VOLUME 30, NUMBER 1
©2014 Law Bulletin Publishing Co.
January 2014
Krause-Anderson, Elion Partners to bring new life to 700,000-square-foot corporate campus
By Dan Rafter, Staff Writer
A
key corner in the Minneapolis market will soon be home to a mixed-use development including offices, shops, restaurants and a future hotel, thanks to a partnership between Minneapolis' Kraus-Anderson and Aventura, Fla.-based Elion Partners. The two companies will work together to redevelop a 100-acre corporate campus at Interstate-94 and Radio Drive in Woodbury, Minn. The plan is to
turn the campus into a 700,000-square-foot commercial development with shops, restaurants, new office space, a hotel, bank, two medical office buildings and a day-care center. Once completed, the new development will include 300,000 square feet of new construction to supplement an existing 400,000-square-foot office building. According to the partnership, Kraus-Anderson will develop the grounds into pad-ready sites for the development of the project's new retail, grocery, restauCampus to page 25
Oil and gas royalties can energize your 1031 exchange with zero drilling risk By Parker Hallam, president of Crude Royalties
S
o often we come across folks who are unaware oil royalties or gas royalties qualify for like – kind exchanges. Indeed, they’ve been utilized for years, contributing to a well-diversified investment portfolio of stocks, bonds, cash and traditional real estate while also helping to defer taxes through a 1031 exchange. Here are just a few examples of the guidance pro-
Hallam
vided by the IRS for utilizing oil and gas minerals and royalties as replacement property:
Revenue Rule 55-526 IRS held that a royalty interest in oil and gas in place constitutes real property for federal income tax purposes.
Private Letter Ruling 8135048 The exchange of overriding royalty interests for an apartment building, office building and 50 percent interest in a condominium is of like-kind.
Revenue Rule 73-248 IRS held that a royalty interest is an interest in real property for federal tax purposes. We’re helping with a 1031 exchange right now for Royalties to page 22
Speakers Include: Scott Parkin, Verve Realty Andy Gittleman, First Service Residential Joe Grunnet, Downtown Resource Group Keena Maher, Waterstone Mortgage Cynthia Froid, Keller Williams Beth Ulrich, BohLand Development | Regatta Wayzata Bay Tom Lund, Summit Real Estate Advisors Brad Goering, Sherman Associates David Carlson, Gatehouse Properties, Ltd Dave Stendah, Omega Management Mike Laukka, Laukka Management Tom Carlson, Carlson & Associates Gretchen Schellhas, Thompson Nybeck 8:00 AM 2013 Condo Market Overview & Update • State of the industry • Who are the players in the market and what are the projects in the pipeline • Lessons learned from last decade • Where does Minnesota stand compared to the rest of the United States • A check list of need to know about the condo marketplace • Market forecasts, trends and projections • The importance of a quality feasibility study • How has the current economic conditions affected the condo industry
9:00 AM 2014 Project Spotlight • Unique Mixed–Use Development – Senior Housing, Retail, Hospitality and Why BohLand chose to purchase? • Design & Construction – Project Approvals, Unique Project Elements • Demographic – Who are our buyers? What are they looking for? How Regatta fit those needs. • “Silver Tsunami” – Future of the ‘baby boomer’ & how to sell to this ever expanding consumer group? 10:00 AM Break 10:10 AM Developers Perspective • Why Apartment and not Condo • State of the industry from the developers perspective • Whats the math when deciding apartment versus condo • Market rent per square foot • Floor mix plan and why so many one bedrooms 11:10 AM Useful Tools for Operating Home Owners Associations • Beyond email: cutting edge communication tools for managers board and residents • Secrets to a productive board/meeting relationship • How to effectively run your HOA smoothly • Getting along: conflict resolutions for boards and managers • Collecting common fees and enforcing rules and regulations 12:00 AM Adjourn
January 2014
Contents
Minnesota Real Estate Journal
JANUARY 2014 • VOLUME 30, NUMBER 1
Page 3
Departments PEOPLE
4
NEWS
6
RESOURCE GUIDE
1
KRAUSE-ANDERSON, ELION PARTNERS TO BRING NEW LIFE TO 700,000-SQUARE-FOOT CORPORATE CAMPUS OIL AND GAS ROYALTIES CAN ENERGIZE YOUR 1031 EXCHANGE WITH ZERO DRILLING RISK
14
MARK NORDLAND, 2014 NAIOP MINNESOTA PRESIDENT
16
INTERPARK READY TO SEE FOURTH AND HENNEPIN SITE BECOME MIXED-USE DEVELOPMENT
18
MAKING YOUR BUILDING OUTPERFORM IN A COMPETITIVE ENVIRONMENT
22
URBAN LAND INSTITUTE’S EMERGING TRENDS REPORT: THE FUTURE OF CRE LOOKS GOOD
22
The Minnesota Real Estate Journal (ISSN 08932255) is published monthly for $85 per year by Law Bulletin Publishing Company, 13400 15th Ave North, Plymouth 55411. Phone: 952-885-0815. Periodicals postage paid at Minneapolis, MN. POSTMASTER: Send address changes to Minnesota Real Estate Journal, 415 State Street, Chicago IL 60654. Lanning Macfarland, Jr. chairman; Sandy Macfarland, CEO; and Brewster Macfarland, president. Back issues $10.00. Subscriptions are non-refundable. For more information call 952-885-0815. ©2014 Law Bulletin Publishing Co. No part of this publication may be reproduced without the written permission of the publisher.
Page 4
Minnesota Real Estate Journal
January 2014
People a division of Law Bulletin Publishing Co.
13400 15th Ave North Plymouth MN 55411 For information call 952-885-0815
Publisher | Managing Editor Jeff Johnson jjohnson@rejournals.com Associate Publisher Jay Kodytek jkodytek@rejournals.com Consulting Editor Dr. Tom Musil tamusil@stthomas.edu Conference Manager Alan Davis adavis@recg.com
EDITORIAL ADVISORY BOARD JOHN ALLEN Industrial Equities ROBERT ANGLESON Navigator Real Estate RICK COLLINS Ryan Cos. US Inc. JEFF EATON Cushman & Wakefield/NorthMarq MARK EVENSON ULG Equis PATRICIA GNETZ US Bank TOM GUMP TAG Consulting JON HEMPEL Hempel Properties DAVID JELLISON Liberty Property Trust CHAD JOHNSON Hellmuth & Johnson BILL WARDWELL Colliers International GEORGE KLUEMPKE Braun Intertec JEFFREY LAFAVRE CBC Griffin Companies WADE LAU Founders Properties MIKE LE JEUNE Fabcon JIM LOCKHART WIPFLI DUANE LUND Exchange Realty PATRICK MASCIA Duke Realty Corp. CLINT MILLER Cushman & Wakefield/NorthMarq DR. THOMAS MUSIL University of St. Thomas WILLIAM M. OSTLUND CBC Griffin Companies WHITNEY PEYTON CB Richard Ellis MIKE SALMEN Transwestern STEWART STENDER Stewart Capital Partners
a division of Law Bulletin Publishing Co. 13400 15th Ave North Plymouth MN 55411 For information call 952-885-0815
Kraus-Anderson Realty names Michael Korsh vice president Kraus-Anderson Realty (KA Realty) has named Michael Korsh vice president. He is responsible for managing all aspects of the company’s new development projects. Korsh works from the KA Realty offices in Bloomington, Minn. Korsh has served as the company’s director of development since 2000. He has over 16 years of diversified experience in the real estate industry, including development of projects in the medical, retail, office and housing sectors. Prior to joining KA Realty, he served as property manager for United Properties, where he managed in excess of one million square feet of office property. Korsh has led the development of numerous notable Minnesota developments including Woodlake Medical Center in Woodbury; Brighton Village Shopping Center in New Brighton; Trails of Orono senior housing in Orono; Arbors at Ridges senior housing in Burnsville; 430 Oak Grove luxury apartments, a historic redevelopment in Minneapolis; and Crossroads of Chanhassen, a mixed-use commercial development in Chanhassen. Projects currently under construction include Deephaven Woods senior housing in Deephaven; and Engel Haus senior housing in Albertville. Korsh earned his B.A. in English from Drake University. He is a Certified Commercial Investment Member (CCIM), Certified Property Manager (CPM) and licensed real estate broker in Minnesota and Wisconsin. He is a member of the Institute of Real Estate Management (IREM); Minnesota Shopping Center Association (MSCA); International Council of Shopping Centers (ICSC); National Association of Industrial and Office Properties (NAIOP); and Minnesota Commercial Association of Realtors (MNCAR). Korsh also serves on the board of directors of Kraus-Anderson Companies.
Mid-America Real Estate – Minnesota Hires Charlie Hexum as Retail Leasing Specialist Minneapolis-based Mid-America Real Estate – Minnesota, LLC recently hired Charlie Hexum as Retail Leasing Specialist, focusing on landlord lease
representation. Hexum has joined a thriving team specializing in small tenant space leasing for a number of high profile landlord clients in Minnesota. Prior to joining Mid-America on a full time basis, Hexum worked as an intern within the firm. Primary responsibilities included assisting the tenant representation team in gathering market information. “We are very excited to welcome Charlie to our team. During his internship this past summer, he demonstrated great potential and a hunger to succeed,” said Mid-America Vice President of Leasing Jesseka Doherty. Hexum earned a Bachelor of Science degree in Real Estate with an emphasis in Sales and Marketing from St. Cloud State University. He is an active member of the National Association of Realtors (NAR), Minnesota Commercial Association of Realtors (MNCAR), and the Minnesota Shopping Center Association (MSCA).
Duke Realty Promotes Steve Schnur to Regional Senior Vice President Schnur will now oversee the company’s Midwest Region comprised of Chicago, St. Louis and Minneapolis. Steven W. Schnur has been promoted to Regional Senior Vice President of the Midwest Region for Duke Realty. In his new position, Schnur will be responsible for the company’s more than 23 million square feet of industrial and office properties in Chicago, Ill.; St. Louis, Mo.; and Minneapolis, Minn. In addition to overseeing the leasing and management of Duke Realty’s portfolio, he also will work to identify acquisition and development opportunities, new land positions and prospects for buildto-suit development. Previously, Schnur was Senior Vice President of Duke Realty’s Chicago operations for nine years. He joined Duke Realty in 2003 as Vice President of Leasing after serving as the Director of Real Estate for Opus North.
Scott Moe Joins CSM Corp. as Vice President Leasing and Development Industry Veteran Brings More Than 25 Years of Experience in Twin Cities Real Estate Market to CSM Leadership Team. CSM Corporation today announced Twin Cities real estate veteran Scott
Moe has joined the company as vice president, leasing and development. In his new role, Moe will oversee the leasing of more than eight million square feet of commercial space that makes up the local CSM portfolio, and will beresponsible for pursuing build-to-suit developments on existing CSM-owned land as well as land to be acquired. He also will use his rich industry and market experience to help CSM assess the viability of speculative development in both office and industrial, and look for opportunities to enhance proactive collaboration with third-party brokerage firms. “The addition ofScott Moe and what he brings to our team has everyone at CSM extremely excited,” said Andy Deckas, president of Commercial Properties and executive vice president, CSM. “His relationships and relevant marketplace experience, and the industry respect he commands will set up CSM for success and growth for years to come.” Prior to joining CSM, Moe was vice president ofleasing and development at Duke Realty LLC for eight years. He was responsible for leasing, marketing and development activities for the company’s 3.5-million-square-foot Twin Cities-area portfolio. Moe broke into the commercial real estate business in 1986 and has worked with United Properties (now C&W Northmarq), Towle (now Cassidy Turley) and Hoyt Development during his career. As a vice president in United Properties’ brokerage services group, he represented local and national companies of varying sizes in leasing and selling their properties and represented companies in their searches for properties to lease or buy, including land and development. “I am delighted for the opportunity to join CSM,” said Moe. “It is a great organization built on the foundation of great people, and I am very much looking forward to working with them to help grow our business.” Moe has earned several distinguished speaking opportunities based on his position and accomplishments within the commercial real estate industry. He has twice moderated and is a three-time presenter at the annual NAIOP Industrial Update. Moe also served as a panelist speaker at seminars hosted by Minnesota Real Estate Journal, MNCREW and other industry organizations.
Page 6
Minnesota Real Estate Journal
January 2014
News Kontor Realty Group Arranges the Sale of 36-unit Multi Family Property in Brooklyn Center. Kontor Realty Group of Eden Prairie, Minnesota announced the sale of Humboldt Commons, a 36 unit multi family property located in Brooklyn Center, Minnesota. The asset sold for $1,620,000/ $45,000 per unit. Cindy Tews of Add-vantage Realty Inc. Shakopee, MN and Neil Friedman of Jordan Realty Inc. Minneapolis, MN respectively had the exclusive listing to market the property on behalf of the seller, a private investor. The buyer, a local private investment group, was secured and represented by Michael Berglund, president of The Kontor Realty Group. “This was a great example of a class C property that was priced to reflect its current market value.” according to Michael Berglund of Kontor. “I’m glad I mentioned this property during a speed dealing session at a
recent Minnesota Real Estate Exchangors meeting” Neil said. “Michael just happened to have a client looking for an off market opportunity in that part of town.” The 3 building 36 unit property, located at 6807, 6813, & 6819 Humboldt Ave. North Brooklyn Center was formerly known as the Humboldt Commons Condominiums. The sale was closed in less than 30 days by Michele Malacko, Commercial Closer at Commercial Partners Title.
Ryan Companies US, Inc. Selected to Expand Distribution Center for Americold Ryan Companies US, Inc. was selected to provide design-build services for an expansion on the Americold Cold Storage Distribution Center in Leesport, Pennsylvania. The $8.8 million project, which is on target to be completed by spring 2014, will add 96,000 square feet to the existing 225,000 square foot distribution center.
“Americold is the global leader in temperature-controlled warehousing and logistics,” said Bob West, Ryan’s Director of Business Development – Food and Beverage. “We are honored to partner with a company whose reputation is that of the top thought leaders and trend setters in the industry.”
CBRE ANNOUNCES THE SALE OF THE Rivertown Distribution Center, Woodbury, Minnesota CBRE announces the sale of the 375 Rivertown Drive to First Industrial Realty Trust, Inc. for $13.4 Million. The property is a 251,968 square foot distribution center built in 1997 with 24’ clear height and is currently 100% occupied by two tenants. The seller High Street Equity Advisors, LLC was represented by the CBRE Institutional Group in Minneapolis led by Steven Buss, Tom Holtz, Ryan Watts and Judd Welliver. High Street Equity Advisors, LLC is private equity real estate firm that focuses on institutional
quality industrial properties in the eastern half of the United States including the mid-west and Texas. The Minneapolis based team of Steven Buss, Tom Holtz, Ryan Watts and Judd Welliver focuses on the disposition of single-tenant and multi-tenant industrial and office properties. Steven, Tom and Ryan are part of the 85-member CBRE Institutional Group. In 2012, the Capital Markets enterprise of CBRE
Cushman & Wakefield | NorthMarq Represents Realty Associates Fund X in Lease with Citi-Cargo & Storage Cushman & Wakefield | NorthMarq represented Realty Associates Fund X in a lease with Citi-Cargo & Storage for 150,000 sq. ft. at 3703 Kennebec Drive, Eagan, Minn. Citi-Cargo & Storage, a provider of business storage and transportation solutions, will take occupancy in Jan. 2014, utilizing the space for warehousing and distribution.
Hot Breakfast, Lunch & Refreshments will be served during the conference
Speakers Include: Ron Ness, President, North Dakota Petroleum Council Chris Faulkner, CEO, Breitling Energy Company Scott Hennen, Partner, Bakken Beacon Media and The Common Sense Club Tom Rolfstad, Executive Director, Williston Economic Development Corporation Shawn Kessel, Dickinson City Admin/ND Assoc of Oil & Gas Producing Counties Steve Fifita, CEO, Artemis Development Group Jeff Swenson, Co-Managing Member, NDI Group, LLC Peter Elzi, CEO, THK & Associates Parker Hallam, COO, Crude Energy
Joseph D. Mahon, Economic Analyst, Federal Reserve Bank of Minneapolis Neil Amondson, Principal, MonDak Corner & NorthStar Transloading Erik Peterson, President, Bakken Consulting Inc. Chance Lindsey, Opulent Investment Group & KW Commercial Pat Hart, President, Meyer Real Estate Group Burt Miller, GENCO Bakken Development Group Brian Manion, President, Infinity Midstream Jesse Evert, President, Evercorp Jay Moore, Oppidan Paul Tucci, Oppidan April, Duemelands Commercial LLLP
Page 8
Realty Associates Fund X was represented by CWN’s Dave Paradise, Sydney Johnson and Tom Sullivan in the transaction.
$1.2M Cash Seals the Deal for a Former Pillsbury Mansion RE/MAX Results Commercial, based in St. Paul, has listed and sold a former Pillsbury mansion which was converted to commercial use in the early 1960’s. 2118 Blaisdell Avenue in Minneapolis sat on the market for more than two years and was listed by two other Brokers prior to being listed by Mark Hulsey, Managing Broker of RE/MAX Results Commercial, in June of 2013. After receiving multiple offers, a deal was settled with NuWay Inc. at $1.2 million cash and closed on Dec. 13, 2013. This property, located in the Whittier neighborhood, first came on the market in 2011 and was listed for $2.9 million. Hulsey took over the listing in June and listed it for less than half the original price at $1,205,000. It’s most recent owner, Pinecrest Inc., a manufacturer of wood doors, mantels, and other archi-
Minnesota Real Estate Journal
tectural details, used the property as a commercial office and showroom space. NuWay Inc. has intentions to convert the property back into housing. “Blaisdell is a very unique property with multiple potential uses,” said Hulsey. “It was challenging to sell since the whole property required significant capital improvements for many explored uses. And, working on a mansion built by the Pillsbury’s brings with it an interesting dynamic for a commercial transaction.” The mansion was built in 1913 and is approximately 23,000 square feet. It has a private parking lot that can accommodate up to 40 vehicles and is located at the corner of Blaisdell Avenue and West 22nd Street. The property boasts original features and fixtures combined with renovation reflecting on the architectural flare and historic design.
Marcus & Millichap ARRANGES THE SALE OF a 50-ROOM HOSPITALITY PROPERTY Marcus & Millichap Real Estate Investment Services, the nation’s largest
real estate investment services firm, has announced the sale of Best Western Rivertown Inn & Suites, a 50-room hospitality property located in Red Wing, Minnesota, according to Craig Patterson, regional manager of the firm’s Minneapolis office. The asset sold for $2,175,000. Jon Ruzicka, an investment specialist in Marcus & Millichap’s Minneapolis office and Gordon Allred, First Vice President Investments in Marcus & Millichap’s Ontario 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 Jon Ruzicka and Gordon Allred. Both seller and eventual buyer were Minnesota based. Mr. Ruzicka commented: “Through an all-encompassing marketing effort, Marcus & Millichap was able to utilize its nationwide platform and ultimately sourced offers internally from offices around the nation, including Atlanta and Austin. The eventual purchaser was a first time hotelier whom Marcus & Millichap helped guide through the process
January 2014
of acquiring their first hospitality property. Financing for the acquisition was sourced internally via Marcus & Millichap’s Capital Corporation.”
Bridgewater Bank Posts Significant Loan Growth in 2013 Bridgewater Bank, a Bloomington, MN based bank focused on serving the unique needs of real estate entrepreneurs, recently concluded a record breaking year for loan production. In 2013, Bridgewater Bank originated $326 million of new loans spread across several different property types including multi-family, student housing, seniors housing, industrial, retail, singlefamily, and land development. Over the course of the year, Bridgewater Bank’s loan portfolio grew from $384 million at to $477 million, representing a growth rate of over 24%. “2013 was an incredible year for us. Over the last 5 years many lending institutions backed away from real estate. We chose to stay the course, expand our client base and continue to meet the needs of the entrepreneurial real estate
Page 10
investor. This decision, combined with our unconventional style and willingness to just get the deal done, allowed Bridgewater Bank to gain a real foothold in the real estate market.” Said Jerry Baack, President and CEO. In addition to growing the loan portfolio, Bridgewater Bank also expanded their physical presence, with an addition of its new downtown branch. Located at the corner of Marquette Avenue and Seventh Street, this auspicious location resides in the epicenter of the vibrant Minneapolis market. Bridgewater Bank has two other locations in Bloomington and Greenwood.
DORSEY & WHITNEY LLP RENEWS LEASE AT FIFTY SOUTH SIXTH IN MINNEAPOLIS Hines, the international real estate firm, announced today that Dorsey & Whitney LLP (Dorsey) has signed a lease renewal commencing in 2016 for 250,000 square feet at its headquarters in Fifty South Sixth in Minneapolis’ CBD. Dorsey has been a tenant at the
Minnesota Real Estate Journal
property since the building opened in 2001. The renewal will ensure their anchor-tenant status through 2031. In conjunction with the lease renewal, Dorsey will be restacking its premises to gain better space efficiency, and as a result, rare upper floor space on levels 24 and 23 will be immediately available for lease for the first time since the building opened. At the same time, Dorsey is taking additional space on level 13 for LegalMine, Dorsey’s e-discovery service. In addition to finalizing Dorsey’s lease renewal, Fifty South Sixth has been recognized and awarded for its efficiency, quality and customer service by achieving LEED® EB Gold Certification, ENERGY STAR® Certification, the BOMA 360 Performance Program Award and the local The Outstanding Building of the Year (TOBY) Award, all in 2013. “Hines has a long-standing relationship with Dorsey dating back to 1978 when they signed a lease at Pillsbury Center (now U.S. Bank Plaza) – Hines’ first development in Minneapolis – and we are pleased to continue that relation-
ship well into the future at Fifty South Sixth,” commented Hines Managing Director Steve Luthman. “We are also thankful for the tremendous leadership provided by brokers Jim Damiani, Nils Snyder and Bob Chodos during this transaction.” “Technology has transformed how law firms are staffed and how they deliver their services to clients,” said Dorsey Managing Partner Ken Cutler. “We are delighted that we could renew our lease to serve our clients even more efficiently from the same great Twin Cities location. We are also very pleased to continue our long-term partnership with Hines.” Jim Damiani, Nils Snyder (Minneapolis) and Bob Chodos (Chicago) with Colliers International represented Dorsey in the renewal transaction, and Hines Directors Bob Pfefferle and Sargent Johnson represented the property owner, Hines Global REIT.
CBRE HOTELS SELLS COUNTRY INN & SUITES MINNEAPOLIS WEST
January 2014
CBRE Hotels is pleased to announce the sale of the Country Inn & Suites Minneapolis West strategically located along the I-494 corridor at 210 Carlson Parkway North, in Plymouth, Minnesota. CI&S Plymouth II, LLC sold the property to Lodging Opportunity Fund, a Real Estate Investment Trust with offices in Fargo, North Dakota and Eden Prairie, Minnesota, who will be implementing a comprehensive renovation and retaining the Country Inn & Suites brand. The 135-room, interior-corridor Country Inn & Suites opened in 1995. The property is beneficially located amongst two million square feet of Class A office space and is within 10 miles of downtown Minneapolis and 20 miles of Minneapolis St Paul International Airport. The property features the independently owned and operated Grizzly’s Woodfire Grille (attached) along with a fitness center, business center and two indoor swimming pools. The CBRE Hotels’ Chicago team consisted of Senior Vice President Nate Sahn and Associate Drew Noecker who represented the seller in this transaction.
Page 12
Mr. Sahn commented, “The buyer will implement a multi-million dollar renovation ultimately converting the hotel to the new Generation 4 Country Inn Prototype Standards. Once complete, the asset will be well positioned to further capitalize on its strong location resulting in strong top and bottom line growth.”
Timberland Partners Announces the Recent Acquisition of Four Multifamily Communities Timberland Partners announces its acquisition of four multifamily communities totaling 818 units in December, 2013. “Timberland Partners had a successful year with the total purchase of six new multifamily communities in 2013,” said Matt Fransen, Vice President of Investments for Timberland Partners. “We are particularly excited about the addition of four new apartment acquisitions in December and the positive momentum it has brought our organization leading us into the New Year. We plan to be very active pursu-
Minnesota Real Estate Journal
ing additional apartment investments in 2014.” The Carrington at Four Corners is a quality, 330-unit property constructed in 1998 with a number of high-quality amenities including a large clubhouse, fitness center, outdoor swimming pool with sundeck, covered pavilion, BBQ and picnic areas, volleyball court, car wash and children’s playground. The Carrington at Four Corners is strategically located just 10 minutes from Walt Disney World, one of the largest single site employers in the country with approximately 66,000 employees. The community will undergo major renovations including extensive landscaping improvements, new signage, exterior paint, and a resort-style clubhouse. Northview Park, a 200 unit community, is located in Sterling Heights, MI and was built in 1995. The community features balconies and patios, central air and heat, washer/dryer connections, fully equipped kitchens with energy efficient gas appliances, clubhouse with an internet café, outdoor pool and grilling areas. Northview Park is a quality, Class
B property in an excellent location near many large employers. The Park at Olathe Station (formerly Indian Meadows) is a 144 unit community located in Olathe, KS. Built in 1995, The Park at Olathe Station is a Class B property in a quality location with a number of attractive amenities including private entries, updated appliance packages, a clubhouse with lounge, outdoor pool and children’s playground. The community is located in a highquality school district and directly south of a retail development that includes anchor tenants Super Target, Best Buy and AMC Theaters. Large employers in the area include Sprint, Embarq, Garmin and Farmers Insurance. Green Meadows, a 144 unit Class B community, is located in Belleville, MI. The community was built in 1995 and features private entries, central air and heat, washer/dryer connections, clubhouse with internet café and Wi-Fi, fitness center, outdoor pool, grilling areas and children’s playground. Green Meadows has a desirable location with easy access to the Detroit Metropolitan
January 2014
Airport, the University of Michigan and the University of Eastern Michigan. “We are pleased about the addition of these properties to our portfolio. Multifamily fundamentals continue to strengthen. In the past several years we have invested heavily in our operating platform which has provided us the confidence and ability to expand beyond our Midwestern footprint. We look forward to 2014 and the opportunities for additional growth in new markets,” says Executive Vice President of Operations, Mark Moore.
Mid-America Real Estate Arranges Sale of Caribou Coffee in Oakdale, Minn. Mid-America Real Estate Corporation’s Net Lease Investment Group recently brokered the sale of a 1,690square-foot Caribou Coffee located in Oakdale, Minn. The property is located at the northeast corner of Highways 36 and 120. A local private investor purchased the property from Bloomington, Minn.-based United Properties for News to page 25
Page 14
Minnesota Real Estate Journal
January 2014
Mark Nordland, 2014 NAIOP Minnesota President Mark Nordland, a principal of Launch Properties and former vice president of development for Ryan Companies, assumed the 2014 presidency of the Minnesota Chapter of NAIOP, the Commercial Real Estate Development Association, on January 1. In this exclusive interview, the Minnesota Real Estate Journal explored with him his observations on the outlook for Minnesota’s commercial real estate industry and his goals and objectives for the chapter. Q. What led you to start your own company, Launch Properties, at this time, in what most people would continue to characterize as a low point for the development industry? A. When I left Ryan in late 2010, the commercial real estate industry was really in the depths. I think developers generally were slow to recognize either the severity of the plunge or how deep it would ultimately go. I love commercial real estate—the deals—the people—the reward of creating something of value. But the landscape was clearly shifting. The major players were taking serious hits, while some of the midsize companies were disappearing. There was also a generational shift going on, with older members leaving the business completely. Quite simply, the CRE industry was going through a major restructuring, one that might open up new opportunities for younger development firms.
Hallam From page 1
a gentleman who is in retirement and looking for both growth and income from his exchange dollars. While he’s selling a mobile home park he’s able to exchange in to a couple of different properties including a multi-tenant property and oil and gas royalties. Our client is interested in oil and gas royalties because of the diversification and potential for monthly income and growth. He’s also savvy enough to be interested in taking advantage of the rapidly developing shale oil and gas plays that are presenting so much opportunity today. We’re helping him to identify opportunities in the Haynesville Shale area, located in North Western Louisiana where there have been over a million acres leased by the biggest and the best operators and there continues to be a tremendous amount of natural gas drilling. Quietly, almost overnight, the United States has seen an oil and gas land grab unlike any in the history of domestic oil and gas production. During the last three years, billions of dollars have been invested in shale oil
Dan Regan, my partner, and I had been working on some deals together. We looked around and thought, why not take advantage of this recession? After all, most of the people who have done very well in commercial real estate did it coming out of a recession. I guess you might say we saw a unique opening, and decided to take advantage of it.
Mark Nordland
Q. Any specific real estate sectors you are targeting? Projects underway? A. We identified a few sectors where we thought we could compete— healthcare, industrial, and retail. Projects of a size that they could be profitable, but smaller to mid-size, where we didn’t necessarily have to compete with the big guys. And projects where there was the potential to build a relationship and do repeat developments. One of our unique skills at Launch
Properties is digging out the best possible site. Every deal we do now is complicated and highly competitive. But our market knowledge, energy, and creativity help us to find the absolute best solutions for our clients, providing us a competitive advantage.
and gas leases by all of the major operators such as ExxonMobil ($40 billion acquisition of XTO), Shell and many others. Even China, Spain and many other foreign national companies have invested literally billions of dollars into our U.S. shale plays within the last 12 months. What are known as “blanket” shale formations have for years been known to hold significant quantities of hydrocarbons but production from these zones has been dormant due to the lack of ability to make them economically productive. This recent land grab, buying up or leasing the areas containing blanket shale, is being driven by advances in drilling technology known as hydraulic fracturing. That, coupled with advanced horizontal drilling technologies, has made millions of acres of minerals, containing trillions of cubic feet of natural gas and millions of barrels of oil, economically attractive. If you follow the money trail, huge amounts of money are being invested by major oil and gas companies, which bodes well for the future of domestic energy production and the benefits of owning the minerals. Our client also believes, as we do, that exposure to a hard asset, outside
of his gold, can help him to protect his portfolio against inflation or dollar devaluation. And, unlike traditional real estate, owning royalties provides passive income with little to no operational risk or additional capital expenditures. Additionally, oil and gas royalties provide 1031 exchanges with a different kind of security blanket. Hard assets such as oil and gas minerals have a strong appeal to those who are experiencing anxiety about the devaluation of the dollar and hyper-inflation and want to diversify their 1031 exchange. Blanket shales are tight geologic formations that literally blanket hundreds or thousands of contiguous acres and are known to contain potentially billions of barrels of oil and/or natural gas. Recent advances in horizontal drilling technology have created a new “oil boom” here in the United States. During the last three years, while most of us have been trying to get through one of the toughest recessions in U.S. history, billions of dollars have been invested into our domestic onshore oil and gas shale plays by the biggest and best oil and gas companies in the world. So, why does blanket shale present
Q. As president of NAIOP Minnesota, and principal spokesperson and advocate for commercial real estate developers, owners and investors in
our state—as well as their business tenants and clients—what concerns you most about the current state of the industry and the economy in which your members operate? A. I really like the position of our organization in the marketplace. Our members have been conservative and cautious, so they are poised for growth. And so is our chapter. We had a couple of years where our industry was recovering, but that’s turned around. NAIOP is capitalizing on that opportunity and growing again. As for challenges, we have a lot of professional organizations today with whom we have to compete for members and attention. But we are up to that challenge, and we plan to deliver even more value for our members during the coming year. One way we can do that is to strengthen and expand the role of our public policy effort as a watchdog for the entire industry. Our public policy committee monitors what’s happening at the Capitol to make sure that revenue solutions don’t come off the backs of our members and the employers who occupy the buildings we develop, own, and manage. A lot of them are small companies, and ultiNordland to page 22
for me a security blanket? Because I can diversify a 1031 exchange into mineral properties that contain these shale oil and gas assets with a great degree of certainty that I own a very popular commodity and am essentially partnering with the biggest oil and gas producers in the world by owning those assets that they are actively producing. In doing so, I benefit from owning the hard asset of oil and gas reserves in the ground and receive monthly royalty income as the oil company sells the oil or gas that is produced from the blanket shale that I own. Do more with your exchange than just avoid the taxes. Benefit your portfolio by increasing its level of diversification and passively take advantage of the domestic oil & gas shale boom by owning the minerals. Parker Hallam President Crude Royalties phallam@crude.com 214-716-2200
Page 16
Minnesota Real Estate Journal
January 2014
InterPark ready to see Fourth and Hennepin site become mixed-use development By Dan Rafter, Staff Writer
O
ne of the largest developers and owners of parking lots hopes to bring a big change to a key corner in downtown Minneapolis. InterPark LLC -- which owns, develops and manages parking facilities across the United States -- is now working with Jones Lang LaSalle to choose a developer to create a mixeduse development at the corner of Fourth Street and Hennepin Avenue in Minneapolis' CBD. InterPark already owns the 25,000-square-foot site. The goal? InterPark officials hope to see a mix of residential, hotel or office space on the site. "When we bought the property 10 years ago, we thought that it would be in an area of progress and development activity," said Marshall Peck, chief executive officer of InterPark. "That was our rationale when we bought the property. What's happened is that this end of downtown has seen some strong development activity. It seemed like the time was right to see this property
developed with a mixed-use project." Peck is right about the development activity near the site. Opus Development Corp. plans to begin construction this year on a nine-story 212,000square-foot headquarters for Xcel Energy Inc. on the corner of Fourth Street and Nicollet Mall. Grocer Whole Foods in September of last year opened a downtown location at nearby 222 Hennepin Ave. on the ground floor of the newly built 222 Hennepin Apartments project developed by Ryan Cos. US Inc. and The Excelsior Group. InterPark will keep the 600-car parking garage, which offers access to Minneapolis' Skyway, that is adjacent to the site. This will allow the site's future developer to offer parking to future tenants. "A developer won't have to spend money to satisfy the parking needs of tenants," Peck said. "The cost to build that parking would be unnecessary, with us providing parking for this site." Chuck Murphy, senior vice president with InterPark, said that the downtown Minneapolis market is a strong one today. This helped convince InterPark
that this is the right time to offer the site for development. "We feel that there is pent-up demand for development of several types," Murphy said. "That could be hotel developers. The multi-family market has improved. We are hearing from developers that their new developments have gone well, that they have attracted a lot of attention from tenants. We think that we are still early in the development cycle. There are fewer lots available in this part of the market." InterPark's site hit the market on Jan. 28, so it's still early in the process. But Peck said that interest is already high. The company had already received an unsolicited offer for the site that it decided not to accept. Jones Lang LaSalle's Brent Robertson and Jon Dahl are leading the marketing efforts for the property. Robertson said that with vacancy rates around 3 percent in downtown Minneapolis, demand will be high for a mixed-use project in a highly visible location. "The timing is right for develop-
ment, whether it be office, residential or hotel," said Roberton, in a written statement. "Downtown Minneapolis is an extremely attractive market for mixed-use commercial development." This isn't the first time that InterPark has made one of the lots it owns available for development. Murphy is now managing a property along downtown Baltimore's harborfront area that InterPark is also hoping to turn into a mixed-use development. Such projects, Peck said, are an important part of InterPark's strategy. "We always want to secure attractive urban parking lots that can be used for future development," Peck said. "We are always looking to secure urban properties that are in the page of progress."
Page 18
Minnesota Real Estate Journal
January 2014
Making Your Building Outperform in a Competitive Environment By: Doug Pierce, AIA, LEED Fellow, Perkins + Will Jim Manning, PE, LEED AP BD+C Gausman & Moore AIRPLANES + BUILDINGS THAT OUTPERFORM What do high-flying airplanes and earthbound buildings have in common? Both rely on performance to be successful in a highly competitive market. In the story of the race between the 1934 Boeing 247 and the 1935 Douglas DC-3 to become the airplane of choice for an emerging industry, we find a lesson for any business trying to outperform in a tough environment. By 1930’s performance standards, both airplanes were advanced, featuring radial air-cooled engines, variable pitch blades, retractable landing gear and lightweight mono-bodies; but unlike the DC-3, the 247 did not have wing flaps, a key component of every successful commercial airplane built since that time. Boeing knew about wing flaps, but value engineered them out and this diminished the planes performance capacity and increased its operating costs. Additionally, the wing spar of the 247 obstructed the walk
aisle, requiring some passengers to climb over it to get to their seats. Because of these shortcomings, demand for the 247 never materialized and Boeing halted production of the 247 at just 75 planes, while Douglas built over 10,000 DC-3’s. The Douglas development team had done a better job of integrating physical performance, passenger satisfaction and overall operational effectiveness; and the resulting design outperformed the competition. What can building owners learn from this story of airplane engineering? Sound business practice. Keep your product up to date and integrate your solutions to achieve user satisfaction, physical performance and overall operational effectiveness. True integrated design goes beyond simple coordination between multiple experts; it invites the team to do interdisciplinary work by respectfully playing in each other’s ‘sandbox’ to open up fresh opportunities. To be effective, team members need both depth + breadth of knowledge so they can effectively blend their expertise with that of others. They also need dynamic, integrative leadership to bring it all together.
This leading-edge, interdisciplinary approach to business applies directly to real-estate, including the design and operations of both new and existing facilities. For older facilities, this means assessing a range of important issues and reviewing core building features. Is the lobby up-to-date for a new age of connected, mobile users? Is the workspace easy to adapt with good air, light and views? Are your occupants
happy, healthy and productive? Is the building’s curb appeal and exterior shell holding up? Are the buildings elevators, HVAC and electrical systems reliable and efficient? And, with Minnesota near the very top nationwide for catastrophic weather losses three of the last seven years, it is important to ask if your facility can offer business continuity in extreme Outperform to page 20
PRIME OFFICE/WAREHOUSE LOCATION! 75,000 SQ FT BUILDING 75,000 SQ FT AVAILABLE 32 FT CLEAR HEIGHT For more information, please contact Traci Tomas at 952-473-1700 or ttomas@leasespace.com
10 DOCK DOORS 100+ PARKING SPACES FREEWAY ACCESS I-35 & I-494
Continental Commerce Center 9545 Penn Ave • Bloomington, MN
Page 20
Minnesota Real Estate Journal
While the architect develops and synthesizes the overall design approach, the mechanical and electrical engineers play a critical role developing system scenarios. Early ‘shoebox’ energy modeling and cost estimating identify the potential energy savings for various systems and their return on investment. Indoor environmental quality and workplace planning are important as well. Systems which are adaptable and provide thermal comfort, appropriate sound levels and comfortable light levels are critical in maintaining occupant and worker satisfaction, achieving lower turnover and obtaining enhanced staff productivity.
Outperform from page 18
weather and if not, is the economic impact of ‘going down’ acceptable to your occupants? The bottom line is this – can you attract, retain and satisfy your tenants while operating efficiently, reliably and effectively? WHEN YOU CAN’T SOLVE A PROBLEM, EXPAND THE SCOPE President Eisenhower, is famous for his success in integrating sea, air and landforces in the Normandy invasion. He also had to cope with unpredictable weather and the political forces of Roosevelt, Churchill and de Gaulle. When asked about his success, Eisenhower said “Whenever I run into a problem I can’t solve, I always make it bigger.” In other words, he made sure he was dealing with all the things directly influencing his problem, even if that meant expanding the scope. In many cases, Eisenhower’s scale jumping is the right approach to getting an existing building up to speed or for making a new design really sing. As an example, mechanical / electrical upgrades alone may not be adequate to make an older facility fully competitive in the market or to justify renovation. But by expanding the scope of the problem to include more of the building and its amenities, added opportunities can
January 2014
open up and the scenarios needed for creating a profitable investment can be mapped. Scenario development involves capital planning, facility assessments, user-focused solutions, and continuous cost analysis to prioritize needs and generate a total value based design. By looking at the whole system the full potential value of the project can be quantified, providing the data and the confidence needed to justify an investment. One size does not fit all and the integrative design process should be tailored to meet project specific needs, budgets, and opportunities. Starting early is essential to getting the best outcomes. A
stakeholder team lead by the architect and comprised of the owner + user representatives, mechanical + electrical engineers, cost estimators, key building operations staff, code officials and the contractor develop and evaluate data driven planning options for the project. Options are selected on the basis of being efficient, effective, and reliable increase the credibility of design scenarios with key decision makers, facilitating smoother approvals and improving performance outcomes. After the early integrative planning is done, the project can confidently move into full design and execution — saving time and money on the backend.
INTEGRATED DESIGN CASE STUDY: St. Louis County Government Service Center Built in 1981, the mechanical and lighting systems of the 160,000 square foot St. Louis County Government Service Center (GSC) in Duluth, Minnesota were reaching the end of their useful life and need to be replaced. To get the most out of the project’s budget, a front-end loaded, integrative planning approach was applied to decision making + design solutioning. Whole system value and savings calculators were utilized in the analysis of the GSC and after completing the initial scenario planning, the owner and Outperform to page 24
Page 22
Minnesota Real Estate Journal
January 2014
Urban Land Institute’s Emerging Trends report: The future of CRE looks good By Dan Rafter, Staff Writer
I
f the financial recovery was a baseball game, we’d be in inning four or five. That’s good, but it’s not as good as being in the bottom half of the ninth. That was a key message from the Emerging Trends in Real Estate presentation at the Urban Land Institute’s fall conference held in Chicago in November of last year. Stephen Blank, senior resident and fellow for finance at the Urban Land Institute, used the baseball analogy to explain where the economy was headed in 2014. The recovery will continue, he said, but there’s still a lot of baseball to be played. “It’s like one of our members said, now we’re recovering from the recovery,” Blank said during the presentation.
Nordland from page 14
mately they take the hit. I don’t think the general public realizes the impact of new property taxes and costs on job growth and the economy. Q. What are your personal goals, as president, for the Minnesota Chapter during the coming year? What would you like to have accomplished when you finish your term next December and look back on the year? A. Both NAIOP and our industry have stabilized, so we are well positioned to grow and move forward. My goals for the year are to improve the value of NAIOP to each of our members and build our membership. We will do that by improving our programs, expanding our efforts at defending and advancing our industry’s interests in the public policy arena, strengthening our advocacy on behalf of our members and their tenants, and expanding opportunities for our members to get to know one another. I don’t like the word “networking.” It is really about finding ways to expand memberto-member connections and grow relationships. Q. What originally influenced you to become a member of NAIOP? A. When I first went to work as a leasing broker for Welsh, they had a company policy of signing everyone up with NAIOP, so that was the beginning. I needed CE credits, and NAIOP was a good place to get them. But what I found, as time went by, was that every time I attended a breakfast meeting I connected with someone, learned something that was of value. It really changed the way I thought about my profession. Q. You are probably one of the younger NAIOP members to lead
Overall, though, the news from the emerging trends presentation was good, with survey respondents telling the Urban Land Institute that they expect commercial real estate in all sectors to improve in 2014. Sure there are challenges: Blank pointed to the uncertainty that commercial pros feel over future government policies and regulations, the continuing financial problems overseas in the Euro zone and stubbornly high unemployment rates across the country as three of the most significant challenges facing commercial real estate. But on the positive side, Blank found plenty of good news to highlight, too. There is good, if not great, job growth in industries that use lots of real estate, industries such as technology, health care and medical research. Corporations across the
the Minnesota Chapter—fifth largest in the nation—in its nearly 40-year history. What motivated you to become more engaged and follow the leadership track that brought you to the presidency? A. It’s really very simple: someone I respected reached out to me and asked me to join a committee, actually NAIOP’s PAC. I learned a lot from that, and made wonderful connections. From there I moved on to the sponsorship committee and the program committee. And later, Jim Freytag of CBRE asked me to become treasurer. That was an honor, and got me even more involved. And eventually, of course, being on the track to become presidentelect—that was a real honor, coming as I did from a small firm, when there were so many heavyweights who would be more logical choices. Q. Do you see your own path as an active member as a model for NAIOP’s developing leaders group? A. Absolutely. My advice is get involved. Look at the long haul—not what you can get out of it today, but the long play—creating great relationships that will last throughout your career. You have to enter with the idea that you will be bettering our industry. If you do that, you will be well rewarded for the time you invest. Q. The Chapter has benefited over the years from the great interest and continuing involvement of many of the industry’s more senior members. Any thoughts on how to backfill their leadership roles as they move on with new faces from within the chapter’s developing leaders group? A. Jump in! Get out there, make things happen. People will notice you when things are accomplished. I was the youngest VP at Ryan and CSM, and I learned that if you are effective, you can advance—quickly.
country are enjoying strong profits, while the single-family housing market continues a strong recovery. This all bodes well for commercial real estate in 2014 and beyond. “Next year we think investors will continue to shift their focus to some of the country’s more overlooked markets and sectors,” Blank said during his presentation. This last point is important for the Midwest. The Emerging Trends report highlighted the top-20 markets in terms of investor favorability ratings. To no one’s surprise, investors predicted that San Francisco would be the top market in 2014. Only a pair of Midwest markets made this list, Nashville in 12th place and Minneapolis/St. Paul in 20th. That last market, the Twin Cities, merited a bit of commentary from presenter Andrew Warren, director with
Q. Any words of advice for younger people considering the commercial real estate industry—or more specifically, real estate development—as a career? Is this a good time or not so good? A. Our industry has no limits. It’s really a small world. Work at building relationships that count. And guard your reputation. That’s the only thing that will stick with you throughout your career. Q. What are the major challenges looming ahead for NAIOP Minnesota in maintaining its membership, continuing its role as a very influential professional organization, and building on its strong established reputation? A. Perhaps the most important is growing in a very competitive environment. When I became involved, there were few organizations that competed in our space. Today there are several that are very strong, so we need to continue to improve to stay useful. Our public policy initiative is a very important piece of that; we really are the industry leader in this area. Q. Commercial property taxes and increasing regulations are continuing challenges to real estate developers and their business clients in Minnesota because “costs matter” to business owners and employers. How is NAIOP Minnesota working to counter them and improve the conditions for growth? What are the key issues your public policy team will be addressing in the 2014 legislative session? A. Property taxes and burdensome regulations, as well as the warehousing tax. But we prefer to not be negative. Our theme is “costs matter” to our employer-tenants. Property taxes and these other costs are paid by our ten-
Chicago-based auditing and consulting firm PwC. Warren said that Minneapolis/St. Paul’s inclusion on the list might come as a surprise to some, but that there were several good reasons why the Twin Cities nabbed that 20th spot. “That area has a fairly diverse industrial base, and people are finding it an interesting market,” Warren said. “It’s attractive to recent college grads who don’t want to leave the Midwest. Minneapolis provides a lot of amenities.” Another interesting tidbit from the presentation? CMBS lending is definitely on the way back. “The return of the CMBS market is like a Biblical revival. It is back from the dead,” Blank said. The numbers prove his point. It’s estimated that the CMBS market will hit $80 billion in 2013 and an even more impressive $100 billion in 2014.
ants. We and they are perfectly willing to pay our fair share, but if we are to grow as a state, the burden on business must be reasonable. Q. NAIOP Minnesota has been working for several years on its own legislative initiative requiring local governments to report revenues and spending in a more transparent way. The goal is to help citizens better understand what their tax money is actually purchasing, as well as the trend lines in local spending and revenues. Is that initiative going forward in 2014, and what do you see as its prospects? A. We are pressing ahead with proposed legislation because we think it would be good for our members and their business tenants. We are very optimistic that this might be the year that the legislature acts, given the broad support we are gaining from across the state, and the editorial support of the Minneapolis Star Tribune, the St. Paul Pioneer Press, and other newspapers around the state, who recognize that greater clarity in reporting would be useful to them as well. Q. NAIOP’S members play a major role in spurring development and construction and thereby creating significant numbers of well-paying jobs in a ripple effect that spreads throughout the state’s economy. What more can the chapter do to encourage and support job creation and business expansion in our state? A. The commercial real estate industry in Minnesota is very collegial and cooperative. If the political environment could in any way mirror the kind of cooperation we enjoy as an industry, we would be more successful in doing what is best for our state and its citizens.
Page 24
Minnesota Real Estate Journal
Campus From page 1
rants and shops. Site work is expected to begin in the summer of 2014. "This is an opportunity for us to create a workplace environment where people can park their car once, go to work, go to lunch and go to the grocery store without ever having to get back into their car," said Matt Alexander, Kraus-Anderson's director of real estate development. "This is typically pretty impossible, which is what makes this exciting. We are taking an existing Class-A office building and revitalizing it."
Outperform from page 20
design team concluded that there was more to renovating the building than just replacing worn-out MEP systems and improving energy efficiency. The estimated value of operational efficiencies, workplace productivity and building effectiveness for a full renovation was calculated at $465,000 annually with a 20-year value of nearly $9,560,000 covering almost half of the capital investment. When added to the increased market value and reliability, this much needed renovation proved to be an excellent investment for the county. Overall facility productivity was improved by restacking the existing departments for better workflow and
Woodbury residents know the site as the State Farm Insurance campus. The insurance company built the regional headquarters in 1996 but moved out in 2006. Since then, the property has sat vacant. The development, then, is a big one for Woodbury. For Juan DeAngulo, managing partner at Elion, the project was a chance to make a mark in a highprofile location. "It all starts with the quality of the location and the quality of the real estate," DeAngulo said. "We are constantly looking for opportunities to unlock value. We felt that there was a great opportunity to unlock value here. We know that this site has faced challenges in the past. But we can overcome that.
security. Office areas were redesigned to provide for better occupant comfort, collaboration and flexibility. Lobby and entrance upgrades reposition the building to better serve the public with improved circulation and way-finding. A new conference area will provide upto-date facilities for electronic conferencing and training, saving travel expenses and time. Multiple HVAC system options were considered and comparisons were made to the existing building performance. Cost effective systems including LED lighting and a variable refrigerant flow HVAC system with dedicated outdoor air and energy recovery were selected with an estimated energy use savings of about 50%. Key to the
January 2014
That is what made us purchase this site." Woodbury city officials, too, are excited about the prospect of seeing an unused site turned into an active mixed-use development. “The partnership between Elion and KrausAnderson is wonderful news for the city,” said Woodbury Mayor Mary Giuliani Stephens, in a written statement. “While Elion has yet to submit a formal development application for this proposal, they clearly have a plan for moving forward. We are excited for this development to evolve into another cornerstone of economic growth for the City of Woodbury.”
analysis was assessing the interaction between various system options and how investment in one strategy could lead to savings and cost reductions in other building systems. Owner maintainability and operational factors were also considered. The project will be dynamically commissioned starting with early design reviews and continuing through a post-occupancy tune-up phase. Added sensors will aid the team and the county in getting the most out of the designs high-performance features now and well into the future. After being fully immersed in the integrated design process, Tony Mancuso, Property Management Director for St. Louis County is very pleased with the outcome stating that “We can
no longer imagine developing a project without taking an integrated design approach. The interdisciplinary thinking that the team brought to the project has smoothed out the bumps and we are getting a much better product.” From the county’s perspective, the early analysis and communication fostered a tighter project scope, built better consensus and led to better decision making. This multi-phased and occupied renovation project is currently well into construction and scheduled for completion in 2015. It is expected to outperform the other buildings in its class.
WHEN IT MATTERS WHO YOUR APPRAISER IS... DEPEND ON THESE: MAI, SRPA, SRA.
“Your most educated and trained real estate appraisers” THANKS TO OUR CORPORATE SPONSORS PLATINUM MINNESOTA REAL ESTATE JOURNAL GOLD FREDRIKSON & BYRON LAW FRIM • HEARTLAND REALTY INVESTORS • OAK GROVE CAPITAL SILVER MALKERSON GUNN MARTIN LLP • CENTRAL BANK • LARKIN HOFFMAN DALY & LINDGREN
NORTH STAR CHAPTER WWW.APPRAISALINSTITUTE.ORG
Page 26 News from page 12
approximately $1.229 million. Tom Fritz and Kevin Conway of Mid-America Real Estate Corporation and Doug Sailor of Mid-America Real Estate – Minnesota LLC exclusively represented the seller in the transaction.
EQUUS CAPITAL PARTNERS CLOSES $310 MILLION PRIVATE EQUITY REAL ESTATE FUND Equus Capital Partners, Ltd. (Equus), one of the nation’s leading private equity real estate fund managers, announced the close of BPG Investment Partnership IX, L.P. (Fund IX), with equity investments totaling $310 million. Fund IX officially closed on December 13, 2013 and is targeting value-add office, multifamily, industrial and retail investments located in major metropolitan centers throughout the United States. “The response has been very positive, with investor commitments exceeding our $250 million goal by 24 percent,” said Joseph G. Nahas, Jr., Senior Vice President, institutional marketing and investor relations, of Equus.
Minnesota Real Estate Journal
Over the last 20 years, Equus has raised nearly $3 billion of discretionary equity through the formation of nine co-mingled, closed end funds and one co-investment fund. Fund IX investors include pension funds, endowments, foundations, Taft-Hartley plans and high net worth individuals. “Equus’ investment strategy for Fund IX mirrors the successful approach we employed for our 10 prior funds on a nimble, entrepreneurial scale that reflects the current real estate environment,” said Daniel M. DiLella, President and Chief Executive Officer of Equus. “We will continue to seek investments where we add value through our proven direct operating platform that has consistently delivered excellent returns for our investors.” Fund IX has already invested $83 million across nine properties in a diverse portfolio that includes multifamily, office, lab and industrial properties located in the East, Midwest and Southwest regions of the United States. Since the time of acquisition, Equus has increased occupancy from 86 percent to 95 percent across the portfolio. The latest investment was the acquisition of Meridian Corporate Plaza
(MCP), a three-building, 329,546square foot Class A office park located in Carmel, a suburb of Indianapolis, Indiana. Locally, Equus owns and operates approximately 1.5 million square feet of office/industrial in the Minneapolis MSA.
CBRE ANNOUNCES THE SALE OF BROOKDALE SQUARE LOCATED IN BROOKLYN CENTER, MINNESOTA CBRE announces the sale of Brookdale Square, a prime redevelopment opportunity, located at 5900 Shingle Creek Parkway, in Brooklyn Center, Minnesota. Brookdale Square consists of 23 acres with 185,800 square feet of retail improvements. The property is shadow anchored by Shingle Creek Crossings, a new 450,000 square foot regional center anchored by Wal-Mart which opened in late summer of 2012. The seller, Brixmor, was represented by the CBRE Private Capital Group in Minneapolis: Jim Leary, Steve Lysen, Jeff Budish and Mindy Rietz. The Minneapolis team focuses on the disposition of single and multi-tenant office, industrial and retail properties in the Midwest.
CBRE ANNOUNCES THE SALE OF 2929 VENTURE DRIVE IN JANESVILLE, WISCONSIN CBRE announces the sale of 2929 Venture Drive totaling 700,000 square feet and located in Janesville, Wisconsin to an affiliate of STAG Industrial, Inc. for $24,000,000. 2929 Venture Drive is a 700,000 square foot cross docked bulk distribution center located in Janesville, Wisconsin that is 100% leased to two tenants. Built in 1999, the building underwent a $2.8 million renovation in 2009. The seller, Helgesen Development Corp., was represented by the CBRE Institutional Group in Minneapolis led by Steven Buss, Tom Holtz, Ryan Watts and Judd Welliver, and by Tom Simon with CBRE in Minneapolis. Helgesen Development Corp. has been providing management, design and construction services since 1949, and is an award winning general contractor, completing projects throughout the United States and Europe. The Minneapolis based team of
January 2014
Steven Buss, Tom Holtz, Ryan Watts and Judd Welliver focuses on the disposition of single-tenant and multi-tenant office and industrial properties. Steven, Tom and Ryan are part of the 85-member CBRE Institutional Group. In 2012, the Capital Markets enterprise of CBRE including the Institutional Group completed over $64.08 billion in combined total U.S. capital activity.
CBRE ARRANGES $21,000,000 FINANCING FOR ROSEDALE COMMONS CBRE Capital Markets is pleased to announce it has arranged $21 Million of permanent financing for Rosedale Commons, a retail center in Roseville. Adjacent to the Rosedale Center, a regional mall, the property is located at 2480 N Fairview Avenue. The shopping center has 168,049 square feet of retail and interior mall space. Rosedale Commons is currently 95% occupied and has a tenant roster that includes: Bed Bath & Beyond, Life Time Fitness, PetSmart, Old Navy, Vitamin Shoppe, Kirkland’s, and Buffalo Wild Wings. The new financing secured by the CBRE Capital Markets team allowed the borrower to refinance their current loan on the property and take advantage of a favorable interest rate for a new term of 15 years. CBRE Capital Markets successfully secured the refinance for Rosedale Commons through it’s relationship with RAIT Financial Trust. “The tenancy strengh of Rosedale Commons and the borrower’s experience with this asset allowed RAIT to utilize a high loan-to-value and provide two years of interest only payments,” said Murray Kornberg with CBRE. The borrower, Rosedale Commons, LP, was represented by CBRE’s Debt & Structured Finance group led by Murray Kornberg, Doug Seylar, and Scott Larson. Rosedale Commons, LP is affiliated with Tanurb Development, the original developer of the property. The Minneapolis-based team of Doug Seylar, Murray Kornberg, Joel Torborg, Ben Bastian, and Scott Larson focuses on loan origination and equity placement of all asset types. The Debt & Structured Finance (DSF) team also helps provide investment and advisory services to meet the financing needs of real estate owners ranging from private investors to large public entities.
Christopher Dolan
REAL ESTATE SERVICES Continental Property Group, Inc. 1907 Wayzata Blvd, Suite 250 Wayzata, MN 55391 Tel-952-473-1700 www.leasespace.com
Monroe Moxness Berg 8000 Norman Centeer dr. #1000 Minneapolis, mn 55437 952-885-5999 www.mmblawfirm.com
REAL ESTATE EDUCATION MN Real Estate Exchangors Henry votel 651-426-1610 Www.mree1031.com Info@mree1031.com