VOLUME 31, NUMBER 02
Š2015 Law Bulletin Publishing Co.
February 2015
Morrissey’s view: Hotel market in Twin Cities stronger than ever
By Dan Rafter, Editor
B
ill Morrissey has never seen a stronger hotel market in the Minneapolis/St. Paul market than the one he's working in now. This is good timing. St. Paul, Minn.-based Morrissey Hospitality Companies is developing a four-story Hilton Home2 Suites hotel in the suburb of Eagan, just east of the new Twin Cities Premium Outlets that opened here last summer. Morrissey, president chief executive officer and founder of Morrissey Hospitality Companies, expects demand to be strong for the new hotel. Once it opens,
it will be the first new hotel in Eagan since 2002. "The hotel market in the Twin Cities is the strongest I've seen it in my entire career," Morrissey said. "During the recession nothing new was built. The supply side, then, was kept under control. The industry can be hurt when everyone comes rushing in with new products at the same time. But our supply has been low, so we are ready for new hotels here." Morrissey knows of what he speaks. He's a veteran of the hospitality industry, and his company provides development, management and consulting services in the hotel business. So if he says the Twin Cities' hotel sector is strong, it is. Hotel to page 20
Out-of-state investors targeting Minneapolis/St. Paul apartment market By Dan Rafter, Editor
S
cott Streiff picked up this interesting bit of information while attending the 2015 National Multifamily Housing Council Apartment Strategies Outlook Conference in Palm Springs: A growing number of national and international investors are targeting the Twin Cities' apartment market. And this is making it more difficult for local investors to sink their dollars into the new and
existing apartment developments in the Minneapolis/St. Paul market. "A lot of national players want to get into the Minneapolis/St. Paul multi-family market," said Streiff, vice president with St. Paul-based Oak Grove Capital. "If you look at the trades we had in this sector last year, I think only one of the big transactions were completed by a local player. Most of the big transactions involved out-of-state money. People want to put their capital into this market." This isn't that surprising to anyone who's fol-
lowed the Twin Cities' apartment market. Multifamily developers have hit the market hard. They added about 4,000 new multi-family units to the region in 2014, and are expected to bring another 5,000 to the area this year. Streiff says that the demand for multi-family living justifies this influx of new apartment units. A growing number of consumers want to live in urban areas where they can walk to public transportation, restaurants, pubs and shops. They can Investors to page 21
February 2015
Contents
Minnesota Real Estate Journal
FEBRUARY 2015 • VOLUME 31, NUMBER 02
Page 3
Departments PEOPLE
4
NEWS
6
RESOURCE GUIDE
1
MORRISSEY’S VIEW: HOTEL MARKET IN TWIN CITIES STRONGER THAN EVER OUT-OF-STATE INVESTORS TARGETING MINNEAPOLIS/ST. PAUL APARTMENT MARKET
12
NAIOP’S LOCAL BUDGET TRANSPARENCY LEGISLATION GAINING GROUND, BUILDING WIDER SUPPORT
14
THE WEIDT GROUP: COMMERCIAL BUILDING OWNERS INCREASINGLY FOCUSING ON ENERGY EFFICIENCY
16
DOLLAR STORES SLOWING DOWN? DON’T COUNT ON IT
18
2015 PRESIDENT OF THE NORTH STAR CHAPTER OF THE APPRAISAL INSTITUTE, FRANCES ODENTHAL - Q&A
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The Minnesota Real Estate Journal (ISSN 08932255) is published monthly for $85 per year by Minnesota Real Estate Journal, 13400 15th Ave North STE C, Plymouth 55441. Phone: 952-885-0815. Periodicals postage paid at Minneapolis, MN. POSTMASTER: Send address changes to Law Bulletin Publishing Co, 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. ©2015 Law Bulletin Publishing Co. No part of this publication may be reproduced without the written permission of the publisher.
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Minnesota Real Estate Journal
February 2015
People a division of Law Bulletin Publishing Co.
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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
Local Real Estate Veteran Andy McConville joins Solomon Real Estate Group Solomon Real Estate Group is pleased to announce that Andy McConville, formerly a Senior Associate at CBRE, Inc., has joined the team at Solomon Real Estate Group. As Vice President for Solomon, McConville will be responsible for sourcing, underwriting and managing new development and acquisition opportunities for the company. In addition, McConville will handling the leasing assignments on the company’s new retail developments. Prior to joining Solomon, McConville spent the past 23 years as a retail broker for CBRE, Inc. in the Minneapolis office. He has completed leasing and sales transactions totaling more than 5 million square feet in his career. According to Jay Scott, Principal of Solomon Real Estate Group, “Andy is an accomplished, results-driven real estate professional with a proven track record of success in leasing and acquiring commercial properties. He will be the point person leading our aggressive acquisition of new retail development opportunities throughout the Twin Cities.” McConville received a Bachelor of Science degree in Economics and History from the University of WisconsinMadison. He is an active member of the Minnesota Shopping Center Association (MSCA) and the International Council of Shopping Centers (ICSC).
Collin Barr, Receives Minneapolis Downtown Council’s Prestigious Father of Waters Award Ryan Companies US, Inc. is pleased to announce Collin Barr, President of Ryan’s North Region, was presented with the Father of Waters award by the Minneapolis Downtown Council (MDC) for his tireless work helping advance the Downtown Council, Downtown Improvement District and Intersections: Downtown 2025 Plan goals. The award, MDC’s highest expression of gratitude, was presented at the 59th Minneapolis Downtown Council Annual Meeting in February. Collin is Immediate Past Chair of the MDC board where he served since 2012. Throughout the two years as Board Chair, he provided stable leader-
ship and maintained a clear vision of what downtown can be through the work of the Intersections: Downtown 2025 Plan. He kept the 2025 Plan headed in a firm, strong direction, and his leadership’s momentum will be felt moving forward. “My time at MDC overlapped the last year of Collin’s leadership as Board Chair, and I want to personally thank him for his incredible dedication to downtown and to the organization,” said Steve Cramer, President and CEO of the Minneapolis Downtown Council. “There were times when it was a heavy lift, but he never backed down or shied away from stepping up.”
MARCUS & MILLICHAP PROMOTES THREE TO SENIOR ASSOCIATE IN MINNEAPOLIS Marcus & Millichap Real Estate Investment Services, the nation’s largest real estate investment services firm, has promoted Matthew Hazelton, Adam ‘AJ’ Prins and Jon Ruzicka, all in Marcus & Millichap’s Minneapolis office, to Senior Associate. This designation signifies superior performance achieved by an associate during his or her sales career at Marcus & Millichap and in the investment real estate brokerage profession, according to Craig Patterson, regional manager of Marcus & Millichap’s Minneapolis office. “With this promotion, Matt, AJ and Jon have earned a designation within the firm that solidifies their reputations as knowledgeable and successful investment professionals,” says Patterson. “Their focus on providing superior client service has earned them a high degree of loyalty and respect from investors as well as from their peers.” Mr. Hazelton, who began his career with the firm in 2006, specializes in the sale of retail and single-tenant properties. He has closed more than $88 million in transactions with Marcus & Millichap and has consistently been one of the top agents in the Minneapolis office. Mr. Prins also began his career with Marcus & Millichap in 2006, specializing in the sale of retail and single-tenant properties. He has closed nearly $90 million in transactions since joining the Minneapolis office. Mr. Ruzicka began his career with Marcus & Millichap in 2011, specializing in the sale of hospitality properties.
During his career, Ruzicka has closed more than $46 million in transactions
DOWNTOWN REAL ESTATE VETERAN JOINS ZELLER REALTY GROUP Jim Durda, who has spent more than three decades in the commercial real estate industry including more than 21 years with IDS Center, is joining Zeller Realty Group as its Executive Vice President to oversee its Minneapolis portfolio. Durda will be responsible for overseeing Zeller’s collection of Minnesota owned and managed properties, which include Fifth Street Towers and LaSalle Plaza in downtown Minneapolis, Wells Fargo Plaza in Bloomington, Edina Corporate Center and Wells Fargo Place in St. Paul. He also will look to expand Zeller Realty Group’s commercial footprint locally and regionally. “Jim is very well respected in the industry and we are confident his experience and expertise will benefit our clients as well as our team,” said Paul M. Zeller, Managing Principal and CEO of Zeller Realty Group. “Jim’s understanding of the market, depth of relationships, as well as his focus on providing first class service to tenants makes him an excellent addition to our organization.” Prior to joining Zeller Realty Group, Durda served as Vice President, Asset Manager and General Manager at Accesso, which owns and manages IDS Center. Durda has been responsible for the leasing and management duties for six IDS Center ownership entities. Durda is involved in the community and has spent nine years on the board of the Minneapolis Downtown Council. He’s also been an active member of the Building Owners and Managers Association (BOMA) for more than two decades. Durda served as BOMA President in 2008, and has been the Government Affairs Chairman for four years. Durda has also been a member of NAIOP (the Commercial Real Estate Development Association) since 1984. “It is an exciting time in the commercial real estate industry in Minneapolis and I am looking forward to joining the Zeller team to enhance our current offerings and also grow our portfolio,” Durda said. “I have had a great deal of respect for the Zeller organization since I completed my first deal with them in 1991.
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News Dougherty Funding LLC Closes $18.5 Million Loan for Pier B Hotel Dougherty Funding LLC has closed an $18.5 million new construction financing loan for Pier B hotel, to be located in Duluth, Minnesota. The subject property is a to-be-built 140-room full-service waterfront hotel located in the popular Canal Park area of Duluth, Minnesota. The site contains four 90’ x 90’ cement silos that are nearly 100 years old that will remain on the site, and provide an iconic image for the development. The 140-room hotel complex will include a spa, a banquet center, a pool overlooking Duluth’s harbor, and outdoor patios near bars and restaurants. Dougherty Funding LLC serves as lead lender and servicer for the loan, arranged for Pier B Holding, LLC.
Dougherty Funding LLC Closes $3.4 Million for Taxexempt Utility Revenue Note for City of Virginia
Minnesota Real Estate Journal
Dougherty Funding LLC has arranged a $3.4 million tax-exempt utility revenue note for the City of Virginia, Minnesota. The proceeds will be used to fund extensive updates for the Department of Public Utilities, including the installation of gas burners into the Utility's biomass boiler #11 and extensive upgrades to the infrastructure of the natural gas main to accommodate increased gas usage in the Utility's biomass boiler #11 and natural gas boiler #10. Dougherty Funding LLC serves as lead lender and servicer for the loan, arranged for the City of Virginia, Minnesota.
ElseWarehouse Apartments: This mixed-use building contains 116 apartment units with five commercial spaces. The property is located at 730 Washington Avenue North in Minneapolis, Minnesota. NorthMarq arranged the $21 million financing for the borrower through its Seller-Servicer relationship with Freddie Mac. Cherrywood Pointe: This 80 unit senior housing property, located at 2996 Cleveland Avenue North in Roseville, Minnesota received $12 million in refinancing. NorthMarq arranged financing for the borrower through its Seller-Servicer relationship with Freddie Mac.
NorthMarq Capital’s Minneapolis office completes refinancing of two multifamily properties for a combined $33 million
NAI Everest Wins NAI Global President’s Award
Patrick S. Minea, senior vice president/managing director of NorthMarq Capital’s Minneapolis based office arranged refinancing of a combined $33 million for two multifamily properties in Minneapolis and Roseville, Minnesota.
NAI Everest received the NAI Global President’s Award in recognition of their leadership, teamwork and performance. NAI Everest is a Member of NAI Global, the largest, most powerful global network of owner-operated commercial real estate brokerage firms. The awards were presented at the 2015 NAI Global Convention in Las Vegas.
February 2015
“NAI Everest continues to demonstrate great commitment to NAI Global, and we are very proud of their achievements and contributions to the organization,” said Jay Olshonsky, President of NAI Global. “They exemplify how our local market leadership is driving growth, and how Members are using the full power of the NAI Global network to help drive their business.”
2nd Annual Best of BOMA Awards celebrate excellence in the commercial real estate industry Dedication and success in making their buildings energy efficient, comfortable, functional assets for their tenants, owners, investors and their communities was the criteria for awards presented last night by BOMA Greater Minneapolis (Building Owners and Managers Association). Winners were announced at the second annual Best of BOMA awards gala. Each winner has a story that demonstrates excellence in their category. (For their stories and photos, please visit the
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BOMA website at www.bomampls.org.) “Every nominee exemplifies the very best in our industry. Their professionalism and commitment to excellence translates into well operated commercial office buildings and tenant satisfaction. These awards recognize their accomplishments,” said Kevin Lewis, BOMA Greater Minneapolis Executive Director. Five individual awards went to: • Property Management Professional of the Year: Bob Traeger, CBRE, General Manager, 333 South Seventh Street • Engineer of the Year: Bill Schouviller, CBRE, Chief Engineer, 333 South Seventh Street • Emerging Leader of the Year: Jessica Lindquist, Shorenstein Realty Services, Assistant Property Manager, Washington Square • Service Partner of the Year: Christy Speck, Director of Business Development, Columbia Building Services, Inc. • President’s Award: Bruce Koehler, Hines, General Property Manager, U.S. Bank Plaza Eight properties received TOBY (The Outstanding Building of the Year)
Minnesota Real Estate Journal
Awards, the most prestigious and comprehensive awards in the commercial real estate industry. The TOBY Awards recognize quality in buildings and rewarding excellence in building management. Buildings are judged on everything from site management and community engagement to environmental and “green” policies, procedures, and results. This years TOBY winners are: • Renovated Building: 330 South Second, owned by GPT Properties Trust and managed by RMR • Historical Building: Ford Center, owned by Ford United Tenant, LLC and managed by Cushman & Wakefield | NorthMarq • Medical Office: Tria Orthopaedic Center, owned by United Properties Investment, LLC and managed by Cushman & Wakefield | NorthMarq • Suburban Office Park (Mid-Rise): Southdale Office Centre, owned by Southdale Office, LLC and KADO Southdale Investment, LLC and managed by Colliers International • 100,000 - 249,999 Square Feet: One Southwest Crossing, owned by One Southwest Crossing and managed by
February 2015
Colliers International • 250,000 - 499,999 Square Feet: The Colonnade, owned by DRA Advisors, LLC and managed by CBRE • 500,000 - 1 Million Square Feet: AT&T Tower, owned by 901 Marquette, LLC and managed by Ryan Companies US, Inc. • Over 1 Million Square Feet: Capella Tower, owned by Minneapolis 225 Holdings, LLC and managed by Ryan Companies US, Inc. And finally, Normandale Lakes 8500 Tower was awarded the Kilowatt Cup, which recognizes the largest energy saver in the Kilowatt Crackdown, an energy conservation initiative hosted in partnership with Xcel Energy. Now in its fourth year, the Kilowatt Crackdown challenges Twin Cities area building owners to improve their buildings’ efficiency.
Oak Grove Capital Arranges $42.5M in Acquisition Financing in the Twin Cities
Dougherty Mortgage LLC Closes $19.3 Million Fannie Mae Loan for Mandalay Apartment Homes
Oak Grove Capital, a leading national provider of real estate financial services, originated a $42.5 million fixedrate Fannie Mae loan for a joint venture between White Oak Partners and a fund
Dougherty Mortgage LLC, a full
service national mortgage banking firm, has arranged a $19.3 million Fannie Mae loan for the acquisition of Mandalay Apartment Homes, a 281-unit multifamily apartment home property located in Dallas, Texas. The 10-year term, SARM, 30-year amortization, 3year interest only loan was arranged by Dougherty’s Minneapolis office, for borrower Mandalay Apartments, LLC. The gated, pet-friendly, Mediterranean style property is located near UTD College and minutes from four major highways. Property amenities include a fitness facility, two pools, and a barbeque area. Apartments feature nine-foot or vaulted ceilings, garden bathtubs, ceiling fans and spacious walk-in closets.
News to page 23
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Minnesota Real Estate Journal
February 2015
Cushman & Wakefield|NorthMarq: 2014 best year for Twin Cities’ CRE market since recession billion in sales at year's end. About 5,000 new apartment units were delivered to the Twin Cities market in 2014.
By Dan Rafter, Editor
L
ast year was the best year for commercial real estate activity in the Minneapolis/St. Paul market since before the recession. Don't believe us? Just ask Cushman & Wakefield|NorthMarq. The real estate firm released its latest Compass Report earlier this month. And the numbers in this report says that the Twin Cities saw its best year for commercial sales, transactions and new construction since 2009. According to the report, the overall vacancy rate in the market fell to 10.9 percent, with all property types experiencing positive absorption. More than 1 million square feet of new construction hit the market, too. Mike Ohmes, Cushman & Wakefield|NorthMarq executive vice president, said that the Twin Cities' momentum should continue into 2015. "Strong economic fundamentals have made the Twin Cities an attractive market on many levels," Ohmes
Ohmes
Yanta
said, in a written statement. How strong as the commercial real estate market in the Twin Cities during the last half of 2014? Here are some key facts: Investors flocking to the region:
Cushman & Wakefield|NorthMarq said that investors from around the nation and the globe are now targeting the Minneapolis/St. Paul market. Their most favored product types are apartments, grocery-anchored retail centers, class-A office assets and high-clearance bulk/distribution buildings. A multi-family boom: The multi-family market here saw its highest sales volume since 2005, approaching $1
Steiger
Medical office on the rise: The
medical office market is strong, too. Cushman & Wakefield|NorthMarq reported that about 905,000 square feet of medical office space is under construction in the first half of 2015, with delivery expected by the end of next year. Industrial sector strong, too: The Twin Cities' industrial market is no slouch, either. According to the Compass Report, the Twin Cities' industrial market reported absorption rates totaling 1.26 million square feet in the second half of 2014. Vacancy rates in this sector dropped to 9.5 percent, the lowest they've been since 1996. Developers broke ground on 3.48 million square feet of speculative and build-to-
suit projects, the most new construction here since the 1990s. A powerful industrial market Jon Yanta, executive director of brokerage services with Cushman & Wakefield|NorthMarq, said that the Twin Cities strong CRE performance shouldn’t be a surprise. Unemployment is low here, he said, and plenty of Fortune 500 companies are expanding their presence in the Minneapolis/St. Paul region. This has had a positive impact on the region’s industrial market, the market on which Yanta focuses. He said that he expects 2015 to be a strong year, too, for the Twin Cities’ industrial market. “The industrial market goes through cycles. You’ll see a four-year, five-year boom with positive absorption, then you go into a correction stage. That is the history of industrial real estate,” Yanta said. “But the last boom, that was a 10-year or a 12-year cycle. It seemed to go on forever. Then we had C&W to page 22
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Minnesota Real Estate Journal
February 2015
NAIOP’s Local Budget Transparency Legislation Gaining Ground, Building Wider Support The bill requires local governments to provide greater detail on revenues and their sources, showing yearly fluctuations in income and how those fluctuations influence spending decisions by local elected leaders. It also calls for those reporting to provide information on year-to-year trends in spending, so that an average taxpayer can inspect trend lines in debt service, employee benefits and other costs over an extended period of time.
By Brandon Champeau Vice President, United Properties Chair, Public Policy Committee NAIOP, Minnesota Chapter The Commercial Real Estate Development Association
A
s the 2015 session unfolds, proposed legislation based on NAIOP Minnesota’s Transparency Initiative is gathering interest and momentum, drawing new support among legislators, citizens groups and public policy, business and trade organizations. Called by one newspaper columnist “the little bill” that could have a big impact, NAIOP’s proposed legislation calls for much greater clarity, transparency and statewide uniformity in the reporting of spending and revenues by local units of government. The draft bill calls for every local government unit across the state— cities and counties—to report their spending in two ways: by department or function (police, safety, fire, parks,
Brandon Champeau public works, etc.), as the majority already do, but also by specifics called “object codes”, detailing budgeting and spending by individual line item, such as wages, benefits, healthcare costs, etc.—the specific supplies or services actually purchased with taxpayer money.
New Support Among Key Legislators The result of nearly five years of work by a task force of NAIOP’s Public Policy Committee charged with identifying the real drivers behind local governments’ need for ever greater property tax revenues, the proposed new taxpayer tool has won the support of several key legislators, including Rep. Steve Drazkowski (R), chair of the House property tax and local government finance division. Drazkowski applauds the proposed legislation, agreeing that it is particularly important at this time, and of real
value to both taxpayers and policymakers. “Taxpayers need something to grab onto when challenging their local governments to stop the waste of taxpayer dollars,” he said in an interview. Drazkowski believes that local government staff and public employees, who in the past have voiced their opposition to the legislation, should support rather than actively oppose it. Support for the bill, he said, would help them gain “credibility for their efforts from the public,” rather than skepticism. Drazkowski also believes the NAIOP-led proposal might play an important role in the reform of the faltering “Truth in Taxation” process, moving that process toward “truth in budgeting” instead, and making it useful for taxpayers and local officials alike. Rep. Roz Peterson (R), a newly elected business owner from Bloomington, has agreed to author the bill in this session, despite the fact that “in theory, I am opposed to additional unfunded mandates,” as she puts it. NAIOP to page 23
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Minnesota Real Estate Journal
February 2015
The Weidt Group: Commercial building owners increasingly focusing on energy efficiency By Dan Rafter
W
hen a building consumes less energy, it’s greener, it’s kinder to the environment. That’s nice. But the owners of commercial buildings – apartment towers, strip centers, warehouses – are more interested in a different kind of green: money. They want energy improvements to save them dollars, big dollars, every year. And here’s the good news: A growing number of commercial property owners are working with consultants and energy companies to reduce their yearly energy bills. They’re doing this by upgrading to LED lighting, an option that’s steadily growing more affordable; installing energy management systems; relying on programmable thermostats; and using motion sensors to make sure that rooms are lit at full force only when necessary. For Adam Niederloh, program manager, and Barb Ohlsen, assistant program manager, with Minnetonka, Minn.-based The Weidt Group, this is especially good news. The Weidt
Group consults with property owners across the Midwest – in addition to its office in Minnetonka, the company boasts offices in Midwest cities Madison, Wis., and Des Moines, Iowa – to help them operate more energy efficient buildings. They’re finding that a growing number of these building owners are willing to spend money upfront if what they’re buying results in years of lower energy bills. “Our goal is make sure that owners are aware that operating efficient buildings can bring them solid savings, year after year,” Niederloh said. “A lot of owners are already aware of this. That’s a good sign. But there is still some hesitation from some of them about the upfront costs. If we can show them, though, how quickly they can recover these costs, it becomes a lot easier to convince them to invest in efficiency improvements.” Why it matters The economy is in recovery mode. And the commercial real estate market in many Midwest cities is booming. This doesn’t mean, though, that it’s
easy today to make big money owning commercial properties today. Yes, rents have gone up in many Midwest markets. But expenses have risen, too. It’s still important for owners to squeeze as much profit out of their office buildings, apartments, retail centers and industrial properties as possible. That’s where energy savings come in. Every dollar in energy savings goes right to the bottom line of a building owner. For instance, when retailer Big Lots installed an energy management system from Siemens in its stores, the retailer began seeing its energy costs drop by 15 percent to 17 percent a year. This is part of the reason why more owners are willing to invest in such high-tech energy solutions as demand response systems. These systems help buildings consume power at the most affordable times. Most utilities charge more for power used during periods of peak demand. A demand response system can help building owners consume more power during off-peak periods and less during higher-cost peak periods. A recent report from Pike Research
predicted that revenues from demand response services will grow from nearly $1.3 billion in 2011 to an impressive $6.1 billion in 2016. The good news for building owners is that much of the technology that can help them reduce their energy bills is becoming more affordable. Niederloh points to LED lights. Just two years ago, these lights were considered cutting-edge, and they came with the price tag that goes with cutting-edge tech. Today, though, the price of LED lighting has dropped, and more building owners are going with this type of lighting to cut their annual energy costs. As the price of LED lights has fallen, it is taking building owners a shorter period of time to recoup the costs of installing them and begin realizing yearly savings. “LED lights are now a more common request in our conversations with building owners,” Ohlsen said. “The owners know about them. They don’t consider them to be overly exotic any more. And that’s a good sign.” Return on investment is key, of Weidt to page xx
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Minnesota Real Estate Journal
February 2015
Dollar stores slowing down? Don’t count on it By Dan Rafter, Editor
D
ollar General plans to open 650 more stores throughout 2015, according to the latest retail research from Marcus & Millichap. That's second among U.S. retailers only to sandwich seller Subway. With the addition of the 650 locations, Dollar General should end 2015 with more than 10,900 stores across the United States. That's a hint of how strong dollar stores are today. Another? Dollar Tree, the big competitor to Dollar General, is the middle of acquiring Family Dollar. Once it does, Dollar Tree will become the largest discount retailer in the country. If Dollar Tree completes its purchase, the company would boast more than $18 million in annual sales and operate 13,000 stores in the United States and Canada. These numbers don't surprise Bill French, senior managing director of retail services with the Indianapolis office of DTZ. French has brokered his share of deals involving dollar stores. He says the stores are more popular today because of the changes they have
made. The stores now offer a wider variety of merchandise, giving consumers reasons to shop them multiple times a week. And the stores themselves are brighter and cleaner. "The operators of these stores are providing a better shopping environment than they did five, 10 or 15 years ago," French said. "There was a time when Family Dollars and Dollar Generals were folksy-type stores. They only appealed to a very, very cost-conscious customer base. I've watched these stores go through their changes.
They've really upgraded their game." The big improvement? Dollar General, Family Dollar and Dollar Tree today stock their shelves with competitively priced grocery products that might bring loyal customers into their stores once or twice a week, French said. "That's so much better than when customers would come in maybe once or twice a month," French said. "They've created more of a food mix, which has really enhanced traffic in the stores, has increased the frequency of the visits made by consumers."
Joe Herron, senior vice president in the Rosemont, Ill., office of Lee & Associates, says that dollar stores remind him of discount grocery chain ALDI. "You see ALDI stores all over," he said. "They're in more expensive suburbs like Barrington. They're in Chicago in neighborhoods like Lincoln Park. They're also in the suburbs that are less wealthy. They appeal to both ends of the economic spectrum. Dollar stores are the same thing." Dollar stores serve a variety of customers. There are families who are struggling with their finances and pick up paper towels, basic food items and cleaning supplies at dollar stores because these products won't break their tight budgets. But these stores also attract wealthier customers who enjoy finding bargains. They bring in the occasional customer who wants to pick up cheap party favors for a child's birthday party or inexpensive candy to hand out to trick-or-treaters on Halloween night. "These stores have really helped themselves by expanding their product offerings," Herron said. "Once upon a time, you didn't know what you would Dollar to page 22
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February 2015
2015 President of the North Star Chapter of the Appraisal Institute, Frances Odenthal - Q&A FRANCES ODENTHAL, MAI, 2015 President of the North Star Chapter of the Appraisal Institute, and office director for Wells Fargo RETECHS in Minneapolis, is a 30-year veteran of the commercial real estate industry and the appraisal profession. Across the country, RETECHS supports all of Wells Fargo in reviewing valuation, costing and environmental aspects of all loans backed by commercial real estate. In her position, Odenthal leads the department’s valuation operations in the 10-state North Central region. As she begins her term as president, we asked for her personal perspectives on the state of the appraisal profession and the outlook for the region’s real estate industry. Q. As president of the Appraisal Institute’s North Star Chapter, you are leading more than 400 residential and commercial appraisers working in Minnesota, North and South Dakota, and Manitoba. What challenges are they facing today? A. I have heard from our residential members that they are increasingly competing with licensed appraisers (but not designated) on more of a fee and timing basis, whereas the comparison should consider the quality. The institute members, (MAI, SRPA or SRA) — have completed more rigorous requirements, beyond those needed for state licensing. Designated appraisers must complete more educational
courses, experience review requirements, and demonstrations of their work product, in order to attain the designation. Unfortunately, since the recession, not all users of appraisal services see the value of the extra experience and education. On the commercial side, there is such a wealth of information available online today on every segment of the market--from hotels to housing to industrial. Though there is an advantage to easy access to information, it is also a challenge for individual appraisers and some smaller firms to stay current on all property types and all market segments. As a result, there is a growing trend that appraisers and appraisal firms focus and specialize in specific sectors and specialty
er, we are being affected by the aging of our members and retirements. On the positive side, we have awarded designations to many new members in the last couple of years. Additionally, we are reaching out to local colleges and universities, looking for ways to inform students of this career path, as it is not a typical field of study, like accounting, marketing, finance, etc.
Frances Odenthal properties where they can develop valuable expertise and can keep apprised of current market data and important trends. Q. How is the North Star Chapter doing in terms of membership growth? A. We are doing well. At 400 members, we are down only slightly from previous years. Like many professional organizations, howev-
Q. What is your Chapter doing to attract younger people to join the profession? A. As introduced in the previous comments, we have already launched a year-long effort to recruit college students, by reaching out to colleges/universities in our region. I have already spoken to the real estate professor for classes at St. Cloud State University and the University of St. Thomas. Communications at this point, are to encourage the appraisal profession and highlighting the great career potential it can be! Q&A to page 22
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Minnesota Real Estate Journal
Hotel From page 1
Soaring RevPAR Morrissey points to the region's rising RevPAR numbers. For those who don't know, RevPAR means revenue per available room, and is a key measurement of the strength of a hotel market. Owners calculate this figure by dividing a hotel's guestroom revenue by its room count and the number of days being measured in a specific period. In the Twin Cities region, RevPAR is on the way up, Morrissey said, growing 5 percent to 8 percent for the last four consecutive years. In Bloomington and Minneapolis, Morrissey said, the RevPAR performance has been even stronger. Some of the reasons for this strong performance are obvious: The national economy is in recovery mode, mean-
ing that business travel is up. "When business improves, there's a growth in travel," Morrissey said. "Businesses are spending again. They are spending capital and making strategic improvements in their businesses. This causes consultants and engineers working for these businesses to go on the road. They need to stay in hotels." At the same time, leisure travel is on the rise, mostly because U.S. consumers are finally starting to feel better about their finances. "Americans think they are better off than they were four years ago," Morrissey said. "They are starting to spend again. Part of the American lifestyle is to travel. People are not taking the exotic trips they were taking before the recession. But they are getting back out there. They want to take their families out traveling again." The Minneapolis/St. Paul region also boasts some qualities that make it a strong hotel market. Morrissey says that tourists have discovered that the
Exchange Realty Announces the Acquisition of the
Anoka Distribution Center Anoka, Minnesota
Exchange Realty has acquired the 228,000 square foot Anoka Distribution Center located in Anoka, Minnesota for $9,500,000. The property is currently 100% occupied by Alliant Techsystems Inc. (NYSE: “ATK�). The seller was represented by Rodney Lee of Premier Commercial Properties.
33 South Sixth Street, Suite 4135 Minneapolis, MN 55402 612.259.7508
region offers plenty for them to do. They've discovered, too, that the Twin Cities isn't as expensive as some other larger metropolitan areas. "A lot of people in the states surrounding Minnesota can't afford to visit places like Chicago," Morrissey said. "The Twins Cities area is still affordable and it has all the amenities travelers want. We might not have 50 museums like in Chicago, but we have plenty of cultural attractions, enough to satisfy the needs of most people for a three- or four-day trip. Why go to Chicago and deal with traffic issues when I can go to the Twin Cities?" New construction The hotel market here is only poised to grow, with new brands entering the region. The Radisson Blu hotel opened in Minneapolis last year. The Mall of America in Bloomington will soon have a 342-room JW Marriott hotel. Then there's the Hilton Home2 Suites that Morrissey Hospitality Com-
February 2015
panies is developing in Eagan. Morrissey said that his company is finishing the equity raise on the 119-room hotel and expects to break ground on the property in the spring. The hotel is Hilton's new extendedstay brand, one designed to appeal to Millennial travelers. It will feature a saline pool, a larger-than-usual fitness center and a bright, open lobby area. Morrissey predicts that the new hotel will be open by May of 2016. "And we are expecting this to be a busy hotel," Morrissey said. "We can use more extended-stay hotels in the Twin Cities. This hotel will be a good fit for that underserved market."
February 2015
Investors From page 1
do this in downtown Minneapolis/St. Paul. Investors have noticed, Streiff said. "We will continue to see a lot of out-of-state capital come to this market," he said. "There is so much international money that wants to be placed in U.S. multi-family sector. Investors from China, Mexico and other international locations really like multi-family here. I expect that they will continue to roll into our
Weidt from page 14
course, to convincing owners to invest their dollars in efficiency technology. If owners understand that they will save enough money each year to quickly recover their upfront costs, they are far more likely to install efficient lighting, thermostats and demand response technology in their buildings, Niederloh said. “If the payback period is less, that does make these energy-saving investments more appealing to building owners,” Niederloh said. “This is a message that building owners have gotten. They understand now that it is possible to recover the costs of high-efficiency lighting, thermostats and other solutions in less time.” A holistic approach Consultants like The Weidt Group take a holistic approach to energy savings, working closely with their clients to reduce their yearly bills. Every building is different, of course. So it’s impossible to take a one-size-fitsall approach. As Ohlsen says, The Weidt Group first evaluates the shells of each
Minnesota Real Estate Journal
Page 21
market and other attractive multifamily markets." The Minneapolis/St. Paul market has plenty of positives to attract investors. The region boasts more than 26 Fortune 500 companies, Streiff said. In the last six months, the region has created more than 30,000 new jobs. This has led to an unemployment rate in the Twin Cities market under 3 percent. Apartment rents continue to rise, and multi-family vacancy rates are low. "All the things you look at from an investment standpoint are favorable
here," Streiff said. That leads to the big question: When will there be too much new apartment development in the Twin Cities? Is there a danger of the supply of new multi-family units outpacing the demand for them, which will lead to higher vacancy rates? Streiff says that there will come a day when the Twin Cities doesn't need any new apartment units. But that day hasn't arrived yet, with tenants continuing to rent new apartment units as soon as they hit the market. "Obviously, the story has yet to be told for 2015. But we have weathered
the storm in the past two years with these new units. They have been absorbed," Streiff said. Streiff said that developers are optimistic that they will be able to charge rents that are in-line with other new multi-family units. These developers are optimistic, too, that they will capture their share of the rental pool in Minneapolis/St. Paul. "We'll have a better indication in the fourth quarter when we look at the trends and numbers," Streiff said. "But people are optimistic for the apartment market here."
of their clients’ buildings. They then provide their clients with information on everything from how much energy they could save by boosting the insulation in their walls to how much they’ll reduce the burden on their heating and air-conditioning systems with higher-efficiency window glass. Weidt Group pros will then take a closer look at how the building operates. They’ll determine if automated thermostats and motion sensors will save a significant amount of money. They’ll look at the impact that LED lights or highefficiency fluorescent lighting might have on a property’s yearly energy consumption. Some building owners might decide to invest in higher-impact systems, such as heat pumps or heat-recovery chillers, products that cost more upfront but might provide a bigger yearly return on their investment. “It’s about finding the right strategies for each individual building,” Ohlsen said.
ing that commercial property owners are becoming more willing seemingly every day to explore ways to reduce their energy bills. This holds true especially with new construction. As Niederloh says, it’s easier to include energy-efficiency measures when you’re building a new property from scratch. It can be more challenging to retrofit existing structures to make them more efficient. “With new construction today, everything is on the table,” Niederloh said. “Owners recognize that they will have to swallow a first-cost pill. But they also realize that once they do, they’ll be able
to take advantage of lower energy costs. There was a time when owners were hesitant to talk about energy saving measures. Now there is no bogeyman. They’re not scared to consider these technologies.” And that can only be good news for the commercial real estate business as property owners continue their efforts to find ways to make a profit in a competitive industry.
Changing attitudes Officials at The Weidt Group are find-
INVITATION TO BID Sale of 2642 University Avenue, St Paul .68 acre and 42,035 Gross Sq Ft Office/Warehouse Bldg On LRT Green Line at Westgate Station Bid Deadline: Friday, April 3, 2015 University of Minnesota - Real Estate Office www.realestate.umn.edu reo@umn.edu
Page 22 C&W from page 10
the slowdown during the recession starting in 2008. In 2013 and 2014, in my opinion, is when a lot of the activity that should have happened in earlier years finally hit.” That’s why the Twin Cities market has seen so many speculative and buildto-suit industrial projects in the last two years, Yanta said. “There was new confidence there for many companies,” Yanta said. “They knew what their sales would be. They could predict their future earnings and space needs. They didn’t have as much uncertainty.” The good news? Yanta doesn’t expect the market to slow down any time soon. “We should have at least another year-and-a-half or two years of growth before economically we’ll slow down again,” he said. Lance Steiger, associate director with the capital markets group for Cushman & Wakefield|NorthMarq, was equally as bullish on the Twin Cities’ multi-family market.
Q&A from page 18
We want to connect with their faculty and leadership regarding expanding their curricula as well, blending in classes that will help fulfill University requirements, as well as the requirements for state licensing and the Appraisal Institute. In addition, we are planning to work with the Commerce Department to assure that students get credit for their work, and also work to create a synergistic path into the Appraisal Institute. By accomplishing this goal, we hope to reduce duplication of courses and put students farther along their career path, based upon their specialized education in real estate appraisal. Q. Next December, when your term as president ends, what would you be especially proud of having achieved? A. I would be most proud if I had helped to really expand the numbers of young people entering our profession, and had been successful in connecting with every college and university in our region. I would also be pleased if our chapter had facilitated with the students getting credit for their coursework from state licensing boards and from the Appraisal Institute. The Institute is also working on implementing a similar program nationally, which we hope will get underway this year. We’re commit-
Minnesota Real Estate Journal
“One of the things that we keep coming back to is that the Twin Cities has the greatest concentration of Fortune 500 companies per capita of any region in the country,” Steiger said. “Having well-paying jobs does wonders for an area’s apartment market.” The apartment boom in the Twin Cities didn’t start until about four years ago. During the three decades before that, new apartment buildings were built at a much slower rate. Because of this, Steiger says, he’s not worried yet that the supply of new apartment buildings in Minneapolis/St. Paul is outpacing demand. After all, the new units that have hit the market have filled up quickly. “We’ve been saying we’re in the sixth or seventh inning for the last three years,” Steiger said. “But we’re still here in the sixth or seventh inning. New buildings are filling up, and they’re not relying on concessions to do so. The fundamentals in the apartment market look strong. They are not weakening.”
ted to getting the discussions going soon, because it’s a ‘win-win’ situation for everyone---for the schools, for the students, for the Appraisal Institute, and the public, which utilizes appraisal services. Q. From your vantage point, what are your observations on current and future real estate values in the Twin Cities, residential and commercial? A. The outlook for the Twin Cities is very favorable. We have low to reasonable vacancy rate across most all major real estate categories and submarkets. There’s solid interest in real estate growth and even stronger interest in new development. Seeing transactions occur, new development occur, is a good positive indicator on future values. Q. Any potential problem sectors in terms of sales prices and valuation? We have seen some really high prices paid recently for certain product types—apartments, for example, as well as office properties and hotels—by national investors. A. Locally, in the apartment market, new development has been active. Unlike some other markets across the country, the Twin Cities can and has absorbed much of the new construction. The historically low
Dollar from page 16
find in these stores. You would get Happy Birthday or Happy New Year hats and maybe some eggs. Now you can count on what you are going to see." A bright future? Herron said that dollar stores continued to grow during even the worst days of the recession, taking advantage of cheap rents by backfilling empty storefronts across the United States. For many months, dollar stores seemed to be the only retailers expanding, Herron said. In the process, dollar stores stole many of the customers who went to retailers such as Target to buy household items or basic groceries. Sure, shoppers won't go to Dollar Tree for steak. But they will go there for canned goods, pop and dishwashing soap. Because of this mix of products,
vacancy rates, indicates pent-up demand. Additionally, this metro area stacks up really well compared with other metro areas across the country. The large number of corporate headquarters and regional offices provide solid employment which is attractive to new graduates. The many well respected universities and colleges bring a new inflow of students/graduates to the Twin Cities. Minnesota offers strong employment, far below the national average, numerous educational offerings, housing choices, public transportation, recreation, etc. On the commercial side, there is steady demand as companies remain strong and competitive. The Twin Cities is also in a commanding position compared to neighboring states. Again, new construction in the various sectors such as office space downtown, industrial in the suburban locations, and retail is occurring due to demand for this new construction. Since the recession, there has been little new construction, and it is good to see the cranes moving again, signaling positive attitudes toward this market. Of course, each market sector and property type needs to be monitored, in order to avoid overbuilding of previous cycles. Keep in mind that real estate can offer diversification, and stability in an overall portfolio, compared to other
February 2015
and their affordable prices, dollar stores should continue to grow even as the economy improves, Herron said. "They are here to stay," Herron said. This doesn't mean, though, that retailers like Dollar Tree and Dollar General will continue to add stores at the same rate or grow their revenues as quickly. As the economy does improve, some shoppers might leave dollar stores behind. But many won't. "I am totally sold on the dollar store," French said. "The model allows them to penetrate a number of very small markets on the rural side. But it also allows them to penetrate dense markets such as the Chicagos of the world. You are now seeing retailers like Target looking at opening smaller stores, 15,000 to 20,000 square feet, to compete with the dollar stores and drug stores out there cutting into their customer base."
investment opportunities. The large national real estate investors have become active in the Twin Cities, are starting to understand and appreciate this strong market metrics. This market offers a solid workforce with high education levels and strong household incomes and you really have a very favorable market situation for commercial real estate. Q. I’m sure your members who are focused on residential are concerned about the level of activity in that segment of the industry. What kind of housing market do you see in 2015? A. Housing in the Twin Cities, whether new construction or resale, is generally strong. Foreclosures are down, there is growing demand, and those are good signs for both builders of new construction and home sellers. I do believe, however, that there are pockets here and there that have become overpriced, so the market is not in equilibrium across all sectors. But overall, I look for 2015 to be a pretty good year in terms of residential sales and mortgage activity---and that’s good for our North Star Chapter’s members!
February 2015 NAIOP from page 12
“However, this is very different. It is not a case of requiring something completely new, different and burdensome of local governments, but simply asking that they take information they already collect and have and make it into something more readily available and useful to their citizens.” Peterson urges a collaborative and bipartisan approach to passing the legislation, and has already had discussions with some city representatives “to encourage them to become a part of the conversation,” she said. Rep. Jim Davnie, Minneapolis DFLer and co-author with Rep. Peterson of NAIOP’s bill, is bluntly critical of the
News From page 8
managed by Ares Management to acquire Southview Gables, a 425 unit garden-style apartment complex in Inver Grove Heights, MN. The fixed-rate loan has a 10-year term with three years of interest-only and seven years of yield maintenance, providing the borrower with additional cash flow in the loan’s early years and attractive loan payoff optionality. Paul Smith, Vice President in Oak Grove Capital’s Columbus office, said, “We are thrilled to have worked with White Oak Partners on their acquisition of Southview Gables. White Oak Partners is a dynamic company with deep roots in the multifamily industry. The responsiveness and sophistication they exhibited as we worked through critical deal points was instrumental in our hitting the collective goals we set out at the beginning of the deal.” Michael Menzer, CEO of White Oak Partners said, “We made the decision to go with Oak Grove based upon their reputation for speed and certainty of execution, along with the comfort that we were dealing with the key decision makers. This was our first transaction with Oak Grove, and we look forward to doing more business with them in the future.” Jeff Patton, Managing Director at Oak Grove Capital, said, “With an increasing number of investors going outside of their own markets for new investment, our national presence allows us to assist our borrowers with local knowledge and experience. On the Southview Gables acquisition, we had an Oak Grove loan officer and a borrower
Minnesota Real Estate Journal
way cities and counties currently report their spending. He agrees that greater transparency in local spending is really a non-partisan issue. “You can tell me you put your budget online, but when you put 500 pages online, you haven’t reached a meaningful definition of ‘transparent,’ he said in an interview, adding that reams of data about taxing and spending decisions are not useful “to the average citizen.” Citizen Support Also Growing Support for greater transparency is also growing in the wider community. Beginning later this spring, NAIOP and its partner, the Center for Fiscal Excellence (CFE), will work with the Citizens League of Minnesota in hosting a series
client, both located in Columbus, OH, and were able to leverage our significant presence in the Twin Cities market to our borrower’s benefit.”
Stahl Construction Completes the New City of Victoria City Hall and Public Works Facilities Stahl Construction recently completed construction of the new City of Victoria city hall and public works facilities. The facilities were built simultaneously over a seven month period. The 12,000-square-foot, woodframed new city hall is two stories and is located on Stieger Lake Lane. The building’s exterior features a blend of different materials including masonry, stone, siding and EIFS (Exterior Insulation and Finish Systems). City council chambers and offices are located on the second floor, with a Carver County library extension on the first. The new public works facility on Bavaria Road is a 16,380-square-foot pre-engineered metal building with office space, shop areas and ample equipment storage. “It has been a pleasure working with Brunton Architects & Engineers on the new city hall, DJ Medin Architects on the public works facility, and City of Victoria officials,” said Dale Sonnichsen, Stahl Construction’s Project Manager, “The municipal sector is a major focus for Stahl Construction and we are proud to construct two facilities for the City of Victoria that will meet the community’s needs for many years to come.”
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of meetings with the issue’s “stakeholders” to explore objections from public employees and local government staff and develop just such a neutral and nonpartisan approach to passing the legislation. Expressions of strong support have also come from the elected leaders and chambers of commerce of the cities and government units where NAIOP and CFE have already conducted pilot programs to answer the charges of increased costs and staff time, including the Edina, Faribault, and Hastings, as well as Dakota County. Matt Smith, Dakota County deputy administrator, a former Minnesota revenue commissioner, told the Minneapolis Star Tribune that any extra staff time
involved was well-spent. “There’s benefit in producing as much budget information, sliced as many ways as we can, for the public,” Smith said. “It’s our job to get people’s heads around what we do.” The Star Tribune’s editors agree. “Local officials who understand the importance of accountability to a functioning democracy should see the value in reporting their spending by category as well as program, particularly as they are opting for higher property taxes,” the newspaper said in an editorial. “For those who don’t,” the newspaper adds, “a legislative nudge is in order.”
Cushman & Wakefield | NorthMarq Secures Sale of Lexington Inn & Suites in Stillwater, Minnesota
Sports Authority signs lease at Minneapolis City Center Retailer to open first store in downtown Minneapolis
Cushman & Wakefield | NorthMarq (CWN) www.cushwakenm.com represented the sale of Lexington Inn & Suites hotel, located at 2000 Washington Ave., Stillwater, Minn., which closed at $2.4 million. The 58-room limited service hotel was originally built as a Holiday Inn Express in 2001 before being converted into the Lexington Inn & Suites in 2010. Ronn Thomas of CWN represented the seller and original developer of the property, Keziah Properties, and the buyer was Cozy Nights Hospitality, LLC, which represented itself during the transaction. “Limited service hotels tend to have lower operating costs and better profit margins as they offer fewer services than full service hotels, such as an inhotel bar or restaurant,” said Thomas. “Because of this, limited service properties such as the Lexington Inn & Suites are currently in high demand within the Twin Cities area.” The sale of the Lexington Inn & Suites marks the fourth hotel transaction secured by Thomas in the last 12 months. Previous transactions include two full service Best Western properties, located in Plymouth and St. Paul, respectively, in addition to a former limited service AmericInn hotel located in Hastings.
Shorenstein Properties LLC today announced Sports Authority, one of the largest full-line sporting goods retailers in the United States and Puerto Rico, signed a lease for 21,877 square feet at Minneapolis City Center. Sports Authority has ten stores in the Minneapolis area but this marks the company’s first store in downtown Minneapolis. The store is expected to open in Fall 2015. “We’re excited to bring our passion for sports and our unparalleled selection of sporting goods and apparel to the Minneapolis City Center, and we look forward to being part of the vibrant retail and lifestyle atmosphere in downtown,” said Michael Foss, Chief Executive Officer of Sports Authority. Sports Authority will occupy the ground-floor retail space on the Nicollet Mall and 7th Street side of the property. Sports Authority’s presence brings total retail occupancy at Minneapolis City Center to 86 percent. Additionally, last week, Shorenstein signed a lease for more than 40,000 square feet with discount luxury apparel retailer Saks Fifth Avenue OFF 5TH for a store that is slated to open in April 2016. “With a strong community of office users in our building and downtown, we’re delighted to now see the traction taking place within the retail component of Minneapolis City Center and the positive effect it is already having on the community,” said Glenn Shannon, president, Shorenstein Properties.