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Mr. Joel Hanson City of Little Canada April 26, 1999 Page 4 users find this type of space attractive. The office users can usually lease only office space at a price less than that for traditional office space and parking is usually more convenient. It is generally accepted that office buildings should be located in areas with a sense of place. The synergy of a mixed -use environment or close proximity to a variety of uses (retail, restau- rants, and other office users) generates higher rents and better leasing. Suburban buildings should be located close to freeways or roads that fee into the regional traffic system. Good access to those roads is critical. Parking should be plentiful and traffic loading on major highways should be at a minimum. Site selection is a crucial step in a project's feasibility. The project's location directly affects the rent and occupancy levels the building can achieve. Even office buildings located relatively near each other experience significant location -based differences in rent and occupancy levels. The site is low amenity, and there are no other new office buildings located nearby. There is very limited mixed -use and this location would not create a synergy with any other uses (i.e. shopping, retail, entertainment). This site is unlikely to attract a developer for a traditional office building. Most of the growth in the suburban office market has come from users that require more flexible space and smaller of- fice sizes. The office /warehouse and office /showroom buildings continue to attract a variety of users (some entirely office and some office warehouse users). Lower lease rates and flexibility of space along with convenient parking typically attract new businesses to these facilities, par- ticularly small businesses. The market for the office /warehouse, office /showroom building in the Twin Cities continues to be strong in most submarkets. Until lease rates increase to a level where they match those of new office construction, it is likely that many small office users will continue to view the of- fice/warehouse building as an attractive alternative to traditional office space. If you have questions or need additional information, please contact me. Page 13 1