PRESS RELEASE

For Immediate Release Thursday August 22, 2006

Contact: Noel LaBine 763-477-3086

Noon luncheon seminar on Industrial Spec Properties held at Rockwood's Banquet Center on August 16, 2006.

     

   

   The Wright County Economic Development Partnership held a Development Series Luncheon Seminar at the Rockwood Banquet Center on August 16th. The event started at 11:30 a.m. with a luncheon that was served to the 40 people, who attended.

    Presentations started at noon and the presenter was Patrick (Pat) Mascia of Duke Realty. Mascia was asked to make a presentation, because Duke Realty has committed to building 1.4 million square feet of industrial spec property in Otsego off of Highway 101. They have started construction in 2006 on the first 50,000 square feet on that site.

    Pat Mascia gave a detailed presentation including the definition and some history of Industrial spec properties, which are properties that are built before tenants are identified. They are built to realize a return on investment through rents received (lease properties). Companies such as Duke Realty are REITs (Real Estate Investment Trusts) and are in the business of providing the market with lease-able commercial and industrial property. Since they are funded by investors, they don't have any bank loans and debt to alter their decision making process. Duke Realty is primarily focused on providing the market with industrial spec property, and they are experienced industrial park developers. As they began filling up their previously built space, they historically make plans to build more; because they intend to always have space available. They also typically try to purchase land in advance of the markets needs; so they can guaranteed a place to put their next development.

  Mascia also discussed the market trends, which they use to identify when and where to make the decision to build more properties. The current market is soft, and Mascia gave his viewpoints on why that may be the case. In his opinion there are three conditions making the market soft now, and they are construction costs, high land costs, and buyers reacting to the increased costs. The current reduction in absorption rate of rental units is a temporary “slide”. Mascia expects the demand for rental property to start increasing, because the yield expectations on rental property are now down as far as they can go. There has to be a spread between what the U.S. Treasuries are paying and what an investor can make on investment real estate, or the dollars won't flow into investment real estate. As the available property becomes absorbed to a degree less than ten per cent vacancy, the providers will increase their rental rates. This will cause the new rates to come into sync with the new costs, and in a relatively short amount of time, the buyers will be over the “sticker shock”.

  Overall, Pat Mascia's presentation was well-received and the audience was satisfied. Several people stayed around after the presentation to visit with Mascia and others.

  The Partnership exists to enhance the business climate of Wright County and to help create more jobs in Wright County . The strategies the Partnership uses to achieve its mission include being an information resource and finding technical assistance; aiding business development through Business Retention & Expansion visits, providing financing resources, and providing business information and training through seminars and workshops. Also, the Partnership markets Wright County to business site locators, and maintains an excellent website, which includes a listing of commercial and industrial property available in Wright County (see www.wrightpartnership.org ). The Partnership also assists with Workforce Development and has gathered economic statistical information, which is available on its website.