Mrej November 2015 by REjournals

VOLUME 31, NUMBER 11

November 2015

HJ Development adding junior box retailers to Baxter’s commercial mix

By Dan Rafter, Editor

he Minneapolis/St. Paul market isn't the only area in Minnesota that's in the middle of a commercial construction boom. Consider Baxter, Minnesota. Though this city in Crow Wing County -- about an hour-and-a-half Northwest of the Twin Cities -- boasted a population of just 7,610 as of the 2010 Census, it's been steadily growing since. And commercial developers have noticed. An Aldi supermarket celebrated its grand-opening Dec. 3 in Baxter. The community is already home to busy Gander Mountain, Walmart Supercenter and Costco Warehouse locations. Now HJ Development is ready to add to the commercial mix here with Central Lakes Crossing, a retail center planned for the intersection of Highway-371

and Glory Road South in Baxter. Plans call for up to 150,000 square feet of junior box space and 30,000 square feet of small shop space. Chris Moe, partner with HJ Development, said that the time is right to tackle such a development in Baxter. “You have a lot of people here with secondary homes that spend a lot of time in the Baxter area,” Moe said. “You have people with higher incomes who live up there on a seasonal basis. I think of this area as Main and Main for Central Minnesota. It draws from a large population base.” Moe says that big box retailers – such as the Walmart Supercenter, a Target and the Costco – have already proven that they can thrive in the Baxter area. HJ Development’s goal with Central Lakes Crossing is to add junior box tenants to the market, in addition to fast-casual restaurant. “We’d like to bring some national names to the development that aren’t curHJ Development to page 22

Patrick Gaughan: To succeed at real estate? You have to do good for your community By Dan Rafter, Editor

s president of Forest Lake, Minnesota-based Gaughan Companies, Patrick Gaughan knows what it takes to succeed in the competitive world of commercial real estate. Gaughan recently shared some of the reasons for his success He spoke, too, about the challenges and rewards of a career in this business. Two generations strong: Gaughan Companies is a

second-generation business. My father started the organization. Just being around it as a child, working with my father, that’s what led me to commercial real estate. Before you know it, you are working away at the business. You suddenly realize how much you have learned, and how much you’ve been taking it for granted. You realize that you enjoy what you are doing, and you notice that you are good at what you do. Since I’ve been a boy, I’ve been involved in construction and development. I started building relationships with peo-

ple in this field from a young age. The mission: When you look at any field, whether you’re talking about medicine, the military or academia. They all have a mission. When it comes to business and commerce, it’s important to do what is good for the community. That includes doing good for the tenant or the investor. You need to give good advice to the people you are representing. You can’t look at a Gaughan to page 16

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Contents

Minnesota Real Estate Journal

NOVEMBER 2015 • VOLUME 31, NUMBER 11

HJ DEVELOPMENT ADDING JUNIOR BOX RETAILERS TO BAXTER’S COMMERCIAL MIX PATRICK GAUGHAN: TO SUCCEED AT REAL ESTATE? YOU HAVE TO DO GOOD FOR YOUR COMMUNITY

EMPLOYMENT GAINS DRIVE TWIN CITIES’ APARTMENT MARKET

MORTENSON DEVELOPMENT’S JEREMY JACOBS: DRAWING ON HIS MILITARY PAST TO SUCCEED IN COMMERCIAL REAL ESTATE

WALGREENS, RITE AID CONSOLIDATION TO PROVIDE NEW OPPORTUNITIES FOR RIVALS?

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Departments PEOPLE

NEWS

The Minnesota Real Estate Journal (ISSN 08932255) is published monthly for $85 per year by Minnesota Real Estate Journal, 13700 83rd Way N, STE 206, Maple Grove, MN 55369. 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

November 2015

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Publisher | Managing Editor Jeff Johnson jjohnson@recg.com Associate Publisher Jay Kodytek jkodytek@recg.com Consulting Editor Dr. Tom Musil tamusil@stthomas.edu Conference Manager | Art Director | Graphic Designer | CE Specialist Alan Davis adavis@recg.com

EDITORIAL ADVISORY BOARD JOHN ALLEN Industrial Equities ROBERT ANGLESON Navigator Real Estate RICK COLLINS Ryan Cos. US Inc. JEFF EATON Cushman & Wakefield/NorthMarq MARK EVENSON ULG Equis PATRICIA GNETZ US Bank TOM GUMP TAG Consulting JON HEMPEL Hempel Properties DAVID JELLISON Liberty Property Trust CHAD JOHNSON Hellmuth & Johnson BILL WARDWELL Colliers International GEORGE KLUEMPKE Braun Intertec JEFFREY LAFAVRE CBC Griffin Companies WADE LAU Founders Properties MIKE LE JEUNE Fabcon JIM LOCKHART WIPFLI DUANE LUND Exchange Realty PATRICK MASCIA Duke Realty Corp. CLINT MILLER Cushman & Wakefield/NorthMarq DR. THOMAS MUSIL University of St. Thomas WILLIAM M. OSTLUND CBC Griffin Companies WHITNEY PEYTON CB Richard Ellis MIKE SALMEN Transwestern STEWART STENDER Stewart Capital Partners

a division of Law Bulletin Publishing Co. 13700 83rd Way N, STE 206 Maple Grove, MN 55369 For information call 952-885-0815

Venture Mortgage Corporation Appoints Kip Dunkelberger as President and CEO Venture Mortgage Corporation, a commercial real estate mortgage banking firm, announced today the appointment of Kip Dunkelberger as President and CEO. Mr. Dunkelberger will direct all aspects of Venture Mortgage Corporation’s operations and management. Kip Dunkelberger has over 15 years of experience in commercial real estate finance and joined Venture Mortgage in 2010 as Vice President of Operations. He quickly began implementing innovative changes at Venture Mortgage, which have contributed to some of the most successful years in the company’s 26-year history. Previously, Mr. Dunkelberger’s career has included roles as Vice President with Welsh Companies in Minnetonka, Principal of Commercial Mortgage Advisors in Wayzata, and Analyst with Voyager Bank in Eden Prairie “Kip has been a vital part of our recent and ongoing successes, and I am thrilled to appoint him as my successor,” said Michael (Mick) Thorsland, Founder of Venture Mortgage Corporation. As Mr. Dunkelberger takes over responsibilities for the executive leadership role, Mick plans to remain an integral part of Venture Mortgage Corporation for the foreseeable future. “I have great respect for Mick and the organization he has built. Since 2010, Mick and I have worked together to strengthen our commercial loan origination and servicing platform by building a talented team who are responsive to the changing needs in the market. I am honored to follow in Mick’s footsteps and I look forward to continued growth,” said Kip Dunkelberger regarding the recent appointment.

Ryan Companies US, Inc. Promotes Karl Drecktrah to Director of Architecture Ryan Companies US, Inc. is pleased to announce Karl Drecktrah, AIA, has been promoted to Director of Architecture. In his new role, Karl focuses on

multi-family, mixed-use, and office projects for Ryan A+E, Inc. He is responsible for managing relationships with customers and consultants as well as Ryan’s internal design team. In addition, Karl continues his role as Integration Leader for Ryan A+E, Inc., ensuring efficient integration of Ryan’s design and construction capabilities. “Karl has shown outstanding integration, collaboration, and execution abilities in his time at Ryan. He lives our mission of building lasting relationships with our customers, and he’s a really talented architect,” said Mike Ryan, President, Ryan A+E, Inc. “He is well respected for his overall pursuit of excellence, and his overall attitude in the workplace. We’re thrilled to have him as our newest Director of Architecture.” Currently, Karl is responsible for the overall design team leadership on 833 Clark Street Apartments, a 31-story, 373-unit luxury residential tower in downtown Chicago, and the 195-unit residential project within Downtown East, Ryan’s $450 million mixed-use development in Minneapolis, as well as a number of multi-tenant office projects. “Having studied Architecture in Italy, Spain, Portugal, and Mexico, I draw much of my design inspiration from travel,” said Drecktrah. “I see the world as one big design opportunity. Whether it’s how we relate to nature, design buildings or build cities, we are constantly rethinking our systems and standards. Once the idea is crafted, the execution begins; no one is more capable of taking the initial idea and making it happen than the extended team at Ryan.” Karl received his Masters of Architecture from the University of Minnesota. He is a member of The American Institute of Architects (AIA).

Employee recognition for bdh+young interiors | architecture Eric Mayer has recently been promoted from Technical Designer to Architectural Intern at bdh+young interiors | architecture. Eric works with the project Architect in all architectural design efforts, ensuring the final form and function capital-

izes on sustainable opportunities and creates an environment that conveys the goals of the client. Congratulations to Angela Moore for reaching her 10 year milestone with bdh+young interiors | architecture!! Angela serves as a Project Manager and is the direct line of communications with clients and the project team, integrating her passion for design with her understanding of design efficiencies and functional needs. Angela’s multi-disciplinary team approach to create functional, efficient, and creative spaces in the medical and dental arenas. Congratulations to Beth Nordstrom, who has reached the 20 year pinnacle of service with bdh+young interiors | architecture!! Beth serves as Associate Partner at bdh+young interiors | architecture, a woman owned firm established in 1971. Beth’s dedication to research, creativity, and client driven design solutions is evident in her impressive body of work over the past 20 years. Beth provides leadership for one of the largest interior & architectural design firms in the Twin Cities Metropolitan area.

EXCELSIOR CAPITAL HIRES DANE SWENSON AS VICE PRESIDENT As Vice President of Excelsior Capital, Dane Swenson’s primary focus is to oversee the origination and maintenance of the construction loan portfolio of the division. In addition, Dane will assist licensed builders and developers with meeting their need for construction capital. Prior to joining Excelsior Capital, Dane was a Senior Vice President at Builders Development & Finance for ten years where he focused on interim construction loans to homebuilders, development of single family subdivisions and lending to developers. Subsequent to that, Dane was President of Alpine Capital for ten years where he oversaw the company which grew to $70,000,000 in assets.

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Minnesota Real Estate Journal

News

Dougherty Mortgage LLC closes $3.6 million Fannie Dougherty Mortgage LLC Mae loan for Tiger Bay closes $3.5 million Fannie Court Apartment Homes in Mae loan for Edgerton Place Gainesville, Florida Apartments in Mitchell, Dougherty Mortgage LLC, a full South Dakota service national mortgage banking firm, Dougherty Mortgage LLC, a full service national mortgage banking firm, recently closed a $3.5 million Fannie Mae loan for the refinance of Edgerton Place Apartments, a market rate multifamily apartment property located in Mitchell, South Dakota. The 65-unit energy-efficient complex offers oneand two-bedroom options with dishwashers, microwaves and washers and dryers in every unit. The property includes a community room, fitness center, security cameras and controlled entries. The 15-year term, 30-year amortization loan was arranged by Dougherty Mortgage's Minneapolis office for the Borrower, Edgerton Place LLC.

recently a $3.6 million Fannie Mae loan for the refinance of Tiger Bay Court Apartment Homes, a multifamily affordable apartment property located in Gainesville, Florida. The 96-unit property offers two- and three-bedroom options with washers and dryers in every unit, a community clubhouse, fitness center, sports courts and pool. The 10-year term, 30-year amortization loan was arranged by Dougherty Mortgage's Minneapolis office for the Borrower, Tiger Bay of Gainesville, Ltd.

Dougherty Funding LLC provides over $45 million in financing for Houston Hospitality Project The Florida office of Dougherty

Funding LLC, located in Tampa, has closed two loans totaling over $45 Million for the acquisition and redevelopment of Houston’s historic Melrose office tower, located in Houston’s central business district. Constructed in 1952, this historically significant building will be converted into a 255-room luxury hotel operating under Starwood’s Le Meridien brand. The project is expected to have an extensive list of upscale amenities, including a fine dining restaurant and lounge, roof top swimming pool, business center, fitness center, and 8,425 square feet of meeting space. Construction is expected to start immediately. The strategic location of the property will serve both the convention visitor and business traveler hospitality submarkets. The transactions, arranged for Houston Hotel Partners, LLC, include the First Deed of Trust construction loan and a bridge loan facility provided by Dougherty Funding LLC, for the Federal Historic Tax Credit proceeds. The capital stack also included State Historic

November 2015

Tax Credits and sponsor equity. Dougherty Funding’s Minneapolis office was also instrumental in finalizing this relatively complex transaction. Dougherty Funding LLC serves as lead lender and servicer for the loan. The operating manager of Houston Hotel Partners, LLC, is an affiliate of Development Services Group, Memphis, Tennessee, that will undertake the adaptive re-use redevelopment of the property. The Beck Group, headquartered in Dallas, will be the General Contractor under a design/build agreement. Both Beck and Development Services Group have experience in successfully completing hospitality projects of this magnitude and complexity.

Metro Group Real Estate Arranges the Sale of a 20 Unit Apartment Property Metro Group Real Estate, a Twin Cities based investment real estate services firm, is pleased to announce the sale of Golden Valley Road Apartments in Minneapolis, MN.

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Minnesota Real Estate Journal

Jerry Lindeen, owner of Metro Group Real Estate, had the exclusive listing to market the property on behalf of the Seller, a private investor. The Buyer, a private investor, was also secured by Jerry Lindeen. Speaking with Mr. Lindeen, the property consists of three buildings with 20 units located between Vincent Avenue North and Upton Avenue North on Golden Valley Road in the Willard-Hay neighborhood of North Minneapolis. The final sale price of the property was $1,200,000.

North Minneapolis CommUNITY Day initiative Five philanthropic projects valued at more than $1 million to date Cushman & Wakefield/NorthMarq has unveiled a new video celebrating its philanthropic initiative in North Minneapolis which renovates and revitalizes the facilities of in-need nonprofit organizations in North Minneapolis. The video launches during the spirit of the holiday season and also celebrates the $1 million in project value the company

has donated to date. The video is available at www.cushwakenm.com/aboutus/Pages/Community-Involvement.aspx. “Part of our company’s vision is giving back to the community,” said Jeff Eaton, President. “We’re very proud of how we’ve been able to positively impact North Minneapolis. Many nonprofits only have enough funding to maintain operational programming, not needed capital improvements to their facility. As a real estate company, we’re able to provide the expertise, vendor partners, labor, and cash donations that these organizations might not otherwise have access to.” Since 2010, Cushman & Wakefield/NorthMarq has annually selected an in-need nonprofit organization that serves the North Minneapolis community and revitalizes the site at no cost. Each project includes both a largescale renovation project and volunteer day for company employees at the chosen site. To date, five CommUNITY Day projects have taken place at the following nonprofits: Unity House, North

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United Methodist Church, Ascension Place, Sojourner Truth Academy and Oak Park Center. Cushman & Wakefield/NorthMarq is firmly committed to making a difference where its employees work and live, and is thrilled by the impact the initiative has made in the North Minneapolis community and how it’s helped build a strong company culture.

Oppidan Investment Company Begins Construction on White Bear Heights Senior Living in White Bear Lake, Minn. National property development firm Oppidan Investment Company today began construction on White Bear Heights Senior Living in White Bear Lake, Minn. White Bear Heights Senior Living is located at 4650 Centerville Road, on the northeast corner of Centerville Road and Highway 96 across from Cub Foods. The 138,000-square foot White Bear Heights Senior Living facility will consist of 113 units, including 36 independ-

November 2015

ent living apartments, 41 assisted living apartments, 30 memory care apartments, six care suites, and a 39-stall underground parking garage plus surface parking. Among the facility’s amenities are a coffee and snack bistro, a fitness center offering classes and wellness programs, a hair salon and spa, an outdoor dining deck, and more. The facility will be operated by Ebenezer in partnership with Fairview Health Services. “We’re delighted to again partner with Ebenezer on a senior housing project and to once again bring our development expertise to the senior housing market,” said Joe Ryan, president of Oppidan. “And, we are very pleased to play a role in meeting the growing demand for safe, secure and high-quality housing for our growing senior population.” According to Ryan, Oppidan also partnered with Ebenezer on Red Rock Senior Living, a 77-unit senior housing project located near the intersection of Lake Road and Interstate 494 in WoodNews to page 18

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Minnesota Real Estate Journal

November 2015

Employment gains drive Twin Citiesâ&#x20AC;&#x2122; apartment market By Dan Rafter, Editor

hy is the multifamily market such a hot one in the Twin Cities? Marcus & Millichap points to the jobs market here. According to the company's most recent apartment research, the abundance of employment opportunities is attracting job seekers to the Minneapolis/St. Paul area. And when these job hunters get here? Many of them want to live in apartment buildings in the heart of the city's urban areas, which explains the multifamily construction boom still taking place in the Twin Cities. Don't expect apartment construction to slow soon. Marcus & Millichap says that major employers such as UnitedHealth Group and Amazon plan to hire hundreds of workers during the next several months. As more residents stream to the Twin Cities in search of these jobs, apartment vacancies throughout the metropolitan area should fall, even as developers are expected to add thousands of apart-

ment units to the area throughout 2015. This is all good news for owners. Marcus & Millichap reports that the demand for apartments is causing rents to soar. The company says that apartment rents during this year have seen their largest climb in seven years. To no one's surprise, the downtown Minneapolis area is seeing the most new apartment projects, followed by the area around the University of Minnesota. But developers aren't neglecting the suburbs, with Marcus & Millichap predicting that they will add more than 2,000 units to the Twin Cities' suburbs during 2015. The raw numbers tell an impressive story: Construction: Marcus & Millichap says that apartment completions reached their highest peak since 2000 during 2014, when 6,100 apartments were brought into service. In 2015, construction slowed, but only by a bit. Developers are expected to add a total of 4,800 new apartment units this year. Vacancies: Marcus & Millichap reports that the multifamily vacancy

rate will fall to 2.5 percent by the end of 2015. That's down 20 basis points for the year. Net absorption will reach 5,200 units. In 2014, the apartment vacancy rate fell 50 basis points.

Rents: Marcus & Millichap reported that effective apartment rents will rise an average of 4.8 percent to $1,098 a month during 2015. This increase comes after last year's gain of 3.1 percent.

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Mortenson Development’s Jeremy Jacobs: Drawing on his military past to succeed in commercial real estate By Dan Rafter, Editor

eremy Jacobs spent five years in the U.S. Army as a captain in the Judge Advocate General Corps., where he served as a prosecutor in the First Cavalry Division. During his military career, Jacobs was deployed to Baghdad, where he met daily with Iraqi civilians to determine how much, if anything, the U.S. Military owed them for damage the military did to them or their property. Jacobs' stint in the military provided him with plenty of skills that he relies on now to succeed in commercial real estate. Minneapolis' Mortenson Development recently hired Jacobs as a development executive. He is now searching for development opportunities in Minnesota, Iowa and the Dakotas. Midwest Real Estate News recently spoke to Jacobs about his real estate career, the reasons for his success and how serving in the U.S. Army gives him an edge when he's working out development deals for Mortenson.

A change of plans: I did five years in the Army. The story of how got into commercial real estate starts there. When I was originally deployed in 2008, I thought it would be the first of many deployments for me. I was going to be a 20-year military guy. I loved what I did. Little did I know that when I deployed I would meet my future wife in Iraq. She was also in the military. We met and that started a quick and immediate career shift. We wanted to get married and start a family. Staying in the military is really hard in terms of being together and being a family. We sat down and wondered what we would do next. I thought back to my time in business and law school. During those days, I developed a real admiration for real estate and real estate development, especially when it came to commercial real estate. To the Twin Cities: We decided to move to the Twin Cities, where my wife is from. I was quickly put in contact with Ryan Companies. They asked me what I’d like to do. I told them that I’d like to work in commercial real

estate. I remember them saying something like, ‘That’s great. But you’re an attorney.’ But they did give me a chance to prove myself. I’m forever grateful to them for that. I worked my way up, worked on some interesting deals. I eventually found a place for myself in the field and started to make some important contributions back to the company for the risk that they took

in hiring me on. Five years after I started at Ryan, I got a call from Mortenson. The company was looking for a new development leader. I got excited about the opportunity and decided to take it. I’ve been with them for three months now, and I really enjoy the work. Jacobs to page 23

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Walgreens, Rite Aid consolidation to provide new opportunities for rivals? By Dan Rafter, Editor

t's uncertain how many drug stores across the Midwest will close if Walgreens eventually buys its smaller rival Rite Aid. But Ron Goldstone, senior vice president of retail with Southfield, Michigan-based Farbman Group, says that the deal will bring plenty of opportunities for rival retailers looking for prime corner locations. The reason? The consolidation between the two drugstore giants will certainly result in store closings. And some of these closings might be on prime corners across the country. "When you have change, it always creates real estate opportunities," Goldstone said. "For many years, the drugstore operators were fighting each other to get control of prime corners. With a consolidation between two of the substantive players, it will free up corners for other retailers to pursue." It might be rare to find a Rite Aid and Walgreens kitty-corner from each other. But it's not unusual to find the rivals in prominent locations a mile or

so apart, Goldstone said. Walgreens, then, if it does close its deal with Rite Aid, will certainly close several prime locations that will become redundant. This will give retailers the chance to upgrade to corner locations when in the past they had to settle for less-desirable mid-block spaces, Goldstone said. "I am a firm believer that competition is good," Goldstone said. "Consolidation could breed new opportunities for more competition. That change can

be good." Walgreens Boots Alliance, the parent company of Walgreens, in late October said it plans to buy Rite Aid for $17.2 billion, including debt. The acquisition, of course, is far from final. U.S. regulators must still approve it. If the deal goes through, the new combined company would boast 12,800 U.S. locations. This would boost it past chief rival CVS Health. CVS has been busy, too. The chain is

in the middle now of buying Target's 1,700 pharmacies. Walgreens now operates about 8,200 stores, while Rite Aid runs about 4,600. Garrick Brown, vice president of research with Cushman & Wakefield, said that Walgreens might close thousands of stores as part of the deal. Brown wrote that Walgreens could close or sell 1,000 stores before the deal is finalized and up to 2,000 more after.

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November 2015

Gaughan From page 1

transaction in the short-term. You have to look at the bigger picture of how a transaction fits into the community or how it helps your client in the long run. This is true even when it’s a small transaction for you. Say you are working with a client who is starting a hair salon. That real estate transaction can be a very big deal for them. At the same time, we are working with a big company like Bayer CropScience. That is a different animal altogether. It’s fun to be a part of that kind of deal. It means a lot to the city. It brings jobs to the community. So all transactions, big or small, are important. And you have to do what’s best for your clients and your community when you work on them. Why microbreweries are better: I like microbreweries rather than a corporation that only cares about its own interests. So I’ll go out of my way to purchase a microbrewery beer. The beer tastes better. I live in a community and I care about it. Small businesses in the hands of many is a better vision in my mind for the world, and for people’s lives. And that’s why caring about the community when we close real estate transactions matters so much. We can

This May, Patrick Gaughan and his family traveled to Lourdes, France, where they volunteered to help the city’s neediest residents make a positive impact that supports the community and the small businesses in it.

To see what my dad did, and the impact he had, that inspired me to try to do something good, too. We are working on a building right now in this town on city-owned property. Gaughan Construction is building Forest Lake's City Center Commons project. The two buildings in the project will be home to Keller Williams, Thrifty White and Maplewood Oral and Maxillofacial Surgery. We are going the extra mile with this project. We’re using good quarry stone. We are not cutting corners with cheap materials. It is my job to deliver something of quality to the community. Community members are the ones who have to look at it for years to come. So we want to make sure that it is a well-designed project made with good materials. There is a lot of reward to doing that. Some people like to make a lot of money and give to charities when they are older. But sometimes, you can make your work and your contribution to the community seamless. You can give back through the work that you do. Meeting the challenges: There are always challenges in this business. I feel like people have changed a bit since I started in this business. That is the biggest challenge. Morals and ethics don’t seem to be as important to people as they were 20 years ago. I attribute it partly to the media affecting people. People don’t interact enough with actual people. They are too busy looking at screens. The workforce out there seems to be very different from when I started. There has been a big cultural change. The cultural changes haven’t been an improvement. Keeping the best people: So much of my success has been because I’m able to keep my clients with me year after year. I do try to spend a lot of time with them, a lot of time trying to understand

their needs and goals. Every year, we host a fishing trip for our clients. We all go out and catch some salmon. That’s fun. But the key is to help your clients do more business. That is what they are all looking for. Say we have a tenant who needs SBA financing for a business. We will refer that client to a banker that we know will do a good job. That banker then refers us business. It’s about being useful to your clients. The off-duty hours: I have six children ranging from 23 to 9. My wife and I like to spend time with them. We also travel a lot. We love to travel and we like world history. So we enjoy making memories while we travel to places like France, England and Ireland. I like to do volunteer work while traveling. Each spring I travel to Lourdes, France, where I volunteer to help the sick and the poor. I also sing in a men’s choir and I do Gregorian chant. I like downhill skiing, too. Fishing and hunting, reading, they are all important to me. The Gregorian chant is interesting. Our Catholic parish has introduced Latin Gregorian chant to some of the services. To do it, you have to learn Latin and the eight modes of chant. It’s like a hobby that you have to take very seriously. You want to sound good, but there is a big learning curve.

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Minnesota Real Estate Journal News from page 8

bury. That facility opened in June of this year. The property development firm is also partnering with Ebenezer on a 150unit senior living community to be located at 55th Street and Lyndale Avenue South in Minneapolis. Construction on that project is expected to begin in the spring of 2016. With construction now underway on White Bear Heights Senior Living, the facility is expected to open in April of 2017.

Ryan Companies US, Inc. Announces Plans to Relocate Corporate Headquarters to Downtown East Development Ryan Companies US, Inc. is excited to announce plans to relocate their corporate headquarters to a new building within Downtown East, Ryan’s $450 million mixed-use development near the US Bank Stadium in downtown Minneapolis. The 172,000-square-foot, 4story building, named the Millwright Building, will be located at the corner

of Third Street and Portland Ave., adjoining one of the two Wells Fargo Towers and across the street from the new Radisson Red Hotel. Ryan will occupy approximately 55,000 square feet on the lower floors of the multi-tenant building. Construction is scheduled to begin spring 2016 and be completed spring 2017. “We’re excited to make the Millwright Building home to Ryan’s North Region and our corporate headquarters. This building provides a great opportunity to showcase all of Ryan’s capabilities in a prime location within Downtown East, our signature project,” said Collin Barr, President of Ryan’s North Region. “When we first envisioned Downtown East, we knew it would transform this long under-utilized part of Minneapolis and we’re thrilled to be a part of the excitement and momentum.” “When it came to choosing a location for our new home, downtown Minneapolis was the only option. It’s where we’ve been for the last thirty years and we love the energy and richness of the culture, recreation, transit, and the rela-

tionships it enables,” added Pat Ryan, President and CEO of Ryan Companies. Ryan will provide its full suite of services to this multi-tenant office project including development, construction, architecture & engineering, capital markets and real estate management. The CBRE team of Brent Karkula and Jim Freytag will provide leasing services. “We’ve designed a state-of-the art office building with all the modern efficiency and amenities, but done so in an exterior character rooted in Minneapolis’ warehouse history. This combination is something we were unable to find elsewhere, and something we believe other tenants will be drawn to,” said Mike Ryan, President of Ryan A+E. The 4-story building features exposed steel structure, a brick exterior, and extremely flexible floor plates. Amenities include a rooftop terrace, a building commons, tons of bike-friendly features, a skyway connection, and immediate access to greenspace. For more information on the Millwright Building, including renderings and floor plans, visit www.millwrightmpls.com. The Downtown East project includes

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1.2 million square feet of office space in two 17-story towers owned by Wells Fargo, 26,000 square feet of retail space, a six-level parking ramp owned by the Minnesota Sports Facilities Authority, a set of four sky bridges and internal skyways, a Radisson Red hotel, a residential apartment complex named EDITION, and a 4.2 acre public green space called The Commons. Minneapolis-based Ryan also has offices in San Diego, CA; Austin, TX; Phoenix, AZ; Chicago, IL; Tampa, FL; Milwaukee, WI; and Des Moines, Davenport, and Cedar Rapids, Iowa.

Cushman & Wakefield/NorthMarq Accepting Bids on Historic Archdiocese of Saint Paul and Minneapolis Property until December 21 The Cushman & Wakefield/NorthMarq (www.cushwakenm.com) Advisory Services Group of Paul Donovan, Jaclyn May and Jeremy Striffler is accepting bids through December 21 on the Hayden Center, a three-story, 63,000

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sq. ft. former school at 328 Kellogg Boulevard West in St. Paul. Cushman & Wakefield/NorthMarq has negotiated an agreement to sell the property, owned by the Archdiocese of Saint Paul & Minneapolis, for $4.5 million to the Minnesota Historical Society. That agreement is subject to approval by the U.S. Bankruptcy Court, and the team will accept bids from other interested parties through the Dec. 21 deadline. Any interested parties should contact Jeremy Striffler at 612-305-2108. Property information can be found at http://ebrochure.cushwakenm.com/Hay denCenter. Cushman & Wakefield/NorthMarq continues to list three other properties for the Archdiocese, including: The Chancery – Located at 226 and 230 Summit Avenue, the Chancery is a two-building, approximately 44,000 sq. ft. complex and was built in 1961. 226 Summit is a three-story office building with 230 Summit as an attached twostory structure that serves as the residence of the Archbishop. The Chancery has undergone numerous capital

Minnesota Real Estate Journal

improvements since 2004 and sits on 3.38 acres of land. Together or separately 226 and 230 present re-purposing opportunities into office or residential as well as a complete ground up housing development. 224 Dayton – Currently housing the publishing offices of The Catholic Spirit, the official publication of the Archdiocese, this three-story structure built in the Renaissance Revival Style is located in the National Register of Historic Places, Historic Hill District and the local St. Paul Heritage Hill Preservation District. Its 18,301 sq. ft. formerly served as the chancery for the Archdiocese prior to the construction of the 226 Summit Chancery building. 250 Dayton – A vacant lot of 0.0789 acres, 250 Dayton is zoned as a RM2 medium-density multi-family residential district.

Cushman & Wakefield | NorthMarq, Owners Bring Reborn 15 Building to Downtown Minneapolis Market With renovations inside and a color-

ful new mural featuring Bob Dylan on the outside, the 15 Building in downtown Minneapolis is quickly becoming one of the most appealing office buildings in the Central Business District. Building owners R2 Companies (“R2”) and Goldman Sachs are investing in renovations to the entire property, located at 15 S. Fifth St., to help transform the 12-story structure in the heart of downtown into a unique, creative office opportunity for the Minneapolis CBD. “This is a rare building, both structurally and architecturally, and our goal is to emphasize those characteristics as we reposition the building,” said Jason Trailov, of R2 Companies. The building’s ownership team worked with the Hennepin Theatre Trust (www.hennepintheatretrust.org) to commission the five-story-high mural of Bob Dylan on the building’s western facade as a tribute to the community’s cultural history. While the mural is painted on the building’s exterior, the property’s ownership team is actively working to renovate the interior as well. R2 and Gold-

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man Sachs have invested significantly to improve the building’s common areas, including the skyway level and lobby, to restore the building’s art deco design components while creating a unique space for the building’s current and future tenants. The Cushman & Wakefield | NorthMarq (www.cushwakenm.com) team of Executive Director Brent Erickson and Senior Associate Erik Ordway are leasing the property on the owner’s behalf. The two have significant experience leasing creative loft-office in the market, including the TractorWorks building in the North Loop neighborhood. “No other building in the downtown core offers this opportunity for tenants,” Ordway said of the 15 Building. “This property will have a brand-new feel to it, while still being a really cool, trendy space right in the middle of the city.” The 15 Building is less than a block from a light rail station, and is a short walk from both the North Loop and Central Business District. National co-working company Assemble™ will open a 16,000 sq. ft. space in the building, and both Chobani

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and the HiFi Project have signed leases to move into the 150,000 sq. ft. property.

CBRE OFFERS FOR SALE THE LAKE CALHOUN CENTER IN MINNEAPOLIS, MINNESOTA Opportunity to Acquire an Irreplaceable Landmark Asset. CBRE is offering for sale the 150,150-square-foot Lake Calhoun Center, a landmark, one-of-a-kind, office property located on the shores of Lake Calhoun in the Uptown area of Minneapolis. The property is being sold on behalf of its owner, The Ackerberg Group. The Uptown area has a large concentration of young professionals attracted to the area’s outdoor recreation, transportation and housing amenities. The Chain of Lakes surrounding Lake Calhoun Center is also home to many Clevel executives from Minneapolis’ largest companies. “Lake Calhoun Center has been one of the top performing office buildings in

Minnesota Real Estate Journal

the Minneapolis market and will allow a new owner to capitalize on the trend for tenants using real estate as a tool to attract millennial workers,” said Steve Buss, Executive Vice President, Capital Markets, CBRE.

CBRE ARRANGES NEW FINANCING FOR THE SCHMITT MUSIC BUILDING IN DOWNTOWN MINNEAPOLIS CBRE Capital Markets’ Debt & Structured Finance team has arranged new permanent financing for the recapitalization of the Schmitt Music Building, a downtown Minneapolis building known for its mural of a musical score from Maurice Ravel’s “Gaspard de la Nuit.” Ben Bastian of CBRE’s Minneapolis office represented the local borrower, 219 Partners Schmitt Acquisition LLC. The borrower is owned by partners of two companies who occupy the property – Shenehon Company and Tewksbury & Kerfeld. They purchased the property in 2000 and have occupied the majority

of the space ever since. The partners are committed to long-term ownership. “CBRE is the ‘A’ team for small investors that want full access to the long term debt and structured finance markets,” said Bob Strachota, President of Shenehon Company and Chief Manager for the Borrower. “CBRE carefully evaluated and underwrote the debt capacity of our property. They realistically set our expectations and proceeded to deliver a variety of mortgage options that we could tailor to our needs. The process was professionally managed and efficiently delivered.”

MARCUS & MILLICHAP ARRANGES THE SALE OF AN 18-UNIT APARTMENT BUILDING Marcus & Millichap (NYSE: MMI), a leading commercial real estate investment services firm with offices throughout the United States and Canada, today announced the sale of Woodhill Apartments, an 18-unit apartment property located in Alexandria, Minnesota, according to Craig Patterson, regional

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manager of the firm’s Minneapolis office. The asset sold for $677,000. Mox Gunderson, Dan Linnell and Cole E. Harstad, investment specialists in Marcus & Millichap’s Minneapolis office, had the exclusive listing to market the property on behalf of the seller, a private investor and secured the buyer, a private investor. Speaking with Mr. Harstad, “Woodhill Apartments is an 18-unit active senior living (55+) building with a very strong historical occupancy. Due to the continued demand for rental housing, Alexandria has proven to be an optional market for investors to purchase stable, accretive assets. We generated eight offers with local, Twin Cities and North Dakota capital competing for the asset.” Woodhill Apartments is located at 1405 7th Avenue East in Alexandria, Minnesota.

Trillium Woods Welcomes Residents Senior Living Community Opens in Plymouth, Minn. Focusing on Wellness News to next page

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News from previous page

The $161 million Trillium Woods, an amenity-rich senior living community nestled in a stunning, natural setting has opened in Plymouth, Minn. The distinctive design of the 46-acre Trillium Woods continuing care retirement community (CCRC) is a modern version of prairie style, incorporating the area’s woodland landscape for providing a comfortable living environment. Trillium Woods is located west of Minneapolis on scenic woodlands and protected wetlands, offering views of Lakes Pomerleau and Camelot in a setting inspired by nature. The community offers 209 independent living residences and an on-site health center, The Birches at Trillium Woods. Residents have the choice of 14 different floor plans for independent living, from spacious one bedroom and two bedroom plus den apartment homes as well as duplex-style garden homes featuring large open floorplans. All resi-

Minnesota Real Estate Journal

dences include patios or balconies and range from approximately 784 to 2,277 square feet. The Birches at Trillium Woods Health Center features 44 private suites providing assisted living, skilled nursing and memory care in a beautifully-designed setting. The health center provides a refreshing approach to long-term health services at a significantly lower cost than other health care options available to seniors. Trillium Woods’ LifeCare Plan provides unlimited days of longterm health care services when needed, providing a peace of mind and predictable future costs.

HJ Development From page 1

rently here,” Moe said. “We think this development and this location will be perfect for that kind of retailer.” Moe and his fellow HJ Development brokers are busy talking with sporting goods and pet-supply retailers. They are targeting beauty supply stores, fast-casual hamburger chains, bakeries and any other retailer that would be a good fit for Central Lakes Crossing. “We have generated a lot of interest already in this project,” Moe said. “We are working on several proposals. We don’t have any signed deals yet. But we are getting closer to that.” The Baxter area – and its surroundings – are like much of the rest of Minnesota: busy. Moe said that vacancy rates in the retail sector here are low. And the expectation is that demand for space at Central Lakes Crossing will be high, too. The land that HJ Development is developing is in the heart of Baxter’s retail corridor. “There is not a lot of existing vacancies in good well-positioned spaces here,” Moe said. “The land we have is

November 2015

in the mix of everything. If you are a retailer who wants to be in this market, you are most likely going to be looking at a ground-up option. That is what we are offering.” Moe says that construction on Central Lakes Crossing should begin in 2016, with the first stores opening here in early 2017. According to Moe, junior box tenants are now willing to pay enough money to justify the costs of new construction, especially in markets as strong as the Baxter area. This is a change: In the recent past, junior box retailers generally targeted retail space that had already been vacated by other tenants. “It’s been a long time since any real new construction has taken place in this market,” Moe said. “Not a lot has been added. There’s been an Olive Garden, a Discount Tire. The larger box tenants have been here for quite a while. They’ve all performed well.”

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Minnesota Real Estate Journal

things have paid dividends for me. People trust those who behave like them. Most of the people I interact with would also admit that they don’t know everything.

Jacobs from page 12

Military skills matter: A number of the skills I picked up in the military are crucial to my success today. Some of them, though, are less obvious but still important. In the military, you wake up every morning at 4:30 or 5 and your work day starts. You work until you are done with the job. There is no such thing as a typical 9-to-5 day. I’ve found that commercial real estate is an industry in which you work every day until you are done, for better or worse. I’ve noticed, too, that the leaders in this industry are those who really know how to communicate. As a leader in the Army, it is as important to communicate with the privates what you are doing as it is to communicate with the generals. When I am working with cities, banks, architects, engineers and planners, the one thing I am really good at is making sure that I communicate with everyone evenly. The power of honesty: I bring a certain level of transparency to the business. When people work with me, they know that what I say is going to be hon-

ored. People don’t often have doubts that what I am saying is true. Not unlike others in the industry, I rely on my reputation. The transparency is key. Also, I’ve never been afraid to say, ‘I don’t know.’ That can convey strength. If you admit to people that you don’t know something, you are inspiring the confidence in them that you will find the person who does know. Those two

The adrenaline rush: When I first left the Army, I thought that I’d never find any adrenaline rush quite like being in the military, being deployed. In the military, you wake up every morning and know what your mission and purpose is. The military is a unique environment. There are things about it that no other career can rival. But commercial real estate is its own sort of adrenaline rush. When you are in the thick of a deal, it is exciting. There are so many things happening. It is chaotic. You get the chance to work with so many stakeholders. They all have different angles and expectations on deals. It’s fun to get engaged in every level of that. A successful development is one in which you walk away and every partner says, ‘I would do that again.’ Achieving that? That’s an adrenaline rush, too. Making a mark: The bigger picture of why I enjoy this business is that commercial real estate gives you a unique opportunity to leave an imprint on a community. The structures that we build become a part of our personal legacy as much as our corporate one. We did something that was interesting, exciting and met the goals of a community. We want the community to embrace our projects. That is the goal of every one of our projects. Impact work: The last project that I worked on before leaving Ryan was a really cool one. It was the conversion of the historic Plymouth building in downtown Minneapolis. That building was built in the 1900s, and had sat vacant for a couple of decades. We had a concept for redeveloping that building into a hotel. I was working on that deal for probably two years, from beginning to end. A year into the deal, it completely fell apart. Everyone walked away. We were all thinking, ‘Now what?’ Over the course of another year, we revived the

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deal. We brought another hotel chain back into the deal. We found more stakeholders. By the middle of next year, construction will be complete. That was a rewarding deal. We took an asset that was underutilized and transformed it into a downtown Minneapolis hotel that will flourish. That will be a nice impact to a corner of downtown that needed help, a part of downtown that had one particular building standing out like a sore thumb. Now it will have a really cool, modern Embassy Suites hotel there. Military work: During my military career I was deployed to Baghdad, specifically Camp Liberty. That camp was part of the first portion of the country that U.S. soldiers seized in 2003. It was an interesting place to be. I was working there shortly before we turned over legal authority from the United States to a sovereign Iraqi government. Part of my day-to-day job was to meet with Iraqi civilians who claimed to some degree that the U.S. government owed them money because of the damage we did to their person and property. For instance, I paid the owner of a hotel that was occupied by U.S. forces for more than two years $300,000 for the fairmarket occupancy plus damages. I also paid $5,000 to the owner of a soybean field that we had accidentally burned by setting off a flare and setting the field ablaze. Maybe someone driving a jeep sideswiped a car and took off the rearview mirror. We might owe the civilian $500 to replace the mirror. Where did we cause damage? Who do we owe the money to? If the claims were legitimate, we paid them out. Free time: My wife and I just had a 3-month-old baby. So that obviously keeps us busy. But when I do have free time, I enjoy crosswords. I’m a big fan of the New York Times Sunday crossword. I’m a former basketball player and I still love that game. So I follow basketball closely. Now that the Vikings are playing well, I watch them every week, too.

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