scott county presentation june2012...

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


• 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


• 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.


• 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


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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