February 2017

Three separate stories were in the news recently: Renter-dominated urban centers, higher costs of construction, and record high prices for existing apartment buildings. What does that have to do with the Twin Cities?

Rented vs. Owned Housing

It shouldn't be a total surprise for anyone involved in urban real estate or multi-family investment, but recent statistics point to a hot rental market in cities across the country, including Midwestern cities. Demographics are changing: In 21 American cities with at least 100,000 population, the number of rental households is greater than the number of owned households.

Rental percentages are trending higher in numerous other cities. Many of them are college towns, but not all. The new urban lifestyle is

A new event center in what has been termed a "spectacular" old Saint Paul building is planned, with work slated to begin this summer, and another larger event center and restaurant are planned in what was once a Pillsbury machine shop near St. Anthony Main in Minneapolis. Work has already begun and opening is expected in July.

Present Plans

Events have already been booked, according to Jessica Barrett, executive director of the new Historic Machine Shop Restaurant & Event Center. The project was granted a liquor license with the stipulation that the facility be open to the public at least once a month. Present plans call for the first floor restaurant to open every Monday, but hours could be expanded. No chef has yet been hired.

The function

Minneapolis and Saint Paul consider it fortunate in that their water supply is the Mississippi River and, at least for the time being, the supply is abundant.

Minneapolis was the first in Minnesota to have a public drinking water system, and today it is a modern enterprise that supplies water not only to the city, but to many neighboring communities. 

The first pump station was built in 1872 and today Water Treatment and Distribution Services (WTDS) pumps 21 billion gallons of water annually from the river.

The Source

Minneapolis and its neighbors are the recipients of a system with nine pump stations and eight reservoirs that produce approximately 57 million gallons of drinking water each day, through 1,000 miles of pipe, much of it 75-100

It looks as if St. Paul might be getting new office and retail space as well as additional parking and some new housing. That's all good news for the capital, which has been looking for a way to reshape the riverfront.

A new 5-star hotel may also be waiting in the wings, but details have not yet been released, and action by the Ramsey County Board awaits joint task force review of a single redevelopment proposal. 

Rising Costs

Demolition at the site was stalled early in 2016 by the need for extensive asbestos abatement. Planned costs also rose from $11.5 million to the currently projected $17 million. A county spokesman reports that the teardown is expected to be complete by August.

A single bidder, Phoenix developer Cardon Development,

After years of substantial growth and good times, will 2017 be the year it all dies down in terms of commercial real estate growth in the Twin Cities? Some brokers see a slowdown, but that doesn't mean a stop sign. It may be more of a lane change, at least in some areas of the market.

The year just ended represented a milestone of a kind -- the first year since 2009 that the local market posted an absorption loss in total leased space. Preliminary estimates placed the loss at about 329 thousand square feet, compared to a loss of 1,831 thousands of square feet during the Great Recession. However, the net gain over the past five years has been substantial. In 2015 alone, more than 1 million square feet of office space were absorbed. 

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