MREJ Dec 2018

VOLUME 34, NUMBER 12

©2018 Real Estate Publishing Corporation

December 2018

With eight high-rise properties in the pipeline for downtown Minneapolis, developers have clearly not lost enthusiasm for multi-housing

By Todd Phillips, Minnesota Real Estate Journal

C

ondominiums appear to be a bigger part of the mix, but rental units are still going strong. 2018, however, did see some planned projects get scrapped in Minneapolis as it appears some bears might be coming out to play with the bulls in 2019.

For the past six years, a strong market with low unemployment and vacancy rates have helped the metro area defy odds and continue to grow well

beyond anyone’s early expectations. Minneapolis is continuing to see high demand with an average vacancy rate of 2.3 percent at the end of September 2018 according to Marquette Advisors, which is (amazingly) lower than a year ago.

“I would say we are at the peak of deliveries in a mature development cycle. Just over 6,000 new market-rate units and 1,500 affordable units opened in 2018, a record total amount for the two combined, and well over 6,000 units of all types are under construction and expected to be delivered in 2019” Tim Larkin,

Senior Vice President at Dougherty Mortgage stated.

Investor Appetite Waning? Not yet.

2019 should continue to be a sellers’ market for multifamily owners, according to Steve Michel of Michael Commercial “All apartment product types are in high demand and selling prices are consistently hitting new high-water marks.”

Larkin adds, “we expect investors to continue to be Multifamily to page 8

December 2018

Featured Stories

Minnesota Real Estate Journal

DECEMBER 2018 • VOLUME 34, NUMBER 12

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Departments PEOPLE ON THE MOVE 4 BREAKING GROUND CLOSINGS

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Minnesota Real Estate Journal (ISSN 08932255) Copyright © 2018 by the Minnesota Real Estate Journal is published monthly except combined in March & April for $85 a year by Jeff Johnson, 7767 Elm Creek Boulevard, Suite 210, Maple Grove, MN 55369.

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MORE BULLS THAN BEARS

©2018 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

7767 Elm Creek Boulevard, Suite 210 Maple Grove, MN 55369 For information call 952-885-0815

President | Publisher Jeff Johnson jeff.johnson@resummits.com Vice President | Publisher Jay Kodytek jay.kodytek@resummits.com Chief Financial Officer Todd Phillips todd.phillips@resummits.com Consulting Editor Dr. Tom Musil tamusil@stthomas.edu Conference Manager | Art Director | Graphic Designer | CE Specialist Alan Davis alan.davis@resummits.com

EDITORIAL ADVISORY BOARD JOHN ALLEN JEFF EATON MARK EVENSON PATRICIA GNETZ

December 2018

CBRE Enhances Capital Markets Team with Strategic Hires in Minneapolis Four Experienced Retail Investment Specialists Join CBRE CBRE Group, Inc., announced today the arrival of four new professionals and two support team members to its expanding Capital Markets Group. The addition of this team significantly bolsters CBRE’s presence in the market and will be an excellent resource for retail investment clients.

Joining CBRE are: Sean Doyle, first vice president; Matt Hazleton, first vice president; AJ Prins, first vice president; Cory Villaume, first vice president; Liam Hansmeyer-Schons, sales assistant and Kate Jones, Capital Markets Operations Manager.

Combined, the team brings to CBRE decades of retail capital markets experience with some of the market’s largest owners and investors.

“The addition of these experienced professionals demonstrates our commitment to expanding our talent base and providing our clients with the best resources possible,” said Jeff Jiovanazzo, sales director for CBRE’s Minneapolis office. “This move will undoubtedly strengthen our position in

AJ Prins

Matt Hazelton

Sean Doyle

Cory Villaume

the Minneapolis market and allow us to deliver exceptional client outcomes.”

With the arrival of this team, CBRE will add significant depth to its services and coverage in the Minneapolis area, as

this team focuses on all aspects of the retail investment market, working with owners and investors throughout the region.

TOM GUMP CHAD JOHNSON BILL WARDWELL JEFFREY LAFAVRE WADE LAU JIM LOCKHART DUANE LUND

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Minnesota Real Estate Journal

December 2018

Merchants Capital Secures First-Ever Freddie Mac NonLIHTC Forward Commitment Financing for $19.7M Affordable Housing Community in Minnesota The Rochester development will bring more than 160 mixed-income homes Mortgage banking firm Merchants Capital has secured financing for the development of a $19.7 million mixedincome workforce housing community in Rochester, Minnesota. Merchants Capital secured the loan through the first-ever Freddie Mac Non-LIHTC Forward Commitment on behalf of Real Estate Equities.

Dubbed Technology Park Apartments, the 164-unit affordable housing complex will help to ease the city’s affordable housing crisis, as Rochester was recently ranked one of the lowest

metropolitan statistical areas (MSAs) nationally for housing affordability by Nationwide Economics. The project closed on Sept. 5, 2018.

“We appreciate the opportunity to assist in the development of this housing community and the chance to help close Rochester’s affordable housing gap,”

said Michael R. Dury, president of Merchants Capital. “We were able to simplify the process with our ability to provide News to page 14

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Minnesota Real Estate Journal

December 2018

Multifamily From page 1

interested in multifamily housing in the Twin Cities because of the strong fundamentals of overall low rental vacancy and low unemployment. However, with record apartment production volume and economic uncertainty seeming to grow, we expect investors to be much more discerning about which properties and which locations they will pursue.

Now that the Green/Southwest LRT line has started construction, we expect the entire length of the corridor to continue to attract new housing investment.”

Grant Campbell of IRET, also sees appetite remaining strong. “Investor interest will remain high and 2019 investment activity will mirror 2018.

Capital is plentiful right now and seeking well located assets. We expect return thresholds to remain the same, however, also believe more conservative underwriting assumptions are being made market wide, which will cause absolute dollar investment pricing to fall.” Campbell goes on to say, “we believe the urban core, and immediately surrounding high-demand neighborhoods, will display the highest resiliency and pricing power long-term.”

Lenders may also be tightening the belts a bit. “Debt Service Coverage

Ratio covenants are tightening as the cycle has extended. On new construction projects, the mortgages are being debt coverage constrained and this is resulting in borrowers having larger cash equity positions” according to Nick Place, Chief lending officer at Bridgewater Bank.

Single Family Woes a Driver “The lack of entry level supply for single family homes, whether existing or new construction, has been a real tailwind for the multifamily sector.”

Michael Roessle, Market Economist at CoStar Group.

Larkin addresses the issue: “The increase in interest rates has made it more difficult for young people, many of which have substantial student loan debt and little savings, to buy houses.

New renters seem to be coming from two main sources – millennials moving Multifamily to page 10

Page 10 Multifamily from page 8

out of their parents’ houses and empty nesters downsizing. Millennials are attracted to small apartment units and are focused on an affordable monthly rent amount, not as much on the rent per square foot. We can expect to see more ‘micro units’ come into the market to meet this demand. Empty nesters are attracted to the larger, and more expensive, apartments coming online Downtown Minneapolis and in various suburban locations.”

Light Rail and Loosening Parking Requirements also a Driver Transit-oriented development is poised for another phase as the Southwest Light Rail breaks ground. Plus, loosened restrictions on parking requirements are bolstering development of small-scale units along existing transit lines. Parking requirements along transit lines were reduced to one parking spot for every two units, as compared to the typical one to one zoning around the metro. With Minneapolis’ 2040 plan recently approved, parking requirements may go away completely.

This is an area where small developers can still create successful projects; “primarily in urban locations that have strong access to transit, recreational and

Minnesota Real Estate Journal

cultural amenities, and/or employment.

Most infill projects in the central cities fall in the 50-80 unit size range” according to Larkin.

B and C markets ripe for Redevelopment The market to redevelop class B and C properties is flourishing, but only for those able to acquire these projects.

High demand continues into 2019 from developers that understand redevelopment. “There is rental upside as new construction rents are still much higher and vacancies remain low” says Roessle.

Larkin adds “nearly 170,000 Twin Cities renter households are considered ‘cost-burdened,’ where the household spends more than 30% of gross income for housing costs. This high number of financially-stressed renters’ places enormous pressure on the existing supply of older rental units and most owners are enjoying high occupancy rates. This also allows some owners to upgrade their buildings and raise rents.”

Nick Place also adds, “the low hanging fruit has been picked in many locations, so investors are either paying up in proven markets or pushing into new, less proven areas. The amount of renovations on these types of units over the last 8 years has taken a large amount of naturally occurring affordable housing

off the market. These renters are really struggling to find places to rent. The effects can be witnessed in the very speedy lease-ups in newly built affordable housing properties across the metro.”

“The redevelopment of Class B and C properties, however, continues to place significant pressure on the availability of affordable rental product, for which supply is at an all-time low and demand is at an all-time high” according to Mary Bujold, President of Maxfield Research.

More Concessions in Minneapolis “Rental concessions have been normal in the urban metro markets since the building boom began and have been appearing in suburban markets as well.

Should we see an economic slowdown, I would expect renters in the luxury segment to see the best deals as that has been virtually all that has been built during this cycle. Renters in the Class B and below markets won’t be as fortunate as demand will continue to remain strong or even accelerate for more affordable options” according to Bujold.

Projects Scrapped There appears to be some pullback or restraint in certain submarkets markets, such as Sherman’s cancelled plans to build apartments on the Thrivent site.

December 2018

Plans for Pentagon Park and an urban village project at the Mall of America were scrapped as well. Is this a sign of things to come in 2019?

The Twin Cities boasts a lower than national average unemployment rate, along with low vacancy rates, and that’s a key reason the developers are still getting after it going into 2019.

Vacancy Rates Headed North, Eventually “I believe we are going to see a rise in vacancy rates among recently built properties as a portion of young renters hops around between new developments trying to maximize their opportunities to obtain move-in deals. These young residents have few belongings and are more easily able to change residences” according to Bujold. Logic dictates that this subset of renters are filling up new properties encouraging developers to build more, but as they jump, they may be leaving large vacancies in their wake.

Roessle adds “the metro wide vacancy rate is performing well and remains well below the U.S. average. Despite a slight uptick from 2017, demand remains positive in the face of the continuing supply. I do expect the vacancy rate to increase over the next couple of years, as additional supply and potential economic slowdown will weigh on the multifamily sector.

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Minnesota Real Estate Journal News from page 6

the construction financing through our parent company, Merchants Bank, and also offer the Freddie Mac Non-LIHTC Forward Commitment product for the long term permanent financing.”

The apartments were financed through a 10-year Freddie Mac NonLIHTC Forward Commitment loan where the interest rate was locked at the closing of the construction loan. NonLIHTC forwards are unfunded, forward commitments for affordable housing developed by nonprofits and subsidized, rent-restricted affordable housing that for-profit developers can use for their new multifamily construction or substantial rehabilitation projects.

“We are very excited to be on the forefront of developing a modern workforce housing product that is not heavily reliant on government funding sources,” said Alexander Bisanz, director of acquisitions at Real Estate Equities.

“Partnering with the Greater Minnesota Housing Fund to provide low-cost, mission-driven equity – as well as structuring attractive financing with Merchants

Capital – truly allowed us to get this project off the ground.”

Forty percent of Technology Park Apartments will be priced affordably for individuals earning an annual income of $40,000, or 60 percent of the area’s annual median income (AMI). The Greater Minnesota Housing Fund contributed a total of $3.4 million in capital for the development of these units, which will cost renters an estimated $1,150 a month for a two-bedroom apartment.

An additional 35 percent of units will be set aside for individuals earning about $55,000 a year, 20 percent below Rochester’s AMI. The remaining units will be priced slightly below the current market value, about $200-300 less than similar apartments in the area.

“In all of Greater Minnesota Housing Fund’s work to create and preserve unsubsidized affordable housing, we have struggled to crack the code on the production of new affordable units without reliance on public resources. Now, as an equity partner in Technology Park, we are furthering our mission and inno-

vating ways to increase the funding pie with new financing solutions,” said Rachel Robinson, fund manager with Greater Minnesota Housing Fund.

“Going forward, Tech Park, with 164 modestly priced apartments, 66 at reduced, affordable rents, will be a pilot for further innovation in this realm.”

Technology Park’s cost-efficient, smart building design achieves sufficient economies of scale to charge modest rents, meeting the needs of a range of household incomes. Today’s market financing tools are working best for luxury apartment construction, and at the other end of the spectrum, affordable apartment developments financed with federal tax credits are limited in supply.

Developers have struggled to find ways to finance new construction homes that are in between: achieving modest rents for residents without government subsidy. Freddie Mac’s new Non-LIHTC Forward Commitment achieves this.

“Freddie Mac’s forward commitment is helping to provide affordable housing for valued members of the Rochester, Minnesota, community who struggle to

December 2018

find it,” said David Leopold, vice president of targeted affordable sales & investments at Freddie Mac Multifamily. “We created Non-LIHTC Forwards for this very purpose – to provide the flexibility and certainty mission-driven investors need to finance housing for low- and very-low income families.”

Technology Park Apartments will be located in Rochester, Minnesota, on the north side of Technology Drive Northwest between Valleyhigh Drive and West Circle Drive. Neighboring Benchmark Electronics to the east, Costco to the south and Crooked Pint to the west, the complex is positioned in close proximity to grocery stores and other nearby amenities

Davis closes two fourth quarter medical office acquisitions to cap a successful 2018 National healthcare real estate firm acquired 220,000 SF of medical office buildings this year and developed three more totaling 81,000 SF for a total cost of $104.4 million

December 2018

Minnesota Real Estate Journal

News from page 12

Minneapolis-based Davis is ending 2018 with a bang.

The national healthcare real estate (HRE) development, property management, brokerage and investment firm acquired three Class A medical office buildings (MOBs) totaling 220,000 square feet for a total of $79 million during the past six months, in addition to developing three new MOBs totaling 81,000 square feet during the year at a cost of $25.4 million.

“As we close out 2018, we are pleased with our acquisition and development volume. In fact, the results exceeded our expectations,” Davis Principal Mark A. Davis says. “These properties are occupied by a diverse group of high-quality healthcare providers and are located in growing areas of the country. They’re also providing much needed healthcare services to their local communities.”

Acquisitions • Davis closed this month on the 55,000 square foot Class A The Urolo-

In the last half of 2018, Minneapolis-based Davis acquired 220,000 square feet of medical office buildings, including The Urology Group (TUG) medical building in Cincinnati, Ohio (above) and the Northern Ohio Medical Specialists (NOMS) building in Sandusky, Ohio (bottom)

Page 13

gy Group (TUG) medical building at 2000 Joseph E. Sanker Blvd. in Cincinnati. Built in 2012, the MOB is 100 percent leased by TUG, which signed a 15-year lease. TUG is one of the largest urology groups in the United States.

• In October, the firm acquired a 104,897 square foot medical building from Northern Ohio Medical Specialists (NOMS). Located at 3004 Hayes Ave. in Sandusky, Ohio, the MOB houses a diverse group of multi-specialty physicians from one of the largest physician groups in the country.

• In late June, Davis closed on the 60,000 square foot Mercy Coral West Medical Building at 2769 Heartland Drive in Coralville, Iowa, near Iowa City. It was the firm’s first healthcare real estate transaction in Iowa. Tenants include OB GYN Associates of Iowa and Coralville, Mercy Urgent Care, Mercy Internal Medicine, Mercy Occupational Health, Corridor Radiology, Progressive Rehabilitation Associates, Professional Foot and Ankle Care, News to page 14

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Minnesota Real Estate Journal News from page 12

and Mercy laboratory services.

Developments • Davis delivered the largest multispecialty medical facility in the Minneapolis-St. Paul metropolitan area in 2018: the new 50,607 square foot CityPlace medical building at 237 Radio Drive in Woodbury, Minn. The anchor tenant, Minnesota Gastroenterology (MNGI), selected Davis’ proposal as it offered the most attractive cost structure and fastest completion timeline, and the proposed location provided optimal access and visibility. Construction began in September 2017 and was completed in June 2018. The new MOB is part of the vibrant, mixed-use CityPlace development featuring hotels, retail, restaurants, medical offices and other highend businesses, which will increase MNGI’s exposure in an already booming area.

• The 18,667 square foot HealthEast Clinic - Vadnais Heights, Minn., which is located at 480 Highway 96 East in the St. Paul suburb of Vadnais Heights. The clinic offers a range of services and specialties, including family medicine, pre-

Two of Davis' 2018 developments were the CityPlace medical building in Woodbury, Minn. (top), and the HealthEast Clinic - Vadnais Heights, Minn. (bottom)

December 2018

natal and OB/GYN care, podiatry, medication therapy management, diabetes education and access to all HealthEast services. Davis developed the MOB with features and amenities suggested by patients to improve their experience.

This included additional space for families, greater patient privacy and additional parking. Construction started in Nov. 2017 and was completed this July.

• Davis also developed the 12,000 square foot, single-tenant Midwest ENT building, which is located at 3590 Arcade St. in Vadnais Heights, Minn.

Construction began this April and the MOB opened in October. Midwest ENT offers multiple ear, nose and throat services, including hearing aid systems, allergy and asthma treatment, and facial plastic surgery and aesthetic skin care.

The project marked the development of the last parcel of privately owned vacant land in the City Center’s southwest sector. The freeway-oriented commercial zone encompassing all four quadrants of the County Road E interchange has become a major retail and hotel destination since it was first proposed in 1988.

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Minnesota Real Estate Journal

CBRE Capital Markets Closes Sale of 14-Story Class A Minnesota Center The iconic 277,044 square foot, 14story Class A office building located in the heart of the dynamic Minneapolis/St. Paul 494 sub-market.

CBRE Capital Markets has arranged the sale of the iconic Minnesota Center office building to Altus Properties.

Ryan Watts, Judd Welliver, Sonja Dusil, and Tom Holtz in CBRE’s Minneapolis office represented the seller, Minnesota Center JV, LLC. “Situated in the heart of the 494 office submarket at the gateway to the France Avenue Corridor, the Minnesota Center is a legacy Twin Cities asset that attracted multiple potential suitors through a competitive marketing process. In an already active year for office investment sales, the successful sale of the Minnesota Center is a continued demonstra-

December 2018

The Minnesota Center is a 277,044square-foot office building, located in Bloomington, Minnesota at the intersection of I-494 and France Avenue along the sought-after France Avenue Corridor. The building is currently 97 percent occupied and is a highly-amenitized Class A office asset featuring covered parking and underground executive parking, an on-site deli, newly-remodeled entrance, lobbies and common areas, and a new state-of-the-art conferencing center with adjacent kitchen area.

Altus Properties is a St. Louis-based private real estate investment and development firm with over 5.25 million square feet of office, industrial, retail and multi-family properties of which approximately 1.5 million square feet is located in the Minneapolis metropolitan area. tion of the strength of the Twin Cites economy and the desirability of the mar-

ket as an option for real estate investors to deploy capital,” said Mr. Watts.

Closings to page 18

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Minnesota Real Estate Journal Closings from page 15

CBRE Multifamily Arranges Sale of 413-Unit The Gates of Rochester Apartment & Townhome Community in Rochester, Minnesota CBRE Multifamily represented Rochester Village Investors, LLC in the

sale of The Gates of Rochester, a 413unit multifamily community at 2015 41st St NW, to Monarch Investment & Management Group, LLC. The Minneapolis-based team of Keith Collins, Abe Appert, Ted Abramson, and Ike Hoffman represented the seller.

Built in 1973 and situated on 22 acres, The Gates of Rochester is located on the northeast corner of highway 52 and 41st

in Rochester, Minnesota with close proximity to the Mayo Clinic, IBM’s Rochester campus, and the Rochester International Airport (RST). The 42building community is comprised of 423,170 SF and offers both apartment and townhome style living.

December 2018

Mid-America Real Estate Arranges Sale of Roseville Plaza in Roseville, MN Mid-America Real Estate Corporation’s Investment Sales team recently brokered the sale of Roseville Plaza in Roseville, Minnesota. The 108,213square-foot retail center was purchased

by Roseville Holdings, LLC and Roseville Properties, LLC for $7,600,000.

Roseville Plaza is located at the southeast corner of State Highway 36 and Fairview Avenue North in Roseville, Minnesota. The center is anchored byPlanet Fitness, Starbucks, and BMO Harris Bank and provides the purchaser a unique redevelopment opportunity.

Mid-America Real Estate Corporation Principal Ben Wineman and Investment Associate Emily Dutson, in cooperation with Mid-America Real EstateMinnesota, LLC Principal Mark Robinson were the exclusive brokers in the transaction on behalf of the seller, New Hyde Park, New York-based Kimco Realty. Colliers International Senior Vice President Ryan Krzmarzick was the exclusive broker in the transaction on behalf of the buyer.

Meritex Completes Development of Two Distribution Buildings in Roseville Highcrest II & III are now leasing Meritex is nearing completion on two state-of-the-art 144,000-square-feet bulk-distribution buildings in Roseville, totaling 288,000 sq-ft. The buildings, called Highcrest II and III, were constructed after the acquisition and demolition of a 360,000- sq.-ft. industrial property, formerly known as the Minnesota Technology Exchange building.

Meritex acquired the property in November 2017. Highcrest II and III have already been well received in the market.

“We’ve seen an increase in companies looking to take advantage of the 32’ clear height and excellent access to Interstate 35W,” said Ben Lieser, Minnesota regional manager at Meritex.

“Leasing activity has been strong with 36,000 square feet already signed with a multinational company that is thrilled to be in a brand-new building conveniently located to their customers.” The development site, located at 2501 and 2503 Walnut Street in Roseville, has close

December 2018

access to Interstate 35W, Highway 36 and Highway 280, and is closer to downtown Minneapolis and downtown St. Paul than any other recent industrial development. It is zoned I-1, which permits a variety of uses including manufacturing, warehousing and distribution, and will feature 32-footclear ceilings and ESFR sprinkler systems.

The site is across the street from Meritex’s fully-leased, 130,000-sq.-ft., Class A office-warehouse known as Highcrest Distribution Center I, which is currently home to Asmodee, a publisher of board games, card games and role-playing games.

The Cushman & Wakefield team of David Stokes, Todd Hanson, Jason Sell, Chris Weirens and Ian Thompson are handling leasing services.

CBRE Capital Markets Closes Sale of 386,295Square-Foot Portfolio for $26.1 Million The class A two-property portfolio was purchased by Cabot Properties, Inc. CBRE Capital Markets has arranged

Minnesota Real Estate Journal

the sale of the two-property Minneapolis Core-Plus Logistics Portfolio.

Judd Welliver, Ryan Watts, Sonja Dusil, and Tom Holtz in CBRE’s Minneapolis office represented the seller, The Meritex Company. Cabot Properties, Inc. purchased the portfolio, which features two high quality logistics buildings located in Rogers, Minnesota. The two building portfolio totals 386,295 square feet of 32’ clear institutional quality logistics buildings that are 88

percent leased.

“The offering received a very positive response from high profile capital sources supporting a renewed interest in the Rogers submarket from institutional industrial investors. This is a re-entry into Minneapolis for Cabot and allows Meritiex to reposition its industrial portfolio for continued growth in development and newer generation properties,” said Judd Welliver, Senior Vice President, CBRE.

Page 19

JLL Capital Markets completes $15.65 million sale of River Gables, a Chaska mixed-use multifamily project Includes 104 residential units and more than 10,000 square feet of streetlevel retail JLL Capital Markets has completed Closings to page 20

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Minnesota Real Estate Journal

December 2018

Closings from page 19

the $15.65 million sale of River Gables, a mixed-use multifamily project, to San Francisco, Calif.-based FPA Multifamily. River Gables, located at 110 First Street East in downtown Chaska, Minn, includes 104 residential units and more than 10,000 square feet of street-level retail.

Senior Vice Presidents Mox Gunderson, Josh Talberg, and Dan Linnell handled the sale on behalf of the seller.

“The Twin-Cities multifamily market continues to see significant demand from investors across the country due to strong job growth and low unemployment,” said Mox Gunderson, JLL Senior Vice President.

River Gables was built in 2001 and offers four stories of mixed-use space.

The building’s convenient location one block north of the Minnesota River in Chaska’s historic downtown area provides easy access to shops, restaurants, entertainment and green space. River Gables includes five retail suites (60

percent occupied at the time of the sale) and a 104-residential unit (99 per-

cent occupied at the time of sale) with studio and one- and two-bedroom

apartments with a full suite of modern amenities, 94 heated underground

December 2018

parking stalls and 40 surface parking spaces.

Downtown Minneapolis HQ Asset Trades for $171M JLL Capital Markets completes sale of 950 Nicollet, a 500,000-square-foot downtown tower leased to Target Corporation JLL Capital Markets experts have completed the $171 million sale of 950 Nicollet, one of three major office towers within Target Corporation’s downtown Minneapolis headquarters campus. The buyer was an affiliate of Silicon Valley-based institutional investor Menlo Equities.

Managing Directors Steven Buss, Stephen Collins, and Nooshin Felsenthal handled the sale on behalf of the seller Union Investment.

“There was extremely strong investor interest in this asset due to the high quality creative office interior finishes, Target’s financial strength, and the desirable Nicollet Avenue location,” said Buss.

“We have been a proud owner of this quality asset with an outstanding tenant that calls Minneapolis its home and corporate headquarter since its founding in 1962. Given its strong real estate market with competing fundamentals, we do not consider this sale a market exit and will continue tracking Minneapolis for further acquisitions.” said Tal Peri, Head of U.S. East Coast & Latin America for Union Investment.

950 Nicollet is the only building within the retailer’s 3.4 million square foot downtown Minneapolis campus that is physically connected to Target’s flagship retail store at 900 Nicollet Avenue.

Minnesota Real Estate Journal

The 12-story building is fully leased to Target on a long-term lease. The tower was built in 2001 and Target recently completed a five-year transformation of the 499,000 s.f. building’s interior, making it one of the premier creative office spaces in the Minneapolis market.

JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The firm’s in-depth local market and global investor knowledge delivers the bestin-class solutions for clients — whether a sale, financing, repositioning, advisory or recapitalization execution. In 2017 alone, the firm’s 2,000 Capital Markets specialists completed $170 billion in investment sale and debt and equity transactions globally.

CBRE Capital Markets Closes $52.3M In Acquisition Financing for Multiple Minneapolis Apartment Properties in November 25 properties, including two portfolios, consist of 672 units Joel Torborg and Ben Bastian of CBRE Minneapolis’s Debt and Structure Finance team arranged more than $52.3 million in SBL financing across 22 properties with 672 units in the month of November. Included within that total were two large multifamily portfolios in the popular Uptown & Eat Street neighborhoods of Minneapolis.

Individual loans sizes ranged from $974,000 to $5,778,000.

“Freddie Mac’s Small Balance Loan program has proven to be an excellent fit for many of our clients who are looking to either acquire or refinance

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large portfolios made up of smaller multifamily properties. While the portfolios deals were split up into individual loans for each property, we were able to close simultaneously, achieve better pricing and significantly reduce closing costs for each loan” said Joel Torborg Freddie Mac’s Small Balance Loan offering provides a competitive option for loans between $1 million and $7.5 million on multifamily properties of 5 units or more. The flexible loan offering provides financing solutions with both hybrid ARM and fixed-rate products with 30-year amortization, available interest only and up to 80% LTV in most markets, which includes the Twin Cities MSA.

CBRE Capital Markets Closes Sale of Built-to-Suit Prime Therapeutics HQ in Eagan, MN for $98.5M CBRE Capital Markets arranged the sale of the 385,000-square-foot Prime

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Therapeutics headquarters facility under construction in Eagan, Minnesota to Winnipeg-based Artis REIT for $98.5 million.

The sale includes the first two phases of the headquarters facility at 2900 Ames Crossing Road in Eagan’s Boulder Lake Business Park. The first building – totaling 225,000 square feet – became available for occupancy in September 2018. The second 160,000square-foot building is expected to be completed in 2019.

Ryan Watts, Sonja Dusil, Tom Holtz and Judd Welliver in CBRE’s Minneapolis office represented the seller, Eagan Heights LLC, a local partnership with United Properties as its developer.

Both buildings will be fully occupied by Prime Therapeutics, a pharmacy benefits manager owned by Blue Cross and Blue Shield, on long-term leases.

“There is a lot of growth and attention on the City of Eagan right now.

That coupled with a long-term lease to

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Minnesota Real Estate Journal

December 2018

strong organization like Prime Therapeutics, made this an attractive opportunity for investors. We truly enjoyed working with the seller to assist them in executing on their strategy for the project,” said Mrs. Dusil.

The sale will close in two phases simultaneous with expected occupancy of the buildings.

CBRE Multifamily Arranges Sale of 698-Unit Concierge Apartment Community in Minneapolis Suburb of Richfield CBRE Multifamily represented MSP Crossroads Apartments LLC in the sale of The Concierge, a 698-unit multifamily community at 7600-7720 Penn Avenue S, to JRK Investors Inc. The Minneapolis-based team of Keith Collins, Abe Appert, Ted Abramson, and Ike Hoffman represented the seller.

Built in 1968 and renovated from

2016 to 2018, Concierge is located in the Minneapolis suburb of Richfield and is well connected by its access to I494, proximity to premiere shopping district and Best Buy World Headquar-

ters next door. The building offers resort-style living with best-in-class amenities, such as the largest outdoor swimming pool in Minnesota with an expansive sun deck, cabanas, entertain-

ment space, state of the art fitness center, golf simulator, rock climbing walls, and much more. The six-building community is comprised of 457,620 square feet.

St. Cloud State University’s Real Estate Alumni Association thank all of this year’s golf tournament sponsors!

ABM Anderson CC Aspen Waste Systems Bituminous Roadways Bridgewater Bank CBRE Chau Appraisals, Inc. Colliers International Corporate Mechanical Crawford Merz Cushman & Wakefield Diversified Real Estate Services, Inc. Dougherty Mortgage, LLC Finance & Commerce Great Clips GTRE Commercial Guaranty Title

Horstmann Enterprises Mark A. Oehrlein Appraisals Mid-America Midwest Maintenance Mission Construction MN Real Estate Journal Nicollet Partners OMNI Brewing Co., Maple Grove Paradigm Tax Group Patchin Messner Dodd & Brumm Ryan Companies US, Inc Servion Commercial Title Shorenstein Realty Services, LP. Sign Source Creative Solutions Summit Landscaping Upland Real Estate Group

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