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					2010 Commercial Real Estate Report
Cedar Rapids | Iowa City / Coralville | Cedar Falls / Waterloo

Eleventh Annual Commercial
Real Estate Report
NAI Iowa Realty Commercial is excited to present our                                                        the challenging economic environment. We’d like to thank the
Eleventh Annual Commercial Real Estate Report. This report is                                               hundreds of Commercial Property Owners who took time to fill
an in-depth analysis of commercial real estate in the Greater                                               out and return our surveys. This data enables us to draw the
Cedar Rapids area. Surveys are distributed annually for office,                                             conclusions and projections throughout the report.
warehouse, retail and investment properties. We gathered facts
and figures on over 1,600 properties; our most comprehensive                                                Thank you for your review of this report and/or your
survey to date. We then applied our own analysis to the data to                                             contribution. Copies of this are available at our office or online
more accurately determine the area’s activity and better predict                                            through our website Should you
future trends.                                                                                              have any questions or comments, please contact me at 319-
                                                                                                            378-6781 or
Data is an essential component of any facilities or investment
decision. At NAI Iowa Realty Commercial, we believe that a                                                  Thank you,
comprehensive analysis is an important aspect of advising our
                                                                                                                                    Kirk Hiland
clients so they are able to make wise, profitable choices.
                                                                                                                                    Managing Broker
This report reflects data gathered through the first quarter of                                                                     NAI Iowa Realty Commercial
2010. It reflects the ongoing effects of the floods of 2008 and

                                                                                                                                                                 Over $100 Million
                                                                                                                                                                     Closed Transaction
                                                                                                                                                                        Volume in 2009!

      Kirk Hiland          Scott Byers • CCIM, SIOR Bob Holland • CCIM, SIOR Joanne Stevens • CCIM

                                Van Miller              Jeremy Tipton              Aaron Saylor            Todd Barker • MBA         Fred Miehe • CCIM            Matt Miehe

                                                                                                                                    Cedar Rapids
                                                                                                                                       Iowa City                 Cedar Falls
                                                                                                                                     & Coralville                & Waterloo

     Tom Dalton              Rod Eiklenborg               Adam Clark            These Offices to Serve You                            319.363.2337              319.233.9999
The information contained in this report is believed to be reliable, but not guaranteed. Reproduction of this publication, in whole or in part, is prohibited without permission of NAI Iowa Realty Commercial.
    NAI Iowa Realty Commercial                                            We are Iowa’s largest and most experienced commercial real
    Our team features specialists in nearly every aspect of               estate company. Recently, we were cited as the 46th highest
    commercial real estate, and we hold individual accreditations         volume producing commercial real estate company in the
    with CCIM, SIOR, MCR, ALC and GRI. Our affiliation with NAI           Midwest, and the only firm in the state that made the list.
    gives us access to markets across the world. With over 3,700          From local investor to corporate America, we have the market
    brokers in 350 offices worldwide, we have vast resources at our       information, contacts, experience and insight to meet diverse
    fingertips; a global perspective combined with local expertise.       needs.

    Locally, our associates have over 350 combined years of               NAI Iowa Realty Commercial has office locations throughout
    experience in:                                                        the state of Iowa (Cedar Rapids, Waterloo, Iowa City and
                                                                          Des Moines). Widely acknowledged as the leader in Iowa
    • Site Selection                                                      commercial real estate, our branches are able to service Cedar
    • Buyer, Seller, Landlord and Tenant Representation                   Rapids, Marion, Hiawatha, Waterloo/Cedar Falls, Iowa City/
                                                                          Coralville, North Liberty, Muscatine, Dubuque, the Quad Cities
    • Land Development: Retail Centers, Industrial/Warehouse and          and all surrounding communities. In conjunction with a sister
      Office Property                                                     office in West Des Moines, we also provide extensive coverage
    • Project Management                                                  in central Iowa.
    • Property and Lease Management
    • Mergers, Acquisitions and Divestitures
    • Business Brokerage


    Today                                                                 Tomorrow
    While investment in Commercial Real Estate is gradually               We are entering a time of the “new normal”.
    picking up, it continues to be controlled by unprecedented
    economic instability and the prior collapse of the commercial         Lease prices are adjusting to new economies and carrying
    mortgage market.                                                      along with them the ultimate value of the commercial real
                                                                          estate. Locally vacancy rates while not anywhere near national
    While local lenders have filled the void for smaller investments,     levels, have remained high and in some cases increased. The
    larger real estate investments, 10 million dollars plus, continue     effects of unemployment and downsizing can be seen across
    to hang fire. Collateralized Mortgage Backed Securities (CMBS)        the market.
    are just beginning to reappear and with the secondary market
    in disarray will not be a factor for sometime to come. Likewise,      That being said, our market has some excellent values for
    Insurance Company money, while available is under severe              both tenancy and ownership. These values are adjusting
    scrutiny both for the asset and the borrower. Investors have to       into the new economy which will feature new tax, health and
    be willing to be very patient and live by new rules in this market.   employment standards.
    This applies to both Sellers and Buyers.                              Fortunately our market is sized to handle future demands in all
    TIC (Tenants in Common) investors have dried up, but the              sectors of Commercial Real Estate.
    good news here is that some of their holdings are coming              Owners and investors have to recognize that we are in a new
    back on the market in this area. These properties are back not        economy with different lending rules, different expectations
    necessarily through a deficiency of the real estate, but rather       of and from tenants, and unfortunately, ever-increasing
    due to losses in other markets.                                       government control of lending, ownership and use.
    Money as it is available is at very favorable rates between 5½        Reminders:
    to 6½ percent. This is definitely a bright side to the investment
    market. Lenders are flush and see very attractive margin              Owner/investors, in order to maintain and grow their
    spreads in their loans. The caveat here though is that these          commercial real estate position, must:
    loans are now being subjected to unprecedented scrutiny by            • Be proactive on property taxes
    not only the lenders themselves, but also by their regulators.
    Down payments have moved into the 20 to 30 percent range.             • Be prepared to refinance into longer term fixed money should
    Debt coverage ratios have escalated and of course the day of            they sense an upturn in inflation
    the non-recourse loan has gone away.                                  • Recognize the ramifications of changes in capital gains taxes
                                                                            that may (probably will) take place
                                                                          • Be available and responsive to tenants to maintain occupancy


Central Business District                                                     Suburban Office
The evolution of the Central Business District continues after                Suburban Office Space is a mix of good and bad. Class A
the Flood of 2008. Several key elements to rebuilding and                     space has maintained a high occupancy of 94+%. This has
or re-tenanting have now been decided on, advanced to the                     remained steady since the Flood when a number of offices
blueprint stage and/or started.                                               relocated and took up some vacant Class A buildings. A
Municipal government has now committed to return to                           softening of this market may occur as Municipal offices move
downtown, mixing the former City offices on Mays Island                       back downtown, however, there has been very little new
with some use of the former Federal Building on First Street.                 construction of Class A speculative space (basically none)
In addition, the new Events Center is moving ahead on First                   in the past year so this should steady the market as offices
Avenue and Third Street with property buyouts in progress and                 transition.
ground breaking in 2011. The Cedar Rapids Library has chosen
the “True North” site along Fourth Avenue and True North
Companies will be moving to the former Library site which
was flooded out in 2008. The Central Fire Station is poised to
relocate to First Avenue and Sixth Street. The County offices
will return to their pre-flood home on Second Street SW. The
new Federal Building is moving along rapidly and giving the
downtown the first look of Sky Cranes in years.

A major factor for CBD Landlords and tenants a year ago was
the availability or lack thereof of steam for heating. This issue
has been resolved for the most part with a reconfiguration of
buildings from the Central System to private on-site systems.
This is a definite factor in gross rent expense. It has been
estimated that this has raised costs by as much as $.50 per
square foot with sure numbers not available at this time.
Occupancy is a mixed bag in the CBD with upper floors                         Class B and C space continues to be troublesome with
(basically undamaged by the flood) being occupied, but much                   vacancy rates now exceeding 18-20% and very minimal
main level still vacant. Overall our survey showed at this time an            demand. This has moved up from last year’s 15 to 18% rate.
85% occupancy with an average rent (spread over Class A, B,                   It appears that economic factors have closed some offices
and C space) of $10.38 per square foot on a net leased basis.                 and caused others to consolidate. Recently NAI Iowa Realty
                                                                              Commercial was involved in a lease transaction where more
As the Federal Building comes online there will be an increase                than a third of the employees would be working from their
in Class A-B vacancy as government offices transition to the                  homes. This trend has been growing over the last few years. It
new building. The new United Way Building will also draw some                 has an obvious impact on tenancy and also more subtle things
non-profit tenants out of their current space increasing vacancy.             such as parking requirements (ramps), food/service needs,
                                                                              daycare, etc.
Overall, the Central Business District has had minimal change
in the last year, but 2011 and forward with the new projects
underway will have significant positive impact, not only on
tenancy but the overall vibrancy and excitement of the area.

                                                               OFFICE RATES
                                             $6   $7   $8     $9   $10    $11     $12   $13   $14   $15   $16

                                 Class A                                                $13.00—–—$15.90

                                 Class B                           $10.00-$11.00

                                 Class C      $6.50—–-$8.50

                                 Average                             $10.00

    Future Growth
    As of this writing, the major office growth contemplated is in
    Medical Services with the possibility of a new Medical Mall
    and a new Cancer Treatment Center. These plans are still in
    progress and while they will have tremendous community
    impact, the influence on traditional office space should be

    No major speculative office spaces are on the horizon at
    this time, tightened lending restrictions and tough economic
    conditions are limiting these opportunities.


    Retail Recap                                                          of Crossroads Mall. Several other as yet unannounced tenants
    Retail in the Corridor area is stable with rents remaining at         will be filling out the balance of the 84,000 square foot space.
    previous year’s levels and occupancy rates that have changed          Theisen’s is refilling a 100,000+ square foot space on 51st
    very little. National economic conditions aside, Corridor retailers   Street in Northeast Cedar Rapids (also a former Econo-Foods).
    have experienced steady sales. Landlords have benefited from          The property which they purchased in the Spring of 2010
    the lack of new construction which has allowed some moderate          should be open by this fall. This is a major step forward in
    backfilling of space as new tenants come to market. Regional          using up second and third generation space in Cedar Rapids.
    malls in Cedar Rapids (Lindale), Coralville (Coral Ridge), Iowa       Theisen’s is also expanding into the Coralville/Iowa City market
    City (Sycamore) and Waterloo (Cross Roads) have maintained            with a new store between Coralville and Tiffin which will also be
    high occupancy both in the Mall and outlying pads and shadow          opening this fall.
    spaces.                                                               Unfortunately, Westdale Mall continues to wallow in foreclosure
    A new Dick’s Sporting Goods is the anchor tenant backfilling          with no bright prospects for a necessary rehab effort at the
    a former Econo-Foods grocery store at the northwest corner            present time. No announcements of major Retail Projects are in
                                                                          the offing at the present time.

              Industrial &

Industrial & Warehouse                                          versus 13.6% a year ago. The Southeast side has tightened to
Warehousing demand has shown a slight increase in the           a 5% vacancy (some of this attributable to the Farmstead plant
past year. Immediately after the flood there was a spike as     no longer being in use or reported). The major warehousing
tenants had to move and Landlords had to rehab buildings.       areas on the Northwest and Southwest have increased vacancy
Transitioning back to buildings and economic conditions have    to about 9.9%, a 4.5% increase. Marion and Hiawatha remain
changed the occupancy rates in quadrants somewhat. The          very tight at 2.75% vacancy. The overall today is in the
Northeast side has tightened up with a current rate of 8.5%     neighborhood of 5.25%.

Two major big boxes still sit vacant with one in excess of      Average rents per square foot have remained very constant
100,000 square feet and another in excess of 200,000 square     for the past few years, with any changes attributable to pass
feet. Further south in the corridor, Coralville has a 410,000   through costs to tenants.
square foot facility available.

                                                                                                          Cedar Falls

                                                                               Cedar Valley At A Glance

                                                                               Population (2008)
                                                                                 Waterloo        66,662
                                                                               Cedar Falls       38,059
                                                                                Evansdale         5,056

                                                                                         Total 109,777

                                                                               Unemployment Rate (July 2010)
                                                                                      Waterloo / Cedar Falls    6.3%
                                                                                      (Down from 7.0% Feb 2010)

                                                                               Commercial Property Rates*
                                                                                                                  Rent/SF      Year     Vacancy
                                                                                                    Property       Low         High       Rate
    The Cedar Valley market continues to grow with strong,
    steady, sustained growth. The market is absorbing office                       Downtown Office (Prime)          $6.25      $9.50     10.0%
    and industrial vacancies.                                                       Suburban Office (Prime)         $8.00     $12.00       7.0%
    • CBE Group purchased a two story 55,000 sq. ft. office                    Industrial Bulk Warehouse            $2.00      $3.25       4.0%
      building in the Cedar Falls Technology Park in late June for                                     Retail       $7.00     $19.00     11.0%
      $5,037,500.                                                              *
                                                                                Rental rates include estimated taxes, insurance and maintenances.
    • Dick’s Sporting Goods has leased 45,000 sq. ft. of retail space
      in the former EconoFoods building near Crossroads Shopping
      Center in Waterloo. Approximately 20,000 sq. ft. of space
      remaining for lease; all under contract.                                 About NAI Global
    • Hy-Vee Grocery store has purchased a 12,000 sq. ft.
      grocery store to relocate an existing store along Ansborough
      Avenue in Waterloo. Their plans for the building are yet to be           NAI Global is one of the world’s leading providers of
      determined, but will probably entail redeveloping the site.              commercial real estate services. We bring together people
                                                                               and resources wherever needed to deliver outstanding
    • Quik Star Convenience Store has acquired a site in Cedar                 results for our clients.
      Falls for a new LEED convenience store on the corner of Hwy
      58 & Ridgeway for a 5-6 million dollar project.                          NAI At A Glance
    • The City of Waterloo has acquired 20 acres of undeveloped                           350    Offices
      ground across US Hwy 20 from Ansborough Avenue for                                    45   Countries
      anticipated future industrial and technology development. The                    5,000     Professionals
      site is adjacent and south of the Tower Park Complex.                        $40 Billion   Annual Transaction Volume
    • Two hotels are being built in South Cedar Falls near the new
      Target retail store. Motel 8 and Suburban Hotel Groups are
      building three-story hotels.
    • Sakura Restaurant has acquired and built a new Japanese
      Steakhouse and Sushi restaurant that opened the Spring of
      2010 in Cedar Falls near College Square Mall. It is a 6,000 sq.
                                                                             • Darden Restaurant Group has acquired a former Ground
      ft. restaurant that built an additional 5,000 sq. ft. for additional
                                                                               Round restaurant with plans to redevelop the site for a Long
      retail space.
                                                                               Horn Steakhouse in Waterloo near the Crossroads Shopping
    • Buffalo Wild Wings is breaking ground in the spring as they              Center.
      plan to build a 5,000 sq. ft. restaurant across from College
      Square Mall in Cedar Falls with additional space for lease.

Individual Memberships

                         116 Third Street SE
                         Cedar Rapids, Iowa 52401
                         319-363-2337 tel
                         319-365-9833 fax

                         220 Ridgeway Ave., Suite 100
                         Waterloo, Iowa 50701
                         319-233-9999 tel
                         319-291-7130 fax

                         327 Second Street, Suite 201
                         Coralville, Iowa 52241
                         319-363-2337 tel
                         319-365-9833 fax


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