MREJ Aug 2016 by REjournals

VOLUME 32, NUMBER 8

August 2016

Is this the longest upswing in the Minneapolis hotel market in … forever?

Limited-service hotels leading the way in hospitality boom

By Dan Rafter

t just might be. Just ask Ronn Thomas, senior director of hospitality for Cushman & Wakefield/NorthMarq. “It’s pretty impressive how long this cycle has lasted,” Thomas said. “And it’s predicted to continue even longer. The economy is rolling on, so there’s no reason why the hospitality industry here won’t continue to improve. There really is no end in sight to the strong performance in hospitality that we’ve been seeing.” Why is the hospitality industry such a strong one in the Twin Cities? Thomas points to the strong local economy in Minneapolis and St. Paul. When the economy is strong, travelers take more trips. At the same time, business travel rises, too, as companies can spend more on sending their employees across the country for meetings, seminars and faceto-face sales calls. The Twin Cities are poised to capitalize on this increase in travel because the region offers so much of what travelers – both business and leisure – are looking for when they hit the road, Thomas said. “Think about yourself and what you are looking for when you travel,” Thomas said. “You might be traveling to visit a college, and we have that here. You want to be close to hospitals. When it comes to business travel we have Fortune 500 companies here. The corporate environment in the Twin Cities is strong. At the same time, there are plenty of fun things to do Hotels to page 20

From Tourism to Terabytes Minnesota’s Playground goes Techy

or the average Minnesotan, the Brainerd Lakes Area is synonymous with tourism. The area has been the state’s premier vacation destination for generations of families in search of a place to relax, recharge and create lifelong memories. With unique shopping and dining, challenging golf courses, world-class resorts, crystal clear lakes and unlimited outdoor recreational opportunities, tourism is the backbone of the local

economy and clearly defines the area. But the area’s economic landscape is quietly starting to shift. An unlikely commercial sector – about as farremoved from tourism as one could possibly get – is enjoying significant growth in the area, bringing with it good-paying jobs and providing diversity to the local economy. The technology sector is on the rise in the Brainerd Lakes Area. Now playfully referred to as Silicon Lakes, the area is home to a growing number of tech

companies that are benefitting from a tech-friendly infrastructure and a “quality of life quotient” that’s off the charts. Tech companies are now noticing Brainerd, Baxter and surrounding communities like Pequot Lakes and Crosslake for a number of reasons, including available and affordable real estate, a robust fiber optic network and a homegrown workforce that’s educated and trained for tech careers. Tech companies also have support from the local business community that has partnered with

the Brainerd Lakes Area Economic Development Corporation (BLAEDC) to develop an initiative called “Tech Ready,” which is a resource for tech companies to learn more about the area and to help people find tech jobs. The area’s crown jewel, though, is a robust state-of-the-art fiber optic network that continues to expand throughout the region, linking local businesses to the rest of the world through a highspeed Internet connection. Tech compaBrainerd to page 12

August 2016

Minnesota Real Estate Journal

Contents

AUGUST 2016 • VOLUME 32, NUMBER 8

LIMITED-SERVICE HOTELS LEADING THE WAY IN HOSPITALITY BOOM FROM TOURISM TO TERABYTES

GREAT RIVER ENERGY CREATES PROGRAM TO IDENTIFY SITES BEST SUITED FOR DATA CENTER DEVELOPMENT

VIKINGS, KRAUS-ANDERSON START CONSTRUCTION OF NEW TRAINING FACILITY AND HEADQUARTERS NEAR MINNEAPOLIS

KRAUS-ANDERSON COMPLETES $4.8 MILLION UNIVERSITY OF MINNESOTA BEE RESEARCH LAB

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Departments PEOPLE

NEWS

Minnesota Real Estate Journal (ISSN 08932255) Copyright © 2016 by the Minnesota Real Estate Journal is published for $85 a year at 12 times per year by Jeff Johnson, 13700 83rd Way North, Suite 206, Maple Grove, MN 55369. Monthly Business and Editorial Offices: 13700 83rd Way North, Maple Grove, MN 55369 Accounting and Circulation Offices: Jeff Johnson, 13700 83rd Way North, Maple Grove, MN 55369 Call 952-885-0815 to subscribe. For more information call: 952-885-0815. POSTMASTER: Send address changes to Minnesota Real Estate Journal, 13700 83rd Way North, Suite 206, Maple Grove, MN 55369 ©2016 Law Bulletin Publishing Co. No part of this publication may be reproduced without the written permission of the publisher.

Page 4

Minnesota Real Estate Journal

August 2016

People a division of Law Bulletin Publishing Co.

Christianson & Company Adds Melissa Fulson 13700 83rd Way N, STE 206 Maple Grove, MN 55369 For information call 952-885-0815

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

Christianson & Company announced that Melissa Fulson joined Christianson & Company in 2016. She spent the previous 19 years working in the architectural design field with emphasis on development and tenant improvements. Her experience includes tenant representation, fit planning, setting up budgets, programming, design, project management and construction administration. Melissa is especially versed in retail and restaurant design and site selection, working with both property owners and tenants. At Christianson & Company, Melissa and will help property owners repurpose space through design to fill vacancies and work with tenants from site selection through grand opening. Her experience is especially deep in the areas of retail, restaurant and hospitality. "We are so excited to add Melissa's talent to our team. Her knowledge and experience in design will be a great asset to elevate our ability to maximize the potential of our client's real estate endeavors,” said Christianson & Company President, Lisa Christianson.

StuartCo Hires Stacy Ekholm as Portfolio Director StuartCo, one of Minnesota’s largest apartment management firms, announced that it has hired Stacy Ekholm to oversee a portfolio of eight properties totaling just over 1,000 units, including two downtown Minneapolis assets, a unique student housing and retail redevelopment, and their newest all studio development, The Madison, in St. Paul. Ms. Ekholm’s multi-family management experience spans over 20 years with positions held at Shelter Corporation, CommonBond Communities, The Goodman Group, and most recently as a Regional Manager at Pinnacle overseeing seven properties in Minnesota and Nebraska. She has experience in project based Section 8, market rate, tax credit, multi-layered, and owner occupied homeowner associations across the Midwest. Ms. Ekholm has earned three Minnesota Multihousing Association MADACS awards for Multi-site Manager, CIC Manager, and Team. She has

earned numerous internal awards within the organizations she has represented, and most recently was one of five representatives in Pinnacle’s Emerging Leaders national program. She holds the CRM, COS, and CMCA industry designations, and is currently a CPM candidate. She is active in the MN Multi-housing Association (MHA) and currently volunteers with the Hastings Veterans Home, MusikLink, and Backing the Blue Line. Ms. Ekholm and her family reside in Inver Grove Heights, MN.

Beth Shipman Joins Bridgewater Bank as Vice President of Compliance Bridgewater Bank, a leading Minnesota bank focused on meeting the unique needs of successful real estate and small business entrepreneurs, is pleased to welcome Beth Shipman to its team as Vice President, Compliance. Her primary role will be to oversee the Bank’s compliance management and BSA programs. Beth joins Bridgewater Bank with over 25 years of regulatory experience, and most recently worked as Vice President of Compliance at Western Bank in Maplewood, MN. She is a graduate of Mankato State University in Mankato, MN. “As the Bank continues to grow, regulatory compliance becomes increasingly important,” stated CEO Jerry Baack. “Beth’s proven leadership, experience and knowledge make her the perfect fit to join our team.”

NAI EVEREST WELCOMES THOMAS G. BACKSTROM NAI Everest, a full service commercial real estate brokerage firm, recently added Tom Backstrom as Vice President to its team of brokerage professionals. Background and Experience Tom brings 45 years of hands on involvement on more than 50,000 units to our clients. He actively participated in over 30 new developments and 20 values-add projects achieving or exceeding all investor/owner expectations for physical and financial success. Tom’s area of expertise in multifamily includes design, development, marketing, lease-up and operations. In his roles, Backstrom has developed a thor-

ough understanding of the goals and objectives of buyers and sellers in the disposition/acquisition process and is an expert representative or advisor for clients considering either option. Backstrom’s experience includes assisting institutional, regional and local developers/owners with due diligence, physical, financial and administrative operations. When assisting sellers, his depth of knowledge, years of experience and understanding of positioning an asset for disposition results in maximizing sale proceeds. His experience includes conducting lease audits, physical inspections, identifying areas of upside potential, from physical improvements to income/expense opportunities.

Cushman & Wakefield/NorthMarq’s Laura Magnuson Named International Facility Management Association President Cushman & Wakefield/NorthMarq (www.cushwakenm.com) Senior Facilities Manager Laura Magnuson has been named President of the Minneapolis/St. Paul chapter of the International Facility Management Association (IFMA) for 2017 – 2018. During her five years as a board member of IFMA, Magnuson has worked closely with members of the association’s executive team and will continue to do so in her role as president. In addition to providing direction for the local chapter, Magnuson is passionate about education and works in conjunction with the University of Minnesota to promote its facilities management program with university students. In her role as Senior Facilities Manager, Magnuson oversees Cushman & Wakefield/NorthMarq’s Securian account, which encompasses one million square feet of office and retail space. In addition to overseeing the facilities management, engineering and maintenance, and parking operations teams, Magnuson partners with Cushman & Wakefield/NorthMarq brokers Tom Stella, Ann Stahley and Jen Helm to manage leasing arrangements for the more than 35 tenants at the property.

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News MARCUS & MILLICHAP ARRANGES THE SALE OF A 100-ROOM HOSPITALITY PROPERTY 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 Comfort Suites, a 100-room hospitality property located in Johnson Creek, Wisconsin, according to Craig Patterson, Regional Manager of the firm’s Minneapolis office. The asset sold for an undisclosed price. Jon Ruzicka, a Senior Associate in Marcus & Millichap’s Minneapolis office, served as exclusive advisor on behalf of the seller, a limited liability company. Todd Lindblom, Regional Manager and Broker of Marcus & Millichap’s Milwaukee office, assisted in closing this transaction. Speaking with Mr. Ruzicka, “The Comfort Suites in Johnson Creek is a perfect example of a beautiful and completely renovated hotel transaction. For the seller, it simply did not fit in with

Minnesota Real Estate Journal

their investment plans. For the buyer, it was an ideal turn-key acquisition that will make a nice addition to their portfolio. This marks the 10th hotel Jon Ruzicka has sold in 2016 and the 8th in Wisconsin.” Comfort Suites is located at 725 Paradise Lane in Johnson Creek, Wisconsin. It is located off Interstate 94 midway between Madison and Milwaukee. It features 100 guest rooms and was recently constructed in 2005 with an addition completed shortly after that included enough conference space to accommodate over 500 people. The seller had performed extensive renovations over the past 12 months.

Dougherty Mortgage LLC closes $32.5 million Fannie Mae loan for The Woodlands of Minnetonka Dougherty Mortgage LLC, a full service national mortgage banking firm, recently closed a $32.5 million Fannie Mae loan for the acquisition of The Woodlands of Minnetonka, a 252-unit market rate multifamily apartment property located in Minnetonka, Minnesota.

The pet-friendly property includes a clubhouse, media room, outdoor fireplace, swimming pool and grilling pavilion. Apartments have oversized closets, patios or balconies and in-suite washers and dryers. The Fannie Mae 12-year term, 5-year interest only, 30year amortization loan was arranged through Dougherty’s Minneapolis office for borrower, Heartland Minnetonka LLC.

MARCUS & MILLICHAP ARRANGES THE SALE OF A 230-ROOM HOSPITALITY PROPERTY 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 The Plaza Hotel & Suites, a 230-room hospitality property located in Wausau, Wisconsin, according to Craig Patterson, Regional Manager of the firm’s Minneapolis office. The asset sold for $1,500,000. Jon Ruzicka, a Senior Associate in Marcus & Millichap’s Minneapolis office, had the exclusive listing to mar-

August 2016

ket the property on behalf of the seller, a prominent local hotelier. The buyer, a limited liability company, was procured by Jon Ruzicka. Todd Lindblom, Regional Manager and Broker of Marcus & Millichap’s Milwaukee office, assisted in closing this transaction. Speaking with Mr. Ruzicka, “The Plaza hotel Wausau has been a fixture in the community dating back to its days as a Holiday Inn. It is still one of the premier choices for local events as it boasts the largest hotel meeting space in the city which allows it to cater to functions of all sizes. The buyer plans to, once again, return it to prominence. This was a difficult marketing assignment because of the fact that the hotel was underperforming and there had been other local brokers marketing it in the recent past. It took a certain type of investor to realize the upside potential, and also, be comfortable with the food, beverage and banquets aspect. Through an all-encompassing marketing effort, multiple offers were generated and the eventual buyer was sourced from Canada and is their first United States purchase. This marks the 10th hotel Jon

Page 8

Ruzicka has sold in 2016, seven of which were in Wisconsin.” The Plaza Hotel & Suites is located at 201 North 17th Avenue in Wausau, Wisconsin. It was originally constructed as a Holiday Inn and features 230 rooms. Approximately 28,000 square feet of meeting space are onsite, making it one of Wausau’s premier event destinations.

Dougherty Mortgage LLC closes $7.6 million Fannie Mae loan for 1810 Belcourt Apartments Dougherty Mortgage LLC, a full service national mortgage banking firm, recently closed a $7.6 million Fannie Mae loan for the refinance of 1810 Belcourt Apartments, a 36-unit market rate multifamily apartment property in Nashville, Tennessee. The property is located near the popular Hillsboro Village neighborhood and offers accesscontrolled parking and a private courtyard. The Fannie Mae loan was arranged through Dougherty’s Nashville, Tennessee office.

Minnesota Real Estate Journal

Cushman & Wakefield NorthMarq Represents Beacon Academy in Opening of New Crystal Facility The Cushman & Wakefield NorthMarq team of Paul Donovan, Jaclyn May, Gerhardt Gliege, Luke Appert, and Jeremy Striffler represented Beacon Academy/Friends of Beacon in the site selection and purchase of a property located at 3420 Nevada Ave. N. in Crystal, which when fully renovated will become the approximately 80,000 sf permanent home for the school. Beacon Academy, a tuition-free K-8 public charter school, will move its facilities from its current location in Maple Grove and its new facility will offer the opportunity for enrollment growth and access to abundant green space on its 12-acre site. The new facility and site will allow Beacon’s mission to thrive—providing Twin Cities families with a proven, rigorous, and content-rich curriculum, integrated with sequential Spanish language instruction. “We are committed to providing a results-driven community, built around

a culture of positive character development and committed parental involvement,” said Sean Koster, Principal of Beacon Academy. “This new facility will help us grow while maintaining a small learning community." The Cushman & Wakefield NorthMarq team of Donovan, May, Gliege, Appert, and Striffler worked with the school to identify the ideal site for the school’s permanent home. The team also guided the school through building the extended project team, accessing financing, handling the entitlement process with the City, coordinating the various requirements of the Minnesota Department Education, and will manage the renovation and addition construction process over the next year. Minneapolis-based RJM Construction was selected as general contractor and Rivera Architects was selected as designer. Interior demolition began earlier this month, making way for improved circulation and finishes. The project also includes mechanical upgrades, site improvements and exterior building repairs.

August 2016

School members, project partners and community members will gather at the new site of the school for a ceremonial groundbreaking on Sept. 7 at 3 p.m. The school will open for the fall 2017 term.

Doran Companies Closes $24.9 Million Purchase of Calhoun Village in Minneapolis Doran Companies, the trend setting developer of high end student housing at the University of Minnesota and numerous luxury multi-family apartment projects in Minneapolis and its western suburbs, announced today that they have closed on the $24.9 million purchase of the 90,000 square foot Calhoun Village Shopping Center located on the north end of Lake Calhoun at 3200 West Lake Street. The seller was Pfaff Calhoun, LLC. Kelly Doran, Founder and Principal of Doran Companies said the deal, completed on Tuesday of this week, “was attractive because of its location and potential for upgrades and expansion in the future.” Doran said the retail property is currently over 90% leased and

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Minnesota Real Estate Journal

while some tenant changes could occur in the future there are no immediate plans in place. Among current tenants are Walgreens, Punch Pizza, Burger Jones and Barnes and Noble. Doran is no stranger to retail developments as earlier in his career he was responsible for several large shopping centers in the Twin Cities area including the Whole Foods –based shopping center Calhoun Commons located directly across Lake Street from Calhoun Village. Currently, Doran’s commercial management entity manages over 1.7 million square feet of shopping centers in the Twin Cities metro and St. Cloud, including Tamarack Village in Woodbury.

252-UNIT MINNETONKA APARTMENT COMMUNITY SOLD TO LOCAL INVESTOR FOR $44.9 MILLION CBRE has arranged the sale of the Woodlands of Minnetonka for $44.9 million on behalf of its owner, Trilogy Real Estate Group. The buyer is Heartland Realty Investors, a Minneapolis-

based investment and property management firm. The multifamily team of Abe Appert, Keith Collins and Laura Hanneman in CBRE’s Minneapolis office represented the seller. The team has worked with Trilogy Real Estate Group since 2011, when Trilogy purchased the Woodlands. The 252-unit apartment community is located at 10275 Greenbrier Road in Minnetonka, a premier west metro suburb due to its proximity to employment centers, retailers, recreation and high average household income and home values. The seller recently completed $3.1 million in capital improvements to the 277,760-square-foot property including the exterior, common area amenities and unit renovations.

Dougherty Mortgage LLC closes $27.5 million Fannie Mae loan for Westbridge Apartments Dougherty Mortgage LLC, a full service national mortgage banking

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firm, recently closed a $27.5 million Fannie Mae loan for the acquisition of Westbridge Apartments, a 284-unit market rate multifamily apartment property located in Carrollton, Texas. The pet-friendly, gated property is minutes from hiking/biking trails and includes a dog park, swimming pool, fitness center and complimentary yoga classes. Apartments have 9-foot ceilings with crown molding, built-in bookshelves, ceiling fans, a patio or balcony, washer and dryer hookup and fireplaces. The Fannie Mae 12-year term, 5-year interest only, 30-year amortization loan was arranged through Dougherty’s Minneapolis office for borrower, Westbridge 2300, LLC.

Dougherty Mortgage LLC closes $10.8 million Fannie Mae loan for Triple Crown Apartments Dougherty Mortgage LLC, a full service national mortgage banking firm, recently closed a $10.8 million Fannie Mae loan for the acquisition of

August 2016

Triple Crown Apartments, a 182-unit market rate multifamily apartment property located in Austin, Texas. Property features include assigned parking, a pool, laundry facilities and a barbecue area. The Fannie Mae 12year term, 4-year interest only, 30-year amortization loan was arranged through Dougherty’s Minneapolis office for borrower, Triple Crown Apts LLC.

Ryan Companies US, Inc. Awarded the Building Services Business for Allina WestHealth Clinic Ryan Companies US, Inc. announced it has been awarded the building services business for Allina WestHealth Clinic in Plymouth, MN. Located at 2855 Campus Drive, the 200,000-square-foot multi-tenant building is home to a growing number of Allina Health specialty services and programs. Ryan is providing maintenance oversight of emergency generators, air compressors, vacuum systems, News to page 22

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Minnesota Real Estate Journal

Brainerd From page 1

nies love it because it gives them the ability to move massive amounts of digital data quickly and globally. Syvantis Technologies is an example of a local tech company that’s enjoying rapid growth because the fiber optic network opened the door to doing business nationwide. Founded locally in 2000, Syvantis now specializes in the remote deployment and support of Microsoft Cloud technologies, including Dynamics GP, Office 365, and Dynamics CRM. Syvantis is up to 21 consultants and is still in hiring mode, said company President Janelle Riley, and much of the credit goes to the fiber optic network. “We have a better infrastructure here than in other parts of the country, including many metropolitan markets,” she said. “People don’t know the power of our infrastructure. There’s huge opportunity here because of it.” Fiber optics is available throughout most of the Brainerd Lakes Area, including commercial areas and building sites. Real estate in the market for companies moving into the area is diverse and available, including shovel-ready building sites for companies looking to build. The area also has an inventory of existing office buildings

Janelle Riley

Steve Christenson

that are move-in ready. One of the biggest real estate success stories in the Brainerd Lakes Area involves Ascensus, which is the largest independent retirement and college savings services provider in the country. The company has nearly 1,600 associates with nearly one-third of them based in Brained to provide 401(k) plan recordkeeping for employers, designs legal and consumer content for its programs, offers education and consulting on retirement and savings services, and develops and supports related software. Ascensus’ employees were scattered

throughout Brainerd and Baxter in four different buildings, including an old Pamida store that the company gutted and renovated. While weighing its options for moving the rest of the employees into one building, Steve Christenson, executive vice president, took a page out of the same playbook and renovated an empty JC Penney store in the East Brainerd Mall, creating office space in the two-story building and developing a campus-like setting for the company’s headquarters. The building is across the street from its Pamida store location, making it easy for employees to move between

August 2016

the two buildings. Christenson said it’s not a perfect solution, but using the JC Penney building killed two birds with one stone: It created a large, airy and comfortable workspace for employees, and it made use of a vacant building that had been empty for some time. Christenson has also been involved in the Tech Ready initiative, and has benefited from the success that the program has had. Tech Ready is focused on promoting growth in the area’s tech sector. That’s being accomplished through marketing efforts as well as ensuring that the area has the infrastructure to support tech companies. Tech Ready also creates a local workforce. Recruiting tech professionals to the area is a goal of the initiative, along with developing a homegrown workforce. BLAEDC, Ascensus and others who championed Tech Ready, worked with Brainerd Senior High School and Central Lakes College (CLC) to develop technology curricula and, in the case of CLC, technology programs that prepare students for technology careers. Meanwhile, the list of tech companies moving to or expanding in Silicon Lakes continues to grow: Glynlyon, Micronet, Gullview Technologies, Landis + Gyr, Consolidated Telecommunications Co., Stromberg Technologies, and the list goes on.

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Minnesota Real Estate Journal

August 2016

Great River Energy creates program to identify sites best suited for data center development

s a cooperative, Great River Energy maintains a deep commitment to the communities it serves, which cover more than two-thirds of Minnesota. This commitment includes supporting the economic vitality of those communities through a variety of resources such as financing, site selection assistance and infrastructure development. These services provide opportunities for rural Minnesota that may not occur without the aid of an electric cooperative. Great River Energy’s economic development services team continuously looks for ways to spark growth in its member cooperatives’ service territories and, in 2013, identified data centers as an opportunity to do just that. Data centers are good customers for electric cooperatives in that they draw electricity in a steady, consistent manner, which helps the co-op with resource planning and ensures existing assets are put to the highest and best use. After hosting a “Data Center 101” training seminar in 2013 for its 28 members and community economic development partners, Great River Energy’s economic development serv-

ices team discovered that existing programs for site assessment in Minnesota did not have a strong enough focus on data centers. So they created one. Enlisting the assistance of Deloitte Consulting’s Real Estate & Location Strategy practice, the team designed a data center site assessment and tiered designation program that launched in 2014. The consultants helped establish evaluation criteria and program parameters, then the Great River Energy team worked with its member cooperatives to identify, evaluate and rank developable sites in their area. “This project has the potential to impact the communities where these sites are located, and the economic development organizations that are representing these sites to different site selectors and businesses,” said Erin Sparks, economic development services specialist at Great River Energy. “These designations really help to make the land more marketable and an easier sell for potential projects that are looking at the region.” The group was “thoroughly impressed” with the response it received from communities and organizations that submitted sites for inclu-

sion in the program. “The list of criteria was very involved and required a lot of time as well as a financial commitment from those entities, and a lot of detailed work went into our review,” Sparks said. In the end, sites were narrowed down to a handful that the team felt were ready for an on-site visit with Great River Energy and Deloitte consulting representatives. Following daylong visits in each community, including a tour of available sites and meetings with community leaders and infrastructure providers, the group evaluated certain sites as “primary” or “secondary,” based on their ability to meet the necessary criteria. Primary sites meet or exceed all program requirements while secondary sites show strong potential but require additional or updated information. All of the primary and secondary sites are well positioned to take advantage of the many reasons Minnesota is viewed as a prime location for data center development: state sales tax exemption, highly reliable but low-cost energy and a currently underserved data center market. The state’s colder

climate also cuts down on annual cooling costs – one of the largest expenses for data centers. The Economic Development Association of Minnesota (EDAM) recognized Great River Energy’s economic development services department for its innovation, professionalism, collaboration and impact in creating this program. The team – which includes Tom Lambrecht, manager; Jeff Borling, economic development services lead; and Sparks – was presented with EDAM’s Economic Development Marketing Award earlier this year. The award recognizes an organization’s efforts in economic development marketing for areas such as talent attraction, business recruitment, tourism, community/regional branding or other marketing priorities. “We’ve been able to do a lot of good with this program so far, especially in understanding how it can help us attract additional data centers to Minnesota,” Lambrecht said. To view the list of sites currently available for data center development as well as their specs, visit econdev.greatriverenergy.com/datacenters.

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Minnesota Real Estate Journal

August 2016

Vikings, Kraus-Anderson start construction of new training facility and headquarters near Minneapolis by Dan Rafter

he Minnesota Vikings began construction earlier this week on their new practice facility and team headquarters. If all goes according to plan, the Vikings’ new campus in Eagan, Minnesota, will open in March of 2018. Kraus-Anderson Construction Company is the construction manager of the practice facility and headquarters, while Crawford Architects is the architecture company that designed the facilities’ plans. “We are excited to get underway with the Vikings headquarters project,” said Kraus-Anderson Construction Company’s chief operating officer Al Gerhardt in a statement. “We are committed to delivering this project safely and on time and on budget.” Construction on the practice facility and headquarters building follows the recent opening of U.S. Bank Stadium in Minneapolis, the NFL Vikings’ new stadium and a centerpiece of the mas-

sive Downtown East mixed-use project spearheaded by Ryan Companies US. Mark Wilf, owner and president of the team, said that these facilities will provide the Vikings with all the tools they need to attract top players and become an even more financially successful organization.

“Constructing this world-class facility futhers our goals of building this football team for sustained success, developing long-term business relationships and ensuring our organization remains a strong community partner,” Wilf said in a statement. Other partners in the project are Twin Cities Orthopedics — who are

sponsoring the facilities and have received naming rights for its efforts — and the city of Eagan. The facilities will be known as the Twin Cities Orthopedics Performance Center and TCO Stadium. The new Vikings campus, about 40 acres, will include new administrative Vikings to page 20

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Minnesota Real Estate Journal

August 2016

Kraus-Anderson completes $4.8 million University of Minnesota Bee Research Lab

raus-Anderson Construction Company has completed construction on a new $4.8 million bee research facility at the University of Minnesota. Located at 1634 Gortner Avenue on the university’s St. Paul campus, the UMN Bee Research Laboratory will facilitate groundbreaking work on bee health and biodiversity. Designed by Minneapolis-based Alliiance, the 10,875-square foot academic research laboratory consolidates lab space, honey extraction, observation hive space, offices and equipment space. The state-of-the-art UMN Bee Research Laboratory also centralizes and facilitates the important bee research projects currently underway at the university. The facility expands and enhances the group’s internationally recognized research and teaching program and provides opportunities for enhanced interdisciplinary and international collaborations. “At the University of Minnesota, we’re discovering solutions every day to protect bees, which, in turn, will help to protect our food supply and human health,” said Professor Marla Spivak, entomologist and honey bee expert at

New state-of-the-art academic research laboratory to facilitate groundbreaking work on bee health and biodiversity. the University of Minnesota. “Together, we can protect American agriculture and the food we eat every day by helping the honey bee get back on its own

six feet.” The B3 project is aiming for Minnesota Sustainable Building 2030, achieving energy performance that

maintains a 60 percent reduction in energy use from other buildings of its type.

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Hotels From page 1

here. We have good leisure and corporate traffic generators in this market.” A recent report by Cushman & Wakefield/NorthMarq said as of July of this year, the year-to-date occupancy rate in Twin Cities’ hotels stool at 63.2 percent. Pricing power, though, is especially impressive, with Cushman & Wakefield/NorthMarq reporting that the Twin Cities’ average daily rate increased 4.2 percent to $110.06. Revenue per available room grew 4.1 percent to $69.51. Developers are busy in this sector, with the report saying that companies as of the middle of the summer had more than 5,600 hotel rooms in various stages of development in the Twin Cities region. Of this number, about 2,400 new rooms are being added to downtown Minneapolis. Significant hotel projects in the Twin Cities market include the Radisson Red developed by Ryan Cos., a Hyatt Centric by Mortenson Development and Marriot Moxy by Graves Hospitality. The Bloomington/Mall of America hospitality market remains strong, too, with developers in the process of adding 788 new rooms to the area. Hotel projects here include the recent-

Minnesota Real Estate Journal

ly completed JW Marriott by Mortenson Development and Hyatt Regency by McGough along with the still-indevelopment InterContinental by Graves Hospitality and AC Hotel by Marriott by Terratron, Inc. St. Paul is also experiencing a miniboom, with Cushman & Wakefield/NorthMarq reporting that developers are working on 400 new rooms in the city. This includes Opus Development’s Radisson Red at the Seven Corners Gateway location and Opus Development’s and Greco’s Hamption Inn & Suites at the Seven Corners Hardware site. Thanks to the increasing demand for hotel rooms in the Twin Cities, owners of these properties have been able to push up their room rates, Thomas said. This has been especially true this summer, as Minneapolis/St. Paul hotel operators take advantage of the increasing number of tourists who have visited the area this season, Thomas said. Some types of hotels, though, are seeing even more business than are others. Thomas pointed to the growing number of limited-service hotels serving the Minneapolis/St. Paul area. This segment of the hospitality business, as it is across the country, is growing at a fast clip, as hoteliers realize that they can save a significant amount of

money, while still attracting tourists and business travelers, by operating hotels that don’t come with all the amenities that full-service properties offer. Limited-service hotels don’t offer attached restaurants. The only food service they might provide is a continental-type breakfast – usually free – each morning. Hotels such as Holiday Inn Express and Hampton Inn are a good example of this type of property, Thomas said. “Fewer and fewer are building the full-service hotels with restaurants attached to them,” Thomas said. “There are better margins in the limited-service end of the industry. Fewer full-service hotels are being built across the country today. There are also fewer headaches in that end of the busiVikings from page 16

offices, an outdoor stadium with the capacity to seat 6,000, five outdoor practice fields, outdoor training areas and an indoor practice facility. The project also includes a media center, expanded locker room, cardiovascular and specialized speed rooms, hydrotherapy room, team auditorium and player meeting rooms. The performance center and stadi-

August 2016

ness because you don’t have to worry about all that food service. You don’t have to hire people to staff a restaurant.” Thomas said that the future of the lodging industry in Minneapolis and St. Paul looks strong. That’s because there is so much activity taking place in the region today. The NFL’s Minnesota Vikings have a new stadium, of course, and that is inspiring additional commercial development, which, in turn, is bringing in the tourists. “There is so much activity in downtown Minneapolis right now. It is impressive to see,” Thomas said. “The hotel industry is filling holes throughout the market where there is a lodging void.”

um will also be available to youth, high school and amateur athletics and other community events. Twin Cities Orthopedics has also announced that it will open an 88,000-square-foot full-service orthopedics center on the Eagan campus.

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Minnesota Real Estate Journal News from page 12

ice machine, and medical gas supply. In addition to Allina WestHealth, Ryan provides building maintenance services for three additional Allina properties including Allina Technical Center, Anoka, MN; Midtown Exchange, Minneapolis, MN; Allina West Gate, Minneapolis, MN. “Allina has been a long-time customer and we are pleased to be expanding our services and partnership,” said Jeff Steinke, Ryan’s Regional Director

of Management. “Ryan approaches every project from the owner’s perspective and focuses on their goals to drive lasting value. The Allina WestHealth business is a testament to Ryan’s growing healthcare portfolio.” As a builder, manager, and owner of a variety of building types for more than 75 years, Ryan understands all aspects of operating a property in alignment with our customers’ goals and priorities. Our building services team specializes in building operating systems and understands how each repair, project or

capital improvement can impact a facility’s overall performance and value.

Grachek Sells New Brighton Facility ACKERBERG announced that Broker Associate Cory Miller has represented local real estate investment firm, Grachek New Brighton, LLC, in the sale of a 60,600 square foot office/warehouse building located at 1451 1st Avenue NW, New Brighton, Minnesota to Big River New Brighton, LLC. Nick Carmichael of Capital Commercial Partners, LLC, represented the buyer. Big River New Brighton, LLC, will continue to lease and manage the property. Grachek New Brighton, LLC, is repositioning their portfolio to include other classes of assets.

MARCUS & MILLICHAP ARRANGES THE SALE OF A 16-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 Jacob's Square Apartments, a 16-unit apartment property located in Saint Cloud, Minnesota, according to Craig Patterson, regional manager of the firm’s Minneapolis office. The asset sold for $1,041,000. Chris Collins, Adam Haydon, Evan Miller, Mox Gunderson, Dan Linnell and Josh Talberg, investment specialists in Marcus & Millichap’s Minneapolis office, had the exclusive listing to market the property on behalf of the seller, a private investor. The buyer, a private investor, was also secured and represented by the listing team. Speaking with Mr. Collins, “Jacob’s Square features large apartment units which differentiates itself from neighboring competitors by offering it’s tenants more space to enjoy. The new owners were excited to purchase Jacob’s Square as they feel it will be a stable asset to their growing Saint Cloud portfolio.” Jacob's Square Apartments is located at 835 Driftwood Drive in Saint Cloud, Minnesota. The property consists of one one-bedroom unit, 1 two-bedroom units, and four three-bedroom units. A portion of the units feature large walkout patios as well as a second bathroom. Jacob’s Square appeals to young families as it is within walking distance to Westwood Elementary School.

August 2016

MARCUS & MILLICHAP ARRANGES THE SALE OF A 12-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 Stevens Crest, a 12-unit apartment property located in Saint Paul, Minnesota, according to Craig Patterson, Regional Manager of the firm’s Minneapolis office. The asset sold for $901,800. Evan Miller, Mox Gunderson, Dan Linnell, Josh Talberg and Abe Roberts, investment specialists in Marcus & Millichap’s Minneapolis office, had the exclusive listing to market the property on behalf of the seller, a private investor. The buyer, a private investor, was also secured and represented by the listing team. Speaking with Mr. Miller, “Three weeks of marketing generated 12 tours, multiple offers, and capital from the West Coast that drove this property to trade above list price, ultimately selling for $75,150 per door, or a 7.1 percent capitalization rate.” Stevens Crest is located at 60 Stevens Street West in Saint Paul, Minnesota. Constructed in 1967, this building consists of two one-bedroom/one-bathroom units and 10 two-bedroom/one-bathroom units. Amenities include on-site laundry, storage lockers, underground parking and off-street parking.

MARCUS & MILLICHAP ARRANGES THE SALE OF A 24-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 East Side Stories, a 24-unit apartment property located in Alexandria, Minnesota, according to Craig Patterson, Regional Manager of the firm’s Minneapolis office. The asset sold for $950,000. Chris Collins, Mox Gunderson, Dan Linnell and Josh Talberg, investment specialists in Marcus & Millichap’s Minneapolis office, had the exclusive listing to market the property on behalf of the seller, a limited liability company. The buyer, a limited liability company, was also secured and represented by the listing team.