Mrej August 2014

VOLUME 30, NUMBER 8

Š2014 Law Bulletin Publishing Co.

August 2014

Dakota Insight Land & Investments: Making an impact in the Bakken

By Dan Rafter, Editor

P

lenty of commercial real estate companies have flocked to the Bakken Shale region of North Dakota. And why not? The region is producing a steady stream of both oil and opportunity. Someone has to build all the shopping centers, hotels, apartment buildings and grocery stores needed by the suddenly

booming towns of the Bakken area, places like Watford City, Williston and New Town.

But few CRE pros recognized the opportunities here as quickly as did Joseph Kachuroi with Watford City, N.D.’s Dakota Insight Land & Investments.

Dakota Insight Land & Investments has been the master developer and general contractor for more than 4,300 residential units and more than 3 million Bakken to page 26

The multi-family market slowing down? Not a chance

By Dan Rafter, Editor

D

owntown Minneapolis. St. Louis. Indianapolis.

Downtown Chicago. Ann Arbor, and not just for student housing. The list of Midwest markets in which apartment rents are soaring, vacancies are plummeting and new multi-family buildings are rising is a long one.

And Sue Blumberg, senior vice president and managing director with the Chicago office of NorthMarq Capital, says that multi-family's hot streak isn't about to end soon.

"When will investor demand for multi-family cool off? When will the construction of new apartment buildings slow? When -- not if, but when -- interest

rates start to hopefully gradually increase," Blumberg said. "Only then will it taper off. And it looks like that won't happen for three to five years."

Blumberg is far from alone in her assessment of the still red-hot multi-family market in the Midwest. Commercial-lending pros across the Midwest agree that investors still consider multi-family the most desirable and commercial sectors.

And developers? They're rushing to build new apartment towers from downtown Chicago to the suburbs of St. Louis and the riverfront of Cleveland.

"For investors looking for financing it is an absolute feeding frenzy," Blumberg said. "It is so competitive right now. Multi-family just couldn't be more attractive to investors."

Strong numbers Marcus & Millichap's 2014 National Apartment Overview provides plenty of evidence of the apartment market's strength.

According to the report, vacancy rates nationwide in the multi-family sector should hit 5.1 percent in 2014. But that's mostly because developers are adding so many new units to the mix. Marcus & Millichap reported that developers will build 215,000 new multifamily units in 2014.

Despite the new construction, rents should continue to rise, Marcus & Millichap reported. In 2013, effective apartment rents across the nation rose 4.2 percent.

Marcus & Millichap predicts that effective rents will Multi-family to page 22

Speakers Include:

Martha Faust, Minnesota Brownfields Monte Hilleman, St. Paul Port Authority Sara Peterson, Parkway Law Rob Devolve, Leonard Street & Deinard Joe Maternowski, Hessian & McKasy Sue Steinwall, Fredrikson & Byron Scott Tankenoff, Hillcrest Development Meredith Udoibok, MNDEED Marcus Martin, Metropolitan Council Denise Beigbeder, Ramsey County Paul Hyde, Hyde Development Rockie Kavajecz, City of Duluth Curt Sunsbury, Solhem Companies

For more information or to register, go to:

www.rejournals.com/2014brownfields Speakers Include:

Barbara Butts Williams, MSFA Board Member and Dean of Business at Capella University Jim Stanton, Shamrock Companies Tony Barranco, Ryan Companies Brent Erickson, Cushman & Wakefield/Northmarq Bill Kater, United Properties Joe Grunnet, Downtown Resource Group Ted Johnson, Minnesota Timberwolves Steve Cramer, Downtown Council Carl Runck, Atlatus Brent E. Hanson, Wells Fargo Bank, N.A. Brian Lamb, Metro Transit Mike Ryan, Ryan Companies David Zaudtke, Eide Bailly

For more information or to register, go to:

www.rejournals.com/DowntownDev

August 2014

Minnesota Real Estate Journal

Contents

AUGUST 2014 • VOLUME 30, NUMBER 8

Page 3

Departments PEOPLE

4

NEWS

6

RESOURCE GUIDE

1

DAKOTA INSIGHT LAND & INVESTMENTS: MAKING AN IMPACT IN THE BAKKEN THE MULTI-FAMILY MARKET SLOWING DOWN? NOT A CHANCE

12

IT’S BEEN NINE YEARS COMING, BUT BIELENBERG GARDENS PROJECT BECOMING A REALITY

14

COMMERCIAL REAL ESTATE DEVELOPMENT: THE ENGINE DRIVING MINNESOTA’S ECONOMY

16

OPUS BRINGING NEW LIFE TO 147-YEAR-OLD CAMPUS BUILDING

18

CONSTRUCTION CONTRACTS FOR EXEMPT ORGANIZATIONS

23

FOOD & BEVERAGE AS A DRIVER OF REVENUE AND GUEST EXPERIENCE:

22

The Minnesota Real Estate Journal (ISSN 08932255) is published monthly for $85 per year by Law Bulletin Publishing Company, 13400 15th Ave North STE C, Plymouth 55441. Phone: 952-885-0815. Periodicals postage paid at Minneapolis, MN. POSTMASTER: Send address changes to Minnesota Real Estate Journal, 415 State Street, Chicago IL 60654. Lanning Macfarland, Jr. chairman; Sandy Macfarland, CEO; and Brewster Macfarland, president. Back issues $10.00. Subscriptions are non-refundable.

For more information call 952-885-0815. ©2014 Law Bulletin Publishing Co. No part of this publication may be reproduced without the written permission of the publisher.

Page 4

Minnesota Real Estate Journal

August 2014

People a division of Law Bulletin Publishing Co.

13400 15th Ave North, Suite C Plymouth MN 55441 For information call 952-885-0815

Publisher | Managing Editor Jeff Johnson jjohnson@rejournals.com Associate Publisher Jay Kodytek jkodytek@rejournals.com Consulting Editor Dr. Tom Musil tamusil@stthomas.edu Conference Manager Alan Davis adavis@recg.com

EDITORIAL ADVISORY BOARD JOHN ALLEN Industrial Equities ROBERT ANGLESON Navigator Real Estate RICK COLLINS Ryan Cos. US Inc. JEFF EATON Cushman & Wakefield/NorthMarq MARK EVENSON ULG Equis PATRICIA GNETZ US Bank TOM GUMP TAG Consulting JON HEMPEL Hempel Properties DAVID JELLISON Liberty Property Trust CHAD JOHNSON Hellmuth & Johnson BILL WARDWELL Colliers International GEORGE KLUEMPKE Braun Intertec JEFFREY LAFAVRE CBC Griffin Companies WADE LAU Founders Properties MIKE LE JEUNE Fabcon JIM LOCKHART WIPFLI DUANE LUND Exchange Realty PATRICK MASCIA Duke Realty Corp.

CLINT MILLER Cushman & Wakefield/NorthMarq DR. THOMAS MUSIL University of St. Thomas WILLIAM M. OSTLUND CBC Griffin Companies WHITNEY PEYTON CB Richard Ellis MIKE SALMEN Transwestern STEWART STENDER Stewart Capital Partners

a division of Law Bulletin Publishing Co. 13400 15th Ave North Suite C Plymouth MN 55441 For information call 952-885-0815

Ryan Companies US, Inc. Hires Erwin Effler III as Vice President of Development – Health Care Ryan Companies US, Inc. is pleased to announce Erwin Effler III has been hired as Vice President of Development – Health Care in the North Region. In his new position, Erwin works closely with health systems, physician groups, and other healthcare providers across the nation facilitating their growth strategies through strategic real estate acquisitions, development, and construction. He is responsible for site selection and acquisition, municipal use permits and approvals, design and construction coordination, financial packaging and lease or sale negotiation.

“Erwin is a thought leader in the health care industry and has a strong national track record of delivering leading-edge health care facilities,” said Collin Barr, President of Ryan’s North Region. “His role will be critical in helping Ryan deliver best-in-class solutions for our customers and we’re delighted to have him on our team.”

Prior to joining Ryan, Erwin led projects for a leading health care real estate investment trust in Toledo, OH where he worked on such notable projects as the NuHealth Redevelopment, a one-million-square-foot health care and senior housing project, and a 60,000-squarefoot medical office building on the new Castle Rock Adventist Hospital Campus. Prior to his real estate career, Erwin worked in the recreational marine industry as an operations consultant and finance provider in Charleston, SC. “The diverse nature of the real estate development and health care industries make my work exciting, challenging, and rewarding,” said Effler. “Creating great places for people to live, work, play, receive treatment, and heal is what I love most about my job.”

CSM Corp. Introduces Minnesota Real Estate Veteran Matt Van Slooten as President of Commercial Properties New hire to manage portfolio and drive growth in improving market conditions CSM Corporation today announced

Matt Van Slooten, formerly of Carlson Real Estate Company, has joined the organization as president of Commercial Properties. In his new role, he will be responsible for the management and strategy of the firm's diversified portfolio of office, industrial and retail properties, as well as the pursuit of new acquisitions and development of those property types. Additionally, he will join an executive leadership team focused on strategically guiding the company for future growth by leveraging its current portfolio and identifying new opportunities in an improving real estate market.

"I am delighted to have Matt as the new leader of our Commercial Properties division," said Gary Holmes, president and CEO, CSM. "His past accomplishments within the commercial, retail and industrial space and his abilities to guide a portfolio and develop growth opportunities complements CSM's vision and what it represents. Matt is an outstanding addition that makes our CSM team stronger."

Van Slooten brings more than 25 years of industry experience to the CSM team. Most recently, he served as president of Carlson Real Estate Company where he led the growth and diversification of the company's portfolio through acquisitions and development. Van Slooten also managed generational transitions in Board leadership for the family-owned real estate investment and development company, and was instrumental in expanding Carlson's operational footprint from Minneapolis and Phoenix (Ariz.) into Charlotte (N.C.).

"Growing up in the Twin Cities, I have watched CSM, have interacted with the team, and am now proud to be a part of the CSM family. I look forward to getting deeply involved in all aspects of the over 9 million square-foot commercial portfolio.

Ryan Companies US, Inc. Hires Chris Wood as President of the West Region Ryan Companies US, Inc. is pleased to announce Chris Wood has been hired as President of the West Region. In his new position, Chris provides overall leadership and direction for the Ryan

development, design, construction, and property management teams. He is responsible for expanding Ryan’s presence in the West Region and developing long-lasting relationships with prospective clients, key vendors, and industry organizations.

"With the addition of Chris, we are significantly increasing our commitment to the Southern California market,” said Jeff Smith, Ryan’s National President.

“We see this market as a vibrant and direct match for our integrated real estate delivery approach. I expect to see Ryan West grow to one of our largest regional offices over the next five years."

With over 30 years of experience in the real estate industry, Chris has built a strong reputation for leading his teams toward the goal of exceeding customer expectations. He has extensive experience in developing multi-tenant distribution/manufacturing projects, and high-tech research and development facilities with an emphasis on defense, electronics, telecommunications, and biotech industries. In addition, Chris has an extensive brokerage background and understands the critical roles played by the brokerage community.

“Having worked my entire career in the Southern California marketplace, I have built solid relationships across the broad spectrum of industries that are integral parts of the commercial real estate industry,” said Wood. “Whether meeting the needs of corporate users of real estate or institutional investors and their respective lenders, attorneys, architects, contractors, brokers or property managers, I am particularly excited to bring my diverse experience and the extended Ryan Companies platform together to significantly expand Ryan’s presence in this region and further establish us as an industry leader,” stated Wood. “Our timing is optimal to apply our depth of knowledge across multiple product types to the mature, infill markets of Southern California where adaptive reuse and redevelopment are becoming more prevalent, in addition to the more typical suburban green-field development.”

Page 6

News IRET Selects Silver Oak Development to Coordinate Southdale Medical Center Expansion Silver Oak Development, an Oakdale, Minnesota-based commercial real estate developer and development management firm, announced that it has been selected by Investors Real Estate Trust (known as IRET) to manage the development of a major new addition to Southdale Medical Center (SMC) in Edina, Minnesota, a Minneapolis suburb.

IRET, a Minot, North Dakota real estate investment trust and the owner and manager of Southdale Medical Center, is one of Minnesota’s largest out-ofstate investors in commercial, multifamily and office building properties. SMC is one of the largest medical office complexes in the Twin Cities. The $25+ million expansion project, already underway, includes construction of an additional new four-story, 57,000 square foot medical office building and parking ramp, adjacent to the existing complex

Minnesota Real Estate Journal

and connected to it and the neighboring Fairview Southdale Hospital. Completion of the medical office building and the ramp’s first phase is scheduled for June 2015. A second phase will be completed by September 2015.

Commenting on his firm’s selection, Paul Reinke, president of Silver Oak Development, described the assignment as “both exciting and challenging--exciting because of the concentration of additional healthcare services it will bring to what is already the Southwest Metro’s leading medical center, and challenging because of the need to coordinate construction of such a large addition without significantly disturbing ongoing clinic operations or inconveniencing visitors, patients or staff.”

Edina Mayor James Hovland praised Silver Oak Development and its staff for months of hard work in closely coordinating planning for the project with the city. “This expansion is the latest in a series of investments by IRET in the complex, and the largest to date,” Hovland said. “From the city’s standpoint, we have found the leadership of IRET and Silver Oak Development to be high-

ly professional and competent. Paul Reinke has been very cooperative in interacting with our staff, all with the purpose of delivering the best possible outcome for the public and for IRET,” he said. Hovland described the expansion as “a reflection of the growing importance of the entire Southdale medical campus to good health outcomes for both Edina residents and those in the broader Southwest Metro region.”

Larkin Hoffman Advises Mall of America on Major Refinancing Larkin Hoffman provided legal counsel to Mall of America during its recent $1.4 billion refinancing. The firm represented the mall’s owner, Triple Five Worldwide, throughout the multipart transaction. The Larkin Hoffman team was led by attorneys Tim Stoltman and Dan Kadlec. Mr. Stoltman provided counsel on the real estate and mortgage financing portions of the transaction and Mr. Kadlec worked on the corporate restructuring of entities relating to the project.

Larkin Hoffman’s president Bill Grif-

August 2014

fith has served as lead counsel to Mall of America for over 20 years. “This significant transaction marks yet another symbolic milestone for Mall of America” said Bill Griffith. “We feel fortunate to have worked on what will certainly be the largest transaction of its kind in Minnesota this year.”

Mall of America is currently undergoing a $325 million expansion project which commenced in March. When completed in August 2015, the expansion will include a luxury hotel, sevenstory office tower, retail space for more than 50 new stores, a new atrium and event space, and underground parking.

Doran Companies Buys Bloomington Office Building Doran Companies, the Bloomington, Minnesota-based general contracting, development and management company has purchased the office building at 7803 Glenroy Road in Bloomington.

The various Doran entities currently occupy 10,970 square feet of the 34,649 square foot three-story building.

Other tenants include United Sugars Corporation and several small business-

Page 8

es, including S.S.C. Technologies, Inc., Consultis of MN, Inc., Selective Site Consultants, Inc., and Pennant Company. The building is 80% leased.

Kelly Doran, principal and owner of Doran Companies said in addition to adding a building monument sign along the heavy travelled West 78th Street that will identify building tenants, there will be immediate extensive interior and exterior renovations to make the property “the finest little office building along the 494 strip.”

Marcus & Millichap ARRANGES THE SALE OF 40,511 SQUARE FEET OF LAND Marcus & Millichap (NYSE: MMI), a leading commercial real estate investment services firm with offices throughout the United States and Canada, today announced the sale of Snelling Avenue Land; 40,511 square feet of land located in Saint Paul, Minnesota, according to Craig Patterson, regional manager of the firm’s Minneapolis office. The asset sold for $1,500,000

Minnesota Real Estate Journal

Michael Ahles, a Senior Associate in Marcus & Millichap’s Minneapolis office, had the exclusive listing to market the property on behalf of the seller, Bradshaw Funeral Home, Inc. The buyer, a developer, was secured by an outside brokerage.

Speaking with Mr. Ahles, “The land will be redeveloped into Senior Housing by The Water Senior Housing group.

An 80-unit, four-story assisted living complex is expected to break ground next spring. Bradshaw Funeral Home, Inc. will be relocating across the street.”

Snelling Avenue Land is located at 678 Snelling Avenue South in Saint Paul, Minnesota.

Cushman & Wakefield | NorthMarq Represents 4275 Norex LLC in Sale of 53,000Sq.-Ft. Industrial Building in Chaska, Minnesota Cushman & Wakefield | NorthMarq represented 4275 Norex LLC in the sale of a 53,000-sq.-ft. industrial building at 4275 Norex Drive, Chaska, Minnesota.

BIOLYPH, a biotechnology company

serving the manufacturers of diagnostic and life science research products, was the buyer.

Situated on nearly 14 acres, the warehouse distribution center has 22’ clear ceiling height and provides excellent access to Highways 5, 41 and 212.

CWN’s Jon Yanta and Kris Smeltzer represented 4275 Norex LLC in the transaction.

“Topping Off Ceremony” held for the new Mother Baby Center at Mercy Hospital A “topping off ceremony” was held on Tuesday to mark the securing of the uppermost beam atop the new Mother Baby Center at Mercy with Children’s, signifying completion of the structural phase of the $30 million project.

The project is a joint venture between Allina Health and Children’s Hospitals and Clinics of Minnesota and will create a new state-of-the art facility, located next to Mercy’s Heart & Vascular Center. The expansion will include two operating rooms, 10 (confirm)

August 2014

labor/delivery/recovery rooms, ten Level II special-care nursery rooms, 22 postpartum rooms, along with shell and support space. Preparation for the construction of the 62,000 square-foot facility began in the summer of 2013, and is expected to be completed in summer of 2015.

“Today’s event marks an important milestone in the construction phase of this exciting project for the Coon Rapids community,” said Dave Bastyr, executive vice president of Knutson Construction’s Minnesota offices, who is responsible for the project’s general oversight.

“We are excited to add such an important facility to the Mercy Hospital, one that we know will greatly enhance the experience for mothers and their families.”

Sara Criger, President of Mercy Hospital and Dave Overman, President and COO of Children’s Hospitals and Clinics of Minnesota spoke at the ceremony about their excitement to have the Mother Baby Center on the campus at Mercy Hospital, which will give them the ability to deliver excellent care to new moms and babies.

Page 10

The partnership between Allina Health and Children’s, which established The Mother Baby Center at Abbott Northwestern and Children’sMinneapolis, is now expanding and benefiting the north metro communities.

Patients, staff, administrators and construction workers were given the opportunity to sign the beam before it was placed on the structure.

A topping off ceremony is a longstanding tradition in construction that occurs when the highest piece of steel is placed on a building’s frame. Its ancient origins are traced back to the Vikings who would place an evergreen tree on the top of a building to celebrate and wish for good luck.

U.S. BANK CLOSES ON $61 MILLION CONSTRUCTION LOAN FOR NEW BE THE MATCH HEADQUARTERS IN NORTH LOOP U.S. Bank and United Properties closed on a $61 million construction loan for Be The Match’s new headquarters in the North Loop neighborhood

Minnesota Real Estate Journal

downtown Minneapolis. Set for completion late next year, the space will eventually house around 900 of the nonprofit’s employees currently at various locations throughout the metro area.

“Target Field and the light-rail expansion have proven to be catalysts for growth in downtown Minneapolis, particularly in the North Loop neighborhood,” said Joseph Hoesley, vice chairman for U.S. Bank Commercial Real Estate. “We expect this project to have a ripple effect tapping into the potential for additional retail and residential development in the surrounding area.”

Minneapolis-based Be The Match, formally known as the National Marrow Donor Program, announced its relocation plans last year and broke ground on the new building last month. The organization, which promotes marrow and cord blood transplantation and is the largest registry of such donors, will lease the space from Bloomington-based commercial real estate firm United Properties.

“This development has been highlyanticipated by downtown Minneapolis’

business and civic communities,” said Frank Dutke, president for United Properties. “In United Properties, Be The Match and U.S. Bank, we have three Twin Cities-based firms coming together to make possible a project that encapsulates downtown’s potential for growth.”

Oppidan Investment Company Has Strong Start to 2014; Enters New Market Segment Oppidan Investment Company, a national property development firm offering a full range of real estate services, today announces its involvement in the development of 485,603-square feet of property across the country in the first half of 2014. During that same time period, the company also provided construction management services for three projects and sold 403,052-square feet of retail space as well as a 42-unit apartment building.

Among its first-half highlights are the company’s first senior living project and the sales of five of its developments in

August 2014

North Dakota’s Bakken region.

Joe Ryan, president of Oppidan, said the progress during the first half of the year validates the company’s efforts on a number of fronts. “It’s always rewarding to have the opportunity to take our expertise to new market sectors as we did with Ebenezer’s Red Rock Senior Living facility. And our sales in the Bakken region clearly demonstrate that we made the right decision in pursuing development there. It’s been a great start to the year—one we would like to continue to build upon,” he said.

Marcus & Millichap ARRANGES THE SALE OF a 11-UNIT APARTMENT BUILDING Marcus & Millichap (NYSE: MMI), a leading commercial real estate investment services firm with offices throughout the United States and Canada, today announced the sale of 3105 Pleasant Avenue, a 11-unit apartment property located in Minneapolis, Minnesota, according to Craig Patterson, regional manager of the firm’s Minneapolis

Page 12

Minnesota Real Estate Journal

August 2014

It’s been nine years coming, but Bielenberg Gardens project becoming a reality

By Dan Rafter, Editor

T

he site first popped onto United Properties' radar in 2005. And why not? As Keith Ulstad, senior vice president with United Properties, says, the plot of land is located in a strategic location in the Minneapolis suburb of Woodbury, Minn.

It sits in the southern half of Woodbury, a desirable market for retailers.

An attractive demographic lives here.

And the site has long been one of the few parcels of land zoned for retail use in this part of Woodbury.

But 2005, of course, was a very different world than the one in which commercial real estate developers are operating today. Before United Properties could finalize plans for a retail development here, the economy fell into recession.

That scuttled any major retail project. Until now.

In late June, United Properties broke ground on the Bielenberg Gardens retail project on this key site at Radio Drive and Bailey Road. The project will include a 65,000-square-foot Jerry's Foods grocery store as an anchor and 6,200-square-foot high-end

liquor store operated by Jerry's Enterprises.

Bielenberg Gardens will also feature a 12,300-square-foot multi-tenant retail building and 10 retail outlots.

The project is an important one for Woodbury. It serves as the retail component of a city-led master-planned

development that will one day include apartments, townhouses and other amenities. The site will connect to the Bielenberg Sports Complex by a tunnel leading under Radio Drive.

Ulstad says the time is now right for the project. It's true, he says, that Woodbury already boasts plenty of

retail. But most of that retail is not located in the southern portion of the community.

"If you peel back the layers of the onion a bit, you'll see that most of the retail is located along Woodbury's I-94 corridor," Ulstad said. "And in high Bielenberg to page 25

Page 14

Minnesota Real Estate Journal

August 2014

Commercial Real Estate Development: The Engine Driving Minnesota’s Economy

By Duane Arens Director of Public Policy NAIOP, The Commercial Real Estate Development Association Minnesota Chapter What is the real value of commercial real estate development?

The critical importance of real estate development and related spending on new commercial buildings to the broader economy is widely recognized, and yet the substantial “ripple effect” it has often goes unrecognized in the halls of the state capitol and among the general public.. However, a new study by the NAIOP Research Foundation, authored by Stephen Fuller, director of the Center for Regional Analysis at George Mason University, describes just how broad and deep the impact of development really is on the local and national economy.

The study, How Office, Industrial and Retail Development and Construction Contributed to the U.S. Economy in 2012, draws on data from McGraw Hill Construction and the Bureau of Economic Analysis, and paints a remarkable portrait of the far-reaching effects of a healthy and thriving real estate development industry.

“While the economic contributions accruing from the actual construction phase of new buildings is widely understood and valued, the pre-construction and post-construction impacts are often overlooked and under-valued,” says Fuller. “The job growth and income generated and supported by annual building operations represent a continuing flow of expenditures into the local, state and national economies that extend throughout the life of the structures.”

These new buildings, Fuller says, also expand the productive capacities of their local economies. “The jobs and [economic] output associated with the newly built capacity contribute significant annual economic and fiscal benefits at all governmental levels,” he explains. “Because these post-construction benefits are cumulative, their economic impacts become increasingly significant to the economy’s growth, expanding and extending the initial economic benefits of the larger upfront construction outlays.”

development and construction in Minnesota in 2012, the latest year available, are impressive, especially for a year in which the state was still in recession mode. They are even more impressive when translated into actual jobs and personal earnings. Here are the big picture numbers:

Commercial development is a key driver of personal incomes in Minnesota Fuller’s findings on the impact of

-$477 million. The balance of the $1.6 billion in total direct investment that remained after paying direct personal earnings, and primarily spent on

-$1.660 billion. Total direct investment in 2012 in new development and related construction in Minnesota.

-28,367. The total number of jobs supported or created in our state by that investment in 2012.

-$1.183 billion. Total personal earnings—71 percent of the total direct investment shown above, not spent on materials used in construction, but money that went directly into workers’ personal pockets in the form of wages, salaries or professional fees—all of it income that was quickly re-circulated within the local and state economies during 2012..

building materials and manufactured products, also created jobs within the broader economy---in manufacturing, assembly, distribution and many other sectors.

The NAIOP Research Foundation report breaks down the combined impact of development and new construction, in terms of investment, personal earnings and jobs created or supported, in this way: Soft Costs. $263 million in direct investment, $185 million in personal earnings, 3,573 jobs.

Site Development. $293 million in direct investment; $209 million in personal earnings; 5,198 jobs.

Hard Costs. $812 million in direct investment; $580 million in personal earnings; 14,412 jobs.

Tenant Improvements. $292 million in direct investment; $209 million in personal earnings; 5,184 jobs.

These breakouts for 2012, if applied to the current year, when development NAIOP to page 20

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Minnesota Real Estate Journal

August 2014

Opus bringing new life to 147-year-old campus building

By Dan Rafter, Editor

T

he Opus Group has decades of experience renovating and expanding collegiate facilities. The company has also tackled its share of renovations at historic buildings.

That's good news for the school leaders at Shattuck-St. Mary's, an Episcopal boarding and day school in Faribault, Minn. The Opus Group is now in the middle of construction on its latest institutional project, turning the 18,500-square-foot Phelps Infirmary building into an on-campus inn with meeting and conference space.

Once complete, the newly renamed Inn at Shattuck-St. Mary's will serve as the diocesan retreat and meeting center for the Episcopal Church in the state of Minneosta.

Tim Callahan, senior project manager at Opus Design Build, said that his company's experience with institutional projects -- the company has handled recent renovation projects at the University of St. Thomas in Minneapolis and Luther College in Decorah, Iowa, among others -- made Opus the obvi-

ous choice for the Shattuck job.

"We have a long history of this kind of work," Callahan said. "On a lot of college campuses, we've done remodels of fairly old buildings. We've done a lot of residential work similar to the hotel/inn concept that we are doing for Shattuck."

The infirmary building is an old one, 147 years old. Remodeling such an old building is never an easy task.

"There are always surprises when you work on a building of this age," Callahan said. "But so far, we've not run into any major roadblocks. Certainly, digging into and remodeling the space has been a unique experience. It's been fun to bring the building back to life and give it a new use for the school.

It's interesting to see how people built spaces like this in that time, and how things have changed."

Opus began the renovation and expansion project in July, and Callahan says that construction should wrap in October.

The project includes a complete remodel of the 147-year-old infirmary building and will add 10,200 square feet of new space to the two-story facil-

ity. The first floor of the building will feature a large meeting room with adjustable partitions, a catering kitchen and a bar and lounge area that can be used for meetings and events.

The second floor will provide 12 guest suites.

Nick Stoneman, president of Shattuck-St. Mary's school, says that the renovation project is long overdue.

"Renewing our oldest building on campus and giving it new life brings great pride and joy to our school community," he said.

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Minnesota Real Estate Journal

August 2014

Construction Contracts for Exempt Organizations Sarah Hopkins, Tax Manager Baker Tilly

I

n Minnesota, entities such as libraries, school districts, certain notfor-profit organizations, and local governments are provided an exemption from sales and use tax on their purchases. However, these exemptions come with complications when purchases for real property construction are involved.

If not done correctly, the contractor or subcontractor that supplied the materials for use in the exempt entity’s project may be subject to back taxes, penalties, and interest.

The sale of building materials, supplies, and equipment to contractors, subcontractors, or builders for the construction, alteration, repair, or improvement to real property is a retail sale.

The reason is because the contractor, subcontractor, or builder is considered to be the end user of those building supplies. In order to purchase the materials and supplies exempt from tax, there are strict guidelines to follow.

First, Minnesota’s statutes state that the exemptions available to exempt organizations do not apply to lump sum

Sarah Hopkins or similar contracts which have a guaranteed maximum price that covers both labor and materials.

What does that mean? In order to take advantage of the sales and use tax exemption for construction contracts, an exempt entity must conduct its bidding separately for labor and materials.

The exempt entity must advertise for separate bids in a way that it would be able to accept one bid without accepting both bids from the contractor.

Once the bidding is complete, separate contracts must be issued for the accepted bids covering materials and labor.

Because exempt entities may not be fully aware of this requirement, contractors and subcontractors should work with exempt entities during the bidding process to ensure the requirements are in place and followed.

The second hurdle is how the purchases must be made. A purchasing agent agreement must be entered into to allow the contractor to make purchases exempt from sales tax of building materials and supplies. This agreement comes with risks for the exempt entity, and therefore the cost savings of not paying the sales tax will need to be weighed against the risks at the time of planning.

The purchasing agent agreement must include all of the following provisions: • The contractor has been appointed as the purchasing agent • The exempt entity takes title to all materials and supplies at the point of delivery • The exempt entity has the risk of loss for all materials and supplies • The exempt entity (not the purchas-

ing agent) has responsibility for all defective materials and supplies, including those incorporated into realty These requirements also apply to any subcontractors that supply both materials and labor.

Once these requirements are met, the contractor must use an Exemption Certificate (Form ST3), available on the Minnesota Department of Revenue’s website, when purchasing building materials and supplies exempt from sales tax in Minnesota. This form must be filled out and provided to the vendor at the time of sale, and the vendor must keep it for its records. At the top of the form, contractors should mark the box to indicate their status as a contractor with a purchasing agent agreement, identify the exempt organization, and describe the specific project.

Contractors, subcontractors, and builders need to retain the following documents pertaining to the purchasing agent agreement: • A copy of the agreement/contract which addresses the requirements detailed above • Evidence of the organization’s Contracts to page 25

Page 20 NAIOP from page 14

and construction are surging, become even more significant. For example, the City of Minneapolis alone is reporting more than $2 billion in new development and construction projects for 2014.

None of this would occur without demand for more space by growing businesses.

All of the good news for Minnesota cited by Prof. Fuller in the NAIOP Research Foundation report resulted

Minnesota Real Estate Journal

from one key driver---business demand for space.

Without a vital, business -friendly economic and tax environment--where businesses are starting up, growing, adding jobs and creating the need for more and better space---none of this can happen.

“NAIOP developer members routinely envision, invest and navigate complicated and risky real estate projects from start to finish,” explains Brandon Champeau, United Properties, chair of the Minnesota Chapter’s

public policy committee. “What begins as just an idea to meet the space needs of a new or growing business ultimately becomes a real building--a catalyst for hundreds of jobs, involving many industries and professions, and involving layers of highly specialized expertise.’

“But businesses that are not growing and expanding because of high property taxes, over- regulation and other government-imposed cost burdens will not commit to the long-term debt or lease obligations a new building

August 2014

requires, and developers will not risk their investment capital,” he says.

That’s why NAIOP’S ongoing commitment to keeping the cost of doing business in Minnesota competitive is so important. Controlling the growth of business property taxes, keeping development and construction-related fees moderate and reasonable, streamlining approvals and the regulatory process all combine to create a hospitable environment for getting development deals accomplished.

“When that happens,” said Champeau, ”the seeds for the design, development and construction of new buildings are planted, and their ripple effects begin. An entrepreneur creates a business, or a business owner expands…money is invested and put at risk…architects and engineers design…doors and windows are manufactured…floors are poured…bricks are cut…walls are built…and the economic impact triggered by that initial demand and the idea for responding to it ripples out, spreading from an isolated property to a neighborhood and then the city, and ultimately to the entire state.”

The ripple effects of commercial development offer long-term community benefits Commercial buildings are legally described as “improvements” to property for good reason. The fact is, commercial real estate development impacts the communities in which it occurs in many more ways than just adding to the immediate personal income streams of construction workers, the building trades, suppliers and related support and professional services.

“New development activity routinely creates major new long-term assets for local communities, resulting in larger tax bases for local governments, which in turn deliver greater revenues for our cities, counties and school districts, not to mention more parks and improved, healthier neighborhoods,” says Mark Nordland, Launch Properties, Minnesota NAIOP Chapter president. “Beyond all of that, and perhaps even more important, a higher level of development activity also creates expanded career and employment opportunities for everyone, but especially for our young people.”

The prelude to achieving all of those wide public benefits is “wise public policy,” says Nordland. “That’s why NAIOP Minnesota continues to work with state and local policymakers to create an environment in which business owners, entrepreneurs and developers remain confident that they can grow and prosper in our state.”

“Only then,” he adds, “will they be willing to take the necessary personal investment risks that result in business expansion, construction demand, and a healthy, growing economy.”

Page 22

Multi-Family From page 1

jump by 2.6 percent by the time 2014 comes to an end.

Breck Hanson, executive vice president and head of commercial real estate in the Chicago office of Associated Bank, says that several factors have combined to provide such a boost to the multi-family market.

“I don’t know if we’ll ever, at least in the future, experience again the single-family-home craze that we saw in the late 1990s and early 2000s,” Hanson said. “The family unit has changed.

People are having children later. People are less certain about the stability of their jobs. The appreciation of homes has either declined or slowed considerably. All of this has combined to make apartment living a more attractive option for people.”

At the same time, the new apartments hitting the market today come with higher-quality amenities, Hanson said. This has attracted some buyers who might otherwise have avoided renting.

“There are higher-quality finishes with today’s apartments,” Hanson said.

“They are more like condominiums or single-family homes. People aren’t sacrificing a high-quality living environment by renting today.”

Minnesota Real Estate Journal

Michael Jehle, vice president in the Bloomfield Hills, Mich., office of Arbor said that the Midwest is a particularly strong region for the multifamily sector.

There are several reasons for this.

The Midwest is seeing strong employment growth. And when new jobs hit an area, people want to move there. At the same time, Midwest cities didn’t see much new apartment product added to their neighborhoods during and immediately after the Great Recession. That has boosted demand for existing products and made finding financing for new apartment communities an easier task.

“You can list many cities in the Midwest – Minneapolis, Kansas City, Chicago, Ann Arbor, Columbus – and say that those markets are on fire right now when it comes to multi-family,” Jehle said. “We really did not see much new apartment development at all from 2008 to 2011. Now we are seeing almost the perfect storm for owners and investors of apartment projects. I can’t remember when the economics for multi-family have been better in this region during the last 15 years.”

Young consumers, of course, are a key to the enduring strength of the multi-family market. It’s why so many of the new multi-family projects are planned for the CBDs of major cities.

As Jehle says, there was a time when

most new apartment developments rose on the outskirts of markets where abundant land was available for construction.

But there was a downside to this: Such locations required a long commute into employment centers. Today, a growing number of renters want to live close to where they work. They don’t want the long commute. As Jehle says, some younger renters don’t even want the hassle of having to own a car.

They’d prefer to live in walkable neighborhoods close to public transportation, neighborhoods that are usually located in the CBDs of bigger cities.

At the same time, many younger people don’t want the responsibility of owning a home and making monthly mortgage payments. Many of these same young people are getting married and having children later in life.

“The need, then, for having a large home for their children and dog isn’t as great as it once was,” Jehle said.

Thomas Sigrist, senior vice president and branch manager with the Chicago office of Berkadia Commercial Mortgage, doesn't expect young consumers to flock in large numbers to singlefamily homes any time soon.

"Younger people today don't want the attachment of a single-family home," Sigrist said. "They want the ability to get up and move. They want

August 2014

to be able to transfer easily if they get a new job opportunity. That's something that you might not be able to do if you are paying off a mortgage loan on a single-family home."

Too much?

The addition of so many new units in so many markets is causing lenders some pause. Blumberg says that NorthMarq takes a close look at the market when developers come to the company in search of multi-family development dollars.

"At what point is there the potential for softness in the market?" Blumberg asked. "We look at the feasibility of new units. There have been so many added to the major metropolitan areas."

That said, Blumberg thinks that most markets -- and most in the Midwest -are still underserved when it comes to multi-family units. Demand continues for new apartment buildings, and once these buildings open, tenants continue to flock to them, she said.

Hanson agrees. He points to his home market of Chicago. Construction of new multi-family properties in the city has been, as Hanson says, “pretty intense.” But even with so much activity, Hanson isn’t worried yet that multifamily construction is outpacing demand in Chicago.

“We haven’t seen a market yet that Multi-Family to page 24

August 2014

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Page 23

Company Profile

Food & Beverage as a Driver of Revenue and Guest Experience: A Roadmap to Full-Service Hotel Success A

pproaching close to forty years in the hospitality industry, Bill Morrissey is always intrigued by the rise and fall of concepts for developing, managing, and sustaining quality brands and products among full-service hotels.

Some of these are pure “glitz and glam,” of course, while others are more enduring – like the impressive legacies of brands like The Ritz-Carlton Hotels and Four Seasons Hotels.

But while brand concepts may come and go, there is a roadmap for success that remains constant, and interestingly, has gone unnoticed by the major international players in the hotel industry. It is the extent to which successfully managing a restaurant or catering operation, combined with hotel management knowledge and expertise, can provide a roadmap for long-term success in the luxury hotel business.

Moving Pieces and “Room 202” We all know how difficult it is to maintain the highest quality standards at a top luxury hotel, but here is a daring statement – at a top rated restaurant, it’s even harder.

The reason is fundamental. “Room 202” at a hotel will always be Room 202. The room’s appearance and amenities must be maintained, refreshed and updated. All the expectations of the most discerning guest must be met and exceeded, from housekeeping to front desk, and beyond. This is not an easy task.

But at the end of the day, Room 202 is just a room – a fixed physical asset and a collection of furnishings and amenities, which create an experience that is reliable to the guest and dependable for the owner/operator. Changing fashions and wear and tear are the major variables.

Compare a hotel to the operations of a restaurant or a catering business.

You have hundreds, maybe thousands of moving pieces, and each moves continuously on a moment-tomoment basis. The food must be fresh, well presented and served at an appropriate temperature. Guests must be greeted with a smile, seated promptly and served expeditiously, yet graciously. Untold numbers of little things can go wrong, from a cracked glass emerging from a dishwasher to an unstable bar stool, which could result not only in an unsatisfactory guest experience, but also, at the extreme, in a negative impact on a guest’s health or well being.

Should something go wrong, a hotelier may two or three nights and days to correct any wrong. At a restaurant, a guest’s experience is narrowly defined

within an hour or two.

Food and beverage (F&B) operations have been correctly compared with performance art as much as hospitality. The performance either comes together, and it’s a hit – or it’s not.

It’s no wonder hotel owners and asset managers often have the most difficult challenges determining the management, branding and operations of the restaurants in their hotels. And it’s not surprising that so many brands and owners treat their restaurants as a guest amenity, rather than something that can help them reach their full market potential!

It’s All about the Perception . . . the People . . . and the Experience At Morrissey Hospitality Companies, Inc. (MHC), we view restaurants and F&B operations differently. In fact, we think a well-executed F&B program can be a driver of revenue and produce a quality guest experience.

A restaurant is an important “public face” for a hotel. It is a gathering place for hotel guests as well as for the local

community. Often, these are the influencers who will shape the perception of a property locally and beyond.

Restaurant visits can often lead to overnight stays, to booking events such as weddings and office parties and to recommendations to business associates and meeting planners. How a hotel owner manages a restaurant is not just important, it is critical!

This fact is even more pronounced in challenging economic times. More than ever, hotel owners need to define and accentuate competitive differences. That can be difficult on the basis of a guest room alone. Ideally, one wants to create a holistic and coherent experience – with outstanding service at the restaurant complementing the experience inside the hotel…and vice versa. And indeed, at the end of the day it is all about the experience. Frequently, a hotel guest’s experience begins and ends with food and beverage.

That is why at MHC, we base our training programs on the experiences and the best practices of our F&B oper-

ations. The true and tested training programs and the right culture will help staff master the level of discipline, personal habits and attention to detail needed to deliver a consistently exceptional experience. Lodging operations has used this methodology religiously to achieve the levels of consistency the successful hotel brands are recognized for.

So why does this exist less in the F&B world? The answer is simple – many more moving parts and human variables. F&B is more variable and more prone to alteration by staff and different interpretation by customers because all five senses are at work. You don’t taste a hotel room, and you do not want to smell one. All this variability requires even more diligent written specifications, controls, measurement and motivation. You work harder to get to the same quality as other services of the hotel, but what happens if you don’t? Your brand components don’t connect and support each other.

Again, this is not to minimize the importance or the complexity of managing the lodging operation of a hotel.

MHC does both with proven success in Minnesota and the Midwest. Neither the general manager of a five-star hotel nor an outstanding restaurant can take anything for granted.

At the same time, there is a deeper lesson here for the hotel and restaurant industry. In an age of shifting guest expectations and abundant ratings systems and methods to share an experience, the consumer is wanting reliability AND experiences that provide a taste of the local community. The local community wants the hotel to be the center of their work and social hospitality needs and a place for those special events in life.

Now more than ever, separating yourself from the competitive mix and creating lasting brands that maximize the real estate and business potential is the road map for sustainable NOI and measurable value.

Bill Morrissey is the President and Founder of Morrissey Hospitality Companies, Inc. based in Saint Paul, Minnesota. MHC is a developer, manager, and consultant to the Midwest’s quality and premier franchised and independent hotels, restaurants, and sports & entertainment venues, including The Saint Paul Hotel. It also manages many restaurants, the catering operations for the Xcel Center in Saint Paul, and catering operations at the 250,000 square foot Saint Paul RiverCentre. www.morrisseyhospitality.com

Page 24 Multi-Family from page 22

you can declare is overbuilt when it comes to multi-family,” Hanson said.

“But we are watching for that now.

Obviously, some markets have had more new construction than others.

Banks are beginning to look at their exposure to a market and to a product type. They are being more selective in which projects and which development companies they choose to work with.”

Blumberg hasn't even seen an increase in concessions as new units hit the market. That's more evidence that the supply of new multi-family buildings isn't outpacing consumer demand.

"We were once seeing two months

Minnesota Real Estate Journal

of free rent," Blumberg said. "Now it is down to a move-in special that is just a few days of free rent. That, to me, is a sign that demand isn't lessening for these new units."

And what types of units are renting in the shortest amount of time? Blumberg says that she's seeing studio apartments nabbing the most interest from renters.

Part of the reason? Apartment rents in many major metropolitan areas are at all-time highs. Smaller studio apartments are more affordable to a greater number of renters.

Demand for these units isn't limited to city centers, either, Blumberg says.

She points to the Chicago market.

While apartment units in the middle of the city draw the highest rents, newer buildings in the suburbs are attracting plenty of activity, too. Many of the suburban apartment complexes tout their work-life amenities, everything from pools to jogging paths to bike trails.

Amenities have become more important to multi-family owners, whether in the suburbs or in the hearts of downtown CBDs. And when it comes to amenities, technology has become important.

Blumberg points to apartment buildings that have high-tech fitness centers.

A resident can, for example, select an

August 2014

online Zumba lesson on a large-screen TV. The next time this resident comes to the same screen, the screen will remember the most recent Zumba lesson the resident took. The screen will then give the resident the option to repeat the lesson or move up to a more intense workout.

Saunas, hot tubs, outdoor pools, indoor pools and rooftop decks are common amenities, too. Blumberg has seen apartments with indoor dog runs and herb gardens.

Financing It’s easier for both developers and investors to acquire financing today to either acquire or build multi-family properties.

But this doesn’t mean that banks and lenders aren’t being prudent with their dollars.

Hanson says that developers, for instance, still have to prove to lenders that the locations of their new apartment projects make sense. The right location will equal strong demand. A bad location could result in too many vacant units.

Hanson says that developers still need to bring the right amount of equity to a transaction. Associated Bank lenders will also look at the developers’ experience in the multi-family market.

“What happens when something gets hot is that there are a lot of people who are trying to build products that they have never built before,” Hanson said. “So experience is an important factor when it comes to financing for developers.”

Developers should also have experience working in the market in which they want to build, Hanson said.

“An understanding of the market is so important,” Hanson said. “Developers need to have an understanding of how to work with a market’s vendors and contractors.”

Jehle says, too, that borrowers need to be able to prove that they have the financial ability to withstand a slowdown in the market.

This is a lesson learned from the Great Recession, an economic downturn that left many borrowers unable to pay back the money they had borrowed.

“The cash that owners have in the event of a project taking a turn for the worse is important,” Jehle said. “That has been important since the economic downturn in late 2008, 2009 and 2010.

What happens when things start going sideways? Can owners survive the fall?”

Sigrist says that Berkadia, too, looks for management experience and owners who are familiar with the specific product type for which they are seeking financing. The good news? The majority of borrowers whom approach Berkadia for refinancing and acquisitions of multi-family properties already know the basics when it comes to qualifying for these dollars.

Multi-Family to next page

August 2014

Multi-Family from page 24

This doesn't always hold, though, for those seeking financing to build new apartment complexes, Sigrist said.

"The majority of refinance and acquisition people already know the market. They know what we are looking for," Sigrist said. "On the construction side, though, it is not as well-defined. Some of the developers are still unaware of some of their loan options. Many, for instance, don't know that they can qualify for HUD financing programs."

Those owners and developers, though, with the right fundamentals

Minnesota Real Estate Journal

should have little trouble finding multi-family financing today, Jehle said.

That’s partly because there are so many sources for multi-family dollars now. There are the traditional banks, of course. But investors and developers can also choose from a growing number of CMBS lenders, Fannie Mae, Freddie Mac and the Federal Housing Administration when it comes to finding multi-family financing.

“Apartments are still the darling child of real estate,” Jehle said.

“There is a lot of money right now for those interested in apartments.”

Bielenberg from page 12

measure, that retail is lifestyle goods, shoppers goods, as opposed to necessary goods. What people didn't like was driving from the southern part of Woodbury to the northern part to buy gas and groceries or to do their banking or get their prescriptions."

Bielenberg Gardens solves this problem, providing those residents who live in the southern portion of the community easier access to these necessary consumer goods.

"We made it clear early on that we are not competing with the lifestyle retail in the area," Ulstad said. "We are not selling ball gowns or flat-screen TVs. This is a shopping center geared to the everyday needs of the citizens of south Woodbury."

The grocery store and strip center are now under construction. Ulstad said that the goal is to get the grocery store environment-proofed by early to mid-

Contracts from page 18

exempt status • Records identifying all materials and supplies purchased for the project If equipment is rented or leased for the project, the exemption may not be used towards this purchase. Only purchases of building materials and supplies that become part of the improvement to real property may be purchased exempt under the agreement.

If the above requirements are not met and the purchases made without paying tax are discovered in a Minnesota sales and use tax audit, the contractor will likely be liable for the amount of tax which should have been paid on the building materials and supplies at the time of purchase.

Because the purchases of these items are taxable to the contractor, subcontractor, or builder, they would be responsible for paying the tax, even if the savings was passed on to the exempt entity. The state would likely not try to recover the tax assessment

Page 25

from the exempt entity since they purchased an improvement to real property rather than the tangible personal property. In addition to an assessment for the tax, penalties and interest would also likely be due. To attempt to recover the tax assessed in the audit, you would need to seek reimbursement from the exempt entity for the mark-up of materials and supplies to account for the tax you should have paid at the time you purchased them.

When considering a construction contract with an exempt entity, contractors, subcontractors, and builders should be sure the necessary requirements are followed. Due to the complex sales and use tax rules that apply, they should consider consulting with their tax adviser to ensure that exposure is minimized and the entity obtains the highest tax savings possible.

Sarah Hopkins, Baker Tilly 612-876-4899 Sarah.Hopkins@BakerTilly.com

December. United Properties is planning an opening of the store in March or April of next year.

"The stars have aligned for us after nine years," Ulstad said. "To get going is a great feeling. If you go up there now, you see the walls actually going up. It's sometimes hard to believe, but we are now underway."

Page 26

Bakken From page 1

square feet of mixed-use commercial projects in the Bakken region. The company has more than $1.3 billion invested in vertical development in North Dakota.

And now Dakota Insight Land & Investments is busy developing and marketing a pair of new mixed-use projects in the Bakken area.

This isn’t surprising; Kachuroi says he still sees plenty of opportunity in this oil-rich region.

“We know this region well,” Kachuroi said. “I’m not saying that we were experts in North Dakota from the time we built our very first project here. But we have taken the time to learn how the process works in North Dakota. We’ve had a big head start on many of our competitors, a head start of more than two years. And we are committed to bringing this part of the state the services it needs.”

The boom times in the Bakken region of North Dakota can be attributed to the oil reserves here, reserves that rival those of Saudi Arabia.

The challenge, though, is that the towns of this slice of North Dakota lacked the amenities needed by their suddenly booming populations. Simply put, there aren't enough hotels,

Minnesota Real Estate Journal

apartment buildings, single-family homes, gas stations or medical facilities here.

That has provided opportunities for commercial developers and brokerages. Some companies, such as Dakota Insight Land & Investments, have made the most of this, and are reshaping the face of the Bakken region.

New projects Dakota Insight Land & Investments is currently marketing the NorthStar Center, a 535-acre master-planned mixed-use community in Williston.

The goal here is to create a walkable, pedestrian-friendly community to meet the needs of Williston's growing population.

The project is no small one. It calls for 1,274 multi-family units, more than 1,500 units of single-family housing, an autoplex auto center, office park and retail. Plans include a central community, a heavy commercial park and some sort of medical use.

"We broke ground on this project two weeks ago, and we are working diligently to have foundations, if not vertical, in place with some of our apartments by the end of this year," Kachuroi said.

Demand from potential tenants has already been strong. Kachuroi said that a Chevy dealership has already committed to filling the autoplex portion of the project.

Dakota Insight is working with Watford City-based Titanium Builders & Development on this project. Titanium, led by founder Jason Vedadi and serving as the master builder on the NorthStar project, has completed commercial projects in five states. Kachuroi also serves as the vice president of development and acquisition for Titanium.

Dakota Insight is also currently marketing Hunter's Run, a 350-acre mixeduse master-planned community in Watford City. This project will bring 190 townhomes, 166 twin homes, 468 apartments and a 7.6-acre park to the community. Other features include

August 2014

commercial opportunities for medical office, retail, restaurants and a possible hotel.

Titanium Builders & Development will again act as the project's master builder and developer.

Construction on this project is well underway. Kachuroi says that he expects 700 residential units to be available for leasing before the year ends. People are already living in some of the completed residential units, he said.

August 2014

Minnesota Real Estate Journal

News

Arc’teryx Signs Lease at Calhoun Square

From page 10

Minneapolis, MN, August 6, 2014 – ACKERBERG announced that they have executed a lease agreement with Arc’teryx for 2,565 square feet at Calhoun Square, located at 3001 Hennepin Avenue, in the Uptown area of Minneapolis, Minnesota. The retailer specializes in apparel and equipment for hiking, climbing, running, snow sports and “life in between”. This is the second Arc'teryx brand store in the United States. The first opened in Seattle on September 7, 2013.

Arc'teryx is an outdoor clothing and sporting goods company founded in North Vancouver, British Columbia, Canada, in 1989. The name and logo of Arc'teryx refer to the Archaeopteryx, the earliest known bird. Johnny Reimann of MidAmerica Group represented Arc’teryx in the transaction. For more information visit www.arcteryx.com or contact Jo Salamon at 604-960-31-8 or Jo.Salamon@arcteryx.com.

“Our newest retail tenant, Arc’teryx, is the kind of tenant we want in Cal-

office. The asset sold for $620,000.

Josh Talberg, an investment specialist in Marcus & Millichap’s Minneapolis office, had the exclusive listing to market the property on behalf of the seller, a private investor. The buyer, a limited liability company, was also secured and represented by Josh Talberg.

Speaking with Mr. Talberg, “This deal generated 11 offers within a 3 week marketing timeline. Due to today’s high demand for both this type of asset and location, along with our strong and proven marketing platform, we concluded this transaction at a sale price of 108 percent over initial list price.”

The property is located at 3105 Pleasant Avenue South in Minneapolis, Minnesota. Built in the 1960’s, the property has had only two owners since development. The property consists of 11 units and is located in the Lyn-Lake area of ‘Uptown’ Minneapolis.

Page 27

houn Square,” said Jackie Knight, Senior Managing Director at ACKERBERG. “This international tenant only has one store per market, and they’ve chosen the Uptown area for that store.

They are a perfect fit for our vision of the property: one of a kind experiences, whether that be from unique product lines, menu offerings, or the level of service that you receive while visiting.

This tenant will certainly be a destination retailer for outdoor enthusiasts in the Twin Cities,” Knight concluded.

testament of collaborative team work, and receiving this final approval is a reflection of a lot of hard work by many different people,” said Shlomo Khoudari, managing principal of Elion Partners, a joint venture partner with Kraus-Anderson on the horizontal phase of the project. “City Place has already awoken interest from corporate users. We look forward to companies seizing the opportunity to make City Place their home and to house their employees in this forward-thinking environment.”

Matt Alexander, Kraus-Anderson’s director of real estate development, said the team is thrilled to receive the City’s approval.

“This is a most important step in realizing the ‘work-play-live’ concept behind the development plan of City Place,” said Alexander. “Kraus-Anderson now expects to begin the site work on the multi-phased project later this fall.”

In May, City Place announced it had finalized a purchase agreement with TMI Hospitality to buy a site on the northwest part of the development for a 116-room Residence Inn hotel. The 700,000-square-foot development will also feature 100,000 square feet of new office buildings and 160,000 square feet of retail, anchored by a 45,000square-foot, high-end grocery store.

City of Woodbury unanimously approves City Place 700,000-square-foot development plans to become a thriving mixeduse corporate center The City of Woodbury tonight approved the site plan for City Place, the 100-acre property in Woodbury, Minn., located at Interstate 94 and Radio Drive. The unanimous vote by the City Council allows for the site to be repositioned to a mixed-use development, featuring an array of amenities that will bring the vision of a work/play environment to life. The 700,000-square-foot development will complement the existing 400,000square-foot office building with a hotel, retail, restaurants and banks.

“The last 15 months have been a true

Sites available for Hotel, Restaurant and Retail.

Recent studies indicate a need in Cambridge.

• • • • •

Build ready sites Direct access to hwy 65 & 95 High traffic counts Redevelopment sites available Fast track approval for building plans and process

View recent studies here: www.opportunitycommunity.com/Cambridge ED/Community-Profile/Community-Reports