2013 - 2014 | Quad Cities Area

Commercial Real Estate Market Report

NAI RUHLUTICA COMMERCIAL COMPANY IOWA |IOWA WWW.RUHLCOMMERCIAL.COM 5111 RIDGE ROAD| |DAVENPORT, DAVENPORT, | WWW.RUHLCOMMERCIAL.COM1

Contents 03

Economic Overview

06

Office

09

Retail

11

Industrial

14

Land & Farm

16

Investment & Multi-Family

18

Our Company

19

Our Team

All information herein, while not guaranteed, has been secured by sources we deem reliable. All information should be verified prior to sale or lease.

To our valued clients and friends, Thank you for taking the time to review our 2013-2014 Commercial Real Estate Market Report for the Quad Cities Area. We greatly appreciate those who have contributed to this report including clients, commercial associates, lenders, owners, appraisers and property managers. NAI Ruhl Commercial Company is the region’s leader in full service commercial real estate. We are proud to have the most extensive and up-to-date database of past sales, leases, and available inventory in the region. NAI Ruhl Commercial Company is honored to represent many of the clients who influence the supply and demand factors in our marketplace. In order to analyze the marketplace, we have compiled information by interviewing local commercial real estate brokers, studied occupancy of significant properties, reviewed recent property sales and leases, and solicited input from appraisers specializing in commercial real estate in and around the Quad Cities. We believe that this approach will provide you with a better understanding of current market conditions and the future outlook for our area. 2013 showed great improvement in activity for the Quad Cities commercial real estate market. We are proud to report that our team of commercial real estate professionals sold over 200 units for a total volume of $90.3 million in sales and leases and provided professional management services for 56 properties totaling 1.5 million square feet. Our organization represented over 58% of the commercial market inventory within the Quad Cities Area. Through our partnership with NAI Global, we completed over $55 billion in annual sales worldwide. For information on our 19 brokers and 17 staff members or detail on properties that are actively listed, please visit our website at www.ruhlcommercial.com. Sincerely,

For further details regarding any of the information contained herein, please contact our office: 5111 Utica Ridge Road Davenport, Iowa 52807 563 355 4000 [email protected] 2

John G. Ruhl President NAI Ruhl Commercial Company

NAI RUHL COMMERCIAL COMPANY | DAVENPORT, IOWA | WWW.RUHLCOMMERCIAL.COM

Economic Overview Continued Market Improvement The Quad Cities commercial real estate market experienced continued improvement in the number, size and quality of commercial real estate transactions for 2013. Current activity and transaction pipelines suggest similar progress in 2014. Land sales have seen improved activity, which suggests new construction will follow. Local civil engineers, architects and building contractors are reporting improved interest and growing pipelines across the board. Our brokers report increased new inquiries and expressions of interest. Economic indicators, such as job growth, household creation and consumer spending, all appear to be leaning in the right direction. We are experiencing an improved lending environment with both local and national lenders. While banks still continue to dispose of some troubled assets, that activity appears to be tapering off. The Small Business Association (S.B.A.) continues to offer federally guaranteed loan packages that are advantageous for owner occupied real estate, new business starts, and acquisitions. These programs are appealing for owners based on lower down payments and lower interest rates that are locked in for longer terms. The programs are highly attractive to lenders as they provide less risk due to a significant portion of the loan being federally guaranteed. Interest rates have been at historic lows and remain highly attractive. There seems to be some urgency for owners and buyers to “lock-in” their lending programs as most in the finance world are suggesting that we will likely see rates climb in the future. The political landscape continues to create uncertainty and concern. Implementation of the Affordable Care Act, congressional partisanship and gridlock, and rising debt are primary concerns creating a lack of confidence by the private sector. From a regional perspective, we are seeing a noticeable disparity between the states of Illinois and Iowa. The Quad Cities is positioned as a border community, straddling the Mississippi River with relatively equal populations in Iowa and Illinois. Illinois struggles financially with a large deficit and negative population growth, while Iowa has a budget surplus and positive growth. This has led to an increased number of clients now requesting Iowa only locations versus Iowa or Illinois possibilities.

2013 Quad Cities Area: Sold Property Types by Unit

8%

10% 37%

15% 30% • Office • Retail • Industrial • Multi-Family • Land & Farm Source: Quad City Area Realtors Association

2013 Quad Cities Area: Listed Properties by Volume

42% 58%

• NAI Ruhl Commercial Company • Other Source: Quad City Area Realtors Association Other firms include Mel Foster Commercial, Quad Cities Iowa Realty and various RE/MAX offices.

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Economic Overview The Rock Island Arsenal, which in recent years has been the area’s largest employer (if you group those employed by the military, US Government and the many private contractors employed on the installation), is always under close watch due to the federal government’s Base Realignment and Closure Commission (BRAC) program. A closing or downsizing of this installation could greatly impact local employment. Local business leaders and politicians work constantly with government leadership to make sure that they know the critical importance of this large employer in our area. Bright spots in the various disciplines of commercial real estate are medical office space and small retail shops. Medical activity appears to be driven by strategic moves from the two large hospital systems in our area, Genesis Hospital Systems and Trinity/UnityPoint Health, who are both responding to the many government-driven changes to healthcare and an aging national demographic. Small retail shops seem to be driven by increased entrepreneurialism regionally and nationally. People are choosing to “work for themselves” in a franchise environment. Specifically, we are seeing numerous small food service operations spring up, which has spawned a new quote “you can’t eat on the Internet.” Other critical employers in our market, such as John Deere, are doing quite well. A recent Quad Cities Chamber of Commerce Annual Economic Outlook event hosted by John Deere and featuring Deere & Company Chief Economist J.B. Penn suggested that “long term fundamentals (are) still solid for (the) food and agriculture business.” Provided that demand for aluminum continues via an improved auto industry, housing demand, and improvement in other manufacturing, this could mean a strong year for Alcoa, the Quad Cities’ seventh largest employer. Year Comparison: Average Sale Price of Properties that were Sold in the Quad Cities Area $800,000 $700,000 • Office • Retail • Industrial • Land & Farm • Multi-Family

Average Sale Price

$600,000 $500,000

Source: Quad City Area Realtors Association

$400,000 $300,000 $200,000 $100,000 0

Year 2011

Year 2012

Year 2013

All information herein, while not guaranteed, has been secured by sources we deem reliable. All information should be verified prior to sale or lease.

4

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Economic Overview Classification

Low Net Rental Rates

High Net Rental Rates

Average Net Rental Rates

Estimated Vacancy Rates

Downtown Office New Construction $13.50 SF $30.00 SF $16.00 SF -Class A $13.00 SF $18.00 SF $15.25 SF 15% Class B $7.00 SF $11.00 SF $9.50 SF 20% Suburban Office New Construction $14.50 SF $30.00 SF $16.50 SF -Class A $13.00 SF $15.00 SF $14.00 SF 7% Class B $9.00 SF $12.00 SF $10.50 SF 15% Retail Downtown $6.00 SF $12.00 SF $10.00 SF 5% Neighborhood Strip Centers $9.00 SF $18.00 SF $13.00 SF 10% Regional Strip Centers $17.00 SF $26.00 SF $20.00 SF 5% Big Box $5.00 SF $10.00 SF $7.00 SF 10% Industrial Bulk Warehouse $1.75 SF $2.50 SF $2.12 SF 5% Distribution $2.50 SF $5.50 SF $3.75 SF 5% Manufacturing $2.00 SF $5.00 SF $3.50 SF 3% Flex Space $5.00 SF $7.50 SF $6.25 SF 10%

Classification

Low Price Per Acre

High Price Per Acre

Low Price Per SF

High Price Per SF

Land and Farm Agricultural Land Transitional Land Land - Office / Retail Land - Industrial (0.5 - 10 AC)

$4,900 AC $34,000 AC -- $43,500 AC

$15,400 AC $55,000 AC -- $130,600 AC

-- -- $4.00 SF $1.00 SF

--- $15.00 SF $3.00 SF

Land - Industrial (10 - 100+ AC) $10,900 AC

$43,500 AC

$0.25 SF

$1.00 SF

Source: Quad City Area Realtors Association Disclaimer: This market opinion is intended to provide a general pricing trend in our immediate area. It is not intended to provide an estimate for any particular piece of property.

NAI RUHL COMMERCIAL COMPANY | DAVENPORT, IOWA | WWW.RUHLCOMMERCIAL.COM

5

Office

Information Contributed by David A. Levin and Meg Halligan

Cautiously Optimistic Overview The office market continued to show improvement in 2013 and is beginning to tighten. From its bottom in 2009-2010, vacant office space is being leased and brokers are once again fielding calls and touring space with office users. While we have not seen increases in rental rates, we are seeing landlords less willing to offer leasing incentives (rent abatement, improvement allowances and moving allowances) that were necessary and common in the recent past. Throughout the recession, lease terms have shortened as tenants demand flexibility and reduced risk. Longer lease terms frequently include rights to terminate early. We expect the office market will continue on this slow but steady path of improvement in 2014.

Office Trends

Office Activity

Rent Concessions

Office Inventory

Vacancy Rates

Recent Activity In Iowa, northeast Davenport and north Bettendorf continue to be active for Class A product. Coventry Place, a mixed-use development built in the early 2000’s, maintains it’s position as a premier office park and is now 95% occupied. Birchwood Fields, a 30-acre master planned office park development, continues to attract interest with the addition of Deloitte in the first office structure and the opening of First National Bank. Genesis Health Plex is also currently under construction in the 18th Avenue and 53rd Street area in Davenport. Riverstation, a mixed-use riverfront development located in Moline, features retail, restaurant, and office space. With the addition of the Quad Cities Chamber of Commerce and Goebel Family Dentistry in 2013, Riverstation is now 95% occupied.

Coventry Place | Davenport, IA

6

Birchwood Fields | Davenport, IA

Riverstation | Moline, IL

NAI RUHL COMMERCIAL COMPANY | DAVENPORT, IOWA | WWW.RUHLCOMMERCIAL.COM

Office Pricing There is no question office rental rates have declined from pre-recession peaks. Our region has, however, “weathered the storm” far better than other parts of the country. Our market was not “over built” as this region is fairly conservative in speculative development and lending practices. Lease rates have declined as tenants renegotiated lease renewal options and landlords conceded to lower rental rates to maintain occupancy. We are now beginning to see landlords offering fewer leasing incentives and holding more firm on rental rates. High Net Rental Rates

Average Net Rental Rates

Estimated Vacancy Rates

Downtown

Low Net Rental Rates

New Construction $13.50 SF $30.00 SF $16.00 SF -Class A $13.00 SF $18.00 SF $15.25 SF 15% Class B $7.00 SF $11.00 SF $9.50 SF 20%

Suburban

Classification

New Construction $14.50 SF $30.00 SF $16.50 SF -Class A $13.00 SF $15.00 SF $14.00 SF 7% Class B $9.00 SF $12.00 SF $10.50 SF 15%

Development

Forecast

Medical office buildings and facilities, as well as financial institutions, continue to grow and expand throughout the Quad Cities Area. Genesis Health Systems constructed a 10,500 SF physical therapy facility at Eastern Avenue and 53rd Street in Davenport and Genesis Health Plex, an off-campus care clinic, was built on 41st Street in Moline. Trinity/UnityPoint Health has constructed a new medical facility at 53rd Street and John Deere Road in Moline. Obstetrics & Gynecology Specialists P.C., better known as The Group, began the construction of a 24,000 SF building at Eastern Avenue and 53rd Street in Davenport.

The office market is showing signs of improvement and we expect that to continue in 2014. As vacancy rates decline and office space is absorbed, we eventually will see pressure to increase lease rates to levels that will justify new office development.

RIA Credit Union is constructing a new facility, which will be approximately 35,000 SF, at 4217 Utica Ridge Road in Bettendorf; expected occupancy is mid-October 2014. The Group Davenport, IA 24,000 SF Under Construction

the Demand JOBS Drive for Office Space All information herein, while not guaranteed, has been secured by sources we deem reliable. All information should be verified prior to sale or lease.

NAI RUHL COMMERCIAL COMPANY | DAVENPORT, IOWA | WWW.RUHLCOMMERCIAL.COM

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Office Notable Sale Transactions Property

City / State

Promotional Support Services Betty Neuman McMahon POCH Properties, LLC

Davenport, IA Davenport, IA Bettendorf, IA



Size 80,000 SF 9,000 SF 6,840 SF GolderCare Solutions | Moline, IL

Notable Lease Transactions Property / Owner

Tenant

City / State

Global Vision III

GolderCare Solutions

Moline, IL



Size 6,255 SF

Coventry Place Ausdal Financial Davenport, IA 6,044 SF Riverstation Quad Cities Chamber Moline, IL 5,849 SF of Commerce P. Bergman Trust

Progressive Insurance

Davenport, IA

5,568 SF

Regency Professional Center

Trinity HR

Rock Island, IL

5,200 SF

Riverstation

Goebel Family Dentistry

Moline, IL

4,244 SF

QCA Total Office Square Footage: Sold or Leased

Total Units Listed: 187

Office Market

350,000

Percentage of Units Sold: 63.64%

69% Iowa

31% Illinois

Approx.

332,000 Total SF

Total Units Listed: 216

2013

400,000

Number of Units Sold: 119

Number of Units Sold: 107 Percentage of Units Sold: 49.54%

300,000 Square Footage

2012

Office Market

QCA Office Market Snapshot

250,000 200,000 150,000 100,000 50,000

63% Iowa

37% Illinois

Approx.

390,000 Total SF

0

2009

2010

2011

2012

2013

Year

Source: Quad City Area Realtors Association

Source: Quad City Area Realtors Association

All information herein, while not guaranteed, has been secured by sources we deem reliable. All information should be verified prior to sale or lease.

8

NAI RUHL COMMERCIAL COMPANY | DAVENPORT, IOWA | WWW.RUHLCOMMERCIAL.COM

Retail

Information Contributed by Richard Weinstein, David Gellerman and Chris Wilkins

Quad Cities Area: Attractive to Retailers Overview The retail market in 2013 continued its steady improvement since 2009. The Quad Cities Area remains attractive to retailers with 375,000 people in the metropolitan statistical area (MSA) and approximately 1,000,000 people within a 60-mile radius. The Quad Cities Area has continued to benefit from the strong, stable employment base of John Deere, Alcoa and the Rock Island Arsenal, which has helped maintain a low regional unemployment rate. With the economy slowly recovering, financing for new projects has become more available than it has in previous years, and interest rates remain historically low.

1,000,000 People in a

60 Mile Radius

Recent Activity After several years of slowed growth and development, 2013 brought major new projects to the Iowa Quad Cities, specifically to the Elmore corridor and the I-74 and Middle Road corridor. Elmore Marketplace consists of 90,000 SF anchored by Holiday Inn & Suites, and houses retailers such as DSW, Pier One, Beauty Brands and Gap Outlet among others. The I-74 and Middle Road corridor will be the home of a 116-room Hilton Garden Inn with a freestanding Starbucks and 6,700 SF of retail space, including AVEDA and other in-line retail. Construction began in 2013 on a new 205,000 SF Menards Mega Store in Davenport that officially opened it’s doors in April 2014. The Illinois Quad Cities has benefited from the relocation of Menards, which has spawned significant retail opportunities along John Deere Road from 60th Street and further east. The new Menards site will include Sam’s Club and other outlot retail parcels. This has also created the redevelopment of the former Menards site at 7th Street with new stores including Hobby Lobby and Ross Dress for Less.

I-74 & Middle Road Corridor | Bettendorf, IA

Elmore Marketplace | Davenport, IA

Quail Ridge Pointe | Bettendorf, IA

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9

Retail Pricing

Retail Trends

Retail rents within the Quad Cities are typically $16.50 to $26.00 PSF net for newly constructed properties. The highest rates are found in the I-74 & Middle Road and Elmore corridors in the Iowa Quad Cities, and at the John Deere Road corridor in the Illinois Quad Cities. Second generation space rents typically range from $12.00 to $16.00 PSF net for smaller spaces. Rents in older areas range from $9.00 to $12.00 PSF. Big box rents range from $5.00 to $9.00 PSF net depending on size and location. Rents are subject to specific build-out requirements. There has been upward pressure on rents as the economy has improved.

Rental Rates Vacancy Rates Retail Inventory Absorption

Notable Retail Transactions Owner / Tenant

Address

City / State

Size

Family Dollar

1817 38th Street

Rock Island, IL

16,000 SF

Sale

CVS

2002 Spruce Hills Drive

Bettendorf, IA

13,000 SF

Sale

Men’s Wearhouse

4770 Elmore Avenue

Davenport, IA

6,000 SF

Lease

Elements of Design

4909 Utica Ridge Road

Davenport, IA

3,600 SF

Lease

100 Montaditos

5141 Utica Ridge Road

Davenport, IA

3,400 SF

Lease

Type

QCA Total Retail Square Footage: Sold or Leased

We anticipate continued steady improvement in the retail market. National, regional and local retailers remain active throughout the Quad Cities. Most new construction will be build-to-suit spaces rather than speculative. While there is a sense that interest rates will gradually increase as the economy improves, the attitude among retailers and developers is to move ahead with cautious optimism as the national economy stabilizes. This contrasts with the last few years when business seemed to be waiting for better times. The Southpark Mall redevelopment may be a boost to the John Deere Road and 16th Street area, as the mall “right sizes” itself and becomes more vibrant. The John Deere Road improvements hope to streamline traffic and make that area more attractive to retailers and their customers.

450,000 400,000 350,000 Square Footage

Forecast

10



300,000 250,000 200,000 150,000 100,000 50,000 0

2009

2010

2011

2012

2013

Year

Source: Quad City Area Realtors Association

NAI RUHL COMMERCIAL COMPANY | DAVENPORT, IOWA | WWW.RUHLCOMMERCIAL.COM

Information Contributed by Charlie Armstrong, SIOR, Alex Kelly and Richard Schaefer

Industrial

High Activity Creates a Shortage Overview The Quad Cities Area industrial market totals approximately 50,000,000 SF. Iowa industrial properties comprise approximately 31,000,000 SF or 62% of that total while Illinois properties, including the Rock Island Arsenal, make up about 19,000,000 SF or 38% of the total. Warehouse/ distribution properties represent 60% of the total space while manufacturing facilities represent 40% of the total space.

QCA Industrial Market Totals

50,000,000 SF

62% 38% Iowa Illinois

Industrial real estate activity had been very slow throughout the recession beginning in the fourth quarter of 2008, hitting bottom in 2009 and 2010 and starting a steady but gradual recovery in 2011 and 2012. However, 2013 started out very strong and continued strong throughout the year. All areas of the industrial market from bulk multi-tenant warehouses to single tenant and owner occupied manufacturing and distribution buildings were active again with sale activity higher than leasing activity. Vacant manufacturing and distribution properties in the region that had been on the market for the last two to three years of the recession were finally sold or leased. Several large newly-listed industrial properties that came on the market in 2013 were leased or sold before the end of the year, notably 111,272 SF in the East Moline Industrial Park and 122,350 SF in DeWitt. This robust activity created a shortage of industrial inventory not seen in many years. We now have a shortage of good Class A and Class B industrial buildings in all size ranges. Prospects coming to our market are unable to find available product, especially in the larger size ranges of 50,000 SF to 150,000 SF and for owner-occupied buildings in the 10,000 SF to 25,000 SF size range. Most of this demand was for properties on the Iowa side of the Quad Cities as prospects became increasingly fearful of the Illinois economy and the state’s fiscal condition. For the first time, we had prospects that previously were open to locating on either side of the Quad Cities but were now specifically requesting Iowa only. As a result, there are higher vacancy rates and longer listing periods on the Illinois side.

Industrial Trends

Absorption

Vacancy Rates

Industrial Activity

Inventory

All information herein, while not guaranteed, has been secured by sources we deem reliable. All information should be verified prior to sale or lease.

NAI RUHL COMMERCIAL COMPANY | DAVENPORT, IOWA | WWW.RUHLCOMMERCIAL.COM

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Industrial QCA Total Industrial Square Footage: Sold or Leased

Development There had been little to no construction of new industrial buildings in the Quad Cites area for the last several years. In 2013, MATCON began construction on a 100,000 SF distribution cross dock facility in East Moline, Fed Ex announced a new 189,000 SF package delivery center in Rock Island, World Wide Industries broke ground on a new 50,000 SF manufacturing facility in the East Moline Industrial Park and Penske built a new 12,240 SF truck leasing/service building in Davenport. Sadler Power Train is close to completing a new 33,000 SF facility in Davenport.

As industrial sales and leasing activity increased, gross absorption increased to a high of 1,511,725 SF of industrial space sold/leased in the Quad Cities area during 2013. 1,400,000

Square Footage

1,200,000 1,000,000 800,000 600,000 400,000 200,000 0

2009

2010

2011

2012

2013

Year

World Wide Industries | East Moline, IL

Source: Quad City Area Realtors Association

Notable Industrial Transactions Owner / Tenant

Address

City, State

ATI Products

7800 51st Street

Rock Island, IL

241,950 SF

Sale

5408 W 61st Avenue

Muscatine, IA

181,000 SF

Sale

Maschio Gaspardo

112 3rd Avenue

DeWitt, IA



122,350 SF

Sale

East Moline School District

3451 Morton Drive

East Moline, IL

111,272 SF

Sale

Dolan

1034 E River Drive

Davenport, IA

100,041 SF

Sale

7310 Vine St Court

Davenport, IA



61,266 SF

Lease

Pak Source

1203 5th Avenue

Rock Island, IL



48,000 SF

Sale

Gen Ventures Inc.

2422 Rockingham

Davenport, IA

85,840 SF

Sale

R & D Holdings

8301 42nd Street

Rock Island, IL

34,750 SF

Sale

Maxx Industries

9105 N Zenith

Davenport, IA

34,731 SF

Keystone

4725 44th Street

Moline, IL

24,000 SF

Sale

6125 Valley Drive

Bettendorf, IA

21,000 SF

Sale

HNI Technologies



Genesis Systems

River View Leasing

12







Size

Type





Sale

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Industrial Pricing Leasing prices for industrial space vary widely depending upon the location, quality, features, size and age of the property. Current net rents on a triple-net basis are as follows: Classification Low High Average Bulk Warehouse Distribution Manufacturing Flex Space

$1.75 SF $2.50 SF $2.00 SF $5.00 SF

7800 51st Street | Rock Island, IL

$2.50 SF $5.50 SF $5.00 SF $7.50 SF

$2.12 SF $3.75 SF $3.50 SF $6.25 SF

3451 Morton Drive | East Moline, IL

Sale prices for industrial buildings generally range from approximately $15.00 SF to $45.00 SF, once again dependent upon location, quality, features, size and age of the property. With the shortage of available industrial building inventory, we expect to see an increase in lease and sale pricing on new deals as well as lease renewals without defined options.

7310 Vine Street Court | Davenport, IA

Vacancy Industrial vacancy is tracked for all multi-tenant industrial warehouse buildings 50,000 SF and larger as well as single tenant industrial buildings 50,000 SF and larger that are either leased or on the market available for sale or lease. At this time, the vacancy rate for Illinois buildings is 17.30% and for Iowa buildings 13.42%, with a total blended vacancy of 15.24%. This overall vacancy rate, for industrial properties, is a 56.5% improvement compared to the vacancy rate of 35% during the peak of the recession. If the above vacancy rate is compared to the total Quad Cities industrial market of buildings over 50,000 SF, this would translate to an overall industrial vacancy rate of 4.21%. Forecast

Strategies

The Quad Cities’ economy, and the Midwest in general, does not see the high growth rates of certain boom areas elsewhere in the country. However, we are very fortunate to have experienced less plant closings, downsizing or foreclosures that were common in other markets during the recent recession. As both the national and Quad Cities regional economy steadily improves, we expect to see increased demand for industrial buildings. The low vacancy rate and shortage of good available industrial inventory will affect our industrial market in a negative way in the near-term as we will be unable to accommodate local expansions and new businesses wanting to locate in our area. The expectation is that demand and rental rates will increase to a point that will eventually lead to new industrial development of build-to-suit and spec building inventory by users, developers and investors.

Tenants should confirm their lease options and make every effort to renew their leases on a timely basis. We can expect fewer concessions from Landlords as they are finally in a position where they can begin to make some realistic rent increases after a long period of rent stagnation. Future buyers and tenants will need to keep a constant eye on available buildings and be ready to make quick decisions to secure space.

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Land & Farm

Information Contributed by Thomas P. Dalton and Jeff R. Heuer

Equilibrium in Supply and Demand Overview

Land & Farm Trends

There is a relationship of retail, office and industrial land sales to the availability of building space and the cost of money. As the economy improves, there is an absorption of building space; this makes the purchasing of land for new buildings more enticing.

Average Price of Farm Land

Scott County saw the highest average county volume in Iowa farm land prices as values increased in 2013 for the 4th year in a row. Homebuilders remain active in purchasing transitional land in growth areas of Davenport and Bettendorf. Pricing

High Price Per Acre

Low Price Per Acre

Classification Agricultural Land Transitional Land Land - Office / Retail

$4,900 AC $34,000 AC --

Land - Industrial (0.5 - 10 AC)

Low Price Per SF

High Price Per SF

$15,400 AC $55,000 AC --

-- -- $4.00 SF

--- $15.00 SF

$130,600 AC

$1.00 SF

$3.00 SF

$43,500 AC

$0.25 SF

$1.00 SF



$43,500 AC

Land - Industrial (10 - 100+ AC) $10,900 AC

Commercial Land Inventory

Agricultural Land

Transitional Land

The recent asset boom in farm land prices has reached a turning point. From 2009 to 2013, the average price of farm land in Iowa and other Midwest states more than doubled. Good, quality farm land in the Quad Cities was selling at an average price of $12,400 per acre. However, during the last half of 2013, farm land prices have flattened or dropped by 3%, with projected prices falling as much as 20-25%. This drop is aligned with the drop in commodity prices in the region, especially corn, which has fallen 40%.

Transitional land, which is in the path of growth but still zoned agricultural, has continued to be strong. This demand should persist as long as the housing market continues to expand in the Iowa Quad Cities. The sale of transitional land will support builder inventory of raw land to be developed. However, there is little demand for large parcels of such land for commercial or industrial development.

Since the asking price for farm land is directly correlated to the rise and decline of commodity prices, the drop in land prices could be cushioned or reversed by any increase in commodity prices or continued strong housing starts.

Residential transitional land is selling in a range of $30,000 - $55,000 per acre. Large parcel commercial transactions could grow with economic expansion and new housing starts.

FARM LAND

milk

PRICES are directly correlated to

commodity prices 14

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Land & Farm Retail Demand for retail land has been steady in prime retail corridors on both the Iowa and Illinois sides of the Quad Cities area largely due to regional developer ownership. Most of these large developments were started pre-2008 with anchor users that included outlots. During the following six years, the prime outlot inventory has slowly been absorbed to almost an equilibrium in supply and demand putting upward price pressure on the older secondary corridors. While there are still some lagging economic indicators, commercial retail land sales should continue to have a typical steady growth for the next three to five years. Office Demand for office land has been divided into three separate primary categories which are business office, medical office, and financial office use. Office land development ownership is generally made up of locally owned office parks, multi-use infill lots in older business corridors or renovated re-purposed vacant buildings in the Central Business District (CBD). Existing office space is still in great supply, which suppresses land sales for new inventory. Traditional office users have downsized due to business conditions and outsourcing. A great majority of the limited office land sales for 2013 are medical and financial users, which could lead to office land sales remaining stagnant for the next three to five years. Industrial Demand for industrial land is related to the availability of existing space, specific labor force, intensity and requirements of specific uses and “own versus lease” along with multi-tiered governmental incentives. Competition for industrial land-use development spans out over more of a regional area with sites that are industrial user ready. The Quad Cities, like many metropolitan statistical areas (MSA’s), have been and are positioned to draw these users. Sales in 2013 were very limited; however, the Quad Cities are at a tipping point as a result of low inventory of existing lease space, which could lead to additional industrial land purchases. Industrial land sales are expected to slowly increase with the majority being build-to-suit projects.

Notable Land Transactions Location

City, State

Size

Future Use

7800 Turkey Hollow Road

Rock Island, IL

29.54 AC

Future FedEx

53rd Avenue & Middle Road

Bettendorf, IA

22.04 AC

Future Development

4801 Grand Avenue

Davenport, IA

5.41 AC

Industrial / HVAC Contractor

NWC 53rd & Eastern Avenue

Davenport, IA

3.65 AC

Office / Medical Group

907 Middle Road

Bettendorf, IA

1.19 AC

Retail / Multi-Tenant Strip

505 Valley View Drive

Moline, IL

0.54 AC

Office / Medical

All information herein, while not guaranteed, has been secured by sources we deem reliable. All information should be verified prior to sale or lease.

NAI RUHL COMMERCIAL COMPANY | DAVENPORT, IOWA | WWW.RUHLCOMMERCIAL.COM

15

Investment & Multi-Family

Information Contributed by Jim Tansey, CCIM and Javier Perez

Commercial Real Estate: An Attractive Investment Overview Commercial real estate remained a quality investment in 2013. The local market was stable with rents and property values increasing, which was a welcomed improvement from the slide that began following the economic downturn in 2008. The impact of the recession on local investment property was not as significant as in other markets, but vacancies did increase. Tenants were able to negotiate lease concessions, and property values decreased. In the years since, vacancies have decreased and the market is stabilizing.

“

“

Despite continuing economic and political uncertainty, US commercial real estate markets are reacting favorably, although predictably, with some sectors, notably multi-family and industrial, demonstrating improvement and growth potential.

Former Katun Distribution Center 7300 N Brady Street | Davenport, IA 121,623 SF

-Dr. Peter Linneman

Chief Economist of NAI Global Dr. Linneman noted that renovation of existing properties in all sectors rather than new construction is driving growth and has helped balance supply and demand. There is a strong industrial recovery underway, led by increased demand for online warehousing, resulting in healthy vacancy levels that will continue to fall. Multi-family construction is rebounding, but is still below normal levels, and an upswing in renovations is driving capital expenditure. Under-production from the past several years resulting in a prolonged shortage will keep rents above average, but below maximum. All information herein, while not guaranteed, has been secured by sources we deem reliable. All information should be verified prior to sale or lease.

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Wells Fargo Bank Building 4300 E 53rd Street | Davenport, IA 29,967 SF

Eagles Crest Apartments 1702 Eagles Crest Avenue | Davenport, IA 85 Units

NAI RUHL COMMERCIAL COMPANY | DAVENPORT, IOWA | WWW.RUHLCOMMERCIAL.COM

Investment & Multi-Family Forecast Along with the commercial real estate industry, the banking industry has improved in the last few years since the recession. Banks have money to lend, though underwriting standards have necessarily become more conservative. The days of 100% financing are gone, with most banks requiring a more traditional 20-25% down payment. The good news is that interest rates have remained historically low. Many investors have been sitting on the sidelines holding on to a higher percentage of cash than normal. While the stock market has produced solid returns lately, investors are worried about the volatility and the artificial lower inflation due to the Fed’s monetary policy. For all of these reasons, commercial real estate is an attractive investment alternative. The rate of return expected in the next year for an investment property is called the capitalization rate, or cap rate for short. It is calculated by taking the projected net income and dividing it by the purchase price. An investment purchased for $1,000,000 with a projected net income of $80,000 is said to have an 8% cap rate. As cap rates come down, prices go up. Investments with longer term leases to high credit tenants will sell at lower cap rates. When the recession hit, net incomes went down and cap rates went up, both causing property values to decrease. We are in a much better situation now with net incomes stabilizing and going back up. Commercial real estate is again seen as an attractive investment alternative, and cap rates are coming down, pushing prices back up. With interest rates remaining low, investors can leverage their capital and boost their rate of return even higher. Commercial real estate has proven to be a quality investment over time. The market trend today is positive, and looks to remain so into the foreseeable future. The key is matching an investor with the right opportunity to meet their individual goals.

Capitalization Rates by Property Type Property Type

Eastern Region

Midwest Region

Southern Region

Western Region

Other*

Apartment 7.3% 7.5% 6.6% 5.7% 5.9% Office

8.2%

8.7%

8.0%

7.5%

7.1%

Warehouse 8.2% 8.6% 7.9% 7.3% 7.5% Retail 7.2% 8.0% 7.8% 7.2% 6.7% Commercial property capitalization rates increased 7 basis points to an average 6.8% nationally across all property types, based on Real Capital Analytics (RCA) data. For properties under $2.5 million, prices increased 4 percent year over year, based on survey data from the National Association of REALTORS, while cap rates increased 50 basis points to an average 9.2 %. Source: CCIM Institute, NATIONAL ASSOCIATION OF REALTORS. * Includes responses from Canada and Mexico.

NAI RUHL COMMERCIAL COMPANY | DAVENPORT, IOWA | WWW.RUHLCOMMERCIAL.COM

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Our Company A Solid Foundation in Commercial Real Estate

John G. Ruhl President

Caroline Ruhl Partner

Chris Beason Partner

More Than 150 Years of Experience Ruhl & Ruhl was established in 1862 during the Civil War.  Additional real estate services were added by owner John H. Ruhl in 1900, and the company quickly grew into a community and industry leader. During the midtwentieth century, Charles Ruhl, Sr. guided the real estate division into one of the region’s best known residential and commercial brokerages.  The company also established a strong emphasis on property management.  Even during the slower economy of the 1980’s when many firms were contracting or had failed, the company continued to expand through market penetration and acquisitions. Now in the fourth generation of the Ruhl family leadership, the company has evolved into three independent operations specializing in commercial real estate, residential real estate, and insurance. A Major Force In Commercial Real Estate Today, NAI Ruhl Commercial Company is led by President John G. Ruhl II, Caroline Ruhl, and Chris Beason, and has expanded into the region’s largest full service commercial real estate firm with significant market presence in the Quad Cities, Iowa City and Dubuque, Iowa. In addition to commercial real estate, Ruhl Commercial manages over 1.5 million square feet of office, retail, multi-family and industrial space throughout Iowa and Illinois, and is recognized as a leading commercial management and brokerage firm by a wide variety of individual and institutional clientele. While still remaining true to our founders’ Midwestern values, we have extended our reach throughout the world.  We’re proud to be affiliated with NAI Global, the largest managed network of commercial real estate firms connecting us to over 5,000 real estate professionals in 400 offices throughout the United States and 54 other countries.

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NAI RUHL COMMERCIAL COMPANY | DAVENPORT, IOWA | WWW.RUHLCOMMERCIAL.COM

Elissa Allen

Marketing Director

David Gellerman Broker Associate

Shawn Langan

Commercial Sales Associate

Marcia Mitchell

Charlie Armstrong, SIOR

Vice President / Director

Angie Gibbs

Information / Research Specialist

David A. Levin

Vice President / Director- Illinois Region

Ray Oczak

Marlene Baltazor

Vice PresidentOperations / Director

Meg Halligan

Commercial Sales Associate

Jeff R. Heuer

Commercial Sales Associate

Geralyn McEvoy

Charlie Miller

Javier Perez

Laurie A. Peters

Assistant to David Weiner

Senior Client Services Coordinator

Vice President Tri State Region

Chris Rife

John G. Ruhl President

Vice President / Director

James Tansey, CCIM

Maintenance Technician

Tom Carroll

Broker Associate

Maintenance Technician

Rod Christie

Commercial Sales Associate

Lori Hickerson

Accounting Specialist

John Corelis

Senior Vice President

Rick Hoots

Maintenance Director

Commercial Sales Associate

Alex Kelly

Commercial Sales Associate

Commercial Real Estate Leaders Since 1862

Commercial Sales Associate

Senior Property Manager / Director

Richard Schaefer

Melissa Severance

Cortney Sievert Client Services Coordinator

Director of Business Development

Kurt Ullemeyer

Bonnie Voelkers

David Weiner, SIOR

Richard Weinstein

Jim Weir

Technician

Director

Broker Associate

Bookkeeping (Maintenance)

Thomas P. Dalton

Lisa Sievert

NAIBroker RUHL COMMERCIAL COMPANY | Financial DAVENPORT, IOWA | WWW.RUHLCOMMERCIAL.COM Maintenance President / Senior Vice President / Director Commercial Sales Chief Officer / Vice Associate Associate

Lynn Simmons

Accounting Specialist

Chris Wilkins

19 Vice President / Director

Ruhl Commercial Company 5111 UTICA RIDGE ROAD DAVENPORT, IA 52807 563 355 4000 RUHLCOMMERCIAL.COM 20

NAI RUHL COMMERCIAL COMPANY | DAVENPORT, IOWA | WWW.RUHLCOMMERCIAL.COM