VOLUME 35, NUMBER 2
©2019 Real Estate Publishing Corporation
February 2019
Development Activity Continues at Strong Pace in Washington County
By Liz Wolf
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rom new upscale apartments and affordable senior housing to new office space and industrial projects, strong development activity continues across Washington County, also known as “East Metro.” The county stretches 41 miles from Forest Lake to Cottage Grove, and Chris Eng says he can connect a developer with any of the county’s 33 East Metro
communities. Eng is the county’s first-ever economic development director, joining the Washington County Community Development Agency (CDA) in 2016. He says the East Metro has a diverse inventory of untapped land. “I want to make it easy for site selectors,” Eng says. “You don’t have to go it alone. If you’re looking for opportunities in the East Metro, I can put you in touch with any of the communities with just one phone call.” Here’s an update on some of the development occurring in Washington County:
Cottage Grove One project that’s working its way through the Cottage Grove city-approval process is the redevelopment of the 3-acre former city hall site. The project calls for 108 units of market-rate apartments. Cottage Grove Senior Planner John Burbank says the proposed two-story, 24,000-square-foot multifamily building would be an $18.6 million capital investment. The developer is Minneapolis-based DK Design and Development. Washington Cty to page 10
Opportunity Zone Deals Heating Up by Nik Linde, Minnesota Real Estate Journal #mrejoppzones, #oppzonesinfo
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et to be perhaps the biggest driver in real estate since the early 1980’s, Opportunity Zones present a massive new funding source and that tool now appears primed and ready for 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. Zachary Robins, attorney at Messerli & Kramer, thinks big deals will happen soon. “Between March and June 2019, I predict that will be the most active time for these opportunity deals. This will be an exciting time and it’s going to be very productive.” Robins notes the recent changes in
advertising will accelerate deals as well. “The new general solicitation rule 506(c) allows for public advertising to maximize the reach of these zones. Not all developments can be named publicly, so this is huge for commercial real estate.” Robins and Duane Lund, CEO of NAI Legacy, are currently involved with the Birdtown Flats in Robbinsdale. “These developments are very exciting, but it’s important to remember that opportunity zones Opportunity Zones to page 8
February 2019
Minnesota Real Estate Journal
Featured Stories
FEBRUARY 2019 • VOLUME 35, NUMBER 2
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Departments PEOPLE ON THE MOVE 4 CLOSINGS
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DEVELOPMENT ACTIVITY CONTINUES AT STRONG PACE IN WASHINGTON COUNTY OPPORTUNITY ZONE DEALS HEATING UP
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BEHIND THE SCENES: MINNESOTA CRE PROS USE NEW TECH TOOLS TO BOOST PRODUCTIVITY, ACCELERATE DEALS
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Minnesota Real Estate Journal (ISSN 08932255) Copyright © 2019 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. Monthly Business and Editorial Offices: 7767 Elm Creek Boulevard, Suite 210, Maple Grove, MN 55369 Accounting and Circulation Offices: Jeff Johnson, 7767 Elm Creek Boulevard, Suite 210, Maple Grove, MN 55369. Call 952-885-0815 to subscribe. For more information call: 952-885-0815. Periodical postage paid at Maple Grove and additional mailing offices. POSTMASTER: Send address changes to Minnesota Real Estate Journal, 7767 Elm Creek Boulevard, Suite 210, Maple Grove, MN 55369 ©2019 Real Estate Publishing Corporation. No part of this publication may be reproduced without the written permission of the publisher.
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Mike Sims steps down as Principal of Mid-America Real Estate – MN, LLC Mid-America Real Estate – Minnesota congratulates former Principal/Director of Tenant Representation Mike Sims on his new venture as a Developer with Launch Properties. Sims departed Mid-America to join Launch where he will work to identify retail opportunities Sims for the commercial real estate development-focused firm. The relationship between the companies will further strengthen both Mid-America and Launch within the Midwest’s commercial real estate industry “I want to give a heartfelt thank you to my colleagues for their commitment to making Mid-America Real Estate – Minnesota the premier retail real estate firm in our industry, I could not be prouder,” said Mike Sims. “The relationships that have been forged are invaluable and I look forward to working with Mid-America in my new role as a developer.” Sims is a 30-year real estate veteran, founding Mid-America Real Estate – Minnesota, LLC in 2008 as Principal and Director of Tenant Representation. Prior to his time with Mid-America, Sims worked for the retail brokerage arm of United Properties/Northmarq Real Estate Group. “We are incredibly thankful for Mike’s many years of friendship, service and insight in establishing MidAmerica Real Estate – Minnesota as the leader in retail real estate,” said Principal/Managing Director Doug Sailor. “We look forward to expanding our relationship with Mike in this next chapter of his esteemed career in our market.” Principal/Senior Vice President Stefanie Meyer adds, “It has been a pleasure and honor working alongside Mike over the past 23 years on the Tenant Representation team. His dedication to the industry is remarkable. We will miss his contagious personality and mentorship.”
Angela Demonte, LEED AP joins Avison Young CoStar’s Power Broker Award recipient from CBRE joins Avison Young Minneapolis, MN — Mark Evenson, Avison Young, Principal and Managing Director of the firm’s Minneapolis office, announced today the strategic hiring of commercial real estate proDemonte fessional, Angela Demonte, LEED AP. Effective immediately, Demonte becomes Senior Associate in the Minneapolis office. Demonte will join veteran commercial real estate professional Jim Rock, CCIM, a Principal at Avison Young whose focus is Capital Markets with a specialty in Retail. Working as a team, they will focus on new-business strategy, client services and continue their successful track record of expanding the Capital Markets presence in Minnesota, the Midwest and key states around the U.S. “We are delighted to have Angela join the Minneapolis office of Avison Young,” comments Mark Evenson. “Her experience and her approach with her clients will make her a valuable member of our team. Angela’s talents and expertise will appreciably contribute to our on-going success in servicing our growing list of clients and customers.” Angela Demonte brings to Avison Young over 14 years of experience and expertise in the commercial real estate arena. This includes investment sales, tenant representation, disposition assignments, leasing, strategic planning, redevelopment and site planning, as well as environmental regulation management. Prior to joining Avison Young, Angela worked at CBRE, providing Advisory and Transaction Services with their Brokerage group for the last eight years. Prior to CBRE, she ran her own business specializing in green building and sustainability consulting services for commercial real estate. She holds a Bachelor of Arts Degree in Natural Science and Environmental Studies from Harvard University. She has served as a guest speaker for many notable Com-
February 2019
mercial Real Estate organizations and events including: Minnesota Real Estate Journal, The CORE Training, Inc (Continuing Education Units for Commercial Real Estate Professionals), CBRE Management Forum, and the Greater Minneapolis Building Owners and Managers Association (BOMA). “I saw the Avison Young platform as a springboard to develop and foster meaningful business relationships,” says Demonte. “I recognized that the opportunity to join Avison Young and partner with a Partnership.
The Opus Group® Announces Promotion of Tom Becker to Regional Vice President The Opus Group (Opus) is pleased to announce the recent promotion of Tom Becker to regional vice president of construction and project management. In this role, Tom will manage the Minneapolis and Des Moines construction operations while also providing leadership to a team of project managers working across multiple sectors. Additionally, he will be responsible for strategic planning, resource allocation and other leadership activities including oversight of all wood-framed residential projects across the country. “Tom’s impact during his tenure at Opus has been directly visible not only in projects across the Twin Cities,” said Dave Bangasser, president and CEO of construction and project management at Opus. “His efforts to lead our business into new approaches and territories have positioned us well to succeed and will continue to do so as his leadership and collaborative nature drive results in Minnesota and Iowa.” Tom has been part of the Opus team for 25 years. He has been involved in highly visible multi-family and student housing projects, including Variant Luxury Mixed-Use Development, Oxbō Luxury Mixed-Use Development, Venue at Dinkytown and VÉLO®. Additionally, Tom has taken an active role in helping grow and expand the business’ portfolio in that time. In 2016, he served as the interim regional vice president of Opus’ Indianapolis office. He is credited with leading Opus’ entry People to page 14
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CBRE Multifamily Arranges Sale of 272-Unit Rental Townhomes in Lakeville Sale takes place in one of Minnesota’s best commercial markets, with a growingpopulation of 63,000 and little rental competition in the submarket CBRE Multifamily represented Healey Ramme Company in the sale and contribution of Southfork Townhomes, a 272-unit multifamily community at 18001 Jubilee Way, to Investors Real Estate Trust. Healey Ramme Company was represented by the Minneapolis-based team of Keith Collins, Abe Appert and Ted Abramson. Constructed in 1988 and 1990, Southfork is located in Lakeville adjacent to I-35W, allowing quick access to downtown Minneapolis and St. Paul, with both the Mall of America and the Minneapolis-St. Paul International Airport less than 15 minutes away. The townhomes provide a quiet and
Minnesota Real Estate Journal
relaxing family-friendly lifestyle with many amenities offered, including a clubhouse, sun deck, a childrens play lot, private entries, walk-in closets, a swimming pool, attached garages, BBQ grills, nearby wildlife trails, and so much more. Seventy-five percent of the 272 units are two and three-bedroom properties, while the remaining 25 percent are one-bedroom properties.
Dougherty Mortgage LLC closes $9.5 million Fannie Mae loan for Tuscano Village Apartments Dougherty Mortgage recently closed a $9.5 million Fannie Mae loan for the acquisition financing of Tuscano Village Apartments, a 119-unit market rate multifamily apartment property located in Glendale, Arizona. The 12-year term, 30-year amortization loan was arranged for borrower 6816 W. Bethany Home Rd PCPRE, LLC through a partnership
with Pinnacle Financial Group, Inc., a Marcus & Millichap Company.
Dougherty Mortgage LLC closes $12.2 million Fannie Mae loan for Park View Villas Dougherty Mortgage recently closed a $12.2 million Fannie Mae loan for the refinancing of Park View Villas, a 107unit market rate multifamily Senior Independent/Assisted Living property located in Port Angeles, Washington. The Property includes a one-story main building, two 3-story residential buildings (87 units), five cottages (20 units) and eight garage buildings. The 7-year term loan was arranged for borrower Park View Lane Investors, LLC.
February 2019
WeWork Signs Lease at United Properties' The Nordic Building WeWork adds North Loop location to its expanding Twin Cities business WeWork today announced it is expanding its Minneapolis presence with a new 60,000 square feet location at United Properties' The Nordic, a mixed-use development currently under construction at 729 Washington Ave North in the North Loop neighborhood. WeWork will occupy floors five through seven of The Nordic's ten-story, 200,000 sq. ft. retail and mixed-use project. WeWork members will receive 24/7 building access, micro-roasted coffee, community events and business services, as well as a communal outdoor terrace on the sixth floor. This will be WeWork's third location in Minneapolis, adding to its current News to page 18
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February 2019
Opportunity Zones From page 1
still operate with the same mechanics of real estate, the fundamentals are still in place.” Lund also speaks highly of this new capital source. “This is one of the most beneficial 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 excit-
ed about. Investors in these Opportunity Zones can defer tax from all prior gains using a Qualified Oppor-
tunity 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.” Philip Colton, Chair of the Securities and Corporate Finance Practice Group at Winthrop and Weinstine, with thirty-five plus years of experience in Real Estate Funds and REITs, thinks it’s crucial to take action sooner than later. “Like many real estate properties, the first set of deals are likely the best deals. There’s a better chance of a large return. All indicators are that this will allow more flexibility, and many will jump on the bandwagon.” However, many are unclear about the rules around opportunity zones, Colton adds “Businesses are weary to take action until all the rules are out on opportunity zones. People are on the sidelines waiting on the rules, waiting for unanswered questions. If there was more information posted by the treasury that would benefit us all, it needs consistent clarity.” 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 exclusion 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 could lead to countless local and national partnerships on Opportunity Zone properties. Of the 128 approved low-income 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. 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 in the Twin Cities Metro 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.
February 2019
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Behind the Scenes: Minnesota CRE Pros Use New Tech Tools to Boost Productivity, Accelerate Deals By Erik Dolan-Del Vecchio
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ome commercial real estate brokers consider technology a necessary evil or, worse, an impediment to productivity. Not Steven Buss. He’s head of the Capital Markets group for JLL in Minneapolis, where he and his team facilitate all manner of office and multifamily investment sales and acquisitions. Buss, formerly with CBRE, makes technology work for him. In fact, he makes it work hard. He uses Apto, the commercial real estate broker software, to manage his pipeline of clients, prospects, properties and deal information. “Your pipeline is your life,” Buss says. “With Apto, I connect things together — people and properties, owners and properties, buyers and listings. That’s the foundational part of doing business. I can look at conversations and information and see my history with people, including what
they’ve invested in, and what they liked and didn’t like about different opportunities we presented to them.” From all the information Buss nets out “higher probability prospects,” in other words, those investors most likely to be interested in a deal, or in the case of a prospective seller, who he should be contacting because he’s identified the decisionmaker connected to the property. One of the reasons Buss chose Apto to manage people and property information is because the software integrates with Real Capital Markets, an online platform that aggregates institutional quality listed properties and document management for the marketing period and sale of investment real estate. “Real Capital Markets Virtual Deal Rooms make life easier for the people you’re doing business with… buyers of clients’ properties,” Buss says. “Reducing friction in their life and your time spend with them frees up time for them, and for you to talk to clients about markets and deals.”
Buss uploads prospect lists from Apto to RCM, and uses RCM for broad electronic distribution of documents. Records update in Apto to reflect who opened a property email, signed a confidentiality agreement, and reviewed an offering memorandum or other deal documentation. Buss notes that JLL is now implementing a proprietary system for managing and maintaining pipeline information.
A Faster “On-Ramp” to Expose Properties in the Market and Share Information with Buyers Cameron Peterson, a senior advisor at SVN l Northco Real Estate Services in Minneapolis, also uses technology, including online information services, to propel his practice forward. Peterson’s firm leads the national golf and resort properties group for SVN in the U.S. For property marketing, his team creates and updates marketing brochures using Buildout, which generates a website and offering packages
for every property, and provides a forum to share information electronically with confidentiality. “The onramp to get people documents and get sign-offs is really fast now,” he says. With Buildout, Peterson’s team can syndicate listings to multiple platforms in real time, exposing properties widely in short order. He cites CREXi, the relatively new online marketplace for sale and lease properties, as a notable source of leads for his practice. SVN l Northco also provides CoStar with updated property availability information on a regular basis. CoStar is the most widely used real estate information service in the U.S.
Technology as the “Great Equalizer” Between Large and Small Firms Standard Commercial is a boutique investment sales and tenant rep brokerage in the Twin Cities, handing assignments for corporate office and industrial users, and sales that are mostly under $20 million. Harrison Wagenseil, principal, says, Tech to page 18
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nitrogen and argon that’s used by many industrial and medical facilities. In retail, the former Home Depot building -- located on East Point Douglas Road -- has been redeveloped for new tenants including TJ Maxx , Home Goods stores and Planet Fitness. Meanwhile, the city approved a master-planning process for the “Cottage View” area, which Burbank says will be the city’s next commercial growth are. The city received a grant through Washington County to develop schematics as to how that site could be redeveloped. It’s the site of the former Cottage View Drive-In theater, which closed in 2012.
Washington Cty From page 1
“They’re working on their finances and the action [by the city] on Feb. 12th extended their letter of intent,” Burbank says. Della Kolpin, president of DK Design and Development, says Cottage Grove hasn’t had a new market-rate housing development for years. “I think since 1993,” she says. “They have a growing need for market-rate apartments within their city. We feel this is a great site. It’s close to schools, recreational areas, the library and has nearby amenities including the Hy-Vee development.” Kolpin says her team is meeting with the city and has done some preliminary site plan reviews. Her goal is to start construction this fall. Initially, plans called for ground-floor commercial space; however, Kolpin says they plan to work with the city to potentially do a comprehensive plan amendment to change it from mixed-use to residential only. “When you look at the market study, the city could use more units than we’re able to provide [because of the size of the site], so we want to try and provide as many units as possible,” she says.
Forest Lake Chris Eng “We would we love to do mixed use. Absolutely. If it was twice the size.” In other development activity, the city of Cottage Grove owns a site on Hardwood Avenue that it’s marketing to hotel developers. The city conducted a market study report with Hospitality Marketers International and concluded the site could support an 80-room, limited-service, mid-scale hotel. In industrial development, Airgas USA LLC acquired land in the Cottage Grove Industrial Park to build an air separation plant to produce liquid oxygen,
One recent project making headlines in Forest Lake is the new $22 million Lighthouse Lofts, a five-story mixeduse redevelopment of the former Forest Lake City Hall site. The developer is Gaughan Cos. The project includes 103 luxury apartments, a 3,300-square-foot Mallards Restaurant, a roof-top deck and clubroom with views of the lake, underground parking, a pet wash and a 4,000square foot Snap Fitness. The project opened last fall. Dan Hebert, senior vice president of commercial accounts for Gaughan Cos., says it’s the type of high-end, fully
February 2019
amenitized apartment project that renters would find in downtown Minneapolis. The city sold the city hall building to Gaughan for $1, and the city council approved $1.34 million in tax increment financing for the redevelopment. “It’s really a wonderful improvement in downtown Forest Lake,” Eng says. Hebert says the project was “somewhat in their backyard,” as the developer is based in Forest Lake. “We had a breakout session with the city staff about how we could redevelop it and help those guys kind of start to change the downtown of Forest Lake and provide more rooftops to help support retail downtown,” Hebert says. “We gave them our concepts and our ideas and they bought into it, and they were willing to give the land for $1 and utilize TIF on the project.” The project was about 65 percent leased at opening, Hebert says. “We’re sitting with about 10 vacancies right now,” he says, adding that the complex is attracting both baby boomers and millenials. “The bigger picture here for Forest Lake is really a continuation of trying to reinvest in downtown,” Hebert adds. “The project has been well-received by the amount of preleasing we’ve had, so Washington Cty to next page
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we’re looking for other people to reinvest in downtown.” The new Forest Lake City Center was developed on U.S. Highway 61 in 2014, and city employees -- including the fire and police departments -moved to that location.
Hugo In Hugo, the rapidly growing Schwieters Properties LLC is expanding in the city’s Bald Eagle Industrial Park by adding a 145,000-square-foot manufacturing facility that will be open by March. Upon completion, Schwieters will use the new building -- at the southwest quadrant of 140th Street and Fenway Avenue -- to manufacture floor panels and roof trusses as an expansion of their existing business in Hugo. The company provides preassembled wall and floor panels and trusses to Twin Cities-area homebuilders as well as commercial and multifamily developers. Rachel Juba, community development director at the city of Hugo, says the company’s expansion plans include this new manufacturing building as well as a 45,000-square-foot warehouse building and two smaller office/warehouse buildings of 12,000 and 15,000 square feet that will be built in future phases, all of which have pre-
Lighthouse Lofts in Forest Lake
liminary approved. Schwieters already has four existing buildings in Hugo, and this newest building is directly across the street from its campus headquarters. A “story behind the story” is that the future of rail had been uncertain at Hugo’s industrial park. Minnesota Commercial Railroad operates the rail. However, the operator recently was able to secure state funding to repair
and upgrade a 6.5-mile section of the freight line from White Bear Lake to its last stop at the Hugo park. Juba says that state funding was one of the reasons that Schwieters kicked off its expansion. “That was a huge deal. That provides them an option for import and export of products,” she says. Also in Hugo, MWF Properties is going through the approval process for
a 45-unit affordable workforce housing project, northeast of the Festival Foods Shopping Center. Juba says the developer received tax credits through Washington County, and this will be the city’s first affordable housing project. Also, Juba says quite a bit of development is occurring along Highway 61 including TGK Automotive Specialist Washington Cty to next page
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February 2019
Washington Cty from previous page
recently built a new 12,000-square-foot headquarters and the new Good Life Senior Living housing project opened. In addition, O’Reilly Auto Parts pulled a building permit earlier this year for a site on Highway 61. In addition, the city owns 4.3 acres on Highway 61 that it’s marketing for sale. It could be used for a mixed-used development with a restaurant/entertainment use, as well as commercial, boutique retail, office and housing. “We want it to be something that’s a destination or a restaurant user that community members have been asking for,” Juba says. If development criteria are met, a developer is eligible to purchase the property for $1.
Oakdale Oakdale is in the planning phase of a 206-acre development off Interstate 694 near 36th Street, on property owned by 3M Co. The area had been planned for a multi-use business and industrial park. However, 3M is no longer interested in developing the property and is selling it. The city’s plans are for the site to become a large-scale residential project. In other future project, a site located west of Tanners Lake, near Interstate 94 and Century Avenue, could become a
Stillwater Commons
mixed-use development. And there’s also development opportunity around the upgraded intersection of Highway 36 and Hadley Avenue where there are several big parcels of land. Bob Streetar, community development director for Oakdale, says at this time there’s no change in the status of these projects, but they remain active.
Stillwater The old Stillwater Lift Bridge closed in August 2017, and the new St. Croix River Crossing is getting a lot of attention for the uptick in development in downtown Stillwater. “Most of our commercial investment has really been concentrated in the
downtown core,” says Stillwater City Planner Abbi Jo Wittman. The new bridge has helped eliminate a lot of the commuter traffic that was trying to get through downtown Stillwater, which would often cause backups. But Wittman says it’s not only the bridge attracting new business and peoWashington Cty to next page
February 2019
ple to Stillwater. The Brown’s Creek State Trail opened so bicyclists can ride from St. Paul to Stillwater. “It’s the new bridge, the closing of the historical lift bridge, the reduction of traffic, the opening of the trails – it all came together at one time and it’s big for downtown Stillwater,” she says. Several hotels have opened downtown including the 40-room boutique Lora hotel, which is the renovation of the former Joseph Wolf Brewery complex on Main Street. It’s the city’s first new hotel in more than two decades. Also, the 52-room Hotel Crosby at 232 Main St. N. in downtown opened last fall, and the Water Street Inn broke ground in October on a 20-room expansion, which will be completed this summer. In other downtown activity, there are plans to reuse the historic National Guard Armory in downtown. Developer Matt Wolf, president of CVII Holdings, acquired the property with plans for an adaptive reuse that calls for mixed-use residential and commercial space. It was reported that it could be renovated into luxury apartments and a draft distillery. Outside of downtown, the Goodman Group is developing a senior-living complex called The Lakes at Stillwater. Also, a new 13,500-square-foot com-
Minnesota Real Estate Journal
mercial office building called Stillwater Commons is being built and will be anchored by Summit Management.
Woodbury Woodbury has a number of multifamily projects underway including the Glen at Valley Creek, a Washington County CDA project that will include 42 units of affordable senior housing. It’s scheduled to open in July.
The Preserve at CityPlace, a 253unit, luxury apartment complex, being developed by Omaha, Neb.-based Commercial Investment Properties (CPI), should break ground in spring. It’s on the CityPlace campus. “That’s an exciting project and will likely be a 16- to 18-month buildout,” says Woodbury City Planner Eric Searles. “It will complete the residential side of the live/work/play aspect of our
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CityPlace development.” CPI also developed the Ascend at Woodbury, which is 305 units of upscale apartments as part of the city’s Urban Village project. And Dominium is developing The Legends of Woodbury, a 216-unit, affordable senior housing development. Construction is expected to be completed in May. In commercial development, Raising Cane’s is opening in March on Radio Drive. A Texas Road House is in the application process for CityPlace. MSP Commercial is developing a new 40,000-square-foot building off I494 at the intersection of Tamarack Road and Weir Drive, in which Summit Orthopedics will be the anchor. Launch Properties is proposing a development at Tamarack Road and Bielenberg Drive, which is going through the application process. It’s a multi-phase commercial project that has a medical pad, hotel pad, credit unit pad, and multi-tenant office pad, Searles says. Also, Aris Clinic is building a new 16,000-square-foot clinic near Woodwinds Hospital campus. And last fall, the 3rd Act Craft Brewery and Goddard School opened in the Urban Village.
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Minnesota Real Estate Journal People from page 4
into wood-framed construction for student, market-rate and senior living housing and now is the company expert in this category. “I am grateful for the opportunity to take on this new role,” said Becker. “As our portfolio continues to expand in the residential, industrial, office and other sectors, we’re able to showcase our team’s ability to design, collaborate and build phenomenal spaces that meet our clients’ goals and vision for the future. I look forward to new challenges and growth opportunities in this role.”
CBRE PROMOTES JEFF JIOVANNAZO TO MANAGING DIRECTOR OF ITS MINNEAPOLIS OFFICE CBRE announced today that Jeff Jiovanazzo has been promoted to Managing Director of the company’s Minneapolis office. Mr. Jiovanazzo has more than 20 years of commercial real Jiovanazzo
estate experience, most recently as Sales Director for CBRE in Minneapolis. “This is a well-deserved promotion for Jeff and I am excited that the next step in his career will be as the leader of our Minneapolis market,” said John Latessa, President of CBRE’s Midwest Division. “I am confident that he will take our Minneapolis operations to new heights.” Mr. Jiovanazzo has been with CBRE since 2015, leading and managing sales professionals in Minneapolis. In 2017, he received the CBRE Sales Management Leadership Award, a national recognition given to the sales director who demonstrates exceptional leadership skills throughout the year. Prior to his role at CBRE, he was a vice president at Colliers International, specializing in industrial sales and leasing in Minneapolis. “Working at CBRE in Minneapolis has been tremendously rewarding and I am excited to take on this new leadership role that will allow me to continue working with our amazing professionals and delivering exceptional outcomes for our clients,” said Mr. Jiovanazzo.
Mr. Jiovanazzo has a B.S. in Financial Economics from Gustavus Adolphus College in St. Peter, Minn.
COLDWELL BANKER COMMERCIAL FISHER GROUP EARNS #1 OFFICE AWARD IN MINNESOTA Coldwell Banker Commercial Fisher Group has been named the 2018 #1 Office in the state of Minnesota for Coldwell Banker Commercial®. This designation is based on Closed Adjusted Gross Commission Income. In addition to the award, President, Broker and Owner, David Schooff CCIM, SIOR holds the #1 salesperson spot in the state of Minnesota. “It is always an honor to be recognized for your achievements within the real estate industry. Much of the success can be attributed to our staff and agents who are consummate professionals both in Greater Mankato and globally,” said Schooff. Schooff has earned the Circle of Excellence honor for the past four consecutive years, placing him in the top 2% of Coldwell Banker Commercial®
February 2019
sales professionals nationwide. This honor is bestowed upon the top-ranking producers among all CBC-affiliated sales professionals* based on their transaction revenue for 2018.
Jason McMillen joins Welsh Construction as Director of Project Management McMillen brings over 26 years of construction project management experience to Welsh February 14, 2019– Welsh Construction is pleased to announce the recent addition of Jason McMillen as Director of Project Management. McMillen will head up major McMillen projects for Welsh Construction and will bring his over 26 years of experience to elevate the construction project management team at Welsh to the next phase of growth. McMillen has worked on many high-profile construction projects in the Minneapolis-St. Paul metro People to page 16
2019 Minnesota Real Estate Awards
Gary Holmes Lifetime Achievement Award Gary Holmes started selling light bulbs door-to-door in Minneapolis at the age of 12. A young entrepreneur, Gary enlisted his Boy Scout troop as a sales force. By age 14, he had earned enough from his light bulb sales to buy his first real estate asset: a set of Minneapolis duplexes. The rest is his legacy. Be there on April 11 when Gary is presented the prestigious lifetime achievement award. Sign-Up for an Individual Seat or Reserve a Table Today! Contact Jay Kodytek • 952-405-7781 • jay.kodytek@resummits.com
2019 Minnesota Real Estate Awards April 11, 2019 Radisson Blu Mall of America 4:30 Cocktail Reception | 5:30 Program Finalists Announced
www.mrej.com/2019Awards #mrejawards
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Minnesota Real Estate Journal
People from page 14
and beyond in his previous positions as Senior Project Manager for Stahl Construction and most recently, JE Dunn Construction, where he managed countless award-winning projects in nearly all commercial real estate sectors including: retail (from Home Depot to Walmart to dozens of highend outlet centers), hospitality (construction of brand-name hotel chains; Extended Stay, Residence Inn, Hyatt and the MSP Airport Hilton), medical (half a dozen HCMC lab remodels) office, (most notably, the Cargill HQ at 12600-12700 Whitewater Drive in Wayzata), as well as a handful of multifamily and education projects. His most prestigious project to date has been his management of the highly anticipated repair and restoration of the Minnesota State Capitol building, which won the ENR Best Government/Public Project Award in 2017. “I’m excited to be joining Welsh Construction because the Welsh culture and project type is a good fit for my experi-
ence.” states McMillen. “We are thrilled to have Jason join us at Welsh Construction. His leadership and vast experience in so many commercial real estate sectors will add great value to our entire team,” says Meghan Huber, Vice President of Welsh Construction.
LHB Announces New Shareholders LHB, Inc. is pleased to announce that Heidi Bringman, Lydia Major, Paul Vogel, Kyle Roddy, and James “Jim” Muehlbauer were elected as LHB Shareholders. Incorporated in 1966, LHB continues to be a privatelyheld, employee-shareholder-owned company. Lydia Major, PLA, LEED AP is an accomplished Landscape Architect and the leader of LHB’s Landscape Architecture & Planning Studio. Lydia works with clients to design vibrant public, commercial, and residential places that benefit the user and the environment. Heidi Bringman, PLA, LEED AP
BD+C, WDCP is a licensed Landscape Architect and Wetland Specialist with over 16 years of experience working in LHB’s Landscape Architecture and Planning Studio. Heidi specializes in public engagement, site and master planning, and the design of trails, parks, and public spaces for a variety of communities and is licensed in both Minnesota and Wisconsin. Paul Vogel, PLS is a professional Land Surveyor and a Leader of LHB’s Duluth Survey Group with over 31 years of surveying experience working with public and private clients. Paul joined LHB in 2007 with 20 years of experience surveying in the Midwest. Paul specializes in creating ALTA/ACSM, boundary, cadastral, topographic, and route surveys, and providing legal descriptions, platting, and project management. James “Jim” Muehlbauer, AIA, NCARB, LEED AP BD+C, a Project Architect, joined LHB in 2016. Jim brought an extensive portfolio of state and local government, healthcare, and
February 2019
education projects. Jim specializes in sustainable design practices and uses his wealth of experience to improve the built environment. Kyle Roddy, PLS is a licensed Professional Land Surveyor and the Leader of LHB’s Minneapolis Survey Group. Kyle joined LHB in 2016 with over 18 years of survey experience providing boundary, topographic, cadastral, and route surveys, ALTA/NSPS Land Title Surveys, subdivision and right-of-way platting, and FEMA floodplain surveys. Kyle manages dayto-day operations of the group as well as provides technical support services to field and office staff.
Topics:
Speakers Include: Scott Smith, President, Fact Right
8:00 am Opportunity Zones Location Overview
George Ashton, Managing Director, LISC
8:25 am Real Estate Opportunities in Opportunity Zones
Duane Lund, CEO, NAI Legacy
9:15 am Legal and Accounting Considerations
Jamie Stolpestad, Managing Partner, Minnesota Opportunity Zone Advisors Susan Hammel, CEO, Cogent Consulting
10:10 am Break
Lisa Holter Ankel, Shareholder, Avisen Legal, P.A.
10:20 Starting or Managing an Opportunity Fund / Fund Qualifications
Larry Fox, Shareholder, Avisen Legal, P.A.
11:00 am Funding a Deal / Partnering with a Fund Sponsor
Jim Lockhart, Partner, Wipfli
11:35 am Investing in Opportunity Zone Fund or Property – Investor Considerations
Danielle Lewis, Tax Manager, Wipfli Terri Thao, Program Director, Nexus Community Partners Dave Higgins, Vice President, Development, McGough Companies
12:00 pm Adjourn and Networking
Zachary Robins, Attorney, Messerli | Kramer
#mrejoppzones #oppzonesinfo Jeff Johnson 952-405-7780 jeff.johnson@resummits.com
Contact
Jay Kodytek 952-405-7781 jay.kodytek@resummits.com
Tony Hallada, Managing Principal, CLA Wealth Advisors Phil Colton, Shareholder, Winthrop & Weinstine Brian Forcier, President, Titanium Partners John McCarthy, Senior Managing Director, Newmark Knight Frank Michael Morrell, SVP New Markets Tax Credit Loan Officer, Sunrise Banks Brad Heitzinger, Special Counsel Attorney, Gray Plant Mooty
www.mrej.com/2019oppZones
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Minnesota Real Estate Journal News from page 6
presence at Capella Tower and 1330 Lagoon in Uptown, totaling more than 200,000 square feet throughout the city. WeWork 729 N Washington Ave is expected to open summer 2019. In January 2019, it was announced that WeWork Labs will be coming to Minneapolis, the first Midwest location for WeWork's innovation platform for early-stage startups. The program complements other partnerships and programs in Minneapolis such as WeWork's Veterans in Residence Program powered by Bunker Labs which provides fullysponsored workspace for veteran-entrepreneurs in 14 cities around the United States. "Since opening our first location in 2017, Minneapolis has welcomed WeWork with open arms. We've formed meaningful partnerships, hosted impactful events and provided our members with a global platform to grow their businesses," said Megan Dodds, Midwest General Manager for WeWork. "We're thrilled to announce WeWork 729 N Washington Ave as our third Minneapolis location and look forward to continued growth in the Twin Cities." WeWork 729 N Washington Ave will provide workspace solutions for businesses of all sizes ranging from a small business to a high-growth start-up to a Fortune 500 company. In fact, 30 percent of the Fortune 500 are WeWork members (globally), and enterprise members make up nearly 30 percent of WeWork's global membership. "WeWork is skilled at creating special environments, and their unique brand of coworking fits the environment we set out to create at The Nordic," said Gordy Stofer, vice president of development for United Properties. "This cuttingedge concept for offices is appealing to not only startups and growing companies, but also to established companies that want different workspace options for their teams." When completed, The Nordic will include office, residential and retail tenants, as well as an outdoor plaza featuring special events programming. "We are confident WeWork's unique community-building amenities like common areas, professional and social events, and access to their global network, will appeal to North Loop residents and be a great addition to The Nordic." Emily Nicoll and Brandon Megal of CBRE represented WeWork in the trans-
action and Tom Tracy, Katie Tufford and Peter Fitzgerald of Cushman & Wakefield represented United Properties.
MARCUS & MILLICHAP ARRANGES THE SALE OF A 65-ROOM HOSPITALITY PROPERTY Marcus & Millichap (NYSE: MMI), a leading commercial real estate investment services firm with offices throughout the United States and Canada, has announced the sale of Country Inn & Suites Fond du Lac, a 65-room hospitality property located in Fond Du Lac, WI, according to Jon Ruzicka, Regional Manager of the firm’s Minneapolis office. Jon Ruzicka, Jake Erickson, and Jared Plamann, investment specialists in Marcus & Millichap’s Minneapolis office and members within the firm’s exclusive National Hospitality Group, had the exclusive listing to market the property on behalf of the seller, a limited liability company. The buyer was also procured by Ruzicka, Erickson, and Plamann. Todd Lindblom, Regional Manager of the firm’s Milwaukee office and Broker of Record, assisted in closing this transaction. This property marks the Upper Midwest’s market leading 37th hotel this listing team has sold since 2013.
CBRE Capital Markets Closes $57.7M In Financing for Multiple Commercial Properties Financing applied to acquisition, refinance and construction for properties consisting of two multifamily properties and an industrial building Joel Torborg and Ben Bastian of CBRE Minneapolis’s Debt and Structure Finance team arranged more than $57.7 million in financing across three transactions. Included within that total were two multifamily properties in the Minneapolis market and an industrial property in Walton, Ky. In the first transaction, Torborg arranged a $32 million refinance for Timberland Parkers Lake Delaware LLC for Parkers Lake, a multifamily property 15100 18th Ave N Plymouth, Minn. Financing was through Freddie Mac and loan terms were a 10 year fixed interest rate, seven-year interest only followed by 30 year amortization Parkers Lake was constructed in 1989 and consists of 248 garden style units situated in 15, three-story residential
February 2019
Tech from page 17
“Technology has been the great equalizer. It allows us to compete for more business and leverage resources but be more nimble than larger firms.” On a daily basis he uses CoStar and REDIComps, and various marketing platforms, including LoopNet, RCM, CREXi and Brevitas. For marketing materials his firm often turns to Buildout to create more standardized collateral, and partners with local advertising and digital design companies to
buildings. Common area amenities include a fitness center, two outdoor pools, attached garages, BBQ/Picnic Area, Playground, Business Center, walking paths, and aesthetically pleasing landscaping throughout. Unit Amenities include large floorplans (av. Size of 1007 SF), high ceilings, full appliance package, central air/heat, ceiling fans, in-unit washer/dryers, fireplaces (select units), and patio/balcony. In the second transaction, Torborg arranged a $24 million construction loan for WTP Capital Advisors through a regional bank. The three-year interest only term with two, 12-month extensions will be used for The Walton Industrial Park, an 892,600 square foot industrial building located on Jones Road in Walton, Ky. The site is located within the highly desirable Northern Kentucky industrial submarket of the Cincinnati MSA. Finally, Bastian secured a $1.7 million acquisition loan for Drew Avenue Ventures LLC for the Crystal Lake Estates, a 23 unit, garden-style apartment complex built in 1967 and situated on a 0.70 -acre site located at 3350 Drew Avenue North, Robbinsdale, Minn. Secured through the Freddie SBL program, the loan offers a long fixed interest rate term and three years interest only followed by 30 year Amortization. In total, CBRE completed more than $110 million in financing in December, including a $47 million refinance previously announced at the Plymouth Corporate Center. The Plymouth Corporate Center is a two-story, 628,436-squarefoot building in Plymouth, Minn. Built in 1974 and completely renovated in 2009, major tenants include TCF Bank, Comm-Works, LLC, Meritain Health, and LLSC Holdings Corp. The property was 98 percent occupancy at close. The CMBS loan with a 10-year term was secured on behalf of Wildamere Capital Management, LLC.
produce custom marketing with a variety of aesthetics suited to individual property marketing needs. With technology, including new online tools and information services, Wagenseil says, his firm can “cast a wider net and tell a more accurate story to a more targeted audience.” “At the end of the day, technology helps, but fundamentally the broker’s value proposition is still the same: to create a market for an asset.”
MARCUS & MILLICHAP ARRANGES THE SALE OF A 42-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 Industrial Street Townhomes, a 42-unit apartment property located in Hudson, Wisconsin, according to Jon Ruzicka, regional manager of the firm’s Minneapolis office. The asset sold for $4,860,000 or $115,714 per door. Evan Miller and Chris Collins, investment specialists in Marcus & Millichap’s Minneapolis office and members within the firm’s exclusive National Multi-Housing Group, had the exclusive listing to market the property on behalf of the seller. The buyer was also procured by Miller and Collins. Todd Lindblom, Regional Manager of the firm’s Milwaukee office and Broker or Record, assisted in closing this transaction. This property marks the 32nd transaction Miller, Collins and the rest of the apartment team within Marcus & Millichap’s Minneapolis office have sold since 2018. According to Mr. Miller, “This investment opportunity presented the seldom found chance to acquire a 42unit townhome community in an up and coming and expanding market neighboring the East Metro. This was just one of the many reasons we drew 20 tours to the site during the three-week marketing window.”