Mrej july 2014 by REjournals

VOLUME 30, NUMBER 7

July 2014

New Radisson Blu in Minneapolis a sign that more luxury lodging to come? By Dan Rafter, Editor

athan Hall has a prediction: The new Radisson Blu hotel in downtown Minneapolis will set off a chain reaction that will bring a series of new luxury lodging choices to the city’s center. Hall, senior project director with the John Hardy Group and the project man-

ager for the new Blu location, says that the high-end property might also cause other local hoteliers to offer more frills at their own locations. "I think this hotel will have a huge impact," Hall said. "I think neighboring hotels will have to step up their game now. We've really brought a freshness to the market. We've raised the bar in terms of not just the design but the accommodations." Blu to page 19

Ryan’s Downtown East project taking shape in Minneapolis By Dan Rafter, Editor

yan Companies US and Wells Fargo broke ground on the massive Downtown East mixed-use development in downtown Minneapolis in late spring. And since that time? Tony Barranco, vice president of development with Ryan Companies, said that the site "has been buzzing." And all the activity has given Barranco and others working on Downtown East a truer picture of just how this development will change the look of downtown Minneapolis. "Sometimes you work on projects like these with so many players, you get caught in the weeds of solving

problems and focusing on the small details," Barranco said. "Then you see the site and all the activity. It's hard not to see the impact that this project is having on the area. It's obviously a great feeling to be part of this." That impact that Barranco mentions? It's far from an insignificant one. The $400 million mixed-use Downtown East development will cover a five-block 12.5-acre area near the new Minnesota Vikings stadium in downtown Minneapolis. The Downtown East project will include 1.1 million square feet of office space in two 17-story office towers owned by Wells Fargo, 193 market-rate apartments, about 28,000 square feet of retail, a six-level parking ramp containing 1,610 parking spaces to be owned by the Minnesota Sports Facilities Authority and a nearly

two-block urban park physically connecting the new Vikings Stadium to the core of downtown Minneapolis. The construction alone of Downtown East will collectively create jobs for about 3,400 tradespeople. Downtown East will be a busy site once construction is complete. Wells Fargo alone plans to move 5,000 of its employees into the two 17-story office towers. Wells Fargo paid Ryan Cos. $217 million for the two office towers and the land under it. The project will also create a pedestrian-friendly urban area near the new Vikings NFL stadium being built now by Mortenson Construction of Golden Valley, Minn. The stadium is scheduled to open in July of Ryan to page 21

July 2014

Minnesota Real Estate Journal

Contents

JULY 2014 • VOLUME 30, NUMBER 7

Page 3

Departments PEOPLE

NEWS

RESOURCE GUIDE

NEW RADISSON BLU IN MINNEAPOLIS A SIGN THAT MORE LUXURY LODGING TO COME? RYAN’S DOWNTOWN EAST PROJECT TAKING SHAPE IN MINNEAPOLIS

NAIOP MINNESOTA’S LOCAL BUDGET TRANSPARENCY INITIATIVE LOOKS TOWARD 2015 LEGISLATIVE SESSION

The Minnesota Real Estate Journal (ISSN 08932255) is published monthly for $85 per year by Law Bulletin Publishing Company, 13400 15th Ave North STE C, Plymouth 55441. Phone: 952-885-0815. Periodicals postage paid at Minneapolis, MN. POSTMASTER: Send address changes to Minnesota Real Estate Journal, 415 State Street, Chicago IL 60654. Lanning Macfarland, Jr. chairman; Sandy Macfarland, CEO; and Brewster Macfarland, president. Back issues $10.00. Subscriptions are non-refundable. For more information call 952-885-0815. ©2014 Law Bulletin Publishing Co. No part of this publication may be reproduced without the written permission of the publisher.

Page 4

Minnesota Real Estate Journal

July 2014

People a division of Law Bulletin Publishing Co.

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

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

EDITORIAL ADVISORY BOARD JOHN ALLEN Industrial Equities ROBERT ANGLESON Navigator Real Estate RICK COLLINS Ryan Cos. US Inc.

Drew Johnson Joins Oppidan Investment Company as Property Developer Minneapolis-based Oppidan Investment Company, a national property development firm offering a full range of real estate services, today announces that Drew Johnson has joined the firm as a developer. In his new role, Johnson joins Oppidan’s staff of four developers to support the firm’s clients in identifying, pursuing and finalizing multi-family residential and commercial development opportunities. Johnson’s 12 years of industry experience includes tenures at United Properties and CSM Corporation, where he held a variety of roles managing the development process and sourcing new real estate deals. Johnson’s past clients include Supervalu, Roundy’s, Walgreens, Starbucks, CVS, and M&J Bank. Johnson graduated Cum Laude from Colby College in Waterville, Maine, with a Bachelor of Arts degree. He also holds a Minnesota Real Estate License and has completed all CCIM coursework.

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

Ron Scholder joins ACKERBERG ACKERBERG announced that Ronald R. Scholder has joined the firm’s brokerage division. Ron is a 30-year veteran of the commercial real estate industry and has navigated complicated transactions on behalf of clients such as AMB, ConAgra, Gillette, Medtronic, Nabisco, Pentair, Federal Reserve Bank of Minnesota, Minneapolis Parks Department and the State of Minnesota. He was named Industrial Broker of the Year by Cassidy Turley in 2008 and 2009. Ron has developed a vast network and maintains relationships with colleagues and clients for the long term. He will continue to provide his expertise and problem solving skills to corporate clients and commercial real estate investors in the setting of ACKERBERG’s boutique brokerage division that focuses on commercial real estate problem solving as well as working with owners to increase values of their properties. Ron is a member of the Society of Industrial and Office Realtors (SIOR),

the Minnesota chapter of NAIOP The Commercial Real Estate Development Association, and the Minnesota Commercial Association of Real Estate (MNCAR).

Bridgewater Bank Names Senior Vice President of Retail Bridgewater Bank, a Minnesota bank focused on meeting the needs of real estate and small business entrepreneurs, is pleased to welcome LuAnn Joy as Senior Vice President of Retail. LuAnn joins Bridgewater Bank with over 25 years of banking experience. In her current position, she manages all retail locations and oversees deposit and ancillary products, as well as consumer lending. “We are fortunate to have LuAnn join our team,” said Mary Jayne Crocker, Executive Vice President and Chief Operating Officer at Bridgewater Bank. “Her experience and knowledge will positively impact the bank as we continue to grow.”

Management & Development Executive Joins Doran Construction Doran Construction, the Bloomington, Minnesota-based general contracting company, has announced the hiring of Bruce Carlson as Vice President of Business Development. Carlson, a veteran construction manager and business development executive, has previous experience with United Properties and Mid-America Real Estate in Minnesota. As Vice President of Development he will work with senior Doran Construction managers to develop general contracting relationships with third party clients. Kelly Doran, principal and founder of Doran Construction, said, “Bruce’s experience as a construction manager is a dimension that will add great strength to our sales team. We are very fortunate to land a respected and experienced executive who understands the industry from the development and planning stages all the way through construction.” Carlson is a former president of the Minnesota Shopping Center Association and has served as a real estate faculty instructor and student mentor at the University of St. Thomas in Minneapolis.

Ryan Companies US, Inc. Promotes Tony Barranco to Vice President of Development, Office and Mixed-Use Ryan Companies US, Inc. is pleased to announce the promotion of Tony Barranco to Vice President of Development, Office and Mixed-Use in the NorthCentral Region. Tony will be filling the position previously held for 15 years by Rick Collins, who has been promoted to President of Ryan’s SouthWest Region. As part of his new responsibilities, Tony will assume the role of Project Development Executive for Ryan’s Downtown East project. He will also lead a variety of corporate office and urban mixed-use development pursuits in the Twin Cities and throughout Ryan’s NorthCentral Region. Casey Hankinson, Vice President of Development for Ryan’s NorthCentral and Rick Collins have worked together as development partners over the last five years with a strong track record of successful projects where Hankinson was working the industrial build-to-suit market and Collins the corporate office opportunities. Now Tony Barranco and Casey Hankinson will be teaming up as development partners to pursue these same market sectors in a similar fashion. Casey Hankinson stated, “I am very excited to be forming this new partnership with Tony Barranco. Both the office and industrial build-to-suit markets are heating up in the Twin Cities and I see this as the prime time for us to execute market leading development projects that support our customers business growth plans.” “Tony has established himself as a rock-solid developer who very creatively crafts unique development solutions for complicated projects,” added Collin Barr, President of Ryan‘s NorthCentral Region. “We are excited about this new opportunity for Tony and know he will continue to achieve optimal commercial property development solutions for our customers.”

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Minnesota Real Estate Journal

July 2014

News

Remembering Larkin Hoffman Law Firm Founder Robert L. Hoffman, 1928-2014 I

t is with great regret that we announce the passing of our founder, Robert L. Hoffman. Bob founded the firm, along with Jim Larkin, in 1958. Over time, he became known as the dean of Twin Cities land-use lawyers and an innovator in law firm management. “Bob was a pioneer in the legal industry,” noted Bill Griffith, president of Larkin Hoffman. “He encouraged the firm to move into new areas, like government relations, land use and environmental law, long before others specialized in those fields.” Bob was involved in land use and real estate development issues as both a policy-maker and lawyer. He represented many development clients on major projects in and around the Twin Cities over his long career, most notably, Mall of America from its inception, Carlson Company headquarters and Target Center. Curt Carlson, founder of Carlson Companies, described Bob as follows: "no matter

how formidable the obstacle, he was so calm about it. He figured a way to compromise to get it accomplished." As an early architect of the Metropolitan Council, the governing body for planning and development in the Twin Cities metropolitan area, Bob

served on the board for several years, chairing the Physical Development Committee. He worked extensively with the Builders Association of the Twin Cities and the Minnesota Housing Partnership to develop and promote affordable housing. Bob was a member of the Land Use Advisory Group for the Public Technology Institute of Washington, D.C. and taught land use law at Hamline University School of Law. After graduating from Carleton College �in 1952, Bob attended the University of Minnesota School of Law, graduating in 1955. His extensive public service included serving on the board of governors of the University of St. Thomas School of Law, as a trustee of Housing Minnesota and as a member of the Urban Land �Institute Development Policies and Regulations Council. He was �a member of the Bloomington City Council for 14 years and served as the chairman of the

Bloomington Economic Development Commission. In 2011, Bob was inducted into the Minnesota Real Estate Hall of Fame. Bob was not only this firm’s founder and long-time leader, he was a true mentor to all of us. He gave us the benefit of his professional experience, business acumen and devotion to community. We live and practice in a better community because of his vision, integrity and ability to help others achieve their goals. He will be missed.

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Cushman & Wakefield | NorthMarq Compass Report: Twin Cities Commercial Real Estate Market Remains Strong as Development Activity Levels Rise in Most Sectors The Twin Cities commercial real estate market enjoyed continued success in first-half 2014 as the vacancy rate remained stable at pre-recession levels of 11.8 percent, according to the latest semi-annual Compass Report from Cushman & Wakefield | NorthMarq (CWN) www.cushwakenm.com. The market recorded 384,000 square feet (sf) of positive absorption, pushing activity into the next-tier cities for land, residential and industrial sectors. The complete Compass Report can be viewedat www.northmarqcompass.com. “With development activity on the rise among most sectors, the Twin Cities commercial real estate market remained strong during first-half 2014,” said Mike Ohmes, Cushman & Wakefield | NorthMarq executive vice president, Transaction and Advisory Services. “Looking forward, more than 2.9 million square

Minnesota Real Estate Journal

feet (msf) of space is expected to be added to the overall market in secondhalf 2014 with multiple industrial, medical office and retail projects currently under construction coming on line. If the majority of the completion dates are met, the Twin Cities will enjoy its highest historical construction level since 2007.” The first six months of 2014 saw: · Investors looking for higher yields. Commercial real estate investors are increasingly coming to the Twin Cities in search of yields higher than those available in larger, more expensive markets. Investor demand in the Twin Cities continues to chase multiple offerings in the market. The most in-demand product types include Class A core office buildings in downtown Minneapolis and select suburban locations. Capital is also chasing apartment properties, grocery-anchored retail centers and modern industrial distribution buildings with minimal office finish. · Multi-family market delivering units and results. The multi-family sector in the Twin Cities market continues to be a favorite among developers and

investors. Roughly $230 million in apartment sales closed in the first half, and sale volume is expected to pick up significantly in the second half of the year. The market has delivered 1,500 units so far this year, and another 5,000 are expected to open by year end. Another 3,000-6,000 are forecast for 2015. Many of the urban developments are benefiting from strong preleasing activity, which is helping them exceed their pro formas and open ahead of schedule. · Development activity in medical office reaching new highs. Construction levels in the Twin Cities medical office market are the highest seen since 2007. As healthcare systems improve their position within the market and organize metro-wide service, they are expanding their existing facilities and building new off-campus centers and clinics. There are currently 14 medical office projects totaling 949,479 sf under construction and an additional 412,978 sf planned. Positive absorption is forecast for second-half 2014 as many of these new developments will come on line and are already preleased.

July 2014

· Industrial sector focusing on distribution needs. Spurred by a steady economy, the Twin Cities industrial market is seeing solid demand for highclear, functional space as more companies expand and need distribution or manufacturing space. However, there is a lack of larger blocks of functional space, particularly bulk/warehouse product. With the hope of increased rental rates, developers are starting build-to-suit and speculative developments. Twelve projects totaling more than 2 million square feet are underway - eight speculative projects totaling 1.178 msf and four build-to-suit projects totaling 907,000 sf. This is the most construction since the late 1990s. Demand should remain healthy. The market could see 700,000 sf of absorption in the second half for a total of 1.3 msf for 2014. · Grocers and outlet stores affecting change in the retail market. After a very strong 2013, the retail market in the Twin Cities held steady in the first half of 2014. The vacancy rate remained flat at 7.2 percent, which is slightly below 2008 levels. More importantly, the mar-

Page 10

ket is bracing for a significant amount of change. Roundy’s announced in the first half that it was exiting the market, and 18 of its stores have been sold. Nine storesremain on the market and are expected to close in July, adding more than 500,000 sf of negative absorption in the second half. At the same time, HyVee is planning its first foray into the Twin Cities with 15-20 stores over the next few years, beginning in 2015. With a footprint of 90,000 sf, this will have a huge impact on the market. The other big news is that the new 409,000-sf Twin Cities Premium Outlets in Eagan will open in August. It is expected to be 95 percent leased, which means it will contribute approximately 390,000 sf of positive absorption in second-half 2014. · Class A office properties remaining in high demand. In the first half of 2014, demand for office space clearly favored high-quality properties. Class A space had a strong first half, posting a vacancy rate of 13.8 percent and some rent growth. The overall vacancy rate remained unchanged at 17.4 percent, which is still the lowest rate since 2009.

Minnesota Real Estate Journal

Absorption dropped to negative 111,324 sf; however, four of the seven submarkets reported modest positive absorption during the past six months. Much of the negative absorption can be attributed to the shrinking footprints of many companies as they utilize space more efficiently, and to the impact of tenants vacating space to move to corporateowned facilities. Modest leasing activity is projected for the balance of 2014 for Class B and C assets. Approximately 75,000 sf of positive absorption is projected for the next six months, leaving the market with flat absorption for the year. · Land developers moving to next tier. Thanks to a healthy amount of activity among residential and industrial users in the Twin Cities land market during the past few years, available land in the first-tier markets is now scarce. In 2014, developers are looking toward a “new frontier” as they expand into previously passed-over territories, including St. Michael, Lakeville, Lake Elmo, Otsego, Hudson, Brooklyn Park and beyond. As developers push into new markets in the greater metropolitan area,

cities will play a key role in whether projects move forward.

Duke Realty Leases 1.4 Million SF in Minneapolis-St. Paul in First Half of Year New leases, renewals and build-tosuit projects contribute to year-to-date activity. Duke Realty Corporation’s (Duke Realty) Minneapolis-St. Paul office announces that it has completed 1.44 million square feet in leases in the metro area since the first of the year. Transactions include 11 industrial leases, five of which are new and six renewals, two new retail leases at The Shops at West End and two new build-to-suit bulk warehouse projects. As a result of this leasing activity, Duke Realty’s 4.4 million-square-foot industrial portfolio is 99 percent leased. “Our Minneapolis-St. Paul office is pleased with the ongoing interest companies have had in our existing properties, as well as our capability to deliver custom facilities on our available, well-

July 2014

located land parcels,” said Steve Schnur, Senior Vice President of Duke Realty’s Midwest Region. “Our success in attracting new tenants and retaining existing clients is indicative of the strength of our portfolio as well as our team.” So far this year, Duke Realty has executed leases for two build-to-suit distribution centers in Gateway North Business Center, its xx-acre industrial park in Otsego just a few minutes north of the I-94/Highway 101 interchange. Duke Realty is constructing a 300,000-squarefoot facility for Ruan Transportation Management Systems and a 485,804square-foot building for Room & Board. Ruan was represented by Patrick Schneider with Calhoun Commercial Real Estate and Room and Board was represented by Tom Hauschild with the Tegra Group, Inc. Dan Swartz with CBRE was the listing broker for Duke Realty for both transactions. “Both Ruan and Room & Board are growing companies focused on accessibility and efficient product storage and handling,” said Josh Budish, Vice President of Leasing, who represented Duke

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Realty in both of the build-to-suit transactions. “Gateway North Business Center provides the highway access they are looking for, and our construction expertise allows us to deliver each company a first-generation building designed and constructed to its specifications.” In addition to the two build-to-suit transactions, Mr. Budish also oversaw the following new leases and renewals. New Leases Nippon Express signed a new 75,729-square-foot lease in Enterprise Industrial Center, located at 2444 Enterprise Drive in Mendota Heights. Phil Simonet with Paramount Real Estate Corporation represented Nippon in the transaction. Bryan VanHoof with CBRE was the listing broker for Duke Realty. M S International will occupy 51,025 square feet in Medicine Lake Industrial Center, 975 Nathan Lane, Plymouth. Jack Tornquist with CBRE was the broker for M S International, while Mark Sims with Cassidy Turley was the listing broker for Duke Realty.

Minnesota Real Estate Journal

Latitude 360 will lease 43,808 square feet in The Shops at West End, an outdoor lifestyle center located at 1621 West End Boulevard in St. Louis Park. Rich Bevis with JR Anderson was the listing broker. Leaptech MN will be moving into 43,149 square feet of space in Crosstown North Business Center 4, located at 8400 89th Avenue N. in Brooklyn Park. Mark Sims with Cassidy Turley represented Leaptech in the transaction. Tim Olsen with Cassidy Turley was the listing broker for Duke Realty. At Crosstown North Business Center 5, 9100 Wyoming Avenue North, Würth Adams will occupy 25,713 square feet. Würth Adams was represented by Jon Juris with Cushman & Wakefield of MN. Mark Sims with Cassidy Turley served as the listing broker for Duke Realty. Communications Test Design has leased 16,030 square feet in Silver Bell Commons, 2015 Silver Bell Road in Eagan. Tony DelDotto with Cushman & Wakefield of MN was the representative

for Communications Test Design. Duke Realty’s listing broker was Bryan VanHoof with CBRE. Also at The Shops at West End, Bonefish Grill has leased 8,132 square feet. Bonefish Grill’s leasing representative was Cushman & Wakefield of MN and the listing broker was Rich Bevis with JR Anderson Realty. Renewals COKeM International has renewed its 157,644-square-foot lease of MN Valley West, located at 3880 4th Avenue East in Shakopee. Brad Bohlman with Colliers International represented COKeM in the transaction Target has renewed its 107,105square-foot lease in Crosstown North Business Center 4, located at 8400 89th Avenue N. in Brooklyn Park. Target and Duke Realty were self-represented in the lease renewal. Scholastic Books will remain in its 48,144-square-foot space in Crosstown North Business Center 1, 9201 Wyoming Avenue North in Brooklyn

July 2014

Park. DTZ Americas served as the broker for Scholastic Books. Mark Sims with Cassidy Turley was the listing broker. Mattress Firm signed a lease renewal for 32,896 square feet in Trapp Road Commerce Center II, 1245 Trapp Road in Eagan. Mattress Firm was represented by Damian Rivera with E Smith Realty. Duke Realty’s listing broker was Tony DelDotto with Cushman & Wakefield of MN. Gleason’s Gymnastic School renewed its lease for 28,005 square feet in Silver Bell Commons, located at 2015 Silver Bell Road in Eagan. Nick Peterson with Wellington Management represented Gleason’s in the transaction. Also in Silver Bell Commons, Empire Today renewed its lease for 18,254 square feet. Brett Severson with JLL represented Empire Today in the transaction.

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Minnesota Real Estate Journal

July 2014

NAIOP Minnesota’s Local Budget Transparency Initiative Looks Toward 2015 Legislative Session By Duane Arens Director of Public Policy NAIOP Minnesota, The Commercial Real Estate Development Association

multi-year effort by NAIOP Minnesota to identify the real drivers behind continuing increases in commercial-industrial property taxes will come into sharp focus this fall, as the campaigning for seats in the Minnesota House of Representatives picks up speed and the 2015 legislative session begins to loom. Generally referred to as NAIOP’s “local budget transparency initiative,” the effort’s long term goal is to encourage local government jurisdictions— cities and counties—to replace their annual financial “data dumps” to citizens with a clearer, more uniform, easy-to-understand and taxpayer friendly presentation of actual local budget numbers. “Moving from what local government services cost to understanding

why they cost what they do, along with an explanation of the why behind the trend lines,” is the way Brandon Champeau, United Properties, chair of NAIOP’s Public Policy Committee, describes it. Such a format would report all local spending by expenditure type or “object code,” i.e., salaries, wages, benefits, pensions, capital costs, etc., rather than by department, program or function---parks, public safety, public works, etc.—as is most common today, along with trend lines showing year-toyear changes in allocations as well as tracking shifts in local government revenues. Our initial proposed legislation, introduced in the 2012 session, faced stiff resistance from the League of Minnesota Cities, government employee unions and other interested parties. Most of the concerns focused on worries about additional burden on city staffs--in terms of time and the cost of accounting changes--as well as suspicions of increased comparisons with neighboring cities based on oversim-

plifications of local governments’ spending priorities. Our proposed legislation, despite support from both sides of the aisle, had the misfortune of being included in the omnibus tax bill, vetoed in toto by the Governor when it hit his desk We plan to introduce essentially the same bill, with some minor amendments, in the upcoming session, this time with State Representative Jim Davnie (D- ) as author. A financial educator with Lutheran Social Services in his private life, Rep. Davnie has long advocated for a better-informed, more involved citizenry. For that to become a reality, he says, “local governments must provide information to taxpayers in a form they can understand. The goal should be consistency in delivering budget information in a way that is accessible by the average taxpayer.” Noting that is not the case today, with local reporting best described as “opaque,” Rep. Davnie says that NAIOP’s transparency legislation plays into the ongoing exploration in

the legislature of replacing current truth in taxation laws “with something different.” NAIOP’s approach, supported by Rep. Davnie, the business community and the media, has centered on advocating a “truth in budgeting” approach to how municipal budgets are put together, This includes providing the public with more and better information before and during the budgeting process, and having that process focus more on outcomes rather than inputs and procedures. Four Pilot Projects Revealed the Real Cost Drivers of Local Property Tax Increases NAIOP’s unique initiative was launched more than four years ago with the establishment of the Nexus Task Force, a special subcommittee of the Public Policy Committee charged with conducting research and gathering information from key participants in the local budgeting process. Paul Reinke, chair of the task force, said the effort was originally triggered NAIOP to page 16

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Minnesota Real Estate Journal

NAIOP from page 14

by growing frustration among NAIOP members “unable to get concrete answers” to their questions about the causes of constantly rising property tax costs. “We wanted to put an end to the constant finger pointing and blame shifting between legislators and city officials over who was really responsible for climbing property taxes,” says Reinke. To assist in researching current budget reporting methods and in designing a new and better approach, the task force recruited the help of the non-partisan, non-profit Minnesota Center for Fiscal Excellence (CFE). To answer the challenges raised during the 2013 session, the Nexus Task Force, with the help of Mark Haveman, CFE’s executive director, and Aaron Twait, director of research, organized and conducted a series of pilot demonstration projects with several local jurisdictions who volunteered to be guinea pigs—Hastings, Faribault, Edina and Dakota County. These pilot projects were designed to test the concept in terms of cost and difficulty of implementation, as a

prelude to re-introducing legislation in 2015. The findings from the pilot projects have been uniformly positive: administrators and staff members of the jurisdictions who participated in the pilot projects are unanimous in declaring that the costs involved, and staff time required, to generate reports and trend lines in the new, easier-tounderstand format were not only minimal, but resulted in fresh citizen insights when released to the public.. Rep. Davnie, who attended a presentation to local business and property owners of Dakota County’s budget in the new format, said he was personally impressed. “Although those present came at the report from the perspective of business owners and the real estate industry, it was striking to me that they came away with new insights. It made it very clear that greater transparency was a plus for the relationship between Dakota County’s governance and their constituents.” Prospects for NAIOP’s Bill in the 2015 Session Appear Bright “What was once a small group of

July 2014

concerned commercial property taxpayers trying to figure out the reason for property tax increases has blossomed into an initiative that has captured the attention and interest of business organizations, media and citizens across the state,” says Haveman, describing the progress of the effort. “There is a growing recognition that no matter how much property taxation may frustrate property owners, it is here to stay and will continue to be an indispensable part of local government finance,” he explains. “As a result, it’s in everyone’s interest to improve public faith and trust in local government finance. NAIOP’s transparency initiative provides the foundation for that effort. There is now bipartisan understanding and support for this initiative because ours is a good government state. Minnesota’s policy makers ‘get it’”. “In my opinion,” says Rep. Davnie, “the electorate is looking for greater transparency, even though it may not show up high in polling, It’s out there, and they seem to recognize it when they see it.The truth in taxation discussions that are sure to be part of the

session will be the real test of how much legislators really care about shedding new sunlight on local budgeting reporting,” he said. Observes Dale Kurschner, editor of Twin Cities Business magazine: “Regardless of the political bickering and the hidden agendas—be they fictional or real—all sides should support greater transparency in government spending. The only reason for not doing so would be if one’s agenda is better served by keeping the public in the dark about what’s really happening with its money.”

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July 2014

Blu From page 1

On July 7, the former Radisson Plaza Hotel at 35 S. Seventh St. in downtown Minneapolis reopened as the Radisson Blu Minneapolis following a $30 million renovation. The renovation updated the more than 360 rooms in the hotel and added 29,000 square feet of new meeting and event space. The hotel features a new 24-hour business center and a business lounge. The property's FireLake Grill House & Cocktail Bar also received its own update. The Bluâ&#x20AC;&#x2122;s arrival in downtown Minneapolis is a significant win for the city. This is only the fourth Blu location for Radisson in the entire United States. The Minneapolis area now has the distinction of boasting two of these four locations. In 2013, the high-end Radisson Blu Mall of America opened in Bloomington near that suburbâ&#x20AC;&#x2122;s Mall of America. A busy market The Radisson Blu makeover is the latest sign of the continuing, and growing, strength of downtown Minneapolis' commercial real estate market, with the city's center attracting a stream of new retail and multi-family develop-

Minnesota Real Estate Journal

ment. The Radisson Blu will provide an additional boost to the downtown market, bringing a luxury lodging presence that the downtown area has long lacked, said Barry Nidiffer, executive vice president of development management with Chartres Lodging Group, LLC, owner of the new Radisson Blu. "There is not a lot of luxury lodging product here," Nidiffer said. "There is not a Four Seasons in downtown Minneapolis. There is a movement to support the addition of new luxury hotel properties in the area. With the amount of Fortune 500 companies here, with the commerce that is happening on an international level in downtown Minneapolis, we can see the hotel market in the city elevating. We can see a day when there are more luxury hotel offerings for people staying in downtown Minneapolis." And the downtown market should only grow stronger. Ryan Companies US and Wells Fargo in late spring broke ground on the massive Downtown East mixed-use development here. Construction is now underway on a new stadium for the NFL's Minnesota Vikings. Minneapolis will even be hosting the Super Bowl in 2018 in this new downtown stadium. The Radisson Blu fits neatly into this bustling center of commerce, Nidiffer

said. "Minneapolis, St. Paul and the entire downtown area are invigorating places to be as far as business and commerce go," Nidiffer said. "And people love to live here, too. Minneapolis is a great city. We believe that the Blu is a great fit for this area. We think it brings a nice style and a new offering to Minneapolis." Stonehill & Taylor Architects handled the architecture and interiordesign work for the new hotel, collaborating with Graven Images, an interi-

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or-design studio based in Glasgow, Scotland. The hotel's guest rooms and suites feature a Scandinavian influence, which fits in well in Minneapolis. The hotel's most awe-inspiring feature, though, might be its revamped lobby, which features a soaring 18story atrium.

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MARCUS & MILLICHAP ARRANGES THE SALE OF A 68-ROOM HOSPITALITY PROPERTY Marcus & Millichap, a leading commercial real estate investment services firm with offices throughout the United States and Canada, today announced the sale of Crossings by Grandstay Inn & Suites Becker, a 68-room hospitality property located in Becker, Minnesota, according to Craig Patterson, regional manager of the firm’s Minneapolis office. The asset sold for $2,375,000. Jon Ruzicka, an investment specialist in Marcus & Millichap’s Minneapolis office, had the exclusive listing to market the property on behalf of the seller, a limited liability company. The buyer, a private investor, was secured by Jon Ruzicka with the cooperation of an outside brokerage. Speaking with Mr. Ruzicka, “Due to its location only 45 minutes outside of the Minneapolis/St. Paul metro area, the Crossings by GrandStay Inn & Suites Becker generated substantial interest. Numerous parties toured the hotel over

Minnesota Real Estate Journal

the course of marketing, which led to multiple offers being submitted. The hotel was exceptionally maintained by current ownership allowing, the eventual purchaser to acquire a recently constructed property with minimal property improvements necessary upon completion of the sale.” Crossings by Grandstay Inn & Suites Becker is located at 14435 Bank Street in Becker, Minnesota. It was built in 2004 and features 68 guestrooms with a wide variety of rooms. The hotel features many modern day amenities that travelers seek.

United Properties to break ground on Northcross Business Park in Brooklyn Park, Minnesota 36-acre site includes headquarters for Wurth Adams and Perbix United Properties will break ground on Northcross Business Park, a 36-acre site at the intersection of Minnesota State Highway 610 and U.S. Highway 169 in Brooklyn Park, Minnesota. The site will include the headquarters for

Wurth Adams Nut & Bolt Co., Perbix Machine Co. Inc., and a speculative industrial building. Earlier this month, the City of Brooklyn Park approved plans for the 36-acre industrial park. Expected to be complete by summer 2015, the park will include: a 165,000-sq.-ft. office/warehouse building for fastener and assembly component distributor Wurth Adams a 70,000-sq.-ft. office/warehouse building for machine manufacturer Perbix a 168,000-sq.-ft. speculative industrial building between the headquarters buildings The Minnesota Department of Employment and Economic Development (DEED) awarded funds from the Minnesota Job Creation Fund to Wurth Adams and Perbix for their expansions. In addition to the City of Brooklyn Park and the state of Minnesota, United Properties' project partners include Pope Architects, engineer EVS, Inc., general contractor R.J. Ryan, and broker Cushman & Wakefield | NorthMarq.

Franklin Street Properties Announces the Selection of its Development Team Franklin Street Properties Corp. announced today the selection of its development team to lead the proposed redevelopment of the TCF Bank Building site located at 801 Marquette Avenue in downtown Minneapolis, Minnesota. Ryan Companies US, Inc. will be the development manager and design/builder, Perkins+Will will lead the architectural design work and CBRE Group, Inc. will be the exclusive leasing agent. The TCF Bank Building is a fourstory office building located in the heart of downtown Minneapolis at the corner of Eighth Street and Marquette Avenue. William Friend, Vice President and Regional Director for FSP, commented: “When we purchased the building in 2010, we saw significant untapped potential on the site. Now, with the improving downtown office market combined with TCF’s decision to relocate to the suburbs when their lease expires at the end of 2015, we believe it is an opportune time for optimizing the potential of the location. We are excited to move forward with this project and believe we have assembled the best team to bring new life to this strategic corner of downtown Minneapolis.” William Friend also noted that multiple options are being considered for the

July 2014

proposed redevelopment. “The workplace is evolving. It’s exciting to be a part of a team actively seeking to deliver the next step in that evolution,” said Tony Layne, Associate Principal at Perkins+Will. “We have a long history of innovation at Perkins+Will. We will draw upon every ounce of that expertise as we work through the process of designing the next great building in the downtown Minneapolis landscape.” Mark McCary, Senior Vice President with CBRE Group, Inc., is enthusiastic about the potential for this redevelopment, noting that “the TCF Bank Building, with its tremendous location in the heart of the CBD, offers the ideal opportunity for FSP to explore, evaluate and deliver to the market a unique office environment designed to deliver to the workplace of the future”. Collin Barr, President-NorthCentral Region at Ryan Companies, agrees, “Ryan is very familiar with the TCF Bank Building and the downtown Minneapolis office market. Given our development history in downtown Minneapolis, we know what this project needs to be in order to succeed.”

The Opus Group® Announces Master Planning of Chaska Creek Business Park The Opus Group (Opus) announced today development plans for approximately 60 acres at the southwest corner of Highway 212 and County Road 10 in Chaska, Minnesota. Plans for the site include approximately 500,000 square feet of industrial and office space. A 15-acre, groceryanchored retail development is also part of the master planned concept. “We’re excited about the development opportunity this property affords and believe the quality and mix of uses will be very well received by the market,” said Dave Menke, president of Opus Development Company, L.L.C. “The proximity and easy access to the Highway 212 corridor coupled with the continued tightening of the southwest market positions this site well to meet unmet industrial and office demand.” The site offers the unique combination of varied commercial uses, convenient access to major arterial roadways, dominant visibility corridors, as well as pedestrian pathways and a natural creek. The site is considered one of the premier locations along the Highway 212 corridor. Opus Development Company, L.L.C.

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Ryan From page 1

2016. Barranco said that construction on Downtown East is moving along on schedule. The parking ramp is due to open near Jan. 1 of 2016, while the two Wells Fargo office towers should open in February and April of that year. The first phase of the residential portion of Downtown East is expected to open in late spring of 2016.

has retained Colliers International to market the site.v

The Opus Group® Announces Start of Construction at Shattuck-St. Mary’s School The Opus Group (Opus) announced today that construction has begun on the renovation and expansion project to create a new facility that will be known as The Inn at Shattuck-St. Mary’s in Faribault, Minnesota. The 18,500-square-foot project will repurpose the historic Phelps Infirmary building into an on-campus inn with a meeting and conference space for the school and community. Shattuck-St. Mary’s is an Episcopal boarding and day school serving students from around the world. In a particularly fitting partnership, The Inn at Shattuck-St. Mary’s will serve as the diocesan retreat and meeting center for the Episcopal Church in Minnesota. “We’re excited for the opportunity to work with Shattuck-St. Mary’s School to remodel this historic building to better suit their modern-day needs,” said Craig Larson, regional vice president of Opus Design Build, L.L.C. “Opus has experience working on both new and

Minnesota Real Estate Journal

Barranco said, too, that he is happy to see the opening of the Green Line light-rail system that trakes commuters from St. Paul and Minneapolis. The line boasts 18 new stops, including, of course, one for Downtown East. "Seeing the light-rail ridership grow and pass through the area already has been a tremendous thing to see," Barranco said. "We're all excited about seeing some of the structures take a bit of shape already. You can already see a hint of how this project is going to look once it's completed."

existing buildings for institutional clients ensuring the completed project has a cohesive look with the surrounding buildings while meeting their needs. We’re pleased to bring our expertise to this project and build this new relationship.” The project will include a complete remodel of the 147-year-old building and will add 10,200 square feet of new space to the two-story complex. The first floor of the building will include a large meeting room with adjustable partitions, a catering kitchen, bar and lounge area that can be used for meetings and events. The second floor will provide a total of 12 guest suites. “Renewing our oldest building on campus and giving it new life as both an Episcopal retreat center and The Inn at Shattuck-St. Mary’s brings great pride and joy to our school community,” said Nick Stoneman, president of ShattuckSt. Mary's School. “We are pleased to be working with The Opus Group on this project.” Opus Design Build, L.L.C. is the general contractor on this project. Construction began in June and completion is scheduled for fall 2014.

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Kidney Specialists of MN signs 10-year extension at Brookdale Corporate Center Stewart Capital Partners announced that they have completed a 10-year lease extension with Kidney Specialists of Minnesota (KSM) at Brookdale Corporate Center II located at 6200 Shingle Creek Parkway, Brooklyn Center, Minnesota. KSM has been a tenant at Brookdale Corporate Center since 2000 and currently occupies 9,223 square feet. "In evaluating what office space was most efficient for our operations, as well as most convenient for our patients and employees, we concluded that extending our lease for the long term at Brookdale Corporate Center was the right decision", said Brent Wilde, CEO of Kidney Specialists of Minnesota. "We are very excited about the continued commitment to the property from KSM,” said Dick Schadegg, leasing agent for Brookdale Corproate Center and President of Schadegg Commercial Real Estate. “Brookdale Corporate Center provides the perfect blend of service, quality environment, excellent freeway access and affordability. This has been substantiated by the high percentage of renewing and expanding tenants like KSM and DBI Consulting, as well as recent new leases with First Step Group, Flying Eagle Transportation and Nadene's Tax Service," Schadegg said. Brookdale Corporate Center is a recently renovated, two-building office campus centrally located ten minutes from downtown Minneapolis at the intersections of I-94/694 and Highway 100 in Brooklyn Center, Minnesota. Each building is comprised of six stories totalling 228,000 square feet. In addition to KSM, major tenants include University of Minnesota Physicians, Merkle, Savvy Sherpa, National American University, Carson, Clelland & Schreder Law Offices Endodontic Associates Limited and First Step Group. KSM was represented in the lease transaction by Ann Hansen and Steve Strom of CRESA Partners, and Dick Schadegg represented the building’s owner, Stewart Capital Partners.

Minnesota Real Estate Journal

the spring, with sixteen floor plan styles already sold out. Scheduled tours are being offered between 3:00pm and 6:30pm daily with adjusted hours on the weekend. The model unit showcases the open floor plan style, floor to ceiling windows, nine-foot ceilings and luxury finishes including quartz countertops, glass backsplash, and stainless steel appliances featured in every unit. Resident amenities include a rooftop terrace, private courtyard with outdoor pool, grills and sundeck, full fitness center, WiFi lounge, club room with theater, underground heated parking and landscaped walking paths with lawn games. The five-acre development will feature 232 units spread over three buildings, the three-story Crossings building, five-story Plaza building, and the tenstory Tower. Floor plan sizes range from studio, one, one plus den, two, two plus den, and three bedroom floor plans as well as exceptional top-floor penthouse units. StuartCo and Simon Property Group are partners on construction of One Southdale Place Apartments at the northwest corner of the intersection of 69th Street and York Avenue South in Edina. Kraus-Anderson Construction Company is the selected builder of the project designed by Minneapolis-based BKV Group. The sophisticated multifamily project has been designed to complement the upscale France and York momentum of the newly remodeled Southdale Mall. One Southdale Place is projected to open in phases, with the three and five story buildings opening September 1st, and the Tower projected to open in January 2015.

StuartCo Opens Model at One Southdale Place Apartments in Edina StuartCo has opened a furnished model for tours at One Southdale Place to showcase the luxury finishes for prospective renters. Pre-leasing began in the spring, with sixteen floor plan styles already sold out. Scheduled tours are being offered between 3:00pm and 6:30pm daily with adjusted hours on the weekend. The model unit showcases the open floor plan style, floor to ceiling windows, nine-foot ceilings and luxury finishes including quartz countertops, glass backsplash, and stainless steel appli-

July 2014

ances featured in every unit. Resident amenities include a rooftop terrace, private courtyard with outdoor pool, grills and sundeck, full fitness center, WiFi lounge, club room with theater, underground heated parking and landscaped walking paths with lawn games. The five-acre development will feature 232 units spread over three buildings, the three-story Crossings building, five-story Plaza building, and the tenstory Tower. Floor plan sizes range from studio, one, one plus den, two, two plus den, and three bedroom floor plans as well as exceptional top-floor penthouse units. StuartCo and Simon Property Group are partners on construction of One Southdale Place Apartments at the northwest corner of the intersection of 69th Street and York Avenue South in Edina. Kraus-Anderson Construction Company is the selected builder of the project designed by Minneapolis-based BKV Group. The sophisticated multifamily project has been designed to complement the upscale France and York momentum of the newly remodeled Southdale Mall. One Southdale Place is projected to open in phases, with the three and five story buildings opening September 1st, and the Tower projected to open in January 2015.

two more apartment buildings in the Twin Cities. Both of these transactions were led by Ted Abramson who represented the sellers. Wilson Ridge Apartments, located at the corner of Johnson Parkway and Highway 94 in St. Paul, was sold by an affiliate of B.T. & A. Construction Co. for $4.89 million on June 30, 2014. The building consists of 102 units. Centennial and Heritage Apartments, with 68 units, are on the corner of Highway 3 and Heritage Way in Farmington. These buildings were sold by a local private partnership for $3.86 million and closed on June 16, 2014. Both properties were purchased by local private investors. “Ted Abramson did an outstanding job in representing our interests as Seller of the Wilson Ridge Apartments in St. Paul, MN. Ted’s knowledge of the multi-housing market together with his expertise in pricing, marketing, soliciting and evaluating offers and processing the transaction through closing was superb. Always professional and responsive to our needs, we look forward to working with Ted again in connection with our future commercial real estate need,” says Deb Wittman, a representative of Wilson Ridge Apartments.

Cushman & Wakefield | NorthMarq www.cushwakenm.com represented Associates Realty Fund IX in a lease with Life Fitness for 146,000 sq. ft. at 11225 Xeon Street, Coon Rapids, Minnesota. Life Fitness, which manufactures and sells strength and cardiovascular equipment under the brand names Life Fitness and Hammer Strength, took occupancy of the state-of-the-art distribution center on July 1. The company distributes its equipment in more than 120 countries. CWN’s Dave Paradise, Sydney Johnson and Nate Erickson represented Associates Realty Fund IX in the transaction.

former Denny Hecker car dealership located at 12969 60th Street North in Oak Park Heights. The 7.8-acre property, located at the corner of Highway 36 and Stillwater Boulevard in Oak Park Heights, consists of a single-tenant building containing 50,000 square feet. The Excelsior Group’s strategy at acquisition was to lease or sell the property to an end user. The sale price for the property is $2.3 million representing an increase of approximately $1 million from the purchase price paid by The Excelsior Group when it acquired the property in January 2013. Greystone Commercial represented The Excelsior Group in the sale.

THE EXCELSIOR GROUP ANNOUNCES THE DISPOSITION OF FORMER Cushman & Wakefield | DENNY HECKER CAR NorthMarq Secures 146,000- DEALERSHIP Sq.-Ft. Industrial Lease with The Excelsior Group, on behalf of Life Fitness in Coon Rapids, Opportunity Partners Fund II, announced today that they have sold the Minnesota

CBRE’s Multi Housing Group Announces Two More Sales CBRE’s Minneapolis Multi Housing Group is pleased to announce the sale of

Christopher Dolan

REAL ESTATE SERVICES Continental Property Group, Inc. 1907 Wayzata Blvd, Suite 250 Wayzata, MN 55391 Tel-952-473-1700 www.leasespace.com

Monroe Moxness Berg 8000 Norman Centeer dr. #1000 Minneapolis, mn 55437 952-885-5999 www.mmblawfirm.com

REAL ESTATE EDUCATION MN Real Estate Exchangors Henry votel 651-426-1610 Www.mree1031.com Info@mree1031.com