2009 Kootenai County Market Forum Office Slides

Office Pat Eberlin

CREATIVITY

Non-Farm Payroll Jobs 60 000 60,000 58,000

56,700

56 000 56,000

56,500 55,100

54,000 52 400 52,400

52 000 52,000 50,000

49,200

48 000 48,000 46,000 44 000 44,000 42,000 40 000 40,000

54,200

46,000

Non-Farm Payroll Jobs

Office Survey Breakdown 10.03%

1,200,000

Net Usaable SF

1,000,000 800,000

3.91%

Vacant SF

600,000 ,

Net Usable SF Net Usable SF

400,000

5.27% 7 70% 7.70%

200,000 0 Post Falls

Hayden

Rathdrum Coeur d'Alene

Source: Fall 2008 Office Survey Auble, Jolicoeur & Gentry/Coldwell Banker Commercial

Class A Space • • • •

Quality of Construction Exceptional finish, amenities and location M d Modern ttechnology h l Rents $18-$24/sq. ft. NNN Annual

Class B Space • • •

Lesser quality interior finishes and amenities More affordable space for tenants Rents $12-18/sq. ft. NNN Annual

Class C Space • •

Functionally out-dated • Lacking ADA, Parking, Technology, Location Rents $6-$12/sq. $ $ ft. NNN Annual

Speculative Office Construction •

New office construction down for two reasons • 1) The negative absorption of existing projects • 2) Financing

New Projects Starting & Finishing in 09 •

Mountain West Bank Operations Center 2 story; 28,000 SF

New Projects Starting & Finishing in 09 •

The Plaza on Sherman SEC Sherman & 7th: 6 story; 70,000 SF

New Projects Starting & Finishing in 09 •

Global Credit Union 320 E Neider: 2 story; 27,400 SF

New Projects Starting & Finishing in 09 •

Kootenai Cancer Center of Post Falls 2 story; 23,609 SF

Creative Minds at Work 1) Value Add Projects

Creative Minds at Work 2) Offer Affordability • Rent concessions • Rent R t abatement b t t • Tenant improvement funds 3) Keep an open mind to retain current tenants • Growing trend of 2009 – Current tenants asking for decreased rent • Maintain value of investment by offering free rent opposed to decreased rent • Deferring D f i th the reduced d d rentt amountt tto the th back b k end d off th the lease term • Request most recent P&Ls to verify financial distress

Creative Minds at Work 4) Flexible Build-Out • Modular Walls with High-End Finishes • Ability Abilit tto E Expand/Contract d/C t t C Costt Eff Effectively ti l • Quick Assembly/Minimal Impact • Classified as Furniture (Faster Depreciation) • Pros vs. Cons

2009 Kootenai County Office Forecast -

Keep open dialogue with current tenants Rising unemployment = Increased Vacancies Offer Affordability Limited amount of new construction will aid in office absorption - CREATIVITY