MREJ November 2018

VOLUME 34, NUMBER 11

©2018 Real Estate Publishing Corporation

November 2018

Ryan Unveils Plans for St. Paul’s Ford Site

The project is estimated to bring more than $1 billion of economic development to the area

By Liz Wolf

M

inneapolis-based Ryan Cos. US Inc. revealed in October long-awaited plans for the 122acre former Ford plant site in St. Paul’s Highland Park neighborhood.

Ryan Cos., which was awarded development rights to the site in June, has submitted its master plan and zoning amendment requests to the St. Paul City Council for approval.

Ryan is proposing a connected, livable, mixed-use neighborhood with 3,745 units of housing including

market-rate rental housing, affordable housing, rowhomes, condos, senior living and single-family homes. Plans also call for 265,000 square feet of office space and 150,000 square feet of retail space.

In addition, there will be 50 acres of public and open space that includes a “world-class central water feature,” parks and plazas, bike and pedestrian trails, little league baseball fields and 1,000 trees.

The concept is the “culmination of years of effort Ford Site to page 10

Opportunity Zones Created by IRS Unleash a Powerful Tool for New Development

A

n innovative and perhaps massive new funding source is now available to real estate developers.

Similar in some respects to 1031 exchanges, Opportunity Zones allow investors to defer capital gains from one transaction to the next. Under these new rules, however, investors can defer gains on highly-appreciated assets like stocks and other non-real estate investments.

Duane Lund, CEO of NAI Legacy, speaks highly of this new capital source. “This is one of the most bene-

ficial tax reforms in decades given you can defer the capital gains taxes on non-real estate assets like stock sales and the sale of a business.” Opportunity Zones have been established within Lund’s business already.

“Our Opportunity Zone program at NAI Legacy is focused exclusively on ‘last mile distribution, fulfillment and storage’ and with our NAI national footprint, we are one of the few opportunity fund sponsors with boots on the ground in every major US market.”

Established under the 2017 Tax Cuts and Jobs Act,

Opportunity Zones were created to spur and encourage investment in low-income communities across the country through tax benefits. A draft of necessary regulations, however, was released on October 19, 2018.

At the time of the release of the detailed regulations, there are 128 designated Opportunity Zones in Minnesota for developers and investors to get excited about. Investors in these Opportunity Zones can defer tax from all prior gains using a Qualified Opportunity Zones to page 8

November 2018

Featured Stories

Minnesota Real Estate Journal

NOVEMBER 2018 • VOLUME 34, NUMBER 11

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Departments PEOPLE ON THE MOVE 4 CLOSINGS

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BREAKING GROUND 20

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RYAN UNVEILS PLANS FOR ST. PAUL’S FORD SITE OPPORTUNITY ZONES CREATED BY IRS UNLEASH A POWERFUL TOOL FOR NEW DEVELOPMENT

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

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President | Publisher Jeff Johnson jeff.johnson@resummits.com Vice President | Publisher Jay Kodytek jay.kodytek@resummits.com

Ehlers Names Jeff Eaton as its Next President Ehlers’ Companies Board of Directors announced Jeff Eaton as its next President today after a unanimous vote earlier this month in favor of selecting him to lead the company. Eaton’s selection is the result of a four-month, nation-

Chief Financial Officer Todd Phillips todd.phillips@resummits.com Consulting Editor Dr. Tom Musil tamusil@stthomas.edu Conference Manager | Art Director | Graphic Designer | CE Specialist Alan Davis alan.davis@resummits.com

Jeff Eaton

EDITORIAL ADVISORY BOARD JOHN ALLEN JEFF EATON MARK EVENSON PATRICIA GNETZ TOM GUMP CHAD JOHNSON BILL WARDWELL JEFFREY LAFAVRE WADE LAU JIM LOCKHART DUANE LUND CLINT MILLER DR. THOMAS MUSIL WHITNEY PEYTON MIKE SALMEN

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

wide search under the guidance of Keystone Executive Search and a special internal committee. “Our collaborative search effort generated a highly-qualified pool of candidates from which two finalists emerged for full Board consideration,” stated Phil Cosson, Ehlers Companies Board Chair and Senior Municipal Advisor. “It became clear to us very quickly that Jeff embodies the executive qualities and experience we need to help Ehlers seize new growth opportunities and optimize financial performance. He will also concentrate on strengthening our regional marketleadership reputation and team-focused workplace culture.”

Eaton joins Ehlers after completing a 25-year career in commercial real estate services earlier this year. He most recently led Cushman & Wakefield’s north central region operation which included Minneapolis, Chicago and Detroit markets. While Ehlers’ search committee and Board were impressed with Eaton’s dynamic leadership and organizational expertise, it was his proven record of building award-winning work cultures which collectively and consistently outperform profitability benchmarks that stood out as the most compelling factor in their decision to select him. “We have an exceptional

team here at Ehlers. We’re all willing to roll up our sleeves and do whatever it takes to help our clients realize their visions, which in turn, helps us fulfill our own mission,” said Cosson. “It was critical to the Board that our next president nurture that philosophy.”

While under Eaton’s direction, Cushman & Wakefield Northmarq was named a Minneapolis Star Tribune “Best Place to Work” seven times, while also winning industry awards for brokerage and property management services. “That winning combination of team-building and top performance was the key factor in choosing Jeff,” confirmed Steve Apfelbacher, Ehlers’ current President. “His commitment to culture and clients, along with his keen eye for business development and profitability growth make him a perfect leader for the next chapter in Ehlers’ great story.”

Apfelbacher announced his plans to retire after a 40-year career with Ehlers, 33 of which he has served as President.

He will remain with the organization through the leadership transition and Eaton is grateful for the opportunity to work with him. “Steve has tremendous expertise in both the municipal advisory business and ESOP financial management,” Eaton said. “He’s guided the company successfully for over three decades and grown Ehlers into the market leader in the Upper Midwest. I am delighted that he’s agreed to share his insights and help me make a smooth transition into leadership.” Both leaders are enthusiastic about Ehlers and its future.

For Eaton, there’s a sense of excitement for a new challenge in the type of organization to which he’s well-accustomed. “When Ehlers approached me about this opportunity, I did my homework,” Eaton said. “It quickly became apparent that there were many parallels with the service business I led for many years; they have a commitment to creating a special culture where everyone’s contributions are valued, and their teams work collaboratively to solve client challenges. They have a well-earned reputation for integrity and professionalism—and they are also laser-focused on growing their market leading practice. I can’t wait to get started!” Apfelbacher is both reflective and confident.

“40 years ago, we had 8 employees and

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a single shop in Minneapolis,” recalled Apfelbacher. “Today, I can say we’ve expanded operations into 5 states with more than 1,500 clients and have more than 80 dedicated municipal advisory professionals and staff.

Leaving this work after four decades is certainly bittersweet, but I feel incredibly confident that, under Jeff’s leadership, Ehlers’ future will continue to be a bright one.” Eaton’s tenure begins November 29, 2018.

NAI Global Announces New Minneapolis Office Jay Olshonsky, SIOR, FRICS and President of NAI Global, a leading global commercial real estate brokerage firm, today announced its new Minnesota office, NAI Legacy, serving the

Duane Lund greater Minneapolis/St. Paul markets including Rochester, St. Cloud and Western Wisconsin.

Led by 30-veteran and CEO/President Duane H. Lund, NAI Legacy offers brokerage services with expertise in industrial, NNN and 1031 Exchanges, as well as asset management and property management. NAI Legacy features an entrepreneurial operating platform for commercial real estate professionals and provides strategic capital to expand their existing brokerage or management operations. Lund said he is primarily focused on consolidating quality real estate service companies and individuals that own or control significant real estate service contracts.

“Over the next 60 days, we will be announcing our initial brokerage and property management partners,” said People to page 13

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Locally-Led Bridgewater Bank Arrives in St. Paul Bridgewater Bank, a leading Minnesota bank focused on meeting the unique needs of successful individuals and entrepreneurs, is pleased to

Minnesota Real Estate Journal

announce the opening of its newest Twin Cities office located in St. Paul’s Osborn370 building (formerly Ecolab Headquarters) at 370 Wabasha Street North.

The full-service branch features 600

square feet of retail space on the building’s first-floor lobby, housing the Bank’s team of deposit services professionals. In addition to the anchor on the main level, Bridgewater occupies 10,000 square feet on Osborn370’s 15th floor, providing space for its commercial lending and business services teams. Open Monday through Friday from 8:30 a.m. to 4:30 p.m., the branch plans to offer clients ATM access and an after-hours depository drop.

“We’re excited to establish our presence in the heart of downtown St. Paul,” says Lisa Salazar, Senior Vice President Deposit Services. “We know local businesses and individuals on the east side will appreciate our unconventional and local approach to banking.”

Bridgewater Bank – one of the top ten largest banks in the state of Minnesota – has experienced unprecedented growth

November 2018

and is expanding its geographic footprint to serve its rapidly growing client base across the Twin Cities. Incepted in 2005, Bridgewater Bank’s original strategic plan anticipated the need for a future branch in the east metro.

Stantec Chosen as Lead Consultant for The Shipyard Redevelopment Project in the City of Green Bay The City of Green Bay (City) and the Redevelopment Authority of Green Bay (RDA) are moving forward with the redevelopment project known as The Shipyard, and Stantec has been chosen as the lead consultant for Phase I of the redevelopment. The project involves remediating brownfields, repurposing vacant and underused property, and enhancing a residential neighborhood on the west side of the City.

News to page 14

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Minnesota Real Estate Journal

Zones From page 1

Fund (QOF), which must be invested into as an entity, treated as a partnership or corporation to qualify for deferral according to the IRS. Lund adds, “Its estimated that US investors currently hold in excess of $2 trillion in unrealized capital gains. Opportunity Zone funds will allow these investors to deploy some of those gains in a tax deferred vehicle.” As a result, the “Treasury Secretary estimates as much as $100B will be invested in Opportunity Zones across the country.” Danielle Lewis, tax manager with Wipfli LLP in Minneapolis, advises clients utilizing Opportunity Zone incentives. “The more lucrative real estate in opportunity zones are likely to go rapidly, especially now with the proposed regulations being released.

Therefore, if you have capital gains you want to defer its important to start going through this process as soon as possible.” Lewis also suggests coordinating with your advisors, “Regulations to opportunity zone rules are complex, therefore speaking with your CPA or tax advisor is recommended before investing in an Opportunity Fund.” Opportunity Zones keep their designation for 10 years, and if investors make appropriate investments in that zone and meet

requirements, they can defer almost any capital gain until December 2026. Not only are gain deferred, a portion of the gain can be abated all-together. That is, if the QOF investment is held longer than 5 years there is a 10 percent exclu-

sion of the deferred gain. If held for more than 7 years the exclusion jumps to 15 percent.

This new program encourages long term growth and economic development in low- income neighborhoods, which

November 2018

could lead to countless local and national partnerships on Opportunity Zone properties. Of the 128 approved lowincome census tracts designated for Opportunity Zones in Minnesota, 44 of them are in the Metro area within Hennepin and Ramsey county according to Employment and Economic Development (mn.gov).

John McCarthy, broker with Newmark Knight Frank, has spent a great deal of time researching opportunity zones. He describes them as “a real game changer.” He adds “there is little government involvement,” while still stimulating transactions that will “have a ripple effect in neighborhoods through these opportunity zones.” The most populated metro areas with Opportunity Zones include; Southeast Minneapolis along Como Avenue, South Minneapolis between East Lake Street and Franklin Avenue, and along Wabasha Street North near downtown St. Paul.

For investors and developers eager to take advantage of new funding sources or defer gains of their own outside of section 1031 exchanges, Opportunity Zone are going to drive continued development.

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Minnesota Real Estate Journal

November 2018

Ford Site From page 1

and thousands of hours of community conversations, research and due diligence, and offers a collaborative vision for the future of the site,” according to a Ryan press release.

The project is estimated to bring more than $1 billion of economic development to the area as well as 14,000 construction jobs and 1,300 permanent jobs, the release said.

The city and neighbors have discussed how to redevelop this site for the past decade. There’s been some pushback by neighbors who worry about traffic and density. While there are details of the plan that will need to be sorted out, St. Paul City Council Member Chris Tolbert says Ryan has done a good job building upon the city’s master plan.

“There’s a lot to like about what Ryan put forward,” Tolbert says. “Ryan is a fantastic developer. They have a great reputation in the community. We look forward to working with them and digging into the details of what they’ve proposed.”

Tolbert goes on to say, “This is a massive project undertaking, obviously, for

any developer… My main goal and the goal of the city and others is to take a thoughtful approach to the development

of this site as it goes forward. Ryan has looked at our framework and vision and has incorporated much of that.”

Tolbert emphasizes that now it’s about “digging into the details” of the Ford Site to page 11

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plan.

He calls the Ford site one of the greatest redevelopment opportunities in the country. He says it’s minutes from both downtowns and the airport, on the banks of the Mississippi River and in the heart of a premier neighborhood.

“It’s a great opportunity, but it’s also a great responsibility and we want to make sure we do it right,” Tolbert says.

What’s next?

The city’s Planning Commission will hold a public hearing on Ryan’s proposed amendments to the “Ford Site Zoning and Master Plan” on Jan. 25, said Hannah Burchill, a spokesperson for the city’s Department of Planning and Economic Development, in an email. The city is currently accepting public comment by email or mail.

After the public hearing, the Comprehensive and Neighborhood Planning Committee will review testimony and make final recommendations to the Planning Commission, according to Burchill. The Planning Commission will then make a recommendation to the mayor and the city council, which will have an additional public hearing before voting.

As of now, no financing -- TIF or otherwise - has been committed to

Ryan Cos., Burchill said in the email.

This will ultimately be part of the final development deal, which will be par-

tially determined by this amendment process, she said.

Ryan said in the release that they

would like to begin infrastructure work in fall 2019.

Ford Site to page 12

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November 2018

Ford Site from page 11

Experts weigh in on site’s opportunities, challenges “The opportunities the former Ford site presents is it’s such a large piece of land in a desirable location between the river and a thriving neighborhood and commercial area,” says Tom Fisher, the Dayton Hudson Chair in Urban Design and director of the Minnesota Design Center at the University of Minnesota.

“It offers the city a chance to expand its tax base and achieve other worthwhile goals, like creating a range of affordable housing options and a greater degree of sustainability, all within a mixed-use walkable neighborhood.”

Fisher says the challenges include “ensuring that there are a range of transit options to prevent traffic congestion, that it has a diversity of building types and designs that can respond to our rapidly changing economy and demographics, and that it has a 21st century infrastructure that is more resilient and energy-efficient than what we have done in the past.”

Herb Tousley, director of real estate programs at the University of St. Thomas, calls the redevelopment a “real opportunity,” pointing out that it’s a large site in the middle of a city.

“It’s going to bring a lot of jobs to the

area,” he says. “There will be people living in the area, which is good for the city. It’s good for the tax base.”

Tousley recognizes that some neighbors have concerns about traffic and says the city has been talking to the

neighborhood groups for years and will continue to do so.

Ryan has a general plan that’s still going to be refined, Tousley says.

“There’s a lot of work to do,” he adds.

“At this point, it’s still very much a work

in progress, but at least they’ve picked a developer and have come closer to a general concept in terms of how things are generally going to lay out.”

November 2018

Minnesota Real Estate Journal

People to page 4

Duane Lund, “we are in final negotiations with several groups and are excited about the potential size and depth of what will be our collective NAI Legacy team.”

In addition to traditional brokerage and property management services, NAI Legacy will offer real estate services for a wide range of unique tax and capital driven investment alternatives including 1031 Exchanges, Opportunity Zones, DST’s and Bonus Depreciation.

Prior to forming NAI Legacy, Lund was the President of Exchange Realty Inc., a private owner of industrial real estate and several 1031 DST assets.

Earlier, he was CEO of Stonehaven Realty Trust (AMEX:RPP) and prior to that he was a Founding Partner for First Industrial Realty Trust Inc. (NYSE:FR). He was also a partner with The Shidler Group, a San Francisco-based private real estate investment company. Collectively, Lund has completed over $2 billion of tax-deferred real estate deals throughout the United States. Prior to his real estate career, Lund was a CPA with KPMG Peat Marwick.

Matt Van Slooten Joins United Properties as CoPresident and Chief Investment Officer Matt Van Slooten joins United Properties today as co-president and chief investment officer of United Properties Investment LLC (UPI). Van Slooten will replace Eva Stevens, who will work with Van Slooten to ensure a smooth transition before she retires in December.

Most recently, Van Slooten served as president of commercial properties for CSM Corporation. Prior to that, he spent 25 years with Carlson Real Estate Company, advancing to the role of president, a post he held for thirteen years.

As co-president, Van Slooten will share responsibility for United Properties with co-president Bill Katter, who also serves as president and chief investment officer of United Properties Development (UPD), for leading and guiding the combined United Properties organization into the future. As chief investment officer for UPI, Van Slooten will be responsible for all aspects of portfolio and asset manage-

ment of the company’s stable portfolio which represents more than 7 million sq. ft. across several markets, including Minnesota, Colorado, Wisconsin and Florida.

“Following a thorough national search, we are delighted that Matt will join United Properties in this critically important role,” said Bert Colianni,

chief executive officer of Marquette Companies, LLC, a Pohlad holding company that owns UPI. “Matt brings many years of outstanding commercial real estate investment experience to United Properties, and we are confident he has the complementary skills and vision to partner with Bill to chart United Properties’ course into the

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future.”

“I am delighted to welcome Matt to United Properties and look forward to working closely with him and the entire United Properties team on our many exciting projects in the days, months and years ahead,” said Katter.

People to page 9

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Minnesota Real Estate Journal News from page 6

For the past eight years, Stantec has worked closely with the City to assess brownfield and underutilized sites in the City’s downtown along the Fox River.

Since 2013, Stantec has helped the City secure $900,000 in U.S. EPA brownfield grants funds to assess brownfield sites, including 17 parcels in the redevelopment area near The Shipyard.

“This assessment work provided valuable data to support the City’s redevelopment plans for The Shipyard,” said Lynelle Caine, senior project manager in Stantec’s Green Bay office. “We couldn’t be more excited to help the City turn their vision into a reality.”

Phase I of the overall redevelopment project will consist of the following: Site preparation and overall stormwater management for the area: Stantec will provide environmental, civil engineering, and FEMA permitting services to prepare both the north and south slips for redevelopment. The north slip will be developed by Breakthrough and the south slip by RDA into a multi-use, multi-season park with various public amenities. Stantec is the lead designer

for the park.

Public improvements: Stantec has teamed with Robert E. Lee & Associates, Inc. and Berners-Schober Associates, Inc. to design and permit various public improvements to support both the Breakthrough development and The Shipyard public park. The proposed improvements are to include: street reconstructions along portions of Arndt, Bridge, and S. Pearl Street, additional surface parking lots, pedestrian paths, railroad crossings, stormwater management facilities, and public buildings for various uses.

Multi-use /multi-season public park: Stantec’s team of local and national experts will work with the City to design The Shipyard public recreational areas.

Various amenities are planned for the site, which may include a multi-purpose sports field with bleachers, a concession building with locker rooms and bathrooms, a splashpad, pedestrian trails, public art, shipping container retail park, waterfront activities (fishing, boating, kayaking), as well as connectivity to the north slip via a pedestrian bridge. The City and Stantec will ask for public

input in the near future.

“We work hard to understand our client’s goals, imagine new possibilities together, and strive for excellence in every project,” said Michael Bach, project manager in Stantec’s Mequon office.

“We look forward to working with our project partners, the City of Green Bay, and RDA to redevelop this area into a destination for years to come.”

CBRE Report: Minneapolis Workforce Housing Outperforming National Market Strong market fundamentals are attracting a wide variety of investors to workforce housing, creating good returns and helping to preserve affordable accommodation in lower-income communities, according to the latest research from CBRE. Workforce housing—rental communities that are affordable for low- to median-income workers—has outperformed the overall multifamily market for the past four years, with relatively low vacancy rates and above-average rent growth. Slow wage growth over the

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past decade contributing to a high number of potential renters, an extreme lack of new supply, and limited alternative options means strong and sustained demand for workforce housing apartments is expected to continue in 2019.

The healthy market performance of workforce housing has attracted major investment of nearly $375 billion over the past five years—51.3% of the total for all multifamily assets. This capital is increasingly coming from unlikely sources, including institutional and cross-border investors.

“The balance of the market forces points to continued strength in workforce housing, justifying the strong investment appeal. Investment in this segment also benefits the housing market by preserving much-needed rental accommodations for lower income renters. Value-add investment, in particular, helps to preserve workforce housing inventory directly by improving the physical quality of the asset through renovation,” said Brian McAuliffe, President – Institutional Properties, Capital Markets, CBRE. News to next page

November 2018

Approximately 13.5 million households currently live in workforce housing, with most of these individuals and families “renters by necessity” (i.e. paying off student debt, saving to buy a house, proximity to family/employment) who do not have the financial means for homeownership or for higherquality multifamily housing.

Over the past decade, only a small amount of new workforce housing has been built, while many older apartment communities have been demolished to accommodate the development of highend properties. The multifamily industry removes more than 100,000 units per year due to obsolescence, and these are predominantly workforce and affordable housing units. The redevelopment of older housing units is tremendously valuable to the multifamily sector, providing better-quality and updated units for renters. The physical improvement to the older multifamily housing stock has also made it more attractive for investors.

Nearly all U.S. metros and submarkets are benefitting from workforce

Minnesota Real Estate Journal

housing’s strong market conditions. The markets with the highest workforce housing rent growth are predominantly higher growth metros. Minneapolis is a top 15 US market (13), demonstrating a rent growth of 3.8% for the year ending Q2 2018. Orlando and Las Vegas lead the country, with 7% rent increases for the same time period. Another nine metros (Jacksonville, Columbus, Tampa, Phoenix, Houston, Inland Empire, Atlanta, San Diego) have growth rates of 4% or above.

“The contributing factor to this growth in Minneapolis is the value-add upside a lot of older B and C product has,” said Ted Abramson, senior vice president with CBRE. “Minneapolis is historically dominated by local owners and during this cycle the increased trade volume has made everyone take steps to remain competitive with these updates.

Most of the value-add product still has a demonstrable gap to the newer product, allowing for these opportunities to invest in improvements.”

The marketplace is not without risks.

Workforce housing affordability has

begun to create some resistance to rent increases and may limit them further in the future. More than one-third (35%) of workforce renter households were considered “rent burdened” last year in that their rent payments represented 30% or more of their incomes, compared to 21% in 2006. Proposed rent control policies, if enacted, could also limit rent growth, while the wide array of public and private programs focused on trying to improve housing affordability may improve the supply/demand situation for renters at the expense of owners.

The Opus Group and Hillcrest Development LLLP Announce Completion of North Star Sheets Building at Southeast Industrial Park The Opus Group (Opus) announces the completion of the North Star Sheets building at Southeast Industrial Park in collaboration withHillcrest Development, LLLP (Hillcrest). The 161,000square-foot rail-served building sits on 16 acres and will be occupied entirely

by North Star Sheets, a producer of cor-

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rugated paper products for manufacturing needs.

“We’re pleased to welcome North Star Sheets to the Southeast Industrial Park,” said Phil Cattanach, senior director, Opus Development Company, L.L.C. “The collaboration with Hillcrest and the City of Cottage Grove was critical to ensure that North Star Sheets was fully operational in just seven months.”

This build-to-suit project broke ground in March 2018 and is the first building in a multiphase 38-acre railserved industrial development in Cottage Grove. The development is located just south of US Highway 61, offering easy access to major freeway systems.

“North Star Sheets is glad to be an addition to the community,” said, Paul Smith, general manager, North Star Sheets. “The investment in the state-ofthe-art equipment and the site will provide employment opportunities into the future. We’re currently providing about 50 jobs onsite and are already looking to expand our workforce.”

The site was certified as shovel-ready News to page 16

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Minnesota Real Estate Journal News from page 15

by the Minnesota Department of Employment and Economic Development (DEED), allowing North Star Sheets to resolve time-consuming hurdles well in advance of breaking ground.

Additionally, in order to meet the tight project timeline, the City of Cottage Grove collaborated with Opus and the project team to ensure North Star Sheets would have the ability to install critical equipment needed for its operations during building construction. Opus’ ability to accommodate these needs while maintaining high safety standards allowed for a much faster and smoother transition for operations to commence upon the building’s completion.

“We appreciate the cohesiveness and high-level of competence of the entire team in completing Phase 1 of the development of Southeast Industrial Park,” said Scott Tankenoff, managing partner, Hillcrest Development, LLLP. “Specifically, the City of Cottage Grove showed leadership and ability to make decisions every step of the way.”

“The investment that Hillcrest has

made in establishing the Southeast Industrial Park has been wonderful for the City of Cottage Grove. Hillcrest’s investment in the City of Cottage Grove has resulted in a great partnership with The Opus Group and brought North Star Sheets to our community,” said Myron Bailey, Mayor, Cottage Grove. “I look forward to seeing what’s next for the Southeast Industrial Park and cannot say enough great things about the work Hillcrest and Opus have done in Cottage Grove. They have a collaborative approach to development that produces successful projects.”

Meritex Completes Leasing of Three Eagan Properties More than 400,000 square-feet of industrial space now 100% occupied in the area.

The Meritex Company is announcing that all three of their Eagan properties have been completely leased to nine separate tenants. The properties represent a total of 404,109 square-feet of industrial real estate, primarily office and warehouse space, in the southeast

submarket of the Twin Cities. “Continued industrial growth in the metro area has led to a high demand for quality properties that meet businesses’ unique needs, from higher clear heights to adaptable spaces,” says Ben Lieser, Minnesota regional manager at Meritex.

“We’ve been matching tenants to their ideal spaces for more than a century, and are thrilled to continue to provide ideal locations, like our three Eagan properties, where business can thrive.” Eagan represents the second largest industrial trade area by size. Currently, there are 93 industrial properties in the area, with less than 4 percent of spaces remaining vacant.

The largest of Meritex’s Eagan properties, 985 Aldrin, was purchased by Meritex in 2013 and is currently home to three tenants. The facility boasts 172,559 square feet with 32’ clear height. It’s located at 985 Aldrin Drive.

Finally, the Lexington Corporate Center, located at 3225 Neil Armstrong Boulevard, has recently completed leasing to five separate tenants. The 76,500 square-foot facility is a Class A building.

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Equipped with divisible office and warehouse spaces with 19’ clear height.

Meritex purchased the facility in 2010.

In addition to the three Eagan locations, Meritex owns and manages property throughout the Twin Cities, totaling 1.8 million square feet. Buildings are located in Eagan, Elk River, Fridley, Minneapolis, Rogers, Roseville, Shakopee and St. Paul. Additionally, Meritex is wrapping up construction on two stateof-the-art 144,000-sq.-ft. bulk-distribution buildings, Highcrest II and III, in Roseville. The properties are anticipated for completion later this month and have already signed one lease.

“As the situation in Eagan demonstrates, demand for industrial spaces in the Twin Cities market continues to grow,” says Lieser. “Vacancy rates are already low and quality spaces are leasing quickly.”

Tutor Perini, C.S. McCrossan Awarded $799.5M Light Rail Project in Minneapolis A joint venture between a subsidiary News to next page

November 2018

of Los Angeles-based Tutor Perini Corp. (NYSE: TPC) and Minnesotabased C.S. McCrossan has been awarded a $799.5 million construction contract from the Metropolitan Council for the Southwest Light Rail Transit project in Minneapolis.

According to local media sources, the project carries a total price tag of about $2 billion, about half of which stems from federal funding. In addition, the project could create as many as 7,500 construction jobs.

As the largest public infrastructure deal in Minnesota’s history, the regional project will deliver a 14.5-mile extension of the METRO Green Line.

In addition to new light rail infrastructure, the project will deliver 44 bridges, two cut-and-cover tunnels and 16 new light rail stations.

The new line will connect the southwestern suburb of Eden Prairie to downtown Minneapolis. New rail stations will also service the suburbs of Edina, Hopkins and Minnetonka.

“This news is long-awaited and hard-earned,” Minnesota Gov. Mark

Minnesota Real Estate Journal

Dayton said last week. “The Southwest Light Rail Transit project is a critical economic development project. When complete, it will improve many thousands of lives from Eden Prairie to North Minneapolis. It will create new jobs, reduce highway congestion, and better connect Minnesotans to one another.”

Preliminary work is slated to begin in December, with major construction activity ramping up in spring 2019. A target completion date has not yet been announced, but when the project was originally bid on in May, the estimated duration of the contract was 42 months.

Local media sources report that passenger service could begin by 2023.

The population of Minneapolis is expected to grow by 50 percent by 2035, which has necessitated more infrastructure projects. A new light rail line now connects downtown Minneapolis and St. Paul, giving residents access to Allianz Field, the $200 million soccer stadium for Minnesota United FC. The stadium is currently under con-

struction and slated for a spring-2019 completion. RD Management LLC is also developing a 20-acre mixed-use project near the stadium that will feature office, retail, hotel and multifamily components.

Tutor Perini’s stock price closed at $17.83 per share on Friday, November 16, down from $23.85 per share a year ago.

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

Built in 1968 and renovated from 2016 to 2018, Concierge is located in the Minneapolis suburb of Richfield and is well connected by its access to I494, proximity to premiere shopping

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district and Best Buy World Headquarters next door. The building offers resort-style living with best-in-class amenities, such as the largest outdoor swimming pool in Minnesota with an expansive sun deck, cabanas, entertainment space, state of the art fitness center, golf simulator, rock climbing walls, and much more. The six-building community is comprised of 457,620 square feet.

Officials: State Unemployment Numbers Lowest Since Last Recession The Minnesota Department of Employment and Economic Development says the state’s seasonally adjusted unemployment rate was 2.8 percent in October.

According to officials, the number of unemployed Minnesotans is 86,118 – the lowest that figure has been since the last recession.

During the month of October, the 1when seasonally adjusted – a techNews to page 18

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Minnesota Real Estate Journal

News from page 17

nique that measures and removes predictable seasonal patterns regarding employment and unemployment to give a more accurate representation of statistics.

Seven of 11 major job sectors gained jobs in October. Leisure and hospitality gained the most with 2,500 added jobs.

Construction; trade, transportation and utilities; financial activities; manufac-

turing; information; and education and health care all showed growth as well.

Mankato showed the highest growth rate with 2.9 percent, with Minneapolis-St. Paul coming in second with 1.7 percent.

The Department of Employment and Economic Development says Minnesota has gained 36,450 jobs over the past year. The state’s private sector gained 1.3 percent. National numbers

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November 2018

show a 1.7 percent total growth rate for the year, with 2.0 percent in the private sector.

Apartment Development Holding Strong in Twin Cities A strong Twin Cities market with low unemployment and vacancy rates have helped the metro area apartment market defy the odds and continue to grow well beyond anyone's expectations. The downtown Minneapolis area has especially grown with high demand with an average vacancy rate of 2.3 percent since the end of September 2018, which is lower than a year ago, according to Marquette Advisors.

The local economy remains strong in comparison to other metro areas, in which federal data reveals a national dip in multifamily building permits every month since March 2018. New apartment developments in other parts

of the country are projected to slow down in the next few years, but the Twin Cities appears impervious to the national trend in the economy, at least for now. “The market is reviewed as balanced between buyers and sellers when the vacancy rate is at 5 percent”, according to Marquette Advisors via Star Tribune.

Developers are also seen as selective in their projects in the midwest as opposed to other cities. By limiting the number of new construction the demand remains high. For downtown renters, the demand continues to increase among a growing demographic who want close proximity to work and access to everything else they perceive they need. The mixed-use developments are becoming a norm, creating work spaces that also have potential to accommodate shops, restaurants, fitness centers, and other high-demand News to nexr page

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November 2018

urban amenities.

The East Town district has rapidly expanded and developed around the US Bank Stadium, which encompasses $588 million dollars of projects built

by Ryan Cos., which was outlined by the Star Tribune The development alone has created a new corner of downtown Minneapolis.

There appears to be some pullback or restraint in certain submarkets markets, such as Shermans cancelled plans to build apartments on the Thrivent site according to Finance and Commerce.

The Twin Cities boasts a lower than national average unemployment rate, along with low vacancy rates, and that’s a key reason the developers see a bustling economy to pursue a growing opportunity in Minnesota’s metro area that has many renters by choice.

Minnesota Real Estate Journal

People from page 13

United Properties Promotes Skalland to Chief Financial/administration Officer; Hielscher Joins Firm as VP, Accounting United Properties has promoted Chief Financial Officer Eric Skalland to chief financial and administration officer, and Janelle Hielscher has joined the firm as the new vice president of accounting, it was announced today.

“Eric’s promotion recognizes his many talents and contributions to United Properties over the years,” said Bill Katter, president of United Properties Development. “Eric has consistently excelled at every assignment since he joined United Properties, and we are pleased that he will add these significant responsibilities to his leadership role. He is a trusted advisor with

a deep understanding of both the investment and development businesses.”

Skalland will assume responsibility for managing the internal shared services teams that support both the development and investment groups of United Properties, including human resources, operations and administration, accounting, IT and risk management. In this role he will report to Bert Colianni, chief executive officer, Marquette Companies.

Skalland began his career with United Properties in 2007 as assistant controller, advancing to controller, chief accounting officer and most recently, chief financial officer. Prior to joining United Properties, he served as a senior financial analyst at CBS Radio, Inc., and as a senior associate with accounting firm Grant Thornton.

Skalland holds a Bachelor of Science degree in accounting from the University of Minnesota – Carlson School of

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Management and is a Certified Public Accountant (CPA). He lives Maple Grove with his wife and daughter.

Janelle Hielscher named VP, accounting Janelle Hielscher has joined United Properties as its new vice president of accounting, reporting to Skalland.

Hielscher began her career at RSM, spending nine years in the assurance services group. After leaving RSM, she spent a year as the director of corporate accounting at Walser Holding Company and most recently served for two years as the vice president of accounting at Sherman Associates. In her new role for United Properties, she will oversee accounting functions for the firm, and report to Skalland.

Janelle brings a strong background in accounting and leadership,” said Skalland. “We are excited to have her join the United Properties team.”