The benefits of the GOP convention to St. Paul's rental office market were transitory - more than offset by the unsteady economy.
By SUSAN FEYDER, Star Tribune
Last update: October 12, 2009
A report released Monday by St. Paul's Building Owners and Managers Association (BOMA) offers little evidence that hosting last year's Republican National Convention provided a boost to the city's office market.
"I think it was valuable to showcase the city," said Patricia Wolf, a St. Paul commercial real estate broker and BOMA board member. But she and other BOMA officials agree that, for the time being, the market collapse that coincided with the convention probably negated any opportunities to increase occupancy. About 51,000 square feet leased short-term by the RNC went back on the market shortly after the convention and has not been re-leased.
In its 2007 report, BOMA said it expected the September 2008 convention to be an opportunity for the city to establish a national and international reputation as a place to do business. "Making this kind of impression on business and community leaders could be a real boost to St. Paul and its office market," the report said.
St. Paul is hardly alone in its struggle with slack demand for office space. Office building owners here and nationwide are dealing with vacancy rates that are the highest in four years, according to Reis Inc., a New York-based real estate research firm. As of the third quarter, the office vacancy rate increased in 72 of 79 metropolitan areas tracked by Reis.
The BOMA report paints a picture of St. Paul basically holding its own in the difficult office market. The vacancy rate for downtown "competitive space" -- that not taken up by government use or building owners -- stood at 20.1 percent as of Aug. 1, slightly higher than last year's 19.6 percent. The vacancy rate for all types of office space held steady at 10 percent. After dropping for the past few years, the size of the downtown office market edged up to 17.15 million square feet, due to re-measurement of some buildings. Previous declines had come, in part, from some older office buildings being converted to other uses, such as housing.
BOMA also reported that rents for all types of competitive office space rose in the past year. That bucks the trend in the markets tracked by Reis, where rents fell in 68 of the 79 metro areas.
The BOMA figures offer a healthier picture of St. Paul's office market than those compiled by area commercial real estate firms, such as the Twin Cities office of Colliers Turley Martin Tucker. In a recent report, it said downtown St. Paul's vacancy rate at the end of the third quarter was 25 percent, compared with 18.1 percent for downtown Minneapolis and 19.6 percent for the Twin Cities overall.
The BOMA report notes some significant office deals in the past year that, in some cases, have brought new tenants to downtown St. Paul. Those include Microsoft Corp., which leased 12,000 square feet at Wells Fargo Place for its Expressions product development team, and GovDelivery Inc., which leased 14,447 square feet in the Hamm Building. Galtier Plaza is being renamed Cray Plaza as part of a deal by the Seattle-based supercomputer company to lease 51,000 square feet in the office building, relocating about 225 employees who have been housed in offices in Mendota Heights. Cray was lured, in part, by a $400,000 forgivable loan, approved in May by the City Council, acting as the Housing and Redevelopment Authority.
Those gains only partially offset more than 100,000 square feet vacated in U.S. Bank Center by Educational Credit Markets Corp., which moved from downtown to space in the Imation corporate campus in Oakdale.
Susan Feyder • 612-673-1723
No comments:
Post a Comment