l/ d l k dCommercial/Industrial Market Findings
Scott County SCALE PresentationJune 8, 2012
Purpose & Scope
• Update of 2006 study• Draft: Feb. 2012• Revised Draft: April 2012• Final: May 2012
• Recommend Demand by• Recommend Demand by product type/submarket through 2020/2030
• SCALE data review
• Land supply – is it sufficientLand supply is it sufficient to meet projected growth & County goals?
Employment Overview
• About 45% of all jobs were located in Shakopee in 2010.
• Jobs expected to grow by about 9 900 jobs (+23 4%) which is• Jobs expected to grow by about 9,900 jobs (+23.4%), which is higher than the Metro Area projections of 16% by 2020.
• Largest growth is expected in Education & Health Services
Change Change
• Largest growth is expected in Education & Health Services, Trade, Transportation, and Utilities, and Manufacturing.
g g1990 2000 2010 2020 2030 2010 ‐ 2020 2020 ‐ 2030
Belle Plaine 931 1,428 1,939 2,800 3,700 861 900Elko New Market 113 248 347 700 1,000 353 300Jordan 913 1,321 1,592 2,100 2,700 508 600New Prague 1,044 3,043 2,897 3,500 4,000 603 500New Prague 1,044 3,043 2,897 3,500 4,000 603 500Prior Lake 3,000 7,972 7,735 9,500 11,000 1,765 1,500Savage 3,180 5,366 6,735 8,500 9,500 1,765 1,000Shakopee 8,500 13,938 18,807 22,500 30,000 3,693 7,500High Growth Townships 338 794 1,194 1,345 1,560 786 215Low Growth Townships 535 1 582 1 065 1 265 1 500 256 235Low Growth Townships 535 1,582 1,065 1,265 1,500 256 235Scott County Total 18,554 35,692 42,311 52,210 64,960 9,899 12,750
Employment Overview
• Only 23.7% of Scott County residents also work in Scottresidents also work in Scott County• 44.1% of Scott County residents commute t H i C tto Hennepin County
• Hennepin, Dakota, Anoka, Washington, and Carver Counties had over 40% living and working in same countyand working in same county.
• Ramsey County had 16.8%.
• Average yearly wages (2011)Average yearly wages (2011)• Scott County ‐ $40,400
• Hennepin County ‐ $60,250
• Metro Area ‐ $54,500
Building Permit Trends (Commercial/Ind.)
• 671 commercial/industrial permits (2000 to 2011) 451 (00’‐05’) | 220 (06’‐11’)( ) | ( )
• Shakopee accounted for 70% of acreage over decade
• Average acres per permit: 3 2 (Cities) | 5 2 (Townships)• Average acres per permit: 3.2 (Cities) | 5.2 (Townships)
10 0100
Annual Average Permits Issued and Acreage Per PermitScott County
2001‐2005 & 2006‐2011 300.0120
Commercial/Industrial Building PermitsScott County2001‐2011
5 0
6.0
7.0
8.0
9.0
10.0
50
60
70
80
90
100
Perm
it
r of B
uilding Pe
rmits Average Annual Building Permits
Acres Per Permit
150.0
200.0
250.0
60
80
100
Acres
uilding Pe
rmits
Building Permits
Acres
0 0
1.0
2.0
3.0
4.0
5.0
0
10
20
30
40
50
Acres Per P
Average Ann
ual N
umbe
r
0.0
50.0
100.0
0
20
40
Num
ber o
f Bu
0.002001‐2005 2006‐2011
Year
0.002001 2003 2002 2004 2005 2006 2007 2008 2009 2010 2011
Year
SCALE Overview(Scott County Association for Leadership & Efficiency)
Key Questions
• Does Scott County have enough land (from pad‐ready to guided) to accommodate commercial/industrial uses that will employ at least 50% of the labor force by 2030?
• Can the commercial/industrial land support development given market conditions?Can the commercial/industrial land support development given market conditions?
• How does Scott County collaboratively market itself as an employment destination in the Metro Area and beyond?
Property Classification System
• Class I: Pad Ready• Class I: Pad Ready • Class II: Guided and zoned. Infrastructure accessible to site• Class III: Guided for C/I uses
SCALE Overview(Scott County Association for Leadership & Efficiency)
• 633 parcels | 8,136 acres 0.00 to 0.99
00 2 99
Parcels by Acreage & Class
• Inventory by Class (acres): Class I: 540 (6.6%)
1.00 to 2.99
3.00 to 4.99
5.00 to 9.99
10.00 to 19.99Acreage Class I
Class II
Class III
Class II: 1,647 (20.3%) Class III: 5,948 (73.1%)
0 10 20 30 40 50 60 70 80 90
20.00 to 49.99
50.00 +
Parcels
Class III
• Townships: 5,900 acres (73%)
• Median Parcel size (acres) Avg. Market Value
Parcels
• Median Parcel size (acres)• Class I: 1.8• Class II: 3.3
Parcel Taxes AcreClass I $650,760 $22,610 $212,041Class II $782,742 $15,584 $70,328Class III $401,533 $4,484 $20,859
g
• Class III: 9.8
SCALE Overview(Scott County Association for Leadership & Efficiency)
• 85% of Class I acreage located in Shakopee Prior Lake Jordan 50
60Parcels by Community & Acreage
0 ‐ 4.99
5.0 ‐ 19.9Shakopee, Prior Lake, Jordan, and Elko‐New Market
• 70% of Class I acreage in the 20
30
40
50
No. of P
arcels
20.0 ‐ 49.9
50.0+
70% of Class I acreage in themunicipalities is less than 3 acres
100%Pct. by Class & Submarket
0
10
20
Belle Plaine Elko NewMarket
Jordan New Prague Prior Lake Savage Shakopee
Community
59.3%46.5%
80.9%
55.9%
15.7%24.2%
44.2%
3.8% 5.2%
93.7%50%
60%
70%
80%
90%
100%
ct.
Class III
Community
21.5%
40.7%53.5%
10.5% 15.3%
39.0%
80.3%54.3%
45.4%
5.8%
93.7%
10%
20%
30%
40%
50%Pc Class II
Class I
4.0%%
0.5%0%Belle Plaine Elko New
MarketJordan New Prague Prior Lake Savage Shakopee Townships
Commercial/Industrial Themes…
• Continued recovery from Great Recession…slow recovery but improvingimproving
• Bi‐furcated market Newer properties out performing oldNewer properties out performing old Move‐up/trade‐up Space efficiency
• Concessions will continue…but decreasing
• New construction is user‐driven/build‐to‐suit
• Multifamily housing driving commercial market
• Outlook for 2012 is more optimistic than 2011Outlook for 2012 is more optimistic than 2011
Retail Overview
• Scott Cty. vacancy of 8.2%• Neighborhood Ctr.– 18.6% 8.2%
8 0%
9.0%
Retail Vacancy by SubmarketTwin Cities Metro Area ‐ 2011
g• Community Ctr.– 5.1%• Regional– 1.4%
7.3%
5.9%
7.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Vacan
cy Rate
• Negative Absorption (‐58k)
• Rents are flat0.0%
1.0%
2.0%
Northeast Northwest Southeast SouthwestSubmarket
24.5%
20.0%
25.0%
30.0%
e
Vacancy by Type of CenterTwin Cities Metro Area ‐ 2011
11.7%
6.2%3.2%5.0%
10.0%
15.0%
Vcancy Ra
te
0.0%Neighborhood Community Regional Mpls CBD
Type of Center
Retail Overview
• 25 properties marketing | 274,000 sq. ft.
• 70% of square footage marketing is in Shakopee
• Avg. lease rate ‐ $15 (net)
Office Overview
• SW Submarket vacancy of 18.4%• Class A– 16.7%
31 7%35.0%
Office Vacancy by Class of SpaceSW Submarket & Metro Area ‐ 1st Half 2011
• Class B– 18.4%• Class C– 31.7% 16.7%
18.4%
31.7%
15.3%
22.4%
26.4%
15.0%
20.0%
25.0%
30.0%
Pct. Vacan
t
Southwest Submarket
Twin Cities Metro Area
• Positive Absorption (+264k)
• Rents down in all sectors 0.0%
5.0%
10.0%
Class A Class B Class C
P20.8%18 3%
19.6%19.2%
24.5%24.3%
21.7%20 0%
25.0%
30.0%
Historic Vacancy RateSouthwest Submarket‐ 2002 ‐2011
14.7%17.0%
14.4%12.1% 11.7%
13.0%
15.8%
20.5%20.8%
18.4%18.3%
17.4%
14.2% 13.8%
17.1%
5.0%
10.0%
15.0%
20.0%
Vacan
cy Rate
Vacancy Rate
0.0%2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Vacancy Rate w/Sublease
Office Overview
• 33 properties marketing | 180,000 sq. ft.
• Mostly small contiguous space marketing
• Median lease rate ‐ $14.75 (net)
Industrial Overview
• SW Submarket vacancy of 16%• Bulk Warehouse – 14.3%
$ $8 46$9 00
$10.00
Historic Rental Rates (Net)Southwest Submarket‐ 2002 ‐2011
• Office Showroom – 20.2%• Office Warehouse – 14.4%
$8.44
$8.23 $8.10 $8.23 $8.43 $8.44
$8.59
$8.52
$8.46$8.43
$4.42 $4.42 $4.52 $4.63 $4.80 $4.83$4.91
$4.42$4.35
$4.34$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
Vacan
cy Rate
• Positive Absorption (+290k)
• Rents down slightly$0.00
$1.00
$2.00
$3.00
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
V
Office Warehouse
17 3%17.2% 17.7%
17.5%
18.8% 20.2%
18.8%20.0%
25.0%
Historic Vacancy RateSouthwest Submarket‐ 2002 ‐2011
14.2%15.9%
16.5%
11.6% 10.5%11.0%
11.7%
16.1%
17.3%16.1%
13.5%11.3%
12.1%
13.2%
5.0%
10.0%
15.0%
Vacan
cy Rate
Vacancy Rate
V R t /S bl
0.0%2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Vacancy Rate w/Sublease
Industrial Overview
• 26 properties marketing | 1.23 million sq. ft.
• Shakopee & Savage make‐up 95% of sq. ft. marketing
• Majority of properties Bulk Warehouse & Office Warehouse
Land Overview
• Steeply discounted prices from peak…but leveling off
• Highest demand for infill or property in 494/694 loop near highest densities
• Demand is user driven – few speculative deals
• Multifamily housing sites highly sought after
• Agricultural land values up – bumper crops• Agricultural land values up – bumper crops
• Single‐family residential lot inventory is declining
• Compared to the Metro Area, actively marketing land in Scott County costs on average about ‐25% less
Commercial/Industrial Demand
Two Demand Scenarios:1. Household & Employment Growthp y2. Building Permit & Land Absorption Trends
Scenario 1:SUMMARY OF COMMERCIAL/INDUSTRIAL DEMAND (ACRES)
SCOTT COUNTY2010 to 2030
2010 ‐ 2020 2020 ‐ 2030 2010 ‐ 2030
• Demand for 520 to 730 acres through 2030
Retail
Office
Industrial 93 ‐ 186 239 ‐ 358 332 ‐ 544
56 79 135
20 31 50 • Highest Demand 2020+Industrial 93 186 239 358 332 544Total 169 ‐ 262 349 ‐ 468 518 ‐ 730
S M fi ld R h I
Note: Demand projects based solely on household growth and employment projections.
Source: Maxfield Research Inc.
Commercial/Industrial Demand
• Avg Acreage/PermitScenario 2:
Avg. Annual Acres Absorbed• Avg. Acreage/Permit Municipalities ‐ 3.24 Townships ‐ 5.2
d f12.7
113.5
58.6
Savage
Shakopee
Townships
t
g2001 to 2011
• Demand for 1,485 acres• Shakopee ‐ highest demand
Demand Summary: 2012 to 2020 4.5
5.4
3.5
18.5
Elko New Market
Jordan
New Prague
Prior Lake
Subm
arket
Prior Lake
Savage
Shakopee
Townships
rket
y6.1
0.0 20.0 40.0 60.0 80.0 100.0 120.0
Belle Plaine
Acres
ll l
Elko New Market
Jordan
New Prague
Prior Lake
Subm
a
2012‐2015
2016‐2020
0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0
Belle Plaine
Acres
Commercial/Industrial Demand
Demand Summary:
• Double the land need utilizing historic absorption trends vs. projected household & employment growth
• Majority of growth to occur in the 2nd half of the decade
N t h Cl I l d t t j t d d th h 2020• Not enough Class I land to meet projected need through 2020
• Class II property must be upgraded to Class I
Job Density/Jobs to Labor Force
2030 Goal: 50% Capture of County Labor Force
• Scott County does not have enough jobs today to employ the total labor force
• 19,000 job deficit in 2010 to meet this goal 660 acres needed (540 Class I today) All Cl I ld b d l t d t t l All Class I would be depleted to meet goal
• Gap will grow through 2030 Deficit of another 420 acres 31,000 jobs needed
Question & Comments
Contact Info:Matt Mullins – Maxfield Research Inc. 612.904.7971mmullins@maxfieldresearch [email protected]
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