All of Minnesota Real Estate BlogRecently posted or modified blog postshttps://www.minnesotacommercial.com/blog/Copyright MinnesotaCommercial.com2023-06-30T15:11:41-07:00tag:minnesotacommercial.com,2012-09-20:19008CO-WORKING IS BACK: WHAT THIS MEANS FOR CRE<img src="/wp-content/uploads/2022/07/co-working-trends-that-office-owners-need.jpg" /> With the need for full-time work-from-home declining, many professionals are seeking out new co-working spaces and are bringing new expectations and trends with them. Commercial real estate experienced rapid changes in the last couple of years, and some developers failed to adapt to these changes. Commercial real estate property managers need to be aware of these changes to create a space that attracts the best tenants. What can be done in office spaces and commercial real estate options to take advantage of the return of co-working, and can it be done profitably? Keep reading to learn how to leverage the newest co-working trends to increase the profitability of your commercial real estate space. What’s Changing in Co-working? As predicted by many experts, the COVID-19 pandemic has changed <a href="https://www.minnesotacommercial.com/future-of-commercial-office-space/">the future of commercial office space</a>. Now, we can see those changes in more exact ways. What exactly is happening as co-working returns to the scene? Freelancers, Owners, and Full-Time Employees A co-working space is a shared professional setting where people from different companies can work. There’s a common misconception that the only people using co-working spaces are those that work freelance or own their own business, but that’s far from true. As we see more individuals working remotely full-time or doing hybrid working models, we also see those individuals entering co-working spaces more than ever before. Some individuals that are now working fully remote miss and appreciate the amenities provided in an office setting, so they may seek co-working space to balance their work environment in a way that works for them. New Types of Co-working Spaces Co-working spaces were first adopted by industries like tech, business consulting, and other similar fields. One of the most notable developments within co-working spaces in the last few years is the shift from these commercial spaces expanding their amenities to accommodate new industries. <a href="https://www.andcards.com/member-experience/gym-coworking/" target="_blank" rel="noopener">Fitness and health professionals seek co-working spaces</a> to run their yoga programs, fitness consulting, and more. While less common, co-working spaces that share fitness equipment rather than desks and internet connections are gaining popularity. Increased Competition Another significant difference in <a href="https://www.commercialcafe.com/coworking" target="_blank" rel="noopener">co-working spaces</a> today is that there is more competition than ever when advertising spaces. The COVID-19 pandemic caused many changes in office culture across the country, which led to many CRE owners and developers seeking unique ways to lease out space. Co-working spaces are more prevalent now than ever before; what can your business do to stand out? It’s simple: learn what tenants expect and ensure you can provide those things. What Do Tenants Expect in Co-working Spaces? <a href="https://www.minnesotacommercial.com/the-evolving-picture-of-coworking-space/">Co-working spaces are constantly evolving</a>, and that is important to keep in mind while developing in the coming months and years. Individuals and businesses renting co-working space expect the latest work-friendly space and technology, so commercial real estate property managers must keep up with expectations to thrive. What are leasees looking for in a modern co-working space? Every individual need will vary, but having some idea of the overarching themes will help you make a suitable investment, development, and marketing choices when managing CRE. Flexible Technology Options One of the most extensive needs in co-working spaces is flexible technology. Gone are the days of providing free Wi-Fi and a place to charge laptops. Instead, some individuals may want to provide their own internet service; others seek specific VPNs and ethernet hookup options. Be prepared to problem solve and make adaptations to bring in business. Ideally, create a space where the technology remains adaptable, and IT support is on-par with what you could get in a more traditional office environment. This will provide the security and peace of mind needed to attract more tenants. Proven Reservation Systems Co-working tenants expect to smoothly reserve and utilize meeting rooms and other private spaces as needed. If they cannot, it is unlikely that they will become long-term supporters of your co-working space. Investing in on-site management and organizational software will increase the productivity of your tenants and make them likely to stay longer. Company Support CRE professionals must remember that many remote employees of large companies may be coming into their spaces, sometimes even in small groups. Knowing how to link up with the company to create space and opportunities to bring in more remote employees will help encourage more tenants and leasees to use your services. Is Investing in Co-working Space Development The Right Choice? Co-working spaces in <a href="https://www.commercialcafe.com/coworking-space/us/mn/minneapolis/" target="_blank" rel="noopener">major cities like Minneapolis</a> draw businesses into empty office spaces left unused in the transition to hybrid and at-home working models, but is it the right time to invest in explicitly developing co-working spaces? It’s best to balance the risk of co-working profiles with other types of CRE investment. The demand for co-working spaces is growing, but options are also available. Dedicating a certain amount of space to flex working spaces can provide flexible options for your business. Develop with flexibility for the best success rate as you expand into more co-working options.2022-02-23T15:56:00-07:002023-06-30T15:06:31-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19009THE FUTURE OF THE HOSPITALITY INDUSTRY<img src="/wp-content/uploads/2022/07/the-future-of-the-hospitality-industry.jpg" /> Even though many people have cut back on travel this summer, there are some who believe that stay-at-home vacations represent a continuing trend. In fact, the hospitality industry is gearing up for travelers as soon as worldwide restrictions become even a little less restrictive. That’s good news for <a href="https://www.minnesotacommercial.com/future-of-commercial-real-estate/">commercial real estate and construction</a>, in addition to those directly involved in hotel management, restaurant operation, and the airline, cruise and travel industries. The signs are all in place, and Americans seem only too ready to head off for new adventures—sooner rather than later. Innovation and Creativity There is a corresponding recognition that the hospitality industry will be forever changed. Post-COVID travel will look and feel different. Although some changes may be welcome, the extent of change may be greater than anyone would have imagined. Whether masks will be required for airline travel or not one year from now, or whether <a href="https://www.webrezpro.com/hotel-tech-for-a-touchless-new-world/" target="_blank" rel="noopener">touchless hotel check ins</a> and disposable restaurant menus become the new normal, the consensus is that travelers will adapt. The more important question may be whether the hospitality industry itself can react to the new needs. Jay Coldren, managing director of hospitality/eat+drink for Streetsense, notes that what was originally thought to be a short crisis followed by a quick return to somewhat-normal operations has morphed into a period of recovery that may require 12 to 18 months just to return to 2019 levels. In the short term, staying afloat is the goal, he says, with cash flow and creativity primary concerns. Additionally, Coldren believes that hotel operators and restaurateurs must listen to their guests and then try to act on the feedback they receive as the economy begins to recover. He is hopeful that the industry as a whole can be flexible, creative and nimble enough to survive, with some important changes. Coldren and others in the industry believe that innovation and a bit of “playfulness” may be antidotes to the mandates for distancing and safety protocols that may well characterize the hospitality industry in the future. Sustainability, Logistics, and Technology Just what does that future hold? For one thing, according to travelers as well as hospitality experts, there will be greater emphasis on sustainability. That was the case prior to the pandemic, but now sanitation may well be the new sustainability. Coldren insists that it’s smart to show the public what is being done to keep things clean. A second supposition is that planning and logistics of travel will be more extensive; quick getaways and spur-of-the-moment weekends may become less doable. And costs? The verdict is still out on that. Finally, <a href="https://www.minnesotacommercial.com/new-technology-for-future-business/">technology advances</a>—particularly as they relate to automation and decreased personal contact —will play an important role. Will we see hotel room service delivery by robot? Touchless check-in is already a reality, and motel lobbies of the future may not be staffed by humans. As a business that spans multiple service sectors, the hospitality industry is not only a major global employer, but it also contributes more than $1 trillion to the United States’ economy alone. The travel hiatus has already sent ripples throughout all levels of business. <a href="https://www.tileclub.coms/news/best-commercial-tiles-for-hospitality-retail-and-offices" target="_blank" rel="noopener">Commercial real estate</a> and construction have been affected, but in most areas, including the Twin Cities, plans for new hotels have not been scrapped. Most agree that large city hotels with convention facilities and those near major airport hubs have been the hardest hit by the travel slowdown. Twin Cities occupancy rates have hovered around 15% to 20% since mid-March, according to published statistics, but in downtown <a href="https://www.minnesotacommercial.com/minneapolis-commercial/">Minneapolis</a>, the rate is much lower, between 4% and 5%, based on numbers supplied by STR, a travel data firm. Rick Bertram, general manager of the Minneapolis Marriott City Center, noted that there were nights with only seven or eight rooms occupied in the 585-room hotel. He made the decision to close the doors in late April, but targeted an early July reopening, with updated decor as well as new cleaning protocols and travel guidance. Guests can now bypass the front desk and unlock room doors via smart phone. What’s in Store for the Future? Despite continuing hotspots of infection in numerous U.S. states, at least one analyst, Michelle Meyer, head of U.S. Economics and BofA Global Research, believes we might have reached a turning point. She notes in an August 12 Economics of Reopening report that the number of states reporting a drop in new infections has increased from 24 to 39 in one week’s time. She also notes that even though air travel is still down by a staggering 72% over last year, dining out rates increased for the fourth consecutive week, according to Open Table. In terms of construction activity, even the recent devastating fire at an apartment/hotel construction site in downtown <a href="https://www.minnesotacommercial.com/st-paul-commercial/">St. Paul</a> brought a quick response and a vow to rebuild. Kaeding Management of Bloomington broke ground nearly a year ago, with Doran Cos. as the lead contractor on the $69 million project. Hotel construction plans nationally have been slowed by the pandemic, but a Kaeding spokesman confirmed that the company will proceed with plans to clean the site and resume construction. According to reports, the building was completely framed, with windows set, but its <a href="https://smokeguard.com/2019/september/19/including-a-fire-suppression-system-in-building-design" target="_blank" rel="noopener">fire suppression systems</a> had yet to be installed when the fire broke out. The investigation into its cause continues. In another local development, the July 30 sale of the sixth-largest hotel in the Twin Cities was just announced at a per-room rate less than half of what was asked when the property was first offered for sale in 2015. The owner, Platinum Equity of Beverly Hills, California, initially marketed it for $55 million, or $97,000 per room, before lowering the asking price to $40 million. The just-confirmed sale of the 568-room hotel, the DoubleTree by Hilton Hotel Bloomington Minneapolis South, was to Vinayaka Hospitality, a suburban Chicago investor, at a price of $26 million. Platinum equity acquired the hotel for $20 million in 2011 and reportedly spent $12 million on refurbishment. It’s not a price trend that spurs confidence for the future, but there is still optimism that the hotel sector will rebound and return to the growth cycle that was established several years ago. What seems certain, though, as Coldren emphasizes, is that hotel operators and restaurateurs have adopted a “clear-eyed approach,” and smart operators will not re-enter the market until they are sure they have the cash and determination to stay afloat for the next 12 to 18 months.2020-09-02T15:06:00-07:002023-06-30T15:08:14-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19010THE FUTURE OF COMMERCIAL OFFICE SPACE<img src="/wp-content/uploads/2022/07/the-future-of-commercial-office-space.jpg" /> As people return to work, just what will the office environment have in store for them? Will it be totally automated or will it even exist? There are “experts” on both sides of the fence. Some who once predicted that <a href="https://www.minnesotacommercial.com/what-will-the-office-of-the-future-be-and-why-is-it-important/">office buildings of the future</a> would be substantially revamped to accommodate greater workplace flexibility now believe that new offices will be configured differently – with greater attention paid to safety and efficiency. But there are others who envision a future more attuned to digital communication than personal interaction who believe that the <a href="https://www.commercialcafe.com/expert-roundup-the-future-of-office-spaces/" target="_blank" rel="noopener">traditional office has forever disappeared</a>. Both may be true to some degree. Future Offices: Different or Non-Existent? The trend toward working remotely was evident long before the worldwide pandemic, forcing millions of employees to work from home or adapt to virtual offices. Until then, there was previously little concern that home would become the most prevalent workspace of the future. Now, there is some uncertainly about whether the majority of employees forced to work from home during the pandemic will ever return to traditional offices. Some like working from home. Others don’t have jobs to return to. And for many, the future might still be uncertain. The conviction is growing among some companies that it’s not only less costly but more efficient as well to let workers choose their surroundings. There is some consensus that the number of desks needed in existing offices, even in a future of full employment, will be lower than previously believed. If that plays out in reality, of course, then the long-term effects on commercial construction and development would be enormous, and the world of commercial real estate will feel the ripple effects. According to an April MIT report, 34% of Americans reported that working from home had eliminated their previous long commutes. At about the same time, a University of Chicago study confirmed that about the same number of employees could work from home. The obvious conclusion is that the COVID-19 shift might well be a precursor of future reality. That, of course, still remains to be seen if, and when, the country returns to an economy that is something near normal. Technology and Convenience The twin drivers of stay-at-home work viability, of course, are technology and convenience, despite governmental mandates that proved it could be done. Kate Lister, president of consulting firm Global Workplace Analytics, said back in April of this year that she expects approximately 30% of the American workforce to work from home “multiple days each week” within about two years. She cites pent-up demand for work-life flexibility and the growth of new technology as factors. The pandemic may have contributed to an early timeline for a shift that was already coming. And increased corporate investment in available advanced technology will make it easier to continue and expand remote working environments. Employees have also invested in new technology as well as in additional <a href="https://tricolongdistancemovers.com/6-ways-organize-office-move/" target="_blank" rel="noopener">furniture and office equipment</a> that makes the home office more professional and user-friendly as they <a href="https://www.minnesotacommercial.com/working-together-while-distancing/">work together in a time of distancing</a>. For many workers, the only difference between a home office and a high-rise might be the time of the commute and the dress code. At home, every day can be a “casual Friday.” Is workspace flexibility sustainable? That may be the most important question. The simple answer is: “Yes, for at least some companies.” Again, however, most analysts don’t believe that office buildings or fully staffed offices will disappear entirely from the business environment. Most do believe, however, that both for the short term and in the future, increased flexibility will exist. Architectural and Human Considerations The future also may lead to an entirely new paradigm for business. CBRE Group, based on recent responses to a survey of 126 key companies, found that flexibility is a key corporate strategy for now, and it is likely to signal an ongoing challenge for firms in the future. More than 60% of respondents noted that they would consider offering employees more choice about work location on a daily basis, but only about 25% would offer the option to work from home full-time. What will the office of the future look like? For one thing, desks will be spaced further apart. The traditional, crowded call center has almost disappeared already, and modern office buildings already offer employee options for work stations that are individualized and unique. Teleconferencing has eliminated the need for large conference rooms, and small-group brainstorming rooms are commonplace, as are “quiet rooms” and nap rooms. Shared desks or <a href="https://www.thebalancecareers.com/flexible-schedule-1918130" target="_blank" rel="noopener">flex-time schedules</a> are likely to become more common. Social distancing is a new term in everyone’s vocabulary and also in the actual landscape of commerce. That will not change in a hurry. Better cleaning and sanitation protocols, clearer barriers between workers, effective customer distancing standards and newer, more comfortable measures to separate employees from customers are all envisioned as answers to health concerns. Voice-controlled lighting and heating, <a href="https://www.openpath.com-post/commercial-building-security-systems-trends" target="_blank" rel="noopener">touchless locks and security measures</a>, better ventilation and traffic controls, and numerous technological improvements have been postulated by planners and developers over the past several months. For now, according to Christine Cavataio, president and chief operating officer at the Cuningham Group, an architectural firm, physical barriers will probably be the predominant fix. She and others believe, though, that architectural solutions will be developed that will change the <a href="https://www.minnesotacommercial.com/future-of-office-design-trends/">look and feel of future offices</a> dramatically. One of the benefits of the workplace, from the standpoint of business development, has always been human interaction, sparking innovation and creativity. If the office as we know it today ceases to exist, according to some executives, business in general cannot be expected to continue as usual. The Certainty of Change While the exact direction for the future of the office may not become evident for some time yet, the only certainly is change. Home offices, virtual offices, co-working spaces, teleconferencing and “telecommuting” all have a place in global business. Which specific designs, solutions and fixes become permanent is, at this point, uncertain. Although office occupancy rates are down, and demand for new space is uncertain, few doubt that the industry will survive and rebound. With that in mind, it is time to look to the future in order to design the options that can help business, office builders and owners and commercial real estate to thrive under new conditions and survive future storms of any kind.2020-08-19T15:08:00-07:002023-06-30T15:09:46-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19011PROPERTY MANAGEMENT STATISTICS POINT TO A BRIGHT FUTURE<img src="/wp-content/uploads/2022/07/future-property-management-stats.jpg" /> Residential and <a href="https://www.minnesotacommercial.com/the-commercial-property-manager-how-to-be-successful-in-your-role/">commercial property managers</a> throughout the nation are looking ahead to third and fourth quarter rebounds in the economy, and current data seems to confirm that it will happen. The second half of the year, particularly the fourth quarter, should bring a surge of business. The way that business will be transacted, however, has been forever affected, and there is substantial uncertainty about how long social <a href="https://www.minnesotacommercial.com/working-together-while-distancing/">distancing and other restrictions</a> will be in effect. This is the time, agree property managers, to take a close look at business plans and to gear up for that surge. It may begin even earlier. According to a recent New York Times survey of economists, three out of four expect the recovery to begin in the second half of the year. At the same time, property managers must continue to monitor health concerns and respond to local safety mandates, restrictions, and ongoing business concerns in a professional and timely manner. Although this may not be the ideal time to make sweeping procedural changes, it is a perfect time to reevaluate existing policies and attempt to ascertain what procedures can be implemented to streamline the operation for the future. In light of existing conditions, future expectations, and primary needs, there are a number of areas to look at. Realities of Collecting Rents and Considering Evictions The current pandemic, without a doubt, has created economic hardship for millions of renters, as well as for the nation’s businesses. Both commercial and residential property managers must face the intertwined realities of ongoing cash flow and either delayed rental payments or non-payment. Some formerly routine procedures, including eviction, are currently regulated by government mandate, with delayed action or freezes in force. Those requirements, on their own, have created an additional burden for property managers. Response of any kind in these confusing times is difficult. While there are no easy answers, and the solutions will differ from one situation to another, many experts agree that this is a perfect time to take stock of existing office procedures, from rent collection to checking references, from residential terms to commercial lease terms and incentives. By using this time to review existing policies and reevaluate needs, including delinquency response, late fees, interest charges, and eviction procedures, a property manager will have clear guides to move forward in the future. The pandemic will end, but periodic renter crises will continue. As a property manager, consider how your existing policies might be adjusted to allow a more flexible and understanding response to rent delinquencies. Or, consider available options for instituting a workout plan or a twice-a-month payment rather than single monthly rent. There are many creative options available, for both residential and office tenants, and even more creative options for warehouse or industrial operations. Out-of-the-box thinking now might lead to innovative and workable solutions for the long-term health and growth of your business. Consider How to Streamline Communications Procedures Again, a deep dive into what works well, types of improvements that would be beneficial, and outdated procedures that can be abandoned, will pay dividends in the future, both in terms of tenant satisfaction and overall ease of operation. Tenant communication should be a primary focus for any residential property manager. If you currently have an <a href="https://www.yardi.com/products/property-management-software/" target="_blank" rel="noopener">online portal</a> that makes rent payments and repair requests easy, then you might not have to make any changes. If your current system isn’t quite up to par, now is the time to revamp it. Update your website as well; make sure that it reflects your current business profile, and that it establishes your firm as the force that you envision in your community. In order to <a href="https://www.minnesotacommercial.com/understanding-the-tenantproperty-manager-relationship/">establish more effective communication with tenants</a>, enlist tenant input. Here are some ideas about how to establish greater support and address potential changes. Form a Tenant Panel, and solicit input on everything from lobby decor to pool hours; Institute a Suggestion Box, perhaps with a gift card for an idea that is implemented; Plan a Party; Support a Cause, with voluntary donations of either time or money; Start a Newsletter, virtual or otherwise. Concerns About Building Repairs and Community Updates The need for routine maintenance and ongoing property repairs is not diminished, even during a worldwide health crisis. No doubt property managers throughout the nation have found appropriate ways to schedule work that needs to be done and to perform necessary work at residential and commercial properties. Establishing effective and efficient means of responding to these ongoing needs, however, is vital. While it might not seem like the appropriate time to interview or <a href="https://www.thisoldhouse.com/21017791/top-8-pro-tips-on-how-to-hire-a-contractor" target="_blank" rel="noopener">add to your contractor list</a>, or to interview new staff, the slower pace of business in the current economic climate is probably a good time to look ahead and to draft new plans and goals. The direction you take should not be made in haste. As business rebounds moving into the fourth-quarter growth that is predicted, the demands on your time may well be much greater. No matter what kind of team have presently assembled, it never hurts to have backups waiting in the wings. Use this time to the best of your advantage. The American Property management industry generated more than $76 billion in revenue in 2018, according to available data, with approximately 844,000 individuals employed in the industry in April 2019. The two most frequently mentioned concerns of industry professionals are efficiency and maintenance. Additional concerns related to tenant growth and boosting revenue, both related to tenant satisfaction. With that in mind, it is certainly appropriate to spend the necessary time and energy to improve operational efficiency and expand the capabilities of your maintenance force. With the forecast for new business just around the corner, there is every reason to believe that property managers will have a busy future as the world gets beyond the current health crisis and the calendar flips over to 2021.2020-08-05T15:10:00-07:002023-06-30T15:11:41-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19404Minneapolis Apartment Leasing Statistics Hold Steady, with a Few Surprises <img class=" img_box_right" src="/wp-content/uploads/2022/07/minneapolis-apartment-stats.jpg" alt="Minneapolis Apartment Leasing Statistics Hold Steady, with a Few Surprises" />Apartment rental trends have been relatively strong and steady in the Twin Cities and across the nation since 2016, according to the latest statistics compiled by RentCafe, but the numbers were last updated in February. However, new construction in <a href="https://www.minnesotacommercial.com/minneapolis-commercial/">Minneapolis</a> has lowered average rents. That's good news, according to analysts, and "a breath of fresh air" in a market that has seen <a href="https://www.minnesotacommercial.com/blog/truth-or-fiction-facts-about-the-twin-cities-affordable-housing-crisis/">rapidly increasing prices</a> over the past five years. A corresponding decrease in affordability in a market that sorely needs housing for a growing labor market has been worrisome for the past several years. In fact, the city has recently taken steps to promote more affordable apartments by approving residential towers in former height-restricted neighborhoods, and by reversing long-standing single-family zoning rules in the city. Median rents were lower by 8% and 13%, respectively, for one- and two-bedroom apartments between 2019 and 2020, according to recently reported figures. Additionally, there are some national trends that may prove interesting for local apartment managers and developers. Surveying National Trends for Apartment Housing Kingsley Associates and the National Multi-family Housing Council (NMHC) recently released its 2020 Apartment Resident Preference Report, detailing input from nearly 375,000 renters in more than 5,300 communities across the country. Some trends may be a little surprising. Kingsley Principal John Falco noted that the information can be of great <a href="https://www.minnesotacommercial.com/blog/the-commercial-property-manager-how-to-be-successful-in-your-role/">help to property managers</a> and leasing agents who seek to boost renter experience, as well as to architects, designers and builders planning new communities and renovations of existing housing. Much of the new apartment stock in Minneapolis over the past several years is the result of ongoing renovation and rehabilitation of existing buildings in the urban core, Uptown, and neighborhoods adjacent to the University of Minnesota campus. The planned high-rise apartment building <a href="https://www.minnesotacommercial.com/blog/changes-in-dinkytown/">currently under construction in Dinkytown</a> is testimony to the city's position as a leader in "ahead of the curve" thinking about long-term affordability for students and young professionals. Here are the nationwide trends that are gaining prominence, according to the NMHC report: Phone and Internet Connectivity Reliable cell reception and high-speed internet, whether within a private apartment, or in public space—even at the pool or in the workout room—seem to be at the top of the list for most apartment dwellers. Telecommuting, virtual communication and <a href="https://www.minnesotacommercial.com/blog/working-together-while-distancing/">working from home</a> will not disappear even as the nation's workforce gets back to work, according to experts. At least 90% of those who responded cited connectivity as a priority consideration, and the requirement for seamless, fast, reliable connectivity is not expected to change in the years ahead. Smart-Home Technology The apartment perks that most interest today's renters are all technology-driven. Does that surprise anyone? Nearly three-quarters of those surveyed report wanting <a href="https://www.minnesotacommercial.com/blog/attract-tenants-with-green-features-and-smart-technology/">smart-home features</a> that make life easier, and also save them money. Thermostats, smart lighting and smart locks are favored features in individual rental units, along with building security, parking and other lifestyle amenities. Virtual and Voice Assistants Renters also want to have a little fun when they're at home. Approximately 43% reported that they were very interested in a virtual, voice-activated assistant, and some even went so far as saying that they would not rent a space that did not include support for such an application. On-site Business Centers vs. Co-working Space The new normal may be in the direction of at least a partial work-from-home schedule for most people. For a majority of apartment dwellers, a designated workspace, complete with office tools and shared desks and business tools, would be a desirable amenity. Even with the <a href="https://www.minnesotacommercial.com/blog/the-evolving-picture-of-coworking-space/">growing popularity of co-working spaces</a>, only 15% of respondents reported ever using one, while nearly 55% said they'd be interested in an on-site business center in their apartment building. Whether for efficiency or a change of pace, this is an amenity that apartment developers might want to consider in new buildings. Renters Love Their Pets Approximately one third of survey respondents reported owning a pet, most commonly a dog, and noted that they are perfectly willing to pay not only a pet deposit, but a higher rate for pet amenities such as a dog park, pet washing station or on-site pet services. Depending on the location, a monthly fee considered reasonable ranged from $28 and $34 additional per service per month. Short-Term Rentals The rise of <a href="https://www.hunker.com/12293338/what-is-considered-a-short-term-rental" target="_blank">short-term rentals</a> nationally is a positive in the eyes of most apartment dwellers. Only 16% of survey respondents had a negative view of such short-term availability within a community. Although the term might vary—from a single semester at college to a six-week training commitment with a major company—there seems to be a demand for flexibility, with the understanding that a one-year or even a six-month lease term is no longer the norm. Co-living Space Although once touted by developers as a viable option to reduce housing costs, the trend toward co-living arrangements seems to have gone flat around the nation. Even Millennials, who once embraced the idea of sharing larger space with other like-minded tenants, have cooled on the idea. Nearly 70% of those surveyed reported that they would not be interested in such arrangements at the present time. Recapping the Minneapolis Data While national trends are interesting, it is the Minneapolis data that is enlightening. Based on the most recent data, average rent for an apartment in the city is $1,588, with the average size at 786 square feet. A one-bedroom unit is typically closer to the average than other floor plans, including studios up to three-bedroom units. The year-over-year increase in average rental rate was just 3%. Thirty-eight percent of <a href="https://www.rentcafe.com/apartments-for-rent/us/mn/minneapolis/" target="_blank">apartments in Minneapolis</a> rent in the range of $1,001 to $1,500 per month, while 26% rent between $1,501 and $2,000. Nineteen percent rent for more than $2,000, while 16% have rates between $701 and $1,000. Renter-occupied households in Minneapolis represent 55% of the total. Finally, since 2016, the rental rates in the city have hovered just below or just above the $1,500 mark, with a slight but steady increase from quarter to quarter. Minneapolis rental rates are consistently just higher than the national average, and it is the most expensive large-city market in Minnesota. Average rent in <a href="https://www.minnesotacommercial.com/st-paul-commercial/">St. Paul</a> is $1,303, but the average in <a href="https://www.minnesotacommercial.com/st-louis-park-commercial/">St. Louis Park</a> is $1,609. Average rent in <a href="https://www.minnesotacommercial.com/edina-commercial/">Edina</a> is $1,502, with the average in <a href="https://www.minnesotacommercial.com/eden-prairie-commercial/">Eden Prairie</a> tabulated at $1,521. That fact that remains at the forefront of all forecasts is that occupancy rates remain high in the Twin Cities, and more apartment housing is still needed. 2020-07-22T20:13:00-07:002022-05-13T06:39:28-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19403Will New Technology Dominate Future Business? <img class=" img_box_right" src="/wp-content/uploads/2022/07/new-technology-in-commercial-real-estate.jpg" alt="Will New Technology Dominate Post-Pandemic Business?" />The direction has been clear for some time, but the COVID-19 pandemic may have helped define future touchless technology. The timeline for development may also have been compressed significantly as the world recovers. International hotel chains are rolling out improvements from check-in to room cleaning. Food and beverage service is likely to be affected as well. Improved health screening, for both guests and employees, promises to revolutionize the hospitality industry. The future is likely to include more automation and less human contact, and it promises to extend not only throughout the business sector but to every aspect of life. As the world starts traveling once more, the new technology will become not only more evident, but more sophisticated. European and Asian hotel chains have already embraced digital technology to improve customer experience. In-room control of everything from ambient lighting to water temperature and television can be accomplished with a simple touch of a tablet touchscreen. Reservations and check-in are now handled almost instantaneously by cell phone and authorization codes; even room security is apt to be digital rather than with a passkey or card. Automat-style food service and in-room mini-bars are increasingly the refreshment centers of choice at small highway motels, major airport hotels, and even convention center complexes. Now, there's an added incentive—health and safety—that is driving development of familiar services via new technology. What does that mean for <a href="https://www.minnesotacommercial.com/minneapolis-commercial/">Minneapolis</a>, and for the many new hotels currently planned for the Twin Cities, <a href="https://www.minnesotacommercial.com/bloomington-commercial/">Bloomington</a> and the rest of the state? For one thing, it is likely to mean less human contact. Whether that's welcome of not, it is probably the new reality. Cleaning and Sanitizing Requirements As the hospitality industry ramps up once again following the 2020 global travel hiatus, more hand cleaning is expected to give way to additional industrial-strength cleaning measures. The Marriott has begun using electrostatic sprayers to apply sanitizing liquids that disinfect surfaces, and UV-light room sanitizers, according to industry reports, as part of the chain's new cleanliness routine. Other hotel chains are looking into the use of service robots for cleaning tasks as well as to deliver items to guest rooms. This should not surprise anyone, with drone deliveries now a reality, and some pizza chains introducing robotic delivery services. Global initiatives focus on establishing guidelines for making properties safer through better cleaning technology, however, not simply by counteracting real or perceived health threats with more chemicals. Some of the more promising techniques involve cleaning that will not pose an additional risk to humans. What Can Travelers Expect? European and Asian travelers have already experienced much of the new technology. In general, other countries around the world embraced technology options earlier than hoteliers in the United States. Cruise lines also pioneered new touchless/contact-free options prior to the pandemic, and will no doubt expand the availability of those options when ships return to the seas. Perhaps the burgeoning tourism trade demanded it, but contactless and touch-free check-in procedures are commonplace and no longer a novelty. Such futuristic amenities as <a href="https://helpdeskgeek.com/reviews/8-ai-assistants-and-what-they-can-do-for-you/" target="_blank">AI assistance</a>, remote controls for everything from in-room music to shower aromatherapy and light shows are certain to be a part of new hotel experiences as hand-sanitizers, automatic doors and room-darkening shades. The widespread availability of mobile devices has, of course, made locating a hotel and reserving a room easier than ever before. Registration as well as payment can easily be completed online, and access without the need for a signature or a face-to-face greeting is quick and simple, if a bit impersonal. In terms of health screening, travelers may get used to travel history reviews, digital fever scans upon arrival, minimal restaurant service and lobbies that encourage social distancing. Shoppers and restaurant-goers appear to have taken such measures in stride. Whether additional measures such as sanitation booths, digital tracking and detailed travel histories are practical or can even be implemented on a large scale depends in part on cost as well as oversight. Whether American business and the traveling public will accept such constraints remains to be seen. The Future for Hotel Employees Travel and hospitality business has always been people-dependent, and that is destined to change in the near future. Technology will almost certainly reduce the need for front-desk personnel in hotels, and food service and delivery jobs may disappear in favor of machines, robots and self-selection, Payroll expenditures may be redirected to technology and automation expense. Behind-the-scenes personnel—maintenance and cleaning crews—will undoubtedly face larger challenges. They will have to adapt not only to advanced screening procedures for their own health, but also will be burdened by more stringent requirements for care of physical facilities and client or guest concerns. Global business will never be the same. Almost everyone agrees with that post-pandemic assessment. Exactly what the future may hold is, at this point, still open to discussion and development. That is a given, across all business sectors. Outlook for the Twin Cities No one believes that hotels of the future will emerge as anything but the service-oriented businesses that they currently are, but the nature of that business will certainly be altered. Activity has been strong over the past year, with multiple new projects in the pipeline. Minneapolis welcomed three new hotels, and <a href="https://www.minnesotacommercial.com/st-paul-commercial/">St. Paul</a> gained two in 2019. Most analysts believe the hotel section will remain strong, because of the city's history of booming CRE development over the past several seasons. Approximately 700 new hotel rooms were under construction in February 2020 in Minneapolis alone, with another 300 currently being developed by Marriott at two St. Paul locations. Another 700 rooms have been proposed for Minneapolis, primarily by boutique developers and small-unit chains rather than major urban developments. However, several larger downtown hotels have recently been acquired by new owners in the past 12 months, signaling reason for continuing "cautious optimism," even though a decline in occupancy is forecast for the next 18-24 months. Investment in the hotel industry in both St. Paul and Bloomington, home of the Mall of America, calls for caution based on economic factors, occupancy rates and other area development numbers. But, overall, the sector seems poised for continued growth. And global trends point to the adoption of exciting new technology. 2020-07-08T20:13:00-07:002022-05-14T12:56:38-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19402How to Choose a Location for Commercial Real Estate <img class=" img_box_right" src="/wp-content/uploads/2022/07/how-to-choose-a-location-for-commercial-real-estate.jpg" alt="" />The tried and true real estate adage about "location" may be overused—and everyone knows it's not all about location. However, when making initial decisions about a commercial real estate project, location is certainly an important factor. Location has an impact not only on what can be developed, but also on cost projections, long-term viability, type of development, return on investment, the environment, and myriad other topics. Whether the planned development is for a hotel, a warehouse, <a href="https://www.storagecafe.com/self-storage/us/mn/" target="_blank">self storage</a> space, retail space or a restaurant, a medical clinic or a mini-golf course, adjacent land use, streets and neighboring properties all play a part in the decision-making process. For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction. Look at the Complete Picture Location, of course, is a great deal more than just the physical plot of land, or a single building. It also involves more than a single neighborhood. Any commercial development must take into account current zoning and development and future projections. Due diligence is always required. The best plans won't succeed in the wrong locale. Here are some primary points to consider before <a href="https://www.minnesotacommercial.com/blog/buying-commercial-real-estate/">buying commercial real estate</a>: Traffic Patterns: Take a close look at the major supply routes, including freeways and major arterial streets, local neighborhood feeder routes and ease of access for vehicular and foot traffic, depending on what is appropriate for your particular business enterprise. <a href="https://www.minnesotacommercial.com/blog/environmental-consciousness-shaping-offices-of-the-future/">Environmental Concerns</a>: This may be a judgment call, but it deserves attention. The needs and concerns that relate to industrial uses will be entirely different from the physical surroundings required for a retail center or upscale restaurant. Ancillary requirements, such as parking, lighting, landscaping and crowd control should also be analyzed. Acquisition Costs: It goes without saying that cost is a major factor. However, never let a low initial price unduly influence your decision, because you may have to spend additional dollars to compensate for other shortcomings. Infrastructure and Support Facilities: On the location checklist, note the existence of needed support. Everything from quality internet to fire department and emergency response time should be high on your list of location requirements. Zoning and Land Use: Existing zoning is pertinent, even for undeveloped land. Allowable uses for a particular tract may be limited. It's true that some municipalities are open to rezoning large parcels as long as master plan requirements are preserved, but such requests can be time-consuming and expensive. Municipal Growth Pattern: It's a fact that most cities grow according to established patterns, rather than expanding in patchwork fashion. Look to the future to determine whether your location will have long-term longevity for its intended use. Historical districts often have stringent requirements for redevelopment and updating. Architectural Limitations: Height and style restrictions may limit your options. New developments tend to have more stringent rules than older, existing areas. Always examine applicable rules and regulations. Taxes, Utilities and Fees: The variables in assessments and recurring charges for commercial real estate may make your choice very clear. In newer areas, look to surrounding development to gain perspective. Expected Appreciation: Anyone who invests in land or property expects its value to appreciate over time. While it's not wise to make a decision based solely on future potential, it should be part of the equation as you consider alternative choices. Development Timetable: Again, whether you start with raw land and plan to build and develop a multi-use tract, envision a remodel of historic property, or simply plan a finish-out of interior space, there will be a lag time. Investigate planning and permitting requirements, consult with building officials, architects and contractors in advance, and factor the timing into your decision. Development Costs: Another important financial consideration. Your total dollar expenditures add up quickly. Never underestimate initial costs, no matter how great the potential return. <a href="https://www.minnesotacommercial.com/blog/how-to-deal-with-the-unexpected/">Climatic Concerns</a>: Is the property location subject to flooding? Is there a threat of seismic activity? What are the seasonal weather patterns that might influence your decision to buy or lease in a specific location? More importantly, perhaps, what are the weather threats that would affect or impede a business in that location? Focus on Specifics The same considerations apply, whether one seeks raw land, an existing building or lease space. The base valuation of real estate and the expected return on investment are key to deciding on the best location. Although top locations may demand an initial premium price, the <a href="https://www.investopedia.com/terms/a/acquisition-cost.asp" target="_blank">acquisition cost</a> is only a part of the puzzle, according to successful investors and developers. Potential may be the great unknown, but there are ways to judge growth factors and future desirability. Weigh the advantages of a location in a currently desirable area against the growth potential of locating in a currently underdeveloped area. Projected return differs according to the type of investment. Expected ROI on lease space is calculated differently than return on raw land, but the final profitability is always the key. Similarly, choosing a location for commercial real estate will depend on individual goals and the distinctive benefits one has in mind. Anyone involved in the <a href="https://www.point2homes.com/US/Commercial-Real-Estate/MN.html" target="_blank">acquisition of commercial real estate</a> will have a slightly different set of rules and formulas for assessing a location's value. And commercial real estate investors will examine yet another set of considerations before making an investment decision. Basic guidelines, however, can be applied across the board and all across the country. No matter what individual concerns are deemed most important, the value of having a somewhat standardized approach to all CRE decision-making cannot be underestimated. Whether the deciding factor might hinge on zoning or financing, cap rate or occupancy projections, cost of renovation or long-term appreciation, location and price are invariably top concerns. Beyond that, the choice must always be predicated on particular circumstances, and timing is always a factor. This checklist should be considered a starting point, but it does not constitute an infallible formula. For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction. 2020-06-17T21:41:00-07:002022-05-14T03:24:50-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19401The Future of Local CRE: Is a Construction Slowdown Coming? <img class=" img_box_right" src="/wp-content/uploads/2022/07/the-future-of-local-real-estate-in-minneapolis.jpg" alt="The Future of Local CRE: Is a Construction Slowdown Coming?" />One of the few constants in commercial real estate and construction is that business trends are somewhat cyclical. That's not to say there's consensus or predictability concerning the timing or the duration of market ups and downs, but rather a sense of inevitability that, after several years, a slowdown is looming. Many companies figure periodic slowdowns into long-term business projections, and they have contingency plans in place to compensate for possible negatives. In terms of planning for the future economy, forecasts include a guarded warning that there is, at present, no way to predict exactly when or for how long the effects of the economic downturn will appear. The plan, at present, at least for major players, is to continue with projects that were booked at the beginning of the year. For some local developers, there are ambitious plans underway, both in the Twin Cities and in other areas. Bidding, Layoffs and Furloughs Bob Gardner, owner of Gardner Builders based in <a href="https://www.minnesotacommercial.com/minneapolis-commercial/">Minneapolis</a>, believes the next three to six months will be pivotal ones for local construction, with the forecast for the next two or three years becoming clear during that interval. Other business leaders note that there are likely to be substantial differences between public and private sectors. Economic <a href="https://www.minnesotacommercial.com/blog/addressing-the-labor-crisis-in-the-construction-trades/">issues in construction-related fields</a> can be expected to have a serious effect on the industry, according to Geoff Glueckstein, JE Dunn Construction senior vice president of operations for Minnesota and North Dakota. Recent layoffs and furloughs of architects and designers, engineers and other support services, he notes, could point to "worse news to come" for the construction industry. However, others interviewed by Minneapolis-St. Paul Business Journal reported more bidders on recent projects, signalling that contractors want to line up jobs for the future. Job site changes may also contribute to a slowdown, both in volume and lower profits, according to some observers, because of the need for additional safety equipment, distancing, and the need to adapt to safer new ways to perform job site duties. Glueckstein notes that none of his company's projects have been placed on hold, that at least a couple are scheduled for starts in the coming year, and that JE Dunn was the winning bidder on three projects recently during a single eight-week period. So, while not overly confident about the future, he is hopeful that a slowdown will be manageable. Another cautiously optimistic voice is that of Andy Hoffman, co-owner of H+U Construction in <a href="https://www.minnesotacommercial.com/edina-commercial/">Edina</a>. He notes that there are currently a higher number of RFPs, and that his company is trying to build a backlog of jobs so that they will have work available to start during the coming year. His strategy is that even lower-paying work is better than no work. Gardner comments, "It's clearly a moving target," adding that while most of his firm's jobs are on track for the immediate future, some have already been postponed or pushed to 2021. He adds, though, that Gardner Builders is still receiving RFPs and "still securing work." Looking Beyond the Immediate Ryan Cos. US Inc. may not be a phenomenon, but its success story cannot be overlooked. Based on projects currently planned for the Twin Cities, the company is in a position to survive whatever potential slowdown visits local commercial real estate and construction. That, in itself, may be good news for the local scene, with the following just a sampling of what's underway: Eleven, the 41-story high-rise that will contain 118 <a href="https://www.minnesotacommercial.com/blog/high-rise-condo-development-in-minneapolis/">luxury condominiums</a> with starting prices of $900,000. Ryan Cos. and Edina-based Arcadia broke ground on the tower last fall. Reportedly, more than half the units have already been sold. The building, situated near the Guthrie Theater on the banks of the Mississippi in downtown Minneapolis, is expected to be complete in late 2021, and is not only the most expensive, but the tallest residential tower in the city's history. Former Ford Site: Ryan Cos. is also involved in the highest-priced local land deal in history in conjunction with Weidner Apartment Homes, headquartered in Kirkland, WA. The partners closed on a 122-acre tract in December 2019 at a price of $61 million. The current master plan proposes 3,800 housing units, a 50,000-square-foot facility for use as institutional or civic space, and 150,000 square feet of retail space. Two smaller parcels have been sold to other <a href="https://www.minnesotacommercial.com/blog/truth-or-fiction-facts-about-the-twin-cities-affordable-housing-crisis/">affordable housing</a> developers, and Ryan noted that design work has begun on the first buildings. Located in St. Paul's Highland Park, the build out will be completed over 10 years, with grading and utility work expected to span approximately 18 months. 10 West End, in <a href="https://www.minnesotacommercial.com/st-louis-park-commercial/">St. Louis Park</a>, is planned as an 11-story building with nearly 350,000 square feet of office space. However, it may be a more difficult project to lease, because if there's a continued requirement for <a href="https://www.minnesotacommercial.com/blog/working-together-while-distancing/">social distancing and remote working</a>, lease space will almost certainly be impacted. The project's co-developer is Excelsior Group, and CEO Chris Culp reports that there are currently some active prospects. He adds that the business leaders he has contacted may have short-term concerns, but "they are optimistic it will be business as usual in the long term." Ryan Cos. is also the developer for two new towers in downtown Austin, TX. Hunter Barrier, South Central president for the Minneapolis-based developer, believes that despite the pandemic, the timing is right for this type of development in Austin. Even though demand for office space in the Texas capital has slowed recently, Barrier expects the market to rebound by the first quarter of 2021. He notes that the project was already well in to the design and approval process when the pandemic hit, but that the Texas economy is still strong, and that expected <a href="https://www.kvue.com/article/money/economy/boomtown-2040/austin-central-texas-population-growth-data/269-372e20bc-beb0-4338-a91a-27f5f7941e0c" target="_blank">population and employment growth</a> make the planned development viable. While a close-up snapshot of any specific locale might point to a short-term downturn, the prevailing outlook—wherever one looks—is that commercial real estate and construction will not suffer lasting damage from the effects of the pandemic. Some, like Jeff Wellman, president of Rochon Corp., believe that the time to take another look at the situation will come in late summer or early fall. He, too, has noticed an uptick in bidders for available projects, and he notes increased competition typically is a sign of reduced margins. Like almost everyone surveyed, Wellman is playing a waiting game right now, waiting for clearer signs of what might lie ahead. 2020-06-03T18:53:00-07:002022-05-13T06:39:52-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19400Office Design Trends for a Future of Distancing <img class=" img_box_right" src="/wp-content/uploads/2022/07/the-future-of-office-design-trends.jpg" alt="Office Design Trends for a Future of Distancing" />Even though Minnesota may be more cautious about reopening business than some other states, Minnesotans may be ahead in studying how to reopen. New Strategies for Making the Workplace Safe The Mayo Clinic's Well Living Lab is situated adjacent to the Mayo campus in <a href="https://www.minnesotacommercial.com/rochester-commercial/">Rochester</a>, and it is a center of activity. The facility is "uniquely positioned," according to Mayo Clinic cardiologist Dr. Veronique Roger, who also serves as the lab's director of research. By simulating office environments in the lab, she believes the confluence of "building and health science technologies and expertise" will generate knowledge that can prepare safe environments. The research focus centers around how to best decontaminate surfaces, employ thermal screening at entrances and minimize the circulation of air particulates. Additionally, researchers hope to track employee performance, satisfaction and emotional resiliency. In addition to the laboratory studies of simulated office settings, strategies and possible solutions will be tested at the <a href="https://kerb.com/office-move/" target="_blank">corporate offices</a> of three cooperating firms. Air filtration, surface hygiene and innovative software designed to promote behavioral changes will be tested by Delos, a real estate technology company based in New York. The Houston-based real estate firm Hines will contribute data and expertise from key executives on the topics of innovation and property management, engineering and development. The Chicago offices of real estate giant Cushman & Wakefield will become the third "real-world" workplace, with the focus on workplace design, strategies and standards for effective physical distancing in the workplace. Healthy Buildings, Healthy Workers There has always been widespread interest in and emphasis on making buildings a healthier environment. As architects and productivity experts began to study buildings from the standpoint of <a href="https://www.minnesotacommercial.com/blog/environmental-consciousness-shaping-offices-of-the-future/">environmental sustainability</a> several decades ago, it became clear that workspace excellence contributed to employee satisfaction and led to better performance, fewer lost days, and higher return on investment. It is a win for everyone involved, including new offices, factories, and schools. There is no disputing the facts: The built environment, particularly buildings where people spend a lot of time in enclosed areas, has a great impact on health and happiness and affects cognitive functions as well. A new book, "Healthy Buildings," by two pioneers of the <a href="https://www.facilitiesnet.com/green/article/Healthy-Buildings-Are-More-Important-Than-Ever--18900" target="_blank">healthy building movement</a>, Joseph Allen and John Macomber, both of Harvard, drive home the point in a compelling way, especially for the post-pandemic world. Allen is director of Harvard's Healthy Buildings Program in the School of Public Health, while Macomber is a recognized expert on urban resilience at Harvard Business School. Their "9 Foundations of a Healthy Building," detailed in the book, move beyond recommendations of the green building movement and offer a sort of blueprint for tracking the "performance indicators" of a building. The authors note that buildings can expose people to disease, but they add that buildings can also protect against disease. The authors outline ways that business owners and building officials can prioritize the most "important and vulnerable asset of any building: its people." Specifically, this distinctive "how-to" book details some relatively simple ideas that can improve the indoor environment: things like ventilation and humidity, lighting and noise control, and limited use of chemicals. Other experts address the importance of direct access to the outdoors, views, greenery, open space and color. Paul Scialla, founder and CEO of Delos, echoes those issues. “We know that buildings have a tremendous impact on our health and well-being, and the role of indoor spaces has now become more important than ever,” he notes. In contemplating the reopening of offices, he says it is “critical that we take an evidence-based approach to <a href="https://blog.fantasticcleaners.com/office-cleaning-checklist/" target="_blank">make our workspaces safer when we return</a>." Great Offices Also Boast New Amenities Almost everyone acknowledges that getting back to work is vital for the future of the economy. And others confirm that getting back to business is important for both the mental health and physical well-being of the workforce. For that reason, the <a href="https://www.minnesotacommercial.com/blog/what-will-the-office-of-the-future-be-and-why-is-it-important/">workplace of the future</a> may well look very different from the "normal" of the past. Some of the more innovative <a href="https://www.minnesotacommercial.com/blog/new-office-trends/">office trends</a> in the Twin Cities feature flexible workspaces, roof decks, <a href="https://arktura.com/acoustic-ceiling-systems-that-achieve-both-performance-and-beauty/" target="_blank">acoustic ceiling tiles</a>, common areas and game rooms, lounges, running tracks, meditation spaces, workout rooms and nap spaces, in addition to the more standard amenities like kitchens and coffee bars. The Baker Center in <a href="https://www.redfin.com/city/10943/MN/Minneapolis" target="_blank">downtown Minneapolis</a> has taken <a href="https://blog.hireahelper.com/how-to-remodel-your-office-without-disrupting-your-workflow/" target="_blank">office space</a> in a new direction. Designed by Studio BV, a group of suites on a single floor was finished out to be "move-in ready," each featuring a host of new ideas to appeal to varied business tenants. Ranging in size between 3,500 and 10,000 square feet, the concept was initially a challenge, according to Studio BV's CEO Betsy Vohs. But the result, apparently, was worth the effort. About half the suites have been leased. They are definitely not generic offices, said Vohs. They were conceived and furnished with function, efficiency and visual excitement in mind, with features like sit-stand desks, natural light and unique lighting fixtures. Additionally, the "cool" suites in the urban high-rise share a common area that includes a "wellness suite" and a shuffleboard court. The goal was to provide prospective tenants with colorful, custom design and the convenience of a fully furnished office space that still could be tailored to individual needs. Vohs is quick to point out the advantages inherent in predesigned office space that is available for rapid move-ins. Whether this is a trend that is destined to continue is still a question, but like many other ideas in the world of Twin Cities offices and commercial real estate, it is certainly interesting. The prospect of more efficient, healthier offices and business facilities for local employees is an exciting one, and one that continues to be driven by unique and innovative thinking. 2020-05-20T22:20:00-07:002022-05-13T06:39:52-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19399Working Together in a Time of Distancing <img class=" img_box_right" src="/wp-content/uploads/2022/07/working-together-in-a-time-of-distancing.jpg" alt="Working Together in a Time of Distancing" />Finding new ways to transact business as well as socialize during the time of quarantine is a prime concern throughout the country, and technology is the prime mover. From business teleconferencing to teaching, enjoying concerts and visiting museums to furnishing a new home or perfecting cooking skills, creative new paths are being forged. And new technology is the driver – across all industries. That's part of the good news. It's as easy to attend a concert in Rome or visit a historical site in Bangkok as it once was to go to the local library. Even studying and attending school is as effortless as reading an <a href="https://mygreexampreparation.com" target="_blank">article</a> online. It's all because of those ubiquitous screens. Today, when the news is all about keeping your distance, it's more than a little encouraging that the technology exists to keep us all together, both on a personal level and in the business world. The Ties That Bind What is certain is that the dynamic of social and business interaction has been irrevocably altered, and it will be some time before it's all sorted out and the world returns to a sense of what is normal and appropriate. What do the current times signal for the future of business in the Twin Cities? Is the <a href="https://www.minnesotacommercial.com/blog/what-will-the-office-of-the-future-be-and-why-is-it-important/">traditional office on the way out</a>? Some would say that has been the direction for years now. Others point to a new world of innovation and long-distance collaboration. What is the future of <a href="https://www.minnesotacommercial.com/minnesota-commercial-property/">Minnesota commercial real estate</a> in the short term, and what are we looking at over the long term? More importantly, perhaps, what are the ramifications for businesses that have "face-to-face" needs? It was almost one year ago that the real estate magazine Connected published an article that identified four top areas for CRE investment. Not surprisingly, they were all tech-related. The Internet of Things (IoT) Effective monitoring ability of buildings and the people who use them is the domain of internet devices. Based on information provided by research firm Memoori, IoT devices with a value of 75 billion will be in place by 2021 to monitor human and building operations across the breadth of the commercial sector. The data collected from offices, retail spaces, warehouses, hotels and hospitals will be invaluable in determining and planning for space needs and efficient operation in the future. Virtual Reality Headsets may be as important as masks and six-foot separation around the board table. Luckily, the <a href="https://disruptionhub.com/business-virtual-reality-5-uses/" target="_blank">potential offered by virtual reality</a> (VR) and augmented reality (AR) solutions is “virtually” unlimited. We have already seen what they offer in terms of benefit for pre-sales, architectural design, space planning and the ability to bring a group of geographically separated colleagues together. In some ways, the future is already here, and the potential exists for future expansion and utilization of both VR and AR capabilities across the spectrum of commercial real estate sales, leasing and management. Automated Workflow Solutions Coordinated end-to-end solutions across the range of operations in the commercial segment is another necessity addressed through the development of automated processes. Management and coordination of a continuum of tasks and responsibilities will simplify complex commercial real estate dealings. When efficiency is the end goal, innovative solutions are the answer. Employee and Workspace Experience Finally, the broad topic of workspace experience rates high priority among CRE directors. Companies that recruit, hire and train key employees focus on meeting diverse needs, providing the best possible environment for the workforce. <a href="https://porch.com/advice/create-perfect-home-office-space" target="_blank">From offices to specialized commercial space</a>—including modern warehouses, medical facilities and the hospitality industry—the needs have never been greater or more diverse. But again, the technology has never before been as all-encompassing. Responses to a survey conducted among a group of 561 global CRE directors were used to identify these top areas of concern. At the time, statistics pointed to a dramatic spread in expected profit, 31% compared to 19%, between early adopters of advanced technology and companies that employed a more cautious approach. Moving Forward from the Pandemic Forecasters were already predicting new ways that <a href="https://www.minnesotacommercial.com/blog/the-transformation-of-real-estate-what-is-technologys-role/">technology would shape the future</a>. Those thoughts are even more pertinent now, but if new tech adoption is just showing up on the horizon of your concerns, you're now behind the curve. It's one thing to make the shift to supportive technology, i.e., teleconferencing, email and voice messaging, on a temporary basis, but something else entirely to wholly embrace technology on a large scale. It remains to be seen if there will be a lasting redirection toward remote employment, but there is little doubt that there will be more reliance on artificial intelligence, virtual reality and computer modeling. Advances and problems in other areas will further impact business: robotics, energy, sustainability, financial concerns, the job market, and government mandates. What changes are necessary? What new directions will be disruptive? How much disruption will be tolerable? The questions of this new age seem to far outdistance the answers. The Need for Industrial Space In early March, according to Matt Rauenhorst, Opus Development Company's executive vice president and general manager, the prospect was still good for modern industrial space in the Twin Cities market. With what he termed strong occupancy levels at that time, he believes that the challenge, post recovery, might be finding that industrial space to efficiently serve the distribution sector. He is confident that the Twin Cities will rebound, and that local “protections” are in place against an economic downspin. He cites, as have others over the course of the past year, the “brain power” available in the Twin Cities, the strong employment numbers, and the history of “measured growth” and a conservative <a href="https://www.minnesotacommercial.com/blog/the-daytons-project-program/">approach to development</a>. Senior Managing Director Brian Netz, in the Minneapolis office of Newmark Knight Frank, also weighs in on the side of optimism, even in the midst of current uncertainty. He points to the varied economy of the Twin Cities as its primary hedge against bad times. “We are not reliant on one or two industries to drive our growth and activity,” he notes. “We are spread out enough so that when activity rises and falls in some industries, it doesn't send our entire economy into a downspin.” That may indeed, be the thought to hold onto, in the days and weeks ahead. That, keeping your distance, and working together through technology. 2020-05-06T20:41:00-07:002022-05-13T06:39:53-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19396Will Slower Growth Cool Minnesota's CRE Boom? <img class=" img_box_right" src="/wp-content/uploads/2022/07/future-commercial-real-estate-growth.jpg" alt="The Future Seems Steady for Minneapolis Commercial Real Estate" />The mood of commercial real estate professionals in the Twin Cities appears to have shifted from an expectation that top-of-the-cycle declines would soon begin to be felt to a more optimistic outlook for the first year of the new decade. A survey of 50 commercial real estate industry leaders, conducted by the University of St. Thomas in May 2019, reported new optimism when compared with results of a 2018 assessment of opportunities and challenges. Survey Results Signal Stability Although the overall survey response remains "slightly pessimistic," there are mood upswings in important areas, including a nine-point increase in expected investor return during the coming two years. The survey is designed to forecast movement in the commercial real estate sector over the coming two-year period. Similar questions have been asked of the same 50 industry leaders for the past 16 years. Responses reflect not only their collective experience, but a realistic overview of the entire market. Local commercial real estate activity extending into 2021 is determined to a large extent by the decisions these development, finance and investment leaders put in play today, according to Herb Tousley, Director of the Real Estate Programs at the university. Even though the overall report points to a slowdown, these industry leaders are not expecting a major downturn. There is still widespread consensus, though, that the current growth cycle is nearing an end. <a href="https://www.minnesotacommercial.com/blog/renter-dominated-cities-a-growing-and-expensive-trend/">Rental rates</a> are expected to remain virtually unchanged for the coming two-year period, an optimistic assessment that should continue to fuel <a href="https://www.minnesotacommercial.com/blog/west-end-development/">planned development</a>. Occupancy rates, however, and continued new space absorption, are cited as concerns, although the index moved to a slightly less pessimistic view in the latest report. Land price increases and commodity prices for building materials, combined with expected shortages in both categories, continue to worry CRE survey respondents. However, from a financial perspective, local leaders see a continuance of favorable returns for investors, along with the continued availability of project funding and credit for development. There is little indication that lenders will increase loan to value requirements, and interest rates are expected to remain steady. The belief that investor ROI will remain constant moved that assessment index into slightly optimistic territory from a previous pessimistic index. Population Leveling and Its Effects Population growth in the state, according to demographers, will come to a virtual standstill in the 2020s, with projected population decline in rural counties and small towns. Even though jobs and people will continue to relocate to larger urban areas, according to the analysts, the expected stall during the first five years of the decade will introduce new economic realities. Minnesota's climate and midwestern location are viewed as deterrents to growth, and the state's population growth statistics have never been a match for boom conditions evident elsewhere, particularly on both coasts and in states like Texas and Arizona. In some ways, that has been a blessing. However, current job vacancies point to a different reality, one that forecasters believe won't be solved by an effort simply to attract more people. Population growth trends have a major impact on the economy, and not only in terms of housing and employment. Fewer people contribute to a decline in services and more challenges throughout the entire business spectrum. Slower growth rates are expected at least for the next two decades, with job market woes reflecting the continued aging of the population. The <a href="https://www.census.gov/" target="_blank">Census Bureau</a> notes that by 2034, more Americans will be over 65 than under the age of 18. Susan Brower, Minnesota's state demographer, says that without a growing population, economic growth in general will be more difficult. She sees a need to shift people into "more productive jobs." Other observers counsel that economic growth depends equally on resources, productivity and people. When fewer people are in the mix, growth slows and "people tend to preserve wealth rather than taking risks to create more of it." Top CRE Performers Steady is the word most often heard in relation to the Minneapolis CRE market outlook. But "booming" is the word Phil Cattanach, vice president and general manager of Opus Development Company, uses to describe the <a href="https://www.minnesotacommercial.com/blog/whats-up-with-multifamily-real-estate/">local market's multi-family</a> and industrial sectors. And he sees no signs of change anytime soon. In addition, Cattanach and others insist that even the CRE sectors that aren't quite as hot are firmly in the "steady" category. <a href="https://www.minnesotacommercial.com/minneapolis-commercial/">Minneapolis</a> in particular is in a position to attract development activity because it has demonstrated an enviable ability to adapt and scale to meet changing demands. Today, the push is for housing near the urban core, but multi-use new development and innovative re-use plans in suburban areas and fringe locations promise a new cycle of growth. The overall picture is considered good for commercial real estate, even if the development of the past few years slows. Minnesota, and particularly Minneapolis and St. Paul, remain the shining lights of growth and stability in the Midwest, and that is expected to continue in the new year, and for the coming decade. 2020-03-18T20:01:00-07:002022-05-14T12:04:51-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19395Minneapolis 2040 Plan: What's Ahead for Commercial Real Estate? <img class=" img_box_right" src="/wp-content/uploads/2022/07/minneapolis-new-growth-plan.jpg" alt="Housing Development is the Basis of Minneapolis' New Growth Plan" />In the Twin Cities today—and for the foreseeable future—one must look up. Real estate development is going higher and higher, particularly in <a href="https://www.minnesotacommercial.com/minneapolis-commercial/">Minneapolis</a>. That's not only a metaphor for physical growth and rising prices, but it's an observation in a literal sense. <a href="https://www.minnesotacommercial.com/blog/high-rise-condo-development-in-minneapolis/">High-rise buildings</a> are the new normal throughout the city, not only in the urban core, but now in Dinkytown and uptown as well. And those high-rises are as likely to be mixed-use developments with retail, office space and affordable apartments as they are to be luxury condominiums. That skyward focus is most likely here to stay, but there is also something new at ground level, if the city's current efforts to deal with population and employment growth trends, transportation needs and affordable housing are to succeed. Minneapolis, in October 2019, became the first city in the nation to eliminate single-family zoning citywide. The move, termed audacious by some, was praised by the New York Times as a "simple and brilliant plan," in a direction long overdue. It is designed to put an end to what is known as exclusionary zoning, and to address the housing gap between rich and poor neighborhoods. A Plan to Spur New Housing Solutions Minneapolis, according to officials, learned some important lessons from other cities, notably San Francisco and Seattle, and moved to deal with spiraling prices and declining affordability. It's not the only move designed to effect change in the city, either. Where other municipalities failed to act, Minneapolis not only sought residents' input through a sturdy process that spanned at least two years, but also formulated a decisive plan. The zoning change, according to a report issued by The Century Foundation, represents a dynamic and dramatic change for a city that had previously reserved 70 percent of its residentially zoned land for single-family development. Now, duplexes and triplexes are to be allowed on previously single-family lots, a change which could yield up to 30 percent more housing units over time. That, by itself, is dramatic. But four other provisions were enacted by a 12 to 1 vote: Construction of three- to six-story buildings will be allowed near transit stops; Off-street <a href="https://www.minnesotacommercial.com/blog/where-has-all-the-parking-gone/">minimum parking</a> requirements were eliminated; There is a set-aside requirement for new apartment development: 10 percent of units must be for moderate-income residents; Affordable housing funding was raised to $40 million from its previous level of $15 million in an effort to combat homelessness and provide immediate relief for low-income renters. The Minneapolis 2040 Plan Over a two-year period, city planners sought comments and insights from a broad spectrum of the citizenry on future directions for the city. The Minneapolis 2040 Plan addresses how the city will change and grow in coming decades, and lays out steps for reaching specific goals. First and foremost among critical concerns was addressing the need not only for more housing, but for more <a href="https://www.minnesotacommercial.com/blog/truth-or-fiction-facts-about-the-twin-cities-affordable-housing-crisis/">affordable housing</a> in areas closer to existing and new employment centers. Both city and state officials agreed in 2018 that the Minneapolis housing crisis is real, and that a comprehensive and directed plan for change was required. The Minneapolis 2040 Plan was born out of that realization, and it defines in detail the kind of city that can be anticipated in 20 years' time. The basis of the plan is a vision of a city that comprises distinctive neighborhoods. Those neighborhoods are viewed, in effect, as discrete "small towns" that will offer cultural richness, a reasonable expectation of nearby employment opportunity, needs fulfillment, natural beauty, access to public transportation, and a choice of housing. These new neighborhoods will be more inclusive, more people-oriented and more walkable than most existing single-family enclaves. At least, that's the hope. <a href="http://www.minneapolismn.gov/news/WCMSP-215799" target="_blank">Minneapolis 2040 is an ambitious plan</a> that, among other goals, seeks to: Eliminate the disparities of opportunity, safety, wealth and health; Build a healthy economy with an abundance of "living wage" jobs; Establish a distinctive, high-quality, clean physical environment with "climate change resilience;" Encourage pro-active, accessible and sustainable government; and Devise an equitable civic participation system that enlists residents, businesses and service groups in an ongoing spirit of problem-solving and cooperation. Whether Minneapolis becomes the kind of city that the 2040 Plan envisions in 20 years' time depends on actions that will be taken today and over the next few years. Right now, there is ample excitement about its many parts, and a reasonable expectation that growth will continue to fuel the demand for the type of housing and business development, as well as the transportation and infrastructure alterations, that will be necessary. If the single-family housing ban is instrumental in helping to rebuild existing residential pockets and establish new neighborhoods to meet the city's diverse needs, then it might become a model for other cities that face similar situations. At this point, there are a lot of unknowns, but Minneapolis has taken some dramatic first steps, and a lot of people are watching with great interest. 2020-03-11T16:32:00-07:002022-05-13T08:00:46-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19394The Dayton's Project: Surveying the 2020 Development Landscape <img class=" img_box_right" src="/wp-content/uploads/2022/07/the-daytons-project-in-minneapolis.jpg" alt="Development Conference to Explore Current Trends, Local Concerns" />Although the CRE world is never static, there are some mixed signals that deserve closer examination as the new year gets underway. A one-day event planned for March 12 at The Dayton's Project, 700 Nicollet Ave. in downtown Minneapolis, will focus on topics that anyone involved in commercial real estate, building, leasing or development in the Twin Cities won't want to miss. Touching on topics that range from zoning concerns to modular construction to the effect of tariffs on the cost of materials, individual speakers and panels will consider the hard questions and try to find consensus about how to deal with challenges. Scheduled speakers will include Shauen Pierce, director of economic development and inclusion policy for the city of <a href="https://www.minnesotacommercial.com/minneapolis-commercial/">Minneapolis</a>; Matt Rauenhorst, vice president of Opus Development Company; Lander Group Founder Michael Lander and Ari Parritz, Vermilion development manager. Additional speakers are anticipated. Discussion moderators are Larkin Hoffman shareholder Chris Yetka and Jerod Rudolf, structural steel specialist with the American Institute of Steel Construction. The program begins at 8 a.m. with a coffee and networking session. The first discussion on Modular Construction: Everything You Need to Know, is scheduled at 9 a.m., followed by How to Make New Development and Re-development Pencil in 2020, a look at how to navigate rapidly rising labor and material costs. The day will conclude with a second networking session. Cost for the Twin Cities Construction and Development Boom Conference is $99. It promises to be an exciting program. The Development Dilemma Sponsored by The Dayton's Project, the half-day program will consider the economic impacts of new construction and redevelopment, with an emphasis on modular construction, and explore the better ways to deal with rising labor and materials costs. Minneapolis has been fortunate in recent years, with a record of multiple large project starts during the past few years. Although there have been challenges along the way, including rising costs, labor shortages, and construction delays, more are in the planning stages. The prevailing local attitude continues to be buoyant and optimistic. On the positive side, <a href="https://www.minnesotacommercial.com/blog/construction-begins-on-multi-family-housing-project-in-bloomington/">multi-family development</a> is booming; supply has generally kept pace with the numbers of new residents moving into the area. A negative, however, is that prices continue to rise. Minneapolis last year became the first city in the nation to alter its zoning, eliminating single-family neighborhoods in an effort to encourage more affordable housing throughout the city. Mixed-use development, including new <a href="https://www.minnesotacommercial.com/blog/high-rise-condo-development-in-minneapolis/">high-rise towers</a> in unlikely neighborhoods, is also vibrant and healthy. New office buildings are under construction in the urban core, as well as a number of redevelopment projects planned throughout the city and in close-in suburban areas. Many have enjoyed pre-completion leasing success, but absorption in some areas has lagged, and frequent construction delays have been disappointing. In general, though, the forecast for the future is positive, even though slower growth is predicted in 2020 and beyond. The Dayton's Project Now scheduled to open to the public this spring, construction began on the landmark building in the heart of Minneapolis three years ago. Demolition was completed the following year, paving the way for a dramatic redo, to convert the former department store into a modern multi-use space. It was not accomplished without some serious <a href="https://www.minnesotacommercial.com/blog/progress-slow-finding-a-balance-for-daytons-renovation/">roadblocks and delays</a>. A prime goal of the redevelopment project was to both honor the past and preserve the history of the iconic building. Some existing interior features were retained, including the Art Deco bathrooms, but at the same time, the iconic building's functional systems were updated to serve the needs of 21st-century tenants. The project's development team, spearheaded by Telos Group and 601w Companies, consulted with local leaders as well as with state and federal agencies to formalize the ambitious plan. The historic Dayton's building is listed on the National Register of Historic Places, and is one of the features of the city's redesigned Nicollet Ave., the acknowledged "Main Street" of Minneapolis for more than 100 years. The 12-story building, last occupied by Macy's, encompasses over 1.2 million square feet. It will now feature, instead of a vast shopping emporium, modern office space loaded with tenant amenities, a futuristic 45,000-square-foot food hall and market, multiple restaurants and retail spaces. Corporate tenants can offer office workers the availability of a green rooftop terrace with skyline views, library and lounge spaces available for exclusive use, and a modern health club as benefits. The building is also connected to the city's skyway system. Looking Back, and Forward Four years ago, mayors across the nation identified economic development, specifically business and job growth, as the Number One concern for their communities. Those topics are, once again, at the top of the list of concerns for cities large and small across America. It was an election year, characterized then, as now, by divisiveness and acrimony on the national level. In their "State of the City" addresses in 2016, the majority of mayors cited a need for local solutions, and called for innovation. Once again, especially in the Twin Cities, that is the order of the day. In all the right areas, Minneapolis has made great strides: Transportation, community awareness, infrastructure, sustainability, demographics and diversity, and budgetary controls. The <a href="https://minneapolis2040.com/" target="_blank">Minneapolis 2040 Plan</a>, adopted in October 2019, is a shared vision for the future of the city that grew out of a two-year discussion by local people, business owners, residents and governing officials. It has particular significance for continued growth and development in the city, defining goals of "equitable access to housing, jobs, and investments." If one were to list the primary challenges facing Minneapolis today, it would probably look much the same as the 2016 list. Rounding out the top five, after economic development, overriding concerns for most cities include public safety, financial strength and fiscal responsibility, infrastructure and education. Minneapolis scores high in the area of education, with a highly educated and well-trained pool of candidates to support new business development, including a healthy entrepreneurial climate. The upcoming program represents another way for the development and commercial real estate communities to join forces for the future of this city. No doubt it will not be the only, or the last, such program in coming months. 2020-03-04T19:02:00-07:002022-05-13T08:00:46-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19398The Big News: Housing Starts and Sales <img class=" img_box_right" src="/wp-content/uploads/2022/07/housing-starts-and-sales-in-minneapolis.jpg" alt="The Big News: Housing Starts & Sales" />Inventory is down, prices are up, record numbers of permits are being issued. What is going on with both single-family and multi-family housing in Minneapolis? Is this the beginning of a new growth cycle? If so, where will it lead? New Activity for Housing Starts According to recent reports, the increase in new permits over the same period last year represents a 15% increase over 2019, for both single-family and multi-family starts. However, based on statistics from the <a href="https://www.mplsrealtor.com/" target="_blank">Minneapolis Association of Realtors</a>, there has been a decline in housing inventory of approximately 15%. Housing First Minnesota spokeswoman Katie Elfstrom notes that more families are choosing to build new homes because there are fewer homes currently available on the market, particularly in suburban areas. This supports additional information shared by the Realtors Association in early February regarding record-high prices for homes sold in 2019. The annual median home price in the metropolitan area reached $280,000 last year, continuing an eight-year trend of price increases. In 2011, the average was at a low point of just $150,000, following a staggering drop of 35% from the pre-recession high of $230,000 in 2006. The market rebound is viewed as a direct result of a better economy and record-low <a href="https://financialframework.com.au/resources/news-knowledge/mortgage-vs-super" target="_blank">mortgage</a> rates. The 2019 median price reflects an increase of nearly 87% in just nine years. The housing picture in Minneapolis, however, isn't that clear. Mixed Messages for Multi-Family Housing Planned <a href="https://www.minnesotacommercial.com/blog/high-rise-condo-development-in-minneapolis/">condo towers</a> and multi-use projects have also been in the news recently, with brisk pre-completion sales reported at one new project in downtown Minneapolis. Eleven is a luxury development on the riverfront, a joint project between Ryan Companies US Inc, based in Minneapolis, and Arcadia LLC, headquartered in Edina. In mid-February, it was announced that more than half of the planned 118 units have already been sold. Prices begin at $900,000 for the luxury condominiums. Groundbreaking was last October for the $190 million project, with reported sales steady during the normally slower months of a Minnesota winter. Principals also make clear that these reported sales are more than "reservations," noting that buyers have made substantial commitments, including purchase contracts and commitments that "would be hard to leave sitting on the table," as explained by Ryan Companies Director of Real Estate Development Carl Runck. The developers spent an upfront $1.5 million on the sales center for the property, situated in the Mill District. The construction loan for the project, which also includes 17 penthouses at the top of the 41-story tower, and ground-floor retail and restaurant space, was reportedly “the largest construction loan ever secured for a condominium project in the state of Minnesota.” No dollar figure, however, was disclosed. However, another developer nixed continuing plans on a luxury development across the river, noting that the time was not right for another million-dollar-plus condo tower in downtown Minneapolis. Alia, conceived by local developer Alatus LLC, was to have been a 40-story high rise with 214 condos, located across the Third Avenue Bridge from downtown. It was a project that had been on the drawing board for years, with approval finally granted following delays caused by litigation. Another development currently underway in the urban core, the RBC Gateway Project situated at Nicollet and Washington, includes 31 high-priced condos in addition to a Four Seasons Hotel and office space. Renovation activity continues to provide new downtown living space, but there is little available that is considered affordable in the current market, posing a dilemma. A spokesperson for Golden Valley–based real estate firm Maxfield Research and Consulting notes that the prices aren't too much of a stretch for local residents who choose to move downtown after selling suburban homes for a profit. But existing close-in housing doesn't meet the needs of an increasing number of new hires at local businesses. Balancing Business Growth, Jobs and Housing By all accounts, the strong business growth of the past few years will continue into 2020 and beyond for Minneapolis. Although some analysts see slower year-over-year growth ahead, very few expect a substantial downturn or a loss of jobs in the immediate future. Concern over providing housing for new arrivals in the city, however, continues to mount. One way that need might be addressed is through rehabbing of existing housing rather than building new. With construction prices still trending upward, and labor shortages continuing to plague the construction industry, simple home remodels continue to provide new opportunities. House flipping, while not a guarantee of profit, typically involves fewer trades, and requires less labor and less time than new construction. That is also confirmed by new data from <a href="https://www.minnesotacommercial.com/hennepin-county-commercial-real-estate/">Hennepin County</a>. With approximately 1,000 flips in the county in 2019, nearly one-third of those reported statewide, the numbers tell the story. Stats for the past two years are virtually the same: Minnesota's flippers earned a gross profit of just under $63,000 per project; ROI for an individual house flip was 35.2%; Only 175 days, on average, were required for a successful flip. Data was provided by ATTOM Data Solutions, which pulled national information from sales deeds. The Minneapolis 2040 Plan and the Immediate Future Clearly, there is a market in Minneapolis for housing and a need for innovative solutions to the housing crunch. The city has already taken the initial steps by becoming the first city in the nation to revamp residential zoning, allowing builders and developers to integrate smaller multi-family housing into formerly single-family neighborhoods. Developers have also joined forces with city officials and employers in an effort to supply housing—rental apartments as well as affordable condos and single-family homes—in neighborhoods adjoining employment centers. The bold <a href="https://www.minnesotacommercial.com/blog/minneapolis-2040-plan/">Minneapolis 2040 Plan</a> envisions a future of smaller communities that focus on integrating "people-friendly" services and live-work opportunity with environmental sustainability throughout the city. Whether it's possible to enact the broad vision in time to provide immediate relief for spiralized housing costs remains to be seen. But the fact that city leaders recognize the need and have asked local residents to share the vision is encouraging enough at this point. Solomon Greene, housing policy expert at Washington, D.C.'s Urban Institute, notes that there is "no silver bullet" to solve a situation that has been building for a long time. But, as he notes, Minneapolis is one of the most aggressive in the nation in its efforts to expand the city's supply of housing, both through greater density and new policies. The praise is warranted—and time will tell where it leads. 2020-02-26T21:14:00-07:002022-05-13T08:00:47-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19405Boost Commercial Property Curb Appeal in 10 Easy Steps <img class=" img_box_right" src="/wp-content/uploads/2022/07/boosting-curb-appeal-commercial-property.jpg" alt="Boost Commercial Property Curb Appeal in 10 Easy Steps" />Whether you're looking to <a href="https://www.minnesotacommercial.com/selling/">sell your commercial property</a> for a good price or attract new customers, chances are you'll need to work on its curb appeal. It's one of the best and most cost-effective ways of making your business as tempting as possible to the investors, tenants, or shoppers you're trying to target. Curb appeal means making a building look as attractive as possible from the outside. While this may sound basic, doing so can increase the value of a property by an average of <a href="https://www.wsj.com/articles/selling-your-home-its-whats-on-the-outside-that-counts-11579792560" target="_blank">around 7%</a>. For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction. Curb Appeal Boosting in 10 Steps There are plenty of ways to reap the impressive benefits that improved curb appeal offers. Some require a significant financial investment, while others need time. Either way, you can rest assured that what you put into it will be worth your while in the long run. Here are 10 ways to boost the curb appeal of your commercial real estate property. Take Stock Start by taking stock of your property's exterior. Are there any areas that are particularly old, untidy, or unattractive? If there are, make a list. Renovation experts claim that painting the home's exterior areas should be <a href="https://www.houseace.com.au/painting/cost-to-paint-a-house/" target="_blank">done every five to seven years</a>. These are the first areas that you'll need to tackle, so it's essential to set them out in order of priority. Clear Out Many of the things that detract from your property's exterior look either need to go or get replaced. Therefore, get rid of old garden furniture, cracked planters, and broken gates. Clean Up Admittedly, there's only so much <a href="https://www.edconstable.com/enjoy-and-finish-decluttering-your-home/" target="_blank">a good clear-out</a> can achieve if the building itself is visibly dirty. Deep cleaning the brickwork or paint, windows, and doors will be crucial to improving curb appeal. You can either do this yourself or hire a professional to do it for you. The latter might be necessary if your building is particularly big or high. Make Repairs Any signs of disrepair on the outside of your commercial property should be fixed as soon as possible. You're unlikely to appeal to the sorts of buyers you want to attract if, say, your building shows external sides of <a href="https://www.projex.com.au/blog/how-to-prevent-flood-damage-in-your-commercial-property/" target="_blank">flood damage</a> and its many associated problems. Update Accordingly Your building may have fixtures that are in good working order but look a little outdated. Consider investing some money into more trendy features such as new door handles and windows for a more modern-feeling property. Make an Impact Attract the attention of more people by introducing impactful accent colors. You could, for example, purchase bright new plants for your flower beds and hanging baskets. For an even bigger statement, try <a href="https://paintwithpinnacle.com/2020/09/15/what-colour-should-you-paint-your-front-door/" target="_blank">painting your building's front door</a>, window sills, and signage in eye-catching colors. Just make sure the shades you pick are <a href="https://www.bhg.com/home-improvement/exteriors/curb-appeal/the-dos-and-don-ts-of-choosing-a-front-door-color/" target="_blank">easy on the eye</a>. Go Green The number of those concerned about the environment is <a href="https://www.ibisworld.com/au/bed/public-concern-over-environmental-issues/5298/" target="_blank">on the rise</a>. Make more sustainable choices and improve your curb appeal while you do. One way of doing so is to plant more trees and eco-friendly plants throughout your grounds. Another is to use sustainable wood for your outdoor seating area. Light It Up Speaking of outdoor seating areas, another way of making your property more attractive to prospective buyers, tenants, or shoppers, is to introduce layered outdoor lighting. Think statement chandeliers or reams of atmospheric fairy lights that can bring a sense of magic and charm to a building's exterior. Fence It In Whether or not you have one already, spending money on a new fence that looks great and increases security has the potential to add to the value of your property. Buy a New Sign Commercial properties need adequate signage to attract customers, whatever the business model might be. If yours hasn't been updated in a few years, commission a fresh sign that draws the eye and increases your credibility. You could also take this as an opportunity to unveil a new, more modern logo or color scheme. Get Started Updating Your Commercial Property's Curb Appeal Today Curb appeal can do a great deal for your business, whether you want to attract new customers, welcome new residents, or sell your property. Regardless of the reason, by following the above tips, you can boost yours and watch the value of your property increase exponentially. For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction. 2020-02-21T03:59:00-07:002022-05-13T08:00:47-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19393How to Handle New Lease Accounting Standards <img class=" img_box_right" src="/wp-content/uploads/2022/07/understanding-new-lease-accounting-standards.jpg" alt="New Lease Accounting Standards Will Require Diligent Effort for Compliance" />It's tax season. Amid the collective groans from business firms and individuals alike, there are also some new standards that will affect private companies and non-profits with a lot of leased space on the books. The new standards are already in effect for publicly held corporations. Updated standards were originally timed to become effective in December 2019 for all business entities, but the target date for implementation by private firms is now the first fiscal reporting year after December 15, 2020. Even with the year-long reprieve, the change may well be burdensome, according to some tax accountants. Affected businesses must treat operating leases as liabilities, according to the Financial Accounting Standards Board (FASB), under the new rules. The change is expected to add a layer of complexity to record-keeping and reporting. It's not a "lease Armageddon," according to Matthew Derba, a director in the New York office of CohnReznick. He adds that there is much new information to digest, and the new standards pose a more difficult challenge than originally expected. But he remains optimistic that "leasing will thrive" and the new deadline is reasonable and achievable. An Overview of Change The new standards were first ratified in 2016 by the FASB, following a long period of consideration. The FASB is the non-profit oversight group that oversees GAAP, the gold standard of <a href="https://www.accounting.com/resources/gaap/" target="_blank">Generally Accepted Accounting Practices</a>. New standards, known as ASC842, apply to leases of more than one year, and became effective for corporations on December 15 of last year. However, the bulk of American companies are not corporations. It is estimated that the standards will affect more than six million private businesses, in contrast with just 4,000 public companies. A Deloitte poll in February 2019, approximately 10 months prior to the implementation deadline, found that fewer than seven percent of public companies felt unprepared. The picture was much different on the private side: Only 17% of company executives felt prepared for the change, while 33% reported feeling unprepared. That was enough, apparently, to offer a time extension. In addition, implementation has proved to be more time-consuming than expected for the public companies. One of the difficulties was in underestimating the length of time needed to review leasing contracts and identify specific leases that fall under the aegis of the new FASB standard. Calculations are complex, according to MRI Software Senior Vice President of Occupier Solutions Mandira Mehra. Traditionally, there has been a separation of duties between the property team that deals with property leases and the financial department that handles balance sheet reporting. Mehra cites a need for closer collaboration in order to adhere to new standards. Lease terms and conditions that can affect the reporting include such provisions as free rent, other types of dollar credit, materiality, operating clauses, and even the actual definition of what kinds of agreements between parties actually constitute a lease. LeaseCrunch CEO Ane Ohm points to the healthcare segment as an example of businesses that "embed" leases in what are termed service agreements. A physical asset can be considered leased property, she notes, and it would count as a lease to be reported under the new standards even if it isn't specifically called a lease. The Benefits of Technology Tools Lease accounting compliance is made easier, according to the experts, with software specifically designed to track leasing obligations. Mehra notes that, when it comes to compliance, there is no margin for human error, and that even with targeted lease-accounting-specific software, preparing for the reporting change is no walk in the park. Private companies, in particular, have been slow to move in the direction of such specific software. The Deloitte survey found that more than half of public companies use such specific program, but less than 13% of private firms have adopted such tools. It was found that about 44% still rely on manual accounting practices, patchworked into existing accounting software. A recent article in Accounting Today forecasts that by the deadline, more than $3 trillion in lease liabilities will have been reported on the balance sheets of private companies and non-profits. It should be noted that firms do not have to wait for the deadline to implement the changes, and some forward-thinking businesses have already done so. Deloitte audit and assurance partner Mark Jacobs notes that this is the first major change in accounting practices in nearly 40 years, and, although the learning curve may be steep, there are some benefits. He suggests studying the lessons learned by early adopters of ASC842. Some major takeaways, in his opinion, include: <a href="https://www.minnesotacommercial.com/blog/technology-millennial-mindset-spell-big-changes-for-business/">Technology solutions</a> are necessary, but the time frame to switch from manual record-keeping may be extended; More coordination will be required to properly identify, manage, record and "account for" leases under the new standards; Leases must be recorded on the balance sheet using a "collateralized incremental borrowing rate," and that can be complicated; Existing processes and controls will almost certainly need to be examined, and probably upgraded; Compiling lease data will require thought and judgment; reportable leases may exist across many individual business departments; and Most importantly, some leases are not clearly labeled as such. Outlook for Property Managers and Leasing Agents Clearly, the new standards affect property leases. Commercial real estate companies, in particular, have a vested interest in assuring that both leasing agents and financial managers have available all the guidelines, tools and information sources necessary to ensure the standards are understood and applied correctly. "A carefully thought-out ASC 842 implementation can yield enhanced analytics, modeling and forecasting capabilities," Deloitte audit and assurance partner Mark Davis wrote in Accounting Today. "At the same time, new lease accounting processes can jump-start related initiatives such as procurement or real estate management and optimization, contract management and compliance and contract digitization." Many questions exist, both for <a href="https://www.minnesotacommercial.com/blog/understanding-the-tenantproperty-manager-relationship/">lessors and lessees</a>. Savills Managing Director Nate Brzozowski notes that a company's leasing activities impacts many areas of operation, and that the variables are almost unlimited. But, he also doesn't think that leasing behavior will be altered dramatically by the new reporting requirements. Strategic planning, he notes, has always involved weighing pros and cons, and that will continue to be the way future leasing decisions are made. Other analysts point out that leases will add debt to a company's balance sheet, and that may lead some companies to seek alternatives such as co-working spaces, short-term leases, or purchasing property. Such decisions must always be made based on individual circumstances. The new standards may add another consideration to the mix, but the consensus is that they will not reach the status of a deciding factor. So, chances are high that, come next year, not much real change will be felt in the leasing community. 2020-02-19T19:10:00-07:002022-05-13T08:01:24-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19392CRE Forecast: Focus on Tenant Experience <img class=" img_box_right" src="/wp-content/uploads/2022/07/focusing-on-the-tenant-experience-in-commercial-real-estate.jpg" alt="New Deloitte Survey Taps into CRE Enthusiam for 2020" />The commercial real estate world is changing, according to an insightful Deloitte survey of CRE executives. Location, while still important, may no longer be the prime driver of success. Today, tenant experience is at the forefront, say leaders in the field from more than 10 nations. Their assessment may alter the focus of <a href="https://www.minnesotacommercial.com/blog/west-end-development/">future development</a>. <br /> Here is what to look at for 2020 and beyond. Rather than focusing on the physical, the new emphasis is on something a bit more difficult to define and analyze. It's an evolution of sorts, based on a 2016 prediction by Deloitte analysts that the "new mantra" for commercial real estate would become a three-legged stool of "location, information, and analytics." Those same analysts now say the industry has further evolved. Experience, they say, should now replace information as one of three key concerns for success. Specifically, the tenant experience. The shift may not be a surprise to anyone in the field. The changing nature of real estate has been obvious, and many commercial real estate companies have already made the <a href="https://www.minnesotacommercial.com/blog/how-is-technology-changing-commercial-real-estate/">shift to technology</a>. What is worthy of note is the extent to which developing technology, user need, new business alliances, and the "trajectory of global economies" influence decisions. More than 90% of respondents noted that they plan to "maintain or increase" tenant-related technology spending in 2020. That's a significant increase. Outlook for the Near Future The 2020 Deloitte survey tallied responses from 750 CRE leaders. Questions were designed to identify what this group views as fundamental to the decision-making process regarding location and memorable tenant experience. The emphasis was on how emerging technologies play a role in that process, and to what extent the analytics affect response. Basic findings include: A shift in tenant preferences: Not surprising, given what Deloitte identifies as "increasing urbanization and globalization." However, new expectations and demands are also related to <a href="https://www.minnesotacommercial.com/blog/what-will-the-office-of-the-future-be-and-why-is-it-important/">emerging workforce options</a>, including flex space and telecommuting, and continuing technology advancements now include greater reliance on Artificial Intelligence (AI) and the Internet of Things (IoT). Tenant experience: This response is a bit surprising. Although survey respondents consistently chose overall tenant experience as a primary concern, most admitted that digital tenant experience is not a "core competency." Ancillary benefits: The executives were united in expressing the belief that technology is not limited to enhancing the tenant experience. They invariably cited the increase in operational efficiency and lower costs as additional benefits of outfitting commercial space with the latest technology tools. Just What Does It Mean? There is no doubt that modern life and business is technology-driven. But in the context of commercial real estate and tenant experience, what are the prime technologies that provide an edge over the competition? First, any applications that ease scheduling and booking, connect previously disparate devices and sensors, and leverage "machine-learning algorithms" are deemed advantageous. In the eyes of tenants, technology that can be employed to analyze mobile data is also highly ranked and appreciated. In some locations, particularly China, <a href="https://www.americanbar.org/groups/criminal_justice/publications/criminal-justice-magazine/2019/spring/facial-recognition-technology/" target="_blank">facial recognition software</a>, mobile apps and personal assistant software that create personalized and efficient experiences is prized. IoT technology has "come of age," for everything from smart-home and "smart-office" voice-controlled apps and security to simple convenience. While it is expected that new technologies will continue to be developed and embraced by commercial tenants, new technologies also come with a cost. Balancing the cost against expected return is the tightrope-walking aspect of the decision-making process when it comes to CRE implementation. The survey also addressed those issues. Weighing the Value Deloitte's economists sound a warning note about the heightened volatility of U.S. and global economies and worldwide political uncertainty. Nevertheless, the conclusion is that the U.S. CRE market "remains on strong footing," despite some talk about a coming recession. More than 70% of surveyed executives plan to maintain or increase technology spending even if there is a slowdown, although U.S. firms with more than $10 billion in revenue report that they would scale back. The report notes that this may be due to already high spending and decreasing need for new <a href="https://www.minnesotacommercial.com/blog/technology-how-will-it-impact-your-investment-plans/">investment in technology</a>. In strictly local terms, the report is encouraging: Two-thirds of U.S. office property respondents look forward to a growth in rental rates in 2020, and one-third expect a decline in vacancies in the coming year. Multi-family property owners, however, anticipate higher vacancy levels. Almost three-quarters of U.S. executives expect higher transaction volume. In the office sector, 74% look forward to an increased availability of capital, and 26% see a decline in the cost of capital. The numbers in other sectors are not as optimistic. Responses to the Deloitte annual survey are similar in many ways to the 2019 survey. Overwhelming concerns, as in past years, continue to include geographic market issues, interest rate fluctuations and tenant concentration risks. But all signs point to continuing growth and stability of the CRE market. Despite the continuing challenges, and a heightened focus on tenant experience, it's a year to greet with enthusiasm. 2020-02-05T18:57:00-07:002022-05-13T08:01:24-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19391West End Development Success Reflects Changing Times <img class=" img_box_right" src="/wp-content/uploads/2022/07/west-end-development-in-minnesota.jpg" alt="A Decade Later, Developers Envision Successful West End Development" />Sometimes ideas don't play out exactly as planned. When ambitious plans were unveiled more than a decade ago for The Shops at West End in <a href="https://www.minnesotacommercial.com/st-louis-park-commercial/">St. Louis Park</a>, it was with hopes that the $400 million mixed-use project would enjoy certain success. The first phase was to be a first-class retail center, followed by apartments, offices, restaurants and hotels.<br /> <br /> In 2008, those early hopes were dashed by the looming recession. The initial shopping center has not been a major success. Even today, more than one quarter of the space remains vacant. Other developments planned were subsequently scrapped by Duke Realty Corp., the original developer, a firm that altered its strategy and pulled away from the project in 2011. <br /> <br /> But the story didn't end there. Today, exciting new chapters are being written. Even though the past decade changed the face of planned development, the original plan served as a catalyst for area-wide change. And, who knows, the result may be better than what was originally envisioned. The Face of Change Since 2013, nearly 800 apartments have been built at the St. Louis Park site, and a final multi-family project will break ground this winter. There are now hotel rooms and offices on the 49-acre site, and more are on the way. Some existing office buildings in the area have been refurbished <a href="https://www.minnesotacommercial.com/blog/new-office-trends/">to attract new tenants</a>, and new construction is planned. The six-building Parkdales office complex was redone by The Excelsior Group and reopened as West End Office Park. It is 87 percent occupied today. The Excelsior Group was one of the first to recognize the area's potential. They broke ground on a <a href="https://www.minnesotacommercial.com/blog/construction-begins-on-multi-family-housing-project-in-bloomington/">multi-family apartment project</a> in 2012 on a piece of land purchased in 2010 at "a depressed price." According to CEO Chris Culp, the 119-unit Flats at West End was 85 percent leased prior to completion. He credits millennials for the area's growth and popularity, noting that over the past six years, the building has averaged 95 percent occupancy, and rents have increased as well. Excelsior is now partnering with Ryan Cos. to develop an 11-story office tower with more than 340,000 square feet of space. Ground was broken on the project, the first of two buildings planned along Highway 100. The two buildings, when complete, should offer approximately 700,000 square feet of new space in a unique business setting that is deemed an "18-hour" location, surrounded by apartments, retail, restaurants and entertainment space. The original Duke development was planned to have a heavier office concentration, with more than one million square feet of business space in four towers. The market has changed since the area was first envisioned by Duke Realty Corp. Originally viewed as a retail and business center, the intervening years have skewed the mix more toward apartments, and the daytime office presence will be smaller. There is still ample room for retail, restaurant and entertainment development. And that is viewed as the future of the West End. Keeping Pace with the Market The direction is <a href="https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/11495-market-condition.html" target="_blank">determined by market conditions</a>. Both developers and real estate brokers believe the mix of residents and workers will bring new vibrancy to the area, and that the West End will continue to grow in price, popularity and value. The area, according to a recent article in the Minneapolis/St. Paul Business Journal, will soon reach $348 million in development since 2010. Completed projects at the St. Louis Park site include: The Flats at West End: 119 apartments Millennium at West End: 158 apartments AC Hotel Minneapolis West End: 126-room hotel Phase 1, Central Park West Apartments: 199 units Talo Apartments: 303 apartment units The following projects are currently under construction: 10 West End (Phase 1): A 343,000-square-foot office building 2 Central Park West (Phase 2): 164-unit apartment complex Global Pointe Senior Community: 98 senior units Elan West End: An apartment community with 207 units Pat Mascia, who headed Duke's early retail development operations, notes that succeeding development would not have been possible, or would have been very different, without The Shops. Mascia, an attorney, now leads Briggs and Morgan's real estate division. He says the retail and entertainment focus is what will spur future growth and development in the area. As tenants move into the apartments, and <a href="https://www.minnesotacommercial.com/blog/what-will-the-office-of-the-future-be-and-why-is-it-important/">workers fill the new offices</a>, there will be a greater need for retail, shopping and entertainment. Growth and development may not be exactly as planned a decade ago, but it seems to be perfectly aligned with today's needs. And it seems obvious the time has come for success at West End. 2020-01-22T20:55:00-07:002022-05-13T08:01:24-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19390How to Deal with the Unexpected <img class=" img_box_right" src="/wp-content/uploads/2022/07/how-to-deal-with-weather-conditions.jpg" alt="How to Plan in Place to Deal with Facility Emergenices" />With freak weather occurrences, from hurricanes and tornadoes with associated flooding, to wild fires, blistering heat and prolonged subzero temperatures headlining the news throughout the country, it seems that risk has become the new normal. If that is so, what preparations and precautions are necessary to <a href="https://www.minnesotacommercial.com/blog/new-office-trends/">protect commercial office tenants</a>? Building codes and energy requirements have become more stringent in the past couple of decades, but weather conditions have also become more challenging. Is there anything <a href="https://www.minnesotacommercial.com/crow-wing-county-commercial-real-estate/">Crow Wing</a> building managers can do to prevent damage and assure that business operations will continue, despite what seems like more frequent storms? The fact is weather conditions in all parts of the world seem to be regularly more extreme than in recent years. Those extremes pose more challenges not only for public utilities, but for building managers and city officials as well. No matter how well buildings are constructed to withstand winds, pounding rains, ice, snow and cold, or extreme heat, it's the day-to-day operational challenges that must be met in order to keep workers comfortable and the wheels of commerce turning. Advance Planning is Key Facilities managers must assess the specific risk factors for their own locations. In most of the Midwest, and in the Twin Cities specifically, it's winter cold that challenges building managers. Even though freak weather conditions wreak havoc in unlikely locations, predictable natural disasters are more regional: tornadoes throughout the plains, flooding in coastal areas and along major rivers, earthquakes and wildfires predominantly in the West. Disaster planning, then, should be location-specific. However, an action plan must also address unknown hazards. Building managers should plan for worst-case scenarios, and develop a list of critical systems in their buildings. Deb Kolar, general manager of operations at the <a href="https://www.ids-center.com/" target="_blank">IDS Center</a> in Minneapolis, is a veteran of hard winters. But last season's Polar Vortex was a challenge even for this pro. She didn't hesitate to act when faced with a forecast of 24-hour low temperatures that hit a "feel like" reading of 50 degrees below zero. The decision was immediate: the building's heating system would stay on for the duration of the extreme cold snap. The goal was to maintain interior temperatures at 67 degrees, both to keep tenants happy and to prevent building pipes from freezing. She notes the additional cost was "well worth it." Focus on Preparedness Taking a key from Kolar's playbook, every business should develop a checklist to allow an action plan to be implemented on short notice. That's a key ingredient when there is early warning, but a plan should also be in effect to deal with unexpected emergencies. Recommendations include: Review Insurance Coverage: Although periodic insurance review should be standard operating procedure, a routine seasonal review (or pre-storm check) is a must. Confirm contact information and procedures in the event a claim must be made, and assure that everyone with authority to make emergency contact has up-to-date information. Review Critical Procedures: Building managers should keep tenants, leasing agents and maintenance staff in the loop. Individual business firms should also keep every employee well-informed. Have a Tactical Plan: Building managers must have a complete tenant list, either on paper or accessible from off-site (cloud storage), with emergency contact numbers. Know what critical services each tenant requires. Individual firms should also have such a list of key personnel and department heads, and a notification plan for all employees. Assess Priorities: Know what building or business services can be shut down, or "sacrificed" in case of emergency, and what systems must be maintained at all costs. Become Familiar with Warning Systems: In case of predicted storms or emergency situations in your vicinity, know what alert systems are in place, and the contact hierarchy. Also become familiar with all responders who will be available following an emergency situation, from law enforcement and disaster response teams, to plumbers, electricians, window repairmen, general contractors; perhaps even caterers and temporary employment services. The Emergency Plan Checklist Planning and preparation are vital. But there are some additional precautions that are equally important. Routine building inspections can identify vulnerabilities that might become critical weaknesses during severe weather. High winds can make flying projectiles out of seemingly "innocent" signs or trash containers. Heavy snow or ice buildup is devastating to specific structural elements. Awnings, signs and outdoor furniture that can be damaged or destroyed should be stored if at all possible. Perform periodic checks of backup generators and emergency lighting and communication equipment, and institute an emergency communication plan—between managers, tenants and vendors, varioius department and individual employees, as well as with city staff, emergency personnel, and general operations staff. That is an essential element of preparedness, according to Kolar, before, during and after a weather emergency. Other building managers attest to the value of developing personal relationships with key utility contacts and repair services, as well as the value, in case of necessary repair work, of having readily accessible building plans. In case of damage, timely repair and restoration is the number one priority. <a href="https://www.minnesotacommercial.com/blog/the-commercial-property-manager-how-to-be-successful-in-your-role/">Managing a major business center</a> is no easy task, even when all the wheels are turning smoothly. But in the event of a major weather threat, or in case another type of emergency disrupts normal operations, a wise building manager will already know how to react quickly. 2020-01-09T22:07:00-07:002022-05-13T11:16:15-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19389Minneapolis Report: Forecast for 2020 <img class=" img_box_right" src="/wp-content/uploads/2022/07/minneapolis-commercial-forecast-for-2020.jpg" alt="Office Space, Multi-family Development Become the Focus for 2020 Minneapolis" />Despite some mixed reports earlier in the year, and the sometimes conflicting assessments of those who track statistics and trends, the end of year forecast for the coming year—across the nation—is relatively bright. According to Kiplinger's economic outlook, states face challenges on several fronts, but <a href="https://www.thebalance.com/current-u-s-federal-government-tax-revenue-3305762" target="_blank">U.S. revenue is on the rise</a>—both from sales of goods and personal and corporate taxes—marking serious and robust growth not experienced since before the Great Recession. That's good news, but the forecast isn't equally encouraging for all states and regions. Healthy tax revenues are expected to continue for the next several quarters, due to continuing low employment and slowly rising incomes. Coupled with modest inflation and high energy prices, many states are cautiously planning to increase budgets, considering reversing spending cuts made following the economic turndown. Concerns nationwide continue to be trade wars, weather events, worker shortages and a widespread manufacturing slowdown attributed to lackluster global growth that has affected exports. The report notes that most states plan to rathole some expected tax revenue into "rainy-day" funds and approve only modest spending increases. Identifying Local Trends As an adjunct to the nationwide forecast, Kiplinger also prepared a list of 11 states facing the biggest challenges in the year ahead. Minnesota was not included on that watchlist. So what's the picture for the state, and particularly for the Minneapolis-<a href="https://www.minnesotacommercial.com/st-paul-commercial/">St. Paul</a> area? Essentially, it's a good one. Construction spending is up, overall. In Minneapolis, however, while total construction volume was down by about five percent over the previous year, second quarter figures show the city continuing to track as expected in all areas, based on data collected. While the residential sector is expected to be down by about 16% when year-end figures are come in, commercial construction is expected to end 2019 only about 2.2% under the 2018 tally. In general, the local commercial real estate market continues to outperform the national average. In particular, a steady demand for new and refurbished <a href="https://www.minnesotacommercial.com/blog/new-office-trends/">office space continues to push activity</a>, especially in the downtown Minneapolis core and its close-in suburbs. Strong demand is met by steady developer delivery, and asking rents increased by 1.5% in the second quarter. The Yardi Matrix Report notes that the city's record represents one of the strongest growth rates in the nation. Even though year-over-year activity was slightly lower in June than the previous year's record, annual sales are expected to surpass 2018's volume of $1.4 billion. Modest job growth numbers were reported, with gains in the business and professional services sector compensating for job losses in retail and manufacturing. Local office absorption continues to be "healthy," with a vacancy rate of 12.6%, well below the national average. Finally, pre-completion leasing activity for new space continues strong, with the RBC Gateway project in Minneapolis claiming an 85% lease rate prior to groundbreaking. What to Expect in 2020 Although we have seen that expectations can change rapidly, <a href="https://www.minnesotacommercial.com/minneapolis-commercial/">Minneapolis</a> and the entire state are primed for continued growth in 2020, even though there are unique problems to be addressed. Continued job growth and <a href="https://www.minnesotacommercial.com/blog/truth-or-fiction-facts-about-the-twin-cities-affordable-housing-crisis/">affordable housing are two prime concerns</a> for a state that has, over the past several years, been a leader of regional growth, real estate development, and innovative problem solving. Especially in the fast-changing urban cores of Minneapolis and St. Paul, targeted programs have served as inspiration to other cities tackling transportation needs, aging infrastructure, effective reuse of older buildings, mixed-use development and ways to attract a qualified labor force. In December, Minneapolis became the first city in the country to ban new single-family home construction in an effort to spur <a href="https://www.minnesotacommercial.com/blog/construction-begins-on-multi-family-housing-project-in-bloomington/">multi-family growth</a> and reduce housing costs. How that will affect the market economically is yet to be seen. Job-seekers have been attracted to the metro area because of low unemployment and the availability of attractive employment with stable companies. However, the unemployment rate rose from an extremely low 2.9% to 3.3% earlier this year. Job growth in 2019 has been modest, but is expected to pick up in 2020, according to Kiplinger. Problem areas continue to be food manufacturing and the non-durable sector represented by 3-M, and healthcare-related firms that constitute a major force of the Minnesota industry. The Mayo Clinic, headquartered in Rochester, remains the flagship of healthcare providers. Following what may be a challenging Midwest winter, major new construction projects promise a busy spring in terms of construction and development. In summary, 2020 should unfold as another good year for commercial real estate, with only a handful of warning signs currently visible. As in the past, Minneapolis and St. Paul should be able to adapt to changing conditions and respond to challenges. The groundwork for another good year has seemingly already been laid. 2019-12-18T21:19:00-07:002022-05-13T08:01:49-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19397The Evolving Picture of Coworking Space <img class=" img_box_right" src="/wp-content/uploads/2022/07/what-is-a-coworking-space-and-how-is-it-evolving.jpg" alt="The Evolving Picture of Coworking Space" />Once heralded as the undeniable future of business office space and a realistic direction for commercial real estate, the picture of coworking space available and planned for 2020 looks somewhat different from the projections of 2017. Here's a review of what was, what is and what might be coming. The concept of coworking space was introduced in 2005, and it enjoyed a period of rapid growth a decade later. But today, although signals are mixed, the trend seems to be slowing. Flexible <a href="https://www.minnesotacommercial.com/blog/new-office-trends/">office trends</a> were innovative when first introduced, but by 2018, they were viewed as a "here-to-stay" portion of the office market. At that time, Bethany Schneider, Newmark Knight Frank associate director, wrote in a report that executive office suites constitute a major share of commercial real estate demand, and that coworking constituted about a third of Manhattan leases between 2016 and 2018. A JLL Survey at the time stated that 60% of corporate office space was underutilized, making coworking space sensible for a greater number of users. Worldwide, the trend today has evolved to a position, according to some who have monitored the phenomenon, where quality supercedes the quest for quantity. Coworking is still an innovative response to evolving business changes fostered by technology. Coworking spaces can offer amenities and services that are invaluable for solopreneurs and shoestring startups. Coworking offices, conference rooms, business services, amenities, telecommunication and secretarial options can create an illusion of "big company" to amplify public acceptance. Coworking spaces can also provide human contact and interaction as a springboard for new ideas. Looking Back In 2017, a Global Coworking Survey estimated that more than 1.1 million individuals went to work at 13,800 coworking spaces across the globe. At that time, the expectation was that the market would grow substantially by 2020. Specifically, three directions were noted: That the market for coworking spaces would extend into Middle America, where lower costs could be reasonably expected to boost the appeal of paying to rent shared desks and services rather than working from home; That industry-specific needs, particularly for IoT technology and facilities targeted to other startup specialties, would become a priority; And, that research pointing to the "melting pot" benefits of coworking spaces would continue to attract users eager to share creative concepts and tap into a wide pool of ideas. In the world of coworking business, names like WeWork, Greendesk and Impact Hub were originally considered luxury brands. They catered to targeted markets and focused on fulfilling a need for startups, entrepreneurial ventures and technology companies. The idea was that shared desks and conference rooms would bring people together in creative ways, eliminating the need for dedicated "brick and mortar" offices and wasted physical space. A year later, in 2019, the trends were viewed in a somewhat different manner. The underlying focus of coworking space, at least in the view of one coworking enthusiast, had shifted slightly from technology to community. Alberto Di Risio, acquisition marketing manager for Kisi, wrote that successful coworking businesses had demonstrated an important ability to cater to niche industries, and that industry-specific needs were more important than prime real estate or a complete roster of available services. While he viewed <a href="https://www.officernd.com/blog/coworking-technology/" target="_blank">technology as a vital part of the co-working model</a>, Di Risio believed that software solutions and advanced technologies should remain flexible and adaptable. To carry that a step further, other analysts pointed to a developing interest in targeted spaces: coworking offices for women only, or rural coworking, spaces for parents only that might include childcare facilities, and coworking spaces for specific businesses that would benefit from enhanced networking opportunities. 2020 and Beyond Even as the past couple of years have brought many <a href="https://www.minnesotacommercial.com/blog/market-perspective-consultant-predicts-changes-ahead-for-commercial-real-estate/">changes to the commercial real estate market</a>, most analysts seem to agree that flexible office space is a concept that is here to stay. From among the scenarios that were envisioned a couple of years ago, moderate projects for growth seem the most viable. The truth is that changes and adjustments in the market are always based on outside influences: the economy, new technology, global trends, and political uncertainty. The trends that seem to be dominant in early 2020, however, also conform to previous expectations in important ways: New Directions in Shared Space With the current growth of <a href="https://www.minnesotacommercial.com/blog/farming-the-city-new-trends-in-urban-agriculture/">urban farms</a> and farmers markets, a corresponding growth of commercial kitchens and cooperative distribution networks is a growing trend in major metropolitan areas like the Dallas-Fort Worth Metroplex. Although not flexible work spaces in the traditional sense of desks and conference rooms, fully equipped and licensed kitchens serve the needs of small bakers, producers of artisanal jams, jellies, salsas and sauces, and even food stylists and cookbook authors with a need to test recipes. Some also have tasting rooms and demonstration kitchens. A second new development in the culinary market stems from the needs of small-volume producers of specialty food products. Shared distribution capabilities simplify marketing and delivery of products like artisanal lettuce and salad greens, mushrooms, local tomatoes, edible flowers and specialty bread to end users, usually local chefs and restaurants. It's not traditional, but the business model relies on shared technology and a central warehouse and delivery system that is designed to meed a specific need. In this case, it's the trending new generation of farm-to-market commerce. Learn-Work Centers Another new concept that holds promise represents a kind of back to the future reimagining of mentorship and interning. In some school districts, students enrolled in career and technical programs shadow professionals at their workplaces, whether an office or a welding shop. In some areas, unique facilities are being built to give students off-campus training in specific trades. In cooperation with local businesses and industries, the financial burden is shared and the result is a supply of interested new job applicants for the future. It's an exciting use of shared space, knowledge and resources. Hybrid Coworking Spaces Similar but different, <a href="http://www.deskmag.com/en/hybrid-coworking-space-design-the-hub-clubworkspace-london-697" target="_blank">hybrid spaces</a> can serve one need during part of the day and transform to meet other needs for a specific portion of time. The possibilities are endless. Just think about it: from a professional recording studio to an after-hours small-audience performance venue, to a professional kitchen to a pop-up gourmet dining experience, to a high-tech conference room or a technology-training classroom. Even if the growth rate continues to slow, it seems certain that the future of coworking spaces remains bright for commercial real estate. It will undoubtedly be different, but it should be better than it was ever imagined. 2019-12-11T19:58:00-07:002022-05-13T08:01:50-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19388Update on the Office Market: 2019 Gains Forecast <img class=" img_box_right" src="/wp-content/uploads/2022/07/update-on-the-office-market-for-2019.jpg" alt="Office Gains Are Part of Twin Cities CRE Good News" />Even though there were some mixed signals earlier in 2019, the <a href="https://www.minnesotacommercial.com/minneapolis-commercial/">Minneapolis</a> and <a href="https://www.minnesotacommercial.com/st-paul-commercial/">St. Paul</a> office forecast for the year is expected to remain strong, performing better than the national average. The summer Yardi-Matrix Report provides an in-depth glimpse at local market activity for the first six months of the year. Key Points of Pride Although the report notes that year-over-year sales activity was somewhat slower in June, overall the annual gain is expected to exceed 2018's $1.4 billion volume, an impressive achievement. And that's just the tip of the iceberg in terms of good news for the Twin Cities market. The local market is seen to be strong, no matter what specific numbers are examined: <a href="https://www.minnesotacommercial.com/blog/new-office-trends/">Demand for office space</a> remains high; Asking rents moved higher by 1.5 percent during the second quarter, earning a place among the highest in the nation; Absorption rates remained "healthy," with the local vacancy rate of 12.6% among the lowest nationally; Gains in office employment were only modest, but they were positive; 1,200 jobs were added in the office sector for the one-year period that ended in May. A gain of 2,000 in the business-professional sector was impacted negatively by a loss of 600 jobs in financial services and 200 jobs taken from the information sector. <a href="https://www.minnesotacommercial.com/blog/construction-outlook-still-strong-for-2018/">Construction remains steady</a>, with approximately 550,000 square feet of space expected to be completed by the end of the year. As of the end of June, more than 2.1 million square feet of new space is under construction. Finally, pre-leasing activity was strong, especially with the larger projects. Prior to groundbreaking, commitments were reportedly in place for more than 85% of the planned 530,000 square feet of space at the CBC Gateway Project. Employment The Twin Cities area remains a tight employment market, according to the report. At the end of May, office-using jobs represented approximately 25.5% of the total area employment pool, compared with a national average of 21.5%. The growth was just 0.2%, said to on par with the national average. Additional job cuts are forecast in the financial services sector, which may be counterbalanced by expected growth in information technology jobs; for the time being, the business and professional services sector remains strong. However, despite a focus on retention of educated younger employees in the fields of information and technology, growing numbers of younger workers are leaving the area to seek more lucrative or more exciting employment elsewhere, especially on the West Coast, according to the report. Whether additional targeted funding from public and private sources can stem this potential talent drain is currently uncertain. If the employment situation tightens further, future numbers might be impacted. Construction and Development <a href="https://www.minnesotacommercial.com/blog/construction-begins-on-multi-family-housing-project-in-bloomington/">Multi-family construction</a> in the central business district, much of it in the form of renovation of older downtown Minneapolis commercial space, has superseded office development for several years. The residential sector is expected to dominate the market, but a combination of need, pricing and a growing trend for business to return to the city's core might boost new office development. However, changing business trends continue to redefine the kind of space that will be of interest to current and future employers. And, the recent announcement by WeWork, could also affect the development of co-working and alternative office space. Overall <a href="https://www.entrepreneur.com/article/246857" target="_blank">office lease rate average</a> was $26.44 a square foot as of the June report; the average asking rate for Class A space was $29.51, with an average of $22.61 per foot for Class B assets. South Central and West Minneapolis, along with St. Paul's CBD, are currently the areas that command the higher prices, with lower asking rates available in eastern Washington County and near the airport. Based on current activity, the supply of new office space will grow by about two percent when completed, adding 2.1 million square feet to existing inventory. A staggering 4.5 million additional square feet of office space was in pre-development, planning or permitting stages as of the end of June. The two largest projects currently underway include the continuing renovation of the former Dayton's Building in downtown Minneapolis, and the 37-story tower that is to be the RBC Gateway. Together, they will add nearly 5.5% to the city's office inventory by the end of 2021. United Properties is involved in both projects. The mixed-use development that includes the RBC Gateway will also feature retail and residential space as well as a new Four Seasons Hotel. No matter how one views the commercial real estate picture in the Twin Cities, the forecast for the future remains bright, despite a few bumps in the road for the office sub-market. The six-month Yardi-Matrix review is positive on all counts. Based on reviews of other sectors, 2019 will close as a good year. 2019-12-11T19:17:00-07:002022-05-13T08:01:50-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19387Ag-Tech: A New Focus for Investor Dollars? <img class=" img_box_right" src="/wp-content/uploads/2022/07/investing-in-agriculture-technology.jpg" alt="Does Agriculture Represent a New Direction for Real Estate Investment?" />It shouldn't come as much of a surprise that the Twin Cities, and the state of Minnesota overall, would be a focal point of innovation and startup funds for agricultural and food-related enterprises. After all, both are well within local tradition and culture, and the Midwest is all about farming and food. But somehow, until relatively recently, what is now termed "Ag-tech" hasn't gained a lot of traction with business investors. Likewise, commercial real estate investment has traditionally not included much in the way of agriculture. Farming, no matter how it's performed, is often deemed risky business. Agriculture is still sometimes viewed as "not business," and the thought of modernizing with anything other than sweat and hard labor has been long in coming. But that's all changing. The perception is well on its way to disappearing in some areas, with alternative <a href="https://www.minnesotacommercial.com/blog/farming-the-city-new-trends-in-urban-agriculture/" target="_blank">urban farming methods</a> springing up all across the globe. Aquaculture, hydroponics, aeroponics, aquaponics and high-rise soil-free farms are sometimes hailed as the latest revolution, touted as the food production model that will save the world's population from starvation. Ag-Tech Investment "Healthy" Recent studies have shown that ag-tech investment is growing at a steady pace—everything from funding for drone companies to manufacturing of the specialty grow-lights that make high-rise "ponics" growing viable. In addition, investment capital for urban farms is no longer an impossible dream. Continental Grain Co. (CGC) is a major player. Chris Abbot, as co-leader of CGC's venture capital arm, is bullish on the Midwest as the hub for innovation in food and agriculture, noting that South Carolina and San Francisco are also extremely active markets. Abbot believes that universities are key components that will fuel the growth, noting that positive "cross-pollitation" occurs between academic and business communities. The <a href="https://twin-cities.umn.edu/" target="_blank">University of Minnesota</a>, with its distinct Minneapolis and St. Paul campuses, can be at the forefront of local growth efforts, he believes, just as the University of Iowa in Ames has been successful in combining "domain expertise and university talent." However, Abbot also believes that Minnesota must scale up its efforts in order to retain a location advantage. He cautions that if current momentum isn't sustained, the local market risks being displaced. Mixed Signals Urban Aquaponics, an ambitious aquaponics startup venture that began operations in a 9,000 square-foot space at St. Paul's former Hamm's Brewery five years ago, ceased operations this year when it lost the financial backing of corporate giant Pentair. It was hailed as one of the most "up-to-date aquaponics facilities in the world" by its founders when it began operations in 2014. It closed in May, after expanding into 87,000 feet of space at the Schmidt Brewery complex. The Pentair announcement simply said that the <a href="https://www.minnesotacommercial.com/blog/eliminating-food-deserts-aquaponics-in-the-city/" target="_blank">aquaponics farm</a> did not live up to its expectations. Pentair, at last report, still holds title to the property, although no plans have yet been announced for a new use. That is just one failure that resulted in the loss of only 27 jobs, but it created a buzz in the investment sector, affected the rejuvenation of a significant real estate transformation, and also impacted the future of alternative farming. Similar urban farms have also closed in recent years in cities like Milwaukee and Dallas. Universities and even high schools, however, continue to point to sustainable farming and soil-less growing as the solution to providing food for the world into the next century. 2019-11-27T19:23:00-07:002022-05-13T08:01:50-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19386Where Has All the Parking Gone? <img class=" img_box_right" src="/wp-content/uploads/2022/07/where-has-all-the-parking-gone-in-minneapolis.jpg" alt="Will New Buildings Rise from Current Minneapolis Parking Lots?" />What used to be surface parking in downtown Minneapolis has virtually disappeared, transformed into new condos, apartments and offices, according to a recent report on available development tracts in the heart of the city. More than 63 acres of undeveloped land existed in the downtown core a dozen years ago, according to a recent Business Journal survey. Today, after a decade-long building boom, less than 20 acres remain undeveloped, and the word is some of the landowners are simply not interested in selling. Whether that's good news or worrisome depends on which side of the development table one sits. Actual versus Potential The apartment and condo market has been particularly strong in downtown Minneapolis in recent years. The trend continues, and the <a href="https://www.minnesotacommercial.com/blog/high-rise-condo-development-in-minneapolis/" target="_blank">luxury condo market</a> appears to be especially exciting right now. However, <a href="https://www.minnesotacommercial.com/blog/new-office-trends/" target="_blank">newer office space</a> absorption seems to be slowing somewhat due to changing needs for business space. The timeline for major redevelopment projects, including high-profile plans, have been delayed, as the former Macy's renovation is behind the original schedule for completion. New tenants are seemingly more difficult to lock in. But none of the negatives seem to have affected the potential for future growth and development of the city's downtown area. In fact, continuing interest and activity in the urban core seems stronger than ever before. What's Underway and What's Possible? Currently, more than seven acres of formerly open space is earmarked for new projects. But, of the tracts not currently under active development consideration, the breakdown is more difficult to categorize. Available property exists primarily along Hennepin Ave. in <a href="https://www.minnesotacommercial.com/hennepin-county-commercial-real-estate/" target="_blank">Hennepin County</a> and in the eastern portion of downtown Minneapolis. Only two tracts are still available in the Skyway area: one is just over eight-tenths of an acre; the second of approximately two acres occupies almost a city block in a prime area near the Campbell Mirthun Tower. The owner notes office development is the sensible target for that tract, but it's currently difficult without a potential tenant in place prior to development. Baker Investments Ltd. owns another tract at Hennepin and Fifth St., and notes the same concerns, even though they are interested in the possibility of a joint venture or a direct sale to a developer. In the past, the firm has toyed with development options, but found none to be viable at the time. Baker, notably, sees the value of turning current surface parking lots into higher-use developments, adding the economic return from the parking business is "good, but not great," and a better use would be multi-family housing, based on the service, maintenance and property tax dollars currently spent on the land. Future Teardowns Envisioned Other local real estate observers, and some developers, see a resurgence of teardown activity, which will help transform downtown Minneapolis into the higher-density environment some city planners view as necessary. There is no doubt the dynamics of downtown development are changing. Some buildings ripe for redevelopment are currently government-owned, and they may be first on the list of "new use" targets. Both city and county officials are involved in efforts to streamline their departments by moving operations to newer, more efficient locations. Low-rise buildings, which have been able to accommodate relatively few employees, will give way to new ground available for development as the consolidation of the work force occurs. As just one example, Hennepin County's current <a href="https://casadeesperanza.org/directory/name/hennepin-family-justice-center/" target="_blank">Family Justice Center</a> is expected to be offered for sale in 2020 or 2021, according to a county spokeswoman. The City of Lakes complex currently occupied by the city is expected to be left empty when employees move into a new building currently under construction near City Hall. The city will reportedly open a Request for Proposals this fall on the three buildings occupying a 1.6-acre tract at Third Ave. and Fourth St. No matter how one views it, the changes occurring in Minneapolis are interesting. Some of the current owners of surface parking lots say they have no interest in selling. A one-acre lot on the University of St. Thomas campus falls into this category. On the other hand, other owners, including the First Baptist Church of Minneapolis (who holds title to a slightly larger than one-acre tract), have entertained several offers, which have not progressed past initial conversations. As land becomes even more scarce, it will surely become more valuable on the open market. What occurs after might be anybody's guess. At this point, only one thing is certain: Minneapolis is in the enviable position of having a vibrant downtown development boom, and it seemingly is poised to continue - at least for the foreseeable position. 2019-10-30T18:09:00-07:002022-05-13T08:01:50-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19385New Office Trends to Attract Tenants <img class=" img_box_right" src="/wp-content/uploads/2022/07/what-to-know-about-new-office-trends.jpg" alt="A Diverse Work Force Demands New and Innovative Office Amenities" />Tomorrow's office buildings are going to be different. Designers and architects, as well as construction professionals and property managers in <a href="https://www.minnesotacommercial.com/dakota-county-commercial-real-estate/" target="_blank">Dakota County</a>, recognize the growing emphasis on building health and the needs of a multi-generational work force. Amenities are the name of the game for offices of the future, but the expected perks may vary depending on the age of the work force. Millennials are known to love their coffee, while other workers prefer game rooms or multi-purpose break rooms where they can unwind and enjoy a little personal time. Some simply zone out with a video or video game. Older workers, including Baby Boomers not ready to retire, appreciate rooms where they can gather with coworkers to socialize, network, toss around ideas or simply relax. Young executives and overstressed professionals appreciate workout rooms, meditation spaces and nap pods. Personal health is as vital as building health to offices of the future. But what exactly does that entail? Aside from a greater emphasis on sustainability, energy-efficiency, air quality and attractive, durable materials, some modern amenities are viewed as creature comforts in the workspace, a means of humanizing the environment and adding therapeutic benefits to the work space. It's a new and emerging science with a holistic approach to what, in <a href="https://www.minnesotacommercial.com/blog/technology-millennial-mindset-spell-big-changes-for-business/" target="_blank">millennial terms, is viewed as "work-life balance."</a> Adaptable space—for both work hours and after-hours use—is one feature that has attracted the attention of business leaders. Options for daycare or after-school activities for teens and part-time employees are new ideas designed to attract future workers. Some companies view sports courts and sponsorship of teen enrichment programs as employee recruiting tools. The Twin Cities Scene Popular amenities in downtown Minneapolis office buildings, however, sometimes have more to do with the location and the weather than with employee individuality, and they cut across all age groups. The <a href="https://www.minnesotacommercial.com/blog/suburbs-vs-urban-core/" target="_blank">popularity of urban</a> condos and apartments situated close to downtown work centers has led to some distinctive amenities. While onsite conference centers and employee collaboration space is high on the list of desirables for urban workers, there are other employee benefits that are cherished in this market. They include: Skyway Connectivity: Both summer heat and humidity and inescapable northern winters make existing downtown skyways convenient, even if not actually necessary. They are certainly well-used, much appreciated, and a bonus for downtown office workers. A location with access to the climate-controlled maze of urban walkways is considered a business bonus well worth a higher leasing rate. Bike Storage: Even though downtown Minneapolis is relatively compact and reliable mass transit is readily available, urban core dwellers love the convenience of being able to bike to work. Offices that provide secure bicycle parking areas or indoor bike and gear storage provide an extra perk for fitness-oriented employees. Property managers and leasing agents find that bike storage is almost as much a selling point for potential tenants as onsite auto parking. Fitness Centers: It's true that employees spend longer hours in the office than ever before. It's also true that keeping fit is as good for the mind as for the body, and that a brief stint with a stationary bike or on the basketball court can be a refreshing break from business stress. Newer office building developers are aware of the need to nourish both body and brain, and are increasingly specifying state-of-the-art <a href="https://www.activewellness.com/blog/6-ways-an-on-site-fitness-center-rejuvenates-a-company" target="_blank">employee workout rooms</a> along with health-conscious cafeterias or snack centers on their list of business-oriented amenities. Outdoor Space: Another outgrowth of the new holistic philosophy that surrounds the work environment, the need for green is accepted by city planners and architects, the medical and psychological community, and by corporate leaders as a cost-effective and viable way to boost morale and improve employee retention rates. Even if a relaxing, accessible outdoor space is impossible, a pleasant outdoor view can be an acceptable substitute. A growing number of new office buildings, however, include roof decks, indoor landscaped atriums, or private gardens as design features. Flex Space: Cubicles are disappearing in favor of open space with or without movable partitions. Comfortable couches, table desks and informal sitting areas can be used for solitary work, networking sessions or small-group meetings. Mobile technology has made personal work-style preferences a viable option for many types of business, and newer office complexes will include at least some flex space in the floor plan. Access to Services: As regular office hours in some fields give way to alternative schedules, more employees find the need to sandwich other life activities into their business day. Mixed-use developments, of course, cater to these needs, but other companies provide different kinds of access to varied services, including meal and grocery delivery, complimentary Uber services to run errands, dry-cleaning pickup and delivery, and even mail order and package delivery stations. The changing world of business is exciting, and smart business owners, as well as commercial property managers and real estate leasing agents, will join forces to respond to new innovations. 2019-10-16T18:32:00-07:002022-05-13T08:01:50-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:193846 Things to Know About Buying Commercial Real Estate <img class=" img_box_right" src="/wp-content/uploads/2022/07/what-to-know-about-buying-commercial-real-estate.jpg" alt="What Everyone Needs to Know About Buying Commercial Real Estate" /><a href="https://www.minnesotacommercial.com/blog/commercial-vs-residential-real-estate-which-type-of-investment-is-right-for-you/" target="_blank">Commercial and residential real estate</a> transactions differ greatly. <a href="https://www.minnesotacommercial.com/crow-wing-county-commercial-real-estate/" target="_blank">Crow Wing County</a> buyers will notice big differences in everything from acquiring financing to negotiating the purchase terms. They can prepare for this process by using this guide to learn all they need to know. That way, they can find and acquire their ideal commercial property with confidence they are taking all the right steps. For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction. Balloon Mortgages are the Most Common Financing Option To finance the purchase price of a commercial property, buyers must approach a bank or other lender to learn about their loan options. For commercial property purchases, most lenders will offer a <a href="https://homeguides.sfgate.com/mortgage-loan-balloon-payment-2942.html" target="_blank">balloon mortgage</a> agreement to those who meet their eligibility restrictions. Unlike typical 15 to 30 year residential mortgages, this type of loan only stretches across five to seven years. Once the term ends, the remaining loan balance comes due immediately, demanding a lump sum payment at that time. If that arrangement will not work for their needs, buyers can try these commercial real estate financing options: Commercial bridge loans Small Business Administration commercial real estate loans Crowdfunding Since commercial properties sell fast <a href="https://www.minnesotacommercial.com/blog/marketing-your-commercial-real-estate-property-6-tips-for-marketing-success/" target="_blank">once they hit the market</a>, buyers should have financing secured before starting their search. Otherwise, they could miss the chance to buy their ideal property. Always Check Zoning Ordinances Every city segments the land into distinct zones designed for a specific purpose. Commercial and residential property owners must abide by the regulations for those zones. Since this could limit business owners' operations in many ways, they must check the zoning ordinances for every property under their consideration. While looking into zoning, they must pay close attention to see if there are any applicable: Easements Covenants Exaction clauses In addition, commercial properties can have variances and other clauses that allow the current owner to use the property outside the zoning regulations. Once the property changes hands, however, those clauses tend to disappear, reverting the location back to the original zoning terms. Price Goes Well Beyond the Structure Location is everything and that goes double for commercial properties. In fact, a building in a high-traffic, desirable location can go for several times more than similar properties in less desirable areas. Buyers need to weigh the benefits of running their business from that location versus the overall value of the building and lot. If their venture does not rely on being in a central location, however, they can likely get away with a cheaper commercial property a little bit off the beaten path. Always Acquire a Building and Property Inspection Buyers should always have a commercial property inspected before making the purchase. Through an inspection, they can learn about all the work the building and grounds need before it can be used for its intended purpose. The inspection should occur after offer acceptance, but before closing. They may need to negotiate for additional time beyond the standard 21 days allowed from offer to closing. This is especially true if the property needs issues addressed by a contractor and another inspection performed before it can close. The need for zoning variances complicates matters further, especially if the city is slow to respond. Negotiating for more time allows buyers to overcome these issues while still acquiring the protections afforded by an inspection. There is Plenty of Room for Negotiations When buying commercial real estate, there is plenty of room for negotiations. Buyers can adjust the terms to suit their needs, ensuring the purchase provides enough value. But before going into any negotiations, buyers need to have their budget and ideal terms in mind. Through effective negotiations, it is possible to secure a lower purchase price and even increase the buyer's chance of having the winning bid. One way to make offers look more lucrative is to include an escalation clause, which allows the price to creep beyond the asking price and competitors' bids. Real Estate Agent Representation is a Must Real estate agents can build the escalation clause into the offer and provide all the support buyers need to find and purchase their ideal commercial property. They are skilled in verifying the zoning ordinances and other terms will work for the buyer's intentions for the property. They are also valuable in defining the terms in negotiations and netting a lower purchase price. Real estate agents can even verify the property is described properly in all related documents—and ensure buyers have enough time to complete a full inspection. As they provide support every step of the way, buyers can better understand the process and move forward in completing their real estate purchase. By taking all these considerations into account, buyers can find and buy the commercial real estate of their dreams without worry about things going awry. They can practice their due diligence and avoid making mistakes that could derail all their efforts. For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction. 2019-10-09T21:08:00-07:002022-05-14T12:11:15-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19383High Rise Condo Development: The Future of Downtown Minneapolis? <img class=" img_box_right" src="/wp-content/uploads/2022/07/high-rise-condo-development-in-minneapolis.jpg" alt="Living in the Clouds: Elevens Condos Will Soar 41 Stories" />At 41 stories tall, Eleven will become the tallest residential building in Minneapolis, dwarfing <a href="https://www.nps.gov/miss/planyourvisit/stanfall.htm" target="_blank">St. Anthony Falls</a> and the Stone Arch Bridge over the Mississippi that it will overlook. Its condos, beginning at $900,000 for a 1,400 square-foot unit, will be among the city's priciest. But they will be unique, according to Mike Ryan, market president of Ryan Cos., the developer that is partnering with Luigi Bernardi's Arcadia to construct the tower. Ryan calls the units the equivalent of "a single-family home" in the city's downtown core rather than "a really nice apartment." Construction was slated to begin this month. The building reflects Bernardi's vision for "something different." A Twin Cities area developer for more than 40 years, he and his father originally worked in the clothing business before veering off into real estate. His father once owned more than 5,000 apartments, but the son built his Edina-based company in <a href="https://www.minnesotacommercial.com/hennepin-county-commercial-real-estate/" target="_blank">Hennepin County</a> on shopping centers and medical office buildings, more recently shifting attention to multi-family ventures as well as a 10,000-square-foot retail center in Edina. He and his wife, now empty nesters, currently live in downtown Minneapolis. Bernardi says he was intrigued by the prospect of luxury urban core housing when he realized that recently completed apartments seem to "all look the same." When the land that Eleven will occupy became available, he seized the opportunity to move in a new direction. The New Appeal of Urban Luxury Robert A.M. Stern Architects of New York led a team of five additional local architects to develop the interiors, giving buyers a choice of three design options. Most units feature corner 14X14-foot balconies that will have overhead heat lamps to counteract the chill of Minnesota winters. An outdoor "amenity deck" will feature a 25-yard lap pool, children's splash pad, firepits and yoga area on the stepped-back eighth floor of the building. Although floor plan and unit size details of the new condo residences are scarce, it is said that some of the urban condos will stretch across an entire floor, and a single penthouse will occupy the top two floors of the building. However, the building's footprint is relatively modest, with actual square footage only 12,500 on lower floors, scaled back to 6,800 square feet per floor at the top. Sales have already begun, from a center installed last May in Ryan's office building near the U.S. Bank Stadium. There's a scale model of the entire building, as well as a furnished model condo and full-size renditions of two kitchens. Sales center staff can, with the push of a button, light up any unit in the model building and then, with the <a href="https://www.minnesotacommercial.com/blog/how-is-technology-changing-commercial-real-estate/" target="_blank">help of modern technology</a>, project a virtual view from any unit onto a television screen in the sales office. The 5,500 square-foot sales center, completed at a cost of $1.5 million, is almost as exciting as the condo tower itself, and it represents a first for this area. According to early reports, the reaction has been very encouraging, with the pool of interested future residents compising a mix of "downsizing boomers," younger people who <a href="https://www.minnesotacommercial.com/blog/downtown-minneapolis-growth-spurt-continues/" target="_blank">want to live downtown</a>, and current urban dwellers looking for something new, according to a spokesman for the Lakes Sotheby's sales team headed by John Wanninger. Looking to the Future Presale of Eleven's 118 units began in May, even though the first luxury condos won't be delivered until sometime in 2021. Bernardi, who sparked the initial idea for the residential tower, is among the first buyers. His new home, he says, will be on the 36th floor. When complete, the building at West River Parkway and 11th Ave. will stand 550 feet tall, and will also include ground-level retail space and, perhaps, a restaurant. Carl Runck, Ryan's director of real estate development, says that the project has "incredible momentum." Another planned condo tower on the other side of the river experienced similar enthusiastic response from prospective buyers when, in December 2018, it began preselling condo units in a building named Alia, to be constructed at 200 Central Ave. SE. It had been in planning stages for five years, but embroiled in a legal dispute with neighbors for more than a year. Even though a court decision found in favor of the developer, Alatus, the project is now on hold once more. The latest word is that a search for a new financing partner is underway, but there is no timeline and little current information is available. Also conceived as a luxury condo tower, Alia was to be a building of 40-42 stories, with more than 200 condo units ranging in price between $350,000 and $4 million. For now, the future of local high-rise residential development is housed in Eleven, but it remains to be seen what other projects might follow in the wake of this luxury upsurge in the downtown core. <br /> <br /> Condo development on this scale is new to the Twin Cities, and the effect is yet to be measured. 2019-10-02T18:22:00-07:002022-05-13T08:02:10-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19382Dinkytown: Is It Really Time to Grow Up? <img class=" img_box_right" src="/wp-content/uploads/2022/07/should-dinkytown-become-modernized.jpeg" alt="Another Major Dinkytown Development Seeks City Approval" />Dinkytown is a beloved, close-to-campus commercial district interlaced with low-cost student housing, that has served the varied needs of generations of <a href="https://twin-cities.umn.edu/" target="_blank">University of Minnesota</a> students but faces another attempt at modernization. Existing buildings in the vicinity would be demolished to make room for new development if a plan destined for review by the Minneapolis Planning Commission Committee of the Whole gains traction. <br /> <br /> CA Ventures, a Chicago-based developer, reportedly envisions high-rise development that would not only occupy an entire block in the heart of the diminutive funky center of Dinkytown, but that would displace the existing Golden Arches that have been a feature here for decades. The planned new construction, based on currently available information, would include a single building up to 25 stories tall, or two towers that could reach 16 stories in height, with up to 370 rental dwelling units, ground-level retail space and 240 parking spaces both on the surface and below grade. The tract proposed for the new tower is slated for 15th Street, in the heart of Dinkytown, just a block from the main campus of the University of Minnesota. How Dinkytown Came to Be Currently a warren of low-slung old brick buildings, the character of the district relates to the stories rather than any architectural significance. Retail coexists with small eateries amid aging structures. Some established businesses have survived several decades; others come and go regularly. But the ambience remains, and Dinkytown's diverse history predates the campus itself. As the first commercial district in the vicinity of the U of M campus, development has been somewhat organic, depending on student and faculty needs that existed at any particular time. There was once a rail line that dropped passengers near the Pillsbury Gates, the main entrance to the University's main campus. Professors occasionally lived in Dinkytown, as did some students, occupying second-story rooms above local shops. Local coffee houses, candy stores and ice cream parlors shared buildings and sidewalks with bookstores, music studios and small restaurants. There once was a high school at one end of Dinkytown, and a branch of Minneapolis' retail giant: the Dayton's University Store. During the height of the Vietnam era, Dinkytown was the center of student protest activity, and even gained national attention. Bob Dylan (Robert Zimmerman from Hibbing) lived above a drug store during his stint as a student, between 1959 and 1961, and played music regularly at the 10 O'Clock Scholar, before giving up his studies and heading for New York and fame. The coffee house moved to the West Bank in 1965. In 2015, much of the <a href="https://www.minnesotacommercial.com/hennepin-county-commercial-real-estate/" target="_blank">commercial area within Hennepin County</a> was designated a commercial historic district by the city. Land parcels and existing buildings dating from 1899 to 1929, situated around the intersection of 14th Ave. and 4th St. Southeast, are included in the designation, and well-known buildings constructed in later years were specifically mentioned in the documentation. The aura and appeal of Dinkytown still exist, and local sentiment to preserve the area much as it has always been is strong. The Pros and Cons of Change Students who live in fraternity houses along University Avenue and various sorority chapter houses, rooming houses and apartments abutting Dinkytown frequent the district, and it is convenient to residents of the Marcy-Holmes neighborhood just to the east. McDonald's Corp. is the largest land owner to be affected by the contemporary development proposal. Their stake is a 0.63-acre tract that holds the current two-story restaurant with its adjacent parking. It is the latest and thoroughly modern incarnation of the iconic walk-up burger and fries outlet that opened on a Dinkytown corner in the early 1960s. Although CA Ventures has not yet secured the land, it has already completed a similar project only about a mile away in Prospect Park. However, this is not the first time that a face-changing plan has been proposed, without success, for Dinkytown. Previous plans for a hotel, a 16-story apartment tower, and other ambitious plans over the years have met with neighborhood opposition, been delayed or derailed by the economy, or simply fallen out of favor for other reasons. Sleepy Dinkytown has really not seen a great deal of development in recent years. But, this proposal may be different. Two options are said to be viable, one for a single tower of about 13,000 square feet, and another for two buildings, each lower in height, but with more total interior space, yielding more apartments. Part of the historic opposition to such proposals has been the question of need <a href="https://www.minnesotacommercial.com/blog/truth-or-fiction-facts-about-the-twin-cities-affordable-housing-crisis/" target="_blank">additional housing</a>. Another concern centers around the affordability of such housing for University undergrads. Previous plans seem to have envisioned units targeted to graduate students or for faculty and staff. Perhaps only time will tell. And that time, according to some reports, may drag on. One source notes that it could be 8 to 10 weeks, at minimum, before the developer even completes the city's application process. For now, at least, it's business as usual in Dinkytown. 2019-09-18T20:57:00-07:002022-05-14T01:46:02-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19381Reverse Migration: Is Downtown the New Boom Town? <img class=" img_box_right" src="/wp-content/uploads/2022/07/downtown-redevelopment-possibe.jpeg" alt="Urban Office Development No Longer Means Strictly City Center" />Is it a relatively unique phenomenon or a lasting trend? A growing number of area companies have already, or are planning to consolidate their workforce in <a href="https://www.minnesotacommercial.com/blog/downtown-minneapolis-growth-spurt-continues/" target="_blank">downtown buildings</a> within the coming year. St. Paul-based Merrill Corp. will relocate more than 300 employees to two buildings of the former Baker Center in downtown Minneapolis by early 2020. Stantec moved approximately 175 employees from Roseville offices to new quarters in Baker Center in early 2019. These are no longer isolated occurrences. McDonald's moved from its suburban campus to downtown Chicago last year. Millennials are sometimes credited with the shift in corporate real estate. Not yet ready to settle in traditional suburbs, this is the generation that seeks work-life balance, and they are serious about making time for culture and entertainment, leisure activities and family life. They do, however, want it all close by. They embrace the opportunity to live within walking distance of their offices, and they want their shops and restaurants convenient and easy to get to quickly. The Changing Face of 21st-Century Business Even though other high-profile firms boast about the benefits associated with decentralization, going virtual, and their newfound ability to downsize physical space requirements due to job-sharing, remote work options and flex-scheduling, an increasing percentage of large companies is moving in the opposite direction. Many firms are moving, once again, to the urban core. A second, equally interesting, destination for businesses trying to boost employee engagement and satisfaction, is the corporate campus. Numerous business centers exist on what were once the borders between a sprawling metropolis and surrounding bedroom communities. Over time, some of these fringe business developments have become small cities in their own right, featuring landscaped grounds and amenities that include shopping, restaurant and entertainment options, sports facilities, parks and green space, and nearby residential housing. In places like Dallas, Minneapolis, Newark, Boston and Chicago, these one-time suburban business centers are being reexamined and reborn. They are being redesigned—and rebuilt—to include not only commercial renovations, but also abundant new features. A 120-acre former AT&T headquarters in suburban New Jersey has been envisioned as a future "Metroburb," according to enthusiastic planners. Rather than continuing to exist as a workday-only business center, it is viewed as an example of what has always been deemed the best part of city life—a compact core with multiple opportunities to live, work and enjoy, all with an emphasis on multi-purpose diversity. Millennials, especially, embrace the idea of live, work and play space in a single location, with no need for a lengthy commute. But older workers, including Baby Boomers who choose to continue working, also appreciate the distinctive urban focus and pedestrian-friendly ambience. These cosmopolitan business communities have also attracted the attention of city planners, who are beginning to rethink metropolitan bus routes and light rail services. The result is a confluence of the best of old and older. These new centers are reminiscent of the small towns of America's past, at a time when commerce and community coexisted harmoniously. Residential condo towers, shopping, upscale dining options, health care, leisure and entertainment facilities, and even educational institutions all find a place in this innovative and creative emerging market. The Outlook for Business in the Twin Cities An example is the former <a href="https://finance-commerce.com/2018/03/former-target-campus-may-appeal-to-downtown-tenants/" target="_blank">Target West Complex in suburban Minneapolis</a>, now undergoing a $5.6 million renovation. It is a unique multi-story building rather than a corporate campus in the strict sense, but it is situated on a 27-acre site in the midst of lakes and green space, rather than in the center of a sea of concrete and parking garages. The prime property was purchased by the Opus Group in 2016, and new space is currently 82 percent leased, according to a spokesman. The first new tenant, Tactile Medical, is slated to occupy its new space in September. Existing letters of intent on the remainder of the office space should assure that the 307,000 square-foot building will be fully occupied early in 2020, according to the developer. <br /> <br /> Urban growth patterns have the effect of bringing former outlying locations closer to the center. Target first occupied the building on Minneapolis' western border more than 50 years ago, when it was the first major office building to be built outside the downtown core. Today, the location is considered ideal for employees. Residential neighborhoods are nearby, lakes and green space are adjacent, and the city's downtown business center is close enough to be convenient. A remodeled cafeteria features direct access to employee basketball and croquet facilities that were preserved from Target days. A tenant lounge occupies the top floor, with an adjacent rooftop patio. Each floor includes a glass-walled "bumpout" with a view of the downtown city skyline. Functional renovations retain the mid-Century ambience of the building, but embrace innovation, acknowledge the need for work-life balance, focus on convenience as well as efficiency, and incentivize out-of-the-box thinking. There is little doubt that the coming decade will usher in even more options for corporate expansion and <a href="https://www.minnesotacommercial.com/hennepin-county-commercial-real-estate/" target="_blank">commercial development in Hennepin County</a>. There is even less doubt that the generational shift will continue to influence not only how and where the way future business is transacted, but also the shape and the design of physical spaces that will contribute to a new and vital corporate culture. 2019-09-10T23:37:00-07:002022-05-14T12:04:06-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19379Rejuvenating St. Paul: A Vision Doomed to Fail? <img class=" img_box_right" src="/uploads/agent-1/can-downtown-st-paul-be-revitalized.jpg" alt="/blog/shopping-for-business-and-fun-at-st-pauls-former-downtown-macys.html /ramsey-county-commercial-real-estate.php" />A bold three-phase plan to forever change the character of St. Paul's riverfront, and its entire downtown, would add well over one million square feet of office space, hundreds of new apartments and condos, luxury hotel rooms, along with approximately 1,500 or more parking spaces and new access to the water from the city's current bluffs. This is in addition to those <a href="https://www.minnesotacommercial.com/blog/shopping-for-business-and-fun-at-st-pauls-former-downtown-macys/" target="_blank">changes at the former downtown Macy's store</a>. The dramatic plan originally received tentative approval from Ramsey County in November 2018. But there is still a lot of uncertainty surrounding the bold proposal. <br /> <br /> What is truth and what is hyperbole may be difficult to sort out. Even if the project gets started, will it reach completion? Reality of New Workspace Needs Ramsey County commissioners authorized a six-month due diligence study last November, and received an initial report in April 2019 from Los Angeles-based AECOM. Recently-announced details, which are nothing if not dramatic, could potentially cost upwards of $1 billion, and there is now some vocal pushback surrounding the feasibility of the ambitious project. Local commercial space absorption rates, according to at least one dissenter, do not justify a massive increase in office space. Existing vacancies might take a decade to fill, notes Transwestern Managing Partner Mike Salmen, whose company oversees leasing the space at the renovated Osborn 370 Tower. However, Brian Dusek, managing partner at AECOM, points out that some tenants have left the downtown area due to the lack of suitable Class A office space. He also claims that current vacancy rates are inflated, and that the rosy picture of available space includes some that isn't true Class A space. Dusek readily admits that challenges exist, but also says that the three-phase plan will put initial emphasis on downtown residential and hotel space, citing a need based on low multi-family vacancy rates and a history of rising rents. He also points to the past decade of corporate flight from the downtown area, noting that almost 20 years have passed since the last new office building was constructed in downtown St. Paul. There also is no availability of space for a major tenant, something that new office towers would provide. Additionally, a pending plan to relocate some state agencies from currently leased downtown space to a newly-built complex at the site of the <a href="https://www.bizjournals.com/twincities/news/2019/05/15/kraus-anderson-s-working-on-a-sears-development.html" target="_blank">former Sears building</a>, might seriously impact current and future need for office buildings downtown. However, that plan has not been finalized, and some proponents of new downtown development, including Dusek, point to the live-work advantages of the planned downtown project. Decades-Old Effort Is Complicated by Topography, Railroads As long ago as 1992, St. Paul recognized the need to address the riverfront's future. The current addresses redevelopment of the former West Publishing site and the former jail, both of which were razed by the country at a cost of approximately $17 million in order to make the sites more attractive to developers. Previous efforts over the years, including a previous request for proposals, have invariably failed. Part of the difficulty of redevelopment centers around topography. The Mississippi River bluffs adjacent to the building site constitute an elevation difference of approximately 80 feet from the downtown street level at Kellogg Ave. to the Shepard Road along the river. Other considerations center around existing rail traffic in the area. Three separate railroads would have to grant permission for air rights over their property for what is termed a "lid" over the tracks. Insurance costs to cover the liability of running trains through the finished development would invariably skyrocket. And there are other associated risks and concerns. The proposed land bridge would allow easier access to the river, eliminating the need to traverse the tracks, or negotiate vehicular traffic and steep bluffs. The often-ignored waterfront is slated to become a primary attraction of the newly-rejuvenated area. The land bridge would effectively expand the development area from the current five acres to 12, with parking stalls for at least 1,500 vehicles underneath. It is also expected to include green space, waterfalls and enhanced views. What is unclear is if any, or all, of these amenities would require public funding. More Answers Expected in July Officials posed a variety of questions to the developer, setting a tentative date of July 23 for a joint workshop between the country board and the developer. Officials expect a response to concerns that include disability access, specific design details, perhaps a more detailed timetable, and possible commitment of public funding to assist the developer. The country's redevelopment manager, Josh Olson, reports that AECOM seems committed and has allocated time, energy and its own funding to the project; they are already in negotiation with the railroads, he says, adding that he receives weekly updates on project progress. If the redevelopment is to proceed, the parking facility, scheduled to be located against the bluffs, would constitute the initial phase, followed by the first of four planned towers with 80 condos and a 150-room hotel, and a smaller 12-story, 400,000 square-foot office building. The next phase would include both apartments and offices, with the final tower slated for building and development at a later date. However, continued growth in commercial properties is expected to continue in areas outside of the downtown St. Paul core in <a href="https://www.minnesotacommercial.com/ramsey-county-commercial-real-estate/" target="_blank">Ramsey County</a>. 2019-08-08T01:59:00-07:002022-05-13T08:02:35-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19380Workplace Focus: Space Redesigns Aim to Reduce Stress, Boost Satisfaction and Performance <img class=" img_box_right" src="/wp-content/uploads/2022/07/office-environments-made-like-home.jpg" alt="Tomorrow's Workplace May Feature All the Comforts of Home" />Collaboration is a key concept in office design for the future, according to designers who are trying to respond to client demands for flexibility in the workplace. <a href="https://www.minnesotacommercial.com/blog/how-is-technology-changing-commercial-real-estate/" target="_blank">Technology</a> and altered business relationships, along with changing work force schedules have led to new demands for less formal offices, along with new spaces that can be used on a shared basis or reconfigured as needed. Notable Features of New Office Design Increased social interaction in the workplace is now viewed as a boon to creativity, boosting performance and helping to establish a <br /> positive corporate culture. Newer office layouts are more open; they also include dedicated space for employees to meet informally and comfortable areas dedicated to networking or brainstorming, in addition to lunchrooms and cafeterias. Some firms have installed media centers and game rooms in the workplace, while other corporate headquarters boast workout rooms, running tracks and "nap spaces." Today's workspaces are no longer the vanilla office buildings of the past, nor are they the cubicle-filled spaces deemed to be highly efficient only a couple of decades ago. While the "corner office" still exists for top-level executives, modern work spaces have broadened the scope, with colorful, light, art-filled rooms that have aesthetic appeal. Offices may not be like working at home, but they make it easier for dedicated workers to spend long hours away from home. These "happy places" pay dividends in terms of employee engagement, lower turnover, physical health and mental energy.<br /> <br /> Design principles that drive the changes stem both from new psychological studies and diverse employee input. Primary goals are to reduce stress levels, boost productivity, increase efficiency and contribute to job satisfaction, all items that contribute to the corporate bottom line. The strategy is not limited to office buildings; new design principles influence retail, manufacturing, warehousing and shipping facilities as well. In addition, technology affirms that healthy buildings—those that include beneficial natural light, improved air quality and temperature control, sound muffling, and access to the outdoors as well as pleasant interiors—are increasingly vital for profitable business. Some of these concepts are already in place or planned for Minneapolis workspaces. Expansion Can Build Connections In the <a href="https://www.limeade.com/2017/03/physical-work-environment-support-well-improvement/" target="_blank">workplace</a>, physical closeness can sometimes get in the way of true interaction. Ability Network, Inc. recently expanded from a portion of a single floor at Butler Square to occupy the entire ninth floor plus part of the eighth floor. The former space, because of a building design that includes two atriums, had seemed fragmented, with some awkward desk placements. Despite spreading out, the space renovation has fostered a new "closeness" among the staff, and increased the sense of community and connection. Additional work stations now include booths and couches as well as stand-up desks. Thirty-year old cubicles today feature lower dividers, with no loss of function. The result, instead, is a higher level of personal connection between employees, more networking, and enhanced "team spirit." The newly redesigned workplace also has relaxation and socialization benefits: A shuffleboard table, ping pong table and mini-basketball game encourage interaction and friendly competition. The software development firm specializes in simplifying technology systems for healthcare providers. Bud Matthews, president and general manager, notes that, despite an initial timidity about the new space, employees now fully embrace the opportunity to associate and interact with others. He adds that it is not unusual for a heated game of basketball to continue past quitting time, and that the new office space has enhanced the company's culture in a very real way. Flex Space and Color Highlight Design Gardner Builders, another local firm that recently doubled its square footage in Minneapolis' Baker Center, also opted for open space and modern design. With about half its work force primarily in the field and only coming to the downtown office on an occasional basis, there is little need for assigned desks to sit empty. But in the previous office configuration, there was inadequate provision for them to work while in the office. The renovated space now includes community work tables, unassigned flexible stations and comfortable gathering spaces that are suitable for solitary tasks or for meetings and brainstorming sessions. This firm opted to completely do away with private offices. Even the CEO, Bob Gardner, sits at an open workstation, and heartily endorses the idea of togetherness that the design fosters. Sliding glass doors and flexible blinds offer a degree of privacy and sound control. Gardner's influence in the design is evident in the recurring pops of color that enliven the space. They are a vibrant green, his lucky color forever, he notes. Green is also the company's branding choice. The space showcases the firm's ingenuity by utilizing common plywood and graphics, mixing sleek and rustic materials, and using color blocks as art. The space reinforces the notion that the juxtaposition of everyday materials with refined execution can be brilliant. These are just two examples of the exciting changes coming to Minneapolis and <a href="https://www.minnesotacommercial.com/dakota-county-commercial-real-estate/" target="_blank">Dakota County commercial workspaces</a>. There are certain to be more. 2019-08-07T21:01:00-07:002022-05-13T08:02:35-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19378Is the End of the Post-Crisis Boom at Hand? <img class=" img_box_right" src="/wp-content/uploads/2022/07/is-the-building-boom-over.jpg" alt="is-commercial-building-over for-the-twin-cities" />There seem to be abundant signs globally that the availability of cheap money that followed the financial crisis of a decade ago is ending, and that a slowdown in all real estate sectors will arrive sooner rather than later. But, is it true? And if a slowdown becomes reality, what effect will it have on Twin Cities development and the local economy as a whole?<br /> <br /> The answer is by no means simple, and opinions are far from united: Here's an overview from those who are trying to sort it all out: No one is yet predicting a crash, but signs of a softening are everywhere, despite record high prices and plenty, perhaps too much, financial liquidity. The opportunities, according to some, aren't in balance with the demand. The noted Chicago-based investor, <a href="https://en.wikipedia.org/wiki/Sam_Zell" target="_blank">Sam Zell</a>, notes: "There is too much capital chasing too few opportunities,” adding that real estate values are unclear, income is lower because of low interest rates, and investors are looking elsewhere. Volatility Spurred by Globalism In previous decades, the bulk of real estate investment dollars originated locally. Today, however, investment funds for a Minneapolis real estate development are as likely to come from Asia or China as from the United States. In addition, institutional investors with vast sums to place are in search of high returns, and they are extremely cautious about the potential risks of real estate investment, fearing a repeat of the previous meltdown. A record-high sum of available real estate investment capital exists, but real estate prices are nearly 50 percent higher than in 2007. A spokesman for Morgan Stanley's real estate investment division explains that the firm is looking at investment with a focus on "downside protection." Other analysts point to a sense of desperation on the part of worldwide investors, pointing to the growth of special markets that include student and retirement housing, healthcare building construction and other unique markets. In many locations, including Minneapolis, ambitious new retail and office development has stalled, while investors seek pre-construction commitments from potential tenants, and/or additional governmental incentives. Many investors see potential cracks in the system, fearing that instability and lightly-regulated debt funds are creating new bubbles with a potential to burst, according to Judith Evans in London, writing in the Financial Times. Developments Closer to Home Dayton's Redevelopment: Minneapolis The timeline for the major redevelopment of the former <a href="https://www.minnesotacommercial.com/blog/progress-slow-finding-a-balance-for-daytons-renovation/" target="_blank">Dayton's flagship</a> in downtown Minneapolis has now been pushed back, and no new project announcements have been made other than for the planned food court of the 1.2 million square feet of space. When plans were announced for the redo, the new Nicollet Center was heralded as a breath of fresh air for the city, with new retail space joining offices, eateries and entertainment venues to bring new life to downtown. However, office vacancies in the central business district at the end of 2018 held at almost 20 percent, and new retail enterprises have been slow to commit to the plans. The former Dayton's building has stood empty since the store's closure in 2017; original plans called for parts of the refurbished building, including the food court, to open in 2019, even though it was acknowledged at the outset that it was a long-term project. Riverfront Redevelopment: St. Paul The visionary $900 million mixed-use update along the <a href="https://www.minnesotacommercial.com/ramsey-county-commercial-real-estate/" target="_blank">Ramsey County downtown commercial </a>riverfront that won the approval of Ramsey County commissioners in late 2018, has run into some potential snags, even as AECOM, the developer, unveiled more plans to the county board just recently. In fact, AECOM was faced with more questions about details of the plan, and some have voiced an opinion that the redevelopment will never occur, at least not as currently envisioned. In fact, this is the fourth such effort to modernize the riverfront presented to authorities since 1992. The current plan would be built in stages, with a massive parking ramp slated to go under residential and hotel space and office towers, as well as an eight-acre landscaped park and other public realm development. The distinctive plan would alter the city's skyline, with one of four proposed towers to become St. Paul's tallest, at 40 stories. The proposal also features a massive "lid" over existing topography, and would provide more ready access to the river from the current bluffs that stretch down to the water. If approved in its entirety, the project will continue well into the next decade, according to the out-of-state developers, who view it as both challenging and catalytic for St. Paul. These are just two of the Twin Cities projects that bear watching over the next year or two, in terms of investment, development and the future of local real estate opportunity. Even if the boom is over, exciting times seem to be ahead. 2019-07-10T20:34:00-07:002022-05-13T06:21:25-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19377Retail Renaissance: Fact or Fiction? <img class=" img_box_right" src="/wp-content/uploads/2022/07/is-there-a-chance-for-retail-tor-ecover.jpg" alt="is-there-a-retail-rebirth-in-commercial-real-estate" />Is it simply wishful thinking, or as some business leaders contend, are we seeing a rebirth of innovation in retail and <a href="https://www.minnesotacommercial.com/itasca-county-commercial-real-estate/" target="_blank">commercial development in Itasca County</a>? There is no doubt, according to experts, that there are still some store closings and retail chain reorganizations ahead, but the impact may simply be "more of the same" rather than a pronounced downturn, as many had feared. Based on prevailing opinion from leaders at the International Council of Shopping Centers convention in Las Vegas, there is still ample opportunity for retailers to grow and prosper. Low unemployment rates hinder growth because entry-level retail jobs are sometimes difficult to fill. There may still be store closings, according to most experts, but they are likely to be based more on individual store performance rather than chain-wide bankruptcies. Speakers at a local half-day summit sponsored in June 2019 by MN Real Estate Journal, echoed those same views while presenting an overview of the future for all segments of commercial real estate. Twin Cities Projections Those big box bankruptcies had a measurable effect in 2018 in Minneapolis and St. Paul, but prime location, Class A retail space is filling. Available Class B space is also recovering, although time on market tends to be longer than previously experiences, rental rates are flat or declining somewhat, and competition for tenants remains strong. Interaction between owners and tenants is deemed vital, and creativity in terms of leasing options and tenant relations is deemed essential. The consensus, however, is that 2019 will bring no dramatic changes to this area. More of the same is forecast. And that sameness, while not record-setting, is positive for all segments of the market, including owners and investors, real estate professionals and tenants at all levels of the retail mix. Satisfying the Need for Space Previously-identified needs continue to plague the retail market, both locally and nationwide. With the continuing growth of internet marketing and online sales, trends point to a declining need to serve traditional shoppers in brick and mortar stores. However, there has been a resurgence of consumer interest in store pickup locations. The convenience of ordering online with a <a href="https://www.nielsen.com/us/en/insights/article/2018/curb-appeal-are-you-ready-for-click-collect/" target="_blank">local pickup option</a> cannot be denied. Even smaller grocery chains, dine-in restaurants, book stores and boutiques have bought in to the trend, providing parking spaces, separate counters, drive-through lanes and to-the-car-delivery for such customers. Major retailers, Amazon included, have begun to rethink previous assumptions about the future. The need for additional warehouse space will grow, but future options will undoubtedly include more fulfillment centers and small-scale, mixed-use retail centers. The character of retail may change, but continued growth seems a given. Construction and Technology The expectation for continued construction and building finish-outs is high, even though major developments, like the Dayton's renovation, have been slower than projections. The local development boom will likely return to more sustainable levels of growth, according to most analysts. The cities and their suburbs, however, benefit from the availability of both skilled and entry-level construction workers, a fluid financial and investment climate, and forward-thinking, growth-oriented governments. Demand for new and remodeled space across all sectors of commercial development remains strong, with 35 straight quarters of positive absorption recorded. Not limited to the major cities, the 2019 construction forecast for the entire region is one of increasing opportunity. An influx of out-of-state investment is not only interesting, but welcome. <a href="https://www.minnesotacommercial.com/blog/how-is-technology-changing-commercial-real-estate/" target="_blank">Technology</a>, too, continues to impact the future, not only for forecasting trends, but also in terms of responding to needs. While the future of e-commerce is still an open book, better tracking of consumer habits and the use of artificial intelligence as a predictive tool will perhaps offer new insights and guidance. Technology and automation are sure to become increasingly important as a way to cushion the impact of the tight labor market in the retail sector. An Overview of Opinions So, despite some mixed opinions, local commenters feel good about the future. But there are some cautionary views: Demand for single use retail may be waning; Find the right lender or financial partner has become more difficult; The disparity between buyers and sellers may be widening; Costs are higher, across the board, both for retail development and retail operations. Operators of local shopping centers and smaller malls would be wise to concentrate on the creation of unique experiences, according to the analysts, focusing more on shopper needs than physical space. Amenities may be the way to boost the numbers for all concerned. But, however one views the needs and challenges, there is promise ahead, according to the speakers. 2019-07-05T00:22:00-07:002022-05-13T11:44:02-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19376Marketing Your Commercial Real Estate Property: 6 Tips for Marketing Success <img class=" img_box_right" src="/wp-content/uploads/2022/07/how-to-sell-commercial-property.jpg" alt="selling-commercial-property-right-by-marketing" />You don't have to have an established marketing team to successfully sell your commercial property. With one knowledgeable real estate professional and a smart strategy, you can attract buyers and make a profit from the sale of your commercial real estate - with a <a href="https://www.minnesotacommercial.com/marketing-plan/" target="_blank">great commercial property marketing plan</a>. Whether you're new to the game or an old pro, these tips can help you sell your property quickly and to the highest bidder. 1. Make a Plan Do research before listing your property for sale. Who are your customers, and what are their expectations? Where are they? What will they like about your property, and what will they want changed? How much do similar properties cost? What can you do to make your property more desirable? How long can you expect the sale of your property to take? Set marketing strategy goals. For example: <a href="https://instasize.com/blog/establishing-your-brand-voice" target="_blank">Create a brand</a> for your property. Work with professionals to take stills and video of the property. Set a budget. Make a timeline. As you establish your plan, work with your real estate agent. Focus on high-ROI projects and tasks to ensure that your commercial property will make a profit. 2. Create a Website As much as 80% of investors start their search for a commercial property online. A fully interactive, top-of-the-line website is a must for attracting buyers. A real estate website needs to be highly visual, focusing on the most functional and attractive aspects of your property. Work with a website professional to use SEO and all the latest web technology to make your website stand out from the competition. Highlight the newest additions or remodels on your property. Add a blog to update potential investors and make your page more relevant. Keep the website easy to navigate and simple in design, to capture a range of audiences. As you're choosing a graphic and web designer, look at their portfolio for experience in the real estate market. User-friendly, attractive design is critical. Spend time clicking on each website to evaluate its success, and choose the website developer whose style matches your brand. 3. Invest in Your Property While a new construction property does not need to be remodeled, existing buildings often need upgrading before they're ready to be sold. Investing in your property to improve or repair existing systems can pay back handsomely, if the improvements are performed selectively. Buyers like smart upgrades. For example: Install <a href="https://blog.litchfieldbuilders.com/best-eco-friendly-building-materials-to-use-in-commercial-construction" target="_blank">environmentally-friendly fixtures</a> to reduce power and water usage. Replace old appliances to improve the efficiency and visual appeal of the property. Repair major systems in need of repair, such as the roof or HVAC system. Make major cosmetic improvements to improve staging. Work with a well-known commercial contractor to ensure all repairs are performed to code. Once the repairs are made, document the changes on the property's website. Mention all upgrades in the property listing and in printed media as well. Take pictures of upgrades to show the quality of the work and the finished results. 4. Stage Staging is an important part of any real estate transaction, and commercial real estate is no different. Staging attracts and instills confidence in buyers, leading them to the firm belief that your commercial property is a sound investment. Use visuals and graphics. Hang signs that reinforce your brand and create a look that is visually cohesive. Install attractive landscaping. Good landscaping helps Investors form a positive opinion from the second they pull into the property. Work with a professional. Hire a professional interior and exterior designer to make your property look its best. 5. Hold Broker Events Hold broker events that bring together the most important people in the industry. Broker events give an opportunity for agents in your area to see first-hand your property's good qualities and potential. The more brokers are allowed to explore your property, the more likely they are to push your property to their investor clients. Invite potential investors to these events. In the days before the event takes place, stage and prepare your <a href="https://www.minnesotacommercial.com/hennepin-county-commercial-real-estate/" target="_blank">Hennepin County commercial property.</a> Check that all systems are running smoothly, and plan to serve drinks and food to make your property as comfortable as possible. On the day of the event, play music and create a party atmosphere to help your guests relax and enjoy themselves. 6. Work With a Professional It's important to work with the right real estate agent. Vet several agents before settling on the right candidate. When looking for someone, seek out professionals who have a track record of success selling property of the same type. As you interview each candidate, ask them about their marketing strategy, and how long they anticipate it will take to sell your property. What disadvantages might you face while trying to sell your property, and what would they do to overcome those issues? Avoid working with real estate professionals who seek to gloss over any issues your property is facing. The best candidate will have a plan to address problems in a straight-forward and logical way. Hire someone who you feel comfortable communicating with, and who has good references. Hiring the right real estate agent is the best way to ensure that your property will sell quickly and for a profit. 2019-06-28T20:20:00-07:002022-05-13T08:02:59-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19375Selling Your Commercial Property Soon? Time to Update Landscaping <img class=" img_box_right" src="/wp-content/uploads/2022/07/good-landscaping-can-sell-a-property.jpg" alt="selling-commercial-property-means-great-landscaping" />Commercial properties rely on good landscaping in many ways. Landscaping improves the appearance of the property while making it more user-friendly for customers and workers. Landscaping is also essential for curb appeal. If you're planning to sell your commercial property sometime in the next year, not only should you <a href="https://www.minnesotacommercial.com/blog/stage-commercial-property/" target="_blank">consider staging a vacant commercial space</a>, but it might be time to install new landscaping. Updated landscaping can make your property easier to sell, thus increasing your profit. Most plants look best after they've been given a chance to become established and thrive in their new location, so the earlier you can get started on this project, the better. Install Low-Maintenance Plants Most business owners have little time to spend on shrub and plant maintenance. Some kinds of plants need more attention than others. The best plants to install on a commercial property are the kind that grow slowly (and thus need little pruning), need little water once established, and produce little or no debris to be cleaned up. For example: Boxwood. These slow-growing shrubs are easy to shape and sculpt, will thrive in a variety of light conditions, and once established are very drought resistant. Azaleas. These easy to care for shrubs produce colorful blossoms every year, and require no dead-heading after blooming is over. Hostas. These attractive plants come in a variety of colors, come back year after year, and grow well in low-light. Ornamental grasses. These plants grow tall and provide a rustic appeal. If eco-friendly features are important to you, install native plants to save water and promote a healthy natural environment. Once established, native plants often need little supplemental watering to keep going. Use Mulch Mulch reduces your property's watering requirement by trapping moisture in the ground. Mulch also helps plants thrive by keeping their roots cool. It is used extensively on commercial properties to control weeds and provide an attractive filler between landscaping features. It comes in different colors and can be made from different materials, so you can choose a type of mulch that works well for your property. Install Professional Sprinklers Unless you use xeriscaping to reduce your watering needs, you'll need professional sprinklers to water your landscaping and keep it healthy. Work with a licensed landscape contractor to have this installation performed, to ensure that the sprinkler is installed to code. When seeking a contractor, check references and credentials before signing a contract, to ensure that the person you hire is right for the job. Shade Your Parking Lot Parking lots can be hot, unpleasant places in summer. You can make your parking lot more comfortable by <a href="https://www.fastcompany.com/90204411/a-simple-solution-to-help-cities-fight-overheating-more-trees" target="_blank">planting trees</a>. Trees need wide containers to contain their roots and keep them healthy. Smaller trees are easier to plant in parking lots than larger trees, because they need smaller containers and less space to spread out under ground. Work with your landscape designer to ensure that the tree you choose is appropriate. Flowers and fruits can create a mess in your parking lot at certain times of year. Know what you're planting and what kind of debris that tree will shed over your property throughout the year. Avoid planting trees that drop large, round seeds (like sweet gum) or large, hard nuts (like walnut). The debris from these trees can become a tripping hazard that can lead to customer accidents. Establish Pathways People will take the shortest route to reach the front doors of your commercial building, whether you want them to or not. In some cases, this means they will walk through your landscaping, thus damaging what you've planted. Installation of thoughtful, attractive pathways can help make your property more desirable to buyers. Pathways should be made of durable materials like paving stones. Install numerous pathways to ensure that customers from all around the property will be able to find a convenient pathway for them. Work With a Landscaping Professional The best way to ensure that your landscaping will attract buyers when your <a href="https://www.minnesotacommercial.com/dakota-county-commercial-real-estate/" target="_blank">Dakota County commercial property</a> is put up for sale is to have it installed by a <a href="https://straightlinelandscape.com/galleries/complete-landscape-design-projects/" target="_blank">landscaping professional</a>. Work with your landscaper to produce a functional, thoughtful design that will be low maintenance for you, and attractive to buyers. Work with a real estate professional as well. Your real estate agent can help you devise new ways to make your property worth more when the time comes to put it up for sale. Start meeting with a real estate agent months before putting the property on the market. Your real estate agent can give you suggestions that can help make your property more valuable to buyers. 2019-06-28T19:46:00-07:002022-05-13T08:02:59-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:193746 Tips When Choosing a Property Management Company <img class=" img_box_right" src="/wp-content/uploads/2022/07/does-a-good-commercial-management-company-matter.jpg" alt="how-to-choose-a-management-company" />A landlord is only as good as their property management company. A good company will keep tenants happy, <a href="https://www.minnesotacommercial.com/blog/the-right-ways-to-screen-prospective-tenants/" target="_blank">effectively screen new tenants</a>, and will ensure that all properties under their care are in good condition. If the company you choose does not treat your tenants or properties well, business will suffer. It's vitally important to choose a company that has a good reputation and sound business practices. The following 6 tips can help you choose a property management company that will benefit your properties. 1. Get Referrals You probably know property owners in your area. Ask someone with good judgment which property management company they use. Find out why they like that company, what they would change about that company (if anything), and if they would refer that company to someone else. Ask multiple property owners, if you know more than one. 2. Read the Contract An established property management company should require a contract or a written service agreement for its clients. Read the contract for every company that you're considering. Highlight any portions that you don't understand or need to be clarified. Ask questions if need be, or show the contract to your lawyer if it makes you more comfortable. Never sign a contract you don't understand. 3. Visit One or More of Their Properties One of the best ways to ensure that a property company is taking good care of its clients is to visit some properties under their care. Note the condition of the landscaping and the building exterior. If the opportunity arises, ask tenants if they're happy. 4. Interview Multiple Companies Meet with representatives from each company in person. Have a list of questions to ask each company to make it easier to compare candidates. Questions to ask include: How long have you been in business? How many properties do you manage? Can you tell me which properties you manage around town? Do you have references? Do you have an emergency number for tenants to call after hours? Does your company manage all of its own maintenance or do you subcontract certain types of work? How many employees does your company have? What methods do you use to screen tenants? How do you handle evictions? While you're interviewing candidates, listen for cues that indicate they're familiar with your state's tenant laws. It's critical for any management company you hire to be familiar with your state laws, as mismanagement of your tenants could <a href="https://mattgould.ca" target="_blank">result in fines and even lawsuits</a>. 5. Shop Around Shop around for quotes. Read each bid closely, as not all companies will provide the same services. Keep in mind that the lowest bid may not be the best bid. Companies that dramatically undercut the competition could be cutting corners in a way that would lead to poor customer service and unhappy tenants. 6. Check Their Licensure and Certifications Some states require property management companies to have a <a href="https://mn.gov/commerce/licensees/real-estate/" target="_blank">real estate license</a> in order to show empty apartments. Find out the requirements in your state, then check each property management company to ensure that they have the right credentials and certifications. Depending on the laws in your state, and what the property management company is responsible for doing, your management company may also need to have a contractor's license. Find out exactly what your state requires. When vetting the company, make sure the license is active. It's not enough to have a license number; the number should be valid and active. Keep Up with Your Management Company After They're Hired Once the management company is hired, it's your responsibility to ensure that they're living up to their end of the bargain. Check in on your <a href="https://www.minnesotacommercial.com/crow-wing-county-commercial-real-estate/" target="_blank">Crow Wing County commercial property</a> on a regular basis. Inspect the grounds, look at the landscaping, check the various systems on the property (HVAC, roofing, etc), and talk to your tenants. Do this at least once per year to ensure that your property management company is meeting your standards and providing a good experience for your tenants. Pay attention to trends, as well. A sudden loss of multiple tenants on a single property could be an indication of a problem. Keeping up with the activity of your property management company helps protect your reputation as a landlord and property owner. 2019-06-19T21:29:00-07:002022-05-13T12:57:14-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:193735 Portfolio Lessons to Be Learned from the Summit Hotel Sale5 Portfolio Lessons to Be Learned from the Summit Hotel Sale<br /><br /> <img class=" img_box_right" src="/uploads/agent-1/what-did-we-learn-from the summit-hotel-sale.jpg" alt="The Summit Hotel Sale and What Investors and the Public Have Learned" />Summit Hotel Properties recently sold off six hotels for $135 million, resulting in a net gain of $36.6 million. One of their properties was the SpringHill Suites by Marriott, located at the Mall of America. The numbers for this sale are impressive, with an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) multiple of 12.8 and close to 7% capitalization rate. However, there's a lot more to this story than just the group's net gain from the sale. In fact, Summit Hotel Properties has seen some dips in their stock price that are worth taking note of. Whether an <a href="https://www.minnesotacommercial.com/hennepin-county-commercial-real-estate/" target="_blank">investor holds one property in Hennepin County</a>, Minneapolis or several across the US, there are a few lessons to be learned from this sale that can be applied to larger portfolio management. For informational purposes only. Always consult with a certified tax expert before proceeding with any real estate transaction. How REITs Work <a href="https://www.reit.com/what-reit" target="_blank">A Real Estate Investment Trust (REIT) </a>applies the principles of a mutual fund to property. Instead of buying a property outright, investors give their money to this special kind of trust. The REIT will spread the money around to a variety of properties, and investors will receive dividends based on the rental values of the properties (without having to personally manage the properties). When the time comes to sell those properties, investors share in the profits. When it comes to managing a portfolio, investors have to ask themselves about the types of properties they want to invest in and who they want to manage those companies. Summit Hotel Property has always had a recycling strategy, investing in high-growth hotels after selling off lower performers. If an investor believes the REIT is mistakenly investing in hotels when they should be investing in Airbnb properties or if they feel the REIT is mismanaging the funds in some way, then they may want to think twice before building their portfolio with the wrong REIT. The Nature of Property Management Summit Hotel Group invests in mid- to upscale lodging properties with solid reputations. The ultimate goal is to manage the property, streamline operations, and maximize their investors' returns. The group's full portfolio currently consists of 69 hotels totaling 10,714 guestrooms across 24 states, including Minnesota. Because the Summit Hotel Group chooses brands with solid reputations (e.g., Marriott, Hampton, Hyatt, etc.), the company is more likely to collect rent on time, every time. In turn, the properties are more likely to attract more guests because they're well maintained by a management group that cares about the state of the facility and its ground. The company's priorities while they owned the hotels are likely what contributed to the solid cap rate. When it comes to managing a real estate portfolio, property management plays a big role in how well the property fares in the long term. The Writing on the Wall Real estate investors need to look between the lines when it comes to property sales, which means asking why certain decisions are made. Summit Hotel Group ultimately sold these properties to reduce an outstanding balance from their credit facility. After paying out their investors and settling with the agency, they'll have $395 million available to borrow. Summit released financial results in 2018 showing that their price per diluted share had slipped $.11 from 2017 to 2018. The net income attributable to their stockholders also decreased to $71 million, which may have been what prompted the sale. If an investor's portfolio contains a REIT, they should keep up with yearly updates from the trust to assess how the stock is faring in the general market. Honesty Matters Summit Hotel Group has been forthcoming with its investors, posting its press releases, financial updates, and reports on its website. The payout to their investors is not the highest, but this may not necessarily be a bad sign. The leadership has made property improvements a top priority, which is a smart move in the increasingly competitive lodging sector. Some experts believe that the company's integrity is a strong mark in the company's favor, especially if investors are playing the long game. Lodging Is a Difficult Market The lodging and hotel sector has had a wild ride in the past few years, especially as more people opt for <a href="https://www.igms.com/airbnb-or-vrbo/" target="_blank">marketplaces like Airbnb</a>. Everything from the economy to the weather can affect how many people stay in a hotel during any given year - <a href="https://www.minnesotacommercial.com/blog/hotels-reinventing-for-a-new-breed-of-traveler/" target="_blank">travelers are expecting things from hotels</a> they have never expected before. This doesn't mean that hotels reflect poorly on a portfolio though. In fact, more people are turning to upscale hotels, like those that Summit Hotel Group purchases. But investors should be ready for some degree of unpredictability if they choose to make lodging a part of their overall holdings. This sale has a few principles that anyone can use to manage their portfolio—whether they invest in a REIT or not. By and large, investments in the twin cities are a long-term game. Even if Summit has been struggling when it comes to their share price, their end strategy fits in with changing consumer expectations. As long as investors can reasonably ensure their properties are wisely managed, they're more likely to turn a profit. For informational purposes only. Always consult with a certified tax expert before proceeding with any real estate transaction. 2019-05-15T23:12:00-07:002022-05-13T08:02:59-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19372How Is Technology Changing Commercial Real Estate?How Is Technology Changing Commercial Real Estate?<br /><br /> <img class=" img_box_right" src="/wp-content/uploads/2022/07/technology-inovations-in-commercial-real-estate.jpg" alt="How Technology is Impacting Commercial real Estate in Minneapolis and St. Paul" />Commercial real estate in Minneapolis/St. Paul has long been rooted in tradition. Even as technology popped up all over the country, the industry didn't rush toward it en masse. This is understandable, given that office workers and builders have a very different relationship with technology. The Twin Cities are starting to see more <a href="https://www.minnesotacommercial.com/blog/disruptive-technology-and-the-future-of-commercial-real-estate/" target="_blank">adaption of technology</a> in the industry though, even if not everyone is moving at the same pace. A variety of new tools are converging to smooth out the many wrinkles that pop up along the way of a project. From builders to developers to agents, investors may want to learn more about how new tools such as <a href="https://www.maxpanda.com" target="_blank">computerized maintenance management software</a> as well as other types of technology are changing the mindsets of those in the industry, and how these changes will affect future pricing and sales. Safety is also a big concern and with technology such as <a href="https://www.ecesis.net" target="_blank">EHS Software</a> to manage Risk, things are only looking better. The Resistance From construction companies to real estate agents, there's been a broad resistance to technology in the past across all commercial real estate. Construction company owners may not have wanted to test new devices for fear of endangering the safety of their buildings or the welfare of their workers. Real estate agents have built their business on relationships and resisted a disruption to a system that has served them so well for so long. But the influence of technology across all sectors is undeniably beneficial for those who understand how it can be applied to their specialty. Despite the uneven adoption in the industry, we are starting to see a shift toward modern tools to manage commercial real estate. Like most technology, the new devices on the market promise to speed sales up, cut costs down, and make data easier to track. The Future of Real Estate Agents There's no end of communication tools in the digital age that promise to help professionals keep their clients and data straight. Real estate apps are designed to separate information, so agents can identify key information: Owners of properties Available listings Client conversation history Client preferences Financial data If a commercial real estate investor is only interested in <a href="https://www.nolo.com/legal-encyclopedia/buying-home-resort-community-pros-cons.html" target="_blank">investing in resort properties</a>, apps allow real estate agents to quickly identify a shortlist of candidates. They can use the app to make it easier to communicate with clients at the right time, so no one's left in the dark. These apps can also be integrated with Real Capital Markets, a nationwide platform that Minneapolis real estate agents can use to see a full list of aggregated properties (and their corresponding sales and marketing details). It all translates to fewer miscommunications between real estate agents and investors. New technology can help investors and real estate form stronger bonds, so sales can be finalized without the hassle. The Future of Location Scouting When it comes to scouting new locations for commercial real estate, developers are starting to use drones and 3D scanners to help them determine where to build. For example, the Twin Cities are seeing a spike right now in commercial real estate on properties close to the new light-rail project near the university. If a developer wanted to take advantage of this trend, they could use a drone to pinpoint a location that meets their needs. A 3D scanner can give developers further data, such as the size of any impediments (e.g., brush, debris, etc.) on the land that could get in the way of their project. Developers spend a good deal of time on a project trying to find the best possible location for a new property. Whether it's a renovation or a brand-new building, pushback from investors can end up adding weeks onto the original construction deadline. New technology gives developers the chances to thoroughly evaluate multiple properties without having to visit and hand-measure the sites. The Future of Green Technology Green technology hasn't been seen in all commercial buildings, but it's certainly been popping up in more and more properties. One notable example is the Science Museum of Minnesota. This heat recovery system works by capturing any extra warmth produced by any of the museum's systems. From mechanical to electrical, the extra heat is captured and then used to heat the building during colder months. These systems can lower heating costs down about 65%, making a commercial property far more valuable to a buyer. This green technology inclusion seems to be a part of a larger trend across the state. More developers are looking for ways to turn a movement into an economic gain. The more renewable resources there are, the more money everyone can save. In nearby St. Cloud, renewable energy is now responsible for 65% of public facility buildings. Commercial real estate owners The growth of technology in<a href="https://www.minnesotacommercial.com/dakota-county-commercial-real-estate/" target="_blank"> commercial real estate is important to the Twin Cities and Dakota County </a>in a much more concrete way too, in that technology companies still need commercial properties to house their workers. When a technology bubble bursts, a real estate market burst is not far behind. If Minneapolis continues to adopt more real estate technology, leaders may see more tech companies who want to set up shop in the Twin Cities. 2019-05-10T21:56:00-07:002022-05-14T12:07:00-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19371Is Buying a Minneapolis Office the Right Investment?Is Buying a Minneapolis Office the Right Investment?<br /><br /> <img class=" img_box_right" src="/wp-content/uploads/2022/07/investing-in-commercial-real-estatein-minneapolis.jpg" alt="Investment in Commercial Real Estate in Minneapolis, Is it a Good Decision?" />The possibility of a high return on an investment is a reason why some choose to get into commercial real estate. Minneapolis may be a great area to invest in to attract professional tenants that can create a steady income for an investor, as well as other incentives, including the possibility of <a href="https://www.minnesotacommercial.com/blog/minnesota-opportunity-zones-the-prospect-for-2019/" target="_blank">new opportunity zones.</a>. When reviewing the types of Minneapolis real estate available, how inviting is it to own office space in or near Minneapolis? Is now the right time to buy an office building? Understand more about the demand for office buildings in the commercial real estate market of Minneapolis today. Investing in Office Buildings Low, mid and high-rise structures can fall under the office building asset class. Compared with other asset classes, it can be the most volatile sector, as property specific factors and supply and demand can influence the return. Overall economy and job growth for white collar workers can be used to assess demand in an area. An investor should have a market analysis performed to decide whether to buy office buildings in a specific area. According to various sources, there is a rising demand for offices in Minneapolis. The average asking rent is now 15.9 percent more than the 10-year average. In the first quarter, there has been an increase of 31.3 percent when it comes to leasing activity. However, investors should also know that there has been a slight increase to 18.3 percent in overall vacancy rate. Negative net absorption has been reported during the first quarter but there are predictions of positive absorption for the rest of the year. When investigating the options in this asset class, it may be useful to know that the biggest leasing demand in Minneapolis is seen for <a href="http://www.areadevelopment.com/AssetManagement/Directory2013/primer-differentiating-office-space-class-26281155.shtml" target="_blank">Class-A office space</a>. Investors who are interested in the office building asset class may see a few interesting characteristics, including a stable income from long lease terms. A long lease makes it easier for tenants to budget but may mean that currents rents are at variance with the market rent. This may be a consideration for markets with rapidly increasing asking rents. As with any real estate investment, the potential for a vacancy period and lost rent may be a concern. Need for a Minneapolis Office The right location is important for many businesses and organizations. Businesses with a good <a href="https://www.minnesotacommercial.com/crow-wing-county-commercial-real-estate/" target="_blank">Crow Wing County office or commercial location</a> can see increased foot traffic, be able to hire from a larger pool of qualified employees, and be situated close to transportation, restaurants, shopping and more. Investors may also see business owners pay a premium for an office space that meets their specific needs. Meet Minneapolis is one such organization that has recently moved into the heart of Minneapolis. This tourism bureau works to attract people to the area, highlighting places, businesses and events in the city. Now located at 801 Marquette Avenue, it is near the Minneapolis Convention Center and other downtown destinations. Meet Minneapolis has already seen positive changes in the first few months after the move. The number of tours given in the brief time of being there has already exceeded the amount given during the 12 years at their previous location. Organizations and businesses that need to connect with Minneapolis residents and visitors will find that a city-centric location just might do the trick. More Insights for Investors Investors in the office building asset class may see lower vacancy rates when contracting with tenants that get value from an office in Minneapolis. However, changing supply may also impact rental rates for office space. Understanding the microeconomics of the area and other indicators can help those looking to get into buying and leasing offices in the Minneapolis area navigate any challenges that may arise. 2019-05-02T03:41:00-07:002022-05-13T08:02:59-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19370Downtown Minneapolis: Growth Spurt ContinuesDowntown Minneapolis: Growth Spurt Continues<br /><br /> <img class=" img_box_right" src="/wp-content/uploads/2022/07/downtown-minneapolis-grows-in-population-and-buisnesses.jpg" alt="The City of Minneapolis Downtown Continues to Grow and Expand" />According to all pertinent statistics, downtown Minneapolis continues to grow - in a healthy way. Since 2006, the population has increased 56 percent; more than 205,000 employees fill downtown jobs. Last year, the city welcomed 33 million business and leisure visitors, for a total of 2,301,040 hotel room nights occupied. A whopping 80.7 million rides were recorded by Metro Transit, with another 53.3 million rides recorded on city buses. Expansion is planned for both light rail and bus routes. Nearly 40 percent of the city's office space is within the central business district, and nearly 460,000 square feet of Class A <a href="https://www.minnesotacommercial.com/blog/hot-office-design-trends-for-2018/" target="_blank">office space</a> was absorbed in 2018 alone. For the seventh straight year, the value of building permits topped $1 billion. The picture for St. Paul is similarly rosy. According to a mid-2018 CNBC report, the Twin Cities urban area is "fast-becoming one of the most business friendly regions in the nation." Reasons cited include a low unemployment rate, a reasonable cost of living, only about one percent above the national average, and a high level of college attainment, at 40.5 percent. What Fuels the Continuing Growth and Stability? Minnesota's Twin Cities are considered to be both business-oriented and family-friendly, a sure-fire combination for growth. The greater Minneapolis-St. Paul region continues to lure young professionals at a rate higher than competing cities. The area adding 28,000 jobs the first three quarters of 2018, constituting a more than six percent growth rate. Projections call for an additional 12 percent growth over the next 20 years. The Midwest location is viewed as an advantage, approximately equidistant between the coasts, and within about a three-hour flight of anywhere in the continental United States - with a great airport in the form of the <a href="https://www.mspairport.com/" target="_blank">MSP, or the Minneapolis St. Paul International Airport</a>. In addition, the area is a hub for innovation, according to a University of Minnesota law professor Myron Orfield, who adds that add least 35 colleges and universities are in the immediate vicinity to provide companies with enthusiastic and well-trained new employees. The cities have also, for varying reasons, been able to attract highly-qualified foreign-born residents. Finally, the types of firms with headquarters and/or major employment centers in Minneapolis-St. Paul reads like a "Who's Who" of American business, ranging across the diverse fields of finance and healthcare, retail, agriculture and food, to the overlapping fields of sports, recreation, hospitality and travel. Tourism also is a factor in the current growth boom and continuing regional development. The New Face of Downtown To be sure, the downtown faces of both St. Paul and Minneapolis have changed. Changes will no doubt continue, with new challenges to be faced not only by city planners and developers, but also by the state legislature. However, the overall view from all quarters is positive at this point in time. A new version of mixed use development has emerged in both cities' downtown cores. More than 50,000 people now call downtown Minneapolis home, an increase of 14.5 percent over 2017. Currently, there are more than 2,300 rental apartment units under construction, with about half of the $1.8 billion in building permits issued in downtown wards. Concurrent with new housing, there is a corresponding desire for green spaces and dog parks, grocery stores and casual eateries, off-street parking, retail shops and entertainment venues, fitness centers and internet cafes. However, it's not all about the amenities. Those needs all bode well for commercial development. Housing affordability is a prime concerns as well. Housing affordability over the long term needs to be addressed. At the current time, there is no doubt that it is less expensive to live in surrounding suburbs than in the urban core. Though interest in housing and <a href="https://www.minnesotacommercial.com/carver-county-commercial-real-estate/" target="_blank">commercial buildings has increased in surrounding areas like Carver County</a>. There are some who decry the currend trend: Renovating older buildings into amenity-filled expensive urban condos is deemed unsustainable over the long term. Affordability strategies are both necessary and challenging. On the upside, though, there is ample opportunity for entrepreneurial ventures, and the lively downtown atmospere holds promise for both urban residents and downtown workers. It is a dynamic that has not escaped the notice of investors. And there is every reason to believe that the Twin Cities will continue to enjoy a healthy future in terms of commercial real estate opportunities. 2019-04-17T22:06:00-07:002022-05-14T12:29:00-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19369Environmental Consciousness: Shaping Offices of the FutureEnvironmental Consciousness: Shaping Offices of the Future<br /><br /> <img class=" img_box_right" src="/wp-content/uploads/2022/07/green-buildings-and-commercial-development-minneapolis.jpg" alt="he City of Minneapolis is a Green Leader in Environmental Development" />Minneapolis scores high on the list of top-ranking environmentally friendly cities in the U.S., capturing sixth place on a list compiled by CommercialCafe. But, what exactly does that entail, and what does it say about future development? More than half the world's population had migrated to cities by the year 2007, a turning point in world history. By 2030, based on United Nations estimates, two-thirds of the world will call a city home. According to <a href="https://escapewaste.com" target="_blank">sustainability blogger</a> Antonia Ko, cities are, by their very nature, energy hogs. The need to supply apartment dwellers and office workers with their future needs involves new kinds of energy and services at all levels. Electricity and water consumption, of course, are the first to come to mind, but transportation, <a href="https://todoos.com/product-category/receptacles/waste-receptacles/" target="_blank">waste removal</a>, building and development, green space and air quality, food supply and recreational facilities are also overwhelming concerns for city planners. It's not just energy consumpion, but lifestyle needs and the work environment that must be addressed. What Minneapolis Does Right The study awarded points for such things as energy use from sustainable sources that include hydropower, geothermal, solar, wind and biomass, <a href="https://getexplosionproof.com/" target="_blank">custom HVAC</a>, along with inverse points for a decreasing dependence on carbon-emitting fuel sources. Points were deducted for high levels of CO2 emissions. Transportation was factored in, with consideration given to the availability of EV charging stations, as well as how well cities supply public transportation needs, and how attuned the population is to walking, bicycling and such concepts as ride-sharing. West Coast cities, notably San Francisco, Seattle, Oakland, CA, and San Diego garnered the top four slots, with Boston ranking number five. Minneapolis edged out Boulder, CO, for sixth place, followed by Eugene, OR, Washington, DC, and Hayward, CA to round out the top ten. Interestingly, while states like California and Colorado have mandated green energy initiatives and, in some cases, held companies responsible financially for not meeting goals, the Minneapolis rating was based largely on points earned for low CO2 emissions and a high concentration of EV charging stations. While the city generates some of its energy through solar and wind, there is no applicable reliance on geothermal or hydroelectric. Seattle, on the other hand, is more than 80 percent hydro-powered, and another four percent wind-powered. Only seven percent of its needs are supplied by nuclear, coal and gas, combined. Minneapolis does have a highly effective and well-used public transportation system. Minneapolis, despite its winter weather, boasts high <a href="https://www.walkscore.com/bike-score-methodology.shtml" target="_blank">walking and bike scores</a>. The rating is attributable perhaps to the concentration of residential units in the downtown core, and the location of parks, trails and recreational destinations near residential and business centers. The city's downtown Skywalk network, open spaces and mixed use developments are conducive to lowered reliance on personal vehicles. In addition, a functional light rail and bus system addresses transportation needs. More than 50,000 residents now live within the central business district. Building Innovations of Note Minneapolis is also a green leader in building and development circles. Even though the city didn't make the list of metropolitan areas with a high percentage of LEED-certified building, Minneapolis has the first major office building to be constructed of renewable materials in the past 100 years. Built as part of the T3 Project initiated by Hines, the global real estate investment, development and management firm. T3 stands for "Timber, Transit and Technology" and is designed to show that vintage style can be efficiently modern and green at the same time. The building, completed in November 2016, is a multi-story, multi-use building in the city's North Loop as part of a Hines three-phase plan. Built entirely of renewable resources—wood—the building is LEED gold-certified and features 12,000 square feet of retail space on ground level, as well as expansive amenity spaces including a fitness center, social networking and collaborative work areas, 100 bike parking stalls and a rooftop patio. Small business are also on the ban-wagon with <a href="https://www.minnesotacommercial.com/blog/how-small-businesses-can-use-solar-power-to-get-ahead/" target="_blank">solar power electrical generation</a>. Structural timbers and floor decking are all wood. The construction materials provide enhanced acoustics and the building features large windows to supply abundant natural light to the interiors. The T3 building is situated near Target Field Station, the light rail transportation hub that serves Metro Blue and Green lines as well as Northstar Commuter Rail. It also offers access to the city's downtown Skywalk, and it's close to Target Field, the home of the Minnesota Twins. T3 represents a collaboration between Hines and the AFL-CIO Building Investment Trust, a partnership which also developed the nearby Dock Street Flats Apartments. A third 100,000 square-foot parcel is available for future development. Subsequent T3 commercial projects have been planned in Atlanta and in Chicago. Both will be larger than the Minneapolis building. According to information supplied by Hines, the wood construction that characterizes T3 has the potential to reduce pollution by the equivalent of 996 vehicles removed from the road for a year, and it takes just 15 minutes for renewable-growth forests in the U.S. and Canada to grow the amount of wood needed for the building. As Minneapolis and <a href="https://www.minnesotacommercial.com/itasca-county-commercial-real-estate/" target="_blank">commercial buildings in Itasca County</a> continue to expand, there will no doubt be even more innovative development plans on the drawing board. 2019-04-10T20:07:00-07:002022-05-13T08:03:22-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19368Progress Slow: Finding a Balance for Dayton's RenovationProgress Slow: Finding a Balance for Dayton's Renovation<br /><br /> <img class=" img_box_right" src="/wp-content/uploads/2022/07/status-of-downtown-dayton-store-renovation.jpg" alt="Downtown Minneapolis Dayton Store Renovation Update" />Finding a balance between forward-thinking renovation and historic preservation at the former Dayton's flagship store in downtown Minneapolis hasn't been easy. Now, nearly two years after the store closed and ambitious redevelopment plans were unveiled, progress still seems slow. However, the developer, Chicago-based Telos Group, is unfazed by the delays. The interior construction that will create a massive interior multi-story atrium is imminent, but so far the work that has been completed is hardly noticeable to anyone passing by. Although the plan was always to retain the historic exterior of the iconic century-old Dayton's store, interior space is due for massive updates. To date, however, the alterations have been largely behind the scenes. Progress has been steady, according to Brian Whiting, Telos Group president. Even though much of what has been done isn't visible at this point, work is proceeded according to plan, although slower than originally planned. To date, a major office tenant has yet to be signed. The food court and expected first retail stores will not be opening this summer as once hoped; instead, their debut has been postponed until 2020. Still, the developers are not worried. With a similar big money renovation of downtown Chicago's Old Main Post Office, Telos Group and other members of the Dayton's refurbishment team, point to their ability to weather delays and setbacks. The New York firm at the helm of both renovations, 601 W. Cos, has more than $1 billion allocated for the combined projects. Ironing Out Conflicting Concerns Some of the delays are attributed to the demands of <a href="https://www.minnesotacommercial.com/blog/rewards-and-pitfalls-of-historic-redevelopment/" target="_blank">historic preservation restrictions</a> in both cities. Another facet of the hard work necessary is simply the amount of effort and oversight involved in transformed huge spaces designed for another purpose into the mixed use vision of investors, architects, builders and developers. Finding the right mix of dramatic open space, retail, office and service uses is complicated. And renovation of any kind is typically fraught unexpected delays. Cutting through the floors of an existing building while maintaining structural integrity is, understandably, a nail-biting experience. But, at the former downtown Dayton's store, that is the innovative change that comes next. A new multi-story atrium, designed to extend upward from the basement through the building's second floor, is a major design feature of the new space, but it also became a major stumbling block. Approvals from state and federal authorities were slow to be granted. The former Dayton's store is on the <a href="https://www.nps.gov/subjects/nationalregister/index.htm" target="_blank">National Register of Historic Places</a>, which qualifies the building for some federal tax credits, but also requires compliance with stringent guidelines. The new atrium, however, will transform the iconic retail space into a modern light-filled office and retail complex, connected by Skywalk to other downtown Minneapolis buildings. Disagreement centered around the size of the atrium, with preservation officials ruling that planned alterations changed the historic building's character "too significantly," thereby disallowing certain tax credits. An agreement was reached last month, however, when developers agreed to minimize the opening by about 25 percent. Projected costs have risen from original estimates of $190 million to approximately $214 million, according to reports. Moving Forward Once Again Now, crews will begin the long-awaited work, and it is time, says Project Director Don Kohlenberger, president of redevelopment consulting firm Hightower Initiatives, to get moving once again. Other familiar parts of the old Dayton's store, including fourth floor Art Deco bathrooms and the roof of the Sky Room Restaurant, will be retained. The developer notes that there is a lot of nostalgia attached to the former retail store, and that future tenants will be allowed the option of determining how some specific spaces will be used. The original auditorium and the former Oak Grill fall into that category. To date, no future uses have been announced. Although a new timeline is not definitive, the development team plans to showcase the refurbished building's new spaces with Skywalk displays open to the public, and on social media. In addition, a "demonstration space" will occupy approximately 24,000 square feet on the fifth floor, enabling prospective tenants to preview possible finish out ideas. It's all part of the effort to secure new tenants for the building's 92,000 square feet of rentable space that will be available upon completion of the construction. The new display space is expected to be complete by the end of November. It is also possible that the old Dayton's will not be entirely forgotten, even when the renovation is complete. Developers gained control of the stylized Dayton's trademark, and are reportedly considering some sort of retail outlet at the revitalized mixed-use building, with items that will display the beloved former brand, a unique way to tie the past to the future in downtown Minneapolis. Such renovations of older commercial buildings is happening all over the Minneapolis area, including <a href="https://www.minnesotacommercial.com/anoka-county-commercial-real-estate/" target="_blank">commercial buildings in Anoka County</a>. 2019-04-05T02:54:00-07:002022-05-13T08:03:22-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19367Tenant Prospecting: Strategies for Continued SuccessTenant Prospecting: Strategies for Continued Success<br /><br /> <img class=" img_box_right" src="/wp-content/uploads/2022/07/commercial-tenant-prospecting-a-guide.jpg" alt="Strategies and Guide for Tenant Prospecting" />Prospecting, or lead generation, is key to success in many fields, but building a contact base is especially vital in commercial real estate. Whether an agent specializes in helping investors buy and <a href="https://www.minnesotacommercial.com/agents/" target="_blank">sell commercial properties</a> or in property management on behalf on an owner or investor, tenant prospecting is the key to ongoing effectiveness. It represents a way to build legitimacy and expertise, and is also a valuable means of gaining referrals that lead to future business. However, prospecting is not a part-time effort, and it requires diligence and consistency. Basics of Prospecting Success Prospecting techniques are not difficult to master, but they may sometimes seem redundant. It's important to be aware of market trends, but it's equally important to examine local business directions and be attuned to potential future needs. Awareness about property ownership, planned development, business expansion, lessees and lease terms, available space and upcoming vacancies is the raw material that a successful property manager calls upon to match prospective tenants with the right landlords. Every lease negotiation centers around existing market conditions, but closing a deal also requires knowledge about the competition and a thorough understanding of tenant requirements. A beginning agent should research available buildings, owners, key tenants, business types in a specific location, and identifiable trends. No matter what your focus, whether you represent owners or tenants, it's important to establish yourself and your firm as a knowledgeable player in the world of <a href="https://www.minnesotacommercial.com/crow-wing-county-commercial-real-estate/" target="_blank">Crow Wing County commercial real estate</a>. Enlarge Your Potential Contact Base Leasing services are typically considered a specialized function of real estate. In order to grow your clientele and enhance your reputation as a property manager or leasing specialist, it's important to think beyond your initial comfort zone. The specialization required to work with investors as well as tenants means than property managers must develop skills that are uniquely service-oriented. Generate new leads by thinking beyond your initial comfort zone. One way to do that is by returning to some more traditional methods: Search city records and send an introductory letter to building owners; Develop a pitch to introduce yourself and your services; Knock on doors or make quick phone calls; Ask for referrals from current clients; Use Pinpoint Prospecting Rather than a Shotgun Approach Expand not only your client base, but also your skill mix, to take advantage of new opportunities. Although many property managers specialize in either landlord services or <a href="https://homelinemn.org/" target="_blank">tenant or renters advocacy</a>, it is always an advantage to have a working knowledge of relocation needs, new property finish-outs, property redundancies, and other related topics. Sell yourself as the expert in the field whenever it's appropriate. In addition, pull out all the stops when it comes to creative packaging that will lead to new occupancies: Bundle complementary businesses as potential tenants in a single building; Suggest possible new uses to an existing landlord faced with changing demographics or an altered economic landscape; Contact municipalities and government authorities to forge new alliances for future development; Investigate the possibility of marketing live-work spaces and creative "maker spaces" in locales where previous uses have changed. Target areas ripe for renovation and redevelopment in order to work with both sides of the Landlord/Tenant relationship. In addition, utilize your knowledge of changing market conditions or planned new development in the region to identify potential businesses that might have an interest in relocating, and then contact them to schedule a meeting. If your business is primarily owner-oriented, use similar techniques to identify new investment opportunities, whether it's a different locale or a variant of the tenant profile. Effective property management goes far beyond the knowledge of major buildings, popular locations and planned new developments. As a property manager or real este broker who specializes in leasing commercial properties, there are a myriad of opportunities to expand your menu of services and be of more service to clients. 2019-03-21T00:22:00-07:002022-05-13T08:03:51-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19366What's With St. Paul's Creative Enterprise Zone and Why Does It Matter?What's With St. Paul's Creative Enterprise Zone and Why Does It Matter?<br /><br /> <img class=" img_box_right" src="/wp-content/uploads/2022/07/commercial-zones-and-a-new-direction.jpg" alt="Are There New Directions for Minnesota Commercial Zones?" />Will the<a href="https://www.minnesotacommercial.com/blog/minnesota-commercial-real-estate-market-update/" target="_blank"> planned Minnesota commercial real estate projects</a> breathe new life and energy into the creative zone, or do they spell a change of direction for local "makers" who might be priced out of the zone that was intended to encourage affordable live and work spaces? Will High Prices Lead to Dying Creativity? Rising prices, high demand and new development costs have all been cited as elements that contribute to the current high, and continually rising prices for housing in the Twin Cities and throughout the nation. The dilemma of shrinking opportunities for medium-to-lower-income renters is not limited to specific areas, however, and solutions are not easy. Affordable housing initiatives that require a certain percentage of units in new developments be set aside as "affordable" are only a band-aid for a major wound, according to critics. In other areas, however, creative live-work spaces and "enterprise zones" allow residents to define their lifestyles in ways that don't fall into easy categories. That is the vision for the area in the residential and <a href="https://www.minnesotacommercial.com/ramsey-county-commercial-real-estate/" target="_blank">commercial area in Ramsey County</a> between Raymond Avenue in St. Paul and the Minneapolis line. The former warehouse district north and south of University Ave. has been known as the Creative Enterprise Zone for years. It is a sometimes seedy, sometimes exciting, district that attracts a virtual kaleidoscope of residents, artists, startup firms, creative media types, light industry and others who thrive on the different and the unusual. There is little separation in the area between the workaday world and weekend or "off-duty" lifestyle. The preservation of this kind of distinctive culture has sparked a move that is designed to strengthen the vitality of the zone and preserve it for future creative uses. Through a community-driven development effort, the board of directors of the Creative Enterprise Zone announced that a sum of $205,000 has been secured to fund the effort. A Diverse Coalition for Growth Public input is invited to help develop strategies, mobilize support, define possibilities and work toward the defined goals. Current funding will be used to hire a staff person tasked to pursue local ownership of creative maker spaces, and with the goal of boosting operating income through other local real estate strategies. The national Local Initiatives Support Corp. provided a one-year grant, and the following foundations offered two-year grants: <a href="https://www.mcknight.org/" target="_blank">The McKnight Foundation</a>, St. Paul Foundation, Bigelow Foundation and the Mardag Foundation. Public donations are also encouraged. Anyone interested in learning more or participating in other ways is encouraged to contact Creative Enterprise Zone, a non-profit organization headquartered in St. Paul. 2019-03-13T22:21:00-07:002022-05-13T10:07:07-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19365Construction Begins on Multi-Family Housing Project in BloomingtonConstruction Begins on Multi-Family Housing Project in Bloomington<br /><br /> <img class=" img_box_right" src="/wp-content/uploads/2022/07/housing-project-for-bloomington-announced.jpg" alt="New Bloomington 402-unit Housing Project Announced" />Ground has been broken on a 402-unit housing project at Bloomington Central Station, a 50-acre master-planned site that is expected to revitalize the city's South Loop District. The third multi-family project at the site, The Fenley is among the first ground-up projects to begin as part of the <a href="https://www.minnesotacommercial.com/blog/minnesota-opportunity-zones-the-prospect-for-2019/" target="_blank">Minnesota Opportunity Zone</a> endeavor authorized by federal legislation approved in 2017. Planned to Encourage Economic Development It is unique: The majority of the units are planned as high-end apartments, but 10 percent will be made available at 80 percent median income rents, in conformity with public subsidy requirements. The incentive program provides for investors to channel unrealized capital gains to projects specified locations throughout the state. More than 100 such historically under-invested areas were identified by Minnesota and approved as Opportunity Zones under the guidelines of the federal legislation. It is hoped that these joint investments will catalyze new business starts, encourage job creation and lead to economic development as well as new construction and redevelopment projects. The plan was approved last spring, followed by a tax increment financing subsidy that was jointly approved last October by the Bloomington Port Authority and the city council. The new apartment project, designed by <a href="https://www.esgarch.com/" target="_blank">ESG Architecture and Design</a>, will join the corporate headquarters offices of both HealthPartners and Ceridian as well as a Hyatt Regency Hotel. When completed, there will be a total of more than 1,000 residential units on the site, including other apartments and condominium units. Approximately 1.9 million additional square feet of undeveloped land exists for future use. Convenient and Amenity-Rich The Fenley, scheduled to open in 2020, is the latest in the continuing collaboration between the developer and the city of <a href="https://www.minnesotacommercial.com/hennepin-county-commercial-real-estate/" target="_blank">Bloomington in Hennepin County</a>, which resulted in the master plan of Bloomington Central Station. Its location is viewed as ideal for this type of multi-use development. It offers easy access to freeways and close to two stops of Metro Transit's Blue Line and the Light Rail Transit System. It is close to the Mall of America and the Minneapolis-St. Paul International Airport, as well as the Minnesota Valley National Wildlife Refuge and a two-acre park. The building itself will boast luxury appointments and amenities, including an outdoor pool area with patio and grill stations, outdoor lounge with adjacent bocce court, a top floor "sky-lounge" that features a viewing deck, and an impressive courtyard entry. Tenant parking facilities feature assigned stalls to match the floor of individual apartments; and residents will have the use of a fitness room, yoga studio and sauna, a community room, a work-friendly cafe in the lobby, and a park-side courtyard. Ground-floor retail space adds additional convenience for residents. Based in Roseville, McGough is a contractor and developer with expertise in planning, project development and management that spans six generations. Bloomington Central Station represents just one of many collaborative ventures that the company has been involved with. The budget for this project is approximately $100 million. A two-story condo project, The Reflections, was previous built by McGough. The company still have almost 15 acres available at the site for future development. 2019-03-06T21:48:00-07:002022-05-14T01:45:23-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19364Minnesota Commercial Real Estate Market UpdateMinnesota Commercial Real Estate Market Update<br /><br /> <img class=" img_box_right" src="/wp-content/uploads/2022/07/what-does-the-future-hold-for-2019.jpg" alt="2019 Is Expected to Bring Many Changes to Commercial Real Estate" />Although it might seem that 2019 forecasts for commercial real estate investment represent a textbook study in Good News/Bad News predictions, there are some indicators that, at the very least, there are some reasons for concern. Although demand for housing is still high in most urban areas, so are prices and they continue to rise, but there are mixed signs across all CRE sectors. Business, particularly retail sales, posted slowdowns at the end of 2018, and that is worrisome for <a href="https://www.minnesotacommercial.com/blog/what-cre-investors-are-learning-about-student-housing/" target="_blank">CRE investors and developers</a>. However, any current assessments might seem more like guesses than educated predictions backed up by facts, figures and identifiable trends. Part of the problem with forecasting this year is the mixed signals coming from almost every sector—government, business, the Federal Reserve, Wall Street and the global economy. Aside from adopting a wait and see attitude, there are positive signs pointing to moderate gains in specific areas. There is also a continuing belief that a <a href="https://www.thestreet.com/markets/recession-could-hit-a-vulnerable-u-s-economy-in-2019-what-investors-should-do-14787976" target="_blank">recession is due</a>, if not this year, then certainly by 2020. And there are other signs that investors will become more cautious and deliberate, but that may also be a plus in terms of future returns. Industrial Zone Strength Joseph J. Ori at GlobeSt.com cites growth, investor capital and robust demand as the factors that will spur <a href="https://www.globest.com/2019/01/04/top-10-cre-predictions-for-2019/" target="_blank">continued growth in the industrial zone.</a> He notes especially the effects of e-commerce growth, strong customer demand for next day deliveries, and high consumer optimism. adding that the average rent growth was 7.8 percent over the last two and a half years, and that during the first half of 2018, 128 million square feet of industrial space was absorbed. Opportunity Zones The Opportunity Zones established by the passage of the 2017 Tax Cut and Jobs Act is poised to introduce additional investment capital and create far-reaching potential for new business development in underdeveloped and low-income regions. Minnesota's 128 targeted opportunity zones, including the City of Duluth, stand ready to utilize available investment funding to add new growth and stability to some blighted areas. The first of the state's investment funds was recently launched with a goal of attracting $100 million in investment dollars to be distributed to spur low and modern income development in smaller Minnesota communities. Investors will reap substantial reinvestment tax benefits under the program. The Growth of REIT Asset Value Ori also singles out 2017 as a turning point in the health of the <a href="https://www.minnesotacommercial.com/carver-county-commercial-real-estate/" target="_blank">Carver County commercial real estate REIT market</a>, adding that the introduction of Blackstone REIT with its sales of shares at a monthly per share net asset value introduced a profound improvement in the health of the REIT investment market. He sees that as continuing in the coming year, and singles out additional players that include Nuveen, Starwood Capital, and Jones Lang LaSalle. Class B Mall Gains Even though the past four years have been brutal for some Class B malls, Ori believes that the surge of bankruptcies and failures that occurred are now in the past, and that the future looks bright for this market sector. He cites decreasing competition from national retailers for available consumer spend, and looks to higher rents and better occupancy rates, in addition to higher values and more sales. The Role of Technology Innovative technology is also viewed as a player in the CRE investment scene during the coming year. Because the widespread belief exists that a downturn is in the offing, more investors are likely to be more cautious in their decision-making, according to Liam Kerins, writing for Captivate.com. He believes that <a href="http://captivateblog.com/11-cre-tech-predictions-for-2019/" target="_blank">the role of new technology</a>, including drones, meeting tenant communication and management objectives, online leasing capabilities, data analysis and the occupant experience will all have an effect. The need to build ongoing relationships, particularly between real estate managers and tenants is also expected to impact the commercial real estate market, prompting more human interaction, just as the expectation of a work-life balance has affected office development and facility design. Rather than simple energy efficiency and sustainable materials, new buildings are more likely to focus on overall health and wellness of employees and the work force. One thing about 2019 may not be open to debate. Changes are in the air. That may be the most pertinent—and the most predictable—message concerning the future of commercial real estate. 2019-02-13T21:09:00-07:002022-05-13T08:04:14-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:193632019 Forecast: What's Up with Multifamily Real Estate?2019 Forecast: What's Up with Multifamily Real Estate?<br /><br /> <img class=" img_box_right" src="/wp-content/uploads/2022/07/commercial-real-estate-and-multifamily-real-estate-forcast.jpg" alt="The Forecast for 2019 and Multifamily Real Estate" />The year just past was another good one for the multifamily housing market, according to all reports. But what lies ahead? According to most market analysts, <a href="https://www.kiplinger.com/article/real-estate/T050-C032-S014-2019-real-estate-report-the-multifamily-market.html" target="_blank">three perils will exert influence</a> over what occurs in 2019: Interest Rates and <a href="https://www.minnesotacommercial.com/blog/foreign-lending-in-commercial-real-estate/" target="_blank">Available Lending</a> Supply Development Concerns With continued volatility both on the political scene and in financial areas, even the experts tend to disagree somewhat on the forecast. Recent speculation about additional interest rate hikes may—or may not—have been put to rest. It seems too early to tell yet whether there is a continued balanced suppy of new apartment units or construction already underway will lead to an oversupply in specific markets. And, finally, the "known unknowns" in the marketplace continue to plague multifamily development. Continuing labor concerns constitute a risk for builders, developers and investors. Increasing cost of raw materials due to federal tariffs is another concern, with some prices showing a 10 percent year-over-year rise. Affordability continues to plague the market, with especially severe implications in some cities. For informational purposes only. Always consult with a licensed commercial real estate professional before proceeding with any real estate transaction. Correction or Crisis? While most experts point to uncertainty as the primary expectation for coming months, most also agree that the multifamily market can expect some price drops and current high-priced markets will almost certainly experience a correction. While real estate in general faces a number of unique challenges, the amenity-driven big-city rental scene is unsustainable in the view of a few analysts. But it's not just big cities that face affordability crisis. Based on available statistics, more than 50 percent of renters spend more than 30 percent of income on rent, and some projections say that by the year 2030 more than 4.6 million new rental units must be ready. The picture isn't any brighter for home ownership. HUD records say that 12 million American pay more than half their income just for housing, and the crisis extends across the spectrum, from big cities and suburban areas to small towns. It is indeed considered <a href="https://www.curbed.com/2018/10/10/17959984/real-estate-trends-2019-housing-affordability-investment" target="_blank">a crisis of unique proportions</a>; housing affordability has dropped by 15 percent just since 2015. The Outlook for 2019 and Beyond The patchwork quilt of investment opportunity does not offer a clear picture of what will occur across the nation, but it is clear that opportunity exists in niche markets, and in smaller communities in need of quality, affordable multifamily housing, whether it's the condo market, apartment leasing or mixed use development. <a href="https://laurelparc.com" target="_blank">Senior care and assisted living facilities</a>, as well as student housing, are viewed as strong contenders for continued investment. In some areas, including San Francisco and high-priced Boston, New York City and Houston, a moderation in price is viewed as desirable, and the resulting market adjustment must be viewed favorably, although in the short term it may seem like a setback. Others point to the possibility of a <a href="https://www.thestreet.com/markets/recession-could-hit-a-vulnerable-u-s-economy-in-2019-what-investors-should-do-14787976" target="_blank">coming recession</a> with nationwide effect, but even that dire prediction is countered by uncertainty and a shifting timeline. There is hope that greater efficiencies through technology, a labor market buoyed up by new training programs and public-private partnerships and continued economic good news will lead to better performance in <a href="https://www.minnesotacommercial.com/anoka-county-commercial-real-estate/" target="_blank">Anoka County commercial real estate sectors</a>. Perhaps only the passage of time will tell. For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction. 2019-02-06T23:37:00-07:002022-05-13T08:04:14-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19362Minnesota Opportunity Zones: The Prospect for 2019Minnesota Opportunity Zones: The Prospect for 2019<br /><br /> <img class=" img_box_right" src="/wp-content/uploads/2022/07/what-areopportunity-zones-in-the-state-of-minnesota.jpg" alt="Minnesota Opportunity Zones Give Birth to Funding to Spur Development" />Even though designated Oppportunity Zones throughout the nation are viewed as vehicles for investment in local communities and a market-driven source of renewed opportunity for workers and residents of low-wealth communities, state and local officials see challenges in implementing programs that will have the hoped-for positive results in Minnesota. But that has not deterred forward progress with the program. Federally-sponsored bipartisan efforts created the Opportunity Zone funding in 2017 as part of the Tax Cut and Jobs Act of 2017. Congress subsequently approved a list of 128 Minnesota census tracts eligible to receive the funding. Minnesota's Department of Employment and Economic Opportunity (DEED) is tasked with administration of the funding program. Collaboration between state authorities and the U.S. Treasury Department was expected to promote needed investment and spur economic and business growth in some of Minnesota's lower income areas. Additionally, it was hoped that the program would bring new <a href="https://mn.gov/deed/newscenter/press-releases/#/detail/appId/1/id/340141" target="_blank">public-private partnerships</a> into play, according to DEED Commissioner Shawntera Hardy. The state's housing commission also expressed hope that local communities and developers could work together to explore new strategies to supply needed housing in underdeveloped areas. Making the Vision a Reality The opportunity zone investment program makes it possible for investors who have realized capital gains on past investment to gain a tax break by <a href="https://www.minnesotacommercial.com/blog/technology-how-will-it-impact-your-investment-plans/" target="_blank">investing in a qualified new opportunity</a> in a designated area within a specified time frame. It involves some advance planning an a joint effort to make such investment attractive and viable, but some regional proponents see it as a way to assure new growth on a speedy basis. Although the time clock on the program is for 10 years, some spokesmen note that it is inadvisable to wait even until the end of 2019, making it imperative to get the program implemented as soon as possible. The <a href="http://www.lisc.org/duluth/regional-stories/capital-gains-break-encourages-private-community-investment/" target="_blank">City of Duluth </a>is doing just that. The Local Initiatives Support Corp. (LISC) held a forum during the second half of 2018 to introduce the program to about 70 investors. LISC Executive Director Pam Kramer noted that depressed communities noted a business decline of approximately six percent following the Great Recession, and that the program is designed to get the ball rolling once again toward new business development and job formation. Because the program is still relatively young, there is as yet no real measurable data on its potential benefits to local areas or to the state as a whole. Structuring New Investment Opportunity Funds for <a href="https://www.minnesotacommercial.com/blue-earth-county-commercial-real-estate/" target="_blank">commercial real estate in Blue Earth County</a> may be organized in various ways, as corporations or partnerships, and allowable investments include stock issuance, venture capital funds and private equity business. Funds may be used for business equipment and other assets, and real estate investments are allowable under certain conditions that include new construction or other improvements. Cash investment in property with no plan to improve a site or create additional asset value within a time frame of 30 months is not allowed. Even though there is local control over the designation of the opportunity zones and local input into the investment plans, the funds are controlled and disbursed by the federal government and there is some lack of clarity and direction. However, Duluth officials remain hopeful that the opportunity zone designation will lead to new life in their city, and point to the adoption of a comprehensive "Imagine Duluth 2035" plan as evidence that it will contribute to a better future. First Fund Launched In November of 2018, Developing Real Estate in Emerging Areas of Minnesota (DREAM) Fund became the first to be launched in Minnesota under the federal opportunity zone legislation. Fund backers hope to secure up to $100 million in investments to funnel into development among the state's designated opportunity zones. It is an <a href="http://www.startribune.com/inaugural-twin-cities-opportunity-zone-investment-fund-launches/499056721/" target="_blank">ambitious undertaking</a>, according to CEO Ravi Norman of Thor Companies, a manager of the fund. Norman stated that he believes it represents a great opportunity for the company's development and construction business, but also fulfills another goal of investing locally for the benefit of the state and its people. Another investor-partner in this first enterprise fund, calls it a "triple bottom line" objective of financial return, noting that it fulfills both social and environmental goals in local communities. 2019-02-01T03:35:00-07:002022-05-13T08:04:14-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19361Addressing the Labor Crisis in the Construction TradesAddressing the Labor Crisis in the Construction Trades<br /><br /> <img class=" img_box_right" src="/wp-content/uploads/2022/07/minnesota-construction-labor-shortage.jpg" alt="Addressing the Labor Crisis in the Construction Trades" />It's a problem that's been brewing for a decade or more. There aren't enough skilled workers to keep up with the demand—across the country and across the wide spectrum of <a href="https://www.minnesotacommercial.com/newconstruction/" target="_blank">real estate and construction</a>, from new homes to new high rises. A Nationwide Crisis Nationally, approximately 70 percent of contractors who responded to a survey conducted by the Associated General Contractors, noted that they had problems filling and retaining hourly workers. In the west, the percentage is often 75 percent or higher. It goes beyond the ability to pay higher wages; unemployment among construction trades is near an all-time low, at just 4.4 per cent in May, indicating a <a href="https://www.bisnow.com/san-francisco/news/construction-development/construction-firms-rethink-recruitment-retention-programs-to-better-address-labor-shortage-89576" target="_blank">severe lack of available workers</a>. The shortage is critical for many reasons, and the problems extends far beyond boom towns and state boundaries, even though some firms have raised base pay by as much as 25 percent to attract new workers. In Minnesota, Fox News 9 reported in August 2018 that the the most difficult positions to fill include electricians, concrete workers, cement masons, welders and pipe layers. Some local contractors have begun to recruit untrained workers and develop in-house training programs. A form of traditional apprenticeship program is another type of solution for some companies, and "shadow jobs" as well as formal and informal mentorships for students are on the rise in various parts of the country. There is a new appreciation of the need for diversity, for women, and for immigrants with specific skills. Skilled tradespeople, not only for construction jobs, but in agriculture, product distribution, automobile trades, health services and computer or information technology fields, as well as for personal services are in <a href="https://www.minnesotacommercial.com/blog/construction-outlook-still-strong-for-2018/" target="_blank">high demand in the construction industry</a>. There is also a growing recognition that a college education is not the path to success for all students. Partnerships to Offer Training A national endeavor with a mission to bridge the gap between students and employers, SkillsUSA has initiated a comprehensive program that works with school districts, teachers and industry executives to design workable solutions. The primary goal is to establish career and technical training programs in the schools, but an overriding concern is to identify the types of skilled labor pools that will be needed in the near future and to innovate solutions to meet those needs. It is also acknowledged that there is a need to instill in younger workers a new respect for employment in trades, crafts and specialty fields. The focus includes, in addition to construction trades, agriculture, auto technology, cosmetology, criminal justice, engineering and information technology, among others. In some growing Texas communities, direct cooperation between municipal governments, schools, local business and students is an outgrowth of this new philosophy. Business executives and industrial employers in these trend-setting collaborations agree to fund special training programs that are administered by local school districts, in exchange for tax breaks and other incentives offered for relocation to a new community. In some cases, participating companies then guarantee jobs to program graduates. Although the <a href="http://www.burlesonisd.net/departments/educational-operations/career-technical-education/" target="_blank">cooperative programs</a> are still in their infancy, they hold much promise, and have been not only well-received, but well-supported and highly acclaimed. The solutions may not be easy, but many innovative new options are currently being introduced in markets throughout the nation. Project Build Minnesota Among the home-grown solutions to relieve the crisis situation in the building trades is a statewide Minnesota program designed to boost not only the numbers, but the perception of construction trades workers. The facts are impressive: In Minnesota, construction salaries, benefits and job security have risen in recent years, during a time when young college graduates face a less secure future and one that is often accompanied by the burden of debt associated with a high-priced degree. Corporate and educational proponents note that more than 50 percent of construction workers enjoy their work and want to remain in the construction trades. Recent surveys also report that the average wage of construction workers in Minnesota ranges from the mid-$50s to upwards of $80,000 for some trades. And the program also points to the personal satisfaction of being able to say "I built that" as one of the benefits. It seems to be working, and the statewide initiative has attracted the attention and the support of <a href="http://www.shingobee.com/About-Us/News/entryid/146/new-organization-working-to-combat-construction-labor-shortages" target="_blank">Shingobee Builders</a>, one of several highly-respected professional construction companies. While their association with <a href="https://projectbuildmn.org/thetrades/" target="_blank">Project Build Minnesota</a> is partially one of self-preservation, it is also part of a concerted effort to assure a better future for the state as a whole and for all its citizens. If the construction industry cannot solve its labor problems, the cost will be high not only in terms of higher prices, but also in terms of diminished quality and slowed development. It's an encouraging way to address a current disturbing situation. 2019-01-24T21:26:00-07:002022-05-13T02:33:26-07:00Kris Lindahltag:minnesotacommercial.com,2012-09-20:19360What CRE Investors Are Learning About Student HousingWhat CRE Investors Are Learning About Student Housing<br /><br /> <img class=" img_box_right" src="/wp-content/uploads/2022/07/commercial-investment-in-student-housing.jpg" alt="For Real Estate Investors, Student Housing Is a Profitable New Market" />Real estate investors are "on track to spend more than $11 billion to buy student housing properties in 2018," according to a December 17 article in Minnesota Real Estate Journal. That's almost $3 billion more in valuation than the total deals closed the previous year. Because of what has been termed "recession resiliency," the student housing market is termed stable, despite rising prices and worries about overbuilding. J. Ryan Lang, executive managing director of the ARA Newmark Student Housing office in Austin, Texas, notes that this asset class was characterized by record transaction volume in the second half of the year. Student Housing Market Evolves, Remains Strong Foreign investment and large portfolio transactions in previous years were instrumental to the strength of the student housing market. During 2018, foreign investment levels dropped somewhat, but both the number and dollar volume of smaller individual transactions increased. Over the past several years, many deals have been closed in major university towns, and there has been a corresponding decrease in the volume of new construction. Prices are also rising, and the spread in cap rates has eroded, according to Jaclyn Fitts, director of CBRE's national student housing service, but she points to the desire for diversification and alternative investments throughout the market as key <a href="https://www.nreionline.com/student-housing/investment-outlook-student-housing-remains-stable" target="_blank">factors fueling the growth</a> of the student housing market. Fitts uses the word "exuberance" to describe student housing market potential. During the height of the student housing boom, in 2014, developers produced 62,000 new beds in major university markets like the University of Minnesota Twin Cities, which has campuses in <a href="https://www.minnesotacommercial.com/hennepin-county-commercial-real-estate/" target="_blank">Hennepin County</a> and elsewhere. Fewer than 40,000 are expected to be opened for the beginning of the 2019 school year, based on projections by Axiometrics, a research firm. But this does not worry most analysts. The president and CEO of an investment and development firm that specializes in student housing, Fred Pierce of Pierce Education Properties agrees that the market will continue to be strong throughout the coming year, and he believes that the <a href="https://mrej.com/cre-investors-continue-to-be-attracted-to-student-housing-as-a-diversification-play/" target="_blank">perceived overbuilding</a> may entice some investors to purchase under-performing assets in some affected markets. Data Analysis and Needs The student housing market is characterized by a wide variety of investment types, ranging from modern luxury developments to dorm-style housing close to campus, repurposed units in mid-rise multi-family buildings, and even rooms for rent in larger homes. Capital investors rely on current data from existing specific market databases on college applications and current enrollment, on and off-campus housing availability and occupancy rates, new construction and many other factors to make investment decisions, and often a site visit is required to gather data. Where the <a href="https://www.nreionline.com/student-housing/unmet-student-housing-data-needs-suggests-market-opportunity" target="_blank">data often falls short</a>, according to Casey Petersen, chief operating officer at Peak Campus in Brookhaven, Ga., is in its ability to predict future trends and needs. Peterson insists that real estate is local and needs to be managed locally and suggests that the concept of a data warehouse that can take the data "beyond descriptive and into predictive," is an achievable goal that should help investors. Modeling trends would be beneficial, he says, not only for the specific student housing market class, but across the whole spectrum of investment activity, particularly for new mid-to high-rise multi-family housing investment. Others point to the benefits of developing mobile apps for student housing, more transparency surrounding pricing and amenities, and software solutions to "measure, monitor and manage the customer experience." Many of these topics were explored in depth at an October 2018 student <a href="https://www.nmhc.org/shc" target="_blank">housing conference</a> sponsored by the National Multifamily Housing Council. Among the takeaways was the hope that a larger percentage of the $12.6 billion in venture capital investment funds would find its way into the the student housing asset class. So far, that seems to be the direction. In a June 2018 article, Forbes contributor Sean Lyons, founding partner at Triad Real Estate Partners, also expressed confidence that the <a href="https://www.forbes.com/sites/forbesrealestatecouncil/2018/06/11/is-student-housing-still-a-good-investment/#45901d7a6408" target="_blank">student housing market</a> would continue to perform well, even though it's still young and currently undergoing a transition from niche status to more mainstream investment. 2019-01-18T00:03:00-07:002022-05-13T08:04:14-07:00Kris Lindahl