Property auction and real estate appraisal Solutions

Continued softness in the office market discouraged investor interest in large multi-tenant product. Average cap rates drifted higher in both the CBD and suburban markets as the jobless recovery undermined demand and forced vacancy rates up throughout the year. As a result, several portfolio offerings were withdrawn from the market during 2003, including a 700,000-square-foot Class A office tower in the heart of the CBD. While most office product is relatively well occupied, the lack of meaningful absorption has forced potential buyers to discount prices to compensate for rollover risk, higher than usual vacancies and limited upside potential in the near term. At the same time, low interest rates have improved performance of otherwise marginal properties.

This situation is likely to continue until interest rates begin to increase, forcing sellers to be more realistic about pricing, which could significantly increase the volume of investment transactions in the office sector West Coast Valuers Conditions should improve during 2004 as the economy gains momentum and job growth translates into increased demand for multi-housing product.

The five Midwestern markets covered in the Great Plains represent small to mid-sized metropolitan areas that are largely influenced by the national economy and experience similar trends as first-tier markets. The region’s central location is a beneficial aspect, and provides a bridge between the active coastal mega-metropolitan markets.

The region’s commercial real estate markets are nearly parallel. In each of the five markets, retail is the leading product type with vast growth and limited ramifications of the economic downturn. However, the question remains whether or not retail can sustain the same rate of growth for much longer. Meanwhile, office and industrial are making a comeback in most of the cities after enduring a two-year slowdown.

St. Louis, the largest metropolitan area in the region, is the healthiest. Nearly every property type in the St. Louis market is performing well and is poised for further growth. The St. Louis office market is recovering with a gradual uptick in demand and a shallow speculative construction pipeline. The recent trend towards corporate consolidations is further fueling activity. Companies such as MCI WorldCom, MasterCard International and Express Scripts constructed new corporate facilities. Now, two more companies are continuing this trend, as CitiGroup and A.G. Edwards move into their new headquarters facilities.

Reimbursement of Property valuations

For the second consecutive quarter, demand for industrial space increased, posting positive absorption and stabilizing vacancies. A majority of the activity is taking place across the Mississippi River in Illinois in the 2,300- acre, Gateway Commerce Center. The giant warehouse/distribution park is prompting many companies, such as Proctor & Gamble, Dial Corporation, Unilever and Hershey Foods, to build large facilities here.

Our professionals of valuation solutions have a great knowledge big-box retailers continue to grow in St. Louis. Many developments are power centers anchored by large discounters such as Target and Wal-Mart. One of the largest retail developments in the area is St. Louis Mills, a 1.2-million-square- foot mall in Hazelwood. The mall has 18 anchors and more than 200 retailers, predominately discounters, illustrating the strength of discounters in today’s economy.

Kansas City is perhaps one of the more stable markets in the Great Plains region. A diverse economy and steady residential growth keeps the city on an even keel and shielded from any drastic changes in a given industry. Retail is developing in nearly every part of the metropolitan area. The largest of the recent projects is in Kansas City, Kansas, near the Kansas Speedway. Village West, a 400-acre development anchored by Nebraska Furniture Mart, Cabela’s Sporting Goods and Great Wolfe Lodge evolved into a retail destination. The Legends is the planned 1 million-square-foot shopping center component to Village West expected to kick-off construction in 2004.

The Kansas City office market did stumble somewhat in 2002, but the market proved its resiliency in 2003 by absorbing much of the space pushed on the market from corporate downsizing and restructuring. Vacancy peaked at 19.9 percent before declining to 18.2 percent. The office market is expected to continue improving over the course of the next two years as the economy strengthens and companies become more secure.