PRESS RELEASE

For Immediate Release Tuesday, August 19, 2008

Contact: Noel LaBine 763-477-3086

Spec Industrial Development seminar
held at Rivewood National Golf Course, Otsego

The Wright County Economic Development Partnership held a Spec Industrial Update at their monthly noon luncheon event on August 13 th at Riverwood National Golf Course Club house in Otsego. Duke Realty was the sponsor for this event.

Scott Moe of Duke Realty was the presenter. Duke Realty owns the 120,000 square foot Spec Industrial building called Gateway North that is located along the east side of 101 in Otsego. They have been busy working with potential tenants for that site. Scott Moe shared information about current trends and future possibilities for the industrial building market.

Moe explained that although the cost of new construction for industrial buildings has gone up, the rates charged to lease such buildings have stayed the same. The result is a decline in yield for the investors of those buildings. When you factor in the current trend of rising Cap Rates (or interest for the capital needed to finance those buildings), the profit margin or net operating income (NOI) deteriorates even more. On top of that scenario the current demand for industrial properties is down about 70% from this time a year ago. While it appears that the vacancy rate for bulk warehouse and office/ warehouse is less than it was three years ago, there is still plenty of space available and with weak demand very few developers are interested in building more space.

That being said, there still is some demand, and Duke Realty expects the current building off of 101 to be filled soon. The potential tenants made the decision to locate in Wright County because of the large labor force that is there. When they ran a blind ad in several newspapers looking for additional employees, 99% of the responses came from workers in Sherburne and Wright Counties .