VOLUME 33, NUMBER 12
©2017 Real Estate Publishing Corporation
December 2017
Apartment Deliveries Sets a New High-Water Mark in 2017, Possible Repeat in 2018
Multifamily development was strong in 2017, very strong By Todd Phillips, Minnesota Real Estate Journal
T
o recap the 2017 multi-family market, the Minnesota Real Estate Journal talked to three industry experts, Gina Dingman, President NAI Everest,
Matt Mullins, Vice President at Maxfield Research, Jon Fletcher, Vice President of Development at Lennar. The final count for 2017 deliveries is expected to breach 4,500 units for the seven county metro, blowing past the previous high-water mark of 3,800 units set in 2014. According to Matt Mullins of Maxfield Research, “2018 looks just as strong. We are tracking 4,400 units under construction, or close to it, which should be completed in 2018.” Strong market fundamentals and an economy
awash in capital seem to be driving continued development. “The metro is still seeing rent growth in most submarkets, some as high as 5%,” according to Gina Dingman of NAI Everest. Combined with a market vacancy of 2.7% and developers are paying attention. “As long as you have both rent growth and low vacancy, developers will continue to put up new projects.” Apartments to page 10
To all our readers, advertisers, and conference attendees
I
t has been an exciting year for us at the Minnesota Real Estate Journal and for the Commercial Real Estate Industry in our great state. And it seems we all have even bigger and brighter plans for 2018. Over the course of the last twelve months, after purchasing the Minnesota Real Estate Journal and Real Estate Summits, we have produced more than 60 live educational and networking summits across ten states. More than 10,000 people have attended one of those summits and heard from some of our 750 industryleading speakers. And we have ambitious expansion
Johnson
plans for 2018. First of all, we want to renew our focus on delivering Minnesota CRE news, not just in our print publication, but also by enhancing our website, delivering more frequent news emails and by making the most of the new features on LinkedIn. In order to accomplish those things, we need your help. Please continue to send us your
press releases or just drop us a note with what you are excited about, who you recently hired, or a project that just got inked. Feel free to reach out to me, Jay, Alan or Todd with your story ideas, guest columns, and events. We need you to make our business the best it can be. We also plan to continue our growth across the Midwest. In 2017, we held events in Wisconsin, Indiana, North Dakota, South Dakota, Missouri and Texas, to name a few. We intend to offer more events in those Looking to 2018 to page 18
December 2017
Contents
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Minnesota Real Estate Journal
DECEMBER 2017 • VOLUME 33, NUMBER 12
MULTIFAMILY DEVELOPMENT WAS STRONG IN 2017, VERY STRONG TO ALL OUR READERS, ADVERTISERS, AND CONFERENCE ATTENDEES
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MESA WEST CAPITAL ENTERS MINNEAPOLIS MARKET RETAILERS JUST HAD ONE JOLLY HOLIDAY SEASON
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Departments PEOPLE
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NEWS
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Minnesota Real Estate Journal (ISSN 08932255) Copyright © 2017 by the Minnesota Real Estate Journal is published for $85 a year at 12 times per year by Jeff Johnson, 13700 83rd Way North, Suite 206, Maple Grove, MN 55369. Monthly Business and Editorial Offices: 13700 83rd Way North, Maple Grove, MN 55369 Accounting and Circulation Offices: Jeff Johnson, 13700 83rd Way North, Maple Grove, MN 55369 Call 952-885-0815 to subscribe. For more information call: 952-885-0815. Periodical postage paid at Maple Grove and additional mailing offices. POSTMASTER: Send address changes to Minnesota Real Estate Journal, 13700 83rd Way North, Suite 206, Maple Grove, MN 55369 ©2017 Real Estate Publishing Corporation. No part of this publication may be reproduced without the written permission of the publisher.
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Minnesota Real Estate Journal
December 2017
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EDITORIAL ADVISORY BOARD JOHN ALLEN Industrial Equities ROBERT ANGLESON Navigator Real Estate JEFF EATON Cushman & Wakefield MARK EVENSON Avison Young PATRICIA GNETZ US Bank TOM GUMP TAG Consulting CHAD JOHNSON Hellmuth & Johnson BILL WARDWELL Colliers International JEFFREY LAFAVRE IAG Commercial WADE LAU Founders Properties JIM LOCKHART WIPFLI DUANE LUND Exchange Realty CLINT MILLER Cushman & Wakefield DR. THOMAS MUSIL WHITNEY PEYTON MIKE SALMEN Transwestern
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Cushman & Wakefield’s Aaron Barnard Awarded SIOR’s Top Honor and Elected Foundation President; Sydney Johnson Earns SIOR Designation Robert P. Boblett Award Recognizes Dedication, Distinguished Service Aaron Barnard, a Senior Director in Cushman & Wakefield’s MinneapolisSt. Paul office, was honored this month as the winner of the Society of Industrial and Office Realtors’® (SIOR) distinguished Robert P. Boblett Award. SIOR presented Barnard with the award at its annual awards ceremony in early December. The honor is given each year to one member in recognition of his or her dedication, distinguished service and longstanding commitment to the ideals and standards of SIOR. The award is the highest honor given each year by the Minnesota chapter of SIOR. In an unrelated decision, Barnard has also been named the 2018 President of the SIOR Foundation. Barnard is a 20-year veteran of Minneapolis commercial real estate, with a client list including such notable names as Cargill, Opus, Ryan Cos. and W.P. Carey Inc. Barnard previously served as SIOR Minnesota president in 2012 and served as a trustee of the SIOR Foundation since 2012. He’s actively involved in several SIOR committees, including the Conference Committee and Keynote Speaker Committee at the national level, and the Programs Committee for the Minnesota Chapter. Sydney Johnson, also a Senior Director and a 12-year veteran of Cushman & Wakefield, attained her SIOR designation this quarter. The designation is awarded to specialists in industrial and office markets who are proven closers and meet production, ethical and educational requirements.
Doran Companies Hires Peter Carlson to Lead Development Efforts for Denver Office Carlson is a Denver-based executive with 35 years of development and construction experience Doran Companies, an award-winning real estate development and construc-
tion organization, has hired Peter Carlson to head up its development efforts in Denver. Carlson has nearly 35 years of real estate development and construction experience, primarily in executive leadership roles. “Peter is an exceptional and highly qualified senior executive with a unique combination of expertise in both real estate development and construction," says Tony Kuechle, Senior Vice President of Development for Doran Companies. “Based in Denver, he has significant experience and strong ties to the Colorado community, which aligns with our long-term commitment to grow our Denver operations to mirror what we have accomplished in the Twin Cities.” As one of the fastest-growing real estate development firms in the Upper Midwest, Doran Companies is a trusted leader in development, architecture, construction and property management. Based in Bloomington, Minnesota, the company expanded to Denver last year and is committed to remaining in the market long-term, with several developments currently in negotiations. Doran Companies is currently constructing Ascent, a 456,945 square feet, 255-unit mixed-use, market rate project in Westminster. Construction is set for completion in 2019. “I am delighted to join the Doran Companies team, where I can continue to live in the vibrant state of Colorado
and focus on numerous local development and construction projects, including the Ascent project," says Carlson. “I chose to join Doran Companies because of their long-term commitment to building and developing in Denver, as well as their philosophy that success is driven by delivering exceptional service and forming lasting relationships. This same philosophy defines the metro Denver community.” Carlson, who will serve as Senior Vice President of Development, has held senior leadership roles at organizations like The Opus Group, Chesapeake Companies and Pathfinder Companies. He holds a Master of Business Administration degree, as well as Bachelor of Science degree from the University of Minnesota. He is also an adjunct guest faculty member at the University of Colorado-Boulder’s MBA program and a member of the Commercial Real Estate Development Association (NAIOP) and International Council of Shopping Centers (ICSC).
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Minnesota Real Estate Journal
News Dougherty Mortgage LLC closes $1.2 million Fannie Mae loan for Crystal Chase Apartments Dougherty Mortgage LLC, a full service national mortgage banking firm, recently closed a $1.2 million Fannie Mae loan for the acquisition financing of Crystal Chase Apartments, a 32-unit multifamily affordable housing property located in Strasburg, Virginia. Apartment features include dishwasher and disposal, energy efficient appliances, walk-in closets and washer/dryer hookups. Community amenities include grill area, clubhouse, on-site laundry facility and playground. The Fannie Mae 12year loan has a 30-year amortization schedule and was arranged through Dougherty’s Minneapolis office for borrower IPI Crystal Chase LP.
Dougherty Funding LLC closes $2.7 million loan for Midway Mall The Minneapolis office of Dougherty
Funding LLC has closed a $2,675,000 First Mortgage loan to finance the Midway Mall located in Elyria, Ohio. The owned collateral encompasses 585,606 SF of gross leasable area. The Mall is approximately 80% occupied by 75 tenants, comprised of a mixture of national, regional and local tenants. The financing was arranged for Elyria Realty LLC, Midway CH LLC and Midway Nassim LLC. Dougherty Funding serves as lead lender and servicer for the loan.
CBRE Capital Markets Closes Sale of the Southwest Office/Tech Portfolio CBRE Capital Markets represented ownership in the sale of the Southwest Office/Tech Portfolio, a 166,650square-foot office/tech portfolio in Eden Prairie, Minnesota. Judd Welliver, Ryan Watts, Sonja Dusil, and Tom Holtz of CBRE Capital Markets in Minneapolis, represented the seller. The buyer is Red Tail Acquisitions (RTA), a private real estate investment firm based in Irvine, CA. The sale
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December 2017
closed December 20, 2017, and marks RTA’s second industrial purchase in the Minneapolis market. The Southwest Office/Tech Portfolio consists of three single-story office and tech buildings totaling 166,650 square feet. The portfolio includes Edenvale Executive Center A & B and Valley Gate North. The properties are located in Eden Prairie, a southwestern suburb of Minneapolis, Minnesota. The properties were built in 1986 and 1987 with 11' to 14' clear heights and 82.7 percent overall office finish. The portfolio is currently 82 percent occupied.
CBRE Capital Markets Arranges Sale of Two Minneapolis Creative Office Properties CBRE Capital Markets announced today the sale of The Broadway and Icehouse Plaza in Minneapolis, two buildings in First & First’s Twin Cities creative real estate portfolio, to Northpond Partners. Ryan Watts, Sonja Dusil, Judd Welliver and Tom Holtz of CBRE’s Minneapo-
lis office arranged the sale on behalf of Minneapolis-based developer First & First. Together, the buildings in the sale total 95,895 square feet and were 98 percent occupied at the time of closing. First & First is committed to reimagining historically significant sites within the Minneapolis and St. Paul urban landscape. They transform these unique assets into inspired places that facilitate a creative and cultural experience. CBRE is also marketing additional properties for sale within First & First’s Creative Real Estate Portfolio. Chicago-based Northpond Partners focuses on the acquisition, development, and redevelopment of retail and mixeduse properties located in select urban and suburban markets domestically. Leveraging decades of expertise and relationships, Northpond targets valueadd and opportunistic investment strategies. The Broadway, at 945 Broadway Street NE, is a 56,156-square-foot creative office and retail building fronting Broadway Street in northeast Minneapolis. The two-floor building was originally constructed in 1922 and reno-
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vated in 2013. Major tenants include Spyhouse Coffee, 612Brew and CorePower Yoga. Icehouse Plaza, located on Minneapolis’ Eat Street in the Whittier neighborhood, includes two office and retail buildings totaling 39,739 rentable square feet with 13 multifamily units and an outdoor plaza. The properties, at 2550 and 2548 Nicollet Avenue South, were renovated in 2011. Tenants include restaurants Icehouse, Eat Street Social and Black Sheep Pizza; and indoor bouldering gym Vertical Endeavors.
Colliers International | Minneapolis-St. Paul Investment Services Team negotiates sale of value-add apartment complex in Shakopee The sale of White Pines Apartments represents a growing interest in Twin Cities, outer-ring, suburban acquisitions from national institutional investors The Investment Services Team at Colliers International | Minneapolis-St. Paul represented At Home Apartments in the
Minnesota Real Estate Journal
sale of White Pines Apartments located at 1324 Eagle Creek Blvd, in Shakopee, Minnesota. White Pines Apartments was sold to New York-based Abacus Capital Group for $14,500,000. The property, totaling 123 units, was 100% leased upon closing. Ted Bickel, Senior Vice President at Colliers International | Minneapolis-St. Paul says of the sale, “It illustrates the strength of the Minneapolis-St. Paul metro market as a whole and particularly the increasing national investor appetite for outer ring suburban opportunities, which is a relatively new phenomena.” The Colliers International | Minneapolis-St. Paul Investment Services Team of Senior Vice President Ted Bickel, Vice President Jeff Budish and Associate Brady DeVore represented At Home Apartments in this transaction.
Colliers International | Minneapolis-St. Paul Investment Services Team negotiates sale of two student housing properties
Solhaus and Solhaus Tower, both located in the prime U of M neighborhood of Dinkytown, represent a strategically timed investment sale of two newer developments in the rapidlyexpanding campus neighborhood. Monday, December 19th, 2017 – The Investment Services Team at Colliers International | Minneapolis-St. Paul represented Denver-based Forum Real Estate Group, in the sale of Solhaus, and Solhaus Tower, two multi-family, campus housing properties located at 2428 Delaware St SE & 515 Huron Blvd SE. The properties, totaling 150 units, are about a block away from each other in the bustling University of Minnesota campus area of Stadium Village. The properties were purchased by San Francisco-based FPA for $27,425,000. In the last few years FPA has added the Twin Cities metro area to their watch list and the Solhaus and Solhaus Tower sale brings FPA’s total Minneapolis multifamily portfolio to 10 properties. FPA is one of the nations largest multi-family ownership groups in the nation with over 25,000 units. “We had heavy interest from the pre-
December 2017
marketing phase and were happy to contract with a strong, reputable buyer.” said Ted Bickel, Senior Vice President at Colliers International | Minneapolis-St. Paul. The Colliers International | Minneapolis-St. Paul Investment Services Team of Senior Vice President Ted Bickel, Vice President Jeff Budish and Associate Brady DeVore represented Forum Real Estate Group in this transaction.
GRANITE WOODS IN PLYMOUTH, MINNESOTA SOLD FOR $24.5 MILLION CBRE Multifamily announced it has arranged the sale of Granite Woods, a 192-unit apartment community in Plymouth, Minnesota. The Minneapolis-based team of Keith Collins, Abe Appert, Ted Abramson, and Ike Hoffman arranged the $24.5 million sale on behalf of its owner, Arlington Arms LLC, an entity related to the St. Louis Park-based Main Street Companies, Inc. The buyer is Granite Woods – Minneapolis LLC, an entity controlled by Curtis Capital Group in Bellevue,
December 2017
Washington. The sale, which closed December 19, works out to $127,343 per unit. The property is located at 3925 Lancaster Lane North in Plymouth near the Highway 169 and Rockford Road intersection. Granite Woods, built in 1972, is comprised of 192 apartment units with an average unit size of 974 square feet. The community features a large clubhouse with a community room, game room, fitness center and indoor pool and underground parking. The outdoor amenities include a pool, dog park, tennis court and walking trails.
MARCUS & MILLICHAP ARRANGES THE SALE OF 1091 GOODRICH AVENUE, A 13-UNIT APARTMENT BUILDING IN ST. PAUL 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 1091
Minnesota Real Estate Journal
Goodrich Avenue, a 13-unit, apartment building located in Saint Paul, Minnesota, according to Craig Patterson, regional manager of the firm’s Minneapolis office. The asset sold for $1,515,000. Dan Linnell, Mox Gunderson, Evan Miller, and Josh Talberg, investment specialists in Marcus & Millichap’s Minneapolis office, had the exclusive listing to market the property on behalf of the seller, a private investor and secured the buyer, also a private investor. Speaking with Mr. Linnell, “This sub-market of Saint Paul is home to and promotes multiple driving factors that attract an array of higher paying renters and in turn, an abundance in types of investors that had interest in the offering. Buyers have shown in this hot marketplace that the motivations for buying and controlling real estate are diverse and forward-looking with short term benefits and even greater rewards over time compared to alternative investments; contributing to
the market’s record high prices with this product.”
Davis wins national healthcare real estate development award for HealthEast MOB The Minneapolis-based healthcare real estate developer created a top medical building focusing equally on design and patient experience. The HealthEast Clinic & Specialty Center in Maplewood, Minn., won a 2017 HREI Insights Award for “Best New Medical Office Building or Other Outpatient Facility (100,000 square feet or more).” Mark Davis and Jill Rasmussen of Davis were on hand to accept the award Dec. 7 during the RealShare Healthcare Real Estate Conference in Scottsdale, Ariz. The HealthEast Clinic & Specialty Center in Maplewood, Minn., developed by Minneapolis-based Davis, has won top honors at the national HREI Insights Award™. Davis won the award for “Best New Medical Office
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Building or Other Outpatient Facility (100,000 square feet or more).” Davis, a national healthcare real estate (HRE) development, property management, brokerage and investment firm, was commended at the award ceremony for creating a compelling example of a top-quality medical facility that is beautiful, functional and user friendly, yet was developed efficiently and cost-effectively in a time-sensitive manner. Davis overcame multiple challenges to successfully develop the 147,885 square foot medical facility located at 2945 Hazelwood St., next to HealthEast’s St. John’s Hospital campus in Maplewood, a northeast St. Paul suburb. The HREI Insights Awards, the first and only national awards dedicated to recognizing excellence in the areas of HRE development and executive leadership, are presented annually by HREI, a national magazine that reports on HRE development, financing and investment. This year’s awards were News to page 18
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Minnesota Real Estate Journal
December 2017
Apartments From page 1
URBAN vs SUBURBAN Lennar is one major player that isn’t locked in to either the suburban or urban model. They currently have projects under construction in Edina and Bloomington, as well as Minneapolis. According to Jon Fletcher, “We look for sites that are as close to amenities as possible. Walkability has become a big draw for our residents.” Proximity to retail defines a very large percentage of the new projects in the seven county metro, whether urban or suburban. “Folks want to be part of a community,” according to Fletcher. “There is only so much community you can fit inside a building; so the environment outside the building has become almost as important as what you put inside.” And Lennar is confident they have found and will continue to find sites that meet those criteria in both urban and suburban markets. “Land cost is becoming an issue, however.” adds Fletcher. As most developers have reported, the numbers still have to make sense. And with the market as hot as it is, there is a risk that
land seller expectations have outpaced what a project can support. “It’s a potential issue in most submarkets,” adds Dingman. “Land Seller expectations have to be in-line with what a developer believes they can support with achievable rent projections.”
NEW PRODUCT vs REDEVELOPMENT It is not just new product making an impact on the Minneapolis-St. Paul market; redevelopment is playing a major role as well. According to Dingman, “new projects are done on a slimmer margin than many of the redevelopment plays. Redevelopment often
can have a bigger risk and thus more substantial rewards. Therefore, valueadd developers are chasing redevelopment instead of building new.” Dingman further says she has seen valueadd purchases top $150,000 per unit, and that’s before rehab costs. “When Apartments to next page
December 2017
the project is complete, the developer is still delivering a class A project, even with the high per door cost they paid to acquire and redevelop the property, they are still below replacement cost.” FOLLOW THE MONEY In most real estate cycles, Minneapolis-St. Paul is overlooked by investment firms on the coasts, flyover country. “Not only are we seeing money come in from the institutional investors on the coasts, we are getting substantial interest from direct foreign investors as well.” Dingman speculates that it is Minnesota’s strong economy and highly educated job market that has piqued those investors’ interest. The fact that MSP continues to be ranked a top five apartment market in most national reports seems to add to that as well. “I wouldn’t call it a herd mentality,” adds Dingman, “but strong fundamentals combined with a stable economy and workforce has certainly driven investors to Minnesota in large numbers.” MEET THE DEVELOPERS It is not just the big developers that making waves. Of course players like Doran Companies, Lennar, and Opus are busy doing mega-projects, but a number of other developers are busy as
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well. “CPM seems to be the leader by number of projects recently developed and in the ground. Collectively, all their 25 to 75 unit projects put them right up there with developers like Doran,” according to Mullins. “But it is definitely not any one developer or small group of developers. Development is currently spread across dozens of firms.” WHEN WILL IT ALL END? Dingman, Mullins and Fletcher all agree that growth looks good in the near term. With other metropolitan areas putting up 15,000 or more units in a year, Minnesota still looks constrained in comparison. “There are substantial barriers to entry in this market,” reports Dingman, “and that should keep development at a disciplined pace.” Unanimous concern about rising construction costs is also a mitigating factor. When you have rising land costs along with rising construction costs, it tightens the market for new development opportunities. Contractors report that nearly every line item in the construction budget is poised to go up in 2018. Some line items, like drywall, may go up double digits. Lennar is using creative strategies like exposed concrete ceilings and columns to
reduce the need for drywall in projects. “With labor and materials headed down south to repair hurricane damage, construction costs are certainly a concern for 2018,” adds Fletcher.
Only time will tell where 2018 will end, but all signs point forward for now.
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Minnesota Real Estate Journal
December 2017
Retailers just had one jolly holiday season
Mesa West Capital enters Minneapolis market
M
esa West Capital has originated its first loan in the state of Minnesota, funding $20 million in first mortgage debt to recapitalize an historic 150,000-square-foot office building in Minneapolis. The five-year, interest-only loan is secured by The Colwell Building, a recently renovated eight-story redstone and brick building located at 123 N. 3rd St. in Minneapolis’ Warehouse District. A joint venture led by San Francisco-based real estate investment firm Spear Street Capital recently completed the first phase of a multi-mil-
lion-dollar renovation of the property. Improvements included new terrazzo floors in the lobby, upgrades to the elevator systems and cabs, new HVAC and windows, earning the building an Energy Star label from the EPA for improved building energy performance and sustainability. A portion of the loan proceeds from the Mesa West loan will be used to build a fitness center and bike-storage room, as well as to fund leasing and tenant improvement costs associated with stabilizing the building.
T
his holiday season was a merry one for U.S. retailers. A new report says holiday sales saw the largest year-over-year increase since 2011. According to the Mastercard SpendingPulse report, holiday sales jumped 4.9 percent this year when compared to 2016. The report traced sales from Nov. 1 through Dec. 24. Another report, this one published by Customer Growth Partners, said that consumers spent $598 billion during this holiday season. That’s a jump from $565 billion last year. The week before Christmas was
an especially strong one for retailers. This isn’t surprising. The National Retail Federation reported that more than six in 10 holiday shoppers planned on purchasing their last holiday gift during the week of Dec. 18 through 24. The federation reported that “Super Saturday,” the last Saturday before Christmas, was expected to be the biggest day of the year for retailers. According to the federation, 53 percent of consumers – or about 126 million people – were expected to be finishing their shopping on that day.
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presented December 7 during the RealShare Healthcare Real Estate Conference in Scottsdale, Ariz. “Davis faced unusually difficult challenges in developing the HealthEast Clinic & Specialty Center,” HREI Publisher Murray Wolf says, “yet was able to exceed its clients’ expectations.” Working with Davis, HealthEast identified on-campus and off-campus ambulatory services, both owned and affiliated, to consolidate into a state-ofthe-art ambulatory facility adjacent to its Maplewood hospital campus. Davis secured land and designed a building to meet near-term and long-term objectives – Phase I of 82,000 square feet. The concept and design proved so successful that shortly after construction began on Phase I, HealthEast sought to expand the building to accommodate additional program elements in the initial phase. Space demands from affiliated groups drove the second building expansion shortly thereafter. Using a phased construction approach, Davis
Minnesota Real Estate Journal
completed the building within 30 days of the original completion date and met all financial requirements. Mark A. Davis, Principal of Davis, notes, “A significant accomplishment was that Davis was able to expand the building twice after construction began to meet increased tenant demand, yet was still able to deliver the completed facility within 30 days of the original target date. It was a true team effort by the development, architecture and construction teams. The bottom line is that Davis met HealthEast’s original time requirements and financial parameters while nearly doubling the size of the medical center.” “The judges were highly impressed with how Davis was able to adapt to the clients’ changing needs even after the development was well underway," Mr. Wolf says. As of this fall, almost all of the tenants have moved into the new outpatient center, and the facility is more than 90 percent leased and vibrant with activity. The center is meeting the
needs of a host of well-known medical providers and contributing to their success. This includes many well-established, mature practices that relocated their services to the building from throughout the Twin Cities metropolitan area. In addition to HealthEast and HealthEast Surgery Center - Maplewood, tenants include Maplewood Imaging Center, Partners Obstetrics & Gynecology PA, Central Regional Pathology Laboratories and Minnesota Urology. The completed medical center features welcoming, light-filled rooms; warm touches such as wood trim and accents and “floating” glass staircases; colorful and original artwork designed by local artists and a piano in the lobby to provide soothing music as patients arrive. The Minnesota-based project architect, interior design and construction teams included Pat Giordana and Darcy Hield from BDH & Young, based in Edina, Minn., and Tim McKee and Jeff Heide from Timco Construc-
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tion Inc., based in Plymouth, Minn.
Cushman & Wakefield Negotiates Sale of North Loop Apartments Sale of Riverwalk Townhomes and Flats Property Drew 19 Offers The Cushman & Wakefield team of Lance Steiger and Robert Dulin represented the seller in the $19.2 million sale of the Riverwalk Townhomes and Flats, an apartment and office condo property located in the North Loop neighborhood in Minneapolis. The buyer is Goodman Real Estate, a Seattle-based real estate investment company specializing in multifamily and commercial properties. The firm’s assets are valued at more than $2.5 billion. The seller is the James Stanton Estate. The $19.2 million sales price included 96 apartment units and 10,000 square feet of office condo space. The sale closed Friday, Dec. 15. Riverwalk was a rare offering for investors, as it featured the opportunity
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to acquire an irreplaceable North Loop asset with brick-and-timber construction. Steiger and Dulin received 19 offers, six of which came from out-ofstate investors. “Lance and Robert, along with the rest of Cushman & Wakefield team, did an amazing job representing our company in this transaction,” said Lynn Leegard, President of Shamrock Development and Trustee for the Estate. Located on the northeast quadrant of First Street North and Fourth Avenue North, Riverwalk is just blocks away from offices, restaurants and nightlife, and such Minneapolis attractions as Target Field. The Mississippi River is less than two blocks north. The property was originally constructed as a freighthouse for Northwestern Railroad and underwent a renovation in 1986. The Riverwalk property features 40 townhouse-style units and 56 flats. All units feature washer-dryers, individual HVAC, exposed brick/timber and high ceilings.
Minnesota Real Estate Journal
Colliers International | Minneapolis-St. Paul Investment Team Closes 24Property Portfolio Deal The MSP Investment Services Group at Colliers International | MinneapolisSt. Paul represented Brennan Investment Group, out of Chicago, along with the company’s capital partner Arch Street Capital, of Connecticut, in the recapitalization of their 24-property portfolio with CDH Investments, out of China. The full portfolio totalling 3.37 million square-feet of mostly single tenant, long-term lease, industrial properties will continue to be operated and managed by Brennan Investment Group. The 24-property portfolio, located across 13 U.S. states was 100 percent leased upon completion of the sale and consists of 21 tenants. Of the 24 properties, 14 serve as the tenants’ corporate headquarters. Industries operating out of the properties include manufacturing and distribution in 19 different industries.
“This portfolio’s diverse mix of industry-leading tenants, operating in mission critical industrial manufacturing facilities, under long-term leases, provided CDH with a unique blend of high current income and long-term stability” said Dave Berglund, Senior Vice President at Colliers International | Minneapolis-St. Paul The Colliers International | Minneapolis-St. Paul Investment team of Senior Vice President Mark Kolsrud, Senior Vice President Dave Berglund, and Senior Vice President Colin Ryan represented Brennan Investments in this transaction. [Bret Hardy, Eric Cohen, Richard Putnam]
Dougherty Mortgage LLC closes $17.3 million Fannie Mae loan for Avilla Marana I Dougherty Mortgage LLC, a full service national mortgage banking firm, recently closed a $17.3 million Fannie Mae loan for the acquisition financing of Avilla Marana I, a 166-unit market rate multifamily apartment property
December 2017
located in Tucson, Arizona. The 10year loan has a 30-year amortization schedule and was arranged through Dougherty’s Minneapolis and Vienna, Virginia offices for borrower AM14050, LLC.
Site of one of the first Best Buy stores in the country gives way to new luxury apartment community at 66th and York in Edina ENVi boasts eco-friendly design and amenity-rich living Prior to its closing in 2012, the Best Buy store across from Southdale Shopping Center at 66th & York served as one of the oldest operating stores of the national retail chain. This week, it is being taken down to make way for the construction of 185 luxury apartment homes. ENVi will open in Edina during the summer of 2019, and is a joint venture between Bloomington-based Doran Companies and KM2 Development of Minneapolis. “We are excited about this living com-
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munity in Edina. It will offer residents an ideal location and unrivaled amenities,” said Doran Companies owner Kelly Doran. “The architectural design will also create a dramatic new entryway into Edina.” The eco-friendly design, created by Doran Architecture, aims to reduce the project’s environmental footprint. A white roof will reduce the heat island effect many cities face, native plantings will ensure draught-resistant vegetation and improved run-off protection, increased thermal building design combined with Energy Star® appliances will boost energy efficiency and electric carcharging stations will be available for residents and guests alike. “We know that our residents – including millennials and empty nesters alike – care a great deal about their environmental footprint,” said Anne Behrendt, chief operating officer at Doran companies. “We are dedicated to ensuring this apartment community secures LEED certification because it is the right thing
Minnesota Real Estate Journal
to do.” KM2 principals Mike Mikan and Kurt Krumenauer purchased the Best Buy property and an adjacent single-family home in 2016, and subsequently joined with Doran to develop multi-family housing on the site. ENVi will be constructed by Doran Construction and will be comprised of five levels of studio, alcove, one-, two- and three-bedroom apartments and two levels of underground and enclosed parking. In addition, the project will include 13 twolevel townhome walk-ups along 66th Street and Xerxes Avenue. Amenities at ENVI will include a porte cochere for protected drop off and pick up, an indoor entertainment clubroom with full kitchen and a terracelevel outdoor pool with dining areas, grills, bar, fire features, bocce ball and a putting green. Additional amenities include a business center, state-of-theart fitness center, spa and sauna and golf simulator.
Dougherty Mortgage LLC closes $4.8 million HUD loan for Greenway Terrace Dougherty Mortgage LLC, a full service national mortgage banking firm, recently closed a $4.8 million HUD 221 (d)(4) loan for the new construction financing of Greenway Terrace in Ramsey, Minnesota. Greenway Terrace is a proposed 54-unit Low-Income Housing Tax Credit (LIHTC) project with 100% of the units restricted to individuals and families earning 50% or less of the Area Median Income. Additionally, four (4) units will have Section 811 ProjectBased Rental Assistance, four units will have Group Residential Housing (GRH) assistance, and 15 units will have Project-Based Vouchers. The unit mix consists of six (6) one-bedroom units, 21 two-bedroom units, 21 three-bedroom units, and six (6) four-bedroom units. In addition to the HUD-insured first mortgage, the project obtained an allocation of 9% Low Income Housing Tax Credits and funds from Anoka County and the
December 2017
Metropolitan Council. The loan has a term of 40 years plus construction period and was arranged through Dougherty’s Minneapolis office for borrower Ramsey Station Apartments Limited Partnership.
Oppidan completes construction on North Market in North Minneapolis Construction completed on North Market in North Minneapolis Grand opening scheduled for December 13 MINNEAPOLIS – (DECEMBER 5, 2017) – Oppidan Investment Company, a national property development firm headquartered in Excelsior, Minn., has completed the redevelopment of the North Market grocery store, located at 4414 Humboldt Ave. N. in Minneapolis. Construction began in June 2017 and the grocery store is celebrating its grand opening on Wednesday, Dec. 13. Pillsbury United Communities selected Oppidan to provide its construction management services for North Market, a
December 2017
15,000-square foot space formerly occupied by Kowalski’s. The neighborhood is one of the country’s largest food deserts, making this project highly anticipated within the community. “Every time we enter into a project, our goal is to positively impact the wellbeing of those who call the neighborhood their home, and we believe we’ve done just that with North Market,” said Joe Ryan, Oppidan Chief Executive Officer. “At Oppidan, we care about our communities and this dedication to enhancing a community continues long after the project ends.” The Oppidan team includes Shannon Rusk and Louis Zachary. The project’s general contractor is Benson-Orth and architect is LSE.
Dougherty Mortgage LLC closes $10.5 million Fannie Mae loan for Vineyard Village Apartments Dougherty Mortgage LLC, a full service national mortgage banking firm, recently utilized Fannie Mae
Minnesota Real Estate Journal
Multifamily Green Financing for a $10.5 million loan for the refinancing of Vineyard Village Apartments, a 324unit market rate multifamily apartment property located in San Antonio, Texas. The 12-year loan has a 30-year amortization schedule and was arranged through Dougherty’s Minneapolis and Vienna, Virginia offices for borrower Struga San Antonio #1, LLC.’
Dougherty Mortgage LLC closes $4 million Fannie Mae loan for Spanish Chase Dougherty Mortgage LLC, a full service national mortgage banking firm, recently closed a $4 million Fannie Mae loan for the acquisition financing of Spanish Chase, a 77-unit market rate multifamily apartment property located in Irving, Texas. The Fannie Mae 12-year loan has a 30-year amortization schedule and was arranged through a partnership with Old Capital Lending and Dougherty’s Minneapolis and Vienna, Virginia offices for bor-
rower Spanish Chase LLC.
Dougherty Mortgage LLC closes $14.7 million HUD loan for Pioneer Apartments Dougherty Mortgage LLC, a full service national mortgage banking firm, recently closed a $14.7 million HUD 221 (d)(4) loan for the acquisition and substantial rehabilitation of an existing office building into a 144-unit
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Low Income Housing Tax Credit apartment project, Pioneer Apartments, located in St. Paul, Minnesota. The property was originally constructed in 1954 and was most recently used as the St. Paul Pioneer Press headquarters. The building will be renovated into 144 affordable multifamily units, with approximately $176,000 per unit in renovations to be completed as part of this transaction. All 144 units will be restricted to individuals and families
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Looking to 2018 From page 1
markets and add Ohio to our list of states. If you also do business in any of those markets, reach out and let’s find a way to collaborate. Even more exciting, 2017 turned out to be a great year for the CRE industry as a whole in Minnesota. We were thrilled to see a number of projects come to fruition in both Downtowns and see a number of plans come together at the Mall of America and areas like Edina and the West End. It seems as though there is a never-ending stream of exciting projects announced every month. We applaud each of you, for it is these projects that are the lifeblood of our industry and you lead the landscape of our next generation. Finally, we hope that you had a great year individually. If you are like many of our clients, you were as busy and productive as ever and have big plans like us for the coming year. Keep up the good work! From me, Jeff Johnson, and on behalf of all of us at the Minnesota Real Estate Journal, we wish you a happy and prosperous new year!
Minnesota Real Estate Journal
News from page 10
earning 60% or less than the Area Median Income. Construction completion is expected in early 2019. In addition to the HUD-insured first mortgage, the project will receive equity from the sale of Low Income Housing Tax Credits, Federal Historic Tax Credits, State Historic Tax Credits funded in the form of a loan from Preservation Alliance Minnesota, and funds from the Metropolitan Council. The project also involved tax-exempt bonds underwritten by Dougherty & Company LLC, an affiliate of Dougherty Mortgage. The loan has a term of 40 years plus construction period and was arranged through Dougherty’s Minneapolis office for borrower Pioneer Apartments, LLLP, a Minnesota limited liability limited partnership.
December 2017