development, distribution,
manufacturing, industrial showroom, and service buildings, in both single-tenant and multi-tenant
buildings, including owner-occupied buildings. CoStar Group's national database includes approximately
69.1 billion square feet of coverage in 2.8 million properties. All rental rates reported in the CoStar
Industrial Report are calculated using the quoted rental rate for each property.

For information on subscribing to CoStar’s other products and services, please contact us at
1-877-7COSTAR, or visit our web site at www.costar.com

© Copyright 2010 CoStar Group, Inc. All Rights Reserved. Although CoStar makes efforts to ensure the accuracy and reliability of the
information contained herein, CoStar makes no guarantee, representation or warranty regarding the quality, accuracy, timeliness or
completeness of the information. The publication is provided ‘as is’ and CoStar expressly disclaims any guarantees, representations or
warranties of any kind, including those of MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

CoStar Group, Inc.


2 Bethesda Metro Center • Bethesda, MD USA 20814 • (800) 204-5960 • www.costar.com • NASDAQ: CSGP

B THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market

Terms & Definitions


Availability Rate: The ratio of available space to total rentable Deliveries: Buildings that complete construction during a specified
space, calculated by dividing the total available square feet by the period of time. In order for space to be considered delivered, a
total rentable square feet. certificate of occupancy must have been issued for the property.
Available Space: The total amount of space that is currently Delivery Date: The date a building completes construction and
being marketed as available for lease in a given time period. It receives a certificate of occupancy.
includes any space that is available, regardless of whether the Developer: The company, entity or individual that transforms raw
space is vacant, occupied, available for sublease, or available at land to improved property by use of labor, capital and entrepre-
a future date. neurial efforts.
Build-to-Suit: A term describing a particular property, developed Direct Space: Space that is being offered for lease directly from
specifically for a certain tenant to occupy, with structural features, the landlord or owner of a building, as opposed to space being
systems, or improvement work designed specifically for the needs offered in a building by another tenant (or broker of a tenant)
of that tenant. A build-to-suit can be leased or owned by the ten- trying to sublet a space that has already been leased.
ant. In a leased build-to-suit, a tenant will usually have a long
term lease on the space. Existing Inventory: The square footage of buildings that have
received a certificate of occupancy and are able to be occupied
Buyer: The individual, group, company, or entity that has pur- by tenants. It does not include space in buildings that are either
chased a commercial real estate asset. planned, under construction or under renovation.
Cap Rate: Short for capitalization rate. The Cap Rate is a calcula- Flex Building: A type of building designed to be versatile, which
tion that reflects the relationship between one year’s net operating may be used in combination with office (corporate headquarters),
income and the current market value of a particular property. research and development, quasi-retail sales, and including but
The Cap Rate is calculated by dividing the annual net operating not limited to industrial, warehouse, and distribution uses. A typi-
income by the sales price (or asking sales price). cal flex building will be one or two stories with at least half of the
CBD: Abbreviation for Central Business District. (See also: rentable area being used as office space, have ceiling heights of 16
Central Business District) feet or less, and have some type of drive-in door, even though the
door may be glassed in or sealed off.
Central Business District: The designations of Central Business
District (CBD) and Suburban refer to a particular geographic area Full Service Rental Rate: Rental rates that include all operating
within a metropolitan statistical area (MSA) describing the level expenses such as utilities, electricity, janitorial services, taxes and
of real estate development found there. The CBD is characterized insurance.
by a high density, well organized core within the largest city of a Gross Absorption: The total change in occupied space over a
given MSA. given period of time, counting space that is occupied but not
Class A: A classification used to describe buildings that generally space that is vacated by tenants. Gross absorption differs from
qualify as extremely desirable investment-grade properties and leasing Activity, which is the sum of all space leased over a certain
command the highest rents or sale prices compared to other period of time. Unless otherwise noted Gross Absorption includes
buildings in the same market. Such buildings are well located direct and sublease space.
and provide efficient tenant layouts as well as high quality, and in Growth in Inventory: The change in size of the existing square
some buildings, one-of-a-kind floor plans. They can be an archi- footage in a given area over a given period of time, generally due
tectural or historical landmark designed by prominent architects. to the construction of new buildings.
These buildings contain a modern mechanical system, and have
above-average maintenance and management as well as the best Industrial Building: A type of building adapted for such uses as
quality materials and workmanship in their trim and interior fit- the assemblage, processing, and/or manufacturing of products
tings. They are generally the most attractive and eagerly sought from raw materials or fabricated parts. Additional uses include
by investors willing to pay a premium for quality. warehousing, distribution, and maintenance facilities. The pri-
mary purpose of the space is for storing, producing, assembling,
Class B: A classification used to describe buildings that generally or distributing product.
qualify as a more speculative investment, and as such, command
lower rents or sale prices compared to Class A properties. Such Landlord Rep: (Landlord Representative) In a typical lease trans-
buildings offer utilitarian space without special attractions, and action between an owner/landlord and tenant, the broker that
have ordinary design, if new or fairly new; good to excellent represents the interests of the owner/landlord is referred to as the
design if an older non-landmark building. These buildings typical- Landlord Rep.
ly have average to good maintenance, management and tenants. Leased Space: All the space that has a financial lease obligation.
They are less appealing to tenants than Class A properties, and It includes all leased space, regardless of whether the space is
may be deficient in a number of respects including floor plans, currently occupied by a tenant. Leased space also includes space
condition and facilities. They lack prestige and must depend being offered for sublease.
chiefly on a lower price to attract tenants and investors.
Leasing Activity: The volume of square footage that is commit-
Class C: A classification used to describe buildings that gener- ted to and signed under a lease obligation for a specific building
ally qualify as no-frills, older buildings that offer basic space and or market in a given period of time. It includes direct leases,
command lower rents or sale prices compared to other buildings subleases and renewals of existing leases. It also includes any
in the same market. Such buildings typically have below-average pre-leasing activity in planned, under construction, or under
maintenance and management, and could have mixed or low renovation buildings.
tenant prestige, inferior elevators, and/or mechanical/electrical
systems. These buildings lack prestige and must depend chiefly Market: Geographic boundaries that serve to delineate core areas
on a lower price to attract tenants and investors. that are competitive with each other and constitute a generally
accepted primary competitive set of areas. Markets are building-
Construction Starts: Buildings that began construction during a type specific, and are non-overlapping contiguous geographic
specific period of time. (See also: Deliveries) designations having a cumulative sum that matches the boundar-
Contiguous Blocks of Space: Space within a building that is, or is ies of the entire Region (See also: Region). Markets can be further
able to be joined together into a single contiguous space. subdivided into Submarkets. (See also: Submarkets)

©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT C


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market

Multi-Tenant: Buildings that house more than one tenant at a Seller: The individual, group, company, or entity that sells a par-
given time. Usually, multi-tenant buildings were designed and ticular commercial real estate asset.
built to accommodate many different floor plans and designs for SF: Abbreviation for Square Feet.
different tenant needs. (See also: Tenancy).
Single-Tenant: Buildings that are occupied, or intended to be
Net Absorption: The net change in occupied space over a given occupied by a single tenant. (See also: Build-to-suit and Tenancy)
period of time. Unless otherwise noted Net Absorption includes
direct and sublease space. Sublease Space: Space that has been leased by a tenant and is
being offered for lease back to the market by the tenant with
Net Rental Rate: A rental rate that excludes certain expenses that the lease obligation. Sublease space is sometimes referred to as
a tenant could incur in occupying office space. Such expenses sublet space.
are expected to be paid directly by the tenant and may include
janitorial costs, electricity, utilities, taxes, insurance and other Submarkets: Specific geographic boundaries that serve to delin-
related costs. eate a core group of buildings that are competitive with each
other and constitute a generally accepted primary competitive
New Space: Sometimes called first generation space, refers to set, or peer group. Submarkets are building type specific (office,
space that has never been occupied and/or leased by a tenant. industrial, retail, etc.), with distinct boundaries dependent on
Occupied Space: Space that is physically occupied by a tenant. different factors relevant to each building type. Submarkets are
It does not include leased space that is not currently occupied non-overlapping, contiguous geographic designations having a
by a tenant. cumulative sum that matches the boundaries of the Market they
are located within (See also: Market).
Office Building: A type of commercial building used exclusively
or primarily for office use (business), as opposed to manufactur- Suburban: The Suburban and Central Business District (CBD)
ing, warehousing, or other uses. Office buildings may sometimes designations refer to a particular geographic area within a metro-
have other associated uses within part of the building, i.e., retail politan statistical area (MSA). Suburban is defined as including all
sales, financial, or restaurant, usually on the ground floor. office inventory not located in the CBD. (See also: CBD)
Owner: The company, entity, or individual that holds title on a Tenancy: A term used to indicate whether or not a building is
given building or property. occupied by multiple tenants (See also: Multi-tenant) or a single
tenant. (See also: Single-tenant)
Planned/Proposed: The status of a building that has been
announced for future development but not yet started Tenant Rep: Tenant Rep stands for Tenant Representative. In a
construction. typical lease transaction between an owner/landlord and tenant,
the broker that represents the interests of the tenant is referred to
Preleased Space: The amount of space in a building that has been
as a Tenant Rep.
leased prior to its construction completion date, or certificate of
occupancy date. Time On Market: A measure of how long a currently available
space has been marketed for lease, regardless of whether it is
Price/SF: Calculated by dividing the price of a building (either
vacant or occupied.
sales price or asking sales price) by the Rentable Building Area
(RBA). Under Construction: The status of a building that is in the process
of being developed, assembled, built or constructed. A building is
Property Manager: The company and/or person responsible for
considered to be under construction after it has begun construc-
the day-to-day operations of a building, such as cleaning, trash
tion and until it receives a certificate of occupancy.
removal, etc. The property manager also makes sure that the vari-
ous systems within the building, such as the elevators, HVAC, and Vacancy Rate: A measurement expressed as a percentage of the
electrical systems, are functioning properly. total amount of physically vacant space divided by the total
amount of existing inventory. Under construction space generally
Quoted Rental Rate: The asking rate per square foot for a par-
is not included in vacancy calculations.
ticular building or unit of space by a broker or property owner.
Quoted rental rates may differ from the actual rates paid by Vacant Space: Space that is not currently occupied by a tenant,
tenants following the negotiation of all terms and conditions in regardless of any lease obligation that may be on the space.
a specific lease. Vacant space could be space that is either available or not avail-
RBA: Abbreviation for Rentable Building Area. (See also: able. For example, sublease space that is currently being paid for
by a tenant but not occupied by that tenant, would be considered
Rentable Building Area)
vacant space. Likewise, space that has been leased but not yet
Region: Core areas containing a large population nucleus, that occupied because of finish work being done, would also be con-
together with adjacent communities have a high degree of eco- sidered vacant space.
nomic and social integration. Regions are further divided into
Weighted Average Rental Rate: Rental rates that are calculated by
market areas, called Markets. (See also: Markets)
factoring in, or weighting, the square footage associated with each
Relet Space: Sometimes called second generation or direct space, particular rental rate. This has the effect of causing rental rates
refers to existing space that has previously been occupied by on larger spaces to affect the average more than that of smaller
another tenant. spaces. The weighted average rental rate is calculated by taking
Rentable Building Area: (RBA) The total square footage of a the ratio of the square footage associated with the rental rate on
building that can be occupied by, or assigned to a tenant for the each individual available space to the square footage associated
purpose of determining a tenant’s rental obligation. Generally with rental rates on all available spaces, multiplying the rental rate
RBA includes a percentage of common areas including all hall- by that ratio, and then adding together all the resulting numbers.
ways, main lobbies, bathrooms, and telephone closets. Unless specifically specified otherwise, rental rate averages include
both Direct and Sublet available spaces.
Rental Rates: The annual costs of occupancy for a particular
space quoted on a per square foot basis. Year Built: The year in which a building completed construction
and was issued a certificate of occupancy.
Sales Price: The total dollar amount paid for a particular property
at a particular point in time. YTD: Abbreviation for Year-to-Date. Describes statistics that are
cumulative from the beginning of a calendar year through what-
Sales Volume: The sum of sales prices for a given group of build- ever time period is being studied.
ings in a given time period.

D THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market


OVERVIEW

Minneapolis’s Vacancy Increases to 7.3%


Net Absorption Negative (292,432) SF in the Quarter

T
he Minneapolis Industrial market ended the fourth negative (405,877) square feet in the fourth quarter 2009 com-
quarter 2009 with a vacancy rate of 7.3%. The vacancy pared to negative (1,317) square feet in the third quarter 2009,
rate was up over the previous quarter, with net absorp- negative (322,510) in the second quarter 2009, and negative
tion totaling negative (292,432) square feet in the fourth quarter. (175,649) in the first quarter 2009.
Vacant sublease space decreased in the quarter, ending the quarter
Vacancy
at 599,105 square feet. Rental rates ended the fourth quarter
The Industrial vacancy rate in the Minneapolis market area
at $6.09, a decrease over the previous quarter. A total of three
increased to 7.3% at the end of the fourth quarter 2009. The
buildings delivered to the market in the quarter totaling 176,739
vacancy rate was 7.2% at the end of the third quarter 2009, 7.2%
square feet, with 28,042 square feet still under construction at the
at the end of the second quarter 2009, and 7.0% at the end of the
end of the quarter.
first quarter 2009.
Absorption Flex projects reported a vacancy rate of 10.5% at the end
Net absorption for the overall Minneapolis Industrial of the fourth quarter 2009, 10.5% at the end of the third quarter
market was negative (292,432) square feet in the fourth quarter 2009, 10.4% at the end of the second quarter 2009, and 10.3%
2009. That compares to negative (23,407) square feet in the third at the end of the first quarter 2009.
quarter 2009, negative (435,313) square feet in the second quar- Warehouse projects reported a vacancy rate of 6.4% at the
ter 2009, and negative (251,501) square feet in the first quarter end of the fourth quarter 2009, 6.2% at the end of third quarter
2009. 2009, 6.2% at the end of the second quarter 2009, and 6.1% at
Tenants moving into large blocks of space in 2009 include: the end of the first quarter 2009.
Jacobs Trading Company moving into 330,000 square feet at
Largest Lease Signings
Continental Decatur, BP Wind Energy North America moving
The largest lease signings occurring in 2009 included: the
into 244,666 square feet at River Road Industrial Center, and
330,000-square-foot lease signed by Jacobs Trading Company
Cokem International, Ltd. moving into 157,000 square feet at
at Continental Decatur in the Southwest market; the 300,000-
3880 4th Ave E.
square-foot deal signed by Silgan Containers at 1080 Park Pl in
The Flex building market recorded net absorption of posi-
the Southwest market; and the 244,666-square-foot lease signed
tive 113,445 square feet in the fourth quarter 2009, compared to
by BP Wind Energy North America at River Road Industrial
negative (22,090) square feet in the third quarter 2009, negative
Center in the North Central market.
(112,803) in the second quarter 2009, and negative (75,852) in
the first quarter 2009. Sublease Vacancy
The Warehouse building market recorded net absorption of The amount of vacant sublease space in the Minneapolis

Vacancy Rates by Building Type 2006-2009


Flex Warehouse Total Market
14%

12%

10%
Vacancy Rate

8%

6%

4%

2%

0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Absorption & Deliveries


©2010 COSTAR GROUP, INC.
U.S. Vacancy Comparison
THE COSTAR INDUSTRIAL REPORT 1

Past 10 Quarters Past 10 Quarters


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market


OVERVIEW

market decreased to 599,105 square feet by the end of the fourth ing 160,038 square feet completed in the second quarter 2009,
quarter 2009, from 701,160 square feet at the end of the third and 381,773 square feet in four buildings completed in the first
quarter 2009. There was 634,476 square feet vacant at the end quarter 2009.
of the second quarter 2009 and 659,235 square feet at the end of There was 28,042 square feet of Industrial space under con-
the first quarter 2009. struction at the end of the fourth quarter 2009.
Minneapolis’s Flex projects reported vacant sublease space Some of the notable 2009 deliveries include: 9150 217th St
of 132,050 square feet at the end of fourth quarter 2009, down W, a 282,100-square-foot facility that delivered in first quarter
from the 262,973 square feet reported at the end of the third 2009 and is now 0% occupied, and AMB Rogers Distribution
quarter 2009. There were 346,165 square feet of sublease space Center, a 147,160-square-foot building that delivered in second
vacant at the end of the second quarter 2009, and 352,329 square quarter 2009 and is now 42% occupied.
feet at the end of the first quarter 2009. The largest projects underway at the end of fourth quarter
Warehouse projects reported increased vacant sublease space 2009 were 4001 Valley Industrial Blvd S, a 19,800-square-foot
from the third quarter 2009 to the fourth quarter 2009. Sublease building with 0% of its space pre-leased, and 576 Front Ave, an
vacancy went from 438,187 square feet to 467,055 square feet 8,242-square-foot facility that is 100% pre-leased.
during that time. There was 288,311 square feet at the end of the
Inventory
second quarter 2009, and 306,906 square feet at the end of the
Total Industrial inventory in the Minneapolis market area
first quarter 2009.
006-2009 amounted to 341,649,959 square feet in 8,413 buildings as of
Rental Rates the end of the fourth quarter 2009. The Flex sector consisted of
Warehouse Total Market
The average quoted asking rental rate for available Industrial 74,906,692 square feet in 1,995 projects. The Warehouse sector
space was $6.09 per square foot per year at the end of the fourth consisted of 266,743,267 square feet in 6,418 buildings. Within
quarter 2009 in the Minneapolis market area. This represented the Industrial market there were 427 owner-occupied buildings
a 2.2% decrease in quoted rental rates from the end of the third accounting for 37,681,952 square feet of Industrial space.
quarter 2009, when rents were reported at $6.23 per square
Sales Activity
foot.
Tallying industrial building sales of 15,000 square feet or
The average quoted rate within the Flex sector was $8.02
larger, Minneapolis industrial sales figures fell during the third
per square foot at the end of the fourth quarter 2009, while
quarter 2009 in terms of dollar volume compared to the second
Warehouse rates stood at $5.66. At the end of the third quarter
quarter of 2009.
2009, Flex rates were $8.20 per square foot, and Warehouse rates
In the third quarter, 15 industrial transactions closed with a
were $5.75.
total volume of $38,104,310. The 15 buildings totaled 745,677
Deliveries and Construction square feet and the average price per square foot equated to
During the fourth quarter 2009, three buildings totaling $51.10 per square foot. That compares to 21 transactions totaling
2007 4q 176,739
2008 1q 2008square
2q feet
2008 3q were
2008 4qcompleted
2009 1q in 2q
2009 the 2009
Minneapolis
3q 2009 4q market $67,626,500 in the second quarter. The total square footage was
area. This compares to two buildings totaling 38,531 square 1,480,639 for an average price per square foot of $45.67.
feet completed in the third quarter 2009, four buildings total- Total year-to-date industrial building sales activity in 2009 is
down compared to the previous year. In the first nine months of
U.S. Vacancy Comparison 2009, the market saw 48 industrial sales transactions with a total
Past 10 Quarters volume of $139,709,778. The price per square foot has averaged
Minneapolis United States $47.81 this year. In the first nine months of 2008, the market
12.0% posted 107 transactions with a total volume of $632,245,878.
10.0%
The price per square foot averaged $80.66.
Cap rates have been higher in 2009, averaging 9.28%, com-
8.0% pared to the first nine months of last year when they averaged
Vacancy Rate

8.31%.
6.0%
One of the largest transactions that has occurred within the
4.0% last four quarters in the Minneapolis market is the sale of 6200
Glenn Carlson Dr in Saint Cloud. This 338,000-square-foot
2.0% industrial building sold for $17,100,000, or $50.59 per square
0.0%
foot. The property sold on 10/15/2009.
2007 2007 2008 2008 2008 2008 2009 2009 2009 2009
3q 4q 1q 2q 3q 4q 1q 2q 3q 4q
Reports compiled by: Jennifer Quast CoStar Research Manager.
Source: CoStar Property•

2 THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market


MARKETS

CoStar Markets
In analyzing metropolitan areas in the U.S., CoStar has developed geographic designations to help group properties together, called
Regions, Markets and Submarkets. Regions are the equivalent of metropolitan areas, or areas containing a large population nucleus,
that together with adjacent communities have a high degree of economic and social integration. Regions are then divided into
Markets, which are core areas within a metropolitan area that are known to be competitive with each other in terms of attracting
and keeping tenants. Markets are then further subdivided into smaller units called Submarkets, which serve to delineate a core group
of buildings that are competitive with each other and constitute a generally accepted competitive set, or peer group.

Markets
Chisago County Ind
East Ind
Isanti County Ind
Midway Ind
Minneapolis Ind
North Central Ind
Northwest Ind
Pierce County Ind
Sherburne County Ind
South Central Ind
Southwest Ind
St Croix County Ind
St Paul Ind
Stearns County Ind
Wright County Ind

©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 3


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market


EMPLOYMENT AND TENANT

Total Employment by Industry Total Employment Growth


Percent of Total Employment by Industry Total Number of Jobs Added Per Year

11% Natural Resources & Minneapolis U.S. Average


0% Mining 4.0%
Construction
19%
3.0%
Manufacturing
14%
2.0%
Trade, Transportation &
Utilities
Information 1.0%

Percent Growth
2% 0.0%
Financial Activities
5%
Professional & Business -1.0%
8% Services
Education & Health -2.0%
Services
10% Leisure & Hospitality -3.0%
Other Services
-4.0%
15% Government
-5.0%
16%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source: Department of Labor, Bureau of Labor Statistics Source: Department of Labor, Bureau of Labor Statistics

Total Employment Growth Industrial* Employment Growth


Cumulative Growth in Jobs Over the Past 5 Years Number of Industrial* Jobs Added Per Year
Employment Inventory
Minneapolis U.S. Average
Market Growth Growth Difference 4.0%
Atlanta -200.00% 13.80% -213.80% 3.0%

Chicago -105.80% 9.60% -115.40% 2.0%


1.0%
Dallas/Ft Worth -95.80% 14.00% -109.80%
0.0%
Percent Growth

Denver -100.70% 9.60% -110.30% -1.0%


Detroit -121.60% 5.40% -127.00% -2.0%

Houston -95.00% 16.80% -111.80% -3.0%


-4.0%
Inland Empire (California) -107.10% 48.20% -155.30%
-5.0%
Los Angeles -106.20% 2.60% -108.80%
-6.0%
Northern New Jersey -99.80% 4.40% -104.20% -7.0%
Pittsburgh -98.60% 5.80% -104.40% -8.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Minneapolis -104.40% 12.00% -116.40%
Source: Department of Labor, Bureau of Labor Statistics. * Industrial employment is defined as jobs in the
Source: Department of Labor, Bureau of Labor Statistics
Manufacturing, and Trade, Transportation & Utilities industries

Historical Unemployment Rates


Minneapolis U.S. Average
12.0%

10.0%
Percent Unemployment

8.0%

6.0%

4.0%

2.0%

0.0%
1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009
1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q 1q 3q

Source: Department of Labor, Bureau of Labor Statistics

4 THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market


INVENTORY & DEVELOPMENT

Historical Deliveries 1982 - 2009


Deliveries Average Delivered SF
10.0
8.9
9.0
8.2 8.2
8.0
6.8 6.8
7.0
6.2
5.9 5.9 6.0 5.9
5.7 5.7
Millions of SF

6.0 5.5

5.0 4.4
4.1
4.0 3.6
3.0
2.7 2.7
3.0
2.2 2.0 2.1 2.0
1.8 1.7 1.8
2.0 1.6
0.8
1.0

0.0
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source: CoStar Property® * Future deliveries based on current under construction buildings.

Construction Activity Markets Ranked by Under Construction RBA


Under Construction Inventory Average Bldg Size
Market # Bldgs Total RBA Preleased SF Preleased % All Existing U/C
Southwest Ind 1 19,800 0 0.0% 48,678 19,800
St Paul Ind 1 8,242 8,242 100.0% 33,208 8,242
St Croix County Ind 0 0 0 0.0% 32,302 0
Chisago County Ind 0 0 0 0.0% 19,395 0
South Central Ind 0 0 0 0.0% 43,940 0
Midway Ind 0 0 0 0.0% 53,762 0
Minneapolis Ind 0 0 0 0.0% 34,832 0
Northwest Ind 0 0 0 0.0% 51,002 0
Isanti County Ind 0 0 0 0.0% 19,710 0
East Ind 0 0 0 0.0% 36,789 0
All Other 0 0 0 0.0% 33,542 0
Totals 2 28,042 8,242 29.4% 40,610 14,021

Source: CoStar Property®

Recent Deliveries Future Deliveries


Leased & Un-Leased SF in Deliveries Since 2005 Preleased & Un-Leased SF in Properties Scheduled to Deliver
Leased Un-Leased Preleased Un-Leased
2.5 25

2.0 20

T
Thousands of SF
Millions of SF

1.5 15

1.0 10

0.5 5

0.0 0
2005 2006 2007 2008 2009 2010 1q 2010 2q

Source: CoStar Property® Source: CoStar Property®

©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 5


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market


INVENTORY & DEVELOPMENT

Historical Construction Starts & Deliveries


Square Footage Per Quarter Starting and Completing Construction
Construction Starts Deliveries
1.2 1.1

1.0
0.8
0.8 0.8
0.8
Millions of SF

0.7
0.6 0.6
0.6
0.5 0.5 0.5
0.5 0.5 0.5
0.4 0.4
0.4 0.3 0.3
0.3 0.2 0.3
0.2
0.2
0.2 0.2
0.2 0.1 0.1
0.1 0.1
0.0
0.0 0.0 0.0
0.0
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Recent Deliveries by Project Size Breakdown of Year-to-Date Development Based on RBA of Project

Building Size # Bldgs RBA SF Leased % Leased Avg Rate Single-Tenant Multi-Tenant

< 50,000 SF 8 131,087 74,237 56.6% $0.00 20,131 110,956

50,000 SF - 99,999 SF 3 196,734 138,289 70.3% $8.37 0 196,734

100,000 SF - 249,999 SF 1 147,160 147,160 100.0% $7.25 0 147,160

250,000 SF - 499,999 SF 1 282,100 0 0.0% $4.90 0 282,100

>= 500,000 SF 0 0 0 0.0% $0.00 0 0

Source: CoStar Property®

Recent Development by Tenancy Existing Inventory Comparison


Based on RBA Developed for Single & Multi-Tenant Use Based on Total RBA
2009 Deliveries Currently Under Construction By Building Type By Tenancy Type

3% 0%
33%
22%
78%
67%
97% 100%

Flex Warehouse Multi Single


Multi Single Multi Single

Source: CoStar Property® Source: CoStar Property®

6 THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market


INVENTORY & DEVELOPMENT

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©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 7


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market


INVENTORY & DEVELOPMENT

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8 THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market


FIGURES AT A GLANCE

Flex Market Statistics Year-End 2009


Existing Inventory Vacancy YTD Net YTD Under Quoted
Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates
Chisago County Ind 4 62,648 8,640 8,640 13.8% 0 0 0 $9.00
East Ind 241 7,381,745 597,437 597,437 8.1% (57,291) 0 0 $8.98
Isanti County Ind 6 151,465 20,181 20,181 13.3% 2,676 0 0 $5.37
Midway Ind 162 6,293,274 733,061 733,061 11.6% (210,393) 0 0 $6.94
Minneapolis Ind 49 1,559,454 199,692 209,692 13.4% 42,415 0 0 $7.86
North Central Ind 298 10,905,484 1,090,150 1,145,390 10.5% (115,512) 92,689 0 $7.94
Northwest Ind 192 9,902,069 1,101,665 1,140,663 11.5% 19,932 38,450 0 $8.51
Pierce County Ind 0 0 0 0 0.0% 0 0 0 $0.00
Sherburne County Ind 16 347,848 44,797 44,797 12.9% (1,297) 0 0 $5.83
South Central Ind 376 13,104,264 1,221,077 1,224,377 9.3% (56,346) 0 0 $8.22
Southwest Ind 418 19,609,046 2,228,843 2,253,355 11.5% 207,882 0 0 $7.72
St Croix County Ind 28 632,514 106,945 106,945 16.9% 17,000 0 0 $10.37
St Paul Ind 170 4,222,636 284,212 284,212 6.7% 43,384 0 8,242 $7.99
Stearns County Ind 13 264,076 37,786 37,786 14.3% 3,640 0 0 $7.58
Wright County Ind 22 470,169 47,137 47,137 10.0% 6,610 0 0 $8.18
Totals 1,995 74,906,692 7,721,623 7,853,673 10.5% (97,300) 131,139 8,242 $8.02
Source: CoStar Property®

Warehouse Market Statistics Year-End 2009


Existing Inventory Vacancy YTD Net YTD Under Quoted
Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates
Chisago County Ind 159 3,098,811 128,328 128,328 4.1% (56,536) 0 0 $4.24
East Ind 237 10,203,553 510,098 510,098 5.0% (81,713) 0 0 $5.93
Isanti County Ind 97 1,878,659 47,081 47,081 2.5% 8,192 0 0 $5.53
Midway Ind 293 18,168,301 1,994,336 2,177,566 12.0% (251,825) 0 0 $5.37
Minneapolis Ind 662 23,206,339 1,567,499 1,645,499 7.1% 4,229 20,131 0 $5.22
North Central Ind 1,264 48,284,483 2,200,924 2,299,442 4.8% (46,465) 30,464 0 $5.71
Northwest Ind 979 49,820,994 2,772,809 2,797,094 5.6% (344,767) 227,727 0 $6.51
Pierce County Ind 12 132,264 18,820 18,820 14.2% (3,240) 0 0 $3.35
Sherburne County Ind 288 6,768,582 322,128 322,128 4.8% (90,870) 0 0 $5.76
South Central Ind 672 32,944,408 3,184,638 3,242,156 9.8% (284,477) 282,100 0 $5.54
Southwest Ind 940 46,495,139 2,564,993 2,572,278 5.5% 261,812 65,520 19,800 $5.51
St Croix County Ind 163 5,537,130 143,738 143,738 2.6% 25,384 0 0 $4.25
St Paul Ind 241 9,425,878 475,631 493,850 5.2% (34,432) 0 0 $4.57
Stearns County Ind 145 4,992,145 323,562 323,562 6.5% 5,811 0 0 $4.72
Wright County Ind 266 5,786,581 373,579 373,579 6.5% (16,456) 0 0 $6.08
Totals 6,418 266,743,267 16,628,164 17,095,219 6.4% (905,353) 625,942 19,800 $5.66
Source: CoStar Property®

Total Industrial Market Statistics Year-End 2009


Existing Inventory Vacancy YTD Net YTD Under Quoted
Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates
Chisago County Ind 163 3,161,459 136,968 136,968 4.3% (56,536) 0 0 $4.53
East Ind 478 17,585,298 1,107,535 1,107,535 6.3% (139,004) 0 0 $7.14
Isanti County Ind 103 2,030,124 67,262 67,262 3.3% 10,868 0 0 $5.50
Midway Ind 455 24,461,575 2,727,397 2,910,627 11.9% (462,218) 0 0 $5.54
Minneapolis Ind 711 24,765,793 1,767,191 1,855,191 7.5% 46,644 20,131 0 $5.35
North Central Ind 1,562 59,189,967 3,291,074 3,444,832 5.8% (161,977) 123,153 0 $6.14
Northwest Ind 1,171 59,723,063 3,874,474 3,937,757 6.6% (324,835) 266,177 0 $6.78
Pierce County Ind 12 132,264 18,820 18,820 14.2% (3,240) 0 0 $3.35
Sherburne County Ind 304 7,116,430 366,925 366,925 5.2% (92,167) 0 0 $5.77
South Central Ind 1,048 46,048,672 4,405,715 4,466,533 9.7% (340,823) 282,100 0 $6.02
Southwest Ind 1,358 66,104,185 4,793,836 4,825,633 7.3% 469,694 65,520 19,800 $6.10
St Croix County Ind 191 6,169,644 250,683 250,683 4.1% 42,384 0 0 $4.57
St Paul Ind 411 13,648,514 759,843 778,062 5.7% 8,952 0 8,242 $5.21
Stearns County Ind 158 5,256,221 361,348 361,348 6.9% 9,451 0 0 $4.88
Wright County Ind 288 6,256,750 420,716 420,716 6.7% (9,846) 0 0 $6.36
Totals 8,413 341,649,959 24,349,787 24,948,892 7.3% (1,002,653) 757,081 28,042 $6.09
Source: CoStar Property®

©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 9


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market


FIGURES AT A GLANCE

Flex Market Statistics Year-End 2009


Existing Inventory Vacancy Net Deliveries UC Inventory Quoted
Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates
2009 4q 1,995 74,906,692 7,721,623 7,853,673 10.5% 113,445 2 112,739 1 8,242 $8.02
2009 3q 1,993 74,793,953 7,591,406 7,854,379 10.5% (22,090) 1 18,400 3 120,981 $8.20
2009 2q 1,992 74,775,553 7,467,724 7,813,889 10.4% (112,803) 0 0 4 139,381 $8.24
2009 1q 1,992 74,775,553 7,348,757 7,701,086 10.3% (75,852) 0 0 3 120,981 $8.35
2008 4q 1,992 74,775,553 7,298,509 7,625,234 10.2% 390,491 2 83,135 0 0 $8.35
2008 3q 1,990 74,692,418 7,782,674 7,932,590 10.6% 70,122 2 50,550 2 83,135 $8.11
2008 2q 1,988 74,641,868 7,753,173 7,952,162 10.7% 263,262 1 116,000 3 116,182 $7.99
2008 1q 1,987 74,525,868 7,906,364 8,099,424 10.9% 213,861 8 403,762 3 166,550 $7.94
2007 4q 1,979 74,122,106 7,711,753 7,909,523 10.7% 58,906 1 50,000 9 519,762 $7.64
2007 3q 1,978 74,072,106 7,723,466 7,918,429 10.7% 108,455 3 127,900 9 453,762 $7.79
2007 2q 1,975 73,944,206 7,677,050 7,898,984 10.7% 1,075,830 2 100,848 8 399,900 $7.75
2007 1q 1,973 73,843,358 8,593,043 8,873,966 12.0% (400) 10 335,082 8 313,748 $7.67
2006 4q 1,963 73,508,276 8,208,107 8,538,484 11.6% 34,643 2 44,000 14 561,559 $7.69
2006 3q 1,961 73,464,276 8,217,584 8,529,127 11.6% (117,669) 3 100,473 12 396,175 $7.65
2006 2q 1,958 73,363,803 8,052,067 8,310,985 11.3% 277,258 1 194,500 8 296,915 $7.42
2006 1q 1,957 73,169,303 8,075,613 8,393,743 11.5% 0 12 376,518 5 339,973 $7.15
Source: CoStar Property®

Warehouse Market Statistics Year-End 2009


Existing Inventory Vacancy Net Deliveries UC Inventory Quoted
Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates
2009 4q 6,418 266,743,267 16,628,164 17,095,219 6.4% (405,877) 1 64,000 1 19,800 $5.66
2009 3q 6,417 266,679,267 16,187,155 16,625,342 6.2% (1,317) 1 20,131 2 83,800 $5.75
2009 2q 6,416 266,659,136 16,315,583 16,603,894 6.2% (322,510) 4 160,038 3 103,931 $5.75
2009 1q 6,413 266,504,191 15,819,533 16,126,439 6.1% (175,649) 4 381,773 6 199,969 $5.81
2008 4q 6,410 266,301,464 15,423,107 15,748,063 5.9% (383,720) 4 188,313 9 561,942 $5.82
2008 3q 6,407 266,141,704 14,888,349 15,204,583 5.7% 9,079 4 193,820 7 287,986 $5.76
2008 2q 6,404 265,952,808 14,832,292 15,024,766 5.6% 477,682 8 551,540 9 440,578 $5.68
2008 1q 6,397 265,441,855 14,740,653 14,991,495 5.6% 1,589,093 3 373,704 13 843,693 $5.66
2007 4q 6,394 265,068,151 15,917,276 16,206,884 6.1% 356,635 6 416,250 14 1,119,540 $5.57
2007 3q 6,388 264,651,901 15,926,232 16,147,269 6.1% 592,971 6 368,720 13 1,152,611 $5.50
2007 2q 6,382 264,283,181 16,030,447 16,371,520 6.2% 168,399 6 212,971 17 1,308,067 $5.49
2007 1q 6,376 264,070,210 15,856,666 16,326,948 6.2% 1,466,726 11 452,388 16 860,975 $5.47
2006 4q 6,365 263,617,822 16,983,755 17,341,286 6.6% 281,596 7 268,893 19 833,759 $5.28
2006 3q 6,358 263,348,929 17,042,790 17,353,989 6.6% 1,386,611 9 148,608 20 851,518 $5.18
2006 2q 6,349 263,200,321 17,955,284 18,591,992 7.1% 1,910,085 5 69,827 21 700,144 $5.18
2006 1q 6,345 263,404,287 19,530,088 20,706,043 7.9% 0 24 743,910 17 334,435 $5.07
Source: CoStar Property®

Total Industrial Market Statistics Year-End 2009


Existing Inventory Vacancy Net Deliveries UC Inventory Quoted
Period # Blds Total RBA Direct SF Total SF Vac % Absorption # Blds Total RBA # Blds Total RBA Rates
2009 4q 8,413 341,649,959 24,349,787 24,948,892 7.3% (292,432) 3 176,739 2 28,042 $6.09
2009 3q 8,410 341,473,220 23,778,561 24,479,721 7.2% (23,407) 2 38,531 5 204,781 $6.23
2009 2q 8,408 341,434,689 23,783,307 24,417,783 7.2% (435,313) 4 160,038 7 243,312 $6.27
2009 1q 8,405 341,279,744 23,168,290 23,827,525 7.0% (251,501) 4 381,773 9 320,950 $6.34
2008 4q 8,402 341,077,017 22,721,616 23,373,297 6.9% 6,771 6 271,448 9 561,942 $6.37
2008 3q 8,397 340,834,122 22,671,023 23,137,173 6.8% 79,201 6 244,370 9 371,121 $6.28
2008 2q 8,392 340,594,676 22,585,465 22,976,928 6.7% 740,944 9 667,540 12 556,760 $6.18
2008 1q 8,384 339,967,723 22,647,017 23,090,919 6.8% 1,802,954 11 777,466 16 1,010,243 $6.15
2007 4q 8,373 339,190,257 23,629,029 24,116,407 7.1% 415,541 7 466,250 23 1,639,302 $6.06
2007 3q 8,366 338,724,007 23,649,698 24,065,698 7.1% 701,426 9 496,620 22 1,606,373 $6.08
2007 2q 8,357 338,227,387 23,707,497 24,270,504 7.2% 1,244,229 8 313,819 25 1,707,967 $6.11
2007 1q 8,349 337,913,568 24,449,709 25,200,914 7.5% 1,466,326 21 787,470 24 1,174,723 $6.05
2006 4q 8,328 337,126,098 25,191,862 25,879,770 7.7% 316,239 9 312,893 33 1,395,318 $5.88
2006 3q 8,319 336,813,205 25,260,374 25,883,116 7.7% 1,268,942 12 249,081 32 1,247,693 $5.77
2006 2q 8,307 336,564,124 26,007,351 26,902,977 8.0% 2,187,343 6 264,327 29 997,059 $5.74
2006 1q 8,302 336,573,590 27,605,701 29,099,786 8.6% 0 36 1,120,428 22 674,408 $5.60
Source: CoStar Property®

10 THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market


LEASING ACTIVITY

Historical Rental Rates


Based on Quoted Rental Rates
Flex Warehouse Total Market
$9.00

$8.00

$7.00

$6.00
Dollars/SF/Year

$5.00

$4.00

$3.00

$2.00

$1.00

$0.00
2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacancy by Available Space Type Vacancy by Building Type


Percent of All Vacant Space in Direct vs. Sublet Percent of All Vacant Space by Building Type
Minneapolis United States Minneapolis United States

2% 5%
14%
69%
31%
86%

98% 95%

Direct Sublet Direct Sublet Flex Warehouse Flex Warehouse


Source: CoStar Property® Source: CoStar Property®

U.S. Rental Rate Comparison Future Space Available


Based on Average Quoted Rental Rates Space Scheduled to be Available for Occupancy*
Minneapolis United States 1.4
$6.60
1.2
$6.40 1.2

$6.20
1.0
$6.00
Dollars/SF/Year

$5.80 0.8
Millions

$5.60
0.6
$5.40

$5.20 0.4

$5.00 0.2
0.2
0.1
$4.80 0.0 0.0 0.0
2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 0.0
3q 4q 1q 2q 3q 4q 1q 2q 3q 4q 2010 1q 2010 2q 2010 3q 2010 4q 2011 1q 2011 2q

Source: CoStar Property® Source: CoStar Property® * Includes Under Construction Space

©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 11


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market


LEASING ACTIVITY

Select Top Industrial Leases Based on Leased Square Footage For Deals Signed in 2009
Building Submarket SF Qtr Tenant Name Tenant Rep Company Landlord Rep Company

1 Continental Decatur Southwest Ind 330,000 1st Jacobs Trading Company Continental Property Group, Inc. Continental Property Group, Inc.

2 1080 Park Pl* Southwest Ind 300,000 2nd Silgan Containers Direct Deal NorthMarq

3 River Road Industrial Center North Central Ind 244,666 3rd BP Wind Energy North America Direct Deal Colliers Turley Martin Tucker

4 3880 4th Ave E Southwest Ind 157,000 2nd Cokem International, Ltd. NAI Welsh NAI Welsh

5 7401 N Boone Ave Northwest Ind 155,026 2nd AM Retail Group, Inc Direct Deal Direct Deal

6 2300 Pilot Knob Rd South Central Ind 124,783 4th MPC N/A NAI Welsh

7 MSP Midway Industrial Park #9* Midway Ind 123,464 2nd Northpoint Capital Partners, LLC Direct Deal NAI Welsh

8 Crosstown North Business Center - Bldg XII Northwest Ind 120,048 2nd Graybar Electric Co. CB Richard Ellis Colliers Turley Martin Tucker

9 Continental Distribution Center Southwest Ind 106,371 4th National Distribution Center N/A NAI Welsh

10 9210 Wyoming Ave N Northwest Ind 86,941 2nd Target Keewaydin Real Estate Advisors Duke Realty Corporation

11 IGH Dist Center South Central Ind 74,086 4th Land O’Lakes N/A NorthMarq

12 Plymouth Corporate Center Northwest Ind 65,000 3rd Comm-Works AREA CB Richard Ellis

13 AMB Rogers Distribution Center Northwest Ind 61,100 2nd Blu Dot NAI Welsh Colliers Turley Martin Tucker

14 5130 Industrial St Southwest Ind 56,620 2nd N/A N/A Wayzata Properties

15 4658 Heatherwood Rd Stearns County Ind 54,000 4th Quest Telecommunications N/A RQ Investments

16 8299 NE Central Ave* North Central Ind 53,000 3rd Medtronic, Inc. N/A N/A

17 12755 Highway 55 Northwest Ind 48,700 4th IQor, Inc CB Richard Ellis Walsh Partners, Inc.

18 AMB Aurora Industrial Warehouse North Central Ind 47,715 1st N/A N/A CB Richard Ellis

19 9449 Science Center Dr* Northwest Ind 46,726 3rd Multiband Corporation N/A N/A

20 1809 E Hennepin Ave Midway Ind 45,650 4th N/A N/A Paramount Real Estate Corporation

21 Eagandale Crossing South Central Ind 42,303 2nd Buffets, Inc. CB Richard Ellis Paramount Real Estate Corporation

22 940 E Hennepin Ave Midway Ind 41,000 2nd Arrowhead Contracting CB Richard Ellis Hillcrest Development LLLP

23 Boulder Lakes Office III South Central Ind 37,000 3rd AllianceOne, Inc. NorthMarq Transwestern

24 Rice Creek Business Center I North Central Ind 34,461 3rd N/A N/A Interstate Partners

25 Parkers Lake Pointe East Northwest Ind 32,760 3rd N/A N/A N/A

26 MSP Midway Industrial Park #8 Midway Ind 32,000 2nd Ryder Logistics N/A NAI Welsh

27 6533 Flying Cloud Dr* Southwest Ind 31,940 2nd Alternative Business Furniture, Inc. N/A NAI Welsh

28 Penn Avenue Business Center Southwest Ind 29,774 4th N/A N/A Standard Holdings

29 11300 K-Tel Dr Southwest Ind 29,540 2nd N/A N/A The C. Chase Company

30 Silver Bell Commons* South Central Ind 28,055 2nd Gleason’s Gymnastic School Direct Deal Direct Deal

31 Sun Lite III Northwest Ind 28,000 1st Roberts Hamilton Co. N/A NAI Welsh

32 5350 Highway 61 East Ind 28,000 2nd N/A Steve Harrington Steve Harrington

33 654 Industrial Blvd Southwest Ind 27,564 2nd Premier Gymnastics N/A Copperwood Investments LLC

34 New Brighton Commerce Center North Central Ind 26,763 3rd Comtrol UGL Equis Transwestern

35 Wedgwood Commerce Ctr 3 Northwest Ind 26,073 2nd Cartika Medical Inc NorthMarq Grubb & Ellis/Northco Real Estate S

36 Lexington Preserve Business Park - Phase II North Central Ind 24,537 2nd Karl Dungs N/A NAI Welsh

37 3750 N Annapolis Ln Northwest Ind 23,355 2nd Atritech Jones Lang LaSalle NorthMarq

38 CLT Floorcoverings Building South Central Ind 23,300 2nd N/A N/A Langer Real Estate Services

39 Diamond Lake Industrial Center I Northwest Ind 23,159 3rd Cabela’s Marine Source N/A Colliers Turley Martin Tucker

40 Huntington Building Southwest Ind 22,000 3rd N/A N/A NAI Welsh

Source: CoStar Property®


* Renewal

12 THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market


SALES ACTIVITY

The Optimist Sales Index Average of Two Highest Price/SF's and Two Lowest Cap Rates Per Quarter

Cap Rate Price/SF


12.0% $350

$300
10.0%
Cap Rate Percentage

$250
8.0%

Dollars/SF
$200
6.0%
$150
4.0%
$100

2.0% $50

0.0% $0
2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q

Source: CoStar COMPS®

Sales Volume & Price Sales Analysis by Building Size


Based on Industrial Building Sales of 15,000 SF and Larger Based on Industrial Bldg Sales From Oct. 2008 - Sept. 2009
Sales Volume Price/SF Bldg Size # RBA $ Volume Price/SF Cap Rate
$450 $200

$400 $180
< 25,000 SF 64 861,868 $ 69,370,443 $ 80.49 8.22%
Millions of Sales Volume Dollars

$160
$350
$140
$300
$120
Price/SF

$250 25K-99K SF 40 1,895,677 $ 91,623,462 $ 48.33 8.13%


$100
$200
$80
$150
$60
$100 100K-249K SF 17 2,618,927 $ 110,492,788 $ 42.19 10.01%
$40

$50 $20

$0 $0
2005 2005 2006 2006 2007 2007 2008 2008 2009 >250K SF 2 648,200 $ 24,940,000 $ 38.48 8.70%
2q 4q 2q 4q 2q 4q 2q 4q 2q

Source: CoStar COMPS® Source: CoStar COMPS®

U.S. Price/SF Comparison U.S. Cap Rate Comparison


Based on Industrial Building Sales of 15,000 SF and Larger Based on Industrial Building Sales of 15,000 SF and Larger
Minneapolis US Minneapolis US
$200 12.0%
$180
10.0%
$160
Cap Rate Percentage

$140
8.0%
Dollars per SF

$120
$100 6.0%
$80
4.0%
$60
$40
2.0%
$20
$0 0.0%
2005 2005 2006 2006 2007 2007 2008 2008 2009 2005 2005 2006 2006 2007 2007 2008 2008 2009
2q 4q 2q 4q 2q 4q 2q 4q 2q 2q 4q 2q 4q 2q 4q 2q 4q 2q

Source: CoStar COMPS® Source: CoStar COMPS®

©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 13


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market


SALES ACTIVITY

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14 THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market


SALES ACTIVITY

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Select Land Sales Based on Industrial Zoned Land Sales Occurring From Oct. 2008 - Dec. 2009

Rich Valley Blvd, Inver Grove Heights 9349 W Broadway Ave, Brooklyn Park 2101-2201 W 94th St, Bloomington
Sale Price: $3,345,093 Sale Price: $2,505,608 Sale Price: $1,830,250
Acres: 29.18 Acres: 1.22 Acres: 4.96
Price/SF: $2.63 Price/SF: $47.15 Price/SF: $8.47
Closing Date: 12/18/2008 Closing Date: 12/30/2008 Closing Date: 01/15/2009
Zoning: Commercial Zoning: Unknown Zoning: I-2
Intended Use: Industrial Intended Use: Industrial Intended Use: Industrial
Buyer: Rich Valley Llc Buyer: Northwest EMC, Inc. Buyer: Forklifts Of Minnesota Inc
Seller: Pab Ents Of Minnesota Inc Seller: Ryan Companies US, Inc. Seller: 2145, LLP

2305 Kennedy St NE, Minneapolis 13940 Northdale Blvd, Rogers


Sale Price: $1,044,000 Sale Price: $525,000
Acres: 1.19 Acres: 3.06
Price/SF: $20.10 Price/SF: $3.94
Closing Date: 05/11/2009 Closing Date: 08/24/2009
Zoning: I-2 Zoning: C-2
Intended Use: Parking Lot Intended Use: Retail
Buyer: Techne Corp Buyer: Lidd Properties Llc
Seller: Hillcrest Development LLLP Seller: SourceGroup LLC

Source: CoStar COMPS®

©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 15


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market


C H I S A G O C O U N T Y M A R K E T
MARKET HIGHLIGHTS - FLEX & WAREHOUSE

Deliveries, Absorption & Vacancy Historical Analysis, Flex and Warehouse


Delivered SF Absorption SF Vacancy
0.300 12.0%

0.200 10.0%

0.100 8.0%

Percent Vacant
Millions SF

0.000 6.0%

(0.100) 4.0%

(0.200) 2.0%

(0.300) 0.0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacant Space Quoted Rental Rates


Historical Analysis, Flex and Warehouse Historical Analysis, Flex and Warehouse

Direct SF Sublet SF $4.60


0.20

0.18 $4.50

0.16 $4.40
0.14
Dollars/SF/Year

$4.30
Millions SF

0.12
$4.20
0.10

0.08 $4.10

0.06
$4.00
0.04
$3.90
0.02

0.00 $3.80
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property® Source: CoStar Property®

Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted


Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates
2009 4q 163 3,161,459 136,968 4.3% (8,981) 0 0 0 0 $4.53
2009 3q 163 3,161,459 127,987 4.0% 47,920 0 0 0 0 $4.25
2009 2q 163 3,161,459 175,907 5.6% (95,475) 0 0 0 0 $4.18
2009 1q 163 3,161,459 80,432 2.5% 0 0 0 0 0 $4.55
2008 4q 163 3,161,459 80,432 2.5% 13,251 0 0 0 0 $4.28
2008 3q 163 3,161,459 93,683 3.0% (11,640) 0 0 0 0 $4.10
2008 2q 163 3,161,459 82,043 2.6% 4,840 0 0 0 0 $4.25
2008 1q 163 3,161,459 86,883 2.7% 15,822 0 0 0 0 $4.20
2007 4q 163 3,161,459 102,705 3.2% 205,187 0 0 0 0 $3.84
2007 3q 163 3,161,459 307,892 9.7% 11,248 0 0 0 0 $6.86
2007 2q 163 3,161,459 319,140 10.1% (12,348) 0 0 0 0 $6.86
2007 1q 163 3,161,459 306,792 9.7% (252,000) 1 14,800 0 0 $6.50
2006 4q 162 3,146,659 39,992 1.3% 0 0 0 1 14,800 $0.00
2006 3q 162 3,146,659 39,992 1.3% 0 0 0 1 14,800 $0.00
2006 2q 162 3,146,659 39,992 1.3% (39,992) 0 0 0 0 $0.00
2006 1q 162 3,146,659 0 0.0% 0 0 0 0 0 $0.00
Source: CoStar Property®

16 THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market


E A S T M A R K E T
MARKET HIGHLIGHTS - FLEX & WAREHOUSE

Deliveries, Absorption & Vacancy Historical Analysis, Flex and Warehouse


Delivered SF Absorption SF Vacancy
0.200 7.0%

6.0%
0.150

5.0%
0.100

Percent Vacant
Millions SF

4.0%
0.050
3.0%

0.000
2.0%

(0.050)
1.0%

(0.100) 0.0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacant Space Quoted Rental Rates


Historical Analysis, Flex and Warehouse Historical Analysis, Flex and Warehouse

Direct SF Sublet SF $8.60


1.15
$8.40

1.10 $8.20
$8.00
Dollars/SF/Year

1.05 $7.80
Millions SF

$7.60
1.00 $7.40
$7.20
0.95
$7.00
$6.80
0.90
$6.60

0.85 $6.40
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property® Source: CoStar Property®

Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted


Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates
2009 4q 478 17,585,298 1,107,535 6.3% (6,057) 0 0 0 0 $7.14
2009 3q 478 17,585,298 1,101,478 6.3% (60,109) 0 0 0 0 $7.19
2009 2q 478 17,585,298 1,041,369 5.9% (4,049) 0 0 0 0 $7.88
2009 1q 478 17,585,298 1,037,320 5.9% (68,789) 0 0 0 0 $7.79
2008 4q 478 17,585,298 968,531 5.5% 72,292 0 0 0 0 $8.14
2008 3q 478 17,585,298 1,040,823 5.9% 161,248 2 176,000 0 0 $8.10
2008 2q 476 17,409,298 1,026,071 5.9% (19,741) 1 14,800 2 176,000 $8.18
2008 1q 475 17,394,498 991,530 5.7% 42,244 1 43,396 3 190,800 $8.41
2007 4q 474 17,351,102 990,378 5.7% 83,192 0 0 4 234,196 $7.84
2007 3q 474 17,351,102 1,073,570 6.2% 112,714 1 50,120 2 58,196 $7.87
2007 2q 473 17,300,982 1,136,164 6.6% (1,437) 2 68,607 2 64,920 $7.41
2007 1q 471 17,232,375 1,066,120 6.2% 24,466 4 174,714 4 133,527 $7.27
2006 4q 467 17,057,661 915,872 5.4% 3,267 2 48,057 6 231,850 $6.66
2006 3q 465 17,009,604 871,082 5.1% (24,617) 2 21,673 7 237,571 $6.51
2006 2q 463 16,987,931 824,792 4.9% (9,587) 0 0 6 182,504 $6.49
2006 1q 463 16,987,931 815,205 4.8% 0 5 119,705 3 36,473 $5.87
Source: CoStar Property®

©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 17


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market


I S A N T I C O U N T Y M A R K E T
MARKET HIGHLIGHTS - FLEX & WAREHOUSE

Deliveries, Absorption & Vacancy Historical Analysis, Flex and Warehouse


Delivered SF Absorption SF Vacancy
0.080 5.0%

4.5%
0.060
4.0%
0.040 3.5%

Percent Vacant
Millions SF

3.0%
0.020
2.5%
0.000
2.0%

(0.020) 1.5%

1.0%
(0.040)
0.5%

(0.060) 0.0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacant Space Quoted Rental Rates


Historical Analysis, Flex and Warehouse Historical Analysis, Flex and Warehouse

Direct SF Sublet SF $5.60


0.09
$5.50
0.08
$5.40
0.07
$5.30
Dollars/SF/Year

0.06
$5.20
Millions SF

0.05
$5.10
0.04 $5.00
0.03 $4.90

0.02 $4.80

0.01 $4.70

0.00 $4.60
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property® Source: CoStar Property®

Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted


Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates
2009 4q 103 2,030,124 67,262 3.3% 13,462 0 0 0 0 $5.50
2009 3q 103 2,030,124 80,724 4.0% (2,234) 0 0 0 0 $5.53
2009 2q 103 2,030,124 78,490 3.9% (1,400) 0 0 0 0 $5.51
2009 1q 103 2,030,124 77,090 3.8% 1,040 0 0 0 0 $5.50
2008 4q 103 2,030,124 78,130 3.8% 0 0 0 0 0 $5.46
2008 3q 103 2,030,124 78,130 3.8% (8,964) 0 0 0 0 $4.99
2008 2q 103 2,030,124 69,166 3.4% (582) 0 0 0 0 $4.96
2008 1q 103 2,030,124 68,584 3.4% 16,745 0 0 0 0 $4.96
2007 4q 103 2,030,124 85,329 4.2% (3,452) 0 0 0 0 $6.58
2007 3q 103 2,030,124 81,877 4.0% (27,264) 1 16,000 0 0 $6.86
2007 2q 102 2,014,124 38,613 1.9% 39,200 1 22,500 1 16,000 $7.19
2007 1q 101 1,991,624 55,313 2.8% (713) 0 0 2 38,500 $6.17
2006 4q 101 1,991,624 54,600 2.7% (39,100) 0 0 1 22,500 $3.91
2006 3q 101 1,991,624 15,500 0.8% 17,300 0 0 0 0 $3.91
2006 2q 101 1,991,624 32,800 1.6% 60,800 0 0 0 0 $4.20
2006 1q 101 1,991,624 93,600 4.7% 0 3 45,997 0 0 $4.08
Source: CoStar Property®

18 THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market


M I D W A Y M A R K E T
MARKET HIGHLIGHTS - FLEX & WAREHOUSE

Deliveries, Absorption & Vacancy Historical Analysis, Flex and Warehouse


Delivered SF Absorption SF Vacancy
0.300 14.0%

0.200 12.0%

0.100
10.0%

Percent Vacant
0.000
Millions SF

8.0%
(0.100)
6.0%
(0.200)
4.0%
(0.300)

(0.400) 2.0%

(0.500) 0.0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacant Space Quoted Rental Rates


Historical Analysis, Flex and Warehouse Historical Analysis, Flex and Warehouse

Direct SF Sublet SF $6.40


3.50

3.00 $6.20

2.50 $6.00
Dollars/SF/Year
Millions SF

2.00
$5.80

1.50
$5.60
1.00

$5.40
0.50

0.00 $5.20
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property® Source: CoStar Property®

Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted


Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates
2009 4q 455 24,461,575 2,910,627 11.9% (103,028) 0 0 0 0 $5.54
2009 3q 455 24,461,575 2,807,599 11.5% (114,478) 0 0 0 0 $5.76
2009 2q 455 24,461,575 2,693,121 11.0% (118,972) 0 0 0 0 $5.83
2009 1q 455 24,461,575 2,574,149 10.5% (125,740) 0 0 0 0 $6.15
2008 4q 455 24,461,575 2,448,409 10.0% (446,031) 0 0 0 0 $6.19
2008 3q 455 24,461,575 2,002,378 8.2% (133,572) 0 0 0 0 $6.06
2008 2q 455 24,461,575 1,868,806 7.6% (160,988) 0 0 0 0 $6.05
2008 1q 455 24,461,575 1,707,818 7.0% 60,965 0 0 0 0 $6.03
2007 4q 455 24,461,575 1,768,783 7.2% (87,358) 0 0 0 0 $5.96
2007 3q 455 24,461,575 1,681,425 6.9% 138,950 0 0 0 0 $5.92
2007 2q 455 24,461,575 1,820,375 7.4% (289,363) 0 0 0 0 $6.06
2007 1q 455 24,461,575 1,531,012 6.3% 186,880 0 0 0 0 $5.85
2006 4q 455 24,461,575 1,717,892 7.0% (73,640) 0 0 0 0 $5.45
2006 3q 455 24,461,575 1,644,252 6.7% 250,868 0 0 0 0 $5.41
2006 2q 455 24,461,575 1,895,120 7.7% 228,902 0 0 0 0 $5.33
2006 1q 455 24,461,575 2,124,022 8.7% 0 1 142,998 0 0 $5.07
Source: CoStar Property®

©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 19


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market


M I N N E A P O L I S M A R K E T
MARKET HIGHLIGHTS - FLEX & WAREHOUSE

Deliveries, Absorption & Vacancy Historical Analysis, Flex and Warehouse


Delivered SF Absorption SF Vacancy
0.250 9.0%

0.200 8.0%
0.150
7.0%
0.100
6.0%

Percent Vacant
0.050
Millions SF

0.000 5.0%

(0.050) 4.0%
(0.100)
3.0%
(0.150)
2.0%
(0.200)

(0.250) 1.0%

(0.300) 0.0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacant Space Quoted Rental Rates


Historical Analysis, Flex and Warehouse Historical Analysis, Flex and Warehouse

Direct SF Sublet SF $5.60


2.50

$5.50
2.00
$5.40
Dollars/SF/Year
Millions SF

1.50 $5.30

$5.20
1.00
$5.10

0.50
$5.00

0.00 $4.90
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property® Source: CoStar Property®

Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted


Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates
2009 4q 711 24,765,793 1,855,191 7.5% 8,460 0 0 0 0 $5.35
2009 3q 711 24,765,793 1,863,651 7.5% 43,022 1 20,131 0 0 $5.37
2009 2q 710 24,745,662 1,886,542 7.6% 50,497 0 0 1 20,131 $5.40
2009 1q 710 24,745,662 1,937,039 7.8% (55,335) 0 0 1 20,131 $5.50
2008 4q 710 24,745,662 1,881,704 7.6% (118,766) 0 0 1 20,131 $5.30
2008 3q 710 24,745,662 1,762,938 7.1% (56,710) 0 0 0 0 $5.12
2008 2q 710 24,745,662 1,706,228 6.9% (140,448) 1 44,857 0 0 $5.15
2008 1q 710 24,741,392 1,561,510 6.3% 63,954 0 0 1 44,857 $5.25
2007 4q 710 24,741,392 1,625,464 6.6% 146,449 0 0 1 44,857 $5.03
2007 3q 710 24,741,392 1,771,913 7.2% (118,147) 0 0 1 44,857 $4.84
2007 2q 710 24,741,392 1,653,766 6.7% 45,113 0 0 1 44,857 $5.11
2007 1q 710 24,741,392 1,698,879 6.9% 196,450 0 0 0 0 $5.24
2006 4q 710 24,741,392 1,895,329 7.7% 135,138 0 0 0 0 $5.50
2006 3q 710 24,741,392 2,030,467 8.2% (238,633) 0 0 0 0 $5.43
2006 2q 710 24,741,392 1,791,834 7.2% (128,855) 0 0 0 0 $5.55
2006 1q 710 24,741,392 1,662,979 6.7% 0 2 189,100 0 0 $5.17
Source: CoStar Property®

20 THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market


N O R T H C E N T R A L M A R K E T
MARKET HIGHLIGHTS - FLEX & WAREHOUSE

Deliveries, Absorption & Vacancy Historical Analysis, Flex and Warehouse


Delivered SF Absorption SF Vacancy
1.200 9.0%

1.000 8.0%

7.0%
0.800
6.0%

Percent Vacant
0.600
Millions SF

5.0%
0.400
4.0%
0.200
3.0%
0.000
2.0%

(0.200) 1.0%

(0.400) 0.0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacant Space Quoted Rental Rates


Historical Analysis, Flex and Warehouse Historical Analysis, Flex and Warehouse

Direct SF Sublet SF $6.60


4.00

3.50 $6.40

3.00 $6.20
Dollars/SF/Year
Millions SF

2.50
$6.00

2.00
$5.80
1.50
$5.60
1.00
$5.40
0.50

0.00 $5.20
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property® Source: CoStar Property®

Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted


Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates
2009 4q 1,562 59,189,967 3,444,832 5.8% (204,435) 1 74,289 0 0 $6.14
2009 3q 1,561 59,115,678 3,166,108 5.4% 262,854 1 18,400 1 74,289 $6.19
2009 2q 1,560 59,097,278 3,410,562 5.8% (278,222) 1 8,430 2 92,689 $6.30
2009 1q 1,559 59,088,848 3,123,910 5.3% 57,826 1 22,034 2 82,719 $6.44
2008 4q 1,558 59,066,814 3,159,702 5.3% 66,580 1 57,980 2 30,464 $6.50
2008 3q 1,557 59,008,834 3,168,302 5.4% (125,730) 2 23,550 2 80,014 $6.26
2008 2q 1,556 58,990,208 3,023,946 5.1% 205,965 0 0 3 81,530 $5.91
2008 1q 1,556 58,990,208 3,229,911 5.5% 1,012,185 4 330,880 2 23,550 $5.73
2007 4q 1,552 58,659,328 3,911,216 6.7% 200,166 0 0 4 330,880 $5.70
2007 3q 1,552 58,659,328 4,111,382 7.0% 264,276 2 110,000 4 330,880 $5.64
2007 2q 1,550 58,549,328 4,265,658 7.3% 71,084 0 0 6 440,880 $5.43
2007 1q 1,550 58,549,328 4,336,742 7.4% 195,973 3 61,028 2 58,000 $5.43
2006 4q 1,547 58,488,300 4,471,687 7.6% (98,013) 1 53,200 4 89,028 $5.48
2006 3q 1,546 58,435,100 4,320,474 7.4% (231,120) 3 54,767 3 86,321 $5.23
2006 2q 1,543 58,380,333 4,034,587 6.9% 448,177 2 26,000 4 107,967 $5.49
2006 1q 1,542 58,628,126 4,730,557 8.1% 0 9 220,386 6 133,967 $5.36
Source: CoStar Property®

©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 21


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market


N O R T H W E S T M A R K E T
MARKET HIGHLIGHTS - FLEX & WAREHOUSE

Deliveries, Absorption & Vacancy Historical Analysis, Flex and Warehouse


Delivered SF Absorption SF Vacancy
1.000 10.0%

9.0%
0.800
8.0%
0.600 7.0%

Percent Vacant
Millions SF

6.0%
0.400
5.0%
0.200
4.0%

0.000 3.0%

2.0%
(0.200)
1.0%

(0.400) 0.0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacant Space Quoted Rental Rates


Historical Analysis, Flex and Warehouse Historical Analysis, Flex and Warehouse

Direct SF Sublet SF $7.20


4.50

4.00 $7.10

3.50
$7.00
Dollars/SF/Year

3.00
Millions SF

$6.90
2.50

2.00 $6.80

1.50
$6.70
1.00
$6.60
0.50

0.00 $6.50
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property® Source: CoStar Property®

Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted


Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates
2009 4q 1,171 59,723,063 3,937,757 6.6% (56,746) 1 38,450 0 0 $6.78
2009 3q 1,170 59,684,613 3,842,561 6.4% (96,533) 0 0 1 38,450 $7.07
2009 2q 1,170 59,684,613 3,746,028 6.3% (114,350) 2 150,088 1 38,450 $6.94
2009 1q 1,168 59,534,525 3,481,590 5.8% (57,206) 2 77,639 3 188,538 $7.09
2008 4q 1,166 59,456,886 3,346,745 5.6% (175,311) 0 0 4 227,727 $7.04
2008 3q 1,166 59,456,886 3,171,434 5.3% 266,985 0 0 2 77,639 $6.98
2008 2q 1,166 59,456,886 3,438,419 5.8% 110,542 2 163,857 1 58,445 $6.86
2008 1q 1,164 59,293,029 3,385,104 5.7% 102,197 1 170,824 2 163,857 $6.74
2007 4q 1,163 59,122,205 3,316,477 5.6% (18,653) 1 104,004 2 245,824 $6.52
2007 3q 1,162 59,018,201 3,193,820 5.4% 185,383 0 0 3 349,828 $6.73
2007 2q 1,162 59,018,201 3,379,203 5.7% 235,382 0 0 2 179,004 $6.86
2007 1q 1,162 59,018,201 3,614,585 6.1% 346,119 0 0 1 104,004 $6.50
2006 4q 1,162 59,018,201 3,960,704 6.7% 352,491 0 0 0 0 $6.12
2006 3q 1,162 59,018,201 4,313,195 7.3% 764,874 1 9,695 0 0 $6.17
2006 2q 1,161 59,008,506 5,068,374 8.6% 554,004 2 225,955 1 9,695 $5.82
2006 1q 1,159 58,782,551 5,396,423 9.2% 0 1 4,170 3 235,650 $5.51
Source: CoStar Property®

22 THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market


P I E R C E C O U N T Y M A R K E T
MARKET HIGHLIGHTS - FLEX & WAREHOUSE

Deliveries, Absorption & Vacancy Historical Analysis, Flex and Warehouse


Delivered SF Absorption SF Vacancy
0.015 25.0%

0.010
20.0%
0.005

Percent Vacant
Millions SF

15.0%
0.000

(0.005)
10.0%

(0.010)
5.0%
(0.015)

(0.020) 0.0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacant Space Quoted Rental Rates


Historical Analysis, Flex and Warehouse Historical Analysis, Flex and Warehouse

Direct SF Sublet SF $4.00


0.03
$3.50
0.03
$3.00
Dollars/SF/Year

0.02 $2.50
Millions SF

$2.00
0.02

$1.50
0.01
$1.00

0.01
$0.50

0.00 $0.00
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property® Source: CoStar Property®

Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted


Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates
2009 4q 12 132,264 18,820 14.2% 9,000 0 0 0 0 $3.35
2009 3q 12 132,264 27,820 21.0% (12,240) 0 0 0 0 $3.07
2009 2q 12 132,264 15,580 11.8% 0 0 0 0 0 $0.00
2009 1q 12 132,264 15,580 11.8% 0 0 0 0 0 $0.00
2008 4q 12 132,264 15,580 11.8% 0 0 0 0 0 $0.00
2008 3q 12 132,264 15,580 11.8% (15,580) 0 0 0 0 $0.00
2008 2q 12 132,264 0 0.0% 0 0 0 0 0 $0.00
2008 1q 12 132,264 0 0.0% 0 0 0 0 0 $0.00
2007 4q 12 132,264 0 0.0% 0 0 0 0 0 $0.00
2007 3q 12 132,264 0 0.0% 0 0 0 0 0 $0.00
2007 2q 12 132,264 0 0.0% 0 0 0 0 0 $0.00
2007 1q 12 132,264 0 0.0% 0 0 0 0 0 $0.00
2006 4q 12 132,264 0 0.0% 0 0 0 0 0 $0.00
2006 3q 12 132,264 0 0.0% 0 0 0 0 0 $0.00
2006 2q 12 132,264 0 0.0% 0 0 0 0 0 $0.00
2006 1q 12 132,264 0 0.0% 0 0 0 0 0 $0.00
Source: CoStar Property®

©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 23


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market


S H E R B U R N E C O U N T Y M A R K E T
MARKET HIGHLIGHTS - FLEX & WAREHOUSE

Deliveries, Absorption & Vacancy Historical Analysis, Flex and Warehouse


Delivered SF Absorption SF Vacancy
0.100 6.0%

5.0%
0.050

4.0%

Percent Vacant
Millions SF

0.000

3.0%

(0.050)
2.0%

(0.100)
1.0%

(0.150) 0.0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacant Space Quoted Rental Rates


Historical Analysis, Flex and Warehouse Historical Analysis, Flex and Warehouse

Direct SF Sublet SF $6.20


0.40
$6.10
0.35
$6.00
0.30
Dollars/SF/Year

$5.90
Millions SF

0.25

$5.80
0.20

0.15 $5.70

0.10 $5.60

0.05 $5.50

0.00 $5.40
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property® Source: CoStar Property®

Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted


Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates
2009 4q 304 7,116,430 366,925 5.2% (74,988) 0 0 0 0 $5.77
2009 3q 304 7,116,430 291,937 4.1% (18,266) 0 0 0 0 $6.04
2009 2q 304 7,116,430 273,671 3.8% 3,057 0 0 0 0 $5.90
2009 1q 304 7,116,430 276,728 3.9% (1,970) 0 0 0 0 $6.13
2008 4q 304 7,116,430 274,758 3.9% (70,426) 1 20,000 0 0 $5.70
2008 3q 303 7,096,430 184,332 2.6% 22,345 1 8,820 1 20,000 $6.12
2008 2q 302 7,087,610 197,857 2.8% 15,840 2 86,300 2 28,820 $5.99
2008 1q 300 7,001,310 127,397 1.8% 44,272 0 0 3 95,120 $5.90
2007 4q 300 7,001,310 171,669 2.5% 74,915 1 60,000 3 95,120 $6.47
2007 3q 299 6,941,310 186,584 2.7% 41,840 0 0 1 60,000 $6.45
2007 2q 299 6,941,310 228,424 3.3% 7,540 0 0 1 60,000 $6.40
2007 1q 299 6,941,310 235,964 3.4% (116,419) 0 0 1 60,000 $6.44
2006 4q 299 6,941,310 119,545 1.7% 5,353 3 59,600 0 0 $6.10
2006 3q 296 6,881,710 65,298 0.9% 68,980 0 0 3 59,600 $5.57
2006 2q 296 6,881,710 134,278 2.0% 11,600 0 0 3 59,600 $5.53
2006 1q 296 6,881,710 145,878 2.1% 0 0 0 0 0 $6.19
Source: CoStar Property®

24 THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market


S O U T H C E N T R A L M A R K E T
MARKET HIGHLIGHTS - FLEX & WAREHOUSE

Deliveries, Absorption & Vacancy Historical Analysis, Flex and Warehouse


Delivered SF Absorption SF Vacancy
0.500 12.0%

0.400
10.0%
0.300
8.0%

Percent Vacant
0.200
Millions SF

0.100 6.0%

0.000
4.0%
(0.100)
2.0%
(0.200)

(0.300) 0.0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacant Space Quoted Rental Rates


Historical Analysis, Flex and Warehouse Historical Analysis, Flex and Warehouse

Direct SF Sublet SF $6.30


5.00
$6.25
4.50

4.00 $6.20

3.50 $6.15
Dollars/SF/Year
Millions SF

3.00 $6.10
2.50
$6.05
2.00
$6.00
1.50
$5.95
1.00
$5.90
0.50

0.00 $5.85
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property® Source: CoStar Property®

Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted


Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates
2009 4q 1,048 46,048,672 4,466,533 9.7% 7,495 0 0 0 0 $6.02
2009 3q 1,048 46,048,672 4,474,028 9.7% (206,844) 0 0 0 0 $6.07
2009 2q 1,048 46,048,672 4,267,184 9.3% (113,626) 0 0 0 0 $6.16
2009 1q 1,048 46,048,672 4,153,558 9.0% (27,848) 1 282,100 0 0 $6.06
2008 4q 1,048 45,945,618 4,022,656 8.8% 134,318 0 0 1 282,100 $6.24
2008 3q 1,048 45,945,618 4,156,974 9.0% (140,355) 1 36,000 0 0 $6.27
2008 2q 1,047 45,909,618 3,980,619 8.7% 92,875 3 357,726 1 36,000 $6.05
2008 1q 1,044 45,551,892 3,715,768 8.2% (12,460) 0 0 4 393,726 $6.08
2007 4q 1,044 45,551,892 3,703,308 8.1% (72,396) 3 209,806 3 357,726 $5.83
2007 3q 1,041 45,342,086 3,421,106 7.5% (65,435) 1 33,000 4 437,806 $5.60
2007 2q 1,040 45,309,086 3,322,671 7.3% 364,303 0 0 5 470,806 $5.76
2007 1q 1,040 45,309,086 3,686,974 8.1% 291,739 7 223,312 3 213,480 $6.10
2006 4q 1,033 45,085,774 3,755,401 8.3% (119,520) 0 0 7 223,312 $5.78
2006 3q 1,033 45,085,774 3,635,881 8.1% 450,693 1 12,312 7 223,312 $5.71
2006 2q 1,032 45,073,462 4,074,262 9.0% 96,658 1 1 3 75,012 $5.72
2006 1q 1,031 45,073,461 4,170,919 9.3% 0 3 40,198 3 60,313 $5.69
Source: CoStar Property®

©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 25


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market


S O U T H W E S T M A R K E T
MARKET HIGHLIGHTS - FLEX & WAREHOUSE

Deliveries, Absorption & Vacancy Historical Analysis, Flex and Warehouse


Delivered SF Absorption SF Vacancy
1.000 14.0%

0.800 12.0%

0.600 10.0%

Percent Vacant
Millions SF

0.400 8.0%

0.200 6.0%

0.000 4.0%

(0.200) 2.0%

(0.400) 0.0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacant Space Quoted Rental Rates


Historical Analysis, Flex and Warehouse Historical Analysis, Flex and Warehouse

Direct SF Sublet SF $6.25


7.00

6.00 $6.20

5.00
Dollars/SF/Year

$6.15
Millions SF

4.00

3.00 $6.10

2.00
$6.05
1.00

0.00 $6.00
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property® Source: CoStar Property®

Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted


Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates
2009 4q 1,358 66,104,185 4,825,633 7.3% 73,655 1 64,000 1 19,800 $6.10
2009 3q 1,357 66,040,185 4,835,288 7.3% 14,540 0 0 2 83,800 $6.17
2009 2q 1,357 66,040,185 4,849,828 7.3% 201,479 1 1,520 2 83,800 $6.17
2009 1q 1,356 66,038,665 5,049,787 7.6% 180,020 0 0 2 21,320 $6.19
2008 4q 1,356 66,038,665 5,229,807 7.9% 275,656 3 95,135 1 1,520 $6.21
2008 3q 1,353 65,943,530 5,410,328 8.2% 194,744 0 0 3 95,135 $6.08
2008 2q 1,353 65,943,530 5,605,072 8.5% 565,520 0 0 2 77,632 $6.08
2008 1q 1,353 65,943,530 6,170,592 9.4% (211,830) 3 175,366 0 0 $6.09
2007 4q 1,350 65,768,164 5,783,396 8.8% 81,662 1 42,440 3 175,366 $6.10
2007 3q 1,349 65,725,724 5,822,618 8.9% 305,744 2 127,900 4 217,806 $6.19
2007 2q 1,347 65,597,824 6,000,462 9.1% 881,596 4 218,712 3 214,900 $6.27
2007 1q 1,343 65,379,112 6,663,346 10.2% 764,632 3 196,611 6 346,612 $6.17
2006 4q 1,340 65,182,501 7,231,367 11.1% 120,536 2 127,036 8 494,223 $6.19
2006 3q 1,338 65,055,465 7,224,867 11.1% 348,833 2 52,334 6 439,084 $6.07
2006 2q 1,336 65,003,131 7,521,366 11.6% 490,384 0 0 6 326,981 $6.06
2006 1q 1,336 65,003,131 8,011,750 12.3% 0 6 220,759 2 52,334 $6.03
Source: CoStar Property®

26 THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market


S T C R O I X C O U N T Y M A R K E T
MARKET HIGHLIGHTS - FLEX & WAREHOUSE

Deliveries, Absorption & Vacancy Historical Analysis, Flex and Warehouse


Delivered SF Absorption SF Vacancy
0.200 7.0%

6.0%
0.150

5.0%
0.100

Percent Vacant
Millions SF

4.0%
0.050
3.0%

0.000
2.0%

(0.050)
1.0%

(0.100) 0.0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacant Space Quoted Rental Rates


Historical Analysis, Flex and Warehouse Historical Analysis, Flex and Warehouse

Direct SF Sublet SF $7.00


0.40

0.35 $6.00

0.30 $5.00
Dollars/SF/Year
Millions SF

0.25
$4.00

0.20
$3.00
0.15
$2.00
0.10
$1.00
0.05

0.00 $0.00
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property® Source: CoStar Property®

Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted


Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates
2009 4q 191 6,169,644 250,683 4.1% (8,733) 0 0 0 0 $4.57
2009 3q 191 6,169,644 241,950 3.9% 92,456 0 0 0 0 $5.59
2009 2q 191 6,169,644 334,406 5.4% (1,916) 0 0 0 0 $5.53
2009 1q 191 6,169,644 332,490 5.4% (39,423) 0 0 0 0 $6.46
2008 4q 191 6,169,644 293,067 4.8% (10,497) 0 0 0 0 $5.55
2008 3q 192 6,198,197 311,123 5.0% (80,586) 0 0 0 0 $5.24
2008 2q 192 6,198,197 230,537 3.7% 14,260 0 0 0 0 $4.90
2008 1q 192 6,198,197 244,797 3.9% 170,452 1 12,000 0 0 $5.01
2007 4q 191 6,186,197 403,249 6.5% 7,450 1 50,000 1 12,000 $6.41
2007 3q 190 6,136,197 360,699 5.9% (31,564) 1 6,000 2 62,000 $6.46
2007 2q 189 6,130,197 323,135 5.3% (3,907) 0 0 2 18,000 $6.57
2007 1q 189 6,130,197 319,228 5.2% 11,623 0 0 2 18,000 $5.34
2006 4q 189 6,130,197 330,851 5.4% (21,567) 0 0 0 0 $3.49
2006 3q 189 6,130,197 309,284 5.0% 1,516 1 12,000 0 0 $3.36
2006 2q 188 6,118,197 298,800 4.9% 40,290 0 0 1 12,000 $3.36
2006 1q 188 6,118,197 339,090 5.5% 0 1 11,000 1 12,000 $3.36
Source: CoStar Property®

©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 27


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market


S T P A U L M A R K E T
MARKET HIGHLIGHTS - FLEX & WAREHOUSE

Deliveries, Absorption & Vacancy Historical Analysis, Flex and Warehouse


Delivered SF Absorption SF Vacancy
0.200 9.0%

0.150 8.0%

0.100 7.0%

0.050 6.0%

Percent Vacant
Millions SF

0.000 5.0%

(0.050) 4.0%

(0.100) 3.0%

(0.150) 2.0%

(0.200) 1.0%

(0.250) 0.0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacant Space Quoted Rental Rates


Historical Analysis, Flex and Warehouse Historical Analysis, Flex and Warehouse

Direct SF Sublet SF $7.00


1.00

0.90 $6.00
0.80
$5.00
0.70
Dollars/SF/Year
Millions SF

0.60 $4.00

0.50
$3.00
0.40

0.30 $2.00

0.20
$1.00
0.10

0.00 $0.00
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property® Source: CoStar Property®

Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted


Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates
2009 4q 411 13,648,514 778,062 5.7% 34,109 0 0 1 8,242 $5.21
2009 3q 411 13,648,514 812,171 6.0% (511) 0 0 1 8,242 $5.38
2009 2q 411 13,648,514 811,660 5.9% 29,524 0 0 1 8,242 $5.41
2009 1q 412 13,653,607 846,277 6.2% (54,170) 0 0 1 8,242 $5.70
2008 4q 412 13,653,607 792,107 5.8% 69,847 0 0 0 0 $6.19
2008 3q 412 13,653,607 861,954 6.3% 19,564 0 0 0 0 $6.05
2008 2q 412 13,653,607 881,518 6.5% 50,385 0 0 0 0 $5.87
2008 1q 412 13,653,607 931,903 6.8% 159,278 1 45,000 0 0 $6.50
2007 4q 411 13,608,607 1,046,181 7.7% (154,403) 0 0 1 45,000 $6.28
2007 3q 411 13,608,607 891,778 6.6% 74,635 0 0 1 45,000 $6.35
2007 2q 411 13,608,607 966,413 7.1% (214,169) 0 0 1 45,000 $5.92
2007 1q 411 13,608,607 752,244 5.5% (119,053) 0 0 1 45,000 $6.10
2006 4q 411 13,608,607 633,191 4.7% 71,348 0 0 1 45,000 $6.24
2006 3q 411 13,608,607 704,539 5.2% (12,254) 1 78,800 1 45,000 $6.12
2006 2q 410 13,529,807 613,485 4.5% (12,641) 0 0 2 123,800 $5.55
2006 1q 410 13,529,807 600,844 4.4% 0 1 67,580 2 123,800 $5.84
Source: CoStar Property®

28 THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.


YEAR-END 2009 – MINNEAPOLIS

Minneapolis Industrial Market


S T E A R N S C O U N T Y M A R K E T
MARKET HIGHLIGHTS - FLEX & WAREHOUSE

Deliveries, Absorption & Vacancy Historical Analysis, Flex and Warehouse


Delivered SF Absorption SF Vacancy
0.500 18.0%

16.0%
0.400
14.0%
0.300
12.0%

Percent Vacant
Millions SF

0.200 10.0%

0.100 8.0%

6.0%
0.000
4.0%
(0.100)
2.0%

(0.200) 0.0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacant Space Quoted Rental Rates


Historical Analysis, Flex and Warehouse Historical Analysis, Flex and Warehouse

Direct SF Sublet SF $5.80


0.50

0.45 $5.60
0.40
$5.40
0.35
Dollars/SF/Year
Millions SF

0.30 $5.20

0.25
$5.00
0.20

0.15 $4.80

0.10
$4.60
0.05

0.00 $4.40
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property® Source: CoStar Property®

Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted


Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates
2009 4q 158 5,256,221 361,348 6.9% (4,845) 0 0 0 0 $4.88
2009 3q 158 5,256,221 356,503 6.8% 72,732 0 0 0 0 $5.20
2009 2q 158 5,256,221 429,235 8.2% (37,795) 0 0 0 0 $5.62
2009 1q 158 5,256,221 391,440 7.4% (20,641) 0 0 0 0 $5.11
2008 4q 158 5,256,221 370,799 7.1% 42,772 1 98,333 0 0 $5.21
2008 3q 157 5,157,888 315,238 6.1% (7,864) 0 0 1 98,333 $5.23
2008 2q 157 5,157,888 307,374 6.0% (5,491) 0 0 1 98,333 $5.41
2008 1q 157 5,157,888 301,883 5.9% 276,113 0 0 1 98,333 $5.30
2007 4q 157 5,157,888 577,996 11.2% (24,134) 0 0 1 98,333 $5.80
2007 3q 157 5,157,888 553,862 10.7% (54,100) 0 0 0 0 $6.15
2007 2q 157 5,157,888 499,762 9.7% 105,571 0 0 0 0 $6.15
2007 1q 157 5,157,888 605,333 11.7% (126,144) 0 0 0 0 $5.81
2006 4q 157 5,157,888 479,189 9.3% (30,228) 0 0 0 0 $5.84
2006 3q 157 5,157,888 448,961 8.7% (7,904) 0 0 0 0 $5.60
2006 2q 157 5,157,888 441,057 8.6% 419,068 0 0 0 0 $4.94
2006 1q 157 5,157,888 860,125 16.7% 0 3 43,535 0 0 $5.25
Source: CoStar Property®

©2010 COSTAR GROUP, INC. THE COSTAR INDUSTRIAL REPORT 29


MINNEAPOLIS – YEAR-END 2009

Minneapolis Industrial Market


W R I G H T C O U N T Y M A R K E T
MARKET HIGHLIGHTS - FLEX & WAREHOUSE

Deliveries, Absorption & Vacancy Historical Analysis, Flex and Warehouse


Delivered SF Absorption SF Vacancy
0.200 12.0%

0.150
10.0%
0.100
8.0%

Percent Vacant
0.050
Millions SF

0.000 6.0%

(0.050)
4.0%
(0.100)
2.0%
(0.150)

(0.200) 0.0%
2006 1q 2006 2q 2006 3q 2006 4q 2007 1q 2007 2q 2007 3q 2007 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property®

Vacant Space Quoted Rental Rates


Historical Analysis, Flex and Warehouse Historical Analysis, Flex and Warehouse

Direct SF Sublet SF $7.40


0.60
$7.20
0.50
$7.00
Dollars/SF/Year

0.40 $6.80
Millions SF

$6.60
0.30

$6.40
0.20
$6.20

0.10
$6.00

0.00 $5.80
2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q 2008 1q 2008 2q 2008 3q 2008 4q 2009 1q 2009 2q 2009 3q 2009 4q

Source: CoStar Property® Source: CoStar Property®

Existing Inventory Vacancy Net Delivered Inventory UC Inventory Quoted


Period # Bldgs Total RBA Vacant SF Vacancy % Absorption # Bldgs Total RBA # Bldgs Total RBA Rates
2009 4q 288 6,256,750 420,716 6.7% 29,200 0 0 0 0 $6.36
2009 3q 288 6,256,750 449,916 7.2% (45,716) 0 0 0 0 $6.43
2009 2q 288 6,256,750 404,200 6.5% 45,935 0 0 0 0 $6.94
2009 1q 288 6,256,750 450,135 7.2% (39,265) 0 0 0 0 $7.24
2008 4q 288 6,256,750 410,870 6.6% 153,086 0 0 0 0 $7.09
2008 3q 288 6,256,750 563,956 9.0% (4,684) 0 0 0 0 $7.20
2008 2q 288 6,256,750 559,272 8.9% 7,967 0 0 0 0 $6.74
2008 1q 288 6,256,750 567,239 9.1% 63,017 0 0 0 0 $6.46
2007 4q 288 6,256,750 630,256 10.1% (23,084) 0 0 0 0 $6.45
2007 3q 288 6,256,750 607,172 9.7% (136,854) 1 153,600 0 0 $6.34
2007 2q 287 6,103,150 316,718 5.2% 15,664 1 4,000 1 153,600 $6.38
2007 1q 286 6,099,150 328,382 5.4% 62,773 3 117,005 2 157,600 $6.29
2006 4q 283 5,982,145 274,150 4.6% 10,174 1 25,000 5 274,605 $6.73
2006 3q 282 5,957,145 259,324 4.4% (119,594) 1 7,500 4 142,005 $6.66
2006 2q 281 5,949,645 132,230 2.2% 28,535 1 12,371 3 99,500 $5.75
2006 1q 280 5,937,274 148,394 2.5% 0 1 15,000 2 19,871 $5.79
Source: CoStar Property®

30 THE COSTAR INDUSTRIAL REPORT ©2010 COSTAR GROUP, INC.